Exhibit 4.4
EXECUTION COPY
LOCAL MARKETING AGREEMENT
This Local Marketing Agreement (this "Agreement") is dated as of February
11, 2003, among ▇▇▇▇▇▇ Telecasting of Southern California LLC, a Delaware
limited liability company ("PTSC") and ▇▇▇▇▇▇ Southern California License LLC, a
Delaware limited liability company ("PSC License" and, collectively with PTSC,
"▇▇▇▇▇▇"), and Azteca International Corporation, a Delaware corporation ("AIC")
and TV Azteca, S.A. de C.V., a sociedad anonima de capital variable incorporated
under the laws of Mexico ("TVA") as guarantor.
WHEREAS, PSC License is a direct, wholly-owned subsidiary of PTSC and the
licensee of KAZA-TV, Avalon, California (the "Station"), pursuant to
authorizations granted by the Federal Communications Commission ("FCC");
WHEREAS, TVA, the ultimate parent of AIC, AIC and ▇▇▇▇▇▇ and certain
affiliates of ▇▇▇▇▇▇ desire to settle certain disputes among them and, in
furtherance thereof, have entered into that certain Settlement Agreement (the
"Settlement Agreement"), dated as of the date hereof, by and among TVA, AIC,
▇▇▇▇▇▇ and certain other affiliates of ▇▇▇▇▇▇;
WHEREAS, it is a condition to the consummation of the transactions
contemplated by the Settlement Agreement that AIC and ▇▇▇▇▇▇ concurrently enter
into this Agreement;
WHEREAS, AIC desires to provide programming and related services to the
Station subject to the terms and conditions set forth herein and to the
Communications Act of 1934, as amended ("Communications Act"), and the rules,
regulations and published policies of the FCC ("FCC Rules" and, together with
the Communications Act, "Communications Laws"); and
WHEREAS, ▇▇▇▇▇▇ desires to accept the programming and related services to
be supplied by AIC to the Station.
NOW, THEREFORE, for and in consideration of the mutual covenants herein
contained, the parties hereto, intending to be legally bound, agree as follows:
1. Air Time and Transmission Services. Subject to the terms and conditions
of this Agreement, beginning on the Effective Date (as defined below), AIC will
broadcast, or cause to be broadcast, at AIC's expense, on the Station
programming designated by AIC (the "Programming").
2. Payments. AIC hereby agrees to pay to ▇▇▇▇▇▇, as full and complete
consideration for the rights granted hereunder from and after the Effective Date
and on the terms and conditions herein provided, the amounts specified in
Attachment A. Payments specified in Attachment A are due and payable as set
forth in Attachment A. Notwithstanding any provision in this Agreement to the
contrary, if this Agreement is terminated, the obligation of AIC to make the
payments specified in Attachment A, other than amounts that are accrued and
unpaid at the date of termination, shall cease; provided, however, that if this
Agreement is terminated by ▇▇▇▇▇▇ pursuant to Section 12.2.1, AIC shall be
obligated to make the payments provided for in
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Sections 12.2.2 or 12.2.3, and, provided further, that AIC shall continue to be
obligated to make the payments required pursuant to Section 10.1 for any period
to and including the date of termination.
3. Term.
3.1. Initial Term.
3.1.1 Subject to Section 3.2, the term of this Agreement (the "Term") shall
commence on the Effective Date (as defined below) and shall continue until the
Cut-Off Date or the Extended Cut-Off Date, as applicable (each, as defined in
the Option Agreement, dated as of the date hereof, by and between PTSC and AIC
(the "Option Agreement")), unless otherwise extended pursuant to Section 3.3 or
terminated pursuant to Section 12 or Section 13.
3.1.2 For purposes of this Agreement, "Effective Date" shall mean, subject
to Section 3.2: (i) June 1, 2003, or (ii) if PTSC has exercised its right to
extend the Maturity Date (as defined in the Amended and Restated Credit
Agreement dated as of the date hereof between PTSC and AIC (the "Amended and
Restated Credit Agreement")) pursuant to clause (i)(B) of the definition thereof
in the Amended and Restated Credit Agreement, July 1, 2003, in each case, only
if PTSC fails to pay in full prior to the Effective Date the PTSC Debt,
including all accrued and unpaid interest thereon; provided, however, that if
(x) PTSC pays in full the PTSC Debt, including all accrued and unpaid interest
thereon or (y) an EchoStar Injunction (as defined in the Amended and Restated
Credit Agreement) is issued prior to June 1, 2003 or if PTSC has exercised its
right to extend the Maturity Date pursuant to Section (i)(B) of the definition
thereof in the Amended and Restated Credit Agreement, July 1, 2003, then this
Agreement shall automatically terminate and be void ab initio, upon the
occurrence of the earlier of either of such events. Notwithstanding the above,
this Agreement shall automatically terminate and be void ab initio (i) at
midnight New York City time on the last day of the HSR Option Effectiveness
Filing Period (as defined in the Option Agreement), unless prior to such date
and time the Optionee has made the initial filing under the HSR Act specified in
Section 6.8 of the Option Agreement or ▇▇▇▇▇▇ has received the HSR Opinion (as
defined in the Option Agreement), or (ii) at midnight New York City time on
April 30, 2003, if the Optionee has made the requisite filings under the HSR Act
as specified in Section 6.8 of the Option Agreement and the statutory waiting
period under the HSR Act in connection with such filing has not expired on or
prior to April 30, 2003.
3.2. Pampas Certificate.
3.2.1 As a condition precedent to the commencement of the Term, which
condition may be waived in the sole and absolute discretion of AIC, AIC shall
have received from PTSC a certificate (the "LMA Effective Date Certificate"),
dated as of the Effective Date and signed on behalf of PTSC by its manager,
certifying that, as of the Effective Date, (i) the FCC Licenses (as defined in
the Option Agreement) and the lease for the transmission tower with respect to
the Station are in full force and effect and (ii) except for periods of
operation at less than full power on a temporary basis as a result of routine
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maintenance, the Station is broadcasting in the ordinary course of business
(collectively, the "LMA Effective Date Representations").
3.2.2 If (i) PTSC does not deliver the LMA Effective Date Certificate
because one or more of the LMA Effective Date Representations fails to be true
and correct, in each case on the date that otherwise would have been the
Effective Date but for such failure and (ii} such failure can be cured, then
PTSC shall use its reasonable commercial efforts to cure such failure as soon as
reasonably practicable, including, without limitation, using insurance proceeds
in accordance with Section 14.2.5, whereupon the Effective Date shall be
postponed until ten (10) Business Days after the delivery to AIC of the LMA
Effective Date Certificate. If such failure cannot be cured in the judgment of
the FCC Expert within a reasonable period of time, then this Agreement shall
terminate and the parties shall negotiate in good faith an alternative to the
transactions contemplated hereby and in the Settlement Agreement.
3.3. Extension of Term. Extension of Term. If, on and as of the Cut-Off
Date or the Extended Cut-Off Date, as applicable (both as defined in the Option
Agreement), (i) the Closing (as defined in the Option Agreement) contemplated by
the Option Agreement has not been consummated and (ii) PTSC has not yet paid in
full the PTSC Debt, including all accrued and unpaid interest thereon, then,
unless earlier terminated pursuant to Section 12 or Section 13, the Term shall
extend until the earlier of (x) the Maturity Date (as defined in the Amended and
Restated Credit Agreement) and (y) the date that is six (6) months after the
payment in full of all amounts due under the PTSC Debt, including accrued and
unpaid interest thereon.
4. Programming.
4.1. Programming Generally. The Programming may include news, network
programs, syndicated programs, barter programs, paid-for programs,
locally-produced programs, advertising commercial matter (in program or spot
announcement forms), promotions (including on-air giveaways), contests and
public service information. The right to use the Programming and to authorize
its use in any manner and in any media whatsoever shall be, and remain, vested
solely in AIC, subject in all events to the rights, if any, of others in such
Programming.
4.2. Public Service Programming. ▇▇▇▇▇▇ will retain sole responsibility for
the ascertainment of the problems, needs and concerns of residents of the
Station's community of license and service area. Upon the request of ▇▇▇▇▇▇, AIC
will assist ▇▇▇▇▇▇ in ascertaining such problems, needs and concerns. AIC will
make a good faith effort to include in its Programming programs which are
responsive to such problems, needs and concerns. If, in ▇▇▇▇▇▇' good faith
judgment, the Programming does not include programming sufficiently responsive
under the Communications Laws to ascertained community problems, needs and
concerns, then ▇▇▇▇▇▇ shall have the right and the obligation to broadcast such
additional programming, either produced or purchased by ▇▇▇▇▇▇, as ▇▇▇▇▇▇ shall
reasonably determine to be appropriate in order adequately to respond to
ascertained community problems, needs and concerns (the "▇▇▇▇▇▇ Programming").
AIC shall reimburse ▇▇▇▇▇▇ for the cost of any ▇▇▇▇▇▇ Programming if the FCC
Expert determines that ▇▇▇▇▇▇ in its good faith judgment
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determined that the Programming did not include programming sufficient to
respond to the problems, needs and concerns of residents in the Station's
community of license and service area. ▇▇▇▇▇▇ Programming shall be shown in the
time period reserved by ▇▇▇▇▇▇ pursuant to Section 6 unless ▇▇▇▇▇▇ determines in
its good faith judgment that the Communications Laws require such ▇▇▇▇▇▇
Programming to be broadcast at some other time.
4.3. Children's Programming. ▇▇▇▇▇▇, in cooperation with AIC, shall ensure
that educational and informational programming designed primarily for children
aged 16 years and younger is broadcast over the Station in compliance with the
Communications Laws. AIC will make a good faith effort to include in its
Programming programming designed primarily for children aged 16 years and
younger which complies with the Communications Laws. If, in ▇▇▇▇▇▇' good faith
judgment, the Programming does not include sufficient programming designed
primarily for children aged 16 years and younger which complies with the
Communications Laws, then ▇▇▇▇▇▇ shall have the right and obligation to
broadcast such additional programming either produced or purchased by ▇▇▇▇▇▇ as
▇▇▇▇▇▇ shall reasonably determine to be appropriate in order to comply with the
Communications Laws (the "Children's Programming"). AIC shall reimburse ▇▇▇▇▇▇
for the cost of any Children's Programming if the FCC Expert determines that
▇▇▇▇▇▇ in its good faith judgment determined that the Programming did not
include programming designed primarily for children aged 16 years or younger
sufficient to comply with the Communications Laws. Children's Programming shall
be shown in the time period reserved by ▇▇▇▇▇▇ pursuant to Section 6 unless
▇▇▇▇▇▇ determines in its good faith judgment that the Communications Laws
require it to be broadcast at some other time.
4.4. Additional Obligations.
4.4.1 ▇▇▇▇▇▇ shall coordinate with AIC the broadcast of the Station's
hourly station identification and any other announcements required to be
broadcast by the Communications Laws.
