-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JXuafR5U5BjJ3Gtsnpa051hY0aYBHfjvr4K0EasvattQPOjnd/ipu6UPJi5+yP4F 8y4w9/IPG4xjK1bh5Eavlw== 0000912752-96-000019.txt : 19960517 0000912752-96-000019.hdr.sgml : 19960517 ACCESSION NUMBER: 0000912752-96-000019 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960515 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: SINCLAIR BROADCAST GROUP INC CENTRAL INDEX KEY: 0000912752 STANDARD INDUSTRIAL CLASSIFICATION: TELEVISION BROADCASTING STATIONS [4833] IRS NUMBER: 521494660 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-26076 FILM NUMBER: 96567009 BUSINESS ADDRESS: STREET 1: 2000 WEST 41ST ST CITY: BALTIMORE STATE: MD ZIP: 21211 BUSINESS PHONE: 4104675005 MAIL ADDRESS: STREET 1: 2000 W 41ST ST CITY: BALTIMORE STATE: MD ZIP: 21211 10-Q 1 1ST QTR 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE [X] SECURITIES EXCHANGE ACT OF 1934 For the Quarterly period ended March 31, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________to__________. Commission File Number: 033-69482 SINCLAIR BROADCAST GROUP, INC. (Exact name of Registrant as specified in its charter) Maryland 52-1494660 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 2000 W. 41st Street 21211 Baltimore, Maryland 21211 (Address of principal executive offices) (410) 467-5005 (Registrant's telephone number including area code) None (Former name, former address and former fiscal year - if changed since last report) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes __X__ No ____ As of May 14, 1996, there were 6,273,000 shares of Class A common stock, $.01 par value, and 28,476,981 shares of Class B common stock, $.01 par value, of the Registrant issued and outstanding. SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES Form 10-Q For the Quarter Ended March 31, 1996 TABLE OF CONTENTS Part I. Financial Information Page Item 1 Consolidated Financial Statements Consolidated Balance Sheets December 31, 1995 and March 31, 1996 3 Consolidated Statements of Operations three months ended March 31, 1995 and 1996 4 Consolidated Statements of Stockholders' Equity three months ended March 31, 1996 5 Consolidated Statements of Cash Flows three months ended March 31, 1995 and 1996 6 Notes to Consolidated Financial Statements 7 Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations (to be completed) 11 Signature 15 Item 6 Exhibits SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (dollars in thousands) December 31, March 31, 1995 1996 ASSETS CURRENT ASSETS: Cash and cash equivalents $112,450 $97,420 Accounts receivable, net of allowance for doubtful accounts 50,022 41,148 Current portion of program contract costs 18,036 17,636 Deferred barter costs 1,268 1,688 Prepaid expenses and other current assets 1,972 2,355 Deferred tax assets 4,565 5,279 Total current assets 188,313 165,526 PROPERTY AND EQUIPMENT, net 42,797 44,880 PROGRAM CONTRACT COSTS, less current portion 19,277 15,858 LOANS TO OFFICERS AND AFFILIATES, net 11,900 11,856 NON-COMPETE AND CONSULTING AGREEMENTS, net 30,379 25,199 DEFERRED TAX ASSET 16,462 17,770 OTHER ASSETS 27,355 30,536 ACQUIRED INTANGIBLE BROADCASTING ASSETS, net 268,789 298,355 Total Assets $605,272 $609,980 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 2,187 $ 2,130 Income taxes payable 3,944 2,729 Accrued liabilities 20,720 30,373 Current portion of long-term liabilities- Notes payable and commercial bank financing 1,133 1,235 Capital leases payable 524 441 Notes and capital leases payable to affiliates 1,867 1,907 Program contracts payable 26,395 24,542 Deferred barter revenues 1,752 2,080 Total current liabilities 58,522 65,437 LONG-TERM OBLIGATIONS: Notes payable and commercial bank financing 400,644 400,000 Capital leases payable 44 - Notes and capital lease payable to affiliates 13,959 13,716 Program contracts payable 30,942 30,213 Other long-term liabilities 2,442 2,395 Total liabilities 506,553 511,761 MINORITY INTEREST IN CONSOLIDATED SUBSIDIARY 2,345 2,303 COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY: Preferred stock, $.01 par value, 5,000,000 shares authorized and -0- outstanding - - Class A Common Stock, $.01 par value, 35,000,000 shares authorized and -0- and 5,960,000 shares issued and outstanding 58 60 Class B Common Stock, $.01 par value, 35,000,000 shares authorized and 28,790,000 shares issued and outstanding 290 288 Additional paid-in capital 116,089 116,089 Accumulated deficit (20,063) (20,521) Total stockholders' equity 96,374 95,916 Total Liabilities and Stockholders' Equity $605,272 $609,980 SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (dollars in thousands) Three Months Ending March 31, March 31, 1995 1996 REVENUES: Station broadcast revenues, net of agency commissions $39,136 $44,176 Revenues realized from barter arrangement 3,559 3,593 Total revenues 42,695 47,769 OPERATING EXPENSES: Program and production 6,862 7,648 Selling, general and administrative 8,449 9,292 Expenses realized from barter arrangements 3,116 2,931 Amortization of program contract costs and net realizable value adjustments 6,555 7,717 Depreciation and amortization of property and equipment 1,586 1,465 Amortization of acquired intangible broadcasting assets and other assets 11,782 10,677 Total operating expense 38,350 39,730 Broadcast operating income 4,345 8,039 OTHER INCOME (EXPENSE): Interest expense (9,968) (10,896) Interest income 443 1,723 Other income (expense) 114 253 Net loss before provision for income taxes (5,066) (881) INCOME TAX BENEFIT 2,523 423 Net loss $(2,543) $(458) NET LOSS PER COMMON SHARE $(.09) $(.01) WEIGHTED AVERAGE SHARES OUTSTANDING (in thousands) 29,000 34,750 SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY FOR THE THREE MONTHS ENDING MARCH 31, 1996 (dollars in thousands) Earnings Total Class A Class B Additional (Accumu- Stock- Preferred Common Common Paid-In lated Holders' Stock Stock Stock Capital Deficit) Equity BALANCE, December 31, 1995 as previously reported $ - $ 58 $ 290 $116,089 $(20,063) $ 96,374 Class B shares converted to Class A shares - 2 (2) - - - Net loss - - - - (458) (458) BALANCE, March 31, 1996 $ - $ 60 $ 288 $116,089 $ (20,521) $ 95,916 SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (dollars in thousands) Three Months Ending March 31, March 31, 1995 1996 CASH FLOW FROM OPERATING ACTIVITIES: Net loss $ (2,543) $ (458) Adjustments to reconcile net loss to net cash flows from operating activities- Depreciation and amortization of property and equipment 1,586 1,465 Amortization of acquired intangible broadcast assets, non-compete and consulting agreements 11,782 10,677 Amortization of program contract costs and net realizable value adjustments 6,555 7,717 Deferred tax benefit (2,523) (3,159) Changes in assets and liabilities, net of effect of acquisitions and dispositions- Decrease in receivables, net 5,430 8,874 (Increase) in refundable income taxes (28) - (Decrease) increase in prepaid expenses and other current assets 4,772 (383) Increase in accounts payable and accrued liabilities 299 9,596 (Decrease) in income taxes payable (6,043) (1,215) (Increase) in other assets and acquired intangible broadcast assets (1,579) (61) Net effect of change in deferred barter revenues and deferred barter costs (15) (92) Decrease in other long term liabilities (47) (47) Decrease (increase) in minority interest 21 (42) Payments on program contracts payable (5,632) (6,433) Net cash for from operating activities 12,035 26,439 CASH FLOW FROM INVESTING ACTIVITIES: Acquisition of property and equipment, net of disposal and lease obligations assumed (383) (1,272) Payments for acquisition of television stations (55,500) (34,726) Payments for acquisition of non-license assets (46,500) - Payments for consulting and non-compete agreements (1,000) (50) Payments for purchase option (1,000) - Proceeds from disposal of property and equipment 2,000 - Repayments of loans to officers and affiliates 282 44 Payments relating to future acquisitions - (4,593) Net cash flow used in investing activities (102,101) (40,597) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from notes payable and commercial bank financing 125,000 - Repayment of notes payable, commercial bank financing and capital leases (30,791) (669) Repayments of notes and capital leases to affiliates (169) (203) Net cash flow from/(used in)financing activities 94,040 (872) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 3,974 (15,030) CASH AND CASH EQUIVALENTS, beginning of period 2,446 112,450 CASH AND CASH EQUIVALENTS, end of period $ 6,420 $ 97,420 SUPPLEMENTAL DISCLOSURE OF CASH PAID FOR: Interest $ 6,850 $ 609 Income Taxes $ 6,107 $ 4,037 SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Basis of Presentation The accompanying consolidated financial statements include the accounts of Sinclair Broadcast Group, Inc. (SBG), Chesapeake Television, Inc. (WBFF), WPGH, Inc. (WPGH), WTTE Channel 28, Inc. (WTTE), WCGV, Inc. (WCGV), WTTO, Inc. (WTTO), WLFL, Inc. (WLFL), WTVZ, Inc. (WTVZ), WSMH, Inc. (WSMH) and all other subsidiaries. The companies mentioned above, which are collectively referred to hereafter as "the Company or Companies", own and operate television stations in Baltimore, Maryland; Pittsburgh, Pennsylvania; Columbus, Ohio; Milwaukee, Wisconsin; Birmingham, Alabama; Raleigh/Durham, North Carolina; Norfolk, Virginia and Flint, Michigan. Additionally, included in the accompanying consolidated financial statements are the results of operations of certain television stations pursuant to local marketing agreements (LMA's). These markets are Pittsburgh, Pennsylvania, Baltimore, Maryland, Milwaukee, Wisconsin, Raleigh/Durham, North Carolina, Birmingham, Alabama and Tuscaloosa, Alabama. Interim Financial Statements The consolidated financial statements for the three months ended March 31, 1995 and 1996 are unaudited, but in the opinion of management, such financial statements have been presented on the same basis as the audited consolidated financial statements and include all adjustments, consisting only of normal recurring adjustments necessary for a fair presentation of the financial position and results of operations, and cash flows for these periods. As permitted under the applicable rules and regulations of the Securities and Exchange Commission, these financial statements do not include all disclosures normally included with audited consolidated financial statements, and, accordingly, should be read in conjunction with the consolidated financial statements and notes thereto as of December 31, 1994, and 1995 and for the years then ended. The results of operations presented in the accompanying financial statements are not necessarily representative of operations for an entire year. Programming The Companies have agreements with distributors for the rights to television programming over contract periods which generally run from one to seven years. Contract payments are made in installments over terms that are generally shorter than the contract period. Each contract is recorded as a liability when the license period begins and the program is available for its first showing. The portion of the program contracts payable due within one year is reflected as a current liability in the accompanying consolidated financial statements. The rights to program materials are reflected in the accompanying consolidated balance sheets at the lower of amortized cost or estimated net realizable value. Estimated net realizable values are based upon management's expectation of future advertising revenues net of sales commissions to be generated by the program. Amortization of program contract costs is generally computed under either four year accelerated method or based on usage, whichever yields the greater amortization for each program. Program contract costs, estimated by management to be amortized in the succeeding year, are classified as current assets. 2. ACQUISITIONS: In July 1995, the Company exercised its option to purchase the license and non-license assets of the television station WSMH in Flint, Michigan for an option exercise price of $1.0 million. In February 1996, the Company consummated the acquisition for a purchase price of $35.4 million at which time the balance due of $34.4 million was paid from the Company's existing cash balance. This transaction was recorded as a purchase, whereby the assets and liabilities were recorded at their fair market value. In January 1996, the Company entered into a purchase agreement to acquire the license and non-license assets of the television station WYZZ in Peoria, Illinois and made a cash payment of $1.0 million to be applied against cash proceeds to the seller upon closing. The Company plans to consummate the transaction following FCC approval for a purchase price of approximately $21.0 million. In March 1996, the Company entered into an agreement to acquire the outstanding stock of Superior Communication, Inc. (Superior) and made a cash payment of $3.2 million to be applied against cash proceeds to the stockholders of Superior upon closing. Superior owns the license and non-license assets of the television station KOCB in Oklahoma City, Oklahoma and WDKY in Lexington, Kentucky. In May 1996, the Company consummated the acquisition for a purchase price of approximately $63.0 million. 3. CONTINGENCIES AND OTHER COMMITMENTS: Lawsuits and claims are filed against the Companies from time to time in the ordinary course of business. These actions are in various preliminary stages, and no judgements or decisions have been rendered by hearing boards or courts. Management, after reviewing developments to date with legal counsel, is of the opinion that the outcome of such matters will not have a material adverse effect on the Companies' financial position or results of operations. 4. SUBSEQUENT EVENTS: In April 1996, the Company entered into an agreement to purchase certain non-license assets of River City Broadcasting, L.P. which is an owner and operator of various television and radio stations (RCB) and made a down payment of $60.0 million to be applied against the purchase price at closing of approximately $1.02 billion. Simultaneously, the Company entered into an option agreement to purchase certain other license and non-license assets of River City Broadcasting, L.P. for an option purchase price of $150 million. In May 1996, in response to Department of Justice concerns expressed about the Company's proposed acquisition of certain assets of River City Broadcasting, the Company entered into a modification agreement eliminating both Sinclair's option to acquire the assets of WSYX-TV in Columbus, Ohio and the agreements to enter into a related time brokerage agreement. Sinclair is negotiating a separate option agreement with River City for the acquisition of the assets of WSYX-TV which would result in an increase in the originally reported option price for the assets of WSYX and a corresponding reduction in the originally reported purchase price for the other River City assets. As of the date of this filing, the modified purchase price has not been finalized. In conjunction with the RCB acquisition, the Company entered into an agreement to purchase the non-license assets of KRRT, Inc., a television station in San Antonio, Texas, for a purchase price of $29.6 million. In connection with the aforementioned acquisitions the Company will have available for grant options granted options to purchase approximately 2.1 million shares of Class A Common Stock with an exercise price approximating fair market value on the date of the grant. The Company intends to finance the above transactions with approximately $1.1 billion of senior bank debt and the issuance of $115 million of Series A Exchangeable Preferred Stock. Pending shareholder approval the Series A Exchangeable Preferred Stock will be convertible into 4,181,000 of Class A Common Stock. Item 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following information should be read in conjunction with the unaudited consolidated financial statements and notes thereto included in this Quarterly Report and the audited financial statements and Management's Discussion and Analysis contained in the Company's Form 10-K for the fiscal year ended December 31, 1995. RESULTS OF OPERATIONS Comparison of three months ended March 31, 1994 to the three months ended March 31, 1995. Three months ended March 31, 1995 1996 (Dollars in thousands) STATEMENT OF OPERATIONS DATA: Net broadcast revenues $39,136 $44,176 Barter revenues 3,559 3,593 Total revenues 42,695 47,769 Operating expenses excluding depreciation and amortization 18,427 19,871 Depreciation and amortization 19,923 19,859 Broadcast operating income 4,345 8,039 Interest expense (9,968) (10,896) Interest and other income 557 1,976 Net loss before benefit for income taxes (5,066) (881) Income tax benefit 2,523 423 Net loss $(2,543) $ (458) Net loss per common share $ (.09) $ (.01) Weighted average shares outstanding 29,000 34,750 OTHER DATA: Broadcast cash flow (a) $19,688 $22,800 Broadcast cash flow margin 50.3% 51.6% Operating cash flow (b) $18,636 $21,465 Operating cash flow margin 47.6% 48.6% Program contract payments $ 5,632 $ 6,433 Corporate expense 1,052 1,335 Net broadcast revenues increased to $44.2 million for the three months ended March 31, 1996 from $39.1 million for the three months ended March 31, 1995, or 13.0%. When including the effects of non-cash barter transactions, net broadcast revenues for the three months ended March 31, 1996 increased by 11.9%. These increases in net broadcast revenues were primarily a result of the LMA transactions entered into with WABM and WDBB after the first quarter of 1995 ( the "1995 LMA's" ) and the acquisition of WSMH in Flint, Michigan in March 1996, as well as double digit revenue growth in the Company's largest markets. This revenue growth is generally due to a substantial increase in ratings in prime access combined with a strong national movie and local foreign automotive business. Operating expenses excluding depreciation and amortization increased from $18.4 million for the three months ended March 31, 1995 to $19.8 million for the three months ended March 31, 1996, or 7.6%. This increase is primarily due to an increase in LMA fees associated with the 1995 LMA's and an increase in corporate overhead associated with being a public company, both totaling approximately $.8 million. Excluding the affect of the above increases operating expenses increased only 3.2% from the same period of the prior year. Broadcast operating income increased from $4.3 million for the three months ended March 31, 1995 to $8.0 million for the three months ended March 31, 1996, or 86.0%. Interest expense increased from $10.0 million for the three months ended March 31, 1995 to $10.9 million for the three months ended March 31, 1996 or 9.0%. This increase is primarily due to a l.5% increase in the weighted average interest rate on relatively the same level of debt outstanding during both periods, following the replacement of senior bank debt with the proceeds of the public debt offering in August 1995. Interest and other income increased from $.6 million for the three months ended March 31, 1995 to $2.0 million for the three months ended March 31, 1996 or 23.3%. This increase resulted primarily from the excess cash balances remaining from the proceeds of the public debt offering in August 1995. Net loss for the three months ended March 31, 1996 was $458 thousand or ($.01) per share compared to a loss of $2.5 million or ($.09) per share for the three months ended March 31, 1995. Broadcast cashflow increased to $22.8 million for the three months ended March 31, 1996 from $19.7 million for the three months ended March 31, 1995, or 15.8%. Operating cashflow increased to $21.5 million for the three months ended March 31, 1996 from $18.6 million for the three months ended March 31, 1995, or 15.2%. Liquidity and Capital Resources The capital structure of the Company consists of the Company's outstanding long-term debt and stockholders' equity. Th stockholders' equity consists of common stock, additional paid in capital and accumulated deficit. The Company's balance of cash and cash equivalents was $97.4 million as of March 31, 1996. The Company's primary source of liquidity is cash provided by operations. After giving effect for the $60.0 million down payment for the acquisition of River City Broadcasting, L.P., in April 1996, the Company's cash balance would have been $37.4 million. Net cash flows from operating activities increased from $12.0 million for the three months ending March 31, 1995 to $26.4 million for the three months ending March 31, 1996. The Company paid income taxes of $6.1 million during the three months ending March 31, 1995 compared to $4.0 million for the three months ending March 31, 1996 due to anticipated tax benefits generated by its 1996 acquisitions. The Company made interest payments on outstanding indebtedness of $6.9 million during the three months ending March 31, 1995 compared to $0.6 million for the three months ending March 31, 1996 as payments due for the public debt offering were made on April 1, 1996. Program rights payments increased from $5.6 million for the three months ending March 31, 1995 to $6.4 million for the three months ending March 31, 1996, primarily as a result of the acquisitions. Net cash flows used in investing activities was $102.1 million for the three months ending March 31, 1995 compared to $40.6 million for the three months ending March 31, 1996. During the three months ending March 31, 1996, the Company purchased the license and non-license assets of WSMH in Flint, Michigan for $35.4 million at which time the balance due to the seller of $34.4 million was paid from the Company's existing cash balance. In January 1996, the Company made a cash payment of $1.0 million relating to the acquisition of the license and non-license assets of WYZZ in Peoria, Illinois. In March 1996, the Company made a cash payment of $3.2 million relating to the purchase for the outstanding stock of Superior Communications, Inc. (Superior). Superior owns the license and non-license assets of WDKY in Lexington, Kentucky and KOCB in Oklahoma City, Oklahoma. In May 1996, the Superior acquisition was consummated for a purchase price of $63.0 million. Net cash flows from financing activities was $94.0 million for the three months ending March 31, 1995 compared to amounts used of $0.9 million for the three months ending March 31, 1996. In May 1996, the Company utilized available indebtedness of $61.0 million under Facility B of the Bank Credit Agreement in connection with the acquisition of Superior. Simultaneously with the acquisition , the Company repaid indebtedness of $25.0 million under Facility B of the Bank Credit Agreement from the Company's existing cash balance. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. SINCLAIR BROADCAST GROUP, INC. by:____________________________________ David B. Amy Chief Financial Officer (Principal Accounting Officer) Index to Exhibits Exhibit Number Description - ------ ----------- 10.67 Asset Purchase Agreement by and between River City Broadcasting, L.P. as seller and Sinclair Broadcast Group, Inc. as buyer dated as of April 10, 1996. 10.68 Option Agreement by and among River City Broadcasting, L.P., as sellers and Sinclair Broadcast Group, Inc. dated as of April 10, 1996. 10.69 Modification Agreement by and between River City Broadcast Group, L.P. as seller, and Sinclair Broadcast Group, Inc. as buyer, with reference to Asset Purchase Agreement dated as of April 10, 1996. EX-27 2 FINANCIAL DATA SCHEDULE
5 1000 3-MOS DEC-31-1996 MAR-31-1996 5358 92062 41148 1166 0 165526 66420 21541 609980 65437 400000 0 0 348 95568 609980 0 47769 0 39730 0 0 10869 (881) 423 (458) 0 0 0 (458) (.01) (.01)
EX-1 3 ASSET PURCHASE AGREEMENT ASSET PURCHASE AGREEMENT THIS ASSET PURCHASE AGREEMENT (this "Agreement") is dated as of April 10, 1996, and is by and between River City Broadcasting, L.P., a limited partnership duly formed under the laws of the State of Delaware ("Seller"), and Sinclair Broadcast Group, Inc., a Maryland corporation ("Buyer"). RECITALS WHEREAS, Seller (i) owns certain assets used in connection with the business and operations of (a) Television Stations KOVR(TV), Stockton, California, WTTV(TV), Bloomington, Indiana, WTTK(TV), Kokomo, Indiana, KDSM-TV, Des Moines, Iowa, KDNL-TV, St. Louis, Missouri, WLOS-TV, Asheville, North Carolina, WFBC(TV), Anderson, South Carolina, and KABB-TV, San Antonio, Texas (collectively, the "TV Stations") and (b) Radio Stations KBLA(AM), Santa Monica, California, WVRV(FM), East St. Louis, Illinois, WJCE-FM, Russellville, Kentucky, KMEZ-FM, Belle Chasse, Louisiana, WSMB(AM), New Orleans, Louisiana, WLMG-FM, New Orleans, Louisiana, WWL(AM), New Orleans, Louisiana, KPNT(FM), Sainte Genevieve, Missouri, WBEN(AM), Buffalo, New York, WMJQ-FM, Buffalo, New York, WWKB(AM), Buffalo, New York, WKSE-FM, Niagara Falls, New York, WGBI(AM), Scranton, Pennsylvania, WGGY(FM), Scranton, Pennsylvania, WILK(AM), Wilkes Barre, Pennsylvania, WKRZ-FM, Wilkes Barre, Pennsylvania, WOGY-FM, Germantown, Tennessee, WJCE(AM), Memphis, Tennessee, WRVR-FM, Memphis, Tennessee, WLAC(AM), Nashville, Tennessee, and WLAC-FM, Nashville, Tennessee (collectively, the "Radio Stations"); (ii) operates pursuant to local marketing agreements listed on Schedule 1.1(c)(1) (the "LMAs") Television Station KRRT(TV), Kerrville, Texas and Radio Station WXPX(AM), West Hazelton, Pennsylvania (collectively, the "LMA Stations"); (iii) sells advertising time pursuant to joint sales agreements listed on Schedule 1.1(c)(2) (collectively, the "JSAs") with respect to Radio Stations WGR(AM), Buffalo, New York, WWWS(AM), Buffalo, New York and WWSH(FM), Pittston, Pennsylvania (collectively, the "JSA Stations"); and (iv) holds an option pursuant to that certain option agreement listed on Schedule 1.1(c)(3) (collectively, the "Station Options") to purchase the assets or stock of Keymarket of South Carolina, Inc., a South Carolina corporation ("KMSC"), which owns Radio Stations WFBC(AM), Greenville, South Carolina, WFBC-FM, Greenville, South Carolina, and WORD(AM), Spartanburg, South Carolina (collectively, the "Option Stations"; the TV Stations and the Radio Stations and any LMA Station or any Option Station that is purchased by Seller prior to the Closing Date or any other television or radio station that is purchased by Seller as contemplated in Schedule 2.2(a)(1), or with the consent of Buyer, are hereinafter collectively referred to as the "Owned Stations" and individually as an "Owned Station"; the Owned Stations together with the LMA Stations are hereinafter collectively referred to as the "Stations" and individually as a "Station"); and WHEREAS, Seller owns all of the issued and outstanding stock of Sandia Peak Broadcasters, Inc., a Delaware corporation ("Sandia"), a 40% general partnership interest in Twin Peaks Radio, a New Mexico general partnership ("Twin Peaks"), and a 1% general partnership interest in Twin Peaks Radio License Partnership, a Missouri general partnership ("Twin Peaks License Partnership") (collectively, the "RCB Twin Peaks Equity Interest"), with the remaining 60% general partnership interest in Twin Peaks Radio being owned by Sandia and the remaining 99% general partnership interest in Twin Peaks License Partnership being owned by Twin Peaks Radio; and Twin Peaks Radio owns certain assets in connection with the business and operations of, and Twin Peaks License Partnership holds certain FCC licenses for, Radio Stations KZSS(AM), Albuquerque, New Mexico, KZRR(FM), Albuquerque, New Mexico and KLSK(FM), Santa Fe, New Mexico (collectively, referred to herein as the "New Mexico Stations"); and pursuant to the terms of the Option Agreement (as defined below), Buyer will receive an option to acquire the RCB Twin Peaks Equity Interest (although none of the assets of the New Mexico Stations shall be transferred hereunder, for purposes of the representations and warranties set forth in this Agreement, the New Mexico Stations shall be deemed to be "Radio Stations" and the assets of the New Mexico Stations that are of the same type as those described in Section 1.1 hereof shall be deemed to be "Station Assets"); provided, however, to the extent Seller has sold the New Mexico Stations or the RCB Twin Peaks Equity Interest prior to Closing, no representations or warranties shall be made hereunder or under the Option Agreement with respect to the New Mexico Stations or the RCB Twin Peaks Equity Interest as contemplated hereunder, and Buyer acknowledges and agrees that it waives its right to acquire the RCB Twin Peaks Equity Interest under the Option Agreement and Seller shall have no obligation to sell, and Buyer shall have no obligation to purchase, the RCB Twin Peaks Equity Interest. WHEREAS, Seller owns certain assets (the "Columbus Assets") used in connection with the business and operations of WSYX(TV), Columbus, Ohio (the "Columbus Station"), and pursuant to the terms of the Option Agreement, Buyer will receive an option to acquire certain of the assets owned by Seller relating to the Columbus Station, including the License Assets (as defined below) relating to the Columbus Station; the assets of the Columbus Station (other than (i) the collective bargaining agreements and the employment agreements relating to employees working for the Columbus Station who will be hired by Buyer pursuant to the terms hereof and (ii) the programming agreements and other operating contracts of the Columbus Station (excluding, however, real property leases and network affiliation agreements), relating to the Columbus Station listed on Schedules 1.1(d) and 1.1(e)) will not be transferred hereunder; for purposes of the representations and warranties, indemnification provisions and Sections 2.2, 8.10 and 10.20 of this Agreement, the Columbus Station shall be deemed to be a "TV Station" and the Columbus Station Assets (such term, when used herein, to have the meaning set forth in the Option Agreement) shall be deemed to be "Station Assets"); and WHEREAS, Seller desires to sell, assign and transfer, and Buyer desires to acquire, (i) certain assets used or held for use in connection with the operation of the Owned Stations described in more detail below (other than the assets specifically excluded as provided in this Agreement) and (ii) all of the rights of Seller under each LMA, each JSA and each Station Option and all other assets of Seller used or held for use in connection with any LMA Station and any JSA Station; NOW, THEREFORE, in consideration of the foregoing and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending legally to be bound, agree as follows: ARTICLE 1 TRANSFER OF ASSETS 1.1 Transfer of Assets. Upon and subject to the terms and conditions stated in this Agreement, on the Closing Date (as defined in Section 2.3 hereof), Seller shall convey, transfer and deliver to Buyer, and Buyer shall acquire from Seller, all of Seller's right, title and interest in and to all of the assets and properties of Seller, real and personal, tangible and intangible, which are owned and used by Seller in connection with the business and operations of the Owned Stations, including, without limitation, rights under contracts and leases, real and personal property, plant and equipment, inventories and intangibles, contracts, rights and other assets owned by Seller relating to the LMA Stations and the JSA Stations; the Station Options; and certain specified agreements relating to the Columbus Station, but excluding the Excluded Assets described in Section 1.2 hereof. The rights, assets, property and business of Seller with respect to the Stations to be transferred to Buyer pursuant to this Section 1.1 are hereinafter referred to as the "Station Assets." The Station Assets include the following, except to the extent excluded pursuant to Section 1.2: (a) Tangible Personal Property. All equipment, vehicles, furniture, office materials and supplies, spare parts and other tangible personal property of every kind and description owned as of the date of this Agreement by Seller and used in connection with the business and operations of any Station, or any JSA Station, including, without limitation, those shown on Schedule 1.1(a) to this Agreement, and any additions, improvements, replacements and alterations thereto made between the date of this Agreement and the Closing Date, but excluding all such property which is consumed, retired or disposed of by Seller in the ordinary course of its business between the date of this Agreement and the Closing Date or as otherwise permitted by this Agreement. (b) Real Property. (i) Certain real property owned by Seller listed on Schedule 1.1(b) to this Agreement (the "Real Property"); (ii) all buildings, structures, improvements and transmitting towers and other fixtures thereon (the "Real Property Improvements") owned by Seller and used in the business and operations of any Station or any JSA Station; (iii) the leaseholds and other interests in real property held by Seller (the "Leasehold Interests") listed and so designated on Schedule 1.1(b) to this Agreement; and (iv) real property, and all buildings, structures and improvements thereon and leasehold interests that are acquired by Seller between the date hereof and the Closing Date. (c) LMA, JSAs and Option Agreements. All agreements to which Seller is a party for the (i) local management of any LMA Station that are listed on Schedule 1.1(c)(1) to this Agreement, (ii) joint sales of advertising time on any JSA Station that are listed on Schedule 1.1(c)(2), (iii) purchase of any Option Station that are listed on Schedule 1.1(c)(3) to this Agreement, each to the extent unperformed as of the Closing Date, and agreements of Seller entered into in the ordinary course of business between the date hereof and the Closing Date for the local management of, joint sales of advertising time on, or purchase of, any television or radio station. (d) Program Contracts. All program licenses and contracts listed on Schedule 1.1(d), together with any usage reports, under which Seller is authorized to broadcast film or radio product or programs on any Station or the Columbus Station, other than the Excluded Contracts (as defined in Section 1.2(d)), together with all program licenses and contracts that will have been entered into by Seller in the ordinary course of business, between the date of this Agreement and the Closing Date, and all other program licenses and contracts entered into between the date of this Agreement and the Closing Date the making of which by Seller is permitted by this Agreement, to the extent existing as of the Closing Date (collectively, the "Program Contracts"). (e) Other Contracts. All contracts relating to any Station, any JSA Station or the Columbus Station to which Seller, any Owned Station or the Columbus Station is a party, including trade or barter arrangements (in addition to and not included in those set forth in Sections 1.1(b), 1.1(c) and 1.1(d) hereof) (collectively, "Other Contracts"), including all agreements, equipment leases and other leases listed on Schedules 1.1(e) and 3.10 (and on the list of employment agreements delivered to Buyer pursuant to Section 3.10) (as may be entered into, amended, renewed or extended pursuant to Section 5.1) to this Agreement, together with all such contracts that will have been entered into by any Owned Station, by Seller or by the Columbus Station relating to any Station, any JSA Station or the Columbus Station in the ordinary course of business between the date of this Agreement and the Closing Date, and all such other contracts that will have been entered into by any Owned Station, by Seller or by the Columbus Station relating to any Station, any JSA Station or the Columbus Station between the date of this Agreement and the Closing Date, the making of which by Seller is permitted by this Agreement to the extent existing as of the Closing Date. As used in this Agreement, "Contract" means any agreement, lease, arrangement, commitment or understanding, written or oral, expressed or implied, to which an Owned Station, or Seller with respect to any Station or any JSA Station, is a party or is bound. (f) Trademarks, Etc. All trademarks, service marks, patents, trade names, jingles, slogans and logotypes owned and used by Seller in connection with the business and operations of any Owned Station or owned and used by Seller in connection with the business and operations of any LMA Station or any JSA Station as of the date hereof, listed on Schedule 1.1(f) to this Agreement as well as any others acquired by Seller in connection with the operation of any Owned Station, any LMA Station or any JSA Station between the date hereof and the Closing Date (collectively, "Trademarks, Etc."). (g) Programming Copyrights. All program and programming materials and elements of whatever form or nature owned by Seller and used in connection with the business and operations of any Station as of the date hereof, whether recorded on tape or any other substance or intended for live performance, and whether completed or in production, and all related common law and statutory copyrights owned by or licensed to Seller and used in connection with the business and operations of any Station, including, without limitation those set forth on Schedule 1.1(g) to this Agreement together with all such programs, materials, elements and copyrights acquired by Seller between the date hereof and the Closing Date (collectively, the "Programming Copyrights"). (h) Files and Records. All files and other records of Seller relating solely to the business and operations of any Station, any JSA Station, any Option Station and any other Station Assets prior to the Closing, other than account books of original entry and such files and records that are maintained at the corporate offices of Seller's general partner for tax and accounting purposes. (i) Prepaid Items. All deposits and prepaid expenses of Seller with respect to items that are prorated in Section 2.2 below. (j) Financial Statements, Books and Records. Copies of all financial statements (whether internal, compilation, reviewed or audited), including all books, records, accounts, checks, payment records, tax records (including payroll, unemployment, real estate and other tax records) and other such similar books and records, of Seller (or, to the extent Seller owns such materials, of any previous owner) with respect to any Owned Station for the three (3) fiscal years immediately preceding the date hereof in the case of any Owned Station that has been owned by Seller for a period of three years or more and for which such financial statements have been prepared prior to the date hereof and for each of the years (under three years) to the extent reasonably available to Seller in the case of Owned Stations that have been owned by Seller for a period of less than three years prior to the date hereof and all interim periods following the date hereof through and including the Closing. (k) Agreements for Sale of Time. All orders and agreements now existing or entered into by the Stations or by Seller relating to the Stations, the LMA Stations, the JSA Stations or the Columbus Station in the ordinary course of business between the date hereof and the Closing Date for the sale of advertising time on the Stations, the LMA Stations, the JSA Stations or the Columbus Station to the extent unperformed as of the Closing Date. (l) News Materials. All news files, archives, tapes, and other materials stored or used by Seller relating to the news operation of the Owned Stations and owned by Seller relating to the news operation of the LMA Stations, including, but not limited to, any raw film footage and other similar materials, existing as of the date of this Agreement and through the Closing Date, except for any such materials that may be disposed of or consumed in the ordinary course of business. (m) Television Affiliation Agreements, NewVenco and Alliance. All television network affiliation agreements relating to the Stations (the "Affiliation Agreements"), as listed on Schedule 1.1(m), if any, together with all television Affiliation Agreements that will have been entered into by Seller in the ordinary course of business between the date hereof and the Closing Date, and any interest set forth in Schedule 1.1(m) relating to NewVenco, Inc. and Television Alliance Group, Inc. in connection with the applicable affiliation agreement, if any, but excluding any such interest relating to the Columbus Station (the "Other Assets"). (n) Other Assets. All of the assets listed on Schedule 1.1(n) and, except to the extent referenced in Section 1.2(f) below, all of the assets owned by Seller relating to the business and operations of the LMA Stations and the JSA Stations. 1.2 Excluded Assets. Buyer hereby acknowledges and agrees that there shall be excluded from the Station Assets and retained by Seller, to the extent in existence on the Closing Date, the following assets (the "Excluded Assets"): (a) Personal Property Disposed Of. All tangible personal property disposed of or consumed in the ordinary course of the business of Seller between the date of this Agreement and the Closing Date. (b) Insurance, Bonds, Etc. All contracts of insurance and all insurance plans and the assets thereof and all bonds, letters of credit or similar items and any cash surrender value in regard thereto. (c) Claims. Any and all claims of Seller with respect to transactions occurring prior to the Closing Date, including, without limitation, rights and interests of Seller in and to any claims for tax refunds (including, but not limited to, federal, state or local franchise, income or other taxes) and all causes of action and claims of Seller under contracts and with respect to other transactions with respect to events occurring prior to the Closing Date and all claims for other refunds of monies paid to any governmental agency and all claims for copyright royalties for broadcast prior to the Closing Date. (d) Certain Contracts. The agreements listed on Schedule 1.2(d) hereof and the Leases and the Subleases (as defined in Section 7.5 hereof) (the "Excluded Contracts"). (e) Certain Books and Records. Seller's partnership records and other books and records that pertain to internal partnership matters of Seller and Seller's account books of original entry with respect to any Station, any JSA Station, any Option Station and any other Station Assets, and all original accounts, checks, payment records, tax records (including payroll, unemployment, real estate and other tax records) and other similar books, records and information of Seller relating to Seller's operation of the business of any Station, any JSA Station, any Option Station and any other Station Assets prior to Closing, with the proviso that Buyer shall receive on the Closing Date and be allowed to maintain copies of all such records relating to any Station, JSA Station, Option Station or other Station Assets and/or upon a written request for same shall be allowed further access to all excluded records to the extent retained by Seller, at all reasonable times for a period of three (3) years after the Closing Date. (f) License Assets. All (i)(1) licenses and (2) antennae, transmitters, engineering equipment, etc., which are necessary and required by the Federal Communications Commission (the "FCC") or otherwise and as referenced on Schedule 1.2(f) hereof (and which are included in the Option Agreement referred to in Sections 7.7 and 8.5 hereof), for the proper, legal and effective operation of any Owned Station as a broadcast facility, (ii) FCC authorizations of Seller or River City License Partnership, a Missouri general partnership ("Licensee"), all of which have been transferred to, or are held by, Licensee with respect to any Owned Station and are referenced on Schedule 1.2(f), and all applications therefor, together with any renewals, extensions, or modifications thereof and additions thereto (the "FCC Authorizations"), (iii) all real property owned by Seller referenced on Schedule 1.2(f) to this Agreement, and all buildings, structures and improvements thereon, used in the business and operations of any Station or any JSA Station and all other leaseholds and other interests in real property held by Seller referenced on Schedule 1.2(f) to this Agreement and real property, and all buildings, structures and improvements thereon (the "Excluded Real Property"), (iv) interests in certain entities referenced on Schedule 1.2(f), (v) call signs referenced on Schedule 1.2(f), (vi) retransmission consent agreements referenced on Schedule 1.2(f), (vii) other assets and contracts referenced on Schedule 1.2(f) and (viii) FCC logs and other FCC-related records that relate to the operations of the Stations ((i)-(viii) above, together with any other items more particularly described and defined in the Option Agreement as "License Assets" are sometimes collectively referred to herein as "License Assets"). (g) Receivables. Except as set forth in Section 10.20, all notes and accounts receivable and other receivables of Seller relating to or arising out of the operation of any Station, any JSA Station or the Columbus Station prior to Closing, including, without limitation, under network affiliation agreements (collectively, the "Receivables"). (h) Certain Prepaid Expenses. The deposits and prepaid expenses of Seller with respect to the items that are not subject to adjustment under Section 2.2 hereof. (i) Cash. All cash, cash equivalents and cash items of any kind whatsoever, certificates of deposit, money market instruments, bank balances, and rights in and to bank accounts, Treasury bills and marketable securities and other securities of Seller. (j) Pension Assets, Etc. Except as otherwise provided in Section 10.3, pension, profit sharing, retirement, bonus, stock purchase, savings plans and trusts, 401(k) plans, health insurance plans (including any insurance contracts or policies related thereto), and the assets thereof and any rights thereto, and all other plans, agreements or understandings to provide employee benefits of any kind for employees of Seller. (k) River City Name. All rights to and goodwill in the name "River City Broadcasting" or any logo, variation or derivation thereof. (l) Interests in Certain Subsidiaries. All of Seller's interests in the subsidiaries of Seller described on Schedule 1.2(l). (m) Columbus Station Assets. The assets owned by Seller relating to the Columbus Station which are the subject of the Option Agreement, including real property leases and the affiliation agreements (except for the collective bargaining agreements and employment agreements relating thereto and the programming agreements and other operating contracts described on Schedules 1.1(d) and 1.1(e)). (n) Goodwill. All of Seller's goodwill in and going concern value associated with the Stations. 1.3 Liabilities. (a) Liens. The Station Assets shall be sold and conveyed to Buyer free and clear of all liens, security interests and encumbrances except (i) all matters of record including, without limitation, those matters disclosed on Schedules 1.3 and 3.6 hereto as "continuing" and, including, without limitation, the rights of lessors with respect to any leasehold interests in real property or operating leases for personal property as disclosed in Schedules 1.1(b) and 1.1(e); (ii)(1) liens or encumbrances on the Real Property, Real Property Improvements and Leasehold Interests, currently of record; and (2) other liens or encumbrances on the Real Property, Real Property Improvements and Leasehold Interests included in the Station Assets that with respect to clause (ii)(2) hereof do not materially affect the value or the current or continued use and enjoyment (to the extent such continued use and enjoyment conforms with current use and enjoyment) thereof in the operation of the Station Assets; (iii) liens for taxes not yet due and payable; and (iv) the Assumed Liabilities (as hereinafter defined) (all of the foregoing in clauses (i) through (iv) are sometimes collectively referred to herein as "Permitted Encumbrances" but shall be deemed to exclude any judgment liens, mortgages, capital leases or security interests or trust arrangements providing for similar effect (including, without limitation, purchase money mortgages or purchase money interests granted by Seller in favor of any third party securing obligations for borrowed money)). (b) Assumption of Liabilities. (i) Buyer agrees that, on the Closing Date, Buyer shall assume, undertake and agree to pay, satisfy, perform, discharge and be liable for and Seller shall not be liable for (1) the liabilities and obligations of Seller as the same shall exist on the Closing Date that arise out of and related to the ownership and operation of the Station Assets (including under the contracts assigned pursuant to Sections 1.1(b), (c), (d), (e) and (m), including the collective bargaining agreements referenced on Schedule 3.10, and any contracts that are entered into after the date hereof as permitted by this Agreement and those liabilities and obligations referred to in Section 10.3 hereof) on and after the Closing Date; (2) any liability or obligation of Buyer for any federal, state or local income or other taxes or, to the extent of any prorations pursuant to Section 2.2 hereof, for real estate or payroll taxes attributable to any period of time on or after the Closing Date and any liability or obligation for real estate and payroll taxes of Seller to the extent a proration was provided for in Section 2.2 hereof attributable to the period of time prior to the Closing; (3) any liability or obligation to any former employee of Seller who has been hired by Buyer, including any employee of any Station or any JSA Station who has been hired by Buyer, attributable to any period of time on or after the Closing Date; (4) any liability or obligation arising out of any litigation, proceeding or claim by any person or entity relating to the business or operations of any Station, JSA Station or any of the Station Assets with respect to any events or circumstances that happen or exist on or after the Closing Date; (5) any severance or other liability arising out of the termination of any employee's employment with or by Buyer on or after the Closing Date; and (6) any duty, obligation or liability relating to any pension, 401(k) or other similar plan, agreement or arrangement provided by Buyer to any employee or former employee of Seller on or after the Closing Date (all of the foregoing, together with other liabilities or obligations expressly assumed by Buyer hereunder, are referred to herein collectively as the "Assumed Liabilities"). (ii) Buyer shall not assume or be liable for (1) any liability or obligation arising out of the management, operation or sales or other obligations in connection with any LMA Station or any JSA Station, or any of the Station Assets or the License Assets prior to the Closing Date (except for the Assumed Liabilities); (2) any liability or obligation under any contracts not (except for Assumed Liabilities) expressly assumed by Buyer hereunder (subject to Section 1.3(c) below with respect to Consent Contracts); (3) any liability or obligation of Seller for any federal, state or local income or other taxes (subject, in the case of real estate or payroll taxes, to the proration provided for in Section 2.2 hereof) attributable to any period of time prior to the Closing; (4) any liability or obligation with respect to the Excluded Contracts; (5) any liability or obligation to any employee or former employee of Seller attributable to any period of time prior to the Closing Date (except as otherwise set forth herein); and (6) any liability or obligation of Seller arising out of any litigation, proceeding or claim by any person or entity relating to the Station Assets with respect to events or circumstances that happened or exist prior to the Closing Date, whether or not such litigation, proceeding or claim is pending, threatened, or asserted before, on or after the Closing Date. It is agreed and understood by the Parties that the post-closing liability of Seller to Buyer is limited in the manner described in Section 9.4 hereof and shall be paid solely through the mechanism of the off-set against the Option Exercise Price as more specifically described in Section 9.4 hereof. All liabilities and obligations arising out of the Station Assets that do not constitute Assumed Liabilities shall be retained by Seller and are referred to herein as "Retained Liabilities". To the extent, if any, Seller makes a payment to Buyer as a result of any proration or adjustment pursuant to Section 2.2 hereof, Buyer shall then assume and shall be obligated to pay such obligations and liabilities for which such proration or adjustment was made pursuant to Section 2.2. (c) Consents to Contracts. (i) If any required approval of or consent to the transfer and assignment to Buyer of any contract or equity interest included in the Station Assets is not obtained on or before the Closing Date, obtaining such consent shall not constitute a condition precedent to Buyer's obligations to close hereunder. Unless Buyer otherwise requests of Seller, all such contracts shall be assigned on the Closing Date. If Buyer requests, Seller shall retain such contracts in respect of which consents have not been obtained (the "Consent Contracts") until the earlier of (1) the expiration thereof (without any extension thereunder) and (2) the final Option Closing Date (as defined in the Option Agreement), or to the extent any such Consent Contract does not relate to the Stations, Seller shall retain such Consent Contract until the Columbus Option Closing Date. Buyer agrees that on such date, Seller will assign to Buyer, and Buyer will assume from Seller, such Consent Contracts that have not yet been transferred to Buyer regardless of whether consent has been obtained in connection therewith, all without any liability or obligation of Seller. Between the Closing Date and the date on which such Consent Contract is assumed as set forth above in this paragraph, Seller shall use its commercially reasonable efforts to obtain all required consents (which, except as provided in clause (c)(ii) below shall not require the expenditure by Seller of any expenses, except for ministerial processing fees in connection with assignment of such contracts as set forth in such contracts and Seller's out-of-pocket expenses to its attorney or other agents incurred in connection with obtaining such consents). To the extent Seller is unable to obtain such consents, Seller shall retain such Consent Contract, and Buyer shall, by making payments to Seller (which Seller shall then pay to the contracting party under such Consent Contract), pay, satisfy, perform and discharge Seller's liabilities and obligations in connection with the Consent Contracts which are related to the period on or after the Closing Date, and Buyer shall indemnify and hold Seller harmless with respect to any other liabilities which arise with respect to the Consent Contracts which are related to the period on or after the Closing Date, including, without limitation, liabilities that arise due to the assignment of such Consent Contracts to Buyer or the retention by Seller of such Consent Contracts and the use thereof by Buyer, without consent. Such liabilities and obligations in connection with the Consent Contracts shall also constitute "Assumed Liabilities" for purposes of this Agreement. (ii) If as a condition to the grant of consents to the real property leases set forth on Schedule 1.1(b), the party to such lease whose consent is required requires any cash payment to be made or any changes under such lease resulting in material increases in the economic terms thereunder (collectively "Consent Costs"), Seller shall be responsible for the first $150,000 (with respect to any such single lease) and $300,000 (with respect to all such leases collectively) of Consent Costs. Buyer shall be responsible for the next $150,000 (with respect to any single lease) and $300,000 (with respect to such leases collectively) of Consent Costs. With respect to the Consent Costs in excess of such amounts, Seller and Buyer will each bear one half. The parties agree to negotiate in good faith with respect to changes under leases that result in material increases in the economic terms thereunder. The parties agree to promptly notify the other, and to maintain a record, with respect to all Consent Costs requested, and paid by either party. Nothing herein shall be construed to limit Buyer's obligation to accept as a condition to the grant of such consents the imposition of any reasonable non-economic changes under the applicable contracts. ARTICLE 2 PURCHASE; CLOSING 2.1 Purchase Price. In consideration of Seller's performance of this Agreement and the transfer and delivery of the Station Assets to Buyer at the Closing, (a) Buyer will pay to Seller Nine Hundred Nine Million One Hundred Fifty Three Thousand Seven Hundred Forty Dollars ($909,153,740) (the "Cash Purchase Price"), plus or minus the amount of any adjustments made pursuant to Section 2.2 below and (b) Buyer will issue to Seller the number of shares of Series A Exchangeable Preferred Stock of Buyer, par value $.01 per share, having an aggregate Agreed Value (as defined in the Articles Supplementary referred to below) as of the Closing Date of One Hundred Fifteen Million Dollars ($115,000,000) (the "Exchangeable Preferred Stock"), which shares shall be exchangeable after the Closing, on the terms and conditions set forth herein, into an equivalent number of shares of Buyer's Series B Convertible Preferred Stock, par value $.01 per share (the "Convertible Preferred Stock"), having an aggregate Agreed Value (as defined in the Amended Charter referred to below) of $115,000,000 (the "Stock Purchase Price," and together with the Cash Purchase Price, collectively, the "Purchase Price"). The Convertible Preferred Stock shall be issued by Buyer in exchange for the Exchangeable Preferred Stock immediately after the filing by Buyer with the Maryland Department of Assessments and Taxation, as contemplated by Section 10.4 hereof, of an amendment and restatement of Buyer's charter, which shall be in the form of the Amended Charter (as defined below). The shares of Convertible Preferred Stock to be issued by Buyer in exchange for the Exchangeable Preferred Stock hereunder shall be convertible, in the aggregate, into Four Million One Hundred Eighty-One Thousand Eight Hundred Eighteen (4,181,818) shares of Buyer's Class A Common Stock, par value $.01 per share ("Buyer Common Stock"), subject to adjustment upon any split, reorganization, recapitalization, combination or dividend and certain other events affecting the Common Stock of Buyer prior to the Closing as described in Schedule 2.1(a) (the "Anti-Dilution Adjustments") and subject to such other adjustments from and after the Closing as may be set forth in the Articles Supplementary. The Exchangeable Preferred Stock shall have the designations, preferences and relative participating, optional and other special rights and qualifications, limitations and restrictions as set forth in the Articles Supplementary to Buyer's existing charter, which shall be in the form of the Articles Supplementary attached as Exhibit 2.1(b) hereof (the "Articles Supplementary"). The Convertible Preferred Stock shall have the designations, preferences and relative participating, optional and other special rights and qualifications, limitations and restrictions as set forth in the Articles Supplementary. At the Closing, Buyer will assume the Assumed Liabilities. The Cash Purchase Price shall be paid by Buyer to Seller on the Closing Date, except as otherwise provided in the following paragraph, by wire transfer of immediately available federal funds in United States dollars to such bank accounts as are designated by Seller on or prior to the Closing Date. In the event that the Buyer elects to extend the Termination Date for Extended Periods (as defined herein) pursuant to Section 2.3(d) hereof, the Cash Purchase Price shall be increased by Ten Million Dollars ($10,000,000) for each such Litigation Extended Period and Five Million Dollars ($5,000,000) for the Cure Extended Period, and Buyer shall be required to pay to Seller such additional Cash Purchase Price, in increments of Ten Million Dollars ($10,000,000), on the first day of each such Litigation Extended Period and Five Million Dollars ($5,000,000) on the first day of the Cure Extended Period, by wire transfer of immediately available federal funds in United States dollars to such accounts as are designated by Seller; provided that to the extent the final Extended Period is to be for less than 30 (in the case of a Litigation Extended Period) or 15 (in the case of the Cure Extended Period) days, as provided for in Section 2.3(d) below, such $10,000,000 or $5,000,000, as applicable, amount payable with respect to such Extended Period shall be reduced by an amount equal to the product of (a) a fraction whose numerator is equal to the difference between 30 (in the case of a Litigation Extended Period) or 15 (in the case of a Cure Extended Period) and the number of days in such final Extended Period, and whose denominator is 30 (in the case of a Litigation Extended Period) or 15 (in the case of the Cure Extended Period), multiplied by (b) $10,000,000 (in the case of a Litigation Extended Period) and $5,000,000 (in the case of a Cure Extended Period). Such payments to extend the Termination Date shall be retained by Seller irrespective of whether Closing occurs hereunder and shall be non-refundable to Buyer except to the extent expressly set forth in Section 10.2(c). To the extent that the Closing occurs on a Closing Date prior to the expiration of a then current Extended Period, the Purchase Price shall be subject to further adjustment as provided in Section 2.2(a)(vii) hereof. 