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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form 10-K
(Mark One)
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997
or
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from_________to__________
Commission file number 0-2700
HEARST-ARGYLE TELEVISION, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 74-2717523
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
888 Seventh Avenue 10106
New York, NY (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (212) 649-2300
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Series A Common Stock, par value $.01 per share
(Title of Class)
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 |_|
The aggregate market value of the Registrant's voting stock held by
nonaffiliates on March 6, 1998, based on the closing price for the Registrant's
Series A Common Stock on such date as reported on the Nasdaq National Market,
was approximately $405,000,000.
Shares of Common Stock outstanding at March 6, 1998: 53,839,252 shares,
(consisting of 12,540,604 shares of Series A Common Stock and 41,298,648 shares
of Series B Common Stock).
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. |X|
DOCUMENTS INCORPORATED BY REFERENCE: Portions of the Company's Proxy Statement
relating to the 1998 Annual Meeting of Stockholders are incorporated by
reference into Part III (Items 10, 11, 12 and 13), and Item 4 of the Company's
Current Reports on Form 8-K filed with the Commission on October 17, 1997 and
October 20, 1997, is incorporated into Part II (Item 9).
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FORWARD-LOOKING STATEMENTS
THE FORWARD LOOKING STATEMENTS CONTAINED IN THIS REPORT, CONCERNING, AMONG
OTHER THINGS, INCREASES IN NET REVENUES AND BROADCAST CASH FLOW (AS DEFINED
HEREIN) AND REDUCTIONS IN OPERATING EXPENSES, INVOLVE RISKS AND UNCERTAINTIES,
AND ARE SUBJECT TO CHANGE BASED ON VARIOUS IMPORTANT FACTORS, INCLUDING THE
IMPACT OF CHANGES IN NATIONAL AND REGIONAL ECONOMIES, SUCCESSFUL INTEGRATION OF
ACQUIRED TELEVISION STATIONS (INCLUDING ACHIEVEMENT OF SYNERGIES AND COST
REDUCTIONS), PRICING FLUCTUATIONS IN LOCAL AND NATIONAL ADVERTISING AND
VOLATILITY IN PROGRAMMING COSTS.
PART I
ITEM 1. BUSINESS
The Company owns or manages 15 network-affiliated television stations
reaching approximately 11.5% of U.S. television households. The Company is the
largest, "pure-play" publicly owned television broadcast group in the U.S.
The Company was formed in 1994 as a Delaware corporation under the name
Argyle Television, Inc. ("Argyle"), and its business operations began in January
1995 with the consummation of its acquisition of three television stations. The
Company is the successor to the combined operations of Argyle and the television
broadcast group of The Hearst Corporation ("Hearst") pursuant to a merger
transaction that was consummated on August 29, 1997 (the "Hearst Transaction").
Hearst, one of the nation's largest privately-held companies, is a diversified
communications company engaged in a broad range of publishing, broadcasting,
cable television networks and other communications activities. In the Hearst
Transaction, Hearst contributed its television broadcast group and related
broadcast operations (the "Hearst Broadcast Group") to Argyle and merged a
wholly-owned subsidiary of Hearst with and into Argyle, with Argyle as the
surviving corporation (renamed "Hearst-Argyle Television, Inc."). As a result of
the Hearst Transaction and related transactions, Hearst currently owns through a
subsidiary approximately 41.3 million shares of the Company's Series B Common
Stock, comprising approximately 77% of the total outstanding common stock of the
Company. Through its ownership of the Company's Series B Common Stock, Hearst
has the right to elect nine of the 11 members of the Company's Board of
Directors.
The Stations
The Company owns 12 television stations (the "Stations"), eight of which
are in the top 50 of the 211 generally recognized geographic designated market
areas ("DMAs") according to A.C. Nielsen Co. ("Nielsen") estimates for the
1997-1998 broadcasting season. In addition, the Company manages two television
stations and two radio stations that are owned by Hearst: WWWB-TV in Tampa,
Florida, WPBF-TV in West Palm Beach, Florida and WBAL(AM) and WIYY(FM) in
Baltimore, Maryland. The Company also provides management services to Hearst in
order to allow Hearst to fulfill its obligations under a program service and
time brokerage agreement between Hearst and the permittee of KCWB-TV in Kansas
City, Missouri (the "Missouri LMA"). For the year ended December 31, 1997, on a
pro forma basis after giving effect to the consummation of the Hearst
Transaction, the Company's total revenues and broadcast cash flow were $387.8
million and $175.8 million, respectively.
Under the order of the Federal Communications Commission (the "FCC")
approving the Hearst Transaction, because of signal overlaps the Company must
divest two of its television stations (WNAC-TV in Providence, Rhode Island, and
WDTN-TV in Dayton, Ohio) and has filed applications with the FCC for the
transfer of ownership of such stations. The Company has entered into an
agreement with STC Broadcasting, Inc. and related entities (collectively, "STC")
to accomplish a tax-deferred exchange of such stations for three stations
currently owned or to be acquired by STC. See "Recent Developments--Station
Swaps."
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The following table sets forth certain information for each of the
Company's owned and managed television stations:
<TABLE>
<CAPTION>
Percentage
of U.S.
Market Network Television
Market Rank(1) Station Affiliation Channel Households(2)
--------------------- ------------- ------- ----------- ------- -------------
<S> <C> <C> <C> <C> <C>
*Boston, MA 6 WCVB ABC 5 2.22%
*Tampa, FL(3) 15 WWWB WB 32 1.47%
*Pittsburgh, PA 19 WTAE ABC 4 1.16%
*Baltimore, MD 23 WBAL NBC 11 1.01%
Cincinnati, OH 30 WLWT NBC 5 0.81%
*Kansas City, MO 31 KMBC ABC 9 0.81%
*Kansas City, MO(3) 31 KCWB UPN 29 ***
*Milwaukee, WI 32 WISN ABC 12 0.81%
*West Palm Beach, FL(3) 43 WPBF ABC 12 0.61%
Oklahoma City, OK 44 KOCO ABC 5 0.61%
Providence, RI(4)(5) 49 WNAC FOX 64 0.57%
*Dayton, OH(4) 53 WDTN ABC 4 0.52%
Honolulu, HI 71 KITV ABC 4 0.39%
Jackson, MS 90 WAPT ABC 16 0.30%
Fort Smith/ 116 KHBS/ ABC/ 40/ 0.22%
Fayetteville, AR KHOG ABC 29 ------
Total 11.51%
=====
</TABLE>
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* Denotes a station owned or operated by the Company as a consequence of the
Hearst Transaction.
(1) Market rank is based on the relative size of the DMA among the 211
generally recognized DMAs in the U.S., based on Nielsen estimates for the
1997-98 season.
(2) Based on Nielsen estimates for the 1997-98 season.
(3) WWWB-TV and WPBF-TV are managed by the Company under a management
agreement with Hearst. In addition, the Company provides certain
management services to Hearst in order to allow Hearst to fulfill its
obligations under the Missouri LMA with KCWB.
(4) WNAC-TV's (Providence, RI) broadcast signal overlaps with WCVB-TV's
(Boston, MA) broadcast signal, and WDTN-TV's (Dayton, OH) broadcast signal
overlaps with WLWT-TV's (Cincinnati, OH) broadcast signal, Under FCC
rules, a single entity cannot own stations with overlapping signals. The
Company has entered into an agreement pursuant to which it will divest
WNAC and WDTN. See "Recent Developments--Station Swaps."
(5) Subject to a Joint Marketing and Programming Agreement with Clear Channel
Communications, Inc.
The Company has an option to acquire WWWB-TV and Hearst's interests and option
with respect to KCWB-TV (together with WWWB-TV, the "Option Properties"), as
well as a right of first refusal until approximately August 2000 with respect to
WPBF-TV (if such station is proposed by Hearst to be sold to a third party). The
option period for each Option Property commences in February 1999 and terminates
in August 2000 and the purchase price is the fair market value of the station as
determined by the parties, or an independent third-party appraisal, subject to
certain specified parameters. If Hearst elects to sell an Option Property prior
to the commencement of, or during, the option period, the Company will have a
right of first refusal to acquire such Option Property. The exercise of the
option and the right of first refusal will be by action of the independent
directors of the Company, and any option exercise may be withdrawn by the
Company after receipt of the third-party appraisal.
Network Affiliation Agreements and Relationships
Each of the Stations is affiliated with a major network pursuant to a
network affiliation agreement. Each affiliation agreement provides the
affiliated Station with the right to broadcast all programs transmitted by the
network with which the Station is affiliated. In return, the network has the
right to sell a substantial majority of the advertising time during such
broadcasts. In exchange for every hour that a Station broadcasts network
programming, the network pays the Station a specified network compensation
payment, which varies with the time of day. Typically, prime-time programming
generates the highest hourly network compensation payments. Ten of the Stations
have network affiliation agreements with ABC, two of the Stations have
agreements with NBC, one of the Stations has an agreement with Fox, one of the
Stations has an agreement with WB and one of the Stations has an agreement with
UPN. Generally, the term of each affiliation agreement with ABC is two years,
renewable for successive two-year periods, and each affiliation agreement is
subject to cancellation by either party
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upon six months notice to the other party. In the case of WTAE, the affiliation
agreement is not subject to cancellation on six months notice, and the term of
the affiliation agreement will be successively renewed unless either party gives
the other notice of non-renewal six months prior to the end of the then current
term. In the case of KITV, the affiliation agreement is not expressly renewable
but is effective through January 2005. In the case of WAPT, the affiliation
agreement is for a term of 10 years (through March 5, 2005). In the case of
WPBF, the affiliation agreement is not subject to successive renewal periods. In
1994 negotiations commenced to renew the ABC affiliation agreements relating to
the ABC affiliates acquired in the Hearst Transaction to provide for, among
other things, 10-year terms and increased compensation. Such agreements are
still in the process of negotiation and documentation has not yet been
finalized, although the Company is receiving its increased compensation. The
term of the NBC affiliation agreement with WBAL is a period of seven years and
is subject to successive three-year renewals unless either party gives the other
notice of non-renewal 12 months prior to the end of the then current term. The
NBC affiliation agreement for WLWT is for an initial term of six years (through
August 28, 2000) and is renewable for successive four-year terms unless either
party gives notice of intent not to renew at least six months prior to the end
of the initial or any successive term. The UPN affiliation with KCWB is for a
term through August 31, 2008. The WB network affiliation agreement is subject to
successive two-year renewal periods based upon a renewal notice issued by WB,
and is not subject to early cancellation unless the network ceases operations or
is substantially restructured. Unlike affiliates of ABC or NBC, WB affiliates
may be required to pay the network compensation based upon ratings generated by
the station in return for the broadcast rights to the network's programming. The
Fox affiliation agreement for WNAC may be terminated by Fox upon 90 days advance
notice and provides that the network may terminate the agreement for WNAC upon
60 days notice if the network or an entity related to the network acquires a
television broadcast station licensed within the Station's market. Each network
has the right to terminate its affiliation agreement in the event of a material
breach of such agreement by a station and in certain other circumstances.
Although the Company does not expect that its network affiliation agreements
will be terminated and expects to continue to be able to renew its network
affiliation agreements, no assurance can be given that such agreements will not
be terminated or that renewals will be obtained on as favorable terms or at all.
Recent Developments
In addition to the Hearst Transaction, the Company recently consummated or
commenced the following transactions:
Common Stock Offering and Debt Offerings. On November 12, 1997, the
Company completed an underwritten public offering of 4,232,000 shares (giving
effect to the exercise of the Underwriter's over-allotment option) of Series A
Common Stock, par value $.01 per share, at $27.00 per share (the "Common Stock
Offering"). The Series A Common Stock is traded on the Nasdaq National Market
under the symbol "HATV." On November 13, 1997, the Company completed an
underwritten public offering of $300 million aggregate principal amount of 7%
Senior Notes due 2007 and 7 1/2% Debentures due 2027 (the "1997 Debt Offering").
On January 13, 1998, the Company completed an underwritten public offering of
the $200 million aggregate principal amount of 7% Senior Notes due 2018 (the
"1998 Debt Offering," and together with the 1997 Debt Offering, the "Debt
Offerings"). The aggregate net proceeds of approximately $593.0 million from the
Common Stock Offering and the Debt Offerings were used to repay outstanding
indebtedness.
Subordinated Notes. On December 29, 1997, the Company completed the
redemption of $45 million principal amount of the then outstanding $150 million
principal amount of 9 3/4% Senior Subordinated Notes due 2005, which the Company
issued in October 1995 (the "Subordinated Notes"). On March 13, 1998, the
Company completed a tender offer and capital solicitation and repurchased
approximately $102 million of the remaining $105 million principal amount of
Subordinated Notes.
Station Swaps. On February 18, 1998 the Company, through a wholly-owned
subsidiary, entered into an Asset Exchange Agreement with STC, pursuant to which
the Company agreed to exchange its television stations WDTN-TV in Dayton, Ohio,
and WNAC-TV in Providence, Rhode Island, in addition to the Company's interest
in certain contracts with television station WPRI-TV in Providence, Rhode Island
for STC's television stations KSBW-TV, serving the Salinas-Monterey, California
television market, and WPTZ-TV and WNNE-TV, serving the Burlington,
Vermont-Plattsburgh, New York television market. The Company also agreed to pay
STC up to
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approximately $21.4 million in cash, an amount based on the difference between
the 1997 broadcast cash flows of the stations the Company acquired and those of
the stations the Company sold. In completing the transaction, the Company is
complying with an FCC order requiring that it divest WDTN-TV and WNAC-TV due to
a signal overlap with its stations in Cincinnati and Boston, respectively. The
transaction was structured as a tax-deferred exchange of assets pursuant to
Section 1031 of the Internal Revenue Code. Closing of the transaction is subject
to consummation of STC's acquisition of WPTZ-TV and WNNE-TV from Sinclair
Broadcast Group, Inc., review by the Department of Justice and the Federal
Communications Commission, receipt of certain other consents and satisfaction of
customary closing conditions.
The Commercial Television Broadcasting Industry
General. Commercial television broadcasting began in the United States on
a regular basis in the 1940s. Currently, a limited number of channels are
available for broadcasting in any one geographic area, and a license to operate
a television station must be granted by the FCC. Television stations that
broadcast over the VHF band (channels 2-13) of the spectrum generally have some
competitive advantage over television stations that broadcast over the UHF band
(channels above 13) of the spectrum because the former usually have better
signal coverage and operate at a lower transmission cost. The improvement of UHF
transmitters and receivers, the complete elimination from the marketplace of
VHF-only receivers and the expansion of cable television systems, however, have
reduced to some extent the VHF signal advantage.
All television stations in the country are grouped by Nielsen, a national
audience measuring service, into 211 generally recognized television markets
that are ranked in size according to various formulae based upon actual or
potential audience. Each market is designated as an exclusive geographic area
consisting of all counties in which the home-market commercial stations receive
the greatest percentage of total viewing hours. These specific geographic
markets are referred to by Nielsen as "designated market areas" ("DMAs").
Nielsen periodically publishes data on estimated audiences for the television
stations in the various markets throughout the country. The estimates are
expressed in terms of the percentage of the total potential audience in the
market viewing a station (the station's "rating") and of the percentage of
households using television actually viewing the stations (the station's
"share"). Nielsen provides such data on the basis of total television households
and selected demographic grouping in the market. Nielsen uses two methods of
determining a station's ability to attract viewers. In larger geographic
markets, ratings are determined by a combination of meters connected directly to
selected television sets and weekly diaries of television viewing, while in
smaller markets only weekly diaries are utilized.
Historically, three major broadcast networks--ABC, NBC and CBS--dominated
broadcast television. In recent years, however, Fox effectively has evolved into
the fourth major network, even though it produces seven hours less of prime time
programming than the other major networks. In addition, UPN and WB Network have
been launched as television networks. Stations that operate without network
affiliations are referred to as "independent" stations. All of the Stations are
affiliated with networks.
The affiliation by a station with one of the four major networks has a
significant impact on the composition of the station's programming, revenues,
expenses and operations. A typical affiliate of a major network receives the
majority of each day's programming from the network. This programming, along
with cash payments ("Network Compensation"), is provided to the affiliate by the
network in exchange for a substantial majority of the advertising time sold
during the airing of network programs. The network then sells this advertising
time for its own account. The affiliate retains the revenues from time sold
during breaks in and between network programs and during programs produced by
the affiliate or purchased from non-network sources. In acquiring programming to
supplement programming supplied by the affiliated network, network affiliates
compete primarily with other affiliates and independent stations in their
markets. Cable systems generally do not compete with local stations for
programming, although various national cable networks from time to time have
acquired programs that otherwise would have been offered to local television
stations. In addition, a television station may acquire programming though
barter arrangements. Under barter arrangements, a national program distributor
may receive advertising time in exchange for the programming it supplies, with
the station paying either a reduced fee or no fee for such programming.
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A fully independent station, unlike a network-affiliated station,
purchases or produces all of the programming that it broadcasts, resulting in
generally higher programming costs. The independent station, however, may retain
its entire inventory of advertising time and all of the revenues obtained
therefrom.
Television station revenues are derived primarily from local, regional and
national advertising and, to a much lesser extent, from network compensation and
revenues from studio or tower rental and commercial production activities.
Advertising rates are set based upon a variety of factors, including a program's
popularity among the viewers an advertiser wishes to attract, the number of
advertisers competing for the available time, the size and demographic makeup of
the market served by the station and the availability of alternative advertising
media in the market area. Rates also are determined by a station's overall
ratings and share in its market, as well as the station's ratings and share
among particular demographic groups that an advertiser may be targeting. Because
broadcast television stations rely on advertising revenues, they are sensitive
to cyclical changes in the economy. The size of advertisers' budgets, which are
affected by broad economic trends, affect the broadcast industry in general and
the revenues of individual broadcast television stations. The advertising
revenues of the stations are generally highest in the second and fourth quarters
of each year, due in part to increases in consumer advertising in the spring and
retail advertising in the period leading up to and including the holiday season.
Additionally, advertising revenues in even-numbered years benefit from
advertising placed by candidates for political offices, and demand for
advertising time in Olympic broadcasts. Proposals have been advanced in Congress
to require television broadcast stations to provide advertising time to
political candidates at no charge, which would eliminate in whole or in part
advertising revenues from political candidates. Furthermore, FCC Chairman
William Kennard has indicated that the FCC may commence a proceeding to examine
free or reduced-rate political airtime initiatives.
Through the 1970s, network television broadcasting enjoyed virtual
dominance in viewership and television advertising revenues, because
network-affiliated stations competed only with each other in local markets.
Beginning in the 1980s, this level of dominance began to change, as the FCC
authorized more local stations and marketplace choices expanded with the growth
of independent stations and cable television services.
Cable television systems were first installed in significant numbers in
the 1970s and were initially used primarily to retransmit broadcast television
programming to paying subscribers in areas with poor broadcast signal reception.
In the aggregate, cable-originated programming has emerged as a significant
competitor for viewers of broadcast television programming, although no single
cable programming network regularly attains audience levels equivalent to any of
the major broadcast networks and, collectively, the broadcast originated signals
still constitute the majority of viewing in most cable homes. The advertising
share of cable networks has increased during the 1970s, 1980s, and 1990s as a
result of the growth in cable penetration (the percentage of television
households that are connected to a cable system). Notwithstanding such increases
in cable viewership and advertising, over-the-air broadcasting remains the
dominant distribution system for mass market television advertising.
Competition. Competition in the television industry takes place on several
levels: competition for audience, competition for programming (including news)
and competition for advertisers. Additional factors material to a television
station's competitive position included signal coverage and assigned frequency.
Further advances in technology may increase competition for household
audiences and advertisers. Video compression techniques, now in use with direct
broadcast satellites and in development for cable and wireless cable, are
expected to permit greater numbers of channels to be carried within existing
bandwidth. These compression techniques, as well as other technological
developments, are applicable to all video delivery systems, including
over-the-air broadcasting, and have the potential to provide vastly expanded
programming to highly targeted audiences. Reduction in the cost of creating
additional channel capacity could lower entry barriers for new channels and
encourage the development of increasingly specialized niche programming. This
ability to reach very narrowly defined audiences is expected to alter the
competitive dynamics for advertising expenditures. The Company is unable to
predict the effect that technological changes will have on the broadcast
television industry or the future results of the Stations.
The television broadcasting industry continually is faced with such
technological change and innovation, the possible rise in popularity of
competing entertainment and communications media and governmental restrictions
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or actions of federal regulatory bodies, including the FCC and the Federal Trade
Commission, any of which could have a material effect on the Stations.
The Stations compete for audience on the basis of program popularity,
which has a direct effect on advertising rates. A majority of the daily
programming on the Stations is supplied by the network with which each such
station is affiliated. In time periods in which the network provides
programming, the Stations are primarily dependent upon the performance of the
network programs in attracting viewers. Each Station competes in non- network
time periods based on the performance of its programming during such time
periods, using a combination of self-produced news, public affairs and other
entertainment programming, including news and syndicated programs, that such
station believes will be attractive to viewers.
The Stations compete for television viewership share against local
network-affiliated and independent stations, as well as against cable and
alternate methods of television transmission. These other transmission methods
can increase competition for a station by bringing into its market distant
broadcasting signals not otherwise available to the station's audience and also
by serving as a distribution system for non-broadcast programming originated on
the cable system.
Other sources of competition for the Stations include home entertainment
systems (including video cassette recorder and playback systems, videodiscs and
television game devices), the Internet, multipoint distribution systems,
multichannel multipoint distribution systems, wireless cable, satellite master
antenna television systems and some low power, in-home satellite services. The
Stations also face competition from high-powered direct broadcast satellite
services, such as PrimeStar and DIRECTV, which transmit programming directly to
homes equipped with special receiving antennas. The Stations compete with these
services both on the basis of service and product performance (quality of
reception and number of channels that may be offered) and price (the relative
cost to utilize these systems compared to broadcast television viewing).
Programming is a significant factor in determining the overall
profitability of any television broadcast station. Competition for non-network
programming involves negotiating with national program distributors or
syndicators that sell first-run and off-network packages of programming. The
Stations compete against in-market broadcast stations for exclusive access to
off-network reruns (such as Home Improvement) and first-run product (such as the
Oprah Winfrey Show). Cable systems generally do not compete with local stations
for programming, although various national cable networks from time to time have
acquired programs that otherwise would have been offered to local television
stations.
Advertising rates are based upon the size of the market in which a station
operates, a program's popularity among the viewers an advertiser wishes to
attract, the number of advertisers competing for the available time, the
demographic makeup of the market served by the station, the availability of
alternative advertising media in the market area, the aggressiveness and
knowledgeability of sales forces and the development of projects, features and
programs that tie advertiser messages to programming. Advertising rates also are
determined by a station's overall ability to attract viewers in its market, as
well as the station's ability to attract viewers among particular demographic
groups that an advertiser may be targeting. Broadcast television stations
compete for advertising revenues with other broadcast television stations and
with the print media, radio stations and cable system operators serving the same
market. Additional competitors for advertising revenues include a variety of
other media, including direct marketing. Since greater amounts of advertising
time are available for sale by independent stations, independent stations
typically achieve a greater proportion of television market advertising revenues
relative to their share of the market's audience. Public broadcasting outlets in
most communities compete with commercial broadcasters for viewers but not for
advertising dollars.
Technology. The FCC has adopted rules that will allow television
broadcasters to provide digital television ("DTV") to consumers. The FCC also
adopted a table of allotments for DTV, which will provide eligible existing
broadcasters with a second channel on which to provide DTV service. The
allotment plan is based on a core spectrum of channels 2-51. Ultimately, the FCC
plans to recover the frequencies outside of the core spectrum to be used for
other purposes. Recently, the FCC announced that it will reallocate channels
60-69. Four channels will be reallocated to fixed and mobile services for public
safety use and the remaining six channels to the fixed, mobile
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and broadcasting services. These licenses are to be assigned through competitive
bidding. The FTC will decide at a later date the use of the remaining spectrum
recovered outside of the core DTV spectrum. Broadcasters that obtain a DTV
channel outside of the core spectrum may ultimately be required to move to a new
channel at the time the analog channels are recovered. Television broadcasters
will be allowed to use their DTV channels according to their best business
judgment. Such uses can include multiple standard definition program channels,
data transfer, subscription video, interactive materials and audio signals,
although broadcasters will be required to provide a free digital video
programming service that is at least comparable to today's analog service.
Broadcasters will not be required to air "high definition" programming or,
initially, to simulcast their analog programming on the digital channel.
Affiliates of ABC, CBS, NBC and FOX in the top 10 television markets will be
required to be on the air with a digital signal by May 1, 1999. Affiliates of
those networks in markets 11-30 will be required to be on the air with a digital
signal by November 1, 1999, and remaining commercial broadcasters within five
years. The Company has begun to file applications for authority to operate
digital stations. The applications for KITV (and satellite stations KMAU and
KHVO) have been granted, while the application of WLWT is pending. The FCC
stated that broadcasters will remain public trustees and that it will issue a
notice to determine the extent of broadcasters' future public interest
obligations. Existing analog and DTV broadcast operations outside the core
spectrum, such as WNAC, are fully protected during a transition period, which is
targeted for completion in the year 2006. The Company will incur significant
costs in the conversion to DTV. The Company is unable to predict the extent or
timing of consumer demand for any such DTV services.
Digital Conversion Timetable
<TABLE>
<CAPTION>
FCC Mandated
Timetable for
Market Analog Construction of
Station (Affiliation) Rank(1) Channel DTV Channel DTV Facilities
- ----------------------------------------------- ---------------- -------------- ------------------- ----------------
<S> <C> <C> <C> <C>
WCVB, Boston, MA (ABC) 6 5 20 May 1, 1999*
WWWB, Tampa, FL (WB)(2) 15 32 19 May 1, 2002
WTAE, Pittsburgh, PA (ABC) 19 4 51 November 1, 1999
WBAL, Baltimore, MD (NBC) 23 11 59 November 1, 1999
WLWT, Cincinnati, OH (NBC) 30 5 35 November 1, 1999
WISN, Milwaukee, WI (ABC) 32 12 34 May 1, 2002
KMBC, Kansas City, MO (ABC) 31 9 14 May 1, 2002
KCWB, Kansas City, MO (WB)(2) 31 29 31 May 1, 2002
KOCO, Oklahoma City, OK (ABC) 43 5 16 May 1, 2002
WPBF, West Palm Beach, FL (ABC)(2) 44 25 16 May 1, 2002
WNAC, Providence, RI (FOX)(3)(4) 49 64 54 May 1, 2002
WDTN, Dayton, OH (ABC)(3) 53 2 46 May 1, 2002
KITV, Honolulu, HI (ABC) 71 4 40 May 1, 2002
WAPT, Jackson, MS (ABC) 90 16 21 May 1, 2002
WPTZ, Plattsburgh, NY (NBC)(3) 91 5 14 May 1, 2002
WNNE, Hartford, VT (NBC)(3) 91 31 25 May 1, 2002
KHBS, Fort Smith, AR (ABC) 116 40 21 May 1, 2002
KHOG, Fayetteville, AR (ABC) 116 29 15 May 1, 2002
KSBW, Monterey, CA (NBC)(3) 122 8 43 May 1, 2002
</TABLE>
- ----------
* Station has voluntarily committed to an 18-month construction schedule.
(1) Market rank is based on the relative size of the DMA among the 211
generally recognized DMAs in the U.S., based on Nielsen estimates for the
1997-98 season.
(2) WWWB-TV and WPBF-TV are managed by the Company under the Management
Agreement with Hearst. In addition, the Company provides certain
management services to Hearst in order to allow Hearst to fulfill its
obligations under Program Services and Time Brokerage Agreement with
KCWB-TV, Inc. the permittee of KCWB.
(3) WNAC-TV's (Providence RI) broadcast signal overlaps with WCVB-TV's
(Boston, MA) broadcast signal, and WDTN-TV's (Dayton, OH) broadcast signal
overlaps with WLWT-TV's (Cincinnati, OH) broadcast signal. Under FCC
rules, a single entity cannot own stations with overlapping signals. The
Company has entered into an agreement pursuant to which it will divest
WNAC and WDTN in exchange for WPTZ, WNNE and KSBW. See "Recent
Developments--Station Swaps."
(4) Subject to a Joint Marketing and Programming Agreement with Clear Channel
Communications, Inc.
8
<PAGE>
Federal Regulation of Television Broadcasting
Television broadcasting is subject to the jurisdiction of the FCC under
the Communications Act. The Communications Act prohibits the operation of
television broadcasting stations except under a license issued by the FCC and
empowers the FCC, among other actions, to issue, renew, revoke and modify
broadcasting licenses; assign frequency bands; determine stations' frequencies,
locations and power; regulate the equipment used by station; adopt other
regulations to carry out the provisions of the Communications Act; impose
penalties for violation of such regulations; and, impose fees for processing
applications and other administrative functions. The Communications Act
prohibits the assignment of a license or the transfer of control of a licensee
without prior approval of the FCC. The sale of WNAC and WDTN and the acquisition
of KSBW, WPTZ and WNNE remain subject to FCC approval. Members of the public
will have an opportunity to file petitions to deny or other comments concerning
the transaction. Under the Communications Act, the FCC also regulates certain
aspects of the operation of cable television systems and other electronic media
that compete with broadcast stations.
The process for renewal of broadcast station licenses as set forth under
the Communications Act has undergone significant change as a result of the
Telecommunications Act. Prior to the passage of the Telecommunications Act,
television broadcasting licenses generally were granted or renewed for a period
of five years upon a finding by the FCC that the "public interest, convenience
and necessity" would be served thereby. Under the Telecommunications Act, the
statutory restriction on the length of broadcast licenses has been amended to
allow the FCC to grant broadcast licenses for terms of up to eight years. The
Telecommunications Act requires renewal of a broadcast license if the FCC finds
that (i) the station has served the public interest, convenience and necessity;
(ii) there have been no serious violations of either the Communications Act or
the FCC's rules and regulations by the licensee; and, (iii) there have been no
other serious violations that taken together constitute a pattern of abuse. In
making its determination, the FCC may consider petitions to deny by cannot
consider whether the public interest would be better served by a person other
than the renewal applicant. Under the Telecommunications Act, competing
applications for the same frequency may be accepted only after the FCC has
denied an incumbent's application for renewal of license.
The main station licenses of KMBC, WISN, WDTN, WLWT, KHBS (including
satellite station KHOG), WAPT, WPBF, WWWB, WBAL, WTAE, WPTZ, WNAC, WCVB, WNNE,
KITV (including its satellite stations KMAU and KHVO), KSBW and KOCO, will
expire on February 1, 2006, December 1, 2005, October 1, 2005, October 1, 2005,
June 1, 2005, June 1, 2005, February 1, 2005, February 1, 2005, October 1, 2004,
August 1, 1999, June 1, 1999, April 1, 1999, April 1, 1999, April 1, 1999,
February 1, 1999, December 1, 1998 and June 1, 1998, respectively. An
application for renewal of the license for KOCO is pending at the FCC. Petitions
to deny the KOCO renewal application will be due on or before May 1, 1998. KCWB
operates pursuant to a Special Temporary Authorization ("STA"), which may, in
the discretion of the FCC, be renewed at six month intervals. An application for
extension of the STA is pending at the FCC. The Company is not aware of any
facts or circumstances that would prevent the renewal of the licenses or
authorizations for the stations at the end of their respective terms or the
renewal of KCWB's STA.
The Communications Act, FCC rules and regulations and the
Telecommunications Act also regulate broadcast ownership. The FCC has
promulgated rules that, among other matters, limit the ability of individuals
and entities to own or have an official position or ownership interest above a
certain level (an "attributable" interest) in broadcast stations as well as
other specified mass media entities. On a local basis, FCC rules currently allow
an individual entity to have an attributable interest in only one television
station in a market. As WCVB is considered to be in the same market as WNNE for
the purposes of this rule, the application seeking the FCC's consent to the
acquisition of WNNE contains a request for a temporary waiver of the rules
pending conclusion of an FCC rulemaking proceeding considering changes to the
rule. Although the Company believes that the temporary waiver will be granted,
there can be no assurances that the rule will ultimately be changed in a manner
that will allow the Company to maintain control of both stations on a permanent
basis. Furthermore, FCC rules, the Communications Act or both generally restrict
or prohibit the ability of an individual or entity to have an attributable
interest, or cross-ownership, in a television station and in a radio station,
daily newspaper or cable television system that is located in the same local
market area served by the television station. Hearst has an attributable
interest in the Company's broadcast stations and owns daily newspapers in
various local markets. The FCC has instituted proceedings for the
9
<PAGE>
possible relaxation of certain of its rules regulating television station
ownership, certain types of cross-ownership and the standards used to determine
what types of interests are considered to be attributable under its rules. Among
the proposals under consideration is whether to deem as attributable certain
television local marketing agreements and, if deemed attributable, the extent to
which currently effective agreements of this type should be exempted from any
new FCC rules. Such attribution could implicate local television ownership rules
that currently prohibit an entity from having an attributable interest in two
stations serving the same market and could have a material effect on the Joint
Marketing and Programming Agreement between the Company and Clear Channel
relating to WNAC, and the Programming Services and Time Brokerage Agreement
between the Company and the licensee of KCWB. If the FCC's ultimate regulatory
decision were to disfavor the continued validity of such joint operation
agreements or LMAs, then these agreements, in the worst case scenario, might be
required to be terminated. In addition, pursuant to the Telecommunications Act,
the FCC has eliminated the 12-station national limit for TV station ownership
and increased the national audience reach limitation from 25% to 35%. Further,
legislation recently introduced in Congress could, if enacted, repeal or modify
the newspaper/television cross-ownership rule provision and a petition recently
has been filed requesting that the FCC initiate a rulemaking proceeding to
determine whether the FCC's newspaper/television cross-ownership rule should be
eliminated. Moreover, the FCC will review the newspaper, television and all
other cross-ownership rules as part of the biennial review process mandated by
the Telecommunications Act. Under that process, the FCC must determine whether,
because of increased competition, any regulation no long serves the public
interest. Elimination of the rule could enable the Company to acquire television
stations in markets in which Hearst owns daily newspapers. There can be no
assurances, however, that the legislation will be enacted or that either the
biennial review process or the proposed FCC rulemaking proceeding, if initiated,
will result in elimination of the rule.
The Communications Act restricts the ability of foreign entities or
individuals to own or hold certain interests in broadcast licenses. The
Telecommunications Act, however, eliminated the restrictions on aliens serving
as directors or officers of broadcast licensees or as directors or officers of
entities holding interests in broadcast licensees. The FCC has adopted rules,
effective January 1, 1998, that will require, over a phase-in period of 8 to 10
years, the closed captioning of video signals. Petitions for reconsideration of
the rules have been filed. The FCC is considering the institution of a TV
ratings system as mandated by the Telecommunications Act.
The FCC has reduced significantly its past regulation of broadcast
stations, including elimination of formal ascertainment requirements and
guidelines concerning amounts of certain types of programming and commercial
matter that may be broadcast. There are, however, FCC rules and policies, and
rules and policies of other federal agencies, that regulate matters such as
network-affiliate relations, cable systems' carriage of syndicated and network
programming on distant stations, political advertising practices, obscene and
indecent programming, equal employment opportunity, application procedures and
other areas affecting the business or operations of broadcast stations. The FCC
has also adopted rules to implement the Children's Television Act of 1990,
which, among other matters, limits the permissible amount of commercial matter
in children's programs and requires each television station to present
"educational and informational" children's programming. The FCC also has adopted
renewal processing guidelines that effectively require television stations to
broadcast an average of three hours per week of children's educational
programming.
The FCC also has adopted regulations to implement certain provisions of
the 1992 Cable Act, which regulates, among other matters, signal carriage,
retransmission consent and equal employment opportunity requirements. Certain
provisions of the 1992 Cable Act are the subject of pending judicial review
proceedings. The Telecommunications Act modified the 1992 Cable Act in several
important respects. In addition to matters relating to broadcast ownership, the
Telecommunications Act, among other things, repealed the cross-ownership ban
between cable and telephone entities and the FCC's video dialtone rules, the
limitations on cross-ownership of broadcast network and cable entities and the
statutory prohibition of TV/cable cross-ownership. These provision, among
others, allow for significant involvement in the future by telephone companies
in providing video services.
On March 31, 1997, the United States Supreme Court, in a 5-4 decision,
upheld the constitutionality of the must-carry provisions of the 1992 Cable Act.
As a result, the regulations promulgated by the FCC to implement the must-carry
provision remain in effect. Under those rules, cable operators generally are
required to devote up to one-third of their activated channel capacity to the
carriage of local commercial television stations. The FCC has
10
<PAGE>
announced that it will conduct a rulemaking to determine whether the must-carry
provision will apply to broadcasters' digital television signals.
The foregoing does not purport to be a complete summary of all of the
provisions of the Communications Act, the Telecommunications Act, the 1992 Cable
Act or the related regulations and policies of the FCC. Proposals for additional
or revised regulations and requirements are pending before and are being
considered by Congress and federal regulatory agencies from time to time. Also,
various of the foregoing matters are now, or may become, the subject of court
litigations, and the Company cannot predict the outcome of any such litigation
or the impact on its business or the business of the Company.
Employees
As of December 31, 1998, the Company had approximately 1,445 full-time
employees and 172 part-time employees. A total of approximately 593 employees
are represented by four unions (the American Federation of Television and Radio
Artists, the International Brotherhood of Electrical Workers, the International
Alliance of Theatrical Stage Employees, and the Directors Guild of America). The
Company has not experienced any significant labor problems, and it believes that
its relations with its employees are satisfactory.
ITEM 2. PROPERTIES
The Company's principal executive offices are located at 888 Seventh
Avenue, New York, New York 10106. Each Station's real properties generally
include owned or leased offices, studios, transmitter sites and antenna sites.
Typically, offices and main studios are located together, while transmitters and
antenna sites are in a separate location that is more suitable for optimizing
signal strength and coverage. Set forth below are the Stations' principal
facilities as of December 31, 1997. In addition to the property listed below,
the Company and the Stations also lease other property primarily for
communications equipment.
<TABLE>
<CAPTION>
Owned or Approximate Expiration
Station/Property Location Use Leased Size of Lease
- ---------------------------------- --------------------------------- ----------- ------------------ -------------------
<S> <C> <C> <C> <C>
Corporate NY Office Leased 4,612 sq. ft. month-to-month
LA Office Leased 3,191 sq. ft. 1998
San Antonio Office Leased 3,674 sq. ft. 1999
WLWT Office and studio Leased 60,000 sq. ft. 1999
Cincinnati, OH Tower and transmitter Owned 4.2 acres --
Office and studio Owned 54,000 sq. ft. --
Office and studio Owned 12,585 sq. ft. --
KOCO Office and studio Owned 28,000 sq. ft. --
Oklahoma City, OK Tower and transmitter Owned 85 acres --
WNAC Tower and transmitter Owned 33 acres --
Rehobeth, MA
KITV Office and studio Owned 33,000 sq. ft. --
Honolulu, HI Tower and transmitter Leased 130 sq. ft. 2006
Tower and transmitter Leased 300 sq. ft. 2006
Tower and transmitter Leased 1 acre month-to-month
WAPT Office and studio Owned 8,600 sq. ft. --
Jackson, MS Tower and transmitter Owned 25 acres --
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
Owned or Approximate Expiration
Station/Property Location Use Leased Size of Lease
- ---------------------------------- --------------------------------- ----------- ------------------ -------------------
<S> <C> <C> <C> <C>
KHBS Office and studio Owned 35,000 sq. ft. --
Fort Smith/Fayetteville, Office and studio Leased 15,000 sq. ft. --
AR Tower and transmitter Leased -- --
Tower and transmitter Owned 26 acres --
WCVB Office and studio Leased 91,602 sq. ft. 2003
Boston, MA Office and studio Leased 5,337 sq. ft. month-to-month
Office and studio Leased 8,628 sq. ft. month-to-month
Tower and transmitter 44 acres 1999
WTAE Office and studio Owned 68,033 sq. ft. --
Pittsburgh, PA Tower and transmitter Owned 37 acres --
WBAL Office and studio Owned 65,000 sq. ft. --
Baltimore, MD Tower and transmitter Partnership 3.5 acres --
WISN Office and studio Owned 88,000 sq. ft. --
Milwaukee, WI Tower and transmitter Owned 5.5 acres --
KMBC Office and studio Leased 53,749 sq. ft. 2001
Kansas City, MO Office and studio Leased 4,765 sq. ft. 2009
Tower and transmitter Owned 11.6 acres --
WDTN Office and studio Owned 43,500 sq. ft. --
Dayton, OH Tower and transmitter Owned 25.29 acres --
</TABLE>
ITEM 3. LEGAL PROCEEDINGS
From time to time, the Company becomes involved in various claims and
lawsuits that are incidental to its business. In the opinion of the Company,
there are no legal proceedings pending against the Company or any of its
subsidiaries that are likely to have a material adverse effect on the Company's
consolidated financial condition or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The Series A Common Stock is quoted on the Nasdaq National Market under
the symbol "HATV." Prior to the consummation of the Hearst Transaction, shares
of Series A Common Stock were traded on the Nasdaq National Market under the
symbol "ARGL." The Company's Series B Common Stock, 100% of which is held by a
subsidiary of Hearst, is not publicly traded. The table below sets forth, for
the calendar quarters indicated, the high and low sales prices of the Series A
Common Stock of Argyle prior to the consummation of the Hearst Transaction
12
<PAGE>
on August 29, 1997, and of the Company's Series A Common Stock subsequent to the
consummation of the Hearst Transaction, in each case as reported in The Wall
Street Journal.
Price Range of Series A Common Stock
------------------------------------
Fiscal 1996 High Low
- ----------- ---- ---
First Quarter 23 17
Second Quarter 27 19 1/2
Third Quarter 29 1/4 22
Fourth Quarter 28 3/4 23 3/4
Fiscal 1997
- -----------
First Quarter 29 1/8 23 7/8
Second Quarter 25 1/2 22 1/2
Third Quarter 30 5/8 24 7/8
Fourth Quarter 32 5/8 26 1/4
On March 6, 1998, the closing price for the Company's Series A Common Stock on
the Nasdaq National Market was $36-3/8 (as reported in The Wall Street Journal),
and the approximate number of shareholders of record of the Series A Common
Stock at the close of business on such date was 156.
The Company has not paid any dividends on its Series A Common Stock or its
Series B Common Stock since inception and does not expect to pay any dividends
on either class in the immediate future. The Company's Credit Facility with The
Chase Manhattan Bank limits the ability of the Company to pay dividends under
certain conditions.
The Company issued 100% of the Series B Common Stock to Hearst as part of
the Hearst Transaction and related transactions. Of the shares of Series B
Common Stock, the Company issued 38,611,002 shares on August 29, 1997 and
2,687,646 shares on December 30, 1997. The Company issued the Series B Stock
pursuant to the exemption from registration contained in Section 4(2) of the
Securities Act. The Company issued the Series B Common Stock to Hearst as
consideration for the contribution of the assets and properties of Hearst's
broadcast group and $275 million of Hearst's long-term debt.
All of the outstanding shares of Series B Common Stock are required to be
held by Hearst or a Permitted Transferee (as defined below). All such shares are
currently held by Hearst Broadcasting, Inc., a wholly owned subsidiary of
Hearst. No holder of shares of Series B Common Stock may transfer any such
shares to any person other than to (i) Hearst; (ii) any corporation into which
Hearst is merged or consolidated or to which all or substantially all of
Hearst's assets are transferred; or (iii) any entity controlled by Hearst (each
a "Permitted Transferee"). Series B Common Stock, however, may be converted at
any time into Series A Common Stock and freely transferred, subject to the terms
and conditions of the Company's Amended and Restated Certificate of
Incorporation and to applicable securities laws limitations. If at any time the
Permitted Transferees first hold in the aggregate less than 20% of all shares of
the Company's Common Stock that are then issued and outstanding, then each
issued and outstanding share of Series B Common Stock automatically will be
converted into one fully-paid and nonassessable share of Series A Common Stock,
and the Company will not be authorized to issue any additional shares of Series
B Common Stock. Notwithstanding any other provision to the contrary, no holder
of Series B Common Stock shall (i) transfer any shares of Series B Common Stock;
(ii) convert Series B Common Stock; or (iii) be entitled to receive any cash,
stock, other securities or other property with respect to or in exchange for any
shares of Series B Common Stock in connection with any merger or consolidation
or sale or conveyance of all or substantially all of the property or business of
the Company as an entity, unless all necessary approvals of the FCC as required
by the Communications Act, and the rules and regulations thereunder have been
obtained or waived.
13
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
The selected financial data should be read in conjunction with the
historical and pro forma financial statements and notes thereto included
elsewhere herein and in "Management's Discussion and Analysis of Financial
Condition and Results of Operations." The historical financial data for the
years ended December 31, 1993 and 1994 have been derived from the audited
combined financial statements of WZZM, WAPT and WNAC (collectively, the
"Northstar Stations" and "Northstar historical") acquired by Argyle Television,
Inc. (the "Predecessor Company" and "Argyle") effective January 4, 1995. The
historical financial data for the years ended December 31, 1995 and 1996 and the
eight months ended August 31, 1997, have been derived from the audited
consolidated financial statements of the Predecessor Company. The historical
financial data for the four months ended December 31, 1997, have been derived
from the audited consolidated financial statements of Hearst-Argyle Television,
Inc. (the "Company"). The pro forma consolidated financial data for the year
ended December 31, 1997 has been prepared as if the Gannett Swap and the Hearst
Transaction had been completed at the beginning of the year presented. Such pro
forma data is not necessarily indicative of the actual results that would have
occurred nor of results that may occur.
<TABLE>
<CAPTION>
Predecessor
Company The Company
Years Ended December 31, Eight Months Four Months
--------------------------------------------- Ended Ended The Company
Northstar Historical Predecessor Company August 31 December 31 Pro forma
--------- ---------- ------------------- --------- --------- ---------
1993 1994 1995 1996 1997(a) 1997(b) 1997(c)
--------- --------- -------- --------- --------- --------- ---------
(In thousands, except per share and ratio data)
<S> <C> <C> <C> <C> <C> <C> <C>
Statement of operations data:
Total revenues $ 28,440 $ 34,538 $ 46,944 $ 73,294 $ 51,826 $ 146,440 $ 387,782
Station operating expenses 14,295 16,430 23,603 37,639 27,610 59,993 168,443
Amortization of program rights 3,876 3,600 3,961 4,725 2,833 14,652 42,978
Depreciation and amortization 2,884 3,126 12,294 23,965 16,955 12,150 36,240
--------- --------- --------- --------- --------- --------- ---------
Station operating income 7,385 11,382 7,086 6,965 4,428 59,645 140,121
Corporate expenses 1,174 1,103 2,324 4,285 2,700 3,518 11,000
Non-cash compensation expense -- -- 675 675 3,518 -- --
--------- --------- --------- --------- --------- --------- ---------
Operating income (loss) 6,211 10,279 4,087 2,005 (1,790) 56,127 129,121
Interest expense, net 5,885 4,745 12,052 16,566 12,749 15,830 38,377
--------- --------- --------- --------- --------- --------- ---------
Income (loss) from continuing
Operations before income taxes 326 5,534 (7,965) (14,561) (14,539) 40,297 90,744
Income taxes 301 170 -- -- -- 16,419 37,732
--------- --------- --------- --------- --------- --------- ---------
Income (loss) from continuing
operations 25 5,364 (7,965) (14,561) (14,539) 23,878 53,012
Cumulative effect of a change in
Accounting principle(d) (213) -- -- -- -- -- --
Extraordinary item(e) -- (774) (7,842) -- -- (16,212) --
--------- --------- --------- --------- --------- --------- ---------
Net income (loss) $ (188) $ 4,590 $ (15,807) $ (14,561) $ (14,539) $ 7,666 $ 53,012
========= =========
Less preferred stock dividends(f) -- (829) (711) (711) (1,422)
--------- --------- --------- --------- ---------
Earnings (loss) applicable to common
stockholders $ (15,807) $ (15,390) $ (15,250) $ 6,955 $ 51,590
========= ========= ========= ========= =========
Basic:
Income (loss) from continuing
operations before extraordinary
item per common share $ (1.25) $ (1.37) $ (1.34) $ 0.48 $ 0.96
========= ========= ========= ========= =========
Income (loss) from continuing
operations per common share $ (2.47) $ (1.37) $ (1.34) $ 0.14 $ 0.96
========= ========= ========= ========= =========
Number of shares used in per share
calculation 6,388 11,246 11,347 48,628 53,828
========= ========= ========= ========= =========
Diluted:
Income (loss) from continuing
operations before extraordinary
item per common share $ (1.25) $ (1.37) $ (1.34) $ 0.48 $ 0.96
========= ========= ========= ========= =========
Income (loss) from continuing
operations per common share $ (2.47) $ (1.37) $ (1.34) $ 0.14 $ 0.96
========= ========= ========= ========= =========
Number of shares used in per share
calculation 6,388 11,246 11,347 48,752 53,873
========= ========= ========= ========= =========
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
Predecessor
Company The Company
Years Ended December 31, Eight Months Four Months
--------------------------------------------- Ended Ended The Company
Northstar Historical Predecessor Company August 31 December 31 Pro forma
--------- ---------- ------------------- --------- --------- ---------
1993 1994 1995 1996 1997(a) 1997(b) 1997(c)
--------- --------- -------- --------- --------- --------- ---------
(In thousands, except per share and ratio data)
<S> <C> <C> <C> <C> <C> <C> <C>
Other data:
Broadcast cash flow(g) $ 9,868 $ 14,223 $ 20,440 $ 31,889 $ 21,182 $ 71,345 $ 175,834
Broadcast cash flow margin(h) 34.7% 41.2% 43.5% 43.5% 40.9% 48.7% 45.3%
Operating cash flow(i) $ 8,694 $ 13,120 $ 18,116 $ 27,604 $ 18,482 $ 67,827 $ 164,834
Operating cash flow margin(j) 30.6% 38.0% 38.6% 37.7% 35.7% 46.3% 42.5%
After-tax cash flow(k) N/A N/A $ 4,329 $ 9,404 $ 2,416 $ 36,028 $ 89,252
Capital expenditures $ 1,136 $ 701 $ 3,762 $ 6,633 $ 12,138 $ 18,268 N/A
Program payments $ 4,277 $ 3,885 $ 2,901 $ 3,766 $ 3,034 $ 15,102 $ 43,505
Balance sheet data (at year end):
Cash and cash equivalents $ 93 $ 1,313 $ 2,206 $ 949 N/A $ 12,759 $ 12,759
Total assets 76,015 78,575 291,141 328,608 N/A 1,044,109 1,044,109
Total debt (including current portion) 63,235 42,670 150,000 171,500 N/A 490,000 500,000
Stockholders' equity (deficit)(l) (3,440) 24,513 116,293 129,152 N/A 326,654 326,654
</TABLE>
See footnotes on the following page.
Notes To Selected Financial Data
(a) Includes the results of operations of Argyle Television, Inc., the results
of operations of WZZM and WGRZ for January 1997 only, KITV, WAPT, Argyle's
share of the Clear Channel Venture and KHBS/KHOG (the "Arkansas Stations")
for the full period presented and WLWT and KOCO from February 1 through
August 31, 1997.
(b) Includes the results of operations of Hearst-Argyle Television, Inc.,
which includes WLWT, KOCO, KITV, WAPT, KHBS, the Company's share of the
Clear Channel Venture (collectively, the "Argyle Stations"), WCVB, WTAE,
WISN, WBAL, KMBC and WDTN (collectively, the "Hearst Broadcast Group") and
the management fee derived by the Company from WWWB, WPBF, KCWB and
WBAL-radio ("the Managed Stations") for the full period presented.
(c) Includes the results of operations of the Argyle Stations, Hearst
Broadcast Group and the management fee derived by the Company from the
Managed Stations on a combined pro forma basis as if the Hearst
Transaction and the Gannett Swap had occurred at the beginning of the
period presented.
(d) Represents the cumulative effect of the adoption of SFAS No. 109,
Accounting for Income Taxes.
(e) Represents the write-offs of unamortized financing costs and premiums paid
upon early extinguishment of certain Company debt.
(f) Gives effect to dividends on the Preferred Stock issued in connection with
the acquisition of the Arkansas Stations.
(g) Broadcast cash flow is defined as station operating income (loss), plus
depreciation and amortization and write down of intangible assets, plus
amortization of program rights, minus program payments. Broadcast cash
flow does not present a measure of operating results and does not purport
to represent cash provided by operating activities. Broadcast cash flow
should not be considered in isolation or as a substitute for measures of
performance prepared in accordance with generally accepted accounting
principles.
(h) Broadcast cash flow margin is broadcast cash flow divided by total
revenues, expressed as a percentage.
(i) Operating cash flow is defined as operating income (loss), plus
depreciation and amortization, write down of intangible assets, and
amortization of program rights, minus program payments, plus non-cash
compensation expense. Operating cash flow is presented here not as a
measure of operating results, but rather as a measure of debt service
ability. Operating cash flow does not purport to represent cash provided
by operating activities and should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with
generally accepted accounting principles.
(j) Operating cash flow margin is operating cash flow divided by total
revenues, expressed as a percentage.
(k) After-tax cash flow is defined as income (loss) before extraordinary item
plus depreciation and amortization. After-tax cash flow does not present a
measure of operating results and does not purport to represent cash
provided by operating activities. After-tax cash flow should not be
considered in isolation or as a substitute
15
<PAGE>
for measures of performance prepared in accordance with generally accepted
accounting principles. This measure may not be comparable to similarly
titled measures used by other companies.
(l) The Company has not paid any dividends on its Common Stock since
inception.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Results of Operations
On August 29, 1997 (September 1, 1997 for accounting purposes), Argyle
consummated an agreement with The Hearst Corporation ("Hearst") to combine the
Hearst Broadcast Group (WCVB, WBAL, WTAE, WISN, WDTN and KMBC) with and into
Argyle to form Hearst-Argyle Television, Inc. (the "Company") (the "Hearst
Transaction"). In addition, the Company agreed to provide management services
with respect to WWWB, WPBF, KCWB and WBAL-radio (the "Managed Stations"), three
of which stations are owned by Hearst and the other of which Hearst provides
certain services to under a local marketing agreement, in exchange for a
management fee. (See Notes 3 and 12 to the consolidated financial statements).
In January 1995, Argyle acquired three television stations -- WZZM, WNAC
and WAPT. Argyle acquired KITV in June 1995 and WGRZ in December 1995. In June
1996, Argyle acquired KHBS and its satellite KHOG (the "Arkansas Stations"). On
July 1, 1996, Argyle entered into a Joint Marketing and Programming Agreement
(the "Clear Channel Venture") with Clear Channel Communications, Inc. involving
WNAC and WPRI, the CBS affiliate in Providence, Rhode Island, owned by Clear
Channel Communications, Inc. On January 31, 1997, Argyle swapped WZZM and WGRZ
under the terms of an agreement (the "Gannett Swap") for WLWT and KOCO with
Gannett Co., Inc. ("Gannett"). (See Note 3 to the consolidated financial
statements.)
The following discussion of results of operations does not include the
full-year pro forma effects of the Hearst Transaction.
Results of operations for the year ended December 31, 1997 include: (i)
WZZM and WGRZ for January; (ii) KITV, WAPT, the Arkansas Stations, and the
Company's share of broadcast cash flows from the Clear Channel Venture for the
entire period presented; (iii) WLWT and KOCO from February through December;
(iv) the Hearst Broadcast Group from September through December; and, (v) fees
derived by the Company from the Managed Stations from September through
December. Results of operations for the year ended December 31, 1996 include:
(i) WZZM, WAPT, KITV, and WGRZ for the entire period presented; (ii) the
Arkansas Stations from June through December; (iii) Argyle's share of broadcast
cash flows from the Clear Channel Venture from July through December; and, (iv)
WNAC from January through June. Results of operations for the year ended
December 31, 1995 include: (i) WZZM, WAPT and WNAC for the entire period
presented; (ii) KITV from June 15 through December 31; and (iii) WGRZ for
December, only. As a result of the Hearst Transaction, the consolidated
financial statements for the period subsequent to the Hearst Transaction are
presented on a different basis of accounting than those for the period prior to
the Hearst Transaction and, therefore, are not directly comparable.
16
<PAGE>
<TABLE>
<CAPTION>
Years Ended December 31,
------------------------------------
1995 1996 1997
--------- --------- ---------
(In thousands)
<S> <C> <C> <C>
Total revenues $ 46,944 $ 73,294 $ 198,266
Station operating expenses 23,603 37,639 87,603
Amortization of program rights 3,961 4,725 17,485
Depreciation and amortization of intangibles 12,294 23,965 29,105
--------- --------- ---------
Station operating income 7,086 6,965 64,073
Corporate general and administrative expenses 2,324 4,285 6,218
Non-cash compensation expense 675 675 3,518
--------- --------- ---------
Operating income 4,087 2,005 54,337
Interest expense, net 12,052 16,566 28,579
--------- --------- ---------
Income (loss) before taxes and extraordinary item (7,965) (14,561) 25,758
Income taxes -- -- (16,419)
--------- --------- ---------
Income (loss) before extraordinary item (7,965) (14,561) 9,339
Extraordinary item, early retirement of debt (7,842) -- (16,212)
--------- --------- ---------
Net loss $ (15,807) $ (14,561) $ (6,873)
========= ========= =========
</TABLE>
Set forth below are the principal types of television revenues and related
agency and national sales representative commissions for the Company's twelve
stations on a pro forma combined full-year basis for the periods indicated and
the percentage contribution of each to the total revenues. The information
included in the table below does not include certain pro forma adjustments
reflected in pro forma financial statements set forth elsewhere herein.
<TABLE>
<CAPTION>
Combined
Years Ended December 31,
----------------------------------------------------------------------------------
1995 % 1996 % 1997 %
--------------- ----------- ---------------- ----------- ---------------- ------
(In thousands)
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Local/Regional(a) $ 220,064 60.8% $ 218,299 59.2% $ 239,301 62.1%
National(b) 165,707 45.8 163,310 44.3 166,100 43.1
Network
Compensation(c) 21,203 5.9 21,440 5.8 22,129 5.7
Political(d) 3,580 1.0 18,995 5.1 3,022 0.8
Barter(e) 7,987 2.2 7,338 2.0 12,891 3.4
Other 8,587 2.4 7,192 1.9 10,757 2.8
Agency and Sales
Representative
Commissions(f) (65,512) (18.1) (67,529) (18.3) (68,956) (17.9)
--------- --------- --------- --------- --------- ---------
Total Revenues $ 361,616 100% $ 369,045 100% $ 385,244 100%
========= ========= =========
</TABLE>
- ----------
(a) Represents sale of advertising time to local and regional advertisers.
(b) Represents sale of advertising time to national advertisers.
(c) Represents payment by the networks for broadcasting network programming.
(d) Represents sale of advertising time to political advertisers.
(e) Represents value of commercial time exchanged for syndicated programs and
commercial time exchanged for goods and services (trade outs).
(f) Represents commissions paid to local and national advertising agencies and
to national sales representatives.
17
<PAGE>
Year Ended December 31, 1997 (The Company)
Compared to Year Ended December 31, 1996 (Predecessor Company)
Total revenues. Total revenues in the year ended December 31, 1997 were
$198.3 million, as compared to $73.3 million in the year ended December 31,
1996, an increase of $125.0 million or 170.5%. The increase was primarily
attributable to the Hearst Transaction which added $113.6 million to 1997 total
revenues. In addition, the incremental revenues resulting from Gannett Swap were
$8.5 million and the full-year inclusion of the Arkansas Stations added $4.1
million to 1997 total revenues. These revenue gains were offset by the net
effects of the Clear Channel Venture, which accounted for a $1.3 million
decrease in recorded total revenues, because only the Company's share of the
Clear Channel Venture broadcast cash flows is included in total revenues.
Station operating expenses. Station operating expenses in the year ended
December 31, 1997 were $87.6 million, as compared to $37.6 million in the year
ended December 31, 1996, an increase of $50.0 million or 133%. The increase was
primarily attributable to the Hearst Transaction, which added $42.7 million to
station operating expenses during 1997. In addition, the incremental station
operating expenses resulting from the Gannett Swap were $4.2 million and the
full-year inclusion of the Arkansas Stations added $3.5 million to 1997 station
operating expenses. This was offset by the Clear Channel Venture, which
accounted for a $1.3 million decrease in station operating expenses as a result
of WNAC expenses being eliminated, and only the Company's share of the Clear
Channel Venture broadcast cash flows being included in total revenues.
Amortization of program rights. Amortization of program rights in the year
ended December 31, 1997 was $17.5 million, as compared to $4.7 million in the
year ended December 31, 1996, an increase of $12.8 million or 272.3%. The
increase was primarily attributable to the Hearst Transaction, which added $13.2
million to amortization of program rights during 1997.
Depreciation and amortization. Depreciation and amortization of intangible
assets was $29.1 million in the year ended December 31, 1997, as compared to
$24.0 million in the year ended December 31, 1996, an increase of $5.1 million
or 21.3%. The increase was primarily attributable to the Hearst Transaction,
which added $5.2 million to depreciation and amortization of intangibles during
1997. In addition, the increase was attributable to the additional depreciation
and amortization resulting from the step-up to fair market value of the Argyle
Stations fixed and intangible assets. This step-up was recorded in connection
with The Hearst Transaction and accounted for approximately $1.4 million of the
increase in depreciation and amortization expense.
Station operating income. Station operating income in the year ended
December 31, 1997 was $64.1 million, as compared to $7.0 million in the year
ended December 31, 1996, an increase of $57.1 million or 815.7%. The station
operating income increase was primarily attributable to the Hearst Transaction.
Corporate general and administrative expenses. Corporate general and
administrative expenses were $6.2 million for the year ended December 31, 1997,
as compared to $4.3 million for the year ended December 31, 1996, an increase of
$1.9 million or 44.2%. The increase was primarily attributable to the increase
in corporate staff following the Hearst Transaction and other costs associated
with the Hearst Transaction.
Non-cash compensation expense. Non-cash compensation expense of $3.5
million during 1997, represents stock option expense recorded in compliance with
SFAS No. 123. As a result of the Hearst Transaction, all stock options
outstanding were vested and either were cancelled in exchange for consideration
or rolled-over into the 1997 Stock Option Plan. Because of this, the SFAS No.
123 expense, which would have been recorded over time, was recorded in August
1997. See Note 10 to the consolidated financial statements.
Interest expense, net. Interest expense, net was $28.6 million in the year
ended December 31, 1997, as compared to $16.6 million in the year ended December
31, 1996, an increase of $12.0 million or 72.3%. This increase in interest
expense was primarily attributable to a larger outstanding debt balance in 1997
than in 1996, which was the result of the Hearst Transaction and the Gannett
Swap. Interest expense, net for the 1996 year was reduced by $1.1 million as a
result of the change in fair market value of interest rate protection agreements
since
18
<PAGE>
December 31, 1995 recorded in compliance with SFAS No. 119. Interest rate
protection agreements were accounted for using hedge accounting during 1997.
Income taxes. Income tax expense was $16.4 million for the year ended
December 31, 1997. This represents federal and state taxes as calculated on the
Company's net income before taxes and extraordinary item for the four month's
ended December 31, 1997. The Company incurred losses for all prior periods
presented and therefore, did not record any federal or state income tax benefit.
Extraordinary item. The Company recorded an extraordinary item of $16.2
million net of the related income tax benefit, in 1997. This extraordinary item
resulted from a refinancing of the Company's $275.0 million private placement
debt (assumed in connection with the Hearst Transaction) and $45.0 million of
the Company's senior subordinated notes in December 1997. The extraordinary item
includes the write-off of the pro rata portion of the unamortized financing
costs associated with the senior subordinated notes and the payment of a premium
for both refinancings.
Net loss. Net loss was $6.9 million in the year ended December 31, 1997,
as compared to $14.6 million in the year ended December 31, 1996, a decrease of
$7.7 million or 52.7%. This decrease was attributable to the items discussed
above.
Broadcast Cash Flow. Broadcast cash flow was $92.5 million in the year
ended December 31, 1997, as compared to $31.9 million in the year ended December
31, 1996, an increase of $60.6 million or 190%. The broadcast cash flow increase
resulted from the Hearst Transaction, inclusion of the Arkansas Stations for the
entire 1997 year, and the effect of the Gannett Swap. Broadcast cash flow margin
increased to 46.7% in 1997 from 43.5% in 1996.
Year Ended December 31, 1996 (Predecessor Company)
Compared to Year Ended December 31, 1995 (Predecessor Company)
Total revenues. Total revenues in the year ended December 31, 1996 were
$73.3 million, as compared to $46.9 million in the year ended December 31, 1995,
an increase of $26.4 million or 56.3%. The acquisition of KITV during June 1995,
WGRZ during December 1995 and KHBS during June 1996 resulted in an approximately
$26.9 million increase in total revenues. In addition, WZZM experienced an
increase of $2.6 million in total revenues, which was due to an increase in
trade and barter revenues and an increase in local revenues and national
political revenues. These revenue gains were offset by the net effects of the
Clear Channel Venture, which accounted for a $3.1 million decrease in recorded
total revenues, because only the Company's share of the Clear Channel Venture
broadcast cash flows is included in total revenues.
Station operating expenses. Station operating expenses in the year ended
December 31, 1996 were $37.6 million, as compared to $23.6 million in the year
ended December 31, 1995, an increase of $14.0 million or 59.3%. The acquisition
of KITV during June 1995, WGRZ during December 1995 and KHBS during June 1996
resulted in an approximate $15.3 million increase in station operating expenses.
In addition, WZZM experienced a $1.0 million increase in trade and barter
expenses, which was offset by a decrease in other operating expenses at WZZM and
WAPT of $0.3 million. This was offset by the Clear Channel Venture, which
accounted for a $2.0 million decrease in station operating expenses as a result
of WNAC expenses being eliminated, and only the Company's share of the Clear
Channel Venture broadcast cash flows being included in total revenues.
Amortization of program rights. Amortization of program rights in the year
ended December 31, 1996 was $4.7 million, as compared to $4.0 million in the
year ended December 31, 1995, an increase of $0.7 million or 17.5%. The
acquisition of KITV during June 1995, WGRZ during December 1995 and KHBS during
June 1996 resulted in an approximate $1.2 million increase in amortization of
program rights. This was offset by the Clear Channel Venture, which accounted
for a $0.5 million decrease in amortization of program rights as a result of
WNAC amortization being eliminated, and only the Company's share of the Clear
Channel Venture broadcast cash flows being included in total revenues.
19
<PAGE>
Depreciation and amortization. Depreciation and amortization of intangible
assets was $24.0 million in the year ended December 31, 1996, as compared to
$12.3 million in the year ended December 31, 1995, an increase of $11.7 million
or 95.1%. The acquisition of KITV during June 1995, WGRZ during December 1995
and KHBS during June 1996 and the write-up of fixed assets and intangible assets
to fair market value at their respective dates of acquisition resulted in an
approximately $10.5 million increase in depreciation and amortization expense.
In addition, there was an increase in amortization of approximately $0.7 million
related to the Clear Channel Venture in 1996.
Station operating income. Station operating income in the year ended
December 31, 1996 was $7.0 million, as compared to $7.1 million in the year
ended December 31, 1995, a decrease of $0.1 million or 1.4%. The station
operating income decrease was primarily attributable to a disproportionate
increase in depreciation and amortization as compared to the increase in total
revenues.
Corporate general and administrative expenses. Corporate general and
administrative expenses were $4.3 million for the year ended December 31 1996,
as compared to $2.3 million for the year ended December 31, 1995, an increase of
$2.0 million or 87.0%. The increase was primarily attributable to incentive
compensation, expenses associated with transaction activities, the acquisition
of KITV and WGRZ during 1995, and incremental expenses associated with being a
new company during 1995 and becoming a public company following the Company's
initial public offering of its common stock in October 1995.
Non-cash compensation expense. Non-cash compensation expense of $0.7
million during both 1996 and 1995 represents stock option expense recorded in
compliance with SFAS No. 123.
Interest expense, net. Interest expense, net was $16.6 million in the year
ended December 31, 1996, as compared to $12.1 million in the year ended December
31, 1995, an increase of $4.5 million or 37.2%. This increase in interest
expense was primarily attributable to a larger outstanding debt balance in 1996
than in 1995, which was the result of the acquisitions and related financings of
the Arkansas Stations, the Clear Channel Venture and the issuance of the Senior
Subordinated Notes in October 1995. Interest income was $1.0 million in the year
ended December 31, 1995. This represents the interest earned on cash temporarily
invested prior to the acquisition of WGRZ. Interest income in the year ended
December 31, 1996 was $0.08 million.
Extraordinary item. The Company incurred an extraordinary loss of $7.8
million in 1995. This extraordinary loss resulted from a refinancing of the
Company's senior bank debt in June 1995 and in October 1995. These refinancing
resulted in a write-off of all unamortized financing costs associated with the
senior bank debt incurred in connection with the acquisition of the Northstar
Stations in January 1995 and KITV in June 1995.
Net loss. Net loss was $14.6 million in the year ended December 31, 1996,
as compared to $15.8 million in the year ended December 31, 1995, a decrease of
$1.2 million. The decrease was attributable to the items discussed above.
Broadcast Cash Flow. Broadcast cash flow was $31.9 million in the year
ended December 31, 1996, as compared to $20.4 million in the year ended December
31, 1995, an increase of $11.5 million or 56.4%. The broadcast cash flow
increase resulted primarily from the acquisition of KITV during June 1995, WGRZ
during December 1995 and KHBS during June 1996. Broadcast cash flow margin
remained constant between years at 43.5%.
Liquidity and Capital Resources
Upon completion of the Hearst Transaction on August 29, 1997, the Company
retired its existing credit agreement (the "Old Credit Agreement") and entered
into a $1 billion credit facility with Chase Manhattan Bank (the "Credit
Facility"). As of December 31, 1997, there was $85.0 million outstanding under
the Credit Facility. The Company may borrow amounts under the Credit Facility
from time to time for additional acquisitions, capital expenditures and working
capital, subject to the satisfaction of certain conditions on the date of
borrowing.
20
<PAGE>
On November 12, 1997 the Company sold 4,000,000 shares (plus 232,000
shares of the underwriters' over-allotment option) of Series A Common Stock at
$27 per share. On November 13, 1997, the Company issued $125,000,000 aggregate
principal amount of 7.0% Senior Notes due 2007 and $175,000,000 aggregate
principal amount of 7.5% Senior Notes due 2027 (collectively, the "Senior
Notes"). The Company used the proceeds from the equity and debt offerings
(collectively, the "Offerings") to pay down existing debt.
During December 1997, the Company refinanced its $275.0 million Private
Placement Debt, assumed in the Hearst Transaction, using proceeds from the
Offerings and advances under the Credit Facility. In addition, the Company
refinanced $45.0 million of its Senior Subordinated Notes (the "Notes") pursuant
to provisions of the indenture during December 1997. This refinancing was funded
by advances under the Credit Facility. The Company will refinance the remaining
Notes during 1998. (See Note 16 to the consolidated financial statements)
Capital expenditures were $6.6 million in 1996 and $30.4 million in 1997.
The Company invested approximately $15.8 million in 1997 related to the
construction of a new all-digital studio and station facility for KITV. In
addition, the Company invested approximately $8.5 million in its new station
facility at WLWT.
The Company anticipates that its primary sources of cash, those being
current cash balances, operating cash flow and amounts available under the
Credit Facility, will be sufficient to finance the operating and working capital
requirements of its stations, the Company's debt service requirements and
anticipated capital expenditures for the Company for both the next 12 months and
the foreseeable future thereafter.
Impact on Inflation
The impact of inflation on the Company's operations has not been
significant to date. There can be no assurance, however, that a high rate of
inflation in the future would not have an adverse impact on the Company's
operating results.
Forward-Looking Statements
This report contains certain forward-looking statements concerning the
Company's operations, economic performance and financial condition. These
statements are based upon a number of assumptions and estimates which are
inherently subject to uncertainties and contingencies, many of which are beyond
the control of the Company, and reflect future business decisions which are
subject to change. Some of the assumptions may not materialize and unanticipated
events may occur which can affect the Company's results.
Year 2000
The Company has evaluated the potential impact of the situation commonly
referred to as the "Year 2000 problem." The Year 2000 problem, which is common
to most corporations, concerns the inability of information systems, primarily
computer software programs, to properly recognize and process date sensitive
information related to the year 2000. Preliminary assessment indicates that
solutions will involve a mix of modifying existing systems, retiring obsolete
systems and confirming vendor compliance. There can be no guarantee that the
systems of other companies on which the Company's systems rely will be timely
converted and would not have an adverse effect on the Company's systems. The
Company will utilize both internal and external resources to test and reprogram
or replace its software for Year 2000 compliance. The Company currently does not
anticipate any significant incremental capital expenditures associated with the
Year 2000 problem. However, Year 2000 assessments will continue and capital
expenditure estimates could change.
New Accounting Pronouncements
In June 1997, the Financial Accounting Standards Board issued SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related Information" ("SFAS
131"), and SFAS No. 130, "Reporting Comprehensive Income" ("SFAS 130"). SFAS 131
establishes standards for reporting certain financial and descriptive
information for reportable segments on the same basis that is used internally
for evaluating segment performance and the allocation of resources
21
<PAGE>
to segments. SFAS 130 establishes standards for presenting nonshareholder
related items that are excluded from net income and reported as components of
stockholders' equity, such as foreign currency translation. These statements are
effective for fiscal years beginning after December 15, 1997. In February 1998,
the Financial Accounting Standards Board issued SFAS No. 132, "Employers'
Disclosures About Pensions and Other Postretirement Benefits", which becomes
effective for the Company's 1998 consolidated financial statements. SFAS No. 132
standardizes the disclosure requirements for pensions and other postretirement
benefits to the extent practicable, requires additional information on changes
in the benefit obligations and fair values of plan assets that will facilitate
financial analysis, and eliminates certain previously required disclosures. The
adoption, of these statements will not have a material effect on the Company's
consolidated financial statements.
22
<PAGE>
ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO HISTORICAL CONSOLIDATED FINANCIAL STATEMENTS
Page
----
Hearst-Argyle Television, Inc.
Report of Deloitte & Touche LLP ............................................ 24
Report of Ernst & Young LLP ................................................ 25
Consolidated Balance Sheets as of December 31, 1996 (Predecessor
Company) and 1997 .......................................................... 26
Consolidated Statements of Operations for the Years Ended December 31,
1995 and 1996 and the Eight Months Ended August 31, 1997 (Predecessor
Company) and the Four Months Ended December 31, 1997 ....................... 28
Consolidated Statements of Stockholders' Equity for the Years Ended
December 31, 1995 and 1996 and the Eight Months Ended August 31, 1997
(Predecessor Company) and the Four Months Ended December 31, 1997. ......... 29
Consolidated Statements of Cash Flows for the Years Ended December 31,
1995 and 1996 and the Eight Months Ended August 31, 1997 (Predecessor
Company) and the Four Months Ended December 31, 1997 ....................... 30
Notes to Consolidated Financial Statements ................................. 32
23
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Stockholders and Board of Directors of
Hearst-Argyle Television, Inc.
We have audited the accompanying consolidated balance sheet of Hearst-Argyle
Television, Inc. (successor to Argyle Television, Inc. the "Predecessor
Company") (collectively referred to as the "Company") as of December 31, 1997,
and the related consolidated statements of operations, stockholders' equity and
cash flows for the period September 1, 1997 (Date of Acquisition) to December
31, 1997 and as to the Predecessor Company the related statements of operations,
stockholders' equity and cash flows for the period January 1, 1997 to August 31,
1997. Our audit also included the financial statement schedule listed in Item
14. These consolidated financial statements and financial statement schedule are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements and financial statement
schedule based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of the Company at December 31, 1997,
and the results of its operations and its cash flows for the period September 1,
1997 to December 31, 1997 (period after the change in control referred to in
Note 3 to the consolidated financial statements), and with respect to the
Predecessor Company for the period January 1, 1997 to August 31, 1997 (period up
to the change in control referred to in Note 3 to the consolidated financial
statements) in conformity with generally accepted accounting principles. Also,
in our opinion, such financial statement schedule, when considered in relation
to the basic consolidated financial statements taken as a whole, presents fairly
in all material respects the information set forth therein.
As more fully discussed in Note 3 to the consolidated financial statements, the
Predecessor Company was acquired in a business combination accounted for as a
purchase. As a result of the acquisition, the consolidated financial statements
for the period subsequent to the acquisition are presented on a different basis
of accounting than those for the periods prior to the acquisition and,
therefore, are not directly comparable.
Deloitte & Touche LLP
New York, New York
February 26, 1998
(March 9, 1998 as to Note 16)
24
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors of
Argyle Television, Inc.
We have audited the accompanying consolidated balance sheet of Argyle
Television, Inc. as of December 31, 1996, and the related consolidated
statements of operations, stockholders' equity, and cash flows for each of the
two years in the period ended December 31, 1996. Our audits also included the
Financial Statement Schedule listed in the Index at Item 14a. These financial
statements and schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
schedule based on our audits.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Argyle Television,
Inc. at December 31, 1996, and consolidated results of its operations and its
cash flows for each of the two years in the period ended December 31, 1996 in
conformity with generally accepted accounting principles. Also, in our opinion,
the related Financial Statement Schedule, when considered in relation to the
basic financial statements taken as a whole, presents fairly in all material
respects the information set forth therein.
As discussed in Note 2 to the financial statements, in 1995 the Company changed
its method of accounting for stock-based compensation.
Ernst & Young LLP
February 12, 1997
San Antonio, Texas
25
<PAGE>
HEARST-ARGYLE TELEVISION, INC.
Consolidated Balance Sheets
<TABLE>
<CAPTION>
December 31, 1996 December 31, 1997
-------------------- -----------------
(Predecessor Company)
(In thousands)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 949 $ 12,759
Accounts receivable, net of allowance for
Doubtful accounts of $169 and $2,204
in 1996 and 1997, respectively 14,936 89,988
Barter program rights 5,912 3,996
Program rights 3,934 31,741
Deferred income taxes -- 5,975
Related party receivable -- 3,695
Other 1,895 7,070
Net assets held for sale -- 72,019
--------- -----------
Total current assets 27,626 227,243
--------- -----------
Property, plant and equipment:
Land, building and improvements 17,135 31,901
Broadcasting equipment 21,126 120,747
Office furniture, equipment and other 5,524 19,233
Construction in progress 2,357 16,128
--------- -----------
46,142 188,009
Less accumulated depreciation (6,929) (90,205)
--------- -----------
Property, plant and equipment, net 39,213 97,804
--------- -----------
Intangible assets, net 231,856 661,326
--------- -----------
Other assets:
Deferred acquisition and financing costs,
net of accumulated amortization of $1,050
and $2,952 in 1996 and 1997, respectively 5,788 27,796
Barter program rights, noncurrent 5,333 1,315
Program rights, noncurrent 3,580 2,196
Other 15,212 26,429
--------- -----------
Total other assets 29,913 57,736
--------- -----------
Total assets $ 328,608 $ 1,044,109
========= ===========
</TABLE>
See notes to consolidated financial statements.
26
<PAGE>
HEARST-ARGYLE TELEVISION, INC.
Consolidated Balance Sheets
<TABLE>
<CAPTION>
December 31, 1996 December 31, 1997
-------------------- -----------------
(Predecessor Company)
(In thousands except share data)
<S> <C> <C>
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 1,001 $ 616
Accrued liabilities 5,612 31,579
Barter program rights payable 6,776 4,008
Program rights payable 4,251 31,761
Other 868 3,904
--------- -----------
Total current liabilities 18,508 71,868
--------- -----------
Barter program rights payable 5,333 1,269
Program rights payable 3,610 3,654
Long-term debt 171,500 490,000
Deferred income taxes -- 150,274
Other liabilities 505 390
--------- -----------
Total noncurrent liabilities 180,948 645,587
--------- -----------
Stockholders' equity:
Series A preferred stock, 10,938 shares issued and
outstanding 1 1
Series B preferred stock, 10,938 shares issued and
outstanding 1 1
Series A common stock, par value $.01 per share,
35,000,000 shares authorized, 3,846,914 shares
issued and outstanding in 1996 and 100,000,000
shares authorized, 12,529,154 shares issued and
outstanding in 1997 38 125
Series B common stock, par value $.01 per share,
200,000 shares authorized, 200,000 shares
issued and outstanding in 1996 and 100,000,000
shares authorized, 41,298,648 shares issued
and outstanding in 1997 2 413
Series C common stock, par value $.01 per share,
14,800,000 shares authorized, 7,300,000 shares
issued and outstanding in 1996 73 --
Additional paid-in capital 159,454 363,404
Retained deficit (30,417) (37,290)
--------- -----------
Total stockholders' equity 129,152 326,654
--------- -----------
Total liabilities and stockholders' equity $ 328,608 $ 1,044,109
========= ===========
</TABLE>
See notes to consolidated financial statements.
27
<PAGE>
HEARST-ARGYLE TELEVISION, INC.
Consolidated Statements of Operations
<TABLE>
<CAPTION>
Eight Months Four Months
Years Ended December 31, Ended Ended
1995 1996 August 31, 1997 December 31, 1997
---------- ---------- --------------- -----------------
(Predecessor Company)
(In thousands, except per share data)
<S> <C> <C> <C> <C>
Total revenues $ 46,944 $ 73,294 $ 51,826 $ 146,440
Station operating expenses 23,603 37,639 27,610 59,993
Amortization of program rights 3,961 4,725 2,833 14,652
Depreciation and amortization 12,294 23,965 16,955 12,150
-------- -------- -------- ---------
Station operating income 7,086 6,965 4,428 59,645
Corporate general and administrative expenses 2,324 4,285 2,700 3,518
Non-cash compensation expense 675 675 3,518 --
-------- -------- -------- ---------
Operating income (loss) 4,087 2,005 (1,790) 56,127
Interest expense, net 12,052 16,566 12,749 15,830
-------- -------- -------- ---------
Earnings (loss) before income taxes and
extraordinary item (7,965) (14,561) (14,539) 40,297
Income taxes -- -- -- 16,419
-------- -------- -------- ---------
Income (loss) before extraordinary item (7,965) (14,561) (14,539) 23,878
Extraordinary item, loss on early retirement of debt,
net of income tax benefit in 1997 (7,842) -- -- (16,212)
-------- -------- -------- ---------
Net income (loss) (15,807) (14,561) (14,539) 7,666
Less preferred stock dividends -- (829) (711) (711)
-------- -------- -------- ---------
Earnings (loss) applicable to common stockholders $(15,807) $(15,390) $(15,250) $ 6,955
======== ======== ======== =========
Earnings (loss) per common share - Basic:
Before extraordinary item $ (1.25) $ (1.37) $ (1.34) $ 0.48
Extraordinary item (1.22) -- -- (0.34)
-------- -------- -------- ---------
Net income (loss) $ (2.47) $ (1.37) $ (1.34) $ 0.14
======== ======== ======== =========
Number of common shares used in the calculation 6,388 11,246 11,347 48,628
======== ======== ======== =========
Earnings (loss) per common share - Diluted:
Before extraordinary loss $ (1.25) $ (1.37) $ (1.34) $ 0.48
Extraordinary item (1.22) -- -- (0.34)
-------- -------- -------- ---------
Net income (loss) $ (2.47) $ (1.37) $ (1.34) $ 0.14
======== ======== ======== =========
Number of common shares used in the calculation 6,388 11,246 11,347 48,752
======== ======== ======== =========
</TABLE>
See notes to consolidated financial statements.
28
<PAGE>
HEARST-ARGYLE TELEVISION, INC.
Consolidated Statements of Stockholders' Equity
<TABLE>
<CAPTION>
Additional
Preferred Common Stock Paid-In Retained
Stock Series A Series B Series C Capital Deficit Total
----- --------- -------- -------- ------- ------- -----
(In thousands, except share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Balances at January 1, 1995 $ - $ -- $ -- $ -- $ 1 $ (49) $ (48)
Issuance of 199,900 shares of voting
common stock for cash* - -- 2 -- 1,997 -- 1,999
Issuance of 7,300,000 shares of Series C
common stock for cash - -- -- 73 72,927 -- 73,000
Issuance of 3,619,260 shares of Series A
common stock for cash - 36 -- -- 56,281 -- 56,317
Capital contribution of equipment - -- -- -- 158 -- 158
Compensation element of stock options - -- -- -- 675 -- 675
Net loss - -- -- -- -- (15,807) (15,807)
------ ------ ------ ------ --------- -------- ---------
Balances at December 31, 1995 - 36 2 73 132,039 (15,856) 116,294
Issuance of stock in connection with the
Acquisition of the Arkansas Stations:
Series A common stock - 227,654 shares;
Series A preferred stock - 10,938 shares;
Series B preferred stock - 10,938 shares 2 2 -- -- 27,569 -- 27,573
Compensation element of stock options - -- -- -- 675 -- 675
Dividends paid on preferred stock - -- -- -- (829) -- (829)
Net loss - -- -- -- -- (14,561) (14,561)
------ ------ ------ ------ --------- -------- ---------
Balances at December 31, 1996 2 38 2 73 159,454 (30,417) 129,152
Compensation element of stock options - -- -- -- 3,518 -- 3,518
Net loss - -- -- -- -- (14,539) (14,539)
Dividends paid on preferred stock - -- -- -- (711) -- (711)
------ ------ ------ ------ --------- -------- ---------
Balances at August 31, 1997 (Predecessor
Company) 2 38 2 73 162,261 (44,956) 117,420
Net income - -- -- -- -- 7,666 7,666
Issuance of stock in connection with
The Hearst Transaction:
Shares issued:
Series A common stock - 8,277,054 shares;
Series B common stock - 41,298,648 shares;
Shares redeemed:
Series A common stock - 11,346,900 shares; - 44 411 (73) 93,673 -- 94,055
Issuance of 4,252,100 shares series
A common stock for cash - 43 -- -- 108,181 -- 108,224
Dividends paid on preferred stock - -- -- -- (711) -- (711)
------ ------ ------ ------ --------- -------- ---------
Balances at December 31, 1997 $ 2 $ 125 $ 413 $ -- $ 363,404 $(37,290) $ 326,654
====== ====== ====== ====== ========= ======== =========
</TABLE>
* Converted into Series B Common Stock during 1995.
See notes to consolidated financial statements.
29
<PAGE>
HEARST-ARGYLE TELEVISION, INC.
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Eight Months Four Months
Years Ended December 31, Ended Ended
1995 1996 August 31, 1997 December 31, 1997
----------- --------- --------------- -----------------
(Predecessor Company)
(In thousands)
<S> <C> <C> <C> <C>
Operating Activities
Net income (loss) $ (15,807) $(14,561) $(14,539) $ 7,666
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Extraordinary item, loss on early retirement of debt 7,842 -- -- 26,584
Depreciation 2,333 4,672 3,766 3,781
Amortization of intangible assets 9,961 19,293 13,189 8,369
Amortization of deferred financing costs 839 899 434 635
Amortization of program rights 3,961 4,725 2,833 14,652
Program payments (2,901) (3,766) (3,034) (15,102)
Deferred income taxes -- -- -- 9,691
Provisions for doubtful accounts 70 235 -- 538
Compensation element of stock options 675 675 3,518 --
Fair value adjustments of interest rate protection 1,039 (1,151) (327) --
agreements
Changes in operating assets and liabilities:
Accounts receivable (3,193) (1,900) (450) (17,416)
Other assets 237 67 5,793 694
Accounts payable and accrued liabilities 3,377 (1,179) 8,262 (4,436)
Other liabilities (1,574) (1,066) (5,759) 2,467
--------- -------- -------- ---------
Net cash provided by operating activities 6,859 6,943 13,686 38,123
Investing Activities
Payment relating to the Hearst Transaction -- -- -- (110,076)
Clear Channel Venture Payment -- (13,527) -- --
Acquisition of stations (233,739) (5,889) (23,016) --
Purchases of property, plant, and equipment:
Special projects/buildings -- (2,274) (5,633) (14,964)
Digital (770) (268) (2,608) (1,698)
Maintenance (2,992) (4,091) (3,897) (1,606)
Partial payment on relocation of studio -- (840) -- --
Acquisition costs -- (1,856) (1,894) --
--------- -------- -------- ---------
Net cash used in investing activities (237,501) (28,745) (37,048) (128,344)
</TABLE>
See notes to consolidated financial statements
30
<PAGE>
HEARST-ARGYLE TELEVISION, INC.
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Eight Months Four Months
Years Ended December 31, Ended Ended
1995 1996 August 31, 1997 December 31, 1997
------------------ ------------------- ------------------ ------------------
(Predecessor Company)
(In thousands)
<S> <C> <C> <C> <C>
Financing Activities
Financing costs and other $ (13,924) $ (126) $ (6,279) $ (19,868)
Issuance of common stock, net 131,316 -- -- 108,934
Issuance of Senior Notes -- -- -- 300,000
Repayment of Private Placement Debt -- -- -- (295,895)
Repayment of Senior Subordinated Notes -- -- -- (49,387)
Proceeds from issuance of Senior Subordinated Notes 150,000 -- -- --
Dividends paid on preferred stock -- (829) (711) (711)
Proceeds from issuance of long-term debt 170,250 31,500 88,000 185,000
Payment of long-term debt (204,796) (10,000) (54,500) (155,000)
--------------- --------------- --------------- ---------------
Net cash provided by financing activities 232,846 20,545 26,510 73,073
--------------- --------------- --------------- ---------------
Increase (decrease) in cash and cash equivalents 2,204 (1,257) 3,148 (17,148)
Cash and cash equivalents at beginning of period 2 2,206 949 29,907
--------------- --------------- --------------- ---------------
Cash and cash equivalents at end of period $ 2,206 $ 949 $ 4,097 $ 12,759
=============== =============== =============== ===============
Supplemental Cash Flow Information:
Capital contribution of equipment $ 158
Business acquired in purchase transaction:
Fair market value of assets acquired $ 282,930 $ 38,259 $ 23,030 $ 610,762
Liabilities assumed (14,644) (4,773) (14) (332,903)
Note payable issued to seller (34,547) -- -- --
Issuance of preferred stock -- (21,876) -- --
Issuance of common stock -- (5,721) -- (166,783)
--------------- --------------- --------------- ---------------
Net cash paid for acquisitions $ 233,739 $ 5,889 $ 23,016 $ 111,076
=============== =============== =============== ===============
</TABLE>
See notes to consolidated financial statements.
31
<PAGE>
HEARST-ARGYLE TELEVISION, INC.
Notes to Consolidated Financial Statements
1. Nature of Operations
Hearst-Argyle Television, Inc. (successor to Argyle Television, Inc., the
Predecessor Company, collectively referred to as the "Company") owns and
operates twelve network-affiliated television stations in geographically diverse
markets in the United States and provides management services to three
network-affiliated television stations and two radio stations (the "Managed
Stations"). Nine of the stations are affiliates of the American Broadcasting
Companies (ABC), two stations are affiliates of the National Broadcasting
Company, Inc. (NBC), and one station is an affiliate of the Fox Broadcasting
Company (Fox). The Company operates in one main business segment, commercial
television broadcasting. See Note 3.
2. Summary of Accounting Policies and Use of Estimates
The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiaries. All significant intercompany accounts have been
eliminated in consolidation. As more fully discussed in Note 3, the Predecessor
Company was acquired in a business combination accounted for as a purchase. As a
result of the acquisition, the consolidated financial statements for the period
subsequent to the acquisition are presented on a different basis of accounting
than those for the periods prior to the acquisition and, therefore, are not
directly comparable.
Cash Equivalents
All highly liquid investments with maturities of three months or less when
purchased are considered to be cash equivalents.
Accounts Receivable
Concentration of credit risk with respect to accounts receivable is limited due
to the large number of geographically diverse customers, individually small
balances and short payment terms.
Program Rights
Program rights and the corresponding contractual obligations are recorded when
the license period begins and the programs are available for use. Costs are
amortized based on the number of showings or license period. Program rights and
the corresponding contractual obligations are classified as current or long-term
based on estimated usage and payment terms, respectively.
Program rights are reviewed periodically for impairment and, if necessary,
adjusted to estimated net realizable value. No significant adjustments have been
recorded in the accompanying consolidated statements of operations.
Barter and Trade Transactions
Barter transactions represent the exchange of commercial air time for
programming. Trade transactions represent the exchange of commercial air time
for merchandise or services. Barter transactions are generally recorded at the
fair market value of the commercial air time relinquished. Trade transactions
are generally recorded at the fair market value of the merchandise or services
received. Barter program rights and payables are recorded for barter
transactions based upon the availability of the broadcast property. Revenue is
recognized on barter and trade transactions when the commercials are broadcast;
expenses are recorded when the merchandise or service received is utilized.
Barter and trade revenues for the years ended December 31, 1995 and 1996, the
eight months ended August 31, 1997 and the four months ended December 31, 1997
were approximately $5,484,000, $6,923,000, $3,062,000, and $6,580,000
respectively, and are included in total revenues. Barter and trade expenses for
the years
32
<PAGE>
HEARST-ARGYLE TELEVISION, INC.
Notes to Consolidated Financial Statements (Continued)
2. Summary of Accounting Policies and Use of Estimates (continued)
ended December 31, 1995 and 1996, the eight months ended August 31, 1997 and the
four months ended December 31, 1997 were $5,420,000, $7,011,000, $2,955,000 and
$6,596,000, respectively, and are included in station operating expenses.
Property, Plant and Equipment
Property, plant and equipment is recorded at cost. Depreciation is calculated on
the straight-line method over the estimated useful lives as follows: buildings -
25 to 39 years; broadcasting equipment - five to seven years; office furniture,
equipment and other - five years. Leasehold improvements are amortized on the
straight-line method over the shorter of the lease term or the estimated useful
life of the asset.
Intangible Assets
Intangible assets are recorded at cost. Amortization is calculated on the
straight-line method over the estimated lives as follows: FCC licenses, network
affiliation agreements, and goodwill - 40 years; other intangible assets 3-40
years. The recoverability of the carrying values of the excess of the purchase
price over the net assets acquired and intangible assets is evaluated quarterly
to determine if an impairment in value has occurred. An impairment in value will
be considered to have occurred when it is determined that the undiscounted
future operating cash flows generated by the acquired businesses are not
sufficient to recover the carrying values of such intangible assets. If it has
been determined that an impairment in value has occurred, the excess of the
purchase price over the net assets acquired and intangible assets would be
written down to an amount which will be equivalent to the present value of the
estimated future operating cash flows to be generated by the acquired
businesses.
Income Taxes
Subsequent to August 29, 1997, the Company is included in the consolidated
federal income tax return of The Hearst Corporation ("Hearst"). The Company
files separate income tax returns in states where a consolidated return is not
permitted. Pursuant to the regulations under the Internal Revenue Code, the
Company's pro rata share of the consolidated federal income tax liability of
Hearst is allocated to the Company on a separate return basis. In accordance
with Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes", deferred income tax assets and liabilities are measured based upon the
difference between the financial accounting and tax basis of assets and
liabilities.
Earnings Per Share
The Company adopted Statement of Financial Accounting Standards ("SFAS") No.
128, Earnings Per Share ("SFAS 128") in 1997. SFAS 128 replaced primary earnings
per share ("EPS") with basic EPS and fully diluted EPS with diluted EPS. Basic
EPS is calculated by dividing net income (loss) less preferred stock dividends
by weighted average common shares outstanding. Diluted EPS is calculated
similarly, except that it includes the dilutive effect of shares issuable under
the Company's stock option plan (see Note 10). SFAS 128 also requires previously
reported earnings per share to be restated to conform with the provisions of
this statement. All per share amounts included in the footnotes are the same for
basic and diluted earnings per share unless otherwise noted. The adoption of
SFAS 128 did not have a material effect on the Company's consolidated financial
statements.
New Accounting Pronouncements
In June 1997, the Financial Accounting Standards Board issued SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related Information" ("SFAS
131"), and SFAS No. 130, "Reporting Comprehensive Income" ("SFAS
33
<PAGE>
HEARST-ARGYLE TELEVISION, INC.
Notes to Consolidated Financial Statements (Continued)
2. Summary of Accounting Policies and Use of Estimates (continued)
130"). SFAS 131 establishes standards for reporting certain financial and
descriptive information for reportable segments on the same basis that is used
internally for evaluating segment performance and the allocation of resources to
segments. SFAS 130 establishes standards for presenting nonshareholder related
items that are excluded from net income and reported as components of
stockholders' equity, such as foreign currency translation. These statements are
effective for fiscal year beginning after December 15, 1997. In February 1998,
the Financial Accounting Standards Board issued SFAS No. 132, "Employers'
Disclosures About Pensions and Other Postretirement Benefits", which becomes
effective for the Company's 1998 consolidated financial statements. SFAS No. 132
standardizes the disclosure requirements for pensions and other postretirement
benefits to the extent practicable, requires additional information on changes
in the benefit obligations and fair values of plan assets that will facilitate
financial analysis, and eliminates certain previously required disclosures. The
adoption, of these statements will not have a material effect on the Company's
consolidated financial statements.
Stock-Based Compensation
During the fourth quarter of 1995, the Company adopted SFAS Statement No. 123,
"Accounting for Stock-Based Compensation" (SFAS No. 123), in accounting for its
employee stock options and elected to use the fair value method in accounting
for its stock-based compensation plan. The effect of adopting SFAS No. 123 was
an increase to the 1995 net loss by $474,569. Subsequent to the Hearst
Transaction, to conform accounting policies, the Company has elected to account
for employee stock-based compensation under APB No. 25 and related
interpretations. Under APB No. 25, because the exercise price of the Company's
employee stock options equals the market price of the underlying stock on the
date of grant, no compensation expense is recognized.
Interest Rate Agreements
The Company enters into interest-rate swap agreements to modify the interest
characteristics of its outstanding debt. Each interest-rate swap agreement is
designated with all or a portion of the principal balance and term of a specific
debt obligation. These agreements involve the exchange of amounts based on a
fixed interest rate for amounts based on variable interest rates over the life
of the agreement without an exchange of the notional amount upon which the
payments are based. The differential to be paid or received as interest rates
change is accrued and recognized as an adjustment to interest expense related to
the debt. The related amount payable to or receivable from counterparties is
included in other liabilities or assets. Gains and losses on terminations of
interest-rate swap agreements are deferred as an adjustment to the carrying
amount of the outstanding debt and amortized as an adjustment to interest
expense related to the debt over the remaining term of the original contract
life of the terminated swap agreement. In the event of the early extinguishment
of a designated debt obligation, any realized or unrealized gain or loss from
the swap would be recognized in income coincident with the extinguishment. Any
swap agreements that are not designated with outstanding debt or notional
amounts of interest-rate swap agreements in excess of the principal amounts of
the underlying debt obligations are recorded as an asset or liability at fair
value, with changes in fair value recorded as an adjustment to interest expense.
(See Note 5)
The Company purchases interest-rate cap agreements that are designed to limit
its exposure to increasing interest rates. The interest-rate cap of these
agreements exceeds the current market levels at the time they are entered into.
The interest rate indices specified by the agreements have been and are expected
to be highly correlated with the interest rates the Company incurs on its
borrowings. Payments to be received as a result of the specified interest rate
index exceeding the cap rate are accrued in other assets and are recognized as a
reduction to interest expense. The cost of these agreements is included in other
assets and amortized to interest expense ratably during the life of the
agreement. Upon termination of an interest-rate cap agreement, any gain is
deferred in other liabilities and amortized over the remaining term of the
original contractual life of the agreement as a reduction to interest expense.
34
<PAGE>
HEARST-ARGYLE TELEVISION, INC.
Notes to Consolidated Financial Statements (Continued)
2. Summary of Accounting Policies and Use of Estimates (continued)
Any notional amounts of agreements in excess of borrowings expected to be
outstanding during their terms would be marked to market, with changes in market
value recorded as an adjustment to interest expense.
Deferred Acquisition and Financing Costs
Acquisition costs are capitalized and will be included in the purchase price of
the acquired stations. Financing costs are deferred and are amortized using the
interest method over the term of the related debt when funded.
Use of Estimates
The preparation of the consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect amounts reported in the consolidated financial
statements and accompanying notes. Actual results could differ from those
estimates.
3. Acquisitions
The Company is the successor to the combined operations of Argyle Television,
Inc. ("Argyle" and "Predecessor Company") and the television broadcast group of
The Hearst Corporation ("Hearst") pursuant to a merger transaction that was
consummated on August 29, 1997, effective September 1, 1997 for accounting
purposes (the "Hearst Transaction"). In that transaction, Hearst (the accounting
acquiror) contributed its television broadcast group and related broadcast
operations (the "Hearst Broadcast Group") to Argyle and merged a wholly-owned
subsidiary of Hearst with and into Argyle, with Argyle as the surviving
corporation (renamed "Hearst-Argyle Television, Inc."). As a result of the
Hearst Transaction, Hearst currently owns approximately 41.3 million shares of
the Company's Series B Common Stock, comprising approximately 77% of the total
outstanding common stock of the Company.
For accounting purposes, Hearst has been deemed to be the acquiror of Argyle.
Accordingly, the assets and liabilities of Argyle have been adjusted to the
extent acquired by Hearst to their estimated fair values based upon preliminary
purchase price allocation. The net assets of the Hearst Broadcast Group have
been reflected at their historical cost basis.
In August 1994, the Company entered into an acquisition agreement with NTG, Inc.
relating to the acquisition of WZZM, Grand Rapids, Michigan; WNAC, Providence,
Rhode Island; and, WAPT, Jackson, Mississippi (the "Northstar Stations").
On January 4, 1995, the Company acquired the Northstar Stations for
approximately $108 million in cash. In addition, the Company agreed to certain
working capital adjustments and to assume certain state income tax liabilities
of $1.7 million. Fees and expenses associated with the acquisition approximated
$2.5 million.
During January 1995, the Company entered into an asset purchase agreement with
Tak Communications, Inc., debtor in possession, relating to the acquisition of
WGRZ, Buffalo, New York (the "Buffalo Station"); and KITV, Honolulu; KMAU,
Wailuku; KHVO, Hilo; and, TV Translator K51BB, Lihue, Hawaii (the "Hawaii
Stations") in two closings for an aggregate consideration of $146 million.
On June 13, 1995, the Company acquired the Hawaii Stations for approximately
$16.5 million in cash and a note issued to the seller for $34.5 million, which
was paid in December 1995. Fees and expenses associated with this acquisition
were approximately $800,000.
35
<PAGE>
HEARST-ARGYLE TELEVISION, INC.
Notes to Consolidated Financial Statements (Continued)
3. Acquisitions (continued)
On December 5, 1995, the Company acquired the Buffalo Station for $91 million in
cash. Under the terms of the acquisition agreement, the Company also made a
supplemental payment to the seller of $4 million in cash as a result of the
closing of both the Hawaii Stations and the Buffalo Station. Such additional
consideration has been allocated to the assets acquired in the purchases of the
Hawaii Stations and the Buffalo Station. Fees and expenses associated with the
Buffalo acquisition were approximately $3.0 million. During 1996, there was a
change in the Buffalo Station purchase price valuation, which affected equipment
and FCC license by approximately $1.3 million.
On June 11, 1996, the Company acquired KHBS, Fort Smith, Arkansas, and its S-2
satellite KHOG, Fayetteville, Arkansas, (the "Arkansas Stations"). As
consideration, the Company issued 227,654 shares of the Company's Series A
Common Stock, 10,938 shares of the Company's Series A Preferred Stock and 10,938
shares of the Company's Series B Preferred Stock valued at approximately $27.6
million. The Company also paid approximately $5.9 million in cash for certain
real estate, a non-competition covenant and affiliated debt associated with this
acquisition. During the last part of 1996, there was a change in the Arkansas
Stations purchase price valuation, which affected intangibles and other
liabilities by approximately $2.3 million.
In November 1996, Argyle entered into a definitive agreement (the "Gannett
Swap") with Gannett Co., Inc. ("Gannett") to swap the Company's WZZM and WGRZ
for Gannett's WLWT, the NBC affiliate in Cincinnati, Ohio, and KOCO, the ABC
affiliate in Oklahoma City, Oklahoma. In connection with this transaction,
Argyle agreed to pay Gannett $20 million in additional consideration, funded by
borrowings under Argyle's Bank Credit Agreement dated October 27, 1995 ("Old
Credit Agreement"). This transaction closed on January 31, 1997.
These transactions were accounted for as a purchase and, accordingly, the
purchase price and related acquisition costs have been allocated to the acquired
assets and liabilities based upon their preliminarily determined fair market
values. The excess of the purchase price over the net fair market value of the
tangible assets acquired and the liabilities assumed was allocated to
identifiable intangible assets including FCC licenses and network affiliation
agreements and goodwill. The final asset and liability fair values may differ
from those set forth in the accompanying consolidated balance sheet at December
31, 1997; however, the changes, if any, are not expected to have a material
effect on the consolidated financial statements of the Company. The consolidated
financial statements include the results of operations of the acquired stations
since the date of the acquisition.
