Exhibit 10.50
Amended and Restated
As of March 6, 2001
Granite Broadcasting Corporation
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
("GRANITE")
The Parties set forth on
Schedule I hereto
(collectively, the "PARTIES")
RE: KNTV(TV) (San Francisco-Oakland-San Jose, California DMA)
Ladies and Gentlemen:
Reference is made to that certain Affiliation Agreement, dated as of May
31, 2000, among the NBC Television Network ("NBC"), Granite and the parties
thereto (collectively with the documents entered into or contemplated to be
entered into in connection therewith, "EXISTING AFFILIATION AGREEMENT") with
respect to television stations KSEE, KBJR-TV, WEEK-TV and KNTV(TV). In
consideration of the agreement by NBC, on the terms and subject to the
conditions set forth herein, to amend the schedule of Affiliation Payments
(defined below) set forth in the Existing Affiliation Agreement, and for other
good and valuable consideration as set forth more particularly below, the
parties hereto agree to amend and restate the Existing Affiliation Agreement as
set forth herein. Accordingly, the following shall comprise the agreement among
us for the affiliation of the television broadcasting station set forth above
(each of the Parties and their respective station being referred to herein
together as a "STATION" or "KNTV(TV)") with NBC and shall supersede and replace
all prior agreements between Station and NBC (which agreements, including
without limitation the Existing Affiliation Agreement, are hereby terminated and
of no further force or effect as to KNTV(TV)) except (x) for the most recent
amendments to such prior agreements with respect to network non-duplication
protection under Federal Communications Commission ("FCC") Rules Section 76.92
(the "NON-DUPLICATION AMENDMENTS") and (y) that any indemnities provided for in
such prior agreements, as well as any liabilities outstanding thereunder as of
the date of this Agreement, shall survive.
1. TERM. This Agreement shall be effective as of the date hereof;
PROVIDED, HOWEVER, that such effectiveness shall in all events be subject to the
condition precedent set forth in Section 4(a) below; and PROVIDED FURTHER, that
notwithstanding the foregoing, Sections 2, 3, 5, 6, 7, 8, 9, 10, 11, 12, 15, 16,
17, 18, and 19(b) and (c) shall be of no force or effect with respect to
KNTV(TV) until, and, subject to the terms and conditions set forth herein,
KNTV(TV)'s affiliation with NBC shall commence at, 3:00 A.M., New York City time
on January 1, 2002 (the "KNTV(TV) EFFECTIVE DATE"). Unless sooner terminated as
provided hereunder, this Agreement shall remain in effect until 2:59 A.M., New
York City time on January 1, 2012.
2. PROGRAMMING.
(a) NBC commits to supply programming throughout the term of this
Agreement for free over-the-air television broadcasting by the Station during
the hours set forth below (the "PROGRAMMED TIME PERIODS"). Station agrees that,
subject only to Section 3 below, Station shall clear and broadcast all
programming supplied to Station hereunder for broadcast ("NBC PROGRAMMING"; and
any one program of NBC Programming, an "NBC PROGRAM") in the Programmed Time
Periods on the dates and at the times the programs are scheduled by NBC.
Monday through Saturday: 8:00-11:00 P.M.
Sunday: 7:00-11:00 P.M.
Monday through Thursday: 11:35 P.M.-2:05 A.M.
Friday: 11:35 P.M.-2:35 A.M.
Saturday: 11:30 P.M.-1:00 A.M.
Monday through Friday: 4:30-5:00 A.M., 7:00-10:00 A.M., and 5:30-6:00 P.M.
Saturday: 7:00-9:00 A.M. and 5:30-6:00 P.M.
Sunday: 8:00-9:00 A.M., 10:30-11:30 A.M. and 5:30-6:00 P.M.
Monday through Friday: 1:00-3:00 P.M.
Saturday: 10:00A.M.-1:00 P.M.
Monday through Friday: 2:05-4:00 A.M.
(b) Notwithstanding Section 2(a), with NBC's prior written consent,
Station may clear and broadcast NBC Programming at times other than the times
scheduled by NBC, and Station and NBC agree to negotiate in good faith any
proposed scheduling changes. Any agreed scheduling change shall count as 1/2
unit toward Station's Prime Time Preemption Amount (as defined in Section 3(d));
e.g., if the rescheduled NBC Program runs for one hour, Station's Prime Time
Preemption Amount would be reduced by 1/2 hour; and if the rescheduled NBC
Program runs for 1/2 hour, Station's Prime Time Preemption Amount would be
reduced by 1/4 hour, etc.) if Station can demonstrate to NBC's reasonable
satisfaction that the scheduling change will not result in a decrease of more
than 1/2 the percentage of Households Using Televisions ("HUTs") in the
Designated Market Area (as defined by Xxxxxxx, "DMA") which the NBC Program
would have delivered if broadcast at the originally scheduled time. If Station
is not able to so demonstrate, the agreed scheduling change will count as one
unit toward Station's Prime Time Preemption Amount (e.g., if the rescheduled NBC
Program runs for one hour, Station's Prime Time Preemption Amount would be
reduced by one hour, etc.).
(c) NBC shall advise Station of NBC's programming for the Programmed Time
Periods at least sixty (60) days prior to the commencement of any Broadcast Year
by posting on the internet site currently referred to as "Affiliate Partnership
Tool" ("APT") or by any other means of written notice as NBC may deem advisable.
NBC shall advise Station of any changes in programming or scheduling by posting
on APT or by such other means of written notice as NBC may deem advisable.
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(d) In addition to programming supplied above, NBC shall offer Station a
variety of sports programming and special events programming ("NBC SPORTS
PROGRAMMING") for television broadcast at times other than Programmed Time
Periods. For a period of seventy-two (72) hours following NBC's offer, Station
shall have the right of first refusal with respect to such programming as
against any other television station located in Station's community of license
or any television program transmission service furnishing a television signal to
Station's community of license. Station shall confirm its clearance of such
programming to NBC within the 72-hour period via APT or such other means as NBC
may designate. Station's confirmation of clearance shall constitute Station's
agreement to broadcast such programming in accordance with the terms of such
offer and this Agreement.
(e) The selection, scheduling, substitution and withdrawal of any NBC
Program or other portion of NBC Programming shall at all times remain within the
sole discretion and control of NBC. Station acknowledges that local and network
programming needs may change during the Term, and that NBC may (i) subtract from
or otherwise modify the Programmed Time Periods from time to time on at least
180 days' prior written notice to Station, and (ii) add to the Programmed Time
Periods only after NBC has announced the proposed addition to a majority (based
on DMA percentage designations in effect at the time) (the "AFFILIATE MAJORITY")
of NBC affiliated television stations ("NBC AFFILIATES") and, after such
announcement, NBC has determined to implement such addition with respect to the
Affiliate Majority. Nothing herein shall prevent or hinder NBC from (i)
substituting one or more sponsored or sustaining programs (i.e., programs which
do not include local availabilities) or (ii) canceling one or more NBC Programs;
provided, that NBC shall exercise all reasonable efforts to give Station at
least three (3) weeks prior notice thereof.
(f) For purposes of this Agreement, a "BROADCAST YEAR" shall mean a twelve
(12) month period during the Term which commences on any September 1 and ends on
August 31 of the immediately following year.
3. PREEMPTIONS.
(a) Station acknowledges that NBC will make a substantial investment in
network programming during the term of this Agreement in order to provide
Station with network-quality news, public affairs, entertainment, sports,
children's and other programming. In view of such investment, and after
considering the amount of broadcast time available to Station outside of the
Programmed Time Periods, Station further acknowledges and confirms that it does
not presently foresee any need to substitute programming of any kind for NBC
Programming, except under those circumstances requiring live coverage of local
news events, including follow-up coverage which airs within 48 hours of the
original newsworthy event ("NEWS EVENTS").