2.2 Adjustments. (a) (i) Operations. The items set forth in this Section 2.2(a) relating to the operation of the Owned Stations and the Columbus Station, and to the management, operations, sales or other obligations, as applicable, in connection with the LMA Stations and the JSA Stations, and the income, expenses and liabilities attributable thereto through 11:59 p.m. on the day preceding the Closing Date (the "Adjustment Date") shall be for the account of Seller and, thereafter, for the account of Buyer, and shall be prorated accordingly. Items including, but not limited to, power and utilities charges, ad valorem property taxes upon the basis of the most recent assessment available, business and license fees, charges for utilities, water/sewer and natural gas, time sales agreements, property and equipment rentals, commissions, wages, payroll taxes, accrued vacation pay of employees of Seller who are hired by Buyer(all such vacation pay accrued prior to the Closing Date to be the responsibility of Seller), and rents and similar prepaid and deferred items, shall be prorated between Seller and Buyer, the proration to be made as of the Adjustment Date. There shall be no prorations and/or adjustments with respect to any sick leave and personal days accrued on or prior to the Closing Date by any employees of Seller, and the Buyer shall assume and be responsible for all liabilities in respect thereof. All special assessments and similar charges or liens imposed against the Real Property, Leasehold Interests or Real Property Improvements in respect of any period of time through the Adjustment Date, whether payable in installments or otherwise, shall be the responsibility of Seller, and amounts payable with respect to such special assessments, charges or liens in respect of any period of time after the Adjustment Date shall be the responsibility of Buyer and shall be adjusted as required hereunder. (ii) Trades. All trade, barter or similar arrangements for the sale of advertising time other than for cash (with the exception of film or program barter agreements and media barter agreements) ("Trades") shall be prorated between Buyer and Seller as of the Adjustment Date. If, on the Closing Date, the aggregate value of the performance obligations of the Stations on or after the Closing Date under all such Trades, less the aggregate value of the goods, services or other items to be received thereunder on or after the Closing Date, exceeds (1) $50,000 for any Station, or (2) $250,000 in the aggregate for all Stations, then Buyer shall receive a credit against the Cash Purchase Price for the amount of such excess. If on the Closing Date, the aggregate value of the goods, services or other items to be received on or after the Closing Date less the aggregate value of the performance obligation of the Stations on or after the Closing Date exceeds (1) $50,000 for any Station, or (2) $250,000 in the aggregate for all Stations, then the Cash Purchase Price shall be increased by the amount of such excess. Trades shall be valued in accordance with the valuation method currently used by Seller, which for purposes of the preceding sentence, means that the liability for performance obligations shall be valued according to the applicable Station's prevailing rates as of the Closing Date, and goods, services or other items being received shall be valued based on the fair market value of such goods, services or other items on the Closing Date. There shall be no other proration or adjustment with respect to Trades, and there shall be no proration or adjustment with respect to any film or program barter agreements, media barter agreements or program contracts all of which (except for the Add Back Programming Liabilities) shall be assumed by Buyer as part of the Assumed Liabilities. (iii) Station Options and Other Acquisitions and Transactions. To the extent that prior to the Closing Date (1) any Station Option is consummated, or (2) Seller acquires any other television or radio station or has entered into or enters into any other transaction contemplated in Schedule 2.2(a)(1), the Cash Purchase Price shall be increased by (A) the non-recurring out-of-pocket costs incurred by Seller with respect to the consummation of the Station Options and (B) the corresponding amount relating to such other television or radio station as set forth in Schedule 2.2(a)(1), or if not listed therein, as may be agreed to by the parties hereto, plus the non-recurring out-of-pocket costs incurred by Seller with respect to the consummation of such other acquisition or transaction. To the extent that Seller has not consummated the acquisitions contemplated on Schedule 2.2(a)(1) but has made any deposits in respect thereof, the Cash Purchase Price shall be increased by the amount of each such deposit. To the extent that the Station Options have not been consummated on or before the Closing Date, the Cash Purchase Price shall be decreased in the amount of the Option Price, as adjusted, as set forth in Section 1(c) of the Option Agreement listed on Schedule 1.1(c)(3), as amended, in connection with the assumption of the Station Options by Buyer hereunder. (iv) Rich JSA. To the extent that, as of the Closing Date, WWWS(AM) and WGR(AM), Buffalo, New York have not yet been sold by Rich Communications Corporation ("Rich") and Seller has not received the amount that would otherwise be payable by Rich to Seller under Section 13 of the Joint Sales Agreement with Rich listed on Schedule 1.1(c)(2) hereof if such stations had been sold by such date, the Cash Purchase Price shall be increased by such amount. (v) Other. The Cash Purchase Price shall be adjusted in accordance with Schedule 2.2(a)(v). (vi) Bock Note. The Cash Purchase Price shall be increased by $34,376.90 in connection with the assignment of the Promissory Note dated September 13, 1995 in favor of Seller made by Eric J. Bock, Guy W. Bock and Susan Bock-Dean, which is being endorsed (without recourse to Seller) to Buyer hereunder. (vii) Payment for Extended Period. The Cash Purchase Price shall be decreased by the amount equal to the product of (A) a fraction whose numerator is equal to the difference between 30 (in the case of a Litigation Extended Period) or 15 (in the case of a Cure Extended Period) and the number of days elapsed in the then-current Extended Period as of the Closing Date, if any, and whose denominator is equal to 30 (in the case of a Litigation Extended Period) or 15 (in the case of a Cure Extended Period), multiplied by (B) $10,000,000 (in the case of a Litigation Extended Period) and $5,000,000 (in the case of a Cure Extended Period); provided that where an Extended Period is less than 30 (in the case of a Litigation Extended Period) or 15 (in the case of a Cure Extended Period) days, a corresponding adjustment shall be made based upon the number of days remaining in such Extended Period, the original number of days in such Extended Period and the additional Cash Purchase Price payment made in respect of such Extended Period under Section 2.1. (viii) Alliance. The Cash Purchase Price shall be increased by Twenty-Five Thousand Nine Hundred Sixty-Five Dollars and Seventy Cents ($25,965.70) as reimbursement for Seller's investment in Television Alliance Group, Inc. (ix) New Mexico Stations. To the extent Seller has sold the New Mexico Stations or the RCB Twin Peaks Equity Interest prior to the Closing Date, the Cash Purchase Price for all of the Stations shall be reduced by the amount paid to Seller in connection therewith, minus (1) the non-recurring out-of-pocket costs incurred by Seller in respect of consummation of such sale, (2) the total amount of all federal, state and local taxes (other than income taxes) incurred in connection with such sale and (3) the total amount of all federal, state and local income taxes incurred by Sandia in connection with such sale. In connection with any such sale, Seller shall provide a certificate to Buyer as to the amount of the adjustment hereunder together with appropriate documentation supporting Seller's calculations. (b) (i) Prorations Certificate. For the purpose of determining the prorations and adjustments required pursuant to Section 2.2(a), Seller shall deliver to Buyer, not less than five (5) days prior to the Closing Date, a certificate (the "Prorations Certificate"), to be signed at Closing by an appropriate official of Seller after due inquiry by such official, but without any personal liability to any such official, which specifies Seller's good faith determination of the dollar amount of the prorations and adjustments under Section 2.2(a), including, without limitation, appropriate documentation supporting Seller's determinations and calculations under Section 2.2(a). (ii) Pre-Closing Dispute; Escrow. If Buyer, acting in good faith, does not agree with any amount set forth in the Prorations Certificate, then on or prior to the second business day prior to the Closing Date, Buyer may deliver to Seller a written report (the "Buyer's Estimate Report") setting forth in reasonable detail Buyer's good faith reasonable estimate(s) of the amount(s) with which Buyer disagrees. Any estimated amount which is set forth in the Prorations Certificate and as to which Buyer does not deliver its own estimate on or prior to such second business day will be the "estimated amount" of the prorations and adjustments under Section 2.2(a) (the "Adjustment Amount") on the Closing Date. In the case of any such estimated amount as to which Buyer delivers its own estimate, Seller and Buyer will endeavor in good faith to agree prior to the Closing on the appropriate amount of such estimate, and any amount so agreed upon by them in writing prior to the Closing will be the "estimated amount" of the Adjustment Amount on the Closing Date. In the case of any such estimated amount as to which Buyer delivers its own estimate and Seller and Buyer do not so agree, the estimate set forth in the Prorations Certificate will be the "estimated amount" of the Adjustment Amount, on the Closing Date, and at the Closing the difference (if any) between the amount of the Cash Purchase Price that would be determined using the amount set forth in the Prorations Certificate and the amount of the Cash Purchase Price determined using the estimated Adjustment Amount set forth in the Buyer's Estimate Report (such amount, the "Post-Closing Estimate Fund Deposit") will be transferred by Buyer to Magna Trust Company, St. Louis, Missouri or such other bank as mutually agreed to by the parties (the "Prorations Escrow Agent"), to be held by the Prorations Escrow Agent, pursuant to the Post-Closing Escrow Agreement substantially in the form of Exhibit 2.2(b) (with such changes as the Prorations Escrow Agent may request), and pending final determination of the disputed amount(s) in question pursuant to this Section 2.2(b) as set forth below, as a fund in escrow (the "Post-Closing Estimate Fund") to provide security for the payment of any additional amount which may be payable by Buyer pursuant to Section 2.1. (iii) Adjustment at Closing. At Closing, the Cash Purchase Price shall be decreased to the extent Seller owes Buyer funds or increased to the extent Buyer owes Seller funds, based upon the amount set forth in the Prorations Certificate. (iv) Closing Balance Sheet. Within one hundred and twenty (120) days after the Closing Date, Buyer shall prepare a closing balance sheet (the "Closing Balance Sheet") as of the close of business on the Adjustment Date and submit it to Seller for review. To the extent Seller does not agree with any amount set forth in the Closing Balance Sheet, Seller shall deliver written notice of such disagreement to Buyer. Within one hundred and fifty (150) days after the Closing Date, final adjustments pursuant to Section 2.2 shall be determined, and any required refund or payment shall be made in accordance with subsection (vi) below on the basis of the Closing Balance Sheet, subject to the provisions relating to disputes provided for herein. Upon acceptance, payment hereunder will be remitted within five (5) days thereafter. If any dispute arises over the amount to be refunded or paid, such refund or payment shall nonetheless be made to the extent such amount is not in dispute. (v) Post-Closing Dispute. If any dispute cannot be resolved by Buyer and Seller or their respective independent public accountants within one hundred and eighty (180) days after the Closing Date, the disputed matters shall be referred to a mutually satisfactory independent public accounting firm of national stature which has not been employed by any party hereto for the two (2) years preceding the date of such referral; such firm to be selected by the independent public accountants of Seller and Buyer. The determination of such firm shall be conclusive and binding on each party and not subject to dispute or review. One-half of the fees of such firm shall be paid by Seller, and one-half shall be paid by Buyer. (vi) Disbursement of Post-Closing Estimate Fund. If any funds are transferred to the Prorations Escrow Agent to be held in the Post-Closing Estimate Fund, then any amount which becomes payable to Buyer or Seller pursuant to Section 2.2(b), together with interest accrued on such amount, will be paid to Buyer or Seller from the Post-Closing Estimate Fund, to the extent of the funds therein. If no funds are transferred to the Prorations Escrow Agent to be held in the Post-Closing Estimate Fund or the entire amount so transferred has theretofore been paid pursuant to this paragraph of Section 2.2(b), then any remaining amount payable to Seller pursuant to Section 2.2(b) will be paid by Buyer and any remaining amount payable to Buyer pursuant to Section 2.2(b) will be paid by Seller. Any amount payable by Seller or Buyer pursuant to Section 2.2(b) (other than to the extent that funds are available from the Post-Closing Estimate Escrow to pay such amount) will bear interest at the prime or reference rate of interest announced by Chemical Bank as in effect from time to time, from the third business day after the adjusted Cash Purchase Price is determined in accordance with Section 2.2(b) through and including the date upon which such amount and all such interest are paid in full. 2.3 (a) The Closing. The closing of the transactions provided for in this Agreement (the "Closing") shall be held in the offices of Dow, Lohnes & Albertson, 1200 New Hampshire Avenue, N.W., Suite 800, Washington, D.C. 20036 or such other mutually agreeable location at 10:00 a.m. on a date (the "Closing Date") as shall be mutually agreed upon by Buyer and Seller which, subject to the other provisions of this Section 2.3, shall not be later than the date (the "Originally Scheduled Termination Date" and such date, as the same may be extended pursuant to, and subject to, the provisions of this Section 2.3, the "Termination Date") that is sixty (60) days after the date of this Agreement (unless such sixtieth day is not a business day in Maryland, in which case on the first business day thereafter) and, failing mutual agreement of the parties, the Closing Date shall be on such sixtieth day (or, if not a business day in Maryland, on the first business day thereafter); provided, however, that to the extent Seller is not able to deliver any item set forth in Section 2.4(a) by such sixtieth day, the Closing Date may be extended at Buyer's option without payment of any additional consideration by Buyer, for up to an additional fifteen (15) day period. (b) Notwithstanding the foregoing, if on the Originally Scheduled Termination Date the condition precedent set forth in Sections 7.4 or 8.6 hereof has not been satisfied, either Buyer or Seller may elect to postpone the Originally Scheduled Termination Date for up to an additional thirty (30) days plus the number of days during the period from the date of this Agreement through the earlier of (1) the date on which Sections 7.4 and 8.6 hereof have been satisfied and (2) the Closing Date, during which the Federal Trade Commission or the Department of Justice closes due to an unscheduled shutdown (not including weekends or scheduled holidays) (together, the "Additional Period" and the number of days in such period being referred to herein as the "Additional Days"), and the Closing shall thereafter take place on a date specified by written notice from such party, which date shall be not less than five (5) days nor more than fifteen (15) days after the satisfaction of such condition precedent, but in no event later than the date which occurs a number of days after the Originally Scheduled Termination that is equal to the number of Additional Days. (c) If at the end of such Additional Period, either condition precedent set forth in Section 7.4 or Section 8.6 has not been satisfied, either Buyer or Seller may terminate this Agreement and the provisions of Section 10.2 shall be applicable. (d) To the extent that, as of the Originally Scheduled Termination Date (or, if applicable, as extended pursuant to Section 2.3(b) hereof), (1) any injunction of a court or other governmental authority restrains or enjoins the consummation of the transactions contemplated hereby, or any proceeding of the sort falling within the provisions of Section 8.2 is pending, Buyer shall provide copies of the documentation relating thereto to Seller and Buyer may extend such Termination Date for additional thirty (30) day periods (or to the extent extended on or after December 2, 1996 for the lesser period to and including December 31, 1996) (each a "Litigation Extended Period") to and including December 31, 1996 or (2) Buyer has received notice from Seller as specified in the proviso in Section 10.1(a)(ii), Buyer may extend such Termination Date for an additional fifteen (15) day period (or to the extent extended on or after December 17, 1996 for the lesser period to and including December 31, 1996) (the "Cure Extended Period") and together with a Litigation Extended Period, sometimes hereafter referred to collectively as the "Extended Periods", as applicable and individually as an "Extended Period"). The right to extend the Termination Date pursuant to the preceding sentence shall only be available to Buyer to the extent Buyer delivers to Seller written notice (an "Extension Notice") on or prior to such Termination Date or any then current Extended Period, of Buyer's intent to extend the Termination Date and Buyer makes the payments referred to in Section 2.1 with respect to extension of the Termination Dates on the dates specified therein. During such Extended Period, Buyer may deliver written notice to Seller specifying that the Closing shall take place on a specified date, within the applicable Extended Period, which date shall not be less than five (5) business days from receipt of such notice by Seller. (e) Notwithstanding anything to the contrary set forth in Articles 7, 8 or 10, or otherwise herein, Buyer agrees that, if the Termination Date has been extended by Buyer pursuant to Section 2.3(d), then (1) Sections 8.2, 8.4, 8.6 and 8.10 shall be deemed to have been satisfied as of the date Buyer elects to extend the Termination Date and shall thereafter no longer constitute conditions precedent to Buyer's obligation to close hereunder; (2) On the Originally Scheduled Termination Date (or, if applicable, as extended pursuant to Section 2.3(b) hereof), determination shall be made as to the satisfaction of the condition set forth in Section 8.1(a) (and, if such condition is satisfied, the general partner of Seller shall deliver to Buyer a certificate of the general partner of Seller certifying to the fulfillment of such condition) and if such condition is satisfied as of such date and such certificate is delivered, Section 8.1(a) (and the delivery of the certificate applicable thereto referred to in Section 8.1(c)) shall no longer constitute conditions precedent to Buyer's obligation to close hereunder and any determination of Seller's compliance with such representations and warranties for purposes of indemnification hereunder or under the Option Agreement for purposes of indemnification thereunder shall be made only as of the Originally Scheduled Termination Date (or, if applicable, as extended pursuant to Section 2.3(b) hereof); (3) No changes in the representations and warranties of Seller set forth herein that are attributable to the period after the Originally Scheduled Termination Date (or, if applicable, as extended pursuant to Section 2.3(b) hereof), shall be taken into account for purposes of determining whether the changes in the representations and warranties of Seller set forth herein would cause a Material Adverse Change pursuant to Section 7.7. (4) Satisfaction of the conditions precedent set forth in Sections 8.1(b) (and the delivery of the certificate applicable thereto referred to in Section 8.1(c)), and delivery of documents to be delivered at Closing under Sections 8.5, 8.7, 8.8, 8.9 and 8.11, shall be determined as of the actual date of Closing; (5) Satisfaction of the condition precedent set forth in Section 8.3 shall be determined as of the actual date of Closing, except that such opinion may be modified to take into account circumstances arising after the Originally Scheduled Termination Date (or, if applicable, as extended pursuant to Section 2.3(b) hereof); and (6) If the Buyer elects to extend the Termination Date, thereafter until the Closing Date Seller covenants that it shall not negligently, grossly negligently, or intentionally and wrongfully take, or omit to take, any action that would cause Seller's representations and warranties hereunder or under the Option Agreement to be breached; provided it is understood and agreed that this covenant shall be treated, as are all other covenants of Seller, as a covenant subject to Section 8.1(b). 2.4 Deliveries at Closing. All actions at the Closing shall be deemed to occur simultaneously, and no document or payment shall be deemed to be delivered or made until all documents and payments are delivered or made to the reasonable satisfaction of Buyer, Seller, and each of their respective counsel; provided, however, the execution and delivery of the Option Agreement and the Time Brokerage Agreements, each more fully described below, will be deemed to occur immediately after the Closing of this Agreement. (a) Deliveries by Seller at Closing. At the Closing, Seller shall deliver to Buyer such instruments of conveyance and other customary documentation as shall in form and substance be reasonably satisfactory to Buyer and its counsel, including, without limitation, the following: (i) one or more bills of sale conveying the personal property included in the Station Assets; (ii) any mortgage discharges or releases of liens that are necessary in order for the Station Assets to be free and clear of all liens, mortgages or security interests, other than the Permitted Encumbrances; (iii) certificates of the general partner of Seller as required by Section 8.1(c); (iv) a certified copy of the resolutions or proceedings of the general partner of Seller authorizing the transactions contemplated by this Agreement; (v) a certificate as to the formation and good standing of Seller issued by the Secretary of State (the "SOS") of the State of Delaware, dated not more than ten (10) days before the Closing Date, and certificates issued by an appropriate governmental authority as to the qualification of Seller to do business in the jurisdictions listed in Schedule 3.1, to the extent such certificates are available; (vi) a receipt for the Cash Purchase Price and a receipt for the stock certificates delivered in payment of the Stock Purchase Price; (vii) the opinions of counsel required by Section 8.3; (viii) all consents received by Seller through the Closing Date to the assignment of the Program Contracts, the Other Contracts and the other non-FCC licenses, contracts and leases included in the Station Assets; (ix) the Time Brokerage Agreements contemplated by Sections 7.6 and 8.8; (x) the Leases or Subleases contemplated by Sections 7.5 and 8.7; (xi) the Option Agreement contemplated by Sections 7.7 and 8.5 (as modified by Seller as permitted under Section 7.7 hereof); (xii) documents of conveyance reasonably acceptable to Buyer evidencing the transfer of the Real Property; (xiii) the Registration Rights Agreement contemplated by Section 10.5; (xiv) certificates of insurance showing Buyer named as an additional insured as contemplated in Section 5.1; (xv) to the extent (1) consent is obtained for the transfer thereof and (2) made available by NewVenco, Inc. and Television Alliance Group, Inc., (a) all stock certificates of NewVenco, Inc. and Television Alliance Group, Inc. representing all of Seller's interest and investments in the Other Assets (together with stock powers endorsed in blank for such stock certificates of NewVenco, Inc. and Television Alliance Group, Inc., respectively) or (b) a stock certificate of NewVenco, Inc. and Television Alliance Group, Inc. representing Buyer's interest in the Other Assets; (xvi) to the extent consent is obtained to the transfer thereof, a stock certificate of Transtower, Inc. representing all of Seller's interest in Transtower, Inc. (together with a stock power endorsed in blank for such stock of Transtower, Inc.); (xvii) a bill of sale and general assignment and assumption agreement, which Seller shall cause RCB Kids Fair, Inc. ("Kids Fair") to execute in favor of Buyer, conveying the assets of Kids Fair to Buyer; (xviii) the list of Qualified Beneficiaries entitled to Continuation Coverage as of the Closing Date, as contemplated under Section 10.3(b); (xix) a Consent and Agreement in the form of Exhibit 2.4, executed by Seller; and (xx) such other documents as Buyer shall reasonably request. (b) Deliveries by Buyer at Closing. At the Closing, Buyer shall deliver to Seller the Cash Purchase Price and the Stock Purchase Price, and Buyer shall deliver to Seller such instruments and other customary documentation as shall in form and substance be reasonably satisfactory to Seller and its counsel, including without limitation, the following: (i) the Cash Purchase Price, which shall be delivered to Seller, in the manner set forth in Section 2.1; (ii) stock certificates of Buyer issued to Seller representing the shares of Exchangeable Preferred Stock, which shares shall be duly and validly issued, fully paid and nonassessable; (iii) a certificate of Buyer as required by Section 7.1(c); (iv) a certified copy of the resolutions or proceedings of Buyer authorizing the transactions contemplated by this Agreement; (v) a certificate as to the existence and good standing of Buyer issued by the Maryland Department of Assessments and Taxation not more than ten (10) days before the Closing Date and a certificate as to the qualification of Buyer or an appropriate wholly-owned operating subsidiary of Buyer to do business in the States of California, Illinois, Indiana, Iowa, Kentucky, Louisiana, Missouri, New Mexico, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Texas and any other state in which an Owned Station is based, from the Secretary of State or analogous entity of each of such states; (vi) the opinion of counsel required by Section 7.3; (vii) the Leases or Subleases contemplated by Sections 7.5 and 8.7; (viii) the Time Brokerage Agreements contemplated by Sections 7.6 and 8.8; (ix) the Option Agreement contemplated by Sections 7.7 and 8.5, together with evidence of payment in full of the Option Grant Price (as defined in the Option Agreement) to the Seller and Licensee under the Option Agreement, as specified in the Option Agreement; (x) Buyer's charter, as amended by the Articles Supplementary as contemplated by Section 7.9, certified as being in effect as of a date shortly before the Closing Date by the Maryland Department of Assessments and Taxation; (xi) the Registration Rights Agreement contemplated by Section 10.5; (xii) certificates of insurance contemplated in Section 6.9; (xiii) the New Employment Agreements contemplated by Section 7.8; and (xiv) such other documents as Seller shall reasonably request. 2.5 Deliveries by Seller Prior to Closing and Upon Execution. Title Policies. Seller shall deliver to the Buyer copies of all currently existing owners and leasehold policies of title insurance and surveys that Seller has received with respect to the Real Property, Leasehold Interests and Excluded Real Property. (b) Employment Agreement, Consulting Agreement, Voting Agreement and Stock Option Agreements. Contemporaneously with the execution of this Agreement, (i) Buyer and Barry Baker ("Baker") shall each have executed and delivered to the other an employment agreement, in the form attached as Exhibit 2.5(a) (the "Employment Agreement"); (ii) Buyer and Baker shall have each executed and delivered to the other a consulting agreement in the form attached as Exhibit 2.5(b) (the "Consulting Agreement"); (iii) Buyer and Baker shall have each executed and delivered to the other a stock option agreement in the form attached as Exhibit 2.5(c) (the "Baker Stock Option Agreement"); (iv) a stock option agreement in favor of each of the employees listed on Schedule 2.5(d) (the "Corporate Employees") in the form attached as Exhibit 2.5(d) (the "Corporate Employee Stock Option Agreement") shall have been duly executed and delivered by the Buyer and the options relating to the Corporate Employees set forth in the Letter Agreement between Buyer and Seller dated the date hereof shall have been granted to the Corporate Employees (the "Employee Letter Agreement"); (v) a stock option agreement in favor of each of the employees listed on Schedule 2.5(e) (the "Station Employees") in the form attached as Exhibit 2.5(e) (the "Station Employee Stock Option Agreement") shall have been duly executed and delivered by Buyer; (vi) the Board of Directors of Buyer shall have adopted, and the compensation committee (and any other committee that is required to so approve) shall have approved the awards under, the First Amendment to Incentive Stock Option Plan in the form attached as Exhibit 2.5(f) (the "ISO Amendment") and the 1996 Long Term-Incentive Plan in the form attached as Exhibit 2.5(g) (the "LTIP") and the Employee Letter Agreement; (vii) a voting agreement among David D. Smith, Frederick G. Smith, J. Duncan Smith and Robert E. Smith, in the form attached as Exhibit 2.5(h) (the "Voting Agreement") shall have been executed and delivered by all of the parties thereto; and (viii) Buyer and Seller shall each have executed and delivered the Employee Letter Agreement. Buyer will not take any action, or omit to take any action, that would cause any of the agreements listed in (i) through (viii) of this Section 2.5(b) to be ineffective on or before the Closing Date. 2.6 Effect of Laws or Proceedings. The parties hereto acknowledge and agree that notwithstanding anything in this Agreement or any other documents related hereto to the contrary (including, without limitation, any representations or warranties made by Seller, covenants of the Seller made herein, any condition precedent to the obligations of Buyer set forth in this Agreement, or any provisions relating to indemnification to be made by Seller hereunder), matters relating to, in connection with or resulting or arising from: (a) the effect, for purposes of any laws, statutes, ordinances, rules, regulations, orders or other actions, whenever promulgated or enacted, including any communications or communications-related laws, statutes, ordinances, rules, regulations, orders or other actions, whenever promulgated or enacted, and any licenses, permits or authorizations issued by any governmental authority (including, without limitation, the FCC) (collectively, "Laws") or any contract or agreement to be conveyed to or assumed, directly or indirectly, by Buyer or Option Holder pursuant hereto or under the Option Agreement (collectively, "Conveyed Contracts"), of (1) the transfer of the Station Assets to Buyer and the retention by Seller of the License Assets; (2) the grant by Seller and River City License Partnership of the options under the Option Agreement; (3) the execution, delivery and performance of any of the Transaction Documents (as defined below); or (4) the consummation of the other transactions contemplated hereby or by the Option Agreement; (b) any conflict with, violation of, or breach or default under, or termination of any Laws or Conveyed Contracts as a result of the consummation of any of the transactions contemplated hereby (including, without limitation, the Transaction Documents) or by the Option Agreement; or (c) any claims, actions, suits or other proceedings of any nature whatsoever ("Proceedings"), by any person or entity (including, without limitation, any governmental entity) by or before any court, administrative agency or otherwise, alleging a conflict, violation of, breach or default under, termination of, or other inconsistency with Laws or Conveyed Contracts as a result of the consummation of any of the transactions contemplated hereby (including, without limitation, the Transaction Documents) or by the Option Agreement, shall not: (i) cause or constitute, directly or indirectly, a breach by Seller of any of its representations, warranties, covenants or agreements set forth in this Agreement or any other document related hereto (and such representations, warranties, covenants and agreements shall hereby be deemed to be modified appropriately to reflect and permit the impact and existence of such Laws, Conveyed Contracts and Proceedings and to permit any action by Seller to comply with or attempt in good faith to comply with such Laws, Conveyed Contracts and Proceedings); (ii) otherwise cause or constitute, directly or indirectly, a default or breach by Seller under this Agreement or any other documents related hereto; (iii) result in the failure of any condition precedent to the obligations of Buyer under this Agreement or any other document related hereto to be satisfied; (iv) otherwise excuse Buyer's performance of its obligations under this Agreement or any other document related hereto; or (v) give rise to any claim for indemnification or other compensation by Buyer or any adjustment of the Purchase Price; provided that the foregoing clauses (i) through (v) shall not apply to (1) any claim brought by a partner of Seller alleging a violation of Seller's partnership agreement or any claim brought by any partner, officer, director, agent or Affiliate of Seller; (2) any breach by Seller of its covenants set forth in this Agreement; or (3) any action instituted by the Federal Trade Commission or the Department of Justice under the HSR Act, in each case which shall be governed by other applicable provisions of this Agreement. ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF SELLER Seller represents and warrants to Buyer as follows: 3.1 Formation. Seller is a limited partnership duly formed, validly existing and in good standing under the laws of the State of Delaware. Seller has the requisite partnership power and authority to carry on the business of the Owned Stations now being conducted by it and to own and operate the Station Assets owned and operated by it and is qualified to conduct the business of the Owned Stations now being conducted by it in each jurisdiction listed in Schedule 3.1. 3.2 Partnership Action. All requisite partnership actions and proceedings necessary to be taken by or on the part of Seller in connection with the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby and necessary to make the same effective have been duly and validly taken. This Agreement has been duly and validly authorized, executed and delivered by or on behalf of Seller and constitutes the valid and binding agreement of Seller enforceable against Seller in accordance with and subject to its terms, except as enforceability may be limited by laws affecting the enforcement of creditors' rights or contractual obligations generally and by the application of general principles of equity. 3.3 Financials. Seller has delivered to Buyer copies of (i) the internally prepared unaudited consolidated balance sheet of Seller and its subsidiaries as of December 31, 1995 and the related statement of operations for the twelve-month period ended December 31, 1995 (the "1995 Internal Financial Statements"); (ii) the internally prepared unaudited consolidated balance sheet of Seller and its subsidiaries as of January 31, 1996 and February 29, 1996 and the related consolidated statement of operations for the one-month and two-month, respectively, period then ended (the "1996 Internal Financial Statements"); and and (ii) the audited balance sheets of Seller and its subsidiaries as of December 31, 1993 and December 31, 1994 and related statements of operations and cash flows, and partners' equity for Seller and its subsidiaries for the years then ended (the "1993 and 1994 Year-End Financial Statements"). Except as set forth on Schedule 3.27, the 1995 Internal Financial Statements and the 1993 and 1994 Year-End Financial Statements are, and the 1995 Year-End Audited Financial Statements (as defined below) and the Closing Financial Statements (as defined below), each to be delivered to Buyer pursuant to Section 5.3(a) hereof will be, in all material respects, (a) in agreement with the books and records regularly maintained by Seller with respect to Seller and its subsidiaries and (b) prepared in accordance with generally accepted accounting principles applied on a consistent basis in all material respects (except, to the extent not applied on a consistent basis in all material respects, as noted thereon) and except as set forth on Schedule 3.27, and except with respect to the 1995 Internal Financial Statements and the Closing Financial Statements the absence of notes thereto throughout the year or period involved, and the 1995 Internal Financial Statements and the 1993 and 1994 Year-End Audited Financial Statements present, and the 1995 Year-End Financial Statements will present, fairly in all material respects, the financial position of Seller and its subsidiaries as at the respective dates of the balance sheet and the results of the operations and the cash flow of Seller and its subsidiaries for the year and period then ended (subject, in the case of unaudited statements to normal year-end adjustments). December 31, 1995 is sometimes referred to herein as the "Balance Sheet Date." 3.4 Business Since the Balance Sheet Date. From the Balance Sheet Date to the date of this Agreement, there has been no Station Material Adverse Change (as defined in Section 3.6), or Material Adverse Change and the business of Seller has been conducted in the ordinary course of business and in the same manner as it was before the Balance Sheet Date except to the extent that any differing conduct would not cause a Station Material Adverse Change. 3.5 Condition of Assets. The material tangible assets included in the Station Assets and the Leasehold Interests are being maintained in accordance with general industry practices in good operating condition and repair, wear and tear in ordinary usage, insured casualty and condemnation excepted. 3.6 Title, Etc. Seller owns the Real Property and Real Property Improvements designated as owned by Seller and leases the Leasehold Interests designated as leased by Seller set forth on Schedule 1.1(b) in connection with the operation of the Stations and the JSA Stations. Seller is not in default under any of the material Leasehold Interests. Except as set forth on Schedules 3.6 and 1.3, and except to the extent that any such noncompliance would not cause a Station Material Adverse Change (as defined below), to Seller's actual knowledge, the Real Property and the Leasehold Interests listed on Schedule 1.1(b) and their present uses comply in all material respects with all applicable zoning laws and ordinances; and to Seller's actual knowledge, there exists no written notice of any uncorrected material violations of housing, building, safety or fire ordinances with respect to the Real Property, Real Property Improvements, or the Leasehold Interests listed on Schedule 1.1(b) except where such violation would not cause a material adverse change in the financial condition or business of any TV Station individually or the Radio Stations, taken as a whole (provided that the foregoing shall not include any material adverse change attributable to (i) factors affecting the television or radio industries generally, (ii) general national, regional or local economic or financial conditions, (iii) governmental or legislative laws, rules or regulations, (iv) any affiliation agreement or the lack thereof or the non-transfer to Buyer thereof or (v) actions taken by Buyer or any Affiliate of Buyer) (a "Station Material Adverse Change"). For purposes of this Agreement, "Affiliate" means with respect to a party, any Person, directly or indirectly, controlling or controlled by such party, or any Person under direct or indirect common control with such party (as such terms are interpreted from time to time pursuant to the Securities Act of 1933, as amended); "Person" means and includes natural persons, corporations, limited partnerships, general partnerships, joint stock companies, joint ventures, associations, companies, trusts, banks, trust companies, land trusts, business trusts or other organizations, whether or not legal entities, and governments and agencies and political subdivisions thereof; and "actual knowledge" with respect to Seller means the conscious awareness of facts of Seller's Station general managers and the officers of the general partner of Seller, after reasonable inquiry by such Station general managers and such officers with respect to the matters referred to herein as to which the Seller is stating its knowledge. Seller has not received any written notice with respect to, and Seller has no actual knowledge of, any pending or threatened condemnation proceeding affecting the Real Property or Leasehold Interests listed on Schedule 1.1(b) or any part thereof or of any sale or other disposition of the Real Property or Leasehold Interests or any portion thereof in lieu of condemnation, that would cause a Station Material Adverse Change. Except as set forth on Schedules 3.6 and 1.3, Seller has good, insurable and marketable (only, with respect to insurability and marketability, as to tangible property constituting Real Property) and indefeasible title to the tangible assets included in the Station Assets owned by it, and all such assets will on the Closing Date be free and clear of all security interests, mortgages, pledges, liens, encumbrances, or charges of any nature whatsoever except for Permitted Encumbrances. 3.7 Trademarks, Etc. Except as set forth on Schedules 1.1(f) and 1.1(g), Seller possesses adequate rights, licenses or other authority to use all trademarks and trade names necessary to conduct the business of the Owned Stations as presently conducted by Seller, including without limitation the intellectual property described in Sections 1.1(f) and (g) hereof and the respective Schedules thereto, except where the failure to so possess would not cause a Station Material Adverse Change. Except as set forth on Schedules 1.1(f) and 1.1(g) hereto, Seller has not received any notice with respect to any alleged infringement or unlawful or improper use of any copyright, trademark, trade name or other intangible property right owned by others and used in connection with the Owned Stations. Seller represents and warrants that, except as set forth on Schedule 1.1(f) hereto, none of the trademarks listed thereon has been registered. 3.8 Insurance. The Owned Stations and the Station Assets are, as of the date of this Agreement, insured by Seller against loss or damage by fire and other hazards and risks of the character usually insured against by persons operating similar properties and businesses under policies issued by insurers of recognized responsibility, as described on Schedule 3.8 hereof. 3.9 Contracts. Schedules 1.1(b), 1.1(c)(1),(2) and (3), 1.1(d), 1.1(e), 1.1(m) and 3.10 to this Agreement contain a complete list of the following contracts as to which the Owned Stations or Seller with respect to the Station Assets is a party or by which either of them is bound as of the date of this Agreement, other than the Excluded Contracts: (a) contracts evidencing time sales to advertisers or advertising agencies that are "trade" or "barter" transactions that require the furnishing of advertising time on any Owned Station or, to the extent Seller is a party thereto, on any LMA Station or any JSA Station, at any time after the Closing Date, and that individually involve annual payments of more than $250,000; (b) sales agency or advertising representation contracts ending more than one year after the date of this Agreement; (c) employment contracts that individually involve annual base salaries of more than $100,000; (d) material licenses or agreements under which Seller is authorized to broadcast on any Station filmed or taped programming supplied by others; (e) leases of personal property which have a term, including renewal options exercisable by any party thereto, ending more than one year after the date of this Agreement and which involve annual payments of more than $50,000 individually or $250,000 in the aggregate; (f) material contracts not made in the ordinary and usual course of business; (g) any other contracts which are material to the business and operations of the Station Assets and involve annual payments of more than $100,000 individually; and (h) any television or radio network affiliation agreements. Notwithstanding anything to the contrary in the foregoing, it is understood and agreed that Seller is not required to list contracts entered into in the ordinary course of business for the sale or sponsorship of advertising time on any Station or JSA Station for cash at such Station's or JSA Station's prevailing rate with not more than one year remaining in their terms. All information listed on Schedule 1.1(d) regarding the Program Contracts for TV Stations is correct and accurate in all material respects including, without limitation, the term of such contract and the amount of any unpaid payments due thereunder as of December 31, 1995. 3.10 Employees. Seller has heretofore delivered to Buyer a list of all its employees as of the date of this Agreement and their respective salaries and dates of hire. Except as noted on such list or on Schedule 3.10, Seller has no written contracts of employment with any employee. Except as described on Schedule 3.10, Seller is not a party to or subject to any collective bargaining agreements with respect to any Station nor, except as described on Schedule 3.10, does Seller have any other contracts with any labor union or other labor organization with respect to any Station. Except as set forth on Schedules 3.10 and 3.11, Seller is not a party to any pending or, to Seller's actual knowledge, threatened labor dispute affecting any Station that would cause a Station Material Adverse Change. 3.11 Litigation. Except as set forth on Schedule 3.11 hereto: (i) Seller, with respect to the Owned Stations, has not been operating under or subject to or in default with respect to any order, writ, injunction or decree of any court or federal, state, municipal or other governmental department, commission, board, agency or instrumentality which has or could reasonably be expected to cause a Station Material Adverse Change; (ii) Seller is not a party to any litigation pending or, to Seller's actual knowledge, threatened litigation affecting any of the Station Assets that would cause a Station Material Adverse Change. There creditors or voluntary or involuntary proceedings in bankruptcy pending against or contemplated by Seller, and to Seller's actual knowledge, no such actions have been threatened against Seller or any Station or any subsidiary of Seller. On the date hereof, except for ongoing or planned FCC rulemakings affecting the television or radio industry generally, there is no litigation or proceeding pending or, to Seller's actual knowledge, threatened against or affecting Seller that would affect Seller's ability to carry out the transactions contemplated by this Agreement or restrain, enjoin, prohibit or render illegal the consummation of the transactions contemplated by this Agreement. 3.12 Compliance with Laws. Seller, with respect to the Station Assets, is to Seller's actual knowledge, in compliance, except where failure to so comply would not cause a Station Material Adverse Change, with all applicable laws, regulations and orders, and the present uses by Seller of the Station Assets do not, to Seller's actual knowledge, violate any such laws, regulations or orders, except to the extent that any such violation would not result in a Station Material Adverse Change. 3.13 No Conflicts. Except as set forth on Schedule 3.13, on the Closing Date, neither the execution and delivery by Seller of this Agreement, nor the consummation by Seller of the transactions contemplated hereby would constitute or, with the giving of notice or the passage of time or both, would constitute a material violation of or would conflict in any material respect with or result in any material breach of or any material default under, any of the terms, conditions or provisions of any law or regulation to which Seller is subject, or of the partnership agreement of Seller, or of any contract, agreement or instrument that is required by the terms hereof to be listed on the Schedules hereto to which Seller is a party or by which Seller is bound. 