TIME BROKERAGE AGREEMENT
for
KPLR-TV
by and between
KOPLAR COMMUNICATIONS TELEVISION, L.L.C.
&
KOPLAR COMMUNICATIONS, INC.
and
ACME TELEVISION LICENSES
OF
MISSOURI, INC.
&
ACME TELEVISION HOLDINGS, LLC
TIME BROKERAGE AGREEMENT
This Agreement ("Agreement") is dated this eighth day of September 1997 and
is by and between KOPLAR COMMUNICATIONS TELEVISION, L.L.C., ("KCT "), a limited
liability company formed under the laws of the State of Missouri, KOPLAR
COMMUNICATIONS, INC. ("Koplar"), a corporation formed under the laws of the
State of Missouri (KCT and Koplar are collectively referred to herein as
"Licensee" unless the context requires otherwise), ACME TELEVISION LICENSES OF
MISSOURI, INC. ("Broker"), a corporation formed under the laws of the State of
Missouri, and ACME TELEVISION HOLDINGS, LLC ("ACME"), a limited liability
company formed under the laws of the State of Delaware.
WHEREAS, Licensee holds licenses and other authorizations from the Federal
Communications Commission ("FCC") for KPLR-TV in St. Louis, Missouri (the
"Station"); and
WHEREAS, ACME, the parent company of Broker, and Koplar, the controlling
member of Licensee, and the Shareholders of Koplar (the "Selling Shareholders")
are parties to a certain Stock Purchase Agreement (the "Purchase Agreement")
dated July 29, 1997 for the sale of all the stock in Koplar; and
WHEREAS, ACME intends to assign its obligations and rights under the
Purchase Agreement to ATLMI in accordance with and subject to Section 12.2 of
the Purchase Agreement; and
WHEREAS, the parties hereto have carefully considered the FCC's time
brokerage policies for television stations and intend that this Agreement in all
respects comply with such policies; and
WHEREAS, Licensee agrees to provide time on the Station to Broker on terms
and conditions that conform with policies of the Station and the FCC for time
brokerage arrangements and that are as set forth herein; and
WHEREAS, Broker agrees to utilize the facilities of the Station solely to
broadcast programming that conforms with the policies of Licensee and the rules
and policies of the FCC, all as set forth herein;
NOW, THEREFORE, in light of the foregoing and the mutual promises and
covenants contained herein, the parties hereby agree as follows:
ARTICLE I: PROVISION OF PROGRAMMING
SECTION 1.1. BROKER'S USE OF STATION FACILITIES
Licensee shall make the Station's broadcast transmission facilities
available to Broker beginning on the commencement of the Term specified in
Section 1.2 of this Agreement, subject to the provisions of this Agreement. The
Licensee shall make the foregoing facilities available to Broker one hundred
sixty-eight (168) hours per week, Sunday through Saturday, except for (a)
downtime occasioned by maintenance, (b) time utilized by the Licensee to comply
with applicable law or to fulfill its obligations under the Communications Act
of 1934, as amended (the "Act"), or the rules and policies of the FCC, and (c)
time necessary to comply with Licensee's agreements with program suppliers (the
"Program Contracts"), including but not limited to The WB Network, which are in
effect as of the date of this Agreement. Upon commencement of the Term, Broker
may provide programming to be broadcast on the Station for the entire 168-hour
weekly period subject to (a) any diminution under this Agreement, and (b) the
provisions of Section 1.3. At Broker's option, the programming may originate
from Licensee's studios.
SECTION 1.2. TERM OF PROGRAMMING OBLIGATION
The term of this Agreement (the "Term") shall commence on the same date
(the "Effective Date") on which Broker places monies in escrow as required by
the Escrow Agreement executed in connection with Section 9.4 of the Purchase
Agreement. The Term of this Agreement shall expire on the earlier of the (a)
transfer of control of Koplar to ACME or its assignee as contemplated by the
Purchase Agreement, (b) the termination of the Purchase Agreement prior to any
distribution of the Escrow Funds to the Selling Shareholders, or (c) the date
ten (10) years from the Effective Date: provided, that, at the option of Broker
exercised at least ninety (90) days prior to the expiration of the Term, Broker
and Licensee shall enter into good faith negotiations to extend this Agreement
for another 10-year term under mutually agreeable terms and conditions.
Notwithstanding anything contained herein to the contrary, in the event that the
Escrow Funds have not been distributed to the Selling Shareholders when and as
required by Section 3.3 of the Escrow Agreement, Koplar may terminate this
Agreement upon ten (10) days notice to the other parties.
