MARK E. BERGI—IAUSEN (S.B. #278968)
O’MELVENY & MYERS LLP
2765 Sand Hill Road
Menlo Park, CA 94025-7019
Telephone:
(650)473-2600
Facsimile:
(650) 473—2601
B. ANDREW BEDNARK (pro hac vice forthcoming)

O’MELVENY & MYERS LLP
7 Times Square
New York, NY 10036

Telephone:
Facsimile:

(212) 326-2000
(212) 326-2061

.

Attorneys for Plaintiffs
LocusPoint Networks, LLC and
LocusPoint II KCSM, LLC
10
11

SUPERIOR COURT OF THE STATE OF CALIFORNIA

12

COUNTY OF SAN MATEO

13

.

LOCUSPOINT NETWORKS, LLC,
a Delaware Limited Liability Company, and
LOCUSPOINT 1] KCSM, LLC,
a Delaware Limited Liability Company,

14
15

16

Plaintiffs,
17

v.

18

19
20.

21

22

'

SAN MATEO COUNTY COMMUNITY
COLLEGE DISTRICT and RURAL
CALIFORNIA BROADCASTING
CORPORATION,

,

Defendants.

.

h

.4

Case No.

VERIFIED COMPLAINT FOR
(I) BREACH OF CONTRACT,
(II) BREACH OF THE IMPLIED
COVENANT OF GOOD FAITH AND
FAIR DEALING,
(III) VIOLATIONS OF THE PUBLIC
RECORDS ACT (CAL. GOV. CODE §
6250 ET SEQ.),
(IV) INTENTIONAL INTERFERENCE
WITH CONTRACTUAL RELATIONS,
“
AND
(V) VIOLATIONS OF THE UNFAIR
"COMPETITION LAW (CAL. BUS. &
PROF’L CODE § 17200 ET SEQ.)

’

2'3

9 9

BYFAX

24
I/17— (NV—04899

25
‘

6MP
Complaint

26

27

.(InfillllIlllllllllllllllllllllll

28

COMPLAINT

 LocusPoint Networks, LLC and LocusPoint

ll KCSM, LLC (“LPN”), by and through

their undersigned counsel, for their complaint against the San Mateo County Community College

District (“the District”) and Rural California Broadcasting Corporation (“RCB”), respectfully
allege, upon knowledge as to their own actions and information and belief as to others’ actions, as

follows:

NATURE OF THE ACTION
1.

This is

an action to

prevent the District from exploiting its contractual breaches to

enrich itself at LPN’s expense. LPN seeks to prevent the District from disposing

of a unique and

valuable asset, the television station KCSM-TV, that LPN had subsidized since 2013. Now,
10

rather than fiind KCSM itself, the District has arranged

11

RCB, in Violation

12

had the

13

spectrum rights in the FCC’s 2016 auction.

14

a

shotgun-wedding sale to its accomplice,

of the District’s contracts with LPN—a sale that would not and could not occur

District performed its contracts with LPN in the first place by selling KCSM’s broadcast-

2.

The District and LPN entered three contracts in May 2013 under which LPN

million of needed funding to KCSM, which the District had been

15

agreed to provide up to $3.6

16

operating at a nearly

17

of the potential future proceeds it could receive by bidding to sell KCSM’s broadcast—spectrum

18

usage rights in a special auction (the

$1

million annual loss. In exchange, the District agreed to give LPN

a share

“Auction”) that the Federal Communications Commission

.19

(“FCC”) would conduct at a future date. While the District agreed to

20_

to sell 'KCSM’s spectrum rights in the Auction, the parties also agreed to two scenarios in which

21

KCSM could be sold outside the Auction—a “Call Option Sale” at LPN’s option and

22

Option Sale” at the District’s option, provided that the District had otherwise performed its

23

obligations. Other than in those two scenarios, under which LPN would receive the same

24

percentage

25

operating it as usual until an “Auction Sale, Call Option Sale or Put Option Sale” had occurred.

26

These restrictions were so important that the parties agreed they could be specifically enforced

27

because money damages could not adequately compensate a breach.

‘Ftake

all actions necessary”

a

“Put

of the sale proceeds, the District agreed not to sell KCSM, but rather to continue

28
2
COMPLAINT

.

1

 3.

The District appointed three

of its officers as the only individuals

authorized to

place bids on its behalf in the Auction. On November 15, 2016, one ofthe District’s authorized

bidders failed to enter

a

bid to sell KCSM’S spectrum rights in the Auction, breaching the

District’s contracts with LPN. As a result, KCSM was permanently dropped from the Auction.
4.

But the District did not let its breach get in the way oftaking LPN’s funding. To

the contrary, the District (i) signed
had submitted a bid, and

a

Bid Submission Confirmation Sheet falsely stating that it

(ii) falsely certified that it had performed its obligations

so

LPN would

in turn continue its quarterly payments to the District. After LPN discovered the District’s
breaches, it asserted claims against the District on February 21, 2017. Those claims are the
10

subject

11

ly.

of a separate action

LLC et ano.

v. San

Mateo Cty.

Coll. Dist, No. 17 Civ. 1550 (San Mateo Cty. Super. Ct.) (the “Auction Litigation”).1
5.

12

in this Court, LocusPoint Networks,

Unable to continue deceiving LPN into bankrolling KCSM, the District decided

13

simply to sell KCSM outside the procedures to which it and LPN had agreed, rather than continue

14

to operate the station at its own expense. Furthermore, the District planned to keep the sale

15

proceeds for itself, even though (i) LPN’s subsidies had kept KCSM afloat since 2013, and

16

(ii) the District continued to own KCSM only because it had breached its obligation to LPN to

.17

enter a bid in the Auction. The sale, another deliberate breach, would thus rob LPN

18

$3.4 million it had contributed to KCSM without providing a cent

19

promised in return,
6.

.20

of the nearly

of the proceeds the District had

.

The District found a willing accomplice in RCB, which wanted KCSM’s spectrum

it agreed to sell spectrum rights for its own station, KRCB, in the

21

and Bay Area presence after

22

Auction—a sale that netted it nearly $72 million. The District and RCB began discussions

..23.
24

February 2017,

soon as the FCC lifted a restriction on communications between Auction

participants.

25

26

as

1n

7.

Meanwhile, the District, which was bound by California law and its own Board

policies to conduct a public bidding and auction process

if it were to sell KCSM, embarked on a

27

The Auction Litigation is consolidated with San Mateo Cty. Cmty. Coll. Dist. v. LocusPoint
Networks, LLC et al., No. 17 Civ. 1534 (San Mateo Cty. Super. Ct.).
1

28

_

3

COMPLAINT

 course that was public in name only, and designed to ensure that RCB submitted the highest bid.

The District issued

a

request for proposals to acquire KCSM (the “RFP”) on June 13, 2017, but

did not post it on its website or otherwise publish it online. The District’s Board

of Trustees

never publicly authorized or addressed the RFP, until it called a meeting three months later on 24

hours’ notice to approve the terms

of the sale to none other than RCB. Even

at that September 6,

2017 meeting, the District tried to hide RCB’s identity, revealing it only after a question from one

of the handful of attendees of the hastily arranged meeting. To
rubber—stamped the terms
8.

sale to RCB without any discussion or debate.

LPN, which had questioned the District’s process and provided notice of its

10

contractual rights onAugust 10, 2017, immediately requested the District’s public records about

11

the sale under the California Public Records Act. Among other records, LPN asked for the

12

documents behind the District’s vague, conclusory representations that it “gave required public

13

notice

of the RFP” and had notified
9.

14

a

“number” of potential bidders.

The District continued to hide those facts.

It accelerated

its plan to ratify the

15

KCSM sale agreement with RCB by calling another special meeting—and then purposely

16

rescheduling the meeting time without changing the “Call to Order” on the public agenda. In a

17

near-empty room, the Board

18

minute September 20, 2017 meeting that was purely a formality,

,19
..

of the

no one’s surprise, the Board

of Trustees voted to ratify the KCSMsale agreement
as the sale

in a four—

to RCB was and had

always been a foregone conclusion. The next day, September 21,. the District acknowledged

20

LPN’s Public Records Act request for the first time—in other words, after it had firstrushed to

21

ratify the KCSM sale agreement without disclosing the records LPN had requested.

22

10.

The District’s plot, however, was ahnaked violation of the Public Records Act and

‘

.-

'23

the Brown'Act, Californiaés open-meeting law, which

24

agreement. After LPN called out the District’s behavior on September 25, 2017, the District was

25

forced to rescind the ratification and hold a properly noticed vote on October 11, 2017. The

26

District still has not disclosed public records about the sale that LPN requested, which California

27

law required it to produce before ratifying the KCSM sale agreement.

nullified its ratification of the-KCSM sale

28
4
COMPLAINT

-

 The agreement makes plain that RCB agreed to purchase KCSM with full

11.

knowledge

of LPN’s

contractual rights—but proceeded anyway because the District agreed to

protect RCB from liability, including by paying its legal fees. The agreement discloses (i) the

Auction Litigation; (ii) the existence of the District’s contracts with LPN, which are publicly
available; and

(iii) LPN’s rights to prevent the sale. But RCB

District (i) granted termination rights

nevertheless signed up because the

if LPN were to enforce its contracts with the District or

name RCB as a defendant, (ii) would reduce the KCSM purchase price by the amount

legal fees as a result

of such litigation,

and

of RCB’s

(iii) would indemnify RCB against “any and all”

liability resulting from LPN’s enforcing its rights.
10

LPN seeks, among other things,

12.

an order

(i) compelling the District’s specific

of its contractual obligation not to sell KCSM

11

performance

12

with LPN, and (ii) enjoining the consummation of the KCSM sale agreement

13

District’s contractual obligations to LPN and

14

law based on RCB’s intentional interference with LPN’s contractual rights. Allowing the sale to

15

proceed would allow the District and RCB to profit from disregarding LPN’s rights—for which

16

LPN has paid the District nearly $3.4 million—through

17

in the first place

18

Auction conducted by the FCC.

as an

,

as a breach

of the

unlawful business practice under California

a sale

if the District had fulfilled its contractual

19

except as allowed under its contracts

that would not and could not occur

obligation to LPN to enter

a

bid in the

THE PARTIES

‘

20

13.

Plaintiff LocusPoint Networks, LLC

,

is a Delaware limited

.

21

its principal place

22

14.

2'3'

its principal place

24

15.-

of business

in Pleasanton, California.

Pla1nt1ff LocusPomt

‘

of business

II KCSM, LLC

15

a

Delaware limited liability company with

in Pleasanton, California.

On information and belief, Defendant San Mateo County Community College

community college district operating three colleges (Cafiada College, College of San

25

District is

26

Mateo and Skyline College) located in San Mateo County, California,-

a

liability company with

27
28
5

COMPLAINT

 16.

is a California

On information and belief, Defendant Rural California Broadcasting Corporation

non-profit corporation with its principal place of business in Rohnert Park,

California.

JURISDICTION AND VENUE
17.

This action arises under the laws of the State of California and is within the subject

matter jurisdiction
18.

of this Court.

The District is

a

California community college district subject to the personal

jurisdiction of this Cou1t. The District accepted this Cou1’t’sjurisdiction in
16, 2013 Funding Agreement between the
10

19.

ll

this Court.

12

20.

13

RCB is

a

District and LPN.

Venue is proper under (i) California Code of Civil Procedure

venue in, this Court; and
21.

§

394(a) because this

§

10.14, in which the District accepted the jurisdiction of, and

(iii) California Code ofCivil Procedure

§§ 395(a)

& 395.5.

The amount in controversy exceeds $25,000, and unlimited civil jurisdiction is

proper under California Code

of Civil Procedure

§

88.

FACTUALBACKGROUND

m

w

of the May

is an action against a California community college district located in San Mateo County,

m

n

10.14

California non-profit corporation subject to the personal jurisdiction of

California; (ii) Funding Agreement

w

§

LPN Asserts Claims Against the District Arising From the District’s Failure to Submit

a

I
V

20

Bidfor KCSM in the FCC’s Broadcast Spectrum Auction

’21

'22.

LPN first asserted claims against the District on February 21, 20172 arising from

of the Dist1ict’ s broadcast

22

three contracts between LPN and the District governing the disposition

23

television station, KCSM, for which the District holds an FCC Television Broadcast Station

24

License. Those claims are the subject

25

after expiration

of the Auction Litigation in this Court, which LPN filed

of the 45-day notice period under Cal. Gov’t Code

§

912.4(a).

26

27
2

28

Letter from B. Andrew Bednark, Esq., to San Mateo County Community College District Board
(Feb. 21, 2017) (attached as Exhibit A).

of Trustees

6

COMPLAINT

 23.

The District and LPN’s contractual relationship was the product

process in which the District sought

of a 201 l—l 3

finding for KCSM, which it had been operating

at an

approximately $1 million annual loss. The District sought a third party to subsidize KCSM until

it could participate in the FCC’s special auction, mandated in legislation enacted by Congress in
2012, at which licensees such as the District could bid to sell their broadcast-spectrum usage

rights (the “Auction”). The District and LPN documented their rights and obligations in the May
16, 2013

Funding Agreement, Bid Management Agreement, and Put/Call Option Agreement

(collectively, the “LPN Contracts”).
24.

Through the Funding Agreement and Put/Call Option Agreement, LPN agreed to

of KCSM up to $3.6 million in quarterly payments

10

subsidize the District’s operation

11

for a share of the proceeds from (i) the District’s relinquishment of KCSM’s spectrum—usage

12

rights in the Auction, or alternatively, (ii) the sale of KCSM either at LPN’s option (the “Call

13

Option Sale”) or the District’s option (the “Put Option Sale”).3 The District could not exercise

14

the Put Option, however,
25.

15

in exchange

if it had materially breached any of the LPN Contracts.4

In exchange for LPN’s subsidy payments, the District promised (among other

16

things) that (i) KCSM would “participate in the Auction”5; (ii) it would designate “up to three

17

individuals who shall serve

18

“authorized to place bids on behalf of the District during the Auction”; (iii) it would “take all

19

actions necessary to cause the spectrum usage rights associated with [KCSM’s] FCC License to

as

the District’s authorized bidders during the Auction”-who would be

20" be relinquished in the Auction”7; and (iv) it would certify before receiving each-quarterly subsidy
21
.

payment from LPN that it had “performed in all material respects” its contractual obligations.8

22
23”

3

.

'

24
25

26
27
28

Funding Agreement § 2.1 (attached as Exhibit B); Put/Call Option Agreement §§ 1—4 (attached
'
'
Exhibit C).
4
Ex. C (Put/Call Option Agreement) § 4.c.i.
5
Ex. C (Put/Call Option Agreement) § 10.b.
6
Amendment to Bid Management Agreement (Dec. 8, 2015) § 1.1 (attached as Exhibit D); see
also generally Bid Management Agreement (attached as Exhibit B to the complaint in LocusPoint
Networks, LLC et ano. v. San Mateo Cty. Cmty. Coll. Dist., No. 17 Civ. 1550 (San Mateo Cty.
Super. Ct.) (Apr. 10, 2017)).
7
Ex. B (Funding Agreement) § 6.9.
8
Ex. B (Funding Agreement) § 3.2.
'

as

.

’

7
COMPLAINT

 26.

until

The District agreed that it would continue to operate and would not sell KCSM

an Auction Sale, Call Option Sale, or Put Option Sale. The

the Station, and perform all

of its obligations with

District committed to “operate

respect thereto, in the ordinary course

of

business consistent with past practices” until an “Auction Sale, Call Option Sale, or Put Option

Sale,” whichever happens first.9
27.

In addition to continuing to operate KCSM, the District agreed to conditions on its

sale. The District agreed not to discuss selling KCSM with another party until an “Auction Sale,

Call Option Sale, or Put Option Sale”: the District “will
discussions with any other party
10

in” the LPN

ll

28.

. . .

.

. .

not solicit, initiate or hold

with respect to any sale of the Station, except

as

permitted

Contracts.10

And the District promised not to sell KCSM except through an Auction Sale, Call

12

Option Sale, or Put Option Sale, unless the District had first satisfied all its obligations to LPN:

13

the District “covenants and agrees that, until the earlier

14

Reimbursement Obligations” (defined as “all obligations of evely nature

15

time to time owed to LPN under the Funding Documents,” such

16

from an Auction Sale or Call Option Sale) “and (ii) the consummation of any Auction Sale, Call

17

Option Sale or Put Option Sale,” the District “shall not convey, sell.

18

one transaction or a series

19

used in .connection with the operation

20

transactions contemplated by the Option Agreement”—i.e., the Auction Sale, Call Option Sale, or-

21

Put Option

22

29.

23

of (i) the payment

as

in

full of all of the

of [the District] from

LPN’s share of the proceeds

‘.'.

or otherwise dispose of, in

of transactions, substantially all of its business, property or assets

of the Station

. . .

other than in connection with the

.

. .

.

Sale.11
.

The Auction Litigation concerns the District’s breach

‘

of its obligation to place bids

in the Auction. As the complaint alleges, the District filed an application to‘participate in the

24
25
9

26

27
28

Ex. C (Put/Call Option Agreement) § 10.c.ii; see also Ex. B (Funding Agreement) § 6.8
(obligating the District to “continue to operate the Station in substantially the same manner as
operated prior to” May 16, 2013).
10
Ex. C (Put/Call Option Agreement) 10.c.iii.
“ Ex. B (Funding Agreement) § 7.3; id.§ at 6 (defining “Reimbursement Obligations”); see, e.g.,
Ex. C (Put/Call Option Agreement) §§ 2.a, 3.a, 4.21.
8

COMPLAINT

 Auction on January 6, 2016, and designated three of its officers

as its

authorized bidders.12 Under

FCC procedures, only those three District personnel could receive and use an electronic code key
(a “SecurID

30.

token”) from the FCC to “place bids for the applicant during the auction.”13

After successfully logging into the FCC Reverse Auction Bidding System and

participating in 52 rounds in which
failed to submit

a

a

bid was potentially required, the District’s authorized bidder

bid in Stage 3, Round 23, on November 14, 2016.14 In the presence ofa

consultant that LPN had retained because FCC “Quiet Period” rules prohibited LPN and the

District fi‘om communicating directly about the District’s bids or bidding strategy, the District
bidder (i) falsely signed a Bid Submission Confirmation Sheet stating that she had submitted

a

of generating a Bid Summary confirmation directly

10

bid; (ii) failed to follow the normal procedure

11

from the FCC Auction website; and (iii) failed to verify the bid submission during the remaining

12

approximately 48 minutes that Round 23 bidding remained open.” The District was therefore

13

permanently dropped from the Auction.16
31.

14

Nevertheless, the District continued to certify to LPN that it had “performed in all

15

material respects all agreements” with LPN so it would continue to receive LPN’s quarterly

16

subsidy payments to fund K’CSM.17 In reliance

17

$225,000 to the District on December 20, 2016.18 The District did not alert LPN about the falsity

18

of this certification

19

on Februaryi6, 2017.1‘9 When (LPN discovered the District’s breaches, it exercised its contractual

20

rightlto discontinue subsidy payments on February 21, 2017.20

On

the

District’s false certification, LPN paid

(and the subsidy payment it induced) even after the FCC’s Quiet Period ended

21

22
‘12

23

24
25

26

27
28

Complaint W 68—69, LocusPoint‘Networks, LLC et ano; v. San Mateo Cty. Cmty. Coll. Dist.,
No. 17 Civ. 1550 (San Mateo Cty. Super. Ct.) (Apr. 10, 2017) (attached as Exhibit E).
13
FEDERAL COMMUNICATIONS COMMISSION, DA 15-1252, INSTRUCTIONS FOR FCC FORM I77
APPLICATION To PARTICIPATE IN THE REVERSE AUCTION (AUCTION 1001) (2015).
14
Ex. E (Auction Litigation Complaint) 111] 81, 86—87.
15
Ex. E (Auction Litigation Complaint) 1m 83, 88—90.
16
Ex. E (Auction Litigation Complaint) 111191—92.
17
Ex. E (Auction Litigation Complaint) 111] 95—97.
18
Ex. E (Auction Litigation Complaint) 1“] 96—97.
19
Ex. E (Auction Litigation Complaint) 111] 99—100.
20
Ex. A (Feb. 21, 2017 claims letter) at 7—8.
9

COMPLAINT

 To Avoid Funding KCSM, the District Rushes to Sell the Station Despite Its Contractual

Obligations Not to Do So
32.

After its failure to enter a bid in the Auction was revealed, the District could no

longer mislead LPN and lost its right to LPN’s subsidy payments. Rather than fund KCSM itself,
the District quickly decided to hold a fire sale, disregarding the commitments it had made to LPN

not to do so.
33.
‘

In February 2017, the District first spoke to RCB,

soon receive proceeds

transmitting on

a

of nearly $72 million from

a

public broadcaster that would

the Auction for moving its station, KRCB, from

channel in the UHF band to one in the low-VHF band. KCSM offered RCB the

of

10

opportunity to double its potential viewership from three million to six million because

11

KCSM’s wide Bay Area coverage, whereas KRCB had transmitted primarily north of the Bay

12

Area. RCB and the District began discussing a potential sale
34.

13

of KCSM.

Meanwhile, public scrutiny intensified regarding the District’s failure to place

a

14

required bid to sell KCSM’s spectmm rights in the Auction. At the District Board

15

March 22, 2017 meeting, the Board heard from members of the public who, in response to “press

16

reports regarding issues with KCSM—FM and the sale of KCSM—TV,” demanded that “the public

17

is owed an explanation” and" that “the public deserves clear accounting and transparency

18

regard to KCSM.”21
35.

19

20

of Trustees’

with

The District responded not with transparency, but by hiding information from the

public and acting in near-total secrecy to lock up its face-saving fire sale of KCSM to RCB.

21

Although obligated by California law and its own Board policy to conduct a “public bid process

22

or public auction only after appropriate public notice, ”22 such

“23

a

public process would have risked

interfering with or delaying the arranged sale to RCB. Thus, the District’s June 13, 2017 RFP (i)

public Board of Trustees meeting, (ii) was not posted on the

24

was not discussed or authorized at

25

District’s website (where current and archived proposals

a

are otherwise posted), and

(iii) was not

26

27
28

2‘

Minutes of the Regular Meeting of the Board of Trustees of the San Mateo County Community
College District (Mar. 22, 2017), at 4.
22
San Mateo County Community College District, Board Policy No. 8.31 (BP 6550).
10

COMPLAINT

 published online or in

a

newspaper that published it online. The District’s RFP process was thus

far fi'om “public”; rather, it was designed to ensure that RCB would have the highest bid.

A truly public, far—reaching process would have been particularly appropriate here

36.
because

of KCSM’s unique position

in the post-Auction market as the only Bay Area non-

commercial educational station that did not relinquish spectrum in the Auction. This rendered

KCSM potentially attractive to similar broadcasters not only in the Bay Area, such
also nationwide because

RCB, but

of the unique opportunity to enter the desirable Bay Area market.

The Board of Trustees did not publicly address KCSM’s future again until

37.

10

as

September 2017. Consistent with the District’s plan to dump KCSM quickly at the expense

of

any meaningful public notice or a bona fide auction process, it quietly posted on September

5 an

agenda

for a “special” Board of Trustees meeting the very next day to vote on the “Approval of

of KCSM-TV.” With only a handful of people present,

12

the Sale

13

September 6 meeting to allow Chancellor Ron Galatolo to finalize an agreement to sell KCSM.

After

a

the Board quickly moved at the

District representative recited the material terms, not one Board member asked

a

single

15

question about the buyer, the sale process, the negotiations (or lack thereof), or the terms. Only

16

after

17

surprisingly—RCB. .With no debate, all Board members in attendance voted to allow Chancellor

18

Galatolo to finalize the sale agreement. The meeting lasted a total

a

reporter’s question did the District reluctantly identify the buyer, which was—not
i

38.

19

,

of eleven minutes.

On the very next day, September 7, RCB announced that it had alreadyg“purchased

will operate

KCSIVIVTVj’23 The day after, September 8, the District—in another stealth, late-

20

and

21

in—the-day website

postffstated that the Board would vote on September 13‘to ratifythe KCSM

I

In other words, the District had already finalized the sale agreement that it only

22

sale agreement.24

23

disclosed to the public for the first time-48 hours earlier. The sale to-RCB was a foregone

24

conclusion

25

39.

if ever there was one.
In the same September

8

post, the District publicly disclosed for the first time that

of months of previously unreported Board action behind closed

26

the KCSM sale was the product

27

23

28

connect—to—krcb/krcb—north-bay—public-media-acquires—kcsm-tv (last accessed Sept. 11, 2017).
24
Agenda, Regular Meeting of the Board of Trustees, Sept. 13, 2017, at 2.

“KRCB North Bay Public Media Acquires KCSM TV,” available at https://www.krcb.org/

'

11

COMPLAINT

,'
—

-

 doors. The District disclosed that the Board had authorized the RFP, although there is no online

record or discussion

of the RFP,”

of that authorization.

The District stated that it “gave required public notice

although it gave no specifics about where the RFP was posted or published. And the

District stated that it notified

“number” of potential bidders, “including certain brokers and local

a

Bay Area stations,” although it did not identify who or how many (or whether any are outside the

Bay Area).25
40.

The District further disclosed that the Board had created an “RFP

subcommittee”—again outside public view—to “negotiate” with RCB. The results were
predictable: RCB, in discussions with the District since Februaiy 2017, did not increase its cash

monthly 30-

10

offer. Instead, the District negotiated and accepted nonmonetary terms, such

11

second announcements and 30—minute installments

12

cash, demonstrating that the District never intended to maximize

13

The District Withholds Requested Public Records About the Arranged Sale to RCB While

14

the Board Votes to Ratify the Sale
41.

15

On September

1

1,

as

of District-produced programming,

in lieu

of

KCSM’s sale price.

2017, the next business day after the District scheduled the

16

ratification vote, LPN requested under the California Public Records Act26 the information and

17

documents about the KCSM sale that the District appeared intent on concealing. LPN requested

18

documents relating to, among'other things, (i) the Board’s authorization to issue the RFP; (ii) the

19

“required public notice” that the Districtrepresented it published; (iii) the brokers and local Bay

20

Area stations that the District represented itcontacted; (iv) the Board’s creation of the RFP

21

subcommittee; and (v) the District’s communications with RCB about the sale. LPN notified the

22

District that California Supreme Court caselaw applying the Public Records Act required the

23

District to produce the requested documents before the-Board of Trustees ratified the KCSM sale

24

agreement.27 Because

25

process leading to the selection

26

public records must be produced to ensure that “a reasonable time remains for public input before

27

25

Board Report No. 17—9-104B at l.

26

Cal. Gov’t Code §§ 6250 et seq.
See Michaelis, Montanari & Johnson v. Superior Court, 38 Cal. 4th 1065, 1073—74 (2006).
'
12
COMPLAINT

28

27

of the public’s “legitimate and

.

substantial interest in scrutinizing the

of the winning proposal,” the Supreme Court requires that related

 the Board’s final award is made,” to “give the public and all interested parties ample opportunity
to scrutinize and protest the proposed award.”28 The law thus presented the District with a

choice—produce the requested public records before the scheduled vote to ratify the KCSM sale
agreement, or adjourn that vote until after producing the requested public records.
The District chose instead to ignore LPN’s request until after

42.

the KCSM sale agreement, violating the Public Records Act.

It crafted

a

it had voted to ratify

plan to ratify the

agreement not at the September 13, 2017 regular meeting, as it had originally noticed before

LPN’s request, but at a later “special” meeting. At the September

13

meeting, Board president

Thomas Mohr only read a carefully drafted script repeating the District’s conclusory assertions

it followed

the law and published notice

of the RFP.29 Mohr and the Board continued to

10

that

11

conceal the basic information that LPN had requested, such as details

12

online publication, all but confirming that the District’s “public” process was intended to hide

13

from competition abackroom deal that the District and RCB had already cut. Despite promising

14

time for “public comments and questions” after Mohr’s speech, the Board instead quickly voted

15

to table the KCSM deliberation for a week

16

business. The District refused to answer a reporter’s later question why the Board had tabled the

17‘

ratification vote.”

18

The Board Votes to Ratify the KCSM Sale Agreement in a Special Meeting Held Before the

1'9

Publicly Noticed Time

of the RFP’s newspaper and

“in the interest of time.”30 It then moved on to other

‘

I

43.

20
21

with

22

spirit

a

-

The Board tabled the September 13 ratification vote because it hoped to get away

later vote at

a

September 20 special meeting that violated both the letter and certainly the

of the Brown Act, California’s open—meeting

law. The Brown Act requires local agencies

‘23

24
28

25

Id. at 1073—74.
Minutes of the Regular Meeting of the Board of Trustees (Sept. 13, 2017), at 4—6.
30
Minutes of the Regular Meeting of the Board of Trustees (Sept. 13, 2017), at 6.
31
Community College Oflicials Seal KCSM Deal, San Mateo Daily Journal (Sept. 22, 2017),
available at http://www.smdailyjoumal.com/news/local/community—college-officials—seal-kcsmdeal/article_c2cb2e3c—9f51-11e7—8bdf-cf3255258d08.html (reporting that District spokesman
“declined to offer reasoning for the college board- postponing a decision on the sale last week”).

29

26

27
28

1

3

COMPLAINT

 to post

a

notice

of any special

meeting “on the local agency’s Internet Web site” that must, among

other things, “specify the time and place
44.

of the

special meeting.”32

The District first posted the September 20 special meeting agenda on its website

late on Friday, September 15, 2017.

It reflected that the meeting would be called to

order at 6:00

pm, followed by “consideration” of a single item, “Ratification of the Sale Agreement for the
Purchase
date:

of KCSM-TV?”3

The web page containing the link to that agenda identified the posting

“Modified on 15th September, 2017.”34
45.

On the day before the special meeting, the District quietly rescheduled it to occur

earlier. Tucked into the middle

of the seven-line heading

at the top

of the

agenda, the District

pm.” to “5:00 pm.”35 But it did not change the agenda itself, which continued to

1o

changed “6:00

11

state (in bold) that the

12

“consideration” of the KCSM

13

agenda link on its website, which continued to read, falsely,

14

2017.”37 Thus, anyone who had viewed the agenda would have had no reason to suspect, let

15

alone view, the “modified” agenda because the District gave no indication that

16

modified—indeed, the website misleadingly indicated that it had not. And even ifthose

17

18

.

sale.36

pm,” followed

by the

Nor did the District update the modification date next to the
“Modified on” “15th September,

it had

been

constituents (or anyone else) had viewed the revised agenda, they would have observed that the

call to order and KCSM sale discussion were still scheduled for 6:00.
46.

19

20’

“Call to Order/Roll Call” would occur at “6:00

.T he

District’s trick worked. TheBoard convened the September 20 special

meeting in a near-empty room, in stark contrast to the dozens in attendance a week earlier, when

21.

22

32

Cal. Gov’t Code § 54956(a).
Agenda,-San MateoCounty Community College District, SpecialMeeting of the Board of
Trustees (downloaded from the District’s website on Sunday, September 17, 2017) (attached as
Exhibit F).
34
Exhibit G (September 20 screenshot of the District’s website‘showing that after the meeting,
the District’s website still falsely asserted that the agenda was last “modified on” “15th
September, 2017”).
35
Agenda, San Mateo County Community College District, Special Meeting of the Board of
Trustees (downloaded from the District’s website on September 20, 2017) (attached as Exhibit
33

23

'

24
25

26

27
28

‘

H).
36
Ex. H.
37
Ex. G.
14

COMPLAINT

~

'

 the Board tabled deliberation on the KCSM sale. Once again with no discussion, comments, or

questions from a single Board member (or anyone else), the Board voted to ratify the KCSM sale
agreement. The entire meeting lasted four minutes.

47.

The next day, September 21, the District acknowledged LPN’s Public Records Act

request for the first time. The District admitted that it has responsive documents but would not

produce them until “approximately the end

of November 2017”—long after the Board vote to

ratify the KCSM sale. To this day, the District has not produced any of the responsive documents

it committed in its letter to produce, such

as

documents responsive to LPN’s requests about (i) the

Board’s authorization to issue the RFP; (ii) the “required public notice” that the District
10

represented it published;

11

it contacted;'(iv)

12

among the RFP subcommittee and Chancellor Galatolo about the sale; (vi) the District’s

13

communications with RCB about the sale; or (vii) the District’s stated attempts to negotiate

14

higher cash payment for KCSM.

15

the Board’s creation

and local Bay Area stations that the

District represented

of the RFP subcommittee; (v) communications

between or

a

On September 25, 2017, LPN called out the District’s behavior as a violation

of

16

the Brown Act’s basic and straightforward requirement that local agencies conduct their business

17

at the announced time. Caught red—handed, the

18

that it would rescind its September 20 ratification

'19,
~

48.

(iii) the brokers

District was forced to state on October

6, 2017,

of the KCSM sale agreement. Neither the

proposed board resolution nor the accompanying board report answered other questions about the

20

Board’s conduct, such

21‘

its website falsely indicated that the agenda and board packet had not been revised since the

22

original posting on “15th September, 2017.” The Board quickly voted—again with no comments,

23

questions, or additional information'from any Board members—to’rati-fy the KCSMisale

24

agreement at its October 11, 2017 meeting.

as

why it moved up the meeting from 6:00 to 5:00 on short notice and why

i.

25

26

The KCSM Sale Agreement’s Plain Language Demonstrates That RCB Knew the

27

Agreement Interferes with LPN ’s Contractual Rights

28

'

15

COMPLAINT

 49.
sale and

The District’s accomplice, RCB, well knew

of LPN’s rights concerning the KCSM

RCB’s potential liability—for which the District agreed to protect it. The District posted

on September 15, 2017, an undated “Execution

Version” of the KCSM sale agreement,38 which

was later signed and dated September 22, 2017.39 Schedule 2.10 to the agreement, titled “Seller

Litigation,” disclosed to RCB the Auction Litigation and the existence of the LPN Contracts,
which had been publicly available since LPN filed the Auction Litigation on April 10, 2017.
Schedule 2.10 also disclosed to RCB LPN’s assertion that the LPN Contracts entitled LPN “to

block the sale
50.

of Station at this time.”40
With knowledge of LPN’s rights and RCB’s potential liability, RCB nevertheless
with the purchase. It accepted the risks and liability

if LPN were to enforce its

10

chose to continue

11

rights because RCB got the District to protect and indemnify it: (i) RCB could terminate the

12

KCSM sale agreement

13

party to any legal or equitable action by LPN”41 ; (ii) RCB would receive a credit against the

14

KCSM purchase price in the amount of its “legal costs and other related expenses in connection

15

with” such litigation“;

(iii) the District would indemnify RCB against “any

and all losses”

16

resulting from “any third party claim” resulting from the “business or operation

of the Station”

17

before closing,43 such as LPN’s claims arising from the LPN Contracts. RCB is thus free to

18

interfere with LPN’s contractual rights with impunity.

if LPN were to obtain an order enjoining the sale or if RCB were “made a

and

19

FIRST CAUSE OF ACTION

20

Breach of Contract Against the District

21

51.‘

LPN hereby incorporates the‘preceding paragraphs

1

through 5 0

of this Complaint
-

22

by reference as
52.

23

24

if set forth here again in full.

The Funding Agreement and Put/Call option Agreement are valid and enforceable?

contracts between the District and LPN.

25
38

26

39

27

41

1).

Exhibit J.
40
Ex. I & J at Schedule 2.10.
42

28

Asset Purchase Agreement (attached as Exhibit

43

Ex. I &J § 10.6(b)—(c).
Ex. I &J§ 10.6(d).
Ex. I & J § 9.2(a)(iv)—(v).
16

COMPLAINT

 LPN has fully performed its duties under the Funding Agreement and Put/Call

53.

Option Agreement.
Put/Call Option Agreement

54.

of its obligations with

and perform all

§

10.c.ii. requires the District to “operate the Station,

respect thereto, in the ordinary course

of business

consistent with past practices” until “the earlier to occur of an Auction Sale, Call Option Sale, or
Put Option Sale.”

By agreeing to sell KCSM to RCB, the District has breached its obligation to

55.

“operate the Station

.

.

.

in the ordinary course

of business consistent with

past practices.” And no

“Auction Sale, Call Option Sale, or Put Option Sale” has occurred: (i) no Auction Sale occurred
10

because KCSM was dropped from the Auction due to the District’s failure to enter a bid on

11

November

12

“Sale Call Option” “to cause [the District] to participate in

13

Agreement

14

its Put Option under Put/Call Option Agreement

15

Contracts,

16

described above and in the Auction Litigation.
56.

17

15,

§

as

2016; (ii) no Call Option Sale has occurred because LPN has not exercised its

3.a.; and

well

(iii)

a

Sale” under Put/Call Option

no Put Option Sale has occurred because the District cannot exercise

as the occurrence

{3'

4.c. due to its material breaches

of the LPN

of a “Triggering Event” under the Funding Agreement,

Similarly, Funding Agreement

6.8 requires the District,

§

“[flrom and after” May

18

16, 2013, to “continue to operate the Station in substantially the same manner as operated

19

to” May‘16, 2013. Under Funding Agreement

20

payment in full

21

nature

22

the consummation

§

6, this obligation lasts

of all of the Reimbursement Obligations” (defined

as

as

prior

“until the earlier of (i) the

“all obligations of every

of [the 'District]-from time to time owed to LPN under the Funding Documents“) “and (ii)

of any Auction

Sale, Call Option Sale or Put Option Sale.”

I

23

57.

“By agreeing to selliKC‘SM to RCB, the District has breached. its obligation to

24

“continue to operate the Station in substantially the same manner as operated prior to” May 16,

25

2013. This obligation remains in effect because (i) no “Auction Sale, Call Option Sale, or Put

26

Option Sale” has been or can be consummated,

27

has not paid any

28

defined in Put/Call Option Agreement

as described

in paragraph 55; and (ii) the District

of its Reimbursement Obligations, including but not limited to the LPN
§ 1.
17
COMPLAINT

Share

 Put/Call Option Agreement

58.

or hold discussions with any other party

§

10.c.iii. obligates the District “not [to] solicit, initiate

with respect to any sale of the Station, except

. . .

as

permitted in” the LPN Contracts, until “the earlier to occur of an Auction Sale, Call Option Sale,
or Put Option Sale.”

By discussing and agreeing to the sale of KCSM to RCB, the District has breached

59.

its obligation under Put/Call Option Agreement

§

10.c.iii. And no “Auction Sale, Call Option

Sale, or Put Option Sale” has occurred, as described in paragraph 55.

Funding Agreement

60.

§

7.3 obligates the

otherwise dispose of, in one transaction or

a

series

District “not [to] convey, sell

of transactions, substantially

used in connection with the operation

of the Station

all

. . .

or

of its

business,

10

property or assets

11

connection with the transactions contemplated by the Option Agreement”——i.e., the Auction Sale,

12

Call Option Sale, or Put Option Sale. Under Funding Agreement

13

the earlier

14

consummation of any Auction Sale, Call Option Sale or Put Option Sale.”

of (i) the payment

in

§

.

. .

other than in

7, this obligation lasts

full of all ofthe Reimbursement Obligations

.

. .

and

“until

(ii) the

By agreeing to sell KCSM to RCB, the District has breached its Funding

61.

15

. . .

7.3 obligation not to

“sell

substantially all of its business, property or assets

16

Agreement

17

used in connection with the operation

18

(i) no “Auction Sale, Call Option Sale, or Put Option Sale” has been or can be consummated,

19

described in paragraph 55; and (ii),the District has not paidany

20

Obligations, including but not limited to the LPN Share defined in Put/Call Option Agreement

21

1.

§

. . .

of the Station.” This obligation remains

. .

.

'

in effect because
as

of its Reimbursement
'

.

.

22

62.

§

_
g

The Put/Call Option Agreement entitles LPN to specific performance to remedy

the District’s breaches ofPut/Call optioh Agreement §§ l0.c.ii.

23

l

& 10.c.iii.

and Funding
‘
I

10.a. incorporates “as

if the same

24

Agreement §§ 6.8 & 7.3 (which Put/Call Option Agreement

25

were set forth fully herein”).

26

Agreement, the parties agreed that (i) “money damages alone will be inadequate to compensate
‘

§

“[I]n the event of a material breach” of the Put/Call Option

27

the damaged party,” and (ii) “the non-breaching party shall be entitled, in lieu

28

Agreement, to specific performance of its terms.” (Put/Call Option Agreement
18

COMPLAINT

of terminating this
§

11.) The parties

 contemplated that proceeds

through one

of a Sale of KCSM would

of three potential

be inadequate unless

KCSM were sold

sale structures to which the parties expressly agreed—an Auction

Sale, Put Option Sale, or Call Option Sale—to

Furthermore, the District waived its defense

fully capture KCSM’s value

of an

as a

unique asset.

“If anyraction is

adequate monetary remedy:

brought by one party against the other to enforce this Agreement, the other party shall waive the
defense that there is an adequate remedy at law.”

LPN is therefore entitled,

63.

as a

result

of the District’s wrongful

this Complaint, to the District’s Specific performance

of its covenants

Agreement §§ 10.c.ii. & 10.c.iii. and Funding Agreement §§ 6.8
10

to “sell

11

operation

.

.

.

substantially all of its business, property or assets

.

in Put/Call Option

& 7.3, including its covenant not
.

used in connection with the

of the Station.”
If, in the alternative, the District’s

64.

12

.

acts described in

sale

of KCSM to RCB were

deemed a Put

13

Option Sale under the Put/Call Option Agreement, then LPN would be entitled to the LPN Share,

14

or 36.5%,

15

derived from

21

16

Agreement

4.a.) The precise amount

of the

§

sale proceeds:

“LPN will be entitled to receive the LPN Share of the proceeds

Put Option Sale upon the consummation

of such a transaction.” (Put/Call Option

of such damages will

be proven at trial.

17

SECOND CAUSE OF ACTION

18

Breach of Implied Covenant of Good Faith and Fair Dealing Against the District

,19

65.

LPN, hereby incorporates the preceding paragraphs
I

3

20

by reference as
66.

2.1

1

through 64

of this Complaint

3

if set forth here again in full.
The Funding Agreement and Put/Call Option Agreement are valid and enforceable

~

22

contracts between the District and LPN.
i

23

I

67.

Implied 1111111: Funding Agreement and Put/Call Option. Agreement are covenants

24

of good faith

25

realizing the benefits

26

27

68.

and

fair dealing that prohibit the District from taking actions to prevent LPN from

of the Funding Agreement and Put/Call Option Agreement.

The Funding Agreement and Put/Call Option Agreement prohibit the District from

selling KCSM except in an Auction Sale, Call Option Sale, or Put Option Sale. In each

28
1

9

COMPLAINT

of those

 Sales, the Put/Call Option Agreement entitles LPN to the LPN Share, or 36.5%,

of the sale

proceeds.

After the District’s actions prevented an Auction Sale fi‘om occurring

69.

(as described

above and in the Auction Litigation), the District has further acted in bad faith to frustrate LPN’s

right to receive the benefits of the Put/Call Option Agreement—namely, (i) specific performance

of the District’s covenants to continue operating KCSM and not to sell KCSM except in

an

Auction Sale, Call Option Sale, or Put Option Sale; or (ii) in the alternative, the LPN Share ofthe
proceeds fi‘om the sale

ofKCSM in either a Call Option

Sale or Put Option Sale. The District,

of KCSM immediately

among other things, (i) began discussions with RCB about a potential sale
10

after the Quiet Period ended in February 2017; (ii) entered an agreement to sell KCSM in

11

transaction that is neither

12

of any kind to LPN; (iii)

13

(and related legal fees) arising fi‘om interfering with the LPN Contracts; (iv) denied LPN the

14

District’s public records about the sale in violation ofthe California Public Records Act; and (v)

15

tried to secure the Board of Trustees’ ratification

16

Brown Act.
70.

18

Option Agreement.
71.

Call Option Sale nor

a

Put Option Sale and provides for no payment

agreed to indemnify or credit RCB in the amount

of any liability to LPN

of the KCSM sale agreement

in violation

of the

LPN has fully performed its duties under the Funding Agreement and Put/Call

17

.19

a

a

‘.

.As a direct and proximate result

of the District’s breach of the implied covenant of

20

good faith and fair dealing, LPN has been harmed and continues to suffer harm. Because the

21_

District agreed that “money damages alone will be inadequate to compensate the damaged party”

22

for losing the benefits of the Put/Call Option Agreement, LPN is entitled to the District’s specific

23

performance

24

Agreement §§ 6.8 & 7.3. If, in the alternative, the District’s sale of KCSM to RCB were deemed

25

a

5

of its covenants

in Put/calliOption Agreement §§ 10.c.ii.

10.c.iii. and Funding

Put Option Sale under the Put/Call Option Agreement, then LPN would be entitled to the LPN

'

26

-&

Share, or 36.5%,

of the

sale proceeds.

27
28

20
COMPLAINT

‘

 THIRD CAUSE OF ACTION
Violation of the California Public Records Act, Cal. Gov’t Code

§

6250 et seq., Against the

District
LPN hereby incorporates the preceding paragraphs

72.

LPN requested on September

records relating to the proposed sale

responsive to [LPN’s] request”; and

11, 2017,

certain categories

(ii) “will produce any and all non-privileged responsive

will

The District’s Board

of Trustees ratified the KCSM

sale agreement

October

14

September 21, 2017 letter. The District still has not produced those records.

1

1,

LPN is therefore entitled under Cal. Gov. Code

76.

with RCB

§

6258 to a declaration that the

District has violated the California Public Records Act by failing under Cal. Gov. Code

16

on

2017, before the District had produced the requested public records as it agreed in its

13

15

be approximately

ofNovember 2017.”
75.

12

of the District’s public

of KCSM to RCB.

documents as soon as:we are reasonably able to do so, which we believe
the end

of this Complaint

The District responded on September 21, 2017, that it (i) “has documents

74.

11

71

if set forth here again in full.

by reference as
73.

through

1

§

6253
3

California Supreme Court’s decision in Michaelis, Montanari & Johnson

Superior

17

and the

18

Court, 38 Cal. 4th 1065, 1073—74 (2006), to make the requested public records promptly

of Trustees ratified

available to LPN before the District’s Board

.19

v.

the KCSM sale agreement-with.

i

I

'

i

RCB.

20

LPN requests an order under Cal. Gov. Code

77.

.21-

~

§

6259(a) directing the District to

22

produce to LPN all public records identified in LPN’S September 11, 2017 request, which the

23

District improperly withheld until the Board of Trustees ratified the ‘KCSM sale agreement,

'

and-

-

continues to improperly 'withhold.

24
25

FOURTH CAUSE OF ACTION

26

Intentional Interference with Contractual Relations Against RCB

27

78.

28
.

LPN hereby incorporates the preceding paragraphs

by reference as

if set forth here again in full.
21

COMPLAINT

1

through 77

of this Complaint

_.

 The Funding Agreement and Put/Call Option Agreement are valid and enforceable

79.

contracts between the District and LPN.
RCB knows

80.

of these contracts.

Schedule 2.10 to the KCSM sale agreement, titled

“Seller Litigation,” disclosed to RCB the Auction Litigation and the existence ofthe LPN
Contracts, which are publicly available. Schedule 2.10 also disclosed to RCB LPN’s assertion
that the LPN Contracts entitled LPN “to block the sale

of Station

at this time.”44

RCB’s intentional acts were designed to induce the District’s breach of the

81.

Funding Agreement and Put/Call Option Agreement. As described above, RCB (i) contacted the

District in February 2017 to discuss selling KCSM; (ii) made
10

an

offer to purchase KCSM; (iii)

negotiated and executed the KCSM sale agreement with knowledge that the LPN Contracts did
not allow the District to enter it; and (iv) requested and obtained termination rights and

12

indemnification or credit from the District in the amount of RCB’s liability to LPN (and related

13

legal fees) arising from interfering with the LPN Contracts.

15

As described above, the District has actually breached the Funding Agreement and

82.

14

Put/Call Option Agreement by ratifying the KCSM sale agreement.
As

83.

16

a

direct and proximate result of RCB’s actions, LPN has suffered harm
-

17

as

.

described above.

FIFTH CAUSE OF ACTION

18

Violation of the Unfair Competition Law, Cal. Bus. & Prof. Code

19

§ 17200 et seq.,

Against

'

IRCB

20

LPN hereby incorporates the preceding paragraphs

84.

21

.

22

by reference as

1

through 83 of this Complaint

if set forth here again in full.

7

RCB committed an unlawfulact because itintentionally interfered with the

85.

23

.

24

Funding Agreement and Put/Call Option Agreement in discussing, negotiating, and entering into

25

a business

26

RCB’s actions were immoral, unethical, oppressive, or unscrupulous, and therefore an unfair

27

business practice.

28

44

EX.

transaction with the District to purchase KCSM,

I at Schedule 2.10.
22
COMPLAINT

as

described above.

At a minimum,

 As

86.

a

direct and proximate result of RCB’s unlawful and unfair business act, LPN

has suffered injury in fact and has lost money or property.
I

SIXTH CAUSE OF ACTION

Attorneys’

Fees

Under the Funding Agreement, the Put/Call Option Agreement, and the

California Public Records Act (Cal. Gov. Code

88.

6259(d)) Against the District

LPN hereby incorporates the preceding paragraphs

87.

by reference

§

as

1

through 86 of this Complaint

if set forth here again in full.
The Funding Agreement and Put/Call Option Agreement are valid and enforceable

contracts between the District and LPN.

LPN has fully performed its duties under the Funding Agreement and Put/Call

10

89.

11

Option Agreement.

12

90.

Section

1 1

of the Put/Call Option Agreement allows the prevailing party to recover

13

its reasonable attorneys’ fees and costs in an action to enforce the Put/Call Option Agreement:

14

“If any action is brought by one party against the other to enforce this Agreement

15

prevailing party shall be entitled to receive from the non-prevailing party all court costs and

16

reasonable. attorney’s fees incurred by the prevailing party in enforcing or defending its rights
'

17

19,

-

.

.

the

under this provision.”
91.

18

.

This is an action for specific performance

of the Put/Call Option Agreement.

Thus,- the prevailing party is entitled to recover its reasonable attorneys? fees and court costs

incurred in enforcing the Put/Call Option Agreement under section 11.
21.
22
23

24
25

92.

Section 10.2

of the Funding Agreement allows the prevailing party to recover its

reasonable attorneys’ fees and costs in any litigation arising out

of the Funding Agreement:

If either party to this Agreement shall bring any action for relief against the other,
declaratory or otherwise, arising out of this Agreement, the losing party shall pay
to the prevailing party reasonable attorneys’ fees and costs incurred in bringing
such suit and/or enforcing any judgment granted therein. Any judgment or order
entered in such action shall contain a specific provision providing for the recovery
of attorneys’ fees and costs incurred in enforcing such judgment.

26

27
28
23
COMPLAINT

 93.

This action arises out

of the Funding Agreement.

Thus, the prevailing party is

entitled to recover its reasonable attorneys’ fees and expenses incurred in bringing this action and

enforcing any judgment.
94.

The California Public Records Act, Cal. Gov. Code

§

6259(d), entitles the

prevailing party to its reasonable attorneys’ fees and court costs: “The court shall award court
costs and reasonable attorney fees to the

plaintiff should the plaintiff prevail in litigation filed

pursuant to this section.”
95.

This action is filed pursuant to Ca]. Gov. Code §§ 6258

& 6259.

Thus, LPN is

entitled to recover its court costs and reasonable attorneys’ fees incurred in bringing its claim
under Cal. Gov. Code §§ 6258 & 6259.

10

PRESENTATION OF CLAIMS

11

96.

12
13

_

LPN presented its claims to the District in compliance with Cal. Gov. Code

§

910

on February 21, 2017 (the Auction Litigation) and on August 10, 2017 (claims relating to the

KCSM sale agreement).

14

97.

15

Specifically, the Auction Litigation claims were delivered by hand and sent by

16

certified mail from San Francisco, California, to the District’s Chancellor’s Office and the

17

District’s Board of Trustees on February 21, 2017. On the same date, the claims were sent by
mail to Chancellor Galatolo, Mr. Eugene Whitlock, and the members

18

e—

of the District Board of

‘

1.9

Trustees. On April 9, 2017, the District’s counsel requested that LPN send all future

g

-20‘.' communications to counsel.
_21

LPN therefore sent its August 10, 2017 letter notifying the District

of claims relating to the proposed sale of KCSM directly to the District’s counsel.

22

98.

The District did not provide

a

notice

,

of insufficiency under Cal. Gov.

Code

'

23‘
§

24

910.8 within 20 days
99.

of either the February 21, 2017 letteror August

10, 2017 letter.

The District did not respond to LPN’s claims by .September 25, 2017. On the

of Trustees ratified the KCSM sale agreement on October

25

contrary, the District Board

26

The District’s Board has therefore rejected LPN’s claims under Cal. Gov. Code

27

PRAYER FOR RELIEF

28

LPN prays for judgment against the District and RCB,
24
COMPLAINT

as

follows:

§

11, 2017.

912.4(c).

 Ordering the District’s specific performance of the Put/Call Option Agreement, or,
in the alternative,

ifthe

sale

of KCSM under the KCSM

sale agreement were

deemed a Put Option Sale under the Put/Call Option Agreement, awarding LPN
damages in an amount to be proven at trial, but in no event less than the minimum

jurisdictional amount;
For

a

preliminary injunction during the pendency of this Action to restrain and

enjoin the District from breaching its covenants in Put/Call Option Agreement §§
10.c.ii. & 10.c.iii. and Funding Agreement §§ 6.8 & 7.3 by completing the sale of

KCSM under the KCSM sale agreement;
10

For

ll

California Public Records Act;

12

For an order under Cal. Gov. Code

l3

LPN all public records identified in LPN’s September 11, 2017 request;

14

For compensatory damages against RCB in

15

For

16

enjoin RCB from continuing the unlawful and unfair business transaction

17

described above;

18

For

19

Prof. Code

20

unfair business transaction described above;

21

Directing the District to pay LPN’s attorneys’ fees and costs incurred in enforcing

a

a

a

declaration under Cal. Gov. Code

§

§

6258 that the District has violated the

6259(a) directing the District to produce to

permanent injunction under Cal. Bus.

a sum

& Prof. Code

preliminary injunction during the pendency
§

to be determined at trial;
§

17203 to restrain and

of this action under Cal. Bus. &

17203 to restrain and enjoin RCB from continuing the unlawful and

its rights and bringing its claims under the Put/Call Option Agreement and

22
A

23

Funding Agreement, in an amount to be determined upon an offer of proof to the

24

Court, and granting LPN leave of the Court to offer a report constituting such

25

proof to the Court;

26

Directing the District-to pay LPN’s attorneys’ fees and court costs incurred in

27

bringing its claim under the California Public Records Act, Cal. Gov. Code

28

6259(d), in an amount to be determined upon an offer
25
COMPLAINT

of proof to the Court,

§

and

 granting LPN leave of the Court to offer a report constituting such proof to the

Court;

j

.

k.

For prejudgment interest; and

For such other and further relief as the court may deem proper.

\DOONOKA-RAWNH

DATED: October 23, 2017

Mark E. Berghausen (S.B. #278968)
B. Andrew Bednark (pro hac vice forthcoming)
O’
#VENY & MYERS LLP

L

ausen‘BB
Mark E. Be
B. Andrew Bednark

K

H

3—:

Attorneys for LocusPoint Networks, LLC and
LocusPoint II KCSM, LLC

>—x

p—l

)—3

H

r—

HH

NJ-i

NM

N

N

N

26
COMPLAINT

 VERIFICATION
I, William D. CleKay, declare:

l.

9)

I am a principal

of LocusPoint Networks. LLC and Loeusl’oint II KCSM, LLC

and am authorized to make this verification on their behalf.
U1

2.

I have read the above complaint and know its contents.

3.

The matters stated in the complaint in Paragraphs 2, 8,

13—14,

22, 24—29, 41, 47,

51-68, 70-74, 76~79, and 82-99 are true of my own knowledge, and l am informed and believe
COOCNQ

that the remaining statements are true upon that information and belief.

I declare under penalty of perjury under the laws of the United States ofAmeriea and the
State

of California that the foregoing is true

and correct.

Executed on October 23: 2017. at Pleasanton, California.

WlLLlAM D. DEKAY

27
COMPLAINT

 EXHIBITA 

O
O’MELVENY & MYERS LLI’
BEIIINC
BRUSSELS

CENTURY CITY

Times Square Tower
7 Times Square
New York, New York 10036-6524

HONG KONG

LONDON

Los ANCELES

TELEPHONE (212) 326-2000
I-‘ACSIMILE (212) 326-2061

WWW

SEOUL
SHANGHAI

SILICON VALLEY
SINGAPORE
TOKYO

0mm corn

NEWPORT BEACH

February 21, 2017
U.S.

SAN FRANCISCO

MAIL AND PERSONAL DELIVERY

WASHINGTON, DC.

, .. DIAL
DIRLC1
(212) 326—2289

,
“RIIERS
.

\\’Rl'l‘l".R'S E-MAII. ADDRESS

abednark@omm.com

Board of Trustees
San Mateo County Community College District
3401 CSM Drive
San Mateo, California 94402—3651

Office of Chancellor Ron Galatolo
San Mateo County Community College District
3401 CSM Drive
San Mateo, California 94402-3 651
Dear Chancellor Galatolo and the Board of Trustees:

.

We represent LocusPoint Networks, LLC and LocusPoint II KCSM, LLC (“LPN”). LPN
hereby asserts claims against the San Mateo County Community College District (“the District”)
for money and damages arising from the District’s breaches of its May 16, 2013 contracts with
LPN regarding the Federal Communications Commission’ 3 (“FCC’ s”) 2016 broadcast incentive
auction. Those contracts obligated the District to, among other things, take all necessary actions
to successfully participate in the “reverse auction” component of the incentive auction (“the
Auction”) and to relinquish the spectrum usage rights associated with its station, KCSM-TV,1 so
long as the price offered by the FCC was above an agreed minimum. In the months leading up to
the Auction, the District and LPN established procedures that the District would follow to ensure
KCSM’s successful participation in the Auction, including confirming and documenting each of
the District’s bids as they were submitted in light of the FCC’ s repeated warnings that failure to
submit a bid would result 1n withdrawal from the Auction. Disregarding these procedures, the
District failed‘ in its most fundamental obligation under the contracts—placing a bid. On
November 15, 2016, the District—by its own admission—failed to submit a bid in Stage 3,
'Round 23 of the Auction when the FCC offer was $114,494,613, well above the minimum price
on which the District and LPN had agreed. As a direct and immediate result, the FCC, in
accordance with its well—publicized procedures, dropped KCSM from the entire Auction,
rendering KCSM unable to sell its spectrum usage rights for a “Go Off-Air” option, as other full—
tl

The District operates the full-power noncommercial education television station KCSM-TV (RF Channel 43), San
Mateo, California (FCC Facility ID No. 58912) and holds all FCC licenses and authorizations necessary for the
current operations of KCSM-TV.

 O’M ELVENY & MYERS

("

LLP

February 21, 2017 - Page 2

power stations in the same television market had done for bids in excess of $80 million for full
relinquishment. The District’s breaches deprived LPN of the 36.5% of the Auction proceeds to
which it would have been entitled but for the District’s breaches of its obligations to bid in the
Auction.
This letter will serve as the notice required under California Government Code Section
945.4, which specifies that such notice be provided as a prerequisite to an action for
damages against the District. We have addressed each of the requirements of § 910 in this letter.

(“§”)

CIRCUMSTANCES OF LPN’S CLAIM
The District Selects LocusPoint as a Partner
The District solicited parties to acquire or fund KCSM beginning in 2011. On
December 7, 2011, it issued an RFP to “qualified entities” to acquire KCSM. According to
Board of Trustees meeting minutes, a team consisting of Jan Roecks, Eugene Whitlock, Marilyn
Lawrence, and outside counsel Lawrence Miller was formed to direct the RFP process. On
February 14, 2012, the District reported that it had received bids from six entities including LPN.
But on October 24, 2012, the Board decided not to pursue the sale.
_

Rather, as the November 14, 2012 Board meeting minutes reflect, Jan Roecks proposed a
new plan under which the District would either sell KCSM or partner with a third—party to sell
KCSM’s spectrum usage rights in the upcoming reverse auction that the FCC had announced for
the purpose of transferring spectrum from broadcast use to wireless use. The May 15, 2013
Board minutes report that the District received four bids, and Ms. Roecks recommended the
proposal from LocusPoint Networks as “the best and most valuable option for the District.” The
Board accepted that recommendation.

LPN Agrees to Fund KCSM in Exchange for a Share of the Auction Proceeds

,

LPN and the District signed a binding Letter of Intent on March 19, 2013, that
documented the District’s"‘interest in obtaining support in funding [KCSM’s] operating
expenses.” LPN stated that it will agree to provide that funding in the amount of $3.6 million.
In exchange, the District statedthat it will agree to pay LPN 36.5% of the “proceeds derived
from the District’s participation in the Auction.” The District represented that it “will agree to
participate in the Auction and toplace bids under which it would relinquish to the FCC [KCSM’S]
spectrum usage rights.”
I

'

The District and LPN formalized this arrangement in three agreements executed on May
16, 2013: (1) a Funding Agreement (amended December 17, 2015); (2) a Put/Call Option
Agreement (amended December 17, 2015); and (3) a Bid Management Agreement (amended
December 8, 2015). On behalf of the District, Deputy Chancellor James W. Keller signed the
May 16, 2013 agreements, and Executive Vice Chancellor Kathy Blackwood signed the
December 8 and 17, 2015 amendments.

,

 O’MELVENY & MYERS
February 21, 2017 Page
—

LLP

3

In these contracts, LPN agreed to subsidize the District’s operation of KCSM in the
of $3.6 million in quarterly installments of $225,000. In consideration, the District
agreed, among other things, to (I) participate in the Auction, (2) designate “up to three
individuals who shall serve as the District’s authorized bidders during the Auction” and who are
“authorized to place bids on behalf of the District during the Auction”; (3) “take all actions
necessary to cause the spectrum usage rights associated with [KCSM’s] FCC License to be
relinquished in the Auction”; (4) “[t]ake all such other actions as may be reasonably required or
as LPN . may request in order for the District to successfully participate in the Auction and
relinquish the spectrum usage rights associated with the License at a price that is at or above the
Minimum Bid Amount”; (5) give LPN the option to receive 36.5% of the District’s proceeds
from the Auction; (6) “take no action that could reasonably be expected to impede, interfere with,
delay, postpone, or materially adversely affect” LPN’s option; and (7) certify before receiving
each quarterly payment from LPN that the District had, among other things, “performed in all
material respects” its obligations under the threeagfe'ements. WhileLPNalso has the option “to
cause [the District] to participate in a Sale” of KCSM (and the District had an option “to
participate in a Sale” provided that, among other things, it did not breach the agreements),
neither party expected a sale of KCSM, a noncommercial educational station, to yield any
amount close to the Auction proceeds, as demonstrated by the District’s rejection of prior
acquisition bids in favor of participating in the Auction.
amount

.

.

The Funding Agreement also gave LPN the right to declare its prior quarterly payments
to the District “immediately due and payable” upon “the occurrence and during the continuation
of” certain “Triggering Events,” including the District’s “default in the performance of or
compliance with” the obligations deseribed above. The District agreed that in the event of its
willful breach, it would return LPN’s payments with interest at 8% annually. And in the event of
litigation arising out of the Funding Agreement, “the losing party shall pay to the prevailing
party reasonable attorneys’ fees and costs incurred in bringing such suit.”

At bottom, LPN (i) contributed the subsidy payments in exchange for a percentage of the
Auction proceeds, and (ii), accepted the risk—at a time when the Auction’s timing, design, and
bidding process were all unknown—that the FCC would not meet the parties’ agreed minimum
reserve price. The District, by contrast, had only the responsibility to participate in the Auction,
designate bidders, and place bids. Indeed, under FCC regulations, nobody other than the
District’s "authorized bidders Could place bids for KCSM.

The FCC Adopts Rules for the 'Auction- and Publishes Procedures to Simplify Participation in
the Auction
‘

.

Throughout its development of bidding procedures for the Auction, the FCC sought to
facilitate broadcaster participation by enabling bidders to make a series of simple decisions,
rather than requiring a more complicated bidding strategy. The auction format adopted by the
FCC called on bidders only to make the simple choice of whether to accept the current prices
offered by the FCC. The FCC published the order establishing the Auction design framework,
and later published a detailed notice explaining all bidding procedures. To ensure that

 O’MELVENY & MYERS
February 21, 2017 - Page 4

LLP

I,

)

broadcasters were fully informed about the opportunity presented by the Auction, the FCC also
conducted numerous educational efforts (such as outreach meetings, webinars, and tutorials) and
published a “user guide” specifically for TV stations participating in the Auction.

The FCC’s rules for the auction included back-up mechanisms to enable bidders to deal
with contingencies. While only “authorized bidders” were allowed to enter bids, the FCC
instructed that applicants could identify up to three “authorized bidders who are authorized to
place bids for the applicant in the auction.” And to ensure against technical problems preventing
bidders from entering bids, the FCC’s auction system—which is primarily computer-based—
included a telephonic back-up bidding system that a bidder could have used in case of computer
failure.

The District and LPN Prepare for the Auction to Ensure the District’s Successful

Participation

~

m: a?

v.4... _ ,. .~~.:.-

The District filed an application with the FCC to participate in the Auction, which Jan
Roecks signed on the District’s behalf. The District designated its employees Jan Roecks,
Eugene Whitlock, and Kathy Blackwood as its authorized bidders. Under FCC instructions, only
those authorized bidders were eligible to receive and use an electronic code key (“SecurID
tokens”) from the FCC allowing them to “place bids for the applicant during the auction.”

Participation in the Auction would, among other things, entail ,placing bids in what was
expected to be multiple stages each containing dozens of bidding rounds over several months.
At each stage of the Auction, participants such as the District would be called upon to submit
bids using the SecurID tokens. The FCC would determine which bids would become
“provisionally winning” bids based on the extent of- spectrum usage rights that it needed to
purchase to feasibly reorganize television stations into a smaller TV band. Once the set of
provisionally winning bids for an auction stage was determined, wireless providers would then
bid for the purchased spectrum in a “forward auction” stage. If the wireless providers’ bids were
insufficient to satisfy the government’s purchase obligations, the FCC would conduct a
subsequent stage of both the reVer‘s'e and forward auctions. Once the forward auction hit specific
price benchmarks determined by the FCC, the incentive auction would proceed to‘its conclusion.
,

-

The District’s three authorized bidders met with an LPN representative in December
2015 to begin preparing for the Auction. Joining them at this meeting were representatives from
PricewaterhouseCoopers LLP— (“PwC”). LPN had engaged P—wC at its expense to consult with
the District to comply with FCC’s Prohibited Communications Rule, scheduled to take effect in
January 2016, which would prohibit direct communications between the District and LPN during
the Quiet Period about the District’s (or any other television licensee’s) bids or bidding‘strategy
during the Auction. LPN representative Bill deKay also attended a meeting in December 2015 to
discuss the Auction with Chancellor Galatolo, Jan Roecks, and Eugene Whitlock. The District
agreed to “consult in every round during the Auction with PwC” but acknowledged that PwC
was “not assuming any additional duties or obligations directly to the District.”

.

_

 O'MELVENY ISL MYERS LLP
February 21, 2017 - Page 5

In addition to the above meetings, PwC‘worked closely with the District to ensure close
coordination throughout the Auction. PwC assisted the District in participating in the FCC’s
mock auction (held prior to the start of bidding), and developed and refined agreed-upon bidding
procedures.

The District, LPN, and PWC agreed to implement several procedural safeguards to ensure
that the District properly submitted bids in each Auction round. These safeguards were critical
because the consequences of not submitting a bid were enorrnous—as the FCC repeatedly
warned, a missing bid would be deemed a bid to drop out of the Auction, precluding any future
bidding in any fiiture stage or round. The User Guide to the FCC Reverse Auction Bidding
System, which was supplied to each bidding entity, contains at least three separate warnings that
a failure to bid will be interpreted as a bid for the station to drop out of the Auction. And FCC
Mock Auction documents and other education materials all caution that missing bids will result
«in being dropped from the Auction. Thus, LPN requested, and the District agreed, that the"
District’s authorized bidder prepare and sign a Bid Submission Confirmation Sheet for each
round, on which the bidder would note the date, time, and amount of the District’s submitted bid.
The parties also established that the District’s authorized bidder would generate a Bid Summary
from the FCC’s Auction website that confirmed the time and amount of the bid. The District’s
three authorized bidders practiced the bidding process and followed the agreed procedural
safeguards at a mock Auction in May 2016.

‘

The District Is Dropped from the Auction After Failing to Submit a Bid

Bidding in the Auction began on May 31, 2016. Following an agreed strategy, Jan
Roecks placed a bid on behalf of the District to accept the FCC’s opening price offer of
$353,887,920. Ms; Roecks served as the District’s authorized bidder in all but six rounds of the
Auction—46 rounds in all—between May 31, 2016 and November 10, 2016. And she
successfully placed bids on the District’s behalf in 17 of those rounds. After doing so, her
general practice —consistent with the agreed—upon procedures—was to sign the Bid Submission
Confirmation Sheets {andge'nerate Bid Summaries from the FCC Auction website that confirmed
the District’s bids.
‘

'

‘

,

.

On November 15, 2016, Ms. Roecks failed to submit the District’s bid. She has
admitted2 that she did not “think to actively submit a bid” and did not click the “bid” button
“which we had done for all active rounds since May.” Nor did she follow her admitted “normal
activity” in generating a‘ BidSummary confirmation from the FCC Auction website. But she
nevertheless signed a Bid Submission Confirmation Sheet falsely stating that she had “submitted
the bid according to bid strategy” at “7: 12 AM PST” for Stage 3, Round 23, in the amount of
$114,494,613. Thus, the District not only failed to bid, but also (i) failed to follow its normal
procedure of generating a confirmation directly from the FCC Auction website, (ii) certified that
it had submitted a bid despite not obtaining that confirmation, and (iii) failed to verify whether it
had submitted a bid during the remaining approximately one hour that Round 23 bidding ~
2

Ms. Roecks drafted a memo containing her version

Exhibit A.

of the events of November

15, 2016, which is attached as

.

 O’MELVENY & MYERS
February 21, 2017

—

111’

Page 6

remained open. Under any definition, the District’s carelessness—knowing that KCSM’s
continued participation in the Auction was on the line—constitutes gross negligence.
When Ms. Roecks logged into the FCC Auction website for the next round approximately
three hours later, she learned that the District had been dropped from the Auction due to its
failure to submit a bid in the prior round. She admitted that she realized the “omission” to
submit a bid after “click[ing] around the system in panic.” Shortly thereafter, she wrote to the
FCC that “[i]t appears we did not press a bid button” and “[w]e need to keep bidding.”
Ms. Roecks reported that during a subsequent phone call, the FCC stated (as it had repeatedly
warned) that the District had no recourse because “the auction is automated, is not built to
reinstate bidders for any reason, and there was no way to get back into the auction regardless of
the reason.” According to Ms. Roecks, the FCC “added that the auction results were already
altered by [the District’s] missed bid at 7AM so they could not force a reinstatement.” The bid
window _formthat round was open only between 7:00 AM and 8:00 AM. Ms. Roecks reported that
she immediately informed Chancellor Galatolo of the failed bid. Upon request from Chancellor
Galatolo, Ms. Roecks and PwC both documented the events of the day and closed down the
bidding for KCSM as it was no longer allowed to participate in the Auction.

The District Falsely Certifies Its Performance in Order to Continue Receiving Quarterly
Payments from LPN
Because FCC rules prohibited communications between the District and LPN about the
District’s bids, the District did not inform LPN that it knew it had failed to submit a bid and had
consequently been dropped from the Auction—a “Triggering Event” under the Funding
Agreement because it was a “default in the performance of or compliance with” the District’s
contracts with LPN.

Instead of telling LPN nothing, however, the District told LPN just the opposite. Despite
its admitted and known failure to bid, the District—in a compliance certificate signed by
Executive-Vice Chancellor Kathy Blackwood on December 16, 2016—certified that “[n]o event
has occurred. .that would constitute a Triggering Event” and the District had “performed 1n all
material respects all agreements” with LPN.
-

.

The District’s false certification enabled it to continue receiving quarterly fundingpayments from LPN, which LPN had no obligation to make unless (among other things) the
District had performed its contractual obligations and no Triggering Events had occurred. In
reliance on the District’ s false certification, LPN made its next quarterly payment of $225, 000 to
the District on December 20, 2016.
The District did not withhold the December 16, 2016 certificate it knew was false. It did
not segregate the December 20 payment that its false certification induced LPN to make. And
even if the District had legitimate concerns about notifying LPN during the Quiet Period under
the FCC’s Prohibited Communications Rule, it did not alert LPN about its knowingly false
certification (and the payment it induced) even after the Quiet Period ended on February 6, 2017,
when the District had the opportunity to correct the record during a February 8, 2017 call with

 O’MELVENY & MYERS
February 21, 2017

—

LLP

Page 7

LPN. Instead, the District boldly took LPN’s money and stayed silent. The District’s actions—
and conspicuous inaction—bear all the hallmarks of fraud.
The District Changes Its Story and Denies Its Contractual Responsibilities

On the February 8, 2017 call initiated by LPN, the District denied that it was responsible
for the actions—or inactions—of Jan Roecks related to the failed bid on November 15, 2016.
The District did not deny that Jan Roecks failed to place the bid, but claimed that its only
responsibility was to follow PwC’s instructions. Contradicting Ms. Roecks’ documentation of
events, the District stated that its authorized bidders were merely “robots” acting at PwC’s
direction. While discovery will reveal whether Ms. Roecks’ contemporaneous memo or the
District’s February 8 retelling is correct, what is clear under either version of events is that the
District breached or abdicated its responsibility to submit bids under its agreements with LPN.
Indeed, the District acknowledgedfiin Attachment A to the Bid Management Agreement
amendment that (i) “PwC is not assuming any additional duties or obligations directly to the
District in connection with these services”; and (ii) PwC’s responsibility was to notify the
designated District representative if “the District’s designated authorized bidders intend to take,
or take, actions that are not consistent with the District’s obligations under the Agreement and
any related bidding strategy.” Submitting the District’s bid was the responsibility of the
authorized bidders, the District, and nobody else, as the LPN contracts and FCC rules made clear.

HARM TO LPN
The District’s breaches

of its contracts with LPN have damaged LPN in at least three

respects:
0

o

The District’s breaches deprived LPN of the Auction proceeds to which it would
have been entitled had the District performed its obligations to (among other
things) “take all actions necessary to cause the spectrum usage rights associated
with [KCSM’s] ~‘FCC License to be relinquished in the Auction.” KCSM waswell'
positioned to sell its spectrum in the Auction due to its location in a densely
packed television market requiring the FCC to purchase the spectrum usage rights
of multiple TV stations at attractive prices. Though the FCC is not expected to
release final Auction results publicly until April 2017, on information and belief,
spectrum usage rights for other full—power stations in the same television market
were fully relinquished for amounts in excess of $80 million. By failingto submit
a bid in the Auction—the most fundamental “action[] necessary”. to participate in
the Auction—the District deprived LPN of its right to 36.5% of similar proceeds.

In addition, LPN is also entitled to the $3.375 million it has paid the District to
date under the Funding Agreement, $225,000 of which was paid in reliance on the
District’s knowingly false certification that (i) no Triggering Event had occurred,
and (ii) the District had “performed in all material respects all agreements” with
LPN. A Triggering Event resulting in a Material Adverse Effect had occurred
because the District “default[ed] in the performance of or compliance with” its

-

--

-

 O’MELVENY & MYERS LLP
February 21, 2017 - Page

8

contractual obligations to LPN. LPN therefore (i) declares its $3.375 million of
total payments to the District “immediately due and payable,” and (ii) terminates
any obligation to make any further payments under the Funding Agreement. Due
to the District’s willful breaches, the Funding Agreement requires the District to
repay the $3.375 million to LPN together with interest at an 8% annual rate.

LPN’s damages also include its attorneys’ fees and costs incurred in investigating
and asserting its claims against the District, to which it is entitled under the
Funding Agreement.

THE DISTRICT’S RESPONSE
Under

§

910.8, the District has 20 days from the date

of its receipt of this letter to give

days from the date of receipt to consider this notice and-respond to LPN’s claim. If the District
rejects the claim, allows the claim for an unsatisfactory amount, or fails to act on this claim
within 45 days, LPN intends to pursue its claims in court.

FURTHER INFORMATION TO SATISFY SECTION

§ 910

The names and post office addresses of the claimants:

LocusPoint Networks, LLC
Pleasanton Corporate Commons
6200 Stoneridge Mall Road, Suite 300
Pleasanton, CA 94588
and

LocusPoint II KCSM, LLC
Pleasanton Corporate Commons
>

6200 Stoneridge Mall Road, Suite 300
Pleasanton, CA 94588

The post office address to which the person presenting the claim desires notices to
be sent:

-

~

..

.

'

-

.

-

-

B. Andrew Bednark, Esq.
O’Melveny & Myers LLP
7 Times Square
New York, NY 10036
Because LPN claims more than ten thousand dollars ($10,000), a dollar amount
the claim is not included here. This claim would not be a limited civil case; it
would be an unlimited case. See § 910.

of

 O'MELVENY & MYERS

LLP

February 21, 2017 - Page 9

***
The District has in its possession all of the relevant agreements described above. Should
you require any additional information to process LPN’s claims, please contact me.

Sincerely,

B. An

f

w Bednark

  EXHIBIT 

EXECUTION VERSION

FUNDING AGREEMENT
DATED AS OF MAY 16, 2013

BETWEEN
SAN MATEO COUNTY COMMUNITY COLLEGE DISTRICT

and

LOCUSPOINT NETWORKS-2 LLC

OMM_US:7 463242.10

 TABLE OF CONTENTS
Page No.

SECTION

DEFINITIONS ....................................................................................................................

1 .

Certain Defined Terms .....................................................................................................
Accounting Terms; Utilization of GAS for Purposes of Calculations Under Agreement 7
Other Definitional Provisions and Rules of Construction ................................................ 7

1.1

1

1.2
1.3

SECTION 2.

SUBSIDY PAYMENTS .....................................................................................................

8

Making of Subsidy Payments ...........................................................................................

8

2.1

CONDITIONS TO SUBSIDY PAYMENTS ...................................................................... 8

SECTION 3.

Conditions to Effective Date ............................................................................................ 8
Conditions to All Subsidy Payments .............................................................................. 10

3.1

3.2

REPRESENTATIONS AND WARRANTIES OF SMCCCD ......................................... 10

SECTION 4.

Organization, Powers, Qualification, Good Standing ..................................................... 1
Effectiveness of Funding Documents ............................................................................. 12
Financial Condition ........................................................................................................ 12
....................... 12
No Material Adverse Change; No Interference
Title to Properties; Liens, Real Property ........................................................................ 12
Litigation; Adverse Facts ................................................................................................ 13
Payment of Taxes ........................................................................................................... 13
Performance of Agreements; Material Contracts ........................................................... 13
Employee Benefit Plans; Employee Matters ........................ .......................................... 1 3
Certain Fees .................................................................................................................... 13
Environmental Protection ............................................................................................... l4
Proceeds .......................................................................................................................... 14
........................................ l4
Disclosure

4.1

1

4.2
4.3
4.4
4.5
4.6
4.7
4.8
4.9
4.10

~

4.11

4.12
4.13

REPRESENTATIONS AND WARRANTIES OF LPN ........... ......................................

SECTION 5.

2

_

'

5.2
5.3
5.4

'

,

.

.................................... 15
Financial Statements and Other Reports..... ............... . ..........
Existence, etc.. ................................................. . .................. ................................ ‘. ........... l 7
Payment of Taxes and Claims; Tax Returns ................................................................... 17
Maintenance of Properties; Insurance .............. ....-..- ...... ................................................. 17
Compliance with Laws, etc. ........................................................................................... 17
..... .............................. . ..................... 17
Environmental Matters
.................................. 17
..............
...................
Proceeds Account
Conduct of Business .................................................................................................... 17
Performance of Obligations ............................................................................................ 17
Use of Proceeds .............................................................................................................. 17
Access to Facilities ......................................................................................................... 18

6.1

-

-

-.

.

i

’

6.8‘

6.9
6.10
6.11

SECTION 7.

'

AFFIRMATIVE COVENANTS .................... ................. .................................................. 15

SECTION 6.
6.2
6.3
6.4
6.5
6.6
6.7

14

Organization, Standing, Authority..................; ........................ ....................................... l4
................................ ......... 15
Authorization and Binding Obligation ............ ...........
Absence of Conflicting Agreements ............................................................................... 15
Availability of Funds ...................................................................................................... 15

5.1

.

1

NEGATIVE COVENANTS ............................................................................................. l 8

7.1

7.2

Indebtedness ........................................................................... ........................................ 1 8
Liens and Related Matters .............................................................................................. 18
-

-i _
OMM_US:7I463242.10

'

 TABLE OF CONTENTS
(Continued)
Page No.

Restriction on Fundamental Changes; Asset Sales

7.3

SECTION

8.

NEGATIVE COVENANTS DURING A TRIGGERING EVENT OR AFTER THE
FUNDING TERMINATION DATE ................................................................................

8

18

Indebtedness ................................................................................................................... l8
Liens and Related Matters .............................................................................................. 18
Restriction on Fundamental Changes; Asset Sales ......................................................... 19

8.1

8.2
8.3

SECTION 9.

REIMBURSEMENT OBLIGATIONS .............................................................................

19

Triggering Events ........................................................................................................... 19
Application of Payments; Payments Generally; Calculation of Interest ........................ 21

9.1

9.2

SECTION

1

10.

MISCELLANEOUS .........................................................................................................

10.1

10.2
10.3
10.4
10.5
10.6
10.7
10.8
10.9
10.10
10.11
10.12
10.13
10.14
10.15
10.16

Successors and Assigns .................................................................................................. 21
Expenses ......................................................................................................................... 22
Indemnity ........................................................................................................................ 22
Amendments and Waivers; Termination ........................................................................ 22
Independence of Covenants ............................................................................................ 22
Notices; Effectiveness of Signatures .............................................................................. 23
Survival of Representations, Warranties and Agreements ............................................. 23
Failure or Indulgence Not Waiver; Remedies Cumulative ............................................. 23
Payments Set Aside ........................................................................................................ 23
Severability ....................................................................... .............................................. 23
Damage Waiver .............................................................................................................. 23
Applicable Law ............................................................................................................... 24
Construction of Agreement; Nature of Relationship .......... ............................................ 24
Consent to Jurisdiction and Service of Process .............................................................. 24
Confidentiality; Public Disclosure ....................................... ........................................... 24
Counterparts; Effectiveness ........................ ................................................................... 25
‘

-

’

_.

_

OMM_US:7I463242. 0

21

ii -

 FUNDING AGREEMENT
This FUNDING AGREEMENT is dated as of May 16, 2013 and entered into by and
between SAN MATEO COUNTY COMMUNITY COLLEGE DISTRICT, California community
college district (“SMCCCD”), and LOCUSPOINT NETWORKS, LLC, a Delaware limited liability
company (“LPN”).
21

REC ITALS

WHEREAS, SMCCCD operates full—power noncommercial educational television
station KCSM-TV (RF Channel 43), San Mateo, California (FCC Facility ID No. 58912) (the “Station”)
and holds the FCC License and other Governmental Authorizations for the operation of the Station; and
WHEREAS, LPN, at the request of SMCCCD, has agreed to partially fund the continued
operation of the Station in consideration of the grant by SMCCCD of rights set forth in the Option
Agreement and of the grant by SMCCCD of the rights set forth in this Agreement and the other Funding
Documents;

NOW, THEREFORE, in consideration of the premises and the agreements, provisions
and covenants herein contained, SMCCCD and LPN agree as follows:
SECTION

1.

DEFINITIONS

Certain Defined Terms. The following terms used in this Agreement shall have the
1.1
following meanings:

“Affiliate”, as applied to any Person, means any other Person directly or indirectly
controlling, controlled by, or under common control with, that Person. For the purposes of this definition,
“control” (including, with correlative meanings, the terms ‘controlling”, “controlled by” and “under
common control with”), as applied to any Person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies. of that Person, whether through the
ownership of voting securities or by contract or otherwise.
“Agreement” means this Funding Agreement dated

as

of May 16,2013.

“Authorizing Resolution” has the meaning assigned to that term in subsection
“Bankruptcy Code” means Title

1 1

of the United

now and hereafter in effect, or any successor statute.

4. 2A.

States Code entitled “Bankruptcy”, as

.

“Bid Management Agreement” means that certain Bid
ofMay 16,2013.

Management Agreement by and

'

among SMCCCD and LPN dated as

“Bid Management Compensation” means the aggregate amount
pursuant to Anicle

payable to LPN

VI of the Bid Management Agreement.

“Business Day” means any day excluding Saturday, Sunday and any day which is a legal
holiday under the laws of the State of California or is a day on which banking institutions located in such
state are authorized or required by law or other governmental action to close.

OMM_US:71463242.10

 “Cash” means money, currency or a credit balance in

a

deposit account.