4.4.2 AIC shall cooperate with ▇▇▇▇▇▇ in ensuring compliance with the
Communications Laws governing uses of the Station's facilities by
legally-qualified candidates for election to public office, including compliance
with ▇▇▇▇▇▇' obligation to provide reasonable access to the ▇▇▇▇▇▇ Station
Facilities (as defined in Section 6) by legally-qualified candidates for
election to federal public offices; to comply with the lowest unit charge
provisions of Section 315 of the Communications Act; and to provide a political
disclosure statement to potential political advertisers. AIC and ▇▇▇▇▇▇ shall
cooperate in the preparation of any materials setting forth terms and conditions
for the availability of political advertising time on the Station.
4.4.3 ▇▇▇▇▇▇ shall maintain its public inspection files in accordance with
the Communications Laws. AIC shall, upon request by ▇▇▇▇▇▇, provide ▇▇▇▇▇▇ with
information with respect to the Programming which is responsive to the problems,
needs and concerns of the community or which contains educational or
informational programming for children, so as to assist ▇▇▇▇▇▇ in the
preparation of required quarterly issues/programs reports and children's
programming reports, and AIC shall provide upon reasonable request other
information to enable ▇▇▇▇▇▇ to prepare other records, reports and logs required
by the FCC or other local, state or federal governmental authorities.
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4.4.4 AIC will ensure that the Station shall operate showing the
Programming for the minimum operating hours of 6:00 a.m. through Midnight, seven
days per week, including the 6 MHz. digital channel, if applicable.
4.4.5 All actions or activities of AIC and ▇▇▇▇▇▇ under this Agreement
shall be in accordance with (i) the applicable provisions of the Communications
Laws; (ii) all applicable federal, state and local regulations and policies; and
(iii) generally accepted quality standards in the U.S. broadcasting industry.
4.5. Broadcast Station Programming Policy Statement. ▇▇▇▇▇▇ has adopted a
Broadcast Station Programming Policy Statement (the "Policy Statement"), a copy
of which appears as Exhibit A hereto and which is incorporated herein by
reference as though fully set forth herein. The Policy Statement may be amended
from time to time by ▇▇▇▇▇▇, upon prior written notice to AIC. AIC agrees and
covenants to comply in all material respects with the Policy Statement, the
Communications Laws, and with all changes subsequently made by ▇▇▇▇▇▇ to the
Policy Statement or by any governmental authority pursuant to the Communications
Laws.
5. Advertising and Programming Revenues. During the Term, AIC shall retain
all advertising and other revenues relating to the operation of the Station, and
all accounts receivable earned after the Effective Date, with respect to the
Station, including promotion-related revenues and retransmission consent
revenues, if any; provided, however, that ▇▇▇▇▇▇ shall retain the revenue
derived from the sale of any advertising on the Station during programs
broadcast by ▇▇▇▇▇▇ pursuant to Section 6. ▇▇▇▇▇▇ and AIC each shall have the
right, at its own expense, to seek copyright royalty payments for its own
programming. AIC may sell advertising on the Station in combination with the
sale of advertising on other television stations of AIC's choosing, subject to
compliance with applicable law.
6. Station Facilities. Subject to the terms and conditions set forth in
this Agreement, throughout the Term, ▇▇▇▇▇▇ shall make the facilities of the
Station (the "▇▇▇▇▇▇ Station Facilities") available to AIC for operation and
broadcast with the maximum authorized facilities (which facilities shall include
the Station's 6 MHz digital channel to the extent that a construction permit for
such digital facilities has been granted and construction of the Station's
digital facilities has been completed during the Term) twenty four (24) hours a
day, seven (7) days a week, subject to maintenance requirements; provided,
however, that ▇▇▇▇▇▇ reserves the right to retain up to three (3) hours per
broadcast week to broadcast (both on analog and digital spectrum) each Sunday at
a mutually agreed upon time between the hours of 6:00 a.m. and 9:00 a.m. Pacific
Time, ▇▇▇▇▇▇' own public interest programming and announcements in order to meet
local needs and issues requirements. AIC hereby agrees to perform, without
expense to ▇▇▇▇▇▇, all maintenance of all ▇▇▇▇▇▇ Station Facilities as necessary
for the ▇▇▇▇▇▇ Station Facilities to remain in good operating condition and
repair (ordinary wear and tear excepted). Any downtime in the ▇▇▇▇▇▇ Station
Facilities occasioned by any such maintenance, or by AIC's failure to perform
such maintenance, shall not be deemed to be a default or violation by ▇▇▇▇▇▇ of
this Section 6.
7. Right of Access.
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7.1. Subject to Sections 4 and 9 hereof, ▇▇▇▇▇▇ shall provide AIC and AIC's
employees or agents with unfettered access to the Station in order to perform
their duties in connection with the production and transmission of the
Programming over the facilities of the Station. AIC shall have the right to
install at ▇▇▇▇▇▇'▇ premises, and to maintain throughout the Term, any microwave
studio/transmitter relay equipment, telephone lines, transmitter remote control,
monitoring devices or any other equipment necessary or convenient for the proper
transmission of the Programming on the Station, and ▇▇▇▇▇▇ and AIC shall take
all steps reasonably necessary to prepare and file any applications with the FCC
to effectuate such proper transmission.
7.2. Without limiting the rights of AIC under any other Transaction
Document (as defined in the Settlement Agreement), from and after the date
hereof, upon the request of AIC, ▇▇▇▇▇▇ shall afford to the officers, employees
and authorized representatives of AIC (including independent public accountants,
attorneys and consultants) reasonable access during normal business hours, and
upon not less than 24 hours prior notice, to the offices, properties and
employees of the Station to the extent AIC shall reasonably deem necessary or
desirable in connection with preparing to exercise its rights hereunder and
shall furnish to AIC or its authorized representatives such additional
information concerning the Station as shall be reasonably requested. AIC agrees
that any such investigation and access shall be conducted in such a manner as
not to interfere unreasonably with the operations of ▇▇▇▇▇▇.
7.3. Commencing on the Effective Date and during the Term of this
Agreement, AIC shall have the right, at AIC's expense and in consultation with
▇▇▇▇▇▇, to relocate the Station's studio, control room facilities and offices to
premises owned or leased by AIC within the Station's designated market area (as
defined by ▇▇▇▇▇▇▇ Media Research Company), and to transfer Station equipment
and/or facilities designated by AIC to such premises for use in the operation of
the Station; provided, however, that any such new studio location shall comply
with the Communications Laws, including, without limitation, Section 73.1125 of
the FCC Rules. If AIC leases any premises in connection with any relocation
described above, ▇▇▇▇▇▇ shall have the right to review such lease prior to its
execution to confirm that (i) such lease does not create any liability for the
Station or ▇▇▇▇▇▇, and (ii) such lease provides AIC with the right to sublease
the premises to ▇▇▇▇▇▇ as contemplated by Section 12.5.3. In connection with any
such relocation as described above, AIC shall make available to ▇▇▇▇▇▇ adequate
space for ▇▇▇▇▇▇' main studio facilities and adequate office space for the
▇▇▇▇▇▇ Employees. ▇▇▇▇▇▇ shall ensure that AIC maintains the relocated main
studio in full compliance with the Communications Laws, and in material
compliance with all other applicable laws, and AIC shall assist ▇▇▇▇▇▇ in taking
such action as is necessary to maintain such compliance. AIC shall not take any
action under this Section 7.3 that would cause ▇▇▇▇▇▇ to violate in any material
respect the Communications Laws or any other applicable laws.
8. Force Majeure. During the Term, any failure or impairment of the ▇▇▇▇▇▇
Station Facilities or any delay or interruption in the broadcast of the
Programming, or failure at any time by ▇▇▇▇▇▇ to furnish the ▇▇▇▇▇▇ Station
Facilities, in whole or in part, for the broadcast of the Programming, solely
due to acts of God, force majeure, or due to causes wholly beyond the control of
▇▇▇▇▇▇, shall not constitute a breach of this Agreement, and ▇▇▇▇▇▇ shall not be
liable to AIC in connection therewith.
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9. ▇▇▇▇▇▇ Control of Stations. Notwithstanding anything to the contrary set
forth in this Agreement, ▇▇▇▇▇▇ shall have full authority, control and power
over the operation of the Station during the Term. ▇▇▇▇▇▇ shall retain control
over the policies, programming, finances, personnel and operations of the
Station, including the right to preempt, delay or delete any Programming that
▇▇▇▇▇▇, in good faith, deems to be unsatisfactory, unsuitable or contrary to the
public interest and the right to take any other actions necessary for compliance
with the Communications Laws and all other federal, state or local laws. ▇▇▇▇▇▇
shall be responsible for ensuring compliance with the Communications Laws,
including FCC requirements with respect to ascertainment of community problems,
needs and concerns, children's programming, public service programming,
political broadcasting, main studio staffing, maintenance of public inspection
files and the preparation of quarterly issues/programs reports and children's
programming reports.
10. Responsibility for Employees and Expenses.
10.1. During the Term, ▇▇▇▇▇▇ shall employ two (2) full time employees (the
"▇▇▇▇▇▇ Employees") at the main studio of the Station, one (1) of whom shall be
a manager, and both of whom shall report to and be accountable to ▇▇▇▇▇▇, and
who shall be ultimately responsible for the day-to-day operations of the
Station. ▇▇▇▇▇▇ shall be responsible for paying the salaries, payroll taxes,
medical and other benefits and related costs of the ▇▇▇▇▇▇ Employees, and for
maintaining and paying the costs of appropriate insurance (including worker's
compensation and general liability insurance). ▇▇▇▇▇▇ also shall be responsible
for all expenses related to (i) transmitter site and studio site rent/mortgage
for the Station; (ii) transmitter site and studio site utilities for the
Station; (iii) all income taxes relating to ▇▇▇▇▇▇'▇ earnings from the
arrangements under this Agreement; (iv) all FCC regulatory fees for the Station;
(v) all taxes related to the KAZA Assets (as defined in the Option Agreement) or
the operation of the Station; and (vi) fees of ▇▇▇▇▇▇' FCC counsel. AIC shall
employ and be responsible for the salaries, taxes and related costs and will
maintain appropriate insurance (including worker's compensation and general
liability insurance) for all personnel used in the operation and maintenance of
the Station, and for such other expenses related to the operation and
maintenance of the Station as are set forth in Schedule 10.1 hereto. AIC shall
either pay directly, or reimburse ▇▇▇▇▇▇ (within ten (10) days after receipt of
an invoice therefor), for all expenses listed on Schedule 10.1.
