EXHIBIT 10.13
MANAGEMENT SERVICES AGREEMENT
THIS MANAGEMENT SERVICES AGREEMENT (this "AGREEMENT"), dated
January 7, 2002 (the "EFFECTIVE DATE"), is by and among SUNRISE TELEVISION
CORP., a Delaware corporation ("SUNRISE"), STC BROADCASTING, INC., a Delaware
corporation ("STCB"), STC LICENSE COMPANY, a Delaware corporation ("STCLC"), and
LIN TELEVISION CORPORATION, a Delaware corporation (the "MANAGER").
WITNESSETH:
WHEREAS, Sunrise, STCB, and STCLC (collectively, the "OWNERS")
own or control, either directly or indirectly, all of the operating assets for,
and are the Federal Communications Commission ("FCC") licensees for, certain
television broadcast stations;
WHEREAS, Manager is the owner of, and FCC licensee with
respect to, other television broadcast stations and is experienced in the
management and operation of television broadcast stations, generally; and
WHEREAS, pursuant to the terms and subject to the conditions
hereof, the Owners desire to engage Manager, and Manager desires to accept such
engagement, to provide management and operational services with respect to the
television broadcast stations listed in Exhibit A and any television broadcast
stations that may be owned or operated by the Owners in the future, but
excluding any television broadcast stations that may be sold or otherwise
disposed of in the future (the "STATIONS");
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound, hereby agree as follows:
ARTICLE 1 - DEFINITIONS
1.1 DEFINITIONS. Except as otherwise defined herein, the following
terms shall have the following meanings when used in this Agreement:
"ACT" means the Communications Act of 1934 and any rules,
regulations or policies promulgated thereunder, each as amended or modified from
time to time.
"AFFILIATE" means, with respect to any Person, any other
Person controlled by, controlling, or under common control with such Person,
with "control," for such purposes, meaning the ownership of stock, partnership
or other equity interests conferring the power to direct, or to elect a majority
of the directors or similar Persons empowered to direct, the business of a
Person.
"AGREEMENT" has the meaning ascribed thereto in the preamble
of this Agreement.
"ANNUAL FINANCIAL REPORT" has the meaning ascribed thereto in
Section 4.2.
"APPLICABLE LAW" means any applicable law, regulation, rule,
writ, injunction, ordinance, franchise, decree, determination, award, permit,
license, authorization, requirement, ruling, order or decision of, or by, a
Governmental Authority, including FCC Licenses and Permits.
"APPROVAL DATE" means the date on which the Board of Sunrise
approves the Operating Budget for Fiscal Year 2002.
"ARBITRATION NOTICE" has the meaning ascribed thereto in
Section 10.1.
"ARBITRATION RULES" has the meaning ascribed thereto in
Section 10.1.
"ARBITRATOR" has the meaning ascribed thereto in Section 5.2.
"BOARD" means the board of directors of STCB or the board of
directors of Sunrise, as the context requires.
"CAUSE" has the meaning ascribed thereto in Section 8.1.
"CLAIMING PARTY" has the meaning ascribed thereto in Section
10.1.
"CLAIMS" has the meaning ascribed thereto in Section 9.1.
"CONTRACT" means any contract, agreement, commitment or
understanding, whether written or oral.
"COSTS" means (i) all reasonable out-of-pocket expenses that
are incurred by Manager directly in connection with the performance of the
specified services hereunder, (ii) the reasonable salaries and benefits of the
employees of Manager providing such services who are directly engaged in the
performance of such services (to be calculated at hourly rates determined based
on the individual employee's annual compensation, including reasonable employee
benefits) other than those employees in respect of which the Salary
Reimbursement is allocable, which reasonable salaries and benefits shall not in
the aggregate exceed $500,000 on an annualized basis, and (iii) the reasonable
fees and out-of-pocket expenses of any independent consultants engaged in
connection with the performance of such services, in each case subject to the
Operating Budget for the applicable Fiscal Year.
"DAMAGES" has the meaning ascribed thereto in Section 9.1.
"DELIVERING PARTY" has the meaning ascribed thereto in Section
5.2.
"DISPUTES" has the meaning ascribed thereto in Section 10.1.
"DMA" means designated market area.
-2-
"EFFECTIVE DATE" has the meaning ascribed thereto in the
preamble of this Agreement.
"EXCHANGE ACT" has the meaning ascribed thereto in Section
4.6.
"FCC" has the meaning ascribed thereto in the Recitals of this
Agreement.
"FCC LICENSES" means all licenses, permits and other
authorizations issued by the FCC with respect to the ownership, operation or
construction of the Stations and all auxiliary broadcast and satellite earth
station facilities used in the operation of the Stations (but not including any
Permits).
"FISCAL YEAR" means the calendar year.
"GAAP" means generally accepted accounting principles, as set
forth in the opinions and pronouncements of the Accounting Principals Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or statements by
such other entity as have been approved by a significant segment of the
accounting profession) which are in effect from time to time, consistently
applied.
"GOOD REASON" has the meaning ascribed thereto in Section 8.1.
"GOVERNMENTAL AUTHORITY" means (i) the United States of
America, (ii) any state or commonwealth of the United States of America and any
political subdivision thereof (including counties, municipalities and the like)
or (iii) any agency, authority or instrumentality of any of the foregoing,
including any court, tribunal, department, bureau, commission or board.
"INCENTIVE FEE" has the meaning ascribed thereto in Section
5.2.
"INTERIM PERIOD" means the period from the Effective Date to
and including the Approval Date.
"LIEN" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest, restriction or encumbrance of any kind,
whether statutory or otherwise, in respect to such asset.
"MANAGEMENT FEE" has the meaning ascribed thereto in Section
5.1.
"MANAGER" has the meaning ascribed thereto in the preamble of
this Agreement.
"MANAGER INDEMNITEE" has the meaning ascribed thereto in
Section 9.1.
"OPERATING BUDGET" has the meaning ascribed thereto in Section
4.1.
"OPTION LETTER AGREEMENT" means the option letter agreement in
substantially the form attached hereto as Exhibit B-2, pursuant to which Sunrise
will grant to certain individuals specified by Manager options to purchase
Sunrise common stock under the Stock Option Plan.
-3-
"OWNERS" has the meaning ascribed thereto in the Recitals of
this Agreement.
"OWNERS INDEMNITEE" has the meaning ascribed thereto in
Section 9.3.
"PERMIT" means any license, permit or other authorization
(other than an FCC License) granted or issued by a Governmental Authority, which
is necessary to the conduct of the business or operations of the Stations.
"PERSON" means any human being, organization, general
partnership, limited partnership, corporation, limited liability company, joint
venture, trust, business trust, association, Governmental Authority or other
legal entity.
"RECEIVING PARTY" has the meaning ascribed thereto in Section
5.2.
"REPRESENTATIVES" has the meaning ascribed thereto in Section
6.2.
"SALARY REIMBURSEMENT" has the meaning ascribed thereto in
Section 5.1.
"SEC" has the meaning ascribed thereto in Section 4.6.
"SECURITIES ACT" has the meaning ascribed thereto in Section
7.2.
"STATIONS" has the meaning ascribed thereto in the Recitals of
this Agreement.
"STCB" has the meaning ascribed thereto in the preamble of
this Agreement.
"STCLC" has the meaning ascribed thereto in the preamble of
this Agreement.
"STOCK OPTION PLAN" means the Stock Option Plan in
substantially the form attached hereto as Exhibit B-1.
"SUBSIDIARY" means, with respect to any Person, any other
Person of which such first Person owns the majority of the economic interest in
such Person or owns or has the power to vote, directly or indirectly, securities
representing a majority of the votes ordinarily entitled to be cast for the
election of directors or other governing Persons.
"SUNRISE" has the meaning ascribed thereto in the preamble of
this Agreement.
"TERM" means the term of this Agreement which shall commence
on the Effective Date and, unless otherwise earlier terminated in accordance
with the terms hereof, shall expire in accordance with the terms of Section 2.2.
"WARRANT" means the Warrant in substantially the form attached
hereto as Exhibit C.
"WNAC TRANSFER DATE" means the date of the closing of the
transactions for the transfer by Manager to a third Person of all of Manager's
ownership interest in television broadcast station WNAC-TV, Providence, Rhode
Island, the result of which will be that
-4-
Manager will no longer have an attributable interest in television broadcast
station WNAC-TV, Providence, Rhode Island, as determined in accordance with the
Act.