“Collateral Documents” means the Security Agreement, the Control Agreement and all
other instruments or documents delivered by SMCCCD pursuant to this Agreement in order to grant to
LPN a Lien on the Proceeds.
“Communications Act” means the Communications Act of 1934, as amended, and all
rules, regulations, orders, written policies and decisions of the FCC thereunder or any successor statute or
statutes, as from time to time in effect.
“Communications Regulatory Authority” means the FCC, any State PUC and any
current or future Government Authority which has the specific jurisdiction to regulate the conduct of
wireless or broadcast licensees or to otherwise regulate the communications activities of SMCCCD.

“Compliance Certificate” means

a

certificate substantially in the form of Exhibit

1

annexed hereto.

“Contingent Obligation”, as applied to any Person, means any direct or indirect
liability, contingent or otherwise, of that Person (i) with respect to any Indebtedness, lease, dividend or
other obligation of another if the primary purpose or intent thereof by the Person incurring the Contingent
Obligation is to provide assurance to the obligee of such obligation of another that such obligation of
another will be paid or discharged, or that any agreements relating thereto will be complied with, or that
the holders of such obligation will be protected (in whole or in part) against loss in respect thereof, or
(ii) with respect to any letter of credit issued for the account of that Person or as to which that Person is
otherwise liable for reimbursement of drawings. Contingent Obligations shall include (a) the direct or
indirect guaranty, endorsement (otherwise than for collection or deposit in the ordinary course of
business), co-making, discounting with recourse or sale with recourse by such Person of the obligation of
another, (b) the obligation to make take-or-pay or similar payments if required regardless of nonperformance by any other party or parties to an agreement, and (c) any liability of such Person for the
obligation of another through any agreement (contingent or otherwise) (1) to purchase, repurchase or
otherwise acquire such obligation or any security therefor, or to provide funds for the payment or
discharge of such obligation (whether in the form of loans, advances, stock purchases, capital
contributions or otherwise) or (2) to maintain the solvency or any balance sheet item, level of income or
financial condition of another if, in the case of any agreement described under subclauses (l) or (2) of this
sentence, the primary‘purpose or intent‘thereofis, as described inthe preceding sentence. The amount of
any Contingent Obligation shall be equal to the amount of the obligation so guaranteed or otherwise
supported or, if less, the amount to which such Contingent Obligation-is specifically limited.

“Contractual Obligation”, as applied to any Person, means any provision of any
Security issued by that Person or of any material indenture, mortgage, deed of trust, contract, undertaking,
agreement or other instrument to which that Person is a party or by which it or any of its properties is
boundor to which it or any of its properties is subject.
.

“Control Agreement” means an agreement, satisfactory in form and substance to LPN
and executed by the financial institution at which, the Proceeds Account is maintained, for the purposes of
holding the Proceeds pursuant to which such financial institution confirms and acknowledges LPN’s
security interest in such account.
“Copyright Act” means the Copyright Act of 1976, as amended, including without
limitation, all provisions of Title 17 of the United States Code and the rules and regulations thereunder, in
each case as from time to time in effect.

OMM_US:7I463242.10

 “Dollars”

and the sign “33” mean the lawful money

“Effective Date”

of the United

States

of America.

means May 16, 2013.

“Employee Benefit Plan” means any “employee benefit plan” as defined in Section 3(3)
of ERISA (whether or not subject to ERISA) which is or was maintained or contributed to by SMCCCD
with respect to the Station.

“Environmental Claim” means anyinvestigation, notice, notice of violation, claim,
action, suit, proceeding, demand, abatement order or other order or directive (conditional or otherwise),
by any Government Authority or any other Person, arising (i) pursuant to or in connection with any actual
or alleged violation of any Environmental Law, (ii) in connection with any Hazardous Materials or any
actual or alleged Hazardous Materials Activity, or (iii) in connection with any actual or alleged damage,
injury, threat or harm to health, safety, natural resources or the environment.

“Environmental Laws” means any and all current or future statutes, ordinances, orders,
rules, regulations, guidance documents, judgments, Governmental Authorizations, or any other
requirements of any Government Authority relating to (i) environmental matters, including those relating
to any Hazardous Materials Activity, (ii) the generation, use, stoi‘zfge, transportation 0r disposal of
Hazardous Materials, or (iii) occupational safety and health, industrial hygiene, land use or the protection
of human, plant or animal health or welfare, in any manner applicable to SMCCCD with respect to the
Station or any Facility.

“ERISA” means the Employee Retirement Income Security Act of 1974,
from time to time,. and any successor thereto.

as amended

“Facilities” means

any and all real property (including all buildings, fixtures or other
improvements located thereon) now, hereafter or heretofore owned, leased, operated or used by
SMCCCD with respect to the Station.

“FCC” means the Federal Communications Commission and any successor
governmental agency performing functions similar to those performed by the Federal Communications
Commission on the date hereof.
“FCC License” means the Noncommercial Educational broadcast television license, as
such term is defined in the rules, regulations or policies prOmulgated by the FCC, used 1n connection with
the operation of the Station

“FCC Rules” has the meaning assigned to that term in subsection 4 ID.

“First Priority” means, with respect to any Lien purported to be created in the Proceeds,
pursuant to any Collateral Document, that (i) such Lien 1s perfected and has priority over any other Lien
on such Proceeds and (ii) such Lien is the only Lien (other than Permitted Encumbrances) to which such
Collateral 18 subject.
“Fiscal Year”

means the fiscal year

of SMCCCD ending on June 30 of each calendar

yeah

“Funding Date” means the date of funding of a Subsidy Payment.

OMMgUS:7l463242.lO

 “Funding Documents” means this Agreement, the Option Agreement, the Bid
Management Agreement and the Collateral Documents.

“Funding Termination Date” means the later of July

1, 2017 and the date upon which
LPN is scheduled to make the last Extension Subsidy Payment (as such term is defined in the Option
Agreement), if any.

“GAS” means, subject to the limitations of the application thereof set forth in subsection
.2, the standards applicable to financial audits contained in Government Auditing Standards, issued by
the Comptroller General of the United States, in each case as the same are applicable to the circumstances
as ofthe date of determination.
1

“Governing Body” means the board of directors or other body having the power to
direct or cause the direction of the management and policies of a Person that is a Government Authority,
corporation, partnership, trust or limited liability company.
“Government Authority” means the government of the United States or any other
nation, or any state, regional or local political subdivision orrdepartment thereof, andsany other
governmental or regulatory agency, authority, body, commission,”central bank, boafdf‘fififié‘a’tibrgan,
court, instrumentality or other entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government, in each case whether federal, state,
local or foreign (including the FCC, the County of San Mateo, the State of California and supra-national
bodies such as the European Union or the European Central Bank).
“Governmental Authorization” means any permit, license, registration, authorization,
plan, directive, accreditation, consent, order or consent decree of or from, or notice to, any Government
Authority (including the FCC, the County of San Mateo and the State of California).

,

“Hazardous Materials” means: (i) any chemical, material or substance at any time
defined as or included in the definition of “hazardous substances”, “hazardous wastes”, “hazardous
materials ” , u extremely hazardous waste a) , H acutely hazardous waste n , c: radioactive waste”, “biohazardous
waste”, “pollutant”, “toxic pollutant”, “contaminant”, “restricted hazardous waste”, “infectious waste”,
“toxic substances”, or any other term or expression intended to define, list or classify substances by
reason of properties harmful to health, safety or the indoor or outdoor environment (including harmful
properties such asignitability, corrosivity, reactivity, carcinogenicity, toxicity, reproductive toxicity,
“TCLP toxicity” or “EP toxicity” or words of similar import under any applicable Environmental Laws);
(ii) any oil, petroleum, petroleum fraction or petroleum derived substance; (iii) any'drilling fluids,
produced waters and other wastes associated with the exploration, development or production of crude
oil, natural gas or geothermal resources; (iv) any flammable substances or explosives; (v) any radioactive
materials; (vi) any asbestos—containing materials; (vii) urea formaldehyde foam insulation; (viii) electrical
equipment which contains any oil or dielectric fluid containing polychlorinated biphenyls; (ix) pesticides;
and (x) any other chemical, material or Substance, exposure to-which is prohibited; limited or regulated by
any Government Authority or which may or could pose a hazard to the health and safety of the owners,
occupants or any Persons in the vicinity of any Facility or to the indoor or outdoor environment.
“Hazardous Materials Activity” means any past, current, proposed or threatened
activity, event or occurrence involving any Hazardous Materials, including the use, manufacture,
possession, storage, holding, presence, existence, location, Release, threatened Release, discharge,
placement, generation, transportation, processing, constructioii', treatment, abatement, removal, '
remediation, disposal, disposition or handling of any Hazardous Materials, and any corrective action or
response action with respect to any of the foregoing.

_

OMM__US:7I463242.[0

4-

_

 “Indebtedness”, as applied to any Person, means (i) all indebtedness for borrowed
money, (ii) that portion of obligations with respect to capital leases that is properly classified as a liability
on a balance sheet in conformity with GAS, (iii) notes payable and drafts accepted representing
extensions of credit whether or not representing obligations for borrowed money, (iv) any obligation
owed for all or any part of the deferred purchase price of property or services, which purchase price is
(a) due more than six months from the date of incurrence ofthe obligation in respect thereofor
(b) evidenced by a note or similar written instrument, (v) all indebtedness secured by any Lien on any
property or asset owned or held by that Person regardless of whether the indebtedness secured thereby
shall have been assumed by that Person or is nonrecourse to the credit of that Person and (vi) all
Contingent Obligations of such Person in respect of Indebtedness of others of the kinds referred to in
clauses (i) through (v) above.

“Indemnitee”

has the meaning assigned to that term in subsection 10.3.

“Joint Venture”

means

a joint

venture, partnership or other similar arrangement,

whether in corporate, partnership or other legal form.

“Lien” means any lien, mortgage, pledge, assignment, security—interest, charge or
encumbrance of any kind (including any conditional sale or other title retention agreement, any lease in
the nature thereof, and any agreement to give any security interest) and any option, trust or other
preferential arrangement having the practical effect of any of the foregoing.

any. .M

“Losses”

has the meaning assigned to that term

in subsection 10.3.

“LPN” has the meaning assigned to that term in the introductory paragraph to this
Agreement.

“LPN Account” means

an account as may be designated in writing by LPN from time to

time.

“LPN Indemnified Party” has the meaningassigned

to that term in subsection 10.3.

“Material Adverse Effect” means (i) a material adverse effect upon the business,
operations, properties, assets, condition (financial or otherwise) or the operation of the Station or (ii) the
impairment of the ability of SMCCCD to perform, or of LPN to enforce, the Reimbursement Obligations
‘or any other material obligations under any Funding Document.
‘

“Material Contract” means any contract or other arrangement to which SMCCCD is
party (other than the Funding Documents) relating to or used in the operation of the Station for which
breach, nonperformance, cancellation or failure to renew could have a Material Adverse Effect.
-

.
_

as

defined

1n

“Multiemployer Plan”
of ERISA.

means any Employee Benefit Plan that

15

a

a

“multiernployer plan”

Section 3(37)

“Officer” means the president, chief executive officer, a vice president, chief financial
officer, treasurer, general partner (if an individual), managing member (if an individual) or other
individual appointed by the Governing Body or the Organizational Documents of a Government
Authority, corporation, partnership, trust or limited liability company to serve in a similar capacity as the
foregoing

OMM_US:7I463242.10

~«-<

m?\‘:.;‘_;_:’»

» _

 “Officer’s Certificate”, as applied to any Person, means a certificate executed on behalf
of such Person or one or more Officers of a general partner or a

of such

Person by one or more Officers
managing member of such Person.

“Option Agreement” means that certain Put/Call Option Agreement by and among
as of May 16, 2013.

SMCCCD and LPN dated

“Option Termination Date”

means December 31, 2025.

“Organizational Documents” means the statute or documents (including Bylaws,
applicable) pursuant to which a Person (other than a natural Person) is organized.

the nature

“Pension Plan” means any Employee Benefit
ofa “defined benefit” pension plan.

if

Plan, other than a Multiemployer Plan, in

“Person” means and includes natural persons, corporations, limited partnerships, general
partnerships, limited liability companies, limited liability partnerships, joint stock companies, Joint
Ventures, associations, companies, trusts, banks, trust companies, land trusts, business trusts or other
org‘ai‘iizaiiOns, whether or not legal entities, and Government Authorities.

w.”

“Potential Triggering Event” means
time or both, would constitute

a

a

condition or event that, after notice or lapse

of

Triggering Event.

“Proceedings” means any action, suit, proceeding (whether administrative, judicial or
otherwise), governmental investigation or arbitration.

“Proceeds” means the proceeds from an Auction Sale, Call Option Sale or Put Option
Sale, as such terms are defined the Option Agreement.
“Proceeds Account” has the meaning set forth in subsection 6.7.

“Reimbursement Obligations” means all obligations of every nature of SMCCCD from
time to time owed to LPN under the Funding Documents, whether for reimbursement of any Subsidy
Payment, interest, expenses, indemnification or otherwise.

‘

“Release” means any release, spill, emission, leaking, pUmping, pouring, injection,
escaping, deposit, disposal, discharge, dispersal, dumping, leaching or migration of Hazardous Materials
into the indoor or outdoor environment (including the abandonment or disposal of‘ any barrels, containers
or other closed receptacles containing any Hazardous Materials), including the movement of any
Hazardous Materials through the air, soil, surface water or groundwater.

“Securities” means any stock, shares, partnership interes,ts voting trust certificates,
certificates of interest or participation in any profit- sharing agreement or arrangement, options, warrants,
bonds, debentures, notes, or other evidences of indebtedness, secured or unsecured, conVertible,
subordinated, certificated or uncertificated, or otherwise, or in general any instruments commonly known
as “securities” or any certificates of interest, shares or participations in temporary or interim certificates
for the purchase or acquisition of, or any right to subscribe to, purchase or acquire, any of the foregoing.
,

.

_

“Security Agreement” means the Security Agreement executed and delivered on the
Effective Date, substantially in the form of Exhibit 11 annexed hereto, granting LPN a security interest in
the Proceeds.

OMM_US:7l463242.lO

 “SMCCCD”

10.3

has the meaning assigned to that term in the introduction to this Agreement.

“SMCCCD Indemnified Party” has the meaning
of this Agreement.

assigned to that term in subsection

“State Law” means any state law pertaining to or regulating intrastate and local
telecommunications services, or any successor statute or statutes thereto, and all State Regulations
pursuant to such State Law, in each case as from time to time in effect.
“State PUC” means any state public utility commission or any other state commission,
agency, department, board or authority with responsibility for regulating intrastate and local
telecommunications services.

“State Regulations” means all rules, regulations, written policies, orders and decisions

of any State PUC.
“Station”

has the meaning assigned to that term in the recitals to this Agreement.

“Subsidia‘i*y~‘*‘:*iw7ith respect to any Person, means any corporation, partnership, trust,

limited liability company, association, Joint Venture or other business entity of which more than 50% of
the total voting power of shares of stOck or other ownership interests entitled (without regard to the
occurrence of any contingency) to vote in the election of the members of the Governing Body is at the
time owned or controlled, directly or indirectly, by that Person or one or more of the other subsidiaries of
that Person or a combination thereof.
“Subsidy Payment” has the meaning assigned to that term in subsection 2.1 A.

“Triggering Event” means each of the events

set

forth in subsection 9.1.

“UCC” means the Uniform Commercial Code as in effect in any applicable jurisdiction.

“Willful Breach” has the meaning assigned to'that term in subsection

,

9.1.

1.2
Accounting Terms; Utilization of GAS for Purposes of Calculations Under
Agreement. Except as otherwise expressly provided in this Agreement, all accounting terms not
otherwise defined herein shall have the‘meaning’s assigned to them in conformitywith GAS. Financial
statements and other information required to be deliveredby SMCCCD to LPN pUrsuant to clauses (ii),
(iii) and (viii) of subsection 5.1 shall be prepared in accordance with GAS as in effect at the Effective
Date. Calculations in connection with the definitions, covenants and other provisions of this Agreement
shall utilize GAS as in effect on the Effective Date. If at any time any change in GAS would affect the
computation of any requirement set forth in any Funding Document, and SMCCCD or LPN shall so
request, SMCCCD and LPN shall negotiate in goodfaith to amend such requirement to preserve the
original intent thereof in light of such change in or GAS provided that, until so amended, such
requirement shall continue to be computed in accOrdance with GAS prior to such change therein.
.

1.3
Other Definitional Provisions and Rules of Construction. Any of the terms defined
herein may, unless the context otherwise requires, be used in the singular or the plural, depending on the
reference. References to “Sections” and“‘subsections” shall be to Sections and subsections, respectively,
ofthis Agreement unless otherwise specifically provided. Section and subsection headings in this
Agreement are included herein for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose or be given any substantive effect. The use in any of the Funding

_

OMM_US:71463242.10

7

_

-

 Documents of the word “include” or “including”, when following any general statement, term or matter,
shall not be construed to limit such statement, term or matter to the specific items or matters set forth
immediately following such word or to similar items or matters, whether or not nonlimiting language
(such as “without limitation” or “but not limited to” or words of similar import) is used with reference
thereto, but rather shall be deemed to refer to all other items or matters that fall within the broadest
possible scope of such general statement, term or matter. Unless otherwise expressly provided herein,
references to Organizational Documents, agreements (including the Funding Documents) and other
contractual instruments shall be deemed to include all subsequent amendments, restatements, extensions,
supplements and other modifications thereto.

SECTION

2.

SUBSIDY PAYMENTS

Making of Subsidy Payments.

2.]

A.
Subsidy Payments. Subject to the terms and conditions of this Agreement and
in reliance upon the representations and warranties of SMCCCD herein set forth, LPN hereby agrees to
disburse to SMCCCD from time to time during the period from and after the Effective Date to and
including the Funding Termination Date an amount not exceeding the sum of (X) $3,600,000, (y) the
m‘ as u’w"
aggregate amount of any Extension su slay Payments (as such term is defined in the Option
Agreement), and (z) the Bid Management Compensation (collectively, the “Subsidy Payments”) to be
used for the purposes identified in subsection 6.10. Subject to the terms and conditions of this
Agreement, (i) the Subsidy Payments shall be made in sixteen (16) equal installments (which initial
number of Subsidy Payments may be increased by up to four (4) additional Subsidy Payments in the
circumstances described in Section 2(b) of the Option Agreement), (ii) each Subsidy Payment shall be in
an amount equal to $225,000 (which shall be the amount net ofthe Bid Management Compensation then
payable to LPN pursuant to the terms ofthe Bid Management Agreement), (iii) the first Subsidy
Payment shall be made on July 1, 2013, and (iv) each subsequent Subsidy Payment shall be made on the
first day of each October, January, April and July (commencing with October 1, 2013). Any obligation
of LPN to make Subsidy Payments shall expire immediately and without further action on the Funding
Termination Date if the Subsidy Payments are not made on or before such date.

_

'

.

B.
Funding of Subsidy Payments. Subject to the satisfaction or waiver ofthe
conditions precedent specified in subsections 3.1 and 3.2, LPN shall make the first Subsidy Payment to
SMCCCD on July 1, 2013 by wiring the payment to the SMCCCD Account. Subject to the satisfaction
or waiver after July 1, 2013 of the conditions precedent specified in subsection 3.2, LPN shall make
each subsequent Subsidy Payment to SMCCCD on the applicable Funding Date by wiring the payment
to the SMCCCD Account. In accordance with Section 1(b) of the Option Agreement, in the event that
LPN fails to make any Subsidy Payment within three days of its due date, theiLPN Share, as defined and
applied in the Option Agreement, shall be reduced by an amount equal to 2.28125% multiplied by the.
Gress Auction Proceeds or Gross Sale Proceeds, as applicable, for each such failure, e.g,, from 36.5% to
34.21875% in the case of one late payment.

'

SECTION

3.

CONDITIONS TO SUBSIDY PAYMENTS
The obligation

of LPN to make

Subsidy Payments hereunder is subject to the satisfaction

of the following conditions:
Conditions to Effective Date. The effectiveness of this Agreement on the Effective
3.1
Date is subject to prior or concurrent satisfaction of the following conditions:

OMM_US:7 l 463242.10

,

 A.
SMCCCD Documents. On or before the Effective Date, SMCCCD shall
deliver to LPN the following, each, unless otherwise noted, dated the Effective Date:
A copy of or reference to the current provisions of California Law that
(i)
authorize and empower SMCCCD;
A copy ofthe minutes ofa meeting ofthe Board of Directors of
SMCCCD approving and authorizing the execution, delivery and performance of the
Funding Documents to which it is a party, certified as of the Effective Date by an officer
of SMCCCD;

(ii)

of the Funding Documents

to which SMCCCD is party;

(iii)

Executed copies

(iv)

Such other documents as LPN may reasonably request.

and

B.
Representations and Warranties; Performance of Agreements. SMCCCD
shall have delivered to LPN an Officer’s Certificate, in form and substance satisfactory to LPN to the
effect that the representations and warranties in Section 4 are fi’u’éf’fiOrrect and complete 1n all material
respects on and as of the Effective Date to the same extent as though made on and as of that date (or, to
the extent such representations and warranties specifically relate to an earlier date, that such
representations and warranties were true, correct and complete in all material respects on and as of such
earlier date) and that SMCCCD shall have performed in all material respects all agreements and satisfied
all conditions which this Agreement provides shall be performed or satisfied by it on or before the
Effective Date except as otherwise disclosed to and agreed to in writing by LPN; provided that, if a
representation and warranty, covenant or condition is qualified as to materiality, the applicable
materiality qualifier set forth above shall be disregarded with respect to such representation and
warranty, covenant or condition for purposes of this condition.

Opinions of Counsel to SMCCCD. LPN shall have received originally
C.
executed copies of the written opinion of Schwartz, Woods & Miller, special FCC counsel for
SMCCCD, in form and substance reasonably satisfactory to LPN and its counsel, dated as of the
Effective Date and setting forth substantially such matters as LPN may reasonably request.
D.
Security Interests m Proceeds. LPN shall have received evidence satisfactory
to it that SMCCCD shall have taken or caused to be taken all such actions, including executing and
delivering the Security Agreement and the Control Agreement and any other agreements, documents and
instruments, and making all such filings and recordings that may be necessary or, in the reasonable
opinion of LPN desirable, in order to create in favor of LPN a valid and (upon such filing and recording)
'
perfected First Priority security interest in the Proceeds to the extent of LPN’s interest therein.

E.
Necessary Governmental Authorizations and Consents; Expiration of
Waiting Periods, Etc. SMCCCD shall have obtained all Governmental Authorizations and all consents
.

.

of other Persons, in

,

each case that are necessary or advisable 1n connection with the transactions
contemplated by the Funding Documents on the Effective Date. Each such Governmental Authorization
and consent shall be in full force and effect, except in a case where the failure to obtain or maintain a
Governmental Authorization or consent, either individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect. All applicable waiting periods shall have expired
without any action being taken or threatened by any competent authority that would restrain, prevent or
otherwise impose adverse conditions on the financing. No action, request for stay, petition for review or
rehearing, reconsideration, or appeal with respect to any of the foregoing shall be pending, and the time

_

OMM_US:7l463242.lO

9

_

 for any applicable Government Authority to take action to set aside its consent on its own motion shall
have expired.
F.
Evidence of Insurance. LPN shall have received a certificate from
SMCCCD’s insurance broker or other evidence satisfactory to it that all insurance required to be
maintained pursuant to subsection 6.4 is in full force and effect.

G.
FCC License. LPN shall be satisfied that all rights and remedies of LPN under
the Funding Documents shall not conflict with or cause a breach or default under the FCC License.
3.2
Conditions to All Subsidy Pav'ments. The obligation of LPN to make each Subsidy
on
the
applicable
Funding Date is subject to the following conditions precedent:
Payment

A.

As of such Funding Date:

The representations and warranties contained herein and in the other
(i)
Funding Documents shall be true, correct and complete in all material respects on and as
of that Funding Date to the same extent asthmlgh made on and as
date, except to
the extent such representations and warranties specifically relate to an"'€‘a‘i’i‘i‘6f”date, in
which case such representations and warranties shall have been true, correct and
complete in all material respects on and as of such earlier date; provided, that, if a
representation and warranty is qualified as to materiality, the materiality qualifier set
forth above shall be disregarded with respect to such representation and warranty for
purposes of this condition;
_
a

otat

No event shall have occurred and be continuing or would result from the
(ii)
making of such Subsidy Payment that would constitute a Triggering Event or a Potential
Triggering Event;
SMCCCD shall have performed in all material respects all agreements
(iii)
and satisfied all conditions which this Agreement and each other Funding Agreement
provides shall be performed or satisfied by it on or before that Funding Date;

N0 order, judgment or decree of any arbitrator or Government Authority
(iv)
shall purport to enjoin or restrain LPN from making the Subsidy Payment to be made by
it on that Funding Date;
'

i

No FCC License will have been forfeited or materially impaired as'of
(v)
such Funding Date for any reason, including as a result of or in connection with any
'
Funding Document or the transactions contemplated hereby or thereby;

(vi)

No Material Adverse Effect shall have occurred as of such Funding Date;

LPN shall have received before such Funding Date a duly executed
(vii)
Compliance Certificate attesting to the matters set forth in this subsection 3.2A signed by
a duly authorized Officer of SMCCCD; and

(viii) SMCCCD shall have delivered such other certificates or documents that
LPN shall reasonably request, in form and substance satisfactory to LPN.

_

OMM__US:7l463242. 0

1o

_

 SECTION 4.

REPRESENTATIONS AND WARRANTIES OF SMCCCD
In order to induce LPN to enter into this Agreement and to make the Subsidy Payments,
represents and warrants to LPN:

each of SMCCCD
4.1

Organization, Powers, Qualification, Good Standing.

Organization and Powers. SMCCCD is a Califomia community college
A.
district duly organized, validly existing and in good standing under the laws of the State of California
SMCCCD has all requisite power and authority to own and operate its properties, to carry on its business
as now conducted and as proposed to be conducted, to enter into the Funding Documents to which it is a
party and to carry out the transactions contemplated thereby.

Qualification and Good Standing. SMCCCD is qualified to do business and
B.
in good standing in every jurisdiction where its assets are located and wherever necessary to carry out its
business and operations.
C.
“Er-“=1“

’

Conduct of Business. SMCCCD is operating the Stationjnjhe manner

__._
«av-aw?"

required by subsection 6.8.

D.

,

~
_

FCC License and other Governmental Authorizations. Schedule

4.1

D

annexed hereto accurately and completely lists the FCC License and other Governmental Authorizations
that have been granted or assigned to SMCCCD by the FCC, any other Communications Regulatory
Authority or any other Governmental Authority, including all Governmental Authorizations for the
operation of the Station, and the FCC License and other Governmental Authorizations (a) are in full
force and effect in all respects and (b) comprise all of the licenses, permits, approvals and authorizations
necessary under the Communications Act and the rules, regulations and policies of the FCC (the “FCC
Rules”) for the operation of the Station as presently operated and conducted. The FCC Licenses is not
subject to any restriction or condition other than those set forth in the FCC License. Schedule 4.1D also
accurately and completely lists all agreements, if any, for the use ofpublic utility facilities in connection
'with the Station. Except as specified in Schedule 4.1D annexed hereto, neither the FCC License nor any
other Govemmental Authorization issued to SMCCCD with regard to the Station has a term which will
expire prior to the Option Termination Date. SMCCCD does not have any knowledge of the occurrence
of any event or the existence of any circumstance which is likely to lead to the revocation, suspension,
amendment or non—renewal of the FCC License or other Governmental Authorization, and there are no
applications, investigations, complaints, objections, petitions or proceedings pending'or, to SMCCCD’s
knowledge, threatened before the FCC or any other Governmental Authority relating to the Station,
except for proceedings of general applicability to television broadcast stations. The FCC License and all
other Governmental Authorizations used by SMCCCD are held by it.

Communications Act and State Law. SMCCCD has duly filed in a timely
E.
.manner all reports, forms, applications and statements required to be filed by SMCCCD with the-FCC or
any other Governmental Authority or required by the FCC or any other Governmental Authority to be
maintained by SMCCCD with respect to the Station since the dates SMCCCD has operated the Station,
and they are in all material respects accurate and complete and in compliance with the Communications
Act and State Law, ineluding, without limitation, the FCC Rules and the rules and regulations of any
other Communications Regulatory Authority. The conduct of the business and operations of the Station
are in compliance in all respects with the FCC’s radiation standards applicable to the Station. The
conduct of the business and operations of the Station are in compliance in all material respects with all
applicable engineering and other standards required to be met under applicable federal, state and local
laws, rules, regulations, requirements and policies, including FCC Rules and the Communications Act,

_ 1 1 _

OMM_US:7l463242. l 0

 and are otherwise in compliance in all material respects with all applicable federal, state and local laws,
rules, regulations, requirements and policies, including FCC Rules and the Communications Act,
SMCCCD is not liable to any Person for material copyright infringement under the Copyright Act as a
result of its business operations.
4.2

Effectiveness of Funding Documents.

A.
Authorization of Funding Documents. The execution, delivery and
performance of the Funding Documents has been duly authorized by all necessary action on the part
SMCCCD.

of

No Conflict. The execution, delivery and performance by SMCCCD of the
B.
Funding Documents and the consummation of the transactions contemplated by the Funding
Documents, as applicable, do not and will not (i) violate any provision of any law or any governmental
rule or regulation applicable to SMCCCD or any order, judgment or decree of any court or other
Government Authority binding on SMCCCD, (ii) conflict with, result in a breach of or constitute (with
due notice or lapse of time or both) a default under any Contractual Obligation of SMCCCD, (iii) result
..in-or require the creation or imposition of any Lien upon any of the properties or assets of SMCCCDm—_...._
(d‘thef‘than any Liens created under any of the Funding Documents in favor of LPN), or (iv) require any
approval or consent of any Person under any Contractual Obligation of SMCCCD.
C.
Governmental Consents. The eXecution, delivery and performance by
SMCCCD of the Funding Documents to which it is party, and the consummation of the transactions
contemplated by the Funding Documents, as applicable, do not and will not require any Governmental
Authorization other than that of SMCCCD.

D.
Binding Obligation. Each ofthe Funding Documents to which it is party has
been duly executed and delivered by SMCCCD and is the legally valid and binding obligation of
SMCCCD, enforceable against SMCCCD in accordance with its respective terms, except as may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or limiting
creditors’ rights generally or by equitable principles relating to enforceability.

V

4.3
Financial Condition. SMCCCD does not have (and will not have) any Indebtedness,
contingent liability or liability for taxes, long-term lease or unusual forward or long-term commitment
that, as of any Funding Date, is not reflected in the most recent financial statements delivered to LPN
pursuant to subsection 5.1 or the notes thereto and that, in any such case, is material in relation to the
business, operations, properties, assets, condition (financial or otherwise) or prospects of SMCCCD with
respect to the operation of the Station.
4

'

No Material Adverse Change; No Interference. Since June 30, 2012, no event or
change has occurred that has resulted in a Material Adverse Effect. There is currently no legal or
regulatory proceeding, including interventions by the public or any Government Authority pending, or to
the knowledge of SMCCCD threatened, that could reasonably be expected to materially frustrate, impair
or limit the consummation of any of the transactions contemplated by or Under the Funding Documents
(including the participation by SMCCCD in, or the assignment of the FCC License or surrender of the
spectrum used in the operation of the Station pursuant to, the Auction, a Call Option Sale or Put Option
Sale (as such terms are defined in the Option Agreement» or otherwise to have a Material Adverse Effect.
4.4

.

,

4.5
Title to Properties; Liens; Real Propertv. SMCCCD has (i) good, sufficient and legal
title to (in the case of fee interests in real property), (ii) valid leasehold interests in (in the case of
leasehold interests in real or personal property), or (iii) good title to (in the case of all other personal

_

0MM_US:7 463242.10

12 -

 property), all of its properties and assets used in the operation of the Station and reflected in the most
recent financial statements delivered pursuant to subsection 5.], in each case except for assets disposed of
since the date of such financial statements as permitted under subsections 7.3 and 8.3. Except as
pemiitted by this Agreement, all such properties and assets are free and clear of Liens. Schedule 4.5
annexed hereto contains a true, accurate and complete list of all leases, subleases or assignments of leases
(together with all amendments, modifications, supplements, renewals or extensions of any thereof) of real
property used in connection with the operation of the Station. Each agreement listed on Schedule 4.5 as a
result of the immediately preceding sentence is in full force and effect and SMCCCD does not have
knowledge of any default that has occurred and is continuing thereunder, and each such agreement
constitutes the legally valid and binding obligation of SMCCCD, enforceable against SMCCCD in
accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting creditors’ rights generally or by
equitable principles.

—-

W-

'-

4.6
Litigation; Adverse Facts. There are no Proceedings (whether or not purportedly on
behalf of SMCCCD) at law or in equity, or before or by any court or other Government Authority
(including any Environmental Claims) that are pending or, to the knowledge of SMCCCD, threatened
against or affecting SMCCCD with respect to the Station or any property of SMCCCD‘used in connection
with the Station which, if adversely determined, has a reasonable possibility after giving effect to the
coverage and policy limits of insurance policies issued to SMCCCD, of giving rise to a Material Adverse
Effect. SMCCCD is not (i) in material violation of any applicable laws (including Environmental Laws),
or (ii) subject to or in default with respect to any final judgments, writs, injunctions, decrees, rules or
regulations of any court or other Government Authority.

‘HEruL-Jék;

4.7
Pament of Taxes. SMCCCD is not subject to taxation other than with respect to
employment and sales and use taxes. Except to the extent permitted by subsection 5.3, all tax returns and
reports of SMCCCD required to be filed by it have been timely filed, and all taxes shown on such tax
returns to be due and payable and all assessments, fees and other governmental charges upon SMCCCD
and upon their respective properties, assets, income, businesses and franchises that are due and payable
have been paid when due and payable. SMCCCD does not know of any proposed tax assessment against
it that is not being actively contested by SMCCCD in good faith and by appropriate proceedings;
provided that such reserves or other appropriate provisions, if any, as shall be required in conformity with
GAS shall have been made or provided therefor.

.

Performance of Agreements; Material Contracts. SMCCCD is not in material default
4.8
in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained
in any of its Contractual Obligations with respect to the Station, and no condition exists that, with the
giving of notice orthe lapse of time or both, would constitute such a material default. Schedule 4.8
contains a true, correct and complete list of all the Material Contracts in effect. Except as described on
Schedule 4.8, all such Material Contracts are in full force and effect and no material defaults currently
exist thereunder.
4.9
Employee Benefit Plans; Employee Matters. With respect to the Station, SMCCCD is
in compliancein all material respects with all applicable provisions and requirements of each Employee
Benefit Plan and‘with the requirements of any statutes, orders, rules and‘regulations which are applicable
to each Employee Benefit Plan, and has performed in all material respects all its obligations under each
Employee Benefit Plan. SMCCCD in connection with the Station does not have any potential liability
under any Pension Plan or any Multiemployer Plan. With respect to the Station, there is no strike or work
stoppage in existence or threatened involving SMCCCD.

_

OMM_US:7I463242.10

13

_

 Certain Fees. No broker’s or finder’s fee or commission will be payable with respect to
4.10
this Agreement or any of the transactions contemplated hereby because of any representation or
agreement by SMCCCD, which hereby indemnifies LPN against, and agrees that it will hold LPN
harmless from, any claim, demand or liability for any such broker’s or finder’s fees alleged to have been
incurred in connection herewith or therewith and any expenses (including reasonable fees, expenses and
disbursements of counsel) arising in connection with any such claim, demand or liability.
Environmental Protection. With respect to the Station, SMCCCD and its Facilities or
4.11
operations are not subject to any outstanding written order, consent decree or settlement agreement
concerning the Station with any Person relating to (a) any Environmental Law, (b) any Environmental
Claim, or (c) any Hazardous Materials Activity that, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect; SMCCCD has not received any letter or request for
information under Section 104 of the Comprehensive Environmental Response, Compensation, and
Liability Act (42 U.S.C. § 9604) or any comparable state law; there are and, to SMCCCD’s knowledge,
have been no conditions, occurrences, or Hazardous Materials Activities that could reasonably be
expected to form the basis of an Environmental Claim against SMCCCD that, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse Effect; neither SMCCCD nor, to
SMCCCD’s knowledge, any predecessor of SMCCCD has filed any notice under any Environmental Law
indicating past or present treatment of Hazardous Materials at any Facility, and none of SMCCCD’S
operations involves the generation, transportation, treatment, storage or disposal of hazardous waste, as
defined under 40 C.F.R. Parts 260-270 or any state equivalent; and SMCCCD is in compliance with all
current or reasonably foreseeable future requirements pursuant to or under Environmental Laws would
not, individually or in the aggregate, be reasonably expected to result in a Material Adverse Effect

Matters Relating to Proceeds. No authorization, approval or other action by, and no
4.12
notice to or filing with, any Government Authority is required for either the grant by SMCCCD ofthe
Lien purported to be created in favor of LPN in its share of the Proceeds or (ii) the exercise by LPN of
any rights or remedies in respect of its security interest in its share of the Proceeds or under the Control
Agreement. Except such as may have been filed in favor of LPN as contemplated by the Security
Agreement, no effective UCC financing statement, or other instrument similar in effect covering all or
any part of the Proceeds Account is on file in any filing or recording office. All information supplied to
LPN by or on behalf of SMCCCD with respect to the Proceeds Account is accurate and complete in all
respects.

Disclosure. No representation or warranty of SMCCCD contained in any Funding
4.13
Document or in any other document, certificate or written statement furnished to LPN by or on behalf of
SMCCCD for use in connection with the transactions contemplated by this Agreement contains any
untrue statement of a material fact or omits to state a material fact (known to SMCCCD, in the case of
any document not fumished by it) necessary in order to make the statements contained herein or therein
not misleading in light of the circumstances in which the same were made. Any projections and pro
forma financial information contained in such materials are based upon good faith estimates and
assumptions believed by SMCCCD to be reasonable at the time made, it being recognized by LPN that
such projections as to future events are not to be viewed as facts and that actual results during the period
or periods covered by any such projections may differ from the projected results. There'are no facts
known (or which should upon the reasonable exercise of diligence be known) to SMCCCD (other than
matters of a general economic nature) that, individually or in the aggregate, could reasonably be expected
to result in a Material Adverse Effect and that have not been disclosed herein or in such other documents,
certificates and statements fumished to LPN for use in connection with the transactions contemplated
hereby.
,

_

OMM_US:7l463242. 0

-

14.

'

 SECTION

5.

REPRESENTATIONS AND WARRANTIES OF LPN
In order to induce SMCCCD to enter into this Agreement, LPN represents and warrants

to SMCCCD:

Organization, Standing and Authority. LPN is a limited liability corporation duly
5.1
organized, validly existing and in good standing under the laws of the State of Delaware, with all requisite
power under its organization documents to enter into and perform this Agreement and the transactions
contemplated hereby.
5.2
Authorization and Binding Obligation. The execution, delivery, and performance by
LPN of the Funding Documents, and the consummation by LPN of the transactions contemplated hereby,
have been duly authorized by all necessary corporate action. This Agreement has been duly executed and
delivered by LPN. This Agreement Constitutes the legal, valid, and binding obligation of LPN,
enforceable against LPN in accordance with its terms, except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, or other similar laws affecting the rights of creditors generally or
by general principles of equity.
.0, ”awn”?

Absence of Conflicting Agreements. The execution, delivery, and performance by LPN
5.3
of this Agreement (with or without the giving of notice, the lapse of time, or both) (i) do not require the
consent of any third party; (ii) will not conflict with, result in a breach of, or constitute a default under,
any applicable law, judgment, order, rule or regulation of any court or governmental unit to which LPN is
a party or by which LPN is bound; and (iii) will not conflict with, constitute grounds for termination of,
result in a breach of, constitute a default under, or accelerate or permit the acceleration of any
performance required by, the terms of, any agreement, instrument, license, or permit to which LPN is a
party or by which LPN may be bound.
5.4
Availabilig of Funds: LPN has cash available or has existing borrowing facilities that
are available (and not subject to conditions precedent or other restrictions) that together are sufficient to
enable it to make the Subsidy Payments and to consummate the transactions contemplated by this

Agreement.

SECTION

.

AFFIRMATIVE COVENANTS

SMCCCD covenants and agrees that, until the earlier of (i) the payment in full of all of
the Reimbursement Obligations (other than any unasserted claims for expense reimbursement or
indemnification under subsections 10. 2 or 1.0 3) and (ii) the Consummation of any Auction Sale, Call
Option Sale or Put Option Sale (as such terms are defined in the Option Agreement), SMCCCD shall
perform all covenants in this Section 6.
6.1

‘

6.

Financial Statements and Other Reports.

SMCCCD will maintain a system of accounting established and administered in accordance with
sound business practices to permit preparation of financial statements in conformity with GAS. With
respect to the Station, SMCCCD will deliver to LPN.

Triggering Events, etc.: promptly upon any officer of SMCCCD
(i)
obtaining knowledge (a) of any condition or event that constitutes a Triggering Event or
Potential Triggering Event, (b) that any Person has given any notice to SMCCCD or
taken any other action with respect to a claimed default or event or condition of the type
referred to in subsection 9.1A, or (c) of the occurrence of any event or change that has

.
OMM_US:71463242.I0

- 15 -

'-"'”=”-’*'“"

 caused or evidences, either in any case or in the aggregate, a Material Adverse Effect, an
Officer’s Certificate specifying the nature and period of existence of such condition,
event or change, or specifying the notice given or action taken by any such Person and
the nature of such claimed Triggering Event, Potential Triggering Event, default, event,
condition or change, and what action SMCCCD has taken, is taking and proposes to take
with respect thereto;
Year—End Financials: as soon as available and in any event when
(ii)
provided to the Corporation for Public Broadcasting (a) the Annual Financial Report for
the Station as prepared and certified by independent certified public accountants and (b) a
copy of its Local Content and Service Report prepared in accordance with the
requirements of the Corporation for Public Broadcasting;

Annual Budget: as soon as available, the Station’s annual budget (in
(iii)
reasonable detail) for the next Fiscal Year;

Officer’s Certificate: at the commencement of each Fiscal Year an
(iv)
Officer’s Certificate certifying to the availability of funds sufficient to meet any
Reimbursement‘Obligations 0f SMCCCD during the next Fiscal Year.

_,.__

Litigation or Other Proceedings: promptly upon any Officer of
(v)
SMCCCD obtaining knowledge of(l) the institution of, or non-frivolous threat of, any
Proceeding against or affecting SMCCCD or any of its property not previously disclosed
in writing by SMCCCD to LPN or (2) any material development in any Proceeding that,
in any case: (x) if adversely determined, has a reasonable possibility after giving effect to
the coverage and policy limits ofinsurance policies issued to SMCCCD, of giving rise to
a Material Adverse Effect; (y) seeks to enjoin or otherwise prevent the consummation of,
or to recover any damages or obtain relief as a result of, the transactions contemplated
hereby; or (2) could affect in any way any FCC License, except for Proceedings of
general applicability to television broadcast stations; written notice thereof together with
such other information as may be reasonably available to, SMCCCD to enable LPN and
its counsel to evaluate such matters;
.

Employee-Related Events promptly upon the occurrence of any strike
(vi)
or work stoppage or becoming aware of any threatened strike or work stoppage, a written
notice specifying the nature thereof, what action SMCCCD has taken, is taking or
proposes to take with respect thereto;

.

-

Licenses; Regilations, etc.: promptly (and in any event within 2
(vii)
Business Days) upon receipt of notice of (a)’any forfeiture, non-renewal,"c'ani:ellation,
termination, revocation, suspension, material impairment or material modification of any
FCC-License or other material Governmental Authorization used by SMCCCD in the
operation of the Station, or any notice of material default with respect to any such FCC
License or other such material Governmental Authorization, (b) any refusal by the FCC
or any other Communications Regulatory Authority to renew or extend any FCC License
or other material Governmental Authorization used in the operation of the Station, (c) any
complaint filed by or with the FCC or other Government Authority in connection with the
Station, (d) any show cause order issued by the FCC in connection with the Station, (e)
any disruption, interruption or discontinuation (even temporary) with respect to the
Station, or (f) any other event that could reasonably be expected to have a material
adverse effect on any FCC License (other than events of general applicability to

,

if

-

OMM_US:7I463242.10

_

16

_

 television broadcast stations), an Officers’ Certificate specifying the nature of such event,
the period of existence thereof, and what action SMCCCD is taking and proposes to take
with respect thereto; and

(viii) Other Infomiation: with reasonable promptness, such other information
and data as from time to time may be reasonably requested by LPN concerning the
expenditures of the Station or its business or operations.
Existence etc. Except as permitted under subsections 7.3 and 8.3, SMCCCD will at all
6.2
times preserve and keep in full force and effect all rights and franchises material to its business
(including, without limitation, the FCC License).

Payment of Taxes and Claimsfix Returns. With respect to the Station, SMCCCD
6.3
will pay all claims (including claims for labor, services, materials and supplies) for sums that have
become due and payable and that by law have or may become a Lien upon any of their properties or
assets prior to the time when any penalty or fine shall be incurred with respect thereto; provided that no
such claim need be paid if it is being contested in good faith by appropriate proceedings promptly
instituted and diligently conducted, so long as such reserve or other appropriate provision, any, as shall
be required in conformity’with GAS shall have been made .

if

6.4
Maintenance of Properties; Insurance. SMCCCD will maintain or cause to be
maintained in good repair, working order and condition, ordinary wear and tear excepted, all material
properties used in connection with the operation of the Station and from time to time will make or cause
to be made all appropriate repairs, renewals and replacements thereof. SMCCCD will maintain or cause
to be maintained such self-insurance and commercial insurance coverage as it has maintained during the
past Fiscal Year, consistent with State requirements.

Compliance with Laws, etc. With respect to the Station, SMCCCD shall comply in all
6.5
material respects with the requirements of all applicable laws, rules, regulations and orders (including all
Environmental Laws) of any Government Authority (including the FCC and any other Communications
Regulatory Authority).

Environmental Matters. With respect to the Station, SMCCCD will deliver to LPN,
6.6
promptly upon the occurrence thereof, written notice describing in reasonable detail (a) any material
Environmental Claims that, individually or in theaggregate, could reasonably be expected to result in a
Material Adverse Effect, and (b) SMCCCD’s discovery of any occurrence or condition on any real
property adjoining or in the vicinity of any Facility that could cause such Facility or any part thereof to be
subject to any material restrictions on the ownership, occupancy, transferability or use thereof under any
Environmental Laws. SMCCCD shall promptly take any and all actions necessary to (i) cure any

violation of applicable Environmental Laws by SMCCCD that could reasonably be expected 'to result in,
individually or in the aggregate, any material penalty and (ii) make an appropriate response to any
Environmental Claim against SMCCCD and'discharge any obligations it may have to any Person
thereunder.
6.7
Proceeds Account. SMCCCD shall maintain a deposit account subject to the Control
Agreement in favor of LPN with respect to LPN’s share of the Proceeds (the “Proceeds Account”).

6.8
Conduct of Business. From and after the Effective Date, and except as expressly
contemplated in the Funding Documents, SMCCCD shall continue to operate the Station in substantially
the same manner as operated prior to the Effective Date.

—

OMM_US:7I463242.10

17

—

_

 6.9
Performance of Obligations. SMCCCD shall (i) perform all of its obligations under the
terms of each Funding Document and (ii) take all actions necessary to cause the spectrum usage rights
associated with the FCC License to be relinquished in the Auction (as such term is defined in the Option
Agreement), subject to the terms set forth in the Bid Management Agreement.

6.10
Use of Proceeds. The proceeds of each Subsidy Payment shall be applied by SMCCCD
to fund the operation of the Station
6.11
Access to Facilities. At LPN’s request, SMCCCD shall from time to time give to, or
cause to be given to, LPN full access during normal business hours to the Station (including its main
studio and transmission equipment); provided, however, that all such access shall be scheduled in a
manner reasonably acceptable to SMCCCD.

NEGATIVE COVENANTS

SECTION 7.

SMCCCD covenants and agrees that, until the earlier of (i) the payment in full of all of
the Reimbursement Obligations (other than any unasserted claims for expense reimbursement or
indemnification under subsections_10.2 or 10.3) and (ii) the consummation of any Auction Sale, Call
Option Sale or PutOption Sale (assuch‘terms are defined in the Option Agreement), SMCCCD shall
perform all covenants in this Section 7.
Indebtedness. Other than in the ordinary courseofbusiness, SMCCCD shall not,
7.1
directly or indirectly, create, incur, assume or guaranty, or otherwise become or remain directly or
indirectly liable with respect to, any Indebtedness (other than any Reimbursement Obligations) in respect

ofthe Station.
7.2
Liens and Related Matters. SMCCCD shall not, directly or indirectly, create, incur,
assume or permit to exist any Lien on or with respect to any property or asset of SMCCCD used in the
operation of the Station, whether now owned orhereafter acquired, or any income therefrom, or file or
permit the filing of, or permit to remain in effect, any financing statement or other similar notice of any
Lien with respect to any such prOperty, asset, income or profits under the UCC or under any similar
recording or notice statute, except Permitted Encumbrances.

Restriction on Fundamental Changes; Asset Sales SMCCCD shall not convey, sell,
7. 3
lease or sub-lease (as lessor or sublessor), transfer or otherwise dispose of, in one transaction or a series of
transactions, substantially all of its business, property or assets (including its notes or receivables, whether
newly issued or outstanding) used in connectiOn with the operation of the Station, whether now owned or
hereafter acquired, other than in connection with the transactions contemplated by the Option Agreement.
SMCCCD shall not grant or agree to grant any Person (other than LPN) any interest in any proceeds from
any conveyance, surrender or other disposition of any FCC License.

SECTION 8. NEGATIVE COVENANTS DURING A TRIGGERING EVENT OR AFTER THE
FUNDING TERMINATION DATE.
,

SMCCCD covenants and agrees that, during the occurrence and continuation of a
Triggering Event or at any time after the Funding Termination Date and until the earlier of (i) the
payment in full of all of the Reimbursement Obligations (other than any unasserted claims for expense
reimbursement or indemnification under subsections 10.2 or 10.3) and (ii) the consummation of any
Auction Sale, Call Option Sale or Put Option Sale (as such terms are defined in the Option Agreement),
SMCCCD shall perform all covenants in this Section 8.

_

0MM_US:7I463242.10

18 .

 Indebtedness. Other in the ordinary course of business, SMCCCD shall not, directly or
8.1
indirectly, create, incur, assume or guaranty, or otherwise become or remain directly or indirectly liable
with respect to, any other Indebtedness (other than any Reimbursement Obligations).

Liens and Related Matters. Except in the ordinary course of business, SMCCCD shall
not, directly or indirectly, create, incur, assume or permit to exist any Lien on or with respect to any
property or asset of any kind (including any document or instrument in respect of goods or accounts
receivable) of SMCCCD, whether now owned or hereafter acquired, or any income or profits therefrom,
or file or permit the filing of, or permit to remain in effect, any financing statement or other similar notice
of any Lien with respect to any such property, asset, income or profits under the UCC or under any
similar recording or notice statute, except Permitted Encumbrances.
8.2

8.3

Restriction on Fundamental Changes; Asset Sales. Other than in the ordinary course

of business, SMCCCD shall not convey, sell, lease or sub-lease (as lessor or sublessor), transfer or
otherwise dispose of , in one transaction or a series of transactions, all or any part of its business, property
or assets (including its notes or receivables, whether newly issued or outstanding) used in connection with
the Station, whether now owned or hereafter acquired.

SECTION 9.
9.1

REIMBURSEMENT OBLIGATIONS

""“'"""“"‘"

Triggering Events. To the extent that the occurrence of any of the following conditions

or events (“TriggeringEvents”) shall result in

a

Material Adverse Effect:

A.
Default in Other Agreements. Breach or default by SMCCCD with respect
to any material term of (a) one or more items of Indebtedness or (b) any loan agreement, mortgage,
indenture or other agreement relating to such item(s) of Indebtedness, if the effect of such breach or
default is to cause, or to permit the holder or holders of that Indebtedness (or a trustee on behalf of
such holder or holders) to cause, that Indebtedness to become or be declared due and payable prior to
its stated maturity or the stated maturity of any underlying obligation, as the case may be (upon the
giving or receiving of notice, lapse of time, both, or otherwise); or
(Breach of Certain Covenants. Failure of SMCCCD to perform or comply
B.
with any term or condition contained in subsection 6.2, 6.8, 6.10 or Section 7 or 8 of this Agreement;
or
i

Breach of Warranty. Any representation, warranty, certification or other
statement made by SMCCCD in any Funding Document shall be false in any material respect on the
'
'
date as of which made; or
C.

‘.

7

D'.

Other Defaults Under Funding Documents.‘ SMCCCD shall default in the
performance of or compliance with any term contained in (a) this Agreement or any of the Collateral
Documents, other than any such term referred to in any other provision of this subsection 9.], and.
such default shall not have been remedied or waived within 10 Business Days after the earlier of
(i) an Officer of SMCCCD becoming aware of such default or (ii) receipt by SMCCCD of notice
from LPN of such default or (b) the Option Agreement or the Bid Management Agreement; or
-

E.
Involuntary Appointment of Receiver, etc. A decree or order of a court
having jurisdiction in the premises for the appointment of a receiver, liquidator, sequestrator, trustee,
custodian or other officer having similar powers over SMCCCD, or over all or a substantial part of its
property, shall have been entered; or there shall have occurred the involuntary appointment of an
interim receiver, trustee or other custodian of SMCCCD for all or a substantial part of its property; or

OMM_US:7I463242.IO

1

9_

 a warrant of attachment, execution or similar process shall have been issued against any substantial
part of the property of SMCCCD, and any such event described in this subsection 9.1 E shall continue
for 60 days unless dismissed, bonded or discharged; or

Voluntary Bankruptcy; Appointment of Receiver, etc.

F.

SMCCCD shall have an order for relief entered with respect to it or
(i)
commence a voluntary case under the Bankruptcy Code or under any other applicable
bankruptcy, insolvency or similar law now or hereafter in effect, or shall consent to the
entry of an order for relief in an involuntary case, or to the conversion of an involuntary
case to a voluntary case, under any such law, or shall consent to the appointment of or
taking possession by a receiver, trustee or other custodian for all or a substantial part of
its property; or SMCCCD shall make any assignment for the benefit of creditors; or

(ii)

SMCCCD shall be unable, or shall fail generally, or shall admit in

writing

its inability, to pay its debts as such debts become due; or the Governing Body (or
any committee thereof) of SMCCCD shall adopt any resolution or otherwise authorize

any action to approve any of the actions referred to in clause (i) above or this clause (ii);
or

G.

Judgments and Attachments. Any money judgment, writ or warrant of

attachment or similar process related to the Station shall be entered or filed against SMCCCD or any
of the Station’s assets and shall remain undischarged, unvacated, unbonded or unstayed for a period
of 30 days (or in any event later than five days prior to the date of any proposed sale thereunder); or

,

H.
Invalidity of Funding Documents; Failure of Security; Repudiation of
Reimbursement Obligations. At any time after the execution and delivery thereof, (i) any Funding
Document or any provision thereof, for any reason other than the satisfaction in full of all
Reimbursement Obligations, shall cease to be in full force and effect (other than in accordance with
its terms) or shall be declared to be null and void, (ii) LPN shall not have or shall cease to have a
valid and perfected First Priority Lien in the Proceeds purported to be covered by the Collateral
Documents, in each case for any reason other than the failure of LPN to take any action within its
control, or (iii) SMCCCD shall contest the validity or enforceability of any Funding Document or any
provision thereof in writing or deny in writing that it has any further liability under any Funding
Document to which it is a party or any provision thereof; or
1.

FCC License.

The FCC License shall have been cancelled, terminated, suspended,
(i)
revoked, denied renewal, materially adversely modified, or otherwiSe ceased to be in full
force and effect; or
The FCC, any Communications Regulatory Authority or any other
(ii)
Government Authority commences an action or proceeding that could lead to the
cancellation, termination, suspension, revocation, non-renewal, or material adverse
modification of any FCC License; or
J.
Reimbursement Event. A Reimbursement Event (as such term is defined in
the Option Agreement) shall have occurred:

_

OMM_US:7l463242. l 0

20

_

 9. 1 F, each

THEN (i) upon the occurrence of any Triggering Event described in subsection 9.1E or
Payments made on or prior to such date, shall automatically become

of the Subsidy

immediately due and payable, without presentment, demand, protest or other requirements of any kind, all
of which are hereby expressly waived by SMCCCD, and the obligation of LPN to make any Subsidy
Payment shall thereupon terminate; and (ii) upon the occurrence and during the continuation of any other

Triggering Event, LPN may, by written notice to SMCCCD, either, in LPN’s sole discretion (x) declare
all or any portion of the Subsidy Payments made on or prior to such date, to be, and the same shall
forthwith become, immediately due and payable, and the obligation of LPN to make any Subsidy
Payment hereunder shall thereupon terminate, or (y) exercise the Sale Call Option upon the terms and
conditions set forth in the Option Agreement, in which case LPN shall be deemed to have waived its right
to repayment ,of the Reimbursement Obligations with respect to such Triggering Event and the obligation
of LPN to make Subsidy Payments shall continue; provided, however, if the occurrence of a Triggering
Event is the result of SMCCCD’s willful breach of any obligations under this Agreement or the other
Funding Documents (a “Willful Breach”), then, without limiting any other’rights or remedies of LPN,
SMCCCD’s repayment of Subsidy Payments pursuant to clause (i) or (ii) shall be made together with
interest thereon at a rate equal to 8% per annum. For the avoidance of doubt, failure by SMCCCD to
discharge its obligations pursuant to the Sale Call Option granted under the Option Agreement will
-~—
w
constitute a Willful Breach hereunder.
9.2
Application of Proceeds and Pavments during
Generally; Calculation of Interest.

a

Triggering Event; Payments

Application of Proceeds and Payments during a Triggering Event. Upon the
A.
occurrence and during the continuation of a Triggering Event, all payments made by SMCCCD to LPN in
respect of any Reimbursement Obligation shall be applied to the payment of interest (if interest is
payable) before application to principal and shall be applied to reduce such principal pro rata. In the“
event of a Willful Breach, LPN shall also be entitled to compensation, reimbursement and
indemnification under any Funding Document, and to the payment of all costs and expenses paid or
incurred by LPN in connection with the Funding Documents.
B.
Payments Generally. All payments by SMCCCD of Reimbursement
Obligations shall be made in Dollars in same day funds, free of any restriction or condition, and
delivered to LPN not later than noon San Francisco time on the date due in the LPN Account; funds
received by LPN after that time on such due date shall be deemed to have been paid by SMCCCD on the
next succeeding Business Day. Whenever any payment to be made hereunder shall be statedto be due
on a day that is not a Business Day, such payment shall be made on the next'su'cceeding Business Day
and such extension of time shall be included in the computation of the payment of interest hereunder.
‘

,

C.

Agreement,

Calculation of Interest. Interest payable under subsection 9.] of this

if any, shall be computed on the basis of a 365Qday year, in each case for the actual number

of days elapsed in the period during which it accrues. In computing interest on any Subsidy Payment,
the dateof the making‘of such Subsidy Payment shall be included, and the date of payment of such
'

Subsidy Payment shall be excluded; provided that if a Subsidy Payment is repaid on the same day on
which it is made, one day’s interest shall be paid on that Subsidy Payment. In no event shall the rate of
interest payable by SMCCCD with respect to any Subsidy Payment exceed the maximum rate of interest
permitted to be charged under applicable law (the “Maximum Rate”). If LPN shall receive interest in
an amount that exceeds the Maximum Rate, the excess interest shall be applied to the unpaid principal of
the Subsidy Payment or, if it exceeds such unpaid principal, refunded to SMCCCD.

-

0MM_Us:71463242.1o

21 -

.

 SECTION

10.

MISCELLANEOUS

Successors and Assigns. This Agreement shall be binding upon the parties hereto and
10.1
their respective successors and assigns and shall inure to the benefit of the parties hereto and the
successors and assigns of LPN. SMCCCD’S rights or obligations hereunder or any interest therein may
not be assigned or delegated by SMCCCD without the prior written consent of LPN (and any attempted
assignment or transfer by SMCCCD without such consent shall be null and void). LPN may assign its
rights hereunder and delegate its duties hereunder, in whole or in part, to one or more Affiliates without
the consent of SMCCCD. Any such assignment or delegation authorized pursuant to this subsection l0.1
shall be pursuant to a written agreement, which shall be delivered to SMCCCD. Nothing in this
Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties
hereto, their respective successors and assigns permitted hereby and, to the extent expressly contemplated
hereby, the Affiliates of each of LPN and Indemnitees) any legal or equitable right, remedy or claim
under or by reason of this Agreement.

Expenses. If either party to this Agreement shall bring any action for relief against the
10.2
other, declaratory or otherwise, arising out of this Agreement, the losing party shall pay to the prevailing
party reasonable attorneys’ fees and costs incurred in bringing such suit and/or enforcing any judgment
granted therein. Any judgment or order entered in such action shall contain a specific provision providing
for the recovery of attorneys’ fees and costs incurred in enforcing such judgment.
10.3

Indemnity.

Indemnification by SMCCCD. SMCCCD shall defend and save LPN and its
A.
respective officers, directors, employees, agents, representatives and permitted assigns (each, an “LPN
Indemnified Party”), forever harmless from and against, and shall reimburse each LPN Indemnified
Party for, any and all liabilities, obligations, deficiencies, demands, claims, suits, actions, or causes of
action, assessments, losses, costs and expenses (including reasonable attorneys’ fees) (“Losses”),
sustained or incurred by an LPN Indemnified Party, relating to, resulting from, arising out of , or
otherwise by virtue of, any of the following:
(i)

any breach

of a representation or warranty made by SMCCCD this

any breach

of a covenant or other agreement made by SMCCCD in this

Agreement; and
.

(ii)

,

‘

Agreement.

Indemnification by LPN. LPN shalldef end and save SMCCCD, its
B.
subsidiaries, and their respective officers, directors, employees, agents, representatives and permitted
assigns (each, an “SMCCCD Indemnified Party” and together with the LPN Indemnified Parties,
(“Indemnitees”), forever harmless from and against, and shall reimburse each SMCCCD Indemnified
Party for, any and all Losses sustained or incurred by an SMCCCD Indemnified Party, relating to,
resulting from, arising out of, or otherwise by virtue of, any of the following:
(i)

any breach of a representation or warranty made by LPN in this

Agreement; and

(ii)

any breach

of a covenant or other agreement made by LPN in this

Agreement.

.22 .
OMM__US:7l 463242.10

 10.4
Amendments and Waivers; Termination. This Agreement shall not be amended,
modified or waived in whole or in part except in writing signed by an officer of the party to be bound by
such amendment, modification or waiver. This Agreement may be terminated (a) by mutual written
agreement of SMCCCD and LPN, (b) by LPN upon the occurrence of any Triggering Event described in
subsection 9.1, or (c) by SMCCCD without penalty to it in the event that LPN fails to make any Subsidy
Payment within 34 days of its due date.

Independence of Covenants. All covenants hereunder shall be given independent effect
is not permitted by any of such covenants, the fact that it would
be permitted by an exception to, or would otherwise be within the limitations of, another covenant shall
not avoid the occurrence of a Triggering Event or Potential Triggering Event if such action is taken or
condition exists.
10.5

so that

if a particular action or condition

10.6
Notices; Effectiveness of Signatures. Unless otherwise specifically provided herein,
any notice or other communication herein required or permitted to be given shall be in writing and may be
personally served, or sent by United States mail, return receipt requested, or courier service that provides
proof of delivery, and shall be deemed to have been given when delivered. For the purposes hereof, the
address of each party hereto shall be as set forth under such party’s name on the signature pages hereof or
such other address as shall be designated by such Persofi'in a written notice delivered to the other parties
hereto. Funding Documents and notices under the Funding Documents may be transmitted and/or signed
by signatures delivered in ‘PDF’ format by electronic mail with affirmative return acknowledgement of
receipt by the recipient. The effectiveness of any such documents and signatures shall, subject to
applicable law, have the same force and effect as an original copy with manual signatures and shall be
binding on SMCCCD and LPN. Either party may also require that any such documents and signature be
confirmed by a manually-signed copy thereof; provided, however, that the failure to request or deliver
any such manually—signed copy shall not affect the effectiveness of any document or signature.
10.7
Survival of Representations, Warranties and Agreements. All representations,
warranties and agreements made herein shall survive the execution and delivery of this Agreement and
the making of the Subsidy Payments hereunder. Notwithstanding anything in this Agreement or implied
by law to the contrary, the agreements of SMCCCD set forth in subsections 10.3 and 10.12 shall survive
the payment of the Subsidy Payments and the termination of this Agreement.

Failure or Indulgence Not Waiver; Remedies Cumulative. No failure or delay on the
10.8
part of LPN or SMCCCD in the exercise of any power, rightor privilege. hereunder or under any other
Funding Document shall impair such power, right or privilege or be construed to bea waiver of any
default or acquiescence therein, nor shall any single or partial exercise of any such power, right or
privilege preclude other or fiirther exercise thereof or of any other power, right or privilege. All rights
and remedies existing under this Agreement and the other Funding Documents are cumulative to, and not
exclusive of, any rights or remedies otherwise available.
10. 9
Paments Set Aside. To the extent that SMCCCD makes a payment or payments to
LPN or LPN exercises its rights of setoff, and such payment or payments or the proceeds of such
enforcement or setoff or any part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside and/or required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, any other state or federal law, common law or any equitable cause, then, to the extent of
such recovery, the obligation or part thereof originally intended to be satisfied, and all Liens, rights and
remedies therefor or related thereto, shall be revived and continued in full force and effect as if such
payment or payments had not been made or such enforcement or setoff had not occurred.

.
OMM_US:71463242.10

- 23 -

 10.10 Severabilig. In case any provision in or obligation under this Agreement shall be
invalid, illegal or unenforceable in anyjurisdiction, the validity, legality and enforceability oftl1e
remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not
in any way be affected or impaired thereby, although the parties shall strive to interpret the remaining
provisions and obligations so as to give effect to their mutual economic goals.
10.11 Damage Waiver. To the extent permitted by law, neither SMCCCD nor LPN shall
assert, and hereby waive, any claim against any Indemnitee, on any theory of liability, for special,
indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in
connection with or as a result of this Agreement, any other Funding Document, any transaction
contemplated by the Funding Documents, any Subsidy Payment or the use of proceeds thereof. No
Indemnitee shall be liable for any damages arising from the use by unintended recipients of any

information or other materials distributed by it through telecommunications, electronic or other
information transmission systems in connection with the Funding Documents or the transactions
contemplated thereby.
10.12 Applicable Law. THIS AGREEMENT AND THE OTHER FUNDING
DOCUMENTS (EXCEPT AS OTHERWISE-EXPRESSLY SET FORTH IN ANY SUCH
FUNDING DOCUMENT), AND THE RIGHTS AND OBLIGATIO‘N‘S‘OF THE PARTIES’
HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE
STATE OF CALIFORNIA (INCLUDING SECTION 1646.5 OF THE CIVIL CODE OF THE
STATE OF CALIFORNIA), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES
THAT WOULD REQUIRE APPLICATION OF ANOTHER LAW.
10.13 Construction of Agreement; Nature of Relationship. Each of the parties hereto
acknowledges that (i) it has been represented by counsel in the negotiation and documentation of the
terms of this Agreement, (11) it has had full and fair opportunity to review and revise the terms of this
Agreement, and (iii) this Agreement has been drafted jointly by both of the parties hereto. Accordingly,
each of the parties hereto acknowledges and agrees that the terms of this Agreement shall not be
construed against or in favor of the other party. The parties agree that in connection with all aspects of
the transactions contemplated hereby or by the other Funding Documents and any communications in
connection therewith, SMCCCD, on the one hand, and LPN, on the other hand, will have a business
relationship that does not create, by implication or otherwise, any fiduciary duty on the part of either party
or any of their respective Affiliates, and no such duty will be deemed to have arisen in connection with
any such transactions or communicatibns.

Consent to Jurisdiction and Service of Process. ALL JUDICIAL PROCEEDINGS ‘
BROUGHT AGAINST SMCCCD OR LPN ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OTHER FUNDING DOCUMENT, OR ANY OBLIGATIONS
HEREUNDER AND THEREUNDER, MAY BE BROUGHT IN A STATE OR FEDERAL COURT
OF ,COMPETENT JURISDICTION IN THE STATE OF CALIFORNIA,- COUNTY AND CITY
OF SAN MATEO. BY EXECUTING AND DELIVERING THIS AGREEMENT, EACH OF
SMCCCD AND LPN, FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES,
IRREVOCABLY(I) ACCEPTS GENERALLY AND UNCONDITIONALLY THE EXCLUSIVE
JURISDICTION AND VENUE OF SUCH COURTS; (II) WAIVES ANY DEFENSE OF FORUM
NON CONVENIENS; (III) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH
PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED
MAIL, RETURN RECEIPT REQUESTED, TO SMCCCD OR-LPN, AS APPLICABLE, AT SUCH
PARTY’S ADDRESS PROVIDED IN ACCORDANCE WITH SUBSECTION 10.6; (IV) AGREES
THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE IS SUFFICIENT TO CONFER
10.14

-

~

_

OMM_US:7I463242.IO

24 _

 PERSONAL JURISDICTION OVER ITSELF IN ANY SUCH PROCEEDING IN ANY SUCH
COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN
EVERY RESPECT; (IV) AGREES THAT THE OTHER PARTY RETAINS THE RIGHT TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW; AND (V) AGREES
THAT THE PROVISIONS OF THIS SUBSECTION 10.14' RELATING TO JURISDICTION AND
VENUE SHALL BE BINDING AND ENFORCEABLE TO THE FULLEST EXTENT
PERMISSIBLE UNDER CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 410.40 OR
OTHERWISE.
10.15 Confidentialitv'LPublic Disclosure. A Party receiving Confidential Information
(“Receiving Party”) from the other party (“ isclosing Party”) will refrain from directly or indirectly
disclosing the Disclosing Party’s Confidential Information and may not use the Disclosing Party’s
Confidential Information for any purpose whatsoever, except for the purpose for which it was provided
and as contemplated and authorized by this Agreement or the other Funding Documents. The term
“Confidential Information” shall mean for purposes of this Agreement and the other Funding Documents
all non-public information and material, whether disclosed or made available in writing, electronically,
orally, visually or otherwise, regarding the business of the Disclosing Party and third parties who have
fumished confidential, non-public information to the Disclosing Partyand all other informationzoi; . _ '
material disclosed to the Receiving Party by the Disclosing Party or its Affiliates or representatiVESEfiTaf“
should be understood by a reasonable business person to be confidential. Notwithstanding the foregoing,
the Receiving Party may use and disclose to its Affiliates, directors, officers, employees and agents,
including accountants, legal counsel, investment bankers, underwriters and other advisors (collectively
“Representatives”) the Confidential Information of the Disclosing Party as reasonably necessary to enable
the Receiving Party to fulfill its obligations and realize its benefits under this Agreement and the other
Funding Documents, provided, however, (a) that the Receiving Party shall make all commercially
reasonable efforts to ensure that each such Representative acknowledges and complies with this Section
25 as if such Representative were a party to this Section, and (b) that theReceiving Party shall remain
responsible and liable for such Representative’s compliance with this Section. The Receiving Party shall
use the same degree of care to protect the Confidential Information ofthe Disclosing Party from
unauthorized use or disclosure as it uses to protect its own information of a similar nature, but in no event
less than reasonable care. Notwithstanding the foregoing, the Parties acknowledge that SMCCCD is
subject to the open records requirements of Calif'omia law. SMCCCD shall not disclose any Confidential
Information that may lawfully be withheld under that law. To the maximum extent permitted by law,
SMCCCD will provide LPN with notice of any intended public disclosure of this Agreement or any other
Funding Document and provide LPN with the opportunity to consult with SMCCCD and redact such
agreements to the extent permitted by law prior to their public disclosure.

10.16 Counterparts; Effectiveness. This Agreement and any amendments, waivers, consents
or supplements hereto or in connection herewith may be executed in counterparts, each of which when so
executed and delivered shall be deemed an original, but both suchicounter'parts together shall constitute
but one and the same instrument; signature pages may be detached from separate counterparts and
attached to a single counterpart so that both signature pages are physicallyattachedto the same document.
This Agreement shall become effective upon (1) the execution of a counterpart hereof by each of the
parties hereto and (ii) the satisfaction or waiver of the other conditions set forth in subsection 3.1.

[Remainder

of page intentionally left blank]

_

OMM_US:7l463242. 0

25 .

 IN WITNESS WHEREOF, the parties hemeto have caused this Agreement to be duly
executed and delivered by their respective officers themmto duly authorized as of the date first written
above.

,5

SMCCCD:
SAN MATEO COUNTY

comm COLLEGE

DISTRICT

By/D/K
mega.
Vitae.

Tide:

Swimmer

Notice Addresjs:
”

’

*

"'

“Executive Vice ”Chancellor
San Mateo COunty Community College District
3401 CSM Drive
San Mateo, CA 94402
Phone: 650-358-6790
Email: mecksj@smccd.edu
_

'

With a copy to:
Lawrence M. Miller
Schwartz, Woods & Miller
1233 20"1 Street, Nw, Suite 610
Washington, D. C. 20036- 7322
Phone. (202) 833--1700
Email: miller@swmlaw.com

"
wimgeo‘p'yzas‘
.
Jan Roecks
San Mateo county Community
College
’ '
3401 CSM Drive
San Mateo, CA 94402
-

Phonez‘6507358-6790‘
I

‘

'

Email: roecksj@amecd.edu

Eugene Whitlock
400 County Center,- 6lh Floor
Redwood City,. CA 94063

.

District

".‘2aba-m“ -—.‘

 LPN:
LOCUSPOIN'I‘ NETWORKS, LLC

By:

Title:

‘5}Z/(5/w’“

C60

f

£4754!

Notice Address:

LocusPoint Networks, LLC
Pleasanton Corporate Commons
6200 Stoncridge Mall Road, Suite 300‘
Plcasanton, CA 94588

Attn: William

cay

Facsimile No.: (925) 399-6001
Email: bill@locuspointnetworks.com

with a

copy to:

O'Mclvcny &-Mycrs LLP
2765 Sand Hill Road
Mcnlo Park, Califomia 94025Attn: David Makarcchian, Esq.
Facsimile No.: (650) 473-2601
Email: dmakarcchian@omm.com

 EXHIBITS

FORM OF COMPLIANCE CERTIFICATE
II FORM OF SECURITY AGREEMENT

OM 1 5184914

EXHIBIT I
[FORM OF] COMPLIANCE CERTIFICATE

COMPLIANCE CERTIFICATE
THE UNDERSIGNED HEREBY CERTIFIES THAT:
I am the [Title] of San Mateo County Community College District,
(1)
community college district (“SMCCCD”);

a

California

l have reviewed the terms of that certain Funding Agreement dated as of May 16,
(2)
2013, as amended, supplemented or otherwise modified to the date hereof (said Funding Agreement, as so
amended, supplemented or otherwise modified, being the “Funding Agreement”, the terms defined
therein and not otherwise defined in this Certificate being used in this Certificate as therein defined), by
and among SMCCCD and LocusPoint Networks, LLC, a Delaware limited liability company (“LPN”),
and the terms of the other Funding Documents, and I have made, or have caused to be made under our
supervision, a review inhreasonable detail of the transactions and condition of SMCCCD during the
accounting period covered by the attached financial statements;

As of the date hereof:

(3)

The representations and warranties contained in the Funding Agreement and in
(i)
the other Funding Documents are true, correct and complete in all material respects to the same extent as
though made on and as of the date hereof, except to the extent such representations and warranties
specifically relate to an earlier date, in which case such representations and warranties were true, correct
and complete in all material respects on and as of such earlier date; mvided, that, if a representation and
warranty is qualified as to materiality, the materiality qualifier set forth above shall be disregarded with
respect to such representation and warranty for purposes of this condition;

(ii)
that would constitute

a

No event has occurred or would result from the making of such Subsidy Payment
Triggering Event or a Potential Triggering Event,

SMCCCD has perf'omied in all material respects all agreements and satisfied all
(iii)
conditions which the Funding Agreement and each other Funding Document provides shall be performed
or Satisfied by it on or before the date hereof,
To the knowledge of SMCCCD, no order, judgment or decree of any arbitrator or
(iv)
Government Authority purports to enjoin or restrain LPN from making the Subsidy Payment to be made
by it on the date hereof;
'

-

No FCC License has been forfeited or materially impaired for any reason,
(v)
including as a result of or in connection with any Funding Document or the transactions contemplated
hereby or thereby; and
-

(vi)

No Material Adverse Effect has occurred.

The foregoing certifications are made and delivered this
pursuant to subsection 3 .2A of the Funding Agreement.

1-]
OMM_US:7I 5  8492.4

day of

_

,

Compliance Certificate

 SAN MATEO COUNTY COMMUNITY COLLEGE

DISTRICT

By:
Title:

fimw-mxw-m—

-

‘1.

—— »

I-Z
OMM_US:7 15184924

Compliance Certificate

”www—m

 EXHIBIT 11
FORM OF SECURITY AGREEMENT
This SECURITY AGREEMENT (this “Agreement”) is dated as of May 16, 2013 and
entered into by and between SAN MATEO COUNTY COMMUNITY COLLEGE DISTRICT, a

California community college district (“SMCCCD”), and LOCUSPOINT NETWORKS, LLC,
Delaware limited liability SMCCCD (“LPN”).

a

PRELIMINARY STATEMENTS
A.
Pursuant to the Funding Agreement dated as of May 16, 2013 (said Funding
Agreement, as it may hereafter be amended, restated, supplemented or otherwise modified from time to
time, being the “Funding Agreement”; the terms defined therein and not otherwise defined in Section 20
or elsewhere herein being used herein as therein defined), by and between SMCCCD and LPN, LPN has
made certain commitments, subject to the terms and conditions set forth in the Funding Agreement, to
make funds available to SMCCCD.

In consideration of the funds provided under the Funding Agreement, SMCCCD
B.
has entered into the Option Agreement and the Bid Management Agreement with LPN, and it is desired
that the obligations of SMCCCD under the Option Agreement be secured hereunder.

It is a condition precedent to the funding by LPN ofthe LPN Payment under the
C.
Funding Agreement that SMCCCD shall have granted the security interests and undertaken the
obligations contemplated by this Agreement.
NOW, THEREFORE, in consideration of the agreements set forth herein and in the
Funding Agreement and in order to induce LPN to fund the LPN Payment under the Funding Agreement
and to enter into the other Funding Documents, SMCCCD hereby agrees with LPN as follows:

Grant of Security. SMCCCD hereby assigns to LPN, and hereby grants to LPN a
1.
security interest in, all of SMCCCD’s' right, title and interest in and to (a) the LPN Share, (b) the Proceeds
Account (which is more specifically described on Schedule 1. annexed hereto) and all Money representing
the LPN Share from time to time on deposit in the Proceeds Account, and (c) all‘ ‘proceeds” (as defined in
the UCC) with respect to any of the items described in the foregoing clauses (a) and (b), in each case
whether now or hereafter existing (collectively, the “Collateral”).
SECTION

»

2.
Security for Obligations. This Agreement secures, and the Collateral is collateral
security for, the prompt payment or performance in full when due of all Secured Obligations of
SMCCCD. .“Secured Obligations” means the obligations of SMCCCD to-pay the LPN Share to LPN inaccordance with the terms of the Option Agreement, the Funding Agreement and the other Funding

SECTION

Documents.

SECTION 3;

Representations and Warranties. SMCCCD represents and warrants as follows: (a)
except as expressly-permitted by the Funding Agreement, SMCCCD will at all times own its interests in
the Collateral free and clear of any Lien and no effective financing statement or other instrument similar
in effect covering all or any part of the Collateral is on file in any filing or recording office; (b) the
security interests in the Collateral granted to LPN hereunder constitute valid security interests in the
Collateral, securing the payment of the Secured Obligations; and (c)~upon (i) the filing of UCC financing
statements naming SMCCCD as “debtor”, naming LPN as “secured party” and describing the Collateral
in the filing offices with respect to SMCCCD set forth on Schedule 2 annexed hereto, and (ii) the

.
OMM_US:7 5184914
1

II-l

Security Agreement

 execution and delivery to LPN of an agreement providing for control by LPN of the Proceeds Account,
the security interests in the Collateral granted to LPN will constitute perfected security interests therein
prior to all other Liens, and all filings and other actions necessary or desirable to perfect and protect such
security interests have been, or promptly after the Effective Date will be, duly made or taken.

Further Assurances. SMCCCD agrees that from time to time, at the expense of
SMCCCD, SMCCCD will promptly execute and deliver all further instruments and documents, and take
all further action, that may be necessary or desirable, or that LPN may request, in order to perfect and
protect any security interest granted or purported to be granted hereby or to enable LPN to exercise and
enforce its rights and remedies hereunder with respect to any Collateral.

SECTION 4.

SECTION 5. Certain Covenants of SMCCCD. SMCCCD shall: (a) not use or permit any Collateral
to be used unlawfully or in violation of any provision of this Agreement or any applicable statute,
regulation or ordinance or any policy of insurance covering the Collateral; and (b) use the Collateral only
in accordance with the terms and conditions of the Option Agreement and the other Funding Documents.

SECTION 6. LPN Appointed Attorney-in-Fact. SMCCCD hereby irrevocably appoints LPN as
SMCCCD’s attomey—in-fact, with full authority in the place and stead of SMCCCD and in the name of
SMCCCD, LPN or otherwise, from time to time upon any breach of or default under the Opti‘o‘n‘w‘“
Agreement or any other Funding Document, in LPN’s discretion to take any action and to execute any
instrument that LPN may deem necessary or advisable to accomplish the purposes of this Agreement,
including, without limitation to: (a) ask for, demand, collect, sue for, recover, compound, receive and give
acquittance and receipts for moneys due and to become due under or in respect of any of the Collateral;
and (b) file any claims or take any action or institute any proceedings that LPN may deem necessary or
desirable for the collection of any of the Collateral or otherwise to enforce or protect the rights of LPN
with respect to any of the Collateral.

SECTION 7. LPN May Perform. If SMCCCD fails to perform any agreement contained herein, LPN
may itself perform, or cause performance of, such agreement, and the expenses of LPN incurred in
connection therewith shall be payable by SMCCCD under Section 10.
8. Remedies. Upon any breach of or default under the Option Agreement or any other
Funding Document by SMCCCD, LPN may exercise in respect of the Collateral, in addition to all other
rights and remedies provided for herein or otherwise available to it, all the rights and remedies of a
secured party on default under the UCC (whether or not the UCC applies to the affected Collateral). LPN
may also, upon any breach of or default under the Option Agreement or any other Funding Document by
SMCCCD, provide instructions directing the disposition of funds representing the LPN Share in the
Proceeds Account. SMCCCD further agrees that a breach of any of the covenants contained in this
Section 8 will cause irreparable injury to LPN, that LPN has no adequate remedy at law in respect of such
breach and, as a conseQuence, that each and every covenant contained in this Section shall be specifically
enforceable against SMCCCD, and SMCCCD hereby waives and agrees not to assert any defenses
against an action for specific performance of such covenants except for a defense that no default has
occurred giving rise to the Secured Obligations becoming due and payable prior to their stated maturities.

SECTION

SECTION 9. Application of Proceeds. Except as expressly provided elsewhere in this Agreement, all
proceeds received by LPN in respect of any sale of, collection from, or other realization upon all or any
part of the Collateral shall be applied in accordance with the terms of the Funding Agreement.
SECTION 10. Indemnity and Expenses. SMCCCD agrees to indemnify LPN from and against any
and all claims, losses and liabilities in any way relating to, growing out of or resulting from this
Agreement and the transactions contemplated hereby (including, without limitation, enforcement of this
11-2
OMM_US:71518492.4

Security Agreement

‘

 Agreement), except to the extent such claims, losses or liabilities result solely from LPN’s gross
negligence or willful misconduct as finally determined by a court of competent jurisdiction. LPN agrees
to indemnify SMCCCD from and against any and all claims, losses and liabilities in any way relating to,
growing out of or resulting from this Agreement and the transactions contemplated hereby (including,
without limitation, enforcement of this Agreement), except to the extent such claims, losses or liabilities
result solely from SMCCCD’S gross negligence or willful misconduct as finally determined by a court of
competent jurisdiction. If either party to this Agreement shall bring any action for relief against the other,
declaratory or otherwise, arising out of this Agreement, the losing party shall pay to the prevailing party
reasonable attomeys’ fees and costs incurred in bringing such suit and/or enforcing any judgment granted
therein. Any judgment or order entered in such action shall contain a specific provision providing for the
recovery of attomeys’ fees and costs incurred in enforcing such judgment. The obligations of each party
in this Section 10 shall survive the termination of this Agreement and the discharge of the obligations
under this Agreement and the other Funding Documents.

