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EXHIBIT 10.74
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EXHIBIT 10.74
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TIME BROKERAGE AGREEMENT
BY AND BETWEEN
▇▇▇▇▇▇ COMMUNICATIONS OF SAN ▇▇▇▇, INC.
AND
S & E NETWORK INC.
FOR
TELEVISION STATIONS WSJN-TV, SAN ▇▇▇▇, PUERTO RICO
WKPV(TV), ▇▇▇▇▇, PUERTO RICO
WJWN-TV, SAN SEBASTIAN, PUERTO RICO
JANUARY 31, 1996
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TABLE OF CONTENTS
Page
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SECTION 1. LEASE OF STATION AIR TIME . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Effective Date; Term . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Scope . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Option to Renew . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.6 Licensee Operation of Station . . . . . . . . . . . . . . . . . . . . . . 2
1.7 Licensee Representations and Warranties . . . . . . . . . . . . . . . . . 3
1.8 Licensee Funding. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.9 Programmer Responsibility . . . . . . . . . . . . . . . . . . . . . . . . 4
1.10 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.11 Programming Services . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2. STATIONS OBLIGATIONS TO ITS COMMUNITY OF LICENSE. . . . . . . . . . . . . . . . . 4
2.1 Licensee Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.2 Additional Licensee Obligations . . . . . . . . . . . . . . . . . . . . . 5
2.3 Responsibility for Employees and Expenses . . . . . . . . . . . . . . . . 5
SECTION 3. STATIONS PROGRAMMING POLICIES . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.1 Broadcast Stations Programming Policy Statement . . . . . . . . . . . . . 5
3.2 Licensee Control of Programming . . . . . . . . . . . . . . . . . . . . . 6
3.3 Programmer Compliance with Copyright Act . . . . . . . . . . . . . . . . . 6
3.4 Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.5 Children's Television Advertising . . . . . . . . . . . . . . . . . . . . 7
3.6 Payola . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.7 Cooperation on Programming . . . . . . . . . . . . . . . . . . . . . . . . 7
3.8 Staffing Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 4. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.1 Programmer's Indemnification . . . . . . . . . . . . . . . . . . . . . . . 8
4.2 Licensee's Indemnification . . . . . . . . . . . . . . . . . . . . . . . . 8
4.3 Limitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.4 Time Brokerage Challenge . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 5. ACCESS TO PROGRAMMER MATERIALS AND CORRESPONDENCE . . . . . . . . . . . . . . . . 8
5.1 Confidential Review . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.2 Political Advertising . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 6. TERMINATION AND REMEDIES UPON DEFAULT . . . . . . . . . . . . . . . . . . . . . . 9
6.1 Voluntary Termination . . . . . . . . . . . . . . . . . . . . . . . . . . 9
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6.2 Automatic Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
6.3 Force Majeure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
6.4 Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 7. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
7.1 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
7.2 Call Letters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7.3 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7.4 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7.5 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7.6 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7.7 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7.8 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7.9 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
7.10 Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
7.11 No Joint Venture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
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TIME BROKERAGE AGREEMENT
TIME BROKERAGE AGREEMENT, made this 31st day of January, 1996, by and
between S & E Network Inc., a Puerto Rico corporation (the "Licensee") and
▇▇▇▇▇▇ Communications of San ▇▇▇▇, Inc., a Florida corporation (the
"Programmer").
WHEREAS, Licensee is the owner and operator of Television Stations
WSJN-TV, San ▇▇▇▇, Puerto Rico, WKPV(TV), ▇▇▇▇▇, Puerto Rico and WJWN-TV, San
Sebastian, Puerto Rico (the "Stations");
WHEREAS, Licensee operates Stations WKPV(TV) and WJWN-TV as satellites
of Station WSJN-TV;
WHEREAS, Licensee, Programmer and Licensee's sole shareholder, Housing
Development Associates S.E. ("HDA") have simultaneously entered into a Stock
Purchase Agreement providing for Programmer to purchase fifty percent (50%) of
the Stock of Licensee following receipt of all required FCC approvals;
WHEREAS, Programmer is involved in television station ownership and
operation;
WHEREAS, the Licensee wishes to retain Programmer to provide
programming for the Stations that is in conformity with the Station's policies
and procedures, FCC policies for time brokerage arrangements, and the
provisions hereof;
WHEREAS, Programmer agrees to use the Stations to broadcast such
programming of its selection that is in conformity with all rules, regulations
and policies of the FCC, subject to Licensee's full authority to manage and
control the operation of the Station's; and
WHEREAS, Programmer and Licensee agree to cooperate to make this Time
Brokerage Agreement work to the benefit of the public and both parties and as
contemplated in this Agreement.
NOW, THEREFORE, in consideration of the above recitals and mutual
promises and covenants contained herein, the parties, intending to be legally
bound, agree as follows:
SECTION 1. LEASE OF STATION AIR TIME
1.1 Representations. Both Licensee and Programmer represent that
they are legally qualified, empowered and able to enter into this Agreement and
that the execution, delivery, and performance hereof shall not constitute a
breach or violation of any material agreement, contract or other obligation to
which either party is subject or by which it is bound.