1.2 ADDITIONAL TERMS. The definitions in Section 1.1 shall apply
equally to both the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include," "includes" and "including" shall
be deemed to be followed by the phrase "without limitation." All references to
"party" and "parties" shall be deemed references to the parties to this
Agreement unless the context shall otherwise require. All references to Articles
or Sections shall be deemed references to Articles or Sections of this
Agreement, unless the context shall otherwise require. All references herein to
Exhibits shall be deemed to be references to the Exhibit(s) attached to this
Agreement. The terms "this Agreement", "hereof", "hereunder" and similar
expressions refer to this Agreement as a whole and not to any particular Article
or Section or other portion hereof and include any amendments, modifications or
supplements hereto. The conjunction "or" shall be understood in its inclusive
sense (and/or).
1.3 HEADINGS. The division of this Agreement into Articles and Sections
and the insertion of headings are for convenience of reference only and shall
not affect the construction or interpretation of this Agreement.
ARTICLE 2 - MANAGEMENT SERVICES
2.1 APPOINTMENT OF MANAGER. Pursuant to the terms and subject to the
conditions contained herein, the Owners hereby engage Manager, and Manager
hereby accepts such engagement, to provide management services, as described in
Section 2.4, with respect to the operation of the Stations. On or promptly after
the WNAC Transfer Date, the individuals set forth on Exhibit F shall initially
be elected to serve as officers of the Owners and their respective Subsidiaries
in the capacities set forth opposite such individuals' names on Exhibit F.
2.2 TERM. The engagement of Manager and the Term shall continue until
the third anniversary of the Effective Date, unless sooner terminated and,
thereafter, shall automatically renew for successive additional one (1) year
periods unless on or before 180 days prior to the last day of the initial term
or any renewal term either the Owners or Manager shall notify the other in
writing of its intent not to renew the Term.
2.3 STANDARD OF PERFORMANCE. Manager shall perform its duties and
obligations under this Agreement in accordance with all Applicable Laws and
standard practices of the industry with respect to the management of similarly
situated television stations.
2.4 SERVICES TO BE PERFORMED BY MANAGER. Throughout the Term, and in
addition to those services that may be provided pursuant to Section 2.5,
pursuant to the terms and subject to the conditions hereof (including those
limitations on Manager's authority contained in Section 3.1), and under the
control and at the direction of the Owners, Manager shall provide management
services in order to manage, promote, maintain and operate the Stations, and, in
performing such tasks, Manager shall, among other things, do the following:
(a) Coordinate and supervise all development, sales,
construction, governmental and community relations, legal matters,
marketing, advertising, promotion and publicity relating to the
Stations;
(b) Advise with respect to the programming functions of the
Stations, including analysis of ratings results, preparation of an
overall marketing plan for each of the Stations, evaluation of
-5-
existing and potential programming licenses and evaluation of pricing
for advertising and other services rendered by the Stations;
(c) Coordinate and supervise all maintenance, alterations,
improvements and replacements of and to the Stations;
(d) Prepare, as set forth in Section 4.1, an annual Operating
Budget and/or such other documents and strategic plans as the Board may
reasonably request from time to time;
(e) Arrange for the billing and collection of all fees,
charges or other compensation due to the Stations and arrange for the
payment of all expenses and fees incurred or payable by the Stations;
(f) Maintain, in accordance with GAAP, such books and records
relating to the business and operations of the Stations as the Owners
reasonably shall request and prepare and deliver all such reports or
other documents or information as may be required to be prepared and
filed under the Securities Exchange Act of 1934, as amended, or in
connection with any credit agreement, indenture or other financing
arrangement that may be in place at any time, or from time to time,
with the Owners or the Stations;
(g) Coordinate and supervise the preparation of all reports,
public files, applications, requests and presentations to obtain or
maintain in effect such Permits and FCC Licenses as may be required for
the maintenance and operation of the Stations, including the
preparation of such applications and filings as may be necessary under
the Act;
(h) Coordinate and supervise the negotiation and execution by
the Owners of all Contracts deemed advisable in connection with the
operation of the Stations;
(i) Arrange for property, casualty, liability and other
insurance;
(j) Prepare, or cause to be prepared, and, at the request of
the Owners, file all tax returns and statements, if any, that must be
filed on behalf of the Stations with any taxing authority;
(k) Use commercially reasonable efforts to obtain (i)
favorable terms for the acquisition of programming for broadcast on the
Stations which are substantially similar to the most favorable terms
available to similarly situated Affiliates of Manager in connection
with the purchase by them of programming, (ii) favorable discounts on
purchases of equipment substantially similar to the most favorable
discounts on equipment available to Manager and its Affiliates at the
time such purchases are made and (iii) any other favorable rates,
contracts or arrangements to which Manager has access in the television
broadcast and related industries;
(l) In accordance with the terms of the Operating Budget,
recommend to the Owners for hire and discharge (where appropriate)
employees of each of the Stations;
(m) Interview, recommend to the Owners for selection or
retention and supervise such engineers, contractors, attorneys,
consultants and similar professionals as may be necessary or
appropriate for the maintenance and operation of the Stations; and
(n) Generally, do any and all other acts or execute such other
agreements, documents or affidavits, as may reasonably be necessary to
carry out the duties and responsibilities of Manager hereunder or such
other tasks or duties as may be requested by the Owners.
-6-
2.5 COMPLIANCE WITH FCC LICENSES. Notwithstanding anything in this
Agreement to the contrary, the Owners shall continue to be the licensee of all
FCC Licenses and shall at all times during the Term retain control over the
management and operation of the Stations and their assets, including the right
of final approval in respect of all material programming decisions, control over
the finances and budgets of the Stations, the selection and termination of key
personnel and any material equipment purchase, other than as set forth in the
budgets for the Stations. The Owners shall also retain ultimate responsibility
for compliance with the rules, regulations and policies of the FCC and the terms
of the Act. Subject to compliance with Applicable Law, Manager shall comply with
all instructions from the Board. Unless otherwise instructed by the Board in
writing, Manager hereby expressly agrees that it will take no action (a) which
would be a material violation of any FCC License, (b) which could reasonably be
expected to have the effect of causing the cancellation, revocation or
modification in any adverse way of any FCC License or (c) which could be
expected to otherwise impair the maintenance in good standing or renewal of any
FCC License.
2.6 DELIVERY OF NOTICES OF PROCEEDINGS. Manager shall promptly notify
the Owners, and their respective Boards of (a) any proceedings instituted by, in
or before any Governmental Authority, including the FCC, (b) any notices of
default received by Manager with respect to alleged defaults under or violations
of any FCC Licenses, Permits or any material Contracts or alleged defaults with
respect to any evidence of material indebtedness or any mortgage, indenture or
other agreement relating thereto or (c) any material adverse change in the
condition, financial or otherwise, of the Stations (which determination shall be
made from and after the date of the most recent Annual Financial Report provided
to the Owners).
ARTICLE 3 - MANAGER'S AUTHORITY AND LIMITATIONS THEREON
3.1 MANAGER'S AUTHORITY AND LIMITATIONS.
(a) Subject to the limitations contained in this Agreement,
Manager shall have authority to execute in the name and on behalf of
the Owners such instruments, documents or agreements as may be
necessary, proper or advisable in the rendering by Manager of services
to be provided by Manager hereunder, including Contracts entered into
in the ordinary course which do not require payments, when aggregated
with all other payments and expenses of the Owners and the Stations for
such Fiscal Year, that materially exceed any limitations in the
Operating Budget, and to do all such acts and things, as may be
necessary, proper or advisable in the rendering of services to be
provided by Manager hereunder; provided, however, that Manager shall
not take or fail to take any action which violates or would violate
(upon notice, the passage of time, or otherwise): (i) any Applicable
Laws relating to the Stations; (ii) any material agreement, arrangement
or undertaking to which an Owner or any of its Subsidiaries is a party;
(iii) any Permit or FCC License granted to an Owner or any of its
Subsidiaries in connection with its ownership and operation of the
Stations; (iv) any judicial or administrative order or decree to which
an Owner or any of its Subsidiaries is subject or by which any of the
Owner's or any such Subsidiary's properties or assets is bound; or (v)
any directive of the Board of Sunrise or STCB or their respective Chief
Executive Officers. For purposes hereof, a payment will be deemed to
"materially exceed" the Operating Budget if such payment, together with
any other payments made or projected to be made during the applicable
Fiscal Year, would exceed the expenditures provided in the Operating
Budget by more than five percent (5%).