Effective July 1, 1996, the Company entered into a Joint Marketing and
Programming Agreement (the "Clear Channel Venture") with Clear Channel
Communications, Inc. ("Clear Channel") involving WNAC and WPRI, the CBS
affiliate in Providence, Rhode Island, owned by Clear Channel. Under the
agreement, Clear Channel will program certain air time, including news
programming, on WNAC and will manage the sale of commercial air time on both
stations for an initial period of 10 years. The Company and Clear Channel each
will receive 50% of the broadcast cash flows generated by the two stations
subject to certain adjustments. The Company's share of the Clear Channel Venture
broadcast cash flows is included in total revenues. In connection with this
agreement, the Company paid Clear Channel approximately $13 million, which is
included in other non-current assets and is being amortized using the straight
line method over the initial term of the contract.
Giving effect to the Hearst Transaction and the Gannett Swap discussed above,
unaudited pro forma results of operations reflect combined historical results
for WCVB, WTAE, WBAL, KMBC, WISN, WDTN, WAPT, KITV, WLWT, KOCO, the Arkansas
Stations and the Company's share of the combined broadcast cash flows from the
Clear Channel Venture and fees for providing management services to the Managed
Stations pursuant to a management agreement (See Note 12), as if all
acquisitions and financings (the Credit Facility and the Offerings) occurred as
of January 1, 1996, are as follows:
36
<PAGE>
HEARST-ARGYLE TELEVISION, INC.
Notes to Consolidated Financial Statements (Continued)
<TABLE>
<CAPTION>
Years Ended December 31,
1996 1997
----------- -----------
(In thousands, except per share data)
<S> <C> <C>
Total revenues $ 370,249 $ 387,782
Earnings from continuing operations applicable to common stockholders $ 43,627 $ 51,590
Earnings per common share - basic $ 0.81 $ 0.96
============= =============
- diluted $ 0.81 $ 0.96
============================== ============= =============
Pro forma number of shares used in calculations - basic 53,828 53,828
============= =============
- diluted 53,863 53,873
============= =============
</TABLE>
The above pro forma results are presented in response to applicable accounting
rules relating to business acquisitions and are not necessarily indicative of
the actual results that would be achieved had each of the stations been acquired
at the beginning of the periods presented, nor are they indicative of future
results of operations.
4. Intangible Assets
Intangible assets at December 31, consisted of the following:
1996 1997
------------- -------------
(In thousands)
FCC Licenses $ 126,009 $ 385,768
Cost in excess of net assets acquired -- 202,315
Network affiliation agreement 121,272 15,425
Advertiser client base asset -- 122,828
Favorable studio and office space -- 23,638
Other 12,764 24,228
------------- -------------
260,045 774,202
Accumulated amortization (28,189) (112,876)
------------- -------------
Intangible assets, net $ 231,856 $ 661,326
============= =============
5. Long-Term Debt
Long-term debt at December 31, consists of the following:
1996 1997
------------ -------------
(In thousands)
Old Credit Agreement dated October 27, 1995:
Revolving credit facility $ 21,500 $ --
Credit Facility dated August 29, 1997:
Revolving credit facility -- 85,000
Senior Notes -- 300,000
Senior Subordinated Notes 150,000 105,000
------------- -------------
Long-term debt $ 171,500 $ 490,000
============= =============
Credit Facility
Upon consummation of the Hearst Transaction, the Company entered into a $1
billion credit facility (the "Credit Facility") with the Chase Manhattan Bank
("Chase"). The Credit Facility will mature on December 31, 2004 (the
37
<PAGE>
HEARST-ARGYLE TELEVISION, INC.
Notes to Consolidated Financial Statements (Continued)
5. Long-Term Debt (continued)
"Maturity Date"). On December 31, 1999 (the "Conversion Date"), outstanding
principal indebtedness under the Credit Facility up to $750 million will be
converted into a five-year term loan (the "Term Loan"). The outstanding
principal balance of the Term Loan on the Conversion Date (the "Initial Term
Loan Balance") is to be repaid in quarterly installments on the following
schedule for the years indicated: 2000-2.5% of the Initial Term Loan Balance per
quarter; 2001-3.75% of the Initial Term Loan Balance per quarter; 2002-5% of the
Initial Term Loan Balance per quarter; 2003-6.25% of the Initial Term Loan
Balance per quarter; and, 2004-7.5% of the Initial Term Loan Balance per
quarter. On the Conversion Date and through the Maturity Date, Chase will also
provide a $250 million revolving credit facility (the "Revolving Facility") to
the Company. As of December 31, 1997, the Company had $915 million available
under the Credit Facility.
The Credit Facility is unsecured, but the Company provided a negative pledge
that it will not grant to any third party a security interest in its assets and
the stock of its subsidiaries.
Outstanding principal balances under the Credit Facility (including, after the
Conversion Date, borrowings under the Term Loan and the Revolving Facility) will
bear interest at the "applicable margin" plus either, at the Company's option,
LIBOR or the "alternate base rate." The "applicable margin" will vary depending
on the ratio of the Company's total debt to operating cash flow ("leverage
ratio"). The "alternate base rate" is the higher of (i) Chase's prime rate; (ii)
1% plus the secondary market rate for three month certificates of deposit; or,
(iii) 0.5% plus the rates on overnight federal funds transactions with members
of the Federal Reserve System. The Company will also be required to pay an
annual commitment fee based on the unused portion of the Credit Facility and the
applicable margin ranging from 0.1875% to 0.1250% (but after the Conversion
Date, only on the unused portion of the Revolving Facility).
The Credit Facility contains certain financial and other covenants and
restrictions on the Company that, among other things, (i) limit the Company's
ratio of total debt to operating cash flow to not greater than 5.5 through
December 30, 1999; 5.0 from December 31, 1999 through December 30, 2000; 4.5
from December 31, 2000 through December 30, 2001; and 4.0 from December 31, 2001
through the Maturity Date; (ii) require the Company to maintain a ratio of
operating cash flow to interest expense of not less than 2.0 through December
31, 1999, and not less than 2.5 thereafter; (iii) require the Company to
maintain a ratio of operating cash flow to "fixed charges" (generally, interest
expense, scheduled repayments of principal, taxes and capital expenditures) of
not less than 1.15; (iv) restrict the amount of operating cash flow from
businesses other than the broadcast business to 25% or less of the Company's
total operating cash flow; and, (v) at such times when the ratio of total debt
to operating cash flow is greater than or equal to 4.0, restrict the payment of
dividends and the repurchase of stock to the sum of (x) $100 million; (y)
proceeds from future stock issuances; and, (z) one-third of cash provided by
operations in excess of fixed charges.
The Credit Facility will also provide that all outstanding balances will become
due and payable at such time as Hearst's (and certain of its affiliates') equity
ownership in the Company becomes less than 35% of the total equity of the
Company and Hearst and such affiliates no longer have the right to elect a
majority of the members of the Company's Board.
On August 29, 1997, Argyle's Old Credit Agreement was retired and related
deferred financing fees were written-off and included as a cost of the Hearst
Transaction.
Private Placement Debt
As part of the Hearst Transaction, the Company assumed $275 million of Hearst
Private Placement Debt. The Company repaid the Private Placement Debt and a
related "make-whole" premium of approximately $20.9 million during December
1997.
38
<PAGE>
HEARST-ARGYLE TELEVISION, INC.
Notes to Consolidated Financial Statements (Continued)
5. Long-Term Debt (continued)
Senior Subordinated Notes
In October 1995, Argyle issued $150,000,000 of senior subordinated notes (the
"Notes"). The Notes are due in 2005 and bear interest at 9 3/4% payable
semi-annually. The Notes are general unsecured obligations of the Company. In
addition, the indenture governing the Notes imposes various conditions,
restrictions and limitations on the Company and its subsidiaries. During
December 1997, the Company repaid $45 million of the Notes at a premium of
approximately $4.4 million using proceeds from the Senior Notes Offering. In
addition, the Company wrote-off the pro-rata share of deferred financing fees
related to the Notes which were repaid.
The write-off of deferred financing fees relating to the Notes and the
make-whole premium relating to the Private Placement Debt and the premium
relating to the Notes, aggregating approximately $26.6 million pre-tax, were
classified as an extraordinary item in the accompanying statement of operations
for the period ended December 31, 1997.
Senior Notes
On November 7, 1997 the Company issued $125 million principal amount of 7.00%
Senior Notes Due 2007, priced at 99.616% of par, and $175 million principal
amount of 7.50% Debentures Due 2027, priced at 98.823% of par (collectively,
"the Senior Notes"). The Senior Notes are unsubordinated and unsecured
obligations of the Company. In addition, the indenture governing the Senior
Notes imposes various conditions, restrictions and limitations on the Company
and its subsidiaries.
Proceeds from the Senior Notes offering were used to repay existing indebtedness
of the Company. See Private Placement Debt and Senior Subordinated Notes, above.
Interest Rate Risk Management
Under the terms of the Old Credit Agreement, the Company was required to enter
into interest rate protection agreements to modify the interest characteristics
of a portion (approximately 50%) of its outstanding borrowings thereunder from a
floating rate to a fixed rate.
The Company wrote two options that gave the option holder the right to enter
into two interest rate swap agreements with the Company during May and June
1996. Premiums for these two options were $1,000,477. The option holder
exercised these options in May and June 1996, effectively fixing the Company's
interest rate at approximately 7% on $35 million of its borrowings until June
1999.
Additional information regarding these interest rate protection agreements in
effect at December 31, 1997 follows:
Notional Average Average Estimated
Amount Receive Rate Pay Rate Fair Value
------ ------------ -------- ----------
Interest rate swap agreements:
Fixed rate agreement $20,000,000 LIBOR 7.01% $(339,135)
Fixed rate agreement $15,000,000 LIBOR 6.98% $(254,122)
The Company is exposed to credit risk in the event of nonperformance by
counterparties to its interest rate swap agreements. Credit risk is limited by
entering into such agreements with primary dealers only; therefore, the Company
does not anticipate that nonperformance by counterparties will occur.
Notwithstanding this, the Company's treasury department monitors counterparty
credit ratings at least quarterly through reviewing independent credit
39
<PAGE>
HEARST-ARGYLE TELEVISION, INC.
Notes to Consolidated Financial Statements (Continued)
5. Long-Term Debt (continued)
agency reports. Both current and potential exposure are evaluated, as necessary,
by obtaining replacement cost information from alternative dealers. Potential
loss to the Company from credit risk on these agreements is limited to amounts
receivable, if any. The Company enters into these agreements solely to hedge its
interest rate risk.
The Company entered into various forward treasury lock agreements (Treasury Lock
Agreements) during August 1997 in connection with the offering of $300 million
Senior Notes. The Treasury Lock Agreements were settled simultaneous with the
closing of the Senior Notes on November 12, 1997. The average coupon rate and
treasury yield was 6.375% and 6.648%, respectively. The Company paid the related
institutions approximately $13.0 million, which was capitalized in Deferred
Acquisition and Financing Costs in the consolidated balance sheet, and is being
amortized over the life of the Senior Notes.
<TABLE>
<CAPTION>
Eight Months Four Months
Years Ended December 31, Ended Ended
1995 1996 August 31, 1997 December 31, 1997
-------- ------------------- --------------- -----------------
(Predecessor Company)
(In thousands)
<S> <C> <C> <C> <C>
Interest expense net, consists of the following:
Interest on borrowings:
Bank credit agreements $ 6,571 $ 2,231 $ 2,935 $ 2,089
Senior Subordinated Notes 2,645 14,580 9,750 4,851
Private Placement Debt -- -- -- 7,325
Senior Notes -- -- -- 2,917
Amortization of deferred financings costs and other 1,544 988 434 635
Hawaii Note 839 -- -- --
-------- -------------- -------- ---------
11,599 17,799 13,119 17,817
Interest rate swap agreements:
Changes in fair value for agreements with optional
amounts in excess of outstanding borrowings 452 436 (328) 176
Termination fee 440 -- -- --
Options related to interest rate swap agreements:
Changes in fair value 586 (1,587) -- --
-------- -------------- -------- ---------
Total interest expense 13,077 16,648 12,791 17,993
Interest income 1,025 82 42 2,163
-------- -------------- -------- ---------
Total interest expense, net $ 12,052 $ 16,566 $ 12,749 $ 15,830
======== ============== ======== =========
</TABLE>
40
<PAGE>
HEARST-ARGYLE TELEVISION, INC.
Notes to Consolidated Financial Statements (Continued)
6. Earnings Per Share ("EPS")
<TABLE>
<CAPTION>
For the Four Months Ended December 31, 1997
-------------------------------------------
(In thousands, except per share data)
Income Shares Per-Share
(Numerator) (Denominator) Amount
----------- ------------- ------
<S> <C> <C> <C>
Income before extraordinary item $ 23,878
Less: preferred stock dividends (711)
---------
Basic EPS
Earnings before extraordinary item applicable
to common stockholders $ 23,167 48,628 $ 0.48
======
Effect of Dilutive Securities
Assumed exercise of stock options -- 124
--------- --------
Diluted EPS
Earnings before extraordinary item applicable
to common stockholders plus assumed conversions
$ 23,167 48,752 $ 0.48
========= ======== ======
</TABLE>
The Series A Preferred Stock convertible into Series A Common Stock at a
conversion price of $35 per share, and certain common stock options, were
outstanding as of December 31, 1997 but were not included in the computation of
diluted EPS because the conversion price or exercise price was greater than the
average market price of the common shares during the calculation period.
For all other periods presented, the loss per share has been determined based on
the loss before extraordinary item after preferred stock dividends divided by
the weighted average number of common shares outstanding.
7. Income Taxes
The provision (benefit) for income taxes relating to income before extraordinary
item for the four months ended December 31, 1997, consists of the following:
Current:
State and local $ 2,177
Federal (64)
-----------
2,113
Deferred:
Federal 14,306
-----------
Provision for income taxes $ 16,419
===========
The effective income tax rate for the four months ended December 31, 1997 varied
from the statutory U.S. Federal income tax rate due to the following:
Statutory U.S. Federal income tax 35.0%
State income taxes, net of Federal tax benefit 4.6
Other non-deductible business expenses 1.1
----
Effective income tax rate 40.7%
====
41
<PAGE>
HEARST-ARGYLE TELEVISION, INC.
Notes to Consolidated Financial Statements (Continued)
7. Income Taxes (continued)
As a result of the losses incurred by the Predecessor for the years ended
December 31, 1995 and 1996, no U.S. Federal income tax expense or benefit has
been recorded.
Deferred tax liabilities and assets at December 31 consist of the following:
<TABLE>
<CAPTION>
1996 1997
--------- -----------
(In thousands)
<S> <C> <C>
Deferred tax liabilities:
Accelerated depreciation $ 1,624 $ 8,937
Accelerated funding of pension benefit obligation -- 10,578
Other 750 2,086
Difference between book and tax basis of intangible
assets 8,466 142,812
--------- -----------
Total deferred tax liabilities 10,840 164,413
--------- -----------
Deferred tax assets:
Allowance for doubtful accounts, not currently
deductible -- 1,721
Accrued expenses 689 4,254
Other -- 5,962
Operating loss carryforwards 11,071 8,177
--------- -----------
Total deferred tax assets 11,760 20,114
Valuation allowance for deferred tax assets (920) --
--------- -----------
Net deferred tax assets 10,840 20,114
--------- -----------
Net deferred tax assets/liabilities $ -- $ 144,299
========= ===========
</TABLE>
The Company has a net operating loss carryforward for federal income tax
purposes of approximately $19,438,000, which expires in 2010.
8. Common Stock
In connection with the Hearst Transaction, the Company's Certificate of
Incorporation was amended and restated pursuant to which, among other things,
(i) the Company's authorized common stock was increased from 50 million to 200
million shares; (ii) the Company's existing Series B Common Stock and Series C
Common Stock was reclassified as and changed into an equal number of shares of
Series A Common Stock; (iii) a Series B Common Stock was authorized and
thereafter issued to Hearst in connection with the transaction; and, (iv) the
Company's existing Series A Preferred Stock and Series B Preferred Stock
received voting rights.
The Company has 200 million shares of authorized common stock, par value $.01
per shares, with 100 million shares designated as Series A Common Stock and 100
million shares designated Series B Common Stock. Except as otherwise described
below, the issued and outstanding shares of Series A Common Stock and Series B
Common Stock vote together as a single class on all matters submitted to a vote
of stockholders, with each issued and outstanding share of Series A Common Stock
and Series B Common Stock entitling the holder thereof to one vote on all such
matters. With respect to any election of directors, (i) the holders of the
shares of Series A Common Stock are entitled to vote separately as a class to
elect two members of the Company's Board of Directors (the "Series A Directors")
and (ii) the holders of the shares of the Company's Series B Common Stock are
entitled to
42
<PAGE>
HEARST-ARGYLE TELEVISION, INC.
Notes to Consolidated Financial Statements (Continued)
8. Common Stock (continued)
vote separately as a class to elect the balance of the Company's Board of
Directors (the "Series B Directors"); provided, however, that the number of
Series B Directors shall not constitute less than a majority of the Company's
Board of Directors.
All of the outstanding shares of Series B Common Stock are held by a subsidiary
of Hearst. No holder of shares of Series B Common Stock may transfer any such
shares to any person other than to (i) Hearst; (ii) any corporation into which
Hearst is merged or consolidated or to which all or substantially all of
Hearst's assets are transferred; or, (iii) any entity controlled or consolidated
or to which all or substantially all of Hearst's assets are transferred; or,
(iii) any entity controlled by Hearst (each a "Permitted transferee"). Series B
Common Stock, however, may be converted at any time into Series A Common Stock
and freely transferred, subject to the terms and conditions of the Company's
Certificate of Incorporation and to applicable securities laws limitations.
On November 12, 1997, the Company sold an aggregate of 4 million shares of
Series A Common Stock, par value $.01 per share at $27 per share. In connection
with the offering, the underwriters exercised an over-allotment option and were
sold another 232,000 shares at $27 per share. The aggregate proceeds from the
offering net of expenses was $108.0 million.
On December 29, 1997, the Company issued approximately 2.7 million shares of
Series B Common Stock to Hearst (the "Adjustment Shares") in connection with the
Hearst Transaction relating to net working capital at the date of acquisition
(in excess of $30 million for the Hearst Broadcast group) and the purchase of
surplus pension fund assets.
9. Preferred Stock
The Company has one million shares of authorized preferred stock, par value $.01
per share. Under the Company's Certificate of Incorporation, the Company has two
issued and outstanding series of preferred stock, Series A Preferred Stock and
Series B Preferred Stock (collectively, the "Preferred Stock"). Each series of
Preferred Stock has 10,938 shares issued and outstanding at December 31, 1997.
The Preferred Stock has a cash dividend feature whereby each share accrues $65
per share annually, to be paid quarterly. The Series A Preferred Stock is
convertible at the option of the holders, at any time, into Series A Common
Stock at a conversion price of (i) on or before December 31, 2000, $35; (ii)
during the calendar year ended December 31, 2001, the product of 1.1 times $35;
and, (iii) during each calendar year after December 31, 2001, the product of 1.1
times the preceding year's conversion price. The Company has the option to
redeem all or a portion of the Series A Preferred Stock at any time after June
11, 2001 at a price equal to $1,000 per share plus any accrued and unpaid
dividends.
The holders of Series B Preferred Stock have the option to convert such Series B
Preferred Stock into shares of Series A Common Stock at any time after June 11,
2001 at the average of the closing prices for the Series A Common Stock for each
of the 10 trading days prior to such conversion date. The Company has the option
to redeem all or a portion of the Series B Preferred Stock at any time on or
after June 11, 2001, at a price equal to $1,000 per share plus any accrued and
unpaid dividends.
10. Stock Options
1997 Stock Option Plan
The Company's Board of Directors approved the amendment and restatement of the
Company's second amended and restated 1994 Stock Option Plan and adopted such
plan as the resulting 1997 Stock Option Plan (the "Plan"). The amendment
increases the number of shares reserved for issuance under the Plan to 3 million
shares of Series A Common Stock. The stock options are granted with exercise
prices at quoted market value at time of issuance.
43
<PAGE>
HEARST-ARGYLE TELEVISION, INC.
Notes to Consolidated Financial Statements (Continued)
10. Stock Options (continued)
Options cliff-vest after 3 years commencing on the effective date of the grant
and a portion of the options vest either after 9 years or in one-third
increments upon attainment of certain market price goals of the Company's stock.
All options granted pursuant to the Plan will expire no later than 10 years from
the date of grant.
Old Stock Option Plan
The Company has a stock based compensation plan under which options to purchase
Series C Common Stock up to a maximum of 12% of the Company's fully diluted, as
defined, common stock may be granted to directors and key employees. Options are
granted at a price not less than the fair market value of the stock at the date
of grant; vest either with the passage of time or upon the attainment of
performance goals; and expire 10 years from the date of grant.
The fair value of each option granted is estimated on the date of grant using
the Black-Scholes option-pricing model with the following assumption:
dividends-none; forfeitures-time vesting none, performance vesting 30%; expected
volatility - 33%, zero prior to the Company's initial public offering; risk free
interest rate - 5.25%; and expected life - 5 years. The resulting fair value is
charged to expense over the service period with a corresponding increase in
additional paid in capital. During 1995 and 1996, and for the eight months ended
August 31, 1997, the Company charged to expense approximately $675,000 and
$3,518,000, respectively related to stock based compensation.
A summary of the status of the Company's Plan as of December 31, 1995, 1996 and
1997, and changes during the years ending on those dates is presented below:
<TABLE>
<CAPTION>
1995 1996 1997
------------------------------ ------------------------------ -----------------------------
Weighted Avg. Weighted Avg. Weighted Avg.
Options Exercise Price Options Exercise Price Options Exercise Price
------- -------------- ------- -------------- ------- --------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding-
beginning of year -- -- 1,314,765 $12.15 1,338,172 $12.74
Granted 1,321,015 $12.03 74,532 $22.05 1,843,215 $26.75
Exercised -- -- -- -- (20,150) $10.45
Cancelled -- -- -- -- (1,168,247) $12.35
Forfeited (6,250) $10.00 (51,125) $11.13 (2,250) $10.00
----------- ----------- -----------
Outstanding-end
of the year 1,314,765 $12.15 1,338,172 $12.74 1,990,740 $25.85
=========== =========== ===========
Exercisable at end
of the year 432,505 $10.45 469,813 $11.04 207,125 $17.77
=========== =========== ===========
</TABLE>
The following table summarizes information about stock options outstanding at
December 31, 1997:
<TABLE>
<CAPTION>
Range of Number Outstanding Weighted Average Weighted Average
Exercise Prices at 12/31/97 Remaining Contractual Life Exercise Price
--------------- ------------------ -------------------------- ----------------
<S> <C> <C> <C>
$10.00-$29.00 1,990,740 9.5 years $17.77
</TABLE>
SFAS No. 123 provides for a fair-value based method of accounting for employee
options and measures compensation expense using an option valuation model that
takes into account, as of the grant date, the exercise price and expected life
of the option, the current price of the underlying stock and its expected
volatility, expected dividends on the stock, and the risk-free interest rate for
the expected term of the option which was used by the Company prior to the
Hearst Transaction. Subsequent to the Hearst Transaction, the Company has
elected to account for employee stock-based compensation under APB No. 25 and
related interpretations. Under APB No. 25, because the exercise price of the
Company's employee stock options equals the market price of the underlying stock
on the date of grant, no compensation expense is recognized.
44
<PAGE>
HEARST-ARGYLE TELEVISION, INC.
Notes to Consolidated Financial Statements (Continued)
10. Stock Options (continued)
Pro forma information regarding net income and earnings per share is required by
SFAS No. 123, and has been determined as if the Company had accounted for its
employee stock options under the fair value method of SFAS No. 123. The fair
value of these options was estimated at the date of grant using the
Black-Scholes option pricing model for options granted in 1995, 1996 and 1997.
The following assumptions were used for the four months ended December 31, 1997:
risk-free interest rates of 5.5%, dividend yields of 0.0%, volatility factors of
the expected market price of the Company's common stock of 27%, and the expected
life of the option of 5 and 7 years. The range of fair value of options granted
during the four months ended December 31, 1997 were $9.26-$12.34.
The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded options which have no vesting restrictions and are fully
transferable. In addition, option valuation models require the input of highly
subjective assumptions including the expected stock price volatility. Because
the Company's employee stock options have characteristics significantly
different from those of traded options, and because changes in the subjective
input assumptions can materially affect the fair value estimate, in management's
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its employee stock options.
For purposes of SFAS No. 123 pro forma disclosures, the estimated fair value of
the options is amortized to expense over the option's vesting period. The
Company's pro forma information for the four months ended December 31, 1997 is
as follows:
(In thousands, except per share data)
Pro forma net income........................................... $6,602
Pro forma earnings applicable to common stockholders........... $5,891
Pro forma basic and diluted earnings per common share.......... $ 0.12
The Company has reserved 3.0 million shares of common stock for future issuances
in connection with the Plan at December 31, 1997.
11. Net Assets Held for Sale
Upon completion of the Hearst Transaction, the Company owns television stations
in two areas (Boston and Providence, and Dayton and Cincinnati) with overlapping
service contours in violation of the FCC's local ownership rules. The FCC's
rules prohibit the ownership of two stations in the same geographic area whose
service contours overlap. To comply with these rules, the Company will be
required to divest one station in each of the aforementioned areas. Included in
the caption Net Assets Held for Sale on the accompanying audited consolidated
balance sheet as of December 31, 1997, are the net assets of the stations
located in Providence and Dayton at their carrying values. The Company expects
to complete the exchange of these assets during the third quarter of 1998. See
Note 16.
12. Related Party Transactions
The Predecessor Company entered into separate agreements with one of its
shareholders, Argyle Television Investors, L.P., and the shareholder's general
partner, ATI General Partner, L.P. (the "Partnerships"), under which Argyle
provided to the Partnerships personnel, office, property, services, expertise,
systems and other assets and amenities. In consideration for such, the
partnerships were required to reimburse the Company for expenses and costs
allocated to providing these services to the Partnerships. During the years
ended December 31, 1995 and 1996, and for the eight months ended August 31,
1997, the Company recognized total reimbursements of approximately $840,000,
$893,000 and $568,000, respectively, under these agreements. Such reimbursements
were offset against corporate general and administrative expenses in the
accompanying consolidated statements of operations. Subsequent to the
45
<PAGE>
HEARST-ARGYLE TELEVISION, INC.
Notes to Consolidated Financial Statements (Continued)
12. Related Party Transactions (continued)
Hearst Transaction such Partnerships are no longer shareholders of the Company,
and these agreements are no longer in effect.
During 1995, a related party contributed to the Company equipment with a value
of $157,998. The related party did not receive any consideration for the
contributed equipment.
In connection with the acquisition of the Northstar Stations, the Hawaii
Stations and the Buffalo Station, the Company incurred approximately $13.9
million in financing costs in 1995, a substantial portion of which were fees
paid under the Company's credit agreements. Affiliates of certain of the banks
in the credit agreement bank group were partners in a partnership that owned
shares of the Company's non-voting common stock.
In June 1995, the Company entered into an agreement (the "Buffalo Management
Agreement") to provide interim management services to the Buffalo Station
pending closing of the acquisition of the Buffalo Station. Subject to the
seller's supervision, control and approval, the Company provided to the Buffalo
Station, pursuant to the Buffalo Management Agreement, a number of management
services, including recruitment and training of personnel, direction of
advertising sales efforts, implementation of billing and collection practices,
maintenance of accounting practices, negotiation of contracts and maintenance
and acquisition of equipment. In consideration for the Company's services, the
seller paid the Company $450,000 per month (half of which was paid into escrow
pending the closing of the acquisition of the Buffalo Station). At the closing
of the acquisition of the Buffalo Station on December 5, 1995, the Buffalo
Management Agreement was terminated and that portion of the management fee
placed in escrow was released to the Company. The Company recognized $2.7
million in management fees in 1995, which are included in total revenues in the
accompanying statement of operations (associated expenses are included in
station operating expenses).
The Company has entered into a series of agreements with Hearst including a
Management Agreement (whereby the Company provides certain management services,
such as sales, news, programming and financial and accounting management
services, with respect to certain Hearst owned or operated television and radio
stations); an Option Agreement (whereby Hearst has granted the Company an option
to acquire certain Hearst owned or operated television stations, as well as a
right of first refusal with respect to another television station if Hearst
proposes to sell such station within 36 months of its acquisition); a Studio
Lease Agreement (whereby Hearst leases from the Company certain premises for
Hearst's radio broadcast stations); a Tax Sharing Agreement (whereby Hearst and
the Company have established the sharing of federal, state and local taxes after
the Company became part of the consolidated tax return of Hearst); a Name
License Agreement (whereby Hearst permits the Company to use the Hearst name in
connection with the Hearst-Argyle name and operation of its business); and a
Services Agreement (whereby Hearst provides the company certain administrative
services such as accounting, financial, legal, tax, insurance, data processing
and employee benefits). The Company recorded revenues of approximately $700,000
relating to the Management Agreement and expenses of approximately $900,000
relating to the Services Agreement, during the four months ended December 31,
1997. The Company believes that the terms of all these agreements are reasonable
to both sides; there can be no assurance, however, that more favorable terms
would not be available from third parties.
46
<PAGE>
HEARST-ARGYLE TELEVISION, INC.
Notes to Consolidated Financial Statements (Continued)
13. Commitments
The Company has obligations to various program syndicators and distributors in
accordance with current contracts for the rights to broadcast programs. Future
payments as of December 31, 1997, scheduled under contracts for programs
available are as follows (in thousands):
1998 $35,769
1999 3,417
2000 1,112
2001 394
-------
$40,692
=======
The Company has various agreements relating to non-cancelable operating leases
with an initial term of one year or more (some of which contain renewal
options), future program rights not available for broadcast at December 31,
1997, and employment contracts for key employees. Future minimum payments under
terms of these agreements as of December 31, 1997 are as follows:
Employment
Operating Program and Talent
Leases Rights Contracts
------ ------ ---------
(In thousands)
1998 $ 2,357 $20,427 $24,983
1999 1,711 44,110 18,011
2000 1,555 20,715 7,891
2001 1,351 3,877 2,573
2002 and thereafter 3,643 908 968
------- ------- -------
$10,617 $90,037 $54,426
======= ======= =======
Rent expense for operating leases for the years ended December 31, 1995 and
1996, the eight months ended August 31, 1997 and the four months ended December
31, 1997 was approximately $308,000, $532,000, $416,000 and $1,297,000,
respectively.
In the normal course of business, the Company is subject to various claims and
lawsuits. In the opinion of the Company's management, liabilities, if any,
arising from these matters will not have a significant effect on the Company's
consolidated financial statements.
14. Pension and Employee Savings Plans
Effective August 29, 1997, the Company assumed the obligations of the
noncontributory defined benefit plans (the "Pension Plans") of the non-union and
certain union employees of the Hearst Broadcast Group and purchased the excess
of the plans, fair values of pension plans assets for shares of the Company's
Series B common stock (see Note 8). Benefits under the Pension Plans are
generally based on years of credited service, age at retirement and average of
the highest five consecutive year's compensation. The cost of the Pension Plans
is computed on the basis of the Project Unit Credit Actuarial Cost Method. Past
service cost is amortized over the expected future service periods of the
employees. Beginning January 1, 1998, the Company plans to provide a
noncontributory defined benefit plan to the Company's remaining non-union
employees who are not included in the Pension Plans at December 31, 1997.
47
<PAGE>
HEARST-ARGYLE TELEVISION, INC.
Notes to Consolidated Financial Statements (Continued)
14. Pension and Employee Savings Plan (continued)
The net pension cost (benefit) for the Company's Pension Plans for the four
months ended December 31, 1997 in which the Company's non-union employees
participate are as follows:
1997
-----------------
(In thousands)
Service cost $ 736
Interest cost 891
Return on plan assets:
Actual (3,179)
Deferred 1,234
Amortization of the unrecognized net asset (40)
Other (57)
-------
Net pension benefit $ (415)
=======
The following schedule presents a reconciliation of the funded status at
December 31, 1997:
Assets Exceed Accumulated
Accumulated Benefits
Benefits Exceed Assets
------------- -------------
(In thousands)
Actuarial present value of benefit obligation:
Vested $(27,235) $(1,216)
Nonvested (1,359) (51)
-------- -------
Accumulated benefit obligation $(28,594) $(1,267)
======== =======
Plan assets at fair value $ 72,532 $ 362
Projected benefit obligation (36,227) (5,155)
-------- -------
Plan assets in excess of (less than) the
projected benefit obligation 36,305 (4,793)
Unrecognized net asset (766) (22)
Unrecognized net (gain) loss (9,879) 1,250
Unrecognized minimum liability 505 2,461
-------- -------
Deferred (accrued) pension cost $ 26,165 $(1,104)
======== =======
The deferred pension costs are included in Other Assets on the accompanying
consolidated balance sheet at December 31, 1997.
Assumptions used for computing the projected benefit obligation at December 31,
1997 are as follows:
Discount rate 7.00%
Rate of compensation 5.50%
Long-term rate of return on plan assets 9.00%
The various plans' assets consist primarily of stocks, bonds and cash
equivalents.
The Company's qualified employees may contribute from 1% to 18% of their
compensation up to certain dollar limits to a 401(k) savings plan. The Company
matches one-quarter of the employee contribution up to 6% of the employee's
compensation. The Company contributions to this plan for the years ended
December 31, 1995 and 1996, the eight months ended August 31, 1997 and the four
months ended December 31, 1997 were approximately $68,000, $186,000, $146,000,
and $348,000, respectively. During February 1997, the Company's compensation
committee
48
<PAGE>
HEARST-ARGYLE TELEVISION, INC.
Notes to Consolidated Financial Statements (Continued)
14. Pension and Employee Savings Plan (continued)
approved an increase in the Company's match. The match increased from
one-quarter to one-half of the employee contributions up to 6% of each
employee's compensation, effective July 1, 1997.
15. Fair Value of Financial Instruments
The carrying amounts and the estimated fair values of the Company's financial
instruments for which it is practicable to estimate fair value are as follows
(in thousands):
<TABLE>
<CAPTION>
December 31,
1996 1997
----------------------------- -----------------------------
Carrying Value Fair Value Carrying Value Fair Value
-------------- ---------- -------------- ----------
<S> <C> <C> <C> <C>
Old Credit Agreement dated October 27, 1995:
Revolving credit facility $21,500 $21,853 $ -- $ --
Credit Facility dated August 29, 1997:
Revolving credit facility -- -- 85,000 83,557
Senior Subordinated Notes 150,000 139,039 105,000 126,475
Senior Notes -- -- 300,000 311,551
Series A Preferred Stock* 10,938 11,321 10,938 12,371
Series B Preferred Stock* 10,938 9,604 10,938 10,019
Interest rate swaps -- (849) -- (593)
</TABLE>
* Including Additional Paid-In Capital amount.
The fair values of the Senior Notes and Preferred Stock were determined based on
the quoted market prices, the revolving credit facility was estimated using
discounted cash flow analysis based on current incremental borrowing rates for
similar types of borrowing arrangements. The fair value of the interest rate
swap agreements was determined using discounted cash flow models
For instruments including cash and cash equivalents, accounts receivable and
accounts payable the carrying amount approximates fair value because of the
short maturity of these instruments. In accordance with the requirements of SFAS
No. 107, "Disclosures About Fair Value of Financial Instruments" the Company
believes it is not practicable to estimate the current fair value of the amounts
due to Hearst because of the related party nature of the transactions.
16. Subsequent Events
On January 13, 1998, the Company issued $200,000,000 aggregate principal amount
of 7.0% Senior Notes due 2018. The net proceeds from this issuance will be used
to reduce borrowings under the Credit Facility and fund the tender offer to
repurchase $105,000,000 of the Notes outstanding at December 31, 1997, as
discussed below.
On February 10, 1998, the Company commenced a tender offer and consent
solicitation for its Notes. The total consideration for each $1,000 principal
amount of Notes tendered pursuant to the offer will be the price that would
result from a yield to November 1, 2000, the earliest stated redemption date,
equal to the sum of (i) the yield on the U.S. Treasury Note due October 31, 2000
plus (ii) 25 basis points. On March 9, 1998, the Company announced the price
will be $1,115.53 per $1,000 principal amount of Notes (or $117,130,650 for all
the Notes). This includes accrued and unpaid interest through the expected date
of payment, March 13, 1998.
On February 19, 1998, the Company announced that it agreed to exchange its WDTN
and WNAC stations with STC Broadcasting, Inc. for KSBW, the NBC affiliate
serving the Monterey - Salinas, CA, television market, and WPTZ/WNNE, the NBC
affiliates serving the Burlington, VT - Plattsburgh, NY, television market. In
addition, the
49
<PAGE>
HEARST-ARGYLE TELEVISION, INC.
Notes to Consolidated Financial Statements (Continued)
16. Subsequent Events (continued)
Company will pay STC Broadcasting, Inc. approximately $20 million. The Company
anticipates the transaction will close during the third quarter of 1998.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Information called for by Item 9 was previously reported under Item 4 of
the Company's Current Reports on Form 8-K filed with the Securities and Exchange
Commission on October 17, 1997 and October 20, 1997, which portions are
incorporated herein by reference.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information called for by Item 10 is set forth under the headings
"Executive Officers of the Company" and "Election of Directors" in the Company's
Proxy Statement relating to the 1998 Annual Meeting of Stockholders (the "1998
Proxy Statement"), which is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
Information called for by Item 11 is set forth under the heading
"Executive Compensation and Other Matters" in the 1998 Proxy Statement, which is
incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information called for by Item 12 is set forth under the heading
"Principal Stockholders" in the 1998 Proxy Statement, which is incorporated
herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information called for by Item 13 is set forth under the heading "Certain
Relationships and Related Transactions" in the 1998 Proxy Statement, which is
incorporated herein by reference.
50
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE, AND REPORTS ON FORM 8-K.
(a) Financial Statements, Schedules and Exhibits
(1) The financial statements listed in the Table of Contents for Item 8
hereof are filed as part of this report.
(2) The financial statement schedules required by Regulation S-X are
included as part of this report or are included in the information provided in
the Notes to Consolidated Financial Statements, which are filed as part of this
report.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
HEARST-ARGYLE TELEVISION, INC.
<TABLE>
<CAPTION>
Additions
Balance at Charged to Charged to Balance at
Beginning of Costs and Other Accounts Deductions End of
Description Period Expenses Describe Describe Period
----------- ------ -------- -------- -------- ------
(In thousands)
<S> <C> <C> <C> <C> <C>
Year Ended December 31, 1995:
Allowance for uncollectable accounts $ -- $ 70 $ 63(1) $ -- $ 133
Year Ended December 31, 1996:
Allowance for uncollectable accounts $ 133 $ 235 $ -- $ (199)(2) $ 169
Eight Months Ended August 31, 1997 $ 169 $ -- $ 113(1) $ (106)(2) $ 176
Four Months Ended December 31, 1997:
Allowance for uncollectable accounts $ 1,673 $ 538 $ 317(1) $ (324)(2) $ 2,204
</TABLE>
- ----------
(1) Amounts acquired in acquisitions.
(2) Net write-offs of accounts receivable.
Note: The required information regarding the valuation allowance for deferred
tax assets is included in Note 6 to the Company's Consolidated Financial
Statements.
(b) Reports on Form 8-K
(1) Current Report on Form 8-K filed October 17, 1997 reporting
the change in the Company's certifying accountants to Deloitte
& Touche and the results of the elections by holders of
options on Argyle Series A Common Stock in connection with the
Merger. No financial statements were filed on this report.
(2) Current Report on Form 8-K/A filed October 20,1997 filing a
letter from E&Y stating that E&Y agreed with certain
disclosures made by the Company in connection with the
termination of E&Y and the engagement of Deloitte & Touche. No
financial statements were filed on this report.
(3) Current Report on Form 8-K filed on November 13, 1997
announcing the completion of the Common Stock Offering and the
1997 Debt Offering. No financial statement were filed on this
report.
(c) Exhibits
The following documents are filed or incorporated by reference as exhibits
to this report.
51
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
----------- -----------
2.1 Amended and Restated Agreement and Plan of Merger, dated as of March
26, 1997, among The Hearst Corporation, HAT Merger Sub. Inc., HAT
Contribution Sub, Inc. and Argyle (incorporated by reference to
Exhibit 2.1 of the Company's Registration Statement on Form S-4
(File No. 333-32487)).
3.1 Amended and Restated Certificate of Incorporation of the Company
(incorporated by reference to Appendix C of the Company's
Registration Statement on Form S-4 (file No. 333-32487)).
3.2 Amended and Restated Bylaws of the Company (incorporated by
reference to Exhibit 4.2 of the Company's Form 8-A/A dated September
5, 1997).
4.1 Form of Indenture relating to the Senior Subordinated Notes due 2005
(including form of security) (incorporated by reference to Exhibit
4.1 of Argyle's Form 10-K for the fiscal year ending December 31,
1996).
4.2 First Supplemental Indenture dated as of June 1, 1996 among KHBS
Argyle Television, Inc. and Arkansas Argyle Television, Inc. and
United States Trust Company of New York (incorporated by reference
to Argyle's Current Report on Form 8-K dated June 11, 1996).
4.3 Second Supplemental Indenture dated as of August 29, 1997 among KMBC
Hearst- Argyle Television, Inc., WBAL Hearst-Argyle Television,
Inc., WCVB Hearst-Argyle Television, Inc., WISN Hearst-Argyle
Television, Inc., WTAE Hearst-Argyle Television, Inc. and United
States Trust Company of New York (incorporated by reference to
Exhibit 4.8 of the Company's Registration Statement on Form S-3
(File No. 333-32487)).
4.4 Third Supplemental Indenture dated as of February 26, 1998 among the
Company, Hearst-Argyle Television Stations, Inc., KMBC Hearst-Argyle
Television, Inc., WBAL Hearst-Argyle Television, Inc., WCVB
Hearst-Argyle Television, Inc., WISN Hearst- Argyle Television,
Inc., WTAE Hearst-Argyle Television, Inc., WAPT Hearst-Argyle
Television, Inc., KITV Hearst-Argyle Television, Inc., KHBS
Hearst-Argyle Television, Inc., Ohio/Oklahoma Hearst-Argyle
Television, Inc., Jackson Hearst-Argyle Television, Inc., Hawaii
Hearst-Argyle Television, Inc., Arkansas Hearst-Argyle Television,
Inc. and United States Trust Company of New York.
4.5 Form of Note for Senior Subordinated Notes due 2005 (included in
Exhibit 4.1).
4.6 Indenture, dated as of November 13, 1997, between the Company and
Bank of Montreal Trust Company, as trustee (incorporated by
reference to Exhibit 4.1 of the Company's Current Report on Form 8-K
dated November 13, 1997).
4.7 First Supplemental Indenture, dated as of November 13, 1997, between
the Company and Bank of Montreal Trust Company, as trustee
(incorporated by reference to Exhibit 4.2 of the Company's Current
Report on Form 8-K dated November 13, 1997).
4.8 Global Note representing $125,000,000 of 7% Senior Notes Due
November 15, 2007 (incorporated by reference to Exhibit 4.3 of the
Company's Current Report on Form 8-K dated November 13, 1997).
52
<PAGE>
Exhibit No. Description
----------- -----------
4.9 Global Note representing $175,000,000 of 7 1/2% Debentures Due
November 15, 2027 (incorporated by reference to Exhibit 4.4 of the
Company's Current report on Form 8-K dated January 13, 1998).
4.10 Second Supplemental Indenture, dated as of January 13, 1998, between
the Company and Bank of Montreal Trust Company, as trustee
(incorporated by reference to Exhibit 4.3 of the Company's Current
report on Form 8-K dated January 13, 1998).
4.11 Specimen of the stock certificate for the Company's Series A Common
Stock, $.01 par value per share (incorporated by reference to
Exhibit 4.3 of the Company's Forms 8A/A dated September 5, 1997).
4.12 Form of Registration Rights Agreement among the Company and the
Holders (incorporated by reference to Exhibit B to Exhibit 2.1 of
the Company's Registration Statement on Form S-4 (File No.
333-32487)).
10.1 Amended and Restated Employment Agreement of Ibra Morales
(incorporated by reference to Exhibit 10.3(c) of the Company's
Registration Statement on Form S-1 (File No. 33-96029).
10.2 Amended and Restated Employment Agreement of Harry T. Hawks
(incorporated by reference to Exhibit 10.3(d) of Argyle's
Registration Statement on Form S-1 (File No. 33-96029).
10.3 1997 Stock Option Plan (incorporated by reference to Appendix E of
the Company's Registration Statement on Form S-4 (File No.
333-22487)).
10.4 Affiliation Agreement among Multimedia, Inc., Multimedia
Entertainment, Inc. (re: WLWT) and NBC (incorporated by reference to
Exhibit 10.8(a) of the Company's Form 10-K for the fiscal year
ending December 31, 1996).
10.5 Affiliation Agreement between combined Communications Corporation of
Oklahoma, Inc. (re: KOCO) and ABC (incorporated by reference to
Exhibit 10.8(b) of the Company's Form 10-K for the fiscal year
ending December 31, 1996).
10.6 Affiliation Agreement between Providence Argyle Television, Inc.
(re: WNAC) and Fox Broadcasting Company, dated December 9, 1994, as
amended, and Amendment/NFL Package Agreement (incorporated by
reference to Exhibit 10.5(c) of the Company's Registration Statement
on Form S-1 (File No. 33-96029)).
10.7 Affiliation Agreement between Tak Communications, Inc. (re: KITV)
and ABC, dated November 4, 1994 and Satellite Television Affiliation
Agreements, dated November 9, 1994 (incorporated by reference to
Exhibit 10.5(d) of the Company's Registration Statement on Form S-1
(File No. 33-96029)).
10.8 Form of Affiliation Agreement between Jackson Argyle Television,
Inc. (re: WAPT) and ABC (incorporated by reference to Exhibit
10.5(e) of the Company's Registration Statement on Form S-1 (File
No. 33-96029)).
53
<PAGE>
Exhibit No. Description
----------- -----------
10.9 Affiliation Agreements between Sigma Broadcasting, Inc. (re: KHBS
and KHOG) and ABC (incorporated by reference to the Company's
Current Report on Form 8-K dated June 11, 1996).
10.10 Primary Television Affiliation Agreement for television Station
KMBC, dated April 26, 1988, by and between Capital Cities/ABC, Inc.
and The Hearst Corporation (incorporated by reference to Exhibit
10.1 of the Company's Quarterly Report for the quarter ended
September 30, 1997).
10.11 Primary Television Affiliation Agreement for television Station
WCVB, dated November 21, 1989, by and between Capital Cities/ABC,
Inc. and The Hearst Corporation (incorporated by reference to
Exhibit 10.2 of the Company's Quarterly Report for the quarter ended
September 30, 1997).
10.12 Primary Television Affiliation Agreement for television Station
WISN, dated November 2, 1990, by and between Capital Cities/ABC,
Inc. and The Hearst Corporation (incorporated by reference to
Exhibit 10.3 of the Company's Quarterly Report for the quarter ended
September 30, 1997).
10.13 Primary Television Affiliation Agreement for television Station
WTAE, dated July 14, 1989, by and between Capital Cities/ABC, Inc.
and The Hearst Corporation (incorporated by reference to Exhibit
10.4 of the Company's Quarterly Report for the quarter ended
September 30, 1997).
10.14 Television Affiliation Agreement for Television Broadcasting Station
WBAL-TV, dated January 2, 1995, by and between National Broadcasting
Company, Inc. and The Hearst Corporation (incorporated by reference
to Exhibit 10.5 of the Company's Quarterly Report for the quarter
ended September 30, 1997).
10.15 Amendment to the Television Affiliation Agreement for Television
Broadcasting Station WBAL-TV, dated January 2, 1995, by and between
National Broadcasting Company, Inc. and The Hearst Corporation
(incorporated by reference to Exhibit 10.6 of the Company's
Quarterly Report for the quarter ended September 30, 1997).
10.16 Form of Amended and Restated Tax Sharing Agreement (incorporated by
reference to Exhibit of the Company's Form 10-K for the fiscal year
ending December 31, 1996).
10.17 Change of Control Agreement between the Company and Dean H. Blythe
(incorporated by reference to Exhibit 10.12 of the Company's Form
10-K for the fiscal year ending December 31, 1996).
10.18 Amendment No. 1 to Amended and Restated Employment of Ibra Morales
dated July 31, 1996 (incorporated by reference to Exhibit 10.25 of
the Company's Registration Statement on Form S-4 (File No.
333-32487)).
10.19 Employment Agreement, dated as of August 12, 1997, between
Hearst-Argyle Television, Inc. and Bob Marbut (incorporated by
reference to Exhibit 10.1 of Company's Current Report on Form 8-K
filed October 17, 1997).
54
<PAGE>
Exhibit No. Description
----------- -----------
10.20 Management Services Agreement, dated as of August 29, 1997, between
The Hearst Corporation and the Company (incorporated by reference to
Exhibit 10.2 of Company's Current Report on Form 8-K filed October
17, 1997).
10.21 Option Agreement, dated as of August 29, 1997, between The Hearst
Corporation and the Company (incorporated by reference to Exhibit
10.3 of Company's Current Report on Form 8-K filed October 17,
1997).
10.22 Studio Lease Agreement, dated as of August 29, 1997, between The
Hearst Corporation and the Company (incorporated by reference to
Exhibit 10.4 of Company's Current Report on Form 8-K filed October
17, 1997).
10.23 Services Agreement, dated as of August 29, 1997, between The Hearst
Corporation and the Company (incorporated by reference to Exhibit
10.5 of Company's Current Report on Form 8-K filed October 17,
1997).
10.24 Credit Agreement between the Company, the Subsidiary Guarantors
party thereto and The Chase Manhattan Bank, as administrative agent,
dated August 29, 1997 (the "Credit Agreement").
10.25 Amendment No. 1 to the Credit Agreement dated as of October 31,
1997.
10.26 Amendment No. 2 to the Credit Agreement dated as of January 30,
1998.
10.27 Asset Exchange Agreement between Hearst-Argyle Stations, Inc., STC
Broadcasting, Inc., STC Broadcasting of Vermont, Inc., STC License
Company and STC Broadcasting of Vermont Subsidiary, Inc., dated
February 18, 1998.
10.28 Guaranty, given as of February 18, 1998 by the Company to STC
Broadcasting of Vermont, Inc., STC License Company and STC
Broadcasting of Vermont Subsidiary, Inc.
16.1 Letter from Ernst & Young LLP to the Securities and Exchange
Commission pursuant to Item 304(a)(3) of Reg. S-K (incorporated by
reference to Exhibit 16.1 of the Company's 8-K/A dated October 20,
1997).
21 List of Subsidiaries of The Company.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Deloitte & Touche LLP.
24.1 Powers of Attorney (contained on signature page hereto).
27.1 Financial Data Schedule.
27.2 1997 Restated Financial Data Schedule.
27.3 1996 Restated Financial Data Schedule.
55
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.
HEARST-ARGYLE TELEVISION, INC.
By:/s/ Dean H. Blythe
---------------------
Name: Dean H. Blythe
Title: Secretary
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below by the following persons on behalf of the
Company in the capacities indicated on March 27, 1998.
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each of the undersigned directors and
officers of HEARST-Argyle Television, Inc. hereby constitutes and appoints Dean
H. Blythe and Harry T. Hawks, or either of them, his or her true and lawful
attorney-in-fact and agent, for him or her and in his or her name, place and
stead, in any and all capacities, with full power to act alone, to sign any and
all amendments to this Report, and to file each such amendment to this Report,
with all exhibits thereto, and any and all other documents in connection
therewith, with the Securities and Exchange Commission, hereby granting unto
said attorney-in-fact and agent full power and authority to do and perform any
and all acts and things requisite and necessary to be done in and about the
premises as fully to all intents and purposes as he or she might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and agent
may lawfully do or cause to be done by virtue hereof.
Name Title
/s/ Bob Marbut Co-Chief Executive Officer and Chairman of the Board
- ------------------------- (principal executive officer)
Bob Marbut
/s/ John G. Conomikes (President, Co-Chief Executive Officer and Director
- ------------------------- (principal executive officer)
John G. Conomikes
/s/ David J. Barrett Executive Vice President, Chief Operating Officer and
- ------------------------- Director
David J. Barrett
/s/ Harry T. Hawks Senior Vice President and Chief Financial Officer
- ------------------------- (principal financial officer)
Harry T. Hawks
/s/ Teresa Lopez Controller and Assistant Secretary (principal
- ------------------------- accounting officer)
Teresa Lopez
/s/ Frank A. Bennack, Jr. Director
- -------------------------
Frank A. Bennack, Jr.
/s/ Victor F. Ganzi Director
- -------------------------
Victor F. Ganzi
/s/ George R. Hearst Director
- -------------------------
George R. Hearst
<PAGE>
/s/ William R. Hearst III Director
- -------------------------
William R. Hearst III
/s/ Gilbert C. Maurer Director
- -------------------------
Gilbert C. Maurer
/s/ David Pulver Director
- -------------------------
David Pulver
/s/ Virginia H. Randt Director
- -------------------------
Virginia H. Randt
/s/ Caroline L. Williams Director
- -------------------------
Caroline L. Williams
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
----------- -----------
2.1 Amended and Restated Agreement and Plan of Merger, dated as of March
26, 1997, among The Hearst Corporation, HAT Merger Sub. Inc., HAT
Contribution Sub, Inc. and Argyle (incorporated by reference to
Exhibit 2.1 of the Company's Registration Statement on Form S-4
(File No. 333-32487)).
3.1 Amended and Restated Certificate of Incorporation of the Company
(incorporated by reference to Appendix C of the Company's
Registration Statement on Form S-4 (file No. 333-32487)).
3.2 Amended and Restated Bylaws of the Company (incorporated by
reference to Exhibit 4.2 of the Company's Form 8-A/A dated September
5, 1997).
4.1 Form of Indenture relating to the Senior Subordinated Notes due 2005
(including form of security) (incorporated by reference to Exhibit
4.1 of Argyle's Form 10-K for the fiscal year ending December 31,
1996).
4.2 First Supplemental Indenture dated as of June 1, 1996 among KHBS
Argyle Television, Inc. and Arkansas Argyle Television, Inc. and
United States Trust Company of New York (incorporated by reference
to Argyle's Current Report on Form 8-K dated June 11, 1996).
4.3 Second Supplemental Indenture dated as of August 29, 1997 among KMBC
Hearst- Argyle Television, Inc., WBAL Hearst-Argyle Television,
Inc., WCVB Hearst-Argyle Television, Inc., WISN Hearst-Argyle
Television, Inc., WTAE Hearst-Argyle Television, Inc. and United
States Trust Company of New York (incorporated by reference to
Exhibit 4.8 of the Company's Registration Statement on Form S-3
(File No. 333-32487)).
4.4 Third Supplemental Indenture dated as of February 26, 1998 among the
Company, Hearst-Argyle Television Stations, Inc., KMBC Hearst-Argyle
Television, Inc., WBAL Hearst-Argyle Television, Inc., WCVB
Hearst-Argyle Television, Inc., WISN Hearst- Argyle Television,
Inc., WTAE Hearst-Argyle Television, Inc., WAPT Hearst-Argyle
Television, Inc., KITV Hearst-Argyle Television, Inc., KHBS
Hearst-Argyle Television, Inc., Ohio/Oklahoma Hearst-Argyle
Television, Inc., Jackson Hearst-Argyle Television, Inc., Hawaii
Hearst-Argyle Television, Inc., Arkansas Hearst-Argyle Television,
Inc. and United States Trust Company of New York.
4.5 Form of Note for Senior Subordinated Notes due 2005 (included in
Exhibit 4.1).
4.6 Indenture, dated as of November 13, 1997, between the Company and
Bank of Montreal Trust Company, as trustee (incorporated by
reference to Exhibit 4.1 of the Company's Current Report on Form 8-K
dated November 13, 1997).
4.7 First Supplemental Indenture, dated as of November 13, 1997, between
the Company and Bank of Montreal Trust Company, as trustee
(incorporated by reference to Exhibit 4.2 of the Company's Current
Report on Form 8-K dated November 13, 1997).
4.8 Global Note representing $125,000,000 of 7% Senior Notes Due
November 15, 2007 (incorporated by reference to Exhibit 4.3 of the
Company's Current Report on Form 8-K dated November 13, 1997).
<PAGE>
Exhibit No. Description
----------- -----------
4.9 Global Note representing $175,000,000 of 7 1/2% Debentures Due
November 15, 2027 (incorporated by reference to Exhibit 4.4 of the
Company's Current report on Form 8-K dated January 13, 1998).
4.10 Second Supplemental Indenture, dated as of January 13, 1998, between
the Company and Bank of Montreal Trust Company, as trustee
(incorporated by reference to Exhibit 4.3 of the Company's Current
report on Form 8-K dated January 13, 1998).
4.11 Specimen of the stock certificate for the Company's Series A Common
Stock, $.01 par value per share (incorporated by reference to
Exhibit 4.3 of the Company's Forms 8A/A dated September 5, 1997).
4.12 Form of Registration Rights Agreement among the Company and the
Holders (incorporated by reference to Exhibit B to Exhibit 2.1 of
the Company's Registration Statement on Form S-4 (File No.
333-32487)).
10.1 Amended and Restated Employment Agreement of Ibra Morales
(incorporated by reference to Exhibit 10.3(c) of the Company's
Registration Statement on Form S-1 (File No. 33-96029).
10.2 Amended and Restated Employment Agreement of Harry T. Hawks
(incorporated by reference to Exhibit 10.3(d) of Argyle's
Registration Statement on Form S-1 (File No. 33-96029).
10.3 1997 Stock Option Plan (incorporated by reference to Appendix E of
the Company's Registration Statement on Form S-4 (File No.
333-22487)).
10.4 Affiliation Agreement among Multimedia, Inc., Multimedia
Entertainment, Inc. (re: WLWT) and NBC (incorporated by reference to
Exhibit 10.8(a) of the Company's Form 10-K for the fiscal year
ending December 31, 1996).
10.5 Affiliation Agreement between combined Communications Corporation of
Oklahoma, Inc. (re: KOCO) and ABC (incorporated by reference to
Exhibit 10.8(b) of the Company's Form 10-K for the fiscal year
ending December 31, 1996).
10.6 Affiliation Agreement between Providence Argyle Television, Inc.
(re: WNAC) and Fox Broadcasting Company, dated December 9, 1994, as
amended, and Amendment/NFL Package Agreement (incorporated by
reference to Exhibit 10.5(c) of the Company's Registration Statement
on Form S-1 (File No. 33-96029)).
10.7 Affiliation Agreement between Tak Communications, Inc. (re: KITV)
and ABC, dated November 4, 1994 and Satellite Television Affiliation
Agreements, dated November 9, 1994 (incorporated by reference to
Exhibit 10.5(d) of the Company's Registration Statement on Form S-1
(File No. 33-96029)).
10.8 Form of Affiliation Agreement between Jackson Argyle Television,
Inc. (re: WAPT) and ABC (incorporated by reference to Exhibit
10.5(e) of the Company's Registration Statement on Form S-1 (File
No. 33-96029)).
<PAGE>
Exhibit No. Description
----------- -----------
10.9 Affiliation Agreements between Sigma Broadcasting, Inc. (re: KHBS
and KHOG) and ABC (incorporated by reference to the Company's
Current Report on Form 8-K dated June 11, 1996).
10.10 Primary Television Affiliation Agreement for television Station
KMBC, dated April 26, 1988, by and between Capital Cities/ABC, Inc.
and The Hearst Corporation (incorporated by reference to Exhibit
10.1 of the Company's Quarterly Report for the quarter ended
September 30, 1997).
10.11 Primary Television Affiliation Agreement for television Station
WCVB, dated November 21, 1989, by and between Capital Cities/ABC,
Inc. and The Hearst Corporation (incorporated by reference to
Exhibit 10.2 of the Company's Quarterly Report for the quarter ended
September 30, 1997).
10.12 Primary Television Affiliation Agreement for television Station
WISN, dated November 2, 1990, by and between Capital Cities/ABC,
Inc. and The Hearst Corporation (incorporated by reference to
Exhibit 10.3 of the Company's Quarterly Report for the quarter ended
September 30, 1997).
10.13 Primary Television Affiliation Agreement for television Station
WTAE, dated July 14, 1989, by and between Capital Cities/ABC, Inc.
and The Hearst Corporation (incorporated by reference to Exhibit
10.4 of the Company's Quarterly Report for the quarter ended
September 30, 1997).
10.14 Television Affiliation Agreement for Television Broadcasting Station
WBAL-TV, dated January 2, 1995, by and between National Broadcasting
Company, Inc. and The Hearst Corporation (incorporated by reference
to Exhibit 10.5 of the Company's Quarterly Report for the quarter
ended September 30, 1997).
10.15 Amendment to the Television Affiliation Agreement for Television
Broadcasting Station WBAL-TV, dated January 2, 1995, by and between
National Broadcasting Company, Inc. and The Hearst Corporation
(incorporated by reference to Exhibit 10.6 of the Company's
Quarterly Report for the quarter ended September 30, 1997).
10.16 Form of Amended and Restated Tax Sharing Agreement (incorporated by
reference to Exhibit of the Company's Form 10-K for the fiscal year
ending December 31, 1996).
10.17 Change of Control Agreement between the Company and Dean H. Blythe
(incorporated by reference to Exhibit 10.12 of the Company's Form
10-K for the fiscal year ending December 31, 1996).
10.18 Amendment No. 1 to Amended and Restated Employment of Ibra Morales
dated July 31, 1996 (incorporated by reference to Exhibit 10.25 of
the Company's Registration Statement on Form S-4 (File No.
333-32487)).
10.19 Employment Agreement, dated as of August 12, 1997, between
Hearst-Argyle Television, Inc. and Bob Marbut (incorporated by
reference to Exhibit 10.1 of Company's Current Report on Form 8-K
filed October 17, 1997).
<PAGE>
Exhibit No. Description
----------- -----------
10.20 Management Services Agreement, dated as of August 29, 1997, between
The Hearst Corporation and the Company (incorporated by reference to
Exhibit 10.2 of Company's Current Report on Form 8-K filed October
17, 1997).
10.21 Option Agreement, dated as of August 29, 1997, between The Hearst
Corporation and the Company (incorporated by reference to Exhibit
10.3 of Company's Current Report on Form 8-K filed October 17,
1997).
10.22 Studio Lease Agreement, dated as of August 29, 1997, between The
Hearst Corporation and the Company (incorporated by reference to
Exhibit 10.4 of Company's Current Report on Form 8-K filed October
17, 1997).
10.23 Services Agreement, dated as of August 29, 1997, between The Hearst
Corporation and the Company (incorporated by reference to Exhibit
10.5 of Company's Current Report on Form 8-K filed October 17,
1997).
10.24 Credit Agreement between the Company, the Subsidiary Guarantors
party thereto and The Chase Manhattan Bank, as administrative agent,
dated August 29, 1997 (the "Credit Agreement").
10.25 Amendment No. 1 to the Credit Agreement dated as of October 31,
1997.
10.26 Amendment No. 2 to the Credit Agreement dated as of January 30,
1998.
10.27 Asset Exchange Agreement between Hearst-Argyle Stations, Inc., STC
Broadcasting, Inc., STC Broadcasting of Vermont, Inc., STC License
Company and STC Broadcasting of Vermont Subsidiary, Inc., dated
February 18, 1998.
10.28 Guaranty, given as of February 18, 1998 by the Company to STC
Broadcasting of Vermont, Inc., STC License Company and STC
Broadcasting of Vermont Subsidiary, Inc.
16.1 Letter from Ernst & Young LLP to the Securities and Exchange
Commission pursuant to Item 304(a)(3) of Reg. S-K (incorporated by
reference to Exhibit 16.1 of the Company's 8-K/A dated October 20,
1997).
21 List of Subsidiaries of The Company.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Deloitte & Touche LLP.
24.1 Powers of Attorney (contained on signature page hereto).
27.1 Financial Data Schedule.
27.2 1997 Restated Financial Data Schedule.
27.3 1996 Restated Financial Data Schedule.
<PAGE>
EXHIBIT 4.4
HEARST-ARGYLE TELEVISION, INC., as Issuer,
and
THE SUBSIDIARIES OF HEARST-ARGYLE TELEVISION, INC., as Guarantors,
and
UNITED STATES TRUST COMPANY OF NEW YORK, as Trustee
----------------
THIRD SUPPLEMENTAL INDENTURE
Dated as of February 26, 1998
----------------
$105,000,000
9 3/4% Senior Subordinated Notes Due 2005
<PAGE>
THIS THIRD SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), dated as
of February 26, 1998, is among HEARST-ARGYLE TELEVISION, INC., a Delaware
corporation formerly named Argyle Television, Inc. (the "Company"), its
Subsidiaries (as more specifically identified on the signature pages hereof, the
"Guarantors"), and UNITED STATES TRUST COMPANY OF NEW YORK, a New York bank and
trust company, as trustee (the "Trustee").
RECITALS
The Company, such of the Guarantors as were then subsidiaries of the
Company and the Trustee entered into an indenture dated as of October 27, 1995
(the "Indenture") providing for the issuance by the Company of $150 million in
principal amount of its 9 3/4% Senior Subordinated Notes (the "Securities") as
provided in the Indenture, the payment of which Securities was guaranteed by
such Guarantors in the manner provided in the Guarantees set forth in the
Indenture.
The Indenture was supplemented by that certain First Supplemental Indenture
dated as of June 1, 1996, wherein two additional Subsidiaries, being KHBS Argyle
Television, Inc. (now named KHBS Hearst-Argyle Television, Inc.) and Arkansas
Argyle Television, Inc. (now named Arkansas Hearst-Argyle Television, Inc.)
executed a Guarantee and became Guarantors.
In January 1997, WGRZ Argyle Television, Inc., Grand Rapids Argyle
Television, Inc., and Buffalo Argyle Television, Inc., each a Subsidiary and a
Guarantor, merged with and into WZZM Argyle Television, Inc., also a Subsidiary
and a Guarantor, which was then renamed Ohio/Oklahoma Argyle Television, Inc.
and is now named Ohio/Oklahoma Hearst-Argyle Television, Inc.
On August 29, 1997, Providence Argyle Television, Inc., a Subsidiary and a
Guarantor, merged with and into WNAC Argyle Television, Inc., also a Subsidiary
and a Guarantor, with the surviving corporation being renamed Hearst-Argyle
Television Stations, Inc.
Also on August 29, 1997, the Indenture was supplemented by that certain
Second Supplemental Indenture dated as of August 29, 1997, wherein five
additional Subsidiaries, being KMBC Hearst-Argyle Television, Inc., WBAL
Hearst-Argyle Television, Inc., WCVB Hearst-Argyle Television, Inc., WISN
Hearst-Argyle Television, Inc. and WTAE Hearst-Argyle Television, Inc., each
executed Guarantees and became Guarantors.
On December 29, 1997, $45 million in principal amount of the Securities was
redeemed pursuant to the Company's right of redemption set forth in Section
1101(b) of the Indenture.
The Company has offered, upon the terms and subject to the conditions set
forth in the Offer to Purchase and Consent Solicitation Statement dated February
10, 1998 and the related Consent and Letter of Transmittal dated February 10,
1998 (collectively, the "Tender Offer Documents"), to purchase for cash any and
all of the outstanding Securities.
<PAGE>
The Company, with the consent of the Holders of at least a majority in
aggregate principal amount of the Outstanding Securities, desires to further
supplement the Indenture for the purpose of eliminating substantially all the
restrictive covenants contained therein.
NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE WITNESSETH:
For and in consideration of the premises and the mutual covenants contained
herein and in the Indenture and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, it is hereby mutually
covenanted and agreed, for the equal and proportionate benefit of all Holders of
the Securities, as follows:
ARTICLE ONE
-----------
DEFINITIONS
Section 101. General. Capitalized terms that are used but not defined
-------
herein shall have the meanings ascribed to them in the Indenture.
Section 102. Elimination. Pursuant to Section 902 of the Indenture, Section
-----------
101 (captioned "Definitions") is hereby amended to delete the following terms
and the corresponding definitions thereof:
"Acquired Indebtedness"
"Asset Swap"
"Average Life to Stated Maturity"
"Consolidated Interest Expense"
"Consolidated Net Income"
"Cumulative Consolidated Interest Expense"
"Cumulative Operating Cash Flow"
"Debt to Operating Cash Flow Ratio"
"Disinterested Director"
"Operating Cash Flow"
"Permitted Investment"
"Permitted Payment"
"Qualified Capital Stock"
"Restricted Payments"
"Tax Sharing Agreement"
THIRD SUPPLEMENTAL INDENTURE - Page 2
<PAGE>
ARTICLE TWO
-----------
ELIMINATION OF CERTAIN EVENTS OF DEFAULT
Section 201. Elimination. Pursuant to Section 902 of the Indenture, Article
-----------
Five of the Indenture (captioned "REMEDIES"), being Sections 501 through 516
thereof, inclusive, is hereby amended as follows:
a. Section 501(c) of the Indenture is hereby amended by deleting
the text of Section 501(c) in its entirety and substituting therefor the
following:
" (i) there shall be a default in the performance, or breach, of
any covenant or agreement of the Company or any Guarantor under this Indenture
or any Guarantee (other than a default in the performance, or breach, of a
covenant or agreement which is specifically dealt with in clauses (a) or (b) of
this Section 501 or in subclause (ii) of this clause (c) of this Section 501)
and such default or breach shall continue for a period of 30 days after written
notice has been given, by certified mail, (x) to the Company by the Trustee or
(y) to the Company and the Trustee by the Holders of at least 25% in the
aggregate principal amount of the Outstanding Securities, specifying such
default or breach and requiring it to be remedied and stating that such notice
is a "Notice of Default" hereunder; or (ii) there shall have been a default in
the performance or breach of the provisions of Article Eight;"
b. Section 501(d) of the Indenture is hereby amended by deleting
the text of Section 501(d) in its entirety and substituting therefor the
following: "Intentionally Omitted;"
c. Section 501(f) of the Indenture is hereby amended by deleting
the text of Section 501(f) in its entirety and substituting therefor the
following: "Intentionally Omitted;"
d. Section 501(g) of the Indenture is hereby amended by deleting
the text of Section 501(g) in its entirety and substituting therefor the
following: "Intentionally Omitted;"
ARTICLE THREE
-------------
ELIMINATION OF RESTRICTIVE COVENANTS
Section 301. Elimination. Pursuant to Section 902 of the Indenture, Article
-----------
Ten of the Indenture (captioned "COVENANTS"), being Sections 1001 through 1021
thereof, inclusive, is hereby amended as follows:
THIRD SUPPLEMENTAL INDENTURE - Page 3
<PAGE>
a. Section 1008 of the Indenture is hereby amended by deleting the text of
Section 1008 in its entirety and substituting therefor the following:
"Intentionally Omitted."
b. Section 1009 of the Indenture is hereby amended by deleting the text of
Section 1009 in its entirety and substituting therefor the following:
"Intentionally Omitted."
c. Section 1010 of the Indenture is hereby amended by deleting the text of
Section 1010 in its entirety and substituting therefor the following:
"Intentionally Omitted."
d. Section 1011 of the Indenture is hereby amended by deleting the text of
Section 1011 in its entirety and substituting therefor the following:
"Intentionally Omitted."
e. Section 1012 of the Indenture is hereby amended by deleting the text of
Section 1012 in its entirety and substituting therefor the following:
"Intentionally Omitted."
f. Section 1013 of the Indenture is hereby amended by deleting the text of
Section 1013 in its entirety and substituting therefor the following:
"Intentionally Omitted."
g. Section 1014 of the Indenture is hereby amended by deleting the text of
Section 1014 in its entirety and substituting therefor the following:
"Intentionally Omitted."
h. Section 1015 of the Indenture is hereby amended by deleting the text of
Section 1015 in its entirety and substituting therefor the following:
"Intentionally Omitted."
i. Section 1016 of the Indenture is hereby amended by deleting the text of
Section 1016 in its entirety and substituting therefor the following:
"Intentionally Omitted."
j. Section 1017 of the Indenture is hereby amended by deleting the text of
Section 1017 in its entirety and substituting therefor the following:
"Intentionally Omitted."
k. Section 1018 of the Indenture is hereby amended by deleting the text of
Section 1018 in its entirety and substituting therefor the following:
"Intentionally Omitted."
l. Section 1019 of the Indenture is hereby amended by deleting the text of
Section 1019 in its entirety and substituting therefor the following:
"Intentionally Omitted."
THIRD SUPPLEMENTAL INDENTURE - Page 4
<PAGE>
m. Section 1020(a) of the Indenture is hereby amended by deleting the text
of Section 1020(a) in its entirety and substituting therefor the following:
"The Company shall furnish to the Trustee, not less often than annually, a
brief certificate signed by two executive officers of the Company, at least one
of whom is the principal executive officer, principal financial officer or
principal accounting officer of the Company, as to their knowledge of the
Company's and each Guarantor's compliance with all conditions and covenants
under this Indenture."
n. Section 1021 of the Indenture is hereby amended by deleting the phrase
"Sections 1006 through 1012, 1014 and 1017 through 1020" in the first sentence
and substituting therefor the phrase "Sections 1006, 1007 and 1020".
ARTICLE FOUR
------------
MISCELLANEOUS
Section 401. Effect of Supplemental Indenture. This Supplemental Indenture
--------------------------------
supplements the Indenture and shall be subject to all the terms thereof. Except
as supplemented hereby, the Indenture shall continue in full force and effect.
Section 402. Confirmation and Preservation of Indenture. The Indenture as
------------------------------------------
supplemented by this Supplemental Indenture is in all respects confirmed and
preserved.
Section 403. Conflict With Trust Indenture Act. If any provision of this
---------------------------------
Supplemental Indenture limits, qualifies or conflicts with any provision of the
Trust Indenture Act of 1939, as amended (the "Act"), that is required under the
Act to be part of and govern any provision of this Supplemental Indenture, the
provisions of the Act shall control. If any provision of this Supplemental
Indenture modifies or excludes any provision of the Act that may be so modified
or excluded, such provision of the Act shall be deemed to apply to the Indenture
as so modified or excluded by this Supplemental Indenture, as the case may be.
Section 404. Severability. If any provision in this Supplemental Indenture
------------
shall be invalid, illegal or otherwise unenforceable, then the validity,
legality or enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
Section 405. Counterparts. This Supplemental Indenture may be executed in
------------
any number of counterparts, each of which, when so executed and delivered, shall
be an original; such counterparts shall together constitute but one and the same
instrument.
THIRD SUPPLEMENTAL INDENTURE - Page 5
<PAGE>
Section 406. Effectiveness. This Supplemental Indenture shall be effective
-------------
as of the opening of business on the Payment Date (as defined in the Tender
Offer Documents).
Section 407. Recitals. The recitals contained herein shall be taken as the
--------
statements of the Company. The Trustee assumes no responsibility for their
correctness. The Trustee makes no representations or warranties as to the
validity or sufficiency of this Supplemental Indenture.
Section 408. Governing Law. This Supplemental Indenture shall be governed
-------------
by and construed in accordance with the laws of the jurisdiction that governs
the Indenture and its construction.
[The rest of this page has been intentionally left blank.]
THIRD SUPPLEMENTAL INDENTURE - Page 6
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed, all as of the day and year first above written.
HEARST-ARGYLE TELEVISION, INC.
HEARST-ARGYLE TELEVISION STATIONS, INC.
WAPT HEARST-ARGYLE TELEVISION, INC.
KITV HEARST-ARGYLE TELEVISION, INC.
KHBS HEARST-ARGYLE TELEVISION, INC.
KMBC HEARST-ARGYLE TELEVISION, INC.
WBAL HEARST-ARGYLE TELEVISION, INC.
WCVB HEARST-ARGYLE TELEVISION, INC.
WISN HEARST-ARGYLE TELEVISION, INC.
WTAE HEARST-ARGYLE TELEVISION, INC.
OHIO/OKLAHOMA HEARST-ARGYLE TELEVISION, INC.
JACKSON HEARST-ARGYLE TELEVISION, INC.
HAWAII HEARST-ARGYLE TELEVISION, INC.
ARKANSAS HEARST-ARGYLE TELEVISION, INC.
All By: /s/ Harry T. Hawks
-------------------------------------
Name: Harry T. Hawks
Title: Senior Vice President
Attest: /s/ Dean H. Blythe
--------------------------
Name: Dean H. Blythe
Title: Secretary
UNITED STATES TRUST COMPANY OF
NEW YORK, as Trustee
By:
---------------------------------
Name:
-------------------------
Title:
------------------------
Attest:
------------------------
Name:
-------------------
Title:
------------------
THIRD SUPPLEMENTAL INDENTURE - Page 7
<PAGE>
STATE OF New York (S)
(S)
COUNTY OF New York (S)
This instrument was acknowledged before me on February 26, 1998 by
Harry T. Hawks, Senior Vice President of each of HEARST-ARGYLE TELEVISION, INC.,
HEARST-ARGYLE TELEVISION STATIONS, INC., WAPT HEARST-ARGYLE TELEVISION, INC.,
KITV HEARST-ARGYLE TELEVISION, INC., KHBS HEARST-ARGYLE TELEVISION, INC., KMBC
HEARST-ARGYLE TELEVISION, INC., WBAL HEARST-ARGYLE TELEVISION, INC., WCVB
HEARST-ARGYLE TELEVISION, INC., WISN HEARST-ARGYLE TELEVISION, INC., WTAE
HEARST-ARGYLE TELEVISION, INC., OHIO/OKLAHOMA HEARST-ARGYLE TELEVISION, INC.,
JACKSON HEARST-ARGYLE TELEVISION, INC., HAWAII HEARST-ARGYLE TELEVISION, INC.
and ARKANSAS HEARST-ARGYLE TELEVISION, INC., on behalf of each said corporation.
Given under my hand and official seal this 26th day of February, 1998.
/s/ Kevin J. McCauley
---------------------------------------
Signature
Notary in and for the State of New York.
[NOTARY SEAL APPEARS HERE]
THIRD SUPPLEMENTAL INDENTURE - Page 8
<PAGE>
STATE OF New York (S)
(S)
COUNTY OF New York (S)
This instrument was acknowledged before me on February 26, 1998 by Dean H.
Blythe, Secretary of each of HEARST-ARGYLE TELEVISION, INC., HEARST-ARGYLE
TELEVISION STATIONS, INC., WAPT HEARST-ARGYLE TELEVISION, INC., KITV
HEARST-ARGYLE TELEVISION, INC., KHBS HEARST-ARGYLE TELEVISION, INC., KMBC
HEARST-ARGYLE TELEVISION, INC., WBAL HEARST-ARGYLE TELEVISION, INC., WCVB
HEARST-ARGYLE TELEVISION, INC., WISN HEARST-ARGYLE TELEVISION, INC., WTAE
HEARST-ARGYLE TELEVISION, INC., OHIO/OKLAHOMA HEARST-ARGYLE TELEVISION, INC.,
JACKSON HEARST-ARGYLE TELEVISION, INC., HAWAII HEARST-ARGYLE TELEVISION, INC.
and ARKANSAS HEARST-ARGYLE TELEVISION, INC., on behalf of each said corporation.
Given under my hand and official seal this 26th day of February, 1998.
/s/ Kevin J. McCauley
-----------------------------------------
Signature
Notary in and for the State of New York.
STATE OF (S) [NOTARY SEAL APPEARS HERE]
(S)
COUNTY OF (S)
This instrument was acknowledged before me on February 26, 1998 by
_________________, ______________________ of UNITED STATES TRUST COMPANY OF NEW
YORK, a New York bank and trust company, and on behalf of said bank and trust
company. Given under my hand and official seal this 26th day of February, 1998.
-----------------------------------------
Signature
Notary in and for the State of _________.
THIRD SUPPLEMENTAL INDENTURE - Page 9
<PAGE>
STATE OF (S)
(S)
COUNTY OF (S)
This instrument was acknowledged before me on February 26, 1998 by Dean H.
Blythe, Secretary of each of HEARST-ARGYLE TELEVISION, INC., HEARST-ARGYLE
TELEVISION STATIONS, INC., WAPT HEARST-ARGYLE TELEVISION, INC., KITV
HEARST-ARGYLE TELEVISION, INC., KHBS HEARST-ARGYLE TELEVISION, INC., KMBC
HEARST-ARGYLE TELEVISION, INC., WBAL HEARST-ARGYLE TELEVISION, INC., WCVB
HEARST-ARGYLE TELEVISION, INC., WISN HEARST-ARGYLE TELEVISION, INC., WTAE
HEARST-ARGYLE TELEVISION, INC., OHIO/OKLAHOMA HEARST-ARGYLE TELEVISION, INC.,
JACKSON HEARST-ARGYLE TELEVISION, INC., HAWAII HEARST-ARGYLE TELEVISION, INC.
and ARKANSAS HEARST-ARGYLE TELEVISION, INC., on behalf of each said corporation.
Given under my hand and official seal this 26th day of February, 1998.
------------------------------------------
Signature
Notary in and for the State of __________.
STATE OF Texas (S)
(S)
COUNTY OF Dallas (S)
This instrument was acknowledged before me on February 26, 1998 by [NAME
APPEARS HERE], AUTHORIZED SIGNATORY of UNITED STATES TRUST COMPANY OF NEW YORK,
a New York bank and trust company, and on behalf of said bank and trust company.
Given under my hand and official seal this 26th day of February, 1998.
[SIGNATURE APPEARS HERE]
------------------------------------------
Signature
Notary in and for the State of Texas.
THIRD SUPPLEMENTAL INDENTURE - Page 9
<PAGE>
EXHIBIT 10.24
[Conformed Copy]
33117-001-00
================================================================================
CREDIT AGREEMENT
dated as of
August 29, 1997
between
ARGYLE TELEVISION, INC.
(to be renamed HEARST-ARGYLE TELEVISION, INC.
following the Merger Transactions referred to herein)
The SUBSIDIARY GUARANTORS Party Hereto
The LENDERS Party Hereto
THE CHASE MANHATTAN BANK,
as Administrative Agent
and
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK,
as Documentation Agent
-------------------
$1,000,000,000
-------------------
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
ARTICLE I
DEFINITIONS
<S> <C>
SECTION 1.01. Defined Terms................................................. 1
SECTION 1.02. Classification of Loans and Borrowings........................ 28
SECTION 1.03. Terms Generally............................................... 28
SECTION 1.04. Accounting Terms; GAAP........................................ 29
ARTICLE II
THE CREDITS
SECTION 2.01. The Commitments............................................... 30
SECTION 2.02. Loans and Borrowings.......................................... 31
SECTION 2.03. Requests for Borrowings....................................... 32
SECTION 2.04. Swingline Loans............................................... 33
SECTION 2.05. Letters of Credit............................................. 35
SECTION 2.06. Funding of Borrowings......................................... 39
SECTION 2.07. Interest Elections............................................ 40
SECTION 2.08. Termination and Reduction of the Commitments.................. 41
SECTION 2.09. Repayment of Loans; Evidence of Debt.......................... 43
SECTION 2.10. Prepayment of Loans........................................... 45
SECTION 2.11. Fees.......................................................... 49
SECTION 2.12. Interest...................................................... 51
SECTION 2.13. Alternate Rate of Interest.................................... 51
SECTION 2.14. Increased Costs............................................... 52
SECTION 2.15. Break Funding Payments........................................ 53
SECTION 2.16. Taxes......................................................... 54
SECTION 2.17. Payments Generally; Pro Rata Treatment; Sharing of Set-offs... 55
SECTION 2.18. Mitigation Obligations; Replacement of Lenders................ 57
ARTICLE III
GUARANTEE
SECTION 3.01. The Guarantee................................................. 58
SECTION 3.02. Obligations Unconditional..................................... 59
SECTION 3.03. Reinstatement................................................. 60
SECTION 3.04. Subrogation................................................... 60
SECTION 3.05. Remedies...................................................... 60
SECTION 3.06. Instrument for the Payment of Money........................... 60
</TABLE>
-i-
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 3.07. Continuing Guarantee 60
SECTION 3.08. Rights of Contribution 61
SECTION 3.09. General Limitation on Guarantee Obligations.. 61
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Organization; Powers.......................................... 62
SECTION 4.02. Authorization; Enforceability................................. 62
SECTION 4.03. Governmental Approvals; No Conflicts.......................... 62
SECTION 4.04. Financial Condition; No Material Adverse Change............... 63
SECTION 4.05. Properties.................................................... 64
SECTION 4.06. Litigation and Environmental Matters.......................... 64
SECTION 4.07. Compliance with Laws and Agreements........................... 65
SECTION 4.08. Investment and Holding Company Status......................... 65
SECTION 4.09. Taxes......................................................... 65
SECTION 4.10. ERISA......................................................... 65
SECTION 4.11. Disclosure.................................................... 66
SECTION 4.12. Use of Credit................................................. 66
SECTION 4.13. Material Agreements and Liens With Respect to Indebtedness.... 66
SECTION 4.14. Capitalization................................................ 67
SECTION 4.15. Subsidiaries and Investments.................................. 67
SECTION 4.16. Station Licenses.............................................. 68
SECTION 4.17. Merger Agreement.............................................. 69
ARTICLE V
CONDITIONS
SECTION 5.01. Effective Date................................................ 69
SECTION 5.02. Each Credit Event............................................. 71
ARTICLE VI
AFFIRMATIVE COVENANTS
SECTION 6.01. Financial Statements and Other Information.................... 72
SECTION 6.02. Notices of Material Events.................................... 74
SECTION 6.03. Existence; Conduct of Business................................ 75
SECTION 6.04. Payment of Obligations........................................ 75
SECTION 6.05. Maintenance of Properties; Insurance.......................... 75
SECTION 6.06. Books and Records; Inspection Rights.......................... 75
SECTION 6.07. Compliance with Laws.......................................... 76
</TABLE>
-ii-
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 6.08. Use of Proceeds and Letters of Credit......................... 76
SECTION 6.09. Certain Obligations Respecting Subsidiaries................... 76
ARTICLE VII
NEGATIVE COVENANTS
SECTION 7.01. Indebtedness.................................................. 78
SECTION 7.02. Liens......................................................... 79
SECTION 7.03. Fundamental Changes........................................... 80
SECTION 7.04. Lines of Business............................................. 83
SECTION 7.05. Investments................................................... 83
SECTION 7.06. Restricted Payments........................................... 85
SECTION 7.07. Transactions with Affiliates.................................. 85
SECTION 7.08. Restrictive Agreements........................................ 86
SECTION 7.09. Modifications of Certain Documents............................ 87
SECTION 7.10. Certain Financial Covenants................................... 87
ARTICLE VIII
EVENTS OF DEFAULT................................... 88
ARTICLE IX
THE ADMINISTRATIVE AGENT ............................... 91
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Notices...................................................... 93
SECTION 10.02. Waivers; Amendments.......................................... 94
SECTION 10.03. Expenses; Indemnity; Damage Waiver........................... 95
SECTION 10.04. Successors and Assigns....................................... 96
SECTION 10.05. Survival..................................................... 99
SECTION 10.06. Counterparts; Integration; Effectiveness..................... 99
SECTION 10.07. Severability................................................. 100
SECTION 10.08. Right of Setoff.............................................. 100
SECTION 10.09. Governing Law; Jurisdiction; Consent to Service of Process... 100
SECTION 10.10. WAIVER OF JURY TRIAL......................................... 101
SECTION 10.11. Headings..................................................... 101
SECTION 10.12. Treatment of Certain Information; Confidentiality............ 101
</TABLE>
-iii-
<PAGE>
SCHEDULE I - Commitments
SCHEDULE II - Material Agreements and Liens with Respect to Indebtedness
SCHEDULE III - Litigation and Environmental Matters
SCHEDULE IV - Subsidiaries and Investments
SCHEDULE V - Station Licenses
SCHEDULE VI - Certain Equity Rights
EXHIBIT A - Form of Assignment and Acceptance
EXHIBIT B - Form of Guarantee Assumption Agreement
EXHIBIT C - Form of Opinion of Counsel to the Obligors
EXHIBIT D - Form of Opinion of Special Communications Counsel
EXHIBIT E - Form of Opinion of Special New York Counsel to The
Chase Manhattan Bank
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CREDIT AGREEMENT dated as of August 29, 1997, between ARGYLE
TELEVISION, INC. (to be renamed HEARST-ARGYLE TELEVISION, INC., following the
Merger Transactions referred to herein), the SUBSIDIARY GUARANTORS party hereto,
the LENDERS party hereto and THE CHASE MANHATTAN BANK, as Administrative Agent.
Pursuant to an Amended and Restated Agreement and Plan of Merger dated
as of March 26, 1997 by and among The Hearst Corporation, HAT Merger Sub, Inc.,
HAT Contribution Sub, Inc., and Argyle Television, Inc., the parties thereto
have agreed to effect the Merger Transactions (as hereinafter defined)
providing, inter alia, for the transfer to Argyle Television, Inc. of the Hearst
----- ----
Stations (as hereinafter defined), and related obligations and liabilities. In
that connection, Argyle Television, Inc. has requested that the Lenders extend
credit to it (by means of loans and letters of credit) in an aggregate amount up
to $1,000,000,000 (which may, in the circumstances herein provided, be increased
to $1,250,000,000) to finance the cash portion of the Merger Transactions, to
pay for fees and expenses relating thereto, to finance acquisitions, to
refinance existing indebtedness of Argyle Television, Inc. (including certain
indebtedness assumed in connection with the Merger Transactions), to repurchase
outstanding shares of its capital stock and for the general corporate purposes
of Argyle Television, Inc. and its subsidiaries. The Lenders are willing to
extend such credit upon the terms and conditions hereof and, accordingly, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Defined Terms. As used in this Agreement, the
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following terms have the meanings specified below:
"ABR", when used in reference to any Loan or Borrowing, refers to
---
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Alternate Base Rate.
"Acquisition" shall have the meaning assigned to such term in Section
-----------
7.03(c)(iv).
"Acquisition Related Compensation Expenses" means, with respect to any
-----------------------------------------
acquisition, (i) severance payments made to terminated employees in connection
with such acquisition, (ii) stay bonuses paid in connection with such
acquisition and (iii) costs and fees related to hiring and relocating new
employees in connection with such acquisition, including payments to employee
search firms.
"Additional Permitted Indebtedness" means Indebtedness of the Borrower
---------------------------------
incurred or assumed in accordance with the provisions of Section 7.01(g).
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"Adjusted LIBO Rate" means, with respect to any Eurodollar Borrowing
------------------
for any Interest Period, an interest rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest
Period multiplied by (b) the Statutory Reserve Rate.
"Administrative Agent" means The Chase Manhattan Bank, in its capacity
--------------------
as administrative agent for the Lenders hereunder.
"Administrative Questionnaire" means an Administrative Questionnaire
----------------------------
in a form supplied by the Administrative Agent.
"Affiliate" means, with respect to a specified Person, another Person
---------
that directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.
"Alternate Base Rate" means, for any day, a rate per annum equal to
-------------------
the greatest of (a) the Prime Rate in effect on such day, (b) the Base CD Rate
in effect on such day plus 1% and (c) the Federal Funds Effective Rate in effect
on such day plus 1/2 of 1%. Any change in the Alternate Base Rate due to a
change in the Prime Rate, the Base CD Rate or the Federal Funds Effective Rate
shall be effective from and including the effective date of such change in the
Prime Rate, the Base CD Rate or the Federal Funds Effective Rate, respectively.
"Applicable Margin" means, with respect to any ABR Loan (including any
-----------------
Swingline Loan) or Eurodollar Loan, or with respect to the commitment fees
payable hereunder, as the case may be, the applicable rate per annum set forth
below under the caption "ABR Loans", "Eurodollar Loans" or "Commitment Fee", as
the case may be, based upon the Leverage Ratio as at the last day of the fiscal
quarter most recently ended as to which the Borrower has either delivered
financial statements pursuant to Section 6.01, or (in the case of the fourth
fiscal quarter in any fiscal year) as to which the Borrower has otherwise
delivered financial statements as at the end of and for such fiscal quarter (or,
prior to the delivery of the first of such statements after the Effective Date,
upon the Leverage Ratio set forth in the certificate of a Financial Officer
delivered pursuant to Section 5.01(i)):
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=======================================================
Leverage ABR Eurodollar Commitment
Ratio: Loans Loans Fee
- -------------------------------------------------------
Greater than 5.00x 0.00% 0.625% 0.1875%
- -------------------------------------------------------
Greater than 4.50x
but less than or
equal to 5.00x 0.00% 0.500% 0.1500%
- -------------------------------------------------------
Greater than 4.00x
but less than or
equal to 4.50x 0.00% 0.400% 0.1250%
- -------------------------------------------------------
Less than or equal
to 4.00x 0.00% 0.325% 0.1250%
=======================================================
Each change in the "Applicable Margin" based upon any change in the
Leverage Ratio shall become effective for purposes of the accrual of interest
and commitment fees hereunder (including in respect of all then-outstanding
Loans and Commitments) on the date three Business Days after the delivery to the
Administrative Agent of the financial statements of the Borrower and its
Consolidated Subsidiaries for the most recently ended fiscal quarter pursuant to
Section 6.01, and shall remain effective for such purpose until three Business
Days after the next delivery of such financial statements to the Administrative
Agent hereunder, provided that, notwithstanding the foregoing, the Applicable
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Margin shall be the highest rates provided for in the above schedule for any
period during which either (i) an Event of Default shall have occurred and be
continuing or (ii) the Borrower shall be in default of its obligation to deliver
financial statements for any fiscal quarter by the times specified in Section
6.01 (but upon the cure or waiver of any such Event of Default or default, this
proviso shall no longer be applicable until another such Event of Default or
default shall occur).
"Applicable Percentage" means, with respect to any Lender, the
---------------------
percentage of the total Revolving Commitments represented by such Lender's
Revolving Commitment. If the Revolving Commitments have terminated or expired,
the Applicable Percentages shall be determined based upon the Revolving
Commitments most recently in effect, giving effect to any assignments.
"Argyle Stations" means, collectively, the Cincinnati Station, the
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Providence Station, and television broadcast stations KITV-TV in Honolulu,
Hawaii (and its various satellite stations), WAPT-TV in Jackson, Mississippi,
KHBS-TV in Ft. Smith, Arkansas, KHOG-TV in Fayetteville, Arkansas, and KOCO-TV
in Oklahoma City, Oklahoma.
"Assessment Rate" means, for any day, the annual assessment rate in
---------------
effect on such day that is payable by a member of the Bank Insurance Fund
classified as
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"well-capitalized" and within supervisory subgroup "B" (or a comparable
successor risk classification) within the meaning of 12 C.F.R. Part 327 (or any
successor provision) to the Federal Deposit Insurance Corporation for insurance
by such Corporation of time deposits made in dollars at the offices of such
member in the United States; provided that if, as a result of any change in any
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law, rule or regulation, it is no longer possible to determine the Assessment
Rate as aforesaid, then the Assessment Rate shall be such annual rate as shall
be determined by the Administrative Agent to be representative of the cost of
such insurance to the Lenders.
"Assignment and Acceptance" means an assignment and acceptance entered
-------------------------
into by a Lender and an assignee (with the consent of the party or parties whose
consent is required by Section 10.04), and accepted by the Administrative Agent,
in the form of Exhibit A or any other form approved by the Administrative Agent.
"Available Revolving Credit" means, at any date, the aggregate unused
--------------------------
amount of the Revolving Credit Commitments hereunder (after giving effect to any
pending Borrowings or prepayments as to which notice shall have been given
hereunder) to the extent that (on a pro forma basis) such Revolving Credit
Commitments could have been utilized through Borrowings hereunder for general
working capital purposes during the period of four fiscal quarters most recently
ended for which financial statements are available hereunder.
"Base CD Rate" means the sum of (a) the Three-Month Secondary CD Rate
------------
multiplied by the Statutory Reserve Rate plus (b) the Assessment Rate.
"Basic Documents" means, collectively, the Loan Documents, the Merger
---------------
Agreement, the Private Placement Documents and Tax Sharing Agreement.
"Basket Investments" has the meaning assigned to such term in Section
------------------
7.05(h).
"Board" means the Board of Governors of the Federal Reserve System of
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the United States of America.
"Borrower" means Argyle Television, Inc. (to be renamed Hearst-Argyle
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Television, Inc. following the Merger Transactions), a Delaware corporation.
"Borrowing" means (a) Loans of the same Class and Type, made,
---------
converted or continued on the same date and, in the case of Eurodollar Loans, as
to which a single Interest Period is in effect or (b) a Swingline Loan.
"Borrowing Request" means a request by the Borrower for a Borrowing in
-----------------
accordance with Section 2.03.
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"Bridge Debt" means Indebtedness of Cash Sub in an aggregate principal
-----------
amount equal to $200,000,000 incurred immediately prior to the Merger
Transactions, which Indebtedness is to be assumed by the Borrower in connection
with the Merger Transactions.
"Broadcast Cash Flow" means, for any period, the sum (determined on a
-------------------
consolidated basis without duplication in accordance with GAAP) for the Borrower
and its Consolidated Subsidiaries, of EBITDA for such period, calculated before
Corporate Overhead for such period.
"Business Day" means any day that is not a Saturday, Sunday or other
------------
day on which commercial banks in New York City are authorized or required by law
to remain closed; provided that, when used in connection with a Eurodollar Loan,
--------
the term "Business Day" shall also exclude any day on which banks are not open
for dealings in dollar deposits in the London interbank market.
"Capital Expenditures" means, for any period, expenditures (including
--------------------
the aggregate amount of Capital Lease Obligations incurred during such period)
made by the Borrower or any of its Consolidated Subsidiaries to acquire or
construct fixed assets, plant and equipment (including renewals, improvements
and replacements, but excluding repairs) during such period computed in
accordance with GAAP; provided that any such expenditures made in connection
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with any Acquisition shall not constitute Capital Expenditures.
"Capital Lease Obligations" of any Person means the obligations of
-------------------------
such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.
"Cash Sub" means HAT Contribution Sub, Inc., a Delaware corporation.
--------
"Casualty Event" means, with respect to any property of the Borrower
--------------
or any of its Consolidated Subsidiaries, any casualty or other insured damage
to, or any taking under power of eminent domain or by condemnation or similar
proceeding of, such property for which the Borrower or any of its Consolidated
Subsidiaries receives insurance proceeds, or proceeds of a condemnation award or
other compensation.
"Change of Control" means that (a) an aggregate of at least 35% of the
-----------------
outstanding shares of capital stock of the Borrower shall cease to be owned
beneficially by (i) Hearst and (ii) all "Permitted Transferees" under and as
defined in the Certificate of Incorporation of the Borrower as in effect
immediately after the Merger Transactions and (b) Hearst and such "Permitted
Transferees", collectively, shall cease to be able to elect a majority of the
members of the Board of Directors of the Borrower (or such greater number
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of the members of such Board of Directors as shall be necessary, under the
Certificate of Incorporation and by-laws of the Borrower, to approve all actions
requiring approval of such Board of Directors assuming full attendance by all
members of such Board of Directors at a meeting thereof).
"Change in Law" means (a) the adoption of any law, rule or regulation
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after the date of this Agreement, (b) any change in any law, rule or regulation
or in the interpretation or application thereof by any Governmental Authority
after the date of this Agreement or (c) compliance by any Lender or the Issuing
Lender (or, for purposes of Section 2.14(b), by any lending office of such
Lender or by such Lender's or the Issuing Lender's holding company, if any) with
any request, guideline or directive (whether or not having the force of law) of
any Governmental Authority with which, if the same does not have the force of
law, such Lender believes in good faith that it would be disadvantageous not to
comply, in each case made or issued after the date of this Agreement.
"Cincinnati Station" means television broadcast station WLWT-TV,
------------------
Cincinnati, Ohio.
"Class", when used in reference to any Loan or Borrowing, refers to
-----
whether such Loan, or the Loans comprising such Borrowing, are Revolving Loans,
Incremental Facility Loans, Term Loans or Swingline Loans and, when used in
reference to any Commitment, refers to whether such Commitment is a Revolving
Commitment or Incremental Facility Commitment.
"Code" means the Internal Revenue Code of 1986, as amended from time
----
to time.
"Commitment" means a Revolving Commitment or Incremental Facility
----------
Commitment, or any combination thereof (as the context requires).
"Consolidated Subsidiary" means any Subsidiary of the Borrower other
-----------------------
than a Designated Subsidiary.
"Control" means the possession, directly or indirectly, of the power
-------
to direct or cause the direction of the management or policies of a Person,
whether through the ability to exercise voting power, by contract or otherwise.
"Controlling" and "Controlled" have meanings correlative thereto.
----------- ----------
"Conversion Date" means the Quarterly Date falling on or nearest to
---------------
December 31, 1999.
"Corporate Overhead" means, for any period, all amounts paid or
------------------
incurred by the Borrower and its Consolidated Subsidiaries (determined on a
consolidated basis) during
<PAGE>
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such period in respect of all items of general corporate overhead and
administrative expenses and the like including, without duplication, (x) all
amounts payable by the Borrower or any of its Consolidated Subsidiaries to any
of its Affiliates during such period in respect of items that would constitute
general corporate overhead or administrative expense of the Borrower if paid or
incurred by the Borrower and (y) all Management Fees.
"Dayton Station" means television broadcast station WDTN-TV in Dayton,
--------------
Ohio.
"Debt Service" means, for any period, the sum, for the Borrower and
------------
its Consolidated Subsidiaries (determined on a consolidated basis without
duplication in accordance with GAAP), of the following: (a) the amount, if any,
by which the aggregate principal amount of Incremental Facility Loans
outstanding hereunder at the beginning of such period shall exceed the aggregate
amount of the Incremental Facility Commitments scheduled to be in effect at the
end of such period after giving effect to any reductions of such Commitments
scheduled to occur during such period pursuant to Section 2.08 plus (b) all
----
regularly scheduled payments or regularly scheduled mandatory prepayments of
principal of any other Indebtedness (including the Term Loans and the principal
component of any payments in respect of Capital Lease Obligations, but excluding
any prepayments pursuant to Section 2.10) made during such period plus (c) all
----
Interest Expense for such period.
"Default" means any event or condition which constitutes an Event of
-------
Default or which upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.
"Designated Subsidiary" means any Subsidiary designated as a
---------------------
"Designated Subsidiary" pursuant to Section 6.09(b).
"Disclosed Matters" means the actions, suits and proceedings and the
-----------------
environmental matters disclosed in Schedule III. The disclosure of information
in any schedule or exhibit to this Agreement shall not constitute an admission
by the Borrower that such information is material for any purpose, including
applicable securities laws.
"Disposition" means any sale, assignment, transfer or other
-----------
disposition of any property (whether now owned or hereafter acquired) by the
Borrower or any of its Consolidated Subsidiaries to any other Person excluding
any sale, assignment, transfer or other disposition of (x) any property sold or
disposed of in the ordinary course of business and on ordinary business terms,
(y) any Investment permitted under Section 7.05(f) and (z) the Dayton Station
and the Providence Station. The term "Disposition" shall include the entering
into by the Borrower or any of its Consolidated Subsidiaries of any LMA
Arrangement that in economic effect is functionally equivalent to the sale of a
Station (without limiting the obligation of the Borrower and its Consolidated
Subsidiaries to first
<PAGE>
-8-
obtain the consent of the Required Lenders to such LMA Arrangement pursuant to
Section 10.02, if required hereunder).
"Disposition Investment" means, with respect to any Disposition, any
----------------------
promissory notes or other evidences of indebtedness or Investments received by
the Borrower or any of its Consolidated Subsidiaries in connection with such
Disposition.
"Dividend Payment" means dividends (in cash, property or obligations)
----------------
on, or other payments or distributions on account of, or the setting apart of
money for a sinking or other analogous fund for, or the purchase, redemption,
retirement or other acquisition of, any shares of any class of stock of the
Borrower or of any warrants, options or other rights to acquire the same (or,
other than in respect of employee compensation arrangements entered into in the
ordinary course of business, to make any payments to any Person, such as
"phantom stock" payments, where the amount thereof is calculated with reference
to the fair market or equity value of the Borrower or any of its Subsidiaries),
but excluding (x) dividends payable solely in shares of common stock of the
Borrower or (y) the cash payment by the Borrower to its stockholders pursuant to
a "Cash Election" (as that term is defined in the Merger Agreement) so long as
the aggregate amount of all such cash payments shall not exceed $160,000,000 and
shall be paid on or prior to September 12, 1997.
"dollars" or "$" refers to lawful money of the United States of
------- -
America.
