Document:

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                                                                    Exhibit 10.2

                                                                  EXECUTION COPY

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                         5-YEAR COMPETITIVE ADVANCE AND
                       REVOLVING CREDIT FACILITY AGREEMENT

                           Dated as of August 8, 2002

                                      among

                            THE E.W. SCRIPPS COMPANY,

                                  as Borrower,

                             THE BANKS NAMED HEREIN,

                              JPMORGAN CHASE BANK,

                            as Administrative Agent,

                          J.P. MORGAN SECURITIES INC.,

                       as Sole Advisor, Lead Arranger and
                              Sole Bookrunner, and

              WACHOVIA BANK, N.A., US BANK N.A., MELLON BANK, N.A.,
                 KEYBANK NATIONAL ASSOCIATION and SUNTRUST BANK,

                            as Co-Syndication Agents

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                                TABLE OF CONTENTS

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                                                                                          PAGE

<S>                                                                                      <C>
ARTICLE I DEFINITIONS.......................................................................1
         Section 1.01. Defined Terms........................................................1
         Section 1.02. Terms Generally.....................................................11

ARTICLE II THE CREDITS.....................................................................11
         Section 2.01. Commitments.........................................................11
         Section 2.02. Loans...............................................................12
         Section 2.03. Competitive Bid Procedure...........................................13
         Section 2.04. Standby Borrowing Procedure.........................................15
         Section 2.05. Refinancings........................................................15
         Section 2.06. Fees................................................................16
         Section 2.07. Repayment of Loans; Evidence of Debt................................17
         Section 2.08. Interest on Loans...................................................17
         Section 2.09. Default Interest....................................................18
         Section 2.10. Alternate Rate of Interest..........................................18
         Section 2.11. Termination and Reduction of Commitments............................18
         Section 2.12. Prepayment..........................................................19
         Section 2.13. Reserve Requirements; Change in Circumstances.......................19
         Section 2.14. Change in Legality..................................................21
         Section 2.15. Indemnity...........................................................21
         Section 2.16. Pro Rata Treatment..................................................22
         Section 2.17. Sharing of Setoffs..................................................23
         Section 2.18. Payments............................................................23
         Section 2.19. Taxes...............................................................23
         Section 2.20. Mandatory Assignment; Commitment Termination........................26

ARTICLE III REPRESENTATIONS AND WARRANTIES.................................................26
         Section 3.01. Organization; Powers................................................26
         Section 3.02. Authorization.......................................................27
         Section 3.03. Enforceability......................................................27
         Section 3.04. Governmental Approvals..............................................27
         Section 3.05. Financial Statements................................................27
         Section 3.06. No Material Adverse Change..........................................28
         Section 3.07. Title to Properties; Possession Under Leases........................28
         Section 3.08. Stock of Borrower...................................................28
         Section 3.09. Litigation; Compliance with Laws....................................28
         Section 3.10. Agreements..........................................................28
         Section 3.11. Federal Reserve Regulations.........................................28
         Section 3.12. Investment Company Act; Public Utility Holding Company Act..........29
         Section 3.13. Use of Proceeds.....................................................29
         Section 3.14. Tax Returns.........................................................29
         Section 3.15. No Material Misstatements...........................................29
         Section 3.16. Employee Benefit Plans..............................................29
         Section 3.17. Environmental and Safety Matters....................................30

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ARTICLE IV CONDITIONS OF LENDING...........................................................30
         Section 4.01. All Borrowings......................................................30
         Section 4.02. First Borrowing.....................................................31

ARTICLE V AFFIRMATIVE COVENANTS............................................................32
         Section 5.01. Existence; Businesses and Properties................................32
         Section 5.02. Insurance...........................................................32
         Section 5.03. Obligations and Taxes...............................................33
         Section 5.04. Financial Statements, Reports, etc..................................33
         Section 5.05. Litigation and Other Notices........................................34
         Section 5.06. ERISA...............................................................34
         Section 5.07. Maintaining Records; Access to Properties and Inspections...........35
         Section 5.08. Use of Proceeds.....................................................35
         Section 5.09. Filings.............................................................35

ARTICLE VI NEGATIVE COVENANTS..............................................................35
         Section 6.01. Indebtedness........................................................35
         Section 6.02. Liens...............................................................36
         Section 6.03. Sale and Lease-Back Transactions....................................37
         Section 6.04. Mergers, Consolidations and Sales of Assets.........................38
         Section 6.05. Interest Coverage Ratio.............................................38
         Section 6.06. Fiscal Year.........................................................38

ARTICLE VII EVENTS OF DEFAULT..............................................................38

ARTICLE VIII THE AGENT.....................................................................41

ARTICLE IX MISCELLANEOUS...................................................................43
         Section 9.01. Notices.............................................................43
         Section 9.02. Survival of Agreement...............................................43
         Section 9.03. Binding Effect......................................................44
         Section 9.04. Successors and Assigns..............................................44
         Section 9.05. Expenses; Indemnity.................................................47
         Section 9.06. Rights of Setoff....................................................48
         SECTION 9.07. APPLICABLE LAW......................................................48
         Section 9.08. Waivers; Amendment..................................................48
         Section 9.09. Interest Rate Limitation............................................48
         Section 9.10. Entire Agreement....................................................49
         Section 9.11. Waiver of Jury Trial................................................49
         Section 9.12. Severability........................................................49
         Section 9.13. Counterparts........................................................49
         Section 9.14. Headings............................................................49
         Section 9.15. Jurisdiction; Consent to Service of Process.........................49
         Section 9.16. Confidentiality.....................................................50

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Exhibit A-1                Form of Competitive Bid Request
Exhibit A-2                Form of Notice of Competitive Bid Request
Exhibit A-3                Form of Competitive Bid
Exhibit A-4                Form of Competitive Bid Accept/Reject Letter
Exhibit A-5                Form of Standby Borrowing Request
Exhibit B                  Administrative Questionnaire
Exhibit C                  Form of Assignment and Acceptance
Exhibit D                  Form of Opinion of Counsel

Schedule 2.01              Commitments
Schedule 3.09              Litigation
Schedule 3.17              Environmental
Schedule 6.01              Indebtedness

                                      iii

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          5-YEAR COMPETITIVE ADVANCE AND REVOLVING CREDIT FACILITY AGREEMENT
dated as of August 8, 2002, among THE E.W. SCRIPPS COMPANY, an Ohio corporation
(the "Borrower"), the banks listed in Schedule 2.01 (the "Banks"), JPMORGAN
CHASE BANK, a New York banking corporation, as agent for the Banks (in such
capacity, the "Agent").

          The Borrower has requested the Banks to extend credit to the Borrower
in order to enable it to borrow on a standby revolving credit basis on and after
the date hereof and at any time and from time to time prior to the Maturity Date
(as herein defined) a principal amount not in excess of $200,000,000 at any time
outstanding. The Borrower has also requested the Banks to provide a procedure
pursuant to which the Borrower may invite the Banks to bid on an uncommitted
basis on short-term borrowings by the Borrower. The proceeds of such borrowings
are to be used for general corporate purposes. The Banks are willing to extend
such credit to the Borrower on the terms and subject to the conditions herein
set forth.

          Accordingly, the Borrower, the Banks and the Agent agree as follows:

                                   ARTICLE I

                                   DEFINITIONS

          Section 1.01. DEFINED TERMS. As used in this Agreement, the following
terms shall have the meanings specified below:

          "ABR Borrowing" shall mean a Borrowing comprised of ABR Loans.

          "ABR Loan" shall mean any Standby Loan bearing interest at a rate
determined by reference to the Alternate Base Rate in accordance with the
provisions of Article II.

          "Administrative Fees" shall have the meaning assigned to such term in
Section 2.06(b).

          "Administrative Questionnaire" shall mean an Administrative
Questionnaire in the form of Exhibit B hereto.

          "Affiliate" shall mean, when used with respect to a specified person,
another person that directly, or indirectly through one or more intermediaries,
Controls or is Controlled by or is under common Control with the person
specified.

          "Aggregate Commitments": at any time, the sum of the aggregate amount
of the Commitments then in effect and the aggregate amount of the Commitments
(as defined in the Other Agreement) then in effect.

          "Alternate Base Rate" shall mean, for any day, a rate per annum
(rounded upwards, if necessary, to the next 1/16 of 1%) equal to the greatest of
(a) the Prime Rate in effect on such day, (b) the Base CD Rate in effect on such
day plus 1% and (c) the Federal Funds Effective Rate in effect on such day plus
1/2 of 1%. For purposes hereof, "Prime Rate" shall

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mean the rate of interest per annum publicly announced from time to time by the
Agent as its prime rate in effect at its principal office in New York City; each
change in the Prime Rate shall be effective on the date such change is publicly
announced as effective. "Base CD Rate" shall mean the sum of (a) the product of
(i) the Three-Month Secondary CD Rate and (ii) Statutory Reserves and (b) the
Assessment Rate. "Three-Month Secondary CD Rate" shall mean, for any day, the
secondary market rate for three-month certificates of deposit reported as being
in effect on such day (or, if such day shall not be a Business Day, the next
preceding Business Day) by the Board through the public information telephone
line of the Federal Reserve Bank of New York (which rate will, under the current
practices of the Board, be published in Federal Reserve Statistical Release
H.15(519) during the week following such day), or, if such rate shall not be so
reported on such day or such next preceding Business Day, the average of the
secondary market quotations for three-month certificates of deposit of major
money center banks in New York City received at approximately 10:00 a.m., New
York City time, on such day (or, if such day shall not be a Business Day, on the
next preceding Business Day) by the Agent from three New York City negotiable
certificate of deposit dealers of recognized standing selected by it. "Federal
Funds Effective Rate" shall mean, for any day, the weighted average of the rates
on overnight Federal funds transactions with members of the Federal Reserve
System arranged by Federal funds brokers, as published on the next succeeding
Business Day by the Federal Reserve Bank of new York, or, if such rate is not so
published for any day which is a Business Day, the average of the quotations for
the day of such transactions received by the Agent from three Federal funds
brokers of recognized standing selected by it. If for any reason the Agent shall
have determined (which determination shall be conclusive absent manifest error)
that it is unable to ascertain the Base CD Rate or the Federal Funds Effective
Rate or both for any reason, including the inability or failure of the Agent to
obtain sufficient quotations in accordance with the terms thereof, the Alternate
Base Rate shall be determined without regard to clause (b) or (c), or both, of
the first sentence of this definition, as appropriate, until the circumstances
giving rise to such inability no longer exist. Any change in the Alternate Base
Rate due to a change in the Prime Rate, the Three-Month Secondary CD Rate or the
Federal Funds Effective Rate shall be effective on the effective date of such
change in the Prime Rate, the Three-Month Secondary CD Rate or the Federal Funds
Effective Rate, respectively.

          "Applicable Percentage" shall mean on any date, with respect to the
Facility Fee or the Loans comprising any Eurodollar Standby Borrowing, the
applicable percentage set forth below based upon the ratings applicable on such
date to the Borrower's implied or actual senior, unsecured, non-credit-enhanced
long-term indebtedness for borrowed money (the "Index Debt"):

                              FEE AND SPREAD TABLE

============== ============================ ================ =================
                  RATINGS (S&P/MOODY'S)      FACILITY FEE       LIBOR SPREAD
-------------- ---------------------------- ---------------- -----------------
Category 1     A+/A1 or higher                 0.0700%          0.1550%
-------------- ---------------------------- ---------------- -----------------
Category 2     A/A2                            0.0800%          0.1700%
-------------- ---------------------------- ---------------- -----------------
Category 3     A-/A3                           0.1000%          0.2000%
-------------- ---------------------------- ---------------- -----------------
Category 4     BBB+/Baa1                       0.1250%          0.3750%
-------------- ---------------------------- ---------------- -----------------
Category 5     BBB/Baa2                        0.1500%          0.4750%
-------------- ---------------------------- ---------------- -----------------
Category 6     BBB-/Baa3 or lower              0.1750%          0.5750%
============== ============================ ================ =================

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          For purposes of the foregoing, (a) if no rating for the Index Debt
shall be available from either Moody's or S&P (other than by reason of the
circumstances referred to in the last sentence of this definition), each such
rating agency shall be deemed to have established a rating in Category 4; (b) if
only one of Moody's and S&P shall have in effect a rating for the Index Debt,
the Applicable Percentage shall be determined by reference to the available
rating; (c) if the ratings established or deemed to have been established by
Moody's and S&P shall fall within different categories, the Applicable
Percentage shall be based upon the superior (or numerically lower) category
unless the ratings differ by more than one category, in which case the governing
rating shall be the rating next below the higher of the two; and (d) if any
rating established or deemed to have been established by Moody's or S&P shall be
changed (other than as a result of a change in the rating system of either
Moody's or S&P), such change shall be effective as of the date on which such
change is first announced publicly by the rating agency making such change. Any
change in the LIBOR spread due to a change in the applicable category shall be
effective on the effective date of such change in the applicable category and
shall apply to all Eurodollar Standby Loans that are outstanding at any time
during the period commencing on the effective date of such change in the
applicable category and ending on the date immediately preceding the effective
date of the next such change in the applicable category. If the rating system of
either Moody's or S&P shall change, the Borrower and the Banks shall negotiate
in good faith to amend the references to specific ratings in this definition to
reflect such changed rating system. If either Moody's or S&P shall cease to be
in the business of rating corporate debt obligations, the Borrower and the Banks
shall negotiate in good faith to agree upon a substitute rating agency and to
amend the references to specific ratings in this definition to reflect the
ratings used by such substitute rating agency and, pending such agreement, the
Applicable Percentage shall be determined on the basis of the ratings provided
by the other rating agency.

          "Assessment Rate" shall mean for any date the annual rate (rounded
upwards if necessary, to the next 1/100 of 1%) most recently estimated by the
Agent as the then current net annual assessment rate that will be employed in
determining amounts payable by the Agent to the Federal Deposit Insurance
Corporation (or such successor) of time deposits made in dollars at the Agent's
domestic offices.

          "Assignment and Acceptance" shall mean an assignment and acceptance
entered into by a Bank and an assignee, and accepted by the Agent, in the form
of Exhibit C.

          "Board" shall mean the Board of Governors of the Federal Reserve
System of the United States.

          "Borrowing" shall mean a group of Loans of a single Type made by the
Banks (or, in the case of a Competitive Borrowing, by the Bank or Banks whose
Competitive Bids have been accepted pursuant to Section 2.03) on a single date
and as to which a single Interest Period is in effect.

          "Business Day" shall mean any day (other than a day which is a
Saturday, Sunday or legal holiday in the State of New York) on which banks are
open for business in New York City; PROVIDED, HOWEVER, that, when used in
connection with a Eurodollar Loan, the

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term "Business Day" shall also exclude any day on which banks are not open for
dealings in dollar deposits in the London interbank market.

          "Capital Lease Obligations" of any person shall mean the obligations
of such person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such person under GAAP
and, for the purposes of this Agreement, the amount of such obligations at any
time shall be the capitalized amount thereof at such time determined in
accordance with GAAP.

          A "Change in Control" shall be deemed to have occurred if the Trust or
the beneficiaries thereof shall not be the direct or indirect owner,
beneficially and of record, of at least 51% of the issued and outstanding Common
Voting Shares, $.01 par value per share, of the Borrower and any other common
stock at any time issued by the Borrower, other than the Borrower's Class A
Common Shares, $.01 per share.

          "Closing Date" shall mean August 8, 2002.

          "Code" shall mean the Internal Revenue Code of 1986, as the same may
be amended from time to time.

          "Commitment" shall mean, with respect to each Bank, the commitment of
such Bank hereunder as set forth in Schedule 2.01 hereto, as such Bank's
Commitment may be permanently terminated or reduced from time to time pursuant
to Section 2.11. The Commitments shall automatically and permanently terminate
on the Maturity Date.

          "Competitive Bid" shall mean an offer by a Bank to make a Competitive
Loan pursuant to Section 2.03.

          "Competitive Bid Accept/Reject Letter" shall mean a notification made
by the Borrower pursuant to Section 2.03(d) in the form of Exhibit A-4.

          "Competitive Bid Rate" shall mean, as to any Competitive Bid made by a
Bank pursuant to Section 2.03(b), (i) in the case of a Eurodollar Loan, the
Margin, and (ii) in the case of a Fixed Rate Loan, the fixed rate of interest
offered by the Bank making such Competitive Bid.

          "Competitive Bid Request" shall mean a request made pursuant to
Section 2.03 in the form of Exhibit A-1.

          "Competitive Borrowing" shall mean a borrowing consisting of a
Competitive Loan or concurrent Competitive Loans from the Bank or Banks whose
Competitive Bids for such Borrowing have been accepted by the Borrower under the
bidding procedure described in Section 2.03.

          "Competitive Loan" shall mean a Loan from a Bank to the Borrower
pursuant to the bidding procedure described in Section 2.03. Each Competitive
Loan shall be a Eurodollar Competitive Loan or a Fixed Rate Loan.

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          "Consolidated Cash Flow" shall mean with respect to any person for any
period the aggregate operating income of such person and its consolidated
subsidiaries plus any depreciation and any amortization of intangibles arising
from acquisitions that have been deduced in deriving such operating income, all
computed and consolidated in accordance with GAAP.

          "Consolidated Indebtedness" with respect to any person shall mean the
aggregate Indebtedness of such person and its consolidated subsidiaries,
consolidated in accordance with GAAP.

          "Consolidated Interest Expense" with respect to any person shall mean
for any period the aggregate interest expense of such person and its
consolidated subsidiaries for such period, computed and consolidated in
accordance with GAAP.

          "Consolidated Net Income" with respect to any person shall mean for
any period the aggregate net income (or net deficit) of such person and its
consolidated subsidiaries for such period equal to gross revenues and other
proper income less the aggregate for such person and its consolidated
subsidiaries of (i) operating expenses, (ii) selling, administrative and general
expenses, (iii) taxes, (iv) depreciation, depletion and amortization of
properties and (v) any other items that are treated as expenses under GAAP but
excluding from the definition of Consolidated Net Income any extraordinary gains
or losses, all computed and consolidated in accordance with GAAP.

          "Consolidated Stockholders' Equity" with respect to any person shall
mean the aggregate Stockholders' Equity of such person and its consolidated
subsidiaries, consolidated in accordance with GAAP.

          "Control" shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
person, whether through the ownership of voting securities, by contract or
otherwise, and "Controlling" and "Controlled" shall have meanings correlative
thereto.

          "Default" shall mean any event or condition which upon notice, lapse
of time or both would constitute an Event of Default.

          "dollars" or "$" shall mean lawful money of the United States of
America.

          "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as the same may be amended from time to time.

          "ERISA Affiliate" shall mean any trade or business (whether or not
incorporated) that is a member of a group of which the Borrower is a member and
which is treated as a single employer under Section 414 of the Code.

          "Eurodollar Borrowing" shall mean a Borrowing comprised of Eurodollar
Loans.

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<PAGE>

          "Eurodollar Competitive Loan" shall mean any Competitive Loan bearing
interest at a rate determined by reference to the LIBO Rate in accordance with
the provisions of Article II.

          "Eurodollar Loan" shall mean any Eurodollar Competitive Loan or
Eurodollar Standby Loan.

          "Eurodollar Standby Borrowing" shall mean a Borrowing comprised of
Eurodollar Standby Loans.

          "Eurodollar Standby Loan" shall mean any Standby Loan bearing interest
at a rate determined by reference to the LIBO Rate in accordance with the
provisions of Article II.

          "Event of Default" shall have the meaning assigned to such term in
Article VII.

          "Existing Credit Agreement" shall mean the 5-Year Competitive Advance
and Revolving Credit Facility Agreement dated as of September 26, 1997, as
amended, among the Borrower, the banks named therein and JPMorgan Chase Bank,
successor by merger to the Chase Manhattan Bank, as agent.

          "Facility Fee" shall have the meaning assigned to such term in Section
2.06(a).

          "Fee Letter" shall mean the letter agreement dated July 2, 2002,
between the Borrower and the Agent, providing for the payment of certain fees or
other amounts in connection with the credit facilities established by this
Agreement.

          "Fees" shall mean the Facility Fee and the Administrative Fees.

          "Financial Officer" of any corporation shall mean the chief financial
officer, principal accounting officer, Treasurer, Assistant Treasurer or
Controller of such corporation.

          "Fixed Rate Borrowing" shall mean a Borrowing comprised of Fixed Rate
Loans.

          "Fixed Rate Loan" shall mean any Competitive Loan bearing interest at
a fixed percentage rate per annum (expressed in the form of a decimal to no more
than four decimal places) specified by the Bank making such Loan in its
Competitive Bid.

          "GAAP" shall mean generally accepted accounting principles, applied on
a consistent basis.

          "Governmental Authority" shall mean any Federal, state, local or
foreign court or governmental agency, authority, instrumentality or regulatory
body.

          "Guarantee" of or by any person shall mean any obligation, contingent
or otherwise, of such person guaranteeing or having the economic effect of
guaranteeing any Indebtedness of any other person (the "primary obligor") in any
manner, whether directly or indirectly, and including any obligation of such
person, direct or indirect, (a) to purchase or pay (or advance or supply funds
for the purchase or payment of) such Indebtedness or to purchase (or

                                       6
<PAGE>

to advance or supply funds for the purchase of) any security for the payment of
such Indebtedness, (b) to purchase property, securities or services for the
purpose of assuring the owner of such Indebtedness of the payment of such
Indebtedness or (c) to maintain working capital, equity capital or other
financial statement condition or liquidity of the primary obligor so as to
enable the primary obligor to pay such Indebtedness; PROVIDED, HOWEVER, that the
term Guarantee shall not include endorsements for collection or deposit, in
either case in the ordinary course of business.

          "Indebtedness" of any person shall mean, without duplication, (a) all
obligations of such person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such person
under conditional sale or other title retention agreements relating to property
or assets purchased by such person, (d) all obligations of such person issued or
assumed as the deferred purchase price of property or services, (e) all
Indebtedness of others secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any Lien on
property owned or acquired by such person, whether or not the obligations
secured thereby have been assumed, (f) all Guarantees by such person of
Indebtedness of others, (g) all Capital Lease Obligations of such person, (h)
all obligations of such person in respect of interest rate protection
agreements, foreign currency exchange agreements or other interest or exchange
rate hedging arrangements, in such amount which exceeds $15,000,000 at any time
and (i) all obligations of such person as an account party in respect of letters
of credit and bankers' acceptances; PROVIDED that the definition of Indebtedness
shall not include (i) accounts payable to suppliers and (ii) programming rights,
in each case incurred in the ordinary course of business and not overdue. The
Indebtedness of any person shall include the recourse Indebtedness of any
partnership in which such person is a general partner. For purposes of this
Agreement, the amount of any Indebtedness referred to in clause (h) of the
preceding sentence shall be amounts, including any termination payments,
required to be paid to a counterparty after giving effect to any contractual
netting arrangements, and not any notional amount with regard to which payments
may be calculated.

          "Interest Payment Date" shall mean, with respect to any Loan, the last
day of the Interest Period applicable thereto and, in the case of a Eurodollar
Loan with an Interest Period of more than three months' duration or a Fixed Rate
Loan with an Interest Period of more than 90 days' duration, each day that would
have been an Interest Payment Date for such Loan had successive Interest Periods
of three months' duration or 90 days' duration, as the case may be, been
applicable to such Loan and, in addition, the date of any refinancing or
conversion of such Loan with or to a Loan of a different Type.

          "Interest Period" shall mean (a) as to any Eurodollar Borrowing, the
period commencing on the date of such Borrowing or on the last day of the
immediately preceding Interest Period applicable to such Borrowing, as the case
may be, and ending on the numerically corresponding day (or, if there is no
numerically corresponding day, on the last day) in the calendar month that is 1,
2, 3 or 6 months (or, if agreed to by all Banks, 9 or 12 months) thereafter, as
the Borrower may elect, (b) as to any ABR Borrowing, the period commencing on
the date of such Borrowing and ending on the date 90 days thereafter or, if
earlier, on the Maturity Date or the date of prepayment of such Borrowing and
(c) as to any Fixed Rate Borrowing, the period commencing on the date of such
Borrowing and ending on the date

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specified in the Competitive Bids in which the offer to make the Fixed Rate
Loans comprising such Borrowing were extended, which shall not be earlier than
seven days after the date of such Borrowing or later than 360 days after the
date of such Borrowing; PROVIDED, HOWEVER, that if any Interest Period would end
on a day other than a Business Day, such Interest Period shall be extended to
the next succeeding Business Day unless, in the case of Eurodollar Loans only,
such next succeeding Business Day would fall in the next calendar month, in
which case such Interest Period shall end on the next preceding Business Day.
Interest shall accrue from and including the first day of an Interest Period to
but excluding the last day of such Interest Period.

          "LIBO Rate" shall mean, with respect to any Eurodollar Borrowing for
any Interest Period, the rate appearing on Page 3750 of the Telerate Service (or
on any successor or substitute page of such Service, or any successor to or
substitute for such Service, providing rate quotations comparable to those
currently provided on such page of such Service, as reasonably determined by the
Agent from time to time for purposes of providing quotations of interest rates
applicable to dollar deposits in the London interbank market) at approximately
11:00 a.m., London time, two Business Days prior to the commencement of such
Interest Period, as the rate for dollar deposits with a maturity comparable to
such Interest Period. In the event that such rate is not available at such time
for any reason, then the "LIBO RATE" with respect to such Eurodollar Borrowing
for such Interest Period shall be the rate at which dollar deposits of
$5,000,000 and for a maturity comparable to such Interest Period are offered by
the principal London office of the Agent in immediately available funds in the
London interbank market at approximately 11:00 a.m., London time, two Business
Days prior to the commencement of such Interest Period.

          "Lien" shall mean, with respect to any asset, (a) any mortgage, deed
of trust, lien, pledge, encumbrance, charge or security interest in or on such
asset or (b) the interest of a vendor or a lessor under any conditional sale
agreement, capital lease or title retention agreement relating to such asset.

          "Loan" shall mean a Competitive Loan or a Standby Loan, whether made
as a Eurodollar Loan, an ABR Loan or a Fixed Rate Loan, as permitted hereby.

          "Loan Documents" shall mean this Agreement and the Fee Letter.

          "Margin" shall mean, as to any Eurodollar Competitive Loan, the margin
(expressed as a percentage rate per annum in the form of a decimal to no more
than four decimal places) to be added to or subtracted from the LIBO Rate in
order to determine the interest rate applicable to such Loan, as specified in
the Competitive Bid relating to such Loan.

          "Margin Stock" shall have the meaning given such term under
Regulation U.

          "Material Adverse Effect" shall mean (a) a materially adverse effect
on the business, assets, operations, or condition, financial or otherwise, of
the Borrower and its Subsidiaries taken as a whole, (b) material impairment of
the ability of the Borrower or any Subsidiary to perform any of its obligations
under any Loan Document to which it is or will be a party or (c) material
impairment of the rights of or benefits expressly available to the Banks under
any Loan Document.

                                       8
<PAGE>

          "Maturity Date" shall mean August 8, 2007.

          "Multiemployer Plan" shall mean a multiemployer plan as defined in
Section 4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate (other
than one considered an ERISA Affiliate only pursuant to subsection (m) or (o) of
Code Section 414) is making or accruing an obligation to make contributions, or
has within any of the preceding five plan years made or accrued an obligation to
make contributions.

          "Other Agreement" shall mean the 364-Day Competitive Advance and
Revolving Credit Facility Agreement, dated as of the date hereof, among the
Borrower, the banks named therein, JPMorgan Chase Bank, as administrative agent,
and J.P. Morgan Securities Inc.

          "Participant" shall have the meaning set forth in Section 9.04.

          "PBGC" shall mean the Pension Benefit Guaranty Corporation referred to
and defined in ERISA.

          "person" shall mean any natural person, corporation, business trust,
joint venture, association, company, partnership or government, or any agency or
political subdivision thereof.

          "Plan" shall mean any pension plan (other than a Multiemployer Plan)
subject to the provisions of Title IV of ERISA or Section 412 of the Code and
which is maintained for employees of the Borrower or any ERISA Affiliate.

          "Rate" shall include the LIBO Rate, the Alternate Base Rate and the
Fixed Rate.

          "Register" shall have the meaning given such term in Section
9.04(b)(iv).

          "Regulation D" shall mean Regulation D of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.

          "Regulation U" shall mean Regulation U of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.

          "Regulation X" shall mean Regulation X of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.

          "Related Parties" shall mean, with respect to any specified Person,
such Person's Affiliates and the respective directors, officers, employees,
agents and advisors of such Person and such Person's Affiliates.

          "Reportable Event" shall mean any reportable event as defined in
Section 4043(b) of ERISA or the regulations issued thereunder with respect to a
Plan (other than a Plan maintained by an ERISA Affiliate that is considered an
ERISA Affiliate only pursuant to subsection (m) or (o) of Code Section 414).

          "Required Banks" shall mean, at any time, Banks having Commitments
representing at least 51% of the Total Commitment or, for purposes of
acceleration pursuant to

                                       9
<PAGE>

clause (ii) of Article VII, Banks holding Loans representing at least 51% of the
aggregate principal amount of the Loans outstanding.

          "Responsible Officer" of any corporation shall mean any executive
officer or Financial Officer of such corporation and any other officer or
similar official thereof responsible for the administration of the obligations
of such corporation in respect of this Agreement.

          "Standby Borrowing" shall mean a borrowing consisting of simultaneous
Standby Loans from each of the Banks.

          "Standby Borrowing Request" shall mean a request made pursuant to
Section 2.04 in the form of Exhibit A-5.

          "Standby Loans" shall mean the revolving loans made by the Banks to
the Borrower pursuant to Section 2.04. Each Standby Loan shall be a Eurodollar
Standby Loan or an ABR Loan.

          "Statutory Reserves" shall mean a fraction (expressed as a decimal),
the numerator of which is the number one and the denominator of which is the
number one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board and any other banking authority to which the Agent is
subject for new negotiable nonpersonal time deposits in dollars of over $100,000
with maturities approximately equal to the applicable Interest Period. Statutory
Reserves shall be adjusted automatically on and as of the effective date of any
change in any reserve percentage.

          "Stockholders' Equity" shall mean, for any corporation, the
consolidated total stockholders' equity of such corporation determined in
accordance with GAAP, consistently applied.

          "subsidiary" shall mean, with respect to any person (herein referred
to as the "parent"), any corporation, partnership, association or other business
entity (a) of which securities or other ownership interests representing more
than 50% of the equity or more than 50% of the ordinary voting power or more
than 50% of the general partnership interests are, at the time any determination
is being made, owned, controlled or held, or (b) which is, at the time any
determination is made, otherwise Controlled by the parent or one or more
subsidiaries of the parent or by the parent and one or more subsidiaries of the
parent.

          "Subsidiary" shall mean any subsidiary of the Borrower.

          "Total Commitment" shall mean at any time the aggregate amount of the
Banks' Commitments, as in effect at such time.

          "Transactions" shall have the meaning assigned to such term in Section
3.02.

          "Trust" shall mean The Edward W. Scripps Trust, being that certain
trust for the benefit of descendants of Edward W. Scripps and owning shares of
capital stock of the Borrower.

                                       10
<PAGE>

          "Type", when used in respect of any Loan or Borrowing, shall refer
to the Rate by reference to which interest on such Loan or on the Loans
comprising such Borrowing is determined.

          "Utilization Fee" shall have the meaning assigned to such term in
Section 2.06(c).

          "Withdrawal Liability" shall mean liability to a Multiemployer Plan as
a result of a complete or partial withdrawal from such Multiemployer Plan, as
such terms are defined in Part I of Subtitle E of Title IV of ERISA.

          Section 1.02. TERMS GENERALLY. The definitions in Section 1.01 shall
apply equally to both the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without limitation".
All references herein to Articles, Sections, Exhibits and Schedules shall be
deemed references to Articles and Sections of, and Exhibits and Schedules to,
this Agreement unless the context shall otherwise require. Except as otherwise
expressly provided herein, all terms of an accounting or financial nature shall
be construed in accordance with GAAP, as in effect from time to time; PROVIDED,
HOWEVER, that, for purposes of determining compliance with any covenant set
forth in Article VI, such terms shall be construed in accordance with GAAP as in
effect on the date of this Agreement applied on a basis consistent with the
application used in preparing the Borrower's audited financial statements
referred to in Section 3.05.

                                   ARTICLE II

                                  THE CREDITS

          Section 2.01. COMMITMENTS. Subject to the terms and conditions and
relying upon the representations and warranties herein set forth, each Bank
agrees, severally and not jointly, to make Standby Loans to the Borrower, at any
time and from time to time on and after the date hereof and until the earlier of
the Maturity Date and the termination of the Commitment of such Bank as provided
in this Agreement, in an aggregate principal amount at any time outstanding not
to exceed such Bank's Commitment minus the amount by which the Competitive Loans
outstanding at such time shall be deemed to have used such Commitment pursuant
to Section 2.16, subject, however, to the conditions that (a) at no time shall
(i) the sum of (x) the outstanding aggregate principal amount of all Standby
Loans made by all Banks plus (y) the outstanding aggregate principal amount of
all Competitive Loans made by all Banks exceed (ii) the Total Commitment and (b)
at all times the outstanding aggregate principal amount of all Standby Loans
made by each Bank shall equal the product of (i) the percentage which its
Commitment represents of the Total Commitment times (ii) the outstanding
aggregate principal amount of all Standby Loans made pursuant to Section 2.04.
Each Bank's Commitment is set forth opposite its respective name in Schedule
2.01. Such Commitments may be terminated or reduced from time to time pursuant
to Section 2.11.

          Within the foregoing limits, the Borrower may borrow, pay or repay and
reborrow hereunder, on and after the Closing Date and prior to the Maturity
Date, subject to the terms, conditions and limitations set forth herein.

                                       11
<PAGE>

          Section 2.02. LOANS. (a) Each Standby Loan shall be made as part of a
Borrowing consisting of Loans made by the Banks ratably in accordance with their
Commitments; provided, however, that the failure of any Bank to make any Standby
Loan shall not in itself relieve any other Bank of its obligation to lend
hereunder (it being understood, however, that no Bank shall be responsible for
the failure of any other Bank to make any Loan required to be made by such other
Bank). Each Competitive Loan shall be made in accordance with the procedures set
forth in Section 2.03. The Standby Loans or Competitive Loans comprising any
Borrowing shall be (i) in the case of Competitive Loans, in an aggregate
principal amount which is an integral multiple of $1,000,000 and not less than
$5,000,000 and (ii) in the case of Standby Loans, in an aggregate principal
amount which is an integral multiple of $1,000,000 and not less than $10,000,000
in the case of Eurodollar Standby Loans and $5,000,000 in the case of ABR Loans
(or an aggregate principal amount equal to the remaining balance of the
available Commitments).

          (b) Each Competitive Borrowing shall be comprised entirely of
Eurodollar Competitive Loans or Fixed Rate Loans, and each Standby Borrowing
shall be comprised entirely of Eurodollar Standby Loans or ABR Loans, as the
Borrower may request pursuant to Section 2.03 or 2.04, as applicable. Each Bank
may at its option make any Eurodollar Loan by causing any domestic or foreign
branch or Affiliate of such Bank to make such Loan; PROVIDED that any exercise
of such option shall not affect the obligation of the Borrower to repay such
Loan in accordance with the terms of this Agreement. Borrowings of more than one
Type may be outstanding at the same time; PROVIDED, HOWEVER, that the Borrower
shall not be entitled to request any Borrowing which, if made, would result in
an aggregate of more than five separate Standby Loans of any Bank being
outstanding hereunder at any one time. For purposes of the foregoing, Loans
having different Interest Periods, regardless of whether they commence on the
same date, shall be considered separate Loans.

          (c) Subject to Section 2.05, each Bank shall make each Loan to be made
by it hereunder on the proposed date thereof by wire transfer of immediately
available funds to the Agent in New York, New York, not later than 12:00 noon,
New York City time, and the Agent shall by 3:00 p.m., New York City time, wire
transfer the amounts so received to the general deposit account of the Borrower
at Mellon Bank (or other general deposit account designated by the Borrower in
writing) or, if a Borrowing shall not occur on such date because any condition
precedent herein specified shall not have been met, return the amounts so
received to the respective Banks. Competitive Loans shall be made by the Bank or
Banks whose Competitive Bids therefor are accepted pursuant to Section 2.03 in
the amounts so accepted and Standby Loans shall be made by the Banks pro rata in
accordance with Section 2.16. Unless the Agent shall have received notice from a
Bank prior to the date of any Borrowing that such Bank will not make available
to the Agent such Bank's portion of such Borrowing, the Agent may assume that
such Bank has made such portion available to the Agent on the date of such
Borrowing in accordance with this paragraph (c) and the Agent may, in reliance
upon such assumption, make available to the Borrower on such date a
corresponding amount. If and to the extent that such Bank shall not have made
such portion available to the Agent, such Bank and the Borrower severally agree
(without duplication) to repay to the Agent forthwith on demand such
corresponding amount together with interest thereon, for each day from the date
such amount is made available to the Borrower until the date such amount is
repaid to the Agent at (i) in the case of the Borrower, the interest rate
applicable at the time to the Loans comprising such Borrowing

                                       12
<PAGE>

and (ii) in the case of such Bank, the Federal Funds Effective Rate. If such
Bank shall repay to the Agent such corresponding amount, such amount shall
constitute such Bank's Loan as part of such Borrowing for purposes of this
Agreement.

          (d) Notwithstanding any other provision of this Agreement, the
Borrower shall not be entitled to request any Borrowing if the Interest Period
requested with respect thereto would end after the Maturity Date.

          Section 2.03. COMPETITIVE BID PROCEDURE. (a) In order to request
Competitive Bids, the Borrower shall hand deliver or telecopy to the Agent a
duly completed Competitive Bid Request in the form of Exhibit A-1 hereto, to be
received by the Agent (i) in the case of a Eurodollar Competitive Borrowing, not
later than 10:00 a.m., New York City time, four Business Days before a proposed
Competitive Borrowing and (ii) in the case of a Fixed Rate Borrowing, not later
than 10:00 a.m., New York City time, one Business Day before a proposed
Competitive Borrowing. No ABR Loan shall be requested in, or made pursuant to, a
Competitive Bid Request. A Competitive Bid Request that does not conform
substantially to the format of Exhibit A-1 may be rejected in the Agent's sole
discretion, and the Agent shall as soon as practicable notify the Borrower of
such rejection by telecopier. Such request shall in each case refer to this
Agreement and specify (x) whether the Borrowing then being requested is to be a
Eurodollar Borrowing or a Fixed Rate Borrowing, (y) the date of such Borrowing
(which shall be a Business Day) and the aggregate principal amount thereof which
shall be in a minimum principal amount of $5,000,000 and in an integral multiple
of $1,000,000, and (z) the Interest Period with respect thereto (which may not
end after the Maturity Date). As soon as practicable after its receipt of a
Competitive Bid Request that is not rejected as aforesaid, the Agent shall
invite by telecopier (in the form set forth in Exhibit A-2 hereto) the Banks to
bid, on the terms and conditions of this Agreement, to make Competitive Loans
pursuant to the Competitive Bid Request.

          (b) Each Bank may, in its sole discretion, make one or more
Competitive Bids to the Borrower responsive to a Competitive Bid Request. Each
Competitive Bid by a Bank must be received by the Agent via telecopier, in the
form of Exhibit A-3 hereto, (i) in the case of a Eurodollar Competitive
Borrowing, not later than 9:30 a.m., New York City time, three Business Days
before a proposed Competitive Borrowing and (ii) in the case of a Fixed Rate
Borrowing, not later than 9:30 a.m., New York City time, on the day of a
proposed Competitive Borrowing. Multiple bids will be accepted by the Agent.
Competitive Bids that do not conform substantially to the format of Exhibit A-3
may be rejected by the Agent after conferring with, and upon the instruction of,
the Borrower, such conference between the Agent and the Borrower to occur as
soon as practicable following the receipt by the Agent of such Competitive Bid,
and the Agent shall notify the Bank making such nonconforming bid of such
rejection as soon as practicable. Each Competitive Bid shall refer to this
Agreement and specify (x) the principal amount (which shall be in a minimum
principal amount of $5,000,000 and in an integral multiple of $1,000,000 and
which may equal the entire principal amount of the Competitive Borrowing
requested by the Borrower) of the Competitive Loan or Loans that the Bank is
willing to make to the Borrower, (y) the Competitive Bid Rate or Rates at which
the Bank is prepared to make the Competitive Loan or Loans and (z) the Interest
Period and the last day thereof. If any Bank shall elect not to make a
Competitive Bid, such Bank shall so notify the Agent via telecopier (I) in the
case of Eurodollar Competitive Loans, not later than 9:30 a.m., New York City
time, three Business

                                       13
<PAGE>

Days before a proposed Competitive Borrowing, and (II) in the case of Fixed Rate
Loans, not later than 9:30 a.m., New York City time, on the day of a proposed
Competitive Borrowing; PROVIDED, HOWEVER, that failure by any Bank to give such
notice shall not cause such Bank to be obligated to make any Competitive Loan as
part of such Competitive Borrowing. A Competitive Bid submitted by a Bank
pursuant to this paragraph (b) shall be irrevocable.

          (c) The Agent shall as soon as practicable notify the Borrower by
telecopier (i) in the case of Eurodollar Competitive Loans, not later than 10:00
a.m., New York City time, three Business Days before a proposed Competitive
Borrowing, and (ii) in the case of Fixed Rate Loans, not later than 10:00 a.m.,
New York City time, on the day of a proposed Competitive Borrowing, of all the
Competitive Bids made, the Competitive Bid Rate and the principal amount of each
Competitive Loan in respect of which a Competitive Bid was made and the identity
of the Bank that made each bid. The Agent shall send a copy of all Competitive
Bids to the Borrower for its records as soon as practicable after completion of
the bidding process set forth in this Section 2.03.

          (d) The Borrower may in its sole and absolute discretion, subject only
to the provisions of this paragraph (d), accept or reject any Competitive Bid
referred to in paragraph (c) above. The Borrower shall notify the Agent by
telephone, confirmed by telecopier in the form of a Competitive Bid
Accept/Reject Letter in the form of Exhibit A-4, whether and to what extent it
has decided to accept or reject any of or all the bids referred to in paragraph
(c) above, (x) in the case of a Eurodollar Competitive Borrowing, not later than
10:00 a.m., New York City time, three Business Days before a proposed
Competitive Borrowing, and (y) in the case of a Fixed Rate Borrowing, not later
than 10:00 a.m., New York City time, on the day of a proposed Competitive
Borrowing; PROVIDED, HOWEVER, that (i) the failure by the Borrower to give such
notice shall be deemed to be a rejection of all the bids referred to in
paragraph (c) above, (ii) the Borrower shall not accept a bid made at a
particular Competitive Bid Rate if the Borrower has decided to reject an
unrestricted bid made at a lower Competitive Bid Rate, (iii) the aggregate
amount of the Competitive Bids accepted by the Borrower shall not exceed the
principal amount specified in the Competitive Bid Request, (iv) if the Borrower
shall accept a bid or bids made at a particular Competitive Bid Rate but the
amount of such bid or bids shall cause the total amount of bids to be accepted
by the Borrower to exceed the amount specified in the Competitive Bid Request,
then the Borrower shall accept a portion of such bid or bids in an amount equal
to the amount specified in the Competitive Bid Request less the amount of all
other Competitive Bids accepted with respect to such Competitive Bid Request,
which acceptance, in the case of multiple bids at such Competitive Bid Rate,
shall be made pro rata in accordance with the amount of each such bid at such
Competitive Bid Rate, and (v) except pursuant to clause (iv) above, no bid shall
be accepted for a Competitive Loan unless such Competitive Loan is in a minimum
principal amount of $5,000,000 and an integral multiple of $1,000,000; PROVIDED,
FURTHER, HOWEVER, that if a Competitive Loan must be in an amount less than
$5,000,000 because of the provisions of clause (iv) above, such Competitive Loan
may be for a minimum of $1,000,000 or any integral multiple thereof, and in
calculating the pro rata allocation of acceptances of portions of multiple bids
at a particular Competitive Bid Rate pursuant to clause (iv) the amounts shall
be rounded to integral multiples of $1,000,000 in a manner which shall be in the
discretion of the Borrower. A notice given by the Borrower pursuant to this
paragraph (d) shall be irrevocable.

                                       14
<PAGE>

          (e) The Agent shall promptly notify each bidding Bank (i) in the case
of Eurodollar Competitive Loans, not later than 11:00 a.m., New York City time,
three Business Days before a proposed Competitive Borrowing, and (ii) in the
case of Fixed Rate Loans, not later than 11:00 a.m., New York City time, on the
day of a proposed Competitive Borrowing, whether or not its Competitive Bid has
been accepted (and if so, in what amount and at what Competitive Bid Rate) by
telecopy sent by the Agent, and each successful bidder will thereupon become
bound, subject to the other applicable conditions hereof, to make the
Competitive Loan in respect of which its bid has been accepted.

          (f) A Competitive Bid Request shall not be made within five Business
Days after the date of any previous Competitive Bid Request.

          (g) If the Agent shall elect to submit a Competitive Bid in its
capacity as a Bank, it shall submit such bid directly to the Borrower one
quarter of an hour earlier than the latest time at which the other Banks are
required to submit their bids to the Agent pursuant to paragraph (b) above.

          (h) All Notices required by this Section 2.03 shall be given in
accordance with Section 9.01.

          Section 2.04. STANDBY BORROWING PROCEDURE. In order to request a
Standby Borrowing, the Borrower shall hand deliver or telecopy to the Agent in
the form of Exhibit A-5 (a) in the case of a Eurodollar Standby Borrowing, not
later than 10:00 a.m., New York City time, three Business Days before a proposed
borrowing and (b) in the case of an ABR Borrowing, not later than 10:00 a.m.,
New York City time, on the day of a proposed borrowing. No Fixed Rate Loan shall
be requested or made pursuant to a Standby Borrowing Request. Such notice shall
be irrevocable and shall in each case specify (i) whether the Borrowing then
being requested is to be a Eurodollar Standby Borrowing or an ABR Borrowing;
(ii) the date of such Standby Borrowing (which shall be a Business Day) and the
amount thereof; and (iii) if such Borrowing is to be a Eurodollar Standby
Borrowing, the Interest Period with respect thereto. If no election as to the
Type of Standby Borrowing is specified in any such notice, then the requested
Standby Borrowing shall be an ABR Borrowing. If no Interest Period with respect
to any Eurodollar Standby Borrowing is specified in such notice, then the
Borrower shall be deemed to have selected an Interest Period of one month's
duration. If the Borrower shall not have given notice in accordance with this
Section 2.04 of its election to refinance a Standby Borrowing prior to the end
of the Interest Period in effect for such Borrowing, then the Borrower shall
(unless such Borrowing is repaid at the end of such Interest Period) be deemed
to have given notice of an election to refinance such Borrowing with an ABR
Borrowing. The Agent shall promptly advise the Banks of any notice given
pursuant to this Section 2.04 and of each Bank's portion of the requested
Borrowing.

          Section 2.05. REFINANCINGS. The Borrower may refinance all or any part
of any Borrowing with a Borrowing of the same or a different Type made pursuant
to Section 2.03 or Section 2.04, subject to the conditions and limitations set
forth herein and elsewhere in this Agreement, including refinancings of
Competitive Borrowings with Standby Borrowings and Standby Borrowings with
Competitive Borrowings. Any Borrowing or part thereof so refinanced shall be
repaid in accordance with Section 2.07 with the proceeds of a new Borrowing

                                       15
<PAGE>

hereunder and the proceeds of the new Borrowing shall be paid by the Banks to
the Agent or by the Agent to the Borrower pursuant to Section 2.02(c); PROVIDED,
HOWEVER, that (i) if the principal amount extended by a Bank in a refinancing is
greater than the principal amount extended by such Bank in the Borrowing being
refinanced, then such Bank shall pay such difference to the Agent for
distribution to the Banks described in (ii) below, (ii) if the principal amount
extended by a Bank in the Borrowing being refinanced is greater than the
principal amount being extended by such Bank in the refinancing, the Agent shall
return the difference to such Bank out of amounts received pursuant to (i)
above, and (iii) to the extent any Bank fails to pay the Agent amounts due from
it pursuant to (i) above, any Loan or portion thereof being refinanced with such
amounts shall not be deemed repaid in accordance with Section 2.07 and shall be
payable by the Borrower.

          Section 2.06. FEES. (a) The Borrower agrees to pay to each Bank,
through the Agent, on each March 31, June 30, September 30 and December 31 and
on the date on which the Commitment of such Bank shall be terminated as provided
herein, a facility fee (a "Facility Fee") at a rate per annum equal to the
Applicable Percentage from time to time in effect, on the amount of the
Commitment of such Bank, whether used or unused, during the preceding quarter
(or shorter period commencing with the date hereof or ending with the Maturity
Date or any date on which the Commitment of such Bank shall be terminated as
provided in this Agreement). All Facility Fees shall be computed on the basis of
the actual number of days elapsed in a year of 360 days. The Facility Fee due to
each Bank shall commence to accrue on the date hereof and shall cease to accrue
on the earlier of the Maturity Date and the termination of the Commitment of
such Bank as provided herein.

          (b) The Borrower agrees to pay the Agent, for its own account, the
fees (the "Administrative Fees") at the times and in the amounts agreed upon in
the Fee Letter.

          (c) The Borrower agrees to pay, in immediately available funds, to the
Agent for the account of each Bank a fee (the "UTILIZATION FEE") based upon the
average daily amount of the outstanding Standby Loans of such Bank at a rate per
annum equal to 0.10%, when and for as long as the aggregate outstanding
principal amount of the sum of (a) the Standby Loans hereunder plus (b) the
aggregate principal amount of the Standby Loans (as defined therein) under the
Other Agreement exceeds 25% of (i) until the Availability Termination Date (as
defined therein) of the Other Agreement, the Aggregate Commitments, (ii) from
the Availability Termination Date (as defined therein) of the Other Agreement
through the Maturity Date (as defined therein) of the Other Agreement and the
payment in full of all Standby Loans (as defined therein), the aggregate amount
of the Commitments hereunder plus the aggregate amount of the Commitments (as
defined therein) under the Other Agreement in effect immediately prior to the
Availability Termination Date (as defined therein) of the Other Agreement and
(iii) after the Maturity Date (as defined therein) of the Other Agreement and
the payment in full of all Standby Loans (as defined therein), the aggregate
amount of the Commitments hereunder. The Utilization Fee shall be payable
quarterly in arrears on the last day of each March, June, September and
December, commencing on the first of such dates to occur after the date hereof,
and on the Maturity Date (or such earlier date on which the Commitments shall
terminate and the Loans and all interest, fees and other amounts in respect
thereof shall have been paid in full).

                                       16
<PAGE>

          (d) All Fees shall be paid on the date due, in immediately available
funds, to the Agent for distribution, if and as appropriate, among the Banks.

          Section 2.07. REPAYMENT OF LOANS; EVIDENCE OF DEBT. (a) The Borrower
hereby unconditionally promises to pay (i) to the Agent for the account of each
Bank the then unpaid principal amount of each Standby Loan on the Maturity Date
and (ii) to the Agent for the account of each applicable Bank the then unpaid
principal amount of each Competitive Loan on the last day of the Interest Period
applicable to such Loan.

          (b) Each Bank shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness of the Borrower to such Bank
resulting from each Loan made by such Bank, including the amounts of principal
and interest payable and paid to such Bank from time to time hereunder.

          (c) The Agent shall maintain accounts in which it shall record (i) the
amount of each Loan made hereunder, whether such Loan is a Standby Loan or a
Competitive Loan, and the Type thereof and the Interest Period applicable
thereto, (ii) the amount of any principal or interest due and payable or to
become due and payable from the Borrower to each Bank hereunder and (iii) the
amount of any sum received by the Agent hereunder for the account of the Banks
and each Bank's share thereof.

          (d) The entries made in the accounts maintained pursuant to paragraphs
(b) and (c) of this Section shall be PRIMA FACIE evidence of the existence and
amounts of the obligations recorded therein; PROVIDED that the failure of any
Bank or the Agent to maintain such accounts or any error therein shall not in
any manner affect the obligation of the Borrower to repay the Loans in
accordance with the terms of this Agreement.

          (e) Any Bank may request that Loans made by it be evidenced by a
promissory note. In such event, the Borrower shall prepare, execute and deliver
to such Bank a promissory note payable to the order of such Bank (or, if
requested by such Bank, to such Bank and its registered assigns) and in a usual
and customary form for such Type approved by the Agent in its reasonable
discretion.

          Section 2.08. INTEREST ON LOANS. (a) Subject to the provisions of
Section 2.09, the Loans comprising each Eurodollar Borrowing shall bear interest
(computed on the basis of the actual number of days elapsed over a year of 360
days) at a rate per annum equal to (i) in the case of each Eurodollar Standby
Loan, the LIBO Rate for the Interest Period in effect for such Borrowing plus
the Applicable Percentage, and (ii) in the case of each Eurodollar Competitive
Loan, the LIBO Rate for the Interest Period in effect for such Borrowing plus
the Margin offered by the Bank making such Loan and accepted by the Borrower
pursuant to Section 2.03.

          (b) Subject to the provisions of Section 2.09, the Loans comprising
each ABR Borrowing shall bear interest (computed on the basis of the actual
number of days elapsed over a year of 365 or 366 days, as the case may be, when
determined by reference to the Prime Rate and over a year of 360 days at all
other times) at a rate per annum equal to the Alternate Base Rate.

          (c) Subject to the provisions of Section 2.09, each Fixed Rate Loan
shall bear interest at a rate per annum (computed on the basis of the actual
number of days elapsed over a

                                       17
<PAGE>

year of 360 days) equal to the fixed rate of interest offered by the Bank making
such Loan and accepted by the Borrower pursuant to Section 2.03.

          (d) Interest on each Loan shall be payable on each Interest Payment
Date applicable to such Loan. The LIBO Rate or the Alternate Base Rate for each
Interest Period or day within an Interest Period shall be determined by the
Agent, and such determination shall be conclusive absent manifest error.

          Section 2.09. DEFAULT INTEREST. If the Borrower shall default in the
payment of the principal of or interest on any Loan or any other amount becoming
due hereunder, whether by scheduled maturity, notice of prepayment, acceleration
or otherwise, the Borrower shall on demand from time to time from the Agent pay
interest, to the extent permitted by law, on such defaulted amount up to (but
not including) the date of actual payment (after as well as before judgment) at
a rate per annum (computed as provided in Section 2.08(b)) equal to the
Alternate Base Rate plus 1%.

          Section 2.10. ALTERNATE RATE OF INTEREST. In the event, and on each
occasion, that on the day two Business Days prior to the commencement of any
Interest Period for a Eurodollar Borrowing the Agent shall have determined that
dollar deposits in the principal amounts of the Eurodollar Loans comprising such
Borrowing are not generally available in the London interbank market, or that
the rates at which such dollar deposits are being offered will not adequately
and fairly reflect the cost to any Bank of making or maintaining its Eurodollar
Loan during such Interest Period, or that reasonable means do not exist for
ascertaining the LIBO Rate, the Agent shall, as soon as practicable thereafter,
give written or telecopy notice of such determination to the Borrower and the
Banks. In the event of any such determination, until the Agent shall have
advised the Borrower and the Banks that the circumstances giving rise to such
notice no longer exist, (i) any request by the Borrower for a Eurodollar
Competitive Borrowing pursuant to Section 2.03 shall be of no force and effect
and shall be denied by the Agent and (ii) any request by the Borrower for a
Eurodollar Standby Borrowing pursuant to Section 2.04 shall be deemed to be a
request for an ABR Borrowing. Each determination by the Agent hereunder shall be
conclusive absent manifest error.

          Section 2.11. TERMINATION AND REDUCTION OF COMMITMENTS. (a) The
Commitments shall be automatically terminated on the Maturity Date.

          (b) Upon at least three Business Days' prior irrevocable written or
telecopy notice to the Agent, the Borrower may at any time in whole permanently
terminate, or from time to time in part permanently reduce, the Total
Commitment; PROVIDED, HOWEVER, that (i) each partial reduction of the Total
Commitment shall be in an integral multiple of $5,000,000 and in a minimum
principal amount of $5,000,000 and (ii) no such termination or reduction shall
be made which would reduce the Total Commitment to an amount less than the
aggregate outstanding principal amount of the Loans.

          (c) Each reduction in the Total Commitment hereunder shall be made
ratably among the Banks in accordance with their respective Commitments. The
Borrower shall pay to the Agent for the account of the Banks, on the date of
each termination or reduction, the Facility

                                       18
<PAGE>

Fees on the amount of the Commitments so terminated or reduced accrued to the
date of such termination or reduction.

          Section 2.12. PREPAYMENT. (a) The Borrower shall have the right at any
time and from time to time to prepay any Standby Borrowing, in whole or in part,
upon giving written or telecopy notice (or telephone notice promptly confirmed
by written or telecopy notice) to the Agent: (i) before 10:00 a.m., New York
City time, three Business Days prior to prepayment, in the case of Eurodollar
Loans and (ii) before 10:00 a.m., New York City time, one Business Day prior to
prepayment, in the case of ABR Loans; PROVIDED, HOWEVER, that each partial
prepayment shall be in an amount which is an integral multiple of $1,000,000 and
not less than $10,000,000. The Borrower shall not have the right to prepay any
Competitive Borrowing.

          (b) On the date of any termination or reduction of the Commitments
pursuant to Section 2.11, the Borrower shall pay or prepay so much of the
Standby Borrowings as shall be necessary in order that the aggregate principal
amount of the Competitive Loans and Standby Loans outstanding will not exceed
the Total Commitment after giving effect to such termination or reduction.

          (c) Each notice of prepayment shall specify the prepayment date and
the principal amount of each Borrowing (or portion thereof) to be prepaid, shall
be irrevocable and shall commit the Borrower to prepay such Borrowing (or
portion thereof) by the amount stated therein on the date stated therein. All
prepayments under this Section 2.12 shall be subject to Section 2.15 but
otherwise without premium or penalty. All prepayments under this Section 2.12
shall be accomplished by accrued interest on the principal amount being prepaid
to the date of payment.

          Section 2.13. RESERVE REQUIREMENTS; CHANGE IN CIRCUMSTANCES. (a)
Notwithstanding any other provision herein, if after the date of this Agreement
any change in applicable law or regulation or in the interpretation or
administration thereof by any governmental authority charged with the
interpretation or administration thereof (whether or not having the force of
law) shall change the basis of taxation of payments to any Bank of the principal
of or interest on any Eurodollar Loan or Fixed Rate Loan made by such Bank or
any Fees or other amounts payable hereunder (other than changes in respect of
taxes imposed on the overall net income of such Bank by the jurisdiction in
which such Bank has its principal office or by any political subdivision or
taxing authority therein), or shall impose, modify or deem applicable any
reserve, special deposit or similar requirement against assets of, deposits with
or for the account of or credit extended by such Bank, or shall impose on such
Bank or the London interbank market any other condition affecting this Agreement
or any Eurodollar Loan or Fixed Rate Loan made by such Bank, and the result of
any of the foregoing shall be to increase the cost to such Bank of making or
maintaining any Eurodollar Loan or Fixed Rate Loan or to reduce the amount of
any sum received or receivable by such Bank hereunder (whether of principal,
interest or otherwise) by an amount deemed by such Bank to be material, then the
Borrower will pay to such Bank within 30 days of demand such additional costs
incurred or reduction suffered. Notwithstanding the foregoing, no Bank shall be
entitled to request compensation under this paragraph with respect to any
Competitive Loan if it shall have been aware of the change giving rise to such
request at the time of submission of the Competitive Bid pursuant to which such
Competitive Loan shall have been made.

                                       19
<PAGE>
          (b) If any Bank shall have determined that the applicability of any
law, rule, regulation or guideline adopted pursuant to or arising out of the
July 1988 report of the Basle Committee on Banking Regulations and Supervisory
Practices entitled "International Convergence of Capital Measurement and Capital
Standards", or the adoption after the date hereof of any other law, rule,
regulation or guideline regarding capital adequacy, or any change in any of the
foregoing or in the interpretation or administration of any of the foregoing by
any governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Bank (or any
lending office of such Bank) or any Bank's holding company with any request or
directive regarding capital adequacy (whether or not having the focus of law) of
any such authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on such Bank's capital or on the capital
of such Bank's holding company, if any, as a consequence of this Agreement or
the Loans made by such Bank pursuant hereto to a level below that which such
Bank or such Bank's holding company could have achieved but for such
applicability, adoption, change or compliance (taking into consideration such
Bank's policies and the policies of such Bank's holding company with respect to
capital adequacy) by an amount deemed by such Bank to be material, then from
time to time the Borrower shall pay to such Bank such additional amount or
amounts as will compensate such Bank or such Bank's holding company for any such
reduction suffered. It is acknowledged that the Facility Fee provided for in
this Agreement has been determined on the understanding that the Banks will not
be required to maintain capital against their Commitments under currently
applicable law, rules, regulations and regulatory guidelines. In the event the
Banks shall be advised by bank regulatory authorities responsible for
interpreting or administering such applicable laws, rules, regulations and
guidelines or shall otherwise determine, on the basis of applicable laws, rules,
regulations, guidelines or other requests or statements (whether or not having
the force of law) of such bank regulatory authorities, that such understanding
is incorrect, it is agreed that the Banks will be entitled to make claims under
this paragraph based upon prevailing market requirements for commitments under
comparable credit facilities against which capital is required to be maintained.

          (c) Notwithstanding any other provision of this Section 2.13, no Bank
shall demand compensation for any increased cost or reduction referred to in
paragraph (a) or (b) above if it shall not at the time be the general policy or
practice of such Bank to demand such compensation in similar circumstances under
comparable provisions of other credit agreements, if any.

          (d) A certificate of a Bank setting forth such amount or amounts as
shall be necessary to compensate such Bank as specified in paragraph (a) or (b)
above, as the case may be, shall be delivered to the Borrower and shall be
conclusive absent manifest error. The Borrower shall pay each Bank the amount
shown as due on any such certificate delivered by it within 30 days after the
receipt of the same. If any Bank subsequently receives a refund of any such
amount paid by the Borrower it shall remit such refund to the Borrower.

          (e) Failure on the part of any Bank to demand compensation for any
increased costs or reduction in amounts received or receivable or reduction in
return on capital with respect to any period shall not constitute a waiver of
such Bank's right to demand compensation with respect to any other period;
PROVIDED that if any Bank fails to make such demand within 90 days after it
obtains knowledge of the event giving rise to the demand such Bank shall, with
respect to

                                       20
<PAGE>

amounts payable pursuant to this Section 2.13 resulting from such event, only be
entitled to payment under this Section 2.13 for such costs incurred or reduction
in amounts or return on capital from and after the date 90 days prior to the
date that such Bank does make such demand. The protection of this Section shall
be available to each Bank regardless of any possible contention of the
invalidity or inapplicability of the law, rule, regulation, guideline or other
change or condition which shall have occurred or been imposed.

          Section 2.14. CHANGE IN LEGALITY. (a) Notwithstanding any other
provision herein, if any change in any law or regulation or in the
interpretation thereof by any governmental authority charged with the
administration or interpretation thereof shall make it unlawful for any Bank to
make or maintain any Eurodollar Loan or to give effect to its obligations as
contemplated hereby with respect to any Eurodollar Loan, then, by written or
telecopy notice to the Borrower and to the Agent, such Bank may:

          (i) declare that Eurodollar Loans will not thereafter be made by such
     Bank hereunder, whereupon such Bank shall not submit a Competitive Bid in
     response to a request for Eurodollar Competitive Loans and any request by
     the Borrower for a Eurodollar Standby Borrowing shall, as to such Bank
     only, be deemed a request for an ABR Loan unless such declaration shall be
     subsequently withdrawn; and

          (ii) require that all outstanding Eurodollar Loans made by it be
     converted to ABR Loans, in which event all such Eurodollar Loans shall be
     automatically converted to ABR Loans as of the effective date of such
     notice as provided in paragraph (b) below.

In the event any Bank shall exercise its rights under (i) or (ii) above, all
payments and prepayments of principal which would otherwise have been applied to
repay the Eurodollar Loans that would have been made by such Bank or the
converted Eurodollar Loans of such Bank shall instead be applied to repay the
ABR Loans made by such Bank in lieu of, or resulting from the conversion of,
such Eurodollar Loans.

          (b) For purposes of this Section 2.14, a notice to the Borrower by any
Bank shall be effective as to each Eurodollar Loan, if lawful, on the last day
of the Interest Period currently applicable to such Eurodollar Loan; in all
other cases such notice shall be effective on the date of receipt by the
Borrower.

          (c) Each Bank agrees that, upon the occurrence of any event giving
rise to the operation of paragraph (a) of this Section 2.14 with respect to such
Bank, it shall have a duty to endeavor in good faith to mitigate the adverse
effects that may arise as a consequence of such event to the extent that such
mitigation will not, in the reasonable judgment of such Bank, entail any cost or
disadvantage to such Bank that such Bank is not reimbursed or compensated for by
the Borrower.

          Section 2.15. INDEMNITY. The Borrower shall indemnify each Bank
against any loss or expense which such Bank may sustain or incur as a
consequence of (a) any failure by the Borrower to fulfill on the date of any
borrowing hereunder the applicable conditions set forth in Article IV, (b) any
failure by the Borrower to borrow or to refinance or continue any Loan hereunder
after irrevocable notice of such borrowing, refinancing or continuation has been
given

                                       21
<PAGE>

pursuant to Section 2.03 or 2.04, (c) any payment, prepayment or conversion of a
Eurodollar Loan or Fixed Rate Loan required by any other provision of this
Agreement or otherwise made or deemed made on a date other than the last day of
the Interest Period applicable thereto, (d) any default in payment or prepayment
of the principal amount of any Loan or any part thereof or interest accrued
thereon, as and when due and payable (at the due date thereof, whether by
scheduled maturity, acceleration, irrevocable notice of prepayment or otherwise)
or (e) the occurrence of any Event of Default, including, in each such case, any
loss or reasonable expense sustained or incurred or to be sustained or incurred
in liquidating or employing deposits from third parties acquired to effect or
maintain such Loan or any part thereof as a Eurodollar Loan or Fixed Rate Loan.
Such loss or reasonable expense shall include an amount equal to the excess, if
any, as reasonably determined by such Bank, of (i) its cost of obtaining the
funds for the Loan being paid, prepaid, converted or not borrowed (assumed to be
the LIBO Rate or, in the case of a Fixed Rate Loan, the fixed rate of interest
applicable thereto) for the period from the date of such payment, prepayment or
failure to borrow to the last day of the Interest Period for such Loan (or, in
the case of a failure to borrow, the Interest Period for such Loan which would
have commenced on the date of such failure) over (ii) the amount of interest (as
reasonably determined by such Bank) that would be realized by such Bank in
reemploying the funds so paid, prepaid or not borrowed for the remainder of such
period or Interest Period, as the case may be. A certificate of any Bank setting
forth any amount or amounts which such Bank is entitled to receive pursuant to
this Section shall be delivered to the Borrower and shall be conclusive absent
manifest error.

          Each Bank shall have a duty to mitigate the damages to such Bank that
may arise as a consequence of clause (a), (b), (c), (d) or (e) above to the
extent that such mitigation will not, in the reasonable judgment of such Bank,
entail any cost or disadvantage to such Bank that such Bank is not reimbursed or
compensated for by the Borrower.

          Section 2.16. PRO RATA TREATMENT. Except as required under Section
2.14, each Standby Borrowing, each payment or prepayment of principal of any
Standby Borrowing, each payment of interest on the Standby Loans, each payment
of the Facility Fees, each reduction of the Commitments and each refinancing of
any Borrowing with a Standby Borrowing of any Type, shall be allocated pro rata
among the Banks in accordance with their respective Commitments (or, if such
Commitments shall have expired or been terminated, in accordance with the
respective principal amounts of their outstanding Standby Loans). Each payment
of principal of any Competitive borrowing shall be allocated pro rata among the
Banks participating in such Borrowing in accordance with the respective
principal amounts of their outstanding Competitive Loans comprising such
Borrowing. Each payment of interest on any Competitive Borrowing shall be
allocated pro rata among the Banks participating in such Borrowing in accordance
with the respective amounts of accrued and unpaid interest on their outstanding
Competitive Loans comprising such Borrowing. For purposes of determining the
available Commitments of the Banks at any time, each outstanding Competitive
Borrowing shall be deemed to have utilized the Commitments of the Banks
(including those Banks which shall not have made Loans as part of such
Competitive Borrowing) pro rata in accordance with such respective Commitments.
Each Bank agrees that in computing such Bank's portion of any Borrowing to be
made hereunder, the Agent may, in its discretion, round each Bank's percentage
of such Borrowing to the next higher or lower whole dollar amount.

                                       22
<PAGE>

          Section 2.17. SHARING OF SETOFFS. Each Bank agrees that if it shall,
through the exercise of a right of banker's lien, setoff or counterclaim against
the Borrower, or pursuant to, a secured claim under Section 506 of title 11 of
the United States Code or other security or interest arising from, or in lieu
of, such secured claim received by such Bank under any applicable bankruptcy,
insolvency or other similar law or otherwise, or by any other means, obtain
payment (voluntary or involuntary) in respect of any Standby Loan or Loans as a
result of which the unpaid principal portion of the Standby Loans shall be
proportionately less than the unpaid principal portion of the Standby Loans of
any other Bank, it shall be deemed simultaneously to have purchased from such
other Bank at face value, and shall promptly pay to such other Bank the purchase
price for, a participation in the Standby Loans of such other Bank, so that the
aggregate unpaid principal amount of the Standby Loans and participations in the
Standby Loans held by each Bank shall be in the same proportion to the aggregate
unpaid principal amount of all Standby Loans then outstanding as the principal
amount of its Standby Loans prior to such exercise of banker's lien, setoff or
counterclaim or other event was to the principal amount of all Standby Loans
outstanding prior to such exercise of banker's lien, setoff or counterclaim or
other event; PROVIDED, HOWEVER, that, if any such purchase or purchases or
adjustment shall be made pursuant to this Section 2.17 and the payment giving
rise thereto shall thereafter be recovered, such purchase or purchases or
adjustments shall be rescinded to the extent of such recovery and the purchase
price or prices or adjustments restored without interest. The Borrower expressly
consents to the foregoing arrangements and agrees that any Bank holding a
participation in a Standby Loan deemed to have been so purchased may exercise
any and all rights of banker's lien, setoff or counterclaim with respect to any
and all moneys owing by the Borrower to such Bank by reason thereof as fully as
if such Bank had made a Standby Loan directly to the Borrower in the amount of
such participation.

          Section 2.18 PAYMENTS. (a) The Borrower shall initiate each payment
(including principal of or interest on any Borrowing or any Fees or other
amounts) hereunder and under any other Loan Document not later than 12:00
(noon), New York City time, on the date when due in dollars to the Agent at its
offices at 270 Park Avenue, New York, New York, in immediately available funds.

          Section 2.19. TAXES. (a) Any and all payments by the Borrower
hereunder shall be made, in accordance with Section 2.18, free and clear of and
without deduction for any and all current or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto,
EXCLUDING (i) income taxes imposed on the net income of the Agent or any Bank
(or any transferee or assignee thereof, including a participation holder (any
such entity a "Transferee")) and (ii) franchise taxes imposed on the net income
of the Agent or any Bank (or Transferee), in each case by the jurisdiction under
the laws of which the Agent or such Bank (or Transferee) is organized or has its
principal place of business or any political subdivision thereof (all such
nonexcluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities, collectively or individually, "Taxes"). If the Borrower shall be
required to deduct any Taxes from or in respect of any sum payable hereunder to
any Bank (or any Transferee) or the Agent, (i) the sum payable shall be
increased by the amount (an "additional amount") necessary so that after making
all required deductions (including deductions applicable to additional sums
payable under this Section 2.19) such Bank (or Transferee) or the Agent (as the
case may be) shall receive an amount equal to the sum it would have received had
no such deduction been made, (ii)

                                       23
<PAGE>

the Borrower shall make such deductions and (iii) the Borrower shall pay the
full amount deducted to the relevant Governmental Authority in accordance with
applicable law.

          (b) In addition, the Borrower agrees to pay to the relevant
Governmental Authority in accordance with applicable law any current or future
stamp or documentary taxes or any other excise or property taxes, charges or
similar levies that arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement or any
other Loan Document ("Other Taxes").

          (c) The Borrower will indemnify each Bank (or Transferee) and the
Agent for the full amount of Taxes and Other Taxes paid by such Bank (or
Transferee) or the Agent, as the case may be, and any liability (including
penalties, interest and expenses (including reasonable attorney's fees and
expenses)) arising therefrom or with respect thereto, whether or not such Taxes
or Other Taxes were correctly or legally asserted by the relevant Governmental
Authority. A certificate as to the amount of such payment or liability prepared
by a Bank, or the Agent on its behalf, absent manifest error, shall be final,
conclusive and binding for all purposes. Such indemnification shall be made
within 30 days after the date the Bank (or Transferee) or the Agent, as the case
may be, makes written demand therefor.

          (d) If a Bank (or Transferee) or the Agent shall become aware that it
is entitled to claim a refund from a Governmental Authority in respect of Taxes
or Other Taxes as to which it has been indemnified by the Borrower, or with
respect to which the Borrower has paid additional amounts, pursuant to this
Section 2.19, it shall promptly notify the borrower of the availability of such
refund claim and shall, within 30 days after receipt of a request by the
Borrower, make a claim to such Governmental Authority for such refund at the
Borrower's expense. If a Bank (or Transferee) or the Agent receives a refund
(including pursuant to a claim for refund made pursuant to the preceding
sentence) in respect of any Taxes or Other Taxes as to which it has been
indemnified by the Borrower or with respect to which the Borrower has paid
additional amounts pursuant to this Section 2.19, it shall within 30 days from
the date of such receipt pay over such refund to the Borrower (but only to the
extent of indemnity payments made, or additional amounts paid, by the Borrower
under this Section 2.19 with respect to the Taxes or Other Taxes giving rise to
such refund), net of all out-of-pocket expenses of such Bank (or Transferee) or
the Agent and without interest (other than interest paid by the relevant
Governmental Authority with respect to such refund); PROVIDED, HOWEVER, that the
Borrower, upon the request of such Bank (or Transferee) or the Agent, agrees to
repay the amount paid over to the Borrower (plus penalties, interest or other
charges) to such Bank (or Transferee) or the Agent in the event such Bank (or
Transferee) or the Agent is required to repay such refund to such Governmental
Authority.

          (e) As soon as practicable after the date of any payment of Taxes or
Other Taxes by the Borrower to the relevant Governmental Authority, the Borrower
will deliver to the Agent, at its address referred to in Section 9.01, the
original or a certified copy of a receipt issued by such Governmental Authority
evidencing payment thereof.

          (f) Without prejudice to the survival of any other agreement contained
herein, the agreements and obligations contained in this Section 2.19 shall
survive the payment in full of the principal of and interest on all Loans made
hereunder.