-7-
(b) Notwithstanding any other provision of this Agreement to
the contrary, the Manager shall not, without obtaining the prior
written consent of the Owners (acting upon the approval of the Boards),
take any of the following actions:
(i) sell or enter into any agreement to sell any Station
or all or substantially all of the assets or business of any
Owner, any of its Subsidiaries, or any Station, or consummate
or enter into any agreement or plan that contemplates the
merger, interest exchange, conversion, or combination of any
Owner or any of its Subsidiaries with or into any other
Person;
(ii) acquire or enter into any agreement to acquire any
television broadcast station or any other material properties
or assets acquired other than in the ordinary course of
business or that are not otherwise expressly contemplated in
the Operating Budget;
(iii) enter into any local marketing agreement, joint
operating agreement, or joint sales agreement in respect of
any Station or other television broadcast station;
(iv) in respect of each Owner and each of its
Subsidiaries, (A) make a general assignment for the benefit of
creditors, (B) file a voluntary petition in bankruptcy, (C)
file a petition or answer seeking for itself, any
reorganization, arrangement, composition, readjustment,
dissolution, liquidation, or similar relief under any
bankruptcy or debtor relief law, (D) file an answer or other
pleading admitting or failing to contest the material
allegations of a petition filed against it in any bankruptcy
or insolvency proceeding brought against it, or (E) seek,
consent to, or acquiesce in the appointment of a trustee,
receiver, or liquidator of any Owner or any of its
Subsidiaries or of all or any substantial portion of their
respective properties;
(v) voluntarily dissolve, liquidate, or wind up of the
affairs of any Owner or any of its Subsidiaries;
(vi) initiate by or on behalf of any Owner or any of its
Subsidiaries of any action, suit, or proceeding whether civil,
criminal, administrative, arbitrative, or investigative
involving an amount in excess of $100,000;
(vii) enter into any compromise, settlement, or adjustment
of any claim, debt, liability, obligation, or judgment against
any Owner or any of its Subsidiaries in respect of any pending
or threatened action, suit, or proceeding involving an amount
in excess of $250,000;
(viii) engage in any transaction with Manager or its
Affiliates or Subsidiaries except in connection with the
performance of the services required to be performed by
Manager hereunder;
(ix) increase the compensation of any executive or officer
of any Owner or enter into any employment, deferred
compensation, severance, consulting, non-competition, or other
similar agreement with any such executive or officer, except
in each case as expressly contemplated by the Operating
Budget;
(x) change any of the auditors of any Owner or change any
tax or financial accounting methods, practices or policies
used by any Owner;
-8-
(xi) incur any indebtedness for borrowed money other than
as permitted by each credit agreement, indenture and financing
arrangement to which any Owner is a party; and
(xii) eliminate or materially modify any employee benefit
plan or program other than in connection with the replacement
of such employee benefit plan or program with a comparable
employee benefit plan or arrangement.
3.2 DELEGATION. Manager shall not have the right to delegate any of its
obligations under this Agreement; provided, however, that Manager may (i)
provide the services hereunder through one or more of its Subsidiaries and (ii)
retain such accountants, attorneys, consultants, and other advisors that are
incidental to the performance by Manager its obligations hereunder.
ARTICLE 4 - OPERATING BUDGET AND FINANCIAL AND OPERATIONAL REPORTS
4.1 OPERATING BUDGET.
(a) Not less than thirty (30) days prior to the end of each
Fiscal Year, Manager shall prepare for the Sunrise Board's
consideration a recommended budget for each of Sunrise and its
Subsidiaries (on a consolidated basis) and for the operation of the
Stations during the following Fiscal Year (the "OPERATING BUDGET"),
which Operating Budget shall include projections for the following
Fiscal Year with respect to cash flow from operations, capital
expenditures, operating expenses and such other items as the Board of
Sunrise may reasonably request.
(i) The Operating Budget shall be approved or rejected by
the Board of Sunrise not less than fifteen (15) days prior to
the end of the then current Fiscal Year. Notwithstanding the
rest of this Section 4.1(a)(i), Manager shall prepare and
deliver the first Operating Budget not more than five (5)
months after the Effective Date, and such Operating Budget
shall be approved or rejected by the Board not more than
thirty (30) days after the delivery thereof.
(ii) If the Board of Sunrise fails to approve an Operating
Budget within the time period described therefor, then, on the
first day of such following Fiscal Year, the Operating Budget
for such Fiscal Year shall be the Operating Budget for the
immediately preceding Fiscal Year unless and until such time
as the Board of Sunrise otherwise approves the Operating
Budget for the applicable Fiscal Year; provided, however, that
any applicable item shall be appropriately adjusted in
accordance with the operation of escalation or de-escalation
provisions in Contracts in effect as of the commencement of
such Fiscal Year solely as a result of the passage of time or
due to operations or undertakings approved by the Board or the
occurrence of events beyond the control of Manager, to the
extent such Contracts are still in effect.
4.2 ANNUAL FINANCIAL REPORTS.
(a) Manager shall deliver, or cause to be delivered, to the
Owners, within ninety (90) days after the end of each Fiscal Year,
consolidated, audited financial statements for Sunrise and STCB as of
the end of such year and related statements of income or loss, retained
earnings or deficit and changes in financial position of Sunrise and
STCB, prepared in accordance with GAAP and accompanied by an audited
report and opinion in respect of such financial statements by
independent certified public accountants selected by the Owners which
report and opinion shall be unqualified as to the scope of the audit
(the "ANNUAL FINANCIAL REPORT").
-9-
(b) The Annual Financial Report shall be accompanied by
Manager's computation of the amount payable to Manager as the Incentive
Fee for such Fiscal Year determined in accordance with Section 5.2.
4.3 QUARTERLY FINANCIAL REPORTS. Manager shall give, or cause to be
given, to the respective Boards of Sunrise and STCB, within forty-five (45) days
after the end of each of the first three (3) quarters in each Fiscal Year, an
unaudited balance sheet and statement of income and of cash flows of Sunrise and
STCB, such balance sheet to be as of the close of such quarter and such
statement of income and cash flows to be for such quarter and for the period
from the beginning of the current Fiscal Year to the end of such quarter, in
each case subject to the absence of footnote disclosures, normal audit and
year-end adjustments.
4.4 MONTHLY OPERATIONAL REPORTS. Manager shall promptly give the
respective Boards of Sunrise and STCB, upon becoming available and in any event
within thirty (30) days after the end of each month, a report setting forth in
reasonable detail such information with respect to the business and operations
of the Stations as such Boards may reasonably request, including (a) total
revenue from national, regional and local advertising sales and (b) network
compensation.
4.5 BOOKS AND RECORDS. Manager shall (i) maintain for and on behalf of
the Owners accurate and complete books of account and accurate business records
of the Owners, their respective Subsidiaries, and the Stations (including
records reflecting all sums billed or received, all costs and expenses incurred
on behalf of the Owners and all bills paid and other disbursements made with
respect to the Stations), in which shall be entered all transactions and other
matters relative to each Owner's operations, business, and affairs as are
usually entered into records and books of account that are maintained by persons
engaged in business of like character or are required by the Act or other
Applicable Laws, and (ii) establish a system of internal checks and controls
necessary to provide accurate books of account and records. All such books of
account and other business records relating to the Stations shall be the
exclusive property of the Owners and shall be kept at such location or locations
as Manager shall reasonably determine and give notice of to the Owners in
writing. Manager shall retain such records as are required by statute or by any
Governmental Authority with jurisdiction over the Stations or as reasonably
required by the business and shall deliver all records to the Owners upon the
expiration or sooner termination of this Agreement.
4.6 SEC FILINGS. Owners shall be responsible for preparing and filing
with the Securities and Exchange Commission ("SEC") any reports or other
documents required to be filed pursuant to the Securities Exchange Act of 1934,
as amended (the "EXCHANGE ACT") relating to periods ending on or prior to
December 31, 2001. Manager shall be responsible for preparing and filing with
the SEC any reports or other documents required to be filed pursuant to the
Exchange Act relating to periods ending after December 31, 2001.
