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Exhibit 10.4
STUDIO LEASE AGREEMENT
THIS STUDIO LEASE AGREEMENT, is entered into as of the 29th day of
August, 1997, by and between The Hearst Corporation ("Hearst" and also herein
referred to as "Tenant"), a Delaware corporation, and Argyle Television, Inc.
("Argyle"), a Delaware corporation.
WHEREAS, Hearst and Argyle have entered into an Amended and Restated
Agreement and Plan of Merger dated as of March 26, 1997 (the "Merger Agreement")
pursuant to which certain Hearst subsidiaries will, subject to the terms and
conditions of the Merger Agreement, merge with and into Argyle; and
WHEREAS, Argyle will be the surviving corporation under the Merger
Agreement and will be renamed Hearst-Argyle Television, Inc. ("HAT" and also
herein referred to as "Landlord"); and
WHEREAS, Hearst, or a subsidiary, is the licensee of radio stations
WBAL(AM) and WIYY-FM, Baltimore, Maryland (each a "Radio Station" and
collectively, the "Radio Stations"); and
WHEREAS, the Radio Stations occupy certain space and facilities within
certain premises, which premises will at the Effective Time (as such term is
defined ill the Merger Agreement), become the property of HAT; and
WHEREAS, in connection with the Merger, HAT will become the owner of
television station WBAL-TV, Baltimore, Maryland; and
WHEREAS, it is the intention of the parties hereto that the Radio
Stations will continue to occupy and use such premises following the Effective
Time on terms and conditions set forth hereinafter; and
WHEREAS, this Studio Lease Agreement is entered into in accordance with
Section 9.02(i) of the Merger Agreement and in further consideration thereof;
NOW, THEREFORE, Hearst and Argyle hereby agree as follows:
1. Leased Premises. Landlord is the owner of certain real property and
a building located at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, which is
used for the main studios and transmission facilities of Television Station
WBAL-TV. A portion of such premises (including parking areas and facilities and
driveway) is occupied and used by the Radio Stations, which portion is more
particularly described in Exhibit A attached hereto and made a part hereof (the
"Leased Premises"). Landlord hereby leases to Tenant and Tenant hereby leases
from Landlord the "Leased Premises".
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2. Term of Lease. The term ("Term") of this lease shall be for a period
of 36 months commencing at the Effective Time and unless sooner terminated as
provided in this Lease, ending on a date (the "Expiration Date") which shall be
the 36 month anniversary of the Effective Time.
3. Rent. In accordance with Section 9.01(i) of the Merger Agreement,
Hearst and Argyle have entered into a Management Services Agreement of even date
with this Studio Lease Agreement whereby HAT will provide certain management
services to Hearst with respect to the Radio Stations, and Hearst will pay HAT
certain amounts in consideration of such services. For each year during the
Term, the full and complete consideration to Landlord for this Studio Lease
Agreement shall consist of: (a) those annual amounts payable to HAT under said
Management Services Agreement, plus (b) the annual costs related to the Services
provided by the Landlord to the Radio Stations, which the parties agree shall be
substantially similar to the annual expense amounts Hearst has historically
allocated to the Radio Stations (by way of example, Exhibit B hereto sets forth
the 1997 expense amounts Hearst has allocated to the Radio Stations). Such
consideration shall be subject to pro rata adjustments for partial years of the
Term. Such consideration includes all amounts whatsoever (as rent or otherwise)
payable by Tenant to Landlord with respect to this Studio Lease Agreement, and
Tenant shall not be obligated to pay any additional amounts to Landlord. In the
event that said Management Services Agreement shall terminate prior to the
expiration or termination of the Term hereunder or a Radio Station shall be sold
to a third party as contemplated by Section 2, then Landlord and Tenant shall
negotiate in good faith amounts payable to Landlord in consideration of this
Studio Lease Agreement.
4. Services. During the Term, Landlord shall operate and maintain the
Leased Premises in a manner consistent with past practice with respect to the
operation and maintenance of the Building by Hearst Broadcast Group and in
accordance with all applicable laws and regulations and shall provide the
following services to the Leased Premises: (i) all utilities, including heat,
ventilation, cooling, lighting, and electrical service; (ii) insurance; (iii)
telephone; (iv) building maintenance, and (v) janitorial service and all other
services as needed by Tenant consistent with past practice with respect to
Services previously provided by Hearst Broadcast Group to the Radio Stations
(the "Services"). Landlord shall maintain and repair the foundations, structure
and roof of the Building and shall operate, maintain, repair and replace the
systems, facilities and equipment necessary to provide the services described in
this Section.
