UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K

CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported):  April 5, 2012

EMMIS COMMUNICATIONS CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
     
Indiana
(State or Other Jurisdiction of Incorporation)
     
0-23264
 
35-1542018
(Commission File Number)
 
(IRS Employer Identification No.)
     
ONE EMMIS PLAZA, 40 MONUMENT CIRCLE,
   
           SUITE 700, INDIANAPOLIS, INDIANA
 
46204
(Address of Principal Executive Offices)
 
(Zip Code)
     
317-266-0100
(Registrant’s Telephone Number, Including Area Code)
     
NOT APPLICABLE
(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below):

 
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
     
 
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
     
 
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
     
 
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
     
 
 
 
 
 
 
 
 
 
 

Item 1.01.  Entry into a Material Definitive Agreement.

Local Programming and Marketing Agreement
 
On April 26, 2012, a subsidiary of Emmis Communications Corporation (“Emmis”) entered into a Local Programming and Marketing Agreement (the “LMA”) with New York AM Radio, LLC (“Programmer”) pursuant to which, commencing April 30, 2012, Programmer will purchase from Emmis the right to provide programming on radio station WRKS(FM), 98.7FM, New York, NY (the “Station”) until August 31, 2024, subject to certain conditions.  Disney Enterprises, Inc., the parent company of Programmer, has guaranteed the obligations of Programmer under the LMA.  Emmis’ subsidiary will retain ownership of the Station during the term of the LMA and will receive an annual fee from Programmer of $8,435,000 for the first year of the term under the LMA, which fee will increase by 3.5% each year thereafter until the LMA’s termination.  Emmis’ subsidiary plans to assign the LMA to a special-purpose subsidiary (the “Financing Subsidiary”) in connection with the funding of the Note under the Participation Agreement, each as described below.

This summary of terms of the LMA is not complete and is qualified in its entirety by the terms and conditions of the LMA,   which is filed with this report as Exhibit 10.1.

Participation Agreement

On April 26, 2012, the Financing Subsidiary and a subsidiary of the Financing Subsidiary which was formed to hold the Federal Communications Commission license (the “FCC License”) for the Station (the “License Subsidiary”) entered into a Participation Agreement (the “Participation Agreement”) with Wells Fargo Bank Northwest, National Association (the “Holder”) and Teachers Insurance and Annuity Association of America (“TIAA”).  Pursuant to the Participation Agreement, the Holder will sell to TIAA a 100% participation interest in a 4.10% promissory note to be issued, jointly and severally, by the Financing Subsidiary and the License Subsidiary  in the principal amount of $82.5 million (the “Note”).  The Note will mature on August 1, 2024 and will bear interest at a rate equal to 4.10% per annum.  The Note will be secured by, among other things, an equity pledge agreement, a security agreement and assignment of certain agreements to the Holder.  As evidence of TIAA’s purchase of the participation interest in the Note, TIAA will receive a Pass-Through Certificate which entitles TIAA to receive payments made under the Note.  In its capacity as the trustee, the Holder will receive fees and expenses for undertaking certain obligations related to the Note.  The net proceeds from the Note will be used by the Financing Subsidiary to pay transaction expenses and to pay a dividend to certain Emmis entities for purposes of debt reduction and general corporate purposes.  Emmis anticipates that approximately $75 million of such net proceeds will be used to repay indebtedness under the senior credit agreement of Emmis Operating Company, including all amounts then outstanding under its revolver.

In connection with entry into the Participation Agreement, certain subsidiaries of Emmis (the “Contributors”) plan to contribute the assets (including the FCC License ) to the Financing Subsidiary and the License Subsidiary.  Upon receipt of a final order from the Federal Communications Commission relating to the transfer of the FCC License, the Contributors will contribute the relevant assets of the Station (the “Station Assets”) and the FCC License pursuant to certain contribution agreements entered into in connection with the Participation Agreement.  Upon the contribution of the Station Assets, the Financing Subsidiary and the License Subsidiary will issue the Note.  In connection with the financing of the Station Assets by the Financing Subsidiary, Emmis will agree to act as manager of the Station Assets and provide certain indemnities pursuant to a management agreement entered into in connection with the Participation Agreement.  The funding of the Note is subject to certain conditions and is expected to occur on or about May 31, 2012.

This summary of terms of the Participation Agreement is not complete and is qualified in its entirety by the terms and conditions of the Participation Agreement, which is filed with this report as Exhibit 10.2.
 
 
 
 
 

Asset Purchase Agreement

On April 5, 2012, certain of the Contributors entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) with YMF Media LLC (the “Purchaser”).  Yucaipa Corporate Initiatives Fund II, L.P., Yucaipa Corporate Initiatives (Parallel) Fund II, L.P., Fortress Credit Funding I, LP., Drawbridge Special Opportunities Fund Ltd. and CF ICBC LLC agreed to guarantee certain obligations of the Purchaser under the Asset Purchase Agreement.

Pursuant to the Asset Purchase Agreement, the Contributors agreed to sell certain intellectual property rights to the Purchaser, and the Purchaser agreed to also assume certain liabilities of the Contributors, in the event the Contributors commence broadcasting ESPN programming on the Station under a Local Programming and Marketing Agreement (as described above).  The purchase price is $10,000,000 (payable on the earlier of the consummation of the disposition of KBLX-FM, 102.9FM, Berkeley, CA, or  December 31, 2012), plus quarterly earn-out payments, if any, equal to 15% of the incremental gross revenue over a three-year period in excess of calendar 2011 gross revenues attributable to radio station WBLS(FM), 107.5FM, New York, NY.   The assets that will be sold to the Purchaser include intellectual property rights used or held for use by the Contributors exclusively in the business or operation of the Station, and all assignable registrations, applications, renewals, issuances, extensions, restorations and reversions for, in respect of or relating to the Intellectual Property.  The Asset Purchase Agreement contains customary representations, warranties, covenants and indemnities. 

The transactions contemplated by the Asset Purchase Agreement become effective on May 7, 2012, which is the fifth business day (or earlier if mutually agreed by the parties to the Asset Purchase Agreement) following the date on which the Contributors will commence broadcasting on the Station under a Local Programming and Marketing Agreement (as described above), subject to certain conditions.

This summary of terms of the Asset Purchase Agreement is not complete and is qualified in its entirety by the terms and conditions of the Asset Purchase Agreement, which is filed with this report as Exhibit 10.3.

Item 7.01.   Regulation FD Disclosure.

On April 26, 2012, Emmis issued a press release announcing the transactions described above. A copy of the press release is furnished herewith as Exhibit 99.1.
 
The following table summarizes certain operating results for the Station for the three years ended February 29, 2012:
 
               
All numbers in 000’s.
 
 
For the year ended February 28 (29),
 
   
2010
 
2011
 
2012
 
       
a
 
a
 
Net revenues
 
$        16,621
 
$        14,510
 
$        11,276
 
Station operating expenses, excluding depreciation and amortization expense
 
                    10,062
 
                      9,481
 
                    10,279
 
Restructuring charge
 
                         236
 
                            -
 
                            -
 
Depreciation and amortization
 
                         125
 
                         125
 
                         125
 
Impairment loss
 
                      9,193
 
                            -
 
                            -
 
Operating income (loss)
 
                     (2,995)
 
                      4,904
 
                         872
 
 
 
 
 
 

 
Item 8.01.   Other Events.

Sixth Amendment to Credit Agreement

On April 26, 2012, Emmis and certain of its subsidiaries entered into an amendment of their senior secured credit facility to allow for the entry into the agreements and consummation of the transactions described above.

This summary of terms of the amendment is not complete and is qualified in its entirety by the terms and conditions of the agreement.

Second Amendment to Note Purchase Agreement

On April 26, 2012, Emmis entered into an amendment of the Note Purchase Agreement with Zell Credit Opportunities Master Fund, L.P. to allow for the entry into the agreements and consummation of the transactions described above.

This summary of terms of the amendment is not complete and is qualified in its entirety by the terms and conditions of the agreement.

Item 9.01.   Financial Statements and Exhibits.

(d)  Exhibits
 
Exhibit
Description
 
10.1
Local Programming and Marketing Agreement, dated as of April 26, 2012, between Emmis Radio License Corporation of New York and New York AM Radio, LLC.
 
10.2
Participation Agreement, dated as of April 26, 2012, among Emmis New York Radio LLC, Emmis New York Radio License LLC, Wells Fargo Bank Northwest, National Association and Teachers Insurance and Annuity Association of America.
 
10.3
Asset Purchase Agreement, dated as of April 5, 2012, among Emmis Radio, LLC, Emmis Radio License Corporation of New York, YMF Media LLC and certain other parties thereto.
 
99.1
Press Release dated April 26, 2012 of Emmis Communications Corporation.
 
Note: Certain statements included in this Report on Form 8-K which are not statements of historical fact, including but not limited to those identified with the words “expect,” “will” or “look” are intended to be, and are, by this Note, identified as “forward-looking statements,” as defined in the Securities and Exchange Act of 1934, as amended. Such statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to be materially different from any future result, performance or achievement expressed or implied by such forward-looking statement. Such factors include, among others:
• general economic and business conditions;
• fluctuations in the demand for advertising and demand for different types of advertising media;
• our ability to service our outstanding debt;
• increased competition in our markets and the broadcasting industry;
• our ability to attract and secure programming, on-air talent, writers and photographers;
• inability to obtain (or to obtain timely) necessary approvals for purchase or sale transactions or to complete the transactions for other reasons generally beyond our control;
• increases in the costs of programming, including on-air talent;
• inability to grow through suitable acquisitions;
 
 
 
 
 
 
 
• changes in audience measurement systems
• new or changing regulations of the Federal Communications Commission or other governmental agencies;
• competition from new or different technologies;
• war, terrorist acts or political instability; and
• other factors mentioned in documents filed by the Company with the Securities and Exchange Commission.

Emmis does not undertake any obligation to publicly update or revise any forward-looking statements because of new information, future events or otherwise.
 
 
 
 

SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report on Form 8-K to be signed on its behalf by the undersigned, thereunto duly authorized.
 
Dated:  April 26, 2012
 
 
EMMIS COMMUNICATIONS
CORPORATION
 
       
 
By:
/s/ J. Scott Enright  
    Name:  J. Scott Enright  
    Title:    Executive Vice President,
             General Counsel and Secretary
  		 
       
 

 
 
 

INDEX TO EXHIBITS
 
 
Exhibit
Description
 
 
 
 
 

 
EXHIBIT 10.1
 

LOCAL PROGRAMMING AND MARKETING AGREEMENT


THIS LOCAL PROGRAMMING AND MARKETING AGREEMENT (this “Agreement”) is made as of April 26, 2012 between Emmis Radio License Corporation of New York, a California corporation (“Licensee”) and New York AM Radio, LLC, a Delaware limited liability company (“Programmer”) that is a wholly-owned subsidiary of Disney Enterprises, Inc. (“Guarantor”).
 
Recitals
 
A.           Licensee owns and operates the following radio station, including all subcarrier, data, audio and auxiliary services, (the “Station”) pursuant to a license issued by the Federal Communications Commission (“FCC”):
 
WRKS-FM (98.7 FM), New York, New York, including all HD subcarrier, data, audio and auxiliary services

B.           Licensee desires to obtain programming for the Station, and Programmer desires to provide programming for broadcast on the Station on the terms set forth in this Agreement.

Agreement
 
NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties, intending to be legally bound, hereby agree as follows:
 
 
1.            Term .  The term of this Agreement (the “Term”) will begin on April 30, 2012 and will continue until August 31, 2024 subject to renewal of the Station’s FCC license, which currently has a June 1, 2014 expiration date, and for which Licensee shall timely file and prosecute all license renewal applications that are required to be filed during the Term.  Licensee shall also file and prosecute any other FCC applications necessary for the full and effective operation of the Station.
 
2.            Programming .  During the Term, Programmer shall purchase from Licensee the airtime of the Station for the price and on the terms specified below, and shall transmit to Licensee programming (audio and date) that it produces or owns (the “ Programs ”) for broadcast on the Station twenty-four (24) hours per day, seven (7) days per week.  Licensee may, at its sole discretion upon reasonable notice to Programmer, and without limitation of Licensee’s rights under Section 6 hereof, provide two (2) hours of programming during the period from 1:00 a.m. to 6:00 a.m. local time each Sunday morning (any such programming provided by Licensee, being the “ Licensee Programming ”).  Programmer will supply the Programs at its own cost to the Station’s facilities in a manner that meets technical and quality standards at least equal to those of the Station’s broadcasts prior to commencement of the Term and as detailed below in Section 3 hereof.
 
 
 
 
 
 
3.            Broadcasting/Signal Delivery/Access to Studio and Transmitter Site(s) .
 
(a)           Subject to the provisions of Sections 2 and 6 hereof, during the Term, Licensee shall make available to Programmer the entire programming capacity of the Station for the broadcast of Programs.
 
(b)           The Programs shall originate from Programmer’s own studios or from other studios contracted for and paid for solely by Programmer. Programmer will transmit the Programs to Licensee’s studio as well as to Licensee’s main transmitter location at the Empire State Building via one backup feed, at Programmer’s expense, via a mode of transmission (e.g., satellite facilities, microwave facilities and/or telephone lines) that will ensure that the Programs’ transmission signals meet technical and quality standards substantially equal to those of the Station’s broadcasts prior to the commencement of the Term but in no event lower than the standards required at any time during the Term by the FCC Rules.  Programmer shall provide, at its expense, one or more of the following:  T1 line, ISDN, microwave T1, phone line, or IP link between its studio used to perform this Agreement and Licensee’s main studio location (currently located at 395 Hudson Street, New York, New York 10014).  Programmer shall provide the Programs consistent with FCC Rules and regulations. Licensee will make available space at the studio site, for one dedicated broadcast equipment rack (or its equivalent) along with two separate electrical circuits. This equipment rack will house Programmer’s equipment and will serve as the primary handoff point for the Programs. The secondary handoff point will be a direct connection to the Licensee’s main (Empire State Building) transmitter site via the above listed connection methods.  Licensee shall provide 24 hours a day, seven days per week access to Programmer’s equipment rack (accompanied by Licensee) for routine inspection, service and upgrades upon reasonable advance notice to Licensee.  Licensee shall provide (at the location of Programmer’s rack) access to common telephony services.  Licensee shall provide 24 hours, seven days per week required telemetry to indicate the Station’s real time total RF input via through-line, RF power monitor (which includes IP communication to Programmer) to the Master FM Antenna and associated data (for monitoring purposes only), at Licensee’s sole cost and expense.  Programmer shall have the option to adjust audio processing, stereo encoder, HD encoder at either the Licensee’s studio and/or transmitter, accompanied by Licensee upon reasonable advance notice to Licensee.  Licensee shall provide to Programmer off air confidence feeds (at the studio handoff point) of the main analog channel, HD1, HD2, and HD3.  Licensee shall, in connection with the discharge of its responsibilities hereunder continue to take all commercially reasonable actions under the rules and regulations of the FCC to protect the Station’s service areas from interference caused by signals from other stations and other sources and to keep the Station’s technical facilities in good working order and repair.
 
4.            Advertising .  During the Term, Programmer will be exclusively responsible for the sale of advertising on the Station and for the collection of accounts receivable arising therefrom, and Programmer shall be entitled to all such collections, and to all other broadcast revenues generated by the Station, including on-line advertising and other website related
 
 
 
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revenues, but not any tower revenue.  Programmer shall ensure that its contracts for advertising and programming on the Station terminate upon termination or expiration of this Agreement.
 
5.            Payments; Guaranty .
 
(a)           For the broadcast of the Programs and the other benefits made available to Programmer pursuant to this Agreement, during the Term, Programmer will pay Licensee as set forth on Schedule A attached hereto.
 
(b)           As of the date hereof, Guarantor shall enter into a Guaranty in the form of Schedule B hereto.  Upon request by Licensee, Programmer will provide the most recent available audited annual balance sheet, income statement and statement of cash flows of Guarantor calculated in accordance with United States generally-accepted accounting principles.  Licensee agrees to treat these financial statements as confidential information and to not share with third parties without a non-disclosure agreement (which confidentiality provisions may be set forth in an agreement assigning Licensee’s rights under this Agreement to an affiliate or a financing party (including the successors and/or assigns of any such financing party)); provided, however, no such non-disclosure requirement shall be required for the regulators and auditors of parties to which these financial statements are provided.
 
6.            Control .
 
(a)           Notwithstanding anything to the contrary in this Agreement, Licensee shall have full authority, power and control over the operation of the Station and over all persons working at the Station during the Term and shall be responsible for controlling the day-to-day operations of the Station in conformance with all FCC licenses and permits, and nothing contained in this Agreement shall be construed to prevent or hinder the Licensee from retaining full and complete control over the Station, including, but not limited to, control of its finances, personnel and programming.  Without limiting the generality of the foregoing, Licensee will: (1) employ a manager for the Station, who will report to Licensee and will direct the day-to-day operations of the Station, and who shall have no employment, consulting or other relationship with Programmer, (2) employ a second employee for the Station, who will report and be solely accountable to Licensee’s manager, and (3) retain control over the policies, programming and operations of the Station.
 
(b)           Nothing contained herein shall prevent Licensee from (i) rejecting or refusing programs or advertisements which Licensee in good faith believes to be contrary to the public interest, or (ii) substituting programs which Licensee in good faith believes to be of greater local or national importance or which are designed to address the problems, needs and interests of the local communities.  Without limiting the preceding sentence, Licensee reserve the right to (i) refuse to broadcast any Program containing matter which violates any right of any third party or which does not meet the requirements of the rules, regulations, and policies of the FCC, (ii) preempt any Program in the event of a local, state, or national emergency, or (iii) delete any commercial announcements that do not comply with the requirements of the FCC’s sponsorship identification policy.  Notwithstanding the foregoing, Licensee shall not exercise
 
 
 
3
 
 
their rights under this Section 6(b) for commercial advantage.  Programmer may elect to terminate this Agreement within fifteen (15) days after the end of any calendar month during which Licensee preempts or substitutes other programming for Programs supplied by Programmer during one percent (1%) or more of the total hours of Programmer programming on the Station during such calendar month (excluding Licensee Programming) by giving Licensee thirty (30) days advance notice and paying Licensee the applicable Annual Fee prorated through the termination date.
 
(c)           Programmer shall cooperate with Licensee to ensure that Emergency Alert System (“EAS”) transmissions are properly performed in accordance with Licensee’s instructions.  Licensee shall ensure that all required EAS tests shall be coordinated with the Programming in an effort not to interrupt content in compliance with all FCC Rules.   Programmer will immediately serve Licensee with notice and a copy of any letters of complaint it receives concerning any Program for review by Licensee and inclusion in the Station’s public inspection file.
 
7.            Programs .
 
(a)           Programmer shall ensure that the contents of the Programs conform to all FCC rules, regulations and policies and other applicable law, rules and regulations.  Programmer shall consult with Licensee in the selection of the Programs to ensure that the Programs’ content contains matters responsive to issues of public concern in the local communities, as those issues are made known to Programmer by Licensee.  Upon request by Licensee, Programmer shall provide to Licensee a list of significant community issues addressed in the Programs during the preceding quarter and the specific Programs that addressed such issues.
 
(b)           Licensee shall oversee and take ultimate responsibility with respect to the provision of equal opportunities, lowest unit charge, and reasonable access to political candidates, and compliance with the political broadcast rules of the FCC.  During the Term, Programmer shall cooperate with Licensee as Licensee complies with its political broadcast responsibilities, and shall supply such information promptly to Licensee as may be necessary to comply with the political time record keeping and lowest unit charge requirements of federal law. Programmer shall release advertising availabilities to Licensee as necessary to permit Licensee to comply with the political broadcast rules of the FCC; provided, however, that revenues received by Licensee as a result of any such release of advertising time shall promptly be remitted to Programmer.
 
(c)           During the Term, subject to Section 5 , Licensee and Programmer will maintain music licenses with respect to the Station and the Programs, as appropriate.
 