ARTICLE 5 - COMPENSATION OF MANAGER
5.1 MANAGEMENT FEE AND SALARY REIMBURSEMENT.
(a) As compensation to Manager for the performance of its
services hereunder, each Fiscal Year STCB shall pay to Manager a
management services fee (the "MANAGEMENT FEE") in an amount equal to
Nine Hundred Thousand Dollars ($900,000), less the Salary Reimbursement
for such Fiscal Year. The Management Fee for any Fiscal Year shall be
due and payable on a quarterly basis in advance with the first payment
being made concurrently herewith.
-10-
(b) Each Fiscal Year STCB shall pay to Manager as
reimbursement for the salaries of the individuals set forth on Exhibit
F ("SALARY REIMBURSEMENT"). The Salary Reimbursement for any Fiscal
Year shall be due and payable on a quarterly basis in arrears.
5.2 INCENTIVE FEE.
(a) In addition to the Management Fee payable pursuant to
Section 5.1(a), STCB shall pay to Manager an annual fee (the "INCENTIVE
FEE") in an amount equal to one-third of the cumulative and continuing
cost savings (other than reductions in corporate overhead) actually
realized by the Stations or the Owners resulting from (i) the
clustering of the Stations with Manager's television broadcast stations
or the consolidation of the management and operation of the Stations
with those services related to Manager's televisions broadcast
stations, (ii) the introduction of new technology to the management and
operations of the Stations, and (iii) the renegotiation of vendor
agreements, programming agreements, supply agreements, and other
agreements for and on behalf of STCB or one or more Subsidiaries
relating to the Stations. Concurrently with the delivery of the Annual
Financial Report for any applicable Fiscal Year during the Term,
Manager shall deliver to the Owners its computation of the amount of
the Incentive Fee payable in respect of such Fiscal Year, together with
a schedule setting forth in reasonable detail Manager's computation of
such Incentive Fee. The basis for determining the amount of any savings
will be the costs and expenses and related obligations in respect of
the management and operation for the Stations for the Fiscal Year
ending December 31, 2001, and "savings" shall include any increase in
net revenue resulting from any reduction in any revenue-based
commission payments payable to parties other than employees of the
Owners. In the event this Agreement has terminated or otherwise expired
during any Fiscal Year, the Owners shall deliver or cause to be
delivered to Manager, within ninety (90) days after the end of such
Fiscal Year, a copy of the Annual Financial Report together with the
Owners' computation of the amount of the Incentive Fee payable in
respect of such Fiscal Year (which will be pro-rated for the portion of
such Fiscal Year during which Manager was providing services
hereunder), together with a schedule setting forth in reasonable detail
the Owners' computation of such Incentive Fee. The party receiving the
computation of the Incentive Fee (and other materials and
documentation) pursuant to the preceding two sentences is referred to
as the "RECEIVING PARTY" and the party delivering such computation (and
other materials and documentation) is referred to as the "DELIVERING
PARTY."
(b) In the event the Receiving Party does not dispute the
Delivering Party's computation of the Incentive Fee in writing within
thirty (30) days after delivery of such computation (and other
materials and documentation), or in the event the Owners and Manager
otherwise mutually agree in writing on the amount of such Incentive Fee
payable for the applicable Fiscal Year, such computation shall be
deemed final and binding on Manager and the Owners, and STCB shall pay
or cause to be paid to Manager the Incentive Fee within five (5)
business days after the expiration of such thirty (30) day period or,
if applicable, the date the Owners and Manager otherwise agree in
writing on the computation of the Incentive Fee.
(c) In the event the Receiving Party disputes the Delivering
Party's computation of the Incentive Fee within thirty (30) days after
the delivery of such computation (and other materials and
documentation), such dispute shall be promptly submitted to the Dallas,
Texas office of PricewaterhouseCoopers LLP (the "ARBITRATOR"), which
shall be instructed to review such disputed item(s) and compute and
determine the Incentive Fee. The Arbitrator's determination shall be
delivered to all parties hereto within thirty (30) calendar days after
the referral of such dispute to the Arbitrator. STCB shall pay or cause
to be paid to Manager the Incentive Fee within five (5) business days
after STCB's receipt of the Arbitrator's determination thereof. The
-11-
resolution of the dispute by the Arbitrator shall be set forth in
writing and shall be conclusive and binding upon and non-appealable by
the parties hereto, and such determination shall become final upon the
date of such resolution and may be entered as a final judgment in any
court of competent jurisdiction. The fees and disbursements of the
Arbitrator shall be borne one-half by STCB and one-half by Manager.
5.3 COSTS OF MANAGER.
(a) STCB shall be obligated to reimburse Manager for all Costs
incurred by Manager in connection with the performance of the services
hereunder. Manager shall submit to STCB within forty-five (45) days
after the end of each fiscal quarter an invoice listing the Costs due
from STCB. STCB shall provide payment in the full amount of the invoice
within fifteen (15) days after receipt thereof.
(b) An officer of Manager specified thereby shall be an
authorized signatory to such bank accounts of the Owners as the Owners
shall specify.
ARTICLE 6 - COVENANTS
6.1 COVENANTS OF EACH OWNER.
(a) Prior to the WNAC Transfer Date, (i) Xxxxx XxXxxxxxxx or
another Person who is not an officer or director of Manager shall
continue to serve as Chief Operating Officer of Sunrise and STCB, and
(ii) no Person, who is an officer, director or five (5) percent or
greater stockholder of Manager, shall serve as an officer or director
of any Owner.
(b) From and after the WNAC Transfer Date, Sunrise and STCB
each covenants that its Chief Executive Officer shall be a member of
its board of directors and serve as the Chairman of the Board (for so
long as such Chief Executive Officer continues to serve in such
capacity).
(c) During the Term, each Owner shall promptly deliver to
Manager copies of any and all amendments to its Certificate of
Incorporation or Bylaws and actions of its board of directors or
stockholders.
(d) Concurrently with the execution and delivery of this
Agreement, (i) Sunrise shall grant to Manager the Warrant and (ii)
Sunrise and STCB shall enter into the Waiver and Seventh Amendment to
the Amended and Restated Credit Agreement in substantially the form
attached hereto as Exhibit E;
(e) As soon as practicable after the date hereof (but in any
event within 30 days after the date hereof, Sunrise shall (i) adopt the
Stock Option Plan and (ii) pursuant to the Stock Option Plan and an
Option Letter Agreement, grant to the individuals specified by Manager
options to purchase the number of shares of Sunrise common stock (which
options shall not to exceed an aggregate of 46,127 options for all such
individuals).
6.2 COVENANTS OF MANAGER.
(a) Manager shall promptly notify each Owner of a change in
the Person serving as Chief Executive Officer of Manager, or in the
change in the individual serving as any other officer of Manager (to
the extent such other individual is also providing services to the
Owners on behalf of Manager, whether as an officer of any Owner or
otherwise).
-12-
(b) Manager shall return to the Owners as soon as practicable
after the expiration or sooner termination of this Agreement, all
property of the Owners, their respective Subsidiaries, or the Stations,
as applicable, including all originals and all copies of documents,
notes, computer discs, tapes, or other tangible information of any sort
that Manager has in its possession or under its custody or control that
are the property of the Owners, their respective Subsidiaries, or the
Stations and will not retain any copies of such matter.
(c) Manager shall hold, and shall use its commercially
reasonable efforts to cause its officers, directors, employees,
accountants, counsel, consultants, advisors, financial sources,
financial institutions, and agents (the "REPRESENTATIVES") to hold, in
confidence all confidential information concerning the Owners and their
respective Subsidiaries that is furnished or otherwise made available
to Manager or its Representatives in connection with the performance by
Manager of the services required to be performed by it hereunder,
except to the extent such information (i) was in the public domain
through no fault of Manager or its Representatives, or (ii) is required
to be disclosed by law, rule or regulation or by judicial or
administrative process or pursuant to the rules or regulations of any
national stock exchange. If this Agreement expires or is otherwise
terminated, and to the extent commercially practicable, Manager will
destroy, and will use its commercially reasonable efforts to cause its
Representatives to destroy, upon request of any Owner, all documents
and other materials, and all copies thereof, that were obtained by
Manager in connection with the performance of the services hereunder
and that are subject to such confidence.
(d) None of Manager nor any of its Representatives shall at
any time during or after the Term have or claim to have any right,
title, or interest in any trade name, trademark, service xxxx, or
copyright belonging to or used or to be used by the Owners or any of
their respective Subsidiaries. Each of the Owners or their respective
Subsidiaries, as the case may be, now has and retains, and hereafter
may have and retain, the sole and exclusive right in any and all such
trade names, trademarks, service marks, and copyrights.