5. Taxes. Tenant shall not be responsible for payment of real estate or
other taxes, and any increases or escalations thereto on its portion of the real
property during the Term, except with respect to those allocations payable by
Tenant pursuant to paragraph 3(b) above.
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6. Landlord's and Tenant's Liability.
(a) Landlord will not be responsible for any damage to
Tenant's property, business, or agents or employees resulting from any
electrical power failure, fire, lightning, windstorm or Force Majeure Event, or
any other damage or loss not caused by the gross negligence or intentional
wrongdoing of Landlord or its employees. Landlord's liability to Tenant in the
event of any loss or damage to Tenant's property or the Leased Premises caused
by the gross negligence or intentional wrongdoing of Landlord or its employees
shall be limited to the cost of repairing or replacing such property, plus any
reasonable and necessary costs of removing and reinstalling such property.
Landlord shall not be liable for any loss of business, or for any consequential
damages whatsoever caused by gross negligence or the intentional wrongdoing of
Landlord or its employees.
(b) Tenant will not be responsible for any damage to
Landlord's property, business, or agents or employees resulting from any
electrical power failure, fire, lightning, windstorm or Force Majeure Event, or
any other damage or loss not caused by the gross negligence or intentional
wrongdoing of Tenant or its employees. Tenant's liability to Landlord in the
event of any loss or damage to Landlord's property or the Building caused by the
gross negligence of Tenant or its employees shall be limited to the cost of
repairing or replacing such property, plus any reasonable and necessary costs of
removing and reinstalling such property. Tenant shall not be liable for any loss
of business, or for any consequential damages whatsoever caused by gross
negligence or the intentional wrongdoing of Tenant or its employees.
7. Additional Construction. Any plans for alterations, additions,
improvements or any other additional construction and installation by Tenant
shall be submitted to Landlord for its approval in writing. Landlord hereby
agrees not to unreasonably withhold or delay its consent regarding any such
alterations, additions or improvements. No such approval is necessary for the
continued operation and maintenance of the equipment and facilities in place at
the time of the execution of this Agreement. The installation and construction
shall conform with all requirements imposed by the Federal Communications
Commission and all other federal, state and local governmental agencies.
8. Destruction of Premises.
(a) If Landlord's building is totally destroyed by wind,
explosion, fire, or other casualty of any kind, either Tenant or Landlord shall
have the option of terminating this Lease or any renewal thereof, upon giving
written notice at any time within thirty (30) days from the date of such
destruction, and if the lease be so terminated, all rent shall cease as of the
date of such destruction.
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(b) If Landlord's building should be damaged by wind,
explosion, fire or other casualty (or if totally and completely destroyed and
neither party elects to terminate this Lease Agreement within the provisions of
subparagraph (a) above), then in either event, the Landlord may, at its sole
cost and expense, restore building to a condition substantially similar to that
immediately prior to such destruction or damage. Landlord shall be entitled to
all proceeds of any insurance policies in the event it undertakes repairs. In
such case, all rents paid in advance shall be apportioned as of the date of
damage or destruction and all rent thereafter accruing shall be equitably and
proportionately suspended or adjusted according to the nature and extent of the
destruction or damage, pending completion of rebuilding, restoration or repair,
except that in the event the destruction or damage is so extensive as to make it
unfeasible for Tenant to conduct Tenant's business on the Leased Premises, the
rent shall be completely abated until building is restored by the Landlord. The
Landlord shall not be liable for any inconvenience or interruption of business
of Tenant or of any damage of any kind to Tenant's property or equipment
occasioned by electrical interference, wind, explosion, fire or other cause or
casualty of any kind not attributable to the Landlord. In lieu of restoring the
building as set forth in this paragraph, Landlord may terminate the lease upon
ninety (90) days prior written notice to Tenant.
(c) If Landlord undertakes to restore, rebuild or repair
building in accord with the provisions of subparagraph (b) above, and such
restoration, rebuilding or repair is not accomplished within two hundred seventy
(270) days from the date of the casualty, Tenant shall have the right to
immediately terminate this Lease Agreement by written notice to Landlord.
9. Use of Property. Tenant shall use the leased property
solely for the purpose of operating the Radio Stations and for no
other purpose whatsoever.
