<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________
COMMISSION FILE NUMBER: 333-29555
STC BROADCASTING, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 75-2676358
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification Number)
3839 4th STREET NORTH, SUITE 420 (813) 821-7900
ST. PETERSBURG, FLORIDA 33703 (Registrant's telephone
(Address of principal executive offices) number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
As of May 8, 1998, the registrant had 1000 shares of common stock, par value
$.01 outstanding.
<PAGE> 2
STC BROADCASTING, INC. AND SUBSIDIARIES
FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1998
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C> <C>
Part I Financial Information
ITEM 1. UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Balance Sheets as of March 31, 1998 and
December 31, 1997 2 - 3
Consolidated Statements of Operations for the
Three Months Ended March 31, 1998, the One
Month Ended March 31, 1997, and the Two
Months Ended February 28, 1997 (Predecessor) 4
Consolidated Statement of Stockholder's Equity
for the Three Months Ended March 31, 1998 5
Consolidated Statements of Cash Flows for the
Three Months Ended March 31, 1998, the
One Month Ended March 31, 1997, and the Two
Months Ended February 28, 1997 (Predecessor) 6
Notes to Unaudited Consolidated Financial Statements 7 - 8
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 9 - 16
PART II Other Information
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K 16 - 17
SIGNATURE 18
</TABLE>
1
<PAGE> 3
Item 1. Financial Statements
STC BROADCASTING, INC. AND SUBSIDIARIES
Unaudited Consolidated Balance Sheets
<TABLE>
<CAPTION>
March 31, 1998 December 31, 1997*
-------------- -----------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 11,087,705 $ 1,632,190
Accounts receivable, net of allowance for doubtful
accounts of approximately $292,000 and
$286,000, respectively 8,712,733 10,924,654
Current portion of program rights 4,110,215 4,175,969
Other current assets 1,491,302 929,240
------------ ------------
Total current assets 25,401,955 17,662,053
------------ ------------
PROPERTY AND EQUIPMENT, net 34,929,774 36,002,597
------------ ------------
INTANGIBLE ASSETS, net
FCC licenses 57,393,221 58,403,429
Network affiliation agreements 108,632,738 110,571,178
Other 2,249,586 2,314,677
------------ ------------
Net intangible assets 168,275,545 171,289,284
------------ ------------
OTHER LONG-TERM ASSETS
Deferred acquisition and financing costs
net of accumulated amortization of approximately
$1,483,000 and $1,098,000, respectively 9,224,097 9,590,604
Program rights, net of current portion 7,686,946 8,597,548
Other 102,127 102,127
------------ ------------
Total other long-term assets 17,013,170 18,290,279
------------ ------------
Total assets $245,620,444 $243,244,213
============ ============
</TABLE>
* Derived from the audited financial statements as of December 31, 1997.
See accompanying notes to unaudited consolidated financial statements.
2
<PAGE> 4
STC BROADCASTING, INC. AND SUBSIDIARIES
Unaudited Consolidated Balance Sheets (continued)
<TABLE>
<CAPTION>
March 31,1998 December 31, 1997*
------------- -----------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Accounts payable $ 2,121,441 $ 2,407,165
Accrued interest 495,552 3,273,520
Accrued compensation 845,474 805,897
Accrued other 466,850 678,256
Current portion of program rights payable 4,290,906 4,258,003
------------ ------------
Total current liabilities 8,220,223 11,422,841
LONG-TERM DEBT 125,500,000 114,500,000
DEFERRED INCOME TAXES 23,262,000 23,562,000
PROGRAM RIGHTS PAYABLE, net of current portion 7,931,362 8,950,776
OTHER LONG-TERM LIABILITIES 108,611 116,041
REDEEMABLE PREFERRED STOCK, liquidation
preference of $30,000,000 33,475,052 32,263,225
STOCKHOLDER'S EQUITY:
Common stock, par value $.01 per share, 1,000 shares
authorized, issued and outstanding 10 10
Additional paid in capital 64,011,972 64,011,972
Accumulated deficit (16,888,786) (11,582,652)
------------ ------------
Total stockholder's equity 47,123,196 52,429,330
------------ ------------
Total liabilities and stockholder's equity $245,620,444 $243,244,213
============ ============
</TABLE>
* Derived from the audited financial statements as of December 31, 1997.
See accompanying notes to unaudited consolidated financial statements.
3
<PAGE> 5
STC BROADCASTING, INC. AND SUBSIDIARIES
Unaudited Consolidated Statements of Operations
<TABLE>
<CAPTION> |
Company Company | Predecessor
Three Months One Month | Two Months
Ended Ended | Ended
March 31, 1998 March 31, 1997 | February 28, 1997(1)
-------------- -------------- | --------------------
<S> <C> <C> | <C>
NET REVENUES $ 11,334,718 $ 3,196,672 | $ 5,227,881
|
OPERATING EXPENSES: |
Station operating 4,097,508 1,010,965 | 2,078,753
Selling, general and administrative 2,980,303 710,424 | 1,525,923
Trade and barter 388,072 111,251 | 181,432
Depreciation of property and equipment 1,353,180 305,135 | 756,999
Amortization of intangibles and other long-term assets 3,398,946 899,683 | 976,884
Corporate overhead 460,430 101,885 | 146,000
------------- -------------- | --------------
Total operating expenses 12,678,439 3,139,343 | 5,665,991
------------- -------------- | --------------
OPERATING INCOME (LOSS) (1,343,721) 57,329 | (438,110)
|
OTHER INCOME (EXPENSE): |
Interest income 30,998 13,240 | 20,662
Interest expense (3,051,898) (735,915) | (962,920)
Other income, net 6,314 7,120 | 18,522
------------- -------------- | --------------
NET LOSS BEFORE INCOME TAX BENEFIT (4,358,307) (658,226) | (1,361,846)
|
INCOME TAX BENEFIT 264,000 0 | 0
------------- -------------- | --------------
NET LOSS AFTER TAXES (4,094,307) (658,226) | $ (1,361,846)
| ==============
|
REDEEMABLE PREFERRED STOCK |
DIVIDENDS AND ACCRETION (1,211,827) (361,364) |
------------- -------------- |
NET LOSS APPLICABLE TO |
COMMON SHAREHOLDER $ (5,306,134) $ (1,019,590) |
============= ============== |
|
BASIC NET LOSS PER COMMON SHARE $ (5,306) $ (1,020) |
============= ============== |
|
WEIGHTED AVERAGE NUMBER OF COMMON |
SHARES OUTSTANDING 1,000 1,000 |
============= ============== |
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
(1) Note on 1997 Predecessor Statement:
The Predecessor statement shown above is derived from the audited combined
statements of operations of Smith Television of Michigan, L.P., Smith
Television of Rochester, L.P., Smith Television - WTOV, L.P. and Smith
Television of Salinas- Monterey, L.P. ("the Smith Stations") for the two
months ended February 28, 1997. No provision for income taxes has been shown
since income and loss of the partnerships is required to be reported by the
partners on their respective income tax returns.
4
<PAGE> 6
STC BROADCASTING, INC. AND SUBSIDIARIES
Unaudited Consolidated Statement of Stockholder's Equity
For the Three Months Ended March 31, 1998
<TABLE>
<CAPTION>
Total
Common Additional Accumulated Stockholder's
Stock Paid-in Capital Deficit Equity
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance at December 31, 1997 $ 10 $64,011,972 $(11,582,652) $ 52,429,330
Net loss applicable
to common shareholder - - (5,306,134) (5,306,134)
--------- ----------- ------------ ------------
Balance at March 31, 1998 $ 10 $64,011,972 $(16,888,786) $ 47,123,196
========= =========== ============ ============
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
5
<PAGE> 7
STC BROADCASTING, INC. AND SUBSIDIARIES
Unaudited Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Company Company | Predecessor
Three Months One Month | Two Months
Ended Ended | Ended
March 31, 1998 March 31, 1997 | February 28, 1997(1)
-------------- -------------- | --------------------
<S> <C> <C> | <C>
CASH FLOWS FROM OPERATING ACTIVITIES: |
Net loss after taxes $(4,094,307) $ (658,226) | $ (1,361,846)
Adjustments to reconcile net loss after taxes |
to net cash provided by operating activities: |
Depreciation of property and equipment 1,353,180 305,135 | 756,999
Amortization of intangibles and other long-term assets 3,398,946 899,683 | 976,884
Amortization of program rights 1,092,659 304,121 | 620,416
Payments on program rights (1,102,814) (308,064) | (621,037)
Deferred tax benefit (300,000) - | -
Loss on disposal of property and equipment 3,256 - | -
Change in operating assets and liabilities |
net of effects from acquired stations: |
Accounts receivable 2,211,921 (171,394) | 1,210,423
Other current assets 288,216 (583,083) | (246,862)
Accounts payable and accrued expenses (4,093,229) 2,971,059 | 297,410
----------- ------------- | -------------
Net cash (used in) provided by operating activities (1,242,172) 2,759,231 | 1,632,387
----------- ------------- | -------------
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
Acquisition of Smith Stations - (163,116,856) | -
Capital expenditures (286,211) (257,061) | (263,644)
Other 2,598 - | 31,101
----------- ------------- | -------------
Net cash used in investing activities (283,613) (163,373,917) | (232,543)
----------- ------------- | -------------
CASH FLOWS FROM FINANCING ACTIVITIES: |
Proceeds from borrowing under credit agreement 12,000,000 90,800,000 | -
Proceeds from senior subordinated notes - 100,000,000 | -
Repayment of credit agreement (1,000,000) (90,800,000) | -
Proceeds from sale of preferred stock, net - 28,500,000 | -
Proceeds from sale of common stock, net - 49,011,982 | -
Deferred acquisition and debt refinancing |
costs incurred (18,700) (8,244,501) | -
----------- ------------- | -------------
Net cash provided by financing activities 10,981,300 169,267,481 | -
----------- ------------- | -------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 9,455,515 8,652,795 | 1,399,844
|
CASH AND CASH EQUIVALENTS, BEGINNING BALANCE 1,632,190 - | 2,752,634
----------- ------------- | -------------
CASH AND CASH EQUIVALENTS, ENDING BALANCE $11,087,705 $ 8,652,795 | $ 4,152,478
=========== ============= | =============
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: |
Non cash items |
Preferred dividend and accretion $ 1,211,827 $ 361,364 | -
New program contracts $ 116,303 $ 28,200 | -
Interest paid $ 5,875,699 $ 430,491 | -
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
(1) Note on 1997 Predecessor Statement:
The Predecessor statement shown above is derived from the audited combined
statements of operations of the Smith Stations for the two months ended
February 28, 1997.
6
<PAGE> 8
STC BROADCASTING, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements at March 31, 1998
1. PRINCIPLES OF CONSOLIDATION:
The accompanying consolidated financial statements include those of STC
Broadcasting, Inc. and its subsidiaries (the "Company"). As of March 31, 1998,
the Company owned and operated the following five commercial television
stations (the "Stations").
<TABLE>
<CAPTION>
Network
Station Acquisition Date Market Affiliation
------- ---------------- ------ -----------
<S> <C> <C> <C>
WEYI-TV March 1, 1997 Flint, Saginaw-Bay City, Michigan NBC
WROC-TV March 1, 1997 Rochester, New York CBS
KSBW-TV March 1, 1997 Salinas and Monterey, California NBC
WTOV-TV March 1, 1997 Wheeling, West Virginia and
Steubenville, Ohio NBC
WJAC-TV October 1, 1997 Johnstown, Altoona, and State College,
Pennsylvania NBC
</TABLE>
All common shares of the Company are owned by Sunrise Television Corp.
("Sunrise"). The Company was incorporated on November 1, 1996 and commenced
operations on March 1, 1997. Significant intercompany transactions and
accounts have been eliminated. As permitted under the applicable rules and
regulations of the Securities and Exchange Commission, these financial
statements are condensed interim financial statements and do not include all
disclosures and footnotes required by generally accepted accounting principles
for complete financial statements. These financial statements should be read
in conjunction with the consolidated financial statements and notes thereto as
of December 31, 1997 included in the previously filed Company's Annual Report
on Form 10-K. The interim financial statements are unaudited but include all
adjustments, which are of a normal recurring nature, that the Company considers
necessary for a fair presentation of results for such period. Operating results
of interim periods are not necessarily indicative of results for a full year.
2. LONG TERM DEBT:
The Company's secured revolving credit facility (the "Bank Credit Agreement")
currently provides for borrowing up to $35,000,000 which can be used for
acquisitions, working capital and for general corporate expenses. The
outstanding balances under the Bank Credit Agreement as of March 31, 1998 and
December 31, 1997 were $25,500,000, including amounts for the ARTC acquisition,
and $14,500,000, respectively. The Company had $100,000,000 of 11% Senior
Subordinated Notes due March 15, 2007 outstanding at March 31, 1998 and
December 31, 1997.
3. ACQUISITIONS:
On April 1, 1998, the Company consummated the acquisition of all of the
outstanding common stock of Abilene Radio and Television Company ("ARTC") for
approximately $7,250,000 plus working capital. The transaction was funded by
additional borrowing under the Bank Credit Agreement.
In a series of transactions, the Company will acquire certain assets from
Hearst-Argyle Television, Inc., ("Hearst") through transactions structured as
a Section 1031 tax deferred exchange of assets. On February 3, 1998, the
Company agreed to acquire WPTZ-TV ("WPTZ"), WNNE-TV ("WNNE"), and local
marketing agreement ("LMA") for WFFF-TV ("WFFF") from Sinclair Broadcast
Group, Inc. for $72.0 million, with the intention of using these assets in the
Hearst transaction. WPTZ and WNNE are the NBC affiliates and WFFF
is the Fox affiliate serving the Burlington, Vermont and Plattsburgh,
New York television market. On
7
<PAGE> 9
February 18, 1998, the Company agreed with Hearst to trade KSBW-TV, WPTZ
and WNNE for WDTN-TV, the ABC affiliate in Dayton, Ohio, WNAC-TV, the Fox
affiliate in Providence, Rhode Island, WNAC-TV's interest in a Joint Marketing
Programming Agreement with WPRI-TV, the CBS affiliate in Providence, Rhode
Island, and approximately $22 million in cash. On April 24, 1998, the Company
completed a purchase of non-license assets of WPTZ, WNNE and WFFF for $70.0
million dollars. Funds to complete this acquisition were provided by Hearst.
The assets acquired are pledged to Hearst under the related loan agreement.
The purchase of the license assets of WPTZ, WNNE and WFFF is expected to close
at the end of May 1998 and is subject to Federal Communications Commission
approval and other customary conditions. No assurance can be given as to
whether, or on what terms, such transaction will be consummated by the
Company.
On April 24, 1998, the Company sold to Robert N. Smith, the Chief Executive
Officer and Director of Sunrise and the Company, the assets and certain rights
and obligations related to WFFF. Within ninety days of the closing of the
exchange of WPTZ and WNNE by the Company to Hearst-Argyle Stations, Inc., Smith
has agreed to pay the Company $0.5 million, which amount would be increased to
reflect any operating losses associated with WFFF subsequent to the Company's
commencement of operation of WFFF under a Time Brokerage Agreement on April 24,
1998. The $0.5 million purchase price is secured by a note and liens on all
of the assets sold.
On April 27, 1998, the Company entered into a definitive agreement ("Meyer
Purchase Agreement") to acquire the television assets of Meyer Broadcasting
Company of Bismarck, North Dakota ("Meyer") for $63.75 million. Meyer's
television stations, which are all affiliated with NBC, include KVLY-TV,
serving Fargo, KFYR-TV serving Bismarck, KMOT- TV, serving Minot, KQCD-TV,
serving Dickinson, and KUMV-TV, serving Williston. It is anticipated that
financing for the transaction will be from additional equity contributions by
Sunrise and the modification and expansion of the present Bank Credit
Agreement. The transaction is expected to close around October 1, 1998 and is
subject to Department of Justice and Federal Communications Commission review.
The Meyer Purchase Agreement is subject to customary conditions and no
assurances can be given as to whether, or on what terms, such transaction will
be consummated by the Company.
8
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Introduction
The operating revenues of the Stations are derived primarily from advertising
revenues and, to a much lesser extent, compensation paid by the networks to the
Stations for broadcast network programming. The Stations' primary operating
expenses are employee compensation and related benefits, news gathering, film
and syndicated programming expenditures and promotional costs. A significant
proportion of the operating expenses of the Stations are fixed.
In general, television stations receive revenues from advertising sold for
placement within and adjoining its local programming and national network
programming. Advertising is sold in time increments and is priced primarily on
the basis of a program's popularity within the demographic group an advertiser
desires to reach, as measured principally by audience surveys conducted in
February, May and November of each year. The ratings of local television
stations affiliated with a national television network can be affected by
ratings of network programming. In addition, advertising rates are affected by
the number of advertisers competing for the available time, the size and
demographic makeup of the markets served by the television station and the
availability of alternative advertising media in the market areas. Advertising
rates are highest during the most desirable viewing hours, generally during
local news programming, access (the hour before prime time), early fringe (3:00
p.m. to 5:00 p.m.) and prime time.
Most advertising contracts are short-term and generally run for only a few
weeks. A majority of the revenues are generated from local advertising, which
is sold primarily by a Station's sales staff, and the remainder of the
advertising revenues represents national advertising, which is sold by
independent national advertising sales representatives. The Stations generally
pay commissions to advertising agencies on local and national advertising, and
on national advertising the Stations pay additional commissions to the national
sales representatives. Three Stations are represented by Katz Media
Corporation, one Station is represented by TeleRep, Inc. and one Station by
Harrington, Righter and Parsons, each an independent national advertising sales
representative firm operating under an agreement that provides for exclusive
representation within the particular market of the Station. For the three
months ended March 31, 1998, local advertising comprised 57.5% of the Company's
gross spot revenues (excluding political advertising) and national advertising
comprised 42.5% of the Company's gross spot revenues (excluding political
advertising). The gross spot broadcast revenues of the Stations are generally
highest in the second and fourth quarters of each year, due in part to
including increases in consumer advertising in the spring and retail
advertising in the period leading up to and including the holiday season.
Advertising spending by political candidates is typically heaviest during the
fourth quarter.
"Broadcast Cash Flow" is defined as operating income (loss) plus depreciation
of property and equipment, amortization of intangible assets, corporate
overhead and amortization of program rights, less payments for program rights.
The Company has included broadcast cash flow data because such data are
commonly used as a measure of performance for broadcast companies and are used
by investors to measure a company's ability to service debt. Broadcast cash
flow is not, and should not be used as an indicator or alternative to operating
income, net loss or cash flow as reflected in the accompanying financial
statements, is not intended to represent funds available for debt service,
dividends, reinvestment or other discretionary uses, is not a measure
of financial performance under generally accepted accounting principles and
should not be considered in isolation or as a substitute for measures of
performance prepared in accordance with generally accepted accounting
principles.
This Quarterly Report on Form 10-Q contains forward-looking statements that
involve a number of risks and uncertainties. When used in this Quarterly
Report on Form 10-Q the words "believes," "anticipated," and similar
expressions are intended to identify forward-looking statements. There are a
number of factors that could cause the Company's actual results to differ
materially from those forecasted or projected in such forward-looking
statements. These factors include, without limitation, competition from other
local free over-the-air broadcast stations, acquisition of additional broadcast
properties and future debt service obligations. Readers are cautioned not to
place undue reliance on these forward-looking statements which speak only as of
the date hereof. The Company undertakes no obligations to publicly release the
result of any revisions to these forward-looking statements which may be made
to reflect events or circumstance after the date hereof or to reflect the
occurrence of unanticipated events.
9
<PAGE> 11
HISTORICAL PERFORMANCE
Operating Data.
The following table sets forth certain operating data for the Company for the
three months ended March 31, 1998 and March 31, 1997. The three months ended
March 31, 1997 combines the one month ended March 31, 1997 for the Company and
the two months ended February 28, 1997 for the Smith Stations, the predecessor
entity. The predecessor entity operations are presented on a pre-acquisition
cost basis and are not comparable with the Company's three months of operations
ended March 31, 1998 and one month ended March 31, 1997.
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1998 1997
------------ -----------
(Dollars in thousands)
<S> <C> <C>
Operating Loss $(1,343) $ (381)
Add:
Amortization of program rights 1,093 924
Depreciation of property and equipment 1,353 1,062
Amortization of intangibles 3,399 1,877
Corporate overhead 460 248
Less:
Payments for program rights (1,103) (929)
------- -------
Broadcast cash flow $ 3,859 $ 2,801
======= =======
</TABLE>
Television Revenues.
Set forth below are the principal types of television revenues that the Company
has generated for the periods indicated and the percentage contribution of each
to total revenues. The three months ended March 31, 1997 combines the one
month ended March 31, 1997 for the Company and the two months ended February
28, 1997 for the Smith Stations, the predecessor entity.
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1998 1997
----------------------- -----------------------
$ % of $ % of
-------- -------- -------- --------
(Dollars in Thousands)
<S> <C> <C> <C> <C>
Revenues:
Local $ 6,568 49.52% $ 4,683 47.56%
National 4,852 36.58% 3,853 39.13%
Political 236 1.78% - -
Network Compensation 947 7.14% 734 7.45%
Trade and barter 418 3.15% 320 3.25%
Other 243 1.83% 257 2.61%
------- ------ -------- ------
Total 13,264 100.00% 9,847 100.00%
Agency and national
representative commissions (1,929) (14.54%) (1,423) (14.45%)
------- ------ -------- ------
Net revenue $11,335 85.46% $ 8,424 85.55%
======= ====== ======== ======
</TABLE>
10
<PAGE> 12
Results of Operations.
Set forth below is a summary of the operations of the Company for the periods
indicated and their percentages of net revenue. The three months ended March
31, 1997 combines the one month ended March 31, 1997 for the Company and the
two months ended February 28, 1997 for the Smith Stations, the predecessor
entity. The predecessor entity operations are presented on a pre-acquisition
cost basis and are not comparable with the Company's three months of operations
ended March 31, 1998 and one month ended March 31, 1997.
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1998 1997
------------------------ ---------------------------
% of % of
$ Revenues $ Revenues
--------- ----------- ----------- ---------
(Dollars in Thousands)
<S> <C> <C> <C> <C>
Net Revenues: $ 11,335 100.00% $ 8,424 100.00%
Station Operating Expenses:
Engineering expense 618 5.45% 406 4.82%
Program/Production expense 771 6.80% 635 7.54%
News expense 1,616 14.26% 1,126 13.37%
Sales/Traffic expense 1,095 9.66% 796 9.45%
Promotion expense 153 1.35% 146 1.73%
General & administrative expense 1,732 15.28% 1,293 15.35%
Trade and barter expense 388 3.42% 292 3.47%
--------- ----- ----------- -----
Total station operating expenses 6,373 56.22% 4,694 55.72%
--------- ----- ----------- -----
Amortization of program rights 1,093 9.64% 924 10.97%
Depreciation 1,353 11.94% 1,062 12.61%
Amortization 3,399 29.99% 1,877 22.28%
Corporate overhead 460 4.06% 248 2.94%
--------- ------ ----------- ------
Operating income $ (1,343) (11.85)% $ (381) (4.52)%
========= ====== =========== ======
Broadcast cash flow $ 3,859 34.04% $ 2,801 33.25%
========= ====== =========== ======
</TABLE>
Three months ended March 31, 1998 compared to three months ended March 31, 1997
Gross Revenues
Gross revenues increased by $3.4 million or 34.70% to $13.3 million for the
three months ended March 31, 1998 from $9.8 million for the three months ended
March 31, 1997. The majority of the increase, $2.6 million, is attributable to
the acquisition of WJAC which occurred on October 1, 1997. Local revenue was
up 40.3% and national revenue was up 25.9% over the prior comparative period.
Most of the remaining increase in local and national revenues was due to the
Olympic Games broadcast on WROC, a CBS affiliate. The quarter ended March 31,
1998 had approximately $0.2 million of political revenues compared to zero in
the quarter ended March 31, 1997.
Net Revenues
Net revenues increased by $2.9 million or 34.6% to $11.3 million for the three
months ended March 31, 1998 from $8.4 million for the three months ended March
31, 1997 due to the reasons noted above. Agency and national representative
commission as a percentage of sales increased due to political sales.
11
<PAGE> 13
Station Operating Expenses
Station operating expenses were $6.4 million for the three months ended March
31, 1998 compared to $4.7 million for the three months ended March 31, 1997, an
increase of $1.7 million or 36.2% over the comparable period. The majority of
the increase, $1.5 million, is attributable to the acquisition of WJAC. The
other increase reflects additional news costs at KSBW for coverage of the severe
rains in California, increased costs at WEYI for improvements in news personnel
and additional news expenditures at WROC.
Amortization of Program Rights
Amortization of program rights increased by $0.2 million to $1.1 million
for the three months ended March 31, 1998 from $0.9 million for the comparable
period in 1997. The majority of the increase, $0.15 million, is attributable
to the acquisition of WJAC.
Depreciation
Depreciation increased by $0.3 million to $1.4 million for the three months
ended March 31, 1998 from $1.1 million for the comparable period in 1997. An
increase of $0.3 million is attributable to the acquisition of WJAC.
Amortization
Amortization increased by $1.5 million to $3.4 million for the three months
ended March 31, 1998 from $1.9 million for the comparable period in 1997. The
majority of the increase, $0.9 million, is attributable to the acquisition of
WJAC. The additional increase is due to the revaluation of assets at the time
of the purchase of the four Smith Stations by the Company on March 1, 1997.
Corporate overhead
Corporate overhead increased by $0.3 million to $0.5 million for the three
months ended March 31, 1998 from $0.2 million for the three months ended March
31, 1997. Cost increases related mostly to salary costs as the Company added
staff for expected expansion.
Operating Income
Operating income decreased by $0.9 million to a loss of $1.3 million for the
three months ended March 31, 1998, due to the reasons outlined above.
Interest Expense
Interest expense increased by $1.4 million to $3.1 million for the three months
ended March 31, 1998, from $1.7 million for the three months ended March 31,
1997. The majority of the increase, $1.0 million, is due to the higher
outstanding balances resulting from the purchase of the Smith Stations on March
1, 1997. The additional increase of $0.4 million is attributable to the
acquisition of WJAC.
Income Tax Benefit
Income tax benefit of $0.3 million for the three months ended March 31, 1998, is
attributable to the acquisition of WJAC and the related amortization of the step
up in basis of WJAC assets.
Liquidity and Capital Resources
On March 25, 1997, the Company completed a private placement of $100,000,000
principal amount of its 11% Senior Subordinated Notes (the "Old Notes") due
March 15, 2007. The proceeds from the sale of the Old Notes were used to repay
all outstanding term loan and revolving credit borrowings under the Company's
existing Bank Credit Agreement. The remaining net proceeds from the sale of the
Old Notes were used to fund the purchase of WJAC and for general working capital
purposes. Interest is payable on March 15 and September 15 of each year.
On September 26, 1997, the Company completed an exchange offer in which all
of the Old Notes were
12
<PAGE> 14
exchanged for registered 11% Senior Subordinated Notes (the "New Notes") of the
Company having substantially identical terms as the Old Notes. The Indenture
imposes certain limitations on the ability of the Company and certain of its
subsidiaries to, among other things, pay dividends or make certain other
restricted payments, consummate certain asset sales, enter into certain
transactions with affiliates, incur liens, impose restrictions on the ability
of a subsidiary to pay dividends or make certain payments to the Company, merge
or consolidate with any person or sell, assign, transfer, lease, convey or
otherwise dispose of all or substantially all of the assets of the Company.
The Company's Bank Credit Agreement currently provides for borrowings up
to $35.0 million under its secured revolving credit facility, which matures
on February 27, 2004, with reducing availability beginning in January of 2000.
Undrawn amounts under such facility are available for acquisitions, working
capital and general corporate purposes. It is anticipated that the Credit
Agreement will be expanded in the near future to fund acquisitions, working
capital and general corporate purposes (see Recent Developments). There
was $25.5 million outstanding under the Bank Credit Agreement at March 31,
1998 which included $8,000,000 for the Abilene Radio and Television
acquisition.
Interest payments under the Bank Credit Agreement and the New Notes represent
significant liquidity requirements for the Company. Loans under the Bank
Credit Agreement bear interest at floating rates based upon the interest
rate option selected by the Company. In addition, the Company's 14% Redeemable
Preferred Stock (the "Redeemable Preferred Stock") is cumulative, with
dividends payable quarterly, and prior to 2002 may, at the option of the
Company, be paid in additional shares of Redeemable Preferred Stock. In the
event dividends on the Redeemable Preferred Stock are paid in cash, dividends
would amount to $4.2 million annually. The Bank Credit Agreement and the
Indenture will limit the Company's ability to pay cash dividends prior to 2002
and the Company's ability to exchange the Redeemable Preferred Stock for debt
of the Company.
Based on the current level of operations, anticipated future internally
generated growth, additional borrowings under an expanded Bank Credit Agreement
and additional equity contributions from Sunrise, the Company anticipates that
it will have sufficient funds to meet its anticipated requirements for working
capital, capital expenditures, interest payments and its pending acquisitions.
The Company's future operating performance and ability to service or refinance
the Notes and to extend or refinance the Bank Credit Agreement will be subject
to future economic conditions and to financial, business and other factors,
many of which are beyond the control of the Company. The ability of the Company
to implement its business strategy, complete its transaction with
Hearst-Argyle, Meyer Broadcasting Company and to consummate future acquisitions
will require significant additional debt and/or equity capital and no assurance
can be given as to whether, and on what terms, such additional debt and/or
equity capital will be available, including additional equity contributions from
Sunrise. The degree to which the Company is leveraged could have a significant
effect on its results of operations.
Capital Expenditures
Capital expenditures were $3.1 million for the year ended December 31, 1997 and
$0.3 million for the three month period ended March 31, 1998 and 1997,
respectively. Capital expenditures are anticipated to be $2.5 million for 1998
as the Company continues to improve the news gathering and production
capabilities of WROC, WEYI and WJAC. The Company anticipates spending an
additional $1.9 million to upgrade the KRBC and KACB technical facilities over
the next three months. The Company's ability to make capital expenditures is
subject to certain restrictions under the Bank Credit Agreement.
Depreciation, Amortization and Interest
Because the Company has incurred substantial indebtedness in the acquisitions
of its five Stations ("Acquisitions") for which it will have significant debt
service requirements, and because the Company will have significant non-cash
charges relating to the depreciation and amortization expense of the property
and equipment and intangibles that were acquired in the Acquisitions, the
Company expects that it will report net losses for the foreseeable future.
The Acquisitions have been accounted for using the purchase method of
accounting, and the total purchase price was allocated to the assets and
liabilities acquired based upon their respective fair values. As a result, the
13
<PAGE> 15
Company is recording depreciation and amortization expenses, as well as
interest expenses, that are significantly in excess of historical levels for
the Stations.
PRO FORMA BASIS
Proforma Operating Data.
The following table sets forth certain operating data for the Company's five
Stations for the three months ended March 31, 1998 and March 31, 1997 as if the
Company had owned all five Stations since January 1, 1997.
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1998 1997
------------ -----------
(Dollars in thousands)
<S> <C> <C>
Operating Loss $(1,343) $(1,170)
Add:
Amortization of program rights 1,093 1,087
Depreciation of property and equipment 1,353 1,221
Amortization of intangibles 3,399 3,030
Corporate overhead 460 248
Less:
Payments for program rights (1,103) (1,092)
------- ------
Broadcast cash flow $ 3,859 $ 3,324
======= =======
</TABLE>
Proforma Television Revenues.
Set forth below are the principal types of television revenues that the
Company's five Stations generated for the periods indicated as if they were all
owned since January 1, 1997 and the percentage contribution of each to total
revenues.
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1998 1997
------------------------- -----------------------------
$ % $ %
---------- ----------- ------------ -----------
(Dollars in Thousands)
<S> <C> <C> <C> <C>
Revenues:
Local $ 6,568 49.52% $ 5,889 47.73%
National 4,852 36.58% 4,695 38.05%
Political 236 1.78% - -
Network Compensation 947 7.14% 1,006 8.15%
Trade and barter 418 3.15% 432 3.50%
Other 243 1.83% 317 2.57%
-------- ------ -------- -----
Total 13,264 100.00% 12,339 100.00%
Agency and national
representative commissions (1,929) (14.54)% (1,761) (14.27)%
-------- ------ -------- -------
Net revenue $ 11,335 85.46% $ 10,578 85.73%
======== ====== ======== ======
</TABLE>
14
<PAGE> 16
Proforma Results of Operations.
Set forth below is a summary of the operations of the Company's five Stations
for the periods indicated and their percentages of net revenue as if the
Company had owned the five Stations from January 1, 1997.
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1998 1997
------------------------- --------------------------
% of % of
$ Revenues $ Revenues
--------- --------- ---------- ---------
(Dollars in Thousands)
<S> <C> <C> <C> <C>
Net Revenues: $ 11,335 100.00% $ 10,578 100.00%
Station Operating Expenses:
Engineering expense 618 5.45% 558 5.28%
Program/Production expense 771 6.80% 758 7.17%
News expense 1,616 14.26% 1,482 14.01%
Sales/Traffic expense 1,095 9.66% 1,034 9.78%
Promotion expense 153 1.35% 191 1.81%
General & administrative expense 1,732 15.28% 1,734 16.39%
Trade and barter expense 388 3.42% 405 3.83%
--------- ------ ---------- ------
Total station operating expenses 6,373 56.22% 6,162 58.25%
--------- ------ ---------- ------
Amortization of program rights 1,093 9.64% 1,087 10.28%
Depreciation 1,353 11.94% 1,221 11.26%
Amortization 3,399 29.99% 3,030 17.74%
Corporate overhead 460 4.06% 248 0.96%
--------- ------ ---------- ------
Operating income $ (1,343) (11.85)% $ (1,170) 1.50%
========= ====== ========== ======
Broadcast cash flow $ 3,859 34.04% $ 3,322 31.40%
========= ====== ========== ======
</TABLE>
All of the significant changes on a proforma basis between the quarters ended
March 31, 1998 and 1997 have been explained in the historical discussions other
than changes related to WJAC. Gross revenues at WJAC increased by $0.1 million
to $2.6 million for the three months ended March 31, 1998 from $2.5 million for
the three months ended March 31, 1997. WJAC operating expenses, other than
depreciation and amortization, decreased by $0.1 million during the first
quarter of 1998 as compared to the first quarter of 1997.
Recent Developments
On April 1, 1998, the Company consummated the acquisition of all of the
outstanding common stock of Abilene Radio and Television Company ("ARTC") for
approximately $7,250,000 plus working capital. The transaction was funded by
additional borrowing under the Bank Credit Agreement.
In a series of transactions, the Company will acquire certain assets from
Hearst-Argyle Television, Inc., ("Hearst") through transactions structured as
a Section 1031 tax deferred exchange of assets. On February 3, 1998, the
Company agreed to acquire WPTZ-TV ("WPTZ"), WNNE-TV ("WNNE"), and a LMA for
WFFF-TV ("WFFF") from Sinclair Broadcast Group, Inc. for $72.0 million, with the
intention of using these assets in the Hearst transaction. WPTZ and WNNE
are the NBC affiliates and WFFF is the Fox affiliate serving the
Burlington, Vermont and Plattsburgh, New York television market. On February
18, 1998, the Company agreed with Hearst to trade KSBW-TV, WPTZ and WNNE for
WDTN-TV, the ABC affiliate in Dayton, Ohio, WNAC-TV, the Fox affiliate in
Providence, Rhode Island, WNAC-TV's interest in a Joint Marketing Programming
Agreement with WPRI-TV, the CBS affiliate in Providence, Rhode Island, and
approximately $22
15
<PAGE> 17
million in cash. On April 24, 1998, the Company completed a purchase of non
license assets of WPTZ, WNNE and WFFF for $70.0 million dollars. Funds to
complete this acquisition were provided by Hearst. The assets acquired are
pledged to Hearst under the related loan agreement. The purchase of the
license assets of WPTZ, WNNE and WFFF is expected to close at the end of May
1998 and is subject to Federal Communications Commission approval and other
customary conditions. No assurance can be given as to whether, or on what
terms, such transaction will be consummated by the Company.
On April 24, 1998, the Company sold to Robert N. Smith, the Chief Executive
Officer and Director of Sunrise and the Company, the assets and certain rights
and obligations related to WFFF. Within ninety days of the closing of the
exchange of WPTZ and WNNE by the Company to Hearst-Argyle Stations, Inc., Smith
has agreed to pay the Company $0.5 million, which amount would be increased to
reflect any operating losses associated with WFFF subsequent to the Company's
commencement of operation of WFFF under a Time Brokerage Agreement on April 24,
1998. The $0.5 million purchase price is secured by a note and liens on all of
the assets sold.
On April 27, 1998, the Company entered into a definitive agreement ("Meyer
Purchase Agreement") to acquire the television assets of Meyer Broadcasting
Company of Bismarck, North Dakota ("Meyer") for $63.75 million. Meyer's
television stations, which are all affiliated with NBC, include KVLY-TV,
serving Fargo, KFYR-TV serving Bismarck, KMOT-TV, serving Minot, KQCD-TV,
serving Dickinson, and KUMV-TV, serving Williston. It is anticipated that
financing for the transaction will be from additional equity contributions by
Sunrise and the modification and expansion of the present Bank Credit
Agreement. The transaction is expected to close around October 1, 1998 and is
subject to Department of Justice and Federal Communications Commission review.
The Meyer Purchase Agreement is subject to customary conditions and no
assurances can be given as to whether, or on what terms, such transaction will
be consummated by the Company.
Inflation
The Company believes that its business is affected by inflation to an extent no
greater than other businesses are generally affected.
Year 2000 Compliance
The Company has commenced a study of its computer systems in order to assess
its exposure to year 2000 issues. The Company expects to make the necessary
modifications or changes to its computer information systems to enable proper
processing of transactions relating to the year 2000 and beyond and anticipates
its internal costs will not have a material effect on future operations. There
can be no assurance other matters relating to year 2000 issues will not have a
material adverse effect on the Company.
Environmental Regulation
Prior to the Company's ownership or operation of its facilities, substances or
wastes that are or might be considered hazardous under applicable environmental
laws may have been generated, used, stored or disposed of at certain of those
facilities. In addition, environmental conditions relating to the soil and
groundwater at or under the Company's facilities may be affected by the
proximity of nearby properties that have generated, used, stored or disposed of
hazardous substances. As a result, it is possible that the Company could become
subject to environmental liabilities in the future in connection with these
facilities under applicable environmental laws and regulations. Although the
Company believes that it is in substantial compliance with such environmental
requirements, and has not in the past been required to incur significant costs
in connection therewith, there can be no assurance that the Company's costs to
comply with such requirements will not increase in the future. The Company
presently believes that none of its properties have any condition that is likely
to have a material adverse effect on the Company's financial condition or
results of operations.
Employees
As of March 31, 1998, the Stations had approximately 375 full-time and 36
part-time employees. WEYI has a contract with United Auto Workers that expires
on August 7, 1998 with respect to 50 employees. WROC has a contract with
American Federation of Television and Radio Artists ("AFTRA") that expires on
March 2, 1999 with respect to 18 employees, and has entered into a contract
with the National Association of Broadcast Employees and Technicians/
Communications Workers of America ("NABET") that expires on May 31, 2000
with respect to
16
<PAGE> 18
32 employees. WTOV has a contract with AFTRA that expires January 28, 1999 and
a contract with International Brotherhood of Electrical Workers that expires on
November 30, 2000 with respect to 22 and 17 employees respectively. WJAC has a
contract with International Alliance of Theatrical Stage Employees that expires
on September 30, 2002 with respect to 48 employees. No significant labor
problems have been experienced by the Stations. The Company considers its
overall labor relations to be good. However, there can be no assurance that the
Company's collective bargaining agreements will be renewed in the future or
that the Company will not experience a prolonged labor dispute, which could
have a material adverse effect on the Company's business, financial condition
or results of operations.
PART II
Item 6 Exhibits and Reports on Form 10-Q
(a) Exhibits
<TABLE>
<S> <C>
2.1 Asset Purchase Agreement, dated as of February 3, 1998, by and among Tuscaloosa Broadcasting, Inc. as
Seller and STC Broadcasting of Vermont, Inc., as Buyer (1)
2.2 Asset Exchange Agreement, dated as of February 18, 1998, by and among STC Broadcasting,
Inc., STC Broadcasting of Vermont, Inc., STC License Company, STC Broadcasting of Vermont Subsidiary,
Inc. and Hearst-Argyle Stations, Inc. (1)
2.3 Contract of Sale by and between Meyer Broadcasting Company and STC Broadcasting, Inc. dated April 27,
1998 (2)
10.1 Affiliation Agreement, dated March 2, 1998 between National Broadcasting Company, Inc. and STC
Broadcasting, Inc. (2)
10.2 Letter Agreement between STC Broadcasting of Vermont, Inc. and Smith Broadcasting of Vermont, LLC dated
April 24, 1998 (2)
10.3 Interim Operating Agreement by and among Smith Broadcasting of Vermont, LLC, STC Broadcasting, Inc.,
STC Broadcasting of Vermont, Inc., STC License Company, and STC Broadcasting of Vermont Subsidiary, Inc. dated
April 24, 1998 (2)
10.4 Security Agreement dated April 24, 1998 made by Smith Broadcasting of Vermont, LLC in favor of STC
Broadcasting of Vermont Subsidiary, Inc. (2)
10.5 $500,000 Promissory Note dated April 24, 1998 made by Smith Broadcasting of Vermont, LLC in favor of
STC Broadcasting of Vermont Subsidiary, Inc. (2)
10.6 Letter Agreement between STC Broadcasting, Inc. and Hearst-Argyle Stations, Inc. regarding certain
amendments to the STC Broadcasting, Inc. and Sinclair Broadcast Group, Inc. Asset Purchase Agreement and the STC
Broadcasting, Inc. and Hearst-Argyle Stations, Inc. Asset Exchange Agreement (2)
10.7 First Amendment to Transitional Service Agreement between STC Broadcasting of Vermont Subsidiary, Inc.,
Tuscaloosa Broadcasting Inc., William Evans, Rollins Telecasting and WNNE-TV, Inc. dated April 24, 1998 (2)
10.8 First Amendment to Asset Purchase Agreement by and between STC Broadcasting of Vermont, Inc. and
certain subsidiaries of Sinclair Broadcast Group, Inc. dated April 20, 1998 (2)
10.9 Second Amendment to Asset Purchase Agreement by and between STC Broadcasting of Vermont, Inc. and
certain subsidiaries of Sinclair Broadcast Group, Inc. dated April 24, 1998 (2)
</TABLE>
17
<PAGE> 19
<TABLE>
<S> <C>
10.10 Waiver and Second Amendment, dated April 22, 1998 to the Credit Agreement dated February 28, 1997 by and
among STC Broadcasting, Inc. and The Chase Manhattan Bank and NationsBank of Texas, N.A. (2)
10.11 Credit Agreement between STC Broadcasting of Vermont Subsidiary, Inc. as borrower and Hearst-Argyle
Stations, Inc. as lenders dated April 24, 1998 (2)
21.1 Subsidiaries of STC Broadcasting, Inc. (2)
27.1 Financial Data Schedule (2)
</TABLE>
(1) Incorporated by reference to the Form 10-K of STC Broadcasting, Inc.
for the period March 1, 1997 to December 31, 1997.
(2) Filed herewith
(B) Reports on Form 8-K
No reports on Form 8-K have been filed by the registrant during the
quarter for which this report covers.
18
<PAGE> 20
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
STC Broadcasting, Inc.
Registrant
Date: May 8, 1998 By: /s/ David A. Fitz
-------------------------------
David A. Fitz
Senior Vice-President/
Chief Financial Officer
19
<PAGE> 1
EXHIBIT 2.3
CONTRACT OF SALE
BY AND BETWEEN
- --------------------------------------------------------------------------------
MEYER BROADCASTING COMPANY,
AS SELLER
AND
STC BROADCASTING, INC.,
AS BUYER
- --------------------------------------------------------------------------------
APRIL 27, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 1 PURCHASE AND SALE OF ASSETS............................................................... 4
1.01 Assets...................................................................................... 4
1.02 Excluded Assets............................................................................. 6
ARTICLE 2 PURCHASE PRICE AND PAYMENTS............................................................... 8
2.01 Purchase Price.............................................................................. 8
2.02 Deposit; Method of Payment of the Purchase Price............................................ 8
2.03 Adjustments and Assumptions................................................................. 9
ARTICLE 3 APPLICATION FOR GOVERNMENT APPROVAL....................................................... 10
3.01 Filing and Prosecution of Application....................................................... 10
3.02 Expenses.................................................................................... 10
3.03 Control of Stations......................................................................... 10
3.04 Hart-Scott-Rodino Notification.............................................................. 10
3.05 Other Governmental Approvals................................................................ 11
3.06 Recording Fees, Survey Costs and Title Insurance Commitments................................ 11
ARTICLE 4 ASSUMPTION OF LIABILITIES................................................................. 11
4.01 Assumed Liabilities......................................................................... 11
ARTICLE 5 CLOSING DATE AND CLOSING TRANSACTIONS..................................................... 12
5.01 The Closing................................................................................. 12
5.02 Deliveries by Seller........................................................................ 12
ARTICLE 6 REPRESENTATIONS, WARRANTIES AND AGREEMENTS................................................ 14
6.01 Representations and Warranties of Seller.................................................... 14
6.02 Representations and Warranties of Buyer..................................................... 24
6.03 Brokers..................................................................................... 25
ARTICLE 7 CONDITIONS TO OBLIGATIONS................................................................. 25
7.01 Conditions to the Obligations of Buyer...................................................... 25
7.02 Conditions to the Obligations of Seller..................................................... 28
ARTICLE 8 TERMINATION; REMEDIES..................................................................... 28
8.01 Termination................................................................................. 28
8.02 Effect of Termination....................................................................... 29
8.03 Default by Buyer............................................................................ 29
8.04 Default by Seller........................................................................... 30
8.05 Specific Performance........................................................................ 30
8.06 Liquidated Damages.......................................................................... 30
8.07 Return of Letter of Credit.................................................................. 31
ARTICLE 9 CONDUCT OF BUSINESS PENDING CLOSING....................................................... 31
9.01 Covenants and Agreements of Seller.......................................................... 31
ARTICLE 10 INDEMNITY................................................................................ 36
10.01 Indemnification by Seller................................................................... 36
10.02 Indemnification by Buyer.................................................................... 37
10.03 Remedies.................................................................................... 37
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
10.04 Claims Procedures........................................................................... 38
10.05 Indemnity Deposit........................................................................... 38
ARTICLE 11 RISK OF LOSS............................................................................. 39
11.01 Risk of Loss................................................................................ 39
ARTICLE 12 MISCELLANEOUS............................................................................ 39
12.01 Best Efforts................................................................................ 39
12.02 Access...................................................................................... 39
12.03 No Solicitation............................................................................. 40
12.04 Expenses.................................................................................... 40
12.05 Collection of Accounts Receivable........................................................... 40
12.06 Survival.................................................................................... 40
12.07 Notices..................................................................................... 41
12.08 Entire Agreement; Amendments; Waiver........................................................ 42
12.09 Remedies Cumulative......................................................................... 42
12.10 Assignment.................................................................................. 42
12.11 Headings.................................................................................... 42
12.12 Governing Law............................................................................... 43
</TABLE>
-3-
<PAGE> 4
CONTRACT OF SALE
AGREEMENT made this 27th day of April, 1998, by STC
BROADCASTING, INC., a Delaware corporation ("Buyer"), and MEYER BROADCASTING
COMPANY, a North Dakota corporation ("Seller").
W I T N E S S E T H:
WHEREAS, Seller is the licensee, owner and operator of
television stations KVLY-TV in Fargo, North Dakota and KFYR-TV in Bismarck,
North Dakota plus three satellite stations, KMOT-TV licensed to Minot, North
Dakota, KQCD-TV licensed to Dickinson, North Dakota, and KUMV-TV licensed to
Williston, North Dakota (the "Stations");
WHEREAS, Seller desires to sell the assets of the Stations to
Buyer under the terms and conditions set forth herein;
WHEREAS, Buyer desires to buy the assets of such Stations from
Seller under the terms and conditions set forth herein; and
WHEREAS, capitalized terms used herein without definition
shall have the respective meanings assigned thereto in Annex I attached hereto
and incorporated herein for all purposes of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants,
conditions and agreements hereinafter set forth and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties have agreed and by these presents do agree as follows:
ARTICLE 1
PURCHASE AND SALE OF ASSETS
1.01 ASSETS.
Subject to the terms and conditions hereof and in reliance upon
the representations, warranties, covenants and agreements contained herein, upon
the Closing, Seller shall sell, assign, transfer, convey and deliver to Buyer,
and Buyer shall purchase, acquire, pay for and accept from Seller, the Stations
and all real, personal and mixed assets, rights, benefits and privileges, both
tangible and intangible, wheresoever situated or located, owned, leased, used or
otherwise held by Seller in connection with the business and operations of any
of the Stations (collectively, the "Assets"); but excluding the Excluded Assets
described in Section 1.02. Subject
-4-
<PAGE> 5
to the provisions of Section 1.02, the Assets shall include all such assets
existing on the date hereof and all such assets acquired between the date hereof
and the Closing Date. The Assets shall include, without limitation, all of
Seller's right, title and interest in, to and under the following:
(a) All tangible personal property, including, without
limitation, plants, automobiles, trucks, and other on or off-road vehicles and
motorized equipment, tools, test, electronic, and other equipment, radios,
television sets, monitors, fax machines, tape players, tapes, cassettes,
cassette players, video recorders, printers, antennas, processors, receivers,
lines, cable, furniture, underground pipes and conduits, wire, amplifiers,
transformers, translators, earth stations, and other auxiliary facilities,
towers, receptacles and outlets, office furniture, equipment and supplies,
computer hardware, facilities used or useful in connection with the transmission
of television or microwave signals, all inventories (including, but not limited
to, inventories of materials and supplies of whatever nature and including
office supplies) including replacements or improvements thereof acquired or
constructed prior to the Closing Date, including, without limitation, those set
forth and described on Exhibit 1.01(a) attached hereto;
(b) All licenses, permits and other evidence of authority
issued by the FCC (the "FCC Licenses") or any other Governmental Authority,
including any pending applications for licenses or permits and any amendments,
renewals, extensions or modifications thereof and additions thereto, including,
without limitation, those set forth and described in Exhibit 1.01(b) attached
hereto;
(c) The film and program licenses (syndicated or otherwise)
and Contracts under which Seller is authorized to broadcast film product or
programs on any of the Stations and listed in Exhibit 1.01(c), including without
limitation, (i) all cash and non-cash (barter) program Contracts, and (ii) any
other such program Contracts that are entered into between the date of this
Agreement and the Closing Date in accordance with the terms of this Agreement
(collectively the "Program Contracts");
(d) All Contracts (excluding Program Contracts) pursuant to
which Seller has sold, traded or bartered commercial air time on the Stations in
consideration for any property or services in lieu of or in addition to cash,
including, without limitation, Contracts under which commercial air time
availability within a particular program are exchanged for the provision of such
program which are set forth and described in Exhibit 1.01(d) (collectively, the
"Trade-out Agreements");
(e) The Contracts listed in Exhibit 1.01(e) (including,
without limitation, all broadcast time sales agreements, network affiliation
agreements, retransmission agreements and national and local advertising
representation agreements for the Stations), together with all Contracts that
will be entered into in the Ordinary Course of Business between the date of this
Agreement and the Closing Date as permitted by this Agreement (collectively, the
"Operating
-5-
<PAGE> 6
Contracts", and together with the Program Contracts and the Trade-out
Agreements, the "Station Contracts");
(f) All interests in Real Property (including mixed real and
personal property), including, without limitation, land, structures, buildings,
studios, towers, microwave towers, easements and agreements or arrangements of
lease with respect to real property or interests therein, building improvements,
fixtures, and rights-of-way, all of which are described on Exhibit 1.01(f)
attached hereto;
(g) All of the intangible personal property, books and
records, logs, public files, historical billing information, correspondence
files, drawings, blueprints, plans and specifications, advertising lists, vendor
lists, music, sound effect and video libraries, station call letters, station
telephone and post office box numbers, promotional materials, customer files,
maintenance records or any other business records relating to or used in
connection with the operation and financial condition of the Stations, good
will, copyrights, trade marks, trade names, service marks, franchises, software,
jingles, slogans, logotypes, engineering records, FCC applications and filings
and all records maintained by Seller pursuant to the rules and regulations of
the FCC, including, without limitation, those set forth and described in Exhibit
1.01(g) attached hereto;
(h) All rights and claims of Seller, if any, whether mature,
contingent or otherwise, against third parties relating to the Assets, other
than Excluded Assets identified in Section 1.02, whether in tort, contract, or
otherwise, including, without limitation, causes of action, unliquidated rights
and claims under or pursuant to all warranties, representations and guarantees
made by manufacturers, suppliers or vendors;
(i) The business of each of the Stations as a "going
concern", customer relationships and reputation of Seller;
(j) The IBM AS400 with related Seller developed traffic and
management software, terminals, monitors, and associated miscellaneous
equipment; and
(k) All other assets, whether tangible or intangible, not
hereinbefore mentioned which are used in connection with the operation of the
Stations, not excluded pursuant to Section 1.02 hereof.
