**Exhibit 10.1**

 

**TAX SHARING AGREEMENT**

 

THIS TAX SHARING AGREEMENT (“Agreement”) is entered into as of October 30,2008 by and between Hearst Holdings, Inc., a Delaware corporation (“Hearst”),and Hearst-Argyle Television, Inc., a Delaware corporation (“Argyle”).

 

RECITALS

 

WHEREAS, Hearst is the common parent of an affiliated group ofcorporations for U.S. federal income tax purposes within the meaning of Section 1504(a) ofthe Internal Revenue Code of 1986, as amended (the “Code”), and theHearst Group (as defined below) files and intends to continue to fileconsolidated U.S. federal income tax returns as permitted by Section 1501of the Code;

 

WHEREAS, as of July 1, 2008, the Argyle Group (as defined below)became a member of Hearst’s affiliated group of corporations (for U.S. federalincome tax purposes), and Argyle desires that the Argyle Group (as definedbelow) join in the filing of the Hearst Group’s consolidated U.S. federalincome tax return as of such date;

 

WHEREAS, certain members of the Argyle Group and certain members of theHearst Sub-Group (as defined below), desire that such members file and intendto file returns relating to Combined State Taxes (as defined below); and

 

WHEREAS, Hearst and Argyle desire to agree upon a method fordetermining the financial consequences to each party and their subsidiariesresulting from the filing of consolidated U.S. federal income tax returns andreturns related to Combined State Taxes; and

 

WHEREAS, Argyle desires Hearst to provide certain services to Argyle andHearst desires to provide certain services to Argyle, in each case, relating toU.S. federal, state, local and non-U.S. taxes.

 

NOW, THEREFORE, for good and valuable consideration, the receipt andsufficiency of which are hereby acknowledged, Hearst and Argyle, forthemselves, their successors and assigns, hereby agree as follows:

 

ARTICLE I

DEFINITIONS

 

1.1      Definitions.  For purposes of this Agreement, the terms setforth below shall have the following meanings.

 

“Argyle Combined State Tax Liability” shall mean, with respectto any taxable year (or portion thereof) and any jurisdiction, an amount ofCombined State Taxes determined in accordance with the principles set forth inthe definition of Argyle U.S. Federal Tax Liability.

 

“Argyle Separate Returns” shall mean any tax return required tobe filed by Argyle or a subsidiary of Argyle (including any consolidated,combined or unitary tax return) that does not include any member of the HearstSub-Group.

 

“Argyle U.S. Federal Tax Liability” shall mean, with respect toany taxable year (or portion thereof), the sum of the Argyle Group’s U.S.Federal Tax liability and any interest, penalties and other additions to suchtaxes for such taxable year, computed as if the Argyle Group were not and neverwere part of the Hearst Group, but rather were a separate affiliated group ofcorporations filing a consolidated U.S. federal income tax return pursuant to Section 1501of the Code, *provided*, *however*,that transactions with members of the Hearst Sub-Group shall be reflectedaccording to the provisions of the consolidated return regulations promulgatedunder the Code governing intercompany transactions, and any Deconsolidationshall trigger any deferred amounts, excess loss accounts or similar items.  Such computation shall be made (A) withoutregard to the income, deductions (including net operating loss and capital lossdeductions) and credits in any year of any member of the Hearst Sub-Group, (B) bytaking into account any Tax Asset of the Argyle Group in accordance with Section 2.1(c)(iv) hereof(without duplication), (C) as though the highest rate of tax specified insubsection (b) of Section 11 of the Code (or any other similar ratesapplicable to specific types of income) were the only rates set forth in thatsubsection, and with other similar adjustments as described in Section 1561of the Code, and (D) reflecting the positions, elections and accountingmethods used by the Hearst in preparing the consolidated U.S. federal incometax return for the Hearst Group.