10. Termination. Upon termination of this Agreement, for whatever
cause, Tenant shall, at the request of Landlord and at Tenant's expense, remove
any equipment that has been installed by Tenant or its predecessors and shall
properly make such replacements and repairs as are necessary to conform the
building to its original condition, normal wear and tear and damage due to fire
or casualty excepted. In addition, Tenant shall disconnect and safely seal off
all wires, conduits, liens and any other devices or systems located within
Landlord's building that were installed by or for Tenant or its predecessors,
and used in connection with the operation of the Radio Stations and related
facilities and equipment. In the event of any removal of equipment, Tenant shall
not cause any damage to building, including the roof, and shall promptly repair
any damage to building that may result from the removal of the equipment, normal
wear and tear and damage due to fire or casualty excepted. All leased spaces
shall be left in their original condition, excepting ordinary use and wear and
damage due to fire or casualty.
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11. Landlord's Rights of Access. Landlord or its agent shall have the
right to enter the Leased Premises at all times in order to examine it or to
make repairs, improvements or additions to the Leased Premises as Landlord may
deem desirable. Landlord shall not in any event be liable for any inconvenience,
annoyance, disturbance, loss of business, or other damage to Tenant by reason of
making such repairs or the performance of any such work on or in the Leased
Premises, or on account of bringing materials, supplies, and equipment into or
through the Leased Premises during the course of such work, and the obligations
of Tenant in this Lease shall not hereby be affected in any manner.
12. Right to Assign and Sublease. Tenant shall not sublet the Leased
Premises or any portion thereof or assign or transfer its rights hereunder to
any third party unless Tenant shall first have obtained the written consent of
Landlord, except that Tenant may assign its right and obligations hereunder to
any buyer of a Radio Station(s) as contemplated by Section 2, in which event
Tenant shall be relieved of any further liability hereunder provided that such
buyer agrees to assume all of the duties and obligations imposed hereunder on
Tenant. Any attempted assignment or other transfer in violation of the foregoing
shall be null and void ab initio.
In the event Landlord should sell or otherwise transfer the Leased
Premises, Landlord shall have no further duties or obligations hereunder
provided that the transferee agrees to assume all of the duties and obligations
imposed hereunder on Landlord. Upon such a transfer, Tenant shall, for all
purposes expressed herein and incidental hereto, accept such transferee as its
lessor hereunder. Landlord may assign any or all rights, duties and obligations
created hereunder without the consent of Tenant.
13. Compliance With Laws and Regulations. Tenant, at its sole expense,
shall comply with all laws, orders, and regulations of all federal, state, and
local authorities and with any direction of any public officer, pursuant to law,
which shall impose any duty upon Landlord or Tenant with respect to the Leased
Premises. Tenant, at its sole expense, shall obtain all licenses or permits
which may be required for the conduct of its business during the term of this
Lease Agreement, or for the making of repairs, alterations, improvements, or
additions. Tenant further agrees to protect, indemnify and save harmless
Landlord from and against any fine, penalty or expense imposed or incurred,
including reasonable attorney's fees, for any violation of such ordinances,
rules, regulations, and statutes with regard to the Leased Premises.
14. Condemnation. If the building or any part thereof is condemned,
taken or ordered dismantled by any governmental authority, corporation or entity
having the power of eminent domain or condemnation, or other power to order
dismantling, so as to make the Leased Premises unusable by Tenant, then this
Agreement shall terminate from the time possession is taken by the condemning
authority, or dismantling is begun, as the case may be, and the
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parties hereto shall have no obligation hereunder with respect to any period
thereafter. Tenant shall receive a proportionate refund from Landlord of any
rent paid by Tenant in advance. All proceeds of any such condemnation award
shall be the sole property of Landlord.
Should any governmental authority order or direct Landlord to make any
alteration to the building, any delay, disruption or hindrance hereby caused to
Tenant, its broadcasting, radio transmissions or business shall not affect or
impair Tenant's obligation to make the payments provided for hereunder. A
prorated portion of the rent provided for herein shall be deducted if the site
is unusable by Tenant for more than 72 hours in the event of such an alteration.
Landlord shall make such required alterations as promptly as reasonably
possible.