1.02 EXCLUDED ASSETS.
There shall be excepted and excluded from the Assets to be
transferred from Seller to Buyer the following (collectively, the "Excluded
Assets"):
(a) All books, records and documents, relating to the
corporate or business operations of Seller other than the Assets of the
Stations, including, without limitation, minute
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books, and similar items relating to Seller and not to the Assets or the
business or operations of the Stations, all of which items are described in
Exhibit 1.02(a) attached hereto. Any of Seller's books of account reasonably
required to confirm, review or assist in the preparation of financial statements
shall be made available to Buyer, at Buyer's expense, for examination and
duplication at Seller's offices, or at such other offices of Seller or their
successors-in-interest as may be designated by them for a period of one (1) year
after the date hereof, but only during regular business hours, and on reasonable
notice;
(b) All (i) personal items of Judith Ekberg Johnson,
including her office furniture, computer and personal items and (ii) office
furnishings, employees personal computers at Seller's corporate headquarters,
but only to the extent that the items described in clauses (i) and (ii) are
specifically identified and described in Exhibit 1.02(b);
(c) Cash, cash equivalents, accounts receivable, and
inter-company receivables and payables, if any, of Seller;
(d) The call letters "KFYR" shall be subject to use by
KFYR-AM licensed to Bismarck, North Dakota;
(e) All interests in the separate parcels of real property
of Seller adjacent to but not including the KMOT-TV studios, more specifically
described as the un-platted portion of the North Three Hundred Feet (300') of
the South One Half (S1/2) of the Southeast Quarter (SE1/4) of Section 27, Range
155 North Township 155 West, Ward County, North Dakota (the "Excluded Parcel"),
upon which rental/storage units are located and which is not used in the
operations of station KMOT-TV;
(f) All Plans, Benefit Arrangements, Qualified Plans and
Welfare Plans and the assets thereof, including, without limitation, those set
forth in Exhibit 6.01(g);
(g) Any financing or loan agreements (including, without
limitation, equipment financing agreements), and other obligations for borrowed
money; and any Contract entered into after the date hereof except as permitted
by this Agreement;
(h) Any and all claims of Seller with respect to any tax
refunds;
(i) All of Seller's deposits and prepaid expenses; provided,
however, any deposit and prepaid expense shall be included in the Assets
conveyed pursuant hereto to the extent that Seller receives adjustment therefor
pursuant to Section 2.03; and
(j) All labor union contracts, collective bargaining
agreements and employment contracts.
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ARTICLE 2
PURCHASE PRICE AND PAYMENTS
2.01 PURCHASE PRICE.
Buyer agrees to pay to Seller, and Seller agrees to accept from
Buyer, in consideration of the Assets the aggregate sum of Sixty-Three Million
Seven Hundred Fifty Thousand Dollars ($63,750,000) (the "Purchase Price").
2.02 DEPOSIT; METHOD OF PAYMENT OF THE PURCHASE PRICE.
The Deposit shall be made and the Purchase Price shall be paid
as follows:
(a) Deposit. For and in partial consideration of the execution
and delivery of this Agreement, simultaneously with the execution and delivery
of this Agreement, Buyer is depositing in escrow with the Deposit Escrow Agent
an original, irrevocable letter of credit (the "Letter of Credit") issued for
the benefit of Seller by The Chase Manhattan Bank for an amount equal to Three
Million One Hundred Eighty-Seven Thousand Five Hundred Dollars ($3,187,500) (the
"Deposit"), such Letter of Credit to be held as an earnest money deposit in
accordance with the terms and conditions of the Deposit Escrow Agreement, a form
of which is attached hereto as Exhibit A. Buyer and Seller shall cause the
Letter of Credit to be returned to Buyer on the Closing Date.
(b) Cash Payment at Closing. Buyer shall pay to Seller the
Purchase Price at Closing by wire transfer of immediately available federal
funds to an account to be identified by Seller not less than two (2) business
days before the Closing Date.
(c) Allocation of the Purchase Price. Seller and Buyer agree
to allocate the Purchase Price among the Stations for all purposes (including
financial, accounting and Tax purposes) as follows:
KVLY: $15,950,000
KMOT: $10,450,000
KQCD: $4,989,000
KUMV: $5,735,000
KFYR: $26,625,000
(i) Within thirty (30) days after the execution of this
Agreement, Seller and Buyer agree to retain Bond & Pecaro (the "Appraisal Firm")
to appraise the classes of Assets of each Station in accordance with the above
allocation of Station values. The Appraisal Firm shall be instructed to perform
an appraisal of the classes of Assets of each Station and deliver a preliminary
draft report to Seller and Buyer as soon as reasonably practicable. Seller and
Buyer will be given an opportunity to review and comment on the preliminary
draft report before the
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Appraisal Firm issues the final report (such final report, the "Appraisal
Report"). Seller and Buyer shall each pay one-half of the fees, costs and
expenses of the Appraisal Firm whether or not the transactions contemplated
hereby are consummated; provided, that the total cost of Seller's portion of the
appraisal shall not exceed Ten Thousand Dollars ($10,000).
(ii) Seller and Buyer each represent, warrant,
covenant, and agree with each other that the Purchase Price shall be allocated
among the classes of Assets for each Station, as set forth in the Appraisal
Report. Seller and Buyer agree, pursuant to Section 1060 of the Code that the
Purchase Price shall be allocated in accordance with this Section 2.02(c), and
that all Tax returns and reports shall be filed consistent with such allocation.
Notwithstanding any other provision of this Agreement, the provisions of this
Section 2.02(c) shall survive the Closing Date without limitation.
2.03 ADJUSTMENTS AND ASSUMPTIONS.
(a) The Station's expenses and accounts payable attributable to
the operation of the Stations up to 12:01 a.m. on the day of the Closing shall,
except as hereinafter provided in this Agreement, be for the account of, and be
the sole responsibility of, Seller. Expenses such as power and utility
charges, lease rents, property taxes, frequency discounts, prepaid time sales
agreements, outstanding trade balances under Trade-out Agreements (as defined in
Section 1.01(d)), annual license fees (if any) and similar prepaid and deferred
items shall be prorated between Seller and Buyer. All prorations shall be made
and paid insofar as feasible at Closing, with a final settlement within ninety
(90) days after the Closing.
(b) With specific reference to Liabilities with respect to
Seller's employees, including, without limitation, Liabilities for vacation pay
or vacation time, wages, commissions, severance, payroll taxes, fringe benefits
and other Liabilities of Seller with respect to its employees, it is understood
that Seller will be solely responsible for all such Liabilities and that Buyer
will not assume any such Liabilities. With specific reference to payment of
commissions to employees, Buyer shall pay commissions to its employees on sales
made by or on behalf of Buyer on or after the Closing Date pursuant to Buyer's
employee commission plan, and Seller shall pay to its employees on sales made by
or on behalf of Seller prior to the Closing Date pursuant to Seller's employee
commission plan. Employees' employment with Seller shall be terminated by
Seller as of the Closing Date, and Buyer may employ employees of its choice from
and after said date upon terms acceptable to Buyer and such employees. During
the four (4) week period prior to the Closing Date, Seller shall provide Buyer
with reasonable opportunities to interview any of the employees of the Stations
concerning employment of such individuals by Buyer after Closing, and will
permit Buyer reasonable access to data regarding such individuals; provided,
however, that the foregoing shall not be deemed to impose any obligation on
Buyer to hire or offer employment to any such employees or to provide any level
of benefits to such employees.
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ARTICLE 3
APPLICATION FOR GOVERNMENT APPROVAL
3.01 FILING AND PROSECUTION OF APPLICATION.
Buyer and Seller shall, as soon as practicable after the date of
this Agreement and in any event not later than five days thereafter, join in an
application to be filed with the FCC requesting its written consent to the
assignment of the FCC Licenses of the Stations from Seller to Buyer. Buyer and
Seller shall take all steps necessary to the expeditious prosecution of such
application to a favorable conclusion, using their reasonable best efforts
throughout; provided, however, that none of the parties hereto shall have any
obligation to take any unreasonable steps to satisfy complainants, if any, or to
participate in any evidentiary hearing. Neither Buyer or Seller shall take
action that such party knows or should know would adversely affect obtaining an
FCC Order, or adversely affect any FCC Order becoming a Final Order.
3.02 EXPENSES.
Except as otherwise expressly provided for herein, each party
shall bear its own legal, accounting and other expenses in connection with the
consummation of the contemplated transaction. The parties shall cooperate with
the preparation of the FCC application and FCC filing fees shall be shared
equally by the parties; however, additional expenses incurred in connection with
the prosecution and/or defense of such FCC application shall be paid by the
party causing such expenses to be incurred. Any costs incurred jointly shall be
shared equally by the parties.
3.03 CONTROL OF STATIONS.
Until Closing, Buyer shall not directly or indirectly, control,
supervise, direct or attempt to control, supervise or direct the operation of
the Stations. Such operation shall be the sole responsibility of Seller.
3.04 HART-SCOTT-RODINO NOTIFICATION.
Buyer and Seller agree that as soon as practicable, but in no
event later than ten (10) days after the execution of this Agreement, each will
complete and file any filing that may be required pursuant to Hart-Scott-Rodino
(each an "HSR Filing"), or shall mutually agree that no such filing is required
and will promptly complete and file responses to all requests for additional
data and information which may be made under such Act. Buyer and Sell shall
share equally in all filing fees incurred in connection with the HSR Filing
under this Section 3.04.
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3.05 OTHER GOVERNMENTAL APPROVALS.
Promptly following the execution of this Agreement, Buyer and
Seller shall proceed to prepare and file with the appropriate Governmental
Authorities any other requests for approvals or waivers, if any, that are
required from other Governmental Authorities in connection with the Closing,
and shall diligently and expeditiously prosecute, and shall cooperate fully
with each other in the prosecution of, such requests for approvals or waivers
and all proceedings necessary to secure such approvals and waivers. Buyer and
Seller shall share equally in all filing fees incurred in connection with the
approvals and waivers under this Section 3.05.
3.06 RECORDING FEES, SURVEY COSTS AND TITLE INSURANCE COMMITMENTS.
Buyer and Seller shall each pay one-half of all recording, license
and other similar taxes and fees, if any, applicable to, imposed upon or arising
out of the sale by Seller and the purchase by Buyer of the Assets and regardless
of which party such fee and/or tax is imposed upon. The costs and expenses of
the Surveys obtained by Buyer for the Title Insurance Commitments shall be paid
by Buyer. Buyer and Seller shall each pay one-half of costs of obtaining the
Title Insurance Commitments.
ARTICLE 4
ASSUMPTION OF LIABILITIES
4.01 ASSUMED LIABILITIES.
Except as expressly set forth below in this Section 4.01, Buyer
does not assume any liabilities or obligations of Seller or the Stations and
Seller shall defend, indemnify and hold Buyer harmless from and against any and
all obligations or liabilities of Seller and the Stations other than those
expressly assumed. From and after the Closing Date, Buyer shall assume and pay,
perform and discharge, and indemnify and hold Seller harmless from and against,
the following future liabilities, obligations and commitments of Seller to be
observed and performed by Buyer from and after the Closing Date, except
obligations, liabilities or commitments accrued prior to the Closing Date:
(a) All of Seller's obligations and commitments from and under
the leases, agreements, permits, consents, licenses, contracts and documents
listed in Exhibits 1.01(b), (c), (d) and (e) as the same may be modified with
the written consent of Buyer on or prior to the Closing Date.
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ARTICLE 5
CLOSING DATE AND CLOSING TRANSACTIONS
5.01 THE CLOSING.
The Closing of this Agreement shall be held on the last business
day of the month during which all of the FCC Orders have become Final Orders.
Closing shall take place at Seller's offices in Bismarck, North Dakota, or such
location as Buyer and Seller shall mutually agree.
5.02 DELIVERIES BY SELLER.
Seller agrees that on the Closing Date it will deliver to Buyer
such titles, bills of sale, endorsements, assignments and consents to
transfer and other good and sufficient instruments of conveyance, transfer and
consent, including, without limitation, a Bill of Sale and Assignment and
Assignment of FCC Licenses, each in the form attached hereto in Exhibit B, as
shall be effective to transfer to Buyer the Assets free and clear of all
Encumbrances. Without limiting the generality of the foregoing, Seller shall
deliver to Buyer:
(a) Appropriate instruments, in form satisfactory to Buyer's
counsel, assigning and transferring to Buyer as of the Closing Date, all of
Seller's right, title and interest in, to and under all of the Assets free and
clear of all Encumbrances.
(b) Copies of all consents and approvals, relating to the
transfer of all licenses or permits held by Seller and the assignment of any
agreement, lease or other Contract which may require consent for assignment
either by its terms or because it is personal to Seller.
(c) Certificates of title with respect to the motor vehicles
listed in Exhibit 1.01(a) or if any such motor vehicles are leased by Seller,
an assignment of such lease.
(d) All such other general instruments of transfer, assignment
and conveyance, general warranty deeds, certificates of title, assignments,
estoppel certificates and recordable assignments for leased Real Property,
evidences of consent or waiver, and other instruments or documents as shall be
necessary to evidence or perfect the sale, assignment, transfer and conveyance
of the Assets to Buyer and effectively vest in Buyer all right, title and
interest in the Assets free and clear of any and all Encumbrances and other
restrictions in accordance with the terms of this Agreement, together with
possession (or constructive possession, in the case of intangibles) thereof.
(e) Evidence reasonably satisfactory to Buyer that any and all
Liabilities which are Seller's responsibility hereunder due or payable by the
Stations or Seller pursuant to or under any Program Contract have been
satisfied to the extent required under this Agreement.
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<PAGE> 13
(f) A report dated not more than ten (10) days prior to the
Closing Date of the North Dakota Secretary of State evidencing no judgments,
financing statements, tax liens, mechanics, material men or other statutory
liens on file with respect to the Assets, and, if such report evidences that
judgments, financing statements, tax liens, mechanic's, material men's or other
statutory liens are on file with respect to any of the Assets, a termination
statement or other appropriate document signed by the secured party or
lienholder evidencing the release or termination of such financing statement or
such lien and, if applicable, a pay-off letter from such secured party or
lienholder.
(g) A copy of (i) the resolutions of directors and shareholders
of Seller, certified as being correct and complete and then in full force and
effect, authorizing the execution, delivery and performance of this Agreement,
and of the other agreements, documents and instruments contemplated herein, and
the consummation of the transactions contemplated hereby and thereby, and (ii)
a certificate of incorporation of Seller and the bylaws of Seller, all
certified by the Secretary of Seller as being true, correct and complete as of
the Closing Date.
(h) A certificate, dated as of the Closing Date and duly
executed by Seller's Broker certifying that Seller's Broker has been paid in
full for services rendered in connection with the transactions contemplated
herein and has no claim with respect thereto.
(i) Internal Revenue Service Form 8594 completed by Seller in
connection with the acquisition of the Assets by Buyer.
(j) The Indemnity Letter of Credit described in Section 10.05.
(k) The Indemnity Escrow Agreement described in Section 10.05
duly executed by Seller.
ARTICLE 6
REPRESENTATIONS, WARRANTIES AND AGREEMENTS
6.01 REPRESENTATIONS AND WARRANTIES OF SELLER.
Seller hereby represents and warrants to Buyer as follows,
which representations and warranties, together with all other representations
and warranties of Seller in this Agreement, shall, subject to the provisions of
Section 12.06 hereof, survive the date hereof and the Closing:
(a) Seller is a corporation duly organized, validly existing
and in good standing under the laws of the state of North Dakota. Neither the
nature of the business of the Stations conducted by Seller, nor the character
of the properties owned, leased or otherwise held in the operation of the
Stations by Seller makes any such qualification necessary in any other state,
country, territory or jurisdiction. Seller has all requisite power and
authority to own and operate
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<PAGE> 14
the Stations, to carry on the business of the Stations as now being conducted
and to enter into this Agreement and the other Seller Documents and perform its
obligations hereunder and thereunder.
(b) The execution, delivery and performance of this Agreement
and the other Seller Documents by Seller have been duly and validly authorized
and approved by all necessary action by Seller, and this Agreement is valid and
binding agreement, enforceable against Seller in accordance with its terms.
(c) Except as set forth in Exhibit 6.01(c), the execution and
carrying out of this Agreement and the other Seller Documents and compliance
with the provisions hereof and thereof by Seller will not violate any provision
of Law, and will not (i) with or without the giving of notice and/or the
passage of time, conflict with or result in any breach of any of the terms or
conditions of, or constitute a default under any indenture, mortgage, agreement
or other instrument or Contract to which Seller is a party or by which it or
the Assets is bound, (ii) result in the creation of any Encumbrance upon the
Assets, (iii) conflict with or violate the articles of incorporation, bylaws or
other organizational documents of Seller, or (iv) require any consent,
approval, authorization or permit of or filing with, or notification to any
Person or Governmental Authority.
(d) Seller has, or will secure, all requisite consents and
assignments and is entitled to sell and convey to Buyer good and marketable
title in and to all tangible property owned by Seller and all other rights,
assets and property described in Section 1.01 hereof, free and clear of all
Encumbrances.
(e) There are no actions, suits, arbitrations, administrative or
other proceedings, or investigations pending, or, to the knowledge of Seller,
threatened, against Seller which may materially adversely affect the Assets,
business operations, financial condition or customer relations of the Stations
or the right of Seller to dispose of the Assets being sold hereunder, or to
enter into or carry out this Agreement, nor does Seller know of any basis for
any such litigation, proceeding or investigation in the future, except for
actions, suits, proceedings or investigations affecting the television industry
generally.
(f) No representation or warranty made herein by Seller, or any
written statement, schedule or certificate furnished to Buyer pursuant hereto
or in connection with the transactions contemplated hereby by Seller contains
or will contain any untrue statement of material fact or omits or will omit a
material fact necessary to make the statement contained therein not misleading.
(g) Employee Benefit Plans.
(i) Except as set forth and described in Exhibit
6.01(g), Seller does not maintain any Plan or other Benefit Arrangement, and
has no other obligations under any other Plan or Benefit Arrangement. Any
Pension Plan terminated by Seller was terminated in
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<PAGE> 15
accordance with applicable Law and Seller has no remaining Liabilities with
respect thereto. No Plan is a Multiemployer Plan, and Seller has never been a
party to or participant in a Multiemployer Plan.
(ii) To the best of Seller's knowledge, Seller has
made all contributions and other payments required by and due under the terms
of any Plan and Benefit Arrangement.
(iii) Exhibit 6.01(g) sets forth the current Qualified
Plan. The Qualified Plan and any related trust agreements or annuity
agreements (or any other funding document) complies and have complied with
ERISA, the Code (including, without limitation, the requirements for Tax
qualification described in Section 401 thereof), and all other Laws. The
trusts established under such Plans are exempt from federal income taxes under
Section 501(a) of the Code, and Seller has provided to Buyer true and complete
copies of all IRS determination letters with respect to such exemptions.
(iv) To the best of Seller's knowledge, Seller has
complied with applicable provisions of Laws pertaining to all Plans and Benefit
Arrangements, and all premiums and assessments relating to all Plans and
Benefit Arrangements. Seller has no Liability for any delinquent contributions
within the meaning of Section 515 of ERISA (including, without limitation,
related attorneys' fees, costs, liquidated damages and interest) or for any
arrearages of wages.
(v) Exhibit 6.01(g) lists all funded Welfare Plans
that provide benefits to current employees of Seller or their beneficiaries.
The funding under each Welfare Plan does not exceed and has not exceeded the
limitations under Sections 419A(b) and 419A(c) of the Code.
(vi) To the best of Seller's knowledge, Seller has no
post-retirement medical, life insurance or other benefits promised, provided or
otherwise due now or in the future to current, former or retired employees of
Seller.
(vii) To the best of Seller's knowledge, Seller has
(A) filed or caused to be filed all returns and reports on the Plans that they
are required to file and (B) paid or made adequate provision for all fees,
interest, penalties, assessments or deficiencies that have become due pursuant
to those returns or reports or pursuant to any assessment or adjustment that
has been made relating to those returns or reports. To the best of Seller's
knowledge, all other fees, interest, penalties and assessments that are payable
by or for Seller have been timely reported, fully paid and discharged. To the
best of Seller's knowledge, there are no unpaid fees, penalties, interest or
assessments due from Seller or from any other person that are or could become
an Encumbrance on any Asset or could otherwise adversely affect the businesses
or Assets. To the best of Seller's knowledge, Seller has collected or withheld
all amounts that are required to be collected or withheld by them to discharge
their obligations, and all of those amounts have been paid to the appropriate
Governmental Authority or set aside in appropriate accounts for future
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<PAGE> 16
payment when due. To the best of Seller's knowledge, Seller has furnished to
Buyer true and complete copies of all documents setting forth the terms and
funding of each Plan.
(viii) All Welfare Plans and the related trusts that
are subject to Section 4980B(f) of the Code and Sections 601 through 607 of
ERISA comply with and have been administered in compliance with the health care
continuation-coverage requirements for tax-favored status under Section
4980B(f) of the Code (formerly Section 162(k) of the Code), Sections 601
through 607 of ERISA, and all proposed or final Treasury regulations under
Section 162 of the Code explaining those requirements.
(h) Taxes.
(i) To the best of Seller's knowledge, Seller has duly
and timely filed all required federal, North Dakota and local tax returns,
reports and estimates for all years and periods (and portions thereof) for
which any such returns, reports and estimates were due, and any and all amounts
shown on such returns and reports to be due and payable have been paid in full.
To the best of Seller's knowledge, all of such returns, reports and estimates
are true and complete in all respects. To the best of Seller's knowledge,
Seller has withheld all tax required to be withheld under applicable federal
and state of North Dakota laws and regulations, and such withholdings have
either been paid to the proper Governmental Authority or set aside in accounts
for such purpose, or accrued, reserved against and entered upon the books of
Seller, as the case may be.
(ii) To the best of Seller's knowledge, there are, and
after the date of this Agreement will be, no tax deficiencies (including
penalties and interest) of any kind assessed against or relating to Seller or
the Assets with respect to any taxable periods ending on or before, or
including, the Closing Date of a character or nature that would result in any
Encumbrance or claims on any of the Assets or on Buyer's title or use of the
Assets or that would result in any claim against Buyer.
(iii) There is no action, suit, proceeding, audit,
investigation or claim pending or, to the knowledge of Seller, threatened in
respect of any Taxes for which Seller may become liable, nor has any deficiency
or claim for any such Taxes been proposed, asserted or, to the knowledge of
Seller, threatened. There is no Contract, waiver or consent providing for an
extension of time with respect to the assessment or collection of any Taxes
against Seller.
(i) FCC Matters. Seller holds the FCC Licenses listed and
described by Seller in Exhibit 1.01(b). Such FCC Licenses constitute all of
the licenses, permits and authorizations from the FCC that are required for the
business and operations of its Stations as they are currently operated. Such
FCC Licenses are valid and in full force and effect through the dates set forth
in Exhibit 1.01(b), unimpaired by any condition which would have a material
adverse effect on the business or operations of the Stations. No application,
action or proceeding is pending for the renewal or modification of any of
Seller's FCC Licenses, and, except for actions or proceedings
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<PAGE> 17
affecting television broadcast stations generally, no application, complaint,
action or proceeding is pending or, to Seller's knowledge, threatened that may
result in the (a) revocation, modification, non-renewal or suspension of any of
such FCC Licenses, (b) issuance of a cease-and-desist order, (c) denial of an
application for renewal or (d) imposition of any administrative or judicial
sanction with respect to any of the Stations. There is not now issued or
outstanding or, to Seller's knowledge, threatened, any investigation,
proceeding, notice of violation or material complaint against Seller at the
FCC. Seller has no knowledge of any facts, conditions or events relating to
Seller or its Stations that would reasonably be expected to cause the FCC to
deny the assignment of the FCC Licenses as provided for in this Agreement.
(j) The Contracts and other intangible assets to be
transferred or assigned to Buyer under this Agreement are and will, on the
Closing Date, be in full force and effect and on the Closing Date there will be
no leases or agreements relating to the Stations (not including this Agreement)
which will be binding on Buyer other than those specifically identified herein
as assumed by Buyer. True and correct copies of all the written leases and
other Contracts have been delivered to Buyer prior to the execution of this
Agreement together with Summary Statements with respect to any oral
commitments, if any. Seller represents and warrants that Seller has complied
in all material respects with the provisions of all such Contracts and
commitments and is not, and at the time of Closing will not be in material
default under any of them, that said leases and other Contracts will be in full
force and effect at the time of Closing unless by their terms they expire prior
thereto, that other than the Station Contracts set forth and described in
Exhibits 1.01(c), (d) and (e), Seller has no other presently existing Contracts
or commitments, oral or written, relating to the Stations, or Assets including,
but not by way of limitation, any collective bargaining or employment
contracts. Seller has not entered into any Contract or any amendment or
modification which waives any of its rights under any Station Contract. The
unperformed obligations ascertainable from the terms on the face of the Station
Contracts (and such amendments or modifications thereto), are the only existing
unperformed obligations thereunder. Seller has no reason to believe that the
network affiliation agreements described in Exhibit 1.01(e) will not be renewed
by the applicable network. Each Station is in compliance in all material
respects with the terms of the applicable network affiliation agreement and
broadcasts, in full, all programming, advertising and other material required
to be broadcast pursuant to the terms of any such network affiliation
agreement.
(k) Until Closing, Seller shall keep the Assets insured to
full insurable value against loss or damage by fire or from other causes
customarily insured against by other Stations similarly situated.
(l) To the best of Seller's knowledge, Seller is in compliance
in all material respects with Laws applicable to Seller, to the Assets, to the
Stations and to its businesses and operations. Seller has obtained and holds
all material permits, licenses and approvals (none of which has been modified
or rescinded and all of which are in full force and effect) from all
Governmental Authorities necessary in order to conduct the operations of the
Stations as presently conducted and to own, use and maintain the Assets.
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(m) Attached hereto as Exhibit 6.01(m) are (i) unaudited
operating statements of each Station as of the end of the fiscal year ending
December 31 in each of 1995, 1996 and 1997, (ii) unaudited operating statements
of each Station for the three (3) month period ending March 31, 1998, (iii)
compiled balance sheets (final audited numbers less non-TV assets and
liabilities) and operating statements of each Station as of the end of the
fiscal year ending December 31 in each of 1995, 1996 and 1997 and as of and for
the two (2) month period ending February 28, 1998. All of the financial
statements referred to in this Section or furnished to Buyer after the date
hereof pursuant to this Agreement: (A) are in accordance with the books and
records of each Station, (B) present fairly and accurately the fixed and
tangible asset base of the Stations as of the respective dates and the results
of operations of the Stations for the respective periods indicated, and (C)
have been prepared in accordance with generally accepted accounting principles
applied on a basis consistent with prior accounting periods (except that none
of the statements contain all footnotes required under generally accepted
accounting principles). Exhibit 6.01(m) sets forth all material changes in
accounting methods (for financial accounting purposes) during the time periods
covered by the financial statements attached as Exhibit 6.01(m) hereto. To the
best of Seller's knowledge, there exists no Liabilities of any Station relating
to, or arising out of, the business or operations of the Stations, except for
the Liabilities set forth on the balance sheets of the Stations as of February
28, 1998, and Liabilities incurred since February 28, 1998 in the Ordinary
Course of Business.
(n) Since December 31, 1997, there has been no material
adverse change in the business, operations, prospects, condition (financial or
otherwise), Assets or Liabilities of the Stations and Seller has conducted its
Stations diligently and substantially in the manner heretofore conducted and
only in the Ordinary Course of Business, and Seller has not (i) incurred loss
of, or significant injury to, any of the Assets as the result of any fire,
explosion, flood, windstorm, earthquake, labor trouble, riot, accident, act of
God or public enemy or armed forces, or other casualty; (ii) incurred, or
become subject to, any Liability, except current Liabilities incurred in the
Ordinary Course of Business; (iii) discharged or satisfied any Encumbrance or
paid any Liability other than current Liabilities in the Ordinary Course of
Business; (iv) mortgaged, pledged or subjected to any Encumbrance any of its
Assets; (v) sold, exchanged, transferred or otherwise disposed of any of its
Assets, or canceled any debts or claims; (vi) written down the value of any
Assets or written off as uncollectible any accounts receivable, except
write-downs and write-offs in the Ordinary Course of Business, none of which,
individually or in the aggregate, are material; (vii) entered into any
transactions other than in the Ordinary Course of Business; (viii) made any
material change in any method of accounting or accounting practice; or (ix)
made any agreement to do any of the foregoing.
(o) Except for the Excluded Assets, the Assets include all of
the assets and rights required for the continued operation of each of the
Stations as presently operated. Except for the Excluded Assets, the Assets
constitute all of the properties and assets used or held for use in the
operation and business of each of the Stations. Except for leased or licensed
Assets, Seller is the sole and exclusive legal and equitable owner of, and has
good title to, the Assets free and
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clear of any Encumbrances, except for and subject only to (i) liens for taxes
not yet due and payable, and (ii) those Encumbrances listed in Exhibit 6.01(o)
which shall be discharged and removed prior to the Closing Date. At the
Closing, Buyer shall acquire good title to, and all right, title and interest
in and to the Assets, free and clear of all Encumbrances.
(p) Real Property.
(i) Exhibit 6.01(p) sets forth a list and description
of all Real Property owned, leased, occupied or used by the Stations, which
list specifies (A) the use made of such Real Property by the Stations in the
business and operations of the Stations, and (B) the owner of each parcel
thereof. All such Real Property is suitable and adequate for the uses for
which it is currently devoted.
(ii) Seller is the sole owner of good, valid, fee
simple, marketable title to the Real Property owned by it, including, without
limitation, all buildings, structures, fixtures and improvements thereon in
each case free and clear of all Encumbrances.
(iii) Exhibit 6.01(p) lists all leases and subleases
pursuant to which any of the Real Property is occupied or used in the operation
of the Stations by Seller. Seller is the owner and holder of all the leasehold
interests purported to be granted by such leases and subleases, in each case
free and clear of all Encumbrances. Exhibit 6.01(p) also sets forth a list and
description of all real property leases and subleases pursuant to which Seller
or the owner of the KFYR Studio Site is a lessor or sublessor (the "KFYR
Leases"), which list specifies the use made of such real property by the lesses
and sublesses thereunder. Each lease and sublease listed on Exhibit 6.01(p) is
in full force and effect and constitutes a legal, valid and binding obligation
of, and is legally enforceable against, the respective parties thereto and
grants the leasehold interest it purports to grant free and clear of all
Encumbrances. The parties thereto have complied with all of the material
provisions of such leases and subleases and are not in default thereunder in
any material respect, and there has not occurred any event which (whether with
or without notice, lapse of time or the happening or occurrence of any other
event) would constitute such a default.
(iv) To the best of Seller's knowledge, all buildings,
structures, fixtures and other improvements on the Real Property are in good
repair, free of defects, and fit for the uses to which they are currently
devoted. To the best of Seller's knowledge, all Real Property and such
buildings, structures, fixtures and improvements on the Real Property conform,
including usage by Seller, with all applicable contractual requirements and
building, zoning, subdivision, environmental, land-use, fire and other Laws
pertaining to or affecting such Real Property. All notices or orders to Seller
to correct violations of Laws issued by any Governmental Authority having
jurisdiction against or affecting any of the Real Property have been complied
with.
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<PAGE> 20
(v) To the best of Seller's knowledge, none of the
Real Property or any leasehold interest in the Real Property is subject to any
Contract or other restriction of any nature whatsoever (recorded or unrecorded)
preventing or limiting Seller's right to convey or to use it.
(vi) No portion of the Real Property or any building,
structure, fixture or improvement thereon is the subject of, or affected by,
any condemnation, eminent domain or inverse condemnation proceeding currently
instituted or pending, and Seller has no knowledge that any of the foregoing
are, or will be, the subject of, or affected by, any such proceeding.
(vii) The Real Property has direct and unobstructed
access to a public right-of-way and to adequate electric, gas, water, sewer and
telephone lines, all of which are adequate for the uses to which the Real
Property is currently devoted and intended to be devoted.
(viii) The buildings, structures, fixtures and
improvements on each parcel of the Real Property lie entirely within the
boundaries of such parcel of the Real Property as specified in the legal
description set forth in Exhibit 6.01(p), and, to the best of Seller's
knowledge, there are no encroachments on the Real Property.
(ix) On the Closing Date, no tangible assets, except
for the Excluded Assets and mobile equipment, used or useful in the business
and operations of the Stations by Seller will be located on any real property
not included in the Real Property.
(q) To the best of Seller's knowledge, all tangible Assets are
in good operating condition and repair, free of defects, and are suitable,
adequate and fit for the uses for which they are intended or are being used;
and such Assets and the present use thereof do not violate in any material
respect any applicable licenses, statutes, engineering standards or building,
fire, zoning, health and safety Laws.
(r) Exhibit 6.01(r) contains a true, correct and complete
listing of all Intellectual Property owned or licensed by or registered in the
name of Seller or used or held for use in the business and operations of the
Stations, all of which are transferable to Buyer and all required consents on
the part of any other person necessary to validate the transfer to Buyer of
such Intellectual Property have been obtained. Seller pays no royalty to
anyone with respect to the Intellectual Property and has the right to bring
action for the infringement thereof. Seller owns or possesses all rights to
use all such Intellectual Property necessary to the conduct of the business of
the Stations. Seller does not have any knowledge and Seller has not received
any notice to the effect that any service rendered by Seller relating to the
business of the Stations may infringe on any Intellectual Property right or
other legally protectable right of another. Seller has the right to the use of
the call letters of the Stations pursuant to the rules and regulations of the
FCC, except that the call letters "KFYR" are also be subject to use by KFYR-AM
licensed to Bismarck, North Dakota.
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(s) All returns, reports and statements relating to the
Stations currently required to be filed by Seller with the FCC or any other
Governmental Authority have been filed and complied with and to the best of
Seller's knowledge are true, correct and complete in all material respects.
All such reports, returns and statements shall continue to be filed on a
current basis until the Closing Date, and to the best of Seller's knowledge
will be true, correct, and complete in all material respects. All documents
required by the FCC's rules to be placed in the Stations' public files have
been placed and are being held in such files. All logs and business records
relating to the business and operations of the Stations, including without
limitation, political and public files, program, operating and maintenance
logs, equipment performance measurements, policies or evidence of insurance,
licenses, payroll, social security and withholding tax returns and other
records pertaining to the business and operations of the Stations have been
maintained in all material respects in accordance with good business practices
and the rules and regulations of the FCC and are in the possession of Seller at
the Stations.
(t) For each Station, Exhibit 6.01(t) sets forth a true and
complete list of all Program Contracts, copies of which have been provided to
Buyer. The Program Contracts have been scheduled and broadcast in the Ordinary
Course of Business. Seller has the right to broadcast on KMOT-TV, KQCD-TV and
KUMV-TV, all of the programming described in the Programming Contracts listed
in Exhibit 6.01(t) for KFYR-TV.
(u) Except as set forth in Exhibit 6.01(u), there are no
strikes, work stoppages, grievance proceedings, union organization efforts, or
other controversies pending or, to the best of Seller's knowledge, threatened
between Seller and (i) any of their respective current or former station
employees or agents, or (ii) any union or collective bargaining unit
representing such station employees. To the best of Seller's knowledge, Seller
has complied and is in compliance in all respects with Laws relating to the
employment or the workplace, including, without limitation, provisions relating
to wages, hours, collective bargaining, safety and health, work authorization,
equal employment opportunity, immigration and the withholding of income taxes,
unemployment compensation, worker's compensation, employee privacy and right to
know and social security contributions. Except as set forth in Exhibit 6.01(u)
hereto, there are no collective bargaining agreements, employment agreements
between Seller and any of its employees or professional service Contracts not
terminable at will relating to the Stations or the business and operations
thereof. The consummation of the transactions contemplated hereby will not
cause Buyer to incur or suffer any Liability relating to, or obligation to pay,
severance, termination, or other payments to any person or entity. Except as
set forth in Exhibit 6.01(u) hereto, no employee of Seller has any contractual
right to continued employment by Seller following consummation of the
transactions contemplated by this Agreement. Exhibit 6.01(u) sets forth a true
and complete list dated as of March 31, 1998, of all employees of Seller by
Stations and for each employee his or her respective position, title, salary,
date of hire, date of last review and accrued vacation and sick days, and all
information with respect to all benefit plans or policies, bonus plans,
commissions, severance plans or policies, compensation arrangements or other
benefits provided to such employees.
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(v) Environmental Matters.
(i) To the best of Seller's knowledge, Seller has
complied and is in compliance with, and the Real Property and all improvements
thereon are in compliance with, all Environmental Laws.
(ii) There are no pending or, to the knowledge of
Seller, threatened actions, suits, claims, legal proceedings or other
proceedings based on any of the actions or events described in clauses (A)
through (E) below, and neither Seller nor any officer thereof has directly or
indirectly received any notice of any complaint, order, directive, citation,
notice of responsibility, notice of potential responsibility, or information
request from any Governmental Authority or any other person or entity or knows
or suspects any fact(s) which might form the basis for any such actions or
notices arising out of or attributable to: (A) the current or past presence at
any part of the Real Property of Hazardous Materials or any substances that
pose a hazard to human health or an impediment to working conditions; (B) the
current or past release or threatened release into the environment from the
Real Property (including, without limitation, into any storm drain, sewer,
septic system or publicly owned treatment works) of any Hazardous Materials or
any substances that pose a hazard to human health or an impediment to working
conditions; (C) the off-site disposal of Hazardous Materials originating on or
from the Real Property or the businesses or Assets of Seller; (D) any facility
operations or procedures of Seller which do not conform to requirements of the
Environmental Laws; or (E) any violation of Environmental Laws at any part of
the Real Property or otherwise arising from Seller's activities involving
Hazardous Materials.
(iii) Seller has been duly issued, and currently has
and will maintain through the Closing Date, all permits, licenses, certificates
and approvals required under any Environmental Law, if any. A true and
complete list of such permits, licenses, certificates and approvals, all of
which are valid and in full force and effect, is set out in Exhibit 6.01(v).
Except in accordance with such permits, licenses, certificates and approvals,
there has been no discharge of any Hazardous Materials or any other material
regulated by such permits, licenses, certificates or approvals.
(iv) The Real Property contains no underground storage
tanks, or underground piping associated with such tanks, that are used by
Seller currently or, to the best of Seller's knowledge, by any prior owner in
the past, for Hazardous Materials except as disclosed in Exhibit 6.01(v)(iv),
and no portion of the Real Property is or has been used as a dump or landfill
or consists of or contains filled in land or wetlands. Neither PCBs nor
asbestos containing materials are present on or in the Real Property except as
disclosed in Exhibit 6.01(v)(iv).
(v) Seller has furnished to Buyer accurate and
complete information pertaining to the environmental history of the Real
Property and the operations of Seller, including without limitation, all
environmental assessments.
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(vi) To the best of Seller's knowledge, the operation
of the Stations does not cause or result in exposure of workers or the general
public to levels of radio frequency radiation in excess of the "Radio Frequency
Protection Guides" recommended in "American National Standard Safety Levels
with Respect to Human Exposure to Radio Frequency Electromagnetic Fields 300
kHz to 100 gHz" (ANSI C95.1-1982), issued by the American National Standards
Institute, and renewal of the FCC Licenses would not constitute a "major
action" within the meaning of Section 1.1301, et seq., of the FCC's rules.
(w) Exhibit 6.01(w) contains a list and brief summary of all
policies of title, property, fire, casualty, liability, life, worker's
compensation, libel and slander, and other forms of insurance of any kind
relating to the Assets or the business and operations of the Stations and owned
or held by Seller. All such policies: (i) are in full force and effect; (ii)
are sufficient for compliance in all material respects by Seller with all
requirements of Law and of all agreements to which Seller is a party; (iii) are
valid, outstanding, and enforceable policies; and (iv) insure against risks of
the kind customarily insured against and in amounts customarily carried by
corporations similarly situated and provide adequate insurance coverage for the
Assets and the Stations (including the business and operations thereof).
(x) Except as set forth in Exhibit 6.01(x) attached hereto,
Seller is not now, and during the past two (2) years has not been, a party,
directly or indirectly, to any material contract, lease, arrangement or
transaction, whether for the purchase, lease or sale of property, for the
rendition of services or otherwise, with any officer, director, employee or
shareholder of Seller. None of the transactions involving Seller which are
identified in Exhibit 6.01(x) contains terms and conditions which are in the
aggregate significantly less favorable to Seller than as would be obtained in a
comparable arm's length transaction or is a transaction which would not have
occurred but for the relationship between the parties. There are no, and at no
time prior to the Closing Date will there be any, Affiliates of Seller.
6.02 REPRESENTATIONS AND WARRANTIES OF BUYER.
Buyer hereby represents and warrants to Seller as follows:
(a) Buyer is a corporation duly organized, validly existing
and in good standing under the applicable laws of the State of Delaware, and
has all requisite power and authority to own, operate and lease its properties,
to carry on its business as now being conducted and to enter into this
Agreement and perform its obligations hereunder.
(b) The execution and delivery of this Agreement by Buyer has
been duly and validly authorized and approved by all necessary action, and this
Agreement is valid and binding upon Buyer in accordance with its terms.
(c) The execution and carrying out of this Agreement and the
compliance with the provisions hereof by Buyer will not violate any provision
of law, will not, with or without the
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giving of notice and/or the passage of time, conflict with or result in any
breach of any of the terms or conditions of, or constitute a default under any
indenture, mortgage agreement or other instrument to which Buyer is a party or
by which it is bound, and will not result in the creation of any lien, charge
or encumbrance upon Buyer's assets.
(d) No representation or warranty of Buyer, or any statement
or certificate furnished by Buyer to Seller hereunder or in connection with the
transactions contemplated hereby, contains or will contain any untrue statement
of a material fact or omits or will omit to state a material fact necessary to
make the statement contained therein not misleading (except to the extent that
such statements are made in reliance on Seller's representations and
warranties).
(e)(i) To Buyer's knowledge, Buyer is, and pending Closing
will use commercially reasonable efforts to remain legally, technically,
financially and otherwise qualified under the Communications Act and all rules,
regulations and policies of the FCC to acquire and operate the Stations. To
Buyer's knowledge, there are no facts or proceedings which would reasonably be
expected to disqualify Buyer under the Communications Act or otherwise from
acquiring or operating any of the Stations or would cause the FCC not to
approve the assignment of the FCC Licenses to Buyer. Buyer has no knowledge of
any fact or circumstance relating to Buyer or any of Buyer's affiliates that
would reasonably be expected to (a) cause the filing of any objection to the
assignment of the FCC Licenses to Buyer, or (b) lead to a delay in the
processing by the FCC of the applications for such assignment. To Buyer's
knowledge, except for a waiver to continue to operate certain of the Stations
as satellites of KFYR-TV, no waiver of any FCC rule or policy is necessary to
be obtained for the grant of the applications for the assignment of the FCC
Licenses to Buyer, nor, to Buyer's knowledge, will processing pursuant to any
exception or rule of general applicability be requested or required in
connection with the consummation of the transactions herein.
(ii) To Buyer's knowledge, the acquisition, ownership
and operation of the Stations by Buyer will be in compliance with all Antitrust
Laws and all rules, regulations, policies and guidelines of the Federal Trade
Commission ("FTC") and the Department of Justice ("DOJ"). Buyer is not aware
of any facts or proceedings which would reasonably be expected to (a) result in
a violation of any Antitrust Laws by Buyer in connection with the consummation
of the transactions contemplated herein, (b) prevent or restrict Buyer from
acquiring, owning or operating any of the Stations, or (c) cause of the FTC
and/or the DOJ to file a civil antitrust complaint or otherwise challenge or
seek to enjoin the acquisition of the Stations by Buyer. Buyer has no
knowledge of any fact, condition, event, or other circumstance relating to
Buyer or Buyer's affiliates that would reasonably be expected to (a) cause the
filing of any complaint based on the Antitrust Laws seeking to enjoin the
acquisition of the Stations by Buyer, or (b) lead to an extension of the thirty
(30) day waiting period under the HSR Act.
(f) Buyer will have available on the Closing Date sufficient
funds to enable it to consummate the transactions contemplated hereby.
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6.03 BROKERS.
Any commissions payable for brokerage fees to Seller's Broker
in connection with this Agreement shall be the obligation of Seller. Seller
represents to Buyer that, except for the brokerage fees payable to Seller's
Broker (which fees are solely the responsibility of Seller), Seller has not
engaged, or incurred any unpaid liability (for any brokerage fees, finders'
fees, commissions or otherwise) to, any broker, finder or agent in connection
with the transactions contemplated by this Agreement; Buyer represents to
Seller that Buyer has not engaged, or incurred any unpaid liability (for any
brokerage fees, finders' fees, commissions or otherwise) to, any broker, finder
or agent in connection with the transactions contemplated by this Agreement;
and Seller agrees to indemnify Buyer, and Buyer agrees to indemnify Sellers,
against any claims asserted against the other parties for any such fees or
commissions by any person purporting to act or to have acted for or on behalf
of the indemnifying party. Notwithstanding any other provision of this
Agreement, this representation and warranty shall survive the Closing without
limitation and shall not be subject to any limitation contained in Section
10.04.
ARTICLE 7
CONDITIONS TO OBLIGATIONS
7.01 CONDITIONS TO THE OBLIGATIONS OF BUYER.
The obligation of Buyer to perform or fulfill or carry out its
agreements, undertakings and obligations herein made or expressed to be
performed, fulfilled or carried out on or after the date hereof and on or
before Closing Date is and shall be subject to fulfillment of or compliance
with, on the date hereof and on or before Closing Date, the following
conditions precedent, any of which may be waived by Buyer:
(a) Seller's representations and warranties contained in this
Agreement shall be true in all material respects as though such representations
and warranties were made on and as of the Closing Date; Seller shall have
performed and complied in all material respects with all agreements required by
this Agreement to be performed or complied with by it prior to or on the Closing
Date, and Buyer shall have been furnished with a certificate from Seller dated
as of the Closing Date, certifying to the fulfillment of the foregoing
conditions.
(b) There shall not have been instituted by any third party any
suit or proceeding to restrain or invalidate this transaction or seeking damages
from or to impose obligations upon Buyer as a result of this transaction which,
in Buyer's good faith judgment, based upon the advice of counsel, a copy of
which shall be delivered to Seller, would involve expense or lapse of time that
would be materially adverse to Buyer's interests. There shall not have been
suffered any casualty or loss, whether or not covered by insurance, which
materially and adversely affects the Stations and/or the Assets.
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(c) Buyer shall have been furnished with an opinion of
Seller's counsel dated as of the Closing Date to the effect that:
(1) Seller is duly organized and existing under the
laws of the state of its formation;
(2) Seller has the requisite power and authority to
execute, deliver and perform this Agreement and to convey, assign, transfer and
deliver the assets being purchased pursuant to this Agreement;
(3) Any proceedings required to be taken by Seller to
authorize Seller to execute, deliver and perform this Agreement and to convey,
assign, transfer and deliver to Buyer the assets being purchased hereunder have
been duly and properly taken;
(4) This Agreement is the legal, valid and binding
obligation of Seller enforceable as to Seller in accordance with its terms,
subject to bankruptcy, insolvency and other laws affecting the enforcement of
creditors' rights;
(5) The instruments executed and delivered by Seller
to Buyer at the closing pursuant to this Agreement have been duly and validly
executed by Seller.
(d) There shall have been no material adverse change in the
financial condition, results of operations, assets or property or business of
the Stations between the date hereof and the Closing Date, and the business of
Seller and the Stations shall have been conducted between the date hereof and
the Closing Date in the ordinary course of business consistent in all material
respects with past practices.
(e) Seller shall have obtained all consents, authorizations,
and approvals from all Persons, Governmental Authorities, and other entities as
are necessary for the consummation of the purchase and sale of the Assets,
including, without limitation, the consent of the FCC.
(f) Seller shall have delivered to Buyer all Contracts,
agreements, instruments and documents required to be delivered by Seller to
Buyer pursuant to Section 5.02.
(g) The FCC Order shall have become a Final Order with respect
to each of the Stations.
(h) Buyer shall have received the Title Insurance Commitment
with respect to the Real Property described in Exhibit 1.01(f).
(i) All applicable waiting periods under Hart-Scott-Rodino
shall have expired or terminated.
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(j) Seller and Judith Ekberg Johnson shall have executed and
delivered to Buyer a noncompetition agreement in form and substance reasonably
satisfactory to Buyer providing that neither will engage in the ownership or
operation of a television station within North Dakota for a period ending two
(2) years after the Closing Date. The parties acknowledge and agree that One
Thousand Dollars ($1,000) of the Purchase Price shall be allocated to the
non-compete.
(k) Seller shall have acquired good and marketable title to
the KFYR Studio Site and KFYR Leases, free and clear of all Encumbrances, or,
in the alternative, the owner of the KFYR Studio Site and KFYR Leases shall be
conveying all of its right title and interest in and to the KFYR Studio Site
and KFYR Leases to Buyer on the Closing Date pursuant to a real estate purchase
agreement and conveyance documents in forms and substance reasonably
satisfactory to Buyer.
(l) The owner of the KFYR Studio Site shall have entered into
a written lease with the KFYR-AM and KYYY-FM radio stations on terms and
conditions reasonably satisfactory to Buyer, which lease shall be freely
assignable by such owner to Buyer.
(m) If required by applicable Laws, Seller shall have
effectuated a legal subdivision of the Excluded Parcel from the Real Property
being conveyed to Buyer. Seller shall bear all costs, if any, and shall obtain
all necessary approvals required for, such subdivision.
7.02 CONDITIONS TO THE OBLIGATIONS OF SELLER.
The obligation of Seller to perform or fulfill or carry out their
agreements, undertakings and obligations herein made or expressed or to be
performed, fulfilled or carried out on or after the date hereof is and
shall be subject to fulfillment of or compliance with, on the Closing Date, the
following conditions precedent, any of which may be waived by Seller:
(a) Buyer's representations and warranties contained in this
Agreement shall be true in all material respects; Buyer shall have performed
and complied in all material respects with all agreements, covenants and
conditions required by this Agreement to be performed or complied with by it
prior to or on the Closing Date, and Seller shall have been furnished with a
certificate from Buyer dated as of the Closing Date, certifying to the
fulfillment of the foregoing conditions.
(b) There shall not have been instituted by any third party
any suit or proceeding to restrain or invalidate this transaction or seeking
damages from or to impose obligations upon Seller as a result of this
transaction which in Seller's good faith judgment, based upon the written
advice of counsel, a copy of which shall be delivered to Buyer, would involve
expense or lapse of time that would be materially adverse to Seller's
interests.
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(c) Buyer shall have obtained from all persons, firms,
governmental agencies, or other entities all such material consents, approvals,
licenses, or other authorizations as may be necessary for Buyer to consummate
the transactions contemplated herein.
ARTICLE 8
TERMINATION; REMEDIES
8.01 TERMINATION.
This Agreement may be terminated at any time prior to the
Closing by:
(a) the mutual consent of Seller and Buyer;
(b) Either Buyer or Seller, by written notice of termination
delivered to the other, if (i) the FCC Order for each Station has not become a
Final Order and/or the Closing has not occurred within twelve (12) months after
the date of this Agreement; provided, however, that the failure of the FCC
Orders to become Final Orders or the failure of the Closing to have occurred
within twelve (12) months of the date of this Agreement shall not be
attributable to the breach of this Agreement by the party seeking termination
under this Section 8.01(b), or (ii) the FCC designates the applications
contemplated by Section 3.01 for an evidentiary hearing;
(c) Buyer, by written notice of termination delivered to
Seller, if the FCC fails to continue the existing satellite waivers or issues
any order in connection with the applications contemplated by Section 3.01 with
conditions which are materially adverse to Buyer (except any such conditions
expressly accepted by Buyer in writing);
(d) Seller, pursuant to Section 8.03 and by Buyer pursuant to
Section 8.04; and
(e) Buyer, by written notice of termination delivered to
Seller, if (i) Seller shall not have delivered a complete set of the Seller
Exhibits (and supporting materials) by May 4, 1998 or (ii) at any time prior to
the end of the Exhibit Review Period pursuant to Section 9.01(p).
8.02 EFFECT OF TERMINATION.
In the event this Agreement is terminated as provided in
Section 8.01, Buyer shall receive the immediate return of the Letter of Credit
or any funds drawn therefrom and this Agreement shall be deemed null, void and
of no further force or effect, and the parties hereto shall be released from
all future obligations hereunder; provided, however, that the obligations of
Buyer and Seller set forth in Sections 3.02, 3.04 and 3.05 (with respect to the
payment of costs, fees and expenses) and Section 12.02 (with respect to
confidentiality), shall survive such
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termination and the parties hereto shall have any and all remedies to enforce
such obligations provided at law or in equity or otherwise (including, without
limitation, specific performance).
