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EXHIBIT 10.3
INTERIM OPERATING AGREEMENT
This INTERIM OPERATING AGREEMENT (this "Agreement") is entered
into as of April 24, 1998 by and among XXXXX BROADCASTING OF VERMONT, LLC, a
Delaware limited liability company ("Xxxxx"), STC BROADCASTING, INC., a
Delaware corporation ("STC Broadcasting"), STC BROADCASTING OF VERMONT, INC., a
Delaware corporation and a wholly-owned subsidiary of STC Broadcasting
("STCBV"), STC LICENSE COMPANY, a Delaware corporation and wholly-owned
subsidiary of STC Broadcasting ("STC License Company"), and STC BROADCASTING OF
VERMONT SUBSIDIARY, INC., a Delaware corporation and wholly-owned subsidiary of
STCBV ("STCBV Sub") (STC Broadcasting, STCBV, STC License Company and STCBV Sub
are sometimes individually referred to herein as a "STC Party" and collectively
referred to herein as "STC" or the "STC Parties").
WHEREAS, STCBV, Tuscaloosa Broadcasting, Inc., a Maryland
corporation ("Tuscaloosa"), WPTZ Licensee, Inc., a Maryland corporation ("WPTZ
Licensee") and WNNE Licensee, Inc., a Maryland corporation ("WNNE Licensee")
(Tuscaloosa, WPTZ Licensee and WNNE Licensee are collectively referred to
herein as "Xxxxxxxx") have as of February 3, 1998, entered into an Asset
Purchase Agreement (the "Xxxxxxxx Agreement") pursuant to which STCBV has
agreed to buy, and Xxxxxxxx has agreed to sell (i) the assets of television
broadcast station WPTZ (TV), Channel 0, Xxxxx Xxxx, Xxx Xxxx ("WPTZ"), and
television broadcast station WNNE-TV, Channel 31, Hartford, Vermont ("WNNE"),
and (ii) certain assets (the "WFFF Assets") and rights relating to television
broadcast station WFFF-TV, Channel 44, Burlington, Vermont ("WFFF"), (WPTZ,
WNNE and WFFF are collectively referred to herein as, the "Stations"), all
subject to the terms described in the Xxxxxxxx Agreement;
WHEREAS, the rights of Xxxxxxxx relating to the WFFF Assets
and WFFF include, without limitation, the rights and obligations of Heritage
Media Corporation pursuant to the Broadcast Facilities Agreement and Time
Brokerage Agreement, each with Champlain Valley Telecasting and each entered
into on August 3, 1995, as amended (collectively, the "WFFF TBA");
WHEREAS, STCBV has assigned to STCBV Sub all of STCBV's rights
and obligations under the Xxxxxxxx Agreement;
WHEREAS, the STC Parties and Hearst-Argyle Stations, Inc., a
Nevada corporation ("HAT"), have entered into an Asset Exchange Agreement (the
"Exchange Agreement") dated as of February 18, 1998, pursuant to which STC is
to assign, transfer and convey to HAT all of STC's right, title and interest in
the assets of the STC Stations (as defined in the Exchange Agreement),
including the assets of WPTZ and WNNE, and HAT is to assign, transfer and
convey to STC all of HAT's right, title and interest in the Clear Channel
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and the assets of the HAT Stations (as defined in the Exchange Agreement),
all subject to the terms and conditions described in the Exchange Agreement;
WHEREAS, Tuscaloosa, Xxxxxxx X. Xxxxx, as trustee for the
Heritage Stations Disposition Trust, and Xxxxxxx Telecasting, Inc., a Delaware
corporation ("Xxxxxxx"), WNNE-TV, Inc., a Vermont corporation ("WNNE
Subsidiary"; WNNE Subsidiary and Xxxxxxx are collectively referred to herein as
the "Heritage Sellers") are parties to that certain Transitional Services
Agreement, dated as of March 6, 1998, as amended by that certain First
Amendment to Transitional Services Agreement, dated as of the date hereof, by
and among the original parties thereto and STCBV Sub (the "Transitional
Services Agreement"), pursuant to which, in order to accommodate an orderly
transition of the Burlington Stations, inter alia, the Trustee has agreed to
continue certain administrative services for STCBV Sub and the Heritage Sellers
have agreed to continue to employ the employees of the Burlington Stations;
WHEREAS, as of the date hereof, pursuant to the Xxxxxxxx
Agreement, STCBV Sub is acquiring the WFFF Assets from Xxxxxxxx and immediately
thereafter transferring to Xxxxx the WFFF Assets;
WHEREAS, WFFF is operated from the broadcasting and
transmission facilities used by WPTZ and in order to accommodate an orderly
transfer of the WFFF Assets from STCBV Sub to Xxxxx, the parties wish to
provide for the continued use of facilities and services provided by the
licensee of WPTZ for the operation of WFFF for a period beginning as of the
date hereof and ending on the Closing Date under the Exchange Agreement (the
"Interim Operation Period"); and
WHEREAS, all capitalized terms used herein but not otherwise
referenced herein shall have the meanings ascribed to such terms in the
Exchange Agreement.