3.14 Brokers. Except for the fees payable to Communications Equity Associates, Inc., which fees shall be paid by Seller, there is no broker or finder or other person who would have any valid claim against any of the parties to this Agreement for a commission or brokerage fee in connection with this Agreement or the transactions contemplated hereby as a result of any agreement or understanding of or action taken by Seller. 3.15 Retransmission Consent Agreements. Schedule 3.15 hereto references a list of all material retransmission consent agreements entered into by Seller with respect to any Station and in effect on the date hereof. 3.16 Environmental. To Seller's actual knowledge and except (a) as stated in Schedule 3.16, (b) as may be revealed by any Phase I or Phase II environmental audit performed or caused to be performed by Buyer or (c) where such matters would not cause a Station Material Adverse Change, neither Seller nor the Owned Stations, (nor the LMA Stations or the JSA Stations, but without any inquiry with respect to the LMA Stations or the JSA Stations) are subject to any (i) "Superfund" evaluation; or (ii) any investigation or proceeding of any governmental authority evaluating whether any remedial action is necessary to respond to release of any chemicals, materials, substances or wastes that are now or hereafter become defined as, or included in the definition of, "hazardous wastes," "hazardous substances," "extremely hazardous substances," "toxic substances," "toxic" or "hazardous pollutants," "hazardous" or "toxic materials," "contaminants," "pollutants," or words of similar import under the Resource Conservation and Recovery Act of 1980, as amended, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, the Hazardous Materials Transportation Act, as amended, the Clean Air Act, as amended, the Clean Water Act, as amended, the Toxic Substances Control act, as amended, the Safe Drinking Water Act, as amended, the Oil Pollution Act, as amended, and their state or local counterparts or equivalents; or (iii) any requirement to remove asbestos material or polychlorinated biphenyls based on Seller's present use of the applicable property. To Seller's actual knowledge except as stated in Schedule 3.16, Seller has complied with all applicable federal, state and local environmental laws and regulations, except where failure to do so would not cause a Station Material Adverse Change. Except (a) as stated in Schedule 3.16, (b) as may be revealed by any Phase I or Phase II environmental audit performed or caused to be performed by Buyer or (c) where such matters would not cause a Station Material Adverse Change, to Seller's actual knowledge, but without any independent environmental assessment (except to the extent any environmental assessment may have previously been undertaken by Seller), as of the Closing Date, the Real Property, the Leasehold Interests and Real Property Improvements contain no condition or substance which under the aforesaid environmental laws and regulations thereunder, as interpreted as of this date by judicial and regulatory authorities, will result in recovery by any person of material remedial or removal costs, expenses or damages, or expenditures by Buyer for abatement or remedial actions. Seller does not have any reason as of the date of this Agreement to believe that an independent environmental assessment would lead to the discovery of any such condition or substance that would cause a Station Material Adverse Change. 3.17 Employee Plans. Copies of all employee benefit plans, all employee welfare benefit plans, all employee pension benefit plans, all multi-employer plans and all multi-employer welfare arrangements (as defined in Sections (3), (1), (2), (37), and (40), respectively, of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), which are currently maintained and/or sponsored by Seller, or to which Seller currently contributes, or has an obligation to contribute in the future, including, without limitation, any agreements containing "golden parachute" provisions and deferred compensation agreements), together with any trusts related thereto and a classification of employees covered thereby (collectively, the "Plans") have previously been delivered to Buyer, and all of the Plans are listed on Schedule 3.17. Except to the extent listed on Schedule 3.17, no such Plan has been terminated by Seller within the past three (3) years. 3.18 Compliance with ERISA. To the actual knowledge of Seller, except as set forth on Schedule 3.18, neither Seller nor any Controlled Group Member (as defined in the Internal Revenue Code of 1986, as amended (the "Code"), Section 414(n)(6)(B)), has ever maintained or sponsored, or contributed to, an employee pension benefit plan (as defined in ERISA Section 3(2)) which is subject to the provisions of Title IV of ERISA. All Plans are in substantial compliance with all applicable provisions of ERISA and the regulations issued thereunder, as well as with all other laws applicable to such Plans, and, in all material respects, have been administered, operated and managed in substantial accordance with the governing documents. All Plans that are intended to qualify (the "Qualified Plans") under Section 401(a) of the Code have been determined by the Internal Revenue Service to be so qualified (except for any prototype plans for which the Internal Revenue Service has issued a determination letter to the creator of such plans), and copies of all current Plan determination letters, most recent Form 5500, or, as applicable, Form 5500-C/R filed with respect to each such qualified Plan or employee welfare benefit plan, and any attachments to such forms have previously been delivered to Buyer by Seller. Based on estimates prepared by Plan actuaries, the amount of unfunded benefit liabilities (within the meaning of ERISA Section 4001(a)(18)) determined as of January 1, 1996 for all Plans subject to Title IV of ERISA does not exceed $300,000. Neither Seller nor any Plan has engaged in any transaction prohibited under the provisions of Section 4975 of the Code or Section 406 of ERISA that could reasonably be expected to result in any liability to Buyer. Except as disclosed in Schedule 3.18, no Plan has incurred an accumulated funding deficiency, as defined in Section 412(a) of the Code and Section 302(l) of ERISA. Further, except to the extent provided in Schedule 3.18, (i) there have been no terminations, partial terminations, or discontinuance of contributions to any Qualified Plan without notice to and approval by the Internal Revenue Service; (ii) with respect to Plans which qualify as "Group Health Plans" under Section 4980B of the Code and Section 607(1) of ERISA and related regulations (relating to the benefit continuation rights imposed by "COBRA"), to the actual knowledge of Seller, Buyer does not have (and will not incur as a result of this transaction) any direct or indirect liability or is (or will be as a result of this transaction) subject to any loss, assessment, excise tax, penalty, loss of federal income tax deduction, or other sanction arising on account of or in respect of any direct or indirect failure by Seller at any time prior to the Closing Date to comply with any such federal or state benefit continuation requirement, which is capable of being assessed or asserted before or after the Closing Date directly or indirectly against Seller with respect to such Group Health Plan; (iii) a copy of the claims history of each Group Health Plan of Seller for the past three (3) years has previously been provided to Buyer; (iv) Seller has no retiree health care obligations to any of its employees; and (v) no severance pay will be due to any employee of Seller as a result of the transaction contemplated herein. 3.19 Taxes. Each of Seller, Sandia, Twin Peaks and Twin Peaks License Partnership has filed or will file all requisite federal, state, local and other tax returns and paid all taxes due thereunder (including withholding tax returns) due for all fiscal periods ended on or before the date hereof which, if not filed, could result in the imposition of any lien or encumbrance on or against the Station Assets and, as of the Closing Date, shall have filed or will file all such returns due for such periods ended on or before the Closing Date (except any such returns for which the filing date has been extended in accordance with normal extension procedures or for which such extension period has not expired). To the actual knowledge of Seller, there are no examinations in progress or claims against Seller, Sandia, Twin Peaks or Twin Peaks License Partnership for any federal, state, local and other taxes (including withholding taxes and any penalties and interest) for any period or periods and no notice of any claim, whether pending or threatened, for taxes has been received. The amount shown and accrued for taxes on the 1995 Year-End Financial Statements as of the respective date thereof are sufficient in accordance with GAAP as of such date for the payment of all taxes of the kinds indicated (including penalties and interest) for all fiscal periods ended on or before such date. 3.20 Certificates of Incorporation, Bylaws and Capitalization of Sandia. A true, correct and complete copy of the certificates of incorporation and bylaws of Sandia, as amended to date, have been provided to Buyer. The authorized capital stock of Sandia consists solely of: (i) 1,000 shares of Common Stock, $.01 par value per share, 110 shares of which are issued and outstanding (the "Sandia Stock") and none of which is held as treasury stock on the date of this Agreement. Seller has good and valid title to the Sandia Stock, and on the Closing Date and on the Option Closing Date with respect to the RCB Twin Peaks Equity Interest, the Sandia Stock will be free of any liens or encumbrances other than Permitted Encumbrances; provided, however, the Sandia Stock may be subject to such restrictions on transfer as may arise under state and/or federal securities or communications laws. All such issued and outstanding shares have been duly authorized and validly issued and are fully paid and nonassessable and to Seller's actual knowledge, have been issued in all material respects in compliance with all applicable state and federal laws concerning the issuance of securities and none of such shares were issued in violation of the preemptive rights of past or present stockholders. There are no shares reserved for issuance. 3.21 Options, Warrants, Rights re: Sandia. There are no outstanding warrants, options (including inactive and nonqualified stock options), agreements to subscribe for or purchase any capital stock or other securities from Sandia or other similar rights (including conversion and preemptive rights). There are no voting trusts or voting agreements among, or irrevocable proxies executed by, Seller, as sole stockholder of Sandia. There are no existing rights of Seller, as sole stockholder to require Sandia to register any securities of Sandia or to participate with Sandia in any registration by Sandia of its securities. There are no agreements of Seller, as sole stockholder of Sandia providing for the purchase or sale of Sandia's capital stock. 3.22 Validity of Sandia Stock. The Sandia Stock, when transferred in compliance with the provisions of the Option Agreement, will be validly issued, will be fully paid and nonassessable, will be free of any preemptive rights, duties or other governmental charges, will be free of any liens or encumbrances other than Permitted Encumbrances and will vest in Buyer 100% of the issued and outstanding stock of Sandia; provided, however, the Sandia Stock may be subject to such restrictions on transfer as may arise under state and/or federal securities or communications laws. 3.23 Partnership Agreements and Partnership Interests in Twin Peaks and Twin Peaks License Partnership. True, correct and complete copies of the partnership agreements of Twin Peaks Radio and Twin Peaks License Partnership, as amended to date, have been provided to Buyer. Sandia owns a 60% general partnership interest and Seller owns a 40% general partnership interest in Twin Peaks (collectively, the "Twin Peaks Partnership Interest"). Twin Peaks owns a 99% general partnership interest and Seller owns a 1% general partnership interest in Twin Peaks License Partnership (collectively, the "Twin Peaks License Partnership Interest"). Sandia and Seller have good and valid title to the Twin Peaks Partnership Interest, and Twin Peaks and Seller have good and valid title to the Twin Peaks License Partnership Interest, and on the Closing Date and on the Option Closing Date with respect to the RCB Twin Peaks Equity Interest, the Sandia Stock, the Twin Peaks Partnership Interest and the Twin Peaks License Partnership Interest will be free of any liens or encumbrances other than Permitted Encumbrances; provided, however, that the Twin Peaks Partnership Interest and the Twin Peaks License Partnership Interest may be subject to such restrictions or transfer as may arise under state and/or federal securities or communications laws. The Twin Peaks Partnership Interest and the Twin Peaks License Partnership Interest have been duly authorized and validly issued pursuant to the respective partnership agreements of Twin Peaks and Twin Peaks License Partnership and are fully paid and nonassessable and none of such Twin Peaks Partnership Interest or Twin Peaks License Partnership Interest have been issued in violation of the preemptive rights of past or present partners. The Twin Peaks Partnership Interest to be transferred to Buyer constitute all of the issued and outstanding partnership interests in Twin Peaks. The Twin Peaks License Partnership Interest to be transferred to Buyer constitute all of the issued and outstanding partnership interests in Twin Peaks License Partnership. 3.24 Options, Warrants, Rights re: Twin Peaks and Twin Peaks License Partnership. There are no outstanding warrants, options (including inactive and nonqualified partnership unit options), agreements to subscribe for or purchase any partnership interest or other securities from Twin Peaks or Twin Peaks License Partnership or other similar rights (including conversion and preemptive rights). There are no voting trusts or voting agreements among, or irrevocable proxies executed by, the partners of Twin Peaks or Twin Peaks License Partnership. There are no existing rights of the partners of Twin Peaks or Twin Peaks License Partnership to require Twin Peaks or Twin Peaks License Partnership to register any securities of Twin Peaks or Twin Peaks License Partnership to participate with Twin Peaks or Twin Peaks License Partnership in any registration by Twin Peaks or Twin Peaks License Partnership of its securities. There are no agreements among the partners of Twin Peaks or Twin Peaks License Partnership providing for the purchase or sale of partnership units of Twin Peaks or Twin Peaks License Partnership. 3.25 Validity of Twin Peaks Partnership Interest and Twin Peaks License Partnership Interest. The Twin Peaks Partnership Interest and Twin Peaks License Partnership Interest, when transferred in compliance with the provisions of the Option Agreement, will be validly issued, will be fully paid and nonassessable, will be free of any preemptive rights, duties or other governmental charges, and will be free of any liens or encumbrances other than Permitted Encumbrances; provided, however, the Twin Peaks Partnership Interest and Twin Peaks License Partnership Interest may be subject to such restrictions on transfer as may arise under state and/or federal securities or communications laws. 3.26 Undisclosed Liabilities. Except (i) as set forth in the 1995 Year-End Financial Statements, (ii) as set forth in Schedule 3.26 and the other Schedules hereto and the Option Agreement and (iii) for liabilities and obligations incurred in the ordinary course of business consistent with past practice, since the date of the most recent consolidated balance sheet of Seller's and its subsidiaries, none of Sandia, Twin Peaks or Twin Peaks License Partnership has any liabilities or obligations of any nature (whether accrued, absolute, contingent or otherwise) required by GAAP to be recognized or disclosed on a consolidated balance sheet of Seller and its subsidiaries or in the notes thereto. 3.27 Totality of Assets. Except as set forth on Schedule 3.27, the assets to be conveyed to and acquired by Buyer hereunder at Closing and the Consent Contracts, together with the assets subject to the Option Agreement, constitute all of the assets owned by Seller or its Affiliates that (i) contributed to the generation of revenues and cash flow from operations of the Stations as of December 31, 1995 or (ii) are used in the business of owning and operating the Stations as presently conducted. 3.28 Complete Disclosure. The representations and warranties in this Article 3 do not include any untrue statements of material fact or omit to state a material fact required to be stated therein necessary to make the statements not misleading in light of the circumstances under which they were made. If prior to the Closing, Seller becomes aware of any material fact or circumstance which changes in any material respect a representation or warranty of Seller set forth or made in this Agreement, the party with such knowledge shall promptly give written notice of such fact or circumstance to Buyer. None of (i) such notification or (ii) any pre-closing investigation made by Buyer of Seller, its properties, businesses, or assets, shall relieve Seller of its obligations under this Agreement, including its representations and warranties made in this Section 3. 3.29 Acquisition of Exchangeable Preferred Stock. With respect to the acquisition at Closing by Seller of the Exchangeable Preferred Stock as contemplated in Section 2.1 hereof, Seller (i) has made its own independent investigation thereof; (ii) has been afforded reasonable access to Buyer and its executive officers with respect thereto; and (iii) is acquiring these securities for investment purposes only and without the intent to effect a public distribution thereof. 3.30 Affiliate Transactions. Except for certain employment agreements set forth on Schedule 3.10 and except as specified in Schedule 3.30, no Station is a party to or bound by any material agreement with or has any obligation to Seller or any officer, director, partner or Affiliate of Seller, other than agreements and obligations on market terms entered into on an arm's length basis. ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF BUYER Buyer represents and warrants to Seller as follows: 4.1 Incorporation. Buyer is a corporation duly organized, validly existing and in good standing under the laws of the State of Maryland, and has the corporate power and authority to enter into and consummate the transactions contemplated by this Agreement. Buyer or an appropriate wholly-owned subsidiary of Buyer is qualified (or will be qualified as of the Closing Date) to do business in the States of California, Illinois, Indiana, Iowa, Kentucky, Louisiana, Missouri, New Mexico, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Texas and any other state in which an Owned Station is doing business. 4.2 Corporate Action. All corporate actions and proceedings necessary to be taken by or on the part of Buyer in connection with the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby and necessary to make the same effective have been duly and validly taken. This Agreement has been duly and validly authorized, executed and delivered by Buyer, and constitutes the valid and binding agreement of Buyer, enforceable in accordance with and subject to its terms, except as enforceability may be limited by laws affecting the enforcement of creditors' rights or contractual obligations generally and by the application of general principles of equity. 4.3 No Conflicts. Neither the execution and delivery by Buyer of this Agreement, nor the consummation by Buyer of the transactions contemplated hereby, would constitute or, with the giving of notice or the passage of time or both, would constitute a material violation of or would conflict with or result in any material breach of or any material default under, any of the terms, conditions or provisions of any law or regulation to which Buyer is subject, or Buyer's articles of incorporation or bylaws, or any contract, agreement or instrument to which Buyer is a party or by which it is bound. 4.4 Brokers. Except for the fees payable to Smith Barney Inc., which fees shall be paid by Buyer, there is no broker or finder or other person who would have any valid claim against any of the parties to this Agreement for a commission or brokerage fee in connection with this Agreement or the transactions contemplated hereby as a result of any agreement or understanding of or action taken by Buyer, after reasonable inquiry by such officers of the matter referred to. 4.5 Litigation. There is no litigation, proceeding or investigation of any nature pending or, to Buyer's actual knowledge, threatened against or affecting Buyer's ability fully to carry out the transactions contemplated by this Agreement or which has or could reasonably be expected to restrain, enjoin, prohibit or render illegal the consummation of the transactions contemplated by this agreement. There are no attachments, executions or assignments for the benefit of creditors or voluntary or involuntary proceedings in bankruptcy pending against or contemplated by Buyer, and no such actions have been threatened against Buyer. For purposes of this Agreement, "actual knowledge" with respect to Buyer means the conscious awareness of facts of the officers of Buyer, after reasonable inquiry by such parties with respect to the matters referred to herein as to which the Buyer is stating its knowledge. 4.6 Assignments. To the actual knowledge of Buyer, except as set forth on Schedule 4.6, Buyer does not know of any reason why any party, other than Seller, to a Program Contract or to any other contract (a "Distributor") will not consent to the assignment of, or assumption by, Buyer of such contract. 4.7 Articles of Incorporation, Bylaws and Capitalization of Buyer. A true, correct and complete copy of the articles of incorporation and bylaws of Buyer, as amended to date, have been provided to Seller. The authorized capital stock of Buyer consists solely of: (i) 35,000,000 shares of Class A Common Stock, $.01 par value per share, 5,960,000 shares of which are issued and outstanding and none of which is held as treasury stock on the date of this Agreement; (ii) 35,000,000 shares of Class B Common Stock, $.01 par value per share, 28,789,981 shares of which are issued and outstanding and none of which is held as treasury stock on the date of this Agreement; and (iii) 5,000,000 shares of Preferred Stock, $.01 par value per share, none of the shares of which is issued and outstanding and none of which is held as treasury stock on the date of this Agreement. All such issued and outstanding shares have been duly authorized and validly issued and are fully paid and nonassessable and to Buyer's actual knowledge, have been issued in all material respects in compliance with all applicable state and federal laws concerning the issuance of securities and none of such shares were issued in violation of the preemptive rights of past or present stockholders. Except as set forth on Schedule 4.8 hereto, the only shares Buyer has reserved for issuance are the shares required for the transfer of the Exchangeable Preferred Stock pursuant to this Agreement and for shares reserved pursuant to certain stock option plans set forth on Schedule 4.8 hereto. 4.8 Options, Warrants, Rights. To the actual knowledge of Buyer, except as listed on Schedule 4.8, there are no outstanding warrants, options (including inactive and nonqualified stock options), agreements to subscribe for or purchase any capital stock or other securities from Buyer or other similar rights (including conversion and preemptive rights). Except as set forth in Schedule 4.8, there are no voting trusts or voting agreements among, or irrevocable proxies executed by, the Class B stockholders of Buyer and to the actual knowledge of Buyer, there are no voting trusts or voting agreements among, or irrevocable proxies created by, the stockholders of Buyer. There are no existing rights of stockholders to require Buyer to register any securities of Buyer or to participate with Buyer in any registration by Buyer of its securities. There are no agreements among the Class B stockholders of Buyer providing for the purchase or sale of Buyer's capital stock, and to the actual knowledge of Buyer, there are no agreements among any other stockholders providing for the purchase or sale of Buyer's capital stock. 4.9 Validity of Stock of Buyer. The Exchangeable Preferred Stock and the Convertible Preferred Stock, when issued in compliance with the provisions of this Agreement, will be validly issued, will be fully paid and nonassessable, will have been issued in compliance with all applicable state and federal laws concerning the issuance of securities and free of any preemptive rights, duties or other governmental charges, and will be free of any liens or encumbrances; provided, however, the Exchangeable Preferred Stock and the Convertible Preferred Stock may be subject to such restrictions on transfer as may arise under state and/or federal securities laws. 4.10 Offering. To the actual knowledge of Buyer, and assuming Seller's representations in Section 3.29 hereof to be true, all offers, sales or issuances by Buyer of its capital stock or other securities have been made in compliance in all material respects with federal securities laws and applicable state securities laws. 4.11 Buyer SEC Documents; Financial Statements. To Buyer's actual knowledge, Buyer has filed all material reports, forms and other documents required to be filed with the SEC since January 1, 1994 (such documents as filed and amended through the date this representation is made or deemed made being called the "Buyer SEC Documents"). As of their respective dates, the Buyer SEC Documents complied in all material respects with the requirements of the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, as the case may be, and the rules and regulations of the SEC promulgated thereunder applicable to such Buyer SEC Documents, and none of the Buyer SEC Documents 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 not misleading. Except to the extent that information contained in any Buyer SEC Document has been revised or superseded by a later-filed Buyer SEC Document filed and publicly available prior to the date this representation is made or deemed made, none of the Buyer SEC Documents contains any untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary in order to make the statements therein not misleading. The financial statements of Buyer included in the Buyer SEC Documents comply as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto, have been prepared in accordance with GAAP (except, in the case of unaudited statements, as permitted by Form 10-Q of the SEC) applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto) and fairly present the consolidated financial position of Buyer and its consolidated subsidiaries as of the dates thereof and the consolidated results of their operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end adjustments). Except as set forth in the Buyer SEC Documents, and except for liabilities and obligations incurred in the ordinary course of business consistent with past practice since the date of the most recent consolidated balance sheet included in the Buyer SEC Documents, neither Buyer nor any of its subsidiaries has any material liabilities or obligations of any nature (whether accrued, absolute, contingent or otherwise) required by GAAP to be recognized or disclosed on a consolidated balance sheet of Buyer and its consolidated subsidiaries or in the notes thereto. ARTICLE 5 COVENANTS OF SELLER PENDING AND AFTER THE CLOSING DATE Seller covenants and agrees, from the date hereof to and including the Closing Date and thereafter where so indicated, that it will act as follows: 5.1 Maintenance of Business. Seller shall, through the Closing Date, with respect to the Station Assets and the License Assets, continue to conduct its business and operations and keep its books of account, records and files in the ordinary and usual course of business. Seller shall from this date forward and at all times thereafter (subject to the provisions of the Option Agreement and the Time Brokerage Agreements) continue to operate the Owned Stations in all material respects in accordance with the terms of the FCC Authorizations and in compliance in all material respects with all applicable laws and FCC rules and regulations and published policies. Seller will promptly execute, or cause Licensee to execute, as appropriate, any necessary applications for the renewal of the FCC Authorizations. Seller will maintain in full force and effect through the Closing Date property damage, liability and other insurance with respect to the Station Assets and the License Assets consistent with Seller's present practices, and on and after the Closing Date through the Option Closing Date (as defined in the Option Agreement) with respect to each Station for which Buyer is entitled to exercise an Option (as defined in the Option Agreement), Buyer shall be named as an additional insured as its interests may appear on the insurance policies carried by Seller with respect to the Station and the License Assets in connection with such Station. Nothing contained in this Agreement shall give Buyer any right from this date forward or at any time thereafter to control the programming, operations or any other matter relating to any Station, any JSA Station or any Option Station, and Seller shall have complete control of the programming, operations and all other matters relating to the Stations and, to the extent applicable, the JSA Stations, subject to the effect of the Time Brokerage Agreements referred to in Sections 7.6 and 8.8 hereof. Prior to the Closing Date, except as set forth in Schedule 5.1 or as otherwise permitted by the last paragraph of this Section 5.1, Seller will not without the prior written consent of Buyer (to the extent the following restrictions are permitted by the FCC and all applicable law): (a) sell, lease, transfer or agree to sell, lease or transfer any Station Assets or License Assets which are material to the operation of any Station, considered as a whole, or which have individually a value in excess of $50,000 or in the aggregate have a value in excess of $250,000 without replacement thereof with a substantially equivalent asset of substantially equivalent kind, condition, and value; (b) enter into (i) any written contract of employment or any collective bargaining agreement which will be binding on Buyer, or (ii) permit any increases in the compensation of any of the employees of any Owned Station or to the extent any employee is employed by Seller, of any LMA Station or any JSA Station, except in the case of (i) and (ii) to the extent consistent with past practices, consistent with the Employee Letter Agreement, or as required by law or existing contract, in which case such contracts and agreements shall be assumed by Buyer and treated as Assumed Liabilities hereunder (except as otherwise contemplated under Section 6.8); provided, however, that Seller may pay bonuses to any of its employees so long as such bonuses do not create a binding obligation upon Buyer after the Closing Date; (c) enter into any contracts under which Seller is authorized to broadcast programming on any Station except to the extent consistent with past practices; (d) apply to the FCC for any construction permit that would materially restrict any Station's present operations or make any material change in the Real Property or Leasehold Interests; (e) modify in any material respect any Plan (except as required by law after consultation with Buyer) to the detriment of Buyer; (f) violate, breach or default under, in any material respect, or take or fail to take any action that (with or without notice or lapse of time or both) would constitute a material violation or breach of, or default under, any term or provision of any material contract or license of any Station, other than as a result of this Agreement, the Option Agreement, the Time Brokerage Agreements and the transactions contemplated hereby and thereby; (g) incur, purchase, cancel, prepay or otherwise provide for a complete or partial discharge in advance of a scheduled payment date with respect to, or waive any right of Seller under, any liability of or owing to Seller in connection with any Station, other than (i) in the ordinary course of business consistent with past practice, (ii) as contemplated pursuant to this Agreement, (iii) the pay-off of any debt of Seller on or prior to the Closing, or (iv) in an aggregate amount not to exceed $1,000,000; (h) engage with any Person in any business combination, except as otherwise contemplated hereunder (including without limitation, as contemplated under Section 2.2 and the schedules related thereto); (i) engage in any transaction with respect to any Station with any officer, director, or Affiliate of Seller (or any Affiliate thereof), either outside the ordinary course of business consistent with past practice or other than on an arm's-length basis; (j) make capital expenditures or commitments for additions to property, plant or equipment constituting capital assets on behalf of any Station outside the ordinary course of business; provided, however, that Seller shall consult with Buyer to be extent Seller seeks to make significant capital expenditures prior to making such capital expenditures; (k) enter into any contract, agreement or commitment to do or engage in any of the foregoing; or (l) enter into and record any easements or restrictive covenants that would materially adversely affect the value or the current or continued use and enjoyment (to the extent such continued use and enjoyment conforms with current use and enjoyment) of the property to which they relate without the consent of Option Holder, which consent will not be unreasonably withheld. Notwithstanding anything in this Agreement to the contrary, Seller shall be entitled to (i) renew or extend the term of any contract listed on Schedules 1.1(b), 1.1(c)(1), (2) and (3), 1.1(d), 1.1(e), 1.1(m) and 3.10 (and on the list of employment agreements delivered to Buyer pursuant to Section 3.10) which, by its terms, expires or will expire prior to December 31, 1996 and, in connection therewith, agrees not to increase the amounts payable thereunder during any such renewal term except in accordance with the usual practices of the related Station and except as set forth above in Section 5.1(b), (ii) take any action specified in subsections (b), (c), (d), (e), (f), (g), (h), (j) and (k) of this Section 5.1 in connection with any acquisition of a television or radio station (including the consummation of any Station Option) or other transaction, as contemplated under Section 2.2(a)(iii) above and (iii) take any action specified in subsections (a), (e), (f), (g), (h), (j) and (k) and enter into a local management agreement in connection with the sale of the New Mexico Stations or the RCB Twin Peaks Equity Interest (the "Twin Peaks Sale") at the time of entry into any agreement of sale for the New Mexico Stations or the RCB Twin Peaks Equity Interest. 5.2 Organization/Goodwill. Seller shall from this date forward and at all times thereafter diligently make all commercially reasonable efforts to preserve the Station Assets and the business organization of the Owned Stations and preserve the goodwill of the Owned Stations' suppliers, customers and others having business relations with it. 5.3 Reports; Access to Facilities, Files and Records. (a) Seller will, as soon as practicable after completion and receipt of the auditors report, provide to Buyer a copy of the audited consolidated balance sheet of Seller and its subsidiaries as of December 31, 1995 and the related consolidated statements of operations and cash flows and partners' equity for Seller and its subsidiaries for the year then ended (the "1995 Year-End Financial Statements"). In addition, Seller will, as soon as practicable after the Closing, deliver to Buyer internally prepared unaudited consolidated balance sheet of Seller and its subsidiaries as of the Closing Date and the related consolidated statement of operations for the period January 1, 1996 through the Closing Date (the "Closing Financial Statements") (b) Seller will, within thirty (30) days after completion, provide to Buyer, for informational purposes only (and without making any representation or warranty with respect thereto), copies of Seller's monthly consolidated balance sheet and operating statement which, in each case, are prepared internally for management purposes in the ordinary course between the date hereof and the Closing Date. (c) At the request of Buyer, Seller shall from time to time give or cause to be given to the officers, employees, accountants, counsel and representatives of Buyer (i) access (in the presence of a representative designated by Seller), upon reasonable prior notice, during normal business hours to the Station Assets and to all books and records relating thereto, and (ii) all such other information concerning the affairs of the Owned Stations and, to the extent reasonably available to Seller, concerning the affairs of the LMA Station, as Buyer may reasonably request, provided that the foregoing does not disrupt or interfere with the business and operations of any of the Stations. 5.4 Consents. Seller shall diligently make and cooperate with Buyer in making all commercially reasonable efforts (without being required to make any payment except as expressly provided for in Section 1.3(c) hereof) to obtain or cause to be obtained prior to the Closing Date consents to the assignment to, or assumption by, Buyer of all material licenses (other than the License Assets), leases and other contracts included in the Station Assets that require the consent of any third party by reason of the transactions provided for in this Agreement. To the fullest extent practicable without causing a default under the Consent Contract and without any expense to Seller, Seller shall cooperate with Buyer in any reasonable arrangement deemed necessary or desirable by Buyer to provide to Buyer, after the Closing Date, the economic and other benefits of the Consent Contracts, including the enforcement of Seller's rights against third parties under the Consent Contracts. 5.5 Notice of Proceedings. Seller shall promptly notify Buyer in writing upon becoming aware of any order or decree or any complaint praying for an order or decree restraining or enjoining the consummation of this Agreement or the transactions contemplated hereunder, or upon receiving any notice from any governmental department, court, agency or commission of its intention to institute an investigation into or to institute a suit or proceeding to restrain or enjoin the consummation of this Agreement or such transactions, or to nullify or render ineffective this Agreement or such transactions if consummated. 5.6 Confidential Information. Seller shall not use or disclose to third parties (except as may be necessary for the consummation of the transactions contemplated hereby, or as required by law, including without limitation, in connection with legal proceedings relating to this Agreement and the transactions contemplated hereby, or otherwise pursuant to subpoena or the request of a governmental authority, and then only with prior notice to Buyer, including delivery of a copy of the subpoena or request, if applicable), this Agreement or any information received from Buyer or its agents in the course of investigating, negotiating and performing the transactions contemplated by this Agreement; provided, however, that Seller may disclose such information to Seller's officers, directors, partners, employees, lenders, advisors, attorneys and accountants who need to know such information in connection with the consummation of the transactions contemplated by this Agreement and who are informed by Seller of the confidential nature of such information. Nothing shall be deemed to be confidential information that: (a) is known to Seller at the time of the disclosure of such information to it; (b) becomes publicly known or available other than as a result of disclosure by or through Seller; (c) is rightfully received by Seller from a third party; or (d) is independently developed by Seller. In the event this Agreement is terminated and the transactions contemplated hereby abandoned, Seller will return to the Buyer all copies of documents, work papers and other written confidential material obtained by Seller in connection with the transactions contemplated hereby. 5.7 Consummation of Agreement. Subject to the express terms and conditions of this Agreement, and without expanding such terms and conditions, Seller shall diligently cooperate with Buyer in making all commercially reasonable efforts in connection with any steps to be taken as part of its respective obligations under this Agreement, and Seller shall diligently make and cooperate in making commercially reasonable efforts to fulfill and perform all conditions and obligations on its part to be fulfilled and performed under this Agreement and to cause all terms and conditions set forth herein to be fulfilled and to cause the transactions contemplated by this Agreement to be fully carried out. 5.8 Notice of Certain Developments. Seller shall give prompt written notice to Buyer (a) if the Station Assets shall have suffered damage on account of fire, explosion or other cause of any nature that (i) is sufficient to prevent operation of any Owned Station or any LMA Station or JSA Station in any material respect for more than twenty-four (24) consecutive hours or (ii) causes a Material Adverse Change; (b) if the regular broadcast transmission of any Owned Station in the normal and usual manner in which it heretofore has been operating is interrupted in any material manner for a period of twenty-four (24) consecutive hours or more; (c) if the Stations, or any one of them, receives notice from any market cable system currently carrying the Station's signal of such market cable system's intention to delete any of the Stations from carriage or change any Station's channel position on such market cable system; (d) if Seller enters into any contract or agreement entered into after the date hereof to be assumed by Buyer hereunder or under the Option Agreement that would be required to be listed on the schedules hereto or under the Option Agreement; or (e) if Seller acquires any other television or radio station or enters into any other transaction contemplated in Schedule 2.2(a)(1). 5.9 Hart-Scott-Rodino. As soon as possible after the date hereof, but in no event later than five (5) business days after the date hereof, Seller shall prepare and jointly file with Buyer all documents with the Federal Trade Commission and the United States Department of Justice, as are required to comply with the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended ("HSR Act"), and shall promptly furnish all materials thereafter requested by any of the regulatory agencies having jurisdiction over such filings. In such event, the parties shall cooperate fully and shall use their commercially reasonable efforts to expedite compliance with the HSR Act. Any filing fees (including, by Seller and Buyer, and to the extent necessary, BV and Baker) with respect to the transaction under the HSR Act shall be borne one-half (1/2) by Seller and one-half (1/2) by Buyer. 5.10 Updated Information. Seller shall provide to Buyer on or shortly prior to the Closing Date a list of any additional material leases or contracts entered into subsequent to the date of this Agreement that would have been required to be listed on Schedules 1.1(b), (d) or (e) hereto pursuant to Article 3 hereof if such leases or contracts existed on the date of this Agreement and a list of any real property acquired between the date hereof and the Closing Date. 5.11 Environmental Audit. Seller shall permit the Buyer and Buyer's agents, as soon as practical after the date hereof and upon Buyer's request therefor, access to the Real Property and the Real Property Improvements and except to the extent prohibited by the applicable leases, to the Leasehold Interests for the purpose of conducting, at Buyer's expense, Phase I and Phase II environmental audits. Any such environmental audits shall be conducted by a reputable environmental investigatory firm of the Buyer's choice subject to the reasonable approval of Seller and in a manner as will not unreasonably interfere with the normal business and operations of any of the Stations. 5.12 Programming. Seller shall write down and fully amortize, effective as of December 31, 1995, and shall cause to be paid and discharged in full on or prior to the Closing, all programming liabilities with regard to Program Contracts that are subject to the "add back" adjustments set forth on Schedule 2.2(a)(2) (the "Add Back Programming Liabilities"). 5.13 Film Payments and Capital Leases. Except as provided under Section 2.2 with respect to Add Back Programming Liabilities, on or prior to Closing Date, Seller shall bring current as of the Closing Date all payments under film contracts including any sports rights fees or payments in accordance with the terms of such film contracts or agreements to broadcast any sporting events (as originally contracted, or in the case of the contract with respect to M*A*S*H at WTTV-TV/WTTK-TV, as may have been modified and in existence on the date hereof). On or prior to the Closing Date, Seller shall retire and pay in full any and all capital lease payments owed by Seller and pay any and all related option prices relating to capital leases held by Seller. 5.14 Down Payment. Seller shall not distribute the Down Payment to its partners prior to the earlier of (i) the Closing Date or (ii) the termination of this Agreement where Seller is entitled to retain the Down Payment. Upon receipt of the Down Payment, until the earlier of (i) the Closing Date or (ii) the termination of this Agreement where Seller is entitled to retain the Down Payment, Seller shall take one or more of the following actions: (1) place the Down Payment (or any portion thereof) in a bank account of Seller which permits Seller to have immediate access thereto; (2) use the Down Payment (or any portion thereof) to make payments under Seller's bank debt; provided that at all times Seller shall have the ability, subject to the terms thereof, to reborrow funds under revolving or other line of credit or similar lending facility in the total amount of the Down Payment used to make payments under the Seller's bank debt; (3) have cash, marketable securities or other assets readily convertible into cash in an amount that is at least equal to the amount of the Down Payment; or (4) any combination of (1) - (3) above so long as the aggregate amount accessible in such account, such revolving or other line of credit or similar facility and such liquid assets shall be at least equal to the Down Payment. 5.15 No Solicitation. Until this Agreement is terminated by its terms, Seller will not (i) solicit, initiate or encourage the submission of any proposal or offer from any Person relating to any (A) merger or consolidation with or into, (B) acquisition or purchase of substantially all of the assets of or substantially all of the equity interest in or (C) similar transaction or business combination involving the Seller or all of the Stations or (ii) participate in any discussions or negotiations regarding, furnish any information with respect to, assist or participate in, or facilitate in any other manner any effort or attempt by any other Person to do or seek any of the foregoing. Until this Agreement is terminated by its terms, Seller will notify Buyer if any Person makes any proposal or offer with respect to any of the foregoing. Seller will not enter into any agreement to transfer, or grant any option or right to acquire, substantially all of the partnership interests of Seller to any Person other than Buyer prior to the termination of this Agreement. It is understood and agreed by Buyer that, notwithstanding anything in this Agreement to the contrary, no breach of this Section 5.15 by Seller will excuse Buyer from its obligation, if any, to consummate the transactions contemplated hereunder. ARTICLE 6 COVENANTS OF BUYER Buyer covenants and agrees that from the date hereof to and including the Closing Date and thereafter where so indicated, that it will act as follows: 6.1 Confidential Information. Buyer shall not use or disclose to third parties (except as may be necessary for the consummation of the transactions contemplated hereby, or as required by law, including, without limitation, in connection with legal proceedings relating to this Agreement and the transactions contemplated hereby, or otherwise pursuant to subpoena or the request of a governmental authority, and then only with prior notice to the other parties hereto, including delivery of a copy of the subpoena or request, if applicable) this Agreement or any information (including, without limitation, financial information and information regarding program contracts and revenue) received from the other parties hereto or their agents in the course of investigating, negotiating and performing the transactions contemplated by this Agreement; provided, however, that the Buyer may disclose such information to Buyer's officers, directors, employees, lenders, advisors, attorneys and accountants who need to know such information in connection with the consummation of the transactions contemplated by this Agreement and who are informed by Buyer of the confidential nature of such information. Nothing shall be deemed to be confidential information that: (a) is known to Buyer at the time of its disclosure to it; (b) becomes publicly known or available other than as a result of disclosure by or through Buyer; (c) is rightfully received by Buyer from a third party; or (d) is independently developed by Buyer. In the event this Agreement is terminated and the purchase and sale contemplated hereby abandoned, Buyer will return to Seller all copies of documents, work papers and other written confidential material obtained by Buyer in connection with the transactions contemplated hereby. 6.2 Consummation of Agreement. Subject to the express terms and conditions of this Agreement, and without expanding such terms and conditions, Buyer shall diligently make and cooperate with Seller in making all commercially reasonable efforts in connection with any steps to be taken as part of its obligations under this Agreement, and Buyer shall diligently make and cooperate with Seller in making all commercially reasonable efforts to fulfill and perform all conditions and obligations on its part to be fulfilled and performed under this Agreement and to cause all terms and conditions set forth herein to be fulfilled and to cause the transactions contemplated by this Agreement to be fully carried out. Buyer agrees to diligently cooperate with Seller in connection with obtaining consents to the assignment to, or assumption by, Buyer of licenses, leases and other contracts included in the Station Assets, and to execute such assumption instruments as may be required in connection with obtaining such consents on monetary terms no less favorable to Buyer than those of Seller under such licenses, leases and other contracts on the date of such assumption; provided, however, that Buyer's cooperation and actions pursuant hereto shall not limit Seller's obligations with respect to the Consent Contracts set forth in Sections 1.3 and 5.4 hereof, or Buyer's obligations with respect to the Consent Contracts set forth in Section 1.3 hereof, or be deemed a waiver of any rights of Buyer or Seller with respect thereto. 6.3 Notice of Proceedings. Buyer will promptly notify Seller in writing upon becoming aware of any order or decree or any complaint praying for an order or decree restraining or enjoining the consummation of this Agreement or the transactions contemplated hereunder, or upon receiving any notice from any governmental department, court, agency or commission of its intention to institute an investigation into or institute a suit or proceeding to restrain or enjoin the consummation of this Agreement or such transactions, or to nullify or render ineffective this Agreement or such transactions if consummated. 6.4 Hart-Scott-Rodino. As soon as possible after the date hereof, but in no event later than five (5) business days after the date hereof, Buyer shall prepare and jointly file with Seller all documents with the Federal Trade Commission and the United States Department of Justice as are required to comply with the HSR Act, and shall promptly furnish all materials thereafter requested by any of the regulatory agencies having jurisdiction over such filings. In such event, the parties shall cooperate fully and shall use their commercially reasonable efforts to expedite compliance with the HSR Act. Any related filing fees under the HSR Act shall be paid in accordance with Section 5.9 hereof. 6.5 Consents and Assignments. Buyer covenants and agrees that it shall provide, on request, to a Distributor such financial or other information as the Distributor may reasonably request in order for the Distributor to consent to the assignment to, and assumption by, Buyer of any Program Contract or other contract. 6.6 Capitalization of Buyer. Prior to the Closing Date, Buyer will not without the prior written consent of Seller (to the extent the following restrictions are permitted by the FCC and all applicable Law): (a) amend its articles of incorporation or by-laws, as applicable, except for the filing of the Articles Supplementary; (b) effect any stock split or otherwise change its capitalization as it exists on the date hereof except as set forth in the Articles Supplementary and as set forth on Schedule 6.6 hereto; (c) issue any stock or make any filing with the SEC, other than any filings required hereunder or made in the ordinary course of business as a public reporting company; or (d) circulate to potential investors any materials in connection with any proposed securities offering. 6.7 Notice of Material Impact. Buyer will promptly notify Seller in writing of any significant developments that have, or could reasonably be expected to have, a material adverse impact on the condition (financial or otherwise) of the business or any material asset of Buyer. 6.8 New Employment Agreements. On or prior to the Closing Date, Buyer shall have caused Sinclair Communications, Inc. ("SCI"), or the SCI Entity, as defined in, and specified under, the Employee Letter Agreement, as the case may be, to have executed and delivered to Seller the New Employment Agreements (as defined in Section 7.8) and Buyer shall have assumed the New Employment Agreements specified in the Employee Letter Agreement from SCI. 6.9 Insurance. On the Closing Date and at all times thereafter, Buyer shall cause all parties currently named as "additional insured" on RCB's policies (a list of which has been previously provided to Buyer) to be named as additional insured parties as their interests may appear, under all insurance policies carried by Buyer with respect to the Stations and the JSA Stations. 6.10 Stock Options. On or prior to the Closing Date, Buyer shall have granted the options contemplated under the Station Employee Letter Agreement to each Station Employee who has entered into an employment agreement substantially in the form of Exhibit 7.8 on or prior to Closing. 