SECTION 1.3. QUALITY AND NATURE OF PROGRAMMING
(a) Any and all programming provided by Broker under this Agreement
shall be in accordance with the Act and the rules and policies of the FCC. All
advertising messages and promotional material or announcements shall comply with
all applicable federal, state and local laws, regulations and policies.
(b) The broadcast of all programming by Broker hereunder shall
be subject to the supervision, direction and control of Licensee. Licensee
shall have the full and
2
unrestricted right to delete and not broadcast all or any part of the
programming provided by Broker which Licensee regards as being unsuitable for
broadcast or the broadcast of which it believes would be contrary to the public
interest.
(c) Notwithstanding anything in this Agreement to the contrary,
Licensee shall have the right to provide programming pursuant to programming
agreements, the WB Affiliation Agreement and sports rights contracts in effect
as of the Effective Date. It is contemplated that Licensee may make available
additional programming under presently existing program contracts available to
be aired on the Station: provided, that in no event shall Licensee enter into
any new programming agreements after the Effective Date of this Agreement
without the prior consent of Broker except to the extent that Licensee
determines, in the exercise of its discretion, that such agreements are
necessary to enable Licensee to comply with applicable law, including Licensee's
obligations under the Act and FCC rules and policies.
SECTION 1.4. MAINTENANCE OF STATION FACILITIES
(a) Licensee shall be responsible for maintaining the transmission
facilities of the Station and for ensuring compliance by the Station with the
operating, reporting, and other requirements established by the Act and the FCC.
Broker shall be responsible for paying all costs of repairing, maintaining and
operating the Station and the business activities relating to the Station
arising on or after the Effective Date subject to the terms and conditions of
this Agreement. Such costs include but are not limited to the following:
(1) all lease and real estate tax payments in connection with the
real property owned or leased by Licensee for the Station's transmitter sites,
tower, parking facilities and satellite uplink and downlink facilities, and any
and all payments (including lease payments) for use of the Station's main
studios and offices;
(2) all personal property taxes in connection with the personal
property relating to the Station;
(3) utility bills for utility services at the transmitter site
of the Station;
(4) local exchange telephone service costs for the transmitter
and studio locations of the Station;
(5) maintenance of the transmitting facilities of the Station and of
all equipment required by the FCC for the operation of the Station in compliance
with the rules and policies of the FCC, including expenditures required to
repair and replace equipment utilized by the Station;
(6) salaries of Licensee's employees, payroll taxes, insurance
benefits and related costs of all personnel employed by Licensee for the
operation of the Station:
3
provided, that employee bonuses distributed after the Effective Date shall be
prorated over the calendar year for 1997;
(7) costs of supplies and equipment repair;
(8) premiums for insurance policies reasonably required with respect
to Station assets or operations as determined by Licensee (with Broker named as
an additional insured on all such insurance policies);
(9) salaries and other expenses incurred prior to September 30, 1997
which have not been paid as of Effective Date;
(10) all expenses and payments required by the Program Contracts as
well as restructure payments to program suppliers for programming previously
aired by the Station; and
(11) all liabilities of Licensee which, by their terms, are required
to be paid by the Licensee (whether or not incurred prior to or after the
Effective Date), except for those liabilities to be paid out of the Escrow Fund
pursuant to the Escrow Agreement.
(b) Notwithstanding anything to the contrary in this Agreement,
Licensee will consult with Broker on a weekly basis or as often as is reasonably
required to develop a mutually agreeable budget for Station operations in each
calendar year during the Term of this Agreement. To the extent expenditures in
excess of any such budget are anticipated, Licensee will make commercially
reasonable efforts to provide Broker with as much advance notice as is
practicable and consult with Broker to reach a mutually agreeable determination
of the expenditures to be made: provided, that Licensee shall retain the
ultimate authority to decide which expenses are required to ensure the Station's
compliance with applicable law and the Program Contracts and to preserve the
business and goodwill of the Station. In no event, however, shall the authority
of Xxxxxx X. Xxxxxx ("Xx. Xxxxxx"), president of the Licensee, with respect to
the operation of the Station be less than the authority he would have as the
Chief Executive Officer of Koplar Communications, Inc. pursuant to the
Management Agreement included as Exhibit E to the Purchase Agreement.
(c) If either party becomes aware that the Station has suffered any
loss or damage of any nature to its transmission or studio facilities which
results in the interruption of service or the inability of the Station to
operate with its maximum authorized facilities, such party shall immediately
notify the other party of the same. Broker shall, at its sole cost, undertake
such repairs at its expense as are necessary to restore full-time operation of
the Station with its maximum authorized facilities as expeditiously as possible
following the occurrence of any such loss or damage.