NOW, THEREFORE, in consideration of the mutual promises and
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
1. Interim Operating Services. During the time that
WPTZ is operated by STCBV Sub, each of the STC Parties agrees that it shall
provide Xxxxx with the following services in conjunction with the operation of
WFFF:
(a) continued use of the WPTZ tower and
transmitter building on Xxxxx Mountain, New
York for all of WFFF's broadcast transmission
needs, including an STL link;
(b) continued use of the WPTZ studio facilities
for all of WFFF's technical functions and
operations;
(c) continued provision of all satellite
down-link feeds for WFFF;
(d) the use by WFFF of WPTZ's equipment and
facilities to continue to receive
programming, process commercials, promotional
material
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and other information to produce an
over-the-air signal that is transmitted to
Xxxxx Mountain, New York; and
(e) continued access to and utilization of the
WPTZ traffic system.
In addition to the foregoing, between the date hereof and the earlier to occur
of June 1, 1998 or the Closings under the Exchange Agreement (the "HAT
Closing"), the STC Parties will continue to provide the accounting and payroll
services presently provided for WFFF's operation in accordance with the terms
and conditions of the Transitional Services Agreement. If this Agreement
remains in effect after June 1, 1998, Xxxxx shall be responsible for all
accounting and payroll services for WFFF.
2. WFFF Assets. The parties hereto acknowledge and
agree that the equipment, contracts and employees listed in Exhibit A
(equipment), Exhibit B (programming contracts), Exhibit C (operating
contracts), and Exhibit D (employees), respectively, constitute all of the WFFF
Assets. Xxxxx represents and warrants that none of the WFFF Assets set forth
on the Exhibits are Shared Assets (as defined in the Exchange Agreement). Such
WFFF Assets and other items that may be acquired from time to time by Xxxxx
shall remain the property of Xxxxx and shall not be encumbered in any way by
any of the STC Parties.
3. Joint Use of STC Shared Assets. As provided for in
Section 2.11.4 of the Exchange Agreement, the parties hereto further
acknowledge and agree that certain of the assets of WPTZ are shared in the
operation of WFFF, and during the term hereof, Xxxxx shall be entitled to
continue to share such assets as necessary for the operation of WFFF; provided,
however, Xxxxx shall not be deemed to have any ownership interest in any of
such assets.
4. Term and Termination. Except for the obligations to
be performed after the Interim Operation Period, this Agreement shall commence
on the date hereof and shall remain in effect until the HAT Closing; provided,
however, Xxxxx shall be permitted to terminate any portion of Xxxxx'x use of
WPTZ's facilities by providing sixty (60) days prior written notice of intent
to do so.