 

----

 

“Argyle Group” shall mean, at any time, Argyle and any direct orindirect corporate subsidiaries of Argyle that would be eligible to join withArgyle, (i) with respect to U.S. Federal Taxes, in the filing of aconsolidated U.S. federal income tax return if Argyle were not consolidatedwith Hearst and (ii) with respect to Combined State Taxes, in the filingof a consolidated, combined or unitary income or franchise tax return if Argylewere not consolidated, combined or filing on a unitary basis with any member ofthe Hearst Sub-Group.

 

“Combined State Tax” means, with respect to each state or localtaxing jurisdiction, any income, franchise or similar tax payable to such stateor local taxing jurisdiction in which a member of the Argyle Group files taxreturns with a member of the Hearst Sub-Group, on a consolidated, combined orunitary basis for purposes of such income or franchise tax.

 

“Deconsolidation” means any event pursuant to which Argyleceases to be a subsidiary corporation includible in a consolidated tax returnof the Hearst Group for U.S. Federal Tax purposes.

 

“Final Determination” shall mean (i) with respect to U.S.Federal Taxes, a “determination” as defined in Section 1313(a) of theCode or execution of an Internal Revenue Service Form 870AD (or any othersettlement or resolution of U.S. Federal Tax intended to be final) and, withrespect to taxes other than U.S. Federal Taxes, any final determination ofliability in respect of a tax that, under applicable law, is not subject tofurther appeal, review or modification through proceedings or otherwise, (ii) anyfinal disposition of a tax issue by reason of the expiration of a statute oflimitations or (iii) the payment of any tax by Hearst with respect to anyitem disallowed or adjusted by any taxing authority where Hearst determines ingood faith, and after giving due consideration to any concerns or objectionsraised by Argyle, that no action should be taken to recoup such payment.

 

“Hearst Group” shall mean, at any time, Hearst and each directand indirect corporate subsidiary eligible to join with Hearst in the filing ofa consolidated U.S. federal income tax return.

 

“Hearst Sub-Group” shall mean, at any time, Hearst and each ofits direct and indirect corporate subsidiaries other than those subsidiariesthat are members of the Argyle Group.

 

“Post-Deconsolidation Tax Period” means (i) any tax periodbeginning and ending after the date of Deconsolidation and (ii) withrespect to a tax period that begins before and ends after the date of Deconsolidation,such portion of the tax period that commences on the day immediately after thedate of Deconsolidation.

 

“Pre-Deconsolidation Tax Period” means (i) any tax periodbeginning and ending before or on the date of Deconsolidation and (ii) withrespect to a period that begins before and ends after the date ofDeconsolidation, such portion of the tax period ending on and including thedate of Deconsolidation.

 

“Tax Asset” means any net operating loss, net capital loss,investment tax credit, foreign tax credit, charitable deduction or any otherdeduction, credit or tax attribute which could reduce taxes (including, withoutlimitation, deductions and credits related to alternative minimum taxes).

 

“U.S. Federal Tax” means any tax imposed under Subtitle A of theCode, including any interest, penalties or additions to tax.

 

1.2      Internal References.  Unless the context indicates otherwise,references to Articles, Sections and paragraphs shall refer to thecorresponding articles, sections and paragraphs in this Agreement andreferences to the parties shall mean the parties to this Agreement.

 

ARTICLE II

TAX SHARING

 

2.1      Tax Sharing.

 

(a)  General. Subject to Section 2.1(c)(iv) below, for each taxable year (orportion thereof) of the Hearst Group during which income, loss, or creditagainst tax of the Argyle Group are includible in the consolidated U.S. federalincome tax return of the Hearst Group, Argyle shall pay to Hearst an amountequal to the Argyle U.S. Federal Tax Liability, and for each taxable period duringwhich income, loss or credit against tax of any member of the Argyle Group areincludible in a return relating to a Combined State Tax, Argyle shall payHearst an amount equal to the Argyle Combined State Tax Liability for suchtaxable period, each as shown on the Pro Forma Returns (as defined in paragraph(c) below) in the manner specified in Sections 2.1(b) and 2.1(c)(ii).