(b) Except as set forth in the immediately following sentence, in the
event Station preempts or otherwise fails to broadcast any NBC Programming
(including, without limitation, NBC Sports Programming) on the dates and at the
times such Programming is scheduled by NBC, then without limiting any other
rights or remedies of NBC under this Agreement or otherwise, Station shall pay
to NBC an amount equivalent to NBC's loss of gross advertising revenues
attributable to Station's failure to broadcast such program in Station's market,
calculated in accordance with Exhibit B hereto. Station shall have no obligation
to reimburse
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NBC for lost advertising revenues if (x) such failure to broadcast NBC
Programming is a direct result of (i) Station's live coverage of News Events
(excluding the addition of scheduled local news programs as a part of Station's
continuing program schedule), (ii) an event of force majeure as provided in
Section 11 hereof; (iii) a scheduling change to which NBC has granted its prior
written consent pursuant to Section 2(a) hereof; or (iv) Station's right to
preempt NBC Programming pursuant to Sections 3(d) and 3(e) below; or (y) if
Station reasonably believes that such programming is unsatisfactory, unsuitable,
or otherwise contrary to the public interest.
(c) Station's determination under clause (y) of subsection (b) above shall
be based upon a substantial difference between the relevant program's style and
content and the style and content of other NBC Programs previously broadcast by
Station. In addition, Station shall not preempt or otherwise fail to broadcast
any NBC Programming under clause (y) of subsection (b) above as a result of
commercial motivation; that is, programming shall not be deemed to be
unsatisfactory, unsuitable or contrary to the public interest based on
performance, ratings, or the availability of alternative programming which
Station believes to be more profitable or more attractive.
(d) Station covenants, represents and warrants to NBC that in any
Broadcast Year during the term of this Agreement, Station shall preempt no more
than five (5) hours in the aggregate (the "PRIME TIME PREEMPTION AMOUNT") of NBC
Programs during the Programmed Time Periods for any reason other than for News
Events. Station hereby confirms that its rights and obligations under this
Section 3(d) are consistent with the provisions of Section 3(a) above.
(e) Station agrees to accept and clear on the dates and at the times
scheduled by NBC all NBC Sports Programming offered by NBC outside the
Programmed Time Periods except Station shall have no obligation to accept and
clear NBC Sports Programming to the extent such programming directly conflicts
with Station's coverage of local sports events and special events of particular
local interest (collectively, "SPECIAL PROGRAMS"). Station agrees that its
coverage of Special Programs outside the Programmed Time Periods in any
Broadcast Year shall not exceed more than five (5) hours in the aggregate (the
"SPORTS PREEMPTION AMOUNT").
(f) In the event Station preempts or otherwise fails to broadcast any NBC
Programming or notifies NBC of its intention to do so, NBC may elect to offer
Station an alternative time period for broadcast of the omitted NBC Program
(including the commercial announcements contained therein, and any replacements
thereof). If Station fails to agree to such alternative broadcast, then in
addition to all other remedies available to it, NBC shall have the right to
license the broadcast rights to the omitted NBC Program to any other
distribution outlet for distribution in Station's DMA.
(g) In the event Station fails to pay to NBC any amounts required to be
paid by it pursuant to this Section 3, and such failure remains uncured after 30
days' written notice from NBC, then in addition to all other remedies available
to it, NBC shall have the option, exercisable in its sole discretion upon 30
days' notice to the breaching Station to (i) terminate that Station's right to
broadcast any one or more series or other NBC Programs, and to the extent and
for the periods that NBC so elects, license the broadcast rights to such series
or other NBC Program(s) to any other distribution outlet for distribution in
that Station's DMA or (ii) terminate this Agreement.
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(h) Notwithstanding the foregoing provisions of this Section 3, in the
event that Station preempts or fails to clear or broadcast on the dates and at
the times scheduled by NBC (in the absence of an agreement regarding a schedule
change pursuant to Section 2(b)) the same prime time NBC Program for four
consecutive scheduled broadcasts of the NBC Program, for any reason other than
for the News Events, then (x) the preemptions shall constitute Station's
permanent non-clearance of the NBC Program for the duration of the Broadcast
Year, (y) each preemption or failure to clear the NBC Program shall count toward
Station's Prime Time Preemption Amount and (z) NBC shall be entitled to the
payments contemplated by Section 3(b) above for each scheduled broadcast of the
NBC Program for the duration of the Broadcast Year.
4. PAYMENTS.
(a) AFFILIATION PAYMENTS. In consideration of NBC entering into this
Agreement, Granite shall pay NBC $372,980,000 (individually, an "AFFILIATION
PAYMENT", and collectively, the "AFFILIATION PAYMENTS"), payable in advance in
the amounts and on the dates set forth below, or the first business day
thereafter, by electronic transfer or such other means as NBC shall determine:
The earlier of (x) January 1, 2002
and (y) the closing date of the Senior
Secured Credit Agreement (defined below) $30,500,000
January 1, 2003 (the "2003 AFFILIATION PAYMENT") $37,160,000
January 1, 2004 (the "2004 AFFILIATION PAYMENT") $37,160,000
January 1, 2005 (the "2005 AFFILIATION PAYMENT") $70,160,000
January 1, 2006 $36,000,000
January 1, 2007 $39,500,000
January 1, 2008 $39,500,000
January 1, 2009 $41,500,000
January 1, 2010 $41,500,000
In the event that, as a result of the occurrence of the closing date of the
Senior Secured Credit Agreement, the first Affiliation Payment is paid by
Granite prior to January 1, 2002, such amount shall be discounted at an annual
discount rate of 12.0% calculated pro rata based on the number of days paid in
advance of January 1, 2002. In the event NBC terminates this Agreement pursuant
to Section 20 or 21 hereof prior to January 1, 2002, the provisions of Section
20 or 21, as applicable, shall apply to determine the amount of any repayment
then owed to Granite. Except as set forth in the schedule above, no Affiliation
Payments for any other calendar years during the term may be paid by Granite
prior to the date for payment set forth in such schedule.
It shall be a condition precedent to the effectiveness of this Agreement
that (x) the proposed senior secured loan facilities to Granite by Xxxxxxx Xxxxx
Credit Partners L.P. ("GSCP") and other financial institutions or entities
acceptable to GSCP in the amount of $205,000,000 on terms substantially similar
in all material respects to those set forth in the indicative term sheet
attached hereto as EXHIBIT C hereto (the "SENIOR SECURED CREDIT AGREEMENT")
shall have been consummated on or prior to January 1, 2002, and (y) in
connection
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with such consummation of the Senior Secured Credit Agreement, there shall have
been executed and delivered (i) an Intercreditor Agreement in substantially the
form of EXHIBIT D hereto by GSCP in its capacity as Collateral Agent (the
"COLLATERAL AGENT"), Granite, National Broadcasting Company, Inc. ("PARENT") and
the remaining parties contemplated therein (the "INTERCREDITOR AGREEMENT") and
(ii) any and all documentation necessary or advisable to give effect to the
terms and conditions set forth in Section 4(e), including, without limitation, a
security agreement, a deed of trust and UCC-1 financing statements, each in a
form satisfactory to the parties thereto (such documentation together with the
Intercreditor Agreement, collectively, the "SECURITY DOCUMENTS"), and legal
opinions in form and substance satisfactory to Parent and its counsel in
connection herewith. In the event that the foregoing conditions precedent are
not satisfied, or satisfaction thereof is not waived by Parent, the Existing
Affiliation Agreement shall remain in full force and effect between the parties
thereto, and this Agreement shall be rendered null and void automatically and
without further action by the Parties or NBC.