5. Compensation for Interim Operating Services; Lease.
The STC Parties shall provide the services described herein for WFFF during the
Interim Operation Period at no charge or cost to Xxxxx; provided, however,
Xxxxx shall be responsible for the payment of all costs and benefits for each
of Xxxxx'x employees and for all supplies necessary for the operation of WFFF.
With respect to Xxxxx'x use of WPTZ's tower and equipment space at Xxxxx
Mountain, New York for WFFF, there will be no charges for rental of such space
during the Interim Operation Period. The STC Parties further agree to
cooperate at the sole expense of Xxxxx in all reasonable respects in connection
with any relocation of WFFF's transmission facilities.
6. Working Capital; Revenue and Expenses.
(a) Xxxxx agrees to make certain advances of working
capital to the STC Parties for the working capital requirements of WFFF as
follows (each a "Working Capital
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Advance"): (i) within three (3) business days of the date hereof, Xxxxx shall
advance to the STC Parties the amount of Twenty-Five Thousand Dollars
($25,000), (ii) on May 7, 1998, Xxxxx shall advance to the STC Parties the
amount of Seventy Thousand Dollars ($70,000), and (iii) after June 1, 1998 and
until such time as the HAT Closing occurs, Xxxxx agrees to make further
advances of working capital to the STC Parties as are necessary for the
business and operations of WFFF within three (3) business days of Xxxxx'x
receipt of the STC Parties' written request. All Working Capital Advances
shall be delivered by Xxxxx (or on behalf of Xxxxx) by wire transfer of federal
funds to an account specified in writing by the STC Parties.
(b) Subject to the terms and conditions of the
Transitional Services Agreement, the STC Parties shall be responsible during
their period of operation of WPTZ for receiving all revenues from WFFF's
business and operations and the payment of all of the operating expenses for
WFFF. At the time of the HAT Closing, there shall be an accounting of the
revenues received and expenses incurred between the date hereof and the HAT
Closing. Such accounting shall be completed within sixty (60) days after the
HAT Closing (the date of the final determination of the accounting shall be the
"Accounting Date"). In the event that all cash expenditures (including film
payments and capital expenditures) for WFFF exceed the sum of the Working
Capital Advances and cash received during the Interim Operation Period, Xxxxx
shall pay to the STC Parties on the Accounting Date an amount equal to such
deficiency. In the event that cash received and Working Capital Advances
exceeds all cash expenditures (including film payments and capital
expenditures) for WFFF during the Interim Operation Period, the STC Parties
shall on the Accounting Date pay to Xxxxx the amount of such excess. All
accounts receivable of WFFF generated from April 24, 1998 through the HAT
Closing shall remain the property of Xxxxx. The parties acknowledge and agree
that under no circumstances shall the STC Parties realize any net negative cash
effects in connection with the business and operations of WFFF. As of the HAT
Closing, Xxxxx shall establish its own bank accounts and be responsible for the
payment of all of Xxxxx'x operating expenses and collection of receivables from
that date forward.
7. Designation of Xxxxx. As of the HAT Closing, the STC
Parties agree to designate Xxxxx as the STC Parties' "permitted designee" under
Section 2.11.3 of the Exchange Agreement.
8. No Joint Venture or Agency. Nothing in this
Agreement shall be construed so as to constitute any joint venture, partnership
or agency relationship between Xxxxx and the STC Parties.
9. Assignment. During the Interim Operation Period,
Xxxxx shall not have the right to assign the WFFF TBA (and any rights or
obligations hereunder relative to WFFF), in whole or in part, except (a) to any
affiliate of Xxxxx or (b) to any other Person with the prior written consent of
HAT (which consent shall not be unreasonably withheld, conditioned or delayed).
This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and assigns as permitted
hereunder. Neither this Agreement nor any rights hereunder shall be assignable
by any party without the prior written consent of the other parties hereto.