 

(b)  Estimated Payments.  Hearst shall determine the amount of theestimated tax installment of the Argyle U.S. Federal Tax Liability(corresponding to Hearst’s estimated U.S. Federal Tax installment), asdetermined under the 

 

----

 

principles of Section 2.1(a) of thisAgreement, and shall provide Argyle with notice of such amount.  Argyle shall, within 5 business days ofreceipt of such notice (but in no event earlier than 5 business days prior tothe due date of Hearst’s corresponding estimated tax payment), pay to Hearstthe amount set forth in such notice. Hearst shall determine under provisions of applicable law the amount ofthe estimated tax installment of the Argyle Combined State Tax Liability(corresponding to the relevant estimated Combined State Tax installment), asdetermined under the principles of Section 2.1(a) of thisAgreement.  Argyle shall, within 5business days of receipt of such notice (but in no event earlier than 5business days prior to the due date of Hearst’s corresponding estimated taxpayment), pay to Hearst the amount so determined.  Hearst shall in good faith give dueconsideration to any concerns or objections raised by Argyle with respect tothe amounts set forth in the foregoing notices.

 

(c)  Payment of Taxes at Year-End.

 

(i)   On orbefore the due date (including all applicable and valid extensions) for theHearst Group’s consolidated U.S. federal income tax return, Hearst shallprepare a pro forma U.S. Federal Tax return (a “Pro Forma U.S. FederalReturn”) of the Argyle Group reflecting the Argyle U.S. Federal TaxLiability.  On or before the due date foreach Combined State Tax return, Hearst shall prepare the relevant pro formaCombined State Tax return (each a “Pro Forma Combined State Return” andtogether with the Pro Forma U.S. Federal Return, the “Pro Forma Returns”)of the Argyle Group reflecting the relevant Argyle Combined State Tax Liability.  The Pro Forma Returns shall be prepared ingood faith and in a manner generally consistent with past practice.  Hearst shall provide Argyle with copies ofsuch Pro Forma Returns on or prior to their due date, and Argyle shall have theright at its own expense to review, ask questions and provide comments(including asking questions of and providing comments to Deloitte (or suchother accounting firm engaged to review such returns pursuant to Section 2.1(e) below))with respect to the Pro Forma Returns, and Hearst shall in good faith give dueconsideration to any such questions or comments raised by Argyle.

 

(ii)  Argyle shall pay to Hearst, or Hearst shallpay to Argyle, as appropriate, an amount equal to the difference, if any,between the Argyle U.S. Federal Tax Liability reflected on the Pro Forma U.S.Federal Return for such year and the aggregate amount of the estimatedinstallments of the Argyle U.S. Federal Tax Liability for such year madepursuant to Section 2.1(b).  Argyleshall pay to Hearst, or Hearst shall pay to Argyle, as appropriate, an amountequal to the difference, if any, between the Argyle Combined State TaxLiability reflected on the relevant Pro Forma Combined State Tax Return forsuch year and the aggregate amount of the estimated installments paid for suchyear with respect to the corresponding Argyle Combined State Tax Liabilitypursuant to Section 2.1(b).  Hearstshall provide notice to Argyle of amounts payable pursuant to this Section 2.1(c)(ii),and Hearst shall in good faith give due consideration to any concerns orobjections raised by Argyle with respect to such amounts.  Amounts payable pursuant to this Section 2.1(c)(ii) shallbe paid within ten (10) days of the delivery of the related Pro FormaReturns.

 

(iii)  In the event that Hearst makes a cashdeposit with a taxing authority in order to stop the running of interest ormakes a payment of tax and correspondingly takes action to recoup such payment(such as suing for a refund), Argyle shall pay to Hearst an amount equal toArgyle’s share of the amount so deposited or paid (calculated in a mannerconsistent with the determinations provided in this Article 2).  Upon receipt by Hearst of a refund of anyamounts paid by it in respect of which Argyle shall have advanced an amounthereunder, Hearst shall pay to Argyle the amount of such refund, together withany interest received by it on such refund, as soon as practicable followingreceipt.  If and to the extent that anyclaim for refund or contest based thereupon shall be unsuccessful, the paymentby Argyle under this Section 2.1(c)(iii) shall be credited towardArgyle’s obligations under this Section 2.1(c)(iii) and any otherpayment obligation of Argyle under Section 2.1(d) below.

