Exhibit 10.49
JOINT SALES AND SHARED
SERVICES AGREEMENT
This JOINT SALES AND SHARED
SERVICES AGREEMENT (this “ Agreement ”) is
dated as of November 12, 2004, by and among KSMO Licensee,
Inc., a Delaware corporation (“ Licensee ”),
KSMO, Inc., a Maryland corporation (“ KSMO-Sub
”), and Meredith Corporation, an Iowa corporation (“
Sales Agent ”).
RECITALS
A.
Licensee and KSMO-Sub (collectively,
the “ KSMO Parties ”) have entered into an Asset
Purchase Agreement dated as of November 12, 2004, by and among
the KSMO Parties (as sellers) and Sales Agent (as buyer) (the
“ Purchase Agreement ”) pursuant to which,
subject to the consent of the Federal Communications Commission
(“ FCC ”) and the terms and conditions of the
Purchase Agreement, Sales Agent intends to acquire the assets and
licenses of, and to own and operate, Television Station KSMO(TV),
Kansas City, Missouri, including the digital television facilities
authorized for the operation of KSMO-DT (collectively referred to
as the “ Station ”);
B.
Sales Agent owns and operates
Television Station KCTV(TV), Kansas City, Missouri (“
KCTV ”), pursuant to licenses, permits, and
authorizations issued by the FCC;
C.
The KSMO Parties currently broadcast
on the Station a combination of programming supplied by The WB
Television Network (“ The WB ”) and syndicated
programming;
D.
In order to support and promote the
economic viability and development of the Station, the KSMO Parties
desire to retain Sales Agent to sell advertising on the Station and
to provide related sales and other services to the KSMO Parties
with respect to the operation of the Station, to utilize certain
facilities of Sales Agent and to provide to the KSMO Parties
certain news and public interest programming for broadcast on the
Station, in each case in conformity with all rules, regulations,
and policies of the FCC; and
E.
It is the parties’ expectation
that Sales Agent, with its experience and operating infrastructure,
will improve the overall efficiency of the Station’s sales
and operating processes and reduce costs, thereby helping to ensure
that the Station remains a viable alternative for both television
viewers and advertisers.
AGREEMENTS
In consideration of the above
recitals and of the mutual agreements and covenants contained
herein, the receipt and sufficiency of which are hereby
acknowledged, Licensee, KSMO-Sub and Sales Agent, intending to be
bound legally, agree as follows:
SECTION 1.
DEFINITIONS
1.1 Terms Defined in this
Section . The following terms, as used in this Agreement,
shall have the meanings set forth in this Section:
“ Affiliate ”
means, with respect to any Person, (a) any other Person that,
directly or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with such
Person, or (b) an officer or director of such Person or of an
Affiliate of such Person within the meaning of clause (a) of this
definition. For purposes of clause (a) of this definition,
(i) a Person shall be deemed to control another Person if such
Person (A) has sufficient power to enable such Person to elect a
majority of the board of directors of such Person, or (B) owns a
majority of the beneficial interests in income and capital of such
Person, and (ii) a Person shall be deemed to control any
partnership of which such Person is a general partner.
“ Base Date ”
means November 12, 2004.
“ Communications Act
” means the Communications Act of 1934, as amended, together
with the rules, regulations, and policies promulgated thereunder by
the FCC, as in effect from time to time.
“ Market ” means
the Kansas City, Missouri, Designated Market Area.
“ Person ”
includes natural persons, corporations, business trusts,
associations, companies, joint ventures, and
partnerships.
“ To the best of Sales
Agent’s knowledge ” or any similar formulation
thereof means the actual knowledge of the Executive Vice President
of the Meredith Broadcast Group or the General Counsel of Sales
Agent, after reasonable inquiry by each such person within his area
of responsibility.
“ To the best of the KSMO
Parties’ knowledge ” or any similar formulation
thereof means the actual knowledge of the President, the Chief
Financial Officer or the General Counsel of Sinclair Broadcast
Group, Inc., or the general manager or main engineer of the
Station, after reasonable inquiry by each such person within his
area of responsibility.