15. Mechanic's or Other Liens.
(a) Notwithstanding anything to the contrary contained in this
lease, Tenant, its successors and assigns, warrant and guarantee to Landlord,
its successors and assigns that if any mechanic's liens or any other lien or
encumbrance of any nature or kind (including for unpaid taxes) shall be filed
against the building of which the Leased Premises forms a part, for work claimed
to have been done for, or materials claimed to have been furnished to Tenant, or
for failure by Tenant to pay or discharge any other obligation or liability, (i)
the same shall be discharged by Tenant, by either payment, by bond or otherwise,
at the sole cost and expense of Tenant, within fifteen (15) days of the giving
of notice thereof by Landlord, (ii) either a release or satisfaction of lien, as
the case may be, shall be filed with the County Clerk of the county in which the
building is situated within such fifteen (15) day period, and (iii) a copy of
such release or satisfaction, as the case may be, certified to by such County
Clerk shall be delivered to Landlord within five (5) days after such filing.
(b) In the event such mechanic's lien or other lien is not
discharged timely, as aforesaid, Landlord may discharge same for the account of
and at the expense of Tenant by payment bonding or otherwise, without
investigation as to the validity thereof or of any offsets or defenses thereto,
and Tenant shall promptly reimburse Landlord, as additional rent, for all
reasonable costs, disbursements, fees and expenses, including, without
limitation, legal fees, incurred in connection with so discharging said
mechanic's lien or other lien, together with interest thereon from the times of
payment until reimbursement by Tenant. Tenant shall, within five (5) days of
demand therefor by Landlord, pay to Landlord as additional rent, the sum of One
Thousand ($1,000.00) Dollars on account of Landlord's legal fees and
disbursements, but the foregoing shall not limit the extent of Tenant's
liability as set forth above.
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(c) In the event such mechanic's lien or other lien is not
discharged timely, as aforesaid, Landlord, in addition to all other rights
granted to Landlord in this lease and without limitation, may institute a
dispossess summary proceeding based upon such failure to discharge any such
lien. In the event Tenant fails to deliver to Landlord the certified copy of the
release or satisfaction required hereunder within the time period provided for
the delivery thereof to Landlord, Landlord shall have the right to assume that
such mechanic's lien or other lien has not been discharged and Landlord shall
have all of the rights and remedies provided for herein based upon Tenant's
failure to discharge any such lien.
(d) Tenant, at its sole cost and expense, shall procure
written waivers of the right to file mechanic's liens executed by contractors,
subcontractors, material suppliers and laborers simultaneously with payment for
the labor performed or materials furnished has been made to each contractor,
subcontractors, material suppliers and laborers simultaneously upon payment in
full for the labor performed or materials furnished by such contractor, material
supplier or laborer. Any failure or refusal on the part of Tenant to comply with
the foregoing shall be deemed a default under this lease.
16. Default. In the event Tenant, at any time during the term
hereof, shall default in the performance of any of its obligations under this
Agreement and such default shall continue for more than ten (10) days after
notice, either oral or written, of such default has been given by Landlord to
Tenant, Landlord, at its election, may terminate this Agreement. Such right of
Landlord to terminate this Agreement shall not be exclusive, however, and shall
not constitute or effect a limitation, restriction, or waiver of any other right
or remedy of Landlord provided by law and shall not relieve or release Tenant
from its obligation to indemnify Landlord and its tenants as herein set forth.
17. Notices. Any written notice or demand required or permitted to
be given or made hereunder shall be made by personal delivery, facsimile, or by
certified mail in a sealed envelope, postage prepaid, addressed as follows:
If to Landlord:
Hearst-Argyle Television, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President and C.O.O.
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If to Tenant:
The Hearst Corporation
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esquire
Vice President and General Counsel
Either party may, from time to time, designate any other address for this
purpose by written notice to the other party.
18. Brokers. Each party hereto represents and warrants that it has not
dealt with any broker in connection with the negotiation or execution of this
Lease. Each party hereto agrees to indemnify and hold the other party hereto
harmless from and against any and all damage, loss, cost or expense including,
without limitation, all reasonable attorneys' fees and disbursements, incurred
by reason of a breach by the indemnifying party of the foregoing representation
and warranty, and such obligations shall survive the expiration or sooner
termination of this Lease.
19. Force Majeure Event. Any obligation of Landlord which is delayed or
not performed due to acts of God, strike, riot, shortages of labor or materials,
war, governmental laws or action, or lack thereof, or any other causes of any
kind whatsoever which are beyond Landlord's reasonable control (each a "Force
Majeure Event"), shall not constitute a default hereunder and shall be performed
within a reasonable time after the end of such cause for delay or
nonperformance. Tenant shall likewise not be deemed in default in the
performance of any of its obligations under this Lease (other than monetary
obligations) if it is unable to fulfill such obligations by reason of a Force
Majeure Event, provided that the foregoing shall not serve to relieve Tenant
from the timely obligation to pay Base Rent or any other charges due by it
hereunder or from the performance of any other financial obligation of Tenant
under this Lease.