 

(iv)  If a Pro FormaReturn reflects a Tax Asset of the Argyle Group, Hearst shall pay to Argyle(including by crediting amounts otherwise payable by Argyle pursuant to thisAgreement) an amount equal to the actual tax savings that would otherwise havebeen achieved by the Argyle Group as a result of such Tax Asset determined asif the Argyle Group was not (and had not been) a member of the Hearst Group;provided, however, that to the extent Hearst (x) is not required to pay anamount to Argyle with respect to a Tax Asset of the Argyle Group pursuant tothe foregoing clause of this Section 2.1(c)(iv) (because, forexample, such Tax Asset would have expired unused if the Argyle Group was not(and had not been) a member of the Hearst Group) and (y) such Tax Asset ofthe Argyle Group may under applicable law be used (or has been used) to reducethe U.S. Federal Tax Liability or state or local tax liability of the HearstSub-Group for any taxable period, Hearst shall pay to Argyle (including bycrediting amounts otherwise payable by Argyle pursuant to this Agreement) anamount equal to fifty (50) percent of the actual tax savings produced by suchTax Asset at the time such Tax Asset of the Argyle Group would have expired ifthe Argyle Group was not (and had not been) a member of the Hearst Group.

 

----

 

(d)  Treatment of Adjustments.  If any adjustment is made in a consolidatedU.S. federal income tax return of the Hearst Group or in a return relating to aCombined State Tax (including as a result of a Final Determination) after thefiling thereof in which income or loss of the Argyle Group (or any memberthereof) is included, then within 10 business days notice of such event, Argyleshall pay to Hearst or Hearst shall pay to Argyle, as the case may be, thedifference between all payments actually made under Section 2.1 withrespect to the taxable year or period covered by such tax return and allpayments that would have been made under Section 2.1 taking suchadjustment into account, together with any penalties actually paid and anyapplicable interest paid or received in respect of such adjustment.

 

(e)  Preparation of Returns and Contests.  So long as (i) the Hearst Group electsto file consolidated U.S. federal income tax returns as permitted by Section 1501of the Code or (ii) any Combined State Tax return is filed, Hearst shallprepare and file such returns and any other returns, documents or statementsrequired to be filed with the Internal Revenue Service with respect to thedetermination of the U.S. Federal Tax liability of the Hearst Group and withthe appropriate taxing authorities with respect to the determination of aCombined State Tax liability.  All suchreturns (including the Pro Forma Returns) shall be determined by Hearst in goodfaith and shall be reviewed by Deloitte (or such other nationally recognizedfirm of independent public accountants as may be retained by Hearst at the timeof such determination).  Without limitingthe foregoing, Hearst shall have the right with respect to any consolidatedU.S. federal income tax returns or returns relating to a Combined State Taxthat it has filed or will file to determine (i) the manner in which suchreturns, documents or statements shall be prepared and filed, including,without limitation, the manner in which any item of income, gain, loss,deduction or credit shall be reported, (ii) whether any extensions shouldbe requested, and (iii) the elections that will be made by any member of theHearst Group.  In addition, Hearst shallhave the right, in good faith, to (i) contest, compromise or settle any adjustmentor deficiency proposed, asserted or assessed as a result of any audit of anyconsolidated U.S. federal income tax return or return relating to a CombinedState Tax, (ii) file, prosecute, compromise or settle any claim forrefund, and (iii) determine whether any refunds shall be received by wayof refund or credited against tax liabilities. In addition, Hearst shall prepare and file ruling requests and take allother actions on behalf of any member of the Hearst Group that it deemsappropriate.  Hearst shall, to the extentsuch information is available, advise Argyle of any significant Argyle taxissue being contested by the U.S. federal, state, local or other taxingauthorities (an “Argyle Tax Issue”), and shall keep Argyle informed withrespect to any contest, compromise or settlement thereof.  In the case of any audit or examination by,or contest or litigation against, any taxing authority (a “Tax Proceeding”), ineach case, with respect to any significant Argyle Tax Issue, (i) Argyleshall have the right to participate, at its own expense, in such TaxProceeding, (ii) Hearst shall provide Argyle with a timely and reasonablydetailed account of each stage of such Tax Proceeding, (iii) Hearst shallconsult with Argyle before taking any significant action in connection withsuch Tax Proceeding, (iv) Hearst shall consult with Argyle and offerArgyle an opportunity to comment before submitting any written materialsprepared or furnished in connection with such Tax Proceeding, (v) Hearstshall defend such Tax Proceeding diligently and in good faith as if it were theonly party in interest in connection with such Tax Proceeding and (vi) Hearstshall not settle, compromise or abandon any such Tax Proceeding withoutproviding written notice of such proposed settlement, compromise or abandonmentand giving due consideration to any concerns or objections raised by Argylewith respect to such proposed settlement, compromise or abandonment, if suchsettlement, compromise or abandonment could have an adverse impact onArgyle.  Argyle shall fully cooperatewith regard to any and all Tax Proceedings to the extent reasonably requestedby Hearst (which cooperation may include, for example, providing Hearst withArgyle tax returns, books and records, and access to Argyle’s internal andexternal financial and tax personnel).