                                       24
<PAGE>

          (g) Each Bank (or Transferee) that is organized under the laws of a
jurisdiction other than the United States, any State thereof or the District of
Columbia (a "Non-U.S. Bank") shall deliver to the Borrower and the Agent two
copies of either United States Internal Revenue Service Form W-8BEN or Form
W-8ECI, or, in the case of a Non-U.S. Bank claiming exemption from U.S. Federal
withholding tax under Section 871(h) or 881(c) of the Code with respect to
payments of "portfolio interest", a Form W-8BEN, or any subsequent versions
thereof or successors thereto (and, if such Non-U.S. Bank delivers a Form
W-8BEN, a certificate representing that such Non-U.S. Bank is not a bank for
purposes of Section 881(c) of the Code, is not a 10-percent shareholder (within
the meaning of Section 871(h)(3)(B) of the Code) of the Borrower and is not a
controlled foreign corporation related to the Borrower (within the meaning of
Section 864(d)(4) of the Code)), properly completed and duly executed by such
Non-U.S. Bank claiming complete exemption from, or reduced rate of, U.S. Federal
withholding tax on payments by the Borrower under this Agreement and the other
Loan Documents. Such forms shall be delivered by each Non-U.S. Bank on or before
the date it becomes a party to this Agreement (or, in the case of a Transferee
that is a participation holder, on or before the date such participation holder
becomes a Transferee hereunder) and on or before the date, if any, such Non-U.S.
Bank changes its applicable lending office by designating a different lending
office (a "New Lending Office"). In addition, each Non-U.S. Bank shall deliver
such forms promptly upon the obsolescence or invalidity of any form previously
delivered by such Non-U.S. Bank. Notwithstanding any other provision of this
Section 2.19(g), a Non-U.S. Bank shall not be required to deliver any form
pursuant to this Section 2.19(g) that such Non-U.S. Bank is not legally able to
deliver.

          (h) The Borrower shall not be required to indemnify any Non-U.S. Bank,
or to pay any additional amounts to any Non-U.S. Bank, in respect of United
States Federal withholding tax pursuant to paragraph (a) or (c) above to the
extent that (i) the obligation to withhold amounts with respect to United States
Federal withholding tax existed on the date such Non-U.S. Bank became a party to
this Agreement (or, in the case of a Transferee that is a participation holder,
on the date such participation holder became a Transferee hereunder) or, with
respect to payments to a New Lending Office, the date such Non-U.S. Bank
designated such New Lending Office with respect to a Loan; PROVIDED, HOWEVER,
that this clause (i) of this subsection 2.19(h) shall not apply to any
Transferee or New Lending Office that becomes a Transferee or New Lending Office
as a result of an assignment, participation, transfer or designation made at the
request of the Borrower; and PROVIDED, FURTHER, HOWEVER, that this clause (i) of
this subsection 2.19(h) shall not apply to the extent the indemnity payment or
additional amounts any Transferee, or Bank (or Transferee) through a New Lending
Office, would be entitled to receive (without regard to this clause (i) of this
subsection 2.19(h)) do not exceed the indemnity payment or additional amounts
that the person making the assignment, participation or transfer to such
Transferee, or Bank (or Transferee) making the designation of such New Lending
Office, would have been entitled to receive in the absence of such assignment,
participation, transfer or designation or (ii) the obligation to pay such
additional amounts would not have arisen but for a failure by such Non-U.S. Bank
to comply with the provisions of paragraph (g) above.

          (i) Any Bank (or Transferee) claiming any additional amounts payable
under this Section 2.19 shall (A) to the extent legally able to do so, upon
written request from the Borrower, file any certificate or document if such
filing would avoid the need for or reduce the amount of

                                       25
<PAGE>

any such additional amounts which may thereafter accrue, and the Borrower shall
not be obligated to pay such additional amounts if, after the Borrower's
request, any Bank (or Transferee) could have filed such certificate or document
and failed to do so; or (B) consistent with legal and regulatory restrictions,
use reasonable efforts to change the jurisdiction of its applicable lending
office if the making of such change would avoid the need for or reduce the
amount of any additional amounts which may thereafter accrue and would not, in
the sole determination of such Bank (or Transferee), be otherwise
disadvantageous to such Bank (or Transferee).

          (j) Nothing contained in this Section 2.19 shall require any Bank (or
Transferee) or the Agent to make available any of its tax returns (or any other
information that it deems to be confidential or proprietary).

          Section 2.20. MANDATORY ASSIGNMENT; COMMITMENT TERMINATION. In the
event any Bank delivers to the Agent or the Borrower, as appropriate, a
certificate in accordance with Section 2.13(c) or a notice in accordance with
Section 2.10 or 2.14, or the Borrower is required to pay any additional amounts
or other payments in accordance with Section 2.19, the Borrower may, at its own
expense, and in its sole discretion (a) require such Bank to transfer and assign
in whole or in part, without recourse (in accordance with Section 9.04), all or
part of its interests, rights and obligations under this Agreement (other than
outstanding Competitive Loans) to an assignee which shall assume such assigned
obligations (which assignee may be another Bank, if a Bank accepts such
assignment); PROVIDED that (i) such assignment shall not conflict with any law,
rule or regulation or order of any court or other Governmental Authority and
(ii) the Borrower or such assignee shall have paid to the assigning Bank in
immediately available funds the principal of and interest accrued to the date of
such payment on the Loans made by it hereunder and all other amounts owed to it
hereunder or (b) terminate the Commitment of such Bank and prepay all
outstanding Loans (other than Competitive Loans) of such Bank; PROVIDED that (x)
such termination of the Commitment of such Bank and prepayment of Loans does not
conflict with any law, rule or regulation or order of any court or Governmental
Authority and (y) the Borrower shall have paid to such Bank in immediately
available funds the principal of and interest accrued to the date of such
payment on the Loans (other than Competitive Loans) made by it hereunder and all
other amounts owed to it hereunder.

                                  ARTICLE III

                         REPRESENTATIONS AND WARRANTIES

          The Borrower represents and warrants to each of the Banks that:

          Section 3.01. ORGANIZATION; POWERS. The Borrower and each Subsidiary
of the Borrower (a) is a corporation or other entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization, (b) has all requisite corporate or other entity power and
authority to own its property and assets and to carry on its business as now
conducted, (c) is qualified to do business in every jurisdiction where such
qualification is required, except where the failure so to qualify would not be
reasonably likely to have a Material Adverse Effect, and (d) in the case of the
Borrower, has the corporate power and authority to execute, deliver and perform
its obligations under each of the Loan Documents to which it is a

                                       26
<PAGE>

party and each other agreement or instrument contemplated thereby to which it is
or will be a party and to borrow hereunder.

          Section 3.02. AUTHORIZATION. The execution, delivery and performance
by the Borrower of this Agreement and the execution, delivery and performance of
each of the other Loan Documents and the borrowings hereunder (collectively, the
"Transactions") (a) have been duly authorized by all requisite corporate and, if
required, stockholder action and (b) will not (i) violate (A) any provision of
law, statute, rule or regulation, or of the certificate or articles of
incorporation or other constitutive documents or by-laws (or code of
regulations) of the Borrower or any Subsidiary, (B) any order of any
Governmental Authority or (C) any provision of any indenture, agreement or other
instrument to which the Borrower or any Subsidiary is a party or by which any of
them or any of their property is or may be bound, (ii) be in conflict with,
result in a breach of or constitute (alone or with notice or lapse of time or
both) a default under any such indenture, agreement or other instrument and
(iii) result in the creation or imposition of any Lien upon or with respect to
any property or assets now owned or hereafter acquired by the Borrower or any
Subsidiary, except for any such violation, conflict, creation or imposition
which does not impair the Borrower's ability to enter into and perform the
Transactions or would not be reasonably likely to have a Material Adverse Effect
or materially impair the position of the Banks with respect to any other
creditors of the Borrower.

          Section 3.03. ENFORCEABILITY. This Agreement has been duly executed
and delivered by the Borrower and constitutes, and each other Loan document when
executed and delivered by the Borrower will constitute, a legal, valid and
binding obligation of the Borrower, enforceable against the Borrower in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency or other similar laws of general application affecting
the enforcement of creditors' rights or by general principles of equity.

          Section 3.04. GOVERNMENTAL APPROVALS. No action, consent or approval
of, registration or filing with or any other action by any Governmental
Authority is or will be required by the Borrower in connection with the
Transactions, except such as have been made or obtained and are in full force
and effect.

          Section 3.05. FINANCIAL STATEMENTS. The Borrower has heretofore
furnished to the Banks the consolidated balance sheet and consolidated
statements of income, retained earnings and cash flows of the Borrower and its
consolidated subsidiaries (a) as of and for the fiscal year ended December 31,
2001, audited by and accompanied by the opinion of Deloitte & Touche LLP,
independent public accountants, and (b) as of and for the fiscal quarter and the
portion of the fiscal year ended March 31, 2002, certified by the chief
financial officer of the Borrower. Such financial statements (subject, in the
case of such interim statements, to normal year-end audit adjustments) present
fairly in all material respects the financial condition and results of
operations of the Borrower and its consolidated subsidiaries as of such dates
and for such periods. Such balance sheets and the notes thereto disclose, in
accordance with GAAP, all material liabilities, direct or contingent, of the
Borrower and its consolidated subsidiaries as of the dates thereof. Such
financial statements were prepared in accordance with GAAP applied on a
consistent basis, except that such interim financial statements do not contain
footnotes.

                                       27
<PAGE>

          Section 3.06. NO MATERIAL ADVERSE CHANGE. There has been no change in
the business, assets, operations or condition, financial or otherwise, of the
Borrower and its Subsidiaries since December 31, 2001 that would constitute a
Material Adverse Effect which is not reflected in the financial statements
referred to in Section 3.05(b).

          Section 3.07. TITLE TO PROPERTIES; POSSESSION UNDER LEASES. (a) Each
of the Borrower and its Subsidiaries has good and marketable title to, or valid
leasehold interests in , all its properties and assets, except for defects in
title that would not, in the aggregate, be reasonably likely to have a Material
Adverse Effect. All material properties and assets are free and clear of Liens,
other than Liens expressly permitted by Section 6.02.

          (b) Each of the Borrower and its Subsidiaries has complied with all
obligations under all leases to which it is a party, all such leases are in full
force and effect and each of the Borrower and its Subsidiaries enjoys peaceful
and undisturbed possession under all such leases, except for any noncompliance,
ineffectiveness or other conditions that would not, in the aggregate, be
reasonably likely to have a Material Adverse Effect.

          Section 3.08. STOCK OF BORROWER. More than 51% of the outstanding
Common Voting Shares, par value $.01, of the Borrower are owned legally,
beneficially and of record by the Trust or the beneficiaries thereof.

          Section 3.09. LITIGATION; COMPLIANCE WITH LAWS. (b) Except as set
forth in Schedule 3.09 or otherwise disclosed to the Banks in writing, there are
not any actions, suits or proceedings at law or in equity or by or before any
Governmental Authority now pending or, to the knowledge of the Borrower,
threatened against or affecting the Borrower or any Subsidiary or any business,
property or rights of any such person (i) which involve any Loan Document or the
Transactions or (ii) as to which there is a reasonable possibility of an adverse
determination and which, if adversely determined, would, individually or in the
aggregate, be reasonably likely to have a Material Adverse Effect.

          (b) None of the Borrower nor any of its Subsidiaries is in violation
of any law, rule or regulation, or in default with respect to any judgment,
writ, injunction or decree of any Governmental Authority, where such violation
or default would be reasonably likely to have a Material Adverse Effect.

          Section 3.10. AGREEMENTS. (a) None of the Borrower nor any of its
Subsidiaries is a party to any agreement or instrument or subject to any
corporate restriction that has resulted or would be reasonably likely to result
in a Material Adverse Effect.

          (b) None of the Borrower nor any of its Subsidiaries is in default in
any manner under any provision of any indenture or other agreement or instrument
evidencing Indebtedness, or any other material agreement or instrument to which
it is a party or by which it or any of its properties or assets are or may be
bound, where such default would be reasonably likely to have a Material Adverse
Effect.

          Section 3.11. FEDERAL RESERVE REGULATIONS. (a) None of the Borrower
nor any of its Subsidiaries is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of purchasing or
carrying Margin Stock.

                                       28
<PAGE>

          (b) No part of the proceeds of any Loan will be used, whether directly
or indirectly, and whether immediately, incidentally or ultimately, (i) to
purchase or carry Margin Stock or to extend credit to others for the purpose of
purchasing or carrying Margin Stock or to refund indebtedness originally
incurred for such purpose, or (ii) for any purpose which entails a violation of,
or which is inconsistent with, the provisions of the Regulations of the Board,
including Regulation U or X.

          Section 3.12. INVESTMENT COMPANY ACT; PUBLIC UTILITY HOLDING COMPANY
ACT. None of the Borrower nor any Subsidiary is (a) an "investment company" as
defined in, or subject to regulation under, the Investment Company Act of 1940
or (b) a "holding company" as defined in, or subject to regulation under, the
Public Utility Holding Company Act of 1935.

          Section 3.13. USE OF PROCEEDS. The Borrower will use the proceeds of
the Loans only for the purposes specified in the preamble to this Agreement.

          Section 3.14. TAX RETURNS. Each of the Borrower and its Subsidiaries
has filed or caused to be filed all Federal, state and local tax returns
required to have been filed by it and has paid or caused to be paid all taxes
shown to be due and payable on such returns or on any assessments received by
it, except taxes that are being contested in good faith by appropriate
proceedings and for which the Borrower shall have set aside on its books
adequate reserves.

          Section 3.15. NO MATERIAL MISSTATEMENTS. No material information,
report, financial statement, exhibit or schedule furnished by the Borrower in
writing to the Agent or any Bank in connection with the negotiation of any Loan
Document or included therein or delivered pursuant thereto contained, contains
or will contain any material misstatement of fact or omitted, omits or will omit
to state any material fact necessary to make the statements therein, in the
light of the circumstances under which they were, are or will be made, not
misleading.

          Section 3.16. EMPLOYEE BENEFIT PLANS. The Borrower and each of its
ERISA Affiliates is in compliance with the applicable provisions of ERISA and
the Code and the regulations and published interpretations thereunder, except
for violations which, in the aggregate, would not be reasonably likely to have a
Material Adverse Effect. No Reportable Event has occurred in respect of any plan
of the Borrower or any ERISA Affiliate that would be reasonably likely to have a
Material Adverse Effect. The present value of all benefit liabilities under each
Plan (based on those assumptions used to fund such Plan) did not, as of the last
annual valuation date applicable thereto, exceed by more than $20,000,000 the
value of the assets of such Plan, and the present value of all benefit
liabilities of all underfunded Plans (based on those assumptions used to fund
each such Plan) did not, as of the last annual valuation dates applicable
thereto, exceed $40,000,000. Neither the Borrower nor any ERISA Affiliate has
incurred any Withdrawal Liability that materially adversely affects the
financial condition of the Borrower and its ERISA Affiliates taken as a whole.
Neither the Borrower nor any ERISA Affiliate has received any notification that
any Multiemployer Plan is in reorganization or has been terminated, within the
meaning of Title IV of ERISA, and no Multiemployer Plan is reasonably expected
to be in reorganization or to be terminated, where such reorganization or
termination has resulted or would reasonably be expected to result in the
contributions required to be made to such Plan that would materially and
adversely affect the financial condition of the Borrower and its ERISA
Affiliates taken as a whole.

                                       29
<PAGE>

          Section 3.17. ENVIRONMENTAL AND SAFETY MATTERS. Except as set forth in
Schedule 3.17 or otherwise previously disclosed to the Banks in writing, each of
the Borrower and each of its Subsidiaries has complied with all Federal, state,
local and other statutes, ordinances, orders, judgments, rulings and regulations
relating to environmental pollution or to environmental regulation or control or
to employee health or safety, except for violations which, in the aggregate,
would not be reasonably likely to have a Material Adverse Effect. Except as set
forth in Schedule 3.17 or otherwise previously disclosed to the Banks in
writing, none of the Borrower or any of its Subsidiaries has received notice of
any failure so to comply. Except as set forth in Schedule 3.17 or otherwise
previously disclosed to the Banks in writing, the Borrower's and its
Subsidiaries' plants do not manage any hazardous wastes, hazardous substances,
hazardous materials, toxic substances, toxic pollutants, or substances similarly
denominated, as those terms or similar terms are used in the Resource
Conservation and Recovery Act, the Comprehensive Environmental Response
Compensation and Liability Act, the Hazardous Materials Transportation Act, the
Toxic Substance Control Act, the Clean Air Act, the Clean Water Act or any other
applicable law relating to environmental pollution or employee health and
safety, in violation in any material respect of any law or any regulations
promulgated pursuant thereto, except for violations which, in the aggregate,
would not be reasonably likely to have a Material Adverse Effect. Except as set
forth in Schedule 3.17 or otherwise previously disclosed to the Banks in
writing, none of the Borrower nor any of its Subsidiaries is aware of any
events, conditions or circumstances involving environmental pollution or
contamination or employee health or safety that is reasonably expected to result
in liability which would have a Material Adverse Effect.

                                   ARTICLE IV

                              CONDITIONS OF LENDING

          The obligations of the Banks to make Loans hereunder are subject to
the satisfaction of the following conditions:

          Section 4.01. ALL BORROWINGS. On the date of each Borrowing, including
each Borrowing in which Loans are refinanced with new Loans as contemplated by
Section 2.05:

          (a) The Agent shall have received a notice of such Borrowing as
     required by Section 2.03 or Section 2.04, as applicable.

          (b) The representations and warranties set forth in Article III hereof
     (except, subject to Section 4.02(e), the representations set forth in
     Section 3.06) shall be true and correct in all material respects on and as
     of the date of such Borrowing with the same effect as though made on and as
     of such date, except to the extent such representations and warranties
     expressly relate to an earlier date.

          (c) At the time of and immediately after such Borrowing no Event of
     Default or Default shall have occurred and be continuing.

                                       30
<PAGE>

Each Borrowing shall be deemed to constitute a representation and warranty by
the Borrower on the date of such Borrowing as to the matters specified in
paragraphs (b) and (c) of this Section 4.01.

          Section 4.02. FIRST BORROWING. On the Closing Date:

          (a) The Agent shall have received a favorable written opinion of Baker
     & Hostetler LLP, counsel for the Borrower, dated the Closing Date and
     addressed to the Banks, to the effect set forth in Exhibit D hereto, and
     the Borrower hereby instructs such counsel to deliver such opinion to the
     Agent.

          (b) All legal matters incident to this Agreement and the borrowings
     hereunder shall be satisfactory to the Banks and their counsel and to
     Simpson Thacher & Bartlett, counsel for the Agent.

          (c) The Agent shall have received (i) a copy of the articles of
     incorporation, including all amendments thereto, of the Borrower, certified
     as of a recent date by the Secretary of State of the state of its
     organization, and a certificate as to the good standing of the Borrower as
     of a recent date, from such Secretary of State; (ii) a certificate of the
     Secretary or Assistant Secretary of the Borrower dated the Closing Date and
     certifying (A) that attached thereto is a true and complete copy of the
     code of regulations of the Borrower as in effect on the Closing Date and at
     all times since a date prior to the date of the resolutions described in
     clause (B) below, (B) that attached thereto is a true and complete copy of
     resolutions duly adopted by the Board of Directors of the Borrower
     authorizing the execution, delivery and performance of the Loan Documents
     and the borrowings hereunder, and that such resolutions have not been
     modified, rescinded or amended and are in full force and effect, (C) that
     the articles of incorporation of the Borrower have not been amended since
     the date of the last amendment thereto shown on the certificate of good
     standing furnished pursuant to clause (i) above, and (D) as to the
     incumbency and specimen signature of each officer executing any Loan
     document or any other document delivered in connection herewith on behalf
     of the Borrower; (iii) a certificate of another officer as to the
     incumbency and specimen signature of the Secretary or Assistant Secretary
     executing the certificate pursuant to (ii) above; and (iv) such other
     documents as the Banks or their counsel or Simpson Thacher & Bartlett,
     counsel for the Agent, may reasonably request.

          (d) The Agent shall have received a certificate from the Borrower,
     dated the Closing Date and signed by a Financial Officer thereof,
     confirming compliance with the conditions precedent set forth in paragraphs
     (b) and (c) of Section 4.01.

          (e) The representations and warranties set forth in Section 3.06 shall
     be true and correct in all material respects.

          (f) Concurrently with the transactions contemplated hereby on the
     Closing Date, the Borrower, the applicable Banks and the Agent shall have
     executed a side letter whereby all competitive loans under the Existing
     Credit Agreement shall be deemed to be Competitive Loans hereunder. The
     Borrower shall have repaid in full all other amounts

                                       31
<PAGE>

     due under the Existing Credit Agreement and under each other agreement
     related thereto, and the Agent shall have received duly executed
     documentation either evidencing or necessary for (i) the termination of the
     Existing Credit Agreement and each other agreement related thereto and (ii)
     the cancelation of all commitments thereunder.

          (g) The Agent shall have received all Fees and other amounts due and
     payable on or prior to the Closing Date.

                                   ARTICLE V

                              AFFIRMATIVE COVENANTS

          The Borrower covenants and agrees with each Bank that, so long as this
Agreement shall remain in effect or the principal of or interest on any Loan,
any Fees or any other expenses or amounts payable under any Loan Document shall
be unpaid, unless the Required Banks shall otherwise consent in writing, it
will, and will cause each of its Subsidiaries to:

          Section 5.01. EXISTENCE; BUSINESSES AND PROPERTIES. (a) Do or cause to
be done all things necessary to preserve, renew and keep in full force and
effect its legal existence, except as otherwise expressly permitted under
Section 6.04 and except with respect to the Subsidiaries of the Borrower where
such failure would not reasonably be likely to have a Material Adverse Effect.

          (b) Except to the extent that the failure to do or cause the same to
be done would not be reasonably likely to have a Material Adverse Effect, do or
cause to be done all things necessary to obtain, preserve, renew, extend and
keep in full force and effect the rights, licenses, permits, franchises,
authorizations, patents, copyrights, trademarks and trade names material to the
conduct of its business; maintain and operate such business in substantially the
manner in which it is presently conducted and operated (subject to changes in
the ordinary course of business); comply in all material respects with all
applicable laws, rules, regulations and orders of any Governmental Authority,
whether now in effect or hereafter enacted; and at all times maintain and
preserve all property material to the conduct of such business and keep such
property in good repair, working order and condition and from time to time make,
or cause to be made all needful and proper repairs, renewals, additions,
improvements and replacements thereto necessary in order that the business
carried on in connection therewith may be properly conducted at all times.

          Section 5.02. INSURANCE. (a) Keep its insurable properties adequately
insured at all times by financially sound and reputable insurers; (b) maintain
such other insurance, to such extent and against such risks, including fire and
other risks insured against by extended coverage, as is customary with companies
in the same or similar businesses, including public liability insurance against
claims for personal injury or death or property damage occurring upon, in, about
or in connection with the use of any properties owned, occupied or controlled by
it, and (c) maintain such other insurance as may be required by law; PROVIDED,
HOWEVER, that, in lieu of or supplementing any such insurance described in (a)
or (b) above, it may adopt such other plan or method of protection conforming to
its self-insurance practices existing on the date hereof.

                                       32
<PAGE>

          Section 5.03. OBLIGATIONS AND TAXES. Except to the extent the failure
to do so would not, in the aggregate, be reasonably likely to have a Material
Adverse Effect, pay its Indebtedness and other obligations promptly and in
accordance with their terms and pay and discharge promptly when due all taxes,
assessments and governmental charges or levies imposed upon it or upon it or
upon its income or profits or in respect of its property, before the same shall
become delinquent or in default, as well as all lawful claims for labor,
materials and supplies or otherwise which, if unpaid, might give rise to a Lien
upon such properties or any part thereof; PROVIDED, HOWEVER, that such payment
and discharge shall not be required with respect to any such tax, assessment,
charge, levy or claim so long as the validity or amount thereof shall be
contested in good faith by appropriate proceedings and the Borrower shall have
set aside on its books adequate reserves with respect thereto.

          Section 5.04. FINANCIAL STATEMENTS, REPORTS, ETC. Furnish to the Agent
and each Bank:

          (a) within 120 days after the end of each fiscal year of the Borrower,
     consolidated balance sheets of the Borrower and its consolidated
     subsidiaries, the related consolidated statements of operations and the
     related consolidated statements of stockholders' equity and cash flows,
     showing the financial condition of the Borrower and its consolidated
     subsidiaries as of the close of such fiscal year and the results of its
     operations during such year, all such consolidated financial statements
     audited by and accompanied by the report thereon of Deloitte & Touche LLP
     or other independent public accountants of recognized national standing
     reasonably acceptable to the Required Banks and accompanied by an opinion
     of such accountants (which shall not be qualified in any material respect)
     to the effect that such consolidated financial condition and results of
     operations of the Borrower on a consolidated basis;

          (b) within 60 days after the end of each of the first three fiscal
     quarters of each fiscal year of the Borrower, consolidated balance sheets
     and related consolidated statements of income, retained earnings and cash
     flows, showing the financial condition of the Borrower and its consolidated
     subsidiaries as of the close of such fiscal quarter and the results of its
     operations during such fiscal quarter and the then elapsed portion of the
     fiscal year, all certified by a Financial Officer of the Borrower as fairly
     presenting in all material respects the financial condition and results of
     operations of the Borrower on a consolidated basis in accordance with GAAP
     consistently applied, subject to normal year-end audit adjustments and
     except for the absence of footnotes in the case of quarterly statements;

          (c) concurrently with any delivery of financial statements under (a)
     or (b) above, a certificate of a Financial Officer of the Borrower opining
     on or certifying such statements (i) certifying that no Event of Default or
     Default has occurred or, if such an Event of Default or Default has
     occurred, specifying the nature and extent thereof and any corrective
     action taken or proposed to be taken with respect thereto and (ii) setting
     forth computations in reasonable detail satisfactory to the Agent
     demonstrating compliance with the covenants contained in Sections 6.01(a)
     and (b)(v), 6.03 and 6.05;

                                       33
<PAGE>

          (d) promptly after the same become publicly available, copies of all
     material periodic and other reports, proxy statements and other materials
     filed by the Borrower or any Subsidiary with the Securities and Exchange
     Commission, or any governmental authority succeeding to any of or all the
     functions of said Commission, or with any national securities exchange, or
     distributed to its public shareholders, as the case may be;

          (e) promptly after the same become publicly available, copies of all
     material reports pertaining to any change in ownership filed by the
     Borrower or any Subsidiary with any Governmental Authority; and

          (f) promptly, from time to time, such other information regarding the
     operations, business affairs and financial condition of the Borrower or any
     Subsidiary, or compliance with the terms of any Loan Document, as the Agent
     or any Bank may reasonably request.

          Section 5.05. LITIGATION AND OTHER NOTICES. Furnish to the Agent and
each Bank prompt written notice of the following:

          (a) any Event of Default or Default, specifying the nature and extent
     thereof and the corrective action (if any) proposed to be taken with
     respect thereto;

          (b) the filing or commencement of, or any threat or notice of
     intention of any person to file or commence, any action, suit or
     proceeding, whether at law or in equity or by or before any Governmental
     Authority, against the Borrower or any Affiliate thereof which could be
     reasonably anticipated to be adversely determined and, if adversely
     determined, could result in a Material Adverse Effect; and

          (c) any development that has resulted in, or could reasonably be
     anticipated by the Borrower to result in, a Material Adverse Effect.

          Section 5.06. ERISA. (a) Comply with the applicable provisions of
ERISA and the Code except to the extent of such noncompliance which, in the
aggregate, would not be reasonably likely to have a Material Adverse Effect and
(b) furnish to the Agent (i) as soon as possible after, and in any event with 30
days after any Responsible Officer of the Borrower or any ERISA Affiliate knows
or has reason to know that any Reportable Event has occurred that alone or
together with any other Reportable Event could reasonably be expected to result
in liability of the Borrower to the PBGC in an aggregate amount exceeding
$10,000,000, a statement of a Financial Officer setting forth details as to such
Reportable Event and the action proposed to be taken with respect thereto,
together with a copy of the notice, if any, of such Reportable Event given to
the PBGC, (ii) promptly after receipt thereof, a copy of any notice that the
Borrower or any ERISA Affiliate may receive from the PBGC relating to the
intention of the PBGC to terminate any Plan or Plans (other than a Plan
maintained by an ERISA Affiliate that is considered an ERISA Affiliate only
pursuant to subsection (m) or (o) of Code Section 414 or to appoint a trustee to
administer any such Plan, (iii) within 10 days after the due date for filing
with the PBGC pursuant to Section 412(n) of the Code of a notice of failure to
make a required installment or other payment with respect to a Plan, a statement
of a Financial Officer setting forth details as to such failure and the action
proposed to be taken with respect thereto, together

                                       34
<PAGE>

     with a copy of such notice given to the PBGC and (iv) promptly and in any
     event within 30 days after receipt thereof by the Borrower or any ERISA
     Affiliate from the sponsor of a Multiemployer Plan, a copy of each notice
     received by the Borrower, or any ERISA Affiliate concerning (A) the
     imposition of Withdrawal Liability or (B) a determination that a
     Multiemployer Plan is, or is expected to be, terminated or in
     reorganization, in each case within the meaning of Title IV of ERISA.

          Section 5.07. MAINTAINING RECORDS; ACCESS TO PROPERTIES AND
INSPECTIONS. Maintain all financial records in accordance with GAAP and permit
any representatives designated by any Bank to visit and inspect the financial
records and the properties of the Borrower or any Subsidiary upon reasonable
prior notice at reasonable times and as often as reasonably requested (PROVIDED
that such Bank shall make reasonable efforts not to interfere unreasonably with
the business of the Borrower or any Subsidiary) and to make extracts from and
copies of such financial records, and permit any representatives designated by
any Bank to discuss the affairs, finances and condition of the Borrower or any
Subsidiary with the officers thereof and independent accountants therefor;
provided that each person obtaining such information shall hold all such
information in strict confidence in accordance with the restrictions set forth
in Section 9.16.

          Section 5.08. USE OF PROCEEDS. Use the proceeds of the Loans only for
the purposes set forth in the preamble to this Agreement.

          Section 5.09. FILINGS. Make all material filings required to be made
by it with any Governmental Authority.

                                   ARTICLE VI

                               NEGATIVE COVENANTS

          The Borrower covenants and agrees with each Bank and the Agent that,
so long as this Agreement shall remain in effect or the principal of or interest
on any Loan, any Fees or any other expenses or amounts payable under any Loan
Document shall be unpaid, unless the Required Banks shall otherwise consent in
writing, it will not, and will not cause or permit any of its Subsidiaries to:

          Section 6.01. INDEBTEDNESS. (a) Permit the ratio of Consolidated
Indebtedness of the Borrower to Consolidated Cash Flow of the Borrower at the
end of and for the most recently ended four consecutive calendar quarters at any
time to be greater than 5.0 to 1.0.

          (b) Permit any Subsidiary of the Borrower to incur, create, assume or
permit to exist any Indebtedness, except:

          (i) Indebtedness existing on the date hereof as set forth in Schedule
     6.01 hereto, and additional Indebtedness incurred pursuant to commitments
     by persons to lend to any Subsidiary but only to the extent such
     commitments are available and unused as of the date hereof as set forth in
     Schedule 6.01 hereto;

                                       35
<PAGE>

          (ii) Indebtedness of a Subsidiary or business existing at the time
     such Subsidiary or business was acquired by the Borrower or a Subsidiary;
     PROVIDED that such Indebtedness was not incurred in contemplation of such
     acquisition;

          (iii) Indebtedness to the Borrower or to another Subsidiary of the
     Borrower; and

          (iv) other Indebtedness exclusive of the Indebtedness permitted by
     clauses (i) through (iii) above in an aggregate amount at any time
     outstanding which, when added to the aggregate Indebtedness secured by
     Liens permitted by Section 6.02(k) and to the aggregate amount incurred by
     the Borrower and any of the Subsidiaries pursuant to Section 6.03(ii)
     herein, shall not exceed 15% of the Consolidated Stockholders' Equity of
     the Borrower at such time.

          Section 6.02. LIENS. Create, incur, assume or permit to exist any Lien
on any property or assets (including stock or other securities of any person,
including any Subsidiary) now owned or hereafter acquired by it or on any income
or revenues or rights in respect of any thereof, except:

          (a) Liens incurred or pledges and deposits made in the ordinary course
     of business in connection with workers' compensation, unemployment
     insurance and old-age pensions and other social security benefits;

          (b) Liens securing the performance of bids, tenders, leases, contracts
     (other than for the repayment of borrowed money), statutory obligations,
     surety and appeal bonds and other obligations of like nature, incurred as
     an incident to and in the ordinary course of business;

          (c) Liens imposed by law, such as carriers', warehousemen's,
     mechanics', materialmen's, suppliers', repairmen's and vendors' liens,
     incurred in good faith in the ordinary course of business with respect to
     obligations not delinquent or which are being contested in good faith by
     appropriate proceedings and as to which the Borrower or a Subsidiary shall
     have set aside on its books adequate reserves;

          (d) Liens securing the payment of taxes, assessments and governmental
     charges or levies, either (i) not delinquent or (ii) being contested in
     good faith by appropriate legal or administrative proceedings and as to
     which the Borrower or a Subsidiary, as the case may be, shall have set
     aside on its books adequate reserves;

          (e) zoning restrictions, easements, licenses, reservations,
     restrictions on the use of real property or minor irregularities incident
     thereto (and with respect to leasehold interests: mortgages, obligations,
     liens and other encumbrances that are incurred, created, assumed or
     permitted to exist and arise by, through or under or are asserted by a
     landlord or owner of the leased property, with or without consent of the
     lessee) which were not incurred in connection with the borrowing of money
     or the obtaining of advances or credit and which do not in the aggregate
     materially detract from the value of the property or assets of the Borrower
     or a Subsidiary, as the case may be, or impair the

                                       36
<PAGE>

     use of such property for the purposes for which such property is held by
     the Borrower or such Subsidiary;

          (f) Liens to secure the purchase price of real or personal property
     acquired, constructed or improved after the date hereof; PROVIDED that any
     such Lien is existing or created at the time of, or substantially
     simultaneously with, the acquisition, construction or improvement by the
     Borrower or a Subsidiary of the property so acquired and at all times
     covers only such property;

          (g) Liens on property of a Subsidiary in favor of the Borrower or
     another Subsidiary;

          (h) Liens created by or resulting from any litigation or proceeding
     which is currently being contested in good faith by appropriate proceedings
     and as to which (i) levy and execution have been stayed and continue to be
     stayed and (ii) the Borrower or a Subsidiary shall have set aside on its
     books adequate reserves;

          (i) Liens on property of a Subsidiary existing at the time it becomes
     a Subsidiary; PROVIDED that such Liens were not created in contemplation of
     the acquisition by the Borrower or another Subsidiary of such Subsidiary;

          (j) Liens on the property of the Borrower or a Subsidiary incidental
     to the conduct of its business or the ownership of its property which were
     not incurred in connection with the borrowing of money or the obtaining of
     advances or credit or other financial accommodations (including but not
     limited to interest rate swap obligations or letter of credit obligations
     of the Borrower or any Subsidiary), and which do not in the aggregate
     materially detract from the value of its property or assets or impair the
     use thereof in the operation of its business;

          (k) the Borrower and any Subsidiary may incur Liens not otherwise
     permitted by this covenant securing Indebtedness in an aggregate amount at
     any time outstanding which, when added to the aggregate amount incurred by
     Subsidiaries under Section 6.01(b)(iv) and to the aggregate amount incurred
     by the Borrower and the Subsidiaries under Section 6.03(ii) does not exceed
     15% of Consolidated Stockholders' Equity of the Borrower at such time;

          (l) judgment Liens that do not constitute an Event of Default; and

          (m) Liens on property acquired by the Borrower or any of its
     Subsidiaries after the Closing Date so long as such Liens are limited to
     the property acquired and were not created in contemplation of the
     acquisition.

          Section 6.03. SALE AND LEASE-BACK TRANSACTIONS. Enter into any
arrangement, directly or indirectly, with any person whereby it shall sell or
transfer any property, real or personal, used or useful in its business, whether
now owned or hereafter acquired, and thereafter rent or lease such property or
other property which it intends to use for substantially the same purpose or
purposes as the property being sold or transferred, except that (i) any
Subsidiary may enter into such an arrangement for the sale or transfer of its
property to another Subsidiary or to

                                       37
<PAGE>

the Borrower and (ii) the Borrower and the Subsidiaries may enter into any such
arrangements provided that the aggregate sale price of all property subject to
such arrangements (other than arrangements described in clause (i) above), when
added to the aggregate amount of Indebtedness incurred by Subsidiaries under
Section 6.01(b)(v) and to the aggregate amount of Indebtedness secured by Liens
permitted by Section 6.02(k), shall not exceed 15% of the Consolidated
Stockholders' Equity of the Borrower at such time.

          Section 6.04. MERGERS, CONSOLIDATIONS AND SALES OF ASSETS. Merge into
or consolidate with any other person, or permit any other person to merge into
or consolidate with it, or sell, transfer, lease or otherwise dispose of (in one
transaction or in a series of transactions) all or substantially all of its
assets (whether now owned or hereafter acquired) or purchase, lease or otherwise
acquire (in one transaction or a series of transactions) all or substantially
all of the assets of any other person, except that if at the time thereof and
immediately after giving effect thereto no Event of Default or Default shall
have occurred and be continuing, (a) the Borrower or a Subsidiary may merge with
another corporation in a transaction in which the surviving entity is the
Borrower or such Subsidiary, respectively, and, in the case of a Subsidiary, the
surviving entity is a wholly owned Subsidiary, (b) any Subsidiary may merge into
the Borrower or another Subsidiary; or (c) the Borrower or a Subsidiary may
purchase, lease or otherwise acquire any assets of any other person.

          Section 6.05. INTEREST COVERAGE RATIO. Permit the ratio of
Consolidated Cash Flow of the Borrower to Consolidated Interest Expense of the
Borrower for the period of four consecutive calendar quarters most recently
ended at any time to be less than 2.5 to 1.0.

          Section 6.06. FISCAL YEAR. Change its fiscal year.

                                  ARTICLE VII

                                EVENTS OF DEFAULT

          In case of the happening of any of the following events ("Events of
Default"):

          (a) any representation or warranty made or deemed made in or in
     connection with any Loan Document or the borrowings hereunder, or any
     representation, warranty, statement or information contained in any report,
     certificate, financial statement or other instrument furnished in
     connection with or pursuant to any Loan Document, shall prove to have been
     false or misleading in any material respect when so made, deemed made or
     furnished;

          (b) default shall be made in the payment of any principal of any Loan
     when and as the same shall become due and payable, whether at the due date
     thereof or at a date fixed for prepayment thereof or by acceleration
     thereof or otherwise;

          (c) default shall be made in the payment of any interest on any Loan
     or any Fee or any other amount (other than an amount referred to in (b)
     above) due under any Loan Document, when and as the same shall become due
     and payable, and such default shall continue unremedied for a period of 5
     Business Days;

                                       38
<PAGE>

          (d) default shall be made in the due observance or performance by the
     Borrower or any Subsidiary of any covenant, condition or agreement
     contained in Section 5.01(a) or 5.05(a) or in Article VI;

          (e) default shall be made in the due observance or performance by the
     Borrower or any Subsidiary of any covenant, condition or agreement
     contained in any Loan Document (other than those specified in (b), (c) or
     (d) above) and such default shall continue unremedied for a period of 30
     days after written notice thereof from the Agent or any Bank to the
     Borrower;

          (f) the Borrower or any Subsidiary shall (i) fail to pay any principal
     or interest, regardless of amount, due in respect of any Indebtedness in a
     principal amount in excess of $10,000,000, when and as the same shall
     become due and payable, or (ii) fail to observe or perform any other term,
     covenant, condition or agreement contained in any agreement or instrument
     evidencing or governing any such Indebtedness if the effect of any failure
     referred to in this clause (ii) is to cause such Indebtedness to become due
     prior to its stated maturity;

          (g) an involuntary proceeding shall be commenced or an involuntary
     petition shall be filed in a court of competent jurisdiction seeking (i)
     relief in respect of the Borrower or any Subsidiary, or of a substantial
     part of the property or assets of the Borrower or a Subsidiary, under Title
     11 of the United States Code, as now constituted or hereafter amended, or
     any other Federal or state bankruptcy, insolvency, receivership or similar
     law, (ii) the appointment of a receiver, trustee, custodian, sequestrator,
     conservator or similar official for the Borrower or any Subsidiary or for a
     substantial part of the property or assets of the Borrower or a Subsidiary
     or (iii) the winding-up or liquidation of the Borrower or any Subsidiary;
     and such proceeding or petition shall continue undismissed for 90 days or
     an order or decree approving or ordering any of the foregoing shall be
     unstayed and in effect for 90 days;

          (h) the Borrower or any Subsidiary shall (i) voluntarily commence any
     proceeding or file any petition seeking relief under Title 11 of the United
     States Code, as now constituted or hereafter amended, or any other Federal
     or state bankruptcy, insolvency, receivership or similar law, (ii) consent
     to the institution of, or fail to contest in a timely and appropriate
     manner, any proceeding or the filing of any petition described in (g)
     above, (iii) apply for or consent to the appointment of a receiver,
     trustee, custodian, sequestrator, conservator or similar official for the
     Borrower or any Subsidiary or for a substantial part of the property or
     assets of the Borrower or any Subsidiary, (iv) file an answer admitting the
     material allegations of a petition filed against it in any such proceeding,
     (v) make a general assignment for the benefit of creditors, (vi) become
     unable, admit in writing its inability or fail generally to pay its debts
     as they become due or (vii) take any action for the purpose of effecting
     any of the foregoing;

          (i) one or more final judgments for the payment of money in excess of
     $10,000,000, excluding such amounts which are covered by insurance, shall
     be rendered against the Borrower, any Subsidiary or any combination thereof
     and the same shall remain undischarged for a period of 30 consecutive days
     during which execution shall

                                       39
<PAGE>

     not be effectively stayed, or any action shall be legally taken by a
     judgment creditor to levy upon assets or properties of the Borrower or any
     Subsidiary to enforce any such judgment;

          (j) a Reportable Event or Reportable Events, or a failure to make a
     required installment or other payment (within the meaning of Section
     412(n)(l) of the Code), shall have occurred with respect to any Plan or
     Plans that reasonably could be expected to result in liability of the
     Borrower to the PBGC or to a Plan in an aggregate amount exceeding
     $10,000,000 and, within 30 days after the reporting of any such Reportable
     Event to the Agent or after the receipt by the Agent of the statement
     required pursuant to Section 5.06, the Agent shall have notified the
     Borrower in writing that (i) the Required Banks have made a determination
     that, on the basis of such Reportable Event or Reportable Events or the
     failure to make a required payment, there are reasonable grounds (A) for
     the termination of such Plan or Plans by the PBGC, (B) for the appointment
     by the appropriate United States District Court of a trustee to administer
     such Plan or Plans or (C) for the imposition of a lien in favor of a Plan
     and (ii) as a result thereof an Event of Default exists hereunder; or a
     trustee shall be appointed by a United States District Court to administer
     any such Plan or Plans; or the PBGC shall institute proceedings to
     terminate any Plan or Plans; or

          (k) (i) the Borrower or any ERISA Affiliate shall have been notified
     by the sponsor of a Multiemployer Plan that it has incurred Withdrawal
     Liability to such Multiemployer Plan, (ii) the Borrower or such ERISA
     Affiliate does not have reasonable grounds for contesting such Withdrawal
     Liability or is not contesting such Withdrawal Liability in a timely and
     appropriate manner and (iii) the amount of such Withdrawal Liability
     specified in such notice, when aggregated with all other amounts required
     to be paid to Multiemployer Plans in connection with Withdrawal Liabilities
     (determined as of the date or dates of such notification), either (A)
     exceeds $10,000,000 or requires payments exceeding $10,000,000 in any year
     or (B) is less than $10,000,000 but any Withdrawal Liability payment
     remains unpaid 30 days after such payment is due;

          (l) the Borrower or any ERISA Affiliate shall have been notified by
     the sponsor of a Multiemployer Plan that such Multiemployer Plan is in
     reorganization or is being terminated, within the meaning of Title IV of
     ERISA, if solely as a result of such reorganization or termination the
     aggregate annual contributions of the Borrower and its ERISA Affiliates to
     all Multiemployer Plans that are then in reorganization or have been or are
     being terminated have been or will be increased over the amounts required
     to be contributed to such Multiemployer Plans for their most recently
     completed plan years by an amount exceeding $10,000,000; or

          (m) there shall have occurred a Change in Control;

then, and in every such event (other than an event with respect to the Borrower
described in paragraph (g) or (h) above), and at any time thereafter during the
continuance of such event, the Agent, at the request of the Required Banks,
shall, by notice to the Borrower, take either or both of the following actions,
at the same or different times: (i) terminate forthwith the Commitments and (ii)
declare the Loans then outstanding to be forthwith due and payable in whole or
in part,

                                       40
<PAGE>

whereupon the principal of the Loans so declared to be due and payable, together
with accrued interest thereon and any unpaid accrued Fees and all other
liabilities of the Borrower accrued hereunder and under any other Loan Document,
shall become forthwith due and payable, without presentment, demand, protest or
any other notice of any kind, all of which are hereby expressly waived by the
Borrower, anything contained herein or in any other Loan Document to the
contrary notwithstanding; and in any event with respect to the Borrower
described in paragraph (g) or (h) above, the Commitments shall automatically
terminate and the principal of the Loans then outstanding, together with accrued
interest thereon and any unpaid accrued Fees and all other liabilities of the
Borrower accrued hereunder and under any other Loan Document, shall
automatically become due and payable, without presentment, demand, protest or
any other notice of any kind, all of which are hereby expressly waived by the
Borrower, anything contained herein or in any other Loan Document to the
contrary notwithstanding.

                                  ARTICLE VIII

                                    THE AGENT

          In order to expedite the transactions contemplated by this Agreement,
JPMorgan Chase Bank is hereby appointed to act as Agent on behalf of the Banks.
Each of the Banks, and each transferee of any Bank, hereby irrevocably
authorizes the Agent to take such actions on behalf of such Bank or transferee
and to exercise such powers as are specifically delegated to the Agent by the
terms and provisions hereof and of the other Loan Documents, together with such
actions and powers as are reasonably incidental thereto. The Agent is hereby
expressly authorized by the Banks, without hereby limiting any implied
authority, (a) to receive on behalf of the Banks all payments of principal of
and interest on the Loans and all other amounts due to the Banks hereunder, and
promptly to distribute to each Bank its proper share of each payment so
received; (b) to give notice on behalf of each of the Banks to the Borrower of
any Event of Default specified in this Agreement of which the Agent has actual
knowledge acquired in connection with its agency hereunder; and (c) to
distribute to each Bank copies of all notices, financial statements and other
materials delivered by the Borrower pursuant to this Agreement as received by
the Agent.

          Neither the Agent nor any of its directors, officers, employees or
agents shall be liable as such for any action taken or omitted by any of them
except for its or his own gross negligence or wilful misconduct, or be
responsible for any statement, warranty or representation herein or the contents
of any document delivered in connection herewith, or be required to ascertain or
to make any inquiry concerning the performance or observance by the Borrower of
any of the terms, conditions, covenants or agreements contained in any Loan
Document. The Agent shall not be responsible to the Banks for the due execution,
genuineness, validity, enforceability or effectiveness of this Agreement or any
other Loan Documents or other instruments or agreements. The Agent shall in all
cases be fully protected in acting, or refraining from acting, in accordance
with written instructions signed by the Required Banks and, except as otherwise
specifically provided herein, such instructions and any action or inaction
pursuant thereto shall be binding on all the Banks. The Agent shall, in the
absence of knowledge to the contrary, be entitled to rely on any instrument or
document believed by it in good faith to be genuine and correct and to have been
signed or sent by the proper person or persons. Neither the

                                       41
<PAGE>

Agent nor any of its directors, officers, employees or agents shall have any
responsibility to the Borrower on account of the failure of or delay in
performance or breach by any Bank of any of its obligations hereunder or to any
Bank on account of the failure of or delay in performance or breach by any other
Bank or the Borrower of any of their respective obligations hereunder or under
any other Loan Document or in connection herewith or therewith. The Agent may
execute any and all duties hereunder by or through agents or employees and shall
be entitled to rely upon the advice of legal counsel selected by it with respect
to all matters arising hereunder and shall not be liable for any action taken or
suffered in good faith by it in accordance with the advice of such counsel.

          The Banks hereby acknowledge that the Agent shall be under no duty to
take any discretionary action permitted to be taken by it pursuant to the
provisions of this Agreement unless it shall be requested in writing to do so by
the Required Banks.

          Subject to the appointment and acceptance of a successor Agent as
provided below, the Agent may resign at any time by notifying the Banks and the
Borrower. Upon any such resignation, the Required Banks shall have the right to
appoint a successor. If no successor shall have been so appointed by the
Required Banks and shall have accepted such appointment within 30 days after the
retiring Agent gives notice of its resignation, then the retiring Agent may, on
behalf of the Banks, appoint a successor Agent which shall be a bank with an
office in New York, New York, having a combined capital and surplus of at least
$500,000,000 or an Affiliate of any such bank. Upon the acceptance of any
appointment as Agent hereunder by a successor bank, such successor shall succeed
to and become vested with all the rights, powers, privileges and duties of the
retiring Agent and the retiring Agent shall be discharged from its duties and
obligations hereunder. After the Agent's resignation hereunder, the provisions
of this Article and Section 9.05 shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was acting as
Agent.

          With respect to the Loans made by it hereunder, the Agent in its
individual capacity and not as Agent shall have the same rights and powers as
any other Bank and may exercise the same as though it were not the Agent, and
the Agent and its Affiliates may accept deposits from, lend money to and
generally engage in any kind of business with the Borrower or any Subsidiary or
other Affiliate thereof as if it were not the Agent.

          Each Bank agrees (i) to reimburse the Agent, on demand, in the amount
of its pro rata share (based on its Commitment hereunder) of any expenses
incurred for the benefit of the Banks by the Agent, including counsel fees and
compensation of agents and employees paid for services rendered on behalf of the
Banks, which shall not have been reimbursed by the Borrower and (ii) to
indemnify and hold harmless the Agent and any of its directors, officers,
employees or agents, on demand, in the amount of such pro rata share, from and
against any and all liabilities, taxes, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by or asserted against it in
its capacity as the Agent or any of them in any way relating to or arising out
of this Agreement or any other Loan Document or any action taken or omitted by
it or any of them under this Agreement or any other Loan Document, to the extent
the same shall not have been reimbursed by the Borrower; PROVIDED that no Bank
shall be liable to the Agent for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs,

                                       42
<PAGE>

expenses or disbursements resulting from the gross negligence or wilful
misconduct of the Agent or any of its directors, officers, employees or agents.

          Each Bank acknowledges that it has, independently and without reliance
upon the Agent or any other Bank and based on such documents and information as
it has deemed appropriate, made its own credit analysis and decision to enter
into this Agreement. Each Bank also acknowledges that it will, independently and
without reliance upon the Agent or any other Bank and based on such documents
and information as it shall from time to time deem appropriate, continue to make
its own decisions in taking or not taking action under or based upon this
Agreement or any other Loan Document, any related agreement or any document
furnished hereunder or thereunder.

                                   ARTICLE IX

                                  MISCELLANEOUS

          Section 9.01. NOTICES. Notices and other communications provided for
herein shall be in writing and shall be delivered by hand or overnight courier
service, mailed by certified or registered mail or sent by telecopy, as follows:

          (a) if to the Borrower, to it at 312 Walnut Street, Suite 2800,
     Cincinnati, Ohio 45202, Attention of Treasurer (Telecopy No. 513-977-3729)
     with a copy to Baker & Hostetler LLP, counsel for the Borrower, to it at
     3200 National City Center, Cleveland, Ohio 44114, Attention of John H.
     Burlingame, Esq. (Telecopy No. 216-696-0740) and 312 Walnut Street, Suite
     2650, Cincinnati, Ohio 45202, Attention of William Appleton (Telecopy No.
     513-929-0303);

          (b) if to the Agent, to JPMorgan Chase Bank, One Chase Manhattan
     Plaza, New York, New York 10081, Attention of Ganesh Persaud (Telecopy No.
     212 - 552-5700), with copies to JPMorgan Chase Bank, 270 Park Avenue, New
     York, New York 10017, Attention of Linda Wisnieski (Telecopy No.
     212-270-4164); and

          (c) if to a Bank, to it at its address (or telecopy number) set forth
     in Schedule 2.01 or in the Assignment and Acceptance pursuant to which such
     Bank shall have become a party hereto.

All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
date of receipt if delivered by hand or overnight courier service or sent by
telecopy, in each case delivered, sent or mailed (properly addressed) to such
party as provided in this Section 9.01 or in accordance with the latest
unrevoked direction from such party given in accordance with this Section 9.01.

          Section 9.02. SURVIVAL OF AGREEMENT. All covenants, agreements,
representations and warranties made by the Borrower herein and in the
certificates or other material instruments prepared or delivered in connection
with or pursuant to this Agreement or any other Loan Document shall be
considered to have been relied upon by the Banks and shall survive the making by
the Banks of the Loans, regardless of any investigation made by the

                                       43
<PAGE>

Banks or on their behalf, and shall continue in full force and effect as long as
the principal of or any accrued interest on any Loan or any Fee or any other
amount payable under this Agreement or any other Loan Document is outstanding
and unpaid and so long as the Commitments have not been terminated.

          Section 9.03. BINDING EFFECT. This Agreement shall become effective
when it shall have been executed by the Borrower and the Agent and when the
Agent shall have received copies hereof which, when taken together, bear the
signatures of each Bank, and thereafter shall be binding upon and inure to the
benefit of the Borrower, the Agent and each Bank and their respective successors
and assigns, except that the Borrower shall not have the right to assign its
rights hereunder or any interest herein without the prior consent of all the
Banks.

          Section 9.04. SUCCESSORS AND ASSIGNS. (a) The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns permitted hereby, except that (i)
the Borrower may not assign or otherwise transfer any of its rights or
obligations hereunder without the prior written consent of each Bank (and any
attempted assignment or transfer by the Borrower without such consent shall be
null and void) and (ii) no Bank may assign or otherwise transfer its rights or
obligations hereunder except in accordance with this Section. Nothing in this
Agreement, expressed or implied, shall be construed to confer upon any Person
(other than the parties hereto, their respective successors and assigns
permitted hereby, Participants (to the extent provided in paragraph (c) of this
Section) and, to the extent expressly contemplated hereby, the Related Parties
of each of the Agent and the Banks) any legal or equitable right, remedy or
claim under or by reason of this Agreement.

          (b) (i) Subject to the conditions set forth in paragraph (b)(ii)
below, any Bank may assign to one or more assignees all or a portion of its
rights and obligations under this Agreement (including all or a portion of its
Commitment and the Loans at the time owing to it) with the prior written consent
(such consent not to be unreasonably withheld, conditioned or delayed) of:

               (A) the Borrower, PROVIDED that no consent of the Borrower shall
     be required for an assignment to a Bank, an Affiliate of a Bank, an
     Approved Fund (as defined below) or, if an Event of Default under clause
     (b), (c), (g) or (h) of Article VII has occurred and is continuing, any
     other assignee; and

               (B) the Agent, PROVIDED that no consent of the Agent shall be
     required for an assignment to an assignee that is a Bank or an affiliate of
     a Bank immediately prior to giving effect to such assignment.

          (ii) Assignments shall be subject to the following additional
     conditions:

               (A) except in the case of an assignment to a Bank or an Affiliate
     of a Bank or an assignment of the entire remaining amount of the assigning
     Bank's Commitment, the amount of the Commitment of the assigning Bank
     subject to each such assignment (determined as of the date the Assignment
     and Acceptance with respect to such assignment is delivered to the Agent)
     shall not be less than $5,000,000 unless each of the

                                       44
<PAGE>

     Borrower and the Agent otherwise consent, PROVIDED that no such consent of
     the Borrower shall be required if an Event of Default under clause (b),
     (c), (g) or (h) of Article VII has occurred and is continuing;

               (B) each partial assignment shall be made as an assignment of a
     proportionate part of all the assigning Bank's rights and obligations under
     this Agreement, PROVIDED that this clause shall not apply to rights in
     respect of outstanding Competitive Loans;

               (C) the parties to each assignment shall execute and deliver to
     the Agent an Assignment and Acceptance, together with a processing and
     recordation fee of $3,500;

               (D) the assignee, if it shall not be a Bank, shall deliver to the
     Agent an Administrative Questionnaire; and

               (E) in the case of an assignment to a CLO (as defined below), the
     assigning Bank shall retain the sole right to approve any amendment,
     modification or waiver of any provision of this Agreement, PROVIDED that
     the Assignment and Acceptance between such Bank and such CLO may provide
     that such Bank will not, without the consent of such CLO, agree to any
     amendment, modification or waiver described in the first proviso to Section
     9.08(b) that affects such CLO.

          For the purposes of this Section 9.04(b), the terms "Approved Fund"
and "CLO" have the following meanings:

          "APPROVED FUND" means (a) a CLO and (b) with respect to any Bank that
is a fund which invests in bank loans and similar extensions of credit, any
other fund that invests in bank loans and similar extensions of credit and is
managed by the same investment advisor as such Bank or by an Affiliate of such
investment advisor.

          "CLO" means any entity (whether a corporation, partnership, trust or
otherwise) that is engaged in making, purchasing, holding or otherwise investing
in bank loans and similar extensions of credit in the ordinary course of its
business and is administered or managed by a Bank or an Affiliate of such Bank.

          (iii) Subject to acceptance and recording thereof pursuant to
paragraph (b)(iv) of this Section, from and after the effective date specified
in each Assignment and Acceptance the assignee thereunder shall be a party
hereto and, to the extent of the interest assigned by such Assignment and
Acceptance, have the rights and obligations of a Bank under this Agreement, and
the assigning Bank thereunder shall, to the extent of the interest assigned by
such Assignment and Acceptance, be released from its obligations under this
Agreement (and, in the case of an Assignment and Acceptance covering all of the
assigning Bank's rights and obligations under this Agreement, such Bank shall
cease to be a party hereto but shall continue to be entitled to the benefits of
Sections 2.13, 2.15, 2.19 and 9.05). Any assignment or transfer by a Bank of
rights or obligations under this Agreement that does not comply with this
Section 9.04 shall be treated for purposes of this Agreement as a sale by such
Bank of a participation in such rights and obligations in accordance with
paragraph (c) of this Section.

                                       45
<PAGE>

          (iv) The Agent, acting for this purpose as an agent of the Borrower,
shall maintain at one of its offices a copy of each Assignment and Acceptance
delivered to it and a register for the recordation of the names and addresses of
the Banks, and the Commitment of, and principal amount of the Loans owing to,
each Bank pursuant to the terms hereof from time to time (the "REGISTER"). The
entries in the Register shall be conclusive, and the Borrower, the Agent and the
Banks may treat each Person whose name is recorded in the Register pursuant to
the terms hereof as a Bank hereunder for all purposes of this Agreement,
notwithstanding notice to the contrary. The Register shall be available for
inspection by the Borrower and any Bank, at any reasonable time and from time to
time upon reasonable prior notice.

          (v) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Bank and an assignee, the assignee's completed
Administrative Questionnaire (unless the assignee shall already be a Bank
hereunder), the processing and recordation fee referred to in paragraph (b) of
this Section and any written consent to such assignment required by paragraph
(b) of this Section, the Agent shall accept such Assignment and Acceptance and
record the information contained therein in the Register. No assignment shall be
effective for purposes of this Agreement unless it has been recorded in the
Register as provided in this paragraph.

          (c) (i) Any Bank may, without the consent of the Borrower or the
Agent, sell participations to one or more banks or other entities (a
"PARTICIPANT") in all or a portion of such Bank's rights and obligations under
this Agreement (including all or a portion of its Commitment and the Loans owing
to it); PROVIDED that (A) such Bank's obligations under this Agreement shall
remain unchanged, (B) such Bank shall remain solely responsible to the other
parties hereto for the performance of such obligations and (C) the Borrower, the
Agent and the other Banks shall continue to deal solely and directly with such
Bank in connection with such Bank's rights and obligations under this Agreement.
Any agreement or instrument pursuant to which a Bank sells such a participation
shall provide that such Bank shall retain the sole right to enforce this
Agreement and to approve any amendment, modification or waiver of any provision
of this Agreement; PROVIDED that such agreement or instrument may provide that
such Bank will not, without the consent of the Participant, agree to any
amendment, modification or waiver described in the first proviso to Section
9.08(b) that affects such Participant. Subject to paragraph (c)(ii) of this
Section, the Borrower agrees that each Participant shall be entitled to the
benefits of Sections 2.13, 2.15 and 2.19 to the same extent as if it were a Bank
and had acquired its interest by assignment pursuant to paragraph (b) of this
Section. To the extent permitted by law, each Participant also shall be entitled
to the benefits of Section 9.06 as though it were a Bank, provided such
Participant agrees to be subject to Section 2.17 as though it were a Bank.

          (ii) A Participant shall not be entitled to receive any greater
payment under Section 2.13 or 2.19 than the applicable Bank would have been
entitled to receive with respect to the participation sold to such Participant,
unless the sale of the participation to such Participant is made with the
Borrower's prior written consent. A Participant that would be a Non-U.S. Bank if
it were a Bank shall not be entitled to the benefits of Section 2.19 unless the
Borrower is notified of the participation sold to such Participant and such
Participant agrees, for the benefit of the Borrower, to comply with Section
2.19(g) as though it were a Bank.

                                       46
<PAGE>

          (d) Any Bank may at any time pledge or assign a security interest in
all or any portion of its rights under this Agreement to secure obligations of
such Bank, including any pledge or assignment to secure obligations to a Federal
Reserve Bank, and this Section shall not apply to any such pledge or assignment
of a security interest; PROVIDED that no such pledge or assignment of a security
interest shall release a Bank from any of its obligations hereunder or
substitute any such pledgee or assignee for such Bank as a party hereto.

          Section 9.05. EXPENSES; INDEMNITY. (a) The Borrower agrees to pay all
out-of-pocket expenses incurred by the Agent in connection with the preparation
of this Agreement and the other Loan Documents or in connection with any
amendments, modifications or waivers of the provisions hereof or thereof
(whether or not the transactions hereby contemplated shall be consummated) or
incurred by the Agent or any Bank in connection with the enforcement or
protection of their rights in connection with this Agreement and the other Loan
Documents or in connection with the Loans made hereunder, including the
reasonable fees, charges and disbursements of Simpson Thacher & Bartlett,
counsel for the Agent, and, in connection with any such enforcement or
protection, the reasonable fees, charges and disbursements of any other counsel
for the Agent or any Bank. The Borrower further agrees that it shall indemnify
the Banks from and hold them harmless against any documentary taxes, assessments
or charges made by any Governmental Authority by reason of the execution and
delivery of this Agreement or any of the other Loan Documents.

          (b) The Borrower agrees to indemnify the Agent, each Bank and each of
their respective directors, officers, employees and agents (each such person
being called an "Indemnitee") against, and to hold each Indemnitee harmless
from, any and all losses, claims, damages, liabilities and related expenses,
including reasonable counsel fees, charges and disbursements, incurred by or
asserted against any Indemnitee arising out of, in any way connected with, or as
a result of (i) the execution or delivery of this Agreement or any other Loan
Document or any agreement or instrument contemplated thereby, the performance by
the parties thereto of their respective obligations thereunder or the
consummation of the Transactions and the other transactions contemplated
thereby, (ii) the use of the proceeds of the Loans or (iii) any claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether or not any Indemnitee is a party thereto; PROVIDED that such indemnity
shall not, as to any Indemnitee, be available to the extent that such losses,
claims, damages, liabilities or related expenses are determined by a court of
competent jurisdiction by final and nonappealable judgment to have resulted from
(A) in the case of the Agent or any Bank, any unexcused breach by the Agent or
such Bank of any of its obligations under this Agreement or (b) the gross
negligence or wilful misconduct of such Indemnitee.

          (c) The provisions of this Section 9.05 shall remain operative and in
full force and effect regardless of the expiration of the term of this
Agreement, the consummation of the transactions contemplated hereby, the
repayment of any of the Loans, the invalidity or unenforceability of any term or
provision of this Agreement or any other Loan Document, or any investigation
made by or on behalf of the Agent or any Bank. All amounts due under this
Section 9.05 shall be payable on written demand therefor.

                                       47
<PAGE>

          (d) Any Bank may at any time assign all or any portion of its rights
under this Agreement to a Federal Reserve Bank; PROVIDED that no such assignment
shall release a Bank from any of its obligations hereunder.

          Section 9.06. RIGHTS OF SETOFF. If an Event of Default shall have
occurred and be continuing, each Bank is hereby authorized at any time and from
time to time, to the fullest extent permitted by law, to set off and apply any
and all deposits (general or special, time or demand, provisional or final) at
any time held and other indebtedness at any time owing by such Bank to or for
the credit or the account of the Borrower against any of and all the obligations
of the Borrower now or hereafter existing under this Agreement and other Loan
Documents held by such Bank, irrespective of whether or not such Bank shall have
made any demand under this Agreement or such other Loan Document and although
such obligations may be unmatured. The rights of each Bank under this Section
are in addition to other rights and remedies (including other rights of Setoff)
which such Bank may have.

          SECTION 9.07. APPLICABLE LAW. THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK.

          Setion 9.08. WAIVERS; AMENDMENT. (a) No failure or delay of the Agent
or any Bank in exercising any power or right hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Agent and the Banks hereunder and
under the other Loan Documents are cumulative and are not exclusive of any
rights or remedies which they would otherwise have. No waiver of any provision
of this Agreement or any other Loan Document or consent to any departure by the
Borrower therefrom shall in any event be effective unless the same shall be
permitted by paragraph (b) below, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given. No
notice or demand on the Borrower in any case shall entitle the Borrower to any
other or further notice or demand in similar or other circumstances.

          (b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Borrower, and the Required Banks; PROVIDED, HOWEVER, that no
such agreement shall (i) decrease the principal amount of, or extend the
maturity of or any scheduled principal payment date or date for the payment of
any interest on any Loan, or waive or excuse any such payment of or any part
thereof, or decrease the rate of interest on any Loan, without the prior written
consent of each Bank affected thereby, (ii) change or extend the Commitment or
decrease the Facility Fees of any Bank without the prior written consent of such
Bank, or (iii) amend or modify the provisions of Section 2.16, the provisions of
this Section, or the definition of "Required Banks", without the prior written
consent of each Bank; PROVIDED FURTHER that no such agreement shall amend,
modify or otherwise affect the rights or duties of the Agent hereunder without
the prior written consent of the Agent.

          Section 0.09. INTEREST RATE LIMITATION. Notwithstanding anything
herein to the contrary, if at any time the applicable interest rate, together
with all fees and charges which are

                                       48
<PAGE>

treated as interest under applicable law (collectively the "Charges"), as
provided for herein or in any other document executed in connection herewith, or
otherwise contracted for, charged, received, taken or reserved by any Bank,
shall exceed the maximum lawful rate (the "Maximum Rate") which may be
contracted for, charged, taken, received or reserved by such Bank in accordance
with applicable law, the rate of interest payable hereunder, together with all
Charges payable to such Bank, shall be limited to the Maximum Rate.

          Section 9.10. ENTIRE AGREEMENT. This Agreement and the other Loan
Documents constitute the entire contract between the parties relative to the
subject matter hereof. Any previous agreement among the parties with respect to
the subject matter hereof is superseded by this Agreement and the other Loan
Documents. Nothing in this Agreement or in the other Loan Documents, expressed
or implied, is intended to confer upon any party other than the parties hereto
and thereto any rights, remedies, obligations or liabilities under or by reason
of this Agreement or the other Loan Documents.

          Section 9.11. WAIVER OF JURY TRIAL. Each party hereto hereby waives,
to the fullest extent permitted by applicable law, any right it may have to a
trial by jury in respect of any litigation directly or indirectly arising out
of, under or in connection with this Agreement or any of the other Loan
Documents. Each party hereto (a) certifies that no representative, agent or
attorney of any other party has represented, expressly or otherwise, that such
other party would not, in the event of litigation, seek to enforce the foregoing
waiver and (b) acknowledges that it and the other parties hereto have been
induced to enter into this Agreement and the other Loan Documents, as
applicable, by, among other things, the mutual waivers and certifications in
this Section 9.11.

          Section 9.12. SEVERABILITY. In the event any one or more of the
provisions contained in this Agreement or in any other Loan Document should be
held invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein and therein
shall not in any way be affected or impaired thereby. The parties shall endeavor
in good-faith negotiations to replace the invalid, illegal or unenforceable
provisions with valid provisions the economic effect of which comes as close as
possible so that of the invalid, illegal or unenforceable provisions.

          Section 9.13. COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall constitute an original but all of which
when taken together shall constitute but one contract, and shall become
effective as provided in Section 9.03.

          Section 9.14. HEADINGS. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.

          Section 9.15. JURISDICTION; CONSENT TO SERVICE OF PROCESS. (c) The
Borrower hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or the other Loan Documents, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and

                                       49
<PAGE>

unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdiction by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement shall affect any right that any Bank
may otherwise have to bring any action or proceeding relating to this Agreement
or the other Loan Documents against the Borrower or its properties in the courts
of any jurisdiction.

          (b) The Borrower hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this agreement or the other Loan Documents in any
New York State or Federal court. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.

          (c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 9.01. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.

          Section 9.16 CONFIDENTIALITY. (d) Each Bank agrees to keep
confidential (and to cause its respective officers, directors, employees, agents
and representatives to keep confidential) the Information (as defined below),
except that any Bank shall be permitted to disclose Information (i) to such of
its officers, directors, employees, agents and representatives (including
outside counsel) as need to know such Information; (ii) to the extent required
by applicable laws and regulations or by any subpoena or similar legal process,
or requested by any bank regulatory authority (provided that such Bank shall,
except (A) as prohibited by law and (B) for Information requested by any such
bank regulatory authority, promptly notify Borrower of the circumstances and
content of each such disclosure and shall request confidential treatment of any
information so disclosed); (iii) to the extent such Information (A) becomes
publicly available other than as a result of a breach of this Agreement, (B)
becomes available to such Bank on a non-confidential basis from a source other
than the Borrower or its Affiliates or (C) was available to such Bank on a
non-confidential basis prior to its disclosure to such Bank by the Borrower or
its Affiliates; or (iv) to the extent the Borrower shall have consented to such
disclosure in writing. As used in this Section 9.16, as to any Bank,
"Information" shall mean any financial statements, materials, documents and
other information that the Borrower or any of its Affiliates may have furnished
or made available or may hereafter furnish or make available to the Agent or any
Bank in connection with this Agreement or any other materials prepared by any
such person from any of the foregoing.

                                       50
<PAGE>

          IN WITNESS WHEREOF, the Borrower, the Agent and the Banks have caused
this Agreement to be duly executed by their respective authorized officers as of
the day and year first above written.

                                       THE E. W. SCRIPPS COMPANY, as Borrower,

                                       By /s/ E. John Wolfzorn
                                          --------------------------------------
                                          Name: E. John Wolfzorn
                                          Title: Treasurer

                                       JPMORGAN CHASE BANK, individually and as
                                          Administrative Agent,

                                       By
                                          --------------------------------------
                                          Name:
                                          Title:

                                       J.P. MORGAN SECURITIES INC.

                                       By
                                          --------------------------------------
                                          Name:
                                          Title:

<PAGE>

          IN WITNESS WHEREOF, the Borrower, the Agent and the Banks have caused
this Agreement to be duly executed by their respective authorized officers as of
the day and year first above written.

                                       THE E. W. SCRIPPS COMPANY, as Borrower,

                                       By
                                          --------------------------------------
                                          Name: E. John Wolfzorn
                                          Title: Treasurer

                                       JPMORGAN CHASE BANK, individually and as
                                          Administrative Agent,

                                       By /s/ James L. Stone
                                          --------------------------------------
                                          Name: James L. Stone
                                          Title: Managing Director

                                       J.P. MORGAN SECURITIES INC.

                                       By /s/ Patricia H. Deans
                                          --------------------------------------
                                          Name: Patricia H. Dean
                                          Title: Managing Director

<PAGE>

                                       SUNTRUST BANK

                                       By: /s/ Thomas C. Palmer
                                           -------------------------------------
                                           Name: Thomas C. Palmer
                                           Title: Managing Director

<PAGE>

                                       KEYBANK NATIONAL ASSOCIATION

                                       By: /s/ Brendan A. Lawlor
                                           -------------------------------------
                                           Name: Brendan A. Lawlor
                                           Title: Vice President

<PAGE>

                                       MELLON BANK, N.A.

                                       By: /s/ Thomas J. Tarasovich, Jr.
                                           -------------------------------------
                                           Name: Thomas J. Tarasovich, Jr.
                                           Title: Lending Officer

<PAGE>

                                       WACHOVIA BANK, N.A.

                                       By: /s/ J. Timothy Toler
                                           -------------------------------------
                                           Name: J. Timothy Toler
                                           Title: Director

<PAGE>

                                       US BANK N.A.

                                       By: /s/ Richard W. Neltner
                                           -------------------------------------
                                           Name: Richard W. Neltner
                                           Title: Senior Vice President

<PAGE>

                                       FIFTH THIRD BANK

                                       By:  /s/ Christine L. Wagner
                                           -------------------------------------
                                           Name: Christine L. Wagner
                                           Title: Assistant Vice President

<PAGE>

                                       UNION BANK OF CALIFORNIA, N.A.

                                       By: /s/ Stender E. Sweeney II
                                           -------------------------------------
                                           Name: Stender E. Sweeney II
                                           Title: Vice President

<PAGE>

                                       MERRILL LYNCH BANK USA

                                       By: /s/ D. Kevin Imlay
                                           -------------------------------------
                                           Name: D. Kevin Imlay
                                           Title: Senior Credit Officer

<PAGE>

                                       WELLS FARGO BANK N.A.

                                       By: /s/ Catherine M. Jones
                                           -------------------------------------
                                           Name: Catherine M. Jones
                                           Title: Vice President

<PAGE>

                                       PNC BANK, NATIONAL ASSOCIATION

                                       By: /s/ Bruce A. Kintner
                                           -------------------------------------
                                           Name: Bruce A. Kintner
                                           Title: Vice President

<PAGE>

                                       FIRST TENNESSEE BANK NATIONAL ASSOCIATION

                                       By: /s/ James H. Atchley
                                           -------------------------------------
                                           Name: James H. Atchley
                                           Title: Senior Vice PresidentEX-10.3 Share Purchase Agreement

 

Exhibit 10.3

SHARE PURCHASE AGREEMENT

 

 

SHARE PURCHASE AGREEMENT

between

SHOP AT HOME, INC.

and

SCRIPPS NETWORKS, INC.