8.            Expenses and Contracts .
 
(a)           During the Term, Programmer will be responsible for (i) the salaries, taxes, insurance and other costs for all personnel employed by Programmer used in production of the Programs, and (ii) the costs of delivering the Programs to Licensee,.  Subject to Section 5 ,
 
 
 
4
 
 
Licensee will pay for its employees contemplated by Section 6 , maintenance of all transmitter equipment and all other operating costs required to be paid to maintain the Station’s broadcast operations in accordance with FCC rules and policies and applicable law.  Subject to Section 5 , Licensee will also pay for all utilities supplied to transmitter site(s).
 
(b)           Outside of the Payments detailed in Section 5, the expenses detailed in this Agreement, Programmer will not be responsible for any additional payments to Licensee or direct expenses related to execution of this Agreement.
 
9.            Format and Call Sign .  The Programs shall consist of a sports format.  During the Term, Licensee will retain all rights to the call letters of the Station or any other call letters which may be assigned by the FCC for use by the Station, hereby licenses to Programmer the right to use the call letters and will ensure that proper station identification announcements are made with such call letters in accordance with FCC rules and regulations.  Programmer shall include in the Programs an announcement at the beginning of each hour of such Programs to identify such call letters, as well as any other announcements required by the rules and regulations of the FCC.
 
10.          Facilities .
 
(a)            Normal Operations .  During the Term, Licensee shall maintain and operate the Station’s transmission facilities consistent with its practices at other radio stations owned and operated by Licensee and its affiliates.  Subject to Section 10(b) below, no failure to broadcast or deliver the Programs due to facility damage, repair or maintenance or due to any reason outside either party’s reasonable control shall be deemed a failure by either party to comply with this Agreement.  Licensee shall replace its existing primary transmitter site (currently Empire State Building) analog and digital transmitters and studio transmitter links with new transmitters and links prior to the beginning of Contract Year six (6). Licensee shall cooperate with Programmer to provide commercially reasonable remote access to monitor the new transmitters..  Additionally, Licensee agrees to make appropriate upgrades to equipment as mutually agreed to maintain industry standards.
 
(b)            Interruption of Normal Operations .   If during the Term, the Station suffers any loss or damage of any nature to its main transmission facilities which results in the interruption of service or the inability of the Station to operate with its maximum authorized facilities (including downtime occasioned by routine maintenance not to exceed two (2) hours per month between 12:30 a.m. and 5:00 a.m. local time), Licensee shall promptly notify Programmer, and Licensee shall undertake such repairs as are necessary to restore full-time operation of the Station with its maximum authorized facilities (from the Empire State Building) as expeditiously as possible following the occurrence of any such loss or damage.  In the event that the Station is Off-Air (as defined below) due to a technical problem  for more than an aggregate of ten (10) hours in any calendar month (“Allowable Off-Air Time”) during the Term, the Annual Fee payable to the Licensee pursuant to Section 5 hereof shall be reduced in the amount equal to Ten Thousand Dollars ($10,000) per hour for each hour or part thereof in excess of the monthly Allowable Off-Air Time during which the Station is Off-Air (the “Off-Air
 
 
 
5
 
 
 
Proration”).  For the purposes of this Section 10(b) , the term “Off-Air” shall mean (i) failure to operate/broadcast the Programs   due to a technical problem not caused by Programmer or (ii), after 24 hours of such operation, operation at the Empire State Building ERI Master FM antenna at less than seventy five percent (75%) of its FCC licensed Empire State Building ERI Master FM antenna input power parameters   .  Notwithstanding the foregoing, in the event that broadcast of the Programs from the Empire State Building ERI Master FM antenna is rendered impossible by a Force Majeure Event, as long as Licensee broadcasts from its West Orange, New Jersey auxiliary antenna (or its broadcast equivalent) at an effective radiated power of 26.55 kilowatts, (x) the Off-Air Proration shall not apply, (y) the Term shall be extended on a day-for-day basis at no additional fee, and (z) Programmer shall continue to pay the fees set forth in Schedule A in the amounts and at the times set forth herein.  If  Programmer or any of its agents or employees cause any damages to any of the Station facilities, Programmer shall promptly provide Licensee with notice of such damage and shall repair such damage at Programmer’s expense or shall reimburse Licensee for the cost of repairing any such damage, and any time during which the Station is Off-Air due to damage caused by Programmer or any of its agents or employees shall not be counted against Licensee’s Allowable Off-Air Time or be subject to a reduction in the Annual Fee.  “Force Majeure Event” means any event beyond the affected party's reasonable control prohibiting broadcasts from the Empire State Building, including, without limitation: (a) acts of God; (b) flood, fire, or earthquake; (c) war, invasion, hostilities (whether war is declared or not), terrorist threats or acts, riot or other civil unrest; (d) government order or law; or (e) action by any governmental authority; (g) national or regional emergency.
 
11.          Representations .  Programmer and Licensee each represent and warrant to the other that (i) it has the power and authority to enter into this Agreement and to consummate the transactions contemplated hereby, (ii) it is in good standing in the jurisdiction of its organization and is qualified to do business in all jurisdictions where the nature of its business requires such qualification, (iii) it has duly authorized this Agreement, and this Agreement is binding upon it, and (iv) the execution, delivery, and performance by it of this Agreement does not conflict with, result in a breach of, or constitute a default or ground for termination under any agreement to which it is a party or by which it is bound.
 
12.          Termination .
 
(a)           This Agreement shall terminate as of 11:59 p.m. E.T. on August 30, 2024, unless earlier terminated in accordance herewith.
 
(b)           Licensee may terminate this Agreement upon written termination notice to Programmer if: (i) Programmer fails to timely make any payment when due under this Agreement; or (ii) there is a material default by Programmer under this Agreement, which is not cured within the Cure Period.  Programmer may terminate this Agreement upon written termination notice to Licensee if there is a material default by Licensee under this Agreement, which is not cured within the Cure Period.  Any such termination shall become effective upon expiration of the Cure Period.
 
 
 
6
 
 
(c)           The term “Cure Period” means a period commencing on the date the breaching party receives written notice from the other of a breach or default hereunder and continuing until the date thirty (30) calendar days thereafter except for a default in payment of the fees set forth in Schedule A for which the cure period shall be five (5) business days.  If this Agreement is terminated for any reason, the parties agree to cooperate with one another and to take all actions necessary to rescind this Agreement and return the parties to the status quo ante .
 
(d)           The parties’ obligations under Section 13 shall survive any termination of this Agreement or expiration of the Term.
 
13.          Indemnification .  Programmer shall indemnify and hold Licensee, its officers, directors, members, partners, affiliates and employees harmless against any and all loss, liability, cost and expense (including reasonable attorneys’ fees) arising from (i) the broadcast of the Programs on the Station, including without limitation all liability for indecency, libel, slander, illegal competition or trade practice, infringement of trademarks, trade names, or program titles, violation of rights of privacy, and infringement of copyrights and proprietary rights or any other violation of third party rights or FCC rules or other applicable law, or (ii) any material breach or default by Programmer under this Agreement.  Licensee shall indemnify and hold Programmer, its officers, directors, members, partners, affiliates and employees harmless against any and all loss, liability, cost and expense (including reasonable attorneys’ fees) arising from any material breach or default by Licensee under this Agreement.  Whenever any claim shall arise for indemnification hereunder, the party entitled to indemnification (the “ Indemnified Party ”) shall promptly provide written notice of such claim to the other party (the “ Indemnifying Party ”). In connection with any claim giving rise to indemnity hereunder resulting from or arising out of any claim, action, suit, proceeding or governmental investigation (“ Action ”) by a person or entity who is not a party to this Agreement, the Indemnifying Party, at its sole cost and expense and upon written notice to the Indemnified Party, may assume the defense of any such Action with counsel reasonably satisfactory to the Indemnified Party. The Indemnified Party shall be entitled to participate in the defense of any such Action, with its counsel and at its own cost and expense. If the Indemnifying Party does not assume the defense of any such Action, the Indemnified Party may, but shall not be obligated to, defend against such Action in such manner as it may deem appropriate, including, but not limited to, settling such Action, after giving notice of it to the Indemnifying Party, on such terms as the Indemnified Party may deem appropriate and no action taken by the Indemnified Party in accordance with such defense and settlement shall relieve the Indemnifying Party of its indemnification obligations herein provided with respect to any damages resulting therefrom. The Indemnifying Party shall not settle any Action without the Indemnified Party's prior written consent (which consent shall not be unreasonably withheld or delayed).
 
14.          Assignment and Pledging .
 
(a)           Licensee may transfer or assign this Agreement (directly or indirectly) to one of its commonly controlled entities or any successor-in-interest to Licensee with respect to
 
 
 
7
 
 
ownership of the Station and its FCC license, in its sole discretion.  For further clarity, Licensee shall not transfer the Station’s assets or FCC license unless Licensee assigns this Agreement to the transferee and the transferee agrees to assume Licensee’s obligations hereunder.  Licensee may pledge its rights under this Agreement as collateral for a secured financing.  In connection with such a pledge of this Agreement as collateral, Programmer hereby agrees to provide promptly upon Licensee’s request  an estoppel certificate in the form of Schedule C to this Agreement (to the extent the statements in such estoppel certificate are true and correct to Programmer’s knowledge) effective as of the date requested by Licensee.
 
(b)           Programmer may not assign this Agreement without the prior written consent of Licensee.  Notwithstanding the foregoing, Programmer shall be entitled to assign this Agreement to one of its commonly-controlled entities with an FCC license, provided that such affiliate agrees to assume all of Programmer’s obligations hereunder.
 
(c)           The terms of this Agreement shall bind and inure to the benefit of the parties’ respective successors and any permitted assigns, and no assignment shall relieve any party of any obligation or liability under this Agreement; provided, however, upon Licensee’s assignment of its rights and obligations under this Agreement to a commonly-controlled special purpose financing subsidiary in connection with an assignment of the Station’s FCC license and assets to that subsidiary, the assigning Licensee shall be fully relieved of its obligations hereunder.  Nothing in this Agreement expressed or implied is intended or shall be construed to give any rights to any person or entity other than the parties hereto and their successors and permitted assigns.

15.          Severability .  If this Agreement conflicts with FCC rules, regulations and policies in any material respect and the terms hereof can be modified so as to comply with such rules, regulations and policies without depriving either party of the benefits of this Agreement in any material respect, then the parties shall modify this Agreement in such manner.  In the event that the Agreement cannot be so modified, the parties agree to negotiate in good faith to attempt to modify the Agreement to accommodate the interests of both parties in compliance with FCC rules, regulations and policies.  The obligations of the parties under this Agreement are subject to the rules, regulations and policies of the FCC and all other applicable laws.  The parties agree that Licensee may file a copy of this Agreement with the FCC.

16.          Notice .  All notices, requests, consents and other communications, required or permitted to be given hereunder, shall be made in writing and shall be deemed to have been made as of: (a) the date that is the next date upon which an overnight delivery service (Federal Express or UPS only) will make such delivery, if sent via such overnight delivery service for next day delivery, postage prepaid, (b) the date such delivery is made, if delivered in person to the notice party specified below, or (c) the date such delivery is made, if delivered via email or facsimile, so long as such notice is also sent via overnight delivery service the same day.   Such notice shall be delivered as follows (or to such other or additional address as either party shall designate by notice in writing to the other in accordance herewith):
 
 
 
8
 

                       If to Licensee :
                      Emmis Radio License Corporation of New York
                      40 Monument Circle, Suite 700
                      Indianapolis, Indiana 46204
                      Attn: Legal Department
                      Email: legal@emmis.com

                       If to Programmer :
New York AM Radio Assets, LLC
77 West 66th Street
New York, New York 10023
Attn: Traug Keller / SVP Production Business Division
Email:  traug.f.keller@espn.com

with a copy (which shall not constitute notice) to:
                      ABC, Inc.
                      77 West 66th Street
                      New York, New York 10023
                      Facsimile Number:  (212) 456-6202
                      Attention:  Corporate Legal Department

17.          Miscellaneous .  This Agreement may be executed in separate counterparts, each of which will be deemed an original and all of which together will constitute one and the same agreement.  This Agreement may be executed by facsimile or electronically-delivered signature and a facsimile or electronically-delivered signature shall constitute an original for all purposes.  No amendment or waiver of compliance with any provision hereof or consent pursuant to this Agreement shall be effective unless evidenced by an instrument in writing signed by the party against whom enforcement of such amendment, waiver, or consent is sought.  This Agreement is not intended to be, and shall not be construed as, an agreement to form a partnership, agency relationship, or joint venture between the parties, or to afford any rights to any third party other than as expressly provided herein.  Neither party shall be authorized to act as an agent of or otherwise to represent the other party.  The construction and performance of this Agreement shall be governed by the laws of the State of New York without giving effect to the choice of law provisions thereof.  This Agreement (including Schedule A hereto) constitutes the entire agreement and understanding among the parties hereto with respect to the subject matter hereof, and supersedes all prior agreements and understandings with respect to the subject matter hereof.

18.          Certifications .  Licensee certifies that it maintains ultimate control over the Stations’ facilities including, specifically, control over the Stations’ finances, personnel and programming.  Programmer certifies that this Agreement complies with the provisions of 47 C.F.R. Sections 73.3555(a) and (c).
 
19.          Nondiscrimination .  In accordance with Paragraphs 49 and 50 of United States Federal Communications Commission Report and Order No. FCC 07-217, Programmer shall not discriminate in any contract for advertising on the Stations on the basis of race or gender, and all
 
 
 
9
 
 
such contracts shall be evaluated, negotiated and completed without regard to race or gender.  Programmer shall include a clause to such effect in all contracts for advertising on the Stations, and if requested shall provide written confirmation of compliance with such requirement.

20.          Exclusive Negotiations .  In the event Programmer gives Licensee notice of its desires to extend the Term of this Agreement, Licensee agrees to commence on or before the beginning of Year 10, good faith negotiations of the terms and provisions of such extension (an “Extension Agreement”) exclusively with Programmer. In the event the parties are unable to reach an Extension Agreement by twelve (12) months prior to the expiration of the Term, then Licensee may enter into negotiations with third parties to program the Station, provided that Licensee shall not enter into an agreement during the Term for a third party to program the Station that contains terms less advantageous to Licensee, taken as a whole, than those contained in Programmer’s proposal without first offering to enter into an Extension Agreement on the terms of such proposal.

[SIGNATURE PAGE FOLLOWS]
 
 
 
10
 

SIGNATURE PAGE TO LOCAL PROGRAMMING AND MARKETING AGREEMENT


           IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first set forth above.
 
PROGRAMMER: NEW YORK AM RADIO, LLC  
       
 
By:
/s/ Traug Keller  
    Name:  Traug Keller  
    Title:     Senior Vice President  
       

LICENSEE:
EMMIS RADIO LICENSE CORPORATION
OF NEW YORK
 
       
 
By:
/s/ Patrick M. Walsh  
    Name:  Patrick M. Walsh  
    Title:    EVP, COO & CFO   
       

 
 
EXHIBIT 10.2
 
PARTICIPATION AGREEMENT
 
 
PURCHASE OF PARTICIPATION INTERESTS
IN A PROMISSORY NOTE
 
 
PARTICIPANT:
TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA
 
 
 
 
_________________________________________________________
 
Dated as of April 26, 2012
 

 
 
 
 
 
Table of Contents

SECTION 1.
PROMISSORY NOTES AND SECURITY
1
     
     1.1.
Note
1
     
     1.2.
Security for the Note
1
     
SECTION 2.
PARTICIPATION INTERESTS, PASS-THROUGH CERTIFICATES
2
     
     2.1.
Sale of Participation Interests
2
     
     2.2.
Pass-Through Certificates
2
     
     2.3.
Rights of Participation
2
     
     2.4.
Fees of the Holder
2
     
SECTION 3.
CERTAIN DEFINITIONS
2
     
SECTION 4.
APPLICATION OF PROCEEDS
5
     
SECTION 5.
CLOSING AND FUNDING
6
     
SECTION 6.
CONDITIONS TO THE EFFECTIVENESS OF THIS AGREEMENT
6
     
     6.1.
Operative Documents
6
     
     6.2.
Taxes
6
     
     6.3.
[Intentionally Omitted]
6
     
     6.4.
Certificates
6
     
     6.5.
Evidence of Insurance
7
     
     6.6.
Governmental Approvals
7
     
     6.7.
Proceedings and Documents
7
     
     6.8.
Private Placement Number
7
     
     6.9.
Schedule D Eligibility
7
     
     6.10.
Confirmation Letter; Placement Agent Representation
8
     
SECTION 7.
CONDITIONS TO BE SATISFIED ON THE FUNDING DATE
8
     
     7.1.
Status of License and Licensee
8
     
     7.2.
Insurance
8
     
     7.3.
Assignment of LMA
8
     
     7.4.
Contribution Agreements
8
     
     7.5.
Consent of FCC to Assignment of Broadcast License
8
     
     7.6.
Insurance
8
     
     7.7.
Estoppel Certificate
8
     
 
 
 
i
 
 
 
Table of Contents
(continued)
Page
 
     7.8.
Sale of Pass-Through Certificates
8
     
     7.9.
Escrow of Required Reserve Funds
9
     
     7.10.
Payment of Special Counsel Fees
9
     
     7.11.
Title to Assets
9
     
     7.12.
Permitted Investment
9
     
     7.13.
Consummation Notice
9
     
     7.14.
Bring-Down Certificates
9
     
     7.15.
Opinions of Counsel
9
     
     7.16.
Assignment of all Leases
9
     
SECTION 8.
REPRESENTATIONS AND WARRANTIES OF THE HOLDER
9
     
     8.1.
Due Organization and Power
9
     
     8.2.
Governmental Authorization
10
     
     8.3.
Offering of the Pass-Through Certificates
10
     
     8.4.
Use of Proceeds
10
     
     8.5.
Authorization, Execution and Delivery of Pass-Through Certificates
10
     
     8.6.
Authorization, Execution and Delivery of Agreement and Operative Documents
10
     
     8.7.
Investment Company Act of 1940
10
     
     8.8.
Prohibited Transactions
11
     
SECTION 9.
REPRESENTATIONS AND WARRANTIES OF THE OBLIGORS
11
     
     9.1.
Due Organization and Power
11
     
     9.2.
Liabilities; Business
11
     
     9.3.
Litigation; Taxes
11
     
     9.4.
Compliance with Other Instruments
12
     
     9.5.
Governmental Authorization
12
     
     9.6.
Event of Default
12
     
     9.7.
Use of Proceeds
12
     
     9.8.
Offering of the Note
12
     
     9.9.
ERISA
13
     
     9.10.
Authorization, Execution and Delivery of Agreement and Operative Documents
13
     
 
 
 
ii
 
 
Table of Contents
(continued)
 
Page
 
     9.11.
Investment Company Act of 1940
13
     
     9.12.
Brokers
13
     
     9.13.
Written Materials
13
     
     9.14.
Debt Service Coverage Ratio
13
     
     9.15.
Title to Assets
13
     
     9.16.
Prohibited Transactions
14
     
     9.17.    
LMA Agreement and Guaranty
14
     
SECTION 10.
REPRESENTATIONS OF PARTICIPANT
14
     
     10.1.
Investment Representation
14
     
     10.2.
ERISA
15
     
     10.3.    
Broker
16
     
SECTION 11.
PAYMENT OF FEES AND EXPENSES
16
     
     11.1.
Fees and Expenses
16
     
     11.2.
Out-of-Pocket Expenses
17
     
     11.3.
Future Expenses
17
     
     11.4.
Brokers’ Fees and Stamp Taxes
17
     
     11.5.
Fees of Holder in Capacity as Trustee
17
     
SECTION 12.
SURVIVAL OF AGREEMENTS
18
     
SECTION 13.
NOTICES
18
     
SECTION 14.
HOME OFFICE PAYMENT
18
     
SECTION 15.
REPRODUCTION OF DOCUMENTS
18
     
SECTION 16.
MISCELLANEOUS
19
     
SECTION 17.
SUPPLEMENTAL PAYMENT
19
     
SECTION 18.
DISCLOSURE
20

 
 
 
iii
 
 

PARTICIPATION AGREEMENT
 
PURCHASE OF PARTICIPATION INTERESTS
IN A 4.10% PROMISSORY NOTE DUE 2024
 
Dated as of April 26, 2012
 
To Each Addressee Listed
on Schedule A Hereto
 
Ladies and Gentlemen:
 
Wells Fargo Bank Northwest, National Association, a national banking association, as trustee (the “ Holder ” or the “ Trustee ”), and the Maker identified in Section 1 below, intending to be legally bound, agree with you as set forth in this Agreement.  Any reference herein to a Section refers to a Section of this Agreement.
 