SECTION 11. Continuing Securitv Interest; Successors and Assigns; Termination and Release.
This Agreement shall create a continuing security interest in the Collateral and shall (i) remain in full
force and effect until the payment in full of the Secured Obligations (other than unasserted claims for
indemnification or expense reimbursement), (ii) be binding upon SMCCCD and.its.r.espective successors
and assigns, and (iii) inure, together with the rights and remedies of LPN hereunder, to the benefit of LPN
and its successors, transferees and assigns. Without limiting the generality of the foregoing clause (iii),
LPN may assign or otherwise transfer its rights and obligations under any Funding Document in
accordance with the terms of such Funding Agreement, and such other Person shall thereupon become
vested with all the benefits in respect thereof granted to LPN herein or otherwise. Upon the payment in
full of all Secured Obligations (other than unasserted claims for indemnification or expense
reimbursement), the security interest granted hereby shall terminate and all rights to the Collateral shall
revert to the applicable SMCCCD. Upon any such termination LPN will, at SMCCCD’ expense, execute
and deliver to SMCCCD such documents as SMCCCD shall reasonably request to evidence such
termination.
SECTION 12. Amendments; Etc. N0 amendment, modification, termination or waiver of any
,provision of this Agreement, and no consent to any departure by SMCCCD therefrom, shall in any event
be effective unless the same shall beiin writing and signed by LPN and, in the case of any such
amendment or modification, by SMCCCD. Any such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which it was given.
13. Notices. Any 'notice or other communication herein requiredor permitted to be given
shall be in writing and may be personally served or sent by electronic mail, telefacsimile or United States
mail or courier service and shall be deemed to have been given when delivered in person or by courier
service, upon receipt of electronic mail, telefacsimile, or three Business Days after depositing it in the
United States mail with postage prepaid and properly addressed;ip' r'ovided that notices to LPN shall not be
effective until received. For the purposes hereof, the address of each party hereto shall be as provided in
subsection .1 0.6 of the Funding Agreement or as set forth under such party’s name on the signature pages
hereof or such other address as shall be designated by such party in a written notice delivered to the other
parties hereto.

SECTION
-

SECTION 14. Failure or Indulgence Not Waiver; Remgijes Cumulative. No failure or delay on the
of LPN in the exercise of any power, right or privilege hereunder shall impair such power, right or
privilege or be construed to be a waiver of any default or acquiescence therein, nor shall any single or
partial exercise of any such power, right or privilege preclude any other or further exercise thereof or of

part

any other power, right or privilege. All rights and remedies existing under this Agreement are cumulative
to, and not exclusive of , any rights or remedies otherwise available.
11—3

OMM_US:7 l 5 l 8492.4

Security Agreement

.

._

'“‘”“"""""

 SECTION 15. Severability. In case any provision in or obligation under this Agreement shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the
remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not
in any way be affected or impaired thereby.
SECTION 16. Headings. Section and subsection headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement for any other purpose or
be given any substantive effect.

SECTION 17. Governing Law; Rules of Construction. THIS AGREEMENT AND THE RIGHTS
AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE
STATE OF CALIFORNIA (INCLUDING SECTION 1646.5 OF THE CIVIL CODE OF THE STATE
OF CALIFORNIA), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THAT WOULD
REQUIRE APPLICATION OF ANOTHER LAW, EXCEPT TO THE EXTENT THAT THE UCC
PROVIDES THAT THE PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR
REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE
GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF CALIFORNIApn.
IN‘W'H’ICH CASE THE LAWS OF SUCH JURISDICTION SHALL GOVERN WITH RESPECT TO
THE PERFECTION OF THE SECURITY INTEREST IN, OR THE REMEDIES WITH RESPECT TO,
SUCH PARTICULAR COLLATERAL. The rules of construction set forth in subsection 1.3 of the
Funding Agreement shall be applicable to this Agreement mutatis mutandis.

.

SECTION 18. Consent to Jurisdiction and Service of Process. ALL JUDICIAL PROCEEDINGS
BROUGHT AGAINST SMCCCD OR LPN ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OTHER FUNDING DOCUMENT, OR ANY OBLIGATIONS HEREUNDER
AND THEREUNDER, MAY BE BROUGHT IN A STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN THE STATE OF CALIFORNIA, COUNTY AND CITY OF SAN MATEO. BY
EXECUTING AND DELIVERING THIS AGREEMENT, EACH OF SMCCCD AND LPN, FOR
ITSELF AND IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY(I) ACCEPTS
GENERALLY AND UNCONDITIONALLY THE EXCLUSIVE JURISDICTION AND VENUE OF
SUCH COURTS; (II) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS; (III) AGREES
THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY
BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO
SMCCCD OR LPN, AS APPLICABLE, AT SUCH PARTY’S ADDRESS PROVIDED IN
ACCORDANCE WITH SECTION 13; (IV) AGREES THAT SERVICE AS PROVIDED IN CLAUSE
(III) ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER ITSELF IN ANY
SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE
AND BINDING SERVICE IN EVERY RESPECT; (IV) AGREES THAT THE OTHER PARTY
RETAINS THE RIGHT TO SERVE PROCESS IN ANY OTHER’MANNER PERMITTED BY LAW;
AND (V) AGREES THAT THE PROVISIONS OF THIS SECTION 18 RELATING TO
JURISDICTION AND VENUE SHAI L BE BINDING AND ENFORCEABLE TO THE FULLEST.
EXTENT PERMISSBLE UNDER CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 410. 40
OR OTHERWISE.

SECTION 19. Counterparts. This Agreement may be executed in one or more counterparts and by
different parties hereto in separate counterparts, each of which when so executed and delivered shall be
deemed an original, but all such counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached to a single counterpart
so that all signature pages are

physically attached to the same document

11-4
OMM_US:7 l 5 l 8492.4

Security Agreement

_

 20. Definitions. Each capitalized term utilized in this Agreement that is not defined in the
Funding Agreement or in this Agreement, but that is defined in the UCC, including the categories of
Collateral listed in Section hereof, shall have the meaning set forth in Articles 1, 8 or 9 of the UCC. In
addition, the following terms used in this Agreement shall have the following meanings:

SECTION

1

“Collateral” has the meaning set forth in Section
“Funding Agreement”

]

.

has the meaning set forth in the Preliminary Statements

of this

Agreement.

“LPN Share”

has the meaning assigned to it in the Option Agreement.

“Secured Obligations” has the meaning set forth in Section

“UCC” means the Uniform Commercial Code,
may hereafter be amended, in the State of California.

as

2 hereof.

it exists on the date of this Agreement or as it

.Lumlwmm‘

[Remainder of page intentionally left blank]

11-5

OMM_US:7l 5 18492.4

Security Agreement

 IN WITNESS WHEREOF, SMCCCD and LPN have caused this Agreement to be duly
executed and delivered by their respective officers thereunto duly authorized as of the date first written
above.
SAN MATEO COMMUNITY COLLEGE

DISTRICT

By:
Name:

Title:

Notice Address:
Executive Vice Chancellor
San Mateo County Community College District

ZMQJLSM Drive
San Mateo, CA 94402
Phone: 650-358-6790

Email: roecksj§cmccdedu

With

a

copy to:

Lawrence M. Miller
Schwartz, Woods & Miller
1233 20‘h Street, NW, Suite 610
Washington, DC. 20036-7322
Phone: 202-833—1700

Email: mil]er@swmlaw.com

With‘a copy to:
Jan Roecks
San Mateo'County Community
3401 CSM Drive
San Mateo, CA 94402

Phone: 650-358-6790
Email: roecks1'gd)smccd.edu

College District

 LOCUSPOINT NETWORKS, LLC

By:
Name:

Title:
Notice Address:
LocusPoint Networks, LLC
Pleasanton Corporate Commons
6200 Stoneridge Mall Road, Suite 300
Pleasanton, CA 94588
Attn: William deKay
Facsimile No.:
Email: bill@locuspointnetworks.com

With a copy to:

.....,.

,

__

O’Melveny & Myers LLP
2765 Sand Hill Road
Menlo Park, CA 94025
Attn: David Makarechian, Esq.
Facsimile No.2 650-473-2601
Email: dmakarechiangébmm.com

 SCHEDULE 1
TO
SECURITY AGREEMENT
Proceeds Account

Type of Account

Depositorv Bank

Deposit Account

Union Bank of
California

Address

of Denositorv Bank

350 California Street, 10‘'1 Floor
San Francisco, CA 94104

II-Schedule
OMM_US:71518492.4

1

W
A/C# 7020024903

ABA# 122000496

Security Agreement

 SCHEDULE 2
TO
SECURITY AGREEMENT

Filin Offices
California Secretary of State

:~=‘WP~‘

.4:

OMM_US:7I463242.10

=4»

—-

 SCHEDULES
4.1D

FCC LICENSE AND MATERIAL GOVERNMENTAL AUTHORIZATIONS

(Attached)
4.5

LEASED REAL PROPERTY

Lease at Sutro.
4.8

MATERIAL CONTRACTS

American Public Television (Program provider)

NETA (Program provider)
EPS (Program provider)

“Milers Information Systems (software services for programming)

AT&T (Studio

to transmitter

link)

Eaton Corp (UPS service contract)

United Comfort Solutions (Air conditioning service - Sutro)

OMM_US:71463242.1 0

 "Sohedule 4.1D
United States of America

FEDERAL COMMUNICATIONS COMMISSION
TELEVISION BROADCAST STATION LICENSE

Authorizing Official:

Official Mailing

Address:

SAN MATEO COUNTY COMMUNITY COLLEGE

1700 w HILLSDALE BLVD
SAN MATEO

CA

DISTRICT

'

Kevin R. Harding

Associate Chief
Video

94402

Division

Media Bureau

Facility
Analog

Idz58912

DatezApril 04, 2011
This license expires 3:00 a.m.
local time, December 01, 2014.
Grant

TSIDz410

Digital TSID:4ll
-

,.

Call Sign: KCSM—TV
License File Number: BLEDT—20091124AHY
This license covers permit no.: BPEDT—20080825AAV

Subject to the provisions of the Communications Act of 1934, subsequent
acts and treaties, and all regulations heretofore or hereafter made by
this Commission, and further subject to the conditions set forth in this
license, the licensee is hereby authorized to use and operate the radio
transmitting apparatus herein described.
This license is issued on the licensee's representation that the
statements contained in licensee's application are true and that the
undertakings therein contained so far as>they are consistent herewith,
will be carried out in good faith. The licensee shall, during the term of
this license, render such broadcasting service as will serve the public
interest, convenience, or necessity to the full extent of the privileges
herein conferred.

This license shall not vest in the licensee any right to operate the
station nor any right in the use of the frequency designated in the
license beyond the term hereof, nor in any other manner than authorized
herein. Neither the license nor the right granted hereunder shall be
assigned or otherwise transferred in violation of the Communications Act
of 1934. This license is subject to the right of use or.control by the
Government Of the United States conferred by Section 606 of the
u
Communications Act of 1934.
-

FCC

Form 352-B October 21, 1985

Page 1

of

2

 H

V

Callsign:
Name

KCSM—Tv

.

of Licensee:

Station Location:

'

License No.

SAN MATEO COUNTY COMMUNITY COLLEGE

:

BLEDT—20091124AHY

DISTRICT

CA-SAN MATEO

Frequency (MHZ): 644

—

650

Channel:43
Hours

of Operation: Unlimited

Transmitter: Type Accepted.
of the Commission's Rules.
Antenna type:

Tilt:

DIE, TUM—CSSP—l4/60H—2-T-R

0-75 Degrees

Major lobe directions
(degrees true):

Electrical
126

54

Latitude:

37deg

45ndn.

19 sec

Longitude:

122 deg

27 min

06

Antenna Coordinates: North
West

Transmitter output power:17.5

effective radiated

sec

kw

12.44
Maximum

Sections 73.1660, 73.1665 and 73.1670

(directional or non—directional): Directional

Description;
Beam

See

DBK

power (Average):

SOOkw

26.99DBK

Height of radiation center above ground:
Height of radiation center above

mean sea

288-3Meters

level: 542-5Meters

Height of radiation center above average terrainz51l-4Meters

structure registration number: 1001289
Overall height of antenna structure above ground (including obstruction
lighting if any) see the registration for this antenna structure.
***
*** END OF AUTHORIZATION

Antenna

FCC Form

352-3 October 21, 1985

‘

Page

2

of

2

 EXHIBIT 

EXECUTION VERSION

PUT/CALL OPTION AGREEMENT
This PUT/CALL OPTION AGREEMENT (the “Agreement”) is entered into as of
May 16, 2013 by and among San Mateo County Community College District, a California
Community College District (“SMCCCD”) and LocusPoint Networks LLC, a Delaware limited
liability company (“LEN”).

RECITALS
SMCCCD operates full-power noncommercial educational television station
A.
KCSM—TV (RF Channel 43), San Mateo, California (FCC Facility ID No. 58912) (the “Station”)
and holds all Federal Communications Commission (“£C_C”) licenses and authorizations
necessary for the current operations of the Station (collectively, the “FCC Licenses”).
B.
SMCCCD has determined that it will participate in the reverse auction
contemplated as part of the broadcast incentive auction to be conducted by the FCC under
Section 6403 of the Middle Class Tax Relief—«and Job Creation Act of 2012 (the “Auction”), as
the rules governing the Auction may provide, and, in the event that SMCCCD is not successful
in relinquishing the Station’s spectrum usage rights in the Auction, enter into a transaction for
the assignment of the FCC Licenses and transfer of the Station’s assets (a “_S_ale”) to a qualified
buyer (a “Buyer”).

SMCCCD wishes to obtain financial support in funding the operating expenses of
the Station, and LPN has expressed an interest in sharing with SMCCCD the proceeds that may
result from (i) the Station’s relinquishment of spectrum usage rights through participation in the
Auction (the “Gross Auction Proceeds”) or (ii) a Sale to a Buyer (the “Gross Sale Proceeds”) in
the event that SMCCCD is not successful in relinquishing the Station’s spectrum usage rights in
the Auction.
C.

In connection with this Agreement, SMCCCD and LPN have entered into that
D.
certain Funding Agreement dated as of the date hereof (the‘ ‘Funding Agreement”) pursuant to
which, upon the terms and conditions set forth therein, LPN has agreed to provide to SMCCCD
funding in the amount of Three Million Six Hundred Thousand Dollars ($3,600,000), to be paid
‘in installments of Two Hundred Twenty-Five Thousand Dollars ($225, 000) (the “Subsidy
Payi_nents ”), for the operating expenses of the Station as it is currently operated 1n compliance
with the rules, regulations and policies of the FCC (thef‘FCC Rules”),

The parties have agreed that in consideration of, among other things, LPN
such funding to SMCCCD pursuant to the Funding Agreement, LPN will have the
right to share a specified percentage of the Gross Auction Proceeds or Gross Sale Proceeds, as
the case may be.
E.

providing
,

In furtherance of these objectives, the parties wish to grant the Options (as defined
below) contained in this Agreement on the terms and subject to the conditions set forth herein.
F.

OMM_lJS:7l464734.lO

 NOW THEREFORE, in consideration of the mutual promises and covenants herein
contained, and other good and valuable consideration (the receipt and sufficiency of which the
parties hereto acknowledge), the parties hereto agree as follows:
LPN Share. The LPN Share shall be equal to thirty-six and one half percent
1.
(36.5%) multiplied by either (i) the Gross Auction Proceeds or (ii) the Gross Sale Proceeds, as
applicable (the “LPN Share”), and shall be subject to the following adjustments:

If an Auction

Sale or Sale occurs before the last of the Subsidy Payments
is made by LPN, then the aggregate dollar amount of any remaining Subsidy Payments that have
not been paid to SMCCCD will be credited to SMCCCD as a reduction to the LPN Share.
a.

b.
In the event that LPN fails to make any Subsidy Payment within three
days of its due date (as described in Section 2 of the Funding Agreement), the LPN Share shall
be reduced by an amount equal to 2.28125% multiplied by the Gross Auction Proceeds or Gross
Sale Proceeds, as applicable, for each such failure, e.g,, from 36.5% to 34.21875% in the case of
one late payment In the event that LPN fails to make any Subsidy Payment within 34 days of its
due date (as described in Section 2 of the Eunding Agreement) SMCCCD shall have the right to

of a Funding Document.
0.
The LPN Share shall be increased by the amount of any application fees or
other out-of-pocket fees or expenses advanced by LPN to the FCC on SMCCCD’s behalf
pursuant to Section 2.2.13 of the Bid Management Agreement by and between SMCCCD and
LPN dated as of the date hereof (the “Bid Management Agreement”).

2.

Auction Call Option.

SMCCCD hereby grants to LPN, upon all of the terms and subject to all of
the conditions set forth herein, an option (the “Auction Call Option”) to receive the LPN Share
of the proceeds derived from the relinquishment of the Station’s spectrum usage rights in
connection with the Auction (an “Auction Sale”). LPN may exercise its Auction Call Option at
any time until thirty (30) days following the deposit of the Gross Auction Proceeds into the
Proceeds Account (as defined in the Funding Agreement) by delivering to SMCCCD a written
notice (an “Auction Call Notice”), which Auction Call Notice shall state that LPN thereby
exercises the Auction Call Option, without condition or qualification, to cause the LPN Share to
be distributed to LPN in accordance with this Agreement. Following receipt of an Auction Call
Notice from LPN, (i) if the FCC allows the LPN Share to be paid directly to LPN, SMCCCD
will make any and all necessary filings with, and requests to, the FCC to cause such direct
payment to be madepto LPN using information to_ be provided by LPNto. SMCCCD in writing,
and (ii) if applicable rules of the FCC do not permit the LPN Share to be paid directly to LPN,
SMCCCD shall cause the Gross Auction Proceeds to be deposited into the Proceeds Account and
shall, within five (5) calendar days thereafter, take all necessary actions to cause the LPN Share
to be paid to LPN by wire transfer of immediately available funds. In the event that SMCCCD
receives the Gross Auction Proceeds prior to receiving an Auction Call Notice, then SMCCCD
will deposit the LPN Share into the Proceeds Account and shall pay the LPN Share to LPN as
soon as practicable thereafier.
a.

-

.

,

OMM_US:7I464734. I 0

 b.
If the date specified by the FCC as the deadline for the filing of
applications to participate in the Auction has not occurred by the three-year anniversary of the
date of this Agreement, LPN and SMCCCD will negotiate in good faith for a period of not more
than ninety (90) days (which such period the parties may extend by their mutual agreement)
regarding whether additional Subsidy Payments should be made beyond the date on which LPN
is scheduled to make the last Subsidy Payment (the “Subsidy Termination Date”) and, if so, to
what extent the LPN Share should be adjusted. In the event that the parties do not agree to
terms under which additional Subsidy Payments would be made or the LPN Share adjusted, LPN
shall have the ability to offer to make up to four (4) additional quarterly Subsidy Payments to
SMCCCD (each an “Extension Subsidy Payment”) over the ensuing one (1) year. SMCCCD
shall have the right to accept or decline LPN’s offer to make Extension Subsidy Payments. lf
SMCCCD accepts LPN’s offer of Extension Subsidy Payments, then for each Extension Subsidy
Payment made by LPN, the LPN Share shall be increased by an amount equal to 2.28125%
multiplied by the Gross Auction Proceeds or Gross Sale Proceeds, as applicable, e.g., from
36.5% to 38.78125% in the case of one Extension Subsidy Payment. If SMCCCD declines
LPN’s offer of Extension Subsidy Payments, SMCCCD shall be responsible for financing
continuing operations of the Station and the LPN Share shall not change. In either event, the
Subsidy Termination Date will be extended for the pe‘ribd"t‘crwhich the offercfigfixtension
Subsidy Payments apply.
3.

Sale Call Option.

a.
SMCCCD hereby grants to LPN, upon all of the terms and subject to all of
the conditions set forth herein, an option (the “Sale Call Option”) to cause SMCCCD to
participate in a Sale (a “Call Option Sale”) to a Buyer identified by LPN that is acceptable to
SMCCCD (it being understood that SMCCCD’s approval of such Buyer will be withheld only if
SMCCCD demonstrates to LPN’s reasonable satisfaction that Buyer would not be qualified to
hold the FCC Licenses); provided, that if LPN’s identification of a Buyer is not permitted by
FCC Rules and/or California law, then SMCCCD shall identify a Buyer in accordance with
SMCCCD’S obligations under California law. LPN will be entitled to receive the LPN Share of
the proceeds derived from a Call Option Sale upon the consummation of such a transaction.

The Sale Call Option will be exercisable for a period (the “Sale Call
Perio' ”) ending on the Option Termination Date and beginning'On the earlier to occur of
g 2p tion
the following: (i) the date that SMCCCD withdraws from theAuction or' is determined to be
*unqualified to bid, or if it neither withdraws or is determined to be unqualified, the date that the
FCC provides notice of the results of the Auction and such notice does not indicate that the FCC
has accepted SMCCCD’s bid for relinquishment of the spectrum usage rights associated with the
FCC Licenses; or (ii) the date on which a Triggering Event (as defined in Section 9.1 of the
Funding Agreement) occurs, except for a Triggering Event under-sections 9.1 E or 9.’lF of the
Funding Agreement; or (iii) thirty (30) days after the Subsidy Termination Date if the FCC has
not by that date announced a 'dateby Which applications to participate in the Auction must be
b.

‘

‘

filed.

c.
LPN may exercise its Sale Call Option during the Sale Call Option Period
a written notice (a “Sale Call Notice”), which Sale Call Notice shall
SMCCCD
delivering
to
by
state that LPN thereby exercises the Sale Call Option, without condition or qualification, to cause
SMCCCD to proceed with a Call Option Sale in accordance with this Agreement.
3
QMM_US:7I464734.10

 4.

Put Option.

a.
LPN hereby grants to SMCCCD, upon all of the terms and subject to all of
the conditions set forth herein, an option (the “Put Option,” and, together with the Auction Call
Option and the Sale Call Option, the “Options”) to participate in a Sale (a “Put Option Sale”) to a
Buyer identified by SMCCCD. LPN will be entitled to receive the LPN Share of the proceeds
derived from a Put Option Sale upon the consummation of such a transaction.

b.
The Put Option shall become exercisable for a period (the “Put Option
Period”) ending on the Option Termination Date and beginning thirty (30) days following the
date on which the Sale Call Option becomes exercisable.
c.
Notwithstanding anything to the contrary in Section 4(b)
Agreement, the Put Option shall not be exercisable in the event that:

.__

of this

i.
SMCCCD is in material breach of this Agreement, the Funding
Agreement or the Bid Management Agreement or the Collateral Documents (as defined in the
Funding Agreement) (collectively, the “Funding Documents”);
_

9......m . ".7

._

ii.

a

_.

Triggering Event has occurred;

there has been any change, effect, event, occurrence or state of
facts that is, or is reasonably expected to be, materially adverse to the business, properties,
financial condition or results of operations of the Station, taken as a whole, or an event or
occurrence which would reasonably be expected to be materially adverse to the business,
properties financial condition or results of operations of SMCCCD in connection with the
Station; or

iii.

iv.
a Put Option Sale shall be prohibited by any applicable law, ruling,
”'—
court order, statute, regulation, or judgment, whether foreign, federal, state or local.
d.
SMCCCD may exercise the Put Option during the Put Option Notice
Period by delivering to LPN a written notice (a “Put Notice”), which Put Notice shall state that
SMCCCD. intends to exercise the Put Option, without condition or qualification, to allow
SMCCCD to proceed with a Put Option Sale 1n accordance with this Agreement The Put Notice
shall identify the Buyer.
~

5.
Termination of Options.
If not previously exercised, the Options will
automatically terminate at 1 1.59 p. m., 011 December 31,2025 (the “Option Termination Date”).

Mechanics of a Sale. In' the event'that SMCCCD participates in the Auction and
6.
Auction Sale does not occur, the parties will work together in good faith to develop a strategy
to maximize the value of the Station and each shall use commercially reasonable efforts to
identify a suitable Buyer and consummate a Sale. Following receipt of a valid Sale Call Notice
by SMCCCD or a valid Put Notice by LPN, subject to the terms and conditions of this
Agreement, SMCCCD and LPN shall proceed in good faith to negotiate, prepare and execute a
definitive agreement with the Buyer for the Sale (the “Sale Aggeement”). LPN will have the
following rights with respect to such Sale to the maximum extent permitted under applicable
law:
an

4
OMM_US:7I464734. l O

 LPN will have the right to participate in, all negotiations involving
SMCCCD and the Buyer
a.

LPN will have the right to consult with SMCCCD regarding all regulatory
b.
processes associated with the “repacking” of KCSM to a new channel assignment if, at the
conclusion of the Auction, the FCC has not accepted SMCCCD’S bid for relinquishment of the
spectrum usage rights associated with the FCC Licenses. Such consultations will include
involvement with SMCCCD in (i) discussions with the FCC regarding the channel reassignment
process, (ii) processes for obtaining the maximum reimbursement of expenses associated with
repacking, and (iii) preparing all filings and applications as may be required by the FCC timely
to complete the repacking process;
0.

all terms and conditions of the Sale Agreement will be subject to LPN’s

prior consultation;
upon consummation of the Sale, LPN
(1.
proceeds by wire transfer of immediately available funds;

will receive

the LPN Share

of the

the Sale Agreement will include a general release of and covenant not to
sue LPN and all of its affiliates with respect to any known or unknown claims against LPN or
any of its officers, directors, members or shareholders in connection with, arising out of or
related to any of the Funding Documents, the Sale Agreement or the transactions contemplated
thereby; and
e.

'

the Sale shall take place by a date that is no later than 30 days after the
f.
FCC’s consent of the transfer of the FCC Licenses becomes a Final Order. For purposes of this
Agreement, the term “Final Order” means action by the FCC consenting to an assignment of the
FCC Licenses or a transfer of control of the Station, provided that such consent shall not have
been reversed, stayed, enjoined, set aside, annulled, or suspended, and with respect to which no
timely request for stay, petition for rehearing, petition forreconsideration, application for review,
or notice of appeal is pending, and as to which the times for filing any such request, petition,
application, notice, or appeal, or for reconsideration or review by the FCC on its own motion,
shall have expired.

Reimbursement Event. If at any time during the Put Option Period SMCCCD is
i7.
not using its commercially reasonable efforts to identify a Buyer and consummate a Sale and
instead chooses to pursue alternative funding for the continued operation of the Station (a
“Reimbursement Event”), then LPN may deliver to SMCCCD written notice that a
Reimbursement Event has occurred and such Reimbursement Event will be a Triggering Event
under Section 9.1 of the Funding Agreement.
‘

4

~

q

‘

Representations and.Warranties of SMCCCD. As an inducement to LPN to enter
into this Agreement, SMCCCD makes the following representations and warranties to LPN, each
of which is true and correct on the date hereof:
8.

a.
FundingAgreement Representations and Warranties. The representations
and warranties of SMCCCD contained in Section 4 of the Funding Agreement are incorporated
herein by reference as if the same were set forth fully herein.

5
OMM-US:7I464734.l0

 SMCCCD is a California
Organization, Standing and Authority.
Community College District duly organized, validly existing and in good standing under the laws
of the State of California. SMCCCD has all requisite power and authority (i) to own, lease and
use its assets as presently owned, leased and used, (ii) to conduct its business and operations as
presently conducted, (iii) to execute and deliver this Agreement, and (iv) to perform and comply
with all of the terms, covenants, and conditions to be performed and complied with by it
hereunder;
b.

Authorization and Binding Obligation. The execution, delivery and
c.
performance by SMCCCD of this Agreement, and the consummation of the transactions
contemplated hereby, have been duly authorized by all necessary action of the governing Board,
and SMCCCD is not aware of any further actions or approvals necessary for the consummation
of any of the transactions contemplated hereby other than a sale pursuant to the Sale Call Option
or the Put Option, which would require approval of the SMCCCD Board. This Agreement has
been duly executed and delivered by SMCCCD. This Agreement constitutes the legal, valid and
binding obligation of SMCCCD, enforceable against SMCCCD in accordance with its terms,
except as limited by applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting therjghts of creditors generally or by general principles of equity.
The
Absence of Conflicting Agreements and Required Consents.
the
require
execution, delivery and performance by SMCCCD of this Agreement (i) does not
consent of any third party (except for the consent of the FCC for a Sale); (ii) will not conflict
with any provision ofthe laws governing SMCCCD; (iii) will not conflict with, result in a breach
of, or constitute a default under, any applicable law, judgment, order, rule or regulation of any
court or governmental unit by which SMCCCD may be bound, provided that FCC consent for a
Sale has been obtained; and (iv) will not conflict with, constitute'grounds for termination of,
result in a breach of, or constitute a default under, any agreement, instrument, license or permit
to which SMCCCD is a party or by which SMCCCD may be bound. Without in any way
limiting the foregoing, SMCCCD warrants that it has complied with any requirements of
California and local law with which a community college district must comply to sell a- broadcast
property SMCCCD will defend itself and LPN against any charge of noncompliance by SMCCD
with such requirements and, in the event of a final decision by a competent authority that
SMCCCD has failed to comply with such requirements, will take all reasonable steps to come
into compliance with such requirements.
d.

No Interference. There is currently no legal or regulatory proceeding,
including interventions by the public or any Government Authority pending, or to the knowledge
of SMCCCD threatened, that could reasonably be expected to materially frustrate, impair or limit
the consummation of any of the transactions contemplated by or under the Funding Documents
(including the participation by SMCCCD in, or’the assignment of the FCC Licenses 0r surrender
of the spectrum usage rights associated with the FCC Licenses pursuant to, the Auction, a Call
Option Sale or Put Option Sale) or otherwise to have a Material AdVerse Effect (as defined in the
Funding Agreement).
e.

Representations and Warranties of LPN. As an inducement to SMCCCD to enter
9.
into this Agreement, LPN makes the following representations and warranties to SMCCCD, each
of which is true and correct on the date hereof:

OMM_US:7l464734.10

 Funding Agreement Representations and Warranties. The representations
Section 5 of the Funding Agreement are incorporated herein
if the same were set forth fully herein

a.

and warranties

by reference

as

of LPN contained in

LPN is a limited liability
b.
Organization, Standing and Authority.
corporation duly organized, validly existing and in good standing under the laws of the State of
Delaware, with all requisite power under its organization documents to enter into and perform
this Agreement and the transactions contemplated hereby.

Authorization and Binding Obligation. The execution, delivery, and
performance by LPN of this Agreement, and the consummation by LPN of the transactions
contemplated hereby, have been duly authorized by all necessary corporate action. This
Agreement has been duly executed and delivered by LPN. This Agreement constitutes the legal,
valid, and binding obligation of LPN, enforceable against LPN in accordance with its terms,
except as limited by applicable bankruptcy, insolvency, reorganization, moratorium, or other
similar laws affecting the rights of creditors generally or by general principles of equity.
c.

The execution, delivery, and
d.
.:.Absence of Conflicting Agreements.
performance by LPN of this Agreement (With oFWithout the giving of notice, the lapse of time,
or both) (i) do not require the consent of any third party (other than the consent of the FCC for a
sale); (ii) will not conflict with, result in a breach of, or constitute a default under, any applicable
law, judgment, order, rule or regulation of any court or governmental unit to which LPN is a
party or by which LPN is bound, provided that FCC consent for a Sale has been obtained; and
(iii) will not conflict with, constitute grounds for termination of, result in a breach of, constitute a
default under, or accelerate or permit the acceleration of any performance required by, the terms
of, any agreement, instrument, license, or permit to which LPN is a party or by which LPN may
be bound.
Covenants.

10.

'a.

._

I

The covenants of SMCCCD contained in Section 6 and Section 7 of the
Funding Agreement are incorporated herein by reference as if the same were set forth fully
herein.

bf
SMCCCD covenants that the Station will participate in the Auction and
SMCCCD and LPN both covenant that they will perform their respective obligatidns under the
Funding Documents.
.

0.
From the date of this Agreement until the earlier to occur
Sale, Call Option Sale or Put Option Sale, SMCCCD will:

of an Auction

.

maintain, and take all actionsnecessary to maintain, the FCC
Licenses in full force and effect and in good standing in accordance with their terms and in
compliance in all material respects with the Communications Act of 1934, as amended, and the
FCC Rules, including but not limited to,the timely filing and prosecuting of any necessary
modification or renewal applications of the FCC Licenses or other submissions to the FCC.
~

.

0MM_US:7I464734. 0

i.

 ii.
operate the Station, and perform all of its obligations with respect
thereto, in the ordinary course of business consistent with past practices, and maintain full and
complete control over the Station’s personnel, programming and finances.

iii.
not solicit, initiate or hold discussions with any other party with
respect to any transaction similar to the transactions contemplated by this Agreement involving
the FCC Licenses or the Station or with respect to any sale of the Station, except as permitted in
the Funding Documents.
d.
From the date of this Agreement until the earlier to occur of an Auction
Option Sale or Put Option Sale, each party covenants that it will take no action that
could reasonably be expected to impede, interfere with, delay, postpone or materially adversely
affect the transactions contemplated by this Agreement or the likelihood of such transactions
Sale, Call

being consummated.
1.
Specific Performance. The parties acknowledge that the Options granted in this
Agreement are unique and not readily obtainable on the open market and that, in the event that
either party fails to perform its obligations pursuant to this Agreement, money damages alone
will be inadequate to compensate the damaged party for its injuryf'l'h‘é parties agree that in the
event of a material breach by a party, the non-breaching party shall be entitled, in lieu of
terminating this Agreement, to specific performance of its terms. If any action is brought by one
party against the other to enforce this Agreement, the other party shall waive the defense that
there is an adequate remedy at law, and the prevailing party in litigation shall be entitled to
receive from the non-prevailing party all court costs and reasonable attomey’s fees incurred by
the prevailing party in enforcing or defending its rights under this provision.
1

12.

Indemnification.

a.
Indemnification by SMCCCD. SMCCCD shall defend and save LPN and
its respective officers, directors, employees, agents, representatives and permitted assigns (each,
an “LPN Indemnified Party”), forever harmless from and against, and shall reimburse each LPN
Indemnified Party for, any and all liabilities, obligations, deficiencies, demands, claims, suits,
actions, or causes of action, assessments, losses, costs and expenses (including reasonable
attorneys’ fees) (“Losses’-’), sustained or incurred by an LPN Indemnified Party, relating to,
resulting from, arising out of, or otherwise by virtue of, any of the following

i.
Section

8

any breach

of a representation or warranty made by SMCCCD in

of this Agreement; and
,

.

ii,

_

_

any

.

breachof

a

covenant or other agreement made by in this
'

'

Agreement.
b.
Indemnification by LPN. LPN shall defend and save SMCCCD and its
respective officers, directors, employees, agents, representatives and permitted assigns (each, an
“SMCCCD Indemnified Party”), forever harmless from and against, and shall reimburse each
SMCCCD Indemnified Party for, any and all Losses sustained or incurred by an SMCCCD
Indemnified Party, relating to, resulting from, arising out of, or otherwise by virtue of, any of the

following:

OMM_US:7I464734.10

 i.

any material breach

of a representation or warranty made by LPN

in Section 9 ofthis Agreement; and

ii.

any material breach

of

a

covenant or other agreement made by

LPN in this Agreement.
Dispute Resolution. Any disputes between LPN and SMCCCD arising out of or
relating to this Agreement shall be subject, mutatis mutandis, to the dispute resolution provisions
set forth in the Funding Agreement.
13.

Modification. This Agreement shall not be amended, modified or waived in
14.
whole or in part except in writing signed by an officer of the party to be bound by such
amendment, modification or waiver.
15.
Waiver of Breach. A waiver by one party of any breach or default by the other
party shall not be construed as a waiver of any other breach or default whether or not similar and
whether or not occurring before or after the subject breach.

l6.
Notices. All notices and other communications required—or permitted hereunder
shall be in writing, shall be deemed duly given upon actual receipt, and shall be delivered (a) in
person, (b) by a generally recognized overnight courier service which provides written
acknowledgment by the addressee of receipt, or (c) by email or other generally accepted means
of electronic transmission, with affirmative evidence of receipt, addressed as set forth in Exhibit
A or to 'such other addresses as may be specified by like notice to the other parties and
acknowledged as received by such addressee(s).

.

,

17.
Assignments. LPN may assign its rights hereunder and delegate its duties
hereunder, in whole or inpart, to one or more affiliates. As used herein, an “affiliate” of a
person means any person that directly or indirectly controls, is controlled by, or is under
common' control with the person in question. However, in that event LPN will remain
responsible for performance. Any such assignment or delegation authorized pursuant to this
Section 17 shall be pursuant to a written agreement, which shall be delivered to SMCCCD.
Except as otherwise expressly provided herein, neither this Agreement nor any rights, duties or
obligatiohs hereunder. may be assigned or delegated by any of the parties, in whole or in part,
whether i/oluntarily, by operation of law or otherwise. Anyatternpted .assignment'or delegation
in violation of this prohibitiOn shall be null and void. Subject to the foregoing, all of the terms
and provisions hereof shall be binding upon, and inure to the benefit of, the successors and
pennitte assigns of the parties. Nothing contained herein, express or implied, is intended to
confer on any person other than the parties or their respective successors and permitted assigns,
any rights, remedies, obligationstor liabilities under orbyreason of this Agreement.

Effect

of Default. Notwithstanding

anything to the contrary in this Agreement, a
party may not exercise any Option or other right under this Agreement if such party is in material
default under this Agreement or any other Funding Document.
18.

Governing Law. This Agreement and the legal relations among the parties shall
19.
be governed by and construed in accordance with the laws of the'State of California applicable to
contracts between California residents made and performed in that State, without regard to
conflict of laws principles.
9
OMM_US:71464734.10

 Further Assurances. In a timely fashion, each party shall execute and deliver such
20.
further instruments, documents or assurances, and take such further action, as shall be required to
carry out the purposes and intent of this Agreement.
21.
Countemarts. This Agreement may be executed in counterparts, each of which
shall be an original instrument and both of which, when taken together, shall constitute one and
the same agreement, and any such counterpart may be delivered by facsimile or other electronic
transmission (including .pdf file) with affirmative evidence of receipt.
'

w“:

WW

22.
Severability. If any provision of this Agreement, or the application thereof, shall
for any reason or to any extent be invalid or unenforceable, then the remainder of this Agreement
and application of such provision to other persons or circumstances shall continue in full force
and effect and in no way be affected, impaired or invalidated; provided, that the aggregate of all
such provisions found to be invalid or unenforceable does not materially affect the benefits and
obligations of the parties of the Agreement taken as a whole. In the event of any such invalidity,
the parties hereto agree that (a) such invalidity shall be as minimal as possible so as to make such
provision(s) valid and enforceable and (b) they shall attempt in good faith to replace any such
invalid provisions with a valid and enforceable provision that effects as nearly-aspossible the
original intent of the parties hereto.

Headings.
The subject headings of the sections and sub—sections of this
Agreement are included for purposes of convenience only, and shall not affect the construction
or interpretation of any of the terms and conditions of this Agreement.
23.

24.

Conflicts. In the event of any conflict or inconsistency between this Agreement
of the Funding Agreement shall control.

and the Funding Agreement, the terms

25.
Public Disclosure. To the maximum extent permitted by law, SMCCCD will
provide LPN with notice of any intended public disclosure of this Agreement or any other
Funding Document and provide LPN with the opportunityto consult with SMCCCD and redact
such agreements to the extent permitted by law prior to their public disclosure.

[Signatures page follows]

10
OMM_US:71464734.10

 IN WITNESS WHEREOF the parties have caused this Put/Call Option Agreement [0 be signed
by their du[y authorized representatives as of the date first set tbrth above.
'

LOCUSPOINT NETWORKS LLC

SAN MATEQ COUNTY COMMUNITY

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 EXHIBIT A
NOTICES

If to SMCCCD:
Executive Vice Chancellor
San Mateo County Community College District
3401 CSM Drive
San Mateo, CA 94402
Phone: 650-358—6790

Email: roecksj@smccd.edu

With

a

copy to:

Lawrence M. Miller
Schwanz, Woods & Miller
1233 20‘h Street, NW, Suite 610
”Washington, DC. 20036—7322 we.
Phone: (202) 833-1700
Email: miller@swmlaw.com

‘

With

a

copy to:

Jan Roecks
San Mateo County Community College
3401 CSM Drive
San Mateo, CA 94402

District

Phone: 650-358-6790

Email: roecksj@smccd.edu
Eugene Whitlock
400 County Center, 6‘“ Floor
Redwood City, CA 94063
,

.

If to LPN:
'

LocusPoint Networks, LLC
Pleasanton Corporate Commons
62,00 Stoneridge Mall Road, Suite 300
Pleasanton, CA 945 88

Attn: William deKay
‘Facsimile No.: (925) 399-6001
Email: bill@locuspointnetworks.com

With a copy to:
O'Melveny & Myers LLP
2765 Sand Hill Road
Menlo Park, California 94025
Attn: David Makarechian, Esq.
Facsimile No.: (650) 473—2601
Email: dmakarechian@omm.com

OMM__US:71464734.10

’
.

 EXHIBIT 

Execution Version

AMENDMENT TO BID MANAGEMENT AGREEMENT
This Amendment (“Amendment”) is entered into on December 8, 2015 (“Amendment
Effective Date”) by San Mateo County Community College District (the “District”), a
community college district of the State of California, and LocusPoint Networks, LLC
a
Delaware limited liability company, to amend the Bid Management Agreement between the
District and LPN, dated as of May 16, 2013 (“Agreement”). Capitalized terms that are used but
not defined herein shall have the meaning given to such terms in the Agreement.

(“E”),

WHEREAS, pursuant to the Agreement, LPN agreed to provide certain specified services
to the District in connection with the Auction. Following the execution of the Agreement, the
FCC issued a new regulation, 47 C.F.R. § 1.2205, and related guidance (collectively,
prohibiting communications between Auction participants and certain of their affiliates, on the
one hand, and “covered television licensees” and “forward auction applicants” (as such terms are
defined in the FCC’s Rules), on the other hand, regarding Auction bids and bidding strategies.
This prohibition is applicable from the deadline for submitting applications to participate in the
tureVerse auction portio-r—ezr a-e—Auction (“Application Deadline”) until the results of the Auction
are announced by public notice (“Quiet Perio ”). As a result of the promulgation of the Rule and
pursuant to Section 2.8 and 8.1 of the Agreement, the Parties hereby amend the Agreement to
modify LPN’s obligations during the Quiet Period to comply with the Rule.

“MU

NOW, THEREFORE, in consideration of the mutual covenants contained herein, the
receipt and sufficiency of which the Parties hereby acknowledge, the Parties agree as follows:
1

r. The Agreement shall be amended

as

of the Amendment Effective Date as follows:

Section 2.2.2 of the Agreement shall be deleted and replaced with the following: “Before
the Quiet Period, timely prepare for review and submission by the District of the
application for KCSM to participate fully in' the Auction;”
Section 2.2.3 of the Agreement shall be deleted and replaced with the following:

a.

..

“[Reserved.]”
Section 2.2.4 of the Agreement shall be deleted and replaced with the following: “Prior
to the Application Deadline, establish a general bidding strategy for maximizing the
value in the Auction of the spectrum usage rights associated with the License;
Section 2.2.5 of the Agreement shall be deleted and replaced with the following: “Train
and supervise the qualified personnel that the District appoints to act as its authorized
bidders in the Auction to assure their satisfactory performance of the duties associated
with authorized bidders in the Auction,”
Section 2.2.7 of the Agreement shall be deleted and replaCed‘with the following:
'
“[Reserved.]”
Section 2.2.10 of the Agreement shall be deleted and replaced with the following:
“Prepare, on behalf of the District, responses to any requests for information which the
FCC may make prior to or following, but not during, the Quiet Period;”
Section 2.2.11 of the Agreement shall be deleted and replaced with the following:
“Participate with the District in any meetings or telephone conferences with the FCC as
the FCC may request prior to or following, but not during, the Quiet Period;”
-

‘

3

'

'

'

'

_

'

 Execution Version

.

Section 2.2.12 of the Agreement shall be deleted and replaced with the following:
“Communicate with the FCC on behalf of the District, prior to or following, but not
during, the Quiet Period, regarding logistical matters relevant to participation in the
Auction and the mechanics of obtaining any proceeds resulting from the District’s
participation in the Auction;”
Section 2.2.13 of the Agreement shall be deleted and replaced with the following: “If, at
the conclusion of the Auction, the FCC accepts the bid for relinquishment of the
spectrum usage rights associated with the License, prepare for the District all filings and
applications as may be required to be filed after the Quiet Period to complete the process
of relinquishment,”
The last sentence of Section 2.3 of the Agreement shall be deleted and replaced with the
following: “In implementing the strategy developed for the Auction, the District shall
cause its authorized bidder to refrain from submitting a bid that would cause such an
event to occur.”
Two new final sentences shall be added to the end of Section 2.4 as follows: “The Parties
agree and acknowledge that LPN has engaged PricewaterhouseCoopers Advisory
Sen/ices LLC (“PW—C”) to serve as DFlfiy’Sfi’sfibcontractor and agent and that PwC may
provide to the District on behalf of LPN certain of the services set forth in Section 2.2
during the Quiet Period to the extent that PwC can do so in compliance with the FCC’S
Rules and LPN cannot. To facilitate this arrangement, the District has executed a Letter
of Authorization in the form attached to this Agreement as Attachment A.”
Section 2.6.3 of the Agreement shall be deleted and replaced with the following:
“Designate prior to the start of the Quiet Period up to three individuals who shall serve as
the District’s authorized bidders during the Auction and who (a) are authorized to place
bids on behalf of the District during the Auction, (b) will be trained by LPN to be familiar
with the FCC’s Rules applicable to the Auction, as well as with Auction processes and
procedures, and (c) will consult in every round during the Auction with PwC in a prompt
and timely manner,”
‘
The executed Attachment A attached to this Amendment shall be attached to the
Agreement as Attachment A to the Agreement.
~

.

.

Entire Agreement; Counterparts. This Amendment and the Agreement which it amends
constitutes the entire understanding between the Parties and supersedes any prior
understandings respecting the subject matter hereof. This Amendment may be signed in any
number of counterparts, each of which shall be an original for all purposes, but all which
taken together shall constitute only ‘one Amendment. The Parties agree that transmission of
this Amendment with facsimile or electronic “pdf” signatures shall bind the Parties in the
same manner as if the Party’s original signatures had been delivered.

[remainder

of this page intentionally left blank — signature page follows]

 Execution Version
SIGNATURE PAGE — AMENDMENT TO BID MANAGEMENT AGREEMENT
IN WITNESS WHEREOF, the Parties hereto have executed this Amendment as of the
first above written.

date and year

SAN MATEO COUNTY COMMUNITY COLLEGE DISTRICT

By

WflW
Name: Kathy Blackwood
Tifler¥=xecutive Vice Omega:

LOCUSPOINT NETWORKS, LLC

%/%

ByName:

Title:

WI

LL

I‘m

09/6

 Execution Version

ATTACHMENT A
LETTER OF AUTHORIZATION

Pursuant to Section 2.4 of the Bid Management Agreement (the “Agreement”), dated as
16, 2013, between LocusPoint Networks, LLC (“LIE”) and San Mateo County
Community College District (the “District”), PricewaterhouseCoopers Advisory Services LLC
has been designated by LPN as LPN’s subcontractor and agent in carrying out certain
of LPN’s obligations under the Agreement.

of May

(“M”)

In particular, between the deadline for submitting applications to participate in the

broadcast incentive auction and the announcement of the auction results (the FCC’s “gm
perio ”), LPN will be unable to communicate with the District regarding bids or bid strategy.
Therefore, LPN has designated PWC to be responsible for performing LPN’s obligations under
Section 2.2 of the Agreement and various of its subsections, including monitoring and assisting
the District with its participation of Station KCSM-TV (RF Channel 43), San Mateo, California
(FCC Facility ID No. 58912) (the “Station”) in the auction. PWCisrnot-assuming anYadééQenaHduties or obligations directly to the District in connection with these services.
PWC will dedicate a member of its staff (and one alternate to act in that member’s place
he or she is unable to do so) to act in LPN’s place under the Agreement during the “quiet
period”. To the extent the District and the District’s designated authorized bidders intend to

take, or take, actions that are not consistent with the District’s obligations under the Agreement
and any related bidding strategy, PwC will notify the previously designated contact
'
representatives of the District.

By acknowledging the designation of PWC

~

as subcontractor and agent

of LPN pursuant

to Section 2.4 of the Agreement, the District agrees to cooperate with PWC in accordance with
Section 2.6 of the Agreement as it performs its engagement by LPN to help ensure compliance
with the FCC’s rules pertaining to the Auction under the Agreement.

Acknowledged this

8‘h

day

of December, 2015.

SAN MATEO COUNTY COMMUNITY COLLEGE DISTRICT

254569755c
By:
Name: Kathy Blackwood

Title: Executive Vice Chancellor

if

 EXHIBITE

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43

U1

CA

TADAHIRO KABURAKI (SB.
O’MELVENY"& MYERS LLP
Two Embarcadero Center
28th Floor

5%

#31 1823)

APR 1
0

ll

San Francisco, CA 941
Telephone:
(415) 984—8700

Facsimile:

mfifi

SANflniIQ§§§QQ

Eye.

(415) 984—8701

Ierklof the So

201;}

perior CCU“

B. ANDREW BEDNARK (pro lzac vice fonlicoming)
O’MELVENY & MYERS LLP
7 Times Square
New York, NY 10036
Telephone:
(212) 326—2000
Facsimile:
(212) 326—2061
.

Attorneys for Plaintiffs
LocusPoint Networks, LLC and
LocusPoint II KCSM, LLC
«qr:

_—'~

SUPERIOR COURT OF THE STATE OF CALIFORNIA

COUNTY OF SAN MATEO

UNLIMITED JURISDICTION

i?ClV015§%
LOCUSPOINT NETWORKS, LLC,
a

Delaware Limited Liability Company;

LOCUSPOINT 11 KCSM, LLC,
a DelaWar‘e Limited Liability Company,

Case No.

COMPLAINT FOR
BREACH OF CONTRACT

'

V..

SAN MATEO COUNTY COMMUNITY
COLLEGE DISTRICT
.

Defendant.

COMPLAINT

 LocusPoint Networks, LLC and LocusPoint
N

II KCSM, LLC (“LPN”), by and through

their undersigned counsel, for their complaint against the San Mateo County Community College

District (“the District”), respectfiilly allege, upon knowledge
information and belief as to others’ actions,

as

as

to their own actions and

follows:

dam-bu.)

NATURE OF THE ACTION
1.

This is an action for damages to recover what LPN would have received but for the

District’s breaches of its three May 2013 contracts with LPN.
2.

Those contracts involved the District’s broadcast television station, KCSM-TV

(“KCSM”), which the District had operated at a significant loss for years. By 20] l, the District
10

had decided to explore selling 5h;Station outright rather than continuing to fund KCSM’s losses,

11

going as far as to issue a Requestfor Proposal (RFP) that solicited six acquisition proposals.
3.

12

Then, in February 2012, a federal law was passed that required the Federal

of FCC

13

Communications Commission (“FCC”) to hold

14

broadcast licenses, such as the District, would have the unique opportunity to sell the spectrum~

15

usage rights—essentially, the right to use the public airwaves—associated

16

prices brokered by the FCC in a multiple-round auction (the “Auction”). The relinquished

17

spectrum would be repackaged by the FCC and auctioned to Mreless—cormnurdcations providers,

18

making licenses covering large metropolitan areas—such as KCSM’s—especially attractive. But

1.9

the critical details of. the Auction, such as timing, design, station valuation, and spectrum supply

20

special auction in which holders

with their licenses at

and demand, were yet to be determined.

21

22

a

4.

Sensing the opportunity, the Districtdecided not to accept any of thesix

acquisition proposals, and chose instead to seek an arrangement under which it could obtain from

2'3‘

a

24

might occur. Outside funding was crucial because the District had‘ ‘approximately $1 million in

25

losses every year at

26

that the District cannot afford to continue this financial subsidization,” as reported in the May 15,

27

2013 Board meeting minutes.

'28

third-party the funding KCSM needed to continue to operate until the Auction, whenever it

5.

KCSM-TV,” and the District’s Board of Trustees (the “Board” was “clear

The District solicited four bids with a second RFP, but only two bids to fimd
_

2
COMPLAINT

 p

‘0

KCSM. On May .15, 2013, the Board selected LPN’s bid, which provided up to $3.6 million in

fimding to KCSM, on the recommendation of the District’s staff that “the proposed agreement

with LocusPoint Networks is the best and most valuable option for the District.”
The value to the District

6.

of LPN’s commitment went far beyond the dollar

amount—LPN’s funds would also buy the District the necessary time until the Auction since it
was unwilling to continue to fund KCSM on its own.

The Auction opportunity enabled the District to negotiate favorable fimding terms

7.

and transfer to LPN the risks associated

\DOOQQ

with the Auction. LPN agreed to forgo any guaranteed

repayment or investment return in'exchange for an option to receive 36.5%
10

proceeds fi'om the Auction—Ems, the District assumkei 11:: risk to its ongoing operating budget.

11

By contrast, at a time of great uncertainty regarding the Auction—the principal trade association

12

for broadcasters had opposed it and the FCC had not yet adopted

13

it—LPN risked its entire investment in exchange fora share of the District’s Auction proceeds.

14

the Auction Were delayed or did not occur, or

15

price, the District would get to keep LPN’s funding while LPN could get nothing. Operating a

16

noncommercial, nonprofit television station at a significant loss, the District could not have

17-

18
.

of the District’s

19.

.

a

framework or rules to govern

If

if the F CC’s offer fell below an agreed minimum

obtained such advantageous financing terms from any traditional source such as a bank—to the

extent
,

it could have obtained any financing at all.
,

8.

.

_

Because LPN staked its investment on the Auction rather than on a guaranteed

20,

repayment or return from the District, LPN sought assurances from the District about the

21

District’s participation in the Auction. For example, (i) the Funding Agreement required the

22

District to “take all actions necessary cause the spectrum usage rights associated with the FCC
to

:2'3

License to be relinquished

1n

the Auction”;

(ii) the Bid Management Agreement obligated the

24

District to “[t]ake all such other actions as maybe reasonably required or as LPN

25

in order for the District to successfully participate in the Anction and relinquish the spectrum

26

usage rights associated with the License at a price that is at or above the [$3,000,000] Minimum

27

Bid Am0unt”; and (iii) the Put/Call Option Agreement bound the District to its obligations under

28

COMPLAINT

. . .

may request

 the other Agreements.l The District expressly agreed to reimburse LPN’s funding payments upon
a breach

N

of these obligations (among other events).
The District and LPN began their preparations for the Auction in December 2015.

9.

Those preparations included establishing procedures that the District’s three authorized bidders—
the only individuals allowed under FCC rules to place bids on a licensee’s behalf—would follow

to ensure KCSM"s successful participation in the Auction. Foremost among those procedures
\oooqoxuinw

was confirming and documenting each

of the District’s bids as they were submitted in light of the

FCC’s repeated warnings that the failure to submit a bid would result in being dropped from the

Auction.
10.

10

The District filed an applicationaviththe FCC to participate irrthe Auction on

11: January 6, 2016, and active bidding began on May 31, 2016. Following agreed procedures, the
12

District successfully participated in all the Auction rounds between May 31 and November 14,

13

2016, that required the District’s participation.

14

11.

But during the morning round on November 15, 2016, the District failed to take

15

the most fundamental “action necessary” to successfully participate in the Auction—placing a

16

bid. Despite knowing that the FCC would deem a bidder’s failure to enter a bid as a decision to

17

drop out

18‘

actively submit a bid.” The FCC’s offer was

,19

of the Auction, the District’s authorized bidder admitted that she did not “think to

contractualMinimum Bid Amount.

$1 14,494,613

in that round, well above the

-

.

.2of

12.

,

The District failed to follow the procedures and perform the checks that the

21

District and LPN had established to prevent just such an outcome. Contrary to the agreed

22

procedures, the District (i) did not generate a Bid Summary confirmation from the FCC Auction

'23
.

website (which only the District

3

authorized bidder could access); (ii) signed a Bid submission

24

Confirmation Sheet certifying falsely that the District had submitted a bid, despite not obtaining

25

the Bid Summary confirmation; and

26

time while the bidding for that round remained open.

(iii) failed to verify that the bid had been submitted

at any

27

'

28

The May 16, 2013 Funding Agreement, Bid Management Agreement, and Put/Call Option
Agreement (and their amendments) are attached as Exhibits A, B, and C, respectively.
4
COMPLAINT

 If the District had participated in the Auction as contractually required, it Would

13.

have submitted all the required bids and KCSM’S spectrum-usage rights would have been

fiilly

relinquished, like those of other full-power television stations in the same television market for
bids in excess
14.

of $80 million, on information and belief.2
Instead, as the direct and immediate result

of the District’s actions (and inaction),

\OOOQO‘U’I-bLflN

the FCC, in accordance with its well—publicized procedures, dropped KCSM from the Auction.
15.

In an instant, LPN’s option for 36.5% of the District’s Auction proceeds became

worthless. LPN’s investment—the subsidies to fund KCSM until the Auction and the time and

effort to prepare the District for it—was wasted.
awz‘filw"

10

16.

—

Depriving LPN of the benefit of 1ts bargain did not stop—the District from

-—

11

continuing to take LPN’s fimds. The District did not tell LPN in 2016 that it had failed to submit

12

a bid and been dropped fi'om the

13

falsely certified on December 16, ,201 6, that it had “performed in all material respects all

14

agreements” with LPN so

15

17.

.

17

In reliance onthe District’s false certification, LPN made its next quarterly

18.

During its first post—auction conversation with LPN on February 8, 2017, the

District kept silent about the false certification and the payment it induced. In breach of its

18

..20

it could satisfy a condition precedent to LPN’s funding obligation.

payment of $225,000 to the District on December 20, 2016.

16

,-l9-

Auction. Rather, despite its known failure to bid, the District

,

contractual reimbursement obligations, the District has not returned any portion

of LPN’s

$3, 375, 000 fiJnding payments.

21

19.

.LPN seeks damages, in an amount to be proven at trial, adequate to compensate

22

for (i) the value of its option to receive 36. 5% of the Auction proceeds the District would have

2.3.

received had

24

reimburse LPN’s $3,375,000 funding payments (plus interest) as the Funding Agreement-

25

requires.

it performed its obligation to bid 1n the Auction, and (ii) the District’s failure to

26
27
2

28

The FCC is expected to issue a public notice announcing winning bidders and final bid prices in

April 2017.
5

COMPLAINT

 THE PARTIES

Plaintiff LocusPoint Networks, LLC is a Delaware limited liability company with

20.

its principal place of business in Pleasanton, California.

Plaintiff LocusPoint II KCSM, LLC is a Delaware limited liability company with

21.

its principal place

W

On information and belief, Defendant San Mateo County Community College

22.

District is

of business in Pleasanton, California.

community college distn'ct operating three colleges—Canada College, College of San

a

Mateo and Skyline College—located in San Mateo County, California.

This action arises under the laws

23.

of the State of California and is within-the subject

‘

matter jurisdiction

of this Court.

The District is a California community college district subject to the personal

24.

jurisdiction of this Court. The District accepted this Court’s jurisdiction in Funding Agreement
:

§

‘

10.14.

Venue is proper under (i) California Code

25.

of Civil Procedure § 394(a) because this

is an action against a California community college district located in San Mateo County,

Califomi'a; and‘ (ii) Funding Agreement

§

10.14, in which the District accepted the jurisdiction of,
4

and venue in, this Court.
i

2.6.

II

‘

The amount in controversy exceeds $25, 000, and unlimited civil jurisdiction

proper under Califomia Code of Civil Procedure

§

1s

88.

FACTUAL BACKGROUND

‘

The District Operates KCSM
27.

The Distn'ct holds the FCC licenses and authorizations necessary to tope’rate

KCSM-TV (RF Channel 43), a fiill-power, noncommercial, education television station located in
San Mateo,

28.

California (FCC Facility ID No. 58912).

An FCC Television Broadcast Station License authorizes

operate the radio transmitting apparatus” descn'bed

a licensee

“to use and

in the license. The FCC authorizes licensees

to use radio transmitters at only the specific frequency, power, and location (among other things)
6
COMPLAINT

 p—d

described in the license.

The KCSM website states that:

29.

KCSM is located in the San Francisco Bay Area, the heart of the fifih largest
television and radio market in the United States with the potential of reaching an
audience of more than 6 million people. KCSM TV broadcasts 24 hours a day, and
our 500 kilowatt broadcast signal has a coverage area that includes San Mateo, San
Francisco, Santa Clara, Santa Cruz, Alameda, Contra Costa, Marin, Solano,
Sonoma and Napa counties.

\OOOQO‘UI-P-WN

30.

KCSM transmits in the UHF band, at 644—650 MHz.

31.

According to an FCC white paper, “[t]he propagation characteristics of the TV

bands, especially in UHF ranges between 470 MHz and 698 MHz, are‘well-suited for wireless

broadband applications.”3
-«~—-«-»--—

10

ll

The District Plains to Sell KCSM or Auction Its Spectrum Usage Rights
As Of June 2011, KCSM was running an annual deficit of $800,000. At the

32.
12

June 8, 2011 meeting

of the Board, the Board President stated that the District cannot continue to

13

subsidize KCSM.
14

Because

33.
.

of the deficit,

the District hired an attorney practicing FCC regulation and

15

compliance law from a Washington DC. firm to explore options for selling KCSM.
16

_After debate, the Board agreed to proceed with an “RFP and sale process” for

34.
.

_

17

KCSM. On December 7, 2011, the District issued an RFP to “qualified entities” to acquire
18

KCSM.
19‘

t

'

i

35.1 The District reported on February
20‘

I

14, 2012, that

I

it had received bids from Six
-

i

entities.
21

'

36.

Eight days later, on February 22, 2012, President Obama signed into law the

22

Middle Class Tax Relief and Job Creation Act of 2012, which required the FCC to hold the

'

.23

Auction within ten years.
24
37.

Recognizing the potential to receive greater proceeds from the Auction than from

25
sale, the Board decided on October 24, 2012, not to accept any

of the six acquisition proposals.

27

3

28

2010), available at https://transition.fcc.gov/national-broadband-plan/spectrum—
analysis-papenpdf, at 6.

FEDERAL COMMUNICATIONS COMMISSION, SPECTRUM ANALYSIS: OPTIONS FOR BROADCAST

SPECTRUM (June

7
COMPLAINT

a

 mm

Rather, as the November 14, 2012 Board meeting minutes reflect, Vice President

38.

of the College of San Mateo4 .lan Roecks—with a team including the District’s FCC counsel—
proposed a new plan under which the District would contract with a third party to fund KCSM’s
Operating deficit until the District could sell KCSM’s spectrum-usage rights in the Auction.

Going forward, the District would require its FCC counsel’s approval on all decisions regarding
the Auction.
The May 15, 2013 Board meeting minutes report that the District received four

39.
\OOO\)O\

proposals, but only two bids to subsidize KCSM until the Auction. Ms Roecks recommended the

proposal from LPN as “the best and most valuable option for the District.” The Board accepted

ll

LPN Agrees to Fund KCSM for

a Share

13

agreements regarding LPN’s funding

14

Auction.
‘

41.

15

of the Auction Proceeds

of KCSM and the sale of KCSM’s spectrum rights in the

The District and LPN signed a binding Letter of Intent on March 19, 2013. The

letter documented (1) the District’s “interest

16

17. expenses of [KCSM]
the amount

18

19

~

'42.

as

,

1n

obtaining support in fimding the operating

soon'as possible,” and (ii) LPN’s agreement to provide that funding in

of $3.6 million.
The District incurred no obligation to repay or provide any return on \LPN’S:

investment. Rather, LPN’s return

20
21

,

District Chancellor Ron Galatolo negotiated with LPN the general structure of the

40.

12

~

WW"

that recommendation.

10

.~

,

~-

(if any) would come as a portion of any proceeds the District

received from the Auction (when or

if it occurred).

The District represented that it (i)

“will agree

22

to participate 1n the Auction and to place bids under which it would relinquish to the FCC

25

[KCSM’s] spectrum usage rights”; and (ii) will agree to pay LPN 36. 5% of the “proceeds derived

24

from the District’s participation in the Auction.”

25‘

43.

Thus, the District secured the funding

it wanted and needed at no out-of-pocket

26

cost or risk'to its ongoing operating budget, because LPN was willing to risk its investment

27~

capital and return in exchange for the prospect of receiving 36.5%

28

4

of uncertain Auction proceeds

The titles of District employees in this Complaint reflect their current known positions.
8

COMPLAINT

 at a time when the Auction’s timing, design, process, spectrum supply and demand, and bidding

levels were all unknown.

In fact, there was substantial risk that the Auction might not occur at all. On

44.

January 25, 2013, nearly two months before the parties signed the Letter of Intent, the National
\OOOQO‘MAUJNr-I

Association

of Broadcasters (“NAB”) argued in a filing with the FCC that the F CC’s pending

Auction design could not move forward unless certain “critical elements [were] fully addressed
and resolved,” and pushed

for a slower process.5 The NAB followed through by petitioning on

August 18, 2014, for judicial review

of the FCC’s order adopting rules to govern the Auction.

The IaWSuit caused the FCC to delay the Auction in the face
was not resolved

of “undeniable impediments, ”6 and

until an appellate court sustained—thefggvorder on June

12, 2015.7

The District and LocusPoint Networks, LLC formalized the arrangement described

45.

in the Letter of Intent in three agreements executed on May 16, 2013: (i) a Funding Agreement
(amended December 17, 2015);
and

(ii) a Put/Call Option Agreement (amended December

(iii) a Bid Management Agreement (amended December

17, 2015);

8, 2015) (collectively “the

Agreements”).

Effective September

46.

1,

2013, as the Agreements permitted, LocusPoint Networks,

LLC assigned its rights and obligations under the Agreements to its wholly owned subsidiary,
LocusPoint II KCSM, LLC.

LPN ’s Subsidy Payments
.

In the Funding Agreement, LPN agreed to subsidize the District’s operation of

47.

,KCSM up to $3,600,000, with “each Subsidy Payment .

. .

in an amount equal to $225,000,.”

payable quarterly.
'

48.

As a condition precedent to LPN’s obligation to make each Quarterly payment, the

District agreed to provide LPN “a duly executed Compliance Certificate attesting,” among other

5

See National Association of Broadcasters, Comments on Auction Design (Jan. 25, 2013),
http://wwwnab.orgidocuments/filings/IncentiveAuctionCommentsO12513.pdf .
6
See Gary Epstein, Incentive Auction Progress Report, FCC Blog, October 24, 2014,

ht_tps://www.fcc. gov/news—events/blog12014/ lO/24/incentive-auction-progress—report
7
See Nat’l Ass 'n ofBroadcasters v. EC.C., 789 F.3d 165 (DC. Cir. 2015).
-

9
COMPLAINT

.

 \

things, that there had been no breaches or “Triggering Events”—i.e., the District’s breach
representation or warranty or “default in the performance

of a

of or compliance with any term” in the

Agreements:

ADJN

The representations and warranties contained in the Funding
(i)
Agreement and in the other Funding Documents are true, correct and complete in
all material respects to the same extent as though made on and as of the date

hereof.

. .

,

No event has occurred or would result from the making‘of such
(ii)
Subsidy Payment that would constitute a Triggering Event or a Potential
Triggering Event;

\OOOQQ'JI

[the District] has performed in all material respects all agreements
(iii)
and satisfied all conditions which the Funding Agreement and each other
[Agreement] provides shall be performed or satisfied by it on or before the date

10

hereof;.

11

._

(vi)
49.

12

mg:

wan-r.

No Material Adverse Effect has occurred.

Under the Funding Agreement, a Material Adverse Effect included “the

13

impairment of the ability of [the District] to perform, or of LPN to enforce,

14

material obligations under any [Agreement].”

. . .

[the District’s]

.

50.

15

LPN made every Subsidy Payment required under the Funding Agreement afier
I

I6

receiving a Compliance Certificate from the District.

.

117
18
..

‘

'51.

To date, LPN has paid the District a total

The Auction: the

.

.419

52.
,

«:0

of $3,375,000 in Subsidy Payments.

District ’3 Obligation to Bid and LPN ’3 Option for It‘s Share ofProceeds

In consideration for LPN’s Subsidy Payments, the-District made several promises

about its participation in the upcoming Auction to protect LPN’s investment.

.21..

.

53.

_

The District promised that KCSM would “participate in the Auction.” (Put/Call

Option Agreement

22

§ 10. b. )

,

The District was to designate “up to three individuals who shall serve

‘

District’s authorized bidders during the Auction” and who are “authorized to place bids on

23

as the

24

behalf of the District during the Auction.” (Bid Management Agreement

25

54.

28

amended.)

The District committed in all three Agreements to take all the necessary actions to

relinquish KCSM’s broadcast spectrum usage rightsin the Auction: (i) the Funding Agreement

26
27

§ 2.6.3, as

l

required the District to “take all actions necessary to cause the spectrum usage rights associated

with the FCC License to be relinquished “in the Auction” (§ 6.9); (ii) the Bid Management
1

0

COMPLAINT

 Agreement bound the District to “[t]ake all such other actions as may be reasonably required or as

LPN, acting in its capacity of bidding consultant and agent, may request in order for the District
to successfully participate in the Auction and relinquish the spectrum usage rights associated with
the License at

a

price that is at or above the [$3,000,000] Minimum Bid Amount” (§ 2.6.5); and

(iii) the Put/Call Option Agreement bound the District to perform its obligations under the other
\OOOQGUI-PUJN

Agreements (§ 10.b.).

The District granted LPN an option “to receive the LPN Share [36.5%]

55.

proceeds derived from the relinquishment

of the

of the Station’s spectrum usage rights in connection

with the Auction” (the “Auction Option”). (Put/Call Option Agreement §§ l & 2(a).)
In addition to the District’s affinnative obligations to participate in theAuctipg,

56.

ll

the District promised not to do anything to jeopardize the Auction Option: the District committed

12

to “take no action that could reasonably be expected to impede, interfere with, delay, postpone or

13

materially adversely affect the transactions contemplated by this [Put/Call Option] Agreement or

14

the likelihood

15

LPN 's Contractual Reimbursement Right

>

17

Payments upon a “Triggering Event,” including any “default in the performance

18

with any term” in the Agreements.

19

258.
'

~

discretion” to “declare all or any portion of theSubsidy Payments

21

payable,” and the District shall deliver the amount duein “same day funds, free

23_

.

or condition,

I

24

. . .

. . .

immediately due and

i
I

i

A

L

I.

A

A

A

.

A

(§§ 9.1 1&‘9.2.B.)_

I

59.

The District also agreed to return LPN’s payments with interest at 8% annually in

of any Agreement. (Funding Agreement

the event of the District’s willful breach

26

The FCC Adopts Rules for the Auction and Simplifies Auction Participation

28

.

of any restriction

25

27'

haS»‘-‘sole

to LPN not later than noon San Francisco time on the date due in the LPN

"
Accoun

10.d.)

of or compliance

Upon such an event that results in a Material Adverse-Effect, LPN

20

22

§

The Funding Agreement requires the District to reimburse LPN’s Subsidy

57.

16

of such transactions being consummated.” (Put/Call Option Agreement

60.

The Auction, as described by the FCC, would consist

§

9.1.)

—

of “two separate but

interdependent auctions—a reverse auction, which will determine the price at which broadcasters
1 1

COMPLAINT

 will voluntarily relinquish their spectrum usage rights;

and a forward auction, which

will

determine the price companies are willing to pay for flexible use wireless licenses.”8 The FCC

would stand in the middle, establishing the supply of spectrum usage rights in the reverse auction
by making offers to broadcasters willing to relinquish them,

as

well

as

the demand for spectrum

in the forward auction by soliciting bids for new wireless licenses from wireless providers.
61.

As the FCC described, the reverse auction and the forward auction must “work

together. Ultimately, the reverse auction requires information about how much bidders are

willing to pay for spectrum licenses in the forward auction;

and the forward auction requires

information regarding what spectrum rights were tendered in the reverse auction.”9
-

62.

The FCC’s role was to manage the market for the spectrum licensesfitaallow

market forces to determine the highest and best use
63.

..

of spectrum.“0

Throughout its development of bidding procedures for the Auction, the FCC

sought to facilitate broadcaster participation by simplifying the bidding process for bidders. The

FCC published an order establishing the Auction design framework, followed by a detailed public

notice explaining all bidding and application procedures. ” And it conducted numerous

’

educational efforts (such as outreach meetings, webinars, and tutorials) and published a “FCC

'Incentive Auction Reverse Auction Bidding System User Guide” (“RABS User Guide”)12

specifically for participating stations.
'8

~
-.

Federal Communications Commission, How It Works. Ike Incentive Auction Explained,
https: //www. fcc. imv/about-c/fcc-initiatives/incentive— auctions/how—it—works (last visited
March 28, 2017).
9
Id For an explanation of the operation of forward and reverse auctions, see Federal
Communications Commission, IncentiveAuction Rules Option and Discussion, at
http: ”wireless. fee. gov/incentiveauctions/learn-program/mle-option/inh’oductionhtml (last visited
March 28,2017).
loFEDERAL COMMUNICATIONS COMMISSION, FCC 15- 78, PUBLIC NOTICE: PROCEDURES FOR
COMPETITIVE BIDDING IN AUCTION 1000, INCLUDING INITIAL CLEARING TARGET DETERMINATION,
QUALIFYING To BID, AND BIDDING 1N AUCTIONS 1001 (REVERSE) AND 1002 (FORWARD) (2015),
available at httjgs: l/apps. fcc. gov/edocs public/attachmateh/FCC- 15- 78A1 Rcd. Ddf, at 3.
”See FEDERAL COMMUNICATIONS COMMISSION, FCC 14- 50, IN THE MATTER OF EXPANDING THE
ECONOMIC AND INNOVATION OPPORTUNITIES 0F SPECTRUM THROUGH INCENTIVE AUCTIONS
REPORT AND ORDER (2014),

available at https://apps.fcc.gov/edocs public/attachmatch/FCC-M—

50A1.;pdf see also FCC 15- 78.
12

Available at mos: //www. fcc. gov/file/3797/download
12

COMPLAINT

'

 Before each round

64.

of the Auction, the FCC would inform each bidder whether its

station would be in “bidding” status (i.e., whether it would be able to submit a bid in that round).

For bidders such as the District that offered to fully relinquish their spectrum, the choice in

bidding status was either to accept or reject the price offered by the FCC. The FCC stated that

a

bidder such as the District “that has or is interested in only a single bid option will have a simple
choice: whether to accept the lower clock price offered for its station’s currently held option or to

reject that offer and drop out of the bidding.”l3
‘

If a broadcaster wereto enter a bid accepting the FCC’s price, the FCC would

65.

determine whether to declare that bid a “provisionally winning” bid or to offer a lower price in a
'

subsequent round.

‘4

Once all stations had either dropped out or been declared “provisionally winning,”

66.

wireless providers would bid for the offered spectrum in a forward auction stage. The Auction

would end (and “provisionally winning” bidders would be named winning bidders) when
forward-auction prices in the largest markets met FCC benchmarks and total forward—auction
revenues covered (i) the winning reverse-auction bids,

(ii) the cost to reimburse stations assigned

new channels 'as a result of the Auction for their reasonably incurred relocation expenses, and

(iii)

I

the FCC?s administrative costs.

If those criteria were not met at the end of a stage, the FCC would conduct another

67.
stage. of the

Auction at a lower spectrum—clearing target, resulting m a lower price offered to

participating stations. The Auction was expected to have multiple stages, each containing dozens

of bidding rounds lasting over several months.
The District and LPN Prepare for the Auction to Ensure the District’s Successful

Participation
,

68.

The District filed an application15 with the FCC to participate in the Auction on

15-78 at 60.
“rec
M

The FCC could also determine that the broadcaster was not needed, and remove it from the
Auction.
'5
As a broadcaster, the District applied to participate in the “reverse auction” portion of the
Auction.
13

COMPLAINT

 January 6, 2016, selecting “Go Off-Air” as its sole bidding option.'6
69.

The District designated its employees Ms. Roecks, Eugene Whitlock, and

Executive Vice Chancellor Kathy Blackwood to act

as

its “authorized bidders.” Under the FCC’S

procedures, only these three authorized bidders would receive and be authorized to use an

electronic code key (a “SecurID token”) from the FCC, which was necessary to “place bids for
\OOOQGUI-h-WNH

the applicant during the auction.”‘7
70.

Even before the application was filed, the District’s authorized bidders held

meetings with LPN to begin preparing for the Auction, consistent with LPN’s agreement to

“[t]rain and supervise the qualified personnel that the District appoints to act as its authorized
bidders inrthe Auction to assure—their satisfactory performance of the duties associated with
authorized bidders in the Auction.”
71.

These meetings were vital because the consequences

of not submitting a bid were

enormous—as the FCC repeatedly warned, a missing bid would be deemed a bid to drop out

of

the Auction, precluding any future bidding in any future stage or round. This waming was

included in official documents adopted by the FCC, in the RABS User Guide, in materials

provided in connection with the FCC Mock Auction documents, and in other education materials
disseminated before the Auction.
ooq-t_Bo.\oooq0\UI-4>wwt—o

72.
«

To ensure that bidders could deal with contingencies and avoid an unintentional

failure to submit abid, the FCC also implemented backup mechanisms, such as (i) permitting
applicants to identify “up to three authorized bidders who are authorized to place bids for the

applicant in the auction”; and (ii) installing a telephonic backup bidding system if a bidder were
to experience technical problems with its computer or with the FCC’s online Auction bidding
System.

'6

Bidders with a station in the UHF television band also could preserve the option to bid to move
the VHF band. In its agreements with LPN, the District forswore that option.
to
FEDERAL COMMUNICATIONS COMMISSION, DA 15-1252, INSTRUCTIONS FOR FCC FORM 177
APPLICATION To PARTICIPATE IN THE REVERSE AUCTION (AUCTION 1001) (2015) available at
t‘QszllappSfccgov/edocs public/attachmatch/DA-l5-1252A1.p_df at 7. The FCC also specified
that “[t]he usemame and the RSA token should be used only by the authorized bidder to which it
was assigned.” (RABS User Guide at 7.)
14
COMPLAINT

 The District’s three authorized bidders met with an LPN representative in

73.

r-I

N

December 2015 to begin their Auction preparation. Joining them at this meeting were

b.)

representatives from PricewaterhouseCoopers i“PwC”), which LPN had engaged at its expense to

.b

consult with the District because an FCC rule, scheduled to take effect in January 2016,

LII

established a “Quiet Period’flprohibiting communications between the District and LPN during

O\

the Auction about the District’s bids or bidding strategy.18

In amending the Bid Management Agreement on December 8, 2015, the District

74.

\1

-

in every round during the Auction with PwC” but acknowledged that PwC was

00

agreed to “consult

\O

“not assuming any additional duties or obligations directly to the District.”
Chancellor-Gamma and two of the District’s authorized bidders attended another

75.

meeting with an LPN representative in December 2015.

At LPN’s request,

76.

One

of the District’s authorized bidders signed a Confidential

Bidding Plan for KCSM for Incentive Auction on January 11, 2016. The plan required that

“Authorized Bidders will complete and sign a Bid Submission Confirmation sheet, located in a
secured Auction Playbook,

following the submission of the bid for each Licensee'in each round

of the Auction.”
.

77.

‘

PwC requested that the District’s authorized bidder also generate a Bid Summary

from the FCC’s Auction website that confirmed the time and amount of the bid.
.

.

78.-

The District submitted a commitment to accept the FCC’S opening price offer for

the relinquishment of' the KCSM Spectrum usage rights on March 29, 2016
79.

The District participated with PwC

1n

the F CC’S May.2016 mock auction. The

District’s three authorized bidders practiced the bidding process and followed the procedures to
V

which the District had agreed.

18

‘

The FCC issued this regulation, 47 C.F.R. § 1.2205, on August 15, 2014, and released guidance
on October 6, 2015, regarding prohibited communications during the “Quiet Period” covering the
time of the Auction. See FEDERAL COMMUNICATIONS COMMISSION PUBLIC NOTICE, DA 15-1 129,
GUIDANCE REGARDING THE PROHIBITION OF CERTAIN COMMUNICATIONS DURING THE INCENTIVE
AUCTION, AUCTION 1000 (2015), available at
llapps. fcc. gov/edocs public/attachmatch/DA—

hm

15-1129A1.pdf
15

COMPLAINT

 The District Fails to Enter a Bid and Is Dropped from the Auction
Bidding in the Auction began on May 31, 2016. Following the strategy and

80.
U)

procedures to which the District had agreed, one

of the District’s authorized bidders, Ms. Roecks,

placed a bid on the District’s behalf to accept the FCC’s opening price offer

Over the three stages

81.

of the auction, until November

of $353,887,920.

14, 2016, an authorized

District bidder logged into the FCC Reverse Auction Bidding System for 52 rounds in which

a

\OOO\IO\UI-P-

I

bid was potentially required.

While any of the District’s three authorized bidders could have executed the

82.

bidding fimction on the District’s behalf, Ms. Roecks performed this role in 46 of those 52
10

rounds. And she successfully placed bidscn-the District’s behaltiin—l7 rounds in which a bid

11

submission was required.

12

'

After doing so, her general practice—consistent with the agreed procedures—was

83.

13

to sign the Bid Submission Confirmation Sheets and generate Bid Summaries from the FCC

14

Auction website confirming the District’s bids in rounds that required

15

a

bid.

As the Auction progressed, however, the District’s bidders strayed from the agreed

84.

16

procedures. For example, on September 2, 2016 (Stage 2, Round 12) and November 10, 2016

17

(Stage 3, Round 18), the District’s authorized bidder failed to sign the Bid submission

.

I

18
19

Confirmation Sheets.
Stage

85.

3 Round 23 of the Auction occurred on November 15,2016 The bidding
'

20
21

22
23

24.
25

26
27
28

window for that round was open between 7:00 a. m. and 8: 00 a. m PST.
Ms. Roecks, the only. District authorized bidder who waspresent for the bidding,

86.

did not submit a bid on the District’ 3 behalf in Stage 3, Round 23.

~

Ms. Roecks stated that she did not “think to actively submit a bid” and did not

87.

click the “bid” button “which we had done for all active rounds since May.”

Nor did Ms. Roecks follow her admitted “normal activity” in generating a Bid

88.

Summary confirmation from the FCC Auction website, as PwC had requested.
89.

‘

Ms. Roecks signed a Bid Submission Confirmation Sheet stating that she had

“submitted the bid according to bid strategy” at “7:12 AM PST” for Stage 3, Round 23, in the

'

16

COMPLAINT

-

 amount

of $1 14,494,613.
Thus, the District not only failed to submit a bid, but also (i) failed to follow its

90.

normal procedure of generating a confirmation directly from the FCC Auction website, (ii) falsely

certified that it had submitted a bid despite not obtaining that confirmation, and (iii) failed to

verify whether it had submitted a bid during the remaining approximately 48 minutes that Round
\OOOQO‘UIAUJNH

23 bidding remained open.

When Ms. Roecks logged into the FCC Auction website for the next round

91.

approximately three hours later, she learned that the District had been dropped from the Auction
due to its failure to submit a bid in the prior round.

'-‘

automated, is not built to reinstate bidders for any reason, and there was no way to get back into

N

the auction regardless

—-

1—;-

The FCC informed the District—as it had repeatedlguvamed—that i‘tlre.auction is

92.

0

1—.

of the reason.”

Ms. Roecks informed Chancellor Galatolo

93.

of the failure to bid. At his request, Ms.

._.

l»

—-

h

Roecks and PwC both documented the events

r—-

U!

as

-—-

O\

The District Falsely Certifies Its Performance in Order to Continue Receiving

of the day and closed down the bidding for KCSM
'

- \l
.—1

H

it was no longer allowed to participate in the Auction.

Quarterly Subsidy Payments from LPN
The District did not inform LPN that it had failed to submit a bid and had

94.

00

consequently been dropped fiom the Auction.

\O

95..

NO

_

Despite its known failure to bid, the District certified on‘December

l6, 2016, that.

‘N H

“[n]o event has occurred

NN

“performed 1n all material respects all agreements” with LPN. The District’ 3 failure to submit a

that wouldconstitutea Triggering Event” and the District had

'bid was a “Triggering Event” under the Funding Agreement because it was a “default in the

NW

N

. . .

performance

.4;

N U!

96.

of or compliance with” the Agreements.
The District’s false certification enabled it to continue receiving quarterly Subsidy

N O\

Payments from LPN, which LPN had no obligation to make unless (among other things) the

N \l

District had performed its contractual obligations and no Triggering Events had occurred.
97.

N 00
I

ll

In reliance on the District’s false certification, LPN made its next quarterly
'
17
COMPLAINT

 Subsidy Payment of $225,000 to the District on December 20, 2016.
The District could have taken action to avoid inducing LPN to make a payment on

98.

N

the basis

of a false certification, or to return the funds as soon as possible. For example, the

District could have declined to sign the December 16, 2016 certificate it knew was false. Or it
could have segregated LPN’s December 20 payment.