1.2 Additional Defined
Terms . In addition to the defined terms in the preamble,
recitals and Section 1.1 hereof, the following is a list of
terms used in this Agreement and a reference to the section or
schedule hereof in which such term is defined:
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Term
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Section/Schedule
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Advertisements
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Section 4.1
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Automatic Increase
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Schedule 3.1
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Broadcast Material
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Section 4.5
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Cash Flow Payment Date
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Schedule 3.1
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Delivered Programming
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Section 4.2
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Disclosure Statement
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Section 5.2(c)
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Excluded Services
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Section 4.4
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Independent Accounting Firm
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Schedule 3.1
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Initial Term
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Section 2.1(a)
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JSA Fee
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Schedule 3.1
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2
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Term
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Section/Schedule
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Katz
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Schedule 3.1
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Katz Rep Agreement
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Schedule 3.1
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Licensee Accounts Receivable
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Section 4.8
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Licensee Revenue Share
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Schedule 3.1
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Licensee’s Expense Schedule
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Schedule 3.1
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Lost Revenue
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Schedule 3.1
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Net Sales Revenue
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Schedule 3.1
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Objection Notice
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Schedule 3.1
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Performance Penalty
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Section 2.3(a)
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Policy Statement
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Section 4.5
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Premises
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Section 5.4
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PSAs
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Section 4.6
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Ratings Agencies
|
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Section 5.1(l)
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Reimbursable Station Expenses
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Schedule 3.1
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Sinclair
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Section 5.1(g)
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Station Broadcast Cash Flow
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Schedule 3.1
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Studio Building
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Section 4.3(a)(i)
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Trade Agreements
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Section 4.7
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Uncured Material Breach
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Section 2.3(a)
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SECTION 2.
TERM
2.1 Term .
(a) Initial Term .
The initial term of this Agreement shall be from the date
hereof until the date that is five (5) years after the Base Date
(the “ Initial Term ”), unless terminated in
accordance with Section 2.2 below.
(b) Renewal Term
. This Agreement shall be renewed automatically for an
additional term of five (5) years commencing on the day following
the expiration of the Initial Term if Sales Agent shall have paid
to Licensee Three Million Three Hundred Fifty Thousand Dollars
($3,350,000) in accordance with the proviso in Section 8.1 of
the Purchase Agreement.
2.2 Termination
.
(a) Mutual Agreement
. This Agreement may be terminated at any time by mutual
agreement of the parties. This Agreement shall terminate upon
the consummation of any assignment or transfer of control of the
FCC licenses for the Station to Sales Agent or any Affiliate of
Sales Agent, subject to the payment by Sales Agent and the KSMO
Parties of all payments owed to the other as of the consummation
date of such assignment or transfer.
(b) Termination by Licensee
or Sales Agent . This Agreement may be terminated by
Licensee or Sales Agent, by written notice to the other, upon the
occurrence of any of the following events:
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(i) this Agreement has been
declared invalid or illegal in whole or substantial part by an
order or decree of an administrative agency or court of competent
jurisdiction which is not subject to appeal or further
administrative or judicial review, and the parties, acting in good
faith, are unable to agree upon a reform of the Agreement so as to
cause the Agreement to comply with applicable law; or
(ii) there has been a change
in the Communications Act that causes this Agreement in its
entirety to be in violation thereof and the applicability of such
change is not subject to appeal or further administrative review;
and the parties, acting in good faith, are unable to agree upon a
reform of the Agreement so as to cause the Agreement to comply with
applicable law.
(c) Termination by Sales
Agent . This Agreement may be terminated by Sales Agent,
by written notice to Licensee, upon the occurrence of any of the
following events:
(i) if Sales Agent is not then
in material breach and the KSMO Parties are in material breach
under this Agreement and the KSMO Parties have failed to cure such
breach within thirty (30) days after receiving written notice of
breach from Sales Agent; or
(ii) if the KSMO Parties or
any Affiliate of the KSMO Parties makes a general assignment for
the benefit of creditors, files, or has filed against it a petition
for bankruptcy, reorganization or an arrangement for the benefit of
creditors, or for the appointment of a receiver, trustee, or
similar creditor’s representative for the property or assets
of the KSMO Parties or any Affiliate of the KSMO Parties under any
federal or state insolvency law which, if filed against KSMO
Parties or any Affiliate of the KSMO Parties, has not been
dismissed within thirty (30) days thereof.