10.2. Not later than ten (10) days prior to the Effective Date, AIC shall
notify ▇▇▇▇▇▇ whether it elects to offer to hire all, but not less than all, of
the employees of the Station who are identified on Attachment B, and any
employee hired to replace an employee identified on Attachment B (at the same
compensation level or a compensation level not greater than ten percent (10%)
greater than the employee being replaced), but specifically excluding (i) any
employees who have left the employment of ▇▇▇▇▇▇ between the date hereof and the
Effective Date; or (ii) the two employees who are designated as the ▇▇▇▇▇▇
Employees. Notwithstanding the foregoing, AIC shall not be required to offer to
hire any employee of the Station who (A) in the case of an hourly or salaried
employee, has received an increase in compensation in excess of ten percent
(10%) of such hourly or salaried employee's annualized rate of compensation, or
(B) in the case of an employee whose compensation includes a commission
component, an increase of ten percent (10%) or more in such commissioned
employee's annualized commission percentage rate, in either case, between
January 29, 2003 and the Effective Date, and AIC's decision not to offer to hire
any such employee shall not
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preclude AIC from offering to hire all other employees of the Station. Within
two (2) business days of a request by AIC (but not earlier than April 1, 2003),
▇▇▇▇▇▇ shall make available, on a confidential basis, a current list of Station
employees and their compensation (including commission rate) as of January 29,
2003 and as of April 1, 2003 for each such employee. Except as provided above
and except with respect to the ▇▇▇▇▇▇ Employees, AIC shall be required to offer
to each ▇▇▇▇▇▇ employee at the Station a starting salary (including commission
rate) comparable to that employee's then-current salary. AIC shall otherwise
have the sole and exclusive right to establish the wage and any other
compensation and all other terms and conditions of employment of any employee
hired by AIC. For purposes of employee benefits under the employee benefit plans
of ▇▇▇▇▇▇, all employees who accept employment with AIC shall be considered
terminated from ▇▇▇▇▇▇ as of the Effective Date, shall be considered new hires
for all purposes of AIC's employee benefits plans, programs and practices, and
shall not be entitled to receive from AIC credit for any accrued vacation days,
sick days, personal days or other such days with respect to their period of
employment with ▇▇▇▇▇▇. Any employee of ▇▇▇▇▇▇ that AIC is not required to offer
to hire hereunder, or that does not accept AIC's offer of employment, shall
remain the obligation of ▇▇▇▇▇▇. ▇▇▇▇▇▇ acknowledges and agrees that it, and not
AIC, is and will remain solely responsible for any and all legal obligations and
liabilities under all applicable employment, labor, tax, benefit and other laws
and agreements in connection with any insurance (including COBRA), supplemental
pension, deferred compensation, retirement and any other benefits and payments,
and related costs, premiums and claims, due, to become due, committed or
otherwise promised to any person who, as of the Effective Date, is a former
employee, current employee, officer, director, or independent contractor of
▇▇▇▇▇▇, relating to the period up to and including the Effective Date. ▇▇▇▇▇▇
also shall be responsible for providing any notice required by the Worker
Adjustment and Retraining Notification Act, 29 U.S.C. ss. 2101 et. seq., or any
state statute or local ordinance requiring notice to terminated or laid off
employees, whether such notice is required to be given before or after the
Effective Date. AIC shall assume responsibility or sponsorship for no employee
benefit plans, programs or practices, whether or not set forth in writing,
maintained by ▇▇▇▇▇▇ at any time and shall not be obligated to pay any benefits
accrued under any such plans, programs, or practices. ▇▇▇▇▇▇ and AIC acknowledge
and agree that the AIC is not a successor employer of ▇▇▇▇▇▇.
10.3. Upon receipt of the SCT Concurrence (as defined in the Settlement
Agreement), AIC shall, during the Term, pay on behalf of PTSC the reasonable
costs (the "Construction Costs") incurred during the Term in connection with the
acquisition, construction and installation by PTSC of the tower, related
transmitter and other facilities required to operate digital channel 47, KAZA-DT
(the "Digital Station"). The parties hereby acknowledge and confirm that the sum
of U.S. Two Million Five Hundred Eighty-One Thousand Dollars ($2,581,000) set
forth in Schedule A to the Status Quo Agreement and Order entered in the
Delaware Action (as defined in the Settlement Agreement) on August 20, 2002
constitutes the estimated budget for the construction of the Digital Station
(the "Project Budget"). Prior to the commencement of the construction of the
Digital Station, PTSC shall provide AIC with a project timetable (the "Project
Timetable") and any modifications to the Project Budget then known to PTSC.
Following commencement of the construction of the Digital Station and until
completion of construction, PTSC shall submit to AIC monthly reports (each, a
"Monthly Report") setting forth in reasonable detail (including, to the extent
available, supporting documentation therefor) the Construction Costs incurred in
the relevant month. AIC shall pay to, or for the account of, PTSC the total
amount of the Construction Costs set forth in each Monthly Report as follows:
(1)
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with respect to any invoice from a third party relating to Construction Costs
incurred for the period included in such Monthly Report, in accordance with the
terms specified in such invoice; and (2) with respect to any Construction Costs
previously paid or to be paid directly by PTSC, within fifteen (15) days
following receipt of such Monthly Report. Notwithstanding the above, AIC shall
not be obligated to pay Construction Costs, in the aggregate, in excess of U.S.
Three Million Dollars ($3,000,000) unless such excess amounts are approved as
reasonable cost overruns by the FCC Expert.
11. Indemnification.
11.1. AIC shall indemnify, defend and hold ▇▇▇▇▇▇, its partners, members,
subsidiaries, affiliated companies, and their respective officers, directors,
employees, agents, successors and assigns (each of the foregoing being a "▇▇▇▇▇▇
Indemnitee") free and harmless from any and all Losses and Expenses resulting
from or relating to (i) the broadcast by ▇▇▇▇▇▇ over the Station of the
Programming, (ii) AIC's breach of any warranty, undertaking, representation or
agreement made or entered into by AIC hereunder, or (iii) any other matters
arising out of or related to AIC's operation of the Station or use of the ▇▇▇▇▇▇
Station Facilities. Notwithstanding the foregoing, AIC shall not be liable for
loss of profits or consequential or indirect damages.
11.2. ▇▇▇▇▇▇ shall indemnify, defend and hold AIC, its partners and its
subsidiaries and affiliated companies and their officers, directors, employees,
agents, successors and assigns (each of the foregoing being an "AIC Indemnitee")
free and harmless from any and all Losses and Expenses resulting from or
relating to (i) the broadcast over the Station by ▇▇▇▇▇▇ of programming other
than the Programming; (ii) liabilities that arise as a result of ▇▇▇▇▇▇'▇
alteration of any and/or all Programming prior to broadcast by ▇▇▇▇▇▇; (iii) any
liabilities with respect to (A) the ▇▇▇▇▇▇ Employees, (B) the current or former
employees or directors or independent contractors of ▇▇▇▇▇▇ or their respective
beneficiaries, in each case relating to the period up to and including the
Effective Date or (C) the business and operations of the Station prior to the
Effective Date other than any liabilities resulting from the broadcast by ▇▇▇▇▇▇
of programming provided to the Station by AIC under any affiliation agreement
between AIC and ▇▇▇▇▇▇; or (iv) ▇▇▇▇▇▇'▇ breach of any warranty, undertaking,
representation or agreement made or entered into by ▇▇▇▇▇▇ hereunder.
Notwithstanding the foregoing, ▇▇▇▇▇▇ shall not be liable for loss of profits or
consequential or indirect damages.
11.3. Notice of Claims; Third Person Claims; Certain Definitions.
11.3.1 Any ▇▇▇▇▇▇ Indemnitee or AIC Indemnitee seeking indemnification
hereunder (the "Indemnified Party") shall give promptly to the party obligated
to provide indemnification to such Indemnified Party (the "Indemnitor") a
written notice (a "Claim Notice") describing in reasonable detail the facts
giving rise to the claim for indemnification hereunder and shall include in such
Claim Notice (if then known) the amount or the method of computation of the
amount of such claim, and a reference to the provision of this Agreement or any
other agreement, document or instrument executed hereunder or in connection
herewith upon which such claim is based. The failure of any Indemnified Party to
give the Claim Notice promptly as required by this Section 11.3.1 shall not
affect such Indemnified Party's rights under this Section 11 except to the
extent such failure is actually prejudicial to the rights and
9
obligations of the Indemnitor. After the giving of any Claim Notice pursuant
hereto, the amount of indemnification to which an Indemnified Party shall be
entitled under this Section 11 shall be determined: (A) by the written agreement
between the Indemnified Party and the Indemnitor; (B) by a final judgment or
decree of any court of competent jurisdiction; or (C) by any other means to
which the Indemnified Party and the Indemnitor shall agree. The judgment or
decree of a court shall be deemed final when the time for appeal, if any, shall
have expired and no appeal shall have been taken or when all appeals taken shall
have been finally determined. The Indemnified Party shall have the burden of
proof in establishing the amount of Losses and Expenses suffered by it.
11.3.2 In order for a party to be entitled to any indemnification provided
for under this Agreement in respect of, arising out of or involving a Claim or
demand made by any third Person against the Indemnified Party, such Indemnified
Party must notify the Indemnitor in writing, and in reasonable detail, of the
third Person Claim promptly after receipt by such Indemnified Party of written
notice of the third Person Claim. Thereafter, the Indemnified Party shall
promptly deliver to the Indemnitor copies of all notices and documents
(including court papers) received by the Indemnified Party relating to the third
Person Claim. Notwithstanding the foregoing, should a party be physically served
with a complaint with regard to a third Person Claim, the Indemnified Party must
notify the Indemnitor with a copy of the complaint within five (5) Business Days
after receipt thereof and shall deliver to the Indemnitor within seven (7)
Business Days after the receipt of such complaint copies of notices and
documents (including court papers) physically served upon the Indemnified Party
relating to the third Person Claim. The failure of any Indemnified Party to give
the Claim Notice promptly (or in five (5) Business Days in the case of service
of a complaint upon the Indemnified Party) as required by this Section 11.3.2
shall not affect such Indemnified Party's rights under this Section 11 except to
the extent such failure is actually prejudicial to the rights and obligations of
the Indemnitor.
11.3.3 In the event of the initiation of any legal proceeding against the
Indemnified Party by a third Person, the Indemnitor shall have the sole and
absolute right after the receipt of notice, at its option and at its own
expense, to be represented by counsel of its choice and to control, defend
against, negotiate, settle or otherwise deal with any Claim or demand which
relates to any loss, liability or damage indemnified against hereunder;
provided, however, that the Indemnified Party may participate in any such
proceeding with counsel of its choice and at its expense. The parties hereto
agree to cooperate fully with each other in connection with the defense,
negotiation or settlement of any such Claim or demand. To the extent the
Indemnitor elects not to defend such Claim or demand, and the Indemnified Party
defends against or otherwise deals with any such Claim or demand, the
Indemnified Party may retain counsel, reasonably acceptable to the Indemnitor,
at the expense of the Indemnitor, and control the defense of such Claim or
demand. Neither the Indemnitor nor the Indemnified Party may settle any such
Claim or demand which settlement obligates the other party to pay money, to
perform obligations or to admit liability without the consent of the other
party, such consent not to be unreasonably withheld. After any final judgment or
award shall have been rendered by a court, arbitration board or administrative
agency of competent jurisdiction and the time in which to appeal therefrom has
expired, or a settlement shall have been consummated, or the Indemnified Party
and the Indemnitor shall arrive at a mutually binding agreement with respect to
each separate matter alleged to be indemnified by the Indemnitor hereunder, the
Indemnified
10
Party shall forward to the Indemnitor notice of any sums due and owing by it
with respect to such matter and the Indemnitor shall pay all of the sums for
which indemnification under this Section 11 is provided so owing to the
Indemnified Party by wire transfer, certified or bank cashier's check within
thirty (30) days after the date of such notice.