 

2.2      Reimbursement for CertainServices.  Hearst shall provide servicesin connection with this Agreement, including but not limited to, (i) thoseservices relating to the preparation of tax returns (including Pro FormaReturns) described herein and (ii) services relating to other activitiesdescribed in Section 2.1(e) and Section 2.3.  Argyle shall reimburse Hearst for itsallocated share of any and third-party fees and expenses incurred by Hearst withrespect to such services, which allocation shall be determined by Hearst ingood faith.  Hearst shall calculate theamount payable and provide notice to Argyle with respect to such amount, andArgyle shall pay such amount to Hearst within fifteen (15) business days ofreceipt of the notice.

 

2.3      Additional Services.  Hearst will provide the tax servicesdescribed in this Article II with respect to all of the separate state,local and foreign taxes of any members of the Argyle Group that do not relateto consolidated U.S. federal income taxes or Combined State Taxes.  Hearst will provide these services in amanner consistent with the principles contained in Article II and Argyleshall reimburse Hearst for such services in a manner consistent with the IntercompanyServices Agreement, dated as of August 29, 1997, as amended, betweenHearst and Argyle.** **Argyle shall have the exclusiveobligation and right to prepare and file, or to cause to be prepared and filed,all federal and state income tax returns (including any amended returns) andcontrol all examinations of federal and state income tax returns that pertainto tax periods ending prior to the effective date of this Agreement.

 

----

 

ARTICLE III

 

POST-DECONSOLIDATION

 

3.1.     Additional Rights andLiabilities Post-Deconsolidation.

 

(a)  Argyle covenants that on or after a Deconsolidation it will not, norwill it cause or permit any member of the Argyle Group to make or change anytax election, change any accounting method, amend any tax return or take anytax position on any tax return, in each case in respect of anyPre-Deconsolidation Tax Period, that would reasonably be expected to result inany increased tax liability or reduction of any Tax Asset of the Hearst Groupor any member thereof (immediately after the Deconsolidation) in respect of anyPre-Deconsolidation Tax Period, without first obtaining the prior writtenconsent of Hearst (which consent shall not be unreasonably withheld,conditioned or delayed).

 

(b)   Inthe event of a Deconsolidation, Hearst may, at its option, elect and Argyleshall join Hearst in electing (if necessary), to reattribute to itself certainTax Assets of the Argyle Group pursuant to Treasury Regulation Section 1.1502-20(g) and,if Hearst makes such election, Argyle shall comply with the requirements ofTreasury Regulation Section 1.1502-20(g)(4)).  If Hearst elects to reattribute to itself anyTax Assets under this Section 3.1(b), Hearst shall pay Argyle an amountequal to the anticipated tax savings (which would include refunds actuallyreceived) produced by such Tax Asset.