(e) The covenants contained in Sections 6.2(b), 6.2(c), and
6.2(d) shall (i) survive the expiration or sooner termination of the
Term and shall continue to bind the parties hereto in accordance with
the terms hereof, and (ii) be construed as covenants or agreements
independent of any other provision of this Agreement and the allegation
or existence of any claim or cause of action of Manager against the
Owners, whether predicated on this Agreement or otherwise, shall not
constitute a defense to the enforcement by the Owners of such
covenants.
(f) In the event of any breach or threatened breach of any of
Sections 6.2(b), 6.2(c), and 6.2(d), Owners shall be entitled to
request from a court of competent jurisdiction the entry of a temporary
restraining order upon notice to Manager, as well as the entry of a
preliminary injunction and a permanent injunction. Such right to an
injunction shall be in addition to and not in limitation of any other
rights or remedies the Manager may have for damages or otherwise.
(g) From and after the expiration or sooner termination of
this Agreement, Manager will (i) execute and deliver such documents and
will take such actions as may be reasonably necessary or appropriate to
separate the operations of the Stations from the television broadcast
stations owned or operated by Manager, and (ii) otherwise cooperate
with Owners to separate the operations of the Stations; provided,
however, that Manager shall not be obligated to incur any material cost
or expense in connection therewith.
-13-
ARTICLE 7 - REPRESENTATIONS AND WARRANTIES
7.1 REPRESENTATIONS AND WARRANTIES BY EACH OWNER. Each Owner, jointly
and severally, makes the following representations and warranties to Manager,
each of which is true and correct as of the date hereof.
(a) Each Owner and each of its Subsidiaries is duly organized,
validly existing and in good standing under the laws of the
jurisdiction of its organization and is qualified to do business in
each jurisdiction in which Stations, directly or indirectly, owned or
controlled by it, are located, except where the failure to be so
qualified could not reasonably be expected to have a material adverse
effect on such Owner or Subsidiary. Each Owner has the requisite power
and authority to execute and deliver this Agreement and all of the
other agreements and instruments to be executed and delivered by such
Owner pursuant hereto, to consummate the transactions contemplated
hereby and thereby and to comply with the terms hereof and thereof. A
true and correct copy of each Owner's Certificate of Incorporation and
Bylaws has previously been provided to Manager.
(b) The execution, delivery and performance of this Agreement
has been duly authorized and approved by all necessary action of each
Owner and do not require any further authorization or consent of such
Owner. This Agreement is a legal, valid and binding agreement of each
Owner enforceable in accordance with its respective terms, except in
each case as such enforceability may be limited by bankruptcy,
moratorium, insolvency, reorganization or other similar laws affecting
or limiting the enforcement of creditors' rights generally and except
as such enforceability is subject to general principles of equity.
(c) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby do not and will
not (i) violate any provision of the Certificate of Incorporation or
Bylaws of each Owner or any of its Subsidiaries, (ii) conflict with or
violate any statute of law, or any judgment, decree, order, regulation
or rule of any Governmental Authority, binding upon or applicable to
each Owner or any of its Subsidiaries or by which the property or
assets of each Owner or any of its Subsidiaries, including the FCC
Licenses, are bound or affected, (iii) violate, conflict with, 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) under, give
any Person (including each Owner or any of its Subsidiaries) any right
of termination or cancellation, any right to assert any remedy with
respect to, or the right to cause the acceleration of the maturity of,
any contract or agreement to which each Owner or any of its
Subsidiaries is a party or by which its property or the property of its
Subsidiaries, including the FCC Licenses, is bound, cause the loss of
any rights, advantages or privileges under or relating to such property
or assets, including the FCC Licenses, or (iv) result in the creation
of any Lien on its property and assets or the property and assets of
its Subsidiaries, other than in respect of clauses (ii), (iii), and
(iv) above any such conflicts, violations, breaches, defaults or Liens
that could not reasonably be expected to have a material adverse effect
on Owners or their respective Subsidiaries.
(d) None of the Owners nor any of their Subsidiaries is in
default under, or in violation of, any Contract or restriction to which
it is a party or by which it is bound and which in any manner could
affect the consummation of the transactions contemplated hereby or the
performance by Manager or its services hereunder, other than such
defaults or violations that could not reasonably be expected to have a
material adverse effect on Owners or their respective Subsidiaries.
-14-
(e) Each Owner is the holder of the FCC Licenses described on
Exhibit D. The FCC Licenses are in full force and effect and have not
been revoked, suspended, canceled, rescinded or terminated and have not
expired. There is not pending any action by or before the FCC to
revoke, suspend, cancel, rescind or materially adversely modify the FCC
Licenses (other than proceedings to amend FCC rules of general
applicability), and there is not now issued or outstanding, by or
before the FCC, any order to show cause, notice of violation, notice of
apparent liability, complaint or notice of forfeiture against such
Owner or any of its Subsidiaries with respect to the Stations.
(f) Subject to any applicable extensions of time, each Owner
has, in respect of each Station's business, filed all foreign, federal,
state, county and local income, excise, property, sales, use, franchise
and other tax returns and reports which are required to have been filed
by it under any Applicable Laws and has paid all taxes which have
become due pursuant to such returns or pursuant to any assessments
which have become payable, other than where the failure to file such
tax returns and reports or pay such taxes could not reasonably be
expected to have a material adverse effect on Owners or their
respective Subsidiaries.
(g) Each Owner and each of its Subsidiaries has good and
marketable title to its property free and clear of Liens other than (i)
Liens for taxes, assessments, or other governmental changes that are
not due and payable or that may thereafter be paid without penalty,
(ii) mechanics', carriers', workmens', repairmens', or other similar
Liens arising or incurred in the ordinary course of business, (iii)
Liens permitted by any credit agreement to which any Owner is a party
or otherwise bound, and (iv) Liens that would not materially detract
from the value of or materially interfere with the present use of any
assets or properties subject thereto or affected thereby. All items of
property are in good operating condition and adequate repair (ordinary
wear and tear excepted), except where the failure of such items to be
in such condition or repair could not reasonably be expected to have a
material adverse effect on Owners or their respective Subsidiaries.
(h) Each Owner and each of its Subsidiaries has complied in
all material respects with all labor and employment laws, rules and
regulations applicable to the Stations' business, including those which
relate to prices, wages, hours, discrimination in employment and
collective bargaining. There is no (i) unfair labor practice charge or
complaint against each Owner or any of its Subsidiaries in respect of
each Station's business pending or threatened before the National Labor
Relations Board, any state labor relations board or any other
Governmental Authority or (ii) strike, dispute, request for
representation, slowdown or stoppage pending or threatened in respect
of each Station's business. Such Owner or its Subsidiary has withheld
and paid, when and as required, all payroll, social security and
related taxes and obligations that it is required to withhold and pay
in connection with its employees.
(i) Each Owner maintains insurance policies with respect to
the Stations consistent with normal business practice. All premiums for
such policies have been paid as billed to date, and such Owner is in
compliance in all material respects with the terms of such policies.
(j) There is no action, suit, proceeding or investigation
pending or, to the knowledge of each Owner, threatened against such
Owner or any of its Subsidiaries which questions the validity of this
Agreement or the right of such Owner to enter into it or to consummate
the transactions contemplated hereby. There is no action, suit,
proceeding, legal claim, arbitration, counter claim or other legal,
administrative or tax proceeding or, to the knowledge of each Owner,
investigation of any kind of such Owner or any of its Subsidiaries
currently pending or which such Owner or any of its Subsidiaries
intends to initiate which, if determined in a manner
-15-
adverse to such Owner or any of its Subsidiaries, could reasonably have
a material adverse effect on such Owner or any of its Subsidiaries.
There are no judicial or administrative orders or decrees to which any
Owner or any of its respective Subsidiaries is subject or by which any
Owner's or any such Subsidiary's assets or properties are bound.
(k) Each Owner and each of its Subsidiaries has complied in
all material respects with all Applicable Laws which are applicable to
the operation of the Stations including filing all returns, reports and
statements that each Owner and each of its Subsidiaries is required to
file with the FCC. There is no action, suit or proceeding pending or,
to the knowledge of either Owner, threatened against such Owner or any
of its Subsidiaries in respect of the Stations that will subject
Manager to liability. To the knowledge of each Owner, there are no
governmental claims or investigations pending or threatened against
such Owner or any of its Subsidiaries in respect of the Stations
(except those affecting the broadcasting industry generally).