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1.2 Effective Date; Term. The effective date of this Agreement
shall be February 1, 1996. It shall continue in force for an initial term of
twelve months from that date unless otherwise extended or terminated as set
forth below.
1.3 Scope. During the term of this Agreement and any renewal
thereof, Licensee shall make available to Programmer broadcast time upon the
Stations as set forth in this Agreement. Programmer shall deliver such
programming, at its expense, to the Stations' transmitter facilities or other
authorized remote control points as reasonably designated by Licensee and
Programmer shall have the right to produce its programming (including
commercials and related production facilities) from the Stations' existing
studio and production facilities. Subject to Licensee's reasonable approval,
as set forth in this Agreement, Programmer shall provide programming of
Programmer's selection complete with commercial matter, news, public service
announcements and other suitable programming to the Licensee up to one hundred
sixty-two hours per week. Notwithstanding the foregoing, the Licensee may
designate such additional time as it may require without any adjustment of the
monthly consideration to be paid to Licensee under Section 1.5 for the
broadcast of certain programming pursuant to Licensee's existing broadcast
agreement with El Comandante Operating Company, Inc. and any other programming
necessary for the Stations to broadcast news, public affairs, children's,
religious and non-entertainment programming as required by the FCC. All
program time not reserved by or designated for Licensee shall be available for
use by Programmer and no other party.
1.4 Option to Renew. Subject to the termination provisions of
Section 6 hereof, this Agreement may be renewed for an additional term as
mutually agreed upon by the Licensee and the Programmer except that this
Agreement shall be automatically extended for such time as is necessary to
permit the FCC to approve Programmer's purchase of Stock in the Licensee
pursuant to the Stock Purchase Agreement.
1.5 Consideration. As consideration for the air time made
available hereunder Programmer shall make payments to Licensee as set forth in
Schedule 1.5.
1.6 Licensee Operation of Station. Licensee will have full
authority, power and control over the management and operations of the Stations
during the term of this Agreement and during any renewal of such term.
Licensee will bear all responsibility for the Stations' compliance with all
applicable provisions of the Communications Act of 1934, as amended, (the
"Act") the rules, regulations and policies of the FCC and all other applicable
laws. Licensee shall be solely responsible for and pay in a timely manner all
operating costs of the Stations, including but not limited to maintenance of
the studio and transmitting facility and costs of electricity, except that
Programmer shall be responsible for the costs of its programming as provided in
Sections 1.8 and 2.3 hereof. Licensee shall employ at its expense management
level and other employees who will direct the day-to-day operations of the
Stations, and who will
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report to and be accountable to the Licensee. Licensee shall be responsible
for the salaries, taxes, insurance and related costs for all personnel employed
by the Stations and shall maintain insurance satisfactory to Programmer
covering the Stations' transmission facilities.
1.7 Licensee Representations and Warranties. Licensee represents
and warrants as follows:
Licensee owns and holds or will hold all licenses and other
permits and authorizations necessary for the operation of the Stations, and
such licenses, permits and authorizations are and will be in full force and
effect throughout the term of this Agreement. There is not now pending, or to
Licensee's best knowledge, threatened, any action by the FCC or by any other
party to revoke, cancel, suspend, refuse to renew or modify adversely any of
such licenses, permits or authorizations. Licensee shall not take any action
or omit to take any action which would have a material adverse impact upon the
Licensee, the Stations or upon Licensee's ability to perform this Agreement.
All reports and applications required to be filed with the FCC or any other
governmental body have been, and during the course of the term of this
Agreement or any renewal thereof, will be filed in a timely and complete
manner. During the term of this Agreement and any renewal thereof, Licensee
shall not dispose of, transfer, assign or pledge any of Licensee's assets and
properties except with the prior written consent of the Programmer, if such
action would materially adversely affect Licensee's performance hereunder or
the business and operations of Licensee or the Stations permitted hereby.
1.8 Licensee Funding.
(a) Licensee shall pay, in a timely fashion, all of the
expenses incurred in operating the Stations including salaries and benefits of
its employees, lease payments, utilities, taxes, programming expenses, etc., as
set forth in Schedule 1.8 (except those for which a good faith dispute has been
raised with the vendor or taxing authority the "Operating Expenses" and all
capital improvements identified on Schedule 1.8A (the Capital Expenses")
hereto. To the extent that Licensee's operating cash flow is insufficient to
pay the Stations' Operating Expenses and Capital Expenses each month,
Programmer shall provide the necessary funds to cover the Operating Expenses
and one-half of the Capital Expenses upon request by Licensee. Such funds
shall be provided by Programmer as loans to Licensee. Funds provided as loans
for Capital Expenses shall be evidenced by and payable in accordance with a
Capital Funding Note in the form attached as Schedule 1.8B and funds provided
as loans for Operating Expenses shall be evidenced by and payable in accordance
with a Revolving Cash Flow Note in the form attached as Schedule 1.8C. The
Capital Funding Note shall be repaid in full before any payment shall be made
on the Revolving Cash Flow Note. Until payment in full of the Licensee's
obligations under the Capital Funding Note and the Revolving Cash Flow Note,
Licensee shall not declare or pay any dividends or repay any indebtedness to
HDA except for amounts payable to Licensee by
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Programmer pursuant to Section 1.5 hereto or as otherwise permitted under the
Stock Purchase Agreement.