(d) Termination by
Licensee . This Agreement may be terminated by Licensee,
by written notice to Sales Agent,
(i) if Sales Agent breaches
its obligations hereunder and such breach reasonably could be
expected to result in the revocation or non-renewal of the
Station’s FCC licenses; or
(ii) if Sales Agent or any
Affiliate of Sales Agent makes a general assignment for the benefit
of creditors, files, or has filed against it a petition for
bankruptcy, reorganization or an arrangement for the benefit of
creditors, or for the appointment of a receiver, trustee, or
similar creditor’s representative for the property or assets
of Sales Agent or any Affiliate of Sales Agent under any federal or
state insolvency law which, if filed against Sales Agent or any
Affiliate of Sales Agent, has not been dismissed within thirty (30)
days thereof.
2.3 Performance Penalty
.
(a) If Sales Agent is in
material breach of its obligations under either the Purchase
Agreement or this Agreement and the KSMO Parties are not then in
material default under the Purchase Agreement or this Agreement,
and such default by Sales Agent shall not have been cured within
twenty-five (25) days following written notice from the KSMO
Parties of such default (or within such longer period as may
reasonably be required to cure such default if not
reasonably
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capable of being cured within twenty-five (25)
days and Sales Agent shall have diligently begun working to cure
such default within such twenty-five (25) day period) (an “
Uncured Material Breach ”), in lieu of any right by
Licensee to terminate the Purchase Agreement or this Agreement as a
result of an Uncured Material Breach, Sales Agent shall owe to the
KSMO Parties a performance penalty calculated as follows (the
“ Performance Penalty ”):
(i) If an Uncured Material
Breach exists on a day Sales Agent is required to pay Licensee the
Licensee Revenue Share as provided in Schedule 3.1 ,
the Performance Penalty shall be the amount of the monthly JSA Fee
(which shall be paid in addition to the Licensee Revenue
Share).
(ii) If such Uncured Material
Breach continues to exist on the next succeeding day Sales Agent is
required to pay Licensee the Licensee Revenue Share as provided in
Schedule 3.1 , the Performance Penalty shall be two
times the amount of the JSA Fee and the Performance Penalty shall
be increased in such manner for each succeeding month that the
Uncured Material Breach remains uncured as of the day Sales Agent
is required to pay Licensee the Licensee Revenue Share as provided
in Schedule 3.1 .
(b) In the event that Sales
Agent shall be obligated to pay any damages hereunder with respect
to any indemnity claim by the KSMO Parties (other than with respect
to a claim concerning a failure to pay the Licensee Revenue Share
in accordance with Schedule 3.1 ) and Sales Agent shall
be obligated to pay or shall have paid a Performance Penalty with
respect to the events giving rise to such damages, then the amount
of such damages payable by Sales Agent shall be reduced by, and to
the extent of, the amount of the Performance Penalty paid to the
KSMO Parties less any separate damages payable to the KSMO Parties
with respect to such events pursuant to the Purchase
Agreement.
2.4 Certain Matters Upon
Termination . If this Agreement is terminated by either
party under Section 2.2, no expiration or termination of this
Agreement shall terminate the obligations of either party hereto,
including, without limitation, to indemnify the other for claims of
third parties under Section 8 of this Agreement, or limit or
impair any party’s rights to receive payments due and owing
hereunder on or before the effective date of such
termination.
SECTION 3. CONSIDERATION
As consideration for the right of
Sales Agent to market and sell air time made available under this
Agreement, Licensee shall be entitled to receive from the
Station’s revenue the amounts set forth in
Schedule 3.1 hereto, and Sales Agent shall provide
services to the KSMO Parties as set forth in this
Agreement.