And even

99.

if the District had legitimate concerns about communicating with LPN

\oooqovraw

during the Quiet Period, it did not alert LPN about its false certification (and the Subsidy Payment

it induced) even after the» Quiet Period ended on February 6, 2017, when the District had the
opportunity to correct the record during a February 8, 2017 call with LPN.

:_’-‘

,.-_..__10

—

11

100.

Instead, the District deposited LPN’s money and stayed silent.

101.

Under Funding Agreement

§

.

_
_

9.1, LPN notified the District on February 21, 2017,

that the $3,375,000 in Subsidy Payments that LPN had paid to date were “immediately due and

12

13. payable.”
As

102.

14

of the date of this Complaint, the District has kept all $3,375,000 of LPN’s
'

funds.

15

.....

FIRST CAUSE OF ACTION

16

Breach of Contract Under California Civil Code

17

§

3300 et seq.

'

(Funding Agreement

18
19

LPN hereby incorporates the preceding paragraphs 1 through 102 of this

103.

,.

20' Complaint by reference as if set forth here again in firll.

‘

22

written agreement between the District and LPN
_

24
25

1

,

is_

a

valid and enforceable

,

LPN has fully performed its duties under the Funding Agreement.

105.

23

7

The Funding Agreement (amended December 17, 2015)

104.

21

§ 6.9)

_

106.

Funding Agreement

§

6.9 required the District to “take all actions necessary to

cause the spectrum usage rights associated with the FCC License to be relinquished

in the

-26. Auction (as such term is defined in the Option Agreement), subject to the terms set forth in the
27

28

Bid Management Agreement.”
107.

Entering

a

bid in the Auction, which only the District’s authorized bidders were
‘
18

COMPLAINT

 authorized to do, was “necessary to cause the spectrum usage rights associated with the FCC
License to be relinquished in the Auction.”

As detailed above, the District willfully failed to enter a bid in Stage 3, Round 23

108.

of the Auction on November

15, 2016,

which resulted in the District being dropped from the

Auction.
\OOOQOflUI-bWNH

The Auction Option was consideration for LPN’S Funding Agreement obligations.

109.

(Funding Agreement at 1.) As a direct and proximate result

of the District’s breach, the Auction

Option became worthless. LPN therefore suffered damages in the amount of 36.5%

of the

Auction proceeds to which it would have been entitled by the Auction Option, and which would
have resulted from the relinquishment

I—l

of KCSM’S spectrum if the District had performed its

obligations under the Funding Agreement.

p—a

n—t

1

LPN is entitled to recover from the District the damages sustained by LPN as

10.

result of the District’s wrongfiil acts described in this Complaint. The amount

r—I

will be proven

p—A

of such damages

at trial.

SECOND CAUSE OF ACTION

n—I

Breach of Contract Under California Civil Code § 3300 et seq.

I—l

”

(Bid Management Agreement

n—n

§ 2.6.5)

LPN hereby incorporates the preceding paragraphs

111.

I—I

n—a

a

1

through 110

of this

Complaint by reference as‘ifset-forth here again in full.
,

IN

N

.

,

The Bid Management Agreement (amended December 8, 2015) is a valid and

112.

enforceable written agreement between theDistrict and LPN.
.

N

LPN has fully performed its duties under the Bid Management Agreement.

113.

.

'

N

114.

‘

Bid Management Agreement §r2.6.5 required

theDistrict to i‘[t]ake all such other

in order for the District to successfully participate in

[\J

actions as may be reasonably required

N

the Auction and relinquish the spectrum usage rights associated with the License at a price that is

N

at .or abovethe-[$3,000,000] Minimum Bid Amount.”

N
N

115.

. . .

Entering a bid in the Auction, which only the District’s authorized bidders were

authorized to do, was “reasonably required

. . .

for the District to successfully participate in the
'
19

COMPLAINT

,

 Auction and relinquish the spectrum usage rights associated with the License.”
As detailed above, the District failed to enter a bid in Stage 3, Round 23

116.

of the

Auction on November 15, 2016, when the FCC’s offer was above the Minimum Bid Amount.
The District’s failure to bid resulted in the District being dropped from the Auction.
117.

The Bid Management Agreement, the Put/Call Option Agreement, and the

Funding Agreement together formed the entire agreement between LPN and the District. (Bid
Management Agreement § 8.6.) As a direct and proximate result of the District’s breach, the
\DOOQQ

Auction Option became worthless. LPN therefore suffered damages in the amount of 36.5% of
the Auction proceeds to which it would have been entitled by the Auction Option, and which

10

would have resulted from the relinquishment of KCSM’s spectrum

11

its obligations under the Bid Management Agreement.

12'

118.

if the District had performed

LPN is entitled to recover from the District the damages sustained by LPN

"W

of the District’s wrongful acts described in this Complaint.

13

result

14

will be proven at trial.

15

The amount of such damages

16

Breach of Contract Under California Civil Code § 3300 et seq.

17

(Bid Management Agreement § 2.6.5)

18

19

20
21

119.

Complaint by reference as
.

5

120.

if set forth here again in full.

1

through 118

of this

.

.

~

‘The Bid Management Agreement (amended December 8, 2015) is a valid and

enforceable written agreement between theDistrict and LPN.

22
I

LPN hereby incorporates the preceding paragraphs

as a

121 .

LPN has fully performed its duties under the Bid Management Agreement.

122.

Bid Management Agreement

8

23

§

2.6.5 required the District to “[t]ake all such other

24

actions

25

for the District to successfully participate in the Auction and relinquish the spectrum usage rights

26

associated‘with the License at a price that is at or above the [$3,000,000] Minimum Bid Amount.”

27
28

. . .

as LPN, acting

123.

in its capacity as bidding consultant and agent, may request in order

In the Confidential Bidding Plan for KCSM for Incentive Auction, to which the

District agreed on January 11, 2016, LPN requested that the District’s authorized bidders
20
COMPLAINT

 “complete and sign a Bid Submission Confirmation sheet, located in a secured Auction Playbook,

following the submission of the bid for each Licensee in each round of the Auction.” By virtue of

Bid Management Agreement § 2.6.5, the District was contractually bound to perform this
l

obligation.
\lO‘UI-hUJN

The District breached this obligation because, as detailed above, Ms. Roecks

124.

signed a false Bid Submission Confirmation Sheet stating that she had “submitted the bid

according to bid strategy” at “7:12 AM PST” for Stage 3, Round 23, in the amount

of

$114,494,613.

00

As a direct and proximate result of the District’s breach, the District was dropped

125.
10

from the Auction-,andwPN’s Auction Optiontherefore becameworthless. LPN therefore

11

suffered damages in the amount of 36.5%

of the Auction proceeds to which it would have been

entitled by the Auction Option, and which would have resulted from the relinquishment

12

of

‘

13

KCSM’s spectrum

14

Agreement.

15

126.

16

if the District had performed its obligations under the Bid Management

LPN is entitled to recover from the District the damages sustained by LPN

result of the District’s wrongful acts described in this Complaint. The amount

as a

of such damages

.17: will be proven .at'trial.
FOURTH CAUSE OF ACTION

18

.19

.

,Breach- of Contract Under California Civil Code § 3300 et seq.
_

-

20
,_

21

22

(Bid Management Agreement § 2.6.5, Amendment Attachment A: Letter of Authorization)
LPN hereby incorporates the preceding paragraphs

127.

1

through 126

of this

Complaint by reference as if set forth here again in fill].
‘

i

.23

128.

The Bid-Management Agreement (amended December 8, 2015) is a valid and

.

24. enforceable written agreement between the District and LPN.
25

129.

LPN has fully performed its duties under the Bid Management Agreement.

26:

130.

Attachment A to the Amendment to the Bid Management Agreement was a Letter

27

of Authorization that required the District to “cooperate with PwC in accordance with Section 2.6

28

of the Agreement as it performs its engagement by LPN to help ensure compliance with the
21

COMPLAINT

 FCC’s rules pertaining to the Auction under the Agreement.”

Bid Management Agreement

131.

actions

. . .

§

2.6.5 required the District to “[t]ake all such other

request in order
LPN, acting in its capacity as bidding consultant and agent, may

as

the spectrum usage rights
for the District to successfully participate in the Auction and relinquish
Minimum Bid Amount.”
associated with the License at a price that is at or above the [$3,000,000]

\IQU‘i-bU-‘N

As detailed above, the District breached

132.

§

2.6.5

of the Bid Management

from
Agreement (as amended) by, among other things, failing to generate a confirmation directly
00

the FCC Auction website in Stage 3, Round 23

of the Auction on November

15, 2016, as

requested by PwC.

10.

As a direct and proximatelesult of the District’s breach, the District was dropped

133.

11

from the Auction, and LPN’s Auction Option therefore became worthless. LPN therefore

12

suffered damages in the amount

13

entitled by the Auction Option, and which would have resulted from the relinquishment of

14‘

KCSM’s spectrum if the District had performed its obligations under the Put/Call Option

15.

Agreement.

of 36.5% of the Auction proceeds to which it would have been

,

LPN is entitled to recover from the District the damages sustained by LPN as a

134.

16,

17'

result of the District’s wrongful acts described in this Complaint. The amount of such damages

18

will be proven at trial.

‘

FIFTH CAUSE OF ACTION

19g

Breach of Contract Under California Civil Code
'

(Put/Call Option Agreement

21;

135.

‘22

_.

‘

"

136.

24

§ 10.d.)

LPN hereby incorporates the preceding paragraphs

Complaint by reference as

23

§ 3300 et seq.

' '

1

‘

p

through 134 of this

if set forth here again in full.

the Put/Call Option Agreement (amended December 17, 2015) is a valid and

enforceable written agreement between the District and LPN.

25

26

137.

LPN has fully performed its duties under the Put/Call Option Agreement.

27

138.

Put/Call Option Agreement

§

10.d. obligated the District to “take no action that

i

28

could reasonably be expected to impede, interfere with, delay, postpone or materially adversely
22
COMPLAINT

 “complete and sign a Bid Submission Confirmation sheet, located in a secured Auction Playbook,

following the submission of the bid for each Licensee in each round of the Auction.” By virtue of
Bid Management Agreement

§

2.6.5, the District was contractually bound to perform this

obligation.

The District breached this obligation because, as detailed above, Ms. Roecks

124.
\OOOQONUI-bwmv—

signed a false Bid Submission Confirmation Sheet stating that she had “submitted the bid

of

according to bid strategy” at “7: 12 AM PST” for Stage 3, Round 23, in the amount
$114,494,613.

As a direct and proximate result of the District’s breach, the District was dropped

125.
'-.'

from the Auction, and LPN’s Auction Option therefore becameavertlfless. LPN therefore

O

suffered damages in the amount

H H

.

of 36.5% of the Auction proceeds to which it would have been
‘

N

entitled by the Auction Option, and which would have resulted from the relinquishment

u—n

W

KCSM’s spectrum

l—l

uh»

t—o

v—I

u-t

of

if the District had performed its obligations under the Bid Management

Agreement.

LPN is entitled to recover from the District theydamages sustained by LPN

126.

M

as a

O\

result of the District’s wrongful acts described in this Complaint. The- amount of such damages

\l

'will be proven at‘trial.

.

H

‘

FOURTH CAUSE OF ACTION

H 00

I—‘

Breach of Contract Under California Civil Code

\O

~

(Bid Management Agreement § 2.6.5, Amendment Attachment A: Letter of Authorization)

[\J O

127.

N
N_’—‘

.LPN hereby incorporates the preceding paragraphs 1 through

Complaint by reference as

126

of this

if set forth here again in full.

I

N'N

128.

93

N

§ 3300 et seq.

-

.

The Bid Management Agreement (amended December 8, 2015) is a validand

enforceable written agreement between the District and LPN.

-h

N VJ]

129.

LPN has fully performed its duties under the Bid Management Agreement.

N0

130.

Attachment A to the Amendment to the Bid Management Agreement was a Letter

N \I

of Authorization that required the District to “cooperate with PwC in accordance with Section 2.6

N 00

of the Agreement as it performs its engagement by LPN to help ensure compliance with the
11

2l

COMPLAINT

 FCC’s rules pertaining to the Auction under the Agreement.”

Bid Management Agreement

131.

actions

. . .

as

LPN, acting in its capacity

as

§

2.6.5 required the District to “[t]ake all such other

bidding consultant and agent, may request in order

for the District to successfully participate in the Auction and relinquish the spectrum usage rights
associated with the License at a price that is at or above the [$3,000,000] Minimum Bid Amount.”

As detailed above, the District breached

132.

§

2.6.5

of the Bid Management

\OOOQQLIIA

Agreement (as amended) by, among other things, failing to generate a confirmation directly from
the FCC Auction website in Stage 3, Round 23
requested by PwC.

of the Auction on November

15, 2016, as

.

i

---——10

As a direct and proximate result

133.

of the District’s breach, the District-washropped

11

from the Auction, and LPN’s Auction Option therefore became worthless. LPN therefore

12

suffered damages in the amount

13

entitled by the Auction Option, and which would have resulted from the relinquishment of

14

KCSM’s spectrum

15:

Agreement.

of 36.5% of the Auction proceeds to which it would have been

if the District had performed its obligations under the Put/Call Option
_

LPN is entitled to recover fiom the District the damages sustained by LPN as a

134.

16
.

17

18:

’

result of the District’s wrongful acts de3cribed in this Complaint. The amount

of such damages

will be proven at trial.
A

.

FIFTH CAUSE OF ACTION

19.

.

.

-

20

2122

23,
24
25
-

__

(Put/Call Option Agreement § 10.d.)
135.

LPN hereby incorporates the preceding paragraphs

Complaint by reference as if set forth here again in
136.

1

through 134 of this

1111]..

_. __
~

_

The Put/Call Option Agreement (amended December 17, 2015) is a valid and

enforceable written agreement between the District and LPN.

~26

.. “$1357;

27

138.

23

moo. of Contract Under California Civil Code § 3300 et seq.

LPN has fully performed its duties-under the Put/Call Option Agreement:
Put/Call Option Agreement § 10.d. obligated the District to “take no action that

could reasonably be expected to impede, interfere with, delay, postpone. or materially adversely
22
COMPLAINT

 affect the transactions contemplated by this Agreement or the likelihood
N

being consummated.”

As detailed above, the District breached

139.

to bid in Stage 3, Round 23

§

of the Auction on November

being dropped from the Auction;
\OOOQO‘UI-bb)

of such transactions

lO.d. by, among other things, (i) failing
15, 2016, which resulted

in the District

(ii) failing to follow its normal procedure of generating a

confirmation directly from the FCC Auction website; (iii) certifying that it had submitted a bid
despite not obtaining that confirmation, and (iv) failing to

verify whether it had submitted a bid

during the remaining time that Round 23 bidding remained open.

The District’s conduct could have reasonably been “expected to impede, interfere

140.

2.2.22“...

109

with, delay,.postpone or materially adversely affect the” Auction Option.

As a direct and proximate result of the Districtis breach, the Auction Option

141.

11

of 36.5% of the Auction

12

became worthless. LPN therefore suffered damages in the amount

13

proceeds to which, it would have been entitled by the Auction Option, and which would have

14

resulted from the relinquishment

15

obligations under the Put/Call Option Agreement.

17

LPN is entitled to recover from the District the damages sustained by LPN as a

142.

16

of KCSM’s spectrum if the District had performed its

resultiof the District’s wrongful acts‘described in this Complaint. The amount of such damages

18‘ will be proven at trial.
4

'19.

SIXTH CAUSE OF ACTION

._

Breach of Contract Under California Civil Code § 3300 et seq.

20

(Put/Call Option Agreement

21
.

4

22

.

§ 10.b.)

LPN hereby incorporates the preceding paragraphs

143.

1

through 142

-

of this

‘

_23

Complaint by reference as if set forth here again in full.
.

24
25

27
28

144.

p

_

The Put/Call Option Agreement (amended December 17, 2015) is a valid and

enforceable written agreement between the District and LPN.
145.

LPN has fully performed its duties under the Put/Call Option Agreement.

146.

Put/Call Option Agreement

§ 10.b.

required the District to perform its obligations

under the Funding Agreement and the Bid Management Agreement.
23
COMPLAINT

 /,_\

As described above in the five Causes

147.
N

of Action of this Complaint, the District

breached its obligations under the Funding Agreement and the Bid Management Agreement,

thereby breaching

§ 10.b

of the Put/Call Option Agreement.

As a direct and proximate result of the District’s breach, the Auction Option

148.
Nam-bu)

became worthless. LPN therefore suffered damages
proceeds to which

in the amount of 36.5% of the Auction

it would have been entitled by the Auction Option, and which would have

resulted from the relinquishment

of KCSM’s spectrum if the District had performed its

obligations under the Put/Call Option Agreement.
LPN is entitled to recover from the District the damages sustained by LPN as a

149.
10

r-result- of the

District’s “2:911n acts described in this Complaint. The amount of such damages

will be proven at trial.

11

12

SEVENTH CAUSQOF ACTION

13

Breach of Contract Under California Civil Code § 3300 et seq.

14

(Funding Agreement § 6.9)

Complaint by reference

16

151.

17

»

20
21

,

3T he

as

1

through 149

of this

if set forth here again in full.

Funding Agreement (amended December 17, 2015) is a valid and enforceable

written agreement between the District and LPN.

18

19,

LPN hereby incorporates the preceding paragraphs

150.

15

152

LPN has fully performed its duties under the Funding Agreement.

153.

Funding Agreement §. 6. 9 required the District to‘ ‘perform all

of 1ts obligations

under the termsof’ the Bid Management Agreement and the Put/Call Option Agreement.

22

154.
.

As described above

1n

the six Causes

,

,

of Action of this Complaint, the District

23' breached its obligations under the Bid Management Agreement
and the Put/Call Option

24' Agreement, thereby breaching § 6.9 of the Funding Agreement.
25

155.

As a direct and proximate result of the District’s breach, the Auction Option

26

became worthless. LPN therefore suffered damages

27

proceeds to which

28

resulted from the relinquishment

in the amount of 36.5% of the Auction

it would have been entitled by the Auction Option, and which would have

of KCSM’s spectrum if the District had performed its

'
24
COMPLAINT

'

 obligations under the Funding Agreement.

EIGHTH CAUSE OF ACTION
Breach of Contract Under California Civil Code § 3300 et seq.
(Reimbursement under Funding Agreement §§ 9.1—9.2)
156.

LPN hereby incorporates the preceding paragraphs

1

through 155

of this

\oooqoxmbmxu—

Complaint by reference as if set forth here again in full.
157.

The Funding Agreement (amended December 17, 2015) is a valid and enforceable

written agreement between the District and LPN.
158.

LPN has fully performed its duties under the Funding Agreement.
.

159.

The-Fumdéng-Agreement obligates the—District to reimburse LPN’s Subsidy

Payments upon a “Triggering Event,” which includes any “default in the performance

compliance with any term contained in (a) this [Funding] Agreement

. . .

Option Agreement or the Bid Management Agreement” that “result[s]' in

Effect.” Under Funding Agreement

§

or (b) the [Put/Call]
a

Material Adverse

1.1, Material Adverse Effects include “the impairment

the ability of [the District] to perform, or

of

of LPN to enforce, the Reimbursement Obligations or

any other material obligations under any”
160."

of or

of the Agreements.

As described above in the seven Causes of Action, the District defaultedhin‘ the

-‘

performance of the Funding Agreement, the PutJCall Option Agreement, and the Bid
--Management Agreement
161.

These defaults resulted 1n a Material Adverse Effect because they resulted 1n the

District being dropped from the Auction, which impaired the District’s ability to perform its
obligations under the Agreements, such as its obligations to “participate

Option Agreement

§

163.

1n

the

Auction” (Funding Agreement

Thus, the defaults described above in the seven Causes

Triggering Events.

the Auction” (Put/Call

10. b) and to “take all actions necessary to cause the spectrum usage rights

associated with the FCC License to be relinquished
162.

1n

§

6.9).

of Action constitute

‘~

A Triggering Event also

occurs when “[a]ny representation, warranty, certification

or other statement made by [the District] shall be false in any material respect on the date as of

'

25
COMPLAINT

 which made” and results in a Material Adverse Effect. (Funding Agreement

9.1(C).)

As described above, the District’s December 16, 2016 certification was false when

164.

made. The District certified that
A

§

“[n]o event has occurred

. . .

that would constitute a Triggering

Event” and the District had “performed in all material respects all agreements” with LPN, despite

knowing that it had failed to enter a bid on November 15, 2016, which constituted .a breach of the
Agreements resulting in a Material Adverse Effect, thus rendering the breaches Triggering
\OOOQONUI

Events.
i

The District’s false certification also breached the District’s warranty in Funding

165.

Agreement

§ 4.13

that .“[n]o representation or warranty of [the District] contained in any.

10

certificate or written statement funrishedatoLP-iy or on behalf oflfthe District]

11

untrue statement of a material fact.”
The false certification resulted in a Material Adverse Effect because

166.

12

. .

. .

.contains any

it prevented

13

LPN from enforcing the District’s reimbursement obligations under Funding Agreement §§ 9.1 &.

14

9.2.

In light of the Triggering Events described in paragraphs 160—166 that resulted in

167.

15

Material Adverse Effect, LPN had “sole discretion” to “declare all or any portion of the Subsidy

16

a

17;

Paymentsumade on or prior to [the Triggering Event] date

18

requiring the District to deliver the amount due in “same day funds, free of any restriction or

.19- condition,

-.

. -.~to

21

. ‘.

immediately‘due and payable,”

LPN not later than noon San Francisco time on the date due inthe'LPN
'1

20

.

i

I

Account.” '(§§ 9.1 & 9.2.3.)"
168..

,

Under Funding Agreement

§

9.1, LPN notified the District on February 21, 2017,

of that date were “immediately

22

that the $3,375,000 in Subsidy Payments that LPN had paid

23

due and payable.” Because the breaches described above in the seven Causes

24

Triggering Events described in paragraphs 160-166 were willful, the District must return the

25

$3,375,000 with interest at an 8% annual rate. (Funding Agreement

4

26
27
28

169.

as

§

of Action and the

9.1.)

The District has not paid LPN 'any portion of the $3,375,000 or the 8% interest

thereon.
170.

The District has therefore breached and continues to breach its Funding Agreement

'
26
COMPLAINT

 obligation to reimburse LPN,’s $3,375,000 in Subsidy Payments plus interest.

As a direct result of the District’s continuing breach, LPN has suffered damages in

171.

the amount

of $3,375,000 plus interest accruing at an 8% annual rate.
NINTH CAUSE OF ACTION
Attorneys’ Fees Under the Funding Agreement

\OOOQQUIAUJN—n

LPN hereby incorporates the preceding paragraphs

172.

through 171

1

of this

Complaint by reference as if set forth here again in full.

The Funding Agreement is

173.

a

valid and enforceable written agreement between the

District and LPN.
174.

LPN has fully performed its duties under the FundingaAgreement.

175.

Section 10.2

«.m-

—

of the Funding Agreement allows the prevailing party to recover its

reasonable attorneys’ fees and costs in any litigation arising out

of the Funding Agreement:

If either party to this Agreement shall bring any action for relief against the other,

'

..

declaratory or otherwise, arising out of this Agreement, the losing party shall pay
to the prevailing party reasonable attorneys’ fees and costs incurred in bringing
such suit and/or enforcing any judgment granted therein. Any judgment or order
entered 1n such action shall contain a specific provision providing for the recovery
of attorneys’ fees and costs incurred 1n enforcing such judgment.

This action arises out

176.

of the Funding Agreement.

Thus, the prevailing party is

entitled to recover its reasonable attorneys’ fees and expenses incurred

1n

bringing this action and

enforcing any judgment.
H

i

j

i

..

'

I

4‘

'

'

'

"ll-PRESENTATION OF'CLATMS
177.

The first breach

of contract described 1n this Complaint occurred on

November 15, 2016, three menths and six days before LPN presented its claims to the District.
-

~178.‘ ..

LPN presented its claims to the District in compliance with Cal. Gov.'Code

§

910.

,

‘

179.

Specifically, the claims were delivered by hand and sent by certified mail from
'

San Francisco,

-

California, to the District’s Chancellor’s Office and the District’s 30336?

Trustees on February 21, 2017. On the same date, the claims were sent by e—mail to Chancellor

Galatolo, Mr. Whitlock, and the members
180.

of the District Board of Trustees.

The claims included notice that LPN declared the Subsidy Payments made to date
27
COMPLAINT

 immediately due and payable because arTriggering Event had occurred, which terminated LPN’s

obligation to make further payments under the Funding Agreement.
The District did not provide a notice

181.
§

of insufficiency under Cal. Gov.

Code

910.8 within 20 days afler the claims were presented.
The District did not respond to LPN’s claims by April 6, 2017. The District’s

182.

Board is therefore deemed to have rejected LPN’s claims under Cal. Gov. Code

§

912.4(c).

DEMAND FOR JURY TRIAL

Plaintiff LPN demands a jury trial in this action.

w

PRAYER FOR RELIEF
LPN prays for judgment against the District,

as

follows:

A

sum to be determined at trial;

a.

For compensatory damages in

b.

Directing the District to pay LPN’s attorneys’ fees and costs incurred in bringing

a

this action, in an amount to be determined upon an offer of proof to the Court, and

granting LPN leave of the Court to offer a report constituting such proof to the
Court;
c.

For prejudgment interest; and

d.

For such other and further relief as the court may deem‘ proper.

'

DATED: April .10,’ 20.17
N

‘

’

W

a

A

Tadahiro Kaburaki (3.3. #311823)
B, Andrew Bednark (pro hizc vi'ce forthcoming)

O’MELVENY & MYERS LLP

Git/Li
-

‘

V

-

.

i

,

.

[£4

Tadahiro Kaburaki

Attorneys for LocusPoint Networks, LLC and LocusPoint
KCSM, LLC

28
COMPLAINT

II

 

EXHIBIT A

/

\,

4

\

A»

__

EXECUTION VERSION

FUNDING AGREEMENT

DATED AS OF MAY 16, 2013
BETWEEN
SAN MATEO COUNTY COMMUNITY COLLEGE DISTRICT

and

LOCUSPOINT NETWORKS, LLC

OMM_US:7l463242.l0

,7

 TABLE OF CONTENTS
Page No.

SECTION

1 .

DEFINITIONS ....................................................................................................................

Certain Defined Terms ..................................................................................................... 1
Accounting Terms; Utilization of GAS for Purposes of Calculations Under Agreement7
Other Definitional Provisions and Rules of Construction ................................................ 7

1.1

1.2
1.3

SECTION 2.

SUBSIDY PAYMENTS ..................................................................................................... 8
Making of Subsidy Payments ...........................................................................................

2.]
SECTION 3.

8

CONDITIONS TO SUBSIDY PAYMENTS ...................................................................... 8
Conditions to Effective Date ............................................................................................ 8
Conditions to All Subsidy Payments .............................................................................. 10

3.1

3.2

SECTION 4.

REPRESENTATIONS AND WARRANTIES OF SMCCCD ......................................... 10
Organization, Powers, Qualification, Good Standing ..................................................... 11
Effectiveness of Funding Documents ............................................................................. 12
Financial Condition ........................................................................................................ 12
No Material Adverse Change; No Interference. ............................................................. 12
Title to Properties; Liens; Real Property ........................................................................ 12
Litigation; Adverse Facts ................................................................................................ 13
Payment of Taxes ........................................................................................................... 13
Performance of Agreements; Material Contracts ........................................................... 13
Employee Benefit Plans; Employee Matters .................................................................. 13
Certain Fees .................................................................................................................... 13
Environmental Protection ............................................................................................... 14
Proceeds .......................................................................................................................... 14
Disclosure ....................................................................................................................... l4

4.]
4.2
4.3
4.4
4.5
4.6
4.7
4.8
4.9
4.10
4.11

4.12
4.13

SECTION

1

5.

Authority14

REPRESENTATIONS AND WARRANTIES OF LPN .................................................. 14
Organization, Standing,
Authorization and Binding Obligation ........................................................................... 15
Absence of Conflicting Agreements ............................................................................... 15
Availability of Funds ...................................................................................................... 15

5.1

5.2
5.3
5.4

SECTION 6.

AFFIRMATIVE COVENANTS

................................... 15-

6.5
6.6
6.7
6.8
6.9
6.10
6.11

FinancialStatements and Other Reports ...........
15
Existence, etc .................................................................................................................. 17
Payment of Taxes and Claims; Tax Returns ................................................................... 17
Maintenance ofProperties; Insurance
..........................
17
Compliance 1with Laws, etc. ........................................................................................... 17
Environmental Matters
.......................
........ ...... l7
Proceeds Account ........................................................................................................... l7
Conduct ofBusmess
............................
17
Performance of Obligations ............................................................................................ 17
Use of Proceeds .............................................................................................................. 17
Access to Facilities ......................................................................................................... I8

SECTION 7.

NEGATIVE COVENANTS ............................................................................................. l8

6.1

6.2
6.3
6.4

-

7.1

7.2

Indebtedness ................................................................................................................... 18
Liens and Related Matters .............................................................................................. 18

-i
OMM_US:71463242.10

_

 TABLE OF CONTENTS
(Continued)
Page No.

Restriction on Fundamental Changes; Asset Sales

7.3

SECTION 8.

NEGATIVE COVENANTS DURING A TRIGGERING EVENT OR AFTER THE
FUNDING TERMINATION DATE ................................................................................

8.2
8.3

REIMBURSEMENT OBLIGATIONS .............................................................................

18

19

Triggering Events ........................................................................................................... 19
Application of Payments; Payments Generally; Calculation of Interest ........................ 21

9.1

9.2

SECTION 10.

8

Indebtedness ................................................................................................................... 1 8
Liens and Related Matters .............................................................................................. l8
Restriction on Fundamental Changes; Asset Sales ......................................................... 19

8.1

SECTION 9.

1

MISCELLANEOUS ..................................................................................................... ....21

10.1

10.2
10.3
10.4
10.5

10.6
10.7
10.8
10.9
10.10
10.11
10.12
10.13
10.14
10.15
10.16

v

Successors and Assigns .................................................................................................. 21
Expenses ......................................................................................................................... 22
Indemnity ........................................................................................................................ 22
Amendments and Waivers; Termination..:;:..::
................ 22
Independence of Covenants ......................
........ 22
Notices; Effectiveness of Signatures .............................................................................. 23
Survival of Representations, Warranties and Agreements ............................................. 23
Failure or Indulgence Not Waiver; Remedies Cumulative ............................................. 23
Payments Set Aside ........................................................................................................ 23
Severability .....................................................................................................................
23
‘
Damage Waiver ...................... ........................................................................................ 2 3
Applicable Law ............................................................................................................... 24
Construction onreement; Nature ofRelationship
........ 24
Consent to Jurisdiction and Service of Process .............................................................. 24
Confidentiality; Public Disclosure .................................................................................. 24
Counterparts; Effectiveness ............................................................................................ 25

__

.

-ii0MM_US:71463242.10

 FUNDING AGREEMENT
This FUNDING AGREEMENT is dated

of May 16, 2013 and entered into by and
between SAN MATEO COUNTY COMMUNITY COLLEGE DISTRICT, a California community
college district (“SMCCCD”), and LOCUSPOINT NETWORKS, LLC, a Delaware limited liability
company (“LPN”).
as

REC ITALS

WHEREAS, SMCCCD operates full-power noncommercial educational television
station KCSM-TV (RF Channel 43), San Mateo, California (FCC Facility ID No. 58912) (the “Station”)
and holds the FCC License and other Governmental Authorizations for the operation of the Station; and
WHEREAS, LPN, at the request of SMCCCD, has agreed to partially fund the continued
operation of the Station in consideration of the grant by SMCCCD of rights set forth in the Option
Agreement and of the grant by SMCCCD of the rights set forth in this Agreement and the other Funding
Documents;
'

mm

:i"

211.;
Juneau-9......

NOW, THEREFORE, in consideration of the premises and the agreements, provisions
and covenants herein contained, SMCCCD and LPN agree as follows:

SECTION

1.

DEFINITIONS

1.1
Certain Defined Terms. The following terms used in this Agreement shall have the
following meanings:

“Affiliate”, as applied to any Person, means any other Person directly or indirectly
controlling, controlled by, or under common control with, that Person. For the purposes of this definition,
“control" (including, with correlative meanings, the terms‘ ‘controlling”, “controlled by” and‘ ‘under
common control with”), as applied to any Person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of that Person, whether through the
ownership of voting securities or by contractor otherwise.
“Agreement” means this Funding Agreement dated as of May l6, 2013.

“Authorizing Resolution” has the meaning assigned to that term in subsection 42A.
“Bankruptcy Code” means Title 1 1 of the United States Code entitled “Bankruptcy”, as
now and hereafter in effect, or any successor statute.
.

“Bid Management Agreement” means that certain Bid Management Agreement by and
as of May 16, 2013

among SMCCCD and LPN dated
=

“Bid Management Compensation” means the aggregate amount payable to LPN
VI of the Bid Management Agreement.

pursuant to Article

“Business Day” means any day excluding Saturday, Sunday and any day which is a legal
holiday under the laws of the State of California or is a day on which banking institutions located in such
state are authorized or required by law or other governmental action to close.

OMM_US:7I463242.10

.

.

.

.

 “Cash” means money, currency or a credit balance in a deposit account.
“Collateral Documents” means the Security Agreement, the Control Agreement and all
other instruments or documents delivered by SMCCCD pursuant to this Agreement'1n order to grant to
LPN a Lien on the Proceeds.
“Communications Act” means the Communications Act of 1934, as amended, and all
rules, regulations, orders, written policies and decisions of the FCC thereunder or any successor statute or
statutes, as from time to time in effect.
“Communications Regulatory Authority” means the FCC, any State PUC and any
current or future Government Authority which has the specific jurisdiction to regulate the conduct of
wireless or broadcast licensees or to otherwise regulate the communications activities of SMCCCD.

“Compliance Certificate” means a certificate substantially in the form of Exhibit I
annexed hereto.

" mw:~-..-;+.__.

“Contingent Obligation”, as applied to any Person, means any direct or indirect
liability, contingent or otherwise, of that Person (i) with respect to any Indebtedness, lease, dividend or
other obligation of another if the primary purpose or intent thereof by the Person incurring the Contingent
Obligation is to provide assurance to the obligee of such obligation of another that such obligation of
another will be paid or discharged, or that any agreements relating thereto will be complied with, or that
the holders of such obligation will be protected (in whole or in part) against loss in respect thereof, or
(ii) with respect to any letter of credit issued for the account of that Person or as to which that Person is
otherwise liable for reimbursement of drawings. Contingent Obligations shall include (a) the direct or
indirect guaranty, endorsement (otherwise than for collection or deposit in the ordinary course of
business), co-making, discounting with recourse or sale with recourse by such Person of the obligation of
another, (b) the obligation to make take-or-pay or similar payments if required regardless of nonperfonnance by any other party or parties to an agreement, and (c) any liability of such Person for the
obligation of another through any agreement (contingent or otherwise) (1) to purchase, repurchase or
otherwise acquire such obligation or any security therefor, or to provide funds for the payment or
discharge of such obligation (whether 1n the form of loans, advances, stock purchases, capital
contributions or otherwise) or (2) to maintain the solvency or any balance sheet item, level of mcome or
financial condition of another if, in the case of any agreement described under subclauses (1) or (2) of this
sentence, the primary purpose or intent thereof is as described in the preceding sentence. The amount of
any Contingent Obligation shall be equal to the amount of the obligation so guaranteed or otherwise
supported or, if less, the amount to~which such Contingent Obligation is specifically limited.
.

“Contractual Obligation”, as applied to any Person, means any provision of any
Security issued by that Person or of any material indenture, mortgage, deed of trust, contract, undertaking,
agreement or other instrument to which that Person 1s a party or by which it or any of'its properties is
bound or to which it or any of 1ts properties is subject.

“Control Agreement” means an agreement, satisfactory 1n form and substance to LPN
and executed by the financial institution at which the Proceeds Account 1s maintained, for the purposes of
holding the Proceeds pursuant to which such financial institution confirms and acknowledges LPN’ 3
security interest in such account.
“Copyright Act” means the Copyright Act of 1976, as amended, including without
limitation, all provisions of Title 17 of the United States Code and the rules and regulations thereunder, in
each case as from time to time 1n effect.
2

OMM_US:7I463242.10

“WWW“

‘

 “Dollars” and the sign “3” mean the lawful money of the United
“Effective Date” means May

States

of America.

16, 2013.

“Employee Benefit Plan” means any “employee benefit plan” as defined in Section 3(3)
of ERISA (whether or not subject to ERISA) which is or was maintained or contributed to by SMCCCD

with respect to the Station.

“Environmental Claim” means any investigation, notice, notice of violation, claim,
action, suit, proceeding, demand, abatement order or other order or directive (conditional or otherwise),
by any Government Authority or any other Person, arising (i) pursuant to or in connection with any actual
or alleged violation of any Environmental Law, (ii) in connection with any Hazardous Materials or any
actual or alleged Hazardous Materials Activity, or (iii) in connection with any actual or alleged damage,
injury, threat or harm to health, safety, natural resources or the environment.

“Environmental Laws” means any and all current or fiiture statutes, ordinances, orders,
rules, regulations, guidance documents, judgments, Governmental Authorizations, or any other
requirements of any Government Authority relating to (i) environmental matters, including those relating
to any Hazardou‘sifiaierials Activity, (ii) the generation, use, storage, transportation 0r disposal of
Hazardous Materials, or (iii) occupational safety and health, industrial hygiene, land use or the protection
of human, plant or animal health or welfare, in any manner applicable to SMCCCD with respect to the
Station or any Facility.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time, and any successor thereto.

“Facilities” means any and all real property. (including all buildings, fixtures or other
improvements located thereon) now, hereafter or heretofore owned, leased, operated or used by
SMCCCD with respect to the Station
‘-

“FCC” means the Federal, Communications Commission and any successor
governmental agency performing functions similar to those performed by the Federal Communications
Commission on the date hereof.
.

,

“FCC License” means the Noncommercial Educational broadcast television license, as
such term is defined'1n the rules, regulations or policies promulgated by the FCC, used 1n connection with
the operation of the Station.

“FCC Rules” has the meaning assigned to that term in subsection 4. l D.

,

'

“First Priority” means, with respect to any Lien purported to be created in the Proceeds,
pursuant to any Collateral Document,- that (i), such Lien is perfected and has priority over any other Lien
on such Proceeds and (ii) such Lien is the only Lien (other than Permitted Encumbrances) to which such
Collateral is subject.
“Fiscal Year” means the fiscal year of SMCCCD ending on June 30 of each calendar
year.

“Funding Date” means the date of fimding of a Subsidy Payment.

OMM__U 5:7 I 463242.!0

"

'

 “Funding Documents” means this Agreement, the Option Agreement, the Bid
Management Agreement and the Collateral Documents.

“Funding Termination Date” means the later of July 1, 2017 and the date upon which
LPN is scheduled to make the last Extension Subsidy Payment (as such term is defined in the Option
Agreement),

if any.

“GAS” means, subject to the limitations of the application thereof set forth in subsection
1.2, the standards applicable to financial audits contained in Government Auditing Standards, issued by
the Comptroller General of the United States, in each case as the same are applicable to the circumstances
as of the date of determination.
“Governing Body” means the board of directors or other body having the power to
direct or cause the direction of the management and policies of a Person that is a Government Authority,
corporation, partnership, trust or limited liability company.
“Government Authority” means the government of the United States or any other
any state, regional or local—political subdivision or department thereof, and any other
governmental or regulatory agencyI'fir'ih‘di'it'y, body, commission, central bank, board, bureau, organ,
court, instrumentality or other entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government, in each case whether federal, state,
local or foreign (including the FCC, the County of San Mateo, the State of California and supra-national
bodies such as the European Union or the European Central Bank).
nation,— or

“Governmental Authorization” means any permit, license, registration, authorization,
plan, directive, accreditation, consent, order or consent decree of or from, or notice to, any Govemment
Authority (including the FCC, the County of San Mateo and the State of California).

.

“Hazardous Materials” means: (i) any chemical, material or substance at any time
defined as or included 1n the definition of “hazardous substances”, “hazardous wastes”, “hazardous
materials”, “extremely hazardous waste”, “acutely hazardous waste”, “radioactive waste”, “biohazardous
waste", “pollutant,’ “toxic pollutant”, “contaminant”, “restricted hazardous waste", “infectious waste”,
“toxic substances" , or any other term or expression intended to define, list or classify substances by
reason of properties harmful to health, safety or the indoor or outdoor environment (including harmful
properties such .as i gnitability, ,corrosivity,reactivity, carcinogenicity, toxicity, reproductive toxicity,
“TCLP toxicity” or'“EP toxicity" or words of similar import under any applicable Environmental Laws);
(ii) any oil, petroleum, petroleum fraction or petroleum derived substance; (iii) any drilling fluids,
produced waters and other wastes associated with the exploration, development or production of crude
oil, natural gas or geothermal resources; (iv) any flammable substances or explosives; (v) any radioactive
materials; (vi) any asbestos-containingmaterials; (vii) urea formaldehyde foam insulation, (viii) electrical
equipment which contains any oil or dielectric fluid containing polychlorinated biphenyls; (ix) pesticides,
and (x) any other chemical, material or Substance, exposure to which 15 prohibited, limited or regulated by'
any Government Authority or which may or could pose a hazard to the health and safety of the owners,
occupants or any Persons in the vicinity of any Facility or to the indoor or outdoor environment.

“Hazardous Materials Activity” means any past, current, proposed or threatened
activity, event or occurrence involving any Hazardous Materials, including the use, manufacture,
possession, storage, holding, presence, existence, location, Release, threatened Release, discharge,
placement, generation, transportation, processing, construction, treatment, abatement, removal,
remediation, disposal, disposition or handling of any Hazardous Materials, and any corrective action or
response action with respect to any of the foregoing.
-4 OMM_US:7 463242.l0

 “Indebtedness”, as applied to any Person, means (i) all indebtedness for borrowed
money, (ii) that portion of obligations with respect to capital leases that is properly classified as a liability
on a balance sheet in conformity with GAS, (iii) notes payable and drafts accepted representing
extensions of credit whether or not representing obligations for borrowed money, (iv) any obligation
owed for all or any part of the deferred purchase price of property or services, which purchase price is
(a) due more than six months from the date of incurrence of the obligation in respect thereof or
(b) evidenced by a note or similar written instrument, (v) all indebtedness secured by any Lien on any
property or asset owned or held by that Person regardless of whether the indebtedness secured thereby
shall have been assumed by that Person or is nonrecourse to the credit of that Person and (vi) all
Contingent Obligations of such Person in respect of Indebtedness of others of the kinds referred to in
clauses (i) through (v) above.

“Indemnitee” has the meaning assigned to that term in subsection

10.3.

“Joint Venture” means a joint venture, partnership or other similar arrangement,
whether in corporate, partnership or other legal form.

“Lien” meansany-‘ien,

mortgage, pledge, assignment, security interest, charge or
encumbrance of any kind (including any conditional sale or other title retention agreement, any lease'in
the nature thereof, and any agreement to give any security interest) and any option, trust or other
preferential arrangement having the practical effect of any of the foregoing.

“Losses” has the meaning assigned to that term in subsection 10.3.

“LPN” has the meaning assigned to that term in the introductory paragraph to this
Agreement.

“LPN Account” means an account as may be designated in writing by LPN from time to
time,

-

“LPN Indemnified Party”_has the meaning assigned to that term in subsection

.

_

10.3.

“Material Adverse Effect” means (i) a material adverse effect upon the business,
-operations, properties, assets, condition (financial or otherwise) or the operation of the Station or (ii) the
impairment of the ability of SMCCCD to perform, or of LPN to enforce, the Reimbursement Obligations
or any other material obligations under any Funding Document.

,

“Material Contract” means any contract or other arrangement to which SMCCCD is a
party (other than the Funding Documents) relating to or used in the operation of the Station for which
breach, nonperformance, cancellation or failure to renew could have a Material Adverse Effect.
-

.

as

“Multiemployer Plan’.’ means any Employee Benefit Plan that

defined 1n Section 3(37)

1s

a

“multiemployer plan"

of ERISA.

“Officer” means the president, chief executive officer, a vice president, chief financial
officer, treasurer, general partner (if an individual), managing member (if an individual) or other
individual appointed by the Governing Body or the Organizational Documents of a Government
Authority, corporation, partnership, trust or limited liability company to serve in a similar capacity as the
foregoing.
_
V.
.

0MM_US:7I463242.I0

_

_

 ‘t’

“Officer’s Certificate”,

as

applied to any Person, means a certificate executed on behalf
partner or a

of such Person by one or more Officers of such Person or one or more Officers of a general
managing member of such Person.

“Option Agreement” means that certain Put/ Call Option Agreement by and among
SMCCCD and LPN dated as of May 16, 2013.

“Option Termination Date” means December 3 l, 2025.
“Organizational Documents” means the statute or documents (including Bylaws,
pursuant
applicable)
to which a Person (other than a natural Person) 1s organized.

if

“Pension Plan” means any Employee Benefit Plan, other than a Multiemployer Plan, in
the nature of a “defined benefit” pension plan-

-

“Person” means and includes natural persons, corporations, limited partnerships, general
partnerships, limited liability companies, limited liability partnerships, joint stock companies, Joint
Ventures, associations, companies, trusts, banks, trust companies land trusts businesstrusts or other
” ‘ ., «mWr_
~-—»
organizations, whether or not legal entities, and Government Authorities.
“Potential Triggering Event” means a condition or event that, after notice or lapse of
time or both, would constitute a Triggering Event.

“Proceedings” means any action, suit, proceeding (whether administrative, judicial or
otherwise), governmental investigation or arbitration.
.

“Proceeds” means the proceeds from an
‘Sale, as such terms are defined the Option Agreement.

Auction Sale, Call Option Sale or Put Option

“Proceeds Account” has the meaning set forth in subsection 6.7.

“ReimbursementObligations” means all obligations of every nature of SMCCCD from
time to time owed to LPN under the Funding Documents, whether for reimbursement of any Subsidy
Payment, interest, expenses, indemnification or otherwise.
~

“Release” means any release, spill, emission, leaking, pumping, pouring, injection,

escaping, deposit, disposal, discharge, dispersal, dumping, leaching or migration of Hazardous Materials
'
into the indoor or outdoor environment (including the abandonment or disposal of any barrels, containers
or other closed receptacles containing any Hazardous Materials), including the movement of any
Hazardous Materials through the air, soil, surface water or groundwater.

“Securities” means any stock, shares, partnership interests, voting trust certificates,
certificates of mterest or participation in any profit-sharing agreement or arrangement, options, warrants,
bonds, debentures, notes, or other evidences of 1ndebtedness secured or unsecured, convertible,
subordinated, certificated or uncertificated, or otherwise, or in general any instruments commonly known
as “securities“ or any certificates of mterest, shares or participations in temporary or interim certificates
for the purchase or acquisition of, or any right to subscribe to, purchaseor acquire, any of the foregoing.
.

’

“Security Agreement” means the Security Agreement executed and delivered on the
Effective Date, substantially in the form of Exhibit ll annexed hereto, granting LPN a security interest in
the Proceeds.

OMM_US:7I463242.I 0

'

 “SMCCCD” has the meaning assigned to that term in the introduction to this Agreement.
“SMCCCD Indemnified Party” has the meaning assigned to that term in subsection
10.3,

‘

of this Agreement.

“State Law” means any state law pertaining to or regulating intrastate and. local
telecommunications services, or any successor statute or statutes thereto, and all State Regulations
pursuant to such State Law, in each case as from time to time in effect.
“State PUC” means any state public utility commission or any other state commission,
agency, department, board or authority with responsibility for regulating intrastate and local
telecommunications services.
.

“State Regulations” means all rules, regulations, written policies, orders and decisions

of any State PUC.
“Station”

has the meaning assigned to that term in the recitals to this Agreement.

“Subsidiary”, with respect to any Person, means any corporation, partnership,trustee-5‘”
limited liability company, association, Joint Venture or other business entity of which more than 50% of
the total voting power of shares of stock or other ownership interests entitled (without regard tothe
occurrence of any contingency) to vote in the election of the members of the Governing Body is at the
time owned or controlled, directly or indirectly, by that Person or one or more of the other subsidiaries of
that Person or a combination thereof.
“Subsidy Payment” has the meaning assigned to that term in subsection 2. l A.

“Triggering Event”

means each

of the events set forth in subSection

9.1.

“UCC” means the Uniform Commercial Code as in effect in any applicable jurisdiction.

“Willful Breach” has the meaning assigned to that term in subsection 9.].

'

'

1.2
Accounting Terms; Utilization of GAS for Pumoses of Calculations Under
Agreement. Except as otherwise expressly provided in this Agreement, all accounting terms not
otherWise defined herein shall have the meanings assigned to them in'conformity with GAS. Financial
statements and other information required to be deliveredtby SMCCCD to LPN pursuant to clauses (ii),
(iii) and (viii) of subsection 5.1 shall be prepared in accordance with GAS as in effect at the Effective
Date. Calculations in connection with the definitions, covenants and other provisions of this Agreement
shall utilize GAS as in effect onthe Effective Date. If at any time any change in GAS would affect the
computation of any requirement set forth in any Funding Document, and SMCCCD or LPN shall so
request, SMCCCD: and LPN shall negotiate in good faith to amend such requirement to preserve the
original intent thereof in light of such change in or GAS provided that, until so amended, such
requiret shall continue to be computed in accordance with GAS prior to such change therein,
1.3
Other Definitional Provisions and Rules of Construction. Any of the terms defined
herein may, unless the context otherwise requires, be used in the singular or the plural, depending on the
reference References to “Sections” and “subsections” shall be to Sections and subsections, respectively,
of this Agreement unless otherwise specifically provided. Section and subsection headings in this
Agreement are included herein for convenienceof reference only and shall not constitute a part of this
Agreement for any other purpose or be given any substantive effect. The use in any of the Funding

-_

OMM_US:7I463242.I 0

7_

 Documents of the word “include” or “including”, when 1‘0110wing any general statement, term or matter,
shall not be construed to limit such statement, term or matter to the specific items or matters set forth
immediately following, such word or to similar items or matters, whether or not nonlimiting language
(such as “without limitation” or “but not limited to” or words of similar import) is used with reference
thereto, but rather shall be deemed to refer to all other items or matters that fall within the broadest
possible scope of such general statement, term or matter. Unless otherwise expressly provided herein,
‘
references to Organizational Documents, agreements (including the Funding Documents) and other
contractual instruments shall be deemed to include all subsequent amendments, restatements, extensions,
supplements and other modifications thereto.

.

SECTION 2. SUBSIDY PAYMENTS
2.]

\

Making of Subsidy Payments.

A.
Subsidy Payments. Subject to the terms and conditions of this Agreement and
in reliance upon the representations and warranties of SMCCCD herein set forth, LPN hereby agrees to
disburse to SMCCCD from time to time during the period from and after the Effective Date to and
including the Funding Termination Date an amount not exceeding the sum of (x) $3, 600, 000, (y) the
aggregate amount of any Extension Subsidy Payments (as such term is defined 1n the Option
Agreement), and (z) the Bid Management Compensation (collectively, the “Subsidy Payments”) to be
used for the purposes identified in subsection 6.10. Subject to the terms and cOnditions of this
Agreement, (i) the Subsidy Payments shall be made in sixteen (16) equal installments (which initial
number of Subsidy Payments may be increased by up to four (4) additional Subsidy Payments in the
circumstances described in Section 2(b) of the Option Agreement), (ii) each Subsidy Payment shall be in
an amount equal to $225,000 (which shall be the amount net of the Bid Management Compensation then
payable to LPN pursuant to the terms of the Bid Management Agreement), (iii) the first Subsidy
Payment shall be made on July 1, 2013, and (iv) each subsequent Subsidy Payment shall be made on the
first day of each October, January, April and July (commencing with October 1, 2013). Any obligation
of LPN to make Subsidy Payments shall expire immediately and without further action on the Funding
Termination Date if the Subsidy Payments are not made on or before such date.
B.
Funding of Subsidy Payments. Subject to the satisfaction or waiver of the
conditions precedent specified in subsections 3.1 and 3.2, LPN shall make the first Subsidy Payment to
SMCCCD on July 1, 2013 by wiring the payment to the SMCCCD Account. Subject to the satisfaction
or waiver afierJuly l , 2013 of the conditionsprecedent specified in subsection 3.2, LPN shall make
each subsequent Subsidy Payment to SMCCCD On the applicable Funding Date by wiring the payment
to the SMCCCD Account. In accordance with Section 1(b) of the Option Agreement, “in the event that
LPN fails to make any Subsidy Payment within three days of its due date, the LPN Share, as defined and
applied in the Option Agreement, shall be reduced by an amount equal to 2.28125% multiplied by the
Gross Auction Proceeds or Gross Sale Proceeds, as applicable, for each such failure, e.g,, from 36.5% to
34. 21 875% 1n the case of one
late payment.
_

,

SECTION 3.

CONDITIONS TO SUBSIDY PAYMENTS
The obligation of LPN to make Subsidy Payments hereunder 15 subject to the satisfaction

of the following conditions:
3.1

Conditions to Effective Date. The effectiveness of this Agreement on the Effective
of the following conditions:

Date is subject to prior or concurrent satisfaction

OMM_US:7 [463242 .10

FWmmg~ .13..

 A.
SMCCCD Documents. On or before the Effective Date, SMCCCD shall
deliver to LPN the following, each, unless otherwise noted, dated the Effective Date:

A copy of or reference to the current provisions of California Law that
(i)
authorize and empower SMCCCD;

A copy of the minutes of a meeting of the Board of Directors of
(ii)
SMCCCD approving and authorizing the execution, delivery and performance of the
Funding Documents to which it is a party, certified as of the Effective Date by an officer
of SMCCCD;

of the Funding Documents to which SMCCCD is party;

(iii)

Executed copies

(iv)

Such other documents as LPN may reasonably request.

and

B.
,

Representations and Warranties; Performance of Agreements. SMCCCD

,mim;

shall have delivered to LPN an Officer’s Certificate, in form and substance satisfactory to LPN, to the
effect that the‘rcpre‘s‘entations and warranties in Section 4 are true, correct and complete in all material
respects on and as of the Effective Date to the same extent as though made on and as of that date (or, to
the extent such representations and warranties specifically relate to an earlier date, that such
representations and warranties were true, correct and complete in all material respects on and as of such
earlier date) and that SMCCCD shall have performed in all material respects all agreements and satisfied
all conditions which this Agreement provides shall be performed or satisfied by it on or before the
Effective Date except as otherwise disclosed to and agreed to in writing by LPN; provided that, if a
representation and warranty, covenant or condition is qualified as to materiality, the applicable
materiality qualifier Set forth above shall be disregarded with-respect to such representation and
warranty, covenant or condition, for purposes of this condition.

m

C.
Opinions of Counsel to SMCCCD. LPN shall have received originally
executed copies of the written opinion of Schwartz, Woods & Miller, special FCC counsel for
SMCCCD, in form and substance reasonably satisfactory to LPN and its counsel, dated as of the
Effective Date and setting forth substantially such matters as LPN may reasonably request.

Security Interests In Proceeds. LPN shall have received evidence satisfactory
D.
to it that SMCCCD shall have taken or caused to be taken all such actions, including executing and
delivering the Security Agreement and the Control Agreement and any other agreements, documents and
instruments, and making all such filings and recordings that may be necessary or, in the reasonable
opinion of LPN desirable, in order to Create in favor of LPN a valid and (upon such filing and recording)
perfected First Priority security interest In the Proceeds to the extent of LPN’ 3 interest therein.
.

E. -‘
Necessary Governmental Authorizations and Consents; Expiration of
Waiting Periods, Etc. SMCCCD shall have obtained all Gtwemmental Authorizations and all consents
of other Persons, in each case that are necessary or advisable In connection with the transactions
contemplated by the Funding Documents on the Effective Date. Each such Governmental Authorization
and consent shall be In full force and effect, except in a case where the failure to obtain or maintain a
Governmental Authorization or consent, either individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect. All applicable waiting periods shall have expired
without any action being taken or threatened by any competent authority that would restrain, prevent or
otherwise impose adverse conditions on the financing No action, request for stay, petition for review or
rehearing, reconsideration, or appeal with respect to any of the foregoing shall be pending, and the time

.

'

,

'
-

l

OMM_US:7I463242.IO

_

9_

'
'~

~

'

:

 for any applicable Government Authority to take action to set aside its consent on its own motion shall
have expired.
F.
Evidence of Insurance. LPN shall have received a certificate from
SMCCCD’s insurance broker or other evidence satisfactory to it that all insurance required to be
maintained pursuant to subsection 6.4 is in full force and effect.

G.
FCC License. LPN shall be satisfied that all rights and remedies of LPN under
the Funding Documents shall not conflict with or cause a breach or default under the FCC License.
3.2
Conditions to All Subsidy Payments. The obligation of LPN to make each Subsidy
Payment on the applicable Funding Date is subject to the following conditions precedent:

As of such Funding Date:

A.

The representations and warranties contained herein and in .the other
(i)
Funding Documents shall be true, correct and complete in all material respects on and as
of that Funding Datemthe same extent as though made on and as of that date, except to
the extent such rept§éiiffiii6hsand warranties specifically relate to an earlier date, in
which case such representations and warranties shall have been true, correct and
complete in all material reSpects on and as of such earlier date; provided, that, if a
representation and warranty is qualified as to materiality, the materiality qualifier Set
forth above shall-be disregarded with respect to such representation and warranty for
purposes of this condition;

No event shall have occurred and be continuing or would result from the
(ii)
making of such Subsidy Payment that would constitute a Triggering—Event or a Potential
Triggering Event;
_
M 0.

SMCCCD shall have performed in all material respects all agreements
(iii)
and satisfied all conditions which this Agreement and each other Funding Agreement
provides shall be performed or satisfied by it on or before that Funding Date;

.

'No order, judgment or decree of any arbitrator or Government Authority
(iv)
shall purport to enjoin or restrain LPN from making the Subsidy Payment to be made by.
it on that Funding Date;

No FCC License will have been forfeited or materially impaired as of
(v)
such Funding Date fer any reason, including as a result of or in connection with any
Funding Document or the transactions contemplated hereby or thereby;

(vi)

~

'

NoMaterial-Adverse Effect shall have occurred

..

as

of such Funding Date;

'

LPN shall have received before such FundingDate a duly executed
Compliance Certificate attesting to the matters set forth in this subsection 3.2A signed by
a duly authorized Officer of SMCCCD; and

(vii)

,

(viii) SMCCCD shall have delivered such other certificates or documents that
LPN shall reasonably request, in form and substance satisfactory to LPN.

.100MM_US:7I463242 .IO

 SECTION 4.

REPRESENTATIONS AND WARRANTIES OF SMCCCD

In order to induce LPN to enter into this Agreement and to make the Subsidy Payments,
each of SMCCCD represents and warrants to LPN:
4.1

Organization, Powers, Qualification, Good Standing.

Organization and Powers. SMCCCD is a California community college
A.
district duly organized, validly existing and in good standing under the laws of the State of California
SMCCCD has all requisite power and authority to own andtoperate its properties, to carry on its business
as now conducted and as proposed to be conducted, to enter into the Funding Dotuments to which it is a
party and to carry out the transactions contemplated thereby.
B.
Qualification and Good Standing. SMCCCD is qualified to do business and
in good standing in every jurisdiction where its assets are located and wherever necessary to carry out its
business and operations

C.
Conductof Business. SMCCCll1soperat1ng the Station in the manner
‘
required by subsection 6. 8.

D.
FCC License and other Governmental Authorizations. Schedule 4.1 D
annexed hereto accurately and completely lists the FCC License and other Governmental Authorizations
that have been granted or assigned to SMCCCD by the FCC, any other Communications Regulatory
Authority or any other Governmental Authority, including all.Govemmental Authorizations for the
operation of the Station, and the FCC License and other Governmental Authorizations (a) are in full
force and effect in all respects and (b) comprise all of the licenses, permits, approvals and authorizations
necessary under the Communications Act and the rules, regulations and policies of the FCC (the “FCC a.-Rules") for the operation of the Station as presently operated and conducted. The FCC Licenses is not
subject to any restriction or condition other than those set forth in the FCC License. Schedule 4.1D also
accurately and completely lists all agreements, any, for the use of public utility facilities in connection
with the Station. Except as specified 1n Schedule 4 1D annexed hereto, neither the FCC License nor any
other Governmental Authorization issued to SMCCCD with regard to the Station has a term which will
expire prior to the Option Termination Date. SMCCCD does not have any knowledge of the occurrence
of any event or the existence of any circumstance which is likely to lead to the revocation, suspension,
amendment or non-renewal of the FCC License or other Governmental Authorization, and there are no ._ ,
appliCations; investigations, complaints, objections, petitions or proceedings pending or, to ,SMCCCD’s
knowledge, threatened before the FCC or any other Governmental Authority relating to the Station,
except for proceedings of general applicability to television broadcast stations. The FCC License and all
“other Governmental Authorizations used by SMCCCD are held by it.

if

.

-

,

E.
Communications Act and State Law. SMCCCD has duly tiled in a timely
manner all reperts, forms, applications: and statements required to be filed by SMCCCD with the FCC or
any other Governmental Authority or required by the FCC or any other Governmental Authority to be
maintained by SMCCCD with respect to the Station since the dates SMCCCD has operated the Station,
and they are in all material respects accurate and complete and in compliance with the Communications
Act and State Law, including, without limitation, the FCC Rules and the rules and regulations of any
other Communications Regulatory Authority. The conduct of the business and operations of the Station
are in compliance in all respects with the FCC’s radiation standards applicable to the Station. The
conduct of the business and operations of the Station are in compliance in all material respects with all
applicable engineering and other standards required to be met under applicable federal, state and local
laws, rules, regulations, requirements andpolicies, including FCC Rules and the Communications Act,
-

OMM"US;7146324210

-I

1

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=

 and are otherwise in compliance in all material respects with all applicable federal, state and local laws,
rules, regulations,requirements and policies, including FCC Rules and the Communications Act.
SMCCCD is not liable to any Person for material copyright infringement under the Copyright Act as a
result of its business operations.
4.2

performance
SMCCCD.

Effectiveness of Funding Documents.

A.
Authorization of Funding Documents. The execution, delivery and
of the Funding Documents has been duly authorized by all necessary action on the part of

B.
No Conflict. The execution, delivery and performance by SMCCCD of the
Funding Documents and the consummation of the transactions contemplated by the Funding
Documents, as applicable, do not and will not (i). violate any provision of any law or any governmental
rule or regulation applicable to SMCCCD or any order, judgment or decree of any court or other
Government Authority binding on SMCCCD, (ii) conflict with, result in a breach of or constitute (with
due notice or lapse of time or both) a default under any Contractual Obligation of SMCCCD, (iii) result
in or require the creation or imposition of anynLiennpon any of the properties or assets of SMCCCD
(other than any Liens created under any of the Funding Documents in favofbPN), or (iv) require any
approval or consent of any Person under any Contractual Obligation of SMCCCD.
C.

Governmental Consents. The execution, delivery and performance by

of the Funding Documents to which it is party, and the consummation of the transactions
contemplated by the Funding Documents, as applicable, do not and will not require any Governmental

SMCCCD

Authorization other than that of SMCCCD.

D.
Binding Obligation. Each of the Funding Documents to which it is party has
been duly executed and delivered by SMCCCD and is the legally valid and binding obligation of
SMCCCD, enforceable against SMCCCD in accordance with its respective terms, except as may be

limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or limiting
creditors’ rights generally or by equitable principles relating to enforceability.
4.3
Financial Condition. SMCCCD does not have (and will not have) any Indebtedness,
contingent liability or liability for taxes, long-term lease or unusual forward or long-term commitment
that, as of any Funding Date, is not reflected in the mostrecent financial statements delivered to LPN
pursuant to subsection 5.1 or the notes thereto and that, in any such case, is material in relation to the
business, operations, properties, assets, condition (financial or otherwise) or prospects of SMCCCD with
respect to the operation of the Station.

4.4
No Material Adverse Change; No Interference. Since June 30, 2012, no event or
change has occurred that has resulted in a Material Adverse Effect. There is currently no legal or
regulatory proceeding, including interventions bythe public or any Government Authority pending, 01" to
the knowledge of SMCCCD threatened, that could reasonably be expected to materially frustrate, impair
or limit the consummation of any of the transactions contemplated by or under the Funding Documents
(including the participation by SMCCCD in, or the assignment of theffiC License or surrender of the
spectrum used in the operation of the Station pursuant to, the Auction, a Call Option Sale or Put Option
Sale (as such terms are defined in the Option Agreement» or otherwise to have a Material Adverse Effect.
4.5
Title to Properties; Liens; Real Property. SMCCCD has (i) good, sufficient and legal
'title to (in the case of fee interests in real property), (ii) valid leasehold interests in (in the case of
leasehold interests in real or personal property), or (iii) good title to (in the case of all other personal

- 12 0MM_US:7l463242. l0

 property), all of its properties and assets used in the operation of the Station and reflected in the most
recent financial statements delivered pursuant to subsection 5.1, in each case except for assets disposed or”
since the date of such financial statements as permitted under subsections 7.3 and 8.3. Except as
pemiitted by this Agreement, all such properties and assets are free and clear of Liens. Schedule 4.5
annexed hereto contains a true, accurate and complete list of all leases, subleases or assignments of leases
(together with all amendments, modifications, supplements, renewals or extensions of any thereof) of real
property used in connection with the operation of the Station. Each agreement listed on Schedule 4.5 as a
result of the immediately preceding sentence is in full force and effect and SMCCCD does not have
knowledge of any default that has occurred and is continuing thereunder, and each such agreement
constitutes the legally valid and binding obligation of SMCCCD, enforceable against SMCCCD in
accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting creditors’ rights generally or by
equitable principles.
4.6
Litigation; Adverse Facts. There are no Proceedings (whether or not purportedly on
behalf of SMCCCD) at law or in equity, or before or by any court or other Govemment Authority
(including any Environmental Claims) that are pending or, to the knowledge of SMCCCD, threatened
against or affecting SMCCCD with respect to the Station or any pro enguoflSMCCCD used in connection
"‘ ‘“
with the Station which, if adversely determined, has a reasonable possibility afier giving effect toi'il‘i'E—
coverage and policy limits of insurance policies issued to SMCCCD, of giving rise to a Material Adverse
Effect. SMCCCD is not (i) in material violation of any applicable laws (including Environmental Laws).
or (ii) subject to or in default with respect to any final judgments, writs, injunctions, decrees, rules or
regulations of any court or other Government Authority.
—

4.7
Pament of Taxes. SMCCCD is not subject to taxation other than with respect to
employment and sales and use taxes. Except to the extent permitted by subsection 5.3, all tax returns and
reports of SMCCCD required to be filed by it have been timely filed, and/all taxes shown on such tax
returns to be due and payable and all assessments, fees and other governmental charges upon SMCCCD
and upon their respective properties, assets, income, businesses and franchises that are due and payable
have been paid when due and payable. SMCCCD does not know of any proposed tax assessment against
it that is not being actively contested by SMCCCD in good faith and by appropriate proceedings;
provided that such reserves or other appropriate provisions, if any, as shall be required in conformity with
GAS shall have been made or provided therefor.

,

,

.

.

4.8
Performance of Agreements; Material Contracts. SMCCCD is not in. material default
in the performance, observance or fulfillment of any of the obligations, coVenants or conditions contained
in any of its Contractual Obligations with respect to the Station, and no condition exists that, with the
giving of notice or the lapse of time or both, would constitute such a material default. Schedule 4. 8
contains a true, correct and complete list of all the Material Contracts in effect. Except as described on
Schedule 4. 8, all such Material Contracts are in full force and effect and no material. defaults currently
,

,

exist thereunder.

Employee Benefit Plans; Employee Matters. With respect to the Station, SMCCCD is
in compliance'in all material respects with all applicable provisions and requirements of each Employee
Benefit Plan and with the requirements of any statutes, orders, rules and regulations which are applicable
to each Employee Benefit Plan, and has performed in all material respects all its obligations under each
Employee Benefit Plan. SMCCCD in connection with the Station does not have any potential liability
under any Pension Plan or any Multiemployer Plan. With respect to the Station, there is no strike or work
stoppage in existence or threatened involving SMCCCD.
4.9

..

OMM_US:7I 463242.10

13 -

_

.

.

.

'

-'
3

'

'

 Certain Fees. No broker’s or finder’s fee or commission will be payable with respect to
4.10
this Agreement or any of the transactions contemplated hereby because of any representation or
agreement by SMCCCD, which hereby indemnifies LPN against, and agrees that it will hold LPN
harmless from, any claim, demand or liability for any such broker‘s or finder’s fees alleged to have been
incurred in connection herewith or therewith and any expenses (including reasonable fees, expenses and
disbursements of counsel) arising in connection with any such claim, demand or liability.

F- :z:.....""~;:7

Environmental Protection. With respect to the Station, SMCCCD and its Facilities or
4.11
operations are not subject to any outstanding written order, consent decree or settlement agreement
concerning the Station with any Person relating to (a) any Environmental Law, (b) any Environmental
Claim, or (c) any Hazardous Materials Activity that, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect; SMCCCD has not received any letter or request for
information under Section 104 of the Comprehensive Environmental Response, Compensation, and
Liability Act (42 U.S.C. § 9604) or any comparable state law; there are and, to SMCCCD’s knowledge,
have been no conditions, occurrences, or Hazardous Materials Activities that could reasonably be
expected to form the basis of an Environmental Claim against SMCCCD that, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse Effect; neither SMCCCD nor, to
SMCCCD's knowledge, any predecessor of SMCCCD has filed any notice under any Envimnmgmallaw
1ndicating past or present treatment of Hazardous Materials at any Facility, and none of SMCCCD’s‘
operations involves the generation, transportation, treatment, storage or disposal of hazardous waste, as
defined under 40 C.F.R. Parts 260-270 or any state equivalent; and SMCCCD is in compliance with all
current or reasonably foreseeable future requirements pursuant to or under Environmental Laws would
not, individually or in the aggregate, be reasonably expected to result in a Material Adverse Effect

Matters Relating to Proceeds. No authorization, approval or other action by, and no
4.12
notice to or filing with, any Government Authority is required for either the grant by SMCCCD of the
Lien purported to be created 1n favor of LPN 1n its share of the Proceeds or (ii) the exercise by LPN of
any rights or remedies 1n respect ofits security interest in its share of the Proceeds or underthe Control
Agreement. Except such as may have been filed in favor of LPN as contemplated by the Security
Agreement, no effective UCC financing statement, or other instrument similar in effect covering all or
any part of the Proceeds Account is on file in any filing or recording office. All information supplied to
LPN by or on behalf of SMCCCD with respect to the Proceeds Account is accurate and complete in all

'

"

52%;“
'

j

'

respects.

4.13
Disclosure. No representation or warranty of SMCCCD contained 1n any Funding
Document or in any other document, certificate or written statement furnished to LPN by or on behalf of
SMCCCD for use in connection with the transactions contemplated by this Agreement contains any
untrue statement of a material fact or omits to state a material fact (known to SMCCCD, in the case of
any document not fumished by it) necessary in order to make the statements contained herein or therein
not misleading in light of the circumstances in which the same were made. Any projections and pro
forma financial information contained 1n such materials are based upon good faith estimates and
assumptions believed by SMCCCD to be reasonable at the time made ,‘it'being recognized by LPN that
such projections as to future events are not to be viewed as facts and that actual results during the period
or periods covered by any such projections may differ from the projected results. There are no facts
known (or which should upon the reasonable exercise of diligence be known) to SMCCCD (other than
matters of a general economic nature) that, individually or in the aggregate, could reasonably be expected
to result in a Material Adverse Effect and that have not been disclosed herein or in such other documents,
certificates and statements fumished to LPN for use in connection with the transactions contemplated
hereby.
-

OMMflUS:7l463242.I0

l4 .

-

 SECTION 5.

REPRESENTATIONS AND WARRANTIES OF LPN
In order to induce SMCCCD to enter into this Agreement, LPN represents and warrants

to SMCCCD:
5.1
Organization, Standing and Authority. LPN is a limited liability corporation duly
organized, validly existing and in good standing under the laws of the State of Delaware, with all requisite
power under its organization documents to enter into and perform this Agreement and the transactions
contemplated hereby.

5.2
Authorization and Binding Obligation. The execution, delivery, and performance by
LPN of the Funding Documents, and the consummation by LPN of the transactionscontemplated hereby,
have been duly authorized by all necessary corporate action. This Agreement has been duly executed and
delivered by LPN. This Agreement constitutes the legal, valid, and binding obligation of LPN,
enforceable against LPN in accordance with its terms, except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, or other similar laws affecting the rights of creditors generally or
by general principles of equity.
~- n’brnJ -‘-\.

‘

“tilti‘rse‘rrce of Conflicting Agreements. The execution, delivery, and performance by LPN
of this Agreement (with or without the giving of notice, the lapse of time, or both) (i) do not require the
consent of any third party; (ii) will not conflict with, result in a breach of, or constitute a default under,
any applicable law, judgment, order, rule or regulation of any court or governmental unit to which LPN is
a party or by which LPN is bound; and (iii) will not conflict with, constitute grounds for termination of,
result in a breach of, constitute a default under, or accelerate or permit the acceleration of any
performance required by, the terms of, any agreement, instrument, license, or permit to which LPN is a
party or by which LPN may be bound.
5.3

5.4
Availability of Funds: LPN has cash available or has existing borrowing facilities that
are available (and not subject to conditions precedent or other restrictions) that together are sufficient to
enable it to make the Subsidy Payments and to consummate the transactions contemplated by this
Agreement.

SECTION 6.

AFFIRMATIVE COVENANTS

SMCCCD covenants and. agrees that, until the earlier of (i) the payment in full of all of
the Reimbursement Obligations (otherithan any unasserted claims for expense reimbursement or
indemnification under subsections 10.2 or 10.3) and (ii) the consummation of any Auction Sale, Call
.Option Sale or Put Option sale (as such terms are defined in the Option Agreement), SMCCCD shall
perform all covenants in this Section 6.
6.1

,_

Financial Statements and Other Reports.

SMCCCD will maintain a system of accounting established and administered in accordance with
sound business practices to permit preparation of financial statements in conformity with GAS. With
reSpect to,the Station, SMCCCD will deliver to LPN:

Triggering Events, etc.: promptly upon any officer of SMCCCD
(i)
obtaining knowledge (a) of any condition or event that constitutes a Triggering Event or
Potential TriggeringEvent, (b) that any Person has given any notice to SMCCCD or
taken any other action with respect to a claimed default or event or condition of the type
referred to in subsection 9.1A, or (c) of the occurrence of any event or change that has

. 15 OMM_US:7l463242.I0

 r

caused or evidences, either in any case or in the aggregate, a Material Adverse Effect, an
Officer’s Certificate specifying the nature and period of existence of such condition,
event or change, or specifying the notice given or action taken by any such Person and
the nature of such claimed Triggering Event, Potential Triggering Event, default, event,
condition or change, and what action SMCCCD has taken, is taking and proposes to take
with respect thereto;

Year-End Financials: as soon as available and in any event when
(ii)
provided to the Corporation for Public Broadcasting (a) the Annual Financial Report for
the Station as prepared and certified by independent certified public accountants and (b) a
copy of its Local Content and Service Report prepared in accordance with the
requirements of the Corporation for Public Broadcasting;
V

Annual Budget: as soon as available, the Station’s annual budget (in
(iii)
reasonable detail) for the next Fiscal Year,-

mam,- my»,

.

Officer’s Certificate: at the commencement of each Fiscal Year an
(iv)
Officer’s Certificate certifying to the availability of funds sufficient to meet any
Reimbursement Obligations of SMCCCD during the next Fiscal Year.
Litigation or Other Proceedings: promptly upon any Officer of
,(v)
SMCCCD obtaining knowledge of (l) the institution of, or non-frivolous threat of, any
Proceeding: against or affecting SMCCCD or any of its property not previously disclosed
in writing by SMCCCDLto LPN or (2) any material development in any Proceeding that,
in any case: (x) if adversely determined, has a reasonable possibility after giving effect to
the coverage and policy limits of insurance policies issued to SMCCCD, of giving rise to
a Material Adverse Effect; (y) seeks to enjoin or otherwise prevent the consummation of,
or to recover any damages or obtain relief as. a result of, the transactions contemplated
hereby; or.(z) could affect in any way any FCC License, except for Proceedings of
general applicability to television broadcast stations; written notice thereof together with
such other information as may be reasonably available to SMCCCD to enable LPN and
its counsel to evaluate such matters;
Employee-Related Events: promptly upon the occurrence of any strike
(vi)
or work stoppage or becoming aware of any threatened strike or work stoppage, a written
notice specifying the nature thereof, what action SMCCCD has taken, 15 taking or
proposes to take with respect thereto;

‘

Licenses; Regglations, etc.: promptly (and 1n any event within 2
(vii)
Business Days) upon receipt of notice of (a) any forfeiture, non-renewal, cancellation,
termination, revocation, suspension, material impairment or material modification of any
FCC License or other material Governmental Authorization used by SMCCCD in the
operation of the Station, or any notice of material default with respect to any such FCC
License or other such material Governmental Authorization, (b) any refusal by the FCC
or any other Communications Regulatory Authority to renew or extend any FCC License
orother material Governmental Authorization used in the operation of the Station, (c) any
complaint filed by or with the FCC or other Govemment Authority in connection with the
Station, ((1) any show cause order issued by the FCC in connection with the Station, (6)
any disruption, interruption'or discontinuation (even temporary) with respect to the
Station, or (0 any other event that could reasonably be expected to have a material
adverse effect on any FCC License (other than events of general applicability to

if

-16~‘
0MM_US:7I463242.10

,

a

 television broadcast stations), an Officers‘ Certificate specifying the nature of such event,
the period of existence thereof, and what action SMCCCD is taking and proposes to take
with respect thereto; and

(viii) Other Infomiation: with reasonable promptness, such other information
and data as from time to time may be reasonably requested by LPN concerning the
expenditures of the Station or its business or operations.
6.2
Existence, etc. Except as permitted under subsections 7.3 and 8.3, SMCCCD will at all
times preserve and keep in full force and effect all rights and franchises material to its business
(including, without limitation, the FCC License).
6.3
Payment of Taxes and Claims; Tax Returns. With respect to the Station, SMCCCD
will pay all claims (including claims for labor, services, materials and supplies) for sums that have

become due and payable and that by law have or may become a Lien upon any of their properties or
assets prior to the time when any penalty or fine shall be incurred with respect thereto; provided that no
such claim need be paid if it is being contested in good faith by appropriate proceedings promptly
instituted and diligently co,nducted so long as such~reserve or other appropriate provision, if any, as shall
be required m conformity with GAS shall have been made

Maintenance of Properties; Insurance. SMCCCD will maintain or cause to be
6.4
maintained in good repair, working order and condition, ordinary wear and tear excepted, all material
properties used in connection with the operation of the Station and from time to time will make orcause
to be made all appropriate repairs, renewals and replacements thereof. SMCCCD will maintain or cause
to be maintained such self-insurance and commercial insurance coverage as it has maintained during the
past Fiscal Year, consistent with State requirements.
6.5
Compliance with Lawg, etc. With respect to the Station, SMCCCD shall comply in all
material reSpects with the requirements of all applicable laWS, rules, regulations and orders (including all
Environmental Laws) of any Government Authority (including the FCC and any other Communications
Regulatory Authority).
.

.

Environmental Matters. With respect to the Station, SMCCCD will deliver to LPN,
6.6
promptly upon the occurrence thereof, written notice describing in reasonable detail (a) any material
Environmental Claims that, individually or in theaggregate, could reasonably be expected to result in a
Material Adverse Effect, and (b) SMCCCD’s discovery of any occurrence or condition on any real
property adj oiningor in the vicinity of any Facility that could cause such Facility or any part thereof to be
subject to any material restrictions on the ownership, occupancy, transferability or use thereof under any
Environmental Laws. SMCCCD shall promptly take any and all actions necessary to (i) cure any
violation of applicable Environmental Laws by SMCCCD that could reasonably be expected to result in,
individually or in the aggregate, any material penalty and (ii) make an appropriate response to any
Environmental Claim against SMCCCD and discharge any obligations it may‘have to any Person
thereunder.
6.7
Proceeds Account. SMCCCD shall maintain a deposit account subject to the Control
Agreement in favor of LPN with respect to LPN’s share of the Proceeds (the “Proceeds Account”).
6.8
Conduct of Business. From and after the Effective Date, and except as expressly
contemplated in the Funding Documents, SMCCCD shall continue to operate the Station in substantially
the same manner as operated prior to the Effective Date.

- 17 .

0MM_US:7I463242.10

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:
I

t

 Performance of Obligations. SMCCCD shall (i) perform all of its obligations under the
6.9
terms of each Funding Document and (ii) take all actions necessary to cause the spectrum usage rights
associated with the FCC License to- be relinquished in the Auction (as such term is defined in the Option
Agreement), subject to the terms set forth in the Bid Management Agreement.
I

Use of Proceeds. The proceeds of each Subsidy Payment shall be applied by SMCCCD
6.10
to fund the operation of the Station

6.1]
Access to Facilities. At LPN’s request, SMCCCD shall from time to time give to, or
cause to be given to, LPN full access during normal business hours to the Station (including its main
studio and transmission equipment); provided, however, that all such access shall be scheduled in a
manner reasonably acceptable to SMCCCD.

SECTION 7.

NEGATIVE COVENANTS

SMCCCD covenants and agrees that, until the earlier of (i) the payment in full of all of
the Reimbursement Obligations (other than any unasserted claims for expense reimbursement or
indemnification under subsections 10.2 or 10.3).and.(ji).the consummatiormf any Auction Sale, Call
Option Sale or Put Option Sale (as such terms are defined in the Option Agreei‘i’rm), SMCCCD shall
perform all covenants in this Section 7.
Indebtedness. Other than in the ordinary course of business, SMCCCD shall not,
directly or indirectly, create, incur, assume or guaranty, or otherwise become or remain directly or
indirectly liable with respect to, any Indebtedness (other than any ReimbursementObligations) in_respect
of the Station.
7.1

7.2
Liens and Related Matters. SMCCCD shall not, directly or indirectly, create, incur,
assume or permit to exist any Lien on or with respect to any property or asset of SMCCCD used in the
operation of the Station, whether now owned or hereafier acquired, or any income therefrom, or file or
permit the filing of, or permit to remain 1n effect, any financing statement or other similar notice of any
Lien with respect to any such property, asset, income or profits under the UCC or under any similar
recording or notice statute, except Permitted Encumbrances.

.

.

.

Restriction on Fundamental Changes; Asset Sales. SMCCCD shall not convey, sell,
7.3
lease or sub-lease (as lessor or sublessor),_ transfer or otherwise dispose of, in one transaction or a series of
transactions, substantially all of its business, property or assets (including its notes or receivables, whether
newly issued or outstanding) used 1n connection with the operation of the Station, whether now owned or
hereafier acquired, other than"in connection with the transactions contemplated by the Option Agreement.
SMCCCD shall not grant or agree to grant any Person (other than LPN) any interest in any proceeds from
any conveyance, surrender or other disposition of any FCC License.

SECTION 8. NEGATIVE COVENANTS DURING A TRIGGERING EVENT 0R AFTER THE
FUNDING TERMINATION DATE.
SMCCCD covenants and agrees that, during the occurrence and continuation of a
Triggering Event or at any time after the Funding Termination Date and until the earlier of (i) the
payment in full of all of the Reimbursement Obligations (other than any unasserted claims for expense
reimbursement or indemnification under subsections 10.2 or 10.3) and (ii) the consummation of any
Auction Sale, Call Option Sale or Put Option Sale (as such terms are defined in the Option Agreement),
SMCCCD shall perform all covenants in this Section 8.

-18.
OMM_US:7I463242.I

O

 Indebtedness. Other in the ordinary course of business, SMCCCD shall not, directly or
8.1
indirectly, create, incur, assume or guaranty, or otherwise become or remain directly or indirectly liable
with reSpect to, any other Indebtedness (other than any Reimbursement Obligations).

Liens and Related Matters. Except in the ordinary course of business, SMCCCD shall
not, directly or indirectly, create, incur, assume or permit to exist any Lien on or with respect to any
property or asset of any kind (including any document or instrument in respect of goods or accounts
receivable) of SMCCCD, whether now owned or hereafter acquired, or any income or profits therefrom,
or file or permit the filing of, or permit to remain in effect, any financing statement or other similar notice
of any Lien with respect to any such property, asset, income or profits under the UCC or under any
similar recording or notice statute, except Permitted Encumbrances.
8.2

Restriction on Fundamental Changes; Asset Sales. Other than in the ordinary course
8.3
of business, SMCCCD shall not convey, sell, lease or sub-lease (as lessor or sublessor), transfer or
otherwise dispose of, in one transaction or a series of transactions, all or any part of its business, property
or assets (including its notes or receivables, whether newly issued or outstanding) used in connection with
the Station, whether now owned or hereafter acquired.

_,

REIMBURSEMENT OBLIGATIONS

SECTION 9.