To the extent that the Station's cash receipts exceed the Stations'
operating expenses (excluding non-cash charges), that amount shall be
distributed, on a quarterly basis, with one-half to HDA and one-half to
Programmer (as a programming service fee); provided, however, that if there are
any outstanding amounts due under the Capital Funding Note or the Revolving
Cash Flow Note, those amounts shall be paid prior to any distribution to HDA or
Programmer.
1.9 Programmer Responsibility. Programmer shall be solely
responsible for any expenses incurred in the origination and/or delivery of its
programming and for any publicity or promotional expenses incurred by
Programmer, including, without limitation, ASCAP and BMI music license fees for
all programming provided by Programmer. Such payments by Programmer shall be
in addition to any other payments to be made by Programmer under this
Agreement.
1.10 Contracts. Programmer will enter into no third-party
contracts, leases or agreements which will bind Licensee in any way except with
Licensee's prior written approval.
1.11 Programming Services. Subject to the direction and control of
Licensee, Programmer shall perform all marketing, sales, billing, collection,
engineering, and maintenance services requested by Licensee in connection with
Licensee's operation of the Stations.
SECTION 2. STATIONS OBLIGATIONS TO ITS COMMUNITY OF LICENSE
2.1 Licensee Authority. Notwithstanding any other provision of
this Agreement, Programmer recognizes that Licensee has certain obligations to
broadcast programming to meet the needs and interests of viewers in the
Stations' service area and the educational and informational needs of children.
From time to time the Licensee shall air specific programming on issues of
importance to the local community and educational and informational programming
for children. Nothing in this Agreement shall abrogate the unrestricted
authority of the Licensee to discharge its obligations to the public and to
comply with the Act and the rules and policies of the FCC.
2.2 Additional Licensee Obligations. Although both parties shall
cooperate in the broadcast of emergency information over the Stations, Licensee
shall also retain the right to interrupt Programmer's programming in case of an
emergency or for programming which, in the good faith judgment of Licensee, is
of greater local or national public importance. Licensee shall also coordinate
with Programmer the Stations' hourly Stations identification and any other
announcements required to be aired by FCC rules. Licensee shall continue to
maintain a main studio, as that term is defined by the FCC, shall maintain its
local public inspection file in
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accordance with FCC rules, regulations and policies, and shall prepare and
place in such inspection file or files in a timely manner all material required
by Section 73.3526 of the FCC rules, including without limitation the Stations'
quarterly issues and program lists; information concerning the broadcast of
children's educational and informational programming; and documentation of
compliance with commercial limits applicable to certain children's television
programming. Programmer shall, upon request by Licensee, provide Licensee with
such information concerning Programmer's programs and advertising as is
necessary to assist Licensee in the preparation of such information. Licensee
shall also maintain the Stations logs, receive and respond to telephone
inquiries, and control and oversee any remote control point which may be
established for the Stations.
2.3 Responsibility for Employees and Expenses. Programmer shall
employ and be solely responsible for the salaries, taxes, insurance and related
costs for all personnel used in the production of its programming and
performance of its services hereunder (including, but not limited to,
salespeople, technical staff, traffic personnel, board operators and
programming staff). Licensee will provide and be responsible for the Stations'
personnel necessary for the broadcast transmission of its own programs
(including, without limitation, the Stations's General Manager and such
operational and other personnel as may be necessary or appropriate), and will
be responsible for the salaries, taxes, benefits, insurance and related costs
for all the Licensee's employees used in the broadcast transmission of its
programs and necessary to other aspects of the Stations operation. Whenever on
the Stations' premises, all personnel shall be subject to the overall
supervision of Licensee's General Manager.
SECTION 3. STATIONS PROGRAMMING POLICIES
3.1 Broadcast Stations Programming Policy Statement. Licensee has
adopted and will enforce a Broadcast Stations Programming Policy Statement (the
"Policy Statement"), a copy of which appears as Schedule 3.1 hereto and which
may be amended in a reasonable manner from time to time by Licensee upon notice
to Programmer. Programmer agrees and covenants to comply in all material
respects with the Policy Statement, to all rules and regulations of the FCC,
and to all changes subsequently made by Licensee or the FCC. Programmer shall
furnish or cause to be furnished the artistic personnel and material for the
programs as provided by this Agreement and all programs shall be prepared and
presented in conformity with the rules, regulations and policies of the FCC and
with the Policy Statement set forth in Attachment III hereto. All advertising
spots and promotional material or announcements shall comply with applicable
federal, state and local regulations and policies and shall be produced in
accordance with quality standards established by Programmer. If Licensee
determines that a program supplied by Programmer is for any reason, within
Licensee's sole discretion, unsatisfactory or unsuitable or contrary to the
public interest, or does not comply with the Policy Statement it may, upon
prior written notice to Programmer (to the extent time permits such notice),
suspend or cancel such
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program without liability to Programmer. Licensee will use reasonable efforts
to provide such written notice to Programmer prior to the suspension or
cancellation of such program.