(d) During the Term of this Agreement, ACME will cause Broker to
commence payments (the "Payments") to Xx. Xxxxxx of the monies that would
otherwise be due to Xx. Xxxxxx upon execution of the Management Agreement
attached as Exhibit E
4
to the Purchase Agreement. Such payments shall be made in lieu of any other
payments which Broker would otherwise be obligated to reimburse Koplar for the
compensation paid to Xx. Xxxxxx as an officer, director and employee of Koplar.
The Payments shall be credited against any monies that ACME has to pay Xx.
Xxxxxx upon execution of the Management Agreement (which will occur at the
transfer of control of Koplar after the requisite FCC approval is obtained). The
term of the Management Agreement will be reduced by a period of time measured
from the date on which the Payments commence to the execution of the Management
Agreement.
SECTION 1.5. HANDLING OF MAIL
Except as required to comply with the Act or FCC rules and policies,
including those regarding the maintenance of the public inspection files (which
shall at all times remain the responsibility of the Licensee), the Licensee
shall not be required to receive or handle mail, faxes, or telephone messages in
connection with programming provided by Broker unless the Licensee, at the
request of Broker, has agreed in writing to do so. Notwithstanding anything
herein to the contrary, Broker shall provide the Licensee with copies of any
mail, faxes, or telephone messages concerning the programming furnished by
Broker under this Agreement to permit Licensee to place copies thereof in the
Station's public inspection files if required by applicable law, rule, or
policy. Each party shall immediately notify the other upon its receipt of any
inquiry or other communication from the FCC or member of the public which
relates to matters covered by the Agreement. It shall be the responsibility of
Licensee to respond to all communications from the FCC, although Licensee will
consult with Broker prior to doing so if time permits.
SECTION 1.6. STAFFING REQUIREMENTS AND EXPENSES
(a) The Licensee shall, to the extent required by applicable law or
policy, maintain a main studio within the Station's principal community contour.
Throughout the Term of this Agreement, Licensee shall retain a General Manager
and at least one other full-time employee and all other personnel, if any,
required by the FCC for the Station.
(b) In addition to the employees identified in subsection (a) of this
section, Licensee may continue to employ such other personnel as Licensee deems
appropriate and necessary, subject to the provisions of Section 1.4(b) of this
Agreement. Licensee shall make its employees available for use by Broker in
connection with Broker's fulfillment of its responsibilities under this
Agreement: provided, that all such employees of Licensee shall at all times be
subject to the ultimate control and supervision of Licensee.
(c) Broker shall be responsible for the salaries, commissions, taxes,
insurance and other related costs of all personnel employed by Licensee
(including but not limited to on-air personalities, engineering personnel, sales
persons, traffic personnel, board operators and other programming staff members)
involved in the production, sale, and broadcast of its programming or
administration with respect to the operations of the Station. Broker shall be
fully responsible for all compensation and the immediate supervision and
direction
5
of its employees, subject, however, to Licensee's ultimate control while
Broker's employees are on the Station's premises. Broker may establish, staff
and maintain a remote control point for the Station, subject to the control and
oversight of the Licensee: provided, that Broker ensures that Licensee maintains
the ability to preempt Broker's programming. Broker shall pay for (1) all
telephone calls associated with program production, (2) any fees billed by
ASCAP, BMI and SESAC, (3) all promotional expenses, and (4) all other copyright
fees attributable to programming provided by Broker under this Agreement.
(d) Notwithstanding anything to the contrary herein, Broker shall have
the option to hire all of the Licensee's employees (except for those identified
in subsection (a) of this section) when all of the Escrow Funds (less any
distributions made therefrom in accordance with the terms of this Agreement) are
distributed to the Selling Shareholders pursuant to Section 3.3 of the Escrow
Agreement.
SECTION 1.7. OPERATION OF STATION
(a) Notwithstanding anything to the contrary in this Agreement, the
Licensee shall retain exclusive authority and control over the policies,
programming and operation of the Station, including, without limitation, the
right (1) to accept or reject any programming or advertisements proffered by
Broker, (2) to cancel or preempt any programs proffered by Broker, (3) to
substitute for any program proffered by Broker a program deemed by the Licensee
to be of greater national, regional or local interest, (4) to require that time
sales by Broker to political candidates comply with law and policy regarding
access, charges and equal opportunities, and (5) to take any other action which
the Licensee deems necessary for compliance with federal, state and local laws,
including the Act and the rules and policies of the FCC.
(b) The Licensee will use its best efforts to provide Broker with
reasonable prior notice of any intention to cancel or preempt any programming
proffered by Broker.
(c) Licensee shall be solely responsible for the Station's compliance
with the Act as well as FCC rules and policies. Broker shall provide information
to the Licensee with respect to Broker's programs to assist the Licensee in
assessing the extent to which such programming is responsive to the needs and
interests of the Station's service area and to enable the Licensee to prepare
reports and applications required by the FCC and other governmental entities,
including but not limited to a quarterly list of community issues and responsive
programming.
