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EXHIBIT 10.23
July 2, 1998
Xxxx X. Xxxxxx
Senior Vice President
Hearst-Argyle Television, Inc.
000 Xxxxxx Xxxxxx
Xxx Xxxx, XX 00000
RE: ASSET EXCHANGE AGREEMENT (THE "ASSET EXCHANGE AGREEMENT"),
DATED AS OF FEBRUARY 18, 1998, AS AMENDED, BY AND AMONG STC
BROADCASTING, INC. ("STC BROADCASTING"), STC BROADCASTING OF
VERMONT, INC. ("STCBV"), STC BROADCASTING OF VERMONT
SUBSIDIARY, INC. ("STCBV SUB") AND STC LICENSE COMPANY ("STC
LICENSE COMPANY") (STC BROADCASTING, STCBV, STCBV SUB AND STC
LICENSE COMPANY SHALL BE COLLECTIVELY REFERRED TO HEREIN AS
THE "STC PARTIES") AND HEARST-ARGYLE STATIONS, INC. ("HAT")
Dear Xxxx:
This closing letter agreement (the "Letter Agreement") sets forth the
mutual understanding and agreement between the STC Parties, Xxxxx Acquisition
Company ("SAC"), Xxxxx Acquisition License Company ("SALC", and together with
SAC, the "Xxxxx Parties") and HAT regarding certain matters in connection with
the Closing as of the date hereof under the Asset Exchange Agreement. All
capitalized terms not otherwise defined herein shall have the meanings ascribed
to such terms in the Asset Exchange Agreement.
1. CONSENT TO ASSIGNMENT BY STC. Pursuant to Section 12.6.1 of
the Asset Exchange Agreement (but subject to the terms and conditions of the QI
Agreement (as defined below)), STC hereby notifies HAT of, and HAT hereby
consents to, the assignment by STC of STC's rights, title and interest under the
Asset Exchange Agreement with respect to the (a) HAT Non-License Assets with
respect to WNAC and WPRI to SAC, and (b) HAT License Assets with respect to WNAC
to SALC. The STC Parties and the Xxxxx Parties agree, jointly and severally, to
perform all obligations of the STC Parties under the Asset Exchange Agreement
with respect to WNAC and WPRI, subject to the limitations and conditions
contained therein, including but not limited to (i) the indemnification of HAT
pursuant to Section 10.2 of the Asset Exchange Agreement with respect to the HAT
Assets relating to WNAC and WPRI subject to the indemnification provisions of
Article X of the Asset Exchange Agreement, and (ii) the assumption of
liabilities and indemnification of HAT pursuant to Section 2.9 of the Asset
Exchange Agreement with respect to WNAC and WPRI (and their employees). HAT
hereby acknowledges and agrees that the Xxxxx Parties shall have all the rights
of STC under Section 10.3 of the Asset Exchange Agreement with respect to the
HAT Assets relating to WNAC and WPRI subject to the indemnification provisions
of Article X of the Asset Exchange Agreement.
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July 2, 1998
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2. USE OF QUALIFIED INTERMEDIARY. The parties hereto acknowledge
and agree that in order to facilitate an orderly Closing under the Asset
Exchange Agreement the parties desire to use Chicago Deferred Exchange
Corporation ("Chicago") as the QI for certain of the transactions pursuant to
that certain Joint Exchange Agreement, dated as of the date hereof, (the "QI
Agreement") by and among the STC Parties, the Xxxxx Parties, HAT and Chicago. In
connection with the use of the QI, the parties acknowledge and agree that the
following provisions of the Asset Exchange Agreement shall be amended:
(a) AMENDMENT TO RECITALS. The eleventh recital to the
Asset Exchange Agreement is hereby deleted in its entirety.