(b) OTHER PAYMENTS TO NBC. In connection with Station's affiliation with
NBC, Granite and Station agree that Station shall pay NBC (or an entity
controlling, controlled by or under common control with NBC, as appropriate):
(i) All amounts owed by Station pursuant to Station's NBC News
Channel Participation Agreement;
(ii) All amounts owed by Station pursuant to Station's Distribution
Contribution Agreement (as defined below);
(iii) All amounts owed by Station pursuant to the Inventory
Management Plan; and
(iv) All amounts owed by Station pursuant to this Agreement,
including without limitation pursuant to Section 3 hereof.
(c) GRANITE EXPENDITURES. Granite shall expend not less than $4,500,000
(the "PROMOTION AMOUNT") from November 1, 2001 through and including May 31,
2002, as directed and approved in writing in advance by NBC, for promotion and
other initiatives in respect of KNTV(TV). For the avoidance of doubt, NBC shall
work with Granite to develop a plan of expenditures for the Promotion Amount;
provided, however, that all expenditures of the Promotion Amount shall be
mutually agreed by NBC and Granite. From time to time upon NBC's request,
Granite shall provide NBC with appropriate documentation evidencing such
expenditures. From January 2, 2002 through and including February 8, 2002, the
Station shall broadcast a minimum number of on-air spots promoting NBC's
coverage of the 2002 Winter Olympic Games, as follows: (i) from January 2, 2002
through and including January 20, 2002, a minimum of ten spots per day between
the hours of 5:00 a.m. and 1:00 a.m., local time; and (ii) from January 21, 2002
through and including February 8, 2002, a minimum of fifteen spots per day
between the hours of 5:00 a.m. and 1:00 a.m., local time. Granite shall consult
with NBC prior to the selection and engagement by Granite or KNTV(TV) of any
advertising or promotional agency or buying service with respect to the Station.
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(D) DEFAULT.
(i) In the event that Granite or Station is in default of any
obligation under Section 4(a) which default remains uncured 30 days after
Granite's receipt of notice thereof from NBC (the "Initial GRACE Period"),
NBC shall have the right, at its election, to either (A) terminate this
Agreement in its entirety upon notice to Granite, and receive in lieu of
any accrued due or past due and unpaid financial amounts at that time owed
to NBC (or any entity controlling, controlled by or under common control
with NBC) under Section 4(a) of this Agreement or otherwise, payment of
Liquidated Damages (as set forth in Section 22(b) below), or (B) subject
to any necessary regulatory approvals, acquire 100% of the capital stock,
or all of the assets, of KNTV(TV) and KNTV License, Inc. (collectively,
the "KNTV ASSETS") at Fair Market Value (as defined below), payable by (x)
the assumption by NBC or a permitted assignee of NBC of the obligations of
Granite under the applicable Liquidated Damages provisions of Section
22(b) (and a release by NBC and such permitted assignee, if applicable, of
all liability of Granite therefor) and (y) the balance (I.E., such Fair
Market Value net of such assumed obligations) payable in cash, LESS NBC's
reasonable transaction costs to the extent permitted under the terms and
conditions of Granite's preferred stock outstanding as of the date of this
Agreement (such purchase price being the "KNTV PURCHASE PRICE" and such
right described in this subsection (B) being the "KNTV CALL RIGHT").
Within 30 days after the end of the Initial Grace Period, NBC shall notify
Granite in writing (with a copy to the Collateral Agent) whether it
intends to exercise the KNTV Call Right (the "CALL EXERCISE NOTICE");
PROVIDED, HOWEVER, that NBC may revoke any exercise of the KNTV Call Right
as set forth in the Call Exercise Notice, by written notice to Granite
(with a copy to the Collateral Agent) delivered within five days after the
date on which the final determination of Fair Market Value as set forth in
the next succeeding paragraph is delivered in writing to NBC and Granite.
To establish the "FAIR MARKET VALUE" of the KNTV Assets, NBC and Granite
shall first negotiate in good faith for 10 days commencing on the date of
receipt by Granite of the Call Exercise Notice (which period may be
extended by mutual agreement of NBC, Granite and the Collateral Agent) to
reach mutual agreement as to such valuation. If NBC and Granite reach an
agreement as to valuation in such period, the provisions of Section 3.3 of
the Intercreditor Agreement shall apply. If NBC and Granite are unable to
mutually agree upon a valuation in such time period, then Fair Market
Value shall be determined by an independent third party appraiser mutually
appointed by NBC and Granite. In the event NBC and Granite are unable to
mutually agree upon an appraiser within 10 days, then each of NBC and
Granite shall choose one nationally recognized investment bank to perform
such valuation, and each such investment bank shall perform such valuation
within 20 days following the appointment of both investment banks. In the
event the higher of the two values determined by the investment banks is
equal to or less than 110% of the lower value, then the average of the two
valuations shall be deemed the Fair Market Value of the KNTV Assets. If
the higher value is greater than 110% of the lower value, then the two
investment banks shall promptly appoint a third nationally recognized
investment bank (which shall not have access to the results of the first
two banks' determinations) to determine the Fair Market Value, and the
average of the two closest determinations (of the three investment banks)
shall be the Fair Market Value of
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the KNTV Assets. Appraisals pursuant to this Section 4(d) shall be
conducted without giving effect to KNTV(TV)'s affiliation with NBC (i.e.,
as an independent, non-network affiliated station) and with NBC and
Granite sharing equally the costs and expenses of such appraisal.
The KNTV Call Right shall terminate (i) in the event that (x) NBC shall
state in the Call Exercise Notice that it does not intend to exercise the
KNTV Call Right, (y) NBC shall fail to deliver the Call Exercise Notice
within the 30-day period following the Initial Grace Period after an event
of default under this Section 4(d)(i), or (z) NBC shall revoke an exercise
of the KNTV Call Right in accordance with the last sentence of the second
preceding paragraph, and (ii) in the event that the parties fail to
consummate the acquisition of the KNTV Assets by the earlier to occur of
(x) 180 days after the determination of the KNTV Purchase Price with
respect to the KNTV Assets, or (y) 10 days after the date on which the FCC
enters a final order approving the transfer of the Station license
(except, in the case of this clause (ii), if such failure is as a result
of a default by Granite or other failure by Granite to cooperate in
consummating such acquisition). In the event of a failure to consummate
the acquisition of the KNTV Assets pursuant to clause (ii) of the
preceding sentence (other than as a result of a breach by NBC of the
definitive purchase agreement with respect to such acquisition), NBC shall
be entitled to Liquidated Damages in accordance with Section 22(b)(ii)(y)
below. Granite and NBC agree (i) to arrange a meeting among Granite, NBC
and representatives designated by GSCP, whether by telephone conference
or, if reasonably practicable, in person, not later than 5 days after the
determination of the KNTV Purchase Price, to discuss the status of the
negotiations between Granite and NBC for the acquisition of the KNTV
Assets pursuant to the KNTV Call Right, and (ii) to make their
representatives available thereafter, until such time as the acquisition
of the KNTV Assets has been consummated, to discuss, by telephone from
time to time (upon reasonable notice and during normal business hours),
the status of such negotiations with representatives designated by GSCP.
Any acquisition of the KNTV Assets by NBC pursuant to the KNTV Call Right
shall be free and clear of any and all Liens on and security interests in
the stock and assets of KNTV except for any Liens expressly agreed to be
assumed by NBC upon the closing of such acquisition, and it shall be a
condition to closing of such acquisition that all secured creditors
holding any Lien on the KNTV Assets shall, upon the payment by NBC of the
KNTV Purchase Price, as provided in this Agreement, execute and furnish to
NBC for filing full and complete releases of all such Liens on the KNTV
Assets. "LIEN" means any mortgage, deed of trust, pledge, hypothecation,
assignment, security interest, deposit arrangement, encumbrance, lien, or
preference priority or other security agreement or other preferential
arrangement whatsoever, including, without limitation, any right of
setoff, any conditional sale or other title retention agreement, the
interest of a lessor under a lease or any financing lease having
substantially the same economic effect as any of the foregoing and the
filing of any financing statement naming the owner of the asset to which
such Lien relates as debtor. The KNTV Call Right may not be assigned by
NBC to any entity that is not directly or indirectly wholly-owned by the
ultimate parent entity of NBC.