(d) Broker shall be responsible for all liabilities, debts and
obligations with respect to the sale of time on the Station and use of the
Station's transmission facilities after the Effective Date.
6
SECTION 1.8. STATION IDENTIFICATION
The Licensee shall be responsible for the broadcast of required station
identification announcements. Broker shall make available to Licensee, without
charge, such announcements for such purpose as requested by Licensee and shall
air such announcements during the programming supplied by Broker.
SECTION 1.9. FORCE MAJEURE
No breach of this Agreement shall be deemed to occur if circumstances
beyond the control of the Licensee cause any (1) damage or malfunction in the
Station's transmission facilities, (2) delay or interruption in the broadcast of
programs, or (3) failure at any time to furnish the facilities to Broker:
provided, that Licensee, or Broker acting under Licensee's supervision, shall
undertake any and all commercially reasonable measures to restore the Station to
fully authorized operation at the earliest practicable date, all at Broker's
cost.
SECTION 1.10. RIGHT TO USE THE PROGRAMS
The right to use the Broker's programming and to authorize its use in
any manner in any media whatsoever shall be, and remain, vested in Broker.
SECTION 1.11. PAYOLA
Neither Broker nor its employees or designated agents shall accept any
consideration, compensation, gift or gratuity of any kind, regardless of its
value or form, including but not limited to a commission, discount, bonus,
material, supplies or other merchandise, services or labor, whether or not
pursuant to written contract or agreement between Broker and merchants or
advertisers, unless the payer is identified in the program in accordance with
the Act and FCC rules and policies. Broker shall provide the Licensee with an
appropriate affidavit within 60 days of the Effective Date of this Agreement and
thereafter on an annual basis, and more frequently if reasonably requested by
Licensee, attesting to its compliance with this section.
SECTION 1.12. COMPLIANCE WITH LAW
Broker shall comply in all material respects with all laws, rules,
regulations and policies applicable to Broker's performance under this Agreement
or to which the Licensee is subject in the operation of the transmission
facilities and the broadcast of programs.
SECTION 1.13. ACCOUNTS RECEIVABLE AND OTHER ASSETS
Except as otherwise provided in this Agreement, Broker shall be
entitled to retain any and all notes, monies and other accounts receivable of
the Station relating to the sale of advertising time on the Station (the "LMA
Accounts Receivable") after the Effective
7
Date of and throughout the Term of this Agreement. At the commencement of the
Term hereof, Licensee shall assign to Broker all of the accounts receivable
generated for the Station prior to the Effective Date of this Agreement
("Licensee's Accounts Receivable") that are outstanding and unpaid on that date
as well as all cash, receivables, and prepaids of the Company. Broker shall not
be required to institute any legal proceedings to enforce the collection of any
Accounts Receivable or to refer any of the Accounts Receivable to a collection
agency.
ARTICLE II: PAYMENT OF MONIES
In addition to the reimbursement of Licensee's expenses pursuant to
Section 1.4(a) of this Agreement, Broker shall pay a monthly fee to Licensee on
the last day of each calendar month equal to the amounts required to be paid by
Licensee to (1) NationsBank, N.A. or (2) Warner Bros. in the following month
pursuant to the agreements Licensee has with those entities in effect as of the
Effective Date.
ARTICLE III: REPRESENTATIONS AND WARRANTIES
SECTION 3.1. MUTUAL REPRESENTATIONS AND WARRANTIES
Except with respect to Licensee's loan with NationsBank, N.A., each
party represents and warrants to the other that it is legally qualified, duly
empowered and authorized to enter into this Agreement, and that the execution,
delivery and performance of this Agreement shall not constitute a breach or
violation of any agreement, contract or other obligation to which either party
is subject or by which it is bound. Licensee and Broker warrant, represent,
covenant and certify that Licensee maintains, and shall continue to maintain,
ultimate control over the Station's facilities during the Term of this
Agreement, including, without limitation, control over the Station's finances,
personnel and programming. Each party hereto represents and warrants that it has
taken all necessary corporate and other necessary action to make this Agreement
legally binding on such party, and that the individual signing this Agreement on
behalf of such party has been fully authorized and empowered to execute this
Agreement on behalf of such party.