11.3.4 In any case where an Indemnified Party actually recovers from third
Persons any amount in respect of a matter with respect to which an Indemnitor
has indemnified it pursuant to this Section 11, such Indemnified Party shall
promptly pay over to the Indemnitor the amount so recovered (after deducting
therefrom the full amount of the expenses incurred by it in procuring such
recovery), but not in excess of the sum of (i) any amount previously so paid by
the Indemnitor to or on behalf of the Indemnified Party in respect of such
matter and (ii) any amount expended by the Indemnitor in pursuing or defending
any Claim arising out of such matter.
11.3.5 For purposes of this Agreement, the following terms shall have the
meanings set forth below:
"Claims" means any actions, suits, proceedings, claims, complaints,
disputes, arbitrations or investigations.
"Expense" means any and all expenses incurred in connection with
investigating, defending or asserting any Claim incident to any matter
indemnified against in this Agreement (including, without limitation, court
filing fees, court costs, arbitration fees or costs, witness fees, and
reasonable fees and disbursements of legal counsel, investigators, expert
witnesses, consultants, accountants and other professionals).
"Governmental Authority" means (i) when used herein in connection with any
representation, warranty, covenant, agreement or obligation of PTSC, means the
government of the United States of America and any state, city, locality or
other political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing Governmental
Authorities referred to in this clause (i); and (ii) when used herein in
connection with any representation, warranty, covenant, agreement or obligation
of AIC, means the governments of the United States of America and Mexico and any
state, city, locality or other political subdivision thereof, any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, and any corporation or other entity
owned or controlled, through stock or capital ownership or otherwise, by any of
the foregoing Governmental Authorities referred to in this clause (ii); and
(iii) when used herein in connection with this Section 11, the government of any
nation, state, city, locality or other political subdivision thereof, any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, and any corporation or other entity
owned or controlled, through stock or capital ownership or otherwise, by any of
the foregoing.
"Losses" means any and all losses, costs, obligations, liabilities,
settlement payments, awards, judgments, fines, penalties, damages, expenses,
deficiencies or other charges.
11
"Person" means any individual, firm, corporation, partnership, trust,
incorporated or unincorporated association, joint venture, joint stock company,
limited liability company, Governmental Authority or other entity of any kind,
and shall include any successor (by merger or otherwise) of such entity.
12. Termination.
12.1. Termination in the Event of Bankruptcy. Either party may terminate
this Agreement if a petition in bankruptcy is filed by or on behalf of the other
party (and PTSC may terminate this Agreement if such a petition is filed by or
on behalf of TVA), or the other party (or, with respect to PTSC, TVA) otherwise
takes advantage of any insolvency law, or an involuntary petition in bankruptcy
is filed against such other party (or, with respect to PTSC, TVA) and not
dismissed within sixty (60) days thereafter, or if a receiver or trustee of any
of the property or equity interests of such party (or, with respect to PTSC,
TVA) is appointed at any time and such appointment is not vacated within sixty
(60) days thereafter.
12.2. Termination in the Event of Breach.
12.2.1 Each of AIC or ▇▇▇▇▇▇ may terminate this Agreement if the other
party has been determined to be in Breach pursuant to the procedures set forth
in Section 15 hereof.
12.2.2 If this Agreement is terminated pursuant to Section 12.2.1 as a
result of AIC's Breach prior to the third anniversary of the Effective Date, AIC
shall be required to make a monthly payment as described in this Section 12.2.2
to ▇▇▇▇▇▇ commencing immediately, but payable on the Business Day following the
date of such termination (the "Pre-Option Payment Date") and ending on the
earlier of (i) the Closing Date (as defined in the Option Agreement) and (ii)
the date the aggregate amount paid to ▇▇▇▇▇▇ by AIC pursuant to this Section
12.2.2 equals U.S. Five Million Dollars ($5,000,000). To the extent required
pursuant to the preceding sentence, the amount of such monthly payments shall be
U.S. Eight Hundred Thousand Dollars ($800,000) for the first six payments and
U.S. Two Hundred Thousand Dollars ($200,000) for the seventh payment, payable on
the Pre-Option Payment Date and each one-month anniversary thereof; provided,
however, that the payment will be pro rata for the month on which the Closing
(as defined in the Option Agreement) is consummated.
12.2.3 If this Agreement is terminated pursuant to Section 12.2.1 as a
result of AIC's Breach after the third anniversary of the Effective Date, AIC
shall be required to make a monthly payment to ▇▇▇▇▇▇ as described in this
Section 12.2.3 commencing immediately, but payable on the fifth (5th) Business
Day following the date of such termination (the "Post-Option Payment Date") and
ending on the earlier of (i) the Maturity Date (as defined in the Amended and
Restated Credit Agreement) and (ii) the date the aggregate amount paid to ▇▇▇▇▇▇
by AIC pursuant to this Section 12.2.3 equals U.S. Four Million Seven Hundred
Eighty Thousand Dollars ($4,780,000). To the extent required pursuant to the
preceding sentence, the amount of each such monthly payment shall be U.S. Seven
Hundred Ninety Six Thousand Six Hundred Sixty Six Dollars ($796,666), payable on
the Post Option Payment Date and each one month anniversary thereof; provided,
however, that the payment will be pro rata for the month in which the Maturity
Date occurs.
12
12.2.4 All payments required by Sections 12.2.2 or 12.2.3 shall be made by
wire transfer of immediately available funds denominated in U.S. dollars to such
bank account or accounts as is/are designated by ▇▇▇▇▇▇ for such purposes not
less than one (1) Business Day before such payment is required to be made.
12.2.5 The payments referenced to in Section 12.2.2 and 12.2.3 shall be the
sole and exclusive remedy of ▇▇▇▇▇▇ in respect of a Breach by AIC of this
Agreement for any alleged loss attributable to any right to, or expectation of
receiving the "Step-Up Amount", being defined as the amounts payable as
Additional Quarterly Consideration pursuant to clause (ii) of the definition of
"Quarterly Consideration" following the Extension Period Effective Date (as set
forth in Attachment A hereto) (that is, the difference between the amounts set
forth in clauses (i) and (ii)). AIC and ▇▇▇▇▇▇ have provided the foregoing
liquidated damages solely for the alleged loss of the Step-Up Amount and after
having considered carefully the anticipated and actual loss of the Step-Up
Amount that would be incurred in such circumstance as a result of a Breach by
AIC, the difficulty of ascertaining at this time the actual amount of damages,
special and general, that ▇▇▇▇▇▇ would suffer as a result of the loss of the
Step-Up Amount, and the inconvenience or nonfeasibility of otherwise obtaining
an adequate remedy in such event. The provision of liquidated damages for the
loss to ▇▇▇▇▇▇ of the Step-Up Amount as a result of AIC's Breach shall have no
effect whatsoever on any other right of ▇▇▇▇▇▇ for any remedy or remedies for
payment, indemnification or other damages available to it under this Agreement
or now or hereafter existing at law or in equity.
12.3. Timely Payment of PTSC Debt. Upon the payment in full of the PTSC
Debt , including any accrued and unpaid interest in accordance with the terms
thereof, prior to the Effective Date (as defined without giving effect to
Section 3.2), this Agreement shall terminate automatically without any further
action by the parties and shall be void ab initio.
12.4. Consummation of Option. Upon the Closing (as such term is defined in
the Option Agreement) contemplated by the Option Agreement, this Agreement shall
terminate automatically without any further action by the parties.
12.5. Liabilities Upon Termination. Upon termination of this Agreement in
accordance with the terms hereof,
12.5.1 AIC shall be responsible for all liabilities, debts and obligations
of AIC accrued in connection with the purchase of air time and transmission
services on the Station including accounts payable, barter agreements and
unaired advertisements, but not for ▇▇▇▇▇▇'▇ federal, state, and local tax
liabilities associated with AIC's payments to ▇▇▇▇▇▇ as provided for herein.
12.5.2 ▇▇▇▇▇▇ shall not be entitled to any further payments under Section
2, Attachment A or otherwise under this Agreement, except (i) for payments due
under this Agreement through the date of termination and (ii) that ▇▇▇▇▇▇ shall
be entitled to continue to receive such payments in the event that this
Agreement has been terminated by ▇▇▇▇▇▇ pursuant to Section 12.2 hereof.
13
12.5.3 If this Agreement is terminated by ▇▇▇▇▇▇ pursuant to Section
12.2.1, or is terminated pursuant to Section 13, in either case before the
Cut-Off Date or the Extended Cut-Off Date, if applicable (as such terms are
defined in the Option Agreement), and if AIC does not deliver an Option Exercise
Notice pursuant to the Option Agreement, then AIC shall make available to
▇▇▇▇▇▇, at ▇▇▇▇▇▇' expense, studio and control room facilities and equipment
sufficient to operate the Station as it is then being operated for a period of
up to six (6) months after such termination, at the election of ▇▇▇▇▇▇. If,
after such termination, AIC delivers an Option Exercise Notice pursuant to the
Option Agreement, AIC shall make available to ▇▇▇▇▇▇, at AIC's expense, studio
and control room facilities and equipment sufficient to operate the Station as
it is then being operated until the Closing under the Option Agreement or, if
there is no Closing under the Option Agreement, for a period continuing up to
six (6) months after the Cut-Off Date or Extended Cut-Off Date, if applicable
(as such terms are defined in the Option Agreement), at the election of ▇▇▇▇▇▇.
▇▇▇▇▇▇ must provide AIC written notice within ten (10) days after termination of
this Agreement that it desires AIC to make such studio, control room facilities
and equipment available to ▇▇▇▇▇▇. AIC shall have no responsibility to provide
▇▇▇▇▇▇ with replacement real or personal property to permit operation of the
Station from a location or utilizing facilities independent of AIC's premises or
facilities unless such property was actually used by AIC in the operation of the
Station. Upon termination of this Agreement, AIC shall return to ▇▇▇▇▇▇ any
equipment and other personal property that (i) has not been retired from service
with ▇▇▇▇▇▇' consent and was (ii) owned by ▇▇▇▇▇▇ and used by AIC during the
Term hereof. If this Agreement is terminated for any reason other than pursuant
to Section 12.2.1 or Section 13 and other than as a result of a Closing under
the Option Agreement, ▇▇▇▇▇▇ shall have the right to sublease any leased space
then being used by AIC in the operation of the Station for a period of up to six
(6) months following the Term, including the use of the studio, control room
facilities and personal property used by AIC to operate the Station.