Each of Granite and the KNTV Entities (defined below) agrees to take any
action upon the exercise by NBC (or its permitted assignee) of the KNTV
Call Right or of its rights
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pursuant to Section 20 hereof which NBC (or such permitted assignee) may
reasonably request in order to obtain and enjoy the full rights and
benefits granted to NBC hereunder and thereunder, and under each other
agreement, instrument and document delivered to NBC in connection
herewith, including specifically, at Granite's own cost and expense, the
use of Granite's and each KNTV Entity's best efforts to assist in
obtaining the approval of the FCC for any action or transaction
contemplated by this Agreement which is then required by law, and
specifically, without limitation, upon request to prepare, sign and file
with the FCC the assignor's or transferor's and licensee's portions of any
application or applications for consent to assignment of license,
construction permit or other authorization or transfer of control
necessary or appropriate under the FCC's rules and regulations. Each of
Granite and the KNTV Entities further consents to the assignment or
transfer of control of any FCC license, construction permit, or other
authorization with respect to the KNTV Assets to NBC (or its permitted
assignee) in connection with the consummation of the purchase of the KNTV
Assets as provided herein.
(ii) In addition to its rights and remedies set forth in
subparagraph 4(d)(i) above, NBC may at its option terminate this Agreement
in the event (A) that KNTV(TV) or KNTV License, Inc. or any subsidiary of
either thereof (each, a "KNTV ENTITY") pursuant to or within the meaning
of any bankruptcy law (i) commences a voluntary case, (ii) consents to the
entry of an order for relief against it in an involuntary case, (iii)
consents to the appointment of a custodian of it for all or substantially
all of its property, (iv) makes a general assignment for the benefit of
its creditors, or (v) generally is not paying its debts as they become
due; or (B) a court of competent jurisdiction enters an order or decree
under any bankruptcy law that (i) is for relief against a KNTV Entity in
an involuntary case, (ii) appoints a custodian of any KNTV Entity or for
all or substantially all of the property of any KNTV Entity, or (iii)
orders the liquidation of any KNTV Entity, and the order or decree remains
unstayed and in effect for 60 days (either (A) or (B), a "BANKRUPTCY
EVENT"). Upon termination of this Agreement pursuant to this subparagraph
4(d)(ii), NBC shall reimburse Granite a pro rata portion of the
Affiliation Payment made in the year of termination, which amount shall be
calculated by multiplying the Affiliation Payment made in the year of
termination by a fraction, the numerator of which is the number of days
remaining in the calendar year of termination after the date of
termination and the denominator of which is 365; PROVIDED, that, if the
year of termination is 2005, the Affiliation Payment shall be deemed to be
$39,660,000.
(e) LIEN ON KBWB. Granite shall cause NBC to receive a valid, perfected
first priority security interest (the "KBWB LIEN") on all of the capital stock
and assets of Pacific FM Incorporated and KOFY-TV License, Inc., whether now
owned or hereafter acquired (other than leases of office space not material to
the operation of KBWB), and including, without limitation, the broadcast license
of KBWB to the extent permitted by applicable law (collectively, the "KBWB
ASSETS"). Such security interest shall secure payment of Liquidated Damages
(other than for any Unpaid Installment (defined below)) payable under this
Agreement up to an amount equal to $34,160,000, plus the amount of all fees,
costs and expenses incurred by NBC in enforcing its rights with respect to such
security interest. Granite shall cause GSCP, for itself and on behalf of all
parties to the Senior Secured Credit Agreement, to enter into the Intercreditor
Agreement. Granite represents and warrants to Parent that Pacific FM
Incorporated
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and KOFY-TV License, Inc. have good and marketable title to all of the KBWB
Assets and no other person or entity owns any interest in any of the KBWB
Assets, other than liens granted pursuant to or permitted under the Senior
Secured Credit Agreement. The only asset of KOFY-TV License, Inc. is the license
to operate television station KBWB granted pursuant to the Communications Act of
1934, as amended, and the rules and regulations of the FCC promulgated
thereunder.
For so long as the Intercreditor Agreement remains in effect, the enforcement of
remedies by NBC under the KBWB Lien shall be subject to a 270-day standstill
period on the terms and conditions set forth in the Intercreditor Agreement as
in effect on the date of effectiveness of this Agreement. The security interest
of NBC shall remain in full force and effect until the first to occur of: (a)
the payment in full of all Liquidated Damages (other than for any Unpaid
Installment) payable to NBC under this Agreement in the event of a default under
such Section 4(a), up to an amount equal to $34,160,000 plus the amount of all
fees, costs and expenses incurred by NBC in enforcing its rights with respect to
such security interest, (b) the consummation of the acquisition of the KNTV
Assets pursuant to the KNTV Call Right, (c) the termination of this Agreement
pursuant to Section 20 or 21 and (d) the payment in full by Granite of the 2005
Affiliation Payment. NBC agrees to permit the substitution of alternative
collateral of equal or greater value than the KBWB Assets, as determined by NBC,
in replacement of the KBWB Assets, including, without limitation, the delivery
of a bond or letter of credit in favor of NBC in an amount equal to $34,160,000,
and otherwise in accordance with the provisions of Section 8(b) of the
Intercreditor Agreement; PROVIDED, HOWEVER, that Granite shall cause NBC to
receive a valid, perfected first priority security interest in any such
substituted collateral, and to execute all documents and instruments necessary
or advisable to give effect thereto, all in a form reasonably satisfactory to
NBC and its counsel; and PROVIDED FURTHER, that any such substitution shall be
subject to the delivery to NBC of a written opinion of counsel to Granite,
reasonably satisfactory to NBC and its counsel, to the effect that the lien
provided by such substituted collateral (if applicable) is a valid and perfected
security interest in such substituted collateral. Any money distributed to NBC
pursuant to Section 8 of the Intercreditor Agreement shall be credited to an
account in the name of NBC unless Granite shall establish an account in the name
of Granite and in the reasonable judgment of NBC such account shall be under the
"control" of NBC (within the meaning of the Uniform Commercial Code of the State
of New York, as amended), in which case the money shall be credited to such
account in the name of Granite under NBC's control.
Granite, Parent and NBC agree to execute and deliver, and Granite agrees
to cause the KBWB Entities to execute and deliver, the Security Documents, in a
form mutually satisfactory to the parties thereto. Granite shall furnish to
Parent legal opinions in form and substance satisfactory to Parent as to
Parent's security interest under the Security Documents.
5. DISTRIBUTION CONTRIBUTION AGREEMENT. Granite shall enter into a
Distribution Contribution Agreement in the form attached as Exhibit A hereto.
6. INVENTORY MANAGEMENT PLAN. Station shall fully participate in the
"Inventory Management Plan" as endorsed by NBC Television Affiliates (a/k/a the
NBC Affiliate Board) on May 19, 1998 (the "INVENTORY MANAGEMENT PLAN"), and in
any additional or substitute inventory management plans approved in the future
by a majority of the NBC affiliated television stations.
10
7. LOCAL COMMERCIAL ANNOUNCEMENTS. From time to time and at least once
each calendar quarter, NBC shall provide Station with notice setting forth the
amount and placement of availabilities for Station's respective local commercial
announcements in and adjacent to regularly scheduled NBC Programming.