August 14, 2002

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 
	 	 	 	Pages
	 	 	 	

	ARTICLE I. DEFINITIONS
	 	 	4	 
	
	
	
	

	 	Section 1.1 Definitions
	 	 	4	 
	
	
	
	

	 
	 	 	 	 
	
	
	
	

	ARTICLE II. SALE AND TRANSFER OF SHARES; CLOSING
	 	 	11	 
	
	
	
	

	 	Section 2.1 Shares
	 	 	11	 
	
	
	
	

	 	Section 2.2 Purchase Price
	 	 	11	 
	
	
	
	

	 	Section 2.3 Closing
	 	 	12	 
	
	
	
	

	 
	 	 	 	 
	
	
	
	

	ARTICLE III. REPRESENTATIONS AND WARRANTIES OF SELLER
	 	 	12	 
	
	
	
	

	 	Section 3.1 Organization and Good Standing
	 	 	12	 
	
	
	
	

	 	Section 3.2 Authority; No Conflict
	 	 	12	 
	
	
	
	

	 	Section 3.3 Capitalization
	 	 	14	 
	
	
	
	

	 	Section 3.4 Financial Statements
	 	 	14	 
	
	
	
	

	 	Section 3.5 Books and Records
	 	 	15	 
	
	
	
	

	 	Section 3.6 Title to Properties; Encumbrances
	 	 	15	 
	
	
	
	

	 	Section 3.7 Condition and Sufficiency of Assets
	 	 	16	 
	
	
	
	

	 	Section 3.8 Accounts Receivable; Reserves for Returns and Charge Backs
	 	 	16	 
	
	
	
	

	 	Section 3.9 Inventory
	 	 	16	 
	
	
	
	

	 	Section 3.10 No Undisclosed Liabilities
	 	 	16	 
	
	
	
	

	 	Section 3.11 Taxes
	 	 	17	 
	
	
	
	

	 	Section 3.12 Employee Benefits
	 	 	18	 
	
	
	
	

	 	Section 3.13 Compliance; Governmental Authorizations
	 	 	23	 
	
	
	
	

	 	Section 3.14 Legal Proceedings; Orders
	 	 	24	 
	
	
	
	

	 	Section 3.15 Absence of Certain Changes and Events
	 	 	25	 
	
	
	
	

	 	Section 3.16 Contracts; No Defaults
	 	 	26	 
	
	
	
	

	 	Section 3.17 Insurance
	 	 	29	 
	
	
	
	

	 	Section 3.18 Environmental Matters
	 	 	30	 
	
	
	
	

	 	Section 3.19 Employees
	 	 	30	 
	
	
	
	

	 	Section 3.20 Labor Relations; Compliance
	 	 	31	 
	
	
	
	

	 	Section 3.21 Intellectual Property
	 	 	31	 
	
	
	
	

	 	Section 3.22 Certain Payments
	 	 	34	 
	
	
	
	

	 	Section 3.23 FCC Licenses; Operations of Licensed Facilities
	 	 	34	 
	
	
	
	

	 	Section 3.24 Subscribers
	 	 	34	 
	
	
	
	

	 	Section 3.25 Affiliation and Programming Agreements
	 	 	35	 
	
	
	
	

	 	Section 3.26 Transponder Contracts
	 	 	35	 
	
	
	
	

	 	Section 3.27 Network Rights
	 	 	35	 
	
	
	
	

	 	Section 3.28 Website
	 	 	36	 
	
	
	
	

	 	Section 3.29 Relationships with Affiliates
	 	 	36	 
	
	
	
	

	 	Section 3.30 Proxy Statement
	 	 	37	 
	
	
	
	

	 	Section 3.31 Customers and Vendors
	 	 	37	 
	
	
	
	

	 	Section 3.32 Brokers or Finders
	 	 	37	 

-i- 

 

	 	 	 	 	 	 
	
	
	
	

	 	Section 3.33 Disclosure
	 	 	37	 
	
	
	
	

	 
	 	 	 	 
	
	
	
	

	ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF BUYER
	 	 	38	 
	
	
	
	

	 	Section 4.1 Organization and Good Standing
	 	 	38	 
	
	
	
	

	 	Section 4.2 Authority; No Conflict
	 	 	38	 
	
	
	
	

	 	Section 4.3 Investment Intent; Financial Capability
	 	 	38	 
	
	
	
	

	 	Section 4.4 Certain Proceedings
	 	 	38	 
	
	
	
	

	 	Section 4.5 Proxy Statement Preparation
	 	 	38	 
	
	
	
	

	 	Section 4.6 Brokers or Finders
	 	 	39	 
	
	
	
	

	 
	 	 	 	 
	
	
	
	

	ARTICLE V. COVENANTS OF SELLER PRIOR TO CLOSING DATE
	 	 	39	 
	
	
	
	

	 	Section 5.1 Access and Investigation
	 	 	39	 
	
	
	
	

	 	Section 5.2 Operation of the Business of the Network
	 	 	39	 
	
	
	
	

	 	Section 5.3 Negative Covenant
	 	 	40	 
	
	
	
	

	 	Section 5.4 Notification
	 	 	40	 
	
	
	
	

	 	Section 5.5 Reasonable Best Efforts
	 	 	40	 
	
	
	
	

	 	Section 5.6 No Solicitation
	 	 	40	 
	
	
	
	

	 	Section 5.7 Preparation of Proxy Statement
	 	 	41	 
	
	
	
	

	 	Section 5.8 Shareholders Meeting
	 	 	42	 
	
	
	
	

	 	Section 5.9 Approval for Transfer of Network Assets and Network Liabilities
	 	 	42	 
	
	
	
	

	 
	 	 	 	 
	
	
	
	

	ARTICLE VI. COVENANTS OF BUYER PRIOR TO CLOSING DATE
	 	 	43	 
	
	
	
	

	 	Section 6.1 Reasonable Best Efforts
	 	 	43	 
	
	
	
	

	 	Section 6.2 Preparation of Proxy Statement
	 	 	43	 
	
	
	
	

	 	Section 6.3 Loan to Operating Company
	 	 	43	 
	
	
	
	

	 
	 	 	 	 
	
	
	
	

	ARTICLE VII. MISCELLANEOUS COVENANTS
	 	 	43	 
	
	
	
	

	 	Section 7.1 Section 338(h)(10) Election
	 	 	43	 
	
	
	
	

	 	Section 7.2 Required Approvals
	 	 	43	 
	
	
	
	

	 	Section 7.3 FCC Actions
	 	 	44	 
	
	
	
	

	 	Section 7.4 Amendment to Holding Company Articles
	 	 	44	 
	
	
	
	

	 	Section 7.5 Access to Records
	 	 	45	 
	
	
	
	

	 
	 	 	 	 
	
	
	
	

	ARTICLE VIII. CONDITIONS PRECEDENT TO BUYER’S OBLIGATION TO CLOSE
	 	 	45	 
	
	
	
	

	 	Section 8.1 Accuracy of Representations
	 	 	45	 
	
	
	
	

	 	Section 8.2 Seller’s Performance
	 	 	45	 
	
	
	
	

	 	Section 8.3 Consents
	 	 	45	 
	
	
	
	

	 	Section 8.4 Additional Documents
	 	 	45	 
	
	
	
	

	 	Section 8.5 No Proceedings
	 	 	46	 
	
	
	
	

	 	Section 8.6 No Claim Regarding Ownership or Sale Proceeds
	 	 	46	 
	
	
	
	

	 	Section 8.7 No Prohibition
	 	 	46	 
	
	
	
	

	 	Section 8.8 Loan Transaction
	 	 	46	 
	
	
	
	

	 	Section 8.9 Network Assets and Network Liabilities
	 	 	46	 
	
	
	
	

	 	Section 8.10 Holding Company Amended Articles
	 	 	47	 

-ii- 

 

	 	 	 	 	 	 
	
	
	
	

	 	Section 8.11 Title Insurance
	 	 	47	 
	
	
	
	

	 	Section 8.12 754 Election
	 	 	47	 
	
	
	
	

	 	Section 8.13 Amendment of Option Plans; Employment Agreements
	 	 	47	 
	
	
	
	

	 	Section 8.14 HSR Act
	 	 	47	 
	
	
	
	

	 	Section 8.15 Shareholder Approval
	 	 	47	 
	
	
	
	

	 
	 	 	 	 
	
	
	
	

	ARTICLE IX. CONDITIONS PRECEDENT TO SELLER’S OBLIGATION TO CLOSE
	 	 	47	 
	
	
	
	

	 	Section 9.1 Accuracy of Representations
	 	 	47	 
	
	
	
	

	 	Section 9.2 Buyer’s Performance
	 	 	47	 
	
	
	
	

	 	Section 9.3 Consents
	 	 	48	 
	
	
	
	

	 	Section 9.4 Additional Documents
	 	 	48	 
	
	
	
	

	 	Section 9.5 No Injunction
	 	 	48	 
	
	
	
	

	 	Section 9.6 Loan Transaction
	 	 	48	 
	
	
	
	

	 
	 	 	 	 
	
	
	
	

	ARTICLE X. TERMINATION
	 	 	48	 
	
	
	
	

	 	Section 10.1 Termination of Agreement
	 	 	48	 
	
	
	
	

	 	Section 10.2 Effect of Termination
	 	 	49	 
	
	
	
	

	 
	 	 	 	 
	
	
	
	

	ARTICLE XI. INDEMNIFICATION; REMEDIES
	 	 	50	 
	
	
	
	

	 	Section 11.1 Survival; Right to Indemnification Not Affected by Knowledge
	 	 	50	 
	
	
	
	

	 	Section 11.2 Indemnification by Seller
	 	 	50	 
	
	
	
	

	 	Section 11.3 Indemnification by Buyer
	 	 	51	 
	
	
	
	

	 	Section 11.4 Time Limitations
	 	 	51	 
	
	
	
	

	 	Section 11.5 Limitations on Amount
	 	 	51	 
	
	
	
	

	 	Section 11.6 Procedure for Indemnification – Third Party Claims
	 	 	51	 
	
	
	
	

	 	Section 11.7 Procedure for Indemnification – Other Claims
	 	 	53	 
	
	
	
	

	 
	 	 	 	 
	
	
	
	

	ARTICLE XII. GENERAL PROVISIONS
	 	 	53	 
	
	
	
	

	 	Section 12.1 Expenses
	 	 	53	 
	
	
	
	

	 	Section 12.2 Public Announcements
	 	 	53	 
	
	
	
	

	 	Section 12.3 Confidentiality
	 	 	53	 
	
	
	
	

	 	Section 12.4 Declaratory Judgment
	 	 	53	 
	
	
	
	

	 	Section 12.5 Notices
	 	 	53	 
	
	
	
	

	 	Section 12.6 Jurisdiction; Service Of Process
	 	 	54	 
	
	
	
	

	 	Section 12.7 Further Assurances
	 	 	54	 
	
	
	
	

	 	Section 12.8 Waiver
	 	 	55	 
	
	
	
	

	 	Section 12.9 Entire Agreement and Modification
	 	 	55	 
	
	
	
	

	 	Section 12.10 Schedules
	 	 	55	 
	
	
	
	

	 	Section 12.11 Assignments, Successors, and No Third-Party Rights
	 	 	55	 
	
	
	
	

	 	Section 12.12 Severability
	 	 	56	 
	
	
	
	

	 	Section 12.13 Section Headings, Construction
	 	 	56	 
	
	
	
	

	 	Section 12.14 Governing Law
	 	 	56	 
	
	
	
	

	 	Section 12.15 Counterparts
	 	 	56	 

-iii- 

 

SHARE PURCHASE AGREEMENT

         This Agreement is made as of August 14, 2002, by Scripps Networks, Inc., a
Delaware corporation (“Buyer”), and Shop At Home, Inc., a Tennessee corporation
(“Seller”).

RECITALS

         Seller owns 1,000 common shares, without par value, of SAH Holdings, Inc., an
Ohio corporation (“Holding Company”), constituting all of Holding Company’s
outstanding shares.

         Seller desires to sell, and Buyer desires to purchase, 800 common shares,
without par value, of Holding Company (the “Shares”) for the consideration and
on the terms set forth in this Agreement.

AGREEMENT

         The parties, intending to be legally bound, agree as follows:

ARTICLE I. DEFINITIONS

         Section 1.1 Definitions. For purposes of this Agreement, the following terms
have the meanings specified in this Section:

         “1934 Act” means the Securities Exchange Act of 1934, as amended, or any
successor law, and rules and regulations issued pursuant thereto.

         “Affiliate” means, with respect to any Person, any other Person (i) that
directly, or indirectly through one or more intermediaries, controls or is
controlled by or is under common control with such Person, (ii) that is a
general partner, director, manager, trustee or principal officer of, or a
limited partner owning more than 10% of, or that serves in a similar capacity
with respect to, such Person, or (iii) of which such Person is a general
partner, director, manager, trustee or principal officer or a limited partner
owning more than 10% of, or with respect to which such Person serves in a
similar capacity. For purposes of this definition, “control” means the
possession, directly or indirectly, of the power to direct or to cause the
direction of the management or policies of the Person in question through the
ownership of voting securities or by contract or otherwise.

         “Affiliation Agreement” means the letter agreement to be entered into
between Seller and Operating Company prior to or at the Closing pertaining to
the provision of programming by the Network to Seller’s owned television
stations.

         “Assets and Liabilities Statement” is defined in Section 3.4(a).

         “Buyer” is defined in the first paragraph of this Agreement.

 

 

         “Closing” is defined in Section 2.4.

         “Closing Date” means the date and time as of which the Closing actually
takes place.

         “Communications Act” means the Communications Act of 1934, as amended and
the rules and regulations promulgated thereunder.

         “Companies” means collectively Holding Company and Operating Company and a
“Company” means either Holding Company or Operating Company.

         “Confidentiality Agreement” means the Confidentiality Agreement between
The E.W. Scripps Company and Seller dated March 11, 2002.

         “Consent” means any approval, consent, ratification, waiver, or other
authorization (including any Governmental Authorization).

         “Contemplated Transactions” means all of the transactions contemplated by
this Agreement, including: (a) the transfer by Seller to Holding Company or
Operating Company of the Network Assets and Network Liabilities, (b) the sale
of the Shares by Seller to Buyer; (c) the execution, delivery, and performance
of the Transaction Documents; (d) the performance by Buyer and Seller of their
respective covenants and obligations under this Agreement; and (e) Buyer’s
acquisition and ownership of the Shares and exercise of control over Holding
Company.

         “Contract” means any agreement, contract, obligation, promise, or
undertaking (whether written or oral and whether express or implied).

         “Damages” is defined in Section 11.2.

         “Encumbrance” means any charge, claim, community property interest,
condition, equitable interest, lien, option, pledge, security interest, right
of first refusal, or restriction of any kind, including any restriction on use,
voting, transfer, receipt of income, or exercise of any other attribute of
ownership.

         “Environment” means soil, land surface or subsurface strata, surface
waters (including navigable waters, ocean waters, streams, ponds, drainage
basins, and wetlands), groundwater, drinking water supply, stream sediments,
ambient air (including indoor air), plant and animal life, and any other
environmental medium or natural resource.

         “Environmental, Health, and Safety Liabilities” means any cost, damages,
liability or other obligation arising under Environmental Law or Occupational
Safety and Health Law and consisting of or relating to (a) any environmental,
health, or safety matters or conditions (including on-site or off-site
contamination, occupational safety and health, and regulation of chemical
substances or products); (b) fines, penalties, judgments, awards, settlements,
legal or
administrative proceedings, damages, losses, claims, demands and response,
investigative, remedial, or inspection costs and expenses arising under
Environmental Law or Occupational

5

 

Safety and Health Law; (c) financial
responsibility under Environmental Law or Occupational Safety and Health Law
for cleanup costs or corrective action, including any investigation, cleanup,
removal, containment, or other remediation or response actions (“Cleanup”)
required by applicable Environmental Law or Occupational Safety and Health Law
(whether or not such Cleanup has been required or requested by any Governmental
Body or other Person) and for any natural resource damages; or (d) any other
compliance, corrective, investigative, or remedial measures required under
Environmental Law or Occupational Safety and Health Law. The terms “removal,”
“remedial,” and “response action” include the types of activities covered by
the U.S. Comprehensive Environmental Response, Compensation, and Liability Act,
42 U.S.C. §9601 et seq., as amended.

         “Environmental Law” means any Legal Requirement that requires or relates
to: (a) advising appropriate authorities, employees, and the public of intended
or actual releases of pollutants or hazardous substances or materials,
violations of discharge limits, or other prohibitions and of the commencements
of activities that could have significant impact on the Environment; (b)
preventing or reducing to acceptable levels the release of pollutants or
hazardous substances or materials into the Environment; (c) reducing the
quantities, preventing the release, or minimizing the hazardous characteristics
of wastes that are generated; (d) assuring that products are designed,
formulated, packaged, and used so that they do not present unreasonable risks
to human health or the Environment when used or disposed of; (e) protecting
resources, species, or ecological amenities; (f) reducing to acceptable levels
the risks inherent in the transportation of hazardous substances, pollutants,
oil, or other potentially harmful substances; (g) cleaning up pollutants that
have been released, preventing the threat of release, or paying the costs of
such clean up or prevention; or (h) making responsible parties pay private
parties for damages done to their health or the Environment, or permitting
self-appointed representatives of the public interest to recover for injuries
done to public assets.

         “ERISA” means the Employee Retirement Income Security Act of 1974 or any
successor law, and rules and regulations issued pursuant to thereto.

         “FTE Subscribers” is defined in Section 3.24.

         “Facilities” means any real property, leaseholds, or other interests
currently or formerly owned or operated by Seller with respect to the Network
or by Operating Company and any buildings, plants, structures, or equipment
currently or formerly owned or operated by Seller with respect to the Network
or by Operating Company.

         “FCC” means the Federal Communications Commission.

         “GAAP” means generally accepted United States accounting principles,
applied on a consistent basis.

         “Governmental Authorization” means any approval, consent, license, permit,
waiver, or other authorization issued, granted, given, or otherwise made
available by or under the authority of any Governmental Body or pursuant to any
Legal Requirement.

6

 

         “Governmental Body” means any: (a) nation, state, county, city, town,
village, district, or other jurisdiction of any nature; (b) federal, state,
local, municipal, foreign, or other government; (c) governmental or
quasi-governmental authority of any nature (including any governmental agency,
branch, department, official, or entity and any court or other tribunal); (d)
multi-national organization or body; or (e) body exercising, or entitled to
exercise, any administrative, executive, judicial, legislative, police,
regulatory, or taxing authority or power of any nature.

         “HSR Act” is defined in Section 7.2.

         “Hazardous Activity” means the distribution, generation, handling,
importing, management, manufacturing, processing, production, refinement,
Release, storage, transfer, transportation, treatment, or use (including any
withdrawal or other use of groundwater) of Hazardous Materials in, on, under,
about, or from the Facilities or any part thereof into the Environment, and any
other act, business, operation, or thing that increases the danger, or risk of
danger, or poses an unreasonable risk of harm to persons or property on or off
the Facilities, or that may affect the value of the Facilities or the
Companies.

         “Hazardous Materials” means any waste or other substance that is listed,
defined, designated, or classified as, or otherwise determined to be,
hazardous, radioactive, or toxic or a pollutant or a contaminant under any
Environmental Law, including any admixture or solution thereof.

         “Holding Company” is defined in the Recitals to this Agreement.

         “Holding Company Contribution Agreement” means the Contribution and
Assumption Agreement to be entered into by Seller and Holding Company
immediately prior to the Closing, the form of which is attached hereto as
Exhibit 1.1A.

         “IRC” means the Internal Revenue Code of 1986 or any successor law, and
regulations issued by the IRS pursuant thereto.

         “IRS” means the U.S. Internal Revenue Service or any successor agency,
and, to the extent relevant, the U.S. Department of the Treasury.

         “Intellectual Property Assets” is defined in Section 3.21.

         An individual will be deemed to have “Knowledge” of a particular fact or
matter if he or she is actually aware of such fact or matter or if a prudent
individual could be expected to discover or otherwise become aware of such fact
or matter in the course of conducting a reasonably comprehensive investigation
concerning the existence of such fact or matter. A Person other than an
individual will be deemed to have “Knowledge” of a particular fact or
matter if any individual who is serving as a director, executive officer,
member, governor, manager (with respect to a partnership or limited liability
company), partner, executor, or trustee of such Person (or in any similar
capacity) has, or at any time had, Knowledge of such fact or matter in
accordance with the preceding sentence.

7

 

         “Legal Requirement” means any order, constitution, law, ordinance,
principle of common law, regulation, statute, or treaty of any Governmental
Body.

         “Network” means a home shopping cable television network and interactive
web-based business called the Shop At Home Network.

         “Network Assets” means the “Membership Interest” and the “Network Employee
Rights” under the Holding Company Contribution Agreement, and the “Contributed
Assets” under the Operating Company Contribution Agreement.

         “Network Liabilities” means the “Assumed Liabilities” under the Holding
Company Contribution Agreement and the Operating Company Contribution
Agreement.

         “Network Intangible Rights” means all domestic or foreign patents, patent
applications, written invention disclosures to be filed or awaiting filing
determinations, trademark and service mark applications, registered trademarks,
registered service marks, uniform resource locators, domain names, franchises,
trade names, jingles, slogans, logotypes, copyrights and other intangible
rights owned, leased or licensed by Seller or the Companies in connection with
the Network.

         “Occupational Safety and Health Law” means any Legal Requirement designed
to provide safe and healthful working conditions and to reduce occupational
safety and health hazards, and any program, whether governmental or private
(including those promulgated or sponsored by industry associations and
insurance companies), designed to provide safe and healthful working
conditions.

         “Operating Company” means Partners – SATH L.L.C., a Tennessee limited
liability company, which is currently owned 99% by Seller and 1% by SAH
Acquisition, but which will, upon consummation of the Contemplated
Transactions, be owned 87.5% by Holding Company, 11.5% by Seller and 1% by SAH
Acquisition.

         “Operating Company Contribution Agreement” means the Contribution and
Assumption Agreement to be entered into by Seller, SAH Acquisition and
Operating Company immediately prior to the Closing (or earlier upon receipt of
consent of Seller’s senior lender and Buyer), the form of which is attached
hereto as Exhibit 1.1B.

         “Operating Company LLC Agreement” means the Amended and Restated Operating
Agreement among Holding Company, Seller, SAH Acquisition and Operating Company
to be entered into at the Closing.

         “Order” means any award, decision, injunction, judgment, order, ruling,
subpoena or verdict entered, issued, made, or rendered by any court,
administrative agency or other Governmental Body or by any arbitrator.

         “Ordinary Course of Business” means an action taken by a Person only if:
(a) such action is consistent with the past practices of such Person and is
taken in the ordinary course of such

8

 

Person’s normal day-to-day operations; (b)
such action is not required to be authorized by such Person’s board of
directors or managers (or by any Person or group of Persons exercising similar
authority) and is not required to be specifically authorized by such Person’s
parent company (if any) or other equity holders; and (c) such action is similar
in nature and magnitude to actions customarily taken, without any authorization
by the board of directors or managers (or by any Person or group of Persons
exercising similar authority), in the ordinary course of the normal day-to-day
operations of other Persons that are in the same line of business as such
Person.

         “Organizational Documents” means (a) the articles or certificate of
incorporation and bylaws or code of regulations of a corporation; or (b) the
articles of organization or certificate of formation or similar document and
limited liability company agreement or operating agreement or similar document
of a limited liability company; (c) any charter or similar document adopted or
filed in connection with the creation, formation, or organization of a Person;
and (d) any amendment to any of the foregoing.

         “Participation Agreement” means the letter agreement referred to in
Section 8.4(g).

         “Person” means any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, or other entity
or Governmental Body.

         “Plan” is defined in Section 3.13.

         “Proceeding” means any action, arbitration, audit, hearing, investigation,
litigation, or suit (whether civil, criminal, administrative, investigative, or
informal) commenced, brought, conducted, or heard by or before, or otherwise
involving, any Governmental Body or arbitrator.

         “Programming Assets” means all programs, programming, performances,
productions, content and related materials of any nature whatsoever, and all
elements thereof, whether intended for television broadcast or other exhibition
over any other medium (including, but not limited to, the Internet) as a live
performance, a pre-recorded performance or otherwise, whether completed or in
process or production, in whatever form or media the same may be recorded,
including, but not limited to, documents, drawings, films, tapes, compact
discs, and any other digital or digitized formats (collectively, the
“Programming Materials”), all related common law and statutory Network
Intangible Rights in the Programming Materials and all rights, releases,
clearances, and licenses granted to Seller by third parties (including, but not
limited to, persons appearing in, or performing services in connection with the
exhibition and syndication of, any of the Programming Materials) with respect
to such third parties’ Third-Party Intangible Rights in the Programming
Materials.

         “Promotional Assets” means all sales support, advertising, marketing and
promotional materials of any nature whatsoever, including, but not limited to,
interstitial promotional materials, and all elements thereof (including, but
not limited to, all advertiser files, information, lists and rate cards, all
catalogs, data, drawings, designs, files, price lists and subscriber
information, files and lists, and all other records and other documents related
thereto), whether intended for television broadcast or other exhibition over or
in any other medium (including, but

9

 

not limited to, the Internet and any print
media) as a live performance, a pre-recorded performance or otherwise, whether
completed or in process or production, in whatever form or media the same may
be recorded, including, but not limited to, documents, drawings, films, tapes,
compact discs, and any other digital or digitized formats (collectively, the
“Promotional Materials”), all related common law and statutory Network
Intangible Rights in the Promotional Materials and all rights, releases,
clearances, and licenses granted to Seller by third parties (including, but not
limited to, persons appearing in, or performing services in connection with the
exhibition and syndication of, any of the Promotional Materials) with respect
to such third parties’ Third-Party Intangible Rights in the Promotional
Materials.

         “Proxy Statement” is defined in Section 5.8.

         “Release” means any spilling, leaking, emitting, discharging, depositing,
escaping, leaching, dumping, or other releasing into the Environment, whether
intentional or unintentional.

         “Representative” means with respect to a particular Person, any director,
officer, member, manager, employee, agent, consultant, advisor, or other
representative of such Person, including legal counsel, accountants, and
financial advisors.

         “SAH Acquisition” means SAH Acquisition Corporation, a Tennessee
corporation wholly owned by Seller.

         “SEC” means the U.S. Securities and Exchange Commission or any successor
agency.

         “Section 338(h)(10) Election” is defined in Section 7.2.

         “Securities Act” means the Securities Act of 1933, as amended, or any
successor law, and rules and regulations issued pursuant thereto.

         “Seller” is defined in the first paragraph of this Agreement.

         “Shareholder Agreement” means the Shareholder Agreement among Seller,
Buyer and Holding Company to be entered at the Closing.

         “Shareholder Approval” is defined in Section 5.7.

         “Shareholders Meeting” is defined in Section 5.8.

         “Shareholders Vote” is defined in Section 5.8.

         “Shares” is defined in the Recitals of this Agreement.

         “Subscriber” means a household that receives Shop at Home Network in a
distribution system, including but not limited to, any cable television system,
MATV and SMATV systems, MMDS, TVRO and other wireline, wireless and direct
broadcast satellite delivery methods, in all cases, whether analog or digital,
in the United States and its territories and possessions.

10

 

         “Tax” means (a) any net income, alternative or add-on minimum tax, gross
income, gross receipts, sales, use, ad valorem, value added, franchise,
profits, license, withholding on amounts paid to or by Seller or a Company,
payroll, employment, excise, severance, stamp occupation, premium, property,
environmental or windfall profit tax, custom, duty or other tax, governmental
fee or other like assessment or charge of any kind whatsoever, together with
any interest or any penalty, addition to tax or additional amount imposed by
any Governmental Body responsible for the imposition of any such tax (domestic
or foreign), (b) any liability of Seller or a Company for the payment of any
amounts of the type described in clause (a) as a result of being a member of an
affiliated, consolidated, combined or unitary group for any period prior to the
Closing, and (c) any liability of Seller or a Company for the payment of any
amounts of the type described in clause (a) as a result of any express or
implied obligation to indemnify any other Person..

         “Tax Return” means any return (including any information return), report,
statement, schedule, notice, form, or other document or information filed with
or submitted to, or required to be filed with or submitted to, any Governmental
Body in connection with the determination, assessment, collection, or payment
of any Tax or in connection with the administration, implementation, or
enforcement of or compliance with any Legal Requirement relating to any Tax.

         “Tax Sharing Agreement” means the Tax Sharing Agreement referenced in
Section 8.4(h).

         “Third Party Intangible Rights” means third parties’ literary, artistic,
trademark, copyright, music performance, master use, synchronization and other
similar intellectual property rights and their publicity, privacy and
publishing rights.

         A claim, Proceeding, dispute, action, or other matter will be deemed to
have been “Threatened” if any demand or statement has been made (orally or in
writing) or any notice has been given (orally or in writing), or if any other
event has occurred or any other circumstances exist, that would lead a prudent
Person to conclude that such a claim, Proceeding, dispute, action, or other
matter is likely to be asserted, commenced, taken, or otherwise pursued in the
future.

         “Transaction Documents” means this Agreement, the Shareholder Agreement,
the Operating Company LLC Agreement, the Affiliation Agreement, the
Confidentiality Agreement, the Participation Agreement, and the Tax Sharing
Agreement.

ARTICLE II. SALE AND TRANSFER OF SHARES; CLOSING

                  Section 2.1 Shares. Subject to the terms and conditions of this Agreement, at
the Closing, Seller shall sell and transfer the Shares to Buyer, and Buyer
shall purchase the Shares from Seller.

                  Section 2.2 Purchase Price. The purchase price (the “Purchase Price”) for the
Shares is $49,500,000.00.

11

 

                  Section 2.3 Closing. The purchase and sale provided for in this Agreement (the
“Closing”) will take place at the offices of Bone McAllester Norton PLLC at 424
Church Street, Suite 900, Nashville, Tennessee, at 10:00 a.m. (local time) on
October 17, 2002 or at such other time and place as the parties may agree.
Subject to Article IX, failure to consummate the Closing on the date and time
determined pursuant to this Section will not result in the termination of this
Agreement and will not relieve any party of any obligation under this
Agreement. At the Closing, Buyer shall pay the Purchase Price to Seller by
wire transfer to an account specified by Seller.

ARTICLE III. REPRESENTATIONS AND WARRANTIES OF SELLER

         Seller represents and warrants to Buyer as follows:

                  Section 3.1 Organization and Good Standing.

         (a)  Seller is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Tennessee, with full corporate power
and authority to conduct its business as it is now being conducted, to own or
use the properties and assets that it purports to own or use, and to perform
all its obligations under this Agreement and the other Transaction Documents to
which it is a party. Seller is duly qualified to do business as a foreign
corporation and is in good standing under the laws of each state or other
jurisdiction in which either the ownership or use of the properties owned or
used by it, or the nature of the activities conducted by it, requires such
qualification, except where the failure to be so qualified would not have a
material adverse effect on Seller.

         (b)  Holding Company is a corporation duly organized, validly existing, and
in good standing under the laws of the State of Ohio, with full corporate power
and authority to own the assets that it purports to own and to perform all its
obligations under this Agreement and the other Transaction Documents to which
it is a party. Holding Company does not own and has never owned any assets.
Holding Company does not conduct and has never conducted any business.

         (c)  Operating Company is a limited liability company duly organized,
validly existing, and in good standing under the laws of the State of
Tennessee, with full power and authority to own or use the properties and
assets that it purports to own or use, and to perform all its obligations under
the other Transaction Documents to which it is a party. Operating Company
currently owns only certain real estate located at 5388 Hickory Hollow Parkway
and certain fixtures and rights related thereto and such property constitutes
the only assets ever owned by Operating Company. Operating Company does not
conduct and has never conducted any business other than the ownership and
operation of such property.

         (d)  Seller has delivered to Buyer copies of its and each Company’s
Organizational Documents, as currently in effect.

                  Section 3.2 Authority; No Conflict.

12

 

         (a)  This Agreement constitutes the legal, valid, and binding obligation of
Seller, enforceable against Seller in accordance with its terms. Upon the
execution and delivery by Seller and the Companies of each other Transaction
Document to which any of them is a party, such Transaction Documents will
constitute the legal, valid, and binding obligations of Seller and the
Companies, as applicable, enforceable against Seller or the Company in
accordance with their respective terms. Each of Seller and each Company has the
absolute and unrestricted right, power and authority to execute and deliver the
Transaction Documents to which it is a party and to perform its obligations
thereunder. Seller’s Board of Directors has approved the Contemplated
Transactions and has resolved to recommend the Contemplated Transactions for
Shareholder Approval.

         (b)  Except as set forth in Schedule 3.2, neither the execution and
delivery of this Agreement nor the consummation or performance of any of the
Contemplated Transactions will, directly or indirectly (with or without notice
or lapse of time):

		
	 	         (i) contravene, conflict with, or result in a violation of (A)
any provision of the Organizational Documents of Seller or either
Company, or (B) any resolution adopted by the board of directors or
the stockholders of Seller or Holding Company or the member or
managers of Operating Company;
	 
	 	         (ii) contravene, conflict with, or result in a violation of,
or give any Governmental Body or other Person the right to
challenge any of the Contemplated Transactions, or to exercise any
remedy or obtain any relief under, any Legal Requirement or any
Order to which Seller or a Company, or any of the assets owned or
used by Seller or a Company, may be subject;
	 
	 	         (iii) contravene, conflict with, or result in a violation of
any of the terms of, or give any Governmental Body the right to
revoke, withdraw, suspend, cancel, terminate, or modify, any
Governmental Authorization that is held by Seller or a Company or
that otherwise relates to the business of, or any of the assets
owned or used by, Seller or a Company;
	 
	 	         (iv) cause Buyer or a Company to become subject to, or to
become liable for the payment of, any Tax;
	 
	 	         (v) cause any of the assets owned or used by Seller or a
Company to be reassessed or revalued by any taxing authority or
other Governmental Body;
	 
	 	         (vi) contravene, conflict with, or result in a violation or
breach of any provision of, or give any Person the right to declare
a default or exercise any remedy under, or to accelerate the
maturity or performance of, or to cancel, terminate, or modify, any
Contract to which Seller or a Company is bound;

		
	 	         (vii) result in the imposition or creation of any Encumbrance
upon or with respect to any of the assets owned or used by Seller
or a Company; or

13

 

		
	 	         (viii) contravene, conflict with, or result in a violation,
breach, or acceleration of any provision of any employment
agreement between Seller and any employee of Seller.

Except as set forth in Schedule 3.2, neither Seller nor a Company is or will be
required to give any notice to or obtain any Consent from any Person in
connection with the execution and delivery of this Agreement or the
consummation or performance of any of the Contemplated Transactions.

                  Section 3.3 Capitalization. The authorized capital shares of Holding
Company consist solely of 1,500 common shares. The Shares constitute all of
the outstanding shares of Holding Company. Seller is and will be on the
Closing Date the record and beneficial owner and holder of all of the Shares of
Holding Company, free and clear of all Encumbrances. All of the Shares are
duly authorized, validly issued, fully paid and nonassessable, and were issued
in conformity with all applicable state and federal securities laws. Holding
Company has no other equity securities of any class issued, reserved for
issuance, or outstanding. There are no outstanding options, offers, warrants,
conversion rights, agreements, or other rights to subscribe for or to purchase
from Holding Company. No shares of Holding Company carry, and no shareholder
of Holding Company has been granted, any preemptive rights. Holding Company is
not obligated under any agreement, arrangement or understanding to redeem or
otherwise purchase any of its shares. Seller and SAH Acquisition are the record
and beneficial owners and holders of 99% and 1%, respectively, of the
outstanding membership interests of Operating Company, free and clear of all
Encumbrances. Other than as contemplated by this Agreement, there are no
Contracts relating to the issuance, sale, or transfer of any equity or other
securities of either Company. Neither Company owns, nor has a Contract to
acquire, any equity securities or other securities of any Person or any direct
or indirect equity or ownership interest in any other business.

                  Section 3.4 Financial Statements.

         (a)  Since June 30, 1997, Seller has filed all reports, schedules, forms,
statements and other documents required to be filed by it with the SEC pursuant
to the reporting requirements of the 1934 Act (all of the foregoing filed prior
to the date hereof and all exhibits included therein and financial statements
and schedules thereto and documents incorporated by reference therein being
hereinafter referred to as the “SEC Documents”). A complete list of the SEC
Documents is set forth on Schedule 3.4. As of their respective dates, the SEC
Documents complied in all material respects with the requirements of the 1934
Act. None of the SEC Documents, at the time they were filed with the SEC,
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. As of their respective dates, Seller’s financial statements
included in the SEC Documents complied as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto. Such financial
statements have been prepared in accordance with GAAP (except as may be
otherwise indicated in such financial statements or the notes thereto, or in
the case of unaudited interim statements, to the extent they may exclude
footnotes or may be condensed or summary statements) and fairly present in all
material respects

14

 

the consolidated financial position of Seller as of the dates
thereof and the consolidated results of its operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments). No other information provided by or on behalf of
Seller to Buyer that is not included in the SEC Documents contains any untrue
statement of a material fact or omits to state any material fact necessary in
order to make the statements therein, in the light of the circumstance under
which they are or were made, not misleading.

         (b)  Schedule 3.4(b) includes a statement of assets and liabilities of the
Network as of June 30, 2002 (the “Assets and Liabilities Statement”). The
Assets and Liabilities Statement was prepared in accordance with the books and
records of Seller (which are and have been maintained in accordance with GAAP,
consistently applied), were prepared in good faith in accordance with sound
internal accounting practices, consistently applied, subject to the assumptions
stated therein, and present fairly in all material respects the financial
condition of the Network at June 30, 2002.

                  Section 3.5 Books and Records. The books of account, minute books, stock
record books, and other records of Seller and each Company, all of which have
been made available to Buyer, are complete and correct and have been maintained
in accordance with sound business practices. Seller maintains a system of
internal accounting controls sufficient to provide reasonable assurance that
(a) transactions are executed in accordance with management’s general or
specific authorizations, (b) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain
asset accountability, (c) access to assets is permitted only in accordance with
management’s general or specific authorization and (d) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences. The
minute books of Seller and each Company contain accurate and complete records
of all meetings held of, and action taken by, the stockholders or members and
Board of Directors, managers, and committees thereof, and no meeting of any
such stockholders, members, Board of Directors, managers, or committee has been
held for which minutes have not been prepared and are not contained in such
minute books except for certain meetings held after June 16, 2002 solely for
the purpose of considering the Contemplated Transactions (each of which will be
provided to Buyer as soon as they are available and in no event later than the
Closing). At the Closing, each Company will be in possession of all of its
books and records.

                  Section 3.6 Title to Properties; Encumbrances. Schedule 3.6 contains a
complete and accurate list of all real property, leaseholds, or other interests
therein owned or used by the Network. Seller has made available to Buyer all
policies of title insurance, surveys, deeds and other documents vesting title
in or containing restrictions on
the ownership or use of any real property owned or used by the Network. Seller
or a Company owns (with good and marketable title in the case of real property,
subject only to the matters permitted by the following sentence) all the
properties and assets (whether real, personal, or mixed and whether tangible or
intangible) that it purports to own located in the facilities owned or operated
by it or reflected as owned in its books and records. Except as set forth on
Schedule 3.6, all properties and assets of Seller and each Company are free and
clear of all Encumbrances and are not, in the case of real property, subject to
any rights of way, building use restrictions, exceptions, variances,
reservations, or

15

 

limitations of any nature except, with respect to all such
properties and assets, liens for current taxes not yet due and with respect to
real property, (a) minor imperfections of title, if any, none of which is
substantial in amount, materially detracts from the value or impairs the use of
the property subject thereto, or impairs the operations of the Network, and (b)
zoning laws and other land use restrictions that do not impair the present or
anticipated use of the property subject thereto. All buildings, plants, and
structures owned by Seller or a Company lie wholly within the boundaries of the
real property owned by such entity and do not encroach upon the property of, or
otherwise conflict with the property rights of, any other Person.

                  Section 3.7 Condition and Sufficiency of Assets. The buildings, plants,
structures, and equipment constituting the Network Assets are structurally
sound, are in good operating condition and repair, and are adequate for the
uses to which they are being put, and none of such buildings, plants,
structures, or equipment is in need of maintenance or repairs except for
ordinary, routine maintenance and repairs that are not material in nature or
cost. The building, plants, structures, and equipment constituting the Network
Assets are sufficient for the continued conduct of the Companies’ business
after the Closing in substantially the same manner as conducted by Seller prior
to the Closing and constitute all of the assets necessary to operate the
Network as previously operated by Seller.

                  Section 3.8 Accounts Receivable; Reserves for Returns and Charge Backs. All
accounts receivable of Seller that are reflected on the Network accounting
records of Seller as of the Closing Date (collectively, the “Accounts
Receivable”) represent or will represent valid obligations arising from sales
actually made or services actually performed in the Ordinary Course of
Business. Unless paid prior to the Closing Date, the Accounts Receivable are
or will be as of the Closing Date current and collectible by the Companies, net
of the respective reserves shown on the accounting records of Seller. Subject
to such reserves, each of the Accounts Receivable either has been or will be
collected in full, without any set-off, within 90 days after the day on which
it first becomes due and payable. There is no contest, claim, or right of
set-off, other than returns in the Ordinary Course of Business, under any
Contract with any obligor of an Accounts Receivable relating to the amount or
validity of such Accounts Receivable. Schedule 3.8 contains a complete and
accurate list of all Accounts Receivable as of June 30, 2002, which list sets
forth the aging of such Accounts Receivable. The reserves for returns shown on
the Network accounting records of Seller are adequate and calculated consistent
with past practice.

                  Section 3.9 Inventory.
All inventory of Seller relating to the Network consists of a quality and
quantity usable and salable in the Ordinary Course of Business, except for
obsolete items and items of below-standard quality, all of which have been
written off or written down to net realizable value on the Network accounting
records of Seller as of June 30, 2002. All inventories not written off have
been priced on an average cost basis. The quantities of each item of inventory
(whether raw materials, work-in-process, or finished goods) are not excessive,
but are reasonable in the present circumstances of Seller.

                  Section 3.10 No Undisclosed Liabilities. Except as set forth in Schedule 3.10,
Seller has no liabilities or obligations of any nature (whether known or
unknown and whether absolute, accrued, contingent, or otherwise) related to the
Network except for liabilities or

16

 

obligations reflected or reserved against on
the face of the Assets and Liabilities Statement and current liabilities
incurred in the Ordinary Course of Business since June 30, 2002.

                  Section 3.11 Taxes.

         (a)  Seller and the Companies have timely filed or caused to be timely
filed all Tax Returns that are or were required to be filed by or with respect
to any of them, either separately or as a member of a group of entities,
pursuant to applicable Legal Requirements and all Taxes owed by Seller and the
Companies have been timely paid. All such Tax Returns are true, correct and
complete. Seller has made available to Buyer copies of all such Tax Returns
filed since June 30, 1993. Schedule 3.11 contains a complete and accurate list
of all income Tax Returns filed since June 30, 1993. Seller and the Companies
have paid, or made provision for the payment of, all Taxes that have or may
have become due pursuant to all Tax Returns or otherwise, or pursuant to any
assessment received by Seller or a Company, except such Taxes, if any, as are
listed in Schedule 3.11 and are being contested in good faith and as to which
adequate reserves (determined in accordance with GAAP) have been provided in
the applicable accounting records.

         (b)  The United States federal and state income Tax Returns of Seller and
the Companies subject to such Taxes have been audited by the IRS or relevant
state tax authorities or are closed by the applicable statute of limitations
for all taxable years through June 30, 1998. Schedule 3.11 contains a complete
and accurate list of all audits of all such Tax Returns, including a reasonably
detailed description of the nature and outcome of each audit. All deficiencies
proposed as a result of such audits have been paid, reserved against, settled,
or, as described in Schedule 3.11, are being contested in good faith by
appropriate proceedings. Schedule 3.11 describes all adjustments to the United
States federal and state income Tax Returns filed by Seller or a Company or any
group of corporations including Seller or a Company for all taxable years since
June 30, 1993, and the resulting deficiencies proposed by the IRS or state
authorities. Except as described in Schedule 3.11, neither Seller nor a Company
has given or been requested to give waivers or extensions (or is or would be
subject to a waiver or extension given by any other Person) of any statute of
limitations relating to the payment of Taxes of Seller or a Company or for
which Seller or a Company may be liable.

         (c)  The charges, accruals, and reserves with respect to Taxes on the
respective books of Seller and each Company are adequate (determined in
accordance with GAAP) and are at least equal to Seller’s and such Company’s
respective liability for Taxes. There exists no proposed Tax assessment against
Seller or either Company except as disclosed in Schedule 3.11. All Taxes that
Seller or a Company is or was required by Legal Requirements to withhold or
collect have been duly withheld or collected and, to the extent required, have
been paid to the proper Governmental Body or other Person.

         (d)  Except as set forth on Schedule 3.11, (i) none of Seller or the
Companies has made with respect to Seller or the Companies, or any property
held by the Companies any consent under IRC §341(f), (ii) no property of the
Companies is “tax exempt use property” within the meaning of IRC §168(h), (iii)
none of the Companies is a party to any lease made pursuant to §168(f)(8) of
the Internal Revenue Code of 1954, and (iv) none of Seller or the Companies has
agreed or is required to make any adjustment under IRC §481(a) by reason of a

17

 

change in method of accounting or otherwise that will affect the liability of
Seller or the Companies for Taxes.

         (e)  Except as set forth on Schedule 3.11, Seller and the Companies have
withheld and paid all Taxes required by law to have been withheld and paid and
have complied in all respects with all rules and regulations relating to the
withholding or remittance of Taxes (including, without limitation,
employee-related Taxes).

         (f)  Except as set forth on Schedule 3.11, none of the Companies is a party
to an Contract or arrangement that, individually or collectively, would give
rise to any payment (whether in cash or property) that would not be deductible
pursuant to IRC §§162(a)(1), 162(m), 162(n) or 280G.

         (g)  None of Seller or the Companies is a foreign person within the meaning
of IRC §1445.

         (h)  Except as set forth on Schedule 3.11, (i) none of Seller or the
Companies is a party to any Tax allocation, indemnity or sharing agreement;
(ii) none of Seller or the Companies has any liability for Taxes of any Person
(A) under Treasury Regulation §1.1502-6, (B) as transferee or successor, (C) by
Contract, or (D) otherwise; and (iii) neither Seller nor the Companies has been
a member of an affiliated group (as that term is defined in the IRC) filing a
consolidated federal income Tax return other than a group the common parent of
which was Seller.

                  Section 3.12 Employee Benefits. (a) As used in this Section, the
following terms have the following meanings:

         “Company Other Benefit Obligation” means an Other Benefit Obligation owed,
adopted, or followed by Seller or an ERISA Affiliate.

         “Company Plan” means all Plans of which Seller or an ERISA Affiliate is or
was a Plan Sponsor, or to which Seller or an ERISA Affiliate otherwise
contributes or has contributed, or in which Seller or an ERISA Affiliate
otherwise participates or has participated.

         “ERISA Affiliate” means any other Person that, together with Seller, would
be treated as a single employer under IRC §414.

         “Other Benefit Obligations” means all obligations, arrangements, or
customary practices, whether or not legally enforceable, to provide benefits,
other than salary or wages, as compensation for services rendered, to present
or former directors, employees, or agents, other than obligations,
arrangements, and practices that are Plans. Other Benefit Obligations include
consulting agreements under which the compensation paid does not depend upon
the amount of service rendered, sabbatical policies, severance payment
policies, and fringe benefits within the meaning of IRC §132.

         “PBGC” means the Pension Benefit Guaranty Corporation, or any successor
thereto.

18

 

         “Pension Plan” is defined in ERISA §3(2)(A).

         “Plan” is defined in ERISA §3(3).

         “Plan Sponsor” is defined in ERISA §3(16)(B).

         “Qualified Plan” means any Company Plan that meets or purports to meet the
requirements of IRC §401(a).

         “Welfare Plan” is defined in ERISA §3(1).

	 	(b)	 	         (i) Schedule 3.12(b)(i) contains a complete and accurate list
of (A) all ERISA Affiliates, and (B) all Plans of which Seller or
any such ERISA Affiliate is or was a Plan Sponsor, in which Seller
or any such ERISA Affiliate participates or has participated, or to
which Seller or any such ERISA Affiliate contributes or has
contributed. Neither Seller nor any ERISA Affiliate has ever
established, maintained, or contributed to or otherwise participated
in, or had an obligation to maintain, contribute to, or otherwise
participate in, any voluntary employees’ benefit association under
IRC §501(c)(9), Pension Plan subject to Title IV of ERISA or
multi-employer plan as defined in ERISA §3(37)(A). Neither Company
has or has ever had any employees or sponsored any Plan or Other
Benefit Obligation.

		
	 	         (ii) Schedule 3.12(b)(ii) contains a complete and accurate
list of all Company Plans, Company Other Benefit Obligations and
identifies as such all Company Plans that are defined benefit
Pension Plans or Qualified Plans.

		
	 	         (iii) Schedule 3.12(b)(iii) sets forth a calculation of
Seller’s liability for post-retirement benefits other than
pensions, made in accordance with Financial
Accounting Statement 106 of the Financial Accounting Standards
Board, regardless of whether Seller is required by Statement 106 to
disclose such information.

		
	 	         (iv) Schedule 3.12(b)(iv) sets forth the financial cost of all
obligations owed under any Company Plan or Company Other Benefit
Obligation that is not subject to the disclosure and reporting
requirements of ERISA.

	 	(c)	 	Seller has delivered to Buyer:

		
	 	         (i) all documents that set forth the terms of each Company
Plan, Company Other Benefit Obligation and of any related trust,
including (A) all plan descriptions and summary plan descriptions
of Company Plans for which Seller is required to prepare, file, and
distribute plan descriptions and summary plan descriptions, and (B)
all summaries and descriptions furnished to participants and
beneficiaries regarding Company Plans and Company Other Benefit
Obligations for which a plan description or summary plan
description is not required;

19

 

		
	 	         (ii) all personnel, payroll, and employment manuals and
policies;

		
	 	         (iii) all collective bargaining agreements pursuant to which
contributions have been made or obligations incurred (including
both pension and welfare benefits) by Seller and the ERISA
Affiliates, and all collective bargaining agreements pursuant to
which contributions are being made or obligations are owed by such
entities;

		
	 	         (iv) a written description of any Company Plan or Company
Other Benefit Obligation that is not otherwise in writing;

		
	 	         (v) all registration statements filed with respect to any
Company Plan;

		
	 	         (vi) all insurance policies purchased by or to provide
benefits under any Company Plan;

		
	 	         (vii) all contracts with third party administrators,
actuaries, investment managers, consultants, and other independent
contractors that relate to any Company Plan and Company Other
Benefit Obligation;

		
	 	         (viii) all reports submitted within the four years preceding
the date of this Agreement by third party administrators,
actuaries, investment managers, consultants, or other independent
contractors with respect to any Company Plan or Company Other
Benefit Obligation;

		
	 	         (ix) all notifications to employees of their rights under
ERISA §601 et seq. and IRC §4980B;
	 
	 	         (x) the Form 5500 filed in each of the most recent three plan
years with respect to each Company Plan, including all schedules
thereto and the opinions of independent accountants;

		
	 	         (xi) all notices that were given by Seller or any ERISA
Affiliate or any Company Plan to the IRS, PBGC, or any participant
or beneficiary, pursuant to statute, within the four years
preceding the date of this Agreement, including notices that are
expressly mentioned elsewhere in this Section 3.12;

		
	 	         (xii) all notices that were given by the IRS, PBGC, or the
Department of Labor to Seller, any ERISA Affiliate, or any Company
Plan within the four years preceding the date of this Agreement;
and

		
	 	         (xiii) the most recent determination letter for each Qualified
Plan.

	 	(d)	 	Except as set forth in Schedule 3.12(d):

		
	 	         (i) Seller and each ERISA Affiliate have performed all of
their respective obligations under all Company Plans and Company
Other Benefit Obligations. Seller and each ERISA Affiliate have
made appropriate entries in 

20

 

		
	 	their financial records and statements
for all obligations and liabilities under such Plans and
Obligations that have accrued but are not due.

		
	 	         (ii) No statement, either written or oral, has been made by
Seller or any ERISA Affiliate to any Person with regard to any Plan
or Other Benefit Obligation that was not in accordance with the
Plan or Other Benefit Obligation and that could have, individually
or in the aggregate, a material adverse economic consequence to a
Company or Buyer.

		
	 	         (iii) Seller and each ERISA Affiliate, with respect to all
Company Plans and Company Other Benefits Obligations are, and each
Company Plan and Company Other Benefit Obligation is, in full
compliance with ERISA, the IRC, and other applicable Legal
Requirements, including the provisions of such Legal Requirements
expressly mentioned in this Section 3.12, and with any applicable
collective bargaining agreement.

		
	 	         (iv) No transaction prohibited by ERISA §406 and no
“prohibited transaction” under IRC §4975(c) have occurred with
respect to any Company Plan with respect to which there is no
statutory or regulatory exemption.

		
	 	         (v) Seller has no liability to the IRS with respect to any
Company Plan, including any liability imposed by Chapter 43 of the
IRC.

		
	 	         (vi) Seller has no liability to the PBGC with respect to any
Company Plan or has any liability under ERISA §502 or §4071.

		
	 	         (vii) All filings required by ERISA and the IRC as to each
Company Plan have been timely filed, and all notices and
disclosures to participants required by either ERISA or the IRC
have been timely provided.

		
	 	         (viii) All contributions and payments made or accrued with
respect to all Company Plans and Company Other Benefit Obligations
are deductible under IRC §162 or §404. No amount, or any asset of
any Company Plan is subject to tax as unrelated business taxable
income.

		
	 	         (ix) Each Company Plan can be terminated within 30 days,
without payment of any additional contribution or amount and
without the vesting or acceleration of any benefits promised by
such Plan.

		
	 	         (x) Since June 30, 1999, there has been no establishment or
amendment of any Company Plan or Company Other Benefit Obligation.

		
	 	         (xi) No event has occurred or circumstance exists that could
result in a material increase in premium costs of Company Plans and
Company Other Benefit Obligations that are insured, or a material
increase in benefit costs of such Plans and Obligations that are
self-insured.

21

 

		
	 	         (xii) Other than claims for benefits submitted by participants
or beneficiaries, no claim against, or legal proceeding involving,
any Company Plan or Company Other Benefit Obligation is pending or,
to Seller’s Knowledge, Threatened.

		
	 	         (xiii) No Company Plan is a stock bonus or pension plan within
the meaning of IRC §401(a).

		
	 	         (xiv) Each Qualified Plan is qualified in form and operation
under IRC §401(a); each trust for each such Qualified Plan is
exempt from federal income tax under IRC §501(a). No event has
occurred or circumstance exists that will or could give rise to
disqualification or loss of tax-exempt status of any such Qualified
Plan or trust.

		
	 	         (xv) Seller and each ERISA Affiliate has met the minimum
funding standard, and has made all contributions required, under
ERISA §302 and IRC §402.

		
	 	         (xvi) Seller and each ERISA Affiliate has paid all amounts due
to the PBGC pursuant to ERISA §4007.

		
	 	         (xvii) Neither Seller nor any ERISA Affiliate has filed a
notice of intent to terminate any Company Plan or has adopted any
amendment to treat a Company Plan as terminated. The PBGC has not
instituted proceedings to treat any Company Plan as terminated. No
event has occurred or circumstance exists
that may constitute grounds under ERISA §4042 for the
termination of, or the appointment of a trustee to administer, any
Company Plan.

		
	 	         (xviii) No amendment has been made, or is reasonably expected
to be made, to any Company Plan that has required or could require
the provision of security under ERISA §307 or IRC §401(a)(29).

		
	 	         (xix) No accumulated funding deficiency, whether or not
waived, exists with respect to any Company Plan; no event has
occurred or circumstance exists that may result in an accumulated
funding deficiency as of the last day of the current plan year of
any Company Plan.

		
	 	         (xx) The actuarial report for each Pension Plan of Seller and
each ERISA Affiliate fairly presents the financial condition and
the results of operations of each such Pension Plan in accordance
with GAAP.

		
	 	         (xxi) Since the last valuation date for each Pension Plan of
Seller and each ERISA Affiliate, no event has occurred or
circumstance exists that would increase the amount of benefits
under any such Pension Plan or that would cause the excess of
Pension Plan assets over benefit liabilities (as defined in ERISA
§4001) to decrease, or the amount by which benefit liabilities
exceed assets to increase.

22

 

		
	 	         (xxii) No reportable event (as defined in ERISA §4043 and in
regulations issued thereunder) has occurred.

		
	 	         (xxiii) Seller has no Knowledge of any facts or circumstances
that may give rise to any liability of Seller, a Company or Buyer
to the PBGC under Title IV of ERISA.

		
	 	         (xxiv) Except to the extent required under ERISA §601 et seq.
and IRC §4980B, neither Seller nor any ERISA Affiliate provides
health or welfare benefits for any retired or former employee nor
is it obligated to provide health or welfare benefits to any active
employee following such employee’s retirement or other termination
of service.

		
	 	         (xxv) Seller has the right to modify and terminate benefits to
retirees (other than Pension Plans) with respect to both retired
and active employees.

		
	 	         (xxvi) Seller has complied with the provisions of ERISA §601
et seq. and IRC §4980B.

		
	 	         (xxvii) No payment that is owed or may become due to any
director, officer, employee, or agent of Seller will be
non-deductible to Seller or subject to tax under IRC §280G or
§4999; nor will Seller be required to “gross up” or otherwise
compensate any such Person because of the imposition of any excise
tax on a payment to such Person.

		
	 	         (xxviii) The consummation of the Contemplated Transactions
will not result in the payment, vesting, or acceleration of any
benefit under any Company Plan or Company Other Benefit Obligation,
nor will it trigger the payment of severance or termination pay
under any policy, plan, procedure, practice or agreement to any
employee of Seller.

		
	 	         (xxix) Seller is in material compliance with its obligations
to its employees under the Health Insurance Portability and
Accountability Act of 1996.

                  Section 3.13 Compliance; Governmental Authorizations.

         (a)  Except as set forth in Schedule 3.13(a):

		
	 	         (i) each of Seller and each Company is and at all times has
been, in full compliance with each Legal Requirement that is or was
applicable to it or to the conduct or operation of its business or
the ownership or use of any of its assets;

		
	 	         (ii) no event has occurred or circumstance exists that (with
or without notice or lapse of time) (A) may constitute or result
in a violation by Seller or a Company of, or a failure on the part
of Seller or a Company to comply with, any Legal Requirement, or
(B) may give rise to any obligation on the part of Seller or 

23

 

		
	 	a
Company to undertake, or to bear all or any portion of the cost of,
any remedial action of any nature; and

		
	 	         (iii) neither Seller nor a Company has received any notice or
other communication (whether oral or written) from any Governmental
Body or any other Person regarding (A) any actual, alleged,
possible, or potential violation of, or failure to comply with, any
Legal Requirement, or (B) any actual, alleged, possible, or
potential obligation on the part of Seller or a Company to
undertake, or to bear all or any portion of the cost of, any
remedial action of any nature.

         (b)  Schedule 3.13(b) contains a complete and accurate list of each
Governmental Authorization that is held by Seller or each Company or that
otherwise relates to the business of, or to any of the assets owned or used by,
the Companies. Each Governmental Authorization listed or required to be listed
in Schedule 3.13(b) is valid and in full force and effect. Except as set forth
in Schedule 3.13(b):

		
	 	         (i) Seller and each Company is, and at all times has been, in
full compliance with all of the terms and requirements of each
Governmental Authorization identified or required to be identified
in Schedule 3.13(b);

		
	 	         (ii) no event has occurred or circumstance exists that may
(with or without notice or lapse of time) (A) constitute or result
directly or indirectly in a violation of or a failure to comply
with any term or requirement of any Governmental Authorization
listed or required to be listed in Schedule 3.13(b), or (B) result
directly or indirectly in the revocation, withdrawal, suspension,
cancellation, or termination of, or any modification to, any
Governmental Authorization listed or required to be listed in
Schedule 3.13(b);

		
	 	         (iii) neither Seller nor a Company has received any notice or
other communication (whether oral or written) from any Governmental
Body or any other Person regarding (A) any actual, alleged,
possible, or potential violation of or failure to comply with any
term or requirement of any Governmental Authorization, or (B) any
actual, proposed, possible, or potential revocation, withdrawal,
suspension, cancellation, termination of, or modification to any
Governmental Authorization; and

		
	 	         (iv) all applications required to have been filed for the
renewal of the Governmental Authorizations listed or required to be
listed in Schedule 3.13(b) or the transfer of the Governmental
Authorizations listed or required to be listed in Schedule 3.13(b)
from Seller or any of its subsidiaries to either Company have been
duly filed on a timely basis with the appropriate Governmental
Bodies, and all other filings required to have been made with
respect to such Governmental Authorizations have been duly made on
a timely basis with the appropriate Governmental Bodies.

The Governmental Authorizations listed in Schedule 3.13(b) collectively
constitute all of the Governmental Authorizations necessary to permit the
Companies to lawfully conduct and

24

 

operate their business in the manner they
currently conduct and operate such business and to permit the Companies to own
and use their assets in the manner in which they currently own and use such
assets.

                  Section 3.14 Legal Proceedings; Orders.

         (a)  Except as set forth in Schedule 3.14, there is no pending Proceeding:

		
	 	         (i) that has been commenced by or against Seller or a Company
or that otherwise relates to or may affect the business of, or any
of the assets owned or used by, the Companies; or

		
	 	         (ii) that challenges, or that may have the effect of
preventing, delaying, making illegal, or otherwise interfering
with, any of the Contemplated Transactions.

To Seller’s Knowledge, no such Proceeding has been Threatened. Seller has made
available to Buyer copies of all pleadings, correspondence, and other documents
relating to each Proceeding listed in Schedule 3.14. Except as specifically
referenced in Schedule 3.14 as having a material adverse effect, the
Proceedings listed in Schedule 3.14 will not have a material adverse effect on
the business, operations, assets, condition, or prospects of the Companies.

         (b)  Except as set forth in Schedule 3.14:

		
	 	         (i) there is no Order to which a Company, or any of the assets
owned or used by the Companies, is subject;

		
	 	         (ii) Seller is not subject to any Order that relates to the
business of, or any of the assets owned or used by, the Companies;
and

		
	 	         (iii) no officer, director, agent, or employee of a Company is
subject to any Order that prohibits such Person from engaging in or
continuing any conduct, activity, or practice relating to the
business of the Companies.

         (c)  Except as set forth in Schedule 3.14:

		
	 	         (i) Each of Seller and each Company is, and at all times has
been, in full compliance with all of the terms and requirements of
each Order to which it, or any of the assets owned or used by it,
is or has been subject;

		
	 	         (ii) no event has occurred or circumstance exists that may
constitute or result in (with or without notice or lapse of time) a
violation of or failure to comply with any term or requirement of
any Order to which Seller or a Company, or any of the assets owned
or used by the Companies, is subject; and

		
	 	         (iii) neither Seller nor a Company has received any notice or
other communication (whether oral or written) from any Governmental
Body or any other Person regarding any actual, alleged, possible,
or potential violation of, or 

25

 

		
	 	failure to comply with, any term or
requirement of any Order to which Seller or a Company, or any of
the assets owned or used by the Companies, is or has been subject.

                  Section 3.15 Absence of Certain Changes and Events. Since June 30, 2001,
except as set forth on Schedule 3.15, there has not been any material adverse
change in the business, operations, properties, prospects, assets, or condition
of Seller, and no event has occurred or circumstance exists that may result in
such a material adverse change. Neither Seller nor either Company has taken any
steps, and none of them currently expect to take any steps, to seek protection
pursuant to any bankruptcy law nor does Seller or either Company have any
knowledge or reason to believe that its creditors intend to initiate
involuntary bankruptcy proceedings or any actual knowledge of any fact that
would reasonably lead a creditor to do so. Except as set forth in Schedule
3.15, since June 30, 2001, Seller has conducted its business only in the
Ordinary Course of Business and there has not been any:

         (a)  payment or increase by Seller of any bonuses, salaries, or other
compensation to any director, officer, or (except in the Ordinary Course of
Business) employee or entry into any employment, severance, or similar Contract
with any director, officer, or (except in the Ordinary Course of Business)
employee;

         (b)  adoption of, or increase in the payments to or benefits under, any
profit sharing, bonus, deferred compensation, savings, insurance, pension,
retirement, or other employee benefit plan for or with any employees of Seller;

         (c)  damage to or destruction or loss of any asset or property owned or
used by the Network, whether or not covered by insurance, materially and
adversely affecting the properties, assets, business, financial condition, or
prospects of the Network;

         (d)  entry into, termination of, or receipt of notice of termination of (i)
any license, distributorship, dealer, sales representative, joint venture,
credit, affiliation or similar agreement, or (ii) any Contract or transaction
involving a total remaining commitment by or to Seller (as relates to the
Network) of at least $50,000 except in the Ordinary Course of Business;

         (e)  sale (other than sales of inventory in the Ordinary Course of
Business), lease, or other disposition of any asset or property owned or used
by the Companies or mortgage, pledge, or imposition of any Encumbrance on any
material asset or property owned or used by the Network;

         (f)  cancellation or waiver of any claims or rights with a value to Seller
(as relates to the Network) in excess of $50,000;

         (g)  material change in the accounting methods used by Seller; or

         (h)  agreement, whether oral or written, by Seller or a Company, as
applicable, to do any of the foregoing.

                  Section 3.16 Contracts; No Defaults.

26

 

         (a)  Schedule 3.16(a) contains a complete and accurate list, and Seller has
delivered to Buyer true and complete copies, of:

		
	 	         (i) each Contract relating to the business of the Network that
involves performance of services or delivery of goods or materials
by Seller or a Company of an amount or value in excess of $50,000;

		
	 	         (ii) each Contract relating to the business of the Network
that involves performance of services or delivery of goods or
materials to Seller or a Company of an amount or value in excess of
$50,000;

		
	 	         (iii) each Contract relating to the business of the Network
that was not entered into in the Ordinary Course of Business and
that involves expenditures or receipts of Seller or a Company in
excess of $50,000;

		
	 	         (iv) each lease, rental or occupancy agreement, license,
installment and conditional sale agreement, and other Contract
relating to the business of the Network affecting the ownership of,
leasing of, title to, use of, or any leasehold or other interest
in, any real or personal property (except personal property leases
and
installment and conditional sales agreements having a value
per item or aggregate payments of less than $50,000 and with terms
of less than one year);

		
	 	         (v) each licensing agreement or other Contract relating to the
business of the Network with respect to patents, trademarks,
copyrights, or other intellectual property, including agreements
with current or former employees, consultants, or contractors
regarding the appropriation or the non-disclosure of any
Intellectual Property Assets;

		
	 	         (vi) each joint venture, partnership, and other Contract
(however named) involving a sharing of profits, losses, costs, or
liabilities by Seller or a Company or with respect to the Network
business with any other Person;

		
	 	         (vii) each Contract containing covenants that in any way
purport to restrict the business activity of Seller or a Company or
any Affiliate of a Company or limit the freedom of Seller or a
Company or any Affiliate of a Company to engage in any line of
business or to compete with any Person;

		
	 	         (viii) each Contract providing for payments to or by any
Person based on sales, purchases, or profits, other than direct
payments for goods;

		
	 	         (ix) each power of attorney binding on Seller (as relates to
the Network) or a Company that is currently effective and
outstanding;

		
	 	         (x) each Contract entered into other than in the Ordinary
Course of Business that contains or provides for an express
undertaking by Seller (as relates to the Network) or a Company to
be responsible for consequential damages;

27

 

		
	 	         (xi) each Contract for capital expenditures by Seller or a
Company with respect to the Network business in excess of $50,000;

		
	 	         (xii) each written warranty, guaranty, and or other similar
undertaking with respect to contractual performance extended by
Seller or a Company with respect to the Network business other than
in the Ordinary Course of Business;

		
	 	         (xiii) each Contract that is a talent or programming Contract
or in any way obligates Seller to pay any royalty, residual,
license fee or other similar payment in respect of any third
parties’ literary, artistic, trademark, copyright, music
performance, master use, synchronization and other similar
intellectual property rights and their publicity, privacy and
publishing rights; and

		
	 	         (xiv) each amendment, supplement, and modification (whether
oral or written) in respect of any of the foregoing.

         (b)  Except as set forth in Schedule 3.16(b), no officer, director, or
employee of Seller is bound by any Contract that purports to limit the ability
of such Person to (A) engage in or continue any conduct, activity, or practice
relating to the business of the Network, or (B) assign to a Company or to any
other Person any rights to any invention, improvement, or discovery.

         (c)  Except as set forth in Schedule 3.16(c), each Contract listed or
required to be listed in Schedule 3.16(a) is in full force and effect and is
valid and enforceable in accordance with its terms.

         (d)  Except as set forth in Schedule 3.16(d):

		
	 	         (i) each of Seller and each Company is and has been in full
compliance with all applicable terms and requirements of each
Contract listed or required to be listed in Schedule 3.16(a),
including, without limitation, all “most favored nations”
provisions of such Contracts;

		
	 	         (ii) each other party to each Contract listed or required to
be listed in Schedule 3.16(a) is, to Seller’s Knowledge, in full
compliance with all applicable terms and requirements of such
Contract;

		
	 	         (iii) no event has occurred or circumstance exists that (with
or without notice or lapse of time) may contravene, conflict with,
or result in a violation or breach of, or give Seller or a Company
or other Person the right to declare a default or exercise any
remedy under, or to accelerate the maturity or performance of, or
to cancel, terminate, or modify, any Contract listed or required to
be listed in Schedule 3.16(a); and

		
	 	         (iv) neither Seller nor a Company has given to or received
from any other Person, at any time since June 30, 1999, any notice
or other communication (whether oral or written) regarding any
actual, alleged, possible, or potential violation or breach of, or
default under, any Contract listed or required to be listed 

28

 

		
	 	in
Schedule 3.16(a), except for notices of violations, breaches or
defaults, the results of which would not result in the ability for
the other party to such Contract to exercise a right or remedy that
could have a material adverse effect on Seller or the Company, as
the case may be.

         (e)  To Seller’s Knowledge, there are no renegotiations of, attempts to
renegotiate, or outstanding rights to renegotiate any material amounts paid or
payable to a Company or with respect to the Companies’ business under current
or completed Contracts with any Person and no such Person has made written
demand for such renegotiation.

         (f)  The Contracts relating to the sale, design, manufacture, or provision
of products or services by the Companies have been entered into in the Ordinary
Course of Business and have been entered into without the commission of any act
alone or in concert with any other Person, or any consideration having been
paid or promised, that is or would be in violation of any Legal Requirement.

                  Section 3.17 Insurance.

         (a)  Seller has made available to Buyer true and complete copies of all
policies of insurance to which Seller or a Company is a party or under which
Seller or a Company, or any director, officer or manager of Seller or a
Company, is or has been covered at any time within the
five years preceding the date of this Agreement, copies of all pending
applications for policies of insurance; and any statement by the auditor of
Seller’s financial statements with regard to the adequacy of such entity’s
coverage or of the reserves for claims.

         (b)  Schedule 3.17(b) sets forth, by year, for the current policy year and
each of the five preceding policy years a summary of the loss experience under
each policy and a statement describing each claim under an insurance policy for
an amount in excess of $10,000.

         (c)  Except as set forth on Schedule 3.17(c):

		
	 	         (i) All policies to which Seller or a Company is a party or
that provide coverage to Seller, a Company, or any director,
officer or manager of Seller or a Company (A) are valid,
outstanding and enforceable; (B) are issued by an insurer that is
financially sound and reputable; (C) taken together, provide
adequate insurance coverage for the assets and the operations of
the Network; (D) are sufficient for compliance with all Legal
Requirements and Contracts to which Seller or a Company is a party
or by which any of them is bound; (E) will continue in full force
and effect following the consummation of the Contemplated
Transactions; and (F) do not provide for any retrospective premium
adjustment or other experienced-based liability on the part of
Seller or a Company.

		
	 	         (ii) Neither Seller nor a Company has received any refusal of
coverage or any notice that a defense will be afforded with
reservation of rights, or any notice of cancellation or any other
indication that any insurance policy is no longer in full force or
effect or will not be renewed or that the issuer of any policy is
not willing or able to perform its obligations thereunder.

29

 

		
	 	         (iii) Each of Seller and each Company has paid all premiums
due, and has otherwise performed all of its obligations, under each
policy to which it is a party or that provides coverage to the
Companies or their business or any director, officer or manager
thereof.

		
	 	         (iv) Seller and the Companies have given notice to the insurer
of all material claims that may be insured thereby.

                  Section 3.18 Environmental Matters. Except as set forth in Schedule 3.18:

         (a)  Each of Seller and each Company is, and at all times has been, in full
compliance with, and has not been and is not in violation of or liable under,
any Environmental Law. Neither Seller nor either Company has or has any basis
to expect, nor has any of them or any other Person for whose conduct they are
or may be held to be responsible received, any actual or Threatened Order,
notice, or other communication from (i) any Governmental Body or private
citizen acting in the public interest, or (ii) the current or prior owner or
operator of any Facilities, of any actual or potential violation or failure to
comply with any Environmental Law, or of any actual or Threatened obligation to
undertake or bear the cost of any Environmental, Health, and Safety
Liabilities with respect to any of the Facilities or any other properties
or assets (whether real, personal, or mixed) in which Seller or a Company has
or had an interest, or with respect to any property or Facility at or to which
Hazardous Materials were generated, manufactured, refined, transferred,
imported, used, or processed by Seller, a Company, or any other Person for
whose conduct they are or may be held responsible, or from which Hazardous
Materials have been transported, treated, stored, handled, transferred,
disposed, recycled, or received.

         (b)  There are no Hazardous Materials present on or in the Environment at
the Facilities. None of Seller, either Company, or any other Person for whose
conduct they are or may be held responsible has permitted or conducted, or is
aware of, any Hazardous Activity conducted with respect to the Facilities or
any other properties or assets (whether real, personal, or mixed) in which
Seller or a Company has or had an interest except in full compliance with all
applicable Environmental Laws.

         (c)  There has been no Release or, to Seller’s Knowledge, threat of
Release, of any Hazardous Materials at or from the Facilities or at any other
locations where any Hazardous Materials were generated, manufactured, refined,
transferred, produced, imported, used, or processed from or by the Facilities,
or from or by any other properties and assets (whether real, personal, or
mixed) in which Seller or a Company has or had an interest.

         (d)  Seller has delivered to Buyer accurate and complete copies and results
of any reports, studies, analyses, tests, or monitoring possessed or initiated
by Seller or a Company pertaining to Hazardous Materials or Hazardous
Activities in, on, or under the Facilities, or concerning compliance by Seller,
a Company, or any other Person for whose conduct they are or may be held
responsible, with Environmental Laws.

                  Section 3.19 Employees.

30

 

         (a)  Schedule 3.19 contains a complete and accurate list of the following
information for each employee of Seller relating to the Network, including each
employee on leave of absence or layoff status: name; job title; current
compensation paid or payable and any change in compensation since June 30,
2002; vacation accrued; and service credited for purposes of vesting and
eligibility to participate under any Company Plan.

         (b)  No employee of Seller is a party to, or is otherwise bound by, any
agreement or arrangement, including any confidentiality, noncompetition, or
proprietary rights agreement, between such employee and any other Person (a
“Proprietary Rights Agreement”) that in any way adversely affects or will
affect (i) the performance of his duties as an employee of Seller or, after the
Closing, of a Company, or (ii) the ability Seller or the Companies to conduct
the Network business, including any Proprietary Rights Agreement with Seller or
a Company. To Seller’s Knowledge, no officer or other key employee of Seller
intends to terminate his employment.