8.03 DEFAULT BY BUYER.
If Buyer shall default in the performance of its obligations
under this Agreement or if, as a result of Buyer's action or failure to act,
the conditions precedent to Seller's obligation to close specified in Section
7.02 are not satisfied, and such default, action or failure to act is not cured
within a reasonable amount of time not to exceed thirty (30) days after notice
thereof from Seller, and provided that Seller shall not then be in default in
the performance of Seller's obligations hereunder, Seller shall be entitled, by
written notice to Buyer, to terminate this Agreement, and as Seller's sole
remedy under this Agreement, to the Deposit by drawing on the Letter of Credit
in accordance with the terms of the Deposit Escrow Agreement as liquidated
damages, and upon such payment Buyer shall be discharged from all further
liability under this Agreement; provided, however, that if such default, action
or failure to act is not capable of being cured within thirty (30) days in the
reasonable determination of Seller, then the foregoing thirty (30) day cure
period shall not apply and Seller shall be entitled to exercise its rights
under this Section 8.03 following such determination.
8.04 DEFAULT BY SELLER.
If Seller shall default in the performance of Seller's
obligations under this Agreement, or if, as a result of Seller's action or
failure to act, the conditions precedent to Buyer's obligation to close
specified in Section 7.01 are not satisfied and such default, action or failure
to act is not cured within a reasonable amount of time not to exceed thirty
(30) days after notice thereof from Buyer, and provided that Buyer shall not
then be in default in the performance of Buyer's obligations hereunder, Buyer
shall be entitled, at Buyer's sole option:
(a) to require Seller to consummate and specifically perform
the sale in accordance with the terms of this Agreement, if necessary through
injunction or other court order or process; or
(b) by written notice to Seller, to terminate this Agreement
to receive the immediate return of the Letter of Credit, and to pursue any
other remedies Buyer has at law or in equity or otherwise; provided, however,
that if such default, action or failure to act is not capable of being cured
within thirty (30) days in the reasonable determination of Buyer, then the
foregoing thirty (30) day cure period shall not apply and Buyer shall be
entitled to exercise its rights under this Section 8.04 following such
determination.
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8.05 SPECIFIC PERFORMANCE.
Seller and Buyer acknowledge that the Assets to be sold and
delivered to Buyer pursuant to this Agreement are unique and that Buyer has no
adequate remedy at law if Seller shall fail to perform any of its obligations
hereunder, and Seller therefore confirms and agrees that Buyer's right to
specific performance is essential to protect the rights and interests of Buyer.
Accordingly, in addition to any other remedies which Buyer may have hereunder
or at law or in equity or otherwise and provided that Buyer is not in default
in any material respect of any of its obligations hereunder, Seller hereby
agrees that Buyer shall have the right to have all obligations, undertakings,
agreements and other provisions of this Agreement specifically performed by
Seller and that Buyer shall have the right to obtain an order or decree of such
specific performance in the United States District Court for the District of
North Dakota or any North Dakota state district court.
8.06 LIQUIDATED DAMAGES.
Seller and Buyer have provided for the amount of the Deposit to
be liquidated damages as the sole and exclusive remedy for Seller after having
considered carefully the anticipated and actual harms and losses that would be
incurred if Buyer defaults and thus fails to perform its obligations to
consummate the transactions contemplated hereunder, the difficulty of
ascertaining at this time the actual amount of damages, special and general,
that Seller will suffer in such event, and the inconvenience or nonfeasibility
of otherwise obtaining an adequate remedy in such event.
8.07 RETURN OF LETTER OF CREDIT.
In the event this Agreement shall not be consummated for any
reason other than as specified in Section 8.03, Buyer shall be entitled to
receive and Buyer and Seller shall cause the immediate return of the Letter of
Credit.
ARTICLE 9
CONDUCT OF BUSINESS PENDING CLOSING
9.01 COVENANTS AND AGREEMENTS OF SELLER.
Seller warrants and agrees that, pending Closing:
(a) Seller's assets, business, and operations being sold
hereunder will be conducted only in the Ordinary Course of Business, including
supplying all products and services required by them but not disposing of any
Assets except in the Ordinary Course of Business and
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property or equipment of like kind and equivalent value is substituted
therefore. No change will be made in the aforementioned policies or practices.
(b) Except as set forth in Exhibit 9.01(b), there will be no
pay increase or any bonus payment or arrangement with any employee or agent of
Stations other than normal and customary increases or bonuses pursuant to
annual reviews. In addition, Seller shall not enter into or become subject to
any employment, labor, union or professional service Contract related to the
operations of any Station which is not terminable at will, or any bonus,
pension, insurance, profit sharing, incentive, deferred compensation, severance
pay, retirement, hospitalization employee benefit or other similar plan
covering any employees of the Stations.
(c) Seller will use its best efforts to preserve Seller's
Stations intact and to preserve for Buyer the good will of its suppliers,
employees, subscribers and others having business relations with it.
(d) There shall be no material changes in any Contracts or
commitments, nor shall any new Contracts or commitments be entered into
extending beyond the Closing Date without the written consent of Buyer, except
for those Contracts and commitments which do not relate to the programming of
any Station and which are in amounts less than Fifteen Thousand Dollars
($15,000) individually, and, in the aggregate with all such Contracts and
commitments, in an amount less than One Hundred Thousand Dollars ($100,000.00).
(e) Buyer, its agents and employees, shall have full access,
during normal business hours throughout the period prior to Closing, to all of
Seller's properties, books, Contracts, commitments and records relating to the
Stations (including, without limitation, employee personnel files). In
addition, Seller shall deliver to Buyer a copy of the following documents and
information relating to the owned Real Property described in Exhibit 1.01(f):
(i) any and all engineering studies, environmental reports, soil boring test
results, boundary or topographic surveys; (ii) existing title policies or title
reports, along with copies of exceptions referenced therein; and (iii) any and
all existing proposed, and proffered conditions and agreements accepted and
agreed to by Seller or any predecessor in title to Seller as a condition to
development of the owned real property, in Seller's possession or otherwise
available to Seller.
(f) At Closing, Seller shall provide Buyer with a list of all
accounts receivable of the Stations. Buyer shall endeavor to collect (without
any requirement to litigate or take other enforcement action) all such accounts
receivable and remit to Seller sums collected on the accounts receivable every
thirty (30) days and shall furnish to Seller a final accounting within one
hundred eighty (180) days following Closing. In addition, Buyer shall provide
Seller with a listing of all accounts receivable that have not been collected.
The uncollected accounts receivable are the property of Seller.
(g) Seller shall use its best efforts to cause advertisers to
use, prior to the Closing Date, the time available under trade-out agreements.
Notwithstanding any other
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provision of this Agreement, Seller will not enter into any new trade-out
agreements which exceed Five Thousand Dollars ($5,000) individually or Fifty
Thousand Dollars ($50,000) in the aggregate without the prior consent of Buyer.
All outstanding positive and negative trade balances of the Stations as of the
Closing Date shall be prorated pursuant to Section 2.03(a) hereof.
(h) Within twenty (20) days after the end of each calendar
month prior to Closing, Seller will provide monthly reports to Buyer reflecting
the results of operations of the Stations during such month. Such statements
shall be prepared in a manner consistent with past practices. Buyer is
involved in the television industry and has had the opportunity to view the
Stations and ask questions concerning the operation of the Stations and the
content of the financial information mentioned herein.
(i) Pending and prior to the Closing, Seller will not, without
the prior written approval of Buyer, do or agree to do any of the following:
(A) Change or modify any of Seller's accounting
principles or practices or any method of applying such principles or practices;
(B) Do or omit to do any act (or permit such action or
omission) which will cause a material breach of any Station Contract or any
other Contract to which Seller is a party or by which Seller is bound;
(C) Take any action which may jeopardize the validity
or enforceability of or rights under the FCC Licenses, or under any Station
Contract, or which may diminish the value thereof, or which may prevent the
satisfaction or fulfillment of a condition precedent hereunder;
(D) Program or broadcast any Program Contract,
picture, feature film or syndicated program (and the film usage schedules and
amortization schedules associated therewith), except in the Ordinary Course of
Business; provided, however, in no event shall any of the Stations not
broadcast, in full, all programming, advertising and other material required to
be broadcast pursuant to the terms of any affiliation agreement with such
network;
(E) Take any action or fail to take any action which
would cause any of the representations, warranties or covenants contained
herein to be untrue, incorrect or incapable of being performed or satisfied on
the Closing Date; or
(F) Enter any transactions with any officer, director,
employee or shareholder of Seller, including, without limitation, any renewal,
extension, modification or other change in, any existing Contract to which any
such Person is a party or any other transaction involving any such Person.
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(j) Pending and prior to the Closing Date, Seller will:
(A)(i) Pay or otherwise satisfy all obligations (cash
and barter) of the Stations as they come due and payable; (ii) maintain all
Assets in customary repair, order and condition; and (iii) maintain their books
of account, records, and files in substantially the same manner as heretofore;
(B) Maintain the validity of the FCC Licenses, and
comply in all material respects with all requirements of the FCC Licenses and
the rules and regulations of the FCC;
(C) Use best efforts to maintain in full force and
effect Seller's present network affiliation agreements for the Stations (and
any and all modifications and renewals thereof);
(D) Pay and perform its obligations under the Station
Contracts and under any additional agreements that shall be entered into
between the date hereof and the Closing pursuant to Section 9.01(d), in
accordance with the respective terms and conditions of such Contracts;
(E) Pay or discharge when due and payable all Taxes;
(F) Take all corporate action (including, without
limitation, all shareholder action) under the Laws of North Dakota necessary to
effectuate the transactions contemplated by this Agreement and by the other
Seller Documents;
(G) Maintain in full force and effect all of their
existing casualty, liability, and other insurance through the day following the
Closing Date in amounts not less than those in effect on the date hereof;
(H) Upon receiving notice or otherwise becoming aware
of any violation relating to the FCC Licenses, any violation by Seller or the
Stations of any rules and regulations of the FCC, or any material violations
under any other applicable Laws, promptly notify Buyer and, at Seller's
expense, cure all such violations prior to the Closing Date;
(I) Promptly notify Buyer in writing if any Station
ceases to broadcast at its authorized power for more than forty-eight (48)
consecutive hours. Such notice shall specify the reason or reasons for such
cessation and the corrective measures taken or to be taken by Seller; and
(J) Give prompt written notice to Buyer of (a) the
occurrence, or failure to occur, of any event that would be likely to cause any
of Seller's representations or warranties contained in this Agreement to be
untrue or inaccurate at any time from the date hereof
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to the Closing Date, and (b) any failure on Seller's part to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied
by Seller under this Agreement; provided, however, that such notice shall not
operate to cure any breach of the representations, warranties, covenants,
conditions or agreements contained herein.
(k) Seller and Buyer shall consult with each other before
issuing any press release or otherwise making any public statements with respect
to this Agreement or the transactions contemplated herein and shall not issue
any such press release or make any such public statement without the prior
written consent of the other party, which shall not be unreasonably withheld;
provided, however, that Buyer may, without the prior written consent of Seller,
issue such press release or make such public statement as may be required by Law
or any listing agreement with a national securities exchange to which Buyer is a
party if it has used all reasonable efforts to consult with Seller and to obtain
Seller's consent but has been unable to do so in a timely manner.
(l) Environmental Audits.
(i) Within thirty (30) days after the date of this
Agreement, Buyer shall have the right to have Phase I environmental audits (the
"Phase I Audits") performed on the Real Property by Environmental Strategies
Corporation, and to deliver copies of any such Phase I Audits to Seller (the
date of receipt of the Phase I Audits by Seller being the "Audit Receipt
Date"). Seller shall permit Buyer and the environmental inspection firm to
have access to the Real Property for the purpose of conducting such
environmental inspections. Buyer and Seller shall each pay one-half (1/2) of
the fees and expenses of the environmental inspection firm incurred in
connection with preparation of the Phase I Audits; provided that Seller's share
shall not exceed Ten Thousand Dollars ($10,000).
(ii) In the event that the Phase I Audits indicate
that any conditions exist on the Real Property that violate, fail to comply
with, or require remediation under, any applicable Environmental Laws, or that
suggest that additional testing or investigation may be necessary or
appropriate (any such condition, an "Environmental Condition"), then Buyer,
during the thirty (30) day period after the Audit Receipt Date (the "Subsequent
Audit Period"), may, at its own cost and expense, have any additional
environmental investigations as it deems necessary performed on the Real
Property on which the Environmental Condition was identified. If any Phase I
Audit or any subsequent investigations performed by Buyer and delivered to
Seller during the Subsequent Audit Period reveal a Environmental Condition,
Seller shall take whatever reasonable remedial actions are necessary to cure
such Environmental Condition and to cause the Real Property to be in compliance
with applicable Environmental Laws. If Seller shall refuse to take any such
remedial action on the grounds that such action would be unreasonable, Buyer
shall have the right, at its election, to terminate this Agreement, receive
immediate return of the Letter of Credit, and to pursue any remedies Buyer has
at law or in equity or otherwise.
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(iii) In the event that any Environmental Condition
has not been remedied to Buyer's reasonable satisfaction prior to the Closing
Date, and provided that Seller is diligently taking steps to remedy such
Environmental Condition, then the Closing Date shall be delayed for a period of
up to thirty (30) days to provide Seller with additional time to remedy such
Environmental Condition. If such Environmental Condition is not remedied to
Buyer's reasonable satisfaction within such thirty (30) day period, or Buyer
determines in good faith that it is not reasonably likely that such
Environmental Condition will be remedied within such thirty (30) day period,
then Buyer may elect, by written notice to Seller, to terminate this Agreement,
in which event the Letter of Credit shall be returned to Buyer regardless of
whether Buyer is in default under, or breach of, any of the terms of this
Agreement.
(m) Buyer and its auditors shall be entitled at Buyer's
expense to conduct an audit of Seller's financial information as Buyer may
reasonably determine is necessary to satisfy Buyer's public company reporting
requirements pursuant to the Securities Act of 1933 or the Securities Exchange
Act of 1934. Seller agrees to cooperate with Buyer and its auditors as
reasonably requested by Buyer in connection with the preparation and filing of
such financial statements, including providing customary and required
confirmations of the financial data as prescribed by generally accepted
auditing standards.
(n) Seller shall use its reasonable best efforts to enter into
and consummate a real estate purchase agreement in form and substance
reasonably satisfactory to Buyer, pursuant to which Seller shall acquire good
and marketable title to the KFYR Studio Site and KFYR Leases prior to Closing.
(o) Within five (5) business days after Buyer's receipt of the
final engineering reports for the Stations prepared by Central Tank and Tower,
Inc. of Ebensburg, Pennsylvania (the "Engineering Reports"), Buyer shall
provide a copy thereof to Seller. As promptly as practicable after Seller's
receipt of the Engineering Reports and prior to Closing, Seller shall remedy
any conditions identified in the Engineering Reports that are necessary for the
Stations to comply with Laws applicable to the ownership and operation of the
towers and facilities covered by the Engineering Reports, including, without
limitation, the rules and regulations of the FCC and FAA.
(p) The parties acknowledge that as of the date of this
Agreement, the Exhibits referred to herein (other than Exhibits A, B and C)
have not been completed (such incomplete Exhibits, the "Seller Exhibits").
Buyer covenants that it shall provide comments to Seller's counsel on the
initial drafts of the Seller Exhibits previously provided to Buyer no later
than April 29, 1998. Seller covenants that Seller shall in good faith
incorporate Buyer's comments and deliver to Buyer and to Buyer's counsel a
revised and complete set of the Seller Exhibits (and copies of all materials
identified on the Seller Exhibits, as reasonably required to support the Seller
Exhibits or as otherwise requested by Buyer) no later than May 4, 1998. On the
date of receipt of the revised Seller Exhibits, an officer of Seller shall
certify in writing that the Seller Exhibits (and supporting materials)
delivered to Buyer and Buyer's counsel are complete and
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correct. Buyer shall have a period of five (5) business days following the
date of receipt by Buyer and Buyer's counsel of the complete and correct set of
the Seller Exhibits (and supporting materials) (the "Exhibit Review Period") to
review such Seller Exhibits and to determine in the good faith exercise of
Buyer's reasonable business judgment whether the items referenced therein are
acceptable to Buyer. If Buyer, after reasonable consultation with Seller,
determines that the items referred to in the Seller Exhibits are not
acceptable, Buyer shall be entitled to terminate this Agreement pursuant to the
terms set forth in Section 8.01(e).
ARTICLE 10
INDEMNITY
10.01 INDEMNIFICATION BY SELLER.
Seller agrees from and after the Closing Date to indemnify,
defend and to hold Buyer, and Buyer's officers, directors, employees, agents and
successors and assigns (each a "Buyer Indemnified Party"), harmless from and
against and in respect of any Losses incurred by any such Buyer Indemnified
Party from:
(a) Breach of any representation or warranty or non-fulfillment
of any agreement or covenant on the part of Seller under this Agreement or any
exhibit or other instrument furnished or to be furnished to Buyer hereunder.
(b) Any claims made by creditors of Seller relating to the
operation of the Stations to the extent not assumed by Buyer hereunder.
(c) All other Liabilities related to or arising out of the
Assets or the business and operations of the Stations for the period prior to
the Closing Date.
(d) Any employment related practices, policies, Contracts,
decisions, actions or omissions by Seller for the period ending on the Closing
Date with respect to any of Seller's employees or former employees.
(e) As an inducement to Buyer to waive compliance with the
provisions of any applicable bulk transfer laws, Seller covenants and agrees to
pay and discharge when due all debts, obligations and liabilities relating to
the Stations and/or the Assets except the liabilities assumed by Buyer in
accordance with Section 4.01. Seller further agrees to indemnify, defend and
hold harmless each Buyer Indemnified Party from and against and in respect of
any and all Losses, including without limitation any claims made by creditors,
with respect to non-compliance with any bulk transfer law.
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10.02 INDEMNIFICATION BY BUYER.
Buyer agrees from and after the Closing to indemnify, defend and
to hold Seller, and Seller's officers, directors, employees, agents and
successors and assigns (each a "Seller Indemnified Party"), harmless from and
against and in respect of any Losses incurred by any such Seller Indemnified
Party from:
(a) Buyer's failure to materially perform and discharge all of
the obligations and liabilities specifically assumed by it hereunder.
(b) Any damage or deficiency resulting from any material
misrepresentation, breach of warranty, or non-fulfillment of any agreement or
covenant on the part of Buyer under this Agreement, or from any material
misrepresentation in or material omission from any exhibit or other instrument
furnished or to be furnished to Seller hereunder.
10.03 REMEDIES.
The remedies provided by this indemnity shall be in addition to,
and not in lieu of, any other remedies to which the respective party is entitled
at law or in equity for any breach or noncompliance by the other with the
provisions of this Agreement.
10.04 CLAIMS PROCEDURES.
Seller and Buyer each agrees to give prompt written notice to
the other of any claim against the party giving notice which might give rise to
a claim by it against the other party hereto based upon the indemnity agreement
contained in Sections 10.01 and 10.02 hereof, stating the nature and basis of
the claim and the actual or estimated amount thereof. In the event any action,
suit or proceeding is brought against Seller or Buyer with respect to which the
other party hereto may have liability under the indemnity agreement contained in
Sections 10.01 or 10.02 hereof, the indemnifying party shall have the right, at
its sole cost and expense, to defend such action in the name and on behalf of
the indemnified party and in connection with any such action, suit or
proceeding, the parties hereto agree to render to each other such assistance as
may reasonably be required in order to insure the proper and adequate defense of
any such action, suit or proceeding. The party hereto seeking indemnification
hereunder shall not make any settlement of any claim which might give rise to
liability to the other party hereto under the indemnity contained in Sections
10.01 or 10.02 hereof without the written consent of such other party, which
consent such other party covenants shall not be unreasonably withheld. In any
event the indemnifying party shall not be obligated to make any payment pursuant
to this indemnity agreement until the aggregate amount of the indemnifying
party's liability hereunder for all claims exceeds Twenty-Five Thousand Dollars
($25,000) in the aggregate. In no event shall Seller have any right of
contribution against the Stations with respect to any Losses.
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10.05 INDEMNITY DEPOSIT.
At Closing Seller shall deposit in escrow with United Bank (f/k/a
The George Mason Bank) (the "Indemnity Escrow Agent") an original, irrevocable
letter of credit (the "Indemnity Letter of Credit") issued for the benefit of
Buyer by a financial institution reasonably acceptable to Buyer for an amount
equal to Two Million Dollars ($2,000,000), such Indemnity Letter of Credit to be
held as security for Seller's indemnification obligations under this Agreement
in accordance with the terms and conditions of the Indemnity Escrow Agreement, a
form of which is attached hereto as Exhibit C. Buyer and Seller shall cause the
Escrowed Property (as defined in the Indemnity Escrow Agreement) to be returned
to the Seller one (1) year after the Closing Date, unless there shall be any
claims outstanding on such date, in which case the Escrowed Property shall
continue to be held by the Indemnity Escrow Agent until such claims are resolved
in accordance with the terms and conditions of the Indemnity Escrow Agreement.
ARTICLE 11
RISK OF LOSS
11.01 RISK OF LOSS.
The risk of any loss, damage or destruction to any of the Assets
to be transferred to Buyer hereunder from fire or other casualty or loss shall
be borne by Seller at all times prior to the Closing. Upon the occurrence of
any material loss or damage to any of the Assets to be transferred hereunder as
a result of fire, casualty, or other causes prior to the Closing, Seller shall
notify Buyer of same in writing immediately, stating with particularity the
reasonable estimates of the loss or damage incurred, the cause of damage, if
known, and the extent to which restoration, replacement and repair of the Assets
lost or destroyed is believed reimbursable under any insurance policy with
respect thereto. Provided Seller has not repaired, restored or replaced the
damaged Assets by the Closing, Buyer shall have the option (but not the
obligation) exercisable at the Closing to:
(a) terminate this Agreement;
(b) postpone the Closing until such time as the property has
been completely repaired, replaced or restored; or
(c) elect to consummate the Closing and accept the property in
its "then" condition, in which event Seller shall assign to Buyer all rights
under any insurance claim covering the loss and pay over to Buyer the proceeds
under any such insurance policy heretofore received by Seller with respect
thereto.
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ARTICLE 12
MISCELLANEOUS
12.01 BEST EFFORTS.
Each party hereto agrees to use its best efforts to cause the
consummation of the transactions contemplated hereby including, but not limited
to, using its best efforts to assure that the conditions to Closing are
satisfied.
12.02 ACCESS.
Following the date hereof, Seller shall afford to Buyer,
through its attorneys, accountants, and authorized representatives, free and
full access to the plants, properties, books and records of Seller relating to
operation of the Stations on reasonable notice during normal business hours in
order to permit Buyer to make such investigation of the business, properties,
and operations of Seller as Buyer may deem necessary or desirable. Any
information furnished to, or obtained by, any party hereto, its officers,
attorneys, accountants, or authorized representatives, as a result of its
investigations or otherwise in connection with the transactions herein
contemplated shall be treated as confidential information and in the event that
the transactions contemplated hereby are not consummated, each party agrees to
return to the other party all written information furnished by the other party
to it and that it will not use such confidential information, or permit any
such confidential information to be made publicly available.
12.03 NO SOLICITATION.
Seller agrees that, pending the consummation of the
transactions contemplated hereby or prior to the termination of the
transactions so contemplated, it will not enter into any arrangement with any
other party with respect to the sale or other disposition of the Assets and
will not negotiate or otherwise deal with any other person or entity for the
purpose of such sale or disposition.
12.04 EXPENSES.
Except as otherwise expressly provided for herein, Buyer and
Seller shall each pay its own expenses in connection with the preparation of
this Agreement and the consummation of the transactions contemplated hereby.
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12.05 COLLECTION OF ACCOUNTS RECEIVABLE.
From and after the Closing Date, Buyer shall have the right and
authority to collect all account receivables and to endorse with the name of
Seller any checks or drafts received on account of any such items.
12.06 SURVIVAL.
Each party hereto covenants and agrees that its representations
and warranties contained in this Agreement and in any instrument of sale,
assignment, conveyance, and transfer executed and delivered pursuant to this
Agreement shall survive the date hereof and the Closing, and such
representations contained therein and the duty to indemnify pursuant to Article
10 above shall be of no further force and effect after the end of the twelve
(12) months following the date hereof, except as to breaches theretofore
discovered.
12.07 NOTICES.
All notices, claims and other communications hereunder shall be
in writing and shall be deemed to have been duly given if personally delivered,
or mailed first class, postage prepaid, delivered by overnight air courier or
transmitted by facsimile transmission addressed as follows:
(a) if to Seller:
Judith Ekberg Johnson
CEO
Meyer Broadcasting Company
Post Office Box 400
Bismarck, North Dakota 58501
Fax: (701) 222-1013
copy to:
Patrick W. Durick
Pearce & Durick
Attorneys at Law
Post Office Box 400
Bismarck, North Dakota 58502
Fax: (701) 223-7865
(b) if to Buyer:
STC Broadcasting, Inc.
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3839 4th Street North
Suite 420
St. Petersburg, Florida 33703
Attn: David Fitz
Fax: (813) 821-8092
with copies (which shall not constitute notice) to:
Hogan & Hartson L.L.P.
555 Thirteenth Street, N.W.
Washington, D.C. 20004
Attn: William S. Reyner, Jr., Esq.
Fax: (202) 637-5910
and to:
Hicks, Muse, Tate & Furst Incorporated
200 Crescent Court
Suite 1600
Dallas, Texas 75201
Attn: Lawrence D. Stuart, Jr.
Fax: (214) 720-7888
or at such other address as any party may from time to time furnish to the
other party by notice given in accordance with the provisions of this Section.
All notices shall be deemed given when mailed or personally delivered in the
manner provided in this Section.
12.08 ENTIRE AGREEMENT; AMENDMENTS; WAIVER.
This Agreement, together with the Exhibits hereto, contains the
entire understanding between the parties hereto concerning the subject matter
hereof and may not be changed, modified or altered, except by an agreement in
writing executed by the parties hereto. Any waiver by either party of any of
its rights under this Agreement or of any breach of this Agreement shall not
constitute a waiver of any other rights or of any other or future breach.
12.09 REMEDIES CUMULATIVE.
Each and all of the rights and remedies in this Agreement
provided, and each and all of the rights and remedies allowed at law in equity
in like case, shall be cumulative, and the exercise of one right or remedy
shall not be exclusive of the right to exercise or resort to any and all other
rights or remedies provided in this Agreement or at law or in equity.
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12.10 ASSIGNMENT.
This Agreement and all rights and obligations of Buyer may be
assigned, either before or after the Closing Date, without the consent of
Seller, to an affiliate or subsidiary of Buyer or a limited partnership, the
general partner of which is a wholly-owned subsidiary of Buyer, provided that
any such assignment shall not relieve Buyer of any of its obligations
hereunder.
12.11 HEADINGS.
Descriptive headings are for convenience only and shall not
control or affect the meaning or construction of any provisions of this
Agreement.
12.12 GOVERNING LAW.
This Agreement has been executed in, and shall be construed in
accordance with and subject to the laws and decisions of the State of North
Dakota, applicable to contracts made and to be performed entirely therein.
This Agreement may be executed in several counterparts, each of which shall be
an original; but such counterparts shall together constitute one and the same
instrument.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement on
the day and year first above written.
SELLER:
MEYER BROADCASTING COMPANY
By: /s/ Judith Ekberg Johnson
------------------------------------
Judith Ekberg Johnson
Its: President
BUYER:
STC BROADCASTING, INC.
By: /s/ David A. Fitz
------------------------------------
Its: Chief Financial Officer
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ANNEX I
DEFINITIONS
"Affiliate" means, with respect to any specified Person,
another Person which directly or indirectly controls, is controlled by, or is
under common control with, the specified Person.
"Antitrust Laws" means the Sherman Act, as amended, the
Clayton Act, as amended, the Hart-Scott-Rodino Act, the Federal Trade
Commission Act, as amended, and all other federal and state statutes, rules,
regulations, orders, decrees, administrative and judicial doctrines, and other
laws that are designed or intended to prohibit, restrict or regulate actions
having the purpose or effect of monopolization or restraint of trade.
"Benefit Arrangement" means a benefit program or practice
providing for bonuses, incentive compensation, vacation pay, severance pay,
insurance, restricted stock, stock options, employee discounts, company cars,
tuition reimbursement or any other perquisite or benefit (including, without
limitation, any fringe benefit under Section 132 of the Code) to employees,
officers or independent contractors that is not a Plan.
"Closing Date" means the time and date on which the Closing
takes place, as established by Section 5.01.
"Code" means the Internal Revenue Code of 1986, as amended,
and all Laws promulgated pursuant thereto or in connection therewith.
"Communications Act" means the Communications Act of 1934, as
amended.
"Contract" means any concurrence of understanding and
intention between two or more persons (or entities) with respect to their
relative rights and/or obligations or with respect to a thing done or to be
done, including without limitation, any contract, agreement, lease,
arrangement, commitment, or understanding, written or oral, expressed or
implied.
"Deposit Escrow Agent" means United Bank (f/k/a The George
Mason Bank).
"Deposit Escrow Agreement" means that certain Escrow Agreement
dated as of the date hereof by and among Buyer, Sellers and the Deposit Escrow
Agent, in the form of Exhibit A attached hereto.
"Encumbrances" means any mortgages, pledges, liens, security
interests, restrictions and easements except general utility easements that do
not interfere with the use of the property.
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"Environmental Laws" means the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, ("CERCLA") as amended by the
Superfund Amendments and Reauthorization Act of 1986 ("SARA"), 42 U.S.C. degree
9601 et seq.; the Toxic Substances Control Act ("TSCA"), 15 U.S.C. degree 2601
et seq.; the Hazardous Materials Transportation Act, 49 U.S.C. degree 1802 et
seq.; the Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. degree 6901
et seq.; the Clean Water Act ("CWA"), 33 U.S.C. degree 1251 et seq.; the Safe
Drinking Water Act, 42 U.S.C. degree 300f et seq.; the Clean Air Act ("CAA"), 42
U.S.C. degree 7401 et seq.; or any other applicable laws, relating to Hazardous
Materials generation, production, use, storage, treatment, transportation or
disposal, or the protection of the environment.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and all Laws promulgated pursuant thereto or in connection
therewith.
"FCC" means the Federal Communications Commission.
"FCC Order" means an order or orders of the FCC, or of the
Chief, Mass Media Bureau of the FCC, acting under delegated authority,
consenting to the assignment to Buyer of the FCC Licenses for each of the
Stations, as proposed in the applications therefor, without conditions which
are adverse to Buyer or which in any way diminish the operating rights with
respect to the Assets and the Stations, except any such conditions expressly
accepted by Buyer in writing.
"Final Order" means an FCC Order as to which the time for
filing a request for administrative or judicial review, or for instituting
administrative review sua sponte, shall have expired without any such filing
having been made or notice of such review having been issued; or, in the event
of such filing or review sua sponte, as to which such filing or review shall
have been disposed of favorably to the grant and the time for seeking further
relief with respect thereto shall have expired without any request for such
further relief having been filed.
"Governmental Authority" means any agency, board, bureau,
court, commission, department, instrumentality or administration of the United
States government, any state government or any local or other governmental body
in a state, territory or possession of the United States or the District of
Columbia.
"Hart-Scott-Rodino" means the Hart-Scott-Rodino antitrust
Improvements Act of 1976, as amended, and all Laws promulgated pursuant thereto
or in connection therewith.
"Hazardous Materials" means any wastes, substances, or
materials (whether solids, liquids or gases) that are deemed hazardous, toxic,
pollutants, or contaminants, including without limitation, substances defined
as "hazardous wastes", "hazardous substances", "toxic substances", "radioactive
materials" or other similar designations in, or otherwise subject to regulation
under, any Environmental Laws. "Hazardous Materials" includes polychlorinated
biphenyls (PCBs),
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asbestos, lead-based paints and petroleum and petroleum products (including,
without limitation, crude oil or any fraction thereof).
"IRS" means the Internal Revenue Service.
"KFYR Studio Site" means the KFYR-TV studio site located at
200 North Fourth Street, Bismarck, North Dakota 58501, and all buildings,
towers, improvements, structures and fixtures thereon.
"Laws" means all applicable common law and any statute, law,
code, ordinance, regulation, rule, resolution, order, determination, writ,
injunction, award (including, without limitation, any award of any arbitrator),
judgments and decrees applicable to the specified persons or entities and to
the businesses and assets thereof (including, without limitation, Laws relating
to securities registration and regulation; the sale, leasing, ownership or
management of real property; employment practices, terms and conditions, and
wages and hours; building standards, land use and zoning; safety, health and
fire prevention; and environmental protection, including Environmental Laws).
"Liabilities" shall mean, as to any Person, all debts, adverse
claims, liabilities and obligations, direct, indirect, absolute or contingent
of such person or entity, whether accrued, vested or otherwise, whether in
contract, tort, strict liability or otherwise and whether or not actually
reflected, or required by generally accepted accounting principles to be
reflected, in such person's or entity's balance sheets or other books and
records, including, without limitation, (a) obligations arising under any Law
of any Governmental Authority or imposed by any court or any arbitrator of any
kind, (b) obligations arising in connection with products sold by, or in
connection with services provided by, or under Contracts; (c) all indebtedness
or liability of such Person for borrowed money, or for the purchase price of
property or services (including trade obligations); (d) all obligations of such
Person as lessee under leases, capital or other; (e) liabilities of such Person
in respect of plans covered by Title IV of ERISA, or otherwise arising in
respect of plans for employees or former employees or their respective families
or beneficiaries; (f) all liabilities of other Persons directly or indirectly
guaranteed, endorsed (other than for collection or deposit in the ordinary
course of business) or discounted with recourse by such person or entity or
with respect to which the person or entity in question is otherwise directly or
indirectly liable; (g) all obligations secured by any Lien (as defined herein)
on property of such person or entity, whether or not the obligations have been
assumed; (h) all other items which have been or in accordance with generally
accepted accounting principles would be, included in determining total
liabilities on the liability side of the balance sheet; and (i) any and all
other obligations.
"Losses" means any and all demands, claims, complaints,
actions or causes of action, suits, proceedings, investigations, arbitrations,
assessments, losses, damages (including diminution in value), liabilities,
obligations (including those arising out of any action, such as any settlement
or compromise thereof or judgment or award therein) and any costs and expenses,
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including, without limitation to, interest, penalties and reasonable attorneys'
fees and disbursements.
"Multiemployer Plan" means a "multiemployer plan" as such term
is defined in Section 3(37) of ERISA.
"Ordinary Course of Business" means the ordinary course of
business consistent with past practices of Seller and prudent business
operations.
"Pension Plan" means an "employee pension benefit plan" as
such term is defined in Section 3(2) of ERISA.
"Person" shall mean any individual, corporation, partnership,
limited liability company, joint venture, trust, unincorporated organization,
other form of business or legal entity or Governmental Authority.
"Plan" means any plan, program or arrangement, whether or not
written, that is or was an "employee benefit plan" as such term is defined in
Section 3(3) of ERISA and (a) which was or is established or maintained by
Seller; (b) to which Seller contributed or was obligated to contribute or to
fund or provide benefits; or (c) which provides or promises benefits to any
person who performs or who has performed services for Seller and because of
those services is or has been (i) a participant therein or (ii) entitled to
benefits thereunder.
"Qualified Plan" means a Pension Plan that satisfies, or is
intended by Seller to satisfy, the requirements for tax qualification described
in Section 401 of the Code.
"Real Property" means all realty, towers, fixtures, easements,
rights-of-way, leasehold and other interests in real property, buildings and
improvements owned, leased, occupied or used in the business and operations of
the Stations, including, without limitation, the fee interest in the KFYR
Studio Site.
"Seller Documents" means this Agreement and other agreements,
documents and instruments executed and delivered by Seller in connection with
the transactions contemplated by this Agreement.
"Seller Tax Returns" means all federal, state, local, foreign
and other applicable Tax returns, declarations of estimated Tax reports
required to be filed by Seller (without regard to extensions of time permitted
by law or otherwise).
"Seller's Broker" means Media Venture Partners.
"Survey" means a survey for a parcel or parcels of real
property prepared by a registered land surveyor licensed in the state where
such real property is located (the "Surveyor"),
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certified by the Surveyor to Buyer and Buyer's lender, and showing (a) the
location of all lot and street lines; (b) the location of encroachments,
overhangs or projections by buildings or improvements erected on adjacent lands
or on such real property; (c) adequate means of ingress and egress to public
roads; (d) the location of all utility and other easements, rights of way,
set-back lines and other matters of record affecting such real property; (e) a
description and the location of all existing improvements (including parking
areas); and (f) such other reasonable facts and information as Buyer may
require.
"Taxes" means all federal, state, local and foreign taxes
(including, without limitation, income, profit, franchise, sales, use, real
property, personal property, ad valorem, excise, employment, social security
and wage withholding taxes) and installments of estimated taxes, assessments,
deficiencies, levies, imports, duties, license fees, registration fees,
withholdings, or other similar charges of every kind, character or description
imposed by any Governmental Authorities, and any interest, penalties or
additions to tax imposed thereon or in connection therewith.
"Title Insurance Commitment" means an irrevocable title
insurance commitment issued by a title insurance company acceptable to Buyer
with respect to the interests in Real Property described in Exhibit 1.01(f) for
(a) a prepaid owner's policy of title insurance (on ALTA 1992 Owner's Form),
showing title for the Real Property interest described in Exhibit 1.01(f) in
Buyer, and (b) a prepaid full-coverage mortgagee policy of title insurance (on
the ALTA 1992 Lender's Form), naming Buyer's lender as the insured party, with
no exception as to survey matters, insuring that the mortgage of Buyer's lender
constitutes a valid and recorded first lien on a good and marketable fee simple
interest in the Real Property described in Exhibit 1.01(f), and providing full
protection against filed and unfiled mechanics' and material men's liens. Each
such policy shall not include any (i) survey matters exceptions, (ii) standard
printed exceptions, (iii) creditor's rights exceptions, (iv) mechanics and
material men's liens exceptions and (v) any other exceptions that are not
Permitted Exceptions (as defined below). "Permitted Exceptions" shall mean (i)
the lien of real estate taxes not yet due and payable, (ii) all matters
revealed in the Title Insurance Commitment described above which are approved
by Buyer, (iii) all existing building, zoning and other city , state, county or
federal laws, codes and regulations affecting the Real Property covered by the
Title Insurance Commitment, and (iv) any existing general utility easements
serving the Real Property covered by the Title Insurance Commitment. The
dollar amount of each interest insured shall be equal to the amount of
consideration allocated to such interest pursuant to Section 2.02(c)(i). If
the interest insured was not separately appraised by the Appraisal Firm and the
parties cannot agree on the amount of consideration to be allocated to such
interest, then the parties shall direct the Appraisal Firm to appraise such
interest and such appraisal shall be binding on both parties for purposes of
this definition. Costs for the appraisal of any real estate interest pursuant
to this definition shall be borne equally by the parties. The foregoing
appraisal procedures shall not apply in the case of any mortgagee policy which
shall be in an amount required by Buyer's lenders(s).
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"Welfare Plan" means an "employee welfare benefit plan" as
such term is defined in Section 3(1) of ERISA.
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<PAGE> 1
EXHIBIT 10.1
NBC Network
30 Rockefeller Plaza
New York, NY 10112
212-664-4444
March 2, 1998
STC Broadcasting, Inc.
c/o KRBC-TV
4510 South 14th Street
Abilene, Texas 79605
Re: KRBC-TV (Abilene, Texas)
Gentlemen:
In connection with the Affiliation Agreement (the "Agreement") dated
December 20, 1995 between NBC Television Network ("NBC") and STC Broadcasting,
Inc. (as successor-in-interest to Abilene Radio & Television Company), licensee
of television broadcast station KRBC-TV (collectively, the "Station") and the
agreement dated December 20, 1995 with respect to its satellite station KACB
(San Angelo, Texas), NBC and the Station agree to the following provisions and
to amend the Agreement, effective as of the date hereof, as set forth below:
1. The expiration date of the term set forth in Paragraph 1 of
the Agreement is hereby changed from July 31, 2005 (the "Original Expiration
Date") to December 31, 2010.
2. Notwithstanding anything to the contrary set forth in
Paragraph 5 of the Agreement, during the twelve-month period commencing on the
Original Expiration Date and each subsequent twelve-month period thereafter
during the term of the Agreement, the aggregate amount of compensation payable
by NBC to the Station shall be equal to the greater of (i) the aggregate amount
of compensation actually paid by NBC to the Station during the twelve-month
period immediately preceding the Original Expiration Date and (ii) an amount
equal to (a) the Compensation Factor (as defined below) for such twelve-month
period multiplied by (b) the Station's then-current NBC Percent as determined
in accordance with Exhibit A annexed hereto and made a part hereof (the "NBC
Percent"). For purposes of this Agreement, the following definitions shall also
apply:
(a) The "Compensation Factor" for any twelve-month period
referred to above shall be an amount equal to (i) the aggregate compensation
actually paid by NBC during the immediately preceding twelve-month period to
all NBC Affiliates in the Measured Markets (as defined below) divided by (ii)
the sum of all such NBC Affiliates' respective NBC Percents.
(b) The "Measured Markets" for purposes of any calculation
hereunder shall mean the ten markets immediately above the Station and the ten
markets immediately below the Station, when ranked on the basis of their total
audience delivery of the NBC Television Network.
3. The Station hereby agrees to enter into good faith negotiations
with NBC with respect to the appointment and authorization of NBC regarding the
negotiation of agreements related to the grant of retransmission rights to the
broadcast signal of the Station with multiple system operators ("MSO's") and
other cable television systems whose subscribers are located within or without
the ADI of the Station who would be able to receive the Station's signal.
4. In the event that at any time during the term of the Agreement,
NBC seeks to replace or supplement its current form of affiliation agreement or
arrangements with the NBC Affiliates, generally, with other contractual
arrangements, including, without limitation, participation in a joint venture or
other similar arrangement between NBC and its NBC Affiliates, Station agrees to
enter into good faith negotiations with NBC with respect to such other
arrangements,
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so long as the minimum number of NBC Affiliates whose consent to such
arrangements is determined to be required by NBC have agreed to so participate.
5. Each defined term used herein without definition shall have
the meaning assigned to such term in the Agreement.
Except as provided herein, the Agreement is hereby affirmed and shall
remain in full force and effect.
Very truly yours,
NBC TELEVISION NETWORK
By: /s/ Jean M. Dietze
------------------------------
Name: Jean M. Dietze
Title: VP Affiliate Relations
The foregoing has been reviewed by,
and is acceptable to:
STC BROADCASTING, INC.
BY: /s/ Frederick W. Brazelton
-------------------------------
Name: Frederick W. Brazelton
Title: Vice President
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NBC TV NETWORK
December 20, 1995
Abilene Radio & Television Stations Inc.
and
Abilene Radio & Television Co.
c/o KRBC-TV
Box 178 Abilene, Texas 76904
Gentlemen:
In connection with that certain Affiliation Agreement (the "Agreement")
dated December 20, 1995, between NBC Television Network "NBC") and Abilene Radio
&, Television Co., licensee of television broadcast station KRBC-TV,
(collectively, the "Station"), the Station and NBC hereby agree as follows:
1. NBC will reimburse Station for up to $50,000 per year of
Station's expenditures for advertising and off-air promotion of Station and NBC
programming (the "Promotion Amount"); provided, however, that Station agrees to
provide, in each such year, on-air promotion of NBC -programming on the Station
in an amount equal to the Promotion Amount reimbursed by NBC for such year. Such
on-air Promotion shall be in addition to Station's commitments pursuant to NBC's
"2600 GRP's" promotion plan and the amount of such on-air promotion shall be
calculated based upon Station's standard rates charged to unaffiliated third
parties for comparable advertising time, after giving effect to all customary
and usual discounts and other rate reductions; provided that the maximum
aggregate amount payable by NBC to Station relating to such reimbursement for
advertising and off-air promotion of Station shall not exceed $50,000 for each
year during the term of the Agreement. Station shall furnish NBC with reports
and other applicable documentation to substantiate the amount of all Promotional
Amounts to be reimbursed by NBC hereunder. All amounts owed by NBC pursuant to
the foregoing shall be paid by NBC to Station on a quarterly basis within thirty
(30) days after the end of the calendar quarter in which NBC receives such
applicable documentation for incurred Promotional Amounts.
2. NBC agrees that Station's net annual compensation during the
term of the Agreement shall not be less than $245,000, after deduction of the
applicable annual amounts for the Waiver Percentage and NBC News Channel Fees;
provided that such annual compensation amount shall be reduced to $235,000 in
years in which NBC offers Olympic programming. The foregoing annual compensation
target amount is based on the following assumptions:
(i) The Station performs all of its obligations
and commitments under the Agreement and complies with each and every of its
commitments regarding clearance and preemption of NBC programming as set forth
in the Agreement; specifically, the foregoing amount assume that the Station is
broadcasting NBC programming live in all of the Programmed Time Periods
applicable to the Station and NBC Sports Programming as provided for in the
Agreement, except for the permitted "Prime Time Preemption Amounts" and "Sports
Preemption Amounts" (as such terms are defined in the Agreement);
(ii) The Station fulfills its commitments set
forth in the Agreement regarding local news programming and pursuant to NBC's
"2600 GRPs" promotion with respect to promotion of NBC programming; and
(iii) The foregoing annual compensation amounts may
not be achieved in years in which a significant portion of NBC programming
consists of news coverage in addition to regularly scheduled news programming.
3. NBC agrees to make available to Station marketing, research and
promotion expertise in connection with moving KRBC-TV's 5:00 P.M. weekday local
news program to 6:00 P.M. and generally making satellite station KABC a more
effective presence in its market.
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4. Station agrees, during the first year of the Agreement, to
begin working with NBC to further "brand" the Station as an "NBC Station" in its
market through cooperative efforts in areas such as on-air promotion, unified
graphic design, use of the NBC peacock logo and NBC identification.
5. Each defined term, used herein without definition shall have
the meaning assigned to such term in the Agreement.
Please indicate your acceptance of the foregoing by signing in
the space indicated below.
Very truly yours,
NBC TELEVISION NETWORK
By: /s/ John F. Damiano
------------------------------
Name: John F. Damiano
Title: Sr. VP Affiliate Relations
The foregoing has been reviewed by,
and is acceptable to,
Abilene Radio & Television Co.
By: /s/ Gary Ackers
------------------------
Name: Gary Ackers
Title: President
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NBC TV NETWORK
December 20, 1995
Abilene Radio & Television Stations Inc.
and
Abilene Radio & Television Co.
c/o KRBC-TV
Box 178
Abilene, Texas 76904
Gentlemen:
RE: KRBC-TV (Abilene, Texas)
The following shall comprise the agreement between us for the
affiliation of your KRBC-TV television broadcasting station KRBC-TV (Abilene
Radio & Television Co. ("Abilene") and KRBC-TV collectively herein called
"Station") with the NBC Television Network (herein called "NBC") and shall
supersede and replace our prior agreement dated May 1, 1990, except for the most
recent amendment with respect to network non-duplication protection under
Federal Communications Commission ("FCC") Rules Section 76.92.
1. Term. This Agreement shall be effective as of 3:00 A.M., New
York City time on the 1st day of August, 1995 and, unless sooner terminated as
provided in this Agreement, it shall remain in effect for a period of ten (10)
years thereafter. It shall then be renewed on the same terms and conditions for
a further period of five (5) years and for successive further periods of five
(5) years each, unless and until either party shall, at least twelve (12)
months prior to the expiration of the then current term, give the other party
written notice that it does not desire to have this Agreement renewed for a
further period.
2. NBC Programming.
(a) NBC shall deliver to Station for free,
over-the-air television broadcasting all programming which NBC makes available
for broadcasting in the community to which Station is presently licensed by the
FCC, except as otherwise expressly provided herein.
(b) NBC commits to supply sufficient programming
throughout the term of this Agreement for the hours presently programmed by it
(the "Programmed Time Periods"), which Programmed Time Periods are as follows
(the specified times are all local time in Station's community of license):
Prime Time: Monday thru Saturday - 7:00-10:00 P.M.
Sunday - 6:00-10:00 P.M.
Late Night: Monday thru Thursday 10:35 P.M.-12:35 A.M.
Friday - 10:35 P.M. - 12:35 A.M.
Saturday - 10:30 P.M.-12:00 Midnight
News: Monday thru Friday - 6:30-7:00 A.M.,
7:00-9:00 A.M. and 5:30-6:00 P.M.
Saturday - 7:00-9:00 A.M. and 5:30-6:00 P.M.
Sunday - 7:00-9:00 A.M. and 5:30-6:00 P.M.
Daytime: Monday thru Friday - 9:00-10:00 A.M.
and 11:00 A.M.-2:00 P.M.
Saturday - 9:00 A.M.-11:30 A.M.
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The selection, scheduling, substitution and withdrawal of any
program or portion thereof delivered to Station during the Programmed Time
Periods shall at all times remain within the sole discretion and control of NBC.
The parties acknowledge that local and network programming needs may change
during the term of this Agreement, and each party agrees throughout the term to
negotiate in good faith with the other party any proposed modification of the
Programmed Time Periods.
(c) In addition to the programming supplied pursuant to
Paragraph 2(b) above, NBC shall offer Station throughout the term of this
Agreement a variety of sports, special events and overnight news programming for
television broadcast at times other than the Programmed Time Periods. Station
shall have the right of first refusal with respect to any such programming good
for seventy-two (72) hours as against any other television station located in
Station's community of license or any television program transmission service
furnishing a television signal to Station's community of license, including, but
not limited to, any community antennae television system, subscription
television service, multipoint distribution system and satellite transmission
service. Station shall notify NBC of its acceptance or rejection of NBC's offer
of such programming as promptly as possible. Station's acceptance of NBC's offer
shall constitute Station's agreement to broadcast such programming in accordance
with the terms of such offer and this Agreement. Notwithstanding any other
provision in this Agreement, no preexisting acceptance of NBC programming shall
be superseded or otherwise affected by this Agreement, and those acceptances
shall remain in full force and effect. With respect to NBC programs outside the
Programmed Time Periods (either offered or already contracted for pursuant to
this Agreement), nothing herein contained shall prevent or hinder NBC from (i)
substituting one or more sponsored or sustaining programs, in which event NBC
shall offer such substituted program or programs to Station in accordance with
the provisions of this Paragraph 2(c), or (ii) canceling one or more such NBC
programs; provided, however, that NBC shall exercise all reasonable efforts to
give Station at least three (3) weeks prior written notice of such substitution
or cancellation. Station shall not be obligated to broadcast, and NBC shall not
be obligated to continue to deliver, subsequent to the termination of this
Agreement, any programs which NBC may have offered and which Station may have
accepted during the term hereof.
3. Station Carriage in Programmed Time Periods.
(a) Station agrees that, subject only to the preemption
rights set forth herein, including Station's unqualified right to preempt for
Station's live coverage of local news events, Station shall broadcast over
Station's facilities all NBC programming supplied to Station for broadcast in
the Programmed Time Periods on the dates and at the times the programs are
scheduled by NBC, except to the extent that Station is actually broadcasting
programming pursuant to (and within the specified limits of) a commitment
contemplated by Paragraph 3(b) below. As used herein, the "live coverage of
local news events" with respect to Station's preemption rights shall in no event
refer to the addition of scheduled local news programs as part of Station's
regular continuing program schedule.
(b) As an inducement for NBC to enter into this
Agreement, Station covenants, represents and warrants to NBC that during any
Broadcast Year (as hereinafter defined) during the term hereof, Station shall
preempt no more than twelve (12) hours in the aggregate of NBC programs during
the Prime Time Programmed Time Period for any reason other than for the live
coverage of news events (the "Prime Time Preemption Amount"). For the purposes
of this Agreement, a "Broadcast Year" shall mean a twelve (12) month period
during the term hereof which commences on any September 1 during the term hereof
and which ends on August 31 of the immediately following year. Station hereby
confirms that its rights and obligations under this Paragraph 3(b) are
consistent with the provisions of Paragraph 4(c) below.
(c) The Station hereby agrees to accept and clear all
sports programming offered to the Station by NBC outside the Programmed Time
Periods ("NBC Sports Programming"), except for NBC sports programming which
directly conflicts with Station's coverage of sports events and special events
of particular local interest (collectively, such coverage of such sports events
and special events are referred to below as "Special Programs"). Station agrees
not to broadcast more than three (3) hours of Special Programs outside the
Programmed Time Periods in the aggregate during any Broadcast Year during the
term of this Agreement which would conflict with NBC Sports Programming outside
the Programmed Time Periods (the "Sports Preemption Amount").
(d) Notwithstanding the foregoing provisions of
subparagraphs (b) and (c) above and without limiting the provisions thereof,
Station agrees that in any one (1) month period during a Broadcast Year,
Station's preemptions of NBC Prime Time programs and NBC Sports Programming
shall not exceed 40% of, respectively, the Prime Time Preemption Amount and
the Sports Preemption Amount, unless otherwise consistent with Station's
programming
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practice. In addition, Station agrees that in no event shall Station preempt
NBC programming for any programming offered or syndicated by any other
broadcast television network; provided that such agreement by Station shall
only be deemed in effect to the extent consistent with applicable law.