W"

m...—

9.1
Triggering Events. To the extent that the occurrence of any of the following conditions
or events (“Triggering Events”) shall result in a Material Adverse Effect:

Default in Other Agreements. Breach or default by SMCCCD with respect
A.
to any material term of (a) one or more items of Indebtedness or (b) any loan agreement, mortgage,
indenture or other agreement relating to such item(s) of Indebtedness, if the effect of such breach or
default is to cause, or to permit the holder or holders of that Indebtedness (or a trustee on behalf of
such holder or holders) to cause, that Indebtedness to become or be declared due and payable prior to
its stated maturity or the stated maturity of any underlying obligation, as the case may be(upon the
~
giving or receiving of notice, lapse of time, both, or otherwise); or
‘B.
Breach of Certain Covenants. Failure of SMCCCD to perform or comply
with any term or condition contained in subsection 6.2, 6.8, 6.10 or Section 7 or 8 of this Agreement;
or
Breach of Warranty. Any representation, warranty, certification or other
C.
statement made by SMCCCD in any Funding Document shall be false in any material respect on the
date as of which made; or
.

»

D.
Other Defaults Under Funding Documents. SMCCCD shall default in the
performance of or compliance with any term contained in (a) this Agreement or any of the Collateral
Documents, other than any such term referred to in any other provision of this subsection 9.1, and
such default shall not have been remedied or waived within 10 Business Days after the earlier of
(i) an Officer of'SMCCCD becoming aware of such default or (ii) receipt by SMCCCD of notice
from LPN of such default or (b) the Option Agreement or the Bid Management Agreement; or
E.
Involuntary Appointment of Receiver, etc. A decree or order of a court
having jurisdiction in the premises for the appointment of a receiver, liquidator, sequestrator, trustee,
custodian or other officer having similar powers over SMCCCD, or 0\7er all or a substantial part of its
property, shall have been entered; or there shall have occurred the involuntary appointment of an
interim receiver, trustee or other custodian of SMCCCD for all or a substantial part of its property; or

. 19 .
OMM_US:7I463242. 0

'_

 a warrant of attachment, execution or similar process shall have been issued against any substantial
part of the property of SMCCCD, and any such event described in this subsection 9.1E shall continue
for 60 days unless dismissed, bonded or discharged; or

F.

Voluntary Bankruptcy; Appointment of Receiver, etc.

SMCCCD shall have an order for relief entered with respectlto it or
(i)
commence a voluntary case under the Bankruptcy Code or under any other applicable
bankruptcy, insolvency or similar law now or hereafter in effect, or shall consent to the
entry of an order for relief in an involuntary case, or to the conversion of an involuntary
case to a voluntary case, under any such law, or shall, consent to the appointment of or
taking possession by a receiver, trustee or other custodian for all or a substantial part of
its property; or SMCCCD shall make any assignment for the benefit of creditors; or
SMCCCD shall be unable, or shall fail generally, or shall admit in
(ii)
writing its inability, to pay its debts as such debts become due; or the Goveming Body (or
any committee thereof) of SMCCCD shall adopt any resolution or otherwise authorize
any action to approve any of the actions referred to in clause (i) above or thiselause (ii);
v

:;:.:‘._.....-

z;-

or
G.
Judgments and Attachments. Any money judgment, writ or warrant of
attachment or similar process related to the Station shall be entered or filed against SMCCCD or any
of the Station’s assets and shall remain undischarged, unvacated, unbonded or unstayed for a period
of 30 days (or in any event later than five days prior to the date of any proposed sale thereunder); or
H.
Invalidity of Funding Documents; Failure of Security; Repudiation of
Reimbursement Obligations. At any time after the execution and delivery thereof, (i) any Funding
Document or any provision thereof, for any reason other than the satisfaction in full of all
Reimbursement Obligations, shall cease to be in full force and effect (other than in accordance with
its terms) or shall be declared to be null and void, (ii) LPN shall not have or shall cease to have a
valid and perfected First Priority Lien in the Proceeds purported to be covered by the Collateral
Documents, in each case for any reason other than the failure of LPN to take any action within its
control, or (iii) SMCCCD shall contest the validity or enforceability of any Funding Document or any
provision thereof in writing or deny in writing that it has any further liability under any Funding
Document to which it is a party or any provision thereof; or

I.

FCC License.

-

The FCC License shall have been cancelled, terminated, suspended,
(i)
.
revoked, denied renewal, materiallyadversely modified, or otherwise ceased to be in full
'
force and effect; or '
The FCC, any Communications Regulatory Authority or any other
(ii)
Government Authority commences an action or proceeding that could lead to the
cancellation, termination, suspension, revocation, non-renewal, or material adverse
modification of any FCC License; or
_

J.
Reimbursement Event. A Reimbursement Event (as such term is defined in
_
the Option Agreement) shall have occurred:

. 20 0MM_US:7I463242.10

 9. IF, each

THEN (i) upon the occurrence of any Triggering Event described 1n subsection 9.1E or
of the Subsidy Payments made on or prior to such date, shall automatically become

immediately due and payable, without presentment, demand, protest or other requirements of any kind, all
of which are hereby expressly waived by SMCCCD, and the obligation of LPN to make any Subsidy
Payment shall thereupon terminate; and (ii) upon the occurrence and during the continuation of any other

“.1...

Mia,”

__

.2

Triggering Event, LPN may, by written notice to SMCCCD, either, in LPN’s sole discretion (x) declare
all or any portion of the Subsidy Payments made on or prior to such date, to be, and the same shall
forthwith become, immediately due and payable, and the obligation of LPN to make any Subsidy
Payment hereunder shall thereupon terminate, or (y) exercise the Sale Call Option upon the terms and
conditions set forth in the Option Agreement, in which case LPN shall be deemed to have waived its right
to repayment ,of the Reimbursement Obligations with respect to such Triggering Event and the obligation
of LPN to make Subsidy Payments shall-continue; provided, however, if the occurrence of a Triggering
Event is the result of SMCCCD’s willful breach of any obligations under this Agreement or the other
Funding Documents (a “Willful Breach”), then, without limiting any other rights or remedies of LPN,
SMCCCD’s repayment of Subsidy Payments pursuant to clause (i) or (ii) shall be made together with
interest thereon at a rate equal to 8% per annum. For the avoidance of doubt, failure by SMCCCD to
discharge its obligations pursuant to the Sale Call Option granted under the Option Agreement will
constitute a Willfulugrueach hereunder.

Application of Proceeds and Paments during
9.2
Generally; Calculation of Interest.

a

Triggering Event; Pam ents
~

Application of Proceeds and Payments during a Triggering EVent. Upon the
A.
occurrence and during the continuation of a Triggering Event, all payments made by SMCCCD to LPN in
respect of any Reimbursement Obligation shall be applied to the payment of interest (if interest is
payable) before application to principal and shall be applied to reduce such principal pro rata. In the
event of a Willful Breach, LPN shall also be entitled to compensation, reimbursement and
indemnification under any Funding Document, and to the payment of all costs and expenses paid or
incurred by LPN in connection with the Funding‘Documents.

f

Payments Generally. All payments by SMCCCD o Re1mbursement
B.
Obligations shall be made 1n Dollars In same day funds, free of any restriction or condition, and
delivered to LPN not later than noon San Francisco time on the date due 1n the LPN Account; funds
received by LPN after that time on such due date shall be deemed to have been paid by SMCCCD on the
next succeeding Business Day.- Whenever any payment to be made hereunder shall be stated to .be due
on a day that is not a Business Day, such'payment shall be made on the next succeeding Business Day
and such extension of time shall be included in the computation of the payment of interest hereunder.

Calculation of Interest. Interest payable under subsection 9.1 of this.
C.
Agreement, 1f any, shall be computed on the basis of a 365-day year, in each case for the actual number
of days elapsed 1n the period during which it accrues. ln computing interest on any Subsidy Payment,
the date of the making of suoh Subsidy Payment shall be included,‘and the date of payment of such
‘Subsidy Payment shall be excluded; provided that if a Subsidy Payment is repaid on the same day on
which it is made, one day’s interest shall be paid on that Subsidy Payment. In no event shall the rate of
interest payable by SMCCCD with respect to any Subsidy Payment exceed the maximum rate of interest
permitted to be charged under applicable law (the “Maximum Rate”). If LPN shall receive interest in
an amount that exceeds the Maximum Rate, the excess interest shall be applied to the unpaid principal of
the Subsidy Payment or, if it exceeds such unpaid principal, refunded to SMCCCD.

OMM_US:7 463242.10

'

- 2] -

«W.- ..

 SECTION 10. MISCELLANEOUS
10.1
Successors and Assigns. This Agreement shall be binding upon the parties hereto and
their respective successors and assigns and shall inure to the benefit of the parties hereto and the
successors and assigns of LPN. SMCCCD’s rights or obligations hereunder or any interest therein may
not be assigned or delegated by SMCCCD without the prior written consent of LPN (and any attempted
assignment or transfer by SMCCCD without such consent shall be null and void). LPN may assign its
rights hereunder and delegate its duties hereunder, in whole or in part, to one or more Affiliates without
the consent of SMCCCD. Any such assignment or delegation authorized pursuant to this subsection 10.1
shall be pursuant to a written agreement, which shall be delivered to SMCCCD. Nothing in this
Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties
hereto, their respective successors and assigns permitted hereby and, to the extent expressly contemplated
hereby, the Affiliates of each of LPN and lndemnitees) any legal or equitable right, remedy or claim
'
under or by reason of this Agreement

W.

10.2
If either party to this Agreement shall bring any action for relief against the
other, declaratory or otherwise, arising out of this Agreement, the losing party shall pay to the prevailing
partxreasonable attomeys’ fees and costs incurred in bringing such suit and/or enforcing any judgment
granted therein. Any judgment or order entered in such action shall contain a specific provision providing
for the recovery of attomeys’ fees and costs incurred in enforcing such judgment
'

10.3

Indemnity.

A.
Indemnification by SMCCCD. SMCCCD shall defend and save LPN and its
respective officers, directors, employees, agents, representatives and permitted assigns (each, an “LPN
Indemnified Party”), forever harmless from and against, and shall reimburse each LPN Indemnified
Party for, any and all liabilities, obligations, deficiencies, demands, claims,.suits, actions, or causes of
action, assessments, losses, costs and expenses (including reasonable attorneys’ fees) (“Losses”),
sustained or incurred by an LPN Indemnified Party, relating to, resulting from, arising out of , or
otherwise by virtue of, any of the following:

(i)

any breach

of a representation Or Warranty made by SMCCCD this

Agreement; and
.

_

(ii)

Agreement.

anybreach'of a covenant or other agreementrmade by SMCCCD in this
'

'

'

v

'
,

B.
Indemnification by LPN. LPN shall defend and save SMCCCD, its
subsidiaries, and their respective officers, directors, employees, agents, representatives and permitted
assigns (each; an “SMCCCD Indemnified Party” and together with the LPN Indemnified Parties,
(“Indemnitees”), forever harmless from and against, and shall reimburse each SMCCCD Indemnified
Party for, any and all Losses sustained or incurredby an SMCCCD Indemnified Party, relating to,
resulting from, arising out of, or otherwise by virtue of, any of the following:
I

any breach of a representation or warranty made by LPN in this
(i)
Agreement; and

(ii)
Agreement

any breach of a covenant or other agreement made by LPN in this

- 22 .
0MM_US:7l 463242.10

 3'

10.4
Amendments and Waivers; Termination. This Agreement shall not be amended,
modified or waived in whole or in part except in writing signed by an officer of the party to be bound by
such amendment, modification or waiver. This Agreement may be terminated (a) by mutual written
agreement of SMCCCD and LPN, (b) by LPN upon the occurrence of any Triggering Event described in
subsection 9.], or (c) by SMCCCD without penalty to it in the event that LPN fails to make any Subsidy
Payment within 34 days of its due date
-

10.5
so that

Independence of Covenants. All covenants hereunder shall be given independent effect

if a particular action or condition is not permitted by any of such covenants, the fact that it would

be permitted by an exception to, or would otherwise be within the limitations of, another covenant shall
not avoid the occurrence of a Triggering Event or Potential Triggering Event such action is taken or

if

condition exists.

'

10.6
Notices; Effectiveness of Signatures. Unless otherwise specifically provided herein,
any notice or other communication herein required or permitted to be given shall be in writing and may be
personally served, or sent by United States mail, return receipt requested, or courier service that provides
proof of delivery. and shall be deemed to have been given when delivered. For the purposes hereof, the
address of each party heretoshall be as set forth under such party’s name on the signature pages hereof or
such other address as shall be designated by'such Péfib‘fi‘ifi? Written notice delivered to the other parties
hereto. Funding Documents and notices under the Funding Documents may be transmitted and/or signed
by signatures delivered in ‘PDF’ format by electronic mail with affirmative return acknowledgement of
receipt by the recipient. The effectiveness of any such documents and signatures shall, subject to
applicable law, have the same force and effect as an original c0py with manual signatures and shall be
binding on SMCCCD and LPN. Either party may also require that any such documents and signature be
confirmed by a manually-signed copy thereof; provided, however, that the failure to request or deliver
any such manually-signed copy shall not affect the effectiveness of any document or signature.
)

,

.‘o—.——

.__.,

Survival of Representations, Warranties and Agreements. All representations,
10.7
warranties and agreements made herein shall survive the execution and delivery of this Agreement and
the making of the Subsidy Payments hereunder. Notwithstanding anything in this Agreement or implied
and 10.12 shall survrve
by law to the contrary, the agreements of SMCCCD set forth in subsections 10.3
the payment of the Subsidy Payments and the termination of this Agreement.

Failure or Indulgence Not Waiver; Remedies Cumulative. No failure or delay on the
part of LPN or SMCCCD in the exercise of any power, right or privilege hereunder or under any other
of
Funding Document shall impair such power, right or privilege or be construed lobe a waiver any
right
such
or
power,
default or acquiescence therein, nor shall any single'or partial exerciSe of any
rights
privilege preclude other or further exercise thereof or of any other power, right or pnvrlege. All
10.8

_

cumulative to, and not,
and remedies existingunder this Agreement and the other Funding Documents are
exclusive of, any rights or remedies otherwise available.
Payments Set Aside; To the ‘eXtent that SMCCCD makes a payment'or payments to
LPN or LPN exercises its rights of setoff, and such payment or payments or the proceeds of such
enforcement or setoff or any part thereof are subsequently invalidated, declared to be fraudulent or,
preferential, set aside and/or required to be repaid to a trustee, receiver or any other party under any
of
bankruptcy law, any other state or federal law, common law or any equitable cause, then, to the extent
and
rights
Liens,
and
all
satisfied,
be
to
such recovery, the obligation or part thereof originally intended
remedies therefor or related thereto, shall be revived and continued in full force and effect as if such
payment or payments had not 'been made of such enforcement or setoff had not occurred.
10.9

0MM_US:7I463242.I0

 10.10 Severabilig. In case any provision in or obligation under this Agreement shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the
remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not
in any way be affected or impaired thereby, although the parties shall strive to interpret the remaining
provisions and obligations so as to give effect to their mutual economic goals.
,

10.11 Damage Waiver. To the extent permitted by law, neither SMCCCD nor LPN shall
assert, and hereby waive, any claim against any Indemnitee, on any theory of liability, for special,
indirect, consequential or punitive damages (asopposed to direct or actual damages) arising out of, in
connection with or as a result of this Agreement, any other Funding Document, any transaction
contemplated by the Funding Documents, any Subsidy Payment or the use of proceeds thereof. No
Indemnitee shall be liable for any damages arising from the use by unintended recipients of any
information or other materials distributed by it through telecommunications, electronic or other
information transmission systems in connection with the Funding Documents or the transactions

contemplated thereby.
10.12 Agglicable Law. THIS AGREEMENT AND THE OTHER FUNDING
DOCUMENTS (EXCEPT AS OTHERWISEMEXRRESSLY SET FORIHJN ANY SUCH
FUNDING DOCUMENT), AND THE RIGHTS AND OBLIGATIONS C":”THE PARTIES
HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN‘ ACCORDANCE WITH, THE INTERNAL LAWS OF THE
STATE OF CALIFORNIA (INCLUDING SECTION 1646.5 OF THE CIVIL CODE OF THE
STATE OF CALIFORNIA), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES
THAT WOULD REQUIRE APPLICATION OF ANOTHER LAW.
.7‘.
Ag,

_

i

.

10.13 Construction of
reement; Nature of Relationship. Each of the parties hereto
acknowledges that (i) it has been represented by counsel in the negotiation and documentation of the
terms of this Agreement, (ii) it has had full andgjbiropportunity to review and revise the terrns o_f this
Agreement, and (iii) this Agreement has been drafted jointly by both of the parties hereto. Accordingly,
each of the parties hereto acknowledges and agrees that the terms of this Agreement shall not be
construed against or in favor-of the other party. The partiesagree that in connection with all aspects of
the transactions contemplated hereby or by the other Funding Documents and any communications in'
connection therewith, SMCCCD, on the one hand, and LPN, on the other hand, will have a business
relationship that does not create, by implication or otherwise, any fiduciary duty on the part of either party
or any of their respective Affiliates, and no such duty will be deemed to have arisen in connection with
any such transactions or communications
.

-

'

10.14 Consent to Jurisdiction and Service of Process. ALL JUDICIAL PROCEEDINGS
BROUGHT AGAINST SMCCCD 0R LPN ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OTHER FUNDING DOCUMENT, OR ANY OBLIGATIONS
HEREUNDER AND THEREUN‘DER, MAY BE BROUGHT IN A STATE OR FEDERAL COURT
OF COMPETENT JURISDICTION IN THE STATE OFCALIFORNIA, COUNTY AND CITY
OF SAN MATEO. BY EXECUTING AND DELIVERING THIS AGREEMENT, EACH OF
SMCCCD AND LPN, FOR ITSELF 'AND IN .CONNECTION WITH ITS PROPERTIES,
IRREVOCABLY(I) ACCEPTS GENERALLY AND UNCONDITIDNALLY THE EXCLUSIVE
JURISDICTION AND VENUE OF SUCH COURTS; (II) WAIVES ANY DEFENSE OF FORUM
NON CON VENIENS; (III) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH
PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED
MAIL, RETURNRECEIPT REQUESTED, TO SMCCCD OR LPN, AS APPLICABLE, AT SUCH
PARTY ’S ADDRESS PROVIDED IN ACCORDANCE WITH SUBSECTION 10.6; (IV) AGREES
THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE IS SUFFICIENT T0 CONFER
.

. 24 0MM_US:7I463242.l0

-

 PERSONAL JURISDICTION OVER ITSELF IN ANY SUCH‘PROCEEDING IN ANY SUCH
COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN
EVERY RESPECT; (IV) AGREES THAT THE OTHER PARTY RETAINS THE RIGHT TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW; AND (V) AGREES
THAT THE PROVISIONS OF THIS SUBSECTION 10.14- RELATING TO JURISDICTION AND
VENUE SHALL BE BINDING AND ENFORCEABLE TO THE FULLEST EXTENT
PERMISSIBLE UNDER CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 410.40 OR
OTHERWISE.

Confidentiality; Public Disclosure. A Party receiving Confidential Information
(“Receiving Partf’) from the other party (“Disclosing Pam”) will refrain from directly or indirectly
10.15

disclosing the Disclosing Party’s Confidential Information and may not use the Disclosing Party’s
Confidential Information for any purpose whatsoever, except for the purpose for which it was provided
and as contemplated and authorized by this Agreement or the other Funding Documents. The term
“Confidential Information” shall mean for purposes of this Agreement and the other Funding Documents
all non-public information and material, whether disclosed or made available in writing, electronically,
orally, visually or otherwise, regarding the business of the Disclosing Party and third parties who have
fumished confidential, non-public information to the Disclosing Partymd‘allmlherjnfonnation QL__W.
material disclosed to the Receiving Party by the Disclosing Party or its Affiliates orrepresentatives 6’2???should be understood by a reasonable business person to be confidential. Notwithstanding the foregoing,
the Receiving Party may use and disclose to its Affiliates, directors, officers, employees and agents,
including accountants, legal counsel, investment bankers, underwriters and other advisors (collectively
“Representatives”) the Confidential Information of the Disclosing Party as reasonably necessary to enable
the Receiving Party to fulfill its obligations and realize its benefits under this Agreement and the other
Funding Documents, provided, however, (a) that the Receiving Party shall make all commercially
reasonable efforts to ensure that each such Representative acknowledges and complies with this Section
25 as if such Representative were a party to this Section, and (b) that the Receiving Party shall remain
responsible and liable for such Representative’s compliance with this Section. The Receiving Party shall
use the same degree of care to protect the Confidential Information of the Disclosing Party from
unauthorized use or disclosure as it uses to protect its own information of a similar nature—but in no event
less than reasonable care. Notwithstanding the foregoing, the Parties acknowledge that SMCCCD is
subject to the open records requirements of California law. SMCCCD shall not disclose any Confidential
Information that may lawfully be withheld under that law. To the maximum extent permitted by law,
SMCCCD will provide LPN with notice of any intended public disclosure of this Agreement or any other
Funding Document and provide LPN with the opportunity to consult with SMCCCD and redact such
agreements to the extent permitted by law prior to their public discloSure.
_

.

.

’

10.16 Counterparts; Effectiveness. This Agreement and any amendments, waivers, consents
or supplements, hereto or in connection herewith may be executed in counterparts, each of which when .so
executed and delivered shall be deemed an original, but both such counterparts together shall constitute
but one and the same instrument; signature pages may be detached from separate counterparts and
attached to a” single counterpart so that both signature pages are physically attached to the same document.
This Agreement shall become effective"upon (i)'the execution of a counterpart hereof by each of the
parties hereto and (ii) the satisfaction or waiver of the other conditions set forth in subsection 3.].
.h. »....

[Remainder of page intentionally left blank]

-25 0MM_US:7I463242. 0

-

.

 I

IN WITNESS WHEREOF, the parties hexeto have caused this Agreement to be duly
executed and delivered by their respective office-a theramto duly authoriwd as of the date first mitten
above.
SMCCCD:
SAN MATEO COUNTY COMMUNITY COLLEGE

DISTRICT

Title:

W'fi‘it

‘i‘CQ.

C

Notice Address:

WIM—rr
"

g

..

”an”,

A

,

-

Executive Vice Chancellor
San Mateo County Community College District
3401 CSM Drive
SanMateo, CA 94402
Phone: 650-358-6790
Email: mecksj@smccd.edu

i

With a copy to:

.

_

Lawrence M. Miller
Schwartz, Woods & Miller
1233 20'h Street, NW, Suite 610
Wasmgton, DC. 20036-7322
Phone: (202) 833-1700
Email: miller@swmlaw.com

Withacopytm.

A

'

E

j

.

a-

Jan Roecks
7

.

.

,

_

San Mateo County Community College
3401 CSM Drive
San Mateo,

CA 94402

Phone: 650-358-6790

Email: mecksj@smccd.edu
Eugene Whitlock
400 County Center, 6‘“ Floor
Redwood City, CA 94063

District

7

wrmnmaz;

 LPN:

LOCUSPOIN'I' NETWORKS, LLC

8,
Title:

24%
(€20

A:

Notice Address".

LocpsPoint Networks, LLC
Pleasanton Corporate Commons
6200 Stoncridge Mall Road, Suite 300
Plcasanton, CA 94588
Attn: William
Facsimile No.‘. (925) 399-6001
Email: bill@locuspoinlnetworks.com

cay

With a copy to:
O'Mclveny & Myers LLP
2765 Sand Hill Road
Mcnlo Park, California 94025
Attn: David Makarcchian, Esq.
Facsimile No.: (650)473-2601
Email: dmakarochian@omm.com

  

 



EXHIBITS

FORM OF COMPLIANCE CERTIFICATE
FORM OF SECURITY AGREEMENT

. .. v.

EXHIBIT I
[FORM OF] COMPLIANCE CERTIFICATE

COMPLIANCE CERTIFICATE
THE UNDERSIGNED HEREBY CERTIFIES THAT:

I am the [Title] of San Mateo County Community College District,
(1)
community college district (“SMCCCD”);

a

California

have reviewed the terms of that certain Funding Agreement dated as of May 16,
2013, as amended, supplemented or otherwise modified to the date hereof (said Funding Agreement, as so
amended, supplemented or otherwise modified, being the “Funding Agreement”, the terms defined
therein and not othenvise defined in this Certificate being used in this Certificate as therein defined), by
and among SMCCCD and LocusPoint Networks, LLC, a Delaware limited liability company (“LPN"),
and the terms of the other Funding Documents; and I have made, or have caused to be made under our
supervision, a review in reasonable detail of the transactions and condition of SMCCCD during the
accounting period covered by the attached financial statc*cn.s
(2)

1

(3)

~

As of the date hereof:

The representations and warranties contained in the Funding Agreement and in
(i)
the other Funding Documents are true, correct and complete in all material respects to the same extent as
though made on and as of the date hereof, except to the extent such representations and warranties
specifically relate to an earlier date, in which case such representations and warranties were true, correct
and complete in all material respects on and as of such earlier date; provided, that, if a representation and
warranty is qualified as to materiality, the materiality qualifier set forth above shall be disregarded with
respect to such representation and warranty for purposes of th1s condition;

No event has occurred or would result from the making of such Subsidy Payment
(ii)
that would constitute a Triggering Event or a Potential Triggering Event;
SMCCCD has perfomted in all material respects all agreements and satisfied all
(iii)
conditions which the Funding Agreement and each other Funding Document provides shall be performed
or satisfied by it on or before the date hereof;
-

.

To the knowledge of SMCCCD, no order, judgment or decree of any arbitrator or
(iv)
Government Authority purports to enjoin or restrain LPN from making the Subsidy Payment to be made
by it on the date hereof;

No FCC License has been forfeited or materially impaired for any reason,
.
(v)
including as a result of or in connection with any Funding Document or the transactions contemplated
hereby or thereby; and
.

.

(vi)

No Material Adverse Effect has occurred.

The foregoing certifications are made and delivered this
pursuant to subsection 32A of the Funding Agreement.

I -I
0MM_US:7I 5184914

_

day of

Compliance Certificate

 SAN MATEO COUNTY COMMUNITY COLLEGE

DISTRICT
I

i

By:
Title:

I
:

 

'

OMM_US:7 l 5 1 8492.4

1-2

Compliance Certificate

 EXHIBIT II
FORM OF SECURITY AGREEMENT
This SECURITY AGREEMENT (this “Agreement”) is dated as of May 16, 2013 and
entered into by and between SAN MATEO COUNTY COMMUNITY COLLEGE DISTRICT, a
California community college district (“SMCCCD”), and LOCUSPOINT NETWORKS, LLC, a
Delaware limited liability SMCCCD (“LPN”).

PRELIMINARY STATEMENTS
Pursuant to the Funding Agreement dated as of May 16, 2013 (said Funding
Agreement, as it may hereafter be amended, restated, supplemented or otherwise modified from time to
time, being the “Funding Agreement"; the terms defined therein and not otherwise defined 1n Section 20
or elsewhere herein being used herein as therein defined), by and between SMCCCD and LPN, LPN has
madecertain commitments, subject to the terms and conditions set forth in the Funding Agreement, to
make funds available to SMCCCD.

A.

In consideration of the funds provided under the Funding Agreement, SMG%®W
has entered into the Option Agreement and the Bid Management Agreement with LPN, and it is desired
that the obligations of SMCCCD under the Option Agreement be secured hereunder.
B.

It is a condition precedent to the funding by LPN of the LPN Payment under the
C.
Funding Agreement that SMCCCD shall have granted the security interests and‘ undertaken the
obligations contemplated by this Agreement.
NOW, THEREFORE, in consideration of the agreements set forth herein and in the
Funding Agreement and 1n order to induce LPN to fund the LPN Payment under the Funding Agreement
and to enter into the other Funding Documents, SMCCCD hereby agrees with LPN as follows:

SECTION

1.

Grant of Security. SMCCCD hereby assigns to LPN, and hereby grants to LPN a
of SMCCCD’s right, title and interest in and to (a) the LPN Share, (b) the Proceeds

security interest in, all

Account (which is more specifically described on Schedule 1 annexed hereto) and all Money representing
the LPN Share from time to time on deposit in the Proceeds Account, and (c) all “proceeds” (as defined in
the UCC) with respect to any of the items described 1n the foregoing clauses (a)
(b), 1n each case
and
“Collateral”).
whether now or hereafter existing (collectively, the
.

SECTION 2. Security for Obligations. This Agreement secures, and the Collateral is collateral
security for, the prompt payment- or performance in full when due of all Secured Obligations of
SMCCCD. “Secured Obligations” means the obligations of SMCCCD to pay the LPN Share to LPN in
other Funding
accordance with the terms of the Option Agreement, the Funding Agreement
and the
Documents.
.

Representations and Warranties. SMCCCD represents and warrants as follows: (a)
except as expressly permitted by the Funding Agreement, SMCCCD will at all times own its interests in
the Collateral free and clear of any Lien and no effective financing statement or other instrument similar
in effect covering all or any part of the Collateral is on file in any filing or recordingoffice; (b) the
security interests in the Collateral granted to LPN hereunder constitute valid security interests in the
Collateral, securing the payment of the Secured Obligations; and (c) upon (1) the filing of UCC financing
statements naming SMCCCD as “debtor", naming LPN as “secured party” and describing the Collateral
in the filing offices with respect to SMCCCD set forth on Schedule 2 annexed hereto, and (ii) the

SECTION 3.

11-1

Security Agreement
‘

OMM_US:7lSlB492.4

.

-

 §_l‘

execution and delivery to LPN of an agreement providing for control by LPN of the Proceeds Account,
the security interests in the Collateral granted to LPN will constitute perfected security interests therein
prior to all other Liens, and all filings and other actions necessary or desirable to perfect and protect such
security interests have been, or promptly after the Effective Date will be, duly made or taken.

SECTION 4. Further Assurances. SMCCCD agrees that from time to time, at the expense of
SMCCCD, SMCCCD will promptly execute and deliver all further instruments and documents, and take
all further action, that may be necessary or desirable, or that LPN may request, in order to perfect and
protect any security interest granted or purported to be granted hereby or to enable LPN to exercise and
enforce its rights and remedies hereunder with respect to any Collateral.
SECTION 5. Certain Covemipts of SMCCCD. SMCCCD shall: (a) not use or permit any Collateral
to be used unlawfully or in violation of any provision of this Agreement or any applicable statute,
regulation or ordinance or any policy of insurance covering the Collateral; and (b) use the Collateral only
in accordance with the terms and conditions of the Option Agreement and the other Funding Documents.
SECTION 6. LPN Appointed Attorney-in—Fact. SMCCCD hereby irrevocably appoints LPN as
SMCCCD’s attomey-in-fact, with full authority in the place and stead of SMCCCD and in thefiname of
SMCCCD, LPN or otherwise, from time to time upon any breach of or default under the Option
Agreement or any-other Funding Document, in LPN’s discretion to take any action and to execute any
instrument that LPN may deem necessary. or advisable to accomplish the purposes of this Agreement,
including, without limitation to: (a) ask for, demand, collect, sue for, recover, compound, receive and give
acquittance and receipts for moneys due and to become due under or in respect of any of the Collateral;
and (b) file any claims or take any action or institute any proceedings that LPN may deem necessary or
desirable for the collection of any of the Collateral or otherwise to enforce or protect the rights of LPN
with respect to any of the Collateral.

--‘7-x=::rzr:w-r ~

SECTION 7. LPN May Perform. If SMCCCD fails to perform any agreement contained herein, LPN
may itself perform, or cause performance of, such agreement, and the expenses of LPN incurred in
connection therewith shall be payable by SMCCCD under Section 10.
Remedies. Upon any breach of or default under the Option‘Agreement or any other
Funding Document by SMCCCD, LPN may exercise in respect of the Collateral, in addition to all other
rights and remedies provided for herein or otherwise available to it, all the rights and remedies of a
secured party on default under the UCC (whether or notthe UCC applies to the affected Collateral). LPN
may. also, upon any breach of or default under the Option Agreement or any other Funding Document by
SMCCCD, provide instructions directing the disposition of funds representing the LPN Share in the
Proceeds Account: SMCCCD fiirther agrees that a breach of any of the covenants contained in this
Section 8 will cause irreparable injury to LPN, that LPN has no adequate remedy at law in respect of such
breach and, as a consequence, that each and every covenant contained in this Section shall be specifically
enforceable against SMCCCD, and SMCCCD hereby waives and agrees not to assert any defenses
against an action for specific performance of such covenants except for a defense that no default has
occurred giving rise to the Secured Obligations becoming due and payable prior to their stated maturities.

SECTION 8.

.

'

'

SECTION 9. Application of Proceeds. Except as expressly provided elsewhere in this Agreement, all
proceeds received by LPN in respect of any sale of, collection from, or other realization upon all or any
part of the Collateral shall be applied in accordance with the terms of the Funding Agreement.
SECTION 10. Indemnig and Expenses. SMCCCD agrees to indemnify LPN from and‘against any
and all claims, losses and liabilities in any way relating to, growing out of or resulting from this
Agreement and the transactions contemplated hereby (including, without limitation, enforcement of this
11-2
OMM_US:7l 5184914

~

Security Agreement

”MW

 Agreement), except to the extent such claims, losses or liabilities result solely from LPN’s gross
negligence or willful misconduct as finally determined by a court of competent jurisdiction. LPN agrees
to indemnify SMCCCD from and against any and all claims, losses and liabilities in any way relating to,
growing out of or resulting from this Agreement and the transactions contemplated hereby (including,
without limitation, enforcement of this Agreement), except to the extent such claims, losses or liabilities
result solely from'SMCCCD’s gross negligence or willful misconduct as finally determined by a court of
competent jurisdiction. If either party to this Agreement shall bring any action for relief against the other,
declaratory or otherwise, arising out of this Agreement, the losing party shall pay to the prevailing party
reasonable attomeys’ fees and costs incurred in bringing such suit and/or enforcing any judgment granted
therein. Any judgment or order entered in such action shall contain a specific provision providing for the
recovery of attorneys’ fees and costs incurred in enforcing such judgment. The obligations of each party
in this Section 10 shall survive thetermination of this Agreement and the discharge of the obligations
under this Agreement and the other Funding Documents.

SECTION 11. Continuing Security Interest; Successors and Assiggs; Termination and Release.
This Agreement shall create a continuing security interest in the Collateral and shall (i) remain in full
.
force and effect until the payment in full of the Secured Obligations (other than unasserted claims for
indemnification or expense reimbursement), (ii) be binding upon SMCCCD and its respective successors M-.and assi’g‘fis'jgéh'd (iii) inure, together with the rights and remedies of LPN hereunder, to the benefit of LPN
and its successors, transferees and assigns. Without limiting the generality of the foregoing clause (iii),
LPN may assign or otherwise transfer its rights and obligations under any Funding Document in
accordance with the terms of such Funding Agreement, and such other Person shall thereupon become
vested with all the benefits in respect thereof granted to LPN herein or otherwise. Upon the payment in
full of all Secured Obligations (other than unasserted claims for indemnification or expense
reimbursement), the security interest granted hereby shall terminate and all rights to the Collateral shall
revert to the applicable SMCCCD. Upon any such termination LPN will, at SMCCCD’ expense, execute
and deliver to SMCCCD such documents as SMCCCD shall reasonably request to evidence such
____.
.
...
termination.

»

_

SECTION

12. Amendments; Etc. No amendment, modification, termination or waiver of any
provision of this Agreement, and no consent to any departure by SMCCCD therefrom, shall 1n any event
be effective unless the same shall be 1n writing and signed by LPN and, in the case of any such
amendment or modification, by SMCCCD. Any such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which it was given.

»

SECTION 13. Notices. Any notice or other communication herein reouiredor permitted to be given
shall .be in writing and may be personally served or sent by electronic mail, telefacsimile or United States
mail or courier service and shall'be deemed to have been given when delivered in person or by courier
service, upon receipt of electronic mail, telef‘acsimile, or three Business Days after depositing it in the
United States mail with postage prepaid and properly addressed; provided that notices to LPN shall not be
effective until received. For the purposes hereof, the address of each party hereto shall be as provided 1n
subsection 10.6 of the Funding Agreement or as set forth under such party’ s name on the signature pageshereof or such other address as shall be designated by such party in a written notice delivered to the other
parties hereto.

-

‘

SECTION 14. Failure or Indulgegg Not Waiver; Remedies Cumulative. No failure or delay on the
of LPN in the exercise of any power, right or privilege hereunder shall impair such power, right or
privilege or be construed to be a waiver of any default or acquiescence therein, nor shall any single or
partial exercise of any such power, right or privilege preclude any other or further exercise thereof or of
part

any other power, right or privilege. All rights and remedies existing under this Agreement are cumulative
to, and not exclusive of, any rights or remedies otherwise available.

_

0MM_US:715I8492.4

“-3
.

Security Agreement

 SECTION 15. Severability. In case any provision in or obligation under this Agreement shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the
remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not
in any way be affected or impaired thereby.
SECTION 16. Headings. Section and subsection headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement for any other purpose or
be given any substantive effect.
SECTION 17. Governing Law; Rules of Construction. THIS AGREEMENT AND THE RIGHTS
AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE
STATE OF CALIFORNIA (INCLUDING SECTION 1646.5 OF THE CIVIL CODE OF THE STATE
OF CALIFORNIA), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THAT WOULD
REQUIRE APPLICATION OF ANOTHER LAW, EXCEPT TO THE EXTENT THAT THE UCC
PROVIDES THAT THE PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR
REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE
GOMERNED BY THE LAWSOF A JURISDICTION OTHER THAN THE STATE OF CALIFORNIA,
IN WHICH CASE THE LAWS"GE"‘SUCH JURISDICTION SHALL GOVERN WITH RESPECT TO
THE PERFECTION OF THE SECURITY INTEREST IN, OR THE REMEDIES WITH RESPECT TO,
SUCH PARTICULAR COLLATERAL. The rules of construction set forth in subsection 1.3 of the
Funding Agreement shall be applicable to this Agreement mutatis mutandis.

,

..
_

'

‘

SECTION 18. Consent to Jurisdiction and Service of Process. ALL JUDICIAL PROCEEDINGS
BROUGHT AGAINST SMCCCD OR LPN ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OTHERFUNDING DOCUMENT, OR ANY OBLIGATIONS HEREUNDER
AND THEREUNDER, MAY BE BROUGHT IN A STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN THE STATE OF CALIFORNIA, COUNTY AND CITY OF SAN MATEO. BY
EXECUTING AND DELIVERING THIS AGREEMENT, EACH OF SMCCCD AND LPN, FOR
ITSELF AND IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLYO) ACCEPTS
GENERALLY AND UNCONDITIONALLY THE EXCLUSIVE JURISDICTION AND VENUE OF
SUCH COURTS; (II) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS; (III) AGREES
THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY
BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO
SMCCCD, OR LPN, AS APPLICABLE, AT SUCH PARTY'S ADDRESS PROVIDED IN
ACCORDANCE WITH SECTION 13; (IV) AGREES‘THAT SERVICE ‘AS-PROVIDED IN CLAUSE
(III) ABOVE IS SUFFICIENT T0 CONFER PERSONAL JURISDICTION OVER ITSELF IN ANY
SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE
AND BINDING SERVICE IN EVERY RESPECT; (IV) AGREES THAT THE OTHER PARTY
RETAINS THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW;
AND (V) AGREES THAT THE PROVISIONS OF THIS SECTION 18 RELATING TO
JURISDICTION AND VENUE SHALL BE BINDING A'ND' ENFORCEABLE TO THE FULLEST
EXTENT PERMISSIBLE UNDER CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 410.40
-

OR OTHERWISE.

'
-

-

.

SECTION 19. Countegparts. This Agreement may be executed in one or more counterparts and by
different parties hereto in separate counterparts, each of which when so executed and delivered shall be
deemed an original, but all such counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached to a single counterpart
so that all signature pages are physically attached to the same document.
-

11-4
OMM_US:715l8492.4

Security Agreement

 SECTION

20. Definitions. Each capitalized term utilized in this Agreement that is not defined in the
Funding Agreement or in this Agreement, but that is defined in the UCC, including the categories of
Collateral listed in Section 1 hereof, shall have the meaning set forth in Articles 1, 8 or 9 of the UCC. In
addition, the following terms used in this Agreement shall have the following meanings:

“Collateral” has the meaning set forth in Section
“Funding Agreement”

has the meaning set

1

.

forth in the Preliminary Statements of this

Agreement.

“LPN Share”

has the meaning assigned to it in the Option Agreement.

“Secured Obligations” has the meaning set forth in Section

“UCC” means the Uniform Commercial Code,
may hereafter be amended, in the State of California.

as

“753:“. -m.

2

hereof.

it exists on the date of this Agreement or as it

pmww ‘

[Remainder of page intentionally left blank]

11-5
OMM_US:7I “8492.4

Securily Agreement

 IN WITNESS WHEREOF, SMCCCD and LPN have caused this Agreement to be duly
executed and delivered by their respective officers thereunto duly authorized as of the date first written
above.
SAN MATEO COMMUNITY COLLEGE

DISTRICT

By:
Name:

Title:

Notice Address:

,

Executive Vice Chancellor
San Mateo County Community College District
“3'16"?" CSM Drive
12;;W,“
San Mateo, CA 94402
Phone: 650-358-6790
Email: roecksl'gwémccdedu

With a copy to:
Lawrence M.

Miller

Schvvartz, Woods & Miller
"1:233 20“1 Street, NW, Suite 610

MW

Washington, D.C. 20036-7322
Phone: 202-833-1700
Email:‘

With a copy to:
Jan Roecks
San Mateo County Community College

340] CSM Drive
San Mateo, CA 94402
Phone: 650-358’6790
Email: [oecksjgtfismccdedu

District

 LOCUSPOINT NETWORKS, LLC

By:
Name:

Title:
Notice Address:
LocusPoint Networks, LLC
Pleasanton Corporate Commons
6200 Stoneridge Mall Road, Suite 300
Pleasanton, CA 94588
Attn: William deKay

Facsimile No.:
Email: bill@locuspointnenNorkscom

With

" “‘
a

copy toé

O’Melveny & Myers LLP
2765 Sand Hill Road
Menlo Park, CA 94025
Ann: David Makarechian, Esq.

Facsimile No.: 650—473-2601
Email: dmakarechian(iz)omm.com

firm,“

 SCHEDULE 1
TO
SECURITY AGREEMENT

MW

Type

of Account

Deposit Account

Depository Bank

Address of Depository Bank

Account Number

Union Bank of
California

350 California Street, 10“I Floor
San Francisco, CA 94104

A/C# 7020024903
ABA# 122000496

II-Schedule
OMM_US:71518492.4

1

Security Agreement

 SCHEDULE 2
TO
SECURITY AGREEMENT

Filing Offices
Califémia Secretary of State

OMM _US:7I463242.10

 SCHEDULES
4.1D

FCC LICENSE AND MATERIAL GOVERNMENTAL AUTHORIZATIONS

(Attached)
4.5

LEASED REAL PROPERTY

Lease at Sutro.

4.8

MATERIAL CONTRACTS

American Public Television (Program provider)

NETA (Program provider)
EPS (Program provider)

Myers Information Systemsv(software services for programming)

AT&T (Studio to transmitter link)
Eaton Corp (UPS service contract)

United Comfort Solutions (Air conditioning service - Sutro)

0MM__US:7 1463242. I 0

 '

Schedule

4 . 1D

United States of America.
»

FEDERAL COMMUNICATIONS COMMISSION
TELEVISION BROADCAST STATION LICENSE

Authorizing

Official Mailing

Address:

SAN MATEO COUNTY COMMUNITY COLLEGE

'1700

Kevin R. Harding

DISTRICT

Associate

'

w HILLSDALE BLVD
‘

~SAN MATEO

Official:

Video

CA94402

thief

Division

Media Bureau

Facility

Id:58912

Grant DatezApril O4, 2011
Analog
This license eXpires 3:00 a.m.
V__
Di g ital
Alocal time, December 01, 2014.
Call Sign: KCSM-TV
License File Number: BLEDT—20091124AHY
This license covers permit no.: BPEDT—ZOOBOBZSAAV
TSIDz410
TSID:411

.

n

Subject to the provisions of the Communicatiéns Act of 1934, subsequent
acts and treaties, and all regulations heretofore or hereafter made by
this Commission, and further subject to the conditions set forth in this
license, the licensee is hereby authorized to use and operate the radio
transmitting apparatus herein described.
This license is issued on the licensee's representation that the
statements contained in licensee's application are true and that the
undertakings therein contained so far as they are consistent herewith,
will be carried out in good faith. The licensee shall, during the term of
this license, render such broadcasting service as will serve the public
interest, convenience, or necessity to the full extent of the privileges
herein conferred.
This license shall not vest in the licensee any right to operate the
station nor any right in the use of the frequency designated in the
license beyond the term hereof, nor in any other manner than authorized
herein. Neither the license nor the right granted hereunder shall be
assigned or otherwise transferred in violation of the Communications Act
of 1934. .This‘ license is subject to- the right of use or control by the
Government of the United States conferred by Section 606 of the
Communications Act of 1934.

'

13cc

Form 352-3 October 21,_ 1985

Page 1

of

2

 I'

Callsign:
.; '

Name

License No. : BLEDT-20091124AHY

KCSM—TV

of Licensee:

Station Location:

SAN MATEO COUNTY COMMUNITY COLLEGE

DISTRICT

CA-SAN MATEO

Frequency (MHz): 644

—

650

Channel : 43

Hours of Operation: Unlimited

Transmitter: Type Accepted.
of the Commission's Rules.
Antenna type:

Tilt:

TUM-CSSP-14/60H—2-T-R

0-75 Degrees

Major lobe directions
(degrees true)

'Sections 73.1660, 73.1665 and 73.1670

(directional or non-directional) : Directional

Description; DIE,
Beam

See

‘

Electrical
“"— “

126

54

:

Latitude:

37 deg

45 min

19 sec

West Longitude:

122 deg

27 min

06 sec

Antenna- Coordinates : North

Transmitter output power: 17.5

kW

12 .44 DBK

Maximum

effective radiated

power (Average)

Height. of) radiation center above ground:

Height of radiation center above

:

500 kW
26 . 99 DBK
288

-

3

Meters

level: 542-5Meters
average terrain: 511-4Meters

mean sea

“Height! of radiation center above
.Antenna structure registration number: 1001289
Overall height of antenna structure above ground (including obstruction
lighting if any) see the registration for this antenna structure.
*** END OF AUTHORIZATION ***

FCC (Form

352-3 October 21, 1985

Page 2

of

2

 DRAFT 11/29/15

AMENDMENT TO FUNDING AGREEMENT
This Amendment (“Amendment”) is entered into on December 17, 2015 (“Amendment
Effective Date”) by San Mateo County Community College District (“SMCCCD” , a community
college district of the State of California, and LocusPoint Networks, LLC (“L_P_N_”), a Delaware
limited liability company, to amend the Funding Agreement between the District and LPN, dated
as of May 16, 2013 (“Agreement”). Capitalized terms that are used but not defined herein shall
have the meaning given to such terms in the Agreement.
WHEREAS, pursuant to the Agreement, LPN has agreed to partially fund the continued
operation of station KCSM-TV (RF Channel 43), San Mateo, California (FCC Facility ID No.
58912) (the “Station”) in consideration of the grant by SMCCCD of rights set forth in the Option
Agreement and of the grant by SMCCCD of the rights set forth in the Agreement and the other
Funding Documents; and
-WHEREAS, under the Agreement, upon a Triggering Event under the Agreemcatt—iPN
would have the right, among other rights, to exercise a Sale Call Option granted under the Option
Agreement; and
WHEREAS, following the exeCution of the Agreement, the FCC issued a new regulation,
C.F.‘R.
47
prohibiting certain
§ 1.2205, and related guidance (collectively,
communications from the deadline for submitting applications to participate in the reverse
auction portion of the Auction until the results of the Auction are announced by public notice
(“g Quiet Period”), and as a result, LPN and SMCCCD may not communicate during the Quiet
Period with respect to certain circumstances that could give rise to an exercise of the Sale Cal]
Option; and

“MW

WHEREAS, to avoid any doubt as to the parties compliance with the Rule, and pursuant
to Section 14 (Modification) of the Agreement, the Parties desire to amend the Agreement to
modify the earliest date by which LPN could exercise the Sale Call Option 1n the event of a
’lriggering Event, in order to comply with the Rule.
4

~

NOW, THEREFORE, in consideration of the mutual covenants contained herein, the
receipt and sufficiency of which the Parties hereby acknowledge, the Parties agree as follows:
'1.
‘

Section 9.1 of the Agreement shall be amended by adding to the remedies provisions
included at the end thereof thefollowing language in. subsection.(y) following the words
“provided, however,”:

“that if the deadline for submitting applications to participate in the reverse auction
portion of the Auction has passed, then the Sale Call Option may not be exercised
until one day after the results of the Auction are announced by the FCC by public
notice and such notice does not indicate that the FCC has accepted SMCCCD’s bid
for relinquishment of the spectrum usage rights associated with the FCC License, and
provided further that”

-

 '

DRAFT 11/29/2015
With this amendment, Section 9.1 will read in its entirety (the additional language being
underlined herein for refefence only):

Triggering Events. To the extent that the occurrence of any of the
following conditions or events (“Triggering Events”) shall result in, a Material Adverse
9.1

Effect:

;

‘
i

A.
Default in Other Agreements. Breach or default by SMCCCD with
respect to any material term of (a) one or more items of Indebtedness or (b) any loan
agreement, mortgage, indenture or other agreement relating to such item(s) of Indebtedness,
the effect of such breach or default is to cause, or to permit the holder or holders of that
Indebtedness (or a trustee on behalf of such holder or holders) to. cause, that Indebtedness to
become or be declared due and~ payable prior to its stated maturity or the stated maturity of
any underlying obligation, as the case may be (upon the giving or receiving of notice, lapse of
time, both, or otherwise); or

i

if

B.
Breach of Certain Covenants. Failure of SMCCCD to perform or
comply with any term or condition contained in subsection 6.2, 6.8, 6.10 or Seéti‘brfl'or 8 of
this Agreement; or

”—1157W1v.

amw—m

‘

C.
Breach of Warranty. Any representation, warranty, certification or
other statement made by SMCCCD in any Funding Document shall be false in any material
respect on the date as ofwhich made; or

D.
Other Defaults Under Funding Documents. SMCCCD shall
default in the performance of or compliance with any term contained in (a) this Agreement or
any of the Collateral Documents, other than any such term referred to in any other
provision of this subsection 9.1, and such default shall not have been remedied or waived
within 10 Business Days after the earlier of (i) an Officer of SMCCCD becoming aware of
such default or (ii) receipt by SMCCCD of notice from LPN of such default or (b) the Option
Agreement or the Bid Management Agreement; or

E.
Involuntary Appointment of Receiver, etc. A decree or order of a
court having jurisdiction in the premises for the appointment of a receiver, liquidator,
sequestrator, trustee, custodian or other officer having similarpo'w'ers over SMCCCD, or over
all or a substantial part of its property, shall have been entered; or there shall have occurred
the involuntary appointment of an interim receiver, trustee or other custodian of SMCCCD
for all or a substantial part of its property; or a warrant of attachment, execution or similar
process shall have been issued against any substantial part of the property of SMCCCD, and“
any such event described 1n this subsection 9.1E shall continue for 60 days unless dismissed,
bonded or discharged; or

-

.
'

'

.

-

.

F.

Voluntary Bankruptcy; Appointment ‘of Receiver, etc.

SMCCCD shall have an order for relief entered with respect to it
(i)
or commence a voluntary case under the Bankruptcy Code or underany other
applicable bankruptcy, insolvency or similar law now or hereafier in effect, or
shall consent to the entry of an order for relief in an involuntary case, or to the
conversion of an involuntary case to a voluntary case, under any such law, or
shall consent to the appointment of or taking possession by a receiver, trustee or
other custodian for all or a substantial part of its property; or SMCQCD shall

'

"

h
1

 DRAFT 11/29/2015 ,
make any assignment for the benefit of creditors; or

SMCCCD shall be unable, or shall fail generally, or shall admit
(ii)
in writing its inability, to pay its debts as such debts become due; or the
Governing Body (or any committee thereof) of SMCCCD shall adopt any
resolution or otherwise authorize any action to approve any of the actions
referred to in clause (i) above or this clause (ii); or

G.
Judgments and Attachments. Any money judgment, writ or
warrant of attachment or similar process related to the Station shall be entered or filed against
SMCCCD or any of the Station’s assets and shall remain undischarged, unvacated, unbonded
or unstayed for a period of 30 days (or in any event later than five days prior to the date of
any proposed sale thereunder); or

-

H.
Invalidity of Funding Documents; Failure of Security;
Repudiation of Reimbursement Obligations. At any time afier the execution and delivery
thereof, (i) any Funding Document or any provision thereof, for any reason other than the
missfaction 1n full of all Reimbursement Obligations, shall cease to be in full force and effect
(other than 1n accordance with its terms) or shall be declared to be null and void, (ii) LPN
shall not have or shall cease to have a valid and perfected First Priority Lien 1n the Proceeds
purported to be covered by the Collateral Documents, in each case for any reason other than
the failure of LPN to take any action within its control, or (iii) SMCCCD shall contest the
validity or enforceability of any Funding Document or any provision thereof in writing or
deny in writing that it has any further liability under any Funding Document to which it is a
party or any provision thereof; or

_.

1.

‘

-

FCC License.

The FCC License shall have been cancelled, terminated,
(i)
suspended, revoked, denied renewal, materially adversely modified, or otherwise
ceased to be 1n full force and effect; or
1

The FCC, any Communications Regulatory Authority or any
(ii)
other Government Authority commences an action or proceeding that could lead
to the cancellation, termination, suspension, revocation, non-renewal, or material
adverse modification of any FCC License; or

J.
Reimbursement Event. A Reimbursement Event (as such term is
defined in the Option Agreement) shall have occurred:

THEN (i) upon the occurrence of any Triggering Event described in subsection 9.1E or
9. IF, each of the Subsidy Payments made on or prior to such date, shall automatically
become immediately due and payable, without presentment, demand, protest or other
requirements of any kind, all of which are hereby expressly waived by SMCCCD, and the
obligation of LPN to make any Subsidy Payment shall thereupon terminate, and (ii) upon
the occurrence and during the continuation of any other Triggering Event, LPN may, by
written notice to SMCCCD, either, in LPN’s sole discretion (x) declare all or any portion
of the Subsidy Payments made on or prior to such date, to be, and the same shall
forthwith become, immediately due and payable, and the obligation of LPN to make any
Subsidy Payment hereunder shall thereupon terminate, or (y) exercise the Sale Call
.

 DRAFT 11/29/2015
Option upon the terms and conditions set forth in the Option Agreement, in which case
LPN shall be deemed to have waived its right to repayment of the Reimbursement
Obligations with respect to such Triggering Event and the obligation of LPN to make
Subsidy Payments shall continue; provided, however, that if the deadline for submitting
applications to participate in the reverse auction portion of the Auction has passed, then
the Sale Call 0p tion may not ‘be exercised until one day after the results of the Auction
are announced by the FCC by public notice and such notice does not indicate that the
FCC has accepted SMCCCD’s bid for rclinguishment of the spectrum usage rights
associated with the FCC License; and provided further that if the occurrence of a
Triggering Event is the result of SMCCCD’s willful breach of any obligations under this
Agreement or the other Funding DOcuments (a “Willful Breach”), then, without limiting
any other rights or remedies of LPN, SMCCCD’s repayment of Subsidy Payments
pursuant to clause (i) or (ii) shall be made together with interest thereon at a rate equal to
8% per annum. For the avoidance of doubt, failure by SMCCCD to discharge its
obligations pursuant to the Sale Call Option granted under the Option Agreement will
constitute a Willful Breach hereunder.
2.

’

.

Entire Agreement; Countegparts. This Amendment and the Agreement which it amends
constitutes the entire understanding between the Parties with regard to the subject matter
hereof and supersedes any prior understandings respecting the subject matter hereof. This
Amendment may be signed in any number of counterparts, each of which shall be an original
for all purposes, but all which taken together shall constitute only one Amendment. The
Parties agree that transmission of this Amendment with facsimile or electronic “pdf’
signatures shall bind the Parties in the same manner as if the Party’s original signatures had
been delivered.

IN WITNESS WHEREOF, the Parties hereto have executed this Amendment as of the
firstabove written.

date3and year

,

SAN MATEO COUNTY COMMUNITY COLLEGE DISTRICT

'By:

:

i

'

Name: Kathy Blackwood
Title: Executive Vice ChanCellOr

LOCUSPOINT NETWORKS,

Name:

LLC

 q"

 

Title:

1 
.

11

DRAFT 11/29/2015

EXHIBIT 

EXECUTION VERSION

BID MANAGEMENT AGREEMENT

This BID MANAGEMENT AGREEMENT (this “Agreement”) is entered into and
effective this May 16, 2013, by and among San Mateo County Community College District (the
“District”), a community college district of the State of California, and LocusPoint Networks,
LLC (“LP—N”), a Delaware limited liability company (the District and LPN each individually a
“Party” and collectively, the “Parties”).

EEQTA_LS
WHEREAS, the District operates noncommercial educational television Station KCSMTV (RF Channel 43), San Mateo, California (FCC Facility ID No. 58912) (“KCS‘M”) and holds
the License issued by the Federal Communications Commission (“FCC”) for KCSM; and
WHEREAS, the District has determined that the spectntm usage rights associated with
""”
KC SM will be made available for relinquishment in the broadcast incentive auction to be
conducted by the FCC pursuant to Section 6403 of the Middle Class Tax Relief and Job Creation
Act of 201 2 (the “Auction”); and
WHEREAS, the Parties have entered into a Funding Agreement, a Put/Call Option
Agreement, and certain other agreements (collectively, the “Funding Documents”), each dated as
of the date hereof, pursuant to which LPN will provide funding to the District to support the
District’s ongoing operation of KCSM, and the District has committed, among other things, to
share with LPN proceeds from KCSM’s participation in the Auction and to enter into this
Agreement; and
1

WHEREAS, the District and LPN are each committed to working cooperatively to
effectuate the terms of the Funding Documents and this Agreement and to maximize the
proceeds received in the Auction 1n exchange for the relinquishment of the spectrum usage rights
associated with the License;
_

'

WHEREAS, until and through’the conclusion of the Auction, the Parties may wish to
coordinate with one another regarding bids and bidding strategies in the Auction; and

'

-.

-

WHEREAS, LPN has substantial expertise in'the development'of strategies for
participating in sophisticated auctions such as the Auction, has access to personnel who are
familiar with prior auctionsconducted'by the FCC, and has access to significant resources that
can be employed brought to bear on the District’s participation in the Auction; and
WHEREAS, the District wishes to hire LPN as a consultant to develop strategies for
successfully participating in the Auction and to appoint LPN as its exclusive agent to manage
KCSM’s participation in the Auction in accordance with the terms of this Agreement and in
conformance with, and subject to any limitations contained in, the F CC’s Rules, and LPN is able
and willing to perform the duties assigned to it hereunder.

OM M__US:7l 553466.!

 NOW, THEREFORE, in consideration of the mutual covenants contained herein, the
receipt and sufficiency of which the Parties hereby acknowledge, the Parties agree as follows:

ARTICLE I
DEFINITIONS
For purposes of this Agreement:

“Agreement” means this Bid Management Agreement,

as amended

from time to time.

“Auction” means the broadcast incentive auction to be conducted by the FCC pursuant to
Section 6403 of the Middle Class Tax Reliefand Job Creation Act of 2012, Pub. L. No.
9‘ 6403, 126 Stat. 156, 225-30 (2012).

_

1

12—96,

“Authorized Representative” means a person designated by a Party to implement that
Party’ 3 obligations under this Agreement, and “Authorized Representatives” means more than
one Authorized Representative.
«

“FCC” means the Federal Communications Commission or any successor agency.
“FCC’s Rules” means the requirements or prohibitions contained at the relevant time in
all applicable laws (including the Communications Act of 1934, as amended through such time),
rules, regulations (including Title 47 of the Code of Federal Regulations), policies and orders of
the FCC or any other relevant governmental agency.

“License” means all licenses and authorizations issued by the FCC to construct and
operate KCSM and all spectrum usage rights associated therewith.
I

“Minimum Bid Amount” means Three Million Dollars ($3,000,000).

ARTICLE II
BID MANAGEMENT

'

'

'
.

2.1
As an express exercise of its sole right to determine whether and 110w KCSM will
participate in‘ the Auction, the District hereby appoints LPN to act as its exclusive consultant and
agent to develop and implement any and all strategies appropriate to such participation. Such
participation shall be premised on achieving the District’s objective cf relinquishing all spectrum
usage rights associated with the License for the maximum value possible, but 1n any event for a
value not less than the Minimum Bid Amount.

2.2
As the exclusive bidding COnsultant and agent for the District under this
Agreement, LPN will have the obligation to:

2.2.] Keep the District informed of material developments in the FCC’s
rulemaking and other proceedings designed to adopt rules that will apply to the Auction.
LPN may, in its sole discretion, participate in any such proceedings, either in its own
name or as part of a group or association of participating parties, to advocate the adoption

0NIM_US:71553466.I

J...

 Rules that would allow the District to participate fully in the
Auction with the opportunity to relinquish spectrum usage rights associated with the
License at their desired value;

of provisions in the FCC’s

2.2.2 Timely prepare for review and submission by the District such filings and
applications as may be required by the FCC ’3 Rules for the District to participate fully in
the Auction;
2.2.3 Advance to the District and pay to the FCC, any filing fees, deposits or
other payment obligations that the FCC’s Rules may require for the District to participate

in the Auction;
2.2.4 Establish a general bidding strategy for maximizing the value in the
of the spectrum usage rights associated with the License;

Auction

2.2.5 Appoint qualified personnel to act as the District‘s authorized bidders in
.the Auction, and train and supervise such personnel to assure their satisfactory
performance of the duties associated with authorized bidders in the Auction;

Provide training to the District to assure compliance with all requirements

2.2.6

of the FCC ’5 Rules applicable to “applicants” in the Auction, including, to the extent
appropriate, training for the officers, directors and agents of the District who may be
individually subject to compliance with the FCC’s Rules during the‘Auction;
2.2.7 Timely submit all bids in the Auction for the District as may be required
for continued participation in the Auction until successful relinquishment of the spectrum
usage rights associated with the License; provided, however, that LPN shall not place any
bid that would result in such relinquishment for less than the Minimum Bid Amount;

2.2.8 Throughout the Auction, keep the District informed Concerning the
bidding process, including, but not limited to, the results of each bidding round and
expected bids in the next bidding round;
2.2.9 Comply with all regulatory requirements imposed on: participants in the
Auction, including, but not limited to, any restrictions on communications with other
.
bidders during the Auction, as may be imposed under any so—called “anti-collusion rules”
adopted as part of the FCC’s Rules;
,

2.2.10 Prepare, on behalf of the District, responses to any requests for
information which the FCC may make priOr to, during, or follOWing completion
‘
Auction;
‘

.

of the

,

_

2.2.1 Participate with the District in any meetings or telephone conferences with
the FCC as the FCC may request prior to, during, or following completion of the
1

Auction;

oMM_Us:7 553465.i

 2.2.12 Communicate with the FCC, on behalf of the District, regarding logistical
matters relevant to participation in the Auction and the mechanics of obtaining any
proceeds resulting from the District’s participation in the Auction;
2.2.13 If, at the conclusion of the Auction, the FCC accepts the bid for
relinquishment of the spectrum usage rights associated with the License, prepare for the
District all filings and applications as may be required to complete the process of
relinquishment, including, but not limited to, advancing to the District, and paying to the
FCC on their behalf, any filing or other fees associated with being a winning bidder in the
Auction; and

.

'

2.2.14 Take all such other actions as may be reasonably required by the District
its bidding consultant and agent to achieve its successful participation in the Auction at
a price that is at or above the Minimum Bid Amount.
as

2.2.15 Consult with the District regarding all regulatory processes associated
with the “repacking” of KCSM to a new channel assignment if, at the conclusion of the
Auction, the FCC‘h‘a‘snot accepted the District’s bid for relinquishment of the spectrum
usage rights associated with the License. Such consultations will include involvement
with the District in (a) discussions with the FCC regarding the channel reassignment
process, (b) processes for obtaining the maximum reimbursement by the US. government
of expenses associated with repacking, and (c) preparing all filings and applications as
may be required by the FCC timely to complete the repacking process.

The Parties agree that the spectrum usage rights associated with the License
should not be relinquished for an amount that is below the Minimum Bid Amount. In
implementing the strategy developed for the Auction, LPN will not, without the prior written
approval of the District, submit a bid that would cause such an event to occur.
2.3

2.4
The District expressly acknowledges that in performing its duties hereunder, LPN
may engage independent Consultants, agents and subcontractors at its own expense. LPN agrees
that any such engagement shall be undertaken under LPN’s direction and supervision, and LPN
shall remain primarily responsible for satisfaction of its obligations hereunder notwithstanding
,

such engagement.

.

'

‘

._

'
‘

-

i

2.5
In performing its duties under this Agreement, LPN will comply in all material
respects with the requirements of the FCC’s Rules that are relevant .to LPN-‘s performance
hereunder.
'

i

2.6
In furtherance of its participation‘in the Auction, the District hereby agrees that
will cooperate with LPN in the fulfillment of LPN’s obligations hereunder, and that it will, at
LPN's request:
2.6.1 Participate in such training as to the FCC’s Rules for the Auction
provide
in
order to ensure compliance at all times with such FCC Rules;
may

OMM_US:7 553466.I

as

it

LPN

g

 Provide LPN with such information as LPN may require in order for it to
complete all filings and applications required for participation in the Auction, and execute such
applications asthe FCC may require for such participation;
2.6.2

Designate prior to the commencement of the Auction one or more
individuals who shall represent their interests during the Auction and who (a) are authorized to
commit the District with respect to decisions made during the Auction, (b) will have been trained
by LPN to be familiar with the FCC’ s Rules applicable to the Auction, as well as with Auction
processes and procedures, and (c) will be available throughout the Auction to consult with LPN
in a prompt and timely manner;
2. 6. 3

4

At LPN’ 5 request, participate in such meetings with the FCC as the FCC
may request prior to, during, or following the completion of the Auction 1n fitherance of the
2.6. 4

District’s participation therein;
2.6.5

Take all such other actions as may be reasonably required or as LPN,

actingin its capacity of bidding consultant—and-agent, may request in order for the District to
successfully participate in the Auction andmbish the spectrum usage rights associated with
the License at a price that is at or above the Minimum Bid Amount; and
2. 6. 6 Upon the request and advice of LPN, give commercially reasonable
consideration to changes 1n the Minimum Bid Amount.

2.7
During the Term hereof, without LPN’s express written consent, the District may
not directly or indirectly solicit, engage or contract with any other person or entity for the
purpose of consulting with, acting as an agent for, advising, or managing the activities of, the
District with regard to participation in the Auction or in any proceeding before the FCC relating
to the FCC Rules applicable to..the Auction or any related matter arising out of the Auction, or
with regard to the sale, assignment or transfer of the License, except that the District may consult
with'District counsel and its established communications counsel.

The Parties acknowledge that the FCC has not adopted final rules for the conduct
of the Auction and that the adoption of those rules could affect their respective obligations as set
forth herein or any other terms of this Agreement. If that should occur, the- Parties agree to
negotiate in good faith to modify this Agreement to the extent required for the intent of the
Parties 1n this Agreement and 1n the Funding Documents
e., that the District will participate
fully in the Auction so as to relinquish its spectrum usage rights at a bid amount at or above the
Minimum Bid Amount, and that LPN will be the District's exclusive consultant (except asset
forthabove),and agent with respect to the District‘s participation inthe Auction as contemplated
in this Agreement — to be preserved to the maximum extent reasonably possible under the FCC’s.
Rules for the Auction as adopted from time to time. The Parties expressly agree that, they are
unable to reach an agreement on any modifications to this Agreement necessary to comply with
the FCC’s Rules, then this Agreement shall remain binding and control each Party's participation
in the Auction to the maximum extent then permitted under the FCC’s Rules.
2. 8

-i.

if

OM M_US:7 1553466.]

‘

-

 ARTICLE III
CONTROL OF KCSM LICENSE AND OPERATIONS
Notwithstanding anything contained in this Agreement that may provide for, or be
construed to provide for, the contrary, the District will at all times maintain dejure and defacto
control over the License and over KCS’M, including control over KCSM’s programming,
personnel, finances, and other operations. During the term of this Agreement, the District will,
and will take all actions necessary to, maintain the License in full force and effect and in good
standing in accordance with its terms and in compliance in all material respects with the
Communications Act of 1934, as amended, and the FCC’s Rules. Without limiting the
generality of the foregoing, the District will timely file and prosecute any necessary modification
or renewal applications relating to KCSM, and will make such other submissions to the FCC as
are necessary to maintain the License in full force and effect and in good standing. The District
will operate KCSM, and perform all of its obligations with respect thereto, in the ordinary course
of business consistent with past practices, and will maintain full and complete control over the
Station’s personnel, programming and finances.

ARTICLE IV
TERM OF AGREEMENT; TERMINATION

m.

4.l
This Agreement will become effective on the date of its execution and will
continue in effect (unless terminated by the Parties) until the later of (i) the date on which
spectrum usage rights associated with the License have been relinquished in the Auction and
payment therefor has been received by the parties entitled thereto under the Funding Documents
or (ii) the date on which the process of repacking KCSM has been completed, KCSM is
operating on its newly assigned frequency, and reimbursement by the US. government of the
costs associated with .repacking have been paid.
4.2

Termination of Agreement. This Agreement may be‘ terminated before-the end of

the Term:
4.2.1

by

mutual written consent of the Parties;

4. 2. 2 by the District 1n the event that LPN has materially violated or breached
any agreement contained 1n this Agreement and such material violation or breach has prevented
the District’s participation in the Auction or resulted in a material violation of the FCC’s Rules,
but only if such material violation ”or breach has not been waived in writing by the District or
cured
LPN within thirty (3 0) days after its
of written notice thereof from the District;
receipt

by

I

by the District"1n the event that LPN fails to make any subsidy Payment
Within 34 days of its due date (as described 1n Section 2 of the Funding Agreement).
4. 2.3

4.2.4 by LPN in the event that the District has materially violated or breached
any agreement contained in this Agreement and such material violation or breach has prevented
the District’s participation in the Auction or has materially hindered, delayed or prevented LPN’s
satisfaction of any obligation undertaken hereunder, but only such violation or breach has not

if

0MM_US:7I 553466. I

'

 been waived in writing by LPN or cured by the District within ten (10) days after its receipt

of

written notice thereof from LPN;
4.2.5 by either Party, upon written notice to the other Party, if any of the
Funding Documents has been terminated by the terminating Party by reason of a material
uncured breach thereof by the other Party.

ARTICLE V
OTHER INTERESTS 0F LPN
LPN has notified the District that it holds financial interests in other television broadcast
stations (including interests in another licensed broadcast station that operates in the San
Francisco Designated Market Area (DMA)), and that it may acquire interests in other licensed
television broadcast stations operating in the San Francisco DMA or other DMAs that may
participate in the Auction. The District acknowledges that LPN may participate in the Auction
through its interests in these or other licensed television broadcast stations, and that in such case
the Parties will comply with the FCC’s Rules as they may .bepromulgated from timeto time,
including complying with such disclosure obligations as the FCC may require for participation in
the Auction.

ARTICLE VI
COMPENSATION
In exchange for LPN’s provision of services hereunder, the District will pay to LPN a fee
of Ten Thousand Dollars ($10,000) per calendar quarter commencing on the first day of the first
calendar quarter immediately following the date on which this Agreement is executed, and
continuing until Subsidy Payments are no longer being mad'élinder the Funding Agreement or
until this Agreement is terminated in accordance with its terms, whichever is earlier. The Parties
agree and acknowledge that LPN shall continue to be obligated to provide services under this
Agreement for the entire term of this Agreement, even if such term extends beyond the period
during which fee payments must be made under this Article VI.

ARTICLE VII" ..
INDEMNIFICATION

.

7.]
Indemnification by the District. The District shall indemnify and hold harmless
LPN as well as its affiliated companiesand entities, officers, directors, employees and agents
from all liabilities, claims, costs, damages fines, forfeitures and expenses (“Losses’ ) arising out
of (i) any breach of any representation, warranty, obligation or performance of the District under
this Agreement (ii) any actions by the District that are inconsistent with the FCC’s Rules or the
'
District’s obligations to the FCC as holder of the License, or (iii) any negligence or willful
misconduct by the District relative to its obligations under this Agreement.

‘

Indemnification by LPN. LPN shall indemnify and hold harmless the District, as
arising out of (i) any breach
of any representation, warranty, obligation or performanceof LPN under this Agreement, (ii) any
actions by LPN that are inconsistent with the FCC Rules or (iii) any gross negligence or willful
misconduct by LPN relative to its obligations under this Agreement.
7.2

well

as its officers, directors, employees and agents, from all Losses

7
0MM_US:7 553466.I

.

 ARTICLE VIII
MISCELLANEOUS
Amendment. This Agreement may only be amended by mutual written agreement

8.1

ofthe Parties.
8.2
accordance

Choice of Law, The Agreement shall be'govemed by and construed in
with the laws of the State of California.

8.3
Confidentiality. A Party receiving Confidential Infonnation (“Receiving Party")
from the other party (“Disclosing Party") will refrain from directly or indirectly disclosing the
Disclosing Party’s Confidential Information and may not use the Disclosing Party's Confidential
Information for any purpose whatsoever, except for the purpose for which it was provided and as
contemplated and authorized by this Agreement. The term “Confidential Information“ shall
mean for purposes of this Agreement all non-public information and material, whether disclosed
or made available in writing, electronically, orally, visually or otherwise, regarding the business
of the Disclosing Party and third parties who have fumished confidential, nonpublic—information
the Disclosing Party and all other information or material disclosed to the Receiving Party by
the Disclosing Party or its affiliates or representatives that should be understood by a reasonable
business person to be confidential Notwithstanding the foregoing, the Receiving Party may use
and disclose to its employees, agents, and advisers (collectively “Representatives5”) the
Confidential Information of the Disclosing Party as reasonably necessary to enable the Receiving
Party to fulfill its obligations and realize itsbenefits under this Agreement, provided, however,
(a) that the Receiving Party shall make all commercially reasonable efforts to ensure that each
such Representative acknowledges and complies with this Section 8.3 as if such Represéntative
were a party to the Section, and (b) that the Receiving Party shall remain responsible and liable
for such Representative’s compliance with this Section. The Receiving Party shall use the same
degree of care to protect the Confidential Information of the Disclosing Party from unauthorized
use or disclosure as it uses to protect its own information of a similar nature, but in no event less
than reasonable care. Notwithstanding the foregoing, the Parties acknowledge that the District
is subject to the open records requirements of California law. The District shall not disclose any
Confidential Information that may lawfully be withheld under that law.

_—. _ 7—

L‘to

.

‘

8.4
N__o_tices. All notices or other communications hereunder shall be in writing arid
shall be deemed to have been duly given If personally delivered, delivered by electronic mail
acknowledged as haVing been received, or mailed by registered or certified mail (return receipt
requested, postage prepaid) or by reputable overnight courier addressed to the following or to
replacement address subsequently identified 1n writing to all
any
other parties to this Agreement:

If to the District:

With copies (which will

OMM__US:7I 553466. I

Executive Vice Chancellor
San Mateo County Community College District
3401 CSM Drive
San Mateo, CA 94402
Phone: 650-358-6790
Email: roecksj@smccd.edu

 not constitute notice) to:

Lawrence M. Miller
Schwartz, Woods & Miller
1233 20‘h Street, NW, Suite 610
Washington, DC. 20036-7322
Phone: (202) 833-1700
Email: miller@swmlaw.com
Jan Roecks
San Mateo County Community College

District

340] CSM Drive
San Mateo, CA 94402
Phone: 650—358-6790

Email: roeclcsj@smccd.edu
Eugene Whitlock

400 County Center, 61h Floor
Redwood City, CA 94063

-

‘T':______*

lfto LPN:

William D. deKay
LocuSPoint Networks, LLC
Pleasanton Corporate Commons
6200 Stoneridge Mall Road, Suite 300
Pleasanton, CA 94588
Phone: 650-678-2508

Emailt-bill@locuspointnetworks.com

With a copy (which will
not constitute notice) to:
'

‘

4‘

'

‘

Jonathan V. Cohen

Wilkinson Barker Knauer, LLP
2300 N Street, NW, Suite 700

-

-

'

Washington, DC. 20037-1128
Phone: (202) 383-3416.

Email: joncohen@wbklaw.com

Any notice sent by mail as above provided shall be deemed delivered upon receiptmor
attempted delivery. Any notice personally delivered shall be deemed delivered on the date
delivery is made to the address specified above. Copies of all notices or other communications
(which shall not constitute notice hereunder) shall be sent simultaneously to counsel designated
by the Parties by written notice.
.

8.5

Relationship. Nothingin this Agreement shall be construed to render the Parties
or affiliates under the FCC’s Rules or to impose upon any of them

as partners, joint venturers
any liability as such.

8. 6
Entire Ageement. This Agreement and the’Funding Documents constitute the
entire understanding between the Parties and supersede any prior understandings respecting the
subject matter hereof.

OMM_US:7 l 553466.!

i

 Assignment; Binding Effect. This Agreement may not be assigned by LPN or by
the District without the express written consent of the other Party, which may be delayed,
conditioned or withheld in such Party’s sole unfettered discretion; provided, however, that LPN
may assign its rights and obligations under this Agreement to any entity in which it has a
controlling interest or which is under common control, in which event LPN nevertheless shall
remain fully and primarily liable for the performance of all obligations imposed on LPN under
this Agreement. This Agreement shall be binding upon and inure to the benefit of the successors
and legal assigns of the Parties.
8.7

Further Assurance. The Parties shall execute and deliver such further instruments
and perform such further acts as may reasonably be required to carry out the intent and purposes
of this Agreement.
‘

8.8

Severability. In the event any provision of this Agreement is held to be
8.9
unenforceable, such unenforceability shall not affect any other provision hereof, and this
Agreement shall be construed to the greatest extent possible as if such unenforceable provision
------had never been contained
herein, provided the economic benefit of this Agreement to the parties
is not significantly dimmished

Limitation of Liability. IN NO EVENT SHALL EITHER PARTY BE LIABLE
FOR ANY LOST PROFITS OR FOR ANY INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE
OR CONSEQUENTLAL DAMAGES ARISING FROM, OR IN CONNECTION WITH THIS
AGREEMENT, EVEN IF THE PARTY KNEW OR HAD REASON TO KNOW OF THE
POSSIBILITY OF SUCH DAMAGES OR LOSSES, EXCEPT THAT THIS LIMITATION OF
LIABILITYSHALL NOT APPLY TO LIMIT (A) DAMAGES RESULTING FROM EITHER
PARTY’S GROSS NEGLIGENCE, WILLFUL MISCONDUCT, FRAUD, OR FRAUDULENT
MISREPRESENTATION; (B) DAMAGES CAUSED BY ANY BREACH BY A PARTY OF
ITS OBLIGATIONS UNDER SECTION 8.3 (CONFIDENTIALITY); OR (C) EITHER
PARTY’S‘INDEMNIFICATION OBLIGATIONS UNDER ARTICLE VII
(INDEMNIFICATION).
8.10

.

8.ll Headings. All article, section and paragraph titles or captions contained in this
Agreement are fOr convenience only and shall not be deemed part of the text of this Agreement.
All pronouns and any variations thereof shall be deemed to refer to the masculine, feminine,
neuter, singular or plural as the context may require.
Countemarts .This Agreement may be signed in counterparts, each of which shall
be an original for all purposes, but both which taken together shall conStitute only one
Agreement.
8; 12

[remainder of this page intentionally left blank —- signature page follows]

I0
0MM_US:7 553466.I

-

i

 SIGNATURE PAG ~Bl

'

MA A 'MENT

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-

FNT

IN WtTNESS WHEREOF, the Parties hereto have executed this Agreement as of the
date and year first above written.

SAN MATEO Comm!

Communmr Causes

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Ks, LLC

 Execution Version

AMENDMENT TO BID MANAGEMENT AGREEMENT
This Amendment (“Amendment”) is enteredinto on December 8, 2015 (“Amendment
Effective Date”) by San Mateo County Community College District (the “Dist1ict”), a
community college district of the State of California, and LocusPoint Networks, LLC (“@131”), a
Delaware limited liability company, to amend the Bid Management Agreement between the
District and LPN, dated as of May 16, 2013 (“Agreement”). Capitalized terms that are used but
not defined herein shall have the meaning given to such terms in the Agreement.

WHEREAS, pursuant to the Agreement, LPN agreed to provide certain specified services
to the District in connection with the Auction. Following the execution of the Agreement, the
FCC issued a new regulation, 47 C.F.R. § 1.2205, and related guidance (collectively, “3319”)
prohibiting communications between Auction participants and certain of their affiliates, on the
one hand, and “covered television licensees” and “forward auction applicants” (as such terms are
defined in the FCC’s Rules), on the other hand, regarding Auction bids and bidding strategies.
This prohibition is applicable from the deadline for submitting applications to participate in the
reverse auction portion of the Auction (‘ ‘Afiplication Deadline”) until the results of the Auction
are announced by public notice (“g Quiet Period”). As a result of the promulgation of the Rule and
pursuant to Section 2.8 and 8.1 of the Agreement, the Parties hereby amend the Agreement to
modify LPN’s obligations during the Quiet Period to comply with the Rule.

NOW, THEREFORE, in consideration of the mutual covenants contained herein, the
receipt and sufficiency of which the Parties hereby acknowledge, the Parties agree as follows:
The Agreement shall be amended as

1.

of the Amendment Effective Date as follows:

Section 2. 2 .2 of the Agreement shall be deleted and replaced with the following: “Before
the Quiet Period, timely prepare for review and submission by the District of the
application for KCSM to participate fully 1n the Auction;”
b. Section 2. 2. 3 of the Agreement shall be deleted and replaced with the following:
a.

.

'

“[Reserved.]”
Section 2.2.4 of the Agreement shall be deleted and replaced with the following: “Prior
theApplication Deadline, establish a general bidding strategy for maximizing the
value in the Auction of the Spectrum usage rights associated with the License;
(1. Section 2.2.5 of the Agreement shall be deleted and replaced with the following: “Train
,and supervise the qualified personnel that the Dishict appoints to act as its authon'zed
bidders in the Auction to assure their satisfactory performance of the duties associated
with authorized bidders in the Auction; ”
e. Section 2. 2. 7 of the Agreement shall be deleted and replaced with the following:
“[Reserved. ]”
f. Section 2.2.10 of the Agreement shall be deleted and replaced with the following:
“Prepare, on behalf of the District, responses to any requests for information which the
FCC may make prior to or following, but not during, the Quiet Period;”
g. Section 2.2.11 of the Agreement shall be deleted and replaced with the following:
“Participate with the District in any meetings or telephone conferences with the FCC as
the FCC may request prior to or following, but not during, the Quiet Period;”
c.

,

‘

to'

.

»

.

‘

_

_

.

 Execution Version
Section 2.2.12 of the Agreement shall be deleted and replaced with the following:
“Communicate with the FCC on behalf of the District, prior to or following, but not
during, the Quiet Period, regarding logistical matters relevant to participation in the
Auction and the mechanics of obtaining any proceeds resulting from the District’s
participation in the Auction-;”
i. Section 2.2.13 of the Agreement shall be deleted and replaced with the following: “If, at
the conclusion of the Auction, the FCC accepts the bid for relinquishment of the
spectrum usage rights associated with the License, prepare for the District all filings and
applications as may be required to be filed afier the Quiet Period to complete the process
of relinquishment;”
j. The last sentence of Section 2.3 of the Agreement shall be deleted and replaced with the
following: “In implementing the strategy developed for the Auction, the District shall
cause its authorized bidder to refrain from submitting a bid that would cause such an
event to occur.”
k. Two new final sentences shall be added to the end of Section 2.4 as follows: “The Parties
agree and acknowledge that LPN has engaged PricewaterhouseCoopers Advisory
Services LLC
to serve as LPN’s subcontractor weight“ and that PWEfifiyTL
provide to the District on behalf of LPN certain of the services set forth in Section 2.2
during the Quiet Period to the extent that PwC can do so in compliance with the FCC’s
Rules and LPN cannot. To facilitate this arrangement, the District has executed a Letter
of Authorization in the form attached to this Agreement as Attachment A.”
l. Sectidn 2.6.3 of the Agreement shall be deleted and replaced with the following
“Designate prior to the start of the Quiet Period up to three individuals who shall serve as
the District’ 5 authorized bidders during the Auction and who (a) are authorized to place
bids on behalf of the District during the Auction, (b) will be trained by LPN to be familiar
with the FCC’s Rules applicable to the Auction, as well as with Auction processes and
procedures, and (c) will consult 1n every round during the Auction with PwC m a prompt

h.