(b) TRANSFER BY THE STC EXCHANGE ENTITIES. Section 2.1 of
the Asset Exchange Agreement is hereby amended in its entirety to read as
follows:
"Subject to the terms and conditions of this Agreement and the QI
Agreement and in reliance upon the representations, warranties and agreements
contained herein, (a) STC Broadcasting shall assign, transfer, convey and
deliver to HAT free and clear of any Encumbrances other than Permitted
Encumbrances, and HAT shall acquire and accept from STC Broadcasting, all right,
title and interest of STC Broadcasting in, to and under all real, personal and
mixed assets, rights, benefits and privileges, both tangible and intangible,
owned, leased, used or useful by STC Broadcasting in connection with the
business and operations of the STC Stations other than the STC License Assets
(collectively, the "STC Non-License Assets") with respect to KSBW; (b) STCBV Sub
shall assign, transfer, convey and deliver to HAT free and clear of any
Encumbrances other than Permitted Encumbrances, and HAT shall acquire and accept
from STCBV Sub, all right, title and interest of STCBV Sub in, to and under all
STC Non-License Assets and all STC License Assets (the STC Non-License Assets
and the STC License Assets are collectively referred to herein as the "STC
Assets") with respect to WPTZ and WNNE; and (c) STC License Company shall
assign, transfer, convey and deliver to HAT free and clear of any Encumbrances
other than Permitted Encumbrances, and HAT shall acquire and accept from STC
License Company, all right, title and interest of STC License Company in, to and
under all STC License Assets with respect to KSBW. The STC Assets shall exclude
the STC Excluded Assets described in Section 2.4. STC Broadcasting, STCBV, STCBV
Sub, STC License Company, SAC and SALC are sometimes referred to herein as the
"STC Exchange Entities"."
(c) TRANSFER BY HAT. Section 2.2 of the Asset Exchange
Agreement is hereby amended in its entirety to read as follows:
"Subject to the terms and conditions of this Agreement and the QI
Agreement and in reliance upon the representations, warranties and agreements
contained herein, (a) HAT shall assign, transfer, convey and deliver to STC
Broadcasting free and clear of any Encumbrances other than Permitted
Encumbrances, and STC Broadcasting shall acquire and accept from HAT, all right,
title and interest of HAT in, to and under all real, personal
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July 2, 1998
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and mixed assets, rights, benefits and privileges, both tangible and intangible,
owned, leased, used or useful by HAT in connection with the business and
operations of the HAT Stations other than the HAT License Assets (collectively,
the "HAT Non-License Assets") with respect to WDTN; (b) HAT shall assign,
transfer, convey and deliver to STC (subject, however, to STC's right to assign
STC's rights under this clause (b), with the prior consent of HAT, to Xxxxx
Acquisition Company (d/b/a WNAC-TV), a Delaware corporation ultimately
controlled by Xxxxxx X. Xxxxx ("SAC")) free and clear of any Encumbrances other
than Permitted Encumbrances and STC (or SAC, if STC has assigned STC's rights to
SAC) shall acquire and accept from HAT, all right, title and interest of HAT in,
to the HAT Non-License Assets with respect to WNAC; (c) HAT shall assign,
transfer, convey and deliver to STC License Company free and clear of any
Encumbrances other than Permitted Encumbrances, and STC License Company shall
acquire and accept from HAT, all right, title and interest of HAT in, to and
under all HAT License Assets (the HAT License Assets and the HAT Non-License
Assets are collectively referred to herein as the "HAT Assets"; the STC Assets
and the HAT Assets are sometimes each individually referred to herein as
"Assets") with respect to WDTN; and (d) HAT shall assign, transfer, convey and
deliver to STC (subject, however, to STC's right to assign STC's rights under
this cause (d), with the prior written consent of HAT, to Xxxxx Acquisition
License Company, a Delaware corporation ultimately controlled by Xxxxxx X. Xxxxx
("SALC")), free and clear of any Encumbrances other than Permitted Encumbrances
and STC (or SALC, if STC has assigned STC's rights to SALC) shall acquire and
accept from HAT, all right, title and interest of HAT in, to the HAT License
Assets with respect to WNAC. The HAT Assets shall exclude the HAT Excluded
Assets described in Section 2.4."