6.11 Amended Charter. On or prior to Closing Date, Buyer will submit to Seller a form of an amendment and restatement of Buyer's charter, which shall be in the form of Articles of Amendment and Restatement to the Articles of Incorporation of Buyer which shall permit the issuance of the Convertible Preferred Stock as contemplated under Section 2.1 and performance by the Buyer of all obligations in respect thereof, including, without limitation, the authorization of additional shares of Class A Common Stock, and which shall be in form and substance reasonably satisfactory to Seller (the "Amended Charter"). ARTICLE 7 CONDITIONS TO THE OBLIGATIONS OF SELLER The obligations of Seller to consummate the transactions contemplated by this Agreement to occur on the date scheduled for Closing are, at its option, subject to the fulfillment of the following conditions prior to or at the Closing Date: 7.1 Representations, Warranties, Covenants. (a) The representations and warranties of Buyer contained in this Agreement shall have been true and accurate in all material respects as of the date when made and shall be true and accurate in all material respects as of the Closing Date, except to the extent any such representation or warranty is expressly stated only as of a specified earlier date or dates, in which case such representation or warranty shall be true and accurate in all material respects as of such earlier date or dates and except to the extent changes are permitted or contemplated pursuant to this Agreement; (b) Buyer shall have performed and complied in all material respects with the covenants and agreements required by this Agreement to be performed or complied with by them prior to or at the Closing Date, including, without limitation, delivery in full of the Purchase Price; and (c) Buyer shall have delivered to Seller a certificate of an officer of Buyer dated the Closing Date certifying to the fulfillment of the conditions set forth in Sections 7.1(a) and 7.1(b). 7.2 Proceedings. (a) As of the Closing Date, no action or proceeding shall have been instituted and be pending before any court or governmental body to materially restrain or prohibit, or to obtain material damages in respect of, the consummation of this Agreement that may reasonably be expected to result in a permanent injunction against such consummation or, if the transactions contemplated hereby were consummated, an order to nullify or render ineffective this Agreement or such transactions or the recovery against Seller of such material damages; and (b) As of the Closing Date, none of the parties to this Agreement shall have received written notice (other than a letter of inquiry) from any governmental body of its intention to institute any action or proceeding to materially restrain or enjoin or nullify, or to obtain material damages in respect of, this Agreement or the transactions contemplated hereby that may reasonably be expected to result in a permanent injunction against such consummation or, if the transactions contemplated hereby were consummated, an order to nullify or render ineffective this Agreement or such transactions or the recovery against Seller of such material damages; provided, however, that the foregoing (a) and (b) shall not be deemed to fall within the provisions hereof or qualify as a condition hereunder to the extent such action or proceeding is (1) brought or caused to be brought (i) by any partner, officer, director, agent, Affiliate or creditor of Seller, or any other party claiming by, through or against Seller that is not related to Buyer, (ii) any third party or agent of such party to any Contract relating to any consent required to convey any such Contract or (iii) by any party or agent of such party, who is currently a party to any such affiliation agreement with Seller, Licensee or any Affiliate of Seller or Licensee or in any way relating to any television or radio network affiliation agreement of Seller, Licensee, any Affiliate of Seller or Licensee, Buyer or any Affiliate of Buyer or (2) a Proceeding referred to in Section 2.6 hereof. 7.3 Opinion of Counsel. Seller shall have received opinions of counsel to Buyer dated the Closing Date, in substantially the forms attached to this Agreement as Exhibits 7.3(a) and 7.3(b). 7.4 Hart-Scott-Rodino. The waiting period under the HSR Act shall have expired or been terminated, and there shall not be pending any action instituted by the Federal Trade Commission or the Department of Justice under the HSR Act, and there shall not be outstanding any order of a court relating thereto, restraining the transactions contemplated hereby. 7.5 Leases/Subleases. Seller shall have received copies from Buyer of certain leases (the "Leases") or subleases (the "Subleases") for the Real Property and the Leasehold Interests (other than with respect to the Columbus Stations) fully executed by the Buyer, which will enable Seller to continue to operate the Owned Stations consistent with (i) previous operating expenses and practices, (ii) its FCC Authorizations, and (iii) all FCC rules, regulations and procedures. The Leases and/or Subleases to be delivered hereunder and which are contemplated hereby shall be reasonably acceptable to Seller, and the Subleases shall be consistent in all material terms with the material terms of the existing leases for the Leasehold Interests. The term of each Lease and Sublease shall be coterminous with the term of the Option relating to the Owned Station to which such Lease or Sublease applies. 7.6 Time Brokerage Agreements. Buyer shall have entered into and delivered to Seller time brokerage agreements with Seller for the Group I Stations (as defined in the Option Agreement) and for the Columbus Station in substantially the forms of Exhibits 7.6(a) and 7.6(b), respectively hereto (the "Time Brokerage Agreements") fully executed by Buyer. 7.7 Option Agreement. Seller shall have received from Buyer an option agreement substantially in the form of Exhibit 7.7 hereto, as such agreement may be modified after the date hereof by Seller to give effect to changes in the representations and warranties of Seller and Licensee (including the exhibits and schedules thereto) appropriate to reflect changes occurring or arising after the date hereof that, together with any changes to the representations and warranties of Seller set forth herein, would not cause a Material Adverse Change (as defined in Section 8.10) (the "Option Agreement"), fully executed by Buyer. 7.8 New Employment Agreements. Buyer shall have caused SCI, or the SCI Entity, as defined in, and specified under, the Employee Letter Agreement, as the case may be, to have executed and delivered employment agreements with the persons listed on Schedule 7.8 (or any replacement person designated by Seller, including any person designated to fill a "TBD" position, to fill such position) substantially in the form of Exhibit 7.8 and subject to the limitations set forth in the Employee Letter Agreement (the "New Employment Agreements") and Buyer shall have assumed the New Employment Agreements specified in the Employee Letter Agreement. 7.9 Articles Supplementary. The Articles Supplementary shall have been filed as an amendment to the existing charter of Buyer with the Maryland Department of Assessments and Taxation. 7.10 Material Adverse Change. There shall not have been a material adverse change in Buyer's financial condition or business taken as a whole (provided that the foregoing shall not include any material adverse change attributable to (i) factors affecting the television or radio industries generally, (ii) general national, regional or local economic or financial conditions, (iii) governmental or legislative laws, rules or regulations or (iv) actions taken by Seller or any Affiliate of Seller). 7.11 Approval of Stock Options. All necessary consents of the directors (including any committees thereof) of Buyer to approve all of the stock options described in the Baker Stock Option Agreement, the Corporate Employee Stock Option Agreements contemplated by the Employee Letter Agreement and the Station Employee Stock Option Agreement shall not have been rescinded or revoked and shall be in full force and effect. 7.12 Stock Options. Buyer shall have granted the options contemplated under the Employee Letter Agreement to each Station Employee who has entered into an employment agreement in the form of Exhibit 7.8. 7.13 Amended Charter. The Buyer shall have submitted to Seller the Amended Charter, in form and substance reasonably satisfactory to Seller. ARTICLE 8 CONDITIONS TO THE OBLIGATIONS OF BUYER The obligations of Buyer to consummate the transactions contemplated by this Agreement to occur on the date scheduled for Closing are, at its option, subject to the fulfillment of the following conditions prior to or at the Closing Date; provided that it is understood and agreed by Buyer that the provisions hereof shall be subject to the provisions of Section 2.3(e) hereof: 8.1 Representations, Warranties, Covenants. (a) The representations and warranties of Seller contained in this Agreement shall have been true and accurate as of the date when made and shall be true and accurate as of the Closing Date, except to the extent (i) any such representation or warranty is expressly stated only as of a specified earlier date or dates, in which case such representation and warranty shall be true and accurate as of such earlier specified date or dates except as set forth in (iii) below of this Section 8.1(a), (ii) changes are permitted or contemplated pursuant to this Agreement or (iii) the consequence of the matter set forth in such representation and warranty having failed to be true and accurate as of the date when made, on the Closing Date or on such earlier specified date would not result in a Material Adverse Change. (b) Seller shall have performed and complied in all respects with the covenants and agreements required by this Agreement to be performed or complied with by it prior to or at the Closing Date, except to the extent that the consequence of the failure of Seller to have so performed or complied would not result in a Material Adverse Change. (c) The general partner of Seller shall have delivered to Buyer a certificate of an officer of the general partner of Seller dated the Closing Date certifying to the fulfillment of the conditions set forth in Section 8.1(a) and 8.1(b). 8.2 Proceedings. (a) As of the Closing Date, no action or proceeding shall have been instituted and be pending before any court or governmental body to restrain materially or prohibit, or to obtain material damages in respect of, the consummation of this Agreement that may reasonably be expected to result in a permanent injunction against such consummation or, if the transactions contemplated hereby were consummated, an order to nullify or render ineffective this Agreement or such transactions or for the recovery against Buyer of such material damages; and (b) as of the Closing Date, none of the parties to this Agreement shall have received written notice (other than a letter of inquiry) from any governmental body of its intention to institute any action or proceeding to materially restrain, enjoin or nullify, or to obtain material damages in respect of, this Agreement or the transactions contemplated hereby that may reasonably be expected to result in a permanent injunction against such consummation or, if the transactions contemplated hereby were consummated, an order to nullify or render ineffective this Agreement or such transactions or the recovery against Buyer of such material damages; provided, however, that the foregoing (a) and (b) shall not be deemed to fall within the provisions hereof or qualify as a condition hereunder to the extent such action or proceeding is (1) brought or caused to be brought by (i) any stockholder, bondholder, officer, director, agent, Affiliate or creditor of Buyer or any other party claiming by, through or against Buyer that is not related to Seller,(ii) any third party or agent of such party to any Contract relating to any consent required to convey any such Contract, or (iii) any party or agent of such party, who is currently a party to any such affiliation agreement with Buyer or any Affiliate of Buyer or in any way relating to any television or radio network affiliation agreement of Seller, Licensee, any Affiliate of Seller or Licensee or Buyer or any Affiliate of Buyer; or (2) a Proceeding referred to in Section 2.6 hereof. 8.3 Opinion of Counsel. Buyer shall have received an opinion of counsel to Seller dated the Closing Date in substantially the form attached to this Agreement as Exhibit 8.3. 8.4 Damage to the Assets. The Station Assets shall not have suffered damage on account of fire, explosion or other similar cause of any nature that causes a Material Adverse Change; provided, however, that if, after Seller has duly notified Buyer of such damage, Buyer does not notify Seller that Buyer is terminating this Agreement pursuant to Section 10.1(b)(iii) hereof within the time period specified therein, then Buyer shall be deemed to have waived this condition of Closing. 8.5 Option Agreement. Buyer shall have received from Seller the Option Agreement fully executed by Seller and Licensee. 8.6 Hart-Scott-Rodino. The waiting period under the HSR Act shall have expired or been terminated, and there shall not be pending any action instituted by the Federal Trade Commission or the Department of Justice under the HSR Act, and there shall not be outstanding any order of a court relating thereto, restraining the transaction contemplated hereby. 8.7 Leases/Subleases. Buyer shall have received from Seller, fully executed by Seller, the Leases and/or Subleases referred to in Section 7.5 hereof. 8.8 Time Brokerage Agreements. The Buyer shall have received from Seller the Time Brokerage Agreements, fully executed by Seller. 8.9 Add Back Programming Liabilities. Buyer shall have received evidence that Seller has paid all Add Back Programming Liabilities. 8.10 Material Adverse Change. Since the date of this Agreement, there shall not have been a material adverse change in Seller's and its subsidiaries' financial condition or business taken as a whole, or of the Station Assets taken as a whole (provided that the foregoing shall not include any material adverse change attributable to (i) factors affecting the television or radio industries generally, (ii) general national, regional or local economic or financial conditions, (iii) governmental or legislative laws, rules or regulations, (iv) any affiliation agreement or the lack thereof or the non-transfer to Buyer thereof or (v) actions taken by Buyer or any Affiliate of Buyer) (a "Material Adverse Change"). 8.11 Certain Financial Statements. Seller shall have delivered to Buyer (a) on or prior to the Closing Date, unaudited financial statements (i) for the period from January 1, 1994 to September 8, 1994 with respect to the television stations acquired from Continental Broadcasting Company, (ii) for the period from January 1, 1995 to July 7, 1995 with respect to the radio stations acquired from Keymarket of New Orleans, Inc., Keymarket of NEPA, Inc., Lackazerne, Inc., Keymarket of Buffalo, Inc., Keymarket of Nashville, Inc., Keymarket of Los Angeles, and Keymarket Communications, and (b) not later than ten (10) business days prior to the Closing Date, the 1995 Year-End Financial Statements. 8.12 Marcus Non-Compete. Buyer shall have received the non-competition letter agreement executed by Larry D. Marcus in substantially the form of Exhibit 8.12 hereto. ARTICLE 9 INDEMNIFICATION 9.1 Survival. The representations and warranties of Seller and Buyer contained in this Agreement (including the Schedules hereto) or in any certificate delivered by it or made pursuant to Sections 2.4, 7.1, and 8.1 of this Agreement shall survive the Closing Date for a period of one (1) year after the Closing Date. Except as provided below in this Section 9.1, the covenants of Seller and Buyer under this Agreement to be performed on or before the Closing Date shall survive the Closing Date for a period of one year after the Closing Date. Buyer's obligation to pay, perform or discharge the Assumed Liabilities shall survive until such Assumed Liabilities have been paid, performed or discharged in full. Seller's obligations with respect to all obligations and liabilities not assumed by Buyer pursuant to this Agreement shall survive until such obligations and liabilities have been paid, performed or discharged in full. The covenants and agreements contained in this Article 9 shall continue in full force and effect until fully discharged. Any other covenants or agreements contained herein or made pursuant hereto which by their terms are to be performed after the Closing shall survive until fully performed and discharged in full, including without limitation all obligations and liabilities with respect to the Assumed Liabilities, the Retained Liabilities and the Consent Contracts. 9.2 Indemnification of Buyer. Seller agrees that after the Closing, subject to the limitations in Section 9.4 below, it shall indemnify and hold Buyer and its officers, directors, employees, agents and Affiliates harmless from and against any and all damages, claims, losses, expenses, costs, obligations and liabilities including, without limiting the generality of the foregoing, liabilities for reasonable attorneys' fees and expenses ("Loss and Expense") suffered (whether any such claim arises out of a third party action or is made by Buyer against Seller) by Buyer resulting from (i) any material breach of any representation or warranty made by Seller pursuant to this Agreement; (ii) any material failure by Seller to perform or fulfill any of its covenants or agreements set forth in this Agreement; (iii) any failure by Seller to pay, perform or discharge any liabilities or obligations not specifically assumed by Buyer pursuant to this Agreement; or (iv) any litigation, proceeding or claim by any third party arising from the business or operations of the Station Assets by Seller prior to the Closing Date, except to the extent arising from obligations or liabilities that have been disclosed to Buyer in this Agreement or the Option Agreement in the Schedules hereto or thereto (other than those set forth on Schedule 9.2) and except to the extent arising for obligations or liabilities of or assumed by Buyer pursuant to this Agreement. 9.3 Indemnification of Seller. Buyer agrees that, after the Closing, it shall indemnify and hold Seller and its officers, directors, partners, employees, agents and Affiliates harmless from and against any and all Loss and Expense suffered (whether any such claim arises out of a third party action or is made by Seller against Buyer) by Seller resulting from (i) any material breach of any representation or warranty made by Buyer pursuant to this Agreement; (ii) any material failure by Buyer to perform or fulfill any of its covenants or agreements set forth in this Agreement; (iii) any failure by Buyer to pay, perform or discharge any Assumed Liabilities or any other obligations or liabilities of or assumed by Buyer under this Agreement (including, without limitation, those set forth in Section 10.3 hereof); or (iv) any litigation, proceeding, or claim arising from the business or operations of the Station Assets on or after the Closing Date. 9.4 Limitation of Liability. (i) Notwithstanding any other provision of this Agreement, after the Closing, neither Seller nor Buyer shall indemnify or otherwise be liable to the other unless (a) the party seeking indemnification has complied with the terms of, including the time limits set forth in, Section 9.6 and (b) the aggregate amount of Buyer's Loss and Expense (in the case of Seller's indemnification of Buyer) or Seller's Loss and Expense (in the case of Buyer's indemnification of Seller) exceeds $500,000, in which event the indemnified party shall be entitled to recover its aggregate Loss and Expense inclusive of such $500,000 threshold; provided that such limitation shall not apply to any indemnification obligation of Buyer pursuant to Section 9.3(ii), (iii) or (iv) hereof or Seller pursuant to 9.2(ii), (iii) or (iv) hereof. Notwithstanding any provision contained herein, in no event shall Seller be liable for any amount, which, when combined with any other amounts for which Seller previously has been liable under Section 9.2 hereof and any amount for which Seller and Licensee are liable, or previously have been liable, under Section 9.2 of the Option Agreement is in excess of $50,000,000. (ii) Notwithstanding anything in this Agreement to the contrary, it is understood and agreed that any amounts owed to Buyer by Seller for such Loss and Expense as determined in accordance with this Article 9 shall be made solely and exclusively in the form of a deduction from the Columbus Option Closing Price (as defined in the Option Agreement) that has not yet been paid to Seller and Licensee under the Option Agreement and that once the Columbus Option Closing Price has been paid in full to Seller and Licensee or a portion thereof placed in the Indemnification Fund (as defined in and pursuant to the terms of the Option Agreement) or if the Columbus Option is terminated under the Option Agreement, Buyer shall have no further recourse against Seller or Licensee, and no other payment by Seller shall be required, hereunder, except for any then pending claims against the amount of the Columbus Option Closing Price placed in the Indemnification Fund. (iii) Anything in this Agreement or any applicable law to the contrary notwithstanding, neither Seller (except to the extent expressly provided for in Section 9.4(ii)) nor any partner, director, officer, employee, agent or Affiliate of Seller (including any shareholder, director, officer, employee, agent or Affiliate of the general partner of the Seller) shall have any personal liability to Buyer as a result of the breach of any representation, warranty, covenant or agreement of Seller contained herein or otherwise and shall have no personal obligation to indemnify Buyer for any of Buyer's Losses or Expenses. 9.5 Bulk Sales Indemnity. Buyer hereby waives compliance with the provisions of any applicable bulk transfer laws. Subject to the limitations set forth in Section 9.4 above, Seller further agrees to indemnify and hold Buyer harmless from and indemnify Buyer against any and all Loss and Expense relating to any claims made by creditors, with respect to non-compliance with any bulk transfer law, except to the extent that such claims result from the Assumed Liabilities and other obligations or liabilities to be paid or discharged by Buyer as a result of this Agreement and/or Buyer's failure to pay the same when due. 9.6 Notice of Claims. If Buyer or Seller believes that it has suffered or incurred any Loss and Expense, such party shall notify the other promptly in writing and, in any event, within one year of the date of this Agreement, describing such Loss and Expense, the factual basis for such claim, the amount thereof, estimated in good faith, and the method of computation of such Loss and Expense, all with reasonable particularity and containing a reference to the provisions of this Agreement in respect of which such Loss and Expense shall have occurred. If any action at law or suit in equity is instituted by a third party with respect to which any of the parties intends to claim any liability or expense as Loss and Expense under this Article 9, such party shall within twenty (20) days after receiving written notice thereof (or sooner to the extent the indemnifying party would not have time to adequately take the actions contemplated under Section 9.7), notify the indemnifying party of such action or suit. 9.7 Defense of Third Party Claims. The indemnifying party under this Article 9 shall have the right to conduct and control through counsel of its own choosing the defense of any third party claim, action or suit (and the indemnified party shall cooperate fully with the indemnifying party), but the indemnified party may, at its election, participate in the defense of any such claim, action or suit at its sole cost and expense provided that, if the indemnifying party shall fail to defend any such claim, action or suit, then the indemnified party may defend through counsel of its own choosing such claim, action or suit, and (so long as it gives the indemnifying party at least fifteen (15) days' notice of the terms of the proposed settlement thereof and permits the indemnifying party to then undertake the defense thereof) settle such claim, action or suit, and to recover from the indemnifying party the amount of such settlement or of any judgment and the costs and expenses of such defense. The indemnifying party shall not compromise or settle any third party claim, action or suit without the prior written consent of the indemnified party, which consent will not be unreasonably withheld or delayed. 9.8 Indemnity as Sole Remedy. After the Closing Date, indemnification pursuant to this Article 9 shall be the sole and exclusive remedy of any party to this Agreement for any breach of a representation, warranty or covenant made or obligation undertaken by any other party, or for any Loss or Expense arising out of or relating to the items listed in Sections 9.2 and 9.3 or otherwise related to the transactions contemplated hereby, other than in respect of the Registration Rights Agreement, the Time Brokerage Agreements, the Option Agreement, the Employment Agreement, the Consulting Agreement, the Baker Stock Option Agreement, the Corporate Employee Stock Option Agreement, the Station Employee Stock Option Agreement, the Employee Letter Agreement, the Voting Agreement, the ISO Amendment, the LTIP, the Amended Charter or the Articles Supplementary (collectively, the "Transaction Documents") which shall be governed by their terms, whether such claim may be asserted as a breach of contract, tort or otherwise. 9.9 Arbitration. To the fullest extent not prohibited by law, any controversy, claim or dispute arising out of or relating to Article 9 of this Agreement, including the determination of the determination of the scope or applicability of this Agreement to arbitrate, shall be settled by final and binding arbitration in accordance with the rules then in effect of the American Arbitration Association ("AAA"), as modified or supplemented under this section, and subject to the Federal Arbitration Act, 9 U.S.C. Sections 1-16. The decision of the arbitrators shall be final and binding provided that, where a remedy for breach is prescribed hereunder or limitations on remedies are prescribed, the arbitrators shall be bound by such restrictions, and judgment upon the award rendered by the arbitrators may be entered in any court having jurisdiction thereof. If any series of claims arising out of the same or related transactions shall involve claims which are arbitrable under the preceding paragraph and claims which are not, the arbitrable claims shall first be finally determined before suit may be instituted upon the others and the parties will take such action as may be necessary to toll any statutes of limitations, or defenses based upon the passage of time, that are applicable to such non-arbitrable claims during the period in which the arbitrable claims are being determined. In the event of any controversy, claim or dispute that is subject to arbitration under this Section 9.9, any party thereto may commence arbitration hereunder by delivering notice to the other party or parties thereto. The arbitration panel shall consist of three arbitrators, appointed in accordance with the procedures set forth in this paragraph. Within ten (10) business days of delivery of the notice of commencement of arbitration referred to above, Seller, on the one hand, and Buyer, on the other hand, shall each appoint one arbitrator, and the two arbitrators so appointed shall within ten (10) business days of their appointment mutually agree upon and appoint one additional arbitrator (or, if such arbitrators cannot agree on an additional arbitrator, the additional arbitrator shall be appointed by the AAA as provided under its rules); provided, that persons eligible to be selected as arbitrators shall be limited to attorneys at law who (i) are on the AAA's Large, Complex Case Panel, (ii) have practiced law for at least 15 years as an attorney specializing in either general commercial litigation or general corporate and commercial matters and (iii) are experienced in matters involving the broadcasting industry. The arbitration hearing shall commence no later than thirty (30) business days after the completion of the selection of the arbitrators. Consistent with the intent of the parties hereto that the arbitration be conducted as expeditiously as possible, the parties agree that (i) discovery shall be limited to the production of such documents and the taking of such depositions as the arbitrators determine are reasonably necessary to the resolution of the controversy, claim or dispute and (ii) the arbitrators shall limit the presentation of evidence by each side in such arbitration to not more than ten (10) full days (or the equivalent thereof) or such shorter period as the arbitrators shall determine to be necessary in order to resolve the controversy, claim or dispute. The arbitrators shall be instructed to render a decision within ten (10) business days of the close of the arbitration hearing. If arbitration has not been completed within ninety (90) days of the commencement of such arbitration, any party to the arbitration may initiate litigation upon ten (10) days written notice to the other party(ies); provided, however, that if one party has requested the other to participate in an arbitration and the other has failed to participate, the requesting party may initiate litigation before the expiration of such ninety-day period; and provided further, that if any party to the arbitration fails to meet any of the time limits set forth in this Section 9.9 or set by the arbitrators in the arbitration, any other party may provide ten (10) days written notice of its intent to institute litigation with respect to the controversy, claim or dispute without the need to continue or complete the arbitration and without awaiting the expiration of such ninety-day period. The parties hereto further agree that if any of the rules of the AAA are contrary to or conflict with any of the time periods provided for hereunder, or with any other aspect of the matters set forth in this Section 9.9, that such rules shall be modified in all respects necessary to accord with the provisions of this Section 9.9 (and the arbitrators shall be so instructed by the parties). The arbitrators shall base their decision on the terms of this Agreement and applicable law and judicial precedent which a United States District Court sitting in the District of Maryland (Southern Division) would apply in the event the dispute were litigated in such court, and shall render their decision in writing and include in such decision a statement of the findings of fact and conclusions of law upon which the decision is based. Each party agrees to cooperate fully with the arbitrator(s) to resolve any controversy, claim or dispute. The arbitrators shall not be empowered to award punitive damages or damages in excess of actual damages. The venue for all arbitration proceedings shall be Rockville, Maryland. ARTICLE TERMINATION/MISCELLANEOUS 10.1 Termination of Agreement. This Agreement may be terminated at any time on or prior to the Closing Date as follows: (a) By Seller: (i) if Buyer fails to comply with Section 6.4 hereof within ten (10) business days after Seller notifies Buyer that Buyer has not complied with such Section; provided that, in the case termination is based on Buyer's failure to comply with Section 6.4, Seller shall have complied with Section 5.9; or (ii) if any of the conditions provided in Article 7 have not been met by the Termination Date and have not been waived, provided that Seller is not in default or breach in any material respect of its representations and warranties, covenants or agreements under this Agreement and that the failure to meet such conditions is not due to Seller's breach of the Agreement; provided, however, that if on such date the conditions specified in Section 7.1(a) and (b) hereof have not been satisfied, Seller shall deliver written notice thereof to Buyer and Buyer's senior lenders ("Buyer's Lenders") under its then existing senior credit facility (the name and notice information regarding which Buyer shall provide to Seller), and Seller shall not be entitled to terminate this Agreement until (1) after it has delivered such notice; (2) after delivery of such notice, if Buyer fails to make the payment required pursuant to Sections 2.1 and 2.3(d); or (3) if the payment is made pursuant to Sections 2.1 and 2.3(d), if such conditions have not been satisfied in full within fifteen (15) days following receipt of such notice. (b) By Buyer: (i) if Seller fails to comply with Section 5.9 hereof within ten (10) business days after Buyer notifies Seller that Seller has not complied with such Section; provided that, in the case termination is based on Seller's failure to comply with Section 5.9, Buyer shall have complied with Section 6.4; or (ii) subject to the provisions of Section 2.3(e) hereof, if any conditions provided in Article 8 have not been met by the Termination Date and have not been waived, provided that Buyer is not in default or breach in any material respect of its representations and warranties, covenants or agreements under this Agreement and that the failure to meet such conditions is not due to Buyer's breach of the Agreement; or (iii) no later than thirty (30) business days after Seller has notified Buyer pursuant to Section 8.4 of the occurrence of any damage or event as described in Section 8.4. (c) By Either Buyer or Seller as follows: (i) by mutual written consent of Buyer and Seller. No party hereto shall have any liability to any other for costs, expenses, damages, loss of anticipated profits or otherwise as a result of a termination pursuant to this Section 10.1 except as provided in Section 10.2 hereof. 10.2 Liabilities Upon Termination. (a) Concurrent with the execution hereof, Buyer is delivering Sixty Million Dollars ($60,000,000) (the "Down Payment") to Seller by wire transfer of immediately available funds which will be held and disbursed pursuant to the terms hereof. At Closing, the Cash Purchase Price shall be reduced by the Down Payment. To the extent the Down Payment is applied to the Cash Purchase Price or is paid to Buyer pursuant to Section 10.2(c), the Down Payment shall be deemed to include the "Down Payment Interest", which means interest on the Down Payment calculated at a rate of four percent (4%) per annum on the basis of a 365-day year based on the actual number of days the Down Payment was held by Seller. (b) The full amount of the Down Payment shall be retained by Seller if the Agreement is terminated by Seller pursuant to Section 10.1(a), except if termination is due to a failure of Section 7.4 to be satisfied and Buyer is not in default of its obligations under this Agreement, then, and in such event, the Down Payment shall be payable by Seller to Buyer, together with the Down Payment Interest. (c) The full amount of the Down Payment shall be payable to Buyer by Seller if the Agreement is terminated by Buyer pursuant to Section 10.1(b), and the full amount of any additional Cash Purchase Price payments previously made by Buyer in connection with any Extended Periods pursuant to Section 2.1 hereof shall be payable to Buyer by Seller only if the Agreement is terminated by Buyer pursuant to Section 10.1(b)(ii) as a result of the Seller's grossly negligent or willful and wrongful breach of its obligations under this Agreement. (d) The full amount of the Down Payment shall be payable pursuant to the joint agreement of Buyer and Seller in the event that this Agreement is terminated by Buyer and Seller pursuant to Section 10.1(c)(i). (e) In the event of termination, as provided in Section 10.1, the provisions of Section 3.14, 4.4, 5.6, 6.1, this 10.2, 10.7-10.15, 10.17-10.19 and 10.22 shall survive. The sole and exclusive remedy of Seller in connection with its termination of this Agreement or a failure of performance or compliance by Buyer with any covenant or agreement contained in this Agreement prior to the Closing shall be the right of Seller to retain the Down Payment as provided in this Section 10.2 and any additional Cash Purchase Price payments previously made by Buyer hereunder. The sole and exclusive remedies of Buyer in connection with Buyer's termination of this Agreement for any failure of performance or compliance by Seller with any covenant or agreement contained in this Agreement prior to the Closing shall be limited to (i) their right to a return of the Down Payment, and under certain circumstances, additional Cash Purchase Price payments made by Buyer hereunder, each as expressly provided in this Section 10.2, (ii) their right to seek specific enforcement of this Agreement against Seller; provided, that Buyer shall not be entitled to specific performance unless it shall have complied with and shall not be in breach of the material terms and conditions of this Agreement, and (iii) the right to bring claim(s) for actual but not consequential or incidental damages; provided, however, that notwithstanding anything to the contrary in the foregoing, to the extent that Seller breaches its obligation to close hereunder after all conditions provided in Article 7 have been met by Buyer or waived by Seller and Buyer stands ready, willing and able to close hereunder, (x) Buyer shall have the right to bring an action for specific performance and to the extent Buyer is not granted specific performance or elects not to bring an action for specific performance, Seller shall pay to Buyer Sixty Million Dollars ($60,000,000) but Buyer shall have no other rights or remedies hereunder and (y) if Seller then enters into a binding agreement within one year from the date of this Agreement to sell substantially all of the assets of Seller or substantially all of the partnership interests in Seller for an amount in excess of the value of the Purchase Price, Seller shall pay to Buyer (1) the difference between the value of the Purchase Price and the value of the total purchase price received by Seller in connection therewith minus (2) $60,000,000. Buyer's remedies are cumulative and not intended to be limited by the doctrine of election of remedies. Without limiting the generality of the foregoing, neither Buyer nor Seller may rely on the failure of any condition precedent set forth in Articles 7 and 8, as applicable, to be satisfied if such failure was caused by such other party's (or parties') failure to act in good faith, or a breach of or failure to perform its representations, warranties, covenants or other obligations in accordance with the terms of this Agreement. (f) Anything in this Agreement or any applicable law to the contrary notwithstanding, neither Seller (except to the extent expressly provided for in Section 10.1(e)) nor any partner, director, officer, employee, agent or Affiliate of Seller (including any shareholder, director, officer, employee agent or Affiliate of the general partner of the Seller) shall have any personal liability to Buyer as a result of the breach of any representation, warranty, covenant or agreement of Seller contained herein or otherwise and shall have no personal obligation to Buyer for any of Buyer's remedies hereunder. 10.3 Employee Matters. The following provisions shall act exclusively for the benefit of the parties to this Agreement and not for the benefit of any other person or entity: (a) Effective as of the Closing Date, Buyer shall offer employment to each employee of Seller who is employed at any Station, any JSA Station or the Columbus Station immediately prior to the Closing Date (collectively, the "Assumed Employees"), other than those employees designated by Seller that are to be retained by Seller under the TBA. Except as otherwise provided in this Section 10.3 or as any employment agreement between Buyer and any Assumed Employee may otherwise require, the Buyer shall offer employment to the Assumed Employees on terms and conditions that are substantially similar in the aggregate to the terms and conditions of employment of Buyer's employees as of the Closing Date, including the provision of retirement and health care benefits. Buyer shall assume all contracts of employment of the Assumed Employees and notwithstanding anything in the foregoing to the contrary, to the extent such employment contract or collective bargaining agreement assumed hereunder provides for terms and conditions in addition to those referenced in the preceding sentence, Buyer shall assume the terms thereof. Each Assumed Employee shall receive credit for past service with Seller for all purposes under Buyer's benefits plans. With respect to the employees of the Columbus Station, from and after the date hereof through and including the Columbus Option Closing Date (as defined in the Option Agreement) or, if applicable, 60 days after the termination of the Option with respect to Columbus under the Option Agreement, Buyer agrees that it will not, nor will it permit any Affiliate of Buyer to, enter into an agreement that would restrict or prohibit any such employee from being employed by Seller in the future. (b) Buyer shall assume full responsibility and liability for offering and providing "Continuation Coverage" to any "Qualified Beneficiary" who is covered by a "Group Health Plan" sponsored or contributed to by Seller or any entity required to be combined with Seller (within the meaning of Sections 414(b), (c), (m) or (o) of the Code) and who has experienced a "Qualifying Event" or is receiving "Continuation Coverage" on or prior to the Closing Date. Schedule 10.3 identifies all Qualified Beneficiaries entitled to Continuation Coverage under any Seller Group Health Plan on the date of this Agreement, and Seller shall deliver on the Closing Date a list of Qualified Beneficiaries entitled to Continuation Coverage as of such date. "Continuation Coverage," "Qualified Beneficiary," "Qualifying Event" and "Group Health Plan" all shall have the meanings given such terms under Section 4980B of the Code and Section 601 et seq. of ERISA. (c) Buyer shall offer health plan coverage to all Assumed Employees under the terms and conditions generally applicable to Buyer's employees as of the Closing Date. For purposes of providing such coverage, Buyer shall waive all preexisting condition limitations for all Assumed Employees covered by Seller's group health plan as of the Closing Date and shall provide such health care coverage effective as of the Closing Date without the application of any eligibility period for coverage. In addition, Buyer shall credit all employee payments toward deductible and co-payment obligations limits under Seller's health care plans for the plan year which includes the Closing Date as if such payments had been made for similar purposes under Buyer's health care plans during the plan year which includes the Closing Date, with respect to the Assumed Employees. (d) Buyer shall grant Assumed Employees credit for and shall assume and be responsible for any liabilities with respect to sick leave and personal days accrued but unused by any Assumed Employees as of the Closing Date, and, subject to the proration provided for in Section 2.2(a)(i), Buyer shall grant Assumed Employees credit for and shall assume and be responsible for any liabilities with respect to any accrued but unused vacation for such employees as of the Closing Date. (e) Seller currently maintains the WLOS TV, Inc. Retirement Plan (the "WLOS Plan"), a defined benefit pension plan for the benefit of certain employees. The WLOS Plan has been frozen and all future benefit accruals ceased, effective as of January 10, 1994. Buyer agrees, effective as of the Closing Date to fully assume sponsorship of such plan including all obligations of the sponsor to contribute to and administer the plan. Buyer and Seller agree to perform all acts necessary or proper to consummate the assumption of the WLOS Plan, including, but not limited to, the making of all proper filings with the Internal Revenue Service and the Department of Labor and the receipt of all necessary notices or approvals from governmental agencies. (f) Within a reasonable period of time after the Closing Date, Seller shall transfer from the River City Investment and Retirement Plan (the "Seller 401(k) Plan") to the Sinclair Broadcast Group, Inc. 401(k) Profit Sharing Plan and Trust ("Buyer's 401(k) Plan") an amount, in cash, equal to the aggregate account balances held in the Seller 401(k) Plan as of the date of transfer with respect to all Assumed Employees. Prior to the date of such transfer, and as preconditions thereto: (i) Buyer shall use commercially reasonable efforts to deliver to Seller a copy of the most recently issued Internal Revenue Service ("IRS") determination letter (or other proof satisfactory to counsel for Seller) that Buyer's 401(k) Plan is qualified under the Code, and (ii) Seller shall use commercially reasonable efforts to deliver to Buyer a copy of the most recently issued IRS determination letter (or other proof satisfactory to counsel for the Buyer) that the Seller 401(k) Plan is qualified under the Code (including, to the extent relevant, a determination letter issued to a prototype plan adopted by Seller). Subsequent to the transfer of assets to Buyer's 401(k) Plan, neither Seller nor the Seller 401(k) Plan shall retain any liability with respect to such Assumed Employees to provide them with benefits in accordance with the terms of the Seller 401(k) Plan. On or prior to the Closing Date, Seller shall deliver to Buyer a list of all Assumed Employees, indicating thereon the total amount deferred in pre-tax dollars to the Seller 401(k) Plan by each Assumed Employee under the terms of Section 402(g) of the Code with respect to the plan year of the Seller 401(k) Plan in which Closing occurs. Seller and Buyer agree to cooperate with respect to any government filing, including, but not limited to, the filing of IRS Forms 5310-A, if necessary, to effect the transfer of assets contemplated by this Section 10.3. (g) Buyer agrees that Seller may inform its employees that Buyer has agreed that the employees will be offered employment as provided in this Section 10.3; provided, however, that Buyer shall have the right to approve any written statement to be made by Seller in connection therewith. (h) Seller currently maintains retiree medical coverage for certain employees and former employees listed on Schedule 10.3 (the "Retirees") and Buyer hereby agrees to continue such retiree medical coverage for the Retirees. Retiree coverage offered by Buyer under this Section 10.3(h) will be under the same terms and conditions generally applicable to Buyer's current employees, subject to offsets, at the option of Buyer, for any health care benefits, whether from a governmental source or from other employers, payable to the affected former employees of Seller. 10.4 Proxy Statement; Special Stockholders Meeting to Approve Amended Charter. Buyer agrees that, as soon as practicable after the Closing Date but in no event more than sixty (60) days after the Closing Date, it shall cause to be filed with the Securities and Exchange Commission (the "SEC") proxy statement materials for the purpose of soliciting proxies from the holders of Buyer Common Stock in order to approve, at the next regularly scheduled or special meeting of Buyer's stockholders (which meeting, in any event shall be scheduled to occur not more than 90 days after the Closing Date), (i) the adoption of an amendment and restatement of Buyer's charter in the form of the Amended Charter, which is necessary in order to effect the issuance of the Convertible Preferred Stock as contemplated under Section 2.1 hereof, and (ii) to approve the Consulting Agreement, Employment Agreement, the ISO Amendment and the LTIP and the issuance of all of the stock options described in the Baker Stock Option Agreement, the Corporate Employee Stock Option Agreement, the Station Employee Stock Option Agreement and to the extent approval is necessary, the Employee Letter Agreement. Buyer shall use its commercially reasonable efforts to obtain such clearance by the SEC of such proxy statement materials as promptly as possible, and as soon as is permissible under the rules and regulations of the SEC, Buyer shall cause definitive copies of such proxy materials to be distributed to Buyer's stockholders. Buyer thereafter shall use its commercially reasonable efforts to obtain the approval of its stockholders to the adoption of Amended Charter and the approval of the other matters described in this Section 10.4. Buyer shall cause the Amended Charter to be filed with the Maryland Department of Assessments and Taxation as soon as practicable after the adoption thereof by its stockholders. Prior to such filing of the Amended Charter, Buyer will not, without the prior written consent of Seller (to the extent the following restrictions are permitted by the FCC and all applicable Law): (a) amend its articles of incorporation or by-laws, as applicable, except for the filing of the Articles Supplementary; or (b) effect any stock split or otherwise change its capitalization as it exists on the date hereof except as set forth in the Articles Supplementary and as set forth on Schedule 6.6 hereto. Buyer shall issue the Convertible Preferred Stock to Seller in exchange for the Exchangeable Preferred Stock immediately after the filing by Buyer with the Maryland Department of Assessments and Taxation of the Amended Charter. Thereafter, Seller shall be permitted to distribute such shares of Convertible Preferred Stock to its partners and warrant holders and to the stockholders of Seller's corporate general partner, and such transferees also shall become parties to the Registration Rights Agreement with respect to the shares of Buyer Common Stock underlying such Convertible Preferred Stock; provided that if Seller has not received the Convertible Preferred Stock within twelve (12) months after the Closing Date, it shall be permitted to distribute the Exchangeable Preferred Stock to the same parties to whom the Convertible Preferred Stock may be transferred. Buyer shall cooperate with Seller in all respects in connection with such distribution of shares of Exchangeable Preferred Stock (to the extent applicable) and Convertible Preferred Stock (including, without limitation, in connection with the issuance to such transferees of Seller of new share certificates for such Convertible Preferred Stock in such share denominations (not to exceed in the aggregate the number of shares issuable to Seller in exchange for the Exchangeable Preferred Stock) as shall be designated by Seller to Buyer in writing); provided, however, that prior to such distribution to such transferees, Seller shall have caused such persons or entities to whom such shares are to be transferred to deliver to Buyer such representation letters and stockholder questionnaires as Buyer may reasonably request in order for Buyer to comply with the applicable requirements of federal and state securities laws relevant to such distribution. 10.5 Registration Statement; Nasdaq Listing. Buyer agrees that, in no event more than sixty (60) days after the date as of which it has filed the Amended Charter with the Maryland Department of Assessments and Taxation, it shall file with the SEC, in accordance with the Registration Rights Agreement, substantially in the form of Exhibit 10.5 hereto (the "Registration Rights Agreement"), and the applicable provisions of the Securities Act of 1933, as amended, a registration statement on Form S-3 (or such other form as may be appropriate) with respect to the resale by Seller or such partners of Seller or stockholders of the corporate general partner of Seller (as shall be designated in writing by Seller to Buyer) of the shares of Buyer Common Stock underlying the Convertible Preferred Stock which is to be issued as contemplated under Section 2.1 hereof, which registration statement shall be kept effective in accordance with the Registration Rights Agreement (such registration statement is hereinafter referred to as the "Registration Statement"). Buyer shall otherwise comply with the applicable provisions of the Registration Rights Agreement in seeking to obtain the effectiveness thereof as soon after the filing thereof as is reasonably practicable. In connection with any such Registration Statement, Seller shall furnish (and shall cause such partners of Seller or stockholders of the corporate general partner of Seller as have been designated by Seller to receive shares of Convertible Preferred Stock, as contemplated above, to furnish) all information (financial and other) that is requested by the Staff of the SEC or is reasonably required under the applicable SEC rules and forms on a timely basis to enable Buyer to comply with its obligations under this Section 10.5 and the Registration Rights Agreement. Buyer also shall apply, prior to or concurrently with the filing of the Registration Statement, to the Nasdaq National Market System for the listing of the Buyer Common Stock underlying the Convertible Preferred Stock and shall use commercially reasonably efforts to obtain approval for the listing of such stock. 10.6 Expenses. Subject to the provisions of Sections 5.9, 3.14 and 4.4, each party hereto shall bear all of its expenses incurred in connection with the transactions contemplated by this Agreement, including, without limitation, accounting and legal fees incurred in connection herewith; provided, however, that Seller on the one hand, and Buyer on the other hand, shall each pay one-half of any sales or transfer taxes (including any real property transfer taxes) arising from transfer of the Station Assets. 10.7 Assignments. This Agreement shall not be assigned by any party hereto without the prior written consent of the other parties except that Buyer may assign its rights and interests hereunder (in whole or in part as to any Station or JSA Station) to a direct or indirect wholly-owned subsidiary of Buyer or of Buyer in which event such assignee shall be responsible for all representations, covenants and agreements of Buyer hereunder as if such assignee was a party hereto provided that Buyer gives Seller written notice thereof and that any such assignment above shall not relieve Sinclair Broadcast Group, Inc. or any permitted assignee of any of its obligations or liabilities hereunder (including, without limitation, the obligations of Buyer hereunder to issue shares of its capital stock pursuant to Section 2.1 and the obligations specified in Sections 10.4 and 10.5 hereof). To the extent of any such assignment by Buyer in accordance with the terms of Section 10.5 hereof, Seller shall deliver any such documents contemplated under Section 2.4(a) to such assignee provided that once such delivery shall have been made to such assignee, Seller's obligations hereunder with respect to such delivery shall be deemed to have been discharged. It is understood and agreed that Seller may assign its rights to receive hereunder, or otherwise distribute, the Stock Purchase Price to the partners of Seller. It is understood and agreed that nothing herein shall be deemed to prohibit a transfer of control of Seller or Licensee or the assignment of any FCC Authorizations of the other License Assets by Seller or Licensee. Any attempt to assign this Agreement without any required consent shall be void. It is understood and agreed that nothing herein shall be deemed to expand the rights granted hereunder to any permitted assignee, which rights shall be in combination with, and not in addition to, the rights of Buyer. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. 10.8 Further Assurances. Subject to the terms and conditions of this Agreement, from time to time prior to, at and after the Closing Date, each party hereto will use commercially reasonable efforts to take, or cause to be taken, all such actions and to do or cause to be done, all things, necessary, proper or advisable under applicable laws and regulations to consummate and make effective the sale contemplated by this Agreement and the consummation of the other transactions contemplated hereby, including executing and delivering such documents as the other party being advised by counsel shall reasonably request in connection with the consummation of this Agreement and the consummation of the other transactions contemplated hereby, including, without limitation, the execution and delivery of any and all confirmatory and other instruments, in addition to those to be delivered on the Closing Date. 10.9 Notices. All notices, demands and other communications which may or are required to be given hereunder or with respect hereto shall be in writing, shall be delivered personally or sent by nationally recognized overnight delivery service, charges prepaid, or by registered or certified mail, return-receipt requested, or by facsimile transmission, and shall be deemed to have been given or made when personally delivered, the next business day after delivery to such overnight delivery service, when dispatched by facsimile transmission, five (5) days after deposited in the mail, first class postage prepaid, addressed as follows: (a) If to Seller: River City Broadcasting, L.P. 1215 Cole Street St. Louis, Missouri 63106 Telecopier: (314) 259-5709 Attn.: Mr. Barry Baker and Mr. Larry D. Marcus Telecopier: (314) 259-5709 with a copy to: Dow, Lohnes & Albertson A Professional Limited Liability Company 1200 New Hampshire Ave., N.W. Suite 800 Washington, D.C. 20036-6802 Attn.: Leonard J. Baxt, Esq. Telecopier: (202) 776-2222 and with a copy to: Baker & Botts 800 Trammell Crow Center 2001 Ross Avenue Dallas, Texas 75201-2916 Attn.: Andrew M. Baker, Esq. Telecopier: (214) 953-6503 or to such other address as Seller may from time to time designate. (b) If to Buyer: Sinclair Broadcast Group, Inc. 2000 W. 41st Street Baltimore, Maryland 21211 Attn.: Mr. David D. Smith Telecopier: (410) 467-5043 with a copy to: Thomas & Libowitz, P.A. The USF&G Tower 100 Light Street Suite 1100 Baltimore, Maryland 21202-1053 Attn: Steven A. Thomas, Esq. Telecopier: (410) 752-2046 or to such other address as Buyer may from time to time designate. 10.10 Captions. The captions of Articles and Sections of this Agreement are for convenience only, and shall not control or affect the meaning or construction of any of the provisions of this Agreement. 10.11 Law Governing. THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED, AND ENFORCED IN ACCORDANCE WITH THE LAWS OF MARYLAND WITHOUT REFERENCE TO ITS PRINCIPLES OF CONFLICT OF LAWS, EXCEPT TO THE EXTENT THAT THE FEDERAL LAW OF THE UNITED STATES GOVERNS THE TRANSACTIONS CONTEMPLATED HEREBY. Consent to Jurisdiction, Etc. EXCEPT AS SET FORTH IN SECTION 9.9 HEREOF, THE PARTIES HERETO HEREBY IRREVOCABLY CONSENT TO THE NONEXCLUSIVE JURISDICTION AND VENUE OF ANY FEDERAL COURT LOCATED IN THE DISTRICT OF MARYLAND (SOUTHERN DIVISION) OR TO THE EXTENT SUCH COURTS ARE NOT AVAILABLE, ANY COURT IN THE STATE OF MARYLAND LOCATED IN THE COUNTY OF MONTGOMERY, MARYLAND, IN CONNECTION WITH ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT. THE PARTIES HERETO HEREBY WAIVE PERSONAL SERVICE OF ANY PROCESS IN CONNECTION WITH ANY SUCH ACTION OR PROCEEDING AND AGREE THAT THE SERVICE THEREOF MAY BE MADE BY CERTIFIED OR REGISTERED MAIL ADDRESSED TO OR BY PERSONAL DELIVERY TO THE OTHER PARTY AT SUCH OTHER PARTY'S ADDRESS SET FORTH PURSUANT TO PARAGRAPH 10.9 HEREOF. IN THE ALTERNATIVE, IN ITS DISCRETION, ANY OF THE PARTIES HERETO MAY EFFECT SERVICE UPON ANY OTHER PARTY IN ANY OTHER FORM OR MANNER PERMITTED BY LAW. 10.13 Waiver of Provisions. The terms, covenants, representations, warranties and conditions of this Agreement may be waived only by a written instrument executed by the party waiving compliance. The failure of any party at any time or times to require performance of any provision of this Agreement shall in no manner affect the right at a later date to enforce the same. No waiver by any party of any condition or the breach of any provision, term, covenant, representation or warranty contained in this Agreement, whether by conduct or otherwise, in any one or more instances shall be deemed to be or construed as a further or continuing waiver of any such condition or of the breach of any other provision, term, covenant, representation or warranty of this Agreement. 10.14 Counterparts. This Agreement may be executed in two (2) or more counterparts, and all counterparts so executed shall constitute one (1) agreement binding on all of the parties hereto, notwithstanding that all the parties are not signatory to the same counterpart. 10.15 Entire Agreement/Amendments. This Agreement (including the Exhibits and Schedules hereto) and the documents delivered pursuant to the Agreement or other written agreements among the parties, dated the date hereof or hereafter, constitute the entire agreement among the parties pertaining to the subject matter hereof and supersede any and all prior and contemporaneous agreements, understandings, negotiations and discussions, whether oral or written, between them relating to the subject matter hereof. No amendment or waiver of any provision of this Agreement shall be binding unless executed in writing by the party to be bound thereby. 10.16 Access to Books and Records. Buyer shall preserve until the later of (i) three (3) years after the Closing Date and (ii) the date on which Buyer has no further obligations under the Option Agreement all books and records of Seller. At the request of Seller, Buyer agrees to give to the officers, partners, employees, agents, accountants and counsel of Seller access, upon reasonable prior notice during normal business hours, to the property, accounts, books, contracts, records, accounts payable and receivable, records of employees of Seller (as Seller may have been reorganized) and other information concerning the affairs of Seller, any Station, any JSA Station, any Option Station or any of the Station Assets, except as may be prohibited by law, and to the employees of Buyer as Seller may reasonably request. Subsequent to the Closing Date, Seller shall have no obligation to retain books and records relating to Seller or the Station Assets. To the extent any such books and records are retained, then for a period not to exceed three (3) years after the Closing Date, at the request of Buyer, Seller agrees to give the officers, employees, accountants and counsel of Buyer access, upon reasonable prior notice during normal business hours, to the books, records and files retained by Seller with respect to the business and operation of Seller, any Station, any JSA Station or any Option Station by Seller as Buyer may reasonably request in connection with an audit of any Station, any JSA Station or any Option Station. Each of Buyer and Seller shall be permitted at their own expense to make extracts from or copies of the foregoing books, records and files of the other party. 10.17 Public Announcements and Press Releases. Neither Seller nor Buyer shall, except by mutual agreement, make any press release or other public announcement (written or oral) concerning this Agreement or the transactions contemplated by this Agreement, except as may be required by any law, rule or regulation (including, without limitation, filings and reports required to be made with or pursuant to the rules of the SEC) or any by existing contract, license, or agreement to which it is a party and provided that the party required to make such announcement shall provide a draft copy thereof to the other parties hereto, and consult with such other parties concerning the timing and content of such announcement, before such announcement is made. 10.18 Headings. The Article and Section headings contained in this Agreement are solely for the purpose of reference, are not part of the agreement of the parties and shall not in any way affect the meaning or interpretation of this Agreement. 10.19 Severability. If any provision of this Agreement or the application thereof to any person or circumstance shall be invalid or unenforceable to any extent, the remainder of this Agreement and the application of such provision to other persons or circumstances shall not be affected thereby and shall be enforced to the greatest extent permitted by law so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid or unenforceable, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the greatest extent possible. 10.20 Receivables. (a) For the Collection Period (as defined below), Buyer, as agent for Seller, shall collect on behalf of Seller all Receivables with the same care and diligence as Buyer uses with respect to its own accounts receivable, except that Buyer shall not be obligated to use any extraordinary efforts for collection, including without limitation, institution of litigation, and shall not refer any of the Receivables to a collection agency or to an attorney for collection, or compromise, settle or adjust the amount of any Receivable, except with the prior written approval of Seller. (b) To the extent that (i) Twenty Million Dollars ($20,000,000) or more in receivables from account debtors of Seller is outstanding on the Closing Date, the Initial $20,000,000 Receivables Amount shall be divided equally between Buyer and Seller and during the Collection Period, Buyer shall remit to Seller one-half of all payments received by Buyer from account debtors of Seller up to the Initial $20,000,000 Receivables Amount and all payments in excess of the Initial $20,000,000 Receivables Amount; and (ii) less than Twenty Million Dollars ($20,000,000) in receivables from account debtors of Seller is outstanding on the Closing Date, the amount in excess of Ten Million Dollars ($10,000,000) (the "Initial Excess Amount") shall be divided equally between Buyer and Seller, and during the Collection Period, Buyer shall remit to Seller one half of all payments received by Buyer from account debtors of Seller up to the Initial Excess Amount and thereafter Buyer shall retain the difference between one half of the Initial Excess Amount and Ten Million Dollars ($10,000,000). (c) To the extent the Collection Period has not yet ended because one hundred twenty (120) days have not yet passed since the Closing Date thereafter, all payments received from account debtors shall first be applied in reduction of the oldest outstanding balance due from such account debtor, except to the extent: (a) any account debtor specifically identifies the invoice being paid, in which case, the account debtor's instructions shall govern; or (b) an account is disputed by the account debtor as properly due, and the account debtor has so notified Buyer in writing, in which case, all payments received shall be applied as provided in (a) above, except to the extent of such dispute. Buyer will promptly give Seller written notice of any such dispute with respect to which Buyer has received notice from the account debtor. (d) Buyer shall remit all payments owed to Seller (as set forth in this Section 10.20) on the fifteenth day and the last day of each month. (e) So long as Buyer is in compliance with this Section 10.20, during the Collection Period none of Seller or any of its representatives or agents, shall make any direct solicitation of the account debtors for collection purposes or other direct attempts to collect from account debtors during such Collection Period except as may be agreed to by Buyer, except with respect to those accounts which may be or become more than ninety (90) days past due, and except those accounts from which Buyer has received written notice of a dispute from the account debtor. (f) "Collection Period" means the period from the Closing Date through the later of (i) one hundred twenty (120) days after the Closing Date, and (ii) the date on which the Buyer shall have collected (a) the first Twenty Million Dollars ($20,000,000) in payments from account debtors of Seller (the "Initial $20,000,000 Receivables Amount") or (b) to the extent that less than Twenty Million Dollars (20,000,000) in receivables from account debtors of Seller is outstanding on the Closing Date, the Initial Receivables Amount plus the difference between one-half of the Initial Receivables Amount and Ten Million Dollars ($10,000,000). (g) Upon the conclusion of the Collection Period, Buyer shall remit to Seller all amounts collected by Buyer from account debtors not previously remitted to Seller that are in excess of the $10,000,000 to be retained by Buyer hereunder, shall assign to Seller all uncollected Receivables and shall furnish Seller with a list of the amounts collected during such period and all files concerning any uncollected Receivables, and Buyer shall have no further responsibilities hereunder except to remit promptly to Seller any amounts subsequently received by it on account of the Receivables. 10.21 Board of Directors and Committees. From and after the Closing Date, Buyer shall cause (i) each of (1) Baker and (2) Roy F. Coppedge (or such other individual as may be designated by Boston Ventures Limited Partnership IV and Boston Ventures Limited Partnership IVA (collectively, "Boston Ventures")) (the "BV Designee") to receive notice of all meetings of the Board of Directors of Buyer and to be permitted to attend such meetings, (ii) Baker to receive notice of all meetings of any executive and finance committees and to be permitted to attend such meetings, and (iii) the BV Designee to receive notice of all meetings of any compensation and finance committees and to be permitted to attend such meetings. In addition, if the Board of Directors or any executive, finance or compensation committee of Buyer plans to take actions by written consent in lieu of a meeting, then Buyer shall cause Baker (in the case of the Board of Directors and any executive and finance committees) and the BV Designee (in the case of the Board of Directors and any finance and compensation committees) to receive a copy of the form of consent documents relating to such actions at the same time that such documents are circulated or distributed to the members of the Board of Directors, executive, finance or compensation committees, as applicable. In addition, as soon as permissible under the rules of the FCC and applicable laws, Buyer shall cause (i) each of Baker and the BV Designee to be appointed as members of the Board of Directors of Buyer, (ii) Baker to be appointed as a member of any executive committee and, to the extent established, the finance committee and (iii) the BV Designee to be appointed as a member of any finance committee, to the extent established, and the compensation committee. Buyer's Board of Directors (which presently consists of seven (7) directors) has duly adopted resolutions which have fixed the number of members of (x) directors of Buyer at nine (9) directors, (y) the executive committee at six (6) members, and (z) the compensation committee at six (6) members and such resolutions also have designated Baker and the BV Designee, as applicable, to fill the directorships on the Buyer's Board of Directors and memberships on such committees pursuant to the terms of this Agreement. To the extent that the Buyer or the Board of Directors establishes a finance committee, it shall designate each of Baker and the BV Designee as members of the finance committee. Baker shall be entitled to be a director of Buyer and a member of the executive committee and, to the extent established, the finance committee for so long as he remains an employee of Buyer, and BV shall be entitled to have the BV Designee be a director of Buyer and a member of the compensation committee and, to the extent established, the finance committee until the first to occur of (i) the later of (a) the fifth anniversary of the Closing Date and (b) the expiration of the initial five-year term of Barry Baker's Employment Agreement with Buyer and (ii) such time, after Buyer has issued the Convertible Preferred Stock to Seller or to its partners, as Boston Ventures no longer owns, of record or beneficially to the extent of its interest as a limited partner of Seller, at least 721,115 shares of Buyer Common Stock, on an "as converted" basis, as such number may be adjusted pursuant to stock splits, stock combinations, reclassifications or recapitalizations of Buyer occurring after the date hereof. 10.22 List of Definitions. The following is a list of certain terms used in this Agreement and a reference to the Section hereof in which such term is defined: Terms Section AAA Section 9.9 Add Back Programming Liabilities Section 5.12 Additional Days Section 2.3(b) Additional Period Section 2.3(b) Adjustment Amount Section 2.2(b) Adjustment Date Section 2.2(a)(i) Affiliate Section 3.6 Affiliation Agreements Section 1.1(m) Agreement Preamble Amended Charter Section 6.11 Anti-Dilution Adjustments Section 2.1(i) Articles Supplementary Section 2.1 Assumed Employees Section 10.3(a) Assumed Liabilities Section 1.3 Balance Sheet Date Section 3.3 Baker Section 2.5(b) Baker Stock Option Agreement Section 2.5(b) Boston Ventures Section 10.21 Buyer Preamble Buyer Common Stock Section 2.1 Buyer SEC Documents Section 4.11 Buyer's Estimate Report Section 2.2(b) Buyer's 401(k) Plan Section 10.3(f) Buyer's Lenders Section 10.1(a)(ii) BV Designee Section 10.21 Cash Purchase Price Section 2.1 Closing Section 2.3(a) Closing Balance Sheet Section 2.2(b) Closing Date Section 2.3(a) Closing Financial Statements Section 5.3(a) Code Section 3.18 Collection Period Section 10.20 Columbus Assets Recitals Columbus Station Recitals Consent Contracts Section 1.3 Consent Costs Section 1.3 Consulting Agreement Section 2.5(b) Contract Section 1.1(e) Convertible Preferred Stock Section 2.1 Conveyed Contracts Section 2.6 Corporate Employees Section 2.5(b) Corporate Employee Stock Option Agreement Section 2.5(b) Cure Extended Period Section 2.3(d) Distributor Section 4.6 Down Payment Section 10.2(a) Down Payment Interest Section 10.2(a) Employee Letter Agreement Section 2.5(b) Employment Agreement Section 2.5(b) ERISA Section 3.17 Exchangeable Preferred Stock Section 2.1 Excluded Assets Section 1.2 Excluded Contracts Section 1.2(d) Excluded Real Property Section 1.2(f) Extended Periods Section 2.3(d) Extension Notice Section 2.3(d) FCC Section 1.2(f) FCC Authorizations Section 1.2(f) HSR Act Section 5.9 Initial Excess Amount Section 10.20 Initial $20,000,000 Receivables Amount Section 10.20 IRS Section 10.3(f) ISO Amendment Section 2.5(b) JSAs Recitals JSA Stations Recitals Kids Fair Section 2.4(a)(xvii) KMSC Recitals Laws Section 2.6 Leasehold Interests Section 1.1(b) Leases Section 7.5 License Assets Section 1.2(f) Licensee Section 1.2(f) Litigation Extended Period Section 2.3(d) LMAs Recitals LMA Stations Recitals Loss and Expense Section 9.2 LTIP Section 2.5(b) Material Adverse Change Section 8.10 New Employment Agreements Section 7.8 New Mexico Stations Recitals 1993 and 1994 Year-End Financial Statements Section 3.3 1995 Internal Financial Statements Section 3.3 1995 Year-End Financial Statements Section 5.3(a) 1996 Internal Financial Statements Section 3.3 Option Agreement Section 7.7 Option Stations Recitals Originally Scheduled Termination Date Section 2.3(a) Other Assets Section 1.1(m) Other Contracts Section 1.1(e) Owned Stations Recitals Permitted Encumbrances Section 1.3 Person Section 3.6 Plans Section 3.17 Post-Closing Estimate Fund Section 2.2(b) Post Closing Estimate Fund Deposit Section 2.2(b) Proceedings Section 2.6 Program Contracts Section 1.1(d) Programming Copyrights Section 1.1(g) Prorations Escrow Agent Section 2.2(b) Prorations Certificate Section 2.2(b) Purchase Price Section 2.1 Qualified Plans Section 3.18 Radio Stations Recitals Rich Section 2.2(a)(iv) RCB Twin Peaks Equity Interest Recitals Real Property Section 1.1(b) Real Property Improvements Section 1.1(b) Receivables Section 1.2(g) Registration Rights Agreement Section 10.5 Registration Statement Section 10.5 Retained Liabilities Section 1.3 Retirees Section 10.3(h) Sandia Recitals Sandia Stock Section 3.20 SCI Section 6.8 SEC Section 10.4 Seller Preamble Seller 401(k) Plan Section 10.3(f) SOS Section 2.4(a)(v) Station Assets Section 1.1 Station Employee Stock Option Agreement Section 2.5(b) Station Employees Section 2.5(b) Station Material Adverse Change Section 3.6 Station Options Recitals Stations Recitals Stock Purchase Price Section 2.1 Subleases Section 7.5 Termination Date Section 2.3(a) Time Brokerage Agreements Section 7.6 Trademarks, Etc. Section 1.1(f) Trades Section 2.2(a)(ii) Transaction Documents Section 9.8 TV Stations Recitals Twin Peaks Recitals Twin Peaks License Partnership Recitals Twin Peaks License Partnership Interest Section 3.23 Twin Peaks Partnership Interest Section 3.23 Twin Peaks Sale Section 5.1(l) Voting Agreement Section 2.5(b) WLOS Plan Section 10.3(e) IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed by their duly authorized officers, all as of the day and year first above written. BUYER: SINCLAIR BROADCAST GROUP, INC. By: _________________________ Name: Title: SELLER: RIVER CITY BROADCASTING, L.P. By: Better Communications, Inc., its General Partner By: _________________________ Name: Title: TABLE OF CONTENTS ARTICLE 1 TRANSFER OF ASSETS 1.1 Transfer of Assets 1.2 Excluded Assets 1.3 Liabilities ARTICLE 2 PURCHASE; CLOSING 2.1 Purchase Price 2.2 Adjustments 2.3 The Closing 2.4 Deliveries at Closing 2.5 Deliveries by Seller Prior to Closing and Upon Execution 2.6 Effect of Laws or Proceedings ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF SELLER 3.1 Formation 3.2 Partnership Action 3.3 Financials 3.4 Business Since the Balance Sheet Date 3.5 Condition of Assets 3.6 Title, Etc. 3.7 Trademarks, Etc. 3.8 Insurance 3.9 Contracts 3.10 Employees 3.11 Litigation 3.12 Compliance with Laws 3.13 No Conflicts 3.14 Brokers 3.15 Retransmission Consent Agreements 3.16 Environmental 3.17 Employee Plans 3.18 Compliance with ERISA 3.19 Taxes 3.20 Certificates of Incorporation, Bylaws and Capitalization of Sandia 3.21 Options, Warrants, Rights re: Sandia 3.22 Validity of Sandia Stock 3.23 Partnership Agreements and Partnership Interests in Twin Peaks and Twin Peaks License Partnership 3.24 Options, Warrants, Rights re: Twin Peaks and Twin Peaks License Partnership 3.25 Validity of Twin Peaks Partnership Interest and Twin Peaks License Partnership Interest 3.26 Undisclosed Liabilities 3.27 Totality of Assets 3.28 Complete Disclosure 3.29 Acquisition of Exchangeable Preferred Stock 3.30 Affiliate Transactions ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF BUYER 4.1 Incorporation 4.2 Corporate Action 4.3 No Conflicts 4.4 Brokers 4.5 Litigation 4.6 Assignments 4.7 Articles of Incorporation, Bylaws and Capitalization of Buyer 4.8 Options, Warrants, Rights 4.9 Validity of Stock of Buyer 4.10 Offering 4.11 Buyer SEC Documents; Financial Statements ARTICLE 5 COVENANTS OF SELLER PENDING AND AFTER THE CLOSING DATE 5.1 Maintenance of Business 5.2 Organization/Goodwill 5.3 Reports; Access to Facilities, Files and Records 5.4 Consents 5.5 Notice of Proceedings 5.6 Confidential Information 5.7 Consummation of Agreement 5.8 Notice of Certain Developments 5.9 Hart-Scott-Rodino 5.10 Updated Information 5.11 Environmental Audit 5.12 Programming 5.13 Film Payments and Capital Leases 5.14 Down Payment 5.15 No Solicitation ARTICLE 6 COVENANTS OF BUYER 6.1 Confidential Information 6.2 Consummation of Agreement 6.3 Notice of Proceedings 6.4 Hart-Scott-Rodino 6.5 Consents and Assignments 6.6 Capitalization of Buyer 6.7 Notice of Material Impact 6.8 New Employment Agreements 6.9 Insurance 6.10 Stock Options 6.11 Amended Charter ARTICLE 7 CONDITIONS TO THE OBLIGATIONS OF SELLER 7.1 Representations, Warranties, Covenants 7.2 Proceedings 7.3 Opinion of Counsel 7.4 Hart-Scott-Rodino 7.5 Leases/Subleases 7.6 Time Brokerage Agreement 7.7 Option Agreement 7.8 New Employment Agreements 7.9 Articles Supplementary 7.10 Material Adverse Change 7.11 Approval of Stock Options 7.12 Stock Options 7.13 Amended Charter ARTICLE 8 CONDITIONS TO THE OBLIGATIONS OF BUYER 8.1 Representations, Warranties, Covenants 8.2 Proceedings 8.3 Opinion of Counsel 8.4 Damage to the Assets 8.5 Option Agreement 8.6 Hart-Scott-Rodino 8.7 Leases/Subleases 8.8 Time Brokerage Agreements 8.9 Add Back Programming Liabilities 8.10 Material Adverse Change 8.11 Certain Financial Statements 8.12 Marcus Non-Compete ARTICLE 9 INDEMNIFICATION 9.1 Survival 9.2 Indemnification of Buyer 9.3 Indemnification of Seller 9.4 Limitation of Liability 9.5 Bulk Sales Indemnity 9.6 Notice of Claims 9.7 Defense of Third Party Claims 9.8 Indemnity as Sole Remedy 9.9 Arbitration ARTICLE 10 TERMINATION/MISCELLANEOUS 10.1 Termination of Agreement 10.2 Liabilities Upon Termination 10.3 Employee Matters 10.4 Proxy Statement; Special Stockholders Meeting to Approve Amended Charter 10.5 Registration Statement; Nasdaq Listing 10.6 Expenses 10.7 Assignments 10.8 Further Assurances 10.9 Notices 10.10 Captions 10.11 Law Governing 10.12 Consent to Jurisdiction, Etc. 10.13 Waiver of Provisions 10.14 Counterparts 10.15 Entire Agreement/Amendments 10.16 Access to Books and Records 10.17 Public Announcements and Press Releases 10.18 Headings 10.19 Severability 10.20 Receivables 10.21 Board of Directors and Committees 10.22 List of Definitions Exhibits Exhibit 2.1(b) Articles Supplementary Exhibit 2.2(b) Post-Closing Escrow Agreement Exhibit 2.4 Consent and Agreement Exhibit 2.5(a) Employment Agreement Exhibit 2.5(b) Consulting Agreement Exhibit 2.5(c) Baker Stock Option Agreement Exhibit 2.5(d) Corporate Employee Stock Option Agreement Exhibit 2.5(e) Station Employee Stock Option Agreement Exhibit 2.5(f) First Amendment to Incentive Stock Option Plan Exhibit 2.5(g) Long Term Incentive Plan Exhibit 2.5(h) Voting Agreement Exhibit 7.3(a) Opinion of Counsel to Buyer Exhibit 7.3(b) Opinion of Special Counsel to Buyer Exhibit 7.6(a) Time Brokerage Agreement for Group I Stations Exhibit 7.6(b) Time Brokerage Agreement for Columbus Station Exhibit 7.7 Option Agreement Exhibit 7.8 New Employment Agreements Exhibit 8.3 Opinion of Counsel to Seller Exhibit 8.12 Marcus Non-Compete Exhibit 10.5 Registration Rights Agreement Schedules Schedule 1.1(a) Tangible Personal Property Schedule 1.1(b) Real Property Schedule 1.1(c)(1) LMAs Schedule 1.1(c)(2) JSAs Schedule 1.1(c)(3) Option Agreement Schedule 1.1(d) Program Contracts Schedule 1.1(e) Other Contracts Schedule 1.1(f) Trademarks, Etc. Schedule 1.1(g) Programming Copyrights Schedule 1.1(m) Affiliation Agreements, NewVenco and Alliance Schedule 1.1(n) Other Assets Schedule 1.2(d) Excluded Contracts Schedule 1.2(f) License Assets Schedule 1.2(l) Interests in Certain Subsidiaries Schedule 1.3 Liabilities Schedule 2.1(a) Anti-Dilution Adjustments Schedule 2.2(a)(1) Other Acquisitions and Transactions Schedule 2.2(a)(2) Add Backs Schedule 2.2(a)(v) Other Adjustment Schedule 2.5(d) Corporate Employees Schedule 2.5(e) Station Employees Schedule 3.1 Qualifications Schedule 3.6 Title, Etc. Schedule 3.8 Insurance Schedule 3.10 Certain Employee Matters and Collective Bargaining Agreements Schedule 3.11 Litigation Schedule 3.13 No Conflicts Schedule 3.15 Retransmission Consent Agreements Schedule 3.16 Environmental Schedule 3.17 Employee Plans Schedule 3.18 Compliance with ERISA Schedule 3.26 Undisclosed Liabilities Schedule 3.27 Totality of Assets Schedule 3.30 Affiliate Transactions Schedule 4.6 Assignments Schedule 4.8 Options, Warrants, Rights Schedule 5.1 Maintenance of Business Schedule 6.6 Changes in Capitalization of Buyer Schedule 7.8 New Employment Agreements Schedule 9.2 Indemnification of Buyer Schedule 10.3 Employee Matters ASSET PURCHASE AGREEMENT BY AND BETWEEN RIVER CITY BROADCASTING, L.P., AS SELLER, AND SINCLAIR BROADCAST GROUP, INC. AS BUYER DATED AS OF APRIL 10, 1996 EX-2 4 OPTION AGREEMENT OPTION AGREEMENT THIS OPTION AGREEMENT (this "Agreement") is dated as of _____ __, 1996 (the "Option Grant Date"), and is by and among River City Broadcasting, L.P., a limited partnership duly formed under the laws of the State of Delaware ("RCB"), River City License Partnership, a general partnership duly formed under the laws of the State of Missouri ("Licensee") (RCB and Licensee sometimes collectively referred to herein as "Sellers" and individually as a "Seller"), and Sinclair Broadcast Group, Inc., a corporation duly organized under the laws of the State of Maryland ("Option Holder"). RECITALS WHEREAS, Licensee is the licensee of (i) Television Stations KOVR(TV), Stockton, California, WTTV(TV), Bloomington, Indiana, WTTK(TV), Kokomo, Indiana, KDSM-TV, Des Moines, Iowa, KDNL-TV, St. Louis, Missouri, WLOS-TV, Asheville, North Carolina, WFBC(TV), Anderson, South Carolina and KABB-TV, San Antonio, Texas (collectively referred to herein as the "Group I TV Stations"); (ii) Television Station WSYX(TV), Columbus, Ohio (the "Columbus Station," and collectively referred to herein with the Group I TV Stations as the "TV Stations") and (iii) Radio Stations KBLA(AM), Santa Monica, California, WVRV(FM), East St. Louis, Illinois, WJCE-FM, Russellville, Kentucky, KMEZ-FM, Belle Chasse, Louisiana, WSMB(AM), New Orleans, Louisiana, WLMG-FM, New Orleans, Louisiana, WWL(AM), New Orleans, Louisiana, KPNT(FM), Sainte Genevieve, Missouri, WBEN(AM), Buffalo, New York, WMJQ-FM, Buffalo, New York, WWKB(AM), Buffalo, New York, WKSE-FM, Niagara Falls, New York, WGBI(AM), Scranton, Pennsylvania, WGGY(FM), Scranton, Pennsylvania, WILK-AM, Wilkes Barre, Pennsylvania, WKRZ-FM, Wilkes Barre, Pennsylvania, WOGY-FM, Germantown, Tennessee, WJCE(AM), Memphis, Tennessee, WRVR-FM, Memphis, Tennessee, WLAC(AM), Nashville, Tennessee and WLAC-FM, Nashville, Tennessee (collectively referred to herein as the "Radio Stations," and collectively as the "Stations" when referred to herein with the TV Stations and any television or radio station with respect to which RCB or Licensee becomes a licensee (as described in Schedule 2.2(a)(1) to the Asset Purchase Agreement as defined below, or with the consent of Option Holder) prior to the Asset Purchase Agreement Closing Date (the "After-Acquired Stations")), pursuant to certain authorizations (the "FCC Authorizations") issued by the Federal Communications Commission (the "FCC")(the Group I TV Stations, the Radio Stations and any After-Acquired Stations being collectively referred to herein as "Group I Stations"); and WHEREAS, RCB owns all of the issued and outstanding capital stock (the "Sandia Stock") of Sandia Peak Broadcasters, Inc., a Delaware corporation ("Sandia"), a 40% general partnership interest (the "Twin Peaks Partnership Interest") in Twin Peaks Radio, a New Mexico general partnership ("Twin Peaks"); a 1% general partnership interest (the "Twin Peaks License Partnership Interest") in Twin Peaks Radio License Partnership, a Missouri general partnership, with the remaining 60% general partnership interest in Twin Peaks being owned by Sandia and the remaining 99% general partnership interest in Twin Peaks License Partnership being owned by Twin Peaks; and Twin Peaks License Partnership is the licensee of Radio Stations KZSS(AM), Albuquerque, New Mexico, KZRR(FM), Albuquerque, New Mexico and KLSK(FM), Santa Fe, New Mexico (collectively referred to herein as the "New Mexico Stations"), pursuant to certain FCC Authorizations, and Twin Peaks owns certain assets used or useful in connection with the operation of the New Mexico Stations (the Sandia Stock, the Twin Peaks Partnership Interest and the Twin Peaks License Partnership Interest being sometimes collectively referred to herein as the "RCB Twin Peaks Equity Interests") and for purposes of the representations and warranties, indemnification provisions and nomenclature of the Options, the New Mexico Stations being deemed to be "Group I Stations" and the assets of the New Mexico Stations that are of the same type as those identified in Section 1.1.A hereof being deemed to be "License Assets"; provided, however, to the extent RCB sells the New Mexico Stations or the RCB Twin Peaks Equity Interest (the "Twin Peaks Sale") prior to the Option Grant Date or prior to the date Option Holder has consummated the acquisition of the RCB Twin Peaks Equity Interest, no representations or warranties shall be made hereunder with respect to the New Mexico Stations or the RCB Twin Peaks Equity Interest as contemplated hereunder, and Option Holder acknowledges and agrees that it waives its right to acquire the RCB Twin Peaks Equity Interest and any Option with respect thereto shall immediately terminate, and RCB shall have no obligation to sell and Option Holder shall have no obligation to purchase, the RCB Twin Peaks Equity Interest; and WHEREAS, RCB owns certain Other Assets (as defined herein); and WHEREAS, RCB has entered with Option Holder into an Asset Purchase Agreement, dated as of April 10, 1996 (the "Asset Purchase Agreement"), pursuant to which Option Holder is purchasing on the date hereof certain assets and rights of RCB, as provided in the Asset Purchase Agreement; and WHEREAS, on the date hereof (the "Asset Purchase Agreement Closing Date") in connection with the closing of the Asset Purchase Agreement (the "Asset Purchase Closing"), Sellers and Option Holder have entered into two Time Brokerage Agreements (the "TBAs") pursuant to which Option Holder will provide (i) certain commercial television programming to Sellers for the Columbus Station and (ii) certain television and radio programming to Sellers for the Group I Stations, all on the terms and conditions contained in such TBAs; and WHEREAS, RCB and Licensee desire to grant an option to the Option Holder to acquire the License Assets (as defined in Section 1.1.A herein), and the Columbus Station Assets (as defined below), and Option Holder desires to acquire an option to acquire the License Assets, and the Columbus Station Assets, all on the terms described herein; and WHEREAS, with respect to each Station, on the Option Closing Date (as defined in Section 2.2(b) herein) applicable to such Station, Sellers will transfer and assign to Option Holder all of the License Assets and, in the case of the Option Closing Date for the Columbus Station (the "Columbus Option Closing Date"), will also transfer the Columbus Station Assets (as defined below); NOW, THEREFORE, in consideration of the foregoing and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending legally to be bound, agree as follows: ARTICLE 1 OPTION TO ACQUIRE LICENSE ASSETS AND COLUMBUS STATION ASSETS A. Options. Upon and subject to the terms and conditions stated in this Agreement, Sellers hereby as of the date hereof grant to Option Holder (i) separate options to acquire (a) concurrently in their entirety at one Closing or separately at one or more Closings, all of Sellers' rights, title and interest in, to and under the License Assets used or held by Sellers with respect to the Group I Stations, including (subject to RCB's right to consummate the Twin Peaks Sale) the RCB Twin Peaks Equity Interest (the "Group I Options") and (b) concurrently in their entirety at one Closing, all of Sellers' rights, title and interest in, to and under the License Assets with respect to the Columbus Station, the NewVenco Other Assets relating to the Columbus Station and the Columbus Station Assets (the "Columbus Option"). The Group I Options and the Columbus Option are sometimes hereinafter individually referred to as an "Option" and collectively as the "Options". 1.1.A. Option to Acquire License Assets. Subject to the terms and conditions stated in this Agreement, on the Option Closing Date applicable to such Stations which are being acquired on such Option Closing Date, Sellers shall convey, transfer, assign and deliver to Option Holder, and Option Holder shall acquire from Sellers, all of Sellers' rights, title and interest in, to and under all License Assets used or held for use by Sellers with respect to such Stations, including the RCB Twin Peaks Equity Interest. As used in this Agreement, "License Assets" used or held for use with respect to any Station means all of Sellers' rights in, to and under the following, on the Option Closing Date for such Station: (a) FCC Authorizations. All FCC Authorizations issued to Licensee with respect to the Station, including, without limitation, those shown on Schedule 1.1.A(a) to this Agreement, and all applications therefor, together with any renewals, extensions or modifications thereof and additions thereto. (b) Tangible Personal Property. All equipment, vehicles, furniture, transmitters, antennae, engineering equipment, office materials and supplies, spare parts and other tangible personal property of every kind and description owned as of the date of this Agreement by Sellers and used in connection with the business and operations of the Station, including, without limitation, those shown on Schedule 1.1.A(b) to this Agreement, and any additions, improvements, replacements and alterations thereto made between the date of this Agreement and the Option Closing Date for the Station, but excluding all such property which is consumed, retired or disposed of by Sellers in the ordinary course of their business between the date of this Agreement and the Option Closing Date for the Station or as otherwise permitted by this Agreement. (c) Real Property. (i) All real property owned by Sellers listed on Schedule 1.1.A(c) (the "Real Property"), (ii) all buildings, structures, towers, improvements, transmitting towers and other fixtures thereon (the "Real Property Improvements"), owned by Seller and used in the business and operations of the Station; (iii) all other leaseholds and other interests in real property held by Sellers (the "Leasehold Interests") listed and so designated on Schedule 1.1.A(c); and (iv) real property, and all buildings, structures and improvements thereon and leasehold interests that are acquired by Sellers between the date hereof and the Option Closing Date for the Station. (d) Other Contracts. All contracts relating to any Station, other than the TBA relating thereto, to which either Seller is a party (in addition to and not included in those set forth in Sections 1.1.A(b) and 1.1.A(c) hereof) and the Consent Contracts, as defined in the Asset Purchase Agreement (collectively, "Other Contracts"), including all agreements, equipment leases and other leases listed on Schedules 1.1.A(d) and 3.11 (as may be entered into, amended, renewed or extended pursuant to Section 5.1) to this Agreement, together with all such contracts that will have been entered into in the ordinary course of business of the Station between the date of this Agreement and the Option Closing Date for the Station and all other such Contracts that will have been entered into between the date of this Agreement and the Option Closing Date for the Station the making of which by Sellers is permitted by this Agreement, to the extent existing as of the Option Closing Date for the Station. As used in this Agreement, "Contract" means, with respect to any Station, any agreement, lease, arrangement, commitment or understanding, written or oral, expressed or implied, to which the Station or Sellers with respect to the Station are a party or are bound. (e) Trademarks, Etc. All trademarks, service marks, patents, trade names, jingles, slogans and logotypes owned and used by Sellers in connection with the business and operations of the Station as of the date hereof, including, without limitation, Sellers' rights to use the call letters of the Station and any related names and phrases and those shown on Schedule 1.1.A(e) to this Agreement and those acquired between the date hereof and the Option Closing Date for the Station. (f) FCC Records. All FCC logs and other records that relate to the operations of the Station. (g) Files and Records. All files and other records of Sellers relating solely to the business and operations of the Station other than account books of original entry and other than such files and records that are maintained at the corporate offices of Sellers or RCB's general partner for tax accounting purposes. (h) RCB Twin Peaks Equity Interests. With respect to the New Mexico Stations, all of the RCB Twin Peaks Equity Interests. (i) Goodwill. All of Sellers' goodwill in and going concern value associated with the Stations. (j) Other Assets. All other assets of Sellers relating to the business and operations of the Station not expressly excluded in Section 1.2 hereof. 1.1.B Transfer of Columbus Assets. Subject to the terms and conditions stated in this Agreement, on the Columbus Option Closing Date, RCB shall convey, transfer and deliver to Option Holder, and Option Holder shall acquire from RCB, in addition to acquiring the License Assets relating to the Columbus Station described in Section 1.1.A on such date, all of RCB's right, title and interest in and to all of the assets and properties of RCB, real and personal, tangible and intangible, which are owned and used by RCB in connection with the business and operations of the Columbus Station, including, without limitation, rights under contracts and leases, real and personal property, plant and equipment, inventories and intangibles, contracts and rights, but excluding the Excluded Assets described in Section 1.2 hereof. The rights, assets, property and business of RCB with respect to the Columbus Station to be transferred to Option Holder pursuant to this Section 1.1.B are hereinafter referred to as the "Columbus Station Assets." The Columbus Station Assets include the following, except to the extent excluded pursuant to Section 1.2: (a) Tangible Personal Property. All equipment, vehicles, furniture, office materials and supplies, spare parts and other tangible personal property of every kind and description owned as of the date of this Agreement by RCB and used in connection with the business and operations of the Columbus Station, including, without limitation, those shown on Schedule 1.1.B(a) to this Agreement, and any additions, improvements, replacements and alterations thereto made between the date of this Agreement and the Columbus Option Closing Date, but excluding all such property which is consumed, retired or disposed of by RCB in the ordinary course of its business between the date of this Agreement and the Columbus Option Closing Date or as otherwise permitted by this Agreement. (b) Real Property. (i) All real property owned by RCB listed on Schedule 1.1.B(b) to this Agreement (the "Columbus Real Property"); (ii) all buildings, structures, improvements, transmitting towers and other fixtures thereon (the "Columbus Real Property Improvements") owned by RCB and used in the business and operations of the Columbus Station; (iii) the leaseholds and other interests in real property held by RCB (the "Columbus Leasehold Interests") listed and so designated on Schedule 1.1.B(b) to this Agreement; and (iv) real property, and all buildings, structures and improvements thereon and leasehold interests relating to the Columbus Station that are acquired by RCB between the date hereof and the Columbus Option Closing Date. (c) Other Contracts. All contracts relating to the Columbus Station to which RCB or the Columbus Station is a party, (in addition to and not included in those set forth in Sections 1.1.B(b) hereof) (collectively, "Columbus Other Contracts"), including all agreements, equipment leases and other leases listed on Schedule 1.1.B(c) to this Agreement and any network affiliation agreement, if any, together with all such contracts that will have been entered into by RCB or the Columbus Station in the ordinary course of business between the date of this Agreement and the Columbus Option Closing Date, and all such other contracts that will have been entered into by RCB or the Columbus Station between the date of this Agreement and the Columbus Option Closing Date, the making of which by RCB is permitted by this Agreement to the extent existing as of the Columbus Option Closing Date. As used in this Agreement, "Columbus Contract" means any agreement, lease, arrangement, commitment or understanding, written or oral, expressed or implied, to which the Columbus Station, or RCB with respect to the Columbus Station, is a party or is bound. (d) Trademarks, Etc. All trademarks, service marks, patents, trade names, jingles, slogans and logotypes owned and used by RCB primarily in connection with the business and operations of the Columbus Station as of the date hereof listed on Schedule 1.1.B(d) to this Agreement as well as any others acquired by RCB primarily in connection with operation of the Columbus Station between the date hereof and the Columbus Option Closing Date (collectively, "Columbus Trademarks, Etc."). (e) Programming Copyrights. All program and programming materials and elements of whatever form or nature owned by RCB and used in connection with the business and operations of the Columbus Station as of the date hereof, whether recorded on tape or any other substance or intended for live performance, and whether completed or in production, and all related common law and statutory copyrights owned by or licensed to RCB and used in connection with the business and operations of the Columbus Station, together with all such programs, materials, elements and copyrights acquired by RCB between the date hereof and the Columbus Option Closing Date, including, without limitation, those set forth on Schedule 1.1.B(e) to this Agreement (collectively, the "Columbus Programming Copyrights"). (f) Files and Records. All files and other records of RCB relating solely to the business and operations of the Columbus Station and any other Columbus Station Assets prior to the Columbus Option Closing Date, other than account books of original entry and such files and records that are maintained at the corporate offices of RCB's general partner for tax and accounting purposes. (g) Prepaid Items. All deposits and prepaid expenses. (h) Financial Statements, Books and Records. Copies of all financial statements (whether internal, compilation, reviewed or audited), including all books, records, accounts, checks, payment records, tax records (including payroll, unemployment, real estate and other tax records) and other such similar books and records, of RCB (or, to the extent RCB owns such materials, of any previous owner) with respect to the Columbus Station for each of the years to the extent reasonably available to RCB and all interim periods following the date hereof through and including the Columbus Option Closing Date. (i) News Materials. All news files, archives, tapes, and other materials stored or used by RCB relating to the news operation of the Columbus Station, including, but not limited to, any raw film footage and other similar materials, existing as of the date of this Agreement and through the Columbus Option Closing Date, except for any such materials that may be disposed of or consumed in the ordinary course of business. (j) NewVenco Other Assets. RCB's interest set forth in Schedule 1.1.B(j) in NewVenco, Inc. relating to the Columbus Station, if any (the "NewVenco Other Assets"). 1.2 Excluded Assets. There shall be excluded from the License Assets relating to any Station and the Columbus Assets relating to the Columbus Station and retained by Sellers, to the extent in existence on the Option Closing Date for such Station, the following assets (the "Excluded Assets"): (a) Cash. All cash, cash equivalents and cash items of any kind whatsoever, certificates of deposit, money market instruments, bank balances and rights in and to bank accounts, Treasury bills and marketable securities and other securities of either Seller. (b) Personal Property Disposed Of. All tangible personal property disposed of or consumed in the ordinary course of the business of any Station between the date of this Agreement and the Closing relating to such Station. (c) Insurance, Bonds, Etc. All contracts of insurance and all insurance plans and the assets thereof and all bonds, letters of credit or similar items and any cash surrender value in regard thereto. (d) Claims. Any and all claims of Sellers with respect to transactions occurring prior to the occurrence of the last Option Closing Date hereunder, including, without limitation, rights and interests of Sellers in and to any claims for tax refunds (including, but not limited to, federal, state or local franchise, income or other taxes) and all causes of action and claims of Sellers under contracts and with respect to other transactions with respect to events occurring prior to such last Option Closing Date and all claims for other refunds of monies paid to any governmental agency and all claims for copyright royalties for broadcast prior to the Closing Date. (e) Pension Assets, Etc. Except as otherwise provided under Section 10.1, pension, profit sharing, retirement, bonus, stock purchase, savings plans and trusts, 401(k) plans, health insurance plans (including any insurance contracts or policies related thereto), and the assets thereof and any rights thereto, and all other plans, agreements or understandings to provide employee benefits of any kind for employees of Sellers. (f) Certain Contracts. The agreements listed on Schedule 1.2(f) hereof (the "Excluded Contracts"). (g) Certain Books and Records. Sellers' partnership records and other books and records that pertain to internal partnership matters of Sellers and Sellers' account books of original entry with respect to any Station, and all books, records, accounts, checks, payment records, tax records (including payroll, unemployment, real estate and other tax records) and other similar books, records and information of Sellers relating to Sellers' operation of the business of each Station prior to the Closing relating to such Station, with the proviso that Option Holder shall be allowed to maintain copies of all such records relating to the Stations, the License Assets or the Columbus Station Assets and/or upon a written request for same shall be allowed further access to all excluded records to the extent retained by Sellers at all reasonable times during the term of this Agreement for a period of the (3) years after the Option Closing Date relating thereto. (h) Certain Prepaid Expenses. The prepaid expenses of Sellers with respect to items that are not subject to adjustment under Section 2.5. (i) Interests in Certain Subsidiaries. All of Sellers' interests in the subsidiaries described in Schedule 1.2(i). (j) River City Name. All rights to and goodwill in the name "River City Broadcasting" and any logo, variation or derivation thereof. 1.3 Liabilities. (a) Liens. For each Station, the License Assets used or held for use by Sellers with respect to such Station, and for the Columbus Station, the Columbus Station Assets used or held for use by RCB with respect to the Columbus Station, shall be sold and conveyed to Option Holder, as of the Option Closing Date for such Station, free and clear of all liens, security interests and encumbrances except (i) all matters of record including, without limitation, those matters disclosed on Schedule 1.3 hereto as "continuing" and, including, without limitation, the rights of lessors with respect to any leasehold interests in real property or operating leases for personal property; (ii)(1) liens or encumbrances on the Real Property, Real Property Improvements, Leasehold Interests, Columbus Real Property, Columbus Real Property Improvements and Columbus Leasehold Interests currently of record; and (2) other liens or encumbrances on the Real Property, Real Property Improvements and Leasehold Interests included in the License Assets and the Columbus Real Property, Columbus Real Property Improvements and Columbus Leasehold Interests included in the Columbus Station Assets that with respect to (ii)(2) hereof do not materially affect the value or the current or continued use and enjoyment (to the extent such continued use and enjoyment conforms with current use and enjoyment) thereof in the operation of the Stations; (iii) liens for taxes not yet due and payable; and (iv) the Assumed Liabilities (as hereinafter defined) and "Assumed Liabilities" as defined in the Asset Purchase Agreement (all of the foregoing in clauses (i) through (iv) are sometimes collectively referred to herein collectively as "Permitted Encumbrances" but shall be deemed to exclude any judgment liens, mortgages, capital leases or security interests or trust arrangements providing for similar effect (including, without limitation, purchase money mortgages and purchase money security interests granted by Sellers in favor of any third party securing obligations for borrowed money)). (b) Assumption of Liabilities. (i) Option Holder agrees that, on the Option Closing Date relating to any Station, Option Holder shall assume, undertake and agree to pay, satisfy, perform, discharge and be liable for, with respect to such Station, and Sellers shall not thereafter be liable for (1) any liabilities and obligations of Sellers that Option Holder has not previously assumed and as the same shall exist on the Option Closing Date that arise on or after the Option Closing Date, including all such liabilities and obligations arising out of and related to the ownership and operation of such Station that Option Holder has not previously assumed, including the License Assets and the Columbus Station Assets (including under the contracts assigned pursuant to Sections 1.1.A(c), 1.1.A(d), 1.1.B(b) and 1.1.B(c) with respect to such Station and any contracts that are entered into after the date hereof with respect to such Station and those liabilities and obligations referred to in Section 10.1 hereof); (2) any liability or obligation arising out of the business or operations of any Station or any of the License Assets, arising on or after the Option Closing Date for such Station; (3) any Assumed Liabilities, including under any contracts assumed by Option Holder hereunder, with respect to such Group I Station or the Columbus Station Assets with respect to the Columbus Station; (4) any other liabilities or obligations incurred or assumed by Option Holder with respect to any of the License Assets with respect to such Station; (5) any liability or obligation to any Station Employee for such Station; and (6) any duty, obligation or liability relating to any pension, 401(k) or other similar plan, agreement or arrangement provided by Option Holder to any Station Employee for such Station. (ii) Additionally, with respect to the Columbus Station, Option Holder shall assume, undertake and agree to pay, satisfy, perform, discharge and be liable for, and Sellers shall not be liable for (1) any liability or obligation arising out of the business or operations of the Columbus Station or any of the Columbus Station Assets arising on or after the Columbus Option Closing Date; (2) any liability or obligation of Option Holder for any federal, state or local income or other taxes or, to the extent of any prorations pursuant to Section 2.2 of the Asset Purchase Agreement or for real estate attributable to any period of time on or after the Columbus Option Closing Date and any liability or obligation for real estate of Sellers to the extent a proration was provided for in Section 2.2 of the Asset Purchase Agreement attributable to the period of time prior to the Columbus Option Closing Date; (3) any liability or obligation of Option Holder for any payroll taxes attributable to any period of time on or after the Asset Purchase Agreement Closing Date and any liability or obligation for payroll taxes of Sellers to the extent a proration was provided for in Section 2.2 of the Asset Purchase Agreement attributable to the period of time prior to the Asset Purchase Agreement Closing Date; (4) any liability or obligation to any former employee of Sellers at the Columbus Station who has been hired by Option Holder, attributable to any period of time on or after the Asset Purchase Agreement Closing Date; (5) any liability or obligation arising out of any litigation, proceeding or claim by any person or entity relating to the business or operations of the Columbus Station, any of the Columbus Station Assets with respect to any events or circumstances that happen or exist on or after the Columbus Option Closing Date; and (6) any severance or other liability arising out of the termination of any employee's employment with or by Option Holder on or after the Closing Date on which such employee was hired by Option Holder, and in the case of former employees of the Columbus Stations, on or after the Asset Purchase Agreement Closing Date; and (7) any duty, obligation or liability relating to any pension, 401(K) or other similar plan, agreement or arrangement provided by Option Holder to any employee or former employee of Seller on or after the Closing Date on which such employee was hired by Option Holder, and in the case of former employees of the Columbus Station, on or after the Asset Purchase Agreement Closing Date (all of the foregoing in this paragraph, together with other liabilities or obligations in the preceding paragraph and all other liabilities or obligations expressly assumed by Option Holder hereunder, are referred to herein collectively as the "Assumed Liabilities"). All liabilities and obligations arising of the License Assets that do not constitute Assumed Liabilities shall be retained by Sellers and are referred to herein as "Retained Liabilities". To the extent, if any, any Seller makes a payment to Option Holder as a result of any adjustment pursuant to Section 2.5 hereof, Option Holder shall then assume and be obligated to pay such obligations and liabilities for which such adjustment was made pursuant to Section 2.5. (c) Consents to Contracts. Option Holder agrees that (i) on the Columbus Option Closing Date, Option Holder will assume contracts included in the Columbus Station Assets and the License Assets relating to the Columbus Station and (ii) on the Option Closing Date for such Station, Option Holder will assume the contracts included in the License Assets relating to such Group I Station (together with any Consent Contracts, as defined in and pursuant to Section 1.3 of the Asset Purchase Agreement), in the case of (i) and (ii) above regardless of whether consent has been obtained in connection therewith. The liabilities and obligations in connection with all such contracts shall also constitute "Assumed Liabilities" for purposes of this Agreement. 