3.2 Licensee Control of Programming. Programmer recognizes that
the Licensee has full authority to control the operation of the Stations. The
parties agree that Licensee's authority includes but is not limited to the
right to reject or refuse such portions of the Programmer's programming which
Licensee believes to be unsatisfactory, unsuitable or contrary to the public
interest. Programmer shall have the right to change the programming supplied
to Licensee and shall give Licensee at least twenty-four (24) hours notice of
substantial and material changes in such programming.
3.3 Programmer Compliance with Copyright Act. Programmer
represents and warrants to Licensee that Programmer has full authority to
broadcast its programming on the Stations, and that Programmer shall not
broadcast any material in violation of the Copyright Act. All music supplied
by Programmer shall be: (i) licensed by ASCAP, SESAC or BMI; (ii) in the
public domain; or (iii) cleared at the source by Programmer. Licensee will
maintain ASCAP, BMI and SESAC licenses as necessary. The right to use the
programming and to authorize its use in any manner shall be and remain vested
in Programmer.
3.4 Sales. Programmer may sell commercial announcements on the
Stations in combination with other stations owned or programmed by Programmer
and the revenues from programming on the Stations shall be paid to Licensee.
Programmer shall be responsible for payment of the commissions due to any
national sales representative engaged by it for the purpose of selling national
advertising which is carried during the programming it provides to Licensee.
3.5 Children's Television Advertising. Programmer agrees that it
will not broadcast advertising within programs originally designed for children
aged 12 years and under in excess of the amounts permitted under applicable FCC
rules, and will take all steps necessary to pre-screen children's programming
broadcast during the hours it is providing such programming, to establish that
advertising is not being broadcast in excess of the applicable FCC rules.
3.6 Payola. Programmer agrees that it will not accept any
consideration, compensation, gift or gratuity of any kind whatsoever,
regardless of its value or form, including, but not limited to, a commission,
discount, bonus, material, supplies or other merchandise, services or labor
(collectively "Consideration"), whether or not pursuant to written contracts or
agreements between Programmer and merchants or advertisers, unless the payer is
identified in the program for which Consideration was provided as having paid
for or furnished such Consideration, in accordance with the Act and FCC
requirements. Programmer agrees to annually, or more frequently at the request
of the Licensee, execute and provide Licensee with a
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Payola Affidavit from each of its employees involved with the Stations
substantially in the form attached hereto as Schedule 3.6.
3.7 Cooperation on Programming. Programmer and Licensee mutually
acknowledge their interest in ensuring that the Stations serve the needs and
interests of the Stations' communities of license and agree to cooperate to
provide such service. Licensee shall, on a regular basis, assess the issues of
concern to residents of this service area and address those issues in its
public service programming. Programmer, in cooperation with Licensee, will
endeavor to ensure that programming responsive to the needs and interests of
the community of license and surrounding area is broadcast, in compliance with
applicable FCC requirements. Licensee will describe those issues and the
programming that is broadcast in response to those issues and place
issues/programs lists in the Stations' public inspection file as required by
FCC rules. Further, Licensee may request, and Programmer shall provide,
information concerning such of Programmer's programs as are responsive to
community issues so as to assist Licensee in the satisfaction of its public
service programming obligations. Licensee shall also evaluate the local need
for children's educational and informational programming and shall inform
Programmer of its conclusions in that regard. Licensee, in cooperation with
Programmer, will ensure that educational and informational programming for
children is broadcast over the Stations in compliance with applicable FCC
requirements. Programmer shall also provide Licensee upon request such other
information as is necessary to enable Licensee to prepare records and reports
required by the Commission or other local, state or federal government
entities.
3.8 Staffing Requirements. Licensee will be in full compliance
with the main studio staff requirements as specified by the FCC.
SECTION 4. INDEMNIFICATION
4.1 Programmer's Indemnification. Programmer shall indemnify and
hold harmless Licensee from and against any and all claims, losses, costs,
liabilities, damages, forfeitures and expenses (including reasonable legal fees
and other expenses incidental thereto) of every kind, nature and description
(collectively, "Damages") resulting from (i) Programmer's breach of any
representation, warranty, covenant or agreement contained in this Agreement, or
(ii) any claims relating to programming provided by Programmer and Programmer's
broadcast and sale of advertising time on the Stations.
4.2 Licensee's Indemnification. Licensee shall indemnify and hold
harmless Programmer from and against any and all claims, losses, consents,
liabilities, damages, FCC forfeitures and expenses (including reasonable legal
fees and other expenses incidental thereto) of every kind, nature and
description, arising out of Licensee's breach of any representation, warranty,
covenant or agreement contained in this Agreement.
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4.3 Limitation. Neither Licensee nor Programmer shall be entitled
to indemnification pursuant to this section unless such claim for
indemnification is asserted in writing delivered to the other party.