 

(c)  Hearst agrees to pay to Argyle the actualtax benefit received by Hearst Group from the use in any Pre-DeconsolidationTax Period of a carryback of any Tax Asset of the Argyle Group from aPost-Deconsolidation Tax Period.  Suchbenefit shall be considered equal to the excess of (i) the amount of U.S.Federal Taxes or state or local taxes, as the case may be, that would have beenpayable by the Hearst Group in the absence of such carryback over (ii) theamount of U.S. Federal Taxes or state or local taxes, as the case may be,actually payable by the Hearst Group. Payment of the amount of such benefit shall be made within 10 businessdays of the filing of the applicable tax return for the taxable year in whichthe Tax Asset is utilized.  If,subsequent to the payment by Hearst to Argyle of any such amount, there shallbe (A) a Final Determination which results in a disallowance or areduction of the Tax Asset so carried back or (B) a reduction in theamount of the benefit realized by the Hearst Group as a result of any other TaxAsset that arises in a Post-Deconsolidation Tax Period, Argyle shall repay toHearst, within 10 business days of such event described in (A) or (B) (an“Event” or, collectively, the “Events”) any amount that would nothave been payable to Argyle pursuant to this Section 3.1(c) had theamount of the benefit been determined in light of the Events.  Argyle shall hold Hearst harmless for anypenalty or interest payable by any member of the Hearst Group, as a result ofany Event described in clause (A) above. Any such amount shall be paid by Argyle to Hearst within 10 businessdays of the payment by Hearst or any member of the Hearst Group of any suchinterest or penalty.

 

ARTICLE IV

 

MISCELLANEOUS

 

4.1.  Limitation ofLiability.  Neither Hearst nor Argyleshall be liable to the other for any special, indirect, incidental orconsequential damages of the other arising in connection with this Agreement; *provided*, *however* that inthe event that (i) the Internal Revenue Service (or other competent taxingauthority) asserts a tax liability directly against Argyle or any member of theArgyle Group, pursuant to its authority under Treasury Regulation Section 1.1502-6(or other relevant statutory authority), (ii) Argyle has made all paymentsand performed all of its obligations otherwise required of it under thisAgreement with respect to such liability or otherwise, and (iii) Hearstwas given the opportunity to contest, settle or compromise such liabilitypursuant to Section 2.1(e) of this Agreement, then Hearst shallindemnify Argyle for actual payments made after a Final Determination withrespect to such liability to the extent that such payments exceed Argyle’sshare of such liability (calculated in a manner that avoids double-countingunder this Agreement), such share determined in accordance with Article IIof this Agreement.  Notwithstanding theforegoing, Hearst shall not be required to indemnify Argyle under this Section 4.1except to the extent that the actual payments made by Argyle with respect tothe tax liability over Argyle’s share of such liability exceeds $25,000.

 

4.2      Tax Characterization ofPayments.  For all Tax purposes andnotwithstanding any other provision of this Agreement, to the extent permittedby applicable law, the parties hereto shall treat any payment made pursuant tothis Agreement (other than any payment made in satisfaction of an intercompanyobligation and a payment made pursuant to Sections 2.2 and 2.3) as a capital contributionor dividend distribution, as the case may be, and, accordingly, as notincludible in the taxable income of the recipient.  If, as a result of a Final Determination, itis determined that the receipt or accrual of any payment made under this Agreementis taxable to the recipient, the party responsible for such payment 

 

----

 

shall pay to such recipient an amount equal to anyincrease in the taxes of the recipient as a result of receiving the payment(grossed up to take into account such payment, if applicable).

 

4.3.  Subsidiaries.

 

(a)  Performance. Hearst agrees and acknowledges that Hearst shall be responsible for theperformance of the obligations of each member of the Hearst Sub-Group hereunderapplicable to such subsidiary.  Argyleagrees and acknowledges that Argyle shall be responsible for the performance byeach member of the Argyle Group of the obligations hereunder applicable to suchmember.