(d) EXCHANGE OF ASSETS. Section 2.5.1 of the Asset
Exchange Agreement is hereby amended in its entirety to read as follows:
"Subject to the terms and conditions of the QI Agreement and for and in
consideration of the conveyance of the STC Assets to HAT and in addition to the
assumption of Liabilities by HAT as set forth in Section 2.10, at the Closing
HAT agrees to (a) transfer to STC Broadcasting the HAT Non-License Assets with
respect to WDTN and transfer to Xxxxx Acquisition Company the HAT Non-License
Assets with respect to WNAC and WPRI, as provided for in Section 2.2, (b)
transfer to STC License Company the HAT License Assets with respect to WDTN and
transfer to Xxxxx Acquisition License Company the HAT License Assets with
respect to WNAC, as provided for in Section 2.2, and (c) pay to STC by wire
transfer of immediately available funds to an account designated by STC the
amount of Twenty-One Million Three Hundred Sixty-Six Thousand Six Hundred and
Fifty Dollars ($21,366,650) (the "Cash Consideration"), less (i) any Burlington
Financing Amount which is not repaid by STCBV Sub as of the Closing Date, and
(ii) plus any adjustments, if any, with respect to the ABC Affiliation Agreement
as described in Section 7.5."
(e) ASSIGNMENT OF THE XXXXXXXX DOCUMENTS. Section 2.11.2
of the Asset Exchange Agreement is hereby amended in its entirety to read as
follows:
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July 2, 1998
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"At the Closing, STCBV Sub agrees to assign to HAT all of STCBV Sub's
right, title and interest in, to and under the Xxxxxxxx Documents that relate to
WPTZ, WNNE and any assets related thereto (but not including the assets of
WFFF). In the event that any such rights and interests are not assignable, STC
shall use commercially reasonable efforts (a) to provide HAT the financial and
business benefits HAT would have enjoyed had such rights and interests been
assignable as of the date hereof, and (b) upon the request of HAT, to enforce in
STCBV Sub's name for the account of HAT any rights that would otherwise have
been available to HAT had the rights and interests under the Xxxxxxxx Documents
been assignable as of the date hereof."
(f) WFFF TBA. Section 2.11.3 of the Asset Exchange
Agreement is hereby amended by deleting the second and third sentences thereof.
(g) LIKE-KIND EXCHANGE TREATMENT. Section 6.12.2 is
hereby amended in its entirety to read as follows:
"The parties intend that the following exchanges of Assets pursuant to
this Agreement shall qualify as "like kind" exchanges under Section 1031 of the
Code: (a) for the STC Exchange Entities, the exchange by the STC Exchange
Entities of KSBW for WDTN, and (b) for HAT, the exchange by HAT of the HAT
Assets for the STC Assets. The parties acknowledge and agree that the exchange
by the STC Exchange Entities of WNNE and WPTZ for any of the HAT Assets is not
intended to qualify for the STC Exchange Entities as a "like kind" exchange
under Section 1031 of the Code."
(h) ELECTION OF A QUALIFIED INTERMEDIARY. Section 6.12.5
of the Asset Exchange Agreement is hereby amended in its entirety to read as
follows
"HAT acknowledges and agrees that the STC Exchange Entities have
elected to facilitate the exchanges contemplated by this Agreement by the use of
a "qualified intermediary" as defined in Treas. Reg. (S)1.1031(k)-1(g)(4) (the
"QI") for purposes of engaging in the exchange of the HAT Assets and the STC
Assets. Both HAT and the STC Exchange Entities agree at Closing (but immediately
prior to the consummation of the exchange of Assets contemplated in Article II)
to assign such party's rights in respect of such party's Assets (other than the
Cash Consideration) under this Agreement to the QI (but such assignment shall
not relieve any party of such party's obligations under this Agreement and such
assignment shall be conditioned upon the QI re-assigning such rights to such
party immediately after the consummation of the exchange of Assets contemplated
by Article II). Each party shall cooperate with all reasonable requests of the
other party and the QI in arranging and effecting the transfer of the Assets to
and from the QI. Without limiting the generality of the foregoing, at Closing,
each of the STC Exchange Entities and HAT agree to comply with the terms and
conditions of the QI Agreement and to (i) deliver such party's Assets (other
than the Cash Consideration) to the QI rather than to the other party (which
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delivery shall discharge the obligation of such party to make delivery of the
Assets hereunder), and (ii) to accept delivery of the other party's Assets from
the QI rather than from the other party."