(“M”)

»

and timely mannerf’

.

m. The executed Attachment A attached to this Amendment shall be attached to the
Agreement as Attachment A to the Agreement.
'

.
'

'

Entire Ageement; Countemarts. This Amendmentand the Agreement which-it amends
constitutes the entire understanding-between the Parties and supersedes any prior
understandings respecting the subject matter hereof. This Amendment‘may be signed in any
number of counterparts, each of which shall be an original for all purposes, but all which
taken together shall constitute only one Amendment. The Parties agree that transmission of
this Amendment with facsimile or electronic “pdf” signatures shall bind the Parties 1n the
sarne manner as if the Party’ 5 original signatures had been delivered.

[remainder of this page intentionally left blank — signature page follows]

.

.

-

 Execution Version
SIGNATURE PAGE — AMENDMENT TO BID MANAGEMENT AGREEMENT
IN WITNESS WHEREOF, the Parties hereto have executed this Amendment
date and year first above written.

as

of the

SAN MATEO COUNTY COMMUNITY COLLEGE DISTRICT

(Mg/mg
y
Name: Kathy Blackwood
Title: Executive Vice Chancellar'

LocusPomT NETWORKS, LLC

///%

ByNamc:

WIHLLIM

Gin/Hf)

”Tim;

- -

“3%.“?

 W

Execution Version

LETTER OF AUTHORIZATION

Pursuant to Section 2.4 of the Bid Management Agreement (the ‘f‘Agreemen ’), dated as
of May 16, 2013, between LocusPoint Networks, LLC (“L131”) and San Mateo County
Community College District (the “District”), PricewaterhouseCoopers Advisory Services LLC
has been designated by LPN as LPN’s subcontractor and agent in carrying out certain
LPN’s
of
obligations under the Agreement.
~

(“M”)

In particular, between the deadline for submitting applications to participate in the
broadcast incentive auction and the announcement of the auction results (the FCC’s “gu_ie_t
period”), LPN will be unable to communicate with the District regarding bids or bid strategy.
Therefore, LPN has designated PwC to be responsible for performing LPN’s obligations under
Section 2.2 of the Agreement and various of its subsections, including monitoring and assisting
the District with its participation of Station KCSM—TV (RF Channel 43), San Mateo, California __
(FCC Facility ID No. 58912) (the “St__a__tion”) 1n the auction. PWC is not assuming any additional
duties or obligations directly to the District 1n connection with these services.
PwC will dedicate a member of its staff (and one alternate to act in that member’s place
he or she is unable to do so) to act in LPN’s place under the Agreement during the “quiet
period”. To the extent the District and the District’s designated authorized bidders intend to
take, or take, actions that are not consistent with the District 5 obligations under the Agreement
and any related bidding strategy, PwC will notify the previously designated contact
representatives of the District.

By acknowledging the designation of PWC as subcontractor and agent of LPN pursuant
to Section 2 4 of the Agreement, the District agrees to cooperate with PWC 1n accordance with
Section 2. 6 of the Agreement as it performs its engagement by LPN to help ensure cOmpliance
with the FCC’s rules pertaining to the Auction under the Agreement.

AcknoWledg'ed‘this

8th

day

of_ December,

2015.

SAN MATEO COUNTY COMMUNITY COLLEGE DISTRICT

Name: Kathy Blackwood

Title: Executive Vice Chancellor

if

‘

,

 EXHIBIT 

sum-nur-v-v 77?:

EXECUTION VERSION

PUT/CALL OPTION AGREEMENT
This PUT/CALL OPTION AGREEMENT (the “Agreement”) is entered into as of
May 16, 2013 by and among San Mateo County Community College District, a California
Community College District (“SMCCCD”) and LocusPoint Networks LLC, a Delaware limited
liability company

(“fl”).

RECITALS
A.
SMCCCD operates full-power noncommercial educational television station
KCSM-TV (RF Channel 43), San Mateo, California (FCC Facility ID No. 58912) (the “Station”)
licenses and authorizations
and holds all Federal Communications Commission
necessary for the current operations of the Station (collectively, the “FCC Licenses”).

(“fl”)

B.
SMCCCD has determined that it will participate in the reverse auction
contemplated as part of the broadcast incentive auction to be conducted by the FCC under
Section 6403 of the Middle Class Tax 'Relietéaad-Job Creation Act of 2012 (the “Auction”), as
the rules governing the Auction may provide, and, in the event that SMCCCD is not successful
in relinquishing the Station’s Spectrum usage rights in the Auction, enter into a transaction for
the assignment of the FCC Licenses and transfer of the Station’s assets (a “SL165 to a qualified
buyer (a “Buyer”).
C.
SMCCCD wishes to obtain financial support in fitnding the Operating expenses of
the Station, and LPN has expressed an interest in sharing with SMCCCD the proceeds that may
result from (i) the Station’s relinquishment of spectrum usage rights through participation ‘in the
Auction (the “Gross Auction Proceeds”) or (ii) a Sale to a Buyer (the “Gross Sale Proceeds”) in
the event that SMCCCD is not successful in relinquishing the Station’s spectrum usage rights in
‘

the. Auction.

.

D.
In connection with this Agreement, SMCCCD and LPN have entered into that
certain Funding Agreement dated as of the date hereof (the “Funding Agreement”) pursuant to
which, upon the, terms andconditions set forth therein, LPN has agreed to provide to SMCCCD
funding'in'the amount of- Three Million Six Hundred Thousand Dollars ($3,600,000), to be paid
'in installments of Two ,Hundred Twenty-Five Thousand Dollars ($225,000) (the “Subsidy
Paments”), for the operating expenses of the Station as it is currently operated in compliance
with the rules, regulations and policies of the FCC (the ffFCC Rules”).
_

'

.

,E°
‘The parties have agreed that in consideration of, among other things, LPN
providing such funding to SMCCCD pursuant to the Funding Agreement, LPN Will'have the
right to share a specified percentage of the Gross Auction Proceeds or Gross Sale Proceeds, as
.

_

.

the case may be.
F.
In furtherance of these objectives, the parties wish to grant the Options (as defined
below) contained in this Agreement on the terms and subject to the conditions set forth herein.

OM M_US:7l 464734. 1.0

 NOW THEREFORE, in consideration of the mutual promises and covenants herein
contained, and other good and valuable consideration (the receipt and sufficiency
parties hereto acknowledge), the parties hereto agree as follows:

of which

the

LPN Share. The LPN Share shall be equal to thirty-six and one half percent
(36.5%) multiplied by either (i) the Gross Auction Proceedsor (ii) the Gross Sale Proceeds, as
applicable (the “LPN Share”), and shall be subject to the following adjustments:
1.

a.
If an Auction Sale or Sale occurs before the last of the Subsidy Payments
is made by LPN, then the aggregate dollar amount of any remaining Subsidy Payments that have
not been paid to SMCCCD will be credited to SMCCCD as a reduction to the LPN Share.

b.
In the event that LPN fails to make any Subsidy Payment within three
days of its due date (as described in Section 2 of the Funding Agreement), the LPN Share shall
be reduced by an amount equal to 2.28125% multiplied by the Gross Auction Proceeds or Gross
Sale Proceeds, as applicable, for each such failure, e.g., from 36.5% to 34.21875% in the case of
one late payment. In the event that LPN fails to make any Subsidy Payment within 34 days of its
due date (as described 1n Section 2 of the Funding Agreement), SMCCCD shall have the right to

terminate this Agreement, except
of a Funding Document.

if LPN’s non-payment is due tominaterial
a
breach by SMCCCD

0.
The LPN Share shall be increased by the amount of any application fees or
other out-of-pocket fees or expenses advanced by LPN to the FCC on SMCCCD’s behalf
pursuant to Section 2.2.13 of the Bid Management Agreement by and between SMCCCD and
LPN dated as of the date hereof (the “Bid Management Agreement”).

2.

Auction Call

tion.

a.
SMCCCD hereby grants to LPN, upon all of the terms and subject to all of
the conditions set forth herein, an option (the “Auction Call
to receive the LPN Share
of the proceeds derived from the relinquishment 'of the Station’s spectrum usage nghts in
connection with the Auction (an “Auction Sale”). LPN may exercise its Auction Call Option at
any time until thirty (30) days following the deposit of the Gross Auction Proceeds into the
Proceeds Account (as def ned 1n the Funding Agreement) by delivering to SMCCCD a written
notice (an “Auction Call Netice”), which Auction Call Notice shall state that LPN thereby
exercises the Auction Call option, without condition or qualification, to cause the LPN Share to
be distributed to LPN in accordance with this Agreement Following receipt of an Auction Call
Notice from LPN, (i) the FCC allows the LPN Share to be paid directly to LPN, SMCCCD
will make any and all necessary filings with, and requests to, the FCC to cause such direct
payment to be made to LPN using information to be provided by LPN to SMCCCD in writing,
and (ii)
applicable rules of the FCC do not permit the LPN Share to be paid directly to LPN,
SMCCCD shall cause the Gross Auction Proceeds to be deposited into the Proceeds Account and
shall, within five (5) calendar days thereafter, take all necessary actions to cause the LPN Share
to be paid to LPN by wire transfer of immediately available funds. In the event that SMCCCD
receives the Gross Auction Proceeds prior to receiving an Auction Call Notice, then SMCCCD
will deposit the LPN Share into the Proceeds Account and shall pay the LPN Share to LPN as
soon as practicable thereafier.

iion”)

‘

if

-«

-

,

if

OMM_US:7 I 464734. l0

 the date specified by the FCC as the deadline for the filing of
applications to participate in the Auction has not occurred by the three-year anniversary of the
date of this Agreement, LPN and SMCCCD will negotiate in good faith for a period of not more
than ninety (90) days (which such period the parties may extend by their mutual agreement)
regarding whether additional Subsidy Payments should be made beyond the date on which LPN
and,
so, to
is scheduled to make the last Subsidy Payment (the
what extent the LPN Share should be adjusted. In the event that the parties do not agree to
terms under which additional Subsidy Payments would be made or the LPN Share adjusted, LPN
shall have the ability to offer to make up to four (4) additional quarterly Subsidy Payments to
SMCCCD (each an “Extension Subsidy Pamen ”) over the ensuing one (1') year. SMCCCD
shall have the right to accept or decline LPN’s offer to make Extension Subsidy Payments. If
SMCCCD accepts LPN’s offer of Extension Subsidy Payments, then for each Extension Subsidy
Payment made by LPN, the LPN Share shall be increased by an amount equal to 2.28125%
multiplied by the Gross Auction Proceeds or Gross Sale Proceeds, as applicable, e.g., from
SMCCCD declines
36.5% to 38.78125% in the case of one Extension Subsidy Payment.
LPN’s offer of Extension Subsidy Payments, SMCCCD shall be responsible for financing
continuing operations of the Station and the LPN Share shall not change. In either event, the
Subsidy Termination Date will be extended for—{Wed 'to-'which mafifffitgl Extension
Subsidy Payments apply.
b.

If

“WW

if

lf

3.

.

Sale Call Option.

SMCCCD hereby grants to LPN, upon all of the terms and subject to all of
the conditions set forth herein, an option (the “Sale Call Option”) to cause SMCCCD to
participate in a Sale (a “Call Option Sale”) to a Buyer identified by LPN that is acceptable to
SMCCCD (it being understood that SMCCCD’S approval of such Buyer will be withheld only if
SMCCCD demonstrates to LPN’s reasonable satisfaction that Buyer would not be qualified to
hold the FCC Licenses); provided, that if LPN’s identification of a Buyer is not permitted by
FCC Rules and/or California law, then SMCCCD shall identify a Buyer in accordance with
SMCCCD’s obligations under California law. LPN will be entitled to receive the LPN Share of
the proceeds derived fi'om a Call Option Sale upon the consummation of such a transaction.
a.

-

“SM

b.
The Sale Call Option will be exercisable for a period (the
'Option Period”) ending on the Option ‘TerminatiOn Date and beginning on the earlier to occur 'of
the following: (i) the date that SMCCCD withdraws from the Auction or is deterrnined to be
unqualified to bid, or if it neither withdraws or-is determined to be unqualified, the date that the
FCC provides notice of the results of the Auction and such notice does not indicate that the FCC
has accepted SMCCCD’s bid for relinquishment of the spectrum usage rights aSsociated with the
FCC Licenses; or (ii) the date on which a Triggering Event (as defined in Section 9.1 of the
Funding Agreement) occurs, except for a Triggering Event‘under Sections 9.11? or 9.1F'of the
Funding Agreement; or (iii) thirty (30) days after the Subsidy Termination Date if the FCC has
not by that date announced a date by which applications to participate in the Auction must be
_‘ ‘

filed.

c.
LPN may exercise its Sale Call Option during the Sale Call Option Period
by delivering to SMCCCD a written notice (a “Sale Call Notice”), which Sale Call Notice shall
state that LPN thereby exercises the Sale Call Option, without condition or qualification, to cause
SMCCCD to proceed with a Call Option Sale in accordance with this Agreement.
3
OMM_US:7]464734.IO

.

 4.

Put Option.

LPN hereby grants to SMCCCD, upon all of the terms and subject to all of
the conditions set forth herein, an option (the “Put Option,” and, together with the Auction Call
Option and the Sale Call Option, the “tions”) to participate in a Sale (a “Put Option Sale”) to a
Buyer identified by SMCCCD. LPN will be entitled to receive the LPN Share of the proceeds
derived from a Put Option Sale upon the consummation of such a transaction.
a.

*

b.
The Put Option shall become exercisable for a period (the “Put Option
Period”) ending on the Option Termination Date and beginning thirty (30) days following the
date on which the Sale Call Option becomes exercisable.
c.
Notwithstanding anything to the contrary in Section 4(b)
Agreement, the Put Option shall not be exercisable in the event that:

of this

i.
SMCCCD is in material breach of this Agreement, the Funding
Agreement or the Bid Management Agreement or the Collateral Documents (as defined in the
Funding Agreement) (collectively, the “Funding Documents”);
.. __.._
_
_.._._,___.:T_:.__ _
—--‘

ii.

a

.

..
.

__,

M.7.Me,_._.._._.

Triggering Event has occurred;

iii.
there has been any change, effect, event, occurrence or state of
facts.that is, or is reasonably expected to be, materially adverse to the business, properties,
financial condition or results of operations of the Station, taken as a whole, or an event or
occurrence which would reasonably be expected to be materially adverse to the business,
properties, financial condition or results of operations of SMCCCD in connection with the
Station; or
iv.
a Put Option Sale shall be prohibited by any applicable law, ruling,
court order, statute, regulation, or judgment, whether foreign, federal, state or local.

.

(1.
SMCCCD may exercise the Put Option during the Put Option Notice
Period by delivering to LPN a written notice (a “Put Notice”), which _Put Notice shall state that
SMCCCD intends to exercise the Put Option, without condition or qualification, to allow
SMCCCD to proceed with a Put Option Sale 1n accordance with this Agreement. The Put Notice
shall identify the Buyer.

5.
Termination
automatically terminate at

of Options.

If

not previously exercised, the Options will

ll: 59 p. m., on December 31, 2025 (the “Option Termination Date ”)..

Mechanics of a Sale. In the event that SMCCCD participates in' the Auction and
an Auction Sale. does not occur, the parties will work together 1n good faith to develop a strategy
to maximize the value of the Station and each shall use commercially reasonable efforts to
identify a suitable Buyer and consummate a Sale Following receipt of a valid Sale Call Notice
by SMCCCD or a valid Put Notice by LPN, subject to the tenns' and conditions. of this
Agreement, SMCCCD and LPN shall proceed 1n good faith to negotiate, prepare and execute a
definitive agreement with the Buyer for the Sale (the “Sale Aggeement”). LPN will have the
following rights with respect to such Sale to the maximum extent permitted under applicable
law:
6.

4
0MM_US:71464734.I0

"

i

 LPN will have the right to participate in, all negotiations involving
SMCCCD and the Buyer
a.

b.
LPN will have the right to consult with SMCCCD regarding all regulatory
processes associated with the “repacking” of KCSM to a new channel assignment if, at the
conclusion of the Auction, the FCC has not accepted SMCCCD’s bid for relinquishment of the
spectrum usage rights associated with the FCC Licenses. Such consultations will include
involvement with SMCCCD in (i) discussions with the FCC regarding the channel reassignment
process, (ii) processes for obtaining the maximum reimbursement of expenses associated with
repacking, and (iii) preparing all filings'and applications as may be required by the FCC timely
to complete the repacking process;
.c.

all terms and conditions

of the

Sale Agreement

be subject to LPN’s

will

prior consultation;
upon consummation of the Sale, LPN will receive the LPN Share
proceeds by wire transfer of immediately available funds;
(1.

“WWW”

of the
WM“

the Sale Agreement will include a general release of and covenant not to
sue LPN and all of its affiliates with respect to any known or unknown claims against LPN or
any of its officers, directors, members or shareholders in connection with, arising out of or
related to any of the Funding Documents, the Sale Agreement or the transactions contemplated
thereby; and
e

f.
the Sale shall take place by a date that is no later than 30 days after the
FCC’s consent of the transfer of the FCC Licenses becomes a Final Order. For purposes of this
Agreement, the term “Final Order” means action by the FCC consenting to an assignment of the
FCC Licenses or a transfer of control of the Station, provided that such consent shall not have
been reversed, stayed, enjoined, set aside, annulled, or suspended, and with respect to which no
timely request for stay, petition for rehearing, petition for reconsideration, application for review,
or notice of appeal is pending, and as to which the times for filing any such request, petition,
application, notice, or appeal, or for reconsideration or review by the FCC on its own motion,

-

..

1

shall have expired.
7.
Reimbursement Event. If at any time during the Put Option Period SMCCCD is
not .using its commercially reasonable efforts to identify a Buyer and consummate a Sale and
instead chooses to pursue alternative fimding for the continued operation of the Station (a
“Reimbursement Event” , then LPN may deliver to SMCCCD written notice that a
Reimbursement Event has occurred and such Reimbursement Event will be a Triggering Event
under Section 9. _l of the Funding Agreement.
'

-

-

.

'

.

-

.

-

'

Representations and Warranties of SMCCCD. As an inducement to LPN to enter
into this Agreement, SMCCCD makes the following representations and warranties to LPN, each
of which is true and correct on the date hereof:
8.

,

.

-

'

3.
Funding Ageement Representations and Warranties. The representations
’and warranties of SMCCCD contained in Section 4 of the Funding Agreement are incorporated '
herein by reference as the same were set forth fully herein.

if

5
0MM_us:71454734.1o

 SMCCCD is a California
Organization, Standing and Authority.
standing under the laws
good
and
in
Community College District duly organized, validly existing
of the State of California. SMCCCD has all requisite power and authority (i) to own, lease and
use its assets as presently owned, leased and used, (ii) to conduct its business and operations as
presently conducted, (iii) to execute and deliver this Agreement, and (iv) to perform and comply
with all of the terms, covenants, and conditions to be performed and complied with by it
hereunder;
b.

Authorization and Binding Obligation. The execution, delivery and
performance by SMCCCD of this Agreement, and the consummation of the transactions
contemplated hereby, have been duly authorized by all necessary action of the governing Board,
and SMCCCD is not aware of any further actions or approvals necessary for the consummation
of any of the transactions contemplated hereby other than a sale pursuant to the Sale Call Option
or the Put Option, which would require approval of the SMCCCD Board. This Agreement has
been duly executed and delivered by SMCCCD. This Agreement constitutes the legal, valid and
binding obligation of SMCCCD, enforceable against SMCCCD in accordance with its terms,
except as limited by applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting thgwriflglitflsof creditors generally or by general principles of equity.
c.

'

(1.
The
Absence of Conflicting Agreements and Required Consents.
execution, delivery and performance by SMCCCD of this Agreement (i) does not require the
consent of any third party (except for the consent of the FCC for a Sale); (ii) will not conflict
with any provision of the laws goveming SMCCCD; (iii) will not conflict with, result in a breach
of, or constitute a default under, any applicable law, judgment, order, rule or regulation of any
court or governmental unit by which SMCCCD may be bound, provided that FCC consent for a
Sale has been obtained; and (iv) will not conflict with, constitute grounds for termination of,
, result in a breach of, or constitute a default under, any agreement, instrument, license or permit
to which SMCCCD is a party or by which SMCCCD may be bound. Without in any way
limiting the foregoing, SMCCCD warrants that it has complied with any requirements of
California and local law with which a community college district must comply to sell a broadcast
property SMCCCD will defend. itself and LPN against any charge of noncompliance by SMCCD
with such requirements and, in the event of a final decision by a competent authority that
SMCCCD has failed to comply with such requirements, will take all reasonable steps to come
into compliance with such requirements.
-

'

e.
No Interference. There is currently no legal or regulatory proceeding,
including interventions by the publicor anyCovemment Authority pending, or to the knowledge
of SMCCCD threatened, that could reasonably be'expected to materially'frustrate, impair or limit
the consummation of any of the transactions contemplated by or under the Funding Documents
(including tlie‘par'ticipation by SMCCCD in, or the assignment of the‘FCC 'L‘icenSes or surrender
of the spectrum usage rights associated with the FCC Licenses pursuant to, the Auction, a Call
Option Sale or Put Option Sale) or otherwise to have a Material Adverse EffeCt (as defined in the
Funding Agreement).

9.
Representations and Warranties of LPN. As an inducement to SMCCCD to enter
into this Agreement, LPN makes the following representations and warranties to SMCCCD, each
of which is true and correct on the date hereof:

0MM_US:7I464734.10

'

 Funding Agreement Representations and Warranties. The representations
and warranties of LPN contained in Section 5 of the Funding Agreement are incorporated herein
by reference as if the same were set forth fully herein
a.

LPN is a limited liability
Orggization. Standing and Authority.
corporation duly organized, validly existing and in good standing under the laws of the State of
Delaware, with all requisite power under its organization documents to enter into and perform
b.

this Agreement and the transactions contemplated hereby.

Authorization and Binding Obligation. The execution, delivery, and
performance by LPN of this Agreement, and the consummation by LPN of the transactions
contemplated hereby, have been duly authorized by all necessary corporate action. This
Agreement has been duly executed and delivered by LPN. This Agreement constitutes the legal,
valid, and binding obligation of LPN, enforceable against LPN in accordance with its terms,
except as limited by applicable bankruptcy, insolvency, reorganization, moratorium, or other
similar laws affecting the rights of creditors generally or by general principles of equity.
c.

.

-—&sence- of Conflictiggg— Agreements.
(1.
The execution, delivery, and
performance by LPN of this Agreement (Withmo'rTs/‘ithout the giving of notice, the lapse of time,
or both) (i) do not require the consent of any third party (other than the consent of the FCC for a
sale); (ii) will not conflict with, result in a breach of, or constitute a default under, any applicable
law, judgment, order, rule or regulation of any court or governmental unit to which LPN is a
party or by which LPN is bound, provided that FCC consent for a Sale has been obtained; and
(iii) will not conflict with, constitute grounds for termination of, result in a breach of, constitute a
default under, or accelerate or permit the acceleration of any performance required by, the terms
of, any agreement, instrument, license, or permit to which LPN is a party or by whicluLPN may
be bound.
1

»-

Covenants.

0.

contained in Section 6‘ and Section ’7 of the
Funding Agreement are incorporated herein by reference as
the same were set forth fully
a.

The covenants

of SMCCCD

if

herein.
—'

SMCCCD covenants that the Station will participate in the Auction and
SMCCCD and LPN both covenant-that they will perform their respective obligations under the
Funding Documents.
b.

0.
From the date of this Agreement until the earlier to occur
Sale, Call Option Sale or Put Option Sale, SMCCCD willz;

of an Auction

,

“—

i.
maintain, and take all actions necessary to maintain, the FCC
Licenses in full force and effect and in good standing in accordance with their terms and in
compliance in all material respects with the Communications Act of 1934, as amended, and the
FCC Rules, including but not limited to.the timely filing and prosecuting of any necessary
modification or renewal applications of the FCC Licenses or other submissions to the FCC.

OMM_US:7 I 464734. I 0

‘-

 rr.

operate the Station, and perform all of its obligations with respect
thereto, in the ordinary course of business consistent with past practices, and maintain full and
complete control over the Station’s personnel,.programming and finances.

ii.

not solicit, initiate or hold discussions with any other party with
respect to any transaction similar to the transactions contemplated by this Agreement involving
the FCC Licenses or the Station or with respect to any sale of the Station, except as permitted in
the Funding Documents.

iii.

From the date of this Agreement until the earlier to occur of an Auction
Sale, Call Option Sale or Put Option Sale, each party covenants that ’it will take no action that
could reasonably be expected to impede, interfere with, delay, postpone or materially adversely
affect the transactions contemplated by this Agreement or the likelihood of such transactions
being consummated.
d.

Specific Performance. The parties acknowledge that the Options granted in this
11.
Agreement are unique and not readily obtainable on the open market and that, in the event that
either party fails to perform its obligationspursuant to—this— Agreement, money damages alone
will be inadequate to compensate the damaged party for‘ it"s”i‘iij‘fir'y. The parties agree that in the
event of a material breach by a party, the non-breaching party shall be entitled, in lieu of
terminating this Agreement, to specific performance of its terms. If any action is brought by one
party against the other to enforce this Agreement, the other party shall waive the defense that
there is an adequate remedy at law, and the prevailing party in litigation shall be entitled to
receive from the non—prevailing party all court costs and reasonable attomey’s fees incurred by
the prevailing party in enforcing or defending its rights under this provision.
Indemnification.

12.

_

a.
Indemnification by SMCCCD SMCCCD shall defend and save LPN and
reSpective
officers,
directors, employees, agents, representatives and permitted assigns (each,
its
an “LPN Indemnified Party" ), forever harmless from and against, and shall reimburse each LPN
Indemnified Party for, any and all liabilities, obligations, deficiencies, demands, claims, suits,
actions, or causes of action, assessments, losses, costs and expenses (including reasonable
attorneys’ fees) (“Losses”), sustained or incurred by an LPN Indemnified Party, relating to,
resulting fiom, arising out of, or otherWise by virtue of, any of the following:
I

i.
Section
.

of a representation or warranty made by SMCCCI)‘1n

of this Agreement, and

8

_

.

any breach

.

ii.

.
4

._,.any breach

of

a covenant

or other agreement made by

in

this

Agreement.
.

b.
Indemnification by LPN. LPN shall defend and save SMCCCD and its
respective officers, directors, employees, agents, representatives and permitted assigns (each, an
“SMCCCD Indemnified Party”), forever harmless fi'om and against, and shall reimburse each
SMCCCD Indemnified Party for, any and all Losses sustained or incurred by an SMCCCD
Indemnified Party, relating to, resulting from, arising out of, or otherwiseby virtue of, any of the

following:

0MM_US:71464734.10

,

 i.
any material breach
in Section 9 of this Agreement; and

ii.

any material breach

of a
of

representation or warranty made by LPN

a covenant

or other agreement made by

LPN in this Agreement.
Dispute Resolution. Any disputes between LPN and SMCCCD arising out of or
relating to this Agreement shall be subject, mutatis mutandis, to the dispute resolution provisions
set forth in the Funding Agreement.
13.

Modification. This Agreement shall not be‘ amended, modified or waived in
whole or in part except in writing signed by an officer of the party to be bound by such
amendment, modification or waiver.
14.

15.
Waiver of Breach. A waiver by one party of any breach or default by the other
party shall not be construed as a waiver of any other breach or default whether or not similar and
whether or not occurring before or alter the subject breach.
16.
Notices. All notices and other communicationsréquired or permietedvhereunder
shall be in writing, shall be deemed duly given upon actual receipt, and shall be delivered (a) in
person, (b) by a generally recognized overnight courier service which provides written
acknowledgment by the addressee of receipt, or (c) by email or other generally accepted means
of electronic transmission, with affinnative evidence of receipt, addressed as set forth in Exhibit
A or to such other addresses as may be specified by like notice to the other parties and
acknowledged as received by such addressee(s).

"

'

.-

.

l7.

Assiggments.
LPN may assign its rights hereunder and delegate its duties
hereunder, in whole or in part, to one or more affiliates. As used herein, an “affiliate” of a
person means any person that directly or indirectly controls, is controlled by, or is under
common control With the person in question. ,However, in that event LPN will remain
responsible for perfonnanCe. Any such assignment or delegation authorized pursuant to this
Section 17 shall be pursuant to a written agreement, which shall be delivered to SMCCCD.
Except as othewvise expressly provided herein, neither this Agreement nor any rights, duties or
.obligations hereunder may be assigned or delegated by any of the parties, in Whole or in part,
whether voluntarily, by operation of law or otherwise. Any attempted assignment or delegation
in violation of this prohibition shall be null and void. Subject to the foregoing, all of the terms
and provisions hereof shall be binding upon, and inure to the benefit of, the successors and
permitted assigns of the parties. Nothing contained herein, express or implied, is intended to
confer on any person other than the parties or their respective successors and permitted assigns,
any rights, remedies, obligations or liabilities under or by reason of this Agreement.
18.

Effect

of Default. Notwithstanding anything to the contrary in this Agreement,

party may not exercise any Option or other right under this Agreement
default under this Agreement or any other Funding Document.

a'

if such party is in material

19.
Governing Law. This Agreement and the legal relations among the parties shall
be governed by and construed 1n accordance with the laws of the State of California applicable to
contracts between California residents made and performed 1n that State, without regard to
conflict of laws principles.

9
OMM_US:7I464734. 0

'

 Further Assurances. In a timely fashion, each party shall execute and deliver such
20.
further instruments, documents or assurances, and take such further action, as shall be required to
carry out the purposes and intent of this Agreement.
.

21.
Counterparts. This Agreement may be executed in counterparts, each of which
shall be an original instrument and both of which, when taken together, shall constitute one and
the same agreement, and any such counterpart may be delivered by facsimile or other electronic
'

transmission (including .pdf file) with affirmative evidence

_..52

_
_

of receipt.

22.
Severabilig. If any provision of this Agreement, or the application thereof, shall
for any reason or to any extent be invalid or unenforceable, then the remainder of this Agreement
and application of such provision to other persons or circumstances shall continue in fiJll force
and effect and in no way be affected, impaired or invalidated; provided, that the aggregate of all
such provisions found to be invalid or unenforceable does not materially affect the benefits and
obligations of the parties of the Agreement taken as a whole. In the event of any such invalidity,
the parties hereto agree that (a) such invalidity shall be as minimal as possible so as to make such
provision(s) valid and enforceable and (b) they shall attempt in good faith to replace any such
invalid provisions with a valid and enforceable provision that effects asrnearyaas possible the
original intent of the parties hereto.

23.
Headings.
The subject headings of the sections and sub-sections of this
Agreement are included for purposes of convenience only, and shall not affect the construction
or interpretation of any of the terms and conditions of this Agreement.
24.
Conflicts. In the event of any conflict or inconsistency between this Agreement
and the Funding Agreement, the terms of the Funding Agreement shall control, __

Public. Disclosure. To the maximum extent permitted by law, SMCCCD will
25.
provide LPN with notice of any intended public disclosure of this Agreement or any other
Funding Document and provide LPN with the opportunity to consult with SMCCCD and redact
such agreements to the extent permitted by law prior to their public disclosure.

[Signatures page follows]

1

OMM_US:7I464734.I0

0

~~

 JN WITNESS WHEREOF, the paniw have caused this Put/Call Option Agreement to be signed
as of the date first set fimh above.
by their duly authorized

mmfim

LOCUSPOINT NETWORKS LLC

Its:

SAN MATEO COUNTY COMMUNITY
ICT
COLL}:
_

“away“:-

-

 1‘"

r

EXHIBIT A
NOTICES

If to SMCCCD:
Executive Vice Chancellor
San Mateo County Community College District
'
3401 CSM Drive
San Mateo, CA 94402
Phone: 650-358-6790
Email: roecksj@smccd.edu

With

a

copy to:

Lawrence M. Miller
SchWanz, Woods & Miller
1233 20'h Street, NW, Suite 610

"’Wfi‘shington, D.C. 200363;;2w»
Phone: (202) 833-1700
Email: miller@swmlaw.com

With

a

copy to:

"

Jan Roecks
San Mateo County Community College District
3401 CSM Drive
San Mateo, CA 94402
Phone: 650-358-6790
‘

'

Email: roeck§j@smccd.edu
Eugene Whitlock
400 County Center, 6"I Floor
Redwood City, CA 94063
V

~

IftoLPNzt-r
LocusPoint Networks,

LLC

Pleasanton Corporate Commons
6200 StoneridgeMalI Road, Suite 300
Pleasanton, CA 94588
‘

'

Attn: William deKay
Facsimilc‘No; (925)399-6001
Email: bill@locu3pointnetworks.com

With a copy to:
‘O'Melveny

& Myers LLP

2765 Sand Hill Road
Menlo Park, California 94025
Attn: David Makarechian, Esq.
Facsimile No.: (650) 473-2601
Email: dmakarechian@omm.com

OMM_US:7I464734.IO

 DRAFT 11/29/15

AMENDMENT TO PUT/CALL OPTION AGREEMENT
This Amendment (“Amendment”) is entered into on December 17, 2015 (“Amendment
Effective Date”) by San Mateo County Community College District (“SMCCCD”), a community
college district of the State of California, and LocusPoint Networks, LLC (“LEN”), a Delaware
limited liability company, to amend the Put/Call Option Agreement between the District and
LPN, dated as of May 16, 2013 (“Agreement”). Capitalized terms that are used but not defined
herein shall have the meaning given to such terms in the Agreement.
WHEREAS, pursuant to the Agreement, SMCCD, among other matters, granted to LPN
under certain conditions stated in the Agreement, the Sale Call Option‘ pursuant to which LPN
may cause SMCCCD to participate in the sale of station KCSM-TV (RF Channel 43), San
Mateo, California (FCC Facility ID No. 58912) (the “Station”), including the Station’s FCC
License and all of the Station’s other assets; and

WHEREKSTueér Section 3(bW-the Agreement, the Sale Call Option is exercisable on
the earlier to occur of the following: (i) the date that the SMCCCD withdraws from the Auction
or is determined to be unqualified to bid, or if it neither withdraws or is determined to be
unqualified, the date that the FCC provides notice of the results of the Auction and such notice
does not indicate that the FCC has accepted SMCCCD’s bid for relinquishment of the spectrum
usage rights associated with the FCC Licenses; or (ii) the date on which a Triggering Event (as
defined in Section 9.1 of the Funding Agreement) occurs, except for a Triggering Event under
Sections 9.1E or 92‘1F of the Funding Agreement; or (iii) thirty (30) days afier the Subsidy
Termination Date if the FCC has not by that date announced a date by which applications to
participate in the Auction must be filed; and

'

1

WHEREAS, following the execution of the Agreement, the FCC‘issued a new regulation,
CPR. § 1.2205, and related guidance (collectively, “M6? prohibiting certain
communications fiom the deadline for submitting applications to participate in the reverse
auction portion of the Auction until the results of the Auction are announced by public notice
(“g Quiet Period”), and as a‘result, LPN and SMCCCD may not communicate during the Quiet 'Period with respect to certain circumstances that could give rise to an exercise of the Sale Call
Option; and
47‘

'

-

‘

‘

'

WHEREAS, to avoid any doubt as to the parties’ compliance with the Rule,‘ and pursuant
to Section 14 (Modification) and Section 20 (Further Assurances) of the Agreement, the parties
desire to amend the-Agreement to modify the earliest date by which LPN may exercise the Sale
Call Option to comply with the Rule.

NOW, THEREFORE, in consideration of the mutual covenants contained herein, the
receipt and sufficiency of which the parties hereby acknowledge, the parties agree as follows:
1.

Section 3(b) of the Agreement shall be amended as

of the Amendment Efi'ective to follows:

b.
The Sale Call Option will be exercisable for a period (the “Sale Call
Option Period”) ending on the Option Termination Date and beginning on the earlier to

'

 DRAFT 11/29/2015
occur of the following (i) one day alter the results of the Auction are announced by the
FCC by public notice and such notice does not indicate that the FCC has accepted
SMCCCD’s bid for relinquishment of the spectrum usage rights associated with the FCC
Licenses; or (ii) the date on which a Triggering Event (as defined in Section 9.1 of the
Funding Agreement) occurs, except fora Triggering Event under Sections 9.1E or 9.] F of
the Funding Agreement, but $11! if such Triggering Event occurs before the deadline for
submitting applications to participate in the reverse auction portion of the Auction has
passed, provided, howeVer that once the deadline fOr submitting applications to participate
in the reverse auction portion of the Auction has passed, the Sale Call Option may not then
be exercised until one day afier the results of the Auction are announced by the FCC by
public notice if such notice does not indicate that the FCC has accepted SMCCCD’s bid
for relinquishment of the spectrum usage rights associated with the FCC Licenses; or (iii)
thirty (30) days after the Subsidy Termination Date
the FCC has not by that date
announced a date by which applications to participate in the Auction must be filed.

if

2. Entire Agreement; Counterp arts.“ This Amendment and the Agreement which it amends
constitutes the entire understandihg‘fifileen the Partieseefit’rfiegard to the subject matter
hereof and supersedes any prior understandings respecting the subject matter hereof. This
Amendment may be signed in any number of counterparts, each of which shall be an original
for all purposes, but all which taken together shall constitute only one Amendment. The
Parties agree that transmission of this Amendment with facsimile or electronic “pdi”
signatures shall bind the Parties 1n the same manner as 1f the Party’s original signatures had
been delivered.

IN WITNESS WHEREOF, the Parties hereto have executed this Amendment as of the
first above written.

date and year

SAN MATEO COUNTY COMMUNITY COLLEGE DISTRICT

/</4)%7gq&ma/
By:,
.

Name: Kathy BlackWOOd
Title: Executive Vice Chancellor

LOCUSPOINT N Erwonics, LLC

‘By:

//4/

Name:

Title:

 EXHIBIT 

AGENDA
SAN MATEO COUNTY COMMUNITY COLLEGE DISTRICT
SPECIAL MEETING OF THE BOARD OF TRUSTEES
September 20, 2017, 6:00 p.m.
District Office Board Room, 3401 CSM Drive, San Mateo, CA 94402
Other Location: Av. Atlantica, 1500, Rio de Janeiro - RJ, 22021-000, Brazil

NOTICE ABOUT PUBLIC PARTICIPATION AT BOARD MEETINGS
The Board welcomes public discussion.
0
The public ’5 comments on agenda items will be taken at the time the item is discussed by the Board.
0
To comment on items not on the agenda, a member of the public may address the Board under “Statements
from the Public on Non-Agenda Items;” at this time, there can be discussion on any matter related to the
Colleges or the District, except for personnel items and potential or existing litigation. No more than 20
minutes will be allocated for this section of the agenda. No Board response will be made nor is Board action
permitted on matters presented under this agenda topic.
0
a member of the public wishes to present a proposal to be included on a future Board agenda,
arrangements should be made through the Chancellor’s Office at least seven days in advance of the meeting.
These matters will be heard under the agenda item “Presentations to the Board by Persons or Delegations. ”
A member of the public may also write to the‘BeartL-regarding Distrfimfiin‘mletters can be addressed to
340] CSM Drive, San Mateo, CA 94402.
0
Persons with disabilities who require auxiliary aids or services will be provided such aids with a three day
notice. For further information, contact the Executive Assistant to the Board at (650) 358-6 753.
0
Regular Board meetings are tape recorded; tapes are kept for one month.
Government Code §5495 7.5 states that public records relating to any item on the open session agenda for a
regular board meeting should be made available for public inspection. Those records that are distributed less
than 72 hours prior to the meeting are available for public inspection at the same time they are distributed to the
members of the Board. The Board has designated the Chancellor’s Office at 3 4 01 CSM Drive for the purpose of
making those public records available for later inspection; members of the public should call 65 0—35 8—6 753 to
arrange a time for such inspection.

If

6:00 p.m.

Call to Order/Roll Call
Pledge of Allegiance

CONSIDERATION OF ITEM TABLED AT THE MEETING OF SEPTEMBER 13. 2017
17-9-104B

.

Ratification of the Purchase Agreement for the Sale of KCSM-TV and Ancillary
Agreements

ADJOURNMENT

 San Mateo

County Community College District

September 20, 2017

BOARD REPORT 17-9-104B

of the Board of Trustees

TO:

Members

FROM:

Ron Galatolo, Chancellor

PREPARED BY:

Eugene Whitlock, Vice Chancellor, Human Resources and General Counsel,
(650) 358—6883

RATIFICATION OF THE PURCHASE AGREEMENT FOR THE SALE OF KCSM—TV AND
AN CILLARY AGREEMENTS
a special meeting of the Board of Trustees on September 6, 201w-«sthaBoard voted unanunousbLt_o_
authorize the Chancellor to enter into an agreement consistent with the material terms of the agreement
and to authorize the Board President to enter into an escrow agreement and any other ancillary
agreements that are necessary to effectuate the sale of KCSM.

At

At that meeting, Eugene Whitlock, Vice Chancellor of Human Resources/General Counsel, stated the
material terms that are under consideration, as follows:

With regard to station
0

o
0

assets, assets that would be transferred include:
,.
FCC licenses
Transmitter site equipment and master control equipment, to be sold “as is”
Lease for Sutro Tower which would be fully transferred to the buyer
All files and records of the Station required to be kept by the FCC, and all repacking records

The purchase price would be $12 million cash at closing. Of that $12 million, $960,000 would be
paid as a deposit at the time ,of the execution of the agreement, to be deposited with an agreed
escrow agent subject to a separate escrow agreement.

Additional consideration, to be provided by the buyer, includes:
0
Television and radio underwriting announcements for five years after closing
0
Three student internships per semester, for three years after closing
- Carriage of KCSM(FM), for five years after closing
o
Carriage of 30 minutes of Dlsmct—produced programming once each month, for five years
after closing
1

’

Closing is scheduled to take place within

10 days

after FCC consent is final.

With regard to repacking, the District is obliged to continue repacking efforts as required by the
FCC. At closing, the buyer promises to reimburse any unreimbursed costs the District has incurred
in connection with repacking.
There are terms and conditions around termination. For example, if the deal does not close within 12
months from the date of the agreement, either party may terminate the agreement.

_

 ‘

BOARD REPORT NO.

17—9—1043

2

Upon approval by the Board, Vice Chancellor Whitlock said the District would work with KRCB to
finalize the agreement and then bring it back to the Board for ratification. The agreement has now been
finalized and is being presented to the Board for ratification.

RECOMMENDATION
It is recommended that the Board ratify the sale of KCSM-TV to KRCB—TV. Copies of the Asset
Purchase Agreement and Escrow Instruction and Agreement are attached to this report.

magma-rm-

—-

—--<

-

 Execution Version

ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this “Agreemen ”), effective as of
September_.2017 (the “Effective Date”), is entered into between SAN MATEO COUNTY
COMMUNITY COLLEGE DISTRICT, a California Community College District (“Sing”),
and RURAL CALIFORNIA BROADCASTING CORPORATION, a California non-profit
and nonstock corporation (“Buyer”).
Recitals

A.
Seller is the licensee of and operates noncommercial educational television
Station KCSM—TV, San Mateo, California (the “Station”), pursuant to a license issued by
the Federal Communications Commission (the “FCC”).
B.

Seller desires to sell and assign to Buyer, and Buyer wishes to buy and
take assignment of, certain assets of Seller and the FCC Licenses as set forth herein on
the temsendsubject to the conditions hereinafter set forth, subject to the prior approval
of the FCC.

Wham.

In consideration of the foregoing and the mutual promises contained herein, Buyer and
Seller, intending to be legally bound, hereby agree as follows:

Agreement

ARTICLE

1:

PURCHASE OF ASSETS

1.]

Station Assets. On the terms and subject to the conditions hereof, at Closing

(as defined in Section 1.8), Seller shall sell, assign, transfer, convey and deliver to Buyer, and
Buyer shall purchase and acquire from‘Seller, all right, title and interest of Seller in and to the
assets owned and held by Seller and described in this Section 1.1 (collectively, the “Station

Assets”). The Station Assets consist of:

all transferable FCC licenses, permits and other authorizations with
respect to the Station (the “FCC Licenses”), which are listed on Schedule 1 1(a), including any
renewals or modifications thereof between the date hereof and Closing;
.

(a)

'

the‘equipment, transmitters, and other tangible personal property that
of the Station and listed on Schedule 1.1(b), except for
(i) any retirements or dispositions thereof made between the date hereof and Closing in the
ordinary course of business in accordance with Section 4.1(0) hereof and (ii) the Rejected
Personal Property (as defined in Section 2.6) (the “Tangfle Personal Property”);
(b)

are used or held for use in the operation

'

the contracts, agreements and leases that are used in the operation of the
(0)
Station and listed on Schedule 1.1(c), and all other such contracts, agreements and leases
entered into between the date hereof and Closing subject to the limitations set forth in Section
(the “Station Contracts”); and

flfl)

all files, documents and records exclusively relating to the Station
(d)
Assets or required by the FCC to be kept by the Station, including the Station’s local public
4833-7934-5741 .v8

‘

'-.-

 Execution Version

files, engineering data and logs, Form 399 filed with the FCC specifying estimated expenses
related to Repacking (as defined in Section 1.6) and all Attachments thereto, together with all
quotations, studies and correspondence relating to the KCSM repack plan, but excluding
records included in or related to Excluded Assets (as defined in Section 1.2).
The Station Assets shall be transferred to Buyer free and clear of liens, claims and
except for Assumed Obligations (defined in Section 1.3), liens that will
encumbrances
be released at or prior to Closing, liens listed on Schedule 1.1(0) hereto, and such other liens,
claims, restrictions, and other exceptions that do not in any material respect detract from the
value of the property subject thereto or impair the use thereof in the ordinary course of the
business of the Station (collectively, “Permitted Liens”).

(“m”),

1.2
Excluded Assets. Notwithstanding anything to the contrary contained in this
Agreement and for the purposes of clarity, the Parties agree that the Station Assets shall not
include the following assets or‘ any rights, title and interest therein (the “Excluded Assets”):

all cashanicash equivalents, including without limitation certificates
(a)
deposit, commercial paper, treasury bills, marketable securities, money market accounts and
all such similar accounts or investments;
~

-

all tangible and intangible personal property retired or disposed of

(b)
between the date

of

of this Agreement and Closing in accordance with Article 4;

all Seller business records, including, without limitation, financial
(c)
records, charter documents, and books and records relating to the organization and existence
of Seller, duplicate copies of the records of the Station, and all records not relating to the
operation of the Station;

all contracts of insurance, all coverages and proceeds thereunder and all
(d)
rights in connection therewith, including without limitation rights arising from any refunds
due with respect to insurance premium payments to the extent related to such 1nsurance
policies;
'

all pension, profit sharing plans and trusts and the assets thereof and any
(e)
other employee benefit plan or arrangement and the assets thereof, if any;
_

all receivables (if any) and any other rights to receipt of cash that accrue
or have accrued prior to the Effective Time (as defined in Section 1.6) or otherwise arising
duringor attributable'to any period prior to the Effective Time (the “Receivables”);

(0

.

‘

all rights and claims, whether mature, contingent or otherwise, against
(g)
third parties with respect to the Station and the Station Assets, to the extent arising during or
attributable to any period prior to the Effective Time (as defined in Section 1.6);
all deposits and prepaid expenses (and rights arising therefrom or
(h)
related thereto), except to the extent Seller receives a credit therefor under Section 1.6
(Prorations and Adjustments);

4833-7934—5741 .v8

 Execution Version

all rights and claims, whether mature, contingent or otherwise, primarily
(i)
related to the Retained Obligations (as defined in Section 1.3);
all assets used or held for use in the operation of any other radio or
(i)
television station (other than the Station) owned or operated by Seller or an affiliate of Seller,
or shared between any such station and the Station, except for the items specifically set forth
on Schedule 1.1(b);
all intellectual property associated with the Station, including
(k)
trademarks, trade names, service marks, internet domain names and websites, copyrights,
slogans, or logos, including without limitation all intellectual property using or related to the
call signs “KCSM” or “KCSM-TV”, or any variation thereof, together with Seller’s
programming information and studies, marketing and demographic data, viewership studies
and correspondence; and

(l)

the items listed in Schedule 1.20) hereto.

Assumption of Obligations. On the Closing Date (as defined in Section
shall
assume
the (i) obligations of Seller arising during, or attributable to, any period
1.8), Buyer
of time on or after the Closing Date under the Station Contracts, (ii) all obligations and liabilities
arising out of Buyer’s ownership of the Station Assets, and (iii) any other liabilities of Seller to
the extent Buyer receives a credit therefor under Section 1.6 (Prorations and Adjustments)
(collectively, the “Assumed Obligations”). Except for the Assumed Obligations, Buyer does not
assume, and will not be deemed by the execution and delivery of this Agreement or the
consummation of the-transactions contemplated hereby to have assumed, any other liabilities or
obligations of Seller (the “Retained Obligations”).
1.3

1.4
Purchase Price. In consideration for the sale of the Station Assets to Buyer,
at Closing Buyer shall pay Seller, by wire transfer of immediately available funds, the sum of
Twelve Million Dollars ($12,000,000.00) (including the Deposit (as defined in Section 1.5),
subject to any adjustment pursuant to Section 1.6 (Prorations and Adjustments) (the “Purchase

M”)-

’

1.5
Deposit. on the’date of this Agreement, Buyer shall make a cash deposit in
immediately available funds in an amount equal to Nine Hundred and Sixty Thousand Dollars
($960,000.00) (the “Deposit”) with McGovern Escrow Services, Inc. (the “Escrow Agent”)
pursuant to the Escrow Agreement (the “Escrow Agreemen ”) of even date herewith among
Buyer, Seller and the Escrow Agent. At Closing, the Deposit shall be disbursed to Seller and
applied‘to' the Purchase Price and any interest acorued thereon shall be disburSed to Buyer. 'If»
this Agreement is terminated by Seller pursuant to Section 10.130), the Deposit and any interest
accrued thereon shall be disburSed to Seller pursuant to Section 10.4 (Liquidated Damages). If
this Agreement is terminated pursuant any other provision, the Deposit and any interest accrued
thereon shall be disbursed to Buyer. The parties shall each cooperate to instruct the Escrow
Agent to disburse the Deposit and all interest thereon to the party entitled thereto and shall not,
by any act or omission, delay or prevent any such disbursement unless contested by a party in
good faith in writing within five (5) business days of a disbursement request, in which event the
Deposit shall remain with the Escrow Agent until the parties’ dispute is resolved. Any failure by
Buyer to make the Deposit on the date hereof constitutes a material default as to which the Cure
'

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4833-7934-5741.v8

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Period under Section 10.2 (Cure Period) shall not apply and shall entitle Seller to immediately
terminate this Agreement.

Prorations and Adjustments. All prepaid and deferred income and expenses
1.6
relating to the Station Assets and arising from the operation of the Station shall be prorated
between Buyer and Seller in accordance with generally accepted accounting principles
(“GAAP”) as of 12:01 am. on the day of Closing (the “Effective Time”). Such prorations shall
include without limitation all taxes (except transfer taxes as provided by Section 11.1
(Expenses), music and other license fees, FCC regulatory fees, utility expenses, rent and other
amounts under Station Contracts, and similar prepaid and deferred items. Seller shall receive a
credit for all of the Station’s deposits and prepaid expenses to the extent they inure to Buyer’s
benefit. Except as set forth in Schedule 1.6, Buyer will reimburse Seller for any expenses related
to the Station’s involuntary channel reassignment in connection with reorganization of the
television broadcast band pursuant to Section 6403(b) of the Middle Class Tax Relief and Job
Creation Act of 2012 (“Repacking”) incurred by Seller but not reimbursed to Seller from the
United States Treasury’s Repacking reimbursement fund as of the Effective Time, subject to
Seller’s remittance to Buyer of any subsequent reimbursements received—by Seller. To the extent
possible, initial prorations and adjustments shall be made on the Closing Date, with final
prorations and adjustments made no later than ninety (90) calendar days after Closing.
1.7
Additional Consideration. In further consideration for the sale of the Station
Assets to Buyer, in addition to the Purchase Price, Buyer shall provide to Seller the additional
consideration as set forth in Schedule 1. 7.
1.8
Closing. 'The consummation of the sale and purchase of the Station Assets
provided for in this Agreement (the “Closing”) shall take place on or before the tenth (10th)
business day after the date on which the FCC Consent (as defined in Section 1.9) becomes a
Final Order (as defined in Section 7.3) or on such other day after such FCC Consent as Buyer
and Seller may mutually agree, subject to the satisfaction or waiver of the conditions set forth
in Article 6 and Article 7. The date on which the Closing is to occur is referred to herein as the
“Closing Date.”

FCC Consent. Within ten (10) business days after the date of this
Agreement, Buyer and Seller shallifile an application with the FCC (the “FCC Application”)
requesting FCC consent to the assignment of the FCC Licenses to Buyer. FCC censent to the
FCC Application without any material adverse conditions other than those of general
applicability is referred to herein as the “FCC Consent”. Buyer and Seller shall diligently
prosecute the FCC Application and otherwise use their commercially reasonable efforts to obtain
the FCC Consent as soon. asupossible. Buyer and Seller shall notify each other of all documents
filed with or received from any governmental agency with respect to this Agreement or the
transactions contemplated hereby. Buyer and Seller shall furnish each other‘with such
information and assistance as the other may reasonably request in connection with their
preparation of any governmental filing hereunder. Except as otherwise provided herein, each
party will be solely responsible for the expenses incurred by it in the preparation, filing, and
prosecution of its respective portion of the FCC Application. Neither Buyer nor Seller shall take
any intentional action that would, or intentionally fail to take such action the failure of which to
take would, reasonably be expected to have the effect of materially delaying the issuance of the
FCC Consent.
1.9

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44833-7934-5741.V8

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Repacking. Buyer acknowledges that it has reviewed Seller’s plans,
including equipment specifications, related to Repacking (as defined in Section 1.6). Seller
agrees to give Buyer advance notice (which may be by email) of any material changes to the
equipment specifications and vendors and to consider Buyer’s recommendations regarding
Repacking equipment specifications. For clarity, Seller has no obligation to Buyer with respect
to Repacking, including without limitation any obligation to accept Buyer’s recommendations
regarding equipment specifications, except as expressly set forth in this Agreement.
1.10

ARTICLE 2: SELLER REPRESENTATIONS AND WARRANTIES
Seller makes the following representations and warranties to Buyer:
Organization. Seller is a California Community College District duly
2.1
organized, validly existing and in good standing under the laws of the State of California. Seller
has all requisite power and authority (i) to own, lease and use its assets as presently owned,
leased and used, (ii) for the conduct the business and operations of Seller as presently conducted,
(iii) to execute and deliver this Agreement, and (iv) to perform and comply with all cféleemteams, covenants, and conditions to be performed and complied with by Seller hereunder.

Authorization. The execution, delivery and performance of this Agreement
2.2
been
authorized and approved by all necessary action of Seller and do not
have
Seller
duly
by
require any further authorization or consent of Seller. This Agreement is a legal, valid and
binding agreement of Seller enforceable in accordance with its terms, except in each case as such
enforceability may be limited by bankruptcy, moratorium, insolvency, reorganization or other
similar laws affecting or limiting the enforcement of creditors’ rights generally and except as
such enforceability is subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
No conflicts. Except for the FCC Consent and consents to assign certain of
the Station Contracts, and except as otherwise as set forth on Schedule 2.10, the execution,
delivery and performance by Seller of this Agreement and the consummation by Seller of the
transactions contemplated hereby do not conflict with any organizational documents of Seller or
any other material contract to which Seller 13 bound, or— any law, judgment, order, or decree to
which Seller IS subject, or require the consent or approval of, or a filing by Seller with, any
governmental or regulatory authority.
2.3

_

.

’

2.4
FCC Licenses. Seller is the holder of the FCC Licenses described on
Schedule 1. 1 (a), which are all of the governmental licenses, permits and authorizations required
for the present operation of the Station. The FCC Licenses are in full force and effect and have
not been revoked, suspended, canceled, rescinded or terminated and have not expired. Except
with respect to Repacking asset forth in Schedule 1.1(a), there is no pending, or, to Seller’s
knowledge threatened, action by or before the FCC to revoke, suspend, cancel, rescind or
materially adversely modify any of the FCC Licenses (other than proceedings to amend FCC
rules and regulations of general applicability). There is not issued or outstanding, by or before
the FCC, any order to show cause, notice of violation, notice of apparent liability, or order of
forfeiture against the Station or against Seller with respect to the Station that could result in any
such action. The Station is operating in compliance in all material respects with the FCC
Licenses, the Communications Act of 1934, as amended (the “Communications Act”), and the
.

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4833-7934-5741.v8

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rules, regulations and policies of the FCC, other than such non-compliance as would not have a
material adverse effect on Buyer, the Station Assets or the transactions contemplated by this
Agreement. All material reports and filings required to be filed with the FCC by Seller with
respect to the Station have been timely filed and all such reports and filings are accurate and
complete, other than as would not have a material adverse effect on Buyer, the Station Assets or
the transactions contemplated by this Agreement.
Taxes. Seller is not subject to taxation other than with respect to
employment and sales and use taxes. It has timely filed all required tax returns in the manner
prescribed by law, and all such tax returns are true, correct and complete in all material respects.
Seller has properly accrued or paid to the extent such taxes have become due all taxes due from
Seller. Seller has properly withheld all taxes as required. There are no liens for taxes upon the
Station Assets. There is no dispute or claim concerning any tax liability relating to Seller either
claimed or raised by any taxing authority. There are no pending tax audits or proposed tax audits
of which Seller has notice.
2.5

.

.

2.6
Personal Property. Schedule 1.1(b) contains a list of all material items of -~
Tangible Personal Property included in the Station Assets. Except as described in Schedule
1. 1(1)), Seller has good title to or a valid leasehold or license interest in such Tangible Personal
Property free and clear of Liens other than Permitted Liens. Subject the foregoing, each item of
Tangible Personal Property is sold “as is” as of the Effective Date. Buyer shall give notice to

emmmm..__;~_._—_-

v

-

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2

Seller within forty (40) days after the date on which the FCC Application is filed of any items
listed on Schedule 1.1(b) (other than the Sutro Equipment) it does not wish to acquire at closing,
and Schedule 1.] (b) shall be deemed amended to exclude such items (such excluded items, the
“Rejected Personal Property”), and Buyer shall thereafter have no rights with respect to the
‘"
Rejected Personal Property:
2.7
Contracts. Schedule 1.1(c) contains a list of all contracts that are included in
the Station Contracts. 'The Station Contracts requiring the consent of a third party to assignment
are identified on Schedule 1.1(c). Each of the Station Contracts is in effect and is binding upon
Seller and the other parties thereto (subject to bankruptcy, insolvency, reorganization or other
similar laws relating to or affecting the enforcement of creditors’ rights generally). Seller has
performed its obligations under each of the Station Contracts in all material respects, and is not"
in material default thereunder, and no other party to any of the Station Contracts 13 in default
thereunder 1n any material respect.
.

7

,

_

‘

Insurance. All of the Tangible Personal Property is (a) self- insured against
loss or damage up to a limit of $150, 000 in accordance with California law and Seller’s
establiShed practice, and such 1nsurance will be maintained 1n effect by Seller until the Closing,
and (b) insured with a commercial 1nsurance company for loss or damage in excess of the selfinsurance amount up to $5, 000, 000.
2. 8

Compliance with Law. Other than such non-compliance as would not have
effect on a reasonable buyer, the Station Assets or the transactions
contemplated by this Agreement, Seller has complied with all laws, rules and regulations,
including without limitation all FCC rules and regulations applicable to the operation of the
Station, and all decrees and orders of any court or governmental authority which are applicable
to the operation of the Station. To Seller’s knowledge, there are no claims or investigations by
2.9

a material adverse

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4833-7934-5741 .v8

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 Execution Version

the government pending or threatened against Seller in respect

of the Station

except those

affecting the industry generally.
2.10
Litigation. Except as set forth on Schedule 2.10, there is no action, suit or
proceeding pending or, to Seller’s knowledge, threatened against Seller in respect to the Station
Assets that will or threatens to subject Buyer to liability or which will or threatens to affect
Seller’s ability to perform its obligations under this Agreement. Seller is not operating under or
subject to any order, writ, injunction or decree relating to the Station Assets of any court or
governmental authority which would have a material adverse effect on the condition of the
Station Assets or on the ability of Seller to enter into this Agreement or consummate the
transactions contemplated hereby, other than those of general applicability (e. g, Repacking).

2.] 1
Disclaimer of Other Express and Implied Representations and Warranties.
Except for the representations and warranties expressly made by Seller in this Article 2, Seller
makes no other representations or warranties, express or implied, whether statutory or by
common law regarding Seller, the business and operation of the Station, or the Station Assets.
~%—.—

-——

No Other Representations or Warranties. Seller agrees that neither Buyer
nor any of its representatives has made and shall not be deemed to have made, nor has Seller or
any of its representatives relied on, any representation, warranty, covenant or agreement, express
or implied, or any statement or information, with respect to Buyer, its business, or its proposed
acquisition, and operation of the Station, other than those representations, warranties, covenants
and agreements explicitly set forth in Article 3. Seller further acknowledges and agrees that (a)
it has made its own investigation into, and based thereon has formed an independent judgment
concerning the Buyer, its business and the proposed acquisition and operation of the Station, and
(b) Buyer has made available such information about Buyer as Seller has reasonably requested.

ARTICLE

3:

BUYER REPRESENTATIONS AND WARRANTIES

Buyer hereby makes the following representations and warranties to Seller:

3.]
Organization. Buyer lS duly organized, validly existing and 1n good
standing under the laws of the jurisdiction of 1ts organization, and 1s, omill be at Closing,
qualified to do business 1n the state of California. Buyer has the requisite power and authority to
execute, deliver and perform this Agreement'and all of the other agreements and instruments to
be executed and delivered by Buyer pursuant hereto and to consummate the transactions
contemplated hereby.
'

3.2 ”

“

Authorization. The execution,-delivery and performance of this-Agreement
by Buyer has beenduly authorized and approved by all necessary action of Buyer and do not
require any further authOrization or consent of Buyer. This Agreement is a legal, valid and
binding agreement of Buyer enforceable in accordance with its terms, except in each case as such
enforceability may be limited by bankruptcy, moratorium, insolvency, reorganization or other
similar laws affecting or limiting the enforcement of creditors’ rights generally and except as
such enforceability is subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).

4833-7934-5741.v8

.

 Execution Version

No Conflicts. Except for the FCC Consent, the execution, delivery and
performance by Buyer of this Agreement and the consummation by Buyer of any of the
transactions contemplated hereby do not conflict with any organizational documents of Buyer,
any contract or agreement to which Buyer is a party or is by which it is bound, or any law,
judgment, order or decree to which Buyer is subject, or require the consent or approval of, or a
filing by Buyer with, any governmental or regulatory authority or any third party.
3.3

3.4
Litigation. There is no action, suit or proceeding pending or, to Buyer’s
knowledge, threatened against Buyer which questions the legality or propriety of the transactions
contemplated by this Agreement or could materially adversely affect the ability of Buyer to
perform its obligations hereunder.
3.5
Qualification. Buyer is legally, financially and otherwise qualified to be the
licensee of, acquire, own and operate the Station under the Communications Act and the rules,
regulations and policies of the FCC, including, but not limited to, eligibility to hold a
noncommercial educational license under Section 73.621 of those rules. There are no facts that
would, under existinglawandthe existing rules, regulations, policies and procedures of the FCC,
disqualify Buyer as an assignee of the FCC Licenses or as the owner and operator of the Station,
or that that would reasonably be expected to delay the FCC’s processing of the FCC Application
because of Buyer’s qualifications. No divestiture, waiver of or exemption from any existing
FCC rule or policy on the part of Buyer is necessary for the FCC Consent to be obtained.

3.6
Financing. Buyer has on hand or from committed funds financial resources
sufficient to consummate the transactions contemplated by this Agreement and to operate the
Station after the Closing Date. Buyer’s obligations hereunder are‘not subject to or conditioned
upon it obtaining financing or a financing commitment of any nature.

No Other Representations or Warranties. Buyer agrees that neither Seller
nor any of its representatives has made and shall not be deemed to have made, nor has Buyer or
any of its representatives relied on, any representation, warranty, covenant or agreement, express
or implied, or any statement or information, with respect to Seller, its business, the Station, or the
3.7

Station Assets, other than those representations, warranties, covenants and agreements explicitly
set forth in Article 2. Buyer further acknowledges and agrees that (a) it has made its-own"
investigation into, and based thereon has formed an independent judgment concerning the
Station and the Station Assets, and (b) Seller has made available such information about the
Station and the Station Assets as Buyer has reasonably requested.

ARTICLE 4: SELLER AND BUYER COVENANTS
Seller’s Covenants. Between the date hereof and Closing, except as
4.1
permitted by this Agreement or with the prior written consent of Buyer, which shall not be
unreasonably withheld, delayed or conditioned, Seller shall:
use commercially reasonable efforts to operate the Station in the
(a)
ordinary course of business (for avoidance of doubt, any expense reductions made consistent
with Seller’s past practices shall be deemed in the ordinary course of business) and in all
material respects in accordance with FCC rules and regulations and with all other applicable
laws, regulations, rules and orders;
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4833-7934-5741.v8

 Execution Version

except with respect to Repacking as set forth in Schedule 1.1 (a)
(b)
and Section 4-1lhl, not modify, and in all material respects maintain in full force and effect,
the FCC Licenses;
except in the ordinary course of business, not sell, lease or dispose of or
(0)
agree to sell, lease or dispose of any of the Station Assets unless replaced with similar items of
substantially equal or greater value and utility, or create, assume or permit to exist any Liens
upon the Station Assets, except for Permitted Liens, and not dissolve, liquidate, merge or
consolidate with any other entity;
use commercially reasonable efforts to maintain the Tangible Personal
(d)
Property in the ordinary course of business;

upon reasonable notice, give Buyer and its representatives reasonable
(e)
access during normal business hours to the Station Assets, and furnish Buyer with information

relating to the Station Assets that Buyer may reasonably request, provided that such access
rights shall not be exercised -in a manner—thattijfierfenes with the operation of the Station;
not enter into new Station Contracts that will be binding upon Buyer
(f)
after Closing or amend or terminate any existing Station Contracts, except for Station
Contracts made, amended or terminated with Buyer’s prior written consent;
cooperate with Buyer in timely filing such applications and other
(g)
material as may be required to obtain FCC Consent to the assignment of the FCC Licenses to
Buyer, including, but not limited to, providing the FCC with such information as it .may
reasonably request, assisting Buyer in providing such information, where appropriate, and
generally using commercially reasonable efforts to obtain the prompt and timely FCC
‘—'
Consent; and
take such commercially reasonable steps as are required by the Mt.
(h)
Sutro transmitter site landlord and, in consultation with Buyer as provided by Section 1.10
(Repacking), such other steps as Seller reasonably deems necessary and appropriate, in each
case to enable the Station to meet the Repacking requirements‘angLschedule established by the
FCC.

Buyer’s Covenants. Between the date hereof and Closing, except as
4.2
permitted by this Agreement or with the prior written consent of Seller," which shall not be
unreasonably withheld, delayed or conditioned, Buyer shall:
take no action that would reasonably be expected to impair its
(a)
qualifications to be the licensee of the Station, materially delay obtaining the FCC Consent,
result in its disqualification under the rules of the FCC to be the licensee of the Station, or that
would require it to obtain a waiver of the FCC Rules in order to obtain the FCC Consent;
cooperate with Seller in timely filing such applications and other
(b)
material as may be required to obtain FCC Consent to the assignment of the FCC Licenses to
Buyer, including, but not limited to, providing the FCC with such information as it may
reasonably request, assisting Seller in providing such information, where appropriate, and
_

9 4833-7934-5741.v8

 Execution Version

generally using commercially reasonable efforts to obtain the prompt and timely FCC
Consent; and
after joining in the filing of the application for FCC Consent, apply
(c)
promptly to the FCC for a change in the Station call sign to take effect upon Closing so as to
avoid confusion with Seller’s continuing operation of Station KCSM (FM), San Mateo,
California.

ARTICLE 5: JOINT COVENANTS
Buyer and Seller hereby covenant and agree

as

follows:

5.1
Control. Buyer shall not, directly or indirectly, control, supervise or direct
the operation of the Station prior to Closing. Consistent with the Communications Act and the
FCC rules and regulations, control, supervision and direction of the operation of the Station prior
to Closing shall remain the responsibility of Seller as the holder of the FCC Licenses.

“fl'mvm—_ .2

.

5.2
Risk of Loss Seller shall bear the risk of any loss of or damage to the
Tangible Personal Property located at the Mt. Sutro transmitter site and necessary for the
operation of the Station as it is operated as of the Effective Date (the “Sutro Equipment”) at all
times until the Closing, and Buyer shall bear the risk of any such loss or damage thereafter. In
the event that any loss of or material damage to the Sutro Equipment occurs after the Effective
Date but prior to Closing, then upon becoming aWare of such loss or material damage, Seller
shall use commercially reasonable efforts to promptly notify Buyer in writing, and it shall be the
responsibility of Seller, prior to Closing, to repair or cause to be repaired or replaced, and to
restore, the affected Sutro Equipment substantially to its condition prior to any such loss, damage
or destruction; provided, that in the event that any Sutro Equipment is not repaired, replaced, or
restored prior to Closing, Buyer, at its sole option, upon written notice to Seller: (a) may elect to
postpone the Closing until the earlier of (A) such time as the property has been repaired,
replaced, or restored in all material respects, or (B) up to six (6) months from the date when all
other conditions to Closing herein have been satisfied (other than those conditions that by their
nature are to be satisfied at Closing, but subject to the satisfaction of those conditions at such
time), or (b) may at any time during such six (6) month period elect to consummate the Closing
and accept the property in its then condition, in which event the Purchase Price shall be reduced
by the estimated cost of such repair, replacement or restoration of the Sutro Equipment as
determined by an independent third-party engineer agreeableto bothParties, which engineer
Seller and Buyer shall instruct to base the estimate on the least expensive approach that complies

with good engineering practices, considering the timeframe of Repacking. If Buyer shall extend
the time for Closing pursuant to clause (a) above, the provisions ofS
Section 10.1gd1'sha11 be tolled
for such time as Buyer has elected to postpone the Closing pursuant to this Section 5 .2 and Seller
is using reasonable best efforts to effect such repair, replacement or restoration, and for five (5)
business days after the property involved has been repaired, replaced or restored in all material
respects.
5.3

Consents.

The parties shall use commercially reasonable efforts to obtain any third
(a)
party consents necessary for the assignment of any Station Contract (which commercially
_

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4833-7934-5741 .v8

 Execution Version

reasonable efforts shall not require any payment to any such third party), but no such consents
shall be conditions to Closing except for the Required Consents. Receipt of consents designated
with a diamond on Schedule 1.1(c) shall be a condition precedent to Buyer’s obligation to close
under this Agreement (the “Required Consents”).

To the extent that any Station Contract may not be assigned without the
(b)
consent of any third party, and such consent is not obtained prior to Closing, this Agreement and
any assignment executed pursuant to this Agreement shall not constitute an assignment of such
Station Contract; provided, however, with respect to each such Station Contract, Seller and
Buyer shall cooperate to the extent feasible in effecting a lawful and commercially reasonable
arrangement under which Buyer shall receive the benefits under the Station Contract from and
after Closing, and to the extent of the benefits received, Buyer shall pay and perform Seller’s
obligations arising under the Station Contract from and after Closing in accordance with its
terms. This subparagraph 5.3(b) shall not apply to the Required Consents.
5.4
FCC Qualification. Neither Buyer nor any person with an attributable
interest in Buyer shall file any application to acquire any station or otherwise operate--any»st—ation
if, as a result, such action would cause Buyer, or any person with an attributable interest in
Buyer, to have an attributable interest in, and/or seek to acquire an attributable interest in, any
station(s) which would involve a greater number of stations than would be permitted, absent an
exemption or waiver, under the Communications Act, or any of the rules, regulations or policies
the FCC, including the FCC’s multiple ownership rules, in effect from time to time, or which
would raise market concentration questions under applicable law.
5:5
Actions. After Closing, if reasonably requested by Seller, Buyer shall
cooperate with Seller in the investigation, defense or prosecution of any action that is pending or
threatened against Seller or its affiliates with respect to the Station, whether or not such action is
subject to a claim for indemnification pursuant to this Agreement; provided, however, that Seller
shall reimburse Buyer for the out-of-pocket costs (including reasonable attorneys’ fees), if any,
reasonably incurred by Buyer to comply with this Section 5.5.

ARTICLE 6:’ SELLER CLOSING CONDITIONS
The obligation of Seller to consummate the Closing hereunder is subject to satisfaction, at
or prior to Closing, of each of the following conditions (unless waived in writing by Seller):
'

Representations and Covenants.

6.1

The representations and warranties of Buyer made inthis Agreement
(a)
shall be true and correct in all material. respects as of the Closing Date except for changes

. .

permitted or contemplated by the terms of this Agreement.
The covenants and agreements to be complied with and performed by
(b)
Buyer at or prior to Closing shall have been complied with and performed in all material
respects.

Seller shall have received a certificate dated as of the Closing Date from
Buyer executed by an authorized officer of Buyer to the effect that the conditions set forth
in Sections 6.1(a) and (b) have been satisfied.
(0)

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Execution Version

6.2
Proceedings. Neither Seller nor Buyer shall be subject to any court or
governmental order or injunction restraining or prohibiting the consummation of the transactions
contemplated hereby.
6.3

FCC Authorization. The FCC Consent shall have been obtained.

6.4

Deliveries. Buyer shall have complied with its obligations set forth

in Section 8.2 (Buyer Documents).

ARTICLE 7: BUYER CLOSING CONDITIONS
The obligation
at or prior to Closing,

Representations and Covenants.

7.1

”WW“:

.

6'

a

of Buyer to consummate the Closing hereunder is subject to satisfaction,
of each of the following conditions (unless waived in writing by Buyer):

The representations and warranties of Seller made in this Agreement
(a) _
shall be true and correct in all material respects as of the Closing Date except for changes
permitted or contemplated by the terms of this Agreement.

”rm-“2m. .ggwnlw—

The covenants and agreements to be complied with and performed by
(b)
Seller at or prior to Closing shall have been complied with and performed in all material
respects.

Buyer shall have received a certificate dated as of the Closing Date
from Seller executed by an authorized official of Seller to the effect that the conditions set
forth 1n Sections 7.1(a) and (b) have been satisfied.
(0)

7.2
Proceedings. Neither Seller nor Buyer shall be subject to any court or
governmental order or injunction restraining or prohibiting the consummation of the transactions
contemplated hereby.

'

FCC Authorization. The FCC Consentshall have been obtained and, unless
waived by Buyer, the FCC Consent shall have become a Final Order. For purposes of this
Agreement, the term. “Final Order” shall mean that action shall have been taken by the FCC
(including action duly taken by the FCC’s staff, pursuant to delegated authority) which shall not
have been reversed, stayed, enjoined, set aside, annulledor suspended;.with respect to which no
timely request for stay, petition for rehearing, appeal or certiorari or sua sponte action of the
FCC with comparable effect shall be pending; and as to which the normal time for filing any
such request, petition, appeal, certiorari or for the taking of any such sua sponte action by the
FCC shall have expired or otherwise terminated.
7.3

7.4
Deliveries. Seller shall have complied with its obligations set forth
in Section 8.1 (Seller Documents).

'

7.5
Consents. The Required Consent shall have been obtained, including but
not limited to landlord consents for all studio and transmitter site leases (to the extent such leases
require such consent) being assigned and assumed hereunder.

'

- 12 4833-7934-5741.v8

 Execution Version

ARTICLE 8: CLOSING DELIVERIES
Seller Documents. At Closing, Seller shall deliver or cause to be delivered

8.1

to Buyer:

(i)

the certificate described in Section 7.1(c);

(ii)

an assignment

(iii)

an assignment and assumption

of FCC authorizations assigning the FCC Licenses

from Seller to Buyer;

of contracts assigning the

Station

Contracts from Seller to Buyer;
an assignment and assumption

(iv)

of intangible assets assigning the

Intangible Assets

(if any) from
(v)

a

firr—‘n

bill of sale conveying the Tangible Personal Property from Sellerwm-

(vi)

a

copy

"mu?“

Seller to Buyer;

to BITS/er;

of the Required Consents;

(vii) certified resolutions of Seller’s Board of Trustees approving the
execution, delivery, and performance of this Agreement and the consummation of the
transactions contemplated herein, and the delivery of the closing documents provided for
hereunder; and
~

any other instruments of conveyance, assignment and transfer that
may be reasonably necessary to convey, transfer and assign the Station Assets from Seller to
Buyer, free and clear of Liens, except for Permitted Liens.’

(viii)

Buyer Documents. At Closing, Buyer shall deliver or cause to be delivered

8.2
to Seller:
.

a

,Price) and

fl

(i)

the'Purchase-I Price -in' accordance

-

(Risk of Loss) and 10.6(d) hereof;

(ii)

the certificate described in Section 6.110);

(iii)

an assignment and assumption
’

-

4

Contracts;

-

i

..

.

p.

.

_

(iv)

of contracts assuming the
.

.
.

'

Intangible Assets

with Sections 1.4 (Purchase

~

an assignment and assumption

Station

.

of intangible assets assigning the

(if any) from Seller to Buyer;

a good standing certificate issued by the Secretary
(v)
Buyer’s jurisdiction of formation;

(vi)

of State of

certified resolutions of Buyer’s Board of Directors approving the
of this Agreement and the consummation of the

execution, delivery, and performance

_

13

_

4833-7934-5741.v8

 Execution Version

transactions contemplated herein, and the delivery
hereunder; and

of the closing documents provided for

(vii) such other documents and instruments of assumption that may be
necessary to assume the Assumed Obligations (as defined in Section 1.3).
ARTICLE

SURVIVAL; INDEMNIFICATION

9:

Survival.

9.1

Except as provided by Section 1.5 (Deposit) and Section 10.4
(a)
(Liquidated Damages) with respect to Liquidated Damages, the termination of this Agreement
shall not relieve any party of liability for any material breach or default under this Agreement
prior to the date of termination. Notwithstanding anything contained herein to the
contrary, Section 1.5 (Deposit) and Section 11.1 (Expenses) shall survive any termination of this
Agreement.
.. ..__.»...,,,..

Closing, shall survive for a period of one (1) year from the Closing Date, whereupon they shall
expire and be of no further force or effect, except (i) those under Section 2.1
(Organization), Section 2.2 (Authorization), Section 2.5 (Taxes), Section 3.1 (Organization)
and Section 3.2 (Authorization) (collectively, the “Fundamental Representations”), all of which
shall survive until the expiration ofany applicable statute oflimitations, and (ii) that ifwithin
such applicable period the indemnified party gives the indemnifying party written notice of a
claim for breach thereof describing in reasonable detail the nature and basis of such claim, then
such claim shall survive until the earlier of resolution of such claim or expiration of the
applicable statute of limitations. The covenants and agreements in this Agreement that are to be
performed alter the Closing shall survive until performed and any other covenants and
agreements shall survive for a period of nine (9) months from the Closing Date.

Indemnification.

9.2

From 'and after‘Closing, Seller shall defend, indemnify and hold
(a)
harmless Buyer and its officers, directors, members and employees from and against and in
respect of, and reimburse them for, any and all losses; costs, damages, liabilities and expenses,
including reasonable attorneys’ fees and expenses (“Damages”) resulting from:

(i)

any material breach by Seller of its representations and warranties

of this Agreement; or'

made under Article 2

,

,

,

3

i

.

(ii)

any material breach by Seller of any material obligation under this

(iii)

any material breach by Seller

Agreement; or

of the Retained Obligations (as

defined in Section 1.3); or
the business or operation of the Station before the Effective Time,
(iv)
except for the Assumed Obligations (as defined in Section 1.3); or
_

14

_

4833-7934-5741.v8

 Execution Version

any third party claim, demand, lawsuit or action resulting from any
(v)
material breach or deviation, as applicable, as described in Section 9.2(a)( i H iv).

Notwithstanding the foregoing or anything else in the Agreement to the
(b)
contrary, Seller shall have no liability to Buyer until Buyer’s aggregate Damages exceed the sum
of Five Thousand Dollars ($5,000) (“Basket”), after which the amount of the Basket shall be
excluded from any calculation of Damages.
From and after Closing, Buyer shall defend, indemnify and hold
(c)
harmless Seller and its officers, directors, members and employees from and against and in
respect of, and reimburse them for, any and all Damages incurred by Seller in connection any
claim, demand, lawsuit or action arising out of or resulting from:
any material breach by Buyer
(i)
made under this Agreement; or
“"“

of its representations and warranties

(ii)

any material breachgby Buyer

of any material obligation under this

(iii)

any material breach by Buyer

of the Assumed Obligations (as

Agreement; or

defined in Section 1.3); or
the business or operation
(iv)
except for the Retained Obligations; or

of the

Station after the Effective Time,

any third party claim, demand, lawsuit or action resulting from any
(v)
material breach, or the business or operation of the Station, as applicable, as described in Section
9.2(c)(i)—§

iv).

Notwithstanding the foregoing or anything else in this Agreement to the
(d)
contrary, Buyer shall have no liability to Seller until Seller’s aggregate Damages exceed the
Basket, after which the amount of the Basket shall be excluded from any calculation of
~
Damages.
‘

e

9.3

-

‘

‘

IndemnifiCationProcedures for Third Party Claims.

The indemnified party shall give prompt written notice to the
,(a)
indemnifying party of any demand, suit, claim or assertion of liability by third parties that is
subject to indemnification hereunder (a “Claim”), but a failure to give such notice or delaying
such notice shall not affect the indemnified party’s rights or the indemnifying party’s obligations
except to. the extent the indemnifying party’s ability to remedy, contest, defend or settle with
respect to such Claim is thereby prejudiced and provided that such notice is given within the time
period described in Section 9.1 (Survival).
The indemnifying party shall have the right to undertake the defense or
(b)
opposition to such Claim with counsel selected by it. In the event that the indemnifying party
does not undertake such defense or opposition in a timely manner, the indemnified party may
undertake the defense, opposition, compromise or settlement of such Claim with counsel selected
by it and the indemnifying party shall be required to pay for reasonable attorneys’ fees and costs
_

15

_

4833-7934-5741.v8

 Execution Version

incurred by the indemnified party (subject to the right of the indemnifying party to assume
of or opposition to such Claim at any time prior to settlement, compromise or final
determination thereof).
defense

Anything in this Agreement to the contrary notwithstanding:

(0)

the indemnified party shall have the right, at its own cost and
(i)
expense, to participate in the defense, opposition, compromise or settlement of the Claim;
the indemnifying party shall not, without the indemnified party’s
(ii)
written consent, settle or compromise any Claim or consent to entry of any judgment that does
not include the giving by the claimant to the indemnified party a release from all liability in
respect of such Claim subject to the limitations herein; and

(iii) in the event that the indemnifying party undertakes defense of or
opposition to any Claim, the indemnified party, by counsel or other representative of its own
choosing and at its sole cost and expense,‘shalhhave.the right to c‘ons‘gltwjth the indemnifying
party and its counsel concerning such Claim and the indemnifying party and the indemnified
party and their respective counsel shall cooperate in good faith with respect to such Claim.
In determining the amount of any Damages hereunder, the amount shall
of any insurance proceeds and other third party
recoveries actually received by Seller or Buyer or any of its affiliates in respect thereof (which
proceeds and recoveries Seller or Buyer agrees to use, or to cause any such affiliate to use,
diligent efforts to obtain) and the amount of any tax benefit related thereto. If an
indemnification payment is received by Seller or Buyer, and Seller or Buyer or any of their
affiliates later receives insurance proceeds, other third party recoveries, or tax benefits in
respect of the related Damages, Seller or Buyer shall promptly pay to the other a sum equal to
the lesser of (y) the actual amount of insurance proceeds, other third party recoveries, and tax
benefits or (z) the actual amount of the indemnification payment previously paid by the other
with respect to such Damages. Seller and Buyer shall use, and shall cause its affiliates to use,
commercially reasonable efforts to mitigate the amount of Damages for which it may be
entitled to indemnification hereunder.
(d)

be determined after deducting the amount

’

i

Remedies Exclusive.

9.4

'

The remedies prOVid'ed in this Article 9 and in Article 10 shall be the
exclusive remedies of the parties hereto in connection with the transactions contemplated by
this Agreement, including without limitationany breach or'non-performance of any
representation, warranty, covenant, obligation or agreement contained herein. No party (and
no affiliate" of any party) may commence any suit, action or proceeding against any other party
hereto with respect to the subject matter of this Agreement, whether in contract, tort or
otherwise, except to enforce such party’s express rights pursuant to this Article 9 or Article 10.
The provisions of Articles 9 and m were specifically bargained for and reflected in the
amounts payable to Seller in connection with the transactions contemplated hereby.
(a)

Without limiting the foregoing and notwithstanding anything that may
(b)
be expressed or implied in this Agreement, Seller and Buyer each agree and acknowledge that
_

16

_

4833-7934-5741.v8

 Execution Version

their only recourse hereunder is against the other. Without limiting the generality of the
foregoing sentence, Seller and Buyer each agree and acknowledge that (a) no recourse shall be
had against any past, current or future affiliate, shareholder, director, officer, employee, agent,
trustee, board or other governing entity, or attorney of the other (collectively, the “Excluded
Persons”), with respect to the subject matter of this Agreement, and (b) neither it nor any of its
affiliates shall commence any suit, action or proceeding against any Excluded Person with
respect to the subject matter of this Agreement, whether in contract, tort or otherwise.
9.5
Tax Treatment of Indemnity Payments. It is the intention of the parties to
treat any indemnity payment made under this Agreement as an adjustment to the purchase price
for all purposes, and the parties agree to file their tax returns accordingly.

