Time Brokerage Agreement

EXHIBIT 10.17


TIME BROKERAGE AGREEMENT


THIS TIME BROKERAGE AGREEMENT ("Agreement"), dated as of December 29, 1999, is made and entered into by and between RADIO UNICA CORP., a Delaware corporation ("Unica"), and QUETZAL BILINGUAL COMM., INC., a California corporation ("Quetzal").


WHEREAS, Quetzal is the owner and operator of radio station KURS, 1040 kHz, licensed to San Diego, California (the "Station");


WHEREAS, Unica and Quetzal have entered into that certain Option Agreement, dated as of December 29, 1999 (the "Option Agreement"), pursuant to which Quetzal has granted to Unica an option (the "Option") to purchase substantially all of the assets of the Station pursuant to the Asset Purchase Agreement (the "Asset Purchase Agreement") attached as an exhibit to the Option Agreement;


WHEREAS, Quetzal desires to make available to Unica substantially all the broadcasting time on the Station; and


WHEREAS, Unica is engaged in the business of radio broadcasting and desires to avail itself of the Station's available broadcast time.


NOW, THEREFORE, in consideration of the promises and the mutual covenants and agreements herein contained, Unica and Quetzal agree as follows:


1. COMMENCEMENT DATE AND FACILITIES.


Commencing 12:01 a.m. on Saturday, January 1, 2000 (the "Operational Commencement Date"), Quetzal shall broadcast, or cause to be broadcast, over the Station transmission facilities certain programming, consisting of programs, announcements and advertising (the "Programming"), originating at the Station's studio or delivered to Quetzal by Unica in compliance with the provisions of Section 6(a) of this Agreement. Unica shall deliver the Programming to Quetzal's transmitter site at Unica's exclusive cost, by means reasonably acceptable to Quetzal.


2. LICENSE TO USE STUDIO AND OFFICE FACILITIES; ASSIGNMENTS.


(a) During the Term (as hereinafter defined) of this Agreement Unica is hereby granted a license to utilize the Station's studio and office facilities located at the News Plaza Building, 296 H Street, 3rd Floor, Chula Vista, CA 91910 (the "Premises"); PROVIDED, THAT until February 29, 2000, Mr. Jaime Bonilla and his personnel shall be allowed to continue to use approximately 1,410 square feet of office space located on the Premises that Mr. Bonilla and his peronnel are currently using for business offices (the "Office Space"). Unica hereby agrees to pay News Baja, Inc. a monthly fee of Two Thousand Six Hundred Twenty-Six Dollars ($2,626.00) for the use of the Office Space commencing on March 1, 2000 and continuing for the remainder of the Term of this Agreement; except that, no such monthly fee for the Office Space shall be owed by Unica until Mr. Bonilla and


his personnel have vacated the Office Space. During the Term of this Agreement, Unica shall be obligated to make no payments for the license to use the Premises other than the monthly fee called for by this Section 2(a) and the fee called for by Section 4 hereof. Unica shall not make any material physical improvements or changes to the Premises without the prior written consent of Quetzal, which consent shall not be unreasonably denied nor delayed; PROVIDED, HOWEVER, that Unica may, at its own expense, install on the Premises such equipment, including, without limitation, satellite receivers, as necessary to permit Unica to broadcast the Programming on the Station. Such installation shall be subject to Quetzal's approval and supervision. Title to any such equipment installed on the Premises by Unica shall remain with Unica. Unica does not assume, and shall not be deemed to assume, under this Agreement or otherwise by reason of the transactions contemplated by this Agreement, any liabilities, obligations or commitments of Quetzal of any nature whatsoever, regardless of whether arising from or relating to the ownership, operations or business of the Station. Except as specifically provided in Section 2(d) hereof, this Agreement shall not constitute an assignment of any contract or lease to which Quetzal is a party, including without limitation any studio or tower leases. Consistent with this Agreement, except as specifically provided in Section 2(d) hereof, Quetzal shall continue to perform all of its obligations under all contracts, leases and other agreements in a timely manner and otherwise keep all such contracts and leases in full force and effect.


(b) In the event that Unica exercises the Option pursuant to the terms of the Option Agreement, Unica and News Baja, Inc., the controlling shareholder of Quetzal, agree to enter into a lease agreement substantially in the form of Quetzal's current lease with News Baja for the Premises, a copy of which is attached hereto as Exhibit A, which lease shall include the following terms: Unica shall pay monthly rent of $8,400.00 for a term of seven years and shall have the option to extend the term of the lease for an additional five years. The monthly rent shall be increased three percent (3%) per year. The lease shall include parking, general building maintenance and the use of fifty percent (50%) of the garage (News Baja to pay for separation wall and new exterior entrance into subdivided space). Electrical shall be paid for at a rate of thirty-three percent (33%) of the electrical invoice for the building. The first and last month's rent shall be paid as a deposit.