SECTION 3.2. LICENSEE'S REPRESENTATIONS AND WARRANTIES
(a) Except as may be otherwise specified in the Purchase Agreement or
the schedules thereto, (i) Licensee represents and warrants to Broker that it
owns and holds the FCC Licenses for the Station and that each such license or
authorization is in full force and effect, unimpaired by any acts or omissions
of Licensee or its agents, there is not now pending or, to Licensee's knowledge,
threatened any action by or before the FCC or any court to revoke, cancel,
suspend, refuse to renew or modify adversely the FCC Licenses, (ii) as of the
date of this Agreement, no event has occurred that does justify or, after notice
or lapse of time or both, would justify, the revocation, nonrenewal or
termination of any FCC License, (iii) Licensee is not in material violation of
any statute, ordinance, rule, regulation, policy, order or decree of any
federal, state, or local governmental entity, court or authority
8
having jurisdiction over it or over any part of the operations or assets of the
Station, which violation would have a material adverse effect on the FCC
Licenses, the Station Assets, or Licensee's ability to perform this Agreement,
and (iv) Licensee will not dispose of, transfer, assign or pledge any of the
Station assets except pursuant to the Purchase Agreement or with the prior
written consent of Broker or except for non-material assets disposed of in the
ordinary course of business.
(b) Notwithstanding anything to the contrary in the Purchase Agreement,
the representations and warranties of the Company and the Selling Shareholders
set forth in the following provisions of the Purchase Agreement shall be deemed
to be made as of September 30, 1997, and such representations and warranties
shall not continue beyond such date (meaning that no claim for indemnification
can be made for any change in fact or circumstance relating thereto which occurs
after September 30, 1997): Section 2.4 (solely to the extent of the impact of
this Agreement on such representation and warranty); Section 2.5 (to the extent
related to the condition of the Real Property); Section 2.6 (to the extent
related to the condition of the Personal Property); Section 2.10 (Audited
Financial Statements); Section 2.13 (Compensation and Employee Plans); 2.14
(Labor Relations); Section 2.15 (Tax Returns and Audit, to the extent related to
the Company's financial ability to pay taxes or establish reserves for taxes);
2.16 (Claims and Legal Actions); 2.17 (Compliance with Laws except as to any
matter relating to 2.4 subject to this Agreement not being the cause of any such
violation); Section 2.18 (Conduct of Business in Ordinary Course); Section 2.20
(Environmental); Section 2.23 (Cable Carriage).
(c) Licensee shall update all the schedules in the Purchase Agreement
ten (10) days prior to any distribution of the Escrow Funds to Selling
Shareholders pursuant to Section 3.3 of this Agreement and thereafter as often
as may be requested by Buyers (but in no event more than ONCE A month). Except
as provided in this Agreement or with respect to those representations and
warranties deemed to continue beyond September 30, 1997, Koplar shall have no
liability with respect to any matter disclosed on any updated schedule. In no
event shall Licensee be in breach of any representation or warranty to the
extent caused by Broker's actions or omissions under this Agreement.
SECTION 3.3. BROKER'S REPRESENTATIONS AND WARRANTIES
(a) Broker represents and warrants to Licensee that Broker is not in
material violation of any statute, ordinance, rule, regulation, policy, order or
decree of any federal, state or local governmental entity, court or authority
having jurisdiction over it or over any part of its operation or assets, which
violation would have a material adverse effect on Broker, its assets, or its
ability to perform this Agreement, or the operation of the Station, or the FCC
Licenses.
(b) During the Term of this Agreement, Broker shall broadcast, without
charge, any advertisements which Licensee is obligated to air under trade or
barter agreements in existence prior to the date of this Agreement: provided,
that such
10
advertisements will be aired on a run of schedule basis at a time or times
determined by Broker and preemptable for any party who will pay cash for the
time. Broker shall honor all terms and conditions of Licensee's cash advertising
agreements and programming agreements that are in existence as of the date of
this Agreement and were entered into in the ordinary course of business.
SECTION 3.4. INDEMNIFICATION
(a) Each party shall defend, indemnify and hold harmless the other
party and its partners, officers, stockholders, directors, employees, agents,
successors and assigns, from and against any and all costs, losses, claims,
liabilities, fines, expenses, penalties, and damages (including reasonable
attorneys' fees) resulting from any material breach or Event of Default under
this Agreement.
(b) A party shall notify the indemnifying party in writing as soon as
it practicable and in any event within twenty (20) days of the occurrence of any
event, or of its discovery of any facts, which in its opinion entitle or may
entitle it to indemnification under this Section: provided, that failure to give
such notice within such 20-day period shall not affect the liability of the
indemnifying party under this Section unless the failure to give such notice
within such time period materially adversely affects the indemnifying party's
ability to defend itself against the event giving rise to the claim for
indemnification or to cure the default giving rise to such claim, and then such
indemnification obligations shall be reduced only to the extent of such material
adverse effect. With respect to threatened or asserted claims of third parties,
the indemnifying party shall promptly defend such claim by counsel of its own
choosing. The other party shall reasonably cooperate in such defense.