ARTICLE

10:

TERMINATION; SPECIFIC PERFORMANCE; LIMITATION OF LIABILITY

10.1
Termination. Subject to Section 9.] (Survival), this Agreement may be
terminated prior to Closing as follows:
--—--:n=r:;r_

(a)

_.

by mutual written consent of Buyer and Seller;

by written notice of Buyer to Seller if Seller breaches its representations
(b)
or warranties or defaults in the performance of its obligations or covenants set forth in this
Agreement and such breach or default is material in the context of the transactions
contemplated hereby and is not cured within the Cure Period (as defined in Section 10.2);
by written notice of Seller to Buyer if Buyer breaches its representations
(c)
or warranties or defaults in the performance of its obligations or covenants set forth in this
Agreement and such breach or default is material in the context of the transactions
contemplated hereby and is not cured within the Cure Period; provided, however, that the Cure
Period shall not apply to Buyer’s obligations to make the Deposit on the date hereof and to
pay the Purchase Price at Closing; or
by written notice of Seller to Buyer or Buyer to Seller, as long as the
(d)
terminating party is not in‘ breach of any of its representations or warranties or in default in the
performance of any of its obligations or covenants set forth in this Agreement, if Closing does
not occur by the date twelve (12) months after the date of this Agreement.
'

Cure Period. Each party shall give the other party prompt written notice
The term
Period” as used herein means a period commencing on the date Buyer or Seller receives from theother written notice of breach or default hereunder and continuing until the earlier of (i) twenty
(20)-calendar days thereafter or (ii) the Closing Date; provided, however, that if the breach or
default is non-monetary and cannot reasonably be cured within such period but can be cured
before the Closing Date, and diligent efforts to cure promptly commence, then the Cure Period
shall continue as long as such diligent efforts to cure continue, but not beyond the Closing Date.
10.2

upon learning

of any breach or default by the other party under this Agreement.

“M

if

10.3
Specific Performance. Notwithstanding Section 9.4; a), in the event of
failure or threatened failure by either party to comply with the terms of this Agreement, the other
party shall be entitled to an injunction restraining such failure or threatened failure and, subject
to obtaining any necessary FCC consent, to enforce this Agreement by a decree of specific
'

- 17 4833-7934-5741.v8

 Execution Version

performance requiring compliance with this Agreement. If a party brings an action to enforce
specific performance under this Agreement, the other party shall waive the defense that there is
an adequate remedy at law and waive any requirement to post a bond or other security.

If

Seller terminates this Agreement pursuant
Liguidated Damages.
10.4
to Section 10.1(c), then Seller shall be entitled to the Deposit and such payment shall constitute
liquidated damages and the sole remedy of Seller for a breach by Buyer of this Agreement. The
parties acknowledge and agree that payment of such amount shall constitute payment of
liquidated damages and is not a penalty and that the liquidated damages amount is reasonable in
light of the substantial but indeterminate harm anticipated to be caused by material breach or
default under this Agreement, the difficulty of proof of loss and damages, the inconvenience and
non—feasibility of otherwise obtaining an adequate remedy, and the value of the transactions to be
consummated hereunder. In addition, if Buyer contests Seller’s right to the Deposit, then the
prevailing party in any action by Seller to enforce its right to the Deposit shall be entitled to
payment by the other party of the reasonable attorneys’ fees incurred by the prevailing party in
such action.

Limitation of L1ab1l1ty Notwithstanding anything 1n this Agreement to the
contrary, neither party shall have any liability to the other under any circumstances for special,
indirect, consequential, punitive or exemplary damages or similar damages of any kind,
including any damages calculated using a “multiplier” or any other similar method, whether or
10.5

not foreseeable, occasioned by any failure to perform or the breach or default of any
representation, covenant, warranty or other obligation under this Agreement, whether based in
negligence or otherwise.
Special Termination Right of Buyer. Subject to Section 9.1 (Survival), in
10. 6
addition to the termination rights set forth 1n Section 10.1 (Termination), Buyer may terminate
this Agreement prior to Closing as set forth 1n this Section 10. 6:

4

Buyer may terminate this Agreement by written notice to Seller if
(a)
LocusPoint Networks LLC (“LPN”) or any party affiliated with LPN files with the FCC any
petition or opposition to the FCC Application or to Seller 5 or Buyer’s qualifications to hold a
broadcast license, and as a result of such filing, either (i) FCC Consent 1s delayed more than
six (6) months after the date on which the FCC Application 18 filed and it is not then
reasonably foreseeable that FCC Consent will be obtained within sixty (60) days thereafter or
eight.(8) months after the date on which the FCC
(ii) FCC, Consent lS delayed more than
i
Application is filed.
'

Buyer may terminate this Agreement by written notice to Seller if LPN
or any party affiliated with LPN initiates any legal or equitable action to oppose, obstruct or
delay the sale of the Station Assets by Seller or purchase of the Station Assets by Buyer and i
thereby obtains an order from a court of competent jurisdiction that IS legally binding on one
or both parties to this Agreement that (i) by its terms prevents the Closing; (ii) by its terms
imposes conditions on the Closing that either Buyer or Seller are not willing or able to satisfy
within ten (10) days afier the date on which all other closing conditions set forth in Articles 6
and 1 have been met or waived; or (iii) otherwise delays the Closing for more than eight (8)
months after the date on which the FCC Application is filed.
'

(b)

—

l8

-

'
4833-7934-5741.v8

 Execution Version

Buyer may terminate this Agreement by written notice to Seller if
(0)
Buyer is for any reason made a party to any legal or equitable action by LPN or Seller arising
out of the dispute between LPN and Seller that is the subject of the litigation described in
Schedule 2.10.
In the event that Buyer forebears from exercising its rights to terminate
(d)
under Section 10.6(c), and Buyer deems it necessary or advisable to incur legal costs and
other related expenses in connection with responding to or defending against any claims or
assertions relating to Buyer, then the Purchase Price shall be reduced by such costs and
expenses reasonably incurred by Buyer prior to Closing; provided, that Buyer shall notify
Seller of such expenses as they are incurred (i.e, within ten (10) days of receiving each
invoice). Notwithstanding the immediately foregoing sentence, at any time after such
expenses incurred by Buyer exceed Seventy-Five Thousand Dollars ($75,000.00) in the
aggregate, Seller shall have the right to reimburse such expenses to Buyer and terminate this
Agreement without further liability to Buyer by giving Buyer ten (10) days’ notice of its intent
to do so; unless Buyer gives notice to Seller within such 10—day notice period that it agrees to
pay such expenses in excess of $75,000 going forward.

ARTICLE

I 1:

MISCELLANEOUS

11.1
Expenses. Each party shall be solely responsible for all costs and expenses
incurred by it in connection with the negotiation, preparation and performance of and compliance
with the terms of this Agreement. Transfer or sales or use taxes, fees and charges applicable to
the transfer of the Station Assets under this Agreement, if any, shall be paid one-half by Buyer
and one-half by Seller. Each party is respbnsible for any commission, brokerage fee, advisory
fee or other similar payment that arises as a result of any agreement or action of it or any party *
acting on its behalf in connection with this Agreement or the transactions contemplated hereby.

11.2
Further Assurances. 'Afier Closing, each party shall from time to time, at the
of and without fither cost or expense to the other, execute and deliver such other
instruments of conveyance and assumption and take such other actions as may reasonably be
requested in order to more effectively consummate the transactions contemplated hereby.

request

Assignment. Neither party may assign all or "part of this Agreement without
the prior written consent of the other party hereto. The terms of this Agreement shall bind and
inure to the benefit of the parties’ respective successors and any permitted assigns, and no
assignment shall relieve any party of any obligation or liability under this Agreement.
1

1.3

‘

11.4
Notices. Any notice pursuant to this Agreement shall be in writing and shall
be deemed delivered on the date of personal delivery or confirmed facsimile transmission or
'

confirmed delivery by a nationally recognized overnight courier service, and shall be addressed
as follows (or to such other address as any party may request by written notice):

To Seller:

San Mateo Community College
3401 CSM Drive
San Mateo, California 94402

District

Attn: Executive Vice Chancellor

_

19

_

4833-7934-5741.v8

-

 Execution Version

with copies to:

Kathy Blackwood
San Mateo County Community College District
3401 CSM Drive
San Mateo, California 94402

and

Pillsbury Winthrop
1200 — 17th St. SW
Washington, DC 20036
Attn: John Hane

To Buyer:

Rural California Broadcasting Corporation
5850 LabathAvenue
Rohnert Park, CA 94928
Attn: Nancy Dobbs, President and CEO

with copy to:

Gray Miller Persh LLP
mm,_.,,.1.200 New Hampshire Avenue NW, Suite 410
Washington, DC 20036
Attn: Todd D. Gray

11.5
Amendments. No amendment or waiver of compliance with any provision
hereof or consent pursuant to this Agreement shall be effective unless evidenced by an
instrument in writing signed by the party against whom enforcement of such amendment, waiver,
or consent is sought.

Entire Agreement. This Agreement (including the Schedules hereto)
constitutes the entire agreement and understanding among the parties hereto with respect to the
subject matter hereof, and supersedes all prior agreements and understandings with respect to the
subject matter hereof. No party makes any representation or warranty with respect to the
transactions contemplated by this Agreement except as expressly set forth 1n this Agreement and
each party he1 eby confirms that it has not' relied upon any representations or statements, whether
written or oral, except those representations and warranties set forth in Article 2 and 3 of this
Agreement.
11.6

.

'

11 .7
Severability. If any court or governmental authority holds any provision in
this Agreement invalid, illegal or unenforceable under any applicable law, then, so long as no
party is deprived of the benefits of thls Agreement 1n any material respect, this Agreement shall
be construed with the invalid, illegal or unenforceable provision deleted and the validity, legality
and enforceability of the remaining prOvisiOns contained herein shall not be affected 0r impaired

thereby.

,.

.

-

~

11.8
No Beneficiaries. Nothing in this Agreement expressed or implied is
intended or shall be construed to give any rights to any person or entity other than the parties
hereto and their successors and permitted assigns.

11.9
Governing Law and Venue. The construction and performance of this
Agreement shall be governed by the laws of the State of California without giving effect to the

- 20

_'

4833-7934-5741.v8

 Execution Version

choice of law provisions thereof. Any action to enforce the terms of this Agreement shall be
brought in the courts of the State of California with venue lying in the County of San Mateo.
l 1.10
Construction. The parties hereto have participated jointly in the negotiation
drafting of this Agreement and the other agreements, documents and instruments
contemplated herein, all provisions shall be construed as if drafted jointly by the parties, and no
presumption or burden of proof shall arise favoring or disfavoring any party by virtue of
and

authoring any of the provisions.
1 l .11
Counterparts. This Agreement may be executed in separate counterparts,
each of which will be deemed an original and all of which together will constitute one and the
same agreement.

[SIGNATURE PAGE FOLLOWS]

mm ‘13"""’— -

_

21

_

4833-7934-5741.v8

 SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT

IN WITNESS WHEREOF, the parties have executed this Agreement
date first set forth above.

of the

Rural California Broadcasting
Corporation

San Mateo County Community

College District

as

'

I

'

By:

By:

.

Printed:

Printed:
4

Title:

Title:

4833-7934—5741 .v8

 List of Schedules

1.1(a)

—

FCC Licenses

1.1(b)

—

Tangible Personal Property

1.1(c)

—

Station Contracts

1.2(1)

—

Other Excluded Assets

1.6

—

Repacking Expenses

1.7

—

Additional Consideration

2.10

—

Seller Litigation

4833-7934—5741.v8

 Schedule 1.1(a)

FCC Licenses, Applications, and Authorizations
1.

Television broadcast station license (FCC file no. BLEDT—20091124AHY).

2. License renewal authorization (FCC file no. BREDT—20140721AEJ; expires

12/1/2022).
3.

*Construction permit authorizing minor modification ofBLED-T—20091124AHY
to specify operation on Channel 27 (FCC File No. 0000028093).

4. Television broadcast station auxiliary antenna license (FCC file no.

BXLEDT-

20120621AAB).
5.

Earth Station license E040364 (FCC file no. SES-REG—20040909-01357; expires
9/9/2019).

6.

FCC Form 399, Incentive Auction Relocation Reimbursement (file number
0000028092), filed July 11, 2017, and pending with the FCC.

x1fie A...

*Pursuant to the FCC’s process of “repacking” television broadcast stations, Seller has
been assigned to Transition Phase 8, and is required to complete construction and testing
of Station’s authorized Channel 27 facilities on or before January 18, 2020. The Station
must discontinue operations on its pre-auction channel on or before March 13, 2020
(together, the “Repacking Deadlines”). See FCC Public Notice “Incentive Auction
Closing and Channel Reassignment Public Notice”, DA 17-314 (released April 13, 2017).
NOTWITHSTANDING ANYTHING IN THE AGREEMENT OR THE SCHEDULES
THERETO TO THE CONTRARY, SELLER MAKES NO REPRESENTATION OR
WARRANTY REGARDING THE FEASIBILITY OR ABILITY OF SELLER OR
BUYER TO MEET THE FCC’ S REPACKING DEADLINES.

..

ii ..
4833-7934-5741.v8

 Schedule 1.1(b)

Tangible Personal Property
Property subject to Liens identified with a diamond ( 0).

Mt. Sutro Transmitter Site Equipment

TRANSMITTER EQUIPMENT
TRANSMITTER
LOCAL NAME

MODEL

MANUFACTURER

STATUS

DTV ANTENNA
SYSTEM

ACTIVE

43 WAVEGUIDE

COMBINER

ACTIVE

DIELECTRIC

HARRIS DTV TV

XMTR

HARRIS

ACTIVE

DHD9OP4

MISCELLANEOUS
SUTRO SITE

MISCELLANEOUS

EQUIPMENT

Other Tangible Personal Property

MASTER CONTROL EQUIPMENT
MCR LOCAL NAME

MODEL

MANUFACTURER

STATUS

DAB407AES PATCH BAY

4MKII

ADC

‘

>

Active

PP12226RS-

SDI/HD PATCH BAY

ADC

SVJT-BK

Active

AJA-l FRAME SYNC

AJ A VIDEO
SYSTEMS

FS-l

Active

SYSTEMS

FS-l

Active

AUTOMATION

AVID

Titan

KVM #1

AVOCENT

AMX 5130

Active

KVM #1ot

AVOCENT

AMX 5130

Active

KVM #2

AVOCENT

AMX 5130

Active

KVM #3

AVOCENT

AMX 5130

Active

KVM #4

AVOCENT

AMX 5130

Active

KVM #5

AVOCENT

AMX 5130

Active

KVM #6

AVOCENT

AMX 5130

Active

KVM #7

AVOCENT

AMX 5130

Active

KVM #8

AVOCENT

AMX 5130

Active

AJA VIDEO
AJA-2 FRAME SYNC
SUNDANCE

.

.

Active

-iii4833—7934—5741 .v8

 KVM #9

AVOCENT

AMx 5130

Active

KVM BASE STATION

AVOCENT

AMx 50I 0

Active

HD9625LGA-

EVERTz HD KEYER

EVERTZ

Active

EAS Plus BP

9625LGA Plus

EVERTz KEYER #I

EVERTz

EAS

Active

EVERTz KEYER #2

EVERTz

9625LGA

Active

9625LGA Plus

EVERTz KEYER #3

EVERTz

EVERTz KEYER #4

EVERTz

EAS

Active

MONITOR WALL
ENGINE - MC

EVERTz

MVP

Active

DPSI
SYNCRONIZERII'BC

LEITCH

DPS 575

Active

SYNCRONIZERrTBC

LEITCH

DPS 575

Active

MASSLOGGER

MASSTECH

ML—350—015

out of
service

Active

EAS

9625LGA Plus

DPS2

20 RACKS AND

MIDDLE
ATLANTIC /

30m

WIRING

BELDEN

MEDIAPORT 4CH1

OMNEON

MIP-5322

Active

MEDIAPORT 4CH

OMNEON

MIP-5322

Active

MULTIPORT I

OMNEON

PR-MIP-5501‘“ 'Acti‘ve‘

MULTIPORT 2

OMNEON

PR-MIP-SSOI

Active

OMNEON CONTROL
SERVER

OMNEON

NCM 2003

Active

PROBROWSE PROXY
GEN 1

OMNEON

MPB-1002-G

inactive

PROBROWSE PROXY
GEN 2

OMNEON

MPB-lOQZ-G

inactive

2

Active

‘

inactive

PROBROWSE SERVER

OMNEON

DVC PRO VCR 4

PANASONIC

AJ-SD93O

Active

DVC PRO VCR

PANASONIC

AJ-‘SD930

Active

8

,

DVC PRO VCR

PANASONIC

‘DVC PRO VCR

PANASONIC

DVC PRO VCR

PANASONIC

.

‘

MPB-100lHC

inactive

SD255
'

‘

-

SD255

inactive

SD255

inactive

‘

XD CAM VCR

SONY

PDWHD1500

Active

HD CAM VCR

SONY

HDW-1800

Active

DIGIBETA VCR

SONY

DVW-M2006

Active

MULIT MONITOR
(MANY)

WOHLER/MARSH

ALL

Active

RACK MT

PANASONIC

Active

_

iv _
4833-7934-5741 .v8

 MONITORS(3)
19" MONITORS
(MANY)

SAMSUNG

DEKOCAST C

PINNACLE

DEKOCAST

Active

PIONEER

PRV-LX]

inactive

SENCORE

MRD 3187A

Active

SENCORE ATLAS IRD

SENCORE

MRD 3187A

Active

SENCORE ATLAS IRD

SENCORE

MRD 3187A

Active

IRD A

THOMSON

RX8200

Active

IRD B

THOMSON

RX8200

Active

IRD C

THOMSON

RX8200

Active

1RD D

THOMSON

RX8200

Active

IRD E

THOMSON

RX8200

Active

IRD F

THOMSOqmm.

RX8200

Active

SYNCRONIZER

SNELL & WILCOX

TBS 18OAV

Active

DIGI BETA

SONY

DVWMZOOO

Active

QC2 MONITOR

SONY

BVM-DZOF U

Active

QC3 MONITOR

SONY

BVM-D20F1 U

inactive

DVD RECORDER
SENCORE ATLAS IRD

Active

'

1

.

M2/MUXMX5
MULTIPLEXER (2)

TANDBERG

620

Active

TANDBERG

TT1260/D1RB
AS

Active

TANDBERG

TT1 260/D1RB
AS

Active

TT1260/DIRB
AS

Active

..

SD ASI RECEIVER #1

SD ASI RECEIVER #2

,

SD ASI RECEIVER #3

TANDBERG

M2/ENC/ES71

_

O/ATSC

Active

M2/ENC/E571
0/ATSC

ActiVe

TANDBERG

M2/ENC/ES71
O/ATSC

Active

TANDBERG

M2/ENC/E571
O/ATSC

THOMSON

Jupiter

inactive

TANDBERG

SD ENCODER #1
.

‘
‘

TANDBERG

SD ENCODER #2

.

SD ENCODER #3

v.

_

.
_

SD ENCODER #4

I

.

.
V

Active

JUPITER CONTROL
.

SYSTEM
ROUTER CNTRL

i

PANELS(4)

THOMSON

Van'ous

Active

51-]

THOMSON

SI—3000C

Active

SI-2

THOMSON

SI-3000C

Active

Trinix
TRINIX ROUTER

THOMSON

DV33128

Active

VENUS ROUTER

THOMSON

Venus

Active

_

V

.-

4833-7934-5741.v8

 VM-I

THOMSON

VM-3000C

Active

QCI AUDIO

WOHLER

AMPl-DA

Active

QC2 AUDIO

WOI-ILER

AMPI -DA

Active

WAVEFORM
MONITOR

TEKTRONIX

7120

Active

WAVEFORM
RASTERIZER

TEKTRONIX

7020

Active

PRODUCTION
LOCAL NAME

MANUFACTURER

MODEL

STATUS

BATTERY BELT #1

ANTON BAUER

30/13

ACTIVE

BATTERY BELT #2

ANTON BAUER

30/ 13

ACTIVE

DIONIC 90 #3

ANTON BAUER

Dionic 90

out of
service

DIONIC 90 #4

ANTON BAUER

Dionic%“wm

out of
service

DIONIC

#5

ANTON BAUER

Dionic 90

out of
service

DIONIC 90 #6

ANTON BAUER

Dionic 90

out of
service

QUAD 2702
POWERCHARGER

ANTON BAUER

Quad 2702

out of
service

K5600

K0200/400JBN
DOUB+3

ACTIVE

FIELD MIXER

SHURE

FP32A

ACTIVE

FIELD MIXER

SHURE

M67

VE

FIELD MONITOR

SONY

PVM-8041VQ

ACTIVE

Aspect ratio converter

Picolink

XDCAMHD
CAMCORDER

SONY

9O

..

JOKER NEWS COMBO

_

KIT

INACTI

Active
.

FIELD CAMERA
ZOOM CONTROL

,PDWF-335L

ACTIVE

I

'
I

CANON

ACTIVE

ZSG-200M

XDCAM WIDE ANGLE

KIIIOEX3.6B

LENS

CANON,

IRSE

_

.

ACTIVE

.

‘

KH21EX5.7

XDCAM ZOOM LENS

CANON

‘

TRIPOD SYSTEM

ACTIVE

IRSE SX12

'Vision

Vinten

10

'

'

ACTIVE

'

TRIPOD SYSTEM
(matte box)

O'CONNOR

50

ACTIVE

MATTE BOX

VOCAS

MB-325

ACTIVE

Lavalier Microphone

Sony

ECM- 66

Active

Sony

ECM- 66

Active

SONY

PDW-UI

Active

Lavalier Microphone

XDCAM HD DISC
DRIVE

'-

- vi 4833-7934-5741.v8

  

 

XDCAM HD DISC
DRIVE

 

SONY

 



 

Active

 

 

-vii -

*era'h?l?rlm? 

4833-7934-5741 .v8

Schedule 1.1(c)

Station Contracts
9

Transmitter site lease between Sutro Tower, Inc. and San Mateo. County Community
College District dated January 16, 2003, as amended May 22, 2014, extended term
through February 28, 2020 (“Sutro Lease”).

9

Repacking services agreement, Sutro Tower, Inc. and San Mateo County Community
College District dated July 31, 2017, term concurrent with Sutro Lease.

O

-m~:g;;a.-.w.

Designates Station Contract requiring

third party consent.
7'

_

-

viii 4833-7934-5741.v8

*rw“~l~mfi;t

r.

 Schedule 1.2(1)

Other Excluded Assets
The Rejected Personal Property.

-- Mm: “yr-FEW.

“=-

_

ix ..
4833-7934-5741 .V8

 Schedule 1.6

Unreimbursed Repacking Expenses

None.

4833-7934-5741 .v8

Schedule 1.7

Additional Consideration
1.

Television and Radio Announcements. Beginning on the date of Closing and
ending on the date five (5) years thereafter, Buyer shall make available to Seller, at no
cost to Seller, on—air underwriting announcement spots of up to thirty (30) seconds in
length on KRCB TV 22 and on KRCB FM RADIO 91. Each month Buyer shall
produce one (1) announcement for Seller, based on copy provided by Seller, to
describe to the Buyer's broadcast area (including but not limited to the San Francisco
North Bay Region), its activities and initiatives for the benefit of Seller's alumni,
prospective students and parents (the "Messages"). In the alternative, Seller may
provide pre-produced announcement to Buyer in a manner and format reasonably
acceptable to Buyer. Seller shall be responsible for scheduling the Messages with
Buyer on a monthly use—it—or—lose—it basis, and for providing the copy or pre—
produced announcements to Buyer at least fourteen (14) days prior to Seller's first
desired broadcast date. Buyer will schedule five (5) monthly spot placements on
KRCB TV 22 and ten (10) monthly spot placements on KRCB FM RADIO 91.
Buyer shall run all Messages between the hours of 6 am and midnight local time on a
run—of-schedule basis with approximately equal distribution across dayparts. Should
Seller not elect to utilize any Messages by the end of any month, such unused
Messages shall be forfeited and may not be carried forward to future months (and any
order that is not timely placed by Seller shall be deemed used). Buyer will provide to
Seller each month a written summary of when (date and time) the Messages aired on
KRCB TV 22 and on KRCB FM RADIO 91 in the previous month, provided that
Seller informs Buyer to whom and where this "proof-of—performance" documentation
should be sent. The Messages shall conform to the regulations and policies
applicable to noncommercial educational broadcasting, including public TV and radio
industry standards, and Buyer shall have the right to preempt or reject any Message(s)
and otherwise maintain control over the programming of the stations in order to
comply With applicable laws (including without limitation FCC rules and regulations)
and Buyer’s standards and practices, which Buyer shall apply to the Messages on a
uniform and non—discriminatory basis as compared to all other underwriting
announcements broadcast by each respective station}. Buyer shall make-good any
preempted or rejected Messages subject to Seller timely providing make--good copy
or pre- produced announcements. Notwithstanding anything 1n the Agreement or in
this Schedule 1.7, seller has no obligation make use of the

Messages.‘

'

Student Internships. At the beginning of the first semester (of Seller’s student
campuses) following the date of Closing, or another date mutually agreed upon by the
parties, until three (3) years thereafter, pursuant to an appropriate internship site
agreement between Seller and Buyer with provisions that are customary for
community college student internships (but excluding any payments from Seller to
Buyer), Buyer shall work with Seller to provide training, in the form of educational
internships, at Buyer's studio and office location for up to six of Seller's students per
_

xi _
4833-7934-5741.V8

 year (three (3) students per semester) working in Buyer's marketing, development,
production, telecommunications, and social media departments. The objective of the
training and educational internship program is to provide Seller's students with
applicable working experiences that allow the Seller's students to learn and gain
onsite training from Buyer's staff. Buyer and Seller agree to cooperate during the
three (3) year period in designing and implementing the actual educational internship
program. Buyer and Seller will mutually agree on the number of hours the students
will work on a weekly basis and the number of weeks per year that the training and
educational internship will be offered. Transportation to and from Buyer's studio and
office location is the responsibility of the individual students and/or the Seller's
educational program. Each year Buyer and Seller will review and evaluate the
established educational internship program to consider whether operational and
content modifications are necessary and appropriate. The educational internships
training shall be unpaid, unless the nature and scope of the responsibilities performed
is appropriate for paid services, as determined by Buyer in its reasonable good—faith
discretion, in which case Buyer shall make paymentfor such services. In the first
year of the student training pur—sfivant'to this Agreement, Buyer and Seller will make
reasonable efforts to establish and be operational with the training and educational
internship program on or before six (6) weeks prior to the commencement of the first
semester. Notwithstanding anything in the Agreement or in this Schedule 1.7, Seller
shall have no obligation to make use of the student internships.

Carriage of KCSM(FM) video channel via TV Digital Broadcast. Beginning at
the Closing, and for five (5) years thereafter, Buyer will maintain carriage of the
KCSM(FM) video channel as broadcast on the Station as of the Effective Date (the
“ CSMgFM) Stream”). Carriage of the KCSM(FM) Stream shall in all cases be
consistent with FCC requirements for noncommercial educational stations and

.

Sections 73.503 and 73.621

.

of the FCC rules. Buyer’s retransmission of the

KCSM(FM) Stream will include the slide show featuring the Jazz Datebook,
community events and Jazz Trivia substantially as they are carried as of the Effective
Date, provided that Seller continues to produce and fumish such features to Buyer.
Seller shall be responsible for providing the KCSM(FM) Stream to~Buyer via a
technological solution in an AS] encoded format that the Buyer, in its reasonable
discretion, deems appropriate for integration into the Station’s multi-channel digital
stream. Seller shall be solely responsible for the costs of production and encoding of
the KCSM(FM) Stream, for the costs of providing the KCSM(FM) Stream to Buyer,
and for the content of the KCSM(FM) Stream, and shall obtain and maintain
commercially reasonable'media perils insurance for Buyer's broadcast of the
KCSM(FM) Stream with such insurance including Buyer as an additional named
insured. Buyer, at its sole discretion, shall have the exclusive right to preempt or
reject any specific programming of the KCSM(FM) Stream if Buyer, in its reasonable
judgment, concludes that such programming does not serve the public interest, or that
alternate programming or alternative program scheduling, would better address local
needs. As between the parties, all right, title and interest in and to the KCSM(FM)
Stream, and the right to authorize the use of the KCSM(FM) Stream in any manner
and in any media whatsoever, shall be and remain vested at all times solely in Seller.

—

xii 4833-7934-5741.v8

 Seller shall secure, at its sole cost and expense, any rights licenses that might be
necessary for the transmission of the KCSM(FM) Stream over the Station.
Notwithstanding anything in the Agreement or in this Schedule 1.7, Seller shall have
no obligation to continue providing the KCSM(FM) Stream to Buyer and Seller does
not grant any rights to Buyer with respect to the KCSM(FM) Stream.
.

Local Programs. Each month during the five (5) year period immediately following
Closing, Buyer will broadcast on its primary (.1 or equivalent) channel up to thirty

“M

(30) minutes per month of Seller-produced video programming (each, a
Program”) in a timeslot of Buyer’s choice in pre-prime or on weekends. Seller will
give notice of its intent to provide a Local Program and its total run time at least two
(2) months in advance of the calendar month in which it intends to provide such
Local Program (e.g., Seller will give notice no later than September 30 with respect to
Local Program to air in December). Each Local Program must be delivered to Buyer
no later than one (1) month in advance of the calendar month in which Seller wishes
the Local Program to air. Local Programs must adhere to FCC requirements for non—
commercial stations, comply with Buyer’s reasonabler‘tEChnical standardsr'afid‘flbe
delivered by Seller to Buyer in a mutually agreeable manner. Buyer, at its sole
discretion, shall have the right to preempt or reject any Local Program provided by
Seller if Buyer, in its reasonable judgment, concludes that such Local Program does
not serve the public interest, or that alternate programming would better address local
needs. Notwithstanding anything in the Agreement or in this Schedule 1.7, Seller
shall have no obligation to provide any Local Program or to make use of the rights
granted to Buyer herein.

-

xiii -

'
4833-7934-5741.v8

 Schedule 2.10

Seller Litigation

--wsm-_:fi=?:

..

_

Seller has sued LocusPoint Networks, LLC, LocusPoint II KCSM, LLC and
PricewaterhouseCoopers Advisory Services LLC, and LocusPoint Networks, LLC and
LocusPoint II KCSM, LLC have sued Seller, in Superior Court of the State of California,
County of San Mateo, in each case raising claims arising out of a series of agreements
between LocusPoint Networks, LLC and Seller regarding a potential sale of Station in the
F CC’s broadcast incentive auction. See San Mateo County Community College District,
et al vs. LocusPoint Networks, LLC, ET. AL, l7-ClV-01534; LocusPointetworks, LLC,
et al vs. San Mateo County Community College District, l7-CIV-01550. LocusPoint
Networks, LLC has asserted to Seller that it believes those same agreements give
LocusPoint Networks, LLC the right to block the sale of Station at this time. Seller
disputes LocusPoint Networks, LLC’s assertions for a number of reasons, including
without limitation that LocusPoint Networks, LLC materially breached the agreements
such that the provisions LocusPoint Networks, LLC has stated it relies upon for'its
assertions no longer bind Seller, and because any security interest LocusPoint Networks,
LLC may hold is limited to the proceeds of the sale of certain assets used in the operation
of the Station and does not extend to the assets themselves.

-

xiv 4833-7934-5741.v8

 Mix, Mx‘M Q‘VERM

Escmw SERWCM

22 Battery Street, Suite 914, San Francisco, CA. 94111
Telephone: 415.735.3645 * Facsimile: 415.358.5732

This Escrow Company holds California Department of Business Oversight Escrow License No. 9635091

Escrow No. 100895

ESCROW INSTRUCTION AND AGREEMENT
This Escrow Instruction and Agreement (”Instruction”) dated September_, 2017, shall not be binding
on McGovern Escrow Services, Inc. (”Escrow Agent”) until acknowledged and executed by all persons
identified as principals herein.
This Agreement is entered into by and between SAN MATEO COUNTY COMMUNITY COLLEGE DISTRICT,
a Caiifo‘r'ni’a'Community College District (”Seller”), RURAL CALIFORNIA BROADCASTING CORPORATION, a
California non—profit and nonstock corporation (”Buyer"), and the Escrow Agent. Seller and Buyer are
sometimes referred to collectively as the ”Parties, and each individually is a ”Party”.

_,

WHEREAS, Seller and Buyer have entered into an Asset Purchase Agreement dated September
2017 the (”Agreement”).

WHEREAS, under the terms ofthe Agreement the Seller desires to sell and assign to Buyer, and
Buyer wishes to buy and take assignment of, certain assets of Seller and the FCC Licenses ofthat certain
noncommercial educational television station known as KSCM-TV (the ”Station”), under terms and
conditions set forth in the Agreement.
WHEREAS, under the terms of the Agreement Buyer shall ’make'a cash deposit, in immediately
available funds, in the amount of Nine Hundred Sixty Thousand and No/lOOUS ($960,000.00).

NOW, THEREFORE, the Parties desire to establish an escrow account in which $960,000.00 (the
”Escrow Funds” )will be deposited hereto by Buyer.

Deposit of Funds
On or before September
the Escrow Funds.

1.

'

,

2017 (the ”Closing Date"), Buyer shall cause to be deposited hereto

The Escrow Funds are to be deposited in-the form of
Escrow Services, Inc., Escrow No. 100895.
a.

a

wire transfer payable to McGovern

Upon receipt of the Escrow Funds that have been deemed collected, the Escrow Agent is
instructed to invest the Escrow Funds in one or more federally insured, interest bearing
account. All interest accrued on the Escrow Funds shall be credited to Rural California
Broadcasting Corporation for taxation purposes and reported as such.

4833-8757-9471 .v6

 Escrow No. 100895

b.

Concurrent with the execution ofthis Escrow Agreement, Buyer shall deliver to escrow:
i.
A copy of the Certificate of Incorporation as filed with the California Secretary of
State, and a Resolution designating signing authority for the corporation.
ii.
Customer Identification form from the officers and/or any other signing
authority of Buyer as required for bank interest bearing account purposes.
iii.
IRS form W—9, Request for Taxpayer Identification Number and Certification
from Rural California Broadcasting Corporation.

Disbursement of Funds

prior to the Closing as defined in the Agreement, or three
prior to any other disbursement of Escrow Funds, Seller and Buyer shall submit
to escrow mutual written instruction as to:
a. Any and all prorations and adjustments to be made between the Parties, and
b. The disbursement of the Escrow Funds to Seller and the accrued interest to Buyer, or
c. Any other disbursement of the Escrow Funds as contemplated in the Agreement.
On or before three (3) business days

(3) business days

Obligation-M.
to Disburse
Notwithstanding any provision to the contrary herein (or in the General Provisions attached),
Escrow Agent shall effect the delivery and disbursement of the Escrow Property as set out in
Section 2. within three (3) business days of receipt of the required authorization and instruction
_from the Parties.

.

Duties of Escrow Agent
Escrow Agent will not be liable for actions or omissions hereunder, except for its own gross
negligence, bad faith or willful misconduct and, except with respect to claims based upon such
gross negligence, bad faith or willful misconduct, such actions or omissions as are successfully
asserted against Escrow Agent. Buyer and Seller shall jointly and severally indemnify and hold
harmless Escrow Agent (and any successor Escrow Agent) from and against any and all losses,
liabilities, claims, actions, damages and expenses, including reasonable attorney’s fees and
disbursements, arising out of and in connection with this Agreement. Without limiting the
foregoing, Escrow Agent will in no event be liable with respect to any action taken or omitted to
be taken by it in good faith in accordance with any written notice of Buyer delivered to Escrow
'Agent in accordance with this Agreement. Each of Buyer and Seller hereby releases, waives,
discharges and covenants not to sue the Escrow Agent for any action taken or omitted to be
taken under this Agreement except to the extent caused by Escrow Agent’ 5 gross negligence,
bad faith or willful misconduct.
.

Termination of Escrow
a. The date of termination is upon the distribution of the Escrow Property pursuant to this
Agreement, provided, however,‘In the event any funds remain in the account on the first
(1“) anniversary of the date ofthese escrow instructions and Agreement, these escrow
instructions and Agreement shall be renewed on an annual basis until all such funds are
disbursed subject to the terms of Section 5.(b) below.

4833-8757-9471.v6

 Escrow No. 100895

b.

6.

Should Escrow Agent at any time and for any reason desire to be relieved of its obligations
as escrow holder hereunder, the Escrow Agent shall give written notice of its desire to be
relieved to the Parties. The Parties shall, within (30) days of the receipt of such notice,
appoint a successor escrow agent and instruct Escrow Agent to deliver the Escrow Funds
hereunder to the successor escrow agent. If Escrow Agent is not notified of the
appointment of a successor escrow agent within sixty (60) days of its transmission of notice
under this Section, Escrow Agent shall hold the Escrow Funds until: (i) it receives the
authorization and instruction described in Section 2; (ii) it receives a court order instructing
it to disburse the Escrow Funds; or (iii) it files a suit in interpleader and deposits Escrow
Funds with the court.

Independent Review
The Parties have made their own determination as to whether the language in this Instruction
memorialize their own respective Agreement, are not usurious, and/or come under any
consumer protection laws. McGovern Escrow Services, Inc. makes no representations or
warranties with respect to the terms and conditions of the Agreement. The Parties further
represent and warrant that each.l."«a.s.»recei\..led sufficient information, either through said party’s
own legal counsel or other sources of said party’s own selection, so as to be able to make an
intelligent and informed judgment whether to enter into the Agreement, along with this Escrow
Instruction and Agreement. Each undersigned party further state that each has read the
document(s) in their entirety prior to executing each such document, and that each has
executed the documents voluntarily, with competence and capacity to contract and with the
knowledge of the terms significance and legal effect of each such document.
The Asset Purchase Agreement
This Escrow Instruction is executed for the purpose of enabling the Escrow Agent to complete
this transaction, but is in no way intended to modify, amend, supersede or in any way change
the Asset Purchase Agreement, dated September_, 2017 and entered into prior to this Escrow
Instruction and Agreement. Escrow Agent is not a party to and is not to be concerned with said
Agreement or any matters contained therein, and is responsible only for such matters as are
specifically set out in these instructions.

Invalidity Provision
Should any provision of this Agreement be found invalid, such invalidity shall not in any way
affect the remaining provision ofthis Agreement;
.

9.

Assignment
This Parties hereto shall not assign any of its rights or delegate any ofthis duties under this
Agreement without prior written‘ consent of the other party and any unauthorized assignment

or delegation shall be void and of no effect.

4833-8757-9471.v6

 Escrow No'. 100895

Escrow No. 100895

10. Notices

All notices, requests, consents and other communications hereunder to any party pursuant to
this Note will be deemed to be sufficient if contained in a written instrument delivered
personally or mailed by certified or registered mail postage prepaid or sent electronically by
confirmed email transmission, addressed as set forth below, or to such other address as may
hereinafter be designated in writing by the recipient to the sender pursuant to this Section 10.
Any such notice shall be effective (i) when personally delivered, (ii) one (1) business day after it
has been deposited with a nationally-recognized overnight courier, duly addressed and postage
prepaid, (iii) two (2) business days after it has been deposited in the United States mail, duly
addressed and postage prepaid, or (iv) on the business day of confirmed transmission by
facsimile or email. Any party may change such party's address for notice by written notice to
the other parties pursuant to the provisions of this Section 10.
To Seller:
San Mateo

To Buyer:

Community College Dist???

Rural Caifitfi’rIWB'roadcasting Corporation

3401 CSM Drive

5850 Labath Avenue

San Mateo, CA 94402

Rohnert Park, CA 94928

Attn: Executive Vice Chancellor

Attn: Nancy Dobbs, President and

Email: blackwoodk@smccd.edu

Email: nancy_dobbs@’krcb.org

CEO

To McGovern Escrow Services, Inc:
Ms. Elizabeth McGovern

McGovern Escrow Services, Inc.
22 Battery Street, Suite 914

_,

San Francisco, Ca 94111

Email: elizabeth@mcgovernescrow.com
11. Compensation

for the payment of escrow fees and charges shall be exclusively paid by Buyer and Seller
described'In the attached Escrow Fee schedule (”Exhibit A”).

Funds
as

12. Amendment

-

of Escrow

This Agreement may not be amended except in writing, executed by the Parties and the Escrow
Agent. ’This Agreement may be executed in counterparts, each'ofwhich‘ so executed shall be

deemed an original, irrespective of the date of executionand delivery, and the counterparts
shall constitute one and the same document.

4833-8757-9471.v6

’

 Escrow No. 100895

13. Governing Law and Assignment

This Agreement shall be construed in accordance with and governed by the laws of the State of

California and shall be binding upon the parties hereto and their respective successors, heirs,
personal representatives and permitted assigns; provided, however, that any assignment or
transfer by any party of its rights under this Agreement or with respect to the Escrow Funds
shall be void as against the Escrow Agent unless (a) written notice thereof shall be given to the
Escrow Agent; and (b) the Escrow Agent shall have consented in writing to such assignment or

transfer.
14. Court Orders

Escrow Agent is hereby authorized, in its exclusive discretion, to obey and comply with all final
and non-appealable writs, orders, judgments or decrees issued by any court or administrative
agency affecting any money, documents or other assets or items held by Escrow Agent. Escrow

Agent shall not be liable to any of the Parties hereto, their successors, heirs or personal
representatives by reason of Escrow Agent’s complianCe with such writs, ordensgyggments or.
decrees.
15. USA Patriot Act Notice

The Escrow Agent notifies the Parties hereto that pursuant to the requirements ofthe USA

Patriot Act (Title ll of Pub. L. 107-56, signed into law October 26, 2001) (the ”Act”), the Escrow
Agent is required to obtain, verify and record information that identifies the Parties to this
Instruction and Agreement, which information includes the name and address of the Parties and
other information that will allow Escrow Agent to identify them in accordance with the Act.

4833-8757-9471.v6

 Escrow No. 100895

EXHIBIT A
Escrow Fee Agreement

for complying with the Escrow Instruction and Agreement dated September_, 2017,
Pacific Retirement Services, Inc. agrees to pay all applicable fees to McGovern Escrow Services, Inc., as
In consideration

detailed below:
$3,000.00
25.00
30.00
150.00
350.00

Escrow Set-Up and Documentation Fee
(Due upon execution and delivery of the Escrow Instruction and Agreement)
Check disbursement fee per instrument

Wire transfer fee per event
Account reconciliation reports, as requested
Annual Maintenance Fee
~

Agreed and authorized by:
SELLER:

San Mateo County Community College District,

A California Community College District

-

BUYER:

Rural California Broadcasting Corporation
California non—profit and nonstock

a

corporation
.

Signature:

Signature:

Date:

Date:

Signature:

Signature:

Date:

Date:

4833—8757-9471.v6

‘vflu‘utH-u

 Escrow No. 100895

EXHIBIT B
In accordance

with this Escrow Instruction and Agreement dated September

,

2017, the names of the

persons who are authorized to give written instructions on behalf of each of the Parties hereof, and

exemplars of their respective signatures are as follows:

SELLER:

San

Mateo County Community College District,

A California Community College District

BUYER:

Rural California Broadcasting Corporation
California non-profit and nonstock

a

corporation

Signature

Signature

Printed Name

Printed Name

Title

Title

Signature

Signature

Printed Name

Printed. Name

Title

Title

'Number of signatures required:

Number of signatures required:

‘

4833-8757-9471.v6

 Escrow No. 100895

GENERAL PROVISIONS

-

DEPOSITS. All funds received in escrow shall be deposited with other escrow funds in a non-interest bearing
general escrow account or accounts of McGovern Escrow Services, unless otherwise instructed in writing.
OTHER AGREEMENTS. Unless otherwise specifically provided herein in writing, Escrow Agent is not to be
required to read, understand, interpret, or be concerned in any manner whatsoever with any conditional
sales contract, purchase agreement, lease contract, security agreement, or other agreement, written or
oral, of any kind whatsoever, and is not responsible for the delivery of any papers other than described
herein. Escrow Agent is not a party to, or bound by any agreement which may be deposited under,
evidenced by, or which may arise out of these instructions.
AGENCY RESPONSIBILITIES. Escrow Agent is to make no examination of the property being transferred
herein or of the condition of or the title thereto. Escrow Agent acts as a depository only and is not
responsible or liable in any manner whatever for sufficiency, correctness, genuineness or validity of any
instrument deposited with it hereunder, or with respect to the form or execution of the same, or the
identity, authority, or right of any person executing or depositing the same.
DEFAULTS. Escrow Agent shall not be required to take or be bound by notice of any default of any person,
or take any artio.n_..i.nti.t.h..r.espect to such default involving any expense or liability, unless notice in writing is
given to the Escrow Agent at the address set forth above, of such default by the undersigned or any of
them, and unless Escrow Agent is indemnified in a manner satisfactory to it against any and all expense and
liability.
NOTICES. Escrow Agent shall be protected acting upon any notice, request, waiver, consent, receipt or
other paper or document reasonably believed by Escrow Agent to be signed by the property party or
‘
parties.
JUDGMENT. Escrow Agent shall not be liable for any error ofjudgment or for any act done or step taken or
omitted by it in good faith or for any mistake or fact of law, or for anything which it may do or refrain from
doing in connection herewith, except its own gross negligence or willful misconduct, and Escrow Agent shall
have no duties to anyone except those signing these instructions.
COUNSEL. Escrow Agent may advise with legal counsel of its choice in the event of any dispute or question
as to the construction of these instructions, or Escrow Agent's duties hereunder and Escrow Agent shall
incur no liability and shall be fully protected in acting in accordance with the opinion and instructions of its
counsel. Further, the parties hereto shall reimburse Escrow Agent for the costs, expenses and attorney's
fees incurred by Escrow Agent for such advice and counsel. Escrow Agent is hereby authorized to deduct
Seller and Buyer portion of such costs, expenses and attorneys fees from any funds held in escrow.
DISAGREEMENTS. In the event of any disagreement between the undersigned or any of them, and/or the
persons named in these instructions, and/or any other person, resulting in adverse claims andrdemands
being made in connection with or for any papers, money or property involved herein or affected hereby,
Escrow Agent shall be entitled at its option to refuse to comply with any such claim or demand, as long as
such disagreements shall continue, and in so doing Escrow Agent shall not be or become liable for damages
or interest to the undersigned or any of them Or to any person for its failure Cir resal to comply with such
conflicting or adverse demands, and Escrow Agent shall be entitled to continue to refrain and refuse to act

.until:

,.

.

.
,

,

_

.,

,

rights of the adverse claimant had been finally adjudicated in a court assuming and having
jurisdiction of the parties and the money,'papers and property involved herein or affected hereby
'
and/or
2. All differences shall have been adjusted by agreement and Escrow Agent shall have been notified
thereof in writing signed by all of the persons interested.
b.
Notwithstanding the foregoing, however, in the event of any such disagreement, Escrow Agent in its
sole discretion may (a) file a suit in interpleader for the purpose of having the respective rights of the
claimants adjudicated, and then deposit with the court all documents and property held hereunder, and
the Parties agree to pay all costs and expenses incurred by Escrow Agent in such action, including
attorneys fees, and such costs and expenses shall be included in the judgment in any such action or
a.

1. The

4833-8757-9471.v6

 Escrow No. 100895

10.

11.
12.

13.

14.

15.

16.

(b) submit the matter to the American Arbitration Association, who will name a single arbitrator to
conduct an arbitration in San Francisco, California to determine the respective rights of claimants in
accordance with the Commercial Arbitration Rules of the American Arbitration Association. All costs and
expenses, including attorney’s fees incurred with respect to the arbitration by Escrow Agent shall be paid
by the Parties in equal proportions. The arbitration award shall be final and without appeal. A judgment
upon the award may be entered in any court having jurisdiction of the parties.
INDEMNITY. In consideration of acceptance of this appointment by Escrow Agent, the Parties agree to
defend, indemnify and hold Escrow Agent harmless as to any liability incurred by Escrow Agent to any
person, firm or corporation by reason of its having accepted same or in carrying out any of the terms hereof,
and to reimburse Escrow Agent for all its expenses, including among other things, counsel fees and court
costs incurred by reason of its position or actions taken pursuant to these Escrow Instructions. Subject to
Section 4 of the Agreement, the Principals hereby agree that the Escrow Agent shall not be liable to any of
them for any action taken by Escrow Agent pursuant to and authorized by the terms hereof.
COURT ORDERS. Escrow Agent is hereby authorized in its exclusive discretion, to obey and comply with all
writs, orders, judgments or decrees issued by any court or administrative agency affecting any money,
documents or other securities or writings held by Escrow Agent. Escrow Agent shall not be liable to any of
the parties hereto, their successors, heirs or personal representatives, by reason of Escrow Agent's
compliance with s‘Uch writs, orders, juo‘gnetfsrc‘fi decrees. Notwithstanding such writ, order, judgment or
decree IS later reversed, modified, set aside or vacated.
USURY. Escrow Agent is not to be concerned with any question or usury in the processing of this escrow
and Escrow Agent is hereby released of any responsibility or liability therefore.
AMENDMENTS TO ESCROW INSTRUCTIONS. These instructions shall not be subject to rescission or
modification except by receipt by Escrow Agentat the address above of written instructions signed by all of
the parties hereto or their successors in interest and no such modification shall be effective unless and until
consented to in writing by Escrow Agent.
SIGNATURES. These instructions may be executed in counterparts, each of which so executed shall be
deemed as an original, irrespective of the date of its execution and delivery; and such counterparts together
with shall constitute one and the same instrument.
COMPLETE AGREEMENT. These instructions constitute the complete agreement between the Parties and
Escrow Agent, with respect to the subject matters referred to in theseinstructions. These instructions
supersede all prior contemporaneous negotiations, promises, covenants, agreementsand representations
of every nature whatsoever with respect to the subject matters referred to in these instructions, all of which
have become merged and finally integrated into these instructions. Each of the parties understands that in
the event of any subsequent litigation, controversy or dispute concerning any of the terms, conditions or
provisions of these instructions, no party shall be permitted to offer or to introduce any oral evidence
concerning any oral promises, agreements, representations or statements relating to the subject matters of
these instructions not set forth herein'In writing.
SEVERABILITY. In case any provision in these instructions shall be invalid, illegal or unenforceable, such
provision shall be several from the remained ofthese instructions, and the valIdIty, legality or enforceability
of the remaining provisions shall not in anyway be affected or impaired thereby.
APPLICABLE LAW. These instructions and the rights and obligations of the parties thereto shall be governed
by the laws of the State of California.

4833-8757-9471.v6

 Escrow No. 100895

17. SURVIVAL OF REPRESENTATION. All representations and warranties set forth herein shall survive the
closing of escrow.
18. BINDING OF SUCCESSORS. The parties intend that these instructions will be binding upon and for the
benefit of the parties hereto and their respective successors and assigns.

The Parties each hereby state that they have read the foregoing Escrow Instruction and Agreement,
understand and agree to it, and acknowledge receipt of a copy of it.
IN WITNESS WHEREOF,

the Parties have caused this Agreement to be executed

as

of this

day of

September, 2017.

SELLER:

_

BUYER:
___

.

‘

San Mateo County Community College District
A California Community College District

Rural California'Broadcasting Corporation
a Ca non—profit and nonstock corporation

Signature:

Signature:

Date:

Date:

McGovern Escrow Services, Inc.

a

California corporation

By:

Elizabeth McGovern, President

10
4833-8757-9471.v6

 EXHIBIT 

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2017 08 14 Special Meeting Agenda
2017-08439 Agenda

'
7

4th Au ust, 2017
6327 PM

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[:1

 EXHIBIT 

REVISED AGENDA
SAN MATEO COUNTY COMMUNITY COLLEGE DISTRICT
SPECIAL MEETING OF THE BOARD OF TRUSTEES
September 20, 2017, 5:00 p.m.
District Office Board Room, 3401 CSM Drive, San Mateo, CA 94402
Other Locations: Av. Atlantica, 1500, Rio de Janeiro - RJ, 22021—000, Brazil
and 150 Post Street, Suite 442, San Francisco, CA 94108

i

NOTICE ABOUT PUBLIC PARTICIPATION AT BOARD MEETINGS
The Board welcomes public discussion.
0
The public ’s comments on agenda items will be taken at the time the item is discussed by the Board.
0
To comment on items not on the agenda, a member of the public may address the Board under “Statements
from the Public on Non—Agenda Items;” at this time, there can be discussion on any matter related to the
Colleges or the District, except for personnel items and potential or existing litigation. No more than 20
minutes will be allocated for this section of the agenda. No Board response will be made nor is Board action
permitted on matters presented under this agenda topic.
I
a member of the public wishes to present a proposal to be included on a future Board agenda,
arrangements should be made through the Chancellor’s Oflice at least seven days in advance of the meeting.
These‘Ttmtters will be heard angle rake-agenda item “Presentations to the Board by Persons or Delegations. ”
A member of the public may also write to the Board regarding District business; letters can be addressed to
3401 CSM Drive, San Mateo, CA 94402.
0
Persons with disabilities who require auxiliary aids or services will be provided such aids with a three day
notice. For further information, contact the Executive Assistant to the Board at (650) 358-6 753.
- Regular Board meetings are tape recorded; tapes are kept for one month.
Government Code §5495 7.5 states that public records relating to any item on the open session agenda for a
regular board meeting should be made available for public inspection. Those records that are distributed less
than 72 hours prior to the meeting are available for public inspection at the same time they are distributed to the
members of the Board. The Board has designated the Chancellor’s Oflice at 3401 CSM Drive for the purpose of
making those public records available for later inspection; members of the public should call 65 0-35 8-6 753 to
arrange a time for such inspection.

If

_

6:00 p.m.

Call to Order/Roll Call
Pledge of Allegiance

CONSIDERATION OF ITEM TABLED AT THE MEETING OF SEPTEMBER 13, 2017
'

17—9—104B
'

‘

ADJOURNMENT

Ratification of the Purchase Agreement for the Sale of’KCSM—TV and Ancillary
Agreements

'
-

 EXHIBIT I

Execution Version

ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this “Agreement”), effective as of
2017 (the “Effective Date”), is entered into between SAN MATEO COUNTY
COMMUNITY COLLEGE DISTRICT, a California Community College District (“Seller”),
and RURAL CALIFORNIA BROADCASTING CORPORATION, a California non-profit
and nonstock corporation (“Buyer”).
September

_,

Recitals

A.
Seller is the licensee of and operates noncommercial educational television
Station KCSM—TV, San Mateo, California (the “Station”), pursuant to a license issued by
the Federal Communications Commission (the “FCC”).
B.
Seller desires to sell and assign to Buyer, and Buyer wishes to buy and
take assignment of, certain assets of Seller and the FCC Licenses as set forth herein on
the terms and subject to the conditions hereinafterwset forth, subject .mmcqadQLapproval
of the FCC.
In consideration of the foregoing and the mutual promises contained herein, Buyer and
Seller, intending to be legally bound, hereby agree as follows:

Agreement

ARTICLE

1:

PURCHASE OF ASSETS

1.]
Station Assets. On the terms and subject to the conditions hereof, at Closing
defined
Section
in
(as
1.8), Seller shall sell, assign, transfer, convey and deliver to Buyer, and
Buyer shall purchase and acquire from Seller, all right, title and interest of Seller in and to the
assets owned and held by Seller and described in this Section 1.1 (collectively, the “Station
Assets”). The Station Assets consist of:

all transferable FCC licenses,'permit's and other authorizations with
(a)
respect to the Station (the “FCC Licenses”), which are listed on Schedule 1.1(a), including any
renewals or modifications thereof between the date hereof and Closing;

-

the equipment, transmitters, and other tangible personal property that
(b)
are used or held for use in the operation of the Station and listed on Schedule 1.] (2)), except for
(i) any retirements or dispositions thereof made between the date hereof and Closing in the
ordinary course of business in accordance with Section 4.1(01 hereof and (ii) the Rejected
Personal Property (as defined in Section 2.6) (the “Tangible Personal Property”);

the contracts, agreements and leases that are used in the operation of the
(c)
Station and listed on Schedule 1.1(c), and all other such contracts, agreements and leases
entered into between the date hereof and Closing subject to the limitations set forth in Section
(the “Station Contracts”); and

flfl

all files, documents and records exclusively relating to the Station
(d)
Assets or required by the FCC to be kept by the Station, including the Station’s local public
4833-7934-5741.v8

 Execution Version

files, engineering data and logs, Form 399 filed with the FCC specifying estimated expenses
related to Repacking (as defined in Section 1.6) and all Attachments thereto, together with all
quotations, studies and correspondence relating to the KCSM repack plan, but excluding
records included in or related to Excluded Assets (as defined in Section 1.2).
The Station Assets shall be transferred to Buyer free and clear of liens, claims and
encumbrances (“LE”): except for Assumed Obligations (defined in Section 1.3), liens that will
be released at or prior to Closing, liens listed on Schedule 1.1(c) hereto, and such other liens,
claims, restrictions, and other exceptions that do not in any material respect detract from the
value of the property subject thereto or impair the use thereof in the ordinary course of the
business of the Station (collectively, “Permitted Liens”).
1.2
Excluded Assets. Notwithstanding anything to the contrary contained in this
Agreement and for the purposes of clarity, the Parties agree that the Station Assets shall not
include the following assets or any rights, title and interest therein (the “Excluded Assets”):

all cash and cash equivalents, including withofi’erlimitation certifiCatesm
(a)
deposit, commercial paper, treasury bills, marketable securities, money market accounts and
all such similar accounts or investments;
all tangible and intangible personal property retired or disposed
(b)
between the date of this Agreement and Closing in accordance with Article 4;

of

all Seller business records, including, without limitation, financial
(c)
records, charter documents, and books and records relating to the organization and existence
of Seller, duplicate copies of the records of the Station, and all records not relating to the
operation of the Station;
all contracts of insurance, all coverages and proceeds thereunder and all
(d)
rights in connection therewith, including without limitation rights arising from any refunds
due with respect to insurance premium payments to the extent related to such insurance
policies;
all pension, profit sharing plans ‘and trusts and the assets thereof and any]
(e)
other employee benefit plan or arrangement and the assets thereof, if any;
all receivables (if any) and any other rights to’receipt'of cash that accrue
(t)
or have accrued prior to the Effective Time (as defined in Section 1.6) or otherwise arising
during or attributable to any period prior to the Effective Time (the -“Receivables”);
'

all rights and claims, whether mature, contingent or otherwise, against
(g)
third parties with respect to the Station and the Station Assets, to the extent arising during or
attributable to any period prior to the Effective Time (as defined in Section 1.6);
all deposits and prepaid expenses (and rights arising therefrom or
(h)
related thereto), except to the extent Seller receives a credit therefor under Section 1.6
(Prorations and Adjustments);

4833-7934-5741.v8

 'Execution Version

all rights and claims, whether mature, contingent or otherwise, primarily
related to the Retained Obligations (as defined in Section 1.3);

(i)

all assets used or held for use in the operation of any other radio or
(i)
television station (other than the Station) owned or operated by Seller or an affiliate of Seller,
or shared between any such station and the Station, except for the items specifically set forth
on Schedule

1.](b);

all intellectual property associated with the Station, including
(k)
trademarks, trade names, service marks, internet domain names and websites, copyrights,
slogans, or logos, including without limitation all intellectual property using or related to the
call signs “KCSM” or “KCSM-TV”, or any variation thereof, together with Seller’s
programming information and studies, marketing and demographic data, viewership studies
and correspondence; and

(l)

the items listed in Schedule 1.2(1) hereto.

1.3
Assumption of Obligations. On the Closing Date (as defined in Section
1.8), Buyer shall assume the (i) obligations of Seller arising during, or attributable to, any period
of time on or after the Closing Date under the Station Contracts, (ii) all obligations and liabilities
arising out of Buyer’s ownership of the Station Assets, and (iii) any other liabilities of Seller to
the extent Buyer receives a credit therefor under Section 1.6 (Prorations and Adjustments)
(collectively, the “Assumed Obligations”). Except for the Assumed Obligations, Buyer does not
assume, and will not be deemed by the execution and delivery of this Agreement or the

consummation of the transactions contemplated hereby to have assumed, any other liabilities or
obligations of Seller (the “Retained Obligations”).
1.4
Purchase Price. In consideration for the sale of the Station Assets to Buyer,
at Closing Buyer shall pay Seller, by wire transfer of immediately available funds, the sum of
Twelve Million Dollars ($12,000,000.00) (including the Deposit (as defined in Section 1.5),
subject to any adjustment pursuant to Section 1.6 (Prorations and Adjustments) (the “Purchase

M”)-

1.5
Deposit. On the date of this Agreement, Buyer shall make a cash deposit in
immediately available fimds in an amount equal to Nine Hundred and Sixty Thousand Dollars
($960,000.00) (the “Deposit”) with McGovern Escrow Services, Inc. (the “Escrow Agent”)
pursuant to the Escrow Agreement (the “Escrow Agreement”) of even date hereWith‘among
Buyer, Seller and the Escrow Agent. At Closing, the Deposit shall be disbursed to Seller and
applied to the Purchase Price and any interest accrued thereon shall be disbursed to Buyer.‘ If ‘
this Agreement is terminated by Seller pursuant to. Section 10.110), the Deposit and any interest
accrued thereon shall be disbursed to Seller pursuant to Section 10.4 (Liquidated Damages). If
this Agreement is terminated pursuant any other provision, the Deposit and any interest accrued
thereon shall be disbursed to Buyer. The parties shall each cooperate to instruct the Escrow
Agent to disburse the Deposit and all interest thereon to the party entitled thereto and shall not,
by any act or omission, delay or prevent any such disbursement unless contested by a party in
good faith in writing within five (5) business days of a disbursement request, in which event the
Deposit shall remain with the Escrow Agent until the parties’ dispute is resolved. Any failure by
Buyer to make the Deposit on the date hereof constitutes a material default as to which the Cure
_

3

_

4833-7934-5741.v8

 Execution Version

Period under Section 10.2 (Cure Period) shall not apply and shall entitle Seller to immediately
terminate this Agreement.

Prorations and Adjustments. All prepaid and deferred income and expenses
relating to the Station Assets and arising from the operation of the Station shall be prorated
between Buyer and Seller in accordance with generally accepted accounting principles
(“GAAP”) as of 12:01 am. on the day of Closing (the “Effective Time”). Such prorations shall
include without limitation all taxes (except transfer taxes as provided by Section 11.1
(Expenses), music and other license fees, FCC regulatory fees, utility expenses, rent and other
amounts under Station Contracts, and similar prepaid and deferred items. Seller shall receive a
credit for all of the Station’s deposits and prepaid expenses to the extent they inure to Buyer’s
benefit. Except as set forth in Schedule 1.6, Buyer will reimburse Seller for any expenses related
to the Station’s involuntary channel reassignment in connection with reorganization of the
television broadcast band pursuant to Section 6403(b) of the Middle Class Tax Relief and Job
Creation Act of 2012 (“Repacking”) incurred by Seller but not reimbursed to Seller from the
United States Treasury’s Repacking reimbursement fund as of the Effective Time, subject to
Seller’s remittancewtowBuyer of any subsequent reimbursements received by Seller. To the extent
possible, initial prorations and adjustments shall be made on the Closing Date, with final
prorations and adjustments made no later than ninety (90) calendar days after Closing.
1.6

“mun

__

Additional Consideration. In further consideration for the sale of the Station
Assets to Buyer, in addition to the Purchase Price, Buyer shall provide to Seller the additional
consideration as set forth in Schedule 1. 7.
1.7

1.8
Closing. The consummation of the 'sale and purchase of the Station Assets
provided for in this Agreement (the “Closing”) shall take place on or before the tenth (10th)
business day after the date on which the FCC Consent (as defined in Section 1.9) becomes a
Final Order (as defined in Section 7.3) or on such other day after such FCC Consent as Buyer
and Seller may mutually agree, subject to the satisfaction or waiver of the conditions set forth
in Article 6 and Article 7. The date on which the Closing is to occur is referred to herein as the
“Closing Date.”
1.9
FCC Consent. Within ten (10) business days after the date of this
Agreement, Buyer and Seller shall file an application with the FCC (the “FCC Application”)requesting FCC consent to the assignment of the FCC Licenses to Buyer. FCC consent to the
FCC Application without any material adverse conditions other than those of general
applicability is referred to herein as the “FCC Consent”. Buyer and Seller shall diligently
prosecute the FCC Application and otherwise use their commercially reasonable efforts to obtain
the FCC Consent as soon as possible. Buyer and'Seller shall notify each other of all documents
filed with or received from any governmental agency with respect to this Agreement or the
transactions contemplated hereby. Buyer and Seller shall fumish each other with such
information and assistance as the other may reasonably request in connection with their
preparation of any governmental filing hereunder. Except as otherwise provided herein, each
party will be solely responsible for the expenses incurred by it in the preparation, filing, and
prosecution of its respective portion of the FCC Application. Neither Buyer nor Seller shall take
any intentional action that would, or intentionally fail to take such action the failure of which to
take would, reasonably be expected to have the effect of materially delaying the issuance of the
FCC Consent.
.

_

4

_

4833-7934-5741.V8

 Execution Version

1.10
Repacking. Buyer acknowledges that it has reviewed Seller’s plans,
including equipment specifications, related to Repacking (as defined in Section 1.6). Seller
agrees to give Buyer advance notice (which may be by email) of any material changes to the
equipment specifications and vendors and to consider Buyer’s recommendations regarding
Repacking equipment specifications. For clarity, Seller has no obligation to Buyer with respect
to Repacking, including without limitation any obligation to accept Buyer’s recommendations
regarding equipment specifications, except as expressly set forth in this Agreement.

ARTICLE 2: SELLER REPRESENTATIONS AND WARRANTIES
Seller makes the following representations and warranties to Buyer:
2.1
Organization. Seller is a California Community College District duly
organized, validly existing and in good standing under the laws of the State of California. Seller
has all requisite power and authority (i) to own, lease and use its assets as presently owned,
leased and used, (ii) for the conduct the business and operations of Seller as presently conducted,
(iii) to execute'and deliver this Agreementywand (iv) to perform and comply with all of the terms,
covenants, and conditions to be performed and complied with by Seller hereunder.

2.2
Authorization. The execution, delivery and performance of this Agreement
by Seller have been duly authorized and approved by all necessary action of Seller and do not
require any further authorization or consent of Seller. This Agreement is a legal, valid and
binding agreement of Seller enforceable in accordance with its terms, except in each case as such
enforceability may be limited by bankruptcy, moratorium, insolvency, reorganization or other
similar laws affecting or limiting the enforcement of creditors’ rights generally and except as
such enforceability is subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
2.3
No Conflicts. Except for the FCC Consent and consents to assign certain of
the Station Contracts, and except as otherwise as set forth -on Schedule 2.10, the execution,
delivery and performance by Seller of this Agreement and the consummation by Seller of the
transactions contemplated hereby do not conflict with any organizational documents of Seller or
any other material contract to which Seller isund, or any law, judgment, order, or decree to
which Seller is subject, or require the consent or approval of, or a filingby Seller with, any
’

governmental or regulatory authority.

.

2.4
FCC Licenses. Seller is the holder of the FCC Licensesdescribed on
Schedule 1.1(a), which are all of the governmental licenses, permits and authorizations required
for the present operation of the Station.‘ The FCC Licenses are. in full force and effect and have
not been revoked, suspended, canceled, rescinded or terminated and have not expired. Except
with respect to Repacking as set forth in Schedule 1.1 (a), there is no pending, or, to Seller’s
knowledge threatened, action by or before the FCC to revoke, suspend, cancel, rescind or
materially adversely modify any of the FCC Licenses (other than proceedings to amend FCC
rules and regulations of general applicability). There is not issued or outstanding, by or before
the FCC, any Order to show-cause, notice of violation, notice of apparent liability, or order of
forfeiture against the Station or against Seller with respect to the Station that could result in any
such action. The Station is operating in compliance in all material respects with the FCC
Licenses, the Communications Act of 1934, as amended (the “Communications Act”), and the
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4833-7934-5741.v8

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rules, regulations and policies of the FCC, other than such non—compliance as would not have a
material adverse effect on Buyer, the Station Assets or the transactions contemplated by this
Agreement. All material reports and filings required to be filed with the FCC by Seller with
respect to the Station have been timely filed and all such reports and filings are accurate and
complete, other than as would not have a material adverse effect on Buyer, the Station Assets or
the transactions contemplated by this Agreement.
2.5
Taxes. Seller is not subject to taxation other than with respect to
employment and sales and use taxes. It has timely filed all required tax returns in the manner
prescribed by law, and all such tax returns are true, correct and complete in all material respects.
Seller has properly accrued or paid to the extent such taxes have become due all taxes due from
Seller. Seller has properly withheld all taxes as required. There are no liens for taxes upon the
Station Assets. There is no dispute or claim concerning any tax liability relating to Seller either
claimed or raised by any taxing authority. There are no pending tax audits or proposed tax audits
of which Seller has notice.

2.6
Personal Property. Schedulccltatld‘yeeontains a list of all material items of
Tangible Personal Property included in the Station Assets. Except as described in Schedule
1,1(b), Seller has good title to or a valid leasehold or license interest in such Tangible Personal
Property free and clear of Liens other than Permitted Liens. Subject the foregoing, each item of
Tangible Personal Property is sold “as is” as of the Effective Date. Buyer shall give notice to
Seller within forty (40) days after the date on which the FCC Application is filed of any items
listed on Schedule 1.1(b) (other than the Sutro Equipment) it does not wish to acquire at closing,
and Schedule 1.1 (b) shall be deemed amended to exclude such items (such excluded items, the
“Rejected Personal Property”), and Buyer shall thereafter have no rights with respect to the"
'
"
Rejected Personal Property.

,

.

2.7
Contracts. Schedule 1.1(c) contains a list of all contracts that are included in
the Station Contracts. The' Station Contracts requiring the consent of a third partyto assignment
are identified on Schedule 1.1(c). Each of the Station Contracts is in effect and is binding upon
Seller and the other parties thereto (subject to bankruptcy, insolvency, reorganization or other
similar laws relating to or affecting the enforcement of creditors’ rights generally). Seller has
performed its obligations under each of the Station Contracts in all material respects, and is not
in material default thereunder, and no other party to any of the Station Contracts is in default
thereunder in any material" respect.
2.8
Insurance. All of the Tangible Personal Property is (a) self-insured against
loss or damage up to a limit of $150,000 in accordance with California law and Seller’s
established practice, and such insurance will be maintained in effect ‘by Seller until the CloSing,
and (b) insured with a commercial insurance company for loss or damage in excess of the selfinsurance amount up to $5,000,000.

Compliance with Law. Other than such non-compliance as would not have
a material adverse effect on a reasonable buyer, the Station Assets or the transactions
contemplated by this Agreement, Seller has complied with all laws, rules and regulations,
including without limitation all FCC rules and regulations applicable to the operation of the
Station, and all decrees and orders of any court or governmental authority which are applicable
to the operation of the Station. To Seller’s knowledge, there are no claims or investigations by
2.9

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the government pending or threatened against Seller in respect

of the

Station except those

affecting the industry generally.
2.10
Litigation. Except as set forth on Schedule 2.10, there is no action, suit or
proceeding pending or, to Seller’s knowledge, threatened against Seller in respect to the Station
Assets that will or threatens to subject Buyer to liability or which will or threatens to affect
Seller’s ability to perform its obligations under this Agreement. Seller is not operating under or
subject to any order, writ, injunction or decree relating to the Station Assets of any court or
governmental authority which would have a material adverse effect on the condition of the
Station Assets or on the ability of Seller to enter into this Agreement or consummate the
transactions contemplated hereby, other than those of general applicability (e. g., Repacking).
2.11
Disclaimer of Other Express and Implied Representations and Warranties.
Except for the representations and warranties expressly made by Seller in this Article 2, Seller
makes no other representations or warranties, express or implied, whether statutory or by
common law regarding Seller, the business and operation of the Station, or the Station Assets.
'.V=:-."£

swam—z

_

_

2.12
No Other Representations or Warranties. Seller agrees that neither Buyer
nor any of its representatives has made and shall not be deemed to have made, nor has Seller or
any of its representatives relied on, any representation, warranty, covenant or agreement, express
or implied, or any statement or information, with respect to Buyer, its business, or its proposed
acquisition and operation of the Station, other than those representations, warranties, covenants
and agreements explicitly set forth in Article 3. Seller further acknowledges and agrees that (a)
it has made its own investigation into, and based thereon has formed an independentjudgment
concerning the Buyer, its business and the proposed acquisition and operation of the Station, and
(b) Buyer has made available such information about Buyer as Seller has reasonably requested.

ARTICLE 3: BUYER REPRESENTATIONS'AND WARRANTIES
Buyer hereby makes the following representations and warranties to Seller:
Organization. Buyer is duly Organized, validly existing and in good
under
the
standing
laws of the jurisdiction bf its organization, and is, or will be at Closing, . __
qualified to do business in the state of California. .Buyer has the requisite power and authority to
execute, deliver and perform this Agreement and all of the other. agreements and instruments to
be executed and delivered by Buyer pursuant hereto and to consummate the transactions
contemplated hereby.
3.1

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4

'

'

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3.2
Authorization. The execution, delivery and performance of this Agreement
by Buyer has been duly authorized and approved by all necessary action of Buyer and do not
require any further authorization or consent of Buyer. This Agreement is a legal, valid and
binding agreement of Buyer enforceable in accordance with its terms, except in each case as such
enforceability may be limited by bankruptcy, moratorium, insolvency, reorganization or other
similar laws affecting or limiting the enforcement of creditors’ rights generally and except as
such enforceability is subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
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4833-7934-5741.v8

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3.3
No Conflicts. Except for the FCC Consent, the execution, delivery and
performance by Buyer of this Agreement and the consummation by Buyer of any of the
transactions contemplated hereby do not conflict with any organizational documents of Buyer,
any contract or agreement to which Buyer is a party or is by which it is bound, or any law,
judgment, order or decree to which Buyer is subject, or require the consent or approval of, or a
filing by Buyer with, any governmental or regulatory authority or any third party.

3.4
Litigation. There is no action, suit or proceeding pending or, to Buyer’s
knowledge, threatened against Buyer which questions the legality or propriety of the transactions
contemplated by this Agreement or could materially adversely affect the ability of Buyer to
perform its obligations hereunder.

Qualification. Buyer is legally, financially and otherwise qualified to be the
licensee of, acquire, own and operate the Station under the Communications Act and the rules,
regulations and policies of the FCC, including, but not limited to, eligibility to hold a
noncommercial educational license under Section 73.621 of those rules. There are no facts that
would, under existing law and the existing rules, regulations, policies and‘procedures of the—EGG,”disqualify Buyer as an assignee of the FCC Licenses or as the owner and operator of the Station,
or that that would reasonably be expected to delay the FCC’s processing of the FCC Application
because of Buyer’s qualifications. No divestiture, waiver of or exemption from any existing
FCC rule or policy on the part of Buyer is necessary for the FCC Consent to be obtained.
3.5

3.6
Financing. Buyer has on hand or from committed funds financial resources
sufficient to consummate the transactions contemplated by this Agreement and to operate the
Station after the Closing Date. Buyer’s obligations hereunder are not subject to or conditioned
upon it obtaining financing or a financing commitment of any nature.

3.7
No Other Representations or Warranties, Buyer agrees that neither Seller
nor any of its representatives has made and shall not be deemed to have made, 'nor has Buyer or
any of its representatives relied on, any representation, warranty, covenant or agreement, express
or implied, or any statement or information, with respect to Seller, its business, the Station, or the
Station Assets, other than those representations,warranties, covenants and agreements explicitly
Set forth in Article 2. Buyer fiirther acknowledges and agrees that (a) it has made its own
investigation into, and based thereon has formed an independent judgment concerning the
Station and the Station Assets, and (b) Seller has made available such information about the
Station and the Station Assets as Buyer has reasonablyrequested.

ARTICLE 4: SELLER AND BUYER COVENANTS
4.1
Seller’s Covenants. Between the date hereof and Closing, except as
permitted by this Agreement or with the prior written consent of Buyer, which shall not be
unreasonably withheld, delayed or conditioned, Seller shall:

use commercially reasonable efforts to operate the Station in the
(a)
ordinary course of business (for avoidance of doubt, any expense reductions made_ consistent
with Seller’s past practices shall be deemed in the ordinary course of business) and in all
material respects in accordance with FCC rules and regulations and with all other applicable
laws, regulations, rules and orders;
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4833-7934-5741.v8

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except with respect to Repacking as set forth in Schedule 1.1 (a)
(b)
and Section 4.1(h), not modify, and in all material respects maintain in full force and effect,
the FCC Licenses;

except in the ordinary course of business, not sell, lease or dispose of or
(0)
agree to sell, lease or dispose of any of the Station Assets unless replaced with similar items of
substantially equal or greater value and utility, or create, assume or permit to exist any Liens
upon the Station Assets, except for Permitted Liens, and not dissolve, liquidate, merge or
consolidate with any other entity;
use commercially reasonable efforts to maintain the Tangible Personal
(d)
Property in the ordinary course of business;

upon reasonable notice, give Buyer and its representatives reasonable
access during normal business hours to the Station Assets, and furnish Buyer with information
relating to the Station Assets that Buyer may reasonably request, provided that such access
.mmmgights shall not be exercised in a manner that interferes with the operation of the Station; _._._,_,
(e)

not enter into new Station Contracts that will be binding upon Buyer
(t)
after Closing or amend or terminate any existing Station Contracts, except for Station
Contracts made, amended or terminated with Buyer’s prior written consent;
cooperate with Buyer in timely filing such applications and other
(g)
material as may be required to obtain FCC Consent to the assignment of the FCC Licenses to
Buyer, including, but not limited to, providing the FCC with such information as it may m
reasonably request, assisting Buyer in providing such information, where appropriate, and
generally using commercially reasonable efforts to obtain the prompt and timely FCC
Consent; and
take such commercially reasonable steps as are required by the Mt.
(h)
Sutro transmitter site landlord and, in consultation with Buyer as provided by Section 1.10
(Repacking), such other steps as Seller reasonably deems necessary and appropriate, in each
case to enable the Station to meet' the Repacking requirements and schedule established by the
FCC.
'

Buyer’s Covenants. Between the date hereof and Closing, except as
4.2
permitted by this Agreement or with the prior written consent of Seller, which shall not be
unreasonably withheld, delayed or conditioned, Buyer shall:
take no action that would reasonably be expected to impair its
(a)
qualifications to be the licensee of the Station, materially delay obtaining the FCC Consent,
result in its disqualification under the rules of the FCC to be the licensee of the Station, or that
would require it to obtain a waiver of the FCC Rules in order to obtain the FCC Consent;
,

cooperate with Seller in timely filing such applications and other .k
material as may be required to obtain FCC Consent to the assignment of the FCC Licenses to
Buyer, including, but not limited to, providing the FCC with such information as it may
reasonably request, assisting Seller in providing such information, where appropriate, and
(b)

-94833-7934-5741.v8

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 Execution Version

generally using commercially reasonable efforts to obtain the prompt and timely FCC
Consent; and

afterjoining in the filing of the application for FCC Consent, apply
(c)
promptly to the FCC for a change in the Station call sign to take effect upon Closing so as to
avoid confusion with Seller’scontinuing operation of Station KCSM (FM), San Mateo,
California.

ARTICLE

5:

JOINT COVENANTS

Buyer and Seller hereby covenant and agree

as

follows:

5.1
Control. Buyer shall not, directly or indirectly, control, supervise or direct
the operation of the Station prior to Closing. Consistent with the Communications Act and the
FCC rules and regulations, control, supervision and direction of the operation of the Station prior
to Closing shall remain the responsibility of Seller as the holder of the FCC Licenses.

5.2
Risk of Loss. Seller shall bear the risk of any loss of or damage to the
Tangible Personal Property located at the Mt. Sutro transmitter site and necessary for the
operation of the Station as it is operated as of the Effective Date (the “Sutro Equipment”) at all
times until the Closing, and Buyer shall bear the risk of any such loss or damage thereafter. In
the event that any loss of or material damage to the Sutro Equipment occurs after the Effective
Date but prior to Closing, then upon becoming aware of such loss or material damage, Seller
shall use commercially reasonable efforts to promptly notify Buyer in writing, and it shall be the
responsibility of Seller, prior to Closing, to repair or causeto be repaired or replaced, and to
restore, the affected Sutro Equipment substantially to its condition prior to any such loss, damage
or destruction; provided, that in the event that any Sutro Equipment is not repaired, replaced, or
restored prior to Closing, Buyer, at its sole option, upon written notice to Seller: (a) may elect to
postpone the Closing until the earlier of (A) such time as the property hasbeen repaired,
replaced, or restored in all material respects, or (B) up to six (6) months from the date when all
other conditions to Closing herein have been satisfied (other than those conditions that by their
nature are to be satisfied at Closing, but subject togthe satisfaction of those conditions at such
time); or (b) may at any time during such six (6)‘month period elect to consummate the Closing
and accept the property in its then condition, in which event the Purchase Price shall be reduced
by the estimated cost of such repair, replacement or restoration of the Sutro Equipment as
determined by an independent third—party engineer agreeable to both Parties, which engineer
Seller and Buyer shall instruct to base the estimate on the least expensive approach that complies
with good engineering practices, considering the timeframe of Repacking. If Buyer shall extend
the time for Closing’pursuant to clause (a) above, the provisions of Section 10.1(d) shall'be tolled
for such time as Buyer has elected to postpone the Closing pursuant to this Section 5.2 and Seller
is using reasonable best efforts to effect such repair, replacement or restoration, and for five (5)
business days after the property involved has been repaired, replaced or restored in all material

respects.
5.3

Consents.

The parties shall use commercially reasonable efforts to obtain any third
(a)
party consents necessary for the assignment of any Station Contract (which commercially
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4833-7934-5741.v8

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.

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 Execution Version

reasonable efforts shall not require any payment to any such third party), but no such consents
shall be conditions to Closing except for the Required Consents. Receipt of consents designated
with a diamond on Schedule 1.1(c) shall be a condition precedent to Buyer’s obligation to close
under this Agreement (the “Required Consents”).

To the extent that any Station Contract may not be assigned without the
consent of any third party, and such consent is not obtained prior to Closing, this Agreement and
any assignment executed pursuant to this Agreement shall not constitute an assignment of such
Station Contract; provided, however, with respect to each such Station Contract, Seller and
Buyer shall cooperate to the extent feasible in effecting a lawful and commercially reasonable
arrangement under which Buyer shall receive the benefits under the Station Contract from and
after Closing, and to the extent of the benefits received, Buyer shall pay and perform Seller’s
obligations arising under the Station Contract from and after Closing in accordance with its
terms. This subparagraph 5.3(b) shall not apply to the Required Consents.
(b)

5.4
FCC Qualification. Neither Buyer nor any person with an attributable
interest irrBuyer shall file any application to acquire any station or otherwise operate any station
if, as a result, such action would cause Buyer, or any person with an attributable interest in
Buyer, to have an attributable interest in, and/or seek to acquire an attributable interest in, any
station(s) which would involve a greater number of stations than would be permitted, absent an
exemption or waiver, under the Communications Act, or any of the rules, regulations or policies
the FCC, including the FCC’s multiple ownership rules, in effect from time to time, or which
would raise market concentration questions under applicable law.

Actions. After Closing, if reasOnably requested by Seller, Buyer shall
cooperate with Seller in the investigation, defense or prosecution of any action that is pending or
threatened against Seller or its affiliates with respect to the Station, whether or not such action is
subject to a claim for indemnification pursuant to this Agreement; provided, however, that Seller
shall reimburse Buyer for the out—of—pocket costs (including reasonable attorneys’ fees), if any,
reasonably incurred by Buyer to comply with this Section 5.5.
5.5

ARTICLE 6: SELLER CLOSING CONDITIONS
The obligation of Seller to consummate the'Closing hereunderis subject .to satisfaction, at
or prior to Closing, of each of the following conditions (unless waived in writing by Seller):
6.1.

‘

‘

'

Representations and Covenants.~

The representations and» warranties of Buyer made in this Agreement
(a)
shall be true and correct in all material respects as of the Closing Date except for changes
permitted or contemplated by the terms of this Agreement.
'

The covenants and agreements to be complied with and performed by
(b)
Buyer at or prior to Closing shall have been complied with and performed in all material
respects.

Seller shall have received a certificate dated as of the Closing Date from
(0)
Buyer executed by an authorized officer of Buyer to the effect that the conditions set forth
in Sections 6.11a) and (b) have been satisfied.
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4833-7934-5741.v8

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Proceedings. Neither Seller nor Buyer shall be subject to any court or
governmental order or injunction restraining or prohibiting the consummation of the transactions
contemplated hereby.
6.2

FCC Authorization. The FCC Consent shall have been obtained.