(c) In addition to any payments required pursuant to Section 4(a) hereof and Section 1.6 of the Option Agreement, on the date hereof, Unica shall pay News Baja One Hundred Thousand Dollars ($100,000.00) for vacating the Premises, such amount to be paid by wire transfer of immediately available funds to an account specified by Quetzal in writing.


(d) Subject to the terms hereof, Quetzal hereby assigns, transfers, and conveys to Unica, its successors and assigns, and Unica hereby accepts all of the rights, title and interest of Quetzal in the contracts set forth on Schedule 2(d)(i) hereof. In addition, Quetzal hereby assigns title to and Unica hereby accepts the contracts to a 1996 GMC Safari, account number 085-0368-18340 and a 1996 GMC Safari, account number 085-0368-19474 and Quetzal hereby further assigns title to a 1985 GMC Step Van. Additionally, Unica hereby assumes the obligations for advertising time as set forth on Schedule 2(d)(ii) hereto; PROVIDED, THAT, in no event will Unica be responsible for more than $149,879.50 of advertising time which obligation Unica shall fulfill in accordance with Seller's


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rate card; and subject to the terms of Section 21.2(g) hereof, Unica covenants and agrees to use its best efforts to commission Lotus Hispanic Reps. Corp., a California corporation ("Lotus") for sales previously booked and recorded for the broadcast period that begins January 1, 2000 pursuant to that certain contract dated September 28, 1999 between Lotus and Pacific Spanish Network Radio Station KURS (the "Lotus Agreement").


3 TERM.


This Agreement shall be effective on January 1, 2000, and, unless sooner terminated, extended or renewed as hereinafter provided, shall end on December 31, 2001 (the "Initial Term"). In the event the Option is exercised by Unica, the Initial Term of this Agreement shall end upon the Closing (as defined in the Asset Purchase Agreement) or the termination of the Asset Purchase Agreement pursuant to the terms thereof, it being expressly agreed and understood that termination of the Asset Purchase Agreement shall not result in the Initial Term of this Agreement ending prior to December 31, 2001. At any time prior to the end of the Initial Term, Unica, at its sole option, by written notice to Quetzal, may renew this Agreement for an additional one year period, in which case this Agreement, unless sooner terminated, shall continue from January 1, 2002 and end on December 31, 2002, (the "Renewal Term," and together with the Initial Term, the "Term").


4 PAYMENTS BY UNICA.


(a) In addition to any fees and costs Unica incurs in producing, providing and delivering the Programming (including costs payable by Unica pursuant to Section 4(c) and Section 10(a) hereof), and the fees called for pursuant to Section 2(a) hereof and subject to Section 1.6 of the Option Agreement, Unica hereby agrees to pay Quetzal, during the Term, a monthly fee of Sixty Two Thousand Dollars ($62,000.00) ("Monthly Fee"), which Monthly Fee includes all costs related to engineering, transmitter operations, utilities, and transmitter lines and subject to Section 2(a) hereof) the use of Quetzal's studio facilities. The Monthly Fee payable by Unica to Quetzal pursuant to this Agreement shall be paid in advance without notice or demand prior to the first day of each month during the Term hereof, except that Unica shall pay Quetzal, on the date hereof, a deposit of One Hundred Twenty Four Thousand Dollars ($124,000.00), representing the Monthly Fee to be paid by Unica for the first and last month pursuant to this Section 4(a), such amount to be paid by wire transfer of immediately available funds to an account specified by Quetzal in writing. Quetzal hereby agrees that the Monthly Fees due hereunder for the seventh and eighth months shall be suspended and no payments shall be made by Unica to Quetzal for such months; PROVIDED, THAT if the Option is not exercised by Unica, such Monthly Fees for the seventh and eighth months in the amount of One Hundred Twenty Four Thousand Dollars ($124,000.00) shall be added to the last Monthly Fee payment due under this Agreement by Unica to Quetzal. Monthly Fee payments received later than the fifth business day of any month shall be subject to a late charge of five percent (5%) of the Monthly Fee (the "Late Charge"). The Late Charge shall be paid within ten business days of written notice by Quetzal to Unica of the late Monthly Fee. Subject to Section 1.6 of the Option Agreement, all payments to Quetzal hereunder shall be made without deductions or offset and shall be non-refundable, except as otherwise provided in this Agreement.


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(b) Subsequent payments will be made by check delivered to Quetzal at 296 H Street, 3rd Floor, Chula Vista, California 91910, or such other address as Quetzal may select pursuant to Section 29 hereof, PROVIDED, THAT, if Quetzal has given wire transfer instructions to Unica, Unica will be required to make all payments by wire transfer of immediately available funds to the account specified by Quetzal.