"EBITDA" means, for any period, the sum, determined without
------
duplication, for the Borrower and its Consolidated Subsidiaries, of (a) net
revenue (defined as gross operating revenue, including network compensation and
production revenues, plus rental income minus the sum of barter and trade
---- -----
revenue, agency and advertising commissions and sales representative fees) minus
-----
(b) operating expenses (determined as provided in the next sentence) minus (c)
-----
Film Cash Payments minus (d) Corporate Overhead. In calculating "EBITDA":
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(i) "operating expenses" shall be determined exclusive of barter
and trade expenses, depreciation and amortization (including amortization
in respect of Film Obligations and barter expenses), Interest Expense, any
non-cash charges (including non-cash pension expenses and any write-offs of
programming rights), Acquisition Related Compensation Expenses, LMA
Purchase Price Payments, income taxes accrued for the relevant period, and
any Capital Expenditures, and "net revenue" and "operating expenses" shall
both be determined exclusive of (x) any payments made or received under
Hedging Agreements, (y) extraordinary and non-recurring gains or losses,
and any gains or losses from the sale of assets and (z) any non-cash stock
option expense or non-cash stock option gain in respect of options for the
capital stock of the Borrower issued to any of its or its Subsidiaries'
officers, directors or employees;
<PAGE>
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(ii) performance bonuses shall be treated as an "operating
expense" only in the period in which such bonuses are paid, whether or not
such bonuses are accrued during or in respect of such period;
(iii) for all purposes of this Agreement (other than for
purposes of EBITDA as used in the definition of Excess Cash Flow), any Film
Cash Payment to the extent consisting of an up-front payment made with
respect to a Film Obligation incurred during such period, shall not be
deducted in determining EBITDA for such period but shall instead (x) in the
event such contract has a term of twelve months or less, be amortized over
the term of such contract and (y) in the event such contract has a term of
more than twelve months, be amortized over the term of such contract (or,
if shorter, the pay period of such contract), and in the case of both (x)
and (y), only the portion of such Film Cash Payment so amortized during
such period shall be deducted in determining EBITDA for such period; and
(iv) if during any period for which EBITDA is being determined
the Borrower or any Consolidated Subsidiary shall have acquired any new
Station or Stations (including the Hearst Stations), then, for all purposes
of this Agreement (other than for purposes of the definition of Excess Cash
Flow, for which purpose actual EBITDA for the relevant period shall be
used), EBITDA shall be determined on a pro forma basis for such period as
if the relevant acquisition had been made or consummated on the first day
of such period.
"Effective Date" means the date on which the conditions specified in
--------------
Section 5.01 are satisfied (or waived in accordance with Section 10.02).
"Environmental Laws" means all laws, rules, regulations, codes,
------------------
ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by any Governmental Authority,
relating in any way to the environment, preservation or reclamation of natural
resources, the management, release or threatened release of any Hazardous
Material or to health and safety matters.
"Environmental Liability" means any liability, contingent or otherwise
-----------------------
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of the Borrower or any Subsidiary directly or
indirectly resulting from or based upon (a) violation of any Environmental Law,
(b) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials,
(d) the release or threatened release of any Hazardous Materials into the
environment or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.
"Equity Issuance" means (a) any issuance or sale by the Borrower after
---------------
the Effective Date of (i) any of its capital stock, (ii) any warrants or options
exercisable in respect
<PAGE>
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of its capital stock (other than any warrants or options issued to directors,
officers or employees of the Borrower or any of its Consolidated Subsidiaries,
pursuant to employee benefit plans established in the ordinary course of
business and any capital stock of the Borrower issued upon the exercise of such
warrants or options) or (iii) any other security or instrument representing an
equity interest (or the right to obtain any equity interest) in the Borrower or
(b) the receipt by the Borrower whether directly (or indirectly through one or
more of its Consolidated Subsidiaries) after the Effective Date of any capital
contribution (whether or not evidenced by any equity security issued by the
Borrower).
"Equity Rights" means, with respect to any Person, any subscriptions,
-------------
options, warrants, commitments, preemptive rights or agreements of any kind
(including any stockholders' or voting trust agreements) for the issuance, sale,
registration or voting of, or securities convertible into, any additional shares
of capital stock of any class, or partnership or other ownership interests of
any type in, such Person.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time.
"ERISA Affiliate" means any trade or business (whether or not
---------------
incorporated) that, together with the Borrower, is treated as a single employer
under Section 414(b) or (c) of the Code, or, solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
"ERISA Event" means (a) any "reportable event", as defined in Section
-----------
4043 of ERISA or the regulations issued thereunder with respect to a Plan (other
than an event for which the 30-day notice period is waived); (b) the existence
with respect to any Plan of an "accumulated funding deficiency" (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination of any Plan;
(e) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan
administrator of any notice relating to an intention to terminate any Plan or
Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the
Borrower or any of its ERISA Affiliates of any liability with respect to the
withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the
receipt by the Borrower or any ERISA Affiliate of any notice, or the receipt by
any Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice,
concerning the imposition of Withdrawal Liability or of a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA.
<PAGE>
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"Eurodollar", when used in reference to any Loan or Borrowing, refers
----------
to whether such Loan, or the Loans comprising such Borrowing, are bearing
interest at a rate determined by reference to the Adjusted LIBO Rate.
"Event of Default" has the meaning assigned to such term in Article
----------------
VIII.
"Excess Cash Flow" means, for any period, the sum, determined without
----------------
duplication, for the Borrower and its Consolidated Subsidiaries, of (a) EBITDA
for such period minus (b) Fixed Charges for such period plus (c) cash receipts
----- ----
during such period in respect of any extraordinary or non-recurring gains to the
extent not required pursuant to Section 2.10(b)(ii) to be applied to the
prepayment of the Loans (and/or to provide cover for Letter of Credit
Liabilities) and reductions of the Commitments (or minus cash payments during
-----
such period in respect of any extraordinary or non-recurring losses) minus (d)
-----
Acquisition Related Compensation Expenses for such period.
"Excluded Taxes" means, with respect to the Administrative Agent, any
--------------
Lender, the Issuing Lender or any other recipient of any payment to be made by
or on account of any obligation of the Borrower hereunder, (a) income or
franchise taxes imposed on (or measured by) its net income by the United States
of America, or by the jurisdiction under the laws of which such recipient is
organized or in which its principal office is located or, in the case of any
Lender, in which its applicable lending office is located, (b) any branch
profits taxes imposed by the United States of America or any similar tax imposed
by any other jurisdiction in which the Borrower is located and (c) in the case
of a Foreign Lender (other than an assignee pursuant to a request by the
Borrower under Section 2.18(b)), any withholding tax that is imposed on amounts
payable to such Foreign Lender at the time such Foreign Lender becomes a party
to this Agreement or is attributable to such Foreign Lender's failure or
inability to comply with Section 2.16(e), except to the extent that such Foreign
Lender's assignor (if any) was entitled, at the time of assignment, to receive
additional amounts from the Borrower with respect to such withholding tax
pursuant to Section 2.16(a).
"Existing Credit Agreement" means the Amended and Restated Credit
-------------------------
Agreement dated as of June 13, 1995 between the Borrower, each of the
subsidiaries of the Borrower named therein, the lenders named therein, The Chase
Manhattan Bank (successor to The Chase Manhattan Bank (National Association)) as
administrative agent for said lenders, and Bank of Montreal, Banque Paribas and
Union Bank as co-agents (as modified and supplemented and in effect on the
Effective Date).
"FCC" means the Federal Communications Commission or any governmental
---
authority substituted therefor.
"Federal Funds Effective Rate" means, for any day, the weighted
----------------------------
average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds
<PAGE>
-12-
brokers, as published on the next succeeding Business Day by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day that is a
Business Day, the average (rounded upwards, if necessary, to the next 1/100 of
1%) of the quotations for such day for such transactions received by the
Administrative Agent from three Federal funds brokers of recognized standing
selected by it.
"Film Cash Payments" means, for any period, the sum (determined on a
------------------
consolidated basis and without duplication in accordance with GAAP) of all
payments by the Borrower and its Consolidated Subsidiaries made or scheduled to
be made during such period in respect of Film Obligations.
"Film Obligations" means obligations in respect of the purchase, use,
----------------
license or acquisition of programs, programming materials, films and similar
assets used in connection with the business and operation of the Borrower and
its Consolidated Subsidiaries.
"Financial Officer" means the chief financial officer, principal
-----------------
accounting officer, treasurer or controller of the Borrower.
"Fixed Charges" means, for any period, the sum, for the Borrower and
-------------
its Consolidated Subsidiaries (determined on a consolidated basis without
duplication in accordance with GAAP), of the following:
(a) the aggregate amount of Debt Service for such period, plus
----
(b) the aggregate amount of taxes (excluding deferred taxes) paid or
payable in respect of the income or profit of the Borrower and its
Subsidiaries for such period plus
----
(c) the aggregate amount of all Capital Expenditures made during such
period (such aggregate amount of Capital Expenditures to be deemed to be
equal to the lesser of (x) actual Capital Expenditures for such period and
(y) $15,000,000, provided that the amount of actual Capital Expenditures in
--------
excess of $15,000,000 in such period, shall not be excluded from the
calculation of "Fixed Charges" unless and to the extent that, at the time
of calculation, the Borrower has Available Revolving Credit), plus
----
(d) commitment fees and letter of credit fees paid during such period
pursuant to this Agreement plus
----
(e) Dividend Payments and Management Fees paid in cash during such
period.
In calculating "Fixed Charges" for any period, if any portion of such period
shall occur prior to an Acquisition of any Station, Fixed Charges shall be
calculated as if such Station had been acquired by the Borrower and its
Consolidated Subsidiaries at the beginning of such period.
<PAGE>
-13-
"Fixed Charges Ratio" means, as at any date, the ratio of (a) EBITDA
-------------------
for the period of four consecutive fiscal quarters ending on or most recently
ended prior to such date to (b) Fixed Charges for such period.
"Foreign Lender" means any Lender that is organized under the laws of
--------------
a jurisdiction other than that in which the Borrower is located. For purposes
of this definition, the United States of America, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.
"Fort Smith Preferred Stock" means, collectively, shares of Series A
--------------------------
Preferred Stock of the Borrower (in an aggregate face amount up to but not
exceeding $12,500,000) and shares of Series B Preferred Stock of the Borrower
(in an aggregate face amount up to but not exceeding $12,500,000).
"GAAP" means generally accepted accounting principles in the United
----
States of America.
"Governmental Authority" means the government of the United States of
----------------------
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.
"Guarantee" shall mean a guarantee, an endorsement, a contingent
---------
agreement to purchase or to furnish funds for the payment or maintenance of, or
otherwise to be or become contingently liable under or with respect to, the
Indebtedness, other obligations, net worth, working capital or earnings of any
Person, or a guarantee of the payment of dividends or other distributions upon
the stock or equity interests of any Person, or an agreement to purchase, sell
or lease (as lessee or lessor) Property, products, materials, supplies or
services primarily for the purpose of enabling a debtor to make payment of such
debtor's obligations or an agreement to assure a creditor against loss, and
including causing a bank or other financial institution to issue a letter of
credit or other similar instrument for the benefit of another Person, but
excluding (i) endorsements for collection or deposit in the ordinary course of
business and (ii) typical and customary indemnification obligations, and
representations and warranties, made in connection with the purchase or sale of
property or the issuance of securities. The terms "Guarantee" and "Guaranteed"
--------- ----------
used as a verb shall have a correlative meaning.
"Guarantee Assumption Agreement" means a Guarantee Assumption
------------------------------
Agreement substantially in the form of Exhibit B by an entity that, pursuant to
Section 6.09(c) is required to become a "Subsidiary Guarantor" hereunder in
favor of the Administrative Agent.
<PAGE>
-14-
"Hazardous Materials" means all explosive or radioactive substances or
-------------------
wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law.
"Hearst" means The Hearst Corporation, a Delaware corporation.
------
"Hearst Stations" means, collectively, the Dayton Station and
---------------
television broadcast stations KMBC-TV in Kansas City, Kansas, WBAL-TV in
Baltimore, Maryland, WCVB-TV in Boston, Massachusetts, WISN-TV in Milwaukee,
Wisconsin, and WTAE-TV in Pittsburgh, Pennsylvania.
"Hedging Agreement" means any interest rate protection agreement,
-----------------
foreign currency exchange agreement, commodity price protection agreement,
equity derivative or other interest or currency exchange rate or commodity price
hedging arrangement.
"Incremental Facility Availability Period" means the period from and
----------------------------------------
including the Effective Date to but excluding the Quarterly Date falling on or
nearest to December 31, 1998.
"Incremental Facility Commitment" of any Series means, with respect to
-------------------------------
each Lender, the commitment, if any, of such Lender to make Incremental Facility
Loans of such Series, as such commitment may be (a) reduced from time to time
pursuant to Section 2.08 and (b) reduced or increased from time to time pursuant
to assignments by or to such Lender pursuant to Section 10.04. The amount of
each Lender's Incremental Facility Commitment of any Series shall be determined
in accordance with the provisions of Section 2.01(c). The aggregate amount of
the Incremental Facility Commitments of all Series shall not exceed
$250,000,000.
"Incremental Facility Commitment Reduction Date" means, with respect
----------------------------------------------
to the Incremental Facility Loans, each Quarterly Date during the period
commencing March 31, 2001, through and including the Maturity Date.
"Incremental Facility Lenders" means, in respect of any Series of
----------------------------
Incremental Facility Loans, a Lender with an Incremental Facility Commitment of
such Series or, if the Incremental Facility Commitments of such Series have
terminated or expired, a Lender with outstanding Incremental Facility Loans of
such Series.
"Incremental Facility Loans" means the Loans provided for by Section
--------------------------
2.01(c), which may be ABR Loans and/or Eurodollar Loans.
<PAGE>
-15-
"Indebtedness" shall mean, for any Person, the sum (determined on a
------------
consolidated basis without duplication in accordance with GAAP), of the
following: (a) obligations created, issued or incurred by such Person for
borrowed money (whether by loan, the issuance and sale of debt securities or the
sale of Property to another Person subject to an understanding or agreement,
contingent or otherwise, to repurchase such Property from such Person); (b)
obligations of such Person to pay the deferred purchase or acquisition price of
Property or services, other than trade accounts payable (other than for borrowed
money) arising, and accrued expenses incurred, in the ordinary course of
business so long as such trade accounts payable are payable within 90 days of
the date the respective goods are delivered or the respective services are
rendered; (c) Indebtedness of others secured by a Lien on the Property of such
Person, whether or not the respective indebtedness so secured has been assumed
by such Person; (d) obligations of such Person in respect of letters of credit
or similar instruments issued or accepted by banks and other financial
institutions for account of such Person; (e) Capital Lease Obligations of such
Person; and (f) Indebtedness of others Guaranteed by such Person; provided that,
--------
such term shall not in any event include (v) contingent consideration payable in
connection with an Acquisition where, as of the date of determination, the
contingency requiring payment of such consideration is unlikely to occur (except
that in any event any such contingent consideration required to be carried as a
liability on a balance sheet of the Borrower and its Subsidiaries, or required
to be disclosed in a footnote to such balance sheet, shall constitute
Indebtedness), (w) obligations under Hedging Agreements, (x) Film Obligations,
(y) obligations in respect of letters of credit or surety bonds issued in
connection with fiduciary or fidelity obligations of or with respect to such
Person in the ordinary course of business or (z) obligations in respect of
shares of Fort Smith Preferred Stock.
The Indebtedness of any Person shall include the Indebtedness of any
other entity (including any partnership in which such Person is a general
partner) to the extent such Person is liable therefor as a result of such
Person's ownership interest in or other relationship with such entity, except to
the extent the terms of such Indebtedness provide that such Person is not liable
therefor.
"Indemnified Taxes" means Taxes other than Excluded Taxes.
-----------------
"Information Memorandum" means the Confidential Information Memorandum
----------------------
dated June, 1997, prepared in connection with the syndication to the Lenders of
the Commitments under this Agreement.
"Interest Coverage Ratio" means, as at any date of determination
-----------------------
thereof, the ratio of (a) EBITDA for the period of four fiscal quarters ending
on or most recently ended prior to such date to (b) Interest Expense for such
period.
"Interest Election Request" means a request by the Borrower to convert
-------------------------
or continue a Borrowing in accordance with Section 2.07.
<PAGE>
-16-
"Interest Expense" shall mean, for any period, the sum, for the
----------------
Borrower and its Consolidated Subsidiaries (determined on a consolidated basis
without duplication in accordance with GAAP), of the following: (a) all
interest in respect of Indebtedness (including the interest component of any
payments in respect of Capital Lease Obligations but excluding any capitalized
financing fees) accrued or capitalized during such period (whether or not
actually paid during such period) plus (b) the net amount payable (or minus the
---- -----
net amount receivable) under Hedging Agreements during such period (whether or
not actually paid or received during such period). Notwithstanding the
foregoing, if as at any date (a "calculation date") fewer than four complete
----------------
consecutive fiscal quarters have elapsed subsequent to the Effective Date,
Interest Expense shall be calculated only for the portion of such period
commencing on the Effective Date and ending on the calculation date, and then
shall be annualized by multiplying the amount of such Interest Expense by a
fraction, the numerator of which is 365 and the denominator of which is the
number of days during the period commencing on the day immediately following the
Effective Date through and including the calculation date.
Notwithstanding the foregoing provisions of this definition, "Interest
Expense" for any period shall not include any dividends paid in respect of the
Fort Smith Preferred Stock during such period.
"Interest Payment Date" means (a) with respect to any ABR Loan, each
---------------------
Quarterly Date, (b) with respect to any Eurodollar Loan, the last day of the
Interest Period applicable to the Borrowing of which such Loan is a part and, in
the case of a Eurodollar Borrowing with an Interest Period of more than three
months' duration, each day prior to the last day of such Interest Period that
occurs at intervals of three months' duration after the first day of such
Interest Period and (c) with respect to any Swingline Loan, the day that such
Loan is required to be repaid.
"Interest Period" means, with respect to any Eurodollar Borrowing, the
---------------
period commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, three or six months (or,
with the consent of each Lender, nine months) thereafter, as the Borrower may
elect; provided, that (i) if any Interest Period would end on a day other than a
--------
Business Day, such Interest Period shall be extended to the next succeeding
Business Day unless such next succeeding Business Day would fall in the next
calendar month, in which case such Interest Period shall end on the next
preceding Business Day and (ii) any Interest Period that commences on the last
Business Day of a calendar month (or on a day for which there is no numerically
corresponding day in the last calendar month of such Interest Period) shall end
on the last Business Day of the last calendar month of such Interest Period.
For purposes hereof, the date of a Borrowing initially shall be the date on
which such Borrowing is made and thereafter shall be the effective date of the
most recent conversion or continuation of such Borrowing.
<PAGE>
-17-
"Investment" means, for any Person: (a) the acquisition (whether for
----------
cash, property, services or securities or otherwise) of capital stock, bonds,
notes, debentures, partnership or other ownership interests or other securities
of any other Person or any agreement to make any such acquisition (including any
"short sale" or any sale of any securities at a time when such securities are
not owned by the Person entering into such sale); (b) the making of any deposit
with, or advance, loan or other extension of credit to, any other Person
(including the purchase of property from another Person subject to an
understanding or agreement, contingent or otherwise, to resell such property to
such Person), but excluding any such advance, loan or extension of credit having
a term not exceeding 90 days arising in connection with the sale of programming
or advertising time by such Person in the ordinary course of business; (c) the
entering into of any Guarantee of, or other contingent obligation with respect
to, Indebtedness or other liability of any other Person and (without
duplication) any amount committed to be advanced, lent or extended to such
Person; or (d) the entering into of any Hedging Agreement.
"Issuing Lender" means The Chase Manhattan Bank, in its capacity as
--------------
the issuer of Letters of Credit hereunder, and its successors in such capacity
as provided in Section 2.05(j).
"LC Disbursement" means a payment made by the Issuing Lender pursuant
---------------
to a Letter of Credit.
"LC Exposure" means, at any time, the sum of (a) the aggregate undrawn
-----------
amount of all outstanding Letters of Credit at such time plus (b) the aggregate
amount of all LC Disbursements that have not yet been reimbursed by or on behalf
of the Borrower at such time. The LC Exposure of any Lender at any time shall
be its Applicable Percentage of the total LC Exposure at such time.
"Lenders" means the Persons listed on Schedule I and any other Person
-------
that shall have become a party hereto pursuant to an Assignment and Acceptance,
other than any such Person that ceases to be a party hereto pursuant to an
Assignment and Acceptance. Unless the context otherwise requires, the term
"Lenders" includes each Swingline Lender.
"Letter of Credit" means any letter of credit issued pursuant to this
----------------
Agreement.
"Letter of Credit Documents" means, with respect to any Letter of
--------------------------
Credit, collectively, any application therefor and any other agreements,
instruments, guarantees or other documents (whether general in application or
applicable only to such Letter of Credit) governing or providing for (a) the
rights and obligations of the parties concerned or at risk with respect to such
Letter of Credit or (b) any collateral security for any of such obligations,
each as the same may be modified and supplemented and in effect from time to
time.
<PAGE>
-18-
"Leverage Ratio" means, at any date, the ratio of (a) the sum, for the
--------------
Borrower and its Consolidated Subsidiaries (determined on a consolidated basis
without duplication in accordance with GAAP) of the aggregate amount of all
Indebtedness as at such date to (b) EBITDA for the period of four consecutive
fiscal quarters ending on or most recently ended prior at such date.
"LIBO Rate" means, with respect to any Eurodollar Borrowing for any
---------
Interest Period, the rate appearing on Page 3750 of the Dow Jones Markets
Service (or on any successor or substitute page of such Service, or any
successor to or substitute for such Service, providing rate quotations
comparable to those currently provided on such page of such Service, as
determined by the Administrative Agent from time to time for purposes of
providing quotations of interest rates applicable to dollar deposits in the
London interbank market) at approximately 11:00 a.m., London time, two Business
Days prior to the commencement of such Interest Period, as the rate for dollar
deposits with a maturity comparable to such Interest Period. In the event that
such rate is not available at such time for any reason, then the LIBO Rate with
respect to such Eurodollar Borrowing for such Interest Period shall be the rate
at which dollar deposits of $5,000,000 and for a maturity comparable to such
Interest Period are offered by the principal London office of the Administrative
Agent in immediately available funds in the London interbank market at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period.
"Lien" means, with respect to any asset, (a) any mortgage, deed of
----
trust, lien, pledge, hypothecation, encumbrance, charge or security interest in,
on or of such asset, (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the
foregoing) relating to such asset and (c) in the case of securities, any
purchase option, call or similar right of a third party with respect to such
securities.
"LMA Arrangement" means, with respect to any Person that owns any
---------------
television broadcasting station, (i) any so-called "local marketing agreements"
or any other arrangements with any other television broadcasting station (other
than with the Borrower or another Consolidated Subsidiary with respect to one of
the Stations) whereby the parties agree to function cooperatively in terms of
programming, advertising, sales, management, consulting or similar services; or
(ii) any so-called "time brokerage agreements" or any other agreements or
arrangements under which any Station shall (A) sell broadcast time to any other
television broadcasting station (other than to any other Station) which programs
such broadcast time and sells its own commercial advertising announcements
during such broadcast time or (B) purchase broadcast time on any other
television broadcasting station (other than on any other Station) for the
purpose of programming such broadcast time and selling its commercial
advertisements during such time.
<PAGE>
-19-
"LMA Purchase Price Payments" means any payment under an LMA
---------------------------
Arrangement that constitutes an Acquisition to the extent such payment
constitutes all or a portion of the purchase or acquisition price (whether or
not deferred) of the assets or the air time or both of the television station
subject to such LMA Arrangement.
"Loan Documents" means, collectively, this Agreement and the Letter of
--------------
Credit Documents.
"Loans" means the loans made by the Lenders to the Borrower pursuant
-----
to this Agreement.
"Management Fees" means, for any period, any amounts paid or incurred
---------------
by the Borrower or any of its Consolidated Subsidiaries to any of its Affiliates
(excluding to the Borrower and its Consolidated Subsidiaries) on account of
fees, salaries, administrative expenses and other compensation (including on
account of any regular, special or accrued bonuses), provided that "Management
--------
Fees" for any period shall not include any non-cash stock option expense (or be
reduced by any non-cash stock option gain) in respect of options for the capital
stock of the Borrower issued to any of its or its Subsidiaries' officers,
directors or employees.
"Margin Stock" means "margin stock" within the meaning of Regulations
------------
G, T, U and X.
"Material Adverse Effect" means a material adverse effect on (a) the
-----------------------
business, assets, operations, prospects or condition, financial or otherwise, of
the Borrower and its Consolidated Subsidiaries taken as a whole (excluding
adverse changes to prospects as a result of changes affecting the television
broadcasting industry generally), (b) the ability of any Obligor to perform any
of its obligations under this Agreement or any of the other Loan Documents to
which it is a party or (c) the rights of or benefits available to the Lenders
under this Agreement or any of the other Loan Documents.
"Material Indebtedness" means Indebtedness (other than the Loans and
---------------------
Letters of Credit), or obligations in respect of one or more Hedging Agreements,
of any one or more of the Borrower and its Consolidated Subsidiaries in an
aggregate principal amount exceeding $15,000,000. For purposes of determining
Material Indebtedness, the "principal amount" of the obligations of any Person
----------------
in respect of any Hedging Agreement at any time shall be the maximum aggregate
amount (giving effect to any netting agreements) that such Person would be
required to pay if such Hedging Agreement were terminated at such time.
"Maturity Date" means, the Quarterly Date falling on or nearest to
-------------
December 31, 2004.
<PAGE>
-20-
"Merger Agreement" means the Amended and Restated Agreement and Plan
----------------
of Merger dated as of March 26, 1997 by and among Hearst, Merger Sub, Cash Sub
and the Borrower.
"Merger Sub" means HAT Merger Sub, Inc., a Delaware corporation.
----------
"Merger Transactions" means, collectively, the following transactions
-------------------
contemplated by the Merger Agreement, each of which is to take place
substantially simultaneously on the Effective Date in the following order:
(a) the restatement of the Certificate of Incorporation of the
Borrower in the form attached to the Merger Agreement as Exhibit A;
(b) the contribution by Cash Sub to the Borrower of $200,000,026.50
and the contribution by Hearst to the Borrower of the Hearst Stations and
"Hearst Broadcasting Productions" (as such term is defined in the Merger
Agreement);
(c) in consideration for the contributions described in the foregoing
clause (b), (x) the assumption by the Borrower of the Bridge Debt, the
Private Placement Debt and the obligations and liabilities of Hearst
relating to the Hearst Stations (including "Hearst Broadcasting
Productions" as such term is defined in the Merger Agreement), and the
assumption by the respective Subsidiaries of the Borrower to whom the
Hearst Stations (and "Hearst Broadcasting Productions") are being
transferred of such obligations and liabilities and (y) the issuance by the
Borrower to Hearst of 38,611,000 shares (subject to a working capital
adjustment) of the Borrower's Series B Common Stock and by the Borrower to
Cash Sub of one share of the Borrower's Series B Common Stock; and
(d) the merger of Merger Sub with and into the Borrower, with the
Borrower being the surviving corporation and with the outstanding shares of
capital stock of the constituent corporations to be converted, or canceled
in exchange for cash, in the manner and to the extent provided in Article
III of the Merger Agreement.
"Multiemployer Plan" means a multiemployer plan as defined in Section
------------------
4001(a)(3) of ERISA.
"Net Cash Proceeds" means:
-----------------
(a) in the case of any Casualty Event, the aggregate amount of cash
proceeds of insurance, condemnation awards and other compensation received
by the Borrower and its Consolidated Subsidiaries in respect of such
Casualty Event net of (i) reasonable expenses incurred by the Borrower and
its Consolidated Subsidiaries in connection therewith and (ii)
contractually required repayments of Indebtedness to the
<PAGE>
-21-
extent secured by a Lien on such property and any income and transfer taxes
payable by the Borrower or any of its Consolidated Subsidiaries in respect
of such Casualty Event; and
(b) in the case of any Disposition, the aggregate amount of all cash
payments received by the Borrower and its Consolidated Subsidiaries
directly or indirectly in connection with such Disposition, whether at the
time of such Disposition or after such Disposition under deferred payment
arrangements or Investments entered into or received in connection with
such Disposition (including Disposition Investments); provided that
--------
(i) Net Cash Proceeds shall be net of (A) the amount of any
legal, title, transfer, accounting and recording tax expenses,
commissions and other fees and expenses payable by the Borrower and
its Consolidated Subsidiaries in connection with such Disposition and
(B) any Federal, state and local income or other taxes estimated to be
payable by the Borrower and its Consolidated Subsidiaries as a result
of such Disposition, but only to the extent that such estimated taxes
are in fact paid to the relevant Federal, state or local governmental
authority within fifteen months of the date of such Disposition; and
(ii) Net Cash Proceeds shall be net of any repayments by
the Borrower or any of its Consolidated Subsidiaries of Indebtedness
to the extent that (A) such Indebtedness is secured by a Lien on the
property that is the subject of such Disposition and (B) the
transferee of (or holder of a Lien on) such property requires that
such Indebtedness be repaid as a condition to the purchase of such
property.
"Obligor" means the Borrower and each Subsidiary Guarantor.
-------
"Other Taxes" means any and all present or future stamp or documentary
-----------
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made under any Loan Document or from the execution, delivery or
enforcement of, or otherwise with respect to, any Loan Document.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
----
defined in ERISA and any successor entity performing similar functions.
"Permitted Encumbrances" means:
----------------------
(a) Liens imposed by law for taxes that are not yet due or are being
contested in compliance with Section 6.04;
<PAGE>
-22-
(b) carriers', warehousemen's, mechanics', materialmen's, repairmen's
and other like Liens imposed by law, arising in the ordinary course of
business and securing obligations that are not overdue by more than 30 days
or are being contested in compliance with Section 6.04;
(c) pledges and deposits made in the ordinary course of business in
compliance with workers' compensation, unemployment insurance and other
social security laws or regulations;
(d) deposits to secure the performance of bids, tenders, trade
contracts, leases, statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature, in each case in
the ordinary course of business;
(e) judgment liens in respect of judgments that do not constitute an
Event of Default under clause (l) of Article VIII; and
(f) easements, zoning restrictions, rights-of-way and similar
encumbrances on real property imposed by law or arising in the ordinary
course of business that do not secure any monetary obligations and do not
materially detract from the value of the affected property or interfere
with the ordinary conduct of business of the Borrower or any Subsidiary.
"Permitted Investments" means:
---------------------
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States of
America (or by any agency thereof to the extent such obligations are backed
by the full faith and credit of the United States of America), in each case
maturing within one year from the date of acquisition thereof;
(b) investments in commercial paper maturing within 270 days from the
date of acquisition thereof and having, at such date of acquisition, the
highest credit rating obtainable from Standard & Poor's Ratings Group or
from Moody's Investors Services, Inc.;
(c) investments in certificates of deposit, banker's acceptances and
time deposits maturing within 270 days from the date of acquisition thereof
issued or guaranteed by or placed with, and money market deposit accounts
issued or offered by, any domestic office of any commercial bank organized
under the laws of the United States of America or any State thereof (or
organized under the laws of any other jurisdiction if such bank has a long-
term senior debt rating of A or better) which has a combined capital and
surplus and undivided profits of not less than $500,000,000;
<PAGE>
-23-
(d) fully collateralized repurchase agreements with a term of not
more than 30 days for securities described in clause (a) of this definition
and entered into with a financial institution satisfying the criteria
described in clause (c) of this definition; and
(e) interest in any money market mutual fund offered by The Chase
Manhattan Bank and/or Morgan Guaranty Trust Company of New York registered
under the Investment Company Act of 1940, as amended, the portfolio of
which is limited primarily to obligations described in the foregoing
clauses (a), (b), (c) and (d) so long as such fund has total assets of at
least $1,000,000,000 and is rated AAAm-G or better or AAA or better by
Standard & Poor's Ratings Group or Moody's Investors Services, Inc.,
respectively.
"Person" means any natural person, corporation, limited liability
------
company, trust, joint venture, association, company, partnership, Governmental
Authority or other entity.
"Plan" means any employee pension benefit plan (other than a
----
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which the Borrower or
any ERISA Affiliate is (or, if such plan were terminated, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"Prime Rate" means the rate of interest per annum publicly announced
----------
from time to time by The Chase Manhattan Bank as its prime rate in effect at its
principal office in New York City; each change in the Prime Rate shall be
effective from and including the date such change is publicly announced as being
effective.
"Principal Payment Dates" means the Quarterly Dates falling on or
-----------------------
nearest to March 31, June 30, September 30 and December 31 of each year,
commencing with December 31, 2000, through and including December 31, 2004.
"Private Placement Debt" means the Indebtedness of Hearst in respect
----------------------
of its 7.87% Series A Senior Notes due 2001, its 8.01% Series B Senior Notes due
2002 and its 8.04% Series C Senior Notes due 2003, in an aggregate original
principal amount of $275,000,000, which Notes were issued by Hearst pursuant to
the several separate Note Purchase Agreements, each dated as of December 22,
1992, between Hearst and the "Purchasers" referred to therein, which
Indebtedness is to be assumed by the Borrower in connection with the Merger
Transactions.
"Private Placement Debt Documents" means, collectively, the Notes
--------------------------------
evidencing the Private Placement Debt and several separate Note Purchase
Agreements pursuant to which the Private Placement Debt was issued.
<PAGE>
-24-
"Providence Station" means television broadcast station WNAC-TV in
------------------
Providence, Rhode Island.
"Purchase Price" means, with respect to any Acquisition under Section
--------------
7.03(c)(iv) hereof, an amount equal to the sum (without duplication) of (i) the
aggregate consideration, whether cash, property or securities (including any
Indebtedness incurred pursuant to Section 7.01(f) or 7.01(g)), paid or delivered
by the Borrower and its Consolidated Subsidiaries in connection with such
Acquisition plus (ii) the aggregate amount of liabilities of the acquired
----
business (net of current assets of the acquired business) that would be
reflected on a balance sheet (if such were to be prepared) of the Borrower and
its Consolidated Subsidiaries after giving effect to such Acquisition, provided
--------
that the term "Purchase Price" shall in any event exclude transaction fees and
expenses associated with the respective Acquisition).
"Quarterly Dates" means the last Business Day of March, June,
---------------
September and December in each year, the first of which shall be the first such
day after the date hereof.
"Register" has the meaning set forth in Section 10.04.
--------
"Registration Statement" means the registration statement on Form S-4
----------------------
(together with all amendments, schedules and exhibits thereto) filed by the
Borrower with the Securities and Exchange Commission with respect to Hearst-
Argyle Television Inc.'s Series A Common Stock to be issued in connection with
the Merger Transactions.
"Related Parties" means, with respect to any specified Person, such
---------------
Person's Affiliates and the respective directors, officers, employees, agents
and advisors of such Person and such Person's Affiliates.
"Required Incremental Facility Lenders" means, with respect to any
-------------------------------------
Series of Incremental Facility Loans at any time, Lenders having Incremental
Facility Loans and unused Incremental Facility Commitments of such Series
representing more than 50% of the sum of the total Incremental Facility Loans of
such Series and unused Incremental Facility Commitments of such Series at such
time.
"Required Lenders" means, at any time, Lenders having Revolving
----------------
Exposures, Term Loans, Incremental Facility Loans and unused Commitments
representing more than 50% of the sum of the total Revolving Exposures,
outstanding Term Loans and Incremental Facility Loans and unused Commitments at
such time.
"Required Revolving Lenders" means, at any time, Revolving Lenders
--------------------------
having Revolving Exposures and unused Commitments representing more than 50% of
the sum of the total Revolving Exposures and unused Commitments at such time.
<PAGE>
-25-
"Required Term Lenders" means Lenders having Term Loans representing
---------------------
more than 50% of the sum of the total Term Loans at such time.
"Restricted Debt Payment" means any purchase, redemption, retirement
-----------------------
or acquisition for value, or the setting apart of any money for a sinking,
defeasance or other analogous fund for the purchase, redemption, retirement or
other acquisition of, or any voluntary payment or prepayment of the principal of
or interest on, or any other amount owing in respect of, the Senior Subordinated
Notes or any Additional Permitted Indebtedness, provided that the term
--------
"Restricted Debt Payment" shall not include (x) the repurchase of the Senior
Subordinated Notes resulting from a "change of control event" in connection with
the Merger Transactions, (y) regularly scheduled payments of principal or
interest in respect of the Senior Subordinated Notes or (z) regularly scheduled
payments of principal or interest in respect of Additional Permitted
Indebtedness, in the case of each of the foregoing clauses (y) and (z), to the
extent required pursuant to the instruments evidencing the Senior Subordinated
Notes or such Additional Permitted Indebtedness, as the case may be.
"Restricted Payments" means, collectively, any Dividend Payment and
-------------------
any Restricted Debt Payment.
"Revolving Availability Period" means the period from and including
-----------------------------
the Effective Date to but excluding the earlier of the Maturity Date and the
date of termination of the Commitments.
"Revolving Commitment" means, with respect to each Lender, the
--------------------
commitment, if any, of such Lender to make Revolving Loans and to acquire
participations in Letters of Credit and Swingline Loans hereunder, expressed as
an amount representing the maximum aggregate amount of such Lender's Revolving
Exposure hereunder, as such commitment may be (a) reduced from time to time
pursuant to Section 2.08 and (b) reduced or increased from time to time pursuant
to assignments by or to such Lender pursuant to Section 10.04. The amount of
each Lender's Revolving Commitment as of the date hereof is set forth on
Schedule I, and (after giving effect to any assignment of any Commitment
permitted under Section 10.04) in the Assignment and Acceptance pursuant to
which such Lender shall have assumed its Revolving Commitment, as applicable.
The aggregate original amount of the Lenders' Revolving Commitments is
$1,000,000,000.
"Revolving Exposure" means, with respect to any Lender at any time,
------------------
the sum of the outstanding principal amount of such Lender's Revolving Loans and
its LC Exposure and Swingline Exposure at such time.
"Revolving Lenders" means a Lender with a Revolving Commitment or, if
-----------------
the Revolving Commitments have terminated or expired, a Lender with Revolving
Exposure.
"Revolving Loan" means a Loan made pursuant to Section 2.01(a).
--------------
<PAGE>
-26-
"Senior Subordinated Notes" means the 9 3/4% Senior Subordinated Notes
-------------------------
due 2005 issued by the Borrower pursuant to an Indenture dated as of October 27,
1995, between the Borrower and United States Trust Company of New York, as
trustee.
"Series" has the meaning set forth in Section 2.01(c).
------
"Station Licenses" means all authorizations, licenses or permits
----------------
issued by the FCC and granted or assigned to the Borrower or any Consolidated
Subsidiary thereof, or under which the Borrower or any Consolidated Subsidiary
thereof has the right to operate any Station, together with any extensions or
renewals thereof.
"Stations" means the television broadcasting stations from time to
--------
time owned by the Borrower or any of its Consolidated Subsidiaries. Immediately
after giving effect to the Merger, the Stations will consist of the Argyle
Stations and the Hearst Stations.
"Statutory Reserve Rate" means, for any day, a fraction (expressed as
----------------------
a decimal), the numerator of which is the number one and the denominator of
which is the number one minus the aggregate of the maximum reserve percentages
(including any marginal, special, emergency or supplemental reserves) expressed
as a decimal established by the Board and in effect on such day to which the
Administrative Agent is subject (a) with respect to the Base CD Rate, for new
negotiable nonpersonal time deposits in dollars of over $100,000 with maturities
approximately equal to three months and (b) with respect to the Adjusted LIBO
Rate, for eurocurrency funding (currently referred to as "Eurocurrency
Liabilities" in Regulation D of the Board). Such reserve percentages shall
include those imposed pursuant to such Regulation D. Eurodollar Loans shall be
deemed to constitute eurocurrency funding and to be subject to such reserve
requirements without benefit of or credit for proration, exemptions or offsets
that may be available from time to time to any Lender under such Regulation D or
any comparable regulation. The Statutory Reserve Rate shall be adjusted
automatically on and as of the effective date of any change in any reserve
percentage. The Statutory Reserve Rate as of the date hereof is zero.
"Subsidiary" means, with respect to any Person (the "parent") at any
---------- ------
date, any corporation, limited liability company, partnership, association or
other entity the accounts of which would be consolidated with those of the
parent in the parent's consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date, as well as any
other corporation, limited liability company, partnership, association or other
entity (a) of which securities or other ownership interests representing more
than 50% of the equity or more than 50% of the ordinary voting power or, in the
case of a partnership, more than 50% of the general partnership interests are,
as of such date, owned, controlled or held, or (b) that is, as of such date,
otherwise Controlled, by the parent or one or more subsidiaries of the parent or
by the parent and one or more subsidiaries of the parent. Unless otherwise
specified, "Subsidiary" means a subsidiary of the Borrower.
<PAGE>
-27-
"Subsidiary Guarantor" means each of the Subsidiaries of the Borrower
--------------------
identified under the caption "SUBSIDIARY GUARANTORS" on the signature pages
hereto and each Subsidiary of the Borrower that becomes a "Subsidiary Guarantor"
after the date hereof pursuant to Section 6.09(c).
"Swingline Exposure" means, at any time, the aggregate principal
------------------
amount of all Swingline Loans outstanding at such time. The Swingline Exposure
of any Lender at any time shall be its Applicable Percentage of the total
Swingline Exposure at such time.
"Swingline Lender" means The Chase Manhattan Bank and Morgan Guaranty
----------------
Trust Company of New York, each in its capacity as lender of Swingline Loans
hereunder, as the case may be.
"Swingline Loan" means a Loan made pursuant to Section 2.04.
--------------
"Tax Sharing Agreement" means the Tax Sharing Agreement between Hearst
---------------------
and the Borrower to be executed in connection with the Merger Transactions, a
form of which is attached as Exhibit 9.02(f) to the Merger Agreement.
"Taxes" means any and all present or future taxes, levies, imposts,
-----
duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"Term Loan" means the portion of the Revolving Loans converted
---------
pursuant to Section 2.01(b).
"Three-Month Secondary CD Rate" means, for any day, the secondary
------------------------------
market rate for three-month certificates of deposit reported as being in effect
on such day (or, if such day is not a Business Day, the next preceding Business
Day) by the Board through the public information telephone line of the Federal
Reserve Bank of New York (which rate will, under the current practices of the
Board, be published in Federal Reserve Statistical Release H.15(519) during the
week following such day) or, if such rate is not so reported on such day or such
next preceding Business Day, the average of the secondary market quotations for
three-month certificates of deposit of major money center banks in New York City
received at approximately 10:00 a.m., New York City time, on such day (or, if
such day is not a Business Day, on the next preceding Business Day) by the
Administrative Agent from three negotiable certificate of deposit dealers of
recognized standing selected by it.
"Transactions" means the execution, delivery and performance by each
------------
Obligor of this Agreement and the other Basic Documents to which such Obligor is
intended to be a party, the borrowing of Loans, the use of the proceeds thereof
and the issuance of Letters of Credit hereunder.
<PAGE>
-28-
"Type", when used in reference to any Loan or Borrowing, refers to
----
whether the rate of interest on such Loan, or on the Loans comprising such
Borrowing, is determined by reference to the Adjusted LIBO Rate or the Alternate
Base Rate.
"Wholly Owned Subsidiary" means, with respect to any Person, any
-----------------------
corporation, partnership or other entity of which all of the equity securities,
Equity Rights or other ownership interests (other than, in the case of a
corporation, directors' qualifying shares) are directly or indirectly owned or
controlled by such Person or one or more Wholly Owned Subsidiaries of such
Person or by such Person and one or more Wholly Owned Subsidiaries of such
Person.
"Withdrawal Liability" means liability to a Multiemployer Plan as a
--------------------
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. Classification of Loans and Borrowings. For purposes
--------------------------------------
of this Agreement, Loans may be classified and referred to by Class (e.g., a
"Revolving Loan") or by Type (e.g., a "Eurodollar Loan") or by Class and Type
(e.g., an "ABR Revolving Loan"); each Series of Incremental Facility Loans shall
be deemed a separate Class of Loans hereunder. Borrowings also may be
classified and referred to by Class (e.g., a "Revolving Borrowing") or by Type
(e.g., a "Eurodollar Borrowing") or by Class and Type (e.g., an "ABR Revolving
Borrowing"); each Series of Incremental Facility Borrowings and Incremental
Facility Commitments shall be deemed a separate Borrowing and Commitment
hereunder.
SECTION 1.03. Terms Generally. The definitions of terms herein shall
---------------
apply equally to the singular and plural forms of the terms defined. Whenever
the context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including"
shall be deemed to be followed by the phrase "without limitation". The word
"will" shall be construed to have the same meaning and effect as the word
"shall". Unless the context requires otherwise (a) any definition of or
reference to any agreement, instrument or other document herein shall be
construed as referring to such agreement, instrument or other document as from
time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth herein),
(b) any reference herein to any Person shall be construed to include such
Person's successors and assigns, (c) the words "herein", "hereof" and
"hereunder", and words of similar import, shall be construed to refer to this
Agreement in its entirety and not to any particular provision hereof, (d) all
references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules to,
this Agreement and (e) the words "asset" and "property" shall be construed to
have the same meaning and effect and to refer to any and all tangible and
intangible assets and properties, including cash, securities, accounts and
contract rights.
<PAGE>
-29-
SECTION 1.04. Accounting Terms; GAAP. Except as otherwise expressly
----------------------
provided herein, all terms of an accounting or financial nature shall be
construed in accordance with, or derived by reference to, GAAP, as in effect
from time to time; provided that, if the Borrower notifies the Administrative
--------
Agent that the Borrower requests an amendment to any provision hereof to
eliminate the effect of any change occurring after the date hereof in GAAP or in
the application thereof on the operation of such provision (or if the
Administrative Agent notifies the Borrower that the Required Lenders request an
amendment to any provision hereof for such purpose), regardless of whether any
such notice is given before or after such change in GAAP or in the application
thereof, then such provision shall be interpreted on the basis of GAAP as in
effect and applied immediately before such change shall have become effective
until such notice shall have been withdrawn or such provision amended in
accordance herewith. References in this Agreement to the determination of items
"in accordance with GAAP" means that such items shall be derived by reference
-----------------------
to, and with the relevant components of such items being determined in
accordance with, GAAP even though (as is the case with terms such as "pro
forma", "Broadcast Cash Flow" and "Film Cash Payments") such terms may not have
a meaning under GAAP.
Pursuant to the Tax Sharing Agreement the Borrower and Hearst have
agreed as to the amounts that the Borrower and its Subsidiaries will be
obligated to pay to Hearst in respect of Federal income taxes. So long as the
Borrower and its Subsidiaries shall be included in consolidated Federal income
tax returns filed by Hearst pursuant to the Tax Sharing Agreement, whenever
making determinations under this Agreement of the amount of Federal income taxes
payable during any period (or the amount of refunds in respect of such taxes
receivable during any period) by the Borrower and its Subsidiaries, the amount
of such taxes payable or receivable shall be deemed to be equal to the amounts
payable or receivable, as the case may be, in respect of such taxes under the
Tax Sharing Agreement without reference to whether Hearst and its Subsidiaries
as an affiliated group shall in fact pay any amounts in respect of Federal
income taxes (or receive any amounts in respect of refunds of Federal income
taxes) during the relevant period.
To enable the ready and consistent determination of compliance with
the covenants set forth in Article VII, the Borrower will not change the last
day of its fiscal year from December 31 of each year, or the last days of the
first three fiscal quarters in each of its fiscal years from March 31, June 30
and September 30 of each year, respectively.
<PAGE>
-30-
ARTICLE II
THE CREDITS
SECTION 2.01. The Commitments.
---------------
(a) Revolving Loans. Subject to the terms and conditions set forth
---------------
herein, each Lender agrees to make Revolving Loans to the Borrower from time to
time during the Revolving Availability Period in an aggregate principal amount
that will not result in (i) such Lender's Revolving Exposure exceeding such
Lender's Revolving Commitment or (ii) the total Revolving Exposures exceeding
the total Revolving Commitments. Within the foregoing limits and subject to the
terms and conditions set forth herein, the Borrower may borrow, prepay and
reborrow Revolving Loans.
(b) Conversion Date. On the Conversion Date (so long as on such date
---------------
the aggregate then-outstanding amount of the Revolving Commitments is at least
equal to $250,000,000), a portion of the Revolving Loans equal to the lesser of
(a) the aggregate then-outstanding principal amount of the Revolving Loans and
(b) the excess, if any, of (i) the aggregate then-outstanding amount of the
Revolving Commitments over (ii) $250,000,000, shall be automatically converted
into Term Loans, and the Revolving Commitments shall be reduced to $250,000,000,
provided that in no event shall the aggregate principal amount of Revolving
- --------
Loans so converted into Term Loans be less than $50,000,000 (and, if the amount
that would otherwise be so converted shall be less than $50,000,000, the
Revolving Commitments shall instead be reduced to the sum of (x) $250,000,000
plus (y) such amount that would otherwise have been converted into Term Loans
- ----
but for this proviso). Term Loans, once repaid, may not be reborrowed.
(c) Incremental Facility Loans. In addition to borrowings of
--------------------------
Revolving Loans, at any time during the Incremental Facility Availability Period
the Borrower may from time to time request the Lenders offer to enter into
commitments to make additional revolving loans to the Borrower hereunder, which
commitment of any Lender shall not be less than $10,000,000 and not greater than
$250,000,000. In the event that one or more of the Lenders offer, in their sole
discretion, to enter into such commitments, and such Lenders and the Borrower
agree as to the amount of such commitments that shall be allocated to the
respective Lenders making such offers and the fees (if any) to be payable by the
Borrower in connection therewith, such Lenders shall become obligated to make
Incremental Facility Loans under this Agreement in an amount equal to the amount
of their respective Incremental Facility Commitments. The Incremental Facility
Loans to be made pursuant to any such agreement between the Borrower and one or
more Lenders in response to any such request by the Borrower shall be deemed to
be a separate "Series" of Incremental Facility Loans for all purposes of this
------
Agreement. Anything herein to the contrary notwithstanding, (i) the minimum
aggregate principal amount of Incremental Facility Commitments entered into
pursuant to any such request (and, accordingly, the minimum aggregate principal
amount of
<PAGE>
-31-
any Series of Incremental Facility Loans) shall be $25,000,000 and (ii) the
aggregate principal amount of all Commitments and Borrowings of Incremental
Facility Loans shall not exceed $250,000,000.
Following agreement by the Borrower and one or more of the Lenders as
provided above, subject to the terms and conditions set forth herein, each
Incremental Facility Lender of any Series agrees to make Incremental Facility
Loans of such Series to the Borrower from time to time during the period from
and including the date of such agreement to but not including the Maturity Date,
in an aggregate principal amount up to but not exceeding the amount of the
Incremental Facility Commitment of such Series of such Incremental Facility
Lender. Within the foregoing limits and subject to the terms and conditions set
forth herein, the Borrower may borrow, prepay and reborrow Incremental Facility
Loans of any Series as the Borrower shall from time to time select.
SECTION 2.02. Loans and Borrowings.
--------------------
(a) Obligation of Lenders. Each Loan shall be made as part of a
---------------------
Borrowing consisting of Loans of the same Class and Type made by the Lenders
ratably in accordance with their respective Commitments of the applicable Class.
The failure of any Lender to make any Loan required to be made by it shall not
relieve any other Lender of its obligations hereunder; provided that the
--------
Commitments of the Lenders are several and no Lender shall be responsible for
any other Lender's failure to make Loans as required.
(b) Type of Loans. Subject to Sections 2.04 and 2.13, each Borrowing
-------------
shall be comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may
request in accordance herewith. Each Lender at its option may make any
Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such
Lender to make such Loan; provided that any exercise of such option shall not
--------
affect the obligation of the Borrower to repay such Loan in accordance with the
terms of this Agreement, except that if the designation of any such foreign
branch or Affiliate shall result in any costs, reductions or taxes which would
not otherwise have been applicable, such Lender shall not be entitled to
compensation for such costs, reductions or taxes unless it shall in good faith
have determined such designation to be necessary or advisable to avoid any
material disadvantage to it.
(c) Minimum Amounts. At the commencement of each Interest Period for
---------------
any Eurodollar Borrowing, such Borrowing shall be in an aggregate amount of
$5,000,000 or a larger multiple of $1,000,000. At the time that each ABR
Borrowing is made, such Borrowing shall be in an aggregate amount equal to
$1,000,000 or a larger multiple of $1,000,000; provided that an ABR Borrowing
--------
may be in an aggregate amount that is equal to the entire unused balance of the
total Commitments of the applicable Class or that is required to finance the
reimbursement of an LC Disbursement as contemplated by Section 2.05(f).
Swingline Loans shall be in an aggregate amount equal to at least $500,000 or a
larger multiple of $100,000. Borrowings of more than one Type and Class may be
outstanding at
<PAGE>
-32-
the same time; provided that there shall not at any time be more than a total of
--------
12 Eurodollar Borrowings outstanding.
(e) Conversion or Continuation of Eurodollar Loans. Notwithstanding
----------------------------------------------
any other provision of this Agreement, the Borrower shall not be entitled to
request, or to elect to convert or continue as a Eurodollar Loan: (i) any
Borrowing if the Interest Period requested with respect thereto would end after
the Maturity Date; or (ii) any Term Loan, or Incremental Facility Loan of any
Series, if the Interest Period therefor would commence before and end after any
Principal Payment Date (in the case of a Term Loan) or Incremental Facility
Commitment Reduction Date (in the case of any Series of Incremental Facility
Loan) unless, after giving effect thereto, the aggregate principal amount of the
Term Loans having Interest Periods that end after such Principal Payment Date,
or Incremental Facility Loans of such Series having Interest Periods that end
after such Incremental Facility Commitment Reduction Date, shall be equal to or
less than the aggregate principal amount of the Term Loans or Incremental
Facility Loans of such Series, as applicable, permitted to be outstanding after
giving effect to the payments of principal required to be made on such Principal
Payment Date or Incremental Facility Commitment Reduction Date, as the case may
be.
SECTION 2.03. Requests for Borrowings. To request a Borrowing (other
-----------------------
than in respect of a Borrowing comprised of a Swingline Loan, as to which the
provisions of Section 2.04 shall apply), the Borrower shall notify the
Administrative Agent of such request by telephone (a) in the case of a
Eurodollar Borrowing, not later than 12:00 noon, New York City time, three
Business Days before the date of the proposed Borrowing or (b) in the case of an
ABR Borrowing, not later than 12:00 noon, New York City time, one Business Day
before the date of the proposed Borrowing; provided that any such notice of an
--------
ABR Revolving Borrowing to finance the reimbursement of an LC Disbursement as
contemplated by Section 2.05(f) may be given not later than 10:00 a.m., New York
City time, on the date of the proposed Borrowing. Each such telephonic
Borrowing Request shall be irrevocable and shall be confirmed promptly by hand
delivery or telecopy to the Administrative Agent of a written Borrowing Request
in a form approved by the Administrative Agent and signed by the Borrower. Each
such telephonic and written Borrowing Request shall specify the following
information in compliance with Section 2.02:
(i) whether the requested Borrowing is to be a Revolving
Borrowing or Incremental Facility Borrowing (including, if applicable, the
respective Series of Incremental Facility to which such Borrowing relates);
(ii) the aggregate amount of the requested Borrowing;
(iii) the date of such Borrowing, which shall be a Business Day;
(iv) whether such Borrowing is to be an ABR Borrowing or a
Eurodollar Borrowing;
<PAGE>
-33-
(v) in the case of a Eurodollar Borrowing, the initial Interest
Period to be applicable thereto, which shall be a period contemplated by
the definition of the term "Interest Period"; and
(vi) the location and number of the Borrower's account to which
funds are to be disbursed, which shall comply with the requirements of
Section 2.06.
If no election as to the Type of Borrowing is specified, then the requested
Borrowing shall be an ABR Borrowing. If no Interest Period is specified with
respect to any requested Eurodollar Borrowing, then the Borrower shall be deemed
to have selected an Interest Period of one month's duration. Promptly following
receipt of a Borrowing Request in accordance with this Section, the
Administrative Agent shall advise each Lender of the details thereof and of the
amount of such Lender's Loan to be made as part of the requested Borrowing.
SECTION 2.04. Swingline Loans.
---------------
(a) Agreement to Make Swingline Loans. Subject to the terms and
---------------------------------
conditions set forth herein, each Swingline Lender agrees to make Swingline
Loans to the Borrower from time to time during the Revolving Availability
Period, in an aggregate principal amount at any time outstanding that will not
result in (i) the aggregate principal amount of outstanding Swingline Loans
exceeding $20,000,000 or (ii) the total Revolving Exposures exceeding the total
Revolving Commitments; provided that neither Swingline Lender shall be required
--------
to make a Swingline Loan to refinance an outstanding Swingline Loan. Within the
foregoing limits and subject to the terms and conditions set forth herein, the
Borrower may borrow, prepay and reborrow Swingline Loans. Swingline Loans made
hereunder shall constitute utilization of the Revolving Commitments and shall
reduce the availability of such Revolving Commitments on a dollar-for-dollar
basis.
(b) Interest Rates. Swingline Loans shall be ABR Loans, except that
--------------
a Swingline Lender and the Borrower may agree that the interest rate in respect
of a Swingline Loan made by such Swingline Lender be at an alternative rate of
interest (and with such applicable margins and prepayment premiums) as may from
time to time be offered by such Swingline Lender to the Borrower in its sole
discretion; provided that upon any sale pursuant to Section 2.04(d) of
--------
participations in any Swingline Loan the interest on which is determined by
reference to such an alternative rate, such Swingline Loans shall automatically
be converted into an ABR Loan.
(c) Notice of Swingline Loans by Borrower. To request a Swingline
-------------------------------------
Loan, the Borrower shall notify the Administrative Agent of such request by
telephone (confirmed by telecopy), not later than 12:00 noon, New York City
time, on the day of a proposed Swingline Loan. Each such notice shall be
irrevocable and shall specify the requested date (which shall be a Business Day)
and amount of the requested Swingline Loan and the respective Swingline Lender
from which the Borrower wishes to make such Borrowing. The
<PAGE>
-34-
Administrative Agent will promptly advise the respective Swingline Lender of any
such notice received from the Borrower. A Swingline Lender shall make each
Swingline Loan available to the Borrower by means of a credit to the general
deposit account of the Borrower with the Administrative Agent or such Swingline
Lender (or, in the case of a Swingline Loan made to finance the reimbursement of
an LC Disbursement as provided in Section 2.05(f), by remittance to the Issuing
Lender) by 3:00 p.m., New York City time, on the requested date of such
Swingline Loan.
(d) Participations by Lenders in Swingline Loans. A Swingline Lender
--------------------------------------------
may by written notice given to the Administrative Agent (with a copy to the
Borrower) not later than 10:00 a.m., New York City time, on any Business Day
require the Lenders to acquire participations on such Business Day in all or a
portion of the Swingline Loans of such Swingline Lender outstanding. Such
notice to the Administrative Agent shall specify the aggregate amount of
Swingline Loans in which Lenders will participate. Promptly upon receipt of
such notice, the Administrative Agent will give notice thereof to each Lender,
specifying in such notice such Lender's Applicable Percentage of such Swingline
Loan or Loans. Each Lender hereby absolutely and unconditionally agrees, upon
receipt of notice as provided above in this paragraph, to pay to the
Administrative Agent, for the account of the respective Swingline Lender, such
Lender's Applicable Percentage of such Swingline Loan or Loans. Each Lender
acknowledges and agrees that its obligation to acquire participations in
Swingline Loans pursuant to this paragraph is absolute and unconditional and
shall not be affected by any circumstance whatsoever, including the occurrence
and continuance of a Default or reduction or termination of the Commitments, and
that each such payment shall be made without any offset, abatement, withholding
or reduction whatsoever. Each Lender shall comply with its obligation under
this paragraph by wire transfer of immediately available funds, in the same
manner as provided in Section 2.06 with respect to Loans made by such Lender
(and Section 2.06 shall apply, mutatis mutandis, to the payment obligations of
------- --------
the Lenders), and the Administrative Agent shall promptly pay to the respective
Swingline Lender the amounts so received by it from the Lenders. The
Administrative Agent shall notify the Borrower of any participations in any
Swingline Loan acquired pursuant to this paragraph, and thereafter payments in
respect of such Swingline Loan shall be made to the Administrative Agent and not
to such Swingline Lender. Any amounts received by a Swingline Lender from the
Borrower (or other party on behalf of the Borrower) in respect of a Swingline
Loan after receipt by such Swingline Lender of the proceeds of a sale of
participations therein shall be promptly remitted to the Administrative Agent;
any such amounts received by the Administrative Agent shall be promptly remitted
by the Administrative Agent to the Lenders that shall have made their payments
pursuant to this paragraph and to the respective Swingline Lender, as their
interests may appear. The purchase of participations in a Swingline Loan
pursuant to this paragraph shall not relieve the Borrower of any default in the
payment thereof.
<PAGE>
-35-
SECTION 2.05. Letters of Credit.
-----------------
(a) General. Subject to the terms and conditions set forth herein,
-------
in addition to the Loans provided for in Section 2.01, the Borrower may request
the Issuing Lender to issue, at any time and from time to time during the
Revolving Availability Period, Letters of Credit for its own account in such
form as is acceptable to the Issuing Lender in its reasonable determination.
Letters of Credit issued hereunder shall constitute utilization of the Revolving
Commitments.
(b) Notice of Issuance, Amendment, Renewal or Extension. To request
---------------------------------------------------
the issuance of a Letter of Credit (or the amendment, renewal or extension of an
outstanding Letter of Credit), the Borrower shall hand deliver or telecopy (or
transmit by electronic communication, if arrangements for doing so have been
approved by the Issuing Lender) to the Issuing Lender and the Administrative
Agent (reasonably in advance of the requested date of issuance, amendment,
renewal or extension) a notice requesting the issuance of a Letter of Credit, or
identifying the Letter of Credit to be amended, renewed or extended, and
specifying the date of issuance, amendment, renewal or extension (which shall be
a Business Day), the date on which such Letter of Credit is to expire (which
shall comply with paragraph (d) of this Section), the amount of such Letter of
Credit, the name and address of the beneficiary thereof and such other
information as shall be necessary to prepare, amend, renew or extend such Letter
of Credit. If requested by the Issuing Lender, the Borrower also shall submit a
letter of credit application on the Issuing Lender's standard form in connection
with any request for a Letter of Credit. In the event of any inconsistency
between the terms and conditions of this Agreement and the terms and conditions
of any form of letter of credit application or other agreement submitted by the
Borrower to, or entered into by the Borrower with, the Issuing Lender relating
to any Letter of Credit, the terms and conditions of this Agreement shall
control.
(c) Limitations on Amounts. A Letter of Credit shall be issued,
----------------------
amended, renewed or extended only if (and upon issuance, amendment, renewal or
extension of each Letter of Credit the Borrower shall be deemed to represent and
warrant that), after giving effect to such issuance, amendment, renewal or
extension (i) the aggregate LC Exposure of the Issuing Lender (determined for
these purposes without giving effect to the participations therein of the
Lenders pursuant to paragraph (e) of this Section) shall not exceed $50,000,000
and (ii) the total Revolving Exposures shall not exceed the total Revolving
Commitments.
(d) Expiration Date. Each Letter of Credit shall expire at or prior
---------------
to the close of business on the earlier of (i) the date 12 months after the date
of the issuance of such Letter of Credit (or, in the case of any renewal or
extension thereof, 12 months after such renewal or extension) and (ii) the date
that is five Business Days prior to the Maturity Date.
(e) Participations. By the issuance of a Letter of Credit (or an
--------------
amendment to a Letter of Credit increasing the amount thereof) by the Issuing
Lender, and without any further
<PAGE>
-36-
action on the part of the Issuing Lender or the Lenders, the Issuing Lender
hereby grants to each Lender, and each Lender hereby acquires from the Issuing
Lender, a participation in such Letter of Credit equal to such Lender's
Applicable Percentage of the aggregate amount available to be drawn under such
Letter of Credit. Each Lender acknowledges and agrees that its obligation to
acquire participations pursuant to this paragraph in respect of Letters of
Credit is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including any amendment, renewal or extension of any
Letter of Credit or the occurrence and continuance of a Default or reduction or
termination of the Commitments, and that each such payment shall be made without
any offset, abatement, withholding or reduction whatsoever.
In consideration and in furtherance of the foregoing, each Lender
hereby absolutely and unconditionally agrees to pay to the Administrative Agent,
for the account of the Issuing Lender, such Lender's Applicable Percentage of
each LC Disbursement made by the Issuing Lender promptly upon the request of the
Issuing Lender at any time from the time of such LC Disbursement until such LC
Disbursement is reimbursed by the Borrower or at any time after any
reimbursement payment is required to be refunded to the Borrower for any reason.
Each such payment shall be made in the same manner as provided in Section 2.06
with respect to Loans made by such Lender (and Section 2.06 shall apply, mutatis
-------
mutandis, to the payment obligations of the Lenders), and the Administrative
- --------
Agent shall promptly pay to the Issuing Lender the amounts so received by it
from the Lenders. Promptly following receipt by the Administrative Agent of any
payment from the Borrower pursuant to the next following paragraph, the
Administrative Agent shall distribute such payment to the Issuing Lender or, to
the extent that the Lenders have made payments pursuant to this paragraph to
reimburse the Issuing Lender, then to such Lenders and the Issuing Lender as
their interests may appear. Any payment made by a Lender pursuant to this
paragraph to reimburse the Issuing Lender for any LC Disbursement shall not
constitute a Loan and shall not relieve the Borrower of its obligation to
reimburse such LC Disbursement.
(f) Reimbursement. If the Issuing Lender shall make any LC
-------------
Disbursement in respect of a Letter of Credit, the Borrower shall reimburse the
Issuing Lender in respect of such LC Disbursement by paying to the
Administrative Agent an amount equal to such LC Disbursement not later than
12:00 noon, New York City time, on (i) the Business Day that the Borrower
receives notice of such LC Disbursement, if such notice is received prior to
10:00 a.m., New York City time, or (ii) the Business Day immediately following
the day that the Borrower receives such notice, if such notice is not received
prior to such time, provided that, if such LC Disbursement is not less than
--------
$100,000 the Borrower may, subject to the conditions to borrowing set forth
herein, request in accordance with Section 2.03 or 2.04 that such payment be
financed with an ABR Revolving Borrowing or Swingline Loan in an equivalent
amount and, to the extent so financed, the Borrower's obligation to make such
payment shall be discharged and replaced by the resulting ABR Revolving
Borrowing or Swingline Loan.
<PAGE>
-37-
If the Borrower fails to make such payment when due, the
Administrative Agent shall notify each Lender of the applicable LC Disbursement,
the payment then due from the Borrower in respect thereof and such Lender's
Applicable Percentage thereof.
(g) Obligations Absolute. The Borrower's obligation to reimburse LC
--------------------
Disbursements as provided in paragraph (f) of this Section shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement under any and all circumstances whatsoever and
irrespective of (i) any lack of validity or enforceability of any Letter of
Credit, or any term or provision therein, (ii) any draft or other document
presented under a Letter of Credit proving to be forged, fraudulent or invalid
in any respect or any statement therein being untrue or inaccurate in any
respect, (iii) payment by the Issuing Lender under a Letter of Credit against
presentation of a draft or other document that does not comply strictly with the
terms of such Letter of Credit, and (iv) any other event or circumstance
whatsoever, whether or not similar to any of the foregoing, that might, but for
the provisions of this Section, constitute a legal or equitable discharge of the
Borrower's obligations hereunder.
Neither the Administrative Agent, the Lenders nor the Issuing Lender,
nor any of their Related Parties, shall have any liability or responsibility by
reason of or in connection with the issuance or transfer of any Letter of Credit
by the Issuing Lender or any payment or failure to make any payment thereunder
(irrespective of any of the circumstances referred to in the preceding
sentence), or any error, omission, interruption, loss or delay in transmission
or delivery of any draft, notice or other communication under or relating to any
Letter of Credit (including any document required to make a drawing thereunder),
any error in interpretation of technical terms or any consequence arising from
causes beyond the control of the Issuing Lender; provided that the foregoing
--------
shall not be construed to excuse the Issuing Lender from liability to the
Borrower to the extent of any direct damages (as opposed to consequential
damages, claims in respect of which are hereby waived by the Borrower to the
extent permitted by applicable law) suffered by the Borrower that are caused by
the Issuing Lender's gross negligence or wilful misconduct when determining
whether drafts and other documents presented under a Letter of Credit comply
with the terms thereof. The parties hereto expressly agree that:
(i) the Issuing Lender may accept documents that it believes in
good faith appear on their face to be in substantial compliance with the
terms of a Letter of Credit without responsibility for further
investigation, regardless of any notice or information to the contrary, and
may make payment upon presentation of documents that appear on their face
to be in substantial compliance with the terms of such Letter of Credit;
(ii) the Issuing Lender shall have the right, in its sole
discretion, to decline to accept such documents and to decline to make such
payment if such documents are not in strict compliance with the terms of
such Letter of Credit; and
<PAGE>
-38-
(iii) this sentence shall establish the standard of care to be
exercised by the Issuing Lender when determining whether drafts and other
documents presented under a Letter of Credit comply with the terms thereof
(and the parties hereto hereby waive, to the extent permitted by applicable
law, any standard of care inconsistent with the foregoing).
(h) Disbursement Procedures. The Issuing Lender shall, within a
-----------------------
reasonable time following its receipt thereof, examine all documents purporting
to represent a demand for payment under a Letter of Credit. The Issuing Lender
shall promptly after such examination notify the Administrative Agent and the
Borrower by telephone (confirmed by telecopy) of such demand for payment and
whether the Issuing Lender has made or will make an LC Disbursement thereunder;
provided that any failure to give or delay in giving such notice shall not
- --------
relieve the Borrower of its obligation to reimburse the Issuing Lender and the
Lenders with respect to any such LC Disbursement.
(i) Interim Interest. If the Issuing Lender shall make any LC
----------------
Disbursement, then, unless the Borrower shall reimburse such LC Disbursement in
full on the date such LC Disbursement is made, the unpaid amount thereof shall
bear interest, for each day from and including the date such LC Disbursement is
made to but excluding the date that the Borrower reimburses such LC
Disbursement, at the rate per annum then applicable to ABR Loans; provided that,
--------
if the Borrower fails to reimburse such LC Disbursement when due pursuant to
paragraph (f) of this Section, then Section 2.12(d) shall apply. Interest
accrued pursuant to this paragraph shall be for the account of the Issuing
Lender, except that interest accrued on and after the date of payment by any
Lender pursuant to paragraph (f) of this Section to reimburse the Issuing Lender
shall be for the account of such Lender to the extent of such payment.
(j) Replacement of the Issuing Lender. The Issuing Lender may be
---------------------------------
replaced at any time by written agreement among the Borrower, the Administrative
Agent, the replaced Issuing Lender and the successor Issuing Lender. The
Administrative Agent shall notify the Lenders of any such replacement of the
Issuing Lender. At the time any such replacement shall become effective, the
Borrower shall pay all unpaid fees accrued for the account of the replaced
Issuing Lender pursuant to Section 2.11(b). From and after the effective date
of any such replacement, (i) the successor Issuing Lender shall have all the
rights and obligations of the replaced Issuing Lender under this Agreement with
respect to Letters of Credit to be issued thereafter and (ii) references herein
to the term "Issuing Lender" shall be deemed to refer to such successor or to
any previous Issuing Lender, or to such successor and all previous Issuing
Lenders, as the context shall require. After the replacement of an Issuing
Lender hereunder, the replaced Issuing Lender shall remain a party hereto and
shall continue to have all the rights and obligations of an Issuing Lender under
this Agreement with respect to Letters of Credit issued by it prior to such
replacement, but shall not be required to issue additional Letters of Credit.
<PAGE>
-39-
(k) Cash Collateralization. If either (i) an Event of Default shall
----------------------
occur and be continuing and the Borrower receives notice from the Administrative
Agent or the Required Lenders (or, if the maturity of the Loans has been
accelerated, Lenders with LC Exposure representing more than 50% of the total LC
Exposure) demanding the deposit of cash collateral pursuant to this paragraph,
or (ii) the Borrower shall be required to provide cover for LC Exposure pursuant
to Sections 2.09 and 2.10, the Borrower shall immediately deposit into an
account with the Administrative Agent, in the name of the Administrative Agent
and for the benefit of the Lenders, an amount in cash equal to, in the case of
an Event of Default, the LC Exposure as of such date plus any accrued and unpaid
interest thereon and, in the case of cover pursuant to Section 2.10, the amount
required under Section 2.10, provided that the obligation to deposit such cash
--------
collateral shall become effective immediately, and such deposit shall become
immediately due and payable, without demand or other notice of any kind, upon
the occurrence of any Event of Default with respect to the Borrower described in
clause (i) or (j) of Article VIII. Such deposit shall be held by the
Administrative Agent as collateral for the LC Exposure under this Agreement.
(l) Existing Letters of Credit. Pursuant to Section 2.10(a) of the
--------------------------
Existing Credit Agreement, the Issuing Lender may from time to time have issued
"Revolving Letters of Credit" (as defined therein). Each of the parties hereto
agrees that any such "Revolving Letter of Credit" that shall be outstanding on
the Effective Date shall constitute, on and after the Effective Date, a Letter
of Credit for all purposes of this Agreement.
SECTION 2.06. Funding of Borrowings.
---------------------
(a) Funding by Lenders. Each Lender shall make each Loan to be made
------------------
by it hereunder on the proposed date thereof by wire transfer of immediately
available funds by 12:00 noon, New York City time, to the account of the
Administrative Agent most recently designated by it for such purpose by notice
to the Lenders; provided that Swingline Loans shall be made as provided in
--------
Section 2.04. The Administrative Agent will make such Loans available to the
Borrower by promptly crediting the amounts so received, in like funds, to an
account of the Borrower maintained with the Administrative Agent in New York
City and designated by the Borrower in the applicable Borrowing Request;
provided that ABR Revolving Borrowings made to finance the reimbursement of an
- --------
LC Disbursement as provided in Section 2.05(f) shall be remitted by the
Administrative Agent to the Issuing Lender.
(b) Presumption by Administrative Agent. Unless the Administrative
-----------------------------------
Agent shall have received notice from a Lender prior to the proposed date of any
Borrowing that such Lender will not make available to the Administrative Agent
such Lender's share of such Borrowing, the Administrative Agent may assume that
such Lender has made such share available on such date in accordance with
paragraph (a) of this Section and may, in reliance upon such assumption, make
available to the Borrower a corresponding amount. In such event, if a Lender
has not in fact made its share of the applicable Borrowing available to the
Administrative Agent, then the applicable Lender and the Borrower severally
agree to pay to
<PAGE>
-40-
the Administrative Agent forthwith on demand such corresponding amount with
interest thereon, for each day from and including the date such amount is made
available to the Borrower to but excluding the date of payment to the
Administrative Agent, at (i) in the case of such Lender, the Federal Funds
Effective Rate or (ii) in the case of the Borrower, the interest rate applicable
to ABR Loans. If such Lender pays such amount to the Administrative Agent, then
such amount shall constitute such Lender's Loan included in such Borrowing.
SECTION 2.07. Interest Elections.
------------------
(a) Elections by Borrower. Each Borrowing initially shall be of the
---------------------
Type specified in the applicable Borrowing Request and, in the case of a
Eurodollar Borrowing, shall have an initial Interest Period as specified in such
Borrowing Request. Thereafter, the Borrower may elect to convert such Borrowing
to a different Type or to continue such Borrowing and, in the case of a
Eurodollar Borrowing, may elect Interest Periods therefor, all as provided in
this Section. The Borrower may elect different options with respect to
different portions of the affected Borrowing, in which case each such portion
shall be allocated ratably among the Lenders holding the Loans comprising such
Borrowing, and the Loans comprising each such portion shall be considered a
separate Borrowing. This Section shall not apply to Swingline Borrowings, which
may not be converted or continued.
(b) Notice of Elections. To make an election pursuant to this
-------------------
Section, the Borrower shall notify the Administrative Agent of such election by
telephone by the time that a Borrowing Request would be required under Section
2.03 if the Borrower were requesting a Borrowing of the Type resulting from such
election to be made on the effective date of such election. Each such
telephonic Interest Election Request shall be irrevocable and shall be confirmed
promptly by hand delivery or telecopy to the Administrative Agent of a written
Interest Election Request in a form approved by the Administrative Agent and
signed by the Borrower.
(c) Information in Election Notices. Each telephonic and written
-------------------------------
Interest Election Request shall specify the following information in compliance
with Section 2.02:
(i) the Borrowing to which such Interest Election Request
applies (including, if applicable, the respective Series of Incremental
Facility Loans to which such Interest Election Request relates) and, if
different options are being elected with respect to different portions
thereof, the portions thereof to be allocated to each resulting Borrowing
(in which case the information to be specified pursuant to clauses (iii)
and (iv) of this paragraph shall be specified for each resulting
Borrowing);
(ii) the effective date of the election made pursuant to such
Interest Election Request, which shall be a Business Day;
<PAGE>
-41-
(iii) whether the resulting Borrowing is to be an ABR Borrowing
or a Eurodollar Borrowing; and
(iv) if the resulting Borrowing is a Eurodollar Borrowing, the
Interest Period to be applicable thereto after giving effect to such
election, which shall be a period contemplated by the definition of the
term "Interest Period".
If any such Interest Election Request requests a Eurodollar Borrowing but does
not specify an Interest Period, then the Borrower shall be deemed to have
selected an Interest Period of one month's duration.
(d) Notice by Administrative Agent to Lenders. Promptly following
-----------------------------------------
receipt of an Interest Election Request, the Administrative Agent shall advise
each relevant Lender of the details thereof and of such Lender's portion of each
resulting Borrowing.
(e) Presumptions if no Notice. If the Borrower fails to deliver a
-------------------------
timely Interest Election Request with respect to a Eurodollar Borrowing prior to
the end of the Interest Period applicable thereto, then, unless such Borrowing
is repaid as provided herein, at the end of such Interest Period such Borrowing
shall be converted to an ABR Borrowing. Notwithstanding any contrary provision
hereof, if an Event of Default has occurred and is continuing and the
Administrative Agent, at the request of the Required Lenders, so notifies the
Borrower, then, so long as an Event of Default is continuing (i) no outstanding
Borrowing may be converted to or continued as a Eurodollar Borrowing and (ii)
unless repaid, each Eurodollar Borrowing shall be converted to an ABR Borrowing
at the end of the Interest Period applicable thereto.
SECTION 2.08. Termination and Reduction of the Commitments.
--------------------------------------------
(a) Scheduled Termination. Unless previously terminated, (i) the
---------------------
Revolving Commitments shall terminate on the Maturity Date and (ii) the
Incremental Facility Commitments shall terminate on the Maturity Date.
(b) Voluntary Termination or Reduction. The Borrower may at any time
----------------------------------
terminate, or from time to time reduce, the Commitments of any Class (including
the Commitments of any Series of Incremental Facility Loans); provided that (i)
--------
each reduction of the Commitments of any Class pursuant to this Section shall be
in an amount that is $5,000,000 or a larger multiple of $1,000,000 and (ii) the
Borrower shall not terminate or reduce the Revolving Commitments if, after
giving effect to any concurrent prepayment of the Loans in accordance with
Section 2.10, the total Revolving Exposures would exceed the total Revolving
Commitments.
(c) Notice of Termination or Reduction. The Borrower shall notify
----------------------------------
the Administrative Agent of any election to terminate or reduce the Commitments
of any Class
<PAGE>
-42-
under paragraph (b) of this Section at least three Business Days prior to the
effective date of such termination or reduction, specifying such election and
the effective date thereof. Promptly following receipt of any notice, the
Administrative Agent shall advise the Lenders of the contents thereof. Each
notice delivered by the Borrower pursuant to this Section shall be irrevocable;
provided that a notice of termination of the Revolving Commitments delivered by
- --------
the Borrower may state that such notice is conditioned upon the effectiveness of
other credit facilities, in which case such notice may be revoked by the
Borrower (by notice to the Administrative Agent on or prior to the specified
effective date) if such condition is not satisfied.
(d) Effect of Termination or Reduction. Any termination or reduction
----------------------------------
of the Commitments of any Class shall be permanent. Each reduction of the
Commitments of any Class shall be made ratably among the Lenders in accordance
with their respective Commitments of such Class.
(e) Conversion Date Reduction of Revolving Commitments. The
--------------------------------------------------
Revolving Commitments shall be automatically reduced on the Conversion Date in
the manner and to the extent provided in Section 2.01(b).
(f) Reduction of Incremental Facility Commitments. The aggregate
---------------------------------------------
amount of the Incremental Facility Commitments of each Series will be
automatically reduced to zero on the Maturity Date. In addition, the aggregate
amount of the Incremental Facility Commitments of each Series shall be
automatically reduced at the close of business on each Incremental Facility
Commitment Reduction Date set forth in column (A) below by an amount (subject to
reduction as provided below) equal to the percentage of the original aggregate
principal amount of the Incremental Facility Commitments of such Series set
forth in column (B) below opposite such Incremental Facility Commitment
Reduction Date:
(A) (B)
Incremental Facility Incremental Facility
Commitment Reduction Commitments Reduced by the
Date Falling on or Percentages of Original Incremental
Nearest to: Facility Commitments (%)
---------- ------------------------
March 31, 2001 6.25%
June 30, 2001 6.25%
September 30, 2001 6.25%
December 31, 2001 6.25%
March 31, 2002 6.25%
June 30, 2002 6.25%
September 30, 2002 6.25%
December 31, 2002 6.25%
<PAGE>
-43-
March 31, 2003 6.25%
June 30, 2003 6.25%
September 30, 2003 6.25%
December 31, 2003 6.25%
March 31, 2004 6.25%
June 30, 2004 6.25%
September 30, 2004 6.25%
December 31, 2004 6.25%
Each reduction in Incremental Facility Commitments of any Series pursuant to
paragraph (b) of this Section shall be applied as follows: first, such
-----
reduction shall be applied to the first installment set forth in the schedule
above for the calendar year immediately following the calendar year in which
such reduction occurs and, second, after such first installment shall have been
------
reduced in full, such reduction shall be applied to the remaining installments
set forth in the schedule above ratably in accordance with the respective
amounts thereof.
SECTION 2.09. Repayment of Loans; Evidence of Debt.
------------------------------------
(a) Repayment. The Borrower hereby unconditionally promises to pay
---------
the Loans outstanding hereunder as follows:
(i) to the Administrative Agent for the account of each Lender
the outstanding principal amount of each Revolving Loan of such Lender on
the Maturity Date,
(ii) to the Administrative Agent for the account of each Lender
the outstanding principal amount of each Term Loan of such Lender on each
Principal Payment Date set forth below in an amount equal to the percentage
of the original principal amount of such Term Loan on the Conversion Date
set forth opposite such Principal Payment Date:
Percentage of
Aggregate Principal
Principal Payment Date Amount Outstanding
---------------------- ------------------
March 31, 2000 2.50%
June 30, 2000 2.50%
September 30, 2000 2.50%
December 31, 2000 2.50%
<PAGE>
-44-
March 31, 2001 3.75%
June 30, 2001 3.75%
September 30, 2001 3.75%
December 31, 2001 3.75%
March 31, 2002 5.00%
June 30, 2002 5.00%
September 30, 2002 5.00%
December 31, 2002 5.00%
March 31, 2003 6.25%
June 30, 2003 6.25%
September 30, 2003 6.25%
December 31, 2003 6.25%
March 31, 2004 7.50%
June 30, 2004 7.50%
September 30, 2004 7.50%
December 31, 2004 7.50%,
(iii) to the Administrative Agent for the account of each
Incremental Facility Lender the outstanding principal amount of each
Incremental Facility Loan of such Lender on the Maturity Date and
(iv) to each Swingline Lender the outstanding principal amount
of each Swingline Loan made by such Swingline Lender on the earlier of the
Maturity Date and the first date after such Swingline Loan is made that is
the last day of a calendar month and that is at least two Business Days
after such Swingline Loan is made.
(b) Manner of Repayment. Prior to any repayment or prepayment of any
-------------------
Borrowings hereunder, the Borrower shall select the Borrowing or Borrowings to
be paid and shall notify the Administrative Agent by telephone (confirmed by
telecopy) of such selection not later than 11:00 a.m., New York City time, three
Business Days before the scheduled date of such payment; provided that each
--------
payment of Borrowings shall be applied to pay any outstanding ABR Term
Borrowings before any other Borrowings. If the Borrower fails to make a timely
selection of the Borrowing or Borrowings to be repaid or prepaid, such payment
shall be applied, first, to pay any outstanding ABR Term Borrowings and, second,
to other Borrowings in the order of the remaining duration of their respective
Interest Periods (the Borrowing with the shortest remaining Interest Period to
be paid first). Each payment of a Borrowing shall be applied ratably to the
Loans included in such Borrowing.
(c) Maintenance of Loan Accounts by Lenders. Each Lender shall
---------------------------------------
maintain in accordance with its usual practice an account or accounts evidencing
the indebtedness of the
<PAGE>
-45-
Borrower to such Lender resulting from each Loan made by such Lender, including
the amounts of principal and interest payable and paid to such Lender from time
to time hereunder.
(d) Maintenance of Loan Accounts by Administrative Agent. The
----------------------------------------------------
Administrative Agent shall maintain accounts in which it shall record (i) the
amount of each Loan made hereunder, the Class and Type thereof (including, in
the case of Incremental Facility Loans, the respective Series thereof) and the
Interest Period applicable thereto, (ii) the amount of any principal or interest
due and payable or to become due and payable from the Borrower to each Lender
hereunder and (iii) the amount of any sum received by the Administrative Agent
hereunder for the account of the Lenders and each Lender's share thereof.
(e) Effect of Loan Accounts. The entries made in the accounts
-----------------------
maintained pursuant to paragraph (c) or (d) of this Section shall be prima facie
----- -----
evidence of the existence and amounts of the obligations recorded therein;
provided that the failure of any Lender or the Administrative Agent to maintain
- --------
such accounts or any error therein shall not in any manner affect the obligation
of the Borrower to repay the Loans in accordance with the terms of this
Agreement.
(f) Promissory Notes. Any Lender may request that Loans of any Class
----------------
made by it be evidenced by a promissory note. In such event, the Borrower shall
prepare, execute and deliver to such Lender a promissory note payable to the
order of such Lender (or, if requested by such Lender, to such Lender and its
registered assigns) and in a form approved by the Administrative Agent.
Thereafter, the Loans evidenced by such promissory note and interest thereon
shall at all times (including after assignment pursuant to Section 10.04) be
represented by one or more promissory notes in such form payable to the order of
the payee named therein (or, if such promissory note is a registered note, to
such payee and its registered assigns).
SECTION 2.10. Prepayment of Loans.
-------------------
(a) Optional Prepayments. The Borrower shall have the right at any
--------------------
time and from time to time to prepay any Borrowing in whole or in part, subject
to prior notice in accordance with paragraph (e) of this Section 2.10. Each
prepayment of Term Loans pursuant to this paragraph (a) shall be applied as
follows: first, such prepayment shall be applied to the first installment set
-----
forth in the schedule in Section 2.09(a)(ii) for the calendar year immediately
following the calendar year in which such prepayment occurs and, second, after
------
such first installment shall have been prepaid in full, such prepayment shall be
applied to the remaining installments set forth in said schedule ratably in
accordance with the respective amounts thereof.
<PAGE>
-46-
(b) Mandatory Prepayments -- Casualty Events and Sales of Assets.
------------------------------------------------------------
The Borrower shall make prepayments of the Loans (and reduce the Commitments)
hereunder as follows:
(i) Casualty Events. Upon the date twelve months following the
---------------
receipt by the Borrower or any of its Consolidated Subsidiaries of the
proceeds of insurance, condemnation award or other compensation in respect
of any Casualty Event affecting any property of the Borrower or any of its
Consolidated Subsidiaries (or upon such earlier date as the Borrower or
such Consolidated Subsidiary, as the case may be, shall have determined not
to repair or replace the property affected by such Casualty Event), the
Borrower shall prepay the Loans (and/or provide cover for LC Exposure as
specified in Section 2.05(k)), and the Commitments shall be subject to
automatic reduction, in an aggregate amount, if any, equal to 100% of the
Net Cash Proceeds of such Casualty Event not theretofore applied to the
repair or replacement of such property, such prepayment and reduction to be
effected in each case in the manner and to the extent specified in clause
(iii) of this Section 2.10(b).
(ii) Sale of Assets. Without limiting the obligation of the
--------------
Borrower to obtain the consent of the Required Lenders to any Disposition
not otherwise permitted hereunder, the Borrower agrees, on or prior to the
occurrence of any Disposition, to deliver to the Administrative Agent a
statement certified by a Financial Officer, in form and detail reasonably
satisfactory to the Administrative Agent, of the estimated amount of the
Net Cash Proceeds of such Disposition that will (on the date of such
Disposition) be received by the Borrower or any of its Consolidated
Subsidiaries in cash and, unless the Borrower shall elect to reinvest such
Net Cash Proceeds as provided below, the Borrower will prepay the Loans
hereunder (and provide cover for LC Exposure as specified in Section
2.05(k)), and the Commitments hereunder shall be subject to automatic
reduction, as follows:
(x) upon the date of such Disposition, in an aggregate amount
equal to 100% of such estimated amount of the Net Cash Proceeds of
such Disposition, to the extent received by the Borrower or any of its
Consolidated Subsidiaries in cash on the date of such Disposition; and
(y) thereafter, quarterly, on the date of the delivery by the
Borrower to the Administrative Agent pursuant to Section 6.01 of the
financial statements for any quarterly fiscal period or fiscal year,
to the extent the Borrower or any of its Consolidated Subsidiaries
shall receive Net Cash Proceeds during the quarterly fiscal period
ending on the date of such financial statements in cash under deferred
payment arrangements or Disposition Investments entered into or
received in connection with any Disposition, an amount equal to (A)
100% of the aggregate amount of such Net Cash Proceeds minus (B) any
-----
transaction expenses associated with Dispositions and not previously
deducted in the
<PAGE>
-47-
determination of Net Cash Proceeds plus (or minus, as the case may be)
---- -----
(C) any other adjustment received or paid by the Borrower or any of
its Consolidated Subsidiaries pursuant to the respective agreements
giving rise to Dispositions and not previously taken into account in
the determination of the Net Cash Proceeds of Dispositions, provided
--------
that if prior to the date upon which the Borrower would otherwise be
required to make a prepayment under this subclause (y) with respect to
any quarterly fiscal period the aggregate amount of such Net Cash
Proceeds (after giving effect to the adjustments provided for in this
subclause (y)) shall exceed $25,000,000, then the Borrower shall
within three Business Days make a prepayment under this subclause (y)
in an amount equal to such required prepayment.
Prepayments of Loans (and cover for LC Exposure) and reductions of
Commitments shall be effected in each case in the manner and to the extent
specified in clause (iii) of this Section 2.10(b).
Notwithstanding the foregoing, the Borrower shall not be required to
make a prepayment (or provide cover), and the Commitments shall not be
reduced, pursuant to this Section 2.10(b)(ii) with respect to the Net Cash
Proceeds from any Disposition in the event that the Borrower advises the
Administrative Agent at the time a prepayment is required to be made under
the foregoing subclauses (x) or (y) that it intends to reinvest such Net
Cash Proceeds into replacement assets pursuant to one or more Capital
Expenditures or Acquisitions permitted hereunder, so long as the Net Cash
Proceeds from any Disposition are in fact so reinvested within 350 days of
such Disposition (it being understood that, in the event more than one
Disposition shall occur, such Net Cash Proceeds shall be deemed to be
applied in the same order in which such Dispositions occurred and,
accordingly, any such Net Cash Proceeds not so reinvested within 350 days
shall be forthwith applied to the prepayment of Loans (and cover for LC
Exposure as specified in Section 2.05(k)) and reductions of Commitments as
provided in clause (iii) of this Section 2.10(b).
Anything herein to the contrary notwithstanding, the Borrower shall
not be required to make any prepayment pursuant to this Section 2.10(b)(ii)
(and the provisions of this Section 2.10(b)(ii) shall accordingly be
inapplicable) to the extent that after giving effect to any Disposition the
Leverage Ratio is less than 4.00 to 1.
(iii) Application. Upon the occurrence of any of the events
-----------
described in the above clauses of this Section 2.10(b), the amount of the
required prepayment shall be applied to the reduction of the Revolving
Commitments and Incremental Facility Commitments of each Series, and to the
prepayment of the Term Loans, in each case ratably in accordance with the
respective then-outstanding aggregate amounts of such Commitments and Loans
(and to the extent that, after giving effect to any such reduction of
Revolving Commitments, the aggregate Revolving Exposure shall exceed
<PAGE>
-48-
the Revolving Commitments, to the simultaneous prepayment of Revolving
Loans and/or cover for LC Exposure as specified in Section 2.05(k) and to
the extent that, after giving effect to any such reduction of Incremental
Facility Commitments of any Series, the Incremental Facility Loans of such
Series shall exceed the Incremental Facility Commitments of such Series, to
the simultaneous prepayment of Incremental Facility Loans of such Series),
such reduction of Commitments and prepayments to be applied,
(x) in the case of such prepayment of Term Loans, first to the
-----
prepayment of the first installment set forth in the schedule in
Section 2.09(a)(ii) for the calendar year immediately following the
calendar year in which such prepayment occurs and, second, after such
------
first installment shall have been prepaid in full, to the prepayment
of the remaining installments set forth in said schedule ratably in
accordance with the respective amounts thereof and
(y) in the case of such reduction of Incremental Facility
Commitments of any Series, first, to the reduction of the first
-----
installment set forth in the schedule in Section 2.08(f) for the
calendar year immediately following the calendar year in which such
reduction occurs and, second, after such first installment shall have
------
been reduced in full, to the reduction of the remaining installments
set forth in said schedule ratably in accordance with the respective
amounts thereof.
Notwithstanding the foregoing, to the extent that the aggregate amount of any of
the required prepayments contemplated by this paragraph (b) shall be in excess
of the amount of the ABR Loans of any Class outstanding on the date of such
prepayment, only the portion of the amount of such prepayment of such Class as
is equal to the amount of such ABR Loans shall be immediately prepaid and at the
election of the Borrower, the balance of such required prepayment shall be
either (i) deposited with the Administrative Agent to be held as collateral
security for the Loans of such Class and applied to the prepayment of the
Eurodollar Loans of such Class on the last day(s) of the then next-expiring
Interest Period(s) for Eurodollar Loans in the order in which such Interest
Period(s) shall expire (or immediately if any Event of Default shall occur and
be continuing), or (ii) made immediately, together with any amounts owing to the
Lenders under Section 2.15.
(c) Mandatory Prepayments -- Outstandings Exceeding Commitments. The
-----------------------------------------------------------
Borrower shall prepay the Revolving Loans (and/or provide cover for LC Exposure
as specified in Section 2.05(k)) in the event that the aggregate amount of the
Revolving Exposure shall at any time exceed the aggregate amount of the
Revolving Commitments. In addition, the Borrower shall prepay the Incremental
Facility Loans of any Series in the event that the aggregate amount of the
Incremental Facility Loans of such Series shall at any time exceed the aggregate
amount of the Incremental Facility Commitments of such Series.
<PAGE>
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(d) Mandatory Prepayments -- Change of Control. In the event that
------------------------------------------
any "Change of Control" shall occur in respect of the Senior Subordinated Notes,
or any similar event shall occur in respect of any Additional Permitted
Indebtedness, in either case at a time when the aggregate outstanding principal
amount of the respective Indebtedness affected thereby is in excess of
$25,000,000, and as a result thereof the Borrower shall be required to offer to
repurchase, redeem or prepay any portion of the Senior Subordinated Notes or
such Additional Permitted Indebtedness, the Borrower shall prepay the Loans
(and/or provide cover for LC Exposure as specified in Section 2.05(k)), and the
Commitments shall be automatically reduced to zero.
(e) Notices. The Borrower shall notify the Administrative Agent
-------
(and, in the case of prepayment of a Swingline Loan, the respective Swingline
Lender) by telephone (confirmed by telecopy) of any prepayment hereunder (i) in
the case of prepayment of a Eurodollar Borrowing, not later than 11:00 a.m., New
York City time, two Business Days before the date of prepayment, (ii) in the
case of prepayment of an ABR Borrowing, not later than 11:00 a.m., New York City
time, one Business Day before the date of prepayment or (iii) in the case of
prepayment of a Swingline Loan, not later than 12:00 noon, New York City time,
on the date of prepayment. Each such notice shall be irrevocable and shall
specify the prepayment date, the principal amount of each Borrowing or portion
thereof to be prepaid and in the case of a mandatory prepayment, a reasonably
detailed calculation of the amount of such prepayment; provided that, if a
--------
notice of prepayment is given in connection with a conditional notice of
termination of the Revolving Commitments as contemplated by Section 2.08, then
such notice of prepayment may be revoked if such notice of termination is
revoked in accordance with Section 2.08. Promptly following receipt of any such
notice relating to a Borrowing, the Administrative Agent shall advise the
Lenders of the contents thereof. Each partial prepayment of any Borrowing shall
be in an amount that would be permitted in the case of a Borrowing of the same
Type as provided in Section 2.02, except as necessary to apply fully the
required amount of a mandatory prepayment. Each prepayment of a Borrowing shall
be applied ratably to the Loans included in the prepaid Borrowing. Prepayments
shall be accompanied by accrued interest to the extent required by Section 2.12.
SECTION 2.11. Fees.
----
(a) Commitment Fee. The Borrower shall pay to the Administrative
--------------
Agent for account of each Lender a commitment fee, which shall accrue at the
Applicable Margin on the daily average unutilized amount of such Lender's
Incremental Facility Commitment and Revolving Commitment (for which purpose the
aggregate amount of any LC Exposure shall be deemed to be a pro rata (based on
the Revolving Commitments) utilization of each Lender's Revolving Commitment and
the aggregate principal amount of any Swingline Loans shall be deemed to be a
utilization of the respective Swingline Lender's Revolving Commitment), for the
period from and including the date hereof to but not including the earlier of
the date such Commitment is terminated and the Maturity Date. Accrued
<PAGE>
-50-
commitment fees shall be payable on each Quarterly Date and on the earlier of
the date the relevant Commitments are terminated and the Maturity Date, as the
case may be.
(b) Letter of Credit Fees. The Borrower agrees to pay (i) to the
---------------------
Administrative Agent for the account of each Revolving Lender a participation
fee with respect to its participations in Letters of Credit, which shall accrue
at a rate per annum equal to the Applicable Margin used to determine interest on
Eurodollar Revolving Loans on the average daily amount of such Lender's LC
Exposure (excluding any portion thereof attributable to unreimbursed LC
Disbursements) during the period from and including the Effective Date to but
excluding the later of the date on which such Lender's Revolving Commitment
terminates and the date on which such Lender ceases to have any LC Exposure, and
(ii) to the Issuing Lender a fronting fee, which shall accrue at the rate of
3/16 of 1% per annum on the average daily amount of the LC Exposure (excluding
any portion thereof attributable to unreimbursed LC Disbursements) during the
period from and including the Effective Date to but excluding the later of the
date of termination of the Revolving Commitments and the date on which there
ceases to be any LC Exposure, as well as the Issuing Lender's standard fees with
respect to the issuance, amendment, renewal or extension of any Letter of Credit
or processing of drawings thereunder. Participation fees and fronting fees
accrued through and including each Quarterly Date shall be payable on the third
Business Day following such Quarterly Date, commencing on the first such date to
occur after the Effective Date; provided that all such fees shall be payable on
--------
the date on which the Revolving Commitments terminate and any such fees accruing
after the date on which the Revolving Commitments terminate shall be payable on
demand. Any other fees payable to the Issuing Lender pursuant to this paragraph
shall be payable within 10 days after demand. All participation fees and
fronting fees shall be computed on the basis of a year of 360 days and shall be
payable for the actual number of days elapsed (including the first day but
excluding the last day).
(c) Administrative Agent Fees. The Borrower agrees to pay to the
-------------------------
Administrative Agent, for its own account, fees payable in the amounts and at
the times separately agreed upon between the Borrower and the Administrative
Agent (it being understood that if the Administrative Agent shall resign or be
removed, a ratable portion of any fees theretofore paid to the Administrative
Agent for the period during which such resignation or removal shall occur shall
be promptly paid by the Administrative Agent to the Borrower to the extent the
Borrower is required to pay fees for the balance of such period to a replacement
Administrative Agent).
(d) Payment of Fees. All fees payable hereunder shall be paid on the
---------------
dates due, in immediately available funds, to the Administrative Agent (or to
the Issuing Lender, in the case of fees payable to it) for distribution, in the
case of commitment fees and participation fees, to the Lenders entitled thereto.
Except as otherwise expressly provided in paragraph (c) above, fees paid shall
not be refundable under any circumstances.
<PAGE>
-51-
SECTION 2.12. Interest.
--------
(a) ABR Borrowings. The Loans comprising each ABR Borrowing (other
--------------
than Swingline Loans, as to which paragraph (c) below shall apply) shall bear
interest at a rate per annum equal to the Alternate Base Rate plus the
Applicable Margin.
(b) Eurodollar Borrowings. The Loans comprising each Eurodollar
---------------------
Borrowing shall bear interest at a rate per annum equal to the Adjusted LIBO
Rate for the Interest Period in effect for such Borrowing plus the Applicable
Margin.
(c) Swingline Borrowings. Each Swingline Loan shall bear interest at
--------------------
a rate per annum equal to the Alternative Base Rate plus the Applicable Margin,
or at such alternate rate of interest as may be applicable thereto as
contemplated by Section 2.04(b).
(d) Default Interest. Notwithstanding the foregoing, if any
----------------
principal of or interest on any Loan or any fee or other amount payable by the
Borrower hereunder is not paid when due, whether at stated maturity, upon
acceleration, by mandatory prepayment or otherwise, such overdue amount (or, in
case the amount in default is principal of a Loan, all amounts outstanding
hereunder) shall bear interest, after as well as before judgment, at a rate per
annum equal to (i) in the case of overdue principal of any Loan, 2% plus the
----
rate otherwise applicable to such Loan as provided above or (ii) in the case of
any other amount, 2% plus the rate applicable to ABR Loans as provided in
----
paragraph (a) of this Section.
(e) Payment of Interest. Accrued interest on each Loan shall be
-------------------
payable in arrears on each Interest Payment Date for such Loan and, in the case
of Revolving Loans, upon termination of the Revolving Commitments; provided that
--------
(i) interest accrued pursuant to paragraph (d) of this Section shall be payable
on demand, (ii) in the event of any repayment or prepayment of any Loan (other
than a prepayment of an ABR Revolving Loan prior to the Maturity Date), accrued
interest on the principal amount repaid or prepaid shall be payable on the date
of such repayment or prepayment and (iii) in the event of any conversion of any
Eurodollar Borrowing prior to the end of the current Interest Period therefor,
accrued interest on such Loan shall be payable on the effective date of such
conversion.
(f) Computation. All interest hereunder shall be computed on the
-----------
basis of a year of 360 days, except that interest computed by reference to the
Alternate Base Rate at times when the Alternate Base Rate is based on the Prime
Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap
year), and in each case shall be payable for the actual number of days elapsed
(including the first day but excluding the last day). The applicable Alternate
Base Rate or Adjusted LIBO Rate shall be determined by the Administrative Agent,
and such determination shall be conclusive absent manifest error.
SECTION 2.13. Alternate Rate of Interest. If prior to the
--------------------------
commencement of any Interest Period for a Eurodollar Borrowing:
<PAGE>
-52-
(a) the Administrative Agent determines (which determination shall be
conclusive absent manifest error) that adequate and reasonable means do not
exist for ascertaining the Adjusted LIBO Rate for such Interest Period; or
(b) if such Borrowing is of a particular Class of Loans (including of
a particular Series of Incremental Facility Loans), the Administrative
Agent is advised by the Required Revolving Lenders, Required Term Lenders
or Required Incremental Facility Lenders of such Series, as the case may
be, that the Adjusted LIBO Rate or the LIBO Rate, as applicable, for such
Interest Period will not adequately and fairly reflect the cost to such
Lenders of making or maintaining their Loans of such Class included in such
Borrowing for such Interest Period;
then the Administrative Agent shall give notice thereof to the Borrower and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective
and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such
Borrowing shall be made as an ABR Borrowing, provided that a Lender and the
--------
Borrower may agree that, in lieu of the interest rate on such affected Borrowing
being calculated by reference to the Alternative Base Rate while such
circumstances shall continue, such interest rate shall instead be at an
alternative rate of interest (and with such applicable margins and prepayment
premiums) as may from time to time be offered by such Lender to the Borrower in
its sole discretion.
SECTION 2.14. Increased Costs.
---------------
(a) Increased Costs Generally. If any Change in Law shall:
-------------------------
(i) impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with or for the
account of, or credit extended by, any Lender (except any such reserve
requirement reflected in the Adjusted LIBO Rate) or the Issuing Lender; or
(ii) impose on any Lender or the Issuing Lender or the London
interbank market any other condition affecting this Agreement or Eurodollar
Loans made by such Lender or any Letter of Credit or participation therein;
and the result of any of the foregoing shall be to increase the cost to such
Lenders of making or maintaining any Eurodollar Loan (or of maintaining its
obligation to make any such Loan) or to increase the cost to such Lender or the
Issuing Lender of participating in, issuing or maintaining any Letter of Credit
or to reduce the amount of any sum received or receivable by such Lender or the
Issuing Lender hereunder (whether of principal, interest or otherwise), then the
Borrower will pay to such Lender or the Issuing Lender, as the case may be, such
<PAGE>
-53-
additional amount or amounts as will compensate such Lender or the Issuing
Lender, as the case may be, for such additional costs incurred or reduction
suffered.