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10. Force Majeure. The parties hereto shall not be
liable to any other party for any loss or damage due to delays or failure to
perform resulting from an event of "Force Majeure", including without
limitation, act of God; adverse weather; loss of electrical power; accident;
war; fire; lockout; strike or labor dispute; riot or civil commotion; act of
the public enemy; enactment, rule, order or act of civil or military authority;
acts or omissions of the other party; judicial action; inability to secure
adequate materials, labor, or facilities; defaults of subcontractors or
suppliers; the inability of carriers to make scheduled deliveries; or any other
event beyond the reasonable control of such party.
11. Headings. Section and subsection headings contained
in this Agreement are inserted for convenience of reference only, shall not be
deemed to be a part of this Agreement for any purpose, and shall not in any way
define or affect the meaning, construction or scope of any of the provisions
hereof.
12. No Third Party Beneficiary. It is the explicit
intention of the parties hereto that no person or entity other than the parties
hereto is or shall be entitled to bring any action to enforce any provision of
this Agreement against any of the parties hereto, and the covenants,
undertakings, and agreements set forth in this Agreement shall be solely for
the benefit of, and shall be enforceable only by, the parties hereto or their
respective successors and assigns as permitted hereunder.
13. Notices. All notices and communications required by
this Agreement to be delivered to Xxxxx and HAT shall be delivered as follows:
If to STC:
STC Broadcasting, Inc.
0000 0xx Xxxxxx Xxxxx
Xxxxx 000
Xx. Xxxxxxxxxx, Xxxxxxx 00000
Attn: Xxxxx X. Xxxx
Fax: (000) 000-0000
with a copy (which shall not constitute
notice) to:
Xxxxx & Xxxxxxx L.L.P.
000 Xxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attn: Xxxxxxx X. Xxxxxx, Xx., Esq.
Fax: (000) 000-0000
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and to:
Hicks, Muse, Xxxx & Xxxxx Incorporated
000 Xxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: Xxxxxxxx X. Xxxxxx, Xx.
Fax: (000) 000-0000
If to Xxxxx:
Xxxxx Broadcasting of Vermont, LLC
000 Xx Xxxxx
Xxxxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxx
Fax: (000) 000-0000
and to:
Xxxxx Broadcasting of Vermont, LLC
0000 Xxxxxx Xxxxxx, Xxxxx
Xxxxx 000
Xx. Xxxxxxxxxx, Xxxxxxx 00000
Attn: Xxxxxxxx Xxxxxxxx
Fax: (000) 000-0000
14. Entire Agreement; Amendment. This Agreement contains
the entire Agreement between the parties. No amendment, modification or
discharge of this Agreement shall be valid or binding unless set forth in
writing and executed by each party to this Agreement.
15. Choice of Law. This Agreement shall be governed by
and construed under and in accordance with the laws of the State of New York
(except the choice of law provisions thereof), and each of the parties hereby
agrees to submit to the jurisdiction and venue of the courts of the State of
New York.
16. Authorization. This execution, delivery and
performance of this Agreement have been validly authorized and the Agreement
constitutes a valid and binding agreement among each of the signatories hereto.
17. Counterparts. This Agreement may be executed in one
or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
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[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, each of the parties hereto has executed
this Interim Operating Agreement, or has caused this Interim Operating
Agreement to be duly executed and delivered in its name on its behalf, all as
of the day and year first above written.
XXXXX BROADCASTING OF VERMONT, LLC
By: /s/ Xxxxxx X. Xxxxx
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STC BROADCASTING, INC.
By: /s/ Xxxxx X. Xxxx
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Xxxxx X. Xxxx
Chief Financial Officer
STC LICENSE COMPANY
By: /s/ Xxxxx X. Xxxx
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Xxxxx X. Xxxx
Chief Financial Officer
STC BROADCASTING OF VERMONT, INC.
By: /s/ Xxxxx X. Xxxx
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Xxxxx X. Xxxx
Chief Financial Officer
STC BROADCASTING OF VERMONT SUBSIDIARY,
INC.
By: /s/ Xxxxx X. Xxxx
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Xxxxx X. Xxxx
Chief Financial Officer
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