7.2 REPRESENTATIONS AND WARRANTIES BY MANAGER. Manager makes the
following representations and warranties to the Owners:
(a) Manager is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. Manager
has the requisite power and authority to execute and deliver this
Agreement and all of the other agreements and instruments to be
executed and delivered by Manager pursuant hereto to consummate the
transactions contemplated hereby and thereby and to comply with the
terms, conditions and provisions hereof and thereof.
(b) The execution, delivery and performance of this Agreement
has been duly authorized and approved by all necessary action of
Manager and do not require any further authorization or consent of
Manager. This Agreement is a legal, valid and binding agreement of
Manager enforceable in accordance with its respective terms, except in
each case as such enforceability may be limited by bankruptcy,
moratorium, insolvency, reorganization or other similar laws affecting
or limiting the enforcement of creditors' rights generally and except
as such enforceability is subject to general principles of equity.
(c) Neither the execution and delivery by Manager of this
Agreement nor the consummation by Manager of any of the transactions
contemplated hereby or thereby nor compliance by Manager with or
fulfillment by Manager of the terms, conditions and provisions hereof
or thereof will conflict with the Certificate of Incorporation or
Bylaws of Manager or any Applicable Laws to which Manager is subject or
require the approval, consent, authorization or act of, or the making
by Manager of any declaration, filing or registration with, any third
party or any Governmental Authority or violate, conflict with, 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) under, give
any Person (including Manager) any right of termination or
cancellation, any right to assert any remedy with respect to, or the
right to cause the acceleration of the maturity of, any contract or
agreement to which Manager is a party or by which its property is bound
or cause the loss of any rights, advantages or privileges under or
relating to such property or assets.
(d) There is no action, suit, proceeding or investigation
pending or, to the knowledge of Manager, threatened against Manager
which questions the validity of this Agreement or the right of Manager
to enter into it or to consummate the transactions contemplated hereby.
(e) Manager is an "accredited investor" as defined in Rule
501(a) of Regulation D under the Securities Act of 1933, as amended
(the "SECURITIES ACT"). Manager has sufficient knowledge and experience
in financial and business matters so as to be capable of evaluating the
-16-
merits and risks of its investment in the Warrant and is capable of
bearing the economic risks of such investment. Manager is acquiring the
Warrant for investment for its own account, and not with a view to, or
for sale in connection with, any distribution thereof. Manager
understands and acknowledges that the Warrant has not been registered
under the Securities Act, or the securities laws of any state or
foreign jurisdiction and, unless so registered, may not be offered,
sold, transferred, or otherwise disposed of except pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act and any applicable securities laws
of any state or foreign jurisdiction. Neither Manager nor any Person
acting on its behalf will take any action that would cause the loss of
any exemption from registration or qualification of the Warrant under
the Securities Act or under all applicable state securities laws.
Manager understands and acknowledges that a legend will be placed on
the Warrant in substantially the following form:
THIS WARRANT, AND THE SHARES ISSUABLE UPON EXERCISE OF THIS
WARRANT, HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), NOR PURSUANT TO THE
SECURITIES OR "BLUE SKY" LAWS OF ANY STATE. THIS WARRANT, AND
THE SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT, MAY NOT BE
OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED, OR
OTHERWISE ASSIGNED, EXCEPT UPON DELIVERY TO SUNRISE TELEVISION
CORP. (THE "ISSUER") OF AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE ISSUER THAT REGISTRATION UNDER THE
SECURITIES ACT IS NOT REQUIRED FOR SUCH TRANSFER OR THE
SUBMISSION TO THE ISSUER OF SUCH OTHER EVIDENCE AS MAY BE
SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY SUCH
TRANSFER WILL NOT BE IN VIOLATION OF THE SECURITIES ACT OR
APPLICABLE STATE SECURITIES LAWS OR ANY RULE OR REGULATION
PROMULGATED THEREUNDER.
7.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties of the Owners and Manager in this Agreement shall survive for a
period of one year after the date of this Agreement.
ARTICLE 8 - TERMINATION
8.1 TERMINATION RIGHTS. This Agreement may be terminated solely, as
follows:
(a) at any time with the mutual written consent of Manager and
the Owners;
(b) at any time, by the Owners upon 180 days' written notice
to Manager;
(c) by the Owners for (i) the gross negligence, willful
misconduct, or fraud on the part of Manager in carrying out its
obligations under this Agreement, (ii) the conviction of Manager or any
of individual who is from time to time serving as an executive officer
of Sunrise who is also an executive officer of Manager of a felony or
commitment of fraud, or (iii) a breach by Manager
-17-
of its obligations under this Agreement, which breach has not been
cured within 30 days after Manager's receipt of written notice of such
breach (the events described in this Section 8.1(c) being collectively
referred to as "CAUSE");
(d) at any time after the WNAC Transfer Date, by the Owners,
if Xxxx Xxxxxxx dies or is under a Disability (as defined in the Stock
Option Plan) or ceases to be Chief Executive Officer of either Sunrise
or STCB (other than removal by his removal by the Board or stockholders
of the applicable Owner);
(e) by Manager for a breach by Owners of their obligations
under this Agreement, which breach has not been cured within 30 days
after the Owners receipt of written notice of such breach, provided,
however, that Manager shall not have the right to terminate this
Agreement if such breach was caused by Manager's act or failure to act
for or on behalf of Owner;
(f) by Manager, upon 30 days' written notice to the Owners, if
either Sunrise or STCB amends its Bylaws or takes any other corporate
action that would (i) limit or otherwise materially change the power
and responsibility of its Chief Executive Officer to appoint all
officers of such Owner or (ii) result in any other officer reporting
directly to such Owner's board of directors;
(g) at any time after the WNAC Transfer Date, by Manager, upon
30 days' written notice to the Owners, if Xxxx Xxxxxxx has been removed
as the Chief Executive Officer of either Sunrise or STCB (the events
described in Sections 8.1(e), 8.1(f), and 8.1(g) being referred to as
"GOOD REASON"); and
(h) at any time during the 15-day period immediately after
January 28, 2002, by either Manager or Owners, if Manager has not
obtained, on or before January 28, 2002, the requisite consent of the
Lenders (as defined below) under that certain Amended and Restated
Credit Agreement dated as of June 29, 2001, among LIN Holdings Corp.,
the Manager, as borrower, the lenders party thereto (the "LENDERS"),
JPMorgan Chase Bank (f/k/a The Chase Manhattan Bank), as Administrative
Agent, Swingline Lender, and Issuing Lender, and the other parties
party thereto, as amended.
8.2 EFFECT OF TERMINATION.
(a) If this Agreement is terminated by Manager for Good Reason
or by the Owners without Cause (other than termination pursuant to
Section 8.1(d) or 8.1(h)), STCB shall, within 30 days after the
termination date, pay to Manager, as liquidated damages, and not as a
penalty, an amount equal to $1,350,000.
(b) If this Agreement is terminated by the Owners for Cause or
by Manager without Good Reason (other than termination pursuant to
Section 8.1(h)), then (i) Manager shall, within 30 days after the
termination date, pay to Owners, as liquidated damages, and not as a
penalty, an amount equal to $1,350,000, (ii) all options granted
pursuant to the Option Letter Agreement shall cease to vest as more
particularly described in the Option Letter Agreement, and (iii) the
Warrant may become exercisable for a lower number of shares of Sunrise
common stock as more particularly described in the Warrant.
(c) If this Agreement is terminated by either Manager or the
Owners for any reason (other than termination pursuant to Section
8.1(h)), then, in addition, to any amounts required to be paid under
Section 8.2(a) or 8.2(b), if any, (i) STCB shall pay to Manager an
amount equal to Manager's pro rata share of the Salary Reimbursement
under Section 5.1(b) and the Incentive Fee
-18-
in accordance with Section 5.2, (ii) STCB shall reimburse Manager (in
accordance with Section 5.3) for all Costs incurred by Manager through
the date of termination that have not been reimbursed prior to such
date, and (iii) Manager shall, within 30 days after the termination
date, pay to STCB an amount equal to STCB's pro rata share of the
Management Fee (based on that portion of the fiscal quarter during
which Manager did not provide services hereunder).