SECTION 1.   PROMISSORY NOTES AND SECURITY
 
1.1.   Note .   The Holder will be the payee under the Promissory Note substantially in the form of Exhibit A hereto, to be executed by Emmis New York Radio LLC, a Delaware limited liability company, (the “ Maker ”) and Emmis New York Radio License LLC, a Delaware limited liability company (“ Licensee ”; together with maker, collectedly called “ Obligors ”) to be dated as of the Funding Date, as hereinafter defined (“ Note ”) in the principal amount of $82,526,935.00.
 
1.2.   Security for the Note .   The Note is or will be secured by (a) a pledge agreement (the “ Equity Pledge Agreement ”), substantially in the form of Exhibit B hereto from Maker to Holder relating to 100% of the limited liability company interests in Licensee, (b) an assignment (the “ LMA Assignment ”) substantially in the form of Exhibit C hereto, from Maker to Holder assigning payments and rights under the Local Programming and Marketing Agreement (the “ LMA Agreement ”) dated as of April 26, 2012 between Emmis Radio License Corporation of New York (to be assigned to Maker on or before the Funding Date) and New York AM Radio, LLC (” Programmer ”) together with the guaranty thereof (“ Guaranty ”) by Disney Enterprises, Inc. (“ Guarantor ”), (c) a security interest in all assets of Obligors other than those subject to the Equity Pledge Agreement and the FCC License, including funds in the Reserves, all as more fully provided in a certain Security Agreement, to be dated as of the Closing Date substantially in the form of Exhibit D hereto, from Maker (the “ Security Agreement ”), and (d) an assignment of management agreement (the “ Assignment of Management Agreement ”) between Emmis Operating Company (“ Emmis ”), as manager and Licensee, as counterparty, substantially in the form of Exhibit E hereto (the “ Management Agreement ”). The indebtedness evidenced by the Note, together with all financial and other obligations of the Obligors under the Security Agreement, the Equity Pledge Agreement and the LMA Assignment securing payment of the Note, is hereinafter referred to as the “ Loan .”
 
 
 
 
 
 
SECTION 2.   PARTICIPATION INTERESTS, PASS-THROUGH CERTIFICATES
 
2.1.   Sale of Participation Interests .   Subject to the terms and conditions herein set forth, the Holder agrees to sell to you and you agree to purchase from the Holder a participation interest in the Loan at a price, payable in full on the Funding Date, equal to the amount set forth opposite your name on Schedule A hereto.
 
2.2.   Pass-Through Certificates .   Pursuant to and in accordance with the terms of that certain Declaration of Trust dated as of the Closing Date (the “ Declaration of Trust ”), the Holder, in its capacity as trustee under the Declaration of Trust, will execute and deliver to you on the Funding Date one Pass-Through Certificate (a “ Pass-Through Certificate ”) which evidences your purchase of a participation interest in the Loan to be funded on the Funding Date with the proceeds of the issuance of the Note.
 
2.3.   Rights of Participation .   The purchase of a Pass-Through Certificate entitles you to receive, upon actual payment of such funds by or on behalf of Maker, (a) the percentage ownership interest set forth in such Pass-Through Certificate multiplied by the principal portion of such payment on the Loan, (b) the percentage ownership interest set forth in such Pass-Through Certificate multiplied by the interest portion of such payment on the Loan, including any make-whole premiums, and (c) the percentage ownership interest set forth in such Pass-Through Certificate multiplied by the amount of any late fees, prepayment premiums or reserve charges paid pursuant to the Note, the Security Agreement, the Equity Pledge Agreement, the Assignment of Management Agreement  or the LMA Assignment related to the Loan.
 
2.4.   Fees of the Holder .   Notwithstanding the foregoing, the Holder has agreed to service and administer the Loan and to hold the Security Agreement, the Equity Pledge Agreement, the LMA Assignment, the Assignment of Management Agreement and the other collateral securing the Loan (the “ Collateral ”) in trust on your behalf. In its capacity as trustee under the Declaration of Trust, the Holder shall be entitled to receive, in the manner and in accordance with the priorities set forth in the Security Agreement, its fees and expenses for undertaking such obligations related to the Loan, which fees and expenses are more fully described in Section 10.5 hereof.
 
SECTION 3.   CERTAIN DEFINITIONS
 
Capitalized terms not elsewhere defined herein shall have the meanings set forth in this Section 3.
 
“ Annual Fee ” has the meaning specified in the LMA Agreement.
 
“ Assignment of Management Agreement ” has the meaning specified in Section 1.
 
“ Back-Up Transmitter Lease ” means the lease agreement dated June 15, 2000 between Mountaintop Communications, L.L.C., as landlord, and Licensee (as assignee of  Emmis Communications Corporation), as tenant, relating to Licensee’s right to use certain space in West Orange, New Jersey as a back-up transmitter site.
 
 
 
2
 
 
“ Business Day ” means any weekday except a day on which banking institutions in New York or Utah are authorized by law to be closed.
 
“ Casualty Gap Policy ” means the an insurance policy naming Holder as the insured, to be issued on the Funding Date and (i) in form and substance reasonably satisfactory to Participant, (ii) issued by an insurer reasonably acceptable to Participant, (iii) having a limit of liability not less than the original principal amount of the Note, and (iv) payable in the event of certain casualties involving either the transmitter or back-up transmitter sites maintained by or on behalf of Maker.
 
“ Closing ” has the meaning specified in Section 5.
 
“ Closing Date ” means April 26, 2012.
 
“ Code ” means the Internal Revenue Code of 1986, as amended.
 
“ Collateral ” has the meaning specified in Section 2.
 
“ Consent and Release ” means the Release of Security Interest, to be dated the Funding Date, substantially in the form of Schedule B hereto.
 
“ Contribution Agreement ” means that certain WRKS Contribution Agreement by and between Emmis New York and Maker, dated the date hereof, providing for the contribution of certain assets of Emmis New York to Maker as a capital contribution.
 
“ Declaration of Trust ” has the meaning specified in Section 2.
 
“ Eagle 9 Policy ” means the policy insuring the perfection and priority of the security interest created by the Equity Pledge Agreement.
 
“ Emmis ” has the meaning specified in Section 1.
 
“ Emmis New York ” means Emmis Radio License Corporation of New York.
 
“ Equity Pledge Agreement ” means the pledge and security agreement by Maker to the Trustee, dated the date hereof, and relating to the equity interests in Licensee.
 
“ Estoppel Certificate ” means the certificate of Emmis and Guarantor substantially in the form attached to the LMA Agreement.
 
“ Event of Default ” has the meaning specified in Section 6.1 of the Security Agreement.
 
“ ERISA ” means the Employee Retirement Income Security Act of 1974 and the regulations adopted pursuant thereto.
 
“ FCC ” has the meaning specified in Section 7.15.
 
“ FCC License ” has the meaning specified in Section 7.1.
 
 
 
3
 
 
“ Funding Date ” has the meaning specified in Section 7.
 
“ Governmental Authority ” means
 
(a)   the government of
 
(i)   the United States of America or any State or other political subdivision thereof, or
 
(ii)   any jurisdiction in which a Maker conducts all or any part of its business, or which asserts jurisdiction over the Property, or
 
(b)   any entity exercising executive, legislative, judicial, regulatory or administrative functions of, or pertaining to, any such government.
 
“ Guarantor ” has the meaning specified in Section 1.
 
“ Guaranty ” means the guaranty of the LMA Agreement made by the Guarantor.
 
“ Holder ” has the meaning specified in the introductory paragraph of this Agreement.
 
“ Investment Company Act ” has the meaning specified in Section 8.7.
 
“ License Contribution Agreement ” means that certain WRKS License Contribution Agreement by and between Maker and Licensee, providing for the contribution of certain assets of Maker to Licensee as a capital contribution.
 
“ Licensee ” has the meaning specified in Section 1.
 
“ LMA Agreement ” has the meaning specified in Section 1.
 
“ Loan ” has the meaning specified in Section 1.
 
“ Management Agreement ” has the meaning specified in Section 1.
 
“ Maker ” has the meaning specified in Section 1.
 
“ Maturity Date ” has the meaning specified in the Note.
 
“ NAIC ” means the National Association of Insurance Commissioners.
 
“ NAIC Annual Statement ” has the meaning specified in Section 10.2(i)
 
“ Note ” has the meaning specified in Section 1.
 
“ Operative Documents ” means the Note, the LMA Agreement, the Guaranty, the Equity Pledge Agreement, the LMA Assignment, the Management Agreement, the Assignment of Management Agreement, the Estoppel Certificate, the Security Agreement, the Space Lease, the Back-Up Transmitter Lease, the Casualty Gap Policy, the Eagle 9 Policy, the Declaration of
 
 
 
4
 
 
Trust any other instrument or agreement entered into or executed in connection with the making of the Loan, together with the Pass-Through Certificates evidencing a participation interest in the Loan.
 
“ Pass-Through Certificates ” has the meaning specified in Section 2.2.
 
“ Participant ” means Teachers Insurance and Annuity Association of America and its successors and assigns hereunder or as holders of Pass-Through Certificates.
 
“ Permitted Encumbrance s” means all statutory liens of landlords and carriers, warehousemen, mechanics, materialmen and other like liens arising in the ordinary course of business for which payment is not delinquent and which are not being foreclosed upon; liens incurred on deposits in the ordinary course of business in connection with workers compensation, unemployment insurance and other types of employment related programs; liens incurred on deposits to secure the performance of bids, trade contracts, leases, statutory obligations, surety and appeal bonds, government contracts, tenders, performance bonds and the lien of taxes not yet due and payable.
 
“ Programmer ” has the meaning specified in Section 1.
 
“ Reserves ” means the Capital Expense Reserve, the Operating Expense Reserve, the FCC License Renewal Reserve, the Replacement Transmitter Reserve and the Excess Cash Flow Reserve, each as defined in the Security Agreement.
 
“ Securities Act ” means the Securities Act of 1933, as amended.
 
“ Security Agreement ” has the meaning specified in Section 1.
 
“ Space Lease ” means, collectively, (a) the lease dated May 1, 1984, as amended, between Empire State Building Company (as predecessor to Empire State Building Company L.L.C.), as landlord, and Licensee (as assignee of Emmis Radio, LLC (as successor to RKO General, Inc.)), as tenant, relating to Licensee’s right to use certain transmitter tower space in the Empire State Building, and (b) the lease and license agreement dated November 7, 2003 between Empire State Building Company L.L.C., as landlord, and Emmis Radio Corporation, as tenant, as subleased by Licensee from Emmis Radio Corporation, relating to Licensee’s right to use certain transmitter equipment room space in the Empire State Building.
 
“ Station ” has the meaning specified in Section 7.1
 
“ Underwritten DSCR Requirement ” has the meaning specified in Section 9.14.
 
SECTION 4.   APPLICATION OF PROCEEDS
 
The proceeds from your purchase of the Pass-Through Certificates will be used to make the Loan to the Maker. Maker will use the proceeds of the Loan to pay a dividend to direct and indirect parent entities of Maker for debt reduction of such entities and for general corporate purposes of such entities.
 
 
 
5
 
 
SECTION 5.   CLOSING AND FUNDING
 
The sale and purchase of the Pass-Through Certificate shall take place through escrow on the Funding Date. On the Funding Date, the Holder will deliver to you or your designee the Pass-Through Certificates, registered in your name or in the name or names of one or more other persons, all as you may designate, against payment of the purchase price therefor in federal or other immediately available funds to or upon the order of the Holder. The purchase price payable on the Funding Date shall be $ 82,526,935.00 . The Holder’s and Makers’ payment instructions shall be delivered to you in writing at least three (3) business days prior to the Closing Date. If, on the Funding Date, the Pass-Through Certificates are not tendered to you or your designee, or if the conditions specified in Sections 6 and 7 of this Agreement shall not have been fulfilled to your satisfaction, you shall have the option to be relieved of your obligations hereunder without relinquishing any rights you may have against any other party hereto.
 
SECTION 6.   CONDITIONS TO THE EFFECTIVENESS OF THIS AGREEMENT
 
Your obligation to enter into this Agreement is subject to (a) the accuracy and correctness on the Closing Date of the representations and warranties of Maker contained herein and in the Operative Documents and in any written materials prepared or provided by Maker, Emmis or Licensee in connection with the transactions contemplated herein, (b) the accuracy and correctness on the Closing Date of the representations and warranties of Maker, Licensee or Emmis contained in any certificate or Operative Document delivered pursuant hereto to which they are a party, (c) the performance by the Holder of its agreements contained herein to be performed by it on or prior to the Closing Date, and (d) the satisfaction of all of the following conditions on or prior to the Closing Date each satisfactory in form and substance to you.
 
6.1.   Operative Documents .   On the Closing Date, each of the Operative Documents (other than the Eagle 9 Policy, the Casualty Gap Policy and the Estoppel Certificate) shall have been duly authorized, executed and delivered by the parties thereto, shall be in full force and effect, without modifications thereto not otherwise consented to by you, and no default shall exist thereunder, and your special counsel shall have received a fully executed copy of each Operative Document other than the Note, which shall be held by the Holder, and the Pass-Through Certificates, which shall be delivered to you on the Funding Date.  In addition, the Operative Documents and any financing statements under the Uniform Commercial Code shall have been delivered to your special counsel in contemplation of recordation, registration and filing, if necessary.
 
6.2.   Taxes .   All taxes, fees and other charges in connection with the execution, delivery, recording, filing and registration of this Agreement, the Pass-Through Certificates and the Operative Documents shall have been paid.
 
6.3.   [ Intentionally Omitted ].  
 
6.4.   Certificates .   You and your special counsel shall have received (a) from Obligors, certificates certifying that all of the representations made by it in this Agreement and all of the Operative Documents to which Maker or Licensee is a party are true and correct as of the date of delivery hereof; (b) from the Holder, a certificate certifying that (x) it is duly authorized under
 
 
 
6
 
 
 
applicable law and attaching its articles of organization and its by-laws to undertake its obligations as contemplated by this Agreement and the Operative Documents to which it is a party, (y) all corporate action, necessary or required therefor has been duly and effectively taken or obtained by it, and (z) each of this Agreement and each of the Operative Documents to which it is party is a legal, valid and binding obligation of the Holder enforceable in accordance with its respective terms; and (c)  such other certificates addressing such matters as you reasonably request.
 
6.5.   Evidence of Insurance .   Maker shall have obtained commercial general liability and special form property insurance as required by the Security Agreement, and provided certificates thereof, satisfactory in form and substance to you.
 
6.6.   Governmental Approvals .   On the Closing Date, all necessary approvals, authorizations and consents, if any, of all governmental bodies (including courts) having jurisdiction with respect to the assets of Licensee or Maker, the Holder or the Programmer, with respect to the transactions herein contemplated shall have been obtained and shall have become irrevocable, except that the FCC grant of consent to the transfer of the FCC License to Licensee shall not have become final.
 
6.7.   Proceedings and Documents .   All opinions, certificates and other instruments and all proceedings in connection with the transactions contemplated by this Agreement shall be satisfactory in form and substance to you and your special counsel.  You shall have received copies of all instruments and other evidence and documents as you may reasonably request, in form and substance reasonably satisfactory to you and your special counsel, related  to such transactions and the taking of all corporate, limited liability company or partnership proceedings in connection therewith.  If any provision of this Agreement or any Operative Document requires the certification, representation or warranty of the existence or nonexistence of any particular fact or implies as a condition the existence or nonexistence of such fact, then you shall be free to require the establishment to your satisfaction of the existence or nonexistence of any such fact.
 
6.8.   Private Placement Number .   Standard & Poor’s Corporation CUSIP Service Bureau shall have assigned a “private placement number” to the Pass-Through Certificates.
 
6.9.   Schedule D Eligibility .   Teachers Insurance and Annuity Association of America is applying to the NAIC for an advance determination that the Pass-Through Certificates will qualify as Schedule D assets. The Maker and the Holder shall have entered into any documents or otherwise cooperated with any request by you or your special counsel which is reasonably necessary to ensure that the subject transaction shall be eligible for “Schedule D” reporting on your NAIC Annual Statement and, if the NAIC determines that the subject transaction is not eligible for such “Schedule D” reporting, Maker and the Holder will cooperate with any request by you or your counsel which is reasonably necessary to obtain such eligibility, provided however, such cooperation shall not extend to the expenditure of money by Maker or the Holder or obligate Maker or the Holder to deposit, escrow or reserve money, nor obligate the Maker or the Holder to execute any amendment, document or other instrument or incur any additional or greater liability other than de minimis expense in connection with such cooperation.
 
 
 
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6.10.   Confirmation Letter; Placement Agent Representation .  You and your special counsel shall have received a letter from Moelis & Co. LLC confirming the representation of Holder set forth in Section 8.3 regarding the number and character of offerees of the Note and Pass-Through Certificate.
 
SECTION 7.   CONDITIONS TO BE SATISFIED ON THE FUNDING DATE
 
Your obligation to purchase the Pass-Through Certificate is subject to the satisfaction of all of the following conditions on or prior to the date (such date not to be later than July 1, 2012, on which such date you shall have the option to be relieved of your obligations hereunder without relinquishing any rights you may have against any other party hereto) on which such purchase is to occur (the “ Funding Date ”), each satisfactory in form and substance to you.
 
7.1.   Status of License and Licensee.     Licensee shall be a wholly owned subsidiary of Maker. The FCC license (the “ FCC License ”) entitling Licensee to operate its radio station (the “ Station ”) shall be in full force and effect and the FCC consent to the transfer of the FCC License to Licensee shall have become final, as described in Section 7.5 below.
 
7.2.   Insurance.   Holder shall have received the Eagle 9 Policy and such policy shall be in full force and effect.  In addition, you shall have received evidence that the Casualty Gap Policy has been issued in a form satisfactory to you and your special counsel and such policy shall be in full force and effect.
 
7.3.   Assignment of LMA.   The interest of Emmis New York under the LMA Agreement shall have been assigned to Maker.
 
7.4.   Contribution Agreements.   The assignments of assets pursuant to the Contribution Agreement and the License Contribution Agreement shall have occurred.
 
7.5.   Consent of FCC to Assignment of Broadcast License.   The FCC shall have granted its consent to the assignment of the FCC License held by Emmis New York to Licensee and such consent shall have become a Final Order.  Final Order shall mean an action by the FCC (i) that has not been vacated, set aside or suspended, (ii) with respect to which no request for stay, motion or petition for rehearing, reconsideration or review, or application or request for review or notice of appeal or sua sponte review by the FCC is pending, and (iii) as to which the time for filing any such request, motion, petition, application, appeal or notice and for entry of orders staying, reconsidering or reviewing on the FCC’s own motion has expired.  The FCC License shall have been assigned to Licensee.
 
7.6.   Insurance.   The Eagle 9 Policy and the Casualty Gap Policy shall be in full force and effect with their premiums paid in full.
 
7.7.   Estoppel Certificate . The Estoppel Certificate shall have been delivered.
 
7.8.   Sale of Pass-Through Certificates .   On the Funding Date, the Holder shall sell to the Participant and the Participant shall purchase the Pass-Through Certificate to be purchased by it as specified in Schedule A .
 