12.5.4 Notwithstanding anything in the foregoing to the contrary, except as
specifically provided in Section 12.2.5 with respect to the Step-Up Amount,
termination of this Agreement shall not extinguish any rights of either party as
may be provided by Section 11, Section 18.10 and Section 18.11 hereof.
13. Local Marketing Agreement Challenge. If this Agreement is challenged in
whole or in part at or by a governmental authority or judicial forum, counsel
for ▇▇▇▇▇▇ and counsel for AIC shall jointly defend this Agreement and the
parties' performance hereunder. If this Agreement is declared invalid or illegal
in whole or in substantial part by a ruling, order or decree of a Governmental
Authority or judicial forum, and such ruling, order or decree has become
effective, then the parties shall endeavor in good faith to reform the Agreement
as necessary. If the parties are unable to reform this Agreement within thirty
(30) days of the effective date of such ruling, order or decree, then this
Agreement shall terminate and neither party shall have any further liability to
the other except as may be provided by Sections 11 and 12.5 hereof. For the
avoidance of doubt, no party will have any liability for a breach of a
representation or warranty based on a determination of illegality or invalidity
under this Section 13.
14. Additional Representations, Warranties and Covenants.
14.1. Additional Representations, Warranties and Covenants of ▇▇▇▇▇▇.
14
14.1.1 Authority; No Conflicts.
(i) Each of PTSC and PSC License has the requisite limited liability
company power and authority to execute and deliver this
Agreement, to consummate the transactions contemplated hereby and
to comply with the terms, conditions and provisions hereof.
(ii) The execution, delivery and performance of this Agreement by each
of PTSC and PSC License have been duly authorized and approved by
all necessary limited liability company action of each of PTSC
and PSC License and do not and will not require any further
authorization or consent of either of PTSC or PSC License. This
Agreement is a legal, valid and binding agreement of each of PTSC
and PSC License enforceable in accordance with its terms, except
as such enforceability may be limited by bankruptcy, moratorium,
insolvency, reorganization or other similar laws affecting or
limiting the enforcement of creditors' rights generally and
except as such enforceability is subject to general principles of
equity (regardless of whether such enforceability is considered
in a proceeding in equity or at law).
(iii) None of the execution, delivery and performance by either of
PTSC or PSC License of this Agreement, the consummation by either
of PTSC or PSC License of any of the transactions contemplated
hereby or compliance by either of PTSC or PSC License with, or
fulfillment by either of PTSC or PSC License of, the terms,
conditions and provisions hereof will:
(A) conflict with, result in a breach of the terms, conditions
or provisions of, or constitute a default, an event of
default or an event creating rights of acceleration,
termination or cancellation or a loss of rights under, or
result in the creation or imposition of any Lien (as defined
in the Option Agreement) upon any of the Purchased Assets
(as defined in the Option Agreement) under, the certificate
of formation, operating agreement, certificate of
incorporation or bylaws of PTSC or any of its Subsidiaries
(as defined in the Option Agreement), any Station Agreement
(as defined in the Option Agreement), any Governmental
Permit (as defined in the Option Agreement) or any Order (as
defined in the Option Agreement) to which PTSC or any of its
Subsidiaries (as defined in the Option Agreement) is a party
or to which any of the Purchased Assets (as defined in the
Option Agreement), the Station or the Business (as defined
in the Option Agreement) is subject or by which ▇▇▇▇▇▇ or
any of its Subsidiaries (as defined in the Option Agreement)
is bound, or any Requirement of Law (as defined in the
Option Agreement) affecting PTSC, any of its Subsidiaries
(as defined in the Option Agreement), any of the Purchased
Assets (as defined in the Option Agreement), the Station or
the Business (as defined in the Option Agreement) except for
any such conflicts, breaches or other occurrences of the
type referred to above, which would not individually or in
the aggregate have a Material Adverse Effect (as defined in
the Option Agreement) or prevent the consummation by each of
PTSC and PSC License of the transactions contemplated
hereby.
15
(B) require the approval, consent, authorization or act of, or
the making by PTSC or any of its Subsidiaries (as defined in
the Option Agreement) of any declaration, filing or
registration with, any third party or any Governmental
Authority, except for such of the foregoing as are necessary
pursuant to the HSR Act (as defined in the Option
Agreement), the Communications Act or the rules and
regulations of the FCC, and except for any such approvals,
consents, authorizations or other actions of the type
referred to above which would not individually or in the
aggregate have a Material Adverse Effect (as defined in the
Option Agreement) or prevent the consummation by each of
▇▇▇▇▇▇ of the transactions contemplated hereby.
14.1.2 Authorizations. During the Term, either PTSC or PSC shall own and
hold all licenses and other permits and authorizations necessary for the
operation of the Station as presently conducted (including licenses, permits and
authorizations issued by the FCC), and such licenses, permits and authorizations
shall be in full force and effect for the entire Term hereunder, unimpaired by
any acts or omissions of ▇▇▇▇▇▇, its principals, employees or agents except
where the failure to own and hold such licenses, permits and authorizations or
the failure of such licenses, permits and authorizations to be in full force and
effect would not have a Material Adverse Effect (as defined in the Option
Agreement).
14.1.3 Broadcast Obligations. ▇▇▇▇▇▇ has no agreement, contract, commitment
or understanding to broadcast any programming (including paid programming) on
the Station which would be in effect for more than 30 days after the Effective
Date. After the date hereof, except as contemplated by this Agreement or the
Amended and Restated Affiliation Agreement (as defined therein), ▇▇▇▇▇▇ shall
not incur any programming obligations which would be in effect for more than 30
days after the Effective Date for the Station without the prior written consent
of AIC. AIC shall be obligated to broadcast any such programming and shall be
entitled to receive any revenue relating to such programming which is scheduled
to be broadcast up to 30 days after the Effective Date.
14.1.4 ▇▇▇▇▇▇ Control. ▇▇▇▇▇▇ and AIC agree that, for the Term, ▇▇▇▇▇▇
shall maintain ultimate control over the Station's facilities, including
specifically control over the Station's finances, personnel and programming, and
nothing herein shall be interpreted as depriving ▇▇▇▇▇▇ of the power or right of
such ultimate control.
14.1.5 Insurance. ▇▇▇▇▇▇ shall maintain in full force and effect throughout
the Term insurance with responsible and reputable insurance companies or
associations covering such risks (including fire and other risks insured against
by extended coverage, public liability insurance, insurance for claims against
personal injury or death or property damage and such other insurance as may be
applicable) and in such amounts as it currently has in place. AIC shall be
listed as an additional insured on such insurance policies. Any insurance
proceeds received by ▇▇▇▇▇▇ in respect of damaged property owned or leased by
▇▇▇▇▇▇ shall be used to repair or replace such property. ▇▇▇▇▇▇ has presented to
AIC prior to the date hereof certificates of insurance or binders for such
insurance policies.
14.1.6 Compliance with Applicable Law. ▇▇▇▇▇▇ covenants that the
performance of its obligations under this Agreement shall be in material
compliance with,
16
and shall not violate in any material respect, any applicable laws or any
applicable rules, regulations or orders of the FCC or any other Governmental
Authority and ▇▇▇▇▇▇ acknowledges that AIC has not urged, counseled, or advised
the use of any unfair business practice.
14.2. Additional Representations, Warranties and Covenants of AIC and TVA.
14.2.1 Authority; No Conflicts
(i) Each of AIC and TVA has the requisite corporate power and
authority to execute and deliver this Agreement, to consummate
the transactions contemplated hereby and to comply with the
terms, conditions and provisions hereof.
(ii) The execution, delivery and performance of this Agreement by each
of AIC and TVA have been duly authorized and approved by all
necessary corporate action of each of AIC and TVA and does not
require any further authorization or consent of either of AIC or
TVA. This Agreement is a legal, valid and binding agreement of
each of AIC and TVA enforceable in accordance with its terms,
except as such enforceability may be limited by bankruptcy,
moratorium, insolvency, reorganization or other similar laws
affecting or limiting the enforcement of creditors' rights
generally and except as such enforceability is subject to general
principles of equity (regardless of whether such enforceability
is considered in a proceeding in equity or at law).
(iii) None of the execution and delivery by either of AIC or TVA of
this Agreement, the consummation by either of AIC or TVA of any
of the transactions contemplated hereby or compliance by either
of AIC or TVA with or fulfillment by either of AIC or TVA of the
terms, conditions and provisions hereof will:
(A) conflict with, result in a breach of the terms, conditions
or provisions of, or constitute a default, an event of
default or an event creating rights of acceleration,
termination or cancellation or a loss of rights under, or
result in the creation or imposition of any Lien (as defined
in the Option Agreement) upon any assets of AIC or TVA
under, the certificate of incorporation or bylaws of AIC or
TVA, any indenture, note, mortgage, lease, guaranty or
material agreement, or any Order (as defined in the Option
Agreement), to which AIC or TVA is a party or any of the
assets of AIC or TVA is subject or by which AIC or TVA is
bound, or any Requirement of Law (as defined in the Option
Agreement) affecting AIC or TVA or its assets except for any
such conflicts, breaches or other occurrences of the type
referred to above, which would not individually or in the
aggregate have a material adverse effect on the business of
AIC or TVA or prevent the consummation by AIC or TVA of the
transactions contemplated hereby; or
(B) require the approval, consent, authorization or act of, or
the making by AIC or TVA of any declaration, filing or
registration with, any third party or Governmental
Authority, except for such of the foregoing as are necessary
pursuant to the HSR Act (as defined in the Option
Agreement),
17
the Communications Act or the rules regulations and policies
of the FCC, and except for any such approvals, consents,
authorizations or other actions of the type referred to above
which would not individually or in the aggregate have a
material adverse effect on the business of AIC or TVA or
prevent the consummation by AIC or TVA of the transactions
contemplated hereby.
14.2.2 Compliance with Applicable Law. AIC covenants that the performance
of its obligations under this Agreement and its furnishing of Programming shall
be in material compliance with, and shall not violate in any material respect,
any applicable laws or any applicable rules, regulations, or orders of the FCC
or any other governmental authority, including without limitation, Section
73.1740(a)(2) of the FCC Rules, and AIC acknowledges that ▇▇▇▇▇▇ has not urged,
counseled, or advised the use of any unfair business practice.
14.2.3 Handling of Complaints. AIC shall promptly advise ▇▇▇▇▇▇ of any
public or FCC complaint or inquiry that AIC receives concerning the Programming
and shall cooperate with ▇▇▇▇▇▇ and take all actions as may be reasonably
requested by ▇▇▇▇▇▇ in responding to any such complaint or inquiry.
14.2.4 Copyright and Licensing. AIC represents and warrants to ▇▇▇▇▇▇ that
AIC has and shall have throughout the Term full authority to broadcast the
Programming on the Station and that AIC shall not broadcast on the Station any
material in violation of the U.S. copyright laws. All music supplied by AIC for
broadcast on the Station shall be: (i) licensed by ASCAP, SESAC or BMI; (ii) in
the public domain; or (iii) cleared at the source by AIC.