(d) If this Agreement is terminated by either Manager or
Owners pursuant to Section 8.1(h), then (i) all options granted
pursuant to the Option Letter Agreement shall automatically be
forfeited for no consideration, (ii) the Warrant shall automatically be
cancelled for no consideration, (iii) Manager shall, within 30 days
after the termination date, pay to STCB an amount equal to any
Management Fees previously paid by STCB to Manager, and (iv) Manager
shall, within 30 days after demand therefor, reimburse Owners for all
costs and expenses incurred by Owners in connection with the unwinding
the transactions contemplated by this Agreement.
(e) Upon termination of this Agreement in accordance with
Section 8.1, except for Sections 6.2(b), 6.2(c), 6.2(d), 6.2(e),
6.2(f), and 6.2(g), this Section 8.2, and Articles 9 and 10, which
shall survive the termination of this Agreement, this Agreement shall
be null and void, and no party hereto or any of its officers,
directors, stockholders, employees, agents, consultants, or other
Affiliates shall have any rights, obligations or liabilities hereunder
or in respect hereof; provided, however, that nothing contained in this
Section 8.2 shall relieve any party from liability for any breach of
any representation or warranty or failure to comply with any covenant
or agreement contained herein except in the case of a termination under
Section 8.1(a).
ARTICLE 9 - INDEMNIFICATION
9.1 INDEMNIFICATION. The Owners will indemnify and hold harmless
Manager, its Affiliates and all officers, directors, employees, stockholders,
partners and agents of Manager and its Affiliates (individually, a "MANAGER
INDEMNITEE") from and against any and all claims, demands, costs, damages,
losses, liabilities, joint and several, expenses of any nature (including
reasonable attorneys', accountants' and experts' fees and disbursements),
judgments, fines, settlements and other amounts (collectively, "DAMAGES")
arising from any and all claims, demands, actions, suits or proceedings, civil,
criminal, administrative or investigative (collectively, "CLAIMS") in which the
Manager Indemnitee may be involved or threatened to be involved, as a party or
otherwise, arising out of Manager's performance of its obligations under this
Agreement or the ownership or operation of the Stations, regardless of whether
this Agreement continues to be in effect or the Manager Indemnitee continues to
be an Affiliate, or an officer, director, employee, stockholder, partner or
agent of Manager, at the time any such Claims are made or Damages incurred,
provided that (a) the Manager Indemnitee acted in good faith and in a manner it
reasonably believed to be in the best interest of the Owners and, with respect
to any criminal proceeding, had no reasonable cause to believe its conduct was
unlawful and (b) the Manager Indemnitee's conduct did not constitute gross
negligence, willful misconduct or a breach of this Agreement. Any
indemnification hereunder will be satisfied solely out of the assets of the
Owners.
9.2 ADVANCEMENT OF EXPENSES. Expenses (including attorneys' and
experts' fees and related costs) incurred by a Manager Indemnitee in defending
any Claim will be advanced by the Owners prior to the final disposition of such
Claim, provided that the Owners have received an undertaking (together with a
bond or other appropriate security) given by or on behalf of the Manager
Indemnitee to repay such amount if it is finally determined by a court of
competent jurisdiction that such Manager Indemnitee is not entitled to
indemnification pursuant to this Article 9.
-19-
9.3 INDEMNIFICATION BY MANAGER. Manager will indemnify and hold
harmless the Owners, their Affiliates and all officers, directors, employees,
stockholders, partners, members and agents of the Owners and their Affiliates
(individually, an "OWNERS INDEMNITEE") from and against any and all Damages
arising from any and all Claims in which an Owners Indemnitee may be involved or
threatened to be involved, as a party or otherwise, arising out of Manager's
gross negligence or willful misconduct in connection with the performance of the
services under this Agreement; provided that neither Manager nor any of its
Affiliates or any other Person that comprises a Manager Indemnitee under Section
9.1 shall be deemed an Owners Indemnitee under this Section 9.3. Manager will
advance expenses to an Owners Indemnitee in defending any Claim in the same
manner as provided in Section 9.2 for Manager.
9.4 LIMITATION ON LIABILITY. Notwithstanding anything contained herein
to the contrary, no party shall be liable to another party for any incidental,
indirect, special, punitive, exemplary or consequential loss or damages arising
out of, or in connection with, indirect or consequential loss, damage, cost or
expense suffered or incurred by such other party as a result of a breach of any
representation or warranty made to such other party or a breach of any covenant
or agreement made by such party to such other party in this Agreement, whether
such liability arises out of contract, tort (including negligence), strict
liability, stature or otherwise, and each party releases the other parties from
such liability.
ARTICLE 10 - MISCELLANEOUS
10.1 ARBITRATION.
(a) All disputes between the parties hereto relating to this
Agreement other than any disputes that seek injunctive or other
equitable relief ("DISPUTES") shall be resolved by arbitration in
accordance with this Article 10. This agreement to arbitrate as set
forth in this Article 10 shall survive the termination of this
Agreement. All arbitration shall be conducted pursuant to the
Commercial Arbitration Rules of the American Arbitration Association
(the "ARBITRATION RULES") as then in force except as otherwise provided
herein. The decision of the arbitrators shall be final and binding on
the parties. All arbitration shall be undertaken pursuant to the
Federal Arbitration Act, where applicable, and the decision of the
arbitrators shall be enforceable in any court of competent jurisdiction
pursuant to the Federal Arbitration Act.
(b) To submit a Dispute to arbitration, the party seeking
arbitration (the "CLAIMING PARTY") shall furnish the other party and
the American Arbitration Association with a notice (the "ARBITRATION
NOTICE") containing: (i) the name and address of such Claiming Party;
(ii) a reasonably detailed description of the Dispute and the amount
of, and basis for damages (or other requested relief) relating to or
arising out of such Dispute; (iii) the Claiming Party's intent to
commence arbitration proceedings under this Agreement; and (iv) the
other information required under the Federal Arbitration Act and the
Arbitration Rules.
(c) In any Dispute where a party seeks One Hundred Thousand
Dollars ($100,000) or more in damages, three arbitrators shall be
employed. Within ten (10) days after delivery of the Arbitration
Notice, the Claiming Party and the other party shall jointly select
three independent arbitrators from the list of the American Arbitration
Association's National Panel of Commercial Arbitrators. If the parties
cannot agree upon the panel of arbitrators within such 10-day period,
the American Arbitration Association shall select a panel of three
independent arbitrators from the list. If the Claiming Party seeks less
than One Hundred Thousand Dollars ($100,000) in damages, one
independent arbitrator shall be selected by the American Arbitration
Association.
-20-
(d) The costs and expenses of any arbitration proceeding,
including the arbitrators' fees and expenses, shall be borne and may be
specified in the arbitration award; provided, however, that if such
arbitration award does not specify which party should bear any such
cost or expense, such cost or expense shall be borne equally by the
parties hereto. The arbitration proceedings shall take place in New
York City, New York. In resolving all Disputes, the arbitrators shall
apply the law of the State of New York without regard to the choice of
law provisions thereof. The arbitrators are by this agreement directed
to conduct the arbitration hearing no later than two (2) months from
the service of the Arbitration Notice unless good cause is shown
establishing that the hearing cannot fairly and practically be so
convened.
(e) Parties shall be entitled to conduct document discovery by
requesting production of documents. Responses or objections shall be
served twenty (20) days after receipt of a request. The arbitrators
shall resolve any discovery disputes by such pre-hearing conferences as
may be needed. All parties agree that the arbitrators and any counsel
of record to the proceeding shall have the power of subpoena process as
provided by Applicable Law.
10.2 FORCE MAJEURE. Notwithstanding any provision of this Agreement to
the contrary, no party hereto shall be liable to any other party hereto for
failure to perform any obligation under this Agreement if prevented from doing
so by reason of fires, strikes, labor unrest, inability to obtain labor,
materials, equipment or supplies, governmental restrictions, embargoes, civil
commotion, rationing or other orders or requirements of Governmental
Authorities, an unusual failure of transportation, acts of military authorities,
acts of terrorism, unusually adverse weather conditions, acts of God or other
contingencies, including equipment failures, beyond the reasonable control of
the parties, and all requirements as to notice and other performance required
hereunder within a specified period shall be automatically extended to
accommodate the period of pendency of such contingency which shall interfere
with such performance. A force majeure event that prevents one party hereto from
performing any obligation under this Agreement shall not excuse the
nonperformance of the other party if such other party is not also subject to the
force majeure event. Notwithstanding the foregoing, no such cause shall excuse
the timely payment of money when due hereunder except as otherwise expressly
provided in this Agreement.