 
 
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7.9.   Escrow of Required Reserve Funds.   Holder shall have reserved from proceeds of the issuance of the Note the full amount of funds required to be held as Reserves pursuant to Section 4.1.3 of the Security Agreement.
 
7.10.   Payment of Special Counsel Fees .  Without limiting the provisions of Section 11, on the Funding Date, Maker shall have paid the fees, charges and disbursements of your special counsel to the extent reflected in a statement of such counsel rendered to the Maker prior to the Funding Date.
 
7.11.   Title to Assets .   The Consent and Release shall have been delivered.
 
7.12.   Permitted Investment .  The purchase by you of the Pass-Through Certificates shall be permitted on the Funding Date under the laws and regulations of the jurisdiction to which you may be subject, without recourse to any provision of such laws which permits the making of an investment without restriction as to the character of the particular investment being made and you shall have received such evidence as you or your special counsel shall have reasonably requested to establish compliance with this condition.
 
7.13.   Consummation Notice .  A consummation notice shall have been filed with the FCC, confirming consummation of the assignment of the FCC License from Emmis New York to Licensee.
 
7.14.   Bring-Down Certificates .   You shall have received bring-down certificates from each of Maker, Licensee, Manager and Emmis New York with respect to all representations and warranties made by such entities under any of the Operative Documents and the Contribution Agreements, certifying to Holder that all such representations and warranties are true and correct as of the Funding Date.
 
7.15.   Opinions of Counsel .   You and your special counsel shall have received opinions of (a) counsel to the Maker, Emmis, Emmis New York and the Licensee, (b) counsel to the Holder, (c) special Federal Communications Commission (“ FCC ”) counsel and (d) a substantive non-consolidation opinion relating to both Maker and Licensee, all of which shall be reasonably satisfactory in form and substance to you and your special counsel. All such opinions shall be dated the Funding Date.
 
7.16.   Assignment of all Leases .   The assignments of the Back-up Transmitter Lease, the Space Lease and any other leases and licenses relating to the operation of the Station to Licensee shall have occurred .
 
SECTION 8.   REPRESENTATIONS AND WARRANTIES OF THE HOLDER
 
The Holder represents and warrants that as of the date hereof:
 
8.1.   Due Organization and Power .   It (a) has been duly organized and is validly existing and in good standing as a national banking association, (b) has the full power, authority and legal right to engage in the transactions contemplated hereby, and (c) has the full power, authority and legal right to execute and deliver this Agreement, the Pass-Through Certificates
 
 
 
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and any of the other Operative Documents to which it is a party, and to perform and observe the terms and conditions of each of such instruments.
 
8.2.   Governmental Authorization .   No authorization, consent or approval of any governmental authority is required for the execution, delivery and performance by it of this Agreement, the Pass-Through Certificates or any Operative Document to which it is a party, or for the issuance and sale of the Pass-Through Certificates in the manner herein provided.  If, on the Closing Date, any such authorization, consent or approval shall be required, the same shall have been obtained or made on or prior to the Closing.
 
8.3.   Offering of the Pass-Through Certificates .   It has not offered the Pass-Through Certificates or any part thereof or any similar security for sale to, solicited offers to buy any thereof from or otherwise approached or negotiated with anyone other than you and no others with regard thereto.  Neither it nor any agent on its behalf will sell or offer the Pass-Through Certificates or any part thereof or any similar security for sale to, solicit any offers to buy any thereof from or otherwise approach or negotiate in respect thereof with any person or persons so as thereby to require registration of the Pass-Through Certificates under Section 5 of the Securities Act.
 
8.4.   Use of Proceeds .   It will apply the proceeds of the sale of the Pass-Through Certificates to fund the Loan to Maker.  It will not, directly or indirectly, apply any part of the proceeds of the Pass-Through Certificates for the purpose (whether immediate, incidental or ultimate) of purchasing or carrying any “margin security” as defined in Regulation U of the Federal Reserve Board (12 C.F.R. 221) or any security issued by any investment company registered pursuant to Section 8 of the Investment Company Act of 1940, as amended, or for the purpose of repaying any indebtedness originally incurred for such purpose.  It will not, directly or indirectly, apply any part of the proceeds of the Pass-Through Certificates for the purpose (whether immediate, incidental or ultimate) of purchasing or carrying any “margin stock” as defined in Regulation U of the Federal Reserve Board (12 C.F.R. Section 221), or for the purpose of repaying any indebtedness which was originally incurred for any such purpose.  It does not own, nor does it intend to acquire, any such margin security or margin stock.
 
8.5.   Authorization, Execution and Delivery of Pass-Through Certificates .   The Pass-Through Certificates issued will be duly authorized, executed and delivered by it, and will be legal, valid, binding and enforceable obligations of the Holder in accordance with the terms thereof, and entitled to the benefits and security of this Agreement and the Declaration of Trust.
 
8.6.   Authorization, Execution and Delivery of Agreement and Operative Documents .   This Agreement and the Operative Documents have been or will be on the Closing Date (as the case may be) duly authorized, executed and delivered by the Holder, and are or will be legal, valid and binding instruments enforceable against the Holder in accordance with their respective terms except that certain rights and remedies as set forth in such Operative Documents may be limited by bankruptcy, reorganization and other laws of general application relating to or affecting the enforcement of creditors’ or lessors’ rights.
 
8.7.   Investment Company Act of 1940 .   The Holder is not and will not be required to, as a result of the offer and sale of the Pass-Through Certificates as contemplated by this
 
 
 
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 Agreement and the Declaration of Trust, register as an “investment company” under the Investment Company Act of 1940, as amended (the “ Investment Company Act ”), and the Holder is not “controlled” by an “investment company” as defined in the Investment Company Act.
 
8.8.   Prohibited Transactions .  Neither the sale of the Pass-Through Certificates by the Holder hereunder nor its use of the proceeds thereof will violate the Trading with the Enemy Act, as amended, or any of the foreign asset control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or the enabling legislation or executive order relating thereto.  Without limiting the foregoing, neither the Holder nor any of its subsidiaries (A) is or will become a Person whose property or interests in property are blocked pursuant to Section 1 of Executive Order 13224 of September 23, 2001 entitled Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079) or (b) engages or will engage in any dealings or transactions, or be otherwise associated, with any such Person.  The Holder and its subsidiaries are in compliance, in all material respects, with the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA Patriot Act of 2001).  No part of the proceeds from the sale of the Pass-Through Certificates hereunder will be used, directly or indirectly, for any payment to any governmental official or employee, political party, official of a political party, candidate for political office or anyone else acting in an official party capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended .
 
SECTION 9.   REPRESENTATIONS AND WARRANTIES OF THE OBLIGORS
 
Each Obligor represents and warrants as follows as of the date of delivery hereof:
 
9.1.   Due Organization and Power .   It (a) is a limited liability company, duly organized, validly existing and in good standing under the laws of the State of Delaware, and is duly qualified as a foreign limited liability company and is in good standing in each jurisdiction in which such qualification is required by law, (b) has the full power, authority and legal right to acquire, own and grant security title to and a security interest in the property pledged under the Security Agreement, the LMA Assignment and the Equity Pledge Agreement, as applicable, and to engage in the transactions contemplated hereby, and (c) has the full power, authority and legal right to execute and deliver this Agreement, the Note and the Operative Documents to which it is a party, and to perform and observe the terms and conditions of each of such instruments.
 
9.2.   Liabilities; Business .   It has no liabilities except as contemplated hereby, by the LMA, the Space Lease and the Back-Up Transmitter Lease and as permitted by the Security Agreement.  Amounts payable under the LMA Agreement are sufficient to pay its obligations as they become due on the Note as well as paying the Trustee’s fees and making required deposits into the Reserves as contemplated by Section 4.1.3 of the Security Agreement. It has not engaged in any business except as contemplated hereby and as permitted by the Security Agreement.  It has no subsidiaries other than Licensee.
 
9.3.   Litigation; Taxes .   There are no actions, suits or proceedings pending or threatened in writing against or affecting it at law or in equity or before any court or administrative officer or agency.  It is not in default (a) in the payment of any taxes levied or
 
 
 
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assessed against it or its assets or (b) under any statute, rule, order, decree, writ, injunction or regulation of any governmental body (including any court) or (c) under any contract or agreement to which it is a party or any contract or agreement by which it is bound.
 
9.4.   Compliance with Other Instruments .   It is not a party to any contract or agreement or subject to any charter or restriction or to any order, writ, injunction or decree of any court or governmental authority which adversely affects its business, property, assets or financial condition.  Neither the execution, delivery or performance of this Agreement or the Operative Documents nor compliance herewith or therewith by Obligor (a) conflicts or will conflict with or results or will result in a breach of or constitutes or will constitute a default under (i) its organizational documents, (ii) any law or any order, writ, injunction or decree of any court or governmental authority to which it is subject, or (iii) any agreement or instrument to which it is a party or by which it is bound or (b) results or will result in the creation or imposition of any lien, charge or encumbrance upon its property pursuant to such agreement or instrument, except the lien and security interest created, and as permitted, by the Security Agreement.
 
9.5.   Governmental Authorization .   No authorization, consent or approval of any governmental authority is required for the execution, delivery and performance by it of this Agreement, the Note or any Operative Document, in the manner herein provided or for the granting by Maker of the security under the Security Agreement in the manner and to the extent therein provided.  If, on the Closing Date, any such authorization, consent or approval shall be required, the same shall have been obtained or made on or prior to the Closing.
 
9.6.   Event of Default .   No event has occurred and is continuing which constitutes a default or an Event of Default by Maker under the Security Agreement or the LMA Agreement.
 
9.7.   Use of Proceeds .   It will apply the proceeds of the sale of the Note to fund the Reserves required hereunder,  to pay expenses of the transactions contemplated hereby and then to make a distribution to its indirect and direct parent entities for the purpose of debt reduction and other corporate purposes.  It will not, directly or indirectly, apply any part of the proceeds of the Note for the purpose (whether immediate, incidental or ultimate) of purchasing or carrying any “margin security” as defined in Regulation U of the Federal Reserve Board (12 C.F.R. 221) or any security issued by any investment company registered pursuant to Section 8 of the Investment Company Act of 1940, as amended, or for the purpose of repaying any indebtedness originally incurred for such purpose.  It will not, directly or indirectly, apply any part of the proceeds of the Note for the purpose (whether immediate, incidental or ultimate) of purchasing or carrying any “margin stock” as defined in Regulation U of the Federal Reserve Board (12 C.F.R. Section 221), or for the purpose of repaying any indebtedness which was originally incurred for any such purpose.  It does not own, nor does it intend to acquire, any such margin security or margin stock.
 
9.8.   Offering of the Note .  Obligors have not offered the Note or any part thereof or any similar security for sale to, solicited offers to buy any thereof from or otherwise approached or negotiated with anyone other than not more than twenty (20) institutional investors with regard thereto.  Neither Obligors nor any agent authorized on their behalves will sell or offer the Note or any part thereof or any similar security for sale to, solicit any offers to buy any thereof
 
 
 
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from or otherwise approach or negotiate in respect thereof with any person or persons so as thereby to require registration of the Note under Section 5 of the Securities Act .
 
9.9.   ERISA .   In reliance on the representation of Participant contained in Section 9.2, the execution, delivery and performance of this Agreement with respect to Maker and the issuance of the Note by Maker will not involve any transaction that is subject to the prohibitions of Section 406 of ERISA for which an exemption is not available or in connection with which a tax could be imposed pursuant to Section 4975 of the Code.
 
9.10.   Authorization, Execution and Delivery of Agreement and Operative Documents .   This Agreement and the other Operative Documents to which either Maker or Licensee is a party have been duly authorized, executed and delivered by the Maker or Licensee, as applicable, and are legal, valid and binding instruments enforceable against the Maker and Licensee in accordance with their respective terms except that certain rights and remedies as set forth in such Operative Documents may be limited by bankruptcy, reorganization and other laws of general application relating to or affecting the enforcement of creditors’ rights.
 
9.11.   Investment Company Act of 1940 .   The Maker is not and will not be required to, as a result of the offer and sale of the Note as contemplated by this Agreement, register as an “investment company” under the Investment Company Act, and Maker is not “controlled” by an “investment company” as defined in the Investment Company Act.
 
9.12.   Brokers .   The Maker has not dealt with any broker, investment banker, agent or other person who may be entitled to any commission or compensation in connection with the sale of the Note to the Holder or the sale of the Pass-Through Certificates to you other than Moelis & Co.LLC, whose fee will be paid by Maker or its parent at the Closing.
 
9.13.   Written Materials .   Except as previously disclosed to you in writing, there is no fact or facts known to Obligors (other than facts generally known to the public) which materially adversely affect or, in the future may (so far as the Obligors can now foresee) materially adversely affect, the business, operations, affairs, prospects, properties or condition of Obligors.
 
9.14.   Debt Service Coverage Ratio .   With respect to each Payment Date scheduled during the term of the Loan, if the Annual Fee payable under the LMA Agreement on each date for the payment thereof, after required deposits into the Reserves and payment of trustee’s fees due to Holder on or about such date, will not equal or exceed the product of (y) 1.05 multiplied by (z) with respect to each Payment Date, the debt service payment due under the Note (including amortization payments sufficient to fully amortize the original principal amount of the Note by the Maturity Date) (the “ Underwritten DSCR Requirement ”), then, upon written demand of Trustee, Obligors shall prepay the Note in part at such time in an amount sufficient to cause the Underwritten DSCR Requirement to be satisfied (as determined by the holders of a majority in outstanding principal amount of the Pass-Through Certificates).
 
9.15.   Title to Assets .   The Maker owns 100% of the membership interests in Licensee.  Licensee has a valid and subsisting leasehold estate in its office in the Empire State Building pursuant to the Space Lease, a valid and subsisting leasehold estate in the back-up transmitter site in West Orange, New Jersey pursuant to the Back-Up Transmitter Lease, and owns the
 
 
 
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transmitter equipment at both sites, free and clear of all liens and encumbrances.  Licensee has a valid and enforceable license to use an antenna on top of the Empire State Building. Upon completion of the Closing, Holder will have a valid first priority security interest in all assets of Obligors.
 
9.16.   Prohibited Transactions .  Neither the sale of the Note by Obligors hereunder nor its use of the proceeds thereof will violate the Trading with the Enemy Act, as amended, or any of the foreign asset control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or the enabling legislation or executive order relating thereto.  Without limiting the foregoing, neither Maker nor any of its direct or indirect owners of affiliates (A) is or will become a Person whose property or interests in property are blocked pursuant to Section 1 of Executive Order 13224 of September 23, 2001 entitled Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079) or (b) engages or will engage in any dealings or transactions, or be otherwise associated, with any such Person.  The Obligors and their affiliates are in compliance, in all material respects, with the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA Patriot Act of 2001) and the Comprehensive Iran Sanctions Accountability and Divestment Act.   No part of the proceeds from the sale of the Note hereunder will be used, directly or indirectly, for any payment to any governmental official or employee, political party, official of a political party, candidate for political office or anyone else acting in an official party capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended.
 
9.17.   LMA Agreement and Guaranty .  The LMA Agreement and the Guaranty are each in full force and effect, and no modifications of amendments of either such document have been made.  Neither Obligors nor Emmis New York has received from Programmer any notice of breach or termination of the LMA Agreement. To the best of Obligors’ and Emmis New York’s knowledge, no breach of the LMA Agreement exists by either party thereto and no event which, with notice of lapse of time or both, would constitute a breach under the LMA Agreement has occurred.  Neither Maker nor Emmis New York has made any assignment of the LMA Agreement or rights thereunder except pursuant to the LMA Assignment.
 
SECTION 10.   REPRESENTATIONS OF PARTICIPANT
 
You represent that on and as of the Closing Date:
 
10.1.   Investment Representation.
 
(a)   You understand that the Pass-Through Certificates have not been and will not be registered under the Securities Act, in reliance upon the exemption provided in Section 4(2) of the Securities Act, or registered or qualified under the securities laws or “Blue Sky” laws of any jurisdiction.
 
(b)   You (i) have such knowledge, sophistication and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the Pass-Through Certificates, (ii) are able to bear the economic risk of an investment in the Pass-
 
 
 
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Through Certificates, and (iii) are an “accredited investor” within the meaning of Section 2(a)(15) the Securities Act.
 
(c)   You are either (i) acquiring the Pass-Through Certificates for your own account, or for accounts as to which you exercise sole investment discretion, for investment purposes only and not with a view to any distribution in violation of the Securities Act, subject, nevertheless, to the understanding that the disposition of your property shall at all times be and remain within your control, or (ii) acquiring the Pass-Through Certificates for resale, not involving a public offering within the meaning of the Securities Act, to one or more institutional investors which shall, as a condition precedent to such sale, deliver to the Holder a representation to the effect set forth in clause (i) above.
 
10.2.   ERISA .   You represent that at least one of the following statements is an accurate representation as to each source of funds (a “ Source ”) to be used by you to pay the purchase price of the Pass-Through Certificates to be purchased by you hereunder:
 
(i)   the Source is an “insurance company general account” (as the term is defined in the United States Department of Labor’s Prohibited Transaction Exemption ( “PTE” ) 95-60) in respect of which the reserves and liabilities (as defined by the annual statement for life insurance companies approved by the National Association of Insurance Commissioners (the “NAIC Annual Statement” ) for the general account contract(s) held by or on behalf of any employee benefit plan together with the amount of the reserves and liabilities for the general account contract(s) held by or on behalf of any other employee benefit plans maintained by the same employer (or affiliate thereof as defined in PTE 95-60) or by the same employee organization in the general account do not exceed 10% of the total reserves and liabilities of the general account (exclusive of separate account liabilities) plus surplus as set forth in the NAIC Annual Statement filed with the Participant’s state of domicile; or
 
(ii)   the Source is a separate account that is maintained solely in connection with the Participant’s fixed contractual obligations under which the amounts payable, or credited, to any employee benefit plan (or its related trust) that has any interest in such separate account (or to any participant or beneficiary of such plan (including any annuitant)) are not affected in any manner by the investment performance of the separate account; or
 
(iii)   the Source is either (i) an insurance company pooled separate account, within the meaning of PTE 90-1 or (ii) a bank collective investment fund, within the meaning of the PTE 91-38 and, except as disclosed by the Participant to Maker in writing pursuant to this clause (c) , no employee benefit plan or group of plans maintained by the same employer or employee organization beneficially owns more than 10% of all assets allocated to such pooled separate account or collective investment fund; or
 
(iv)   the Source constitutes assets of an “investment fund” (within the meaning of Part V of PTE 84-14 (the “QPAM Exemption” )) managed by a “qualified professional asset manager” or “QPAM” (within the meaning of Part V of the QPAM Exemption), no employee benefit plan’s assets that are included in such investment fund,
 
 
 
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when combined with the assets of all other employee benefit plans established or maintained by the same employer or by an affiliate (within the meaning of Section V(c)(1) of the QPAM Exemption) of such employer or by the same employee organization and managed by such QPAM, exceed 20% of the total client assets managed by such QPAM, the conditions of Part I(c) and (g) of the QPAM Exemption are satisfied, neither the QPAM nor a person controlling or controlled by the QPAM (applying the definition of “control” in Section V(e) of the QPAM Exemption) owns a 5% or more interest in the Owner and (i) the identity of such QPAM and (ii) the names of all employee benefit plans whose assets are included in such investment fund have been disclosed to the Owner in writing pursuant to this clause (d) ; or
 
(v)   the Source constitutes assets of a “plan(s)” (within the meaning of Section IV of PTE 96-23 (the “INHAM Exemption” )) managed by an “in-house asset manager” or “INHAM” (within the meaning of Part IV of the INHAM exemption), the conditions of Part I(a), (g) and (h) of the INHAM Exemption are satisfied, neither the INHAM nor a person controlling or controlled by the INHAM (applying the definition of “control” in Section IV(h) of the INHAM Exemption) owns a 5% or more interest in the Owner and (a) the identity of such INHAM and (b) the name(s) of the employee benefit plan(s) whose assets constitute the Source have been disclosed to the Owner in writing pursuant to this clause (e) ; or
 
(vi)   the Source is a governmental plan; or
 
(vii)   the Source is one or more employee benefit plans, or a separate account or trust fund comprised of one or more employee benefit plans, each of which has been identified to the Owner in writing; or
 
(viii)   the Source does not include assets of any employee benefit plan, other than a plan exempt from the coverage of ERISA.
 