4.4 Time Brokerage Challenge. If this Agreement is challenged at
the FCC, whether or not in connection with the Stations' license renewal
application, counsel for the Licensee and counsel for the Programmer shall
jointly defend the Agreement and the parties' performance thereunder throughout
all FCC proceedings at the sole expense of the Programmer. If portions of this
Agreement do not receive the approval of the FCC Staff, then the parties shall
reform the Agreement as necessary to satisfy the FCC Staff's concerns in a
manner that preserves the economic arrangement between the parties or, at
Programmer's option and expense, seek reversal of the Staff's decision and
approval from the full Commission or a court of law.
SECTION 5. ACCESS TO PROGRAMMER MATERIALS AND CORRESPONDENCE
5.1 Confidential Review. Prior to the commencement of any
programming by Programmer under this Agreement, Programmer shall acquaint the
Licensee with the nature and type of the programming to be provided. Licensee
shall be entitled to review at its discretion from time to time on a
confidential basis any of Programmer's programming material it may reasonably
request. Programmer shall promptly provide Licensee with copies of all
correspondence and complaints received from the public (including any telephone
logs of complaints called in), and copies of all program logs and promotional
materials. However, nothing in this section shall entitle Licensee to review
the internal corporate or financial records of the Programmer.
5.2 Political Advertising. Programmer shall cooperate with
Licensee to assist Licensee in complying with all rules of the FCC regarding
political broadcasting. Licensee shall promptly supply to Programmer, and
Programmer shall promptly supply to Licensee, such information, including all
inquiries concerning the broadcast of political advertising, as may be
necessary to comply with FCC rules and policies, including the lowest unit
rate, equal opportunities, reasonable access, political file and related
requirements of federal law. Licensee, in consultation with Programmer, shall
develop a statement which discloses its political broadcasting policies to
political candidates, and Programmer shall follow those policies and rates in
the sale of political programming and advertising. In the event that
Programmer, in the reasonable judgment of Licensee, fails to satisfy the
political broadcasting requirements under the Act and the rules and regulations
of the FCC and such failure inhibits Licensee in its compliance with the
political broadcasting requirements of the FCC, then to the extent reasonably
necessary
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to assure such compliance, Programmer shall either provide rebates to political
advertisers or release broadcast time and/or advertising availabilities to
Licensee at no cost to Licensee.
SECTION 6. TERMINATION AND REMEDIES UPON DEFAULT
6.1 Voluntary Termination. In addition to other remedies
available at law or equity, this Agreement may be terminated as set forth below
by either Licensee or Programmer by written notice to the other if the party
seeking to terminate is not then in material default or breach hereof, upon the
occurrence of any of the following:
(a) subject to the provisions of Section 7.9, this
Agreement is declared invalid or illegal in whole or substantial part by an
order or decree of an administrative agency or court of competent jurisdiction
and such order or decree has become final and is no longer subject to further
administrative or judicial review;
(b) the other party is in material breach of its
obligations hereunder and has failed to cure such breach within thirty (30)
days of notice from the non-breaching party;
(c) the mutual consent of both parties; or
(d) there has been a material change in FCC rules,
policies or precedent that would cause this Agreement to be in violation
thereof and such change is in effect and not the subject of an appeal or
further administrative review and this Agreement cannot be reformed, in a
manner acceptable to Buyer and Seller, to remove and/or eliminate the
violation.
6.2 Automatic Termination. This Agreement shall be terminated
automatically without any notice upon the occurrence of any of the following:
(a) the closing of Programmer's purchase of fifty percent
(50%) of the Stock in Licensee pursuant to the Stock Purchase Agreement; or
(b) the termination of the Stock Purchase Agreement;
6.3 Force Majeure. Any failure or impairment of the Stations'
facilities or any delay or interruption in the broadcast of programs, or
failure at any time to furnish facilities, in whole or in part, for broadcast,
due to Acts of God, strikes, lockouts, material or labor restrictions by any
governmental authority, civil riot, floods and any other cause not reasonably
within the control of Licensee, or for power reductions necessitated for
maintenance of the Stations or for maintenance of other Stations located on the
towers from which the Stations will
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be broadcasting, shall not constitute a breach of this Agreement and Licensee
will not be liable to Programmer for reimbursement or reduction of the
consideration owed to Licensee.
6.4 Other Agreements. During the term of this Agreement or any
renewal hereof, neither Licensee nor Programmer will enter into any other
agreement with any other person that would conflict with or result in a
material breach of this Agreement by such party.
SECTION 7. MISCELLANEOUS
7.1 Assignment.
(a) Neither this Agreement nor any of the rights,
interests or obligations of either party hereunder shall be assigned,
encumbered, hypothecated or otherwise transferred without the prior written
consent of the other party, such consent not to be unreasonably withheld.
Notwithstanding the foregoing, Programmer shall have the right to collaterally
assign its rights and interests hereunder to its senior lenders.
(b) This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns.
7.2 Call Letters. Upon request of Programmer, subject to the
consent of the Licensee, Licensee shall apply to the FCC for authority to
change the call letters of the Stations (with the consent of the FCC) to such
call letters that Programmer shall reasonably designate. Licensee must
coordinate with Programmer any proposed changes to the call letters of the
Stations before taking any action to change such letters.