 

(b)  Application to Present and Future Subsidiaries.  This Agreement is being entered into by Hearstand Argyle on behalf of themselves and each member of the Hearst Sub-Group andArgyle Group, respectively.  ThisAgreement shall constitute a direct obligation of each such member and shall bedeemed to have been readopted and affirmed on behalf of any corporation whichbecomes a member of the Hearst Sub-Group or Argyle Group in the future.

 

4.4.  Cooperation.  Hearst and Argyle shall cooperate fully inthe implementation of this Agreement, including but not limited to, providingpromptly to the requesting party such assistance and documentation as may bereasonably requested by such party in connection with any of the activitiesdescribed in Article II or Article III.  In addition, Hearst and Argyle shall retainall relevant tax records for relevant open periods in accordance with pastpractice.

 

4.5.  Agent.  Each member of the Argyle Group herebyirrevocably appoints Hearst as its agent and attorney-in-fact to take anyaction as Hearst may deem necessary or appropriate to effect Section 2.1including, without limitation, those actions specified in Treasury Regulation Section 1.1502-77(a).

 

4.6.     Ratification.  This Agreement is subject to ratification bythe independent members of Argyle’s Board of Directors in all respects.

 

4.7      Amendments.  This Agreement may not be amended orterminated orally, but only by a writing duly executed by or on behalf of theparties hereto.  Any such amendment shallbe validly and sufficiently authorized for purposes of this Agreement if it issigned on behalf of Hearst and Argyle by any of their respective presidents orvice presidents.

 

4.8.     Term.  Subject to Article III, this Agreementshall expire upon the date of Deconsolidation with respect to allPost-Deconsolidation periods; *provided*, *however*, that all rights and obligations arising hereunderwith respect to a Pre-Deconsolidation Tax Period shall survive until they arefully effectuated or performed and, *provided*, *further*, that notwithstanding anything in this Agreement tothe contrary, all rights and obligations arising hereunder with respect to aPost-Deconsolidation Tax Period shall remain in effect and its provisions shallsurvive for the full period of all applicable statutes of limitation (givingeffect to any extension, waiver or mitigation thereof).

 

4.9.  Effective Date.  This Agreement shall be effective as of thedate it is ratified by the independent members of Argyle’s Board of Directors(the “Ratification Date”), and after such time it shall govern all opentaxable periods and shall supersede all prior agreements as to the allocationof U.S. federal income tax liability between the parties to this Agreement forall such open taxable years and for all subsequent taxable years.  As of the Ratification Date, all such prioragreements are hereby canceled with respect to members of the Argyle Group.

 

4.10.  Severability.  If any provision of this Agreement or theapplication of any such provision to any party or circumstances shall bedetermined by any court of competent jurisdiction to be invalid, illegal orunenforceable to any extent, the remainder of this Agreement or such provisionor the application of such provision to such party or circumstances, other thanthose to which it is so determined to be invalid, illegal or unenforceable,shall remain in full force and effect to the fullest extent permitted by lawand shall not be affected thereby, unless such a construction would beunreasonable.

 

4.11. Notices.  All notices andother communications required or permitted hereunder shall be in writing, shallbe deemed duly given upon actual receipt, and shall be delivered (a) inperson, (b) by registered or certified mail, postage prepaid, returnreceipt requested, or (c) by facsimile or other generally accepted meansof electronic transmission (provided that a copy of any notice deliveredpursuant to this clause (c) shall also be sent pursuant to clause (b),addressed as follows:

 

(a)   If toArgyle, to:

 

Harry T. Hawks

Executive Vice President &

Chief Financial Officer

Hearst-Argyle Television, Inc.

300 West 57th Street

New York, New York 10019

 

----

 

(b)   If to Hearst, to:

 

David L. Kors

Hearst Tower

214 North Tryon St.

Charlotte, North Carolina 28202

 

or to such other addresses or telecopy numbers as may be specified bylike notice to the other parties.