(c) If the indemnifying party, within a reasonable time after notice of
a claim hereunder, fails to defend such claim, the other party shall be entitled
to undertake the defense, compromise or settlement of such claim subject to the
right of the indemnifying party to assume the defense of such claim at any time
prior to the settlement, compromise or final determination thereof. Anything in
this Section 3.4 to the contrary notwithstanding: (i) the indemnified party
shall have the right to defend, compromise or settle such claim if the
indemnifying party fails to act in a timely manner and such failure is likely to
have a material adverse effect upon the indemnified party; (ii) the indemnifying
party will not, without the other party's written consent, settle or compromise
any claim or consent to any entry of judgment which does not include as an
unconditional term thereof the giving by the claimant or the plaintiff to the
other party of a release from all liability in respect to such claim; and (iii)
the indemnifying party shall not be liable for any settlement or compromise to
which it did not consent, which consent shall not be unreasonably withheld.
(d) Notwithstanding anything to the contrary in this Agreement, neither
Licensee nor its officers, directors, agents and employees will be responsible
or have any liability with respect to the financial and on-air or other
operational performance of the
11
station (e.g. ratings) during the Term of this Agreement: provided, that this
subsection shall not affect Licensee's responsibilities under Section 1.7(c) of
this Agreement.
ARTICLE IV: TERMINATION
SECTION 4.1. EVENTS OF DEFAULT
The following shall, after the expiration of the applicable cure period
provided for in Section 4.2, without curing the acts or omissions set forth
below, constitute an Event of Default:
(a) Broker's failure to fully and timely make any payments to
Licensee required under this Agreement;
(b) a material breach by either party hereto in the material
observance or performance of any material covenant, condition or undertaking
contained herein; or
(c) if any material representation or warranty made by either party in
this Agreement shall prove to have been or become false or misleading in any
material respect.
For purposes of Sections 4.1 (b) and (c) of this Agreement, no noncompliance
will be deemed material unless such noncompliance does have or is likely to have
an adverse impact on Licensee's ability to operate the Station in material
compliance with applicable law or to maintain the business of the Station in any
material respect.
SECTION 4.2. CURE PERIOD
An Event of Default shall not be deemed to have occurred until, in the
case of payment of any money to Licensee, ten (10) business days, or in the case
of any other default thirty (30) business days, after the nondefaulting party
has provided the defaulting party with written notice specifying the event or
events that, if not cured, would constitute an Event of Default and specifying
the action necessary to cure the Event of Default within such period. The
aforementioned cure period shall be extended for twenty (20) days if the
defaulting party is acting in good faith to cure the default and such delay is
not materially adverse to the other parties. Notwithstanding the foregoing, the
cure period with respect to the failure to timely pay any payroll or payroll tax
deposit payable by Broker pursuant to this Agreement shall be two (2) business
days.
SECTION 4.3. TERMINATION UPON DEFAULT
Upon the occurrence of an Event of Default, the nondefaulting party may
terminate this Agreement, unless the latter party is also in material default
hereunder. If Broker has defaulted in the performance of its obligations and
Licensee terminates this Agreement, Licensee shall be under no obligation to
make available to Broker any further
11
broadcast time or broadcast transmission facilities after the effective date of
such termination (as determined by Section 1.2 of this Agreement).
SECTION 4.4. TERMINATION UPON GOVERNMENT ACTION
(a) This Agreement may be or, as the case may be, shall be terminated
under any one of the following circumstances: (i) by Broker, if the FCC revokes
any FCC License for the Station; (ii) by Broker or Licensee, as the case may be,
if the FCC or any other governmental agency with jurisdiction over this
Agreement, by order, rule, or policy requires a modification to this Agreement
which is materially adverse to Broker and/or Licensee; or (iii) by Broker or
Licensee, if the FCC or any other governmental agency with jurisdiction over
this Agreement, by order, rule, or policy, requires the termination of this
Agreement: provided, that, if Licensee or Broker elects to contest the agency's
proposed action, this Agreement shall remain in effect pending resolution of
such dispute if permitted under applicable law; provided further, that each
party shall be responsible for its own expenses incurred as a result of the
agency proceeding; and provided further, that Broker shall, at its own expense,
cooperate and comply with any reasonable request of Licensee to assemble and
provide to Licensee information relating to Broker's performance under this
Agreement. In the event that the validity of any portion of this Agreement is
called into question by the FCC or as the result of any change in FCC rules or
policies, the parties hereto shall consult with the FCC and its staff concerning
such matters and shall negotiate in good faith a modification of this Agreement
which obviates any such FCC questions as to validity while preserving the intent
of the parties and the economic and other benefits of this Agreement without
imposing or creating a material adverse consequence for either party.