10.3 MANAGER AS INDEPENDENT CONTRACTOR. Manager shall serve as an
independent contractor in rendering the services herein, and nothing in this
Agreement shall be construed as establishing a partnership or joint venture
relationship by and among Manager and the Owners.
10.4 OTHER ACTIVITIES. Nothing in this Agreement shall limit or
restrict the right of Manager to engage in any other business or to devote its
time and attention to the management or other aspects of any other business or
to render services of any kind. Manager and its Affiliates may engage in or
possess or acquire an interest in other business ventures of any nature or
description, independently or with others, whether currently existing or
hereafter created, including the ownership, acquisition or operation of radio
and television stations, and the Owners shall not have any rights in or to such
independent ventures or the income or profits derived therefrom, provided that
such activities are not undertaken through or on behalf of the Owners.
10.5 NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed given when delivered personally or by facsimile
transmission (receipt confirmed telephonically), mailed by registered or
certified mail (postage prepaid, return receipt requested), or sent by
nationally recognized courier service to the parties at the following addresses
(or at such other address for a party as shall be specified by like notice):
-21-
If to Sunrise, to the independent members of Sunrise's Board
as constituted from time to time. Until notice is otherwise
provided by Sunrise to the contrary, such Board members are:
Dr. Xxxxxxx Xxxxxxxxxx
University of Texas at Austin
X.X. Xxx X
Xxxxxx, Xxxxx 00000
Facsimile No.: 000-000-0000
and
Xxxxxxx X. Xxxxxxxx, Xx.
000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Facsimile No.: 000-000-0000
With a copy (which shall not constitute notice) to:
Weil, Gotshal & Xxxxxx LLP
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxx, Esq.
Facsimile: 000-000-0000
If to STCB or STCLC, to the independent members of STCB's
Board as constituted from time to time. Until notice is
otherwise provided by STCB to the contrary, such Board members
are:
Dr. Xxxxxxx Xxxxxxxxxx
University of Texas at Austin
X.X. Xxx X
Xxxxxx, Xxxxx 00000
Facsimile No.: 000-000-0000
and
Xxxxxxx X. Xxxxxxxx, Xx.
000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Facsimile No.: 000-000-0000
-22-
With a copy (which shall not constitute notice) to:
Weil, Gotshal & Xxxxxx LLP
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxx, Esq.
Facsimile: 000-000-0000
If to Manager:
LIN Television Corporation
Xxx Xxxxxxxx Xxxxxx, Xxxxx 000X
Xxxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxxxx
Vice-President Corporate Development and Treasurer
Facsimile: 000-000-0000
With copies (which shall not constitute notice) to:
LIN Television Corporation
Four Xxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: General Counsel
Facsimile: 000-000-0000
and
Xxxxxxxxx & Xxxxxxx
0000 Xxxxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx Xx., Esq.
Facsimile: 000-000-0000
10.6 BENEFIT AND BINDING EFFECT. No party hereto may assign this
Agreement without the prior written consent of the other parties except as
provided in the immediately following sentence. Manager shall have the right to
assign this Agreement without obtaining the consent of the other parties hereto
if such assignment is to a Subsidiary of Manager, provided that such assignment
shall not relieve Manager of any of its obligations under this Agreement. This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns.
10.7 GOVERNING LAW. This Agreement shall be governed by the laws of the
State of New York (without giving effect to the principles of conflicts of law).
10.8 ENTIRE AGREEMENT; AMENDMENTS. This Agreement represents the entire
understanding and agreement between the Owners and Manager with respect to the
specific subject matter hereof. This Agreement cannot be amended or modified
except by an agreement in writing which makes specific reference to this
Agreement and which is signed by the party against which enforcement of any such
amendment or modification is sought.
-23-
10.9 FURTHER ASSURANCES. The parties shall take any actions and execute
any other documents that may be necessary or desirable to the implementation and
consummation of this Agreement or that may be reasonably requested by any other
party hereto. Each party will cooperate with the other parties and provide any
assistance reasonably requested by any other party to effectuate the terms of
this Agreement.
10.10 SEVERABILITY. If any provision of this Agreement or the
application thereof to any Person or circumstance shall be held invalid or
unenforceable to any extent by any court of competent jurisdiction, the
remainder of this Agreement and the application of such provision to other
persons or circumstances shall not be affected thereby and shall be enforced to
the greatest extent permitted by Applicable Law.
10.11 COUNTERPARTS. This Agreement may be signed in counterparts, each
of which shall be deemed to be an original but which, when taken together, shall
constitute one and the same instrument. Facsimile signature pages of this
Agreement shall be valid and binding as original signatures and when the same
are delivered by each party to the other parties, such delivery shall be
considered an agreement of the respective parties to fully execute and deliver
to one another originally signed copies of this Agreement.
10.12 WAIVER. The waiver by the Owners or Manager of any breach of any
term, covenant or condition contained in this Agreement shall not be deemed to
be a waiver of any subsequent breach of the same or any other term, covenant or
condition contained herein. No covenant, term or condition of this Agreement
shall be deemed to have been waived by the Owners or Manager, unless such waiver
is in writing and is signed by the party against whom such waiver is asserted.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-24-
IN WITNESS WHEREOF, this Agreement has been executed by the
parties hereto as of the date first above written.
SUNRISE TELEVISION CORP.
By: /s/ Xxxxx X. Xxxx
-----------------------------
Name: Xxxxx X. Xxxx
Title: Executive Vice President and
Chief Financial Officer
STC BROADCASTING, INC.
By: /s/ Xxxxx X. Xxxx
-----------------------------
Name: Xxxxx X. Xxxx
Title: Executive Vice President and
Chief Financial Officer
STC LICENSE COMPANY
By: /s/ Xxxxx X. Xxxx
-----------------------------
Name: Xxxxx X. Xxxx
Title: Executive Vice President and
Chief Financial Officer
LIN TELEVISION CORPORATION
By: /s/ Xxxx X. Xxxxxxx
-----------------------------
Name: Xxxx X. Xxxxxxx
Title: Chairman, President and Chief
Executive Officer
Exhibit A
to
Management Services Agreement
List of Stations
WPRI-TV, Providence, RI
WEYI-TV, Flint-Saginaw-Bay City, MI
WUPW-TV, Toledo, OH
KRBC-TV, Abilene-Sweetwater, TX
KACB-TV, San Angelo, TX
WDTN-TV, Dayton, OH
WNAC-TV, Providence, RI
Exhibit B-1
to
Management Services Agreement
Form of Stock Option Plan
[Intentionally Omitted]
Exhibit B-2
to
Management Services Agreement
Form of Option Letter Agreement
[Intentionally Omitted]
Exhibit C
to
Management Services Agreement
Form of Warrant
[Intentionally Omitted]
Exhibit D
to
Management Services Agreement
FCC Licenses
1. WPRI-TV, Providence, RI
2. WEYI-TV, Saginaw, MI
3. WUPW-TV, Toledo, OH
4. KRBC-TV, Abilene, TX
5. KACB-TV, San Angelo, TX
6. WDTN-TV, Dayton, OH
together with any ancillary and non-broadcast
licenses associated with any of the foregoing.
Exhibit E
to
Management Services Agreement
Waiver and Seventh Amendment to the Amended and Restated Credit Agreement
[Intentionally Omitted]
Exhibit F
to
Management Services Agreement
Officers and Titles
Xxxx X. Xxxxxxx, Chairman, President and CEO
Xxxx Xxxxxxxxx, Vice President, Television
C. Xxxxxx Xxxxx, Xx., Vice President Engineering & Operations
Xxxxxx X. Parent, Vice President, Deputy General Counsel
Xxxxxxx X. Xxxxxxxx, Vice President, Corporate Development & Treasurer
Xxxxx X. Xxxxxxx, Vice President, Finance
Xxxxxxx X. Xxxxxxxxxx, Vice President, Corporate Controller*
Xxxxxxx X. Xxxxxxx, Vice President, New Development & General Counsel
Xxxxxx Xxxxxx, Director of Regulatory & Corporate Compliance
* denotes Chief Accounting Officer for purposes of filings under the
Securities Exchange Act of 1934, as amended.