1.4 Option Exercise. In order to exercise an Option, Option Holder must deliver to Sellers written notice (an "Exercise Notice") of Option Holder's intention to so exercise such Option and designating whether all or any one of the Group I Options or the Columbus Option is being exercised (and in the case of a Group I Option, designating which Stations are to be acquired thereunder). The date upon which any Exercise Notice is given with respect to an Option shall be referred to as the "Exercise Date" for such Option. Option Holder may withdraw any Exercise Notice at any time prior to the related Option Closing Date by written notice to that effect to Sellers. Upon withdrawal of any Exercise Notice, Option Holder shall reimburse Sellers for all reasonable out-of-pocket expenses, including, without limitation, reasonable attorneys' fees, incurred by Sellers in connection with its compliance with Section 5.8(a) and Section 5.8(b) with respect to such Exercise Notice. Nothing contained in this Section 1.4 is intended to prohibit the Option Holder from subsequently exercising an Option during the Exercise Period defined in Section 1.5 hereof after any such withdrawal nor shall any withdrawal of any Exercise Notice extend the terms of the Option or affect the payments referred to in Section 1.5 below. The Group I Options may be exercised concurrently in one step or separately in two or more steps with respect to the Group I Stations. 1.5 Terms of Option. Option Holder shall have the right to exercise the Group I Options and the Columbus Option from the date hereof for ten (10) years from the Option Grant Date to and including April 10, 2006 (the "Exercise Period"). Upon the failure of Option Holder to deliver the Exercise Notice for any unexercised Group I Option during the Exercise Period as provided herein, such Group I Option shall expire. Upon the failure of Option Holder either to deliver the Exercise Notice for the Columbus Option during the Exercise Period as provided herein or to pay the Option Extension Fees (as defined below) on any Unpaid Option (as defined below), the Columbus Option shall expire. Notwithstanding anything to the contrary herein, the Closing on an Option may take place after the expiration of the Exercise Period so long as Option Holder has (i) delivered the Exercise Notice for such Option to Sellers in accordance with Section 1.4 prior to the expiration of the then current Exercise Period and (ii) in the case of the Columbus Option, in addition paid all Option Extension Fees on all Unpaid Options, but in no event shall the final Closing of (1) any Group I Option take place later than April 10, 2008 or (2) the Columbus Option take place later than April 10, 2008. ARTICLE 2 PAYMENTS AND CLOSING 2.1 Grant Price and Option Closing Price. 2.1.A Payment for Option Grant. In consideration of Sellers' grant of the Options, Option Holder shall pay to Sellers Three Hundred Two Thousand Dollars ($302,000) (the "Option Grant Price"), which shall be allocated among the Stations in accordance with Schedule 2.1.A. The Option Grant Price shall be allocated between the Sellers as determined by Seller and paid by Option Holder to Sellers by wire transfer of immediately available funds to such bank account(s) as Sellers may designate on or prior to the Option Grant Date. 2.1.B Payment Upon Option Closing and Option Extension Fees. (a) In consideration of Sellers' performance of this Agreement and the transfer, assignment and delivery of (i) the License Assets of the Group I Stations, Option Holder will pay to Sellers with respect to each Group I Station the amount allocable to such Group I Station in accordance with Schedule 2.1.B(a) (collectively, the "Group I Option Closing Price" and together with the Columbus Option Closing Price, sometimes hereinafter referred to as the "Option Closing Price") on or before the Columbus Option Closing Date, and (ii) the Columbus Station Assets and the License Assets relating to the Columbus Station, Option Holder will pay to Sellers One Hundred Thirty Million Dollars ($130,000,000) on the Columbus Option Closing Date, as adjusted pursuant to Section 2.5 below (the "Columbus Option Closing Price"). Option Holder shall pay the Option Closing Price at the following times: (i) With respect to a Group I Option the Closing of which occurs prior to the Columbus Option Closing Date, Option Holder shall pay the Option Closing Price for such Group I Option at any time on or prior to the Columbus Option Closing Date; (ii) With respect to a Group I Option the Closing of which does not occur on or prior to the Columbus Option Closing Date, Option Holder shall pay the Option Closing Price for such Group I Option on the Columbus Option Closing Date; and (iii) With respect to the Columbus Option, Option Holder shall pay the Columbus Option Closing Price on the Columbus Option Closing Date. As used herein, at any time the "Unpaid Options" shall comprise: (i) any Group I Option the Closing of which has occurred and with respect to which Option Holder has not yet paid the Option Closing Price, and (ii) any Option the Closing of which has not occurred. (b) Until the Closing for the Columbus Station has occurred (whether or not the Columbus Option has been exercised), unless Option Holder elects to terminate its right to exercise the Columbus Option by written notice to Sellers, Option Holder shall be required to pay to Sellers, on December 31, 1996, and on each March 31, June 30, September 30 and December 31 thereafter and on the Columbus Option Closing Date or, if the Columbus Option Closing Date has not occurred, April 10, 2008, an extension fee with respect to each Group I Option and the Columbus Option (each, an "Option Extension Fee" and collectively, the "Option Extension Fees"). The Option Extension Fees shall accrue on each Unpaid Option on the basis of a 365-day year based on the actual number of days elapsed in the period during which the Option Extension Fees accrue. The Option Extension Fees shall be paid as follows: (i) on December 31, 1996 (or the Columbus Option Closing Date, if earlier), Option Holder shall pay to Sellers an Option Extension Fee with respect to each Unpaid Option in an amount equal to (A) the product of (Y) eight percent (8%) and (Z) the amount of the Option Closing Price attributable to such Unpaid Option minus, in the case of an Unpaid Option that has been assigned pursuant to Section 11.4, the Option Assignment Price for such Unpaid Option, multiplied by (B) a fraction, the numerator of which is the number of days elapsed from the Option Grant Date to December 31, 1996 (or the Columbus Option Closing Date, if earlier) and the denominator of which is 365; (ii) thereafter, on each March 31, June 30, September 30 and December 31, and on the Columbus Option Closing Date or, if the Columbus Option Closing Date has not occurred, on April 10, 2008, Option Holder shall pay to Sellers an Option Extension Fee calculated as follows: (A) with respect to each Unpaid Option, for the period beginning on January 1, 1997 and ending on the first anniversary of the Option Grant Date, an amount equal to (A) the product of (Y) eight percent (8%) and (Z) the amount of the Option Closing Price attributable to such Unpaid Option minus, in the case of an Unpaid Option that has been assigned pursuant to Section 11.4, the Option Assignment Price for such Unpaid Option, multiplied by (B) a fraction, the numerator of which is equal to the number of days elapsed since the due date of the previous payment of an Option Extension Fee and the denominator of which is 365; (B) with respect to each Unpaid Option, for the period beginning on the first day after the first anniversary of the Option Grant Date and ending on the second anniversary of the Option Grant Date, an amount equal to (A) the product of (Y) fifteen percent (15%) and (Z) the amount of the Option Closing Price attributable to such Unpaid Option minus, in the case of an Unpaid Option that has been assigned pursuant to Section 11.4, the Option Assignment Price for such Unpaid Option, multiplied by (B) a fraction, the numerator of which is equal to the number of days elapsed since the later of (I) the due date of the previous payment of an Option Extension Fee and (II) the first anniversary of the Option Grant Date, and the denominator of which is 365; and (C) with respect to each Unpaid Option, for the period beginning on the first day after the second anniversary of the Option Grant Date and ending on the Columbus Option Closing Date or, if the Columbus Option Closing Date has not occurred, April 10, 2008, an amount equal to (A) the product of (Y) twenty-five percent (25%) and (Z) the amount of the Option Closing Price attributable to such Unpaid Option minus, in the case of an Unpaid Option that has been assigned pursuant to Section 11.4, the Option Assignment Price for such Unpaid Option, multiplied by (B) a fraction, the numerator of which is equal to the number of days elapsed since the later of (I) the due date of the previous payment of an Option Extension Fee and (II) the second anniversary of the Option Grant Date, and the denominator of which is 365. (c) The Option Holder shall assume the Assumed Liabilities and other obligations and liabilities to be assumed by Option Holder hereunder with respect to a Group I Station or the Columbus Station on the Option Closing Date for such Station. (d) Notwithstanding any other provision contained herein, except and subject to Section 11.1.C, (i) the Group I Options shall expire on April 10, 2006 and (ii) notwithstanding the expiration or termination of a Group I Option, such terminated Group I Option shall continue to be an Unpaid Option, and Option Holder shall continue to be liable for the payment of the Option Closing Price and Extension Fees attributable to such terminated Option pursuant to this Section 2.1.B unless and until the Columbus Option is terminated as provided herein; (iii) the Columbus Option shall expire on the first to occur of (a) April 10, 2006 and (b) whether or not the Columbus Option has been exercised, the date on which an Option Extension Fee for any Group I Option or the Columbus Option is due if Option Holder shall not have paid such Option Extension Fee by such date; (iv) it is understood and agreed by Option Holder that in no event shall any Option Extension Fee be refundable to Option Holder hereunder; (v) if Option Holder elects to terminate the Columbus Option, any accrued and unpaid Option Extension Fee for any Group I Option and the Columbus Option through the date of such written notice shall be paid by Option Holder to Sellers by wire transfer of immediately available funds on the date of such notice of termination; and (vi) if Option Holder elects to terminate the Columbus Option, Option Holder shall be under no obligation to pay to Sellers any Group I Option Closing Price or any Columbus Option Closing Price. (e) The Option Closing Price payable for each Station and Extension Fees attributable to such Station shall be allocated between the Sellers in such manner as determined by the Sellers and shall be paid by Option Holder to Sellers by wire transfer of immediately available federal funds in United States dollars to such bank account(s) as Sellers may designate; provided, however, that payments of One Hundred Dollars ($100.00) or less may be made by check. 2.2 Option Grant and Closing. (a) Option Grant. The grant of the Options (the "Option Grant") shall become effective on the Option Grant Date upon the execution of this Agreement by all parties and the receipt of the Option Grant Price referred to in Section 2.1(a)(i). (b) Closing. The closing of the purchase and sale with respect to a Station upon the exercise of the Option relating to such Station (a "Closing") shall be held in the offices of Dow, Lohnes & Albertson, 1200 New Hampshire Avenue, N.W., Suite 800, Washington, D.C. 20036, at 10:00 a.m., local time, on a regular business day specified by Option Holder by written notice to Sellers not less than twenty (20) business days in advance of such specified business day, or at such other place and/or such other day as Sellers and Option Holder may agree in writing, provided that, in the case of the Columbus Option, in no event shall the Closing take place after April 10, 2008 and in the case of the Group I Options, in no event shall any Closing take place after April 10, 2008 (hereinafter referred to with respect to such Option as an "Option Closing Date"). 2.3 Deliveries at Option Grant. (a) Deliveries by Sellers. On the Option Grant Date, Sellers have delivered to Option Holder such customary documentation reasonably satisfactory to Option Holder and its counsel in order to effect the transaction contemplated by this Agreement, including, without limitation, the following: (i) a certified copy of the resolutions or proceedings of Sellers authorizing Sellers' consummation of the transactions contemplated by this Agreement; (ii) a certificate as to the existence and good standing of RCB issued by the Secretary of State of Delaware not more than ten (10) days before this Option Grant Date, certifying as to the incorporation and/or organization of RCB in Delaware and, certificates issued by an appropriate governmental authority of RCB to do business in the jurisdictions listed in Schedule 3.1, to the extent such certificates are available, dated not more than ten (10) days before the Option Grant Date; (iii) a receipt for the Option Grant Price; (iv) the opinion of Sellers' counsel in the form attached as Exhibit 8.3 to the Asset Purchase Agreement, dated as of this Option Grant Date; (v) certificates of insurance showing Option Holder named as additional insured as contemplated in Section 5.1; and (vi) such other documents as Option Holder may reasonably request. (b) Deliveries by Option Holder. On the Option Grant Date, Option Holder have delivered to Sellers the Option Grant Price and such instruments and other customary documentation reasonably satisfactory to Sellers and their counsel in order to effect the transactions contemplated by this Agreement, including, without limitation, the following: (i) a certified copy of resolutions or proceedings of Option Holder authorizing the consummation of the transactions contemplated by this Agreement; (ii) a certificate issued by the Maryland Department of Assessments and Taxation dated not more than ten (10) days before this Option Grant Date certifying as to the incorporation and good standing and/or qualification of Option Holder in Maryland and, to the extent available, a certificate of the appropriate governmental authorities as to the qualification of Option Holder, or an appropriate wholly-owned operating subsidiary of Option Holder, to transact business in each jurisdiction in which the Stations presently transact business from the Secretary of State or analogous entity of each such jurisdiction, dated not more than ten (10) days before the Option Grant Date; (iii) opinions of Option Holder's counsel and special counsel in the forms attached as Exhibits 7.3(a) and 7.3(b), respectively, to the Asset Purchase Agreement, each dated as of this Option Grant Date; (iv) certificates of insurance contemplated in Section 6.5; and (v) such further documents as Sellers may reasonably request. 2.4 Deliveries at Closing. All actions at each Closing shall be deemed to occur simultaneously, and no document or payment shall be deemed to be delivered or made until all documents and payments are delivered or made to the reasonable satisfaction of Option Holder, Sellers and their respective counsel. (a) Deliveries by Sellers. (i) At each Closing, Sellers shall deliver to Option Holder such instruments of conveyance and other customary documentation as shall in form and substance be reasonably satisfactory to Option Holder and its counsel, including, without limitation, the following: (a) one or more bills of sale conveying the personal property and all leases, contracts, and other intangible assets included in (i) the License Assets for the Station that is the subject of such Closing and (ii) in the case of the Columbus Station, the Columbus Station Assets; (b) one or more assignments conveying the FCC Authorizations included in the License Assets for the Station that is the subject of such Closing; (c) any mortgage discharges or releases of liens that are necessary in order to transfer (i) the License Assets for the Station that is the subject of such Closing as contemplated by Section 1.3 and (ii) in the case of the Columbus Station, the Columbus Station Assets; (d) with respect to the Closing of a Group I Option, a receipt for the Option Closing Price for the Station that is the subject of such Closing and for the Extension Fee applicable to such Group I Option that has accrued since the due date of the previous payment of Option Extension Fees for such Option (unless, with respect to the Closing of a Group I Option prior to the Columbus Option Closing Date, Option Holder defers the payment of such Option Closing Price until the Columbus Option Closing Date), and with respect to the Closing of the Columbus Option, a receipt for (i) the Columbus Option Closing Price, (ii) the Option Closing Price of all Unpaid Options, and (iii) the Extension Fees applicable to the Columbus Option and such Unpaid Options that have accrued since the due date of the previous payment of Option Extension Fees for such Options; (e) all consents received by Sellers through the Option Closing Date to the assignment to or assumption by Option Holder of licenses, contracts and leases included in (i) the License Assets for the Station that is the subject of such Closing and (ii) in the case of the Columbus Station, the Columbus Station Assets; (f) the Terminations as required by Section 8.6 hereof; (g) documents of conveyance evidencing transfer of (i) the Real Property included in the License Assets for the Station that is the subject of such Closing, and (ii) the Columbus Real Property in the case of the Closing of the Columbus Option; (h) in the case of the Closing of the Twin Peaks Equity Interests, a stock certificate of Sandia representing the Sandia Stock (together with a blank stock power for the Sandia Stock); (i) to the extent (1) consent is obtained to the transfer thereof and (2) made available by NewVenco, Inc., in the case of the Closing of the Columbus Option only, (a) a stock certificate of NewVenco, Inc. representing all of RCB's interest in NewVenco, Inc. in connection with the Columbus Station (together with a stock power endorsed in blank for such stock of NewVenco, Inc.) or (b) a stock certificate of NewVenco, Inc. representing Option Holder's interest in NewVenco, Inc. in connection with the Columbus Station; (i) to the extent (1) such assets were not conveyed under the Asset Purchase Agreement, (2) made available by NewVenco, Inc. and Television Alliance Group, Inc. and (3) consent is obtained to the transfer thereof, (a) all stock certificates of NewVenco, Inc. and Television Alliance Group, Inc. representing all of RCB's interest in the Other Assets (as such term is defined in the Asset Purchase Agreement) (together with stock powers endorsed in blank for such stock certificates of NewVenco, Inc. and Television Alliance Group, Inc., respectively) or (b) a stock certificate of NewVenco, Inc. and Television Alliance Group, Inc. representing Buyer's interest in the Other Assets; (ii) to the extent (1) such assets were not conveyed under the Asset Purchase Agreement and (2) consent is obtained to the transfer thereof, a stock certificate of Transtower, Inc. representing all of Seller's interest in Transtower, Inc. (together with a stock power endorsed in blank for such stock of Transtower, Inc.); and (j) the list of Qualified Beneficiaries entitled to Continuation Coverage as of such Closing Date, as contemplated under Section 10.1(b). (ii) At each Closing, and upon the written request of Option Holder at least ten (10) business days prior to such Closing, Sellers shall deliver to Option Holder, to the extent requested by Option Holder, the following: (a) a certified copy of the resolutions or proceedings of each Seller authorizing the transactions contemplated at such Closing by this Agreement; (b) a certificate of Sellers as required by Section 8.1(c) hereof; (c) the opinion of counsel required by Section 8.3 hereof; (d) a certificate as to the existence and good standing of RCB issued by the Secretary of State of the State of Delaware dated not more than ten (10) days before the Option Closing Date and a certificate of the appropriate governmental authorities as to RCB's qualification to transact business in Delaware and, certificates issued by the appropriate governmental authority of the jurisdiction in which the Station that is the subject of such Closing to the extent RCB then transacts business in such jurisdiction and to the extent such certificates are available, dated not more than ten (10) days before the Option Closing Date; (e) such other documents as Option Holder shall reasonably request. (b) Deliveries by Option Holder. (i) At each Closing, Option Holder shall deliver to Sellers the Closing Price applicable to such Closing and such instruments of assumption and other customary documentation as shall in form and substance be reasonably satisfactory to Sellers and their counsel, including, without limitation, the following: (a) with respect to the Closing of a Group I Option, the Option Closing Price for the Station that is the subject of such Closing and the Extension Fee applicable to such Group I Option that has accrued since the due date of the previous payment of Option Extension Fees for such Option (unless, with respect to the Closing of a Group I Option prior to the Columbus Option Closing Date, Option Holder defers the payment of such Option Closing Price until the Columbus Option Closing Date), and with respect to the Closing of the Columbus Option, (i) the Columbus Option Closing Price, (ii) the Option Closing Price of all Unpaid Options, and (iii) the Extension Fees applicable to the Columbus Option and such Unpaid Options that have accrued since the due date of the previous payment of Option Extension Fees for such Options; provided that in either event such amounts shall be delivered in the manner set forth in Section 2.1.B hereof; (b) an assumption of liabilities pursuant to which Option Holder will assume the Assumed Liabilities relating to the Station that is the subject of such Closing; (c) the Terminations as required by Section 7.6; and (d) in the case of the Closing of the RCB Twin Peaks Equity Interests, a receipt for the stock certificate issued to Option Holder representing the Sandia Stock; (ii) At each Closing, and upon the written request of Sellers at least ten (10) business days prior to such Closing, Option Holder shall deliver to Sellers, to the extent requested by Sellers, the following: (a) a certified copy of the resolutions or proceedings of Option Holder authorizing the transactions contemplated by this Agreement; (b) a certificate of Option Holder as required by Section 7.1(c) hereof; (c) a certificate as to the existence and good standing of Option Holder issued by the Maryland Department of Assessments and Taxation dated not more than ten (10) days before the Option Closing Date and a certificate of the appropriate governmental authorities as to the qualification of Option Holder or an appropriate wholly-owned operating subsidiary of Option Holder to transact business in each jurisdiction in which the Station that is the subject of such Closing then transacts business from the Secretary of State or analogous entity of such jurisdiction dated not more than 10 days before the Option Closing Date; (d) the opinion of counsel required by Section 7.3 hereof; (e) such other documents as Sellers shall reasonably request. 2.5 Adjustments. (a) (i) TBA. The parties agree to finalize any payments due under the TBA relating to the Station through 11:59 p.m. on the day preceding the Option Closing Date for such Station (the "Adjustment Date"). (ii) Indemnity. To the extent that Sellers are liable for any Loss or Expense under Article 9 hereof or under Article 9 of the Asset Purchase Agreement, the Option Closing Price in respect of the Columbus Station shall be reduced by the amount that Sellers are liable for in connection with such Loss or Expense, subject to the limitations set forth in Section 9.4 hereof. (b) (i) Pre-Closing Certificate. For the purpose of finalizing the amounts required pursuant to Section 2.5(a)(i), Sellers shall deliver to Option Holder, and Option Holder shall deliver to Sellers, not less than five (5) days prior to the applicable Option Closing Date, a certificate (the "Pre-Closing Certificate"), to be signed at such Closing by an appropriate official of such parties after due inquiry by such official, but without any personal liability to any such official, each of which shall specify Sellers' and Option Holder's good faith determinations of the dollar amount under Section 2.5(a)(i), including, without limitation, appropriate documentation supporting determinations and calculations under Section 2.5(a). (ii) Pre-Closing Dispute; Escrow. If Sellers or Option Holder, acting in good faith, do not agree with any amount set forth in the other parties' Pre-Closing Certificate, then on or prior to the second business day prior to such Closing Date, such party (the "Disputing Party") may deliver to the other a written report (the "Estimate Report") setting forth in reasonable detail the Disputing Party's good faith reasonable estimate(s) of the amount(s) with which the Disputing Party disagrees. Any estimated amount which is set forth in the Pre-Closing Certificate and as to which the Disputing Party does not deliver its own estimate on or prior to such second business day will be the "estimated amount" of the adjustments under Section 2.5(a)(i) (the "Adjustment Amount"), on the applicable Closing Date. In the case of any such estimated amount as to which the Disputing Party delivers its own estimate, the parties will endeavor in good faith to agree prior to the Closing on the appropriate amount of such estimate, and any amount so agreed upon by them in writing prior to the Closing will be the "estimated amount" of the Adjustment Amount on the applicable Closing Date. In the case of any such estimated amount as to which the Disputing Party delivers its own estimate and Sellers and Option Holder do not so agree, the estimate set forth in the Sellers' Pre-Closing Certificate will be the "estimated amount" of the Adjustment Amount, on the Closing Date, and at the Closing the difference (if any) between the amount of the Option Closing Price that would be determined using the amount set forth in the Sellers' Pre-Closing Certificate (as adjusted in accordance with Section 2.5(a)(ii)) and the amount of the Option Closing Price determined using the estimated Adjustment Amount set forth in the Estimate Report (such amount, the "Post-Closing Estimate Fund Deposit") will be transferred by Option Holder to Magna Trust Company, St. Louis, Missouri or such other bank as mutually agreed to by the parties (the "Escrow Agent"), to be held by the Escrow Agent pursuant to the Post-Closing Escrow Agreement in the form of Exhibit 2.5(b) (with such changes as the Escrow Agent may request), and pending final determination of the disputed amount(s) in question pursuant to this Section 2.5(b) as set forth below, as a fund in escrow (the "Post-Closing Estimate Fund") to provide security for the payment of any additional amount which may be payable by Option Holder or pursuant to Section 2.1. (iii) Adjustment at Closing. At such Closing, the Option Closing Price shall be decreased to the extent Sellers owe Option Holder funds or increased to the extent Option Holder owes Sellers funds, based upon the amount set forth, in the Sellers' Pre-Closing Certificate (as adjusted in accordance with Section 2.5(a)(ii)). (iv) Post-Closing Dispute. If any such dispute cannot be resolved by Option Holder and Sellers or their respective independent public accountants within one hundred and eighty (80) days after the Option Closing Date, the disputed matters shall be referred to a mutually satisfactory independent public accounting firm of national stature which has not been employed by any party hereto for the two (2) years preceding the date of such referral; such firm to be selected by the independent public accountants of Sellers and Option Holder. The determination of such firm shall be conclusive and binding on each party and not subject to dispute or review. One-half of the fees of such firm shall be paid by Sellers, and one-half shall be paid by Option Holder. (v) Disbursement of Post-Closing Estimate Fund. If any funds are transferred to the Escrow Agent to be held in the Post-Closing Estimate Fund, then any amount which becomes payable to Option Holder or Sellers pursuant to Section 2.5(b), together with interest accrued on such amount, will be paid to Option Holder or Sellers from the Post-Closing Estimate Fund, to the extent of the funds therein. If no funds are transferred to the Escrow Agent to be held in the Post-Closing Estimate Fund or the entire amount so transferred has theretofore been paid pursuant to this paragraph of Section 2.5(b), then any remaining amount payable to Sellers pursuant to Section 2.5(b) will be paid by Option Holder and any remaining amount payable to Option Holder pursuant to Section 2.5(b) will be paid by Sellers. Any amount payable by Sellers or Option Holder pursuant to Section 2.5(b) (other than to the extent that funds are available from the Post-Closing Estimate Escrow to pay such amount) will bear interest at the prime or reference rate of interest announced by Chemical Bank as in effect from time to time, from the third business day after the adjusted Cash Purchase Price is determined in accordance with Section 2.5(b) through and including the date upon which such amount and all such interest are paid in full. 2.6 Effect of Certain Laws or Proceedings. The parties hereto acknowledge and agree that notwithstanding anything in this Agreement or any other documents related hereto to the contrary (including, without limitation, any representations or warranties made by Sellers, covenants of the Sellers made herein, any condition precedent to the obligations of Option Holder set forth in this Agreement, or any provisions relating to indemnification to be made by Sellers hereunder), matters relating to, in connection with or resulting or arising from: (a) the effect, for purposes of any laws, statutes, ordinances, rules, regulations, orders or other actions whenever promulgated or enacted, including communications or communications-related laws, statutes, ordinances, rules, regulations, orders or other actions, whenever promulgated or enacted, and any licenses, permits or authorizations issued by any governmental authority (including, without limitation, the FCC) (collectively, "Laws") or any contract or agreement to be conveyed to or assumed, directly or indirectly, by Option Holder pursuant hereto or under the Asset Purchase Agreement (collectively, the "Conveyed Contracts"), of (1) the transfer of the Station Assets, as defined in and pursuant to the terms of the Asset Purchase Agreement, to Option Holder and the transfer by Sellers of the License Assets and the Columbus Station Assets hereunder; (2) the grant by Sellers of the Options; (3) the execution, delivery and performance of any of the Transaction Documents; or (4) the consummation of the other transactions contemplated hereby or by the Asset Purchase Agreement; (b) any conflict with, violation of, termination of or breach or default under any Laws or Conveyed Contracts as a result of the consummation of any of the transactions contemplated hereby or by the Asset Purchase Agreement (including, without limitation, the Transaction Documents); or (c) any claims, actions, suits or other proceedings of any nature whatsoever ("Proceedings"), by any person or entity (including, without limitation, any governmental entity) by or before any court, administrative agency or otherwise, alleging a conflict, violation of, breach or default under, termination of or other inconsistency with Laws or Conveyed Contracts as a result of the consummation of any of the transactions contemplated hereby or by the Asset Purchase Agreement (including, without limitation, the Transaction Documents), shall not: (i) cause or constitute, directly or indirectly, a breach by Seller of any of its representations, warranties, covenants or agreements set forth in this Agreement or any other document related hereto (and such representations, warranties, covenants and agreements shall hereby be deemed to be modified appropriately to reflect and permit the impact and existence of such Laws, Conveyed Contracts and Proceedings and to permit any action by Seller to comply with or attempt in good faith to comply with such Laws, Conveyed Contracts and Proceedings); (ii) otherwise cause or constitute, directly or indirectly, a default or breach by Sellers under this Agreement or any other documents related hereto; (iii) result in the failure of any condition precedent to the obligations of Option Holder under this Agreement or any other document related hereto to be satisfied; (iv) otherwise excuse Option Holder's performance of its obligations under this Agreement or any other document related hereto; or (v) give rise to any claim for indemnification or other compensation by Option Holder or any adjustment of the Option Closing Price; provided that the foregoing clauses (i) through (v) shall not apply to (1) any claim brought by a partner of Sellers alleging a violation of any Seller's partnership agreement or any claim brought by any partner, officer, director, agent or Affiliate of Sellers; (2) any breach by Sellers of their covenants set forth in this Agreement; or (3) any action instituted by the Federal Trade Commission or the Department of Justice relating to the HSR Act, in each case which shall be governed by other applicable provisions of this Agreement. 2.7 Representations and Warranties of Sellers. The parties hereto acknowledge and agree that notwithstanding anything in this Agreement or any other documents related hereto to the contrary, and without expanding any obligations of Sellers hereunder, Sellers shall have no liability hereunder (for indemnification or otherwise) for the breach of any representation or warranty hereunder relating to events occurring after the date hereof unless such breach was caused by a negligent, grossly negligent or intentional wrongful action taken by Sellers. ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF SELLERS Subject to the exceptions set forth in Section 8.1(a) hereof, Sellers represent and warrant to Option Holder as follows: 3.1 Organization. RCB is a limited partnership duly formed, validly existing and in good standing under the law of the State of Delaware. Licensee is a general partnership duly formed and validly existing under the laws of the State of Missouri. Each Seller has the requisite partnership power and authority to carry on the business of the Stations now being conducted by it, to own and operate the License Assets owned and operated by it, and to enter into and consummate the transactions contemplated by this Agreement. RCB is qualified to conduct the business of the Stations now being conducted by it in each jurisdiction listed on Schedule 3.1. 3.2 Approval/Authority. All requisite partnership actions and proceedings necessary to be taken by or on the part of each Seller in connection with the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby and necessary to make the same effective have been, or with respect to each Closing will be, duly and validly taken. This Agreement has been duly and validly authorized, executed and delivered by each Seller and constitutes its valid and binding agreement, enforceable in accordance with and subject to its terms, except as enforceability may be limited by laws affecting the enforcement of creditors' rights or contractual obligations generally and by the application of general principles of equity. 3.3 No Conflicts. Except as set forth on Schedule 3.3, on this Option Grant Date (after giving effect to all approvals and consents which have been obtained), neither the execution and delivery by Sellers of this Agreement, nor the consummation by either Seller of the transactions contemplated hereby would constitute, a material violation of or would conflict in any material respect with or result in any material breach of or any material default under, any of the terms, conditions or provisions of any law or regulation to which either Seller is subject, or of RCB's agreement of limited partnership or Licensee's agreement of general partnership, as the case may be, or any contract, agreement or instrument that is required by the terms hereof to be listed on the Schedules hereto to which either Seller is a party or by which either Seller is bound. 3.4 Brokers. Except for the fees payable to Communications Equity Associates referenced in Section 3.14 of the Asset Purchase Agreement, there is no broker or finder or other person or entity who would have any valid claim against Sellers for a commission or broker's fee in connection with this Agreement or the transactions contemplated hereby as a result of any agreement or understanding of or action taken by any Seller or any Affiliate of Seller. 3.5 FCC Authorizations. Licensee is the holder of the FCC Authorizations listed in Schedule 1.1.A(a) to this Agreement. Such FCC Authorizations constitute all of the licenses and authorizations required under the Communications Act of 1934, as amended (the "Communications Act") or the current rules and regulations and published policies of the FCC for and/or used in the operation of the Stations as now operated by Sellers. The material FCC Authorizations are in full force and effect and will not be subject to or scheduled for renewal until the dates set forth in Schedule 1.1.A(a). Except as set forth on Schedule 3.5, there is not pending, or to the actual knowledge of Sellers, threatened, any action by or before the FCC to revoke, cancel, rescind, modify or refuse to renew in the ordinary course any of the FCC Authorizations, and except as set forth on Schedule 3.5, there is not now pending, or to the actual knowledge of Sellers, threatened, issued or outstanding by or before the FCC, any investigation, order to show cause, notice of violation, notice of apparent liability or notice of forfeiture or complaint against Sellers with respect to any of the Stations, except to the extent that the result of such action, investigation, order, notice or complaint would not be attributable to (i) factors affecting the television or radio industries generally, (ii) general national, regional or local economic or financial conditions, (iii) governmental or legislative laws, rules or regulations, (iv) any affiliation agreement or the lack thereof or the non-transfer to Option Holder thereof or (v) actions taken by Option Holder or any Affiliate of Option Holder). To Sellers' actual knowledge, each Station is operating in compliance in all material respects with the FCC Authorizations, the Communications Act and the current rules and regulations of the FCC. For purposes of this Agreement, "Affiliate" means with respect to a party, any Person, directly or indirectly, controlling or controlled by such party, or any Person under direct or indirect common control with such party (as such terms are interpreted from time to time pursuant to the Securities Act of 1933, as amended); "Person" means and includes natural persons, corporations, limited partnerships, general partnerships, joint stock companies, joint ventures, associations, companies, trusts, banks, trust companies, land trusts, business trusts or other organizations, whether or not legal entities, and governments and agencies and political subdivisions thereof; and "actual knowledge" with respect to Sellers means the conscious awareness of facts of Sellers' Station general managers and the officers of the general partner of Sellers after reasonable inquiry by such Station general managers and such officers with respect to the matters related to herein as to which the Sellers are stating their knowledge. 3.6 Condition of Assets. The material tangible assets included in the License Assets are, in all material respects, in good and technically sound operating condition to permit the owner thereof to operate the Stations (in the manner in which the Stations are operated by the Sellers) in compliance with the terms of the FCC Authorizations, the Communications Act and current FCC rules and regulations. 3.7 Title. (a) Schedule 1.1.A(c) contains a description of the material real property leases (the "Leases") to which either Seller is a party as a tenant (or subtenant) or landlord with respect to the License Assets as of the date of this Agreement to be used under the TBAs. To the actual knowledge of Sellers, Sellers or either of them, as the case may be, are not in material default under any of the Leases. (b) Except for this Option, the Permitted Encumbrances, as set forth on Schedule 1.3 and as otherwise provided herein, Sellers have on this Option Grant Date good, insurable and marketable (only, with respect to insurability and marketability, as to tangible property constituting Real Property) and indefeasible title to the tangible assets included in the License Assets owned by them and good and marketable title to the Real Property, and all such assets and Real Property are free and clear of all liens and encumbrances except for Permitted Encumbrances. (c) On the Option Grant Date, except for Permitted Encumbrances, Sellers shall cause the FCC Authorizations to be free and clear of all liens, security interests and encumbrances of any kind whatsoever and shall cause the FCC Authorizations to remain free and clear of all such liens, security interests and encumbrances from the Option Grant Date through the Option Closing Date. 3.8 Call Letters, Trademarks, Etc. Except as set forth on Schedule 1.1.A(e), Sellers possess, and on the Option Closing Date shall possess, adequate rights, licenses or other authority to use all call letters, trademarks and trade names necessary to conduct the business of the Stations as presently conducted by Sellers except where the failure to so possess would not cause a material adverse change in financial condition or business of any TV Station, individually, or the Radio Stations, taken as a whole (provided that the foregoing shall not include any material adverse change attributable to (i) factors affecting the television or radio industries generally, (ii) general national, regional or local economic or financial conditions, (iii) governmental or legislative laws, rules or regulations, (iv) any affiliation agreement or the lack thereof or the non-transfer to Option Holder thereof or (v) actions taken by Option Holder or any Affiliate of Option Holder) (a "Station Material Adverse Change"). Except as set forth on Schedule 1.1.A(e), Sellers have not received any notice with respect to any alleged infringement or unlawful or improper use of any copyright, trademark, trade name or other intangible property right owned or alleged to be owned by others and used in connection with the Stations. Sellers represent and warrant that, except as set forth on Schedule 1.1.A(e) hereto, none of the trademarks listed thereon have been registered. 3.9 Insurance. The Stations and the License Assets are, as of the Option Grant Date, insured by Sellers against loss or damage by fire and other hazards and risks of the character usually insured against by persons operating similar properties and business under policies issued by insurers of recognized responsibility. 3.10 Contracts. Schedules 1.1.A(c), 1.1.A(d) and 3.11 to this Agreement contain a list of the following contracts as to which any Station or either Seller with respect to any Station is a party, and which have been excluded from transfer (or in the case of the Columbus Station, from representation) under the Asset Purchase Agreement, as of the Option Grant Date, other than the Excluded Contracts: (a) contracts evidencing time sales to advertisers or advertising agencies that are "trade" or "barter" transactions that require the furnishing of advertising time on a Station at any time after the Option Grant Date and that individually involve annual payments of more than $250,000; (b) sales agency or advertising representation contracts ending more than one year after the date of this Agreement; (c) employment contracts that individually involve annual base salaries of more than $100,000; (d) material licenses or agreements under which either Seller is authorized to broadcast on any Station filmed or taped programming supplied by others; (e) leases of personal property which have a term, including renewal options exercisable by any other party thereto, ending more than one year after the date of this Agreement and which involve annual payments of more than $50,000 or $250,000 in the aggregate; (f) material contracts not made in the ordinary and usual course of business; and (g) any other contracts which are material to the business and operation of any Station and involve annual payments of more than $100,000 individually. Notwithstanding anything to the contrary in the foregoing, it is understood and agreed that Seller is not required to list contracts entered into in the ordinary course of business for the sale or sponsorship of advertising time on any Station for cash at such Station's prevailing rate with not more than one year remaining in any of their terms. 3.11 Employees. Sellers have heretofore delivered to Option Holder a list of all employees of the Sellers as of the Option Grant Date and their respective salaries and dates of hire. Except as described on such list or on Schedule 3.11, after giving effect to the consummation of the Asset Purchase Agreement Closing Sellers have no written contracts of employment with any employee. Except as described on Schedule 3.11 after giving effect to the consummation of the Asset Purchase Agreement Closing, neither Seller is a party to or subject to any collective bargaining agreements with respect to any Station nor, except as described in Schedule 3.11 after giving effect to the consummation of the Asset Purchase Agreement Closing, does either Seller have any other contracts with any labor union or other labor organization with respect to any Station. Except as described on Schedule 3.11 after giving effect to the consummation of the Asset Purchase Agreement Closing, Sellers are not a party to any pending or, to their actual knowledge, threatened labor dispute affecting any Station that would cause a Station Material Adverse Change. 3.12 Litigation. Except as set forth on Schedule 3.12 hereto: (i) Sellers, with respect to the Stations, have not been operating under or subject to or in default with respect to any order, writ, injunction or decree of any court or federal, state, municipal or other governmental department, commission, board, agency or instrumentality which has caused or could reasonably be expected to cause a Station Material Adverse Change; (ii) neither Seller is a party to any pending or, to Sellers' actual knowledge, threatened litigation affecting any of the License Assets that would cause a Station Material Adverse Change. There are no attachments, executions or assignments for the benefit of creditors or voluntary or involuntary proceedings in bankruptcy pending against or contemplated by Sellers, and to Sellers' actual knowledge, no such actions have been threatened against Sellers or any Station or any subsidiary of Seller. On the date hereof, except for ongoing or planned FCC rulemakings affecting the television or radio industry generally, there is no litigation or proceeding pending or, to Sellers' actual knowledge, threatened against or affecting Sellers that would affect Sellers' ability to carry out the transactions contemplated by this Agreement or restrain, enjoin, prohibit or render illegal the consummation of the transactions contemplated by this Agreement. 3.13 Compliance with Laws. Except as set forth on Schedule 3.5, Sellers, with respect to the Stations, are to their actual knowledge, in compliance, except where the failure to so comply would not cause a Station Material Adverse Change, with all applicable laws, regulations and orders, and the present uses by Sellers of the License Assets do not, to Sellers' actual knowledge, violate any such laws, regulations or orders, except to the extent that any such violation would not result in a Station Material Adverse Change. 3.14 Complete Disclosure. The representations and warranties in this Article 3 do not include any untrue statements of material fact or omit to state a material fact required to be stated therein necessary to make the statements not misleading in light of the circumstances under which they were made. ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF OPTION HOLDER Option Holder represents and warrants to Sellers as follows: 4.1 Incorporation. Option Holder is a corporation duly organized, validly existing and in good standing under the laws of the State of Maryland, and Option Holder or an appropriate wholly-owned subsidiary of Option Holder shall be qualified to transact business in the States of California, Illinois, Indiana, Iowa, Kentucky, Louisiana, Missouri, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Texas and any other state in which a Station is doing business as of the respective Option Closing Date of the acquisition of License Assets in such jurisdiction, and each of Option Holder has the corporate power and authority to enter into and consummate the transactions contemplated by this Agreement. 4.2 Corporate Action. All corporate actions and proceedings necessary to be taken by or on the part of Option Holder in connection with the execution and delivery of this Agreement and the respective consummation of the transactions contemplated hereby and necessary to make the same effective have been duly and validly taken. This Agreement has been duly and validly authorized, executed and delivered by Option Holder, and constitutes its valid and binding agreement, enforceable in accordance with and subject to its terms except as enforceability may be limited by laws affecting the enforcement of creditors' rights or contractual obligations generally and by the application of general principles of equity. 4.3 No Conflicts. Neither the execution and delivery by Option Holder of this Agreement, nor the consummation by Option Holder of the transactions contemplated hereby, would constitute or, with the giving of notice or the passage of time or both, would constitute a material violation of or would conflict with or result in any material breach of or any material default under any of the terms, conditions or provisions of any law or regulation to which Option Holder is subject, or the articles of incorporation or bylaws of Option Holder, or any contract, agreement or instrument to which Option Holder is a party or by which it is or will be bound. 4.4 Brokers. Except for the fees payable to Smith Barney Inc. as referenced in Section 4.4 of the Asset Purchase Agreement, there is no broker or finder or other person who would have any valid claim against any of the parties to this Agreement for a commission or brokerage in connection with this Agreement or the transactions contemplated hereby as a result of any agreement or understanding of or action taken by Option Holder. 