[CART, INC. Letterhead]
February 27, 2002
Promotion Entertainment of Mexico, LLC
000 Xxxxx Xxxxxxx Xxxxx Xxxx
Xxxxx 000
Xxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxxxxx
Re: Mexican Television Rights
Dear Xxxxx:
This letter will serve to confirm the agreement between Promotion
Entertainment of Mexico, LLC ("Promotion") and Championship Auto Racing Teams,
Inc. ("CART") to enter into a definitive agreement with respect to Mexican
television rights on the terms and conditions, and subject to the conditions
precedent set forth below:
1. RIGHTS.
Promotion shall have the exclusive right to broadcast, distribute and
transmit the CART sanctioned FedEx Championship Series events via television and
radio in Mexico throughout the term of the agreement. CART and Promotion shall
not be liable to the other party for any "spillover" from U.S. domestic or
Mexican broadcasts.
2. PRODUCTION AND DISTRIBUTION.
Promotion, at its sole cost, shall be responsible for all host
broadcast television expenses for the Monterrey and Mexico City Races as well as
for the world feed which will be provided to CART at no cost. CART shall provide
Promotion with a clean (without commentary and graphics) world feed of CART
events outside of Mexico at no cost to Promotion. The world feed shall be
produced in a manner consistent with the production of the 2001 event in
Monterrey and the standards of similar and like international sports broadcasts.
Xxxxx X. Xxxxxxxxxxx
Promotion Entertainment of Mexico, L.L.C.
March 29, 2002
Page 2
3. FINANCIAL TERMS.
2002 - Promotion shall pay CART $300,000, payable quarterly, commencing
March 31, 2002. In addition, CART would receive seventy percent (70%) of
Promotion's Net Profits until such time as CART has received a total of
$500,000, inclusive of the $300,000 payment.
2003 - Promotion shall pay CART $325,000, payable quarterly, commencing
March 31, 2003. In addition, CART would receive seventy percent (70%) of
Promotion's Net Profits until such time as CART has received a total of
$550,000, inclusive of the $325,000 payment.
2004 - Promotion shall pay CART $350,000, payable quarterly, commencing
March 31, 2004. In addition, CART would receive seventy percent (70%) of
Promotion's Net Profits until such time as CART has received a total of
$600,000, inclusive of the $350,000 payment.
The definitive agreement shall set forth the definition of Net Profits
and the right of CART to audit the books and records of Promotion. If Promotion
receives a rights fee, the Net Profit shall equal the rights fee reduced by the
guaranteed payment set forth above. In the computation of Net Profits, the
parties understand and agree that Promotion may enter into a trade with
television in which it will trade certain potential profits related to
television for advertising and other promotional benefits for the Monterrey and
Mexico City Races. To the extent that such trades do not exceed $500,000 in 2002
and $750,000 in 2003 and 2004, such amounts will not be taken into consideration
in determining Net Profits. Any trades in excess of said amounts will be
included in the profit sharing calculations. In addition, the guaranteed payment
to CART will be an expense for purposes of determining Net Profits.
4. TERM.
This agreement shall be effective as provided herein and shall continue
through December 31, 2004.
5. CONDITIONS PRECEDENT.
This agreement and the obligations hereunder are subject to the
satisfaction of the conditions set forth below:
A. Promotion shall provide to CART written confirmation
satisfactory to CART from the parties to the Sanction
agreements for Monterrey and Mexico City, stating that each of
the parties waives its present right to negotiate or enter
into any agreement with CART with respect to the television
rights associated with Mexico.
Xxxxx X. Xxxxxxxxxxx
Promotion Entertainment of Mexico, L.L.C.
March 29, 2002
Page 3
B. CART shall provide Promotion with a certificate from
Xxxxxxxxxxx X. Xxxx stating that the Board of Directors of
CART has approved this agreement.
Upon receipt of the items listed above, this agreement shall be in full
force and effect. If such conditions are not met by March 1, 2002, this
agreement will terminate.
6. RIGHT TO NEGOTIATE AN EXTENSION.
CART grants to Promotion the exclusive first right to negotiate in good
faith, an extension beyond 2004 on terms mutually agreed upon with such
negotiation period to conclude thirty (30) days following the 2004 Mexico City
event.
This letter is intended to be a binding Letter of Intent, subject to
the conditions precedent set forth above, and therefore, shall constitute a
legally binding enforceable contract between the parties pertaining to the
subject matter hereof and shall be binding until such time as this agreement is
replaced and superceded by a mutually acceptable definitive agreement. Both
parties agree to use their best efforts to reduce this letter into a definitive
agreement on or before September 15, 2002. The agreement will supercede the
September 10, 2001 letter between the parties, which will become null and void
upon execution of this agreement and the satisfaction of the conditions
precedent set forth herein. Both parties understand, that because of the fact
that the Monterrey Mexico Race will take place on March 10, 2002, the parties
must move forward with significant efforts related to this agreement and the
race in Monterrey, Mexico and therefore the parties agree to use good faith in
negotiating and resolving any issues which may arise with respect to such
activities.
If you are in agreement with the foregoing and this letter is
acceptable to you, please confirm by signing a copy of this letter and
returning it to my attention no later than 12:00 p.m. Eastern time, February
28, 2002.
Very truly yours,
CHAMPIONSHIP AUTO RACING TEAMS
By: /s/ Xxxxxxxxxxx X. Xxxx
----------------------------------------
Accepted and agreed to this 28th day of February, 2002.
Xxxxx X. Xxxxxxxxxxx
Promotion Entertainment of Mexico, L.L.C.
March 29, 2002
Page 4
PROMOTION ENTERTAINMENT OF MEXICO, L.L.C.
By: /s/ Xxxxx X. Xxxxxxxxxxx
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