(b) Capital Requirements. If any Lender or the Issuing Lender
--------------------
determines that any Change in Law regarding capital requirements has or would
have the effect of reducing the rate of return on such Lender's or the Issuing
Lender's capital or on the capital of such Lender's or the Issuing Lender's
holding company, if any, as a consequence of this Agreement or the Loans made
by, or participations in Letters of Credit held by, such Lender, or the Letters
of Credit issued by the Issuing Lender, to a level below that which such Lender
or the Issuing Lender or such Lender's or the Issuing Lender's holding company
could have achieved but for such Change in Law (taking into consideration such
Lender's or the Issuing Lender's policies and the policies of such Lender's or
the Issuing Lender's holding company with respect to capital adequacy), then
from time to time the Borrower will pay to such Lender or the Issuing Lender, as
the case may be, such additional amount or amounts as will compensate such
Lender or the Issuing Lender or such Lender's or the Issuing Lender's holding
company for any such reduction suffered.
(c) Certificates from Lenders. A certificate of a Lender or the
-------------------------
Issuing Lender setting forth the amount or amounts necessary to compensate such
Lender or the Issuing Lender or its holding company, as the case may be, as
specified in paragraph (a) or (b) of this Section, and setting forth in
reasonable detail the manner in which such amount or amounts have been
determined, shall be delivered to the Borrower and shall be conclusive absent
manifest error. The Borrower shall pay such Lender or the Issuing Lender, as
the case may be, the amount shown as due on any such certificate within 10 days
after receipt thereof.
(d) Delay in Requests. Failure or delay on the part of any Lender or
-----------------
the Issuing Lender to demand compensation pursuant to this Section shall not
constitute a waiver of such Lender's or the Issuing Lender's right to demand
such compensation; provided that the Borrower shall not be required to
--------
compensate a Lender or the Issuing Lender pursuant to this Section for any
increased costs or reductions incurred more than six months prior to the date
that such Lender or the Issuing Lender, as the case may be, notifies the
Borrower of the Change in Law giving rise to such increased costs or reductions
and of such Lender's or the Issuing Lender's intention to claim compensation
therefor; provided further that, if the Change in Law giving rise to such
-------- -------
increased costs or reductions is retroactive, then the six-month period referred
to above shall be extended to include the period of retroactive effect thereof.
SECTION 2.15. Break Funding Payments. In the event of (a) the
----------------------
payment of any principal of any Eurodollar Loan other than on the last day of an
Interest Period applicable thereto (including as a result of an Event of
Default), (b) the conversion of any Eurodollar Loan other than on the last day
of the Interest Period applicable thereto, (c) the failure to borrow, convert,
continue or prepay any Loan on the date specified in any notice delivered
pursuant hereto (regardless of whether such notice is permitted to be revocable
under Section 2.10(b) and is revoked in accordance herewith), or (d) the
assignment of any
<PAGE>
-54-
Eurodollar Loan other than on the last day of the Interest Period applicable
thereto as a result of a request by the Borrower pursuant to Section 2.18, then,
in any such event, the Borrower shall compensate each Lender for the loss, cost
and expense attributable to such event. In the case of a Eurodollar Loan, the
loss to any Lender attributable to any such event shall be deemed to include an
amount determined by such Lender to be equal to the excess, if any, of (i) the
amount of interest that such Lender would pay for a deposit equal to the
principal amount of such Loan for the period from the date of such payment,
conversion, failure or assignment to the last day of the then current Interest
Period for such Loan (or, in the case of a failure to borrow, convert or
continue, the duration of the Interest Period that would have resulted from such
borrowing, conversion or continuation) if the interest rate payable on such
deposit were equal to the Adjusted LIBO Rate for such Interest Period, over (ii)
the amount of interest that such Lender would earn on such principal amount for
such period if such Lender were to invest such principal amount for such period
at the interest rate that would be bid by such Lender (or an affiliate of such
Lender) for dollar deposits from other banks in the eurodollar market at the
commencement of such period. A certificate of any Lender setting forth any
amount or amounts that such Lender is entitled to receive pursuant to this
Section shall be delivered to the Borrower and shall be conclusive absent
manifest error. The Borrower shall pay such Lender the amount shown as due on
any such certificate within 10 days after receipt thereof.
SECTION 2.16. Taxes.
-----
(a) Payments Free of Taxes. Any and all payments by or an account of
----------------------
any obligation of the Borrower hereunder or under any other Loan Document shall
be made free and clear of and without deduction for any Indemnified Taxes or
Other Taxes; provided that if the Borrower shall be required to deduct any
--------
Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable
shall be increased as necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section)
the Administrative Agent, Lender or Issuing Lender (as the case may be) receives
an amount equal to the sum it would have received had no such deductions been
made, (ii) the Borrower shall make such deductions and (iii) the Borrower shall
pay the full amount deducted to the relevant Governmental Authority in
accordance with applicable law.
(b) Payment of Other Taxes by Borrower. In addition, the Borrower
----------------------------------
shall pay any Other Taxes to the relevant Governmental Authority in accordance
with applicable law.
(c) Indemnification by Borrower. The Borrower shall indemnify the
---------------------------
Administrative Agent, each Lender and the Issuing Lender, within 10 days after
written demand therefor, for the full amount of any Indemnified Taxes or Other
Taxes (including Indemnified Taxes or Other Taxes imposed or asserted on or
attributable to amounts payable under this Section) paid by the Administrative
Agent, such Lender or the Issuing Lender, as the case may be, and any penalties,
interest and reasonable expenses arising therefrom or with respect thereto,
whether or not such Indemnified Taxes or Other Taxes were correctly or
<PAGE>
-55-
legally imposed or asserted by the relevant Governmental Authority. A
certificate as to the amount of such payment or liability delivered to the
Borrower by a Lender or the Issuing Lender, or by the Administrative Agent on
its own behalf or on behalf of a Lender or the Issuing Lender, shall be
conclusive absent manifest error.
(d) Receipt for Payments. As soon as practicable after any payment
--------------------
of Indemnified Taxes or Other Taxes by the Borrower to a Governmental Authority,
the Borrower shall deliver to the Administrative Agent the original or a
certified copy of a receipt issued by such Governmental Authority evidencing
such payment, a copy of the return reporting such payment or other evidence of
such payment reasonably satisfactory to the Administrative Agent.
(e) Foreign Lenders. Any Foreign Lender that is entitled to an
---------------
exemption from or reduction of withholding tax under the law of the jurisdiction
in which the Borrower is located, or any treaty to which such jurisdiction is a
party, with respect to payments under this Agreement shall deliver to the
Borrower (with a copy to the Administrative Agent), at the time or times
prescribed by applicable law or reasonably requested by the Borrower, such
properly completed and executed documentation prescribed by applicable law as
will permit such payments to be made without withholding or at a reduced rate.
SECTION 2.17. Payments Generally; Pro Rata Treatment; Sharing of Set-
------------------------------------------------------
offs.
- ----
(a) Payments by Obligors. Each Obligor shall make each payment
--------------------
required to be made by it hereunder (whether of principal, interest, fees or
reimbursement of LC Disbursements, or under Section 2.14, 2.15 or 2.16, or
otherwise) or under any other Loan Document (except to the extent otherwise
provided therein) prior to 12:00 noon, New York City time, on the date when due,
in immediately available funds, without set-off or counterclaim. Any amounts
received after such time on any date may, in the discretion of the
Administrative Agent, be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest thereon. All such payments
shall be made to the Administrative Agent at its offices at 270 Park Avenue, New
York, New York, except as otherwise expressly provided in the relevant Loan
Document, and except payments to be made directly to the Issuing Lender or a
Swingline Lender as expressly provided herein and except that payments pursuant
to Sections 2.14, 2.15, 2.16 and 10.03 shall be made directly to the Persons
entitled thereto. The Administrative Agent shall distribute any such payments
received by it for the account of any other Person to the appropriate recipient
promptly following receipt thereof. If any payment hereunder shall be due on a
day that is not a Business Day, the date for payment shall be extended to the
next succeeding Business Day and, in the case of any payment accruing interest,
interest thereon shall be payable for the period of such extension. All
payments hereunder or under any other Loan Document (except to the extent
otherwise provided therein) shall be made in dollars.
<PAGE>
-56-
(b) Application if Payments Insufficient. If at any time
------------------------------------
insufficient funds are received by and available to the Administrative Agent to
pay fully all amounts of principal, unreimbursed LC Disbursements, interest and
fees then due hereunder, then such funds as shall actually have been received
shall be applied (i) first, to pay interest and fees then due hereunder, ratably
among the parties entitled thereto in accordance with the amounts of interest
and fees then due to such parties, and (ii) second, to pay principal and
unreimbursed LC Disbursements then due hereunder, ratably among the parties
entitled thereto in accordance with the amounts of principal and unreimbursed LC
Disbursements then due to such parties.
(c) Pro Rata Treatment. Except to the extent otherwise provided
------------------
herein: (i) each borrowing of Loans of a particular Class (including of a
particular Series of Incremental Facility Loans) from the Lenders under Section
2.01 shall be made from the relevant Lenders, each payment of commitment fee
under Section 2.11 in respect of Commitments of a particular Class (including of
a particular Series of Incremental Facility Loans) shall be made for account of
the relevant Lenders, and each termination or reduction of the amount of the
Commitments of a particular Class (including of a particular Incremental
Facility of Term Loans) under Section 2.08 shall be applied to the respective
Commitments of such Class of the relevant Lenders, pro rata according to the
amounts of their respective Commitments of such Class; (ii) Eurodollar Loans of
any Class (including of a particular Series of Incremental Facility Loans)
having the same Interest Period shall be allocated pro rata among the relevant
Lenders according to the amounts of their Commitments or such Class (in the case
of the making of Loans) or their respective Loans of such Class (in the case of
conversions and continuations of Loans); (iii) each payment or prepayment by the
Borrower of principal of Loans of a particular Class (including of a particular
Series of Incremental Facility Loans) shall be made for account of the relevant
Lenders pro rata in accordance with the respective unpaid principal amounts of
the Loans of such Class held by them; (iv) each payment by the Borrower of
interest on Loans of a particular Class (including of a particular Series of
Incremental Facility Loans) shall be made for account of the relevant Lenders
pro rata in accordance with the amounts of interest on such Loans then due and
payable to the respective Lenders; and (v) each payment by the Borrower of
participation fees in respect of Letters of Credit shall be made for the account
of the Revolving Lenders pro rata in accordance with the amount of participation
fees then due and payable to the Revolving Lenders.
(d) Sharing of Payments by Lenders. If any Lender shall, by
------------------------------
exercising any right of set-off or counterclaim or otherwise, obtain payment in
respect of any principal of or interest on any of its Loans or participations in
LC Disbursements or Swingline Loans resulting in such Lender receiving payment
of a greater proportion of the aggregate amount of its Loans and participations
in LC Disbursements and Swingline Loans and accrued interest thereon then due
than the proportion received by any other Lender, then the Lender receiving such
greater proportion shall purchase (for cash at face value) participations in the
Loans and participations in LC Disbursements and Swingline Loans of other
Lenders to the extent
<PAGE>
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necessary so that the benefit of all such payments shall be shared by the
Lenders ratably in accordance with the aggregate amount of principal of and
accrued interest on their respective Loans and participations in LC
Disbursements and Swingline Loans; provided that (i) if any such participations
--------
are purchased and all or any portion of the payment giving rise thereto is
recovered, such participations shall be rescinded and the purchase price
restored to the extent of such recovery, without interest, and (ii) the
provisions of this paragraph shall not be construed to apply to any payment made
by any Obligor pursuant to and in accordance with the express terms of this
Agreement or any payment obtained by a Lender as consideration for the
assignment of or sale of a participation in any of its Loans or participations
in LC Disbursements to any assignee or participant, other than to the Borrower
or any Subsidiary or Affiliate thereof (as to which the provisions of this
paragraph shall apply). Each Obligor consents to the foregoing and agrees, to
the extent it may effectively do so under applicable law, that any Lender
acquiring a participation pursuant to the foregoing arrangements may exercise
against such Obligor rights of set-off and counterclaim with respect to such
participation as fully as if such Lender were a direct creditor of such Obligor
in the amount of such participation.
(e) Presumptions of Payment. Unless the Administrative Agent shall
-----------------------
have received notice from the Borrower prior to the date on which any payment is
due to the Administrative Agent for the account of the Lenders or the Issuing
Lender hereunder that the Borrower will not make such payment, the
Administrative Agent may assume that the Borrower has made such payment on such
date in accordance herewith and may, in reliance upon such assumption,
distribute to the Lenders or the Issuing Lender, as the case may be, the amount
due. In such event, if the Borrower has not in fact made such payment, then
each of the Lenders or the Issuing Lender, as the case may be, severally agrees
to repay to the Administrative Agent forthwith on demand the amount so
distributed to such Lender or the Issuing Lender with interest thereon, for each
day from and including the date such amount is distributed to it to but
excluding the date of payment to the Administrative Agent, at the Federal Funds
Effective Rate.
(f) Certain Deductions by Administrative Agent. If any Lender shall
------------------------------------------
fail to make any payment required to be made by it pursuant to Section 2.04(c),
2.05(e) or (f), 2.06(b) or 2.17(e), then the Administrative Agent may, in its
discretion (notwithstanding any contrary provision hereof), apply any amounts
thereafter received by the Administrative Agent for the account of such Lender
to satisfy such Lender's obligations under such Sections until all such
unsatisfied obligations are fully paid.
SECTION 2.18. Mitigation Obligations; Replacement of Lenders.
----------------------------------------------
(a) Designation of Different Lending Office. If any Lender requests
---------------------------------------
compensation under Section 2.14, or if the Borrower is required to pay any
additional amount to any Lender or any Governmental Authority for the account of
any Lender pursuant to Section 2.16, then such Lender shall, at Borrower's
request, use reasonable efforts to designate a different lending office for
funding or booking its Loans hereunder or to assign its
<PAGE>
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rights and obligations hereunder to another of its offices, branches or
affiliates, if, in the good faith judgment of such Lender, such designation or
assignment (i) would eliminate or reduce amounts payable pursuant to Section
2.14 or 2.16, as the case may be, in the future and (ii) would not subject such
Lender to any unreimbursed cost or expense and would not otherwise be
disadvantageous to such Lender. The Borrower hereby agrees to pay all
reasonable costs and expenses incurred by any Lender in connection with any such
designation or assignment.
(b) Replacement of Lenders. If any Lender requests compensation
----------------------
under Section 2.14, or if the Borrower is required to pay any additional amount
to any Lender or any Governmental Authority for the account of any Lender
pursuant to Section 2.16, or if any Lender defaults in its obligation to fund
Loans hereunder, then the Borrower may, at its sole expense and effort, upon
notice to such Lender and the Administrative Agent, require such Lender to
assign and delegate, without recourse (in accordance with and subject to the
restrictions contained in Section 10.04), all its interests, rights and
obligations under this Agreement to an assignee that shall assume such
obligations (which assignee may be another Lender, if a Lender accepts such
assignment); provided that (i) the Borrower shall have received the prior
--------
written consent of the Administrative Agent (and, if a Revolving Commitment is
being assigned, the Issuing Lender and each Swingline Lender), which consent
shall not unreasonably be withheld, (ii) such Lender shall have received payment
of an amount equal to the outstanding principal of its Loans and participations
in LC Disbursements and Swingline Loans, accrued interest thereon, accrued fees
and all other amounts payable to it hereunder, from the assignee (to the extent
of such outstanding principal and accrued interest and fees) or the Borrower (in
the case of all other amounts) and (iii) in the case of any such assignment
resulting from a claim for compensation under Section 2.14 or payments required
to be made pursuant to Section 2.16, such assignment will result in a reduction
in such compensation or payments. A Lender shall not be required to make any
such assignment and delegation if, prior thereto, as a result of a waiver by
such Lender or otherwise, the circumstances entitling the Borrower to require
such assignment and delegation cease to apply.
ARTICLE III
GUARANTEE
SECTION 3.01. The Guarantee. The Subsidiary Guarantors hereby
-------------
jointly and severally guarantee to each Lender and the Administrative Agent and
their respective successors and assigns the prompt payment in full when due
(whether at stated maturity, by acceleration or otherwise) of the principal of
and interest on the Loans made by the Lenders to the Borrower and all other
amounts from time to time owing to the Lenders or the Administrative Agent by
the Borrower under this Agreement and by any Obligor under any of the other Loan
Documents, and all obligations of the Borrower or any of its Subsidiaries to any
Lender in respect of any Hedging Agreement, in each case strictly in accordance
with the
<PAGE>
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terms thereof (such obligations being herein collectively called the "Guaranteed
----------
Obligations"). The Subsidiary Guarantors hereby further jointly and severally
- -----------
agree that if the Borrower shall fail to pay in full when due (whether at stated
maturity, by acceleration or otherwise) any of the Guaranteed Obligations, the
Subsidiary Guarantors will promptly pay the same, without any demand or notice
whatsoever, and that in the case of any extension of time of payment or renewal
of any of the Guaranteed Obligations, the same will be promptly paid in full
when due (whether at extended maturity, by acceleration or otherwise) in
accordance with the terms of such extension or renewal.
SECTION 3.02. Obligations Unconditional. The obligations of the
-------------------------
Subsidiary Guarantors under Section 3.01 are absolute and unconditional, joint
and several, irrespective of the value, genuineness, validity, regularity or
enforceability of the obligations of the Borrower under this Agreement or any
other agreement or instrument referred to herein or therein, or any
substitution, release or exchange of any other guarantee of or security for any
of the Guaranteed Obligations, and, to the fullest extent permitted by
applicable law, irrespective of any other circumstance whatsoever that might
otherwise constitute a legal or equitable discharge or defense of a surety or
guarantor, it being the intent of this Section that the obligations of the
Subsidiary Guarantors hereunder shall be absolute and unconditional, joint and
several, under any and all circumstances. Without limiting the generality of
the foregoing, it is agreed that the occurrence of any one or more of the
following shall not alter or impair the liability of the Subsidiary Guarantors
hereunder, which shall remain absolute and unconditional as described above:
(i) at any time or from time to time, without notice to the
Subsidiary Guarantors, the time for any performance of or compliance with
any of the Guaranteed Obligations shall be extended, or such performance or
compliance shall be waived;
(ii) any of the acts mentioned in any of the provisions of this
Agreement or any other agreement or instrument referred to herein shall be
done or omitted;
(iii) the maturity of any of the Guaranteed Obligations shall be
accelerated, or any of the Guaranteed Obligations shall be modified,
supplemented or amended in any respect, or any right under this Agreement
or any other agreement or instrument referred to herein shall be waived or
any other guarantee of any of the Guaranteed Obligations or any security
therefor shall be released or exchanged in whole or in part or otherwise
dealt with; or
(iv) any lien or security interest granted to, or in favor of,
the Administrative Agent or any Lender or Lenders as security for any of
the Guaranteed Obligations shall fail to be perfected.
The Subsidiary Guarantors hereby expressly waive diligence, presentment, demand
of payment, protest and all notices whatsoever, and any requirement that the
Administrative Agent or any Lender exhaust any right, power or remedy or proceed
against the Borrower
<PAGE>
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under this Agreement or any other agreement or instrument referred to herein, or
against any other Person under any other guarantee of, or security for, any of
the Guaranteed Obligations.
SECTION 3.03. Reinstatement. The obligations of the Subsidiary
-------------
Guarantors under this Article shall be automatically reinstated if and to the
extent that for any reason any payment by or on behalf of the Borrower in
respect of the Guaranteed Obligations is rescinded or must be otherwise restored
by any holder of any of the Guaranteed Obligations, whether as a result of any
proceedings in bankruptcy or reorganization or otherwise, and the Subsidiary
Guarantors jointly and severally agree that they will indemnify the
Administrative Agent and each Lender on demand for all reasonable costs and
expenses (including fees of counsel) incurred by the Administrative Agent or
such Lender in connection with such rescission or restoration, including any
such costs and expenses incurred in defending against any claim alleging that
such payment constituted a preference, fraudulent transfer or similar payment
under any bankruptcy, insolvency or similar law.
SECTION 3.04. Subrogation. Each Subsidiary Guarantor hereby waives
-----------
all rights of subrogation or contribution, whether arising by contract or
operation of law (including any such right arising under the Bankruptcy Code) or
otherwise by reason of any payment by it pursuant to the provisions of this
Article and further agrees with the Borrower for the benefit of each of its
creditors (including each Lender and the Administrative Agent) that any such
payment by it shall constitute a contribution of capital by such Subsidiary
Guarantor to the Borrower (or an investment in the equity capital of the
Borrower by such Subsidiary Guarantor).
SECTION 3.05. Remedies. The Subsidiary Guarantors jointly and
--------
severally agree that, as between the Subsidiary Guarantors and the Lenders, the
obligations of the Borrower under this Agreement may be declared to be forthwith
due and payable as provided in Article VIII (and shall be deemed to have become
automatically due and payable in the circumstances provided in Article VIII) for
purposes of Section 3.01 notwithstanding any stay, injunction or other
prohibition preventing such declaration (or such obligations from becoming
automatically due and payable) as against the Borrower and that, in the event of
such declaration (or such obligations being deemed to have become automatically
due and payable), such obligations (whether or not due and payable by the
Borrower) shall forthwith become due and payable by the Subsidiary Guarantors
for purposes of Section 3.01.
SECTION 3.06. Instrument for the Payment of Money. Each Subsidiary
-----------------------------------
Guarantor hereby acknowledges that the guarantee in this Article constitutes an
instrument for the payment of money, and consents and agrees that any Lender or
the Administrative Agent, at its sole option, in the event of a dispute by such
Subsidiary Guarantor in the payment of any moneys due hereunder, shall have the
right to bring motion-action under New York CPLR Section 3213.
SECTION 3.07. Continuing Guarantee. The guarantee in this Article is
--------------------
a continuing guarantee, and shall apply to all Guaranteed Obligations whenever
arising.
<PAGE>
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SECTION 3.08. Rights of Contribution. The Subsidiary Guarantors
----------------------
hereby agree, as between themselves, that if any Subsidiary Guarantor shall
become an Excess Funding Guarantor (as defined below) by reason of the payment
by such Subsidiary Guarantor of any Guaranteed Obligations, each other
Subsidiary Guarantor shall, on demand of such Excess Funding Guarantor (but
subject to the next sentence), pay to such Excess Funding Guarantor an amount
equal to such Subsidiary Guarantor's Pro Rata Share (as defined below and
determined, for this purpose, without reference to the properties, debts and
liabilities of such Excess Funding Guarantor) of the Excess Payment (as defined
below) in respect of such Guaranteed Obligations. The payment obligation of a
Subsidiary Guarantor to any Excess Funding Guarantor under this Section shall be
subordinate and subject in right of payment to the prior payment in full of the
obligations of such Subsidiary Guarantor under the other provisions of this
Article and such Excess Funding Guarantor shall not exercise any right or remedy
with respect to such excess until payment and satisfaction in full of all of
such obligations.
For purposes of this Section, (i) "Excess Funding Guarantor" means, in
------------------------
respect of any Guaranteed Obligations, a Subsidiary Guarantor that has paid an
amount in excess of its Pro Rata Share of such Guaranteed Obligations, (ii)
"Excess Payment" means, in respect of any Guaranteed Obligations, the amount
- ---------------
paid by an Excess Funding Guarantor in excess of its Pro Rata Share of such
Guaranteed Obligations and (iii) "Pro Rata Share" means, for any Subsidiary
--------------
Guarantor, the ratio (expressed as a percentage) of (x) the amount by which the
aggregate present fair saleable value of all properties of such Subsidiary
Guarantor (excluding any shares of stock of any other Subsidiary Guarantor)
exceeds the amount of all the debts and liabilities of such Subsidiary Guarantor
(including contingent, subordinated, unmatured and unliquidated liabilities, but
excluding the obligations of such Subsidiary Guarantor hereunder and any
obligations of any other Subsidiary Guarantor that have been Guaranteed by such
Subsidiary Guarantor) to (y) the amount by which the aggregate fair saleable
value of all properties of all of the Subsidiary Guarantors exceeds the amount
of all the debts and liabilities (including contingent, subordinated, unmatured
and unliquidated liabilities, but excluding the obligations of the Borrower and
the Subsidiary Guarantors hereunder and under the other Loan Documents) of all
of the Subsidiary Guarantors, determined (A) with respect to any Subsidiary
Guarantor that is a party hereto on the Effective Date, as of the Effective
Date, and (B) with respect to any other Subsidiary Guarantor, as of the date
such Subsidiary Guarantor becomes a Subsidiary Guarantor hereunder.
SECTION 3.09. General Limitation on Guarantee Obligations. In any
-------------------------------------------
action or proceeding involving any state corporate law, or any state or Federal
bankruptcy, insolvency, reorganization or other law affecting the rights of
creditors generally, if the obligations of any Subsidiary Guarantor under
Section 3.01 would otherwise, taking into account the provisions of Section
3.08, be held or determined to be void, invalid or unenforceable, or
subordinated to the claims of any other creditors, on account of the amount of
its liability under Section 3.01, then, notwithstanding any other provision
hereof to the contrary, the amount of such liability shall, without any further
action by such Subsidiary Guarantor, any Lender, the Administrative Agent or any
other Person, be automatically
<PAGE>
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limited and reduced to the highest amount that is valid and enforceable and not
subordinated to the claims of other creditors as determined in such action or
proceeding.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lenders that:
SECTION 4.01. Organization; Powers. Each of the Borrower and its
--------------------
Consolidated Subsidiaries is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization, has all
requisite power and authority to carry on its business as now conducted and,
except where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect, is qualified to
do business in, and is in good standing in, every jurisdiction where such
qualification is required.
SECTION 4.02. Authorization; Enforceability. The Transactions are
-----------------------------
within each Obligor's corporate powers and have been duly authorized by all
necessary corporate and, if required, stockholder action. This Agreement has
been duly executed and delivered by each Obligor and constitutes, and each of
the other Basic Documents to which it is a party when executed and delivered by
such Obligor and the other parties thereto will constitute, a legal, valid and
binding obligation of such Obligor, enforceable against each Obligor in
accordance with its terms, except as such enforceability may be limited by (a)
bankruptcy, insolvency, reorganization, moratorium or similar laws of general
applicability affecting the enforcement of creditors' rights and (b) the
application of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
SECTION 4.03. Governmental Approvals; No Conflicts. The Transactions
------------------------------------
(a) do not require any material consent or approval of, registration or filing
with, or any other action by, any Governmental Authority, except such as have
been obtained or made and are in full force and effect, (b) will not violate any
applicable law or regulation or the charter, by-laws or other organizational
documents of the Borrower or any of its Consolidated Subsidiaries or any order
of any Governmental Authority, (c) will not violate or result in a default under
any indenture, agreement or other instrument binding upon the Borrower or any of
its Consolidated Subsidiaries or assets, or give rise to a right thereunder to
require any payment to be made by any such Person (other than that an offer to
repurchase the Senior Subordinated Notes shall be made as provided in the
Indenture with respect thereto as a result of the Merger Transactions and other
than consents required with respect to the Merger Transactions under leases and
other contracts, but not including any agreement relating to any Indebtedness,
entered into in the ordinary course of business and as to which the failure to
obtain such consent, individually or in the aggregate, could not reasonably be
expected to
<PAGE>
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result in a Material Adverse Effect) and (d) will not result in the creation or
imposition of any Lien on any asset of the Borrower or any of its Consolidated
Subsidiaries.
SECTION 4.04. Financial Condition; No Material Adverse Change.
-----------------------------------------------
(a) The Borrower has heretofore delivered, or made available, to the
Lenders the following financial statements as set forth in the Registration
Statement:
(i) the audited consolidated balance sheet and related
statements of operations, stockholders' equity and cash flows of the
Borrower and its Subsidiaries as of and for the fiscal years ended December
31, 1995 and December 31, 1996, respectively, reported on by Ernst & Young
LLP, independent public accountants;
(ii) the unaudited condensed consolidated balance sheet and
related statements of operations, stockholders' equity and cash flows of
the Borrower and its Subsidiaries as of and for the three-month period
ended March 31, 1997;
(iii) the respective financial statements of Northstar
Television of Grand Rapids, Inc., Northstar Television of Jackson, Inc. and
Northstar Television of Providence, Inc, of Multimedia Entertainment, Inc.
(d.b.a. WLWT-TV) and of Selected Gannett Television Stations, in each case
as set forth in the Registration Statement;
(iv) the audited combined balance sheets and related statements
of operations and cash flows of the Hearst Broadcast Group of Hearst as of
and for the fiscal years ended December 31, 1995 and December 31, 1996,
respectively, reported on by Deloitte & Touche LLP, independent public
accountants;
(v) the unaudited combined balance sheets and related
statements of operations and cash flows of the Hearst Broadcast Group of
Hearst as of and for the three-month period ended March 31, 1997; and
(vi) the unaudited pro forma combined condensed balance sheet
and the related statements of operations for the fiscal year ended December
31, 1996, prepared under the assumption that the Merger Transactions had
occurred at the beginning of such fiscal year.
Such financial statements present fairly, in all material respects, the actual
or pro forma (as the case may be) financial position and the actual or pro forma
(as the case may be) results of operations and cash flows of the respective
entities as of such dates and for such periods in accordance with GAAP, subject
to year-end audit adjustments and the absence of footnotes in the case of the
statements referred to in clauses (ii), (iv) and (v) above.
(b) Since December 31, 1996, there has been no material adverse
change in the business, condition (financial or otherwise), operations,
properties or prospects (excluding
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adverse changes to prospects as a result of changes affecting the television
broadcasting industry generally) of the Borrower and its Subsidiaries, taken as
a whole, and during the period since December 31, 1996 and prior to the
Effective Date, there has been no material adverse change in the business,
condition (financial or otherwise), operations, properties or prospects
(excluding adverse changes to prospects as a result of changes affecting the
television broadcasting industry generally) of the Hearst Broadcast Group of
Hearst, taken as a whole.
SECTION 4.05. Properties.
----------
(a) Each of the Borrower and its Consolidated Subsidiaries has (and,
after giving effect to the Merger Transactions, will have) good title to, or
valid leasehold interests in, all its real and personal property material to its
business, subject only to Liens permitted by Section 7.02 and except for minor
defects in title or interests that do not interfere with their ability to
conduct their business as currently conducted or to utilize such properties for
their intended purposes.
(b) Each of the Borrower and its Consolidated Subsidiaries owns or is
licensed to use (and, after giving effect to the Merger Transactions, will own
or be licensed to use) all trademarks, tradenames, copyrights, patents and other
intellectual property material to its business, and the use thereof by the
Borrower and its Consolidated Subsidiaries does not (and, after giving effect to
the Merger Transactions, will not) infringe upon the rights of any other Person,
except for any such infringements that, individually or in the aggregate, could
not reasonably be expected to result in a Material Adverse Effect.
SECTION 4.06. Litigation and Environmental Matters.
------------------------------------
(a) There are no actions, suits or proceedings by or before any
arbitrator or Governmental Authority now pending against or, to the knowledge of
the Borrower, threatened against or affecting the Borrower or any of its
Consolidated Subsidiaries (or that will, after giving effect to the Merger
Transactions, affect the Borrower or any of its Consolidated Subsidiaries) (i)
as to which there is a reasonable likelihood of an adverse determination and
that, if adversely determined, could reasonably be expected, individually or in
the aggregate, to result in a Material Adverse Effect (other than the Disclosed
Matters) or (ii) that involve this Agreement or the Transactions (other than the
possible assertion of statutory dissenters' rights described in the Registration
Statement).
(b) Except for the Disclosed Matters and except with respect to any
other matters that, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, neither the Borrower nor any of
its Consolidated Subsidiaries (i) has failed (or, after giving effect to the
Merger Transactions, will have failed) to comply with any Environmental Law or
to obtain, maintain or comply with any permit, license or other approval
required under any Environmental Law, (ii) has become (or, after giving effect
to the Merger Transactions, will have become) subject to any Environmental
Liability, (iii) has
<PAGE>
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received (or, after giving effect to the Merger Transactions, will have
received) notice of any claim with respect to any Environmental Liability or
(iv) knows of any basis for any Environmental Liability.
(c) Since the date of this Agreement, there has been no change in the
status of the Disclosed Matters that, individually or in the aggregate, has
resulted in, or could reasonably be expected to result in, a Material Adverse
Effect.
SECTION 4.07. Compliance with Laws and Agreements. Each of the
-----------------------------------
Borrower and its Consolidated Subsidiaries is (and, after giving effect to the
Merger Transactions, will be) in compliance with all laws, regulations and
orders of any Governmental Authority applicable to it or its property and all
indentures, agreements and other instruments binding upon it or its property,
except where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect. No Default has
occurred and is continuing.
SECTION 4.08. Investment and Holding Company Status. Neither the
-------------------------------------
Borrower nor any of its Subsidiaries is (a) an "investment company" as defined
in, or subject to regulation under, the Investment Company Act of 1940 or (b) a
"holding company" as defined in, or subject to regulation under, the Public
Utility Holding Company Act of 1935.
SECTION 4.09. Taxes. Effective as of the close of business on the
-----
Effective Date, the Borrower and its Subsidiaries will be members of an
affiliated group of corporations filing consolidated returns for Federal income
tax purposes, of which Hearst is the "common parent" (within the meaning of
Section 1504 of the Code) of such group. There is no tax sharing, tax
allocation or similar agreement (other than the Tax Sharing Agreement) to which
the Borrower or any of its Subsidiaries is subject that is currently in effect
providing for the manner in which tax payments owing by the members of such
affiliated group (whether in respect of Federal, state or foreign income or
other taxes) are allocated among the members of the group. The Borrower has
filed (either directly or indirectly through Hearst) all Tax returns and reports
required to have been filed and has paid (either directly or indirectly through
Hearst) all Taxes required to have been paid by it, except (a) Taxes that are
being contested in good faith by appropriate proceedings and for which such
Person has set aside on its books adequate reserves or (b) to the extent that
the failure to do so could not reasonably be expected to result in a Material
Adverse Effect.
SECTION 4.10. ERISA. No ERISA Event has occurred or is reasonably
-----
expected to occur that, when taken together with all other such ERISA Events for
which liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect. The present value of all accumulated
benefit obligations under each Plan (based on the assumptions used for purposes
of Statement of Financial Accounting Standards No. 87) did not, as of the date
of the most recent financial statements reflecting such amounts, exceed the fair
market value of the assets of such Plan, and the present value of all
accumulated benefit obligations of all underfunded Plans (based on the
assumptions used for
<PAGE>
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purposes of Statement of Financial Accounting Standards No. 87) did not, as of
the date of the most recent financial statements reflecting such amounts, exceed
the fair market value of the assets of all such underfunded Plans, in either
case by an amount that could reasonably be expected to result in a Material
Adverse Effect.
SECTION 4.11. Disclosure. The Borrower has disclosed to the Lenders
----------
(i) all agreements, instruments and corporate or other restrictions to which it
or any of its Consolidated Subsidiaries is (or, after giving effect to the
Merger Transactions, will be) subject, and (ii) all other matters known to it,
that, in the case of either of the foregoing clauses (i) or (ii), individually
or in the aggregate, could reasonably be expected to result in a Material
Adverse Effect. None of the reports, financial statements, certificates or
other written information (including the Information Memorandum) furnished by or
on behalf of the Obligors to the Lender in connection with the negotiation of
this Agreement and the other Loan Documents or delivered hereunder or thereunder
(as modified or supplemented by other information so furnished) contains any
material misstatement of fact or omits to state any material fact necessary to
make the statements therein, when taken as a whole, in the light of the
circumstances under which they were made, not misleading; provided that, with
--------
respect to projected financial information, the Borrower represents only that
such information was prepared in good faith based upon assumptions believed to
be reasonable at the time in light of circumstances in effect on the date
prepared, it being understood that such projections do not constitute a
representation or warranty as to the future performance of the Borrower and that
actual results may vary from such projections.
SECTION 4.12. Use of Credit. Neither the Borrower nor any of its
-------------
Subsidiaries is engaged principally, or as one of its important activities, in
the business of extending credit for the purpose, whether immediate, incidental
or ultimate, of buying or carrying Margin Stock, and no part of the proceeds of
any extension of credit hereunder will be used to buy or carry any Margin Stock.
SECTION 4.13. Material Agreements and Liens With Respect to
---------------------------------------------
Indebtedness.
- ------------
(a) Part A of Schedule II is a complete and correct list of each
credit agreement, loan agreement, indenture, purchase agreement, guarantee,
letter of credit or other arrangement providing for or otherwise relating to any
Indebtedness or any extension of credit (or commitment for any extension of
credit) to, or guarantee by, the Borrower or any of its Consolidated
Subsidiaries outstanding on the date hereof (or that will be outstanding on the
Effective Date after giving effect to the Merger Transactions) the aggregate
principal or face amount of which equals or exceeds (or may equal or exceed)
$10,000,000, and the aggregate principal or face amount outstanding or that may
become outstanding under each such arrangement is correctly described in Part A
of Schedule II.
(b) Part B of Schedule II is a complete and correct list of each Lien
securing Indebtedness of any Person outstanding on the date hereof (or that will
be outstanding on the Effective Date after giving effect to the Merger
Transactions) the aggregate principal or face
<PAGE>
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amount of which equals or exceeds (or may equal or exceed) $10,000,000 and
covering any property of the Borrower or any of its Consolidated Subsidiaries,
and the aggregate Indebtedness secured (or that may be secured) by each such
Lien and the property covered by each such Lien is correctly described in Part B
of Schedule II.
SECTION 4.14. Capitalization. On the Effective Date (after giving
--------------
effect to the Merger Transactions), the authorized capital stock of the Borrower
will consist of an aggregate of 201,000,000 shares consisting of (i) 200,000,000
shares of Common Stock, par value $.01 per share, of which 100,000,000 will be
designated as Series A Common Stock and 100,000,000 will be designated as Series
B Common Stock and (ii) 1,000,000 shares of preferred stock, of which 12,500
shares will be designated as Series A Preferred Stock and 12,500 shares will be
designated as Series B Preferred Stock. Except as disclosed in the
Registration Statement or in Schedule VI, as of the date hereof, there are no
outstanding obligations of the Borrower or any of its Subsidiaries to
repurchase, redeem, or otherwise acquire any shares of capital stock of the
Borrower nor are there any outstanding obligations of the Borrower or any of its
Subsidiaries to make payments to any Person, such as "phantom stock" payments,
where the amount thereof is calculated with reference to the fair market value
or equity value of the Borrower or any of its Subsidiaries.
SECTION 4.15. Subsidiaries and Investments.
----------------------------
(a) As at the date hereof (in the case of all Subsidiaries of the
Borrower on the Effective Date after giving effect to the Merger Transactions),
and as at the most recent date such Schedule shall be supplemented pursuant to
Section 7.03(c)(iv) (in the case of any Subsidiary formed or acquired pursuant
to any Acquisition), set forth in Part A of Schedule IV is a complete and
correct list of all of the Subsidiaries of the Borrower (excluding any
Subsidiary that shall have been sold, or the existence of which shall have been
terminated, in accordance with a transaction permitted hereunder), together
with, for each such Subsidiary, (i) the jurisdiction of organization of such
Subsidiary, (ii) each Person (other than the holders of shares of stock of the
Borrower) holding ownership interests in such Subsidiary and (iii) the nature of
the ownership interests held by each such Person and the percentage of ownership
of such Subsidiary represented by such ownership interests. As at the date
hereof, except as disclosed in Part A of Schedule IV, (x) each of the Borrower
and its Subsidiaries owns, free and clear of Liens, and has the unencumbered
right to vote, all outstanding ownership interests in each Person shown to be
held by it in Part A of Schedule IV, (y) all of the issued and outstanding
capital stock of each such Person organized as a corporation is validly issued,
fully paid and nonassessable and (z) there are no outstanding Equity Rights with
respect to such Person (excluding for these purposes any letters of intent
entered into with respect to the sale of the Dayton Station or the Providence
Station).
(b) Set forth in Part B of Schedule IV is a complete and correct list
of all Investments (other than Investments disclosed in Part A of Schedule IV)
held by the Borrower or any of its Subsidiaries in any Person on the date hereof
(or that will be held by the Borrower and its Subsidiaries on the Effective Date
after giving effect to the Merger
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Transactions) and, for each such Investment, (x) the identity of the Person or
Persons holding such Investment and (y) the nature of such Investment. Except
as disclosed in Part B of Schedule IV, each of the Borrower and its Subsidiaries
owns, free and clear of all Liens, all such Investments.
(c) Except for the Senior Subordinated Notes, none of the
Consolidated Subsidiaries of the Borrower is on the date hereof (or will be on
the Effective Date after giving effect to the Merger Transactions) subject to
any indenture, agreement, instrument or other arrangement of the type described
in Section 7.08.
SECTION 4.16. Station Licenses. As at the date hereof (in the case
----------------
of all Stations to be owned by the Borrower and its Consolidated Subsidiaries on
the Effective Date after giving effect to the Merger Transactions), and as at
the most recent date such Schedule shall be supplemented pursuant to Section
7.03(c)(iv) (in the case of any Station acquired pursuant to any Acquisition):
(a) Schedule V accurately and completely lists all Station Licenses
(other than non-material incidental microwave relay and remote transmitter
licenses) granted or assigned to the Borrower or any Consolidated
Subsidiary, or under which the Borrower and its Consolidated Subsidiaries
have the right to operate such Station. The Station Licenses listed on
said Schedule V with respect to any Station include all material
authorizations, licenses and permits issued by the FCC that are required or
necessary for the operation of such Station, and the conduct of the
business of the Borrower and its Consolidated Subsidiaries with respect to
such Station.
(b) The Station Licenses listed in said Schedule V are validly issued
in the name of, or the FCC has consented to the assignment of or transfer
of control of such Station Licenses to, the Borrower or one or more of its
Subsidiaries.
(c) Each such Station License is in full force and effect, and the
Borrower and its Consolidated Subsidiaries have fulfilled and performed in
all material respects all of their obligations with respect thereto and
have full power and authority to operate thereunder, and all consents of
the FCC to the assignment of, or transfer of control of, the principal
broadcasting licenses and any other material Station Licenses in connection
with the Merger Transactions have been approved by orders of the FCC which
orders (to the extent that any pre-grant objections have been filed) have
become final (i.e. no longer subject to further judicial or administrative
review).
(d) All operating assets, rights and other property relating to, and
material to the operations of, any Station, are owned (or are available for
use under lease, license or other arrangements entered into with third
parties) by the Borrower or one or more of its Subsidiaries.
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SECTION 4.17. Merger Agreement. The Borrower has heretofore
----------------
delivered to the Administrative Agent a complete copy (including all
modifications, waivers and supplements thereto, and exhibits and schedules) of
the Merger Agreement.
ARTICLE V
CONDITIONS
SECTION 5.01. Effective Date. The obligations of the Lenders to make
--------------
Loans, and of the Issuing Lender to issue Letters of Credit hereunder, shall not
become effective until the date on which the Administrative Agent shall have
received each of the following documents, each of which shall be satisfactory to
the Administrative Agent (and to the extent specified below, to each Lender) in
form and substance (or such condition shall have been waived in accordance with
Section 10.02):
(a) Executed Counterparts. From each party hereto either (i) a
---------------------
counterpart of this Agreement signed on behalf of such party or (ii)
written evidence satisfactory to the Administrative Agent (which may
include telecopy transmission of a signed signature page of this Agreement)
that such party has signed a counterpart of this Agreement.
(b) Opinions of Counsel to the Obligors. Favorable written opinions
-----------------------------------
(addressed to the Administrative Agent and the Lenders and dated the
Effective Date) of (i) Locke Purnell Rain Harrell (A Professional
Corporation), counsel for the Obligors, substantially in the form of
Exhibit C and (ii) Wiley, Rein & Fielding and Brooks, Pierce, McLendon,
Humphrey & Leonard, special communications counsel for the Borrower,
covering the matters set forth in Exhibit D, and in each case covering such
other matters relating to the Borrower, this Agreement or the Transactions
as the Required Lenders shall reasonably request. Each Obligor hereby
requests such counsel to deliver such opinions.
(c) Opinion of Special New York Counsel to The Chase Manhattan Bank.
---------------------------------------------------------------
An opinion, dated the Effective Date, of Milbank, Tweed, Hadley & McCloy,
special New York counsel to The Chase Manhattan Bank, substantially in the
form of Exhibit E (and The Chase Manhattan Bank hereby instructs such
counsel to deliver such opinion to the Lenders).
(d) Corporate Documents. Such documents and certificates as the
-------------------
Administrative Agent or its counsel may reasonably request relating to the
organization, existence and good standing of each Obligor, the
authorization of the Transactions and any other legal matters relating to
the Obligors, this Agreement or the Transactions, all in form and substance
reasonably satisfactory to the Administrative Agent and its counsel.
<PAGE>
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(e) Officer's Certificate. A certificate, dated the Effective Date
---------------------
and signed by the President, a Vice President or a Financial Officer,
confirming compliance with the conditions set forth in the lettered clauses
of the first sentence of Section 5.02.
(f) Repayment of Existing Indebtedness. Evidence that the principal
----------------------------------
of and interest on, and all other amounts owing in respect of, the
Indebtedness (including any contingent or other amounts payable in respect
of letters of credit) in respect of the Existing Credit Agreement and the
Bridge Debt or indicated on Schedule II that is to be repaid on the
Effective Date shall have been (or shall be simultaneously) paid in full,
that any commitments to extend credit under the agreements or instruments
relating to such Indebtedness shall have been canceled or terminated and
that all Guarantees in respect of, and all Liens securing, any such
Indebtedness shall have been released (or arrangements for such release
satisfactory to the Administrative Agent shall have been made).
(g) Station Licenses, Etc. Evidence that all of the principal
---------------------
broadcasting licenses and any other material Station Licenses appearing in
Schedule V for each Station shall have been validly issued in the name of,
or the FCC has consented to the assignment of or the transfer of control of
such Station Licenses to, the Borrower or one or more of its Subsidiaries,
and shall be in full force and effect, and all consents to such assignments
and transfers of control will have been approved by orders of the FCC,
which orders (to the extent pre-grant objections have been filed) have
become final (i.e. no longer subject to further judicial or administrative
review).
(h) Merger Transactions. Evidence that (x) the Merger Transactions
-------------------
shall have been (or shall be simultaneously) consummated in all material
respects in accordance with the terms of the Merger Agreement (except for
any modifications, supplements or waivers thereof, or written consents or
determinations made by the parties thereto, that shall be satisfactory to
the Required Lenders or that shall not result in a Material Adverse
Effect), and (y) the percentage of the aggregate outstanding stockholders
of the Borrower that have reserved their statutory dissenters' rights as
described in the Registration Statement shall not exceed 5%, and the
Administrative Agent shall have received a certificate of a Financial
Officer to the effect of the foregoing clauses (x) and (y), and to the
effect that attached thereto are true and complete copies of the documents
delivered in connection with the closing of the Merger Transactions
pursuant to the Merger Agreement.
(i) Leverage Ratio. A certificate of a Financial Officer setting
--------------
forth a calculation of the Leverage Ratio as at the Effective Date, after
giving effect to the Merger Transactions.
(j) Private Placement Debt. Evidence that the holders of the Private
----------------------
Placement Debt shall have consented to (or the Private Placement Debt
Documents otherwise have been amended to permit) the Merger Transactions
and this Agreement (including
<PAGE>
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to the provisions of Section 2.05(k)) and that the Private Placement Debt
Documents shall have been modified in connection therewith in a manner in
form and substance satisfactory to the Required Lenders.
(k) Other Documents. Such other documents as the Administrative
---------------
Agent or any Lender or special New York counsel to The Chase Manhattan Bank
may reasonably request.
The obligation of any Lender to make its initial extension of credit
hereunder is also subject to the payment by the Borrower of such fees as the
Borrower shall have agreed to pay to any Lender or the Administrative Agent in
connection herewith, including the reasonable fees and expenses of Milbank,
Tweed, Hadley & McCloy, special New York counsel to The Chase Manhattan Bank, in
connection with the negotiation, preparation, execution and delivery of this
Agreement and the other Loan Documents and the extensions of credit hereunder
(to the extent that statements for such fees and expenses have been delivered to
the Borrower).
The Administrative Agent shall notify the Borrower and the Lenders of
the Effective Date, and such notice shall be conclusive and binding.
Notwithstanding the foregoing, the obligations of the Lenders to make Loans and
of the Issuing Lender to issue Letters of Credit hereunder shall not become
effective unless each of the foregoing conditions is satisfied (or waived
pursuant to Section 10.02) on or prior to 3:00 p.m., New York City time, on
September 16, 1997 (and, in the event such conditions are not so satisfied or
waived, the Commitments shall terminate at such time).
SECTION 5.02. Each Credit Event. The obligation of each Lender to
-----------------
make a Loan on the occasion of any Borrowing, and of the Issuing Lender to
issue, amend, renew or extend any Letter of Credit, is subject to the
satisfaction of the following conditions:
(a) the representations and warranties of the Borrower set forth in
this Agreement, and of each Obligor in each of the other Loan Documents to
which it is a party, shall be true and correct on and as of the date of
such Borrowing or the date of issuance, amendment, renewal or extension of
such Letter of Credit, as applicable, unless such representation or
warranty is expressly stated to have been made as of a specific date (such
as the date hereof or the Effective Date), in which case such
representation and warranty shall be true and correct on and as of such
specific date; and
(b) at the time of and immediately after giving effect to such
Borrowing or the issuance, amendment, renewal or extension of such Letter
of Credit, as applicable, no Default shall have occurred and be continuing.
<PAGE>
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Each Borrowing and each issuance, amendment, renewal or extension of a Letter of
Credit shall be deemed to constitute a representation and warranty by the
Borrower on the date thereof as to the matters specified in the preceding
sentence.
ARTICLE VI
AFFIRMATIVE COVENANTS
Until the Commitments have expired or been terminated and the
principal of and interest on each Loan and all fees payable hereunder shall have
been paid in full and all Letters of Credit shall have expired or terminated and
all LC Disbursements shall have been reimbursed or covered, the Borrower
covenants and agrees with the Lenders that:
SECTION 6.01. Financial Statements and Other Information. The
------------------------------------------
Borrower will furnish to the Administrative Agent and each Lender:
(a) as soon as available and in any event within 90 days after the
end of each fiscal year of the Borrower, consolidated statements of
operations, stockholders' equity and cash flows of the Borrower and its
Subsidiaries and of the Borrower and its Consolidated Subsidiaries (and,
separately stated, of each Designated Subsidiary) for such fiscal year and
the related consolidated balance sheets of the Borrower and its
Subsidiaries and of the Borrower and its Consolidated Subsidiaries (and,
separately stated, of each Designated Subsidiary) as at the end of such
fiscal year, setting forth in each case in comparative (or, for periods
prior to any Acquisition, comparative historical) form the corresponding
consolidated (or, in the case of a Designated Subsidiary, separately
stated) figures for the preceding fiscal year, and accompanied
(i) in the case of said consolidated statements and
balance sheet of the Borrower and its Subsidiaries, by an opinion
thereon of independent certified public accountants of recognized
national standing, which opinion shall state that said consolidated
financial statements fairly present the consolidated financial
condition and results of operations of the Borrower and its
Subsidiaries as at the end of, and for, such fiscal year in accordance
with GAAP, consistently applied (except as noted pursuant to paragraph
(c) below),
(ii) in the case of said consolidated statements and
balance sheet of the Borrower and its Consolidated Subsidiaries, by a
report of independent certified public accountants of recognized
national standing, which report shall state that said consolidated
financial statements have been reviewed by such accountants, and
(iii) in the case of said consolidated statements and
balance sheet of the Borrower and its Consolidated Subsidiaries (and
separate statements and
<PAGE>
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balance sheets for a Designated Subsidiary), by a certificate of a
Financial Officer, which certificate shall state that said
consolidated financial statements fairly present the consolidated
financial condition and results of operations of the Borrower and its
Consolidated Subsidiaries (and, in the case of each Designated
Subsidiary, said separately stated financial statements fairly present
the respective results of operations of such Designated Subsidiary),
in each case in accordance with (except, in the case of the
consolidated financial statements of the Borrower and its Consolidated
Subsidiaries for the exclusion therefrom of the Designated
Subsidiaries) GAAP, consistently applied (except as noted pursuant to
paragraph (c) below), as at the end of, and for, such fiscal year;
(b) as soon as available and in any event within 60 days after the
end of each of the first three quarterly fiscal periods of each fiscal year
of the Borrower, consolidated statements of operations, stockholders'
equity and cash flows of the Borrower and its Subsidiaries and of the
Borrower and its Consolidated Subsidiaries (and, separately stated, of each
Designated Subsidiary) for such period and for the period from the
beginning of the respective fiscal year to the end of such period, and the
related consolidated balance sheets of the Borrower and its Subsidiaries
and of the Borrower and its Consolidated Subsidiaries (and, separately
stated, of each Designated Subsidiary) as at the end of such period,
setting forth in each case in comparative (or for periods prior to any
Acquisition, comparative historical) form the corresponding consolidated
(or, in the case of a Designated Subsidiary, separately stated) figures for
the corresponding periods in the preceding fiscal year (except that, in the
case of balance sheets, such comparison shall be to the last day of the
prior fiscal year), accompanied by a certificate of a Financial Officer,
which certificate shall state that said consolidated financial statements
fairly present the consolidated financial condition and results of
operations of, as the case may be, the Borrower and its Subsidiaries and
the Borrower and its Consolidated Subsidiaries (or of such Designated
Subsidiary, as the case may be), in each case in accordance with (except,
in the case of the consolidated financial statements of the Borrower and
its Consolidated Subsidiaries, for the exclusion therefrom of the
Designated Subsidiaries) GAAP, consistently applied (except as noted
pursuant to paragraph (c) below), as at the end of, and for, such period
(subject to normal year-end audit adjustments);
(c) concurrently with any delivery of financial statements under
clause (a) or (b) of this Section, a certificate of a Financial Officer (i)
certifying as to whether a Default has occurred and, if a Default has
occurred, specifying the details thereof and any action taken or proposed
to be taken with respect thereto, (ii) setting forth reasonably detailed
calculations demonstrating compliance with Sections 7.01, 7.06 and 7.10 and
(iii) stating whether any change in GAAP or in the application thereof has
occurred since the date of the audited financial statements referred to in
Section 4.04 that affects (or in the future is reasonably likely to affect)
in any material respect the presentation of financial information with
respect to the Borrower and its Subsidiaries
<PAGE>
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required hereunder and, if any such change has occurred, specifying the
effect of such change on the financial statements accompanying such
certificate;
(d) concurrently with any delivery of financial statements under
clause (a) of this Section, a statement of the accounting firm that
reported on such financial statements stating whether they obtained
knowledge during the course of their examination of such financial
statements of any default by the Borrower under Section 7.10 (insofar as
such Section relates to accounting matters) (which statement may be limited
by accounting rules or guidelines);
(e) promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed by
the Borrower or any of its Subsidiaries with the Securities and Exchange
Commission, or any Governmental Authority succeeding to any or all of the
functions of said Commission, or with any national securities exchange, or
distributed by the Borrower to its stockholders generally or to holders of
any class of Indebtedness generally, as the case may be;
(f) promptly upon their becoming available, copies of any and all
periodic or special reports filed by the Borrower or any of its
Consolidated Subsidiaries with the FCC or with any other Federal, state or
local governmental authority, if such reports indicate any material adverse
change in the business, operations, affairs or condition of the Borrower
and its Consolidated Subsidiaries, taken as a whole, or if copies thereof
are requested by any Lender or the Administrative Agent, and copies of any
and all notices and other communications from the FCC or from any other
Federal, state or local governmental authority with respect to the
Borrower, any of its Consolidated Subsidiaries or any Station that raises
any matters that could, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect; and
(g) promptly following any request therefor, such other information
regarding the operations, business affairs and financial condition of the
Borrower or any of its Consolidated Subsidiaries, or compliance with the
terms of this Agreement and the other Loan Documents, as the Administrative
Agent or any Lender may reasonably request.
SECTION 6.02. Notices of Material Events. The Borrower will furnish
--------------------------
to the Administrative Agent and each Lender prompt written notice of the
following:
(a) the occurrence of any Default;
(b) the filing or commencement of any action, suit or proceeding by
or before any arbitrator or Governmental Authority against or affecting the
Borrower or any of its Affiliates that, if adversely determined, could
reasonably be expected to result in a Material Adverse Effect;
<PAGE>
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(c) the occurrence of any ERISA Event that, alone or together with
any other ERISA Events that have occurred, could reasonably be expected to
result in a Material Adverse Effect; and
(d) any other development that results in, or could reasonably be
expected to result in, a Material Adverse Effect.
Each notice delivered under this Section shall be accompanied by a statement of
a Financial Officer or other executive officer of the Borrower setting forth the
details of the event or development requiring such notice and any action taken
or proposed to be taken with respect thereto.
SECTION 6.03. Existence; Conduct of Business. The Borrower will, and
------------------------------
will cause each of its Consolidated Subsidiaries to, do or cause to be done all
things necessary to preserve, renew and keep in full force and effect its legal
existence and the rights, licenses, permits, privileges and franchises material
to the conduct of its business; provided that the foregoing shall not prohibit
--------
any merger, consolidation, liquidation or dissolution permitted under Section
7.03.
SECTION 6.04. Payment of Obligations. The Borrower will, and will
----------------------
cause each of its Consolidated Subsidiaries to, pay its obligations, including
Tax liabilities, that, if not paid, could result in a Material Adverse Effect
before the same shall become delinquent or in default, except where (a) the
validity or amount thereof is being contested in good faith by appropriate
proceedings, (b) the Borrower or such Consolidated Subsidiary has set aside on
its books adequate reserves with respect thereto in accordance with GAAP and (c)
the failure to make payment pending such contest could not reasonably be
expected to result in a Material Adverse Effect.
SECTION 6.05. Maintenance of Properties; Insurance. The Borrower
------------------------------------
will, and will cause each of its Consolidated Subsidiaries to, (a) keep and
maintain all property material to the conduct of its business in good working
order and condition, ordinary wear and tear excepted, and (b) maintain, with
financially sound and reputable insurance companies, insurance in such amounts
and against such risks as are customarily maintained by companies engaged in the
same or similar businesses operating in the same or similar locations, provided
--------
that the Borrower will in any event maintain (with respect to itself and each of
its Consolidated Subsidiaries) casualty insurance and insurance against claims
for damages with respect to defamation, libel, slander, privacy or other similar
injury to person or reputation (including misappropriation of personal
likeness), in such amounts as are then customary for Persons engaged in the same
or similar business similarly situated.
SECTION 6.06. Books and Records; Inspection Rights. The Borrower
------------------------------------
will, and will cause each of its Consolidated Subsidiaries to, keep proper books
of record and account in which full, true and correct entries are made of all
dealings and transactions in relation to its business and activities. The
Borrower will, and will cause each of its
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Consolidated Subsidiaries to, permit any representatives designated by the
Administrative Agent or any Lender, upon reasonable prior notice, to visit and
inspect its properties, to examine and make extracts from its books and records,
and to discuss its affairs, finances and condition with its officers and
independent accountants, all at such reasonable times and as often as reasonably
requested.
SECTION 6.07. Compliance with Laws. The Borrower will, and will
--------------------
cause each of its Consolidated Subsidiaries to, comply with all laws, rules,
regulations and orders of any Governmental Authority, including, but not limited
to, Environmental Laws applicable to it or its property, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.
SECTION 6.08. Use of Proceeds and Letters of Credit. The proceeds of
-------------------------------------
the Loans will be used to finance the cash portion of the Merger Transactions,
to pay for fees and expenses relating thereto, to finance acquisitions pursuant
to Section 7.03(c), to refinance existing indebtedness of the Borrower
(including the Senior Subordinated Notes, indebtedness under the Existing Credit
Agreement, the Bridge Debt and the Private Placement Debt), to repurchase
outstanding shares of capital stock of the Borrower (to the extent permitted
hereunder) and for general corporate purposes of the Borrower and its
Subsidiaries. No part of the proceeds of any Loan will be used, whether
directly or indirectly, for any purpose that entails a violation of any of the
Regulations of the Board, including Regulations G, U and X.
SECTION 6.09. Certain Obligations Respecting Subsidiaries.
-------------------------------------------
(a) Wholly Owned Subsidiaries. Subject to paragraph (b) below, the
-------------------------
Borrower will, and will cause each of its Subsidiaries to, take such action from
time to time as shall be necessary to ensure that each of its Consolidated
Subsidiaries is a Wholly Owned Subsidiary.
(b) Designated Subsidiaries. Notwithstanding the provisions of
-----------------------
paragraph (a) above, the Borrower may at any time after the date hereof
designate any Subsidiary (other than a Subsidiary holding any Station Licenses
or the operating assets of any Stations) as a "Designated Subsidiary" for
purposes of this Agreement, by delivering to the Administrative Agent a
certificate of a senior officer of the Borrower (and the Administrative Agent
shall promptly deliver a copy thereof to each Lender following receipt)
identifying such Subsidiary, stating that such Subsidiary shall be treated as a
"Designated Subsidiary" for all purposes hereof and certifying that, after
giving effect to such designation, the Borrower will be in compliance with the
provisions of this Agreement applicable to such Designated Subsidiary (including
the provisions of Section 7.05(f) with respect to the type of business in which
a Designated Subsidiary shall be involved and the limitations upon the aggregate
amount of Investments in Designated Subsidiaries therein specified), and such
designation will not result in a Default hereunder. In the event of any such
designation of a Subsidiary that is at the time a Subsidiary Guarantor
hereunder, the Administrative Agent agrees (to the extent such designation
complies with the requirements of the immediately preceding sentence) to release
such Subsidiary from its Guarantee hereunder, and in that connection to execute
and deliver
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(at the expense of the Borrower) such instruments as the Borrower shall
reasonably request to effect such release. Any Subsidiary of a Designated
Subsidiary shall be deemed to be a "Designated Subsidiary".
The Borrower may at any time rescind the designation of any Subsidiary
as a "Designated Subsidiary" for purposes of this Agreement, by delivering to
the Administrative Agent (which shall promptly forward a copy thereof to each
Lender) a certificate of a Financial Officer identifying such Subsidiary,
stating that such Subsidiary shall no longer be treated as a "Designated
Subsidiary" for purposes hereof and certifying that, after giving effect to such
rescission, the Borrower will be in compliance with the provisions of this
Agreement applicable to Consolidated Subsidiaries (and, without limiting the
generality of the foregoing, upon such rescission and as a condition thereto,
the Borrower agrees to comply with the requirements of paragraph (c) below with
respect to such Subsidiary).
(c) Subsidiary Guarantors. The Borrower will take such action, and
---------------------
will cause each of its Subsidiaries to take such action, from time to time as
shall be necessary to ensure that all Consolidated Subsidiaries of the Borrower
are "Subsidiary Guarantors" hereunder. Without limiting the generality of the
foregoing, in the event that the Borrower or any of its Subsidiaries shall form
or acquire any new Subsidiary that shall constitute a Consolidated Subsidiary
hereunder (including any Subsidiary of the Borrower that shall become a
Subsidiary of the Borrower in connection with any Acquisition, but excluding any
new Subsidiary that is a Designated Subsidiary), the Borrower and its
Subsidiaries will cause such new Subsidiary to
(i) become a "Subsidiary Guarantor" hereunder pursuant to a
Guarantee Assumption Agreement, and
(ii) deliver such proof of corporate action, incumbency of
officers, opinions of counsel and other documents as is consistent with
those delivered by each Obligor pursuant to Section 5.01 on the Effective
Date or as the Administrative Agent shall have reasonably requested.
ARTICLE VII
NEGATIVE COVENANTS
Until the Commitments have expired or terminated and the principal of
and interest on each Loan and all fees payable hereunder have been paid in full
and all Letters of Credit have expired or terminated and all LC Disbursements
shall have been reimbursed or covered, the Borrower covenants and agrees with
the Lenders that:
<PAGE>
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SECTION 7.01. Indebtedness. The Borrower will not, nor will it
------------
permit any of its Consolidated Subsidiaries to, create, incur, assume or permit
to exist any Indebtedness, except:
(a) Indebtedness hereunder;
(b) Indebtedness existing on the date hereof and set forth in Part A
of Schedule II (including Indebtedness relating to the Hearst Stations
assumed in connection with the Merger Transactions, but excluding,
following the making of the initial Loans hereunder, the Indebtedness to be
repaid with the proceeds of such Loans, as indicated on Schedule II),
together with any extensions, renewals, refinancings or replacements of any
such Indebtedness so long as the principal thereof is not increased and
such Indebtedness, as so extended, renewed, refinanced or replaced, would
constitute Indebtedness that could be incurred in compliance with Section
7.01(g);
(c) Indebtedness of any Consolidated Subsidiary to the Borrower or
any other Consolidated Subsidiary;
(d) Guarantees by the Borrower of Indebtedness of any Consolidated
Subsidiary and by any Consolidated Subsidiary of Indebtedness of the
Borrower or any other Consolidated Subsidiary;
(e) Indebtedness of the Borrower and its Subsidiaries in respect of
the deferred payment of insurance premiums up to an aggregate principal
amount not exceeding $10,000,000 at any one time outstanding;
(f) Indebtedness of any Person that becomes a Consolidated Subsidiary
after the Effective Date; provided that such Indebtedness exists at the
--------
time such Person becomes a Subsidiary and is not created in contemplation
of or in connection with such Person becoming a Consolidated Subsidiary;
(g) additional Indebtedness of the Borrower (and of its Consolidated
Subsidiaries in respect of a Guarantee of such Indebtedness), incurred
after the Effective Date (or assumed in connection with an Acquisition),
provided that
--------
(i) the stated maturity date with respect to such
Indebtedness shall be at least six months after the Maturity Date,
(ii) no principal payments with respect to such
Indebtedness shall be stated to be due prior to the Maturity Date
(other than in respect of a Change of Control or similar event),
except that if such Indebtedness is pari passu in right of payment
---- -----
with the obligations of the Obligors hereunder (i.e. not subordinated
in right of payment to such obligations), such Indebtedness may
provide for principal payments prior to the Maturity Date, so long as
the
<PAGE>
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weighted average life to maturity of such Indebtedness (determined in
accordance with GAAP) is not earlier than the weighted average life to
maturity of the Loans hereunder,
(iii) all covenants with respect to such Indebtedness shall
be no more restrictive then the covenants set forth in this Agreement
and the Borrower shall be in compliance with such covenants,
(iv) such Indebtedness is not secured by any Lien on
property of the Borrower or any Consolidated Subsidiary,
(v) any Guarantee by a Consolidated Subsidiary of such
Indebtedness shall provide that such Guarantee shall be released in
the event that such Consolidated Subsidiary is to be sold by the
Borrower, and
(vi) at the time of such incurrence, and after giving
effect thereto, no Default shall have occurred and be continuing and
the Borrower shall be in pro forma compliance with Section 7.10 (the
determination of such pro forma compliance to be calculated, as at the
end of and for the period of four fiscal quarters most recently ended
prior to the date of such incurrence for which financial statements of
the Borrower and its Consolidated Subsidiaries are available, under
the assumption that such incurrence shall have occurred at the
beginning of the applicable period) and the Borrower shall have
delivered to the Administrative Agent a certificate of a Financial
Officer showing such calculations in reasonable detail to demonstrate
such compliance; and
(h) other secured Indebtedness in an aggregate principal amount not
exceeding $25,000,000 and other Indebtedness in an aggregate principal
amount not exceeding $100,000,000, in either case at any time outstanding.
SECTION 7.02. Liens. The Borrower will not, nor will it permit any
-----
of its Consolidated Subsidiaries to, create, incur, assume or permit to exist
any Lien on any property or asset now owned or hereafter acquired by it, or
assign or sell any income or revenues (including accounts receivable) or rights
in respect of any thereof, except:
(a) Permitted Encumbrances;
(b) any Lien on any property or asset of the Borrower or any of its
Consolidated Subsidiaries existing on the date hereof and set forth in Part
B of Schedule II (including Liens relating to the Hearst Stations assumed
in connection with the Merger Transactions, but excluding, following the
making of the initial Loans hereunder, Liens securing Indebtedness to be
repaid with the proceeds of such Loans, as indicated on Schedule II);
provided that (i) no such Lien shall extend to any other
--------
<PAGE>
-80-
property or asset of the Borrower or any of its Consolidated Subsidiaries
and (ii) such Lien shall secure only those obligations which it secures on
the date hereof;
(c) any Lien existing on any property or asset of any Person that
becomes a Consolidated Subsidiary after the Effective Date prior to the
time such Person becomes a Consolidated Subsidiary; provided that (i) such
--------
Lien is not created in contemplation of or in connection with such Person
becoming a Consolidated Subsidiary, (ii) such Lien shall not apply to any
other property or assets of the Borrower or any Consolidated Subsidiary,
(iii) such Lien shall secure only those obligations which it secures on the
date such Person becomes a Consolidated Subsidiary and (iv) the aggregate
amount of Indebtedness or other obligations secured thereby shall not
exceed $25,000,000; and
(d) Liens on fixed or capital assets acquired, constructed or
improved by the Borrower or any Consolidated Subsidiary; provided that (i)
--------
such security interests secure Indebtedness permitted by clause (h) of
Section 7.01, (ii) such security interests and the Indebtedness secured
thereby are incurred prior to or within 90 days after such acquisition or
the completion of such construction or improvement, (iii) the Indebtedness
secured thereby does not exceed the cost of acquiring, constructing or
improving such fixed or capital assets, (iv) such security interests shall
not apply to any other property or assets of the Borrower or any
Consolidated Subsidiary and (v) the aggregate amount of Indebtedness or
other obligations secured thereby shall not exceed $25,000,000.
SECTION 7.03. Fundamental Changes.
-------------------
(a) Mergers and Consolidations. The Borrower will not, nor will it
--------------------------
permit any of its Consolidated Subsidiaries to, enter into any transaction of
merger, consolidation or amalgamation, or liquidate, wind up or dissolve itself
(or suffer any liquidation or dissolution); provided that, subject to Section
--------
7.04, and so long as after giving effect thereto no Default shall have occurred
and be continuing hereunder, (i) any Consolidated Subsidiary of the Borrower may
merge into or consolidate with the Borrower or any Subsidiary Guarantor so long
as the Borrower or a Subsidiary Guarantor is the continuing or surviving party,
(ii) any Consolidated Subsidiary of the Borrower may liquidate or dissolve into
the Borrower or any Subsidiary Guarantor and (iii) the Borrower and its
Consolidated Subsidiaries may enter into the transactions permitted under
clauses (B), (C) or (D) of paragraph (b) below, and under clause (iv) of
paragraph (c) below.
(b) Dispositions. The Borrower will not, nor will it permit any of
------------
its Consolidated Subsidiaries to, sell, transfer, lease or otherwise dispose of
all or any substantial part of its assets, except that, if at the time thereof
and immediately after giving effect thereto no Default shall have occurred and
be continuing (i) any Consolidated Subsidiary may sell, transfer, lease or
otherwise dispose of its assets to the Borrower or another Consolidated
Subsidiary and (ii) the Borrower and any of its Consolidated Subsidiaries may
sell, transfer,
<PAGE>
-81-
lease, exchange or dispose of (in one transaction or in a series of transactions
and, in the case of clauses (B), (C) and (D) below, in any form, including by
way of a merger or consolidation the effect of which is to result in the
disposition of the respective Station):
(A) any part of its assets in the ordinary course of business and on
ordinary business terms,
(B) the Dayton Station and the Providence Station,
(C) any one or more Stations, so long as the Broadcast Cash Flow
attributed to all Stations sold or exchanged pursuant to this clause (C)
(but not pursuant to clause (B)) during any fiscal year shall not exceed
25% of the Broadcast Cash Flow for such fiscal year nor 50% of the
Broadcast Cash Flow for any period five consecutive fiscal years (Broadcast
Cash Flow, for purposes hereof, to be determined under the assumption that
none of the sales otherwise permitted under this clause (C) had occurred
during such fiscal year or five fiscal year period and that the Broadcast
Cash Flow of any Station sold during such period remained unchanged after
such sale), and
(D) any non-broadcast assets acquired by the Borrower and its
Consolidated Subsidiaries.
(c) Acquisitions. The Borrower will not, nor will it permit any of
------------
its Consolidated Subsidiaries to, acquire any business or property from, or
capital stock of, or be a party to any acquisition of, any Person except:
(i) purchases of equipment, programming rights and other
property to be sold or used in the ordinary course of business;
(ii) Investments permitted under Section 7.05;
(iii) Capital Expenditures; and
(iv) the Borrower and its Consolidated Subsidiaries may,
pursuant to a merger or consolidation, a purchase of stock or assets or
entering into an LMA Arrangement (any such transaction being herein called
an "Acquisition"), acquire after the date hereof (or, in the case of an LMA
-----------
Arrangement, acquire the right to operate) additional television
broadcasting stations (any such station that is the subject of any
Acquisition being hereinafter referred to as an "Acquired Station"), and
----------------
additional broadcast industry related assets, so long as:
(A) in the case of any Acquisition (other than of one or more
television broadcasting stations), the aggregate Purchase Price of any
single such Acquisition shall not exceed $100,000,000 and of all such
Acquisitions after the Effective Date shall not exceed $200,000,000;
<PAGE>
-82-
(B) except if such Acquisition constitutes an LMA Arrangement,
the assignment or transfer of control of the Station Licenses with
respect to such Acquired Station shall have been approved by an order
or orders of the FCC, which order or orders (to the extent that any
pre-grant objections have been filed) shall have become final (i.e. no
longer subject to further judicial or administrative review);
(C) immediately prior to such Acquisition and after giving
effect thereto, (1) no Default shall have occurred and be continuing
and (2) the Borrower shall be in pro forma compliance with Section
7.10 (the determination of such pro forma compliance to be calculated,
as at the end of and for the period of four fiscal quarters most
recently ended prior to the date of such Acquisition for which
financial statements of the Borrower and its Consolidated Subsidiaries
are available, under the assumption that such Acquisition shall have
occurred at the beginning of the applicable period) and the Borrower
shall have delivered to the Administrative Agent a certificate of a
Financial Officer showing such calculations in reasonable detail to
demonstrate such compliance;
(D) in connection with such Acquisition the Borrower shall have
delivered to the Administrative Agent environmental surveys and
assessments prepared by a firm of licensed engineers in form and
substance reasonably satisfactory to the Administrative Agent
reflecting that the assets or Subsidiary being acquired in such
Acquisition is not subject to any material environmental liabilities;
(E) the Borrower shall have delivered evidence satisfactory to
the Administrative Agent that the Borrower and its Consolidated
Subsidiaries will not become liable, contingently or otherwise, in
respect of any material tax or material ERISA liability of the
respective seller (or the entity owning the Acquired Station or
broadcast industry related assets) as a result of such Acquisition;
and
(F) concurrently with the consummation of such Acquisition, the
Borrower shall have supplemented Schedules IV and V in order that such
Schedules accurately reflect any additional Consolidated Subsidiaries
formed or acquired pursuant to such Acquisition and accurately
identify the respective Station Licenses (other than non-material
incidental microwave relay and remote transmitter Licenses) of any
Acquired Station.
<PAGE>
-83-
SECTION 7.04. Lines of Business.
-----------------
(a) Business Activities. The Borrower will not at any time permit
-------------------
less than 75% of EBITDA to be derived from the television and radio broadcast
business (it being understood that the broadcast production business, as
conducted on the date hereof by "Hearst Broadcasting Productions" (as such term
is defined in the Merger Agreement), shall not be deemed to be the television
and radio broadcast business).
(b) Network Affiliation. The Borrower will cause any Station that is
-------------------
subject to an affiliation agreement with one of National Broadcasting Company,
Inc., Fox Broadcasting Company, CBS, Inc. or American Broadcasting Companies,
Inc. (each, a "Major Network") to maintain such agreement in full force and
-------------
effect, provided that (i) the Borrower may permit such Station to become subject
--------
to any new or substitute affiliation agreement with such or any other Major
Network and (ii) the Borrower may permit any one or more of such affiliation
agreements to expire or be terminated so long as the percentage of the aggregate
Broadcast Cash Flow of the Borrower and its Consolidated Subsidiaries during the
term of this Agreement attributable to Stations that cease to be so affiliated
shall not exceed 20%. With respect to any Station that is not subject to an
affiliation agreement with a Major Network, including any Station that is
currently affiliated with the Warner Brothers Network or the United Paramount
Network (each, an "Emerging Network"), the Borrower may permit such Station (i)
----------------
to cease to be party to any affiliation agreement, (ii) to become a party to an
affiliation agreement with a Major Network (in which event such Station shall
not become subject to the immediately preceding sentence) or (iii) to become a
party to an affiliation agreement with the other Emerging Network or any similar
emerging network.
(c) LMA Arrangements. The Borrower will not permit the aggregate
----------------
percentage of EBITDA for any period of four consecutive fiscal quarters that is
attributable to Stations subject to LMA Arrangements to exceed 20% of the
aggregate EBITDA for such period.
(d) License Subsidiaries. In the event that the Required Lenders
--------------------
shall deem the same to be necessary after the occurrence and during the
continuance of an Event of Default, the Borrower will create one or more
Subsidiaries to which the Station Licenses of each of the Stations of the
Borrower will be transferred (and will effect such transfer, and will deliver
evidence thereof and of all necessary FCC approvals to the Administrative Agent
within 180 days after such request).
SECTION 7.05. Investments. The Borrower will not, nor will it permit
-----------
any of its Consolidated Subsidiaries to, make or permit to remain outstanding
any Investments except:
(a) Investments outstanding on the date hereof and identified in Part
B of Schedule IV;
<PAGE>
-84-
(b) operating deposit accounts with banks;
(c) Permitted Investments;
(d) Investments by the Borrower and its Consolidated Subsidiaries in
the Borrower and its Consolidated Subsidiaries;
(e) Hedging Agreements entered into in the ordinary course of the
Borrower's financial planning and not for speculative purposes;
(f) Investments (not including, however, Guarantees of obligations)
by the Borrower and its Consolidated Subsidiaries in Designated
Subsidiaries or other entities that are, in either case, involved in a
business related to the business of the Borrower and its Consolidated
Subsidiaries, so long as the amount of such Investments shall not exceed
$250,000,000 at any one time outstanding;
(g) Investments constituting Acquisitions permitted under Section
7.03; and
(h) so long as at the time thereof, and after giving effect thereto,
no Default shall have occurred and be continuing, the Borrower may make
additional Investments (each a "Basket Investment") as follows:
-----------------
(i) if after giving effect to such Basket Investment the
Leverage Ratio shall be greater than 4.00 to 1, the Borrower may make
any Basket Investment (the "Current Basket Investment") so long as the
-------------------------
aggregate amount of all Basket Investments and Restricted Payments
made during the period commencing on the Effective Date through and
including the date upon which the Current Basket Investment is to be
made shall not exceed the sum of (w) $100,000,000 plus (x) the net
----
cash proceeds from all Equity Issuances after the Effective Date plus
----
(y) the aggregate amount of Net Cash Proceeds from Dispositions not
required to be applied to the prepayment of Loans, or the reduction of
Commitments, pursuant to Section 2.10(b)(ii) plus (z) 33-1/3% of the
----
cumulative amount of Excess Cash Flow for the period commencing on the
Effective Date through and including the fiscal quarter most recently
ended prior to the date of the Current Basket Investment for which
financial statements are available; and
(ii) if after giving effect to such Basket Investment the
Leverage Ratio shall be less than or equal to 4.00 to 1, the Borrower
may make Basket Investments in any amount.
A Basket Investment permitted by Section 7.05(h) at the time of its making may
remain outstanding at a subsequent time notwithstanding that additional Basket
Investments could not be made at such subsequent time. The aggregate amount of
an Investment at any one time
<PAGE>
-85-
outstanding for purposes of clauses (f) and (h) above, shall be deemed to be
equal to (A) the aggregate amount of cash, together with the aggregate fair
market value of property, loaned, advanced, contributed, transferred or
otherwise invested that gives rise to such Investment minus (B) the aggregate
-----
amount of dividends, distributions or other payments received in cash in respect
of such Investment; the amount of an Investment shall not in any event be
reduced by reason of any write-off of such Investment.
SECTION 7.06. Restricted Payments. The Borrower will not, nor will
-------------------
it permit any of its Consolidated Subsidiaries to, declare or make, or agree to
pay or make, directly or indirectly, any Restricted Payment, except that, so
long as at the time thereof, and after giving effect thereto, no Default shall
have occurred and be continuing, the Borrower may make Restricted Payments as
follows:
(a) if after giving effect to such Restricted Payment the Leverage
Ratio shall be greater than 4.00 to 1, the Borrower may make any Restricted
Payment (the "Current Restricted Payment") so long as the aggregate amount
--------------------------
of all Restricted Payments and Basket Investments made during the period
commencing on the Effective Date through and including the date upon which
the Current Restricted Payment is to be made shall not exceed the sum of
(w) $100,000,000 plus (x) the net cash proceeds from all Equity Issuances
----
after the Effective Date plus (y) the aggregate amount of Net Cash Proceeds
----
from Dispositions not required to be applied to the prepayment of Loans, or
the reduction of Commitments, pursuant to Section 2.10(b)(ii) plus (z) 33-
----
1/3% of the cumulative amount of Excess Cash Flow for the period commencing
on the Effective Date through and including the fiscal quarter most
recently ended prior to the date of the Current Restricted Payment for
which financial statements are available; and
(b) if after giving effect to such Restricted Payment the Leverage
Ratio shall be less than or equal to 4.00 to 1, the Borrower may make
Restricted Payments in any amount.
Nothing herein shall be deemed to prohibit the payment of dividends by
any Subsidiary of the Borrower to the Borrower or to any other Subsidiary of the
Borrower.
SECTION 7.07. Transactions with Affiliates. The Borrower will not,
----------------------------
nor will it permit any of its Consolidated Subsidiaries to, sell, lease or
otherwise transfer any property or assets to, or purchase, lease or otherwise
acquire any property or assets from, or otherwise engage in any other
transactions with, any of its Affiliates, except the following:
(a) transactions at prices and on terms and conditions not less
favorable to the Borrower or such Consolidated Subsidiary than could be
obtained on an arm's-length basis from unrelated third parties,
<PAGE>
-86-
(b) transactions between or among the Borrower and its Wholly Owned
Subsidiaries (other than Designated Subsidiaries) not involving any other
Affiliate,
(c) any Restricted Payment permitted by Section 7.06 or any
Investment permitted by Section 7.05,
(d) the options on certain television stations granted by Hearst in
favor of the Borrower and described in Exhibit 9.01(i) of the Merger
Agreement,
(e) arrangements between Hearst and the Borrower, with respect to
payroll, insurance, data processing, employee benefits, tax services,
accounting, corporate, financial, legal and other administrative items that
are on terms and conditions not less favorable to the Borrower than those
arrangements historically existing between Hearst and the Hearst Stations
and reflected in the projections set forth in the Information Memorandum,
it being understood that an increase in payments to Hearst based upon an
increase in the size of the business of the Borrower and its Subsidiaries
(resulting in an increase in payroll, insurance, data processing, employee
benefits, tax services, accounting, corporate, financial, legal and other
administrative items),
(f) the Tax Sharing Agreement, and
(g) the transactions, plans and agreements described under the
heading "Interests of Certain Persons in the Hearst Transactions; Affiliate
Transactions" in the Registration Statement.
SECTION 7.08. Restrictive Agreements. The Borrower will not, and
----------------------
will not permit any of its Consolidated Subsidiaries to, directly or indirectly,
enter into, incur or permit to exist any agreement or other arrangement that
prohibits, restricts or imposes any condition upon (a) the ability of the
Borrower or any Consolidated Subsidiary to create, incur or permit to exist any
Lien upon any of its property or assets, or (b) the ability of any Consolidated
Subsidiary to pay dividends or other distributions with respect to any shares of
its capital stock or to make or repay loans or advances to the Borrower or any
other Consolidated Subsidiary or to Guarantee Indebtedness of the Borrower or
any other Consolidated Subsidiary; provided that (i) the foregoing shall not
--------
apply to restrictions and conditions imposed by law or by this Agreement, (ii)
the foregoing shall not apply to restrictions and conditions existing pursuant
to the Senior Subordinated Notes (but shall apply to any extension or renewal
of, or any amendment or modification expanding the scope of, any such
restriction or condition), (iii) the foregoing shall not apply to customary
restrictions and conditions contained in agreements relating to the sale of a
Consolidated Subsidiary pending such sale, provided such restrictions and
conditions apply only to the Consolidated Subsidiary that is to be sold and such
sale is permitted hereunder, (iv) clause (a) of the foregoing shall not apply to
restrictions or conditions imposed by any agreement relating to secured
Indebtedness permitted by this Agreement if such restrictions or conditions
apply only to the property or assets securing such Indebtedness, (v) clause (a)
of the foregoing shall not
<PAGE>
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apply to customary provisions in leases and other contracts restricting the
assignment thereof and (vi) clauses (a) and (b) of the foregoing shall not apply
to any Indebtedness that is pari passu in right of payment with the obligations
---- -----
of the Obligors hereunder (i.e. not subordinated in right of payment to such
obligations).
SECTION 7.09. Modifications of Certain Documents. Without the prior
----------------------------------
consent of the Administrative Agent (to be given upon the approval of the
Required Lenders), the Borrower will not consent to any modification, supplement
or waiver of (i) any of the provisions of any agreement, instrument or other
document evidencing or relating to Additional Permitted Indebtedness or the
Senior Subordinated Notes (or the Indenture pursuant to which the Senior
Subordinated Notes have been issued) or (ii) the Merger Agreement in a manner
that, in either case, would be materially adverse to the Lenders.
SECTION 7.10. Certain Financial Covenants.
---------------------------
(a) Leverage Ratio. The Borrower will not permit the Leverage Ratio
--------------
to exceed the following respective ratios at any time during the following
respective periods:
Period Ratio
------ -----
From the Effective Date
through December 30, 1999 5.50 to 1
From December 31, 1999
through December 30, 2000 5.00 to 1
From December 31, 2000
through December 30, 2001 4.50 to 1
From December 31, 2001
and at all times thereafter 4.00 to 1
(b) Interest Coverage Ratio. The Borrower will not permit the
-----------------------
Interest Coverage Ratio to be less than (i) 2.00 to 1 as at the last day of any
fiscal quarter ending on or before the fiscal quarter ending December 31, 1999
and (ii) 2.50 to 1 as at the last day of any fiscal quarter thereafter.
(c) Fixed Charges Ratio. The Borrower will not permit the Fixed
-------------------
Charges Ratio to be less than 1.15 to 1 as at the last day of any fiscal
quarter.
<PAGE>
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ARTICLE VIII
EVENTS OF DEFAULT
If any of the following events ("Events of Default") shall occur:
-----------------
(a) the Borrower shall fail to pay any principal of any Loan or any
reimbursement obligation in respect of any LC Disbursement when and as the
same shall become due and payable, whether at the due date thereof or at a
date fixed for prepayment thereof or otherwise;
(b) the Borrower shall fail to pay any interest on any Loan or (after
notice from any Lender or the Administrative Agent) any fee or any other
amount (other than an amount referred to in clause (a) of this Article)
payable under this Agreement or under any other Loan Document, when and as
the same shall become due and payable, and such failure shall continue
unremedied for a period of three Business Days;
(c) any representation or warranty made or deemed made by or on
behalf of any Obligor in or in connection with this Agreement or any other
Loan Document or any amendment or modification hereof or thereof, or in any
report, certificate, financial statement or other document furnished
pursuant to or in connection with this Agreement or any other Loan Document
or any amendment or modification hereof or thereof, shall prove to have
been incorrect when made or deemed made in any material respect; or any
representation or warranty made by or on behalf of Hearst in the Merger
Agreement shall prove to have been incorrect when made in any material
respect;
(d) the Borrower shall fail to observe or perform any covenant,
condition or agreement contained in Section 6.02, 6.03 (with respect to the
Borrower's existence), 6.08 or 6.09 or in Article VII;
(e) any Obligor shall fail to observe or perform any covenant,
condition or agreement contained in this Agreement (other than those
specified in clause (a), (b) or (d) of this Article) or any other Loan
Document and such failure shall continue unremedied for a period of 30 or
more days after notice thereof from the Administrative Agent (given at the
request of any Lender) is received by the Borrower;
(f) the Borrower or any of its Consolidated Subsidiaries shall fail
to make any payment (whether of principal or interest and regardless of
amount) in respect of any Material Indebtedness, when and as the same shall
become due and payable;
(g) any event or condition occurs that results in any Material
Indebtedness becoming due prior to its scheduled maturity or that enables
or permits (with or
<PAGE>
-89-
without the giving of notice, the lapse of time or both) the holder or
holders of any Material Indebtedness or any trustee or agent on its or
their behalf to cause any Material Indebtedness to become due, or to
require the prepayment, repurchase, redemption or defeasance thereof, prior
to its scheduled maturity; provided that this clause (g) shall not apply to
--------
the offer to repurchase the Senior Subordinated Notes as a result of the
Merger Transactions or to secured Indebtedness that becomes due as a result
of the voluntary sale or transfer of the property or assets securing such
Indebtedness;
(h) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, reorganization or other
relief in respect of any Obligor or its debts, or of a substantial part of
its assets, under any Federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect or (ii) the
appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for any Obligor or for a substantial part of its assets,
and, in any such case, such proceeding or petition shall continue
undismissed for 60 days or an order or decree approving or ordering any of
the foregoing shall be entered;
(i) any Obligor shall (i) voluntarily commence any proceeding or file
any petition seeking liquidation, reorganization or other relief under any
Federal, state or foreign bankruptcy, insolvency, receivership or similar
law now or hereafter in effect, (ii) consent to the institution of, or fail
to contest in a timely and appropriate manner, any proceeding or petition
described in clause (h) of this Article, (iii) apply for or consent to the
appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for any Obligor or for a substantial part of its assets,
(iv) file an answer admitting the material allegations of a petition filed
against it in any such proceeding, (v) make a general assignment for the
benefit of creditors or (vi) take any action for the purpose of effecting
any of the foregoing;
(j) any Obligor shall become unable, admit in writing its inability
or fail generally to pay its debts as they become due;
(k) one or more judgments for the payment of money in an aggregate
amount in excess of $25,000,000 shall be rendered against any Obligor or
any combination thereof and the same shall remain undischarged for a period
of 30 consecutive days during which execution shall not be effectively
stayed, or any action shall be legally taken by a judgment creditor to
attach or levy upon any assets of any Obligor to enforce any such judgment;
(l) an ERISA Event shall have occurred that, in the reasonable
judgment of the Required Lenders, when taken together with all other ERISA
Events that have occurred, could reasonably be expected to result in a
Material Adverse Effect;
<PAGE>
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(m) a reasonable basis shall exist for the assertion against the
Borrower or any of its Subsidiaries, or any predecessor in interest of the
Borrower or any of its Subsidiaries or Affiliates, of (or there shall have
been asserted against the Borrower or any of its Subsidiaries) any claims
or liabilities, whether accrued, absolute or contingent, based on or
arising from the generation, storage, transport, handling or disposal of
Hazardous Materials by the Borrower or any of its Subsidiaries, Affiliates
or predecessors that, in the reasonable judgment of the Required Lenders,
are reasonably likely to be determined adversely to the Borrower or any of
its Subsidiaries, and the amount thereof (either individually or in the
aggregate) is reasonably likely to have a Material Adverse Effect (insofar
as such amount is payable by the Borrower or any of its Consolidated
Subsidiaries but after deducting any portion thereof that is reasonably
expected to be paid by other creditworthy Persons jointly and severally
liable therefor);
(n) a Change of Control shall occur; or
(o) the principal broadcasting licenses of any Station, or any other
material authorizations, licenses or permits issued by the FCC, shall be
revoked or canceled or expire by their terms and not be renewed, or shall
be modified in a manner materially adverse to the Borrower or the
respective Consolidated Subsidiary operating such Station;
then, and in every such event (other than an event with respect to any Obligor
described in clause (i) or (j) of this Article), and at any time thereafter
during the continuance of such event, the Administrative Agent may, and at the
request of the Required Lenders shall, by notice to the Borrower, take either or
both of the following actions, at the same or different times:
(i) terminate the Commitments, and thereupon the Commitments
shall terminate immediately, and
(ii) declare the Loans then outstanding to be due and payable in
whole (or in part, in which case any principal not so declared to be due
and payable may thereafter be declared to be due and payable), and
thereupon the principal of the Loans so declared to be due and payable,
together with accrued interest thereon and all fees and other obligations
of the Obligors accrued hereunder, shall become due and payable
immediately, without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by each Obligor;
and in case of any event with respect to any Obligor described in clause (h) or
(i) of this Article, the Commitments shall automatically terminate and the
principal of the Loans then outstanding, together with accrued interest thereon
and all fees and other obligations of the Obligors accrued hereunder, shall
automatically become due and payable, without
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presentment, demand, protest or other notice of any kind, all of which are
hereby waived by each Obligor.
ARTICLE IX
THE ADMINISTRATIVE AGENT
Each of the Lenders and the Issuing Lender hereby irrevocably appoints
the Administrative Agent as its agent hereunder and under the other Loan
Documents and authorizes the Administrative Agent to take such actions on its
behalf and to exercise such powers as are delegated to the Administrative Agent
by the terms hereof or thereof, together with such actions and powers as are
reasonably incidental thereto.
The Person serving as the Administrative Agent hereunder shall have
the same rights and powers in its capacity as a Lender as any other Lender and
may exercise the same as though it were not the Administrative Agent, and such
Person and its Affiliates may accept deposits from, lend money to and generally
engage in any kind of business with the Borrower or any Subsidiary or other
Affiliate thereof as if it were not the Administrative Agent hereunder.
The Administrative Agent shall not have any duties or obligations
except those expressly set forth herein and in the other Loan Documents.
Without limiting the generality of the foregoing, (a) the Administrative Agent
shall not be subject to any fiduciary or other implied duties, regardless of
whether a Default has occurred and is continuing, (b) the Administrative Agent
shall not have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly
contemplated hereby or by the other Loan Documents that the Administrative Agent
is required to exercise in writing by the Required Lenders, and (c) except as
expressly set forth herein and in the other Loan Documents, the Administrative
Agent shall not have any duty to disclose, and shall not be liable for the
failure to disclose, any information relating to the Borrower or any of its
Subsidiaries that is communicated to or obtained by the bank serving as
Administrative Agent or any of its Affiliates in any capacity. The
Administrative Agent shall not be liable for any action taken or not taken by it
with the consent or at the request of the Required Lenders or in the absence of
its own gross negligence or wilful misconduct. The Administrative Agent shall
be deemed not to have knowledge of any Default unless and until written notice
thereof is given to the Administrative Agent by the Borrower or a Lender, and
the Administrative Agent shall not be responsible for or have any duty to
ascertain or inquire into (i) any statement, warranty or representation made in
or in connection with this Agreement or any other Loan Document, (ii) the
contents of any certificate, report or other document delivered hereunder or
thereunder or in connection herewith or therewith, (iii) the performance or
observance of any of the covenants, agreements or other terms or conditions set
forth herein or therein, (iv) the validity, enforceability, effectiveness or
genuineness of this Agreement, any other Loan Document or any other agreement,
instrument or document, or (v) the
<PAGE>
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satisfaction of any condition set forth in Article V or elsewhere herein or
therein, other than to confirm receipt of items expressly required to be
delivered to the Administrative Agent.
The Administrative Agent shall be entitled to rely upon, and shall not
incur any liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing believed by it to be genuine
and to have been signed or sent by the proper Person. The Administrative Agent
also may rely upon any statement made to it orally or by telephone and believed
by it to be made by the proper Person, and shall not incur any liability for
relying thereon. The Administrative Agent may consult with legal counsel (who
may be counsel for an Obligor), independent accountants and other experts
selected by it, and shall not be liable for any action taken or not taken by it
in accordance with the advice of any such counsel, accountants or experts.
The Administrative Agent may perform any and all its duties and
exercise its rights and powers by or through any one or more sub-agents
appointed by the Administrative Agent. The Administrative Agent and any such
sub-agent may perform any and all its duties and exercise its rights and powers
through their respective Related Parties. The exculpatory provisions of the
preceding paragraphs shall apply to any such sub-agent and to the Related
Parties of the Administrative Agent and any such sub-agent, and shall apply to
their respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as Administrative Agent.
Subject to the appointment and acceptance of a successor
Administrative Agent as provided in this paragraph, the Administrative Agent may
resign at any time by notifying the Lenders, the Issuing Lender and the
Borrower. Upon any such resignation, the Required Lenders shall have the right,
in consultation with the Borrower, to appoint a successor. If no successor
shall have been so appointed by the Required Lenders and shall have accepted
such appointment within 30 days after the retiring Administrative Agent gives
notice of its resignation, then the retiring Administrative Agent may, on behalf
of the Lenders and the Issuing Lender, appoint a successor Administrative Agent
which shall be a bank with an office in New York, New York, or an Affiliate of
any such bank. Upon the acceptance of its appointment as Administrative Agent
hereunder by a successor, such successor shall succeed to and become vested with
all the rights, powers, privileges and duties of the retiring Administrative
Agent and the retiring Administrative Agent shall be discharged from its duties
and obligations hereunder. The fees payable by the Borrower to a successor
Administrative Agent shall be the same as those payable to its predecessor
unless otherwise agreed between the Borrower and such successor (and, as
provided in Section 2.11(c), the retiring Administrative Agent shall make
available to the Borrower a ratable portion of any fees theretofore paid to the
Administrative Agent for the period during which the resignation or removal of
such retiring Administrative Agent shall occur to the extent the Borrower is
required to pay fees for the balance of such period to the successor
Administrative Agent). After the Administrative Agent's resignation hereunder,
the provisions of this Article and Section 10.03 shall continue in effect for
its benefit in respect of any actions taken or omitted to be taken by it while
it was acting as Administrative Agent.
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Each Lender acknowledges that it has, independently and without
reliance upon the Administrative Agent or any other Lender and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and
information as it shall from time to time deem appropriate, continue to make its
own decisions in taking or not taking action under or based upon this Agreement,
any other Loan Document or any related agreement or any document furnished
hereunder or thereunder.
Except as otherwise provided in Section 10.02(b) with respect to this
Agreement, the Administrative Agent may, with the prior consent of the Required
Lenders (but not otherwise), consent to any modification, supplement or waiver
under any of the Loan Documents.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Notices. Except in the case of notices and other
-------
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
(a) if to the Borrower or any Subsidiary Guarantor, to it c/o Hearst-
Argyle Television, Inc. at 888 7th Avenue, New York, New York 10019,
Attention of Harry T. Hawks (Telecopy No. 212-765-9639);
(b) if to the Administrative Agent, to The Chase Manhattan Bank, 1
Chase Manhattan Plaza, 8th Floor, New York, New York 10081, Attention Loan
and Agency Services Group (Telecopy No. (212) 552-5658), with a copy to The
Chase Manhattan Bank, 270 Park Avenue, New York, New York 10017, Attention
of Mitchell Gervis (Telecopy No. 212-270-4584);
(c) if to the Issuing Lender, to it at The Chase Manhattan Bank,
Trade Services, 55 Water Street, Room 1710, New York, New York 10041,
Attention of Roshdy Botros, Assistant Manager (Telecopy No. 212-638-8200);
and
(d) if to a Lender (including any Lender in its capacity as a
Swingline Lender), to it at its address (or telecopy number) set forth in
its Administrative Questionnaire.
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Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. All notices and
other communications given to any party hereto in accordance with the provisions
of this Agreement shall be deemed to have been given on the date of receipt.
SECTION 10.02. Waivers; Amendments.
-------------------
(a) No Deemed Waivers; Remedies Cumulative. No failure or delay by
--------------------------------------
the Administrative Agent, the Issuing Lender or any Lender in exercising any
right or power hereunder shall operate as a waiver thereof, nor shall any single
or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. The
rights and remedies of the Administrative Agent, the Issuing Lender and the
Lenders hereunder are cumulative and are not exclusive of any rights or remedies
that they would otherwise have. No waiver of any provision of this Agreement or
consent to any departure by any Obligor therefrom shall in any event be
effective unless the same shall be permitted by paragraph (b) of this Section,
and then such waiver or consent shall be effective only in the specific instance
and for the purpose for which given. Without limiting the generality of the
foregoing, the making of a Loan or issuance of a Letter of Credit shall not be
construed as a waiver of any Default, regardless of whether the Administrative
Agent, any Lender or the Issuing Lender may have had notice or knowledge of such
Default at the time.
(b) Amendments. Neither this Agreement nor any provision hereof may
----------
be waived, amended or modified except pursuant to an agreement or agreements in
writing entered into by the Borrower and the Required Lenders or by the Borrower
and the Administrative Agent with the consent of the Required Lenders; provided
--------
that no such agreement shall (i) increase any Commitment of any Lender without
the written consent of such Lender, (ii) reduce the principal amount of any Loan
or LC Disbursement or reduce the rate of interest thereon, or reduce any fees
payable hereunder, without the written consent of each Lender affected thereby,
(iii) postpone the scheduled date of payment of the principal amount of any Loan
or LC Disbursement, or any interest thereon, or any fees payable hereunder, or
reduce the amount of, waive or excuse any such payment, or postpone the
scheduled date of any reduction or expiration of any Commitment, without the
written consent of each Lender affected thereby, (iv) change Section 2.17(b) or
(d) in a manner that would alter the pro rata sharing of payments required
thereby, without the written consent of each Lender, (v) change any of the
provisions of this Section or the definition of the term "Required Incremental
Facility Lenders", "Required Lenders", "Required Revolving Lenders" or "Required
Term Lenders" or any other provision hereof specifying the number or percentage
of Lenders required to waive, amend or modify any rights hereunder or make any
determination or grant any consent hereunder, without the written consent of
each Lender, or (vi) except as otherwise provided herein, release any Subsidiary
Guarantor from any of its guarantee obligations under Article III without the
written consent of each Lender; and provided further that (x) no such agreement
-------- -------
shall amend, modify or otherwise affect the rights or duties of the
Administrative Agent, the Issuing Lender or either Swingline Lender
<PAGE>
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hereunder without the prior written consent of the Administrative Agent, the
Issuing Lender or such Swingline Lender, as the case may be and (y) any
modification or supplement of Article III shall require the consent of each
Subsidiary Guarantor.
Anything in this Agreement to the contrary notwithstanding, (A) no
waiver or modification of any provision of this Agreement that has the effect
(either immediately or at some later time) of enabling the Borrower to satisfy a
condition precedent to the making of a Revolving Loan, or Incremental Facility
Loans of any Series, shall be effective against the Revolving Lenders or
Incremental Facility Lenders of such Series, as the case may be, for purposes of
the Revolving Commitments or Incremental Facility Commitments of such Series
unless the Required Revolving Lenders or Required Incremental Facility Lenders
of such Series, as applicable, shall have concurred with such waiver or
modification and (B) upon the sale, transfer or other disposition of any
Subsidiary Guarantor hereunder in a transaction permitted under Section 7.03 (or
to which the Required Lenders shall have consented), the Administrative Agent is
authorized and instructed to enter into an amendment to this Agreement releasing
such Subsidiary Guarantor from its Guarantee under Article III.
SECTION 10.03. Expenses; Indemnity; Damage Waiver.
----------------------------------
(a) Costs and Expenses. The Borrower shall pay (i) all reasonable
------------------
out-of-pocket expenses incurred by the Administrative Agent and its Affiliates,
including the reasonable fees, charges and disbursements of counsel for the
Administrative Agent, in connection with the syndication of the credit
facilities provided for herein, the preparation of this Agreement and the other
Loan Documents or any amendments, modifications or waivers of the provisions
hereof or thereof (whether or not the transactions contemplated hereby or
thereby shall be consummated), (ii) all out-of-pocket expenses incurred by the
Issuing Lender in connection with the issuance, amendment, renewal or extension
of any Letter of Credit or any demand for payment thereunder and (iii) all out-
of-pocket expenses incurred by the Administrative Agent, the Issuing Lender or
any Lender, including the fees, charges and disbursements of any counsel for the
Administrative Agent, the Issuing Lender or any Lender, in connection with the
enforcement or protection of its rights in connection with this Agreement and
the other Loan Documents, including its rights under this Section, or in
connection with the Loans made or Letters of Credit issued hereunder, including
in connection with any workout, restructuring or negotiations in respect
thereof.