7.3 Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original but all of which
together will constitute one and the same instrument.
7.4 Entire Agreement. This Agreement and the Attachments hereto
embody the entire agreement and understanding of the parties relating to the
operation of the Stations. No amendment, waiver of compliance with any
provision or condition hereof, or consent pursuant to this Agreement will be
effective unless evidenced by an instrument in writing signed by the parties.
7.5 Taxes. Licensee and Programmer shall each pay its own ad
valorem taxes, if any, which may be assessed on such party's respective
personal property for the periods that such items are owned by such party.
Programmer shall pay all taxes, if any, to which the
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consideration specified in Section 1.5 herein is subject, provided that
Licensee is responsible for payment of its own income taxes.
7.6 Headings. The headings are for convenience only and will not
control or affect the meaning or construction of the provisions of this
Agreement.
7.7 Governing Law. The obligations of Licensee and Programmer are
subject to applicable federal, state and local law, rules and regulations,
including, but not limited to, the Act and the Rules and Regulations of the
FCC. The construction and performance of the Agreement will be governed by the
laws of the State of Florida.
7.8 Notices. All notices, demands and requests required or
permitted to be given under the provisions of this Agreement shall be (i) in
writing, (ii) sent by telecopy (with receipt personally confirmed by
telephone), delivered by personal delivery, or sent by commercial delivery
service or certified mail, return receipt requested, (iii) deemed to have been
given on the date telecopied with receipt confirmed, the date of personal
delivery, or the date set forth in the records of the delivery service or on
the return receipt, and (iv) addressed as follows:
To Programmer: ▇▇▇▇▇▇ Communications of San ▇▇▇▇, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
To Licensee: S & E Network Inc.
El Comandante Race Track
Canonvanas, Puerto Rico 00729
Attention: President
or to any such other or additional persons and addresses as the parties may
from time to time designate in a writing delivered in accordance with this
Section 7.8.
7.9 Severability. If any provision of this Agreement or the
application thereof to any person or circumstances shall be invalid or
unenforceable to any extent, the remainder of this Agreement and the
application of such provision to other persons or circumstances shall not be
affected thereby and shall be enforced to the greatest extent permitted by law.
In the event that the FCC alters or modifies its rules or policies in a fashion
which would raise a substantial and material question as to the validity of any
provision of this Agreement, the parties hereto shall negotiate in good faith
to revise any such provision of this Agreement with a view toward assuring
compliance with all then existing FCC rules and policies which may be
applicable, while
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attempting to preserve, as closely as possible, the intent of the parties as
embodied in the provision of this Agreement which is to be so modified.
7.10 Arbitration. Any dispute arising out of or related to this
Agreement that Licensee and Programmer are unable to resolve by themselves
shall be settled by arbitration in Washington, D.C. by a panel of three
arbitrators. Licensee and Programmer shall each designate one disinterested
arbitrator and the two arbitrators designed shall select the third arbitrator.
The persons selected as arbitrators need not be professional arbitrators, and
persons such as lawyers, accountants and bankers shall be acceptable. Before
undertaking to resolve a dispute, each arbitrator shall be duly sworn
faithfully and fairly to hear and examine the matters in controversy and to
make a just award according to the best of his or her understanding. The
arbitration hearing shall be conducted in accordance with the commercial
arbitration rules of the American Arbitration Association. The written
decision of a majority of the arbitrators shall be final and binding on
Licensee and Programmer. The costs and expenses of the arbitration proceeding
shall be assessed between Licensee and Programmer in a manner to be decided by
a majority of the arbitrators, and the assessment shall be set forth in the
decision and award of the arbitrators. Judgment on the award, if it is not
paid within thirty days, may be entered in any court having jurisdiction over
the matter. No action at law or in equity based upon any claim arising out of
or related to this Agreement shall be instituted in any court by Licensee or
Programmer against the other except: (i) an action to compel arbitration
pursuant to this Section; or (ii) an action to enforce the award of the
arbitration panel rendered in accordance with this Section, or (iii) an action
exclusively seeking a temporary restraining order, preliminary injunction or
injunction.
7.11 No Joint Venture. Nothing in this Agreement shall be deemed
to create a joint venture between the Licensee and the Programmer. The parties
intend that Programmer conduct itself in a manner so as to be an independent
contractor.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
17
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
the day and year first above written.
LICENSEE: S & E NETWORK INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Executive Vice President
PROGRAMMER: ▇▇▇▇▇▇ COMMUNICATIONS
OF SAN ▇▇▇▇, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman
18
SCHEDULE 1.5
Compensation Schedule
During the term of this Agreement, Programmer shall pay Licensee a
monthly fee (beginning on the effective date of this Agreement) of Twenty Three
Thousand Three Hundred Thirty Three Dollars ($23,333.00)
Payments shall be made by delivery of a check to Licensee at an
address to be designed.