8. CONDITIONS OF STATION'S BROADCAST. Station's broadcast of NBC
Programming shall be subject to the following terms and conditions:
(a) Station shall not make any deletions from, or additions or
modifications to, any NBC Program or any commercial, NBC identification, program
promotional or production credit announcements or other interstitial material
contained therein, nor broadcast any commercial or other announcements (except
emergency bulletins) during any such program, without NBC's prior written
authorization. Station may, however, delete announcements promoting any NBC
Program which is not to be broadcast by Station, provided that (i) such deletion
shall be permitted only in the event and to the extent that Station substitutes
for any such deleted promotional announcements other announcements promoting NBC
Programs to be broadcast by Station, and (ii) Station shall run an announcement
(which may be by voice-over or crawl) within the program broadcast at the
scheduled time of the preempted NBC program identifying(x) the preempted NBC
Program and its next scheduled broadcast time and date, and (y) in the event NBC
has licensed the broadcast rights to the preempted NBC Program to another
distribution outlet located in Station's DMA, such other distribution outlet and
its scheduled broadcast time and date of the program. Station shall broadcast
each NBC Program from the commencement of network origination until the
commencement of the next program.
(b) For purposes of identification of Station with the NBC Programs, and
until written notice to the contrary is given by NBC, Station may superimpose on
certain Entertainment programs, where designated by NBC, a single line of type,
not to exceed fifty (50) video lines in height and situated in the lower eighth
raster of the video screen, which single line shall include (and be limited to)
Station's call letters, community of license or home market, channel number, and
the NBC logo. No other addition to any Entertainment program is contemplated by
this consent, and the authorization contained herein specifically excludes and
prohibits any addition whatsoever to News and Sports programs, except
identification of Station as provided in the preceding sentence as required by
the FCC.
9. LOCAL NEWS. Station agrees, during the term of this Agreement, to
broadcast local news programs of at least thirty (30) minutes in length as
lead-ins to each of "The Today Show" (or replacement programming), "NBC Nightly
News" (or replacement programming) and NBC's Late Night Programming; provided,
that Station may preempt any of such local news programming on Saturday or
Sunday to the extent that such programming would directly conflict with
Station's broadcast of weekend NBC Sports Programming.
10. STATION REPORTS. Station shall submit to NBC in writing upon forms
provided by NBC or via e-mail or via APT, as NBC may designate, such reports as
NBC may request covering the broadcast by Station of NBC Programming.
11. FORCE MAJEURE. Neither Station nor NBC shall incur any liability
hereunder because of NBC's failure to deliver, or the failure of Station to
broadcast, any or all NBC Programs due
11
to failure of facilities, labor disputes, government regulations or causes
beyond the reasonable control of the party so failing to deliver or to
broadcast. Without limiting the generality of the foregoing, NBC's failure to
deliver a program due to cancellation of that program for any reason shall be
deemed to be for causes beyond NBC's reasonable control.
12. INDEMNIFICATION. NBC shall indemnify, defend and hold Station, its
parent, subsidiary and affiliated companies, and their respective directors,
officers and employees, harmless from and against all claims, damages,
liabilities, costs and expenses (including reasonable attorneys' fees) arising
out of the use by Station, in accordance with this Agreement, of any NBC Program
or other material as furnished by NBC hereunder, provided that Station promptly
notifies NBC of any claim or litigation to which this indemnity shall apply, and
that Station cooperates fully with NBC in the defense or settlement of such
claim or litigation. Similarly, Station shall indemnify, defend and hold NBC,
its parent, subsidiary and affiliated companies, and their respective directors,
officers and employees, harmless with respect to (x) material added to or
deleted from any program by Station, except for cut-ins produced by or on behalf
of NBC and inserted by Station at NBC's direction and (y) any programming or
other material broadcast by Station and not provided by NBC hereunder.
These indemnities shall not apply to litigation expenses, including
attorneys' fees, which the indemnified party elects to incur on its own behalf.
Except as otherwise provided herein, neither Station, on the one hand, nor NBC,
on the other hand, shall have any rights against the other for claims by third
persons, or for the non-operation of facilities or the non-furnishing of
programs for broadcasting, if such non-operation or non-furnishing is due to
failure of equipment, actions or claims by any third person, labor disputes, or
any cause beyond such party's reasonable control.
13. PROGRAM DEVELOPMENT COSTS. Throughout the term of this Agreement, upon
request from NBC, Granite and/or Station shall participate with NBC to
contribute financially, pro-rata on a station-by-station basis, based upon DMA
percentage, to future NBC efforts to secure as part of NBC Programming major
sports and entertainment programming opportunities (including, for example and
without limitation, rights to broadcast National Football League games and
entertainment programs such as "ER").
14. COOPERATION.
(a) Throughout the term of this Agreement and where commercially and
legally feasible as reasonably determined by NBC, NBC will offer Granite the
right to participate in: (x) NBC syndicated programming acquisitions and (y) NBC
"preferred-relationship" technology and equipment transactions, in each case at
terms comparable to those applicable to NBC's owned and operated television
stations (the "NBC O&O'S"). NBC will use reasonable efforts to provide Granite
with the material terms of each such participation at least five business days
prior to requiring Granite to elect whether to participate.
(b) Throughout the term of this Agreement, NBC shall use good faith
efforts to cooperate with Granite in notifying Granite of, and when commercially
feasible in NBC's reasonable discretion, offering Granite participation in, new
NBC undertakings of over-the-air broadcast ventures within Station's communities
of license (whether or not involving the
12
transmission of television programs, but excluding any existing ventures
(including, without limitation, ventures with Xxxxxx Communications and/or
PaxTV) and excluding any acquisition of an ownership interest in any broadcast
television station).
15. REGIONAL NEWS. In the event that during the term of this Agreement NBC
holds or acquires a controlling (as defined in Section 20(d)) interest in a
regional or local cable news service within the San Francisco DMA, NBC will
offer Granite the right to participate in such cable news service as a provider
of local news content (through KNTV(TV)), an equity participant, or in such
other manner as NBC and Granite may mutually agree. NBC will use reasonable
efforts to provide Granite with the material terms of such participation at
least 30 days prior to requiring Granite to elect whether to participate.
16. CHANGE IN OPERATIONS. Station represents and warrants that it holds a
valid license granted by the FCC to operate Station as a television broadcast
station; such representation and warranty shall constitute a continuing
representation and warranty by Station. In the event that at any time (a)
Station's transmitter location, power, or frequency is changed so as to effect a
material reduction in coverage by the Station, (b) Station's programming format
or hours of operation are materially changed, (c) Station ceases to produce and
broadcast local news, or (d) the number of hours of local news which Station
broadcasts materially decreases, in each case so that Station is of less value
to NBC as a broadcaster of NBC programming than at the date of this Agreement,
then NBC may terminate this Agreement with respect to Station upon thirty (30)
days prior written notice to such Station. With regard to Section 16(d), a
reduction in the total number of local news hours broadcast by Station will not
be "material" if the decrease is a direct result of Station's clearance of NBC
Programming during the Programmed Time Periods as contemplated by this
Agreement.
17. DTV CONVERSION. Station acknowledges that upon commencement of
operation of Station's digital television signal ("DTV CHANNEL"), Station will,
to the same extent as this Agreement provides for carriage of NBC Programming on
its analog channel, carry on such DTV Channel the digital feed of such NBC
Programming as and in the technical format provided by NBC consistent with the
ATSC standards and all "Program-Related Material" (as defined below); provided,
such Program-Related Material is formatted to be contained within the 6 MHz
channel assigned by the FCC to Station for digital broadcasting. It is expressly
understood that this Agreement applies only to the primary network feed in
digital format of the programming provided by NBC to its affiliated stations for
the purpose of analog broadcasting (the "PRIMARY NETWORK FEED"), together with
Program-Related Material, and that Station will in no event be required to carry
additional digital network programming (i.e., "multiplexed" programming).