14.2.5 Information For FCC Reports. Upon request by ▇▇▇▇▇▇, AIC shall
provide in a timely manner any such information in its possession or prepare
such information to provide to ▇▇▇▇▇▇ which shall enable ▇▇▇▇▇▇ to prepare, file
or maintain the records and reports required by the FCC.
14.2.6 Must-Carry. AIC shall assist ▇▇▇▇▇▇ in determining whether
additional must-carry rights become available to the Station and, to the extent
that such rights become available, AIC shall cooperate with and assist ▇▇▇▇▇▇ in
making valid must-carry elections or entering into valid retransmission consent
agreements to take full advantage of such rights. AIC shall not take any actions
the purpose of which is to jeopardize in any material respect the Station's
cable carriage, satellite carriage or any other rights it might have with
respect to must carry or retransmission consent rights.
14.2.7 Compliance with Leases. AIC shall comply in all material respects
with the terms of all material leases and material station agreements as
delivered to AIC by PTSC under the Amended and Restated Credit Agreement, and
any liability resulting from AIC's failure to so comply shall be the
responsibility of AIC.
14.2.8 Insurance. AIC shall maintain in full force and effect throughout
the Term insurance with responsible and reputable insurance companies or
associations covering such risks (including fire and other risks insured against
by extended coverage, public liability insurance, insurance for claims against
personal injury or death or
18
property damage and such other insurance as may be applicable) as is
conventionally carried by an operator of a full power television broadcast
station, but in any event at least comparable to the coverage currently
maintained by ▇▇▇▇▇▇, a certificate with respect to which has been previously
delivered. ▇▇▇▇▇▇ shall be listed as an additional insured on such insurance
policies. Any insurance proceeds received by AIC in respect of damaged property
shall be used to repair or replace such property.
15. Dispute Resolution.
15.1. Disputes. Notwithstanding anything herein to the contrary, any and
all disputes, controversies, or claims arising out of, relating to, or in
connection with, the performance of the parties' respective obligations under
this Agreement, including, but not limited to, any alleged violation by either
of the parties of the rules, regulations, or policies of the FCC or of
technical, programming, or other broadcast industry standards or practices
("Contract Claims"), will be determined and resolved solely in accordance with
the procedures set forth in this Section 15.
15.2. FCC Expert. The parties have appointed R. ▇▇▇▇▇ ▇▇▇▇▇▇, Esq., who has
significant personal and professional experience and knowledge of the television
broadcast industry and applicable FCC rules, regulations, and policies, as an
arbitrator (the "FCC Expert") to resolve all Contract Claims, including awarding
monetary damages.
15.3. Procedures. The FCC Expert will arbitrate all Contract Claims as set
forth in this Section 15.3. The arbitration of a Contract Claim will be
commenced by the submission of a statement of claim in writing by either party
(the "Initiating Party") to the FCC Expert and to the other party (the
"Defending Party") at the addresses specified in Section 18.5. The Defending
Party will have five (5) Business Days from its receipt of the statement of
claim to deliver a statement of defense in writing to the FCC Expert and to the
Initiating Party at the addresses and in the manner specified in Section 18.5.
The Initiating Party shall thereafter have three (3) Business Days from its
receipt of the statement of defense to deliver a reply in writing to the FCC
Expert and to the Defending Party. Each of the statement of claim and the
statement of defense shall be limited to no more than ten (10) pages, and the
reply shall be limited to no more than five (5) pages, each double spaced,
unless the FCC Expert directs otherwise. If the Defending Party shall fail to
submit a statement of defense and/or if the Initiating Party shall fail to
submit a reply to the Defending Party's statement of defense within the times
allotted, the FCC Expert shall proceed to resolve the matter in accordance with
Section 15.4 without such a statement of defense or reply. If no statement of
defense shall have been filed by the Defending Party, then the Initiating Party
may not file a reply. Neither party shall engage in any other communications
with the FCC Expert regarding any Contract Claim, and neither party shall engage
in any ex parte communication with the FCC Expert.
15.4. Resolution. In addition to the submissions provided for in Section
15.3 above, the FCC Expert may consider any materials he or she may deem
appropriate. The FCC Expert shall issue a decision in writing no later than the
earlier of ten (10) Business Days after (i) receiving a reply, or, if no reply
shall have been submitted, after the last date upon which a reply could have
been filed consistent with Section 15.3, or (ii) if no statement of defense
shall have been submitted, the last date upon which a statement of defense could
have been filed
19
consistent with Section 15.3. Except as provided in Section 15.5 below, the FCC
Expert's decision (the "Expert Decision") shall be binding upon the parties, and
no party shall commence any arbitration, legal action, or other proceeding to
upset or challenge the Expert Decision.
15.5. FCC Ruling. Solely with respect to any Contract Claim or a portion of
any Contract Claim which arises out of, relates to, or is in connection with,
any alleged violation by either of the parties of the rules, regulations, or
policies of the FCC (an "FCC Claim"), either party may, within thirty (30) days
after the date upon which an Expert Decision shall have been rendered, and
solely with respect to matters decided therein that involve an FCC Claim, seek a
ruling by the FCC of the matter pertaining to the FCC Claim. Such a ruling may
be sought only through a written request to the appropriate staff of the FCC's
Media Bureau or the FCC's Enforcement Bureau, as determined by the FCC Expert,
which may take the form of a letter, a pleading, an electronic-mail message, or
any other written submission, which written request (in whatever medium) shall
be drafted by and submitted to the FCC staff by the FCC Expert after
consultation with the Initiating Party and the Defending Party, and without
divulging the identities of the parties to the FCC staff at any time or in any
manner (unless the FCC Expert shall have been given specific permission by
▇▇▇▇▇▇ or its legal counsel in writing to divulge the identities of the parties
to the FCC staff), with copies of such written request served upon the
Initiating Party and the Defending Party by the FCC Expert at the time of its
submission to the FCC staff, in conformance with the notice provisions in
Section 18.5. Pending the receipt of the ruling by the FCC's staff, neither the
Initiating Party nor the Defending Party, nor their respective agents or
representatives, shall make or cause to be made any form of communication to the
FCC, whether oral, written, or otherwise, pertaining to the subject matter of
the request for the FCC's staff's ruling in the same or any other proceeding;
provided, however, that to the extent requested by the FCC's staff or reasonably
requested by either the Initiating Party or the Defending Party, and only after
consultation with the Initiating Party and the Defending Party or their legal
representatives, the FCC Expert may make any additional communication with the
FCC's staff pertaining to the request for a ruling, and provided, further, that
in the event of a written communication with the FCC's staff pertaining to the
request for a ruling, the FCC Expert shall provide a copy thereof simultaneously
to the Initiating Party and to the Defending Party in conformance with the
notice provisions in Section 18.5, and provided, further, that in the event of
an oral communication with the FCC's staff pertaining to the request for a
ruling, the FCC Expert shall promptly reduce the substance of such communication
to writing and shall provide a copy thereof to the Initiating Party and to the
Defending Party in conformance with the notice provisions in Section 18.5; and
provided, further, that in the event the FCC staff requests information directly
from either the Initiating Party or the Defending Party, such party may comply
with the FCC staff's request and shall promptly inform the FCC Expert and the
other party of the request and provide each with a copy of the information
provided to the FCC staff. Any written ruling rendered by the FCC's staff, or
any written communication from the FCC's staff setting forth the FCC's position
on the matter raised in the FCC Claim, shall be binding upon the parties and, to
the extent contrary to the Expert Decision on the matter, shall overrule and
supercede the Expert Decision. In the event that there should be a dispute
between the parties regarding whether or to what extent a written FCC ruling on
an FCC Claim shall have overruled all or any part of an Expert Decision, the FCC
Expert shall resolve that dispute and his or her resolution shall be binding
upon the parties. No oral ruling by the FCC's staff communicated to the FCC
Expert, the Initiating Party, the
20
Defending Party, or their representatives shall be binding upon the parties, nor
shall such oral ruling by the FCC's staff have any effect upon the Expert
Decision.
15.6. Cure. Irrespective of whether a request for an FCC ruling on a matter
which is the subject of an Expert Decision on an FCC Claim shall have been made,
as provided in Section 15.5, each party shall, within the time period specified
in the Expert Decision, but in any event not later than thirty (30) days after
the date upon which an Expert Decision shall have been rendered, take all action
necessary to cure any violation of this Agreement consistent with the direction
of the Expert Decision, and otherwise shall perform as directed in the Expert
Decision, and to bring such party's conduct within the terms of the Expert
Decision. In the event that either party fails to comply with the Expert
Decision, the other party may apply to the FCC Expert under the same terms and
procedures as provided in Section 15.3, above, for a determination by the FCC
Expert that the other party is in breach of the Agreement. A written decision by
the FCC Expert that a party has breached an Expert Decision, or has failed to
cure or otherwise bring its conduct within the terms of the Expert Decision,
within the required time frame, shall conclusively establish a breach of this
Agreement by such party (a "Breach").
15.7. FCC Expert Compensation. The parties agree that each will be
responsible for one-half (1/2) of the compensation due to the FCC Expert.
15.8. Replacement of FCC Expert. The FCC Expert may resign at any time by
so notifying the parties in writing, such resignation to be effective upon
appointment of a successor FCC Expert. The FCC Expert may also, in his or her
sole discretion, recuse himself or herself from resolving any particular
Contract Claim, in which case he or she may, with the approval of the Initiating
Party and the Defending Party, appoint a pro tempore FCC Expert to resolve that
particular Contract Claim, which pro tempore FCC Expert shall agree to be
governed by the provisions of this Section 15, and the FCC Expert shall
otherwise remain available to resolve all other Contract Claims in accordance
with this Section 15. The parties may remove the FCC Expert at any time by so
notifying the FCC Expert in a writing signed by all of the parties, and may
appoint a successor FCC Expert by their unanimous written consent. If the FCC
Expert resigns or is removed, or if a vacancy exists for any reason, the parties
will promptly agree upon the successor FCC Expert. Failing agreement of the
parties within fourteen (14) days of the resignation or removal or recusal of
the FCC Expert, a successor or pro tempore FCC Expert shall be designated by
agreement of FCC counsel for the parties; provided, however, that if for any
reason a successor FCC Expert is not designated within twenty (20) days of the
resignation or removal of the FCC Expert, the successor FCC Expert shall be
chosen by the American Arbitration Association in New York City (the "AAA") and
either party shall have the right to request the AAA to make such selection by
submitting the request to the AAA in writing together with a copy of this
Section 15, simultaneously providing a copy of the request to the other party in
conformance with the notice provisions in Section 18.5. Any successor FCC Expert
appointed or designated pursuant to this Section 15.8 shall be the "FCC Expert"
for all purposes of this Section 15; provided, however that the FCC Expert
selected by the AAA shall not follow the rules promulgated by the AAA but shall
instead abide by the provisions of this Agreement.