SECTION 4. SCOPE OF SERVICES
4.1 Sales and Related
Services . Except as expressly provided to the contrary
herein, the KSMO Parties retain Sales Agent on an exclusive basis
for the Initial Term and each succeeding renewal term of this
Agreement to market and sell all forms of regional, and local spot
advertising, sponsorships, direct response advertising, paid
programming, including infomercials, and all long-form advertising
broadcast on the Station and all advertising on any Internet site
maintained by or on behalf of the Station during the Initial Term
and any renewal term (the “ Advertisements
”).
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Subject to the terms of Schedule 3.1
, national spot advertising broadcast on the Station shall continue
to be sold by the Station’s existing national rep firm.
The KSMO Parties shall promptly provide to Sales Agent and its
employees such information as Sales Agent may request to support
the marketing and sale of the Advertisements and the collection of
accounts receivable with respect thereto. Sales Agent also
shall be responsible for the promotion of the Station and for the
Station’s traffic, billing and collection functions for the
Advertisements. Sales Agent shall designate an adequate
number of its personnel to perform such services for the Station.
Sales Agent shall conduct the sales, traffic and promotion
functions for the Station in accordance with standard practice in
the industry. Sales Agent and the KSMO Parties shall
periodically review the personnel needs and job functions of the
persons designated by Sales Agent to perform its obligations under
this Agreement and implement such changes as they mutually agree
are appropriate. Revenues from the sale of the Advertisements
shall be allocated between Sales Agent and Licensee as set forth in
Schedule 3.1 . Sales Agent may sell the
Advertisements in combination with any other broadcast stations of
its choosing, including KCTV; provided, however , that under
no circumstances will advertisers be required to purchase time on
the Station and KCTV together. Subject to Section 4.5,
the placement, duration and rates of the Advertisements shall be
determined by Sales Agent. The value of commercial time
bartered in exchange for programming shall be excluded from the
definition of Net Sales Revenue.
4.2 Delivered
Programming . Commencing on the Base Date, Sales Agent
shall provide to Licensee for broadcast, simulcast or rebroadcast
on the Station, as applicable, local news and other programming as
described more particularly in Schedule 4.2 hereof (the
“ Delivered Programming ”). The total
duration of all Delivered Programming supplied by Sales Agent for
broadcast on the Station shall in no event exceed the lesser of 25
hours per week or 15% of the Station’s broadcast hours for
any week. Sales Agent shall be responsible for obtaining the
rights to broadcast the Delivered Programming on the Station and
for paying all costs incurred in obtaining such rights. To
the extent permission is required to rebroadcast any Delivered
Programming under Section 325 of the Communications Act, Sales
Agent hereby grants Licensee such permission. The Delivered
Programming shall be subject to Sales Agent’s editorial
judgment and the requirements of Section 4.5, including but
not limited to the Licensee’s right of rejection or
preemption. All Delivered Programming shall be in conformity
in all material respects with standards established by Licensee and
consistent with similar programming broadcast on Sales
Agent’s own television broadcast stations. Apart from
its obligation to provide the Delivered Programming as set forth
herein, Sales Agent shall have no involvement with respect to the
programming to be aired on the Station, the selection of which
shall be entirely within the discretion of Licensee. Sales
Agent shall retain all revenue from the sale of Advertisements that
are adjacent to or in the Delivered Programming.
4.3 Shared Services
. Sales Agent agrees to provide to the KSMO Parties the
following additional facilities, equipment and services to support
the operation of the Station, subject to the KSMO Parties’
right to modify, upon reasonable prior notice to Sales Agent, any
such service, provided that no such modification shall
expand in any material respect the obligations of Sales Agent, or
require Sales Agent to incur any material additional obligation or
liability, hereunder:
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(a)
Office and Studio
Space .