20. Tenant's Early Termination Option. Provided this Lease shall then
be in full force and effect, and Tenant shall not be in default hereunder beyond
any applicable notice or grace period, Tenant shall have the right, at any time
during the term hereof, to terminate this Lease ("Tenant's Termination Option"),
provided that (i) Tenant shall sell the Radio Stations to a third party and (ii)
Tenant shall give notice to Landlord of the exercise of Tenant's Termination
Option (the "Termination Option Notice") not later than ninety (90) days prior
to the intended termination date (the "Early Termination Date"). If Tenant has
timely delivered the Termination Option Notice and continues to make all
payments due under this Lease and is not in default hereunder through the Early
Termination Date, then this Lease shall expire on the Early Termination Date
with the same force and effect as if the Early Termination Date were the
Expiration Date. In the event Tenant shall sell a Radio Station (rather than the
Radio Stations) then this Lease shall terminate only as to that portion of the
Leased Premises occupied
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by such Radio Station, provided the terms and conditions set forth above have
been complied with fully. The Lease shall, on or before the Early Termination
Date, be amended by Landlord to reflect, inter alia, the decrease in the amount
of square feet leased by Landlord to Tenant.
21. Construction of Language. The terms Lease, Lease Agreement, or
Agreement shall be inclusive of each other, and also shall include renewals,
extensions, or modifications of the Lease Agreement. Words of any gender used in
this Lease Agreement shall be held to include any other gender, and words of the
singular shall be held to include the plural and the plural to include the
singular when the sense requires. The paragraph headings and titles are not a
part of this Lease Agreement and shall have no effect upon the construction and
interpretation of any party hereof.
22. Governing Law. The construction, validity and enforceability of
this Agreement shall be governed by the laws of the State of Maryland, without
regard to its conflicts of laws principles.
23. Entire Agreement. This instrument contains the entire agreement
between the parties, and no statement, premise, inducement, representation or
prior agreement which is not contained in this written agreement shall be valid
or binding.
24. Amendment. No amendment, modification, alteration or revision of
this Lease Agreement shall be valid and binding unless made in writing and
signed by an officer of Tenant and by an officer of Landlord.
25. Binding Effect. This Lease shall be binding upon and shall inure to
the benefit of the parties hereto, their successors and assigns.
IN WITNESS WHEREOF, Hearst and Argyle have caused this Lease Agreement to be
executed as of the date first above written.
THE HEARST CORPORATION
ATTEST:
/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Assist Secretary By: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Name: Vice President
[Corporate Seal]
ATTEST: ARGYLE TELEVISION, INC.
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇ /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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Secretary By: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Name: Chief Financial Officer
Secretary & Treasurer
[Corporate Seal]
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EXHIBIT A
[FLOORPLAN THIRD FLOOR]
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[FLOORPLAN FOURTH FLOOR]
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EXHIBIT B
H E A R S T B R O A D C A S T I N G
EXPENSE ITEMS ALLOCATED TO RADIO
BASED ON 1997 BUDGET
UNIT: WBAL RADIO
AMOUNT ALLOCATED/ ALLOCATION
EXPENSE CATEGORY/ITEM CHARGED TO RADIO PERCENTAGE
---------------------------------------------------- ----------------------------- -----------------
Accounting: Accounting Expenses $ 28,330 30.0%
Accounting Salaries 110,439 30.0%
Telephone: Equipment Charges 77,016 30.0%
Utilities: Electric 67,008 30.0%
Water & Sewage 1,860 30.0%
Gas 10,250 30.0%
Insurance: Libel 6,780 30.0%
Property 15,180 20.0%
Casualty 34,470 20.0%
Other 14,790 30.0%
Taxes: Real Estate Taxes 26,160 30.0%
Personal Property 58,070 15.0%
Other 18,075 30.0%
Building Services: 169,485 30.0%
Other Payroll: News 51,996 Flat Charge
▇▇▇▇▇/▇▇▇▇▇▇ 34,112 Flat Charge
Telephone Operator 6,756 30.0%
Building Services 40,076 30.0%
Legal: FCC Retainer 8,040 34.0%
Miscellaneous: Other - Employee Outing 3,300 30.0%
Postage & Freight 13,670 Flat Charge
TOTAL: $798,863
Note: (1) Radio Picks up $96,292 in Expense
For Detour ▇▇▇▇
02/28/97
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