3. PRORATION DETERMINATION DATE; NO PRORATION FOR WPTZ AND WNNE.
Notwithstanding anything to the contrary set forth in Section 2.6 of the Asset
Exchange Agreement or otherwise, STC and HAT acknowledge and agree that (i) the
date and time to be used for calculating the Proration Amount under Section 2.6
of the Purchase Agreement shall be June 1, 1998 at 12:01 AM with respect to the
Closing under the Asset Exchange Agreement on the date hereof, and (ii) there
shall be no Proration Amount calculated by STC for WPTZ and WNNE and there shall
be no proration adjustment for WPTZ and WNNE.
4. CERTAIN FINANCIAL ARRANGEMENTS FOR WDTN AND KSBW. In order to
facilitate an orderly transition of KSBW to HAT and WDTN to STC, the parties
acknowledge and agree that the date and time to be used for calculating the
Accounts Receivable for KSBW and WDTN for purposes of Section 2.7 of the Asset
Exchange Agreement shall be June 1, 1998 at 12:01 AM (the "Accounts Receivable
Transfer Date") with respect to the Closing under the Asset Exchange Agreement
on the date hereof. The parties further acknowledge and agree that any cash or
other revenue collected during the period between the Accounts Receivable
Transfer Date and the date hereof (the "Interim Period") shall be allocated
between the parties as follows: (a) STC shall receive the benefit of all cash or
other revenue received with respect to WDTN during the Interim Period, and (b)
HAT shall receive the benefit of all cash or other revenue received with respect
to KSBW during the Interim Period. Consequently, each of HAT and STC shall
receive an adjustment to the Base Purchase Price for such cash collected by HAT
and STC, respectively, during the Interim Period as provided for in that certain
Settlement Statement and Agreement Regarding Flow of Funds, dated as of the date
hereof, by and among the STC Exchange Entities and HAT (the "Settlement
Statement"). The parties further acknowledge and agree that (a) any accounts
payable relating to the operation of WDTN in the ordinary course of business
consistent with past practice, up to and including May 31, 1998, shall be paid
by HAT, and any accounts payable relating to the operation of WDTN in the
ordinary course of business consistent with past practice on or after June 1,
1998 shall be paid by STC, unless otherwise provided for in the Proration Amount
for WDTN, and (b) any accounts payable relating to the operation of KSBW in the
ordinary course of business consistent with past practice, up to and including
May 31, 1998, shall be paid by STC, and any accounts payable relating to the
operation of KSBW in the ordinary course of business consistent with past
practice on or after June 1, 1998 shall be paid by HAT, unless otherwise
provided for in the Proration Amount for KSBW.
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5. CERTAIN FINANCIAL ARRANGEMENTS FOR WNAC AND WPRI. In order to
facilitate an orderly transition of WNAC and WDTN to SAC, the parties
acknowledge and agree that all amounts payable under the Clear Channel
Agreements in respect of the period on or after June 1, 1998 shall be for the
benefit and account of SAC.
6. TERMINATION AND RELEASE UNDER STCBV SUB/HAT CREDIT AGREEMENT.
The parties acknowledge and agree that the transfer of funds on the date hereof
in accordance with the Settlement Statement constitutes full, satisfactory and
complete performance of all obligations of the parties under the Credit
Agreement dated as of April 24, 1998 by and between STCBV Sub and HAT (the
"Credit Agreement"), specifically including but not limited to the obligations
of full repayment of principal and payment of all interest by STCBV Sub; and
that, subject only to such transfer of funds, as of the date hereof, there are
no further obligations or performances of any kind required of either STC or HAT
under the Credit Agreement. The parties acknowledge that, subject only to the
transfer of such funds on the date hereof described in the preceding sentence,
this shall act as a full and complete release of any and all further obligation
under the Credit Agreement or any other document or agreement executed in
connection therewith. HAT further acknowledges and agrees that upon receipt of
the amounts payable to HAT as provided for in the Settlement Statement, HAT
shall immediately release the Note (as defined in the Credit Agreement) and any
securities pledged in connection therewith and deliver the same by overnight
courier to counsel for STC.