Consistent with and subject to the foregoing, Station shall have the right to
use any available remaining portion of their respective digital capacity for the
purpose of transmitting local programs or any other material for any business
purpose; provided, however, that in the event that NBC proposes that Station
carry network multiplexed programming or ancillary data which is not
Program-Related Material, Station agrees to negotiate in good faith with NBC
regarding the terms pursuant to which such multiplexed programming or ancillary
data may be carried.
As used in this Section, "PROGRAM-RELATED MATERIAL" shall mean (i)
closed-captioning information, (ii) program identification codes, (iii) program
ratings information, (iv) alternative language feeds related to the programming,
(v) Xxxxxxx data, (vi) programming, data and other
13
enhancements which are related to the programming and network advertisements
provided in the Primary Network Feed and which are intended to be viewed in
conjunction with such programming and advertisements, (vii) such other material
as has been agreed by the Affiliate Majority (calculated by excluding the
affiliated television stations owned and operated by NBC), (viii) such other
material as may be provided by NBC that is necessary for the delivery or
distribution of the NBC Television Network programs in digital format, (ix)
information and material directly associated with specific network commercial
advertisements contained in the network programs, and (x) information and
material designed to promote network programming; provided, that in no case
shall such promotional and informational material supersede or substantially
interfere with the Primary Network Feed then being transmitted for viewing by
the audience. To the extent that Station is not transmitting a DTV Channel as of
May 1, 2002 and Station is not then able to demonstrate to NBC that Station is
exercising commercially reasonable efforts to transmit a DTV Channel, NBC shall
be permitted to offer the Primary Network Feed, together with any
Program-Related Material or other material provided by NBC for digital
transmission, to any licensee transmitting a DTV Channel in Station's DMA
notwithstanding any other provision of this Agreement.
18. UNAUTHORIZED COPYING AND TRANSMISSION; RETRANSMISSION CONSENT.
(a) Station shall not authorize, cause, or permit, without NBC's consent,
any NBC Program or other material furnished to Station hereunder to be recorded,
duplicated, rebroadcast or otherwise transmitted or used for any purpose other
than broadcasting by Station as provided herein. Notwithstanding the foregoing,
Station shall not be restricted in the exercise of its signal carriage rights
pursuant to any applicable rule or regulation of the FCC with respect to
retransmission of its broadcast signal by any cable system or multichannel video
program distributor ("MVPD"), as defined in Section 76.64(d) of the FCC Rules,
which (a) is located within the DMA in which Station is located, or (b) was
actually carrying Station's signal as of April 1, 1993, or (c) with respect to
cable systems, serving an area in which Station is "significantly viewed" (as
determined by the FCC) as of April 1, 1993; provided, however, that any such
exercise pursuant to FCC Rules with respect to NBC Programs shall not be deemed
to constitute a license by NBC. NBC reserves the right to restrict such signal
carriage with respect to NBC Programming in the event of a change in applicable
law, rule or regulation.
(b) In consideration of the grant by NBC to Station of the Non-Duplication
Amendments, Station hereby agrees as follows:
(i) Station shall not grant consent to the retransmission of its
broadcast signal by any cable television system, or, except as provided in
Section 18(b)(ii) below, to any other MVPD whose carriage of broadcast
signals requires retransmission consent, if such cable system or MVPD is
located outside the DMA to which Station is assigned, unless Station's
signal was actually carried by such cable system or MVPD as of April 1,
1993, or, with respect to such cable system, is "significantly viewed" (as
determined by the FCC) as of April 1, 1993.
(ii) Station shall not grant consent to the retransmission of its
broadcast signal by any MVPD that provides such signal to any home
satellite dish user, unless such user is located within Station's own DMA.
14
(c) If Station violates any of the provisions set forth in this Section
18, NBC may, in addition to any other of its rights or remedies at law or in
equity under this Agreement or any amendment thereto, terminate this Agreement
with respect to the violating Station by written notice to Station given at
least ninety (90) days prior to the effective date of such termination.
19. "BRANDING" PLAN/PROMOTION/STATION SWITCH.
(a) NBC agrees to work with Station to "brand" Station as an "NBC Station"
in Station's market through cooperative efforts in areas such as on-air
promotion, unified graphic design, use of the NBC peacock logo and NBC
identification. Station agrees to be branded as an "NBC Station" and to
participate in the foregoing branding promotion plan during the term hereof so
as to cause Station to be identified, in the perception of television viewers,
as an "NBC Station" similar to such viewers' perception of the NBC O&O's as "NBC
Stations." NBC, on the one hand, and Station, on the other hand, agree to
consult with each other, promptly after execution hereof, with respect to
implementation of such branding undertaking.
(b) Station shall dedicate annually for on-air promotion of NBC
Programming not less than (x) 16,500 Gross Rating Points ("GRP'S") or (y) 25% of
the total GRP's for all fixed promotional announcements broadcast by Station,
whichever is greater. The NBC Advertising and Promotion department may consult
with Station to develop Station's allocation of the committed GRP's based on
promotional needs of both Station and NBC.
(c) Station shall continue to participate in the year-round swap program.
(d) NBC, Granite and KNTV(TV) each acknowledge that KNTV(TV)'s affiliation
with NBC and related station switch will require significant cooperation among
such parties both before and after the KNTV(TV) Effective Date in order to
acclimate the San Francisco DMA viewing audience to KNTV(TV)'s new affiliation
with NBC and to mitigate the effect of the station switch. Accordingly, Granite
and KNTV(TV) agree to work diligently and in good faith with NBC (in particular,
with NBC News and with NBC's promotion divisions) both before and after the
KNTV(TV) Effective Date to implement programming and other initiatives as NBC
may propose in respect of KNTV(TV).
20. ASSIGNMENT.
(a) If any application is made to the FCC pertaining to an assignment or a
transfer of control of Station's license, or any interest therein or in Granite,
Granite shall immediately notify NBC in writing of the filing of such
application. Except as to "short form" assignments or transfers of control made
pursuant to Section 73.3540(f) of the FCC Rules ("SHORT-FORM TRANSACTIONS"),
promptly following Granite's notice to NBC, Granite shall arrange for a meeting
between NBC and the proposed assignee or transferee to review the financial and
operating plans and such other information as NBC may request of the proposed
assignee or transferee. Within thirty (30) days of such meeting, except as to
Short-Form Transactions, NBC shall either (x) consent to the proposed assignment
or transfer of control, in which event the assignee or transferee shall enter
into an assignment and assumption agreement with respect to the rights, duties
and obligations of Granite set forth in this Agreement, in form and substance
satisfactory to NBC or (y) terminate this Agreement. In the event that NBC
terminates this Agreement
15
pursuant to the preceding sentence, upon such termination Granite shall not be
liable for Liquidated Damages and NBC shall pay Granite the Unearned Affiliation
Payment (as defined in paragraph 20(b) below); provided, that such termination
shall not trigger NBC's obligation to pay Granite $14,500,000 as provided in
Section 21 below. Any purported assignment or transfer by Granite or Station
that does not comply with the foregoing shall be null and void and not
enforceable against NBC.
(b) Notwithstanding any other provision of this Section 20 to the
contrary, Granite shall provide NBC with at least 60 days prior written notice
(the "OFFER NOTICE") of any (i) proposed sale, lease, assignment, change of
control, disposition, or transfer, or (ii) any other reorganization or
recapitalization involving a change of control; in either case, directly or
indirectly, in part or in whole (any of the foregoing, a "PROPOSED
Transaction"), of KNTV(TV), KNTV License, Inc., any other entity that owns a
material portion of the assets of or any FCC license of KNTV(TV), and/or any of
the respective securities or related assets of any of the foregoing, including,
without limitation, a change of control of Granite. The Offer Notice shall
include the material terms of the Proposed Transaction including without
limitation the name of the proposed transferee, a description of the assets
and/or securities to be transferred, the consideration to be paid therefor (the
"OFFER PRICE"), and all other material terms and conditions.