4.5 Litigation. There is no litigation, proceeding or investigation of any nature pending or, to the best of Option Holder's actual knowledge, threatened against or affecting Option Holder that would affect Option Holder's ability fully to carry out the transactions contemplated by this Agreement or which has or could reasonably expected to restrain, enjoin, prohibit or render illegal the consummation of the transactions contemplated by this Agreement. There are no attachments, executions or assignments for the benefit of creditors or voluntary or involuntary proceedings in bankruptcy pending against or contemplated by Option Holder, and no such actions have been threatened against Option Holder. For purposes of this Agreement "actual knowledge" with respect to Option Holder means the conscious awareness of facts of the officers of Option Holder after reasonable inquiry by such officers with respect to the matters referred to herein as to which Option Holder is stating its knowledge. ARTICLE 5 COVENANTS OF SELLERS PENDING THE CLOSING Sellers covenant and agree, from the date hereof to and including the Option Closing Date for a Station and thereafter where so indicated (but not after the final Option Closing Date or the earlier termination of this Agreement), that they will act as follows with respect to such Station, and in the case of the Columbus Station Assets, that they will act as set forth in Article 5 of the Asset Purchase Agreement, and to the extent any conflict exists in the terms of Article 5 hereof and Article 5 of the Asset Purchase Agreement, the terms hereof shall govern with respect to the License Assets, including the License Assets of the Columbus Station, and the terms of Article 5 of the Asset Purchase Agreement shall govern with respect to the Columbus Station and the Columbus Station Assets: 5.1 Maintenance of Business until Closing. Until the Option Closing Date applicable to a particular station, each Seller shall, with respect to the License Assets relating to such Station, continue to conduct its business and operations and keep its books of account, records and files in a manner consistent with the applicable TBA. Until the Option Closing Date applicable with respect to the particular Station, subject to the provisions of the TBAs, Sellers shall operate the Stations in all material respects in accordance with the terms of the FCC Authorizations and in compliance in all material respects with all applicable laws and FCC rules, regulations and published policies. Sellers will promptly execute and file any necessary applications for the renewal of the FCC Authorizations. Sellers will maintain in full force and effect through the Option Closing Date for each Station property damage, liability and other insurance with respect to the License Assets used or held for use by Sellers with respect to such Station consistent with Sellers' present practices as set forth in Section 3.9, and between the Option Grant Date and the Option Closing Date with respect to a Station, Option Holder shall be named as an additional insured as its interests may appear on the insurance policies carried by Sellers with respect to the License Assets in connection with such Station thereunder. Except as consistent with the applicable TBA, nothing contained in this Agreement shall give Option Holder any right to control the programming, operations or any other matter relating to any Station prior to the Option Closing Date for such Station, and Sellers shall have complete control of the programming, operations and all other matters relating to each Station up to the Option Closing Date for such Station. Prior to the Option Closing Date for a Station, except as set forth on Schedule 5.1 or as otherwise may be consistent with the applicable TBA and the third from the last paragraph of this Section 5.1, Sellers will not, without the prior written consent of Option Holder (to the extent the following restrictions are permitted by the FCC and all applicable law): (a) enter into (i) any written contract of employment or any collective bargaining agreement that will be binding on Option Holder or (ii) permit any increases in the compensation of any of the Station's employees, except in the case of (i) and (ii), to the extent consistent with the applicable TBA or past practices or as required by law or existing contract, in which case such contracts and agreements shall be assumed by Option Holder and treated as Assumed Liabilities hereunder; provided, however, that Sellers may pay bonuses to any of their employees so long as such bonuses do not create a binding obligation upon Option Holder after the applicable Closing Date; (b) apply to the FCC for any construction permit that would materially restrict the Station's present operations or make any material change in the Station's buildings or leasehold improvements; (c) (i) create or permit any lien or encumbrance, other than the Permitted Encumbrances, on the License Assets or the Columbus Station Assets; or (ii) make capital expenditures or commitments for additions to property, plant or equipment constituting capital assets on behalf of any Station outside the ordinary course of business or consistent with the TBAs; provided, however, that Seller shall consult with Option Holder to the extent Seller seeks to make significant capital expenditures prior to making such capital expenditures; (d) violate, breach or default under, in any material respect, or take or fail to take any action that (with or without notice or lapse of time or both) would constitute a material violation or breach of, or default under, any term or provision of any material contract or license of any Station, other than as a result of this Agreement, the Option Agreement, the TBAs and the transactions contemplated hereby and thereby; (e) incur, purchase, cancel, prepay or otherwise provide for a complete or partial discharge in advance of a scheduled payment date with respect to, or waive any right of Sellers under, any liability of or owing to Sellers in connection with any Station, other than (i) in the ordinary course of business consistent with past practice, (ii) as contemplated pursuant to this Agreement or the TBA, (iii) the pay-off of any debt of Seller on or prior to the Closing or (iv) in an aggregate amount not to exceed $1,000,000; provided, however, that notwithstanding the foregoing, except as otherwise contemplated under the third from the last paragraph of this Section 5.1, Sellers will not incur or suffer to exist any additional indebtedness (whether in connection with any Station or otherwise, but excluding trade accounts payable (other than for borrowed money) arising, and accrued expenses incurred, in the ordinary course of business so long as such trade accounts payable are payable within 90 days of the date the respective goods are delivered or the respective services are rendered). (f) engage with any Person in any business combination, except as otherwise contemplated hereunder; (g) engage in any transaction with respect to any Station with any officer, director, or Affiliate of Sellers (or any Affiliate thereof), either outside the ordinary course of business consistent with past practice or other than on an arm's-length basis; (h) enter into any contract, agreement or commitment to do or engage in any of the foregoing; (i) except as otherwise expressly provided for herein, sell, lease, transfer or agree to sell, lease or transfer any Option or any License Assets; or (j) enter into and record any easements or restrictive covenants that would materially adversely affect the value or the current or continued use and enjoyment (to the extent such continued use and enjoyment conforms with current use and enjoyment) of the property to which they relate without the consent of Option Holder, which consent will not be unreasonably withheld; Notwithstanding anything in this Agreement to the contrary, Sellers shall be entitled to (i) renew or extend the term of any contract listed on Schedules 1.1.A(c), 1.1.A(d), 1.1.A(i)(1) or 3.11 which, by its terms, expires or will expire prior to April 10, 2006 and, in connection therewith, agree not to increase the amounts payable thereunder during any such renewal term except in accordance with the applicable Station's usual practices or the TBA relating to the Station and (ii) take any action specified in subsections (c), (d), (e), (f) and (h) and enter into a local management agreement in connection with the Twin Peaks Sale at the time of entry into any agreement of sale for the New Mexico Stations or the RCB Twin Peaks Equity Interest. Notwithstanding anything in this Agreement to the contrary, if Option Holder or any permitted assignee under a TBA, has defaulted or breached in any material respect its economic obligations or liabilities hereunder or under the TBA for the Group I Stations, prior to a sale by Sellers of the Group I Station relating thereto as set forth below, Sellers shall give Option Holder and Option Holder's lenders ("Option Holder's Lenders") under its then existing senior credit facility (the name and notice information regarding which Option Holder shall provide to Sellers) notice of the breach by Sellers, and Option Holder shall be given fifteen (15) days from the date of receipt of such notice to cure such breach and Option Holder's Lenders shall be given ninety (90) days from the date of receipt of such notice to cure such breach. During such cure period (or, if Option Holder or any permitted assignee under a TBA, has defaulted or breached in any material respect its economic obligations or liabilities hereunder or under the TBA for the Columbus Station, during the applicable cure period under Section 11.1.C), Sellers shall be permitted to borrow an aggregate amount not to exceed Three Million Dollars ($3,000,000) the proceeds of which shall be used to continue to operate such Stations. After the applicable cure periods with respect to such breach relating to a Group I Station have expired without such breach having been cured within such periods, Sellers shall, without being in violation of any of the covenants set forth herein, and without being subject to the restrictions set forth in such covenants, take such actions as Sellers in good faith deem necessary or desirable in connection with the operations of such Group I Stations, including without limitation, that Sellers may terminate such TBA with respect to such Group I Station and/or may sell the Group I Station with respect to which Option Holder or any permitted assignee under a TBA, is in breach, and upon the sale of such Group I Station, Sellers shall, upon receipt thereof, pay to Option Holder any amount received as payment for such Group I Station minus (1) any non-recurring reasonable out-of-pocket costs incurred by Sellers in connection with such sale, other than any sales commission paid by Sellers in connection therewith, (2) any amounts owed by Option Holder to Sellers, including, without limitation, in connection with any economic breach by Option Holder hereunder or by Option Holder, or any permitted assignee under the TBA, and all Option Extension Fees that are due but have not yet been paid through the date of the closing of such sale, (3) the total amount of all federal, state and local taxes incurred by Sellers in connection with such sale and (4) a commission based on the total amount paid for such Group I Station (the "Sale Price") using the Standard Formula. For purposes of this Agreement, "Standard Formula" means (a) five percent (5%) on the first one million dollars ($1,000,000.00) of the Sale Price or the Columbus Sale Price, as applicable; (b) four percent (4%) on the next one million dollars ($1,000,000.00) of the Sale Price or the Columbus Sale Price, as applicable; (c) three percent (3%) on the next one million dollars ($1,000,000.00) of the Sale Price or the Columbus Sale Price, as applicable; (d) two percent (2%) on the next one million dollars ($1,000,000.00) of the Sale Price or the Columbus Sale Price, as applicable; and (e) one percent (1%) on any excess over four million dollars ($4,000,000.00) of the Sale Price or the Columbus Sale Price, as applicable. Option Holder's Group I Option with respect thereto shall terminate upon such sale. Option Holder hereby appoints each Seller as its attorney-in-fact for Option Holder with full authority in the place and stead of Option Holder and in the name of Option Holder, in Sellers' discretion to take any action to execute any instrument Sellers may deem necessary and advisable to accomplish such sale. Sellers agree to act in a commercially reasonable manner in connection with the sale of such Group I Station, and Option Holder shall cooperate with Sellers in connection therewith. Option Holder's rights hereunder shall be subject to any such actions as may be taken by Sellers pursuant hereto. TO THE EXTENT SELLERS HAVE ACTED IN A COMMERCIALLY REASONABLE MANNER IN CONNECTION WITH THE SALE OF A GROUP I STATION, NO CLAIM MAY BE MADE BY OPTION HOLDER AGAINST SELLERS OR ITS PARTNERS, AFFILIATES, DIRECTORS, OFFICERS, EMPLOYEES, ATTORNEYS OR AGENTS FOR ANY SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES IN RESPECT OF ANY BREACH OR WRONGFUL CONDUCT (WHETHER THE CLAIM THEREFOR IS BASED ON CONTRACT, TORT OR DUTY IMPOSED BY LAW) IN CONNECTION WITH, ARISING OUT OF OR IN ANY WAY RELATED TO THE TRANSACTIONS CONTEMPLATED AND RELATIONSHIP ESTABLISHED BY THE FOREGOING PARAGRAPH, OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH; AND OPTION HOLDER HEREBY WAIVES, RELEASES AND AGREES NOT TO SUE UPON ANY SUCH CLAIM FOR ANY SUCH DAMAGES, WHETHER OR NOT ACCRUED AND WHETHER OR NOT KNOWN OR SUSPECTED TO EXIST IN ITS FAVOR. 5.2 Goodwill/Compliance with Agreements. Sellers shall diligently make all commercially reasonable efforts to preserve the License Assets and the business organization of the Stations and preserve the goodwill of the Stations' suppliers, customers and others having business relations with the Stations in a manner consistent with the applicable TBAs. 5.3 Reports; Access to Facilities, Files and Records. From time to time during the Exercise Period at the request of Option Holder, Sellers shall give or cause to be given to the officers, employees, agents and representatives of Option Holder (a) access (in the presence of any representative designated by Sellers), upon reasonable prior notice, during normal business hours, to the License Assets and to all books and records relating thereto, and (b) all such other information in Sellers' possession concerning the affairs of the Stations as Option Holder may reasonably request, provided that the foregoing does not unreasonably disrupt or interfere with the business and operations of Sellers or the Stations. 5.4 Notice of Proceedings. Sellers will promptly notify Option Holder in writing upon becoming aware of any order or decree or any complaint praying for an order or decree restraining or enjoining the consummation of this Agreement or the transactions contemplated hereunder, or upon receiving any notice from any governmental department, court, agency or commission of its intention to institute an investigation into or to institute a suit or proceeding to restrain or enjoin the consummation of this Agreement or such transactions, or to nullify or render ineffective this Agreement or such transactions if consummated. 5.5 Confidential Information. Sellers shall not use or disclose to any third parties (except as may be necessary for the consummation of the transactions contemplated hereby, or as required by law, including, without limitation, in connection with legal proceedings relating to this Agreement and the transactions contemplated hereby, or otherwise pursuant to subpoena or the request of a governmental authority, and then only with prior notice to Option Holder, including delivery of a copy of the subpoena or request, if applicable) this Agreement or any information received from Option Holder or its agents in the course of investigating, negotiating and performing the transactions contemplated by this Agreement; provided, however, that Sellers may disclose such information to Sellers' respective officers, partners, employees, lenders, advisors, attorneys and accountants who need to know such information in connection with the consummation of the transactions contemplated by the Agreement and who are informed by Sellers of the confidential nature of such information. Nothing shall be deemed confidential information that: (a) is known to either Seller at the time of the disclosure of such information to such Seller; (b) becomes publicly known or available other than as a result of disclosure by or through either Seller; (c) is rightfully received by Sellers from a third party; or (d) is independently developed by either Seller. In the event this Agreement is terminated and the transactions contemplated hereby abandoned, Sellers will return to the Option Holder all copies of documents, work papers and other written confidential material obtained by Sellers in connection with the transactions contemplated hereby. 5.6 Consummation of Option Closing. Subject to the express terms and conditions of this Agreement, and without expanding such terms and conditions, Sellers shall diligently make and cooperate with Option Holder in making all commercially reasonable efforts in connection with any steps to be taken as part of its respective obligations under this Agreement, and each of Sellers shall diligently make and cooperate with Option Holder in making all commercially reasonable efforts to fulfill and perform all conditions and obligations on their part to be fulfilled and performed under this Agreement and to cause all terms and conditions set forth herein to be fulfilled and to cause the transactions contemplated by this Agreement in connection with the Option Exercise and Closing to be fully carried out. 5.7 Notice of Certain Developments. Sellers shall give prompt written notice to Option Holder if prior to the Option Closing Date: (a) License Assets shall have suffered damage on account of fire, explosion or other cause of any nature that is sufficient to prevent operation of any Station in any material respect for more than twenty-four (24) consecutive hours, or (b) the regular broadcast transmission of any Station in the normal and usual manner in which it heretofore has been operating is interrupted in any material manner for a period of more than twenty-four (24) consecutive hours. 5.8 Covenants of Sellers After Option Exercise. Sellers covenant and agree that, after their receipt of any Exercise Notice for the exercise of an Option relating to a particular Station, until either the Closing for such exercised Option occurs or such Exercise Notice is withdrawn pursuant to Section 1.4: (a) Application for Commission Consent and Defense of Claims. Within ten (10) days after receipt by Sellers of such Exercise Notice with respect to a Station, Sellers will complete Sellers' portion of applications to the FCC requesting its written consent to the assignment of the FCC Authorizations for such Station (and any extension or renewals thereof and any necessary waiver required under the terms of 47 C.F.R. Section 73.3555(b) with respect thereto) to Option Holder, and upon receipt of Option Holder's portions of such applications, will promptly file such applications with the FCC jointly with Option Holder. Sellers will diligently take and cooperate in the taking of all commercially reasonable steps that are necessary, proper or desirable to expedite the preparation of such applications and their prosecution to a grant. Sellers will promptly provide Option Holder with a copy of any pleading, order or other document served on them relating to such applications. Sellers shall take, and cooperate with Option Holder in taking, all commercially reasonable steps to oppose any petition for reconsideration, application for review, or request for judicial review of, or any other protest filed with respect to, the issuance of the FCC consents contemplated by this Section 5.8(a). (b) Consents. Sellers will diligently make and cooperate with Option Holder in making all commercially reasonable efforts (without being required to make any payment) to obtain or cause to be obtained prior to the Option Closing Date consents to the assignment to or assumption by Option Holder of all material licenses, leases and other contracts included in the License Assets used or held for use by Sellers with respect to such Station that require the consent of any third party by reason of the transactions provided for in this Agreement. (c) Consummation of Agreement. Subject to the terms and conditions of this Agreement, and without expanding such terms and conditions, Sellers shall diligently make and cooperate with Option Holder in making all commercially reasonable efforts to fulfill and perform all conditions and obligations on their part to be fulfilled and performed under this Agreement and to cause the transactions contemplated by this Agreement to be fully carried out. 5.9 Hart-Scott-Rodino. To the extent required by law, Sellers, as promptly as practicable, shall prepare and jointly file with Option Holder all documents with the Federal Trade Commission and the United States Department of Justice, as are required to comply with the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended ("HSR Act"), and shall promptly furnish all materials thereafter requested by any of the regulatory agencies having jurisdiction over such filings. In such event, the parties shall cooperate fully and shall use their commercially reasonable efforts to expedite compliance with the HSR Act. Any filing fees (including by Sellers and Option Holder with respect to the transaction) under the HSR Act shall be borne one-half (1/2) by Sellers and one-half (1/2) by Option Holder. 5.10 Compliance with TBAs. For so long as the applicable TBA is in effect with respect to a Station, Sellers shall comply in all material respects with all terms, provisions, covenants and agreements to be complied with by Sellers under the TBA with respect to such Station. 5.11 New Mexico Stations. To the extent RCB sells the New Mexico Stations or the RCB Twin Peaks Equity Interest after the Option Grant Date and prior to the purchase by Option Holder of the RCB Twin Peaks Equity Interest hereunder, RCB shall pay to Option Holder the amount paid to RCB in connection therewith, minus (1) the non-recurring out-of-pocket costs incurred by RCB in respect of consummation of such sale, (2) the total amount of all federal, state and local taxes (other than income taxes) incurred in connection with such sale, (3) the total amount of all federal, state and local income taxes incurred by Sandia in connection with such sale, and (4) the Option Closing Price for the RCB Twin Peaks Equity Interest. In connection with any such sale, RCB shall provide a certificate to Option Holder as to the amount of the adjustment or the amount to be paid by RCB hereunder together with appropriate documentation supporting RCB's calculations. ARTICLE 6 COVENANTS OF OPTION HOLDER PENDING THE CLOSING Option Holder covenants and agrees that from and after the date hereof through and including the final Option Closing Date that it will act as follows with respect to each Station, and in the case of the Columbus Station Assets, that it will act as set forth in Article 6 of the Asset Purchase Agreement, and to the extent any conflict exists in the terms of Article 6 hereof and Article 6 of the Asset Purchase Agreement with respect to the Columbus Station, the terms hereof shall govern with respect to the License Assets, including the License Assets of the Columbus Station, and the terms of Article 6 of the Asset Purchase Agreement shall govern with respect to the Columbus Station and the Columbus Station Assets: 6.1 Confidential Information. Option Holder shall not use or disclose to third parties (except as may be necessary for the consummation of the transactions contemplated hereby, or as required by law, including, without limitation, in connection with legal proceedings relating to this Agreement and the transactions contemplated hereby, or otherwise pursuant to subpoena or the request of a governmental authority, and then only with prior notice to Sellers, including delivery of a copy of the subpoena or request, if applicable) this Agreement or any information (including, without limitation, financial information and information regarding program contracts and revenue) received from Sellers or their agents in the course of investigating, negotiating and performing the transactions contemplated by this Agreement; provided, however, that the Option Holder may disclose such information to Option Holder's officers, directors, employees, lenders, advisors, attorneys and accountants who need to know such information in connection with the consummation of the transactions contemplated by this Agreement and who are informed by Option Holder of the confidential nature of such information. Nothing shall be deemed to be confidential information that: (a) is known to Option Holder at the time of its disclosure to it; (b) becomes publicly known or available other than as a result of disclosure by or through Option Holder; (c) is rightfully received by Option Holder from a third party; or (d) is independently developed by Option Holder. In the event this Agreement is terminated and the purchase and sale contemplated hereby abandoned, Option Holder will return to the appropriate Seller all copies of documents, work papers and other written confidential material obtained by Option Holder in connection with the transactions contemplated hereby. 6.2 Consummation of Agreement. Subject to the provisions of Section 11.1 of this Agreement, and subject to the express terms and conditions of this Agreement, and without expanding such terms and conditions, Option Holder shall diligently make and cooperate with Sellers in making all commercially reasonable efforts in connection with any steps to be taken as part of their obligations under this Agreement, and Option Holder shall diligently make and cooperate with Sellers in making all commercially reasonable efforts to fulfill and perform all conditions and obligations on its part to be fulfilled and performed under this Agreement and to cause the transactions contemplated by this Agreement to be fully carried out. Option Holder agrees to diligently cooperate with Sellers in connection with obtaining consents to the assignment to, or assumption by, Option Holder of licenses, leases and other contracts included in the License Assets, and to execute such assumption instruments as may be required in connection with obtaining such consents on monetary terms no less favorable to Option Holder than those Sellers under such licenses, leases and other contracts on the date of such assumption. 6.3 Notice of Proceedings. Option Holder will promptly notify Sellers in writing upon becoming aware of any order or decree or any complaint praying for an order or decree restraining or enjoining the consummation of this Agreement or the transactions contemplated hereunder, or upon receiving any notice from any governmental department, court, agency or commission of its intention to institute an investigation into or institute a suit or proceeding to restrain or enjoin the consummation of this Agreement or such transactions, or to nullify or render ineffective this Agreement or such transactions if consummated. 6.4 Covenants of Option Holder After Option Exercise. Option Holder covenants and agrees that after Option Holder gives any Exercise Notice for the exercise of an Option relating to a particular Station, and until either the Closing occurs or such Exercise Notice is withdrawn or deemed to be withdrawn pursuant to Section 1.4: (a) Application For Commission Consent. Within ten (10) days after delivery to Sellers of such Exercise Notice with respect to a Station, Option Holder will complete Option Holder's portion of applications to the FCC requesting its written consent to the assignment of the FCC Authorizations for such Station (and any extension or renewals thereof and any necessary waiver required under the terms of 47 C.F.R. Section 73.3555(b) with respect thereto) to Option Holder, and upon receipt of Sellers' portion of such applications pursuant to Section 5.8(a), hereof will promptly file such applications with the FCC jointly with Sellers. Option Holder will diligently take and cooperate in the taking of all commercially reasonable steps that are necessary, proper or desirable to expedite the preparation of all such applications and their prosecution to a grant. Option Holder will promptly provide Sellers with the copy of any pleading, order or other documents served on Option Holder relating to such applications. Option Holder shall take, and cooperate with Sellers in taking, all commercially reasonable steps to oppose any petition for reconsideration, application for review, or request for judicial review of, or any other protest filed with respect to, the FCC consents contemplated by this Section 6.4(a). (b) Consents for Closing. Option Holder will diligently make and cooperate in making all reasonable efforts jointly with Sellers to obtain or cause to be obtained for the Closing prior to the Option Closing Date all necessary consents relating to the License Assets used or held for use by Sellers with respect to such Station and to execute such assumption instruments as may be required in connection with obtaining such consents. Without limitation of the foregoing, Option Holder covenants and agrees that it shall provide on request, to any third party from whom such consent is sought, such financial or other information as such third party may reasonably request in order for such third party to grant such consent. 6.5 Insurance. On the Option Grant Date and at all times thereafter until the Option Closing Date with respect to a Station, Option Holder shall cause all parties currently named as "additional insured" on RCB's and Licensee's policies (a list of which has been previously provided to Option Holder) to be named as additional insured parties as their interests may appear, under all insurance policies carried by Option Holder with respect to the applicable Station. 6.6 Notice of Material Impact. Option Holder will promptly notify the Sellers in writing of any significant developments that have, or could reasonably be expected to have, a material adverse impact on the condition (financial or otherwise) of the business or any material asset of Option Holder. 6.7 Hart-Scott-Rodino. To the extent required by law, Option Holder, as promptly as practicable, shall prepare and jointly file with Sellers all documents with the Federal Trade Commission and the United States Department of Justice as are required to comply with the HSR Act, and shall promptly furnish all materials thereafter requested by any of the regulatory agencies having jurisdiction over such filings. In such event, the parties shall cooperate fully and shall use their commercially reasonable efforts to expedite compliance with the HSR Act. Any related filing fees under the HSR Act shall be paid in accordance with Section 5.9 hereof. 6.8 Compliance with TBAs. For so long as the applicable TBA is in effect with respect to a Station, Option Holder shall comply in all material respects with all terms, provisions, covenants and agreements to be complied with by Option Holder under the TBA with respect to such Station. ARTICLE 7 CONDITIONS TO THE OBLIGATIONS OF SELLERS In the case of a closing of the Columbus Option, all of the conditions set forth below apply with respect to the Columbus Station; in the case of a closing of a Group I Option on the Columbus Option Closing Date, all of the conditions set forth below (other than Sections 7.1(a) and 7.1(c)) apply with respect to the Group I Stations that are the subject of such Group I Option; and in the case of a closing of a Group I Option other than on the Columbus Option Closing Date, all of the conditions set forth below (other than Section 7.1) apply with respect to all of the Group I Stations that are the subject of such Group I Option. The obligations of Sellers to consummate the transactions contemplated by this Agreement with respect to a duly exercised Option from this Option Grant Date to the Option Closing Date are, at their option, subject to the fulfillment of the following conditions prior to or at the applicable Option Closing Date: 7.1 Representations, Warranties, Covenants. (a) The representations and warranties of Option Holder contained in this Agreement (and in the case of the Columbus Station, as contained in the Asset Purchase Agreement, with respect to the Columbus Station Assets only) shall have been true and accurate in all material respects as of the date when made and shall be true and accurate in all material respects as of the Option Closing Date except to the extent any such representation or warranty is expressly stated only as of a specified earlier date or dates, in which case such representation or warranty shall be true and accurate in all material respects as of such earlier date or dates and except to the extent changes are permitted or contemplated pursuant to this Agreement (or the Asset Purchase Agreement, to the extent applicable, in the case of the Columbus Station as set forth above); (b) Option Holder shall have performed and complied in all material respects with the covenants and agreements required by this Agreement (including those included by reference under Article 6 hereof that are set forth in the Asset Purchase Agreement) and the TBAs to be performed or complied with by them prior to or at the Option Closing Date (including the delivery by Option Holder of the Option Closing Price due with respect to the Option then being closed, the Option Closing Price of all Unpaid Options, and the Extension Fees applicable to such Option and such Unpaid Options that have accrued since the due date of the previous payment of Option Extension Fees for such Options); and (c) If requested by Sellers in accordance with Section 2.4(b)(ii), Option Holder shall have delivered to Sellers a certificate of an officer of Option Holder dated as of the Columbus Option Closing Date certifying to the fulfillment of the conditions set forth in Section 7.1. 7.2 Proceedings. (a) As of the Option Closing Date, no action or proceeding shall have been instituted and be pending before any court or governmental body to materially restrain or prohibit, or to obtain material damages in respect of, the consummation of this Agreement that may reasonably be expected to result in a permanent injunction against such consummation or, if the transactions contemplated hereby were consummated, an order to nullify or render ineffective this Agreement or such transactions or for the recovery against Sellers of such material damages; and as of the Option Closing Date, none of the parties to this Agreement shall have received written notice (other than a letter of inquiry) from any governmental body of its intention to institute any action or proceeding to materially restrain or enjoin or nullify, or to obtain material changes in respect of, this Agreement or the transactions contemplated hereby that may reasonably be expected to result in a permanent injunction against such consummation or, if the transactions contemplated hereby were consummated, an order to nullify or render ineffective this Agreement or such transactions or the recovery against Sellers of substantial damages; provided, however, that the foregoing (a) and (b) shall not be deemed to fall within the provisions hereof, qualify as a condition hereunder to the extent such action or proceeding is (1) brought or caused to be brought by (i) any partner, officer, director, agent, Affiliate or creditor of Sellers, or any other party claiming by, through or against Sellers that is not related to Option Holder, (ii) any third party or agent of such party to any Contract relating to any consent required to convey any such Contract, or (iii) any party or agent of such party, who is currently a party to such affiliation agreement with Sellers, or any Affiliate of Sellers or in any way relating to any television or radio network affiliation agreement of any Seller, any Affiliate of any Seller, Option Holder or any Affiliate of Option Holder; or (2) a Proceeding referred to in Section 2.6 hereof. 7.3 Opinion of Counsel. If requested by Sellers in accordance with Section 2.4(b)(ii), Sellers shall have received an opinion of Option Holder's counsel dated as of the Option Closing Date in substantially the form attached to this Agreement as Exhibit 7.3(i) and an opinion of Option Holder's special communications counsel, dated as of the Option Closing Date in substantially the form attached to this Agreement as Exhibit 7.3(ii). 7.4 FCC Authorization. As of the Option Closing Date, all FCC consents and approvals contemplated by this Agreement with respect to the Station shall have been granted. 7.5 Hart-Scott-Rodino. To the extent required by law, the waiting period under the HSR Act shall have expired or be terminated and there shall not be pending any action instituted by the Federal Trade Commission or the Department of Justice under the HSR Act, and there shall not be outstanding any order of a court restraining the transactions contemplated hereby. 7.6 Termination of Certain Agreements. The Sellers shall have received from Option Holder the termination of (i) the Leases and Subleases (as such terms are defined in the Asset Purchase Agreement) entered into by Option Holder and RCB with respect to the Station and (ii) the TBA relating to the Station (together, the "Terminations"). 7.7 TBAs. Option Holder or any permitted assignee shall have paid all outstanding amounts due and owing, and performed in all material respects all covenants and agreements to be performed by it or any permitted assignee under the TBAs, on or before the Option Closing Date, including, without limitation, the amount due in respect of any breach of its, or any permitted assignee's, economic obligations or liabilities under the TBAs. ARTICLE 8 CONDITIONS TO THE OBLIGATIONS OF OPTION HOLDER In the case of a closing of the Columbus Option, all of the conditions set forth below apply with respect to the Columbus Station and in the case of a closing of the Group I Option, all of the conditions set forth below apply with respect to all of the Group I Stations for which such Group I Option was exercised. Subject to Section 2.6 hereof, the obligations of Option Holder to consummate the transactions contemplated by this Agreement of a duly exercised Option are, at its option, subject to the fulfillment of the following conditions prior to or at the applicable Option Closing Date: 8.1 Representations, Warranties, and Covenants. (a) The representations and warranties of Sellers contained in this Agreement (and in the case of the Columbus Station, as contained in the Asset Purchase Agreement, with respect to the Columbus Station Assets only) shall have been true and accurate as of the date when made and shall be true and accurate as of the Option Closing Date (except that such representations and warranties in the Asset Purchase Agreement with respect to the Columbus Station Assets shall only be required to be true and accurate as of the Asset Purchase Closing Date), except to the extent (i) any such representation or warranty is expressly stated only as of a specified earlier date or dates, in which case such representation and warranty shall be true and accurate as of such earlier date or dates except as set forth in (iii) below of this Section 8.1(a); (ii) changes are permitted as contemplated pursuant to this Agreement (or the Asset Purchase Agreement, to the extent applicable, in the case of the Columbus Station as set forth above) and the TBAs, (iii) the consequence of the matter set forth in such representation and warranty having failed to be true and accurate as of the date when made, on the Closing Date or on such earlier specified date would not result in a material adverse change in the financial condition or business of the Stations taken as a whole, or of the License Assets taken as a whole (provided that the foregoing shall not include any material adverse change attributable to (v) factors affecting the television or radio industries generally, (w) general national, regional or local economic or financial conditions, (x) governmental or legislative laws, rules or regulations, (y) any affiliation agreement or the lack thereof or the non-transfer to Option Holder thereof, or (z) actions taken by Option Holder or any Affiliate of Option Holder) (a "Material Adverse Change"). (b) Each Seller shall have performed and complied in all respects with covenants and agreements required by this Agreement (including those included by reference under Article 5 hereof that are set forth in the Asset Purchase Agreement) to be performed or complied with by it prior to or at such Option Closing Date, including the delivery to Option Holder of the instruments conveying the License Assets that are the subject of such Closing to Option Holder and the Columbus Station Assets in the case of the Closing with respect to the Columbus Station, except to the extent that the consequence of the failure of Seller to have so performed or complied would not result in a Material Adverse Change. (c) If requested by Option Holder in accordance with Section 2.4(a)(ii), Sellers shall have delivered to Option Holder a certificate of an officer of the general partner of RCB and of Licensee dated the Option Closing Date certifying to the fulfillment of the conditions set forth in Sections 8.1(a) and 8.1(b). 8.2 Proceedings. (a) As of the Option Closing Date, no action or proceeding shall have been instituted and be pending before any court or governmental body to materially restrain or prohibit, or to obtain material damages in respect of, the consummation of this Agreement that may reasonably be expected to result in a permanent injunction against such consummation or, if the transactions contemplated hereby were consummated, an order to nullify or render ineffective this Agreement or such transactions or for the recovery against Option Holder of such material damages; and (b) as of the Option Closing Date, none of the parties to this Agreement shall have received written notice (other than a letter of inquiry) from any governmental body of its intention to institute any action or proceeding to materially restrain or enjoin or nullify, or to obtain material damages in respect of, this Agreement or the transactions contemplated hereby that may reasonably be expected to result in a permanent injunction against such consummation or, if the transactions contemplated hereby were consummated, an order to nullify or render ineffective this Agreement or such transactions or the recovery against Option Holder of substantial damages; provided, however, that the foregoing (a) and (b) shall not be deemed to fall within the provisions hereof or qualify as a condition hereunder to the extent such action or proceeding is (1) brought or caused to be brought by (i) any stockholder, bondholder, officer, director, agent, Affiliate or creditor of Option Holder or any other party claiming by, through or against Option Holder that is not related to Sellers, (ii) any third party or agent of such party to any Contract relating to any consent required to convey any such Contract, or (iii) any party or agent of such party, who is currently a party to any such affiliation agreement with Option Holder or any Affiliate of Option Holder or in any way relating to any television or radio network affiliation agreement of any Seller, any Affiliate of any Seller, Option Holder or any Affiliate of Option Holder; or (2) a Proceeding referred to in Section 2.6 hereof. 8.3 Opinion of Counsel. If requested by Option Holder, in accordance with Section 2.4(a)(ii), Option Holder shall have received an opinion of Seller's counsel dated as of the Option Closing Date in substantially the form attached to this Agreement as Exhibit 8.3(i), and an opinion of Sellers' special communications counsel dated as of the Option Closing Date in substantially the form attached to this Agreement as Exhibit 8.3(ii). 8.4 FCC Authorizations. As of the Option Closing Date, all FCC consents and approvals as contemplated by this Agreement with respect to the Station shall have been granted. 8.5 Hart-Scott-Rodino. To the extent required by law, the waiting period under the HSR Act shall have expired or been terminated and there shall not be pending any action instituted by the Federal Trade Commission or the Department of Justice under the HSR Act, and there shall not be outstanding any order of a court restraining the transactions contemplated hereby. 8.6 Termination of Certain Agreements. The Option Holder shall have received from RCB the Terminations. 8.7 TBAs. Seller shall have performed in all material respects all economic covenants and agreements to be performed by it under the TBAs, on or before the Columbus Option Closing Date. ARTICLE 9 INDEMNIFICATION 9.1 Survival. The representations and warranties of Sellers and Option Holder contained in this Agreement (including the Schedules hereto) or in any certificate delivered by it pursuant to Sections 2.4, 7.1 and 8.1 of this Agreement and the covenants of Sellers and Option Holder under this Agreement to be performed on or before an Option Closing Date (a) that relate to a Station shall survive the Option Closing Date with respect to such Station until the earlier of (i) a period of one (1) year after such Option Closing Date, (ii) the final Option Closing Date or (iii) the Columbus Option Closing Date, and (b) that do not relate to the Stations shall survive for one year from the Option Grant Date. Option Holder's obligation to pay, perform or discharge the Assumed Liabilities shall survive until such Assumed Liabilities have been paid, performed or discharged in full. Sellers' obligations with respect to all obligations and liabilities not assumed by Option Holder pursuant to this Agreement shall survive until such obligations and liabilities have been paid, performed or discharged in full. The covenants and agreements contained in this Article 9 shall continue in full force and effect until fully discharged. Any other covenants or agreements contained herein or made pursuant hereto which by their terms are to be performed after the Option Closing Date shall survive until fully performed and discharged in full, including without limitation all obligations and liabilities with respect to the Assumed Liabilities and the Retained Liabilities. In the case of the representations and warranties with respect to the Columbus Station Assets or otherwise made with respect to the Columbus Station under the Asset Purchase Agreement, such representations and warranties shall survive only until the first anniversary of the Asset Purchase Closing Date. 9.2 Indemnification of Option Holder. Sellers agree that, after the Closing, subject to the limitations in Section 9.4 below, they shall indemnify and hold Option Holder and its officers, directors, employees, agents and Affiliates harmless from and against any and all damages, claims, losses, expenses, costs, obligations and liabilities, including, without limiting the generality of the foregoing, liabilities for reasonable attorneys' fees and expenses ("Loss and Expense") suffered (whether any such claim arises out of a third party action or is made by Option Holder against Sellers) by Option Holder resulting from (i) any material breach of a representation or warranty made by Sellers pursuant to this Agreement; (ii) any material failure by Sellers to perform or fulfill any of their covenants or agreements set forth in this Agreement; (iii) any failure by Sellers to pay, perform or discharge any liabilities or obligations not specifically assumed by Option Holder pursuant to this Agreement; (iv) any litigation, proceeding or claim by any third party arising from the business or operations of the License Assets by Sellers prior to the Option Grant Date, except to the extent arising from obligations or liabilities that have been disclosed to Option Holder in this Agreement or the Asset Purchase Agreement or the Schedules hereto (other than those set forth on Schedule 9.2) and except to the extent arising from obligations or liabilities of or assumed by Option Holder pursuant to this Agreement and from obligations or liabilities incurred by Option Holder pursuant to the TBAs. 9.3 Indemnification of Sellers. Option Holder agrees that, after the Closing, it shall indemnify and hold Sellers and their respective officers, directors, partners, employees, agents and Affiliates harmless from and against any and all Loss and Expense suffered (whether any such claim arises out of a third party action or is made by any Seller against Option Holder) by any Seller resulting from (i) any material breach of representation or warranty made by Option Holder pursuant to this Agreement; (ii) any material failure by Option Holder to perform or fulfill any of its covenants or agreements set forth in this Agreement; (iii) any failure by Option Holder to pay, perform or discharge any Assumed Liabilities or any other obligations or liabilities of or assumed by Option Holder under this Agreement (including, without limitation, those set forth in Section 10.1 hereof); or (iv) any litigation, proceeding or claim arising from the business or operations of any of the Stations on or after the Option Grant Date. 9.4 Limitation of Liability. (i) Notwithstanding any other provision of this Agreement, after a Closing, neither Sellers nor Option Holder shall indemnify or otherwise be liable to the other, unless (a) the party seeking indemnification has complied with the terms of, including the time limits set forth in, Section 9.6 and (b) the aggregate amount of Option Holder's Loss and Expense (in the case of Sellers' indemnification of Option Holder) or Sellers' Loss and Expense (in the case of Option Holder's indemnification of Sellers) exceeds $500,000, in which event the indemnified party shall be entitled to recover its aggregate Loss and Expense inclusive of $500,000 threshold; provided that such limitation shall not apply to any indemnification obligation of Option Holder pursuant to Section 9.3(ii), (iii) or (iv) hereunder or Sellers pursuant to Section 9.2(ii), (iii) or (iv) hereof. Notwithstanding any provision contained herein, in no event shall Sellers be liable for any amount, which, when combined with any other amount for which Sellers previously have been liable under Section 9.2 hereof and any amount for which RCB is liable, or previously has been liable, under Section 9.2 of the Asset Purchase Agreement, is in excess of $50,000,000. (ii) Notwithstanding anything in this Agreement to the contrary, it is understood and agreed that any amounts owed to Option Holder by Sellers for such Loss and Expense as determined in accordance with this Article 9 hereof and Article 9 of the Asset Purchase Agreement shall be made solely and exclusively in the form of a deduction from the Columbus Option Closing Price that has not yet been paid to Sellers hereunder and that once the Columbus Option Closing Price has been paid in full or portion thereof placed in the Indemnification Fund to Sellers or if the Columbus Option is terminated hereunder, Option Holder shall have no further recourse against Sellers, and no other payment by Sellers shall be required, hereunder, except for any pending claims against the amount of the Option Closing Price placed in the Indemnification Fund. (iii) Anything in this Agreement or any applicable law to the contrary notwithstanding, neither Sellers (except to the extent expressly provided for in Section 9.4(ii)) nor any partner, director, officer, employee, agent or Affiliate of any Seller (including any shareholder, director, officer, employee, agent or Affiliate of the general partners of any Seller) shall have any personal liability to Option Holder as a result of the breach of any representation, warranty, covenant or agreement of Sellers contained herein or otherwise and shall have no personal obligation to indemnify Option Holder for any of Option Holder's Losses or Expenses. If Option Holder has any pending claim for indemnification against Sellers with respect to any Loss or Expense hereunder or under the Asset Purchase Agreement on the Columbus Option Closing Date, at the closing of the Columbus Option the difference (if any) between the amount of the Columbus Option Closing Price and the good faith estimate of the amount of such indemnification claim (such amount, the "Indemnification Fund Deposit") will be paid to Seller and the amount of the good faith estimate of such indemnification claim will be transferred by the Option Holder to Magna Trust Company, St. Louis, Missouri or such other bank as mutually agreed to by the parties (the "Indemnification Escrow Agent"), to be held by the Indemnification Escrow Agent, pursuant to the Indemnification Escrow Agreement substantially in the form of Exhibit 9.4 (with such changes as the Indemnification Escrow Agent may reasonably request), and pending final determination of such claim for indemnification pursuant to this Article 9, as a fund in escrow (the "Indemnification Fund") to provide security for the payment of such claim. Sellers shall bear the risk of loss of the Indemnification Fund Deposit to the extent that any institutional failure by Magna Trust Company results in the loss of the Indemnification Fund Deposit. If any funds are transferred to the Indemnification Escrow Agent to be held in the Indemnification Fund, then any amount which becomes payable to Option Holder or Sellers pursuant to a determination of such claim for indemnification, together with any interest earned thereon, will be paid to Option Holder or Sellers from the Indemnification Fund, to the extent of the funds therein. To the extent any amount is payable to Option Holder from the Indemnification Fund, Option Holder shall receive such amount plus any interest accrued in such account allocable to such amount, and the balance of such account, if any, shall be paid to Sellers. To the extent any amount is payable to Sellers from the Indemnification Fund, Sellers shall receive such amount plus any interest accrued in such account allocable to such amount, and Option Holder shall pay to Sellers the difference, if any, between any such interest accrued in such account and the interest that would have accrued with respect to the amount payable to Sellers from the Indemnification Fund, utilizing the Applicable Interest Rate (as defined below) applicable on the Columbus Option Closing Date through the date such funds are paid to Sellers, as such may change from time to time in accordance with the following sentence. For purposes of this Section 9.4, "Applicable Interest Rate" means (i) on or before the first anniversary of the Option Grant Date, eight percent (8%) per annum, (ii) after the first anniversary of the Option Grant Date but on or before the second anniversary of the Option Grant Date, fifteen percent (15%) per annum, and (iii) after the second anniversary of the Option Grant Date, twenty-five percent (25%) per annum, which amount shall accrue on the basis of a 365-day year based on the number of days elapsed in the period during which it accrues. 