                  Section 3.20 Labor Relations; Compliance. Since June 30, 1997, Seller has not
been and is not a party to any collective bargaining or other labor Contract.
Except as set forth on Schedule 3.20, since June 30, 1997, there has not been,
there is not presently pending or existing, and to Seller’s Knowledge there is
not Threatened, (a)
any strike, slowdown, picketing, work stoppage, or employee grievance process,
(b) any Proceeding against or affecting the Network relating to the alleged
violation of any Legal Requirement pertaining to labor relations or employment
matters, including any charge or complaint filed by an employee or union with
the National Labor Relations Board, the Equal Employment Opportunity
Commission, or any comparable Governmental Body, organizational activity, or
other labor or employment dispute against or affecting the Network, or (c) any
application for certification of a collective bargaining agent. To Seller’s
Knowledge, no event has occurred or circumstance exists that could provide the
basis for any work stoppage or other labor dispute by employees of Seller.
There is no lockout of any employees by Seller, and no such action is
contemplated by Seller. Seller has complied in all respects with all Legal
Requirements relating to employment, equal employment opportunity,
nondiscrimination, immigration, wages, hours, benefits, collective bargaining,
the payment of social security and similar taxes, occupational safety and
health, and plant closing. Seller is not liable for the payment of any
compensation, damages, taxes, fines, penalties, or other amounts, however
designated, for failure to comply with any of the foregoing Legal Requirements.

                  Section 3.21 Intellectual Property.

         (a)  Intellectual Property Assets. As used in this Agreement, the term
“Intellectual Property Assets” includes:

		
	 	         (i) the name “Shop at Home”, all fictional business names,
trading names, registered and unregistered trademarks, service
marks, and applications (collectively, “Marks”);

		
	 	         (ii) all patents, patent applications, and inventions and
discoveries that may be patentable (collectively, “Patents”);

31

 

		
	 	         (iii) all copyrights in both published works and unpublished
works (collectively, “Copyrights”);

		
	 	         (iv) all rights in mask works (collectively, “Rights in Mask
Works”); and

		
	 	         (v) all know-how, trade secrets, confidential information,
customer lists, software, technical information, data, process
technology, plans, drawings, and blue prints (collectively, “Trade
Secrets”)

in each case owned, used, or licensed by Seller as licensee or licensor.

         (b)  Agreements. Schedule 3.21(b) contains a complete and accurate list
and summary description, including any royalties paid or received by Seller, of
all Contracts relating to the Intellectual Property Assets to which Seller is a
party or by which Seller is bound, except for any license implied by the sale
of a product and perpetual, paid-up licenses for commonly available software
programs with a value of less than $25,000 under which Seller is the licensee.
There are no outstanding and, to Seller’s Knowledge, no Threatened disputes or
disagreements with respect to any such Contract.

         (c)  Know-How Necessary for the Business. The Intellectual Property Assets
are all those necessary for the operation of the Network as it is currently
conducted. Seller is the owner of all right, title, and interest in and to
each of the Intellectual Property Assets, free and clear of all Encumbrances,
and Seller has the right to use without payment to a third party all of the
Intellectual Property Assets. Notwithstanding the foregoing, Buyer
acknowledges that Seller has not applied for a trademark or servicemark
registration for the name “Shop At Home”; provided, however that nothing
contained in this sentence will be deemed to abrogate Seller’s representation
with respect to such Mark as set forth in Section 3.21(e)(v).

         (d)  Patents. Except for commercially available software applications and
as disclosed on Schedule 3.21(d), Seller does not own or use any Patents
relating to the Network.

         (e)  Marks.

		
	 	         (i) Schedule 3.21(e) contains a complete and accurate list and
summary description of all Marks. Seller is the owner of all
right, title, and interest in and to each of the Marks, free and
clear of all Encumbrances.

		
	 	         (ii) All Marks that have been registered with the U.S. Patent
and Trademark Office are currently in compliance with all formal
legal requirements (including the timely post-registration filing
of affidavits of use and incontestability and renewal
applications), are valid and enforceable, and are not subject to
any maintenance fees or Taxes or actions falling due within 90 days
after the Closing Date.

32

 

		
	 	         (iii) No Mark has been or is now involved in any opposition,
invalidation, or cancellation and, to Seller’s Knowledge, no such
action is Threatened with the respect to any of the Marks.

		
	 	         (iv) To Seller’s Knowledge, there is no potentially
interfering trademark or trademark application of any third party.

		
	 	         (v) Except as Schedule 3.21, no Mark is infringed or, to
Seller’s Knowledge, has been challenged or threatened in any way.
None of the Marks used by Seller infringes or is alleged to
infringe any trade name, trademark, or service mark of any third
party.

		
	 	         (vi) All products and materials containing a Mark bear the
proper federal registration notice where permitted by law.

         (f)  Copyrights.

		
	 	         (i) Schedule 3.21(f) contains a complete and accurate list and
summary description of all Copyrights. Seller is the owner of all
right, title, and interest in and to each of the Copyrights, free
and clear of all Encumbrances.

		
	 	         (ii) All the Copyrights have been registered and are currently
in compliance with formal legal requirements, are valid and
enforceable, and are not
subject to any maintenance fees or Taxes or actions falling
due within 90 days after the date of Closing.

		
	 	         (iii) No Copyright is infringed or, to Seller’s Knowledge, has
been challenged or threatened in any way. None of the subject
matter of any of the Copyrights infringes or is alleged to infringe
any copyright of any third party or is a derivative work based on
the work of a third party.
	 
	 	         (iv) All works encompassed by the Copyrights have been marked
with the proper copyright notice.

         (g)  Trade Secrets.

		
	 	         (i) With respect to each Trade Secret, the documentation
relating to such Trade Secret is current, accurate, and sufficient
in detail and content to identify and explain it and to allow its
full and proper use without reliance on the knowledge or memory of
any individual.
	 
	 	         (ii) Seller has taken all reasonable precautions to protect
the secrecy, confidentiality, and value of its Trade Secrets.
	 
	 	         (iii) Seller has good title and an absolute (but not
necessarily exclusive) right to use the Trade Secrets used by it
related to the Network. The Trade Secrets are not part of the
public knowledge or literature, and, to Seller’s Knowledge, have
not been used, divulged, or appropriated either for the benefit of
any Person 

33

 

		
	 	(other than Seller or a Company) or to the detriment of
the Network. No Trade Secret is subject to any adverse claim or
has been challenged or threatened in any way.

                  Section 3.22 Certain Payments. Since June 30, 1997, neither Seller nor a
Company or any director, officer, member, manager, agent, or employee of Seller
or a Company, or to Seller’s Knowledge, any other Person associated with or
acting for or on behalf of Seller or a Company, has directly or indirectly (a)
made any contribution, gift, bribe, rebate, payoff, influence payment,
kickback, or other payment to any Person, private or public, regardless of
form, whether in money, property, or services (i) to obtain favorable treatment
in securing business, (ii) to pay for favorable treatment for business secured,
(iii) to obtain special concessions or for special concessions already
obtained, for or in respect of Seller or a Company or any Affiliate of Seller
or a Company, or (iv) in violation of any Legal Requirement, or (b)
established or maintained any fund or asset that has not been recorded in the
books and records of Seller or a Company.

                  Section 3.23 FCC Licenses; Operations of Licensed Facilities. Seller and its
subsidiaries have operated the television stations for which any of them hold
licenses from the FCC, in each case which are owned or operated by Seller or
its subsidiaries (the “Licensed Facilities”), in material compliance with the
terms of the licenses issued by the FCC to
Seller or any subsidiary (the “FCC Licenses”), and in material compliance with
the Communications Act. Seller has, and each of its subsidiaries has, timely
filed or made all applications, reports and other disclosures required by the
FCC to be made with respect to the Licensed Facilities and has timely paid all
FCC regulatory fees with respect thereto. Seller and each of its subsidiaries
have, and are the authorized legal holders of, all FCC Licenses necessary or
used in the operation of the business of Seller and the Companies as presently
operated. All FCC Licenses are validly held and are in full force and effect,
unimpaired by any act or omission of Seller, any of its subsidiaries (or, to
Seller’s Knowledge, their respective predecessors) or their respective
officers, managers, employees or agents. Except as set forth in Schedule 3.23,
no application or Proceeding is pending for the renewal of any FCC License and,
to Seller’s Knowledge, there is not before the FCC any Proceeding, notice of
violation or order of forfeiture relating to any Licensed Facility, and Seller
has no Knowledge of any basis that could reasonably be expected to cause the
FCC not to renew any FCC License (other than Proceedings to amend FCC rules or
the Communications Act of general applicability to the television broadcast
industry). There is not pending and, to Seller’s Knowledge, there is not
Threatened, any action by or before the FCC to revoke, suspend, cancel,
rescind, fail to renew, or modify in any material respect any FCC License
(other than Proceedings to amend FCC rules or the Communications Act of general
applicability to the television broadcast industry).

                  Section 3.24 Subscribers. Seller has an Existing Subscriber Base (as
hereinafter defined) of at least 42 million FTE Subscribers represented by
existing Affiliation Agreements or carriage agreements, each of which is in
full force and effect and is the legal, valid and binding obligation of Seller
and, to Seller’s Knowledge, the other parties thereto. Schedule 3.24 contains
a summary of each oral carriage agreement to which Seller or a subsidiary of
Seller is a party. “Existing Subscriber Base” means FTE Subscribers pursuant
to oral or written carriage agreements with Seller or its subsidiaries. “FTE
Subscriber” means one Subscriber who receives

34

 

the Shop At Home Network on a
full-time basis, calculated on a basis consistent with that historically
calculated by Seller by estimating the number of full-time households that
receive the Shop At Home Network and derived by adding (a) the number of actual
full-time households and (b) a number calculated under the assumption that
part-time households had been combined into full-time households in accordance
with a formula, as set forth more fully on Schedule 3.24, that considers the
number of hours carried and gives weight to the amount of sales historically
made by Seller during such hours.

                  Section 3.25 Affiliation and Programming Agreements.

         (a)  Affiliation Agreements. Schedule 3.25(a) sets forth an accurate and
complete list of, and a schedule of payments with respect to, all Contracts
with cable system operators and satellite televisions system operators relating
to carriage of the Network (the “Affiliation Agreements”) and the number of
Subscribers served by each such operator. Except as disclosed on Schedule
3.25(a), none of the Affiliation Agreements contains any “most favored nations”
provisions and none of the Affiliation Agreements purports to be binding on any
Affiliates of Seller or the Companies or any successor in interest to any of
them. Except as disclosed on Schedule 3.25(a), Seller has not received any
notice that any such cable system operator or
satellite television system operator (i) has canceled or terminated, or
has a specific intention to cancel or terminate, any Affiliation Agreement, or
(ii) has a specific intention to effect a planned reduction in the number of
Subscribers covered by any Affiliation Agreement, other than any Affiliation
Agreement representing less than 10,000 FTE Subscribers. All Affiliation
Agreements are valid, binding and in full force and effect, enforceable by
Seller in accordance with their terms. Except as disclosed on Schedule
3.25(a), Seller has performed all obligations required to be performed by it to
date under the Affiliation Agreements and Seller is not (with or without the
lapse of time or the giving of notice, or both) in breach or default in any
respect thereunder and, to Seller’s Knowledge, no other party to any of the
Affiliation Agreements is (with or without the lapse of time or the giving of
notice, or both) in breach or default in any respect thereunder.

         (b)  Programming Agreements. Schedule 3.25(b) sets forth an accurate and
complete list of, and a schedule of payments with respect to, all Contracts
with third parties relating to the Programming Assets (the “Programming
Agreements”). Except as disclosed on Schedule 3.25(b), Seller has not received
any notice that any other party to the Programming Agreements (i) has canceled
or terminated, or has a specific intention to cancel or terminate, any
Programming Agreement, or (ii) has a specific intention to effect a planned
alteration or modification of the Programming Assets that are the subject
matter of any Programming Agreement. All Programming Agreements are valid,
binding and in full force and effect, enforceable by Seller in accordance with
their terms. Except as disclosed on Schedule 3.25(b), Seller has performed all
obligations required to be performed by it to date under the Programming
Agreements and Seller is not (with or without the lapse of time or the giving
of notice, or both) in breach or default in any respect thereunder and, to
Seller’s Knowledge, no other party to any of the Programming Agreements is
(with or without the lapse of time or the giving of notice, or both) in breach
or default in any respect thereunder.

35

 

                  Section 3.26 Transponder Contracts. Schedule 3.26 sets forth (a) a list of,
and a schedule of payments in respect of, all Contracts to which Seller or a
Company is a party that relate to transponders for the Network and (b) a
description of any ongoing discussion Seller is conducting with any third
person or entity with respect thereto.

                  Section 3.27 Network Rights. Except as disclosed on Schedule 3.27, (a) none of
the execution and delivery of this Agreement, the consummation by Seller of the
Contemplated Transactions or the compliance by Seller with any of the
provisions hereof will result in the creation or imposition of any Encumbrance
upon, or give to any other party or parties any claim, interest or right,
including rights of termination or cancellation in or with respect to (i) any
Network Intangible Rights or (ii) any rights, releases, clearances or licenses
granted by third parties (A) with respect to their Third-Party Intangible
Rights in any Programming Assets, Promotional Assets, or other Network
Intangible Rights (collectively, “Network Rights”) and (B) appearing on or
performing services in connection with the operation of the Network and
exhibition and syndication of its Network Rights; (b) other than in the
ordinary course and scope of business, neither Seller nor any director, officer
or employee of Seller has done anything, by Contract or otherwise, which could
reasonably be expected to
impair the rights of Seller (or, after the Closing, the Companies) in the
Network Rights; (c) Seller is the owner of the Network Rights, and the Network
Rights are in full force and effect and not subject to cancellation for any
reason; (d) there are no registrations for the Network Rights in any country
outside the United States; (e) Seller has not done or authorized, caused or
permitted to be done any action or omission that conflicts with Seller’s
ownership of the Network Rights; (f) neither Seller nor either Company is a
party to or bound under any, and there is no pending, proposed, or, to Seller’s
Knowledge, Threatened certificate, claim, lien, Contract, instrument, Order, or
other restriction, which adversely affects, or reasonably could be expected to
adversely affect, any or all of the Network Rights, or any rights of Seller or
a Company with respect to the Network Rights now or following the consummation
of the transactions contemplated by this Agreement; (g) neither Seller nor a
Company has infringed upon or unlawfully used any intellectual property owned
or claimed by another; (h) to Seller’s Knowledge, no person or entity is
infringing on any right of Seller with respect to any Network Rights; and (i)
Seller has not received any notice of any claim of infringement or any other
claim or proceeding relating to any Network Rights, and no Affiliate or
employee of Seller owns or has any proprietary, financial or other interest,
direct or indirect, in whole or in part, in any Network Rights. The Network
does not use any licensed music with respect to its programming.

                  Section 3.28 Website. With respect to shopathometv.com, Seller (a) has
obtained and presently possesses all legal rights to exclusive use of the
required Universal Resource Locator (“URL”) under the shopathometv.com, .org
and .net domains and shall promptly obtain identical URLs at the .biz and .info
domains; (b) has applied for appropriate Trademark registrations for the URL;
(c) maintains what it believes are adequate computer resources to help ensure
that no service outages will occur due to insufficient data-storage, memory,
server or other related reasons; and (d) has in place a plan to permit and
accommodate anticipated increases in traffic levels (e.g., additional servers,
hardware, software and/or personnel).

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                  Section 3.29 Relationships with Affiliates. Neither Seller nor any Affiliate
of Seller or a Company has, or since June 30, 1999 has had, any interest in any
property (whether real, personal, or mixed and whether tangible or intangible),
used in or pertaining to the Companies’ business. Neither Seller nor any
Affiliate of Seller or of a Company is, or since June 30, 1999 has owned (of
record or as a beneficial owner) an equity interest or any other financial or
profit interest in, a Person that has (i) had business dealings or a material
financial interest in any transaction with Seller or a Company other than
business dealings or transactions conducted in the Ordinary Course of Business
with Seller or a Company at substantially prevailing market prices and on
substantially prevailing market terms, or (ii) engaged in competition with
Seller or a Company with respect to the Companies’ business. Except as set
forth in Schedule 3.29, neither Seller nor any Affiliate of Seller or of a
Company is a party to any Contract with, or has any claim or right against, a
Company.

                  Section 3.30 Proxy Statement.
Other than information supplied in writing by Buyer and its Affiliates for
inclusion in the Proxy Statement, with respect to which Seller gives no
representation, the Proxy Statement will not on the date the Proxy Statement is
first mailed to shareholders of Seller or at the time of the Shareholders Vote,
contain any statement which, at such time and in light of the circumstances
under which it is made, is false or misleading with respect to any material
fact, omits to state any material fact necessary in order to make such
statements made in the Proxy Statement not false or misleading, or omits to
state any material fact necessary to correct any statement in any earlier
communication with respect to the solicitation of proxies for the Shareholders
Meeting which has become false or misleading. If at any time prior to the
Shareholders Vote, any event relating to Seller or any of its Affiliates that
should be set forth in a supplement to the Proxy Statement is discovered by
Seller, Seller shall promptly inform Buyer thereof.

                  Section 3.31 Customers and Vendors. Schedule 3.31 lists the top ten vendors of
products to Seller during the fiscal year ended June 30, 2002, and the amount
purchased from such vendors during the fiscal years ended June 30, 2002 and
June 30, 2001. Schedule 3.31 lists the top ten customers of products from
Seller during the fiscal year ended June 30, 2002.

                  Section 3.32 Brokers or Finders. Except for Friedman, Billings, Ramsey & Co.,
Inc., neither Seller nor a Company has incurred any obligation or liability,
contingent or otherwise, for brokerage or finders’ fees or agents’ commissions,
fairness opinion, or other similar payment in connection with this Agreement
and Seller shall indemnify and hold Buyer and the Companies harmless from any
such payment alleged to be due by or through Seller or a Company as a result of
Seller’s or such Company’s action.

                  Section 3.33 Disclosure. No representation or warranty of Seller in this
Agreement (including the Schedules) omits to state a material fact necessary to
make the statements herein or therein, in light of the circumstances in which
they were made, not misleading. There is no fact known to Seller that has
specific application to Seller or the Companies (other than general economic or
industry conditions) and that materially adversely affects or, as far as Seller
can reasonably foresee, materially threatens, the assets, business, prospects,
financial condition, or results of operations of the Companies that has not
been set forth in this Agreement or the Schedules.

37

 

ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF BUYER

                  Buyer represents and warrants to Seller as follows:

                  Section 4.1 Organization and Good Standing. Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of the State
of Delaware.

                  Section 4.2 Authority; No Conflict.

         (a)  This Agreement constitutes the legal, valid, and binding obligation of
Buyer, enforceable against Buyer in accordance with its terms. Upon the
execution and delivery by Buyer of the Transaction Documents to which it is a
party, such Transaction Documents will constitute the legal, valid, and binding
obligations of Buyer, enforceable against Buyer in accordance with their
respective terms. Buyer has the absolute and unrestricted right, power, and
authority to execute and deliver this Agreement and the Transaction Documents
to which it is a party and to perform its obligations hereunder and thereunder.

         (b)  Neither the execution and delivery of this Agreement by Buyer nor the
consummation or performance of any of the Contemplated Transactions by Buyer
will give any Person the right to prevent, delay, or otherwise interfere with
any of the Contemplated Transactions pursuant to:

		
	 	         (i) any provision of Buyer’s Organizational Documents;

		
	 	         (ii) any resolution adopted by the board of directors or the
stockholders of Buyer;

		
	 	         (iii) any Legal Requirement or Order to which Buyer may be
subject; or

		
	 	         (iv) any Contract to which Buyer is a party or by which Buyer
may be bound.

Buyer is not and will not be required to obtain any Consent from any Person in
connection with the execution and delivery of this Agreement or the
consummation or performance of any of the Contemplated Transactions.

                  Section 4.3 Investment Intent; Financial Capability. Buyer is acquiring the
Shares for its own account and not with a view to their distribution within the
meaning of Section 2(11) of the Securities Act. Buyer is an “accredited
investor” as that term is defined in Rule 501(a)(3) of Regulation D. Buyer has
the financial ability to consummate the Contemplated Transactions.

                  Section 4.4 Certain Proceedings. There is no pending Proceeding that has been
commenced against Buyer and that challenges, or may have the effect of
preventing, delaying,

38

 

making illegal, or otherwise interfering with, any of the
Contemplated Transactions. To Buyer’s Knowledge, no such Proceeding has been
Threatened.

                  Section 4.5 Proxy Statement Preparation.
The information supplied in writing by Buyer for inclusion in the Proxy
Statement will not, on the date the Proxy Statement is first mailed to
shareholders of Seller or at the time of the Shareholders Vote, contain any
statement which, at such time and in light of the circumstances under which it
is made, is false or misleading with respect to any material fact, omits to
state any material fact necessary in order to make such statements made in the
Proxy Statement not false or misleading, or omits to state any material fact
necessary to correct any statement in any earlier communication with respect to
the solicitation of proxies for the Shareholders Meeting which has become false
or misleading. If at any time prior to the Shareholders Vote, any event
relating to Buyer or any of its Affiliates that should be set forth in the
supplement to the Proxy Statement is discovered by Buyer, Buyer shall promptly
inform Seller thereof.

                  Section 4.6 Brokers or Finders. Except for Allen & Company, Incorporated,
Buyer has incurred no obligation or liability, contingent or otherwise, for
brokerage or finders’ fees or agents’ commissions or other similar payment in
connection with this Agreement and shall indemnify and hold Seller harmless
from any such payment alleged to be due by or through Buyer as a result of
Buyer’s action.

ARTICLE V. COVENANTS OF SELLER PRIOR TO CLOSING DATE

                  Section 5.1 Access and Investigation. Between the date of this Agreement and
the Closing Date, Seller shall, and shall cause the Companies and their
Representatives to, (a) afford Buyer and its Representatives and, if
applicable, prospective lenders and their Representatives (collectively,
“Buyer’s Advisors”) full and free access to the Companies’ personnel,
properties (including subsurface testing), contracts, books and records, and
other documents and data, (b) furnish Buyer and Buyer’s Advisors with copies of
all such contracts, books and records, and other existing documents and data as
Buyer reasonably requests, and (c) furnish Buyer and Buyer’s Advisors with such
additional financial, operating, and other data and information as Buyer
reasonably requests.

                  Section 5.2 Operation of the Business of the Network. Between the date of this
Agreement and the Closing Date, Seller shall, and shall cause the Companies to:

         (a)  conduct its business only in the Ordinary Course of Business;

         (b)  use its best efforts to preserve intact its current business
organization, keep available the services of its current officers, employees,
and agents, and maintain the relations and goodwill with suppliers, customers,
landlords, creditors, employees, agents, Network affiliates, advertisers and
others having business relationships with it;

         (c)  confer with Buyer concerning operational matters of a material nature;
and

39

 

         (d)  otherwise report periodically to Buyer, at Buyer’s reasonable request,
concerning the status of its business, operations, and finances.

Without limiting the foregoing, Seller shall maintain sufficient cash on hand
to timely make required payments with respect to its indebtedness for borrowed
money. Notwithstanding anything to the contrary contained in this Section 5.2,
immediately prior to the Closing (or earlier upon consent of Seller’s senior
lender and Buyer), Seller shall transfer the Network Assets and Network
Liabilities to Holding Company or Operating Company, as Buyer and Seller shall
mutually agree. Furthermore, notwithstanding anything to the contrary
contained in this Section 5.2, Operating Company may make a distribution to its
members of $3,000,000. In no event will Seller permit the net working capital
deficit of Operating Company at the Closing to be greater than $4,800,000
without obtaining Buyer’s prior consent, which consent will not be unreasonably
withheld. As used in the previous sentence, “net working capital” means (a)
cash, cash equivalents, inventories and trade receivables, net of applicable
reserves, computed in accordance with GAAP, minus (b) trade payables and
accrued wages, computed in accordance with GAAP.

                  Section 5.3 Negative Covenant. Except as otherwise expressly permitted by this
Agreement, between the date of this Agreement and the Closing Date, Seller
shall not, and shall cause the Companies not to, without Buyer’s prior consent,
take any affirmative action, or fail to take any reasonable action within their
or its control, as a result of which any of the changes or events listed in
Section 3.15 is likely to occur.

                  Section 5.4 Notification. Between the date of this Agreement and the Closing
Date, Seller shall promptly notify Buyer in writing if Seller or a Company
becomes aware of any fact or condition that causes or constitutes a breach of
any of Seller’s representations and warranties as of the date of this
Agreement, or if Seller or a Company becomes aware of the occurrence after the
date of this Agreement of any fact or condition that would (except as expressly
contemplated by this Agreement) cause or constitute a breach of any such
representation or warranty had such representation or warranty been made as of
the time of occurrence or discovery of such fact or condition. During the same
period, Seller shall promptly notify Buyer of the occurrence of any breach of
any covenant of Seller in this Article V or of the occurrence of any event that
may make the satisfaction of the conditions in Article VIII impossible or
unlikely.

                  Section 5.5 Reasonable Best Efforts. Between the date of this Agreement and
the Closing Date, Seller shall use its reasonable best efforts to cause the
conditions in Articles VIII and IX to be satisfied.

                  Section 5.6 No Solicitation. During the term of this Agreement, Seller (a)
shall not, directly or indirectly, and shall not authorize or permit its
officers, directors, employees, affiliates, agents or advisors or other
Representatives (including, without limitation, any investment banker, attorney
or accountant
retained by it) to, directly or indirectly, solicit, initiate or encourage
(including by way of furnishing non-public information), or take any other
action to facilitate, any inquiries or the making of any proposal or offer
(including, without limitation, any

40

 

proposal or offer to its stockholders) that
constitutes, or may reasonably be expected to lead to, any Third-Party
Transaction (as hereinafter defined), or enter into or maintain or continue
discussions or negotiate with any person or entity regarding a Third-Party
Transaction, or agree to or endorse any Third-Party Transaction; (b) shall
notify Buyer promptly if any written proposal or offer regarding a Third-Party
Transaction is made; (c) shall immediately cease and cause to be terminated all
existing discussions or negotiations with any parties conducted heretofore with
respect to a Third-Party Transaction; and (d) shall not release any third party
from, or waive any provision of, any confidentiality or standstill agreement to
which Seller is a party. Seller shall promptly notify Buyer in writing if it
receives any written proposal or offer relating to a Third-Party Transaction,
and Seller shall inform such inquiring person or entity of the existence of
this provision and make such person or entity aware of Seller’s obligations
hereunder. Notification hereunder must include the identity of the person or
entity making such offer or other proposal, the terms thereof, and any other
information with respect thereto as Buyer reasonably requests. Notwithstanding
the foregoing, (y) Seller may engage in discussions and negotiations, enter
into agreements, and conclude transactions with Castle Creek Partners, Capital
Works Group and the Dickey family with respect to possible non-voting preferred
equity investments (pari passu or junior to Seller’s Series D Senior Redeemable
Preferred Stock) by such third parties in Seller unrelated to the Contemplated
Transactions; provided that Seller shall keep Buyer information regarding all
developments with respect thereto and (z) Seller may, with notice to Buyer,
discuss with any third party proposals for the potential acquisition of one or
more of Seller’s broadcast television stations (exclusive of the Network
business) but Seller may not enter into agreements in respect of such
discussions without Buyer’s written consent; provided that in no event shall
any such transaction be inconsistent with or impair the benefit to Buyer of the
Contemplated Transactions. For purposes hereof, a “Third-Party Transaction”
means any of the following involving Seller (other than the Contemplated
Transactions and other than as set forth in the previous sentence): (a) a
merger, consolidation, share exchange, business combination or other similar
transaction; (b) any sale, lease, exchange, transfer or other disposition of
10% or more of the assets of Seller; (c) a tender offer or exchange offer for,
or any other acquisition of, 10% or more of the outstanding voting securities
of Seller; or (d) any issuance, sale or grant of any shares of, or securities
convertible into or exchangeable for, or options, warrants, calls, commitments
or rights of any kind to acquire, any shares of capital stock of Seller.

                  Section 5.7 Preparation of Proxy Statement.

         (a)  As soon as practicable after the execution of this Agreement, Seller
shall prepare and cause to be filed with the SEC preliminary proxy materials
(the “Proxy Statement”) for the solicitation of approval of the shareholders of
Seller of (i) the Contemplated Transactions and (ii) the amendment of Seller’s
amended and restated charter to change its corporate name to one which is not
the same as or similar to its present name or any other trademark or trade
style or name now or then used by Operating Company (collectively, the
“Shareholder Approval”) and for the election of directors and such other
matters as Seller and Buyer may reasonably agree.
Subject to compliance by Buyer with its covenants in this Section 6.3, Seller
shall cause the Proxy Statement related thereto to materially comply with
applicable law and the rules and regulations promulgated by the SEC, to respond
promptly to any comments of the SEC or its staff and Seller shall use
reasonable best efforts to cause the Proxy Statement to be mailed to

41

 

Seller’s
shareholders as promptly as practicable. Each party shall promptly furnish to
the other party all information concerning itself, its shareholders and its
affiliates that may be required or reasonably requested in connection with any
action contemplated by this Section. If any event relating to any party occurs,
or if any party becomes aware of any information, that should be disclosed in
an amendment or supplement to the Proxy Statement, then such party shall inform
the other thereof and shall cooperate with each other in filing such amendment
or supplement with the SEC and, if appropriate, in mailing such amendment or
supplement to the shareholders of Seller. The Proxy Statement shall include the
recommendations of the Board of Directors of Seller in favor of Shareholder
Approval. Buyer and its advisors shall have a reasonable opportunity to review
and comment on the proxy materials prior to any filing with the SEC.

         (b)  Seller will notify Buyer promptly of the receipt of any comments from
the SEC or its staff or any other government official and of any requests by
the SEC or its staff or any other government official for amendments or
supplements to the Proxy Statement or for additional information, and will
supply Buyer with copies of all such comments and any correspondence between
Seller and its representatives, and the SEC or its staff or any other
government official with respect thereto. If at any time prior to the Closing
Date, any event shall occur that should be set forth in an amendment of, or a
supplement to, the Proxy Statement, Seller agrees promptly to prepare and file
such amendment or supplement and to distribute such amendment or supplement as
required by applicable law, including mailing such supplement or amendment to
the shareholders of Seller. Buyer and its advisors shall have a reasonable
opportunity to review and comment on any amendment or supplement to the Proxy
Statement prior to any filing with the SEC.

                  Section 5.8 Shareholders Meeting. Seller shall take all action necessary in
accordance with applicable law and its amended and restated charter, as
amended, and its bylaws, and use its best efforts, to (a) on the date hereof,
set a record date of September 9, 2002 for a meeting of Seller’s shareholders
(the “Shareholders Meeting”) to provide for the vote of Seller’s shareholders
(the “Shareholders Vote”) with respect to the matters subject to Shareholder
Approval and with respect to the other matters to be voted upon pursuant to
Section 5.7, (b) on the date hereof, call and publicly announce such
Shareholders Meeting and such record date, and (c) hold and convene the
Shareholders Meeting. The date of the Shareholders Meeting will be October 16,
2002 unless the parties otherwise agree to another date. Except as required by
the SEC or applicable court order, Seller shall not postpone or adjourn (other
than for the absence of a quorum) the Shareholders Meeting without the consent
of Buyer. Seller shall take all other action necessary or advisable to secure
the Shareholder Approval.

                  Section 5.9 Approval for Transfer of Network Assets and Network Liabilities.
As soon as practicable after the date hereof, Seller shall request the consent
of its senior lender to transfer the Network Assets and the Network Liabilities
to Holding Company or Operating Company and to transfer a portion of Seller’s
membership in Operating Company representing 87.5% of the outstanding
membership interests to Holding Company and Seller shall use best efforts to
obtain such consent; provided, however, that if obtaining such consent requires
the payment of money other than the actual expenses of the lender with respect
thereto, including reasonable attorneys’ fees, then Seller shall first obtain
Buyer’s consent with respect thereto.

42

 

ARTICLE VI. COVENANTS OF BUYER PRIOR TO CLOSING DATE

                  Section 6.1 Reasonable Best Efforts. Between the date of this Agreement and
the Closing Date, Buyer shall use its reasonable best efforts to cause the
conditions in Articles VIII and IX to be satisfied.

                  Section 6.2 Preparation of Proxy Statement. None of the information to be
supplied by Buyer or its Affiliates for inclusion in the Proxy Statement will,
at the time the Proxy Statement is mailed to the shareholders of Seller, or as
of the Shareholders Vote, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. As to all matters respecting Buyer and its
Affiliates, the Proxy Statement will comply as to form in all material respects
with the provisions of the Exchange Act, and the rules and regulations
promulgated by the SEC thereunder.

                  Section 6.3 Loan to Operating Company. Immediately prior to the Closing and
upon Operating Company’s execution of that certain Secured Promissory Note in
the original amount of $35,000,000 and the security documents required by Buyer
in connection therewith, Buyer shall make Operating Company a loan under such
Note in at least an amount such that Operating Company has, together with its
cash already on hand, cash equal to $3,000,000 in readily available funds.

ARTICLE VII. MISCELLANEOUS COVENANTS

                  Section 7.1 Section 338(h)(10) Election. Seller will join with Buyer in making
an election under IRC §338(h)(10) (and an election corresponding to IRC
§338(h)(10) or §338(g) under state, local and foreign tax law to the extent
necessary to achieve a tax basis step-up in the Company’s assets) with respect
to the purchase by Buyer from Seller of the Shares (a “Section 338(h)(10)
Election”). Buyer and Seller shall report the Contemplated Transactions in a
manner consistent with the Section 338(h)(10) Election. Neither Seller nor
Buyer shall take any action that is inconsistent with the Section 338(h)(10)
Election or its validity under the IRC and the applicable Treasury Regulations.
Buyer shall deliver to Seller, Buyer’s calculation of the aggregate deemed
sales price, the adjusted grossed-up
basis and the allocation of the adjusted grossed-up basis among the assets of
the Company in accordance with the principles of Treasury Regulations §1.338-6.
Buyer shall prepare and file Form 8023 and such other documents required in
connection with the Section 338(h)(10) Election. Seller, Holding Company and
Buyer shall cooperate fully with each other and make available to each other
such Tax data and other information as may be reasonably required by Seller or
Buyer in order for Buyer to timely file the Section 338(h)(10) Election and any
other required statements or schedules (or any amendments or supplements
thereto) and compute the aggregate deemed sale price and the adjusted
grossed-up basis in accordance with the Treasury regulations.

                  Section 7.2 Required Approvals. As promptly as practicable after the date of
this Agreement, Buyer and Seller shall, and Seller shall cause the Companies
to, make all filings required by Legal Requirements to be made by them in order
to consummate the Contemplated Transactions. Between the date of this Agreement
and the Closing Date, Buyer and Seller shall,

43

 

and Seller shall cause the
Companies to, cooperate with each other with respect to all filings that the
other elects to make or is required by Legal Requirements to make in connection
with the Contemplated Transactions.

Without limiting the generality of the foregoing, Seller and Buyer shall
promptly make and effect all registrations, filings and submissions required to
be made or effected by them pursuant to the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the “HSR Act”) and other applicable Legal
Requirements with respect to this Agreement and the other Transaction Documents
and the Contemplated Transactions. Each of Seller and Buyer shall bear one-half
of the cost of such filing. Without limiting the generality of the foregoing,
each of Buyer and Seller shall (a) promptly provide all information requested
by any Governmental Body in connection with this Agreement and the other
Transaction Documents and the Contemplated Transactions, and (b) promptly take
all actions and steps necessary to obtain any antitrust clearance or similar
clearance required to be obtained from the Federal Trade Commission, the
Antitrust Division of the Department of Justice, any state attorney general,
any foreign competition authority or any other governmental entity in
connection with the Contemplated Transactions. The actions required to be
taken by Buyer and Seller pursuant to this Section in order to obtain required
antitrust clearances will include using reasonable efforts to avoid or set
aside any preliminary or permanent injunction or other Order but do not include
making arrangements for the disposition of particular assets and making
arrangements to hold such assets separate pending their disposition.

Without limiting the generality of the foregoing, each party hereto shall (a)
give the other party prompt notice of the commencement of any Proceeding by or
before any Governmental Body with respect to this Agreement or the other
Transaction Documents or any of the Contemplated Transactions, (b) keep the
other party informed as to the status of any such Proceeding, and (c) promptly
inform the other party of any communication to or from the Federal Trade
Commission, the Antitrust Division of the Department of Justice, or any other
Governmental Body regarding this Agreement or the Contemplated Transaction.

                  Section 7.3 FCC Actions.
Seller and Buyer shall (i) promptly make any submissions required under the
FCC’s rules or the Communications Act or requested by the FCC or its staff;
(ii) use reasonable efforts to cooperate with one another in (A) determining
whether any filings are required to be made with, or consents, authorizations
or approvals are required to be obtained from the FCC in connection with the
execution, delivery and performance of the Transaction Documents, and (B)
timely make all such filings and timely seek all such consents, authorizations
or approvals; and (iii) take, or cause to be taken, all other actions and do,
or cause to be done, all other things necessary, proper or advisable to
consummate and make effective the transactions contemplated hereby, including,
without limitation, taking or undertaking all such further action as may be
necessary to resolve such objections, if any, as the FCC, may assert under
communications laws with respect to the Contemplated Transactions. Any fee
payable to the FCC in connection with such filing will be borne one-half by
Seller and one-half by Buyer.

                  Section 7.4 Amendment to Holding Company Articles. If the Closing occurs prior
to November 6, 2002, Seller hereby agrees to vote its shares in Holding Company
in favor

44

 

of an amendment to Holding Company’s Articles of Incorporation to
eliminate cumulative voting.

                  Section 7.5 Access to Records. For a period of three years following the
Closing Date, Buyer shall provide, or shall cause Operating Company or Holding
Company to provide, to Seller reasonable access to or copies of any files,
records, books of account, computer programs and software, data and other
records which were a part of the Network Assets, which Seller reasonably
believes are necessary or advisable for tax reporting or other business
purposes.

ARTICLE VIII. CONDITIONS PRECEDENT TO BUYER’S OBLIGATION TO CLOSE

                  Buyer’s obligation to purchase the Shares and to take the other actions
required to be taken by Buyer at the Closing is subject to the satisfaction, at
or prior to the Closing, of each of the following conditions (any of which may
be waived by Buyer, in whole or in part):

                  Section 8.1 Accuracy of Representations. Each of Seller’s representations and
warranties in this Agreement must have been accurate as of the date of this
Agreement, and must be accurate as of the Closing Date as if made on the
Closing Date.

                  Section 8.2 Seller’s Performance.

Each of the covenants and obligations that Seller is required to perform or to
comply with pursuant to this Agreement at or prior to the Closing must have
been duly performed and complied with in all material respects.

                  Section 8.3 Consents. Each of the Consents identified in Schedule 3.2 must
have been obtained and must be in full force and effect.

                  Section 8.4 Additional Documents. Each of the following documents must have
been delivered to Buyer:

         (a)  certificates representing the Shares, issued in the name of Buyer or
duly endorsed for transfer;

         (b)  a certificate executed by Seller certifying to Buyer that each of
Seller’s representations and warranties in this Agreement was accurate in all
respects as of the date of this Agreement and is accurate in all respects as of
the Closing Date as if made on the Closing Date;

         (c)  an opinion of Bone McAllester Norton PLLC, dated the Closing Date, in
the form of Exhibit 8.4(c);

         (d)  the Operating Company LLC Agreement, in the form of Exhibit 8.4(d),
executed by all of the parties thereto;

         (e)  the Shareholder Agreement, in the form of Exhibit 8.4(e), executed by
Seller and Holding Company;

45

 

         (f)  the Affiliation Agreement, in the form of Exhibit 8.4(f), executed by
the parties thereto;

         (g)  the Participation Agreement, in the form of Exhibit 8.4(g), executed
by Seller;

         (h)  the Loan and Security Agreement, in the form of Exhibit 8.4(h),
executed by the parties thereto (other than The E.W. Scripps Company);

         (i)  the Tax Sharing Agreement, executed by Buyer and Holding Company;

         (j)  such documents and forms, executed by Seller, as are required to
complete properly the Section 338(h)(10) Election; and

         (k)  such other documents as Buyer may reasonably request for the purpose
of (i) evidencing the accuracy of any of Seller’s representations and
warranties, (ii) evidencing the performance by Seller of, or the compliance by
Seller with, any covenant or obligation required to be performed or complied
with by Seller, (iii) evidencing the satisfaction of any condition referred to
in this Article VIII, or (iv) otherwise facilitating the consummation or
performance of any of the Contemplated Transactions.

                  Section 8.5 No Proceedings.
Since the date of this Agreement, there must not have been commenced or
Threatened against Buyer, or against any Person affiliated with Buyer, any
Proceeding (a) involving any challenge to, or seeking damages or other relief
in connection with, any of the Contemplated Transactions, or (b) that may have
the likely effect of preventing, delaying, making illegal, or otherwise
interfering with any of the Contemplated Transactions.

                  Section 8.6 No Claim Regarding Ownership or Sale Proceeds. There must not have
been made or Threatened by any Person any claim asserting that such Person (a)
is the holder or the beneficial owner of, or has the right to acquire or to
obtain beneficial ownership of, any stock of, or any other voting, equity, or
ownership interest in, the Companies, or (b) is entitled to all or any portion
of the Purchase Price.

                  Section 8.7 No Prohibition. Neither the consummation nor the performance of
any of the Contemplated Transactions will, directly or indirectly (with or
without notice or lapse of time), materially contravene, or conflict with, or
result in a material violation of, or cause Buyer or any Person affiliated with
Buyer to suffer any material adverse consequence under, (a) any applicable
Legal Requirement or Order, or (b) any Legal Requirement or Order that has been
published, introduced, or otherwise proposed by or before any Governmental
Body.

                  Section 8.8 Loan Transaction. All of the conditions to the making of the
$47,500,000 loan by Buyer to Seller, other than consummation of the Closing,
shall have been satisfied and the closing thereof shall occur simultaneously
with the Closing.

                  Section 8.9 Network Assets and Network Liabilities. The Network Assets and the
Network Liabilities shall have been transferred to Holding Company or Operating
Company and a portion of Seller’s membership interest in Operating Company
representing 87.5% of the outstanding membership interests of Operating Company
shall have been transferred to Holding

46

 

Company, each on terms and conditions
and pursuant to documentation in form and substance in all respects reasonably
satisfactory to Buyer.

                  Section 8.10 Holding Company Amended Articles. The Articles of Incorporation
of Holding Company shall have been amended to change the name thereof to
Scripps Shop At Home Holding Company and, if the Closing occurs after November
6, 2002, to eliminate cumulative voting.

                  Section 8.11 Title Insurance. Operating Company shall be the beneficiary of a
policy or policies of title insurance with respect to its real property, in
form and substance satisfactory to Buyer.

                  Section 8.12 754 Election. Operating Company shall have made an election
pursuant to IRC §754.

                  Section 8.13 Amendment of Option Plans; Employment Agreements. Seller shall
have amended all of its various stock option plans, agreements and grants to
the extent necessary in Buyer’s reasonable opinion to provide that the
Contemplated Transactions do not trigger any change in control, successor or
automatic conversion provisions contained therein. Operating Company or
Holding Company shall have entered into employment agreements, upon terms and
conditions satisfactory to Buyer in its sole and absolute discretion with those
executive officers listed on Schedule 8.13 containing such terms as set forth
on Schedule 8.13.

                  Section 8.14 HSR Act. The waiting period (and any extensions thereof)
applicable to the Contemplated Transactions under the HSR Act shall have been
terminated or shall have expired.

                  Section 8.15 Shareholder Approval. The Shareholders Meeting, the Shareholders
Vote and the Shareholder Approval shall have been consummated.

ARTICLE IX. CONDITIONS PRECEDENT TO SELLER’S OBLIGATION TO CLOSE

                  Seller’s obligation to sell the Shares and to take the other actions
required to be taken by Seller at the Closing is subject to the satisfaction,
at or prior to the Closing, of each of the following conditions (any of which
may be waived by Seller, in whole or in part):

                  Section 9.1 Accuracy of Representations. Each of Buyer’s representations and
warranties in this Agreement must have been accurate in all respects as of the
date of this Agreement and must be accurate in all respects as of the Closing
Date as if made on the Closing Date.

                  Section 9.2 Buyer’s Performance. Each of the covenants and obligations that
Buyer is required to perform or to comply with pursuant to this Agreement at or
prior to the Closing must have been performed and complied with in all material
respects.

47

 

                  Section 9.3 Consents.
Each of the Consents identified in Schedule 3.2 must have been obtained and
must be in full force and effect.

                  Section 9.4 Additional Documents. Each of the following documents must have
been delivered to Seller:

         (a)     the Shareholder Agreement, duly endorsed by Buyer;

         (b)     the Participation Agreement, in the form of Exhibit 8.4(g), executed
by Buyer;

         (c)     the Loan and Security Agreement, in the form of Exhibit 8.4(h),
executed by The E.W. Scripps Company;

         (d)     a certificate executed by Buyer certifying to Seller that each of
Buyer’s representations and warranties in this Agreement was accurate in all
respects as of the date of this Agreement and is accurate in all respects as of
the Closing Date as if made on the Closing Date;

         (e)     the E.W. Scripps Company and Operating Company shall have entered into
a Secured Cognovit Promissory Note in a principal amount of $35,000,0000 and
the security documents referred to therein;

         (f)     such documents as Seller may reasonably request for the purpose of (i)
evidencing the accuracy of any representation or warranty of Buyer, (ii)
evidencing the performance by Buyer of, or the compliance by Buyer with, any
covenant or obligation required to be performed or complied with by Buyer,
(iii) evidencing the satisfaction of any condition referred to in this Article
IX, or (iv) otherwise facilitating the consummation of any of the Contemplated
Transactions.

                  Section 9.5 No Injunction. There must not be in effect any Legal Requirement
or any injunction or other Order that prohibits the sale of the Shares by
Seller to Buyer.

                  Section 9.6 Loan Transaction. All of the conditions to the making of the
$47,500,000 loan by Buyer to Seller, other than consummation of the Closing,
shall have been satisfied and the closing thereof shall occur simultaneously
with the Closing.

ARTICLE X. TERMINATION

                  Section 10.1 Termination of Agreement. This Agreement may be terminated and
the transactions contemplated hereby abandoned at any time prior to the Closing
Date:

         (a)     by mutual written consent of Buyer and Seller duly authorized by
their respective Boards of Directors;

48

 

         (b)  by either Buyer or Seller if there is any law or regulation that
makes consummation of the Contemplated Transactions illegal or otherwise
prohibited or if consummation of the Contemplated Transactions would
violate any non-appealable final order, decree or judgment of any
Governmental Entity having competent jurisdiction;

         (c)  by either Seller or Buyer on or after January 1, 2003 if the Closing
shall not have been consummated on or before December 31, 2002 (the
“Termination Date”); provided that such right to terminate this
Agreement will not be available to any party whose failure to perform or
satisfy in any material respect any covenant, condition or obligation of
such party under this Agreement when performance or satisfaction thereof
was due is the cause of such delay;

         (d)  by either Buyer or Seller if any of the representations or warranties
of the other party contained herein are inaccurate or untrue in any
respect if qualified by the word “material” or in any material respect
if not so qualified, and such inaccuracy cannot reasonably be expected
to be cured prior to the Termination Date and, in the case of Seller,
the failure of any representation and warranty to satisfy the foregoing
standard would reasonably be expected to have a material adverse effect
on Operating Company or its ability to operate the Network;

         (e)  by Buyer if Seller has not within 100 days from the date hereof
obtained Shareholder Approval;

         (f)  by Buyer, provided it is not then in material breach of any of its
obligations under this Agreement, if Seller fails to perform or satisfy
in any material respect any agreement, covenant, condition or obligation
in this Agreement when performance or satisfaction thereof is due and
does not cure the failure within 20 business days after Buyer delivers
written notice thereof; or

         (g)  by Seller, provided it is not then in material breach of any of its
obligations under this Agreement, if Buyer fails to perform or satisfy
in any material respect any agreement, covenant, condition or obligation
in this Agreement when performance thereof is due and does not cure the
failure within 20 business days after notice by Seller thereof.

The party desiring to terminate this Agreement pursuant to this Section 10.1
will give written notice of such termination to the other party.

                  Section 10.2 Effect of Termination. Except as set forth in clause (b) to the
proviso to the following sentence, each party’s right of termination under
Section 10.1 is in addition to any other rights it may have under this
Agreement or otherwise, and the exercise of a right of termination will not be
an election of remedies. If this Agreement is terminated pursuant to Section
10.1, all further obligations of the parties under this Agreement will
terminate, except that the obligations in Sections 12.1 and 12.3 will survive;
provided, however, that (a) if this Agreement is terminated by a party because
of the breach of the Agreement by the other party or because one or more of the
conditions to the terminating party’s obligations under this Agreement is not
satisfied as a result of the other party’s failure to comply with its
obligations under this Agreement, the terminating party’s right to pursue all
legal remedies will survive such

49

 

termination unimpaired, and (b) if this
Agreement is terminated by Buyer pursuant to Section 10.1(e) and Seller has
received an offer or proposal for a Third-Party Transaction, then Seller shall
pay to Buyer, in cash, within one business day after the closing of the
Third-Party Transaction or 30 days after termination of discussions by Seller
and such third party with respect thereto a non-refundable fee in the amount of
$2,500,000, the receipt of which will be Buyer’s sole remedy hereunder.

ARTICLE XI. INDEMNIFICATION; REMEDIES

                  Section 11.1 Survival; Right to Indemnification Not Affected by Knowledge. All
representations, warranties, covenants, and obligations in this Agreement, the
Schedules, and any other certificate or document delivered pursuant to this
Agreement will survive the Closing. The right to indemnification, payment of
Damages or other remedy based on such representations, warranties, covenants,
and obligations will not be affected by any investigation conducted with
respect to, or any Knowledge acquired (or capable of being acquired) at any
time, whether before or after the execution and delivery of this Agreement or
the Closing Date, with respect to the accuracy or inaccuracy of or compliance
with, any such representation, warranty, covenant, or obligation. The waiver of
any condition based on the accuracy of any representation or warranty, or on
the performance of or compliance with any covenant or obligation, will not
affect the right to indemnification, payment of Damages, or other remedy based
on such representations, warranties, covenants, and obligations.

                  Section 11.2 Indemnification by Seller. Seller shall indemnify and hold
harmless Buyer, the Companies and their respective Representatives and
Affiliates (collectively, the “Indemnified Persons”) for, and shall pay to the
Indemnified Persons the amount of, any loss, liability, claim, damage
(including incidental and consequential damages), expense (including costs of
investigation and defense and reasonable attorneys’ fees) or diminution of
value, whether or not involving a third-party claim (collectively, “Damages”),
arising, directly or indirectly, from or in connection with:

         (a)  any breach of any representation or warranty made by Seller in this
Agreement or any other certificate or document delivered by Seller pursuant to
this Agreement;

         (b)  any breach by Seller of any covenant or obligation of Seller in this
Agreement;

         (c)  any product shipped by, or any services provided by, Seller or a
Company prior to the Closing Date;

         (d)  any liability of Seller that does not constitute a Network Liability;
and

         (e) any claim by any Person for brokerage or finder’s fees or commissions
or similar payments based upon any agreement or understanding alleged to have
been made by any such Person with either Seller or a Company (or any Person
acting on their behalf) in connection with any of the Contemplated
Transactions.

50

 

The remedies provided in this Section 11.2 will not be exclusive of or limit
any other remedies that may be available to Buyer or the other Indemnified
Persons.

                  Section 11.3 Indemnification by Buyer. Buyer shall indemnify and hold harmless
Seller, and shall pay to Seller the amount of any Damages arising, directly or
indirectly, from or in connection with (a) any breach of any representation or
warranty made by Buyer in this Agreement or in any certificate delivered by
Buyer pursuant to this Agreement, (b) any breach by Buyer of any covenant or
obligation of Buyer in this Agreement, or (c) any claim by any Person for
brokerage or finder’s fees or commissions or similar payments based upon any
agreement or understanding alleged to have been made by such Person with Buyer
(or any Person acting on its behalf) in connection with any of the Contemplated
Transactions.

                  Section 11.4 Time Limitations. If the Closing occurs, Seller will not be
liable (for indemnification or otherwise) with respect to any representation or
warranty, or covenant or obligation to be performed and complied with prior to
the Closing Date, other than those in Sections 3.3, 3.11, 3.13, 3.18, and 3.19,
unless on or before the second annual anniversary of the Closing Date, Buyer
notifies Seller of a claim specifying the factual basis of that claim in
reasonable detail to the extent then known by Buyer; a claim with respect to
Section 3.3, 3.11, 3.13, 3.18 or 3.19, or a claim for indemnification or
reimbursement not based upon any representation or warranty or any covenant or
obligation to be performed and complied with prior to the Closing Date may be
made at any time. If the Closing occurs, Buyer will not be liable (for
indemnification or otherwise) with respect to any representation or warranty,
or covenant or obligation to be performed and complied with prior to the
Closing Date, unless on or before the second annual anniversary of the Closing
Date Seller notifies Buyer of a claim specifying the factual basis of that
claim in reasonable detail to the extent then known by Seller.

                  Section 11.5 Limitations on Amount.

         (a)  Seller will not be liable (for indemnification or otherwise) with
respect to the matters described in Section 11.2(a) or, to the extent relating
to any failure to perform or comply prior to the Closing Date, Section 11.2(b)
until the total of all Damages with respect to such
matters exceeds $100,000, after which Seller will be liable for all
Damages and not merely those that exceed $100,000. However, the foregoing
limitation will not apply to any breach of any of Seller’s representations and
warranties of which Seller had Knowledge at any time prior to the date on which
such representation and warranty is made or any intentional breach by Seller of
any covenant or obligation.

         (b)  Buyer will not be liable (for indemnification or otherwise) with
respect to the matters described in Section 11.3(a) or (b) until the total of
all Damages with respect to such matters exceeds $50,000, after which Buyer
will be liable for all Damages and not merely those that exceed $50,000.
However, the foregoing limitation will not apply to any breach of any of
Buyer’s representations and warranties of which Buyer had Knowledge at any time
prior to the date on which such representation and warranty is made or any
intentional breach by Buyer of any covenant or obligation.

                  Section 11.6 Procedure for Indemnification – Third Party Claims.

51

 

         (a)  Promptly after receipt by an indemnified party under Section 11.2 or
11.3 of notice of the commencement of any Proceeding against it, such
indemnified party will, if a claim is to be made against an indemnifying party
under such Section, give notice to the indemnifying party of the commencement
of such claim, but the failure to notify the indemnifying party will not
relieve the indemnifying party of any liability that it may have to any
indemnified party, except to the extent that the indemnifying party
demonstrates that the defense of such action is prejudiced by the indemnifying
party’s failure to give such notice.

         (b)  If any Proceeding referred to in Section 11.6(a) is brought against an
indemnified party and it gives notice to the indemnifying party of the
commencement of such Proceeding, the indemnifying party may participate in such
Proceeding and, to the extent that it wishes (unless (i) the indemnifying party
is also a party to such Proceeding and the indemnified party determines in good
faith that joint representation would be inappropriate, or (ii) the
indemnifying party fails to provide reasonable assurance to the indemnified
party of its financial capacity to defend such Proceeding and provide
indemnification with respect to such Proceeding) to assume the defense of such
Proceeding with counsel reasonably satisfactory to the indemnified party and,
after notice from the indemnifying party to the indemnified party of its
election to assume the defense of such Proceeding, the indemnifying party shall
not, as long as it diligently conducts such defense, be liable to the
indemnified party under this Article XI for any fees of other counsel or any
other expenses with respect to the defense of such Proceeding, in each case
subsequently incurred by the indemnified party in connection with the defense
of such Proceeding, other than reasonable costs of investigation. If the
indemnifying party assumes the defense of a Proceeding, (i) it will be
conclusively established for purposes of this Agreement that the claims made in
that Proceeding are within the scope of and subject to indemnification; (ii) no
compromise or settlement of such claims may be effected by the indemnifying
party without the indemnified party’s consent unless (A) there is no finding or
admission of any violation of Legal Requirements or any violation of the rights
of any Person and no effect on any other claims that may be made against the
indemnified party, and (B) the sole relief provided is monetary damages that
are paid in full by the indemnifying party; and (iii) the indemnified party
will not be liable with respect to any compromise or settlement of such claims
effected without its consent. If notice is given to an indemnifying party of
the commencement of any Proceeding and the
indemnifying party does not, within 20 days after the indemnified party’s
notice is given, give notice to the indemnified party of its election to assume
the defense of such Proceeding, the indemnifying party will be bound by any
determination made in such Proceeding or any compromise or settlement effected
by the indemnified party.

         (c)  Notwithstanding the foregoing, if an indemnified party determines in
good faith that there is a reasonable probability that a Proceeding may
adversely affect it or its affiliates other than as a result of monetary
damages for which it would be entitled to indemnification under this Agreement,
the indemnified party may, by notice to the indemnifying party, assume the
exclusive right to defend, compromise, or settle such Proceeding, but the
indemnifying party will not be bound by any determination of a Proceeding so
defended or any compromise or settlement effected without its consent (which
may not be unreasonably withheld).

         (d)  Seller and Buyer hereby consent to the non-exclusive jurisdiction of
any court in which a Proceeding is brought against any Indemnified Person for
purposes of any claim that an

52

 

Indemnified Person may have under this Agreement
with respect to such Proceeding or the matters alleged therein, and agree that
process may be served on Seller or Buyer, as the case may be, with respect to
such a claim anywhere in the world.

                  Section 11.7 Procedure for Indemnification – Other Claims. A claim for
indemnification for any matter not involving a third-party claim may be
asserted by notice to the party from whom indemnification is sought.

ARTICLE XII. GENERAL PROVISIONS

                  Section 12.1 Expenses. Except as otherwise expressly provided in this
Agreement, each party will bear its respective expenses incurred in connection
with the preparation, execution, and performance of this Agreement and the
Contemplated Transactions, including all fees and expenses of agents,
representatives, counsel, and accountants. In the event of termination of this
Agreement, the obligation of each party to pay its own expenses will be subject
to any rights of such party arising from a breach of this Agreement by another
party.

                  Section 12.2 Public Announcements. The parties shall issue a joint press
release (and individual press releases that have been approved by the other
party) upon execution of this Agreement and upon the Closing. Except as
otherwise required by law, neither party shall make any other disclosure
regarding the Contemplated Transactions without giving the other party the
reasonable opportunity to comment on such disclosure. Seller and Buyer will
consult with each other concerning the means by which a Company’s employees,
customers, and suppliers and others having dealings with a Company, will be
informed of the Contemplated Transactions, and Buyer has the right to be
present for any such communication.

                  Section 12.3 Confidentiality.
The parties shall continue to be bound by the Confidentiality Agreement.

                  Section 12.4 Declaratory Judgment. If Buyer deems it advisable to seek any
declaratory judgment that Shareholder Approval is not necessary, Seller shall
cooperate in all respects with respect thereto, including bringing and using
its best efforts to vigorously prosecute such action. Buyer, at its own
expense, may participate in or direct the prosecution of such action.

                  Section 12.5 Notices. All notices, consents, waivers, and other communications
under this Agreement must be in writing and will be deemed to have been duly
given when (a) delivered by hand (with written confirmation of receipt), (b)
sent by telecopier (with written confirmation of receipt), provided that a copy
is mailed by certified mail, return receipt requested, or (c) when received by
the addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and telecopier
numbers set forth below (or to such other addresses and telecopier numbers as a
party may designate by notice to the other parties):

53

 

Seller:

SHOP AT HOME, INC.

5388 Hickory Hollow Parkway

Antioch, Tennessee 37013

Attn: George J. Phillips, Executive Vice President

Facsimile No.: (615) 263-8911

with a copy to:

BONE McALLESTER NORTON PLLC

SunTrust Center

424 Church Street

Suite 900

Nashville, Tennessee 37203

Attn: Charles W. Bone, Esq.

Facsimile No.: (615) 238-6301

Buyer:

SCRIPPS NETWORKS, INC.

c/o The E.W. Scripps Company

312 Walnut Street

28th Floor

Cincinnati, Ohio 45202

Attn: Timothy Peterman, Vice President Corporate Development

Facsimile No.: (513) 977-3024

with a copy to:

BAKER & HOSTETLER LLP

312 Walnut Street

Suite 2650

Cincinnati, Ohio 45202

Attn: William Appleton, Esq.

Facsimile No.: (513) 929-0303

                  Section 12.6 Jurisdiction; Service Of Process. Any action or proceeding
seeking to enforce any provision of, or based on any right arising out of, this
Agreement may be brought against any of the parties in the courts of the State
of Ohio, Hamilton County, or, if it has or can acquire jurisdiction, in the
United States District Court for the Southern District of Ohio, and each party
consents to the jurisdiction of such courts (and of the appropriate appellate
courts) in any such action or proceeding and waives any objection to venue laid
therein. Process in any action or proceeding referred to in the preceding
sentence may be served on any party anywhere in the world.

                  Section 12.7 Further Assurances. Each party agrees (a) to furnish to the other
party such further information, (b) to execute and deliver to the other
party
such other

54

 

documents, and (c) to do such other acts and things, all as the
other
party reasonably requests for the purpose of carrying out the intent of
this Agreement and the documents referred to in this Agreement.

                  Section 12.8 Waiver. The parties’ rights and remedies are cumulative and not
alternative. A party’s failure or delay in exercising any right, power, or
privilege under this Agreement or the documents referred to in this Agreement
will not operate as a waiver of such right, power, or privilege, and no single
or partial exercise of any such right, power, or privilege will preclude any
other or further exercise of such right, power, or privilege or the exercise of
any other right, power, or privilege. To the maximum extent permitted by
applicable law, (a) no claim or right arising out of this Agreement or the
documents referred to in this Agreement can be discharged by one party, in
whole or in part, by a waiver or renunciation of the claim or right unless in
writing signed by the other party; (b) no waiver given by a party will be
applicable except in the specific instance for which it is given; and (c) no
notice to or demand on one party will be deemed to be a waiver of any
obligation of such party or of the right of the party giving such notice or
demand to take further action without notice or demand as provided in this
Agreement or the documents referred to in this Agreement.

                  Section 12.9 Entire Agreement and Modification. This Agreement, together with
the Confidentiality Agreement, supersedes all prior agreements between the
parties with respect to its subject matter and constitutes (along with the
documents
referred to in this Agreement) a complete and exclusive statement of the terms
of the agreement between the parties with respect to its subject matter. This
Agreement may not be amended except by a written agreement executed by the
party to be charged with the amendment.

                  Section 12.10 Schedules.

         (a)  The disclosures in the Schedules must relate only to the
representations and warranties in the Section of the Agreement to which they
expressly relate and not to any other representation or warranty in this
Agreement.

         (b)  In the event of any inconsistency between the statements in the body
of this Agreement and those in the Schedules (other than an exception expressly
set forth as such in the Schedules with respect to a specifically identified
representation or warranty), the statements in the body of this Agreement will
control.

                  Section 12.11 Assignments, Successors, and No Third-Party Rights. Neither
party may assign any of its rights under this Agreement without the prior
consent of the other parties, except that Buyer may assign any of its rights
under this Agreement to any Affiliate of Buyer. Subject to the preceding
sentence, this Agreement will apply to, be binding in all respects upon, and
inure to the benefit of the successors and permitted assigns of the parties.
Nothing expressed or referred to in this Agreement will be construed to give
any Person other than the parties any legal or equitable right, remedy, or
claim under or with respect to this Agreement or any provision of this
Agreement. This Agreement and all of its provisions and conditions are for the
sole and exclusive benefit of the parties and their successors and assigns.

55

 

                  Section 12.12 Severability. If any provision of this Agreement is held invalid
or unenforceable by any court of competent jurisdiction, the other provisions
of this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.

                  Section 12.13 Section Headings, Construction. The headings of Sections in this
Agreement are provided for convenience only and will not affect its
construction or interpretation. All references to “Section” or “Sections” refer
to the corresponding Section or Sections of this Agreement. All words used in
this Agreement will be construed to be of such gender or number as the
circumstances require. Unless otherwise expressly provided, the word
“including” does not limit the preceding words or terms.

                  Section 12.14 Governing Law. This Agreement will be governed by the laws of
the State of Ohio without regard to conflicts of laws principles.

                  Section 12.15 Counterparts. This Agreement may be executed in two or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.

[Remainder of page intentionally left blank.]

56

 

         IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first written above.

	 	 	 	 	 
	 	 	BUYER:
	
	
	
	

	 	 	SCRIPPS NETWORKS, INC.
	
	
	
	

	 	 	 	 	 
	
	
	
	

	 	 	
By
	 	/s/ Richard A. Boehne
	 	 	 	 	

	 	 	
Title
	 	Executive Vice President
	 	 	 	 	

	 	 	 	 	 
	
	
	
	

	 	 	SELLER:
	
	
	
	

	 	 	SHOP AT HOME, INC.
	
	
	
	

	 	 	 	 	 
	
	
	
	

	 	 	
By
	 	/s/ George R. Ditomassi
	 	 	 	 	

	 	 	
Title
	 	Co-Chief Executive Officer
	 	 	 	 	

	 	 	 	 	 
	
	
	
	

	 	 	
By
	 	/s/ Frank A. Woods
	 	 	 	 	

	 	 	
Title
	 	Co-Chief Executive Officer
	 	 	 	 	

The E.W. Scripps Company hereby guarantees the obligations of Buyer under the
foregoing Share Purchase Agreement.

THE E.W. SCRIPPS COMPANY

	 	 	 	 	 
	 	 	
By
	 	/s/ Richard A. Boehne
	 	 	 	 	

	 	 	
Title
	 	Executive Vice President
	 	 	 	 	

57

 

EXHIBIT 1.1A

CONTRIBUTION AND ASSUMPTION AGREEMENT

         THIS CONTRIBUTION AND ASSUMPTION AGREEMENT, dated as of      , 2002
[this date will be the Closing Date of the Share Purchase Agreement] (this
“Agreement”), is made by and between Shop At Home, Inc., a Tennessee
corporation (“SATH”), and SAH Holdings, Inc., an Ohio corporation and wholly
owned subsidiary of SATH (“Holdings”).

         WHEREAS, SATH desires to contribute to Holdings 88.39% of the 99%
membership interest that SATH currently owns in Partners – SATH, L.L.C., a
Tennessee limited liability company (the “Company”) and a wholly owned
subsidiary of SATH (including an indirect 1% interest owned through SAH
Acquisition Corporation, a Tennessee corporation and a wholly owned subsidiary
of SATH), representing an 87.5% membership interest in the Company; and

         WHEREAS, SATH desires to contribute or cause certain of its Affiliates to
contribute to Holdings all of its and their rights relating to the employment
of the employees of the Network Employees who are listed on Schedule 1.01(b)
(the “Network Employees) as set forth herein for the benefit of the Network
Business (the “Network Employees Rights”), and Holdings desires to assume
certain of the liabilities and obligations of SATH and certain of its
Affiliates relating to the employment of the Network Employees by Holdings for
the benefit of the Network Business.

         NOW, THEREFORE, in consideration of the foregoing and the agreements set
forth below, the parties hereto agree as follows:

ARTICLE I

Contribution, Retention and Assumption

         1.01 Contributions.

                  (a)  SATH hereby contributes, conveys, transfers and assigns to Holdings,
free and clear of all liens and encumbrances, all of SATH’s right, title and
interest in and to 88.39% of SATH’s 99% membership interest in the Company
(representing an 87.5% membership interest in the Company) (the “Membership
Interest”).

                  (b)  SATH and each of its Affiliates with an interest therein hereby
contributes, grants, conveys, assigns, transfers and delivers to Holdings all
of their Network Employees Rights with respect to the Network Employees listed
on Schedule 1.01(b), including all records, contracts, assets and other
properties of SATH and its Affiliates related thereto, and SATH and Holdings
hereby agree, as soon as is administratively practicable after the date hereof,
to cause each Network Employee to become an employee of Holdings for all
purposes on such salary as set forth for such Network Employee on Schedule
1.01(b) and such other terms and conditions, including but not limited to
bonus, leave allowances and health and welfare benefits, as SATH and Holdings
shall mutually agree with the consent of Scripps Networks, Inc.

 

 

         1.02 Retention and Assumption of Liabilities.

                  (a)  Except for the Assumed Membership Interest Liabilities (hereinafter
defined) and the Assumed Employees Liabilities (hereinafter defined)
(collectively, the “Assumed Liabilities”), Holdings shall not assume any debts,
liabilities or obligations of any kind, character or description, whether
accrued or fixed, absolute or contingent, matured or unmatured or determined or
undetermined, or any costs or expenses related thereto (collectively,
“Liabilities”), of SATH or any Affiliate of SATH, including, but not limited to
Liabilities in respect of the Membership Interest, the Network Employees and
the Network Employees Rights (collectively, the “Retained Liabilities”), and
Holdings shall not at any time be required to assume, pay, perform or discharge
any Retained Liabilities.

                  (b)  Notwithstanding the provisions of Section 1.02(a), the Company hereby
unconditionally assumes and agrees to pay, perform, satisfy and discharge all
Liabilities first arising on or after the date hereof in connection with the
ownership of the Membership Interest, whether arising by reason of contact,
operation of law or otherwise, and including, but not limited to all such
Liabilities arising under the Operating Agreement of the Company dated      ,
     (the “Assumed Membership Interest Liabilities”).

                  (c)  Notwithstanding the provisions of Section 1.02(a), Holdings hereby
unconditionally assumes and agrees to pay, perform, satisfy and discharge (i)
all Liabilities first arising on or after the date hereof in connection with
the Network Employees and Network Employees Rights and (ii) the Liabilities of
SATH and its Affiliates relating to the Network Employees to the extent unpaid,
unperformed, unsatisfied and not discharged prior to the date hereof solely as
expressly set forth on Schedule 1.02(c) (collectively, the “Assumed Employees
Liabilities”). Holdings shall have no responsibility or liability with respect
to any employees of SATH or its Affiliates who are not listed on Schedule
1.01(b).

                  (d)  For purposes of this Agreement, the term “Affiliate” means any other
legal entity (i) that directly, or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with
SATH, (ii) that is a general partner, director, manager, trustee or principal
officer of, or a limited partner owning more than ten percent (10%) of, or that
serves in a similar capacity with respect to, SATH, or (iii) of which SATH is a
general partner, director, manager, trustee or principal officer or a limited
partner owning more than ten percent (10%) of, or with respect to which SATH
serves in a similar capacity. For purposes of this definition of Affiliate,
“control” means the possession, directly or indirectly, of the power to direct
or to cause the direction of the management or policies of the legal entity in
question through the ownership of voting securities or by contract or
otherwise. The Holdings shall be excluded from the meaning of Affiliate for
all purposes of this Agreement.

                  (a)  1.03 Intentionally Omitted. 

         Section 12.16 1.04 Conveyancing and Assumption Instruments.
In connection with the transfers of the Membership Interest and the Network
Employees Rights and the assumptions of Assumed Liabilities contemplated by
this Agreement, the parties hereto agree that (a) the transfers of assets,
rights and properties contemplated hereby shall be effected by

2

 

delivery by the
appropriate parties of such good and sufficient instruments of contribution,
transfer and delivery, in form and substance reasonably satisfactory to the
parties as shall be necessary to vest in the Holdings all of the right, title
and interest in and to the Membership Interest and the Network Employees
Rights, and (b) the assumption of the Assumed Liabilities contemplated hereby
shall be effected by delivery of the appropriate parties of such good and
sufficient instruments of assumption, in form and substance reasonably
satisfactory to the parties, as shall be necessary for the assumption by
Holdings of the Assumed Liabilities. Each of the parties hereto also agrees to
deliver to any other party hereto such other documents, instruments and
writings as may be reasonably requested by such other parties hereto in
connection with the transactions contemplated hereby. Notwithstanding any other
provisions of this Agreement to the contrary, (x) the instruments of transfer
or assumption referred to in this Section 1.04 shall not include any
representations and warranties, and (y) in the event and to the extent that
there is any conflict between the provisions of this Agreement and the
provisions of any of the instruments of transfer or assumption referred to in
this Section 1.04, the provisions of this Agreement shall prevail and govern.

         1.05 Indemnities. SATH shall indemnify Holdings and hold it harmless from
any and all claims, demands, losses, liabilities, damages and expenses
(including reasonable attorneys fees) (“Losses”) arising out of or in
connection with the Retained Liabilities. Holdings shall indemnify SATH and
hold it harmless from any and all Losses arising out of or in connection with
the Assumed Liabilities.

         1.06 Further Assurances. Each of the parties promptly shall execute such
documents and other instruments and take such further actions (including the
making of governmental filings) as may be reasonably required or desirable to
carry out the provisions of this Agreement and to consummate the transactions
contemplated hereby, including all certificates, assignments, assumption
agreements, bills of sale, consents, and other documents, as shall be
reasonably necessary to evidence the transactions contemplated hereby.

ARTICLE 2

Miscellaneous

                  2.01 Parties Bound. This Agreement shall be binding upon the parties
and their respective successors and assigns.

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

                  2.03 Entire Agreement. This Agreement constitutes the entire agreement
among the parties with respect to the subject matter hereof and supersedes all
prior written and

3

 

oral and all contemporaneous oral agreements and
understandings with respect to the subject matter hereof.

                  Section 12.17 2.04 Applicable Law. The laws of the State of Tennessee
shall govern this Agreement, excluding any conflict of laws rules.

         IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized on the day and
year first above written.

	 	 	 	 	 
	 	 	 	 	 
	
	
	
	

	 	 	SHOP AT HOME, INC.
	
	
	
	

	

	 	 	 	 
	
	
	
	

	 	 	
By:	 	 
	
	
	
	

	 	 	 	 	

	
	
	
	

	 	 	
Name:	 	 
	
	
	
	

	 	 	 	 	

	
	
	
	

	 	 	
Title:	 	 
	
	
	
	

	 	 	 	 	

	
	
	
	

	

	 	 	 	 
	
	
	
	

	 	 	SAH HOLDINGS, INC.
	
	
	
	

	

	 	 	 	 
	
	
	
	

	 	 	
By:	 	 
	
	
	
	

	 	 	 	 	

	
	
	
	

	 	 	
Name:	 	 
	
	
	
	

	 	 	 	 	

	
	
	
	

	 	 	
Title:	 	 
	
	
	
	

	 	 	 	 	

4

 

Schedule 1.01(b)

Network Employees

[To be provided by George Phillips]

5

 

Schedule 1.02(c)

Assumed Employee Liabilities

	 	1.	 	Accrued but unpaid wages of the Network Employees.
	 
	 	2.	 	Accrued but unused vacation of the Network Employees.

6

 

EXHIBIT 1.1B

CONTRIBUTION AND ASSUMPTION AGREEMENT

         THIS CONTRIBUTION AND ASSUMPTION AGREEMENT, dated effective as of
     , 2002 (this “Agreement”), is made by and among Shop At Home, Inc., a
Tennessee corporation (“SATH”), SAH Acquisition Corporation, a Tennessee
corporation and a wholly owned subsidiary of SATH (“SAHAC”), and Partners –
SATH, L.L.C., a Tennessee limited liability company and a wholly owned
subsidiary of SATH through an indirect 1% membership interest held therein by
SAHAC and a 99% membership interest held by SATH (the “Company”).