7. COBRA MATTERS FOR HAT TERMINATED EMPLOYEES. The parties
acknowledge and agree that notwithstanding the terms and conditions of the Asset
Exchange Agreement, STC agrees to make available to any Non-Transferred Employee
of WDTN the option to obtain COBRA benefits from the HMO plan which STC offers
to other Designated Employees at WDTN; provided, however, STC shall not be
required to provide such COBRA benefits if the provision of such COBRA benefits
would result in any material adverse economic effect to STC. The parties further
acknowledge and agree that STC shall not be obligated to provide the COBRA
benefits described in the preceding sentence for more than twelve (12) months
after the date hereof.
8. ENVIRONMENTAL MATTERS. The parties acknowledge and agree that
certain environmental remediation required at WDTN and KSBW under Section 6.17
of the Agreement have not been completed as of the date hereof. Each of HAT and
STC agrees to use its best efforts to complete the environmental remediation
described in Section 6.17 as promptly as possible, but in no event later than
ninety (90) days after the date hereof.
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9. DEFERRED REAL PROPERTY. The parties acknowledge and agree that
as of the date hereof HAT has been unable to transfer and convey that certain
parcel of unimproved real property located in the town of Rehoboth, Bristol
County, Massachusetts consisting of approximately 18.98 acres, as is more
particularly described on Schedule 2.3.2 of the HAT Disclosure (the "Deferred
Real Property") and for which the current title holder of record is Rhode Island
Broadcasting Corporation ("RIBC"). From and after the date hereof, HAT agrees to
use its best efforts to purchase the Deferred Real Property from RIBC and
transfer and convey the Deferred Real Property to SAC and in accordance with the
terms and conditions of the Asset Exchange Agreement. If HAT has not transferred
the Deferred Real Property to SAC on or prior to the one hundred and eightieth
(180th) day after the date hereof, HAT shall immediately pay to SAC the amount
of $103,000 as liquidated damages for HAT failing to transfer and convey the
Deferred Real Property to SAC, upon such payment, and HAT shall not be obligated
to transfer the Deferred Real Property to SAC.
10. MISCELLANEOUS. Except as expressly modified hereby, all other
terms and conditions of the Asset Exchange Agreement shall remain in full force
and effect in accordance with their terms.
* * * * * * * * * *
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Please acknowledge your understanding of and agreement with the
foregoing by signing this Letter Agreement in the spaces provided below.
STC BROADCASTING, INC.
By: /s/ Xxxxx X. Xxxx
-----------------
Xxxxx X. Xxxx
Chief Financial Officer
STC LICENSE COMPANY
By: /s/ Xxxxx X. Xxxx
-----------------
Xxxxx X. Xxxx
Chief Financial Officer
STC BROADCASTING OF VERMONT, INC.
By: /s/ Xxxxx X. Xxxx
-----------------
Xxxxx X. Xxxx
Chief Financial Officer
STC BROADCASTING OF VERMONT
SUBSIDIARY, INC.
By: /s/ Xxxxx X. Xxxx
-----------------
Xxxxx X. Xxxx
Chief Financial Officer
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XXXXX ACQUISITION COMPANY (d/b/a
WNAC-TV)
By: /s/ Xxxxx X. Xxxx
-----------------
Xxxxx X. Xxxx
Chief Financial Officer
XXXXX ACQUISITION LICENSE COMPANY
By: /s/ Xxxxx X. Xxxx
-----------------
Xxxxx X. Xxxx
Chief Financial Officer
ACKNOWLEDGED AND AGREED:
HEARST-ARGYLE STATIONS, INC.
By: /s/ Xxxx X. Xxxxxx
------------------
Xxxx X. Xxxxxx
Senior Vice President
ccs: Xxxxx X. Xxxx
Xxxxxx X. Xxxxx
Xxxxxxx X. Xxxxxx, Xx.