21
16. Intellectual Property. Effective as of the Effective Date, ▇▇▇▇▇▇
licenses to AIC the exclusive right to use (or, only to the extent ▇▇▇▇▇▇ does
not hold the exclusive right, the non-exclusive right to use) all intellectual
property owned by or licensed to ▇▇▇▇▇▇ and used primarily in the operation of
the Station (including, but not limited to, logos, jingles, promotional
materials, call signs, goodwill, trademarks, service marks, slogans, trade
names, copyrights and any applications and registrations therefor) (the "IP
License"). In the event of termination of this Agreement, the IP License shall
terminate.
17. Benefit and Assignment.
17.1. This Agreement may not be assigned by either party, in whole or in
part, either voluntarily or by operation of law, without the prior written
consent of the other party; provided, however, that ▇▇▇▇▇▇ may assign its rights
and obligations under this Agreement to an Affiliate to whom ▇▇▇▇▇▇ transfers
all of the assets used in the operation of the Station and interests in the
Station (the "Permitted Affiliate Transferee"); provided, however, that (i) the
Permitted Affiliate Transferee qualifies under the Communications Act and all
other Requirements of Law to become a holder of the Governmental Permits
(including, without limitation, the FCC Licenses), (ii) each representation and
warranty of ▇▇▇▇▇▇ in this Agreement is true and correct in all respects as to
the Permitted Affiliate Transferee, as though the Permitted Affiliate Transferee
were substituted for ▇▇▇▇▇▇ throughout this Agreement, (iii) ▇▇▇▇▇▇ gives
written notice to AIC at least ten (10) Business Days prior to the assignment to
the Permitted Affiliate Transferee, setting forth the ownership structure of the
Permitted Affiliate Transferee, and (iv) ▇▇▇▇▇▇ and the Permitted Affiliate
Transferee execute and deliver to AIC an undertaking in form and substance
reasonably satisfactory to AIC in which ▇▇▇▇▇▇ and the Permitted Affiliate
Transferee confirm that (x) the conditions set forth in clauses (i) and (ii)
have been complied with in all respects, (y) the Permitted Affiliate Transferee
has the power, authority and legal right to discharge its obligations under this
Agreement, and (z) ▇▇▇▇▇▇ and the Permitted Affiliate Transferee are jointly and
severally liable for the representations and warranties of ▇▇▇▇▇▇ set forth in
this Agreement, as modified to include the statements set forth in such
undertaking, and agree that they are bound as "▇▇▇▇▇▇" hereunder. No such
assignment by ▇▇▇▇▇▇ shall relieve ▇▇▇▇▇▇ of any of its obligations hereunder.
Any assignment contrary to the provisions of this Section 17 shall be deemed a
Breach under this Agreement.
17.2. For purposes of this Agreement, an "assignment or transfer of
control" under Section 73.3540 and 73.3541 of the rules, regulations and
policies of the FCC or any successor hereof shall be deemed an assignment or
transfer of control requiring AIC's prior written consent.
17.3. The parties acknowledge and agree that in the course of AIC's
performance and/or compliance under this Agreement, AIC may, in its sole
discretion and at its expense, (i) engage such agents, advisors, consultants,
independent contractors, or other similar representatives as AIC may deem
appropriate and (ii) delegate AIC's rights under this Agreement as AIC may deem
appropriate; provided that no such engagement or delegation shall relieve AIC of
any of its obligations under this Agreement.
18. General Terms.
22
18.1. Amendment. Any amendment, supplement or modification of or to any
provision of this Agreement, and any waiver of any provision of this Agreement,
and any consent to any departure by any party hereto from the terms of any
provision of this Agreement, shall be effective (i) only if it is made or given
in writing and signed by each of the parties hereto, and (ii) only in the
specific instance and for the specific purpose for which made or given. No
failure to exercise and no delay in exercising on the part of any party hereto
in exercising any right, remedy, power or privilege provided in this Agreement
or by statute or at law or in equity shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right, remedy, power or
privilege preclude any other or further exercise thereof or the exercise of any
other right, remedy, power or privilege. No course of dealing between the
parties hereto shall operate as a waiver of any right, power or privilege
hereunder of any such party. Each and every default by any of the parties under
this Agreement shall give rise to a separate cause of action hereunder, and
separate suits may be brought under this Agreement as each cause of action
arises.
18.2. Entire Agreement. This Agreement, together with the exhibits,
schedules and attachments hereto, and the Settlement Agreement are intended by
the parties as a final expression of their agreement and intended to be a
complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein and therein.
There are no restrictions, promises, representations, warranties or
undertakings, other than those set forth or referred to herein or therein. This
Agreement, together with the exhibits, schedules and attachments hereto, and the
Settlement Agreement supercede all prior agreements and understandings between
the parties with respect to such subject matter, including the Terminated
Agreements (as defined in the Settlement Agreement).
18.3. Survival of Representations and Warranties. All of the
representations and warranties of made herein shall survive the execution and
delivery of this Agreement.
18.4. Confidentiality. No statement announcing in any way the transactions
contemplated by this Agreement shall be issued by (i) AIC, without the prior
written consent of ▇▇▇▇▇▇ as to the specific content of such statement, such
consent not to be unreasonably withheld or delayed (ii) ▇▇▇▇▇▇, without the
prior written consent of AIC as to the specific content of such statement, such
consent not to be unreasonably withheld or delayed; provided that this Section
18.4 shall not apply in the event such disclosure is required (a) by any pending
litigation or any Requirement of Law (as defined in the Settlement Agreement)
(as determined in good faith by counsel to AIC or ▇▇▇▇▇▇, as applicable),
including if a court of competent jurisdiction or a duly authorized Governmental
Authority requires any such statement in a final Order (as defined in the
Settlement Agreement) or (b) if there is a Requirement of Law (as determined in
good faith by counsel to AIC or ▇▇▇▇▇▇, as applicable) for the filing of any
Transaction Document with a Governmental Authority or other disclosure related
thereto; and, provided, further, that the parties hereto are expressly
authorized to disclose to any and all persons the structure and tax aspects of
the transactions contemplated by this Agreement and the other Transaction
Documents and all materials of any kind that are provided to such party related
to such structure and tax aspects.
23
18.5. Notices. All notices, demands and other communications hereunder
shall be made in writing and shall be sent by registered or certified
first-class mail, return receipt requested, courier service or personal
delivery:
(1) if to ▇▇▇▇▇▇:
c/▇ ▇▇▇▇▇▇ Telecasting Companies
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
with a copy to:
▇▇▇▇ ▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, Esq
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Esq.
and with a copy to:
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Jr., Esq.
(2) if to AIC:
c/o TV Azteca, S.A. de C.V.
Periferico Sur 4121
Col. ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇
▇.▇. ▇▇▇▇▇ ▇▇▇▇▇▇
Delegacion Tlalpan
Mexico, D.F.
Tel: ▇▇▇-▇▇▇-▇-▇▇▇▇▇▇▇▇
Attention: Lic. ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
and with a copy to:
▇▇▇▇, Weiss, Rifkind, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
24
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇ ▇▇▇▇▇, Esq.
and with a copy to:
▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
All such notices, demands and other communications shall be deemed to have been
duly given when delivered by hand, if personally delivered; and when delivered
by courier, if delivered by commercial courier service; when actually received
by the intended recipient, if mailed; provided, however, that if any notice,
demand or other communication is delivered or received, as the case may be,
after 5:00 P.M. New York City time on a Business Day or delivered or received,
as the case may be, on a day that is not a Business Day, such notice, demand or
communication shall be deemed to have been duly given pursuant to this Section
18.5 on the next succeeding Business Day. Any party may by notice given in
accordance with this Section 18.5 designate another address or Person (as such
term is defined in the Settlement Agreement) for receipt of notices hereunder,
but such notice shall not be effective until actually received. For purposes of
this Agreement, the term "Business Day" means any day other than a Saturday,
Sunday or other day on which commercial banks in the State of New York or Mexico
City, Mexico are authorized or required by law or executive order to close.
18.6. Counterparts. This Agreement may be executed in any number of
counterparts, each of which so executed shall be deemed to be an original, but
all such counterparts shall together constitute but one and the same agreement.
Execution and delivery of this Agreement by exchange of facsimile copies bearing
the facsimile signature of a party hereto shall constitute a valid and binding
execution and delivery of this Agreement by such party. Such facsimile copies
shall constitute enforceable original documents.
18.7. Headings; Gender. The headings in this Agreement are inserted for
convenience of reference only and shall not affect the interpretation of this
Agreement. As used herein, masculine pronouns shall include the feminine and
neuter, neuter pronouns shall include the masculine and feminine, and the
singular shall be deemed to include the plural. As used in this Agreement, the
words "include" and "including," and variations thereof, shall not be deemed to
be terms of limitation, but rather shall be deemed to be followed by the words
"without limitation." Except as otherwise indicated, all references in this
Agreement to "Sections", "Exhibits" and "Attachments" are intended to refer to
Sections of this Agreement, Exhibits to this Agreement and Attachments to this
Agreement.
18.8. Further Assurances. Each party hereto agrees to execute, acknowledge,
deliver, file and record such further certificates, amendments, instruments and
documents, and to do all such other acts and things, as may be required by law
or as may be necessary, advisable or convenient to carry out the intent and
purpose of this Agreement.
25
18.9. Rule of Construction. The general rule of construction for
interpreting a contract, which provides that the provisions of a contract should
be construed against the party preparing the contract, is waived by the parties
hereto. Each party acknowledges that such parry was represented by separate
legal counsel in this matter who participated in the preparation of this
Agreement or such party had the opportunity to retain counsel to participate in
the preparation of this Agreement but elected not to do so.
18.10. Remedies. Except as otherwise provided herein, no remedy herein
conferred or reserved is intended to be exclusive of any other available remedy
or remedies, and each and every remedy shall be cumulative and shall be in
addition to every remedy under this Agreement or now or hereafter existing at
law or in equity.
18.11. Specific Performance. The parties recognize that if a party breaches
this Agreement and refuses to perform under the provisions of this Agreement,
monetary damages alone would not be adequate to compensate the non-breaching
party for its injury. Except as set forth in Section 12.2, the non-breaching
party shall therefore be entitled, in addition to any other remedies that may be
available (including the provisions of Section 11 (relating to
indemnification)), to obtain specific performance of the terms of this
Agreement. If any action is brought by the non-breaching party to enforce this
Agreement the breaching party shall waive the defense in any such action that
there is an adequate remedy at law and interpose no opposition, legal or
otherwise, as to the propriety of specific performance as a remedy hereunder,
and the breaching party agrees that the non-breaching party shall have the right
to seek specific performance without being required to prove actual damages,
post bond, or furnish other security. This Section 18.11 shall not limit the
non-breaching party's ability to seek damages in the event such party elects to
terminate this Agreement as a result of a Breach hereunder by the other party
instead of seeking specific performance.
18.12. Consent to Jurisdiction. Any Claim arising out of or relating to
this Agreement or the transactions contemplated hereby shall be brought by the
parties and heard and determined only in Delaware Chancery Court, unless
Delaware Chancery Court determines that it does not have jurisdiction over such
Claim, in which case such Claim may be brought by the parties and heard and
determined only in Delaware state court or a federal court sitting in Delaware.