         WHEREAS, SATH desires to contribute, or cause certain of its Affiliates
(hereinafter defined) to contribute, to the Company certain rights, assets and
properties relating to SATH’s business of selling consumer products through
interactive electronic media including broadcast, cable and satellite
television and the Internet (via shopathometv.com) (the “Network Business”) and
to cause the Company to assume certain liabilities and obligations of SATH and
certain of its Affiliates relating to the Network Business in order to
consolidate substantially all of the rights, assets, properties, liabilities
and obligations of the Network Business into the Company, excluding rights and
liabilities in respect of the employees of the Network Business (the “Network
Employees”).

         NOW, THEREFORE, in consideration of the foregoing and the agreements set
forth below, the parties hereto agree as follows:

ARTICLE 1

CONTRIBUTION, RETENTION AND ASSUMPTION

         1.01
Contribution and Retention of Assets.

                  (a)
Except for the Retained Assets (hereinafter defined), SATH and each of its
Affiliates with an interest therein hereby contributes, grants, conveys,
assigns, transfers and delivers, subject to all liens and encumbrances, a 1%
undivided interest to SAHAC and, immediately upon such contribution by SATH to
SAHAC, SATH and each of its Affiliates with an interest therein and SAHAC
hereby respectively contribute, grant, convey, assign, transfer and deliver 99%
and 1% undivided interests to the Company, in and to all right, title and
interest of SATH and its Affiliates and SAHAC with an interest therein in and
to any and all assets, rights and properties used or held for use in the
conduct and operation of the Network Business, whether tangible or intangible,
whether fixed, contingent or otherwise, and wherever located (collectively, the
“Contributed Assets”), including, but not limited to, the assets, rights and
properties described on Schedule 1.01(a).

                  (b)
Notwithstanding the provisions of Section 1.01(a), the Contributed Assets
shall not include, and SATH and its Affiliates shall retain all of their right,
title and interest in and to,

 

 

the assets, rights and properties described on
Schedule 1.01(b), SATH’s rights under this Agreement, all their rights relating
to the employment of the Network Employees and any other assets, rights and
properties of SATH and its Affiliates not used or held for use in the
operations of the Network Business (collectively, the “Retained Assets”).

         1.02
Retention and Assumption of Liabilities.

                  (a)
Except for the Assumed Liabilities (hereinafter defined), neither SAHAC
nor the Company shall assume any debts, liabilities or obligations of any kind,
character or description, whether accrued or fixed, absolute or contingent,
matured or unmatured or determined or undetermined, or any costs or expenses
related thereto (collectively, “Liabilities”), of SATH, the Network Business,
or any Affiliate of SATH, including, but not limited to Liabilities in respect
of the Network Employees (collectively, the “Retained Liabilities”), and
neither SAHAC nor the Company shall at any time be required to assume, pay,
perform or discharge any Retained Liabilities.

                  (b)
Notwithstanding the provisions of Section 1.02(a), SAHAC as to an
undivided interest of 1% of SATH therein, and the Company as to the 99% and 1%
undivided interests of SATH and SAHAC therein, without recourse, hereby
unconditionally assume and agree to pay, perform, satisfy and discharge (i) all
Liabilities first arising on or after the date hereof in connection with the
Contributed Assets or as a result of the Company’s conduct and operation of the
Network Business on or after the date hereof and (ii) the Liabilities of SATH
and its Affiliates relating to the Network Business (excluding Liabilities in
respect of the Network Employees and excluding Liabilities in respect of any
Retained Asset) to the extent unpaid, unperformed, unsatisfied and not
discharged prior to the date hereof solely as expressly set forth on Schedule
1.02(b) (the “Assumed Liabilities”).

                  (c)  For purposes of this Agreement, the term “Affiliate” means any other
legal entity (i) that directly, or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with
SATH, (ii) that is a general partner, director, manager, trustee or principal
officer of, or a limited partner owning more than ten percent (10%) of, or that
serves in a similar capacity with respect to, SATH, or (iii) of which SATH is a
general partner, director, manager, trustee or principal officer or a limited
partner owning more than ten percent (10%) of, or with respect to which SATH
serves in a similar capacity. For purposes of this definition of Affiliate,
“control” means the possession, directly or indirectly, of the power to direct
or to cause the direction of the management or policies of the legal entity in
question through the ownership of voting securities or by contract or
otherwise. The Company and SAHAC shall be excluded from the meaning of
Affiliate for all purposes of this Agreement.

         1.03 Intentionally omitted.

         1.04 Conveyancing and Assumption Instruments.
In connection with the transfers of Contributed Assets and the assumptions of
Assumed Liabilities contemplated by this Agreement, the parties hereto agree
that (a) the transfers of assets, rights and properties contemplated hereby
shall be effected by delivery by the appropriate parties of (i) with respect to
those which are evidenced by capital stock certificates or similar instruments,
certificates duly endorsed in blank or accompanied by stock powers or other
instruments of assignment executed in blank, (ii) with

2

 

respect to any real
property interest and any improvements thereon, a quitclaim deed or the
equivalent thereof in accordance with local practice, and (iii) with respect to
all other rights, assets and properties, such good and sufficient instruments
of contribution, transfer and delivery, in form and substance reasonably
satisfactory to the parties as shall be necessary to vest in the Company or
SAHAC, as the case may be, all of the right, title and interest in and to the
Contributed Assets, and (b) the assumption of the Assumed Liabilities
contemplated hereby shall be effected by delivery of the appropriate parties of
such good and sufficient instruments of assumption, in form and substance
reasonably satisfactory to the parties, as shall be necessary for the
assumption by SAHAC or the Company of the Assumed Liabilities. Each of the
parties hereto also agrees to deliver to any other party hereto such other
documents, instruments and writings as may be reasonably requested by such
other parties hereto in connection with the transactions contemplated hereby.
Notwithstanding any other provisions of this Agreement to the contrary, (x) the
instruments of transfer or assumption referred to in this Section 1.04 shall
not include any representations and warranties, and (y) in the event and to the
extent that there is any conflict between the provisions of this Agreement and
the provisions of any of the instruments of transfer or assumption referred to
in this Section 1.04, the provisions of this Agreement shall prevail and
govern.

         1.05 Indemnities. SATH shall indemnify SAHAC and the Company and hold
them harmless from any and all claims, demands, losses, liabilities, damages
and expenses (including reasonable attorneys fees) (“Losses”) arising out of or
in connection with the Retained Liabilities. The Company shall indemnify SATH
and SAHAC and hold each of them harmless from all Losses arising out of or in
connection with the Assumed Liabilities.

         1.06
Further Assurances. Each of the parties promptly shall execute such
documents and other instruments and take such further actions as may be
reasonably required or desirable to carry out the provisions of this Agreement
and to consummate the transactions contemplated hereby, including all
assignments, assumption agreements, bills of sale, consents, and other
documents as shall be reasonably necessary to evidence the assignments,
transfers, conveyances, and assumptions hereunder.

         1.07 Employees. Nothing in this Agreement, expressed or implied, shall confer
upon any current employee or former employee of SATH or the Company or any of
their Affiliates any rights or remedies of any nature or kind whatsoever
(including, without limitation, any right to employment, resumed employment or
continued employment for any specified period), under or by reason of this
Agreement, and no such current or former employee will be deemed to be a
third-party beneficiary of any provision of this Agreement.

ARTICLE 2

MISCELLANEOUS

         2.01
Parties Bound. This Agreement shall be binding upon the parties and their
successors and assigns.

         2.02
Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original but together shall constitute but one and the
same agreement.

3

 

         2.03
Entire Agreement. This Agreement constitutes the entire agreement among
the parties with respect to the subject matter hereof and supersedes all prior
written and oral and all contemporaneous oral agreements and understandings
with respect to the subject matter hereof.

         2.04
Applicable Law. The laws of the State of Tennessee shall govern this
Agreement, excluding any conflict of laws rules.

         2.05
Exhibits and Schedules. All Exhibits and Schedules referred to herein and
attached hereto are incorporated by this reference thereto.

[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

4

 

         IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized on the day and
year first above written.

	 	 	 	 
	 	SHOP AT HOME, INC.
	
	
	
	

	 	

	 	 
	
	
	
	

	 	By:	 	 
	
	
	
	

	 	 	 	

	
	
	
	

	 	Name:	 	 
	
	
	
	

	 	Title:	 	 
	
	
	
	

	 	 	 	 

	
	
	
	

	 	

	 	 
	
	
	
	

	 	SAH ACQUISITION CORPORATION
	
	
	
	

	 	

	 	 
	
	
	
	

	 	By:	 	 
	
	
	
	

	 	 	 	

	
	
	
	

	 	Name:	 	 
	
	
	
	

	 	Title:	 	 
	
	
	
	

	 	 	 	 

	
	
	
	

	 	

	 	 
	
	
	
	

	 	PARTNERS-SATH, L.L.C.
	
	
	
	

	 	

	 	 
	
	
	
	

	 	By:	 	 
	
	
	
	

	 	 	 	

	
	
	
	

	 	Name:	 	 
	
	
	
	

	 	Title:	 	 
	
	
	
	

	 	 	 	 

5

 

Schedule 1.01(b)

CONTRIBUTED ASSETS

         The following sets forth general descriptions of certain assets, rights
and properties included in the Contributed Assets:

                  all programs, programming, performances, productions, content and related
materials of any nature whatsoever, and all elements thereof, whether intended
for television broadcast or other exhibition over any other medium (including,
but not limited to, the Internet) as a live performance, a pre-recorded
performance or otherwise, whether completed or in process or production, in
whatever form or media the same may be recorded, including, but not limited to,
documents, drawings, films, tapes, compact discs, and any other digital or
digitized formats (collectively, the “Programming Materials”), all related
common law and statutory Network Intangible Rights (as defined in paragraph (c)
hereof) in the Programming Materials and all rights, releases, clearances, and
licenses granted by third parties (including, but not limited to persons
appearing in, or performing services in connection with the exhibition and
syndication of, any of the Programming Materials) with respect to such third
parties’ literary, artistic, trademark, copyright, music performance, master
use, synchronization and other similar intellectual property rights and their
publicity, privacy and publishing rights (collectively, the “Third-Party
Intangible Rights”) in the Programming Materials;

                  all sales support, advertising, marketing and promotional materials of any
nature whatsoever, including, but not limited to, interstitial promotional
materials, and all elements thereof (including, but not limited to, all
advertiser files, information, lists and rate cards, all catalogs, data,
drawings, designs, files, price lists and subscriber information, files and
lists, and all other records and other documents related thereto), whether
intended for television broadcast or other exhibition over or in any other
medium (including, but not limited to, the Internet and any print media) as a
live performance, a pre-recorded performance or otherwise, whether completed or
in process or production, in whatever form or media the same may be recorded,
including, but not limited to, documents, drawings, films, tapes, compact
discs, and any other digital or digitized formats (collectively, the
“Promotional Materials”), all related common law and statutory Network
Intangible Rights in the Promotional Materials and all rights, releases,
clearances, and licenses granted by third parties (including, but not limited
to, persons appearing in, or performing services in connection with the
exhibition and syndication of, any of the Promotional Materials) with respect
to such third parties’ Third-Party Intangible Rights in the Promotional
Materials;

                  all domestic or foreign patents, patent applications, written invention
disclosures to be filed or awaiting filing determinations, copyrights,
trademark and service mark applications, registered trademarks, registered
service marks, unregistered trademarks and service marks in which SATH or its
Affiliates possess common law rights, uniform resource locators, domain names,
franchises, trade names, jingles, slogans, logotypes, copyrights and other
intangible rights owned, leased or licensed (collectively, the “Network
Intangible Rights”);

 

 

                  all goodwill associated with the Network Business as a going concern and
with the Network Intangible Rights;

                   

                   

                  all files, records, books of account, computer programs, tapes, electronic
data processing software, data and other records to the extent exclusively
relating to the conduct and operation of the Network Business, in whatever form
or format they are maintained, kept or stored, including, without limitation,
books of account and accounting information, purchasing and production
information, income, sales, use and all other tax information, subscriber data,
subscriber and other third party credit information, pricing information,
advertiser information, cost and expense information, market research, surveys
and reports, equipment service, maintenance and warranty records, sales,
advertising, marketing and promotional materials, and industry information;

                  all Contracts entered into in connection with the conduct and operation of
the Network Business (such as, without limitation, contracts with suppliers,
service vendors, providers of insurance or services in connection with employee
benefit and welfare plans, advertisers, consultants and designers) and all
rights under such Contracts, whether such rights are express or implied,
matured or unmatured, known or unknown, absolute or contingent;

                  all stationery, forms, labels, and similar supplies bearing, exhibiting or
otherwise embodying any of the Network Intangible Rights;

                  all prepaid expenses, deposits and other current assets of a similar
nature related to Contracts or otherwise, including cash, cash equivalents,
notes receivable, accounts receivable and prepaid taxes, and all negotiable
instruments and chattel paper, including credit card receivables and accrued
interest charges on customer accounts;

                  all rights to all post office boxes, telephone numbers and facsimile
numbers;

                  all orders, arrangements, understandings and Contracts for the sale of
advertising time on broadcasts or on Internet web sites;

                  all goods, assets, rights and services due under trade contracts with
third parties, and all inventory and work in process;

                  all permits, licenses, consents, approvals or other authorizations from or
of any court, arbitral tribunal, administrative agency or commission or other
governmental or other regulatory authority, agency or body relating to or
necessary for the conduct and operation of the Network Business;

                  all rights, claims, credits, causes of action and rights of set-off
against third parties relating to the Network Business or Contributed Assets;
and

                  all real property, furniture, fixtures, equipment, vehicles, tools,
computer and hardware, whether owned, leased licensed or otherwise, and all
appurtenances thereto.

 

 

Schedule 1.01(b)

RETAINED ASSETS

         The following sets forth the Retained Assets:

                  (a) all assets, rights and properties directly used or directly held for
use in the operation of the five (5) UHF television station properties owned
and operated by SATH and its Affiliates in San Francisco, California, Boston,
Massachusetts, Cleveland, Ohio, Raleigh, North Carolina and Bridgeport,
Connecticut, including but not limited to, the FCC licenses for such stations,
equipment at such stations, employment agreements of the personnel working at
such stations and the leases and other Contracts which relate exclusively to
such stations, but excluding all rights in Programming Materials, Third-Party
Intangible Rights, Promotional Rights, and Network Intangible Rights.

                  (b) AT&T/TCI full-time carriage agreement dated 4/24/96.

                  (c) Employment related contracts with Bennett S, Smith, George S.
Ditomassi, Frank A. Woods, Arthur D. Tek, George J. Phillips, Robert B. Wales,
Ronald T. Cook, Thomas N. Merrihew and Howard W. Lambert.

                  (d) Promissory Notes from J.D. Clinton and Charles W. Bone.

                  (e) Equity Edge Software concerning SATH’s stock option program.

                  (f) The membership interest in the Company and the shares of capital stock
in SAH Holdings, Inc. and SAHAC owned and held by SATH.

                  (g) Paymaxx Agreement.

                  (h) All rights, claims, credits, causes of action and rights of set-off
against third parties relating to the Retained Liabilities.

 

 

Schedule 1.02(b)

ASSUMED LIABILITIES

                  (a) The current liabilities of the Network Business as of the date hereof
reflected or reserved against on the face of the Pro Forma Statement of Assets
and Liabilities attached to and made part hereof (as approved in writing by
Scripps Networks, Inc.). SATH hereby represents and warrants to the Company
that such Pro Forma Statement of Assets and Liabilities has been prepared in
all material respects consistently with the Pro Forma Statement of Assets and
Liabilities of the Network Business as of June 30, 2002 delivered by SATH to
Scripps Networks, Inc. in connection with the Share Purchase Agreement dated
August      , 2002 between SATH and Scripps Networks, Inc. SATH further
represents and warrants to the Company that such Pro Forma Statement of Assets
and Liabilities does not contain any current liabilities not incurred in the
Ordinary Course of Business (as such term is defined in the Share Purchase
Agreement referred to herein).

                  (b) If any claim is made after the date hereof by a third party alleging
infringement of such third party’s intellectual property rights arising from
the use of the name “Shop at Home” in the operation of the Network Business by
either or both SATH or the Company, as between SATH and the Company, SATH shall
be responsible for all Liabilities which arose therefrom that relate to any
period prior to the date hereof and the Company shall be responsible for all
Liabilities which arose therefrom on and after the date hereof and, if the
Company elects to defend such claim, the Company shall at its cost and expense
provide a defense for both the Company and SATH; provided that SATH shall
cooperate with the Company at SATH’s cost and expense as may be reasonably
required.

 

 

EXHIBIT 8.4(c)

Capitalized terms used herein will have the meanings set forth in the Share
Purchase Agreement between Shop At Home, Inc. and Scripps Networks, Inc. (the
“Purchase Agreement”).

         1.     Seller is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Tennessee. The Holding Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Ohio. The Operating Company is a limited liability
company duly organized, validly existing and in good standing under the laws of
the State of Tennessee.

         2.     Each of Seller, the Holding Company and the Operating Company has the
necessary power and authority to conduct its business as currently conducted
and to own, lease and use its assets in the manner in which its assets are
currently owned, leased and used. Each of Seller, the Holding Company and the
Operating Company is qualified to do business as a foreign corporation in each
jurisdiction in which the nature of its business or ownership of its assets
requires such qualification (except to the extent that failure to be so
qualified would not have a material adverse effect on the business of Seller,
the Holding Company or the Operating Company, as the case may be), and is in
good standing in each such jurisdiction.

         3.     The Holding Company has 1,500 authorized shares, without par value, of
which 1,000 are outstanding and are held beneficially and of record by Seller.
All of the Holding Company’s outstanding shares have been duly authorized and
validly issued and are fully paid and nonassessable.

         4.     The Operating Company is owned beneficially and of record 1% by SAH
Acquisition Corporation, 87.5% by the Holding Company and 11.5% by Seller.

         5.     No preemptive rights, rights of first refusal or similar rights to
purchase securities of the Operating Company or the Holding Company exist and
no such rights will arise or become exercisable by virtue of or in connection
with the transactions contemplated by the Agreement. There are no outstanding
or authorized options, warrants, convertible securities, subscription rights,
conversion rights, exchange rights relating to the issuance or sale of any
securities of the Holding Company or the Operating Company. There are no stock
appreciation, phantom stock, profit participation or other similar rights
granted by the Holding Company or the Operating Company.

         6.     To our knowledge, there is no pending Proceeding and no Person has
threatened to commence any Proceeding materially affecting or that could
materially affect the Holding Company or the Operating Company, or their
properties or assets or the Network or that questions the validity or
enforceability of the Transaction Documents or the Contemplated Transactions.

         7.     Each of Seller, the Holding Company and the Operating Company has the
requisite power and authority to enter into and to perform its obligations
pursuant to the Transaction Documents to

 

 

 which it is a party. The execution, delivery and performance by each of
Seller, the Holding Company and the Operating Company of the Transaction
Documents to which it is a party, and the consummation of the Contemplated
Transactions, have been duly authorized by all necessary corporate and
shareholder action on the part of Seller, the Holding Company and the Operating
Company. The Transaction Documents to which each of Seller, the Holding
Company and the Operating Company is a party constitute the legal, valid and
binding obligation of Seller, the Holding Company or the Operating Company, as
the case may be, enforceable against such entity in accordance with their
respective terms.

         8.     The execution and delivery by each of Seller, the Holding Company and
the Operating Company of the Transaction Documents to which it is a party and
the consummation by such entity of the Contemplated Transactions will not (a)
violate such entity’s Organizational Documents; (b) violate any Legal
Requirement applicable to the Contemplated Transactions; or (c) cause a default
by such entity under, or give rise to a right of payment under or the right to
terminate, amend, modify, abandon or accelerate obligations under, any Contract
to which such entity is a party or by which it or any of its assets or
properties are bound.

         9.     Except for the third party consents or notices set forth on Schedule
3.2 to the Purchase Agreement, none of Seller, the Holding Company or the
Operating Company is required to make any filing with or give any notice to or
obtain any consent from any Person in connection with the execution and
delivery of the Transaction Documents or consummation of the Contemplated
Transactions.

 

 

EXHIBIT 8.4(d)

 

 

 

 

AMENDED AND RESTATED OPERATING AGREEMENT

OF

SHOP AT HOME NETWORK, LLC

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 
	 	 	 	 	 	Page
	 	 	 	 	 	

	ARTICLE 1 Definitions
	 	 	1	 
	
	
	
	

	ARTICLE 2 The Company
	 	 	1	 
	
	
	
	

	 	2.1 Formation
	 	 	1	 
	
	
	
	

	 	2.2 Operating Agreement
	 	 	1	 
	
	
	
	

	 	2.3 Name
	 	 	1	 
	
	
	
	

	 	2.4 Purpose
	 	 	2	 
	
	
	
	

	 	2.5 Authority of Scripps Holding and Scripps Governors with Respect to the Network
	 	 	2	 
	
	
	
	

	 	2.6 Names and Addresses of Members
	 	 	2	 
	
	
	
	

	 	2.7 Period of Duration
	 	 	2	 
	
	
	
	

	 	2.8 Statutory Agent and Office
	 	 	2	 
	
	
	
	

	 	2.9 Principal Executive Office
	 	 	2	 
	
	
	
	

	ARTICLE 3 Accounting and General Tax Matters
	 	 	2	 
	
	
	
	

	 	3.1 Accounting Methods
	 	 	2	 
	
	
	
	

	 	3.2 Records
	 	 	2	 
	
	
	
	

	 	3.3 Fiscal Year
	 	 	2	 
	
	
	
	

	 	3.4 Taxation as a Partnership
	 	 	3	 
	
	
	
	

	 	3.5 Tax Elections
	 	 	3	 
	
	
	
	

	 	3.6 Tax Matters Partner
	 	 	3	 
	
	
	
	

	 	3.7 Tax Information
	 	 	3	 
	
	
	
	

	ARTICLE 4 Management
	 	 	3	 
	
	
	
	

	 	4.1 Management by the Board of Governors
	 	 	3	 
	
	
	
	

	 	4.2 Board of Governors
	 	 	5	 
	
	
	
	

	 	 	4.2.1 Composition
	 	 	5	 
	
	
	
	

	 	 	4.2.2 Authority
	 	 	5	 
	
	
	
	

	 	 	4.2.3 Voting
	 	 	6	 
	
	
	
	

	 	 	4.2.4 Meetings
	 	 	6	 
	
	
	
	

	 	 	4.2.5 Committees
	 	 	6	 
	
	
	
	

	 	 	4.2.6 Compensation
	 	 	6	 
	
	
	
	

	 	 	4.2.7 Governors’ Time and Effort
	 	 	6	 
	
	
	
	

	 	4.3 Officers and Employees
	 	 	6	 
	
	
	
	

	 	4.4 Arrangements with Scripps Affiliates
	 	 	7	 
	
	
	
	

	 	4.5 Compensation of Scripps Holdings
	 	 	7	 
	
	
	
	

	 	4.6 Discretion
	 	 	7	 
	
	
	
	

	ARTICLE 5 General Rights and Obligations of Members
	 	 	7	 
	
	
	
	

	 	5.1 Limitation of Liability
	 	 	7	 
	
	
	
	

	 	5.2 Standards for Access to Information
	 	 	8	 
	
	
	
	

	 	5.3 Limited Voting and Management Rights
	 	 	8	 
	
	
	
	

	 	5.4 Representations and Warranties
	 	 	8	 
	
	
	
	

	 	5.5 No Withdrawal of a Member
	 	 	9	 
	
	
	
	

	 	5.6 Title to Property
	 	 	9	 
	
	
	
	

	 	5.7 Financial Statements
	 	 	9	 

 

 

	 	 	 	 	 	 	 	 
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	 	5.8 Confidentiality Covenants
	 	 	9	 
	
	
	
	

	 	5.9 Outside Businesses or Opportunities
	 	 	10	 
	
	
	
	

	 	5.10 Noncompetition Covenant of SATH
	 	 	10	 
	
	
	
	

	 	5.11 Re-formation in Delaware
	 	 	10	 
	
	
	
	

	ARTICLE 6 EXCULPATORY PROVISIONS; Indemnification
	 	 	11	 
	
	
	
	

	 	6.1 Exculpatory Provisions
	 	 	11	 
	
	
	
	

	 	 	6.1.1 General Limitation of Liability
	 	 	11	 
	
	
	
	

	 	 	6.1.2 Limitation of Duties
	 	 	11	 
	
	
	
	

	 	 	6.1.3 No Consequential Damages
	 	 	11	 
	
	
	
	

	 	6.2 Indemnification of Governors and Other Indemnified Persons
	 	 	11	 
	
	
	
	

	 	 	6.2.1 General Obligations of the Company
	 	 	11	 
	
	
	
	

	 	 	6.2.2 Disabling Conduct
	 	 	12	 
	
	
	
	

	 	 	6.2.3 Advances
	 	 	12	 
	
	
	
	

	 	 	6.2.4 Non-Exclusivity
	 	 	12	 
	
	
	
	

	 	 	6.2.5 Insurance
	 	 	12	 
	
	
	
	

	 	 	6.2.6 No Personal Liability of Members
	 	 	13	 
	
	
	
	

	 	 	6.2.7 Conflicts of Interest
	 	 	13	 
	
	
	
	

	 	 	6.2.8 Beneficiaries
	 	 	13	 
	
	
	
	

	ARTICLE 7 Contributions and Loans
	 	 	13	 
	
	
	
	

	 	7.1 Members’ Capital Contributions
	 	 	13	 
	
	
	
	

	 	7.2 Additional Equity Funding
	 	 	13	 
	
	
	
	

	 	7.3 No Interest
	 	 	14	 
	
	
	
	

	 	7.4 Credit Line
	 	 	14	 
	
	
	
	

	 	7.5 Loans From Members
	 	 	14	 
	
	
	
	

	ARTICLE 8 Capital Accounts
	 	 	14	 
	
	
	
	

	 	8.1 Creation and Maintenance
	 	 	14	 
	
	
	
	

	 	 	8.1.1 Interpretations
	 	 	14	 
	
	
	
	

	 	 	8.1.2 Computations
	 	 	15	 
	
	
	
	

	 	 	8.1.3 Book Value and Revaluations of Company Property
	 	 	15	 
	
	
	
	

	 	 	8.1.4 Effective Terminations under Code Section 708(b)(1)(B)
	 	 	15	 
	
	
	
	

	 	8.2 Transfer of Capital Account; No Code Section 743 Adjustment
	 	 	16	 
	
	
	
	

	 	8.3 No Deficit Restoration Obligation
	 	 	16	 
	
	
	
	

	ARTICLE 9 Allocations
	 	 	16	 
	
	
	
	

	 	9.1 Allocation of Operating Profits and Losses
	 	 	16	 
	
	
	
	

	 	 	9.1.1 Profits
	 	 	16	 
	
	
	
	

	 	 	9.1.2 Losses
	 	 	16	 
	
	
	
	

	 	 	9.1.3 Limitations and Special Allocations
	 	 	16	 
	
	
	
	

	 	9.2 Special Allocations
	 	 	17	 
	
	
	
	

	 	 	9.2.1 Nonrecourse Deductions
	 	 	17	 
	
	
	
	

	 	 	9.2.2 Member Nonrecourse Deductions
	 	 	17	 
	
	
	
	

	 	 	9.2.3 Company Minimum Gain
	 	 	17	 
	
	
	
	

	 	 	9.2.4 Member Minimum Gain
	 	 	17	 
	
	
	
	

	 	 	9.2.5 Qualified Income Offset
	 	 	17	 
	
	
	
	

	 	 	9.2.6 Gross Income Allocation
	 	 	18	 
	
	
	
	

	 	 	9.2.7 Code Section 754 Adjustments
	 	 	18	 

 

 

	 	 	 	 	 	 	 	 
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	 	9.3 Corrective Allocations
	 	 	18	 
	
	
	
	

	 	9.4 Application of Code Section 704(c)
	 	 	18	 
	
	
	
	

	 	9.5 Distributions of Nonrecourse Liability Proceeds
	 	 	18	 
	
	
	
	

	 	9.6 Allocation of Debt
	 	 	19	 
	
	
	
	

	 	9.7 Other Allocation Provisions
	 	 	19	 
	
	
	
	

	 	 	9.7.1 Elections
	 	 	19	 
	
	
	
	

	 	 	9.7.2 Fees to Members
	 	 	19	 
	
	
	
	

	ARTICLE 10 Distributions
	 	 	19	 
	
	
	
	

	 	10.1 Distributions
	 	 	19	 
	
	
	
	

	 	 	10.1.1 Definition of Distributable Cash
	 	 	19	 
	
	
	
	

	 	 	10.1.2 Tax Distributions
	 	 	19	 
	
	
	
	

	 	 	10.1.3 Distributions of Distributable Cash
	 	 	20	 
	
	
	
	

	 	 	10.1.4 Distributions of Proceeds from Interim Capital Transactions
	 	 	20	 
	
	
	
	

	 	 	10.1.5 Distributions of Proceeds from Liquidating Capital Transactions
	 	 	20	 
	
	
	
	

	 	10.2 General Limitations on Distributions
	 	 	20	 
	
	
	
	

	ARTICLE 11 Dispositions of Membership Interests
	 	 	20	 
	
	
	
	

	 	11.1 General Restrictions
	 	 	20	 
	
	
	
	

	 	11.2 Void Dispositions
	 	 	22	 
	
	
	
	

	 	11.3 Scripps Holding’s Right of First Refusal
	 	 	22	 
	
	
	
	

	 	 	11.3.1 Notice of Intended Disposition
	 	 	22	 
	
	
	
	

	 	 	11.3.2 Exercise of Right
	 	 	22	 
	
	
	
	

	 	 	11.3.3 Non-Exercise of Right
	 	 	22	 
	
	
	
	

	 	 	11.3.4 SATH Debt
	 	 	22	 
	
	
	
	

	 	11.4 Transfers to Affiliates
	 	 	23	 
	
	
	
	

	 	11.5 Scripps Holding’s Right to Sell; SATH’s and Sub’s Tag
Along Right; Scripps Holding’s Drag Along Right
	 	 	23	 
	
	
	
	

	 	11.6 Put and Call Rights
	 	 	23	 
	
	
	
	

	 	 	11.6.1 SATH’s and Sub’s Put Right
	 	 	24	 
	
	
	
	

	 	 	11.6.2 SATH’s Put Right Upon Scripps’s Disposition of Scripps Holding Shares
	 	 	24	 
	
	
	
	

	 	 	11.6.3 Scripps’s Call Right
	 	 	24	 
	
	
	
	

	 	 	11.6.4 Scripps Holding Call Right Upon SATH’s Disposition of Scripps Holding Shares
	 	 	24	 
	
	
	
	

	 	 	11.6.5 Scripps Call Right Upon Change in Control of SATH
	 	 	25	 
	
	
	
	

	 	 	11.6.6 Scripps Call Right Upon Default
	 	 	25	 
	
	
	
	

	 	 	11.6.7 Limitation on Exercise Based on Exercise of Put/Call
Relating to Scripps Holding
	 	 	25	 
	
	
	
	

	 	11.7 Certain Buyout Events
	 	 	25	 
	
	
	
	

	 	 	11.7.1 Definition of Event
	 	 	25	 
	
	
	
	

	 	 	11.7.2 Purchase Option of the Company
	 	 	26	 
	
	
	
	

	 	 	11.7.3 Company’s Right of Assignment
	 	 	26	 
	
	
	
	

	 	 	11.7.4 Scripps Debt
	 	 	26	 
	
	
	
	

	 	 	11.7.5 Continuing Effect After Insolvency
	 	 	27	 
	
	
	
	

	 	11.8 Determination of Fair Market Value
	 	 	27	 
	
	
	
	

	 	11.9 Contract Terms
	 	 	27	 
	
	
	
	

	 	 	 	11.9.1 Payment Terms
	 	 	27	 
	
	
	
	

	 	 	 	11.9.2 Closing
	 	 	28	 
	
	
	
	

	 	 	 	11.9.3 Documents
	 	 	28	 

 

 

	 	 	 	 	 	 	 	 
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	ARTICLE 12 Assignees; Substitute Members
	 	 	28	 
	
	
	
	

	 	12.1 Admission of Substitute Members
	 	 	28	 
	
	
	
	

	 	12.2 Rights of Assignees
	 	 	28	 
	
	
	
	

	ARTICLE 13 Dissolution and Winding Up
	 	 	29	 
	
	
	
	

	 	13.1 Dissolution
	 	 	29	 
	
	
	
	

	 	13.2 Effect of Dissolution
	 	 	29	 
	
	
	
	

	 	13.3 Winding Up
	 	 	29	 
	
	
	
	

	 	13.4 Fair Market Value Distributions
	 	 	29	 
	
	
	
	

	 	13.5 Proceeds of Liquidation
	 	 	29	 
	
	
	
	

	 	 	 	13.5.1 Expenses
	 	 	29	 
	
	
	
	

	 	 	 	13.5.2 Debts
	 	 	29	 
	
	
	
	

	 	 	 	13.5.3 Reserves
	 	 	30	 
	
	
	
	

	 	 	 	13.5.4 Capital Accounts
	 	 	30	 
	
	
	
	

	 	13.6 Final Accounting
	 	 	30	 
	
	
	
	

	ARTICLE 14 Amendment
	 	 	30	 
	
	
	
	

	ARTICLE 15 Miscellaneous Provisions
	 	 	30	 
	
	
	
	

	 	15.1 Entire Agreement
	 	 	30	 
	
	
	
	

	 	15.2 Rights of Creditors and Third Parties
	 	 	30	 
	
	
	
	

	 	15.3 Notices
	 	 	30	 
	
	
	
	

	 	15.4 Severability
	 	 	31	 
	
	
	
	

	 	15.5 Parties Bound
	 	 	31	 
	
	
	
	

	 	15.6 Applicable Law
	 	 	31	 
	
	
	
	

	 	15.7 Strict Construction
	 	 	31	 
	
	
	
	

	 	15.8 Headings
	 	 	31	 
	
	
	
	

	 	15.9 Counterpart Execution
	 	 	31	 
	
	
	
	

	 	15.10 Pronouns
	 	 	31	 
	
	
	
	

	 	15.11 Effect of Waiver or Consent
	 	 	31	 
	
	
	
	

	 	15.12 Further Assurances
	 	 	31	 
	
	
	
	

	 	15.13 Public Announcements
	 	 	32	 
	
	
	
	

	 	15.14 Expenses
	 	 	32	 
	
	
	
	

	SCHEDULE II
	 	 	1	 

 

 

AMENDED AND RESTATED OPERATING AGREEMENT

OF

SHOP AT HOME NETWORK, LLC

         THIS AMENDED AND RESTATED OPERATING AGREEMENT of Shop At Home Network,
LLC, a Tennessee limited liability company fka Partners – SATH, L.L.C.
(together with any successor thereto, the “Company”), dated as of , 2002, is
made by and among Shop At Home, Inc., a Tennessee corporation (“SATH”), SAH
Acquisition Corporation, a Tennessee corporation and wholly owned subsidiary of
SATH (“Sub”), and The Scripps Shop At Home Holding Company, an Ohio corporation
fka SAH Holdings, Inc. (“Scripps Holding”).

         WHEREAS, SATH holds an eleven and one-half percent (11.5%) membership
interest in the Company, Sub holds a one percent (1%) membership interest in
the Company and Scripps Holding holds an eighty-seven and one-half percent
(87.5%) membership interest in the Company; and

         WHEREAS, pursuant to the Share Purchase Agreement, dated August 14, 2002,
between Scripps Networks, Inc., a Delaware corporation (“Scripps”), and SATH,
SATH sold to Scripps eighty percent (80%) of the outstanding common shares of
Scripps Holding and as a condition to such sale, SATH, Sub, and Scripps Holding
are required to enter into this Amended and Restated Operating Agreement.

Article 1

Definitions

         Certain capitalized terms used in this Agreement are defined as set forth
on Schedule I.

Article 2

The Company

                  2.1
Formation. The Members hereby agree to associate themselves as Members of the
Company under and pursuant to the provisions of the Act for the limited
purposes and scope set forth in this Agreement. The Members expressly do not
intend to form a partnership under the laws of the State of Tennessee or any
other laws; provided, however, that to the extent permissible by law, the
Members intend for the Company to be treated as a partnership for Federal,
state, and local income tax purposes as more fully set forth in Section 3.4.

                  2.2
Operating Agreement. In consideration of the mutual covenants herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Members hereby agree to the
terms and conditions of this Agreement (as it may from time to time be amended
according to its terms), intending that this Agreement, including the Schedules
and Exhibits incorporated herein, shall be the sole source of agreement among
the Members as to the affairs of the Company and the conduct of its business.

                  2.3
Name. The name of the Company is “Shop At Home Network, LLC” and all business of
the Company shall be conducted under that name or such other assumed or
fictitious name or names as may be approved by the Board of Governors. The
Company shall execute and file, as appropriate, any assumed or fictitious name
certificates and other similar documents and instruments as may be necessary or
appropriate with respect to the conduct of the Company’s business. The name of
the Company may

 

 

be changed if authorized by the Board of Governors and upon any
such name change the Company shall promptly file such name change instruments
as may be required by applicable law.

                  2.4
Purpose. The purpose of the Company is to own and operate a home shopping
cable television network and related interactive web-based service offered and
distributed in North America (the “Shop At Home Network”) and to take any
action as the Board of Governors determines to be appropriate, convenient or
incidental to such purpose.

                  2.5
Authority of Scripps Holding and Scripps Governors with Respect to the
Network. Neither Scripps Holding nor the Scripps Governors will be obligated
to continue the business operations of the Network, and, as the holder of more
than fifty percent (50%) of the Membership Interests, Scripps Holding may cause
the discontinuation of the business of the Network and the dissolution of the
Company, if, in its sole discretion such business is no longer feasible or
desirable or otherwise in the interests of Scripps Holding or Scripps.

                  2.6
Names and Addresses of Members. The names and addresses of the Members
are as reflected on Schedule II.

                  2.7
Period of Duration. The period of duration of the Company shall commence
on the Effective Date and shall continue in perpetuity unless the Company shall
be dissolved and its affairs wound up in accordance with the Act or this
Agreement.

                  2.8
Statutory Agent and Office. The Company’s statutory agent and office in
Tennessee shall be CT Corporation System, 530 Gay Street, Knoxville, Tennessee
37902. At any time, the Board of Governors may designate another statutory
agent or office.

                  2.9
Principal Executive Office. The principal executive office of the Company
shall be at 5388 Hickory Hollow Parkway, Nashville, Tennessee, or such other
location as may be approved by the Board of Governors.

Article 3

Accounting and General Tax Matters

                  3.1
Accounting Methods. The Company shall prepare and maintain its books and records substantially
in accordance with generally accepted accounting principles (subject, in the
case of interim periods, to normal year-end audit adjustments). The Members’
Capital Accounts shall be maintained and Profits and Losses shall be calculated
as provided in this Agreement.

                  3.2
Records. The Company shall maintain and preserve, during the term of the
Company, and for such time after dissolution as the Board of Governors
determines, all accounts, books and other material Company documents and
records, including the documents and records required to be maintained by the
Act.

                  3.3
Fiscal Year. The fiscal year of the Company shall be its Taxable Year,
which is intended to be the twelve (12) calendar month period ending on
December 31 in each year, except that the first fiscal year of the Company
shall be
that period (even if less than twelve months) beginning on the
Effective Date and ending on the next following December 31, and the final
fiscal year of the Company shall be

2

 

that period beginning on January 1 of such
year and ending on the date of cancellation of the Articles of Organization.

                  3.4
Taxation as a Partnership. It is intended that the Company, as a domestic
eligible entity under Treasury Regulations Section 301.7701-3, will be
recognized and treated as a partnership for Federal, state and local tax
purposes and, accordingly, it is agreed that for Federal income tax purposes,
the Company shall keep its books and records and shall report in accordance
with the provisions of Subchapter K of Chapter 1 of the Code and such other
Code and Treasury Regulations provisions as may apply. The Members further
agree that no Member shall cause the Company to elect to be classified other
than as a partnership.

                  3.5
Tax Elections. Except as otherwise provided in this Agreement (including
but not limited to Section 9.4.7 and Section 9.6), the Board of Governors may
make any and all tax elections for the Company allowed under the Code or the
tax laws of any state or other jurisdiction having taxing jurisdiction over the
Company.

                  3.6
Tax Matters Partner. The Board of Governors shall designate one Member as
the “tax matters partner” of the Company pursuant to Section 6231(a)(7) of the
Code. The initial tax matters partner for the Company shall be Scripps
Holding. Upon a Change of Control, a successor “tax matters partner” shall be
designated by a Majority of Members entitled to vote after such Change of
Control is consummated. Any Member designated as the tax matters partner shall
take such action as may be necessary to cause each Member to become a notice
partner within the meaning of Section 6223 of the Code. Any Member who is
designated the tax matters partner may not take any action contemplated by
Sections 6222 through 6232 of the Code without the consent of the Board of
Governors.

                  3.7
Tax Information. The Company shall provide complete tax return information to the Members
within one hundred twenty (120) days after the close of each Taxable Year.

Article 4

Management

                  4.1
Management by the Board of Governors. Except to the extent that any
provision of this Agreement or the Act (and in the case of the Act only those
provisions which cannot be modified by this Agreement) requires any power,
authority, or action to be exercised or taken, or first authorized or taken, or
requires any decision to be made, by the Members, the Board of Governors shall
have the complete and exclusive right and the fullest right, power and
authority, and the Members hereby irrevocably grant to the Board of Governors
the complete and exclusive right, power and authority to the fullest extent
permitted by the Act, to manage, direct, and control the affairs and business
of the Company and exercise the authority and powers of the Company. Without
limiting the generality of the foregoing, and by way of example and not
limitation, the Board of Governors will have the sole right, power and
authority (except as otherwise noted) to cause the Company to take any of the
following actions:

                  4.1.1
acquire, sell, lease, sublease, manage, finance and own assets, whether or
not in the ordinary course of the Company’s business;

                  4.1.2
repurchase Membership Interests or any other class or type of interest in
the Company;

3

 

                  4.1.3
admit new members to the Company and reduce the Membership Interests of
existing Members to reflect the value of new members’ contributions to the
Company in accordance with Section 7.2;

                  4.1.4
make distributions and retain significant balances of cash and cash
equivalents not required for working capital;

                  4.1.5
subject to and in accordance with Section 4.4, enter into any transaction
with any Member or an Affiliate thereof;

                  4.1.6
approve an annual budget and any significant deviations therefrom
(including capital, operating, research and development budgets);

                  4.1.7
make capital expenditures;

                  4.1.8
establish reserves or write-offs;

                  4.1.9
pay, collect, compromise, litigate, arbitrate or otherwise adjust or
settle any and all claims or demands of or against the Company or to hold such
proceeds against the payment of contingent liabilities;

                  4.1.10
borrow money or obtain credit in such amounts, at such rates of interest
and upon such other terms and conditions as it deems appropriate, including
nonrecourse debts, from banks, other lending institutions or any other Person,
including (subject to Section 7.5) the Members or any of their
respective Affiliates, and pursuant to indentures, loan agreements or any
other type of instrument, for any purpose of the Company, and secure payment of
the principal of any such indebtedness and the interest thereon by mortgage,
pledge, conveyance or assignment in trust of or grant security interests in the
whole or any part of any or all of the property and assets of the Company;
provided, however, that no Member shall become personally liable, as a
guarantor or otherwise, without such Member’s written consent;

                  4.1.11
make, execute, assign, acknowledge and file any and all documents or
instruments of any kind which it may deem necessary or appropriate in carrying
out the purposes and business of the Company (and any Person dealing with the
Board of Governors shall not be required to determine or inquire into its
authority or power to bind the Company or to execute, acknowledge or deliver
any and all documents in connection therewith);

                  4.1.12
assume obligations, enter into contracts, including contracts of guaranty
or suretyship, incur liabilities, lend money and otherwise use the credit of
the Company, and secure any and all obligations, contracts or liabilities of
the Company by mortgage, pledge or other encumbrance of all or any part of the
property and assets of the Company;

                  4.1.13
invest funds of the Company;

                  4.1.14
employ and engage suitable agents, employees, advisors, consultants and
counsel (including any custodian, investment advisor, accountant, attorney,
corporate fiduciary, bank or other reputable financial institution, or any
other agents, employees or Persons who may serve in such capacity for any
Member or any Affiliate thereof) to carry out any activities under this
Agreement, including a Person who may be engaged to undertake some or all of
the general management, property

4

 

management, financial accounting and
recordkeeping or other duties, and to indemnify such Persons against
liabilities incurred by them in acting in such capacity on behalf of the
Company;

                  4.1.15
employ and retain Persons as may be necessary or appropriate for the
conduct of the Company’s business;

                  4.1.16
qualify the Company to do business in any state, territory, dependency or
foreign country;

                  4.1.17
form or cause to be formed, and own securities of, one or more
corporations, and form or cause to be formed and participate and own interests
in partnerships, joint ventures, limited liability companies, trusts and other
entities;

                  4.1.18
adopt, fund and maintain employee benefit plans or participate in
affiliated group plans;

                  4.1.19
select and engage independent accountants;

                  4.1.20
choose and change accounting and tax policies;

                  4.1.21
modify or terminate any of the agreements to which the Company is a party
and enter into new agreements; and

                  4.1.22
take any other actions as the Board of Governors determines to be
appropriate, convenient or incidental to the purposes of the Company.

         The expression of any right, power or authority of the Board of Governors
in this Agreement shall not in any way limit or exclude any other right, power
or authority which is not specifically or expressly set forth in this
Agreement.

         4.2
Board of Governors.

                  4.2.1
Composition. So long as SATH and Sub collectively hold 12.5% of the Membership
Interests of the Company, the Board of Governors shall consist of five (5)
members, three (3) to be appointed by Scripps Holding (the “Scripps Governors”)
and two (2) to be appointed by SATH (the “SATH Governors”). Either Scripps
Holding or SATH may remove one or more of its appointees on the Board of
Governors and appoint substitutes therefor at any time and from time to time
upon written notice to the Company and the other Members. Removals and
appointments shall be mandatory at any time upon which the relative Percentage
Interests of the Members shift pursuant to this Agreement, so that the relative
voting power on the Board of Governors complies at all times with the intent of
this Section 4.1.1. Sub shall not be entitled to a Governor. The Company
shall also allow one representative designated by SATH to attend all meetings
of the Board of Governors in a nonvoting capacity.

                  4.2.2
Authority. Except for any matter with respect to which approval of the Members
is expressly required by this Agreement, any matter pertaining to the Company
that the Board of Governors in its discretion submits to a vote of the Members,
or any matter with respect to which approval of the Members is required by any
provision of the Act which cannot be modified by this Agreement (collectively,
the “Reserved Matters”), the Board of Governors shall have full and complete
authority, power and discretion to manage and control the business, operations,
affairs and properties of the Company, to make all decisions regarding those
matters and to perform any and all other acts or activities customary or
incident thereto. Except for decisions in respect of the Reserved Matters, all

5

 

decisions of the Board of Governors shall be presumed to be within its scope of
authority, power and discretion and shall be binding on the Company and each
Member. The Members hereby waive all rights to vote on matters relating to the
management and control of the business, operations, affairs and properties of
the Company, other than with respect to the Reserved Matters, and hereby
irrevocably assign all such voting rights to the Board of Governors. No member
of the Board of Governors in his or her capacity as such shall have the
authority, power or discretion to take any action individually other than in
the course of carrying out delegated authority, power or discretion under
direction given by the Board of Governors or its delegee duly acting.

                  4.2.3
Voting. All approvals, authorizations, consents, decisions, votes and other
actions of the Board of Governors under this Agreement (“Board Actions”) shall
be deemed duly given, made or taken if accomplished either by (i) the
affirmative vote of a majority of the Board of Governors at a duly constituted
meeting at which a quorum is present, or (ii) the written action or consent of
a majority of the Board of Governors.

                  4.2.4
Meetings. Meetings of the Board of Governors will be held quarterly at such time and
place as are specified in a call for such meeting made by any two members of
the Board of Governors by giving at least five (5) business days prior written
notice to the other members of the Board of Governors of the time, place and
purposes of such meeting. Meetings may be held by conference telephone if each
person participating in the meeting can hear and be heard by the others. A
designee of the Board of Governors shall keep minutes of each meeting and a
record of all Board Actions and shall deliver such minutes and records to the
members of the Board of Governors promptly after such meeting.

                  4.2.5
Committees. The Board of Governors may form such committees of its members
with such delegated authority, power and discretion as the Board of Governors
may determine from time to time are in the best interests of the Company and
the Members. Each such committee shall include at least one SATH Governor.

                  4.2.6
Compensation. The Company shall not compensate any Governor for services he or
she may render to or for the Company in his or her capacity as Governor;
provided that the Company shall reimburse each Governor for his or her
reasonable out-of-pocket expenses incurred in such capacity on behalf of the
Company, subject to any limits imposed by the Board of Governors.

                  4.2.7
Governors’ Time and Effort. Notwithstanding any other provision of this
Agreement to the contrary, no Governor shall be required to devote his or her
full time, effort, or attention to the operations, business and affairs of the
Company, but shall devote such time, effort and attention as such Governor
deems to be reasonably necessary to manage and direct the operations, business
and affairs of the Company.

         4.3
Officers and Employees.

                  4.3.1
The day-to-day operational management of the Company shall be exercised by
such officers as shall be appointed from time to time by the Board of
Governors, which officers shall include a President who will be the Chief
Manager of the Company and a Secretary and may include any number of
Vice-Presidents as may be deemed necessary from time to time by the Board of
Governors and a Treasurer, and may include any other officer as may be deemed
necessary by the Board of Governors from time to time. Except for the
positions of President and Secretary which shall not be held by the same
Person, one Person may hold more than one position, but no officer shall
execute, acknowledge, or verify any instrument in

6

 

more than one capacity. The
officers, subject to the direct control of the Board of Governors, shall do all
things and take all actions necessary or appropriate to run the business of the
Company. Any officer may be removed at any time, with or without cause by the
Board of Governors.

                  4.3.2
The Company may employ such employees and agents as the Board of Governors
deems necessary or appropriate to effectuate the purposes of the Company.

                  4.3.3
The officers and employees of the Company may be officers and employees of
Scripps or its Affiliates, including Scripps Holding, and officers and
employees of the Company may also be officers and employees of Scripps Holding.
The Members hereby waive any conflict of interest that may arise in connection
with the foregoing.

                  4.4
Arrangements with Scripps Affiliates. The Company may enter into any
agreement or contract with any Person who is an Affiliate of Scripps, without
the prior approval of any Member; provided that any such agreement or contract
shall contain substantially such terms and conditions as would be contained in
a similar agreement or contract entered into by the Company with a comparable,
unaffiliated third party.

         4.5
Compensation of Scripps Holdings.

                  4.5.1
Scripps Holding and its personnel, and any Affiliates of it and their
personnel utilized by the Company, may be compensated and reimbursed by the
Company for their operating, administrative, management, employee and clerical
services for and on behalf of the Company, including but not limited to, the
following functions: (i) bookkeeping and accounting, (ii) data processing,
(iii) accounts payable, (iv) purchasing, (v) regulatory reporting, (vi)
contract administration, (vii) legal, tax and auditing matters, (viii)
marketing, (ix) advertising and affiliate sales, (x) programming, (xi)
promotion and development, and (xii) human resources matters. Such
compensation and reimbursement shall be on substantially the terms that would
be available in connection with the provision of such services from comparable,
unaffiliated third parties as the Board of Governors shall determine in its
discretion.

                  4.5.2
The Company shall reimburse Scripps Holding for all compensation,
benefits, costs, employment taxes, and expenses paid by Scripps Holding to any
officer or other employee of Scripps Holding or any Affiliate of Scripps
Holding assigned to or working for the Company.

                  4.6
Discretion. Whenever in this Agreement the Board of Governors or a Member is
permitted or required to make a decision in its “discretion” or under a grant
of similar authority or latitude, each Governor or Member shall be entitled to
exercise his or its sole and absolute discretion after considering only such
interests and factors as he or it desires, including, exclusively its interests
in the case of a Member, and the interests of the Member he represents on the
Board of Governors in the case of a Governor; and shall have no duty or
obligation to give preference to any interest of or factors affecting the other
Members of its Governor(s).

Article 5

General Rights and Obligations of Members

                  5.1
Limitation of Liability. Each Member’s personal liability for the debts,
liabilities and obligations of the Company shall be limited as set forth in the
Act, including but not limited to Section 48-217-101 of the Act, and as set
forth in Section 6.1.2.

7

 

                  5.2
Standards for Access to Information. Any Member requesting access to the
information described in Section 48-228-102 of the Act shall make such demand
in writing, stating the purpose of the demand in reasonable detail, mailed or
delivered to the Company at the Principal Office. The Company shall comply with
such demand by providing the Member with the right to examine documents in
person or by agent or attorney and to make copies of the documents personally
examined, or providing the Member true and accurate copies
of the documents responsive to the demand. The Company may not keep
confidential from the Members any information concerning the business or
affairs of the Company, including but not limited to, trade secrets, except
information that the Company is required by order of a court of competent
jurisdiction to keep confidential, and any confidential information disclosed
to a Member shall be subject to the confidentiality and nondisclosure
provisions of Section 5.8.

                  5.3
Limited Voting and Management Rights. Members (but not Assignees who have not
been admitted as Substitute Members pursuant to Article 12) shall be entitled
to vote only on the Reserved Matters. Except to the extent otherwise expressly
provided in this Agreement or in any provision of the Act which cannot be
modified by this Agreement, all Reserved Matters shall require the affirmative
consent or approval, either in writing or pursuant to a vote at a duly
constituted meeting of the Members entitled to vote thereon, of Members having
Percentage Interests in excess of 50% of the Percentage Interests of all
Members (a “Majority of the Members”). The Members shall meet as often as shall
be necessary to act on the Reserved Matters. Except as otherwise provided in
this Agreement with respect to the Reserved Matters, no Member may in its
capacity as a member participate in the management, control or direction of the
Company’s operations, business or affairs, transact any business for the
Company, or have any right, power or authority to act for or on behalf of or to
bind the Company, the same being vested solely and exclusively in the Board of
Governors and its delegees. The Members acknowledge and agree that each Member,
when exercising its right to vote on Reserved Matters, shall be entitled to
exercise such right to vote considering exclusively its own interests and,
without limiting the generality of the foregoing, such Member, in exercising
its right to vote, shall have no duty or obligation to consider the interests
of the Company or the interests of any other Member and may exercise its right
to vote irrespective of the effect that the action proposed to be taken will
have on the Company or on any other Member and that the foregoing provisions
apply whether or not any single Member or group of Affiliated Members
constitutes or controls a Majority of the Members.

                  5.4
Representations and Warranties. Each Member hereby represents and
warrants to the Company and each other Member that: (a) it is duly organized,
validly existing and in good standing under the laws of its state of
organization; (b) it has all requisite power and authority to enter into this
Agreement; (c) its execution and delivery of this Agreement and its
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate or limited liability company action on its part; (d)
this Agreement has been duly and validly executed and delivered by it and
constitutes (assuming the due and valid execution and delivery of this
Agreement by the other party) its legal, valid and binding obligation,
enforceable against it in accordance with its terms; (e) there is no litigation
pending or, to the best of its knowledge, threatened against it which has a
reasonable likelihood of materially and adversely affecting the operations,
properties or business of the Company or any of such party’s obligations under
this Agreement; (f) its execution, delivery and performance of this Agreement
will not result in a breach of any of the terms, provisions or conditions of
any agreement to which it is a party which has a reasonable likelihood of
materially and adversely affecting the operations, properties or business of
the Company or its obligations under this Agreement; (g) its execution and

8

 

delivery of this Agreement does not require any filing by such party with, or
approval or consent of, any governmental authority which has not already been
made or obtained; and (h) it acknowledges that its Membership Interest has not
been registered under the Securities Act of 1933, as amended, or any state
securities laws and may not be resold or transferred by such party without
appropriate registration or in accordance with an opinion of
counsel in form and substance satisfactory to the Board of Governors that an
exemption from such requirements is available.

                  5.5
No Withdrawal of a Member. Except as specifically provided in Article 11,
and subject to the provisions for Disposition contained therein, no Member
shall have the right to withdraw as a Member of the Company prior to the
Liquidation and termination of the Company. No Member shall be considered to
have ceased to be or to have withdrawn as a member of the Company for any
reason listed in Section 48-245-101(a)(5) of the Act, it being the express
intent of the parties that this Agreement contain the complete understanding of
the Members in respect thereof. In addition, no Member shall have the right to
receive a return of or withdraw any portion of its Capital Contributions to, or
to receive any Distributions or Liquidation Proceeds from, the Company, except
as provided in Article 10, Article 11 or Article 13, as the case may be.

                  5.6
Title to Property. All real and personal property owned by the Company
shall be owned by the Company as an entity and no Member shall have any
ownership interest in such property in the Member’s individual name or right.
No Member, officer, or agent of the Company shall have the right or authority
to pledge, lien, or mortgage any Company asset for his or its own personal
benefit.

                  5.7
Financial Statements. The Board of Governors shall deliver to all Members
annual audited financial statements of the Company, commencing with the Fiscal
Year ending December 31, 2002, within ninety (90) days after the close of each
Fiscal Year and shall deliver to all Members monthly unaudited financial
statements of the Company within thirty (30) days after the end of each fiscal
month, or within such earlier timeframe as necessary to let the Members comply
with their respective reporting obligations to the Securities and Exchange
Commission.

                  5.8
Confidentiality Covenants. Each Member agrees that, except as required by
law, legal process, government regulators, or as reasonably necessary for the
proper performance of such Member’s obligations or the enforcement of such
Member’s rights under this Agreement, such Member will treat and hold as
confidential (and not disclose or provide access to any Person other than such
Member’s attorneys or accountants, without the prior written consent of the
Company) and such Member will cause its Affiliates, officers, managers,
governors, partners, employees and agents to treat and hold as confidential
(and not divulge, provide access to any Person, or use to the detriment of the
disclosing Member or the Company, without the prior written consent of the
Board of Governors) all information relating to (i) the business of the Company
and of Scripps Holding and (ii) any patents, inventions, designs, know-how,
trade secrets or other intellectual property relating to the Company or to
Scripps Holding in each case which is of a proprietary nature and the secrecy
of which provides a material, competitive, or economic advantage to the Company
or Scripps Holding, and in each case excluding (A) information in the public
domain when received by such Member or thereafter in the public domain through
sources other than such Member, (B) information lawfully received by such
Member from a third party not subject to a confidentiality obligation and (C)
information developed independently by such Member. The obligations of the
Members hereunder shall not apply to the extent that the disclosure of
information otherwise determined to be confidential is required by applicable
law, provided, however, that prior to disclosing such confidential information
to any party other than a

9

 

governmental agency exercising its ordinary
regulatory oversight of a Member, a Member shall notify the Company thereof,
which notice shall include the basis upon which such Member believes the
information is required to be disclosed. This Section 5.8 shall survive for a
period of five years with respect to any Member that for any reason ceases to
be a Member of the Company and for a period of time agreed to by all of the
Members in connection with any dissolution of the Company pursuant to Article
13. The provisions of this Section 5.8 shall be enforceable by any and all
remedies available at law and in equity, including, but not limited to, damages
and injunctive relief.

                  5.9
Outside Businesses or Opportunities. Except as set forth in the letter
agreement, dated as of the date hereof, between SATH and Scripps relating to
SATH’s right to participate in future acquisitions by Scripps of a home
shopping network, Scripps or any Affiliate thereof may engage in or possess an
interest in any business venture of any nature or description, including,
without limitation, any business venture for the exploitation of home shopping
programming, content, merchandising, licensing and products and services and
all rights in connection therewith in all media and formats now or hereafter
devised, including without limitation, magazines, radio programming,
conventions and trade shows, independently or with others, which business
venture may be the same as, similar to or dissimilar to the business of the
Company or Scripps Holding, and may use the words “Shop At Home”; and neither
the Company or Scripps Holding, nor any Member of the Company or any
shareholder of Scripps Holding, shall have any rights by virtue of this
Agreement in and to such independent ventures or the income or profits derived
therefrom, and the pursuit by Scripps or any such Affiliate of any such
venture, even if competitive with the business of the Company or Scripps
Holding, shall not be deemed wrongful or improper. Neither Scripps nor any
Affiliate thereof shall be obligated to present any particular investment
opportunity to the Company or Scripps Holding even if such opportunity is of a
character which, if presented to the Company or Scripps Holding, could be taken
by the Company or Scripps Holding or which, absent this provision, would have
to be presented to the Company or Scripps Holding, and Scripps or any such
Affiliate shall have the right to take for its own account (individually or as
a partner or fiduciary) or to recommend to others any such particular
investment opportunity.

                  5.10
Noncompetition Covenant of SATH. Solely for purposes of this Section 5.10 and
for no other purpose, the term “Affiliate” does not include any individual
stockholder of SATH or any Person that is a director or officer of SATH.
During the period in which SATH has any interest in the Company, and for a
period of three years following the earlier of the termination of this
Agreement or the termination of SATH’s interest in the Company, neither SATH
nor any of its Affiliates shall directly or indirectly acquire or possess any
interest, or engage or participate, independently or with any other Person, as
an owner, investor, shareholder, member, partner, joint venturer, lender,
manager, governor, operator, distributor, consultant, contractor, director,
officer, employee, agent or otherwise, in any business, enterprise, venture or
other activity that consists of the development, ownership, distribution and
commercial exploitation of a cable television network or interactive web-based
service business the same or substantially the same in concept as the Shop At
Home Network. The provisions of this Section 5.10 shall be enforceable by any
and all remedies available at law and in equity, including, but not limited to,
damages and injunctive relief. Notwithstanding the foregoing, SATH, or any
Affiliate of SATH, may acquire and hold shares
constituting not more than five percent (5%) of the equity in any company where
the shareholding is for investment purposes only and does not confer any
control over the business in question and neither SATH nor any such Affiliate
is involved in the management of such company or provides services to such
company.

10

 

                  5.11
Re-formation in Delaware. SATH hereby consents to the re-formation of the
Company as a Delaware limited liability company at Scripps Holdings’ option, by
virtue of a merger with and into a Delaware limited liability company
containing substantially the same rights and obligations with respect to the
Membership Interests as contained herein.

Article 6

Exculpatory Provisions; Indemnification

         6.1
Exculpatory Provisions.

                  6.1.1
General Limitation of Liability. Notwithstanding any other provision of this
Agreement, whether express or implied, or any obligation or duty at law or in
equity (including fiduciary duties), none of the Members, any Governor, or any
of their respective Affiliates, or any of their respective officers, directors,
stockholders, partners, employees, representatives or agents, and none of the
officers, employees, representatives or agents of the Company or its Affiliates
(individually, a “Covered Person” and collectively, the “Covered Persons”)
shall be liable to the Company or any Member for any act or omission of such
Covered Person in reliance on the provisions of this Agreement, provided that
such act or omission does not constitute fraud, willful misconduct or bad faith
(“Disabling Conduct”). For the avoidance of doubt, the Members acknowledge and
agree that under no circumstances will the exercise by a Member of its voting
rights, or the direction of a member over its representative(s) on the Board of
Governors, under any section of this Agreement and the consideration in
connection therewith by such Member of exclusively its own interests
irrespective of any interests of the Company or any other Member, constitute
Disabling Conduct. A Covered Person may rely and shall incur no liability in
acting or refraining from acting in reliance upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent, order, bond,
debenture, paper, document, signature or writing reasonably believed by such
Covered Person to be genuine, and a Covered Person may rely on a certificate
signed by an officer or other agent or representative of any Person in order to
ascertain any fact with respect to such Person or within such Person’s
knowledge and may rely on an opinion of counsel selected by such Covered Person
with respect to legal matters, unless in any such case such Covered Person
commits Disabling Conduct.

                  6.1.2
Limitation of Duties. The provisions of this Agreement, including, without
limitation, this Section 6.1 and Section 5.3, to the extent that they alter,
define, limit, modify or restrict the duties (including fiduciary duties) and
liabilities of any Covered Person otherwise existing at law or in equity, are
agreed by the Members to replace such other duties (including fiduciary duties)
and liabilities of such Covered Person.

                  6.1.3
No Consequential Damages. Notwithstanding any other provision of this Agreement, no Covered Person
shall be liable to any other Member, any Governor or other Person claiming by
or through any Member, Governor or Affiliate thereof for any lost profits or
any special, incidental, consequential, or punitive losses or damages arising
out of this Agreement or any breach thereof or any actions or omissions in
connection therewith or as the result of any investment in the Company by any
Member or Governor or any rights as a Member or Governor.

         6.2
Indemnification of Governors and Other Indemnified Persons.

11

 

                  6.2.1
General Obligations of the Company. To the fullest extent permitted by law,
the Company shall indemnify and hold harmless each Covered Person from and
against any and all losses, claims, demands, liabilities, expenses (including
all fees and expenses), judgments, fines, settlements and other amounts arising
from any and all claims, demands, actions, suits or proceedings, whether civil,
criminal, administrative or investigative in nature, in which the Covered
Person may be involved, or threatened to be involved, as a party or otherwise,
by reason of being a Member or by reason of management of the affairs of the
Company, or status as a Governor, or an Affiliate thereof, or partner,
director, officer, member, manager, governor, stockholder, employee,
representative or agent thereof or of the Company or a Person serving at the
request of the Company, any Governor or any Affiliate thereof with another
Person in a similar capacity, which relates to or arises out of the property,
business or affairs of the Company, and regardless of whether the liability or
expense accrued at or relates to, in whole or in part, any time before, on or
after the date hereof. The negative disposition of any such action, suit or
proceeding by judgment, order, settlement, conviction or upon a plea of nolo
contendere, or its equivalent, shall not, of itself, create a presumption that
the Covered Person acted in a manner contrary to the standard set forth in
Section 6.2.2. Any indemnification pursuant to this Section 6.2 shall be made
only out of the assets of the Company.

                  6.2.2
Disabling Conduct. A Covered Person shall not be entitled to indemnification
under Section 6.2.1 with respect to any claim, issue or matter in which it has
been finally determined by the non-appealable judgment of a court of competent
jurisdiction that it has engaged in Disabling Conduct; provided that a court of
competent jurisdiction may determine upon application that, despite such
Disabling Conduct, in view of all the circumstances of the case, the Covered
Person is fairly and reasonably entitled to indemnification for such
liabilities and expenses as the court may deem proper.

                  6.2.3
Advances. To the fullest extent permitted by law, expenses (including legal
fees and expenses) incurred by a Covered Person in defending any claim, demand,
action, suit or proceeding shall, from time to time, be advanced by the Company
prior to the final disposition of such claim, demand, action, suit or
proceeding upon receipt by the Company of an undertaking by or on behalf of the
covered Person to repay such amount if it shall be determined that the covered
Person is not entitled to be indemnified as authorized in this Section 6.2.

                  6.2.4
Non-Exclusivity. The indemnification provided by this Section 6.2 shall be in addition to
any other rights to which a Covered Person may be entitled under any agreement,
by law or vote of the Members or otherwise, both as to action in the Covered
Person’s capacity as a Governor, an Affiliate thereof or a partner, director,
officer, stockholder, member, manager, governor, representative, employee or
agent thereof, or an officer, employee, representative or agent of the Company
or an Affiliate thereof and, as to action in any other capacity, shall continue
as to a Covered Person who has ceased to serve in such capacity and shall inure
to the benefit of the heirs, successors, assigns and administrators of a
Covered Person.

                  6.2.5
Insurance. The Company may purchase and maintain insurance, to the extent and
in such amounts as the Board of Governors shall, in its discretion, deem
reasonable, on behalf of Covered Persons and such other Persons as the Board of
Governors shall determine, against any liability that may be asserted against
or expenses that may be incurred by such Person in connection with activities
of the Company or such indemnitees, regardless of whether the Company would
have the power to indemnify such Person against such liability under the
provisions of this Agreement. The Board of Governors may cause the Company to
enter into indemnity contracts with Covered Persons and adopt written
procedures

12

 

pursuant to which arrangements are made for the advancement of
expenses and the funding of obligations under this Section 6.2 and containing
such other procedures regarding indemnification as are appropriate.

                  6.2.6
No Personal Liability of Members. In no event may any Covered Person subject
the Members to personal liability by reason of any indemnification of a Covered
Person under this Agreement or otherwise. Any indemnification by the Company
as authorized by this Section 6.2 shall in no event cause the Members to incur
any personal liability beyond their liability stated under this Agreement, nor
shall it result in any liability of the Members to any third party.

                  6.2.7
Conflicts of Interest. A Covered Person shall not be denied indemnification in
whole or in part under this Section 6.2 because the Covered Person had an
interest in the transaction with respect to which the indemnification applies
if the transaction is otherwise permitted by the terms of this Agreement.

                  6.2.8
Beneficiaries. The provisions of this Section 6.2 are for the benefit of the
Covered Persons and their heirs, successors, assigns, administrators and
personal representatives and shall not be deemed to be for the benefit of any
other Persons. The provisions of this Section 6.2 shall not be amended in any
way that would adversely affect the Covered Person without the consent of the
Covered Person.

Article 7

Contributions and Loans

                  7.1
Members’ Capital Contributions. As of the Effective Date, each Member has made the Capital Contribution to
the Company that is set forth opposite such Member’s name on Schedule II. No
Member shall be required to make any additional Capital Contributions.

                  7.2
Additional Equity Funding. If a Majority of the Members determine, in
such Majority’s discretion, that the Company requires funding in addition to
that available under the EWS Credit Facility, the Scripps Governors shall have
the sole discretion to determine whether such funding will be in the form of a
loan to the Company by Scripps or an Affiliate thereof, the Members (pursuant
to Section 7.5) or a third party, or whether such funding will be in the form
of Additional Capital Contributions from the Members or Scripps or an Affiliate
of Scripps or a third party, any such contribution to be based upon the Fair
Market Value of the Company at the time such contribution is proposed to be
made, as determined in accordance with Section 11.8. If Capital Contributions
are to be made in accordance with the foregoing by Scripps or Scripps Holding
or any of their Affiliates, SATH shall be entitled to make an Additional
Capital Contribution on a pro rata basis and will be granted a period of six
(6) months, measured from receipt of written notice evidencing the aforesaid
commitment of Scripps, Scripps Holding or such Affiliate, to determine whether
or not to make such Additional Capital Contribution and to make such Additional
Capital Contribution in accordance herewith. During such six (6) month period,
Scripps, Scripps Holding or such Affiliate of Scripps may make its contemplated
Additional Capital Contribution and may loan to the Company funds equal to the
portion of the Additional Capital Contribution to be made by SATH, with such
loan bearing interest at 6% per annum and with such interest being borne by
SATH and payable at the time of its Additional Capital Contribution. Such loan
shall be repaid in full, with such interest, when SATH makes its Additional
Capital Contribution as contemplated. If a third party makes an additional
capital contribution or if Scripps, Scripps Holding or an Affiliate of Scripps
makes Additional Capital Contributions to the

13

 

Company, but SATH and/or Sub do
not (or both Scripps and Sub and/or SATH make Additional Capital Contributions,
but not in the ratio of their then-current respective Percentage Interests),
then the Percentage Interests of the Members will be recomputed, based on the
ratio of the fair market values of the Members’ respective Capital Accounts as
of the end of the six-month period referred to above and taking into account
the Additional Capital Contributions of the Members. Notwithstanding and
without limiting the foregoing, SATH will not have any preemptive right to
purchase any securities issued to any third party other than Scripps, Scripps
Holding or an Affiliate of Scripps.

                  7.3
No Interest. No interest shall accrue on any Capital Contribution.

                  7.4
Credit Line. The E.W. Scripps Company (“EWS”) and the Company have entered
into a credit facility, dated      , 2002, pursuant to which EWS may loan up
to $35,000,000 in aggregate principal amount to the Company as EWS determines
in its sole discretion is necessary for the working capital needs of the
Company (the “EWS Credit Facility”). Other than Tax Distributions, the Company
shall not make any distributions to the Members until all principal and
interest outstanding under the EWS Credit Facility is paid in full. The
Members each have received and reviewed copies of all documents evidencing the
EWS Credit Facility.

                  7.5
Loans From Members. In the event that the Board of Governors determines in its
reasonable business judgment that it is in the best interest of the Company to
borrow funds from the Members for use in the operation of the business of the
Company, the Company shall give written notice of such determination to the
Members including a requested loan amount. The Members shall have a period of
twenty (20) days from the date of such notice in which to give the Company
written notice that they wish to loan funds to the Company in an amount equal
to the amount of the requested loan, multiplied by their respective Percentage
Interests. In that case, the Company shall execute a promissory note in form
and content reasonably acceptable to all Members making a loan and such Members
shall each loan their share of the requested funds in cash to the Company
within five (5) days after the Member’s written election to participate in such
loan is delivered to the Company. If all Members do not elect to participate
in the making of any such loan within the aforementioned twenty (20) day
period, the Company may borrow the remaining amount from the Members who have
elected to participate in such loan request, in such manner as the Board of
Governors deems reasonably appropriate. All loans made pursuant to this
Section 7.5 shall be payable upon demand or upon such other commercially
reasonable terms as the Board of Governors shall determine. Unless otherwise
agreed by the Board of Governors, interest shall accrue and may be payable
monthly on the unpaid principal balance of any such loan at a fluctuating
interest rate not to exceed two percentage points (2%) in excess of the
announced prime rate of The Fifth Third Bank of Cincinnati, Ohio or its
successors, and any change in the interest rate due to a change in such
announced prime rate shall be effective immediately upon and after each such
announced change in the prime rate. Any payments made by the Company on such
loans shall be made to the Members in proportion to the outstanding balance of
the loans owed to each of them. In making any such loan, Members shall be
treated as general creditors of the Company and not as Members.

Article 8

Capital Accounts

         8.1
Creation and Maintenance.

                  8.1.1
Interpretations. The Company shall maintain for each Member a separate Capital
Account in accordance with Treasury Regulations Section 1.704-1(b), this
Section 8.1 and all other

14

 

provisions of this Agreement relating to the
maintenance of Capital Accounts. All such provisions of this Agreement are
intended to be interpreted and applied in a manner consistent therewith.

                  8.1.2
Computations. The Capital Account of each Member shall, except as otherwise
expressly stated herein, initially consist of the amount of its Capital Account
immediately after the date of this Agreement. The Member’s Capital Account
shall be increased by (a) the amount of cash or the Agreed Value of Contributed
Property it contributes to the Company, net of liabilities assumed by the
Company or to which the Contributed Property is subject and (b) its allocable
share of Profits and items thereof allocated pursuant to the provisions of this
Agreement. Its Capital Account shall be decreased by (i) the amount of any
cash distributed to it, (ii) the fair market value of any Company Property
distributed to it (net of the amount of any Company liability assumed by such
Member or which is secured by any Company Property distributed to such Member),
(iii) its allocable share of Losses and items thereof allocated
pursuant to the provisions of this Agreement, (iv) its share of any
expenditures described in Code Section 705(a)(2)(B), and (v) such other items
as are required by the Treasury Regulations.

         8.1.3
Book Value and Revaluations of Company Property.

                  (a)
“Book Value” means, with respect to any asset of the Company, such asset’s
adjusted basis for federal income tax purposes, except as follows:

                           (i)
The initial Book Value of any Contributed Property shall be the gross fair
market value of such asset.