4. Preemptions
(a) In the event that Station, for any reason, fails to
broadcast or advises NBC that it will not broadcast any NBC programming as
provided herein, then, in each case, Station, upon notice from NBC to Station,
shall broadcast such omitted programming and the commercial announcements
contained therein (or any replacement programming and the commercial
announcements contained therein) during a time period or periods which the
parties shall promptly and mutually agree upon and which shall, to the extent
possible, be of a quality and rating value comparable to that of the time period
or periods at which such omitted programming was not broadcast as provided
herein. In the event that the parties do not promptly agree upon a time period
or periods as provided in the preceding sentence, then, without limitation to
any other rights of NBC under this Agreement or otherwise, NBC shall have the
right to license the broadcast rights to the applicable omitted programming (or
replacement programming) to another television station located in Station's
community of license.
(b) In the event that Station preempts or fails to
clear or broadcast any NBC programming as provided herein for any reason other
than: (i) the live coverage of local news events, (ii) as permitted by
Paragraphs 3(b), 3(c) or 3(d) above, (iii) force majeure as provided for in
Paragraph 11 below, or (iv) because: (A) the programming is delivered in a form
which does not meet accepted standards of good engineering practice; (B) the
programming does not comply with the rules and regulations of the FCC; or (C)
Station reasonably believes that such programming .would not meet prevailing
contemporary standards of good taste in its community of license, then, without
limiting any other rights of NBC under this Agreement or otherwise, upon NBC's
request, Station shall pay NBC, or NBC may deduct or offset from any amounts
payable to Station hereunder or under any other agreement between Station and
NBC (or an entity controlling, controlled by or under common control with NBC),
an amount equivalent to NBC's loss in net advertising revenues attributable to
the failure of Station to broadcast such program in Station's market as
scheduled by NBC, which amount shall be calculated in accordance with Exhibit A
hereto. Without limiting or affecting any other determination of a material
breach hereunder, any failure by Station to pay any amount due under this
Paragraph 4(b) shall be deemed a material breach of this Agreement. In the event
of Station's material breach of this Agreement, without limiting any other of
NBC's rights of NBC under this Agreement or otherwise, NBC shall have the
option, exercisable in its sole discretion upon thirty (30) days' written notice
to Station, to either (x) terminate Station's right to broadcast any one or more
series or other NBC programs, as NBC shall elect, and, to the extent and for the
period(s) that NBC elects, thereafter license the broadcast rights to such
series or other NBC program(s) to any other television station or stations
located in Station's I community of license or (y) unless the breach is cured
within such thirty (30) day period, terminate this Agreement. Station
acknowledges that NBC programming previously broadcast by Station has been
consistent with the standards set forth in the foregoing clause (C); Station
also agrees that Station's reasonable belief that an NBC program does not meet
such standards will be based on a substantial difference in such program's style
and content from NBC programs previously broadcast by Station, unless the
relevant standards in the Station's community of license have changed.
(c) With respect to programs offered or already
contracted for pursuant to this Agreement, nothing erein contained shall be
construed to prevent or hinder Station from: (i) rejecting or refusing any NBC
program which Station reasonably believes to be unsatisfactory or unsuitable or
contrary to the public interest, or (ii) substituting a program which, in
Station's opinion, is of greater local or national importance; provided,
however, that Station shall give NBC written notice of each such rejection,
refusal or substitution, and the reason therefor, at least three (3) weeks in
advance of the scheduled broadcast, or as soon thereafter as possible (including
an explanation of the cause for any lesser notice). Station confirms that its
determination that a substitute program is of greater local or national
importance shall be based on Station's reasonable good faith judgment.
5. Station Compensation. In further consideration of
Station's performance of its obligations under this Agreement NBC shall
compensate Station as follows:
(a)(i) NBC shall pay Station for Station's broadcast of each network sponsored
program or portion thereof (except those specified in Paragraph 5(b) below)
which is broadcast during the Live Time Period therefor the amount resulting
from multiplying the following:
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<PAGE> 8
(A) Station's Network Station Rate, which is $610; by
(B) The percentage set forth in the compensation matrix table
attached hereto as Exhibit B (the "Compensation Table") opposite the
applicable time period; by
(C) The fraction of an hour substantially occupied by such program
or portion thereof; by
(D) The fraction of the aggregate length of all Commercial
Availabilities during such program or portion thereof occupied by
Network Commercial Announcements.
As used herein, "Live Time Period" shall mean the time period or periods
as specified by NBC for the broadcast of a program by Station; "Commercial
Availability" shall mean a period of time made available by NBC during a network
sponsored program for one or more Network Commercial Announcements; and "Network
Commercial Announcement" shall mean a commercial announcement broadcast over
Station during a Commercial Availability and paid for by or on behalf of one or
more of NBC's network advertisers, not including, however, announcements
consisting of billboards, credits, public service announcements, promotional
announcements and announcements required by law.
(ii) For each network sponsored program or portion thereof
(except those specified in Paragraph 5(b) below) which is broadcast by Station
during a time period other than the Live Time Period therefor, NBC reserves the
right, in its sole discretion, to withhold payment of compensation for such
program. If NBC does not withhold payment of compensation for such program, NBC
shall pay Station as if Station had broadcast the program or portion thereof
during such Live Time Period, except that if the percentage set forth in the
Compensation Table opposite the time period during which Station broadcasts the
program or portion thereof is less than that set forth opposite such Live Time
Period, NBC shall pay Station on the basis of the time period during which
Station broadcasts the program or portion thereof.
(b) NBC shall pay Station such amounts as NBC and
Station shall agree upon for all network sponsored programs broadcast by Station
consisting of:
(i) Sports programs;
(ii) Special events programs, and
(iii) Programs for which NBC specifies a Live Time Period
which straddles any of the time period categories in the Compensation Table.
(c) (i) On or about the fifteenth day of the last
month of each calendar quarter during the term hereof, subject to the timely
receipt of reports requested under Paragraph 9 below, NBC shall pay Station, by
electronic transfer or such other means as NBC shall determine, an estimate of
the amounts due hereunder for such calendar quarter. NBC shall make the
appropriate adjustment for the payment actually due for such calendar quarter in
the payment of the estimated amount due for the next calendar quarter. NBC shall
calculate the amounts due hereunder on a weekly basis and shall report such
amounts to Station within a reasonable period of time after the close of each
month during the term.
(ii) From the amounts otherwise payable to Station hereunder,
NBC shall deduct for each week during each calendar quarter of the term hereof
a sum equal to 217% of Station's Network Station Rate provided in subparagraph
5(a)(i)(A) above (the "Waiver Percentage"). This deduction shall be calculated
on a weekly basis, with 4.2857 as the agreed number of weeks per month, and
shall be reported to Station with the reports due under subparagraph 5(c)(i)
above. NBC shall make other deductions from the amounts otherwise payable to
Station hereunder for additional services made available by NBC and utilized by
Station such as, but not limited to, NBC News Channel.
<PAGE> 9
(d) (i) As part of NBC's customary annual performance
evaluation of the NBC affiliated broadcast television stations (collectively,
the "NBC Affiliates"), NBC may decrease or increase the Pool (as defined below)
only by a percentage amount which is equal to or less than the corresponding
percentage decrease or increase, as applicable, in the Adult Audience Delivery
(as defined below) during the prior Broadcast Year as compared to the Adult
Audience Delivery during the Broadcast Year immediately preceding such prior
Broadcast Year. Notwithstanding the foregoing, (A) any such adjustment in the
amount of the Pool for any calendar year during the term of this Agreement shall
not exceed five percent (5%) of the amount of the Pool for the prior calendar
year, and (B) the 1994 Pool amount shall remain in
8
<PAGE> 10
effect during calendar years 1995 and 1996. As used herein, "Pool" shall mean,
with respect to any calendar year, the aggregate of the Network Station Rates
for all NBC Affiliates during such calendar year, and "Adult Audience
Delivery," with respect to any Broadcast Year, shall mean the Adult 18-49
audience delivery of all NBC Affiliates as measured by the average of the NSI
Sweeps in November, February and May during such Broadcast Year or such other
demographic that becomes the primary selling demographic for Prime Time by the
NBC Television Network; provided that in the event NBC changes its Primary
Selling Demographic with respect to a Broadcast Year during the term hereof,
NBC shall announce such change during July preceding the commencement of such
Broadcast Year.
Subject to the limitations set forth below, NBC reserves the right as part of a
general rate revision to reevaluate and change at any time: (A) the Network
Station Rate set forth in subparagraph 5(a)(i)(A) above, (B) the percentages
set forth in the Compensation Table, or (C) the Waiver Percentage set forth in
subparagraph 5(c)(ii) above, by giving written notice to Station at least
thirty (30) days prior to the effective date of such change. Notwithstanding
the foregoing, NBC agrees that:
(X) In no event during the term of this Agreement shall the percentage of the
Pool represented by Station's Network Station Rate (the "Station's Pool
Percentage") be reduced to an amount which will result in (aa) if Station's
Rate Index (as defined below) is less than 1 as of the date hereof, a Rate
Index less than Station's Rate Index as of the date hereof or (bb) if Station's
Rate Index is 1 or more as of the date hereof, a Rate Index of less than 1; and
provided further, that NBC shall be permitted to reduce Station's Network
Station Rate pursuant to subparagraph 5(d)(ii) below. As used herein, "Rate
Index" shall mean the number obtained by dividing (cc) Station's Pool
Percentage by (dd) Station's "NBC Percent" (i.e. the relative contribution to
NBC (expressed as a percentage) as determined in NBC's customary annual
performance evaluation of all NBC Affiliates);
(Y) the Compensation Table attached hereto as Exhibit B shall be modified
during the term of this Agreement only as mutually agreed to by NBC and Station
or as may be recommended by the NBC Affiliate Board; and
(Z) NBC may increase the Waiver Percentage only by reason of an increase in
NBC's technical costs of delivering programming to the NBC Television Network;
provided that any such increase in the Waiver Percentage shall be subject to
review by the NBC Affiliate Board.
(ii) Notwithstanding anything contained in subparagraph
5(d)(i) to the contrary, the parties acknowledge that the payment of
compensation to Station hereunder is in consideration of certain commitments by
Station, including commitments regarding Station's local news program schedule
and promotion of NBC programming as respectively set forth in Exhibits C and D
attached hereto, which Exhibits are incorporated herein by this reference. In
the event that Station (A) materially reduces its local news program schedule
as set forth in Exhibit C, or (B) does not fulfill such commitments as are set
forth in Exhibit D in all years during the term of this Agreement, NBC reserves
the right to decrease Station's Network Station Rate by notifying Station in
writing at least ninety (90) days prior to the effective date of such change.
(e) Notwithstanding the foregoing, Station acknowledges that in
the event that ownership or control of KACB (San Angelo, Texas) is sold or
otherwise transferred to a party other than an entity controlled by or under
common control with Abilene Radio & Television Station Inc., NBC shall have the
right to reduce Station's Network Station Rate as appropriate to reflect the
reduced coverage area of KRBC-TV (i.e., on a combined basis with KACB,).
6. Local Commercial Announcements. Subject to the following
sentence, NBC agrees that during each quarter during the term of this
Agreement, the average weekly number of minutes available for Station's local
commercial announcements in and adjacent to regularly scheduled NBC programming
in each daypart (with pro-rated adjustments for national sports programming,
special news coverage or other special events) shall not be less than
ninety-five percent (95%) of the average weekly number of minutes for the
applicable daypart during the 1993-94 Broadcast Year as set forth in Exhibit E
attached hereto (except if the reduction is due to a change in applicable
government regulations). In the event of a reduction in the average weekly
number of minutes available for Station's local commercial announcements in and
adjacent to regularly scheduled NBC programming which causes NBC not to be in
compliance with the foregoing provision, NBC agrees to offset the effects of
such reduction by providing Station with a comparable economic benefit,
9
<PAGE> 11
which benefit may take the form of local coverage of NBC promotional
announcements, an increase in the amount of station's preemptions permitted
under Paragraphs 3(b), 3(c) or 3(d) hereof, or other form of benefit. The
foregoing provisions of this Paragraph 6 are not intended to facilitate any
disproportionate change by NBC in the allocation of the number of minutes
available for Station's local commercial announcements in and adjacent to
regularly scheduled NBC programming among different time periods in any
daypart, if such change is solely for NBC's economic benefit.
7. Delivery. NBC shall transmit the programming hereunder by
satellite and shall notify Station as to both the satellite and transponder
being used for such transmission, and the programming shall be deemed delivered
to Station when transmitted to the satellite. Where, in the opinion of NBC, it
is impractical or undesirable to furnish a program over satellite facilities,
NBC may deliver the program to Station in any other manner, including but not
limited to, in the form of motion picture film, video tape or other recorded
version, postage prepaid, in sufficient time for Station to broadcast the
program at the time scheduled. Such recordings shall be used only for a single
television broadcast over Station, and Station shall comply with all NBC
instructions concerning the disposition to be made of each such recording
received by Station hereunder.
8. Conditions of Station's Broadcast. Station's broadcast of
NBC programming shall be subject to the following terms and conditions:
(a) Station shall not make any deletions from, or additions
or modifications to, any NBC program furnished to Station hereunder or any
commercial, NBC identification, program promotional or production credit
announcements or other interstitial material contained therein, nor broadcast
any commercial or other announcements (except emergency bulletins) during any
such program, without NBC's prior written authorization. Station may, however,
delete announcements promoting any NBC program which is not to be broadcast by
Station, provided that such deletion shall be permitted only in the event and
to the extent that Station substitutes for any such deleted promotional
announcements other announcements promoting NBC programs to be broadcast by
Station.
(b) For purposes of identification of Station with
the NBC programs, and until written notice to the contrary is given by NBC,
Station may superimpose on various Entertainment programs, where designated by
NBC, a single line of type, not to exceed fifty (50) video lines in height and
situated in the lower eighth raster of the video screen, which single line shall
include (and be limited to) Station's call letters, community of license or home
market-, channel number, and the NBC logo. No other addition to any
Entertainment program is contemplated by this consent, and the authorization
contained herein specifically excludes and prohibits any addition whatsoever to
News and Sports programs, except identification of Station as provided in the
preceding sentence as required by the FCC.
(c) The placement and duration of station-break
periods provided for locally originated announcements between NBC programs or
segments thereof shall be designated by NBC. Station shall broadcast each NBC
program delivered to Station hereunder from the commencement of network
origination until the commencement of the terminal station break.
(d) In the event of the confirmation by NBC of any
violation by Station of any of the provisions of this Paragraph 8, NBC may, in
its reasonable discretion, withhold an amount of compensation otherwise due
Station under Paragraph 5 above which is appropriate in view of the nature of
the specific violation, it being understood that the amount withheld for any
violation shall not exceed the total compensation due Station for the week in
which such violation occurs. Nothing contained in this Paragraph 8(d) shall
limit the rights of Station under Paragraph 4(c) above.
9. Station Reports Station shall submit to NBC in writing, upon
forms provided by NBC, such reports as NBC may request covering the broadcast
by Station of programs furnished to Station hereunder.
10. Music Performance Rights. All programs delivered to Station
pursuant to this Agreement shall be furnished with all music performance rights
necessary for broadcast by Station included. Station shall have no
responsibility for obtaining such rights from ASCAP, BMI or other music
licensing societies insofar as the programs delivered by NBC to Station for
broadcasting are concerned. As used in this paragraph, "programs" shall
include, but shall not be limited to, program and promotional material and
commercial and public service announcements furnished by NBC. Station shall be
responsible for all music license requirements for any commercial and public
service
10
<PAGE> 12
announcements or other material inserted by Station within or adjacent
to the programs as permitted under the terms of this Agreement, except for
cut-ins produced by or on behalf of NBC and inserted by Station at NBC's
direction.
11. Force Majeure. Neither Station nor NBC shall incur any
liability hereunder because of NBC's failure to deliver, or the failure of
Station to broadcast, any or all programs due to failure of facilities, labor
disputes, government regulations or causes beyond the reasonable control of the
party so failing to deliver or to broadcast. Without limiting the generality
of the foregoing, NBC's failure to deliver a program for any of the following
reasons shall be deemed to be for causes beyond NBC's reasonable control:
cancellation of a program because of the death, illness or refusal to appear or
perform of a star or principal performer thereon, or because of such person's
failure to conduct himself or herself with due regard to social conventions and
public morals and decency, or because of such person's commission of any act or
involvement in any situation or occurrence tending to degrade him or her in
society, or bringing him or her into public disrepute, contempt, scandal or
ridicule, or tending to shock, insult or offend the community, or tending to
reflect unfavorably upon NBC or the program sponsor.
12. Indemnification. NBC shall indemnify, defend and hold Station,
its parent, subsidiary and affiliated companies, and their respective
directors, officers and employees, harmless from and against all claims,
damages, liabilities, costs and expenses (including reasonable attorneys' fees)
arising out of the use by Station, in accordance with this Agreement, of any
program or other material as furnished by NBC hereunder, provided that
Station promptly notifies NBC of any claim or litigation to which this
indemnity shall apply, and that Station cooperates fully with NBC in the
defense or settlement of such claim or litigation. Similarly, Station shall
indemnify, defend and hold NBC, its parent, subsidiary and affiliated
companies, and their respective directors, officers and employees, harmless
with respect to material added to or deleted from any program by Station,
except for cut-ins produced by or on behalf of NBC and inserted by Station at
NBC's direction. These indemnities shall not apply to litigation expenses,
including attorneys' fees, which the indemnified party elects to incur on its
own behalf. Except as otherwise provided herein, neither Station nor NBC shall
have any rights against the other for claims by third persons, or for the
non-operation of facilities or the non-furnishing of programs for broadcasting,
if such non-operation or non-furnishing is due to failure of equipment, actions
or claims by any third person, labor disputes, or any cause beyond such party's
reasonable control.
13. Station's Right of First Negotiation. Throughout the term
of this Agreement, NBC shall give Station prompt notice of any determination by
NBC to engage in new over-the-air broadcast ventures within Station's community
of license (whether or not involving the transmission of television programs,
but excluding any acquisition of an ownership interest in any broadcast
television station) (a "Broadcast Venture"). NBC shall negotiate exclusively
with Station in good faith, for a period of time following such notice to
Station as shall be determined by NBC to be appropriate to the circumstances and
as shall be specified in such notice, with respect to Station's participation on
a financial and/or operational basis in any such Broadcast Venture within
Station's community of license before NBC may enter into any such negotiations
with a Third Party (as defined below) within such community of license. "Third
Party" shall mean any person or entity other than an NBC Party; "NBC Party"
shall mean any of NBC, National Broadcasting Company, Inc. or their respective
parent, subsidiary, affiliated, related or successor entities.
14. Change in Operations. Station represents and warrants that
it holds a valid license granted by the FCC to operate the Station as a
television broadcast station; such representation and warranty shall constitute
a continuing representation and warranty by Station. In the event that Station's
transmitter location, power, frequency, programming format or hours of operation
are materially changed at any time so that Station is of less value to NBC as a
broadcaster of NBC programming than at the date of this Agreement, then NBC
shall have the right to terminate this Agreement upon thirty (30) days prior
written notice to Station.
15. Assignment.
(a) This Agreement shall not be assigned without
the prior written consent of NBC which will not be unreasonably withheld, and
any permitted assignment shall not relieve Station of its obligations hereunder.
Any purported assignment by Station without such consent shall be null and void
and not enforceable against NBC.
(b) Station agrees to include as a condition of any proposed
assignment, sale or transfer of ownership or control of Station (including any
assignment or transfer referred to in Paragraph 15(c) below other than a
"short-form" assignment) a contractually binding provision that the assignee or
transferee shall assume and become bound by this Agreement for (i) the
remainder of the then-current term of this Agreement or (ii) three (3) years
from the date of said
11
<PAGE> 13
assignment or transfer, whichever period is greater. Station acknowledges that
any such assignment, sale or transfer which does not so provide for such
assumption and for NBC's right to extend the term of this Agreement will cause
NBC irreparable injury for which damages are not an adequate remedy. Therefore,
Station agrees that NBC shall be entitled to seek an injunction or similar
relief from any court of competent jurisdiction restraining Station from
committing any violation of this Paragraph 15(b).
(c) Station agrees that if any application is made to the
FCC pertaining to an assignment or a transfer of control of Station's license,
or any interest therein, Station shall immediately notify NBC in writing of the
filing of such application. Except as to "short form" assignments or transfers
of control made pursuant to Section 73.3540(f) of the FCC Rules, NBC shall have
the right to terminate this Agreement in the event of any assignment or
transfer. Station agrees, except in the case of "short form" assignments or
transfers of control, that promptly following Station's notice to NBC, Station
(i) shall arrange for a meeting between NBC and the proposed assignee or
transferee to review the financial and operating plans of the proposed assignee
or transferee, and (ii) shall procure and deliver to NBC, in form satisfactory
to NBC, the agreement of the proposed assignee or transferee that, upon
consummation of the assignment or transfer of control of the Station's license,
the assignee or transferee will assume and perform this Agreement in its
entirety without limitation of any kind. If Station complies with its
obligations set forth in the preceding sentence and NBC does not terminate this
Agreement upon written notice to Station within the thirty (30) day period
following the later of the meeting with the proposed assignee or transferee or
the delivery to NBC of a satisfactory assumption agreement, NBC shall be deemed
to have consented to the assignment or transfer of control.
(d) NBC agrees that in the event of a sale or transfer of
all or substantially all of the assets or business of NBC (whether structured
as a sale or transfer of equity or assets of NBC), NBC agrees to assign this
Agreement to the purchaser or transferee and to cause such purchaser or
transferee to assume NBC's obligations hereunder; provided that the foregoing
agreement shall not apply in the event that this Agreement becomes an
obligation of such purchaser or transferee by operation of law. Upon such
assignment and assumption, NBC shall have no liability to Station under this
Agreement with respect to obligations arising after the effective date of such
assignment and assumption.
16. Unauthorized Copying and Transmission. Except for the
rebroadcasting of Station's signal by KACB pursuant to the Satellite Agreement
dated the date hereof, as attached as Exhibit F hereto (the "Satellite
Agreement"), Station shall not authorize, cause, or permit, without NBC's
consent, any program or other material furnished to Station hereunder to be
recorded, duplicated, rebroadcast or otherwise transmitted or used for any
purpose other than broadcasting by Station as provided herein. Notwithstanding
the foregoing, Station shall not be restricted in the exercise of its signal
carriage rights pursuant to any applicable rule or regulation of the FCC with
respect to retransmission of its broadcast signal by any cable system or
multichannel video program distributor ("MVPD"), as defined in Section 76.64(d)
of the FCC Rules, which (a) is located within the Area of Dominant Influence
("ADI"), as defined by Arbitron, in which Station is located, or (b) was
actually carrying Station's signal as of April 1, 1993, or (c) with respect to
cable systems, serving an area in which Station is "significantly viewed" (as
determined by the FCC) as of April 1, 1993; provided, however, that any such
exercise pursuant to FCC Rules with respect to NBC programs shall not be deemed
to constitute a license by NBC; and provided, further, that at such time as NBC
adopts a term in substitution for the term "ADI" by reason of any similar
action by the FCC or other appropriate authority, such substitute term shall
replace the references to "ADI" herein. NBC reserves the right to restrict such
signal carriage with respect to NBC programming in the event of a change in
applicable law, rule or regulation.
17. Limitations on Retransmission Consent. In consideration of the
grant by NBC to Station of the non-duplication protection provided in the most
recent amendment to this Agreement, Station hereby agrees as follows:
(a) Station shall not grant consent to the retransmission
of its broadcast signal by any cable television system, or, except as provided
in Paragraph 17(b) below, to any other MVPD whose carriage of broadcast signals
requires retransmission consent, if such cable system or MVPD is located
outside the ADI to which Station is assigned, unless Station's signal was
actually carried by such cable system or MVPD as of April 1, 1993, or, with
respect to such cable system, is "significantly viewed" (as determined by the
FCC) as of April 1, 1993; provided, however, that at each renewal of this
Agreement, in the event Station can demonstrate to NBC that it is
"significantly viewed" (as determined by the FCC) in areas in addition to those
in which it was "significantly viewed" as of April 1, 1993 ("Additional Viewing
Areas"), NBC agrees that it will negotiate in good faith with Station regarding
a possible extension of Station's grant of the right to retransmit its
broadcast signal to cable systems in the Additional Viewing Areas.
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<PAGE> 14
(b) Station shall not grant consent to the
retransmission of its broadcast signal by any MVPD that provides such signal to
any home satellite dish user, unless such user is located within Station's own
ADI or is an "unserved household" as defined in Section 119(d) or any successor
provision of Title 17 of the United States Code.
18. Remedies for Unauthorized Copving and Transmission. If
Station violates any of the provisions set forth in Paragraphs 16 and 17 above,
NBC may, in addition to any other of its rights or remedies at law or in equity
under this Agreement or any amendment thereto, terminate this Agreement by
written notice to Station given at least ninety (90) days prior to the effective
date of such termination.
19. Applicable Law. The obligations of Station and NBC under
this Agreement are subject to all applicable federal, state, and local laws,
rules and regulations (including, but not limited to, the Communications Act of
1934, as amended, and the rules and regulations of the FCC), and this Agreement
and all matters or issues collateral thereto shall be governed by the law of the
State of New York applicable to contracts negotiated, executed and performed
entirely therein (without regard to principles of conflicts of laws).
20. Waiver. A waiver by either of the parties hereto of a
breach of any provision of thi9 s Agreement shall not be deemed to constitute a
waiver of any preceding or subsequent breach of the same provision or any other
provision hereof.
21. Notices. Any notices hereunder shall be in writing and
shall be given by personal delivery, overnight courier service, or registered or
certified mail, addressed to the respective addresses set forth on the first
page of this Agreement or at such other address or addresses as may be specified
in writing by the party to whom the notice is given. Such notices shall be
deemed given when personally delivered, delivered to an overnight courier
service or mailed, except that notice of change of address shall be effective
only from the date of its receipt.
22. Captions. The captions of the paragraphs in this Agreement
are for convenience only and shall not in any way affect the interpretation
hereof.
23. Entire Agreement. The foregoing constitutes the entire
agreement between Station and NBC with respect to the subject matter hereof, all
prior understandings being merged herein, except for the most recent amendment
with respect to network nonduplication protection under FCC Rules Section 76.92
and the Satellite Agreement. This Agreement may not be changed, modified,
renewed, extended or discharged, except as specifically provided herein or by an
agreement in writing signed by the parties hereto.
24. Confidentiality. The parties agree to use their best
efforts to preserve the confidentiality of this Agreement and of the terms and
conditions set forth herein, and the exhibits annexed hereto, to the fullest
extent permissible by law. The parties recognize that Section 73.3613 of the
FCC's Rules and Regulations requires the filing with the FCC of television
network affiliation agreements by each affiliate, but are unaware of any
requirement for the filing of exhibits annexed to such affiliation agreements.
In the event that the FCC should request either party to file said exhibits,
that party shall give prompt notice to the other, and shall submit said exhibits
to the FCC with a request that said exhibits be withheld from public inspection
pursuant to Section 0.459 of the FCC's Rules and Regulations on the grounds that
said exhibits contain confidential commercial or financial information that
would customarily be guarded from competitors and not be released to the public.
25. Counterparts. This Agreement may be signed in any number of
counterparts with the same effect as if the signature to each such counterpart
were upon the same instrument.
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<PAGE> 15
If the foregoing is in accordance with your understanding,
please indicate your acceptance on the copy of this Agreement enclosed for that
purpose and return that copy to NBC.
Very truly yours,
NATIONAL BROADCASTING COMPANY, INC.
By: /s/ John Damiano
-----------------------------
ABILENE RADIO & TELEVISION STATIONS, INC.
By :
---------------------------------
ABILENE RADIO & TELEVISION CO.
By: /s/ Gary Ackers
---------------------------------
President
<PAGE> 16
EXHIBIT "A"
ECONOMIC ADJUSTMENTS
Adjustments due to a preemption of or other failure to
broadcast an NBC program referred to in Paragraph 4(b) of this Agreement will
be calculated using the following two factors:
1. "Station's NBC delivery percentage" which is
the Station's audience contribution to NBC Network programs expressed as a
percentage. (This is the same NBC delivery percentage used in the annual
compensation evaluation.)
2. "Program revenue" which is the average NBC
Network revenue for the preempted program. (NOTE: Program revenue will be the
average revenue per program based on total annual revenue for that program,
except revenue for each prime time program, which will be adjusted for the day
of the week and the quarter in which the program is aired.)
Station's NBC delivery percentage is multiplied by the program
revenue to yield the dollar adjustment. An example:
Station preempts "Program X"
Station's NBC Network delivery % = 2.1%
NBC's revenue for "Program X" = $900,000
$900,000 x 2.1% = $18,900 payment to NBC
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<PAGE> 17
EXHIBIT "B"
KRBC-TV, ABILENE, TEXAS
Compensation Matrix
(NETWORK STATION RATE __________ X HOURS CARRIED X % BELOW)
MON - SUN 6PM - 11PM* 30%
- --------------------------------------------------------------------------------
MON - SUN 5PM - 6 PM* 15%
11PM - 1AM
SAT - SUN 4PM - 5PM
- --------------------------------------------------------------------------------
MON - FRI 9AM - 5PM 11.06%
- --------------------------------------------------------------------------------
SUN 7AM - 4PM** 10.5%
SAT 2PM - 4PM
- --------------------------------------------------------------------------------
SAT 7AM - 2PM** 7.88%
- --------------------------------------------------------------------------------
NIGHTLY NEWS MON - FRI 0%
NIGHTLY NEWS SAT - SUN 10%
- --------------------------------------------------------------------------------
TONIGHT SHOW 7.5%.
- --------------------------------------------------------------------------------
LATE NIGHT 10.25%
- --------------------------------------------------------------------------------
FRIDAY NIGHT 4.75%
- --------------------------------------------------------------------------------
LATER 4%
- --------------------------------------------------------------------------------
SATURDAY NIGHT LIVE 6.67%
- --------------------------------------------------------------------------------
* EXCLUDING NIGHTLY NEWS
**EXCLUDING SATURDAY AND SUNDAY TODAY
All times above are expressed in terms of your station's then current local
time.
16
<PAGE> 18
EXHIBIT "C"
KRBC-TV NEWS PROGRAMS
Monday - Friday
6:00-6:30 A.M
10:00-10:30 P.M.
Saturday
10:00-10:30 P.M.
Sunday
10:00-10:30 P.M.
NBC acknowledges that KACB does not maintain its own local news operations and
currently broadcasts KRBC-TV local news programs, but in the event KACB
discontinues its broadcast of KRBC-TV local news programs, NBC confirms that
notwithstanding anything contained in Paragraph 5 of this Agreement to the
contrary, Station shall not be deemed in breach of its obligation as set forth
in Paragraph 5(d)(ii) solely by reason of such discontinuance.
17
<PAGE> 19
30 Rockefeller Plaza A Division of PETER R. Flynn
New York, NY 10112 National Broadcasting Director
212 664-3945 Company, Inc. Regional Affiliate Relations
NBC
TV NETWORK
EXHIBIT "D"
January 11, 1995
Ms. Mary Cooksey
Promotion Director
KRBC-TV
4510 S. 14th St.
Abilene, Texas 79605
Dear Mary
Enclosed in this folder you will find copies of the forms which must be
submitted each quarter in order for you to participate in the primetime
promotion plan, which, when executed entitles the station to 10% of its annual
compensation.
Just to briefly review the concept: the idea is to earmark local promotion time
with a NATIONAL value of $11 million dollars (equal to 10% of the total
compensation pool for all stations) to support NBC's primetime line-up,
especially the 10 PM NYT head-ins to your local news.
The forms are essentially the same as 1994's. There is a PLANNING WORKSHEET for
all four quarters which should be filled out with your projected GRP delivery
for each quarter, meeting the annual 2600 GRP total. Please return the
completed form to me. Then, you'll also find individual PER-QUARTER forms which
should be submitted no later than the 15th of the month following the quarter
just ended. Simply fill in your GRP's, give us any comments or qualifying
statements, sign the form at the bottom and fax it to (212) 664-2495, the
number at the top of each form.
Please, call me should you have questions or comments.
Thank you for your cooperation in 1994 and let's do it to them again this year!
Sincerely,
cc- Ken Knox
Loretta Alden, NBC
18
<PAGE> 20
EXHIBIT "E"
LOCAL INVENTORY
REGULAR SCHEDULED PROGRAMS
Weekly Weekly
Units Minutes
-----------------------
Primetime 106 53'
Late Night 215 107' 30"
Daytime 115 57' 30"
News 219 109' 30"
19
<PAGE> 21
EXHIBIT "F"
SATELLITE AGREEMENT
20
<PAGE> 1
EXHIBIT 10.2
April 24, 1998
Mr. Eric C. Neuman
Mr. David A. Fitz
STC Broadcasting of Vermont, Inc.
200 Crescent Court
Suite 1600
Dallas, Texas 75201
Dear Rick and David:
Reference is made to the Asset Purchase Agreement (the
"Purchase Agreement") dated as of February 3, 1998, by and among Tuscaloosa
Broadcasting, Inc., WPTZ Licensee, Inc. and WNNE Licensee, Inc. (the
"Sellers"), and STC Broadcasting of Vermont, Inc., as subsequently assigned to
STC Broadcasting of Vermont Subsidiary, Inc. ("STC Vermont Sub"), pursuant to
which the Sellers have agreed to sell, and STC Vermont Sub has agreed to buy,
the Assets (as defined therein) with respect to television broadcast stations
WPTZ-TV, Channel 5, North Pole, New York, WNNE-TV, Channel 31, Hartford,
Vermont and WFFF-TV, Channel 44, Burlington, Vermont ("WFFF"). Capitalized
terms not otherwise defined herein shall have the meaning ascribed to such
terms in the Purchase Agreement.
Pursuant to the letter of understanding dated March 2, 1998,
Smith Broadcasting of Vermont, LLC ("Smith"), is willing to buy and assume, and
STC Vermont Sub is willing to sell, all the rights and obligations being
acquired by STC Vermont Sub from the Sellers relating to WFFF. The purpose of
this letter agreement is to clarify certain closing matters and to set forth
the documentation that will be necessary to effect the transfer of the WFFF
assets and liabilities from STC Vermont Sub to Smith.
1. CLOSING. The closing (the "Closing") of the transfer
of the WFFF assets and liabilities from STC Vermont Sub to Smith will be deemed
to occur simultaneously with the non-license transfer under the Purchase
Agreement.
2. STC VERMONT SUB DELIVERIES. At the Closing, STC
Vermont Sub will deliver to Smith the following:
<PAGE> 2
Mr. Eric C. Neuman
Mr. David A. Fitz
April 24, 1998
Page 2
(a) Bill of Sale - the Bill of Sale and
Assignment of Assets, dated as of the date hereof, duly executed by STC Vermont
Sub;
(b) Assumption Agreement - the Assumption
Agreement, dated as of the date hereof (the "Assumption Agreement"), duly
executed by STC Vermont Sub;
(c) Interim Operating Agreement - the Interim
Operating Agreement, dated as of the date hereof (the "Interim Operating
Agreement"), duly executed by the STC Parties named therein;
(d) Certified Resolutions - copies of the
resolutions of the Board of Directors of STC Vermont Sub, certified as being
correct, complete and then in full force and effect, authorizing the execution,
delivery and performance of the documents described herein, and the
consummation of the transactions contemplated hereby;
(e) Officers' Certificate - a certificate signed
by the Secretary of STC Vermont Sub as to the incumbency of the officers of STC
Vermont Sub executing the documents described herein, and true and correct
copies of the organizational documents of STC Vermont Sub;
(f) Certificate of Good Standing - a certificate
of good standing of STC Vermont Sub from the State of Delaware dated a date not
more than a reasonable number of days prior to the Closing; and
(g) Fox Consent - the written consent of Fox
Broadcasting Company to the assignment of WFFF's network affiliation agreement
to Smith.
3. SMITH DELIVERIES. At the Closing, Smith will deliver
to STC Vermont Sub the following:
(a) Promissory Note - the Promissory Note, dated
as of the date hereof, in the principal amount of Five Hundred Thousand Dollars
($500,000) (the "Note"), duly executed by Smith;
(b) Security Agreement - the Security Agreement,
dated as of the date hereof, duly executed by Smith, pursuant to which Smith
grants a first priority security interest in all assets of Smith to STC Vermont
Sub as collateral for Smith's obligations under the Note, the Assumption
Agreement and the Interim Operating Agreement;
<PAGE> 3
Mr. Eric C. Neuman
Mr. David A. Fitz
April 24, 1998
Page 3
(c) Assumption Agreement - the Assumption
Agreement, duly executed by Smith;
(d) Interim Operating Agreement - the Interim
Operating Agreement, duly executed by Smith;
(e) Certified Resolutions - copies of the
resolutions of the Member of Smith, certified as being correct, complete and
then in full force and effect, authorizing the execution, delivery and
performance of the documents described herein, and the consummation of the
transactions contemplated hereby;
(f) Officers' Certificate - a certificate signed
by the Secretary of Smith as to the incumbency of the officers of Smith
executing the documents described herein, and true and correct copies of the
organizational documents of Smith; and
(g) Certificate of Good Standing - a certificate
of good standing of Smith from the State of Delaware dated a date not more than
a reasonable number of days prior to the Closing.
4. WFFF EMPLOYEES. Upon the Closing, Smith will assume
all of STC Vermont Sub's obligations under Section 8.4 of the Purchase
Agreement with respect to the Employees of WFFF listed in Exhibit A (the "WFFF
Transferred Employees"). Smith represents and warrants that the WFFF
Transferred Employees are the only employees of the Stations who exclusively
work in the business and operations of WFFF.
5. INDEMNIFICATION BY SMITH. From and after the
Closing, Smith agrees to indemnify, defend and hold harmless the STC Parties
(as defined in the Asset Exchange Agreement dated as of February 18, 1998,
among STC Vermont Sub, certain affiliates of STC Vermont Sub and Hearst-Argyle
Stations, Inc.) and their respective officers, directors, employees, agents,
successors and assigns, from and against and in respect of all Liabilities and
Losses related to the business or operations of WFFF or Smith's ownership of
the Assets transferred to Smith pursuant to the Bill of Sale; provided,
however, that Smith shall not assume or have any responsibility for any
Liabilities or Losses described in this Section 5 that arise out of or result
from the willful misconduct, gross negligence or bad faith of STC Vermont Sub.
* * * * * * *
<PAGE> 4
Mr. Eric C. Neuman
Mr. David A. Fitz
April 24, 1998
Page 4
If the foregoing is acceptable to STC Vermont Sub, please
confirm below.
Very truly yours,
SMITH BROADCASTING OF VERMONT, LLC
By: /s/ Robert N. Smith
----------------------------
Robert N. Smith
Chief Executive Officer
Acknowledged and agreed to:
STC BROADCASTING OF VERMONT
SUBSIDIARY, INC.
By: /s/ David A. Fitz
----------------------------------
David A. Fitz
Chief Financial Officer
<PAGE> 5
EXHIBIT A
WFFF EMPLOYEES
Production:
- -----------
Patrick Dodge
Dale Forgette
James Stover
Engineer:
- ---------
Nathan Darling
Carrie K. Henry
Chad Kossbiel
Rahn Marion
Sales:
- -------
John Worthington
Joshua Bloombery
Traffic:
- --------
Kelli J. Hewson
Tammie True
<PAGE> 1
EXHIBIT 10.3
INTERIM OPERATING AGREEMENT
This INTERIM OPERATING AGREEMENT (this "Agreement") is entered
into as of April 24, 1998 by and among SMITH BROADCASTING OF VERMONT, LLC, a
Delaware limited liability company ("Smith"), STC BROADCASTING, INC., a
Delaware corporation ("STC Broadcasting"), STC BROADCASTING OF VERMONT, INC., a
Delaware corporation and a wholly-owned subsidiary of STC Broadcasting
("STCBV"), STC LICENSE COMPANY, a Delaware corporation and wholly-owned
subsidiary of STC Broadcasting ("STC License Company"), and STC BROADCASTING OF
VERMONT SUBSIDIARY, INC., a Delaware corporation and wholly-owned subsidiary of
STCBV ("STCBV Sub") (STC Broadcasting, STCBV, STC License Company and STCBV Sub
are sometimes individually referred to herein as a "STC Party" and collectively
referred to herein as "STC" or the "STC Parties").
WHEREAS, STCBV, Tuscaloosa Broadcasting, Inc., a Maryland
corporation ("Tuscaloosa"), WPTZ Licensee, Inc., a Maryland corporation ("WPTZ
Licensee") and WNNE Licensee, Inc., a Maryland corporation ("WNNE Licensee")
(Tuscaloosa, WPTZ Licensee and WNNE Licensee are collectively referred to
herein as "Sinclair") have as of February 3, 1998, entered into an Asset
Purchase Agreement (the "Sinclair Agreement") pursuant to which STCBV has
agreed to buy, and Sinclair has agreed to sell (i) the assets of television
broadcast station WPTZ (TV), Channel 5, North Pole, New York ("WPTZ"), and
television broadcast station WNNE-TV, Channel 31, Hartford, Vermont ("WNNE"),
and (ii) certain assets (the "WFFF Assets") and rights relating to television
broadcast station WFFF-TV, Channel 44, Burlington, Vermont ("WFFF"), (WPTZ,
WNNE and WFFF are collectively referred to herein as, the "Stations"), all
subject to the terms described in the Sinclair Agreement;
WHEREAS, the rights of Sinclair relating to the WFFF Assets
and WFFF include, without limitation, the rights and obligations of Heritage
Media Corporation pursuant to the Broadcast Facilities Agreement and Time
Brokerage Agreement, each with Champlain Valley Telecasting and each entered
into on August 3, 1995, as amended (collectively, the "WFFF TBA");
WHEREAS, STCBV has assigned to STCBV Sub all of STCBV's rights
and obligations under the Sinclair Agreement;
WHEREAS, the STC Parties and Hearst-Argyle Stations, Inc., a
Nevada corporation ("HAT"), have entered into an Asset Exchange Agreement (the
"Exchange Agreement") dated as of February 18, 1998, pursuant to which STC is
to assign, transfer and convey to HAT all of STC's right, title and interest in
the assets of the STC Stations (as defined in the Exchange Agreement),
including the assets of WPTZ and WNNE, and HAT is to assign, transfer and
convey to STC all of HAT's right, title and interest in the Clear Channel
Agreements
<PAGE> 2
and the assets of the HAT Stations (as defined in the Exchange Agreement),
all subject to the terms and conditions described in the Exchange Agreement;
WHEREAS, Tuscaloosa, William G. Evans, as trustee for the
Heritage Stations Disposition Trust, and Rollins Telecasting, Inc., a Delaware
corporation ("Rollins"), WNNE-TV, Inc., a Vermont corporation ("WNNE
Subsidiary"; WNNE Subsidiary and Rollins are collectively referred to herein as
the "Heritage Sellers") are parties to that certain Transitional Services
Agreement, dated as of March 6, 1998, as amended by that certain First
Amendment to Transitional Services Agreement, dated as of the date hereof, by
and among the original parties thereto and STCBV Sub (the "Transitional
Services Agreement"), pursuant to which, in order to accommodate an orderly
transition of the Burlington Stations, inter alia, the Trustee has agreed to
continue certain administrative services for STCBV Sub and the Heritage Sellers
have agreed to continue to employ the employees of the Burlington Stations;
WHEREAS, as of the date hereof, pursuant to the Sinclair
Agreement, STCBV Sub is acquiring the WFFF Assets from Sinclair and immediately
thereafter transferring to Smith the WFFF Assets;
WHEREAS, WFFF is operated from the broadcasting and
transmission facilities used by WPTZ and in order to accommodate an orderly
transfer of the WFFF Assets from STCBV Sub to Smith, the parties wish to
provide for the continued use of facilities and services provided by the
licensee of WPTZ for the operation of WFFF for a period beginning as of the
date hereof and ending on the Closing Date under the Exchange Agreement (the
"Interim Operation Period"); and
WHEREAS, all capitalized terms used herein but not otherwise
referenced herein shall have the meanings ascribed to such terms in the
Exchange Agreement.
NOW, THEREFORE, in consideration of the mutual promises and
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
1. Interim Operating Services. During the time that
WPTZ is operated by STCBV Sub, each of the STC Parties agrees that it shall
provide Smith with the following services in conjunction with the operation of
WFFF:
(a) continued use of the WPTZ tower and
transmitter building on Terry Mountain, New
York for all of WFFF's broadcast transmission
needs, including an STL link;
(b) continued use of the WPTZ studio facilities
for all of WFFF's technical functions and
operations;
(c) continued provision of all satellite
down-link feeds for WFFF;
(d) the use by WFFF of WPTZ's equipment and
facilities to continue to receive
programming, process commercials, promotional
material
-2-
<PAGE> 3
and other information to produce an
over-the-air signal that is transmitted to
Terry Mountain, New York; and
(e) continued access to and utilization of the
WPTZ traffic system.
In addition to the foregoing, between the date hereof and the earlier to occur
of June 1, 1998 or the Closings under the Exchange Agreement (the "HAT
Closing"), the STC Parties will continue to provide the accounting and payroll
services presently provided for WFFF's operation in accordance with the terms
and conditions of the Transitional Services Agreement. If this Agreement
remains in effect after June 1, 1998, Smith shall be responsible for all
accounting and payroll services for WFFF.
2. WFFF Assets. The parties hereto acknowledge and
agree that the equipment, contracts and employees listed in Exhibit A
(equipment), Exhibit B (programming contracts), Exhibit C (operating
contracts), and Exhibit D (employees), respectively, constitute all of the WFFF
Assets. Smith represents and warrants that none of the WFFF Assets set forth
on the Exhibits are Shared Assets (as defined in the Exchange Agreement). Such
WFFF Assets and other items that may be acquired from time to time by Smith
shall remain the property of Smith and shall not be encumbered in any way by
any of the STC Parties.
3. Joint Use of STC Shared Assets. As provided for in
Section 2.11.4 of the Exchange Agreement, the parties hereto further
acknowledge and agree that certain of the assets of WPTZ are shared in the
operation of WFFF, and during the term hereof, Smith shall be entitled to
continue to share such assets as necessary for the operation of WFFF; provided,
however, Smith shall not be deemed to have any ownership interest in any of
such assets.
4. Term and Termination. Except for the obligations to
be performed after the Interim Operation Period, this Agreement shall commence
on the date hereof and shall remain in effect until the HAT Closing; provided,
however, Smith shall be permitted to terminate any portion of Smith's use of
WPTZ's facilities by providing sixty (60) days prior written notice of intent
to do so.
5. Compensation for Interim Operating Services; Lease.
The STC Parties shall provide the services described herein for WFFF during the
Interim Operation Period at no charge or cost to Smith; provided, however,
Smith shall be responsible for the payment of all costs and benefits for each
of Smith's employees and for all supplies necessary for the operation of WFFF.
With respect to Smith's use of WPTZ's tower and equipment space at Terry
Mountain, New York for WFFF, there will be no charges for rental of such space
during the Interim Operation Period. The STC Parties further agree to
cooperate at the sole expense of Smith in all reasonable respects in connection
with any relocation of WFFF's transmission facilities.
6. Working Capital; Revenue and Expenses.
(a) Smith agrees to make certain advances of working
capital to the STC Parties for the working capital requirements of WFFF as
follows (each a "Working Capital
-3-
<PAGE> 4
Advance"): (i) within three (3) business days of the date hereof, Smith shall
advance to the STC Parties the amount of Twenty-Five Thousand Dollars
($25,000), (ii) on May 7, 1998, Smith shall advance to the STC Parties the
amount of Seventy Thousand Dollars ($70,000), and (iii) after June 1, 1998 and
until such time as the HAT Closing occurs, Smith agrees to make further
advances of working capital to the STC Parties as are necessary for the
business and operations of WFFF within three (3) business days of Smith's
receipt of the STC Parties' written request. All Working Capital Advances
shall be delivered by Smith (or on behalf of Smith) by wire transfer of federal
funds to an account specified in writing by the STC Parties.
(b) Subject to the terms and conditions of the
Transitional Services Agreement, the STC Parties shall be responsible during
their period of operation of WPTZ for receiving all revenues from WFFF's
business and operations and the payment of all of the operating expenses for
WFFF. At the time of the HAT Closing, there shall be an accounting of the
revenues received and expenses incurred between the date hereof and the HAT
Closing. Such accounting shall be completed within sixty (60) days after the
HAT Closing (the date of the final determination of the accounting shall be the
"Accounting Date"). In the event that all cash expenditures (including film
payments and capital expenditures) for WFFF exceed the sum of the Working
Capital Advances and cash received during the Interim Operation Period, Smith
shall pay to the STC Parties on the Accounting Date an amount equal to such
deficiency. In the event that cash received and Working Capital Advances
exceeds all cash expenditures (including film payments and capital
expenditures) for WFFF during the Interim Operation Period, the STC Parties
shall on the Accounting Date pay to Smith the amount of such excess. All
accounts receivable of WFFF generated from April 24, 1998 through the HAT
Closing shall remain the property of Smith. The parties acknowledge and agree
that under no circumstances shall the STC Parties realize any net negative cash
effects in connection with the business and operations of WFFF. As of the HAT
Closing, Smith shall establish its own bank accounts and be responsible for the
payment of all of Smith's operating expenses and collection of receivables from
that date forward.
7. Designation of Smith. As of the HAT Closing, the STC
Parties agree to designate Smith as the STC Parties' "permitted designee" under
Section 2.11.3 of the Exchange Agreement.
8. No Joint Venture or Agency. Nothing in this
Agreement shall be construed so as to constitute any joint venture, partnership
or agency relationship between Smith and the STC Parties.
9. Assignment. During the Interim Operation Period,
Smith shall not have the right to assign the WFFF TBA (and any rights or
obligations hereunder relative to WFFF), in whole or in part, except (a) to any
affiliate of Smith or (b) to any other Person with the prior written consent of
HAT (which consent shall not be unreasonably withheld, conditioned or delayed).
This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and assigns as permitted
hereunder. Neither this Agreement nor any rights hereunder shall be assignable
by any party without the prior written consent of the other parties hereto.
-4-
<PAGE> 5
10. Force Majeure. The parties hereto shall not be
liable to any other party for any loss or damage due to delays or failure to
perform resulting from an event of "Force Majeure", including without
limitation, act of God; adverse weather; loss of electrical power; accident;
war; fire; lockout; strike or labor dispute; riot or civil commotion; act of
the public enemy; enactment, rule, order or act of civil or military authority;
acts or omissions of the other party; judicial action; inability to secure
adequate materials, labor, or facilities; defaults of subcontractors or
suppliers; the inability of carriers to make scheduled deliveries; or any other
event beyond the reasonable control of such party.
11. Headings. Section and subsection headings contained
in this Agreement are inserted for convenience of reference only, shall not be
deemed to be a part of this Agreement for any purpose, and shall not in any way
define or affect the meaning, construction or scope of any of the provisions
hereof.
12. No Third Party Beneficiary. It is the explicit
intention of the parties hereto that no person or entity other than the parties
hereto is or shall be entitled to bring any action to enforce any provision of
this Agreement against any of the parties hereto, and the covenants,
undertakings, and agreements set forth in this Agreement shall be solely for
the benefit of, and shall be enforceable only by, the parties hereto or their
respective successors and assigns as permitted hereunder.
13. Notices. All notices and communications required by
this Agreement to be delivered to Smith and HAT shall be delivered as follows:
If to STC:
STC Broadcasting, Inc.
3839 4th Street North
Suite 420
St. Petersburg, Florida 33703
Attn: David A. Fitz
Fax: (813) 821-8092
with a copy (which shall not constitute
notice) to:
Hogan & Hartson L.L.P.
555 Thirteenth Street, N.W.
Washington, D.C. 20004
Attn: William S. Reyner, Jr., Esq.
Fax: (202) 637-5910
-5-
<PAGE> 6
and to:
Hicks, Muse, Tate & Furst Incorporated
200 Crescent Court
Suite 1600
Dallas, Texas 75201
Attn: Lawrence D. Stuart, Jr.
Fax: (214) 740-7355
If to Smith:
Smith Broadcasting of Vermont, LLC
127 El Paseo
Santa Barbara, California 93101
Attn: Robert N. Smith
Fax: (805) 965-1144
and to:
Smith Broadcasting of Vermont, LLC
3839 Fourth Street, North
Suite 420
St. Petersburg, Florida 33703
Attn: Margaret Williams
Fax: (813) 821-8092
14. Entire Agreement; Amendment. This Agreement contains
the entire Agreement between the parties. No amendment, modification or
discharge of this Agreement shall be valid or binding unless set forth in
writing and executed by each party to this Agreement.
15. Choice of Law. This Agreement shall be governed by
and construed under and in accordance with the laws of the State of New York
(except the choice of law provisions thereof), and each of the parties hereby
agrees to submit to the jurisdiction and venue of the courts of the State of
New York.
16. Authorization. This execution, delivery and
performance of this Agreement have been validly authorized and the Agreement
constitutes a valid and binding agreement among each of the signatories hereto.
17. Counterparts. This Agreement may be executed in one
or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
-6-
<PAGE> 7
[SIGNATURE PAGE FOLLOWS]
-7-
<PAGE> 8
IN WITNESS WHEREOF, each of the parties hereto has executed
this Interim Operating Agreement, or has caused this Interim Operating
Agreement to be duly executed and delivered in its name on its behalf, all as
of the day and year first above written.