19
SCHEDULE 1.8
Categories of Anticipated Stations Expenses
(1) Lease and Utility Payments
(2) Employee Salaries and Benefits
(3) Property Insurance and Property Taxes
(4) Fees, Licenses and Professional Fees
(5) Miscellaneous Stations Expenses
(6) Equipment Repair and Replacement
(7) Mutually Agreed Upon Employee Expenses and
Out of Pocket Costs of Programmer
20
SCHEDULE 1.8A
Capital Improvements
To maintain reliable long term operations, Licensee and Programmer
agree that the WSJN-TV transmitter site needs additional air conditioning. To
meet that need, an additional five-ton unit and step-down transformer will be
required at the cost of $6,500. Environmental compliance at the WSJN-TV site
requires that the fuel storage tank be placed in a containment area at a cost
of about $1,000. Additional improvements at the Stations needed for redundancy
as mutually agreed to by Licensee and Programmer.
21
SCHEDULE 3.1
Broadcast Stations Programming Policy Statement
22
BROADCAST STATIONS PROGRAMMING POLICY STATEMENT
The following sets forth the policies generally applicable to the
presentation of programming and advertising over Television Stations WSJN-TV,
San ▇▇▇▇, Puerto Rico, WKPV(TV), ▇▇▇▇▇, Puerto Rico and WJWN-TV, San Sebastian,
Puerto Rico. All programming and advertising broadcast by the Stations must
conform to these policies and to the provisions of the Communications Act of
1934, as amended [the "Act"], and the Rules and Regulations of the Federal
Communications Commission ["FCC"].
Stations Identification
Each Station must broadcast a Station identification announcement once an hour
as close to the hour as feasible in a natural break in the programming. The
announcement must include (1) the Station's call letters (currently, _____);
followed immediately by (2) the Station's city of license ( __________, Puerto
Rico).
Broadcast of Telephone Conversations
Before recording a telephone conversation for broadcast or broadcasting such a
conversation simultaneously with its occurrence, any party to the call must be
informed that the call will be broadcast or will be recorded for later
broadcast, and the party's consent to such broadcast must be obtained. This
requirement does not apply to calls initiated by the other party which are made
in a context in which it is customary for the Stations to broadcast telephone
calls.
Sponsorship Identification
When money, service, or other valuable consideration is either directly or
indirectly paid or promised as part of an arrangement to transmit any
programming, the Stations at the time of broadcast shall announce (1) that the
matter is sponsored, either whole or in part; and (2) by whom or on whose
behalf the matter is sponsored. Products or services furnished to the Stations
in consideration for an identification of any person, product, service,
trademark or brand name shall be identified in this manner.
In the case of any political or controversial issue broadcast for which any
material or service is furnished as an inducement for its transmission, an
announcement shall be made at the beginning and conclusion of the broadcast
stating (1) the material or service that has been furnished; and (2) the
person(s) or association(s) on whose behalf the programming is transmitted.
However, if the broadcast is 5 minutes duration or less, the required
announcement need only be made either at its beginning or end.
Prior to any sponsored broadcast involving political matters or controversial
issues, the Stations shall obtain a list of the chief executive officers,
members of the executive committee or board of directors of the sponsoring
organization and shall place this list in the Stations's public inspection
file.
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Payola/Plugola
The Stations, its personnel, or its programmers shall not accept or agree to
accept from any person any money, service, or other valuable consideration for
the broadcast of any matter unless such fact is disclosed to the Stations so
that all required Stations identification announcements can be made. All
persons responsible any Station's programming must, from time to time, execute
such documents as may be required by Station's management to confirm their
understanding of and compliance with the FCC's sponsorship identification
requirements.
Rebroadcasts
The Stations shall not rebroadcast the signal of any other broadcast stations
without first obtaining such station's prior written consent to such
rebroadcast.
Fairness
Stations shall seek to afford coverage to contrasting viewpoints concerning
controversial issues of public importance.
Personal Attacks
The Stations shall not air attacks upon the honesty, character, integrity or
like personal qualities of any identified person or group. If such an attack
should nonetheless occur during the presentation of views on a controversial
issue of public importance, those responsible for programming shall submit a
tape or transcript of the broadcast to Stations management and to the person
attacked within 48 hours, and shall offer the person attacked a reasonable
opportunity to respond.
Political Editorials
Unless specifically authorized by Stations' management, the Stations shall not
air any editorial which either endorses or opposes a legally qualified
candidate for public office.
Political Broadcasting
All "uses" of the Stations by legally qualified candidates for elective office
shall be in accordance with the Act and the FCC's Rules and policies, including
without limitation, equal opportunities requirements, reasonable access
requirements, lowest unit charge requirements and similar rules and
regulations.
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Obscenity and Indecency
The Stations shall not broadcast any obscene material. Material is deemed to
be obscene if the average person, applying contemporary community standards in
the local community, would find that the material, taken as a whole, appeals to
the prurient interest; depicts or describes in a patently offensive way sexual
conduct specifically defined by applicable state law; and taken as a whole,
lacks serious literary artistic, political or scientific value.
The Stations shall not broadcast any indecent material outside of the periods
of time prescribed by the Commission. Material is deemed to be indecent if it
includes language or material that, in context, depicts or describes, in terms
patently offensive as measured by contemporary community standards for the
broadcast medium, sexual or excretory activities or organs.