                           (ii)
The Book Value of all Company assets shall be adjusted to equal their
respective gross fair market values, as determined by the Board of Governors in
accordance with Code Section 7701(g), as of the following times: (a) the
acquisition of an additional interest in the Company by any new or existing
Member in exchange for more than a de minimis Capital Contribution; (b) the
distribution by the Company to a retiring or continuing Member as consideration
for a Membership Interest in the Company of more than a de minimis amount of
money or other Company Property; and (c) the Liquidation of the Company.

                           (iii)
If the Book Value of an asset has been determined or adjusted pursuant to
clause (i) or (ii) of this Section 8.1.3, such Book Value shall thereafter be
adjusted for the Depreciation taken into account with respect to such asset for
purposes of computing Profits and Losses.

                  (b)
The decision of whether to revalue the Company Property and the Members’
Capital Accounts, and the amount of any such adjustments shall be determined by
the Board of Governors using such reasonable methods of valuation as it may
adopt.

                  8.1.4
Effective Terminations under Code Section 708(b)(1)(B). A Transferee of a
Member’s Membership Interest will succeed to the Capital Account (or portion
thereof) relating to the Disposed interest; provided, however, that if the
Disposition causes a termination of the Company under Code Section
708(b)(1)(B), the Company Properties shall be deemed to have been contributed
to a new limited liability company in exchange for all of the interests in such
new limited liability company, which interests will then be deemed to be
distributed in Liquidation of the Company to the Members (including the
transferee of an interest). The Capital Accounts of such new limited liability
company shall be maintained in accordance with the principles set forth herein,
this Agreement will apply to such

15

 

new limited liability company and all
references herein to the Company will become references to the new limited
liability company.

                  8.2
Transfer of Capital Account; No Code Section 743 Adjustment. In the event of a
Disposition of some or all of a Member’s Membership Interest as permitted by
this Agreement, the Capital Account of the Disposing Member shall become the
Capital Account of the Transferee to the extent it relates to the portion of
the Membership Interest subject to the Disposition. The Capital Account to
which a Transferee succeeds pursuant to a Disposition shall not be adjusted to
reflect any basis adjustment under Code Section 743.

                  8.3
No Deficit Restoration Obligation. Notwithstanding anything in this Agreement
to the contrary, no Member shall have an obligation to make any contributions
of capital to the Company at any time, including but not limited to an
obligation to restore a deficit Capital Account or otherwise.

Article 9

Allocations

                  9.1
Allocation of Operating Profits and Losses. After accounting for the special
allocations contemplated by Section 9.4, and subject to the provisions of
Section 9.2 and Section 9.3, Operating Profits and Losses shall be allocated
among the Members as follows:

                  9.1.1
Profits. Operating Profits shall be allocated in the following order and
priority:

                           (a) First, to the extent that Losses have been allocated pursuant to
Section 9.1.2(b), Profits shall be allocated among the Members to offset the
Losses allocated pursuant to Section 9.1.2(b) until the cumulative Profits
allocated pursuant to this Section 9.1.1(a) equal cumulative Losses allocated
pursuant to Section 9.1.2(b) for all periods (and allocated among the Members
pro rata in proportion to their shares of Losses being offset).

                           (b) Second, the balance, if any, shall be allocated to the Members pro
rata in proportion to their respective Percentage Interests.

                  9.1.2
Losses. Operating Losses shall be allocated in the following order and
priority:

                           (a)
First, to the extent Profits have been allocated pursuant to Section
9.1.1(b) for any prior Taxable Year, Losses shall be allocated first to offset
any Profits allocated pursuant to Section 9.1.1(b) (pro rata among the Members
in proportion to their shares of Profits being offset). To the extent that any
allocations of Profits are offset pursuant to this Section 9.1.2(a), such
allocations shall be disregarded for purposes of computing subsequent
allocations pursuant to this Section 9.1.2(a).

                           (b)
Second, to the Members pro rata in proportion to their respective
Percentage Interests.

                  9.1.3
Limitations and Special Allocations. Notwithstanding the provisions of Section
9.1.2, no Losses will be allocated to a Member to the extent it would result in
or cause a further increase in a deficit balance in its Adjusted Capital
Account as of the end of the Taxable Year. In such event, such Losses will be
allocated among the Members pro rata in proportion to their Adjusted Capital
Account balances. Furthermore, if any Losses are allocated among the Members
pursuant to this Section 9.1.3(a),

16

 

then notwithstanding the provisions of
Section 9.1.1,
Operating Profits occurring after the Taxable Year of such Losses will first be
allocated to those Members to offset the Losses so allocated pursuant to the
second sentence of this Section 9.1.3(a).

                  9.2
Special Allocations. Notwithstanding anything to contrary contained in Section
9.1, the following special allocations contemplated by this Section 9.2 shall
in all events apply in determining the allocation of Profits and Losses among
the Members and shall be made prior to the allocations required under Section
9.1.

                           9.2.1
Nonrecourse Deductions. Nonrecourse Deductions shall be allocated to the
Members in proportion to their Percentage Interests.

                           9.2.2
Member Nonrecourse Deductions. Any Member Nonrecourse Deductions for any
Taxable Year shall be allocated to the Member(s) bearing the economic risk of
loss with respect to the Member Nonrecourse Debt to which such Member
Nonrecourse Deductions are attributable in accordance with Treasury Regulations
Section 1.704-2 (i)(1).

                           9.2.3
Company Minimum Gain. Notwithstanding any other provisions of this Agreement,
in the event there is a net decrease in Company Minimum Gain during a Taxable
Year, the Members shall be allocated items of income and gain in accordance
with Treasury Regulations Section 1.704-2(f). For purposes of this Agreement,
this Section 9.2.3 is intended to comply with the minimum gain charge-back
requirement of Treasury Regulations Section 1.704-2(f) and shall be interpreted
and applied in a manner consistent therewith.

                           9.2.4
Member Minimum Gain. Notwithstanding any provision of the Agreement to the
contrary (except Section 9.2.3 and subject to the exceptions set forth in
Treasury Regulations Section 1.704-2(i)(4)), if there is a net decrease in
Member Nonrecourse Debt Minimum Gain during any Taxable Year, each Member who
has a share of the Member Nonrecourse Debt Minimum Gain, determined in
accordance with Treasury Regulations Section 1.704-2(i)(3), shall be specially
allocated items of Company income and gain for such Taxable Year (and, if
necessary, subsequent Taxable Years) in an amount equal to such Member’s share
of the net decrease in Member Nonrecourse Debt Minimum Gain, determined in
accordance with Treasury Regulations Section 1.704-2(i)(5). Allocations
pursuant to the previous sentence shall be made in proportion to the respective
amounts required to be allocated to each Member pursuant thereto. The items to
be so allocated shall be determined in accordance with Treasury Regulations
Section 1.704-2(i)(4). This Section 9.2.4 is intended to comply with the
minimum gain chargeback requirement in Treasury Regulations Section 1.704-2(i)
and shall be interpreted consistently therewith. Solely for purposes of this
Section 9.2.4, each Member’s Adjusted Capital Account balance shall be
determined prior to any other allocations pursuant to this Article 9 with
respect to such Taxable Year, other than allocations pursuant to Section 9.2.3.

                           9.2.5
Qualified Income Offset. Any Member who unexpectedly receives an adjustment, allocation or
distribution described in Treasury Regulations Code Sections
1.704-1(b)(2)(ii)(d)(4), (5) or (6) that causes a deficit balance in its
Capital Account (in excess of any amounts which such Member is obligated to
restore to the Company, if any, or any deemed deficit restoration obligation
pursuant to Treasury Regulations Sections 1.704-2(g)(1) and (i)(5)), shall be
allocated items of income and gain in an amount and a manner sufficient to
eliminate, to the extent required by the Treasury Regulations, such deficit
balance as quickly as possible. This Section 9.2.5 is intended to comply with
the alternate test for

17

 

economic effect set forth in Treasury Regulations
Section 1.704-1(b)(2)(ii)(d) and shall be interpreted and applied in a manner
consistent therewith.

                  9.2.6
Gross Income Allocation. If any Member has a deficit Capital Account at the
end of any Company Taxable Year which is in excess of the sum of (i) the amount
(if any) such Member is obligated to restore pursuant to any provision of this
Agreement, and (ii) the amount such Member is deemed to be obligated to restore
pursuant to the penultimate sentences of Treasury Regulations Sections
1.704-2(g)(1) and 1.704-2(i)(5), each such Member shall be specially allocated
items of Company income and gain in the amount of such excess as quickly as
possible, provided that an allocation pursuant to this Section 9.2.6 shall be
made only if and to the extent that such Member would have a deficit Capital
Account in excess of such sum after all other allocations provided for in this
Article 9 have been made as if this Section 9.2.6 and Section 9.2.5 were not in
this Agreement.

                  9.2.7
Code Section 754 Adjustments. To the extent an adjustment to the adjusted
basis of any Company Property or Contributed Property pursuant to Code Section
734(b) or Code Section 743(b) is required, pursuant to the Treasury Regulations
to be taken into account in determining Capital Accounts, the amount of such
adjustment to the Capital Accounts shall be treated as an item of gain (if the
adjustment increases the basis of the asset) or loss (if the adjustment
decreases such basis), and such gain or loss shall be specially allocated to
the Members in a manner consistent with the manner in which their Capital
Accounts are required to be adjusted pursuant to the Treasury Regulations.

                  9.3
Corrective Allocations. The allocations set forth in Section 9.2 (the
“Regulatory Allocations”) are intended to comply with the requirements of
Treasury Regulations Sections 1.704-1(b) and 1.704-2. Notwithstanding any
other provisions of this Article 9 (other than the Regulatory Allocations), the
Regulatory Allocations shall be taken into account as provided for in the
following two sentences. Income, gain, loss and deduction shall be reallocated
to the extent that such reallocation causes the net aggregate amount of
allocations of income, gain, deduction and loss to each Member to be equal to
or more closely approximate the net aggregate amount of such items that would
have been allocated to each such Member if the Regulatory Allocations had not
occurred. This Section 9.3 shall be interpreted and applied in such a manner
and to such extent as is reasonably necessary to eliminate, as quickly as
possible, permanent economic distortions that would otherwise occur as a
consequence of the Regulatory Allocations in the absence of this Section 9.3.

                  9.4
Application of Code Section 704(c). Notwithstanding any other provision of this Agreement, to the extent
required by law, taxable income, gain, loss, deduction, and items thereof
attributable to Contributed Property and to Company Property that has been
revalued pursuant to Section 8.1.3 shall be shared among the Members so as to
take into account any variation between the basis of the property and the fair
market value of the property at the time of contribution or revaluation in
accordance with the requirements of Section 704(c) of the Code and the
applicable Treasury Regulations thereunder. Further, if Code Section 704(c)
applies to any such property, all required reallocations shall be made using
the method(s) prescribed by the Board of Governors.

                  9.5
Distributions of Nonrecourse Liability Proceeds. If, during a Taxable Year,
the Company makes a distribution to any Member that is allocable to the
proceeds of any Nonrecourse Liability of the Company that is allocable to an
increase in Company Minimum Gain pursuant to Treasury Regulations Section
1.704-2(h), then the Company shall elect, to the extent permitted by Treasury
Regulations

18

 

Section 1.704-2(h)(3), to treat such distribution as a distribution
that is not allocable to an increase in Company Minimum Gain.

         9.6
Allocation of Debt. For purposes of allocating excess Nonrecourse Liabilities
among the Members pursuant to Treasury Regulations Section 1.752-3(a)(3), the
Members’ interests in Profits shall be allocated among the Members in the
proportion to their respective Percentage Interests.

         9.7
Other Allocation Provisions.

                  9.7.1
Elections. Except as otherwise provided in this Agreement (including but not
limited to Sections 9.2.7 and 9.4) herein, any elections or other decisions
relating to the allocations of Company items of income, gain, loss, deduction
or credit shall be made by the Board of Governors in any manner that reasonably
reflects the purpose and intention of this Agreement.

                  9.7.2
Fees to Members. Notwithstanding any provision of the Agreement to the
contrary, to the extent any payments in the nature of fees paid to a Member are
finally determined by the Internal Revenue Service to be distributions to a
Member for federal income tax purposes, such Member shall be allocated gross
income in the amount of such distribution.

Article 10

Distributions

         10.1
Distributions.

                  10.1.1
Definition of Distributable Cash. For purposes of this Agreement, the term
“Distributable Cash” means, as of the close of each quarter of the Fiscal Year,
the aggregate amount of cash on hand or in bank, money market, marketable
securities or similar accounts of the Company derived from any source and which
the Board of Governors
determines, in its discretion, is available for distribution to the Members,
after taking into account amounts necessary to pay or fund (i) operating
expenses, including but not limited to management expenses, (ii) capital
expenditures in excess of those paid with Capital Contributions and borrowed
funds, (iii) legal, accounting, management, consulting and advisory fees, (iv)
principal and interest payments on borrowed money (including any money borrowed
from a Member or an Affiliate of a Member), and (v) any reserves established by
the Board of Governors in its discretion for the current Fiscal Year for
working capital or other purposes incident to the operation of the Company or
contingent liabilities or to maintain or supplement existing reserves
established by the Board of Governors in its discretion.

                  10.1.2
Tax
Distributions. Within thirty (30) days, or as soon thereafter as possible,
after the end of each fiscal quarter of the Company, the Company shall
calculate and distribute to each Member such Member’s Mandatory Tax
Distribution Amount (as defined herein). The “Mandatory Tax Distribution
Amount” for each Member in each fiscal quarter of each Fiscal Year means an
amount equal to the excess of (i) the product of (A) the Company’s taxable
income allocated to (or reasonably estimated to be allocable to) that Member
from the beginning of the Fiscal Year through the end of such fiscal quarter
attributable to the items allocated to that Member pursuant to this Agreement
and (B) the maximum federal corporate income tax rate and the maximum combined
state and local corporate income tax rate to which any Member is subject (less
the effect of the deduction of state and local income taxes on the federal
return, assuming no limitation of that deduction under Code Section 68), over
(ii) the aggregate Mandatory Tax Distribution Amounts distributed to that
Member for all prior fiscal quarters in such

19

 

Fiscal Year. Solely for purposes
of this Section 10.1.2, if a Member is allocated a loss for federal income tax
purposes under Article 9 for any Fiscal Year or period of the Company beginning
after the date of this Agreement, such net loss shall be offset against, and
shall reduce the income allocated (or reasonably estimated to be allocable) to,
such Member under this Section 10.1.2 in subsequent fiscal quarters of the
Company (until such loss is exhausted) for purposes of calculating the
Mandatory Tax Distribution Amount for such Member for such subsequent fiscal
quarters within the same calendar year. The Mandatory Tax Distribution Amount
shall be paid by check delivered by Express Mail, or by wire transfer, (i) at
least ten (10) days in advance of each date on which quarterly payments of
estimated federal income taxes are due and (ii) on April 10th of the following
tax year for any reconciliation amounts. Payments of Mandatory Tax
Distribution Amounts shall be made before any other distributions of
Distributable Cash.

                           10.1.3 Distributions of Distributable Cash. To the extent that the Company has any
Distributable Cash after the payment of Tax Distributions under Section 10.1.2,
the Board of Governors, in its sole discretion, may distribute all or a portion
of the balance of the Distributable Cash to the Members in proportion to their
Membership Interests in the Company; provided, however, that the parties agree,
in accordance with Section 7.4, that it is not the intention of the Members
that the Board of Governors distribute any Distributable Cash to the members
until after payment of the EWS Credit Facility.

                           10.1.4
Distributions of Proceeds from Interim Capital Transactions. If the Company
engages in an Interim Capital Transaction, the net proceeds received by the
Company from such Interim Capital Transaction may, in the discretion of the
Board of Governors, be first distributed to Scripps under the EWS Credit
Facility, then to Scripps Holding and any other Member to
repay its loans (plus interest), and then to the Members pro rata in proportion
to their Percentage Interests.

                           10.1.5
Distributions of Proceeds from Liquidating Capital Transactions. The proceeds
of a Capital Transaction (other than from an Interim Capital Transaction) shall
be distributed among the Members in accordance with Section 13.5.4.

                  10.2
General Limitations on Distributions. No Distributions shall be required or
permitted, except as provided in this Article 10, in Article 11 with respect to
involuntary withdrawals pursuant to which the Company has exercised its Event
Option, and in Article 13 with respect to Liquidation of the Company.

Article 11

Dispositions of Membership Interests

                  11.1
General Restrictions. Except as specifically provided in this Agreement, no
Member, Assignee or other Transferee may directly or indirectly Dispose of all
or any part of its Membership Interest or other equity interests in the
Company, whether now owned or hereafter acquired, without first complying with
the terms and conditions of this Article 11. Notwithstanding the foregoing, in
no event will SATH be permitted to pledge, hypothecate or encumber its
Membership Interest without the written consent of Scripps Holdings to be
provided in Scripps Holdings’ sole discretion; provided, however that nothing
in this Article 11 will prohibit the pledge by SATH of its Membership Interest
to Scripps or an Affiliate of Scripps as security for any indebtedness for
borrowed money. Without limiting the generality of the foregoing, no
Disposition shall be permitted, even if permitted by any other provision of

20

 

this Article 11, unless each of the following conditions are satisfied in the
judgment of, or waived in writing by, the Board of Governors in its discretion:

                  11.1.1
The Member, Assignee or other Transferee engaging or attempting to engage
in such Disposition (the “Assigning Member”) complies with all applicable
provisions of this Article 11;

                  11.1.2
The Person engaging or attempting to engage in such Disposition as the
Transferee agrees in writing to assume all of the obligations of the Assigning
Member with respect to such Membership Interest (including the obligations
imposed under this Agreement, including this Article 11) as a condition to any
Disposition and becomes a party to this Agreement;

                  11.1.3
The Assigning Member and the Transferee each execute, acknowledge and
deliver to the Company such instruments of transfer and assignment with respect
to such Disposition and such other instruments as may be reasonably deemed
necessary by, and in form and substance reasonably satisfactory to, the Board
of Governors (including the written instruments described in Section 12.2, if
applicable);

                  11.1.4
Either (i) the Disposed interests will be registered under the Securities
Act of 1933, as amended, and any applicable state securities laws, or (ii) the
Company shall have received, at the expense of the parties to the Disposition,
an opinion of counsel for the Company (or counsel acceptable
to counsel of the Company) to the effect that such Disposition is exempt
from registration under the Securities Act of 1933, as amended, and is in
compliance with all applicable federal and state securities laws and
regulations; provided that, in the event that the Board of Governors waives
such opinion requirements, such waiver will not constitute a waiver of any
subsequent Disposition of such interest or the Disposition of any other
interest;

                  11.1.5
The Disposition does not cause any Nonrecourse Debt that is not already
Member Nonrecourse Debt to become Member Nonrecourse Debt;

                  11.1.6
The Disposition does not result in or create a “prohibited transaction” as
defined in Code Section 4975(c), or result or cause the Company or any Member,
or any Affiliate of a Member, to be liable for any excise tax under Chapter 42
of the Code, or result in or cause any interest in the Company or the Company’s
assets to become an asset of an employee benefit plan (as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974 or any successor
law, and rules and regulations issued pursuant to thereto);

                  11.1.7
The Disposition does not cause any violation of or an event of default
under, or result in acceleration of any indebtedness under, any note, mortgage,
loan, or similar instrument or document to which the Company is a party;

                  11.1.8
The Disposition does not cause a material adverse tax consequence to the
Company or any of the Members including but not limited to any material adverse
tax consequence resulting, directly or indirectly, from the termination of the
Company under Code Section 708;

                  11.1.9
The Disposition does not cause the Company to be classified as an entity
other than a partnership for purposes of the Code;

                  11.1.10
The Assigning Member and Transferee furnish the Company with the
Transferee’s taxpayer identification number, sufficient information to
determine the Transferee’s initial tax basis in

21

 

the interest Disposed, and any
other information necessary to permit the Company to file all required federal
and state tax returns and other legally required information statements or
returns; provided that, without limiting the generality of the foregoing, the
Company will not be required to make any distribution otherwise provided for in
this Agreement with respect to any Disposed interests until it has received
such information; and

                  11.1.11
All costs of the Disposition incurred by the Company are reimbursed by the
Assigning Member or the Transferee to the Company.

         11.2
Void Dispositions. Any attempted Disposition of a Membership Interest, or any
part thereof, not in compliance with this Article 11 shall be null and void ab
initio as against the Company and all other Persons, the Company’s rights under
Section 11.7 shall apply, and the Assigning Member(s) shall be liable to the
Company and the other Members for all damages, costs and expenses the other
Members may sustain or incur as a result of such attempted Disposition.

         11.3
Scripps Holding’s Right of First Refusal.

                  11.3.1
Notice of Intended Disposition.
If SATH and Sub desire to accept a bona fide non-Affiliated third party offer
for the Disposition of all (but not less than all) of their collective
Membership Interests, whether in the public or private markets (including an
initial public offering), SATH and Sub shall promptly deliver to Scripps
Holding a written offer (the “Offer”) to sell such Membership Interests to
Scripps Holding on terms and conditions not less favorable to Scripps Holding
than those under which they propose to Dispose of such Membership Interests to
such third party. The Offer shall disclose the identity of the third party
offeror, the agreed terms of the proposed Disposition (including a date certain
on which the Disposition will be abandoned and terminated if not then
consummated), and any other material facts relating to the proposed
Disposition. SATH and Sub shall also provide satisfactory proof that the
Disposition of the Membership Interests to such third party offeror would not
be in contravention of the provisions set forth in Section 11.1.

                  11.3.2
Exercise of Right. Within 30 days after receipt of the Offer, Scripps Holding
may give written notice to SATH and Sub of its intent to purchase all of SATH’s
and Sub’s Membership Interests on substantially the same terms and conditions
as set forth in the Offer. Scripps Holding will have the right to transfer its
right to purchase the Membership Interests to any of its Affiliates.

                  11.3.3
Non-Exercise of Right. If Scripps Holding does not exercise its rights under
this Section 11.3, SATH and Sub may thereafter Dispose of all (but not less
than all) of their collective Membership Interests to the third party offeror
identified in the Offer upon the terms and conditions specified in the Offer;
provided that any such Disposition must not be effected in contravention of the
provisions of Section 11.1 and the terms of Article 11 must be recognized,
including but not limited to Scripps Holding’s rights under Section 11.5, and
such Disposition must be consummated or abandoned and terminated by a date
certain set forth in the Offer but in any event not later than 90 days after
the Offer has been declined by Scripps Holding or the time for exercise has
lapsed. If SATH and Sub do not effect such Disposition of such Membership
Interests within the specified period, this Section 11.3 will continue to be
applicable to any subsequent attempted Disposition of SATH’s and Sub’s
Membership Interests.

                  11.3.4
SATH Debt. In the event of a sale of SATH’s and Sub’s Membership Interests
under this Section 11.3 (whether or not Scripps Holding is the purchaser) SATH
shall use the proceeds of such sale

22

 

(less expenses related thereto but
including the proceeds to Sub) to first, redeem any Series D Senior Redeemable
Preferred Stock (the “Series D Preferred Shares”) held by EWS or its Affiliates
at the Original Issue Price thereof, plus accrued and unpaid dividends thereon,
and second, pay to EWS or its Affiliates principal and interest owed by SATH to
EWS or its Affiliates under any indebtedness for borrowed money. If Scripps
Holding is the purchaser hereunder, Scripps Holding will have the right to
offset, on a dollar for dollar basis, from the purchase price payable to SATH
hereunder an amount equal to such outstanding indebtedness, redemption price
and dividends.

                  11.4
Transfers to Affiliates. Subject only to compliance with Sections 11.1, a
Member or permitted Transferee that is an Entity (each, an “Entity Member”) may
Dispose of all or any portion of such Entity Member’s interests in the Company
to any member of an affiliated group of corporations within the meaning of Code
Section 1504
that includes such Entity Member. Upon consummation of any Disposition covered
by this Section 11.4 in compliance herewith, such Transferee shall become a
Substitute Member upon execution of a counterpart of this Agreement.

                  11.5
Scripps Holding’s Right to Sell; SATH’s and Sub’s Tag Along Right; Scripps
Holding’s Drag Along Right. Subject only to compliance with Section 11.1 and
this Section 11.5, Scripps Holdings and its successors and assigns may Dispose
of any or all of their Membership Interests to any Person (a “Purchaser”)
without notice to any other Member and without any further restriction. As a
condition to the effectiveness of any such Disposition, if Scripps Holding
intends to Dispose of its Membership Interest and such Disposition would result
in a Change of Control of the Company, SATH and Sub will have the collective
right to require, as a condition to such Disposition, that the Purchaser
purchase from SATH and Sub all of SATH’s and Sub’s Membership Interests. Such
right of SATH and Sub must be exercised concurrently and neither may exercise
such right without the participation of the other. Scripps Holding shall
promptly deliver to SATH and Sub written notice of the proposed Disposition
(the “Sale Notice”), including the terms and conditions of the Purchaser’s
offer, including the price to be paid to Scripps Holding, and the closing and
termination dates, the identity of the Purchaser and any other material facts
or terms and conditions. SATH and Sub shall notify Scripps Holding of their
intention to participate in such sale as soon as practicable but not later than
30 days after receipt of the Sale Notice, which notice of intention to
participate together with the Sale Notice, will be deemed to constitute a
valid, legally binding and enforceable agreement for the Disposition of all of
SATH’s and Sub’s Membership Interests. Scripps Holding, SATH and Sub shall
sell to the Purchaser all of the Membership Interests in the Company proposed
to be Disposed by them at not less than the price originally offered by the
Purchaser, and upon other terms and conditions, if any, not more favorable to
the Purchaser than those originally offered. Scripps Holding shall use its
reasonable best efforts to obtain the agreement of the Purchaser to the
participation of SATH and Sub in the contemplated Disposition, and shall not
Dispose of any Membership Interest to such Purchaser if such Disposition would
result in a Change of Control of the Company and such Purchaser declines to
purchase all of SATH’s and Sub’s Membership Interests pursuant to the terms of
this Section. If (a) SATH and Sub elect not to, or otherwise fail to notify
Scripps Holding of their decision to or not to, participate in the sale under
the Sale Notice and (b) the sale under the Notice of Sale would result in a
Change of Control of the Company, Scripps Holding will have the right, but not
the obligation, to require SATH and Sub to sell all of their Membership
Interests pursuant to the Sale Notice and the foregoing provisions of this
Section by written notice of such requirement given within 45 days after its
delivery of the Sale Notice to SATH and Sub. In the event of a sale of SATH’s
and Sub’s Membership Interests under this Section 11.5, SATH shall use the
proceeds of such sale (less expenses related thereto but including the proceeds
to Sub) to first, redeem any Series D Preferred Shares held by EWS or its
Affiliates at the Original Issue Price thereof, plus accrued and unpaid
dividends thereon, and second, pay to EWS or its Affiliates

23

 

principal and
interest owed by SATH to EWS or its Affiliates under any indebtedness for
borrowed money. If Scripps Holding is the purchaser hereunder, Scripps Holding
will have the right to offset, on a dollar for dollar basis, from the purchase
price payable to SATH hereunder an amount equal to such outstanding
indebtedness, redemption price and dividends.

         11.6
Put and Call Rights.

                  11.6.1
SATH’s and Sub’s Put Right.
At any time after the second anniversary of the Effective Date and prior to the
fifth anniversary of the Effective Date, SATH and Sub will have the right (the
“Put Right”) to require the Company to purchase all but not less than all of
the Membership Interests of SATH and Sub on the Contract Terms at a price equal
to the Fair Market Value thereof (as determined under Section 11.8). The Put
Right must be exercised by SATH and Sub concurrently and neither may exercise
such right without the participation of the other. The Fair Market Value will
be determined as of the date on which SATH and Sub give written notice to the
Company and Scripps Holding of its intent to exercise such right. The closing
of a Disposition shall take place not later than 30 days after the Fair Market
Value is finally determined. Notwithstanding any permitted Disposition of
SATH’s and Sub’s interests in the Company, the Put Right may not be Disposed to
any Person other than a Transferee pursuant to Section 11.4. Notwithstanding
the foregoing provisions of this Section 11.6.1, the Put Right may not be
exercised if a Sale Notice has been given pursuant to Section 11.5 and has not
been rescinded or otherwise terminated. As a condition to the closing of the
transactions contemplated by exercise of the Put Right, SATH shall use the
proceeds of such sale (less expenses related thereto but including the proceeds
to Sub) to redeem any Series D Preferred Shares held by Scripps or its
Affiliates at the Original Issue Price thereof, plus accrued and unpaid
dividends thereon, and the put price will be reduced, on a dollar for dollar
basis, first, by such redemption price, including accrued and unpaid dividends
thereon, and second, by the amount of principal and interest owed by SATH to
Scripps or its Affiliates under any indebtedness for borrowed money.

                  11.6.2
SATH’s Put Right Upon Scripps’s Disposition of Scripps Holding Shares. If
Scripps Disposes of or attempts to Dispose of such shares in Scripps Holding
that such Disposition (or series of related or unrelated Dispositions) of the
shares in Scripps Holding such that, upon consummation thereof, Scripps and/or
its Affiliates (taken as a group) would no longer possess, directly or
indirectly, the power to direct or cause the direction of management or
policies of Scripps Holding through the ownership of shares, then SATH and Sub
may exercise their Put Right in Section 11.6.1 notwithstanding any limitations
with respect to timing set forth in the first clause of such Section.

                  11.6.3
Scripps’s Call Right. Except to the extent such right may be exercised earlier
pursuant to Section 11.6.4, 11.6.5 or 11.6.6, at any time upon and after the
fifth anniversary of the Effective Date, Scripps Holding will have the right
(the “Call Right”) to require SATH and Sub to sell all and not less than all of
their Membership Interests to Scripps Holding (or its assignees) on the
Contract Terms at a price equal to the Fair Market Value thereof. The Fair
Market Value will be determined as of the date on which Scripps Holding gives
written notice to SATH and Sub of its intent to exercise such right. The
closing of such Disposition will take place not later than 30 days after the
Fair Market Value is so determined. Notwithstanding the foregoing provisions
of this Section 11.6.3, the Call Right may not be exercised if a Sale Notice
has been given pursuant to Section 11.5 and has not been rescinded or otherwise
terminated. As a condition to the closing of the transactions contemplated by
exercise of the Call Right, SATH shall use the proceeds of such sale (less
expenses related thereto but including the proceeds to Sub) to redeem any
Series D Preferred Shares held by Scripps or its Affiliates at the Original
Issue Price thereof, plus accrued and unpaid dividends thereon, and the call
price will be reduced, on a

24

 

dollar for dollar basis, first, by such redemption
price, including accrued and unpaid dividends thereon, and second, by the
amount of principal and interest owed by SATH to Scripps or its Affiliates
under any indebtedness for borrowed money.

                  11.6.4
Scripps Holding Call Right Upon SATH’s Disposition of Scripps Holding Shares.
If SATH Disposes of or attempts to Dispose of its shares in Scripps Holding
under any circumstances, then Scripps Holding may exercise its Call Right in
Section 11.6.3 notwithstanding any limitations with respect to timing set forth
in the first clause of such Section.

                  11.6.5
Scripps Call Right Upon Change in Control of SATH. If (A) the board of
directors or shareholders of SATH approve a merger or consolidation that
results in the shareholders of SATH immediately prior to the transaction giving
rise to the consolidation or merger owning less than 50% of the total combined
voting power of all classes of stock entitled to vote of the surviving entity
immediately after the consummation of the merger or consolidation, (B) the
board of directors or shareholders of SATH approve the sale of substantially
all of the assets of SATH or the liquidation or dissolution of SATH, (C) any
person or other entity (other than SATH) purchases any shares (or securities
convertible into shares) pursuant to a tender or exchange offer without the
prior consent of the board of directors or becomes the beneficial owner of
securities of SATH representing 25% or more of the voting power of SATH’s
outstanding securities, (D) during any two-year period, individuals who at the
beginning of such period constitute the entire board of directors of SATH cease
to constitute a majority of the board of directors of SATH, unless the election
or the nomination for election of each new director is approved by at least
two-thirds of the directors then still in office who were directors at the
beginning of that period or (E) any third party acquires the power to direct or
cause the direction of management or policies of SATH through the ownership of
securities, by contract or otherwise, then Scripps Holding may exercise its
Call Right in Section 11.6.3 notwithstanding any limitations with respect to
timing set forth in the first clause of such Section.

                  11.6.6
Scripps Call Right Upon Default. If SATH is in default under this Agreement or
any other agreement between it and Scripps or an Affiliate of Scripps
(including without limitation the Amendment to SATH’s Charter relating to the
Series D Preferred Shares), then Scripps Holding may exercise its Call Right in
Section 11.6.3 notwithstanding any limitations with respect to timing set forth
in the first clause of such Section.

                  11.6.7
Limitation on Exercise Based on Exercise of Put/Call Relating to Scripps
Holding. Notwithstanding anything to the contrary in the foregoing Section
11.6, neither the Put Right nor the Call Right may be exercised unless the Put
Right or the Call Right, respectively, set forth in Section 3(f) of the
Shareholder Agreement among Scripps Holding, SATH and Scripps relating to the
ownership by Scripps and SATH of shares of Scripps Holding is exercised by SATH
or Scripps, respectively.

         11.7
Certain Buyout Events.

                  11.7.1
Definition of Event. For purposes of this Section 11.7, the term “Event” means
the occurrence of any of the following events or circumstances with respect to
any Member or Assignee or other Transferee during any period of ownership of
any Membership Interest by such Member or Assignee or other Transferee or with
respect to any Membership Interest subject to this Agreement:

                           (a)
such Member, Assignee or Transferee becomes or is determined to be
bankrupt or insolvent;

25

 

                           (b)
such Member, Assignee or Transferee institutes or has instituted against
it any proceedings of any kind under any provision of any applicable bankruptcy
or insolvency law seeking any readjustment, arrangement, composition,
postponement or reduction of debts, liabilities or obligations (in the case of
any involuntary proceeding, which is not removed or dismissed within ninety
(90) days);

                           (c)
such Member, Assignee or Transferee makes an assignment for the benefit of
its creditors;

                           (d)
such Member, Assignee or Transferee is required or deemed to have Disposed
of any interest in any of its Membership Interest by operation of law (other
than a Disposition to the Company);

                           (e)
any Membership Interest of such Member, Assignee or Transferee is attached
by, levied upon by, or becomes subject to judicial or other legal process and
such proceeding is not removed, discharged, dismissed or bonded within ninety
(90) days;

                           (f)
the death or Permanent Disability of any Member, Assignee or Transferee
who is a natural Person; or

                           (g)
any Membership Interest of such Member, Assignee or Transferee is the
subject of a Disposition or an attempted Disposition in any way (including a
sale ordered by a court or a Disposition required or deemed to have occurred by
operation of law, other than a Disposition to the Company) in breach of this
Agreement.

                  11.7.2
Purchase Option of the Company. Upon the occurrence of an Event, the
Member, Assignee or Transferee subject to such Event or its legal
representative, if applicable (the “Offering Member”), shall notify the Company
and all Members of the Event within five (5) days of its occurrence (the “Event
Notice”) and, thereupon, the Company shall have the right, but not the
obligation, to purchase all, but not less than all, of the Membership Interest
owned or held beneficially by the Offering Member at the time of such Event at
the price equal to its Fair Market Value as of the date that is the calendar
month-end immediately preceding such Event and on and in accordance with the
Contract Terms (the “Event Option”). Within five (5) days after the
determination of the Fair Market Value in accordance with Section 11.8, the
Company shall notify the Offering Member and the other Members of whether it
intends to exercise the Event Option and upon any such exercise, the closing
thereof shall be made on and in accordance with the Contract Terms. Failure of
a party to give or receive an Event Notice shall not prejudice the rights of
the other parties under this Section 11.7.

                  11.7.3
Company’s Right of Assignment. At the option of Scripps Holding, the Company’s
Event Option may be assigned to and assumed by Scripps Holding or an Affiliate
of Scripps Holding (if it is not the Offering Member) or, if Scripps Holding
does not wish to have the Company’s Event Option assigned to it or an Affiliate
of it, by any other Member or Members (or their designees) other than the
Offering Member, in any case at the option of the Board of Governors in its
discretion without any approval by the Members. If any Members other
than the Offering Member are purchasers and such other Members are unable to
agree upon the amount of the Membership Interest to be acquired by each of
them, each purchasing Member shall be entitled to purchase a portion of such
Membership Interest in the same proportion that the Percentage Interest of such
Member bears to the total Percentage Interests of all such Members.

26

 

                  11.7.4
Scripps Debt. In the event of a sale of SATH’s or Sub’s Membership Interests
under this Section 11.7 (whether or not Scripps Holding is the purchaser) SATH
or Sub, as the case may be, shall use the proceeds of such sale (less expenses
related thereto) to first, redeem any Series D Preferred Shares held by EWS or
its Affiliates at the Original Issue Price thereof, plus accrued and unpaid
dividends thereon, and second, pay to EWS or its Affiliates principal and
interest owed by SATH to EWS or its Affiliates under any indebtedness for
borrowed money. If Scripps Holding is the purchaser hereunder, Scripps Holding
will have the right to offset, on a dollar for dollar basis, from the purchase
price payable to SATH hereunder an amount equal to such outstanding
indebtedness, redemption price or dividends.

                  11.7.5
Continuing Effect After Insolvency. The failure of the Company or the
other Members, as the case may be, to exercise the Event Option, or to
consummate the Event Option if exercised, shall not affect their respective
rights to purchase the same Membership Interest under and in accordance with
any other applicable provisions of this Agreement in the event of a proposed
Disposition thereof to any receiver, petitioner, assignee, transferee or other
Person attempting to obtain an interest in such Membership Interest by a
proposed Disposition or by operation of law. In addition, with respect to any
Membership Interest subject to an Event Option which is not purchased by the
Company or by any other Members, in the absence of any order to the contrary
with respect to such Membership Interest by any court or agency having
jurisdiction under federal or state law with respect to the Event, and to the
extent not in violation of applicable law, such Membership Interest shall be
and remain subject to the provisions and restrictions contained in this
Agreement regardless of the identity of the transferee and such transferee
shall be deemed to be bound by the terms and provisions of this Agreement as an
Assignee.

        11.8
Determination of Fair Market Value. If the purchase price for any transaction
involving any Membership Interest purchased and sold on and in accordance with
the Contract Terms or otherwise is to be the Fair Market Value thereof, or if
Additional Capital Contributions are proposed to be made under Section 7.2, the
determination of such Fair Market Value as at the applicable valuation date
shall be made as set forth in this Section 11.8. Within ten (10) days after it
is determined that the Fair Market Value process must be initiated, each of
Scripps Holding and SATH will choose a nationally recognized reputable
investment bank (which investment bank must commit to deliver its determination
within 60 days) to determine the Fair Market Value and the Fair Market Value
will be the average of the two determinations so made. Notwithstanding
anything to the contrary in the foregoing, however, if the two determinations
differ by more than ten percent (10%), then the aforesaid investment banks
shall select a third nationally recognized reputable investment bank (which
investment bank must commit to deliver its determination within 60 days) to
determine the Fair Market Value; and upon receipt of the third determination,
the Fair Market Value will be the average of the two determinations closest in
amount to each other. Scripps Holding, on the one hand, and SATH and Sub, on
the other hand, will share equally in the cost of the investment banks. The
Board of Governors and the purchaser(s) and seller(s) in the transaction shall
cooperate with the investment banks and provide them (on a confidential basis)
with all information regarding the Company and their respective Membership
Interests (directly or indirectly owned) as reasonably requested by them. The
Fair Market Value shall be determined without regard to any minority interest,
lack of marketability or other discounts for any Membership Interest and
without regard to any premiums for control.

        11.9
Contract Terms. For purposes of this Agreement, the “Contract Terms” are as
follows:

27

 

                  11.9.1
Payment Terms. The purchase price to be paid in any transaction subject to the
Contract Terms shall be due and payable in cash in full at the closing of the
transaction held in accordance with Section 11.9.2, except that the purchase
price of any such Membership Interest shall be reduced, at the election of the
Company where the Company is the purchaser, by an amount equal to the unpaid
balance and any accrued but unpaid interest owed to the Company by the holder
of such Membership Interest, and such indebtedness (to the extent of the
reduction in purchase price) shall be deemed paid to the Company.

                  11.9.2
Closing. Any Disposition of a Membership Interest made pursuant to the
Contract Terms shall be closed as specified in the applicable Section of this
Agreement or, if not so specified, within sixty (60) days after the date on
which the parties involved become unconditionally bound under this Agreement to
effect such Disposition or at such other time as such parties may otherwise
agree.

                  11.9.3
Documents. Upon the delivery at the closing by the transferee of the
purchase price, in cash, to be delivered in payment for such Membership
Interest Disposed of pursuant to the Contract Terms, the Disposing Member shall
execute and deliver to the transferee all such assignments and other
instruments which may reasonably be required to evidence and cause such
Disposition to be a valid, binding and legally enforceable Disposition of such
Membership Interest to the transferee. The transferor shall also execute and
deliver to the transferee a certificate, dated the closing date of such
Disposition, containing a representation and warranty that on such date the
transferor is the holder of record and sole beneficial owner of the entire
Membership Interest so Disposed of, has the full and unrestricted right to
sell, assign, transfer and deliver such Membership Interest to such transferee,
that the Disposition of such Membership Interest to the transferee will not
conflict with or constitute a breach of the Company’s Articles of Organization,
or this Agreement, and that the transferor is transferring to such transferee
good and marketable title to the Membership Interest so transferred, free from
all liens, security interests, pledges, encumbrances, equities, charges,
claims, voting trusts or restrictions whatsoever, other than those restrictions
contained in or arising under this Agreement or, if applicable, the Articles of
Organization (and any restrictions arising by reason of federal or state
securities laws).

Article 12

Assignees; Substitute Members

        12.1
Admission of Substitute Members.
Except as provided in Section 11.4, a Transferee of a Membership Interest
shall be admitted as a Substitute Member and entitled to all the rights of the
Member who initially assigned the Membership Interest only with the approval of
the Board of Governors in its discretion and upon its delivery to the Company
of such instruments, duly executed, as may be reasonably required by the Board
of Governors to confirm such Transferee’s agreement to be bound by the terms of
this Agreement and to assume all obligations of the Assigning Member under this
Agreement. If so admitted, the Substitute Member has all the rights and powers
and is subject to all the restrictions and liabilities of the Member originally
assigning the Membership Interest. The admission of a Substitute Member,
without more, shall not release the Member originally assigning the Membership
Interest from any liability to the Company that may have existed prior to such
admission.

        12.2
Rights of Assignees. If the Board of Governors does not consent to the
substitution of a permitted Transferee as a Substitute Member in respect of a
Disposed Membership Interest, the permitted Transferee shall be an Assignee and
will not, with respect to such Disposed Membership Interest, have any rights or
privileges under this Agreement, except (i) the rights of a holder of a

28

 

Membership Interest to receive distributions, return of Capital Contributions
and related tax allocations and (ii) such privileges and rights which a
non-substituted permitted Transferee is entitled to under the Act that cannot
be eliminated or modified by this Agreement. Accordingly, an Assignee shall
not have any rights to (a) participate or become a participant in the
management of the business and affairs of the Company, (b) require an
accounting of the Company’s transactions, (c) inspect the Company’s books and
records, (d) require any information from the Company, or (e) exercise any
privilege or right of a member of a Tennessee limited liability company which
is not specifically and irrevocably reserved to a non-substituted permitted
Transferee under the Act.

Article 13

Dissolution and Winding Up

                  13.1
Dissolution. The Company shall be dissolved and shall commence the winding up
of its affairs and liquidation of its assets, upon the first to occur of the
following events:

                           13.1.1
the consent of a Majority of Members to dissolve the Company;

                           13.1.2
the sale, transfer or other disposition of all or substantially all of the
assets of the Company; or

                           13.1.3
the entry of a decree of judicial dissolution under the Act.

                           For purposes of this Agreement, no other event shall be deemed an event
triggering dissolution, including, but not limited to, the death, retirement,
resignation, expulsion, bankruptcy, or dissolution of a Member, or any event
specified under the Act as affecting the dissolution of a limited liability
company formed under the Act.

                  13.2
Effect of Dissolution.
Upon dissolution, the Company shall cease carrying on (as distinguished
from the winding up of its affairs and liquidating of its assets) the Company
business, but the Company is not terminated and continues until winding up and
liquidation are completed and a certificate of dissolution has been filed with
the Secretary of State of the State of Tennessee.

                  13.3
Winding Up. Upon the occurrence of the event triggering Dissolution, the
Company will continue solely for the purposes of winding up its affairs in an
orderly manner, liquidating its assets, and satisfying the claims of its
creditors and Members. After such event, neither the Board of Governors nor
any Member shall take any action that is inconsistent with, or not necessary or
appropriate for, the winding up of the Company’s business and affairs. The
Company’s assets will be liquidated as promptly as is consistent with obtaining
the fair value thereof, and the proceeds therefrom, to the extent sufficient
therefor, will be applied and distributed in accordance with Section 13.5 of
this Agreement. The process of winding up and liquidating the assets of the
Company is referred to in this Agreement as “Liquidation”.

                  13.4
Fair Market Value Distributions. If upon Liquidation of the Company any assets
are to be distributed in kind to the Members, the value of such assets shall be
adjusted pursuant to the Treasury Regulations promulgated under Code Section
704(b) and such assets shall be distributed at their respective fair market
values. Furthermore, each Member’s Capital Account shall be adjusted to
reflect what its Capital Account would be if the Company were to sell all of
such assets at their respective fair market values and allocated the Profits or
Losses among the Members in accordance with the provisions of Article 9.

29

 

          13.5
Proceeds of Liquidation. The proceeds of the Liquidation of the Company shall
be applied and distributed in the following order of priority, to the extent
permitted by the Act:

                  13.5.1
Expenses. To the payment of the costs and expenses of the Liquidation of the
Company;

                  13.5.2
Debts. To the payment of the debts and liabilities of the Company (including
any and all fees and loans payable to one or more Members) in the order of
priority as provided by law;

                  13.5.3
Reserves. To establish reserves which the Board of Governors (or the agent or
trustee appointed for Liquidation) may deem reasonably necessary for any
reasonably foreseeable contingent liabilities or obligations of the Company;
and

                  13.5.4
Capital Accounts.
The remaining balance, if any, shall then be distributed to the Members in
an amount equal to and in satisfaction of the positive balance of each Member’s
Capital Account on the date of the Company’s termination, after giving effect
to all adjustments to all Members’ Capital Account balances for all periods as
prescribed by this Agreement.

          13.6
Final Accounting. Each Member shall be furnished with a statement reviewed by
the Company’s accountants, which shall set forth the Profits and/or Losses
generated upon the sale or exchange of the Company’s properties in Liquidation;
the allocation of such Profits and Losses among the Members; the Company’s
proceeds received from the sale or exchange of its properties in Liquidation;
any revaluations of Company Property; the assets and liabilities of the
Company; and the amount distributed or distributable to each Member as of the
date of termination of the Company. Upon compliance with the foregoing
distribution plan, the Members shall cease to be such, and the Board of
Governors (or the agent or trustee appointed for Liquidation), shall execute
and cause to be filed with the Secretary of State of the State of Tennessee a
certificate of cancellation of the Company and any and all other documents
necessary with respect to the termination and cancellation of the Company.

Article 14

Amendment

                  No provision of this Agreement may be amended or modified at any time
except by a written instrument adopted by the Board of Governors and approved
by all of the Members.

Article 15

Miscellaneous Provisions

          15.1
Entire Agreement. This Agreement, including the Schedules referred to herein
and attached hereto, represents the entire agreement among all the Members and
between the Members and the Company. All Schedules referred to herein and
attached hereto are incorporated by this reference thereto.

          15.2
Rights of Creditors and Third Parties. This Agreement is expressly not
intended for the benefit of any creditor of the Company or for any Person other
than the Company, the Members and any Assignees. Except and only to the extent
provided by applicable statute, no such creditor or third party

30

 

shall have any
rights under this Agreement or any agreement between the Company and any Member
or Assignee with respect to any Capital Contribution or otherwise.

                  15.3
Notices. All notices and demands required or permitted under this Agreement
shall be in writing, and delivered as follows: (i) by actual delivery of the
notice into the hands of the party entitled to receive it; (ii) by mailing such
notice by registered or certified mail, return receipt requested, in which case
the notice shall be deemed to be given three (3) days after the date of its
mailing; or (iii) by any overnight carrier,
in which case the notice shall be deemed to be given as of the next business
day after it is sent. All notices which concern this Agreement shall be
addressed as follows:

                  If to the Company or the Board of Governors: to the Principal Office of
the Company.

                  If to the Members: to the address as shown from time to time on the
records of the Company. Any Member may specify a different address, which
change shall become effective upon receipt of such notice by the Company.

                  15.4
Severability. If any provision of this Agreement or the application of such
provision to any Person or circumstance shall be held invalid, or prohibited or
ineffective under the Act or other applicable law, such provision shall be
considered amended to the least degree possible in order to make it effective
under the Act or such other law and, in the event the Act or other applicable
law is subsequently amended or interpreted in such a way to make valid or no
longer prohibited or ineffective any provision of this Agreement that was
formerly invalid, prohibited or ineffective, such provision shall be considered
to be valid and effective from the effective date of such amendment or
interpretation. The remainder of this Agreement, or the application of such
provision to Persons or circumstances other than those as to which it is held
invalid, prohibited or ineffective shall not be affected.

                  15.5
Parties Bound. This Agreement shall be binding upon the Members and their
respective successors, permitted assigns, heirs, devisees, legal
representatives, executors and administrators.

                  15.6
Applicable Law. The laws of the State of Tennessee shall govern this
Agreement, excluding any conflict of laws rules. To the extent permitted by
applicable law, the provisions of this Agreement shall override the provisions
of the Act to the extent of any inconsistency or contradiction between them.

                  15.7
Strict Construction. It is the intent of the Members that this Agreement shall
be deemed to have been prepared by all of the parties to the end that no Member
shall be entitled to the benefit of any favorable interpretation or
construction of any term or provision hereof under any rule or law.

                  15.8
Headings. The headings in this Agreement are inserted for convenience and
identification only and are in no way intended to describe, interpret, define
or limit the scope, extent or intent of this Agreement or any provision.

                  15.9
Counterpart Execution.
This Agreement may be executed in counterparts, each of which shall be
deemed an original but together shall constitute but one and the same
agreement.

                  15.10
Pronouns. All pronouns shall be deemed to refer to the masculine, feminine or
neuter, singular or plural, as the identity of the Person or Persons may
require.

31

 

                  15.11 Effect of Waiver or Consent. A waiver or consent, express or implied, to or of
any breach or default by any Person in the performance by that Person of its
obligations hereunder or with respect to the Company is not a consent or waiver
to or of any other breach or default in the performance by that Person of the
same or any other obligations of that Person. Failure on the part of a Person
to complain of any act or to declare any Person in default hereunder,
irrespective of how long that failure continues, does not constitute a waiver
by that Person of its rights with respect to that default.

                  15.12
Further Assurances. Each Member shall execute and deliver any additional
documents and instruments and perform any additional acts that may be necessary
or appropriate to effectuate and perform the provisions of this Agreement and
the transactions contemplated herein.

                  15.13
Public Announcements. Except as otherwise required by law, for so long as this
Agreement is in effect, no Member shall issue or cause the publication of any
press release or other public announcement with respect to the formation,
business plans, markets, products, management, or business of the Company
without the consent of the Board of Governors.

                  15.14
Expenses. Each Initial Member shall bear its own costs for all matters
involved in the negotiation, execution, and performance of this Agreement, and
related transactions unless otherwise specified herein.

[The remainder of this page is intentionally left blank.]

32

 

         IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first above written.

	 	 	 	 	 	 	 	 	 
	 	 	 	 	SHOP AT HOME, INC.
	
	
	
	

	 	 	 	 	 	 	 	 	 
	
	
	
	

	 	 	 	 	 	 	By:	 	 
	
	
	
	

	 	 	 	 	 	 	 	
	 
	
	
	
	

	 	 	 	 	 	 	Its:	 	 
	
	
	
	

	 	 	 	 	 	 	 	
	 
	
	
	
	

	 	 	 	 	 	 	 	 	 
	
	
	
	

	 	 	 	 	THE SCRIPPS SHOP AT HOME HOLDING COMPANY, LLC
	
	
	
	

	 	 	 	 	 	 	 	 	 
	
	
	
	

	 	 	 	 	 	 	By:	 	 
	
	
	
	

	 	 	 	 	 	 	 	
	 
	
	
	
	

	 	 	 	 	 	 	Its:	 	 
	
	
	
	

	 	 	 	 	 	 	 	
	 
	
	
	
	

	 	 	 	 	 	 	 	 	 
	
	
	
	

	 	 	 	 	SAH ACQUISITION CORPORATION
	
	
	
	

	 	 	 	 	 	 	 	 	 
	
	
	
	

	 	 	 	 	 	 	By:	 	 
	
	
	
	

	 	 	 	 	 	 	 	
	 
	
	
	
	

	 	 	 	 	 	 	Its:	 	 
	
	
	
	

	 	 	 	 	 	 	 	
	 
	
	
	
	

	 	 	 	 	 	 	 	 	 
	
	
	
	

	
Acknowledged and agreed to:	 	 	 
	

	
	
	

	
SHOP AT HOME NETWORK, LLC	 	 	 
	

	
	
	

	By:	 	 	 	 	 	 	 	 
	
	
	
	

	 	 	

	 	 	 
	
	
	
	

	Its:	 	 	 	 	 	 	 	 
	
	
	
	

	 	 	

	 	 	 

33

 

SCHEDULE I

DEFINITIONS

           1.     Act. The Tennessee Limited Liability Company Act, Title 48, Chapters
201-248 of the Tennessee Code Annotated, and any successor statute, as amended
from time to time.

           2.     Additional Member. A Member other than an Initial Member or a
Substitute Member who has acquired a Membership Interest from the Company and
who agrees to be bound by the terms and conditions of this Agreement.

           3.     Adjusted Capital Account. A Member’s Capital Account balance,
increased by such Member’s obligation to restore a deficit balance in its
Capital Account, including any deemed obligation pursuant to the penultimate
sentences of Treasury Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5), and
decreased by the amounts described in Treasury Regulations Sections
1.704-1(b)(2)(ii)(d)(4), (5), or (6).

           4.     Affiliate. When used with reference to a specified Person, any other
Person (i) that directly, or indirectly through one or more intermediaries,
controls or is controlled by or is under common control with the specified
Person, (ii) that is a general partner, director, manager, governor, trustee or
principal officer of, or a limited partner owning more than ten percent (10%)
of, or that serves in a similar capacity with respect to, the specified Person,
or (iii) of which the specified Person is a general partner, director, manager,
governor, trustee or principal officer or a limited partner owning more than
ten percent (10%) of, or with respect to which the specified Person serves in a
similar capacity. For purposes of this definition of Affiliate, “control”
means the possession, directly or indirectly, of the power to direct or to
cause the direction of the management or policies of the Person in question
through the ownership of voting securities or by contract or otherwise.

           5.     Agreed Value. The fair market value of Contributed Property as agreed
to by the contributing Member, the other Members and the Board of Governors,
using such reasonable method of valuation as they may adopt.

           6.     Agreement. This Limited Liability Company Agreement of Shop At Home
Network, LLC, including all amendments.

           7.     Articles of Organization. The Articles of Organization of the Company
as properly adopted and as amended from time to time and filed with the
Secretary of State of the State of Tennessee.

           8.     Assignee. A transferee of a Membership Interest who has not been
admitted as a Substitute Member.

           9.     Assigning Member. As defined in Section 11.1.1.

         10.     Board Actions. As defined in Section 4.2.3.

         11.     Board of Governors. As described in Section 4.2.1.

         12.     Book Value. As defined in Section 8.1.3.

         13.     Capital Account. As defined in Section 8.1.

 

 

         14.     Capital Contribution. The gross amount of investment by a Member or
all Members, as the case may be, which may consist of cash, Property,
promissory note(s) or any binding obligation(s) to contribute cash or Property.

         15.     Capital Transaction. Any of the following: (i) a sale, exchange,
transfer, assignment, or other disposition of all or a portion of any Company
Property (but not including occasional sales in the ordinary course of business
of inventory, operating equipment or furniture, fixtures and equipment); (ii)
any financing or refinancing of, or with respect to, any Company Property;
(iii) any condemnation proceeds or deeding in lieu of condemnation of all or a
portion of any Company Property; (iv) a collection in respect of property,
hazard, or casualty insurance (but not business interruption insurance) or any
damage award except to the extent proceeds are used to repair or replace the
assets so damaged or destroyed; or (v) any other transactions which under
generally accepted accounting principles, would be capital in nature, and
specifically including, but not limited to, the distribution to the Members of
Capital Contributions or proceeds of any loans.

         16.     Change of Control. Any Disposition or series of related or unrelated
Dispositions of the Membership Interest of Scripps Holding or its Affiliates
which, upon consummation thereof, would result in Scripps Holding and/or its
Affiliates (taken as a group) no longer possessing, directly or indirectly, the
power to direct or cause the direction of management or policies of the Company
through the ownership of Membership Interests.

         17.     Code. The Internal Revenue Code of 1986 and any successor statute, as
amended from time to time.

         18.     Company. As defined in the preamble.

         19.     Company Minimum Gain. Such terms have the meaning given to the term
“partnership minimum gain” as set forth in Treasury Regulations Sections
1.704-2(b)(2) and 1.704-2(d), and any Member’s share of Company Minimum Gain
shall be determined in accordance with Treasury Regulations Section
1.704-2(g)(1).

         20.     Company Property. All Property acquired by the Company and any
improvements thereto, but excluding Contributed Property.

         21.     Contract Terms. As defined in Section 11.9.

         22.     Contributed Property. Property or other consideration (excluding
services and cash) contributed to the capital of the Company by the Members.

         23.     Covered Person or Covered Persons. As defined in Section 6.1.1.

         24.     Depreciation. For each Taxable Year or other period, an amount equal
to the depreciation, amortization or other cost recovery deduction, as computed
for federal income tax purposes, allowable with respect to an asset of the
Company for such Taxable Year or other period. Notwithstanding the foregoing,
if the Book Value of a Company asset differs from its adjusted basis for
federal income tax purposes at the beginning of such Taxable Year or other
period, Depreciation shall be an amount which bears the same ratio at such
beginning Book Value as the Depreciation deduction for such Taxable Year or
other period bears to such beginning adjusted tax basis.

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         25.     Disabling Conduct. As defined in Section 6.1.1.

         26.     Discretion. Whenever in this Agreement a Member or the Board of
Governors is permitted or required to make a decision in its “discretion” or
under a grant of similar authority or latitude, the Member or the Member’s
representative(s) on the Board of Governors shall be entitled to exercise sole
and absolute discretion after considering only such interests and factors as it
or he desires, including its or his Member’s own interests, and shall have no
duty or obligation to give any consideration to any interest of or factors
affecting the Company or any other Member.

         27.     Distributable Cash. As defined in Section 10.1.1.

         28.     Distribution. A transfer of Property to a Member on account of a
Membership Interest as described in Article 10.

         29.     Disposition (Dispose). Any direct or indirect sale, assignment,
transfer, exchange, mortgage, pledge, grant, endorsement, delivery, conveyance,
hypothecation, or other transfer, whether absolute, contingent or conditional,
or as security or an encumbrance, whether voluntary or involuntary, whether
with or without consideration, and whether by operation of law, such as
dispositions in a merger or consolidation, pursuant to intestacy, descendance,
distribution by succession, bankruptcy, insolvency, receivership, levy,
execution or other seizure and sale by legal process.

         30.     EWS Credit Facility. As defined in Section 7.4.

         31.     Effective Date. The date of this Agreement set forth in the preamble.

         32.     Entity. A Person other than a natural individual. Entity includes
without limitation corporations (both non-profit and other corporations),
partnerships (both limited and general), joint ventures, limited liability
companies, trusts and unincorporated associations and organizations of any
kind, but the term does not include joint tenancies and tenancies by the
entirety.

         33.     Entity Member. As defined in Section 11.4.

         34.     Event. As defined in Section 11.7.1.

         35.     Event Notice. As defined in Section 11.7.2.

         36.     Event Option. As defined in Section 11.7.2.

         37.     Fair Market Value. As determined pursuant to Section 11.8.

         38.     Fiscal Year. The fiscal year of the Company described in Section 3.3.

         39.     Governor. A member of the Board of Governors.

         40.     Initial Members. Those persons identified on Schedule II who have
executed this Agreement as of the Effective Date.

         41.     Interim Capital Transaction. A Capital Transaction that does not lead
to or is not made in connection with the Liquidation of the Company.

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         42.     Liquidation. As described in Section 13.3.

         43.     Liquidation Proceeds. The proceeds and assets available for
distribution to creditors and Members upon or pursuant to the termination and
Liquidation of the Company, including the proceeds available from the sale of
all or substantially all of the Company’s assets.

         44.     Losses. As described in the definition of Profits and Losses.

         45.     Majority of the Members. As defined in Section 5.3.

         46.     Member Minimum Gain. A Member’s share of minimum gain attributable to
a Member Nonrecourse Debt within the meaning of Treasury Regulations Section
1.704-2(i)(4) and (5).

         47.     Member Nonrecourse Debt. Such term has the meaning given to the term
“partner nonrecourse debt” as set forth in Treasury Regulations Section
1.704-2(b)(4).

         48.     Member Nonrecourse Debt Minimum Gain. The amount, with respect to each
Member Nonrecourse Debt, determined in the same manner as “partner nonrecourse
debt minimum gain” would be determined in accordance with Treasury Regulations
Section 1.704-2(i).

         49.     Member Nonrecourse Deductions. Such term has the meaning given to the
term “partner nonrecourse deductions” as set forth in Treasury Regulations
Section 1.704-2(i)(2). For any Taxable Year, the amount of Member Nonrecourse
Deductions with respect to a Member Nonrecourse Debt shall equal the net
increase during the Taxable Year, if any, in the amount of Member Nonrecourse
Debt Minimum Gain reduced (but not below zero) by proceeds of the liability
that are both attributable to the liability and allocable to an increase in the
Member Nonrecourse Debt Minimum Gain.

         50.     Members. The Initial Members, Substitute Members and Additional
Members.

         51.     Membership Interest. A Member’s share or interest in the Profits and
Losses of the Company and such Member’s rights to Distributions and Liquidation
Proceeds, in each case as provided by this Agreement. A Membership Interest
does not include a Member’s rights (if any) to participate in Company
management pursuant to this Agreement.

         52.     Nonrecourse Debt. Such term has the meaning given the term
“nonrecourse debt” as set forth in Treasury Regulations Section 1.704-2(b)(3).

         53.     Nonrecourse Deductions. Such term has the meaning given the term
“nonrecourse deductions” as set forth in Treasury Regulations Section
1.704-2(b)(1). The amount of Nonrecourse Deductions for a Taxable Year equals
the excess, if any, of the net increase, if any, in the amount of Company
Minimum Gain during that Taxable Year over the aggregate amount of any
distributions during that Taxable Year of proceeds of a Nonrecourse Liability
that are allocable to an increase in Company Minimum Gain, determined according
to the provisions of Treasury Regulations Section 1.704-2(c).

         54.     Nonrecourse Liability. Such term has the meaning given the term
“nonrecourse liability” as set forth in Treasury Regulations Section
1.704-2(b)(3).

         55.     Offer. As defined in Section 11.3.1.

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         56.     Offering Member. As defined in Section 11.7.2.

         57.     Operating Profits and Losses. The Company’s Profits and Losses other
than Profits and Losses from a Capital Transaction.

         58.     Original Issue Price. means the Original Issue Price as defined in
the Articles of Amendment to SATH’s Charter relating to the Series D Preferred
Shares

         59.     Percentage Interest. An expression of a Member’s Membership Interest
as a percentage. The Percentage Interests of the Members are set forth on
Schedule II.

         60.     Person. A natural individual, an estate or any Entity permitted to be
a member of a limited liability company under the laws of the State of
Tennessee.

         61.     Principal Office. The principal office of the Company as described in
Section 2.9.

         62.     Profits and Losses. For each Taxable Year or other period an amount
equal to the Company’s taxable income or loss for such year or period,
determined in accordance with Code Section 703(a) (for this purpose, all items
of income, gain, loss, or deduction required to be stated separately pursuant
to Code Section 703(a)(1) shall be included in taxable income or loss), with
the following adjustments:

                  (i) any income of the Company that is exempt from federal income tax shall
be added to such taxable income or loss;

                  (ii) any expenditures of the Company not deductible in computing its
taxable income and not properly chargeable to capital account (as described in
and within the meaning of Code Section 705(a)(2)(B)) or treated as Code Section
705(a)(2)(B) expenditures pursuant to Treasury Regulations Section
1.704-1(b)(2)(iv)(i) shall be subtracted from such taxable income or loss;

                  (iii) if Company property is reflected on the Company’s books at other
than its adjusted tax basis, then in lieu of depreciation, amortization and
other cost recovery deductions taken into account for federal income tax
purposes, there shall be taken into account Depreciation for such year or other
period, computed in accordance with the Treasury Regulations promulgated
pursuant to Code Section 704(b);

                  (iv) any items that are specially allocated to a Member pursuant to
Section 9.4 shall not be taken into account in determining Profits and Losses;
and

                  (v) for purposes of determining Profit or Loss upon the sale or other
disposition of any Company asset, then in accordance with the Treasury
Regulations promulgated under Code Section 704(b), the value of an asset
properly reflected on the Company’s books at the time of sale or other
disposition shall be substituted for the asset’s adjusted tax basis if at the
time of sale or disposition there is a variance in such value and adjusted tax
basis.

Except as may be otherwise provided in this Agreement, all items that are
components of Profits and Losses shall be divided among the Members in the same
ratio as they share Profits and Losses.

         63.     Property. Any property, real or personal, tangible or intangible,
including cash and any legal or equitable interest in such property, but
excluding services and promises to perform services in the future.

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         64.     Purchaser. As defined in Section 11.5.

         65.     Regulatory Allocations. As defined in Section 9.5.

         66.     Reserved Matters. As defined in Section 4.2.2.

         67.     Sale Notice. As defined in Section 11.5.

         68.     SATH. As defined in the preamble.

         69.     SATH Governors. As defined in Section 4.2.1.

         70.     Scripps. As defined in the preamble.

         71.     Scripps Holding. As defined in the preamble.

         72.     Scripps Governors. As defined in Section 4.2.1.

         73.     Series D Preferred Shares. As defined in Section 11.3.4.

         74.     Shop At Home Network. As defined in Section 2.4.

         75.     Sub. As defined in the preamble.

         76.     Substitute Member. Any Person not a Member of the Company (prior to
the transfer of a Membership Interest to such Person) to whom a Membership
Interest in the Company has been transferred and who has been admitted to the
Company as a Member pursuant to and in accordance with the provisions of
Section 12.1.

         77.     Tax Distributions. The distributions required by Section 10.1.2.

         78.     Taxable Year. The taxable year of the Company as determined pursuant
to Section 706 of the Code.

         79.     Transferee. A purchaser, transferee, assignee (other than collateral
assignees), or any other Person who takes, in accordance with the terms of this
Agreement, a Membership Interest in the Company, and who thereby becomes bound
by the terms and conditions of this Agreement, regardless of whether such
Person becomes a Substitute Member.

         80.     Treasury Regulations. Except where the context indicates otherwise,
the permanent, temporary, proposed or proposed and temporary regulations of the
Department of the Treasury promulgated under the Code as such regulations may
be lawfully changed from time to time.

         81.     Unreturned Capital Contribution. The excess, if any, of a Member’s
aggregate Capital Contributions made after the date of this Agreement, over the
aggregate cash distributed to the Member after the date of this Agreement,
except for Tax Distributions under Section 10.1.2.

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SCHEDULE II

SHOP AT HOME NETWORK, LLC

Members, Percentage Interests and

Capital Contributions (As of _________, 2002)

	 	 	 	 	 	 	 	 	 
	 	 	Percentage	 	Capital
	Name and Address	 	Interest	 	Contribution
	 	 	 	 	 
	Shop At Home, Inc.
	 	 	11.5	%	 	$	 	 
	
	
	
	

	The Scripps Shop At Home Holding Company
	 	 	87.5	%	 	$	 	 
	
	
	
	

	SAH Acquisition Corporation
	 	 	1	%	 	$	 	 

 

 

EXHIBIT 8.4(e)

SHAREHOLDERS AGREEMENT

         THIS AGREEMENT, dated as of      , 2002 (the “Effective Date”), is
among The Scripps Shop At Home Holding Company fka SAH Holdings, Inc., an Ohio
corporation (the “Company”), Shop At Home, Inc., a Tennessee corporation
(“SATH”), and Scripps Networks, Inc., a Delaware corporation (“Scripps”).

R E C I T A L S :

         A.     Pursuant to a Share Purchase Agreement (the “Purchase Agreement”) dated
as of August 14, 2002 between Scripps and SATH, Scripps has agreed to purchase
from SATH, and SATH has agreed to sell to Scripps, 800 common shares, without
par value, of the Company (“Shares”).

         B.     Upon consummation of the transactions contemplated by the Purchase
Agreement, SATH will be the record and beneficial owner of 200 Shares and
Scripps will be the record and beneficial owner of 800 Shares.

         C.     It is a condition to the obligations of Scripps and SATH under the
Purchase Agreement that the parties execute this Agreement.

         NOW, THEREFORE, in consideration of the mutual covenants contained in this
Agreement and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:

         1.     Definitions.

         “Affiliate” means, with respect to any Person, any other Person (i) that
directly, or indirectly through one or more intermediaries, controls or is
controlled by or is under common control with such Person, (ii) that is a
general partner, director, manager, trustee or principal officer of, or a
limited partner owning more than 10% of , or that serves in a similar capacity
with respect to, such Person, or (iii) of which such Person is a general
partner, director, manager, trustee or principal officer or a limited partner
owning more than 10% of, or with respect to which such Person serves in a
similar capacity. For purposes of this definition, “control” means the
possession, directly or indirectly, of the power to direct or to cause the
direction of the management or policies of the Person in question through the
ownership of voting securities or by contract or otherwise.

         “Board” means the board of directors of the Company.

         “Change of Control” means any Disposition or series of related or
unrelated Dispositions of the Shares of Scripps or its Affiliates which, upon
consummation thereof, would result in Scripps or its Affiliates (taken as a
group) no longer possessing, directly or indirectly, the power to direct or
cause the direction of management or policies of the Company through the
ownership of Shares.

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         “Code” means the Internal Revenue Code of 1986 and any successor statute,
as amended from time to time.

         “Dispose” and “Disposition” mean any direct or indirect sale, assignment,
transfer, exchange, mortgage, pledge, grant, endorsement, delivery, conveyance,
hypothecation, or other transfer, whether absolute, contingent or conditional,
or as security or an encumbrance, whether voluntary or involuntary, whether
with or without consideration, and whether by operation of law, such as
dispositions in a merger or consolidation, pursuant to intestacy, descendance,
distribution by succession, bankruptcy, insolvency, receivership, levy,
execution or other seizure or sale by legal process.

         “LLC” means Shop At Home Network, LLC, a Tennessee limited liability
company, of which SATH owns 11.5%, SAH Acquisition Corporation, a Tennessee
corporation and wholly owned subsidiary of SATH, owns 1% and the Company owns
87.5% of the outstanding membership interests.

         “Original Issue Price” means the Original Issue Price as defined in the
Articles of Amendment to SATH’s Charter relating to the Series D Preferred
Shares.

         “Person” means any natural person, partnership, corporation, association,
limited liability company, joint stock company, trust, joint venture,
unincorporated organization or governmental entity or any department, agency or
political subdivision thereof.

         “Purchase Agreement” is defined in the Recitals to this Agreement.

         “Securities Act” means the Securities Act of 1933, as amended from time to
time.

         “Series D Preferred Shares” means any shares of SATH’s Series D Senior
Redeemable Preferred Stock held by Scripps or an Affiliate of Scripps.

         “Shareholders” means Scripps and SATH and their permitted assignees and
transferees.

         2.     Board of Directors. So long as SATH holds at least 15% of the
outstanding shares of the Company, each Shareholder shall vote the Shares over
which such Shareholder has voting control, and shall take all other necessary
or desirable actions within such Shareholder’s control (whether in his or its
capacity as a Shareholder, director, member of a Board committee or officer of
the Company or otherwise), and the Company shall take all necessary and
desirable actions within its control, in order to cause the Board to be
comprised of five members, four to be appointed by Scripps and one to be
appointed by SATH. Either Scripps or SATH may remove one or more of its
appointees upon written notice to the Company and the other. Removals and new
appointments will be mandatory at any time upon which the relative pro rata
proportions of Share ownership of the Shareholders shift pursuant to this
Agreement, so that the relative voting power on the Board complies at all times
with the intent of this Section. The Company shall also allow two
representative designated by SATH to attend all meetings of the Board in a
nonvoting capacity.

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         In making determinations with respect to the LLC (whether on behalf of
Scripps Holding as a Member or otherwise), neither Scripps nor the directors of
the Company appointed by Scripps will in any way be obligated to cause the
continuation of the business of the Network (as defined in the LLC’s Amended
and Restated Operating Agreement) and Scripps may cause the discontinuation of
the business of the Network and the dissolution of the LLC, if, in its sole
discretion, such business is no longer feasible or desirable or otherwise in
the interests of Scripps.

         3.     Restrictions on Transfer of Shares.

         (a)  Transfer of Shares. Except as specifically provided in this
Agreement, no Shareholder may directly or indirectly Dispose of all or any
portion of the Shares or other equity interests in the Company, whether now
owned or hereafter acquired, without first complying with the terms and
conditions of this Section 3. Notwithstanding the foregoing, in no event will
SATH be permitted to pledge, hypothecate or encumber its Shares without the
written consent of Scripps to be provided in Scripps’s sole discretion;
provided, however that nothing in this Section 3 will prohibit the pledge of
Shares by SATH to Scripps or an Affiliate of Scripps as security for any
indebtedness for borrowed money. Without limiting the generality of the
foregoing, no Disposition will be permitted, even if permitted by any other
provision of this Section 3, unless each of the following conditions are
satisfied in the judgment of, or waived in writing by, the Board in its
discretion:

	 	(i)	 	The Shareholder engaging or attempting to engage
in such Disposition (the “Assigning Shareholder”) complies
with all of the applicable provisions of this Section 3;
	 
	 	(ii)	 	The Person engaging or attempting to engage in
such Disposition as the assignee, purchaser or other
transferee of Shares (the “Transferee”) agrees in writing to
assume all of the obligations of the Assigning Shareholder
with respect to such Shares (including the obligations imposed
under this Agreement and specifically this Section 3) as a
condition to any Disposition and becomes a party to this
Agreement;
	 
	 	(iii)	 	The Assigning Shareholder and the Transferee
each execute, acknowledge and deliver to the Company such
instruments of transfer and assignment with respect to such
Disposition and such other instruments as may be reasonably
deemed necessary by, and in form and substance reasonably
satisfactory to, the Board.
	 