As used in this Section 10.2, the terms “employee benefit plan”, “governmental plan” and “separate account” shall have the respective meanings assigned to such terms in Section 3 of ERISA.
 
10.3.   Broker .   Other than Moelis & Co., you have not dealt with any broker, investment banker, agent or other person who may be entitled to any commission or compensation in connection with the sale of the Pass-Through Certificates to you.
 
SECTION 11.   PAYMENT OF FEES AND EXPENSES.
 
Whether or not the transactions contemplated by this Agreement shall be consummated, the Maker will:
 
11.1.   Fees and Expenses .   Cause to be paid at Closing with respect to its Loan all reasonable and documented out-of-pocket fees, expenses and disbursements of you and your special counsel and FCC counsel in connection with this transaction, including, without limitation, the initial NAIC filing fee, all CUSIP private placement number fees, document reproduction expenses, environmental site assessments costs, engineering consultant costs, Eagle
 
 
 
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9 and Casualty Gap insurance premiums, survey expenses, trustee fees (in previously agreed amounts), broker’s or finder’s fee or commission, if any, whether or not this transaction is consummated and all fees, taxes and expenses for the recording, registration and filing of documents (except fees, taxes and expenses occasioned by any sale or transfer of any Pass-Through Certificate by you or any subsequent owner of any of the Pass-Through Certificates) and, for the avoidance of doubt, excluding any of your overhead expenses which could be attributed to this transaction.
 
11.2.   Out-of-Pocket Expenses .   Cause you and the Holder to be reimbursed for reasonable and documented out-of-pocket expenses incurred in connection with such transactions and any items of the character referred to in the immediately preceding subsection which shall have been paid by you.
 
11.3.   Future Expenses .   Cause to be paid all reasonable and documented out-of-pocket costs and expenses (including reasonable attorneys’ fees of special counsel and local or other counsel) incurred by you in connection with any amendments, waivers or consents under or in respect of this Agreement, the Note, or any of the Operative Documents (whether or not such amendment, waiver or consent becomes effective)  (i) in connection with the clarification of any ambiguity or conflict in the Operative Documents, (ii) any amendment proposed by the Licensee or Maker, or (iii) incurred in any manner with respect to any act of the Licensee or Maker, including, without limitation: (a) the costs and expenses incurred in enforcing or defending (or determining whether or how to enforce or defend) any rights under this Agreement, the Note, or the Pass-Through Certificates or in responding to any subpoena or other legal process or informal investigative demand issued on connection with this Agreement, the Note, or the Pass-Through Certificates, or by reason of being an owner of any Pass-Through Certificates, and (b) the costs  and expenses, including financial advisors’, engineers’ and the fees of other professionals, incurred in connection with the insolvency or bankruptcy of Maker or any affiliates or in connection with any work-out or restructuring of the transactions contemplated hereby and by the Pass-Through Certificates.
 
11.4.   Brokers’ Fees and Stamp Taxes .   Pay or cause to be paid as to its Loan, and save you and each subsequent owner of the Pass-Through Certificates (and each nominee of, or payee designated by you or such subsequent owner) harmless from and against any and all liability and loss with respect to or resulting from (a) any claim for or on account of any brokers’ or finders’ fees with respect to such transactions contemplated herein arising by, through or under Maker, but not otherwise, or (b) the nonpayment or delayed payment of any and all stamp and other similar taxes, fees and excises (except your income and franchise taxes and fees, taxes and expenses occasioned by any sale or transfer of the Pass-Through Certificates by you or any subsequent holder of the Pass-Through Certificates), if any, including any interest and penalties, which may be or be determined to be, payable in connection with the transactions contemplated by this Agreement.
 
11.5.   Fees of Holder in Capacity as Trustee .   Pay or cause to be paid all trustee fees of the Holder acting in its capacity as trustee under the Declaration of Trust, as provided in the Security Agreement, including but not limited to the monthly trustee’s fee in the amount of $625.00.
 
 
 
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SECTION 12.   SURVIVAL OF AGREEMENTS
 
All agreements, representations and warranties contained herein or made in writing by the Holder, Licensee or the Maker in any Operative Document in connection with the transactions contemplated hereby (including without limitation the obligations of the Maker and the Licensee contained in Section 11), shall survive the execution and delivery of this Agreement, the issuance, sale and delivery of the Pass-Through Certificates and payment therefor, any disposition thereof by the original registered owners thereof, and any investigation at any time made by you or on your behalf.
 
SECTION 13.   NOTICES
 
All notices and other communications hereunder shall be in writing and shall be mailed by reputable overnight delivery service or by facsimile followed by a hard copy thereof mailed by reputable overnight delivery service, or delivered by hand: (a) if to you, at your address as set forth on Schedule A hereto, or at such other address or facsimile number as you may furnish to the Holder in writing; (b) if to the Holder, to Wells Fargo Bank Northwest, National Association, 260 North Charles Lindbergh Drive, Salt Lake City, UT 84116, Attention:  Corporate Trust Services, and (c) if to Maker or Licensee, to Emmis New York Radio LLC or Emmis New York Radio License LLC, respectively, c/o Emmis Radio License Corporation of New York, 40 Monument Circle, Indianapolis, Indiana 46204, Attention: Legal Department, or at such other address or addresses as any party may furnish in writing to each other party.
 
SECTION 14.   HOME OFFICE PAYMENT
 
So long as you, your affiliate, your nominee or any affiliated institutional investor is the owner of any Pass-Through Certificate purchased by you, (a) the parties direct the Holder, and the Holder agrees, that all amounts which become due and payable on such Pass-Through Certificates be paid by federal wire transfer of funds or electronic funds transfer through the Automated Clearing House System, as applicable, to the account specified on Schedule A hereto opposite your name, without the presentation or surrender of such Pass-Through Certificate or the making of any notation thereon and specifying the amounts of principal, interest and premium, by Noon Eastern Time on the Payment Date (as defined in the Note), and (b) you, your affiliate, your nominee or any affiliated institutional investor will not sell, transfer or otherwise dispose of the Pass-Through Certificates (i) except as provided in the Declaration of Trust and (ii) other than in a manner which does not require registration of the Pass-Through Certificates under the Securities Act.  The terms of this section shall apply to any transferee that qualifies as an institutional investor.
 
SECTION 15.   REPRODUCTION OF DOCUMENTS
 
This Agreement and all documents relating thereto, including, without limitation, (a) consents, waivers and modifications which may hereafter be executed, (b) documents received by you at the Closing, and (c) financial statements and other information previously or hereafter furnished to you, may be reproduced by you by any photographic, photostatic, digital, microfilm, microcard, miniature photographic or other similar process and, except for the Pass-Through Certificates and the Note, you may destroy any original document so reproduced.  The Holder
 
 
 
18
 
 
and Obligors agree and stipulate that any such reproduction, other than of the Pass-Through Certificates and the Note, shall be admissible in evidence as the original itself in any judicial or administrative proceeding (whether or not the original is in existence and whether or not such reproduction was made by you in the regular course of business) and that any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence.
 
SECTION 16.   MISCELLANEOUS
 
This Agreement cannot be changed, discharged or terminated orally, but only by an instrument in writing signed by the party against which enforcement of the same is sought.  All the terms of this Agreement shall be binding upon, inure to the benefit of and be enforceable by the respective successors and assigns by merger, consolidation or transfer of assets of the parties hereto, and, in particular, shall inure to the benefit of and be enforceable by the owner of any of the Pass-Through Certificates.  The Table of Contents preceding this Agreement and the headings to the various sections of this Agreement have been inserted for convenience of reference only and shall not limit or otherwise affect any of the terms hereof. This Agreement may be executed in any number of counterparts, each of which shall be effective only upon delivery and thereafter shall be deemed an original, and all of which shall be taken to be one and the same instrument, for the same effect as if all parties hereto had signed the same signature page. Any signature page of this Agreement may be detached from any counterpart of this Agreement without impairing the legal effect of any signatures thereon and may be attached to another counterpart of this Agreement identical in form hereto but having attached to it one or more additional signature pages.  A facsimile or pdf copy of a signature shall be treated as the equivalent of a manual signature of this Agreement. This Agreement and any documents, certificates or instruments provided in connection with this Agreement may be reproduced by the parties hereto by any photographic, photostatic, microfilm, microcard, digital, miniature photographic or other similar process and any original document so reproduced may be destroyed. To the extent permitted by applicable law, any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding (whether or not the original is in existence and whether or not such reproduction was made in the regular course of business) and any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence.  This Agreement shall be construed and enforced in accordance with, and governed by, the laws of the State of New York.
 
SECTION 17.   SUPPLEMENTAL PAYMENT
 
The Obligors will not directly or indirectly pay or cause to be paid any remuneration, whether by way of supplemental or additional interest, fee or otherwise, or grant any security, to any owner of a Pass-Through Certificates as consideration for or as an inducement to the entering into by any owner of the Pass-Through Certificates of any waiver or amendment of any of the terms and provisions hereof unless such remuneration is concurrently paid, or security is concurrently granted, on the same terms, ratably to each owner of the Pass-Through Certificates then outstanding even if such owner did not consent to such waiver or amendment.
 
 
 
19
 
 
SECTION 18.   DISCLOSURE
 
Maker and Licensee represent that all writings prepared and delivered by Maker or Licensee in connection with the transactions contemplated herein, do not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein not misleading in light of the circumstances under which they were made.
 
[Remainder of page intentionally blank; signatures follow.]
 
 
 
20
 
 
If you are in agreement with the foregoing, please sign the enclosed counterparts and return the same, whereupon this Agreement shall become a binding contract under seal between you, the Holder and the Obligors.
 
 
WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION, as trustee, as Holder
 
       
 
By:
/s/ Scott Rosevear  
    Name:  Scott Rosevear  
    Its:        Vice President  
       
 
 
EMMIS NEW YORK RADIO LLC, as Maker
 
       
 
By:
/s/ J. Scott Enright  
    Name:  J. Scott Enright  
    Its:       Secretary  
       

 
EMMIS NEW YORK RADIO LICENSE LLC , as Licensee
 
       
 
By:
/s/ J. Scott Enright  
    Name:  J. Scott Enright  
    Its:       Secretary   
       
 

 
[Signatures continue on following page.]
 
 
 
 
 
 
 
ACCEPTED  AND  AGREED:
 
   
TEACHERS INSURANCE AND ANNUITY
ASSOCIATION OF AMERICA
 
     
     
By:
/s/ David G. Persky  
  Name:  David G. Persky  
  Title:    Managing Director  
     


 
 
 
 

 
 
 
EXHIBIT 10.3
 
EXECUTION COPY

 
ASSET PURCHASE AGREEMENT
 
 
by and among
 
 
EMMIS RADIO, LLC,
 
 
EMMIS RADIO LICENSE CORPORATION OF NEW YORK
 
 
and
 
 
YMF MEDIA LLC
 
 
dated as of  April 5, 2012
 
 
 
 
 
 
 
 
 
TABLE OF CONTENTS
Page
 
 
ARTICLE 1
 
 
PURCHASE AND SALE OF ASSETS
 
     
1.1
Purchased Assets
1
1.2
Assumption of Liabilities
2
1.3
Consideration
2
1.4
Earn-out Payments
2
1.5
Closing
4
1.6
Closing Deliverables
5
     
 
ARTICLE 2
 
 
REPRESENTATIONS AND WARRANTIES OF THE SELLER
 
     
2.1
Organization and Good Standing
5
2.2
Authorization of Agreement
5
2.3
Conflicts; Consents of Third Parties
6
2.4
Title to Purchased Assets
6
2.5
Intellectual Property
6
2.6
Legal Proceedings
6
2.7
Station Gross Revenue
7
     
 
ARTICLE 3
 
 
REPRESENTATIONS AND WARRANTIES OF PURCHASER
 
     
3.1
Organization and Good Standing
7
3.2
Authorization of Agreement
7
3.3
Conflicts; Consents of Third Parties
7
3.4
Legal Proceedings
8
     
 
ARTICLE 4
 
 
COVENANTS
 
     
4.1
Public Announcements
8
4.2
Use of Trade Names
8
4.3
Further Assurances
8
4.4
Allocation of Purchase Price
8
4.5
Ancillary Agreements
8
4.6
Access to Employees
9
4.7
Programming Contracts
9
4.8
Local Marketing Agreement
9
 
 
 
i
 
 
4.9
Call Letters
9
4.10
Frequency
10
4.11
Exclusive Dealing
10
4.12
Interim Access.
10
4.13
Consulting and Services Agreement
10
4.14
WBLS Purchase.
10
     
 
ARTICLE 5
 
 
CONDITIONS PRECEDENT
 
     
5.1
Conditions Precedent to Obligations of Purchaser and the Sellers
11
5.2
Conditions Precedent to Obligations of Purchaser
11
5.3
Conditions Precedent to Obligations of the Sellers
11
     
 
ARTICLE 6
 
 
TERMINATION
 
     
6.1
Termination
12
6.2
Effect of Termination
13
     
 
ARTICLE 7
 
 
INDEMNIFICATION
 
     
7.1
Seller Indemnification
13
7.2
Purchaser Indemnification
13
7.3
Third Party Claims
14
7.4
Sole Remedy
14
7.5
Effect of Investigation
14
     
 
ARTICLE 8
 
 
MISCELLANEOUS PROVISIONS
 
     
8.1
Survival
14
8.2
Entire Agreement
15
8.3
Waiver of Trial by Jury
15
8.4
Expenses
15
8.5
Governing Law; Jurisdiction
15
8.6
Notices
16
8.7
Severability
18
8.8
Successors and Assigns
18
8.9
No Third Party Beneficiaries
18
8.10
Counterparts
18
8.11
Specific Performance
18
8.12
Time is of the Essence
19
8.13
Guarantors
19
     
 
 
 
 
ii
 
 
 
ARTICLE 9
 
 
DEFINITIONS
 
     
9.1
Definition of Certain Terms
20
9.2
Interpretation
23

 
 
iii
 
 
 
ASSET PURCHASE A GREEMENT
 
This ASSET PURCHASE AGREEMENT (this “ Agreement ”) is made and entered into as of April 5, 2012, by and among Emmis Radio, LLC, an Indiana limited liability company (“ Emmis Radio ”), and Emmis Radio License Corporation of New York, a California corporation (“ Emmis Radio License ,” and together with Emmis Radio, the “ Sellers ”), YMF Media LLC, a Delaware limited liability company (“ Purchaser ”), Yucaipa Corporate Initiatives Fund II, L.P. and Yucaipa Corporate Initiatives (Parallel) Fund II, L.P. (collectively, the “ Yucaipa Guarantors ”) and Fortress Credit Funding I, LP, Drawbridge Special Opportunities Fund Ltd. and CF ICBC LLC (collectively, the “ Fortress Guarantors ”) (each of the Yucaipa Guarantors and Fortress Guarantors, a “ Guarantor ” and together, the “ Guarantors ”).  The Sellers, Purchaser and Guarantors (solely with respect to Article 8 ) are sometimes herein referred to collectively as the “ Parties ” and individually as a “ Party .”
 
WHEREAS, the Sellers desire to sell to Purchaser, and Purchaser desires to purchase and acquire from the Sellers, upon the terms and subject to the conditions set forth in this Agreement, certain assets of the Sellers as specified in this Agreement, in consideration for certain payments by Purchaser, all as specifically described in this Agreement.
 
NOW, THEREFORE, in consideration of the foregoing recitals and the respective covenants, agreements, representations and warranties contained herein and for other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the parties, intending to be legally bound, agree as follows:
 
ARTICLE 1
PURCHASE AND SALE OF ASSETS
 
1.1            Purchased Assets .  Subject to the terms and conditions of this Agreement, at the Closing, each Seller shall sell, transfer, assign, convey and deliver to Purchaser, and Purchaser shall purchase, acquire and accept from each Seller, free and clear of any and all Liens, all of the Sellers’ legal and beneficial right, title and interest in, to and under, as of the Closing Date, any and all of the following assets, wherever located and whether or not carried or reflected on the books and records of the Sellers, whether now existing or hereinafter acquired: (i) the Intellectual Property used or held for use by the Sellers exclusively in the business or operation of WRKS(FM), 98.7FM, New York, NY (the “ Station ”), together with the goodwill associated with and symbolized by each of the foregoing and those items listed on Schedule 2.5 attached hereto (the “ Assets ”); and (ii) all assignable registrations, applications, renewals, issuances, renewals, extensions, restorations and reversions for, in respect of or relating to the Assets (the “ Intellectual Property Assets ”), together with the goodwill associated with and symbolized by each of the foregoing (collectively, the Assets and the Intellectual Property Assets are the “ Purchased Assets ”).  Notwithstanding the foregoing, the Purchased Assets shall not include the Sellers’ cash, cash equivalents, accounts receivable, corporate names, the Call Letters, and organizational documents and claims related to the Purchased Assets to the extent arising during or attributable to any period prior to Closing.
 
 
 
1
 
 
1.2            Assumption of Liabilities .   Purchaser shall not assume any Liability of the Sellers, or any predecessor or any Affiliate of the Sellers, nor any Liability associated with or relating to the Purchased Assets, except for any Contracts that Purchaser and the Sellers mutually agree will be assigned and assumed pursuant to Section 4.7 (collectively, the “ Assumed Liabilities ”).  The Sellers shall be solely responsible for all Liabilities arising from the business and operation of the Purchased Assets prior to Closing, and Purchaser shall be solely responsible for all Liabilities arising from the business and operation of the Purchased Assets after Closing.
 
1.3            Consideration .   The aggregate consideration (the “ Purchase Price ”) payable by Purchaser in consideration for the sale, transfer, assignment, conveyance and delivery by the Sellers to Purchaser of the Purchased Assets shall consist of (i) ten million dollars ($10,000,000) (the “ Cash Purchase Price ”), plus (ii) any Earn-Out Amounts to be made by Purchaser to the Sellers pursuant to Section 1.4 .  The Cash Purchase Price shall be paid to the Sellers  by Purchaser, by wire transfer of immediately available funds to an account designated by the Sellers on or prior to the payment date, upon the earlier to occur of (i) the fifth (5 th ) Business Day following the consummation of the disposition of KBLX-FM, 102.9FM, Berkeley, CA, and (ii) December 31, 2012 (the “ Cash Purchase Price Payment Date ”).  Any payment not made when due under this Agreement shall bear interest at a rate of twelve percent (12%) per annum from the due date until paid.
 
1.4            Earn-out Payments .
 
(a)           No later than the thirtieth (30 th ) calendar day following the last day of each Earn-out Quarter, Purchaser shall prepare and deliver to the Sellers and Miller Kaplan, LLP (“ Miller Kaplan ”) a reasonably detailed written statement of Purchaser Gross Revenues for such Earn-out Quarter (the “ Earn-out Statement ”).
 