Unless the KNTV Call Right has been terminated pursuant to Section 4(d)(i)
above (including, for the avoidance of doubt, termination as a result of NBC's
failure to exercise the KNTV Call Right within the 30-day period following the
Initial Grace Period after an event of default under Section 4(d)(i)), NBC shall
have the option to acquire the KNTV Assets on the same material terms as the
material terms of the Proposed Transaction, exercisable upon written notice to
Granite given within 60 days from NBC's receipt of the Offer Notice, such notice
to indicate either that (x) NBC may elect to exercise its option, in which event
NBC shall have an additional 30-day period in which to give Granite definitive
notice of its election, or (y) NBC elects not to exercise its option. In the
case of a change of control of Granite, the consideration to be paid by NBC for
the KNTV Assets shall be determined based on the Fair Market Value of the KNTV
Assets.
In the event that NBC elects not to exercise its option, then for a period
of 90 days from the earlier of (i) the expiration of the offer to NBC and (ii)
Granite's receipt of written notice from NBC stating that NBC does not intend to
exercise its option, Granite shall be free to enter into a binding obligation to
sell the proposed assets or securities to a third party at a price equal to or
greater than the Offer Price and on terms no more favorable to such third party
than those set forth in the Offer Notice; provided, that any such transaction
shall be subject to NBC's consent and termination rights as set forth in
paragraph (a) of this Section 20.
In the event that NBC acquires the KNTV Assets pursuant to this provision,
this Agreement shall terminate, Granite shall not be liable for Liquidated
Damages and NBC shall pay to Granite the Unearned Affiliation Payment. "UNEARNED
AFFILIATION PAYMENT" means (a) if such termination occurs on or after January 1,
2002 but prior to January 1, 2011, the product determined by multiplying the
Affiliation Payment made in the year of termination of this Agreement (which
Affiliation Payment for the year 2005 shall be deemed to be $36,000,000 for
purposes of calculating the Unearned Affiliation Payment only) by a fraction
(the "Fraction") the numerator of which is the number of calendar days remaining
in the calendar year of termination
16
after the date of termination and the denominator of which is 365, PLUS, if such
termination occurs after payment of the 2005 Affiliation Payment by Granite,
$30.5 million; and (b) if such termination occurs prior to January 1, 2002 and
Granite has prepaid the January 1, 2002 Affiliation Payment pursuant to Section
4(a) above, the amount so prepaid by Granite plus interest thereon from the date
of such payment by Granite to the date of repayment by NBC of the Unearned
Affiliation Payment at a rate of 12.0% per annum and (c) if such termination
occurs on or after January 1, 2011, $30,500,000 multiplied by the Fraction.
(c) Notwithstanding any other provision of this Agreement to the contrary,
the rights and obligations of Granite under Sections 14 and 15 of this Agreement
may not be assigned or transferred.
(d) For purposes of Section 15 and this Section 20, (i) "control" shall
mean having the power to direct the affairs of an entity by reason of any of the
following: (x) having the power to elect or appoint, directly or indirectly, a
majority of the governing body of such entity, (y) owning or controlling the
right to vote a majority of the voting interest of such entity or (z) otherwise
owning or controlling a majority interest in such entity, and (ii) "transfer"
shall include, without limitation, any direct or indirect change in the control
of KNTV(TV), KNTV License, Inc. or Granite. NBC acknowledges that W. Xxx
Xxxxxxxx owns fifty-five percent (55%) of the voting stock of Granite and that
the transfer for estate, tax or similar planning purposes by Xx. Xxxxxxxx of his
voting stock to (i) his estate, (ii) his immediate family members, or (iii)
trusts or other entities which are 100% beneficially owned by Xx. Xxxxxxxx, his
estate or his immediate family members, shall not constitute a "change of
control".
21. SPECIAL TERMINATION RIGHT. If during the term of this Agreement NBC
elects to acquire an attributable interest (determined under FCC rules and
regulations) in another distribution outlet within the San Francisco DMA (a "NEW
OUTLET"), NBC shall give Granite at least 90 days prior notice thereof.
Contingent upon the closing of such acquisition, NBC shall have the right to
terminate this Agreement with respect to KNTV(TV) and grant an NBC affiliation
to the New Outlet. In the event of such a termination and grant, effective upon
the commencement of the New Outlet's NBC affiliation, NBC shall pay Granite (x)
$14,500,000 and (y) any Unearned Affiliation Payment. Upon its receipt of such
amount, Granite shall be relieved of its remaining obligations hereunder with
respect to KNTV(TV) and under Section 4(a) hereof, provided that Granite shall
have paid NBC all amounts past due and all amounts accrued but not yet otherwise
payable pursuant to Section 4(b) or (c). NBC's termination rights under this
Section 21 shall not be triggered by NBC's acquisition, directly or indirectly,
of an attributable interest in broadcast television station presently known as
KKPX-TV (San Jose, California).
22. DAMAGES.
(a) LIMITATION. Upon the consummation of the acquisition by NBC (or its
permitted assignee) of the KNTV Assets pursuant to the KNTV Call Right
(including the assumption by NBC (or its permitted assignee) of the obligations
of Granite under the applicable Liquidated Damages provisions of subsection (b)
below and release of all liability of Granite therefor), such acquisition shall
be NBC's exclusive remedy for breach by Granite or its Subsidiaries of Section
4(a) of this Agreement. NBC agrees that, in the event of a breach by
17
Granite or its Subsidiaries of this Agreement, NBC shall not be entitled to
accelerate any remaining Affiliation Payments, or otherwise collect such
Affiliation Payments from Granite or any KNTV Entity indirectly under a theory
of damages for such breach measured by the loss of such Affiliation Payments,
except as provided in subsection (b) below.
(b) LIQUIDATED DAMAGES. As liquidated damages and not a penalty, in the
event of termination of this Agreement by NBC or the consummation of the
acquisition by NBC (or its permitted assignee) of the KNTV Assets pursuant to
the KNTV Call Right as a result of a breach of Section 4(a) of this Agreement by
Granite or any KNTV Entity, NBC shall be entitled to the following liquidated
damages in the following circumstances (the "LIQUIDATED DAMAGES"):
(i) If such termination or exercise of the KNTV Call Right (which
exercise results in the consummation of the acquisition by NBC (or its
permitted assignee) of the KNTV Assets) occurs after payment in full of
the 2005 Affiliation Payment, an amount equal to the unpaid Section 4(a)
Affiliation Payment due in the year of such termination or exercise (the
"UNPAID INSTALLMENT");
(ii) If such termination or exercise of the KNTV Call Right occurs
prior to payment in full of the 2005 Affiliation Payment, and:
(x) NBC exercises and consummates the KNTV Call Right (A) an
amount equal to $34,160,000 if such exercise occurs as a result of a
default in the payment of the 2003 Affiliation Payment, and (B) an
amount equal to $34,160,000 plus the Unpaid Installment if such
exercise occurs as a result of a default in the payment of the 2004
Affiliation Payment; or
(y) NBC does not consummate the KNTV Call Right, an amount
equal to (A) $34,160,000 (being the amount secured by the KBWB Lien)
plus (B) the Unpaid Installment, with interest thereon at an annual
rate of 20% from the date which is 30 days after the date on which
such Unpaid Installment was due (being unsecured); PROVIDED, that,
if such termination occurs prior to June 30, 2004, NBC shall not be
entitled to receive such Unpaid Installment until the first to occur
of a Bankruptcy Event and June 30, 2004.
