Time Brokerage Agreement

TIME BROKERAGE AGREEMENT


for


KPLR-TV


by and between


KOPLAR COMMUNICATIONS TELEVISION, L.L.C.


&


KOPLAR COMMUNICATIONS, INC.


and


ACME TELEVISION LICENSES


OF


MISSOURI, INC.


&


ACME TELEVISION HOLDINGS, LLC


TIME BROKERAGE AGREEMENT


This Agreement ("Agreement") is dated this eighth day of September 1997 and is by and between KOPLAR COMMUNICATIONS TELEVISION, L.L.C., ("KCT "), a limited liability company formed under the laws of the State of Missouri, KOPLAR COMMUNICATIONS, INC. ("Koplar"), a corporation formed under the laws of the State of Missouri (KCT and Koplar are collectively referred to herein as "Licensee" unless the context requires otherwise), ACME TELEVISION LICENSES OF MISSOURI, INC. ("Broker"), a corporation formed under the laws of the State of Missouri, and ACME TELEVISION HOLDINGS, LLC ("ACME"), a limited liability company formed under the laws of the State of Delaware.


WHEREAS, Licensee holds licenses and other authorizations from the Federal Communications Commission ("FCC") for KPLR-TV in St. Louis, Missouri (the "Station"); and


WHEREAS, ACME, the parent company of Broker, and Koplar, the controlling member of Licensee, and the Shareholders of Koplar (the "Selling Shareholders") are parties to a certain Stock Purchase Agreement (the "Purchase Agreement") dated July 29, 1997 for the sale of all the stock in Koplar; and


WHEREAS, ACME intends to assign its obligations and rights under the Purchase Agreement to ATLMI in accordance with and subject to Section 12.2 of the Purchase Agreement; and


WHEREAS, the parties hereto have carefully considered the FCC's time brokerage policies for television stations and intend that this Agreement in all respects comply with such policies; and


WHEREAS, Licensee agrees to provide time on the Station to Broker on terms and conditions that conform with policies of the Station and the FCC for time brokerage arrangements and that are as set forth herein; and


WHEREAS, Broker agrees to utilize the facilities of the Station solely to broadcast programming that conforms with the policies of Licensee and the rules and policies of the FCC, all as set forth herein;


NOW, THEREFORE, in light of the foregoing and the mutual promises and covenants contained herein, the parties hereby agree as follows:


ARTICLE I: PROVISION OF PROGRAMMING


SECTION 1.1. BROKER'S USE OF STATION FACILITIES


Licensee shall make the Station's broadcast transmission facilities available to Broker beginning on the commencement of the Term specified in Section 1.2 of this Agreement, subject to the provisions of this Agreement. The Licensee shall make the foregoing facilities available to Broker one hundred sixty-eight (168) hours per week, Sunday through Saturday, except for (a) downtime occasioned by maintenance, (b) time utilized by the Licensee to comply with applicable law or to fulfill its obligations under the Communications Act of 1934, as amended (the "Act"), or the rules and policies of the FCC, and (c) time necessary to comply with Licensee's agreements with program suppliers (the "Program Contracts"), including but not limited to The WB Network, which are in effect as of the date of this Agreement. Upon commencement of the Term, Broker may provide programming to be broadcast on the Station for the entire 168-hour weekly period subject to (a) any diminution under this Agreement, and (b) the provisions of Section 1.3. At Broker's option, the programming may originate from Licensee's studios.


SECTION 1.2. TERM OF PROGRAMMING OBLIGATION


The term of this Agreement (the "Term") shall commence on the same date (the "Effective Date") on which Broker places monies in escrow as required by the Escrow Agreement executed in connection with Section 9.4 of the Purchase Agreement. The Term of this Agreement shall expire on the earlier of the (a) transfer of control of Koplar to ACME or its assignee as contemplated by the Purchase Agreement, (b) the termination of the Purchase Agreement prior to any distribution of the Escrow Funds to the Selling Shareholders, or (c) the date ten (10) years from the Effective Date: provided, that, at the option of Broker exercised at least ninety (90) days prior to the expiration of the Term, Broker and Licensee shall enter into good faith negotiations to extend this Agreement for another 10-year term under mutually agreeable terms and conditions. Notwithstanding anything contained herein to the contrary, in the event that the Escrow Funds have not been distributed to the Selling Shareholders when and as required by Section 3.3 of the Escrow Agreement, Koplar may terminate this Agreement upon ten (10) days notice to the other parties.