(b) Indemnification by Borrower. The Borrower shall indemnify the
---------------------------
Administrative Agent, the Issuing Lender and each Lender, and each Related Party
of any of the foregoing Persons (each such Person being called an "Indemnitee")
----------
against, and hold each Indemnitee harmless from, any and all losses, claims,
damages, liabilities and related expenses, including the fees, charges and
disbursements of any counsel for any Indemnitee, incurred by or asserted against
any Indemnitee arising out of, in connection with, or as a result of (i) the
execution or delivery of this Agreement or any agreement or instrument
contemplated hereby, the performance by the parties hereto of their respective
obligations hereunder or the consummation of the Transactions or any other
transactions contemplated
<PAGE>
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hereby, (ii) any Loan or Letter of Credit or the use of the proceeds therefrom
(including any refusal by the Issuing Lender to honor a demand for payment under
a Letter of Credit if the documents presented in connection with such demand do
not strictly comply with the terms of such Letter of Credit), (iii) any actual
or alleged presence or release of Hazardous Materials on or from any property
owned or operated by the Borrower or any of its Subsidiaries, or any
Environmental Liability related in any way to the Borrower or any of its
Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation
or proceeding relating to any of the foregoing, whether based on contract, tort
or any other theory and regardless of whether any Indemnitee is a party thereto;
provided that such indemnity shall not, as to any Indemnitee, be available to
- --------
the extent that such losses, claims, damages, liabilities or related expenses
resulted from the gross negligence or wilful misconduct of such Indemnitee.
(c) Reimbursement by Lenders. To the extent that the Borrower fails
------------------------
to pay any amount required to be paid by it to the Administrative Agent, the
Issuing Lender or either Swingline Lender under paragraph (a) or (b) of this
Section, each Lender severally agrees to pay to the Administrative Agent, the
Issuing Lender or such Swingline Lender, as the case may be, such Lender's
Applicable Percentage (determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought) of such unpaid amount;
provided that the unreimbursed expense or indemnified loss, claim, damage,
- --------
liability or related expense, as the case may be, was incurred by or asserted
against the Administrative Agent, the Issuing Lender or such Swingline Lender in
its capacity as such.
(d) Waiver of Consequential Damages, Etc. To the extent permitted by
------------------------------------
applicable law, no Obligor shall assert, and each Obligor hereby waives, any
claim against any Indemnitee, on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages)
arising out of, in connection with, or as a result of, this Agreement or any
agreement or instrument contemplated hereby, the Transactions, any Loan or
Letter of Credit or the use of the proceeds thereof.
(e) Payments. All amounts due under this Section shall be payable
--------
promptly after written demand therefor.
SECTION 10.04. Successors and Assigns.
----------------------
(a) Assignments Generally. The provisions of this Agreement shall be
---------------------
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns permitted hereby, except that no Obligor may assign or
otherwise transfer any of its rights or obligations hereunder without the prior
written consent of each Lender (and any attempted assignment or transfer by any
Obligor without such consent shall be null and void). Nothing in this
Agreement, expressed or implied, shall be construed to confer upon any Person
(other than the parties hereto, their respective successors and assigns
permitted hereby and, to the extent expressly contemplated hereby, the Related
Parties of each of the Administrative Agent, the Issuing Lender and the Lenders)
any legal or equitable right, remedy or claim under or by reason of this
Agreement.
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(b) Assignments by Lenders. Any Lender may assign to one or more
----------------------
assignees all or a portion of its rights and obligations under this Agreement
(including all or a portion of its Commitments and the Loans at the time owing
to it); provided that
--------
(i) except in the case of an assignment to a Lender or an
Affiliate of a Lender, each of the Borrower and the Administrative Agent
(and, in the case of an assignment of all or a portion of a Commitment or
any Lender's obligations in respect of its LC Exposure or Swingline
Exposure, the Issuing Lender and each Swingline Lender) must give their
prior written consent to such assignment (which consent shall not be
unreasonably withheld),
(ii) except in the case of an assignment to a Lender or an
Affiliate of a Lender or an assignment of the entire remaining amount of
the assigning Lender's Commitment(s), the amount of the Commitment(s) of
the assigning Lender subject to each such assignment (determined as of the
date the Assignment and Acceptance with respect to such assignment is
delivered to the Administrative Agent) shall not be less than $5,000,000
unless each of the Borrower and the Administrative Agent otherwise consent,
(iii) each partial assignment of the Loans, LC Exposure or
Commitments of any Class shall be made as an assignment of a proportionate
part of all the assigning Lender's rights and obligations under this
Agreement in respect of such Class,
(iv) the assignor and the assignee to each assignment shall
execute and deliver to the Administrative Agent an Assignment and
Acceptance, together with a processing and recordation fee of $3,500, and
(v) the assignee, if it shall not be a Lender, shall deliver to
the Administrative Agent an Administrative Questionnaire;
provided further that any consent of the Borrower otherwise required under this
- -------- -------
paragraph shall not be required if an Event of Default under clause (i) or (j)
of Article VIII has occurred and is continuing. Upon acceptance and recording
pursuant to paragraph (d) of this Section, from and after the effective date
specified in each Assignment and Acceptance, the assignee thereunder shall be a
party hereto and, to the extent of the interest assigned by such Assignment and
Acceptance, have the rights and obligations of a Lender under this Agreement,
and the assigning Lender thereunder shall, to the extent of the interest
assigned by such Assignment and Acceptance, be released from its obligations
under this Agreement (and, in the case of an Assignment and Acceptance covering
all of the assigning Lender's rights and obligations under this Agreement, such
Lender shall cease to be a party hereto but shall continue to be entitled to the
benefits of Sections 2.14, 2.15, 2.16 and 10.03). Any assignment or transfer by
a Lender of rights or obligations under this Agreement that does not comply with
this paragraph shall be treated for purposes of this Agreement as a sale by such
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Lender of a participation in such rights and obligations in accordance with
paragraph (e) of this Section.
(c) Maintenance of Register by Administrative Agent. The
-----------------------------------------------
Administrative Agent, acting for this purpose as an agent of the Borrower, shall
maintain at one of its offices in The City of New York a copy of each Assignment
and Acceptance delivered to it and a register for the recordation of the names
and addresses of the Lenders, and the Commitments of, and principal amount of
the Loans and LC Disbursements owing to, each Lender pursuant to the terms
hereof from time to time (the "Register"). The entries in the Register shall be
--------
conclusive, and the Borrower, the Administrative Agent, the Issuing Lender and
the Lenders may treat each Person whose name is recorded in the Register
pursuant to the terms hereof as a Lender hereunder for all purposes of this
Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by the Borrower, the Issuing Lender and any Lender, at
any reasonable time and from time to time upon reasonable prior notice.
(d) Effectiveness of Assignments. Upon its receipt of a duly
----------------------------
completed Assignment and Acceptance executed by an assigning Lender and an
assignee, the assignee's completed Administrative Questionnaire (unless the
assignee shall already be a Lender hereunder), the processing and recordation
fee referred to in paragraph (b) of this Section and any written consent to such
assignment required by paragraph (b) of this Section, the Administrative Agent
shall accept such Assignment and Acceptance and record the information contained
therein in the Register. No assignment shall be effective for purposes of this
Agreement unless it has been recorded in the Register as provided in this
paragraph.
(e) Participations. Any Lender may, without the consent of the
--------------
Borrower, the Administrative Agent, the Issuing Lender or either Swingline
Lender, sell participations to one or more banks or other entities (a
"Participant") in all or a portion of such Lender's rights and obligations under
- ------------
this Agreement and the other Loan Documents (including all or a portion of its
Commitments and the Loans owing to it); provided that (i) such Lender's
--------
obligations under this Agreement and the other Loan Documents shall remain
unchanged, (ii) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations and (iii) the Borrower, the
Administrative Agent, the Issuing Lender and the other Lenders shall continue
to deal solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement and the other Loan Documents. Any
agreement or instrument pursuant to which a Lender sells such a participation
shall provide that such Lender shall retain the sole right to enforce this
Agreement and the other Loan Documents and to approve any amendment,
modification or waiver of any provision of this Agreement or any other Loan
Document; provided that such agreement or instrument may provide that such
--------
Lender will not, without the consent of the Participant, agree to any amendment,
modification or waiver described in the first proviso to Section 10.02(b) that
affects such Participant. Subject to paragraph (f) of this Section, the
Borrower agrees that each Participant shall be entitled to the benefits of
Sections 2.14, 2.15 and 2.16 to the same extent as if it were a Lender and had
acquired its interest by assignment pursuant to paragraph (b) of this Section.
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(f) Limitations on Rights of Participants. A Participant shall not
-------------------------------------
be entitled to receive any greater payment under Section 2.14 or 2.16 than the
applicable Lender would have been entitled to receive with respect to the
participation sold to such Participant, unless the sale of the participation to
such Participant is made with the Borrower's prior written consent. A
Participant that would be a Foreign Lender if it were a Lender shall not be
entitled to the benefits of Section 2.16 unless the Borrower is notified of the
participation sold to such Participant and such Participant agrees, for the
benefit of the Borrower, to comply with Section 2.16(e) as though it were a
Lender, provided that in no event shall the Borrower be required to pay a
--------
greater sum to such Participant than it would have been required to pay to the
Lender from which such Participant acquired such participation.
(g) Pledges. Any Lender may at any time pledge or assign a security
-------
interest in all or any portion of its rights under this Agreement to secure
obligations of such Lender, including any such pledge or assignment to a Federal
Reserve Bank, and this Section shall not apply to any such pledge or assignment
of a security interest; provided that no such pledge or assignment of a security
--------
interest shall release a Lender from any of its obligations hereunder or
substitute any such assignee for such Lender as a party hereto.
(h) No Assignments to Obligors or Affiliates. Anything in this
----------------------------------------
Section 10.04 to the contrary notwithstanding, no Lender may assign or
participate any interest in any Loan or LC Exposure held by it hereunder to the
Borrower or any of its Affiliates or Subsidiaries without the prior consent of
each Lender.
SECTION 10.05. Survival. All covenants, agreements, representations
--------
and warranties made by the Borrower herein and in the certificates or other
instruments delivered in connection with or pursuant to this Agreement shall be
considered to have been relied upon by the other parties hereto and shall
survive the execution and delivery of this Agreement and the making of any Loans
and issuance of any Letters of Credit, regardless of any investigation made by
any such other party or on its behalf and notwithstanding that the
Administrative Agent, the Issuing Lender or any Lender may have had notice or
knowledge of any Default or incorrect representation or warranty at the time any
credit is extended hereunder, and shall continue in full force and effect so
long as the principal of or any accrued interest on any Loan or any fee or any
other amount payable under this Agreement is outstanding and unpaid or any
Letter of Credit is outstanding and so long as the Commitments have not expired
or terminated. The provisions of Sections 2.14, 2.15, 2.16, 3.03 and 10.03 and
Article IX shall survive and remain in full force and effect regardless of the
consummation of the transactions contemplated hereby, the repayment of the
Loans, the expiration or termination of the Letters of Credit and the
Commitments or the termination of this Agreement or any provision hereof.
SECTION 10.06. Counterparts; Integration; Effectiveness. This
----------------------------------------
Agreement may be executed in counterparts (and by different parties hereto on
different counterparts), each of which shall constitute an original, but all of
which when taken together shall constitute a single contract. This Agreement
and any separate letter agreements with respect to fees payable to the
Administrative Agent constitute the entire contract among the parties
<PAGE>
-100-
relating to the subject matter hereof and supersede any and all previous
agreements and understandings, oral or written, relating to the subject matter
hereof. Except as provided in Section 5.01, this Agreement shall become
effective when it shall have been executed by the Administrative Agent and when
the Administrative Agent shall have received counterparts hereof which, when
taken together, bear the signatures of each of the other parties hereto, and
thereafter shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. Delivery of an executed
counterpart of a signature page of this Agreement by telecopy shall be effective
as delivery of a manually executed counterpart of this Agreement.
SECTION 10.07. Severability. Any provision of this Agreement held to
------------
be invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.
SECTION 10.08. Right of Setoff. If an Event of Default shall have
---------------
occurred and be continuing, each Lender is hereby authorized at any time and
from time to time, to the fullest extent permitted by law, to set off and apply
any and all deposits (general or special, time or demand, provisional or final)
at any time held and other indebtedness at any time owing by such Lender to or
for the credit or the account of any Obligor against any of and all the
obligations of any Obligor now or hereafter existing under this Agreement held
by such Lender, irrespective of whether or not such Lender shall have made any
demand under this Agreement and although such obligations may be unmatured. The
rights of each Lender under this Section are in addition to other rights and
remedies (including other rights of setoff) which such Lender may have.
SECTION 10.09. Governing Law; Jurisdiction; Consent to Service of
--------------------------------------------------
Process.
- -------
(a) This Agreement shall be construed in accordance with and governed
by the law of the State of New York.
(b) Each Obligor hereby irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of the Supreme Court
of the State of New York sitting in New York County and of the United States
District Court of the Southern District of New York, and any appellate court
from any thereof, in any action or proceeding arising out of or relating to this
Agreement, or for recognition or enforcement of any judgment, and each of the
parties hereto hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in such New
York State or, to the extent permitted by law, in such Federal court. Each of
the parties hereto agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. Nothing in this Agreement
shall affect any right that the Administrative Agent, the Issuing Lender or
<PAGE>
-101-
any Lender may otherwise have to bring any action or proceeding relating to this
Agreement against any Obligor or its properties in the courts of any
jurisdiction.
(c) Each Obligor hereby irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection which it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement in any court referred to
in paragraph (b) of this Section. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.
(d) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 10.01. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
SECTION 10.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
--------------------
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER
BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
SECTION 10.11. Headings. Article and Section headings and the Table
--------
of Contents used herein are for convenience of reference only, are not part of
this Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
SECTION 10.12. Treatment of Certain Information; Confidentiality.
-------------------------------------------------
(a) Treatment of Certain Information. The Borrower acknowledges that
--------------------------------
from time to time financial advisory, investment banking and other services may
be offered or provided to the Borrower or one or more of its Subsidiaries (in
connection with this Agreement or otherwise) by any Lender or by one or more
subsidiaries or affiliates of such Lender and the Borrower hereby authorizes
each Lender to share any information delivered to such Lender by the Borrower
and its Subsidiaries pursuant to this Agreement, or in connection with the
decision of such Lender to enter into this Agreement, to any such subsidiary or
affiliate for the purpose of using the same in connection with such services.
<PAGE>
-102-
(b) Confidentiality. Each of the Administrative Agent, the Issuing
---------------
Lender and the Lenders agrees to maintain the confidentiality of the Information
(as defined below), except that Information may be disclosed (a) to its and its
Affiliates' directors, officers, employees and agents, including accountants,
legal counsel and other advisors (it being understood that the Persons to whom
such disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential), (b) to the
extent requested by any regulatory authority, (c) to the extent required by
applicable laws or regulations or by any subpoena or similar legal process, (d)
to any other party to this Agreement, (e) in connection with the exercise of any
remedies hereunder or under any other Loan Document or any suit, action or
proceeding relating to this Agreement or any other Loan Document or the
enforcement of rights hereunder or thereunder, (f) subject to an agreement
containing provisions substantially the same as those of this Section, to any
assignee of or Participant in, or any prospective assignee of or Participant in,
any of its rights or obligations under this Agreement, (g) with the consent of
the Borrower or (h) to the extent such Information (i) becomes publicly
available other than as a result of a breach of this Section or (ii) becomes
available to the Administrative Agent, the Issuing Lender or any Lender on a
nonconfidential basis from a source other than an Obligor. For the purposes of
this Section, "Information" means all information received from any Obligor
-----------
relating to any Obligor or its business, other than any such information that is
available to the Administrative Agent, the Issuing Lender or any Lender on a
nonconfidential basis prior to disclosure by an Obligor; provided that, in the
--------
case of information received from an Obligor after the date hereof, such
information is clearly identified at the time of delivery as confidential.
Unless specifically prohibited by applicable law or court order, each Lender and
the Administrative Agent shall, prior to disclosure thereof, notify the Borrower
of any request for disclosure of any such non-public information (A) by any
governmental agency or representative thereof (other than any such request in
connection with an examination of the financial condition of such Lender by such
governmental agency) or (B) pursuant to legal process (including agency
subpoenas). Any Person required to maintain the confidentiality of Information
as provided in this Section shall be considered to have complied with its
obligation to do so if such Person has exercised the same degree of care to
maintain the confidentiality of such Information as such Person would accord to
its own confidential information.
<PAGE>
-103-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
ARGYLE TELEVISION, INC. (to be
renamed HEARST-ARGYLE TELEVISION, INC.,
following the Merger Transactions referred to
herein)
By /s/ Harry T. Hawks
----------------------------------------
Name: Harry T. Hawks
Title: Chief Financial Officer,
Assistant Secretary & Treasurer
SUBSIDIARY GUARANTORS
---------------------
ARKANSAS ARGYLE TELEVISION, INC. (to be
renamed ARKANSAS HEARST-ARGYLE TELEVISION, INC.,
following the Merger Transactions referred to
herein)
By /s/ Harry T. Hawks
----------------------------------------
Name: Harry T. Hawks
Title: Chief Financial Officer,
Assistant Secretary & Treasurer
<PAGE>
-104-
HAWAII ARGYLE TELEVISION, INC. (to be
renamed HAWAII HEARST-ARGYLE
TELEVISION, INC., following the Merger
Transactions referred to herein)
By /s/ Harry T. Hawks
----------------------------------------
Name: Harry T. Hawks
Title: Chief Financial Officer,
Assistant Secretary & Treasurer
JACKSON ARGYLE TELEVISION, INC. (to be
renamed JACKSON HEARST-ARGYLE
TELEVISION, INC., following the Merger
Transactions referred to herein)
By /s/ Harry T. Hawks
----------------------------------------
Name: Harry T. Hawks
Title: Chief Financial Officer,
Assistant Secretary & Treasurer
<PAGE>
-105-
OHIO/OKLAHOMA ARGYLE TELEVISION, INC.
(to be renamed OHIO/OKLAHOMA
HEARST-ARGYLE TELEVISION, INC.,
following the Merger Transactions
referred to herein)
By /s/ Harry T. Hawks
----------------------------------------
Name: Harry T. Hawks
Title: Chief Financial Officer,
Assistant Secretary & Treasurer
HEARST-ARGYLE STATIONS, INC
By /s/ Harry T. Hawks
----------------------------------------
Name: Harry T. Hawks
Title: Chief Financial Officer,
Assistant Secretary & Treasurer
WAPT ARGYLE TELEVISION, INC.
(to be renamed WAPT
HEARST-ARGYLE TELEVISION, INC.,
following the Merger Transactions
referred to herein)
By /s/ Harry T. Hawks
----------------------------------------
Name: Harry T. Hawks
Title: Chief Financial Officer,
Assistant Secretary & Treasurer
KITV ARGYLE TELEVISION, INC.
(to be renamed KITV
HEARST-ARGYLE TELEVISION, INC.,
following the Merger Transactions
referred to herein)
By /s/ Harry T. Hawks
----------------------------------------
Name: Harry T. Hawks
Title: Chief Financial Officer,
Assistant Secretary & Treasurer
<PAGE>
-106-
KHBS ARGYLE TELEVISION, INC.
(to be renamed KHBS
HEARST-ARGYLE TELEVISION, INC.,
following the Merger Transactions
referred to herein)
By /s/ Harry T. Hawks
----------------------------------------
Name: Harry T. Hawks
Title: Chief Financial Officer,
Assistant Secretary & Treasurer
KMBC HEARST-ARGYLE TELEVISION, INC
By /s/ Harry T. Hawks
----------------------------------------
Name: Harry T. Hawks
Title: Chief Financial Officer,
Assistant Secretary & Treasurer
WBAL HEARST-ARGYLE TELEVISION, INC
By /s/ Harry T. Hawks
----------------------------------------
Name: Harry T. Hawks
Title: Chief Financial Officer,
Assistant Secretary & Treasurer
WCVB HEARST-ARGYLE TELEVISION, INC
By /s/ Harry T. Hawks
----------------------------------------
Name: Harry T. Hawks
Title: Chief Financial Officer,
Assistant Secretary & Treasurer
<PAGE>
-107-
WISN HEARST-ARGYLE TELEVISION, INC
By /s/ Harry T. Hawks
----------------------------------------
Name: Harry T. Hawks
Title: Chief Financial Officer,
Assistant Secretary & Treasurer
WTAE HEARST-ARGYLE TELEVISION, INC
By /s/ Harry T. Hawks
----------------------------------------
Name: Harry T. Hawks
Title: Chief Financial Officer,
Assistant Secretary & Treasurer
<PAGE>
-108-
LENDERS
-------
THE CHASE MANHATTAN BANK,
individually, as Swingline Lender and as
Administrative Agent
By /s/ Mitchell J. Gervis
----------------------------------------
Name: Mitchell J. Gervis
Title: Vice President
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, individually, as Swingline Lender
and as Documentation Agent
By /s/ Adam J. Silver
----------------------------------------
Name: Adam J. Silver
Title: Associate
BANK OF MONTREAL
By: /s/ W. T. Calder
---------------------------------------
Name: W. T. Calder
Title: Director, Head of Financing
THE BANK OF NEW YORK
By: /s/ Brendan T. Nedzi
---------------------------------------
Name: Brendan T. Nedzi
Title: Senior Vice President
BANQUE PARIBAS
By: /s/ Lynne S. Randall
---------------------------------------
Name: Lynne S. Randall
Title: Director
By: /s/ Salo Aizenberg
---------------------------------------
Name: Salo Aizenberg
Title: Vice President
<PAGE>
-109-
TORONTO DOMINION (TEXAS), INC.
By: /s/ Frederic Hawley
--------------------------------------
Name: Frederic Hawley
Title: Vice President
UNION BANK OF CALIFORNIA, N.A.
By: /s/ Sonia L. Isaacs
--------------------------------------
Name: Sonia L. Isaacs
Title: Vice President
CAISSE NATIONALE DE CREDIT
AGRICOLE
By: /s/ R. Craig Welch
--------------------------------------
Name: R. Craig Welch
Title: First Vice President
THE DAI-ICHI KANGYO BANK, LTD.
By: /s/ Frank A. Bertelle
--------------------------------------
Name: Frank A. Bertelle
Title: Assistant Vice President
WACHOVIA BANK, N.A.
By: /s/ John A. Robertson
--------------------------------------
Name: John A. Robertson
Title: Senior Vice President
<PAGE>
-110-
THE BANK OF NOVA SCOTIA
By: /s/ Margot C. Bright
---------------------------------------
Name: Margot C. Bright
Title: Authorized Signatory
FIRST HAWAIIAN BANK
By: /s/ Bruce E. Helberg
---------------------------------------
Name: Bruce E. Helberg
Title: Assistant Vice President
THE MITSUBISHI TRUST AND
BANKING CORPORATION
By: /s/ Toshihiro Hayashi
---------------------------------------
Name: Toshihiro Hayashi
Title: Senior Vice President
THE SANWA BANK LIMITED
By: /s/ Paul Judicke
---------------------------------------
Name: Paul Judicke
Title: Vice President
SUNTRUST BANK, CENTRAL FLORIDA,
N.A.
By: /s/ Janet P. Sammons
---------------------------------------
Name: Janet P. Sammons
Title: Vice President
<PAGE>
-111-
THE TOYO TRUST & BANKING COMPANY,
LTD.
By: /s/ T. Mikumo
------------------------------
Name: T. Mikumo
Title: Vice President
MICHIGAN NATIONAL BANK
By: /s/ Stephane E. Lubin
------------------------------
Name: Stephane E. Lubin
Title: Relationship Manager
<PAGE>
SCHEDULE I
Commitments
[See definitions of "Lenders" and "Revolving
Commitment" in Section 1.01]
Revolving Commitment Lenders
- -------------------- -------
$180,000,000.00 The Chase Manhattan Bank
$145,000,000.00 Morgan Guaranty Trust Company of New York
$ 75,000,000.00 Bank of Montreal
$ 75,000,000.00 The Bank of New York
$ 75,000,000.00 Banque Paribas
$ 75,000,000.00 Toronto Dominion (Texas), Inc.
$ 75,000,000.00 Union Bank of California, N.A.
$ 50,000,000.00 Caisse Nationale de Credit Agricole
$ 50,000,000.00 The Dai-Ichi Kangyo Bank, Ltd.
$ 50,000,000.00 Wachovia Bank, N.A.
$ 25,000,000.00 The Bank of Nova Scotia
$ 25,000,000.00 First Hawaiian Bank
$ 25,000,000.00 The Mitsubishi Trust and Banking Corporation
$ 25,000,000.00 The Sanwa Bank Limited
$ 25,000,000.00 SunTrust Bank, Central Florida, N.A.
$ 15,000,000.00 The Toyo Trust & Banking Company, Ltd.
$ 10,000,000.00 Michigan National Bank
Schedule I to Credit Agreement
------------------------------
<PAGE>
SCHEDULE II
Material Agreements and Liens with Respect to Indebtedness
----------------------------------------------------------
[See Section 4.13, Section 5.01(f),
Section 7.01(b) and Section 7.02(b)]
Part A - Material Agreements
-------------------
<TABLE>
<CAPTION>
DESCRIPTION AGGREGATE PRINCIPAL
----------- AMOUNT OUTSTANDING
-----------------------
<S> <C>
Amended and Restated Credit Agreement dated as of June 13, 1995 between Maximum principal
the Borrower, each of the subsidiaries of the Borrower named therein (the amount of $215,000,000
"Existing Loan Subsidiaries"), the lenders named therein, The Chase Manhattan of which $48,000,000
Bank (successor to The Chase Manhattan Bank (National Association)) as was outstanding as of
administrative agent for said lenders, and Bank of Montreal, Banque Paribas 8/25/97
and Union Bank as co-agents (as modified, amended and restated and (To be paid in full
supplemented and in effect on the Effective Date) (the "Existing Credit on the Effective Date)
---------------
Agreement").
- ----------
Indenture dated as of October 27, 1995, as supplemented, between the $150,000,000
- ---------
Borrower and the United States Trust Company of New York, as trustee,
pursuant to which the Borrower issued its 9 3/4% Senior Subordinated Notes
due 2005.
Condominium Purchase Agreement entered into in February 1996 between the $ 7,414,400
- ------------------------------
Borrower and an affiliate of The Meyers Corporation ("Meyers") for the
------
purchase of space in a project being developed by Meyers. This space is to
become the new facility for the Borrower's KITV-TV. Under the
Condominium Purchase Agreement, the Borrower is obligated to make
payments to Meyers totaling $9,268,000, $7,414,400 of which will become
payable at closing under the Condominium Purchase Agreement. In connection
with this project, the Borrower has also entered into certain other agreements
for the finish-out and equipment of this facility, obligating the Borrower to
expend approximately an additional $1,400,000, which amount will be paid
during the fourth quarter of 1997 and the first two quarters of 1998.
Assignment, Assumption and Modification Agreement dated as of August 29, $275,000,000
- -------------------------------------------------
1997 among Hearst, the Borrower, Metropolitan Life Insurance Company
("MetLife") and The Prudential Insurance Company of America ("Prudential")
pursuant to which the Borrower has (i) entered into the Amended and Restated
Note Purchase Agreement, dated as of August 29, 1997 (the "Note Purchase
-------------
Agreement"), among the Borrower, MetLife and Prudential, and (ii) executed
- ---------
the 7.87% Series A Senior Note due 2001, the 8.01% Series B Senior Notes
due 2002 and the 8.04% Series C Senior Note due 2003 issued pursuant to the
Note Purchase Agreement.
Demand Promissory Note dated as of August 29, 1997 made by HAT
- ---------------------- 200,000,000
Contribution Sub, Inc. and payable to the order of The Chase Manhattan Bank, (To be paid in full
which was assumed by the Borrower pursuant to the assumption provision set on the Effective Date)
forth therein.
</TABLE>
Schedule II to Credit Agreement
-------------------------------
<PAGE>
-2-
Part B - Liens
-----
Although substantially all of the assets of the Borrower and the Existing
Loan Subsidiaries were pledged or mortgaged as collateral under the Existing
Credit Agreement, all of such liens and security interests are intended to be
released on the Effective Date.
The Bridge Debt will be secured by the cash proceeds thereof; the
security interest will be released upon repayment of the Bridge Debt on the
Effective Date.
Schedule II to Credit Agreement
-------------------------------
<PAGE>
SCHEDULE III
Litigation and Environmental Matters
------------------------------------
[See definition of "Disclosed Matters" in Section 1.01]
Litigation
- ----------
None.
Environmental Matters
- ---------------------
None.
Schedule III to Credit Agreement
--------------------------------
<PAGE>
SCHEDULE IV
Subsidiaries and Investments
----------------------------
[See Section 4.15 and 7.05]
Part A - Subsidiaries
------------
Subsidiary State of Incorporation
---------- ----------------------
Arkansas Hearst-Argyle Television, Inc. Delaware
Hawaii Hearst-Argyle Television, Inc. Delaware
Jackson Hearst-Argyle Television, Inc. Delaware
Ohio/Oklahoma Hearst-Argyle Television, Inc. Nevada
Hearst-Argyle Stations, Inc. Nevada
WAPT Hearst-Argyle Television, Inc. Nevada
KITV Hearst-Argyle Television, Inc. Nevada
KHBS Hearst-Argyle Television, Inc. Nevada
KMBC Hearst-Argyle Television, Inc. Nevada
WBAL Hearst-Argyle Television, Inc. Nevada
WCVB Hearst-Argyle Television, Inc. Nevada
WISN Hearst-Argyle Television, Inc. Nevada
WTAE Hearst-Argyle Television, Inc. Nevada
Part B - Investments
-----------
Holder of Investment Nature of Investment
-------------------- --------------------
Argyle Television, Inc. An investment in common stock of Affiliated
Enterprises, Inc., a corporation sponsored by
America Broadcasting Company, Inc. ("ABC") and
of which all stockholders are ABC affiliates.
Affiliated Enterprises, Inc. is investigating
new broadcast technologies.
KHBS Argyle Television, Forty-nine percent (49%) of the issued and
Inc. outstanding common stock of Harrison Television,
Inc., which is an applicant for a FCC license to
broadcast in the Harrison, Arkansas area.
Schedule IV to Credit Agreement
-------------------------------
<PAGE>
SCHEDULE V
Station Licenses
----------------
[See Section 4.16 and Section 5.01(g)]
KMBC HEARST-ARGYLE TELEVISION, INC.
Call Sign Type
--------- ----
KMBC Main
WHY-779 TV auxiliary
WHY-780 TV auxiliary
WHY-781 TV auxiliary
WCD-733 TV auxiliary
WCD-734 TV auxiliary
KZ-2685 Remote Pickup
KZ-2686 Remote Pickup
KZ-2687 Remote Pickup
KC-5476 Remote Pickup
KEH-381 Remote Pickup
KPE-669 Remote Pickup
KCI-998 Remote Pickup
WBAL HEARST-ARGYLE TELEVISION, INC.
Call Sign Type
--------- ----
WBAL-TV Main
WZB-677 TV auxiliary
WZB-678 TV auxiliary
WZB-679 TV auxiliary
KEH-561 Remote Pickup
KZH-878 Remote Pickup
KA88745 TV auxiliary
KB55004 TV auxiliary
KW4042 TV auxiliary
KR9984 TV auxiliary
KB96899 Remote Pickup
KZH-895 Remote Pickup
WLI-958 TV auxiliary
KA-21745 TV auxiliary
WLP-530 Relay
KPH-217 Relay
KPH-218 Relay
KB-96899 Remote Pickup
Schedule V to Credit Agreement
------------------------------
<PAGE>
-2-
WCVB HEARST-ARGYLE TELEVISION, INC.
Call Sign Type
--------- ----
WCVB Main
800909MK TV auxiliary
BLQ-304 TV auxiliary
KR-4778 Remote Pickup
KR-5551 Remote Pickup
KR-5550 Remote Pickup
BLP00720 TV auxiliary
BLQ-337 TV auxiliary
KPE-562 Remote Pickup
KTE-753 TV auxiliary
KYY-288 Remote Pickup
KPF-325 Remote Pickup
KKN-760 Remote Pickup
KTE-752 Remote Pickup
KO-5245 TV auxiliary
KQ-4638 TV auxiliary
KR-5541 TV auxiliary
KS-2476 TV auxiliary
KV-4915 TV auxiliary
BLP-01087 TV auxiliary
BLQ-790227ME TV auxiliary
KA-2007 TV auxiliary
KA-2008 TV auxiliary
KA-40608 TV auxiliary
KA-40534 TV auxiliary
KA-95344 TV auxiliary
KA-95345 TV auxiliary
KA-95346 TV auxiliary
KB-55987 TV auxiliary
KB-1749 TV auxiliary
KC-4973 TV auxiliary
KC-4977 TV auxiliary
WLD-65 TV auxiliary
KR-9742 TV auxiliary
KV-3059 TV auxiliary
WHY-437 TV auxiliary
WHS-688 TV auxiliary
WLD-702 TV auxiliary
Schedule V to Credit Agreement
------------------------------
<PAGE>
-3-
WHS-687 TV auxiliary
KA-2009 TV auxiliary
WHB-262 TV auxiliary
WHS-374 TV auxiliary
WCG-783 TV auxiliary
K5-5551 TV auxiliary
KV-3061 TV auxiliary
WHB-263 TV auxiliary
WHB-264 TV auxiliary
WHS-238 TV auxiliary
WHS-686 TV auxiliary
WIL75 TV auxiliary
WDD690 TV auxiliary
KY5603 TV auxiliary
KA-88791 TV auxiliary
KA-88793 TV auxiliary
KA-88792 TV auxiliary
WLE-632 TV auxiliary
WTAE HEARST-ARGYLE TELEVISION, INC.
Call Sign Type
--------- ----
WTAE-TV Main
KZH-868 (BMLRE-830418MH) TV auxiliary
KZH-868 (BPLRE-830418MH) TV auxiliary
KZH-868 (BMLRE-841017MM) Remote Pickup
KZH-868 (BPLRE-860919MG) TV auxiliary
KPE-651 Remote Pickup
KE-5822 Remote Pickup
KA-74922 TV auxiliary
WBG-587 TV auxiliary
KGL-96 TV auxiliary
KW-4093 TV auxiliary
KA-74908 TV auxiliary
WHY-881 TV auxiliary
KW-4094 TV auxiliary
KE-5824 TV auxiliary
KA88617 Remote Pickup
KJH322 Remote Pickup
KPM417 Remote Pickup
KWU56 Remote Pickup
Schedule V to Credit Agreement
------------------------------
<PAGE>
-4-
WZB718 Remote Pickup
WZB719 Remote Pickup
BMLQ-790117MD Wireless microphone
BLNQ-850122ND Wireless microphone
BLQ-791017MG Wireless microphone
WMW-748 TV auxiliary
WISN HEARST-ARGYLE TELEVISION, INC.
Call Sign Type
--------- ----
WISN-TV Main
WPW28 Relay
KA-46987 Remote Pickup
KPJ-265 Remote Pickup
KZH-839 Remote Pickup
KE-5738 TV auxiliary
KA-88867 TV auxiliary
KU-3779 TV auxiliary
WJJ-70 TV auxiliary
KX-3707 TV auxiliary
KX-3708 TV auxiliary
KX-3709 TV auxiliary
WHQ-248 TV auxiliary
WHY-410 TV auxiliary
WHY-801 TV auxiliary
WBM-684 TV auxiliary
KB-97047 Remote Pickup
KSF-759 Remote Pickup
KKR-988 TV auxiliary
BLP-00445 TV auxiliary
BLO-790213MA TV auxiliary
BLQ-811015MG TV auxiliary
900902MF TV auxiliary
KC-3749 TV auxiliary
KX-7958 Remote Pickup
KC-5437 Remote Pickup
WNTL959 TV auxiliary
WNTL958 TV auxiliary
WNTL957 TV auxiliary
WLE-489 TV auxiliary
WLE-490 TV auxiliary
Schedule V to Credit Agreement
------------------------------
<PAGE>
-5-
WLE-491 TV auxiliary
WLE-493 TV auxiliary
KA-88900 TV auxiliary
WNAC HEARST-ARGYLE TELEVISION, INC.
Call Sign Type
--------- ----
WDTN Main
WGZ-599 TV auxiliary
WLJ-325 TV auxiliary
WGZ-598 TV auxiliary
KUQ-43 TV auxiliary
BMPCT-7687 TV auxiliary
KK-2350 TV auxiliary
WZB-758 Remote Pickup
KVX-642 Remote Pickup
KQ-5598 TV auxiliary
KB-55261 TV auxiliary
KB-96270 TV auxiliary
KS-3413 Remote Pickup
BLP-00444 TV auxiliary
KA-2336 TV auxiliary
WMV-770 TV auxiliary
KC-26174 TV auxiliary
KR7807 TV auxiliary
KUQ43 TV auxiliary
KS2929 Remote Pickup
KITV ARGYLE TELEVISION, INC.
Parent Call Aux. Call Sign Expiration Date
- ----------- -------------- ---------------
HONOLULU, HI.
KITV(TV) KB-55352 2-1-99
WBS-406 2-1-99
WDT-808 2-1-99
KA-35132 2-1-99
WDT-805 2-1-99
Schedule V to Credit Agreement
------------------------------
<PAGE>
-6-
WAILUKU, HI.
KMUA(TV) WFW-614 2-1-99
WFW-615 2-1-99
WFW-616 2-1-99
WGR-808 2-1-99
HILO, HI.
KHVO(TV) WCX-441 2-1-99
WMV-612 2-1-99
LIHUE, HI.
K51BB TV Translator 2-1-99
WNAC ARGYLE
TELEVISION, INC.
Parent Call Aux. Call Sign Expiration Date
- ----------- -------------- ----------------
WNAC(TV), Providence, RI 4-1-99
WAPT ARGYLE
TELEVISION, INC.
Parent Call Aux. Call Sign Expiration Date
-------------- ---------------
WAPT(TV), Jackson, MS KE-5839 6-1-2005
KSP-357 6-1-2005
KE-5843 6-1-2005
KP-2585 6-1-2005
KW-4092 6-1-2005
Schedule V to Credit Agreement
------------------------------
<PAGE>
-7-
OHIO/OKLAHOMA
ARGYLE TELEVISION, INC.
Parent Call Aux. Call Sign Expiration Date
- ----------- ------------------ ---------------
WLWT(TV), Cincinnati, OH BLP01076 10-1-97
KPI-932 10-1-97
KPI-936 10-1-97
KZ-2688 10-1-97
KC-23102 10-1-97
KC-23103 10-1-97
WHY-329 10-1-97
WHY-414 10-1-97
WHY-426 10-1-97
KA088625 10-1-97
WGR-884 10-1-97
WHB-737 10-1-97
WHB-738 10-1-97
WHB-739 10-1-97
KA-88634 10-1-97
KE-5896 10-1-97
WHY-386 10-1-97
WHY-429 10-1-97
BLP-99816 10-1-97
BLP-00816 10-1-97
KA-99625 10-1-97
KY-5514 10-1-97
WCT-99625 10-1-97
Schedule V to Credit Agreement
------------------------------
<PAGE>
-8-
OHIO/OKLAHOMA
TELEVISION, INC.
Parent Call Aux. Call Sign Expiration Date
- ----------- -------------- ---------------
KOCO(TV), Oklahoma City, BLP-01173 6-1-98
OK KPH-911 6-1-98
KPM-665 6-1-98
KQA-844 6-1-98
WHS-330 6-1-98
WMV-350 6-1-98
KLW-30 6-1-98
WBG-574 6-1-98
KA-26191 6-1-98
KW-4040 6-1-98
KQ-5617 6-1-98
WLL-550 6-1-98
BLP-00700 6-1-98
KGJ-813 6-1-98
KW-4041 6-1-98
KHBS ARGYLE TELEVISION, INC.
Parent Call Aux. Call Sign Expiration Date
- ----------- -------------- ---------------
KHBS(TV), Fort Smith, AR KC-27615 6-1-2005
KPM-413 6-1-2005
KPM-449 6-1-2005
KP3-985 6-1-2005
KPE-951 6-1-2005
KPM-450 6-1-2005
WHY-481 6-1-2005
WCQ-534 6-1-2005
WGM-90 6-1-2005
WMU-661 6-1-2005
KPM-451 6-1-2005
KPE-950 6-1-2005
WCQ-532 6-1-2005
KPM-445 6-1-2005
Schedule V to Credit Agreement
------------------------------
<PAGE>
-9-
KHOG(TV), Fayetteville, AR KC-2616 6-1-2005
KPK-543 6-1-2005
WFD-538 6-1-2005
KPM-403 6-1-2005
KPM-404 6-1-2005
KPM-405 6-1-2005
KA-88647 6-1-2005
WCQ-536 6-1-2005
WFD-536 6-1-2005
WFD-537 6-1-2005
WFD-579 6-1-2005
WFD-580 6-1-2005
KC-26096 6-1-2005
WMU-414 6-1-2005
KHB-68 6-1-2005
WCT-536 6-1-2005
WCT-657 6-1-2005
Schedule V to Credit Agreement
------------------------------
<PAGE>
SCHEDULE VI
Certain Equity Rights
---------------------
[See Section 4.14]
Neither the Borrower nor any of its subsidiaries shall repurchase any
outstanding shares of Series A Preferred Stock, $.01 par value per share, of the
Borrower (the "Series A Preferred Stock") unless the Borrower on the same terms
either (i) offers to purchase all of the then outstanding shares of Series A
Preferred Stock or (ii) offers to purchase shares of Series A Preferred Stock
from the holders in proportion to the respective number of shares of Series A
Preferred Stock held by each holder.
Neither the Borrower nor any of its subsidiaries shall repurchase any
outstanding shares of Series B Preferred Stock, $.01 par value per share, of the
Borrower (the "Series B Preferred Stock") unless the Borrower on the same terms
either (i) offers to purchase all of the then outstanding shares of Series B
Preferred Stock or (ii) offers to purchase shares of Series B Preferred Stock
from the holders in proportion to the respective number of shares of Series B
Preferred Stock held by each holder.
Schedule VI to Credit Agreement
-------------------------------
<PAGE>
EXHIBIT A
[Form of Assignment and Acceptance]
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Credit Agreement dated as of August 29, 1997
(as amended and in effect on the date hereof, the "Credit Agreement"), between
----------------
Argyle Television, Inc. (to be renamed Hearst-Argyle Television Inc. following
the Merger Transactions therein referred to), the Lenders named therein and The
Chase Manhattan Bank, as Administrative Agent for the Lenders. Terms defined in
the Credit Agreement are used herein with the same meanings.
The Assignor named on the reverse hereof hereby sells and assigns,
without recourse, to the Assignee named on the reverse hereof, and the Assignee
hereby purchases and assumes, without recourse, from the Assignor, effective as
of the Assignment Date set forth on the reverse hereof, the interests set forth
on the reverse hereof (the "Assigned Interest") in the Assignor's rights and
-----------------
obligations under the Credit Agreement, including the interests set forth on the
reverse hereof in the Commitment of the Assignor on the Assignment Date and
Loans owing to the Assignor which are outstanding on the Assignment Date,
together with unpaid interest accrued on the assigned Loans to the Assignment
Date, the participations in Letters of Credit, LC Disbursements and Swingline
Loans held by the Assignor on the Assignment Date, and the amount, if any, set
forth on the reverse hereof of the fees accrued to the Assignment Date for the
account of the Assignor. The Assignee hereby acknowledges receipt of a copy of
the Credit Agreement. From and after the Assignment Date (i) the Assignee shall
be a party to and be bound by the provisions of the Credit Agreement and, to the
extent of the interests assigned by this Assignment and Acceptance, have the
rights and obligations of a Lender thereunder and (ii) the Assignor shall, to
the extent of the interests assigned by this Assignment and Acceptance,
relinquish its rights and be released from its obligations under the Credit
Agreement.
This Assignment and Acceptance is being delivered to the
Administrative Agent together with (i) if the Assignee is a Foreign Lender, any
documentation required to be delivered by the Assignee pursuant to Section
2.16(e) of the Credit Agreement, duly completed and executed by the Assignee,
and (ii) if the Assignee is not already a Lender under the Credit Agreement, an
Administrative Questionnaire in the form supplied by the Administrative Agent,
duly completed by the Assignee. The [Assignee/Assignor] shall pay the fee
payable to the Administrative Agent pursuant to Section 10.04(b) of the Credit
Agreement.
This Assignment and Acceptance shall be governed by and construed in
accordance with the laws of the State of New York.
Assignment and Acceptance
-------------------------
<PAGE>
-2-
Date of Assignment:
Legal Name of Assignor:
Legal Name of Assignee:
Assignee's Address for Notices:
Effective Date of Assignment
("Assignment Date")/1/:
---------------
Percentage Assigned of
Facility/Commitment
(set forth, to at
least 8 decimals, as a
percentage of the
Facility and the
aggregate Commitments
Principal Amount of all Lenders
Facility Assigned thereunder
- -------- -------- ----------------
Commitment Assigned: $ %
Loans:
Fees Assigned (if any):
The terms set forth above and on the reverse side hereof are hereby agreed to:
[Name of Assignor] , as Assignor
------------------------
By:
----------------------------------
Name:
Title:
[Name of Assignee] , as Assignee
------------------------
By:
----------------------------------
Name:
Title:
- -----------------------
/1/ Must be at least five Business Days after execution hereof by all required
parties.
Assignment and Acceptance
-------------------------
<PAGE>
-3-
The undersigned hereby consent to the within assignment:/2/
HEARST-ARGYLE TELEVISION, INC.
By:
--------------------------
Name:
Title:
THE CHASE MANHATTAN BANK,
as Administrative Agent and
Swingline Lender
By:
--------------------------
Name:
Title:
[NAME OF ISSUING LENDER]
By:
--------------------------
Name:
Title:
[NAME OF SWINGLINE LENDER]
By:
--------------------------
Name:
Title:
/2/ Consents to be included to the extent required by Section 10.04(b) of the
Credit Agreement.
Assignment and Acceptance
-------------------------
<PAGE>
EXHIBIT B
[Form of Guarantee Assumption Agreement]
GUARANTEE ASSUMPTION AGREEMENT
GUARANTEE ASSUMPTION AGREEMENT dated as of ________ __, ____ by [NAME
OF ADDITIONAL SUBSIDIARY GUARANTOR], a ________ corporation (the "Additional
----------
Subsidiary Guarantor"), in favor of The Chase Manhattan Bank, as administrative
- --------------------
agent for the lenders or other financial institutions or entities party as
"Lenders" to the Credit Agreement referred to below (in such capacity, together
with its successors in such capacity, the "Administrative Agent").
--------------------
Argyle Television, Inc. (to be renamed Hearst-Argyle Television Inc.
following the Merger Transactions therein referred to), a Delaware corporation,
the Subsidiary Guarantors referred to therein and the Administrative Agent are
parties to a Credit Agreement dated as of August 29, 1997 (as modified and
supplemented and in effect from time to time, the "Credit Agreement").
----------------
Pursuant to Section 6.09(c) of the Credit Agreement, the Additional
Subsidiary Guarantor hereby agrees to become a "Subsidiary Guarantor" for all
purposes of the Credit Agreement. Without limiting the foregoing, the
Additional Subsidiary Guarantor hereby, jointly and severally with the other
Subsidiary Guarantors, guarantees to each Lender and the Administrative Agent
and their respective successors and assigns the prompt payment in full when due
(whether at stated maturity, by acceleration or otherwise) of all Guaranteed
Obligations (as defined in Section 3.01 of the Credit Agreement) in the same
manner and to the same extent as is provided in Article III of the Credit
Agreement. In addition, the Additional Subsidiary Guarantor hereby makes the
representations and warranties set forth in Sections 4.01, 4.02 and 4.03 of the
Credit Agreement with respect to itself and its obligations under this
Agreement, as if each reference in such Sections to the Basic Documents included
reference to this Agreement.
Guarantee Assumption Agreement
------------------------------
<PAGE>
-2-
IN WITNESS WHEREOF, the Additional Subsidiary Guarantor has caused
this Guarantee Assumption Agreement to be duly executed and delivered as of the
day and year first above written.
[NAME OF ADDITIONAL SUBSIDIARY
GUARANTOR]
By
-------------------------------
Title:
Accepted and agreed:
THE CHASE MANHATTAN BANK,
as Administrative Agent
By
----------------------------
Title:
Guarantee Assumption Agreement
------------------------------
<PAGE>
EXHIBIT C
[Form of Opinion of Counsel to the Obligors]
__________, 199__
To the Lenders party to the Credit Agreement referred to below and The Chase
Manhattan Bank, as Administrative Agent
Ladies and Gentlemen:
We have acted as counsel to Argyle Television (to be renamed Hearst-
Argyle Television Inc. following the Merger Transactions therein referred to),
Inc. (the "Borrower"), and its subsidiaries and affiliates, in connection with
--------
the Credit Agreement (the "Credit Agreement") dated as of August 29, 1997,
----------------
between the Borrower, the Subsidiary Guarantors party thereto, the lenders party
thereto and The Chase Manhattan Bank, as Administrative Agent, providing for
extensions of credit to be made by said lenders to the Borrower in an aggregate
principal or face amount not exceeding $***. Except as otherwise provided
herein, terms defined in the Credit Agreement are used herein as defined
therein. This opinion letter is being delivered pursuant to Section 5.01(b)(i)
of the Credit Agreement.
In rendering the opinions expressed below, we have examined the
following agreements, instruments and other documents:
(a) the Credit Agreement; and
(b) such records of the Obligors and such other documents as we have
deemed necessary as a basis for the opinions expressed below.
The Borrower and its Subsidiaries and affiliates party to the Credit Agreement
are herein collectively referred to as the "Obligors".
--------
In our examination, we have assumed the genuineness of all signatures,
the authenticity of all documents submitted to us as originals and the
conformity with authentic original documents of all documents submitted to us as
copies. When relevant facts were not independently established, we have relied
upon statements of governmental officials and upon representations made in or
pursuant to the Credit Agreement and certificates of appropriate representatives
of the Obligors.
In rendering the opinions expressed below, we have assumed, with
respect to all of the documents referred to in this opinion letter, that
(except, to the extent set forth in the opinions expressed below, as to the
Obligors):
Opinion of Counsel to the Obligors
----------------------------------
<PAGE>
-2-
(i) such documents have been duly authorized by, have been duly
executed and delivered by, and constitute legal, valid, binding
and enforceable obligations of, all of the parties to such
documents;
(ii) all signatories to such documents have been duly authorized; and
(iii) all of the parties to such documents are duly organized and
validly existing and have the power and authority (corporate or
other) to execute, deliver and perform such documents.
Based upon and subject to the foregoing and subject also to the
comments and qualifications set forth below, and having considered such
questions of law as we have deemed necessary as a basis for the opinions
expressed below, we are of the opinion that:
1. The Borrower is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware. Each Subsidiary
of the Borrower is a corporation duly organized, validly existing and in
good standing under the laws of the respective state indicated opposite its
name in Schedule V to the Credit Agreement. Each of the Borrower and its
Subsidiaries has all requisite power and authority to carry on its business
as now conducted and, except where the failure to do so, individually or in
the aggregate, could not reasonably be expected to result in a Material
Adverse Effect, is qualified to do business in, and is in good standing in,
every jurisdiction where such qualification is required.
2. The Transactions are within the corporate powers of each Obligor.
3. The Transactions have been duly authorized by all necessary
corporate action on the part of each Obligor.
4. The Credit Agreement has been duly executed and delivered by each
Obligor party thereto.
5. Under conflict of law principles for the State of Texas, the
stated choice of New York law to govern the Credit Agreement will be
honored by the courts of the State of Texas and the Credit Agreement will
be construed in accordance with, and will be treated as being governed by,
the law of the State of New York. However, if the Credit Agreement were
stated to be governed by and construed in accordance with the law of the
State of Texas, or if a court of the State of Texas were to apply the law
of the State of Texas to the Credit Agreement, the Credit Agreement would
nevertheless constitute the legal, valid and binding obligation of each
Obligor party thereto, enforceable against such Obligor in accordance with
its terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws
Opinion of Counsel to the Obligors
----------------------------------
<PAGE>
-3-
relating to or affecting the rights of creditors generally and except as
the enforceability of the Credit Agreement is subject to the application of
general principles of equity (regardless of whether considered in a
proceeding in equity or at law), including (a) the possible unavailability
of specific performance, injunctive relief or any other equitable remedy
and (b) concepts of materiality, reasonableness, good faith and fair
dealing.
6. The Transactions (a) do not require any consent or approval of,
registration or filing with, or any other action by, any Governmental
Authority, except such as have been obtained or made and are in full force
and effect, (b) will not violate any applicable law or regulation or the
charter, by-laws or other organizational documents of the Borrower or any
of its Subsidiaries or any order of any Governmental Authority, (c) will
not violate or result in a default under any indenture, agreement or other
instrument binding upon the Borrower or any of its Subsidiaries or assets,
or give rise to a right thereunder to require any payment to be made by any
such Person, and (d) will not result in the creation or imposition of any
Lien on any asset of the Borrower or any of its Subsidiaries.
7. [Except as set forth in Schedule IV to the Credit Agreement,] we
have no knowledge (after due inquiry) of any actions, suits or proceedings
by or before any arbitrator or Governmental Authority now pending against
or threatened against or affecting the Obligors or any of their respective
Subsidiaries (a) as to which there is a reasonable possibility of an
adverse determination and that, if adversely determined, could reasonably
be expected, individually or in the aggregate, to have a Material Adverse
Effect (other than the Disclosed Matters) or (b) that involve the Credit
Agreement or the Transactions.
8. Neither the Borrower nor any of its Subsidiaries is (a) an
"investment company" as defined in, or subject to regulation under, the
Investment Company Act of 1940 or (b) a "holding company" as defined in, or
subject to regulation under, the Public Utility Holding Company Act of
1935.
The foregoing opinions are subject to the following comments and
qualifications:
(A) The enforceability of Sections 3.03 and 10.03 of the Credit
Agreement may be limited by (i) laws rendering unenforceable
indemnification contrary to Federal or state securities laws and the public
policy underlying such laws and (ii) laws limiting the enforceability of
provisions exculpating or exempting a party, or requiring indemnification
of a party for, liability for its own action or inaction, to the extent the
action or inaction involves gross negligence, recklessness, willful
misconduct or unlawful conduct.
Opinion of Counsel to the Obligors
----------------------------------
<PAGE>
-4-
(B) The enforceability of provisions in the Credit Agreement to the
effect that terms may not be waived or modified except in writing may be
limited under certain circumstances.
(C) We express no opinion as to (i) the effect of the laws of any
jurisdiction in which any Lender is located (other than the State of Texas)
that limit the interest, fees or other charges such Lender may impose, (ii)
the last sentence of Section 2.17(d) or Section 3.06 of the Credit
Agreement and (iii) the first sentence of Section 10.09(b) of the Credit
Agreement, insofar as such sentence relates to the subject matter
jurisdiction of the United States District Court for the Southern District
of New York to adjudicate any controversy related to the Credit Agreement.
(D) We express no opinion as to the applicability to the obligations
of any Subsidiary Guarantor of Section 548 of the Bankruptcy Code, Article
10 of the New York Debtor Creditor Law or any other provision of law
relating to fraudulent conveyances, transfers or obligations, nor do we
express any opinion as to the enforceability of such obligations.
The foregoing opinions are limited to matters involving the Federal
laws of the United States[, the Delaware General Corporation Law] and the law of
the State of Texas, and we do not express any opinion as to the laws of any
other jurisdiction (nor do we express any opinion as to the applicability to, or
the effect upon, the transactions contemplated by the Credit Agreement of the
Federal Communications Act of 1934, as amended, the rules and regulations
promulgated thereunder or the policies of the FCC).
At the request of our clients, this opinion letter is, pursuant to
Section 5.01(b)(i) of the Credit Agreement, provided to you by us in our
capacity as counsel to the Obligors and may not be relied upon by any Person for
any purpose other than in connection with the transactions contemplated by the
Credit Agreement without, in each instance, our prior written consent.
Very truly yours,
Opinion of Counsel to the Obligors
----------------------------------
<PAGE>
EXHIBIT D
[Form of Opinion of Special Communications Counsel to the Borrower]
, 199
---------- --
To the Lenders party to the Credit Agreement
referred to below and The Chase
Manhattan Bank, as Administrative Agent
Ladies and Gentlemen:
We have acted as special communications counsel to Argyle Television,
Inc. (to be renamed Hearst-Argyle Television Inc. following the Merger
Transactions therein referred to), a Delaware corporation (the "Borrower"), and
--------
its Subsidiaries in connection with the Credit Agreement (the "Credit
------
Agreement") dated as of August 29, 1997, between the Borrower, the Subsidiary
Guarantors party thereto, the lenders party thereto and The Chase Manhattan
Bank, as Administrative Agent, providing for extensions of credit to be made by
said lenders to the Borrower in an aggregate principal or face amount not
exceeding $***. Terms defined in the Credit Agreement are used herein as
defined therein. This opinion letter is being delivered pursuant to Section
5.01(b)(ii) of the Credit Agreement.
We have examined originals or copies authenticated to our satisfaction
of all such agreements, instruments and other documents, and such other
documents and public files of the Federal Communications Commission ("FCC") as
---
we have deemed necessary in connection with the opinions hereinafter expressed.
In such examination we have assumed the genuineness of all signatures, the
authenticity of documents submitted to us as originals, the conformity with the
originals of all documents submitted to us as certified or photostatic copies,
and the authenticity of the originals of such latter documents. As to questions
of fact material to such opinions, we have, when relevant facts were not
independently established, relied upon representations and certificates of the
Borrower and its Subsidiaries and their respective officers.
Our opinions set forth below are limited to matters governed by the
Federal Communications Act of 1934, as amended (the "Communications Act"), and
------------------
the rules and regulations promulgated thereunder or the policies of the FCC.
Based upon the foregoing, we are of the opinion that:
1. On ________________, the FCC granted the application for consent
to assignment (File No.__________________) of the main station license and
associated broadcast auxiliary licenses for the operation of television
broadcast station ____-TV, Channel ___, [City, State --Complete as
appropriate]. Such grant by the FCC is valid
Opinion of Special Communications Counsel to the Borrower
---------------------------------------------------------
<PAGE>
-2-
and subsisting and final (i.e. no longer subject to further judicial or
administrative review) and no further approval or action of the FCC is
required to permit the assignments of such licenses to ________________.
All such licenses are in full force and effect. To our knowledge, no
authorizations, approvals or consents of, and no filings or registrations
with the FCC are required for the existing operation of said Station.
2. To our knowledge, there is no action, suit, or proceeding before
the FCC pending or threatened against or affecting the Borrower or any of
its Subsidiaries. To our knowledge, each of the Stations is operating in
compliance in all material respects with its FCC licenses, the Act and the
current rules, regulations and policies of the FCC.
3. No authorizations, consents, approvals, licenses, filings or
registrations with the FCC are required in connection with the execution,
delivery or performance by the Borrower of the Credit Agreement and the
other Basic Documents.
The foregoing opinions are limited to matters involving the Federal
Communications Act of 1934, as amended, the rules and regulations promulgated
thereunder or the policies of the FCC.
At the request of our clients, this opinion letter is, pursuant to
Section 5.01(b)(ii) of the Credit Agreement, provided to you by us in our
capacity as special communications counsel to the Obligors and may not be relied
upon by any Person for any purpose other than in connection with the
transactions contemplated by the Credit Agreement without, in each instance, our
prior written consent.
Very truly yours,
Opinion of Special Communications Counsel to the Borrower
---------------------------------------------------------
<PAGE>
EXHIBIT E
[Form of Opinion of Special New York Counsel to The Chase Manhattan Bank]
, 199
---------- --
To the Lenders party to the Credit Agreement
referred to below and The Chase
Manhattan Bank, as Administrative Agent
Ladies and Gentlemen:
We have acted as special New York counsel to The Chase Manhattan Bank
in connection with the Credit Agreement (the "Credit Agreement") dated as of
----------------
August 29, 1997, between Argyle Television, Inc. (to be renamed Hearst-Argyle
Television Inc. following the Merger Transactions therein referred to, and
herein referred to as the "Borrower"), the Subsidiary Guarantors party thereto,
--------
the lenders party thereto and The Chase Manhattan Bank, as Administrative Agent,
providing for extensions of credit to be made by said lenders to the Borrower in
an aggregate principal or face amount not exceeding $1,000,000,000. Except as
otherwise provided herein, terms defined in the Credit Agreement are used herein
as defined therein. This opinion letter is being delivered pursuant to Section
5.01(c) of the Credit Agreement.
In rendering the opinions expressed below, we have examined the
following agreements, instruments and other documents:
(a) the Credit Agreement; and
(b) such records of the Obligors and such other documents as we have
deemed necessary as a basis for the opinions expressed below.
The Borrower and its Subsidiaries and affiliates party to the Credit Agreement
are herein collectively referred to as the "Obligors".
--------
In our examination, we have assumed the genuineness of all signatures,
the authenticity of all documents submitted to us as originals and the
conformity with authentic original documents of all documents submitted to us as
copies. When relevant facts were not independently established, we have relied
upon representations made in or pursuant to the Credit Agreement.
In rendering the opinions expressed below, we have assumed, with
respect to all of the documents referred to in this opinion letter, that:
(i) such documents have been duly authorized by, have been duly
executed and delivered by, and (except to the extent set forth in
the opinions
Opinion of Special New York Counsel to The Chase Manhattan Bank
---------------------------------------------------------------
<PAGE>
-2-
expressed below as to the Obligors) constitute legal, valid,
binding and enforceable obligations of, all of the parties to
such documents;
(ii) all signatories to such documents have been duly authorized;
and
(iii) all of the parties to such documents are duly organized and
validly existing and have the power and authority (corporate or
other) to execute, deliver and perform such documents.
Based upon and subject to the foregoing and subject also to the
comments and qualifications set forth below, and having considered such
questions of law as we have deemed necessary as a basis for the opinions
expressed below, we are of the opinion that the Credit Agreement constitutes the
legal, valid and binding obligation of each Obligor party thereto, enforceable
against such Obligor in accordance with its terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights of creditors generally and except as the
enforceability of the Credit Agreement is subject to the application of general
principles of equity (regardless of whether considered in a proceeding in equity
or at law), including (a) the possible unavailability of specific performance,
injunctive relief or any other equitable remedy and (b) concepts of materiality,
reasonableness, good faith and fair dealing.
The foregoing opinions are subject to the following comments and
qualifications:
(A) The enforceability of Sections 3.03 and 10.03 of the Credit
Agreement may be limited by (i) laws rendering unenforceable
indemnification contrary to Federal or state securities laws and the public
policy underlying such laws and (ii) laws limiting the enforceability of
provisions exculpating or exempting a party, or requiring indemnification
of a party for, liability for its own action or inaction, to the extent the
action or inaction involves gross negligence, recklessness, willful
misconduct or unlawful conduct.
(B) The enforceability of provisions in the Credit Agreement to the
effect that terms may not be waived or modified except in writing may be
limited under certain circumstances.
(C) We express no opinion as to (i) the effect of the laws of any
jurisdiction in which any Lender is located (other than the State of New
York) that limit the interest, fees or other charges such Lender may
impose, (ii) the last sentence of Section 2.17(d) or Section 3.06 of the
Credit Agreement and (iii) the first sentence of Section 10.09(b) of the
Credit Agreement, insofar as such sentence relates to the
Opinion of Special New York Counsel to The Chase Manhattan Bank
---------------------------------------------------------------
<PAGE>
-3-
subject matter jurisdiction of the United States District Court for the
Southern District of New York to adjudicate any controversy related to the
Credit Agreement.
(D) We express no opinion as to the applicability to the obligations
of any Subsidiary Guarantor of Section 548 of the Bankruptcy Code, Article
10 of the New York Debtor Creditor Law or any other provision of law
relating to fraudulent conveyances, transfers or obligations, nor do we
express any opinion as to the enforceability of such obligations.
The foregoing opinions are limited to matters involving the Federal
laws of the United States and the law of the State of New York, and we do not
express any opinion as to the laws of any other jurisdiction (nor do we express
any opinion as to the applicability to, or the effect upon, the transactions
contemplated by the Credit Agreement of the Federal Communications Act of 1934,
as amended, the rules and regulations promulgated thereunder or the policies of
the FCC).
At the request of our client, this opinion letter is, pursuant to
Section 5.01(c) of the Credit Agreement, provided to you by us in our capacity
as special New York counsel to The Chase Manhattan Bank and may not be relied
upon by any Person for any purpose other than in connection with the
transactions contemplated by the Credit Agreement without, in each instance, our
prior written consent.
Very truly yours,
[Opining and Consultant
Partner's initials]
Opinion of Special New York Counsel to The Chase Manhattan Bank
---------------------------------------------------------------
<PAGE>
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
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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.
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SCHEDULE TO TERM NOTE
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Amount of Amount of Notation Made
Date Loan Principal Repaid Unpaid Balance By
---- --------- ---------------- -------------- -------------
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:
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Name:
Title:
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SCHEDULE TO TERM NOTE
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Amount of Amount of Notation Made
Date Loan Principal Repaid Unpaid Balance By
---- --------- ---------------- -------------- -------------
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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.
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(the "Lender").
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RECITALS
WHEREAS, the Pledgor is the owner of [____________] shares of
common stock (the "Shares") of STC BROADCASTING OF VERMONT SUBSIDIARY, INC. (the
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"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
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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,
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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
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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
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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.
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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".
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SECTION 3. Delivery of Certificates. Simultaneously with the
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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
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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
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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
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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,
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(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
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
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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
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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 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
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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.
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(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
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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
(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
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entire outstanding principal sum of and accrued interest on the Loans is paid in
full and all other non-contingent Obligations are pain 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
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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.
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(d) The Lender undertakes to use commercially reasonable
efforts to cause a sale of the Collateral: provided, that the Lender
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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 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
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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)
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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,
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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
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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
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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.
SECTION 16. General Provisions.
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(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
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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.
(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.
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(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
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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
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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
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and the approval or consent of each other Governmental Authority required to
effectuate the foregoing.
(c) In connection with this Section 17, the Lender shall be
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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]
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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:
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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>
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:
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Name:
Title:
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Exhibit A to Pledge Agreement
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STC BROADCASTING OF VERMONT SUBSIDIARY, INC.
, 1998
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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 pledge
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(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.
A-1
<PAGE>
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:
A-2
<PAGE>
INITIAL DISCLOSURE SCHEDULES
WITH RESPECT TO
TELEVISION BROADCAST STATION
KSBW, CHANNEL 8, SALINAS, CALIFORNIA
TO
ASSET EXCHANGE AGREEMENT
DATED AS OF FEBRUARY 18, 1998
BY AND AMONG
STC BROADCASTING, INC.
STC BROADCASTING, OF VERMONT, INC.
STC BROADCASTING OF VERMONT SUBSIDIARY, INC.
STC LICENSE COMPANY, INC.
AND
HEARST-ARGYLE STATIONS, INC.
<PAGE>
TERMS AND CONDITIONS
The Disclosure Schedules attached hereto are subject to the following terms and
conditions:
1. The inclusion of any fact or item on a schedule, which schedule requires the
listing of a "material" item, is not deemed to be an admission or representation
that the included item is "material".
2. The inclusion of any fact or item on a schedule referenced by a particular
section in the Asset Exchange Agreement shall, should the existence of the fact
or item or its contents, be relevant to any other section, be deemed to be
disclosed with respect to such other section whether or not an explicit
cross-reference appears.
3. The introductory language and heading to each of the disclosure schedules are
inserted for convenience only and shall not create a different standard for
disclosure than the language set forth in the Asset Exchange Agreement.
4. All capitalized terms used herein and not otherwise defined shall have the
meaning given such terms in the Asset Exchange Agreement.
2
<PAGE>
DISCLOSURE SCHEDULES
Schedule 2.3.1 FCC Licenses
Schedule 2.3.2 Real Property Interests
Schedule 2.3.3 Tangible Personal Property
Schedule 2.3.4 Intellectual Property
Schedule 2.3.5 Program Contracts
Schedule 2.3.6 Trade-out Agreements
Schedule 2.3.8 Network Affiliation Agreements
Schedule 2.3.9 Other Operating Contracts
Schedule 2.3.10 Vehicles
Schedule 2.3.12 Auxiliary Facilities
Schedule 2.3.14 Accounts Receivable
Schedule 2.4.13 Shared Contracts
Schedule 2.4.14 Labor Union Contract
Schedule 2.4.15 Excluded Assets
Schedule 2.4.16 Affiliated Transactions
Schedule 3.4 Consents
Schedule 3.5 Financial Statements
Schedule 3.6 Absence of Certain Changes or Events
Schedule 3.7 Litigation
Schedule 3.8 Encumbrances on Assets
Schedule 3.9 FCC Matters
Schedule 3.10 Real Property Documents Delivered & Encumbrances
Schedule 3.14 Employee Benefit Plans
Schedule 3.15 Labor Relations
Schedule 3.16 Environmental Matters
Schedule 3.17 Insurance
Schedule 3.19 Affiliated Transactions
Schedule 12.2 Brokers
3
<PAGE>
SCHEDULE 2.3.1
FCC LICENSES
Call Sign Class Expiration Date
- --------- ----- ---------------
KSBW-TV Main Broadcast License December 31, 1998
K13GS Translator April 1, 1998 (renewal
application filed 12/1/97-
File No. BRTTV-971201GG
Auxiliaries:
KB-55808 TV Pickup December 1, 1998
KB-55148 TV Pickup December 1, 1998
KB-55150 TV Pickup December 1. 1998
KA-88915 TV Pickup December 1, 1998
KA-59086 TV Pickup December 1, 1998
KR-9885 TV Pickup December 1, 1998
WHY-730 TV Intercity Relay December 1, 1998
WBE-815 TV Intercity Relay December 1, 1998
WHS-279 TV Intercity Relay December 1, 1998
WHS-369 TV Intercity Relay December 1, 1998
WHY-871 TV Intercity Relay December 1, 1998
KMT-27 TV Intercity Relay December 1, 1998
KUQ-36 TV Intercity Relay December 1, 1998
WLD-202 TV Intercity Relay December 1, 1998
WLD-563 TV Intercity Relay December 1, 1998
WLD-570 TV Intercity Relay December 1, 1998
WHG-366 TV Intercity Relay December 1, 1998
WHG-365 TV Intercity Relay December 1, 1998
WHG-368 TV Intercity Relay December 1, 1998
WLD-566 TV Intercity Relay December 1, 1998
WLD-559 TV Intercity Relay December 1, 1998
WGX-279 TV Intercity Relay December 1, 1998
WLI-982 TV Intercity Relay December 1, 1998
KA-88554 Remote Pickup Mobile December 1, 1998
WHB-938 TV Intercity Relay December 1, 1998
KPH-796 Remote Pickup Automatic Relay December 1, 1998
KPH-801 Remote Pickup Automatic Relay December 1, 1998
KPH-797 Remote Pickup Base Mobile System December 1, 1998
KA-88554 Remote Pickup Mobile System December 1, 1998
Note: Certain of the above referenced intercity relay stations (which were
previously used to provide NBC service to KSBY) are no longer operational.
4
<PAGE>
SCHEDULE 2.3.2
REAL PROPERTY INTERESTS
Owned Real Property
- -------------------
1. Seller owns a studio site (John's Street Studio) more particularly
described as set forth below:
The following land and premises located in the County of Monterey,
State of California:
Parcel I:
- ---------
Situate in the City of Salinas, County of Monterey, State of California, and
being a portion of Block 11 as shown on the map entitled "F.S. Spring's Addition
to Salinas City," filed June 7, 1902 in Volume 1, Page 28 of cities and towns,
records of said county and also a portion of Block 3, as shown on the map filed
December 1, 1873 in Volume 1, Page 27 of cities and towns, records of said
county, and also a portion of the land described in the deed to John Stolz, et
ux, dated August 13, 1923 in Volume 40, Page 78, official records of said
county, being contiguous without gaps or gores, described as follows:
Beginning at a 3/4 inch iron pipe standing in the northeasterly line of Winham
Street (a city street 66 feet wide) at the southwest corner of the land
described in the deed to Glen O. Kellum, recorded April 5, 1966 in the Reel 456,
Page 144, official records of said county; thence along said northeasterly line
of Winham Street
(1) N. 74(degrees)12' W., 235.40 feet to the intersection with the easterly
line of Front Street (a city street 66 feet wide); thence along said
line of Front Street
(2) N. 15(degrees) 47' E., 253.30 feet to the intersection with the
southwesterly line of John Street (a city street 80 feet wide); thence
along said line of John Street
(3) S. 76(degrees) 06' E., 439.56 feet to the intersection with the
southwesterly line of Abbott Street (a city street 86 feet wide);
thence along said line of Abbott Street
(4) S. 31(degrees) 04' 45" E., 51.28 feet to a 3/4 inch iron pipe at the
most northern corner of the land described in the deed Ramesh J. Patel,
et ux, recorded September 28, 1973 in Reel 873, Page 15, official
records of said County; thence along the northwesterly boundary of said
land
(5) S. 68(degrees)06' 50" W., 185.17 feet to the easterly boundary of said
land of Kellum; thence along said easterly boundary
(6) N. 11(degrees)54' 29" W., 11.64 feet to the northeasterly corner
thereof; thence along the northerly boundary of said land
5
<PAGE>
(7) N. 74(degrees)09' 41" W., 89.39 feet to the northwesterly corner
thereof; thence along the westerly boundary of said land
(8) S. 15(degrees)46' 33" W., 129.99 feet to the point of beginning
Excepting therefrom that portion of said land described to Thelma Alys Lehman
and Barbara Frances Donnelly, recorded November 20, 1947 in Book 1010, Page 429,
official records.
Also described as Parcel A of map filed March 15, 1983 in Volume 15 of parcel
maps, Page 134, official records of Monterey County, State of California.
A.P. No. 2-382-72
2. Seller owns a transmitter site (Fremont Peak) more particularly described as
set forth below.
Parcel II:
- ----------
Being a part of that certain parcel of land situate in the Rancho Cienega Del
Gabilan, in the county of Monterey, State of California, designated as "Parcel
One" in deed to Rollin Reeves, dated June 3, 1929 and recorded in Volume 914,
Page 236, official records of said County, being contiguous without gaps or
gores, described as follows:
Beginning at a point in the southeasterly boundary of and land designated
"Parcel VI" in the deed to the County of San Benito, dated June 22, 1931 and
recorded in Volume 393, Page 246, official records of said County, from which a
brass capped 6" diameter concrete monument standing at the most southerly corner
of said land bears along said boundary S. 50(degrees) 52' 54" W., 273.68 feet;
thence along said boundary
(1) N. 50(degrees) 52' 54" E., 276.81 feet at 83.32 feet another
brass-capped 6 inch diameter concrete monument, 276.81 feet to a point;
thence along the westerly line of a 40' road
(2) S. 11(degrees)31' 23" E., 60.76 feet, at 1.28 feet a 1/2" diameter iron
pipe, 60.76 feet to a 2" by 3" redwood post, thence
(3) S. 7(degrees) 42' 37"W., 136.79 feet to a 1/2" diameter iron pipe from
which a 2" x 3" redwood post bears along said westerly line S. 7
(degrees) 42' 37" W., 36.53 feet; thence leave said line
(4) S. 50(degrees) 53' 37" W., 137.42 feet, to a 1-1/2 inch iron pipe in
the easterly line of said road, from which a 3/4" diameter iron pipe
bears along said line S. 47(degrees) 42' 23" E., 25.28 feet; thence
along said easterly line
(5) N. 43(degrees)34' 23" W., 147.85 feet, at 147.75 feet a 3/4" diameter
iron pipe 147.85 feet to the place of beginning
A.P. No. 149-011-13
6
<PAGE>
Parcel III:
- -----------
An easement for road, poles, power, water and pipelines and any necessary
utilities purposes, 40 feet wide, lying along, contiguous to and easterly of
courses number (2) and (3) above, being contiguous without gaps or gores, and
particularly described as follows:
Beginning at the most northerly corner of the above described tract of land and
running thence, along the easterly boundary thereof,
(1) S. 11(degrees)31' 23" E., 60.76 feet to a 2" x 3" redwood post; thence
(2) S. 7(degrees)42' 37" W., 136.79 feet to a 1/2" diameter iron pipe.
Parcel IV:
- ----------
An easement for road, poles, power, water and pipelines and any necessary
utilities purposes, 40 feet wide, lying along, contiguous to and southwetserly
of Course Number (5) above, being contiguous without gaps or gores, and
particularly described as follows:
Beginning at the most southerly corner of the above described tract of land and
running thence, along the southwesterly boundary thereof,
(1) N. 43(degrees)34' 23" W., 147.85 feet to the most westerly corner
thereof.
Parcel V:
- ---------
An easement for road, poles, power, water, and pipelines and necessary utilities
purposes 40 feet wide being contiguous without gaps or gores, lying along,
contiguous to and southwesterly, southerly and southeasterly of the following
described line:
Beginning at the most southerly corner of Parcel 2 herein described above;
thence
(1) S. 47(degrees) 42' 23" E., 25.28 feet; thence
(2) S. 58(degrees) 36' 23" E., 31.53 feet, thence
(3) S. 86(degrees) 24' 23" E., 29.91 feet; thence
(4) N. 38(degrees) 12' 37" E., 28.62 feet; thence
(5) N. 7(degrees) 42' 37" E., 100.41 feet to the angle point formed by
courses numbered "(3)" and "(4)" in the boundary of the above described
Parcel II.
7
<PAGE>
3. Seller owns a transmitter site (Summit Road) more particularly described as
set forth below:
All that certain real property in the unincorporated area, County of Santa
Clara, State of California, being contiguous without gaps or gores, described as
follows:
Parcel One:
The north half of the southwest quarter of Section 17, Township 10 South, Range
2 East, M.D.B. & M., excepting therefrom that portion thereof lying within Santa
Cruz County.
Parcel Two:
The southeast quarter of the southwest quarter and the east half of the east
half of the southwest quarter of the southwest quarter of Section 17, Township
10 South, Range 2 East, M.D.B. & M., excepting therefrom that portion thereof
lying within Santa Cruz County.
Parcel Three:
The southwest quarter of the southeast quarter of Section 17 and Lot 5 of
Section 20, Township 10 South, Range 2 East, M.D.B. & M., excepting therefrom
that portion thereof lying within Santa Cruz County.
Parcel Four:
All that certain real property in the unincorporated area, County of Santa Cruz,
State of California, being contiguous without gaps or gores, described as
follows:
All that portion of the northwest quarter of the southwest quarter of
Section 17, Township 10 South, Range 2 East, M.D.B. & M. lying southwest of the
centerline of Summit Road.
Leased Real Property
3. License agreement dated May 1, 1983 with Allnet Communications Services,
Inc..
4. License Agreement dated June 1, 1989 with Dolores J. Boesch.
5. Commercial Lease Agreement dated June 1, 1992 with Michael and Eva
Boronfield.
6. Lease agreement dated July 25, 1990 with Gibson, Riordan, Riordan and
Tobin d/b/a Braniforte Plaza.
7. Lease agreement dated May 25, 1964 with Norman Miller.
8. Permit for Right of Way dated November 15, 1994 with the State of
California, acting through the Department of Parks and Recreation.
8
<PAGE>
9. Lease agreement dated February 1, 1992 with the State of California, acting
through the Director of General Services.
10. Lease Agreement dated August 1, 1997 with Heritage Harbor.
Other Interests
- ---------------
See the fixed asset list attached to Schedule 2.3.3 to the extent it contains
any fixtures or other interests in real property.
9
<PAGE>
SCHEDULE 2.3.3
TANGIBLE PERSONAL PROPERTY
(see attached)**
1. The attached fixed asset appraisal as of March 1, 1997, includes two
sections of equipment (Spare Parts and Surplus) which are not presently
used in the Station operation.
2. Since acquisition of the Station by STC Broadcasting, Inc., the Station has
replaced items of equipment and has retained such replaced equipment in
storage or disposed of it as outlined on the attached.
3. See attached schedule of capital expenditures for period 3/1/97 to 12/31/97.
- ------------------
** Attachments previously delivered to HAT and not included herein.
10
<PAGE>
SCHEDULE 2.3.4
INTELLECTUAL PROPERTY
Trade Names Trademark
- ----------- ---------
Action News No
Coverage You Can Count On No
This schedule incorporates by reference all other contracts and rights of Seller
to use trademarks, trade names, service marks and other intellectual property
under the contracts set forth in Schedules 2.3.5, 2.3.6 and 2.3.8 and 2.3.9.
11
<PAGE>
SCHEDULE 2.3.6
TRADE-OUT AGREEMENTS
Consent
SCHEDULE 2.3.5
PROGRAM CONTRACTS
<TABLE>
<CAPTION>
Start End Consent
Contracting Party Program Date Date Necessary
- ----------------- ------- ----- ---- ---------
<S> <C> <C> <C> <C>
King World Jeopardy * 9/97 9/99 Yes
King World Weekend Jeopardy 9/97 9/99 Yes
King World Oprah 9/97 9/2000 Yes
King World Wheel * 9/97 9/99 Yes
King World Weekend Wheel 9/97 9/99 Yes
King World Mr. Food 1/98 12/99 Yes
Turner Prog Services CNN News Product 1/98 12/98 Yes
Twentieth Television NYPD Blue 9/97 9/99 Yes
Warner Bros. Rosie O'Donnell 9/97 9/2000 No
Warner Bros. Warner Bros, Vol 28 9/90 9/98 Yes
Warner Bros. Warner Bros, Vol 29 9/90 9/2002 Yes
Warner Bros Warner Bros, Vol 31 1/94 11/2008 Yes
Columbia Tristar Donnie & Marie 9/98 9/2000 No
BARTER PROGRAM
- --------------
All American Baywatch 9/97 9/98 No
Warner Bros. Extra 9/98 9/2000 No
Buena Vista Television Honey I Shrunk the Kids 9/97 9/98 Yes
Warner Bros. Jenny Jones 9/97 9/98 No
Warner Bros. Martin 9/97 6/99 Yes
Warner Bros. Mr. Cooper 9/97 9/98 Yes
Twentieth Television Real Stories 9/97 9/98 Yes
The Phoenix Communications Sports News Satellite 9/95 9/2001 No
Dow Jones & Company, Inc. Wall Street Journal 9/97 9/98 Yes
</TABLE>
* Commitments:
------------
Sandy DiPasquale has signed a letter of intent and is awaiting final
contracts through the fall of 2002, however, the actual contracts have not
been signed. The reason is the omission, by King World, of co-op dollars
language that has existed in the current contracts. Though we have not
utilized this co-op to date, we did not want to lose having the option to do
so in the future.
12
<PAGE>
SCHEDULE 2.3.6
TRADE-OUT AGREEMENTS
<TABLE>
<CAPTION>
Consent
Contracting Party Description Term Necessary
- ----------------- ----------- ---- ---------
<S> <C> <C> <C>
Active Media Bill Payor 8/1/97 to 7/31/98 No
Services
Cash Plus K Mart 2 hour movies 9/15/97 to 6/98 No
El Palomar Food and beverage in 3/20/95 through 12/31/96 No
exchange for airtime Expired but ongoing until
balance used up
Pacific Bell Bill Payor 1/13/97 to 12/31/98 No
TBS Media
PaLapas Restaurant Food credit 1/1/97 to 12/31/97 No
Expired but ongoing until
balance used up
Pebble Beach Co. Awards Dinner 10/18/97 to 10/17/98 No
Jefferson Awards
Sanctuary Day Spa Day spa tickets 11/28/97 to 12/24/98 No
Seacliff Inn Banquet and restaurant 3/17/97 to 12/31/97 No
usage in exchange for
television airtime
SeaSide Associates Amusement Park 1/1/98 to 12/31/98 No
Santa Cruz
Tower Media Airfare and Hotel 3/21/95 through 3/21/00 No
(for Lucky Stores) accommodations in exchange
for television airtime
Active Media Payment of Media Data 12/29/97 to 12/28/98 No
Services bills 2 for 1
Universal Internet Website Services 3/24/97 to 12/31/97 No
On going at this time.
No new agreement signed
for 1998.
</TABLE>
13
<PAGE>
SCHEDULE 2.3.8
NETWORK AGREEMENTS
<TABLE>
<CAPTION>
Contracting Consent
Party Description Term Necessary
- ----------- ----------- ---- ---------
<S> <C> <C> <C>
National Broadcasting Network Affiliation 1/17/96 - 12/31/05 Yes, plus
Company, Inc. Agreement additional
requirements
set forth in
Section 16 of
the agreement.
NBC News Channel, Inc. NBC News Channel 1/1/91 Renewed in 52 Yes
Participation Agreement week terms. Cancelable
by written notice 60 days
prior to the last Friday
in June or December.
NBC News Channel, Inc. "Nightside" License 11/4/91 through 11/3/93 Yes, plus
Agreement renewable in 2 yr terms. (i) notice
Can cancel in writing at requirement
least 180 days prior to (ii) NBCNC
end of term. can terminate
see section 13)
National Broadcasting News Excerpt License 1/1/91 renews in 52 week Yes
Agreement terms. Cancelable by
written notice 60 days prior
to the last Friday in June or
December.
</TABLE>
14
<PAGE>
SCHEDULE 2.3.9
OPERATING CONTRACTS
1. General
<TABLE>
<CAPTION>
Consent
Contracting Party Description Term Necessary
- ----------------- ----------- ---- ---------
<S> <C> <C> <C>
American Society of Music License 3/1/97 to 3/31/98 No
Composers, Authors and Agreement including
Publishers option for per program
method for computing
license fees
Automated Weather Source Weather Stations System 3/8/95 through 3/7/98 Yes
renewable in 1 year terms
A.C. Nielsen Company Audience Ratings 11/1/93 through 12/31/00 No
Service Agreement
A.C. Nielsen Company S.T.A.R. Sales/Audience 3/25/94 through 3/24/97 Yes
Research Information
Bay City News News Service 1/1/98 to 12/31/98 No
renewable in one year terms
Broadcast Music, Inc. Music License Agreement No
including per option
program method for
computing license fees
Cellular One Cellular Phone Rental Ongoing until written Yes
and/or Service notice of cancellation
Agreements is given
Columbine Systems, Inc. Data Processing System 4/1/96 to 3/30/2001 Yes
License Agreement
Columbine/BMP BMP Sales Software 6/1/95 to 5/31/98 No
License Agreement
First Com Music Compact Disc 1/1/97 to 12/31/99 Yes
Library
Frank Magid & Associates News Consultant 6/1/97 to 12/31/99 No
International Business Operating System and Ongoing - Cancelable Yes
Machines Corporation Utility Software License upon one month prior
Agreement written notice
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
Consent
Contracting Party Description Term Necessary
- ----------------- ----------- ---- ---------
<S> <C> <C> <C>
KCBA TV Shared use of Fremont 7/1/95 through 7/1/97 No
Peak right of way permit
Kavouras, Inc. Meteorological Services Ongoing No
Agreement (including
addendum for additional
services)
Leigh Stowell & Company, Sales Research Services 4/1/97 to 3/31/99 No
Incorporated Agreement
Lexus Financial Services General Manager Auto 2/17/96 to 2/15/99 No
Monterey Bay Office Products Copier Lease 3/1/96 through 2/28/01 No
Monterey Bay Office Products Copier Lease 8/1/97 to 7/31/2000 No
MRI Music License Reporting 1/1/98 to 12/31/98 No
Cancelable 30 days notice
NAACP and Lulac Minority Employment 7/13/94 No
Interns Meetings to 12/1/98 agreement
must be assumed by individual/
corporation acquiring the station
Noll & Associates Television Broadcast 1/1/98 to 12/31/98 No
Sales Training
OMNIMUSIC Music License 9/1/95 through 8/31/98 No
Agreement
SESAC, Inc. Music License 2/28/97 through 12/31/2000 No
Agreement
P. Allen Smith Gardens News Service 1/1/98 to 12/31/98 No
Summit Road Association Road Maintenance Ongoing No
Agreement for Mt.
Madonna Tower Site
Telerep, Incorporated National Sales 11/21/97 to 6/14/2000 No
- ------- Representation
Agreement
Tribune - News In Motion News Service 1/1/98 to 12/31/98 No
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
Consent
Contracting Party Description Term Necessary
- ----------------- ----------- ---- ---------
<S> <C> <C> <C>
The Associated Press AP NewsPower Wire 1/17/96 through 6/30/98 No - however, Successor
Service Agreement renews automatically for must apply for new AP
successive two year membership
periods unless canceled
by six months prior written
notice
The Associated Press APTV Service 1/17/96 through 6/30/98 No - however Successor
Agreement renews automatically for must apply for new A.P.
successive two year membership and
periods unless canceled expressly assumes all
by six months prior obligations under the
written notice contract
The Associated Press AP Newscenter 1/17/96 through 6/30/98 No - however Successor
Supplemental Software Coterminous with main must apply for A.P.
License Agreement membership agreement membership and
expressly assumes all
obligations under the
contract
The Associated Press APTV Supplemental 1/17/96 through 6/30/98 No - however Successor
Software Coterminous with main must apply for A.P.
membership agreement membership
The Associated Press News Desk Software 1/17/96 through 6/30/98 No - however Successor
Agreement Coterminous with main must apply for new A.P.
membership agreement membership and
expressly assumes all
obligations under the
contract
The Associated Press AP Membership 1/17/96 through 6/30/98 No - however, Successor
Agreement for renews automatically for must apply for A.P.
Television successive two year terms membership
unless cancellation by
six months prior written
notice
The Frick Company Consultant and Agent 11/1/97 through 10/30/98 No
for CA Unemployment Automatically renewed
Tax Matters for 1 year periods.
Cancelable on by 60 days
written notice
</TABLE>
17
<PAGE>
2. Lease Agreements where Station is Lessor of Real Property
<TABLE>
<CAPTION>
Consent
Contracting Party Location Term Necessary
- ----------------- -------- ---- ---------
<S> <C> <C> <C>
Frontier Communications Tower Space and 10/1/97 through 9/30/98 No
Services, Inc. Equipment Room
Attn: Joseph D. Buckman Space at 238 John
Lease Administrator Street Microwave
30300 Telegraph Road Tower
Bingham Farms, MI 48025
Frontier Communications Land Lease-Fremont 8/1/94 through 7/31/99 No
Services, Inc. Peak to erect tenant has option to terminate
Attn: Joseph D. Buckman Microwave Relay after 7/31/96 upon 60 days
Lease Administrator Tower and small prior written notice to
30300 Telegraph Rd. Equipment Building Lessor
Bingham Farms, MI 48025
Henry Broadcasting Corp Tower Space on 11/1/95 through 10/31/2005 No
(as successor to Grace KSBW's backup
Broadcasting Corp) tower site and space
KDON-FM in equipment room -
2277 Jerrold Avenue Fremont Peak, CA
San Francisco, CA 94124
Nextel of California Land Lease - 6/1/93 through 5/31/98 No
3675 Mr. Diablo Blvd. Fremont Peak, CA extendable by tenant for an
Suite 330 site for Equipment additional five year period
Lafayette, CA 94549 Building
Telecommunications Fremont Peak, CA 3/1/86 through 2/28/96 No
Properties Communications extendable by Telecom.
1220 Brickyard Cove Rd Lease and Site Properties for two
Ste 200 Management consecutive ten year
Pt. Richmond, CA 94801 Agreement periods
Telecommunications Summit Road, CA 1/15/86 through 1/15/96 No
Properties Communications extendable by Telecom.
1220 Brickyard Cove Road Lease and Site Properties for two
Suite 200 Management consecutive ten year
Pt. Richmond, CA 94801 Agreement periods
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
Consent
Contracting Party Location Term Necessary
- ----------------- -------- ---- ---------
<S> <C> <C> <C>
ICO Network Equipment Room 10/1/97 to 9/30/99 No
5617 Scotts Valley Dr., space at 238
#180 John Street
Scotts Valley, CA 95066
James John Duznica, et.al. Road Lease - 9/23/87 through 9/22/17 No
Summit Road Tower extendable by tenant for an
Tower Site additional ten year period
Monterey-Carmel Antenna Space Lease 1/15/96 to 1/14/2006 No
Communications Corp. Fremont Peak, CA
DBA Repenter
Communications of Monterey
212 Cypress Ave.
Marina, CA 93933
</TABLE>
19
<PAGE>
3. Lease Agreements where Station is Lessee of Real Property
<TABLE>
<CAPTION>
Consent
Contracting Party Location Term Necessary
- ----------------- -------- ---- ---------
<S> <C> <C> <C>
Dolores J. Boesch Quimby Road 6/1/89 through 6/1/04 No
15287 Penetencia Microwave Relay however, landlord retains
Creek Road, Site right to revoke agreement
San Jose, CA 95035 at any time upon 120 days
notice and licensee can terminate
at any time upon 60 days
notice if site is no longer feasible
Michael and Eva Gilroy Bureau 9/1/96 to 8/31/97 on Yes
Brownfield 7459 Monterey St month to month basis
7463 Monterey St. Suite 3
Gilroy, CA Gilroy, CA
Gibson, Riordan, Riordan
and Tobin d/b/a
Branciforte Plaza
c/o
Ron Matusich Ste 220-Branciforte 7/1/97 to 6/30/98 Yes
R.G. Ron Matusich & Plaza, 555 Soquel month to month basis
Associates Avenue, Santa Cruz,
2707 Union Avenue CA 95062
San Jose, CA 95121 Santa Cruz Bureau
Norman Miller K13GS Translator 2/28/64 through 2/28/99 Yes
Upper Circle Drive Site
Carmel Valley, CA 93924 Carmel Valley, CA
Department of Parks and Fremont Peak 11/15/94 to 11/15/99 Yes
Recreation State Park
State of California
Heritage Harbor Monterey News and 7/15/97 to 7/14/2000 Yes
Sales Office
</TABLE>
20
<PAGE>
4. Cable Must Carry / Retransmission Agreements
See FCC Memorandum Opinion and Order dated 2/12/96
<TABLE>
<CAPTION>
Expiration Consent
Contracting Party Description Date Necessary
- ----------------- ----------- ---- ---------
<S> <C> <C> <C>
TCI Monterey/Salinas Retransmission Consent December 31, 2000 No
Scotts Valley/Santa Cruz Retransmission Consent December 31, 1999 No
San Jose Must Carry December 31, 1999 No
Los Altos Cupertino Retransmission Consent December 31, 1999 No
Merced Retransmission Consent December 31, 1999 No
Morgan Hill Must Carry December 31, 1999 No
Los Gatos Must Carry December 31, 1999 No
Gilroy Must Carry December 31, 1999 No
San Martin Must Carry December 31, 1999 No
Mont Serrano Must Carry December 31, 1999 No
Saratoga Must Carry December 31, 1999 No
Campbell Must Carry December 31, 1999 No
Cupertino Must Carry December 31, 1999 No
Matrix Saratoga Retransmission Consent December 31, 1999 No
Coastside Fort Ord/Marina Retransmission Consent December 31, 1999 No
Coastside Presidio Retransmission Consent December 31, 1999 No
Coast Cable San Jose Retransmission Consent December 31, 1999 No
Weststar Bishop Retransmission Consent December 31, 1999 No
Optel/SanFrancisco Retransmission Consent December 31, 1999 No
Sonic Livingston Retransmission Consent December 31, 1999 No
Sonic Capitola Retransmission Consent December 31, 1999 No
Sonic Watsonville Retransmission Consent December 31, 1999 No
Sonic Parajo Dunes Retransmission Consent December 31, 1999 No
Sonic Santa Cruz County Retransmission Consent December 31, 1999 No
Falcon Hollister Retransmission Consent December 31, 1999 No
Falcon Oak Hill Retransmission Consent December 31, 1999 No
Falcon Laguna Seca Retransmission Consent December 31, 1999 No
Falcon Watsonville Retransmission Consent December 31, 1999 No
Falcon Moss Landing Retransmission Consent December 31, 1999 No
Falcon Tierra Grande Retransmission Consent December 31, 1999 No
Falcon Monterey Retransmission Consent December 31, 1999 No
Falcon Castroville Retransmission Consent December 31, 1999 No
Falcon Salinas Retransmission Consent December 31, 1999 No
Falcon Carmel Valley Retransmission Consent December 31, 1999 No
Falcon Aromas Retransmission Consent December 31, 1999 No
Falcon Carmel Highlands Retransmission Consent December 31, 1999 No
Falcon Soledad Retransmission Consent December 31, 1999 No
Falcon San Juan Bautista Retransmission Consent December 31, 1999 No
Falcon Los Lomas Retransmission Consent December 31, 1999 No
Falcon Hidden Hills Retransmission Consent December 31, 1999 No
Falcon Ridgemark Retransmission Consent December 31, 1999 No
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
Expiration Consent
Contracting Party Description Date Necessary
- ----------------- ----------- ---- ---------
<S> <C> <C> <C>
Falcon La Mesa Village Retransmission Consent December 31, 1999 No
Falcon Conzoles Retransmission Consent December 31, 1999 No
Falcon Gilroy Retransmission Consent December 31, 1999 No
Falcon San Martin Retransmission Consent December 31, 1999 No
Falcon Morgan Hill Retransmission Consent December 31, 1999 No
Falcon Pine Canyon Retransmission Consent December 31, 1999 No
Falcon Greenfield Retransmission Consent December 31, 1999 No
Falcon King City Retransmission Consent December 31, 1999 No
</TABLE>
22
<PAGE>
5. Employment Contracts
<TABLE>
<CAPTION>
Start and End Consent to
Employee Name Job Title Dates of Contracts Assignment Required
- ------------- --------- ------------------ -------------------
<S> <C> <C> <C>
David Belyn Assignment Editor 1/5/98 through 1/4/2000 No
Beverly Byer 5 pm News Anchor 5/16/96 through 5/15/98 No
Kate Callaghan Anchor/Reporter 2/7/97 through 2/6/99 No
Erin Clark Primary Anchor 2/2/98 through 2/2/2001 No*
Laura Clark News Director 5/31/95 through 5/30/98 No
Eric Collins Anchor Reporter 9/16/95 through 9/15/98 No
Felix Cortez Reporter 5/15/96 through 4/21/98 No
Dan Green Primary Anchor 10/1/97 through 9/30/2000 No
Tom Langford Reporter 6/4/97 through 6/3/99 No
Jennifer Lee News Producer 7/22/97 through 7/21/99 No
Dennis Lehnen Primary Sports Anchor 3/5/97 through 3/31/99 No
Libby Lewis W/E Anchor/Reporter 12/12/97 through 12/11/99 No
Scott Mace Weather 10/15/97 through 10/2/98 No
Cassady McCabe News Producer 6/18/97 through 6/22/99 No
Ted W. Price III Anchor/Reporter 4/22/96 through 4/21/98 No
Randy Reeves News Producer 3/6/97 through 3/9/99 No
Edgard Sandoval Anchor/Reporter 12/12/97 through 12/11/2000 No
Aram Sarkissian News Producer 11/20/97 through 11/30/98 No
Rick Seeger News Producer 9/9/96 through 9/13/98 No
Jim Vanderzwaan Primary Weather Anchor 3/1/96 through 2/28/99 No
Janelle Wang Reporter 3/12/97 through 2/16/99 No
</TABLE>
* Draft terms for new main anchor
6. Collective Bargaining Agreements
None
23
<PAGE>
SCHEDULE 2.3.10
VEHICLES
<TABLE>
<CAPTION>
MAKE/MODEL IDENTIFICATION CODE
----------- -------------------
<S> <C>
1995 CHEVY LUMINA 1GNDU06D5ST102466
1994 CHEVY VAN 1GCGG35K2RF162048
1994 TOYOTA 4 RUNNER JT3VN39W8R0153601
1994 FORD ESCORT 3FARP15J0RR106719
1993 FORD VAN 1FTJS34GXPHA52514 (Live Truck)
1993 NISSAN PATHFINDER JN8HD17S1PW116503
1992 FORD AEROSTAR 1FMCA11U8NZA60592
1991 DODGE SPIRIT 1B3XA46K2LF839792
1988 TOYOTA STATION WAGON JT2AL32W8J0308607
1996 LEXUS ES300 JT8BF12G2T0153506 (Leased)
1993 CHEVY S10 BLAZER 1GNDT13WXP2165574
1996 TOYOTA RAV4 JT36P10V5T7005951
1980 FORD VAN S34ZHJ65732
1996 TOYOTA RAV4 JT3HP10VXT7015993
1996 FORD VAN 1FTJS3461THB43276 (Live Truck)
1997 MERCURY TRACER 3MELM15P1VR601971
1997 ISUZU RODEO 4WD 452CM58VO43306778
1996 TOYOTA RAV4 JT36TP10VXT7004780
1997 TOYOTA RAV4 JT3HP10V807028034
</TABLE>
24
<PAGE>
SCHEDULE 2.3.12
AUXILIARY FACILITIES
Carmel Valley, CA - translator sight K136S
Fremont Peak - backup tower
Pal Escrito, CA - Microwave relay site
Quimby Road - Microwave relay site
Monterey Street, Gilroy, CA - Gilroy Bureau
Branciforte Plaza, Santa Cruz, CA - Santa Cruz Bureau
Heritage Harbor, Monterey, CA - Monterey Bureau
25
<PAGE>
SCHEDULE 2.3.14
ACCOUNTS RECEIVABLE
See Attached:**
- ------------
Schedule of Receivables at 12/31/97
Aging of Trade Receivables at 12/31/97
Bad Debt analysis at 12/31/97
- ------------------------------------
** Attachments previously delivered to HAT and not included herein.
26
<PAGE>
KSBW-TV
ACCOUNTS RECEIVABLE
DECEMBER 31, 1997
Accounts Receivable - station cash $2,703,049.67
Network Receivable 27,463.00
Coop Receivable 10,000.00
Employee Receivable 1,533.00
Accounts Receivable - other 28,185.68
Unbilled revenue 71,686.10
Allowance for doubtful accounts (48,827.12)
-------------
$2,793,090.63
=============
27
<PAGE>
SCHEDULE 2.4.13
SHARED CONTRACTS
A.C. Nielsen Contract was a SCI Television contract. Nielsen has honored the
terms of the agreement through the various owners since SCI ownership was sold.
The Associated Press Agreements are STC contracts. Our rates reflect reduced
amounts due to ownership of multiple stations using AP. These same discounts are
available to Hearst-Argyle Stations, Inc.
See Schedule 2.4.16.
28
<PAGE>
SCHEDULE 2.4.14
LABOR CONTRACTS
NONE
29
<PAGE>
SCHEDULE 2.4.15
EXCLUDED ASSETS/CONTRACTS
NONE
30
<PAGE>
SCHEDULE 2.4.16
AFFILIATED TRANSACTIONS
1. Employee Benefit Program
---------------------------
KSBW has elected to be a participating affiliate in certain Sunrise Television
Corp employee benefits programs. KSBW is charged the same amount as any
participating affiliate and contributes to the costs of audits on the 401(k)
Plan and Benefit Trust. Sunrise Television Corp. or its employees do not receive
any compensation from any participating affiliate for services rendered. As long
as a participating affiliate elects to participate in the Great West Health,
Life and/or Dental Plan, the administrative costs normally charged by Great West
Life Assurance to the 401(k) plan is waived.
2. General Insurance
------------------
Station has elected to participate in the Hicks, Muse, Tate & Furst insurance
program. Station is billed actual premium costs incurred. Hicks, Muse, Tate &
Furst and its employees receive no compensation for providing this service.
3. Allocation of V.P. News Salary
-------------------------------
KSBW-TV has agreed as long as Ms. Holly Stewart is employed by WROC-TV to
contribute $7,500 annually towards her total compensation. Ms. Stewart provides
news consulting services to KSBW. Any travel costs of Ms. Stewart to KSBW are
paid by KSBW.
31
<PAGE>
SCHEDULE 3.4
CONSENTS
1. See Schedule 2.3.5
2. See Schedule 2.3.6
3. See Schedule 2.3.8
4. See Schedule 2.3.9
32
<PAGE>
SCHEDULE 3.5
FINANCIAL STATEMENTS
. Summary and detailed balance sheet as of December 31, 1997
. Summary and detailed statement of operations for the 10 months ended
December 31, 1997.
. Summary and detailed balance sheet as of February 28, 1997.
. Summary and detailed statement of operations for the two months ended
February 28, 1997.
. Summary and detailed balance sheet as of December 31, 1996.
. Summary and detailed statement of operations for the period 1/3/96 to
12/31/96.
33
<PAGE>
SCHEDULE 3.6
ABSENCE OF CERTAIN CHANGES OR EVENTS
If not offered employment by Hearst-Argyle Stations, Inc. at closing, STC
Broadcasting, Inc. has agreed with Robert Rice, general manager of KSBW-TV, that
they will pay him one year severance.
34
<PAGE>
SCHEDULE 3.7
LITIGATION
Phillip Passafuime of Dawson, Passafuime and Bowden, a law corporation, sent a
letter to Robert Rice on December 22, 1997, indicating that he represented Ms.
Karen Rostodha, a former employee of the station. The letter indicated that Ms.