(c) Unica shall be solely responsible for and shall pay in a timely manner all direct and indirect costs incurred by Unica in producing, providing and delivering the Programming including, but not limited to, (i) program costs, (ii) sales costs, (iii) Station advertising and promotion costs, (iv) costs related to Unica's audio lines to Quetzal's studio or transmitter, (v) salaries, payroll taxes, insurance, health benefits and related costs of personnel employed by Unica in connection with the Programming supplied to Quetzal, (vi) marketing, costs in connection with sales and promotion of radio time, (vii) costs related to administrative supplies, FCC regulatory fees, local and long distance telephone service related to the Station (including toll-free calls), and (viii) income, gross receipts, sales, personal property, and other taxes of any nature whatsoever and costs related to Unica's programming of the Station. Additionally, Unica shall be solely responsible for providing and operating its own vehicles in connection with the Programming and shall be solely responsible for the payment of any costs incurred in connection with the provision and operation of such vehicles, including insurance.


(d) Quetzal agrees to assign to Unica on the date hereof all of its right title and interest in the accounts receivable (the "Accounts Receivable") set forth on Schedule 4(d) hereto. In consideration for assigning the Accounts Receivable to Unica, Unica agrees to pay Quetzal a sum equal to forty percent (40%) of the amount of the total Accounts Receivable set forth on Schedule 4(d), such sum to be paid in four equal, monthly installments, commencing on February 1, 2000.


(e) The failure of Quetzal to demand or insist upon timely and full payment of any payment due hereunder, shall not constitute a waiver of Unica's obligations under this Section 4.


5 PAYMENTS BY QUETZAL.


In addition to the costs payable by Quetzal pursuant to Section 10(b) hereof, Quetzal shall be solely responsible for and shall pay in a timely manner the following costs of the Station: (i) rents, utilities, insurance and maintenance costs relating to the Station's tower and transmitter site facilities and other real and personal property relating to, or used by, the Station; (ii) Quetzal's local telephone service, its delivery and postal service expenses; (iii) the salaries, payroll taxes, insurance, health benefits and related costs of personnel employed by Quetzal in the operation of the Station following the Operational Commencement Date; and (iv) income, gross receipts, sales, personal property, excise or any other taxes of any nature whatsoever pertaining to the transmission function of the Station and costs related to the production and broadcast of material supplied by Quetzal pursuant to Section 6(b) of this Agreement ("Quetzal Programming").


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6 PROGRAMS.


(a) Unica shall furnish or cause to be furnished, at its own cost, material in broadcast-ready form for broadcast on the Station pursuant to this Agreement at all times other than the times of the Quetzal Programming, and all such Unica programs shall accord with the Communications Act of 1934, as amended (as so amended, the "Act"), and all other applicable statutes and Federal Communications Commission ("FCC") policies and requirements. All rights, including without limitation all ownership rights and rights of use, relating to the Programming shall belong exclusively to Unica, and Quetzal shall have no rights of any kind in or to such programs and hereby disclaims all rights thereto.


(b) Quetzal reserves the following periods to present Quetzal Programming and to sell time and collect fees therefor: Sunday morning from 6:00AM - 8:00 AM. Upon reasonable notice from Quetzal, Unica instead of Quetzal will program those hours at Unica's expense and Unica will retain any proceeds resulting therefrom.


7 EMPLOYMENT.


(a) Quetzal shall be solely responsible for, and shall indemnify Unica, its directors, officers, employees, contractors, agents, or affiliates from and against, all claims, costs, losses, liability, damages, and other expenses (including reasonable professional fees and disbursements) relating to, salaries, taxes, insurance, severance, bonuses and other benefits or obligations due or payable to: (i) all personnel (other than employees of Unica) used in the production of Quetzal Programming hereunder or necessary to fulfill Quetzal's obligations hereunder; and (ii) all employees of Quetzal.


(b) Unica shall be solely responsible for, and shall indemnify Quetzal, its directors, officers, employees, contractors, agents or affiliates from and against, all claims, costs, losses, liability, damages, and other expenses (including reasonable professional fees and disbursements) relating to, salaries, taxes, insurance, severance, bonuses, and other benefits or obligations due or payable to: (i) all personnel (other than employees of Quetzal) used in the production of the Programming hereunder or necessary to fulfill Unica's obligations hereunder; and (ii) all employees of Unica.


8 HANDLING OF MAIL AND PUBLIC FILE.


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To the extent that either Quetzal or Unica receives or handles mail, cables, telecopies, telephone calls or other communications in connection with any material broadcast over the Station during the term of this Agreement, the party promptly shall (a) advise the other, in writing, of any public or FCC complaint or inquiry concerning the Programming or the Quetzal Programming, or both and (b) deliver to the other a copy of any written communications from the public or the FCC. Unica also shall deliver to Quetzal copies of all operating and programming information relating to Unica, including, without limitation, the Station's operating logs, necessary to maintain the public file and other records required to be kept by FCC regulations, rules and policies. During the term of this Agreement, Unica, as to the Programming, also shall maintain and deliver to Quetzal such records and information required by the FCC to be placed in the public inspection file of the Station relating to the broadcast of political programming and advertisements, in accordance with the provisions of Sections 73.1943 and 73.3526 of the FCC's rules, and pe ...