SMITH BROADCASTING OF VERMONT, LLC
By: /s/ Robert N. Smith
-----------------------------------
STC BROADCASTING, INC.
By: /s/ David A. Fitz
-----------------------------------
David A. Fitz
Chief Financial Officer
STC LICENSE COMPANY
By: /s/ David A. Fitz
-----------------------------------
David A. Fitz
Chief Financial Officer
STC BROADCASTING OF VERMONT, INC.
By: /s/ David A. Fitz
-----------------------------------
David A. Fitz
Chief Financial Officer
STC BROADCASTING OF VERMONT SUBSIDIARY,
INC.
By: /s/ David A. Fitz
-----------------------------------
David A. Fitz
Chief Financial Officer
-8-
<PAGE> 1
EXHIBIT 10.4
SECURITY AGREEMENT, dated as of April 24, 1998, made by SMITH
BROADCASTING OF VERMONT, LLC, a Delaware limited liability company (the
"Borrower"), in favor of STC BROADCASTING, INC. of VERMONT SUBSIDIARY, a
Delaware corporation (the "Lender").
WITNESSETH:
WHEREAS, on the date hereof, the Lender is lending to the
Borrower the amount of Five Hundred Thousand Dollars ($500,000), as evidenced
by, and subject to the terms and conditions of, a Promissory Note dated as of
the date hereof, in the aggregate principal amount of Five Hundred Thousand
Dollars ($500,000.00) (as renewed, extended, refinanced, or modified from time
to time, the "Note"); and
WHEREAS, it is a condition precedent to the obligation of the
Lender to loan such amount to the Borrower pursuant to the Note that the
Borrower shall have executed and delivered this Agreement to the Lender.
NOW, THEREFORE, in consideration of the premises and to induce
the Lender to loan such amount to the Borrower pursuant to the Note, Borrower
hereby agrees with the Lender as follows:
SECTION I. DEFINED TERMS
A. DEFINITIONS.
1. Unless otherwise defined herein, terms
defined in the Note and used herein shall have the meanings given to them in
the Note, and the following terms, which are defined in the Uniform Commercial
Code in effect in the State of New York on the date hereof, are used herein as
so defined: Accounts, Chattel Paper, Documents, Equipment, Farm Products,
Instruments, and Inventory.
2. The following terms shall have the following
meanings:
"AGREEMENT" shall mean this Security
Agreement, as the same may be amended, restated, supplemented, or otherwise
modified from time to time.
"BORROWER OBLIGATIONS" is the collective
reference to the unpaid principal of and interest on the Note and all other
obligations and liabilities of the Borrower (including, without limitation,
interest accruing at the then applicable rate provided in the Note after the
maturity of the Note and interest accruing at the then applicable rate provided
in the Note after the filing of any petition in bankruptcy or the commencement
of any insolvency, reorganization, or like proceeding relating to the Borrower,
whether or not a claim for post-filing or post-petition interest is allowed in
such proceeding) to the Lender, whether direct or indirect,
<PAGE> 2
absolute or contingent, due or to become due, or now existing or hereafter
incurred, which may arise under, out of, or in connection with the Note, this
Agreement, the Assumption Agreement dated as of the date hereof between Lender
and Borrower, the Interim Operating Agreement dated as of the date hereof among
the Borrower and the STC Parties named therein, or any other document made,
delivered, or given in connection therewith, in each case whether on account of
principal, interest, reimbursement obligations, fees, indemnities, costs,
expenses, or otherwise (including, without limitation, all fees and
disbursements of counsel to the Lender that are required to be paid by the
Borrower pursuant to the terms of any of the foregoing agreements).
"CAPITAL STOCK" shall mean any and all
shares, interests, participations or other equivalents (however designated) of
capital stock of a corporation of whatever class, any and all equivalent
ownership interests in a Person (other than a corporation) and any and all
warrants, rights or options to purchase any of the foregoing.
"CODE" shall mean the Uniform Commercial Code
as from time to time in effect in the State of New York.
"COLLATERAL" is as defined in Section II.
"COLLATERAL ACCOUNT" shall be any collateral
account established by the Lender as provided in Section V.
"COMMUNICATIONS ACT" is the Communications
Act of 1934, as amended.
"COPYRIGHTS" shall mean (i) all copyrights in
the United States or any other country, whether registered or unregistered, or
published or unpublished, all registrations and recordings thereof, and all
applications in connection therewith including, without limitation, all
registrations, recordings, and applications in the United States Copyright
Office, and (ii) the right to obtain all renewals thereof.
"COPYRIGHT LICENSES" are any written
agreements naming the Borrower as licensor or licensee, granting any right
under any Copyright including, without limitation, the grant of rights to
manufacture, distribute, exploit, and sell materials derived from any
Copyright.
"EVENT OF DEFAULT" shall mean an Event of
Default under the Note.
"FCC" shall mean the Federal Communications
Commission.
"GENERAL INTANGIBLES" as such term is defined
in Section 9-106 of the Uniform Commercial Code in effect in the State of New
York on the date hereof and, in any event including, without limitation, with
respect to the Borrower, all contracts, agreements, instruments, and indentures
in any form and portions thereof, to which the Borrower is a party or under
which the Borrower has any right, title, or interest or to which the Borrower
or any
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<PAGE> 3
property of the Borrower is subject, as the same may from time to time be
amended, restated, supplemented, or otherwise modified including, without
limitation, (i) all rights of the Borrower to receive moneys due and to become
due to it thereunder or in connection therewith, (ii) all rights of the
Borrower to damages arising thereunder, and (iii) all rights of the Borrower to
perform and to exercise all remedies thereunder, in each case to the extent the
grant by the Borrower of a security interest pursuant to this Agreement in its
right, title, and interest in such contract, agreement, instrument, or
indenture is not prohibited by such contract, agreement, instrument, or
indenture without the consent of any other party thereto, would not give any
other party to such contract, agreement, instrument, or indenture the right to
terminate its obligations thereunder, or is permitted with consent if all
necessary consents to such grant of a security interest have been obtained from
the other parties thereto (it being understood that the foregoing shall not be
deemed to obligate the Borrower to obtain such consents); provided that the
foregoing limitation shall not affect, limit, restrict, or impair the grant by
the Borrower of a security interest pursuant to this Agreement in any
Receivable or any money or other amounts due or to become due under any such
contract, agreement, instrument, or indenture.
"GOVERNMENTAL AUTHORITY" means any agency,
board, bureau, court, commission, department, instrumentality or administration
of the United States government, any foreign government, any state government
or any local, county or municipal, or other governmental body in a state,
territory or possession of the United States or the District of Columbia.
"INTELLECTUAL PROPERTY" shall include all
rights, priorities, and privileges provided under U.S., multinational, and
foreign law relating to Intellectual Property including, without limitation,
Copyrights, Copyright Licenses, Patents, Patent Licenses, Trademarks, and
Trademark Licenses and all rights to sue at law or in equity for any past,
present, or future infringement or other impairment thereof, including the
right to receive all proceeds and damages therefrom.
"LIEN" shall mean any mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
other), charge, or other security interest or any preference, priority, or
other security agreement or preferential arrangement of any kind or nature
whatsoever (including, without limitation, any conditional sale or other title
retention agreement and any capital lease having substantially the same
economic effect as any of the foregoing).
"PATENTS" are (i) all letters patent of the
United States or any other country and all re-issues and extensions thereof,
(ii) all applications for letters patent of the United States or any other
country and all divisions, continuations, and continuations-in-part thereof,
and (iii) all rights to obtain any re-issues or extensions of the foregoing.
"PATENT LICENSE" shall mean all agreements,
whether written or oral, providing for the grant by or to the Borrower of any
right to manufacture, use, or sell any invention covered in whole or in part by
a Patent.
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"PERSON" is an individual, partnership,
corporation, limited liability company, business trust, joint stock company,
trust, unincorporated association, joint venture, Governmental Authority or
other entity of whatever nature.
"PLEDGED NOTES" shall include all promissory
notes issued to or held by the Borrower (other than promissory notes issued in
connection with extensions of trade credit by the Borrower in the ordinary
course of business).
"PLEDGED SECURITIES" is the collective
reference to the Pledged Notes and the Pledged Stock.
"PLEDGED STOCK" shall include any shares,
stock certificates, options, or rights of any nature whatsoever in respect of
the Capital Stock of any Person that may be issued or granted to, or held by,
the Borrower while this Agreement is in effect.
"PROCEEDS" shall mean all "proceeds" as such
term is defined in Section 9-306(1) of the Uniform Commercial Code in effect in
the State of New York on the date hereof and in any event shall include,
without limitation, all dividends or other income from the Pledged Securities,
collections thereon, or distributions or payments with respect thereto.
"RECEIVABLE" is any right to payment for
goods sold or leased, or for services rendered, whether or not such right is
evidenced by an Instrument or Chattel Paper and whether or not it has been
earned by performance (including, without limitation, any Account).
"SECURITIES ACT" is the Securities Act of
1933, as amended.
"TRADEMARKS" are (i) all trademarks, trade
names, corporate names, company names, business names, fictitious business
names, trade styles, service marks, logos, and other source or business
identifiers, and all goodwill associated therewith, now existing or hereafter
adopted or acquired, all registrations and recordings thereof, and all
applications in connection therewith, whether in the United States Patent and
Trademark Office or in any similar office or agency of the United States, any
state thereof, any other country or any political subdivision thereof or
otherwise, and all common-law rights related thereto, and (ii) the right to
obtain all renewals thereof.
"TRADEMARK LICENSE" shall mean any agreement,
whether written or oral, providing for the grant by or to the Borrower of any
right to use any Trademark.
B. OTHER DEFINITIONAL PROVISIONS
1. The words "hereof," "herein," "hereto,"
"hereunder," and words of similar import when used in this Agreement shall
refer to this Agreement as a whole and not to any particular provision of this
Agreement, and Section and Schedule references are to this Agreement unless
otherwise specified.
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2. The meanings given to terms defined herein
shall be equally applicable to both the singular and plural forms of such
terms.
3. Where the context requires, terms relating to
the Collateral or any part thereof, when used in relation to the Borrower,
shall refer to the Borrower's Collateral or the relevant part thereof.
4. For the purposes of this Agreement, each
reference to Collateral or to any relevant type or item of property
constituting Collateral shall be deemed to exclude any FCC license to the
extent the Borrower is prohibited at that time from granting a security
interest therein pursuant to the Communications Act and the regulations
promulgated thereunder.
SECTION II. GRANT OF SECURITY INTEREST
Borrower hereby assigns, transfers and grants to the Lender a
security interest in all of the following property now owned or at any time
hereafter acquired by the Borrower, or in which the Borrower now has or at any
time in the future may acquire any right, title, or interest (collectively, the
"Collateral"), as collateral security for the prompt and complete payment and
performance when due (whether at the stated maturity, by acceleration or
otherwise) of the Borrower's Obligations:
1. Accounts
2. Chattel Paper
3. Documents
4. Equipment
5. General Intangibles
6. Instruments
7. Intellectual Property
8. Inventory
9. Pledged Securities
10. Books and Records pertaining the Collateral, and
11. to the extent not otherwise included, all Proceeds of
any and all of the foregoing and any and all
collateral security and guarantees given by any
person with respect to any of the foregoing.
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<PAGE> 6
"COLLATERAL" shall not include, with respect
to the Borrower, any General Intangible or Intellectual Property to the extent
the grant by the Borrower of a security interest pursuant to this Agreement in
its rights under such General Intangible or Intellectual Property, as the case
may be, is prohibited or restricted by such General Intangible or Intellectual
Property, as the case may be, and the consent of applicable Persons has not
been and cannot be obtained, provided that the foregoing limitation shall not
affect, limit, restrict, or impair the grant by the Borrower of a security
interest pursuant to this Agreement in any Account or any money or other
amounts due or to become due under any such General Intangible or Intellectual
Property, as the case may be, to the extent provided in Section 9-318 of the
Code as in effect on the date hereof.
SECTION III. REPRESENTATIONS AND WARRANTIES
To induce the Lender to enter into this Security Agreement and
to loan the money to the Borrower pursuant to the Note, Borrower hereby
represents and warrants to the Lender that:
A. REPRESENTATIONS IN THE NOTE. The
representations and warranties set forth in the Note as they relate to the
Borrower, each of which is hereby incorporated herein by reference, are true
and correct, and the Lender shall be entitled to rely on each of them as if
they were fully set forth herein.
B. TITLE; NO OTHER LIENS. Except for the
security interest granted to the Lender pursuant to this Agreement, the
Borrower owns each item of the Collateral free and clear of any and all Liens
or claims of others. No financing statement or other public notice with
respect to all or any part of the Collateral is on file or on record in any
public office, except such as have been filed in favor of the Lender pursuant
to this Agreement.
C. PERFECTED FIRST PRIORITY LIENS. The security
interests granted pursuant to this Agreement (1) that are capable of perfection
pursuant to the Code upon completion of the filings and other actions necessary
under the Code will constitute valid perfected security interests in all of the
Collateral in favor of the Lender, as collateral security for the Borrower's
Obligations, enforceable in accordance with the terms hereof against all
creditors of the Borrower and any Person's purporting to purchase any
collateral from the Borrower, and (2) are prior to all other Liens on the
Collateral.
D. CHIEF EXECUTIVE OFFICER. On the date hereof,
the Borrower's jurisdiction of organization is the State of Delaware, and the
location of the Borrower's chief executive office or sole place of business is
specified on Schedule 1.
E. INVENTORY AND EQUIPMENT. On the date hereof,
the Inventory and the Equipment (other than mobile goods) are kept at the
locations listed on Schedule 2.
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F. FARM PRODUCTS. None of the Collateral
constitutes, or is the Proceeds of, Farm Products.
G. SECURITIES AND NOTES.
While this Agreement is in effect, (i) no
shares, stock certificates, options, or rights of any nature whatsoever in
respect of the Capital Stock of any Person will be issued or granted to, or
held by the Borrower and (ii) no promissory notes will be issued to or held by
the Borrower (other than promissory notes issued in connection with extensions
of trade credit by the Borrower in the ordinary course of business).
H. INTELLECTUAL PROPERTY.
1. To the best of the Borrower's
knowledge, all material Intellectual Property is on the date hereof valid,
subsisting, unexpired, enforceable and has not been abandoned.
2. None of the material Intellectual
Property is on the date hereof the subject of any licensing or franchise
agreement pursuant to which the Borrower is the licensor or franchisor.
3. No holding, decision or judgment has
been rendered by any Governmental Authority which would limit, cancel or
question the validity of, or the Borrower's rights in, any Intellectual
Property in any respect that could reasonably be expected to have a material
adverse effect on the business, assets, property, condition (financial or
otherwise), or prospect of Borrower or the Collateral.
4. No action or proceeding is pending
or, to the knowledge of the Borrower, threatened on the date hereof seeking to
limit, cancel or question the validity, or the Borrower's ownership, of any
Intellectual Property which, if adversely determined, would have a material
adverse effect on the Borrower or the Collateral.
SECTION IV. COVENANTS
Borrower covenants and agrees with the Lender that, from and
after the date of this Agreement until the Borrower Obligations have been paid
in full:
A. NO EVENTS OF DEFAULT. Borrower shall take,
or shall refrain from taking, as the case may be, each action that is necessary
to be taken, as the case may be, so that no Event of Default is caused by the
failure to take such action or to refrain from taking such action by Borrower.
B. INSURANCE. Borrower shall cause each
casualty insurance policy maintained by it to (a) provide that no cancellation,
material reduction in amount or material change in coverage thereof shall be
effective until at least thirty (30) days after receipt by the
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Lender of written notice thereof, (b) name the Lender as insured party or loss
payee, (c) if reasonably requested by the Lender, include a breach of warranty
clause and (d) be reasonably satisfactory in all other respects to the Lender.
C. MAINTENANCE OF PERFECTED SECURITY INTEREST;
FURTHER DOCUMENTATION.
1. The Borrower shall maintain the
security interest created by this Agreement as a perfected security interest
having at least the priority described herein and shall defend such security
interest against the claims and demands of all Persons whomsoever.
2. Upon reasonable written request of
the Lender, the Borrower will furnish to the Lender statements and schedules
further identifying and describing the Collateral and such other reports in
connection with the Collateral as the Lender may reasonably request, all in
reasonable detail.
3. At any time and from time to time,
upon the written request of the Lender, and at the sole expense of the
Borrower, the Borrower will promptly and duly execute and deliver such further
instruments and documents and take such further actions as the Lender may
reasonably request for the purpose of obtaining or preserving the full benefits
of this Agreement and of the rights and powers herein granted, including,
without limitation, the filing of any financing or continuation statements
under the Code (or other similar laws) in effect in any jurisdiction with
respect to the security interests created hereby.
E. CHANGES IN LOCATIONS, NAME, ETC. The
Borrower will not, except upon not less than 15 days' prior written notice to
the Lender and delivery to the Lender of all additional executed financing
statements and other documents reasonably requested by the Lender to maintain
the validity, perfection and priority of the security interests provided for
herein:
(a) permit any of the Inventory or
Equipment (other than (i) immaterial Inventory and
Equipment and (ii) Inventory and Equipment in transit
in the ordinary course of business) to be kept at a
location other than those listed on Schedule 2;
(b) change the location of its chief
executive office or sole place of business from that
referred to in Schedule 1; or
(c) change its name, identity or
corporate structure to such an extent that any
financing statement filed by the Lender in connection
with this Agreement would become misleading.
F. NOTICES. The Borrower will advise the Lender
promptly after the Borrower becomes aware thereof, in reasonable detail, of any
Lien (other than security interests created hereby) on any of the Collateral
which would adversely affect the ability of the Lender to exercise any of the
Lender's remedies hereunder.
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G. PLEDGED SECURITIES.
1. If the Borrower shall become
entitled to receive or shall receive any stock certificate (including, without
limitation, any certificate representing a stock dividend or a distribution in
connection with any reclassification, increase or reduction of capital or any
certificate issued in connection with any reorganization), option or rights in
respect of the Capital Stock of any Person, whether in addition to, in
substitution of, as a conversion of, or in exchange for, any shares of the
Pledged Stock, or otherwise in respect thereof, the Borrower shall accept the
same as the agent of the Lender, hold the same in trust for the Lender and
deliver the same forthwith to the Lender in the same exact form received, duly
indorsed by the Borrower to the Lender, if required, together with an undated
stock power covering such certificate duly executed in blank by the Borrower to
be held by the Lender, subject to the terms hereof, as additional collateral
security for the Borrower Obligations. If an Event of Default shall have
occurred and be continuing, (i) any sums paid upon or in respect of the Pledged
Securities upon the liquidation or dissolution of any issuer thereof shall be
paid over to the Lender to be held by it hereunder as additional collateral
security for the Borrower Obligations and (ii) in case any distribution of
capital shall be made on or in respect of the Pledged Securities or any
property shall be distributed upon or with respect to the Pledged Securities
pursuant to the recapitalization thereof, the property so distributed shall,
unless otherwise subject to a perfected security interest in favor of the
Lender, be delivered to the Lender to be held by it hereunder as additional
collateral security for the Borrower Obligations. If any sums of money or
property so paid or distributed in respect of the Pledged Securities shall be
received by the Borrower, the Borrower shall, until such money or property is
paid or delivered to the Lender, hold such money or property in trust for the
Lender, segregated from other funds of the Borrower, as additional collateral
security for the Borrower Obligations.
2. Without the prior written consent of
the Lender, the Borrower will not (i) vote to enable, or take any other action
to permit, any Person to issue any stock or other equity securities of any
nature (except to the extent such stock or other securities are pledged to the
Lender hereunder) or to issue any other securities convertible into or granting
the right to purchase or exchange for any stock or other equity securities of
any nature of any Person, (ii) sell, assign, transfer, exchange, or otherwise
dispose of, or grant any option with respect to, the Pledged Securities or
Proceeds thereof, (iii) create, incur or permit to exist any Lien or option in
favor of, or any claim of any Person with respect to, any of the Pledged
Securities or Proceeds thereof, or any interest therein, except for the
security interests created by this Agreement or (iv) enter into any agreement
or undertaking restricting the right or ability of the Borrower or the Lender
to dispose of any of the Pledged Securities or Proceeds thereof.
H. RECEIVABLES.
(a) Other than in the ordinary course of
business, the Borrower will not (i) grant any extension of the time of payment
of any Receivable, (ii) compromise or settle any Receivable for less than the
full amount thereof, (iii) release, wholly or partially, any Person liable for
the payment of any Receivable, (iv) allow any credit or discount whatsoever on
any
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Receivable or (v) amend, supplement or modify any Receivable in any manner
that could adversely affect the value thereof.
(b) The Borrower will take all actions
necessary to give notice pursuant to the United States Assignment of Claims Act
of 1940, as amended, or such other analogous law if a material portion of the
total amount of the Receivables is owing from Governmental Authorities.
I. INTELLECTUAL PROPERTY.
1. The Borrower (either itself or
through licensees) will (i) continue to use each material Trademark on each and
every trademark class of goods applicable to its current line as reflected in
its then-current catalogs, brochures and price lists in order to maintain such
Trademark in full force free from any claim of abandonment for non-use, (ii)
maintain as in the past the quality of products and services offered under such
Trademark, (iii) use such Trademark with all notices and legends required by
applicable law or regulations, and (iv) not (and not permit any licensee or
sublicensee thereof to) do any act or knowingly omit to do any act whereby such
Trademark may become invalidated or impaired in any way.
2. The Borrower (either itself or
through licensees) will not do any act or omit to do any act, whereby any
material Patent may become forfeited, abandoned or dedicated to the public.
3. The Borrower (either itself or
through licensees) will not (and will not permit any licensee or sublicensee
thereof to) do any act or knowingly omit to do any act whereby any material
portion of the Copyrights may become invalidated or otherwise impaired. The
Borrower will not (either itself or through licensees) do any act whereby any
material portion of the Copyrights may fall into the public domain.
4. The Borrower (either itself or
through licensees) will not do any act that knowingly uses a material
Intellectual Property to infringe the Intellectual Property rights of a third
party.
5. The Borrower will notify the Lender
immediately if it knows, or has reason to know, that any application or
registration relating to any material Patent, Copyright or Trademark may become
abandoned or dedicated to the public, or of any adverse determination or
development (including, without limitation, the institution of, or any such
determination or development in, any proceeding in the United States Patent and
Trademark Office, the U.S. Copyright Office or any court or tribunal in any
country) regarding the Borrower's ownership of, or the validity of, any
material Intellectual Property or the Borrower's right to register the same or
to own and maintain the same.
6. Whenever the Borrower, either by
itself or through any agent, employee, licensee or designee, shall file an
application for any Patent or Trademark with the United States Patent and
Trademark Office or any Copyright in the U.S. Copyright Office or
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any similar office or agency in any other country or any political subdivision
thereof, the Borrower shall report such filing to the Lender within five (5)
business days after the last day of the fiscal quarter in which such filing
occurs. Upon written request of the Lender, the Borrower shall execute and
deliver, and have recorded, any and all agreements, instruments, documents, and
papers as the Lender may reasonably request to evidence the Lender's security
interest in any such Copyright, Patent or Trademark and the goodwill and
general intangibles of the Borrower relating thereto or represented thereby.
7. The Borrower will take all
reasonable and necessary steps, including, without limitation, in any
proceeding before the United States Patent and Trademark Office, the U.S.
Copyright Office or any similar office or agency in any other country or any
political subdivision thereof, to maintain each registration of the material
Intellectual Property, including, without limitation, filing of applications
for renewal, affidavits of use and affidavits of incontestability.
8. In the event that any material
Intellectual Property is infringed, misappropriated or diluted by a third
party, the Borrower shall (i) take such actions as the Borrower shall
reasonably deem appropriate under the circumstances to protect such
Intellectual Property and (ii) if such Intellectual Property is of material
economic value, promptly notify the Lender after it learns thereof.
SECTION V. REMEDIAL PROVISIONS
A. CERTAIN MATTERS RELATING TO RECEIVABLES.
1. At any time while an Event of
Default shall have occurred and be continuing, upon the Lender's request and at
the expense of the Borrower, the Borrower shall cause independent public
accountants or others satisfactory to the Lender to furnish to the Lender
reports showing reconciliations, aging and test verifications of, and trial
balances for, the Receivables.
2. The Lender hereby authorizes the
Borrower to collect the Borrower's Receivables, and the Lender may curtail or
terminate said authority at any time after the occurrence and during the
continuance of an Event of Default. If required by the Lender at Default, any
payments or Receivables, when collected by the Borrower, (i) shall be forthwith
(and, in any event, within two (2) business days) deposited by the Borrower in
the exact form received, duly indorsed by the Borrower to the Lender if
required, in a Collateral Account maintained under the sole dominion and
control of the Lender subject to withdrawal by the Lender as provided in
Section V,E hereof, and (ii) until so turned over, shall be held by the
Borrower in trust for the Lender, segregated from other funds of the Borrower.
Each such deposit of Proceeds of Receivables shall be accompanied by a report
identifying in reasonable detail the nature and source of the payments included
in the deposit.
3. At the Lender's request, the
Borrower shall deliver to the Lender, and have recorded, all original and other
documents evidencing, and relating to, the
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<PAGE> 12
agreements and transactions which gave rise to the then existing Receivables,
including, without limitation, all original orders, invoices and shipping
receipts.
B. COMMUNICATIONS WITH OBLIGORS; BORROWER
REMAINS LIABLE.
1. The Lender in its own name or in the
name of others may at any time after the occurrence and during the continuance
of an Event of Default communicate with obligors under the Receivables to
verify with them to the Lender's reasonable satisfaction the existence, amount
and terms of any Receivables.
2. Upon the request of the Lender at
any time after the occurrence and during the continuance of an Event of
Default, the Borrower shall notify obligors on the Receivables that the
Receivables have been assigned to the Lender and that payments in respect
thereof shall be made directly to the Lender.
3. Anything herein to the contrary
notwithstanding, each Borrower shall remain liable under each of the
Receivables to observe and perform all the conditions and obligations to be
observed and performed by it thereunder, all in accordance with the terms of
any agreement giving rise thereto. The Lender shall not have any obligation or
liability under any Receivable (or any agreement giving rise thereto) by reason
of or arising out of this Agreement or the receipt by the Lender of any payment
relating thereto, nor shall the Lender be obligated in any manner to perform
any of the obligations of the Borrower under or pursuant to any Receivable (or
any agreement giving rise thereto) to make any payment, to make any inquiry as
to the nature or the sufficiency of any payment received by it or as to the
sufficiency of any performance by any party thereunder, to present or file any
claim, to take any action to enforce any performance or to collect the payment
of any amounts which may have been assigned to it or to which it may be
entitled at any time or times.
C. PLEDGED STOCK.
1. Unless an Event of Default shall
have occurred and be continuing and the Lender shall have given notice to the
Borrower of the Lender's intent to exercise its rights hereunder, Borrower
shall be permitted to receive all cash dividends paid in respect of the Pledged
Stock and all payments made in respect of the Pledged Notes, in each case paid
in the normal course of business of the relevant issuer thereof, and to
exercise all voting and corporate rights with respect to the Pledged
Securities; provided, however, that no vote shall be cast or corporate right
exercised or other action taken which, in the Lender's reasonable judgment,
would impair the Collateral or which would be inconsistent with or result in
any violation of any provision of the Note or this Agreement.
2. If an Event of Default shall occur
and be continuing and the Lender shall give written notice of its intent to
exercise such rights to the Borrower, (i) the Lender shall have the right to
receive any and all cash dividends, payments or other Proceeds paid in respect
of the Pledged Securities and make application thereof to the Borrower
Obligations in such order as the Lender may determine, and (iii) any or all of
the Pledged Securities shall be
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registered in the name of the Lender or its nominee, and the Lender or its
nominee may thereafter exercise (x) all voting, corporate and other rights
pertaining to such Pledged Securities at any meeting of shareholders of the
relevant issuer or issuers or otherwise and (y) any and all rights of
conversion, exchange and subscription and any other rights, privileges or
options pertaining to such Pledged Securities as if it were the absolute owner
thereof (including, without limitation, the right to exchange at its discretion
any and all of the Pledged Securities upon the merger, consolidation,
reorganization, recapitalization or other fundamental change in the corporate
structure of any Issuer, or upon the exercise by the Borrower or the Lender of
any right, privilege or option pertaining to such Pledged Securities, and in
connection therewith, the right to deposit and deliver any and all of the
Pledged Securities with any committee, depository, transfer agent, registrar or
other designated agency upon such terms and conditions as the Lender may
determine), all without liability except to account for property actually
received by it, but the Lender shall have no duty to the Borrower to exercise
any such right, privilege or option and shall not be responsible for any
failure to do so or delay in so doing.
3. Borrower hereby authorizes and
instructs each issuer of any Pledged Securities pledged by the Borrower
hereunder to (i) comply with any instruction received by it from the Lender in
writing that (x) states that an Event of Default has occurred and is continuing
and (y) is otherwise in accordance with the terms of this Agreement, without
any other or further instructions from the Borrower, and the Borrower agrees
that each issuer shall be fully protected in so complying, and (ii) unless
otherwise expressly permitted hereby, pay any dividends or other payments with
respect to the Pledged Securities directly to the Lender.
D. PROCEEDS TO BE TURNED OVER TO LENDER. In
addition to the rights of the Lender specified herein with respect to payments
of Receivables, if an Event of Default shall occur and be continuing, all
Proceeds received by the Borrower consisting of cash, checks and other
near-cash items shall be held by the Borrower in trust for the Lender,
segregated from other funds of the Borrower, and shall, forthwith upon receipt
by the Borrower, be turned over to the Lender in the exact form received by the
Borrower (duly indorsed by the Borrower to the Lender, if required). All
Proceeds received by the Lender hereunder shall be held by the Lender in a
Collateral Account maintained under its sole dominion and control. All
Proceeds while held by the Lender in a Collateral Account (or by the Borrower
in trust for the Lender) shall continue to be held as collateral security for
all the Borrower Obligations and shall not constitute payment thereof until
applied as provided herein.
E. APPLICATION OF PROCEEDS. At any time after
the occurrence and during the continuance of an Event of Default, at the
Lender's election, the Lender may apply all or any part of Proceeds held in any
Collateral Account in payment of the Borrower Obligations in such order as the
Lender may elect, and any part of such funds which the Lender elects not so to
apply and deems not required as collateral security for the Borrower
Obligations shall be paid over from time to time by the Lender to the Borrower
or to whomsoever may be lawfully entitled to receive the same. Any balance of
such Proceeds remaining after the Borrower Obligations shall have been paid in
full, shall be paid over to the Borrower or to whomsoever may be lawfully
entitled to receive the case.
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F. CODE AND OTHER REMEDIES. If an Event of
Default shall occur and be continuing, the Lender may exercise, in addition to
all other rights and remedies granted to the Lender in this Agreement and in
any other instruments or agreement securing, evidencing or relating to the
Borrower Obligations, all rights and remedies of a secured party under the Code
or any other applicable law. Without limiting the generality of the foregoing,
the Lender, without demand or performance or other demand, presentment,
protest, advertisement or notice of any kind (except any notice required by law
referred to below) to or upon the Borrower or any other Person (all and each of
which demands, defenses, advertisements and notices are hereby waived), may in
such circumstances forthwith collect, receive, appropriate and realize upon the
Collateral, or any part thereof, and/or may forthwith sell, lease, assign, give
option or options to purchase, or otherwise dispose of and deliver the
Collateral or any part thereof (or contract to do any of the foregoing), in one
or more parcels at public or private sale or sales, at any exchange, broker's
board or office of the Lender or elsewhere upon such terms and conditions as it
may deem advisable and at such prices as it may deem best, for cash or on
credit or for future delivery without assumption of any credit risk. The
Lender shall have the right upon any such public sale or sales, and, to the
extent permitted by law, upon any such private sale or sales, to purchase the
whole or any part of the Collateral so sold, free of any right or equity of
redemption in the Borrower, which right or equity is hereby waived and
released. Borrower further agrees, at the Lender's request, to assemble the
Collateral and make it available to the Lender at places which the Lender shall
reasonable select, whether at the Borrower's premises or elsewhere. The Lender
shall apply the net proceeds of any action taken by it pursuant to this
Section, after deducting all reasonable costs and expenses of every kind
incurred in connection therewith or incidental to the care or safekeeping of
any of the Collateral or in any way relating to the Collateral or the rights of
the Lender hereunder, including, without limitation, reasonable attorneys' fees
and disbursements, to the payment in whole or in part of the Borrower
Obligations, in such order as the Lender may elect, and only after such
application and after the payment by the Lender of any other amount required by
any provision of law, including, without limitation, Section 9- 504(1)(c) of
the Code, need the Lender account for the surplus, if any, to the Borrower. To
the extent permitted by applicable law, the Borrower waives all claims,
damages, and demands it may acquire against the Lender arising out of the
exercise by the Lender of any rights hereunder. If any notice of a proposed
sale or other disposition of Collateral shall be required by law, such notice
shall be deemed reasonable and proper if given at least 10 days before such
sale or other disposition.
G. REGISTRATION RIGHTS.
1. If the Lender shall determine to
exercise its right to sell any or all of the Pledged Stock pursuant to the
terms and conditions hereof, and if in the opinion of the Lender it is
necessary or advisable to have the Pledged Stock, or that portion thereof to be
sold, registered under the provisions of the Securities Act, the Borrower will
cause the issuer thereof to (i) execute and deliver, and cause the directors
and officers of such issuer to execute and deliver, all such instruments and
documents, and do or cause to be done all such other acts as may be, in the
opinion of the Lender, necessary or advisable to register the Pledged Stock, or
that portion
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<PAGE> 15
thereof to be sold, under the provisions of the Securities Act, (ii) use its
best efforts to cause the registration statement relating thereto to become
effective and to remain effective for a period of one year from the date of the
first public offering of the Pledged Stock, or that portion thereof to be sold,
and (iii) make all amendments thereto and/or to the related prospectus which,
in the opinion of the Lender, are necessary or advisable, all in conformity
with the requirements of the Securities Act and the rules and regulations of
the Securities and Exchange Commission applicable thereto. The Borrower agrees
to cause such issuer to comply with the provisions of the securities or "Blue
Sky" laws of any and all jurisdictions which the Lender shall designate and to
make available to its security holders, as soon as practicable, an earnings
statement (which need not be audited) which will satisfy the provisions of
Section 11(a) of the Securities Act.
2. Borrower recognizes that the Lender
may be unable to effect a public sale of any or all the Pledged Stock, by
reason of certain prohibitions contained in the Securities Act and applicable
state securities laws or otherwise, and may be compelled to resort to one or
more private sales thereof to a restricted group of purchasers which will be
obliged to agree, among other things, to acquire such securities for their own
account for investment and not with a view to the distribution or resale
thereof. Borrower acknowledges and agrees that any such private sale may
result in prices and other terms less favorable than if such sale were a public
sale and, notwithstanding such circumstances, agrees that any such private sale
shall be deemed to have been made in a commercially reasonable manner. The
Lender shall be under no obligation to delay a sale of any of the Pledged Stock
for the period of time necessary to permit the issuer thereof to register such
securities for public sale under the Securities Act, or under applicable state
securities laws, even if such Issuer would agree to do so.
3. Borrower agrees to use its best
efforts to do or cause to be done all such other acts as may be necessary to
make such sale or sales of all or any portion of the Pledged Stock pursuant to
this Section valid and binding and in compliance with any and all other
applicable laws. Borrower further agrees that a breach of any of the covenants
contained in this Section will cause irreparable injury to the Lender, that the
Lender has no adequate remedy at law in respect of such breach and, as a
consequence, that each and every covenant contained in this Section shall be
specifically enforceable against the Borrower, and the Borrower hereby waives
and agrees not to assert any defenses against an action for specific
performance of such covenants except for a defense that no Event of
Default has occurred.
H. WAIVER; DEFICIENCY. Borrower waives and
agrees not be assert any rights or privileges which it may acquire under
Section 9-112 of the Code. Borrower shall remain liable for any deficiency if
the proceeds of any sale or other disposition of the Collateral are
insufficient to pay the Borrower Obligations and the fees and disbursements of
any attorneys employed by the Lender to collect such deficiency.
SECTION VII. THE LENDER
A. LENDER'S APPOINTMENT AS ATTORNEY-IN-FACT,
ETC.
1. Borrower hereby irrevocably
constitutes and appoints the Lender and any officer or agent thereof, with full
power of substitution, as its true and lawful attorney-in-fact with full
irrevocable power and authority in the place and stead of the Borrower and in
the name of the Borrower or in its own name, for the purpose of carrying out
the terms of
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<PAGE> 16
this Agreement, to take any and all appropriate action to the extent permitted
by law and to execute any and all documents and instruments which may be
necessary or desirable to accomplish the purposes of this Agreement, and,
without limiting the generality of the foregoing, Borrower hereby gives the
Lender the power and right, on behalf of the Borrower, without notice to or
assent by the Borrower, to do any or all of the following:
(i) in the name of the Borrower or its own name,
or otherwise, take possession of and indorse and collect any
checks, drafts, notes, acceptances or other instruments for
the payment of moneys due under any Receivable or with respect
to any other Collateral and file any claim or take any other
action or proceeding in any court of law or equity or
otherwise deemed appropriate by the Lender for the purpose of
collecting any and all such moneys due under any Receivable or
with respect to any other Collateral whenever payable;
(ii) in the case of any Copyright, Patent or
Trademark, execute, deliver and have recorded, any and all
agreements, instruments, documents and papers as the Lender
may request to evidence the Lender's security interest in such
Copyright, Patent or Trademark and the goodwill and general
intangibles of the Borrower relating thereto or represented
thereby;
(iii) pay or discharge taxes and Liens levied or
placed on or threatened against the Collateral, effect any
repairs or any insurance called for by the terms of this
Agreement and pay all or any part of the premiums therefor and
the costs thereof;
(iv) execute, in connection with any sale provided
for herein, any indorsements, assignments or other instruments
of conveyance or transfer with respect to the Collateral; and
(v) (a) direct any party liable for any payment
under any of the Collateral to make payment of any and all
moneys due or to become due thereunder directly to the Lender
or as the Lender shall direct; (b) ask or demand for, collect,
and receive payment of and receipt for, any and all moneys,
claims and other amounts due or to become due at any time in
respect of or arising out of any Collateral; (c) sign and
indorse any invoices, freight or express bills, bills of
lading, storage or warehouse receipts, drafts against debtors,
assignments, verifications, notices and other documents in
connection with any of the Collateral; (d) commence and
prosecute any suits, actions or proceedings at law or in
equity in any court of competent jurisdiction to collect the
Collateral or any portion thereof and to enforce any other
right in respect of any Collateral; (e) defend any suit,
action or proceeding brought against the Borrower with respect
to any Collateral; (f) settle, compromise or adjust any such
suit, action or proceeding and, in connection therewith, give
such discharges or releases as the Lender may deem
appropriate; (g) assign any Copyright, Patent or Trademark
(along with the goodwill of the business to which any such
Copyright, Patent or Trademark
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<PAGE> 17
pertains), throughout the world for such term or terms, on
such conditions, and in such manner, as the Lender shall in
its sole discretion determine; and (h) generally, sell,
transfer, pledge and make any agreement with respect to or
otherwise deal with any of the Collateral as fully and
completely as though the Lender were the absolute owner
thereof for all purposes, and do, at the Lender's option and
the Borrower's expense, at any time, or from time to time, all
acts and things which the Lender deems necessary to protect,
preserve or realize upon the Collateral and the Lender's
security interests therein and to effect the intent of this
Agreement, all as fully and effectively as the Borrower might
do.
Anything in this Section to the contrary notwithstanding, the
Lender agrees that it will not exercise any rights under the power of attorney
provided for in this Section unless an Event of Default shall have occurred and
be continuing.
2. If the Borrower fails to perform or
comply with any of its agreements contained herein, the Lender, at its option,
but without any obligation so to do, may perform or comply, or otherwise cause
performance or compliance, with such agreement.
3. The expenses of the Lender incurred
in connection with actions undertaken as provided in this Section, together
with interest thereon at a rate per annum equal to eight percent (8%), from the
date of payment by the Lender to the date reimbursed by the Borrower, shall be
payable by the Borrower to the Lender on demand.
4. The Borrower hereby ratifies all
that said attorneys shall lawfully do or cause to be done by virtue hereof.
All powers, authorizations and agencies contained in this Agreement are coupled
with an interest and are irrevocable until this Agreement is terminated and the
security interests created hereby are released.
B. DUTY OF LENDER. The Lender's sole duty with
respect to the custody, safekeeping and physical preservation of the Collateral
in its possession, under Section 9-207 of the Code or otherwise, shall be to
deal with it in the same manner as the Lender deals with similar property for
its own account. Neither the Lender nor any of its officers, directors,
employees or agents shall be liable for failure to demand, collect or realize
upon any of the Collateral or for any delay in doing so or shall be under any
obligation to sell or otherwise dispose of any Collateral upon the request of
the Borrower or any other Person or to take any action whatsoever with regard
to the Collateral or any part thereof. The powers conferred on the Lender
hereunder are solely to protect the Lender's interest in the Collateral and
shall not impose any duty upon the Lender to exercise any such powers. The
Lender shall be accountable only for amounts that it actually receives as a
result of the exercise of such powers, and neither the Lender nor any of its
officers, directors, employees or agents shall be responsible to the Borrower
for any act or failure to act hereunder, except for the Lender's own gross
negligence or willful misconduct.
C. EXECUTION OF FINANCING STATEMENTS. Pursuant
to Section 9-402 of the Code and any other applicable law, the Borrower
authorizes the Lender to file or record
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<PAGE> 18
financing statements and other filing or recording documents or instruments
with respect to the Collateral without the signature of the Borrower in such
form and in such offices as the Lender reasonably determines appropriate to
perfect the security interests of the Lender under this Agreement. A
photographic or other reproduction of this Agreement shall be sufficient as a
financing statement or other filing or recording document or instrument for
filing or recording in any jurisdiction.
SECTION VIII. MISCELLANEOUS
A. AMENDMENTS IN WRITING. The terms or
provisions of this Agreement may be waived, amended, supplemented or otherwise
modified by a written instrument executed by the Borrower and the Lender,
provided that any provision of this Agreement imposing obligations on the
Borrower may be waived by the Lender in a written instrument executed by the
Lender.
B. NOTICES. All notices, demands, requests, or
other communications which may be or are required to be given or made by any
party to any other party pursuant to this Agreement shall be in writing and
shall be hand delivered, mailed by first-class registered or certified mail,
return receipt requested, postage prepaid, delivered by overnight air courier,
or transmitted by telegram, telex, or facsimile transmission addressed as
follows:
If to Lender:
STC Broadcasting of Vermont Subsidiary, Inc.
3839 4th Street North
Suite 420
St. Petersburg, Florida 33703
Attn: David Fitz
Fax: (813) 821-8092
and to:
Hicks, Muse, Tate & Furst Incorporated
200 Crescent Court
Suite 1600
Dallas, Texas 75201
Attn: Lawrence D. Stuart, Jr.
Fax: (214) 740-7355
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<PAGE> 19
If to Borrower:
Smith Broadcasting of Vermont, LLC
127 El Paseo
Santa Barbara, California 93101
Attn: Robert N. Smith, President
Fax: (805) 965-1144
or such other address as the addressee may indicate by written notice to the
other parties.
Each notice, demand, request, or communication which shall be given or made in
the manner described above shall be deemed sufficiently given or made for all
purposes at such time as it is delivered to the addressee (with the return
receipt, the delivery receipt, the affidavit of messenger or (with respect to a
telex) the answerback being deemed conclusive but not exclusive evidence of
such delivery) or at such time as delivery is refused by the addressee upon
presentation.
C. NO WAIVER BY COURSE OF CONDUCT; CUMULATIVE
REMEDIES. The Lender shall not by any act (except by a written instrument),
delay, indulgence, omission or otherwise be deemed to have waived any right or
remedy hereunder or to have acquiesced in any Event of Default. No failure to
exercise, nor any delay in exercising, on the part of the Lender, any right,
power or privilege hereunder shall operate as a waiver thereof. No single or
partial exercise of any right, power or privilege hereunder shall preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. A waiver by the Lender of any right or remedy hereunder on any one
occasion shall not be construed as a bar to any right or remedy which the
Lender would otherwise have on any future occasion. The rights and remedies
herein provided are cumulative, may be exercised singly or concurrently and are
not exclusive of any other rights or remedies provided by law.
D. ENFORCEMENT EXPENSES; INDEMNIFICATION.
1. Borrower agrees to pay or reimburse
the Lender for all its costs and expense incurred in collecting against the
Borrower or otherwise enforcing or preserving any rights under this Agreement,
including, without limitation, the reasonable fees and disbursements of counsel
to the Lender.
2. Borrower agrees to pay, and to save
the Lender harmless from, any and all liabilities with respect to, or resulting
from any delay in paying, any and all stamp, excise, sales or other taxes which
may be payable or determined to be payable with respect to any of the
Collateral or in connection with any of the transactions contemplated by this
Agreement.
3. The agreements in this Section shall
survive repayment of the Borrower Obligations and all other amounts payable
under the Note.
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<PAGE> 20
E. SUCCESSORS AND ASSIGNS. This Agreement shall
be binding upon the successors and assigns of the Borrower and shall inure to
the benefit of the Lender and its successors and assigns; provided that
Borrower may not assign, transfer or delegate any of its rights or obligations
under this Agreement without the prior written consent of the Lender.
F. SET-OFF. In addition to any rights and
remedies of the Lender provided by law, the Lender shall have the right,
without prior notice to the Borrower, any such notice being expressly waived by
the Borrower to the extent permitted by applicable law, upon any amount
becoming due and payable by the Borrower hereunder (whether at the stated
maturity, by acceleration or otherwise) to set off and appropriate and apply
against such amount any and all deposits (general or special, time or demand,
provisional or final), in any currency, and any other credits, indebtedness or
claims, in any currency, in each case whether direct or indirect, absolute or
contingent, matured or unmatured, at any time held or owing by the Lender to or
for the credit or the account of the Borrower. The Lender agrees promptly to
notify the Borrower after any such setoff and application made by the Lender,
provided that the failure to give such notice shall not affect the validity of
such setoff and application.
G. COUNTERPARTS. This Agreement may be executed
by one or more of the parties to this Agreement on any number of separate
counterparts (including by telecopy), and all of said counterparts taken
together shall be deemed to constitute one and the same instrument. A set of
the copies of this Agreement signed by all the parties shall be lodged with the
Borrower and the Lender.
H. SEVERABILITY. Any provision of this
Agreement which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
I. INTEGRATION. This Agreement and the Note
represent the entire agreement of the Borrower and the Lender with respect to
the subject matter hereof and thereof, and there are no promises, undertakings,
representations or warranties by the Lender relative to subject matter hereof
and thereof not expressly set forth or referred to herein or in the Note.
J. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS
AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
K. SUBMISSION TO JURISDICTION; WAIVERS.
Borrower hereby irrevocably and unconditionally:
1. submits for itself and its property in any
legal action or proceeding relating to this Agreement and the
Note, or for recognition and enforcement of any judgment in
respect thereof, to the nonexclusive general jurisdiction of
the Courts
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<PAGE> 21
of the State of New York, the courts of the United States of
America for the Southern District of New York, and appellate
courts from any thereof;
2. consents that any such action or proceeding
may be brought in such courts and waives any objection that it
may now or hereafter have to the venue of any such action or
proceeding in any such court or that such action or proceeding
was brought in an inconvenient court and agrees not to plead
or claim the same;
3. agrees that service of process in any such
action or proceeding may be effected by mailing a copy thereof
by registered or certified mail (or any substantially similar
form of mail), postage prepaid, to the Borrower at its address
referred to above or at such other address of which the Lender
shall have been notified pursuant thereto;
4. agrees that nothing herein shall affect the
right to effect service of process in any other manner
permitted by law or shall limit the right to sue in any other
jurisdiction; and
5. waives, to the maximum extent not prohibited
by law, any right it may have to claim or recover in any legal
action or proceeding referred to in this Section any special,
exemplary, punitive or consequential damages.
L. ACKNOWLEDGMENTS. Borrower hereby
acknowledges that:
1. it has been advised by counsel in the
negotiation, execution and delivery of this Agreement and the
Note;
2. the Lender has no fiduciary relationship with
or duty to the Borrower arising out of or in connection with
this Agreement, and the relationship between Lender and the
Borrowers in connection herewith is solely that of debtor and
creditor; and
3. no joint venture is created hereby or
otherwise exists by virtue of the transactions contemplated
hereby between the Lender and the Borrower.
M. WAIVERS OF JURY TRIAL. BORROWER AND THE
LENDER HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL
ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR THE NOTE AND FOR ANY
COUNTERCLAIM THEREIN.
N. SECTION HEADINGS. The Section headings used
in this Agreement are for convenience of reference only and are not to affect
the construction hereof or be taken into consideration in the interpretation
hereof.
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<PAGE> 22
O. RELEASES.
(a) At such time as the Note and the
other Borrower Obligations shall have been satisfied in full, the Collateral
shall be released from the Liens created hereby, and this Agreement and all
obligations (other than those expressly stated to survive such termination) of
the Lender and the Borrower hereunder shall terminate, all without delivery of
any instrument or performance of any act by any party, and all rights to the
Collateral shall revert to the Borrower. At the request and sole expense of
the Borrower following any such termination, the Lender shall deliver to the
Borrower any Collateral held by the Lender hereunder, and execute and deliver
to the Borrower such documents as the Borrower shall reasonably request to
evidence such termination.
(b) If any of the Collateral shall be
sold, transferred or otherwise disposed of by the Borrower in a transaction not
prohibited by this Agreement, then the Lender, at the request and sole expense
of the Borrower, shall execute and deliver to the Borrower all releases or
other documents reasonably necessary or desirable for the release of the Liens
created hereby on such Collateral.
P. FCC COMPLIANCE.
(a) Notwithstanding anything to the
contrary contained herein or in any other agreement, instrument, or document
executed in connection herewith, no party hereto shall take any actions
hereunder that would constitute or result in a transfer or assignment of any
FCC license, permit or authorization or a change of control over such FCC
license, permit or authorization requiring the prior approval of the FCC
without first obtaining such prior approval of the FCC. In addition, the
parties acknowledge that the voting rights of the Pledged Stock shall remain
with the Borrower thereof even upon the occurrence and during the continuance
of an Event of Default until the FCC shall have given its prior consent to the
exercise of stockholder rights by a purchaser at a public or private sale of
such Pledged Stock or the exercise of such rights by the Lender or by a
receiver, trustee, conservator or other agent duly appointed pursuant to
applicable law.
(b) If an Event of Default shall have
occurred, Borrower shall take any action which the Lender may request in the
exercise of its rights and remedies under this Agreement in order to transfer
or assign the Collateral to the Lender or to such one or more third parties as
the Lender may designate, or to a combination of the foregoing. To enforce the
provisions of this Section, the Lender is empowered to seek from the FCC and
any other Governmental Authority, to the extent required, consent to or
approval of any involuntary transfer of control of any entity whose Collateral
is subject to this Agreement for the purpose of seeking a bona fide purchaser
to whom control ultimately will be transferred. Borrower agrees to cooperate
with any such purchaser and with the Lender in the preparation, execution and
filing of any forms and providing any information that may be necessary or
helpful in obtaining the FCC's consent to the assignment to such purchaser of
the Collateral. Borrower hereby agrees to consent to any such voluntary or
involuntary transfer after and during the continuation of an Event of Default
and, without limiting any rights of the Lender under this Agreement, to
authorize the
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<PAGE> 23
Lender to nominate a trustee or receiver to assume control of the Collateral,
subject only to required judicial, FCC or other consents required by
Governmental Authorities, in order to effectuate the transactions contemplated
by this Section. Such trustee or receiver shall have all the rights and powers
as provided to it by law or court order, or to the Lender under this Agreement.
Borrower shall cooperate fully in obtaining the consent of the FCC and the
approval or consent of each other Governmental Authority required to effectuate
the foregoing.
(c) Without limiting the obligations of
the Borrower hereunder in any respect, the Borrower further agrees that if the
Borrower, upon or after the occurrence of an Event of Default, should fail or
refuse for any reason whatsoever, without limitation, including any refusal to
execute any application necessary or appropriate to obtain any governmental
consent necessary or appropriate for the exercise of any right of the Lender
hereunder, the Borrower agrees that such application may be executed on the
Borrower's behalf by the clerk of any court of competent jurisdiction without
notice to the Borrower pursuant to court order.
(d) In connection with this Section, the
Lender shall be entitled to rely in good faith upon an opinion of outside FCC
counsel of the Lender's choice with respect to any such assignment or transfer,
whether or not the advice rendered is ultimately determined to have been
accurate.
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<PAGE> 24
IN WITNESS WHEREOF, each of the undersigned has caused this
Security Agreement to be duly executed and delivered as of the date first above
written.
SMITH BROADCASTING OF VERMONT, LLC
By: /s/ Barbara J. Kacy
---------------------------------------
Name: Barbara J. Kacy
Title: Secretary
STC BROADCASTING OF VERMONT
SUBSIDIARY, INC.