	 	(iv)	 	Either (A) the Disposed interests will be
registered under the Securities Act and any applicable state
securities laws, or (B) the Company shall have received, at
the expense of the parties to the Disposition, an opinion of
counsel for the Company (or counsel acceptable to counsel of
the Company) to the effect that such Disposition is exempt
from registration under the Securities Act and is in
compliance with all applicable federal and state securities
laws and regulations; provided that, if the Board waives such
opinion requirements, such waiver will not constitute a

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	 	 	 	waiver of any subsequent Disposition of such interest or the
Disposition of any other interest;
	 
	 	(v)	 	The Disposition does not cause any violation of
or an event of default under, or result in acceleration of any
indebtedness under, any note, mortgage, loan, or similar
instrument or document to which the Company is a party;
	 
	 	(vi)	 	The Assigning Shareholder and Transferee furnish
the Company with the Transferee’s taxpayer identification
number, sufficient information to determine the Transferee’s
initial tax basis in the interest Disposed, and any other
information necessary to permit the Company to file all
required federal and state tax returns and other legally
required information statements or returns; and
	 
	 	(vii)	 	All costs of the Disposition incurred by the
Company are reimbursed by the Assigning Member or the
Transferee to the Company.

         (b) Void Dispositions. Any attempted Disposition of Shares, or any
part thereof, not in compliance with this Section 3 will be null and void ab
initio as against the Company and all other Persons, the Company’s rights under
Section 3(g) will apply, and the Assigning Member(s) will be liable to the
Company and the other Members for all damages, costs and expenses the other
Members may sustain or incur as a result of such attempted Disposition.

         (c) Scripps’s Right of First Refusal.

	 	(i)	 	Notice of Intended Disposition. If SATH desires
to accept a bona fide non-Affiliated third party offer for the
Disposition of all (but not less than all) of its Shares,
whether in the public or private markets (including an initial
public offering), SATH shall promptly deliver to Scripps a
written offer (the “Offer”) to sell such Shares to Scripps on
terms and conditions not less favorable to Scripps than those
under which it proposes to Dispose of such Shares to such
third party. The Offer shall disclose the identity of the
third party offeror, the agreed terms of the proposed
Disposition (including a date certain on which the Disposition
will be abandoned and terminated if not then consummated), and
any other material facts relating to the proposed Disposition.
SATH shall also provide satisfactory proof that the
Disposition of the Shares to such third party offeror would
not be in contravention of the provisions set forth in Section
3(a).
	 
	 	(ii)	 	Exercise of Right. Within 30 days after receipt
of the Offer, Scripps may give written notice to SATH of its
intent to purchase all of SATH’s Shares on substantially the
same terms and conditions as set forth in the Offer. Scripps
will have the right to transfer its right to purchase the
Shares to any of its Affiliates.

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	 	(iii)	 	Non-Exercise of Right. If Scripps does not
exercise its rights under this Section 3(c), SATH may
thereafter Dispose of all (but not less than all) of its
Shares to the third party offeror identified in the Offer upon
the terms and conditions specified in the Offer; provided that
any such Disposition must not be effected in contravention of
the provisions of Section 3(a) and the terms of Section 3 must
be recognized, including but not limited to Scripps’s rights
under Section 3(e), and such Disposition must be consummated
or abandoned and terminated by a date certain set forth in the
Offer but in any event not later than 90 days after the Offer
has been declined by Scripps or the time for exercise has
lapsed. If SATH does not effect such Disposition of such
Shares within the specified period, this Section 3 will
continue to be applicable to any subsequent attempted
Disposition of SATH’s Shares.
	 
	 	(iv)	 	SATH Debt. In the event of a sale of SATH’s
Shares under this Section 3(c) (whether or not Scripps is the
purchaser), SATH shall use the proceeds of such sale (less
expenses related thereto) to first, redeem any Series D
Preferred Shares held by Scripps or its Affiliates at the
Original Issue Price thereof, plus accrued and unpaid
dividends thereon, and second, pay to Scripps or its
Affiliates principal and interest owed by SATH to Scripps or
its Affiliates under any indebtedness for borrowed money. If
Scripps is the purchaser hereunder, Scripps will have the
right to offset, on a dollar for dollar basis, from the
purchase price payable to SATH hereunder an amount equal to
such outstanding indebtedness, redemption price and dividends.

         (d) Transfers to Affiliates. Subject only to compliance with Section
3(a), a Shareholder that is an entity may Dispose of all or any portion of its
Shares to any member of an affiliated group of corporations within the meaning
of Code Section 1504 that includes such Shareholder.

         (e) Scripps’s Right to Sell; SATH’s Tag Along Right; Scripps’s Drag
Along Right. Subject only to compliance with Section 3(a) and this Section
3(e), Scripps and its successors and assigns may Dispose of any or all of their
Shares to any Person (a “Purchaser”) without notice to any other Shareholder
and without any further restriction. As a condition to the effectiveness of
any such Disposition, if Scripps intends to Dispose of Shares and such
Disposition would result in a Change of Control of the Company, SATH will have
the right to require, as a condition to such Disposition, that the Purchaser
purchase from SATH all of SATH’s Shares. Scripps shall promptly deliver to
SATH written notice of the proposed Disposition (the “Sale Notice”), including
the terms and conditions of the Purchaser’s offer, including the price to be
paid to Scripps, and the closing and termination dates, the identity of the
Purchaser and any other material facts or terms and conditions. SATH shall
notify Scripps of its intention to participate in such sale as soon as
practicable but not later than 30 days after receipt of the Sale Notice, which
notice of intention to participate together with the Sale Notice, will be
deemed to constitute a valid, legally binding and enforceable agreement for the
Disposition of all of SATH’s Shares. Scripps and SATH shall sell to the
Purchaser all of the Shares in the Company proposed to be Disposed by them at
not less than the price originally offered by the

6

 

 Purchaser, and upon other terms and conditions, if any, not more favorable
to the Purchaser than those originally offered. Scripps shall use its
reasonable best efforts to obtain the agreement of the Purchaser to the
participation of SATH in the contemplated Disposition, and shall not Dispose of
any Shares to such Purchaser if such Disposition would result in a Change of
Control of the Company and such Purchaser declines to purchase all of SATH’s
Shares pursuant to the terms of this Section. If (i) SATH elects not to, or
otherwise fails to notify Scripps of its decision to or not to, participate in
the sale under the Sale Notice and (ii) the sale under the Notice of Sale would
result in a Change of Control of the Company, Scripps will have the right, but
not the obligation, to require SATH to sell all of its Shares pursuant to the
Sale Notice and the foregoing provisions of this Section by written notice of
such requirement given within 45 days after its delivery of the Sale Notice to
SATH. In the event of a sale of SATH’s Shares under this Section 3(e), SATH
shall use the proceeds of such sale (less expenses related thereto) to first,
redeem any Series D Preferred Shares held by Scripps or its Affiliates at the
Original Issue Price thereof, plus accrued and unpaid dividends thereon, and
second, pay to Scripps or its Affiliates principal and interest owed by SATH to
Scripps or its Affiliates under any indebtedness for borrowed money. If
Scripps is the purchaser hereunder, Scripps will have the right to offset, on a
dollar for dollar basis, from the purchase price payable to SATH hereunder an
amount equal to such outstanding indebtedness, redemption price and dividends.

         (f)
Put and Call Rights.

	 	(i)	 	SATH’s Put Right. At any time after the second
anniversary of the Effective Date and prior to the fifth
anniversary of the Effective Date, SATH will have the right
(the “Put Right”) to require Scripps to purchase all but not
less than all of the Shares of SATH on the Contract Terms (as
defined in Section 3(i)) at a price equal to the Fair Market
Value thereof (as determined under Section 3(h)). The Fair
Market Value will be determined as of the date on which SATH
gives written notice to Scripps of its intent to exercise such
right. The closing of a Disposition shall take place not
later than 30 days after the Fair Market Value is finally
determined. Notwithstanding any permitted Disposition of
SATH’s interest in the Company, the Put Right may not be
Disposed to any Person other than a Transferee pursuant to
Section 3(d). Notwithstanding the foregoing provisions of
this Section 3(f)(i), the Put Right may not be exercised if a
Sale Notice has been given pursuant to Section 3(e) and has
not been rescinded or otherwise terminated. As a condition to
the closing of the transactions contemplated by exercise of
the Put Right, SATH shall use the proceeds of such sale to
redeem any Series D Preferred Shares held by Scripps or its
Affiliates at the Original Issue Price thereof, plus accrued
and unpaid dividends thereon, and the put price will be
reduced, on a dollar for dollar basis, first, by such
redemption price, including accrued and unpaid dividends
thereon, and second, by the amount of principal and interest
owed by SATH to Scripps or its Affiliates under any
indebtedness for borrowed money.

7

 

	 	(ii)	 	SATH’s Put Right Upon Scripps Holdings’
Disposition of LLC Membership Interests. If Scripps Holding
Disposes of or attempts to Dispose of any membership interests
in the LLC such that such Disposition constitutes a Change in
Control (as defined in the LLC’s Operating Agreement), then
SATH may exercise its Put Right in Section 3(f)(i)
notwithstanding any limitations with respect to timing set
forth in the first clause of such Section.
	 
	 	(iii)	 	Scripps’s Call Right. Except to the extent such
right may be exercised earlier pursuant to Section 3(f)(iv),
3(f)(v) or 3(f)(vi), at any time upon and after the fifth
anniversary of the Effective Date, Scripps will have the right
(the “Call Right”) to require SATH to sell all and not less
than all of SATH’s Shares to Scripps (or its assignees) on the
Contract Terms at a price equal to the Fair Market Value
thereof. The Fair Market Value will be determined as of the
date on which Scripps gives written notice to SATH of its
intent to exercise such right. The closing of such
Disposition will take place not later than 30 days after the
Fair Market Value is so determined. Notwithstanding the
foregoing provisions of this Section 3(f)(iii), the Call Right
may not be exercised if a Sale Notice has been given pursuant
to Section 3(e) and has not been rescinded or otherwise
terminated. As a condition to the closing of the transactions
contemplated by exercise of the Call Right, SATH shall use the
proceeds of such sale to redeem any Series D Preferred Shares
held by Scripps or its Affiliates at the Original Issue Price
thereof, plus accrued and unpaid dividends thereon, and the
call price will be reduced, on a dollar for dollar basis,
first, by such redemption price, including accrued and unpaid
dividends thereon, and second, by the amount of principal and
interest owed by SATH to Scripps or its Affiliates under any
indebtedness for borrowed money.
	 
	 	(iv)	 	Scripps Call Right Upon SATH’s Disposition of LLC
Membership Interests. If SATH or SAH Acquisition Corporation
Disposes of or attempts to Dispose of its membership interest
in the LLC, or any portion thereof, under any circumstances,
then Scripps may exercise its Call Right in Section 3(f)(iii)
notwithstanding any limitations with respect to timing set
forth in the first clause of such Section.
	 
	 	(v)	 	Scripps Call Right Upon Change in Control of
SATH. If (A) the board of directors or shareholders of SATH
approve a merger or consolidation that results in the
shareholders of SATH immediately prior to the transaction
giving rise to the consolidation or merger owning less than
50% of the total combined voting power of all classes of stock
entitled to vote of the surviving entity immediately after the
consummation of the merger or consolidation, (B) the board of
directors or shareholders of SATH approve the sale of
substantially all of the assets of SATH or the liquidation or
dissolution of SATH, (C) any person or other entity (other
than SATH)

8

 

	 	 	 	purchases any shares (or securities convertible into shares)
pursuant to a tender or exchange offer without the prior
consent of the board of directors or becomes the beneficial
owner of securities of SATH representing 25% or more of the
voting power of SATH’s outstanding securities, (D) during any
two-year period, individuals who at the beginning of such
period constitute the entire board of directors of SATH cease
to constitute a majority of the board of directors of SATH,
unless the election or the nomination for election of each
new director is approved by at least two-thirds of the
directors then still in office who were directors at the
beginning of that period or (E) any third party acquires the
power to direct or cause the direction of management or
policies of SATH through the ownership of securities, by
contract or otherwise, then Scripps may exercise its Call
Right in Section 3(f)(iii) notwithstanding any limitations
with respect to timing set forth in the first clause of such
Section.
	 
	 	(vi)	 	Scripps Call Right Upon Default. If SATH is in
default under this Agreement or any other agreement between it
and Scripps or an Affiliate of Scripps (including without
limitation the Amendment to SATH’s Charter relating to the
Series D Preferred Shares), then Scripps may exercise its Call
Right in Section 3(f)(iii) notwithstanding any limitations
with respect to timing set forth in the first clause of such
Section.
	 
	 	(vii)	 	Limitation on Exercise Based on Exercise of
Put/Call Relating to Shop At Home Network. Notwithstanding
anything to the contrary in the foregoing Section 3(f),
neither the Put Right nor the Call Right may be exercised
unless the Put Right or the Call Right, respectively, set
forth in Section 11.6 of the LLC’s Operating Agreement is
exercised by SATH or the Company, respectively.

         (g)  Certain Buyout Events.

	 	(i)	 	Definition of Event. For purposes of this
Section 3(g), the term “Event” means the occurrence of any of
the following events or circumstances with respect to any
Shareholder during any period of ownership of any Shares by
such Shareholder or with respect to any Shares subject to this
Agreement:

9

 

	 	(A)	 	such Shareholder becomes or is
determined to be bankrupt or insolvent;
	 
	 	(B)	 	such Shareholder institutes or has
instituted against it any proceedings of any kind under
any provision of any applicable bankruptcy or insolvency
law seeking any readjustment, arrangement, composition,
postponement or reduction of debts, liabilities or
obligations (in the case of any involuntary proceeding,
which is not removed or dismissed within 90 days);
	 
	 	(C)	 	such Shareholder makes an assignment
for the benefit of its creditors;
	 
	 	(D)	 	such Shareholder is required or deemed
to have Disposed of any interest in any of its Shares by
operation of law (other than a Disposition to the
Company);
	 
	 	(E)	 	any Shares of such Shareholder are
attached by, levied upon by, or becomes subject to
judicial or other legal process and such proceeding is
not removed, discharged, dismissed or bonded within 90
days; or
	 
	 	(F)	 	any Shares of such Shareholder are
the subject of a Disposition or an attempted Disposition
in any way (including a sale ordered by a court or a
Disposition required or deemed to have occurred by
operation of law, other than a Disposition to the
Company) in breach of this Agreement.

	 	(ii)	 	Purchase Option of the Company. Upon the
occurrence of an Event, the Shareholder subject to such Event
or its legal representative, if applicable (the “Offering
Shareholder”), shall notify the Company and all Shareholders
of the Event within five days of its occurrence (the “Event
Notice”) and, thereupon, the Company will have the right, but
not the obligation, to purchase all, but not less than all, of
the Shares owned or held beneficially by the Offering
Shareholder at the time of such Event at the price equal to
its Fair Market Value as of the date that is the calendar
month-end immediately preceding such Event and on and in
accordance with the Contract Terms (the “Event Option”).
Within five days after the determination of the Fair Market
Value in accordance with Section 3(h), the Company shall
notify the Offering Shareholder and the other Shareholders
whether it intends to exercise the Event Option and upon any
such exercise, the closing thereof will be made on and in
accordance with the Contract Terms. Failure of a party to
give or receive an Event Notice will not prejudice the rights
of the other parties under this Section 3(g).

10

 

	 	(iii)	 	Right of Assignment. At Scripps’s option, the
Company’s Event Option may be assigned to and assumed by
Scripps or an Affiliate of Scripps (if it is not the Offering
Shareholder) or, if Scripps does not wish to have the
Company’s Event Option assigned to it or an Affiliate of
Scripps, by any other Shareholder or Shareholders (or their
designees) other than the Offering Shareholder, in any case at
the option of the Board in its discretion without any approval
by the Shareholders. If any Shareholders other than the
Offering Shareholder are purchasers and such other
Shareholders are unable to agree upon the number of Shares to
be acquired by each of them, each purchasing Shareholder will
be entitled to purchase a portion of such Shares in the same
proportion that the number of Shares held by such Shareholder
bears to the total outstanding Shares held by all such
Shareholders.
	 
	 	(viii)	 	Scripps Debt. In the event of a sale of SATH’s Shares under
this Section 3(g) (whether or not Scripps is the purchaser),
SATH shall use the proceeds of such sale (less expenses
related thereto) to first, redeem any Series D Preferred
Shares held by Scripps or its Affiliates at the Original Issue
Price thereof, plus accrued and unpaid dividends thereon, and
second, pay to Scripps or its Affiliates principal and
interest owed by SATH to Scripps or its Affiliates under any
indebtedness for borrowed money. If Scripps is the purchaser
hereunder, Scripps will have the right to offset, on a dollar
for dollar basis, from the purchase price payable to SATH
hereunder an amount equal to such outstanding indebtedness,
redemption price and dividends.
	 
	 	(ix)	 	Continuing Effect After Insolvency. The failure
of the Company or the other Shareholders, as the case may be,
to exercise the Event Option, or to consummate the Event
Option if exercised, will not affect their respective rights
to purchase the same Shares under and in accordance with any
other applicable provisions of this Agreement in the event of
a proposed Disposition thereof to any receiver, petitioner,
assignee, transferee or other Person attempting to obtain an
interest in such Shares by a proposed Disposition or by
operation of law. In addition, with respect to any Shares
subject to an Event Option which are not purchased by the
Company or by any other Shareholder, in the absence of any
order to the contrary with respect to such Shares by any court
or agency having jurisdiction under federal or state law with
respect to the Event, and to the extent not in violation of
applicable law, such Shares will be and remain subject to the
provisions and restrictions contained in this Agreement
regardless of the identity of the transferee and such
transferee will be deemed to be bound by the terms and
provisions of this Agreement as an Assignee.

         (h)  Determination of Fair Market Value. If the purchase price for any
transaction involving any Shares purchased and sold on and in accordance with
the Contract Terms or otherwise is to be the Fair Market Value thereof, the
determination of such Fair Market Value as at the applicable valuation date
will be made as set forth in this Section 3(h). Within 10

11

 

days after it is determined that the Fair Market Value process must be
initiated, each of Scripps and SATH shall choose a nationally recognized
reputable investment bank (which investment bank must commit to deliver its
determination within 60 days) to determine the Fair Market Value and the Fair
Market Value will be the average of the two determinations so made.
Notwithstanding anything to the contrary in the foregoing, however, if the two
determinations differ by more than 10%, then the aforesaid investment banks
shall select a third nationally recognized reputable investment bank (which
investment bank must commit to deliver its determination within 60 days) to
determine the Fair Market Value; and upon receipt of the third determination,
the Fair Market Value will be the average of the two determinations closest in
amount to each other. Scripps and SATH will share equally in the cost of the
investment banks. The Board and the purchaser(s) and seller(s) in the
transaction shall cooperate with the investment banks and provide them (on a
confidential basis) with all information regarding the Company and their
respective Shares (directly or indirectly owned) as they reasonably request.
The Fair Market Value will be determined without regard to any minority
interest, lack of marketability or other discounts for any Shares and without
regard to any premiums for control and will be determined without regard for
any increase in membership interest by the Company in the LLC due to a
concurrent exercise of any rights and remedies contained in the LLC’s Operating
Agreement.

         (i)  Contract Terms. For purposes of this Agreement, the “Contract Terms”
are as follows:

	 	(i)	 	Payment Terms. The purchase price to be paid in
any transaction subject to the Contract Terms will be due and
payable in cash in full at the closing of the transaction held
in accordance with Section 3(i)(ii), except that the purchase
price of any such Shares will be reduced, at the Company’s
election where the Company is the purchaser, by an amount
equal to the unpaid balance and any accrued but unpaid
interest owed to the Company by the holder of such Shares, and
such indebtedness (to the extent of the reduction in purchase
price) will be deemed paid to the Company.
	 
	 	(ii)	 	Closing. Any Disposition of Shares made pursuant
to the Contract Terms must be closed as specified in the
applicable Section of this Agreement or, if not so specified,
within 60 days after the date on which the parties involved
become unconditionally bound under this Agreement to effect
such Disposition or at such other time as such parties may
otherwise agree.
	 
	 	(iii)	 	Documents. Upon the delivery at the closing by
the Transferee of the purchase price, in cash, to be delivered
in payment for such Shares Disposed of pursuant to the
Contract Terms, the Assigning Shareholder shall execute and
deliver to the Transferee certificates representing the Shares
Disposed of and all such assignments and other instruments
which may reasonably be required to evidence and cause such
Disposition to be a valid, binding and legally enforceable
Disposition of such Shares to the Transferee. The Assigning
Shareholder shall also execute and deliver to the Transferee a
certificate, dated the closing date of such Disposition,

12

 

	 	 	 	containing a representation and warranty that on such date
the Assigning Shareholder is the holder of record and sole
beneficial owner of the Shares so Disposed of, has the full
and unrestricted right to sell, assign, transfer and deliver
such Shares to such Transferee, that the Disposition of such
Shares to the Transferee will not conflict with or constitute
a breach of the Company’s Articles of Incorporation, Code of
Regulations, or this Agreement, and that the Assigning
Shareholder is transferring to such Transferee good and
marketable title to the Shares so transferred, free from all
liens, security interests, pledges, encumbrances, equities,
charges, claims, voting trusts or restrictions whatsoever,
other than those restrictions contained in or arising under
this Agreement or, if applicable, the Articles of
Incorporation (and any restrictions arising by reason of
federal or state securities laws).

         4.     Affiliate Transactions. SATH acknowledges that the Company may enter
into any agreement with any Person that is an Affiliate of Scripps, without the
prior approval of the Shareholders provided that any such agreement contains
substantially such terms and conditions as would be contained in a similar
agreement entered into by the Company with a comparable, unaffiliated third
party.

         5.     Outside Businesses or Opportunities. Except as set forth in the letter
agreement dated as of the date hereof between SATH and Scripps relating to
SATH’s right to participate in future acquisitions by Scripps of a home
shopping network, Scripps or any Affiliate thereof may engage in or possess an
interest in any business venture of any nature or description, including,
without limitation, any business venture for the exploitation of home shopping
programming, content, merchandising, licensing and products and services and
all rights in connection therewith in all media and formats now or hereafter
devised, including without limitation, magazines, radio programming,
conventions and trade shows, independently or with others, which business
venture may be the same as, similar to or dissimilar to the business of the
Company or the LLC, and may use the words “Shop At Home”; and neither the
Company or the LLC, nor any Shareholder of the Company or any member of the
LLC, will have any rights by virtue of this Agreement or otherwise in and to
such independent ventures or the income or profits derived therefrom, and the
pursuit by Scripps or any such Affiliate of any such venture, even if
competitive with the business of the Company or the LLC, will not be deemed
wrongful or improper. Neither Scripps nor any Affiliate thereof will be
obligated to present any particular investment opportunity to the Company or
the LLC even if such opportunity is of a character which, if presented to the
Company or the LLC, could be taken by the Company or the LLC or which, absent
this provision, would have to be presented to the Company or the LLC, and
Scripps or any such Affiliate will have the right to take for its own account
(individually or as a partner or fiduciary) or to recommend to others any such
particular investment opportunity.

         6.     SATH Participation in Additional Equity Issuances. If the Company
issues any additional equity securities to Scripps or an Affiliate of Scripps,
then SATH will have the right, for a period of six months from Scripps’s (or
such Affiliate’s) election to fund any equity purchase, to purchase up to a
number of such securities equal to (a) the number of such securities issued to
Scripps or such Affiliate, multiplied by (b) a fraction, the numerator of which
is the number of equity securities held by SATH on a fully diluted basis
immediately prior to the

13

 

 issuance to Scripps or such Affiliate and the denominator of which is the
number of equity securities held by Scripps and its Affiliates on a fully
diluted basis immediately prior to the issuance to Scripps or such Affiliate.
Notwithstanding and without limiting the foregoing, SATH will not have any
preemptive right to purchase any securities issued to any third party other
than Scripps or an Affiliate of Scripps.

         7.     Legend. Each certificate evidencing Shares and each certificate issued
in exchange for or upon the transfer of any Shares shall be stamped or
otherwise imprinted with a legend in substantially the following form:

		
	 	“THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO A SHAREHOLDERS AGREEMENT DATED AS OF
         , 2002, AMONG THE ISSUER OF SUCH SECURITIES
(THE “COMPANY”) AND THE COMPANY’S SHAREHOLDERS. A
COPY OF SUCH AGREEMENT WILL BE FURNISHED WITHOUT
CHARGE BY THE COMPANY TO THE HOLDER HEREOF WITHIN FIVE
DAYS OF WRITTEN REQUEST.”

         8.     Miscellaneous.

         (a)  Amendment and Waiver. Except as otherwise provided in this Agreement,
no modification, amendment or waiver of any provision of this Agreement will be
effective unless such modification, amendment or waiver is approved in writing
by the Company and the Shareholders. The failure of any party to enforce any
of the provisions of this Agreement will in no way be construed as a waiver of
such provisions and will not affect the right of such party thereafter to
enforce each and every provision of this Agreement in accordance with its
terms.

         (b)  Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained in this Agreement.

         (c)  Entire Agreement. Except as otherwise expressly set forth in this
Agreement, this Agreement embodies the complete agreement and understanding
among the parties with respect to the subject matter of this Agreement and
supersedes and preempts any prior understandings, agreements or representations
by or among the parties, written or oral, that may have related to the subject
matter of this Agreement in any way.

         (d)  Successors and Assigns. Except as otherwise provided in this
Agreement, this Agreement will bind and inure to the benefit of and be
enforceable by the Company and its successors and assigns, and the Stockholders
and their respective representatives, successors and assigns, so long as they
hold Shares.

14

 

         (e)  Counterparts. This Agreement may be executed in separate
counterparts, each of which, when executed, will be an original and all of
which taken together will constitute one and the same agreement.

         (f)  Remedies. Each Shareholder acknowledges and agrees that, if that
Shareholder fails to perform that Shareholder’s obligations under this
Agreement, the remedy at law available to any party aggrieved by such failure
would be inadequate and that, in addition to any other rights or remedies such
aggrieved party may have at law or in equity, the aggrieved party will be
entitled to specific performance of the provisions of this Agreement or an
injunction against any breach of this Agreement, without the necessity of proof
of actual damage. Accordingly, with respect to any action or proceeding
brought by such aggrieved party to enforce the provisions of this Agreement
against such Shareholder, each such Shareholder hereby waives the claim or
defense that such aggrieved party now has or hereafter has an adequate remedy
at law and such Shareholder hereby agrees not to assert such claim or defense
in any such action or proceeding. This provision will not be construed as
precluding such aggrieved party from exercising any other rights, privileges or
remedies to which such party may be entitled, all of which rights, remedies and
privileges will be deemed cumulative and none of which will be deemed
exclusive. Except as otherwise expressly provided in this Agreement or
otherwise agreed to in writing executed by such aggrieved party, no course of
dealing on the part of, nor any omission or delay by, such aggrieved party will
operate as a waiver of any such right, remedy or privilege, nor will any single
or partial exercise or waiver of any such right, privilege or remedy preclude
any other or further exercise thereof or of any other right, privilege or
remedy available to such aggrieved party.

         (g)  Indemnification. Each Shareholder shall defend, indemnify and hold
harmless all other Shareholders from and against any and all liabilities,
obligations, claims, costs, damages and expenses, including without limitation
reasonable attorneys’ fees and additional tax liabilities and interest and
penalties, incurred by the other Shareholders as a result of the failure of
performance of, or the breach by, the indemnifying Shareholder of any of that
Shareholder’s obligations contained in this Agreement.

         (h)  Power of Attorney. Each Shareholder hereby irrevocably appoints the
Company as that Shareholder’s attorney-in-fact for the purpose of executing an
addendum Agreement on behalf of the Shareholders, from time to time, for the
purpose of binding any Tranferees to the conditions and obligations of this
Agreement.

         (i)  Notices. Any notice provided for in this Agreement must be in writing
and either personally delivered or mailed first-class mail (postage prepaid) or
sent by reputable overnight courier service (charges prepaid) to the recipient
at the address indicated on the records of the Company and to any subsequent
holder of Shares subject to this Agreement at such address as indicated by the
Company’s records, or at such address or to the attention of such other person
as the recipient party has specified by prior written notice to the sending
party. Notices will be deemed to have been given when delivered personally,
three days after deposit in the U.S. mail and one day after deposit with a
reputable overnight courier service.

         (j)  Governing Law. This Agreement will be governed by and construed in
accordance with the laws of the State of Ohio, without regard to conflicts of
law principles.

15

 

         (k)  Conflict. If, and to the extent, any terms or provisions of the
Company’s Articles of Incorporation or Code of Regulations are contrary to the
terms of this Agreement, the terms of this Agreement will control.

[Signature pages follow.]

16

 

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

	 	 	 	 	 
	 	 	THE SCRIPPS SHOP AT HOME HOLDING COMPANY
	
	
	
	

	 	 	 	 	 
	
	
	
	

	 	 	
By:
	 	 

Name:

Title:
	
	
	
	

	 	 	 	 	 
	
	
	
	

	 	 	SCRIPPS NETWORKS, INC.
	
	
	
	

	 	 	 	 	 
	
	
	
	

	 	 	
By:
	 	 

Name:

Title:
	
	
	
	

	 	 	 	 	 
	
	
	
	

	 	 	SHOP AT HOME, INC.
	
	
	
	

	 	 	 	 	 
	
	
	
	

	 	 	
By:
	 	 

Name:

Title:

The E.W. Scripps Company hereby guarantees the obligations of Scripps under the
foregoing Shareholder Agreement.

	 	 	 	 	 
	 	 	THE E.W. SCRIPPS COMPANY
	
	
	
	

	 	 	 	 	 
	
	
	
	

	 	 	
By
 

Title
	 	 

 

17

 

EXHIBIT 8.4(f)

Shop At Home Network, LLC

5388 Hickory Hollow Parkway

Nashville, Tennessee 37013

         , 2002

Shop at Home, Inc.

5388 Hickory Hollow Parkway

Nashville, Tennessee 37013

Ladies and Gentlemen:

         The following shall comprise the agreement (the “Agreement”) among
         (formerly known as Shop at Home, Inc.) and its subsidiaries listed
on Exhibit A, attached hereto and made part hereof (collectively, “SATH”), and
Shop At Home Network, LLC (the “Company”) for the affiliation of SATH’s
television broadcasting stations set forth on Exhibit A (each respective
station and the holder of the FCC license therefor being referred to herein as
a “Station” and collectively as, the “Stations”), with the Company’s Shop at
Home Network (the “Network”) and shall supersede and replace all prior
agreements between SATH and the Company or its predecessor with respect to the
Network, which agreements are hereby terminated and of no further force or
effect.

         1.     Term and Termination.

                  (a) This Agreement shall become effective at      a.m., central time on
     , 2002 (the “Effective Date”) and, unless sooner terminated as
provided herein, shall remain in effect until      a.m., central time on
     , 2005 (the “Term”).

                  (b) This Agreement may be terminated by SATH with respect to any Station,
provided that such termination shall not be effective (i) prior to the day
following the last day of the fifteenth (15th) month following the Effective
Date; (ii) unless SATH provides the Company written notice of such termination
no later than six (6) months prior to the date of such termination; and (iii)
so long as SATH does not enter into any other affiliation or limited marketing
agreement with any television home shopping network.

                  (c) Provided SATH is not in breach of its obligations under this
Agreement, SATH may terminate this Agreement with respect to any Station upon
written notice to the Company if the Company breaches any of its obligations
under this Agreement with respect to such Station and the Company fails within
thirty (30) days after its receipt of notice of such breach from SATH to cure
such breach.

 

 

                  (d) The Company may terminate this Agreement as to all Stations without
liability upon six (6) months prior written notice if the Company shall by
action of its members elect to cease the business of the Network.

         2.     Programming.

                  (a) The Company commits to supply to SATH network programming for free
over-the-air television broadcasting by each Station twenty-four (24) hours a
day, seven (7) days a week for the term of this Agreement (the “Programming
Period”). SATH agrees that, subject only to Section 3 below, each Station
shall clear and broadcast all programming supplied to Station hereunder for
broadcast during the Programming Period.

                  (b) All programming furnished to SATH for the Stations pursuant to this
Agreement shall be referred to herein as “Network Programming,” and any one
program of Network Programming shall be referred to as a “Network Program.”
The selection, scheduling, substitution and withdrawal of any Network Program
or other portion of Network Programming shall at all times remain within the
sole discretion and control of the Company.

                  (c) SATH shall be solely responsible for all costs and expenses incurred
by SATH or any Station hereunder in connection with SATH’s ownership,
operation, maintenance and facility upgrades of each Station, including,
without limitation, timely compliance with the FCC’s requirements for
transition to digital television broadcasting. Notwithstanding the foregoing,
any costs and expenses incurred by SATH or any Station in connection with the
expansion of any Station facilities beyond the FCC’s requirements or any other
non-essential capital improvement, in either case expressly requested by the
Company, shall be paid by the Company.

                  (d) Notwithstanding anything to the contrary in this Agreement, the
Company shall not have any obligation to supply Network Programming to any
Station if the Company reasonably believes that such Station’s airing of
Network Programming could result in the violation by the Company or any parent,
subsidiary or affiliated company of the Company of any policy, rule or
regulation of the FCC, including but not limited to, Section 73.3555(b) of the
FCC’s rules (the local television multiple ownership rule).

         3.     FCC Mandated Programming Requirements.

                  (a) SATH shall be responsible for all material broadcast over its
facilities and reserves the right to substitute programming other than Network
Programming as necessary in its good faith discretion to comply with its
licensee obligations under the FCC’s rules and policies. During the past year,
Stations each have devoted less than 3.5 hours per week (the “Programming
Allowance”) to programming other than Network Programming. SATH does not
presently foresee that any Station’s licensee obligations will require that it
present a greater amount of programming other than Network Programming during
the Programming Period or significantly alter the time periods during which
such programming other than Network Programming is presented.

2

 

                  (b) SATH shall immediately notify the Company in the event that any
Station broadcasts more than 3.5 hours of programming other than Network
Programming in any calendar week and shall provide the Company with a complete
schedule of that week’s programming other than Network Programming within one
week. SATH agrees that the next Network Payment for a month that includes the
last day of a calendar week in which any Station aired more than 3.5 hours of
programming other than Network Programming shall be reduced by an amount equal
to $.0001461 for every hour of programming other than Network Programming
broadcast in excess of the Programming Allowance multiplied by the number of
Network Households reached by the Station. Further, should any Station
broadcast more than 3.5 hours per calendar week of programming other than
Network Programming during any four calendar weeks per calendar year, the
Company, in addition to any other remedies it may have under this Agreement or
otherwise, may immediately terminate the Agreement with respect to that
Station. The remedies set forth in this Section 3 shall not apply if (i)
SATH’s failure to broadcast Network Programming on any Station is a direct
result of an event of force majeure as provided in Section 6 of this Agreement;
or (ii) SATH reasonably believes that such Network Programming is
unsatisfactory, unsuitable, or contrary to the public interest as described
below.

                  (c) While a Station may decline to air Network Programming that it
reasonably deems to be unsatisfactory, unsuitable, or contrary to the public
interest, SATH shall not fail to broadcast any Network Programming as a result
of commercial motivation; that is, programming shall not be deemed to be
unsatisfactory, unsuitable or contrary to the public interest based on
performance, ratings, or the availability of alternative programming which SATH
believes to be more profitable or more attractive.

         4.     Payments. In consideration of SATH entering into this Agreement and
the Stations’ performance of their obligations hereunder, the Company shall pay
SATH an amount calculated by dividing the product of $1.25 and the average
number of Network Households (as hereinafter defined) by twelve (the “Network
Payment”). For purposes of this Section 4, “Network Households” shall mean the
number of cable households reached by the Network calculated by averaging the
total number of cable households reached by the Network on the first and last
day of each month during the Term. The Network Payment shall be due and
payable to SATH in arrears on a monthly basis on the fifteenth (15th) day of
each month during the Term. If any Network Payment is not made within ten (10)
days after the due date thereof, then such Network Payment will bear a penalty
equal to 1% of the amount of such Network Payment per month. The number of
Network Households shall be computed by SATH according to its normal historical
practices based on available information which it believes to be reliable and
according to the agreed upon procedures set forth on Exhibit B. Each Network
Payment shall be accompanied by a certification of SATH’s Chief Executive
Officer, Chief Operating Officer or Chief Financial Officer that such amount
has been determined in compliance with this Section 4. The Company shall have
the right, exercisable no more often than once per year, to conduct an audit of
SATH’s calculations of the number of Network Households. If, as a result of
the audit, the Company concludes that SATH’s calculations are overstated by a
factor of more than 5% for any Station, the resulting overpayments made during
the period of the audit shall be immediately paid to the Company by SATH.
Notwithstanding this payment obligation, SATH may object to the audit
determination made by the Company, and in that event the parties will mutually
agree upon an independent third party to conduct an audit of such calculations,
and the results of such

3

 

 audit shall be binding for the period covered by the audit. If, as a
result of the audit by the third party, it is determined that SATH overstated
the number of Network Households during the audit period by more than 5% for
any Station, the cost of the audit shall be paid by SATH. Otherwise, the cost
of the audit shall be paid by the Company.

         5.     Conditions of Station’s Broadcast. As a condition to SATH’s broadcast
of Network Programming on any Station, SATH shall not make any deletions from,
or additions or modifications to, any Network Program or any commercial,
Network identification, program promotional or production credit announcements
or other interstitial material contained therein, nor broadcast any commercial
or other announcements (except emergency bulletins) during any such program,
without the Company’s prior written authorization. SATH shall broadcast each
Network Program on the Stations from the commencement of network origination
until the commencement of the next program.

         6.     Force Majeure. Neither SATH nor the Company shall incur any liability
to the other party hereunder because of the Company’s failure to deliver, or
the failure of a Station to broadcast, any or all Network Programs due to
failure of facilities, labor disputes, government regulations, including, but
not limited to, applicable FCC regulations, or causes beyond the reasonable
control of the party so failing to deliver or to broadcast. Without limiting
the generality of the foregoing, the Company’s failure to deliver a program due
to cancellation of that program for any reason shall be deemed to be for causes
beyond the Company’s reasonable control.

         7.     Indemnification.

                  (a) The Company shall indemnify, defend and hold each Station
(individually, an “Indemnified Station”), its parent, subsidiary and affiliated
companies, and their respective directors, officers and employees, harmless
from and against all claims, damages, liabilities, costs and expenses
(including reasonable attorneys’ fees) arising out of the use by the
Indemnified Station, in accordance with this Agreement, of any Network Program
or other material as furnished by the Company hereunder, provided that the
Indemnified Station promptly notifies the Company of any claim or litigation to
which this indemnity shall apply, and that the Indemnified Station cooperates
fully with the Company in the defense or settlement of such claim or
litigation.

                  (b) SATH shall indemnify, defend and hold the Company, its parent,
subsidiary and affiliated companies, and their respective directors, officers
and employees, harmless with respect to (i) material added to or deleted from
any program by any Station; and (ii) any programming or other material
broadcast by any Station and not provided by the Company hereunder, provided
that the Company promptly notifies SATH of any claim or litigation to which
this indemnity shall apply, and that the Company cooperates fully with SATH in
the defense or settlement of such claim or litigation.

                  (c) These indemnities shall not apply to litigation expenses, including
attorneys’ fees, which the indemnified party elects to incur on its own behalf,
provided that the indemnifying party has assumed responsibility for the defense
or settlement of the claim.

4

 

         8.     Change in Operations. SATH represents and warrants that it holds a
valid license granted by the FCC to operate each Station as a television
broadcast station. Such representation and warranty shall constitute a
continuing representation and warranty by SATH. In the event that at any time
a Station’s transmitter location, power, frequency or operations and such
change results in a loss of 10% or more of the cable TV households which
receive the Station, then the Company may terminate this Agreement with respect
to such Station or Stations upon thirty (30) days’ prior written notice to
SATH.

         9.     Unauthorized Copying and Transmission; Retransmission Consent.

                  (a) SATH shall not authorize, cause, or permit, without the Company’s
consent, any Network Program or other material furnished to SATH hereunder to
be recorded, duplicated, rebroadcast or otherwise transmitted or used for any
purpose other than broadcasting by SATH on each Station as provided herein.
Notwithstanding the foregoing, SATH shall not be restricted in the exercise of
its signal carriage rights pursuant to any applicable rule or regulation of the
FCC with respect to retransmission of its broadcast signal by any cable system
or multichannel video program distributor (“MVPD”), as defined in Section
76.64(d) of the FCC’s rules, which (i) is located within the DMA in which each
Station is located; or (ii) was actually carrying Station’s signal as of April
1, 1993; or (iii) with respect to cable systems, serving an area in which
Station is “significantly viewed” (as determined by the FCC) as of April 1,
1993; provided, however, that any such exercise pursuant to the FCC’s rules
with respect to Network Programs shall not be deemed to constitute a license by
the Company.

                  (b) SATH shall not consent to the retransmission of its broadcast signal
by any cable television system, or, except as provided in Section (c) below, to
any other MVPD whose carriage of broadcast signals requires retransmission
consent, if such cable system or MVPD is located outside the DMA to which any
Station is assigned, unless such Station’s signal was actually carried by such
cable system or MVPD as of April 1, 1993, or, with respect to such cable
system, is “significantly viewed” (as determined by the FCC) as of April 1,
1993.

                  (c) SATH shall not consent to the retransmission of its broadcast signal
by any MVPD that provides such signal to any home satellite dish user, unless
such user is located within any Station’s own DMA.

                  (d) If SATH violates any of the provisions set forth in this Section 9,
the Company may, in addition to any other of its rights or remedies at law or
in equity under this Agreement or any amendment thereto, terminate this
Agreement with respect to the violating Station by written notice to SATH given
at least ninety (90) days prior to the effective date of such termination.

         10.     DTV Conversion. SATH acknowledges that, upon commencement of
operation of each Station’s digital television signal (“DTV channel”), SATH
will cause each Station, to the same extent as this Agreement provides for
carriage of Network Programming on its analog channel, carry on such DTV
channel the digital feed, when available, of such Network Programming as and in
the technical format provided by the Company consistent with the ATSC standards
and all program related material.

5

 

         11.     Assignment.

                  (a) This Agreement may not be assigned or transferred (including pursuant
to any change in the control of SATH or any Station), except a “short form”
assignment or transfer of control made pursuant to Section 73.3540(f) of the
FCC’s rules, directly or indirectly, whether by operation of law or otherwise,
without the prior written consent of the Company, which consent shall not be
unreasonably withheld, and, except as permitted by Section 11(b), no permitted
assignment or transfer shall relieve SATH of its obligations hereunder. Any
purported assignment or transfer by SATH or any Station without the Company’s
consent as required hereby shall be null and void and not enforceable against
the Company.

                  (b) In the event of a transfer of control or assignment of any Station’s
license, except a “short form” assignment or transfer of control made pursuant
to Section 73.3540(f) of the FCC’s rules (each, a “Change in Control
Transaction”), SATH shall cause the license assignee or transferee (a “Station
Transferee”) to assume SATH’s obligations hereunder with respect to such
Station, provided that such Station Transferee may terminate this Agreement
with respect to such Station but such termination shall not be effective (i)
prior to the day following the last day of the fifteenth
(15th) month following
the Effective Date; and (ii) unless such Station Transferee provides the
Company written notice of such termination no later than six (6) months prior
to the date of such termination.

         12.     Notices. Notices hereunder shall be in writing and shall be given by
personal delivery or overnight courier service: (a) to SATH at the address set
forth on the first page of this Agreement; and (b) to the Company at the
address set forth on the first page of this Agreement, or at such address or
addresses as may be specified in writing by the party to whom the notice is
given. Notices shall be deemed given when personally delivered and on the next
business day following dispatch by overnight courier service.

         13.     Availability of Equitable Remedies. In the event of a material breach
of this Agreement, the party not at fault, if any, shall retain and have the
right to pursue all rights and remedies available at law or in equity against
the defaulting party. Since a breach of the provisions of this Agreement could
not adequately be compensated by money damages, any party shall be entitled, in
addition to any other right or remedy available to it, to an injunction
restraining such breach or threatened breach and to specific performance of any
such provision of this Agreement. No bond or other security shall be required
in connection with any such action, and the parties consent to the issuance of
such an injunction and to the ordering of specific performance.

         14.     Entire Agreement/Amendments. The foregoing constitutes the entire
Agreement among the parties with respect to the affiliation of the Stations
with the Network. This Agreement may not be changed, amended, modified,
renewed, extended or discharged, except as specifically provided herein or by
an agreement in writing signed by the parties hereto.

         15.     Confidentiality. The parties agree to use their best efforts to
preserve the confidentiality of this Agreement and the terms and conditions set
forth herein, and the exhibits annexed hereto, to the fullest extent
permissible by law.

6

 

         16.     Applicable Law. The obligations of SATH and the Company under this
Agreement are subject to all applicable federal, state, and local laws, rules
and regulations, including, but not limited to, the Communications Act of 1934,
as amended, and the rules and regulations of the FCC, and this Agreement and
all matters or issues collateral thereto shall be governed by the law of the
State of Ohio, without regard to applicable conflict of laws provisions.

         17.     Severability. If any provision of this Agreement or the application
of such provision to any circumstance is held invalid, the remainder of this
Agreement, or the application of such provision to circumstances other than
those as to which it is held invalid, will not be affected thereby.

         18.     Waiver. A waiver by SATH or the Company of a breach of any provision
of this Agreement shall not be deemed to constitute a waiver of any preceding
or subsequent breach of the same provision or any other provision hereof.

         19.     Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.

         20.     Headings. The headings contained in this Agreement are for
convenience of reference only and shall not be considered a part of, or affect
the construction or interpretation of any provision of, this Agreement.

         21.     Liability of SATH and Stations. Notwithstanding any provision herein,
SATH and each of its subsidiaries shall be jointly and severally liable for all
agreements, covenants, representations, warranties and indemnities of SATH
hereunder.

7

 

         If the foregoing is in accordance with your understanding, please indicate
your acceptance on the copy of this Agreement enclosed for that purpose and
return that copy to us.

	 	 	 	 	 
	 	 	Very truly yours,
	
	
	
	

	 	 	 	 	 
	
	
	
	

	 	 	SHOP AT HOME NETWORK, LLC
	
	
	
	

	 	 	 	 	 
	
	
	
	

	 	 	
By:
 

Name:
 

Title:
 
	 	 

 

 

	 	 	 	 
	AGREED:	 
	
	
	
	

	 	 	 	 
	
	
	
	

	SHOP AT HOME, INC.	 
	
	
	
	

	 	 	 	 
	
	
	
	

	
By:
 

Name:
 

Title:
 
	 	 

 

 

	 
	
	
	
	

	 	 	 	 
	
	
	
	

	SAH LICENSE, INC.	 
	
	
	
	

	 	 	 	 
	
	
	
	

	
By:
 

Name:
 

Title:
 
	 	 

 

 

	 
	
	
	
	

	 	 	 	 
	
	
	
	

	SAH ACQUISITION CORPORATION II	 
	
	
	
	

	 	 	 	 
	
	
	
	

	
By:
 

Name:
 

Title:
 
	 	 

 

 

	 

8

 

EXHIBIT A

	1.	 	SAH License, Inc.

3993 Howard Hughes Parkway, Suite 100

Las Vegas, NV 89109
	 
	 	 	Licensee of Television Stations: WSAH, Bridgeport, CT; WMFP, Lawrence, MA
	 
	2.	 	SAH Acquisition Corporation II

P.O. Box 305249

Nashville, TN 37230
	 
	 	 	Licensee of Television Stations: KCNS, San Francisco, CA; WRAY-TV,
Wilson, NC; WOAC, Canton, OH

9

 

EXHIBIT 8.4(g)

THE E.W. SCRIPPS COMPANY

312 Walnut Street

Cincinnati, Ohio 45202

_____________, 2002

Shop At Home, Inc.

5388 Hickory Hollow Parkway

Nashville, Tennessee 37013

Dear Sirs:

         As a condition to the indirect purchase by The E.W. Scripps Company
(“EW Scripps”), through a subsidiary, of shares in SAH Holdings, Inc.
(“Holdings”), an Ohio corporation and a wholly owned subsidiary of Shop At
Home, Inc. (“SATH”), EW Scripps hereby agrees that it will not directly or
indirectly through a subsidiary acquire substantially all of the equity
interests in or assets related to any home shopping cable television network
offered and distributed in the United States unless it provides SATH with the
opportunity to participate in such acquisition, on the same terms and
conditions as EW Scripps, pro rata with EW Scripps to the extent of SATH’s
direct or indirect membership interest in the Shop At Home Network, LLC, a
Tennessee limited liability company owned by SATH, Holdings and SAH Acquisition
Corporation, a wholly owned subsidiary of SATH (the “LLC”). If EW Scripps so
chooses, in its sole discretion, EW Scripps can require that such participation
take the form of direct participation in the purchase from the seller of such
business, purchase of the business through an entity jointly owned (directly or
indirectly) by EW Scripps, SATH and third parties, or a sale by EW Scripps or
issuance by the entity holding such business to SATH of equity as soon as
practicable after consummation of the acquisition. EW Scripps shall promptly
deliver to SATH written notice of the proposed acquisition (the “Acquisition
Notice”), including information regarding the business to be acquired, the
terms and conditions of the acquisition, and the closing and termination dates,
and any other material facts or terms and conditions. SATH shall notify Scripps
of its intention to participate in such acquisition as soon as practicable but
not later than 30 days after receipt of the Acquisition Notice.

 

 

         In no event will EW Scripps be required to use the LLC to effect any
acquisition of a home shopping cable television network or be required to offer
any opportunity to effect any such acquisition to the LLC, and, by their
countersignatures on this letter, SATH, SAH Acquisition Corporation and the LLC
hereby acknowledge and agree to same and waive any statutory or common law
duties with respect to the foregoing.

	 	 	 	 	 
	 	 	Respectfully,
	
	
	
	

	 	 	 	 	 
	
	
	
	

	 	 	THE E.W. SCRIPPS COMPANY
	
	
	
	

	 	 	 	 	 
	
	
	
	

	 	 	By	 	 

	 	 	 	 	 
	Acknowledged and agreed to:	 	 
	
	
	
	

	 	 	 	 	 
	
	
	
	

	SHOP AT HOME, INC.	 	 
	
	
	
	

	 	 	 	 	 
	
	
	
	

	By	 	
 
	 	 
	
	
	
	

	 	 	 	 	 
	
	
	
	

	SHOP AT HOME NETWORK, LLC	 	 
	
	
	
	

	 	 	 	 	 
	
	
	
	

	By	 	
 
	 	 
	
	
	
	

	 	 	 	 	 
	
	
	
	

	SAH HOLDINGS, INC.	 	 
	
	
	
	

	 	 	 	 	 
	
	
	
	

	By	 	
 
	 	 
	
	
	
	

	 	 	 	 	 
	
	
	
	

	SAH ACQUISITION CORPORATION	 	 
	
	
	
	

	 	 	 	 	 
	
	
	
	

	By	 	
 
	 	 

2

 

EXHIBIT 8.4(h)

LOAN AND SECURITY AGREEMENT

THIS LOAN AND SECURITY AGREEMENT (this “Agreement”) is dated as of      ,
2002, among (formerly known as SHOP AT HOME, INC.), a Tennessee corporation
(“SATH”), KCNS, INC., a Tennessee corporation (“KCNS”), WMFP, INC., a Tennessee
corporation (“WMFP”), WOAC, INC., a Tennessee corporation (“WOAC”), and SAH
LICENSE, INC., a Nevada corporation (“SAH License”), as the borrowers (each of
the foregoing individually, a “Borrower” and, collectively, the “Borrowers”),
and THE E.W. SCRIPPS COMPANY, an Ohio corporation, as the lender (the
“Lender”). Capitalized and certain other terms are defined in Section 8 of
this Agreement.

AGREEMENT

In consideration of the mutual agreements contained in this Agreement, the
parties hereby agree as follows:

SECTION 1

LOAN, PREPAYMENT AND USE OF PROCEEDS

         1.1 Loan. Subject to the terms and conditions of this Agreement, the
Borrowers agree to borrow from the Lender, and the Lender agrees to loan to the
Borrowers, the principal sum of $47,500,000.00 (the “Loan”). The obligation to
repay the Loan pursuant to this Agreement will be evidenced by a promissory
note (the “Note”) of the Borrowers in the principal amount of $47,500,000.00 in
the form attached hereto as Exhibit A and made a part hereof, and on the terms
set forth therein.

         1.2 Prepayment. The Loan may be prepaid prior to maturity at any time or
from time to time, in whole or in part, without penalty or premium. If the
Borrowers make any prepayment of the Loan, such prepayment will be applied
first to payment of accrued but unpaid interest on the principal balance of the
Loan through the date of prepayment and then to payment of principal. After
any partial prepayment, regular payments will continue to be due and payable in
the same amounts and at the same times as required by the Note prior to
prepayment until the Loan is paid in full.

The parties acknowledge that the Loan is secured by the Collateral. Without
limiting any other provision of this Agreement, if any Borrower sells,
transfers or otherwise disposes of, whether by sale of assets or Stock, merger,
consolidation, reorganization, by contract or otherwise (each a “Transfer”),
any interest in any Collateral, then the Borrowers shall pay to the Lender the
entire amount of the Net Proceeds received by any Borrower from such Transfer
as a prepayment of the Loan under this Section and such amount will be applied
in accordance herewith. Without the Lender’s express written consent, no
Borrower may use any proceeds of a Transfer of Collateral to pay any taxes,
assessments, liens or other obligations other than those contemplated by the
definition of Net Proceeds.

The parties acknowledge that SATH and Scripps Networks, Inc., a subsidiary of
the Lender (“Scripps Networks”), are parties to a Shareholders Agreement dated
of even date herewith, in respect of their interests in The Scripps Shop At
Home Holding Company, an Ohio corporation

 

 

(“Holdings”), and that Holdings, SATH and SAH Acquisition Corporation, a wholly
owned subsidiary of SATH, are parties to an Amended and Restated Operating
Agreement dated of even date herewith, in respect of their interests in Shop At
Home Network, LLC, a Tennessee limited liability company (“Network Operating
Company”) (the Shareholders Agreement and the Amended and Restated Operating
Agreement will be referred to as the “Network Partnership Agreements”). The
Lender hereby agrees that upon the occurrence of any event that under the
Network Partnership Agreements results in any provision thereof requiring or
permitting Scripps Networks or Holdings to offset all or any portion of the
Loan against SATH’s right to receive payments from Scripps Networks or
Holdings, or requiring SATH to make a prepayment of the Loan, the Lender shall
accept such offsets with Scripps Networks and Holdings as valid prepayments
hereunder and the amount of such offsets as determined under the Network
Partnership Agreements will constitute satisfaction of the Loan to the extent
of such amount.

         1.3 Use of Proceeds. The Borrowers shall use the Loan proceeds solely to
fund a portion of the payments necessary for the Borrowers to extinguish all of
their Indebtedness existing on the date hereof under SATH’s $75,000,000 Senior
Secured Notes due April 2005 and the Loan and Security Agreement dated August
1, 2001 between SATH, as Borrower, and Foothill Capital Corporation, as Lender,
and all encumbrances in respect thereof.

SECTION 2

CREATION OF SECURITY INTEREST

         2.1 Grant of Security Interest. The Borrowers hereby grant to the Lender
a continuing valid first lien and security interest (individually, the
“Security Interest” and collectively, the “Security Interests”) in all of their
respective right, title and interest in and to all currently existing and
hereafter acquired or arising Collateral in order to secure prompt repayment of
any and all of the Obligations in accordance with the terms and conditions of
the Loan Documents and in order to secure prompt performance by each Borrower
of its respective covenants and duties under the Loan Documents. The Security
Interest shall attach to all of the Collateral without any further action on
the part of the Lender or the Borrowers. Notwithstanding any other provision of
this Agreement or any of the other Loan Documents, no Borrower has any
authority, whether express or implied, to Transfer or to create any Encumbrance
on any of the Collateral.

         2.2 Evidence of Security Interest. The Security Interest shall be
evidenced and enhanced by this Agreement, the Financing Statements, the Pledge
Agreements and the Collateral Assignments of Leases. The Borrowers shall take
all steps required by any of the foregoing documents to perfect or enhance the
Security Interest, including without limitation by delivering such certificates
and stock powers as may be necessary to perfect the Security Interest in the
Pledged Stock and to the extent not delivered as of the Closing Date by using
commercially reasonable best efforts to obtain the delivery of landlord lien
waivers and estoppels as to any leased real property.

         2.3 Broadcast Licenses as Collateral. Notwithstanding anything in the
definition of “Collateral” to the contrary, to the extent that this Agreement
or any other Loan Document purports to require any Borrower to grant a security
interest to the Lender in any Broadcast License now owned or hereafter
acquired, the Lender will have only a lien and security interest in such
Broadcast License at such time and to the extent that a lien and security
interest in such Broadcast License is permitted under applicable Legal
Requirements. Notwithstanding anything

2

 

in this Agreement or any other Loan Document to the contrary, the Lender
shall not take any action pursuant to this Agreement or any other Loan Document
that would constitute or result in any assignment or deemed assignment of any
Broadcast License without obtaining the prior approval of the FCC or any other
necessary Governmental Body if, under the applicable Legal Requirements then in
effect, such assignment would require such approval. Prior to the Lender’s
exercise of any power, right, privilege or remedy pursuant to this Agreement
that requires any consent, approval, recording, qualification or authorization
of the FCC or any other Governmental Body, the Borrowers shall execute and
deliver, or shall cause the execution and delivery of, all applications,
certificates, instruments and other documents and papers that the Lender
determines may be required to obtain such consent, approval, recording,
qualification or authorization. Without limiting the generality of the
foregoing, upon the Lender’s request, the Borrowers shall use their good faith
efforts to assist the Lender in obtaining any of the foregoing consents,
approvals or authorizations.

         2.4 Financing Statements; Additional Actions.

                  a. The Borrowers authorize the Lender to file any financing statements
required hereunder and any continuation statements or authorizations with
respect thereto (collectively, the “Financing Statements”) in any appropriate
filing office without the signature of any Borrower where permitted by
applicable law.

                  b. If any of the Collateral, including without limitation any proceeds of
any Collateral, is evidenced by or consists of letters of credit, letter of
credit rights, instruments, promissory notes, drafts, documents or chattel
paper (including without limitation electronic chattel paper), or any
supporting obligations in respect thereof, and the Security Interest depends
upon or is enhanced by possession of any such Collateral, immediately upon the
Lender’s request, the Borrowers shall endorse and deliver to the Lender
physical possession thereof.

                  c. If any Borrower acquires any commercial tort claims relating to any
Stations after the date hereof, such Borrower shall immediately deliver a
written description of such claim to the Lender, together with a written
agreement in form and substance satisfactory to the Lender in its reasonable
discretion pursuant to which such Borrower shall pledge and collaterally assign
all of its right, title and interest in and to such commercial tort claim to
the Lender as security for the Obligations.

                  d. If any Collateral is at any time in the possession or control of any
warehouseman, bailee or any agent or processor, the Borrowers shall notify such
Person of the Security Interest in such Collateral and shall obtain from such
Person an acknowledgment that such Person is holding the Collateral for the
Lender’s benefit.

                  e. At any time upon Lender’s request, the Borrowers shall execute and
deliver to the Lender any and all Financing Statements, mortgages, fixture
filings, security agreements, pledges, assignments, endorsements of
certificates of title and all other documents, each in form and substance
satisfactory to the Lender in its reasonable discretion, to create and perfect
and continue perfected or better perfect the Security Interest (whether arising
now or hereafter) in the Collateral. To the maximum extent permitted by
applicable law, each Borrower hereby (i) authorizes the Lender to execute and
file any such documents in any appropriate filing office and (ii) agrees, upon
the Lender’s request, (A) to cause all patents, copyrights and

3

 

trademarks acquired or generated by the Borrower and relating to the
Stations that are not already the subject of a registration with the
appropriate filing office to be registered with such filing office in a manner
sufficient to impart constructive notice of the Borrower’s ownership thereof
and (B) to cause to be prepared, executed and delivered to the Lender
supplemental schedules to the applicable Loan Documents to identify any of the
foregoing as being subject to the Security Interest created under this
Agreement.

         2.5 Power of Attorney. The Borrowers hereby irrevocably make, constitute
and appoint the Lender and any officers, employees or agents designated by the
Lender as the Borrowers’ true and lawful attorney, with power (a) to sign the
name of any Borrower on any of the documents described in this Section 2, (b)
at any time that an Event of Default has occurred and is continuing, to sign
the name of any Borrower on any document relating to the Collateral, (c) to
send requests for verification of accounts, (d) to endorse the name of any
Borrower on any checks, instruments or items of payment that may come into the
Lender’s possession, (e) at any time that an Event of Default has occurred and
is continuing, to make, settle and adjust any claims under a policy of
insurance of any Borrower and (f) at any time that an Event of Default has
occurred and is continuing, to settle and adjust disputes and claims respecting
the accounts, chattel paper or general intangibles directly with the account
debtors for amounts and upon terms that the Lender determines in its sole
discretion. The Lender’s appointment as the Borrowers’ attorney, and each and
every one of the Lender’s rights and powers, being coupled with an interest,
are irrevocable until the Obligations have been fully repaid and performed.

         2.6 Right to Inspect. The Lender and its officers, employees or agents
will have the right, at any time upon reasonable advance notice and from time
to time but not more often than quarterly, to inspect the books and records of
the Borrowers and to assess, check, test and appraise the Collateral, in either
case to verify the financial condition of any Borrower or the amount, quality,
value or condition of the Collateral.

SECTION 3

CONDITIONS PRECEDENT TO THE LENDER’S OBLIGATION

The obligation of the Lender to enter into this Agreement and make the Loan to
the Borrowers is conditioned upon the Borrowers’ satisfaction of the following
conditions precedent:

         3.1 Delivery of Documents. The Borrowers shall have delivered to the
Lender each of the following documents, each in form and substance satisfactory
to the Lender in its sole discretion:

                  a. Properly executed Note;

                  b. Properly executed Financing Statements, Pledge Agreements and
Collateral Assignments of Leases, and other documentation contemplated thereby
or hereby;

                  c. The Organizational Documents of each Borrower pursuant to the Pledge
Agreements, in each case certified by the Secretary or Assistant Secretary of
such Borrower as true and complete on and as of the date of such certificate,
and a certificate of good standing for each of the Borrowers issued by the
secretary of state of its jurisdiction of organization and all

4

 

other jurisdictions in which it is qualified, in each case as of a date
immediately prior to the date hereof;

                  d. Certified copy of the resolutions of the board of directors of each
Borrower authorizing the Loan and such Borrower’s execution and delivery of the
Loan Documents, its grant of the Security Interest, and its assumption of the
Obligations;

                  e. Incumbency certificate for each Borrower, signed by the Secretary or
Assistant Secretary of such Borrower, for each person executing any of the Loan
Documents on behalf of such Borrower;

                  f. Opinion of counsel for each Borrower in form and substance satisfactory
to the Lender confirming the following:

                           (i) The Borrower is a corporation duly organized, existing and in good
standing under the laws of its jurisdiction of organization. The Borrower has
the corporate power to own its properties and to carry on its business as now
being conducted. The Borrower is where necessary duly qualified as a foreign
corporation to do business and is in good standing in the jurisdiction or
jurisdictions in which the nature of the business conducted makes such
qualification necessary.

                           (ii) Except as otherwise disclosed in writing, there is no action or
proceeding pending or threatened against or affecting the Borrower in any court
or before any Governmental Body, arbitration board or tribunal, which
individually or in the aggregate could have a Material Adverse Effect.

                           (iii) The execution of the Loan Documents executed by the Borrower, the
Loan and the Security Interests have been fully authorized by the Borrower
pursuant to its Organizational Documents or otherwise; and the officers
executing the Loan Documents have been duly authorized to do so.

                           (iv) The Loan Documents executed by the Borrower constitute legal, valid
and binding obligations of the Borrower and are enforceable against the
Borrower in accordance with their respective terms, except as enforcement of
such terms may be limited by bankruptcy, insolvency or other similar laws
affecting the enforcement of creditor’s rights generally.

                           (v) The Security Interests constitute valid liens upon the Collateral and
are properly perfected. The filings made in connection with the Liens have
been made in all of the necessary public offices and are all of the filings
which may be of material advantage in preserving, protecting and perfecting the
Security Interests.

                           (vi) The execution of the Loan Documents by the Borrower and its
performance of the Obligations will not be in conflict with the terms and
provisions of any contract or agreement to which the Borrower is a party or by
which it is bound and will not result in a breach of the terms, conditions and
provisions of or constitute a default under the Borrower’s Organizational
Documents.

5

 

                           (vii) The execution and performance of the Loan Documents by the Borrower
do not violate any law, statute or ordinance, nor do they violate any rule or
regulation promulgated pursuant to any law, statute or ordinance which
materially and adversely affects the Borrower.

                           (viii) Such qualifications, assumptions and other matters incident to the
Loan as reasonably may be requested by the Borrower’s counsel.

                  g. Such other usual and customary documents as the Lender or its counsel
may reasonably request.

         3.2 Share Purchase Agreement. All of the terms and conditions provided
under the Share Purchase Agreement dated as of August      , 2002 between Scripps
Networks and SATH (the “Share Purchase Agreement”) which are required to have
been performed for the consummation of the closing thereunder shall have been
fully satisfied and the closing thereunder shall occur simultaneously with the
closing hereunder.

SECTION 4

REPRESENTATIONS AND WARRANTIES OF THE BORROWERS

		
	 	Note: No Schedules need to be produced until the Closing Date, so
all internal restructuring will have occurred already.

         The Borrowers, jointly and severally, represent and warrant to the Lender,
as of the date hereof (except for such representations and warranties that
refer specifically to another date and, in such case, as of the date so
referred to), as follows:

         4.1 Organization and Good Standing. Each Borrower is a corporation duly
organized, validly existing, and in good standing under the laws of its state
of incorporation, with full corporate power and authority to conduct its
business as it is now being conducted, to own or use the properties and assets
that it purports to own or use, and to perform all of its Obligations. Each
Borrower is duly qualified to do business as a foreign corporation and is in
good standing under the laws of each state or other jurisdiction in which
either the ownership or use of the properties owned or used by it, or the
nature of the activities conducted by it, requires such qualification. Each
Borrower has delivered to the Lender copies of its Organizational Documents, as
currently in effect.

         4.2 Authority; No Conflict.

                  a. This Agreement constitutes the legal, valid, and binding obligation of
each Borrower, enforceable against each Borrower in accordance with its terms.
Upon the execution and delivery by each Borrower of each of the Loan Documents
to which it is a party, such Loan Documents will constitute the legal, valid,
and binding obligations of such Borrower, enforceable against such Borrower in
accordance with their respective terms. Each Borrower has the absolute and
unrestricted right, power and authority to execute and deliver the Loan
Documents to which it is a party and to perform its obligations thereunder.

                  b. Neither the execution and delivery of this Agreement nor the
consummation or performance of the terms and conditions of the Loan Documents,
after giving

6

 

effect to the closing of the transactions contemplated under the Share
Purchase Agreement and the Network Partnership Agreements (collectively, the
“Network Transactions”), by a Borrower will, directly or indirectly (with or
without notice or lapse of time):

                           (i) contravene, conflict with, or result in a violation of any provision
of the Organizational Documents of such Borrower, or any resolution adopted by
the board of directors or stockholders of such Borrower;

                           (ii) contravene, conflict with, or result in a violation of, or give any
Governmental Body or other person the right to challenge the Loan, or to
exercise any remedy or obtain any relief under, any Legal Requirement or any
Order to which such Borrower, or any of the assets owned or used by such
Borrower, may be subject;

                           (iii) contravene, conflict with, or result in a violation of any of the
terms of, or give any Governmental Body the right to revoke, withdraw, suspend,
cancel, terminate, or modify, any Governmental Authorization that is held by
such Borrower or that otherwise relates to the business of, or any of the
assets owned or used by, such Borrower;

                           (iv) contravene, conflict with, or result in a violation or breach of any
provision of, or give any Person the right to declare a default or exercise any
remedy under, or to accelerate the maturity or performance of, or to cancel,
terminate, or modify, any Contract to which such Borrower is bound; or

                           (v) result in the imposition or creation of any Encumbrance upon or with
respect to any of the assets owned or used by such Borrower, other than the
Security Interest.

Except as set forth in Schedule 4.2, no Borrower will be required to give any
notice to or obtain any Consent from any Person in connection with the
execution and delivery of the Loan Documents, the consummation of the Loan or
the performance of the Obligations.

         4.3 Capitalization. After giving effect to the Network Transactions, SATH
is the record and beneficial owner and holder of all of the Pledged Stock of
KCNS, WMFP, WOAC, Holdings and Network Operating Company and WMFP is the record
and beneficial owner of all of the Pledged Stock of SAH License. The Pledged
Stock of SAH Acquisition, WMFP and SAH License constitutes all of the
outstanding Stock of such entities. All of the Pledged Stock is owned free and
clear of all Encumbrances except for the Security Interest. The authorized
capital Stock of each such Subsidiary Borrower is set forth in Schedule 4.3,
and all of such Stock is duly authorized, validly issued, fully paid and
nonassessable, and was issued in conformity with all applicable state and
federal securities laws. No Subsidiary Borrower has any other Stock of any
class issued, reserved for issuance, or outstanding. There are no outstanding
options, offers, warrants, conversion rights, agreements, or other rights to
subscribe for Stock of or to purchase Stock from any Subsidiary Borrower. No
Stock of any Subsidiary Borrower carries, and no stockholder of any Subsidiary
Borrower has been granted, any preemptive rights. No Subsidiary Borrower is
obligated under any agreement, arrangement or understanding to redeem or
otherwise purchase any of its Stock. There are no Contracts relating to the
issuance, sale or Transfer of any equity or other Stock of any Subsidiary
Borrower. No Borrower owns, or has a Contract to acquire, any Stock of any
Person, including without limitation any direct or indirect equity or ownership
interest in any other business.

         4.4 Financial Statements.

7

 

                  a. SATH has filed all reports, schedules, forms, statements and other
documents required to be filed by it with the SEC pursuant to the reporting
requirements of the 1934 Act (all of the foregoing filed prior to the date
hereof and all exhibits included therein and financial statements and schedules
thereto and documents incorporated by reference therein being hereinafter
referred to as the “SEC Documents”). A complete list of the SEC Documents is
set forth on Schedule 4.4. As of their respective dates, the SEC Documents
complied in all material respects with the requirements of the 1934 Act. None
of the SEC Documents, at the time they were filed with the SEC, contained any
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. As of their respective dates, SATH’s financial statements included
in the SEC Documents complied as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto. Such financial statements have been prepared in
accordance with GAAP (except as may be otherwise indicated in such financial
statements or the notes thereto, or, in the case of unaudited interim
statements, to the extent they may exclude footnotes or may be condensed or
summary statements) and fairly present in all material respects the
consolidated financial position of SATH and its subsidiaries on a consolidated
basis as of the dates thereof and the consolidated results of its operations
and cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments). No other information
provided by or on behalf of any Borrower to the Lender that is not included in
the SEC Documents contains any untrue statement of a material fact or omits to
state any material fact necessary in order to make the statements therein, in
the light of the circumstance under which they are or were made, not
misleading.

                  b. The Borrowers have delivered or caused to be delivered to the Lender
pro forma combined statements of operations and balance sheets of the Borrowers
for the twelve months ended June 30, 2002 and for the quarter ended September
30, 2002, after giving effect to the Network Transactions and the Loan as if
such transactions had occurred as of July 1, 2002 (the “Pro Forma Financial
Statements”). The Pro Forma Financial Statements were prepared on behalf of
the Borrowers in good faith after taking into account the existing and
historical levels of business activity of the Borrowers, known trends,
including general economic trends, and all other information, assumptions and
estimates considered by management of Borrowers to be reasonable at the time,
after giving effect to the Network Transactions and the Loan, and on a basis
consistent with the financial statements referred to in Sections 4.4(a) and
(c), other than as expressly set forth in the Pro Forma Financial Statements.
There are no statements or conclusions in any of the Pro Forma Financial
Statements that are based upon or include information known to any Borrower to
be misleading in any material respect or that fail to take into account
material information regarding the matters set forth therein. No facts are
known to the Borrowers which, if reflected in the Pro Forma Financial
Statements, could be expected to materially affect the reliability,
performance, accuracy and completeness of the Pro Forma Financial Statements or
the assets, liabilities, results of operations or cash flows reflected therein.

                  c. The Borrowers have delivered to the Lender complete and correct copies
of pro forma financial projections prepared by Borrowers’ management for the
fiscal years ending June 30, 2003 and June 30, 2004, after giving effect to the
Network Transactions and the Loan (the “Financial Projections”). The Financial
Projections were prepared on behalf of the Borrowers in good faith after taking
into account the existing and historical levels of business activity of the
Borrowers, known trends, including general economic trends, and all other
information, assumptions and estimates considered by Borrowers’ management to
be reasonable

8

 

at the time, after giving effect to the Network Transactions and the Loan
and on a basis consistent with the financial statements referred to in Sections
4.4(a) and (b), other than as expressly set forth in the Financial Projections.
There are no statements or conclusions in the Financial Projections that are
based upon or include information known to any Borrower to be misleading in any
material respect or that fail to take into account material information
regarding the matters set forth therein. No facts are known to the Borrowers
which, if reflected in the Financial Projections, could be expected to
materially affect the reliability, performance, accuracy and completeness of
the Financial Projections or the assets, liabilities, results of operations or
cash flows reflected therein. On the date hereof, the Borrowers believe that
the Financial Projections are reasonable and attainable but the parties
acknowledge that future changes in facts and circumstances may render such
Financial Projections unattainable. This Section 4.4(c) is not intended, nor
will it be considered, to be a guaranty of future performance.

                  d. Except as fully reflected in the financial statements and notes related
thereto described in Section 4.4(a), there were as of the date hereof (after
giving effect to the Network Transactions), no liabilities or obligations with
respect to any Borrower of any nature whatsoever (whether absolute, accrued,
contingent or otherwise and whether or not due) which, either individually or
in aggregate, have had or could reasonably be expected to result in a material
adverse effect on the business, prospects, properties, operations, results of
operations, assets, liabilities or condition (financial or otherwise) of any
Borrower. As of the date hereof, the Borrowers know of no basis for the
assertion against any Borrower of any liability or obligation of any nature
whatsoever that is not fully disclosed in the financial statements delivered
pursuant to Sections 4.4(a) and (b) which, either individually or in the
aggregate, has had or could reasonably be expected to result in a Material
Adverse Effect. As of the date hereof (after giving effect to the Network
Transactions), no Borrower has any outstanding Indebtedness other than the Loan
and the Permitted Indebtedness.

         4.5 Books and Records. The books of account, minute books, stock record
books, and other records of the Borrowers, all of which have been made
available to the Lender, are complete and correct and have been maintained in
accordance with sound business practices. Each Borrower maintains a system of
internal accounting controls sufficient to provide reasonable assurance that
(a) transactions are executed in accordance with management’s general or
specific authorizations, (b) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain
asset accountability, (c) access to assets is permitted only in accordance with
management’s general or specific authorization and (d) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences. The
minute books of each Borrower contain accurate and complete records of all
meetings held of, and action taken by, the stockholders or members and the
boards of directors, the managers, and the committees thereof, and no meeting
of any stockholders, members, board of directors, managers, or committee of any
Borrower has been held for which minutes have not been prepared and are not
contained in such minute books.