(i)
If and to the extent Sales Agent
elects, in its sole discretion, to provide some or all of the
services to be provided by Sales Agent hereunder from the studio
facility used by Sales Agent for KCTV (the “ Studio
Building ”), Sales Agent shall provide to the KSMO
Parties’ employees and agents the right to access and use
sufficient office space, including furnishings and office equipment
for the Station’s main studio operations, including
sufficient space to permit Licensee to maintain and make available
to the public the Station’s public inspection file in
accordance with applicable requirements of the Communications Act,
at such locations in or near the Studio Building, in each case as
may be mutually acceptable to Licensee and Sales Agent and as
Licensee reasonably requires for the conduct of the business of the
Station as contemplated by the terms hereof and in accordance with
applicable requirements of the FCC, so long as the provision of
such space and the use of such equipment do not unreasonably
interfere with the conduct of Sales Agent’s business or
operations.
(ii)
Sales Agent shall give Licensee and
its agents a nonexclusive and unrestricted right of access to the
Studio Building at all times, subject only to Sales Agent’s
reasonable security procedures applicable to its own employees, for
the purpose of fulfilling Licensee’s obligations as an FCC
licensee. The right granted under this Section shall
include the incidental benefit and reasonable right of use of
utilities (heat, water, electricity) provided for purposes of Sales
Agent’s own operations. Sales Agent shall provide
separate, lockable office facilities for use by Licensee’s
general manager or other managerial employee(s) and shall permit
Licensee to install appropriate signs on the inside and outside of
the Studio Building (consistent with applicable local requirements
or agreements, if any, governing such signage and with the overall
appearance of the Studio Building) identifying Licensee as the
owner and licensee of the Station.
(iii)
If, at the time of termination of
this Agreement, some or all of the Station’s operations are
co-located in the Studio Building as contemplated by
Section 4.3(a)(i) hereof, Licensee shall be given a transition
period of not less than six (6) months following such termination
in which to relocate such operations. During such transition
period, Licensee shall have access to the Studio Building in the
same manner as during the term of this Agreement. Such
transition period may be lengthened upon such terms and conditions
as may be mutually agreeable to the parties.
(b)
Technical Services
.
(i)
Beginning as soon as reasonably
practicable following the Base Date, Sales Agent shall perform
monitoring and maintenance of the Station’s technical
equipment and facilities and, upon Licensee’s request, shall
assist Licensee with the installation, repair, maintenance and
replacement of the Station’s equipment and facilities;
provided, however , subject to reimbursement to the extent
provided in Schedule 3.1 , Licensee shall be
responsible for all Station capital and equipment replacement
expenditures.
(ii)
Beginning as soon as reasonably
practicable following the Base Date, Sales Agent shall make
available to Licensee, on an independent contractor basis, a
staff
7
engineer employed by Sales Agent to assist the
Licensee’s Chief Operator for the Station in fulfilling his
duties as specified by the rules and regulations of the
FCC.
4.4 Excluded Services
. (a) Licensee retains all rights with respect to the
sale of supplementary or ancillary non-broadcast services on the
Station not included within the definition of
“Advertisements” in Section 4.1 hereof
(collectively, “ Excluded Services ”), and (b)
the commercial inventory and marketing and advertising rights with
respect to Excluded Services are not conveyed to Sales Agent under
this Agreement, provided that the Excluded Services shall
not reduce or limit the number or duration of the Advertisements
made available to Sales Agent under this Agreement.
4.5 Content Policies .
All material furnished by Sales Agent for broadcast on the
Station (“ Broadcast Material ”) shall comply
with applicable federal, state and local regulations and policies,
including commercial limits in children’s programming.
Licensee shall have the right to preempt any Broadcast Material to
present program material of greater local or national
importance. Licensee may reject any Broadcast Material if
Licensee reasonably determines that the broadcast of such material
would violate applicable laws or would otherwise be contrary to the
public interest. Licensee shall promptly notify Sales Agent
of any such rejection, preemption, or rescheduling and shall
cooperate with Sales Agent in efforts to fulfill commitments to
advertisers and syndicators. Licensee is familiar with the
operating standards followed by Sales Agent in the operation of
KCTV, which standards are consistent with those employed by
Licensee in the operation of the Station.