The parties hereto consent to jurisdiction before and waive any objections of
venue to the Delaware Chancery Court, Delaware state court and any federal court
sitting in Delaware. Each party agrees not to assert, by way of motion, as a
defense or otherwise, in any such Claim, that it is not subject personally to
the jurisdiction of any such courts, that such Claim is brought in an
inconvenient forum, that the venue of such Claim is improper or that this
Agreement or the subject matter hereof may not be enforced in or by any such
courts. Each party further irrevocably submits to the jurisdiction of Delaware
Chancery Court, Delaware state court and any federal court sitting in Delaware
in any such Claim. Each of the parties irrevocably consents to service of
process in the manner provided for notices in Section 18.5. Nothing herein
contained shall be deemed to affect the right of any party to serve process in
any manner permitted by law.
18.13. GOVERNING LAW. THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED
HEREBY SHALL BE GOVERNED BY AND
26
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF.
18.14. Severability. If any provision of this Agreement shall be deemed
invalid or unenforceable as written, it shall be construed, to the greatest
extent possible, in a manner which shall render it valid and enforceable. No
invalidity or unenforceability shall affect any other portion of this Agreement.
18.15. No Third Party Beneficiaries. This Agreement is not for the benefit
of any third party and shall not be deemed to grant any right or remedy to any
third party whether or not referred to herein.
18.16. No Agency Relationship. Nothing contained herein shall be construed
so as to create any joint venture, partnership, business combination, or agency
relationship between AIC and ▇▇▇▇▇▇ and neither party shall be authorized to act
on behalf of the other.
IN WITNESS WHEREOF, each of the parties has executed this Agreement as of
the date first above written.
IN WITNESS WHEREOF, each of the parties has executed this Agreement as of
the date first above written.
▇▇▇▇▇▇ SOUTHERN CALIFORNIA LICENSE, LLC
By: ▇▇▇▇▇▇ Telecasting of Southern California LLC
its Sole Member
By: ▇▇▇▇▇▇ Telecasting Companies,
its Manager
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
▇▇▇▇▇▇ TELECASTING OF SOUTHERN CALIFORNIA LLC
By: ▇▇▇▇▇▇ Telecasting Companies, its Manager
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
AZTECA INTERNATIONAL CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Executive Officer
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Director
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Director
TV AZTECA, S.A. de C.V.
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: General Counsel
27
LOCAL MARKETING AGREEMENT
ATTACHMENT A
PAYMENT SCHEDULE
1. Certain Definitions. For purposes hereof:
"Amended and Restated Credit Agreement" means that certain Amended and
Restated Credit Agreement, dated as of February 1, 2003, by and between PTSC and
AIC.
"PTSC Debt" has the meaning set forth in the Amended and Restated Credit
Agreement.
"Quarterly Consideration Date" means each three month, six month, nine
month and annual anniversary of the Effective Date or the Extension Period
Effective Date (as defined below), as applicable, or the next Business Day
thereafter if any such date is not a Business Day.
"Quarterly Consideration" means:
(i) during the initial Term of this Agreement as set forth in Section 3.1
of this Agreement, an amount equal to the product of:
(1) the result of dividing (x) U.S. Fifteen Million Dollars
($15,000,000), by (y) 365 or 366 days as applicable for the relevant year,
multiplied by
(2) the actual number of days elapsed from the Effective Date or from
the immediately prior Quarterly Consideration Date, as applicable, to the
following Quarterly Consideration Date (or, if earlier, the date of
termination of this Agreement); and
(ii) commencing on the first day of any extension of the initial Term
pursuant to Section 3.3 (the "Extension Period Effective Date"), an amount equal
to the product of:
(1) the result of dividing (x) U.S. Twenty-Four Million Five Hundred
Sixty Thousand Dollars ($24,560,000), by (y) 365 or 366 days as applicable
for the relevant year, multiplied by
(2) the actual number of days elapsed from the Extension Period
Effective Date or from the immediately prior Quarterly Consideration Date
during such extension of the initial Term, as applicable, to the following
Quarterly Consideration Date (or, if earlier, the date of termination of
this Agreement).
2. Quarterly Consideration. On each Quarterly Consideration Date for the
prior quarter, AIC shall pay to ▇▇▇▇▇▇ the Quarterly Consideration in
consideration for the broadcast of the Programming on the Station as provided
herein; provided, however, that AIC may set off against the Quarterly
Consideration on a dollar-for-dollar basis all amounts then due and payable by
PTSC to AIC in respect of interest on the PTSC Debt under the Amended and
1
Restated Credit Agreement up to the maximum amount set forth in clause (i) of
the definition of Quarterly Consideration.
3. Failure to Broadcast. If ▇▇▇▇▇▇ preempts the Programming for any reason
other than a reason permitted under Sections 4 and 9 of this Agreement and the
FCC Expert makes a determination that such preemption was not permitted by
Section 4 or 9, the FCC Expert shall also make a determination of the
reimbursement payable by ▇▇▇▇▇▇ to AIC, based upon the pro rata portion of the
Quarterly Consideration paid with respect to any periods of time during which
such Programming is not broadcast, and ▇▇▇▇▇▇ shall reimburse AIC for such
amount as directed in the Expert Decision. AIC may set off against the Quarterly
Consideration on a dollar-for-dollar basis all amounts payable under this
Paragraph 3 which remain unpaid on any Quarterly Consideration Date.
2
ATTACHMENT B
EMPLOYEES
3
Schedule 10.1
AIC shall reimburse ▇▇▇▇▇▇ for the following expenses, costs and taxes,
which are attributable to the term of the LMA: (i) the salaries, payroll taxes,
medical and other benefits and all related costs of the ▇▇▇▇▇▇ Employees and
appropriate insurance (including worker's compensation and medical and general
liability insurance), which for the calendar year 2003 will not exceed $250,000
and will not increase by more than the greater of (A) ten percent per year or
(B) an amount equal to the prevailing market rate for such year in subsequent
calendar years, (ii) all expenses payable under or with respect to the
transmitter site lease (other than any arrearages existing as of the Effective
Date), (iii) all expenses payable under or with respect to the studio site lease
(or any substitute therefor), (iv) all utility payments required for the
operation of the tower site or the studio site, (v) FCC regulatory fees, (vi)
all taxes related to the KAZA Assets (as such term is defined in the Option
Agreement) or the operation of the Station (other than income, gain, franchise,
or similar income-based taxes), (vii) reasonable fees of FCC counsel incurred
with respect to the Station, and (viii) any insurance premiums paid by ▇▇▇▇▇▇
and deductibles paid by ▇▇▇▇▇▇ under any insurance policy that ▇▇▇▇▇▇ maintains
pursuant to Section 14.1.5. For purposes of illustration only: the current
monthly rent for the transmitter site is $13,085; the average monthly cost of
utilities for the transmitter site for the last six months of calendar year 2002
was $18,020; the current monthly rent for the studio site lease is $5,782; the
cost of FCC regulatory fees for the fiscal year ended September 30, 2002 was
approximately $14,000. Except for the expenses described in clause (i) of the
first sentence of this paragraph, ▇▇▇▇▇▇ makes no representation that the level
of any expenses incurred by AIC after the Effective Date will correspond to the
level of expenses listed above.
With respect to any period beginning prior to and ending after the LMA
Effective Date (but not after the end of the Term) or any period beginning after
the Effective Date (but not after the end of the Term) and ending after the
termination of this Agreement, any Taxes (other than income, gain, franchise or
similar income-based taxes), and any expenses other than Taxes, that are
described in this Schedule 10.1 shall be prorated for such periods in such
manner as is described in Section 7.1(a)(i) of the Option Agreement in the
manner set forth in Section 7.1(a)(ii) and 7.1 (e) of the Option Agreement,
respectively.
In addition to the expenses listed above, which shall be paid by ▇▇▇▇▇▇ and
reimbursed by AIC, AIC shall be responsible for all expenses incurred by AIC in
the operation and maintenance of the Station, the KAZA Assets or the Business
during the Term and any reasonable expenses incurred by ▇▇▇▇▇▇ in the operation
and maintenance of the Station during the Term; provided, however, that AIC
shall not reimburse ▇▇▇▇▇▇ for any programming except than as otherwise provided
herein.
4
EXHIBIT A
BROADCAST STATION PROGRAMMING POLICY STATEMENT
AIC agrees to cooperate with ▇▇▇▇▇▇ in the broadcasting of programs of the
highest possible standard of excellence, and for this purpose to observe the
following regulations in the preparation, writing, and broadcasting of its
programs.
I. No Plugola or Payola. AIC covenants that it shall not accept, and
shall instruct its employees not to 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, materials, supplies or other merchandise, services or
labor, in exchange for the broadcast of program matter whether or not
pursuant to written contracts or agreements between AIC and merchants
or advertisers, unless the payor is identified in the program as
having paid for or furnished such consideration in accordance with FCC
requirements.
II. No Lotteries. Announcements giving any information about lotteries or
games, to the extent that such announcements are prohibited by federal
or state law or regulation, are prohibited.
III. Election Procedures. At least fifteen (15) days before the start of
any primary or general election campaign, AIC will clear with ▇▇▇▇▇▇'
General Manager the rates that AIC will charge for advertising time to
be sold on the Station to legally-qualified candidates for election to
public office and/or to their supporters, in order to make certain
that the rates charged are in conformance with applicable law and
Station policy (a copy of which is attached).
IV. Required Announcements. AIC shall broadcast (i) an announcement in a
form satisfactory to ▇▇▇▇▇▇ at the beginning and at the end of each
day's transmissions by the Station, and at the beginning of each hour
during the Station's operations, to identify the Station, and (ii) any
other announcements that may be required by law, regulation, or
Station policy (a copy of which is attached).
V. No Illegal Announcements. No announcements or promotion prohibited by
the Communications Laws or other federal or state law or regulation
shall be made over the Station. Any game, contest, or promotion
relating to or to be presented over the Station must be fully stated
and explained in advance to ▇▇▇▇▇▇, who reserves the right in its sole
discretion to reject any game, contest, or promotion.
VI. ▇▇▇▇▇▇ Discretion Paramount. In accordance with ▇▇▇▇▇▇' responsibility
under the Act and the rules and regulations of the FCC, ▇▇▇▇▇▇
reserves the right to reject or to terminate any advertising proposed
to be presented or being presented over the Station which is in
conflict
1
with Station policy (a copy of which is attached) or which in ▇▇▇▇▇▇'
or its General Manager's sole judgment would not serve the public
interest.
▇▇▇▇▇▇ may waive any of the foregoing regulations in specific instances if,
in its opinion, the Station will remain in compliance with all applicable laws,
rules, regulations, and policies and if broadcasting in the public interest will
be served. In any case where questions of policy or interpretation arise, AIC
should submit such questions to ▇▇▇▇▇▇ for decision before making any
commitments in connection therewith.
2