(b)           If (i) the Closing occurs; and (ii) the Purchaser Gross Revenue for the applicable Earn-out Quarter is greater than the Purchaser Gross Revenue in the corresponding Base Quarter, then Purchaser shall, together with the Earn-out Statement, pay or cause to be paid by wire transfer of immediately available funds to the account of the Sellers, an amount in cash (the “ Earn-out Amount ”) equal to the product of (i) (A) the Purchaser Gross Revenue for the applicable Earn-out Quarter, minus (B) the Purchaser Gross Revenue for the corresponding Base Quarter, multiplied by , (ii) fifteen percent (15%).  If the Purchaser Gross Revenue for the applicable Earn-out Quarter is less than the Purchaser Gross Revenue for the corresponding Base Quarter, then Purchaser shall not have any obligation to make, or cause to be made, any payment for such Earn-out Quarter pursuant to this Section 1.4(b) .  Purchaser represents and warrants to the Sellers that the Base Quarter Purchaser Gross Revenues set forth on Schedule 1.4(b) are true and correct.  Upon reasonable prior notice by the Sellers to Purchaser and during normal business hours, Purchaser shall from time to time provide the Sellers and their accountants with reasonable access to its books and records and provide the Sellers with all other information they reasonably request, in each case, regarding Purchaser Gross Revenue for Base Quarters and Earn-out Quarters.  Except to enforce its rights or as required by law or to meet reporting obligations, the Sellers shall, and shall cause its accountants to, keep confidential and not use any nonpublic information provided by Purchaser pursuant to this Section 1.4 other than the amount of the earn-out payments made by Purchaser to the Sellers.
 
 
 
2
 
 
(c)           No later than the thirtieth (30 th ) calendar day following the last day of each Full Period End Earn-out Quarter, Purchaser shall prepare and deliver to the Sellers and Miller Kaplan a reasonably detailed written statement (the “ Full Period Earn-out Statement ”) of the aggregate Purchaser Gross Revenue for the four Earn-out Quarters ending on the last day of such Full Period End Earn-out Quarter (the “ Full Period Purchaser Gross Revenue ”).
 
(d)           The Full Period Purchaser Gross Revenue as set forth in any Full Period Earn-out Statement shall be conclusively presumed to be true and correct in all respects and shall be final and binding, and the Sellers shall be deemed to have agreed with the calculations of the Full Period Purchaser Gross Revenue, unless the Sellers, within thirty (30) days after delivery to the Sellers of the Full Period Earn-out Statement, notify Purchaser in writing (the “ Dispute Notice ”) that the Sellers dispute Purchaser’s calculations of the Full Period Purchaser Gross Revenue set forth therein, specifying the nature of the disputed items and the basis therefor in reasonable detail (the “ Disputed Items ”). The Sellers and Purchaser shall promptly endeavor in good faith to resolve and finally determine any such disputed items, and upon successful resolution thereof, the Full Period Purchaser Gross Revenue, as adjusted to the extent necessary to reflect the resolution thereof, shall be final, conclusive and binding.
 
(e)           If the Sellers and Purchaser are unable to agree on the Full Period Purchaser Gross Revenue within ten (10) Business Days after delivery of the Dispute Notice, then the Sellers and Purchaser shall submit all unresolved Disputed Items (collectively, the “ Unresolved Items ”) to Pricewaterhouse Coopers, LLP (the “ Independent Accountants ”) to review and resolve such matters.  The Independent Accountants shall recalculate the Disputed Items specified in the Dispute Notice.  The Sellers and Purchaser will instruct the Independent Accountants to endeavor to complete such review and resolution process as promptly as reasonably practicable, and in any case no more than thirty (30) days after submission of the Disputed Item(s) to the Independent Accountants.  Subject to the foregoing, the Independent Accountants may conduct such proceedings as the Independent Accountants believe, in their sole discretion, are appropriate in determining the Unresolved Items; provided , however , that, unless the Sellers and Purchaser otherwise agree, all material communications between the Sellers or Purchaser or any of their respective representatives, on the one hand, and the Independent Accountants, on the other hand, will be in writing with copies simultaneously delivered to either the Sellers or Purchaser (whichever was not the sender or recipient of such material communications).  The Independent Accountants’ resolution of the Unresolved Items will be final, binding and conclusive for all purposes, effective as of the date the Independent Accountants’ written resolution is delivered to the Sellers and Purchaser  The dispute resolution procedure set forth in this Section 1.4(e) shall be the exclusive dispute resolution mechanics for determining any Disputed Item hereunder, including, any Disputed Item concerning whether the calculation of Full Period Purchaser Gross Revenue was prepared in accordance with Generally Accepted Accounting Principles consistently applied, and the indemnifications provisions set forth in Article 7 hereof shall not apply to any such dispute. Each of the Sellers and Purchaser will bear its own legal, accounting and other fees and expenses of participating in such dispute resolution procedure.  Any fees and expenses of the Independent Accountants incurred pursuant to this Section 1.4(e) shall be borne entirely by (i) the Sellers if the Independent Accountant determines that the Full Period Purchaser Gross Revenue reported to the Sellers by Purchaser is equal to or less than the Purchaser Gross Revenue finally determined by the Independent Accountants or (ii) Purchaser if the Independent Accountant determines that the Full Period
 
 
 
3
 
 
 
Purchaser Gross Revenue reported to the Sellers by Purchaser is greater than the Purchaser Gross Revenue finally determined by the Independent Accountants.
 
(f)           If, following the determination of the Full Period Purchaser Gross Revenue for the applicable period, as finally determined pursuant to Section 1.4(d) or Section 1.4(e) , the Aggregate Full Period Payment Amount for the applicable period is greater than the Actual Full Period Earn-out Amount for such applicable period, then the Sellers shall, within five (5) Business Days after the determination of the Full Period Purchaser Gross Revenue in accordance with this Section 1.4 , pay by wire transfer of immediately available funds to an account designated by Purchaser an amount in cash equal to (i) such Aggregate Full Period Payment Amount, minus (ii) such Actual Full Period Earn-out Amount.
 
(g)           If, following the determination of the Full Period Purchaser Gross Revenue for the applicable period, as finally determined pursuant to Section 1.4(d) or Section 1.4(e) , the Actual Full Period Earn-out Amount for the applicable period is greater than the Aggregate Full Period Payment Amount for such applicable period, then Purchaser shall, within three (3) Business Days after the determination of the Full Period Purchaser Gross Revenue in accordance with this Section 1.4 , pay or cause to be paid by wire transfer of immediately available funds to the account of the Sellers an amount in cash equal to (i) the Actual Full Period Earn-out Amount, minus (ii) the Aggregate Full Period Payment Amount.
 
(h)           Notwithstanding anything to the contrary set forth herein, Purchaser’s obligations to make any payments to the Sellers pursuant to this Section 1.4 shall immediately terminate, with no further payments to be made, other than in respect of payments to be made pursuant to any adjustments to prior payments pursuant to Section 1.4(f) and Section 1.4(g) , if, at any time during any Earn-out Quarter prior to the Expiration Date, (i) the Sellers fail to comply with its obligations under Section 4.2 ; or (ii) the Sellers or any Affiliate of the Sellers, on any broadcast radio station the Sellers or any Affiliates of the Sellers Control (such a station, a “ Controlled Station ”), broadcasts Urban AC in the New York City Arbitron Market as its primary format (the date on which such obligations are terminated pursuant to this Section 1.4(h) , the “ Earn-out Termination Date ”).  For purposes of this Section 1.4(h) , “Control” means the right to determine station programming, whether by direct or indirect ownership or through local marketing, brokerage, joint sales, or other agreement or otherwise, it being understood and agreed that the Sellers do not Control WEMP or any other Merlin Media station.
 
(i)           Purchaser shall not sell or otherwise dispose of the Frequency or all or any material part of the assets used or held for use in the operation of the Frequency (collectively, a “ Transfer ”) unless prior to the Transfer the transferee agrees in a writing delivered to the Sellers to assume all of the obligations of Purchaser under Section 1.4 and Section 4.10 after the Transfer.  No Transfer relieves Purchaser or any Guarantor of any obligation under this Agreement.  Purchaser shall not broker or otherwise dispose of any substantial part of the advertising or programming broadcast on the Frequency unless prior thereto the broker or transferee agrees in writing to provide to the Sellers and Purchaser the access and information necessary to determine Purchaser Gross Revenue pursuant to this Agreement.
 
1.5            Closing .   The consummation of the Transactions (the “ Closing ”) shall take place on the fifth (5 th ) Business Day following the date on which the Sellers or an Affiliate of the
 
 
 
4
 
 
Sellers commences broadcasting under the Local Marketing Agreement, subject to the satisfaction or waiver of the conditions set forth in Article 5 (other than conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or waiver of such conditions), unless another time or date, or both, are agreed to in writing by the Parties (the date on which the Closing occurs is referred to herein as the “ Closing Date ”).  At the election of the Parties, the Closing may occur via the electronic exchange of signatures and documents.
 
1.6            Closing Deliverables .   At the Closing and subject to the terms and conditions of this Agreement, the Sellers and Purchaser shall deliver the following (as applicable):
 
(a)           a Bill of Sale in the form attached hereto as Exhibit A (the “ Bill of Sale ”) duly executed by each Seller and Purchaser;
 
(b)           duly executed assignments, in customary form and substance (if any) and sufficient to transfer ownership of the applicable Purchased Assets; and
 
(c)           if any Contracts are being assigned by the Sellers to Purchaser pursuant to Section 4.7 or otherwise, then an assignment and assumption of such Contracts, duly executed by each Seller and Purchaser.
 
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE SELLER
 
The Sellers, jointly and severally, hereby represent and warrant to Purchaser as follows:
 
2.1            Organization and Good Standing .
 
(a)           Each Seller is a corporation or limited liability company, as the case may be, duly organized, validly existing and in good standing under the Laws of its state of incorporation or organization, as the case may be, and has all necessary corporate or limited liability company, as the case may be, power and authority to enter into this Agreement and each of the other Transaction Documents, to carry out its obligations hereunder and thereunder, and to consummate the Transactions.
 
(b)           Each Seller has all necessary corporate or limited liability company, as the case may be, power and authority to own the Purchased Assets.
 
2.2            Authorization of Agreement .   The execution and delivery of this Agreement and each of the other Transaction Documents to be executed by the Sellers, the performance by the Sellers of their respective obligations under this Agreement and each Transaction Document, and the consummation by the Sellers of the Transactions have been duly authorized by each Seller and all requisite corporate or limited liability company, as the case may be, action on the part of each Seller, and no other action or proceeding on the part of either Seller is necessary to authorize the execution and delivery of this Agreement and each of the other Transaction Documents by the Sellers, or the consummation of the Transactions.  This Agreement has been, and upon their execution, the other Transaction Documents shall have been, duly executed and delivered by the Sellers, and (assuming due authorization, execution and delivery by Purchaser),
 
 
 
5
 
 
this Agreement constitutes, and, upon their execution, the other Transaction Documents shall constitute, legal, valid and binding obligations of the Sellers, enforceable against the Sellers in accordance with their respective terms, except to the extent such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect affecting the enforcement of creditors’ rights generally, general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity).
 
2.3            Conflicts; Consents of Third Parties .   None of the execution and delivery by the Sellers of this Agreement or any of the other Transaction Documents, the consummation of the Transactions, or compliance by the Sellers with any of the provisions hereof or thereof will result in the creation of any Lien upon the Purchased Assets, or materially conflict with, or result in any material violation of or material default (with or without notice or lapse of time, or both) under, or give rise to a right of payment, termination, modification, acceleration or cancellation under any provision of (i) the organizational or governance documents of either Seller; (ii) any order of any Governmental Body applicable to either Seller or any of the properties or assets of the Sellers as of the date hereof; (iii) any Contract or Permit to which either Seller is a party or by which any of the properties or assets of either Seller are bound; or (iv) any applicable Law.  No material consent, waiver, approval, order, Permit or authorization of, or declaration or filing with, or notification to, any Person or Governmental Body is required on the part of the Sellers in connection with the execution and delivery of this Agreement or the other Transaction Documents, the compliance by the Sellers with any of the provisions hereof or thereof, the consummation of the Transactions or the taking by the Sellers of any other action contemplated pursuant to the Transaction Documents.
 
2.4            Title to Purchased Assets .   The Sellers have good and transferable title to the Purchased Assets free and clear of all Liens, and, at the Closing, Purchaser will be vested with good and transferable title to such Purchased Assets free and clear of all Liens (other than any Liens arising from Purchaser’s ownership of such Purchased Assets).
 
2.5            Intellectual Property .   Schedule 2.5 sets forth a true and complete list of all material Purchased Assets, including the owner thereof.  Either Emmis Radio or Emmis Radio License is the owner of each Purchased Asset, free and clear of all Liens, and has the right to use, without payment to any other Person, such Intellectual Property, as and where the Sellers have used it.  Other than the Intellectual Property set forth on Schedule 2.5 , the Sellers do not own or otherwise have any rights to, either through direct ownership, license or otherwise, any material Intellectual Property that is exclusively used or held for use in, or that exclusively relates to, the business or operation of the Station.  To the knowledge of the Sellers, there are no Actions, decided, pending or threatened in writing, concerning the Purchased Assets or concerning any claim that the Sellers’ use of the Purchased Assets has infringed, diluted, misappropriated, or otherwise violated in any material respect any Intellectual Property rights of any other Person.  The Sellers have not since January 1, 2009 received any written notice or claim challenging the validity, enforceability, registration or use of any Purchased Assets.
 
2.6            Legal Proceedings .   There is no pending or, to the knowledge of either Seller, threatened, Action by or against either Seller that challenges, or that may have the effect of preventing, delaying, making illegal or otherwise interfering with, the Transactions.  To the
 
 
 
6
 
 
knowledge of the Sellers, no event has occurred or circumstance exists that could reasonably be expected to give rise to or serve as a basis for the commencement of any such Action.
 
2.7            Station Gross Revenue .
 
(a)           The Station Gross Revenue for the calendar year ended December 31, 2011 was at least $11,200,000.
 
(b)           The Station Gross Revenue for the Sellers’ fiscal year ended February 29, 2012 was at least $11,100,000.
 
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF PURCHASER
 
Purchaser hereby represents and warrants to the Sellers as follows:
 
3.1            Organization and Good Standing .   Purchaser is a limited liability company duly organized, validly existing and in good standing under the Laws of the State of Delaware and has all requisite limited liability company power and authority to own, lease and operate its properties and to carry on its business as now conducted.
 
3.2            Authorization of Agreement .   Purchaser has all requisite power and authority to execute and deliver this Agreement, the other Transaction Documents and each other agreement, document, instrument or certificate contemplated by this Agreement or to be executed by Purchaser in connection with the consummation of the Transactions, and to consummate the Transactions.  The execution, delivery and performance by Purchaser of this Agreement and each other Transaction Document and the consummation by the Purchaser of the Transactions have been duly authorized by all necessary limited liability company action on behalf of Purchaser and no other action or proceeding on the part of Purchaser is necessary to authorize the execution and delivery of this Agreement and each of the other Transaction Documents by Purchaser, or the consummation of the Transactions.  This Agreement has been, and each Transaction Document will be at or prior to the Closing, duly executed and delivered by Purchaser and (assuming the due authorization, execution and delivery by the other parties hereto and thereto) this Agreement constitutes, and each Transaction Document when so executed and delivered will constitute, the legal, valid and binding obligations of Purchaser, enforceable against Purchaser in accordance with their respective terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally, and subject, as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity).
 
3.3            Conflicts; Consents of Third Parties .   None of the execution and delivery by Purchaser of this Agreement or the Transaction Documents, the consummation of the Transactions, or the compliance by Purchaser with any of the provisions hereof or thereof will materially conflict with, or result in any material violation of or material default (with or without notice or lapse of time, or both) under, or give rise to a right of payment, termination, modification, acceleration or cancellation under any provision of (i) the organizational or
 
 
 
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governance documents of Purchaser; (ii) any Contract or Permit to which Purchaser is a party or by which Purchaser or its properties or assets are bound; (iii) any order of any Governmental Body applicable to Purchaser or by which any of the properties or assets of Purchaser are bound; or (iv) any applicable Law. No consent, waiver, approval, order, Permit or authorization of, or declaration or filing with, or notification to, any Person or Governmental Body is required on the part of Purchaser in connection with the execution and delivery of this Agreement or the Transaction Documents, the compliance by Purchaser with any of the provisions hereof or thereof, the consummation of the Transactions or the taking by Purchaser of any other action contemplated hereby or thereby.
 
3.4            Legal Proceedings .   There is no pending or, to the knowledge of Purchaser, threatened, Action by or against Purchaser that challenges, or that may have the effect of preventing, delaying, making illegal or otherwise interfering with, the Transactions.  To the knowledge of Purchaser, no event has occurred or circumstance exists that could reasonably be expected to give rise to or serve as a basis for the commencement of any such Action.
 
ARTICLE 4
COVENANTS
 
4.1            Public Announcements .   The Parties agree to keep the terms of this Agreement confidential and not to make any public announcement with respect thereto, except as required by applicable Law or reporting obligations, or to enforce a Party’s rights, or to perform this Agreement, or to announce format changes or as mutually agreed by the Parties.
 
4.2            Use of Trade Names .   The Sellers agree that upon and following the Closing, neither the Sellers nor any Affiliate of the Sellers shall use any of the Purchased Assets, or other assets confusingly similar thereto, in the New York City Arbitron Market.
 
4.3            Further Assurances .   Each of the Parties shall, and without further consideration, execute such additional instruments of assumption and provide such additional documents as may be requested by the other Parties hereto to ensure the proper assignment and assumption of the Assumed Liabilities by Purchaser and the proper transfer of the Purchased Assets to Purchaser and otherwise fully complete the Transactions and the other Transaction Documents.
 
4.4            Allocation of Purchase Price .   Each of the Sellers and Purchaser shall allocate the Purchase Price among the Purchased Assets in accordance with Section 1060 of the Code and the Treasury Regulations promulgated thereunder.  Purchaser and the Sellers each agrees to provide the other promptly with any information required to complete IRS Form 8594.
 
4.5            Ancillary Agreements .   Prior to and following the Closing, upon the Sellers’ receipt of written notice by Purchaser, the Sellers and Purchaser shall use their commercially reasonable efforts to negotiate in good faith the following and to obtain any necessary landlord consents related thereto:
 
(a)           a sublease between a Seller or an Affiliate of the Sellers on the one hand, and Purchaser or an Affiliate of Purchaser, on the other hand, for 395 Hudson Street, New York,
 
 
 
8
 
 
 
NY 10014, (the “ Hudson Location ”) having the terms and conditions set forth on Exhibit B and such other customary terms and conditions as are reasonably acceptable to the Parties;
 
(b)           a sublease between a Seller or an Affiliate of the Sellers on the one hand, and Purchaser or an Affiliate of Purchaser, on the other hand, for the 151 W. 25th St., New York, NY studios (the “ 25 th Street Location ”) having the terms and conditions set forth on Exhibit C and such other customary terms and conditions as are reasonably acceptable to the Parties; and
 
(c)           a shared services agreement between a Seller or an Affiliate of the Sellers on the one hand, and Purchaser or an Affiliate of Purchaser, on the other hand, having the terms and conditions set forth on Exhibit D and such other customary terms and conditions as are reasonably acceptable to the Parties.
 
4.6            Access to Employees .   To the fullest extent permitted by applicable Law, each Seller shall, and shall cause its Subsidiaries to, cooperate with Purchaser in Purchaser’s consideration of whether to offer employment to any employee of the Sellers whose responsibilities solely relate to the operation of the Station (“ Station Employees ”), including by providing all information reasonably requested by Purchaser in respect of any Station Employee that may be disclosed by Purchaser under applicable Law; provided , however , that Purchaser shall not employ any Station Employee prior to the earlier of (i) the Closing; and (ii) the termination of this Agreement in accordance with its terms, and shall have no obligation to offer employment to any Station Employee.
 
4.7            Programming Contracts .   If requested by Purchaser, the Sellers shall afford Purchaser and each of its designated representatives, copies of all Contracts of the Sellers for urban adult contemporary programming or similar programming and talent solely relating to the Station (“ Station Programming Contracts ”).  If Purchaser determines in its sole discretion, and notifies the Sellers that Purchaser desires to assume any Station Programming Contract at the Closing (any such Station Programming Contract, a “ Designated Station Programming Contract ”), then, subject to the receipt of any required consents needed for such assignment, the Sellers shall assign and Purchaser shall assume such Designated Station Programming Contracts at Closing, and such Designated Station Programming Contracts shall be prorated as of Closing with the effect that the Sellers are responsible for all obligations arising with respect to services rendered thereunder prior to Closing and Purchaser is responsible for all obligations arising with respect to services rendered thereunder after Closing.  The Sellers and Purchaser shall use commercially reasonable efforts to obtain any required consents to the assignment to Purchaser from the counterparties of such Designated Station Programming Contracts.
 