Schedule 4.5 sets forth Licensee’s statement of
policy (the “ Policy Statement ”) with regard to
the Delivered Programming and the Advertisements. Sales Agent
shall ensure that the Advertisements and Delivered Programming are
in accordance with this Agreement and Licensee’s Policy
Statement.
4.6 Public Service
Announcements . Sales Agent acknowledges that Licensee
has in the past provided time on the Station for the promotion of
public service organizations in the form of public service
announcements (“ PSAs ”), and agrees that it
will release spot time to Licensee for the broadcast of PSAs at
times and in amounts consistent with Licensee’s past
practices and consistent with Sales Agent’s operating
policies applicable to the broadcast of PSAs on KCTV.
Licensee and Sales Agent shall cooperate in good faith concerning
the placement of the PSAs to be broadcast on the Station;
provided, however, that Licensee shall be ultimately
responsible for selecting and obtaining PSAs for broadcast on the
Station.
4.7 Trade and Barter
Spots . To the best of the KSMO Parties’ knowledge,
Schedule 4.7 hereto is an accurate and complete list in
all material respects as of November 8, 2004, of all Station
contracts for the sale of advertising time on the Station for
non-cash consideration that are in effect as of and will extend
beyond the Base Date (“ Trade Agreements
”). Sales Agent shall comply with and honor all such
Trade Agreements, if and to the extent that Trade Agreement spots
may be broadcast on a preemptible basis. The dollar value of
advertising time on the Station provided to advertisers pursuant to
Trade Agreements shall not be included in the computation and
determination of Net Sales Revenue for purposes of this
Agreement. After the Base Date, Sales Agent and the KSMO
Parties shall have the right to enter into new contracts for the
sale of Advertisements for non-cash consideration, provided
that both parties agree to each such Trade Agreement and
provided further that the dollar value of such advertising
time on the Station for such Trade Agreements is not included in
the computation and determination of Net Sales
8
Revenue for purposes of this Agreement.
The parties shall mutually agree as to the use of the non-cash
consideration received for each new Trade Agreement. For
purposes of this Section 4.7, the term Trade Agreement applies
only to the bartering of advertising in return for goods and
services other than programming.
4.8 Accounts Receivable
. The KSMO Parties or their agent shall retain all revenues
from advertising broadcast by the Station prior to the Base Date
(“ Licensee Accounts Receivable ”). All
revenues from the Advertisements broadcast by the Station on or
after the Base Date, including revenues derived from advertising
sold by the KSMO Parties or their agent prior to the Base Date that
has not been aired as of the Base Date, shall be allocated between
Sales Agent and Licensee as set forth in Schedule 3.1
. Licensee shall use its best efforts to deliver to Sales
Agent a schedule of Licensee Accounts Receivable, within seven
(7) days of the Base Date. For a period of 120 days following
the Base Date, Sales Agent shall issue invoices in accordance with
the Station’s standard billing procedures for time sold and
provided by the Station prior to the Base Date and not invoiced
prior to the Base Date and remit to Licensee all amounts collected
during the period in respect of the Licensee Accounts Receivable as
follows: (a) on or before the eighteenth (18th) day of the second
complete calendar month after the Base Date, pay all amounts
collected up to the end of the prior month; and (b) on or before
the eighteenth (18th) day of each succeeding month, remit all
amounts collected during the month prior thereto. With each
remittance, Sales Agent shall furnish a statement of the amounts
collected and the persons from whom such amounts were
collected. Sales Agent shall, unless the remittance or an
account receivable debtor specified otherwise, apply all amounts it
receives from or for the benefit of any account receivable debtor
first to pay the oldest undisputed Licensee Accounts Receivable of
such debtor before applying any of such amounts to pay any
obligation of such debtor to Sales Agent arising during, or
otherwise attributable to, the period after the Base Date.