Rostodha had not been paid for all of her overtime, a minimum of 320 hours and
for wrongful termination. On January 2, 1998, our attorney, Benjamin Ferrara
responded indicating that she did not have a contract, that the station had paid
all overtime and that she was terminated because her performance was not at
acceptable levels. In our letter of January 2, 1998, we requested additional
information related to her alleged claims. See attached letters.
35
<PAGE>
[LETTERHEAD OF FERRARA, FIORENZA, LARRISON, BARRETT & REITZ, P.C. APPEARS HERE]
January 2, 1998
Via facsimile at (408) 438-2812
and U.S. Mail
Phillip A. Passafuime, Esq.
Dawson, Passafuime & Bowden
4665 Scotts Valley Drive
Scotts Valley, CA 95066-4291
Re: Karen Rostodha and KSBW-TV
Dear Mr. Passafuime:
This office represents the STC Corporation, owner and operator of KSBW-TV
and the undersigned provides assistance to it in connection with certain
personnel and labor relations matters. Robert Rice, President and General
Manager of KSBW, has forwarded a copy of your letter dated December 22, 1997,
regarding the above matter to my attention for review and response.
We have consulted with our clients concerning the claims made in your
letter. Our clients advise that Ms. Rostodha was not serving under any contract
of employment. They further advise that Ms. Rostodha was terminated when it was
determined that she was not performing at acceptable levels and further, after
she was given opportunities to improve her performance.
At the time of her termination, Ms. Rostodha was given the opportunity to
resign with a severance package, and chose not to do so.
. Regarding Overtime Claims
-------------------------
According to our clients, Ms. Rostodha was paid all sums due her at the
time of termination. She was asked to provide the Station with any claims
she may have made for any such work for which she was not compensated. She
did so and the Station paid her accordingly. The Station is at a loss as to
her new claim of "320 hours" overtime. If you would provide me with
documentation (particularization as to date, time and services
<PAGE>
Mr. Passafuime
January 2, 1998
Page 2
allegedly performed by Ms. Rostodha while in the employ of KSBW) that
covers such claims, I will review same with my clients.
. Regarding Refusal to Pay Overtime When Requested
------------------------------------------------
My client is unable to identify any instances when Ms. Rostodha allegedly
requested overtime compensation and was improperly refused same. If you
will provide me with particularization concerning this claim(s), I will be
happy to review it with my clients.
. Regarding Termination
---------------------
The Station feels it acted properly with respect to Ms. Rostodha's
termination. Therefore, we are at a loss to understand your claim that she
was "wrongfully terminated." Please provide me with the factual and legal
basis for such a claim and I will review same with my client.
Under the condition stated in your letter to Mr. Rice, please treat this
correspondence as a rejection of your demands. However, I will be happy to
further discuss this matter, if you choose to supply the information referred to
above.
Thank you.
Very truly yours,
Ferrara, Florenza, Larrison, Barrett & Reitz, P.C.
/s/ Benjamin J. Ferrara
Benjamin J. Ferrara
BJF/cmb
cc: Robert Rice, President and General Manager, KSBW
David Fitz, Executive Vice President and Chief Financial Officer, STC
<PAGE>
[LETTERHEAD OF DAWSON, PASSAFUIME & BOWDEN APPEARS HERE]
December 22, 1997
Bob Rice
KSBW
238 John St.
Sallnas, CA 93901
Re: Karen Rostodha
Dear Mr. Rice,
Please be advised that this law firm represents Ms. Karen Rostodha with
reference to her employment with Channel 8 News. She was recently terminated
from her employment and was Issued a check which did not compensate her for
overtime hours worked over the period of time she was employed by the station.
I have reviewed Ms. Rostodha's records, including her calendar and other
logs. She can easily demonstrate by way of clear time records that she worked a
minimum of 320 hours of overtime for which she was not compensated. She is
clearly a non-exempt employee and is entitled to be compensated at the rate of
time-and-a-half the normal rate of pay. Your handbook, provided for
informational purposes to employees, specifies overtime pay for non-exempt
employees. In addition, Ms. Rostodha has been treated as a non-exempt employee
in the past by KSBW, and meets the criteria as specified by the Court. (See
Nordquist v McGraw (1995) 32 Cal.App.4th 555.). In addition, Ms. Rostodha is
- ------------------
entitled to reasonable attorneys fees in collecting her unpaid overtime.
When our client was hired at KSBW, she was assured that she would be given
one of the anchor jobs. In reliance upon those assurances, she moved from
Houston to take the job at KSBW. Over the next two years, she was passed over
several times for open anchor positions. When she did fill-in, she was commended
for doing a good job, and was asked to "fill-in" again, but with no overtime
pay. She was refused overtime pay when she requested it, and was finally
terminated after "sufficient review and investigation."
<PAGE>
Please consider this letter our demand for payment for overtime for 320
hours at time and one-half for a total of $6,678.00, as well as $1,500.00 for
interest and attorneys fees. Further demand is made in the sum of $28,000 for
the wrongful termination of Ms. Rostodha. This demand shall remain open for 10
days from the date of this letter, and if not fully accepted shall be deemed
rejected.
Please contact me if you would like to discuss this matter further.
Very truly yours,
/s/ Phillip A. Passafuime
PHILLIP A. PASSAFUIME
PAP/wjc
cc: client
<PAGE>
SCHEDULE 3.8
ENCUMBRANCES ON ASSETS
Permitted Encumbrances
- ----------------------
1. See Schedule 3.4
2. See Schedule 3.10
36
<PAGE>
SCHEDULE 3.9
FCC MATTERS
Thomas O. Hicks, the ultimate controlling partner of STC Broadcasting
and STC License Company, and certain of his associates, have attributable
interests in the following stations that implicate the FCC's ownership
restrictions:
WYGY-FM, Hamilton, OH -- WDTN-TV's Grade A signal encompasses all of
Hamilton thereby requiring a one-to-a market waiver of (S)73.3555(c) of
the FCC's Rules.
WISH-TV, Indianapolis, IN -- There is Grade B overlap between this
station and WDTN-TV, but no Grade A overlap. Assuming completion of the
LIN Television Corp. transfer of control that is presently pending, a
waiver of (S)73.3555(b) (the duopoly rule) will be required. A
temporary waiver conditioned on the outcome of the pending rulemaking
will be requested.
WING-FM, Springfield, OH -- An application presently is pending to
assign the license of this station to parties unaffiliated with Mr.
Hicks.
WEZF-FM, Burlington, VT -- A temporary waiver of the one-to-a-market
rule will be requested for the brief period of time that STC License
Company may control WNNE-TV and WPTZ-TV.
With respect to WNAC-TV, Mr. Hicks and certain of his associates have
attributable interest in three radio stations serving Providence, RI; however,
the proposed assignee of the license for WNAC-TV (Smith Acquisition License
Company) and its attributable parties do not have attributable interest in any
media in the Providence, RI area.
Mount Mansfield Television, Inc., the license of WCAX-TV, Burlington,
VT, has filed various petitions and objections with the FCC relating to the
overlap of Grade B signals between WNNE-TV and WPTZ-TV and the affiliated LMA
with WFFF-TV. See, e.g., Memorandum Opinion and Order, FCC-98-6 (January 23,
1998). It is possible WCAX-TV will oppose the acquisition and/or sale of WNNE-TV
and WPTZ-TV by STC License Company. While the FCC has granted a permanent waiver
of Section 73.3555(b) with respect to the overlap of WNNE-TV's and WPTZ-TV's
Grade B contours, this is not yet a final order, and a continuation of this
waiver will be necessary to complete the acquisition by HAT.
37
<PAGE>
SCHEDULE 3.10
PROPERTY DOCUMENTS DELIVERED
Survey of Properties
- --------------------
Studio on John Street, Salinas, CA
Summit Road
Fremont Peak
Grant Deeds
- -----------
Studio on John Street, Salinas, CA
Summit Road - Transmitter
Fremont Peak
Title Policy
- ------------
Studio on John Street, Salinas, CA
Summit Road - Transmitter
Fremont Peak
38
<PAGE>
SCHEDULE 3.10
ENCUMBRANCES ON REAL PROPERTY AND LEASEHOLD INTEREST
Studio Site and Fremont Peak
- ----------------------------
1. The lien of supplemental taxes, if any, assessed pursuant to Chapter 498
Statutes of 1983, of the State of California, arising by reason of a change in
ownership or the completion of new construction; a lien not yet due and payable.
2. Assessment For Water usage by the Monterey Regional Water Pollution Control
Agency; a lien not yet due and payable. Affects Parcel I.
3. A non-exclusive easement for the purpose shown below and rights incidental
thereto as set forth in a document
Granted To: The Pacific Telephone and Telegraph Company
Purpose: Electric Utility Line
Recorded: 6/14/49 in Volume 1144 of Official Records, at Page 421
4. The fact that said land is included within a project area of the
Redevelopment Agency shown below, and that proceedings for the Redevelopment of
said project have been instituted under the Redevelopment Law (such
redevelopment to proceed only after the adoption of the Redevelopment Plan) as
disclosed by a document.
Agency: Salinas Urban Renewal Agency, City of Salinas
Recorded: 7/26/74 in Reel 926 of Official Records at Page 695
Affects: Parcel I
Amended Redevelopment Plan
Recorded: January 28, 1995 in Reel 3193 of Official Records, at Page 584
5. A non-exclusive easement for the purpose shown below and rights incidental
thereto as set forth in a document.
Granted To: Pacific Gas and Electric Company and the Pacific Telephone and
Telegraph Company
Purpose: Electric Utility Facilities
Recorded: 6/15/81 in Reel 1487 of Official Records, at Page 782
Affects: Portions of Parcel II
6. A non-exclusive easement for the purpose shown below and rights incidental
thereto as set forth in a final Order of Condemnation and as shown on that
certain survey made by Monterey County Surveyors, Inc. dated 11/28/1995, Job
#18342 and last revised 1/10/1996.
39
<PAGE>
Granted To: Pacific Gas and Electric Company
Purpose: Electric Transmission Line
Recorded: 7/6/50 in Volume 1228 of Official Records, at Page 523 and
1/27/58 in Reel 1844 of Official Records at Page 324.
Affects: A Portion of Parcel II
7. A non-exclusive easement for the purpose shown below and rights incidental
thereto as set forth in a document and as shown on that certain survey made by
Monterey County Surveyors, Inc. dated 11/28/96, Job #18324 and last revised
1/10/96.
Granted To: Pacific Bell
Purpose: Underground Telecommunications Facilities
Recorded: 7/29/85 in Reel 1862 of Official Records, at Page 266
Affects: The Southwesterly 6 feet of the Southeasterly 34 feet of
Parcel II
8. Any rights, interests, or claims which may exist or arise by reason of the
following facts shown on a survey plat made for Smith Television of
Salinas-Monterey, L.P., dated 11/28/95, Job #18324 and last revised 1/10/96,
prepared by Monterey County Surveyors, Inc.:
(A) The fact that a KSBW sign encroaches along a portion of the Westerly
boundary over the public way.
(B) The fact that the metal facade of the studio building encroaches over the
lot line on the Northwest corner of the studio site and over a portion of the
Northerly boundary of the lot running along John Street onto the public way.
AS TO PARCEL II:
(A) The fact that overhead electric lines encroach over portions of the
Northeasterly and Southerly boundary lines of said lot.
(B) The fact that guy with 8' high C/L fence encroaches along the Southerly
boundary partially on said land and partially on said adjoining land.
(C) The fact that a steel T.V. tower with a 8' high C/L fence encroaches in the
Southwesterly boundary.
(D) The fact that an 8' high C/L fence encroaches along the Southwesterly
boundary partially on said land and partially on adjoining land.
(E) The fact that a guy encroaches along a portion of the Southerly boundary.
40
<PAGE>
9. Covenants and conditions contained in Permit Approval Notice
Executed by: KSBW, Inc.
And Between: Monterey County
Recorded: 5/25/93 in Reel 2947 of Official Records, at Page 1018
Affects: Parcel II
and as Amended by an Indemnification Agreement recorded October 4, 1993, in Reel
3004 of Official Records at Page 812.
10. Rights of tenant as tenant only under an unrecorded lease with certain
terms, covenants, conditions and provisions set forth therein.
Lessor: KSBW, Inc.
Lessee: Nextel of California
Disclosed By: Memorandum of Lease
Recorded: 1/4/94 in Reel 3048 of Official Records, at Page 1017
Affects: a portion of Parcel II
The present ownership of the leasehold created by the above Lease and other
matter affecting the interest of the Lessee are not shown herein.
11. Right of access to Parcel II. Access to the land is possible solely
pursuant to the terms, conditions, and limitations of a Permit for Right of Way
from the State of California acting through the Department of Parks and
Recreation and E.P. Communications, Inc. dated November 15, 1994.
12. Defects, liens, encumbrances, adverse claims affecting the road that is the
subject of the Permit for the Right of Way from the State of California acting
through the Department of Parks and Recreation and E.P.
Communications, Inc. dated November 15, 1994.
13. See Schedule 2.1.8, Section 3, Lease Agreements Where Station is Lessor.
Transmitter Site - Summit Road
- ------------------------------
As to property within Santa Cruz County (Parcel Four):
- ------------------------------------------------------
14. The lien of supplemental taxes, if any, assessed pursuant to the provisions
of Section 75, et. seq. of the Revenue and Taxation Code of the State of
California, arising by reason of a change in ownership or the completion of new
construction; a lien not yet due and payable.
15. The right of the public to use as a roadway so much of the herein described
premises lying within the bounds of Summit Road (Mt. Madonna Road).
41
<PAGE>
As to property within Santa Clara County (Parcels One, Two and Three):
- ----------------------------------------------------------------------
16. The lien of supplemental taxes, if any, assessed pursuant to the provisions
of Section 75, et. seq. of the Revenue and Taxation Code of the State of
California, arising by reason of a change in ownership or the completion of new
construction; a lien not yet due and payable.
17. An easement for the purpose shown below and rights incidental thereto as set
forth in document:
Granted To: County of Santa Clara, et al
Purpose: public street and road purposes and utilities
Recorded: April 18, 1984 in Book I 470 page 364, Official Records
Affects: portions of said land lying within Mt. Madonna Road (Summit
Road)
and as shown on Survey made by Garcia and Henry, Inc., dated 12/86; 5/94 and
10/31/95, and last revised 1/18/96 (Job #86218 & 94022).
18. An easement for the purpose shown below and rights incidental thereto as set
forth in the document:
Granted To: Pacific Gas and Electric Company, a California
Purpose: corporation construct, install, inspect, maintain,
Recorded: replace, remove and use facilities
Affects: July 5, 1984 in Book I 695 page 354, Official Records as second
party deems necessary located within the portion of Summit Road
as shown upon the Record of Survey Map filed for record in Book
495 of Maps at Page 11, Santa Clara County Records, lying
within said lands.
and as shown on Survey made by Garcia and Henry, Inc., dated 12/86; 5/94 and
10/31/95, and last revised 1/18/96 (Job #86218 & 94022).
19. See Schedule 2.1.8, Section 3, Lease Agreements Where Station is Lessor.
General
- -------
20. Real estate taxes not yet due and payable or the validity of which is being
contested in good faith.
21. Laws and governmental regulations that affect the use and maintenance of
such real property.
22. Mechanics', carriers', workers', repairmens', and other similar liens not
more than ninety (90) days old arising or incurred in the ordinary course of
business. There has been no work done within the past ninety (90) days that
would arise in any such liens.
23. Rights or claims of parties in possession not shown by the public records as
parties in possession as tenant only.
42
<PAGE>
SCHEDULE 3.14
EMPLOYEE BENEFIT PLANS
STC Broadcasting, Inc. is a participating affiliate in the following
Sunrise Television Corp. Benefit Plans.
1. Sunrise Television Corp. Employee Benefit Trust.
Covering the following:
. Life Insurance
. Accidental Death, Dismemberment + Loss of Sight Insurance
. Hospital
. Medical Benefits Dental Care Benefits
. Prescription and Mail Order Drug Benefit
. Vision
. Flexible Benefit Account - Dependent Premium only.
. Long term care *, **
Determination letter sought, received and valid on tax exempt status
of Trust.
STC Broadcasting, Inc. will owe the following for each employee and
separate dependent unit withdrawn from the Sunrise Health Plan, which will be
satisfied on or before the closing:
Employee $ 405.55
==========
Dependent Coverage
Additional Amount $ 1,086.23
==========
These payments are to cover incurred but unreported claims as of
closing.
2. Sunrise Television Corp. + Affiliates 401(k) Plan ***,****
3. Sunrise Television Corp. + Affiliates Long and Short-Term Disability Plan
*,**
4. Sunrise Television Corp. + Affiliates Travel - Accident Insurance Plan *, **
* No determination letter sought on plan.
** Completely funded by purchase of insurance contracts.
*** Prototype plan of Dun & Bradstreet. Dun & Bradstreet
has received favorable determination letter on
prototype plan. Sunrise Television Corp has requested
and received a favorable determination letter from
the IRS.
43
<PAGE>
**** The matching contribution component of the 401(k)
Plan for employees is presently 100% on the first 3%
of salary contributed. An additional discretionary
matching contribution is possible.
Participation in each of the foregoing plans will terminate
at closing.
5. Additional Items
a. See Seller's Employee Handbooks which are incorporated herein by
reference.
b. See Schedule 2.3.9 regarding employment agreements which may
provide for additional benefits.
6. Cost of Benefit Programs
. Health, Life and Dental
. $210 for employee
. $465 for family
. Life Insurance
. $.23 per $1,000 for Life
. $.04 per $1,000 for AD & D
. Disability
. $.32 per $100 of covered compensation
. $.29 per $100 of covered compensation
. Long Term Care
. See schedule attached
44
<PAGE>
- --------------------------------------------------------------------------------
[LOGO OF UNUM RATE SHEET
LONG TERM CARE
APPEARS HERE] SUNRISE TELEVISION CORPORATION
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BASE PLAN
- ---------
Facility Monthly Benefit $2,000
House Monthly Benefit $1,000
Facility Benefit Duration 3 Years
House Benefit 50%
Lifetime Maximum $72,000
Elimination Period 90 DAY
Home Care Level TOTAL
- --------------------------------------------------------------------------------
This rate sheet shows the cost per $2,000 of coverage
- --------------------------------------------------------------------------------
Your insurance age: Your age as of the effective date of coverage.
- --------------------------------------------------------------------------------
Select age, plan and transfer premium cost to your Benefit Election Form.
- --------------------------------------------------------------------------------
Monthly Rates
- --------------------------------------------------------------------------------
AGE BASE PLAN AGE BASE PLAN
- --------------------------------------------------------------------------------
18-30 7.00 60 38.20
31 7.40 61 41.20
32 7.60 62 44.60
33 7.80 63 48.20
34 8.20 64 52.00
35 8.60 65 58.00
36 9.00 66 62.60
37 9.40 67 67.80
38 9.80 68 73.60
39 10.40 69 79.60
40 11.00 70 86.40
41 11.40 71 97.60
42 12.00 72 109.00
43 12.80 73 120.40
44 13.40 74 131.80
45 14.20 75 143.20
46 15.00 76 155.50
47 16.00 77 169.60
48 17.00 78 185.20
49 17.80 79 201.60
50 19.00 80 219.40
51 20.20 81 230.00
52 21.60 82 260.00
53 22.80 83 283.80
54 24.40 84 307.80
55 25.80
56 28.00
57 30.40
58 32.60
59 35.40
RUN DATE: 07/01/97 Employer Funded: MUBUYUP
- --------------------------------------------------------------------------------
<PAGE>
SCHEDULE 3.15
LABOR RELATIONS
. See attached list of employees as of December 31, 1997.
. See schedule 3.14 for details on benefits and employee personnel policies
. See Schedule 2.3.9 for employee personal service contracts.
. There are no collective bargaining agreements at KSBW-TV.
. See Schedule 3.7 for potential claim on overtime by former employee.
. If not offered employment by Hearst Argyle Stations, Inc. at closing,
STC Broadcasting, Inc. has agreed with Robert Rice, general manager of
KSBW-TV, that they will pay him one year severance.
45
<PAGE>
All Current KSBW Employees by Dept.
-----------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Last Name First Name Ann. Salary Job Title Ee Status
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
==============================================================================================================================
Engineering: Fulltime: 13, Openings: 0
- ------------ -------------------------
==============================================================================================================================
- ------------------------------------------------------------------------------------------------------------------------------
Camacho Jose $37,500 Master Control Supervisor Fulltime/Perm
- ------------------------------------------------------------------------------------------------------------------------------
Dahle Randy $40,000 TV Maintenance Engineer Fulltime/Perm
- ------------------------------------------------------------------------------------------------------------------------------
Fazekas Gary $26,392 Master Control Operator Fulltime/Perm
- ------------------------------------------------------------------------------------------------------------------------------
Garden Frank $34,049 TV Maintenance Engineer Fulltime/Perm
- ------------------------------------------------------------------------------------------------------------------------------
Green Theresa $29,282 Master Control Operator Fulltime/Perm
- ------------------------------------------------------------------------------------------------------------------------------
Jagoda Stuart $62,500 Chief Engineer Fulltime/Perm
- ------------------------------------------------------------------------------------------------------------------------------
Jonasson Bob $35,218 Master Control Operator Fulltime/Perm
- ------------------------------------------------------------------------------------------------------------------------------
Koskinen Stanley $35,219 Master Control Operator Fulltime/Perm
- ------------------------------------------------------------------------------------------------------------------------------
Mincey Gil $19,760 Master Control Operator Fulltime/Perm
- ------------------------------------------------------------------------------------------------------------------------------
Sainz David $21,367 Building Maintenance Fulltime/Perm
- ------------------------------------------------------------------------------------------------------------------------------
Salas Arnold $31,357 Master Control Operator Fulltime/Perm
- ------------------------------------------------------------------------------------------------------------------------------
Scott Bob $19,760 Master Control Operator Fulltime/Perm
- ------------------------------------------------------------------------------------------------------------------------------
Snow Calvin $35,360 TV Maintenance Engineer Fulltime/Perm
- ------------------------------------------------------------------------------------------------------------------------------
Totals: $427,764
- ------------------------------------------------------------------------------------------------------------------------------
==============================================================================================================================
Programming: Fulltime: 1, Openings: 0
- ------------ ------------------------
==============================================================================================================================
- ------------------------------------------------------------------------------------------------------------------------------
AlkassAdeh Helbard $22,000 Programming Coordinator Fulltime/Perm
- ------------------------------------------------------------------------------------------------------------------------------
Totals: $22,000
- ------------------------------------------------------------------------------------------------------------------------------
==============================================================================================================================
News: Fulltime: 36, Openings: 1 Parttime: 2, Openings: 0
- ----- ------------------------- ------------------------
==============================================================================================================================
OPEN POSITION Reporter Fulltime/Perm
- ------------------------------------------------------------------------------------------------------------------------------
Alvarez Paul $23,920 Photographer Fulltime/Perm
- ------------------------------------------------------------------------------------------------------------------------------
Barnwell Richard $17,944 New Operation Coordinator Fulltime/30+hours
- ------------------------------------------------------------------------------------------------------------------------------
Balyn David $33,000 Assignment Editor Fulltime/Perm
- ------------------------------------------------------------------------------------------------------------------------------
Benitez Rapheal $21,632 Photographer Fulltime/Perm
- ------------------------------------------------------------------------------------------------------------------------------
Bohn Veryl $22,495 Photographer Fulltime/Perm
- ------------------------------------------------------------------------------------------------------------------------------
Byer Beverly $30,800 5 pm Anchor Fulltime/Contract
- ------------------------------------------------------------------------------------------------------------------------------
Callaghan Kate $27,000 Sunrise/Midday Anchor Fulltime/Perm
- ------------------------------------------------------------------------------------------------------------------------------
Clark Laura $70,035 News Director Fulltime/Perm
- ------------------------------------------------------------------------------------------------------------------------------
Cortez Felix $26,500 Reporter Fulltime/Perm
- ------------------------------------------------------------------------------------------------------------------------------
Crisan Laurel $13,260 Associate Producer Fulltime/30+hours
- ------------------------------------------------------------------------------------------------------------------------------
Evans Andrew $25,750 Weekend & Fill-in Sports Fulltime/Perm
- ------------------------------------------------------------------------------------------------------------------------------
Garrott Vance $22,048 Photographer Fulltime/Perm
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 1
<PAGE>
All Current KSBW Employees by Dept.
-----------------------------------
<TABLE>
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------
Gomez Phil $28,000 Santa Cruz Bureau Reporter Fulltime/Perm
- ---------------------------------------------------------------------------------------------------
Green Dan $85,000 5, 6, 11pm Anchor Fulltime/Perm
- ---------------------------------------------------------------------------------------------------
Haubert Chris $38,000 Executive Producer Fulltime/Perm
- ---------------------------------------------------------------------------------------------------
Kershner Dan $23,150 Photographer Fulltime/Perm
- ---------------------------------------------------------------------------------------------------
Kim Darryl $21,632 Photographer Fulltime/Perm
- ---------------------------------------------------------------------------------------------------
Langford Tom $24,500 Reporter Fulltime/Perm
- ---------------------------------------------------------------------------------------------------
Laurent Adrienne $31,500 11 pm Anchor Fulltime/Contract
- ---------------------------------------------------------------------------------------------------
Lee Jen $25,500 11 pm Producer Fulltime/Perm
- ---------------------------------------------------------------------------------------------------
Lehnen Dennis $50,250 Primary Sports Anchor Fulltime/Perm
- ---------------------------------------------------------------------------------------------------
Lewis Libby $32,500 Weekend Anchor Fulltime/Perm
- ---------------------------------------------------------------------------------------------------
Mace Scott $30,000 Sunrise/Midday WX Fulltime/Perm
- ---------------------------------------------------------------------------------------------------
Mills Steve $28,208 Photographer Fulltime/Perm
- ---------------------------------------------------------------------------------------------------
Moren Chris $7,600 Weekend Weather Anchor Parttime/Perm
- ---------------------------------------------------------------------------------------------------
Panalloni Charlotte $18,720 Associate Producer Fulltime/Perm
- ---------------------------------------------------------------------------------------------------
Price Ted $27,500 Ag/Sunrise/Midday Anchor Fulltime/Perm
- ---------------------------------------------------------------------------------------------------
Reeves Randy $27,000 6 pm Producer Fulltime/Perm
- ---------------------------------------------------------------------------------------------------
Sandoval Edgar $30,000 Weekend Anchor Fulltime/Perm
- ---------------------------------------------------------------------------------------------------
Sarkissian Aram $24,500 Sunrise Producer Fulltime/Perm
- ---------------------------------------------------------------------------------------------------
Seeger Rick $27,000 Associate Producer Fulltime/Perm
- ---------------------------------------------------------------------------------------------------
Smith Geoff $16,380 Fill-In Sports Anchor Fulltime/30+hrs
- ---------------------------------------------------------------------------------------------------
Teran Edgar $21,736 Photographer Fulltime/Perm
- ---------------------------------------------------------------------------------------------------
Thompson Dan $22,880 Photographer Fulltime/Perm
- ---------------------------------------------------------------------------------------------------
Van Aken Brian $7,600 Weekend Weather Anchor Parttime/Perm
- ---------------------------------------------------------------------------------------------------
Vanderzwaan Jim $76,000 Primary WX Anchor Fulltime/Perm
- ---------------------------------------------------------------------------------------------------
Velasco-Evers Cassady $28,000 5 pm Producer Fulltime/Perm
- ---------------------------------------------------------------------------------------------------
Wang Janelle $27,000 Gilroy Bureau Reporter Fulltime/Perm
- ---------------------------------------------------------------------------------------------------
Totals: $1,112,540
- ---------------------------------------------------------------------------------------------------
===================================================================================================
Operations: Fulltime: 18, Openings:0 Parttime: 5, Openings: 1
===================================================================================================
- ---------------------------------------------------------------------------------------------------
OPEN POSITION Operations Assistant *Parttime/Temp
- ---------------------------------------------------------------------------------------------------
Belicha Reina $20,800 Operations Coordinator Fulltime/Perm
- ---------------------------------------------------------------------------------------------------
Bennett Ray $45,000 MIS & Fulltime/Perm
- ---------------------------------------------------------------------------------------------------
Carpenter Chris $40,000 Operations Manager Fulltime/Perm
- ---------------------------------------------------------------------------------------------------
Chavez Robert $30,000 Graphic Artist Fulltime/Perm
- ---------------------------------------------------------------------------------------------------
Cleaveland Ray $39,400 Creative Services Producer/Dir Fulltime/Perm
- ---------------------------------------------------------------------------------------------------
DiVackey Ken $15,600 Operations Assistant Fulltime/Perm
- ---------------------------------------------------------------------------------------------------
Gomez Tito $15,600 Operations Assistant Fulltime/Perm
- ---------------------------------------------------------------------------------------------------
Govea Britt $29,994 Creative Services Producer/Dir Fulltime/Perm
- ---------------------------------------------------------------------------------------------------
</TABLE>
Page 2
<PAGE>
All Current KSBW Employees by Dept.
-----------------------------------
<TABLE>
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Hendricks Ron $15,600 Operations Assistant Fulltime/Perm
- -------------------------------------------------------------------------------------------------------------------
Jamieson Rebecca $8,970 Operations Assistant *Parttime/Perm
- -------------------------------------------------------------------------------------------------------------------
Jones Andrew $5,850 Operations Assistant *Parttime/Temp
- -------------------------------------------------------------------------------------------------------------------
Mayes Doug $27,583 Newscast Director Fulltime/Perm
- -------------------------------------------------------------------------------------------------------------------
McKenna Graham $21,840 Newscast Director Fulltime/Perm
- -------------------------------------------------------------------------------------------------------------------
Mora David $15,600 Operations Assistant Fulltime/Perm
- -------------------------------------------------------------------------------------------------------------------
Morphy Oshen $2,080 Operations Videographer Fulltime/Perm
- -------------------------------------------------------------------------------------------------------------------
Nisley-Martinez Rachel $29,120 Assistant Operations Manager Fulltime/Perm
- -------------------------------------------------------------------------------------------------------------------
Parga Angela $19,760 Operations Assistant Fulltime/Perm
- -------------------------------------------------------------------------------------------------------------------
Petree Vickie $11,700 Operations Assistant *Parttime/Temp
- -------------------------------------------------------------------------------------------------------------------
Schiro Dean $21,840 Newcast Director Fulltime/Perm
- -------------------------------------------------------------------------------------------------------------------
Simmons Tadhg $15,600 Operations Assistant Fulltime/Perm
- -------------------------------------------------------------------------------------------------------------------
Smith Steve $7,800 Operations Assistant *Partime/Temp
- -------------------------------------------------------------------------------------------------------------------
Townsend Jet $21,840 Newscast Director Fulltime/Perm
- -------------------------------------------------------------------------------------------------------------------
Turner Mitch $9,750 Operations Assistant *Parttime/Temp
- -------------------------------------------------------------------------------------------------------------------
Totals: $471,327
- -------------------------------------------------------------------------------------------------------------------
===================================================================================================================
Sales: Fulltime: 11 Openings: 1
- ------ --------------------------
===================================================================================================================
- -------------------------------------------------------------------------------------------------------------------
OPEN POSITION **(Will Be Commission Only) Media Consultant Fulltime/Perm
- -------------------------------------------------------------------------------------------------------------------
Clifton Kelli (2) $36,397 Sales Promotion Fulltime/Perm
- -------------------------------------------------------------------------------------------------------------------
Fratzke Nicole (1) $35,557 Media Consultant Fulltime/Perm
- -------------------------------------------------------------------------------------------------------------------
Hillan Wendy (2) $100,837 Sales Manager Fulltime/Perm
- -------------------------------------------------------------------------------------------------------------------
Klayman Jeff (2) $77,162 National Sales Manager Fulltime/Perm
- -------------------------------------------------------------------------------------------------------------------
Lazaro Helen $20,800 Sales Assistant Fulltime/Perm
- -------------------------------------------------------------------------------------------------------------------
Moran (Balertrieri) Cassandra (1) $56,182 Media Consultant Fulltime/Perm
- -------------------------------------------------------------------------------------------------------------------
Oates Judy (1) $42,463 Media Consultant Fulltime/Perm
- -------------------------------------------------------------------------------------------------------------------
Schreck Diane (2) $83,696 Regional Sales Manager Fulltime/Perm
- -------------------------------------------------------------------------------------------------------------------
Subbotin Sally (1) $64,484 Media Consultant Fulltime/Perm
- -------------------------------------------------------------------------------------------------------------------
Tervooren Barbara (1) $67,480 Media Consultant Fulltime/Perm
- -------------------------------------------------------------------------------------------------------------------
Thomas Amanda (2) $34,127 Sales Events Fulltime/Perm
- -------------------------------------------------------------------------------------------------------------------
Totals: $619,185
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
(1): Paid By Commission, Used 1998 Budget
- -------------------------------------------------------------------------------------------------------------------
(2): Includes Salary plus 1998 Budgeted Commissions.
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
===================================================================================================================
Traffic: Fulltime: 3 Openings: 0
- -------- ------------ ------------
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 3
<PAGE>
<TABLE>
<CAPTION>
All Current KSBW Employees by Dept.
-----------------------------------
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
L'Hommedieu Phrona $27,429 Traffic Fulltime/Perm
- --------------------------------------------------------------------------------------------------------------
Pendergrass Pam $41,862 Traffic Manager Fulltime/Perm
- --------------------------------------------------------------------------------------------------------------
Tilmon Marian $22,187 Traffic Fulltime/Perm
- --------------------------------------------------------------------------------------------------------------
Totals: $91,478
- --------------------------------------------------------------------------------------------------------------
==============================================================================================================
Promotions: Fulltime: 1 Openings: 0
==============================================================================================================
- --------------------------------------------------------------------------------------------------------------
Frederick Charles $29,000 Promotions Producer Fulltime/Perm
- --------------------------------------------------------------------------------------------------------------
Totals: $29,000
- --------------------------------------------------------------------------------------------------------------
==============================================================================================================
General & Administrative: Fulltime: 7 Openings: 0
==============================================================================================================
- --------------------------------------------------------------------------------------------------------------
Holmes Elaine $19,282 Receptionist Fulltime/Perm
- --------------------------------------------------------------------------------------------------------------
Kiser Shannon $26,000 Human Resources & Executive Fulltime/Perm
- --------------------------------------------------------------------------------------------------------------
Martin-Fong Joyce $31,929 Accounts Payable & Payroll Fulltime/Perm
- --------------------------------------------------------------------------------------------------------------
Penera Tessie $26,500 Accounts Receivables Fulltime/Perm
- --------------------------------------------------------------------------------------------------------------
Pires Carol $62,000 Business Manager Fulltime/Perm
- --------------------------------------------------------------------------------------------------------------
Rice Bob $176,402 General Manager Fulltime/Perm
- --------------------------------------------------------------------------------------------------------------
Wright Theresa $30,900 Community Relations Director Fulltime/Perm
- --------------------------------------------------------------------------------------------------------------
Totals: $373,013
- --------------------------------------------------------------------------------------------------------------
</TABLE>
Page 4
<PAGE>
SCHEDULE 3.16
ENVIRONMENTAL MATTERS
1. Phase I Environmental Site Assessment and Limited Soil Survey dated
March 8,1994 is incorporated herein by reference.
2. Letter from Environmental Strategies Corporation ("ESC") dated August 4,
1995 is incorporated herein by reference.
3. Letter from PHR Environmental Consultants ("PHR") dated September 19, 1995
is incorporated herein by reference.
4. Letter from "PHR" dated October 9, 1995 is incorporated herein by reference.
5. Letter from "ESC" dated October 17, 1995 is incorporated herein by
reference.
6. Letter from "PHR" dated October 30, 1995 is incorporated herein by
reference.
7. Report dated November 20, 1995 from "PHR" is incorporated herein by
reference.
8. Letter from "PHR" dated December 22, 1995 is incorporated herein by
reference.
9. Letter from "PHR" dated January 10, 1996 is incorporated herein by
reference.
10. Letter from "PHR" dated January 18, 1996 is incorporated herein by
reference.
11. Letter from "ESC" dated January 24, 1996 is incorporated herein by
reference.
12. KSBW Business Response Plan dated April 15, 1996 is incorporated herein by
reference.
13. Letter from ESC dated January 21,1998
46
<PAGE>
SCHEDULE 3.17
INSURANCE POLICIES
See attached Summary of Coverage.
STC Broadcasting, Inc. has elected to participate in the
Hicks, Muse, Tate & Furst insurance program. Coverage for the Station under all
such policies will terminate as of Closing.
47
<PAGE>
[SUNRISE TELEVISION CORP. LOGO APPEARS HERE]
STC Broadcasting, Inc.
VI.
Schedule of Insurance
and Aon Service Team
<PAGE>
= = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = =
STC BROADCASTING, INC.
SCHEDULE OF INSURANCE
---------------------
As of April 1, 1997
<TABLE>
<CAPTION>
====================================================================================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
COVERAGE CARRIER XXX NUMBER EFFECTIVE DATES LIMITS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Aircraft Liability St. Paul (USAIG) 360AC279269 4/01/97 - 4/01/98 $ 30,000,000 Combined Single Limit
(Non-Owned)
Auto Liability/Physical Federal Insurance Co 73212846 4/01/97 - 4/01/98 $ 1,000,000 CSL
Damage $ 500 Comprehensive Deductible
$ 500 Collision Deductible
$ 50,000 Hired Car Physical Damage
$ 500 Hired Car Physical Damage
Comprehensive Ded
$ 500 Hired Car Physical Damage
Collision Ded
Boiler & Machinery Hartford Steam Boiler BMINY621326501 4/01/97 - 4/01/98 $ 100,000,000 Combined PD/BI/EE/Utility
Interruption
$ 5,000,000 Ammonia Contamination
$ 5,000,000 Water Damage
$ 5,000,000 Consequential Damage
$ 5,000,000 Expediting Expense
$ 500,000 Hazardous Substance
$ 5,000 Deductible; except
-----------
12 Hours Utility Interruption
24 Hours BI/EE
Broadcasters E&O Employers Reins. Corp. BR11030 2/28/97 - 2/28/98 $ 5,000,000 Each Occurrence
Crime Federal Insurance Co. 81477513 2/28/97 - 7/01/98 $ 1,000,000 Employee Theft
$ 100,000 Depositor's Theft
$ 1,000 Deductible
</TABLE>
<PAGE>
STC BROADCASTING, INC.
SCHEDULE OF INSURANCE
---------------------
As of April 1, 1997
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
COVERAGE CARRIER POLICY NUMBER EFFECTIVE DATES LIMITS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Directors & Officers National Union Fire 4835299 2/28/97 - 07/01/99 $ 10,000,000 Limit of Liability
Liability Insurance Company $ 100,000 Corporate Retention
Employment Practices A.I. Surplus Lines 8192085 2/28/97 - 12/31/99 $ 10,000,000 Limit of Liability
Liability $ 100,000 Corporate Retention
Fiduciary Liability Federal Insurance Co. 81477513 2/28/97 - 7/01/98 $ 10,000,000 Limit of Liability
General Liability Federal Insurance Co. 35352734 4/01/97 - 4/01/98 $ 2,000,000 General Aggregate
$ 1,000,000 Products/Completed Operations
Aggregate
$ 1,000,000 Personal & Advertising Injury
$ 1,000,000 Per Occurrence
$ 1,000,000 Fire Damage
$ 10,000 Medical
Property Lexington Insurance Co. 8793049 4/01/97 - 4/01/98 $ 400,000,000 "All Risk" Including Business
Interruption
(Primary $5,000,000) Loss Limit Per Occurrence
Sublimits Are Per Occurrence unless
Otherwise Stated
$ 400,000,000 Earthquake - Annual Aggregate
(Outside CA)
$ 100,000,000 Earthquake - Annual Aggregate (CA)
$ 400,000,000 Flood - Annual Aggregate
$ 5,000 Deductible Except:
------
$ 5,000 Transit
$ 50,000 Flood
5% Earthquake - Per Unit of Insurance
$ 100,000 Earthquake Minimum - CA Only
$ 50,000 Earthquake Minimum - All Other
States
2% Wind - Tier 1 Locations
$ 100,000 Wind - Minimum
</TABLE>
<PAGE>
STC BROADCASTING, INC.
SCHEDULE OF INSURANCE
---------------------
As of April 1, 1997
<TABLE>
<CAPTION>
====================================================================================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
COVERAGE CARRIER POLICY NUMBER EFFECTIVE DATES LIMITS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Umbrella Westchester Fire Ins. Co. CUA1036790 4/01/97 - 4/01/98 $ 20,000,000 Per Occurrence
$ 20,000,000 Aggregate
$ 10,000 Self-Insured Retention
Excess Liability TIG Insurance Co. XLX9262707 4/01/97 - 4/01/98 $ 25,000,000 Per Occurrence Excess of
$20,000,000
$ 25,000,000 Aggregate
Excess Liability Federal Insurance Co. 79402066 4/01/97 - 4/01/98 $ 30,000,000 Per Occurrence Excess of
$45,000,000
$ 30,000,000 Aggregate
Excess Liability Travelers Indemnity Co. 7FSEEEX269T427297 4/01/97 - 4/01/98 $ 25,000,000 Per Occurrence Excess of
$75,000,000
$ 25,000,000 Aggregate
Workers' Compensation Federal Insurance Co. 71631919 4/01/97 - 4/01/98 Statutory (Work Comp)
Employers' Liability:
$ 1,000,000 Each Accident
$ 1,000,000 Disease-Policy Limit
$ 1,000,000 Disease-Each Employee
</TABLE>
<PAGE>
SCHEDULE 3.19
AFFILIATED TRANSACTIONS
See Schedule 2.4.16 for details
48
<PAGE>
SCHEDULE 12.2
BROKER
Hearst-Argyle Stations, Inc. and STC Broadcasting, Inc have agreed to pay
Chase Manhattan Bank a broker fee of $1.1 million. Each party agrees to pay 50%
of this amount upon the final closing of the Asset Exchange Agreement.
49
<PAGE>
EXHIBIT 10.25
Execution Copy
AMENDMENT NO. 1
AMENDMENT NO. 1 dated as of October 31, 1997, between HEARST-ARGYLE
TELEVISION, INC., a corporation duly organized and validly existing under the
laws of the State of Delaware (the "Borrower"); each of the subsidiaries of the
--------
Company party hereto and party to the Credit Agreement (individually, a
"Subsidiary Guarantor" and, collectively, the "Subsidiary Guarantors"); each of
- --------------------- ---------------------
the lenders that is a signatory hereto (individually, a "Lender" and,
------
collectively, the "Lenders"); and THE CHASE MANHATTAN BANK, as Administrative
-------
Agent.
The Borrower, the Subsidiary Guarantors, the Lenders and the
Administrative Agent are parties to a Credit Agreement dated as of August 29,
1997 (the "Credit Agreement"), providing, subject to the terms and conditions
----------------
thereof, for extensions of credit to the Borrower (by means of loans and letters
of credit) in an aggregate amount up to $1,000,000,000 (which may, in the
circumstances therein provided, be increased to $1,250,000,000).
The Borrower has requested that the Lenders amend the Credit Agreement
in order to, among other things, (i) release the Subsidiary Guarantors from
their respective obligations under the Credit Agreement and (ii) make certain
other modifications to the Credit Agreement. Accordingly, the parties hereto
hereby agree as follows:
Section 1. Definitions. Except as otherwise defined in this
-----------
Amendment No. 1, terms defined in the Credit Agreement are used herein as
defined therein (including the Credit Agreement as amended by this Amendment No.
1).
Section 2. Release. Subject to the execution and delivery of this
-------
Amendment No. 1 by each Obligor and each Lender, but effective as of the date
hereof, the Subsidiary Guarantors are hereby released and discharged from their
respective obligations under the Credit Agreement. Without limiting the
generality of the foregoing, subject to the satisfaction of such conditions
precedent, but effective the date hereof, the Subsidiary Guarantors shall cease
to be parties to the Credit Agreement and shall no longer have any rights or
obligations thereunder.
Section 3. Amendments. Subject to the satisfaction of the conditions
----------
set forth in Section 4 hereof, but effective as of the date hereof, the Credit
Agreement is hereby amended as follows:
3.01. References in the Credit Agreement (including references to the
Credit Agreement as amended hereby) to "this Agreement" (and indirect references
such as "hereunder", "hereby", "herein" and "hereof") shall be deemed to be
references to the Credit Agreement as amended hereby.
<PAGE>
-2-
3.02. Section 1.01 of the Credit Agreement shall be amended by adding
the following new definitions (to the extent not already included in said
Section 1.01) and inserting the same in the appropriate alphabetical locations
and amending the following definitions (to the extent already included in said
Section 1.01), as follows:
"Obligor" means the Borrower.
-------
"Restricted Debt Payment" means any purchase, redemption, retirement
-----------------------
or acquisition for value, or the setting apart of any money for a sinking,
defeasance or other analogous fund for the purchase, redemption, retirement
or other acquisition of, or any voluntary payment or prepayment of the
principal of or interest on, or any other amount owing in respect of, the
Senior Subordinated Notes or any Additional Permitted Indebtedness,
provided that the term "Restricted Debt Payment" shall not include (x) the
--------
repurchase of the Senior Subordinated Notes resulting from a "change of
control event" in connection with the Merger Transactions or the redemption
or defeasance of the Senior Subordinated Notes contemplated by Section
6.09(d) hereof, (y) regularly scheduled payments of principal or interest
in respect of the Senior Subordinated Notes or (z) regularly scheduled
payments of principal or interest in respect of Additional Permitted
Indebtedness, in the case of each of the foregoing clauses (y) and (z), to
the extent required pursuant to the instruments evidencing the Senior
Subordinated Notes or such Additional Permitted Indebtedness, as the case
may be.
"Senior Notes" means, collectively, the Senior Notes Due 2007 and
------------
Senior Debentures Due 2027 to be issued by the Borrower as contemplated in
a Prospectus Supplement to Prospectus dated October 17, 1997, a copy of
which has ben supplied to the Lenders prior to the execution and delivery
of Amendment No. 1 hereto.
"Senior Notes Indenture" means the Indenture between the Borrower and
----------------------
Bank of Montreal Trust Company, as trustee, pursuant to which the Senior
Notes are to be issued.
3.03. Section 1.01 of the Credit Agreement shall be amended by
deleting the definition of "Guarantee Assumption Agreement" and of "Subsidiary
Guarantor" in their entirety.
3.04. Article III of the Credit Agreement is hereby deleted its
entirety, and instead the following should be inserted under "ARTICLE III":
"ARTICLE III IS INTENTIONALLY DELETED IN ITS ENTIRETY".
<PAGE>
-3-
3.05. Section 6.09 of the Credit Agreement is hereby amended to read
as follows:
"SECTION 6.09. Certain Obligations Respecting Subsidiaries and Senior
------------------------------------------------------
Subordinated Notes.
------------------
(a) Wholly Owned Subsidiaries. Subject to paragraph (b) below, the
-------------------------
Borrower will, and will cause each of its Subsidiaries to, take such action
from time to time as shall be necessary to ensure that each of its
Consolidated Subsidiaries is a Wholly Owned Subsidiary.
(b) Designated Subsidiaries. Notwithstanding the provisions of
-----------------------
paragraph (a) above, the Borrower may at any time after the date hereof
designate any Subsidiary (other than a Subsidiary holding any Station
Licenses or the operating assets of any Stations) as a "Designated
Subsidiary" for purposes of this Agreement, by delivering to the
Administrative Agent a certificate of a senior officer of the Borrower (and
the Administrative Agent shall promptly deliver a copy thereof to each
Lender following receipt) identifying such Subsidiary, stating that such
Subsidiary shall be treated as a "Designated Subsidiary" for all purposes
hereof and certifying that, after giving effect to such designation, the
Borrower will be in compliance with the provisions of this Agreement
applicable to such Designated Subsidiary (including the provisions of
Section 7.05(f) with respect to the type of business in which a Designated
Subsidiary shall be involved and the limitations upon the aggregate amount
of Investments in Designated Subsidiaries therein specified), and such
designation will not result in a Default hereunder. Any Subsidiary of a
Designated Subsidiary shall be deemed to be a "Designated Subsidiary".
(c) Incorporation by Reference. The Borrower agrees, for the benefit
---------------------------
of the Lenders and the Administrative Agent hereunder, to perform, comply
with and be bound by each of is covenants, agreements and obligations
contained in Section 10.7 and 10.8 of the Senior Notes Indenture as
originally in effect and without giving effect to any modifications or
supplements thereto, or termination thereof, after the date thereof.
Without limiting the generality of the foregoing, the above-mentioned
provisions of the Senior Notes Indenture, together with related definitions
and ancillary provisions and schedules and exhibits, are hereby
incorporated by reference, as if set forth herein in full, mutatis
-------
mutandis; provided that, as incorporated herein (i) each reference to the
-------- --------
"Company" shall be deemed to be reference to the Borrower hereunder and
(ii) each reference to the "Debt Securities" of any series shall be deemed
to be a reference to the Loans hereunder.
(d) Retirement of Senior Subordinated Notes. Within 120 days
---------------------------------------
following the effectiveness of Amendment No. 1 hereto, the Borrower shall
either (x) take such action as shall be necessary either to redeem the
Senior Subordinated Notes in full pursuant to the provisions of Section
11.01(c) of the Indenture for the Senior Subordinated Notes or (y)
irrevocably deposit with the trustee for the Senior
<PAGE>
-4-
Subordinated Notes an amount sufficient to defease the Senior Subordinated
Notes pursuant to Section 4.03 of said Indenture, and, in the case of
either of the foregoing clauses (x) and (y), shall have delivered to the
Administrative Agent evidence satisfactory to the Administrative Agent that
such action shall have been taken or such deposit made."
3.06. Section 7.01 of the Credit Agreement is hereby amended to read
as follows:
"SECTION 7.01. Indebtedness. The Borrower will not, nor will it
------------
permit any of its Consolidated Subsidiaries to, create, incur, assume or
permit to exist any Indebtedness, except:
(a) Indebtedness hereunder;
(b) Indebtedness existing on the date hereof and set forth in
Part A of Schedule II (including Indebtedness relating to the Hearst
Stations assumed in connection with the Merger Transactions, but
excluding, following the making of the initial Loans hereunder, the
Indebtedness to be repaid with the proceeds of such Loans, as
indicated on Schedule II), together with any extensions, renewals,
refinancings or replacements of any such Indebtedness so long as the
principal thereof is not increased and such Indebtedness, as so
extended, renewed, refinanced or replaced, would constitute
Indebtedness that could be incurred in compliance with Section
7.01(g);
(c) Indebtedness of any Consolidated Subsidiary to the Borrower
or any other Consolidated Subsidiary;
(d) Guarantees by the Borrower of Indebtedness of any
Consolidated Subsidiary and by any Consolidated Subsidiary of
Indebtedness of any other Consolidated Subsidiary;
(e) Indebtedness of the Borrower and its Subsidiaries in respect
of the deferred payment of insurance premiums up to an aggregate
principal amount not exceeding $10,000,000 at any one time
outstanding;
(f) Indebtedness of any Person that becomes a Consolidated
Subsidiary after the Effective Date; provided that such Indebtedness
--------
exists at the time such Person becomes a Subsidiary and is not created
in contemplation of or in connection with such Person becoming a
Consolidated Subsidiary;
(g) additional Indebtedness of the Borrower, incurred after the
Effective Date (or assumed in connection with an Acquisition),
provided that
--------
<PAGE>
-5-
(i) the stated maturity date with respect to such
Indebtedness shall be at least six months after the Maturity
Date,
(ii) no principal payments with respect to such
Indebtedness shall be stated to be due prior to the Maturity Date
(other than in respect of a Change of Control or similar event),
except that if such Indebtedness is pari passu in right of
---- -----
payment with the obligations of the Obligors hereunder (i.e. not
subordinated in right of payment to such obligations), such
Indebtedness may provide for principal payments prior to the
Maturity Date, so long as the weighted average life to maturity
of such Indebtedness (determined in accordance with GAAP) is not
earlier than the weighted average life to maturity of the Loans
hereunder,
(iii) all covenants with respect to such Indebtedness
shall be no more restrictive then the covenants set forth in this
Agreement and the Borrower shall be in compliance with such
covenants,
(iv) such Indebtedness is not secured by any Lien on
property of the Borrower or any Consolidated Subsidiary, and
(v) at the time of such incurrence, and after giving
effect thereto, no Default shall have occurred and be continuing
and the Borrower shall be in pro forma compliance with Section
7.10 (the determination of such pro forma compliance to be
calculated, as at the end of and for the period of four fiscal
quarters most recently ended prior to the date of such incurrence
for which financial statements of the Borrower and its
Consolidated Subsidiaries are available, under the assumption
that such incurrence shall have occurred at the beginning of the
applicable period) and the Borrower shall have delivered to the
Administrative Agent a certificate of a Financial Officer showing
such calculations in reasonable detail to demonstrate such
compliance; and
(h) other Indebtedness (whether or not secured) of the Borrower
or any Consolidated Subsidiary in an aggregate principal amount not
exceeding $25,000,000 at any time outstanding, and other Indebtedness
(not secured) of the Borrower (but not of any Consolidated Subsidiary)
in an aggregate principal amount not exceeding $100,000,000 at any
time outstanding, so long as the aggregate principal amount of
Indebtedness permitted under this clause (h) shall not exceed
$125,000,000 at any time outstanding."
3.07. Section 7.03(a) of the Credit Agreement is hereby amended in
its entirety to read as follows:
<PAGE>
-6-
"(a) Mergers and Consolidations. The Borrower will not, nor will it
--------------------------
permit any of its Consolidated Subsidiaries to, enter into any transaction
of merger, consolidation or amalgamation, or liquidate, wind up or dissolve
itself (or suffer any liquidation or dissolution); provided that, subject
--------
to Section 7.04, and so long as after giving effect thereto no Default
shall have occurred and be continuing hereunder, (i) any Consolidated
Subsidiary of the Borrower may merge into or consolidate with the Borrower
or a Consolidated Subsidiary so long as the Borrower or a Consolidated
Subsidiary is the continuing or surviving party, (ii) any Consolidated
Subsidiary of the Borrower may liquidate or dissolve into the Borrower or a
Consolidated Subsidiary and (iii) the Borrower and its Consolidated
Subsidiaries may enter into the transactions permitted under clauses (B),
(C) or (D) of paragraph (b) below, and under clause (iv) of paragraph (c)
below."
3.08. The first sentence of Section 10.01(a) of the Credit Agreement
is hereby amended by deleting "or any Subsidiary Guarantor".
3.09. Section 10.02(b) of the Credit Agreement is hereby amended in
its entirety to read as follows:
"(b) Amendments. Neither this Agreement nor any provision hereof may
----------
be waived, amended or modified except pursuant to an agreement or
agreements in writing entered into by the Borrower and the Required Lenders
or by the Borrower and the Administrative Agent with the consent of the
Required Lenders; provided that no such agreement shall (i) increase any
--------
Commitment of any Lender without the written consent of such Lender, (ii)
reduce the principal amount of any Loan or LC Disbursement or reduce the
rate of interest thereon, or reduce any fees payable hereunder, without the
written consent of each Lender affected thereby, (iii) postpone the
scheduled date of payment of the principal amount of any Loan or LC
Disbursement, or any interest thereon, or any fees payable hereunder, or
reduce the amount of, waive or excuse any such payment, or postpone the
scheduled date of any reduction or expiration of any Commitment, without
the written consent of each Lender affected thereby, (iv) change Section
2.17(b) or (d) in a manner that would alter the pro rata sharing of
payments required thereby, without the written consent of each Lender, or
(v) change any of the provisions of this Section or the definition of the
term "Required Incremental Facility Lenders", "Required Lenders", "Required
Revolving Lenders" or "Required Term Lenders" or any other provision hereof
specifying the number or percentage of Lenders required to waive, amend or
modify any rights hereunder or make any determination or grant any consent
hereunder, without the written consent of each Lender; and provided further
-------- -------
that no such agreement shall amend, modify or otherwise affect the rights
or duties of the Administrative Agent, the Issuing Lender or either
Swingline Lender hereunder without the prior written consent of the
Administrative Agent, the Issuing Lender or such Swingline Lender, as the
case may be.
<PAGE>
-7-
Anything in this Agreement to the contrary notwithstanding, no waiver
or modification of any provision of this Agreement that has the effect
(either immediately or at some later time) of enabling the Borrower to
satisfy a condition precedent to the making of a Revolving Loan, or
Incremental Facility Loans of any Series, shall be effective against the
Revolving Lenders or Incremental Facility Lenders of such Series, as the
case may be, for purposes of the Revolving Commitments or Incremental
Facility Commitments of such Series unless the Required Revolving Lenders
or Required Incremental Facility Lenders of such Series, as applicable,
shall have concurred with such waiver or modification."
Section 4. Conditions to Effectiveness. The effectiveness of the
---------------------------
amendments to the Credit Agreement provided in Section 3 hereof are subject to
the fulfillment of the following conditions precedent to the satisfaction of the
Administrative Agent:
(a) Execution. This Amendment No. 1 shall have been duly executed
---------
and delivered by each Obligor and each Lender.
(b) Issuance of Senior Notes. The Senior Notes shall have been
------------------------
issued substantially as contemplated in the Prospectus Supplement to
Prospectus dated October 17, 1997, heretofore delivered to each of the
Lenders, and the Borrower shall have received the net cash proceeds
thereof.
(c) Other Documents. The Administrative Agent shall have received
---------------
such other documents as it shall have reasonably requested.
Upon the satisfaction of such conditions precedent, the Administrative
Agent shall advise the Borrower and each of the Lenders in writing, whereupon
the amendments provided for in Section 3 hereof shall become effective.
Section 5. Miscellaneous. Except as herein provided, the Credit
-------------
Agreement shall remain unchanged and in full force and effect. This Amendment
No. 1 may be executed in any number of counterparts, all of which taken together
shall constitute one and the same amendatory instrument and any of the parties
hereto may execute this Amendment No. 1 by signing any such counterpart. This
Amendment No. 1 shall be governed by, and construed in accordance with, the law
of the State of New York.
<PAGE>
-8-
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No.
1 to be duly executed and delivered as of the day and year first above written.
HEARST-ARGYLE TELEVISION, INC.
By /s/ Dean H. Blythe
----------------------------
Title:
As provided in Section 2 of the foregoing Amendment No. 1, the
Subsidiary Guarantors hereby consent to the execution and delivery of said
Amendment No. 1 and agree that, effective upon the Amendment No. 1 Effective
Date, the Subsidiary Guarantors will be released and discharged from any and all
obligations under the Credit Agreement.
SUBSIDIARY GUARANTORS
---------------------
ARKANSAS HEARST-ARGYLE HAWAII HEARST-ARGYLE
TELEVISION, INC., TELEVISION, INC.
By /s/ Dean H. Blythe By /s/ Dean H. Blythe
------------------------- ----------------------------
Name: Name:
Title: Title:
JACKSON HEARST-ARGYLE OHIO/OKLAHOMA HEARST-ARGYLE
TELEVISION, INC. TELEVISION, INC.
By /s/ Dean H. Blythe By /s/ Dean H. Blythe
------------------------- ----------------------------
Name: Name:
Title: Title:
HEARST-ARGYLE STATIONS, INC WAPT HEARST-ARGYLE
TELEVISION, INC.,
By /s/ Dean H. Blythe By /s/ Dean H. Blythe
------------------------- --------------------------
Name: Name:
Title: Title:
<PAGE>
-9-
KITV HEARST-ARGYLE KHBS HEARST-ARGYLE
TELEVISION, INC. TELEVISION, INC.
By /s/ Dean H. Blythe By /s/ Dean H. Blythe
------------------------- --------------------------
Name: Name:
Title: Title:
KMBC HEARST-ARGYLE WBAL HEARST-ARGYLE
TELEVISION, INC TELEVISION, INC
By /s/ Dean H. Blythe By /s/ Dean H. Blythe
------------------------ ----------------------------
Name: Name:
Title: Title:
WCVB HEARST-ARGYLE WISN HEARST-ARGYLE
TELEVISION, INC TELEVISION, INC
By /s/ Dean H. Blythe By /s/ Dean H. Blythe
------------------------ ----------------------------
Name: Name:
Title: Title:
WTAE HEARST-ARGYLE
TELEVISION, INC
By /s/ Dean H. Blythe
-------------------------
Name:
Title:
<PAGE>
-10-
LENDERS
-------
THE CHASE MANHATTAN BANK, MORGAN GUARANTY TRUST COMPANY
individually, as Swingline Lender OF NEW YORK, individually, as
and as Administrative Agent Swingline Lender and as
Documentation Agent
By /s/ Mitchell Gervis By /s/ Adam J. Silver
---------------------- --------------------------
Name: Mitchell J. Gervis Name: Adam J. Silver
Title: Vice President Title: Associate
BANK OF MONTREAL THE BANK OF NEW YORK
By /s/ R. Encarnacion By /s/ Brendan J. Nedzi
----------------------- -------------------------
Name: R. Encarnacion Name: Brendan J. Nedzi
Title: Director Title: Senior Vice President
BANQUE PARIBAS TORONTO DOMINION (TEXAS),
INC.
By /s/ Lynne S. Randall By /s/ Frederic Hawley
---------------------- --------------------------
Name: Lynne S. Randall Name: Frederic Hawley
Title: Director Title: Vice President
By /s/ William B. Schink
----------------------
Name: William B. Schink
Title: Director
UNION BANK OF CALIFORNIA, N.A. CAISSE NATIONALE DE CREDIT
AGRICOLE
By /s/ Sonia L. Isaacs By /s/ John McCloskey
----------------------- -------------------------
Name: Sonia L. Isaacs Name: John McCloskey
Title: Vice President Title: Vice President
<PAGE>
-11-
THE DAI-ICHI KANGYO BANK, LTD. WACHOVIA BANK, N.A.
By /s/ Frank A. Bertelle By /s/ June C. Deaver
---------------------------- -----------------------------
Name: Frank A. Bertelle Name: June C. Deaver
Title: Assiatant Vice President Title: Vice President
THE BANK OF NOVA SCOTIA FIRST HAWAIIAN BANK
By /s/ Margot C. Bright By /s/ James C. Polk
---------------------------- -----------------------------
Name: Margot C. Bright Name: James C. Polk
Title: Authorized Signatory Title: Assistant Vice President
THE MITSUBISHI TRUST AND SUNTRUST BANK, CENTRAL FLORIDA,
BANKING CORPORATION N.A.
By /s/ Beatrice E. Kossodo By /s/ Janet P. Sammons
---------------------------- ---------------------------
Name: Beatrice E. Kossodo Name: Janet P. Sammons
Title: Senior Vice President Title: Vice President
THE SANWA BANK LIMITED THE TOYO TRUST & BANKING
COMPANY, LTD.
By /s/ Paul Judike By /s/ Takashi Mikumo
---------------------------- -----------------------------
Name: Paul Judicke Name: Takashi Mikumo
Title: Vice President Title: Vice President
MICHIGAN NATIONAL BANK
By /s/ Stephane Lubin
----------------------------
Name: Stephane Lubin
Title: Relationship Manager
<PAGE>
EXHIBIT 10.26
Execution Copy
AMENDMENT NO. 2
AMENDMENT NO. 2 dated as of January 30, 1998, between HEARST-ARGYLE
TELEVISION, INC., a corporation duly organized and validly existing under the
laws of the State of Delaware (the "Borrower"); each of the lenders that is a
--------
signatory hereto (individually, a "Lender" and, collectively, the "Lenders");
------ -------
and THE CHASE MANHATTAN BANK, as Administrative Agent.
The Borrower, the Lenders and the Administrative Agent are parties to
a Credit Agreement dated as of August 29, 1997, as amended (the "Credit
------
Agreement"), providing, subject to the terms and conditions thereof, for
- ---------
extensions of credit to the Borrower (by means of loans and letters of credit)
in an aggregate amount up to $1,000,000,000 (which may, in the circumstances
therein provided, be increased to $1,250,000,000).
The Borrower has requested that the Lenders amend the Credit Agreement
in order to make certain modifications to Section 6.09 of the Credit Agreement.
Accordingly, the parties hereto hereby agree as follows:
Section 1. Definitions. Except as otherwise defined in this
-----------
Amendment No. 2, terms defined in the Credit Agreement are used herein as
defined therein (including the Credit Agreement as amended by this Amendment No.
2).
Section 2. Amendments. Subject to the satisfaction of the conditions
----------
set forth in Section 3 hereof, but effective as of the date hereof, the Credit
Agreement is hereby amended as follows:
2.01. References in the Credit Agreement (including references to the
Credit Agreement as amended hereby) to "this Agreement" (and indirect references
such as "hereunder", "hereby", "herein" and "hereof") shall be deemed to be
references to the Credit Agreement as amended hereby.
2.02. Section 6.09 of the Credit Agreement is hereby amended to read
as follows:
"SECTION 6.09. Certain Obligations Respecting Subsidiaries.
-------------------------------------------
(a) Wholly Owned Subsidiaries. Subject to paragraph (b) below, the
-------------------------
Borrower will, and will cause each of its Subsidiaries to, take such action
from time to time as shall be necessary to ensure that each of its
Consolidated Subsidiaries is a Wholly Owned Subsidiary.
(b) Designated Subsidiaries. Notwithstanding the provisions of
-----------------------
paragraph (a) above, the Borrower may at any time after the date hereof
designate any Subsidiary (other than a Subsidiary holding any Station
Licenses or the operating assets of any Stations) as
<PAGE>
-2-
a "Designated Subsidiary" for purposes of this Agreement, by delivering to
the Administrative Agent a certificate of a senior officer of the Borrower
(and the Administrative Agent shall promptly deliver a copy thereof to each
Lender following receipt) identifying such Subsidiary, stating that such
Subsidiary shall be treated as a "Designated Subsidiary" for all purposes
hereof and certifying that, after giving effect to such designation, the
Borrower will be in compliance with the provisions of this Agreement
applicable to such Designated Subsidiary (including the provisions of
Section 7.05(f) with respect to the type of business in which a Designated
Subsidiary shall be involved and the limitations upon the aggregate amount
of Investments in Designated Subsidiaries therein specified), and such
designation will not result in a Default hereunder. Any Subsidiary of a
Designated Subsidiary shall be deemed to be a "Designated Subsidiary".
(c) Incorporation by Reference. The Borrower agrees, for the benefit
---------------------------
of the Lenders and the Administrative Agent hereunder, to perform, comply
with and be bound by each of is covenants, agreements and obligations
contained in Section 10.7 and 10.8 of the Senior Notes Indenture as
originally in effect and without giving effect to any modifications or
supplements thereto, or termination thereof, after the date thereof.
Without limiting the generality of the foregoing, the above-mentioned
provisions of the Senior Notes Indenture, together with related definitions
and ancillary provisions and schedules and exhibits, are hereby
incorporated by reference, as if set forth herein in full, mutatis
-------
mutandis; provided that, as incorporated herein (i) each reference to the
-------- --------
"Company" shall be deemed to be reference to the Borrower hereunder and
(ii) each reference to the "Debt Securities" of any series shall be deemed
to be a reference to the Loans hereunder."
Section 3. Conditions to Effectiveness. The effectiveness of the
---------------------------
amendments to the Credit Agreement provided in Section 2 hereof are subject to
the fulfillment of the following conditions precedent to the satisfaction of the
Administrative Agent:
(a) Execution. This Amendment No. 2 shall have been duly executed
---------
and delivered by the Borrower and each Lender.
(b) Other Documents. The Administrative Agent shall have received
---------------
such other documents as it shall have reasonably requested.
Upon the satisfaction of such conditions precedent, the Administrative
Agent shall advise the Borrower and each of the Lenders in writing, whereupon
the amendments provided for in Section 2 hereof shall become effective.
Section 4. Miscellaneous. Except as herein provided, the Credit
-------------
Agreement shall remain unchanged and in full force and effect. This Amendment
No. 2 may be executed in any number of counterparts, all of which taken together
shall constitute one and the same amendatory instrument and any of the parties
hereto may execute this Amendment No. 2 by signing any such
<PAGE>
-3-
counterpart. This Amendment No. 2 shall be governed by, and construed in
accordance with, the law of the State of New York.
<PAGE>
-4-
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No.
2 to be duly executed and delivered as of the day and year first above written.
HEARST-ARGYLE TELEVISION, INC.
By /s/ Harry T. Hawk
_____________________________________
Name: Harry T. Hawk
Title: Senior Vice President and
Chief Financial Officer
<PAGE>
-5-
LENDERS
-------
THE CHASE MANHATTAN BANK, MORGAN GUARANTY TRUST COMPANY
individually, as Swingline Lender OF NEW YORK, individually, as
and as Administrative Agent Swingline Lender and as
Documentation Agent
By /s/ Mitchell J. Gervis By /s/ David V. Fox
--------------------------- ---------------------------
Name: Mitchell J. Gervis Name: David V. Fox
Title: Vice President Title: Vice President
BANK OF MONTREAL THE BANK OF NEW YORK
By /s/ Juliet Barnes By /s/ Debra L. McGarry
--------------------------- ---------------------------
Name: Juliet Barnes Name: Debra L. McGarry
Title: Director Title: Vice President
BANQUE PARIBAS TORONTO DOMINION (TEXAS),
INC.
By /s/ Lynne S. Randall By /s/ Neva Nesbitt
--------------------------- ---------------------------
Name: Lynne S. Randall Name: Neva Nesbitt
Title: Director Title: Vice President
By /s/ William B. Schink
---------------------------
Name: William B. Schink
Title: Director
UNION BANK OF CALIFORNIA, N.A. CREDIT AGRICOLE INDOSUEZ
By /s/ William D. Gooch By /s/ R. Craig Welch
--------------------------- ---------------------------
Name: William D. Gooch & /s/ Cheryl A. Solaneto
Title: Vice President ---------------------------
Name: R. Craig Welsh
Title: First Vice President
<PAGE>
-6-
THE DAI-ICHI KANGYO BANK, LTD. WACHOVIA BANK, N.A.
By /s/ Frank A. Bertelle By /s/ James McCreary
--------------------------------- ---------------------------
Name: Frank A. Bertelle Name: James McCreary
Title: Assistant Vice President Title: Senior Vice President
THE BANK OF NOVA SCOTIA FIRST HAWAIIAN BANK
By /s/ Vincent J. Fitzgerald, Jr. By /s/ James C. Polk
--------------------------------- ---------------------------
Name: Vincent J. Fitzgerald, Jr. Name: James C. Polk
Title: Authorized Signatory Title: Assistant Vice President
THE MITSUBISHI TRUST AND SUNTRUST BANK, CENTRAL FLORIDA,
BANKING CORPORATION N.A.
By /s/ T. Hayashi By /s/ Janet P. Sammons
--------------------------------- ---------------------------
Name: Toshihiro Hayashi Name: Janet P. Sammons
Title: Senior Vice President Title: Vice President
THE SANWA BANK LIMITED THE TOYO TRUST & BANKING
COMPANY, LTD.
By /s/ Paul Judicke By /s/ T. MiKumo
--------------------------------- --------------------------
Name: Paul Judicke Name: T. MiKumo
Title: Vice President Title: Vice President
MICHIGAN NATIONAL BANK
By /s/ Stephane Lubin
---------------------------------
Name: Stephane Lubin
Title: Relationship Manager
<PAGE>
EXHIBIT 10.27
ASSET EXCHANGE AGREEMENT
by and among
-------------------------------
STC BROADCASTING, INC.,
STC BROADCASTING OF VERMONT, INC.,
STC LICENSE COMPANY,
STC BROADCASTING OF VERMONT SUBSIDIARY, INC.
as STC
and
HEARST-ARGYLE STATIONS, INC.
as HAT
-------------------------------
February 18, 1998
<PAGE>
INDEX
TAB DOCUMENTS
- --- ---------
1. Asset Exchange Agreement
2. Exhibits to Asset Exchange Agreement
Exhibit A: Bill of Sale and Assignment of Assets
Exhibit B: Assignment of FCC Licenses
Exhibit C: Assignment of Contracts and Leases
Exhibit D: Assumption Agreement
Exhibit E: Credit Facilities
3. STC Disclosure Schedules
4. HAT Guaranty
<PAGE>
ASSET EXCHANGE AGREEMENT
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.
Dated as of February 18, 1998
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE 1. DEFINITIONS AND REFERENCES......................................3
ARTICLE 2. EXCHANGE OF ASSETS..............................................3
2.1. Transfer by the STC Exchange Entities..............................3
2.2. Transfer by HAT....................................................4
2.3. Description of the Assets..........................................4
2.3.1. FCC Licenses..............................................4
2.3.2. Real and Leased Property Interests........................4
2.3.3. Tangible Personal Property................................5
2.3.4. Intellectual Property.....................................5
2.3.5. Program Contracts.........................................5
2.3.6. Trade-out Agreements......................................6
2.3.7. Broadcast Time Sales Agreement............................6
2.3.8. Network Affiliation Agreements............................6
2.3.9. Operating Contracts.......................................6
2.3.10. Vehicles.................................................6
2.3.11. Files and Records........................................7
2.3.12. Auxiliary Facilities.....................................7
2.3.13. Permits and Licenses.....................................7
2.3.14. Goodwill.................................................7
2.3.15. Certain Accounts Receivable..............................7
2.3.16. Rights Under the Sinclair Documents......................7
2.3.17. Certain Cash.............................................8
2.4. Excluded Assets....................................................8
2.4.1. Cash......................................................8
2.4.2. Certain Accounts Receivable...............................8
2.4.3. Personal Property Disposed Of.............................8
2.4.4. Insurance.................................................8
2.4.5. Employee Plans and Assets.................................9
2.4.6. Right to Tax Refunds......................................9
2.4.7. Certain Books and Records.................................9
2.4.8. Third-Party Claims........................................9
2.4.9. Rights Under this Agreement...............................9
2.4.10. Rights Under the HAT Merger Agreement....................9
2.4.11. Names....................................................10
2.4.12. Deposit and Prepaid Expenses.............................10
2.4.13. Shared Contracts.........................................10
2.4.14. Labor Union Contracts....................................10
2.4.15. Miscellaneous Excluded Assets............................10
<PAGE>
TABLE OF CONTENTS (continued)
-----------------
Page
----
2.4.16. Affiliated Transactions..................................10
2.4.17. Assets of Other Television Stations......................11
2.5. Exchange of Assets.................................................11
2.6. Proration Amounts..................................................11
2.7. Accounts Receivable................................................13
2.8. Allocation of Asset Values.........................................15
2.9. Assumption of Liabilities by STC...................................15
2.10. Assumption of Liabilities by HAT..................................16
2.11. Matters Related to the Burlington Stations........................16
2.12. Matters Related to the Providence Stations........................18
2.13. Financing of Burlington Stations..................................19
2.14. Working Capital...................................................19
ARTICLE 3. REPRESENTATIONS AND WARRANTIES BY THE STC PARTIES...............20
3.1. Organization and Standing..........................................20
3.2. Authorization......................................................20
3.3. Compliance with Laws...............................................21
3.4. Consents and Approvals; No Conflicts...............................21
3.5. Financial Statements; Undisclosed Liabilities......................21
3.6. Absence of Certain Changes or Events...............................22
3.7. Absence of Litigation..............................................23
3.8. Assets.............................................................23
3.9. FCC Matters........................................................23
3.10. Real Property.....................................................24
3.11. Intellectual Property.............................................25
3.12. Station Contracts.................................................26
3.13. Taxes.............................................................26
3.14. Employee Benefit Plans............................................27
3.15. Labor Relations...................................................29
3.16. Environmental Matters.............................................29
3.17. Insurance.........................................................30
3.18. Reports...........................................................30
3.19. Affiliated Transactions...........................................31
3.20. Special Purpose...................................................31
3.21. Availability of Funds.............................................31
ARTICLE 4. REPRESENTATIONS AND WARRANTIES BY HAT...........................31
4.1. Organization and Standing..........................................31
4.2. Authorization......................................................32
4.3. Compliance with Laws...............................................32
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TABLE OF CONTENTS (continued)
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4.4. Consents and Approvals; No Conflicts...............................32
4.5. Financial Statements; Undisclosed Liabilities......................33
4.6. Absence of Certain Changes or Events...............................34
4.7. Absence of Litigation..............................................34
4.8. Assets.............................................................34
4.9. FCC Matters........................................................35
4.10. Real Property.....................................................36
4.11. Intellectual Property.............................................37
4.12. Station Contracts.................................................37
4.13. Taxes.............................................................37
4.14. Employee Benefit Plans............................................38
4.15. Labor Relations...................................................40
4.16. Environmental Matters.............................................40
4.17. Insurance.........................................................41
4.18. Reports...........................................................41
4.19. Affiliated Transactions...........................................42
ARTICLE 5. PRE-CLOSING FILINGS.............................................42
5.1. Applications for FCC Consent.......................................42
5.2. Hart-Scott-Rodino..................................................42
5.3. Non-Required Actions...............................................43
ARTICLE 6. COVENANTS AND AGREEMENTS OF THE PARTIES.........................43
6.1. Negative Covenants.................................................43
6.1.1. Dispositions; Mergers.....................................43
6.1.2. Accounting Principles and Practices.......................43
6.1.3. Trade-out Agreements......................................43
6.1.4. Broadcast Time Sales Agreements...........................44
6.1.5. Network Affiliation Agreements and TBAs...................44
6.1.6. Additional Agreements.....................................44
6.1.7. Breaches..................................................44
6.1.8. Employee Matters..........................................44
6.1.9. Actions Affecting FCC Licenses............................45
6.1.10. Programming..............................................45
6.1.11. Encumbrances.............................................45
6.1.12. Transactions With Affiliates.............................45
6.2. Affirmative Covenants..............................................45
6.2.1. Preserve Existence........................................45
6.2.2. Normal Operations.........................................45
6.2.3. Maintain FCC Licenses.....................................46
6.2.4. Network Affiliation.......................................46
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TABLE OF CONTENTS (continued)
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6.2.5. Station Contracts.........................................46
6.2.6. Taxes.....................................................46
6.2.7. Access....................................................46
6.2.8. Insurance.................................................47
6.2.9. Financial Statements......................................47
6.2.10. Consents.................................................48
6.2.11. Corporate Action.........................................48
6.2.12. Environmental Audit......................................49
6.2.13. Sinclair Agreement.......................................49
6.3. Confidentiality....................................................49
6.4. Collection of Receivables..........................................50
6.5. Possession and Control.............................................50
6.6. Risk of Loss.......................................................51
6.7. Public Announcements...............................................51
6.8. Sinclair Employee Matters..........................................51
6.9. Other Employee Matters.............................................53
6.10. Disclosure Schedules..............................................54
6.11. Bulk Sales Laws...................................................55
6.12. Tax Matters.......................................................55
6.13. Preservation of Books and Records.................................57
6.14. Affiliated Transactions...........................................57
6.15. Clear Channel Agreements..........................................57
6.16. Sinclair Agreement................................................58
6.17. Environmental Remediation.........................................58
6.18. Certain FCC Matters...............................................58
ARTICLE 7. CONDITIONS PRECEDENT TO OBLIGATIONS OF STC......................58
7.1. Closing Under the Sinclair Agreement...............................59
7.2. Representations and Covenants......................................59
7.3. Delivery of Documents..............................................59
7.4. Consents...........................................................59
7.5. ABC Affiliation Agreement..........................................59
7.6. FCC Order..........................................................60
7.7. Hart-Scott-Rodino..................................................60
7.8. Legal Proceedings..................................................60
ARTICLE 8. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF HAT..................60
8.1. Closing Under the Sinclair Agreement...............................60
8.2. Representations and Covenants......................................61
8.3. Delivery of Documents..............................................61
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TABLE OF CONTENTS (continued)
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8.4. Consents...........................................................61
8.5. FCC Order..........................................................61
8.6. Hart-Scott-Rodino..................................................61
8.7. Legal Proceedings..................................................62
8.8. LKE Facilitation Transactions......................................62
ARTICLE 9. CLOSING.........................................................62
9.1. Closing. ..........................................................62
9.2. Time and Place of Closing..........................................62
9.3. Delivery by STC at the Closing.....................................62
9.3.1. Agreements and Instruments................................62
9.3.2. Consents..................................................63
9.3.3. Certified Resolutions.....................................63
9.3.4. Officers' Certificates....................................63
9.3.5. Good Standing Certificates................................63
9.4. Delivery by HAT at the Closing.....................................64
9.4.1. Agreements and Instruments................................64
9.4.2. Consents..................................................64
9.4.3. Certified Resolutions.....................................64
9.4.4. Officers' Certificates....................................64
9.4.5. Good Standing Certificates................................65
ARTICLE 10. SURVIVAL; INDEMNIFICATION......................................65
10.1. Survival of Representations.......................................65
10.2. Indemnification by STC............................................66
10.3. Indemnification by HAT............................................66
10.4. Limitations on Indemnification....................................67
10.5. Conditions of Indemnification.....................................67
10.6. Special Tax Indemnification by HAT................................68
10.7. Cure of Breach....................................................70
ARTICLE 11. TERMINATION....................................................70
11.1. Termination of Exchange by the Parties............................70
11.2. Termination of Agreement..........................................72
11.3. Effect of Termination.............................................72
ARTICLE 12. GENERAL PROVISIONS.............................................73
12.1. Additional Actions, Documents and Information.....................73
12.2. Brokers...........................................................73
12.3. Expenses and Taxes................................................74
12.4. Notices...........................................................75
12.5. Waiver. ..........................................................76
12.6. Benefit and Assignment............................................76
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TABLE OF CONTENTS (continued)
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12.7. Entire Agreement; Amendment.......................................77
12.8. Severability......................................................77
12.9. Headings..........................................................77
12.10. Governing Law....................................................77
12.11. Signature in Counterparts........................................78
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<PAGE>
SCHEDULES
Schedule 2.3.1 FCC Licenses
Schedule 2.3.2 Real Property Interests
Schedule 2.3.3 Tangible Personal Property
Schedule 2.3.4 Intellectual Property
Schedule 2.3.5 Program Contracts
Schedule 2.3.6 Trade-out Agreements
Schedule 2.3.8 Network Affiliation Agreements
Schedule 2.3.9 Other Operating Contracts
Schedule 2.3.10 Vehicles
Schedule 2.3.12 Auxiliary Facilities
Schedule 2.3.14 Accounts Receivable
Schedule 2.4.13 Shared Contracts
Schedule 2.4.14 Labor Union Contracts
Schedule 2.4.15 Excluded Assets
Schedule 2.4.16 Affiliated Transactions
Schedule 2.12 WNAC/WPRI Assets
Schedule 3.4 STC Consents
Schedule 3.5 STC Financial Statements
Schedule 3.6 STC Absence of Certain Changes or Events
Schedule 3.7 STC Litigation
Schedule 3.8 STC Encumbrances on Assets
Schedule 3.9 STC FCC Matters
Schedule 3.10 STC Real Property and Encumbrances
Schedule 3.14 STC Employee Benefit Plans
Schedule 3.15 STC Employee Matters
Schedule 3.16 STC Environmental Matters
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<PAGE>
Schedule 3.17 STC Insurance
Schedule 3.19 STC Affiliated Transactions
Schedule 4.4 HAT Consents
Schedule 4.6 HAT Absence of Certain Changes or Events
Schedule 4.7 HAT Litigation
Schedule 4.8 HAT Encumbrances on Assets
Schedule 4.9 HAT FCC Matters
Schedule 4.10 HAT Real Property and Encumbrances
Schedule 4.14 HAT Employee Benefit Plans
Schedule 4.15 HAT Employee Matters
Schedule 4.16 HAT Environmental Matters
Schedule 4.17 HAT Insurance
Schedule 4.19 HAT Affiliated Transactions
Schedule 12.2 Brokers
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<PAGE>
EXHIBITS
EXHIBIT A Form of Bill of Sale and Assignment of Assets
EXHIBIT B Form of Assignment of FCC Licenses
EXHIBIT C Form of Assignment of Contracts and Leases
EXHIBIT D Form of Assumption Agreement
EXHIBIT E Form of Credit Facilities
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<PAGE>
EXHIBIT 10.27
ASSET EXCHANGE AGREEMENT
THIS ASSET EXCHANGE AGREEMENT (this "Agreement") is entered into as of
this 18th day of February, 1998, by and among 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"), and HEARST-ARGYLE STATIONS,
INC., a Nevada corporation ("HAT").
WHEREAS, pursuant to an Asset Purchase Agreement dated as of July 16,
1997 (the "Heritage Agreement"), by and among Sinclair Broadcast Group, Inc., a
Maryland corporation ("Sinclair Parent"), and certain indirect subsidiaries (the
"Heritage Subsidiaries") of Heritage Media Corporation, a Delaware corporation
("HMC"), Sinclair has agreed to buy, and the Heritage Subsidiaries have agreed
to sell, certain broadcast stations owned, controlled or operated by the
Heritage Subsidiaries, including (i) 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) television broadcast station WNNE (TV), Channel 31,
Hartford, Vermont ("WNNE") (WPTZ, WFFF and WNNE are collectively referred to
herein as the "Burlington Stations");
WHEREAS, STCBV and 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, the assets of the Burlington Stations, all
subject to the terms described in the Sinclair Agreement;
WHEREAS, prior to any closing under the Sinclair Agreement, STCBV
intends to assign to STCBV Sub all of STCBV's rights under the Sinclair
Documents to acquire the Assets (as defined in the Sinclair Agreement);
WHEREAS, STC License Company is the licensee of television broadcast
station KSBW (TV), Channel 8, Salinas, California ("KSBW"), pursuant
<PAGE>
to certain authorizations issued by the FCC, and STC Broadcasting operates KSBW
and owns or leases certain assets used in connection with the operation of KSBW
(KSBW, WPTZ and WNNE are collectively referred to herein as the "STC Stations");
WHEREAS, HAT is the licensee of television broadcast station WDTN
(TV), Channel 2, Dayton, Ohio ("WDTN"), pursuant to certain authorizations
issued by the FCC, and HAT operates WDTN and owns or leases certain assets used
in connection with the operation of WDTN;
WHEREAS, HAT (as successor-in-interest to WNAC Argyle Television,
Inc., a Nevada corporation ("WNAC Argyle")) is the licensee of television
broadcast station WNAC (TV), Channel 64, Providence, Rhode Island ("WNAC"),
pursuant to certain authorizations issued by the FCC (WDTN and WNAC are
collectively referred to herein as the "HAT Stations") (the STC Stations and the
HAT Stations are sometimes each individually referred to herein as a "Station");
WHEREAS, Clear Channel Television License, Inc. is the licensee of
WPRI-TV, Channel 12, Providence, Rhode Island ("WPRI"), pursuant to certain
authorizations issued by the FCC;
WHEREAS, pursuant to a Joint Marketing and Programming Agreement dated
as of June 10, 1996, and a Reciprocal Right of First Refusal dated as of June
10, 1996 (collectively, the "Clear Channel Agreements"), both between Clear
Channel Television, Inc. ("Clear Channel") and HAT (as successor-in-interest to
WNAC Argyle and Providence Argyle Television, Inc., a Delaware corporation),
each of HAT and Clear Channel have certain rights and obligations regarding WNAC
and WPRI;
WHEREAS, STC desires to assign, transfer and convey to HAT all of
STC's right, title and interest in the assets of the STC Stations, and HAT
desires to assign, transfer and convey to STC all of HAT's right, title and
interest in the Clear Channel Agreements and the assets of the HAT Stations, all
subject to the terms and conditions described in this Agreement;
WHEREAS, the parties hereto intend that certain of the conveyances
contemplated by this Agreement shall constitute a "like-kind exchange" (the
"Like-Kind Exchange") and that certain of the transactions hereunder shall
qualify as such for nonrecognition of income under Section 1031 of the Code; and
WHEREAS, in order to facilitate the Like-Kind Exchange, immediately
prior to or at the Closing hereunder, STC shall take such actions in order that
all of the FCC Licenses of the STC Stations shall be held by STC License Company
and all other Assets of STC shall be held by STC Broadcasting as
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<PAGE>
contemplated by Section 8.8 (after the consummation of any such actions, "STC
-----------
Broadcasting and "STC License Company" are sometimes referred to herein as the
"STC Exchange Entities").
WHEREAS, pursuant to a guaranty given as of the date hereof by Hearst-
Argyle Television, Inc., a Delaware corporation ("H-A"), H-A has guaranteed to
STC the prompt and complete performance of the obligations of HAT arising under
or pursuant to this Agreement.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements hereinafter set forth, the parties hereto hereby agree
as follows:
ARTICLE 1.
DEFINITIONS AND REFERENCES
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 (such definitions to be equally
applicable to both the singular and plural forms of the terms defined). Unless
otherwise specified, all references herein to "Articles" or "Sections" are to
Articles or Sections of this Agreement.
ARTICLE 2.
EXCHANGE OF ASSETS
2.1. Transfer by the STC Exchange Entities.
Subject to the terms and conditions hereof and in reliance upon the
representations, warranties and agreements contained herein, (a) STC
Broadcasting shall assign, transfer, convey and deliver to HAT free and clear of
any Encumbrances other than Permitted Encumbrances, and HAT shall acquire and
accept from STC Broadcasting all right, title and interest of STC Broadcasting
in, to and under all real, personal and mixed assets, rights, benefits and
privileges, both tangible and intangible, owned, leased, used or useful by STC
Broadcasting in connection with the business and operations of the STC Stations
other than the STC License Assets (collectively, the "STC Non-License Assets");
and (b) STC License Company shall assign, transfer, convey and deliver to HAT
free and clear of any Encumbrances other than Permitted Encumbrances, and HAT
shall acquire and accept from STC License Company, all right, title and interest
of STC License Company in, to and under all STC License Assets (the STC Non-
License Assets and the STC License Assets are collectively referred to herein as
the "STC Assets"). The STC Assets shall exclude the STC Excluded Assets
described in Section 2.4.
-----------
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<PAGE>
2.2. Transfer by HAT.
Subject to the terms and conditions hereof and in reliance upon the
representations, warranties and agreements contained herein, (a) HAT shall
assign, transfer, convey and deliver to STC Broadcasting free and clear of any
Encumbrances other than Permitted Encumbrances, and STC Broadcasting shall
acquire and accept from HAT, all right, title and interest of HAT in, to and
under all real, personal and mixed assets, rights, benefits and privileges, both
tangible and intangible, owned, leased, used or useful by HAT in connection with
the business and operations of the HAT Stations other than the HAT License
Assets (collectively, the "HAT Non-License Assets"); and (b) HAT shall assign,
transfer, convey and deliver to STC License Company (and in the case of the FCC
Licenses for WNAC, for assignment, transfer, conveyance and delivery by STC
License Company immediately thereafter on the Closing Date to Smith Acquisition
License Company, a Delaware corporation ultimately controlled by Robert N. Smith
("SALC")) free and clear of any Encumbrances other than Permitted Encumbrances,
and STC License Company shall acquire and accept from HAT, all right, title and
interest of HAT in, to and under all HAT License Assets (the HAT License Assets
and the HAT Non-License Assets are collectively referred to herein as the "HAT
Assets") (the STC Assets and the HAT Assets are sometimes each individually
referred to herein as "Assets"). The HAT Assets shall exclude the HAT Excluded
Assets described in Section 2.4.
-----------
2.3. Description of the Assets.
The Assets for each Station shall include, without limitation, all of
the right, title and interest of the party transferring such Assets in, to and
under the items described below. The party transferring Assets is sometimes
referred to herein as the "Transferring Party"; and the party acquiring and
accepting Assets from the Transferring Party is sometimes referred to herein as
the "Recipient Party".
2.3.1. FCC Licenses.
All licenses, permits and other authorizations issued by the
FCC for the operation of the Stations of the Transferring Party (the "FCC
Licenses"), including without limitation those listed in Schedule 2.3.1, and all
--------------
applications therefor, together with any renewals, extensions or modifications
thereof and additions thereto.
2.3.2. Real and Leased Property Interests.
(a) All the real property, including, without limitation, all
land, fee interests, easements and other interests of every kind and description
-4-
<PAGE>
in real property, buildings, structures, fixtures, appurtenances, towers and
antennae, and other improvements thereon owned by the Transferring Party and
used or useful in connection with the business and operations of its Stations
("Real Property"), including, without limitation, all of those items listed in
Schedule 2.3.2.
- --------------
(b) All the real property leasehold interests, including,
without limitation, leases and subleases of any land, easements and other real
property leasehold interests of every kind and description in real property,
buildings, structures, fixtures, appurtenances, towers and antennae, and other
improvements thereon leased by the Transferring Party in connection with the
business and operations of its Stations ("Leased Property"), including, without
limitation, all of those items listed in Schedule 2.3.2.
--------------
2.3.3. Tangible Personal Property.
All of the furniture, fixtures, furnishings, machinery,
computers, equipment, inventory, spare parts, supplies, office materials and
other tangible property of every kind and description owned, leased or used by
the Transferring Party in connection with the business and operations of its
Stations, together with any replacements thereof and additions thereto made
before the Closing Date, and less any retirements or dispositions thereof made
before the Closing Date in the Ordinary Course of Business, including, without
limitation, those items which have a book value in excess of Five Thousand
Dollars ($5,000), all of which are set forth and identified in Schedule 2.3.3.
--------------
2.3.4. Intellectual Property.
All of the service marks, copyrights, franchises, trademarks,
trade names, jingles, slogans, logotypes and other similar intangible assets
maintained, owned, leased or used by the Transferring Party in connection with
the business and operations of its Stations (including any and all applications,
registrations, extensions and renewals relating thereto) (the "Intellectual
Property"), and all of the rights, benefits and privileges associated therewith
including, without limitation, the right to use the call letters for its
Stations identified in Schedule 2.3.4.
--------------
2.3.5. Program Contracts.
The program licenses and contracts under which the
Transferring Party is authorized to broadcast programs on its Stations
(collectively the "Program Contracts") including, without limitation, (a) all
program (cash and non-cash) licenses and contracts listed on Schedule 2.3.5, and
--------------
(b) 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.
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<PAGE>
2.3.6. Trade-out Agreements.
All contracts and agreements (excluding Program Contracts)
pursuant to which commercial air time on the Transferring Party's Stations has
been sold, traded or bartered in consideration for any property or services in
lieu of or in addition to cash (collectively, the "Trade-out Agreements")
including, without limitation, those set forth and identified in Schedule 2.3.6.
--------------
2.3.7. Broadcast Time Sales Agreement.
All contracts and agreements pursuant to which commercial air
time on the Transferring Party's Stations has been sold for cash (collectively
the "Time Sales Agreements").
2.3.8. Network Affiliation Agreements.
All network affiliation agreements and other contracts of the
Stations of the Transferring Party with a television broadcast network
(collectively, the "Network Agreements") including, without limitation, those
listed on Schedule 2.3.8.
--------------
2.3.9. Operating Contracts.
All other operating contracts and agreements relating to the
business or operations of the Transferring Party's Stations, all material such
contracts as of the date hereof being listed on Schedule 2.3.9 (including,
--------------
without limitation, the Clear Channel Agreements, all employment agreements and
talent contracts, all leases and subleases relating to the Leased Property, all
agreements relating to any motor vehicles, and all national and local
advertising representation agreements for its Stations), together with all
contracts and agreements that will be entered into between the date of this
Agreement and the Closing Date in accordance with the terms of this Agreement
(collectively, the "Operating Contracts" and together with the Program
Contracts, Trade-out Agreements, Time Sales Agreements and Network Agreements,
the "Station Contracts").
2.3.10. Vehicles.
All automotive equipment and motor vehicles maintained,
owned, leased or otherwise used by the Transferring Party in connection with the
business and operations of its Stations, including, without limitation, those
set forth and described in Schedule 2.3.10.
---------------
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<PAGE>
2.3.11. Files and Records.
All engineering, business and other books, papers, logs,
files and records pertaining to the business and operations of the Transferring
Party's Stations, but not the organizational documents and records of the
Transferring Party.
2.3.12. Auxiliary Facilities.
All translators, earth stations, and other auxiliary
facilities, and all applications therefor owned, leased or otherwise used or
useful by the Transferring Party in connection with the business and operations
of its Stations, including, without limitation, those set forth and described in
Schedule 2.3.12.
- ---------------
2.3.13. Permits and Licenses.
All permits, approvals, orders, authorizations, consents,
licenses, certificates, franchises, exemptions of, or filings or registrations
with, any court or Governmental Authority (other than the FCC) in any
jurisdiction, which have been issued or granted to or are owned or used or
useful by the Transferring Party in connection with the business and operations
of its Stations and all pending applications therefor.
2.3.14. Goodwill.
The business of the Transferring Party's Stations as a
"going concern", customer relationships and goodwill.
2.3.15. Certain Accounts Receivable.
As to STC, all Accounts Receivable arising out of the
business and operations of KSBW, and all Accounts Receivable arising out of the
business and operations of the Burlington Stations from the STC Transfer Date
under the Sinclair Agreement. As to HAT, all Accounts Receivable arising out of
the business and operations of WDTN. Schedule 2.3.15 contains a true and
---------------
complete list, dated as of December 31, 1997, of all Accounts Receivable with
respect to KSBW and WDTN as of such date.
2.3.16. Rights Under the Sinclair Documents.
As to STC, all of STCBV's rights under or pursuant to the
Sinclair Documents except to the extent that such rights pertain to or affect
WFFF.
-7-
<PAGE>
2.3.17. Certain Cash.
As to STC, all cash, cash equivalents or deposits arising
out of the business and operations of the Burlington Stations from and after the
STC Transfer Date, and all interest payable in connection with any such cash,
cash equivalents or deposits after giving effect to the payment of operating
expenses of the Burlington Stations, but excluding any proceeds of a WFFF
Disposition (as defined in that certain Credit Agreement to be entered into by
HAT and STCBV Sub in connection with the Burlington Financing Amount).
2.4. Excluded Assets.
Notwithstanding anything to the contrary in this Agreement, there
shall be excluded from the Assets of each Transferring Party and retained by
such Transferring Party, to the extent in existence as of the Closing Date, the
following assets (collectively, the "Excluded Assets") (the Excluded Assets for
the STC Stations are sometimes individually referred to herein as the "STC
Excluded Assets"; and the Excluded Assets for the HAT Stations are sometimes
individually referred to herein as the "HAT Excluded Assets").
2.4.1. Cash.
Except as set forth in Section 2.3.17, all cash, cash
--------------
equivalents or deposits held by such Transferring Party, all interest payable in
connection with any such cash, cash equivalents or deposits or short term
investments, bank balances and rights in and to bank accounts, marketable and
other securities of such Transferring Party.
2.4.2. Certain Accounts Receivable.
As to STC, all accounts receivable assigned to STCBV Sub for
purposes of collection only under the Sinclair Agreement (the "Sinclair
Receivables"); and, as to HAT, all amounts which are payable to HAT under the
Clear Channel Agreements which were earned prior to the Closing Date.
2.4.3. Personal Property Disposed Of.
All tangible personal property disposed of or consumed in the
Ordinary Course of Business as permitted by this Agreement.
2.4.4. Insurance.
All contracts of insurance and all insurance plans and the
assets thereof.
-8-
<PAGE>
2.4.5. Employee Plans and Assets.
All Plans, Benefit Arrangements (except for any Station
Contracts, Proration Items or other matters which are specifically required to
be assumed by the Recipient Party pursuant to the terms thereof), Qualified
Plans and Welfare Plans and the assets thereof.
2.4.6. Right to Tax Refunds.
Any and all claims of the Transferring Party with respect to
any Tax refunds.
2.4.7. Certain Books and Records.
All of (a) the Transferring Party's organizational documents,
corporate books and records (including minute books and stock ledgers and
records), and originals of account books of original entry, (b) duplicated
copies of any books, records, accounts, checks, payment records, Tax records
(including payroll, unemployment, real estate and other Tax records) and other
similar books, records and information of the Transferring Party relating to the
Transferring Party's operation of the business of its Stations prior to the
Closing Date, (c) all records prepared by or on behalf of the Transferring Party
in connection with the acquisition by it or conveyance of its Stations, and (d)
all records and documents relating to any Excluded Assets.
2.4.8. Third-Party Claims.
To the extent related to any Excluded Assets, all rights and
claims of the Transferring Party whether mature, contingent or otherwise,
against third parties relating to the Assets or the Stations of the Transferring
Party, whether in tort, contract, or otherwise.
2.4.9. Rights Under this Agreement.
All of the Transferring Party's rights under or pursuant to
this Agreement or any other rights in favor of the Transferring Party pursuant
to the other agreements contemplated hereby.
2.4.10. Rights Under the HAT Merger Agreement.
As to HAT, all of HAT's rights under or pursuant to that (a)
certain Amended and Restated Agreement and Plan of Merger, dated as of March 26,
1997, by and among The Hearst Corporation, HAT Merger Sub, Inc., HAT
Contribution Sub, Inc., Argyle Television, Inc., and (b) that certain Stock
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Purchase Agreement, dated as August 26, 1994, by and among Argyle Television
Holdings II, Inc. and NPG, Inc.
2.4.11. Names.
As to STC, all rights to the name "Sunrise Television",
"STC", "STC Broadcasting" and any logo or variation thereof and the goodwill
associated therewith; and, as to HAT, all rights to the name "Hearst-Argyle",
"Hearst" and any logo or variation thereof and the goodwill associated
therewith.
2.4.12. Deposit and Prepaid Expenses.
All of the Transferring Party's deposits and prepaid
expenses, provided, however, any deposit and prepaid expenses shall be included
-------- -------
in the Assets of the Transferring Party conveyed pursuant hereto to the extent
that the Transferring Party receives a credit therefor in the calculation of the
Proration Amount pursuant to Section 2.6.
-----------
2.4.13. Shared Contracts.
As to STC, all shared contracts and agreements relating to
both the STC Stations and any television broadcast station other than the STC
Stations (including, without limitation, WFFF, subject to Section 2.11) as
------------
identified on Schedule 2.4.13; and, as to HAT, all shared contracts and
---------------
agreements relating to both the HAT Stations and any television broadcast
station other than the HAT Stations as identified on Schedule 2.4.13.
---------------
2.4.14. Labor Union Contracts.
As to STC, all labor union or other collective bargaining
agreements relating to KSBW as identified on Schedule 2.4.14; and, as to HAT,
---------------
all labor union or other collective bargaining agreements relating to WDTN as
identified on Schedule 2.4.14.
---------------
2.4.15. Miscellaneous Excluded Assets.
The assets listed and identified on Schedule 2.4.15.
---------------
2.4.16. Affiliated Transactions.
All of the Transferring Party's rights and obligations under
any Affiliated Transactions except to the extent any such rights or obligations
are temporarily transferred pursuant to Section 6.13, including, without
------------
limitation, those set forth in Schedule 2.4.16.
---------------
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2.4.17. Assets of Other Television Stations.
As to STC, all assets and properties of STC owned, used,
held for use or leased by STC in connection with the business and operations of
any television broadcast station other than the STC Stations (including, without
limitation, WFFF, subject to Section 2.11); and, as to HAT, all assets and
------------
properties of HAT owned, used, held for use or leased by HAT in connection with
the business and operations of any television broadcast station other than the
HAT Stations.
2.5. Exchange of Assets.
2.5.1. For and in consideration of the conveyance of the STC Assets
to HAT and in addition to the assumption of Liabilities by HAT as set forth in
Section 2.10, at the Closing HAT agrees to (a) transfer to STC Broadcasting the
- ------------
HAT Non-License Assets and transfer to STC License Company the HAT License
Assets, as provided for in Section 2.2, and (b) pay to STC by wire transfer of
-----------
immediately available funds to an account designated by STC the amount of
Twenty-One Million Three Hundred Sixty-Six Thousand Six Hundred and Fifty
Dollars ($21,366,650) (the "Cash Consideration"), less (i) any Burlington
----
Financing Amount which is not repaid by STCBV Sub as of the Closing Date, and
(ii) plus any adjustments, if any, with respect to the ABC Affiliation Agreement
----
as described in Section 7.5.
-----------
2.5.2. For and in consideration of the conveyance of the HAT Assets
to the STC Exchange Entities, the payment of the Cash Consideration to STC and
in addition to the assumption of Liabilities by STC as set forth in Section 2.9,
-----------
at the Closing the STC Exchange Entities agree to transfer to HAT the STC Assets
as provided for in Section 2.3.
-----------
2.6. Proration Amounts.
2.6.1. At least five (5) days prior to the Closing Date, each
Transferring Party shall make a good faith estimate of the Proration Items for
its Stations that are customary in television broadcast station transactions
(each a "Proration Amount") to reflect that all Proration Items of the
Transferring Party's Stations shall be apportioned between the Recipient Party
and the Transferring Party in accordance with the principle that the
Transferring Party 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 Transferring
Party's Stations before the Closing Date and the percentage available to be
aired on and after the Closing 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 Transferring Party's Stations for
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<PAGE>
the period prior to the Closing Date, and the Recipient Party shall receive the
benefit of all revenues, refunds, deposits and prepaid expenses, and shall be
responsible for all expenses, costs and liabilities allocable to the conduct of
the businesses or operations of such Stations from and after the Closing Date;
provided, however, there shall be no adjustment or proration for any negative or
- -------- -------
positive net trade balance for WPTZ or WNNE 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 either Station exceeds Fifty Thousand Dollars ($50,000) as of the
Closing Date; provided, further, that prorations or adjustments pursuant to this
-------- -------
Section 2.6 shall be made with respect to WNAC and WPRI only to the extent that
- -----------
there are earnings under the Clear Channel Agreements which have not been paid
to HAT and which relate to HAT's period of ownership of WNAC. Determinations
pursuant to this Section 2.6.1 shall be made in accordance with generally
-------------
accepted accounting principles consistently applied for the period prior to the
Closing Date. All Proration Amounts shall be payable in cash at the Closing.