4.8            Local Marketing Agreement .   If and when the Sellers enter into a local marketing agreement (the “ Local Marketing Agreement ”) for the broadcast of ESPN programming on the Station in the New York City market, the Sellers shall promptly provide written notice to Purchaser of same.
 
4.9            Call Letters .  Prior to Closing, on at least three (3) Business Days written notice to Purchaser, the Sellers shall relinquish the Call Letters to the FCC.  If Purchaser requests, the Sellers shall use their respective commercially reasonable efforts to cooperate with Purchaser’s submission of an application to the FCC for the request of the Call Letters.
 

 
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4.10            Frequency .   From the Closing Date until the date that is three (3) years from the Closing Date, Purchaser shall operate (or shall cause an Affiliate to operate) an operating radio station on the Frequency; provided , however , that Purchaser may Transfer the Frequency to the extent such Transfer complies with the conditions set forth in Section 1.4(i) .  Purchaser shall not be in breach of this Section 4.10 in the event of any acts of God, flood, war (whether declared or undeclared), civil or military disturbances or hostilities, nuclear or natural catastrophes, political unrest, explosion, severe weather or accident, earthquake, terrorism, fire, riot, labor disturbances, strikes or work stoppages for any reason, embargo, government action, including any laws, ordinances, regulations or the like (whether domestic, federal, state, county or municipal or foreign) which delay, restrict or prohibit an operating radio station from operating on the Frequency.
 
4.11            Exclusive Dealing .   During the period from the date of this Agreement through and including the Closing Date, the Sellers shall not, and shall cause their respective Affiliates, representatives and other agents to refrain from taking any action to, directly or indirectly, enter into, approve, authorize, encourage, initiate, solicit, or engage in discussions or negotiations with, or provide any information to, any Person other than Purchaser and its Affiliates or representatives concerning, any sale, lease or similar transaction involving the Purchased Assets that conflicts with this Agreement or prevent the Sellers from consummating the Transactions.
 
4.12            Interim Access . Subject to receipt of any required consents of the applicable landlord, beginning on May 31, 2012 and ending on the earlier of (i) December 31, 2012 or (ii) the execution of the corresponding Sublease set forth in Section 4.5(a) or Section 4.5(b) , the Sellers shall provide Purchaser with access to (A) use one (1) on-air studio and one (1) production studio at the Hudson Location, each for twenty four (24) hours a day, seven (7) days a week, in connection with the broadcasting on the Frequency and (B) the studios at the 25th Street Location for day time use, seven days a week, in connection with the broadcasting of WLIB, with rent in each case to be established at the current rate provided for under the corresponding lease.
 
4.13            Consulting and Services Agreement . Notwithstanding anything in this Agreement to the contrary, if, (i) the Sellers breach Section 4.2 ; or (ii) at any time between the Closing Date and the Expiration Date, the Sellers or any Affiliate of the Sellers, on any Controlled Station, broadcasts Urban AC as its primary format in the New York City Arbitron Market, then, the Sellers and Purchaser shall be deemed to have entered into a consulting and services agreement at such time, pursuant to which (i) Purchaser shall provide consulting services to the Sellers with respect to the provision of such urban adult contemporary programming or similar programming or use of the Purchased Assets, as the case may be, and (ii) the Sellers shall pay, on a quarterly basis, a consulting fee to Purchaser equal to fifty percent (50%) of the Competing Station Gross Revenues or Gross Revenue attributable to the Sellers’ use of the Purchased Assets, as the case may be, and which agreement shall (i) expire on the Expiration Date and (ii) include the verification and dispute mechanisms set forth in Section 1.4 mutatus mutandis .
 
4.14            WBLS Purchase . Inner City Media Corporation and its affiliated debtors in possession (the “ Debtors ”) have been authorized by the United States Bankruptcy Court for the Southern District of New York to enter into an agreement (the “ APA ”) to sell certain assets to Purchaser, including WBLS (the “ Sale Transaction ”).  Purchaser shall use commercially
 
 
 
10
 
 
reasonable efforts to promptly (i) consummate the Sale Transaction, (ii) enter into a customary pre-acquisition local marketing agreement with respect to WBLS (the “ LMA ”), and (iii) obtain a revised cash collateral order that includes payment of the Earn-out Amounts.  If an Affiliate of Purchaser or any Guarantor acquires WBLS or if Purchaser assigns the APA or the LMA to any third party, then Purchaser shall cause such Affiliate or transferee to assume Purchaser’s obligations under this Agreement (which shall not relieve Purchaser of any obligation or liability under this Agreement).  If any event occurs or condition arises that Purchaser becomes aware of that could reasonably be expected to impair Purchaser’s ability to enter into the LMA, acquire WBLS or obtain such order, then Purchaser shall give Seller prompt written notice thereof.
 
ARTICLE 5
CONDITIONS PRECEDENT
 
5.1            Conditions Precedent to Obligations of Purchaser and the Sellers .   The respective obligations of each of the Sellers and Purchaser to effect the Transactions are subject to the satisfaction of the following conditions at or prior to the Closing (unless expressly waived in writing by the Parties, in their discretion, at or prior to the Closing):
 
(a)           No injunction or restraining order shall have been issued by any court of competent jurisdiction and be in effect which restrains or prohibits any material transaction contemplated hereby or by any of the Transaction Documents.
 
(b)           There shall have not been commenced or threatened any proceeding or investigation by a Governmental Body of competent jurisdiction for the purpose of restraining, enjoining, delaying or otherwise materially restricting the consummation of the Transactions or materially limiting or materially restricting the conduct of any of the Parties or their Affiliates following consummation of the Transactions.
 
5.2            Conditions Precedent to Obligations of Purchaser . The obligations of Purchaser to effect the Transactions are subject to the satisfaction of the following conditions at or prior to the Closing (unless expressly waived in writing by Purchaser, in its discretion, at or prior to the Closing):
 
(a)           The Sellers shall have performed and complied in all material respects with all covenants and agreements herein required by this Agreement to be performed or complied with prior to the Closing by the Sellers; each of the representations and warranties of the Sellers contained in this Agreement shall be true and correct in all material respects on the Closing Date as though made on the Closing Date (except to the extent that they expressly relate to an earlier date); and there shall have been delivered to Purchaser a certificate to such effect, dated as of the Closing Date, signed by a duly authorized officer of the Sellers.
 
(b)           The Sellers shall have delivered, or caused to be delivered, to Purchaser all of the items to be delivered by them set forth in Section 1.6 .
 
5.3            Conditions Precedent to Obligations of the Sellers .   The obligations of the Sellers to effect the Transactions are subject to the satisfaction of the following conditions at or prior to
 
 
 
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the Closing (unless expressly waived in writing by the Sellers, in their discretion, at or prior to the Closing):
 
(a)           Purchaser shall have performed and complied in all material respects with all covenants and agreements herein required by this Agreement to be performed or complied with prior to the Closing by Purchaser; each of the representations and warranties of Purchaser contained in this Agreement shall be true and correct in all material respects on the Closing Date as though made on the Closing Date (except to the extent that they expressly relate to an earlier date); and there shall have been delivered to the Sellers a certificate to such effect, dated as of the Closing Date, signed by a duly authorized officer of Purchaser.
 
(b)           The Sellers or an Affiliate of the Sellers shall have entered into the Local Marketing Agreement.
 
(c)           Purchaser shall have delivered, or caused to be delivered, to the Sellers all of the items to be delivered by it set forth in Section 1.6 .
 
ARTICLE 6
TERMINATION
 
6.1            Termination .   This Agreement and the Transactions may be terminated at any time prior to the Closing:
 
(a)           by mutual agreement of the Sellers and Purchaser;
 
(b)           by Purchaser or the Sellers by written notice to the other Party, if the Closing shall not have occurred by the close of business on September 1, 2012 (the “ Termination Date ”); provided , however , if the Closing shall not have occurred on or before the Termination Date due to a breach of a Party’s obligations to consummate the Closing and the non-breaching Party has indicated to the other Parties that it is willing to consummate the Closing, then the breaching Party may not terminate this Agreement pursuant to this Section 6.1(b) ;
 
(c)           by Purchaser by written notice to the Sellers, if there shall be a breach by the Sellers of any representation or warranty, or any covenant or agreement contained in this Agreement which would result in a failure of a condition set forth in Section 5.2 and which breach cannot be cured or has not been cured by the earlier of (i) ten (10) Business Days after the giving of written notice by Purchaser to the Sellers of such breach; and (ii) one (1) Business Day prior to the Termination Date;
 
(d)           by the Sellers by written notice to Purchaser, if there shall be a breach by Purchaser of any representation or warranty, or any covenant or agreement contained in this Agreement which would result in a failure of a condition set forth in Section 5.3 and which breach cannot be cured or has not been cured by the earlier of (i) ten (10) Business Days after the giving of written notice by the Sellers to Purchaser of such breach; and (ii) one (1) Business Day prior to the Termination Date; or
 
 
 
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(e)           by the Sellers or Purchaser by written notice to the other Party if there shall be in effect a final non-appealable order of a Governmental Body of competent jurisdiction restraining, enjoining or otherwise prohibiting the consummation of the Transactions; it being agreed that the Parties shall promptly appeal any adverse determination which is not non-appealable (and pursue such appeal with reasonable diligence).
 
6.2            Effect of Termination .   If this Agreement shall be terminated pursuant to this Article 6 , all further obligations of the parties under this Agreement shall be terminated without further liability of any party to the other (other than Section 4.1 , Section 4.12 , Section 6.2 and Article 8 (other than Section 8.1 and Section 8.13 ) which sections shall survive any termination of this Agreement); provided , however , that nothing herein shall relieve any party from liability for its breach of this Agreement.
 
ARTICLE 7
INDEMNIFICATION
 
7.1            Seller Indemnification .   The Sellers shall, jointly and severally, defend, indemnify and hold harmless Purchaser and its officers, directors, employees, Affiliates, agents, advisers, members, attorneys, accountants, controlling Persons and representatives and their heirs, executors, successors and assigns, each in their capacity as such (collectively, the “ Purchaser Indemnitees ”) from and against, and shall pay or reimburse such Purchaser Indemnitees for, any Liability, obligation, loss, cost, expense, fee, judgment, charge, claim, payment, settlement, assessment, interest, penalty, disgorgement, deficiency or damage (whether absolute, accrued, conditional or otherwise and whether or not resulting from third party claims), including out-of-pocket expenses and attorneys’ fees incurred in investigating or defending against any such Loss (as defined below) or in asserting any of their rights under this Agreement (collectively, “ Losses ”), based upon, resulting from, in connection with, arising out of, or otherwise in respect of:
 
(a)           an inaccuracy in or breach of a representation or warranty when made or deemed made by the Sellers under this Agreement;
 
(b)           a breach or non-fulfillment of an obligation of the Sellers, in this Agreement, any Transaction Document or a certificate delivered by the Sellers under this Agreement;
 
(c)           all Liabilities arising from the business and operation of the Purchased Assets prior to Closing; and
 
(d)           any liability for fees and expenses of any agent, broker, Person or firm acting on behalf of the Sellers or any of their Affiliates in connection with this Agreement or any of the Transactions contemplated hereby.
 
7.2            Purchaser Indemnification .   Purchaser shall defend, indemnify and hold harmless the Sellers and their officers, directors, employees, Affiliates, agents, advisers, members, attorneys, accountants, controlling Persons and representatives and their heirs, executors, successors and assigns, each in their capacity as such (collectively, the “ Seller Indemnitees ”)
 
 
 
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from and against, and shall pay or reimburse such Seller Indemnitees for, any Losses based upon, resulting from, in connection with, arising out of, or otherwise in respect of:
 
(a)           an inaccuracy in or breach of a representation or warranty when made or deemed made by Purchaser under this Agreement;
 
(b)           a breach or non-fulfillment of an obligation of Purchaser, in this Agreement, any Transaction Document or a certificate delivered by Purchaser under this Agreement;
 
(c)           any Assumed Liability, and all Liabilities arising from the business and operation of the Purchased Assets after Closing; and
 
(d)           any liability for fees and expenses of any agent, broker, Person or firm acting on behalf of the Purchaser or any of its Affiliates in connection with this Agreement or any of the Transactions contemplated hereby.
 
7.3            Third Party Claims .   If a third party asserts a claim (a “ Third Party Claim ”) against a Person entitled to indemnification under this Agreement (“ Indemnified Party ”), then the Indemnified Party may not consent to entry of a judgment, or enter into a settlement with respect to such Third Party Claim, without the prior written consent of the Party required to provide indemnification under this Article 7 , which consent shall not to be unreasonably conditioned, delayed or withheld.  Each Party shall cooperate in defending any claim or litigation subject to this Article 7 and make its records relating to the defense available to the other Parties (except communications subject to attorney-client privilege or otherwise subject to a pre-existing confidentiality obligation).
 
7.4            Sole Remedy .   The indemnification provided in this Article 7 only applies after the Closing, and is the Parties’ sole and exclusive remedy after the Closing in respect of the subject matter of this Agreement (except as set forth in Section 8.11 and remedies in respect of fraud or willful breach of this Agreement).
 
7.5            Effect of Investigation .   The representations, warranties and covenants of the indemnifying party, and the Indemnified Party’s right to indemnification with respect thereto, shall not be affected or deemed waived by reason of any investigation made by or on behalf of the Indemnified Party (including by any of its representatives) or by reason of the fact that the Indemnified Party or any of its representatives knew or should have known, whether before or after the date hereof, that any such representation or warranty is, was or might be inaccurate or by reason of the Indemnified Party’s waiver of any condition set forth in Section 5.1 , Section 5.2 or Section 5.3 .
 
ARTICLE 8
MISCELLANEOUS PROVISIONS
 
8.1            Survival .   The covenants, obligations and agreements contained in this Agreement that are not performed at or before Closing shall survive and not be affected by Closing, and shall thereafter remain in full force and effect until paid and performed in full, including
 
 
 
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without limitation Purchaser’s obligation to pay the Purchase Price, which upon Closing is an absolute and unconditional obligation which shall be paid when due without notice or demand and without set off or counterclaim.  The representations and warranties set forth in this Agreement shall survive for a period of one (1) year after Closing, upon which they shall expire and be of no further force or effect.
 
8.2            Entire Agreement .   This Agreement (including the Schedules and Exhibits hereto) and the other Transaction Documents represent the entire understanding and agreement between the Parties with respect to the subject matter hereof and supersedes all prior discussions and agreements between the Parties with respect to the subject matter hereof.  This Agreement can be amended, supplemented or changed, and any provision hereof can be waived, only by written instrument making specific reference to this Agreement signed by the Party against whom enforcement of any such amendment, supplement, modification or waiver is sought.  No action taken pursuant to this Agreement, including, any investigation by or on behalf of any Party, shall be deemed to constitute a waiver by the Party taking such action of compliance with any representation, warranty, covenant or agreement contained herein.  The waiver by any Party hereto of a breach of any provision of this Agreement shall not operate or be construed as a further or continuing waiver of such breach or as a waiver of any other or subsequent breach.  No failure on the part of any Party to exercise, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of such right, power or remedy by such Party preclude any other or further exercise thereof or the exercise of any other right, power or remedy.  All remedies hereunder are cumulative and are not exclusive of any other remedies provided by Law.
 
8.3            Waiver of Trial by Jury .   THE PARTIES HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT THAT THEY MAY HAVE TO TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION, OR IN ANY PROCEEDING, DIRECTLY OR INDIRECTLY BASED UPON OR ARISING OUT OF THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT, OR ANY OTHER THEORY).  EACH PARTY (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT, OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 8.3 .
 
8.4            Expenses .   Each of the parties shall bear its own costs, including attorneys’ fees, incurred in negotiating this Agreement and consummating the Transactions.
 
8.5            Governing Law; Jurisdiction .   The validity, construction and performance of this Agreement, and any action arising out of or relating to this Agreement shall be governed by the Laws of the State of New York, without regard to the Laws of the State of New York as to choice or conflict of Laws (other than the principles set forth in Section 5-1401 of the General Obligations Law of the State of New York, which shall apply) or any Laws which would defer to the substantive Laws of any other jurisdiction.  With respect to any suit, action or proceedings
 
 
 
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relating to this Agreement which is permitted to be brought under this Agreement, each party hereby irrevocably (i) submits to the exclusive jurisdiction of the courts of the State of New York located in New York City and the United States District Court located in the borough of Manhattan in New York City; and (ii) waives any objection which it may have to the laying of venue of any such suit, action or proceedings brought in any such court, waives any claim that such suit, action or proceedings have been brought in an inconvenient forum and further waives the right to object, with respect to such suit, action or proceedings, that such court does not have jurisdiction over it.
 
8.6            Notices .   All notices and other communications under this Agreement shall be in writing and shall be deemed duly given (i) when delivered personally or by prepaid overnight courier, with a record of receipt; (ii) the fourth day after mailing if mailed by certified mail, return receipt requested; or (iii) the day of transmission, if sent by email, facsimile or telecopy during regular business hours or the Business Day after transmission, if sent after regular business hours (with a copy promptly sent by prepaid overnight courier with record of receipt or by certified mail, return receipt requested), to the Parties at the following addresses, email addresses or facsimile numbers (or to such other address, email address or facsimile number as a Party may have specified by notice given to the other Parties pursuant to this Section 8.6 ):
 
Sellers:
 
Emmis Radio, LLC
Emmis Radio License Corporation of New York
One Emmis Plaza
40 Monument Circle
Suite 700
Indianapolis, Indiana  46204
Telephone:       (317) 684-6565
Facsimile:        (317) 684-5583
Attention:         Scott Enright, scotte@emmis.com
 
with a copy (which shall not constitute notice) to:
 
Emmis Radio, LLC
Emmis Radio License Corporation of New York
One Emmis Plaza
40 Monument Circle
Suite 700
Indianapolis, Indiana  46204
Facsimile:         (317) 684-5583
Attention:          Legal Department, legal@emmis.com
 
 
 
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and to
 
Wiley Rein LLP
1776 K Street, NW
Washington, DC 20006
Telephone:        (202) 719-7000
Facsimile:         (202) 719-7049
Attention:          John Fiorini
 
Purchaser:
 
Yucaipa Corporate Initiatives Fund II, L.P. and Yucaipa Corporate Initiatives (Parallel) Fund II, L.P.
9130 West Sunset Boulevard
Los Angeles, CA 90069
Telephone:        (310) 789-7200
Facsimile:         (310) 789-1791
Attention:          Jeff Johnson, jeff.johnson@yucaipaco.com
 
-and-
 
Fortress Credit Funding I, LP, Drawbridge Special Opportunities Fund Ltd. and CF ICBC LLC
10250 Constellation Boulevard, Suite 2350
Los Angeles, California 90067
Telephone:        (310) 228-3030
Facsimile:         (310) 228-3031
 
Attention:          Josh Pack, jpack@fortress.com

With copies (which shall not constitute notice) to:

Cadwalader, Wickersham & Taft LLP
One World Financial Center
New York, NY  10281
Telephone:        (212) 504-6000
Facsimile:         (212) 504-6666
Attention:          Christopher Cox; chris.cox@cwt.com
 Scott J. Greenberg; scott.greenberg@cwt.com  
 
 
 
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-and-
 
Schulte Roth & Zabel LLP
919 Third Avenue
New York, New York 10022
Telephone:        (212) 756-2000
Facsimile:         (212) 593-5955
 
Attention:          Adam C. Harris, adam.harris@srz.com
 Meghan M. Breen, meghan.breen@srz.com
 
8.7            Severability .   If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any Law, or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the Transactions is not affected in any manner adverse to any party hereto.  Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that Transactions are fulfilled to the greatest extent possible.
 