SECTION 1.3. QUALITY AND NATURE OF PROGRAMMING


(a) Any and all programming provided by Broker under this Agreement shall be in accordance with the Act and the rules and policies of the FCC. All advertising messages and promotional material or announcements shall comply with all applicable federal, state and local laws, regulations and policies.


(b) The broadcast of all programming by Broker hereunder shall be subject to the supervision, direction and control of Licensee. Licensee shall have the full and
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unrestricted right to delete and not broadcast all or any part of the programming provided by Broker which Licensee regards as being unsuitable for broadcast or the broadcast of which it believes would be contrary to the public interest.


(c) Notwithstanding anything in this Agreement to the contrary, Licensee shall have the right to provide programming pursuant to programming agreements, the WB Affiliation Agreement and sports rights contracts in effect as of the Effective Date. It is contemplated that Licensee may make available additional programming under presently existing program contracts available to be aired on the Station: provided, that in no event shall Licensee enter into any new programming agreements after the Effective Date of this Agreement without the prior consent of Broker except to the extent that Licensee determines, in the exercise of its discretion, that such agreements are necessary to enable Licensee to comply with applicable law, including Licensee's obligations under the Act and FCC rules and policies.


SECTION 1.4. MAINTENANCE OF STATION FACILITIES


(a) Licensee shall be responsible for maintaining the transmission facilities of the Station and for ensuring compliance by the Station with the operating, reporting, and other requirements established by the Act and the FCC. Broker shall be responsible for paying all costs of repairing, maintaining and operating the Station and the business activities relating to the Station arising on or after the Effective Date subject to the terms and conditions of this Agreement. Such costs include but are not limited to the following:


(1) all lease and real estate tax payments in connection with the real property owned or leased by Licensee for the Station's transmitter sites, tower, parking facilities and satellite uplink and downlink facilities, and any and all payments (including lease payments) for use of the Station's main studios and offices;


(2) all personal property taxes in connection with the personal property relating to the Station;


(3) utility bills for utility services at the transmitter site of the Station;


(4) local exchange telephone service costs for the transmitter and studio locations of the Station;


(5) maintenance of the transmitting facilities of the Station and of all equipment required by the FCC for the operation of the Station in compliance with the rules and policies of the FCC, including expenditures required to repair and replace equipment utilized by the Station;


(6) salaries of Licensee's employees, payroll taxes, insurance benefits and related costs of all personnel employed by Licensee for the operation of the Station:
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provided, that employee bonuses distributed after the Effective Date shall be prorated over the calendar year for 1997;


(7) costs of supplies and equipment repair;


(8) premiums for insurance policies reasonably required with respect to Station assets or operations as determined by Licensee (with Broker named as an additional insured on all such insurance policies);


(9) salaries and other expenses incurred prior to September 30, 1997 which have not been paid as of Effective Date;


(10) all expenses and payments required by the Program Contracts as well as restructure payments to program suppliers for programming previously aired by the Station; and


(11) all liabilities of Licensee which, by their terms, are required to be paid by the Licensee (whether or not incurred prior to or after the Effective Date), except for those liabilities to be paid out of the Escrow Fund pursuant to the Escrow Agreement.


(b) Notwithstanding anything to the contrary in this Agreement, Licensee will consult with Broker on a weekly basis or as often as is reasonably required to develop a mutually agreeable budget for Station operations in each calendar year during the Term of this Agreement. To the extent expenditures in excess of any such budget are anticipated, Licensee will make commercially reasonable efforts to provide Broker with as much advance notice as is practicable and consult with Broker to reach a mutually agreeable determination of the expenditures to be made: provided, that Licensee shall retain the ultimate authority to decide which expenses are required to ensure the Station's compliance with applicable law and the Program Contracts and to preserve the business and goodwill of the Station. In no event, however, shall the authority of Edward J. Koplar ("Mr. Koplar"), president of the Licensee, with respect to the operation of the Station be less than the authority he would have as the Chief Executive Officer of Koplar Communications, Inc. pursuant to the Management Agreement included as Exhibit E to the Purchase Agreement.