Licensee Accounts Receivable shall not be included in Net Sales
Revenue. Sales Agent shall collect Licensee Accounts
Receivable using commercially reasonable efforts that are
consistent in all material respects with the efforts Sales Agent
uses to collect accounts receivable from the sale of advertising on
KCTV; provided, however , Sales Agent shall not be required
to refer any Licensee Accounts Receivable to an attorney for
collection, institute legal proceedings or take other extraordinary
measures to collect any Licensee Accounts Receivable.
4.9 Monthly Reports; Books
and Records . The following obligations shall begin on
the first day of the first full calendar month beginning after the
Base Date:
(a) On or before the twentieth
day of each calendar month during the Initial Term and any renewal
term of this Agreement, Sales Agent shall furnish Licensee with a
report regarding Sales Agent’s sales by advertiser of the
Advertisements, other than Advertisements in or adjacent to
Delivered Programming, for the previous calendar month.
Licensee shall have the right to review only those books and
records of Sales Agent that pertain to the revenues from the sale
of such Advertisements.
(b) On or before the twentieth
day of each calendar month during the Initial Term and any renewal
term of this Agreement, the KSMO Parties shall furnish Sales Agent
with such financial statements and reports as the KSMO Parties
prepare in the ordinary course of business as of the Base Date that
reflect the costs and expenses incurred by the KSMO Parties in
operating and maintaining the Station. Sales Agent shall have
the right to review only those books and records
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of the KSMO Parties that pertain to the costs
and expenses of the Station, including any administrative charges,
fees, or other amounts payable to any Affiliate of the KSMO
Parties.
4.10 Control .
Notwithstanding anything to the contrary in this Agreement, the
KSMO Parties and Sales Agent acknowledge and agree that during the
Initial Term and any renewal term of this Agreement, Licensee will
maintain ultimate control and authority over the facilities of the
Station, including specifically control and authority over the
Station’s operations, including finances, personnel, and
programming. Without limiting the generality of the
foregoing, Licensee shall retain sole responsibility for the
selection, development, and acquisition of any and all programming
to be broadcast over the Station, as well as the payment therefor,
other than those payments associated with the Delivered
Programming, subject to the KSMO Parties’ right to
reimbursement in accordance with the terms of
Schedule 3.1 . To that end, Licensee shall (a)
have exclusive authority for the negotiation, preparation,
execution and implementation of any and all programming agreements
for the Station, and (b) retain and hire or utilize whatever
employees Licensee reasonably deems appropriate or necessary to
fulfill those programming functions. Sales Agent shall not
represent, warrant or hold itself out as the Station’s
licensee, and all sales material prepared by Sales Agent for the
sale of advertising time on the Station shall identify Licensee as
the licensee of the Station using mutually agreeable wording and
references. Sales Agent shall sell advertising time and enter
into all agreements for the sale of time on the Station and for the
Delivered Programming in its own name.
SECTION 5. OTHER OBLIGATIONS OF THE
PARTIES
5.1 Responsibilities of the
KSMO Parties . The KSMO Parties, at their expense and
subject to reimbursement to the extent provided by
Schedule 3.1 , shall be responsible for and perform the
following obligations with respect to the business and operations
of the Station during the Initial Term and any renewal term of this
Agreement, in accordance with and subject to the
following:
(a) Licensee shall bear all
responsibility for the Station’s compliance with all
applicable provisions of the Communications Act and all other
applicable laws. Licensee shall file in a timely and complete
manner all reports and applications required to be filed with the
FCC or any other governmental body. All programming aired on
the Station that is produced in whole or in part by the KSMO
Parties or any Affiliate of the KSMO Parties shall comply in all
material respects with Licensee’s Policy
Statement.
(b) The KSMO Parties shall
maintain in effect policies of insurance insuring the assets and
the business of the Station in accordance with good industry
practices and, at the least consistent with the coverage provided
under such policies as were in existence on the day prior to the
Base Date.