Billing
No entity which sells advertising for airing on the Stations shall knowingly
issue any ▇▇▇▇, invoice or other document which contains false information
concerning the amount charged or the broadcast of advertising which is the
subject of the ▇▇▇▇ or invoice. No entity which sells advertising for airing
on the Stations shall misrepresent the nature or content of aired advertising,
nor the quantity, time of day, or day on which such advertising was broadcast.
Contests
Any contests conducted on the Stations shall be conducted substantially as
announced or advertised. Advertisements or announcements concerning such
contests shall fully and accurately disclose the contest's material terms. No
contest description shall be false, misleading or deceptive with respect to any
material term.
Hoaxes
The Stations shall not knowingly broadcast false information concerning a crime
or catastrophe.
Children's Programming
The Stations shall broadcast reasonable amounts of educational and
informational programming designed for children aged 16 years and younger.
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Children's Advertising
Programming designed for children aged 12 years and younger shall not include
more than 12 minutes of commercial matter per hour, Monday through Friday, and
shall not include more than 10.5 minutes of commercial matter per hour on
weekend programming. There shall be no host selling, as that term is defined
by the FCC, in children's programming on the Stations.
Emergency Information
Any emergency information which is broadcast by the Stations shall be
transmitted both aurally and visually or only visually.
Lottery
The Stations shall not advertise or broadcast any information concerning any
lottery (except the Puerto Rican Lottery). The Stations may advertise and
provide information about lotteries conducted by non-profit groups,
governmental entities and in certain situations, by commercial organizations,
if and only if there is no state or local restriction or ban on such
advertising or information and the lottery is legal under state or local law.
Any and all lottery advertising must first be approved by Stations management.
Advertising
Stations shall comply with all federal, state and local laws concerning
advertising, including without limitation, all laws concerning misleading
advertising, and the advertising of alcoholic beverages.
Programming Prohibitions.
Knowing broadcast of the following types of programs and announcements is
prohibited:
False Claims. False or unwarranted claims for any product or service.
Unfair Imitation. Infringements of another advertiser's rights
through plagiarism or unfair imitation of either program idea or copy,
or any other unfair competition.
Commercial Disparagement. Any unfair disparagement of competitors or
competitive goods.
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Profanity. Any programs or announcements that are slanderous, obscene,
profane, vulgar, repulsive or offensive, as evaluated by Stations
management.
Violence. Any programs which are excessively violent.
Unauthenticated Testimonials. Any testimonials which cannot be
authenticated.
27
SCHEDULE 3.6
Payola Statement
28
FORM OF PAYOLA AFFIDAVIT
City of _______________________ )
)
County of ______________________ ) SS:
)
State of _______________________ )
ANTI-PAYOLA/PLUGOLA AFFIDAVIT
________________________, being first duly sworn, deposes and says as follows:
1. He is _____________________ for _____________________. Position
2. He has acted in the above capacity since ____________.
3. No matter has been broadcast by Stations _____ for which service,
money or other valuable consideration has been directly or indirectly
paid, or promised to, or charged, or accepted, by him from any person,
which matter at the time so broadcast has not been announced or
otherwise indicated as paid for or furnished by such person.
4. So far as he is aware, no matter has been broadcast by Stations _____
for which service, money, or other valuable consideration has been
directly or indirectly paid, or promised to, or charged, or accepted
by Stations _____ or by any independent contractor engaged by Stations
_____ in furnishing programs, from any person, which matter at the
time so broadcast has not been announced or otherwise indicated as
paid for or furnished by such person.
5. In future, he will not pay, promise to pay, request, or receive any
service, money, or any other valuable consideration, direct or
indirect, from a third party, in exchange for the influencing of, or
the attempt to influence, the preparation or presentation of broadcast
matter on Stations _____.
6. Nothing contained herein is intended to, or shall prohibit receipt or
acceptance of anything with the expressed knowledge and approval of my
employer, but henceforth any such approval must be given in writing by
someone expressly authorized to give such approval.
7. He, his spouse and his immediate family do___ do not___ have any
present direct or indirect ownership interest in (other than an
investment in a corporation whose
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stock is publicly held), serve as an officer or director of, whether
with or without compensation, or serve as an employee of, any person,
firm or corporation engaged in:
1. The publishing of music;
2. The production, distribution (including wholesale and retail
sales outlets), manufacture or exploitation of music, films,
tapes, recordings or electrical transcriptions of any program
material intended for radio broadcast use;
3. The exploitation, promotion, or management or persons
rendering artistic, production and/or other services in the
entertainment field;
4. The ownership or operation of one or more radio or television
Stations;
5. The wholesale or retail sale of records intended for public
purchase;
6. Advertising on Stations _____, or any other Stations owned by
its licensee (excluding nominal stockholdings in publicly
owned companies).
8. The facts and circumstances relating to such interest are none____ as
follows___:
----------------------------------------------------------------------
----------------------------------------------------------------------
--------------------------------
Affiant
Subscribed and sworn to before me
this day of , 19 .
------ --------------- ---
------------------------------------------
Notary Public
My Commission expires: .
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