By: /s/ David A. Fitz
---------------------------------------
David A. Fitz
Chief Financial Officer
<PAGE> 1
EXHIBIT 10.5
PROMISSORY NOTE
$500,000 April 24, 1998
FOR VALUE RECEIVED, SMITH BROADCASTING OF VERMONT, LLC, a
Delaware limited liability company whose principal office is located at 127 El
Paseo, Santa Barbara, California 93101 (the "Maker"), promises to pay to the
order of STC Broadcasting of Vermont Subsidiary, Inc. a Delaware corporation
(the "Holder"), at 200 Crescent Court, Suite 1600, Dallas, Texas 75201, or at
such other place as the Holder of this Note may from time to time designate, on
July 23, 1998 (the "Maturity Date"), the principal amount of FIVE HUNDRED
THOUSAND DOLLARS ($500,000), without interest. Such payment shall be made in
lawful money of the United States of America, without offset.
The unpaid principal amount of this Note may be prepaid in
whole or in part at any time without premium or penalty upon three (3) business
days prior written notice to the Holder. No prepayment shall entitle any
person to be subrogated to the rights of the Holder unless and until this Note
has been paid in full.
The Maker's obligations under this Note are secured by a first
priority perfected security interest granted to the Holder in and to the assets
of the Maker, all pursuant to the terms of a Security Agreement (the "Security
Agreement") of even date herewith between the Maker and the Holder.
The occurrence of any one or more of the following shall
constitute an event of default ("Event of Default") hereunder:
(1) Failure to pay, when due, the principal amount of
this Note or any other sum payable hereunder (whether
upon maturity hereof, upon any prepayment date upon
acceleration, or otherwise) or under the Interim
Operating Agreement or the Assumption Agreement;
(2) The occurrence of any Event of Default under the
Security Agreement;
(3) The failure of Maker generally to pay its debts as
such debts become due, the admission by Maker in
writing of its inability to pay its debts as such
debts become due, or the making by Maker of any
general assignment for the benefit of creditors;
(4) The commencement by Maker of any case, proceeding, or
other action seeking reorganization, arrangement,
adjustment, liquidation, dissolution, or composition
of it or its debts under any law relating to
bankruptcy,
<PAGE> 2
insolvency, or reorganization, or relief
of debtors, or seeking appointment of a receiver,
trustee, custodian, or other similar official for it
or for all or any substantial part of its property;
or
(5) The commencement of any case, proceeding, or other
action against Maker seeking to have any order for
relief entered against Maker as debtor, or seeking
reorganization, arrangement, adjustment, liquidation,
dissolution, or composition of Maker or its debts
under any law relating to bankruptcy, insolvency,
reorganization, or relief of debtors, or seeking
appointment of a receiver, trustee, custodian, or
other similar official for Maker or for all or any
substantial part of the property of Maker, and (i)
Maker shall, by any act or omission, indicate its
consent to, approval of, or acquiescence in such
case, proceeding, or action, or (ii) such case,
proceeding, or action results in the entry of an
order for relief which is not fully stayed within
seven (7) business days after the entry thereof, or
(iii) such case, proceeding, or action remains
undismissed for a period of fifteen (15) days or more
or is dismissed or suspended only pursuant to Section
305 of the United States Bankruptcy Code or any
corresponding provision of any future United States
bankruptcy law.
Upon the occurrence of any such Event of Default hereunder, the entire
principal amount hereof shall be accelerated, and shall be immediately due and
payable, at the option of the Holder, without demand or notice, and in addition
thereto, and not in substitution therefor, the Holder shall be entitled to
exercise any one or more of the rights and remedies provided for in the
Security Agreement and/or by applicable law. Failure to exercise said option
or to pursue such other remedies shall not constitute a waiver of such option
or such other remedies or of the right to exercise any of the same in the event
of any subsequent Event of Default hereunder.
The Holder may, upon the occurrence of any such Event of
Default hereunder, have resort to the collateral, whether real or personal
property, given as security for this Note (including, without limitation, the
security provided under the Security Agreement) in any order, and may sell and
dispose of such collateral in whole or in part, at any time or from time to
time, with no requirement on the part of the Holder of this Note to marshal
assets. The Holder shall not be required to preserve any rights in such
collateral as against prior parties. In the event that the Holder is required
to give notice of any intended disposition of collateral held as security for
this Note, five (5) business days' notice given by mail or telegraph to the
last known address of the Maker shall be deemed to be reasonable notice.
In the event that the principal amount hereof or any other sum
due hereunder is not paid when due and payable, the whole of the unpaid
principal amount evidenced hereby and all other unpaid sums shall, from the
date when such payment was due and payable until the date of payment in full
thereof, bear interest at the rate of eighteen percent (18%) per annum, which
rate, if applicable, shall commence, without notice, immediately upon the date
when said payment was due and payable.
-2-
<PAGE> 3
The Maker promises to pay all costs and expenses (including
without limitation attorneys' fees and disbursements) incurred in connection
with the collection hereof or in the protection or realization of any
collateral now or hereafter given as security for the repayment hereof
(including, without limitation, the Security Agreement), and to perform each
and every covenant or agreement to be performed by the Maker under this Note
and the Security Agreement.
Any payment on this Note coming due on a Saturday, a Sunday,
or a day which is a legal holiday in the place at which a payment is to be made
hereunder shall be made on the next succeeding day which is a business day in
such place.
Each Obligor (which term shall include the Maker and all
makers, sureties, guarantors, endorsers, and other persons assuming obligations
pursuant to this Note) under this Note hereby waives presentment, protest,
demand, notice of dishonor, and all other notices, and all defenses and pleas
on the grounds of any extension or extensions of the time of payments or the
due dates of this Note, in whole or in part, before or after maturity, with or
without notice. No renewal or extension of this Note, no release or surrender
of any collateral given as security for this Note, no release of any Obligor,
and no delay in enforcement of this Note or in exercising any right or power
hereunder, shall affect the liability of any Obligor. The pleading of any
statute of limitations as a defense to any demand against any Obligor is
expressly waived.
No single or partial exercise by the Holder of any right
hereunder shall preclude any other or further exercise thereof or the exercise
of any other rights. No delay or omission on the part of the Holder in
exercising any right hereunder shall operate as a waiver of such right or of
any other right under this Note.
If any part of any provision of this Note shall be invalid or
unenforceable in any respect, such part shall be ineffective to the extent of
such invalidity or unenforceability only, without in any way affecting the
remaining parts of such provision or the remaining provisions of this Note.
Whenever used herein, the words "Maker" and "Holder" and
"Obligor" shall be deemed to include their respective successors and assigns.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED UNDER AND IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (BUT NOT INCLUDING THE CHOICE
OF LAW RULES THEREOF).
THE MAKER HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE
JURISDICTION OF THE COURTS OF THE UNITED STATES OF AMERICA AND THE COURTS OF
THE STATE OF NEW YORK, WAIVES ANY OBJECTION BASED ON VENUE OR FORUM NON
CONVENIENS WITH RESPECT TO ANY ACTION INSTITUTED IN ANY SUCH COURTS, AND AGREES
THAT ANY CLAIM OR DISPUTE
-3-
<PAGE> 4
CONCERNING THIS NOTE MAY BE HEARD AND DETERMINED IN ANY SUCH COURTS. THE MAKER
HEREBY IRREVOCABLY AGREES THAT A FINAL JUDGMENT OF ANY OF THE COURTS SPECIFIED
ABOVE IN ANY ACTION OR PROCEEDING RELATING TO THIS NOTE SHALL BE CONCLUSIVE AND
MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER
MANNER PROVIDED BY LAW.
THE MAKER HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL
PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY
HAND DELIVERY OR REGISTERED MAIL TO THE MAKER AT ITS ADDRESS SET FORTH ABOVE.
NOTHING IN THIS NOTE SHALL AFFECT THE RIGHT OF THE HOLDER TO SERVE LEGAL
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHT OF THE HOLDER
TO BRING ANY ACTION OR PROCEEDING AGAINST THE MAKER OR ITS ASSETS IN THE COURTS
OF ANY OTHER JURISDICTION.
THE MAKER HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER THIS NOTE. THE MAKER
HEREBY AGREES AND CONSENTS THAT THE HOLDER MAY FILE A COPY OF THIS NOTE WITH
ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE MAKER TO THE WAIVER OF ITS
RIGHT TO TRIAL BY JURY.
[The remainder of this page intentionally left blank.]
-4-
<PAGE> 5
IN WITNESS WHEREOF, the undersigned has duly executed this
PROMISSORY NOTE, or has caused this PROMISSORY NOTE to be duly executed on its
behalf, as of the day and year first hereinabove set forth.
SMITH BROADCASTING
OF VERMONT, LLC
By: /s/ Robert N. Smith
--------------------------------
Name: Robert N. Smith
Title: Chief Executive Officer
<PAGE> 1
EXHIBIT 10.6
April 24, 1998
By FACSIMILE
Dean H. Blythe
Senior Vice President
Hearst-Argyle Television, Inc.
959 Eighth Avenue
New York, NY 10019
RE: (A) ASSET PURCHASE AGREEMENT (THE "ASSET PURCHASE
AGREEMENT"), DATED AS OF FEBRUARY 3, 1998, BY AND
AMONG STC BROADCASTING OF VERMONT, INC. ("STCBV") AND
CERTAIN SUBSIDIARIES OF SINCLAIR BROADCAST GROUP,
INC. (THE "SINCLAIR SELLERS"); (B) ASSET EXCHANGE
AGREEMENT (THE "ASSET EXCHANGE AGREEMENT"), DATED AS
OF FEBRUARY 18, 1998, BY AND AMONG CERTAIN
SUBSIDIARIES OF SUNRISE TELEVISION CORP.
(COLLECTIVELY, THE "STC PARTIES") AND HEARST-ARGYLE
STATIONS, INC. ("HAT"); AND (C) CREDIT AGREEMENT,
DATED AS OF APRIL 24, 1998, BY AND BETWEEN STC
BROADCASTING OF VERMONT SUBSIDIARY, INC. ("STCBV
SUB") AND HAT (THE "CREDIT AGREEMENT")
Dear Dean:
This letter agreement sets forth the mutual understanding and
agreement between the STC Parties and HAT regarding HAT's consent to certain
amendments to the Asset Purchase Agreement, and certain amendments to the Asset
Exchange Agreement. All capitalized terms not otherwise defined herein shall
have the meanings ascribed to such terms in the Asset Exchange Agreement.
1. CONSENT TO AMENDMENTS TO ASSET PURCHASE AGREEMENT.
As required under Section 7.7 of the Credit Agreement and Section 6.16 of the
Asset Exchange Agreement, HAT hereby consents to the following amendments to
the Asset Purchase Agreement: (a) First Amendment to Asset Purchase Agreement,
dated April 20, 1998, by and between the parties thereto; and (b) Second
Amendment to Asset Purchase Agreement, dated April 24, 1998, by and between the
parties thereto. Copies of each of the amendments have been previously
delivered to HAT.
<PAGE> 2
Dean H. Blythe
April 24, 1998
Page 2
2. WORKING CAPITAL FOR WFFF. The parties acknowledge
and agree that the Asset Exchange Agreement is hereby amended to provide that
(a) all cash, cash equivalents or deposits arising out of the business and
operations of WFFF from and after the STC Transfer Date, and all interest
payable in connection with any such cash, cash equivalents or deposits, shall
be an Excluded Asset under Section 2.4.1. of the Asset Exchange Agreement; (b)
all Accounts Receivable arising out of the business and operations of WFFF from
the STC Transfer Date under the Sinclair Agreement shall be an Excluded Asset
under Section 2.4.2. of the Asset Exchange Agreement; and (c) none of the
proceeds of the Working Capital Advances provided by HAT to STCBV Sub pursuant
to Section 2.14 of the Asset Exchange Agreement and none of the Accounts
Receivable, cash, cash equivalents or deposits arising out of the business and
operations of WPTZ and WNNE after the STC Transfer Date, and none of any
interest payable in connection with any of the foregoing, shall be used in the
business and operations of WFFF (it being intended that the operations of WPTZ
and WNNE will not be used to fund the operations of WFFF from and after the STC
Transfer Date). Except as expressly modified hereby, all other terms and
conditions of the Asset Exchange Agreement shall remain in full force and
effect in accordance with their terms.
* * * * * * * * * *
<PAGE> 3
Dean H. Blythe
April 24, 1998
Page 3
Please acknowledge your understanding of and agreement with the
foregoing by signing this letter agreement in the spaces provided below.
STC BROADCASTING, INC.
By: /s/ David A. Fitz
-------------------------------
David A. Fitz
Chief Financial Officer
STC LICENSE COMPANY
By: /s/ David A. Fitz
-------------------------------
David A. Fitz
Chief Financial Officer
STC BROADCASTING OF VERMONT, INC.
By: /s/ David A. Fitz
-------------------------------
David A. Fitz
Chief Financial Officer
STC BROADCASTING OF VERMONT SUBSIDIARY,
INC.
By: /s/ David A. Fitz
-------------------------------
David A. Fitz
Chief Financial Officer
<PAGE> 4
Dean H. Blythe
April 24, 1998
Page 4
ACKNOWLEDGED AND AGREED:
HEARST-ARGYLE STATIONS, INC.
By: /s/ Dean H. Blythe
-----------------------------------
Dean H. Blythe
Senior Vice President
ccs: David A. Fitz
Steven A. Hobbs
William S. Reyner, Jr.
<PAGE> 1
EXHIBIT 10.7
FIRST AMENDMENT TO TRANSITIONAL SERVICES AGREEMENT
THIS FIRST AMENDMENT TO TRANSITIONAL SERVICES AGREEMENT is
entered into as of April 24, 1998 by and among STC BROADCASTING OF VERMONT
SUBSIDIARY, INC., a Delaware corporation ("STC"), TUSCALOOSA BROADCASTING,
INC., a Maryland corporation ("Tuscaloosa"), William G. Evans, as trustee for
the Heritage Stations Disposition Trust ("Trustee"), ROLLINS TELECASTING, INC.,
a Delaware corporation ("Rollins"), WNNE-TV, Inc., a Vermont corporation ("WNNE
Subsidiary"; WNNE Subsidiary and Rollins are collectively referred to herein as
the "Heritage Sellers").
WHEREAS, Rollins and WNNE have transferred their rights with
respect to television broadcast stations WPTZ-TV, Channel 5, North Pole, New
York ("WPTZ"), WFFF-TV, Channel 44, Burlington, Vermont ("WFFF") and WNNE-TV,
Channel 31, Hartford, Vermont ("WNNE" and collectively, the "Stations") to
Tuscaloosa pursuant to the terms of that certain Asset Purchase Agreement dated
as of July 16, 1997 (the "Multi-Stations Purchase Agreement") by and among
Sinclair Broadcast Group, Inc. ("Sinclair") and the Heritage Sellers;
WHEREAS, Tuscaloosa, Trustee and the Heritage Sellers are
parties to that certain Transitional Services Agreement (the "Transitional
Services Agreement") dated as of March 6, 1998, pursuant to which, in order to
accommodate an orderly transition of the Burlington Stations, inter alia, the
Trustee has continued certain administrative services for Tuscaloosa and the
Heritage Sellers have continued to employ the employees of the Burlington
Stations;
WHEREAS, Tuscaloosa and certain other subsidiaries of Sinclair
and STC are parties to that certain Asset Purchase Agreement dated as of
February 3, 1998 (the "Sinclair/STC Agreement") pursuant to which, inter alia,
Tuscaloosa is to assign, transfer and convey to STC all of Tuscaloosa's right,
title and interest in the Stations;
WHEREAS, following the execution of the Sinclair/STC
Agreement, STC, STC Broadcasting, Inc. ("STC Broadcasting"), STC Broadcasting
of Vermont, Inc. ("STCBV"), STC License Company ("STC License Company and
collectively, "STC") and Hearst-Argyle Stations, Inc. ("HAT") entered into that
certain Asset Exchange Agreement dated as of February 18, 1998 pursuant to
which, inter alia,, STC is to assign, transfer and convey to HAT all of STC's
right, title and interest in the assets of WPTZ and WNNE (the "HAT Exchange
Agreement");
WHEREAS, as of the date hereof, (a) pursuant to the
Sinclair/STC Agreement, Tuscaloosa has transferred the Non-License Assets (as
defined therein) of the Stations to STC,
<PAGE> 2
and (b) thereafter, STC has transferred (or will transfer) to Smith
Broadcasting of Vermont, LLC ("Smith") the rights of Tuscaloosa with respect to
WFFF;
WHEREAS, in order to accommodate an orderly transition of WPTZ
and WNNE and the rights with respect to WFFF from STC to HAT and Smith,
respectively, and to minimize any disruption to the employees of the Stations
which may be associated with such transfers, the parties desire to (a) assign
the Transitional Services Agreement from Tuscaloosa to STC effective as of the
date hereof, and (b) amend certain provisions of the Transitional Services
Agreement as provided for herein; and
WHEREAS, all capitalized terms used herein and not otherwise
defined herein shall have the meanings ascribed to such terms in the
Transitional Services Agreement.
NOW, THEREFORE, the parties set forth above, intending to be
legally bound by this Agreement, agree as follows:
1. Assignment and Assumption. Tuscaloosa hereby
expressly assigns to STC the Transitional Services Agreement and all of
Tuscaloosa's rights and obligations thereunder. STC hereby expressly assumes
the Transitional Services Agreement and all of the rights and obligations of
Tuscaloosa thereunder, confirms and agrees to perform and observe each and
every one of Tuscaloosa's obligations under the Transitional Services Agreement
and acknowledges that STC is now "Tuscaloosa" thereunder. The parties
acknowledge and agree that the effective time of the assignment and assumption
is 12:00 a.m. (New York time) as of the date hereof and all Liabilities of
Tuscaloosa arising and to be performed under the Transitional Services
Agreement prior to such time (including, but not limited to, indemnification
with respect to any act, omission or Liability if such act, omission or
Liability occurs or arises prior to such time) shall be the responsibility and
obligation of Tuscaloosa and all Liabilities of STC, as the assignee of
Tuscaloosa under the Transitional Services Agreement, arising and to be
performed after such time (including, but not limited to, indemnification with
respect to any act, omission or Liability if such act, omission or Liability
occurs or arises after such time) shall be the responsibility and obligation of
STC.
2. Amendments.
Section 1 of the Transitional Services Agreement shall be
amended to read in its entirety as follows:
"1. Term. The term of this Agreement shall commence
as of March 6, 1998 and shall remain in effect until the earlier to occur of (a)
the closing of the transfer of WPTZ and WNNE to HAT, or (b) the close of
business on May 31, 1998. This Agreement shall automatically terminate and be
of no further force or effect on June 1, 1998. Notwithstanding the termination
of this Agreement, all obligations of the parties hereto to be performed after
the term hereof shall survive, including, without limitation, any obligations to
pay any amounts owing hereunder for Operating Cash Flow (as defined below),
indemnification or otherwise."
-2-
<PAGE> 3
Section 4 of the Transitional Services Agreement shall be amended
to read in its entirety as follows:
"4. Operating Cash Flow. The Operating Cash Flow (as
defined below) shall be for the account of Tuscaloosa during the term of
this Agreement and the Trustee shall pay (a) the Operating Cash Flow for
March 1998 on April 30, 1998, at: Tuscaloosa Broadcasting, Inc., c/o
Sinclair Broadcast Group, Inc., 2000 West 41st Street, Baltimore,
Maryland 21211, or at such other address as requested in writing by
Sinclair; provided, however, that in the event of a negative Operating
Cash Flow for March 1998, Sinclair shall pay to Trustee such negative
amount on April 30, 1998, at the address specified in Section 2 above;
and (b) any unremitted Operating Cash Flow (and remaining cash balance)
to Tuscaloosa on the date of termination of this Agreement at the
following address: STC Broadcasting of Vermont Subsidiary, Inc., c/o STC
Broadcasting, Inc., 3839 4th Street North, Suite 420, St. Petersburg,
Florida 33703; provided, however, that in the event of a negative
Operating Cash Flow as of the date of termination of this Agreement,
Tuscaloosa shall pay to Trustee such negative amount on such date at the
address specified in Section 2 above; provided, further, that the Trustee
shall promptly pay to Tuscaloosa at the address specified above any cash
receipts received by the Trustee after the date of termination of this
Agreement. For purposes of this Agreement, the Operating Cash Flow shall
mean the revenues of the Stations less the operating expenses of the
Stations and the Trustee on and after the Closing Date, excluding
depreciation, film amortization and intangible asset amortization, but
including film payment, as customarily reported on the monthly financial
reports of the Stations."
Section 8(b) of the Transitional Services Agreement shall be
amended to substitute the last sentence of Section 8(b) with the following
sentence:
"The Trustee, the Heritage Sellers and Tuscaloosa
acknowledge and agree that upon the date of termination of this
Agreement, the Station Employees shall become employees of Tuscaloosa in
accordance with the terms and conditions set forth in the
Sinclair/STC Agreement and all obligations of the Heritage Sellers under
this Section 8 shall terminate."
Section 12 of the Transitional Services Agreement shall be amended
to substitute "STC Broadcasting, Inc." for "Sinclair Broadcast Group, Inc." as
the Guarantor under the Transitional Services Agreement.
Section 13 of the Transitional Services Agreement shall be amended
to provide that all notices to STC Broadcasting of Vermont Subsidiary, Inc."
shall be delivered to the following:
"c/o STC Broadcasting, Inc.
3839 4th Street North
Suite 420
St. Petersburg, Florida 33703
-3-
<PAGE> 4
Attn: David Fitz
Fax: (813) 821-8092"
3. Prorations Between STC and Tuscaloosa. STC and
Tuscaloosa agree that the Service Fee for the month of April 1998 and the
Operating Cash Flow of the Stations shall be prorated between STC and
Tuscaloosa to reflect the principle that Tuscaloosa shall receive the benefit
of the operations of the Stations (and be responsible for all expenses in
connection therewith) for the period prior to the date hereof, and STC shall
receive the benefit of the operations of the Stations (and be responsible for
all expenses in connection therewith) for the period thereafter. The proration
described in the preceding sentence shall be determined in conjunction with the
determination of the Final Proration Amount (as defined in the Sinclair/STC
Agreement) and in accordance with the procedures for prorations set forth in
Section 2.6.2 of the Sinclair/STC Agreement.
4. Miscellaneous. Except as expressly modified
hereby, all other terms and conditions of the Transitional Services Agreement
shall remain in full force and effect in accordance with their terms.
-4-
<PAGE> 5
IN WITNESS WHEREOF, each of the parties hereto has executed
this First Amendment to Transitional Services Agreement, or has caused this
First Amendment to Transitional Services Agreement to be duly executed and
delivered in its name on its behalf, all as of the day and year first above
written.
STC BROADCASTING OF VERMONT
SUBSIDIARY, INC.
By: /s/ David B. Amy
------------------------------
Name: David B. Amy
Title: Secretary
TUSCALOOSA BROADCASTING, INC.
By: /s/ David B. Amy
------------------------------
Name: David B. Amy
Title: Secretary
ROLLINS TELECASTING, INC.
By: /s/ William G. Evans
------------------------------
Name: William G. Evans
Title: Trustee/Vice President
WNNE-TV, INC.
By: /s/ William G. Evans
------------------------------
Name: William G. Evans
Title: Trustee/Vice President
TRUSTEE:
/s/ William G. Evans
---------------------------------
William G. Evans
-5-
<PAGE> 6
For purposes of Section 12 of
this Transitional Services Agreement
SINCLAIR BROADCAST GROUP, INC.
By: /s/ David B. Amy
----------------------------------
Name: David B. Amy
Title: Chief Financial Officer
STC BROADCASTING, INC.
By: /s/ David A. Fitz
----------------------------------
Name: David A. Fitz
Title: Chief Financial Officer
Acknowledged and Consented:
THE NEWS CORPORATION LIMITED
By: /s/ Lawrence Jacobs
----------------------------------
Name: Lawrence Jacobs
Title: Vice President
-6-
<PAGE> 1
EXHIBIT 10.8
FIRST AMENDMENT TO ASSET PURCHASE AGREEMENT
THIS FIRST AMENDMENT TO ASSET PURCHASE AGREEMENT (the
"Agreement") is entered into as of April 16, 1998 by and among STC BROADCASTING
OF VERMONT, INC., a Delaware corporation ("STCBV"), TUSCALOOSA BROADCASTING,
INC., a Maryland corporation ("Tuscaloosa"), WPTZ LICENSEE, INC., a Maryland
corporation ("WPTZ Licensee"), and WNNE LICENSEE, INC., a Maryland corporation
("WNNE Licensee") (Tuscaloosa, WPTZ Licensee and WNNE Licensee, collectively,
the "Sinclair Sellers").
WHEREAS, STCBV and the Sinclair Sellers are parties to that
certain Asset Purchase Agreement dated as of February 3, 1998 (the "Purchase
Agreement") pursuant to which STCBV has agreed to buy, and the Sinclair
Sellers have agreed to sell (i) the assets of television broadcast station WPTZ
(TV), Channel 5, North Pole, New York ("WPTZ"), (ii) certain assets and rights
relating to television broadcast station WFFF-TV, Channel 44, Burlington,
Vermont ("WFFF"), and (iii) the assets of television broadcast station WNNE-TV,
Channel 31, Hartford, Vermont ("WNNE") (WPTZ, WNNE and WFFF are collectively
referred to herein as, the "Stations"), all subject to the terms described in
the Purchase Agreement;
WHEREAS, STCBV and the Sinclair Sellers desire to make certain
modifications to the Purchase Agreement; and
WHEREAS, all capitalized terms used herein and not otherwise
defined herein shall have the meanings ascribed to such terms in the Purchase
Agreement.
NOW, THEREFORE, the parties set forth above, intending to be
legally bound by this Agreement, agree as follows:
1. Section 11.2.1. of the Purchase Agreement shall be
amended to read in its entirety as follows:
"11.2.1. Notwithstanding anything to the contrary
herein, provided that the conditions set forth in Article 9 (except for Section
9.5) and Article 10 (except for Section 10.4) shall have been satisfied and the
Closing shall not have occurred, there shall be a closing (the "Non-License
Transfer") for the purchase and sale of all of the Assets, other than the
License Assets, on April 24, 1998 (the date on which the Non-License Transfer
shall occur as provided for in this Section 11.2.1 is referred to herein as the
"Non-License Transfer Date"). The parties acknowledge and agree that if the
conditions set forth in Article 9 (except for Section
<PAGE> 2
9.5) and Article 10 (except for Section 10.4) are not satisfied as of April 24,
1998, the Non-License Transfer Date shall be such date which is ten (10) days
after satisfaction of all such conditions (subject to rights of Sellers and
Buyer to terminate this Agreement prior to such date in accordance with Article
13)."
2. Except as expressly modified hereby, all other terms
and conditions of the Purchase Agreement shall remain in full force and effect
in accordance with their terms.
[SIGNATURE PAGE FOLLOWS]
-2-
<PAGE> 3
IN WITNESS WHEREOF, each of the parties hereto has executed
this First Amendment to Asset Purchase Agreement, or has caused this First
Amendment to Asset Purchase Agreement to be duly executed and delivered in its
name on its behalf, all as of the day and year first above written.
STC BROADCASTING OF VERMONT, INC.
By: /s/ David A. Fitz
------------------------------------
Name: David A. Fitz
Title: Chief Financial Officer
TUSCALOOSA BROADCASTING, INC.
By: /s/ David B. Amy
------------------------------------
Name: David B. Amy
Title: Treasurer and Secretary
WPTZ LICENSEE, INC.
By: /s/ David B. Amy
------------------------------------
Name: David B. Amy
Title: Treasurer and Secretary
WNNE LICENSEE, INC.
By: /s/ David B. Amy
------------------------------------
Name: David B. Amy
Title: Treasurer and Secretary
-3-
<PAGE> 1
EXHIBIT 10.9
SECOND AMENDMENT TO ASSET PURCHASE AGREEMENT
THIS SECOND AMENDMENT TO ASSET PURCHASE AGREEMENT (the
"Agreement") is entered into as of April 23, 1998 by and among STC BROADCASTING
OF VERMONT, INC., a Delaware corporation ("STCBV"), TUSCALOOSA BROADCASTING,
INC., a Maryland corporation ("Tuscaloosa"), WPTZ LICENSEE, INC., a Maryland
corporation ("WPTZ Licensee"), and WNNE LICENSEE, INC., a Maryland corporation
("WNNE Licensee") (Tuscaloosa, WPTZ Licensee and WNNE Licensee, collectively,
the "Sinclair Sellers").
WHEREAS, STCBV and the Sinclair Sellers are parties to that
certain Asset Purchase Agreement dated as of February 3, 1998 (the "Purchase
Agreement") pursuant to which STCBV has agreed to buy, and the Sinclair
Sellers have agreed to sell (i) the assets of television broadcast station WPTZ
(TV), Channel 5, North Pole, New York ("WPTZ"), (ii) certain assets and rights
relating to television broadcast station WFFF-TV, Channel 44, Burlington,
Vermont ("WFFF"), and (iii) the assets of television broadcast station WNNE-TV,
Channel 31, Hartford, Vermont ("WNNE") (WPTZ, WNNE and WFFF are collectively
referred to herein as, the "Stations"), all subject to the terms described in
the Purchase Agreement;
WHEREAS, STCBV and the Sinclair Sellers have made certain
modifications to the Purchase Agreement pursuant to a First Amendment to Asset
Purchase Agreement dated April 16, 1998;
WHEREAS, STCBV and the Sinclair Sellers desire to make certain
additional modifications to the Purchase Agreement; and
WHEREAS, all capitalized terms used herein and not otherwise
defined herein shall have the meanings ascribed to such terms in the Purchase
Agreement.
NOW, THEREFORE, the parties set forth above, intending to be
legally bound by this Agreement, agree as follows:
1. Section 2.6. of the Purchase Agreement shall be
amended to read in its entirety as follows:
"2.6. Proration Amount
Within ninety (90) days after the Transfer Date,
Buyer shall deliver to Sellers in writing and in reasonable detail a good faith
determination of the adjustments to the
<PAGE> 2
Base Purchase Price customary in television broadcast station transactions for
Proration Items (the "Proration Amount") to reflect that all Proration Items of
the Stations shall be apportioned between Buyer and Sellers in accordance with
the principle that Sellers shall receive the benefit of all revenues, refunds,
deposits (other than deposits for Program Contracts which shall be prorated
based on the percentage of the term that the film or program was aired on the
Stations before the Transfer Date and the percentage available to be aired on
and after the Transfer Date) and prepaid expenses, and shall be responsible for
all expenses, costs and liabilities allocable to the conduct of the businesses
or operations of the Stations for the period prior to the Transfer Date, and
Buyer shall receive the benefit of all revenues, refunds, deposits (other than
deposits for Program Contracts which shall be prorated based on the percentage
of the term that the film or program was aired on the Stations before the
Transfer Date and the percentage available to be aired on and after the
Transfer Date) and prepaid expenses, and shall be responsible for all expenses,
costs and liabilities allocable to the conduct of the businesses or operations
of the Stations from and after the Transfer Date; provided, however, that there
shall be no adjustment or proration for any negative or positive net trade
balance except to the extent that the negative trade balance (i.e., the amount
by which the value of goods or services to be received is less than the value
of any advertising time remaining to be run) for any Station exceeds Fifty
Thousand Dollars ($50,000) as of the Transfer Date; provided, further, that if
there shall be a Non-License Transfer, then prorations and adjustments for
Proration Items related to the License Assets shall be made pursuant to this
Section 2.6. as of the Closing Date. Determinations pursuant to this Section
2.6. shall be made in accordance with generally accepted accounting principles
consistently applied for the period prior to the Non-License Transfer Date or
the Closing Date, as applicable.
Sellers shall assist Buyer in making the determination of the
Proration Amount, and Buyer shall provide Sellers with reasonable access to the
properties, books and records relating to the Stations for the purpose of
determining the Proration Amount. Sellers shall have the right to review the
computations and workpapers used in connection with Buyer's preparation of the
Proration Amount. If Sellers disagree with the amount of the Proration Amount
determined by Buyer, Sellers shall so notify Buyer in writing within thirty
(30) days after the date of receipt of Buyer's Proration Amount, specifying in
detail any point of disagreement; provided, however, that if Sellers fail to
notify Buyer in writing of Sellers' disagreement within such thirty (30) day
period, Buyer's determination of the Proration Amount shall be final,
conclusive and binding on Sellers and Buyer. After the receipt of any notice
of disagreement, Buyer and Sellers shall negotiate in good faith to resolve any
disagreements regarding the Proration Amount. If any such disagreement cannot
be resolved by Sellers and Buyer within thirty (30) days after Buyer has
received notice from Sellers of the existence of such disagreement, Buyer and
Sellers shall jointly select a nationally recognized independent public
accounting firm (the "Accounting Firm"), to review Buyer's determination of the
Proration Amount and to resolve as soon as possible all points of disagreement
raised by Sellers. All determinations made by the Accounting Firm with respect
to the Proration Amount shall be final, conclusive and binding on Buyer and
Sellers. The fees and expenses of the Accounting Firm incurred in connection
with any such determination shall be shared one-half by Buyer and one-half by
Sellers.
-2-
<PAGE> 3
If upon the final determination of the Proration
Amount Buyer is obligated to pay Sellers such amount, then Buyer shall pay such
amount to Sellers in cash, within two (2) business days following the final
determination of the Proration Amount. If upon the final determination of the
Proration Amount Sellers are obligated to pay Buyer such amount, then Sellers
shall pay such amount to Buyer in cash within two (2) business days following
the final determination of the Proration Amount. Any amounts paid pursuant to
this Section 2.6. shall be by wire transfer of immediately available funds for
credit to the recipient at a bank account identified by such recipient in
writing.
Buyer and Sellers agree that prior to the date of the
determination of the Proration Amount pursuant to this Section 2.6. (by the
Accounting Firm or otherwise), neither party will destroy any records
pertaining to, or necessary for, the determination of the Proration Amount.
Each Seller hereby appoints Sinclair as its
attorney-in-fact with power and authority to act for and on behalf of each
Seller in connection with all matters arising under this Section 2.6. Buyer
shall be entitled to rely on such appointment and treat Sinclair as the duly
appointed attorney-in-fact of each Seller."
2. Reference to "Final Proration Amount" in Section
8.4.4. of the Purchase Agreement is hereby changed to "Proration Amount."
3. Except as expressly modified hereby, all other terms
and conditions of the Purchase Agreement shall remain in full force and effect
in accordance with their terms.
[SIGNATURE PAGE FOLLOWS]
-3-
<PAGE> 4
IN WITNESS WHEREOF, each of the parties hereto has executed
this Second Amendment to Asset Purchase Agreement, or has caused this Second
Amendment to Asset Purchase Agreement to be duly executed and delivered in its
name on its behalf, all as of the day and year first above written.
STC BROADCASTING OF VERMONT, INC.
By: /s/ David A. Fitz
----------------------------------
Name: David A. Fitz
Title: Chief Financial Officer
TUSCALOOSA BROADCASTING, INC.
By: /s/ David B. Amy
----------------------------------
Name: David B. Amy
Title: Treasurer and Secretary
WPTZ LICENSEE, INC.
By: /s/ David B. Amy
----------------------------------
Name: David B. Amy
Title: Treasurer and Secretary
WNNE LICENSEE, INC.
By: /s/ David B. Amy
----------------------------------
Name: David B. Amy
Title: Treasurer and Secretary
-4-
<PAGE> 1
EXHIBIT 10.10
WAIVER AND SECOND AMENDMENT
SECOND AMENDMENT, dated as of April 22, 1998 (this "Second
Amendment"), to the Credit Agreement, dated as of February 28, 1997 (as amended
by the First Amendment, dated as of March 25, 1997, the Waiver, dated as of
March 11, 1998 and as may be further amended, supplemented or otherwise
modified from time to time, the "Credit Agreement"; capitalized terms used
herein and not otherwise defined are used herein as defined in the Credit
Agreement), among STC BROADCASTING, INC., a Delaware corporation (the
"Borrower"), the several banks and other financial institutions or entities
from time to time parties thereto (the "Lenders"), NATIONSBANK OF TEXAS, N.A.,
as documentation agent (in such capacity, the "Documentation Agent"), and THE
CHASE MANHATTAN BANK, as administrative and syndication agent for the Lenders
thereunder (in such capacity, the "Administrative Agent").
W I T N E S S E T H :
WHEREAS, pursuant to the Credit Agreement, the Lenders have
agreed to make, and have made, certain Loans to the Borrower;
WHEREAS, the Borrower and certain of its Subsidiaries have
either entered into or intend to enter into the following transactions
(collectively, the "Transactions"):
(a) pursuant to the Asset Purchase Agreement, dated as of February
3, 1998 (the "Purchase Agreement"), by and among Tuscaloosa
Broadcasting, Inc., WPTZ Licensee, Inc. and WNNE Licensee,
Inc. (collectively, the "Sinclair Subs") and STC Broadcasting
of Vermont, Inc. ("STCBV"), the Sinclair Subs have agreed to
assign, transfer and convey to STCBV (i) all of their right,
title and interest in the assets of television stations
WPTZ-TV, Channel 5, North Pole, New York (the "North Pole
Station") and WNNE-TV, Channel 31, Hartford, Vermont (the
"Hartford Station") and (ii) certain assets and rights of
television station WFFF-TV, Channel 44, Burlington, Vermont
(the "Burlington Station" and, collectively with the North
Pole Station and the Hartford Station, the "Sinclair
Stations") and STCBV has agreed to pay to the Sinclair Subs
$72,000,000 (subject to certain adjustments) as consideration
for the purchase of the assets of the Sinclair Stations under
the Purchase Agreement (all of the foregoing transactions,
collectively, the "Purchase Transactions");
(b) pursuant to the Assignment and Assumption Agreement, dated as
of April 20, 1998 (the "Assignment and Assumption Agreement"),
STCBV has assigned all of its rights and obligations under the
Purchase Agreement to its wholly-owned subsidiary, STC
Broadcasting of Vermont Subsidiary, Inc. ("STCBV Sub");
(c) it is intended that the closing of the Purchase Transactions
shall take place in two
<PAGE> 2
2
stages as follows: (i) (A) the Sinclair Subs shall transfer
the non-license assets relating to the Sinclair Stations to
STCBV Sub (such transfer, the "Sinclair Non-License Transfer")
in return for consideration from STCBV Sub of $70,000,000
(subject to certain adjustments) and (B) STCBV Sub shall enter
into a time brokerage agreement (the "Sinclair Time Brokerage
Agreement") with the Sinclair Subs, which shall provide for
STCBV Sub to operate the Sinclair Stations for the Sinclair
Subs and (ii) upon final approval by the Federal
Communications Commission (the "FCC") for the transfer of the
licenses relating to the North Pole Station and the Hartford
Station from the Sinclair Subs to STCBV Sub, the licenses
relating to those stations will be so transferred and the
balance of the consideration owing under the Purchase
Agreement will be paid;
(d) pursuant to the Asset Exchange Agreement, dated as of February
18, 1998 (the "Exchange Agreement"), among the Borrower,
STCBV, STCBV Sub and STC License Company ("STC License" and,
collectively with the Borrower, STCBV and STCBV Sub, the "STC
Parties") and Hearst-Argyle Stations, Inc. ("Hearst") (i) the
STC Parties have agreed to assign, transfer and convey to
Hearst all of their right, title and interest in the North
Pole Station, the Hartford Station and television station
KSBW-TV, Channel 8, Salinas, California (collectively, the
"STC Transferred Assets") and (ii) Hearst has agreed to (x)
assign, transfer and convey to the STC Parties all of its
right, title and interest in (A) television stations WNAC-TV,
Channel 64, Providence, Rhode Island (the "Providence
Station") and WDTN-TV, Channel 2, Dayton, Ohio (the "Dayton
Station") and (B) a Joint Marketing and Programming Agreement,
dated as of June 10, 1996 (the "Joint Marketing Agreement"),
between Clear Channel Television, Inc. ("Clear Channel") and
Hearst and a Reciprocal Right of First Refusal, dated June 10,
1996 (the "Right of Refusal" and, collectively with the Joint
Marketing Agreement, the Providence Station and the Dayton
Station, the "STC Acquired Assets"), between Clear Channel and
Hearst, (y) pay to the STC Parties $21,366,650 (subject to
certain adjustments) and (z) operate for the Borrower, the
Burlington Station for a period of up to two years from the
closing date of the Exchange Agreement, pursuant to a time
brokerage agreement (the "Hearst Time Brokerage Agreement")
which shall provide, among other things, that the Borrower
shall receive all income from the operation of the Burlington
Station (net of Hearst's out of pocket expenses for such
operation) and shall reimburse Hearst if the Burlington
Station is operated at a net deficit (all of the foregoing
transactions, collectively, the "Exchange Transactions");
(e) after the consummation of the Sinclair Non-License Transfer,
STCBV Sub shall transfer the non-license assets relating to
the Burlington Station to an entity ultimately controlled,
directly or indirectly, by Robert N. Smith (such transfer, the
"Smith Transfer"); and
<PAGE> 3
3
(f) upon the consummation of the Sinclair Non-License Transfer,
(i) Hearst has agreed pursuant to the Exchange Agreement to
make a loan to STCBV Sub on terms set forth in the credit
agreement attached as Exhibit E to the Exchange Agreement (the
"STCBV Sub Credit Agreement") in an aggregate amount of up to
$72,000,000, the proceeds of which would be used to finance
the purchase by STCBV Sub of the non-license assets of the
Sinclair Stations pursuant to the Purchase Agreement, which
loan (the "Hearst Loan") would be secured on a non-recourse
basis by all of STCBV's right, title and interest in the
capital stock of STCBV Sub and (ii) upon the consummation of
the Exchange Transactions, the Hearst Loan would be repaid in
full pursuant to the terms of the STCBV Sub Credit Agreement;
WHEREAS, the Borrower has requested that the Lenders amend and
waive, and the Lenders have agreed to amend and waive, certain of the
provisions of the Credit Agreement, to permit the Transactions and to effect
certain other amendments, all upon the terms and subject to the conditions set
forth below;
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Consent to Transactions. (a) The Administrative
Agent and the Lenders hereby consent to the Transactions and waive compliance
with the provisions of:
(i) subsection 6.10(c) of the Credit Agreement to the extent, and
only to the extent, necessary to permit STCBV and STCBV Sub
not to become Guarantors and Grantors and to permit the
Borrower not to pledge the capital stock of STCBV and STCBV
not to pledge the capital stock of STCBV Sub for so long as
the Purchase Transactions and the Exchange Transactions shall
not have been consummated;
(ii) subsection 7.2 of the Credit Agreement to the extent, and only
to the extent, necessary to permit STCBV Sub to incur the
Hearst Loan;
(iii) subsection 7.3 of the Credit Agreement to the extent, and only
to the extent, necessary to permit STCBV to secure the Hearst
Loan with all of its right, title and interest in the capital
stock of STCBV Sub;
(iv) subsection 7.5(d) of the Credit Agreement to the extent, and
only to the extent, necessary to permit STCBV Sub to
consummate the Smith Transfer;
(v) subsection 7.5(d) of the Credit Agreement to the extent, and
only to the extent, necessary to permit STCBV to assign all of
its rights under the Purchase Agreement and the documents
executed in connection therewith to STCBV Sub;
(vi) subsection 7.5(h) of the Credit Agreement to the extent, and
only to the extent, necessary to permit the STC Parties to
consummate the Exchange Transactions; and
<PAGE> 4
4
(vii) subsection 7.13 of the Credit Agreement to the extent, and
only to the extent, necessary to permit (i) the restriction
contained in the Exchange Agreement on the Borrower's ability
to assign any of its rights or obligations under the Hearst
Time Brokerage Agreement to any person other than one of its
affiliates or any person acceptable to Hearst, (ii) the
restriction contained in the Exchange Agreement on the ability
of the STC Parties to permit an encumbrance on the STC
Transferred Assets and (iii) STCBV Sub to enter into the STCBV
Sub Credit Agreement to the extent it limits the ability of
STCBV Sub to (A) create, incur, assume or suffer to exist any
Lien upon any of its Property or revenues or (B) pay dividends
or make any other distributions, or pay any indebtedness owed,
to Sunrise Television Corp. or the Borrower or any of its
Subsidiaries.
(b) The Administrative Agent and the Lenders hereby consent
that (i) the Incurrence by STCBV Sub of the Hearst Loan shall, for purposes of
subsection 2.9(a) only, be deemed not to constitute an Incurrence of
Indebtedness and hereby waive compliance with the provisions of subsection
2.9(a) of the Credit Agreement to the extent, and only to the extent, necessary
to permit STCBV Sub to Incur the Hearst Loan on the terms set forth in the
STCBV Sub Credit Agreement and not apply the Net Cash Proceeds thereof to the
prepayment of the Term Loans and the Revolving Credit Loans and the reduction
of the Revolving Credit Commitments and (ii) the Exchange Transactions shall be
deemed not to constitute Asset Sales and hereby waive compliance with the
provisions of subsection 2.9(b) of the Credit Agreement to the extent, and only
to the extent, necessary to permit the Borrower to consummate the Exchange
Transactions on the terms set forth in the Exchange Agreement and not apply the
Net Cash Proceeds thereof to the prepayment of the Term Loans and the reduction
of the Revolving Credit Commitments.
2. Amendment to Subsection 7.1(e). Subsection 7.1(e) of
the Credit Agreement is hereby amended by deleting the table set forth therein
in its entirety and substituting in lieu thereof the following:
"Year Amount
1997 $4,750,000
1998 $5,300,000
1999 $5,800,000
2000 $5,800,000
2001 $5,800,000
2002 $5,800,000
2003 $5,800,000
2004 $5,800,000"
<PAGE> 5
5
3. Amendment to Subsection 7.7. Subsection 7.7 of the
Credit Agreement is hereby amended by (i) deleting the number "$2,500,000" in
the fifth line and substituting in lieu thereof the number "$3,000,000" and
(ii) adding at the end thereof but immediately prior to the period the
following: "provided, that there shall be permitted during the 1998 and 1999
fiscal years additional Capital Expenditures in connection with the acquisition
and refurbishment of KRBC-TV, Abilene, Texas and KACB-TV, San Angelo, Texas,
not to exceed an aggregate of $2,000,000 during such fiscal years and which
additional amounts shall be expended on or prior to the date which is one year
from the date hereof".
4. Steubenville Station Waiver. The Lenders hereby
waive any Default or Event of Default resulting solely from the failure of the
Borrower to obtain FCC approval for the merger of the Steubenville Station into
the Borrower, to consummate such merger or to redeem the SBP Stock, pursuant to
subsection 6.11 of the Credit Agreement.
5. Effectiveness. This Second Amendment shall become
effective on the date on which the following conditions precedent shall have
been satisfied:
(a) the Administrative Agent shall have received counterparts
of this Second Amendment, duly executed and delivered by the Borrower
and each of the other parties hereto;
(b) the Administrative Agent shall have received a copy of the
resolutions, in form and substance satisfactory to the Administrative
Agent, of the Board of Directors of each of the STC Parties
authorizing the execution, delivery and performance of the Purchase
Agreement, the Exchange Agreement and this Second Amendment (to the
extent a party thereto) and the creation and perfection of the
security interests and liens described in paragraph 8 below and all
transactions in connection therewith, certified by the Secretary or an
Assistant Secretary of each such STC Party as of the date hereof,
which certificate shall state that the resolutions thereby certified
have not been amended, modified, revoked or rescinded as of the date
of such certificate;
(c) the Administrative Agent shall have received, to the
extent that it has not theretofore received, a certificate of the
Secretary or Assistant Secretary of each of the STC Parties as to the
incumbency and signature of each of the officers signing this Second
Amendment, and any other instrument or document delivered by any of
the STC Parties in connection herewith, together with evidence of the
incumbency of such Secretary or Assistant Secretary; and
(d) executed versions of the Purchase Agreement and the
Exchange Agreement (and any waivers, amendments, supplements or other
modifications thereto) shall have been delivered and shall be in form
and substance satisfactory to the Lenders and the Sinclair Non-License
Transfer shall have been consummated pursuant to the terms of the
Purchase Agreement.
<PAGE> 6
6
6. Additional Conditions. In addition, the waivers
described in paragraphs 1(a)(vi) and 1(b)(ii) are subject to each of the
Lenders having received a certificate of the chief financial officer of the
Borrower, in form and substance satisfactory to the Lenders, certifying that
after giving effect to the Purchase Transactions and the Exchange Transactions,
on a pro forma basis for the most recently completed 12-month fiscal period for
which financial statements are available and on a projected basis for the
immediately succeeding 12 months (a) no Default or Event of Default will have
occurred and be continuing, (b) the Borrower will be able to meet its
obligations pursuant to the Loan Documents and (c) the Borrower will be in
compliance with all of the covenants contained in subsection 7.1 (which
certificate shall include appropriate supporting calculations for demonstrating
such compliance with subsection 7.1).
7. Representations and Warranties. On and as of the
date hereof after giving effect to this Second Amendment, the Borrower hereby
represents and warrants to the Lenders that:
(a) Each of its representations and warranties contained in
Section 4 of the Credit Agreement or in any certificate, document or
financial or other statement furnished at any time under or in
connection therewith are true and correct in all material respects on
and as of such date as if made on and as of such date, except to the
extent that such representations and warranties specifically relate to
an earlier date, in which case such representations and warranties
shall be true and correct in all material respects as of such earlier
date; provided that the references to the Credit Agreement
therein shall be deemed to include this Second Amendment; and
(b) No Default or Event of Default has occurred and is
continuing.
8. Covenants. The Borrower agrees to and agrees to cause its
Subsidiaries to, upon the consummation of the Purchase Transactions and the
Exchange Transactions:
(a) execute and deliver such documents (including, without
limitation, UCC financing statements and stock powers) and take such
other actions (including, without limitation, the filing of such UCC
financing statements and the delivery of stock certificates) as may be
requested by or on behalf of the Administrative Agent, and in the form
or manner as may be so requested, to perfect first priority security
interests and liens of the Administrative Agent and the Lenders in the
STC Acquired Assets;
(b) provide to the Administrative Agent promptly upon receipt
thereof, copies of FCC consents on Form 732 relating to the transfer
of control of the licenses of the various stations being transferred
pursuant to the Purchase Agreement and the Exchange Agreement and such
consents shall no longer be subject to reconsideration or review by
the FCC; and
(c) transfer the Station Licenses under the authority of which
the Providence Station and the Dayton Station are operated, to
separate License Subsidiaries.
<PAGE> 7
7
9. Continuing Effect; No Other Amendments. Except as
expressly amended or waived hereby, all of the terms and provisions of the
Credit Agreement and the other Loan Documents are and shall remain in full
force and effect. The amendments and waivers contained herein shall not
constitute an amendment or waiver of any other provision of the Credit
Agreement or the other Credit Documents or for any purpose except as expressly
set forth herein.
10. GOVERNING LAW; Counterparts. (a) THIS SECOND
AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK.
(b) This Second Amendment may be executed in any number of
counterparts, all of which counterparts, taken together, shall constitute one
and the same instrument. This Second Amendment may be delivered by facsimile
transmission of the relevant signature pages hereof.
<PAGE> 8
8
IN WITNESS WHEREOF, the parties have caused this Second
Amendment to be duly executed and delivered by their respective proper and duly
authorized officers as of the day and year first above written.
STC BROADCASTING, INC.