9.5 Bulk Sales Indemnity. Option Holder hereby waives compliance with the provisions of any applicable bulk transfer laws. Subject to the limitations set forth in Section 9.4 above, Sellers further agree to indemnify and hold Option Holder harmless from and indemnify Option Holder against any and all Loss and Expense relating to any claims made by creditors with respect to non-compliance with any bulk transfer law, except to the extent that such claims result from the Assumed Liabilities and other obligations or liabilities to be paid or discharged by Option Holder as a result of this Agreement and the TBAs and/or Option Holder's failure to pay the same when due. 9.6 Notice of Claims. If either Option Holder, on the one hand, or Sellers on the other hand, believes in good faith that it has suffered or incurred any Loss and Expense, such Seller shall notify the Option Holder in writing and, in any event, within one year from the Option Closing Date with respect to the related Station, describing such Loss and Expense, the factual basis for such claim, the amount thereof, estimated in good faith, and the method of computation of such Loss and Expense, all with reasonable particularity and containing a reference to the provisions of this Agreement in respect of which such Loss and Expense shall have occurred. If any action at law or suit in equity is instituted by a third party with respect to which any of the parties intends to claim any liability or expense as Loss and Expense under this Article 9, such party shall within twenty (20) days after receiving written notice thereof (or sooner to the extent the indemnifying party would not have time to adequately take the actions contemplated under Section 9.7) notify the indemnifying party of such action or suit. 9.7 Defense of Third Party Claims. The indemnifying party under this Article 9 shall have the right to conduct and control through counsel of its own choosing the defense of any third party claim, action or suit (and the indemnified party shall cooperate fully with the indemnifying party), but the indemnified party may, at its election, participate in the defense of any such claim, action or suit at its sole cost and expense provided that, if the indemnifying party shall fail to defend any such claim, action or suit, then the indemnified party may defend through counsel of its own choosing such claim, action or suit, and (so long as it gives the indemnifying party at least fifteen (15) days' notice of the terms of the proposed settlement thereof and permits the indemnifying party to then undertake the defense thereof) settle such claim, action or suit, and to recover from the indemnifying party the amount of such settlement or of any judgment and the costs and expenses of such defense. The indemnifying party shall not compromise or settle any third party claim, action or suit without the prior written consent of the indemnified party, which consent will not be unreasonably withheld or delayed. 9.8 Indemnity as Sole Remedy. After the Option Closing Date, indemnification pursuant to this Article 9 shall be the sole and exclusive remedy of any party to this Agreement for any breach of a representation, warranty or covenant made or obligation undertaken by any other party, or for any Loss or Expense arising out of or relating to the items listed in Sections 9.2 and 9.3 or otherwise related to the transactions contemplated hereby, other than in respect of the Asset Purchase Agreement (subject to Section 9.4) and the Registration Rights Agreement, the TBAs, the Employment Agreement, the Consulting Agreement, the Baker Stock Option Agreement, the Corporate Employee Stock Option Agreement, the Station Employee Stock Option Agreement, the Employee Letter Agreement, the Voting Agreement, the ISO Amendment, the LTIP, the Amended Charter or the Articles Supplementary (as such documents are described in the Asset Purchase Agreement and, collectively, the "Transaction Documents"), which shall be governed by their terms, whether such claim may be asserted as a breach of contract, tort or otherwise. 9.9 Arbitration. To the fullest extent not prohibited by law, any controversy, claim or dispute arising out of or relating to Article 9 of this Agreement, including the determination of the scope or applicability of this agreement to arbitrate, shall be settled by final and binding arbitration in accordance with the rules then in effect of the American Arbitration Association ("AAA"), as modified or supplemented under this Section, and subject to the Federal Arbitration Act, 9 U.S.C. Sections 1-16. The decision of the arbitrators shall be final and binding provided that, where a remedy for breach is prescribed hereunder or limitations on remedies are prescribed, the arbitrators shall be bound by such restrictions, and judgment upon the award rendered by the arbitrators may be entered in any court having jurisdiction thereof. If any series of claims arising out of the same or related transactions shall involve claims which are arbitrable under the preceding paragraph and claims which are not, the arbitrable claims shall first be finally determined before suit may be instituted upon the others and the parties will take such action as may be necessary to toll any statutes of limitations, or defenses based upon the passage of time, that are applicable to such non-arbitrable claims during the period in which the arbitrable claims are being determined. In the event of any controversy, claim or dispute that is subject to arbitration under this Section 9.9, any party thereto may commence arbitration hereunder by delivering notice to the other party or parties thereto. The arbitration panel shall consist of three arbitrators, appointed in accordance with the procedures set forth in this paragraph. Within ten (10) business days of delivery of the notice of commencement of arbitration referred to above, Sellers, on the one hand, and Option Holder, on the other hand, shall each appoint one arbitrator, and the two arbitrators so appointed shall within ten (10) business days of their appointment mutually agree upon and appoint one additional arbitrator (or, if such arbitrators cannot agree on an additional arbitrator, the additional arbitrator shall be appointed by the AAA as provided under its rules) provided, that persons eligible to be selected as arbitrators shall be limited to attorneys at law who (i) are on the AAA's Large, Complex Case Panel, (ii) have practiced law for at least 15 years as an attorney specializing in either general commercial litigation or general corporate and commercial matters and (iii) are experienced in matters involving the broadcasting industry. The arbitration hearing shall commence no later than thirty (30) business days after the completion of the selection of the arbitrators. Consistent with the intent of the parties hereto that the arbitration be conducted as expeditiously as possible, the parties agree that (i) discovery shall be limited to the production of such documents and the taking of such depositions as the arbitrators determine are reasonably necessary to the resolution of the controversy, claim or dispute and (ii) the arbitrators shall limit the presentation of evidence by each side in such arbitration to not more than ten (10) full days (or the equivalent thereof) or such shorter period as the arbitrators shall determine to be necessary in order to resolve the controversy, claim or dispute. The arbitrators shall be instructed to render a decision within ten (10) business days of the close of the arbitration hearing. If arbitration has not been completed within ninety (90) days of the commencement of such arbitration, any party to the arbitration may initiate litigation upon ten (10) days written notice to the other party(ies); provided, however, that if one party has requested the other to participate in an arbitration and the other has failed to participate, the requesting party may initiate litigation before the expiration of such ninety-day period; and provided further, that if any party to the arbitration fails to meet any of the time limits set forth in this Section 9.9 or set by the arbitrators in the arbitration, any other party may provide ten (10) days written notice of its intent to institute litigation with respect to the controversy, claim or dispute without the need to continue or complete the arbitration and without awaiting the expiration of such ninety-day period. The parties hereto further agree that if any of the rules of the AAA are contrary to or conflict with any of the time periods provided for hereunder, or with any other aspect of the matters set forth in this Section 9.9, that such rules shall be modified in all respects necessary to accord with the provisions of this Section 9.9 (and the arbitrators shall be so instructed by the parties). The arbitrators shall base their decision on the terms of this Agreement and applicable law and judicial precedent which a United States District Court sitting in the District of Maryland (Southern Division) would apply in the event the dispute were litigated in such court, and shall render their decision in writing and include in such decision a statement of the findings of fact and conclusions of law upon which the decision is based. Each party agrees to cooperate fully with the arbitrator(s) to resolve any controversy, claim or dispute. The arbitrators shall not be empowered to award punitive damages or damages in excess of actual damages. The venue for all arbitration proceedings shall be Rockville, Maryland. ARTICLE 10 EMPLOYEE MATTERS 10.1 Employee Matters. The following provisions shall act exclusively for the benefit of parties to this Agreement and not for the benefit of any other person or entity: (a) Effective as of each Option Closing Date, the Option Holder shall offer employment to each employee of Sellers who is employed at any Station immediately prior to the Option Closing Date with respect to such Station (the "Station Employees") on terms and conditions which are substantially similar in the aggregate to the terms and conditions of employment of the Option Holder's employees as of the Option Closing Date, including the provision of retirement and health care benefits, except as any employment agreement between Option Holder and any Assumed Employee may otherwise require. The Option Holder shall assume all contracts of employment of the Station Employees and notwithstanding anything in the foregoing to the contrary, to the extent such employment contract or collective bargaining agreement assumed hereunder provides for terms and conditions in addition to those referenced in the preceding sentence, Option Holder shall assume the terms thereof. Each Station Employee shall receive credit for past service with the Sellers for all purposes under the Option Holder's benefit plans. (b) Option Holder shall assume full responsibility and liability for offering and providing "Continuation Coverage" to any "Qualified Beneficiary" who is covered by a "Group Health Plan" sponsored or contributed to by the Sellers or any entity required to be combined with the Sellers (within the meaning of Sections 414(b), (c), (m) or (o) of the Code) and who has experienced a "Qualifying Event" or is receiving "Continuation Coverage" arising with respect to employment at any Station on or prior to the Option Closing Date with respect to such Station. For purposes of this Section 10.1(b), a Qualified Beneficiary will be deemed to experience a Qualifying Event or to be receiving Continuation Coverage "arising with respect to employment" at a Station if such Qualified Beneficiary is or was an employee of the Station or is or was the spouse or other covered dependent of such employee. Schedule 10.1 identifies all Qualified Beneficiaries entitled to Continuation Coverage under any Seller's Group Health Plan on the date of this Agreement, and Sellers shall deliver at each Option Closing Date a list of Qualified Beneficiaries entitled to Continuation Coverage as of such date. "Continuation Coverage," "Qualified Beneficiary," "Qualifying Event" and "Group Health Plan" all shall have the meanings given such terms under Section 4980B of the Code and Section 601 et seq. of ERISA. (c) Option Holder shall offer health plan coverage to all Station Employees under the terms and conditions generally applicable to the Option Holder's employees as of the Option Closing Date. For purposes of providing such coverage, the Option Holder shall waive all preexisting condition limitations for all Station Employees covered by any Seller's group health plan as of the Option Closing Date and shall provide such health care coverage effective as of the Option Closing Date without the application of any eligibility period for coverage. In addition, the Option Holder shall credit all employee payments toward deductible and co-payment obligations limits under the Seller's health care plans for the plan year which includes the Option Closing Date as if such payments had been made for similar purposes under the Option Holder's health care plans during the plan year which includes the Option Closing Date, with respect to the Station Employees. (d) Option Holder shall grant Station Employees credit for and shall assume and be responsible for any liabilities with respect to sick leave and personal days accrued but unused by any Station Employees as of the Closing Date, and, Option Holder shall grant Station Employees credit for and shall be responsible for any liabilities with respect to any accrued but unused vacation for such employees. (e) Except as otherwise provided in Section 10.1(f), within a reasonable period of time after each Option Closing Date, RCB shall transfer from the River City Investment and Retirement Plan ("RCB's 401(k) Plan") to the Sinclair Broadcast Group, Inc. 401(k) Profit Sharing Plan and Trust ("Option Holder's 401(k) Plan") an amount, in cash, equal to the aggregate account balances held in the RCB's 401(k) Plan as of the date of transfer with respect to all Station Employees. Prior to the date of such transfer, and as preconditions thereto: (1) the Option Holder shall use commercially reasonable efforts to deliver to Sellers a copy of the most recently issued Internal Revenue Service ("IRS") determination letter (or other proof satisfactory to counsel for the Sellers) that Option Holder's 401(k) Plan is qualified under the Code, and (2) Sellers shall use commercially reasonable efforts to deliver to the Option Holder a copy of the most recently issued IRS determination letter (or other proof satisfactory to counsel for the Option Holder) that RCB's 401(k) Plan is qualified under the Code. Sellers shall not take any action with respect to RCB's 401(k) Plan to create a right on behalf of the Station Employees to distribution of plan assets from RCB's 401(k) Plan prior to such transfer. Subsequent to the transfer of assets to the Option Holder's 401(k) Plan, neither the Sellers nor RCB's 401(k) Plan shall retain any liability with respect to such Station Employees to provide them with benefits in accordance with the terms of RCB's 401(k) Plan. On or prior to the Option Closing Date, Sellers shall deliver to Option Holder a list of all Station Employees, indicating thereon the total amount deferred in pre-tax dollars to RCB's 401(k) Plan by each of the Station Employees under the terms of Section 402(g) of the Code with respect to the plan year of RCB's 401(k) Plan in which Closing occurs. Sellers and the Option Holder agree to cooperate with respect to any government filing, including, but not limited to, the filing of IRS Forms 5310-A, if necessary, to effect the transfer of assets contemplated by this Section 10.1. (f) The Option Holder agrees, effective as of the final Option Closing Date under this Option Agreement, to fully assume sponsorship of RCB's 401(k) Plan including all obligations of the sponsor to contribute to and administer the plan. Sellers and the Option Holder agree to perform all acts necessary or proper to consummate the assumption of RCB's 401(k) Plan, including but not limited to the making of all proper filings with the IRS and the Department of Labor and the receipt of all necessary notices or approvals from governmental agencies. (g) The Option Holder agrees that the Sellers may inform its employees that the Option Holder has agreed that the Station Employees will be offered employment as provided in this Section 10.1; provided, however, that Option Holder shall have the right to approve any written statement to be made by Sellers in connection therewith. ARTICLE 11 TERMINATION/MISCELLANEOUS 11.1 Termination of Options. 11.1.A Columbus Option. If not exercised on or prior to April 10, 2006, in accordance with the terms and conditions specified herein, the Columbus Option shall expire and terminate. Subject to Section 11.1.C below, the Columbus Option may also be terminated at any time on or prior to April 10, 2008 as follows: (a) By Sellers: (i) if any of the conditions provided in Article 7 hereof have not been met by the date scheduled for the Closing of the Columbus Option pursuant to Section 2.2 and have not been waived, provided that Sellers are not in default under or breach in any material respect of their representations and warranties, covenants or agreements under this Agreement and the failure to meet such conditions is not due to Sellers' breach of the Agreement; (ii) if Option Holder fails to deliver any payment with respect to the Group I Options or the Columbus Option as required by Sections 2.1.A or 2.1.B by or at the time such payment is due thereunder; (iii) if Option Holder or any permitted assignee has defaulted or breached in any material respect its representations, warranties, covenants or agreements under the TBA for the Columbus Station; or (iv) if the Columbus Option Closing Date has not occurred on or prior to April 10, 2008. (b) By Option Holder: (i) if any of the conditions provided in Article 8 hereof have not been met by the date scheduled for the Closing of such Option pursuant to Section 2.2 and have not been waived provided that Option Holder is not in default or breach in any material respect of its representations and warranties, covenants or agreements under this Agreement, and the failure to meet such conditions is not due to Option Holder's breach of the Agreement; or (ii) upon written notice by Option Holder to Sellers. (c) By Either Option Holder or Sellers as follows: by mutual written consent of Option Holder and Sellers. 11.1.B Group I Options. If not exercised on or prior to April 10, 2006, in accordance with the terms and conditions specified herein, the applicable unexercised Group I Option shall expire and terminate. Subject to Section 11.1.D., a Group I Option may be terminated by Sellers at any time on or after April 10, 2008 if the Option Closing Date has not occurred on or prior to April 10, 2008. 11.1.C Notice and Cure. Notwithstanding anything to the contrary in the foregoing, to the extent that Option Holder has taken, or failed to take, any of the actions otherwise contemplated under Section 11.1.A(a)(i), (ii) or (iii) prior to a termination under such provisions by Sellers, Sellers shall give Option Holder and Option Holder's Lenders under its then existing senior credit facility (the name and notice information regarding which Option Holder shall provide to Sellers) notice thereof, and (x) in the case of a breach under Section 11.1.A(a)(i) or (iii) or Section 11.1.B, Option Holder shall be given thirty (30) days from the date of receipt of such notice to cure such breach and the Option Holder's Lenders shall be given ninety (90) days from the date of receipt of such notice to cure such breach and (y) in the case of a breach under Section 11.1.A(a)(ii), Option Holder shall be given fifteen (15) days from the date of receipt of such notice to cure such breach and Option Holder's Lenders shall be given ninety (90) days from the date of receipt of such notice to cure such breach. After the applicable cure periods with respect to such breach have expired without such breach having been cured within such periods, Sellers shall have the right to terminate hereunder. 11.1.D Certain Remedies. (a) To the extent Sellers (i) terminate the Columbus Option in accordance with Section 11.1.A(a), and (ii) sell the Columbus Station, Sellers shall, upon receipt thereof, pay to Option Holder any amount received as payment for the Columbus Station in excess of the Closing Price of all Unpaid Options minus (1) any non-recurring reasonable out-of-pocket costs incurred by Sellers in connection with such sale, other than any sales commission paid by Sellers in connection therewith, (2) any amounts owed by Option Holder to Sellers, including, without limitation, in connection with any economic breach by Option Holder under Section 11.1.A(a) and the Option Extension Fees that are due but have not been paid through the date of the closing of such sale and (3) the total amount of all federal, state and local taxes incurred by Sellers in connection with such sale and (4) the Standard Formula on the total amount paid for the Columbus Station (the "Columbus Sale Price"). Sellers agree to act in a commercially reasonable manner in connection with the sale of the Columbus Station, and Option Holder shall cooperate with Sellers in connection therewith. The Columbus Option shall terminate upon such sale. Option Holder's rights hereunder shall be subject to any actions as may be taken by Sellers pursuant hereto. TO THE EXTENT SELLERS HAVE ACTED IN A COMMERCIAL REASONABLE MANNER IN CONNECTION WITH THE SALE OF THE COLUMBUS STATION, NO CLAIM MAY BE MADE BY OPTION HOLDER AGAINST SELLERS OR ITS PARTNERS, AFFILIATES, DIRECTORS, OFFICERS, EMPLOYEES, ATTORNEYS OR AGENTS FOR ANY SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES IN RESPECT OF ANY BREACH OR WRONGFUL CONDUCT (WHETHER THE CLAIM THEREFOR IS BASED ON CONTRACT, TORT OR DUTY IMPOSED BY LAW) IN CONNECTION WITH, ARISING OUT OF OR IN ANY WAY RELATED TO THE TRANSACTIONS CONTEMPLATED AND RELATIONSHIP ESTABLISHED BY THE FOREGOING PARAGRAPH, OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH; AND OPTION HOLDER HEREBY WAIVES, RELEASES AND AGREES NOT TO SUE UPON ANY SUCH CLAIM FOR ANY SUCH DAMAGES, WHETHER OR NOT ACCRUED AND WHETHER OR NOT KNOWN OR SUSPECTED TO EXIST IN ITS FAVOR. (b) On the date of this Agreement, Sellers shall have received from Option Holder, an irrevocable standby letter of credit issued by Option Holder's Lenders for the account of Sellers in the amount of $2,000,000, which shall have no conditions to drawing other than notice from Sellers that Option Holder or any permitted assignee under a TBA has defaulted in its obligations under a TBA relating to a Station, and Sellers shall have the right to draw down all amounts set forth on Schedule 11.1.D for each Station for which the Option Closing Date has not yet occurred, and following each draw down by Sellers, Option Holder shall replenish such letter of credit such that at all times such letter of credit shall be an amount equal to the aggregate of all amounts set forth on Schedule 11.1.D for each Station for which an Option has not yet been exercised. 11.2 Effect of Termination and Other Limitations. (a) In the event of termination, as provided in Section 11.1, the obligations of the parties hereto shall terminate without any liability or obligation on the part of Sellers or Option Holder, except that (i) the provisions of Sections 3.4, 4.4, 5.5, 6.1, 11.3, 11.4-11.12, 11.15-11.17 and 11.19 shall survive, and (ii) to the extent that such termination results from the willful and material breach by a party of any of its representations, warranties, covenants or agreements set forth in this Agreement, the non-defaulting parties' rights to pursue all legal or equitable remedies for breach of contract or otherwise, including the right to specific performance or damages or both, shall survive and the non-prevailing party in any lawsuit related to any such pursuit shall pay the attorney's fees of the prevailing party. Without limiting the generality of the foregoing, neither Option Holder, on the one hand, nor Sellers, on the other hand, may rely on the failure of any condition precedent set forth in Articles 7 or 8, as applicable, to be satisfied if such failure was caused by such party's (or parties') failure to act in good faith, or a breach of or failure to perform its representations, warranties, covenants or other obligations in accordance with the terms of this Agreement. (b) Anything in this Agreement or any applicable law to the contrary notwithstanding, neither any Seller (except to the extent expressly provided for in Section 11.2(a)) nor any partner, director, officer, employee, agent or Affiliate of any Seller (including any shareholder, director, officer, employee, agent or Affiliate of the general partner of the Seller) shall have any personal liability to Option Holder as a result of the breach of any representation, warranty, covenant or agreement of Seller contained herein or otherwise and shall have no personal obligation to Option Holder for any of Option Holder's remedies hereunder. 11.3 Expenses. Subject to the provisions of Sections 3.4 and 4.4, each party hereto shall bear all of its expenses incurred in connection with the transactions contemplated by this Agreement, including, without limitation, accounting and legal fees incurred in connection herewith; provided, however, that Sellers on the one hand, and Option Holder on the other, shall each pay one-half of any sales or transfer taxes (including any real property transfer taxes) arising from transfer of the License Assets and the Columbus Station Assets and any FCC filing fees. 11.4 Assignments. This Agreement shall not be assigned by any party hereto without the prior written consent of the other parties except as specified herein, as follows: (i) Option Holder or any permitted assignee of Option Holder may assign its rights and interests hereunder with respect to any Option provided that (1) Option Holder gives Sellers written notice thereof; (2) such assignment shall not relieve Sinclair Broadcast Group, Inc. or any assignee hereof or of any other Option Holder of any of its obligations or liabilities hereunder; (3) such assignment would not violate any applicable laws, rules, regulations or policies of any applicable governmental authority; and (4) if Option Holder assigns an Option pursuant to this subsection (i) and if any amounts are paid to Option Holder in connection therewith, Option Holder shall, on the date any such payment is received, pay such amount to Sellers, which amount shall be referred to as the "Option Assignment Price" for such Option. (ii) To the extent of any such assignment by Option Holder in accordance with the terms of this Section 11.4, Sellers shall deliver any such documents contemplated under Section 2.4(a) to such assignee provided that once such delivery shall have been made to such assignee, Sellers' obligations hereunder with respect to such delivery shall be deemed to have been discharged. It is understood and agreed that nothing herein shall be deemed to prohibit a transfer of control of any Seller or Licensee or the assignment of any FCC Authorizations or any of the other License Assets by Sellers provided that Sellers agree to amend any filings contemplated under Section 5.8(a) to the extent necessary in connection therewith. Any attempt to assign this Agreement without the required consent shall be void. It is understood and agreed that nothing herein shall be deemed to expand the rights granted hereunder to any permitted assignee, which rights shall be in combination with, and not in addition to, the rights of Option Holder. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. 11.5 Further Assurances. Subject to the terms and conditions of this Agreement, from time to time prior to, at and after the Option Grant Date, each party hereto will use commercially reasonable efforts to take, or cause to be taken, all such actions and to do or cause to be done, all things, necessary, proper or advisable under applicable laws and regulations to consummate and make effective the sale contemplated by this Agreement and the consummation of the other transactions contemplated hereby, including executing and delivering such documents as the other party being advised by counsel shall reasonably request in connection with the consummation of this Agreement and the consummation of the other transactions contemplated hereby, including, without limitation, the execution and delivery of any and all confirmatory and other instruments, in addition to those to be delivered on either the Option Grant Date or any Option Closing Date. 11.6 Notices. All notices, demands and other communications which may or are required to be given hereunder or with respect hereto shall be in writing, shall be delivered personally or sent by nationally recognized overnight delivery service, charges prepaid, or by registered or certified mail, return-receipt requested, or by facsimile transmission, and shall be deemed to have been given or made when personally delivered, the next business day after delivery to such overnight delivery service, when dispatched by facsimile transmission, five (5) days after deposited in the mail, first class postage prepaid, addressed as follows: (a) If to any Seller: River City Broadcasting, L.P. 1215 Cole Street St. Louis, Missouri 63106-3897 Attn.: Mr. Barry A. Baker and Mr. Larry D. Marcus Telecopier: (314) 259-5709 With a copy to: Dow, Lohnes & Albertson A Professional Limited Liability Company 1200 New Hampshire Ave., N.W. Suite 800 Washington, D.C. 20036-6802 Attn.: Leonard J. Baxt, Esq. Telecopier: (202) 776-2222 Baker & Botts 800 Trammell Crow Center 2001 Ross Avenue Dallas, Texas 75201-2916 Attn.:Andrew M. Baker, Esq. Telecopier: (214) 953-6503 or to such other address as any Seller may from time to time designate. (b) If to Option Holder: Sinclair Broadcast Group, Inc. 2000 W. 41st Street Baltimore, Maryland 21211 Attn.: Mr. David D. Smith Telecopier: (410) 467-5043 With a copy to: Thomas & Libowitz, P.A. The USF&G Tower 100 Light Street Suite 1100 Baltimore, Maryland 21202-1053 Attn.: Steven A. Thomas, Esq. Telecopier: (410) 752-2046 or to such other address Option Holder may from time to time designate. 11.7 Captions. The captions of Articles and Sections of this Agreement are for convenience only, and shall not control or affect the meaning or construction of any of the provisions of this Agreement. 11.8 Law Governing. THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED, AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MARYLAND WITHOUT REFERENCE TO ITS PRINCIPLES OF CONFLICT OF LAWS, EXCEPT TO THE EXTENT THAT THE FEDERAL LAW OF THE UNITED STATES GOVERNS THE TRANSACTIONS CONTEMPLATED HEREBY. Consent to Jurisdiction, Etc. EXCEPT AS SET FORTH IN SECTION 9.9 HEREOF, THE PARTIES HERETO HEREBY IRREVOCABLY CONSENT TO THE NONEXCLUSIVE JURISDICTION AND VENUE OF ANY FEDERAL COURT LOCATED IN THE DISTRICT OF MARYLAND (SOUTHERN DIVISION) OR TO THE EXTENT SUCH COURTS ARE NOT AVAILABLE, ANY COURT IN THE STATE OF MARYLAND LOCATED IN THE COUNTY OF MONTGOMERY IN CONNECTION WITH ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT. THE PARTIES HERETO HEREBY WAIVE PERSONAL SERVICE OF ANY PROCESS IN CONNECTION WITH ANY SUCH ACTION OR PROCEEDING AND AGREE THAT THE SERVICE THEREOF MAY BE MADE BY CERTIFIED OR REGISTERED MAIL ADDRESSED TO OR BY PERSONAL DELIVERY TO THE OTHER PARTY AT SUCH OTHER PARTY'S ADDRESS SET FORTH PURSUANT TO PARAGRAPH 11.6 HEREOF. IN THE ALTERNATIVE, IN ITS DISCRETION, ANY OF THE PARTIES HERETO MAY EFFECT SERVICE UPON ANY OTHER PARTY IN ANY OTHER FORM OR MANNER PERMITTED BY LAW. 11.10 Waiver of Provisions. The terms, covenants, representations, warranties, and conditions of this Agreement may be waived only by a written instrument executed by the party waiving compliance. The failure of any party at any time or times to require performance of any provision of this Agreement shall in no manner affect the right at a later date to enforce the same. No waiver by any party of any condition or the breach of any provision, term, covenant, representation, or warranty contained in this Agreement, whether by conduct or otherwise, in any one or more instances shall be deemed to be or construed as a further or continuing waiver of any such condition or of the breach of any other provision, term, covenant, representation, or warranty of this Agreement. 11.11 Counterparts. This Agreement may be executed in two (2) or more counterparts, and all counterparts so executed shall constitute one (1) agreement binding on all of the parties hereto, notwithstanding that all the parties are not signatory to the same counterpart. 11.12 Entire Agreement/Amendments. This Agreement and the TBAs (including the Exhibits and Schedules hereto and thereto) and the documents delivered pursuant to this Agreement or other written agreements among the parties, dated the date hereof or hereafter, constitute the entire agreement among the parties pertaining to the subject matter hereof and supersede any and all prior and contemporaneous agreements, understandings, negotiations, and discussions, whether oral or written, between them relating to the subject matter hereof. No amendment or waiver of any provision of this Agreement shall be binding unless executed in writing by the party to be bound thereby. 11.13 Access to Books and Records. Option Holder shall preserve for at least three (3) years after the Option Closing Date all books and records included in the License Assets and the Columbus Station Assets. At the request of Sellers, Option Holder agrees to give to the officers, partners, employees, agents, accountants and counsel of Sellers access, upon reasonable prior notice during normal business hours, to the property, accounts, books, contracts, records, accounts payable and receivable, records of employees of Sellers and other information concerning the affairs of any Station, any of the License Assets or any of the Columbus Station Assets, except as may be prohibited by law, and to the employees of Option Holder as Sellers may reasonably request. Sellers shall have no obligation to retain books and records relating to the License Assets or the Columbus Station Assets, subsequent to the Closing relating to such License Assets or the Columbus Station Assets, as applicable. To the extent any such books and records are retained, then for a period not to exceed three (3) years after the Closing Date, at the request of Option Holder, Sellers agree to give the officers, employees, accountants and counsel of Option Holder access, upon reasonable prior notice during normal business hours, to the books, records and files retained by Sellers with respect to the business and operation of any Station by Sellers as Option Holder may reasonably request in connection with an audit of any Station. Each of Option Holder and Sellers shall be permitted at their own expense to make extracts from or copies of the foregoing books, records and files of the other party. 11.14 Waiver of Final Grant by FCC. Option Holder and Sellers agree to proceed to effect a Closing with respect to a Station as provided in Section 2.2(b) hereof, on Initial Grant, as defined below. "Initial Grant" shall be defined for the purposes of this Agreement as the date of the publication of the FCC "Public Notice" announcing the grant of the "Assignment Application(s)" for the FCC licenses for such Station to be transferred hereunder which contains no conditions materially adverse to Option Holder. The terms "Public Notice" and "Assignment Application(s)" have the same meaning herein as are generally given to such terms under existing FCC rules, regulations and procedures. 11.15 Headings. The Article and Section headings contained in this Agreement are solely for the purpose of reference, are not part of the agreement of the parties and shall not in any way affect the meaning or interpretation of this Agreement. 11.16 Severability. If any provision of this Agreement or the application thereof to any person or circumstance shall be invalid or unenforceable to any extent, the remainder of this Agreement and the application of such provision to other persons or circumstances shall not be affected thereby and shall be enforced to the greatest extent permitted by law so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid or unenforceable, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the greatest extent possible. 11.17 Public Announcements and Press Releases. Prior to the final Option Closing Date, neither Sellers nor Option Holder shall, except by mutual agreement, make any press release or other public announcement (written or oral) concerning this Agreement or the transactions contemplated by this Agreement, except as may be required by any law, rule or regulation (including, without limitation, filings and reports required to be made with or pursuant to the rules of the SEC) or any by existing contract, license, or agreement to which it is a party and provided that the party required to make such announcement shall provide a draft copy thereof to the other parties hereto, and consult with such other parties concerning the timing and content of such announcement, before such announcement is made. No press releases or other public announcements concerning this Agreement or the transactions contemplated hereby shall be made by any party hereto without the prior written consent of the other parties unless the first such party is legally compelled to do so. 11.18 Board of Directors and Committees. From and after the Asset Purchase Agreement Closing Date, Option Holder shall cause (i) each of (1) Barry Baker ("Baker") and (2) Roy F. Coppedge (or such other individual as may be designated by Boston Ventures Limited Partnership IV and Boston Ventures Limited Partnership IVA (collectively, "Boston Ventures")) (the "BV Designee") to receive notice of all meetings of the Board of Directors of Option Holder and to be permitted to attend such meetings, (ii) Baker to receive notice of all meetings of any executive and finance committees, and to be permitted to attend such meetings, and (iii) the BV Designee to receive notice of all meetings of any compensation and finance committees, and to be permitted to attend such meetings. In addition, if the Board of Directors or any executive, finance or compensation committee of Option Holder plans to take actions by written consent in lieu of a meeting, then Option Holder shall cause Baker (in the case of the Board of Directors and any executive and finance committees) and the BV Designee (in the case of the Board of Directors and any finance and compensation committees) to receive a copy of the form of consent documents relating to such actions at the same time that such documents are circulated or distributed to the members of the Board of Directors, executive, finance or compensation committees, as applicable. In addition, as soon as permissible under the rules of the FCC and applicable laws, Option Holder shall cause (i) each of Baker and the BV Designee to be appointed as members of the Board of Directors of Option Holder, (ii) Baker to be appointed as a member of any executive committee and, to the extent established, the finance committee and (iii) the BV Designee to be appointed as a member of any finance committee, to the extent established, and the compensation committee. Option Holder's Board of Directors (which presently consists of seven (7) directors) has duly adopted resolutions which have fixed the number of members of (x) directors of Option Holder at nine (9) directors, (y) the executive committee at six (6) members, and (z) the compensation committee at six (6) members and such resolutions also have designated Baker and the BV Designee, as applicable, to fill the directorships on the Option Holder's Board of Directors and memberships on such committees pursuant to the terms of this Agreement. To the extent that the Option Holder or the Board of Directors establishes a finance committee, it shall designate each of Baker and the BV Designee as members of the finance committee. Baker shall be entitled to be a director of Option Holder and a member of the executive committee and, to the extent established, the finance committee for so long as he remains an employee of Option Holder, and BV shall be entitled to have the BV Designee be a director of Option Holder and a member of the compensation committee and, to the extent established, the finance committee until the first to occur of (i) the later of (a) the fifth anniversary of the Asset Purchase Agreement Closing Date and (b) the expiration of the initial five-year term of Barry Baker's Employment Agreement with Option Holder and (ii) such time, after Option Holder has issued the Convertible Preferred Stock to RCB or to its Partners, as Boston Ventures no longer owns, of record or beneficially to the extent of its interest as a limited partner of RCB, at least 721,115 shares of Option Holder Common Stock, on an "as converted" basis, as such number may be adjusted pursuant to stock splits, stock combinations, reclassifications or recapitalizations of Option Holder occurring after the date hereof. 11.19 List of Definitions. The following is a list of certain terms used in this Agreement and a reference to the Section hereof in which such term is defined: Terms Section AAA Section 9.9 Adjustment Amount Section 2.5(b) Adjustment Date Section 2.5(a) Affiliate Section 3.5 After-Acquired Stations Recitals Agreement Preamble Applicable Interest Rate Section 9.4(a)(i) Asset Purchase Agreement Recitals Asset Purchase Agreement Closing Date Recitals Asset Purchase Closing Recitals Assumed Liabilities Section 1.3 Baker Section 11.18 Boston Ventures Section 11.18 BV Designee Section 11.18 Closing Section 2.2(b) Columbus Contract Section 1.1.B(c) Columbus Leasehold Interest Section 1.1.B(b) Columbus Option Section 1.1 Columbus Option Closing Date Recitals Columbus Option Closing Price Section 2.1(a) Columbus Other Contracts Section 1.1.B(c) Columbus Programming Copyrights Section 1.1.B(e) Columbus Real Property Section 1.1.B(b) Columbus Real Property Improvements Section 1.1.B(b) Columbus Sale Price Section 11.1(c) Columbus Station Recitals Columbus Station Assets Section 1.1.B Columbus Trademarks, Etc. Section 1.1.B(d) Communications Act Section 3.5 Contract Section 1.1.A(d) Conveyed Contracts Section 2.6 Disputing Party Section 2.5(b) Escrow Agent Section 2.5(b) Estimate Report Section 2.5(b) Excluded Assets Section 1.2 Excluded Contracts Section 1.2(f) Exercise Date Section 1.4 Exercise Notice Section 1.4 Exercise Period Section 1.5 FCC Recitals FCC Authorizations Recitals Group I Options Section 1.1 Group I Option Closing Price Section 2.1.B(a) Group I Stations Recitals Group I TV Stations Recitals HSR Act Section 5.9 Indemnification Escrow Agent Section 9.4(a)(i) Indemnification Fund Section 9.4(a)(i) Indemnification Fund Deposit Section 9.4(a)(i) Initial Grant Section 11.14 IRS Section 10.1(e) Laws Section 2.6 Leasehold Interests Section 1.1.A(c) Leases Section 3.7(a) Licensee Preamble License Assets Section 1.1.A Loss and Expense Section 9.2 Material Adverse Change Section 8.1(a) New Mexico Stations Recitals NewVenco Other Assets Section 1.1.B(j) Option Section 1.1 Option Assignment Price Section 11.4(a)(i) Option Closing Date Section 2.2(b) Option Closing Price Section 2.1.B(a) Option Extension Fees Section 2.1.B(b) Option Grant Section 2.2(a) Option Grant Date Preamble Option Grant Price Section 2.1.A Option Holder Preamble Option Holder's 401(k) Plan Section 10.1(e) Option Holder's Lenders Section 5.1(i) Other Contracts Section 1.1.A(d) Permitted Encumbrances Section 1.3 Person Section 3.5 Post-Closing Estimate Fund Section 2.5(b) Post-Closing Estimate Fund Deposit Section 2.5(b) Pre-Closing Certificate Section 2.5(b) Proceedings Section 2.6 Radio Stations Recitals RCB Preamble RCB's 401(k) Plan Section 10.1(e) RCB Twin Peaks Equity Interests Recitals Real Property Section 1.1.A(c) Real Property Improvements Section 1.1.A(c) Retained Liabilities Section 1.3 Sale Price Section 5.1(i) Sandia Recitals Sandia Stock Recitals Sellers Preamble Standard Formula Section Station Employees Section 10.1(a) Station Material Adverse Change Section 3.8 Stations Recitals TBAs Recitals Terminations Section 7.6 Transaction Documents Section 9.8 TV Stations Recitals Twin Peaks Recitals Twin Peaks License Partnership Interest Recitals Twin Peaks Partnership Interest Recitals Twin Peaks Sale Recitals Unpaid Option Section 2.1.B(a) 11.20 No Third Party Beneficiaries. No person other than Option Holder or Sellers shall have any right to enforce any provision of this Agreement or have any "third party beneficiary" rights hereunder, other than Option Holder's Lenders with respect to Section 11.4 hereof and Boston Ventures and Baker with respect to Section 11.18 hereof and except as expressly provided in a separate agreement dated as of the date of the Asset Purchase Agreement among Option Holder, Sellers and Option Holder's Lenders. IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed by their duly authorized officers, all as of the day and year first above written. RIVER CITY BROADCASTING, L.P. By: Better Communications, Inc., its General Partner By: ________________________(SEAL) Name: Title: RIVER CITY LICENSE PARTNERSHIP By: River City Broadcasting, L.P. By: Better Communications, Inc., its General Partner By: ________________________(SEAL) Name: Title: OPTION HOLDER: SINCLAIR BROADCAST GROUP, INC. By: __________________________(SEAL) Name: Title: TABLE OF CONTENTS ARTICLE 1 OPTION TO ACQUIRE LICENSE ASSETS AND COLUMBUS STATION ASSETS 1.1 Options 1.1.A. Option to Acquire License Assets 1.1.B Transfer of Columbus Assets 1.2 Excluded Assets 1.3 Liabilities 1.4 Option Exercise 1.5 Terms of Option ARTICLE 2 PAYMENTS AND CLOSING 2.1 Grant Price and Option Closing Price 2.1.A Payment for Option Grant 2.1.B Payment Upon Option Closing and Option Extension Fees 2.2 Option Grant and Closing 2.3 Deliveries at Option Grant 2.4 Deliveries at Closing 2.5 Adjustments 2.6 Effect of Certain Laws or Proceedings 2.7 Representations and Warranties of Sellers ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF SELLERS 3.1 Organization 3.2 Approval/Authority 3.3 No Conflicts 3.4 Brokers 3.5 FCC Authorizations 3.6 Condition of Assets 3.7 Title 3.8 Call Letters, Trademarks, Etc. 3.9 Insurance 3.10 Contracts 3.11 Employees 3.12 Litigation 3.13 Compliance with Laws 3.14 Complete Disclosure ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF OPTION HOLDER 4.1 Incorporation 4.2 Corporate Action 4.3 No Conflicts 4.4 Brokers 4.5 Litigation ARTICLE 5 COVENANTS OF SELLERS PENDING THE CLOSING 5.1 Maintenance of Business until Closing 5.2 Goodwill/Compliance with Agreements 5.3 Reports; Access to Facilities, Files and Records 5.4 Notice of Proceedings 5.5 Confidential Information 5.6 Consummation of Option Closing 5.7 Notice of Certain Developments 5.8 Covenants of Sellers After Option Exercise 5.9 Hart-Scott-Rodino 5.10 Compliance with TBAs 5.11 New Mexico Stations ARTICLE 6 COVENANTS OF OPTION HOLDER PENDING THE CLOSING 6.1 Confidential Information 6.2 Consummation of Agreement. 6.3 Notice of Proceedings 6.4 Covenants of Option Holder After Option Exercise 6.5 Insurance 6.6 Notice of Material Impact 6.7 Hart-Scott-Rodino 6.8 Compliance with TBAs ARTICLE 7 CONDITIONS TO THE OBLIGATIONS OF SELLERS 7.1 Representations, Warranties, Covenants 7.2 Proceedings 7.3 Opinion of Counsel 7.4 FCC Authorization 7.5 Hart-Scott-Rodino 7.6 Termination of Certain Agreements 7.7 TBAs ARTICLE 8 CONDITIONS TO THE OBLIGATIONS OF OPTION HOLDER 8.1 Representations, Warranties, and Covenants 8.2 Proceedings 8.3 Opinion of Counsel 8.4 FCC Authorizations 8.5 Hart-Scott-Rodino 8.6 Termination of Certain Agreements 8.7 TBAs ARTICLE 9 INDEMNIFICATION 9.1 Survival 9.2 Indemnification of Option Holder 9.3 Indemnification of Sellers 9.4 Limitation of Liability 9.5 Bulk Sales Indemnity 9.6 Notice of Claims 9.7 Defense of Third Party Claims 9.8 Indemnity as Sole Remedy 9.9 Arbitration ARTICLE 10 EMPLOYEE MATTERS 10.1 Employee Matters ARTICLE 11 TERMINATION/MISCELLANEOUS 11.1 Termination of Options 11.1.A Columbus Option 11.1.B Group I Options 11.1.C Notice and Cure 11.1.D Certain Remedies 11.2 Effect of Termination and Other Limitations 11.3 Expenses 11.4 Assignments 11.5 Further Assurances 11.6 Notices 11.7 Captions 11.8 Law Governing 11.9 Consent to Jurisdiction, Etc. 11.10 Waiver of Provisions 11.11 Counterparts 11.12 Entire Agreement/Amendments 11.13 Access to Books and Records 11.14 Waiver of Final Grant by FCC 11.15 Headings 11.16 Severability 11.17 Public Announcements and Press Releases 11.18 Board of Directors and Committees 11.19 List of Definitions 11.20 No Third Party Beneficiaries Exhibits Exhibit 2.5(b) Post-Closing Escrow Agreement Exhibit 7.3(i) Opinion of Counsel to Option Holder Exhibit 7.3(ii) Opinion of Counsel to Option Holder (FCC) Exhibit 8.3(i) Opinion of Counsel to Sellers Exhibit 8.3(ii) Opinion of Counsel to Sellers (FCC) Exhibit 9.4 Indemnification Escrow Agreement Schedules Schedule 1.1.A(a) FCC Authorizations Schedule 1.1.A(b) Tangible Personal Property Schedule 1.1.A(c) Real Property Schedule 1.1.A(d) Other Contracts Schedule 1.1.A(e) Trademarks, Etc. Schedule 1.1.B(a) Columbus Tangible Personal Property Schedule 1.1.B(b) Columbus Real Property Schedule 1.1.B(c) Columbus Other Contracts Schedule 1.1.B(d) Columbus Trademarks, Etc. Schedule 1.1.B(e) Columbus Programming Copyrights Schedule 1.1.B(j) NewVenco Other Assets Schedule 1.2(f) Excluded Contracts Schedule 1.2(i) Interests in Certain Subsidiaries Schedule 1.3 Liabilities Schedule 2.1.A Allocation of Option Grant Price among Stations Schedule 2.1.B(a) Allocation of Option Closing Price among Stations Schedule 3.1 Qualifications Schedule 3.3 No Conflicts Schedule 3.5 FCC Authorizations Schedule 3.11 Certain Employee Matters Schedule 3.12 Litigation Schedule 5.1 Maintenance of Business Schedule 9.2 Indemnification of Option Holder Schedule 10.1 Employee Matters Schedule 11.1.D Notice and Cure EXHIBIT 7.7 TO THE ASSET PURCHASE AGREEMENT [THIS AGREEMENT MAY BE MODIFIED BY SELLERS PRIOR TO EXECUTION IN ACCORDANCE WITH SECTION 7.7 OF THE ASSET PURCHASE AGREEMENT] OPTION AGREEMENT BY AND AMONG RIVER CITY BROADCASTING, L.P. AND RIVER CITY LICENSE PARTNERSHIP, AS SELLERS, AND SINCLAIR BROADCAST GROUP, INC., AS OPTION HOLDER DATED AS OF ______ __, 1996 EX-3 5 MODIFICATION AGREEMENT MODIFICATION AGREEMENT This MODIFICATION AGREEMENT (this "Modification Agreement") is dated May 10, 1996, by and between RIVER CITY BROADCASTING, L.P., a Delaware limited partnership ("Seller"), and SINCLAIR BROADCAST GROUP, INC., a Maryland corporation ("Buyer"), with reference to that certain Asset Purchase Agreement dated as of April 10, 1996, between Seller and Buyer (the "Purchase Agreement") and with any capitalized term used but not defined herein having the meaning given to such term in the Purchase Agreement. R E C I T A L S: A. The Purchase Agreement contemplates that at the Closing of the Purchase Agreement, (i) Seller shall assign to Buyer certain specified agreements relating to the Columbus Station, and (ii) Buyer and Seller shall enter into (A) a Time Brokerage Agreement with respect to the operation of the Columbus Station, and (B) an Option Agreement providing for the grant by Seller to Buyer of an option to acquire the remainder of the Columbus Station Assets. B. Pursuant to Sections 5.9 and 6.4 of the Purchase Agreement, on April 11, 1996, Buyer and Seller each filed with the U.S. Federal Trade Commission ("FTC") and the U.S. Department of Justice ("DOJ"), an FTC Form C4, Premerger Notification and Report Form (the "Notification Form"), with respect to the transactions contemplated by the Purchase Agreement and the Option Agreement. C. DOJ has informed Buyer and Seller that it contemplates the issuance of a "second request" with respect to the transactions contemplated by the Purchase Agreement and the Option Agreement due to the conveyance by Seller to Buyer of the Columbus Station Assets and the execution at Closing of the Time Brokerage Agreement for the Columbus Station. D. Buyer and Seller wish to set forth their agreements whereby they will endeavor to negotiate modifications to the Purchase Agreement and the Option Agreement to eliminate therefrom conveyance by Seller to Buyer of the Columbus Station Assets and execution of a Time Brokerage Agreement for the Columbus Station. A G R E E M E N T S: In consideration of the above recitals and the covenants and agreements contained herein, the parties hereto agree as follows: 1. Intended Agreements. The parties hereby agree that they will use their commercially reasonable efforts to negotiate, expeditiously and in good faith, the terms of the following: (a) definitive, mutually acceptable amendments to the Purchase Agreement, the Option Agreement and, to the extent necessary, any related schedules, exhibits or other documents, to reflect such provisions as to which the parties may mutually agree, including to eliminate therefrom (i) conveyance by Seller to Buyer of any assets relating to the Columbus Station under the Purchase Agreement or the Option Agreement, (ii) grant of the Columbus Option under the Option Agreement, (iii) execution between Buyer and Seller of a Time Brokerage Agreement for the Columbus Station, and (iv) hiring by Buyer of Seller's Columbus Station employees (such amended agreements, if and as executed, referred to herein as the "Amended Transaction Agreements"); and (b) definitive, mutually acceptable agreements between Buyer and Seller relating to the Columbus Station (when and if executed, the "Columbus Agreements"), which may provide for one or more of the following: (i) the grant by Seller to Buyer of an option to acquire the Columbus Station Assets, (ii) the execution, subject to Section 3 below, between Buyer and Seller of a Time Brokerage Agreement for the Columbus Station, (iii) the hiring by Buyer of Seller's Columbus Station employees, and (iv) such other provisions as to which the parties may mutually agree. 2. HSR Act Compliance. (a) Buyer and Seller acknowledge and confirm (i) that on May 10, 1996, they withdrew their Notifications Forms filed at the FTC and the DOJ, and have thus not received clearance under the HSR Act with respect to the transactions contemplated by the Purchase Agreement and the Option Agreement, and (ii) that consequently, the conditions precedent to the consummation of the Purchase Agreement set forth in Sections 7.4 and 8.6 thereof have not been satisfied. (b) As soon as possible after the date hereof, but in no event later than May 14, 1996, Buyer and Seller shall prepare and file new Notification Forms with the FTC and the DOJ with respect to the transactions contemplated by the Amended Transaction Agreements as described above. Thereafter, Buyer and Seller shall (i) promptly furnish all materials requested by either the FTC and the DOJ, including copies of the Amended Transaction Documents promptly following their execution, and (ii) cooperate fully and use their commercially reasonable efforts to obtain early termination of the waiting period or otherwise expedite compliance with the HSR Act. All filing fees under the HSR Act shall be borne one-half (1/2) by each of Seller and Buyer. 3. The Columbus Station. Buyer and Seller acknowledge and confirm that the HSR Act shall apply to an acquisition by Buyer from Seller of the Columbus Station Assets subject to the Columbus Agreements (if and when executed). Buyer and Seller agree (i) that they will provide both DOJ and FTC with a copy of the Columbus Agreements (if and when executed), and (ii) that they will abide by the terms of the Letter dated the date hereof by counsels to Buyer and Seller to DOJ, a copy of which is attached hereto and the terms of which are incorporated herein by reference. 4. Inability of Buyer and Seller to Agree to Amended Transaction Agreements. Notwithstanding anything to the contrary in the foregoing, if notwithstanding their commercially reasonable and good faith efforts, Buyer and Seller are unable to agree on the terms of the Amended Transaction Agreements and the Columbus Agreements prior to June 10, 1996, then the existing terms of the Purchase Agreement and the Option Agreement shall stand in full force and effect, (i) without giving effect to anything herein with respect to any intention of Buyer or Seller to negotiate amendments thereto, and (ii) with the parties hereby acknowledging that the conditions precedent set forth in Sections 7.4 or 8.6 of the Purchase Agreement shall not have been satisfied. 5. Miscellaneous. This Modification Agreement may be executed in several counterparts, and all so executed shall constitute one Modification Agreement, binding on all the parties hereto. IN WITNESS WHEREOF, this Modification Agreement has been executed by the Seller and Buyer as of the date first above written. Seller: Buyer: RIVER CITY BROADCASTING, L.P. SINCLAIR BROADCAST GROUP, INC. By: Better Communications, Inc., its general partner By:____________________________ By:____________________________ Name: Name: Title: Title: -----END PRIVACY-ENHANCED MESSAGE-----