23. NOTICES/APT. Notices hereunder shall be in writing and shall be given
(a) by personal delivery or overnight courier service: addressed to Granite at
the addresses set forth on the first page of this Agreement; to Station at the
address set forth on Schedule I; to NBC at the address set forth on the first
page of this Agreement, Attention: Senior Vice President, Affiliate Relations;
and to the Collateral Agent at the address for notices set forth in the
Intercreditor Agreement; or at such other address or addresses as may be
specified in writing by the party to whom the notice is given or (b) if such
notice relates to the scheduling, substitution, withdrawal, preemption or other
aspect of programming hereunder, by posting to APT or by such other means as NBC
may specify to Station from time to time. Notices shall be deemed given when
personally delivered and on the next business day following dispatch by
overnight courier service. NBC and Station agree to monitor APT on at least a
daily basis and to update APT as promptly as practicable and in any event so as
to comply with the notice periods provided herein.
18
24. ENTIRE AGREEMENT/AMENDMENTS. The foregoing, together with the Security
Documents, constitutes the entire agreement among Granite, Station and NBC with
respect to the affiliation of Station with NBC, all prior understandings being
merged herein and therein, and except for the Inventory Management Plan. This
Agreement may not be changed, amended, modified, renewed, extended or
discharged, except as specifically provided herein or by an agreement in writing
signed by the parties hereto.
25. CONFIDENTIALITY. The parties agree to use their best efforts to
preserve the confidentiality of this Agreement and of the terms and conditions
set forth herein, and the exhibits annexed hereto, to the fullest extent
permissible by law.
26. APPLICABLE LAW. The obligations of Station and NBC under this
Agreement are subject to all applicable federal, state, and local laws, rules
and regulations (including, but not limited to, the Communications Act of 1934,
as amended, and the rules and regulations of the FCC), and this Agreement and
all matters or issues collateral thereto shall be governed by the law of the
State of New York applicable to contracts negotiated, executed and performed
entirely therein (without regard to principles of conflicts of laws).
27. MISCELLANEOUS. If any provision of this Agreement or the application
of such provision to any circumstance is held invalid, the remainder of this
Agreement, or the application of such provision to circumstances other than
those as to which it is held invalid, will not be affected thereby. A waiver by
Granite, Station or NBC of a breach of any provision of this Agreement shall not
be deemed to constitute a waiver of any preceding or subsequent breach of the
same provision or any other provision hereof. This Agreement may be signed in
any number of counterparts with the same effect as if the signature to each such
counterpart were upon the same instrument.
19
If the foregoing is in accordance with your understanding, please indicate
your acceptance on the copy of this Agreement enclosed for that purpose and
return that copy to NBC.
Very truly yours,
NBC TELEVISION NETWORK
By: /s/ Xxxxxx X. Xxxxx
---------------------------------
AGREED:
GRANITE BROADCASTING CORPORATION
By: /s/ Xxxxxxxx X. Xxxxx
--------------------------------
KNTV(TV):
KNTV LICENSE, INC.
Licensee
By: /s/ Xxxxxxxx X. Xxxxx
--------------------------
KNTV, INC.
By: /s/ Xxxxxxxx X. Xxxxx
--------------------------
20
SCHEDULE I
PARTIES
KNTV(TV): KNTV, Inc.
KNTV License, Inc.
c/o KNTV
000 Xxxx Xxxxxx
Xxx Xxxx, Xxxxxxxxxx 00000
21
EXHIBIT A
FORM OF
DISTRIBUTION CONTRIBUTION AGREEMENT
This agreement (the "AGREEMENT") between the NBC Television Network
("NBC") and Granite Broadcasting Corporation ("GRANITE"), is dated as of
February 3, 2001.
WHEREAS, NBC and Granite have entered into an Affiliation Agreement, dated
as of the date hereof (the "AFFILIATION AGREEMENT"), with respect to the
affiliation with NBC of KNTV(TV) (San Jose, California) (the "STATION");
WHEREAS, in connection with Station's affiliation with NBC, Station will
broadcast programming provided by NBC;
WHEREAS, NBC provides such programming to Station via various means at
substantial cost and expense to NBC (as more fully described below, the "NBC
DISTRIBUTION COSTS");
WHEREAS, pursuant to the Affiliation Agreement, Granite, on behalf of the
Station, agreed to assume the obligations set forth in this Agreement in order
to pay a portion of the NBC Distribution Costs;
NOW THEREFORE, in consideration of the mutual premises set forth herein,
the parties hereto agree as follows:
1. NBC DISTRIBUTION COSTS. The NBC Distribution Costs consist of the
operational, facilities and technical costs, including upgrades, related to
processing and distributing Network programs, promotions, advertisements, news
feeds and other programming and services to the NBC affiliated television
stations.
2. DISTRIBUTION CONTRIBUTION.
a) Granite hereby agrees to pay NBC its pro rata share (calculated
based on the Station's aggregate Xxxxxxx DMA percentages) of the NBC
Distribution Costs (the "GRANITE PAYMENT") annually throughout the term of
this Agreement. The Granite Payment shall be made by wire transfer or such
other means as NBC may approve, in two equal bi-annual installments
payable each January 15 and June 15.
b) Granite hereby acknowledges that from year to year the NBC
Distribution Costs may increase, and that accordingly the Granite Payment
shall increase, in accordance with increases demonstrated in the annual
review of NBC Distribution Costs customarily commissioned by the NBC
Affiliate Board. In the event that for any given year during the term the
Granite Payment exceeds the actual NBC Distribution Costs, then NBC shall
apply the excess to the NBC Strategic Technical Development Fund (a/k/a
the Overcollection Fund (the "FUND")).
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3. THE FUND. Granite hereby agrees to pay its pro rata share (calculated
based on the Station's aggregate Xxxxxxx DMA percentages) of $18,000,000 (which
payment shall be deducted from the Fund) out of a total of $54,000,000 of
capital costs relating to the "Genesis" digital broadcast facilities development
project, on the schedule presented to the NBC Affiliate Board and attached
hereto as Exhibit A.
4. TERM. This Agreement shall commence as of January 1, 2002 and shall
remain in full force and effect, with respect to Granite and Station, for as
long as the Affiliation Agreement (including any renewal thereof) remains in
effect. Notwithstanding the foregoing, this Agreement shall terminate with
respect to Station in the event that Station ceases to be affiliated with NBC.
5. BINDING AGREEMENT. This Agreement shall be binding upon NBC and Granite
and Station upon execution hereof by each of NBC and Granite.
6. MISCELLANEOUS. This Agreement constitutes the entire agreement and
understanding of the parties relating to the subject matter hereof and
supersedes all prior and contemporaneous agreements, negotiations, and
understandings between the parties, both oral and written, relating thereto. No
waiver or amendment of any provision of this Agreement shall be effective unless
in writing and signed by both parties. The terms of this Agreement shall apply
to parties hereto and any of their successors or assigns; provided, however,
that this Agreement may not be transferred or assigned by Granite without the
prior written consent of NBC. This Agreement may be executed in counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement. Notices given
pursuant to this Agreement shall be deemed given upon dispatch if given via
nationally recognized overnight courier or confirmed facsimile, to the address
of the respective party as set forth in the Affiliation Agreement.
7. GOVERNING LAW AND JURISDICTION. This Agreement shall be governed by and
construed under the laws of the State of New York applicable to contracts fully
performed in New York, without regard to New York conflicts law. The parties
hereto irrevocably waive any and all rights to trial by jury in any proceeding
arising out of or relating to this Agreement.
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IN WITNESS HEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as set forth below.
NBC TELEVISION NETWORK
By:
---------------------------------
Name:
Title:
GRANITE BROADCASTING CORPORATION
By:
---------------------------------
Name:
Title:
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EXHIBIT B
25
EXHIBIT C
FORM OF
INTERCREDITOR AGREEMENT
26