         4.6 Title to Properties; Encumbrances; Leases. Schedule 4.6 contains a
complete and accurate list of all real property, leaseholds, or other interests
therein owned or used by each Borrower. The Borrowers have made available to
the Lender all policies of title insurance, surveys, deeds and other documents
vesting title in or containing restrictions on the ownership or

9

 

 use of any real property owned or used by any Borrower. Each Borrower
owns (with good and marketable title in the case of real property, subject only
to the matters permitted by the following sentence) all the properties and
assets (whether real, personal, or mixed and whether tangible or intangible)
that it purports to own or reflected as owned in its books and records. Except
as set forth on Schedule 4.6, all properties and assets of the Borrowers are
free and clear of all Encumbrances and are not, in the case of real property,
subject to any rights of way, building use restrictions, exceptions, variances,
reservations, or limitations of any nature except, with respect to all such
properties and assets, liens for current taxes not yet due and with respect to
real property, (a) minor imperfections of title, if any, none of which is
substantial in amount, materially detracts from the value or impairs the use of
the property subject thereto, or impairs the operations of any Borrower, and
(b) zoning laws and other land use restrictions that do not impair the present
or anticipated use of the property subject thereto. Each Borrower enjoys
peaceful and undisturbed possession under any leases to which it is a party.
All of such leases are valid and subsisting, and no default by any Borrower
exists under any such leases. The property leased or owned by the Borrowers is
all of the property necessary for the operation of the Stations as they are
currently being operated.

         4.7 Condition and Sufficiency of Assets. The buildings, plants,
structures, and equipment of the Borrowers are structurally sound, in good
operating condition and repair, and adequate for the uses to which they are
being put, and none of such buildings, plants, structures or equipment is in
need of maintenance or repairs except for routine maintenance and repairs that
are not material in nature or cost. The building, plants, structures, and
equipment of each Borrower are sufficient for the continued conduct of such
Borrower’s business (after giving effect to the Network Transactions) after the
date hereof in substantially the same manner as conducted prior to the date
hereof (excluding the business transferred in the Network Transactions) and
constitute all of the assets necessary for such Borrower to conduct its
business.

         4.8 No Undisclosed Liabilities. Except as set forth in Schedule 4.8, no
Borrower has any liabilities or obligations of any nature (whether known or
unknown and whether absolute, accrued, contingent, or otherwise) except for
liabilities or obligations reflected or reserved against on the face of the Pro
Forma Financial Statements and current liabilities incurred in the Ordinary
Course of Business since June 30, 2002.

         4.9 Taxes.

                  a. Each Borrower has timely filed or caused to be timely filed all Tax
Returns that are or were required to be filed by or with respect to any of
them, either separately or as a member of a group of entities, pursuant to
applicable Legal Requirements, and all Taxes owed by each Borrower have been
timely paid. All such Tax Returns are true, correct and complete. Each
Borrower has made available to the Lender copies of all such Tax Returns filed
since June 30, 1993. Schedule 4.9 contains a complete and accurate list of,
all such income Tax Returns filed since June 30, 1993. Each Borrower has paid,
or made provision for the payment of, all Taxes that have or may have become
due pursuant to all Tax Returns or otherwise, or pursuant to any assessment
received by such Borrower, except such Taxes, if any, as are listed in Schedule
4.9 and are being contested in good faith and as to which adequate reserves
(determined in accordance with GAAP) have been provided in the applicable
accounting records.

                  b. The federal and state income Tax Returns of each Borrower have been
audited by the IRS or relevant state tax authorities or are closed by the
applicable statute of

10

 

limitations for all taxable years through June 30, 1998. Schedule 4.9
contains a complete and accurate list of all audits of all such Tax Returns,
including a reasonably detailed description of the nature and outcome of each
audit. All deficiencies proposed as a result of such audits have been paid,
reserved against, settled, or, as described in Schedule 4.9, are being
contested in good faith by appropriate proceedings. Schedule 4.9 describes all
adjustments to the United States federal and state income Tax Returns filed by
Borrower or any group of corporations including each of the Borrowers for all
taxable years since June 30, 1993 and the resulting deficiencies proposed by
the IRS or state authorities. Except as described in Schedule 4.9, no Borrower
has given or been requested to give waivers or extensions (or is or would be
subject to a waiver or extension given by any other Person) of any statute of
limitations relating to the payment of Taxes of such Borrower for which such
Borrower may be liable.

                  c. The charges, accruals and reserves with respect to Taxes on the books
of each Borrower are adequate (determined in accordance with GAAP) and are at
least equal to such Borrower’s liability for Taxes. There exists no proposed
Tax assessment against any Borrower except as disclosed in Schedule 4.9. All
Taxes that each Borrower is or was required by Legal Requirements to withhold
or collect have been duly withheld or collected and, to the extent required,
have been paid to the proper Governmental Body or other Person.

         4.10 Employee Benefits. No member of the ERISA Group has ever had any
liability, nor has it ever made a contribution, to any Plan subject to the
minimum funding standards of IRC §412, or to any Multiemployer Plan. Each Plan
sponsored by, or contributed to, any member of the ERISA Group which is
intended to be qualified under IRC §401(a) is so qualified. Each Plan and
Benefit Arrangement has been operated and administered, in all material
respects, in compliance with all applicable Legal Requirements. The Borrowers
have made all contributions and payments to all Plans and Benefit Arrangements
which were due and payable through the date hereof.

         4.11 Compliance; Governmental Authorizations.

                  a. Except for liabilities expressly assumed by Holdings or the Network
Operating Company in connection with the Network Transactions and except as set
forth in Schedule 4.11:

                           (i) each Borrower is, and at all times has been, in full compliance with
each Legal Requirement and each Governmental Authorization that is or was
applicable to it or to the conduct or operation of its business or the
ownership or use of any of its assets;

                           (ii) no event has occurred or circumstance exists that (with or without
notice or lapse of time) (A) may constitute or result in a violation by any
Borrower of, or a failure on the part of any Borrower to comply with, any Legal
Requirement, or (B) may give rise to any obligation on the part of any Borrower
to undertake, or to bear all or any portion of the cost of, any remedial action
of any nature; and

                           (iii) no Borrower has received any notice or other communication (whether
oral or written) from any Governmental Body or any other Person regarding (A)
any actual, alleged, possible, or potential violation of, or failure to comply
with, any Legal Requirement or Governmental Authorization, or (B) any actual,
alleged, possible, or potential obligation on the part of any Borrower to
undertake, or to bear all or any portion of the cost of, any remedial action of
any nature.

11

 

                  b. Schedule 4.11 contains a complete and accurate list of each
Governmental Authorization held by each Borrower or that otherwise relates to
the business of any Borrower as such business shall exist immediately after
giving effect to the Network Transactions. Each Governmental Authorization
listed or required to be listed in Schedule 4.11 is valid and in full force and
effect. Except as set forth in Schedule 4.11:

                           (i) each Borrower is, and at all times has been, in full compliance with
all of the terms and requirements of each Governmental Authorization identified
or required to be identified in Schedule 4.11;

                           (ii) no event has occurred or circumstance exists that may (with or
without notice or lapse of time, or both) (A) constitute or result directly or
indirectly in a violation of, or a failure to comply with, any term or
requirement of any Governmental Authorization listed or required to be listed
in Schedule 4.11, or (B) result directly or indirectly in the revocation,
withdrawal, suspension, cancellation, or termination of, or any modification
to, any Governmental Authorization listed or required to be listed in Schedule
4.11;

                           (iii) no Borrower has received any notice or other communication (whether
oral or written) from any Governmental Body or any other Person regarding (A)
any actual, alleged, possible, or potential violation of, or failure to comply
with, any term or requirement of any Governmental Authorization, or (B) any
actual, proposed, possible, or potential revocation, withdrawal, suspension,
cancellation, termination of, or modification to any Governmental
Authorization; and

                           (iv) all applications required to have been filed for the renewal of the
Governmental Authorizations listed or required to be listed in Schedule 4.11 or
the transfer of the Governmental Authorizations listed or required to be listed
in Schedule 4.11 have been duly filed on a timely basis with the appropriate
Governmental Bodies, and all other filings required to have been made with
respect to such Governmental Authorizations have been duly made on a timely
basis with the appropriate Governmental Bodies.

The Governmental Authorizations listed in Schedule 4.11 collectively constitute
all of the Governmental Authorizations necessary to permit each Borrower to
lawfully conduct and operate its business in the manner in which such business
is currently conducted and operated and to permit each Borrower to own and use
its assets in the manner in which it currently owns and uses such assets in
each case after giving effect to the Network Transactions.

         4.12 Legal Proceedings; Orders.

                  a. Except as set forth in Schedule 4.12, there is no pending Proceeding
(i) that has been commenced by or against any Borrower or that otherwise
relates to or may affect the business of, or any of the assets owned or used
by, any Borrower; or (ii) that challenges, or may have the effect of
preventing, delaying, making illegal, or otherwise interfering with, any of the
transactions contemplated by this Agreement. To the Borrowers’ Knowledge, no
such Proceeding has been Threatened, and no event has occurred or circumstance
exists that may give rise to or serve as a basis for the commencement of any
such Proceeding. The Borrowers have delivered to the Lender copies of all
pleadings, correspondence, and other documents relating to each Proceeding
listed in Schedule 4.12. The Proceedings listed in Schedule 4.12 will not have
a Material Adverse Effect.

12

 

                  b. Except as set forth in Schedule 4.12, (i) there is no Order to which
any Borrower, or any of the assets owned or used by any Borrower, is subject;
and (ii) no Borrower is subject to any Order that relates to the business of,
or any of the assets owned or used by, any of the Borrower.

                  c. Except as set forth in Schedule 4.12:

                           (i) each Borrower is, and at all times has been, in full compliance with
all of the terms and requirements of each Order to which it, or any of the
assets owned or used by it, is or has been subject;

                           (ii) no event has occurred or circumstance exists that may constitute or
result in (with or without notice or lapse of time) a violation of or failure
to comply with any term or requirement of any Order to which any of the
Borrower, or any of the assets owned or used by any of the Borrower, is
subject; and

                           (iii) no Borrower has received any notice or other communication (whether
oral or written) from any Governmental Body or any other Person regarding any
actual, alleged, possible, or potential violation of, or failure to comply
with, any term or requirement of any Order to which any Borrower, or any of the
assets owned or used by any Borrower, is or has been subject.

         4.13 Absence of Certain Changes and Events. Except for the Network
Transactions and except as set forth on Schedule 4.13, since June 30, 2001,
there has not been any material adverse change in the business, operations,
properties, prospects, assets, or condition of any Borrower, and no event has
occurred or circumstance exists that may result in a Material Adverse Effect.
No Borrower has taken, and none of them currently expects to take, any steps to
seek protection pursuant to any bankruptcy law, nor does any Borrower have any
Knowledge that its creditors intend to initiate involuntary bankruptcy
proceedings or any actual Knowledge of any fact that would reasonably lead a
creditor to do so.

         4.14 Contracts; No Defaults.

                  a. Schedule 4.14(a) contains a complete and accurate list, and the
Borrowers have delivered to the Lender true and complete copies, of (in each
case after giving effect to the Network Transactions):

                           (i) each Contract relating to the business of each Borrower that involves
performance of services or delivery of goods or materials by such Borrower of
an amount or value in excess of $50,000;

                           (ii) each lease, rental or occupancy agreement, license, installment and
conditional sale agreement, and other Contract relating to the business of any
Borrower affecting the ownership of, leasing of, title to, use of, or any
leasehold or other interest in, any real or personal property (except personal
property leases and installment and conditional sales agreements having a value
per item or aggregate payments of less than $50,000 and with terms of less than
one year);

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                           (iii) each joint venture, partnership, and other Contract (however named)
involving a sharing of profits, losses, costs, or liabilities of any Borrower
or, with respect to any Borrower’s business, with any other Person;

                           (iv) each written warranty, guaranty, or other similar undertaking with
respect to contractual performance extended by any Borrower or with respect to
the any Borrower’s business other than in the Ordinary Course of Business;

                           (v) each other Contract material to the business of any Borrower; and

                           (vi) each amendment, supplement, and modification (whether oral or
written) in respect of any of the foregoing.

                  b. Except as set forth in Schedule 4.14(b), each Contract listed or
required to be listed in Schedule 4.14(a) is in full force and effect and is
valid and enforceable in accordance with its terms.

                  c. Except as set forth in Schedule 4.14(c):

                           (i) each Borrower is and has been in full compliance with all applicable
terms and requirements of each Contract listed or required to be listed in
Schedule 4.14(a);

                           (ii) each other party to each Contract listed or required to be listed in
Schedule 4.14(a) is, to the Borrowers’ Knowledge, in full compliance with all
applicable terms and requirements of such Contract;

                           (iii) no event has occurred or circumstance exists that (with or without
notice or lapse of time, or both) may contravene, conflict with, or result in a
violation or breach of, or give any Borrower the right to declare a default or
exercise any remedy under, or to accelerate the maturity or performance of, or
to cancel, terminate, or modify, any Contract listed or required to be listed
in Schedule 4.14(a); and

                           (iv) no Borrower has given to or received from any other Person, at any
time since June 30, 1999, any notice or other communication (whether oral or
written) regarding any actual, alleged, possible, or potential violation or
breach of, or default under, any Contract listed or required to be listed in
Schedule 4.14(a).

                  d. To the knowledge of the Borrowers, there are no renegotiations of,
attempts to renegotiate, or outstanding rights to renegotiate any material
amounts paid or payable to any Borrower or with respect to a Borrower’s
business under any Contracts listed or required to be listed on Schedule
4.14(a) with any Person, and no such Person has made written demand for such
renegotiation.

         4.15 Insurance.

                  a. The Borrowers have made available to the Lender true and complete
copies of all policies of insurance to which any Borrower is a party or under
which any

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Borrower, or any director or officer of any Borrower, is or has been covered at any
time within the five years preceding the date of this Agreement; copies of all
pending applications for policies of insurance; and any statement by the
auditor of any Borrower’s financial statements with regard to the adequacy of
such Borrower’s coverage or of the reserves for claims.

                  b. Schedule 4.15(b) sets forth, by year, for the current policy year and
each of the five preceding policy years, a summary of the loss experience under
each of the foregoing policies and a statement describing each claim under any
insurance policy for an amount in excess of $10,000.

                  c. Except as set forth on Schedule 4.15(c):

                           (i) all policies to which any Borrower is a party or that provide coverage
to any Borrower, or any director or officer of any Borrower (A) are valid,
outstanding and enforceable; (B) are issued by an insurer that is financially
sound and reputable; (C) taken together, provide adequate insurance coverage
for Borrowers’ assets and the operations; (D) are sufficient for compliance
with all Legal Requirements and Contracts to which any Borrower is a party or
by which any of them is bound; (E) will continue in full force and effect
following the consummation of the Loan; and (F) do not provide for any
retrospective premium adjustment or other experienced-based liability on the
part of any Borrower;

                           (ii) no Borrower has received any refusal of coverage or any notice that a
defense will be afforded with reservation of rights, or any notice of
cancellation or any other indication that any insurance policy is no longer in
full force and effect or will not be renewed or that the issuer of any policy
is not willing or able to perform its obligations thereunder;

                           (iii) each Borrower has paid all premiums due, and has otherwise performed
all of its obligations under, each policy to which it is a party or that
provides coverage to such Borrower or any of its directors or officers; and

                           (iv) each Borrower has given notice to each insurer of all material claims
that may be insured thereby.

         4.16 Environmental Matters. Except as set forth in Schedule 4.16:

                  a. Each Borrower is, and at all times has been, in full compliance with,
and has not been and is not in violation of or liable under, any Environmental
Law. No Borrower has or has any basis to expect, nor has any Borrower or any
other Person for whose conduct a Borrower is or may be held to be responsible
received, any actual or Threatened order, notice, or other communication from
(i) any Governmental Body or private citizen acting in the public interest, or
(ii) the current or prior owner or operator of any real property in which
Borrower has or previously had an interest, of any actual or potential
violation or failure to comply with any Environmental Law, or of any actual or
Threatened obligation to undertake or bear the cost of any Environmental,
Health, and Safety Liabilities with respect to any of the improvements on any
such property or any other assets (whether real, personal, or mixed) in which
any Borrower has or had an interest, or with respect to any property at or to
which Hazardous Materials were generated, manufactured, refined, transferred,
imported, used, or processed by any Borrower, or any other Person for whose
conduct a Borrower is or may be held responsible, or from which

15

 

Hazardous Materials have been transported, treated, stored, handled, transferred,
disposed, recycled, or received.

                  b. There are no Hazardous Materials present on or in the Environment at
any real property in which a Borrower now has or had immediately prior to
giving effect to the Network Transactions an interest directly or indirectly
through a Subsidiary. No Borrower, or any other Person for whose conduct a
Borrower is or may be held responsible has permitted or conducted, or is aware
of, any Hazardous Activity conducted with respect to any such property or any
other assets (whether real, personal, or mixed) in which any Borrower has or
had an interest except in full compliance with all applicable Environmental
Laws.

                  c. There has been no Release or, to Borrowers’ Knowledge, threat of
Release, of any Hazardous Materials at or from any property in which any
Borrower has or had an interest or at any other location where any Hazardous
Materials were generated, manufactured, refined, transferred, produced,
imported, used, or processed.

                  d. The Borrowers have delivered to the Lender accurate and complete copies
and results of any reports, studies, analyses, tests, or monitoring possessed
or initiated by any Borrower pertaining to Hazardous Materials or Hazardous
Activities in, on, or under any property in which any Borrower has or had an
interest, or concerning compliance by any Borrower, or any other Person for
whose conduct a Borrower is or may be held responsible, with Environmental
Laws.

         4.17 Labor Relations; Compliance. Since June 30, 1997, no Borrower has
been or is a party to any collective bargaining or other labor Contract. Since
June 30, 1997, there has not been, there is not presently pending or existing,
and to the Borrowers’ Knowledge there is not Threatened, (a) any strike,
slowdown, picketing, work stoppage, or employee grievance process affecting any
Borrower, (b) any Proceeding against or affecting any Borrower relating to the
alleged violation of any Legal Requirement pertaining to labor relations or
employment matters, including any charge or complaint filed by an employee or
union with the National Labor Relations Board, the Equal Employment Opportunity
Commission, or any comparable Governmental Body, or any organizational
activity, or any labor or employment dispute against or affecting any Borrower
or any Borrower’s business, or (c) any application for certification of a
collective bargaining agent affecting any Borrower. To the Borrowers’
Knowledge, no event has occurred or circumstance exists that could provide the
basis for any work stoppage or other labor dispute by employees of any
Borrower. There is no lockout of any employees by any Borrower, and no such
action is contemplated by any Borrower. Each Borrower has complied in all
respects with all Legal Requirements relating to employment, equal employment
opportunity, nondiscrimination, immigration, wages, hours, benefits, collective
bargaining, the payment of social security and similar taxes, occupational
safety and health, and plant closings. No Borrower is liable for the payment
of any compensation, damages, taxes, fines, penalties, or other amounts,
however designated, for failure to comply with any of the foregoing Legal
Requirements.

         4.18 Intellectual Property. The Borrowers own, or hold licenses in, all
trademarks, trade names, copyrights, patents, patent rights, and licenses that
are necessary to the conduct of their respective businesses as currently
conducted after giving effect to the Network Transactions. Schedule 4.18 is a
true, correct and complete listing of all material patents, patent

16

 

applications, registered trademarks, trademark applications and copyright
registrations as to which any Borrower is the owner or exclusive licensee.

         4.19 Certain Payments. Since June 30, 1997, no Borrower and no director,
officer, agent, or employee of any Borrower, or to the Borrowers’ Knowledge,
any other Person associated with or acting for or on behalf of any Borrower,
has directly or indirectly (a) made any contribution, gift, bribe, rebate,
payoff, influence payment, kickback, or other payment to any Person, private or
public, regardless of form, whether in money, property, or services (i) to
obtain favorable treatment in securing business, (ii) to pay for favorable
treatment for business secured, (iii) to obtain special concessions or for
special concessions already obtained, for or in respect of any Borrower, (iv)
in violation of any Legal Requirement, or (b) established or maintained any
fund or asset that has not been recorded in the books and records of the
Borrowers.

         4.20 Broadcast Licenses; Operations of Stations. The Borrowers have
operated the Stations in material compliance with the terms of the applicable
Broadcast License and of the Communications Act. Each Borrower has timely
filed or made all applications, reports and other disclosures required by the
FCC to be made with respect to the Stations and has timely paid all FCC
regulatory fees with respect thereto. Each Borrower has and is the authorized
legal holder of, all Broadcast Licenses necessary or useful in the operation of
the business of each Borrower as presently operated. All of the Broadcast
Licenses are validly held and are in full force and effect, unimpaired by any
act or omission of any Borrower or, to the Borrowers’ Knowledge, their
respective predecessors, or their respective directors, officers, employees or
agents. Except as set forth in Schedule 4.20, no application or Proceeding is
pending for the renewal of any Broadcast License and, to the Borrowers’
Knowledge, there is no Proceeding before the FCC, no notice of violation or no
Order of forfeiture relating to any Station, and no Borrower has Knowledge of
any basis that could reasonably be expected to cause the FCC not to renew any
Broadcast License (other than Proceedings to amend FCC rules or the
Communications Act of general applicability to the television broadcast
industry). There is not pending and, to the Borrowers’ Knowledge, there is not
Threatened, any action by or before the FCC to revoke, suspend, cancel,
rescind, fail to renew, or modify in any material respect any Broadcast License
(other than Proceedings to amend FCC rules or the Communications Act of general
applicability to the television broadcast industry).

         4.21 Relationships with Affiliates. Except as set forth on Schedule 4.21,
neither a Borrower nor any Affiliate of a Borrower has, or since June 30, 1999
has had, any interest in any property (whether real, personal, or mixed and
whether tangible or intangible), used in or pertaining to the business of the
Borrowers. Neither a Borrower nor any Affiliate of a Borrower is, or since June
30, 1999 has owned (of record or as a beneficial owner) an equity interest or
any other financial or profit interest in, a Person that has (a) had business
dealings or a material financial interest in any transaction with a Borrower
other than business dealings or transactions conducted in the Ordinary Course
of Business with a Borrower at substantially prevailing market prices and on
substantially prevailing market terms, or (b) engaged in competition with a
Borrower with respect to the business of the Borrowers. Except as set forth in
Schedule 4.21, no Borrower is a party to any Contract with, or has any claim or
right against any other Borrower and no Affiliate of a Borrower is a party to
any Contract with, or has any claim or right against, a Borrower.

17

 

         4.22 State of Incorporation; Location of Chief Executive Office; FEIN;
Organizational I.D. The state of incorporation, chief executive office and
FEIN and organizational identification numbers of each of the Borrowers is as
set forth in Schedule 4.22.

         4.23 Brokerage Fees. The Borrowers have not utilized the services of any
broker or finder in connection with this Agreement, and no brokerage commission
or finder’s fee is payable by the Borrowers in connection with this Agreement.

         4.24 Disclosure. No representation or warranty of any Borrower in this
Agreement (including the Schedules) omits to state a material fact necessary to
make the statements herein or therein, in light of the circumstances in which
they were made, not misleading. There is no fact known to any Borrower that
has specific application to such Borrower (other than general economic or
industry conditions) and that materially adversely affects or, as far as any
Borrower can reasonably foresee, materially threatens, the assets, business,
prospects, financial condition, or results of operations of any Borrower that
has not been set forth in this Agreement or the Schedules.

SECTION 5

AFFIRMATIVE COVENANTS

So long as this Agreement is in effect or the Loan or any other Obligation of
the Borrowers to the Lender is outstanding, the Borrowers shall, jointly and
severally:

         5.1 Promptly pay when due the principal and interest on the Note;

         5.2 Furnish or cause to be furnished to the Lender, with respect to each
Borrower:

                  a. not later than 30 days following the end of each fiscal quarter, in
form and substance satisfactory to the Lender:

                           (i) an unaudited income statement for the period and fiscal year to date
and copies of statements for the same periods of the previous year;

                           (ii) an unaudited balance sheet as of the end of such period and copies of
statements for the same period of the previous year;

                           (iii) a certificate from the chief financial officer stating that the
above financial statements are complete and correct and fairly represent the
financial position of such Borrower as of their respective dates and the
results of the respective Borrower’s operations for the periods then ended;

                           (iv) a certificate from the Chief Financial Officer certifying that there
exists no condition, event or act which with notice of lapse of time could
constitute an Event of Default, or any condition, event or act which could
materially and adversely affect the financial condition or operations of such
Borrower, or, if any such condition, event or act exists, specifying the nature
and status thereof (A) that such Borrower has complied with and is then in
compliance with all terms and covenants of this Agreement, and (B) that there
exists no Event of Default as defined in this Agreement and no event which,
with the giving of notice or the lapse of time would constitute such an Event
of Default; and

18

 

                  b. not later than 90 days following the end of each fiscal year of each
Borrowers, in form and substance satisfactory to the Lender:

                           (i) complete audited financial statements for such Borrower for such
fiscal year, certified by Deloitte & Touche or another comparable independent
certified public accounting firm reasonably acceptable to the Lender, with an
opinion not significantly qualified in the Lender’s opinion; and

                           (ii) a certificate from the Chief Financial Officer certifying that there
exists no condition, event or act which with notice of lapse of time could
constitute an Event of Default, or any condition, event or act which could
materially and adversely affect the financial condition or operations of such
Borrower, or, if any such condition, event or act exists, specifying the nature
and status thereof (A) that such Borrower has complied with and is then in
compliance with all terms and covenants of this Agreement, and (B) that there
exists no Event of Default as defined in this Agreement and no event which,
with the giving of notice or the lapse of time would constitute such an Event
of Default

         5.3 At all times maintain all of the Borrowers’ properties, real and
personal, tangible and intangible, in good order and working condition and from
time to time make necessary repairs, renewals and replacements thereto in order
that such properties shall be preserved and maintained fully and efficiently
and, in addition, maintain and protect any permit, patent, trademark, trade
name or other rights that any Borrower may possess or under which any Borrower
may operate and that are material to any Borrower’s business;

         5.4 Keep all insurable property, real and personal, of the Borrowers
insured with responsible insurance companies against loss or damage by fire,
tornado or windstorm and against such other hazards or liabilities as are
commonly insured against by companies operating the same or comparable
businesses, with each policy naming the Lender as an additional insured. Such
insurance shall be kept in reasonable amounts based on past practices as the
Lender may require and in any event in an amount equal to at least 100% of the
replacement value of such property. Copies of all such policies shall be
delivered to the Lender and shall not be subject to cancellation or
modification without at least 30 days’ prior written notice to the Lender. In
addition thereto, the Borrowers shall carry liability insurance on account of
injury to persons or property and in respect of use and occupancy, including
business interruption, in such reasonable amounts as the Lender may require.
Such insurance may be carried under blanket policies applicable to more than
one entity;

         5.5 Take all action necessary to preserve the corporate existence, foreign
qualification where necessary and applicable, and the right to continue
business of the Borrowers, and operate within the limitations set forth under
each Borrower’s Organizational Documents, and under the applicable Legal
Requirements;

         5.6 Pay and discharge all Taxes imposed upon any of them or upon any of
their income or profits, or upon any property belonging to any of them, prior
to the date on which penalties attach thereto, provided that the Borrowers will
not be required to pay such tax, assessments, charges or levies, the payment of
which is being contested in good faith and by proper proceedings;

19

 

         5.7 Promptly give notice (together with copies of any order or notice
received by any Borrower) to the Lender of:

                  a. the imminent threat or commencement of Proceedings against any Borrower
wherein the amount claimed or the amount of all claims in the aggregate exceeds
$100,000 unless such claim or claims are insured under policies conforming to
the requirements of Section 5.4 or are funded by reserves established in
accordance with GAAP;

                  b. any notification from the Internal Revenue Service or U.S. Department
of Labor of any material noncompliance by a Borrower or any member of the ERISA
Group with applicable Legal Requirements regarding any of Plans or Benefit
Arrangements;

                  c. with respect to any Borrower, any condition, event or act which
constitutes an Event of Default, or which, with the giving of notice or lapse
of time, or both, would constitute an Event of Default, by delivering to the
Lender the certificate of the chief financial officer of such Borrower
specifying such condition, event or act, the period of existence thereof, and
what action such Borrower proposes to take with respect thereto;

                  d. any change of name, address, identity or corporate structure of any
Borrower;

                  e. with respect to any Borrower, any uninsured or partially uninsured loss
through fire, theft, liability or property damage in excess of $100,000 in the
aggregate during any fiscal year of such Borrower;

                  f. any other event or fact that may materially and adversely affect the
financial or operating condition of any Borrower or any Collateral; or

                  g. as soon as practicable after the receipt thereof, and in any event
within ten business days after the issuance thereof:

                           (i) any order or notice of the FCC, a court of competent jurisdiction, or
any other Governmental Body which designates any Broadcast License of any
Borrower or any application therefor for a hearing, or which refuses renewal or
extension of any such Broadcast License, or revokes or suspends the authority
of any Borrower to operate a Station;

                           (ii) a copy of any competing application filed against any Broadcast
License of any Borrower or any application therefor;

                           (iii) copies of any citation, notice of violation or order to show cause
from the FCC, or any material complaint filed by or with the FCC, in each case,
in connection with any Borrower; and

                           (iv) a copy of any notice or application by any Borrower requesting
authority to cease broadcasting on any Station for any period in excess of 48
hours.

         5.8 Pay when due all rent and other amounts payable under any leases to
which any Borrower is a party or by which any Borrower or its properties or
assets are bound;

20

 

         5.9 Comply in all material respects with all applicable Environmental Laws
and obtain and comply in all material respects with and maintain any and all
licenses, approvals, notifications, registrations and permits required by
applicable Environmental Laws; and

         5.10 Provide the Lender promptly upon their becoming available, and in any
event within five days after the receipt of the filing thereof by a Borrower,
with copies of (i) any periodic or special reports filed by any Borrower with
any Governmental Body, if such reports indicate any event or occurrence that
could have a Material Adverse Effect or if copies are requested by the Lender
and (ii) any material notices and other material communications from any
Governmental Body which relate specifically to a Borrower or any Broadcast
License.

SECTION 6

NEGATIVE COVENANTS

So long as this Agreement remains in effect or any Borrower has any Obligations
to the Lender, no Borrower shall without the prior written consent of the
Lender:

         6.1 Grant any security interest in, or permit the imposition of any
Encumbrance upon, any of its properties or assets used or useful in the conduct
or operation of the Stations or the Pledged Stock, including without limitation
the Collateral, except for those in existence as of the date hereof which are
set forth on Schedule 6.1;

         6.2 Purchase, redeem or exchange for cash any of its outstanding Stock or
declare or pay, during any fiscal year, any dividend in cash, stock or other
property except that any Subsidiary Borrower may pay a dividend to another
Borrower and, so long as no Event of Default has occurred, SATH may make
dividends to its shareholders as required by the terms of any of its issued and
outstanding stock and otherwise at its election consistent with its historical
practices;

         6.3 Lease, license, or Transfer any of its properties or assets used or
useful in the conduct or operations of the Stations, including, without
limitation, the Collateral, other than (i) in the Ordinary Course of Business;
(ii) as permitted by and subject to the prepayment repayments of Section 1.2;
or (iii) in connection with a Transfer from any Borrower of the interest in the
Borrower’s Broadcast License to any other Person who will own and control the
Broadcast License of that Borrower, provided that such Person will execute and
deliver any and all documentation and instruments (including, without
limitation, this Agreement or an amendment hereto) to evidence that such Person
will serve as a Borrower with respect to the Loan and the Obligations.

         6.4 Consolidate with or merge with or into any other Person or reorganize,
or, solely with respect to the Subsidiary Borrowers, issue any additional
shares of common or preferred stock, acquire all or substantially all of the
assets of any other Person, or acquire the Stock of or an ownership interest in
any other Person;

         6.5 Solely with respect to the Subsidiary Borrowers, assume, guarantee, or
become contingently liable upon any obligation or Indebtedness of SATH, any
Affiliate or any other Person;

21

 

         6.6 Solely with respect to the Subsidiary Borrowers, create any
Indebtedness to SATH, any Affiliate any other Person, except for short-term
trade accounts payable and endorsements of checks, drafts, and other negotiable
instruments incurred in the Ordinary Course of Business;

         6.7 Solely with respect to the Subsidiary Borrowers, make any loan or
loans, advance or advances, or investment or investments to, in or with SATH,
any Affiliate or any other Person;

         6.8 Prepay, or cause to be prepaid, or become obligated to prepay any
Indebtedness other than in accordance with its stated maturity, except
Indebtedness incurred pursuant to this Agreement;

         6.9 Change the nature of, suspend or cease all of any portion of the
business of any Subsidiary Borrower currently being conducted, or suspend or
cease a material portion of the business or SATH as currently being conducted
after giving effect to the Network Transactions, or change its name, FEIN,
organizational identification number, date of incorporation, or corporate
structure or identity, or add any new fictitious name;

         6.10 Take any action that permits, or after notice or lapse of time or
both would permit, revocation or termination of any Broadcast License;

         6.11 Modify or change its method of accounting (other than as may be
required to conform to GAAP);

         6.12 Enter into or permit to exist, directly or indirectly, any
transaction with any Affiliate of such Borrower except for transactions in the
Ordinary Course of Business, upon fair and reasonable terms that are disclosed
to the Lender and that are no less favorable to the Borrower than would be
obtained in an arm’s length transaction with a non-Affiliate; or

         6.13 Use the Loan proceeds for any purpose other than the purpose
specified in Section 1.3.

SECTION 7

DEFAULT — RIGHTS OF THE LENDER

         7.1 Events of Default. Any one or more of the following events will
constitute an event of default (each, an “Event of Default”) under this
Agreement:

                  a. Default in any payment required to be made under the Note, or in any
other Obligation within five (5) days after the same shall become due;

                  b. Default in any payment of principal or of interest on any other
obligation for borrowed money beyond any period of grace provided with respect
thereto (except for amounts less than $100,000 that are disputed by the
Borrowers in good faith) or in the performance of any other agreement, term or
condition contained in any agreement including without limitation, financing
leases under which any such obligation is created, if the effect of such
default is to cause such obligation to become due or to entitle the holder to
declare such obligation due prior to its date of maturity or, in the case of
financing leases, to enable the lessor to exercise remedies arising only upon
the occurrence of default;

22

 

                  c. Any representation or warranty made by any Borrower herein or in any
writing subsequently furnished in connection with or pursuant to this Agreement
is false in any material respect on the date as of which executed or delivered
to the Lender;

                  d. Default in the performance or observance of any other covenant, term or
condition or agreement contained herein or any of the other Loan Documents, if
such default shall not have been remedied within 30 days after determination of
the existence thereof by a Borrower or within 30 days after written notice
thereof is delivered to a Borrower by the Lender, whichever is earlier, except
defaults as to payments as set forth in Sections 7.1(a) and (b), or by
misrepresentation or warranty breach as set forth in Section 7.1(c), as to
which no notice need be given;

                  e. Any Borrower or Affiliate of a Borrower breaches or is in default under
any provision, term or condition provided under any agreements between the
Lender or any Affiliate of the Lender, on the one hand, and a Borrower or an
Affiliate of a Borrower, on the other hand;

                  f. Any Broadcast License necessary for the operation of the Stations is
terminated, forfeited or revoked or fails to be renewed for any reason
whatsoever, or, for any other reason, any Borrower at any time fails to be a
licensee under any of the Broadcast Licenses or otherwise fails to have all
required authorizations, licenses and permits to construct, own, operate or
promote any Station pursuant to any Broadcast License;

                  g. Any Borrower loses, fails to keep in force, suffers the termination or
revocation or non-renewal of, or terminates, forfeits or suffers a material
adverse amendment to any Broadcast License used by it in connection with any
Station, or any Proceeding is commenced against a Borrower that is reasonably
likely to result in such loss, termination or non-renewal, provided that an
Event of Default will not be deemed to exist if a Broadcast License is not
renewed but is replaced prior to its expiration by another Broadcast License
authorizing substantially the same operations as the non-renewed Broadcast
License;

                  h. (i) The directors or shareholders of any Borrower approve a merger or
consolidation that results in the shareholders of such Borrower immediately
prior to the transaction giving rise to the consolidation or merger owning less
than 50% of the total combined voting power of all classes of stock entitled to
vote of the surviving entity immediately after the consummation of the merger
or consolidation; (ii) the directors or shareholders of any Borrower approve
the sale of substantially all of the assets of such Borrower or the liquidation
or dissolution of such Borrower; (iii) any person or entity (other than another
Borrower) purchases any shares (or securities convertible into shares) of a
Borrower pursuant to a tender or exchange offer without the prior consent of
such Borrower’s board of directors or becomes the beneficial owner of
securities of such Borrower representing 25% or more of the voting power of the
Borrower’s outstanding securities; (iv) during any two-year period, individuals
who at the beginning of such period constitute the entire board of directors of
any Borrower cease to constitute a majority of the board of directors of such
Borrower, unless the election or the nomination for election of each new
director is approved by at least two-thirds of the directors then still in
office who were directors at the beginning of that period; or (v) any third
party acquires the power to direct or cause the direction of management or
policies of any Borrower through the ownership of securities, contract or
otherwise;

23

 

                  i. Any Borrower makes an assignment for the benefit of creditors; or any
Borrower applies to any tribunal for the appointment of a trustee or receiver
for such Borrower or of any substantial part of such Borrower’s assets; or any
Borrower commences any Proceeding relating to such Borrower under any
bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, dissolution or liquidation law of any jurisdiction;
or any such petition or application is filed or any such proceedings are
commenced and such Borrower by any act indicates its approval thereof, consent
thereto, or acquiescence therein; or an order is entered appointing any trustee
or receiver, or adjudicating any such Borrower bankrupt or insolvent, or
approving the petition in any such proceeding;

                  j. Any Order entered in any Proceeding against any Borrower decrees the
dissolution or split-up of such Borrower;

                  k. Any Borrower is enjoined, restrained or in any way prevented by Order
from continuing to conduct all or any material part of its business;

                  l. This Agreement or any other Loan Document that purports to create the
Security Interest, for any reason, fails or ceases to create a valid and
perfected first priority Security Interest on any of the Collateral; or

                  m. A notice of Encumbrance is filed of record with respect to any
Borrower’s assets by any Governmental Authority, or if any Taxes owing to any
Governmental Authority become an Encumbrance upon any assets of a Borrower.

         7.2 Lender’s Rights and Remedies. Upon the occurrence of an Event of
Default, the Lender, at its option, may (a) declare the Obligations immediately
due and payable, without presentment, notice, protest or demand of any kind for
the payment of all or any part of the Obligations (all of which are expressly
waived by the Borrowers) and exercise all of its rights and remedies against
the Borrowers and any Collateral provided herein, in any other Loan Document,
or in any other agreement between any Borrower and the Lender, at law or in
equity, and (b) exercise all rights granted to a secured party under the UCC or
otherwise. Upon the occurrence of an Event of Default, the Lender may take
possession of the Collateral, or any part thereof, and the Borrowers hereby
grant the Lender authority to enter upon any premises on which the Collateral
may be situated, and remove the Collateral from such premises or use such
premises together with the Borrowers’ materials, supplies, books and records,
to maintain possession and/or the condition of the Collateral and to prepare
the Collateral. The Borrowers shall, upon the Lender’s demand, assemble the
Collateral and make it available at a place designated by the Lender which is
reasonably convenient to the Lender. Unless the Collateral is perishable or
threatens to decline speedily in value or is of a type customarily sold on a
recognized market, the Lender shall give the Borrowers reasonable notice of the
time and place of any public sale thereof or of the time after which any
private sales or other intended disposition thereof is to be made. The
requirement of reasonable notice will be met if such notice is mailed, postage
prepaid, to Borrowers at least ten days prior to the time of such sale or
disposition. If the Lender sells any of the Collateral upon credit, the
Borrowers will be credited only with payments actually made by the purchaser,
peceived by the Lender and applied to the Obligations. If the purchaser fails
to pay for the Collateral, the Lender may resell the Collateral and the
Borrowers will be credited with the proceeds therefrom. Notwithstanding the
foregoing, upon the filing by or against any Borrower of any petition under any
provision of the United

24

 

States Bankruptcy Code (and in the case of an
involuntary action, which remains unvacated for 45 days), the Lender may take
the actions described above in clauses (a) and (b).

SECTION 8

DEFINITIONS

As used herein, the following terms shall have the meanings herein specified:

         8.1 “1934 Act” means the Securities Act of 1934, as amended, or any
successor law, and rules and regulations issued pursuant thereto.

         8.2 “Affiliate” means, with respect to any Person, any other Person (i)
that directly, or indirectly through one or more intermediaries, controls or is
controlled by or is under common control with such Person, (ii) that is a
general partner, director, manager, trustee or principal officer of, or a
limited partner owning more than 10% of, or that serves in a similar capacity
with respect to, such Person, or (iii) of which such Person is a general
partner, director, manager, trustee or principal officer or a limited partner
owning more than 10% of, or with respect to which such Person serves in a
similar capacity. For purposes of this definition, “control” means the
possession, directly or indirectly, of the power to direct or to cause the
direction of the management or policies of the Person in question through the
ownership of voting securities or by contract or otherwise. Solely for
purposes of this Agreement, Holdings and Network Operating Company will be
deemed to be Affiliates of the Lender but not Affiliates of any Borrower.

         8.3 “Agreement” is defined in the introductory paragraph.

         8.4 “Benefit Arrangement” means an employee benefit plan within the
meaning of ERISA §3(3) that is not a Plan or Multiemployer Plan.

         8.5 “Borrower” is defined in the introductory paragraph.

         8.6 “Broadcast License” means any license, permit, authorization or
certificate now or hereafter held by any Borrower (including without limitation
the Broadcast Licenses listed on Schedule 8.6) to construct, own, operate or
program any Station that is or has been granted by the FCC or any other
Governmental Body, and all extensions, additions and renewals thereto or
thereof.

         8.7 “Collateral” means all of the Borrowers’ respective right title and
interest, whether now owned or hereafter acquired, in and to each of the
following to the extent it relates to the Stations: accounts; chattel paper;
inventory; equipment; instruments; investment property; documents; letter of
credit rights; general intangibles (including without limitation payment
intangibles); commercial tort claims identified in Schedule 8.7; supporting
obligations; real property; rights under any leases for real property; all of
the Borrowers’ respective rights under all present and future Governmental
Authorizations heretofore or hereafter granted to any Borrower for the
ownership or operation of the Stations, including the Broadcast Licenses; and
to the extent not listed above as original collateral (and without regard to
Section 2.5), all proceeds and products of the any of the foregoing.
“Collateral” also includes all of the Pledged Stock.

25

 

         8.8 “Collateral Assignments of Leases” means the agreements, whether
collateral assignments or leasehold mortgages or deeds of trust, whereby the
Borrowers assign to the Lender all of their respective interests in leases used
or useful in the operation of the Stations.

         8.9 “Communications Act” means the Federal Communications Act of 1934, as
amended and the rules and regulations promulgated thereunder.

         8.10 “Consent” means any approval, consent, ratification, waiver, or other
authorization (including any Governmental Authorization).

         8.11 “Contract” means any agreement, contract, obligation, promise, or
undertaking (whether written or oral and whether express or implied).

         8.12 “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended and any successor statute.

         8.13 “ERISA Group” means the Borrowers and all members of a controlled
group of corporations and all trades or businesses (whether or not
incorporated) under common control which, together with the Borrowers, are
treated as a single employer with the Borrowers under IRC §414.

         8.14 “Encumbrance” means any charge, claim, community property interest,
condition, equitable interest, lien, option, pledge, security interest, right
of first refusal, or restriction of any kind, including any restriction on use,
voting, transfer, receipt of income, or exercise of any other attribute of
ownership.

         8.15 “Environment” means soil, land surface or subsurface strata, surface
waters (including navigable waters, ocean waters, streams, ponds, drainage
basins, and wetlands), groundwater, drinking water supply, stream sediments,
ambient air (including indoor air), plant and animal life, and any other
environmental medium or natural resource.

         8.16 “Environmental, Health, and Safety Liabilities” means any cost,
damages, liability or other obligation arising under Environmental Law or
Occupational Safety and Health Law and consisting of or relating to (a) any
environmental, health, or safety matters or conditions (including on-site or
off-site contamination, occupational safety and health, and regulation of
chemical substances or products); (b) fines, penalties, judgments, awards,
settlements, legal or administrative proceedings, damages, losses, claims,
demands and response, investigative, remedial, or inspection costs and expenses
arising under Environmental Law or Occupational Safety and Health Law; (c)
financial responsibility under Environmental Law or Occupational Safety and
Health Law for cleanup costs or corrective action, including any investigation,
cleanup, removal, containment, or other remediation or response actions
(“Cleanup”) required by applicable Environmental Law or Occupational Safety and
Health Law (whether or not such Cleanup has been required or requested by any
Governmental Body or other Person) and for any natural resource damages; or (d)
any other compliance, corrective, investigative, or remedial measures required
under Environmental Law or Occupational Safety and Health Law. The terms
“removal,” “remedial,” and “response action” include the types of activities
covered by the U.S. Comprehensive Environmental Response, Compensation, and
Liability Act, 42 U.S.C. §9601 et seq., as amended.

26

 

         8.17 “Environmental Law” means any Legal Requirement that requires or
relates to: (a) advising appropriate authorities, employees, and the public of
pntended or actual releases of pollutants or hazardous substances or materials,
violations of discharge limits, or other prohibitions and of the commencements
of activities that could have significant impact on the Environment; (b)
preventing or reducing to acceptable levels the release of pollutants or
hazardous substances or materials into the Environment; (c) reducing the
quantities, preventing the release, or minimizing the hazardous characteristics
of wastes that are generated; (d) assuring that products are designed,
formulated, packaged, and used so that they do not present
unreasonable risks to human health or the Environment when used or
disposed of; (e) protecting resources, species, or ecological amenities; (f)
reducing to acceptable levels the risks inherent in the transportation of
hazardous substances, pollutants, oil, or other potentially harmful substances;
(g) cleaning up pollutants that have been released, preventing the threat of
release, or paying the costs of such clean up or prevention; or (h) making
responsible parties pay private parties for damages done to their health or the
Environment, or permitting self-appointed representatives of the public
interest to recover for injuries done to public assets.

         8.18 “Event of Default” is defined in Section 7.1.

         8.19 “FCC” means the Federal Communications Commission.

         8.20 “Financial Projections” is defined in Section 4.4(c).

         8.21 “Financing Statements” is defined in Section 2.4(a).

         8.22 “GAAP” means generally accepted United States accounting principles,
applied on a consistent basis.

         8.23 “Governmental Authorization” means any approval, consent, license,
permit, waiver, or other authorization issued, granted, given, or otherwise
made available by or under the authority of any Governmental Body or pursuant
to any Legal Requirement.

         8.24 “Governmental Body” means any: (a) nation, state, county, city, town,
village, district, or other jurisdiction of any nature; (b) federal, state,
local, municipal, foreign, or other government; (c) governmental or
quasi-governmental authority of any nature (including any governmental agency,
branch, department, official, or entity and any court or other tribunal); (d)
multi-national organization or body; or (e) body exercising, or entitled to
exercise, any administrative, executive, judicial, legislative, police,
regulatory, or taxing authority or power of any nature.

         8.25 “Hazardous Activity” means the distribution, generation, handling,
importing, management, manufacturing, processing, production, refinement,
Release, storage, transfer, transportation, treatment, or use (including any
withdrawal or other use of groundwater) of Hazardous Materials in, on, under,
about, or from any real property in which any Borrower has or had an interest
into the Environment, and any other act, business, operation, or thing that
increases the danger, or risk of danger, or poses an unreasonable risk of harm
to persons or property on or off any real property in which any Borrower has or
had an interest, or that may affect the value of any real property in which any
Borrower has or had an interest or the Borrowers.

27

 

         8.26 “Hazardous Materials” means any waste or other substance that is
listed, defined, designated, or classified as, or otherwise determined to be,
hazardous, radioactive, or toxic or a pollutant or a contaminant under any
Environmental Law, including any admixture or solution thereof.

         8.27 “Holdings” is defined in Section 1.2.

         8.28 “Indebtedness” means (i) all indebtedness for borrowed money,
including without limitation the Loan; (ii) all obligations evidenced by bonds,
debentures, notes or other similar
instruments; (iii) all other obligations upon which interest or finance
charges are customarily paid; (iv) all obligations arising under conditional
sale or other title retention agreements (including any lease capitalized in
accordance with generally accepted accounting principles) with respect to
property acquired; (v) all indebtedness and obligations of the foregoing types
which are secured by property of a person (whether or not such indebtedness
shall have been assumed by such person); and (vi) all indebtedness and
obligations of the foregoing types which are guaranteed by such person.

         8.29 “IRC” means the Internal Revenue Code of 1986 or any successor law,
and regulations issued by the Internal Revenue Service pursuant thereto.

         8.30 “KCNS” is defined in the introductory paragraph.

         8.31 An individual will be deemed to have “Knowledge” of a particular fact
or matter if he or she is actually aware of such fact or matter or if a prudent
individual could be expected to discover or otherwise become aware of such fact
or matter in the course of conducting a reasonably comprehensive investigation
concerning the existence of such fact or matter. A Person other than an
individual will be deemed to have “Knowledge” of a particular fact or matter if
any individual who is serving as a director, executive officer, member,
governor, manager (with respect to a partnership or limited liability company,
partner, executor, or trustee of such Person (or in any similar capacity) has,
or at any time had, Knowledge of such fact or matter in accordance with the
preceding sentence.

         8.32 “Legal Requirement” means any order, constitution, law, ordinance,
principle of common law, regulation, statute, or treaty of any Governmental
Body.

         8.33 “Lender” is defined in the introductory paragraph.

         8.34 “Loan” is defined in Section 1.1.

         8.35 “Loan Documents” means this Agreement, the Note and any other
document executed by any party in connection with this Agreement, as each may
be amended, supplemented or modified from time to time.

         8.36 “Material Adverse Effect” means (a) a material adverse effect on the
business, properties, prospects, operations, results of operations, assets,
liabilities or condition (financial or otherwise) of any Borrower, (b) a
material impairment of any Borrower’s ability to perform its Obligations or of
the Lender’s ability to enforce the Obligations or realize upon the Collateral
or (c) a material impairment of the enforceability or priority of the Security
Interest with respect to the Collateral as a result of an action or a failure
to act on the part of any Borrower.

28

 

         8.37 “Multiemployer Plan” means an employee pension benefit plan within
the meaning of ERISA §4001(a)(3).

         8.38 “Net Proceeds” means the aggregate proceeds paid in cash or other
readily available funds received by any or all of the Borrowers in exchange for
the Transfer of a Station, net of (a) reasonable costs and expenses relating to
the Transfer of the Station and actually incurred (including, without
limitation, reasonable legal and accounting fees, and customary agent, broker
or finder commissions), and (b) all Taxes paid or payable as a result of the
Transfer of the Station, including but not limited to any transfer or
conveyance taxes actually incurred by
the Borrowers solely to the extent that they arise from the Transfer of
the Station and in any event after giving effect of any applicable net
operating loss carry forward with respect to such Tax liability.

         8.39 “Network Operating Company” is defined in Section 1.2.

         8.40 “Network Partnership Agreements” is defined in Section 1.2.

         8.41 “Network Transactions” is defined in Section 4.2(b).

         8.42 “Note” is defined in Section 1.1.

         8.43 “Obligations” means the Borrowers’ obligation to repay the Loan
together with all other obligations of the Borrowers to the Lender under this
Agreement, the other Loan Documents or any other agreements among the Parties.

         8.44 “Occupational Safety and Health Law” means any Legal Requirement
designed to provide safe and healthful working conditions and to reduce
occupational safety and health hazards, and any program, whether governmental
or private (including those promulgated or sponsored by industry associations
and insurance companies), designed to provide safe and healthful working
conditions.

         8.45 “Order” means any award, decision, injunction, judgment, order,
ruling, subpoena or verdict entered, issued, made, or rendered by any court,
administrative agency or other Governmental Body or by any arbitrator.

         8.46 “Ordinary Course of Business” means an action taken by a Person only
if: (a) such action is consistent with the past practices of such Person and is
taken in the ordinary course of such Person’s normal day-to-day operations; (b)
such action is not required to be authorized by such Person’s board of
directors (or by any Person or group of Persons exercising similar authority)
and is not required to be specifically authorized by such Person’s parent
company (if any) or other equity holders; and (c) such action is similar in
nature and magnitude to actions customarily taken, without any authorization by
the board of directors (or by any Person or group of Persons exercising similar
authority), in the ordinary course of the normal day-to-day operations of other
Persons that are in the same line of business as such Person.

         8.47 “Organizational Documents” means (a) the charter or articles or
certificate of incorporation and bylaws or code of regulations of a
corporation; (b) any charter or similar

29

 

document adopted or filed in connection
with the creation, formation, or organization of any other Person; and (c) any
amendment to any of the foregoing.

         8.48 “Person” means any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, or other entity
or Governmental Body.

         8.49 “Plan” means any employee pension benefit plan (other than a
Multiemployer Plan) which is covered by the Title IV of ERISA or subject to the
minimum funding standards under IRC §412.

         8.50 “Pledge Agreements” means stock pledge agreements in form and
substance satisfactory to the Lender executed and delivered by SATH to the
Lender with respect to the pledge by SATH of all Stock (including, in the case
of the Network Operating Company, the membership interests) of WOAC, WMFP,
KCNS, Holdings, the Network Operating Company, and any other Person owning
and/or controlling the Broadcast Licenses for WOAC, WMFP, and KCNS held by SATH
and executed an delivered by WOAC, WMFP and KCNS to the Lender with respect to
the pledge by WOAC, WMFP and KCNS of all Stock of SAH License or any other
Person owning and/or controlling the Broadcast Licenses for WOAC, WMFP and
KCNS.

         8.51 “Pledged Stock” means the Stock subject to the Pledge Agreements.

         8.52 “Pro Forma Financial Statements” is defined in Section 4.4(b).

         8.53 “Proceeding” means any action, arbitration, audit, hearing,
investigation, litigation, or suit (whether civil, criminal, administrative,
investigative, or informal) commenced, brought, conducted, or heard by or
before, or otherwise involving, any Governmental Body or arbitrator.

         8.54 “Release” means any spilling, leaking, emitting, discharging,
depositing, escaping, leaching, dumping, or other releasing into the
Environment, whether intentional or unintentional.

         8.55 “SAH License” is defined in the introductory paragraph.

         8.56 “SATH” is defined in the introductory paragraph.

         8.57 “Scripps Network” is defined in Section 1.2.

         8.58 “SEC” means the U.S. Securities and Exchange Commission or any
successor agency.

         8.59 “SEC Documents” is defined in Section 4.4.

         8.60 “Security Interest” is defined in Section 2.1.

         8.61 “Share Purchase Agreement” is defined in Section 3.3.

         8.62 “Stations” means WOAC (TV) in Canton, Ohio; KCNS (TV) in San
Francisco, California; and WMFP (TV) in Lawrence, Massachusetts.

30

 

         8.63 “Stock” means all shares, options, warrants, interests, partnerships
or other equivalents (regardless of how designated) of or in a Person, whether
voting or nonvoting, including without limitation common stock, preferred
stock, partnership interest, limited liability company membership interest or
any other “equity securities” (as defined in Rule 3a11-1 of the General Rules
and Regulations promulgated by the SEC under the 1934 Act).

         8.64 “Subsidiary Borrowers” means KCNS, WMFP, and SAH License.

         8.65 “Tax” means (a) any net income, alternative or add-on minimum tax,
gross income, gross receipts, sales, use, ad valorem, value added, franchise,
profits, license, withholding on amounts paid to or by any of the Borrowers,
payroll, employment, excise, severance, stamp occupation, premium, property,
environmental or windfall profit tax, custom,
duty or other tax, governmental fee or other like assessment or charge of
any kind whatsoever, together with any interest or any penalty, addition to tax
or additional amount imposed by any Governmental Body responsible for the
imposition of any such tax (domestic or foreign), (b) any liability of any
Borrower for the payment of any amounts of the type described in clause (a) as
a result of being a member of an affiliated, consolidated, combined or unitary
group for any period prior to the Closing, and (c) any liability of any
Borrower for the payment of any amounts of the type described in clause (a) as
a result of any express or implied obligation to indemnify any other Person.

         8.66 “Tax Return” means any return (including any information return),
report, statement, schedule, notice, form, or other document or information
filed with or submitted to, or required to be filed with or submitted to, any
Governmental Body in connection with the determination, assessment, collection,
or payment of any Tax or in connection with the administration, implementation,
or enforcement of or compliance with any Legal Requirement relating to any Tax.

         8.67 A claim, proceeding, dispute, action, or other matter will be deemed
to have been “Threatened” if any demand or statement has been made (orally or
in writing) or any notice has been given (orally or in writing), or if any
other event has occurred or any other circumstances exist, that would lead a
prudent Person to conclude that such a claim, Proceeding, dispute, action, or
other matter is likely to be asserted, commenced, taken, or otherwise pursued
in the future.

         8.68 “Transfer” is defined in Section 1.2.

         8.69 “UCC” shall mean the Uniform Commercial Code as in effect on the date
hereof in the State of Ohio; provided, however, that if by reason of mandatory
provisions of law, any of the attachment, perfection or priority of the
security interest in any item or portion of the Collateral is governed by the
Uniform Commercial Code as in effect in a jurisdiction other than the State of
Ohio, “UCC” shall mean the Uniform Commercial Code as in effect in such other
jurisdiction for purposes of the provisions hereof relating to such perfection
or effect of perfection or non-perfection.

         8.70 “WOAC” is defined in the introductory paragraph.

         8.71 “WMFP” is defined in the introductory paragraph.

31

 

         8.72 All accounting and financial terms used in this Section and
throughout this Agreement and not otherwise defined shall be determined in
accordance with generally accepted accounting principles consistently applied.

         8.73 Subject to the express definitions set forth in this Agreement, all
terms used in this Agreement are defined in the UCC have the meanings ascribed
to them in the UCC.

SECTION 9

ADDITIONAL REPRESENTATIONS AND WARRANTIES,

WAIVERS AND CONSENTS.

Each Borrower acknowledges, covenants and agrees as follows:

         9.1 Each Borrower will be jointly and severally liable for satisfaction of
the Obligations, including without limitation the repayment of all of the
Indebtedness.

         9.2 The Lender will not have any responsibility to inquire into the
apportionment, allocation or disposition of the proceeds of the Loan as among
the Borrowers.

         9.3 Each Subsidiary Borrower hereby irrevocably appoints SATH as its agent
and attorney-in-fact for all purposes of the Loan Documents, including without
limitation the giving and receiving of notices and other communications, the
making of requests for and conversions or continuations of the Loan, the
execution and delivery of certificates, and the receipt and allocation of
disbursements of the Loan proceeds from the Lender and all matters under
Section 9.6. Any statement, representation, response or instruction provided by
SATH will be deemed to be approved and consented to by each Borrower, and the
Lender may unconditionally rely on any such statement, representation, response
or instruction.

         9.4 The making of the Loan on a joint borrowing basis is solely an
accommodation to the Borrowers and is done at Borrowers’ request. The request
for joint handling of the Loan was made because all of the Borrowers are
engaged in owning and operating the Stations and each Borrower expects to
derive benefit, directly or indirectly, from the Loan because the successful
operation of the Stations is dependent on the continued successful performance
of all of the Borrowers. Each Borrower agrees that the Lender will not incur
any liability to any Borrower as a result thereof. To induce the Lender to
make the Loan, and in consideration thereof, each Borrower hereby agrees to
indemnify the Lender and hold the Lender harmless from and against any and all
liabilities, expenses, losses, damages and/or claims of damage or injury
asserted against the Lender by any Borrower or by any other Person arising from
or incurred by reason of the structuring of the Loan as provided in this
Agreement, reliance by the Lender on any requests or instructions from any
Borrower, or any other action taken by the Lender under this Agreement. This
Section will survive repayment of the Loan.

         9.5 Each Borrower has established adequate means of obtaining from each
other Borrower on a continuing basis financial and other information pertaining
to the business, operations and condition (financial and otherwise) of each
other Borrower and is and hereafter will be completely familiar with the
business, operations and condition (financial and otherwise) of each other
Borrower. The Lender will have no duty, and each Borrower hereby waives any
duty of the Lender, to disclose to any Borrower any matter, fact or thing
relating to the business,

32

 

operations or condition (financial or otherwise) of
any other Borrower, or the property of any other Borrower, whether now or
hereafter known by the Lender.

         9.6 The obligations and liabilities of each Borrower under this Agreement
or any other Loan Document may derive from value provided directly to another
Borrower and, in full recognition of that fact, each Borrower consents and
agrees that the Lender may, at any time and from time to time, without notice
to, demand on, or the agreement of, such Borrower, and without affecting the
enforceability or security of the Loan Documents:

                  a. with the agreement of such Borrower, supplement, modify, amend, extend,
renew, accelerate or change the terms of the Indebtedness, or otherwise change
the time for payment of the Indebtedness or any part thereof, including
increasing or decreasing the rate of interest thereon;

                  b. with the agreement of such Borrower, supplement, modify, amend or
waive, or enter into any agreement, approval or consent with respect to, the
hndebtedness or any part thereof or any of the Loan Documents or any collateral
or any additional security or guaranties, or any condition, covenant, default,
remedy, right, representation or term thereof or thereunder;

                  c. with the agreement of such Borrower, accept new or additional
instruments, documents or agreements in exchange for, or relative to, any of
the Loan Documents or the Indebtedness or any part thereof;

                  d. accept partial payments on the Indebtedness;

                  e. with the agreement of such Borrower, receive and hold additional
security or guaranties for the Indebtedness or any part thereof;

                  f. release, reconvey, terminate, waive, abandon, subordinate, exchange,
substitute, transfer and enforce any collateral or guaranties, and apply any
security and direct the order or manner of sale thereof as the Lender in its
sole and absolute discretion may determine;

                  g. release any party or any guarantor from any personal liability with
respect to the Indebtedness or any part thereof;

                  h. settle, release on terms satisfactory to the Lender, or by operation of
applicable laws or otherwise liquidate or enforce any of the Indebtedness and
any security or guaranty in any manner, consent to the transfer of any
security, and bid and purchase at any sale; and/or

                  i. consent to the merger, change or any other restructuring or termination
of the corporate or limited liability company existence of any other Borrower
or any other person or entity, and correspondingly restructure the Loan,
continuing existence of any lien under any other Loan Document to which any
Borrower is a party or the enforceability hereof or thereof with respect to all
or part of the Indebtedness.

         9.7 Lender will not be required to, and each Borrower expressly waives any
right to require the Lender to, marshal assets in favor of any Borrower or any
other Person or to proceed against any other Borrower or any other person or
entity or any Collateral provided by any other

33

 

Borrower or any other Person,
and the Lender will have the right to proceed against any Borrower and/or any
of the Collateral in such order as the Lender determines in its sole and
absolute discretion. The Lender may file a separate action or actions against
any Borrower, whether such action is brought or prosecuted with respect to any
other security or against any other person, or whether any other person is
joined in any such action or actions. The Lender will have the right to deal
with any Borrower in connection with the Indebtedness or otherwise, or alter
any contracts or agreements now or hereafter existing between the Lender and
any Borrower, in any manner whatsoever, all without in any way altering or
affecting the obligations of any other Borrower under the Loan Documents.

         9.8 Each Borrower authorizes Lender, upon the occurrence of and during the
continuance of any Event of Default, at its sole option, without notice or
demand and without affecting any Aggregate Indebtedness or the validity or
enforceability of any liens of Lender on
any collateral, to foreclose any or all of the deeds of trust of mortgages
securing the obligations by judicial or nonjudicial sale. Each by real
property. This means, among other things:

                  (i) The Lender may collect from any Borrower without first foreclosing on
any real or personal property collateral pledged by the debtor;

                  (ii) If the Lender forecloses on any real property collateral pledged by
the debtor;

                           A. The amount of the debt may be reduced only by the price for which that
collateral is sold at the foreclosure sale, even if the collateral is worth
more than the sale price; and

                           B. The Lender may collect from any Borrower even if the Lender, by
foreclosing on the real property collateral, has destroyed any right one
Borrower may have to collect from another Borrower.

This is an unconditional and irrevocable waiver of any rights and defenses the
Borrower may have because the obligations are secured by real property. These
rights and defenses include but are not limited to, any rights or defenses
based upon Section 580a, 580b, 580d, or 726 of the California Code of Civil
Procedure.

Each Borrower waives all rights and defenses arising out of an election of
remedies by the Lender, even though that election of remedies, such as a
nonjudicial foreclosure with respect to security for a guaranteed obligation,
has destroyed the Borrower’s rights of subrogation and reimbursement against
the other Borrower by the operation of Section 580d of the Code of Civil
Procedure or otherwise.

         9.9 Each Borrower expressly waives any and all defenses now or hereafter
arising or asserted by reason of (i) any disability or other defense of any
other Borrower or any other Person with respect to any Indebtedness, (ii) the
unenforceability or invalidity as to any other Borrower or any other Person of
the Indebtedness, (iii) the unenforceability or invalidity of any security or
guaranty for the Indebtedness or the lack of perfection or continuing
perfection or failure of priority of any security for the Indebtedness, (iv)
the cessation for any cause whatsoever of the liability of any Borrower or any
other Person (other than by reason of the full payment and performance of all
Indebtedness), (v) to the extent permitted by law, any failure of the Lender to
give notice of sale or other disposition of Collateral to any Borrower or any
defect

34

 

in any notice that may be given in connection with any sale or
disposition, (vi) to the extent permitted by law, any failure of the Lender to
comply with applicable Legal Requirements in connection with the sale or other
disposition of any Collateral or other security for any Indebtedness, including
without limitation any failure of the Lender to conduct a commercially
reasonable sale or other disposition of any Collateral or other security for
any obligation, (vii) any act or omission of the Lender or others that directly
or indirectly results in or aids the discharge or release of any Borrower or
any other Person or the Indebtedness or any other security or guaranty therefor
by operation of law or otherwise, (viii) any Legal Requirement that provides
that the obligation of a surety or guarantor must neither be larger in amount
nor in other respects more burdensome than that of the principal or which
reduces a surety’s or guarantor’s obligation in proportion to the principal
obligation, (ix) any failure of the Lender to file or enforce a claim in any
bankruptcy or other proceeding with respect to any other Borrower, (x) the
election by the Lender, in any bankruptcy proceeding of any other Borrower, of
the application or non-application of Section 1111(b)(2) of the United States Bankruptcy Code, (xi) any extension of
credit or the grant of any lien under Section 364 of the United States
Bankruptcy Code in connection with the bankruptcy of any other Borrower, (xii)
any use of cash collateral under Section 363 of the United States Bankruptcy
Code, or (xiii) any agreement or stipulation with any other Borrower with
respect to the provision of adequate protection in any bankruptcy proceeding of
any person or entity.

         9.10 Notwithstanding anything to the contrary elsewhere contained herein
or in any other Loan Document to which any Borrower is a party, each Borrower
hereby waives with respect to each other Borrower and their respective
successors and assigns (including any surety) and any other party any and all
rights at law or in equity, to subrogation, to reimbursement, to exoneration,
to contribution, to setoff or to any other rights that could accrue to a surety
against a principal, to a guarantor against a maker, to an accommodation party
against the party accommodated, or to a holder or transferee against a maker
and which any Borrower may have or hereafter acquire against each other
Borrower or any other party in connection with or as a result of the execution,
delivery and/or performance of this Agreement, the Note or any other Loan
Document to which any Borrower is a party. Each Borrower agrees that it will
not have and shall not assert any such rights against any other Borrower or the
successors and assigns of any other Borrower or any other party (including any
surety), either directly or as an attempted setoff to any action commenced
against any Borrower by another Borrower (as Borrower or in any other capacity)
or any other party. Each Borrower hereby acknowledges and agrees that this
waiver is intended to benefit the Lender and will not limit or otherwise affect
the liability of the Borrower hereunder or under any other Loan Document to
which any Borrower is a party, or the enforceability hereof or thereof.

SECTION 10

MISCELLANEOUS PROVISIONS

         10.1 Amendment; Modification and Waiver. No amendment, modification or
alteration of the terms hereof will be binding unless it is in writing and duly
executed by the parties. Failure of the Lender to exercise its rights
hereunder on any one occasion will not be construed as a waiver of any
requirement of this Agreement or a waiver of the Lender’s right to take
advantage of any subsequent or continued breach by any of the Borrowers of any
covenant contained herein. All remedies herein provided will be in addition to
and not in substitution for any remedies otherwise available to the Lender.

35

 

         10.2 Other Reports to the Lender by the Borrowers and Inspections of
Books, Records, Etc. In addition to the reports required to be furnished to
the Lender under Section 5, each Borrower shall furnish to the Lender such
other information and reports as may be necessary in the Lender’s opinion to
inform the Lender of each Borrower’s financial status and condition and shall
permit any person designated by the Lender to visit and inspect any of the
properties, corporate books and financial records of any Borrower and to
discuss its affairs, finances and accounts with its officers and employees at
such reasonable times and as often as may be requested by the Lender.

         10.3 Lender’s Expenses. If an Event of Default occurs, the Borrowers
shall pay the Lender’s reasonable expenses of collection, including without
limitation reasonable attorneys’ fees and expenses for counsel retained by the
Lender.

         10.4 Notices. All notices and communications to the Lender provided for
herein shall be hand delivered, sent by registered or certified mail, return
receipt requested, or by recognized national courier service, or sent by
facsimile (with receipt confirmed electronically), and shall be effective upon
receipt or delivery, or refusal to accept delivery as evidenced by the return
receipt, addressed to:

		
	 	The E.W. Scripps Company

312 Walnut Street, 28th Floor

Cincinnati, Ohio 45202

Attention: Timothy Peterman, Vice President Corporate Development

Facsimile: (513) 977-3024
	 
	 	with a copy to:
	 
	 	William Appleton, Esq.

Baker & Hostetler LLP

312 Walnut Street

Suite 2650

Cincinnati, Ohio 45202-4074

Facsimile No.: (513) 929-0303

All communications to the Borrowers hereunder shall be hand delivered, sent by
registered or certified mail, return receipt requested, or by recognized
national courier service, or sent by facsimile (with receipt confirmed
electronically), and shall be effective upon receipt or delivery, or refusal to
accept delivery as evidenced by the return receipt, addressed to:

		
	 	Shop At Home, Inc.

5388 Hickory Hollow Parkway

Nashville, Tennessee 37013

Attn:

Facsimile:
	 

36

 

		
	 	with a copy to:
	 
	 	Charles W. Bone, Esq.

Bone McAllester Norton, P.L.L.C.

Suntrust Center

	 	424 Church Street, Suite 900

Nashville, Tennessee 37203

Facsimile: (613) 238-6301

         10.5 Lender’s Duties Upon Payment in Full by the Borrowers. Upon payment
in full of all Obligations, the Lender shall (a) reassign or redeliver, as
appropriate, to the Borrowers all Collateral (except to the extent such
Collateral secures other indebtedness to the Lender); (b) at the Borrowers’
expense, cause to be released or cancelled of record all financing statements
or other documents previously filed and recorded in public offices by or on
behalf of the Lender evidencing the Obligations and the security therefor; and
(c) deliver to the Borrowers the Note marked “Paid in Full.”

         10.6 Governing Law; Interpretation. This Agreement is being delivered and
is intended to be performed in the State of Ohio and will be construed and
enforced in accordance with the laws of such state, without regard to conflicts
of laws principles, except to the extent that, by reason of any mandatory
provision of law, the attachment, perfection or priority of the Security
Interest is governed by the Uniform Commercial Code as in effect in any
jurisdiction other than Ohio. The section headings contained in this Agreement
are for reference purposes only and will not affect in any way the meaning or
interpretation of this Agreement.

         10.7 Counterparts. This Agreement may be executed simultaneously in two
or more counterparts, each of which will be deemed an original but all of which
together shall constitute one and the same instrument.

         10.8 Assignment; Successors and Assigns. Neither this Agreement nor any
of the rights, interests or Obligations hereunder may be assigned by the
Borrowers (whether by operation of law or otherwise) without the prior written
consent of the Lender. Subject to the preceding sentence, this Agreement will
be binding upon, inure to the benefit of and be enforceable by the parties and
their respective successors and assigns.

         10.9 Third Party Beneficiaries. Nothing in this Agreement, express or
implied, is intended or shall be construed to create any third party
beneficiaries.

         10.10 Consent to Jurisdiction; Venue. Each of the parties irrevocably
submits to the exclusive jurisdiction of the state courts of Ohio and the
United States District Court for the Southern District of Ohio for the purpose
of any action or proceeding arising out of or relating to this Agreement, and
each of the parties irrevocably agrees that all claims in respect to such
action or proceeding may be heard and determined exclusively in any Ohio state
court sitting in Hamilton County, Ohio or the United States District Court for
the Southern District of Ohio. Each of the parties agrees that a final
judgment in any Proceeding will be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.

         10.11 Further Assurances. The Borrowers shall, in good faith, execute
such other and further instruments, assignments or documents as may be
necessary or appropriate for the consummation of the transactions contemplated
by this Agreement.

         10.12 Severability. If any provision of this Agreement is finally
determined by a court of competent jurisdiction to be unenforceable, such
provision will be deemed to be severed from this Agreement, but every other
provision of this Agreement will remain in full force and effect.

37

 

         10.13 Entire Agreement. This Agreement (including the documents and the
instruments referred to herein) constitutes the entire agreement among the
parties with respect to its subject matter and supersedes all prior agreements
and understandings, or representations, by or among the parties, written and
oral, with respect to the subject matter hereof and thereof.

38

 

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

	 	 	 	 	 	 	 
	LENDER:	 	BORROWERS:
	
	
	
	

	 	 	 	 	 	 	 
	
	
	
	

	THE E. W. SCRIPPS COMPANY	 	SHOP AT HOME, INC.
	
	
	
	

	 	 	 	 	 	 	 
	
	
	
	

	By	 	

___________,__________________
	 	By
	 	

___________,_____________________________
	
	
	
	

	 	 	 	 	 	 	 
	
	
	
	

	 	 	 	 	WOAC, INC.
	
	
	
	

	 	 	 	 	 	 	 
	
	
	
	

	 	 	 	 	By
	 	

___________,_____________________________
	
	
	
	

	 	 	 	 	 	 	 
	
	
	
	

	 	 	 	 	WMFP, INC.
	
	
	
	

	 	 	 	 	 	 	 
	
	
	
	

	 	 	 	 	By
	 	

___________,_____________________________
	
	
	
	

	 	 	 	 	 	 	 
	
	
	
	

	 	 	 	 	KCNS, INC.
	
	
	
	

	 	 	 	 	 	 	 
	
	
	
	

	 	 	 	 	By
	 	

___________,_____________________________
	
	
	
	

	 	 	 	 	 	 	 
	
	
	
	

	 	 	 	 	SAH LICENSE, INC.
	
	
	
	

	 	 	 	 	 	 	 
	
	
	
	

	 	 	 	 	By
	 	

___________,_____________________________

39

 

EXHIBIT A

Form of Promissory Note

[To Be Inserted]

40

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