 

4.12.  Further Assurances.  Hearst and Argyle shall execute, acknowledgeand deliver, or cause to be executed, acknowledged and delivered, suchinstruments and take such other action as may be necessary or advisable tocarry out their obligations under this Agreement and under any exhibit,document or other instrument delivered pursuant hereto.

 

4.13.  Entire Agreement.  This Agreement constitutes the entireunderstanding of the parties hereto with respect to the subject matter hereof.

 

4.14.  Successors.  This agreement shall be binding on and inureto the benefit of any successor, by merger, acquisition of assets or otherwise,to any of the parties hereto (including but not limited to any successor ofHearst and Argyle succeeding to the tax attributes of such party under Section 381of the Code), to the same extent as if such successor had been an originalparty hereto.  In the event that Hearstceases to be the common parent (within the meaning of Section 1504 of theCode) of the Hearst Group, (i) this Agreement shall remain in effect forand in respect of tax periods during which Hearst was the common parent of theHearst Group and (ii) for tax periods following the date on which Hearstceases to be the common parent of the Hearst Group and during which another director indirect subsidiary of the Hearst Corporation becomes the common parent ofthe affiliated group (within the meaning of Section 1504 of the Code) ofwhich Hearst was formerly the common parent, this Agreement shall beautomatically modified to provide that each reference to “Hearst” (e.g., in “HearstGroup” and “Hearst Sub-Group”), other than as set forth in this Section 4.14,shall be replaced with the name of the new common parent of such affiliatedgroup.

 

4.15.  Authorization, etc.  Each of the parties hereto hereby representsand warrants that it has the power and authority to execute, deliver andperform this Agreement, that this Agreement has been duly authorized by allnecessary corporate action on the part of such party that this Agreement constitutesa legal, valid and binding obligation of each such party and that theexecution, delivery and performance of this Agreement by such party does notcontravene or conflict with any provision of law or of its charter or bylaws orany agreement, instrument or order binding on such party.

 

4.16.  Section Captions.  Section captions used in this Agreementare for convenience and reference only and shall not affect the construction ofthis Agreement.

 

4.17.  Governing Law.  THIS AGREEMENT SHALL BE GOVERNED BY ANDCONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVINGEFFECT TO LAWS AND PRINCIPLES RELATING TO CONFLICTS OF LAW.

 

4.18.  Counterparts.  This Agreement may be executed in any numberof counterparts, each of which shall be deemed an original, but all of whichtogether shall constitute one and the same Agreement.

 

4.19.  Proration.  For the years in which the Argyle Group joinsor leaves the Hearst Group, the parties will elect to ratably allocate items(other than extraordinary items) of the Argyle Group in accordance withrelevant provisions of the Treasury Regulation Section 1.1502-76.

 

4.20.  Argyle SeparateReturns.  Argyle shall prepare and fileor cause to be prepared and filed all Argyle Separate Returns (including anyamended tax returns).  Argyle shall pay,or cause to be paid, and shall be responsible for, any and all taxes requiredto be paid with respect to or required to be reported on any Argyle SeparateReturn (including any increase in such tax as a result of a FinalDetermination).  Argyle shall control, atits own expense, all Tax Proceedings relating to Argyle Separate Returns.  Argyle shall be entitled to any refunds orcredits of or relating to any Argyle Separate Returns.

 

----

 

IN WITNESS WHEREOF, each of the parties hereto has caused thisagreement to be executed by a duly authorized officer as of the date firstabove written.

 

 
|   | HEARST HOLDINGS, INC.           |
|--------|---------------------------------|
|   |                            |
|   |                            |
|   | By:                             |   /s/ Ron  Doerfler |
|   |                            | Name:  Ron Doerfler |
|   |                            | Title:  Senior Vice President and |
|   |                            |          Chief  Financial Officer |
|   |                            |   |
|   |                            |   |
|   | HEARST-ARGYLE  TELEVISION, INC. |
|   |                            |   |
|   |                            |   |
|   | By:                             |   /s/ Harry T. Hawks |
|   |                            | Name: | Harry T. Hawks |
|   |                            | Title: | Executive Vice  President and |
|   |                            |   | Chief Financial Officer |

 

----