8.8            Successors and Assigns .   This Agreement shall be binding upon the parties and their respective successors and permitted assigns.  No assignment of this Agreement or of any rights or obligations hereunder may be made by the Sellers or Purchaser (by operation of law or otherwise) without the prior written consent of the other Parties and any attempted assignment without the required consents shall be void; provided, however, that prior to the Closing, Purchaser may assign its right to purchase any of the Purchased Assets to one or more Affiliates of Purchaser, but no assignment shall relieve Purchaser of any obligation or liability under this Agreement.  Upon any such permitted assignment, the references in this Agreement to Purchaser shall also apply to any such assignee unless the context requires otherwise.
 
8.9            No Third Party Beneficiaries .   This Agreement shall inure solely to the benefit of the Parties and their respective successors and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any Person that is not a Party (or a successor or assign of any such Party) any legal or equitable right, benefit or remedy of any nature whatsoever, including any rights of employment for any specified period, under or by reason of this Agreement; provided , that each Indemnified Party shall be a third party beneficiary of this Agreement and shall have the right to enforce the Parties’ covenants and obligations under this Agreement with respect to Section 7.1 and Section 7.2 .
 
8.10            Counterparts .   This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute a single agreement.  The signature pages hereto may be transmitted by facsimile or .pdf, and if so transmitted, shall constitute originals.
 
8.11            Specific Performance .   The Parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement to be performed were not performed in accordance with their specific terms or were otherwise breached or threatened to be breached and that an award of money damages would be inadequate in such event.  Accordingly, it is
 
 
 
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acknowledged that the Parties shall be entitled to equitable relief, without proof of actual damages, including an order for specific performance to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement, in addition to any other remedy to which they are entitled at law or in equity as a remedy for any such breach or threatened breach.  Each Party further agrees that neither the other Parties nor any other Person shall be required to obtain, furnish or post any bond or similar instrument in connection with or as a condition to obtaining any remedy referred to in this Section 8.11 , and each party hereto irrevocably waives any right it may have to require the obtaining, furnishing or posting of any such bond or similar instrument.  Each party further agrees that the only permitted objection that it may raise in response to any action for equitable relief is that it contests the existence of a breach or threatened breach of this Agreement.
 
8.12            Time is of the Essence .   With respect to all dates and time periods set forth in this Agreement, time is of the essence.
 
8.13            Guarantors .  The Yucaipa Guarantors and the Fortress Guarantors, including their successors and assigns, jointly and severally, absolutely, irrevocably and unconditionally guarantee, as primary obligors and not merely as sureties, Purchaser’s performance of its obligation to consummate the Closing on the Closing Date and the due and punctual payment of the Cash Purchase Price (the “ Guaranteed Obligation ”).  In no event shall the Guarantors be obligated to make payments under this Section 8.13 in an aggregate amount in excess of the Cash Purchase Price.  The Guarantors further agree that their obligations under this Section 8.13 are not conditioned or contingent upon the pursuit of any remedies against Purchaser, and such obligations are not limited or affected by any circumstance that might otherwise limit or affect the obligations of a surety or guarantor, all of which are hereby waived by the Guarantors to the fullest extent permitted by Law.  Each Guarantor further agrees that the Guaranteed Obligation may be amended, modified or renewed by Purchaser, in whole or in part, without notice to or further assent from such Guarantor, and that such Guarantor will remain bound by its obligations under this Section 8.13 notwithstanding any amendment, modification or renewal of any Guaranteed Obligation by Purchaser.  Each Guarantor acknowledges that (i) Yucaipa Guarantor is an Affiliate of Purchaser and Fortress Guarantor owns warrants to acquire an equity interest in Purchaser, (ii) such Guarantor is benefiting from the transactions contemplated by this Agreement, (iii) the Sellers are relying on such Guarantor’s obligations under this Section 8.13 in connection with entering into this Agreement, (iv) a sale or transfer of any membership interest in Purchaser by such Guarantor shall not relieve such Guarantor of its obligations under this Section 8.13 , (v) such Guarantor has all requisite power and authority to enter into this Agreement (solely with respect to this Section 8.13 ) and to carry out its obligations under this Section 8.13 , (vi) such Guarantor’s obligations under this Section 8.13 constitute the legal, valid, and binding obligations of such Guarantor, enforceable against such Guarantor in accordance with their terms, except as enforceability may be limited by applicable equitable principles or by bankruptcy, insolvency, reorganization, moratorium or similar laws in effect from time to time affecting the enforcement of creditors’ rights generally, (vii) the execution and delivery by such Guarantor of this Agreement (solely with respect to this Section 8.13 ) and the performance by such Guarantor of its obligations under this Section 8.13 have been duly authorized and approved by all necessary action of each Guarantor, including any required proceedings of its shareholders, members, managers, partners, officers and directors, and does not require any further authorization or consent of such Guarantor and (viii) the execution and delivery by such
 
 
 
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Guarantor of this Agreement (solely with respect to this Section 8.13 ), and the performance by such Guarantor of its obligations under this Section 8.13 do not (A) conflict with or violate any provision of the organizational documents of such Guarantor, (B) with or without the giving of notice or the passage of time, or both, result in a breach of, or violate, or conflict with, or constitute a default under, or permit the termination of, or cause or permit acceleration under, any material Contract to which such Guarantor is a party or subject or (C) violate any Law or any order, judgment, decree or award of any Governmental Body to or by which such Guarantors is subject or bound.  Each Guarantor waives all notices with respect to the Guaranteed Obligation, including presentment to Purchaser with respect to the Guaranteed Obligation.
 
ARTICLE 9
DEFINITIONS
 
9.1            Definition of Certain Terms .   The terms defined in this Section 9.1 , when capitalized, have the meanings indicated below in this Agreement.
 
“ Action ” means any action, suit, arbitration, claim, inquiry, proceeding or investigation by or before any Governmental Body of any nature, civil, criminal, regulatory or otherwise, in law or in equity.
 
“ Actual Full Period Earn-out Amount ” means the product of (i) (A) Full Period Purchaser Gross Revenue for the applicable period, as finally determined pursuant to Section 1.4(d) or Section 1.4(e) , minus , (B) the Purchaser Gross Revenue for the full year ending on the last day of the last Base Quarter, multiplied by , (ii) fifteen percent (15%).
 
“ Affiliate ” (and, with a correlative meaning “ affiliated ”) means, with respect to any Person, any direct or indirect subsidiary of such Person, and any other Person that directly, or indirectly through one or more intermediaries, controls or is controlled by or is under common control with such first Person, it being understood and agreed that the Sellers are not an Affiliate of WEMP or any other Merlin Media station.  As used in this Agreement (except Section 1.4(h) ), “ control ” (including with correlative meanings, “ controlled by ” and “ under common control with ”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies (whether through ownership of securities or partnership or other ownership interests, by Contract or otherwise).
 
“ Aggregate Full Period Payment Amount ” means the sum of all Earn-out Amounts actually paid by Purchaser to the Seller for the four Earn-out Quarters ending on the last day of each Full Period End Earn-out Quarter.
 
“ Base Quarter ” means the three-month period ending on the last day of March, June, September and December of 2011, as applicable.
 
“ Business Day ” means a day other than a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by Law to close.  Any event the scheduled occurrence of which would fall on a day that is not a Business Day shall be deferred until the next succeeding Business Day.
 
 
 
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“ Call Letters ” means WRKS.
 
“ Code ” means the Internal Revenue Code of 1986, as amended.
 
“ Competing Station Gross Revenues ” means all revenues as determined in accordance with Generally Accepted Accounting Principles consistently applied derived by the Sellers or any Affiliate of the Sellers, on any Controlled Station, attributable to broadcasting Urban AC in the New York Arbitron Market, but excluding trade revenue.
 
“ Contract ” means any agreement, contract, obligation or undertaking (whether written or oral and whether express or implied).
 
“ Earn-out Quarter ” means the first three month period ending on the first to occur of the last day of March, June, September or December following the Closing Date, and each of the next eleven (11) three month periods ending on the last day of March, June, September and December thereafter.

“ Expiration Date ” means the date that is five (5) years after the Closing Date; provided , however , that if an unaffiliated third-party directly or indirectly acquires (whether by merger or purchase or otherwise) control of a Seller or any Affiliate of a Seller (an “ Affected Entity ”), then the Expiration Date shall be the date of such acquisition only with respect to such Affected Entity.
 
“ FCC ” means the United States Federal Communications Commission.
 
“ Frequency ” means the radio station broadcasting on 107.5FM, New York, NY (FCC Facility ID #28203).
 
“ Full Period End Earn-out Quarter ” means the fourth Earn-out Quarter following the Closing and the two succeeding fourth Earn-out Quarters thereafter.
 
“ Governmental Body ” means any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to United States or foreign federal, state or local government, any governmental authority, agency, department, board, commission or instrumentality or any political subdivision thereof, and any tribunal or court or arbitrator(s) of competent jurisdiction, and shall include the FCC.
 
“ Gross Revenue ” means all revenues as determined in accordance with Generally Accepted Accounting Principles consistently applied, including without limitation a reasonable allocation of any joint sales, whether received by the specified party or any broker or other third party, but excluding trade revenue.
 
“ Intellectual Property ” means all trade names, trademarks, service marks, copyrights, jingles, slogans, symbols, logos, domain names, websites and any other proprietary material or information, in whatever format or media, used or held for use by the Sellers exclusively in the operation of the Station.
 
“ IRS ” means the United States Internal Revenue Service.
 
 
 
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“ Law ” means any federal, state, local or foreign law (including common law), statute, code, ordinance, rule, or regulation or other requirement enacted, promulgated, issued or entered by a Governmental Body.
 
“ Liability ” means any and all debts, losses, liabilities, taxes, claims, damages, expenses, fines, costs, royalties, proceedings, deficiencies or obligations (including those arising out of any action, such as any settlement or compromise thereof or judgment or award therein), of any nature, whether known or unknown, absolute, contingent, accrued or unaccrued, liquidated or unliquidated, or otherwise and whether due or to become due, and whether in contract, tort, strict liability or otherwise, and whether or not resulting from third party claims, and any reasonable out-of-pocket costs and expenses in connection therewith (including reasonable legal counsels’, accountants’, or other fees and expenses incurred in defending any action or in investigating any of the same or in asserting any rights thereunder or hereunder).
 
“ Lien ” means any lien, encumbrance, pledge, mortgage, deed of trust, security interest, claim, lease, charge, option, right of first refusal, right of first offer, easement, servitude, proxy, voting trust or agreement, transfer restriction under any shareholder or similar agreement or encumbrance or any other restriction or limitation whatsoever.
 
“ New York City Arbitron Market ” means the New York City metro, as defined by The Arbitron Company.
 
“ Permits ” means any approvals, authorizations, consents, licenses, permits or certificates of a Governmental Body.
 
“ Person ” means and includes natural persons, corporations, limited partnerships, limited liability companies, 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 all Governmental Bodies.
 
“ Purchaser Gross Revenue ” means all revenues, as determined in accordance with Generally Accepted Accounting Principles consistently applied attributable to the Frequency, including without limitation a reasonable allocation of any joint sales, whether received by Purchaser or an Affiliate or any broker or other third party, excluding trade revenue.  For the avoidance of doubt, Purchaser Gross Revenue for any particular Earn-out Quarter shall be determined using the same policies and procedures as were used to determine the Purchaser Gross Revenue for the corresponding Base Quarter.
 
“ Station Gross Revenue ” means all revenues, as determined in accordance with Generally Accepted Accounting Principles consistently applied attributable to the Station, excluding trade revenue.
 
“ Subsidiary ” or “ subsidiary ” means, with respect to any Person, any corporation, limited liability company, joint venture or partnership of which such Person beneficially owns or controls, either directly or indirectly, more than fifty percent (50%) of the total combined voting power or the total economic interest in such Person.
 
“ Transaction Documents ” shall mean this Agreement and the Bill of Sale.
 
 
 
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“ Transactions ” means the transactions contemplated by this Agreement and the other Transaction Documents.
 
“ Urban AC ”   means substantially the same format as broadcast on the Station as of the date of this Agreement, it being understood and agreed that other urban formats, some of which may overlap with such format, including without limitation the format currently broadcast by WQHT and other hip hop and R&B formats, shall not be deemed “Urban AC.”
 
“ WBLS ” means WBLS(FM), 107.5FM, New York, NY.
 
“ WEMP ” means WEMP(FM), 101.9FM, New York, NY.
 
“ WLIB ” means WLIB(AM), 1190AM, New York, NY.
 
“ WQHT ” means WQHT(FM), 97.1FM, New York, NY.
 
9.2            Interpretation .
 
(a)           Whenever the words “ include , ” “ includes ” or “ including ” are used in this Agreement, they will be deemed to be followed by the words “ without limitation. ”  Any singular term in this Agreement will be deemed to include the plural, and any plural term the singular.  All pronouns and variations thereof will be deemed to refer to the feminine, masculine or neuter, singular or plural, as the identity of the Person referred to may require.
 
(b)           Any agreement, instrument or statute defined or referred to herein or in any agreement or instrument that is referred to herein means such agreement, instrument or statute as from time to time amended, modified or supplemented including (in the case of agreements or instruments) by waiver or consent and (in the case of statutes) by succession of comparable successor statutes and references to all attachments thereto and instruments incorporated therein.  References to a Person are also to the Person’s successors and permitted assigns, as applicable.
 
(c)           This Agreement is the product of negotiations among the Parties, each of which is represented by legal counsel, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provision of this Agreement. Rules of construction relating to interpretation against the drafter of an agreement shall not apply to this Agreement and are expressly waived by each Party.
 
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IN WITNESS WHEREOF, each of the Parties has executed this Asset Purchase Agreement as of the date first set forth above.
 
  EMMIS RADIO, LLC  
       
       
       
 
By:
/s/  Ian D. Arnold  
    Name: Ian D. Arnold  
   
Title:  Vice President and Associate General
Counsel
       
 
 
EMMIS RADIO LICENSE CORPORATION
   OF NEW YORK
 
       
       
       
 
By:
/s/  Ian D. Arnold  
    Name:  Ian D. Arnold  
   
Title:    Vice President and Associate General
Counsel
 
       
 
  YMF MEDIA LLC  
       
       
       
 
By:
/s/ Robert P. Bermingham  
    Name:  Robert P. Bermingham  
    Title:    Vice President   
       
 
 
 
IN WITNESS WHEREOF, each of the undersigned has executed this Asset Purchase Agreement solely for the purpose of Section 8.13 hereof (and for no other purpose), as of the date first written above.
 
 
YUCAIPA CORPORATE INITIATIVES
FUND II, L.P.
 
     
 
By: Yucaipa Corporate Initiatives Fund II, LLC,
its General Partner
 
       
 
By:
/s/ Robert P. Bermingham  
    Name:  Robert P. Bermingham  
    Title:    Vice President  
       
 
 
YUCAIPA CORPORATE INITIATIVES
(PARALLEL) FUND II, L.P.
 
     
 
By: Yucaipa Corporate Initiatives Fund II, LLC,
its General Partner
 
       
 
By:
/s/ Robert P. Bermingham  
    Name:  Robert P. Bermingham  
    Title:    Vice President  
       
 
 
FORTRESS CREDIT FUNDING I, LP
 
     
 
By: Fortress Credit Funding I GP LLC, its
General Partner
 
       
 
By:
/s/ Constantine M. Dakolias   
    Name: Constantine M. Dakolias  
    Title:   President   
       
 
 
 
 
 
 
 
DRAWBRIDGE SPECIAL OPPORTUNITIES
FUND LTD.
 
       
 
By:
/s/ Constantine M. Dakolias  
    Name:  Constantine M. Dakolias  
    Title:    Director   
       
 
 
CF ICBC LLC
 
       
 
By:
/s/ Constantine M. Dakolias  
    Name:  Constantine M. Dakolias  
    Title:    President   
       
 
 
 
 
 
EXHIBIT 99.1
 
For Immediate Release
Thursday, April 26, 2012

Contact: Kate Snedeker, Emmis
kate@emmis.com ; 317.266.0100

 
Emmis Announces Series of Transactions Related to 98.7FM in New York
 
Indianapolis…Emmis Communications (Nasdaq: EMMS) today announced a long-term Local Programming and Marketing Agreement (LMA) with ESPN Radio to provide programming and sell advertising on New York’s 98.7FM. Emmis also entered into a transaction to sell the intellectual property rights of Kiss FM, the current format Emmis programs on 98.7FM, to YMF Media, who is in the process of acquiring New York radio stations WBLS-FM and WLIB-AM. In conjunction with these transactions, Emmis also announced that it entered into a loan agreement with a large insurance company. The total consideration related to the proceeds from the loan agreement, initial payment from the sale of Kiss FM intellectual property rights, and the present value of certain loan reserves required under the agreement with the insurance company which Emmis expects to receive in the future, will be approximately $96 million. The long-term LMA is not tied to a sale of the station.  Transaction proceeds will be used to repay amounts outstanding under Emmis’ senior credit facility and to pay transaction fees and expenses.
 
“We want to thank our loyal employees and especially the fans of Kiss FM for an amazing 30 year run including several periods where Kiss was the number one ranked station in New York,” Emmis Chairman and CEO Jeff Smulyan said. “Recent changes in the way radio ratings are measured made it very difficult for us to find success with Kiss FM despite the great work of our Emmis New York team. We hope the best parts of Kiss will continue to live on. With enhanced financial flexibility we look forward to enhancing our service to New York’s urban community at our award winning Hot97 brand.”
 
This weekend Emmis New York plans to celebrate 30 years of Kiss FM. Emmis purchased Kiss FM 98.7 in 1994.
 
 “I have so many friends on the Kiss FM team and this is an extraordinarily difficult decision for me, however the benefits to the financial health of Emmis as a whole are significant. Coupled with the sale of a controlling interest in three of our radio stations to Merlin Media and the forthcoming sale of KXOS in Los Angeles, we will have one of the healthiest balance sheets in media thereby positioning Emmis for future growth,” Smulyan said.
 
The Emmis employees affected by today’s announcement will receive generous severance packages.
 
Paul, Weiss, Rifkind, Wharton & Garrison LLP and Wiley Rein LLP served as legal counsel and Moelis & Company served as financial advisor to Emmis. 
 


 
 
 
 

 
Emmis Communications Corporation is a diversified media company, principally focused on radio broadcasting. Emmis operates the 8th largest publicly traded radio portfolio in the United States based on total listeners. Emmis owns 18 FM and two AM radio stations in New York, Los Angeles, St. Louis, Austin (Emmis has a 50.1% controlling interest in Emmis’ radio stations located there), Indianapolis and Terre Haute, IN.
 
Note: Certain statements included in this press release which are not statements of historical fact, including but not limited to those identified with the words “expect,” “will” or “look” are intended to be, and are, by this Note, identified as “forward-looking statements,” as defined in the Securities and Exchange Act of 1934, as amended. Such statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to be materially different from any future result, performance or achievement expressed or implied by such forward-looking statement. Such factors include, among others:   general economic and business conditions; fluctuations in the demand for advertising and demand for different types of advertising media; our ability to service our outstanding debt; increased competition in our markets and the broadcasting industry; our ability to attract and secure programming, on-air talent, writers and photographers; inability to obtain (or to obtain timely) necessary approvals for purchase or sale transactions or to complete the transactions for other reasons generally beyond our control; increases in the costs of programming, including on-air talent; inability to grow through suitable acquisitions; changes in audience measurement systems new or changing regulations of the Federal Communications Commission or other governmental agencies; competition from new or different technologies; war, terrorist acts or political instability; and other factors mentioned in documents filed by the Company with the Securities and Exchange Commission.
 
Emmis does not undertake any obligation to publicly update or revise any forward-looking statements because of new information, future events or otherwise.
 

 
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