By: /s/ David A. Fitz
-----------------------------------
Title: Executive Vice President and CFO
THE CHASE MANHATTAN BANK,
as Administrative Agent and as a Lender
By: /s/ David Staples
-----------------------------------
Title: Vice President
NATIONSBANK OF TEXAS, N.A., as
Documentation Agent and as a Lender
By: /s/ Anthony M. Cacheria
-----------------------------------
Title: Vice President
FINOVA CAPITAL CORPORATION
By: /s/ Andrew Pluta
-----------------------------------
Title: Vice President
<PAGE> 1
EXHIBIT 10.11
================================================================================
CREDIT AGREEMENT
between
STC BROADCASTING OF VERMONT SUBSIDIARY, INC.
as Borrower,
and
HEARST-ARGYLE STATIONS, INC.
as Lender
Dated as of April 24, 1998
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
SECTION 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Other Definitional Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2. CREDIT FACILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.1 Loans; Borrowing Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.2 Disbursement of Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.3 Repayment of Principal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.4 Payment of Interest; Default Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.5 Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.6 Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 3. PAYMENTS; TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.1 Computation of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.2 Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.3 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 4. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.1 Organization and Good Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.2 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.3 No Conflicts or Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.4 Enforceable Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.5 Title to Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.6 Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.7 No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.8 No Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.9 Security Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.10 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.11 Principal Office, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.12 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.13 Compliance with Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.14 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.15 Purchase Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 5. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.1 Conditions to Initial Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.2 Conditions to Additional Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 6. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6.1 Financial Statements, Reports and Documents . . . . . . . . . . . . . . . . . . . . . . . . 13
6.2 Payment of Taxes and Other Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6.3 Maintenance of Existence and Rights; Conduct of Business . . . . . . . . . . . . . . . . . 13
6.4 Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.5 Other Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.6 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.7 Books and Records; Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
6.8 Compliance with Law........................................................................ 14
6.9 Insurance.................................................................................. 14
6.10 Further.Assurances......................................................................... 15
6.11 Lien on.Assets............................................................................. 15
SECTION 7. NEGATIVE COVENANTS .................................................................................... 15
7.1 Change in Nature of Business............................................................... 15
7.2 Limitation on Indebtedness................................................................. 15
7.3 Negative Pledge............................................................................ 15
7.4 No Restrictions............................................................................ 15
7.5 Limitation on Investments.................................................................. 15
7.6 Limitation on Dividends.................................................................... 16
7.7 Amendments; Material Agreements............................................................ 16
7.8 Affiliated Transactions.................................................................... 16
7.9 Issuance of Shares......................................................................... 16
7.10 Name, Fiscal Year and Accounting Method.................................................... 16
7.11 Liquidation, Mergers, Consolidations and Dispositions of Substantial Assets................ 16
7.12 Restricted Payments........................................................................ 16
7.13 Pension.Plans.............................................................................. 16
7.14 Location of Company........................................................................ 16
SECTION 8. EVENTS OF DEFAULT...................................................................................... 16
8.1 Events of Default.......................................................................... 16
8.2 Remedies................................................................................... 18
8.3 Default Interest........................................................................... 18
SECTION 9. MISCELLANEOUS. . . .................................................................................... 18
9.1 Amendments................................................................................. 18
9.2 Notices.................................................................................... 18
9.3 No Waiver; Cumulative Remedies............................................................. 20
9.4 Survival of Representations and Warranties................................................. 20
9.5 Payment of Lender's Expenses, Indemnity, etc............................................... 20
9.6 Benefit of Agreement; Assignments and Participations....................................... 20
9.7 Headings................................................................................... 21
9.8 GOVERNING LAW.............................................................................. 21
9.9 Submission to Jurisdiction................................................................. 21
9.10 WAIVER OF JURY TRIAL....................................................................... 21
9.11 Confidentiality............................................................................ 21
9.12 FCC Compliance............................................................................. 22
EXHIBITS
A - Form of Note
B - Form of Pledge Agreement
C - Form of Guaranty
</TABLE>
<PAGE> 4
CREDIT AGREEMENT dated as of April 24, 1998 between STC
BROADCASTING OF VERMONT SUBSIDIARY, INC., a corporation organized under the laws
of Delaware (the "Borrower") and HEARST-ARGYLE STATIONS, INC., a corporation
organized under the laws of Nevada (the "Lender").
W I T N E S S E T H :
WHEREAS, the Borrower has requested that the Lender commit to
make one or more term loans to it in an aggregate principal amount as described
herein; and
WHEREAS, the Lender is willing to provide such financial
accommodations on, and subject to, the terms and conditions hereinafter set
forth.
NOW, THEREFORE, in consideration of the foregoing and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms 1.1 As used in this Agreement, the
following terms shall have the following meanings:
"Affiliate": shall mean as to any Person, any other Person
which, directly or indirectly, is in control of, is controlled by, or is under
common control with such Person. For purposes of this definition, control of a
Person shall mean the power, direct or indirect, to direct or cause the
direction of the management and policies of such Person whether through
ownership of voting securities, by contract or otherwise, provided that, in any
event, any Person that owns directly or indirectly securities having more than
50% of the voting power for the election of directors (or Persons having
similar management functions) of any other Person shall be deemed to control
such other Person.
"Agreement": shall mean this Credit Agreement, as amended,
supplemented or modified from time to time.
"Applicable Rate": shall mean a rate per annum equal to 7.75%.
"Bankruptcy Code": shall mean the Federal Bankruptcy Code of
1978, as amended from time to time.
"Business Day": shall mean a day on which commercial banks
are not authorized or required by law or executive order to close in New York,
New York.
"Capitalized Lease": shall mean any lease of property, real
or personal, if the then present value of the minimum rental commitment
thereunder is required to be classified and
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accounted for as a capital lease on the balance sheet of the lessee, in
accordance with GAAP.
"Cash Equivalents": means (i) marketable direct obligations
issued by, or unconditionally guaranteed by, the United States Government or
issued by any agency thereof and backed by the full faith and credit of the
United States, in each case maturing within one year from the date of
acquisition thereof; (ii) marketable direct obligations issued by any state of
the United States of America or any political subdivision of any such state or
any public instrumentality thereof maturing within one year from the date of
acquisition thereof and, at the time of acquisition, having one of the two
highest ratings obtainable from either Standard & Poor's Corporation or Moody's
Investor Service, Inc.; (iii) commercial paper maturing no more than one year
from the date of creation thereof and, at the time of acquisition, having a
rating of at least A-1 from Standard & Poor's corporation and at least P-1 from
Moody's Investor Service, Inc.; (iv) certificates of deposit or bankers'
acceptances maturing within one year from the date of acquisition thereof
issued by any commercial bank organized under the laws of the United States of
America or any state thereof or the District of Columbia or any U.S. branch of
a foreign bank having at the date of acquisition thereof combined capital and
surplus of not less than $200,000,000; and (v) repurchase obligations with a
term of not more than seven days for underlying securities of the types
described in clause (i) above, entered into with any bank meeting the
qualifications specified in clause (iv) above.
"Closing Date": shall mean the date on which each of the
conditions set forth in subsection 5.1 hereof have been satisfied.
"Code": shall mean the Internal Revenue Code of 1986, as
amended from time to time.
"Collateral": shall mean the shares of stock of the Borrower
owned by the Guarantor in which the Lender has been granted a security interest
pursuant to the Pledge Agreement.
"Credit Agreement": means the Credit Agreement, dated as of
February 28, 1997, among STC Broadcasting, Inc., The Chase Manhattan Bank, as
agent, NationsBank of Texas, N.A., as documentation agent, and any other
financial institutions from time to time party thereto, together with the
related documents thereto (including, without limitation, any guarantee
agreements and security documents), in each case as such agreements may be
amended (including any amendment and restatement thereof), supplemented or
otherwise modified from time to time.
"Default": shall mean any Event of Default or any event which
with the giving of notice, the lapse of time, or both, would become an Event of
Default.
"Dividends": shall mean, with respect to any Person, (i) cash
distributions or any other distributions on, or in respect of, any class of
equity interests or securities of such Person, except for distributions made
solely in equity interests or securities of the same class of such Person, and
(ii) any and all funds, cash or other payments made in respect of the
redemption, repurchase or acquisition of equity interests or securities of such
Person.
"Event of Default": shall mean any of the events specified
in subsection 8.1.
"Final Maturity Date": shall mean the date which occurs two
(2) years after the date of the HAT Exchange Agreement.
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"GAAP": shall mean United States generally accepted
accounting principles.
"Governmental Authority": shall mean any nation or
government, any state or other political subdivision thereof and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Guarantee": shall mean, with respect to any Person, any
obligation, contingent or otherwise, of such Person directly or indirectly
guaranteeing any Indebtedness or other obligation of any other Person and,
without limiting the generality of the foregoing, any obligation, direct or
indirect, contingent or otherwise, of such Person (i) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness or
other obligation (whether arising by virtue of partnership arrangements, by
agreement to keep-well, to purchase assets, goods, securities or services, to
take-or-pay, or to maintain financial statement conditions or otherwise) or
(ii) entered into for the purpose of assuring in any other manner the obligee
of such Indebtedness or other obligation of the payment thereof or to protect
such obligee against loss in respect thereof (in whole or in part), provided
that the term Guarantee shall not include endorsements for collection or
deposit in the ordinary course of business. The term "Guarantee" used as a
verb has a corresponding meaning.
"Guarantor": shall mean STC Broadcasting of Vermont, Inc., a
corporation organized under the laws of Delaware.
"Guaranty": shall mean, the guaranty, substantially in the
form of Exhibit C hereto, executed by the Guarantor in favor of the Lender.
"HAT Acquisition": shall mean the acquisition by the Lender
of (i) the STC Assets (as defined in the HAT Exchange Agreement) other than the
STC Excluded Assets (as defined in the HAT Exchange Agreement) in exchange for
the HAT Assets (as defined in the HAT Exchange Agreement) or (ii) the Cash
Purchase Assets pursuant to Section 11.1.2 of the HAT Exchange Agreement, all
as more particularly described in the HAT Exchange Agreement.
"HAT Exchange Agreement": shall mean the Asset Exchange
Agreement, dated as of February 18, 1998 among Borrower, STC Broadcasting,
Inc., STC Broadcasting of Vermont, Inc., STC License Company and Hearst-Argyle
Stations, Inc. with respect to the HAT Acquisition.
"Indebtedness": shall mean as to any Person, at any date,
without duplication, (i) all obligations of such Person for borrowed money,
(ii) all obligations of such Person evidenced by bonds, debentures, notes or
other similar instruments, (iii) all obligations of such Person to pay the
deferred purchase price of property or services, except trade accounts payable
arising in the ordinary course of business, (iv) all obligations of such Person
under Capitalized Leases, (v) all contingent or non-contingent obligations of
such Person to reimburse any bank or other Person in respect of amounts paid or
payable (currently or in the future, on a contingent or non-contingent basis)
under a letter of credit or similar instrument, (vi) all Indebtedness of others
secured by a Lien on any asset of such Person, whether or not such Indebtedness
is assumed by such Person, (vii) all obligations of such Person under interest
rate swaps, caps or collars or under any other financial hedging arrangement
net of any amounts receivable by such Person under such arrangements and (viii)
all Indebtedness of others Guaranteed by such Person.
"Indenture": means the Indenture, dated as of March 25, 1997,
between STC
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Broadcasting, Inc., as amended, supplemented or otherwise modified from time to
time in accordance with the terms thereof.
"Investment": shall mean, when used with reference to any
investment of any Person:
(a) any loan, advance or other extension of credit,
including obligations represented by bonds, notes or other securities and any
Guarantees, made by it to, or for the benefit of, any other Person; and
(b) any capital contribution by such Person to, or
acquisition of stock or other securities or partnership or membership interests
by such Person in, any other Person, or any other investment evidencing an
ownership or other interest of such Person in any other Person.
"Lien": shall mean any mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, security interest, lien
(statutory or other) or preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including, without
limitation, any conditional or installment sale or other title retention
agreement, any Capitalized Lease having substantially the same economic effect
as any of the foregoing, and the filing of any financing statement under the
Uniform Commercial Code or comparable law of any jurisdiction in respect of any
of the foregoing).
"Loans": shall mean the loans provided for in subsection 2.1.
"Material Adverse Effect": shall mean any (i) material
adverse effect whatsoever upon the validity, performance or enforceability of
this Agreement or any of the Related Documents or any of the transactions
contemplated hereby or thereby, (ii) material adverse effect upon the ability
of the Guarantor, the Borrower or any other Person to fulfill any of their
respective obligations under this Agreement or any of the Related Documents or
(iii) material adverse effect on the business, assets or financial condition of
the Guarantor or the Borrower, except for any such material adverse effect
resulting from (a) general economic conditions applicable to the television
broadcast industry, (b) general conditions in the markets in which the
television broadcast stations of the Borrower operate, or (c) circumstances
that are not likely to recur and either have been substantially remedied or can
be substantially remedied without substantial cost or delay.
"Note": shall have the meaning provided in subsection 2.6.
"Obligations": shall mean any and all of the debts,
obligations and liabilities of the Borrower to the Lender provided for or
arising under this Agreement or the Related Documents (including, without
limitation, the obligation to repay the Loans and to pay interest thereon),
whether now existing or hereafter arising, direct or indirect, absolute or
contingent, liquidated or unliquidated, and whether or not from time to time
decreased or extinguished and later increased, created or incurred.
"Permitted Indebtedness": shall mean (i) Indebtedness
hereunder and under the Related Documents, (ii) Indebtedness constituting
current liabilities for taxes and assessments incurred in the ordinary course
of business, provided such liabilities shall be paid and discharged as provided
in subsection 6.2 hereof, (iii) amounts advanced by the Lender to the Borrower
pursuant to Section 2.14 of the HAT Exchange Agreement and (iv) other
Indebtedness in an aggregate
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principal amount not exceeding $50,000.
"Permitted Investments": shall mean investments in cash and
Cash Equivalents.
"Permitted Liens": shall mean (i) all Liens constituting
Permitted Encumbrances (as defined in the HAT Exchange Agreement), (ii) pledges
or deposits made to secure payment of worker's compensation insurance (or to
participate in any fund in connection with worker's compensation insurance),
unemployment insurance, pensions or social security programs, (iii) Liens such
as for landlord's, materialmen's, mechanics', warehousemen's and other like
Liens arising in the ordinary course of business, securing Permitted
Indebtedness whose payment is not overdue for a period in excess of 60 days or
which are being contested in good faith and by appropriate proceedings as to
which appropriate reserves in accordance with GAAP or surety, stay or appeal
bonds have been provided, (iv) Liens for taxes, assessments and governmental
charges or levies imposed upon a Person or upon such Person's income or profits
or property, if the same are not yet due and payable or if the same are being
contested in good faith and as to which appropriate reserves in accordance with
GAAP have been provided, (v) Liens arising from good faith deposits in
connection with leases or contracts (other than contracts involving the
borrowing of money), pledges or deposits to secure public or statutory
obligations, deposits to secure (or in lieu of) surety, stay, appeal or customs
bonds, and deposits to secure the payment of taxes, assessments, customs duties
or other similar charges, (vi) encumbrances consisting of zoning restrictions,
easements, or other restrictions on the use of real property, lawfully in effect
from time to time, (vii) Liens imposed by operation of law with respect to any
judgments or orders not constituting, or otherwise arising out of an Event of
Default; (viii) attachment or judgment Liens not constituting, or otherwise
arising out of an Event of Default; and (ix) Liens in favor of a banking
institution arising by operation of law encumbering deposits (including the
right of set-off) held by such banking institution incurred in the ordinary
course of business and which are within the general parameters customary in the
banking industry.
"Person": shall mean an individual, partnership, corporation,
limited liability company, business trust, joint stock company, trust,
unincorporated association, joint venture, Governmental Authority or other
entity of whatever nature.
"Plan": shall mean any employee benefit plan which is covered
by Title IV of the Employee Retirement Income Security Act of 1974, as amended.
"Pledge Agreement": shall mean the Pledge Agreement,
substantially in the form of Exhibit B hereto, executed by the Guarantor in
favor of the Lender.
"Purchase Agreements": shall mean (a) the STC Purchase
Agreement and (b) the HAT Exchange Agreement.
"Related Documents": shall mean the Note, the Guaranty and
the Pledge Agreement, together with any security agreement, pledge, collateral
assignment and/or mortgage to be executed and delivered pursuant to Section
6.11 hereof and all instruments, documents, agreements and certificates to be
executed and delivered in connection therewith.
"Subsidiary": shall mean as to any Person, a corporation or
other business entity of which shares of stock or other ownership interests
having ordinary voting power to elect a majority of the board of directors or
other managers of such corporation or business entity are at the time
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<PAGE> 9
owned, directly or indirectly through one or more intermediaries, by such
Person.
"STC Acquisition": shall mean the acquisition by the Borrower
of the Assets (as defined in the STC Purchase Agreement) other than the
Excluded Assets (as defined in the STC Purchase Agreement), all as more
particularly described in the STC Purchase Agreement.
"STC Financing Consents": shall mean all amendments, consents
or other waivers which may be required under the Credit Agreement or the
Indenture.
"STC Purchase Agreement": shall mean the Asset Purchase
Agreement, dated as of February 3, 1998, among Tuscaloosa Broadcasting, Inc.,
WPTZ Licensee, Inc., WNNE Licensee, Inc. and STC Broadcasting of Vermont, Inc.
with respect to the STC Acquisition.
"Taxes": shall have the meaning provided in subsection 3.3.
"WFFF Disposition": shall mean the transfer or other
disposition of the assets and rights of Borrower relating to WFFF-TV to any
entity ultimately controlled, directly or indirectly, by Robert N. Smith.
"WFFF-TV": shall mean television broadcast station WFFF-TV,
Channel 44, Burlington, Vermont.
1.2 Other Definitional Provisions. (a) Unless otherwise
specified therein, all terms defined in this Agreement shall have the defined
meanings when used in the Related Documents or any certificate or other document
made or delivered pursuant hereto.
(b) The words "hereof," "herein" and "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement, and
section, subsection, schedule and exhibit references are to this Agreement
unless otherwise specified.
(c) Defined terms in the Agreement shall include in the
singular number the plural and in the plural number the singular.
(d) References in this Agreement to any other agreement,
document or instrument shall, unless the context otherwise requires, include
such other agreement, document or instrument as the same may be from time to
time amended, modified or supplemented.
SECTION 2. CREDIT FACILITY
2.1 Loans; Borrowing Procedures. On the terms and
subject to the conditions of this Agreement, the Lender agrees to make Loans
to the Borrower as follows:
(a) On the Closing Date, the Lender agrees to make a
Loan to the Borrower in
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an amount equal to either: (i) if the Closing (as defined in the STC Purchase
Agreement) occurs simultaneously with the Closing Date hereunder, the Purchase
Price (as defined in the STC Purchase Agreement) payable by the Borrower to the
Sellers (as defined in the STC Purchase Agreement) upon the occurrence of the
Closing (as defined in the STC Purchase Agreement) or (ii) if the Non-License
Transfer (as defined in the STC Purchase Agreement) occurs simultaneously with
the Closing Date hereunder, the portion of the Purchase price payable by the
Borrower to such Sellers upon the occurrence of the Non-License Transfer (as
defined in the STC Purchase Agreement); provided that the amount of such Loan to
be advanced under this subsection 2.1(a) shall not exceed $72,000,000;
(b) Provided the Non-License Transfer (as defined in the
STC Purchase Agreement) occurs before the Closing (as defined in the STC
Purchase Agreement), the Lender agrees to make an additional Loan to the
Borrower on the date of the Closing (as defined in the STC Purchase Agreement),
but in no event after the Final Maturity Date, in an amount equal to the unpaid
portion of the Purchase Price (as defined in the STC Purchase Agreement) to be
paid by the Borrower under the STC Purchase Agreement; provided that the amount
of the additional Loan to be advanced by the Lender under this subsection
2.1(b) together with the amount of the initial Loan advanced pursuant to
subsection 2.1(a) shall not exceed $72,000,000;
(c) Any request for an additional Loan pursuant to
subsection 2.1(b) must be delivered in writing to the Lender by not later than
10:00 a.m., New York City time, two Business Days before the date on which such
Loan is requested to be made and must specify (i) the amounts of the requested
Loan, (ii) the date of borrowing (which must be a Business Day on or prior to
the Final Maturity Date) and (iii) the account into which such Loan proceeds
are to be disbursed, and certify to the Lender that all conditions to such Loan
have been satisfied; and
(d) Amounts borrowed and prepaid or repaid under this
Agreement may not be reborrowed.
2.2 Disbursement of Loans. Subject to the conditions of
this Agreement, the Lender shall make Loans available to the Borrower by wire
transferring the amount thereof to such account as the Borrower shall designate
in writing to the Lender.
2.3 Repayment of Principal. Subject to the provisions of
subsection 2.5 hereof, the Borrower agrees to repay to the Lender the entire
outstanding principal amount of the Loans on the Final Maturity Date.
2.4 Payment of Interest; Default Interest. The Borrower
agrees to pay interest on the unpaid principal amount of the Loans from time to
time outstanding from and including the Closing Date to but not including the
date on which such Loans are paid in full at a rate per annum equal to the
Applicable Rate. Interest shall be payable quarterly, in arrears, on the last
Business Day of each March, June, September and December (with the first such
payment hereunder being payable in June 1998) and on the Final Maturity Date.
Notwithstanding the foregoing, if the Borrower shall fail to pay any installment
of principal of or interest on any Loan when due, then the Borrower shall pay
interest on the amount in default as provided in subsection 8.3.
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2.5 Prepayments. (a) The Borrower may, at any time,
prepay the then outstanding principal amount of the Loans, in whole or in part,
without premium or penalty. The Borrower shall give the Lender not less than
four Business Days' notice of its intent to prepay the Loans, which notice shall
specify the date and amount of the prepayment. Any notice of prepayment given
by the Borrower shall be irrevocable and obligate the Borrower to make the
prepayment specified in such notice on the date specified therein. Any partial
prepayment of the Loans pursuant to this subsection 2.5(a) shall be in an
aggregate principal amount of at least $5,000,000 or an integral multiple of
$1,000,000 in excess thereof. Any prepayment pursuant to this subsection 2.5(a)
shall be accompanied by the payment of accrued and unpaid interest to the date
of such prepayment on the principal amount prepaid.
(b) The Borrower shall prepay the entire outstanding
principal balance of the Loans on the earlier to occur of (i) the date of the
Closing (as defined in the HAT Exchange Agreement) or (ii) upon the
consummation of the Lender's acquisition of the Cash Purchase Assets (as
defined in the Hat Exchange Agreement) pursuant to Section 11.1.2 of the HAT
Exchange Agreement. All prepayments made hereunder shall be accompanied by the
payment of accrued and unpaid interest on the principal amount prepaid through
the date of prepayment.
2.6 Note. The Loan made by the Lender shall be evidenced
by a single promissory note of the Borrower, substantially in the form of
Exhibit A (the "Note"), payable to the order of the Lender. The Lender will
note on its internal records the date and amount of each Loan, the date and
amount of each repayment of principal thereof and will, prior to any permitted
transfer of the Note, endorse on the schedule (or continuation thereof) attached
thereto the outstanding principal amount of the Loan evidenced thereby. Failure
to so record any such information shall not alter the obligations of the
Borrower under this Agreement or the Note.
SECTION 3. PAYMENTS; TAXES
3.1 Computation of Interest. Interest on the Loan shall
be calculated on the basis of a 365-day year and the actual number of days
elapsed.
3.2 Payments. All payments (including prepayments) to be
made by the Borrower on account of principal and interest shall be made without
any set-off or counterclaim whatsoever and shall be made to the Lender, at such
account of the Lender designated for such purpose, in United States Dollars and
in immediately available funds not later than 12:00 noon, New York City time, on
the date on which such payment shall become due. Any payment received after such
time on any Business Day shall be deemed to have been received on the next
Business Day. If any payment hereunder becomes due and payable on a day other
than a Business Day, such payment shall be extended to the next succeeding
Business Day, and, with respect to payments of principal, interest thereon shall
be payable at the then applicable rate during such extension.
3.3 Taxes. All payments made by the Borrower under this
Agreement and the Related Documents shall be made free and clear of,
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and without reduction for or on account of, any current or future taxes, levies,
imposts, duties, charges, fees, deductions or withholdings, now or hereafter
imposed, levied, collected, withheld or assessed by any Governmental Authority,
excluding income and franchise taxes imposed on the Lender.
SECTION 4. REPRESENTATIONS AND WARRANTIES
In order to induce the Lender to enter into this Agreement and
to make the Loan herein provided for, the Borrower hereby represents and
warrants to the Lender that:
4.1 Organization and Good Standing. The Borrower is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its organization, is duly qualified as a foreign entity
and in good standing in all jurisdictions in which the failure to so qualify
would have a Material Adverse Effect, and has all requisite power and authority
to own its properties and assets, to transact the business in which it is
currently engaged, and to execute and deliver, and to perform its obligations
under, this Agreement and the Related Documents to which it is a party. All of
the issued and outstanding capital stock of the Borrower is owned beneficially
and of record by the Guarantor. The Borrower has no Subsidiaries.
4.2 Authorization. The Borrower has taken all corporate
action (including obtaining the consent and approval of the shareholder of the
Borrower, if required) necessary to authorize the execution and delivery of this
Agreement, the Related Documents to which it is a party and the Purchase
Agreements and to perform the obligations contemplated hereby and thereby.
4.3 No Conflicts or Consents. Except with respect to the
STC Financing Consents, which STC Financing Consents have been obtained and are
in full force and effect, neither the execution and delivery of this Agreement,
the Related Documents to which it is a party or the Purchase Agreements, nor the
consummation of the transactions contemplated hereby or thereby, nor the
compliance with the terms and provisions hereof or thereof, will contravene or
conflict with any provision of any constitution, law or regulation to which the
Borrower is subject, or any judgment, license, order or permit applicable to the
Borrower, or any indenture, loan agreement, mortgage, deed of trust, or other
agreement or instrument to which the Borrower is a party or by which it or its
assets may be bound or subject, or violate any provision of its organizational
documents or by-laws. No consent, approval, authorization or order of any court
or Governmental Authority or third party is required in connection with the
execution and delivery by the Borrower of this Agreement or any of the Related
Documents to which it is a party or for the consummation of the transactions
contemplated hereby or thereby, except with respect to the STC Financing
Consents, which STC Financing Consents have been obtained and are in full force
and effect.
4.4 Enforceable Obligations. This Agreement and the
Related Documents to which the Borrower is a party have been duly executed and
delivered by the Borrower and are the legal, valid and binding obligations of
the Borrower, enforceable against it in accordance with their respective terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization
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or other similar laws affecting creditors' rights generally and general
principles of equity.
4.5 Title to Assets. The Borrower has good title to all
of its assets free and clear of all Liens and other encumbrances and adverse
claims of any nature, except Permitted Liens. The Borrower has sufficient
assets to operate its business as currently conducted.
4.6 Financial Condition. Except with respect to the
organization and incorporation of the Borrower and the transactions contemplated
under the Purchase Agreements, the Borrower has not created, incurred or
assumed, directly or indirectly, any Indebtedness or engaged in any business
activities of any type whatsoever or entered into any agreements or arrangements
with any Person.
4.7 No Default. No Default has occurred and is
continuing, nor will the execution, delivery and performance of this Agreement
or any of the Related Documents cause a Default to occur.
4.8 No Litigation. There are no actions, suits or legal,
equitable, arbitration, regulatory or administrative proceedings pending or, to
the best of the Borrower's knowledge after due inquiry, threatened against the
Borrower or any of its properties or assets, which if adversely determined,
could reasonably be expected to have a Material Adverse Effect.
4.9 Security Interests. The Pledge Agreement creates, as
security for the Loans and the other obligations purported to be secured
thereby, a valid and exclusive, perfected security interest in and Lien on all
of the Collateral described in such agreements in favor of the Lender superior
and prior to the rights of all third Persons, subject to no other Liens. The
Guarantor has good and marketable title to all of its Collateral free and clear
of all Liens (except as created pursuant to the Pledge Agreement). No filings
or recordings are required in order to perfect the security interests created
under the Pledge Agreement.
4.10 Taxes. All tax returns required to be filed by the
Borrower in any jurisdiction have been filed or extensions obtained and all
taxes as reflected in such returns, assessments, fees and other governmental
charges upon the Borrower or upon any of their respective properties, income or
franchises have been paid prior to the time that such taxes would give rise to a
Lien thereon, other than a Permitted Lien under subsection 6.2 hereof. There is
no proposed special tax assessment against the Borrower and, to the knowledge of
the Borrower, there is no basis for any such assessment.
4.11 Principal Office, Etc. The principal office, chief
executive office and principal place of business of (a) the Borrower, is located
at c/o STC Broadcasting, Inc., 3839 Fourth Street North, Suite 420, St.
Petersburg, Florida 33703, and (b) the Guarantor, is located at c/o STC
Broadcasting, Inc., 3839 Fourth Street North, Suite 420, St. Petersburg, Florida
33703. The Borrower maintains its principal records and books at such address.
4.12 ERISA. Except for the Plans
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described in the HAT Exchange Agreement, or otherwise required to be provided
or established by Borrower under the STC Purchase Agreement, the Borrower has
not established and does not maintain or contribute to any Plan that is covered
by Title IV of the Employee Retirement Income Security Act of 1974, as amended.
4.13 Compliance with Law. The Borrower is in compliance
with all applicable provisions of all constitutions, laws, rules, regulations,
orders, judgments, decrees, licenses and approvals of any Governmental
Authority, the violation of which would have a Material Adverse Effect.
4.14 Insurance. The Borrower currently has and maintains
insurance coverage of the types and in the amounts required under subsection
6.9.
4.15 Purchase Agreements. The Lender has received a
complete and correct copy of the executed STC Purchase Agreement and all
amendments thereto, waivers relating thereto and other side letters or
agreements affecting the terms thereof. The STC Purchase Agreement has been
duly executed and delivered by the Guarantor and, to the best of Borrower's
knowledge, is in full force and effect in accordance with the terms thereof. All
of the Guarantor's rights under the STC Purchase Agreement have been assigned to
the Borrower. The Borrower hereby acknowledges and agrees that the Lender may
rely on the representations and warranties of the Borrower and the other parties
thereto contained in the STC Purchase Agreement.
SECTION 5. CONDITIONS PRECEDENT
5.1 Conditions to Initial Loan. The obligation of the
Lender to make the initial Loan under Section 2.1(a) hereof is subject to the
satisfaction, immediately prior to or concurrently with the making of such Loan,
of the following conditions precedent:
(a) This Agreement and Related Documents; HAT Exchange
Agreement. The Lender shall have received a counterpart of this Agreement,
each of the Related Documents and the HAT Exchange Agreement, duly executed by
each of the parties thereto.
(b) STC Acquisition. The Lender shall have received
copies, certified as true, correct and complete by the Secretary or an
Assistant Secretary of the Borrower, of the executed STC Purchase Agreement and
all other closing agreements and documents relating thereto or delivered in
connection therewith, and, concurrently with or immediately prior to the
funding of the initial Loan hereunder, all conditions set forth in the STC
Purchase Agreement shall have been satisfied (without any amendment or waiver
not expressly approved by the Lender in writing) and the Borrower shall have
consummated the STC Acquisition or the Non-License Transfer (as defined in the
STC Purchase Agreement).
(c) Legal Proceedings. No injunction, restraining order
or decree of any nature of any court or governmental authority of competent
jurisdiction shall be in effect that restrains or prohibits the transactions
contemplated by this Agreement or the Related Documents.
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(d) Approvals. The STC Financing Consents necessary in
connection with this Agreement and the Related Documents shall have been
obtained and shall remain in effect. The Lender shall have received copies,
certified as true, correct and complete by the Secretary or an Assistant
Secretary of the Borrower of all such STC Financing Consents.
(e) Collateral. The Lender shall have received from the
Guarantor all certificates or other instruments representing all Pledged
Securities (as such term is defined in the Pledge Agreement), together with
executed and undated stock powers or assignments in blank.
(f) Representations and Warranties. Each of the
representations and warranties made by the Borrower and the Guarantor pursuant
to this Agreement and the Related Documents, and each of the representations
and warranties contained in any certificate, document or financial or other
statement furnished in connection with this Agreement and the Related
Documents, shall be true and complete in all material respects on and as of the
Closing Date as if made on and as of the Closing Date, except to the extent
that such representations and warranties expressly relate to a particular date,
in which case such representations and warranties shall be true and complete as
of such date.
(g) No Default. No Default shall have occurred and be
continuing on such date or would occur as a result of the Loan.
(h) Corporate Proceedings. The Lender shall have
received a copy of resolutions, in form and substance reasonably satisfactory
to it, of the Board of Directors (or duly empowered committee thereof) of the
Borrower and the Guarantor authorizing the execution and delivery of this
Agreement and the Related Documents to which it is a party and the consummation
of the transactions hereunder and thereunder certified by its Secretary or an
Assistant Secretary, which certificate shall state that the resolutions thereby
certified have not been amended, modified, revoked or rescinded as of the date
of such certificate.
(i) Good Standing Certificates. The Lender shall have
received a certificate from the Secretary of State of the State of Delaware
evidencing the good standing of each of the Borrower and the Guarantor.
(j) Corporate Documents. The Lender shall have received
a copy of the charter and by-laws of each of the Borrower and the Guarantor,
together, in each case, with all amendments thereto, certified to be true,
correct and complete by the Secretary or an Assistant Secretary of the Borrower
and the Guarantor, as the case may be.
(k) Incumbency Certificate. The Lender shall have
received a certificate of the Secretary or an Assistant Secretary of each of
the Borrower and the Guarantor as to the incumbency and signature of their
respective officers authorized to sign this Agreement and the Related Documents
to which it is a party.
(l) Officer's Certificates. The Lender shall have
received a certificate from an appropriate officer of each of the Borrower and
the Guarantor certifying that (i) the representations and warranties contained
in this Agreement and the Related Documents to which it is a party are accurate
and complete in all material respects and (ii) no Default has occurred and is
continuing or will occur as a result of the initial Loan.
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(m) Insurance. The Lender shall have received evidence
that the Borrower has in effect the insurance coverages required under
subsection 6.9 hereof.
5.2 Conditions to Additional Loans. The obligation of
the Lender to make an additional Loan under subsection 2.1(b) hereof is subject
to the satisfaction, immediately prior to or concurrently with the making of
such additional Loan, of the following conditions precedent:
(a) Representations and Warranties. Each of the
representations and warranties made by the Borrower pursuant to this Agreement,
and each of the representations and warranties contained in any certificate,
document or financial or other statement furnished in connection with this
Agreement, shall be true and complete in all material respects on and as of the
date of such additional Loan as if made on and as of such date, except to the
extent such representations and warranties expressly relate to a particular
date in which case such representations and warranties shall be true and
correct as of such date.
(b) No Default. No Default shall have occurred and be
continuing on such date or would occur as a result of such Loan.
(c) Notice of Borrowing. The Lender shall have received
the notice required pursuant to subsection 2.1(c).
(d) Officer's Certificate. The Lender shall have
received a certificate from an appropriate officer of the Borrower certifying
that (i) the representations and warranties contained in Section 4 hereof are
accurate and complete in all material respects and (ii) no Default has occurred
and is continuing or will occur as a result of such additional Loan.
(e) Legal Proceedings. No injunction, restraining order
or decree of any nature of any court or governmental authority of competent
jurisdiction shall be in effect that restrains or prohibits the transactions
contemplated by this Agreement or the Related Documents.
(f) Supporting Documents. The Lender shall have
received copies, certified as true, correct and complete by the Secretary or
Assistant Secretary of the Borrower, of all closing agreements and documents
relating to the Closing (as defined in the STC Purchase Agreement) in
connection with the STC Acquisition and concurrently with or immediately prior
to the funding of the additional Loan, all conditions to the Closing (as
defined in the STC Purchase Agreement) shall have been satisfied (without any
amendment or waiver not expressly approved by the Lender in writing) and the
Borrower shall have consummated the Closing (as defined in the STC Purchase
Agreement).
SECTION 6. AFFIRMATIVE COVENANTS
The Borrower hereby agrees that, so long as the Note or the
Loan remains outstanding and unpaid or any other amount is owing to the Lender,
the Borrower shall and (except in the case of delivery of financial
information, reports, notices and certificates) shall cause each of
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<PAGE> 17
its Subsidiaries to:
6.1 Financial Statements, Reports and Documents. The
Borrower shall deliver to the Lender the financial statements and other
financial reporting materials required to be delivered pursuant to Section 6.2.9
of the HAT Exchange Agreement.
6.2 Payment of Taxes and Other Indebtedness. The
Borrower shall pay and discharge: (i) all taxes, assessments and governmental
charges or levies imposed upon it or upon its income or profits, or upon any
property belonging to them, (ii) all lawful claims upon it or its properties and
assets (including claims for labor, materials and supplies) and (iii) all of its
other Indebtedness in accordance with, and in the manner provided for under
Section 6.2 of the HAT Exchange Agreement.
6.3 Maintenance of Existence and Rights; Conduct of
Business. The Borrower shall preserve and maintain its existence and all of its
rights, privileges and franchises in accordance with, and in the manner provided
for under Section 6.2.1 of the HAT Exchange Agreement, and conduct its
businesses in an orderly and efficient manner consistent with good business
practices and in accordance with all valid regulations and orders of any
Governmental Authority in accordance with and in the manner provided for under
Section 6.2.2 of the HAT Exchange Agreement.
6.4 Notice of Default. Promptly upon becoming aware of
the existence of any condition or event which constitutes a Default, the
Borrower shall furnish to the Lender written notice specifying the nature and
period of existence thereof and the action which the Borrower is taking or
proposes to take with respect thereto.
6.5 Other Notices. The Borrower shall promptly notify
the Lender of (i) the occurrence of any event or existence of any condition
which would have a Material Adverse Effect; and (ii) the commencement of, or any
material determination in, any litigation with any third party or any proceeding
before any Governmental Authority affecting the Borrower or its assets or
properties which could reasonably be expected to have a Material Adverse Effect.
The Borrower will promptly deliver to Lender a copy of each notice or written
communication received by the Borrower (a) from the Sellers (as defined in the
STC Purchase Agreement) under or in connection with the STC Purchase Agreement
or (b) from the Federal Communications Commission in connection with the
Stations (as defined in the STC Purchase Agreement). Within thirty (30) days
after the end of each fiscal quarter, and no later than the date of delivery of
the information required to be delivered pursuant to subsection 6.1(d) hereof,
the Borrower shall deliver to the Lender notice of (i) the cancellation or
termination of, or any default under, any agreement, contract or other
instrument to which it is a party or by which any of its properties are bound
which could reasonably be expected to have a Material Adverse Effect, and (ii)
any material adverse claim against or affecting the Borrower or any of its
assets or properties.
6.6 Use of Proceeds.
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The Borrower will use the proceeds of each Loan made by the Lender solely for
the payment of the Purchase Price (as defined in the STC Purchase Agreement) in
connection with the STC Acquisition.
6.7 Books and Records; Access. The Borrower shall give
any representative of the Lender access during all business hours and upon
reasonable prior notice, and permit such representative to examine, copy or make
excerpts from, any and all books, records and documents in the possession of the
Borrower relating to the affairs of the Borrower or its assets or properties in
accordance with, and in the manner provided for under, Section 6.2.7 of the HAT
Exchange Agreement. Lender agrees to take such steps as are reasonably
practicable to minimize disruption of the Borrower's operations in connection
with such examination. The Borrower shall maintain complete and accurate books
and records of its transactions in accordance with good accounting practices.
6.8 Compliance with Law. The Borrower shall comply with
all applicable constitutions, laws, rules, regulations, judgments, orders,
decisions, rulings and decrees of any Governmental Authority applicable to it or
to any of its assets, properties, business operations or transactions in
accordance with and in the manner provided for under, the HAT Exchange
Agreement.
6.9 Insurance. The Borrower shall maintain workers'
compensation insurance, liability insurance, casualty insurance and other
insurance on its properties, assets and businesses, now owned or hereafter
acquired, against such casualties, risks and contingencies, and in such types
and amounts, as are maintained by Borrower and in effect on the date of this
Agreement; provided, that on the Closing Date, the Lender shall have received
evidence that it has been named as a loss payee (as its interest may appear) on
the property damage coverage maintained by the Borrower in respect of its assets
and properties, and as an additional insured in respect of the liability
coverage, maintained in respect of such assets and properties.
6.10 Further Assurances. The Borrower shall make, execute
or endorse, and acknowledge and deliver or file or cause the same to be done,
all such notices, certificates and additional agreements, undertakings,
conveyances, transfers, assignments or other assurances, and take any and all
such other action, as the Lender may, from time to time, deem reasonably
necessary or proper in connection with this Agreement or any of the Related
Documents, or the obligations of the Borrower hereunder or thereunder.
6.11 Lien on Assets. Upon the written request of Lender
at any time from and after the date which occurs one hundred twenty (120) days
after the date of this Agreement, the Borrower will promptly, and in any event
within thirty (30) days after the date of such written request, execute and
deliver to Lender such security agreements, and take such further action
necessary to grant in favor of Lender a first priority perfected security
interest in and lien upon all of Borrower's assets, tangible and intangible,
whether personal property or real property. Borrower agrees to take all action
necessary or reasonably requested by Lender to perfect such liens and ensure
that such liens have priority over all Liens other than Permitted Liens.
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SECTION 7. NEGATIVE COVENANTS
The Borrower hereby agrees that, so long as the Note or the
Loan remains outstanding and unpaid or any other amount is owing to the Lender
hereunder:
7.1 Change in Nature of Business. The Borrower will not
(a) enter into any business other than the business of acquiring the Assets (as
defined in the STC Purchase Agreement) pursuant to the STC Purchase Agreement
and operating the same pursuant to the TBA Agreement (as defined in the STC
Purchase Agreement) and the HAT Exchange Agreement or (b) become a party to any
agreement without the prior written consent of the Lender other than the
Purchase Agreements, this Agreement, the Related Documents to which it is a
party, the Station Contracts (as defined in the HAT Exchange Agreement) and
other agreements contemplated in or incidental to the performance of its
obligations under, the Purchase Agreements, this Agreement and the Related
Documents.
7.2 Limitation on Indebtedness. The Borrower shall not
incur, create, contract, assume, have outstanding, guarantee or otherwise be or
become, directly or indirectly, liable in respect of any Indebtedness, except
Permitted Indebtedness.
7.3 Negative Pledge. The Borrower shall not create,
incur or permit or suffer to exist any Lien upon any of its properties or
assets, now owned or hereafter acquired, except for Permitted Liens.
7.4 No Restrictions. The Borrower shall not permit or
suffer to exist any restrictions on the sale or transfer of any assets acquired
with the proceeds of any Loan or pledged to the Lender in accordance with the
terms of the Pledge Agreement, except as provided herein and in the Related
Documents and restrictions imposed by applicable law.
7.5 Limitation on Investments. The Borrower shall not,
without the prior written consent of the Lender, make any Investments, except
Permitted Investments.
7.6 Limitation on Dividends. The Borrower shall not pay
any Dividends, except for the distribution of any proceeds from the WFFF
Disposition.
7.7 Amendments; Material Agreements. The Borrower shall
not amend its organizational documents or by-laws. The Borrower shall not
consent to or permit any alteration, amendment, modification, release, waiver or
termination of any provision of any agreement or contract to which it is a party
except in accordance with, and in the manner provided for under, the HAT
Exchange Agreement.
7.8 Affiliated Transactions.
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<PAGE> 20
The Borrower shall not enter into any transaction or arrangement with an
Affiliate except in accordance with, and in the manner provided for under,
Section 6.1.12 of the HAT Exchange Agreement and except with respect to the WFFF
Disposition.
7.9 Issuance of Shares. The Borrower shall not issue,
sell or otherwise dispose of capital stock or other securities, or rights,
warrants or options to purchase or acquire any such stock or other securities.
7.10 Name, Fiscal Year and Accounting Method. The
Borrower shall not change its name, fiscal year or method of accounting.
7.11 Liquidation, Mergers, Consolidations and Dispositions
of Substantial Assets. The Borrower shall not dissolve or liquidate, or become
a party to any merger or consolidation, or sell, transfer, lease or otherwise
dispose of all or any part of its property, assets or business, except in
accordance with, and in the manner provided for under, Section 6.1.1 or Section
6.12.4 of the HAT Exchange Agreement and except for the WFFF Disposition.
7.12 Restricted Payments. So long as the Obligations are
outstanding, the Borrower shall not redeem, repurchase or otherwise acquire any
capital stock issued by it or any other Person or prepay any Permitted
Indebtedness or any other Indebtedness of the Borrower.
7.13 Pension Plans. Except with respect to the Plans
described in the STC Exchange Agreement or otherwise required to be provided or
established by Borrower under the STC Purchase Agreement, the Borrower will not
establish or become party to any employee benefit plan of the type referred to
in Section 4.12 hereof.
7.14 Location of Company. The Borrower will not maintain
its principal place of business and chief executive office at any place other
than the place specified in Section 4.11 hereof unless the Borrower shall have
given the Lender not less than 10 days's prior written notice of such change of
location.
SECTION 8. EVENTS OF DEFAULT
8.1 Events of Default:
(a) The Borrower shall fail to pay (i) any installment of
principal of or interest on the Loans when due in accordance with the terms
hereof, or (ii) any other amount payable hereunder or under any Related Document
when due in accordance with the terms hereof or thereof, and in the case of
clause (ii) set forth above, such failure shall continue unremedied for a
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period of five days after the date when due; or
(b) Any representation or warranty made or deemed made
by the Borrower herein or by the Borrower or the Guarantor in any Related
Document to which it is a party, or in any certificate, document or financial
or other statement furnished at any time under or in connection with this
Agreement or any Related Documents, shall prove to have been incorrect or
incomplete in any material respect on or as of the date made or deemed made or
shall be breached; or
(c) The Borrower shall default in the observance or
performance of any covenant or agreement set forth herein or in any Related
Document and such default shall continue for a period of 30 days after receipt
of notice thereof from the Lender; or
(d) The Guarantor shall default in the observance or
performance of any covenants or agreements contained in the Guaranty or the
Pledge Agreement; or
(e) The Borrower or the Guarantor shall (i) default in
any payment of principal of or premium or interest on any Indebtedness (other
than Indebtedness owing under this Agreement or the Note) or (ii) any other
event shall occur or condition exist, the effect of which default or other
event or condition is to cause, or to permit the holder or holders of such
Indebtedness (or a trustee or agent on behalf of such holder or holders) to
cause, with the giving of notice if required, such Indebtedness to become due
prior to its stated maturity; or
(f) The Borrower or the Guarantor shall (i) apply for or
consent to the appointment of a receiver, trustee, custodian, intervenor or
liquidator of itself or of all or a substantial part of such Person's assets,
(ii) file a voluntary petition in bankruptcy, admit in writing that such Person
is unable to pay such Person's debts as they become due, or generally not pay
such Person's debts as they become due, (iii) make a general assignment for the
benefit of creditors, (iv) file a petition or answer seeking reorganization or
an arrangement with creditors or to take advantage of any bankruptcy or
insolvency laws, (v) file an answer admitting the material allegations of, or
consent to, or default in answering, a petition filed against such Person in
any bankruptcy, reorganization or insolvency proceeding, or (vi) take corporate
action for the purpose of effecting any of the foregoing; or
(g) An involuntary petition or complaint shall be filed
against the Borrower or the Guarantor seeking bankruptcy relief or
reorganization or the appointment of a receiver, custodian, trustee, intervenor
or liquidator of such Person, or all or substantially all of such Person's
assets and such petition or complaint remains undismissed, undischarged or
unbonded for a period of 60 days or more, or an order, order for relief,
judgment or decree is entered by any court of competent jurisdiction or other
competent authority approving or ordering any of the foregoing; or
(h) Any of the Related Documents or the Purchase
Agreements shall cease for any reason to be in full force and effect in
accordance with its terms or any Person obligated thereunder shall so assert in
writing or the Pledge Agreement shall cease to be effective to grant the Liens
purported to be granted thereby in accordance with its terms or such Liens
shall cease to be enforceable or superior to and prior to the rights of any
other Person; or
(i) The Guarantor shall cease to own, directly or
indirectly, 100% of the issued and outstanding capital stock of the Borrower;
or
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(j) Either Purchase Agreement shall terminate or cease
for any reason to be in full force and effect either automatically or by any
action of any party thereto; or
(k) The TBA Agreement (as defined in the STC Purchase
Agreement) shall cease for any reason to be in full force and effect in
accordance with its terms or any party thereto shall so assert in writing.
8.2 Remedies. If any Event of Default shall occur and be
continuing, then, and in any such event, (a) if such event is an Event of
Default specified in subsection 8.1(f) or (g), automatically the obligation of
the Lender to make any further Loans hereunder shall terminate and the Loans
(with accrued interest thereon) and all other Obligations shall immediately
become due and payable, and (b) if such event is any other Event of Default, the
Lender may, by notice of default to the Borrower, terminate its obligation to
make any further Loans hereunder, whereupon such commitment of the Lender shall
immediately terminate, and/or declare the Loans (with accrued interest thereon)
and all other Obligations to be due and payable forthwith, whereupon the same
shall immediately become due and payable. Except as expressly provided above in
this subsection 8.2, presentment, demand, protest and all other notices of any
kind are hereby expressly waived. Upon the occurrence of an Event of Default
and the acceleration of the Obligations, the Lender may enforce its rights
hereunder, under the Related Documents and under any other instrument or
agreement delivered in connection herewith and therewith and take any other
action to which it is entitled hereunder or thereunder or by law, whether for
the specific performance of any covenant or agreement set forth herein or
therein or to enforce payment as provided herein, therein or by law.
8.3 Default Interest. Notwithstanding any other
provision of this Agreement to the contrary, if the Borrower shall fail to pay
any amount owing to the Lender under this Agreement when due (whether at stated
due date, on acceleration or otherwise), then the Borrower will pay interest to
the Lender, payable on demand, on the amount in default from the date such
payment became due until payment in full at a rate per annum equal to the rate
of interest payable on the Loans immediately prior to the date of such default
plus 3% per annum.
SECTION 9. MISCELLANEOUS
9.1 Amendments. This Agreement may be amended, or any
provision waived, only by an instrument in writing executed by each of the
Borrower and the Lender. Any waiver given shall be effective only in the
specific instance and for the specific purpose for which it is given.
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9.2 Notices. Except as expressly otherwise provided
herein, all notices, requests and demands to or upon the respective parties
hereto to be effective shall be in writing (including by telecopy or telex), and
shall be deemed to have been duly given or made when delivered by hand, or one
Business Day after being sent by overnight mail, or five Business Days after
being deposited in the mail, postage prepaid, or, in the case of telecopy
notice, when acknowledged as received (if received during normal business hours
on a Business Day, otherwise on the next succeeding Business Day or, in the case
of telex notice, when sent, answerback received, addressed as follows, or to
such other address as may be hereafter notified by the respective parties hereto
and any future holders of the Note:
The Lender: Hearst-Argyle Stations, Inc.
c/o Hearst-Argyle Television, Inc.
959 Eighth Avenue
New York, NY 10019
Attn: Dean H. Blythe
Tel.: (212) 649-2307
Fax: (212) 489-2314
with a copy of each such notice to:
Rogers & Wells LLP
200 Park Avenue
New York, New York 10166
Attn: Steven A. Hobbs
Tel.: (212) 878-8005
Fax: (212) 878-8375
The Borrower: STC Broadcasting of Vermont Subsidiary, Inc.
c/o STC Broadcasting, Inc.
3839 Fourth Street North
Suite 420
St. Petersburg, Florida 33703
Attn: David Fitz
Tel.: (813) 821-7346
Fax: (813) 821-8092
with a copy of each such notice to:
(i) Hogan & Hartson LLP
555 Thirteenth Street, N.W.
Washington, D.C. 20004
Attn: William S. Reyner, Jr.
Tel.: (202) 637-6510
Fax: (202) 637-5910
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(ii) Hicks, Muse, Tate & Furst Incorporated
200 Crescent Court
Suite 1600
Dallas, TX 75201
Attn: Lawrence D. Stuart, Jr.
Tel.: (214) 740-7365
Fax: (214) 740-7355
provided that any notice, request or demand to or upon the Lender shall not be
effective until actually received. Any notice, request or demand received on a
day which is not a Business Day shall be deemed to have been received on the
next following Business Day.
9.3 No Waiver; Cumulative Remedies. No failure to
exercise and no delay in exercising, on the part of the Lender, of any right,
remedy, power or privilege hereunder, shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, remedy, power or privilege
hereunder or under any Related Document preclude any other or further exercise
thereof or the exercise of any other right, remedy, power or privilege. The
rights, remedies, powers and privileges herein provided or provided in the
Related Documents are cumulative and not exclusive of any rights, remedies,
powers and privileges provided at law, in equity or otherwise.
9.4 Survival of Representations and Warranties. All
representations and warranties made hereunder and in any document, certificate
or statement delivered pursuant hereto or in connection herewith shall survive
the execution and delivery of this Agreement and the Related Documents.
9.5 Payment of Lender's Expenses, Indemnity, etc. The
Borrower shall:
(a) pay all costs and expenses of the Lender in
connection with any enforcement of, this Agreement and the Related Documents and
the documents and instruments referred to therein or in connection with any
restructuring or rescheduling of the Obligations (including, without limitation,
the reasonable fees and disbursements of counsel for the Lender); and
(b) indemnify the Lender, its officers, directors,
employees, representatives and agents and any persons or entities owned or
controlled by, owning or controlling, or under common control or Affiliated with
Lender (each an "Indemnitee") from, and hold each of them harmless against, any
and all losses, liabilities, claims, damages, expenses, obligations, penalties,
actions, judgments, suits, costs or disbursements of any kind or nature
whatsoever (including, without limitation, the reasonable fees and disbursements
of counsel for such Indemnitee in connection with any investigative,
administrative or judicial proceeding commenced or threatened, whether or not
such Indemnitee shall be designated a party thereto) that may at any time
(including, without limitation, at any time following the payment of the
Obligations) be imposed on, asserted against or incurred by any Indemnitee as a
result of, or arising out of, or in any way related to or by reason of, (i) the
occurrence of an Event of Default hereunder and (ii) the exercise by the Lender
of
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its rights and remedies (including, without limitation, foreclosure) under this
Agreement or any Related Document (but excluding, as to any indemnitee, any such
losses, liabilities, claims, damages, expenses, obligations, penalties, actions,
judgments, suits, costs or disbursements incurred by reason of the gross
negligence or willful misconduct of such Indemnitee). The Borrower's
obligations under this subsection 9.5 shall survive the termination of this
Agreement and the payment of the Obligations.
9.6 Benefit of Agreement; Assignments and Participations.
(a) This Agreement shall be binding upon and inure to the benefit of the
Borrower, the Lender, all future permitted holders of the Note and their
respective permitted successors and assigns, except that the Borrower may not
assign or transfer any of its rights or obligations under this Agreement without
the prior written consent of the Lender.