(b) In the event of termination of this Agreement under this section,
(i) Broker shall pay to the Licensee any monies due under this Agreement but
unpaid as of the date of termination; and (ii) Licensee shall cooperate with
Broker to the extent practicable to enable Broker to fulfill advertising or
other programming contracts for cash compensation then outstanding, in which
event the Broker shall receive such compensation payable therefor. Thereafter,
neither party shall have any liability to the other, except as provided in
Section 3.4.
(c) No termination of this Agreement shall cause a termination of the
Purchase Agreement or cause any delay in the distribution of the Escrow Funds to
the Selling Shareholders pursuant to the Escrow Agreement.
SECTION 4.5. PAYMENTS TO PARTIES
(a) Upon termination of this Agreement in accordance with its terms (by
an Event of Default, consummation of the Purchase Agreement, or expiration of
the Term of this Agreement), Broker shall, within ten (10) days of such
termination, pay to Licensee all monies due Licensee.
12
(b) Notwithstanding any other provision in this Agreement, in the event
that either party terminates this Agreement without consummation of the Purchase
Agreement, Licensee shall have the option of (i) having assigned to it as of the
date of termination all of the LMA Accounts Receivable generated during the Term
of this Agreement along with the obligation to pay any and all outstanding
obligations of Licensee or Broker under this Agreement or (ii) accepting an
assignment of the LMA Accounts Receivable generated under this Agreement, to and
including the date of termination, for a period of one hundred twenty (120) days
(with all monies collected to be distributed to Broker after each 30-day period
within the aforementioned 120-day collection period and a return of all
uncollected LMA Accounts Receivable to Broker upon expiration of that 120-day
collection period), with Broker retaining sole responsibility for making any and
all payments for expenses incurred under this Agreement prior to the date of
termination. Licensee shall advise Broker of its election simultaneously with
the provision of notice of termination.
ARTICLE V: MISCELLANEOUS
SECTION 5.1. INSURANCE
Licensee shall maintain at Broker's cost in full force and effect such
insurance policies as carried by it on the Effective Date of this Agreement with
responsible and reputable insurance companies or associations covering such
risks (including fire and other risks insured against by extended coverage,
broadcaster's general liability, including errors and omissions, invasion of
privacy, libel and defamation claims, public liability insurance, insurance for
claims against personal injury or death or property damage and such other
insurance as may be required by law) and in such amounts and on such terms as is
conventionally carried by broadcasters operating television stations with
facilities comparable to those of the Station. Licensee shall cause Broker to be
named as an additional insured thereunder. Broker shall maintain similar
insurance covering its actions and omissions under this Agreement, including
invasion of privacy, libel and defamation claims based on Broker's programming.
Broker will cause Licensee to be named as an additional insured thereunder. Any
insurance proceeds received by any party hereto for damaged property will be
used to repair or replace such property so that the operation of the Station
conforms with this Agreement.
SECTION 5.2. NOTICES
All necessary notices, demands, requests and other communications
permitted or required under this Agreement shall be in writing and shall be
mailed by certified mail-return receipt requested, postage prepaid; delivered by
hand; or sent by overnight courier service, charges prepaid, and addressed as
follows (or to such other address as either party may designate in writing to
the other):
13
If to the Licensee:
Xxxxxx X. Xxxxxx
President
Koplar Communications Television, L.L.C.
0000 Xxxxxxx Xxxxxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
with a copy to (but which shall not constitute
notice to Licensee):
Xxxxxx X. Xxxxxx, Esq.
Xxxxxxxxxxxx, Xxxxxx & Xxxx, P.C.
00 Xxxxx Xxxxxxxx, Xxxxx 0000
Xx. Xxxxx, XX 00000
If to Broker --
Xxxxxxx Xxxxx
ACME Television Holdings, L.L.C.
000 Xxxxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
and
Mr. Xxx Xxxxx
ACME Television Holdings, L.L.C.
Suite 850
000 Xxxx Xxxxxx Xxxxx
Xxxxx, Xxxx, XX 00000
with a copy to (but which shall not constitute notice to
Broker):
Xxxxx X. Paper, Esq.
Xxxxxxxxx Xxxxxxx Xxxxx & Xxxxxxxx LLP
0000 X Xxxxxx, X.X.
Xxxxxxxxxx, XX 00000
14
SECTION 5.3. WAIVER
No modification or waiver of any provision of this Agreement shall be
effective unless in writing. Such modification or waiver shall be effective only
in the specific instance and for the purpose for which given.
SECTION 5.4. CONSTRUCTION
This Agreement shall be construed in accordance with the laws of the
State of Missouri without regard to conflict of laws provisions. Except as
otherwise stated herein, (i) all capitalized terms shall have the same meaning
attributable to them in the Purchase Agreement, and (ii) all other rules of
construction in the Purchase Agreement shall be applicable to this Agreement.