(c) If either party becomes aware that the Station has suffered any loss or damage of any nature to its transmission or studio facilities which results in the interruption of service or the inability of the Station to operate with its maximum authorized facilities, such party shall immediately notify the other party of the same. Broker shall, at its sole cost, undertake such repairs at its expense as are necessary to restore full-time operation of the Station with its maximum authorized facilities as expeditiously as possible following the occurrence of any such loss or damage.


(d) During the Term of this Agreement, ACME will cause Broker to commence payments (the "Payments") to Mr. Koplar of the monies that would otherwise be due to Mr. Koplar upon execution of the Management Agreement attached as Exhibit E
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to the Purchase Agreement. Such payments shall be made in lieu of any other payments which Broker would otherwise be obligated to reimburse Koplar for the compensation paid to Mr. Koplar as an officer, director and employee of Koplar. The Payments shall be credited against any monies that ACME has to pay Mr. Koplar upon execution of the Management Agreement (which will occur at the transfer of control of Koplar after the requisite FCC approval is obtained). The term of the Management Agreement will be reduced by a period of time measured from the date on which the Payments commence to the execution of the Management Agreement.


SECTION 1.5. HANDLING OF MAIL


Except as required to comply with the Act or FCC rules and policies, including those regarding the maintenance of the public inspection files (which shall at all times remain the responsibility of the Licensee), the Licensee shall not be required to receive or handle mail, faxes, or telephone messages in connection with programming provided by Broker unless the Licensee, at the request of Broker, has agreed in writing to do so. Notwithstanding anything herein to the contrary, Broker shall provide the Licensee with copies of any mail, faxes, or telephone messages concerning the programming furnished by Broker under this Agreement to permit Licensee to place copies thereof in the Station's public inspection files if required by applicable law, rule, or policy. Each party shall immediately notify the other upon its receipt of any inquiry or other communication from the FCC or member of the public which relates to matters covered by the Agreement. It shall be the responsibility of Licensee to respond to all communications from the FCC, although Licensee will consult with Broker prior to doing so if time permits.


SECTION 1.6. STAFFING REQUIREMENTS AND EXPENSES


(a) The Licensee shall, to the extent required by applicable law or policy, maintain a main studio within the Station's principal community contour. Throughout the Term of this Agreement, Licensee shall retain a General Manager and at least one other full-time employee and all other personnel, if any, required by the FCC for the Station.


(b) In addition to the employees identified in subsection (a) of this section, Licensee may continue to employ such other personnel as Licensee deems appropriate and necessary, subject to the provisions of Section 1.4(b) of this Agreement. Licensee shall make its employees available for use by Broker in connection with Broker's fulfillment of its responsibilities under this Agreement: provided, that all such employees of Licensee shall at all times be subject to the ultimate control and supervision of Licensee.


(c) Broker shall be responsible for the salaries, commissions, taxes, insurance and other related costs of all personnel employed by Licensee (including but not limited to on-air personalities, engineering personnel, sales persons, traffic personnel, board operators and other programming staff members) involved in the production, sale, and broadcast of its programming or administration with respect to the operations of the Station. Broker shall be fully responsible for all compensation and the immediate supervision and direction
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of its employees, subject, however, to Licensee's ultimate control while Broker's employees are on the Station's premises. Broker may establish, staff and maintain a remote control point for the Station, subject to the control and oversight of the Licensee: provided, that Broker ensures that Licensee maintains the ability to preempt Broker's programming. Broker shall pay for (1) all telephone calls associated with program production, (2) any fees billed by ASCAP, BMI and SESAC, (3) all promotional expenses, and (4) all other copyright fees attributable to programming provided by Broker under this Agreement.


(d) Notwithstanding anything to the contrary herein, Broker shall have the option to hire all of the ...