(b) The Lender may not assign, or enter into any
participations, in respect of, all or any part of the Loan without the prior
written consent of the Borrower (which consent shall not be unreasonably
withheld, conditioned or delayed). The Lender may assign all or any part of
the Loan without the Borrower's consent (i) at any time to one or more
Affiliates of the Lender or (ii) from and after the occurrence and during the
continuance of an Event of Default, to one or more affiliated or unaffiliated
parties; and provided further that no such participation shall affect the
rights and duties of the Lender vis-a-vis the Borrower. The Borrower shall not
be obligated to furnish any information to any such participant, purchaser or
assignee, but the Lender may provide any such Person with any information
furnished by the Borrower to the Lender in compliance with subsection 9.11.
9.7 Headings. The Section and subsection headings in
this Agreement are for convenience of reference only and shall not affect the
interpretation hereof.
9.8 GOVERNING LAW. THIS AGREEMENT AND THE RELATED
DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT AND
THE RELATED DOCUMENTS SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
9.9 Submission to Jurisdiction. The Borrower hereby
irrevocably and unconditionally: (i) submits for itself and its property in any
legal action or proceeding relating to this Agreement or any Related Document,
or for recognition and enforcement of any judgment in respect thereof, to the
non-exclusive general jurisdiction of the courts of the State of New York, the
courts of the United States of America for the Southern District of New York,
and appellate courts from any thereof; (ii) consents that any such action or
proceeding may be brought in such courts, and waives any objection that it may
now or hereafter have to the venue of any such action or proceeding in any such
court or that such action or proceeding was brought in an inconvenient court and
agrees not to plead or claim the same; (iii) agrees that if any process or
summons may be served by mailing a copy thereof by registered mail, or a form of
mail substantially equivalent thereto, addressed to it at its address set forth
in or designated pursuant to subsection 9.2, such service to become effective 10
days after such mailing; and (iv) agrees that
23
<PAGE> 26
nothing herein shall affect the right to effect service of process in any other
manner permitted by law or shall limit the right to sue in any other
jurisdiction.
9.10 WAIVER OF JURY TRIAL. EACH OF THE PARTIES TO THIS
AGREEMENT IRREVOCABLY AND UNCONDITIONALLY WAIVES ALL RIGHT TO TRIAL BY JURY AS
TO ANY ISSUE RELATING HERETO IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING
OUT OF OR RELATING TO THIS AGREEMENT.
9.11 Confidentiality. The Lender agrees to hold any
non-public information which it may receive from the Borrower pursuant to this
Agreement in confidence, except for disclosure to (i) employees, directors,
agents, legal counsel, accountants, and other professional advisors who are
advised of the confidential nature of such information, on a need-to-know basis,
(ii) as required by law or legal process or in connection with any legal
proceeding, and (iii) permitted assignees, purchasers or participants in
connection with a disposition or proposed disposition of the Lender's interests
hereunder or under the Related Documents, upon execution by such institution of
an agreement to keep such information confidential to the extent described in
this subsection 9.11. Notwithstanding (ii) and (iii) above, in the event that
the Lender is requested pursuant to, or required by, applicable law, regulation,
legal process, or regulatory authority to disclose any such information, the
Lender will provide the Borrower with prompt notice of such request or
requirement in order to enable the Borrower to seek an appropriate protective
order or other remedy, or to consult with the Lender with respect to the
Borrower's taking steps to resist or narrow the scope of such request or legal
process. If, in such event, the Borrower has not provided the Lender with a
protective order or other remedy in sufficient time, with the Lender acting in
good faith and otherwise in its sole discretion, for the Lender to avoid
unlawful nondisclosure of such information, the Lender may disclose such
information pursuant to such law, regulation, or in such legal process, or to
such regulatory authority, as the case may be, without any recourse or remedy
against the Lender by the Borrower or any Affiliate of the Borrower, which the
Borrower hereby expressly waives.
9.12 FCC Compliance. Notwithstanding anything to the
contrary contained herein or in any other agreement, instrument or document
executed in connection herewith, no party hereto shall take any actions
hereunder that would constitute or result in a transfer or assignment of any
license, permit or authorization issued by the Federal Communications Commission
(the "FCC") or a change of control over any such license, permit or
authorization requiring the prior approval of the FCC without first obtaining
such prior approval of the FCC.
[signatures begin on next page]
24
<PAGE> 27
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their proper and duly authorized
officers as of the day and year first above written.
STC BROADCASTING OF VERMONT SUBSIDIARY,
INC.
By: /s/ David A. Fitz
--------------------------------
Name: David A. Fitz
Title: Chief Financial Officer
HEARST-ARGYLE STATIONS, INC.
By: /s/ Dean H. Blythe
--------------------------------
Name: Dean H. Blythe
Title: Sr. Vice President Corporate
Development, Secretary and
General Counsel
<PAGE> 28
EXHIBIT A TO
CREDIT AGREEMENT
TERM NOTE
$72,000,000 New York, New York
____________, 1998
FOR VALUE RECEIVED, STC BROADCASTING OF VERMONT SUBSIDIARY, INC.
("Borrower") promises to pay to the order of HEARST-ARGYLE STATIONS, INC. (the
"Lender") at its office, located at _________________________________________,
in lawful money of the United States of America and in immediately available
funds, the principal amount of SEVENTY-TWO MILLION DOLLARS ($72,000,000), or, if
less, the principal amount of the Loans made by the Lender pursuant to
subsection 2.1 of the Credit Agreement referred to below. The principal amount
of this Note shall be paid in the amounts and on the dates specified in
subsection 2.3 of the Credit Agreement.
Borrower further agrees to pay interest in like money at the office of
the Lender specified above on the unpaid principal amount hereof from time to
time outstanding at the rates and on the dates specified in subsection 2.4 of
the Credit Agreement.
The holder of this Note is authorized to endorse on the schedule
annexed hereto and made a part hereof or on a continuation thereof which shall
be attached hereto and made a part hereof the date and amount of each Loan and
the date and amount of each payment or prepayment of principal thereof. Each
such endorsement shall constitute prima facie evidence of the accuracy of the
information endorsed. The failure to make any such endorsement shall not
affect the obligations of Borrower in respect of the Loans.
This Note (i) is the Note referred to in the Credit Agreement dated as
of ______________, 1998 (as amended, supplemented or otherwise modified from
time to time, the "Credit Agreement"), between Borrower and the Lender, (ii) is
subject to the provisions of the Credit Agreement (including the limitations on
transfers and assignments set forth in Section 9.6 thereof) and (iii) is
subject to prepayment as provided in the Credit Agreement. This Note is
secured as provided in the Credit Agreement and the Related Documents.
Upon the occurrence of any one or more Events of Default, all amounts
then remaining unpaid on this Note shall become, or may be declared to be,
immediately due and payable, all as provided in the Credit Agreement.
All parties now and hereafter liable with respect to this Note,
whether as maker, principal, surety, guarantor, endorser or otherwise, hereby
waive presentment, demand, protest and all other notices of any kind.
A-1
<PAGE> 29
Unless otherwise defined herein, terms defined in the Credit Agreement
and used herein shall have the meanings given to them in the Credit Agreement.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
STC BROADCASTING OF VERMONT
SUBSIDIARY, INC.
By:_______________________________
Name:
Title:
A-2
<PAGE> 30
SCHEDULE TO TERM NOTE
<TABLE>
<CAPTION>
Amount of Amount of Notation
Date Loan Principal Repaid Unpaid Balance Made By
- ---- -------- ---------------- -------------- ---------
<S> <C> <C> <C> <C>
</TABLE>
A-3
<PAGE> 31
EXHIBIT B TO
CREDIT AGREEMENT
PLEDGE AGREEMENT
This Pledge Agreement (the "Pledge Agreement") is made and
entered into as of ____________, 1998 by and between STC Broadcasting of
Vermont, Inc., a Delaware corporation (the "Pledgor") and HEARST-ARGYLE
STATIONS, INC. (the "Lender").
RECITALS
WHEREAS, the Pledgor is the owner of [________] shares of common
stock (the "Shares") of STC BROADCASTING OF VERMONT SUBSIDIARY, INC. (the
"Borrower"), constituting 100% of the issued and outstanding shares of common
stock of the Borrower; and
WHEREAS, the Borrower and the Lender have entered into a Credit
Agreement dated as of the date hereof (as amended, modified and supplemented
from time to time, the "Credit Agreement") pursuant to which the Lender has
agreed to make Loans to the Borrower; and
WHEREAS, in order to secure the Obligations of the Borrower under
the Credit Agreement and the Note and the obligations of the Pledgor under the
Guaranty and this Pledge Agreement, the Lender has required the Pledgor to
pledge, and the Pledgor has agreed to pledge to the Lender, the Shares together
with the other items of Collateral set forth herein;
NOW, THEREFORE, in consideration of the premises and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
SECTION 1. Definitions. Except as otherwise defined
herein, all capitalized terms used but not defined herein shall have the
respective meanings given to such terms in the Credit Agreement.
SECTION 2. Creation of Security Interest. The Pledgor
hereby pledges, grants and assigns to the Lender an exclusive and continuing
security interest in and lien on all of its right, title and interest in, to
and under the following (hereinafter, the "Collateral") as security for the
payment and performance in full of the Obligations of the Borrower under the
Credit Agreement and the Note and the obligations of the Pledgor hereunder and
under the Guaranty:
(a) The Shares, together with the certificates representing
such Shares and all rights and privileges of the Pledgor with respect to
the Shares, all income and profits thereof and all property received in
addition thereto, in respect thereof or in exchange or in substitution
therefor;
(b) Any and all proceeds of any of the foregoing.
The Shares and all other shares or other ownership interests constituting a
part of the "Collateral" described in clauses (a) and (b) above are hereinafter
collectively referred to as the "Pledged Securities".
<PAGE> 32
SECTION 3. Delivery of Certificates. Simultaneously
with the execution and delivery hereof, the Pledgor is delivering to the Lender
all instruments and certificates representing the Pledged Securities, together
with appropriate undated instruments of transfer or assignment duly executed in
blank. In addition, the Pledgor shall promptly deliver to the Lender, or cause
the issuer of the Pledged Securities to deliver directly to the Lender, all
certificates, instruments or other property, including any cash dividends or
distributions representing or constituting any Collateral received or
receivable by the Pledgor after the date of this Pledge Agreement, other than
distributions permitted by Section 7.6 of the Credit Agreement. Any
certificates or other instruments so delivered shall be duly endorsed and
subscribed by the Pledgor or accompanied by appropriate instruments of transfer
or assignment duly executed in blank by the Pledgor. Any such certificates,
instruments or other property representing or constituting any Collateral
received by the Pledgor after the date of this Pledge Agreement shall be held
by the Pledgor in trust for the Lender and shall forthwith be delivered by the
Pledgor to the Lender as aforesaid. If at any time the Lender notifies the
Pledgor that additional endorsements or other instruments of transfer or
assignment with respect to any of the Collateral held by the Lender are
required, the Pledgor shall promptly execute the same in blank and deliver such
endorsements or other instruments of transfer or assignment as the Lender may
request.
SECTION 4. Dividends and Distributions. The Pledgor
shall deliver to the Lender, as Collateral, any and all additional shares of
stock or any other property of any kind received, receivable, distributed or
distributable on or by reason of the Collateral pledged hereunder, whether in
the form of or by way of cash, stock dividends or distributions, warrants,
subscription rights, liquidation (in whole or in part), conversion, prepayment
or redemption (in whole or in part) or otherwise.
SECTION 5. Power of Attorney. The Pledgor hereby
constitutes and irrevocably appoints the Lender, with full power of
substitution and revocation by the Lender, as the Pledgor's true and lawful
attorney-in-fact, for the purpose from time to time upon the occurrence and
during the continuance of an Event of Default of carrying out the provisions of
this Pledge Agreement and taking any action and executing any instrument that
the Lender deems necessary or advisable to accomplish the purposes of this
Pledge Agreement, including, without limitation, to affix to certificates and
documents representing any Collateral the endorsements or other instruments of
transfer or assignment delivered with respect thereto and to transfer or cause
the transfer of the Collateral, or any part thereof, on the books of the
Borrower. The power of attorney granted pursuant to this Pledge Agreement and
all authority hereby conferred are granted and conferred solely to protect the
Lender's interest in the Collateral and shall not impose any duty upon the
Lender to exercise any power. This power of attorney shall be irrevocable as
one coupled with an interest.
SECTION 6. Representations of Pledgor. The Pledgor
represents and warrants to the Lender that:
(a) No consent or authorization of, filing with, or other act
by or in respect of, any arbitrator or Governmental Authority and no
consent of any other Person is required (i) for the execution, delivery
and performance of this Pledge Agreement by the Pledgor, (ii) for the
pledge by the Pledgor of the Collateral to the Lender pursuant to this
Pledge Agreement, or (iii) subject to Section 17 hereof, for the
exercise by the Lender of the rights provided for in this Pledge
Agreement or the remedies in respect of the Collateral pursuant to this
Pledge Agreement, except as may be required under federal or state
securities laws in connection with any sale of the
<PAGE> 33
Collateral;
(b) The Pledgor is the sole legal and beneficial owner of, and
has valid and transferrable title to, the Collateral, free and clear of
all Liens, other than the Lien in favor of the Lender created by this
Pledge Agreement;
(c) There are no outstanding options, warrants or other
agreements with respect to the Collateral;
(d) The Shares represent 100% of the issued and outstanding
capital stock of the Borrower;
(e) The Pledged Securities have been duly authorized and
validly issued, are fully paid and non- assessable, and, subject to
Section 17 hereof, are not subject to any charter, bylaw, statutory,
contractual or other restrictions governing their issuance, transfer,
ownership or control; and
(f) All actions (including, without limitation, delivery to the
Lender of all certificates representing the Pledged Securities together
with undated stock powers or other instruments of assignment duly
executed in blank, registration of the Lien created hereby on the
Collateral on the books and records of the issuer of any Pledged
Securities and, if required, the filing of UCC-1 financing statements in
all appropriate jurisdictions) required to create and perfect the Lien
of the Lender in the Collateral have been taken and the Lien on the
Collateral in favor of the Lender is superior in right to any rights or
claims of any other Person.
SECTION 7. Obligations of Pledgor. The Pledgor further
covenants to the Lender that:
(a) The Pledgor will not sell, transfer or convey any interest
in, or suffer or permit any Lien to exist on or with respect to, any of
the Collateral except the Lien created under this Pledge Agreement;
(b) The Pledgor will, at its own expense, at any time and from
time to time at the request of the Lender, do, make, procure, execute
and deliver all acts, things, writings, assurances and other documents
as may be reasonably requested by the Lender to further preserve,
establish, perfect or enforce the Lender's rights, interests and
remedies created by, provided in or emanating from this Pledge
Agreement;
(c) The Pledgor will defend the Lender's right, title and
interest in, to and under the Collateral against the claims and demands
of all Persons whomsoever (other than Persons claiming by or through the
Lender);
(d) The Pledgor hereby authorizes the Lender to file one or
more financing or continuation statements and amendments thereto
relating to all or any part of the Collateral without the Pledgor's
signature. A photocopy or other reproduction of this Pledge Agreement
shall be sufficient as a financing statement;
(e) The Pledgor will not permit the Borrower to issue any
additional securities or capital
<PAGE> 34
stock; and
(f) The Pledgor will cause the Borrower to execute and deliver
to the Lender on the date hereof a letter substantially in the form of
Exhibit A hereto.
SECTION 8. Rights of Pledgor. So long as no Event of
Default has occurred and is continuing, the Pledgor shall be entitled to vote
or consent with respect to the Collateral in any manner not inconsistent with
this Pledge Agreement, the Credit Agreement or any other Related Document.
Upon the occurrence and during the continuance of an Event of Default, the
Lender shall have the exclusive right to vote the Pledged Securities. The
Pledgor hereby grants to the Lender an irrevocable proxy to vote the
Collateral, which proxy shall be effective immediately upon the occurrence of
and during the continuance of an Event of Default, and upon the request of the
Lender, the Pledgor agrees to deliver to the Lender such further evidence of
such irrevocable proxy or such further irrevocable proxy to vote the Collateral
as the Lender may request.
SECTION 9. Rights of the Lender.
(a) If the Pledgor fails to perform any agreement contained
herein, the Lender may (but shall not be obligated or required to)
perform, or cause the performance, of such agreement.
(b) At any time upon and during the continuance of an Event of
Default, the Lender may (but shall not be obligated or required to):
(i) Subject to Section 17 hereof, cause the Collateral to
be transferred to its name or to the name of its nominee or
nominees and thereafter exercise as to such Collateral all of the
rights, powers and remedies of an owner;
(ii) Ask for, demand, collect, sue for, recover,
compromise, receive and give acquittances and receipts for monies
due or to become due under or in respect of any of the Collateral
and hold the same as part of the Collateral, or apply the same to
any of the Obligations in such manner as the Lender may direct in
its sole discretion;
(iii) Receive, endorse and collect any drafts or other
instruments, documents and chattel paper, in connection with
clause (ii) above (including, without limitation, all instruments
representing dividends, interest payments or other distributions
in respect of the Collateral or any part thereof and give full
discharge for the same);
(iv) Subject to Section 17 hereof, file any claims or
take any actions or institute any proceedings that the Lender may
deem necessary or desirable for the collection of any of the
Collateral or otherwise to enforce compliance with the rights of
the Lender with respect to any of the Collateral;
(v) Enter into any extension, subordination,
reorganization, deposit, merger, or consolidation agreement, or
any other agreement relating to or affecting the Collateral, and
in connection therewith deposit or surrender control of such
Collateral thereunder, and accept other property in exchange
therefor and hold and apply such property or money so received in
accordance with the provisions hereof; and
<PAGE> 35
(vi) Discharge any taxes levied on the Collateral or pay
for the maintenance and preservation of the Collateral; the
amount of such payments, plus any and all fees, costs and
expenses of the Lender (including reasonable attorneys' fees and
disbursements) actually in connection therewith, shall, at the
Lender's option, be reimbursed by the Pledgor on demand.
SECTION 10. Release of Collateral. In the event that the
entire outstanding principal sum of and accrued interest on the Loans is paid
in full and all other non-contingent Obligations are paid and performed in
full, the Lender shall deliver the Collateral to the Pledgor, thereby releasing
the security interest granted hereunder and this Pledge Agreement shall
terminate.
SECTION 11. Event of Default; Remedies. Upon and during the
continuance of an Event of Default:
(a) The Lender shall have all the rights and remedies of a
secured party under the Uniform Commercial Code as in effect in any
applicable jurisdiction. In addition, the Lender shall have the right,
without demand of performance or other demand, advertisement or notice
of any kind, except as specified below, to or upon the Pledgor or any
other Person (all and each of which demands, advertisements and/or
notices are hereby expressly waived), to proceed forthwith to collect,
receive, appropriate and realize upon the Collateral, or any part
thereof and to proceed forthwith to sell, assign, give an option or
options to purchase, contract to sell, or otherwise dispose of and
deliver the Collateral or any part thereof in one or more parcels at
public or private sale or sales at such prices and on such terms and
restrictions (including, without limitation, a requirement that any
purchaser of all or any part of the Collateral shall be required to
purchase any securities constituting the Collateral solely for
investment and without any intention to make a distribution thereof) as
the Lender may deem appropriate without any liability for any loss due
to decrease in the market value of the Collateral during the period
held. If any notification to the Pledgor of the intended disposition of
the Collateral is required by law, such notification shall be deemed
reasonable and properly given if hand delivered or made by telecopy at
least ten Business Days' prior to such disposition to the address of the
Pledgor indicated below.
(b) All of the Lender's rights and remedies under this Pledge
Agreement and under applicable law, including but not limited to the
foregoing, shall be cumulative and not exclusive and shall be
enforceable alternatively, successively or concurrently as the Lender
may deem expedient.
(c) Upon any sale or other disposition, the Lender shall have
the right to deliver, endorse, assign and transfer to the purchaser
thereof the Collateral so sold or disposed of. Each purchaser at any
such sale or other disposition, including the Lender, shall hold the
Collateral free from any claim or right of whatever kind, including any
equity or right of redemption. The Pledgor specifically waives all
rights of stay or appraisal which the Pledgor had or may have under any
rule of law or statute now existing or hereafter adopted.
(d) The Lender undertakes to use commercially reasonable
efforts to cause a sale of the Collateral; provided, that the Lender
shall not be obligated to make any sale or other disposition unless the
terms thereof shall be satisfactory to it. The Pledgor acknowledges and
agrees that the
<PAGE> 36
Lender shall have no liabilities for any delay experienced in its efforts
to effect such a sale or the ultimate terms of any such sale. The Lender
may, without notice or publication, adjourn any private or public
sale, and, upon ten Business Days' prior notice to the Pledgor, hold such
sale at any time or place to which the same may be so adjourned. In case
of any sale of all or any part of the Collateral, on credit or future
delivery, the Collateral so sold may be retained by the Lender until the
selling price is paid by the purchaser thereof, but the Lender shall
incur no liability in case of the failure of such purchaser to take up
and pay for the property so sold and, in case of any such failure, such
property may again be sold as herein provided.
SECTION 12. Disposition of Proceeds. The proceeds of any sale
or disposition of all or any part of the Collateral shall be applied (after
payment of any amounts payable to the Lender pursuant to Section 14 hereof) by
the Lender to the payment of the Obligations in such order as the Lender may
elect. Any surplus thereafter remaining shall be paid to the Pledgor, subject
to the rights of any holder of a Lien on the Collateral of which the Lender has
actual notice. If the proceeds from the sale of the Collateral are
insufficient to satisfy the Obligations, the Pledgor shall remain liable for
any deficiency.
SECTION 13. Termination. This Pledge Agreement shall: (a)
create a continuing security interest in the Collateral; (b) remain in full
force and effect for so long as any Obligations under any of the Related
Documents are outstanding; (c) be binding upon the Pledgor and its permitted
successors and assigns; and (d) inure to the benefit of the Lender and its
successors, transferees and assigns. Without limiting the foregoing, the Lender
may assign or otherwise transfer the Loan, or any portion thereof, held by it to
any other Person in accordance with the terms of the Credit Agreement, and such
other Person shall thereupon become vested with all the benefits in respect
thereof granted herein or otherwise. The Pledgor may not assign its rights or
obligations under this Pledge Agreement without the prior written consent of the
Lender.
SECTION 14. Expenses of the Lender. All expenses (including,
without limitation, reasonable attorneys' fees and disbursements) actually
incurred by the Lender in connection with the failure by the Pledgor to perform
or observe any provision of this Pledge Agreement, the exercise or enforcement
of any rights of the Lender under this Pledge Agreement and the custody or
preservation of any of the Collateral and any actual or attempted sale or
exchange of, or any enforcement, collection, compromise or settlement
respecting, the Collateral, or any other action taken by the Lender hereunder
whether directly or as attorney-in-fact pursuant to a power of attorney or
other authorization herein conferred, shall be deemed an Obligation secured by
the Collateral and the Lender may apply the Collateral to payment of or
reimbursement of itself for such liability.
SECTION 15. Lender's Duty. Except as otherwise expressly set
forth in Section 11(d) hereof, the Lender shall not be required to take any
action hereunder in respect of an Event of Default. The Lender shall not be
liable for any acts, omissions, errors of judgment or mistakes of fact or law
including, without limitation, acts, omissions, errors or mistakes with respect
to the Collateral, except for those arising out of or in connection with the
Lender's (i) gross negligence or willful misconduct, or (ii) failure to use
reasonable care with respect to the safe custody of any certificate or
instrument evidencing any part of the Collateral which is in the physical
possession of the Lender. The Lender shall be under no obligation to take any
steps necessary to preserve rights in the Collateral against any prior parties
but may do so at its option, and all expenses incurred in connection therewith
shall be for the account of the Pledgor, and shall be added to the Obligations
secured hereby.
<PAGE> 37
SECTION 16. General Provisions.
(a) No failure on the part of the Lender 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 by the
Lender of any right, power or remedy hereunder preclude any other or
future exercise thereof, or the exercise of any other right, power or
remedy. The representations, covenants and agreements of the Pledgor
herein contained shall survive the date hereof.
(b) This Pledge Agreement is a Related Document to which
reference is made in, and which is executed pursuant to, the Credit
Agreement and shall (unless otherwise expressly indicated herein) be
construed, administered and applied in accordance with the terms and
provisions thereof.
(c) No amendment or waiver of any provision of this Pledge
Agreement nor consent to any departure by the Pledgor herefrom nor
release of all or any part of the Collateral shall in any event be
effective unless the same shall be in writing, signed by the Lender.
Any such waiver or consent or release shall be effective only in the
specific instance and for the specific purpose for which it is given.
(d) Except as expressly otherwise provided herein, all notices,
requests and demands to or upon the respective parties hereto to be
effective shall be in writing (including by telecopy or telex), and
shall be delivered and deemed effective in the manner set forth in the
Credit Agreement, except that the address for all notices to Pledgor
shall be the address set forth below the signature of the Pledgor.
(e) THIS PLEDGE AGREEMENT SHALL BE GOVERNED BY, AND INTERPRETED
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
EACH OF THE LENDER AND THE PLEDGOR HEREBY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS PLEDGE AGREEMENT.
(f) The Pledgor hereby consents to the non-exclusive
jurisdiction of the Supreme Court of the State of New York for New York
County and the United States District Court for the Southern District of
New York with respect to any suit, claim, action or proceeding arising
out of or related to this Pledge Agreement or the transactions
contemplated hereby and hereby waives any objection which it may have
now or hereafter to the venue of any suit, claim, action or proceeding
arising out of or related to this Pledge Agreement or the transactions
contemplated hereby and brought in the courts specified above and also
hereby waives any claim that any such suit, claim, action or proceeding
has been brought in an inconvenient forum. The Pledgor agrees that
service of process or other legal summons for purposes of any action or
proceeding under this Pledge Agreement or the other Related Documents
may be served on Pledgor by mailing a copy thereof by registered mail,
or a form of mail substantially equivalent thereto, addressed to it at
its address set forth in or designated pursuant to Section 16(d), such
service to become effective 10 days after such mailing and agrees that
nothing herein shall affect the right to effect service of process in
any other manner permitted by law or shall limit the right to sue in any
other jurisdiction.
<PAGE> 38
(g) If any provision of this Pledge Agreement is determined by
a court of competent jurisdiction to be unenforceable, such provision
shall be automatically reformed and construed so as to be valid,
operative and enforceable to the maximum extent permitted by the law
while most nearly preserving its original intent. The invalidity of any
part of this Pledge Agreement shall not render invalid the remainder of
the Pledge Agreement.
(h) This Pledge Agreement may be executed in counterparts, each
of which when so executed and delivered shall be deemed an original, but
all such counterparts taken together shall constitute but one and the
same instrument.
(i) The section headings in this Pledge Agreement are for
convenience of reference only and shall not affect the interpretation
hereof.
SECTION 17. FCC Compliance.
(a) Notwithstanding anything to the contrary contained herein
or in any other agreement, instrument, or document executed in
connection herewith, no party hereto shall take any actions hereunder
that would constitute or result in a transfer or assignment of any
Station License (as defined in the HAT Exchange Agreement), permit or
authorization, or a change of control over such Station License, permit
or authorization requiring the prior approval of the FCC without first
obtaining such prior approval of the FCC. In addition, the parties
acknowledge that the voting rights of the Pledged Securities shall
remain with the Pledgor even upon the occurrence and during the
continuance of an Event of Default until the FCC shall have given its
prior consent to the exercise of stockholder rights by a purchaser at a
public or private sale of such Pledged Securities or the exercise of
such rights by the Lender or by a receiver, trustee, conservator or
other agent duly appointed pursuant to applicable law.
(b) If an Event of Default shall have occurred, Pledgor shall
take any action which the Lender may request in the exercise of its
rights and remedies under this Pledge Agreement in order to transfer or
assign the Collateral to the Lender or to such one or more third parties
as the Lender may designate, or to a combination of the foregoing. To
enforce the provisions of this Section 17, the Lender is empowered to
seek from the FCC and any other Governmental Authority, to the extent
required, consent to or approval of any involuntary transfer of control
of any entity whose Collateral is subject to this Pledge Agreement for
the purpose of seeking a bona fide purchaser to whom control ultimately
will be transferred. Pledgor agrees to cooperate with any such
purchaser and with the Lender in the preparation, execution and filing
of any forms and providing any information that may be necessary or
helpful in obtaining the FCC's consent to the assignment to such
purchase of the Collateral. Pledgor hereby agrees to consent to any
such voluntary or involuntary transfer after and during the continuation
of an Event of Default and, without limiting any rights of the Lender
under this Pledge Agreement, to authorize the Lender to nominate a
trustee or receiver to assume control of the Collateral, subject only to
required judicial, FCC or other consents required by Governmental
Authorities, in order to effectuate the transactions contemplated by
this Section 17. Such trustee or receiver shall have all the rights and
powers as provided to it by law or court order, or to the Lender under
this Pledge Agreement. Pledgor shall cooperate fully in obtaining the
consent of the FCC and the approval or consent of each other
Governmental Authority required to effectuate the foregoing.
<PAGE> 39
(c) In connection with this Section 17, the Lender shall be
entitled to rely in good faith upon an opinion of outside FCC counsel of
the Lender's choice with respect to any such assignment or transfer,
whether or not the advice rendered is ultimately determined to have been
accurate.
[signatures begin on next page]
<PAGE> 40
IN WITNESS WHEREOF, the parties hereto have caused this Pledge Agreement
to be executed by their respective officers thereunto duly authorized as of the
day and year first above written.
STC BROADCASTING OF VERMONT, INC.
By:_____________________________________
Name:
Title:
Address: c/o STC Broadcasting,Inc.
3839 Fourth Street North
Suite 420
St. Petersburg, Florida 33703
Attn: David Fitz
Tel.: (813) 821-7346
Fax: (813) 821-8092
with a copy to:
Hogan & Hartson LLP
555 Thirteenth Street, N.W.
Washington, D.C. 20004
Attn: William S. Reyner, Jr.
Tel.: (202) 637-6510
Fax: (202) 637-5910
Hicks, Muse, Tate & Furst Incorporated
200 Crescent Court
Suite 1600
Dallas, TX 75201
Attn: Lawrence D. Stuart, Jr.
Tel.: (214) 740-7365
Fax: (214) 740-7355
HEARST-ARGYLE STATIONS, INC.
By:_____________________________________
Name:
Title:
<PAGE> 41
The undersigned, as issuer of the Shares, hereby acknowledges the grant
of the security interest set forth herein and consents to the rights and
remedies of the Lender provided herein in respect of the Pledged Securities.
STC BROADCASTING OF VERMONT SUBSIDIARY,
INC.
By:_____________________________________
Name:
Title:
<PAGE> 42
EXHIBIT A TO PLEDGE AGREEMENT
STC BROADCASTING OF VERMONT SUBSIDIARY, INC.
____________, 1998
Hearst-Argyle Stations, Inc.
c/o Hearst-Argyle Television, Inc.
959 Eighth Avenue
New York, NY 10019
Gentlemen:
Reference is made to the Pledge Agreement dated as of the date
hereof (the "Pledge Agreement") between STC Broadcasting of Vermont, Inc., as
pledgor (the "Pledgor"), and you, as lender. Capitalized terms used but not
defined herein have the respective meanings provided in the Pledge Agreement.
In connection with the pledge of the Collateral to you by the
Pledgor, the undersigned, as issuer of the Pledged Securities, hereby agrees
with you as follows:
(i) To deliver directly to you at your address
set forth in the Pledge Agreement, any and all instruments and/or
share certificates evidencing any right, option or warrant, and all
new, additional or substituted securities issued to, or to be received
by, the Pledgor by virtue of its ownership of those Pledged Securities
issued by the undersigned or upon exercise by the Pledgor of any
option, warrant or right attached to such Pledged Securities;
(ii) Except for distributions permitted pursuant
to Section 7.6 of the Credit Agreement, to pay directly to you any and
all cash dividends which might be declared and payable (including any
unpaid dividend accrued prior to the date hereof) on any of such
Pledged Securities; and
(iii) At any time upon and during the continuance
of an Event of Default, upon your presentation of executed instruments
of transfer or assignment naming you or your nominee as transferee,
together with stock certificates representing the Pledged Securities
(issued by the undersigned) to be transferred, to register the
transfer of such Pledged Securities to you or your nominee, as
applicable, subject to the terms of Section 17 of the Pledge Agreement
and to any restrictions on transfers set forth in applicable federal
or state securities laws.
<PAGE> 43
In addition, the undersigned agrees that, if at any time you
shall determine to exercise your right to sell all or any of the Collateral,
the undersigned will, upon your request and at the undersigned's expense:
(a) provide you with such other information and
projections in respect of the undersigned as may be necessary or, in
your opinion, advisable to enable you to effect the sale of the
Collateral; and
(b) do or cause to be done all such other acts
and things consistent with the terms of the Pledge Agreement as may be
necessary to make such sale of the Collateral or any part thereof
valid and binding and in compliance with applicable law.
You are hereby authorized, in connection with any sale of the
Collateral, to deliver or otherwise disclose to any prospective purchaser of
the Collateral (i) any information provided to you pursuant to subsection (a)
above and (ii) any other information in your possession relating to the
undersigned or the Collateral.
Very truly yours,
STC BROADCASTING OF VERMONT SUBSIDIARY,
INC.
By: _______________________________
Name:
Title:
ACKNOWLEDGED, CONSENTED AND AGREED TO:
STC BROADCASTING OF VERMONT, INC.
By: _______________________________
Name:
Title:
<PAGE> 44
EXHIBIT C TO
CREDIT AGREEMENT
GUARANTY
GUARANTY (the "Guaranty") made as of ______________, 1998 by
STC BROADCASTING OF VERMONT, INC., a Delaware corporation (the "Guarantor"), in
favor of HEARST-ARGYLE STATIONS, INC. (the "Lender").
W I T N E S S E T H:
WHEREAS, STC BROADCASTING OF VERMONT SUBSIDIARY, INC., a
Delaware corporation (the "Borrower") has entered into a Credit Agreement dated
as of the date hereof (as amended, modified and supplemented from time to time,
the "Credit Agreement") with the Lender pursuant to which the Lender has agreed
to make Loans to the Borrower;
WHEREAS, the Guarantor is the sole shareholder of the
Borrower;
WHEREAS, the Lender has required the Guarantor to guarantee
the Obligations of the Borrower under the Credit Agreement;
WHEREAS, the Guarantor is willing to guarantee the Obligations
of the Borrower under the Credit Agreement and the Related Documents to which
the Borrower is a party on the terms set forth herein;
WHEREAS, the Guarantor acknowledges it is receiving direct
benefits from the consummation of the Credit Agreement; and
WHEREAS, to secure the payment and performance of the
Obligations of the Borrower under the Credit Agreement and the Note and its
obligations under this Guaranty and the Pledge Agreement, the Guarantor has
executed and delivered to the Lender a Pledge Agreement (as amended, modified
and supplemented from time to time, the "Pledge Agreement") dated as of the
date hereof pursuant to which the Guarantor has granted to the Lender a
security interest in and lien upon all of the issued and outstanding shares of
capital stock of the Borrower.
NOW, THEREFORE, in consideration of the premises, and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the Guarantor hereby agrees as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. Capitalized terms used but not
defined herein shall have the respective meanings provided to such terms in the
Credit Agreement.
<PAGE> 45
SECTION 2. GUARANTY
2.1 Guaranty of Obligations. The Guarantor hereby
unconditionally and irrevocably guarantees (as primary obligor and not merely
as surety) to the Lender the full payment and performance by the Borrower, when
due (whether at stated maturity, by acceleration or otherwise), of all the
Obligations. The Guarantor hereby agrees that it will forthwith pay and
perform the Obligations immediately upon demand by the Lender as such
Obligations become due (whether at stated maturity, by acceleration or
otherwise) in accordance with the terms of the Credit Agreement.
2.2 Guaranty Absolute. This Guaranty is an unconditional
and absolute guaranty of payment (and not merely of collection) and shall apply
to all of the Obligations without limitation as to either amount or period of
time. The Obligations shall be conclusively presumed to have been created in
reliance upon this Guaranty. This Guaranty shall be enforceable against the
Guarantor, its successors and assigns, without the necessity of making any
demand of the Borrower or taking any action or resorting to any suit or
proceeding against the Borrower or any other party or exhausting any other
security or collateral. The Guarantor guarantees that all the Obligations will
be paid strictly in accordance with the terms of the Credit Agreement and the
Related Documents to which the Borrower is a party, regardless of any law,
regulation or order now or hereafter in effect in any jurisdiction affecting
any of such terms or the rights of the Lender with respect thereto and
notwithstanding any claim, defense or right of set-off the Borrower, the
Guarantor or any other Person may have against the Lender.
2.3 Waivers. The Guarantor waives (i) the right to have
the Lender pursue any other remedy or enforce any other rights, (ii) the right
to receive notice of acceptance of this Guaranty or notice of the incurrence,
existence or non-payment of any of the Obligations and (iii) presentment,
demand, notice of dishonor, protest or any other notice or demand to which the
Guarantor might otherwise be entitled. The Guarantor shall not be exonerated
or discharged from liability hereunder by any time or grace period given to the
Borrower or by any other indulgence or concession granted to the Borrower,
including, without limitation, any such period, indulgence or concession
whatsoever affecting or preventing a recovery of the Obligations which, but for
this provision, might operate to exonerate or discharge the Guarantor from its
obligations hereunder.
2.4 Guaranty Not Affected by Changes. This Guaranty
shall be a continuing guaranty, and the obligations and liability of the
Guarantor hereunder shall in no way be affected, impaired, released, reduced or
discharged by reason of the occurrence of any of the following, all without
further notice to or consent of the Guarantor:
(a) the amendment, modification or supplement (whether
material or otherwise) of any of the Obligations, the Credit Agreement
or any of the Related Documents;
(b) the assertion of any of the rights or remedies of the
Lender under the Credit Agreement or any of the Related Documents;
(c) the failure, omission or delay on the part of the
Lender to enforce, assert or exercise any right, power or remedy
conferred on or available to the Lender under the Credit Agreement or
any of the Related Documents;
<PAGE> 46
(d) any bankruptcy, insolvency, reorganization,
arrangement, assignment for the benefit of creditors, receivership or
trusteeship affecting the Borrower;
(e) any lack of validity or enforceability of any of the
Obligations, the Credit Agreement, any of the Related Documents or any
other agreement or instrument relating thereto;
(f) any release or amendment or waiver of or consent to
or departure from any other guaranty or security for all or any of the
Obligations; or
(g) any other circumstances which might otherwise
constitute a defense available to, or a discharge of, the Borrower or
the Guarantor (other than a defense of payment or performance).
This Guaranty shall continue to be effective or be reinstated,
as the case may be, if at any time, any payment of any amounts payable by the
Borrower is rescinded or must otherwise be returned by the Lender upon the
insolvency, bankruptcy or reorganization of the Borrower or otherwise, all as
though such payment had not been made. If an event permitting the acceleration
of any of the Obligations of the Borrower shall at any time have occurred and
be continuing and such acceleration shall at such time be prevented by reason
of the pendency against the Borrower of a case or proceeding under any
bankruptcy or insolvency law, the Guarantor agrees that, for purposes of this
Guaranty and its obligations hereunder, the Obligations of the Borrower shall
be deemed to have been accelerated and the Guarantor shall forthwith pay such
Obligations, and the other obligations hereunder, without any further notice or
demand (including interest which, but for the filing of a petition in
bankruptcy with respect to the Borrower, would accrue on the Obligations).
2.5 Payments. Each payment to be made by the Guarantor
under this Guaranty or in connection herewith to any Person shall be made
without set-off or deduction of any kind whatsoever and also shall be made free
and clear of, and without deduction or withholding for or on account of, any
tax, reserve, levy or duty of, or imposed by, any governmental or taxing
authority in any jurisdiction unless the Guarantor is required to make such a
payment subject to the deduction or withholding of such tax, in which case the
amount payable by the Guarantor in respect of which such deduction or
withholding is required to be made shall be increased to the extent necessary to
ensure that, after the making of such deduction or withholding, such other
Person receives and retains (free from any liability in respect of any such
deduction or withholding) a net amount equal to the amount which it would have
received and so retained had no such deduction or withholding been made or
required to be made. The provisions of this subsection 2.5 shall survive the
payment in full of the Obligations.
2.6 Subrogation. Notwithstanding any payment or payments
made by the Guarantor hereunder, until the Obligations are paid and performed
in full, the Guarantor expressly waives any and all rights of subrogation,
reimbursement, contribution, exoneration and indemnity (contractual, statutory
or otherwise) arising from the existence or performance of this Guaranty and
the Guarantor irrevocably waives any right to enforce any remedy which the
Lender now has or may hereafter have against the Borrower, and waives any
benefit of, and any right to participate in, any security now or hereafter held
by the Lender.
<PAGE> 47
SECTION 3. REPRESENTATIONS AND WARRANTIES
The Guarantor represents and warrants to the Lender that:
3.1 Status. The Guarantor (i) is duly organized, validly
existing and in good standing under the laws of the State of Delaware, (ii) has
the corporate power, authority and legal right to own or operate its properties
or to lease the properties it operates, to conduct the business in which it is
currently engaged and to execute, deliver and perform its obligations under the
Related Documents to which it is a party, (iii) is duly qualified as a foreign
corporation and in good standing under the laws of each jurisdiction where its
ownership, lease or operation of properties or the conduct of its business
requires such qualification, (iv) directly owns all of the issued and
outstanding capital stock of the Borrower and (v) does not have any
Subsidiaries other than the Borrower.
3.2 Corporate Power; Authorization; Consent. The
Guarantor has the corporate power, authority and legal right to make, deliver
and perform this Guaranty and has taken all necessary corporate action to
authorize the execution, delivery and performance of this Guaranty and the
other Related Documents to which it is a party. No consent of any other Person
(including, without limitation, stockholders and creditors of the Guarantor),
and no authorization of, notice to, or other act by or in respect of the
Guarantor by or with any Governmental Authority, foreign or domestic, is
required in connection with the execution, delivery, performance, validity or
enforceability of this Guaranty or any other Related Documents to which it is a
party.
3.3 Binding Effect. This Guaranty and each of the other
Related Documents to which the Guarantor is a party has been duly executed and
delivered by the Guarantor and constitute its legal, valid, and binding
obligation enforceable against it in accordance with its terms except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, or other similar laws affecting creditors, rights generally and
general principles of equity.
3.4 Non-contravention. The execution, delivery and
performance of this Guaranty and each of the other Related Documents to which
it is a party will not violate or contravene any provision of the Guarantor's
organizational documents or by-laws, any mortgage, indenture, lease, contract
or other agreement, instrument or undertaking to which Guarantor is a party or
which is binding upon it or upon any of its assets, and will not result in the
creation or imposition of any Lien on any of its assets. The execution,
delivery or performance of this Guaranty and the other Related Documents to
which it is a party will not violate or contravene any provision of any
applicable law or regulation, or of any order, judgment, writ, award or decree
of any court, arbitrator or Governmental Authority, domestic or foreign.
3.5 Litigation. No litigation, investigation or
proceeding of or before any arbitrator or Governmental Authority is pending, or
to the best of Guarantor's knowledge, threatened by or against it or any of its
properties or revenues or which questions the validity or enforceability of
this Guaranty or any of the other Related Documents to which it is a party.
3.6 Financial Condition. Except in connection with the
organization and incorporation of the Guarantor and the transactions
contemplated by the Purchase Agreements, the Guarantor has not incurred,
created or assumed, directly or indirectly, any Indebtedness or engaged in any
business
<PAGE> 48
activities of any type whatsoever or entered into any agreements or arrangements
with any Person.
3.7 Taxes. All tax returns required to be filed by the
Guarantor in any jurisdiction have been filed or extensions obtained and all
taxes, as reflected in such returns, assessments, fees and other governmental
charges upon the Guarantor or upon any of their respective properties, income
or franchises have been paid prior to the time that such taxes would give rise
to a Lien thereon, other than a Permitted Lien under subsection 4.1 hereof.
There is no proposed special tax assessment against the Guarantor and, to the
knowledge of the Borrower, there is no basis for any such assessment.
3.8 ERISA. The Guarantor has not established and does
not maintain or contribute to any Plan that is covered by Title IV of the
Employee Retirement Income Security Act of 1974, as amended.
SECTION 4. COVENANTS
For so long as this Guaranty shall remain in effect or the
Guarantor shall have any obligation hereunder or under any other Related
Documents to which it is a party:
4.1 Payment of Taxes and Other Indebtedness. The
Guarantor shall pay and discharge: (i) all taxes, assessments and governmental
charges or levies imposed upon it or upon its income or profits, or upon any
property belonging to it, before delinquent, (ii) all lawful claims (including
claims for labor, materials and supplies), which, if unpaid, might give rise to
a Lien upon any of its properties, and (iii) all of its other Indebtedness;
provided, however, that the Guarantor shall not be required to pay any such
tax, assessment, charge, claim or levy, if and so long as the amount,
applicability or validity thereof is at the time being contested in good faith
by appropriate proceedings.
4.2 Preservation of Existence. The Guarantor shall
preserve and maintain its existence, rights, franchises and privileges, except
where the failure to do so could not reasonably be expected to have a material
adverse effect on its business, operations, prospects, properties or condition
(financial or otherwise) or on its ability to perform its obligations under
Related Documents to which it is a party.
4.3 Compliance with Material Agreements. The Guarantor
shall comply in all material respects with all material agreements, indentures,
mortgages or documents binding on it or affecting its properties or business.
4.4 Access; Books and Records; Information. The
Guarantor shall give any representative of the Lender access during all
business hours and upon reasonable prior notice to, and permit such
representative to examine, copy or make excerpts from, any and all books,
records and documents in the possession of the Guarantor relating to the
Guarantor's affairs, as the case may be, and to inspect any of the properties
of the Guarantor. The Guarantor shall maintain complete and accurate books and
records of its transactions in accordance with good accounting practices. The
Guarantor shall provide to Lender such information concerning the business,
properties or financial condition of the Guarantor as the Lender shall
reasonably request, provided that Guarantor shall not be required to provided
audited financial statements if at the time of any such request therefor, it
does not otherwise have its financial statements audited.
<PAGE> 49
4.5 Compliance with Law. The Guarantor shall comply with
all applicable constitutions, laws, rules, regulations, judgments, orders,
decisions, rulings and decrees of any Governmental Authority applicable to it
or to any of its respective properties, business operations or transactions.
4.6 Authorizations and Approvals. The Guarantor shall
promptly obtain, from time to time at its own expense, all such governmental
licenses, authorizations, consents, permits and approvals as may be required by
applicable law.
4.7 Notice of Adverse Change. The Guarantor shall
promptly, and in any event within three (3) Business Days after obtaining
knowledge thereof, notify the Lender, at the address set forth in the Credit
Agreement, of any event which could reasonably be expected to have a material
adverse effect on the business, operations, prospects, properties or condition
(financial or otherwise) of the Guarantor or on its ability to perform its
obligations hereunder or under any of the other Related Documents to which it
is a party.
4.8 Negative Pledge. The Guarantor shall not create,
incur, or permit or suffer to exist any Lien upon any of its properties or
assets, now owned or hereafter acquired except for the Lien created pursuant to
the Pledge Agreement.
4.9 Nature of Business. The Guarantor shall not (a)
engage in any business other than the business of owning the Borrower, (b)
enter into any material agreement except for the STC Purchase Agreement, this
Guaranty and the Pledge Agreement, (c) establish or acquire any Subsidiary
other than the Borrower, (d) create, incur, assume, have outstanding or
otherwise be or become, directly or indirectly liable in respect of any
Indebtedness, except with respect to this Guaranty or (e) amend or modify its
organizational documents or by-laws.
SECTION 5. MISCELLANEOUS
5.1 Parties. This Guaranty shall be binding upon the
Guarantor and its successors and assigns and inure to the benefit of the Lender
and its successors and assigns. The Guarantor may not assign any of its rights
or obligations hereunder without the written consent of the Lender.
5.2 Remedies Cumulative. All of the rights and remedies
of the Lender under this Guaranty, the Credit Agreement and the other Related
Documents are intended to be distinct, separate and cumulative and no such
right or remedy is intended to be an exclusion of or a waiver of any of the
others. All rights and remedies may be enforced concurrently, separately, in
any order and in any combination. This Guaranty is a Related Document to which
reference is made in, and which is executed pursuant to, the Credit Agreement
and shall (unless otherwise expressly indicated herein) be construed,
administered and interpreted in accordance with the terms and provisions
thereof.
5.3 Survival. All representations, warranties and
agreements made herein and in statements or certificates delivered pursuant
hereto shall continue in full force and effect until all of the obligations of
the Guarantor under this Guaranty shall be fully performed in accordance with
the terms hereof, and until the payment in full of all of the Obligations of
the Borrower under the Credit Agreement and the Related Documents to which it
is a party in accordance with the terms and provisions of such
<PAGE> 50
agreements.
5.4 Severability; Amendments, Headings. If any term of
this Guaranty or any application thereof shall be invalid or unenforceable, the
remainder of this Guaranty and any other application of such term shall not be
affected thereby. Any term of this Guaranty may be amended, waived, discharged
or terminated only by an instrument in writing signed by the Lender. The
headings in this Guaranty are for purposes of reference only and shall not
limit or define the meaning hereof.
5.5 Governing Law; Waiver of Jury Trial; Submission to
Jurisdiction.
(a) THIS GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK. EACH OF THE GUARANTOR AND
THE LENDER HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES THE RIGHT TO TRIAL BY
JURY IN ANY LITIGATION IN CONNECTION WITH THIS GUARANTY.
(b) The Guarantor hereby consents to the non-exclusive
jurisdiction of the Supreme Court of the State of New York for New York County
and the United States District Court for the Southern District of New York with
respect to any suit, claim, action or proceeding arising out of or related to
this Guaranty or the transactions contemplated hereby and hereby waives any
objection which it may have now or hereafter to the venue of any suit, claim,
action or proceeding arising out of or related to this Guaranty or the
transactions contemplated hereby and brought in the courts specified above and
also hereby waives any claim that any such suit, claim, action or proceeding
has been brought in an inconvenient forum. The Guarantor agrees that service
of process or other legal summons for purposes of any action or proceeding
under this Guaranty or the other Related Documents may be served on Guarantor
by mailing a copy thereof by registered mail, or a form of mail substantially
equivalent thereto, addressed to it at its address set forth below its
signature hereto, such service to become effective 10 days after such mailing
and agrees that nothing herein shall affect the right to effect service of
process in any other manner permitted by law or shall limit the right to sue in
any other jurisdiction.
<PAGE> 51
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to
be duly executed and delivered as of the date first above written.
STC BROADCASTING OF VERMONT, INC.
By:_____________________________________
Name:
Title:
ADDRESS:
STC Broadcasting, Inc.
3839 Fourth Street North
Suite 420
St. Petersburg, Florida 33703
Attn: David Fitz
Tel.: (813) 821-7346
Fax: (813) 821-8092
with a copy to:
Hogan & Hartson LLP
555 Thirteenth Street, N.W.
Washington, D.C. 20004
Attn: William S. Reyner, Jr.
Tel.: (202) 637-6510
Fax: (202) 637-5910
Hicks, Muse, Tate & Furst Incorporated
200 Crescent Court
Suite 1600
Dallas, TX 75201
Attn: Lawrence D. Stuart, Jr.
Tel.: (214) 740-7365
Fax: (214) 740-7355
<PAGE> 52
<PAGE> 1
EXHIBIT 21.1
SUBSIDIARIES OF STC BROADCASTING, INC.
<TABLE>
<CAPTION>
State of
Name Incorporation Doing Business As:
- ------------------------------------- ------------- ------------------
<S> <C> <C>
Smith Acquisition Company Delaware WTOV-TV
Smith Acquisition License Company Delaware WTOV-TV
WJAC, Incorporated Delaware WJAC-TV
Web Works, Inc. Pennsylvania Inactive
STC Broadcasting of Abilene, Inc. Texas KRBC-TV/KACB-TV
STC Broadcasting of Vermont, Inc. Delaware WPTZ-TV/WNNE-TV
STC Broadcasting of Vermont Subsidiary, Inc. Delaware WPTZ-TV/WNNE-TV
STC License Company Delaware Same as STC Broadcasting, Inc.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 11,088,000
<SECURITIES> 0
<RECEIVABLES> 9,005,000
<ALLOWANCES> 292,000
<INVENTORY> 0
<CURRENT-ASSETS> 25,402,000
<PP&E> 39,733,000
<DEPRECIATION> 4,803,000
<TOTAL-ASSETS> 245,620,000
<CURRENT-LIABILITIES> 8,220,000
<BONDS> 125,500,000
33,475,000
0
<COMMON> 10
<OTHER-SE> 64,012,000
<TOTAL-LIABILITY-AND-EQUITY> 245,620,000
<SALES> 11,335,000
<TOTAL-REVENUES> 11,335,000
<CGS> 7,466,000
<TOTAL-COSTS> 12,678,000
<OTHER-EXPENSES> (37,000)
<LOSS-PROVISION> 26,000
<INTEREST-EXPENSE> 3,052,000
<INCOME-PRETAX> (5,570,000)
<INCOME-TAX> (264,000)
<INCOME-CONTINUING> (5,306,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,306,000)
<EPS-PRIMARY> (5,306)
<EPS-DILUTED> (5,306)
</TABLE>