2.6.2. Within ninety (90) days after the Closing Date, the Recipient
Party shall deliver to the Transferring Party in writing and in reasonable
detail a good faith final determination of the Proration Amount determined as of
the Closing Date under Section 2.6.1 ("Final Proration Amount"). The
-------------
Transferring Party shall assist the Recipient Party in making such
determination, and the Recipient Party shall provide the Transferring Party with
reasonable access to the properties, books and records relating to the Stations
of the Transferring Party for the purpose of determining the Final Proration
Amount. The Transferring Party shall have the right to review the computations
and workpapers used in connection with the Recipient Party's preparation of the
Final Proration Amount. If the Transferring Party disagrees with the amount of
the Final Proration Amount determined by the Recipient Party, the Transferring
Party shall so notify the Recipient Party in writing within thirty (30) days
after the date of receipt of the Recipient Party's Final Proration Amount,
specifying in detail any point of disagreement; provided, however, that if the
-------- -------
Transferring Party fails to notify the Recipient Party in writing of the
Transferring Party's disagreement within such thirty (30) day period, the
Recipient Party's determination of the Final Proration Amount shall be final,
conclusive and binding on the parties. After the receipt of any notice of
disagreement, the parties shall negotiate in good faith to resolve any
disagreements regarding the Final Proration Amount. If any such disagreement
cannot be resolved by the parties within thirty (30) days after the Recipient
Party has received notice from the Transferring Party of the existence of such
disagreement, the parties shall jointly select a nationally recognized
independent public accounting firm (the "Accounting Firm"), to review the
Recipient Party's determination of the Final Proration Amount and to resolve as
soon as possible all points of disagreement raised by the Transferring Party.
All determinations made by the Accounting Firm with respect to the Final
Proration Amount shall be final,
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<PAGE>
conclusive and binding on the parties. The fees and expenses of the Accounting
Firm incurred in connection with any such determination shall be shared one-half
by the Recipient Party and one-half by the Transferring Party.
2.6.3. If the Final Proration Amount is such that the Recipient
Party's payment of the Proration Amount at the Closing was an underpayment to
the Transferring Party, then the Recipient Party shall pay such underpayment
amount to the Transferring Party in cash, within two (2) business days following
the final determination of the Final Proration Amount. If the Final Proration
Amount is such that the Recipient Party's payment of the Proration Amount at the
Closing was an overpayment to the Transferring Party, then the Transferring
Party shall pay such overpayment amount to the Recipient Party in cash within
two (2) business days following the final determination of the Final Proration
Amount. Any amounts paid pursuant to this Section 2.6.3 shall be by wire
-------------
transfer of immediately available funds for credit to the recipient at a bank
account identified by such recipient in writing.
2.6.4. The parties agree that prior to the date of the final
determination of the Final 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 final determination of the Final Proration Amount.
2.7. Accounts Receivable.
2.7.1. At least five (5) days prior to the Closing Date, STC shall
make a good faith estimate of the Accounts Receivable as of the Closing Date for
KSBW less five percent (5%) reserved for bad debts (the "KSBW Receivables"), and
HAT shall make a good faith estimate of the Accounts Receivable as of the
Closing Date for WDTN less five percent (5%) reserved for bad debts (the "WDTN
Receivables"). On the Closing Date, (a) if the amount of the KSBW Receivables
is greater than the amount of the WDTN Receivables, HAT shall pay to STC, in
cash, the amount of the KSBW Receivables minus the amount of the WDTN
-----
Receivables, and (b) if the amount of the WDTN Receivables is greater than the
amount of the KSBW Receivables, STC shall pay to HAT, in cash, the amount of the
WDTN Receivables minus the amount of the KSBW Receivables.
-----
2.7.2. Within thirty (30) days after the Closing Date, the Recipient
Party shall deliver to the Transferring Party in writing and in reasonable
detail a good faith final determination of the Accounts Receivable acquired by
the Recipient Party as of the Closing Date (the "Final AR Amount"). The
Transferring Party shall assist the Recipient Party in making such
determination, and the Recipient Party shall provide the Transferring Party with
reasonable access to the books and records relating to the Stations of the
Recipient Party for the purpose of determining the final Accounts Receivable
amount. The Transferring Party shall
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<PAGE>
have the right to review the computations and work papers used in connection
with the Recipient Party's preparation of the Final AR Amount. If the
Transferring Party disagrees with the Final AR Amount determined by the
Recipient Party, the Transferring Party shall so notify the Recipient Party
within thirty (30) days after the date of receipt of the Recipient Party's Final
AR Amount, specifying in detail any point of disagreement; provided, however,
-------- -------
that if the Transferring Party fails to notify the Recipient Party in writing of
the Transferring Party's disagreement within such thirty (30) day period, the
Recipient Party's determination of the Final AR Amount shall be final,
conclusive and binding on the parties. After the receipt of any notice of
disagreement, the parties shall negotiate in good faith to resolve any
disagreements regarding the Final AR Amount. If any such disagreement cannot be
resolved by the parties within thirty (30) days after the Recipient Party has
received notice from the Transferring Party of the existence of such
disagreement, the parties shall jointly select an Accounting Firm to review the
Recipient Party's determination of the Final AR Amount and to resolve as soon as
possible all points of disagreement raised by the Transferring Party. All
determinations made by the Accounting Firm with respect to the Final AR Amount
shall be final, conclusive and binding on the parties. The fees and expenses of
the Accounting Firm incurred in connection with any such determination shall be
shared one-half by the Recipient Party and one-half by the Transferring Party.
2.7.3. If the Final AR Amount is such that the Recipient Party's
payment of the Accounts Receivable amount at the Closing was an underpayment to
the Transferring Party, then the Recipient Party shall pay such underpayment
amount to the Transferring Party in cash, within two (2) business days following
the final determination of the Final AR Amount. If the Final AR Amount is such
that the Recipient Party's payment of the Accounts Receivable amount at the
Closing is an overpayment to the Transferring Party, then the Transferring Party
shall pay such overpayment to the Recipient Party in cash within two (2)
business days following the determination of the Final AR Amount. Any amount
paid pursuant to this Section 2.7 shall be by wire transfer of immediately
-----------
available funds for credit to the recipient at a bank account identified by such
recipient in writing.
2.7.4. The parties agree that prior to the date of the final
determination of the Final AR Amount pursuant to this Section 2.7 (by the
-----------
Accounting Firm or otherwise) neither party will destroy any records pertaining
to, or necessary for, the final determination of the Final AR Amount.
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<PAGE>
2.8. Allocation of Asset Values.
2.8.1. The fair market value of the STC Assets and the HAT Assets
shall be determined and allocated on the basis of an appraisal (the "Appraisal")
prepared by Bond & Pecaro (the "Appraisal Firm"). The Appraisal Firm shall be
instructed to perform an appraisal of the classes of Assets of each Station and
to deliver a report to STC and HAT as soon as reasonably practicable (the
"Appraisal Report"). The Appraisal Report shall be subject to the approval of
HAT and STC and HAT and STC shall cooperate in good faith to resolve any issues
or differences relating to the Appraisal Report. HAT and STC shall each pay
one-half of the fees, costs and expenses of the Appraisal Firm whether or not
the transactions contemplated hereby are consummated.
2.8.2. Within thirty (30) days of receipt of the Appraisal Report,
the parties shall prepare a schedule that sets forth the "exchange groups" and
"residual groups" (as each quoted term is defined by Treas. Reg. Section
1.1031(j)-1(b)(2)) for the exchanges contemplated by Section 6.12.2 (the
--------------
"Section 1031 Schedule"), together with each asset included in the STC Assets
and HAT Assets that belongs to the relevant exchange group or residual group.
The parties shall cooperate in good faith to resolve any issues relating to the
Section 1031 Schedule to be filed by each individual taxpayer.
2.8.3. Each party, as necessary, shall prepare IRS Form 8594 and IRS
Form 8824 reflecting the fair market value of the Assets such party has
transferred and received as determined in accordance with the above provisions
and shall forward such form to the other parties within thirty (30) days after
agreement on the Section 1031 Schedule. Each party, as necessary, shall file
their respective federal income tax returns for the tax year in which the
Closing occurs with the IRS Form 8594 and IRS Form 8824 as prepared in
accordance with the foregoing. The parties hereto hereby covenant and agree
with each other that they will not take a position on any income tax return that
is in any way inconsistent with the terms of this Section 2.8.3.
-------------
2.9. Assumption of Liabilities by STC.
2.9.1. At the Closing, STC shall assume, pay, perform, discharge and
indemnify and hold HAT harmless from and against (a) all Liabilities arising out
of events occurring on or after the Closing Date related to the businesses or
operations of the HAT Stations or the ownership of the HAT Assets by STC, (b)
all Liabilities arising out of events occurring on or after the Closing Date
with respect to the FCC Licenses of HAT, (c) all Liabilities arising on or after
the Closing Date under the Station Contracts of HAT (including, without
limitation, Trade-out Agreements) pursuant to their terms (except for
Liabilities for any breaches
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<PAGE>
thereunder by HAT occurring prior to the Closing Date), (d) all Liabilities for
which there is an adjustment in favor of STC in connection with the calculation
of the Proration Amount, and (e) all Liabilities to employees of the HAT
Stations to be assumed by STC in accordance with Section 6.9 hereof.
-----------
2.9.2. Except for the Assumed Liabilities described in this Section
-------
2.9, no STC Party will assume any other Liabilities of any kind or description
- ---
of HAT.
2.10. Assumption of Liabilities by HAT.
2.10.1. At the Closing, HAT shall assume, pay, perform, discharge
and indemnify and hold STC harmless from and against (a) all Liabilities arising
out of events occurring on or after the Closing Date related to the businesses
or operations of the STC Stations or the ownership of the STC Assets by HAT, (b)
all Liabilities arising out of events occurring on or after the Closing Date
with respect to the FCC Licenses of STC License Company, (c) all Liabilities
arising on or after the Closing Date under the Station Contracts of STC
(including, without limitation, Trade-out Agreements) pursuant to their terms
(except for Liabilities for any breaches thereunder by STC occurring prior to
the Closing Date), (d) all Liabilities for which there is an adjustment in favor
of HAT in connection with the calculation of the Proration Amount, (e) all
Liabilities to employees of the STC Stations to be assumed by HAT in accordance
with Section 6.8 and Section 6.9 hereof, (f) except for the WFFF Liabilities,
----------- -----------
all Liabilities of STC under the Sinclair Documents (or Liabilities assumed
pursuant to the terms thereof), and (g) all Liabilities arising out of events
occurring on or after the Non-License Transfer (as defined in the Sinclair
Agreement) relating to the business and operations of WNNE and WPTZ (the
Liabilities described in Section 2.10.1(f) and Section 2.10.1(g) are sometimes
----------------- -----------------
collectively referred to herein as the "Sinclair Liabilities").
2.10.2. Except for the Assumed Liabilities described in this
Section 2.10, HAT will not as *** any other Liabilities of any kind or
- ------------
description of STC.
2.11. Matters Related to the Burlington Stations.
2.11.1. HAT acknowledges and agrees that the consummation of the
purchase by STC of WPTZ and WNNE is, as of the date of this Agreement, pending
pursuant the terms of the Sinclair Agreement. Notwithstanding anything to the
contrary set forth herein or otherwise, no STC Party shall make or be deemed to
make any representations, warranties, covenants or agreements regarding WPTZ or
WNNE or any assets related thereto until the consummation of the purchase by STC
of such Stations and Assets and thereafter any representations, warranties,
covenants or agreements regarding such Stations and Assets shall only relate to
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<PAGE>
STC's period of ownership of such Stations and Assets. In addition, the terms
"STC Assets", "Assets", "STC Stations" and "Stations" shall not include WPTZ or
WNNE or the related assets of such stations until such time as WPTZ and WNNE are
acquired by STC pursuant to the Sinclair Agreement.
2.11.2. At the Closing, STC Broadcasting (as the successor-in-
interest to STCBV Sub) agrees to assign to HAT all of STC Broadcasting's right,
title and interest in, to and under the Sinclair Documents that relate to WPTZ,
WNNE and any assets related thereto (but not including the assets of WFFF). In
the event that any such rights and interests are not assignable, STC
Broadcasting shall use commercially reasonable efforts (a) to provide HAT the
financial and business benefits HAT would have enjoyed had such rights and
interests been assignable as of the date hereof, and (b) upon the request of
HAT, to enforce in STC Broadcasting's name for the account of HAT any rights
that would otherwise have been available to HAT had the rights and interests
under the Sinclair Documents been assignable as of the date hereof.
2.11.3. Subject to the terms and conditions of Section 2.11.4
--------------
below, all of the assets used in the operation of WFFF shall be retained by STC
Broadcasting or its permitted designee, including the rights and obligations of
Heritage Media Corporation pursuant to the Broadcast Facilities Agreement and
Time Brokerage Agreement, each entered into on August 3, 1995, as amended (the
"WFFF TBA"). As of the Closing Date, HAT shall operate WFFF pursuant to the
WFFF TBA for a period up to two (2) years from the Closing Date until such time
as STC Broadcasting requests termination of such operation by HAT (the "Interim
Operation"). Under the Interim Operation, STC Broadcasting shall receive all
income net of any out-of-pocket expenses incurred by HAT for the operation of
WFFF and shall reimburse HAT if WFFF is being operated at a net deficit. STC
Broadcasting shall be responsible for all payments due to Champlain Valley
Telecasting, Inc. pursuant to the WFFF TBA during the Interim Operation. At the
conclusion of the Interim Operation, STC Broadcasting shall no longer use any of
the WPTZ facilities in connection with the operation of WFFF, other than the use
of tower and equipment space at Terry Mountain, New York, until such time as STC
Broadcasting is able to relocate its transmission facilities to Mt. Mansfield,
Vermont. There will be no charges for rental of such space for a period of up
to two (2) years after the conclusion of the Interim Operation. HAT agrees to
cooperate at the sole expense of STC Broadcasting in all reasonable respects in
connection with such relocation. In the event that STC Broadcasting is
unsuccessful in relocating WFFF to Mt. Mansfield within this two (2) year
period, HAT agrees to enter into a twenty (20) year lease agreement with STC
Broadcasting for the Terry Mountain space on fair market value terms and
conditions. During the period of the Interim Operation, STC Broadcasting shall
not have the right to assign the WFFF TBA (and any rights or obligations
hereunder relating to WFFF), in whole or in part, except (a) to any Affiliate of
STC Broadcasting or (b) to any other Person with the
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<PAGE>
prior written consent of HAT (which consent shall not be unreasonably withheld,
conditioned or delayed).
2.11.4. HAT acknowledges and agrees that certain of the STC Assets
are also used, held for use or useful in connection with the business and
operations of WFFF (collectively, the "STC Shared Assets"). Prior to the
Closing, STC Broadcasting and HAT shall in good faith allocate the STC Shared
Assets between STC Broadcasting and HAT in accordance with the principle that
those STC Shared Assets used solely in connection with the business and
operations of WFFF shall be retained by STC Broadcasting and included in the STC
Excluded Assets, and all other STC Shared Assets shall be transferred to HAT.
Notwithstanding the foregoing, to the extent that any of the STC Shared Assets
retained by STC Broadcasting are necessary for HAT's operation of WPTZ and/or
WNNE after the Closing, or any of the STC Shared Assets conveyed to HAT are
necessary for STC Broadcasting's continued operation of WFFF after the Closing,
such STC Shared Assets shall be available for joint use by the parties at no
cost for a transitional period for up to two (2) years following the Closing
Date.
2.11.5. At the Closing, the parties agree to enter into a mutually
agreeable transitional services agreement which shall set forth the terms and
conditions of (a) the Interim Operation described in Section 2.11.3, and (b) the
--------------
joint use of certain STC Shared Assets described in Section 2.11.4.
--------------
2.11.6. In order to provide an equitable sharing of the indemnities
contained in Article 12 of the Sinclair Agreement and the Guaranty of even date
by Sinclair Parent, the parties will coordinate the filing of any claims against
Sinclair or Sinclair Parent so that (a) with respect to WFFF, STC shall have the
benefits of up to two percent (2%) of the Basket Amount (as defined in the
Sinclair Agreement) and the Indemnity Cap (as defined in the Sinclair
Agreement), and (b) with respect to WPTZ and WNNE, HAT shall have the benefits
of up to ninety-eight percent (98%) of the Basket Amount (as defined in the
Sinclair Agreement) and the Indemnity Cap (as defined in the Sinclair
Agreement). However, if STC, on the one hand, or HAT, on the other hand, does
not use all of its respective share of such Basket Amount or Indemnity Cap prior
to the scheduled expiration date for the filing of claims against Sinclair or
Sinclair Parent, then the parties shall cooperate so that to the fullest extent
practicable the unused portion of such share shall be made available by STC to
HAT or by HAT to STC, as the case may be, immediately prior to such scheduled
expiration date.
2.12. Matters Related to the Providence Stations.
HAT represents and warrants to the STC Parties that the only HAT
Assets owned, leased, used or useful by HAT in connection with the business and
operations of WNAC are as set forth in Schedule 2.12 (the "Providence Assets").
-------------
In
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<PAGE>
reliance upon such representation and warranty, each STC Party acknowledges and
agrees that, notwithstanding anything to the contrary set forth herein or
otherwise, HAT shall not make nor be deemed to make any representations,
warranties, covenants or agreements regarding WNAC or WPRI or any assets related
thereto, except to the extent any such representation, warranty, covenant or
agreement relates to, or is applicable to, the Providence Assets, the Clear
Channel Agreements or the HAT Balance Sheets.
2.13 Financing of Burlington Stations.
On or prior to the acquisition of the non-licensed STC Assets from
Sinclair pursuant to the terms of the Sinclair Agreement, STCBV shall assign to
STCBV Sub all of STCBV's rights under the Sinclair Documents and HAT agrees to
loan to STCBV Sub, such amounts as are contemplated by the credit agreement,
guaranty and related documents in the form of Exhibit F (all loans thereunder
---------
being referred to as the "Burlington Financing Amount"), and STCBV and STCBV Sub
agree to simultaneously execute and deliver to HAT, and HAT agrees to
simultaneously execute and deliver to STCBV and STCBV Sub, such credit
agreement, guaranty and related documents.
2.14. Working Capital.
(a) From and after the STC Transfer Date through the Closing Date,
HAT agrees to make advances to STCBV Sub for the working capital requirements of
STCBV Sub in connection with the business and operations of the Burlington
Stations during such period (each a "Working Capital Advance"), as STC may
request from time to time . In order to request a Working Capital Advance, STCBV
Sub shall deliver written notice to HAT at least three (3) business days prior
to the proposed date of the Working Capital Advance, signed by or on behalf of
STCBV Sub, and specifying the following information: (i) the date of such
Working Capital Advance, (ii) the amount of such Working Capital Advance (which
amount shall not be less than Two Hundred and Fifty Thousand Dollars
($250,000)), and (iii) the number and location of the account to which funds are
to be disbursed. Upon receipt of any such notice, HAT shall deliver the amount
of the Working Capital Advance to STCBV Sub, by wire transfer of federal funds
to the account specified in such notice and within three (3) business days
following the date specified in such notice.
(b) STCBV Sub and HAT acknowledge and agree that each Working
Capital Advance shall be used by STCBV Sub for general working capital purposes
in the business and operations of the Burlington Stations from and after the STC
Transfer Date through the Closing Date, which shall include, without limitation
(i) payments of any proration amounts owed by STCBV Sub under the Sinclair
Agreement, (ii) fees under that certain TBA Agreement (as defined in the
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Sinclair Agreement), and (iii) interest payments arising under the Burlington
Financing Amount. STCBV Sub acknowledges and agrees that in the event this
Agreement is terminated as provided in Section 11.2, STCBV Sub agrees to
------------
reimburse HAT for any Working Capital Advances provided by HAT pursuant to this
Section 2.14.
- ------------
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES BY THE STC PARTIES
Each STC Party, with respect to such STC Party and with respect to
the STC Stations and STC Assets owned by such STC Party, represents and warrants
to HAT as follows:
3.1. Organization and Standing.
The STC Party is duly organized, validly existing and in good
standing under the laws of the state of its organization and is or will be prior
to the Closing Date duly qualified to do business and is or will be prior to the
Closing Date in good standing in any jurisdiction where its STC Stations are
located and operated and in each other jurisdiction where and at such time as
such qualification is necessary, except for those jurisdictions where the
failure to be so qualified would not, individually or in the aggregate, have a
Material Adverse Effect on its STC Stations. The STC Party has the corporate
power and authority to own, lease and otherwise to hold and operate its STC
Assets, to carry on the business of its STC Stations as now conducted, and to
enter into and perform the terms of this Agreement, the other STC Documents to
which the STC Party is a party and the transactions contemplated hereby and
thereby.
3.2. Authorization.
The execution, delivery and performance of this Agreement and of the
other STC Documents to which the STC Party is a party, and the consummation of
the transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action (none of which actions has been
modified or rescinded and all of which actions are in full force and effect).
This Agreement constitutes, and upon execution and delivery of the other
agreements to which the STC Party is a party will constitute, valid and binding
agreements and obligations of the STC Party, enforceable against the STC Party
in accordance with their respective terms, except as the same may be limited by
bankruptcy, insolvency, reorganization, moratorium and other similar laws of
general applicability relating to or affecting creditors' rights generally and
by the application of general principles of equity.
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3.3. Compliance with Laws.
To STC's knowledge, STC is in material compliance with all Laws
applicable to the STC Assets and to the business and operations of the STC
Stations. STC 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 STC Stations as presently conducted.
3.4. Consents and Approvals; No Conflicts.
3.4.1. The execution and delivery of this Agreement, and the
performance of the transactions contemplated herein by the STC Party, will not
require any consent, approval, authorization or other action by, or filing with
or notification to, any Person or Governmental Authority, except as follows:
(a) filings required under Hart-Scott-Rodino, (b) consents to the assignment of
the FCC Licenses by the FCC, (c) filings, if any, with respect to real estate
transfer taxes, (d) certain of the Station Contracts may be assigned only with
the consent of third parties, as specified in Schedule 3.4, and (e) filings with
------------
the Securities and Exchange Commission.
3.4.2. Assuming all consents, approvals, authorizations and other
actions described in Section 3.4.1 have been obtained and all filings and
-------------
notifications described in Section 3.4.1 have been made, the execution, delivery
-------------
and performance of this Agreement and the other STC Documents to which the STC
Party is a party do not and will not (a) conflict with or violate in any
material respect any Law applicable to the STC Party, its STC Assets or STC
Stations or by which any of its STC Assets or STC Stations is subject or
affected, (b) conflict with or result in any breach of or constitute a default
(or an event which with notice or lapse of time or both would become a default)
of any of the STC Party's Station Contracts or other material agreements to
which the STC Party is a party or by which the STC Party is bound or to which
any of its STC Assets or STC Stations is subject or affected, (c) result in the
creation of any Encumbrance upon its STC Assets, or (d) conflict with or violate
the organizational documents of the STC Party.
3.5. Financial Statements; Undisclosed Liabilities.
3.5.1. STC has provided to HAT unaudited balance sheets of the STC
Stations as listed on Schedule 3.5 (the "STC Balance Sheets"), and unaudited
------------
statements of income and operating cash flows for the STC Stations as listed on
Schedule 3.5. Such financial statements (a) present fairly in all material
- ------------
respects the financial condition of the STC Stations as of the date and the
results of operations and operating cash flows for the period indicated, and (b)
have been
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<PAGE>
prepared in accordance with generally accepted accounting principles applied on
a consistent basis (except that the financial statements referred to in this
Section 3.5.1 do not contain all footnotes and cash flow information from
- -------------
investing and financing activities required under generally accepted accounting
principles and are subject to customary year-end adjustments). To the knowledge
of STC, the Accounts Receivable of STC shown on the balance sheets described in
this Section 3.5 and the KSBW Receivables have been collected or are collectible
in amounts not less than the amounts thereof carried on the books of STC, except
to the extent of the allowance for doubtful accounts shown on such balance
sheets.
3.5.2. There exist no Liabilities of the STC Stations relating to,
or arising out of, the business or operations of the STC Stations, contingent or
absolute, matured or unmatured, known or unknown, except (a) as reflected on the
STC Balance Sheets and (b) for Liabilities that (i) were incurred after December
31, 1997 (the "Current Balance Sheet Date") in the Ordinary Course of Business,
or (ii) were not required to be reflected on the STC Balance Sheets in
accordance with generally accepted accounting principles applied on a consistent
basis.
3.6. Absence of Certain Changes or Events.
Except as set forth and described in Schedule 3.6, since the Current
------------
Balance Sheet Date, there has been no Material Adverse Effect on the STC
Stations. Since the Current Balance Sheet Date, the business of the STC
Stations has been conducted in the Ordinary Course of Business, and the STC
Party has not, with respect to its STC Stations or STC Assets, (a) incurred any
extraordinary loss of, or injury to, any of its STC 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; (b) incurred, or
become subject to, any Liability, except current Liabilities incurred in the
Ordinary Course of Business; (c) discharged or satisfied any Encumbrance or paid
any Liability other than current Liabilities shown in the STC Balance Sheets,
current Liabilities incurred since the Current Balance Sheet Date in the
Ordinary Course of Business, and Liabilities (including, without limitation,
partial and complete prepayments) arising under any credit or loan agreement
between the STC Party and its lenders; (d) mortgaged, pledged or subjected to
any Encumbrance any of its STC Assets (except for Permitted Encumbrances); (e)
made any material change in any method of accounting or accounting practice; (f)
sold, leased, assigned or otherwise transferred any of its material STC Assets
other than obsolete STC Assets which have been replaced by suitable
replacements; (g) made any material increase in compensation or benefits payable
to any employee other than in the Ordinary Course of Business; or (h) made any
agreement to do any of the foregoing.
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<PAGE>
3.7. Absence of Litigation.
As of the date hereof, except as set forth in Schedule 3.7, there is
------------
no material or, to STC's knowledge, immaterial action, suit, investigation,
claim, arbitration, litigation or similar proceeding, nor any order, decree or
judgment pending or, to STC's knowledge, threatened against STC , the STC Assets
or STC Stations before any Governmental Authority.
3.8. Assets.
Except for the STC Excluded Assets, the STC Assets include all of
the assets or property used or useful in the businesses of the STC Stations as
presently operated, including all of the assets or property acquired under the
Sinclair Documents. Except for leased or licensed STC Assets, STC is the owner
of, and has good title to, the STC Assets free and clear of any Encumbrances,
except for Permitted Encumbrances (including, without limitation, those items
set forth on Schedule 3.8). At the Closing, HAT shall acquire good title to,
------------
and all right, title and interest in and to the STC Assets, free and clear of
all Encumbrances, except for Permitted Encumbrances.
3.9. FCC Matters.
3.9.1. STC License Company holds the FCC Licenses for the STC
Stations listed as held by the STC License Company on Schedule 2.3.1. The FCC
--------------
Licenses contained on Schedule 2.3.1 constitute all of the licenses, permits and
--------------
authorizations from the FCC that are required for the business and operations of
the STC Stations. Except as set forth on Schedule 3.9, such FCC Licenses are
------------
valid and in full force and effect through the dates set forth on Schedule
--------
2.3.1, unimpaired by any condition, other than as set forth in such FCC
- -----
Licenses. Except as set forth on Schedule 3.9, no application, action or
------------
proceeding is pending for the renewal or modification of any of STC License
Company's FCC Licenses, and, except for actions or proceedings affecting
television broadcast stations generally, no application, complaint, action or
proceeding is pending or, to STC's knowledge, threatened that may result in the
(a) the revocation, modification, non-renewal or suspension of any of STC
License Company's FCC Licenses, or (b) the issuance of a cease-and-desist order.
Except as set forth in Schedule 3.9, STC has no knowledge of any facts,
------------
conditions or events relating to STC License Company or its STC Stations that
would reasonably be expected to cause the FCC to revoke any of the FCC Licenses
for the STC Stations or not to grant any pending applications for renewal of any
FCC Licenses for the STC Stations or to deny the assignment of the FCC Licenses
of STC License Company to HAT as provided for in this Agreement.
3.9.2. (a) Except as disclosed in Schedule 3.9, STCBV Sub is, and
------------
pending the closing under the Sinclair Agreement will remain legally,
financially
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<PAGE>
and otherwise qualified under the Communications Act and all rules, regulations
and policies of the FCC to acquire and operate the Burlington Stations. Except
as disclosed in Schedule 3.9, there are no facts or proceedings which would
------------
reasonably be expected to disqualify STCBV Sub under the Communications Act or
otherwise from acquiring or operating any of the Burlington Stations or would
cause the FCC not to approve the assignment of the FCC Licenses to STCBV Sub.
Except as disclosed in Schedule 3.9, STC has no knowledge of any fact or
------------
circumstance relating to STC or any Affiliate of STC that would reasonably be
expected to (i) cause the filing of any objection to the assignment of the FCC
Licenses for the Burlington Stations from Sinclair to STCBV Sub, or (ii) lead to
a delay in the processing by the FCC of the applications for such assignment.
Except for existing waivers pertaining to the Burlington Stations and except for
the temporary waiver specified in Schedule 3.9, 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 for the Burlington Stations from Sinclair to
STCBV Sub, nor will processing pursuant to any exception or rule of general
applicability be requested or required in connection with the consummation of
the transactions herein.
(b) Except as disclosed in Schedule 3.9, each of STC License
------------
Company and SALC is, and pending the Closing will remain legally, financially
and otherwise qualified under the Communications Act and all rules, regulations
and policies of the FCC to acquire and operate WDTN and WNAC, respectively.
Except as disclosed in Schedule 3.9, there are no facts or proceedings which
------------
would reasonably be expected to disqualify STC License Company or SALC under the
Communications Act or otherwise from acquiring or operating WDTN and WNAC,
respectively, or would cause the FCC not to approve the assignment of the FCC
Licenses of WDTN and WNAC to STC License Company and SALC, respectively. Except
as disclosed in Schedule 3.9, STC has no knowledge of any fact or circumstance
------------
relating to STC or any Affiliate of STC that would reasonably be expected to (i)
cause the filing of any objection to the assignment of the FCC Licenses for WDTN
and WNAC from HAT to STC License Company and SALC, respectively, or (ii) lead to
a delay in the processing by the FCC of the applications for such assignment.
Except for existing waivers pertaining to the HAT Stations, 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 for WDTN and WNAC from HAT to STC License
Company and SALC, respectively, nor will processing pursuant to any exception or
rule of general applicability be requested or required in connection with the
consummation of the transactions herein.
3.10. Real Property.
3.10.1. STC has good and marketable fee simple title to all fee
estates included in the Real Property of STC and good title to all other owned
Real Property of STC, in each case free and clear of all Encumbrances, except
for
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<PAGE>
Permitted Encumbrances (including, without limitation, those items listed on
Schedule 3.10).
- -------------
3.10.2. STC has a valid leasehold interest in all Leased Property
listed as leased by STC in Schedule 2.3.2. Schedule 2.3.2 lists all leases and
-------------- --------------
subleases pursuant to which any of such Leased Property is leased by STC in
connection with the business and operations of the STC Stations. STC is the
owner and holder of all such Leased Property purported to be granted by such
leases and subleases. Each such lease and sublease is valid as to STC
thereunder and, to STC's knowledge valid as to any other party thereto, and is
in full force and effect and, to STC's knowledge, constitutes a legal and
binding obligation of, and is legally enforceable against STC and each other
party thereto and grants the leasehold interest it purports to grant, including
any rights to nondisturbance and peaceful and quiet enjoyment that may be
contained therein. The lessees and sublessees are, and to the knowledge of STC,
all other parties are, in compliance in all material respects with the
provisions of such leases and subleases.
3.10.3. The Real Property and the Leased Property of STC listed in
Schedule 2.3.2 constitute all of the real property owned, leased or used in the
- --------------
business and operations of the STC Stations which is material to the business
and operations of the STC Stations.
3.10.4. No portion of the Real Property of STC 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 or, to the knowledge of STC, threatened. To STC's
knowledge, and to the extent that such documents are in the possession of STC,
STC has delivered to HAT true, correct and complete copies of the following
documents with respect to its Real Property and Leased Property as identified in
Schedule 3.10: (i) deeds, by which STC has received a fee interest in any of
- -------------
such Real Property; (ii) leases for all of its Leased Property; (iii) title
insurance policies or commitments; (iv) surveys; and (v) inspection reports or
other instruments or reports, including, without limitation, any phase I or
phase II environmental reports or other similar environmental reports, surveys
or assessments (including any and all amendments and other modifications of such
instruments).
3.11. Intellectual Property.
STC possesses adequate rights, licenses and authority to use all
Intellectual Property necessary to conduct the business of the STC Stations as
presently conducted. STC has good title to all Intellectual Property
maintained, owned, leased or used in connection with the business and operations
of the STC Stations, free and clear of any Encumbrances, except for Permitted
Encumbrances. STC is not obligated to pay any royalty or other fees to anyone
with respect to the
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<PAGE>
Intellectual Property of STC. STC has not received any written notice to the
effect that any service rendered by STC relating to the business of the STC
Stations may infringe, or that STC is otherwise infringing, on any intellectual
property right or other legally protectable right of another. No director,
officer or employee of STC has any interest in any Intellectual Property.
3.12. Station Contracts.
Complete and correct copies of the Station Contracts of STC set
forth in Schedules 2.3.5, 2.3.6, 2.3.8 and 2.3.9 (which schedules, as to STC,
---------------------------------------
are true and correct in all material respects) have been made available to HAT
and (a) each such material Station Contract and, to STC's knowledge, each such
immaterial Station Contract, is in full force and effect and constitutes a
legal, valid and binding obligation of STC, and, to STC's knowledge, of each
other party thereto; (b) STC is not in breach or default in any material respect
of the terms of any such Station Contract; (c) none of the material rights of
STC under any such Station Contract will be subject to termination, nor will a
default occur, as a result of the consummation of the transactions contemplated
hereby, except to the extent that failure to obtain the prior consent to
assignment thereof of any party thereto shall or could be interpreted to
constitute a termination or modification of or a default under any such Station
Contract; and (d) to the knowledge of STC, no other party to any such Station
Contract is in breach or default in any material respect of the terms
thereunder.
3.13. Taxes.
STC has (or, in the case of returns becoming due after the date
hereof and on or before the Closing Date, will have prior to the Closing Date)
duly filed all material Tax Returns required to be filed by STC on or before the
Closing Date with respect to all material applicable Taxes. In the case of any
such Tax Returns which receive an extension for their date of filing, such Tax
Returns will be considered due on, and not considered required to be filed
before, the extended due date. All such Tax Returns are (or, in the case of
returns becoming due after the date hereof and on or before the Closing Date,
will be) true and complete in all material respects. STC has: (a) paid all Taxes
due to any Governmental Authority as indicated on such Tax Returns; or (b)
established (or, in the case of amounts becoming due after the date hereof,
prior to the Closing Date will have established) adequate reserves (in
conformity with generally accepted accounting principles consistently applied)
for the payment of such Taxes.
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<PAGE>
3.14. Employee Benefit Plans.
3.14.1. Schedule 3.14 lists all Plans and Benefit Arrangements
-------------
maintained by or contributed to by STC for the benefit of the employees of the
STC Stations (collectively referred to as "STC Benefit Plans"). Each STC
Benefit Plan has been maintained in material compliance with its terms and with
ERISA, the Code and other applicable Laws.
3.14.2. Schedule 3.14 sets forth a list of all Qualified Plans
-------------
maintained by or contributed to by STC for the benefit of the employees of the
STC Stations. All such Qualified Plans and any related trust agreements or
annuity agreements (or any other funding document) have been maintained in
material compliance with ERISA and the Code (including, without limitation, the
requirements for tax qualification described in Section 401 thereof), other than
any Multiemployer Plan. To STC's knowledge, any trusts established under such
Plans are exempt from federal income taxes under Section 501(a) of the Code.
3.14.3. Schedule 3.14 lists all funded Welfare Plans of STC that
-------------
provide benefits to current or former employees of the STC Stations or their
beneficiaries. To STC's knowledge, the funding under each such Welfare Plan
does not exceed and has not exceeded the limitations under Sections 419A(b) and
419A(c) of the Code. To STC's knowledge, STC is not subject to taxation on the
income of any such Welfare Plan's welfare benefit fund (as such term is defined
in Section 419(e) of the Code) under Section 419A(g) of the Code.
3.14.4. STC 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 the STC Stations.
3.14.5. To STC's knowledge, except as set forth in Schedule 3.14,
-------------
STC has (a) filed or caused to be filed all returns and reports on STC's 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. All other fees,
interest, penalties and assessments that are payable by or for STC have been
timely reported, fully paid and discharged. There are no unpaid fees, penalties,
interest or assessments due from STC or from any other person that are or could
become an Encumbrance on any of the STC Assets or could otherwise adversely
affect the businesses of the STC Stations or STC Assets. To STC's knowledge, STC
has collected or withheld all amounts that are required to be collected or
withheld by it to discharge its obligations, and all of those amounts have been
paid to the appropriate Governmental Authority or set aside in appropriate
accounts for future payment
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<PAGE>
when due. STC has furnished to HAT true and complete copies of all documents
setting forth the terms and funding of each of STC's Plans.
3.14.6. Except as set forth in Schedule 3.14, neither STC nor any
-------------
ERISA Affiliate of STC has ever sponsored or maintained, had any obligation to
sponsor or maintain, or had any liability (whether actual or contingent, with
respect to any of its assets or otherwise) with respect to any of STC's Plans
subject to Section 302 of ERISA or Section 412 of the Code or Title IV of ERISA
(including any Multiemployer Plan). Neither STC nor any ERISA Affiliate of STC
(since January 1, 1989) has terminated or withdrawn from or sought a funding
waiver with respect to any plan subject to Title IV of ERISA, and no facts exist
that could reasonably be expected to cause such actions in the future; no
accumulated funding deficiency (as defined in Code Section 412), whether or not
waived, exists with respect to any such plan; no reportable event (as defined in
ERISA Section 4043) has occurred with respect to any such plan (other than
events for which reporting is waived); all costs of any such plans have been
provided for on the basis of consistent methods in accordance with sound
actuarial assumptions and practices, and the assets of each such plan, as of its
last valuation date, exceeded its "Benefit Liabilities" (as defined in ERISA
Section 4001(a)(16)); and, since the last valuation date for each such plan, no
such plan has been amended or changed to increase the amounts of benefits
thereunder and, to the knowledge of STC, there has been no event that would
reduce the excess of assets over benefit liabilities; and except as set forth in
Schedule 3.14, neither STC nor any ERISA Affiliate of STC has ever made or been
- -------------
obligated to make, or reimbursed or been obligated to reimburse another employer
for, contributions to any Multiemployer Plan of STC.
3.14.7. No claims (other than for benefits in the Ordinary Course
of Business) or lawsuits are pending or, to the knowledge of STC, threatened by,
against, or relating to any of the STC Benefit Plans. To STC's knowledge, the
STC Benefit Plans are not presently under audit or examination (nor has notice
been received of a potential audit or examination) by the IRS, the Department of
Labor, or any other governmental agency or entity and no matters are pending
with respect to any Qualified Plan of STC under the IRS's Voluntary Compliance
Resolution program, its Closing Agreement Program, or other similar programs.
3.14.8. With respect to each Plan of STC, there has occurred no
non-exempt "prohibited transaction" (within the meaning of Section 4975 of the
Code) or transaction prohibited by Section 406 of ERISA or breach of any
fiduciary duty described in Section 404 of ERISA that would, if successful,
result in any liability for STC.
3.14.9. STC has no liability with respect to any employee benefit
plan of STC that is not a STC Benefit Plan (exclusive of severance arrangements
and retention agreements) or with respect to any employee benefit plan sponsored
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<PAGE>
or maintained (or which has been or should have been sponsored or maintained or
with respect to which there has been an obligation to do so) by any ERISA
Affiliate of STC.
3.14.10. All group health plans of STC and its ERISA Affiliates
covering any current or former employees of the STC Stations have been operated
in material compliance with the requirements of Sections 4980B (and its
predecessor) and 5000 of the Code, and STC has provided, or will have provided
before the Closing Date, to individuals entitled thereto all required notices
and coverage pursuant to Section 4980B with respect to any "qualifying event"
(as defined therein) occurring before or on the Closing Date.
3.15. Labor Relations.
Schedule 3.15 contains a true and complete list of all employees
-------------
engaged in the business or operations of the STC Stations as of the date set
forth on the list, together with such employee's position, salary and date of
hire. Schedule 3.15 lists all written employment contracts with any such
-------------
employees and all written agreements, plans, arrangements, commitments and
understandings pursuant to which STC has severance obligations with respect to
such employees. Except as set forth on Schedule 3.15, no labor union or other
-------------
collective bargaining unit represents or, to STC's knowledge, claims to
represent, any of the employees of the STC Stations. There are no strikes, work
stoppages, grievance proceedings, union organization efforts, or other
controversies pending between STC and any union or collective bargaining unit
representing (or, to STC's knowledge, claiming to represent) any employees of
the STC Stations. STC is in compliance with all Laws relating to the employment
of employees of the STC Stations or the workplace of the STC Stations,
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 for any noncompliance which would not have a Material
Adverse Effect on the STC Stations. Except as set forth on Schedule 3.15, there
-------------
are no collective bargaining agreements relating to the STC Stations or the
business and operations thereof.
3.16. Environmental Matters.
3.16.1. Schedule 3.16 contains a true and complete list and brief
-------------
summary of all material reports, audits and other documents relating to the
environmental condition of STC's Real Property in STC's possession.
3.16.2. Except as set forth in Schedule 3.16, to STC's knowledge
-------------
(which knowledge is based on the items set forth on Schedule 3.16), STC is in
-------------
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<PAGE>
material compliance with, and STC's Real Property and all improvements thereon
are in material compliance with, all Environmental Laws.
3.16.3. Except as set forth in Schedule 3.16, there are no pending
-------------
or, to the knowledge of STC , threatened actions, suits, claims, or other legal
proceedings based on (and STC has not received any written notice of any
complaint, order, directive, citation, notice of responsibility, notice of
potential responsibility, or information request from any Governmental Authority
arising out of or attributable to): (a) the current or past presence at any
part of STC's Real Property of Hazardous Materials; (b) the current or past
release or threatened release into the environment from STC's Real Property
(including, without limitation, into any storm drain, sewer, septic system or
publicly owned treatment works) of any Hazardous Materials; (c) the off-site
disposal of Hazardous Materials originating on or from STC's Real Property or
the STC Assets or businesses of the STC Stations; (d) any facility operations or
procedures of the STC Stations which do not conform to requirements of the
Environmental Laws; or (e) any violation of Environmental Laws at any part of
STC's Real Property arising from activities of the STC Stations involving
Hazardous Materials. To the knowledge of STC, STC has been duly issued all
material permits, licenses, certificates and approvals required under any
Environmental Law.
3.17. Insurance.
Schedule 3.17 contains a true and complete list and brief summary of
-------------
all policies of title, property, fire, casualty, liability, life, workmen's
compensation, libel and slander, and other forms of insurance of any kind
relating to the STC Assets or the business and operations of the STC Stations.
All such policies: (a) are in full force and effect; (b) are sufficient for
compliance in all material respects with all requirements of Law and of all
material agreements to which STC is a party; and (c) to STC's knowledge, are
valid, outstanding, and enforceable policies and the policy holder is not in
default in any material respect thereunder.
3.18. Reports.
All material returns, reports and statements that the STC Stations
are currently required to file with the FCC or any governmental agency have been
timely filed, and all reporting requirements of the FCC and other governmental
authorities having jurisdiction thereof have been complied with in all material
respects. All of such reports, returns and statements are complete and correct
in all material respects as filed. To STC's knowledge, all documents required by
the FCC to be deposited by STC in its public files (as defined in the rules and
regulations of the FCC) during the period of operation of the STC Stations by
STC have been deposited therein.
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<PAGE>
3.19. Affiliated Transactions.
Except as set forth in Schedule 3.19, the STC Party is not now, and
-------------
during the past three (3) years has not been, a party, directly or indirectly,
to any material contract, lease, arrangement or transaction relating to its STC
Stations, whether for the purchase, lease or sale of property, for the rendition
of services or otherwise, with any Affiliate of the STC Party, or any officer,
director, employee, proprietor, partner or shareholder of the STC Party
(collectively, "STC Affiliated Transactions"). None of the STC Affiliated
Transactions which are identified on Schedule 3.19 contains terms and conditions
-------------
which are in the aggregate significantly less favorable to the STC Party and as
would be obtained in a comparable arms length transaction or transaction which
would not have occurred but for the relationship between the parties.
3.20. Special Purpose.
Except for Liabilities incurred in connection with the organization
and incorporation of STCBV and STCBV Sub and the transactions contemplated by
this Agreement and the Sinclair Agreement, neither STCBV nor STCBV Sub has not
incurred, directly or indirectly, any Liabilities or engaged in any business
activities of any type whatsoever or entered into any agreements or arrangements
with any Person.
3.21. Availability of Funds.
STC will have available on the Closing Date sufficient funds to
enable it to consummate the transactions contemplated hereby and repay the
Burlington Financing Amount (less the Cash Consideration).
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES BY HAT
HAT represents and warrants to the STC Parties as follows:
4.1. Organization and Standing.
HAT is duly organized, validly existing and in good standing under
the laws of the state of its organization and is or will be prior to the Closing
Date duly qualified to do business and is or will be prior to the Closing Date
in good standing in any jurisdiction where the HAT Stations are located and
operated and in each other jurisdiction where and at such time as such
qualification is necessary, except for those jurisdictions where the failure to
be so qualified would not, individually or in the aggregate, have a Material
Adverse Effect on the HAT Stations. HAT has the corporate power and authority to
own, lease and otherwise
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<PAGE>
to hold and operate the HAT Assets, to carry on the business of the HAT Stations
as now conducted, and to enter into and perform the terms of this Agreement, the
HAT Documents to which HAT is a party and the transactions contemplated hereby
and thereby.
4.2. Authorization.
The execution, delivery and performance of this Agreement and of the
HAT Documents to which HAT is a party, and the consummation of the transactions
contemplated hereby and thereby have been duly and validly authorized by all
necessary corporate action (none of which actions has been modified or rescinded
and all of which actions are in full force and effect). This Agreement
constitutes, and upon execution and delivery of the HAT Documents to which HAT
is a party will constitute, valid and binding agreements and obligations of HAT,
enforceable against HAT in accordance with their respective terms, except as the
same may be limited by bankruptcy, insolvency, reorganization, moratorium and
other similar laws of general applicability relating to or affecting creditors'
rights generally and by the application of general principles of equity.
4.3. Compliance with Laws.
To HAT's knowledge, HAT is in material compliance with all Laws
applicable to the HAT Assets and to the business and operations of the HAT
Stations. HAT 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 HAT Stations as presently conducted.
4.4. Consents and Approvals; No Conflicts.
4.4.1. The execution and delivery of this Agreement, and the
performance of the transactions contemplated herein by HAT, will not require any
consent, approval, authorization or other action by, or filing with or
notification to, any Person or Governmental Authority, except as follows: (a)
filings required under Hart-Scott-Rodino, (b) consents to the assignment of the
FCC Licenses by the FCC, (c) filings, if any, with respect to real estate
transfer taxes, (d) certain of the Station Contracts may be assigned only with
the consent of third parties, as specified in Schedule 4.4, (e) filings with the
------------
Securities and Exchange Commission, and (f) under H-A's indenture for certain of
H-A's bonds, H-A's Board of Directors must deliver to the trustee a resolution
determining that the consideration to be received for the HAT Stations is fair
market value and under H-A's bank credit agreement, H-A may not acquire
additional television stations unless H-A delivers certain certificates and
environmental reports to the agent bank as well as evidence that
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<PAGE>
H-A will not become liable for material Tax or ERISA liabilities as a result of
such acquisition.
4.4.2. Assuming all consents, approvals, authorizations and other
actions described in Section 4.4.1 have been obtained and all filings and
-------------
notifications described in Section 4.4.1 have been made, the execution, delivery
-------------
and performance of this Agreement and the HAT Documents to which HAT is a party
do not and will not (a) conflict with or violate in any material respect any Law
applicable to HAT, the HAT Assets or HAT Stations or by which any of the HAT
Assets or HAT Stations is subject or affected, (b) conflict with or result in
any breach of or constitute a default (or an event which with notice or lapse of
time or both would become a default) of any of HAT's Station Contracts or other
material agreements to which HAT is a party or by which HAT is bound or to which
any of the HAT Assets or HAT Stations is subject or affected, (c) result in the
creation of any Encumbrance upon the HAT Assets, or (d) conflict with or violate
the organizational documents of HAT.
4.5. Financial Statements; Undisclosed Liabilities.
4.5.1. HAT has provided to the STC Parties unaudited balance sheets
of the HAT Stations as of December 31, 1997 (the "HAT Balance Sheets"), and
unaudited statements of income and operating cash flows for the HAT Stations for
the twelve (12) month period ending December 31, 1997. Such financial
statements (a) present fairly in all material respects the financial condition
of the HAT Stations as of the date and the results of operations and operating
cash flows for the period indicated, and (b) have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis
(except that the financial statements referred to in this Section 4.5.1 do not
-------------
contain all footnotes and cash flow information from investing and financing
activities required under generally accepted accounting principles and are
subject to customary year-end adjustments). To the knowledge of HAT, the
Accounts Receivable of HAT shown on the balance sheets described in this Section
-------
4.5 and the WDTN Receivables have been collected or are collectible in amounts
- ---
not less than the amounts thereof carried on the books of HAT, except to the
extent of the allowance for doubtful accounts shown on such balance sheets.
4.5.2. There exist no Liabilities of the HAT Stations relating to,
or arising out of, the business or operations of the HAT Stations, contingent or
absolute, matured or unmatured, known or unknown, except (a) as reflected on the
HAT Balance Sheets and (b) for Liabilities that (i) were incurred after the
Current Balance Sheet Date in the Ordinary Course of Business, or (ii) were not
required to be reflected on the Balance Sheets of HAT in accordance with
generally accepted accounting principles applied on a consistent basis.
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<PAGE>
4.6. Absence of Certain Changes or Events.
Except as set forth and described in Schedule 4.6, since the Current
------------
Balance Sheet Date, there has been no Material Adverse Effect on the HAT
Stations. Since the Current Balance Sheet Date, the business of the HAT
Stations has been conducted in the Ordinary Course of Business, and HAT has not,
with respect to the HAT Stations or HAT Assets, (a) incurred any extraordinary
loss of, or injury to, any of the HAT 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; (b) incurred, or become
subject to, any Liability, except current Liabilities incurred in the Ordinary
Course of Business; (c) discharged or satisfied any Encumbrance or paid any
Liability other than current Liabilities shown in the HAT Balance Sheets,
current Liabilities incurred since the Current Balance Sheet Date in the
Ordinary Course of Business, and Liabilities (including, without limitation,
partial and complete prepayments) arising under any credit or loan agreement
between HAT and its lenders; (d) mortgaged, pledged or subjected to any
Encumbrance any of the HAT Assets (except for Permitted Encumbrances); (e) made
any material change in any method of accounting or accounting practice; (f)
sold, leased, assigned or otherwise transferred any of its material HAT Assets
other than obsolete HAT Assets which have been replaced by suitable
replacements; (g) made any material increase in compensation or benefits payable
to any employee other than in the Ordinary Course of Business; or (h) made any
agreement to do any of the foregoing.
4.7. Absence of Litigation.
As of the date hereof, except as set forth in Schedule 4.7, there is
------------
no material or, to HAT's knowledge, immaterial action, suit, investigation,
claim, arbitration, litigation or similar proceeding, nor any order, decree or
judgment pending or, to HAT's knowledge, threatened against HAT, the HAT Assets
or HAT Stations before any Governmental Authority.
4.8. Assets.
Except for the HAT Excluded Assets, the HAT Assets include all of the
assets or property used or useful in the businesses of the HAT Stations as
presently operated. Except for leased or licensed HAT Assets, HAT is the owner
of, and has good title to, the HAT Assets free and clear of any Encumbrances,
except for Permitted Encumbrances (including, without limitation, those items
set forth on Schedule 4.8). At the Closing, the STC Exchange Entities shall
------------
acquire good title to, and all right, title and interest in and to the HAT
Assets, free and clear of all Encumbrances, except for the Permitted
Encumbrances.
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<PAGE>
4.9. FCC Matters.
4.9.1. HAT holds the FCC Licenses listed as held by HAT on Schedule
--------
2.3.1. The FCC Licenses of HAT contained on Schedule 2.3.1 constitute all of
- ----- --------------
the licenses, permits and authorizations from the FCC that are required for the
business and operations of WDTN and WNAC. Except as set forth on Schedule 4.9,
------------
such FCC Licenses are valid and in full force and effect through the dates set
forth on Schedule 2.3.1, unimpaired by any condition, other than as set forth in
--------------
such FCC Licenses. Except as set forth on Schedule 4.9, no application, action
------------
or proceeding is pending for the renewal or modification of any of HAT's FCC
Licenses, and, except for actions or proceedings affecting television broadcast
stations generally, no application, complaint, action or proceeding is pending
or, to HAT's knowledge, threatened that may result in the (a) the revocation,
modification, non-renewal or suspension of any of HAT's FCC Licenses, or (b) the
issuance of a cease-and-desist order. Except as set forth in Schedule 4.9, HAT
------------
has no knowledge of any facts, conditions or events relating to HAT or the HAT
Stations that would reasonably be expected to cause the FCC to revoke any of the
FCC Licenses for the HAT Stations or not to grant any pending applications for
renewal of any FCC Licenses for the HAT Stations or to deny the assignment of
the FCC Licenses of HAT to STC License Company as provided for in this
Agreement.
4.9.2. Except as disclosed in Schedule 4.9, HAT is, and pending the
------------
Closing will remain legally, financially and otherwise qualified under the
Communications Act and all rules, regulations and policies of the FCC to acquire
and operate the STC Stations. Except as disclosed in Schedule 4.9, there are no
------------
facts or proceedings which would reasonably be expected to disqualify HAT under
the Communications Act or otherwise from acquiring or operating any of the STC
Stations or would cause the FCC not to approve the assignment of the FCC
Licenses of STC License Company to HAT. Except as disclosed in Schedule 4.9,
------------
HAT has no knowledge of any fact or circumstance relating to HAT or any
Affiliate of HAT that would reasonably be expected to (a) cause the filing of
any objection to the assignment of the FCC Licenses for the STC Stations from
STC License Company to HAT, or (b) lead to a delay in the processing by the FCC
of the applications for such assignment. Except as disclosed in Schedule 4.9
------------
and except for existing waivers pertaining to the STC Stations, 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 for the STC Stations from STC License
Company to HAT, nor will processing pursuant to any exception or rule of
general applicability be requested or required in connection with the
consummation of the transactions herein.
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<PAGE>
4.10. Real Property.
4.10.1. HAT has good and marketable fee simple title to all fee
estates included in the Real Property of HAT and good title to all other owned
Real Property of HAT, in each case free and clear of all Encumbrances, except
for Permitted Encumbrances (including, without limitation, those items listed on
Schedule 4.10).
- -------------
4.10.2. HAT has a valid leasehold interest in all Leased Property
listed as leased by HAT in Schedule 2.3.2. Schedule 2.3.2 lists all leases and
-------------- --------------
subleases pursuant to which any of such Leased Property is leased by HAT in
connection with the business and operations of the HAT Stations. HAT is the
owner and holder of all such Leased Property purported to be granted by such
leases and subleases. Each such lease and sublease is valid as to HAT
thereunder and, to HAT's knowledge valid as to any other party thereto, and is
in full force and effect and, to HAT's knowledge, constitutes a legal and
binding obligation of, and is legally enforceable against HAT and each other
party thereto and grants the leasehold interest it purports to grant, including
any rights to nondisturbance and peaceful and quiet enjoyment that may be
contained therein. The lessees and sublessees are, and to the knowledge of HAT,
all other parties are, in compliance in all material respects with the
provisions of such leases and subleases.
4.10.3. The Real Property and the Leased Property of HAT listed in
Schedule 2.3.2 constitute all of the real property owned, leased or used in the
- --------------
business and operations of the HAT Stations which is material to the business
and operations of the HAT Stations.
4.10.4. No portion of the Real Property of HAT 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 or, to the knowledge of HAT, threatened. To the knowledge
of HAT, and to the extent that such documents are in the possession of HAT, HAT
has delivered to STC true, correct and complete copies of the following
documents with respect to its Real Property and Leased Property as identified in
Schedule 4.10: (i) deeds, by which HAT has received a fee interest in any of
- -------------
such Real Property; (ii) leases for all of its Leased Property; (iii) title
insurance policies or commitments; (iv) surveys; and (v) inspection reports or
other instruments or reports, including, without limitation, any phase I or
phase II environmental reports or other similar environmental reports, surveys
or assessments (including any and all amendments and other modifications of such
instruments).
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<PAGE>
4.11. Intellectual Property.
HAT possesses adequate rights, licenses and authority to use all
Intellectual Property necessary to conduct the business of the HAT Stations as
presently conducted. HAT has good title to all Intellectual Property
maintained, owned, leased or used in connection with the business and operations
of the HAT Stations, free and clear of any Encumbrances, except for Permitted
Encumbrances. HAT is not obligated to pay any royalty or other fees to anyone
with respect to the Intellectual Property of HAT. HAT has not received any
written notice to the effect that any service rendered by HAT relating to the
business of the HAT Stations may infringe, or that HAT is otherwise infringing,
on any intellectual property right or other legally protectable right of
another. No director, officer or employee of HAT has any interest in any
Intellectual Property.
4.12. Station Contracts.
Complete and correct copies of Station Contracts of HAT set forth in
Schedules 2.3.5, 2.3.6, 2.3.8 and 2.3.9 (which schedules, as to HAT, are true
- ---------------------------------------
and correct in all material respects) have been made available to STC and (a)
each such material Station Contract and, to HAT's knowledge, each such
immaterial Station Contract, is in full force and effect and constitutes a
legal, valid and binding obligation of HAT, and, to HAT's knowledge, of each
other party thereto; (b) HAT is not in breach or default in any material respect
of the terms of any such Station Contract; (c) none of the material rights of
HAT under any such Station Contract will be subject to termination, nor will a
default occur, as a result of the consummation of the transactions contemplated
hereby, except to the extent that failure to obtain the prior consent to
assignment thereof of any party thereto shall or could be interpreted to
constitute a termination or modification of or a default under any such Station
Contract; and (d) to the knowledge of HAT, no other party to any such Station
Contract is in breach or default in any material respect of the terms
thereunder.
4.13. Taxes.
HAT has (or, in the case of returns becoming due after the date
hereof and on or before the Closing Date, will have prior to the Closing Date)
duly filed all material Tax Returns required to be filed by HAT on or before the
Closing Date with respect to all material applicable Taxes. In the case of any
such Tax Returns which receive an extension for their date of filing, such Tax
Returns will be considered due on, and not considered required to be filed
before, the extended due date. All such Tax Returns are (or, in the case of
returns becoming due after the date hereof and on or before the Closing Date,
will be) true and complete in all material respects. HAT has: (a) paid all Taxes
due to any Governmental Authority as indicated on such Tax Returns; or (b)
established (or, in the case of amounts
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<PAGE>
becoming due after the date hereof, prior to the Closing Date will have
established) adequate reserves (in conformity with generally accepted accounting
principles consistently applied) for the payment of such Taxes.
4.14. Employee Benefit Plans.
4.14.1. Schedule 4.14 lists all Plans and Benefit Arrangements
-------------
maintained by or contributed to by HAT for the benefit of the employees of the
HAT Stations (collectively referred to as "HAT Benefit Plans") (the STC Benefit
Plans and the HAT Benefit Plans are sometimes individually referred to herein as
the "Benefit Plans"). Each HAT Benefit Plan has been maintained in material
compliance with its terms and with ERISA, the Code and other applicable Laws.
4.14.2. Schedule 4.14 sets forth a list of all Qualified Plans
-------------
maintained by or contributed to by HAT for the benefit of the employees of the
HAT Stations. All such Qualified Plans and any related trust agreements or
annuity agreements (or any other funding document) have been maintained in
material compliance with ERISA and the Code (including, without limitation, the
requirements for tax qualification described in Section 401 thereof), other than
any Multiemployer Plan. To HAT's knowledge, any trusts established under such
Plans are exempt from federal income taxes under Section 501(a) of the Code.
4.14.3. Schedule 4.14 lists all funded Welfare Plans of HAT that
-------------
provide benefits to current or former employees of the HAT Stations or its
beneficiaries. To HAT's knowledge, the funding under each such Welfare Plan
does not exceed and has not exceeded the limitations under Sections 419A(b) and
419A(c) of the Code. To HAT's knowledge, HAT is not subject to taxation on the
income of any such Welfare Plan's welfare benefit fund (as such term is defined
in Section 419(e) of the Code) under Section 419A(g) of the Code.
4.14.4. HAT 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 the HAT Stations.
4.14.5. To HAT's knowledge, except as set forth in Schedule 4.14,
-------------
HAT has (a) filed or caused to be filed all returns and reports on HAT's 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. All other fees,
interest, penalties and assessments that are payable by or for HAT have been
timely reported, fully paid and discharged. There are no unpaid fees, penalties,
interest or assessments due from HAT or from any other person that are or could
become an Encumbrance on any of the HAT Assets or could otherwise adversely
affect the businesses of the
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<PAGE>
HAT Stations or HAT Assets. To HAT's knowledge, HAT has collected or withheld
all amounts that are required to be collected or withheld by it to discharge its
obligations, and all of those amounts have been paid to the appropriate
Governmental Authority or set aside in appropriate accounts for future payment
when due. HAT has furnished to STC true and complete copies of all documents
setting forth the terms and funding of each of HAT's Plans.
4.14.6. Except as set forth in Schedule 4.14, neither HAT nor any
-------------
ERISA Affiliate of HAT has ever sponsored or maintained, had any obligation to
sponsor or maintain, or had any liability (whether actual or contingent, with
respect to any of its assets or otherwise) with respect to any of HAT's Plans
subject to Section 302 of ERISA or Section 412 of the Code or Title IV of ERISA
(including any Multiemployer Plan). Neither HAT nor any ERISA Affiliate of HAT
(since January 1, 1989) has terminated or withdrawn from or sought a funding
waiver with respect to any plan subject to Title IV of ERISA, and no facts exist
that could reasonably be expected to cause such actions in the future; no
accumulated funding deficiency (as defined in Code Section 412), whether or not
waived, exists with respect to any such plan; no reportable event (as defined in
ERISA Section 4043) has occurred with respect to any such plan (other than
events for which reporting is waived); all costs of any such plans have been
provided for on the basis of consistent methods in accordance with sound
actuarial assumptions and practices, and the assets of each such plan, as of its
last valuation date, exceeded its "Benefit Liabilities" (as defined in ERISA
Section 4001(a)(16)); and, since the last valuation date for each such plan, no
such plan has been amended or changed to increase the amounts of benefits
thereunder and, to the knowledge of HAT, there has been no event that would
reduce the excess of assets over benefit liabilities; and except as set forth in
Schedule 4.14, neither HAT nor any ERISA Affiliate of HAT has ever made or been
- -------------
obligated to make, or reimbursed or been obligated to reimburse another employer
for, contributions to any Multiemployer Plan of HAT.
4.14.7. No claims (other than for benefits in the Ordinary Course
of Business) or lawsuits are pending or, to the knowledge of HAT, threatened by,
against, or relating to any of its Benefit Plans. To HAT's knowledge, the HAT
Benefit Plans are not presently under audit or examination (nor has notice been
received of a potential audit or examination) by the IRS, the Department of
Labor, or any other governmental agency or entity and no matters are pending
with respect to any Qualified Plan of HAT under the IRS's Voluntary Compliance
Resolution program, its Closing Agreement Program, or other similar programs.
4.14.8. With respect to each Plan of HAT, there has occurred no
non-exempt "prohibited transaction" (within the meaning of Section 4975 of the
Code) or transaction prohibited by Section 406 of ERISA or breach of any
fiduciary duty described in Section 404 of ERISA that would, if successful,
result in any liability for HAT.
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<PAGE>
4.14.9. HAT has no liability with respect to any employee benefit
plan of HAT that is not a HAT Benefit Plan (exclusive of severance arrangements
and retention agreements) or with respect to any employee benefit plan sponsored
or maintained (or which has been or should have been sponsored or maintained or
with respect to which there has been an obligation to do so) by any ERISA
Affiliate of HAT.
4.14.10. All group health plans of HAT and its ERISA Affiliates
covering any current or former employees of the HAT Stations have been operated
in material compliance with the requirements of Sections 4980B (and its
predecessor) and 5000 of the Code, and HAT has provided, or will have provided
before the Closing Date, to individuals entitled thereto all required notices
and coverage pursuant to Section 4980B with respect to any "qualifying event"
(as defined therein) occurring before or on the Closing Date.
4.15. Labor Relations.
Schedule 4.15 contains a true and complete list of all employees
-------------
engaged in the business or operations of the HAT Stations as of the date set
forth on the list, together with such employee's position, salary and date of
hire. Schedule 4.15 lists all written employment contracts with any such
-------------
employees and all written agreements, plans, arrangements, commitments and
understandings pursuant to which HAT has severance obligations with respect to
such employees. Except as set forth on Schedule 4.15, no labor union or other
-------------
collective bargaining unit represents or, to HAT's knowledge, claims to
represent, any of the employees of the HAT Stations. There are no strikes, work
stoppages, grievance proceedings, union organization efforts, or other
controversies pending between HAT and any union or collective bargaining unit
representing (or, to HAT's knowledge, claiming to represent) any employees of
the HAT Stations. HAT is in compliance with all Laws relating to the employment
of employees of the HAT Stations or the workplace of the HAT Stations,
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 for any noncompliance which would not have a Material
Adverse Effect on the HAT Stations. Except as set forth on Schedule 4.15, there
-------------
are no collective bargaining agreements relating to the HAT Stations or the
business and operations thereof.
4.16. Environmental Matters.
4.16.1. Schedule 4.16 contains a true and complete list and brief
-------------
summary of all material reports, audits and other documents relating to the
environmental condition of the Real Property of HAT in HAT's possession.
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<PAGE>
4.16.2. Except as set forth in Schedule 4.16, to the knowledge of
-------------
HAT (which knowledge is based on the items set forth on Schedule 4.16), HAT is
-------------
in material compliance with, and the Real Property of HAT and all improvements
thereon are in material compliance with, all Environmental Laws.
4.16.3. Except as set forth in Schedule 4.16, there are no pending
-------------
or, to the knowledge of HAT, threatened actions, suits, claims, or other legal
proceedings based on (and HAT has not received any written notice of any
complaint, order, directive, citation, notice of responsibility, notice of
potential responsibility, or information request from any Governmental Authority
arising out of or attributable to): (a) the current or past presence at any
part of HAT's Real Property of Hazardous Materials; (b) the current or past
release or threatened release into the environment from HAT's Real Property
(including, without limitation, into any storm drain, sewer, septic system or
publicly owned treatment works) of any Hazardous Materials; (c) the off-site
disposal of Hazardous Materials originating on or from HAT's Real Property or
the HAT Assets or businesses of the HAT Stations; (d) any facility operations or
procedures of the HAT Stations which do not conform to requirements of the
Environmental Laws; or (e) any violation of Environmental Laws at any part of
HAT's Real Property arising from activities of the HAT Stations involving
Hazardous Materials. To the knowledge of HAT, HAT has been duly issued all
material permits, licenses, certificates and approvals required under any
Environmental Law.
4.17. Insurance.
Schedule 4.17 contains a true and complete list and brief summary of
-------------
all policies of title, property, fire, casualty, liability, life, workmen's
compensation, libel and slander, and other forms of insurance of any kind
relating to the HAT Assets or the business and operations of the HAT Stations.
All such policies: (a) are in full force and effect; (b) are sufficient for
compliance in all material respects with all requirements of Law and of all
material agreements to which HAT is a party; and (c) to HAT's knowledge, are
valid, outstanding, and enforceable policies and the policy holder is not in
default in any material respect thereunder.
4.18. Reports.
All material returns, reports and statements that the HAT Stations
are currently required to file with the FCC or any governmental agency have been
timely filed, and all reporting requirements of the FCC and other governmental
authorities having jurisdiction thereof have been complied with in all material
respects. All of such reports, returns and statements are complete and correct
in all material respects as filed. To HAT's knowledge, all documents required by
the FCC to be deposited by HAT in its public files (as defined in the rules and
regulations of
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<PAGE>
the FCC) during the period of operation of the HAT Stations by HAT have been
deposited therein.
4.19. Affiliated Transactions.
Except as set forth in Schedule 4.19, HAT is not now, and during the
-------------
past three (3) years has not been, a party, directly or indirectly, to any
material contract, lease, arrangement or transaction relating to the HAT
Stations, whether for the purchase, lease or sale of property, for the rendition
of services or otherwise, with any Affiliate of HAT, or any officer, director,
employee, proprietor, partner or shareholder of HAT (collectively, "HAT
Affiliated Transactions") (STC Affiliated Transactions and HAT Affiliated
Transactions are sometimes collectively referred to herein as the "Affiliated
Transactions"). None of the HAT Affiliated Transactions which are identified on
Schedule 4.19 contains terms and conditions which are in the aggregate
- -------------
significantly less favorable to HAT and as would be obtained in a comparable
arms length transaction or transaction which would not have occurred but for the
relationship between the parties.
ARTICLE 5.
PRE-CLOSING FILINGS
5.1. Applications for FCC Consent.
Within five (5) business days following the execution of this
Agreement, the parties hereto shall jointly file applications for the Stations
with the FCC requesting consent to the assignment of the FCC Licenses for the
Stations as contemplated herein (the "FCC Applications"). Each party hereto
will diligently take, or fully cooperate in the taking of, all necessary and
proper steps, and provide any additional information reasonably requested in
order to obtain promptly the requested consents and approvals of the FCC
Applications by the FCC.
5.2. Hart-Scott-Rodino.
Within five (5) business days following the execution of this
Agreement, the parties hereto shall complete any filing that may be required
pursuant to Hart-Scott-Rodino (each an "HSR Filing"). Each party hereto shall
diligently take, or fully cooperate in the taking of, all necessary and proper
steps, and provide any additional information reasonably requested in order to
comply with, the requirements of Hart-Scott-Rodino.
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<PAGE>
5.3. Non-Required Actions.
No party hereto shall have any obligation to take any steps pursuant
to Section 5.1 or Section 5.2 which would require the divestiture of any
----------- -----------
business or assets of any party hereto or any Affiliate thereof.
ARTICLE 6.
COVENANTS AND AGREEMENTS OF THE PARTIES
Each party covenants and agrees with the other party as follows:
6.1. Negative Covenants.
Pending and prior to the Closing, such party will not without the
prior written consent of the other party (which consent will not be unreasonably
withheld, delayed or conditioned, except in the case of matters referred to in
Sections 6.1.7, 6.1.9 and 6.1.11, with respect to which the other party's
- --------------------------------
consent may be withheld in its sole and absolute discretion), do or agree to do
any of the following:
6.1.1. Dispositions; Mergers.
Sell, assign, lease or otherwise transfer or dispose of any of such
party's Assets other than at substantially fair market value and in the Ordinary
Course of Business; or merge or consolidate with or into any other entity or
enter into any contracts or agreements relating thereto.
6.1.2. Accounting Principles and Practices.
Change or modify any accounting principles or practices or
any method of applying such principles or practices.
6.1.3. Trade-out Agreements.
(a) As to WPTZ and WNNE, enter into or renew any Trade-
out Agreement (excluding any film barter agreements) that would be binding on
the other party after the Closing Date, except in the Ordinary Course of
Business and which requires the provision of broadcast time having a value of
less than (a) Twenty-Five Thousand Dollars ($25,000) individually, and (b)
together with existing Trade-out Agreements still in effect as of the Closing
Date, Two Hundred Fifty Thousand Dollars ($250,000) in the aggregate as of the
Closing Date.
(b) As to KSBW and WDTN, enter into or renew any Trade-
out Agreements (excluding any film barter agreements) that would be
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binding on the other party after the Closing Date, except in the Ordinary Course
of Business which requires the provision of broadcast time having the value of
less than Five Thousand Dollars ($5,000) individually and together with existing
Trade-out Agreements still in effect as of the Closing Date, Fifty Thousand
Dollars ($50,000) in the aggregate as of the Closing Date.
6.1.4. Broadcast Time Sales Agreements.
Enter into or renew any Time Sales Agreement except in the Ordinary
Course of Business and which are for cash at prevailing rates for a term not
exceeding twelve (12) months.
6.1.5. Network Affiliation Agreements and TBAs.
Acquire or enter into or renew any TBA or network
affiliation agreement.
6.1.6. Additional Agreements.
Acquire or enter into any new Station Contracts not referred to in
Sections 6.1.3, 6.1.4 or 6.1.5 above, or renew, extend, amend, alter, modify or
- ------------------------------
otherwise change any existing Station Contract, except in the Ordinary Course of
Business (collectively, "Additional Agreements"); provided, however, such party
-------- -------
shall not enter into (a) any Program Contract for any Station which will be
binding on the other party after the Closing Date, or (b) any other Station
Contract requiring payments by such party under each Station Contract in excess
of Five Thousand Dollars ($5,000) or Seventy-Five Thousand Dollars ($75,000) in
the aggregate.
6.1.7. Breaches.
Do or omit to do any act which will cause a material breach
of any Station Contract.
6.1.8. Employee Matters.
(a) Enter into or become subject to any employment, labor,
union, or professional service contract not terminable at will, or any bonus,
pension, insurance, profit sharing, incentive, deferred compensation, severance
pay, retirement, hospitalization, employee benefit, or other similar plan; or
increase the compensation payable or to become payable to any employee, or pay
or arrange to pay any bonus payment to any employee, except in the Ordinary
Course of Business.
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(b) As to KSBW and WDTN, hire, retain or offer employment
to any new employees.
6.1.9. Actions Affecting FCC Licenses.
Take any action which may jeopardize the validity or
enforceability of or rights under any FCC Licenses.
6.1.10. Programming.
Program or broadcast any Program Contract or syndicated
program, except in the Ordinary Course of Business and consistent with the terms
and conditions of such Program Contracts.
6.1.11. Encumbrances.
Create, assume or permit to exist any Encumbrances upon any
of the Assets except for Permitted Encumbrances and Encumbrances that will be
discharged prior to or on the Closing Date.
6.1.12. Transactions With Affiliates.
Enter into any transaction with any Affiliate of such party
that will be binding upon the other party on or after the Closing Date, except
for transactions not otherwise prohibited by this Section 6.1 and transactions
-----------
between and among Stations operating in the same DMA in the Ordinary Course of
Business, in each case on arm's length terms.
6.2. Affirmative Covenants.
Pending and prior to the Closing, each party will:
6.2.1. Preserve Existence.
Preserve its corporate existence and business organization
intact, maintain its existing franchises and licenses, use commercially
reasonable efforts to preserve for the other party the relationships of its
Stations with suppliers, customers, employees and others with whom its Stations
have business relationships, and keep all of its Assets substantially in their
present condition, ordinary wear and tear excepted.
6.2.2. Normal Operations.
Subject to the terms and conditions of this Agreement
(including, without limitation, Section 6.1), (a) carry on the businesses and
-----------
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activities of its Stations, including without limitation, promotional
activities, the sale of advertising time, entering into other contracts and
agreements, or purchasing and scheduling of programming, in the Ordinary Course
of Business; (b) pay or otherwise satisfy all obligations (cash and barter) of
its Stations in the Ordinary Course of Business; provided, however, such party
-------- -------
shall cause to be brought current as of the Closing Date all payments that are
due and payable under its Station Contracts as originally contracted; (c)
maintain books of account, records, and files with respect to the business and
operations of its Stations in substantially the same manner as heretofore; and
(d) maintain its Assets in customary repair, maintenance and condition, except
to the extent of normal wear and tear, and repair or replace, consistently with
the Ordinary Course of Business, any of its Assets that may be damaged or
destroyed; notwithstanding the foregoing, each party acknowledges that the other
party shall not be obligated to spend any funds on capital expenditures after
the date hereof, except for the repair or replacement of its Assets that may be
damaged or destroyed or to comply with improvements required pursuant to the
environmental remediation described in Section 6.16.
------------
6.2.3. Maintain FCC Licenses.
Maintain the validity of its FCC Licenses, and comply in all
material respects with all requirements of such FCC Licenses and the rules and
regulations of the FCC.
6.2.4. Network Affiliation.
Use best efforts to maintain in full force and effect the
present network affiliation agreements for its Stations (and any and all
modifications and renewals thereof).
6.2.5. Station Contracts.
Pay and perform obligations in the Ordinary Course of Business
under its Station Contracts and under any Additional Agreements that shall be
entered into by such party pursuant to Section 6.1.6, in accordance with the
-------------
respective terms and conditions of such Station Contracts.
6.2.6. Taxes.
Pay or discharge all Taxes when due and payable.
6.2.7. Access.
Prior to the Closing and for a period of five (5) years after
the Closing Date (and to the extent permitted by the Clear Channel Agreements in
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the case of HAT and to the extent permitted by the Heritage Agreement and the
Sinclair Agreement in the case of STC), cause to be afforded to representatives
of the other party reasonable access during normal business hours to offices,
properties, assets, books and records, contracts and reports of its Stations, as
the other party shall from time to time reasonably request; provided, however,
-------- -------
that (a) such investigation shall only be upon reasonable notice and shall not
unreasonably disrupt the personnel or operations of either party or its
Stations, and (b) under no circumstances shall either party be required to
provide access to the other party or any representative of the other party (i)
any information or materials subject to confidentiality agreements with third
parties required to be kept confidential by applicable Laws, or (ii) any
privileged attorney-client communications or attorney work product. All
requests for access to the offices, properties, assets, books and records,
contracts and reports of the Stations of either party shall be made to such
representatives as such party shall designate, who shall be solely responsible
for coordinating all such requests and all access permitted hereunder. Each
party acknowledges and agrees that neither it nor its representatives shall
contact any of the employees, customers, suppliers, partners, or other
associates or Affiliates of the other party, in connection with the transactions
contemplated hereby, whether in person or by telephone, mail or other means of
communication, without the specific prior written authorization of such
representatives of the other party. Subject to and in accordance with the terms
of this Section 6.2.7, each party shall cooperate in all reasonable respects
-------------
with the other party's request to conduct an audit of such party's financial
information as the other party may reasonably determine is necessary to satisfy
the other party's public company reporting requirements pursuant to the
Securities Act of 1933 or the Securities Exchange Act of 1934 including, without
limitation, (a) using commercially reasonable efforts to obtain the consent of
such party's auditors to permit the other party and the other party's auditors
to have access to such auditors' work papers, and (b) consenting to such access
by the other party. All costs and expenses incurred in connection with the
preparation of (and assimilation of relevant information for) any such financial
statements shall be paid by the requesting party.
6.2.8. Insurance.
Maintain in full force and effect all of its existing
casualty, liability, and other insurance in amounts not less than those in
effect on the date hereof.
6.2.9. Financial Statements.
Provide the other party with unaudited monthly statements of
assets and liabilities relating to the business and operations of its Stations,
and monthly statements of revenues and expenses reflecting the results of
business and
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operations of its Stations for January 31, 1998 and for each month thereafter,
within thirty (30) days after the end of each such month. Such party further
agrees to provide the other party with weekly sales pacing reports for its
Stations.
6.2.10. Consents.
(a) Take all reasonable action required to obtain all
consents, approvals and agreements of any third parties necessary to authorize,
approve or permit the consummation of the transactions contemplated by this
Agreement, including, without limitation, any consent of the parties to the
Station Contracts designated as necessary in Schedule 3.4 and Schedule 4.4, as
------------ ------------
applicable, in order to consummate the transactions contemplated hereby
(collectively, the "Restricted Contracts"). Notwithstanding anything to the
contrary set forth in this Agreement or otherwise, to the extent that the
consent or approval of any third party is required under any Restricted
Contract, the party to such Restricted Contract shall only be required to use
reasonable efforts (not involving the payment by such party of any money to any
party to any such Restricted Contract) to obtain such consents and approvals,
and in the event that such party fails to obtain any such consent or approval,
the other party shall have no right to terminate this Agreement.
(b) Notwithstanding anything to the contrary in clause (a)
above, each party shall retain, until such time as any required consents shall
have been obtained by such party, all rights to and under any Station Contract
to which it is a party which requires the consent of any other party thereto for
assignment to the other party if such consent has not been obtained on the
Closing Date (the "Deferred Contract"). Until the assignment of the Deferred
Contract, (i) the party thereto shall continue to use all commercially
reasonable efforts and the other party shall cooperate to obtain the consent
and/or to remove any other impediments to such assignment, and (ii) the parties
agree to cooperate in any lawful arrangement to provide (to the extent permitted
without breach of such Deferred Contract) that the other party shall receive the
benefits of such interest after the Closing Date to the same extent as if it
were the party thereunder. If, subsequent to the Closing Date, the party to a
Deferred Contract shall obtain required consents to assign such Deferred
Contract to the other party, such Deferred Contract for which consent to assign
has been obtained shall at that time be deemed to be conveyed, granted,
bargained, sold, transferred, setover, assigned, released, delivered and
confirmed to the other party, without need of further action or of future
documentation.
6.2.11. Corporate Action.
Take all corporate action (including, without limitation, all
shareholder action), under the Law of any state having jurisdiction over such
party
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necessary to effectuate the transactions contemplated by this Agreement and the
other agreements to which it is a party.
6.2.12. Environmental Audit.
Permit the other party and the other party's agents, as soon
as practical after the date hereof and upon the other party's request therefor,
access to the Real Property of such party and the Leased Property of such party
for the purpose of conducting, at the other party's expense, Phase I and Phase
II environmental audits. Any such environmental audits shall be conducted by a
reputable environmental investigatory firm of the other party's choice subject
to the reasonable approval of such party and in a manner as will not
unreasonably interfere with the normal business and operations of any of the
Stations.
6.2.13. Sinclair Agreement.
As to STC, STC shall consummate the acquisition of the
Burlington Stations in accordance with the provisions of the Sinclair Agreement
and promptly enforce all rights and remedies available to STC pursuant to the
Sinclair Documents.
6.3. Confidentiality.
The Recipient Party shall, at all times, maintain strict
confidentiality with respect to all documents and information furnished to such
party by or on behalf of the Transferring Party. Nothing shall be deemed to be
confidential information that: (a) is known to the Recipient Party at the time
of its disclosure to the Recipient Party; (b) becomes publicly known or
available other than through disclosure by the Recipient Party; (c) is received
by the Recipient Party from a third party not actually known by the Recipient
Party to be bound by a confidentiality agreement with or obligation to the
Transferring Party; or (d) is independently developed by the Recipient Party.
Notwithstanding the foregoing provisions of this Section 6.3, the Recipient
-----------
Party may disclose such confidential information (a) to the extent required or
deemed advisable to comply with applicable Laws; (b) to its officers, directors,
employees, representatives, financial advisors, attorneys, accountants, and
agents with respect to the transactions contemplated hereby (so long as such
parties agree to maintain the confidentiality of such information); and (c) to
any Governmental Authority in connection with the transactions contemplated
hereby. In the event this Agreement is terminated, each party will return to
the other party all documents and other material prepared or furnished by the
other party relating to the transactions contemplated hereunder, whether
obtained before or after the execution of this Agreement.
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<PAGE>
6.4. Collection of Receivables.
At the Closing, STC shall assign the Sinclair Receivables to
HAT for collection purposes only, and, within ten (10) business days after the
Closing Date, STC shall furnish to HAT a list of such Sinclair Receivables by
accounts and the amounts then owing. HAT agrees, during the period of days
remaining between the date of the STC Transfer Date and one hundred fifty (150)
days from such date (the "Sinclair Collection Period"), without any requirement
to litigate to collect such Sinclair Receivables, to use its reasonable efforts
(with at least the care and diligence HAT uses to collect its own accounts
receivable) to collect for STC such Sinclair Receivables and to remit to
Sinclair on the fifth (5th) day following the last day of each month occurring
during the Sinclair Collection Period (or, if any such day is a Saturday, Sunday
or holiday, on the next day on which banking transactions are resumed),
collections received by HAT with respect to such Sinclair Receivables. HAT shall
not make any referral or compromise of any Sinclair Receivable to a collection
agency or attorney for collection and shall not compromise for less than full
value any Sinclair Receivable without the prior written consent of Sinclair. Any
Sinclair Receivable not collected by HAT within the Sinclair Collection Period
shall revert to Sinclair. HAT shall reassign, without recourse to Sinclair, each
Sinclair Receivable and deliver to Sinclair, all records relating thereto on the
same day as HAT remits to Sinclair the collections received. All payments in
respect of the Sinclair Receivables received during the Sinclair Collection
Period shall be first applied to the oldest balance then due on the Sinclair
Receivables unless the account debtor indicates in writing that payment is to be
applied otherwise due to a dispute over an Account Receivable. HAT agrees, upon
the reasonable request of STC, to furnish to STC and Sinclair periodic reports
on the status of its Sinclair Receivables. HAT shall have no right to set-off
any amounts collected for the Sinclair Receivable for any amounts owed to HAT by
STC; provided, however, that HAT shall have the right to seek indemnification in
-------- -------
accordance with the terms and conditions of this Agreement.
6.5. Possession and Control.
Between the date hereof and the Closing Date, the Recipient
Party shall not directly or indirectly control, supervise or direct, or attempt
to control, supervise or direct, the business and operations of the Transferring
Party's Stations, and such operation, including complete control and supervision
of all programming, shall be the sole responsibility of the Transferring Party.
On and after the Closing Date, the Transferring Party shall have no control
over, or right to intervene, supervise, direct or participate in, the business
and operations of the Stations transferred to the Recipient Party.
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<PAGE>
6.6. Risk of Loss.
The risk of loss or damage by fire or other casualty or cause
to the Assets of the Transferring Party until the Closing Date shall be upon the
Transferring Party. In the event of loss or damage prior to the Closing Date
with respect to which the Transferring Party has adequate replacement cost
insurance and which has not been restored, replaced, or repaired as of the
Closing Date and if the Recipient Party shall proceed with the Closing, then the
Recipient Party shall receive at the Closing the insurance proceeds or an
assignment of the right to receive such insurance proceeds, as applicable, to
which the Transferring Party otherwise would be entitled, whereupon the
Transferring Party shall have no further liability to the Recipient Party for
such loss or damage.
6.7. Public Announcements.
Each party shall consult with the other party 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 a party may, without the prior written consent of the other party,
- -------
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 such party
is a party if it has used all reasonable efforts to consult with the other party
and to obtain such party's consent but has been unable to do so in a timely
manner.
6.8. Sinclair Employee Matters.
6.8.1. At the Closing, HAT shall offer employment to each of
the employees of WNNE and WPTZ (including those on leave of absence, whether
short-term, long-term, family, maternity, disability, paid, unpaid or other), at
a comparable salary, position and place of employment as held by each such
employee immediately prior to the Closing Date (such employees who are given
such offers of employment and accept such offers and are employed by HAT are
referred to herein as the "Sinclair Employees"). Nothing in this Section 6.8.1
-------------
is intended to guarantee employment for any Sinclair Employee for any length of
time after the Closing Date.
6.8.2. Except as provided otherwise in this Section 6.8, STC
-----------
shall pay, discharge and be responsible for (a) all salary and wages arising out
of or relating to the employment of the employees of WNNE and WPTZ prior to the
Closing Date and (b) any employee benefits arising under the Benefit Plans of
STC and its Affiliates during the period prior to the Closing Date. From and
after the Closing Date, HAT shall pay, discharge and be responsible for all
salary, wages and
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benefits arising out of or relating to the employment of the Sinclair Employees
by HAT on and after the Closing Date. HAT shall be responsible for all severance
Liabilities, and all COBRA Liabilities for any Sinclair Employees terminated by
HAT on or after the Closing Date.
6.8.3. HAT shall cause all Sinclair Employees as of the
Closing Date to be eligible to participate in its "employee welfare benefit
plans" and "employee pension benefit plans" (as defined in Section 3(1) and 3(2)
of ERISA, respectively) to the extent required under the Sinclair Agreement.
6.8.4. For purposes of any length of service requirements,
waiting periods, vesting periods or differential benefits based on length of
service in any such plan for which a Sinclair Employee may be eligible after the
Closing, HAT shall ensure that, to the extent permitted by law, service by such
Sinclair Employee with the Heritage Subsidiaries, Sinclair, STC or any of their
respective Affiliates shall be deemed to have been service with HAT. In
addition, HAT shall ensure that each Sinclair Employee receives credit under any
welfare benefit plan of HAT for any deductibles or co-payments paid by such
Sinclair Employee and his or her dependents for the current plan year under a
plan maintained by the Heritage Subsidiaries, Sinclair, STC or any of their
respective Affiliates. HAT shall grant credit to each Sinclair Employee for all
sick leave in accordance with the policies of HAT applicable generally to its
employees after giving effect to service for STC as service for HAT. To the
extent taken into account in determining the Final Proration Amount, HAT shall
assume and discharge STC's Liabilities for the payment of all unused vacation
leave accrued by Sinclair Employees as of the Closing Date. To the extent any
claim with respect to such accrued vacation leave is lodged against STC, with
respect to any Sinclair Employee, HAT shall indemnify, defend and hold harmless
STC from and against any and all losses, directly or indirectly, as a result of,
or based upon or arising from the same.
6.8.5. As soon as practicable following the Closing Date,
HAT shall establish and maintain a defined contribution plan or plans (which may
be a preexisting plan or plans (the "HAT Retirement Plan") intended to be
qualified under Section 401(a) and 401(k) of the Code for the benefit of the
Sinclair Employees. Effective as of the Closing Date, STC shall cause
appropriate amendments to be made to its retirement savings plan (the "STC
Retirement Plan") to provide that the Sinclair Employees shall be fully vested
in their accounts under the STC Retirement Plan. As soon as practicable after
the Closing Date, HAT shall take all necessary action to qualify the HAT
Retirement Plan under the applicable provisions of the Code (including but not
limited to Section 401), if it is not yet so qualified, and HAT and STC shall
make any and all filings and submissions to the appropriate governmental
agencies required to be made by them in connection with the transfer of assets
described hereafter. As soon as practicable following the earlier of the receipt
of a favorable determination letter from the Internal Revenue
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Service regarding the qualified status of both the STC Retirement Plan and the
HAT Retirement Plan (each as amended to the date of transfer) or sooner, if STC
and HAT so agree, STC shall cause to be transferred to the HAT Retirement Plan,
in cash, all of the individual account balances of Sinclair Employees under the
STC Retirement Plan, including any outstanding plan participant loan receivables
allocated to such accounts.
6.8.6. HAT acknowledges and agrees that its obligations
pursuant to this Section 6.8 are in addition to, and not in limitation of, HAT's
-----------
obligation to assume the employment contracts set forth on Schedule 2.3.9.
--------------
6.8.7. Except as otherwise provided in this Section 6.8 or
-----------
in any employment, severance or retention agreements of any Sinclair Employees,
all Sinclair Employees shall be at-will employees, and HAT may terminate their
employment or change their terms of employment at will. No employee (or
beneficiary of any employee) of WPTZ or WNNE may sue to enforce the terms of
this Agreement, including specifically this Section 6.8, and no employee or
-----------
beneficiary shall be treated as a third party beneficiary of this Agreement.
Except to the extent provided for herein, HAT may cover the Sinclair Employees
under existing or new benefit plans, programs, and arrangements, and may amend
or terminate any such plans, programs, or arrangements at any time.
6.9. Other Employee Matters.
6.9.1. Except for the Sinclair Employees (who are addressed
in Section 6.8), at least five (5) days prior to the Closing Date, the Recipient
-----------
Party shall designate in writing which employees of the Transferring Party's
Stations the Recipient Party shall offer employment after the Closing Date (all
such employees shall be referred to herein as the "Designated Employees"; all
other employees shall be referred to herein as the "Non-Transferred Employees").
As of the Closing Date, the Recipient Party shall offer employment to each of
the Designated Employees (including those on leave of absence, whether short-
term, long-term, family, maternity, disability, paid, unpaid or other), on terms
and conditions set by the Recipient Party (such employees who are given such
offers of employment and accept such offers and are employed by the Recipient
Party are referred to herein as the "Transferred Employees"). Nothing in this
Section 6.9.1 is intended to guarantee employment for any Transferred Employee
- -------------
for any length of time after the Closing Date.
6.9.2. Except as provided otherwise in this Section 6.9, the
-----------
Transferring Party shall pay, discharge and be responsible for (a) all salary
and wages arising out of or relating to the employment of the employees of its
Stations prior to the Closing Date, (b) all accrued and unpaid vacation pay, (c)
any employee benefits arising under the Benefit Plans of the Transferring Party
and its Affiliates
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during the period prior to the Closing Date and (d) all severance Liabilities
and all COBRA Liabilities for any Non-Transferred Employees (subject to the
Recipient Party's reimbursement obligations set forth in Section 6.9.8). From
-------------
and after the Closing Date, the Recipient Party shall pay, discharge and be
responsible for all salary, wages and benefits arising out of or relating to the
employment of the Designated Employees by the Recipient Party on and after the
Closing Date. The Recipient Party shall be responsible for all severance
Liabilities, and all COBRA Liabilities for any Designated Employees terminated
by the Recipient Party on or after the Closing Date.
6.9.3. For purposes of any length of service requirements,
waiting periods, vesting periods or differential benefits based on length of
service pursuant to any employment program provided by the Recipient Party in
any such plan for which a Transferred Employee may be eligible after the
Closing, the Recipient Party shall ensure that, to the extent permitted by law,
service by such Transferred Employee with the applicable Station or any
Affiliate of the Station shall be deemed to have been service with the Recipient
Party.
6.9.4. Each party acknowledges and agrees that its
obligations pursuant to this Section 6.9 are in addition to, and not in
-----------
limitation of, such party's obligation to assume the employment contracts of the
other party set forth on Schedule 2.3.9.
--------------
6.9.5. Except as otherwise provided in this Section 6.9 or
-----------
in any employment, severance or retention agreements of any Designated
Employees, all Designated Employees shall be at-will employees, and the
Recipient Party may terminate their employment or change their terms of
employment at will. No employee (or beneficiary of any employee) of the Stations
may sue to enforce the terms of this Agreement, including specifically this
Section 6.9, and no employee or beneficiary shall be treated as a third party
- -----------
beneficiary of this Agreement. Except to the extent provided for herein, the
Recipient Party may cover the Designated Employees under existing or new benefit
plans, programs, and arrangements, and may amend or terminate any such plans,
programs, or arrangements at any time.
6.9.6. The Recipient Party agrees to reimburse the
Transferring Party for all severance Liabilities and COBRA Liabilities for Non-
Transferred Employees which are paid by the Transferring Party pursuant to
Section 6.9.2 and which are consistent with the Transferring Party's severance
- -------------
policy in effect as of the date hereof and disclosed to the Recipient Party.
6.10. Disclosure Schedules.
(a) STC hereby acknowledges that for business reasons HAT has
not been able to deliver a complete set of the Schedules for the HAT Stations
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referred to herein prior to the date hereof. HAT covenants that HAT shall
deliver to STC and to STC's counsel a complete set of the Schedules for the HAT
Stations (and copies of all materials identified on the Schedules, as reasonably
required to support such Schedules or as otherwise requested by STC) within ten
(10) business days after the execution and delivery of this Agreement. On the
date of receipt, an officer of HAT shall certify in writing that the Schedules
(and supporting materials) delivered to STC and STC's counsel are complete and
correct. STC shall have ten (10) business days following the date of receipt by
STC and STC's counsel of the complete and correct set of the Schedules (and
supporting materials) for the HAT Stations (the "Schedule Review Period") to
review such Schedules and to determine in the good faith exercise of STC's
reasonable business judgment whether the items referenced therein are acceptable
to STC. If STC, after reasonable consultation with HAT, determines in the good
faith exercise of STC's reasonable business judgment that the items referred to
in the HAT Schedules are not acceptable, STC shall be entitled to terminate this
Agreement pursuant to the terms set forth in Section 11.2(b).
---------------
(b) The parties acknowledge and agree that each party shall
have the right from time to time after the date hereof to update or correct
solely Schedules 2.3.5, 2.3.6, 2.3.8, 2.3.9, 3.4, 4.4, 3.17 and 4.17 attached
-------------------------------------------------------------
hereto solely to reflect actions by such party (and, in the case of STC, actions
by Sinclair or the Heritage Subsidiaries) after the date hereof which are not
prohibited by Section 6.1 hereof. The inclusion of any fact or item on a
-----------
Schedule referenced by a particular section in this Agreement shall, should the
existence of the fact or item or its contents, be relevant to any other section,
be deemed to be disclosed with respect to such other section whether or not an
explicit cross-reference appears in the Schedules.
6.11. Bulk Sales Laws.
Each party hereby waives compliance by the other party, in
connection with the transactions contemplated hereby, with the provisions of any
applicable bulk transfer laws.
6.12. Tax Matters.
6.12.1. Each party represents, warrants, covenants and agrees
with the other party that for tax purposes the exchange of Assets is not
effective until the Closing Date. The parties agree that all Tax returns and
reports shall be filed consistent with the sale of assets taking place as
aforesaid.
6.12.2. The parties intend that the following exchanges of
Assets pursuant to this Agreement shall qualify as "like kind" exchanges under
Section 1031 of the Code: (a) for the STC Exchange Entities, the exchange by the
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STC Exchange Entities of KSBW for the HAT Assets, and (b) for HAT, the exchange
by HAT of the HAT Assets for the STC Assets. The parties acknowledge and agree
that the exchange by the STC Exchange Entities of WNNE and WPTZ is not intended
to qualify for the STC Exchange Entities as a "like kind" exchange under Section
1031 of the Code.
6.12.3. STC covenants with and warrants to HAT, and HAT
covenants with and warrants to STC, that (a) in no Tax return hereafter filed by
STC or any Affiliate of STC, or by HAT or any Affiliate of HAT, or any of their
respective representatives, successors or assigns, will STC or HAT or any of
their respective representatives, successors or assigns, treat any exchanges
described herein inconsistently with or differently than as described herein,
and (b) in no tax audit, tax examination, tax review or tax litigation will STC
or any Affiliate of STC, or HAT or any Affiliate of HAT, or any of their
respective representatives, successors or assigns, treat any such exchange
inconsistently with or differently than as described herein. Each party agrees
to cooperate with the other party in order that STC and HAT effectuate the tax-
deferred exchanges as described herein of like-kind property pursuant to Section
1031 of the Code. The parties agree to execute such agreements and other
documents as may be necessary to complete and otherwise effectuate these tax-
deferred exchanges.
6.12.4. In order to facilitate the Like-Kind Exchange as
contemplated hereunder, STC agrees to take such actions prior to the Closing
(subject to applicable regulatory requirements) as are necessary (the "LKE
Facilitation Transactions") so that immediately prior to the Closing and the
consummation of the Like-Kind Exchange STC Broadcasting shall own all of the STC
Non-License Assets and STC License Company shall own all of the STC License
Assets (the "Preferred STC Ownership"). Notwithstanding anything in this
Agreement to the contrary, the parties acknowledge and agree that STC shall have
the right, without the prior consent of HAT (provided that STC delivers written
notice to HAT of STC's intent to exercise such right at least three (3) days
prior to Closing), to take such actions in order to facilitate the Like-Kind
Exchange in a manner which minimizes the tax consequences to STC of the
transactions contemplated herein provided that the tax consequences for HAT are
the same as if the Preferred STC Ownership structure was used and the
transactions hereunder shall not be adversely affected except that in no event
shall STCBV fail to assign to STCBV Sub all rights under the Sinclair Documents
or STCBV Sub fail to be the entity which acquires WPTZ and WNNE from Sinclair as
contemplated by Section 8.1.
-----------
6.12.5. HAT acknowledges and agrees that STC may elect to
facilitate the exchanges contemplated by this Agreement by the use of a
"qualified intermediary" as defined in Treas. Reg. (S)1.1031(k)-1(g)(4) ("QI")
for purposes of engaging in the exchange of the STC License Assets. If STC so
elects, STC shall
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provide notice to HAT of STC's election, and thereafter both HAT and STC may at
the Closing (but immediately prior to the consummation of the exchange of Assets
contemplated in Article 2) assign such party's rights in respect of such
----------
party's License Assets under this Agreement to a QI (but such assignment shall
not relieve either party of such party's obligations under this Agreement).
Each party shall cooperate with all reasonable requests of the other party and
the QI in arranging and effecting the transfer of the License Assets to and from
the QI. Without limiting the generality of the foregoing, if STC has given
notice of STC's intention to effect the exchange of the Assets with a QI, (i)
HAT shall promptly provide STC with written acknowledgment of such notice, (ii)
at Closing, each party shall deliver such party's License Assets plus the amount
of cash if any, required to complete the exchange to the QI rather than to the
other party (which delivery shall discharge the obligation of such party to make
delivery of the License Assets (and such cash) hereunder), and (iii) at Closing,
accept delivery of the other party's License Assets from the QI rather than from
the other party.
6.13. Preservation of Books and Records.
For a period of five (5) years after the Closing Date, each
party agrees not to dispose of, and agrees to provide the other party reasonable
access to, any material books or records in such party's possession immediately
after the Closing Date that relate to the business or operations of its Stations
prior to the Closing Date.
6.14. Affiliated Transactions.
If as of the Closing Date a Recipient Party desires to
continue any Affiliated Transactions of a Transferring Party, such Recipient
Party shall provide such Transferring Party written notice at least ten (10)
days prior to the Closing Date designating which Affiliated Transactions shall
continue after the Closing Date; provided, however, the parties acknowledge and
-------- -------
agree that no Affiliated Transactions shall continue for a period in excess of
sixty (60) days after the Closing Date.
6.15. Clear Channel Agreements.
HAT shall not (a) do or omit to do any act which will cause a
material breach under any of the Clear Channel Agreements, or (b) amend, modify,
terminate or agree to amend, modify or terminate any of the Clear Channel
Agreements without the prior written consent of STC.
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6.16. Sinclair Agreement.
STC shall not (a) do or omit to do any act which will cause a
breach under the Sinclair Agreement, or (b) amend, modify, terminate, grant or
consent to a waiver under, or agree to amend, modify, terminate, grant or
consent to a waiver under, the Sinclair Agreement without the prior written
consent of HAT.
6.17. Environmental Remediation.
The parties acknowledge and agree that certain environmental
remediation is required at WDTN and KSBW and that (a) HAT shall, at its own
cost, take whatever remedial actions are necessary to cause the abandoned
underground storage tanks at WDTN to be in compliance in all material respects
with Environmental Laws, and (b) STC shall, at its own cost, take whatever
remedial actions are necessary to cause the retrofitting at KSBW to be in
compliance in all material respects with Environmental Laws.
6.18 Certain FCC Matters
(a) Without the prior written consent of HAT, STC covenants
and agrees that, prior to the Closing, neither STC, SALC nor any Affiliated
Entities of STC or SALC shall acquire any new or increased "attributable
interest," as defined in the FCC rules, in any media property ("Further Media
Interest"), which Further Media Interest could not be held together with the HAT
Stations by STC License Company and SALC as contemplated herein following the
Closing Date under the rules and regulations of the FCC.
(b) Without the prior written consent of STC, HAT covenants
and agrees that, prior to the Closing, neither HAT nor any Affiliated Entities
of HAT shall acquire any Further Media Interest, which Further Media Interest
could not be held together with the STC Stations by HAT and Affiliated Entities
of HAT as contemplated herein following the Closing Date under the rules and
regulations of the FCC.
ARTICLE 7.
CONDITIONS PRECEDENT TO
OBLIGATIONS OF STC
The obligations of STC under this Agreement to proceed with
the Closing are subject to the satisfaction (or waiver in writing by STC) at or
prior to the Closing of each of the following conditions:
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7.1. Closing Under the Sinclair Agreement.
STCBV Sub shall have acquired WPTZ and WNNE and the related
Assets (including, without limitation, the FCC Licenses) (as such terms are
defined in the Sinclair Agreement) pursuant to the terms of the Sinclair
Agreement.