(c) The KSMO Parties shall
cause each Station transmitting facility to be maintained at all
times in accordance with good engineering practice and with all
engineering requirements set forth in the Station’s FCC
authorizations (except at such time where reduction of power is
required for routine or emergency maintenance) and in accordance
with the Communications Act. The KSMO Parties shall use,
operate, and maintain all of the assets of the Station in a
reasonable manner. If any loss, damage, impairment,
confiscation or condemnation of
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any of such assets occurs, the KSMO Parties
shall repair, replace, or restore the assets to their prior
condition as soon thereafter as possible, and the KSMO Parties
shall use the proceeds of any claim under any insurance policy to
repair, replace or restore any of the assets that are lost,
damaged, impaired or destroyed.
(d) The KSMO Parties shall be
solely responsible for and shall pay in a timely manner all
operating costs of the Station (excluding those costs to be borne
by Sales Agent in accordance with Section 5.2 or in connection
with these shared services to be provided by Sales Agent to the
KSMO Parties pursuant to Section 4.3), including the cost of
electricity, other utilities and rental or other payments with
respect to real property leased by the KSMO Parties, taxes, and the
salaries, insurance, and other costs for all personnel employed by
the KSMO Parties.
(e) The KSMO Parties shall
promptly pay when due, all music rights payments (including,
without limitation, music performance rights, synchronization
rights, and master use rights), if any, in connection with the
broadcast and/or transmission of all announcements, including the
Advertisements, and programming on the Station, other than the
Delivered Programming.
(f) The KSMO Parties shall,
consistent with their past practice, make any and all capital
expenditures necessary to (i) maintain the Station’s
current level of technical operation, which shall in no event be
lower than generally accepted industry standards and
(ii) complete the construction of the Station’s digital
television facilities in accordance with all FCC rules and policies
concerning such construction
(g) The KSMO Parties shall be
solely responsible for all costs and expenditures associated with
the procuring of programming to be aired on the Station, other than
those associated with the Delivered Programming. The KSMO
Parties shall pay over to Sales Agent all funds received by the
KSMO Parties each year from The WB and any other program syndicator
or supplier for promotion of The WB and other programming on other
stations or media, and Sales Agent shall use all such funds solely
for their intended purposes; provided, however , that the
KSMO Parties shall retain any network compensation paid to the KSMO
Parties after the Base Date by The WB solely in return for the
agreement entered into on July 4, 1997, by Sinclair Broadcast
Group, Inc. (“ Sinclair ”) and The WB pursuant
to which Sinclair agreed to affiliate the Station and certain of
Sinclair’s other television broadcast stations with The
WB. The KSMO Parties shall cooperate with Sales Agent in
filing any necessary forms or reports required to obtain co-op
reimbursement or other funds to which Sales Agent is entitled under
this Section 5.1(g). For the purposes of
Schedule 3.1 hereof, Sales Agent’s receipt of
promotional or co-op payments identified in this
Section 5.1(g) shall not be considered a part of Net Sales
Revenue and its expenditures of such promotional or co-op payments
shall not be considered an expense for purposes of calculating
Station Broadcast Cash Flow. To the extent that any network
or program service agreement of the KSMO Parties provides that, in
exchange for cash payment, additional spot time that otherwise
would be used by such network or program service may be released
for local sales by the Station, the KSMO Parties, upon request by
the Sales Agent, will obtain the release of such commercial spot
inventory for the placement of Advertisements by the Sales Agent,
subject to Sales Agent paying to the KSMO Parties the cash amount
required for such release.
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(h) The KSMO Parties shall
have the right to supplement the promotional efforts undertaken by
Sales Agent, but subject to coordinating such efforts with Sales
Agent in order to maintain image consistency with Sales
Agent’s promotional efforts.
(i) Subject to the provisions
of any network affiliation or other programming agreement, Licensee
shall consult and cooperate with Sales Agent in the negotiation,
maintenance, and enforcement of retransmission consent agreements
with cable, satellite and other multichannel video providers.
Licensee, in consultation with Sales Agent, shall exercise
Licensee’s rights to mandatory carriage and retransmission
consent for cable television and other multichannel video providers
in a manner that ensures the maximum possible distribution of the
Station’s signal on cable, direct-broadcas