SECTION 5.5. HEADINGS
The headings contained in this Agreement are included for convenience
only and no heading shall alter the meaning of any provision.
SECTION 5.6. ASSIGNMENT
This Agreement may not be assigned by either party without the prior
written consent of the other party: provided, that Broker may (i) assign its
rights and obligations under this Agreement to another party controlled by the
same parties or to parties holding notes (the "Note Holders") issued by Broker
or its parent in conjunction with the financing of the transactions contemplated
by the Purchase Agreement or issued as replacements or substitutes therefor,
including amendments and other modifications thereto and refinancings thereof
(with the right of such Note Holders to acquire such rights and obligations only
upon an event of default by Broker or its parent under the agreements evidencing
such financing(s) or refinancing(s), and with the right of such Note Holders to
further assign such rights and obligations without the consent of Licensee), or
(ii) grant a security interest for its rights under this Agreement without
Licensee's consent (with a subsequent assignment pursuant to any foreclosure
thereunder); provided further, that, upon distribution of any Escrow Funds to
the Selling Shareholders, Broker may assign its rights and obligations under
this Agreement to any other entity without Licensee's consent; and provided
further, that any assignee of Broker's rights and obligations under this
Agreement shall agree to be bound by and assume all of Broker's obligations
under this Agreement. This Agreement shall inure to the benefit of and be
binding upon each party's assignees, transferees, or other
successors-in-interest.
SECTION 5.7. COUNTERPART SIGNATURE
This Agreement may be signed in one or more counterparts, and all
counterparts shall be deemed to be one and the same document.
15
SECTION 5.8. ENTIRE AGREEMENT
This Agreement, the Purchase Agreement, and all documents referenced
herein or therein embody the entire agreement between the parties with respect
to the subject matters contained in this Agreement and supersede any and all
prior and contemporaneous agreements and understandings, oral or written with
respect to the subject matters contained in this Agreement. No amendment of this
Agreement shall be valid unless embodied in a document executed by both parties.
SECTIONN 5.9. NO PARTNERSHIP OR JOINT VENTURE CREATED
Nothing in this Agreement shall be construed to make the Licensee
and Broker partners or part of a joint venture or to vest any rights in any
third party.
SECTION 5.10. SEVERABILITY OF PROVISIONS
Except as set forth in Section 4.4 hereto, in the event any provision
contained in this Agreement is held to be invalid, illegal or unenforceable by
the FCC or any court of competent jurisdiction, such holding shall not affect
any other provision hereof, and this Agreement shall be construed as if such
invalid, illegal or unenforceable provision had not be contained herein.
SECTION 5.11. LITIGATION EXPENSES.
If any formal legal proceeding is instituted by a party to enforce that party's
rights under this Agreement, the party prevailing in the proceeding shall be
reimbursed by the other party for all reasonable costs incurred thereby,
including but not limited to reasonable attorneys' fees.
SECTION 5.12. ACME RESPONSIBILITIES.
ACME shall be jointly and severally liable for Broker's obligations
under this Agreement. In no event shall ACME seek indemnification or other
compensations (by way of reduction or Purchase Price under the Purchase
Agreement or otherwise) for any damage or loss to any asset of the Station which
accrues during the Term of this Agreement.
5.13. CONFLICTING PROVISIONS. If any conflict should arise or exist
between any provisions of this Agreement and the Purchase Agreement, the
provisions of this Agreement shall govern.
16
ARTICLE VI: CERTIFICATIONS
SECTION 6.1. CERTIFICATION BY THE LICENSEE
By executing this Agreement, Licensee certifies that it retains
ultimate control under this Agreement over the Station's facilities, including
but not limited to Station finances, personnel and programming.
SECTION 6.2. CERTIFICATION BY BROKER
By executing this Agreement, Broker certifies that this Agreement
complies with Section 73.3555 of the FCC's rules.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
17
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
KOPLAR COMMUNICATIONS, INC.
By:/s/Xxxxxx X. Xxxxxx
----------------------------
Xxxxxx X. Xxxxxx
President
KOPLAR TELEVISION CO., LLC
By: /s/Xxxxxx X. Xxxxxx
--------------------------
Xxxxxx X. Xxxxxx
President
ACME TELEVISION LICENSES OF
MISSOURI, INC.
By: /s/Xxxxxxx X. Xxxxx
--------------------------
Xxxxxxx X. Xxxxx
President
ACME TELEVISION LICENSES, LLC
By: /s/Xxxxxxx X. Xxxxx
---------------------------
Xxxxxxx X. Xxxxx
President
18