7.2. Representations and Covenants.
The representations and warranties of HAT made in this
Agreement shall be true and correct on and as of the Closing Date with the same
effect as though such representations and warranties had been made on and as of
the Closing Date (except as modified by the Schedules updated after the date
hereof in accordance with Section 6.10 and except for representations and
------------
warranties that speak as of a specific date or time other than the Closing Date,
(which need only be true and correct in all material respects as of such date or
time)), and the covenants and agreements of HAT required to be performed on or
before the Closing Date in accordance with the terms of this Agreement shall
have been performed in all respects, except to the extent that the failure of
such representations and warranties to be true and correct and the failure to
perform such covenants shall not have, when considered together, had a Material
Adverse Effect on the HAT Stations.
7.3. Delivery of Documents.
HAT shall have delivered to STC all contracts, agreements,
instruments and documents required to be delivered by HAT to STC pursuant to
Section 9.4.
- -----------
7.4 Consents.
HAT shall have obtained all consents, authorizations or
approvals necessary to effect valid assignments to STC of the main transmission
tower and studio leases for WDTN.
7.5 ABC Affiliation Agreement.
(a) HAT shall have assigned to STC a written network
affiliation agreement with the American Broadcasting Company ("ABC") for WDTN
that provides for (i) Two Million Dollars ($2,000,000) of annual compensation
from ABC (ii) a duration of at least five (5) years after the Closing Date, and
(iii) terms and conditions that are otherwise consistent with the current
programming at WDTN (the "ABC Affiliation Agreement"); provided, however, that
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HAT shall not be obligated to assign the ABC Affiliation Agreement if STC
provides written notice to
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HAT within thirty (30) days of the date of this Agreement that STC shall not
require HAT to obtain the consent of ABC to the assignment of the ABC
Affiliation Agreement to STC as a condition to Closing.
(b) STC and HAT acknowledge and agree that if the ABC
Affiliation Agreement does not provide for Two Million Dollars ($2,000,000) of
annual compensation from ABC, the Cash Consideration payable hereunder by HAT
shall be increased by the amount of (i) Two Million Dollars ($2,000,000) minus
-----
the actual annual compensation received from ABC, multiplied by (ii) Twelve and
----------
one-half (12.5). In addition, if the ABC Affiliation Agreement contains terms
and conditions which are inconsistent with any obligations under any Station
Contracts to be assumed by STC hereunder, the Cash Consideration payable
hereunder by HAT shall also be increased by the amount of Losses to be incurred
by STC as a result of STC's inability to fully use STC's rights under such
Station Contracts.
7.6. FCC Order.
The FCC Order shall have been issued with respect to each
Station and shall be in effect.
7.7. Hart-Scott-Rodino.
All applicable waiting periods under Hart-Scott-Rodino shall
have expired or terminated.
7.8. 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.
ARTICLE 8.
CONDITIONS PRECEDENT TO THE
OBLIGATIONS OF HAT
The obligations of HAT under this Agreement to proceed with
the Closing are subject to the satisfaction (or waiver in writing by HAT) at or
prior to the Closing of each of the following conditions:
8.1. Closing Under the Sinclair Agreement.
STCBV shall have assigned all of its rights under the
Sinclair Documents to STCBV Sub and STCBV Sub shall have acquired WPTZ and WNNE
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and the related Assets (including, without limitation, the FCC Licenses) (as
such terms are defined in the Sinclair Agreement) pursuant to the terms of the
Sinclair Agreement.
8.2. Representations and Covenants.
The representations and warranties of STC made in this Agreement shall
be true and correct on and as of the Closing Date with the same effect as though
such representations and warranties had been made on and as of the Closing Date
(except as modified by the Schedules updated after the date hereof in accordance
with Section 6.10 and except for representations and warranties that speak as of
------------
a specific date or time other than the Closing Date (which need only be true and
correct in all material respects as of such date or time)), and the covenants
and agreements of STC required to be performed on or before the Closing Date in
accordance with the terms of this Agreement shall have been performed in all
respects, except to the extent that the failure of such representations and
warranties to be true and correct and the failure to perform such covenants
shall not have, when considered together, had a Material Adverse Effect on the
STC Stations.
8.3. Delivery of Documents.
STC shall have delivered to HAT all contracts, agreements, instruments
and documents required to be delivered by STC to HAT pursuant to Section 9.3.
-----------
8.4. Consents.
STC shall have obtained all consents, authorizations or approvals
necessary to effect valid assignments to HAT of the Network Agreement for KSBW.
8.5. FCC Order.
The FCC Order shall have been issued with respect to each Station and
shall be in effect.
8.6. Hart-Scott-Rodino.
All applicable waiting periods under Hart-Scott-Rodino shall have
expired or terminated.
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8.7. 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.
8.8. LKE Facilitation Transactions.
Immediately prior to or at the Closing, STC shall have consummated the
LKE Facilitation Transactions, if necessary.
ARTICLE 9.
CLOSING
9.1. Closing.
The closing of the exchange of the Assets hereunder (the "Closing")
shall be held on a date that is the fifth business day after all conditions
precedent to the Closing set forth in Articles 7 and 8 hereof are satisfied or
----------------
waived (the "Closing Date").
9.2. Time and Place of Closing.
The Closing shall be held at 10:00 A.M. local time on the Closing Date
at the offices of Hogan & Hartson L.L.P., 8300 Greensboro Drive, Suite 1100,
McLean, Virginia, or at such other time and place as the parties may agree.
9.3. Delivery by STC at the Closing.
At or before the Closing, STC shall deliver to HAT the following:
9.3.1. Agreements and Instruments
The following bills of sale, assignments and other instruments of
transfer with respect to the STC Assets, dated as of the Closing Date and duly
executed by the applicable STC Exchange Entity:
(a) a Bill of Sale;
(b) an Assignment of FCC Licenses;
(c) an Assignment of Contracts and Leases;
(d) an Assumption Agreement;
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(e) certificates of title with respect to motor vehicles of
the STC Exchange Entities listed on Schedule 2.3.10 or
---------------
if any such motor vehicles are leased by any STC
Exchange Entity, an assignment of such lease; and
(f) special or limited warranty deeds for all Real Property
owned by the STC Exchange Entities in the form
appropriate to the jurisdictions in which such Real
Property is located.
9.3.2. Consents.
Copies of all consents STC has been able to obtain to effect the
assignment to HAT of STC's Station Contracts listed on Schedule 3.4.
------------
9.3.3. Certified Resolutions.
A copy of the approval of the board of directors of each STC Party,
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 to which such STC Party is a party, and the consummation of
the transactions contemplated hereby and thereby.
9.3.4. Officers' Certificates.
(a) A certificate of each STC Party certifying the matters
set forth in Section 8.2;
-----------
(b) A certificate of each STC Party as to the incumbency of
the representatives of such STC Party executing this Agreement or any of the
other agreements to which such STC Party is a party; and
(c) A certificate of STC Broadcasting certifying that all
amounts due and payable as of the Closing Date under any of STC's Station
Contracts relating to KSBW have been paid in full.
9.3.5. Good Standing Certificates.
To the extent available from the applicable jurisdictions,
certificates as to the formation and/or good standing of each STC Party issued
by the appropriate governmental authorities in the states of organization and
each jurisdiction in which such STC Party is qualified to do business, each such
certificate (if available) to be dated a date not more than a reasonable number
of days prior to the Closing Date.
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9.4. Delivery by HAT at the Closing.
At or before the Closing, HAT shall deliver to STC the following:
9.4.1. Agreements and Instruments
The following bills of sale, assignments and other
instruments of transfer with respect to the HAT Assets, dated as of the Closing
Date and duly executed by HAT:
(a) a Bill of Sale;
(b) an Assignment of FCC Licenses;
(c) an Assignment of Contracts and Leases;
(d) an Assumption Agreement;
(e) certificates of title with respect to motor vehicles of
HAT listed on Schedule 2.3.10 or if any such motor
---------------
vehicles are leased by HAT, an assignment of such lease;
and
(f) special or limited warranty deeds for all Real Property
owned by HAT in the form appropriate to the
jurisdictions in which such Real Property is located.
9.4.2. Consents.
(a) Copies of all consents HAT has been able to obtain to
effect the assignment to STC of HAT's Station Contracts listed on Schedule 4.4.
------------
(b) Copies of all consents or notices required under the
Clear Channel Agreements as are required to comply with the terms thereof and to
validly assign the Clear Channel Agreements to STC.
9.4.3. Certified Resolutions.
A copy of the approval of the board of directors of HAT,
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 to which HAT is a party, and the consummation of the
transactions contemplated hereby and thereby.
9.4.4. Officers' Certificates.
(a) A certificate of HAT certifying the matters set forth in
Section 7.2;
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(b) A certificate of HAT as to the incumbency of the
representatives of HAT executing this Agreement or any of the other agreements
to which HAT is a party; and
(c) A certificate of HAT certifying that all amounts due and
payable as of the Closing Date under any of HAT's Stations Contracts relating to
WDTN have been paid in full.
9.4.5. Good Standing Certificates.
To the extent available from the applicable jurisdictions,
certificates as to the formation and/or good standing of HAT issued by the
appropriate governmental authorities in the states of organization and each
jurisdiction in which HAT is qualified to do business, each such certificate (if
available) to be dated a date not more than a reasonable number of days prior to
the Closing Date.
ARTICLE 10.
SURVIVAL; INDEMNIFICATION
10.1. Survival of Representations.
10.1.1. Unless otherwise set forth herein (including, without
limitation, Section 10.1.2), all representations and warranties, covenants and
--------------
agreements of the parties hereto contained in or made pursuant to this Agreement
or in any certificate furnished pursuant hereto shall survive the Closing Date
and shall remain in full force and effect to the following extent: (a)
representations and warranties shall survive for a period of twelve (12) months
after the Closing Date, (b) the covenants and agreements which by their terms
survive the Closing shall continue in full force and effect until fully
discharged (but not beyond the expiration of twelve (12) months after the
Closing Date except in the case of the indemnities set forth in clauses (a),
(b), (d) and (g) of Section 10.2, clauses (a), (b), (d) and (g) of Section 10.3
------------ ------------
and Section 10.6 which shall survive indefinitely), and (c) any representation,
------------
warranty, covenant or agreement that is the subject of a claim which is asserted
in a reasonably detailed writing prior to the expiration of the survival period
set forth in this Section 10.1.1, shall survive with respect to such claim or
--------------
dispute until the final resolution thereof.
10.1.2. No claim for indemnification may be made pursuant to this
Article 10 after the survival period set forth in this Section 10.1.
- ---------- ------------
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10.2. Indemnification by STC.
Subject to the conditions and provisions of Section 10.4 and Section
------------ -------
10.5, from and after the Closing Date, STC agrees to indemnify, defend and hold
- ----
harmless HAT from and against and in any respect of, on a net after-tax basis,
any and all Losses, asserted against, resulting to, imposed upon or incurred by
HAT, directly or indirectly, by reason of or resulting from: (a) any failure by
STC to pay, perform or discharge any Liabilities not assumed by HAT pursuant
hereto; (b) the business or operations of KSBW during the period prior to the
Closing Date; (c) any misrepresentation or breach of the representations and
warranties of STC contained in or made pursuant to this Agreement or any STC
Document (it being agreed that for this purpose the representations and
warranties made in the certificates delivered pursuant to Section 9.3.4(a) shall
----------------
not be qualified by references to Material Adverse Effect set forth in Section
-------
8.2); (d) any breach by STC of any covenants of STC contained in or made
- ----
pursuant to this Agreement or any other STC Document except for covenants
relating to WPTZ and WNNE (which are addressed in Section 10.2(h)); (e) the
---------------
failure of STC to comply with the provisions of any applicable bulk transfer
law; (f) any breach of the covenants and agreements of STC contained in Section
-------
6.18; (g) any WFFF Liabilities; or (h) any Sinclair Liabilities arising as a
- ----
result of the willful misconduct, gross negligence or bad faith of STC.
10.3. Indemnification by HAT.
Subject to the conditions and provisions of Section 10.4 and Section
------------ -------
10.5, from and after the Closing Date, HAT agrees to indemnify, defend and hold
- ----
harmless STC from and against and in any respect of, on a net after-tax basis,
any and all Losses, asserted against, resulting to, imposed upon or incurred by
STC, directly or indirectly, by reason of or resulting from: (a) any failure by
HAT to pay, perform or discharge any Liabilities not assumed by STC pursuant
hereto; (b) the business or operations of the HAT Stations during the period
prior to the Closing Date (except to the extent STC has assumed the Liability
for any such Losses pursuant hereto); (c) any misrepresentation or breach of the
representations and warranties of HAT contained in or made pursuant to this
Agreement or any HAT Document (it being agreed that for this purpose the
representations and warranties made in the certificates delivered pursuant to
Section 9.4.4(a) shall not be qualified by references to Material Adverse Effect
- ----------------
set forth in Section 7.2); (d) any breach by HAT of any covenants of HAT
------------
contained in or made pursuant to this Agreement or any other HAT Document; (e)
the failure of HAT to comply with the provisions of any applicable bulk transfer
law; (f) any breach of the covenants and agreements of HAT contained in Section
-------
6.18; or (g) any Sinclair Liabilities (but excluding any such Sinclair
- ----
Liabilities arising as a result of the willful misconduct, gross negligence or
bad faith of STC).
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10.4. Limitations on Indemnification.
10.4.1. Notwithstanding any other provision of this Agreement to the
contrary, in no event shall Losses include a party's incidental, consequential
or punitive damages, regardless of the theory of recovery. Each party hereto
agrees to use reasonable efforts to mitigate any Losses which form the basis for
any claim for indemnification hereunder.
10.4.2. Notwithstanding any other provision of this Agreement to the
contrary, neither party shall be liable to the other party in respect of any
indemnification hereunder except to the extent that the aggregate amount of
Losses of the other party under this Agreement exceeds Five Hundred Thousand
Dollars ($500,000) (the "Basket Amount"), in which event the Indemnified Party
shall be entitled to seek indemnity from each Indemnifying Party for the full
amount of such Losses; provided, however, the Basket Amount shall not be
-------- -------
applicable to any amounts owed in connection with the determination of the
Proration Amount pursuant to Section 2.6, to the determination of the Accounts
-----------
Receivable amount pursuant to Section 2.7, risk of loss matters pursuant to
-----------
Section 6.6, the obligations with respect to employee matters pursuant to
- -----------
Section 6.8 and Section 6.9 or to the indemnities set forth in clauses (a), (b),
- ----------- -----------
(e), (f), (g) and (h) of Section 10.2 and clauses (a), (b), (e), (f) and (g) of
------------
Section 10.3.
- ------------
10.4.3. Each party (a "recipient party") shall notify the other party
in writing (the "representing party") reasonably promptly of any perceived
breach by the representing party of which the recipient party has knowledge of
any representations, warranties, covenants and agreements, and of any Losses
(including a brief description of the same) of the recipient party caused
thereby. In the event of any breach that is cured prior to the Closing Date in
accordance with the terms of this Agreement, the representing party shall have
no obligation under Section 10.2 or Section 10.3 or otherwise to indemnify the
------------ ------------
recipient party with respect to such Losses.
10.5. Conditions of Indemnification.
The obligations and liabilities of the parties hereunder with respect
to their respective indemnities pursuant to this Article 10, resulting from any
----------
Losses, shall be subject to the following terms and conditions:
10.5.1. The party seeking indemnification (the "Indemnified Party")
must give the other party or parties, as the case may be (the "Indemnifying
Party"), notice of any such Losses promptly after the Indemnified Party receives
notice thereof; provided that the failure to give such notice shall not affect
the rights of the Indemnified Party hereunder except to the extent that the
Indemnifying Party shall have suffered actual damage by reason of such failure.
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10.5.2. The Indemnifying Party shall have the right to undertake, by
counsel or other representatives of its own choosing, the defense of such Losses
at the Indemnifying Party's risk and expense.
10.5.3. In the event that the Indemnifying Party shall elect not to
undertake such defense, or, within a reasonable time after notice from the
Indemnified Party of any such Losses, shall fail to defend, the Indemnified
Party (upon further written notice to the Indemnifying Party) shall have the
right to undertake the defense, compromise or settlement of such Losses, by
counsel or other representatives of its own choosing, on behalf of and for the
account and risk of the Indemnifying Party (subject to the right of the
Indemnifying Party to assume defense of such Losses at any time prior to
settlement, compromise or final determination thereof). In such event, the
Indemnifying Party shall pay to the Indemnified Party, in addition to the other
sums required to be paid hereunder, the costs and expenses incurred by the
Indemnified Party in connection with such defense, compromise or settlement as
and when such costs and expenses are so incurred.
10.5.4. Anything in this Section 10.5 to the contrary
------------
notwithstanding, (a) if there is a reasonable possibility that Losses may
materially and adversely affect the Indemnified Party other than as a result of
money damages or other money payments, the Indemnified Party shall have the
right, at its own cost and expense, to participate in the defense, compromise or
settlement of the Losses, (b) the Indemnifying Party shall not, without the
Indemnified Party's written consent, settle or compromise any Losses or consent
to entry of any judgment which does not include as an unconditional term thereof
the giving by the claimant or the plaintiff to the Indemnified Party of a
release from all liability in respect of such Losses in form and substance
satisfactory to the Indemnified Party, and (c) in the event that the
Indemnifying Party undertakes defense of any Losses, the Indemnified Party, by
counsel or other representative of its own choosing and at its sole cost and
expense, shall have the right to consult with the Indemnifying Party and its
counsel or other representatives concerning such Losses and the Indemnifying
Party and the Indemnified Party and their respective counsel or other
representatives shall cooperate with respect to such Losses and (d) in the event
that the Indemnifying Party undertakes defense of any Losses, the Indemnifying
Party shall have an obligation to keep the Indemnified Party informed of the
status of the defense of such Losses and furnish the Indemnified Party with all
documents, instruments and information that the Indemnified Party shall
reasonably request in connection therewith.
10.6. Special Tax Indemnification by HAT.
(a) The parties acknowledge and agree that STC does not intend to
acquire WPTZ and WNNE for productive use in a trade or business or for
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investment within the meaning of Section 1031 of the Code ("Productive
Use/Investment Property") and the parties do not intend for WPTZ and WNNE to be
treated as property exchanged by STC under this Agreement for property of a
like-kind. STC covenants and agrees not to take any position on any income tax
return that is in any way inconsistent with the foregoing.
(b) HAT agrees to indemnify, defend and hold harmless (the "Tax
Indemnity") STC and each member of STC's federal consolidated group
(collectively, the "STC Indemnified Party") from and against, and in any respect
of, any and all Losses or any net increase in any Taxes (collectively, the "Tax
Increase") to the STC Indemnified Party that is asserted against, resulting to,
imposed upon or incurred by any STC Indemnified Party in connection with any
assertion by the Internal Revenue Service that the exchange of WPTZ and WNNE
pursuant to this Agreement constitutes Productive Use/Investment Property. The
Tax Increase shall be computed by (i) determining the amount obtained by
multiplying (A) the projected increases and decreases in federal, state and
local income or gains of the STC Indemnified Parties for 1998 and each later
taxable year on account of the increases and decreases in income or gains each
year resulting from treatment of WPTZ and WNNE as Productive Use/Investment
Property, by (B) the highest marginal federal, state and local tax rates
applicable to a corporation under applicable law as of the Closing, and (ii)
discounting the net increases or decreases in potential Taxes described in
clause (i) to the date of Closing using a discount rate of 7% per year. The
- ----------
amount of any Tax Indemnity payment by HAT to an STC Indemnified Party pursuant
to this Section 10.6(b) shall be further increased by an amount (the "Gross-Up
---------------
Payment") such that after payment by any STC Indemnified Party of any such
Taxes, including any Taxes imposed on the Gross-Up Payment, STC shall receive
from HAT an amount as if no Taxes had been payable. For purposes of computing
any Taxes relevant to this Section 10.6, any STC Indemnified Party shall be
------------
assumed to be a corporation that is fully taxable on all of its income or gains
at the highest applicable marginal rates for the Taxes at issue as of the
Closing.
(c) Each STC Indemnified Party agrees that in the event it receives
notice, whether oral or written, of any federal, state or local examination,
audit, proposed adjustment, or other administrative or court proceeding, suit,
dispute or other claim (a "Tax Claim") that may affect HAT's liability under
this Section 10.6, the STC Indemnified Party shall promptly notify HAT; provided
------------
that the failure to give such notice shall not affect the rights of the STC
Indemnified Party hereunder except to the extent that HAT shall have suffered
actual damage by reason of such failure. HAT shall be entitled at its sole
discretion and expense to handle and control the defense of any Tax Claim, and
the STC Indemnified Party shall cooperate with HAT in this regard by giving HAT
and its representatives the opportunity to negotiate, settle or dispute the Tax
Claim together with reasonable assistance including, without limitation,
reasonable access to all relevant
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<PAGE>
information, books and records. In no event may the STC Indemnified Party
compromise or settle any Tax Claim without first obtaining the written consent
of HAT.
10.7. Cure of Breach.
Notwithstanding any other provision of this Agreement to the contrary,
a breach by any party hereto of any representations and warranties or a failure
to perform any covenant or agreement hereunder may be cured by such party prior
to the Closing Date (a) by making payment to a third party or taking other
action to discharge the Losses, (b) by placing an amount equal to the Losses in
an escrow account under an escrow arrangement reasonably satisfactory to STC and
HAT or (c) a combination of the foregoing. If the foregoing actions fully cure
the breach, the breaching party shall have no obligation under this Article 10
----------
or otherwise to indemnify the other party with respect to the Losses caused by
such breach; if such actions partially cure the breach, the breaching party
shall continue to have an obligation under this Article 10 to indemnify the
----------
other party with respect to the remaining portion of the Losses caused by such
breach.
ARTICLE 11.
TERMINATION
11.1. Termination of Exchange by the Parties.
11.1.1. The obligation of the parties to consummate the closing of
the exchange of the Assets contemplated by Article 2 may be terminated at any
---------
time prior to such closing by:
(a) the mutual consent of STC and HAT;
(b) STC if HAT shall default in the performance of its
obligations under this Agreement in any material respect and such default is not
cured within thirty (30) days after notice thereof, and provided that STC shall
not then be in material default in the performance of STC's obligations
hereunder;
(c) HAT if any STC Party shall default in the performance of
its obligations under this Agreement in any material respect and such default is
not cured within thirty (30) days after notice thereof, and provided that HAT
shall not then be in material default in the performance of HAT's obligations
hereunder; and
(d) either HAT or STC if such closing shall not have occurred
on or prior to such date which is two (2) years after the date of this
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<PAGE>
Agreement (provided that the party seeking to terminate shall not have such
termination right if such party is in breach of this Agreement and such breach
caused such closing to fail to occur).
11.1.2. Anything contained in this Agreement to the contrary
notwithstanding, in the event that (a) the obligation of the parties to
consummate the closing of the exchange of the Assets contemplated by Article 2
---------
shall be terminated pursuant to Section 11.1, and (b) HAT shall have provided
------------
all required portions of the Burlington Financing Amount to STCBV Sub in
connection with the acquisition of any assets by STC under the Sinclair
Agreement, then in lieu of such exchange of Assets transaction (x) the LKE
Facilitation Transactions shall not be consummated and (y) STCBV Sub shall sell,
assign, transfer, convey and deliver to HAT, free and clear of any Encumbrances
other than those Permitted Encumbrances which are applicable to WPTZ and WNNE,
and HAT shall purchase, acquire and accept from STCBV Sub, all right, title and
interest of STCBV Sub in, to and under all real, personal and mixed assets,
rights, benefits and privileges, both tangible and intangible, owned, leased,
used or useful by STCBV Sub in connection with the business and operations of
WPTZ and WNNE (collectively, the "Cash Purchase Assets"), in each case on the
identical terms and conditions as would have otherwise applied if the closing of
the exchange of the Assets contemplated by Article 2 had occurred except as
---------
follows:
(i) All provisions of this Agreement, including but not
limited to those provisions contained in Article 2, which relate to the HAT
---------
Stations shall be disregarded insofar as such provisions relate to the HAT
Stations;
(ii) All provisions of this Agreement, including but not
limited to those provisions contained in Article 2, which relate to KSBW shall
---------
be disregarded insofar as such provisions relate to KSBW;
(iii) In lieu of the closing of the exchange of the Assets
contemplated by Article 2, the term "Closing" will be deemed to refer to the
---------
closing of the purchase and sale of the Cash Purchase Assets described in this
Section 11.1;
- ------------
(iv) In lieu of the provisions of Section 2.5, the
-----------
following shall apply: For and in consideration of the conveyance of Cash
Purchase Assets to HAT and in addition to the assumption of Liabilities by HAT
as set forth in Section 2.10, at the Closing HAT agrees to pay to STCBV Sub an
------- ----
amount equal to that portion of the Purchase Price (as defined in the Sinclair
Agreement) which shall theretofore have been paid by STC pursuant to the
Sinclair Agreement (but excluding any proration amounts), either by wire
transfer of immediately available funds to an account designated by STC or by
set off against any outstanding Burlington Financing Amount;
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<PAGE>
(v) In lieu of Section 2.8, the following shall apply:
-----------
The payment made by HAT to STCBV Sub pursuant to subparagraph (iv) above shall
be allocated among the Cash Purchase Assets in accordance with the Appraisal,
unless the parties otherwise agree, and all Tax returns and reports shall be
filed consistent with such allocation;
(vi) At the Closing, in lieu of the applicable STC Exchange
Entity, STCBV Sub will deliver the bills of sale, assignments and other
instruments of transfer described in Section 9.3.1 with respect to the Cash
-------------
Purchase Assets; and
(vii) The following Sections of this Agreement shall be
deemed to be void and shall have no further force and effect: 2.5, 2.7, 2.8,
6.12 and 10.6.
11.2. Termination of Agreement.
This Agreement shall automatically terminate without further action by
the parties upon the termination of the Sinclair Agreement in accordance with
its terms. This Agreement may also be terminated by:
(a) HAT by written notice of termination delivered to STC at any
time prior to July 26, 1998 if the acquisition by Sinclair of the Burlington
Stations under the Heritage Agreement shall not have occurred on or prior to
July 16, 1998;
(b) STC by written notice of termination delivered to HAT if (i)
HAT shall not have delivered a complete set of the Schedules for the HAT
Stations (and supporting materials) within ten (10) business days after the
execution and delivery of this Agreement, or (ii) at any time prior to the end
of the Schedule Review Period pursuant to Section 6.10(a); and
---------------
(c) STC by written notice of termination delivered to HAT at any
time prior to the closing of the exchange of the Assets contemplated by
Article 2 if (i) HAT shall have defaulted in its obligation to provide the
- ---------
initial funding of the Burlington Financing Amount as required under Section
-------
2.13, or (ii) if prior to the funding of any portion of the Burlington Financing
- ----
Amount, there shall have been a default by HAT in the performance of its
obligations under this Agreement in any material respect and such default is not
cured within thirty (30) days after notice thereof, and provided that STC shall
not then be in material default in the performance of STC's obligations
hereunder.
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<PAGE>
11.3. Effect of Termination.
11.3.1. In the event this Agreement is terminated as provided in
Section 11.2, 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 the parties set forth in
-------- -------
Section 2.14 (which relate to reimbursement by STCBV Sub of any Working Capital
- ------------
Advances), Section 6.3, and Section 12.3, shall survive such 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); and provided, further that such termination shall not
-------- -------
affect the liability of any party hereto with respect to any breach of this
Agreement by such party occurring prior to such termination.
11.3.2. In the event that the Sinclair Agreement is terminated as
provided therein and Sinclair is entitled to the Deposit under the Letter of
Credit (each as defined in the Sinclair Agreement), HAT shall reimburse STC for
the amount of the Deposit; provided, however, there shall not have been a
-------- -------
material breach or default by STC under the Sinclair Agreement.
ARTICLE 12.
GENERAL PROVISIONS
12.1. Additional Actions, Documents and Information.
The Transferring Party agrees that it will, at any time, prior to, at
or after the Closing Date, take or cause to be taken such further actions, and
execute, deliver and file or cause to be executed, delivered and filed such
further documents and instruments and obtain such consents, as may be reasonably
requested by the Recipient Party in connection with the consummation of the
exchange contemplated by this Agreement.
12.2. Brokers.
Except for the fees payable as set forth in Schedule 12.2, STC
-------------
represents to HAT that STC 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; except for the fees payable as set forth in Schedule 12.2, HAT
-------------
represents to STC that HAT 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 STC agrees to indemnify HAT, and HAT agrees to indemnify STC,
against any claims asserted against the
-73-
<PAGE>
other party 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 the Basket
Amount contained in Section 10.4.2.
--------------
12.3. Expenses and Taxes.
(a) Unless otherwise provided herein, each party hereto shall pay
its own expenses incurred in connection with this Agreement and in the
preparation for and consummation of the transactions provided for herein,
including, without limitation, all costs and expenses incurred in connection
with any title insurance policies, surveys or environmental assessments
(including the environmental remediation described in Section 6.16) obtained by
------------
such party (and in the case of STC, all expenses incurred by STC in connection
with STC's financing required to consummate the transactions contemplated
herein). Notwithstanding the foregoing, HAT and STC shall each pay one-half of
(i) all sales (including, without limitation, bulk sales), use, documentary,
stamp, gross receipts, registration, transfer, conveyance, excise, recording,
license and other similar Taxes and fees ("Transfer Taxes") applicable to,
imposed upon or arising out of the conveyances of the Assets whether now in
effect or hereinafter adopted and regardless of which party such Transfer Tax is
imposed upon, (ii) any FCC filing fees incurred in connection with the
assignment of the FCC Licenses, and (iii) any fees and expenses incurred in
connection with any HSR Filings, and (iv) any fees and expenses incurred in
connection with the use of a QI as contemplated by Section 6.12.
------------
(b) HAT acknowledges and agrees that STC is acquiring WPTZ and
WNNE for HAT's benefit, and HAT agrees to reimburse STC for all costs and
expenses incurred by STC under the Sinclair Documents, including, without
limitation, (i) the costs of the letter of credit deposited by STC pursuant to
the Sinclair Agreement (provided that there shall not have been a material
breach or default by STC under the Sinclair Agreement which results in the
forfeiture of the letter of credit to Sinclair), and (ii) STC's share of costs
and expenses required to be paid by STC pursuant to Section 15.3 of the Sinclair
------------
Agreement; provided, however, all expenses of counsel and accountants of any STC
-------- -------
Party in connection with the negotiation and documentation of the Sinclair
Documents and the consummation of the transactions contemplated therein and all
expenses of STC in connection with STC's financing required to repay the
Burlington Financing Amount (net of the Cash Consideration) shall be paid by
STC.
(c) Subject to HAT's obligations to reimburse STC for all costs
and expenses incurred by STC under the Sinclair Documents pursuant to Section
-------
12.3(b), from and after the Closing, STC agrees to remit to HAT any monies
- -------
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<PAGE>
received from Sinclair or held for the benefit of STC under the Sinclair
Agreement that relate to WPTZ and WNNE.
12.4. 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 STC:
STC Broadcasting, Inc.
3839 4th Street North
Suite 420
St. Petersburg, Florida 33703
Attn: David 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
and to:
Hicks, Muse, Tate & Furst Incorporated
200 Crescent Court
Suite 1600
Dallas, Texas 75201
Attn: Lawrence D. Stuart, Jr.
Fax: (214) 740-7355
-75-
<PAGE>
If to HAT:
Hearst-Argyle Television, Inc.
959 Eighth Avenue
New York, New York 10019
Attn: Dean H. Blythe
Fax: (212) 489-2314
with a copy (which shall not constitute notice) to:
Rogers & Wells
200 Park Avenue
New York, New York 10166
Attn: Steven A. Hobbs
Fax: (212) 878-8375
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.
12.5. Waiver.
No delay or failure on the part of any party hereto in exercising
any right, power or privilege under this Agreement or under any other instrument
or document given in connection with or pursuant to this Agreement shall impair
any such right, power or privilege or be construed as a waiver of any default or
any acquiescence therein. No single or partial exercise of any such right, power
or privilege shall preclude the further exercise of such right, power or
privilege, or the exercise of any other right, power or privilege. No waiver
shall be valid against any party hereto unless made in writing and signed by the
party against whom enforcement of such waiver is sought and then only to the
extent expressly specified therein.
12.6. Benefit and Assignment.
12.6.1. Neither party shall assign this Agreement, in whole or in
part, whether by operation of law or otherwise, without the prior written
consent of
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<PAGE>
the other party and any purported assignment contrary to the terms hereof shall
be null, void and of no force and effect; provided, however, each party consents
to the assignment of this Agreement to a QI as contemplated by Section 6.12.
------------
12.6.2. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto (and any STC Indemnified Party) and their
respective successors and assigns as permitted hereunder. No Person, other than
the parties hereto (and any STC Indemnified Party) and their respective
successors and assigns as permitted hereunder, 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 and agreements set forth in this Agreement shall be
solely for the benefit of, and shall be enforceable only by, the parties hereto
(and any STC Indemnified Party) or their respective successors and assigns as
permitted hereunder.
12.7. Entire Agreement; Amendment.
This Agreement, including the Schedules and Exhibits hereto and the
other instruments and documents referred to herein or delivered pursuant hereto,
contains the entire agreement among the parties with respect to the subject
matter hereof and supersedes all prior oral or written agreements, commitments
or understandings with respect to such matters. No amendment, modification or
discharge of this Agreement shall be valid or binding unless set forth in
writing and duly executed by each of the parties hereto.
12.8. Severability.
If any part of any provision of this Agreement or any other
contract, agreement, document or writing given pursuant to or in connection with
this Agreement shall be invalid or unenforceable under applicable law, such part
shall be ineffective to the extent of such invalidity or unenforceability only,
without in any way affecting the remaining parts of such provisions or the
remaining provisions of said contract, agreement, document or writing.
12.9. Headings.
The headings of the sections and subsections contained in this
Agreement are inserted for convenience only and do not form a part or affect the
meaning, construction or scope thereof.
12.10. Governing Law.
This Agreement, the rights and obligations of the parties hereto,
and any claims or disputes relating thereto, shall be governed by and construed
under
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<PAGE>
and in accordance with the laws of the State of New York, excluding the choice
of law rules thereof.
12.11. Signature in Counterparts.
This Agreement may be executed in separate counterparts, none of
which need contain the signatures of all parties, each of which shall be deemed
to be an original, and all of which taken together constitute one and the same
instrument. It shall not be necessary in making proof of this Agreement to
produce or account for more than the number of counterparts containing the
respective signatures of, or on behalf of, all of the parties hereto.
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<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has executed this Asset
Exchange Agreement, or has caused this Asset Exchange 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, 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
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<PAGE>
HEARST-ARGYLE STATIONS, INC.
By: /s/ Dean H. Blythe
-----------------------------
Dean H. Blythe
Senior Vice President
-80-
<PAGE>
ANNEX I
DEFINITIONS
"ABC" shall have the meaning specified in Section 7.5.
-----------
"ABC Affiliation Agreement" shall have the meaning set forth in
Section 7.5.
- ------------
"Accounting Firm" shall have the meaning set forth in Section 2.6.2.
-------------
"Accounts Receivable" means all cash accounts receivable with respect
to a Station as of the end of the broadcast day immediately preceding the
Closing Date.
"Additional Agreements" shall have the meaning set forth in
Section 6.1.6.
- -------------
"Affiliate" shall mean, with respect to any Person, any other Person
that, (a) directly or indirectly is in control of, is controlled by, or is under
common control with, the first Person, (b) is an officer, director, trustee,
partner (general or limited), employee or holder of five percent (5%) or more of
any class of any voting or non-voting securities or other equity in the first
Person, (c) is an officer, director, trustee, partner (general or limited),
employee or holder of five percent (5%) or more of any class of the voting or
non-voting securities or other equity in any Person which directly or indirectly
is in control of, is controlled by, or is under common control with, the first
Person, and (d) any Family of any individual included in (a), (b) or (c). For
purposes of this definition, "control" (including with correlative meanings
"controlled by" and "under common control with") shall mean possession, directly
or indirectly, of either (X) five percent (5%) or more of the voting power of
the securities having ordinary voting power for the election of directors of the
first Person, or (Y) the power to direct or cause the direction of the
management or policies of the first Person (whether through ownership of
securities, partnership interests or any other ownership or debt interests, by
contract or otherwise).
"Affiliated Entities" shall mean, with respect to any Person, any
other Person that directly or indirectly is in control of, is controlled by, or
is under common control with, the first Person.
"Affiliated Transactions" shall have the meaning set forth in
Section 4.19.
- ------------
"Agreement" shall have the meaning set forth in the Preamble.
"Applicant" shall have the meaning set forth in Section 3.9.3.
-------------
"Appraisal" shall have the meaning set forth in Section 2.8.1.
-------------
<PAGE>
"Appraisal Firm" shall have the meaning set forth in Section 2.8.1.
-------------
"Appraisal Report" shall have the meaning set forth in Section 2.8.1.
-------------
"Assets" shall have the meaning set forth in Section 2.2.
-----------
"Assignment of Contracts and Leases" means that certain Assignment of
Contracts and Leases, dated as of the Closing Date and executed by the
Transferring Party, substantially in the form attached hereto as Exhibit C.
---------
"Assignment of FCC Licenses" means that certain Assignment of FCC
Licenses, dated as of the Closing Date and executed by the Transferring Party,
substantially in the form attached hereto as Exhibit B.
---------
"Assumed Liabilities" mean the Liabilities assumed by the Recipient
Party pursuant to Section 2.9 or Section 2.10, as the case may be.
----------- ------------
"Assumption Agreement" means that certain Assumption Agreement, dated
the Closing Date and executed by the parties, substantially in the form attached
hereto as Exhibit D.
---------
"Basket Amount" shall have the meaning set forth in Section 10.4.2.
--------------
"Benefit Arrangement" means any benefit arrangement, obligation,
custom, or practice, whether or not legally enforceable, to provide benefits,
other than salary, as compensation for services rendered, to present or former
directors, employees, agents, or independent contractors, other than any
obligation, arrangement, custom or practice that is a Plan, including, without
limitation, employment agreements, executive compensation arrangements,
incentive programs or arrangements, sick leave, vacation pay, plant closing
benefits, salary continuation for disability, consulting, or other compensation
arrangements, workers' compensation, retirement, deferred compensation, bonus,
stock option or purchase, hospitalization, medical insurance, life insurance,
tuition reimbursement or scholarship programs, perquisite, company cars, any
plans subject to Code Section 125, and any plans providing benefits or payments
in the event of a change of control, change in ownership, or sale of a
substantial portion (including all or substantially all) of the assets of any
business or portion thereof, in each case with respect to any present or former
employees, directors, or agents.
"Benefit Liabilities" shall have the meaning set forth in
Section 3.14.6.
- --------------
"Benefit Plans" shall have the meaning set forth in Section 4.14.1.
--------------
ANNEXI-2
<PAGE>
"Bill of Sale" means that certain Bill of Sale and Assignment of
Assets, dated as of the Closing Date and executed by the Transferring Party,
substantially in the form attached hereto as Exhibit A.
---------
"Burlington Financing Amount" shall have the meaning set forth in
Section 2.13.
- ------------
"Burlington Stations" shall have the meaning set forth in the
Recitals.
"Cash Consideration" shall have the meaning set forth in
Section 2.5.1.
- -------------
"Cash Purchase Assets" shall have the meaning set forth in
Section 11.1.2.
- --------------
"Clear Channel" shall have the meaning set forth in the Recitals.
"Clear Channel Agreements" shall have the meaning set forth in the
Recitals.
"Closing" shall have the meaning set forth in Section 9.1.
-----------
"Closing Date" shall have the meaning set forth in Section 9.1.
-----------
"Code" means the Internal Revenue Code of 1986, as amended, and all
Laws promulgated pursuant thereto or in connection therewith.
"Current Balance Sheet Date" shall have the meaning set forth in
Section 3.5.2.
- -------------
"Deferred Contract" shall have the meaning set forth in
Section 6.2.10(b).
- -----------------
"Designated Employees" shall have the meaning set forth in
Section 6.9.1.
- -------------
"DMA" means the designated market area for a particular television or
radio station as determined by the A.C. Nielsen Co.
"Encumbrances" mean any mortgages, pledges, liens, security interests,
defects in title, easements, rights-of-way, encumbrances, restrictions and any
other matters affecting title.
"Environmental Laws" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, ("CERCLA") as amended by the
ANNEXI-3
<PAGE>
Superfund Amendments and Reauthorization Act of 1986 ("SARA"), 42 U.S.C. (S)
9601 et seq.; the Toxic Substances Control Act ("TSCA"), 15 U.S.C. (S) 2601 et
------ --
seq.; the Hazardous Materials Transportation Act, 49 U.S.C. (S) 1802 et seq.;
- ---- -------
the Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. (S) 9601 et seq.;
-------
the Clean Water Act ("CWA"), 33 U.S.C. (S) 1251 et seq.; the Safe Drinking Water
Act, 42 U.S.C. (S) 300f et seq.; the Clean Air Act ("CAA"), 42 U.S.C. (S) 7401
-------
et seq.; or any other applicable federal, state, or local laws relating to
- -------
Hazardous Materials generation, production, use, storage, treatment,
transportation or disposal, or the protection of the environment from Hazardous
Materials.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and all Laws promulgated pursuant thereto or in connection therewith.
"ERISA Affiliate" means any person that, together with the referenced
party, would be or was prior to March 17, 1997 treated as a single employer
under Section 414 of the Code or Section 4001 of ERISA.
"Excluded Assets" shall have the meaning set forth in Section 2.4.
-----------
"Family" of an individual includes (a) the individual, (b) the
individual's spouse and former spouses and any other natural person who resides
with such individual, and (c) any other natural person who is related to the
individual or any person described in the preceding clause (b) within the second
degree.
"FCC" means the Federal Communications Commission.
"FCC Applications" shall have the meaning set forth in Section 5.1.
-----------
"FCC Licenses" shall have the meaning set forth in Section 2.3.1.
-------------
"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 the Recipient Party of the FCC Licenses for the Transferring
Party's Stations.
"Final AR Amount" shall have the meaning set forth in Section 2.7.2.
-------------
"Final Proration Amount" shall have the meaning set forth in
Section 2.6.2.
- -------------
"Further Media Interest" shall have the meaning set forth in
Section 6.18.
- ------------
ANNEXI-4
<PAGE>
"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 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.
"HAT" shall have the meaning set forth in the Preamble.
"HAT Affiliated Transactions" shall have the meaning set forth in
Section 4.19.
- ------------
"HAT Assets" shall have the meaning set forth in Section 2.2.
-----------
"HAT Balance Sheets" shall have the meaning set forth in
Section 4.5.1.
- -------------
"HAT Benefit Plans" shall have the meaning specified in
Section 4.14.1.
- --------------
"HAT Documents" shall mean the Bill of Sale and Assignment of Assets,
the Assignment of FCC Licenses, the Assignment of Contracts and Leases, the
Assumption Agreement, and the real property deeds delivered pursuant to
Section 9.4.1(f).
"HAT Excluded Assets" shall have the meaning set forth in Section 2.4.
-----------
"HAT License Assets" shall mean the FCC licenses of the HAT Stations.
"HAT Non-License Assets" shall have the meaning set forth in
Section 2.2.
- -----------
"HAT Retirement Plan" shall have the meaning set forth in
Section 6.8.5.
- -------------
"HAT Stations" shall have the meaning set forth in the Recitals.
"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.
ANNEXI-5
<PAGE>
"Heritage Agreement" shall have the meaning set forth in the Recitals.
"Heritage Subsidiaries" shall have the meaning set forth in the
Recitals.
"HMC" shall have the meaning set forth in the Recitals.
"HSR Filing" shall have the meaning set forth in Section 5.2.
-----------
"Indemnified Party" and "Indemnifying Party" shall have the respective
meanings set forth in Section 10.5.1.
--------------
"Intellectual Property" shall have the meaning set forth in
Section 2.3.4.
- -------------
"Interim Operation" shall have the meaning set forth in
Section 2.11.3.
- --------------
"KSBW" shall have the meaning set forth in the Recitals.
"KSBW Receivables" shall have the meaning set forth in Section 2.7.1.
-------------
"Laws" means any federal, state or local law, foreign law, statute,
code, ordinance, regulation, order, writ, injunction, judgment or decree
applicable to the specified Person and to the businesses and assets thereof.
"Leased Property" shall have the meaning set forth in
Section 2.3.2(b).
- ----------------
"Liabilities" shall mean, as to any Person, all debts, adverse claims,
liabilities and obligations, direct, indirect, absolute or contingent of such
Person, 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
balance sheets or other books and records.
"License Assets" shall mean individually the STC License Assets and
the HAT License Assets.
"Like-Kind Exchange" shall have the meaning set forth in the Recitals.
ANNEXI-6
<PAGE>
"LKE Facilitation Transactions" shall have the meaning set forth in
Section 6.12.4.
- --------------
"Losses" means any and all demands, claims, complaints, actions or
causes of action, suits, proceedings, investigations, arbitrations, assessments,
losses, damages, 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, including, without limitation, reasonable
attorneys' fees and disbursements.
"Material Adverse Effect" on either party's Stations means a material
adverse effect on the business, assets or financial condition of such Stations
taken as a whole, 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 such Stations operate, (c)
circumstances that are not likely to recur and either have been substantially
remedied or can be substantially remedied without substantial cost or delay, or
(d) the refusal by the other party to consent to any new Program Contract.
"Multiemployer Plan" means any Plan described in Section 3(37) of
ERISA.
"Network Agreements" shall have the meaning set forth in
Section 2.3.8.
- -------------
"Non-Transferred Employees" shall have the meaning set forth in
Section 6.9.1.
- -------------
"Operating Contracts" shall have the meaning set forth in
Section 2.3.9.
- -------------
"Ordinary Course of Business" of a party's Stations means the ordinary
course of business of such Stations consistent with past practices of such party
both with respect to type and amount; any actions taken pursuant to the
requirements of law or contracts existing on the date hereof shall be deemed to
be action in the Ordinary Course of Business.
"Permitted Encumbrances" means (a) Encumbrances of a landlord, or
other statutory lien not yet due and payable, or a landlord's liens arising in
the Ordinary Course of Business, (b) Encumbrances arising in connection with
equipment or maintenance financing or leasing under the terms of a Station
Contract set forth on the Schedules, (c) Encumbrances arising pursuant to the
terms of leases on Real Property or Leased Property as set forth on Schedule
--------
2.3.1 and Schedule 2.3.8 which are subject to any lease or sublease to a third
- ----- --------------
party, (d) Encumbrances for Taxes not yet due and payable or which are being
contested in
ANNEXI-7
<PAGE>
good faith and by appropriate proceedings if adequate reserves with respect
thereto are maintained on the contesting party's books in accordance with
generally accepted accounting principles, (e) Encumbrances that do not
materially detract from the value of any of the Assets or materially interfere
with the use thereof as currently used, or (f) those Encumbrances on Schedule
--------
3.8 and Schedule 3.10 with respect to STC and those Encumbrances on Schedule 4.8
- --- ------------- ------------
and Schedule 4.10 with respect to HAT.
-------------
"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" of either party 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 such party or any ERISA Affiliate for the benefit of any current
or former employees of its Stations; (b) to which such party contributed or was
obligated to contribute or to fund or provide benefits or had any liability
(whether actual or contingent) with respect to any of its assets or otherwise
for the benefit of any current or former employees of its Stations; or (c) which
provides or promises benefits to any person who performs or who has performed
services for its Stations and because of those services is or has been (i) a
participant therein or (ii) entitled to benefits thereunder.
"Preferred STC Ownership" shall have the meaning set forth in
Section 6.12.4.
- --------------
"Program Contracts" shall have the meaning set forth in Section 2.3.5.
-------------
"Proration Amount" shall have the meaning set forth in Section 2.6.1.
-------------
"Proration Items" shall mean any power and utility charges, business
and license fees (including retroactive adjustments thereof), sales and service
charges, commissions, special assessments, and rental payments and personal and
real estate Taxes and assessments with respect to the Real Property, taxes
(except for Taxes arising from the transfer of the Assets hereunder), deposits,
Trade-out Agreements, unused sick leave pursuant to any collective bargaining
agreements and other similar prepaid and deferred items and any other operating
expenses incurred in the Ordinary Course of Business (except with respect to
Program Contracts, only those payments due and payable during the month in which
the Closing Date occurs shall be prorated). The parties acknowledge and agree
that there shall be excluded from Proration Items the following: (a) severance
pay relating to any employee of the Transferring Party who shall have been
ANNEXI-8
<PAGE>
terminated prior to the Exchange Date, (b) any Liabilities not being assumed by
the Recipient Party in accordance with Section 2.8, and (c) all accrued and
-----------
unpaid vacation pay.
"Providence Assets" shall have the meaning set forth in Section 2.12.
------------
"QI" shall have the meaning set forth in Section 6.12.5.
--------------
"Qualified Plan" of either party means a Plan that satisfies, or is
intended by such party to satisfy, the requirements for tax qualification
described in Section 401 of the Code including, without limitation, any Plan
that was terminated on or after July 1, 1989, as to which such party may have
any actual or contingent liability.
"Real Property" shall have the meaning set forth in Section 2.3.2(a).
----------------
"Recipient Party" shall have the meaning set forth in Section 2.3.
-----------
"Restricted Contracts" shall have the meaning set forth in
Section 6.2.10(a).
- -----------------
"SALC" shall have the meaning set forth in Section 2.2.
-----------
"Schedule Review Period" shall have the meaning set forth in
Section 6.10(a).
- ---------------
"Schedules" shall mean the disclosure schedules delivered by the
parties in connection herewith.
"Section 1031 Schedule" shall have the meaning set forth in
Section 2.8.2.
- -------------
"Sinclair" shall have the meaning set forth in the Recitals.
"Sinclair Agreement" shall have the meaning set forth in the Recitals.
"Sinclair Collection Period" shall have the meaning set forth in
Section 6.4.
- -----------
"Sinclair Documents" shall mean the Sinclair Agreement and any other
agreements, documents or certificates contemplated thereby or delivered in
connection therewith.
ANNEXI-9
<PAGE>
"Sinclair Filing Date" shall have the meaning set forth in
Section 3.9.3.
- -------------
"Sinclair Liabilities" shall have the meaning set forth in
Section 2.10.1.
- --------------
"Sinclair Parent" shall have the meaning set forth in the Recitals.
"Sinclair Receivables" shall have the meaning set forth in
Section 2.4.2.
- -------------
"Station" and "Stations" shall have the meaning set forth in the
Recitals.
"Station Contracts" shall have the meaning set forth in Section 2.3.9.
-------------
"STC" shall have the meaning set forth in the Preamble.
"STC Affiliated Transactions" shall have the meaning set forth in
Section 3.19.
- ------------
"STC Assets" shall have the meaning set forth in Section 2.1.
-----------
"STC Balance Sheets" shall have the meaning set forth in
Section 3.5.1.
- -------------
"STC Benefit Plans" shall have the meaning specified in
Section 3.14.1.
- --------------
"STC Broadcasting" shall have the meaning set forth in the Preamble.
"STCBV" shall have the meaning set forth in the Preamble.
"STCBV Sub" shall have the meaning set forth in the Preamble.
"STC Documents" shall mean the Bill of Sale and Assignment of Assets,
the Assignment of FCC Licenses, the Assignment of Contracts and Leases, the
Assumption Agreement, and the real property deeds delivered pursuant to
Section 9.3.1(f).
- ----------------
"STC Exchange Entities" shall have the meaning set forth in the
Preamble.
ANNEXI-10
<PAGE>
"STC Excluded Assets" shall have the meaning set forth in Section 2.4.
-----------
"STC Indemnified Party" shall have the meaning set forth in
Section 10.6(b).
- ---------------
"STC License Assets" shall mean the FCC Licenses of the STC Stations.
"STC License Company" shall have the meaning set forth in the
Preamble.
"STC Non-License Assets" shall have the meaning set forth in
Section 2.1.
- -----------
"STC Parties" shall have the meaning set forth in the Preamble.
"STC Stations" shall have the meaning set forth in the Recitals.
"STC Retirement Plan" shall have the meaning set forth in
Section 6.8.5.
- -------------
"STC Transfer Date" shall have the meaning ascribed to such term under
the Sinclair Agreement.
"Tax Claim" shall have the meaning set forth in Section 10.6(c).
---------------
"Tax Increase" shall have the meaning set forth in Section 10.6(b).
---------------
"Taxes" means all federal, state and local 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.
"Tax Returns" of either party means all federal, state, local, foreign
and other applicable Tax returns, declarations of estimated Tax reports required
to be filed by such party in connection with the business and operations of its
Stations (without regard to extensions of time permitted by law or otherwise).
"TBA" means any time brokerage agreement, local marketing arrangement,
joint sales agreement, joint operating agreement, limited management agreement
or other similar agreement or contract.
ANNEXI-11
<PAGE>
"Time Sales Agreements" shall have the meaning set forth in
Section 2.3.7.
- -------------
"Trade-out Agreements" shall have the meaning set forth in
Section 2.3.6.
- -------------
"Transfer Taxes" shall have the meaning set forth in Section 12.3(a).
---------------
"Transferred Employees" shall have the meaning set forth in
Section 6.9.1.
- -------------
"Transferring Party's Plan" shall have the meaning set forth in
Section 6.9.4.
- -------------
"Tuscaloosa" shall have the meaning set forth in the Recitals.
"Welfare Plan" means an "employee welfare benefit plan" as such term
is defined in Section 3(1) of ERISA.
"WDTN" shall have the meaning set forth in the Recitals.
"WDTN Receivables" shall have the meaning set forth in Section 2.7.1.
-------------
"WFFF" shall have the meaning set forth in the Recitals.
"WFFF Liabilities" shall mean all Liabilities of STC relating solely
to WFFF under the Sinclair Documents (or Liabilities relating solely to WFFF
assumed pursuant to the terms thereof), and all Liabilities arising out of
events occurring on or after the Non-License Transfer (as defined in the
Sinclair Agreement) relating solely to the business and operations of WFFF.
"WFFF TBA" shall have the meaning set forth in Section 2.11.3.
--------------
"WNAC" shall have the meaning set forth in the Recitals.
"WNAC/Argyle" shall have the meaning set forth in the Recitals.
"WNNE" shall have the meaning set forth in the Recitals.
"WNNE Licensee" shall have the meaning set forth in the Recital.
"Working Capital Advance" shall have the meaning set forth in
Section 2.14.
- ------------
"WPRI" shall have the meaning set forth in the Recitals.
ANNEXI-12
<PAGE>
"WPTZ" shall have the meaning set forth in the Recitals.
"WPTZ Licensee" shall have the meaning set forth in the Recitals.
ANNEXI-13
<PAGE>
EXHIBIT A
---------
FORM OF BILL OF SALE AND ASSIGNMENT OF ASSETS
THIS BILL OF SALE AND ASSIGNMENT OF ASSETS is made as of this ____ day
of ____________, 199__, by STC BROADCASTING, INC., a Delaware corporation ("STC
Broadcasting").
WHEREAS, STC Broadcasting, STC Broadcasting of Vermont, Inc., STC
License Company and STC Broadcasting of Vermont Subsidiary, Inc., and Hearst-
Argyle Stations, Inc. ("HAT") are parties to that certain Asset Exchange
Agreement dated as of February 18, 1998 (the "Exchange Agreement");
WHEREAS, pursuant to the Exchange Agreement, STC Broadcasting has
agreed to transfer to HAT, and HAT has agreed to accept from STC Broadcasting
the STC 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 KSBW (TV), Channel 8, Salinas, California (collectively,
the "Stations"), all in accordance with and subject to the terms and conditions
set forth in the Exchange Agreement; and
WHEREAS, all capitalized terms used herein shall have the meanings
ascribed to such terms in the Exchange Agreement unless otherwise defined
herein.
NOW, THEREFORE, for and in consideration of the conveyance of the STC
Assets to HAT and in further consideration of the mutual covenants and
agreements contained in the Exchange Agreement, and pursuant to the terms of the
Exchange Agreement, STC Broadcasting hereby assigns, transfers, conveys and
delivers to HAT, and HAT hereby accepts from STC Broadcasting, all of STC
Broadcasting's right, title and interest in, to and under the following assets
(including any contracts or agreements that are entered into and any assets that
are acquired between the date of the Exchange Agreement and the Closing Date in
accordance with the terms therein), but excluding the Excluded Assets described
in Section 2.4 of the Exchange Agreement:
-----------
1. All of the furniture, fixtures, furnishings, machinery, computers,
equipment, inventory, spare parts, supplies, office materials and other tangible
property of every kind and description owned, leased or used by STC Broadcasting
in connection with the business and operations of the Stations, together with
any replacements thereof and additions thereto made before the Closing Date, and
less any retirements or dispositions thereof made before the Closing Date in the
Ordinary Course of Business, including, without limitation, those items which
have a book value in excess of Five Thousand Dollars ($5,000),
<PAGE>
all of which are set forth and identified in Schedule 2.3.3 of the Exchange
--------------
Agreement.
2. All of the service marks, copyrights, franchises, trademarks,
trade names, jingles, slogans, logotypes and other similar intangible assets
maintained, owned, leased or used by STC Broadcasting in connection with the
business and operations of the Stations (including any and all applications,
registrations, extensions and renewals relating thereto) (the "Intellectual
Property"), and all of the rights, benefits and privileges associated therewith
including, without limitation, the right to use the call letters for the
Stations identified in Schedule 2.3.4 of the Exchange Agreement.
--------------
3. The program licenses and contracts under which STC Broadcasting is
authorized to broadcast programs on the Stations (collectively the "Program
Contracts") including, without limitation, (a) all program (cash and non-cash)
licenses and contracts listed on Schedule 2.3.5 of the Exchange Agreement, and
--------------
(b) any other such program contracts that are entered into between the date of
the Exchange Agreement and the Closing Date in accordance with the terms of the
Exchange Agreement.
4. All contracts and agreements (excluding Program Contracts)
pursuant to which commercial air time on the Stations has been sold, traded or
bartered in consideration for any property or services in lieu of or in addition
to cash (collectively, the "Trade-out Agreements") including, without
limitation, those set forth and identified in Schedule 2.3.6 of the Exchange
--------------
Agreement.
5. All contracts and agreements pursuant to which commercial air time
on the Stations has been sold for cash (collectively the "Time Sales
Agreements").
6. All network affiliation agreements and other contracts of the
Stations with a television broadcast network (collectively, the "Network
Agreements") including, without limitation, those listed on Schedule 2.3.8 of
--------------
the Exchange Agreement.
7. All other operating contracts and agreements relating to the
business or operations of the Stations, all material such contracts as of the
date of the Exchange Agreement being listed on Schedule 2.3.9 of the Exchange
--------------
Agreement (including, without limitation, all employment agreements and talent
contracts, all leases and subleases relating to the Leased Property, all
agreements relating to any motor vehicles, and all national and local
advertising representation agreements for the Stations), together with all
contracts and agreements that will be entered into between the date of the
Exchange Agreement and the Closing Date in accordance with the terms of the
Exchange Agreement (collectively, the "Operating Contracts" and together with
the Program Contracts, Trade-out Agreements, Time Sales Agreements and Network
Agreements, the "Station Contracts").
-2-
<PAGE>
8. All automotive equipment and motor vehicles maintained, owned,
leased or otherwise used by STC Broadcasting in connection with the business and
operations of the Stations, including, without limitation, those set forth and
described in Schedule 2.3.10 of the Exchange Agreement.
---------------
9. All engineering, business and other books, papers, logs, files
and records pertaining to the business and operations of the Stations, but not
the organizational documents and records of STC Broadcasting.
10. All translators, earth stations, and other auxiliary facilities,
and all applications therefor owned, leased or otherwise used or useful by STC
Broadcasting in connection with the business and operations of the Stations,
including, without limitation, those set forth and described in Schedule 2.3.12
---------------
of the Exchange Agreement.
11. All permits, approvals, orders, authorizations, consents,
licenses, certificates, franchises, exemptions of, or filings or registrations
with, any court or Governmental Authority (other than the FCC) in any
jurisdiction, which have been issued or granted to or are owned or used or
useful by STC Broadcasting in connection with the business and operations of the
Stations and all pending applications therefor.
12. The business of the Stations as a "going concern", customer
relationships and goodwill.
13. All Accounts Receivable arising out of the business and
operations of KSBW, and all Accounts Receivable arising out of the business and
operations of the Burlington Stations from the STC Transfer Date under the
Sinclair Agreement.
14. All of STC's rights under or pursuant to the Sinclair Documents
except to the extent that such rights pertain to or affect WFFF.
15. All cash, cash equivalents or deposits held by STC arising out of
the business and operations of the Burlington Stations from and after the STC
Transfer Date, and all interest payable in connection with any such cash, cash
equivalents or deposits, but excluding any proceeds of a WFFF Disposition (as
defined in that certain Credit Agreement to be entered into by HAT and STCBV Sub
in connection with the Burlington Financing Amount).
Notwithstanding anything to the contrary hereinabove or in the
Exchange Agreement, specifically excluded from this Bill of Sale and Assignment
of Assets are the Excluded Assets.
EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES OF STC BROADCASTING MADE
IN THE EXCHANGE AGREEMENT, STC
-3-
<PAGE>
BROADCASTING MAKES NO REPRESENTATIONS OR WARRANTIES WITH RESPECT TO THE ASSETS
CONVEYED HEREBY, INCLUDING, WITHOUT LIMITATION, ANY IMPLIED WARRANTIES OF
MERCHANTABILITY, FITNESS FOR INTENDED USE OR FITNESS FOR A PARTICULAR USE.
TO HAVE AND TO HOLD the said described property to STC Broadcasting
and its successors and assigns for their exclusive use and benefit forever.
STC Broadcasting does hereby agree, from and after the date hereof
upon the request of HAT, to execute such other documents as HAT may reasonably
require in order to obtain the full benefit of this Bill of Sale and Assignment
of Assets and STC Broadcasting's obligations hereunder.
-4-
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this Bill of Sale and
Assignment of Assets to be duly executed, as of the date first written above.
STC BROADCASTING, INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
-5-
<PAGE>
EXHIBIT A
---------
FORM OF BILL OF SALE AND ASSIGNMENT OF ASSETS
THIS BILL OF SALE AND ASSIGNMENT OF ASSETS is made as of this ___ day
of_________ 199 by HEARST-ARGYLE STATIONS, INC., a Nevada corporation ("HAT").
WHEREAS, STC Broadcasting, Inc. ("STC Broadcasting"), STC Broadcasting of
Vermont, Inc., STC License Company and STC Broadcasting of Vermont Subsidiary,
Inc., and HAT are parties to that certain Asset Exchange Agreement dated as of
February 18, 1998 (the "Exchange Agreement");
WHEREAS, pursuant to the Exchange Agreement, HAT has agreed to transfer to
STC Broadcasting, and STC Broadcasting has agreed to accept from HAT the HAT
Assets (as defined therein) with respect to television broadcast stations
WDTN(TV), Channel 2, Dayton, Ohio, and WNAC(TV), Channel 64, Providence, Rhode
Island (collectively, the "Stations"), all in accordance with and subject to the
terms and conditions set forth in the Exchange Agreement; and
WHEREAS, all capitalized terms used herein shall have the meanings ascribed
to such terms in the Exchange Agreement unless otherwise defined herein
NOW, THEREFORE, for and in consideration of the conveyance of the HAT
Assets to STC Broadcasting and in further consideration of the mutual covenants
and agreements contained in the Exchange Agreement, and pursuant to the terms of
the Exchange Agreement, HAT hereby assigns, transfers, conveys and delivers to
STC Broadcasting, and STC Broadcasting hereby accepts from HAT, all of HAT's
right, title and interest in, to and under the following assets (including any
contracts or agreements that are entered into and any assets that are acquired
between the date of the Exchange Agreement and the Closing Date in accordance
with the terms therein), but excluding the Excluded Assets described in Section
2.4 of the Exchange Agreement:
1. All of the furniture, fixtures, furnishings, machinery, computers,
equipment, inventory, spare parts, supplies, office materials and other tangible
property of every kind and description owned, leased or used by HAT in
connection with the business and operations of the Stations, together with any
replacements thereof and additions thereto made before the Closing Date, and
less any retirements or dispositions thereof made before the Closing Date in the
Ordinary Course of Business, including, without limitation, those items which
have a book value in excess of Five Thousand Dollars ($5,000), all of which are
set forth and identified in Schedule 2.3.3 of the Exchange Agreement.
<PAGE>
2. All of the service marks, copyrights, franchises, trademarks, trade
names, jingles, slogans, logotypes and other similar intangible assets
maintained, owned, leased or used by HAT in connection with the business and
operations of the Stations (including any and all applications, registrations,
extensions and renewals relating thereto) (the "Intellectual Property"), and all
of the rights, benefits and privileges associated therewith including, without
limitation, the right to use the call letters for the Stations identified in
Schedule 2.3.4 of the Exchange Agreement.
- --------------
3. The program licenses and contracts under which HAT is authorized to
broadcast programs on the Stations (collectively the "Program Contracts")
including, without limitation, (a) all program (cash and non-cash) licenses and
contracts listed on Schedule 2.3.5 of the Exchange Agreement, and (b) any other
--------------
such program contracts that are entered into between the date of the Exchange
Agreement and the Closing Date in accordance with the terms of the Exchange
Agreement.
4. All contracts and agreements (excluding Program Contracts)
pursuant to which commercial air time on the Stations has been sold, traded or
bartered in consideration for any property or services in lieu of or in addition
to cash (collectively, the "Trade-out Agreements") including, without
limitation, those set forth and identified in Schedule 2.3.6 of the Exchange
--------------
Agreement.
5. All contracts and agreements pursuant to which commercial air time on
the Stations has been sold for cash (collectively the "Time Sales Agreements").
6. All network affiliation agreements and other contracts of the Stations
with a television broadcast network (collectively, the "Network Agreements")
including, without limitation, those listed on Schedule 2.3.8 of the Exchange
--------------
Agreement.
7. All other operating contracts and agreements relating to the business or
operations of the Stations, all material such contracts as of the date of the
Exchange Agreement being listed on Schedule 2.3.9 of the Exchange Agreement
--------------
(including, without limitation, the Clear Channel Agreements, all employment
agreements and talent contracts, all leases and subleases relating to the Leased
Property, all agreements relating to any motor vehicles, and all national and
local advertising representation agreements for the Stations), together with all
contracts and agreements that will be entered into between the date of the
Exchange Agreement and the Closing Date in accordance with the terms of the
Exchange Agreement (collectively, the "Operating Contracts" and together with
the Program Contracts, Trade-out Agreements, Time Sales Agreements and Network
Agreements, the "Station Contracts").
-2-
<PAGE>
8. All automotive equipment and motor vehicles maintained, owned, leased or
otherwise used by HAT in connection with the business and operations of the
Stations, including, without limitation, those set forth and described in
Schedule 2.3.10 of the Exchange Agreement.
- ---------------
9. All engineering, business and other books, papers, logs,
files and records pertaining to the business and operations of the Stations, but
not the organizational documents and records of HAT.
10. All translators, earth stations, and other auxiliary
facilities, and all applications therefor owned, leased or otherwise used or
useful by HAT in connection with the business and operations of the Stations,
including, without limitation, those set forth and described in Schedule 2.3.12
---------------
of the Exchange Agreement.
11. All permits, approvals, orders, authorizations, consents, licenses,
certificates, franchises, exemptions of, or filings or registrations with, any
court or Governmental Authority (other than the FCC) in any jurisdiction, which
have been issued or granted to or are owned or used or useful by HAT in
connection with the business and operations of the Stations and all pending
applications therefor.
12. The business of the Stations as a `"going concern", customer
relationships and goodwill.
13. All Accounts Receivable arising out of the business and operations of
WDTN.
Notwithstanding anything to the contrary hereinabove or in the Exchange
Agreement, specifically excluded from this Bill of Sale and Assignment of Assets
are the Excluded Assets.
EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES OF HAT MADE IN THE EXCHANGE
AGREEMENT, HAT MAKES NO REPRESENTATIONS OR WARRANTIES WITH RESPECT TO THE ASSETS
CONVEYED HEREBY, INCLUDING WITHOUT LIMITATION, ANY IMPLIED WARRANTIES OF
MERCHANTABILITY, FITNESS FOR INTENDED USE OR FITNESS FOR A PARTICULAR USE.
TO HAVE AND TO HOLD the said described property to HAT and its successors
and assigns for their exclusive use and benefit forever.
HAT does hereby agree, from and after the date hereof upon the request of
STC Broadcasting, to execute such other documents as STC Broadcasting may
reasonably require in order to obtain the full benefit of this Bill of Sale and
Assignment of Assets and HAT'S obligations hereunder.
-3-
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this Bill of Sale and
Assignment of Assets to be duly executed, as of the date first written above.
HEARST-ARGYLE STATIONS, INC.
By:
---------------------------
Name:
-------------------------
Title:
------------------------
-4-
<PAGE>
EXHIBIT B
---------
FORM OF ASSIGNMENT OF FCC LICENSES
THIS ASSIGNMENT OF FCC LICENSES is made as of this ____ day of
_____________________, 199__, by STC LICENSE COMPANY, a Delaware corporation
("Assignor").
WHEREAS, Assignor, STC Broadcasting, Inc., STC Broadcasting of Vermont,
Inc. and STC Broadcasting of Vermont Subsidiary, Inc., and Hearst-Argyle
Stations, Inc. ("Assignee") are parties to that certain Asset Exchange Agreement
dated as of February 18, 1998 (the "Exchange Agreement"), providing, among other
things, for the sale, assignment, transfer, conveyance and delivery to Assignee
of the STC License Assets (as defined therein);
WHEREAS, in the Exchange Agreement it was agreed, subject to the
granting of the necessary consents by the Federal Communications Commission (the
"Commission"), that Assignor would assign to Assignee the licenses and other
authorizations issued by the Commission for operation of television broadcast
stations WPTZ (TV), Channel 5, North Pole, New York, WNNE-TV, Channel 31,
Hartford, Vermont, and KSBW (TV), Channel 8, Salinas, California (collectively,
the "Stations") together with certain auxiliary facilities;
WHEREAS, the Commission has authorized the assignment of such licenses
and other authorizations from Assignor to Assignee; and
WHEREAS, all capitalized terms used herein shall have the meanings
ascribed to such terms in the Exchange Agreement unless otherwise defined
herein.
NOW, THEREFORE, in consideration of the conveyance by Assignee of the
HAT Assets and the payment by Assignee of the cash consideration pursuant to the
Exchange Agreement and in further consideration of the mutual covenants and
agreements contained in the Exchange Agreement, and pursuant to the terms of the
Exchange Agreement, Assignor does hereby assign, transfer, convey and deliver to
Assignee, and Assignee hereby accepts from Assignor, all of Assignor's right,
title and interest in, to and under the licenses and other authorizations issued
by the Commission with respect to the Stations, including, without limitation
those set forth and identified in Schedule 2.3.1 to the Exchange Agreement.
--------------
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this Assignment of FCC
Licenses to be duly executed as of the day and year first written above.
STC LICENSE COMPANY
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
-2-
<PAGE>
EXHIBIT B
---------
FORM OF ASSIGNMENT OF FCC LICENSES
THIS ASSIGNMENT OF FCC LICENSES is made as of this _____ day of __________,
199___, by HEARST-ARGYLE STATIONS, INC., a Nevada corporation ("Assignor").
WHEREAS, STC Broadcasting, Inc., STC Broadcasting of Vermont, Inc., STC
license Company ("Assignee") and STC Broadcasting of Vermont Subsidiary, Inc.,
and Assignor are parties to that certain Asset Exchange Agreement dated as of
February 18, 1998 (the "Exchange Agreement"), providing, among other things, for
the sale, assignment, transfer, conveyance and delivery to Assignee of the HAT
License Assets (as defined therein);
WHEREAS, in the Exchange Agreement it was agreed, subject to the granting
of the necessary consents by the Federal Communications Commission (the
"Commission"), that Assignor would assign to Assignee the licenses and, other
authorizations issued by the Commission for operation of television broadcast
stations WDTN(TV), Channel 2, Dayton, Ohio ("WDTN"), and WNAC(TV), Channel 64,
Providence, Rhode Island (collectively, the "Stations") together with certain
auxiliary facilities (and in the case of WDTN, all such licenses and other
authorizations shall be assigned by Assignee immediately thereafter to Smith
Acquisition license Company);
WHEREAS, the Commission has authorized the assignment of such licenses and
other authorizations from Assignor to Assignee; and
WHEREAS, all capitalized terms used herein shall have the meanings ascribed
to such terms in the Exchange Agreement unless otherwise defined herein.
NOW, THEREFORE, in consideration of the conveyance by Assignee of the STC
Assets pursuant to the Exchange Agreement and in further consideration of the
mutual covenants and agreements contained in the Exchange Agreement, and
pursuant to the terms of the Exchange Agreement, Assignor does hereby assign,
transfer, convey and deliver to Assignee, and Assignee hereby accepts from
Assignor, all of Assignor's right, title and interest in, to and under the
licenses and other authorizations issued by the Commission with respect to the
Stations, including, without limitation those set forth and identified in
Schedule 2.3.1 to the Exchange Agreement.
- --------------
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this Assignment of FCC
licenses to be duly executed as of the day and year first written above.
HEARST-ARGYLE STATIONS, INC.
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
-2-
<PAGE>
EXHIBIT C
---------
FORM OF ASSIGNMENT OF CONTRACTS AND LEASES
THIS ASSIGNMENT OF CONTRACTS AND LEASES is made as of this _____ day
of ________, 199__, by STC BROADCASTING, INC., a Delaware corporation
("Assignor").
WHEREAS, Assignor, STC Broadcasting of Vermont, Inc., STC License
Company and STC Broadcasting of Vermont Subsidiary, Inc., and Hearst-Argyle
Stations, Inc. ("Assignee") are parties to that certain Asset Exchange Agreement
dated as of February 18, 1998 (the "Exchange Agreement"), providing, among other
things, for the assignment, transfer, conveyance and delivery to Assignee of the
STC 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 KSBW (TV), Channel 8, Salinas, California (collectively, the
"Stations") including those assets conveyed by this Assignment of Contracts and
Leases;
WHEREAS, all capitalized terms used herein shall have the meanings
ascribed to such terms in the Exchange Agreement unless otherwise defined
herein.
NOW, THEREFORE, in consideration of the conveyance by Assignee of the
HAT Assets and the payment by Assignee of the cash consideration pursuant to the
Exchange Agreement and in further consideration of the mutual covenants and
agreements contained in the Exchange Agreement, and pursuant to the terms of the
Exchange Agreement, Assignor hereby bargains, assigns, transfers, conveys and
delivers to Assignee and its successors and assigns all of Assignor's right,
title and interest in and to all contracts, agreements, leases, commitments and
understandings owned or held by Assignor and used or useful in connection with
the business and operation of the Stations, including, without limitation, the
Program Contracts set forth and identified in Schedule 2.3.5 to the Exchange
--------------
Agreement, the Trade-Out Agreements set forth and identified in Schedule 2.3.6
--------------
to the Exchange Agreement, the Network Agreements set forth and identified in
Schedule 2.3.8 to the Exchange Agreement, and the Operating Agreements set forth
- --------------
and identified in Schedule 2.3.9 to the Exchange Agreement, together with those
--------------
Program Contracts, Trade-Out Agreements, Network Agreements and Operating
Contracts that are entered into between the date of the Exchange Agreement and
the Closing Date in accordance with the terms therein.
Notwithstanding anything to the contrary herein above or in the
Exchange Agreement, specifically excluded from this Assignment of Contracts and
Leases are the Excluded Assets.
<PAGE>
IN WITNESS WHEREOF, Assignor has caused this Assignment of Contracts
and Leases to be executed as of the day and year first above written.
STC BROADCASTING, INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
-2-
<PAGE>
EXHIBIT C
---------
FORM OF ASSIGNMENT OF CONTRACTS AND LEASES
THIS ASSIGNMENT OF CONTRACTS AND LEASES is made as of this _____ day of
____________, 199___, by HEARST-ARGYLE STATIONS, INC., a Nevada corporation
("Assignor").
WHEREAS, STC Broadcasting, Inc. (the "Assignee"), STC Broadcasting of
Vermont, Inc., STC License Company and STC Broadcasting of Vermont Subsidiary,
Inc., and Assignor are parties to that certain Asset Exchange Agreement dated as
of February 18, 1998 (the "Exchange Agreement"), providing, among other things,
for the assignment, transfer, conveyance and delivery to Assignee of the HAT
Assets (as defined therein), with respect to television broadcast stations
WDTN(TV), Channel 2, Dayton, Ohio, and WNAC(TV), Channel 64, Providence, Rhode
Island (collectively, the "Stations") including those assets conveyed by this
Assignment of Contracts and Leases;
WHEREAS, all capitalized terms used herein shall have the meanings ascribed
to such terms in the Exchange Agreement unless otherwise defined herein.
NOW, THEREFORE, in consideration of the conveyance by Assignee of the STC
Assets pursuant to the Exchange Agreement and in further consideration of the
mutual covenants and agreements contained in the Exchange Agreement, and
pursuant to the terms of the Exchange Agreement, Assignor hereby bargains,
assigns, transfers, conveys and delivers to Assignee and its successors and
assigns all of Assignor's right, title and interest in and to all contracts,
agreements, leases, commitments and understandings owned or held by Assignor and
used or useful in connection with the business and operation of the Stations,
including, without limitation, the Program Contracts set forth and identified in
Schedule 2.3.5 to the Exchange Agreement, the Trade-Out Agreements set forth and
- --------------
identified in Schedule 2.3.6 to the Exchange Agreement, the Network Agreements
--------------
set forth and identified in Schedule 2.3.8 to the Exchange Agreement, and the
--------------
Operating Agreements set forth and identified in Schedule 2.3.9 to the Exchange
--------------
Agreement (including the Clear Channel Agreements), together with those Program
Contracts, Trade-Out Agreements, Network Agreements and Operating Contracts that
are entered into between the date of the Exchange Agreement and the Closing Date
in accordance with the terms therein.
Notwithstanding anything to the contrary herein above or in the Exchange
Agreement, specifically excluded from this Assignment of Contracts and Leases
are the Excluded Assets.
<PAGE>
IN WITNESS WHEREOF, Assignor has caused this Assignment of Contracts and
Leases to be executed as of the day and year first above written.
HEARST-ARGYLE STATIONS, INC.
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
-2-
<PAGE>
EXHIBIT D
---------
FORM OF ASSUMPTION AGREEMENT
THIS ASSUMPTION AGREEMENT is made and entered into as of this ____ day
of _________________, 199__, by and among STC BROADCASTING, INC., a Delaware
corporation ("STC Broadcasting"), STC BROADCASTING OF VERMONT, INC., a Delaware
corporation ("STCBV"), STC LICENSE COMPANY, a Delaware corporation ("STC License
Company"), and STC BROADCASTING OF VERMONT SUBSIDIARY, INC., a Delaware
corporation ("STCBV Sub") (STC Broadcasting, STCBV, STC License Company and
STCBV Sub shall be collectively referred to herein as "STC"), and HEARST-ARGYLE
STATIONS, INC., a Nevada corporation ("HAT").
WHEREAS, pursuant to that certain Asset Exchange Agreement dated as of
February 18, 1998 by and among STC and HAT (the "Exchange Agreement"), STC has
agreed to transfer and assign to HAT the STC Assets (as defined therein), for
the consideration and upon the terms and conditions set forth in the Exchange
Agreement;
WHEREAS, the Exchange Agreement provides that HAT shall assume certain
liabilities and obligations of STC, but only such specified liabilities and
obligations; and
WHEREAS, all capitalized terms used herein shall have the meanings
ascribed to such terms in the Exchange Agreement unless otherwise defined
herein.
NOW, THEREFORE, for and in consideration of the transfer of the
aforesaid assets, and in further consideration of the mutual covenants and
agreements contained herein and in the Exchange Agreement, and pursuant to the
Exchange Agreement, the parties hereby agree as follows:
Subject to the limitations contained in the Exchange Agreement, HAT
hereby assumes, and agrees to pay, perform and discharge and agrees to indemnify
and hold STC harmless from and against (a) all Liabilities arising out of events
occurring on or after the Closing Date related to the businesses or operations
of the STC Stations or the ownership of the STC Assets by HAT, (b) all
Liabilities arising out of events occurring on or after the Closing Date with
respect to the FCC Licenses of STC License Company, (c) all Liabilities arising
on or after the Closing Date under the Station Contracts of STC (including,
without limitation, Trade-Out Agreements) pursuant to their terms (except for
Liabilities for any breaches thereunder by STC occurring prior to the Closing
Date), (d) all Liabilities for which there is an adjustment in favor of HAT in
connection with the calculating of the Proration Amount, (e) all Liabilities to
employees of the STC Stations to be assumed by HAT in accordance with Section
-------
6.8 and Section 6.9 of the Exchange
- --- -----------
<PAGE>
Agreement, (f) all Liabilities of STC relating to WNNE and WPTZ under the
Sinclair Documents (or Liabilities relating to WNNE and WPTZ assumed pursuant to
the terms thereof), and (g) all Liabilities arising out of events occurring on
or after the Non-License Transfer (as defined in the Sinclair Agreement)
relating to the business and operations of WNNE and WPTZ. HAT shall not assume
or be deemed to assume any debts, liabilities or obligations of STC except as
specified in this Assumption Agreement.
HAT does hereby agree, from and after the date hereof upon the request
of STC, to execute such other documents as STC may reasonably require in order
to obtain the full benefit of this Assumption Agreement and HAT's obligations
hereunder.
This Assumption Agreement shall be governed by and construed under and
in accordance with the laws of the State of New York (without regard to the
choice of law provisions thereof).
-2-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Assumption
Agreement to be duly executed on their behalf, on the day and year first above
written.
STC BROADCASTING, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
STC LICENSE COMPANY
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
STC BROADCASTING OF VERMONT, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
STC BROADCASTING OF VERMONT SUBSIDIARY, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
-3-
<PAGE>
HEARST-ARGYLE STATIONS, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
-4-
<PAGE>
EXHIBIT D
---------
FORM OF ASSUMPTION AGREEMENT
THIS ASSUMPTION AGREEMENT is made and entered into as of this _____day of
_______________, 199___, by and among STC BROADCASTING, INC., a Delaware
corporation ("STC Broadcasting"), STC BROADCASTING OF VERMONT, INC., a Delaware
corporation ("STCBV"), STC LICENSE COMPANY, a Delaware corporation ("STC License
Company"), and STC BROADCASTING OF VERMONT SUBSIDIARY, INC., a Delaware
corporation ("STCBV Sub") (STC Broadcasting, STCBV, STC License Company and
STCBV Sub shall be collectively referred to herein as "STC"), and HEARST-ARGYLE
STATIONS, INC., a Nevada corporation ("HAT").
WHEREAS, pursuant to that certain Asset Exchange Agreement dated as of
February 18, 1998 by and among STC and HAT (the "Exchange Agreement"), HAT has
agreed to transfer and assign to STC the HAT Assets (as defined therein), for
the consideration and upon the terms and conditions set forth in the Exchange
Agreement;
WHEREAS, the Exchange Agreement provides that STC shall assume certain
liabilities and obligations of HAT, but only such specified liabilities and
obligations; and
WHEREAS, all capitalized terms used herein shall have the meanings ascribed
to such terms in the Exchange Agreement unless otherwise defined herein.
NOW, THEREFORE, for and in consideration of the transfer of the aforesaid
assets, and in further consideration of the mutual covenants and agreements
contained herein and in the Exchange Agreement, and pursuant to the Exchange
Agreement, the parties hereby agree as follows:
Subject to the limitations contained in the Exchange Agreement, STC hereby
assumes, and agrees to pay, perform and discharge and agrees to indemnify and
hold HAT harmless from and against (a) all Liabilities arising out of events
occurring on or after the Closing Date related to the businesses or operations
of the HAT Stations or the ownership of the HAT Assets by STC, (b) all
Liabilities arising out of events occurring on or after the Closing Date with
respect to the FCC Licenses of HAT, (c) all Liabilities arising on or after the
Closing Date under the Station Contracts of HAT (including, without limitation,
Trade-Out Agreements) pursuant to their terms (except for Liabilities for any
breaches thereunder by HAT occurring prior to the Closing Date), (d) all
Liabilities for which there is an adjustment in favor of STC in connection with
the calculation of the Proration Amount, (e) all Liabilities to employees of the
HAT Stations to be assumed by STC in accordance with Section 6.9 of the Exchange
-----------
Agreement.
<PAGE>
STC does hereby agree, from and after the date hereof upon the request of
HAT, to execute such other documents as HAT may reasonably require in order to
obtain the full benefit of this Assumption Agreement and STC's obligations
hereunder.
This Assumption Agreement shall be governed by and construed under and in
accordance with the laws of the State of New York (without regard to the choice
of law provisions thereof).
-2-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Assumption
Agreement to be duly executed on their behalf, on the day and year first above
written.
STC BROADCASTING, INC.
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
STC LICENSE COMPANY
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
STC BROADCASTING OF VERMONT, INC.
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
STC BROADCASTING OF VERMONT
SUBSIDIARY, INC.
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
-3-
<PAGE>
HEARST-ARGYLE STATIONS, INC.
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
-4-
<PAGE>
EXHIBIT E TO
ASSET EXCHANGE
AGREEMENT
================================================================================
CREDIT AGREEMENT
between
STC BROADCASTING OF VERMONT SUBSIDIARY, INC.
as Borrower,
and
HEARST-ARGYLE STATIONS. INC.
as Lender
Dated as of ______________, 1998
================================================================================
<PAGE>
TABLE OF CONTENTS
PAGE
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 Pre payments ................................................. 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
i
<PAGE>
PAGE
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
ii
<PAGE>
CREDIT AGREEMENT dated as of _________________, 1998 between STC
BROADCASTING OF VERMONT SUBSIDIARY, INC., a corporation organized under the laws
or Delaware (the "Borrower") and HEARST-ARGYLE STATIONS, INC. a corporation
organized under the laws of Nevada (the "Lender").
WITNESSETH:
----------
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. 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 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
<PAGE>
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.
"GAAP": shall mean United States generally accepted accounting
----
principles.
2
<PAGE>
"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 Acquisition 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, Inc. 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.
3
<PAGE>
"Indenture": means the Indenture, dated as of March 25, 1997, between
---------
STC 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
4
<PAGE>
pursuant to Section 2.14 of the HAT Exchange Agreement and (iv) other
Indebtedness in an aggregate 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 Purchase 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
5
<PAGE>
majority of the board of directors or other managers of such corporation or
business entity are at the time 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 meaning's
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 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
6
<PAGE>
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.
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
7
<PAGE>
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, 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
8
<PAGE>
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 STO 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 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.
9
<PAGE>
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
__________________________________________ and (b) the Guarantor, is located at
____________________. The Borrower maintains its principal records and books at
such address.
4.12 ERISA. Except for the Plans 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 8.9.
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.
10
<PAGE>
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 Purchase Agreement. The
-------------------------------------------------- ---------
Lender shall have received a counterpart of this Agreement, each of the Related
Documents and the HAT Purchase 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.
(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 (i)
----------
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
11
<PAGE>
consummation of the transactions here under 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.
(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(d).
(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.
12
<PAGE>
(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 SIC 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 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
13
<PAGE>
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. The Borrower will use the proceeds of each
---------------
Loan made by the Lender (a) under Section 2.1(a) and 2.1(c) hereof solely for
the payment of the Purchase Price (as defined in the STC Purchase Agreement) in
connection with the STC Acquisition and (b) under Section 2.1(b) hereof solely
for the payment to the Sellers (as defined in the STC Purchase Agreement) of the
Final Probation Amount (as defined in the STC Purchase Agreement).
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.
14
<PAGE>
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.
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 Purchase 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.
15
<PAGE>
7.8 Affiliated Transactions. 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.
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. Each of the following events shall constitute
-----------------
an Event 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 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
16
<PAGE>
(c) The Borrower shall default in the observance or performance of any
covenant or agreement set forth herein or in any Related Document arid 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
(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.
17
<PAGE>
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.
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:
18
<PAGE>
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. 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
(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.
19
<PAGE>
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 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
20
<PAGE>
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 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.
21
<PAGE>
[signatures begin on next page]
22
<PAGE>
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:
---------------------------
Name:
Title:
HEARST-ARGYLE STATIONS, INC.
By:
---------------------------
Name:
Title:
<PAGE>
EXHIBIT 10.28
GUARANTY
GUARANTY (this "Guaranty") given as of February 18, 1998 by HEARST-
ARGYLE TELEVISION, INC., a Delaware corporation (the "Guarantor"), to STC
BROADCASTING, INC., a Delaware corporation ("STC Broadcasting"), STC
BROADCASTING OF VERMONT, INC., a Delaware corporation ("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 collectively referred
to herein as "STC").
WHEREAS, STC and Hearst-Argyle Stations, Inc., a Nevada corporation
("HAT") have entered into an Asset Exchange Agreement, dated as of even date
herewith (the "Exchange Agreement"), pursuant to which STC has agreed to
transfer to HAT substantially all of the assets of the STC Stations, and HAT has
agreed to transfer to STC substantially all of the assets of the HAT Stations
(as such terms are defined in the Exchange Agreement);
WHEREAS, HAT is a direct or indirect wholly-owned subsidiary of the
Guarantor;
WHEREAS, the Guarantor is receiving direct benefits in connection with
the consummation of the transactions contemplated by the Exchange Agreement; and
WHEREAS, as an inducement to STC to enter into and consummate the
transactions contemplated by the Exchange Agreement, the Guarantor is willing to
guarantee the performance obligations of HAT under the Exchange Agreement and
under the other HAT Documents (as defined in the Exchange Agreement
(collectively, the "Transaction Documents"));
NOW, THEREFORE, in consideration of the foregoing, the receipt and
adequacy of which are hereby acknowledged, the Guarantor hereby agrees with STC
as follows:
1. Guaranty. The Guarantor hereby irrevocably and unconditionally
guarantees to STC the prompt and complete performance of each and every
obligation of HAT, direct or indirect, now existing or hereafter arising, under
the Transaction Documents, including, without limitation, the due and punctual
performance and observance by HAT of all of the terms, covenants, and conditions
thereunder.
<PAGE>
Subject to the terms and conditions of this Guaranty, this Guaranty is
an absolute, unconditional, continuing guarantee, is in no way conditioned upon
any event or contingency, or upon any attempt to enforce HAT's performance under
the Transaction Documents or any other right or remedy against HAT to collect
from HAT through the commencement of legal proceedings or otherwise, and shall
be binding upon and enforceable in full against the Guarantor without regard to
the genuineness, regularity, validity or enforceability of the Transaction
Documents or any term thereof or lack of capacity, power or authority of any
party executing the Transaction Documents or any circumstance which might
otherwise constitute a defense available to, or a discharge of, the Guarantor in
respect of this Guaranty or the obligations guaranteed hereby.
The obligations of the Guarantor hereunder shall not be affected,
reduced, impaired, limited or discharged, in whole or in part, by reason of the
assertion by HAT of any claim of any kind relating to HAT; provided, however,
that the foregoing shall not be deemed to constitute a waiver of any claims
against STC available to HAT under the Transaction Documents. The Guarantor
hereby acknowledges that it has received and read a copy of each of the
Transaction Documents.
Notwithstanding anything to the contrary set forth in this Guaranty,
the Guarantor's obligations hereunder shall be subject to, and the Guarantor
shall have the benefit of, any limitations, qualifications or other
contingencies on the obligations and liabilities of HAT under the Transaction
Documents, including, without limitation, the provisions of Section 10.4 of the
Exchange Agreement.
2. Term. This Guaranty is a continuing guaranty and shall continue
in full force and effect until all performance obligations of HAT under the
Transaction Documents and all obligations under this Guaranty have been fully
and completely satisfied, notwithstanding any act, omission, or thing which
might otherwise operate as a legal or equitable discharge of the Guarantor.
3. Obligations Arise Upon Delivery. The obligations of the Guarantor
hereunder shall arise absolutely, irrevocably and unconditionally upon execution
and delivery of this Guaranty.
4. Modifications to Transaction Documents; Bankruptcy. The obligations of
the Guarantor hereunder shall not be reduced, limited, waived or terminated as a
result of any amendment, waiver or modification of any Transaction Document. The
obligations of the Guarantor shall not be released or affected by voluntary or
involuntary proceedings by or against HAT in bankruptcy or for reorganization or
other relief under any bankruptcy or insolvency law.
-2-
<PAGE>
5. Representations and Warranties; Covenants. The Guarantor hereby
represents and warrants to STC as follows: (a) the Guarantor is a corporation
duly organized and validly existing under the laws of Delaware; (b) the
execution, delivery and performance of this Guaranty and of every term, covenant
or condition herein provided for are within its corporate power and authority,
are duly authorized by all proper and necessary corporate action and are not in
conflict with its certificate of incorporation and bylaws or any indenture,
contract or agreement to which the Guarantor is a party or by which the
Guarantor is bound, or with any statute, rule, regulation, decree, judgment or
order binding upon the Guarantor and do not require the consent or approval of
any governmental authority or other third party which has not been obtained; (c)
this Guaranty has been validly executed by the person authorized to do so by the
Guarantor and delivered by the Guarantor to STC and constitutes a legal, valid
and binding obligation of the Guarantor and is enforceable against the Guarantor
in accordance with its terms except as limited by general principles of equity;
and (d) the Guarantor has received adequate, sufficient and valuable
consideration for the execution, delivery and performance of this Guaranty.
6. Waivers. The Guarantor hereby waives notice of, and proof of reliance
by STC upon and acceptance of this Guaranty, and of nonperformance by HAT of its
obligations under the Transaction Documents and of any other notices or demands
of any kind whatsoever and any requirement that STC exhaust any right or take
any action against HAT or any other person or entity or any collateral.
7. Subrogation. The Guarantor will not exercise any rights which it may
acquire by way of subrogation under this Guaranty or otherwise until the
performance in full of all obligations guaranteed pursuant to this Guaranty.
8. Independent Obligations. The Guarantor agrees that the obligations of
the Guarantor hereunder are irrevocable and are independent of the obligations
of HAT under the Transaction Documents; that a separate action or actions may be
brought and prosecuted against the Guarantor regardless of whether any action is
brought against HAT or whether HAT is joined in any such action or actions; and
that the Guarantor waives the benefit of any statute of limitations affecting
the liability of the Guarantor hereunder or the enforcement hereof.
9. General Provisions.
(a) This Guaranty constitutes the entire agreement of the Guarantor
with respect to the subject matter hereof.
(b) Failure or delay by STC in exercising any rights or remedies
hereunder shall not operate as a waiver thereof. A waiver by STC on any
-3-
<PAGE>
one occasion shall not be deemed a waiver on any subsequent occasion, nor shall
any single or partial exercise of any right by STC preclude any other or further
exercise thereof or the exercise of any other right. All rights and remedies of
STC hereunder, under the Transaction Documents, or any other agreement or
instrument, or otherwise available to STC, shall be cumulative.
(c) This Guaranty may not be assigned by the Guarantor without the
prior written consent of STC. This Guaranty shall inure to the benefit of STC
and their successors and assigns permitted by the Transaction Documents, and
shall be binding upon and enforceable against the Guarantor and its successors
and assigns.
(d) The headings herein are for purposes of reference only and shall
not be considered in construing this Guaranty.
(e) THIS GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK. The representations and warranties contained
herein shall survive the execution and delivery of this Guaranty.
(f) Any provision of this Guaranty 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 or affecting the validity or enforceability of such provision
in any other jurisdiction.
(g) All notices, demands or other communications which may or are
required to be given hereunder or with respect hereto shall be in writing, shall
be delivered personally or sent by nationally recognized overnight delivery
service, charges prepaid or by registered or certified mail, return receipt
requested, or by telecopier (fax), and shall be deemed to have been given or
made when personally delivered, the next business day after delivery to such
overnight delivery service, five (5) days after deposited in the mail, first
class postage prepaid, or when received if sent by telecopier (fax), addressed
or sent as follows:
If to Guarantor:
Hearst-Argyle Television, Inc.
959 Eighth Avenue
New York, New York 10019
Attn: Dean H. Blythe
Fax: (212) 489-2314
-4-
<PAGE>
with copies (which shall not constitute notice) to:
Rogers & Wells
200 Park Avenue
New York, New York 10166
Attn: Steven A. Hobbs
Fax: (212) 878-8375
If to STC:
STC Broadcasting, Inc.
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
Fax: (214) 740-7355
or such other address as the addressee may indicate by written notice to the
other parties.
(h) The Guarantor hereby irrevocably consents to the nonexclusive
jurisdiction and venue of the courts of the State of New York and of any federal
court located in New York County, New York, in connection with any action, suit
or proceeding arising out of or relating to this Guaranty. The Guarantor waives
the right to a trial by jury in any action, suit or proceeding arising out of or
relating to this Guaranty or the Transaction Documents. The Guarantor agrees
that a final judgment in any such action, suit or proceeding shall
-5-
<PAGE>
be conclusive for purposes or enforcement in other jurisdictions by suit on the
judgment or in any other manner provided by applicable law.
(i) At STC's option, the Guarantor may be joined in any action, suit
or proceeding against HAT in connection with the Transaction Documents. The
Guarantor shall be conclusively bound by the judgment in any action, suit or
proceeding by STC against HAT related to the Transaction Documents as if the
Guarantor was a party thereto. The Guarantor shall be so bound even if it is
not joined in such action, suit or proceeding.
-6-
<PAGE>
IN WITNESS WHEREOF, the Guarantor has executed this Guaranty as of the
date and year first stated above.
HEARST-ARGYLE TELEVISION, INC.
By: /s/ Dean H. Blythe
-----------------------------------
Name: Dean H. Blythe
---------------------------------
Title: Senior Vice President
--------------------------------
-7-
<PAGE>
EXHIBIT 21
----------
LIST OF SUBSIDIARIES OF THE COMPANY
-----------------------------------
HEARST-ARGYLE TELEVISIONS STATIONS, INC.
WAPT HEARST-ARGYLE TELEVISION, INC.
KITV HEARST-ARGYLE TELEVISION, INC.
KHBS HEARST-ARGYLE TELEVISION, INC.
KMBC HEARST-ARGYLE TELEVISION, INC.
WBAL HEARST-ARGYLE TELEVISION, INC.
WCVB HEARST-ARGYLE TELEVISION, INC.
WISN HEARST-ARGYLE TELEVISION, INC.
WTAE HEARST-ARGYLE TELEVISION, INC.
OHIO/OKLAHOMA HEARST-ARGYLE TELEVISION, INC.
JACKSON HEARST-ARGYLE TELEVISION, INC.
HAWAII HEARST-ARGYLE TELEVISION, INC.
ARKANSAS HEARST-ARGYLE TELEVISION, INC.
<PAGE>
EXHIBIT 23.1
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statement (Form
S-3 No. 333-36659) of Hearst-Argyle Television, Inc. and in the related
Prospectus of our report dated February 12, 1997, except for the second
paragraph of Note 11, as to which the date is March 26, 1997, with respect to
the consolidated financial statements and schedule of Argyle Television, Inc.
for the year ended December 31, 1996 included in this Annual Report. (Form 10-K)
of Hearst-Argyle Television, Inc. for the year ended December 31, 1997.
ERNST & YOUNG LLP
February 27, 1998
San Antonio, Texas
<PAGE>
Exhibit 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in the Registration Statement No.
333-36659 of Hearst-Argyle Television, Inc. (successor to Argyle Television,
Inc.) on Form S-3 and the related prospectus of our report dated February 26,
1998, (March 9, 1998 as to Note 16), relating to the consolidated financial
statements and the financial statement schedule appearing in and incorporated by
reference in the Annual Report on Form 10-K of Hearst-Argyle Television, Inc.
for the year ended December 31, 1997.
DELOITTE & TOUCHE LLP
New York, New York
March 30, 1998
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
EXHIBIT 27.1 FINANCIAL DATA SCHEDULE
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 1997 AND THE CONSOLIDATED
STATEMENT OF OPERATIONS FOR THE EIGHT MONTHS ENDED AUGUST 31, 1997 AND THE FOUR
MONTHS ENDED DECEMBER 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 8-MOS 4-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1997
<PERIOD-START> JAN-01-1997 SEP-01-1997
<PERIOD-END> AUG-31-1997 DEC-31-1997
<CASH> 12,759 0
<SECURITIES> 0 0
<RECEIVABLES> 89,988 0
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 227,243 0
<PP&E> 188,009 0
<DEPRECIATION> (90,205) 0
<TOTAL-ASSETS> 1,044,109 0
<CURRENT-LIABILITIES> 71,868 0
<BONDS> 405,000 0
0 0
2 0
<COMMON> 538 0
<OTHER-SE> 326,114 0
<TOTAL-LIABILITY-AND-EQUITY> 1,044,109 0
<SALES> 0 0
<TOTAL-REVENUES> 51,826 146,440
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 27,610 59,993
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 12,749 15,830
<INCOME-PRETAX> (14,539) 40,297
<INCOME-TAX> 0 16,419
<INCOME-CONTINUING> (14,539) 23,878
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 16,212
<CHANGES> 0 0
<NET-INCOME> (14,539) 7,666
<EPS-PRIMARY> (1.34) 0.48
<EPS-DILUTED> (1.34) 0.48
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
EXHIBIT 27.2 1997 RESTATED FINANCIAL DATA SCHEDULE
THE RESTATED SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 1997,
MARCH 31, 1997 AND PRIOR FISCAL YEAR ENDED DECEMBER 31, 1996 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS YEAR
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1997 DEC-31-1996
<PERIOD-START> APR-01-1997 JAN-01-1997 JAN-01-1996
<PERIOD-END> JUN-30-1997 MAR-31-1997 DEC-31-1996
<CASH> 0 0 0
<SECURITIES> 0 0 0
<RECEIVABLES> 0 0 0
<ALLOWANCES> 0 0 0
<INVENTORY> 0 0 0
<CURRENT-ASSETS> 0 0 0
<PP&E> 0 0 0
<DEPRECIATION> 0 0 0
<TOTAL-ASSETS> 0 0 0
<CURRENT-LIABILITIES> 0 0 0
<BONDS> 0 0 0
0 0 0
0 0 0
<COMMON> 0 0 0
<OTHER-SE> 0 0 0
<TOTAL-LIABILITY-AND-EQUITY> 0 0 0
<SALES> 0 0 0
<TOTAL-REVENUES> 21,886 17,879 73,294
<CGS> 0 0 0
<TOTAL-COSTS> 0 0 0
<OTHER-EXPENSES> 10,586 10,781 37,639
<LOSS-PROVISION> 0 0 0
<INTEREST-EXPENSE> 4,989 4,418 16,566
<INCOME-PRETAX> (2,093) (6,203) (14,560)
<INCOME-TAX> 0 0 0
<INCOME-CONTINUING> (2,093) (6,203) (14,560)
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> (2,093) (6,203) (14,560)
<EPS-PRIMARY> (0.22) (0.58) (1.37)
<EPS-DILUTED> (0.22) (0.58) (1.37)
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
EXHIBIT 27.3 1996 RESTATED FINANCIAL SCHEDULE
THIS RESTATED SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30,
1996, JUNE 30, 1996, MARCH 31, 1996 AND PRIOR FISCAL YEAR ENDED DECEMBER 31,
1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS 3-MOS YEAR
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1996 DEC-31-1996 DEC-31-1995
<PERIOD-START> JUL-01-1996 APR-01-1996 JAN-01-1996 JAN-01-1995
<PERIOD-END> SEP-30-1996 JUN-30-1996 MAR-31-1996 DEC-31-1995
<CASH> 0 0 0 0
<SECURITIES> 0 0 0 0
<RECEIVABLES> 0 0 0 0
<ALLOWANCES> 0 0 0 0
<INVENTORY> 0 0 0 0
<CURRENT-ASSETS> 0 0 0 0
<PP&E> 0 0 0 0
<DEPRECIATION> 0 0 0 0
<TOTAL-ASSETS> 0 0 0 0
<CURRENT-LIABILITIES> 0 0 0 0
<BONDS> 0 0 0 0
0 0 0 0
0 0 0 0
<COMMON> 0 0 0 0
<OTHER-SE> 0 0 0 0
<TOTAL-LIABILITY-AND-EQUITY> 0 0 0 0
<SALES> 0 0 0 0
<TOTAL-REVENUES> 17,439 18,562 15,495 46,944
<CGS> 0 0 0 0
<TOTAL-COSTS> 0 0 0 0
<OTHER-EXPENSES> 9,172 9,474 8,898 23,603
<LOSS-PROVISION> 0 0 0 0
<INTEREST-EXPENSE> 4,741 3,804 3,500 12,053
<INCOME-PRETAX> (5,919) (2,788) (4,330) (7,965)
<INCOME-TAX> 0 0 0 0
<INCOME-CONTINUING> (5,919) (2,788) (4,330) (7,965)
<DISCONTINUED> 0 0 0 0
<EXTRAORDINARY> 0 0 0 7,842
<CHANGES> 0 0 0 0
<NET-INCOME> (5,919) (2,788) (4,330) (15,807)
<EPS-PRIMARY> (0.55) (0.26) (0.39) (2.47)
<EPS-DILUTED> (0.55) (0.26) (0.39) (2.47)
</TABLE>