6.3

6.4
Deliveries. Buyer shall have complied with its obligations set forth
in Section 8.2 (Buyer Documents).

ARTICLE

7:

BUYER CLOSING CONDITIONS

The obligation of Buyer to consummate the Closing hereunder is subject to satisfaction,
at or prior to Closing, of each of the following conditions (unless waived in writing by Buyer):
Representations and Covenants.

7.1

Thelgpresentations and warrantiesof Seller made in this Agreement
(a)
shall be true and correct in all material respectsfufifilfu’flie Closing Date except for changes
permitted or contemplated by the terms of this Agreement.
The covenants and agreements to be complied with and performed by
(b)
Seller at or prior to Closing shall have been complied with and performed in all material
respects.

Buyer shall have received a certificate dated as of the Closing Date
(c)
from Seller executed by an authorized official of Seller to the effect that the conditions set
forth 1n Sections 7.1121) and (b) have been sat1sf ed
7.2
Proceedings. Neither Sellernor Buyer shall besubject to any court or
governmental order or injunction restraining or prohibiting the consummation of the transactions
contemplated hereby.
7. 3
FCC Authorization. The FCC Consent shall have been obtained and, unless
waived by Buyer, the FCC Consent shall have become a Final Order. For purposes of this
Agreement, the term “Final Order” shall mean that action shall have been taken by the FCC
(including action duly taken by the FCC’s staff, pursuant to delegated authority) which shall not
have been reversed, stayed, enjoined, set aside, annulled or suspended; with respect to which no
timely request for stay, petition for rehearing, appeal or certiorari or sua sponte action of the
FCC with comparable effect shall be pending; and as to which the normal time for filing any
such request, petition, appeal, certiorari or for the taking of any such sua sponte action by the
FCC shall have expired or otherwise terminated.
.

_

.

7.4
Deliveries. Seller shall have complied with its obligations set forth
in Section 8.1 (Seller Documents).

Consents. The Required Consent shall have been obtained, including but
not limited to landlord consents for all studio and transmitter site leases (to the extent such leases
require such consent) being assigned and assumed hereunder.
7.5

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4833-7934-5741.v8

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ARTICLE 8: CLOSING DELIVERIES
Seller Documents. At Closing, Seller shall deliver or cause to be delivered

8.1

to Buyer:

(i)

the certificate described in Section 7.110);

(ii)

an assignment

(iii)

an assignment and assumption

of FCC authorizations assigning the FCC Licenses

from Seller to Buyer;

of contracts assigning the Station

Contracts from Seller to Buyer;

of intangible assets

an assignment and assumption
from
Seller to Buyer;
(if any)

(iv)

Intangible Assets

bill of sale conveyingthe Tangible Personal
Property from Seller
"v“;“mw

(v)

a

(vi)

a copy

to Buyer;

assigning the

of the Required

Consents;

(vii) certified resolutions of Seller’s Board of Trustees approving the
execution, delivery, and performance of this Agreement and the consummation of the
transactions contemplated herein, and the delivery of the closing documents provided for
‘
hereunder; and
.

(viii) any other instruments of conveyance, assignment and transfer that
may be reasonably necessary to convey, transfer and assign the Station Assets from Seller to
Buyer, free and clear of Liens, except for Permitted Liens.
Buyer Documents. At Closing, Buyer shall deliver or cause to be delivered

8.2
to Seller:

Price) and

a

(i)

(Risk of Loss)
‘

_

Contracts;

..
.

(ii)

the certificate described in Section 6.110);

(iii)

an assignment and assumption
’

’

'

'

'

‘

'

“

-

of contracts assuming the Station
'

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~

4

,

(iv)
Intangible Assets

the Purchase Price in accordance with Sections 1.4 (Purchase
and 10.6(d) hereof;

an assignment and assumption

.

of intangible assets assigning the

(if any) from Seller to Buyer;

a good standing certificate issued by the Secretary
(v)
Buyer’s jurisdiction of formation;

of State of

--

(vi)

certified resolutions of Buyer’s Board of Directors approving the
of this Agreement and the consummation of the

execution, delivery, and performance

—

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4833-7934-5741.v8

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transactions contemplated herein, and the delivery
hereunder; and

of the closing documents provided for

(vii) such other documents and instruments of assumption that may be
necessary to assume the Assumed Obligations (as defined in Section 1.3).
ARTICLE 9: SURVIVAL; INDEMNIFICATION
Survival.

9.1

provided by Section 1.5 (Deposit) and Section 10.4
with respect to Liquidated Damages, the termination of this Agreement
shall not relieve any party of liability for any material breach or default under this Agreement
prior to the date of termination. Notwithstanding anything contained herein to the
contrary, Section 1.5 (Deposit) and Section 11.1 (Expenses) shall survive any termination of this
Agreement.
Except

(a)
(Liquidated Damages)

as

<x_.;..-

The representations and warranties in this Agreement, made as of the“
(b)
Closing, shall survive for a period of one (1) year from the Closing Date, whereupon they shall
expire and be of no fiirther force or effect, except (i) those under Section 2.1
(Organization), Section 2.2 (Authorization), Section 2.5 (Taxes), Section 3.1 (Organization)
and Section 3.2 (Authorization) (collectively, the “Fundamental Representations”), all of which
I
shall survive until the expiration of any applicable statute of limitations, and (ii) that if within
such applicable period the indemnified party gives the indemnifying party written notice of a
claim for breach thereof describing in reasonable detail the nature and basis of such claim, then
such claim shall survive until the earlier of resolution of such claim or expiration of the
applicable statute of limitations. The covenants and agreements in this Agreement that are to be
performed after the Closing shall survive until performed and any other covenants and
agreements shall survive for a period of nine‘ (9) months from the Closing Date.

Indemnification.

9.2
'

"

From and‘after Closing, ._Seller shall defend; indemnify and hold
(a)
harmless Buyer and its officers, directors, members and employees from and against and in
respect of, and reimburse them for, any and all losses, costs, damages, liabilities and expenses,
including reasonable attorneys’ fees and expenses (“Damages”) resulting from:

(i)
'made under Article 2

any material breach by Seller

of this Agreement; or

-

-

-

,

of its representations

and warranties
-

»

_

(ii)

any material breach by Seller

of any material obligation under this

(iii)

any material breach by Seller

of the Retained Obligations

Agreement; or
(as

defined in Section 1.3); or
the business or operation of the Station before the Effective Time,
(iv)
except for the Assumed Obligations (as defined in Section 1.3); or

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4833-7934-5741.v8

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any third party claim, demand, lawsuit or action resulting from any
(v)
material breach or deviation, as applicable, as described in Section 9.2(a)(i)—(iv1.

Notwithstanding the foregoing or anything else in the Agreement to the
(b)
contrary, Seller shall have no liability to Buyer until Buyer’s aggregate Damages exceed the sum
of Five Thousand Dollars ($5,000) (“Basket”), after which the amount of the Basket shall be
excluded from any calculation of Damages.
From and after Closing, Buyer shall defend, indemnify and hold
(c)
harmless Seller and its officers, directors, members and employees from and against and in
respect of, and reimburse them for, any and all Damages incurred by Seller in connection any
claim, demand, lawsuit or action arising out of or resulting from:
any material breach by Buyer of its representations and warranties
(i)
made under this Agreement; or
'
__

£4,
Agreement; or

(ii)

any material breach by Buyer

of any material obligation under’this

(iii)

any material breach by Buyer

of the Assumed Obligations (as

defined in Section 1.3); or
the business or operation of the Station after the Effective Time,
(iv)
except for the Retained Obligations; or
any third party claim, demand, lawsuit or action resulting fromhany
(v)
material breach, or the business or operation of the Station, as applicable, as described in Section
9.2(011 i M iv).

Notwithstanding the foregoing or anything else in this Agreement to the
(d)
contrary, Buyer shall have no liability to Seller until Seller’s aggregate Damages exceed the
Basket, after which the amount of the Basket shall be excluded from any calculation of
.,
u
Damages.
'

‘

'

'

9.3

'

»-

*

'

Indemnification Procedures for Third Party Claims.

The indemnified party shall give prompt written notice to the
-(a)
indemnifying party of any demand, suit, claim or assertion of liability by third parties that is
subject to indemnification hereunder (a‘TClaim”),but a failure to give such notice or delaying
such notice shall not affect the indemnified party’s rights or the indemnifying party’s obligations
'
except to the extent the indemnifying party’s ability to remedy, contest, defend or settle with
respect to such Claim is thereby prejudiced and provided that such notice is given within the time
period described in Section 9.1 (Survival).
_

-

The indemnifying party shall have the right to undertake the defense or
(b)
opposition to such Claim with counsel selected by it. In the event that the indemnifying party
does not undertake such defense or opposition in a timely manner, the indemnified party may
undertake the defense, opposition, compromise or settlement of such Claim with counsel selected
by it and the indemnifying party shall be required to pay for reasonable attorneys’ fees and costs
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4833-7934-5741.v8

 Execution Version

incurred by the indemnified party (subject to the right of the indemnifying party to assume
of or opposition to such Claim at any time prior to settlement, compromise or final
determination thereof).

defense

(0)

Anything in this Agreement to the contrary notwithstanding:

the indemnified party shall have the right, at its own cost and
(i)
expense, to participate in the defense, opposition, compromise or settlement of the Claim;

the indemnifying party shall not, without the indemnified party’s
(ii)
written consent, settle or compromise any Claim or consent to entry of any judgment that does
not include the giving by the claimant to the indemnified party a release from all liability in
respect of such Claim subject to the limitations herein; and

in the event that the indemnifying party undertakes defense of or
(iii)
opposition to any Claim, the indemnified party, by counsel or other representative of its own

party and its counsel concerning such Claim and the indemnifying party and the indemnified
party and their respective counsel shall cooperate in good faith with respect to such Claim.

,

In determining the amount of any Damages hereunder, the amount shall
(d)
be determined after deducting the amount of any insurance proceeds and other third party
recoveries actually received by Seller or Buyer or any of its affiliates in respect thereof (which
proceeds and recoveries Seller or Buyer agrees to use, or to cause any such affiliate to use,
diligent efforts to obtain) and the amount of any. tax benefit related thereto.
an
indemnification payment is received by Seller or Buyer, and Seller or Buyer or any of their
affiliates later receives insurance proceeds, other third party recoveries, or tax benefits in
respect of the related Damages, Seller or Buyer shall promptly pay to the other a sum equal to
the lesser of (y) the actual amount of insurance proceeds, other third party recoveries, and tax
benefits or (z) the actual amount of the indemnification payment previously paid by the other
with respect to such Damages. Seller and Buyer shall use, and shall cause its affiliates to use,
commercially reasonable efforts to mitigate the amount of Damages fer which it may be

If

.

‘

entitled to indemnification hereunder.
9.4

’

'

"

Remedies Exclusive.

The remedies provided in this Article 9 and in Article 10 shall be the
(a)
exclusive remedies of the parties hereto in connection with the transactions contemplated by
this Agreement, including without limitation any breach or- non-performance of any‘
representation, warranty, covenant, obligation or agreement contained herein. No party (and
no affiliate of any party) may commence any suit, action or proceeding against any other party
hereto with respect to the subject matter of this Agreement, whether in contract, tort or
otherwise, except to enforce such party’s express rights pursuant to this Article 9 or Article 10.
The provisions of Articles 9 and m were specifically bargained for and reflected in the
amounts payable to Seller in connection with the transactions contemplated hereby.

Without limiting the foregoing and notwithstanding anything that may
(b)
be expressed or implied in this Agreement, Seller and Buyer each agree and acknowledge that
_

16

_

4833-7934-5741.v8

'

 Execution Version

their only recourse hereunder is against the other. Without limiting the generality of the
foregoing sentence, Seller and Buyer each agree and acknowledge that (a) no recourse shall be
had against any past, current or future affiliate, shareholder, director, officer, employee, agent,
trustee, board or other governing entity, or attorney of the other (collectively, the “Excluded
Persons”), with respect to the subject matter of this Agreement, and (b) neither it nor any of its
affiliates shall commence any suit, action or proceeding against any Excluded Person with
respect to the subject matter of this Agreement, whether in contract, tort or otherwise.
9.5
Tax Treatment of Indemnity Payments. It is the intention of the parties to
treat any indemnity payment made under this Agreement as an adjustment to the purchase price
for all purposes, and the parties agree to file their tax returns accordingly.

ARTICLE 10: TERMINATION; SPECIFIC PERFORMANCE; LIMITATION OF LIABILITY
10.1
Termination. Subject to Section 9.1 (Survival), this Agreement may be
terminated prior to Closing as follows:

(a)

by mutual written consent

of Buyer and

Seller;

by written notice of Buyer to Seller if Seller breaches its representations
(b)
or warranties or defaults in the performance of its obligations or covenants set forth in this
Agreement and such breach or default is material in the context of the transactions
contemplated hereby and is not cured within the Cure Period (as defined in Section 10.2);

if

'

by written notice of Seller to Buyer Buyer breaches its representations
(c)
or warranties or defaults in the performance of its obligations or covenants set forth in this
Agreement and such breach or default is material in the context of the transactions
contemplated hereby and is not cured within the Cure Period; provided, however, that the Cure
Period shall not apply to Buyer’s obligations to make the Deposit on the date hereof and to
pay the Purchase Price at Closing; or
by written notice of Seller to Buyer or Buyer to Seller, as long as the
(d)
terminating party is not in breach of any of its representations or warranties or in default in the
performance of any of its obligations or covenants set forth in this Agreement, if Closing does
not occur by the date twelve (12) months after the date of this Agreement.
.

10.2
Cure Period. Each party shall give the other party prompt written notice
upon learning of any breach or default by the other party under this Agreement. The term
Period” as used herein means a period commencing on the date Buyer or Seller receives from the
other written notice of breach or default hereunder and continuing until the earlier of (i) twenty
(20) calendar days thereafter or (ii) the Closing Date; provided, however, that the breach or
default is non-monetary and cannot reasonably be cured within such period but can be cured
before the Closing Date, and diligent efforts to cure promptly commence, then the Cure Period
shall continue as long as such diligent efforts to cure continue, but not beyond the Closing Date.

“M

if

if

10.3
Specific Performance. Notwithstanding Section 9.4(a), in the event of
failure or threatened failure by either party to comply with the terms of this Agreement, the other
party shall be entitled to an injunction restraining such failure or threatened failure and, subject
to obtaining any necessary FCC consent, to enforce this Agreement by a decree of specific
_

17

_

4833-7934-5741.v8

 Ex‘eCution Version

performance requiring compliance with this Agreement. If a party brings an action to enforce
specific performance under this Agreement, the other party shall waive the defense that there is
an adequate remedy at law and waive any requirement to post a bond or other security.
10.4
Liguidated Damages. If Seller terminates this Agreement pursuant
to Section 10.11c), then Seller shall be entitled to the Deposit and such payment shall constitute
liquidated damages and the sole remedy of Seller for a breach by Buyer of this Agreement. The
parties acknowledge and agree that payment of such amount shall constitute payment of
liquidated damages and is not a penalty and that the liquidated damages amount is reasonable in
light of the substantial but indeterminate harm anticipated to be caused by material breach or
default under this Agreement, the difficulty of proof of loss and damages, the inconvenience and
non-feasibility of otherwise obtaining an adequate remedy, and the value of the transactions to be
consummated hereunder. In addition, if Buyer contests Seller’s right to the Deposit, then the
prevailing party in any action by Seller to enforce its right to the Deposit shall be entitled to
payment by the other party of the reasonable attorneys’ fees incurred by the prevailing party in
such action.
10.5
Limitation of Liability. Notwithstanding anything in this Agreement to the
contrary, neither party shall have any liability to the other under any circumstances for special,
indirect, consequential, punitive or exemplary damages or similar damages of any kind,
including any damages calculated using a “multiplier” or any other similar method, whether or
not foreseeable, occasioned by any failure to perform or the breach or default of any
representation, covenant, warranty or other obligation under this Agreement, whether based in
negligence or otherwise.

.

Special Termination Right of Buyer. Subject to Section 9.] (Survival), in
10.6
addition to the termination rights set forth in Section 10.1 (Termination), Buyer may terminate
this Agreement prior to Closing as set forth in this Section 10.6:

Buyer may terminate this Agreement by written notice to Seller if
(a)
LocusPoint Networks LLC (“LPN”) or any party affiliated with LPN files with the FCC any
petition or opposition to the FCC Application or to Seller’s or Buyer’s qualifications to hold a
broadcast license, and as a result of such filing, either (i) FCC Consent is delayed more than
six (6) months after the date on which the FCC Application is filed and it is not then
reasonably foreseeable that FCC Consent will be obtained within sixty (60) days thereafier or
(ii) FCC Consent is delayed more than eight (‘8) months after the, date on which the FCC
Application is filed.
Buyer may terminate this Agreement by written notice to Seller if LPN
or any party affiliated with LPN initiates any legal or equitable action to oppose, obstruct or
delay the sale of the Station Assets by Seller or purchase of the Station Assets by Buyer and
thereby obtains an order from a court of competent jurisdiction that is legally binding on one
or both parties to this Agreement that (i) by its terms prevents the Closing; (ii) by its terms
imposes conditions on the Closing that either Buyer or Seller are not willing or able to satisfy
within ten (10) days after the date on which all other closing conditions set forth in Articles 6
and 1 have been met or waived; or (iii) otherwise delays the Closing for more than eight (8)
months afier the date on which the FCC Application is filed.
'

(b)

-184833-7934-5741.v8

'

 Execution Version

Buyer may terminate this Agreement by written notice to Seller if
(0)
Buyer is for any reason made a party to any legal or equitable action by LPN or Seller arising
out of the dispute between LPN and Seller that is the subject of the litigation described in
Schedule 2.10.
In the event that Buyer forebears from exercising its rights to terminate
(d)
under Section 10.6(c), and Buyer deems it necessary or advisable to incur legal costs and
other related expenses in connection with responding to or defending against any claims or
assertions relating to Buyer, then the Purchase Price shall be reduced by such costs and
expenses reasonably incurred by Buyer prior to Closing; provided, that Buyer shall notify
Seller of such expenses as they are incurred (i.e, within ten (10) days of receiving each
invoice). Notwithstanding the immediately foregoing sentence, at any time after such
expenses incurred by Buyer exceed Seventy—Five Thousand Dollars ($75,000.00) in the
aggregate, Seller shall have the right to reimburse such expenses to Buyer and terminate this
Agreement without further liability to Buyer by giving Buyer ten (10) days’ notice of its intent
to do so; unless Buyer gives notice to Seller within such 10- day notice period that it agrees to
pay such expenses in excess of $75, 000 going forward.

ARTICLE 11: MISCELLANEOUS
Expenses. Each party shall be solely responsible for all costs and expenses
11.1
incurred by it in connection with the negotiation, preparation and performance of and compliance
with the terms of this Agreement. Transfer or sales or use taxes, fees and charges applicable to
the transfer of the Station Assets under this Agreement, if any, shall be paid one—half by Buyer
and one-half by Seller. Each party is responsible for any commission, brokerage fee, advisory
fee or other similar payment that arises as a result of any agreement or action of it or any party
acting on its behalf in connection with this Agreement or the transactions contemplated hereby.

Further Assurances. Alter Closing, each party shall from time to time, at the
11.2
of and without further cost or expense to the other, execute and deliver such other
instruments of conveyance and assumption and take such other actions as may reasonably be
requested in order to more effectively consummate the transactions, contemplated hereby.
request

11.3
Assignment. Neither party may assign all or part of this Agreement without
the prior written consent of the other party’hereto. The terms of this Agreement shall bind and
inure to the benefit of the parties’ respective successors and any permitted assigns, and no
assignment shall relieve any party of any obligation or liability under this Agreement.
4

‘

11.4
Notices. Any notice pursuant to this Agreement shall be in Writing and shall
be deemed delivered on the date of personal delivery or confirmed facsimile transmission or
confirmed delivery by a nationally recognized overnight courier service, and shall be addressed
as follows (or to such other address as any party may request by written notice):

To Seller:

San Mateo Community College District
3401 CSM Drive
San Mateo, California 94402

Attn: Executive Vice Chancellor

_

19

_

4833-7934-5741.v8

‘

 '

‘

with copies to:

Kathy Blackwood
San Mateo County Community College District
3401 CSM Drive
San Mateo, California 94402

and

Pillsbury Winthrop

Execution Version

—

17th St. SW
Washington, DC 20036
Attn: John Hane
1200

To Buyer:

Rural California Broadcasting Corporation
5850 Labath Avenue
Rohnert Park, CA 94928
Attn: Nancy Dobbs, President and CEO

with copy to:

Gray Miller Persh LLP
1200 New Hampshire Avenue NW, Suite-410
Washington, DC 20036
Attn: Todd D. Gray

Amendments. N0 amendment or waiver of compliance with any provision
hereof or consent pursuant to this Agreement shall be effective unless evidenced by an
instrument in writing signed by the party against whom enforcement of such amendment, waiver,
or consent is sought.
11.5

Entire Agreement. This Agreement (including-the Schedules hereto)
11.6 ..
constitutes the entire agreement and understanding among the parties hereto with respect to the
subject matter hereof, and supersedes all prior agreements and understandings with respect to the
subject matter hereof. No party makes any representation or warranty with respect to the
transactions contemplated by this Agreement except as expressly set forth in this Agreement and
each party hereby confirms that it has not relied upon any representations or statements, whether
written or oral, except those representations and warranties set forth in Article
2 and g of this
'V
Agreement.
‘

i

'

'

q

I

7

Severabilig. If any court or governmental authority holds any provision in
11.7
this Agreement invalid, illegal or unenforceable under any applicable law, then, so long as no
party is deprived of the benefits of this Agreement in any material respect, this Agreement shall
be construed with the invalid, illegal or unenforceable provision deleted and the validity, legality
and'enforceability of the remaining provisions contained herein shall not be affected or impaired
thereby.
11.8
No Beneficiaries. Nothing in this Agreement expressed or implied is
intended or shall be construed to give any rights to any person or entity other than the parties
hereto and their successors and permitted assigns.

Governing Law and Venue. The construction and performance of this
11.9
Agreement shall be governed by the laws of the State of California without giving effect to the

_

20

_

4833-7934-5741 .v8

 Execution Version

choice of law provisions thereof. Any action to enforce the terms of this Agreement shall be
brought in the courts of the State of California with venue lying in the County of San Mateo.

Construction. The parties hereto have participated jointly in the negotiation
11.10
and drafting of this Agreement and the other agreements, documents and instruments
contemplated herein, all provisions shall be construed as drafted jointly by the parties, and no
presumption or burden of proof shall arise favoring or disfavoring any party by virtue of

if

authoring any

of the provisions.

11.11
each of which will
same agreement.

Counterparts. This Agreement may be executed in separate counterparts,
be deemed an original and all of which together will constitute one and the

[SIGNATURE PAGE FOLLOWS]

4833-7934-5741.v8

 SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT

IN WITNESS WHEREOF, the parties have executed this Agreement

as

of the

date first set forth above.

College District

Rural California Broadcasting
Corporation

By:

By:

Printed:

Printed:

Title:

Title:

San Mateo County Community

_

22

_

4833-7934-5741.v8

 List of Schedules

—

1.1(a)

FCC Licenses

l.l(b) — Tangible Personal Property
—

1.1(c)
1.2(1)

—

Station Contracts

Other Excluded Assets

1.6

—

Repacking Expenses

1.7

—

Additional Consideration

2.10

—

Seller Litigation

4833-7934-5741 .v8

 Schedule 1.1(a)

FCC Licenses, Applications, and Authorizations
1.

Television broadcast station license (FCC file no. BLEDT—20091124AHY).

2. License renewal authorization (FCC file no. BREDT-20140721AEJ; expires

12/1/2022).
3.

*Construction permit authorizing minor modification

of BLEDT-2009l 124AHY

to specify operation on Channel 27 (FCC File No. 0000028093).
4. Television broadcast station auxiliary antenna license (FCC file no. BXLEDT—

20120621AAB).
5. Earth Station license E040364 (FCC

file no. SES-REG-20040909-01357; expires

9/9/2019).
6.

FCC Form 399, Incentive Auction Relocation Reimbursement (file number
0000028092), filed July 11, 2017, and pending with the FCC.

*Pursuant to the FCC’s process of “repacking” television broadcast stations, Seller has
been assigned to Transition Phase 8, and is required to complete construction and testing
of Station’s authorized Channel 27 facilities on or before January 18, 2020. The Station
must discontinue operations on its pre-auction channel on or before 'March 13, 2020
(together, the “Repacking Deadlines”). See FCC Public Notice “Incentive Auction
Closing and Channel Reassignment Public Notice”, DA 17-314 (released April 13, 2017).

NOTWITHSTANDING ANYTHING IN THE AGREEMENT OR THE SCHEDULES
THERETO TO THE CONTRARY, SELLER MAKES NO REPRESENTATION OR
WARRANTY REGARDING THE FEASIBILITY OR ABILITY OF SELLER OR
BUYER TO MEET THE FCC’S REPACKING DEADLINES.
_

_

ii _
4833-7934-5741 .v8

 Schedule 1.1(b)

Tangible Personal Property

Property subject to Liens identified with a diamond (O).

Mt. Sutro Transmitter Site Equipment

TRANSMITTER EQUIPMENT
TRANSMITTER
LOCAL NAME
DTV ANTENNA

MODEL

MANUFACTURER

STATUS

ACTIVE

SYSTEM
43 WAVEGUIDE

COMBINER

ACTIVE

DIELECTRIC

HARRIS DTV TV

XMTR

HARRIS

ACTIVE

DHD90P4

MISCELLANEOUS
SUTRO SITE

EQUIPMENT

MISCELLANEOUS

Other Tangible Personal Property

MASTER CONTROL EQUIPMENT
MCR LOCAL NAME

MANUFACTURER

AES PATCH BAY

ADC

SDI/HD PATCH BAY

ADC

MODEL
.

STATUS

>DAB407-

4MKII

.

..

Active

PP12226RS-

SVJT-BK

AJA VIDEO
AJA-.1 FRAME SYNC

Active

.

FS—l

Active

SYSTEMS

FS-l

Active

AUTOMATION

AVID

Titan

KVM #1

AVOCENT

AMX 5130

KVM #10

AVOCENT

AMX-5130

KVM #2

AVOCENT

AMX

5130

Active

KVM #3

AVOCENT

AMX

5130

Active

KVM #4

AVOCENT

AMX

5130

Active

KVM #5

AVOCENT

AMX 5130

Active

KVM #6

AVOCENT

AMX 5130

Active

KVM #7

AVOCENT

AMX 5130

Active

KVM #8

AVOCENT

AMX 5130

Active

-

AJA-2 FRAME SYNC

.

SYSTEMS

‘

.

AJA VIDEO

SUNDANCE

Active

.

Active
.

Active

-iii—
4833-7934-5741.v8

 KVM #9

AVOCENT

AMx 5130

Active

KVM BASE STATION

AVOCENT

AMx 5010

Active

HD9625LGA-

EVERTz HD KEYER

EVERTz

EAS Plus BP

Active

#1

EVERTz

9625LGA Plus
EAS

Active

EVERTz KEYER #2

EVERTZ

9625LGA

Active

EVERTz KEYER

9625LGA Plus

EVERTz KEYER #3

EVERTz

EAS

Active

EVERTz KEYER #4

EVERTZ

9625LGA Plus
EAS

Active

MONITOR WALL
ENGINE - MC

EVERTz

MVP

Active

DPS]
SYNCRONIZER/TBC

LEITCH

DPS 575

Active

SYNCRONIZER/TBC

LEITCH

DPS 575

MASSLOGGER

MASSTECH

ML—350-015

20 RACKS AND 30KFF

MIDDLE
ATLANTIC /

WIRING

BELDEN

DPS2
-

Active
out of
service

Active

MEDIAPORT 4CH

1

OMNEON

MIP-5322

Active

MEDIAPORT 4CH

2

OMNEON

MIP-5322

Active

1

OMNEON

PR-MIP-5501

Active

MULTIPORT 2

MULTIPORT

OMNEON

PR-MIP-SSOI

Active

OMNEON CONTROL
SERVER

OMNEON

NCM 2003

Active

PROBROWSE PROXY
GEN I

OMNEON

MPB-1002-G

inactive

OMNEON

MPB—1002-G

7

_

PROBROWSE PROXY
GEN 2

inactive

4.

MPB-l
001'
PROBROWSE SERVER

OMNEON

HC

DVC PRO VCR 4

PANASONIC

AI-SD930

DVC PRO VCR

‘-

_

Active
Active

PANASONIC

AJ-SD930

PANASONIC

SD255

DVC‘PRO

VCR

PANASONIC

SD255

DVC PRO VCR

PANASONIC

SD255

XD CAM VCR

SONY

PDWHD1500

Active

HD CAM VCR

SONY

HDW-1800

Active

DIGIBETA VCR

SONY

DVW-M2006

Active

MULIT MONITOR
(MANY)

WOHLER/MARSH

ALL

Active

RACK MT

PANASONIC

Active

-

-

inactive
'

- iv -

,

inactive

DVC PRO VCR

8

.

'

’

.

'intictive'

‘

inactive

'
4833-7934-5741 .v8

 MONITORS(3)
19" MONITORS

Active

(MANY)

SAMSUNG

DEKOCAST C

PINNACLE

DEKOCAST

Active

DVD RECORDER

PIONEER

PRV-LXI

inactive

SENCORE ATLAS IRD

SENCORE

MRD 3187A

Active

SENCORE ATLAS IRD

SENCORE

MRD 3187A

Active

SENCORE ATLAS IRD

SENCORE

MRD 3187A

Active

1RD A

THOMSON

RX8200

Active

1RD B

THOMSON

RX8200

Active

IRD

C

THOMSON

RX8200

Active

IRD D

THOMSON

RX8200

Active

IRD E

THOMSON

RX8200

Active

IRD F

THOMSON

RX8200

Active

SYNCRONIZER

SNELL & WILCOX

TBS 180AV

Active

DIGI BETA

SONY

DVWM2000

Active

QC2 MONITOR

SONY

BVM-DZOFIU

Active

QC3 MONITOR

SONY

BVM-DZOFIU

inactive

M2/MUXMX5
MULTIPLEXER (2)
SD ASI RECEIVER #1

TANDBERG

620

Active

TANDBERG

TT1260/DIRB
AS

Active

TT1260/DIRB
SD ASI RECEIVER #2

TANDBERG

AS

SD ASI RECEIVER #3

TANDBERG

AS

SD ENCODER #1

TANDBERG

Active

TT1260/DIRB
.

Active

M2/ENC/E57I

.
.

O/ATSC

TANDBERG
TANDBERG

M2/ENC/ES71
O/ATSC

.

M2/ENC[E571

TANDBERG

O/ATSC

Active

Jupitci'

inactive

i

,

.

.

SD ENCODER #2
‘

SD ENCODER #3
1

SD ENCODER #4

JUPITER CONTROL
SYSTEM
.

_

'

Active

M2/ENC/E57l0/ATSC

i

‘

‘

'

Active

'

Active

_

'

THOMSON

ROUTER CNTRL
PANELS(4)

THOMSON

Various'

Active

SI—l

THOMSON

SI-3000C

Active

SI—2

THOMSON

SI—3000C

Active

TRINIX ROUTER

THOMSON

DV33128

Active

VENUS ROUTER

THOMSON

Venus

Active

Trinix

..

V

_

—

4833—7934-5741 .v8

 VM-I

THOMSON

VM-3000C

Active

QCI AUDIO

WOHLER

AMPl-DA

Active

QC2 AUDIO

WOI-ILER

AMPl-DA

Active

WAVEFORM
MONITOR

TEKTRONIX

7120

Active

WAVEFORM
RASTERIZER

TEKTRONIX

7020

Active

MANUFACTURER

MODEL

STATUS

#1

ANTON BAUER

30/13

ACTIVE

BATTERY BELT #2

ANTON BAUER

30/13

ACTIVE

DIONIC 90 #3

ANTON BAUER

Dionic 90

out of
service

90 #4

ANTON BAUER

Dionic 90

out of
service

DIONIC 90 #5

ANTON BAUER

Dionic 90

out of
service

DIONIC 90 #6

ANTON BAUER

Dionic 90

out of
service

QUAD 2702
POWERCHARGER

ANTON BAUER

Quad 2702

out of
service

KIT

K5600

K0200/400JBN
DOUB+3

ACTIVE

FIELD MIXER

SHURE

FP32A

ACTIVE

FIELD MIXER

SHURE

M67

VE

FIELD MONITOR

SONY

PVM-8041 Q

ACTIVE

Aspect ratio converter

Picolink

PRODUCTION

LOCAL NAME
BATTERY BELT

“DIONIC

JOKER NEWS COMBO

INACTI

XDCAMHD
CAMCORDER
FIELD CAMERA
ZOOM CONTROL

Active
PDWF-335L

SONY

ACTIVE.

,

,

»

.

CANON

XDCAM WIDE ANGLE
LENS

ACTIVE

ZSG—200M

‘

KHIOEX3.6B

CANON

IRSE

.

ACTIVE

‘

KHZIEXS .7

XDCAM ZOOM LENS

CANON

TRIPOD SYSTEM

ACTIVE

IRSE SX12

'

'

Vinten

Vision 10

ACTIVE

'

TRIPOD SYSTEM

_

(matte box)

O'CONNOR

50

ACTIVE

MATTE BOX

VOCAS

MB-325

ACTIVE

Lavalier Microphone

Sony

ECM- 66

Active

Lavalier Microphone

Sony

ECM- 66

Active

XDCAM HD DISC
DRIVE

SONY

PDW-Ul

Active

-vi4833-7934-5741.V8

  

 

XDCAM HD DISC
DRIVE

 

SONY

 



 

Active

 

 

-vii-

4833-7934-5741.v8

Schedule 1.1(c)

Station Contracts
9

Transmitter site lease between Sutro Tower, ~Inc. and San Mateo County Community
College District dated January 16, 2003, as amended May 22, 2014, extended term
through February 28, 2020 (“Sutro Lease”).

O

Repacking services agreement, Sutro Tower, Inc. and San Mateo County Community
College District dated July 31, 2017, term concurrent with Sutro Lease.

o

Designates Station Contract requiring third party consent.

-

viii 4833-7934-5741.v8

 Schedule 1.2(1)

Other Excluded Assets
The Rejected Personal Property.

_

ix _
4833-7934—5741.v8

 Schedule 1.6

Unreimbursed Repacking Expenses

None.

4833-7934-5741.v8

Schedule 1.7

Additional Consideration
1.

,

I

'

Television and Radio Announcements. Beginning on the date of Closing and
ending on the date five (5) years thereafter, Buyer shall make available to Seller, at no
cost to Seller, on—air underwriting announcement spots of up to thirty (30) seconds in
length on KRCB TV 22 and on KRCB FM RADIO 91. Each month Buyer shall
produce one (1) announcement for Seller, based on copy provided by Seller, to
describe to the Buyer's broadcast area (including but not limited to the San Francisco
North Bay Region), its activities and initiatives for the benefit of Seller's alumni,
prospective students and parents (the "Messages"). In the alternative, Seller may
provide pre-produced announcement to Buyer in a manner and format reasonably
acceptable to Buyer. Seller shall be responsible for scheduling the Messages with
Buyer on a monthly use—it—or-lose-it basis, and for providing the copy or preproduced announcements to Buyer at least fourteen (14) days prior to Seller's first
desired broadcast date. Buyer will schedule five (5) monthly spot placements on
KRCB TV 22 and ten (10) monthly spot placements on KRCB FM RADIO 91.
Buyer shall run all Messages between the hours of 6 am and midnight local time on a
run-of—schedule basis with approximately equal distribution across dayparts. Should
Seller not elect to utilize any Messages by the end of any month, such unused
Messages shall be forfeited and may not be carried forward to future months (and any
order that is not timely placed by Seller shall be deemed used). Buyer will provide to
Seller each month a written summary of when (date and time) the Messages aired on
KRCB TV 22 and on KRCB FM RADIO 91 in the previous month, provided that
Seller informs Buyer to whom and where this "proof-of-performance" documentation
should be sent. The Messages shall conform to the regulations and policies
applicable to noncommercial educational broadcasting, including public TV and radio
industry standards, and Buyer shall have the right to preempt or reject any Message(s)
and otherwise maintain control over the programming of the stations in order to
comply with applicable laws (including without limitation FCC rules and regulations)
and Buyer’s standards and practices, which Buyer shall apply to the Messages on a
uniform and non-discriminatory basis as compared to all other underwriting
announcements broadcast by each respective station. Buyer shall make-good any
preempted or rejected Messages subject to Seller timely providing make—good copy
or pre-produced announcements. Notwithstanding anything in the Agreement or in
this Schedule 1.7, Seller has 'no obligation make use of the MeSSages.'
‘

Student Internships. At the beginning of the first semester (of Seller’s student
campuses) following the date of Closing, or another date mutually agreed upon by the
parties, until three (3) years thereafter, pursuant to an appropriate internship site
agreement between Seller and Buyer with provisions that are customary for
community college student internships (but excluding any payments from Seller to
Buyer), Buyer shall work with Seller to provide training, in the form of educational
internships, at Buyer's studio and office location for up to six of Seller's students per
_

xi ..
4833-7934-5741.V8

 year (three (3) students per semester) working in Buyer's marketing, development,
production, telecommunications, and social media departments. The objective of the
training and educational internship program is to provide Seller's students with
applicable working experiences that allow the Seller's students to learn and gain
onsite training from Buyer's staff. Buyer and Seller agree to cooperate during the
three (3) year period in designing and implementing the actual educational internship
program. Buyer and Seller will mutually agree on the number of hours the students
will work on a weekly basis and the number of weeks per year that the training and
educational internship will be offered. Transportation to and from Buyer's studio and
office location is the responsibility of the individual students and/or the Seller's
educational program. Each year Buyer and Seller will review and evaluate the
established educational internship program to consider whether operational and
content modifications are necessary and appropriate. The educational internships
training shall be unpaid, unless the nature and scope of the responsibilities performed
is appropriate for paid services, as determined by Buyer in its reasonable good-faith
discretion, in which case Buyer shall make payment for such services. In the first
year of the student training pursuant to this Agreement, Buyer and Seller will make
reasonable efforts to establish and be operational with the training and educational
internship program on or before six (6) weeks prior to the commencement of the first
semester. Notwithstanding anything in the Agreement or in this Schedule 1.7, Seller
shall have no obligation to make use of the student internships.
.

Carriage of KCSM(FM) video channel via TV Digital Broadcast. Beginning at
the Closing, and for five (5) years thereafter, Buyer will maintain carriage of the
KCSM(FM) video channel as broadcast on the Station as of the Effective Date (the
“KCSM(FM) Stream”). Carriage of the KCSM(FM) Stream shall in all cases be
consistent with FCC requirements for noncommercial educational stations and
Sections 73.503 and 73.621 of the FCC rules. Buyer’s retransmission of the
KCSM(FM) Stream will include the slide show featuring the Jazz Datebook,
community events and Jazz Trivia substantially as they are carried as of the Effective
Date, provided that Seller continues to produce and furnish such features to Buyer.
Seller shall be responsible for providing the KCSM(FM) Stream to-Buyer via a
technological solution in an ASI encoded format that the Buyer, in its reasonable
discretion, deems appropriate for integration into the Station’s multi-channel digital
stream. Seller shall be solely responsible for the costs of production and encoding of
the KCSM(FM) Stream, for the costs of providing the KCSM(FM) Stream to Buyer,
and for the content of the KCSM(FM) Stream, and shall obtain and maintain
commercially reasonable media perils insurance for Buyer's broadcast of the
KCSM(F M) Stream with such insurance including Buyer as an additional named
insured. Buyer, at its sole discretion, shall have the exclusive right to preempt or
reject any specific programming of the KCSM(FM) Stream if Buyer, in its reasonable
judgment, concludes that such programming does not serve the public interest, or that
alternate programming or alternative program scheduling, would better address local
needs. As between the parties, all right, title and interest in and to the KCSM(FM)
Stream, and the right to authorize the use of the KCSM(FM) Stream in any manner
and in any media whatsoever, shall be and remain vested at all times solely in Seller.

—

xii

—

4833-7934—5741.v8

 Seller shall secure, at its sole cost and expense, any rights licenses that might be
necessary for the transmission of the KCSM(FM) Stream over the Station.
Notwithstanding anything in the Agreement or in this Schedule 1.7, Seller shall have
no obligation to continue providing the KCSM(F M) Stream to Buyer and Seller does
not grant any rights to Buyer with respect to the KCSM(FM) Stream.
.

Local Programs. Each month during the five (5) year period immediately following
Closing, Buyer will broadcast on its primary (.1 or equivalent) channel up to thirty

“M

(30) minutes per month of Seller-produced video programming (each, a
Program”) in a timeslot of Buyer’s choice in pre-prime or on weekends. Seller will
give notice of its intent to provide a Local Program and its total run time at least two
(2) months in advance of the calendar month in which it intends to provide such
Local Program (e.g., Seller will give notice no later than September 30 with respect to
Local Program to air in December). Each Local Program must be delivered to Buyer
no later than one (1) month in advance of the calendar month in which Seller wishes
the Local Program to air. Local Programs must adhere to FCC requirements for noncommercial stations, cornply‘With Buyer’s reasonable technical standards, and be
delivered by Seller to Buyer in a mutually agreeable manner. Buyer, at its sole
discretion, shall have the right to preempt or reject any Local Program provided by
Seller if Buyer, in its reasonable judgment, concludes that such Local Program does
not serve the public interest, or that alternate programming would better address local
needs. Notwithstanding anything in the Agreement or in this Schedule 1.7, Seller
shall have no obligation to provide any Local Program or to make use of the rights
granted to Buyer herein.

-

xiii

—

4833-7934-5741.v8

 Schedule 2.10

Seller Litigation
Seller has sued LocusPoint Networks, LLC, LocusPoint II KCSM, LLC and
PricewaterhouseCoopers Advisory Services LLC, and LocusPoint Networks, LLC and
LocusPoint II KCSM, LLC have sued Seller, in Superior Court of the State of California,
County of San Mateo, in each case raising claims arising out of a series of agreements
between LocusPoint Networks, LLC and Seller regarding a potential sale of Station in the
FCC’s broadcast incentive auction. See San Mateo County Community College District,
et al vs. LocusPoint Networks, LLC, ET. AL, 17—CIV—01534; LocusPoint Networks, LLC,
et al vs. San Mateo County Community College District, 17-CIV-01550. LocusPoint
Networks, LLC has asserted to Seller that it believes those same agreements give
LocusPoint Networks, LLC the right to block the sale of Station at this time. Seller
disputes LocusPoint Networks, LLC’s assertions for a number of reasons, including
without limitation that LocusPoint Networks, LLC materially breached the agreements
such that the provisions LocusPoint Networks,"t has stated it relies upon for its
assertions no longer bind Seller, and because any security interest LocusPoint Networks,
LLC may hold is limited to the proceeds of the sale of certain assets used in the operation
of the Station and does not extend to the assets themselves.

—

xiv

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4833-7934-5741.v8

 33353333333 E33333

ESCROW SERWC§§

22 Battery Street, Suite 914, San Francisco, CA. 94111
Telephone: 415.735.3645 * Facsimile: 415.358.5732

This Escrow Company holds California Department of Business Oversight Escrow License No. 9635091

Escrow No. 100895

ESCROW INSTRUCTION AND AGREEMENT
This Escrow Instruction and Agreement (”Instruction") dated September , 2017, shall not be binding
on McGovern Escrow Services, Inc. (”Escrow Agent") until acknowledged and executed by all persons

identified

as

principals herein.

This Agreement is entered into by and between SAN MATEO COUNTY COMMUNITY COLLEGE DISTRICT,
3 California Community College District (”Seller”), RURAL CALIFORNIA ‘ROADCASTING CORPORATION, a
California non—profit and nonstock corporation (”Buyer"), and the Escrow Agent. Seller and Buyer are

sometimes referred to collectively as the ”Parties, and each individually

is a

”Party".

WHEREAS, Seller and Buyer have entered into an Asset Purchase Agreement dated September
2,017

‘

the (”Agreement”).

WHEREAS, under the terms of the Agreement the Seller desires to sell and assign to Buyer, and
Buyer wishes to buy and take assignment of, certain assets of Seller and the FCC Licenses of that certain
noncommercial educational television station known as KSCM-TV (the ”Station"), under terms and
conditions set forth in the Agreement.
WHEREAS, under the terms of the Agreement Buyer shall make a cash deposit, in immediately
available funds, in the amount of Nine Hundred Sixty Thousand and No/100US ($960,000.00).

NOW, THEREFORE, the Parties desire to establish an escrow account in which S960, 000. 00 (the
{’Escrow Funds” )will be deposited hereto by Buyer.
1.

Deposit of Funds
or before September
the Escrow Funds.
On

,

2017 (the ”Closing Date”), Buyer shall cause to be deposited hereto

The'EscrOw Funds areto be deposited in the form of
Escrow Services, lnc., Escrow No. 100895.
3.

a

wire'transfer payable to McGovern.

Upon receipt ofthe Escrow Funds that have been deemed collected, the Escrow Agent is
instructed to invest the Escrow Funds in one or more federally insured, interest bearing
account. All interest accrued on the Escrow Funds shall be credited to Rural California
Broadcasting Corporation for taxation purposes and reported as such.

4833-8757-9471 .v6

 Escrow No. 100895

b.

2.

Concurrent with the execution ofthis Escrow Agreement, Buyer shall deliver to escrow:
i.
A copy of the Certificate of Incorporation as filed with the California Secretary of
State, and a Resolution designating signing authority for the corporation.
ii.
Customer Identification form from the officers and/or any other signing
authority of Buyer as required for bank interest bearing account purposes.
iii.
IRS form W-9, Request for Taxpayer Identification Number and Certification
from Rural California Broadcasting Corporation.

Disbursement of Funds

.

three (3) business days prior to the Closing as defined in the Agreement, or three
(3) business days prior to any other disbursement of Escrow Funds, Seller and Buyer shall submit
to escrow mutual written instruction as to:
a. Any and all prorations and adjustments to be made between the Parties, and
b. The disbursement ofthe Escrow Funds to Seller and the accrued interest to Buyer, or
c. Any other disbursement ofthe Escrow Funds as contemplated in the Agreement.
On or before

Obligation to Disburse
Notwithstanding any provision to the contrary herein (or in the General Provisions attached),
Escrow Agent shall effect the delivery and disbursement of the Escrow Property as set out in
Section 2. within three (3) business days of receipt ofthe required authorization and instruction
from the Parties.
Duties of Escrow Agent
Escrow Agent will not be liable for actions or omissions hereunder, except for its own gross
negligence, bad faith or willful misconduct and, except with respect to claims based upon such
gross negligence, bad faith or willful misconduct, such actions or omissions as are successfully
asserted against Escrow Agent. Buyer and Seller shall jointly and severally indemnify and hold
harmless Escrow Agent (and any successor Escrow Agent) from and against any and. all losses,
liabilities, claims, actions, damages and expenses, including reasonable attorney’s fees and
disbursements, arising out of and in connection with this Agreement. Without limiting the
foregoing, Escrow Agent will in no event be liable with respect to any action taken or omitted to
be taken by it in good faith in accordance withany written notice of'Buyer deliVered to Escrow
Agent in accordance with this Agreement. Each of Buyer and Seller hereby releases,‘waives,
discharges and covenants not to sue the Escrow Agent for any action taken or omitted to be
taken under this Agreement except to the extent caused by Escrow Agent 5 gross negligence,
bad faith or willful misconduct.

',5

Termination of Escrow
a. The date of termination is upon the distribution of the Escrow Property pursuant to this
Agreement, provided, however, In the event any funds remain in the account on the first
(15‘) anniversary of the date of these escrow instructions and Agreement, these escrow
instructions and Agreement shall be renewed on an annual basis until all such funds are
disbursed subject to the terms of Section 5.(b) below.
.

4833-8757-9471.v6

 Escrow No. 100895

b.

Should Escrow Agent at any time and for any reason desire to be relieved of its obligations
as escrow holder hereunder, the Escrow Agent shall give written notice of its desire to be
relieved to the Parties. The Parties shall, within (30) days of the receipt of such notice,
appoint a successor escrow agent and instruct Escrow Agent to deliver the Escrow Funds
hereunder to the successor escrow agent. If Escrow Agent is not notified of the
appointment of a successor escrow agent within sixty (60) days of its transmission of notice
under this Section, Escrow Agent shall hold the Escrow Funds until: (i) it receives the
authorization and instruction described in Section 2; (ii) it receives a court order instructing
it to disburse the Escrow Funds; or (iii) it files a suit in interpleader and deposits Escrow
Funds with the court.

Independent Review
The Parties have made their own determination as to whether the language in this Instruction
memorialize their own respective Agreement, are not usurious, and/or come under any
consumer protection laws. McGovern Escrow Services, Inc. makes no representations or
warranties with respect to the terms and conditions of the Agreement. The Parties further
represent and warrant that each has received sufficient information, either through said party’s
own legal counsel or other sources of said party’s own selection, so as to be able to make an
intelligent and informed judgment whether to enter into the Agreement, along with this Escrow
Instruction and Agreement. Each undersigned party further state that each has read the
document(s) in their entirety prior to executing each such document, and that each has
executed the documents voluntarily, with competence and capacity to contract and with the
knowledge ofthe terms significance and legal effect of each such document.

6.

..... "ax-2w».

~——
The Asset Purchase Agreement
This Escrow Instruction is executed for the purpose of enabling the Escrow Agent to complete
this transaction, but is in no way intended to modify, amend, supersede or in any Way change
the Asset Purchase Agreement, dated September_, 2017 and entered into prior to this Escrow‘
Instruction and Agreement. Escrow Agent is not a party to and is not to be concerned with said
Agreement or any matters contained therein, and is responsible only for such matters as are
specifically set out in these instructions.

Invalidity PrOvision
Should any provision of this Agreement be found invalid, such invalidity shall not in any way
affect the remaining provision of this Agreement.

'

Assignment
This Parties hereto shall not assign any of its rights or delegate any ofthis duties under this
Agreement without prior written COnSent of the other‘party and 'any'unautho‘rized assignment

or delegation shall be void and of no effect.

‘

4833-8757—9471.v6

“me-«w.

 Escrow No. 100895

Escrow No. 100895

10. Notices

All notices, requests, consents and other communications hereunder to any party pursuant to
this Note will be deemed to be sufficient if contained in a written instrument delivered
personally or mailed by certified or registered mail postage prepaid or sent electronically by
confirmed email transmission, addressed as set forth below, or to such other address as may
hereinafter be designated in writing by the recipient to the sender pursuant to this Section 10.
Any such notice shall be effective (i) when personally delivered, (ii) one (1) business day after it
has been deposited with a nationally-recognized overnight courier, duly addressed and postage
prepaid, (iii) two (2) business days after it has been deposited in the United States mail, duly
addressed and postage prepaid, or (iv) on the business day of confirmed transmission by
facsimile or email. Any party may change such party's address for notice by written notice to
the other parties pursuant to the provisions of this Section 10.
To Seller:

To Buyer:

San’lvia‘reofommunity College District

Rural California Broadcasting Corporation

3401 CSM Drive

5850 Labath Avenue

Mateo, CA 94402
Attn: Executive Vice Chancellor

Attn: Nancy Dobbs, President and CEO

Email: blackwoodk@smccd.edu

Email: nancy_dobbs@krcb.org

Rohnert Park, CA 94928

San

To McGovern Escrow Services, Inc:

Ms. Elizabeth McGovern

McGovern Escrow Services, Inc.
22 Battery Street, Suite 914

SanFrancisco, Ca 94111

,

Email: elizabeth@mcgovernescrowcom

11. Compensation
Funds
as

.,,
for the payment of escrow fees and charges shall be exclusively paid byiBuyer and Seller
,

.

.

V

described in the attached Escrow Fee schedule (”Exhibit A”).

12. Amendment

of Escrow

This Agreement may not be amended except in writing, executed by the Parties and the Escrow

Agent. This Agreement may be executed in counterparts, each of Which so‘executed shall be
deemed an original, irrespective of the. date of execution and delivery, and the counterparts
shall constitute one and the same'document.

4833-8757—9471.v6

 ‘

Escrow No. 100895

13. Governing Law and Assignment

This Agreement shall be construed in accordance with and governed by the laws of the State of

California and shall be binding upon the parties hereto and their respective successors, heirs,
personal representatives and permitted assigns; provided, however, that any assignment or

transfer by any party of its rights under this Agreement or with respect to the Escrow Funds
shall be void as against the Escrow Agent unless (a) written notice thereofshall be given to the
Escrow Agent; and (b) the Escrow Agent shall have consented in writing to sUch assignment or
transfer.
14. Court Orders

Escrow Agent is hereby authorized, in its exclusive discretion, to obey and comply with all final
and non—appealable writs, orders, judgments or decrees issued by any court or administrative

agency affecting any money, documents or other assets or items held by Escrow Agent. Escrow

Agent shall not be liable to any of the Parties hereto, their successors, heirs or personal
representatives. \L;9.2_s.o.n__of Escrow Agent’s compliance with such writs, orders, judgments or
decrees.
15. USA Patriot Act Notice

The Escrow Agent notifies the Parties hereto that pursuant to the requirements of the USA

Patriot Act (Title II of Pub. L. 107—56, signed into law October 26, 2001) (the ”Act”), the Escrow
Agent is required to obtain, verify and record information that identifies the Parties to this
Instruction and Agreement, which information includes the name and address of the Parties and

other information that will allow Escrow Agent to identify them in accordance with the Act.

5

-

4833-8757-9471.v6

 .

Escrow No. 100895

EXHIBIT A
Escrow Fee Agreement

for complying with the Escrow Instruction and Agreement dated September_, 2017,
Pacific Retirement Services, Inc. agrees to pay all applicable fees to McGovern Escrow Services, Inc., as
detailed below:
In consideration

$3,000.00

Escrow Set—Up and Documentation Fee
(Due upon execution and delivery of the Escrow Instruction and Agreement)

25.00
30.00
150.00
350.00

Check disbursement fee per instrument
Wire transfer fee per event
Account reconciliation reports, as requested
Annual Maintenance Fee

Agreed and authorized by:
SELLER:

BUYER:

Mateo County Community College District,
A California Community College District

a

Rural California Broadcasting Corporation
California non-profit and nonstock

San

corporation
Signature:

Signature:

Date:

Date:

Signature:

'

»«

Signature:

.

Date:

Date:

6

_

4833-8757—9471.v6

 Escrow No. 100895

EXHIBIT B
with this Escrow Instruction and Agreement dated September , 2017, the names of the
persons who are authorized to give written instructions on behalf of each of the Parties hereof, and
exemplars of their respective signatures are as follows:
In accordance

SELLER:

San

Mateo County Community College District,

A California Community College District

BUYER:

Rural California Broadcasting Corporation
California non—profit and nonstock

a

corporation

Signature

Signature

Printed Name

Printed Name

Title

Title

Signature

Signature

Printed Name

Printed Name

Title

Title

Number of signatures required:

Number of signatures required:

'

4833-8757-9471.V6

 Escrow No. 100895

GENERAL PROVISIONS
DEPOSITS. All funds received in escrow shall be deposited with other escrow funds in a non-interest bearing
general escrow account or accounts of McGovern Escrow Services, unless otherwise instructed in writing.
OTHER AGREEMENTS. Unless otherwise specifically provided herein in writing, Escrow Agent is not to be
required to read, understand, interpret, or be concerned in any manner whatsoever with any conditional
sales contract, purchase agreement, lease contract, security agreement, or other agreement, written or
oral, of any kind whatsoever, and is not responsible for the delivery of any papers other than described
herein. Escrow Agent is not a party to, or bound by any agreement which may be deposited under,
evidenced by, or which may arise out of these instructions.
AGENCY RESPONSIBILITIES. Escrow Agent is to make no examination of the property being transferred
herein or of the condition of or the title thereto. Escrow Agent acts as a depository only and is not
responsible or liable in any manner whatever for sufficiency, correctness, genuineness or validity of any
instrument deposited with it hereunder, or with respect to the form or execution of the same, or the
identity, authority, or right of any person executing or depositing the same.
DEFAULTS. Escrow Agent shall not be required to take or be bound by notice of any default of any person,
or take any action with respect to such default involving any expense or liability, unless notice in waitingjsm
given to the Escrow Agent at the address set forth above, of such default by the undersigned or any of
them, and unless Escrow Agent is indemnified in a manner satisfactory to it against any and all expense and

'

liability.
NOTICES. Escrow Agent shall be protected acting upon any notice, request, waiver, consent, receipt or
other paper or document reasonably believed by Escrow Agent to be signed by the property party or

parties.

for any error ofjudgment or for any act done or step taken or
omitted by it in good faith or for any mistake or fact of law, or for anything which it may do or refrain from
doing in connection herewith, except its own gross negligence or willful misconduct, and Escrow Agent shall
have no duties to anyone except those signing these instructions.
COUNSEL. Escrow Agent may advise with legal counsel of its choice in the event of any dispute or question
as to the construction of these instructions, or Escrow Agent’s duties hereunder and Escrow Agent shall
incur no liability and shall be fully protected in acting in accordance with the opinion and instructions of its
counsel. Further, the parties hereto shall reimburse Escrow Agent for the costs, expenses and attorney's
fees incurred by Escrow Agent for such advice and counsel. Escrow Agent is hereby authorized to deduct
Seller and Buyer portion of such costs, expenses and attorneys fees from any funds held in escrow.
DISAGREEMENTS. In the event of any disagreement between the undersigned or any of them,.and/,or the
persons named in these instructions, and/or any other person, resulting in adverse claims and demands
being made in connection with or for any papers, money or property involved herein or affected hereby,
Escrow Agent shall be entitled at its option to refuse to comply with any such claim or demand, as long as
such disagreements shall continue, and in so doing Escrow Agent shall not be or become liable for damages
or interest to the undersigned or any of them Or to any person for its failure Or‘refusal to comply with such
conflicting or adverse demands, and Escrow Agent shall be entitled to continue to refrain and refuse to act
,until:
u
..,
a.
1. The rights of the adverse claimant had been finally adjudicated in a court assuming and having
'
jurisdiction of the parties and the money, papers and property in'volvedherein or affected hereby
and/or
2. All differences shall have been adjusted by agreement and Escrow Agent shall have been notified
thereof in writing signed by all of the persons interested.
b.
Notwithstanding the foregoing, however, in the event of any such disagreement, Escrow Agent in its
sole discretion may (a) file a suit in interpleader for the purpose of having the respective rights of the
claimants adjudicated, and then deposit with the court all documents and property held hereunder, and
the Parties agree to pay all costs and expenses incurred by Escrow Agent in such action, including
attorneys fees, and such costs and expenses shall be included in the judgment in any such action or
JUDGMENT. Escrow Agent shall not be liable

—

.

,

4

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-

.

4

.

,

-

.

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4833-8757—9471 .v6

.

_.
_

'

 Escrow No. 100895

10.

11.

12.

13.

14.

,

.

,

‘

15.

16.

(b) submit the matter to the American Arbitration Association, who will name a single arbitrator to
conduct an arbitration in San Francisco, California to determine the respective rights of claimants in
accordance with the Commercial Arbitration Rules of the American Arbitration Association. All costs and
expenses, including attorney’s fees incurred with respect to the arbitration by Escrow Agent shall be paid
by the Parties in equal proportions. The arbitration award shall be final and without appeal. A judgment
upon the award may be entered in any court having jurisdiction of the parties.
INDEMNITY. In consideration of acceptance of this appointment by Escrow Agent, the Parties agree to
defend, indemnify and hold Escrow Agent harmless as to any liability incurred by Escrow Agent to any
person, firm or corporation by reason of its having accepted same or in carrying out any of the terms hereof,
and to reimburse Escrow Agent for all its expenses, including among other things, counsel fees and court
costs incurred by reason of its position or actions taken pursuant to these Escrow Instructions. Subject to
Section 4 of the Agreement, the Principals hereby agree that the Escrow Agent shall not be liable to any of
them for any action taken by Escrow Agent pursuant to and authorized by the terms hereof.
COURT ORDERS. Escrow Agent is hereby authorized in its exclusive discretion, to obey and comply with all
writs, orders, judgments or decrees issued by any court or administrative agency affecting any money,
documents or other securities or writings held by Escrow Agent. Escrow Agent shall not be liable to any of
the parties hereto, their successors, heirs or personal representatives, by reason of Escrow Agent’s
compliance with such writs, orders, judgments or decrees. Notwithstanding such writ, order, jud‘g’rfiaé'nt or
decree is later reversed, modified, set aside or vacated.
USURY. Escrow Agent is not to be concerned with any question or usury in the processing of this escrow
and Escrow Agent is hereby released of any responsibility or liability therefore.
AMENDMENTS TO ESCROW INSTRUCTIONS. These instructions shall not be subject to rescission or
modification except by receipt by Escrow Agent at the address above of written instructions signed by all of
the parties hereto or their successors in interest and no such modification shall be effective unless and until
consented to in writing by Escrow Agent.
SIGNATURES. These instructions may be executed in counterparts, each of which so executed shall be
deemed as an original, irrespective of the date of its execution and delivery; and such counterparts together
with shall constitute one and the same instrument.
COMPLETE AGREEMENT. These instructions constitute the complete agreement between the Parties and
Escrow Agent, with respect to the subject matters referred to in these instructions. These instructions
supersede all prior contemporaneous negotiations, promises, covenantsfagreements and representations
of every nature whatsoever with respect to the subject matters referred to in these instructions, all of which
have become merged and finally integrated into these instructions. Each of the parties understands that in
the event of any subsequent litigation, controversy or dispute concerning any of the terms, conditions or
provisions of these instructions, no party shall be permitted to offer or to introduce any oral evidence
concerning any oral promises, agreements, representations or statements relating to the subject matters of
these instructions not set forth herein In writing.
SEVERABILITY. In case any provision in these instructions shall be invalid, illegal or unenforceable, such
provision shall be several from the remained of these instructions, and the validity, legality or enforceability
of the remaining provisions shall not in any way be affected or impaired thereby.
APPLICABLE LAW. These instructions and the rights and obligations of the parties thereto shall be governed
by the laws of the State of California.

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4833-8757-9471.v6

 Escrow No. 100895

forth herein shall survive the
closing of escrow.
18. BINDING OF SUCCESSORS. The parties intend that these instructions will be binding upon and for the
benefit of the parties hereto and their respective successors and assigns.
17. SURVIVAL OF REPRESENTATION. All representations and warranties set

The Parties each hereby state that they have read the foregoing Escrow Instruction and Agreement,
understand and agree to it, and acknowledge receipt ofa copy of it.
IN WITNESS WHEREOF,

the Parties have caused this Agreement to be executed

as

ofthis

day of

September, 2017.

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w,

___SELLER:
_

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BUYER:

“

Community College District
A California Community College District

a Ca

Signature:

Signature:

Date:

Date:

San Mateo County

McGovern Escrow Services, Inc.

a

Rural California Broadcasting Corporation
non-profit and nonstock corporation

California corporation

By:

Elizabeth McGovern, President

4833-8757—9471.v6

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BOARD RE'RORT No. 17—94%, (Updated)

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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this “Agreement”), effective as of
2017 (the “Effective Date”), is entered into between SAN MATEO COUNTY
COMMUNI
COLLEGE DISTRICT, California Community College District (“_S_e_flg”),
and RURAL CALIFORNIA BROADCASTING CORPORATION, a California non-profit
and nonstock corporation (“Buyer”).
September 92,

21

Recitals

A.
Seller is the licensee of and operates noncommercial educational television
Station KCSM-TV, San Mateo, California (the “Station”), pursuant to a license issued by
the Federal Communications Commission (the “FCC”).
B.
Seller desires to sell and assign to Buyer, and Buyer wishes to buy and
take assignment of, certain assets of Seller and the FCC Licenses as set forth herein on
the terms and subject to the conditions hereinafier setffiit" subject to the prior apprOVal
of the FCC.

In consideration of the foregoing and the mutual promises contained herein, Buyer and
Seller, intending to be legally bound, hereby agree as follows:
Agreement

ARTICLE

1:

PURCHASE OF ASSETS

Station Assets. On the terms and subject to the conditions hereof, at Closing
in Section 1.8), Seller shall sell, assign, transfer, convey and deliver to Buyer, and
Buyer. Shall purchase andacquire from Seller, all right, title and interest of Seller in and to the
assets owned and held by Seller and described in this Sectionil (collectively, the “Station
Assets”). The Station Assets consist of:
1.1

(as defined

all transferable FCC licenses, permits and other authorizations with
(a)
respect to the Station (the “FCC Licenses”), which are listed on Schedule 1 (a), including any
renewals or modifications thereof between the date hereof and Closing;
,

l

the equipment, transmitters, and other tangible personal property that
for use in the operation of the Station and listed on Schedule 1.] ([7), except for
(i) any retirements or dispositions thereof made between the date hereof and Closing in the
ordinary course of business in accordance with Section 4.1 (c) hereof and (ii) the Rejected
.Personal Property (as defined in Section 2.6) (the “TangiblePersonal Proper_ty”);

(b)

are used or held

,

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the contracts, agreements and leases that are used in the operation of the
(c)
Station and listed on Schedule 1.1(0), and all othersuch contracts, agreements and leases
entered into between the date hereof and Closing subject to the limitations set forth in Section
$111) (the “Station Contracts”); and

all files, documents and records exclusively relating to the Station
(d)
Assets or required by the FCC to be kept by the Station, including the Station’s local public
4833-7934—5741N8

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files, engineering data and logs, Form 399 filed with the FCC specifying estimated expenses
related to Repacking (as defined in Section 1.6) and all Attachments thereto, together-with all
quotations, studies and correspondence relating to the KCSM repack plan, but excluding
records included in or related to Excluded Assets (as defined in Section 1.2).
The Station Assets shall be transferred to Buyer free and clear of liens, claims and
encumbrances
except for Assumed Obligations (defined in Section 1.3), liens that will
be released at or prior to Closing, liens listed on Schedule 1. 1(6) hereto, and such other liens,
claims, restrictions, and other exceptions that do not in any material respect detract from the
value of the prope1ty subject thereto or impair the use thereof in the ordinary course of the
business of the Station (collectively, “Permitted Liens”).

(“M”),

Excluded Assets. Notwithstanding anything to the contrary contained in this
Agreement and for the purposes of clarity, the Parties agree that the Station Assets shall not
include the following assets or any rights, title and interest therein (the “Excluded Assets”):
1.2

all cash and cash equivalentsfincluding without 11 reLtatien certificates
deposit, commercial paper, tr‘easuiy bills, marketable securities, money market accounts and
all such similar accounts or investments;
(a)

all tangible and intangible personal property retired or disposed
(b)
between the date of this Agreement and Closing in accordance with Article 4;

of

of

all Seller business records, including, without limitation, financial
(c)
records, charter documents, and books and records relating to the organization and existence
of Seller, duplicate copies of the records of the Station, and all records not relating to the
operation of the Station;

all contracts of insurance, all coverages and proceeds thereunder and all
(d)
rights in connection therewith, including without limitation rights arising from any refunds
due with respect to- insurance premium payments to the extent related to such insurance
policies;
.

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all pension, p1ofit sharing plans and trusts and the assets thereof and any
(e)
other employee benefit plan or arrangement and the assets thereof, if any;
.

p

all receivables (if any) and any other rights to receipt of cash'that accrue
(f)
or have accrued prior to the Effective Time (as defined in Section 1. 6) or otherwise arising
during or attributable to any period prior to the Effective Time (the “Receivables”);
‘

.

all rights and claims, whether mature, contingent or otherwise, against
(g)
third parties with respect to the Station and the Station Assets, to the extent arising during or
attributable to any period prior to the Effective Time (as defined in Section 1.6);

all deposits and prepaid expenses (and rights arising therefrom or
(h)
related thereto), except to the extent Seller receives a credit therefor under Section 1.6
(Prorations and Adjustments);

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all rights and claims, whether mature, contingent or otherwise, primarily
(1)
related to the Retained Obligations (as defined in Section 1.3);

all assets used or held for use in the operation of any other radio or
(i)
television station (other than the Station)'owned or operated by Seller or an affiliate of Seller,
or shared between any such station and the Station, except for the items specifically set forth
on Schedule 1.] (b);
all intellectual property associated with the Station, including
(k)
trademarks, trade names, service marks, internet domain names and websites, copyrights,
slogans, or logos, including without limitation all intellectual prOpeity using or related to the
call signs “KCSM” or “KCSM—TV”, or any variation thereof, together with Seller’s
programming information .and studies, marketing and demographic data, viewership studies
and correspondence; and

(l)

the items listed in Schedule

1

2(l) hereto.

Assumption of Obligations On the Closing Date (as defined In Section
the (i) obligations of Seller arising during, or attributable to, any period
shall
assume
1.8), Buyer
Closing
after
time
Date under the Station Contracts, (ii) all obligations and liabilities
of
on or
the
arising out of Buyer’s ownership of the Station Assets, and (iii) any other liabilities of Seller to
the extent Buyer receives a credit therefor under Section 1.6 (Prorations and Adjustments)
(collectively, the “Assumed Obligations”). Except for the Assumed Obligations, Buyer does not
assume, and will not be deemed by the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby to have assumed, any other liabilities or
obligations of Seller (the “Retained Obligations”).
1.3

Purchase Price. In consideration for the sale of the Station Assets to Buyer,
1.4
at Closing Buyer shall pay Seller, by wire transfer of immediately available funds,.the sum of '
Twelve Million Dollars ($12,000,000.00) (including the Deposit (as defined in Section 1.5),
subject to any adjustment pursuant to Section 1.6 (Prorations and Adjustments) (the “Purchase

M”)-

DepOSit. On the date of this Agreement, Buyer shall make a. cash deposit in1.5
immediately available funds in' an amount equal to Nine Hundred and Sixty Thousand Dollars
($960,000.00) (the “Deposit”) with McGovern Escrow Services, Inc. (the “Escrow Agen ”)
pursuant to the Escrow Agreement (the‘ Esc10w Agreement”) of even date herewith among
Buyer, Seller and the Escrow Agent. At Closing, the Deposit shall be disbursed to Seller and
applied to the Purchase Price and any interest accrued thereon shall be disbursed to Buyer. If
(this Agreement Is terminated by Seller pursuant to Sectidn 10.1(0), the Deposit and any interest
accrued thereon shall be disbursed to Seller pursuant to Section 10. 4 (Liquidated Damages). If
this Ag1eement is terminated pursuant any other p1ovision, the Deposit and any interest acclued
thereon shall be disbursed to Buyer. The parties shall each cooperate to instruct the Escrow
Agent to. disburse the Deposit and all interest thereon to the party entitled thereto and shall not,
by any act or omission, delay or prevent any such disbursement unless contested by a party in
good faith in writing within five (5) business days of a disbursement request, in which event the
Deposit shall remain with the Escrow Agent until the parties’ dispute is resolved. Any failure by
Buyer to make the Deposit on the date hereof constitutes a material default as to which the Cure
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Period under Section 10.2 (Cure Period) shall not apply and shall entitle Seller to immediately
terminate this Agreement.
1.6
Prorations and Adjustments. All prepaid and deferred income and expenses
relating to the Station Assets and arising from the operation of the Station shall be prorated
between Buyer and Seller in accordance with generally accepted accounting principles
(“GAAP”) as of 12:01 am. on the day of Closing (the “Effective Time”). Such prorations shall
include without limitation all taxes (except transfer taxes as provided by Section 11.1
(Expenses), music and other license fees, FCC regulatory fees, utility expenses, rent and other
amounts under Station Contracts, and similar prepaid and deferred items. Seller shall receive a
credit for all of the Station’s deposits and prepaid expenses to the extent they inure to Buyer’s
benefit. Except as set forth in Schedule 1.6, Buyer will reimburse Seller for any expenses related
to the Station’s involuntary channel reassignment in connection with reorganization of the
television broadcast band pursuant to Section 6403(b) of the Middle Class Tax Relief and I ob
Creation Act of 2012 (“Repacking”) incurred by Seller but not reimbursed to Seller from the
United States Treasury’s Repackin g reimbursement fund as of the Effective Time, subject to
“‘
mmSeller’s remittance to Buyer of any subsequent reimbursements received by Seller. To the extent
possible, initial prorations and adjustments shall be made on the Closing Date, with final
prorations and adjustments made no later than ninety (90) calendar days after Closing.
1.7
Additional Consideration. In further consideration for the sale of the Station
Assets to Buyer, in addition to the Purchase Price, Buyer shall provide to Seller the additional
consideration as set forth in Schedule I. 7.

Closing. The consummation of the sale and purchase of the Station Assets
provided for in this Agreement (the‘ ‘Closing”) shall take place on or before the tenth (10”)
business day after the date on which the FCC Consent (as defined'1n Section 1.9) becomes a
Final Order (as defined in Section 7.3) or on such other day after such FCC Consent as Buyer
“
and Seller' may mutually agree, subject to the satisfaction or waiver of the conditions set- forth
in A1ticle 6 and Article 7. The date on which the Closing is to occur is referred to herein as the

,

1.8

{I

Closing Date.”

FCC Consent Within ten (10) business days after- the date of thls
Agreement, Buyer and- Seller shall file an application with the FCC (the “FCC Application”)
requesting FCC consent to the assignment of the FCC Licenses to Buyer. FCC consent to the
FCC Application without any material adverse conditions other than those of general
applicability IS referred to herein as the “FCC Consent”. Buyer and Seller shall diligently
p1osecute the FCC Application and othe1 wise use their commercially reasonable efforts to obtain
the FCC Consent as soon as possible. Buyer and Seller shall notify each other of all documents
filed with or received from any governmental agency with respect to this Agreement or the
transactions contemplated hereby. Buyer and Seller. shall furnish each other with such
information and assistance as the other may reasonably request in connection with their
preparation of any gOVernmental filing hereunder. Except as otherwise provided herein, each
party will be solely responsible for the expenses incurred by it in the preparation, filing, and
prosecution of its respective portion of the FCC Application. Neither Buyer nor Seller shall take
“
any intentional action that would, or intentionally fail to take such action the failure of which to
take would, reasonably be expected to have the effect of materially delaying the issuance of the
FCC Consent.
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1.10
Repacking. Buyer acknowledges that it has reviewed Seller’s plans,
including equipment specifications, related to Repacking (as defined in Section 1.6). Seller
agrees to give Buyer advance notice (which may be by email) of any material changes to the
equipment specifications and vendors and to consider Buyer’s recommendations regarding
Repacking equipment specifications. For clarity, Seller has no obligation to Buyer with respect
to Repacking, including without limitation any obligation to accept Buyer’s recommendations
regarding equipment specifications, except as expressly set forth in this Agreement.

ARTICLE 2: SELLER REPRESENTATIONS AND WARRANTIES
Seller makes the following representations and warranties to Buyer:
2.1
Organization. Seller is a California Community College District duly
organized, validly existing and in good standing under the laws of the State of California. Seller
has all requisite power and authority (i) to own, lease and use its assets as presently owned,
leased and used, (ii) for the conduct the business and operations of Seller as presently conducted,
(iii) to execute and deliver this Agreement, and (iv) toperform and comply with all of the terms,
covenants, and conditions to be performed and complied with by Seller hereunder.

Authorization. The execution, delivery and performance of this Agreement
2.2
Seller
have
been
duly authorized and approved by all necessary action of Seller and do not
by
require any further authorization or consent of Seller. This Agreement is a legal, valid and
binding agreement of Seller enforceable in accordance with its terms, except in each case as such
enforceability may be limited by bankruptcy, moratorium, insolvency, reorganization or other
similar laws affecting or limiting the enforcement of creditors’ rights generally and except as
such enforceability is subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).

No Conflicts. Except for the FCC Consent and consents to assign certain of
the Station Contracts, and except as otherwise as set forth on Schedule 2.10, the execution,
delivery and performance by Seller of this Agreement and the consummation by Seller of the
transactions contemplated hereby do not conflict with any organizational documents of Seller or
any other material contract to which Seller is bound, or any law, judgment, order, or decree to
which Seller issubject, or require the consent or approval of, or a filing by Seller with, any
governmental or regulatory authority.
2.3

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2.4
FCC Licenses. Seller is the holder of the FCC Licenses described on
Schedule 1 .1 (a), which are all of the governmental licenses, permits and authorizations required
for the present operation of the Station. The FCC Licenses are in full force and effect and have
not been revoked, suspended, canceled, rescinded or terminated and have not expired. Except
with reSpect to Repacking as set forth in Schedule. I. 1(a), there is no pending, or, to Seller’s
knowledge threatened, action by or before the FCC to revoke, suspend, cancel, rescind or
materially adversely modify any of the FCC Licenses (other than proceedings to amend FCC
rules and regulations of general applicability). There is not issued or outstanding, by or before
the FCC, any order to show cause, notice of violation, notice of apparent liability, or order of
forfeiture against the Station or against Seller with respect to the Station that could result in any
such action. The Station is operating in compliance in all material respects with the FCC
Licenses, the Communications Act of 1934, as amended (the “Communications Act”), and the
,

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rules, regulations and policies of the FCC, other than such non—compliance as would not have a
material adverse effect on Buyer, the Station Assets or the transactions contemplated by this
Agreement. All material reports and filings required to be filed with the FCC by Seller with
respect to the Station have been timely filed and all such reports and filings are accurate and
complete, other than as would not have a material adverse effect on Buyer, the Station Assetsor
the transactions contemplated by this Agreement.
2.5

Taxes. Seller is not subject to taxation other than with respect to

employment and sales and use taxes. It has timely filed all required tax returns in the manner
.prescribed by law, and all such tax returns are true, correct and complete in all material respects.
Seller has properly accrued or paid to the extent such taxes have become due all taxes due from
Seller. Seller has properly withheld all taxes as required. There are no liens for taxes upon the
Station Assets. There is no dispute or claim concerning any tax liability relating to Seller either
claimed or raised by any taxing authority. There are no pendingtax audits or proposed tax audits
of which Seller has notice.
2.6‘
Personal Premm. Schedule 1.] (1)) contains a list of all material items of
Tangible Personal Property included in the Station Assets. Except as described in Schedule
1,] (19), Seller has good title to or a valid leasehold or license interest in such Tangible Personal
Property free and clear of Liens other than Permitted Liens. Subject the foregoing, each item of
Tangible Personal Property is sold “as is” as of the Effective Date. Buyer shall give notice to
Seller within forty (40) days after the date on which the FCC Application is filed of any items
listed on Schedule 1.1 (1)) (other than the Sutro Equipment) it does not wish to acquire at closing,
and Schedule 1.1 (b) shall be deemed amended to exclude such items (such excluded items, the
“Rejected Personal Property”), and Buyer shall thereafter have no rights with respect'to the
Rejected Personal Property.
Contracts. Schedule 1.1(c) contains a list of all contracts that are included in
the Station Contracts. The Station Contracts requiring the consent of a third party to assignment
are identified on Schedule 1.] (c). Each of the Station Contracts is in effect and is binding upon
Seller and the other parties thereto (subject to bankruptcy, insolvency, reorganization or other
similar laws relating to or affecting the enforcement of creditors rights generally). Seller has
performed its obligations unde1 each 'of the Station Contracts'in all material reSpects, and 1s not
in material default thereunder, and no other party to any of the Station Contracts IS in default
thereunder 1n any material respect.
2.7

.

All of the Tangible Personal Property

is (a) self-insured against
loss or damage up to a limit of $150, 000 in accordance with California law and Seller’s
established practice, and such 1nsurance will. be maintained 1n effect by Seller until the Closing,
and (b) insured with a commercial insurance company for loss or damage in excess of the self-

2.8

Insurance.

,

,

insurance amount up to $5, 000, 000.

Compliance with Law. Other than such non-compliance as would not have
2.9
a material adverse effect on a reasonable buyer, the Station Assets or the transactions
contemplated by this Agreement, Seller has complied with all laws, rules and regulations,
including without limitation all FCC. rules and regulations applicable to the operation of the
Station, and all decrees and orders of any court or governmental authority which are applicable
to the operation of the Station. To Seller’s knowledge, there are no claims or investigations by
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the government pending or threatened against Seller in respect ofthe Station except those
affecting the industry generally.

2.10
Litigation. Except as set forth on Schedule 2.10, there is no action, suit or
proceeding pending 01', to Seller’s knowledge, threatened against Seller in respect to the Station
Assets that will or threatens to subject Buyer to liability or which will or threatens to affect
Seller’s ability to perform its obligations under this Agreement. Seller is not operating under or
subject to any order, writ, injunction or decree relating to' the Station Assets of any court or
governmental authority which would have a material adverse effect on the condition of the
Station Assets or on the ability of Seller to enter into this Agreement or consummate the
transactions contemplated hereby, other than those of general applicability (e. g., Repacking).
2.11
Disclaimer of Other Express and Implied Representations and Warranties.
Except for the representations and warranties expressly made by Seller in this Article 2, Seller
makes no other representations or warranties, express or implied, whether statutory or by
common law regarding Seller the business and operation of the Station, or the Station Assets.

2.12
No Othe1 Representations o1 Wan antics Seller agrees that neither Buye1
nor any of its representatives has made and shall not be deemed to have made, nor has Selle1 or
any of its representatives relied on, any representation, warranty, covenant or agreement, express
or implied, or any statement or information, with respect to Buyer, its business, or its proposed
acquisition and operation of the Station, other than those representations, warranties, covenants
and agreements explicitly set forth in Article 3. Seller further acknowledges and agrees that (a)
it has made its own investigationinto, and based thereon has formed an independent judgment
concerning the Buyer, its business and the proposed acquisition and operation of the Station, and-~
(b) Buyer has made available such information about Buyer as Seller has reasonably requested.

ARTICLE 3: BUYER REPRESENTATIONS AND WARRANTIES
Buyer hereby makes the following representations and warranties to Seller:
Organization. Buyer is duly organized, validly existing and in good
3.1
standing under the laws of the jurisdiction of its organization, and is, or will be at Closing,
qualified to do business 1n the state of California Buyer has the requisite power and authority to
execute, deliver and perform this Agreement and all of the other agreements and instruments to
be executed and delive1ed by Buyer pursuant hereto and to consummate the transactions
~
contemplated hereby.
4

3. 2
Authorization. The execution, delivery and pelformance of this Agreement
by Buyer has been duly authorized and approved by all necessary action of Buyer and do not
require any further authorization or consent of Buyer. This Agreement 13 a legal, valid and
binding agreement of Buyer enforceable 1n accordance with its terms, except in each case as such
enforceability may be limited by bankruptcy, moratorium, insolvency, reorganization or other
similar laws affecting or limiting the enforcement of creditors’ rights generally and except as
such enforceability is subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).

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3.3
No Conflicts. Except for the FCC Consent, the execution, delivery and
performance by Buyer of this Agreement and the consummation by Buyer of any of the
transactions contemplated hereby do not conflict with any organizational documents of Buyer,
any contract or agreement to which Buyer is a party or is by which it is bound, or any law,
judgment, order or decree to which Buyer is subject, or require the consent or approval of, or a
filing by Buyer with, any governmental or regulatory authority or any third party.

Litigation. There is no action, suitor proceeding pending or, to Buyer’s
knowledge, threatened against Buyer which questions the legality or propriety of the transactions
contemplated by this Agreement or could materially adversely affect the ability of Buyer to
perform its obligations hereunder.
3.4

Qualification. Buyer is legally, financially and otherwise qualified to be the
3.5
licensee of, acquire, own and operate the Station under the Communications Act and the rules,
regulations and policies of the FCC, including, but not limited to, eligibility to hold a
noncommercial educational license under Section 73.621 ofthose rules. There are no facts that
would, under existing law and the existing rules, regulations, policies and preeeéures of the FCC,
disqualify Buyer as an assignee of the FCC Licenses or as the owner and operator of the Station,
or that that would reasonably be expected to delay the FCC’s processing of the FCC Application
because of Buyer’s qualifications. No divestiture, waiver of or exemption from any existing
FCC rule or policy on the part of Buyer is necessary for the FCC Consent to be obtained.
Financing. Buyer has on hand or from committed funds financial resources
3.6
sufficient to consummate the transactions contemplated by this Agreement and to operate the
Station after the Closing Date. Buyer’s obligations hereunder are not subject to 0r conditioned
upon it obtaining financing or a financing commitment of any nature.

No Other Representations or Warranties. Buyer agrees that neither Seller
3.7
nor any of its representatives has made and shall not be deemed to have made, nor has Buyer or
any of its representatives relied on, any representation, warranty, covenant or agreement, express
or implied, or any statement or information, with respect to Seller, its business, the Station, or the
Station Assets, other than those representations, warranties, covenants and agreements explicitly
set forth in Article-2. Buyer further acknowledges and agrees that (a)*it has made its own
investigation into, and bascd thereon has formed an independent judgment concerning the
Station and the Station Assets, and (b) Seller'has made available such information about the
Station and the Station Assets as Buyer has reasonably requested.

ARTICLE 4: SELLER AND BUYER COVENANTS
‘

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Seller’s Covenants. Between the date hereof and Closing, except'as
permitted by this Agreement or with the prior written consent of Buyer, which shall not be
unreasonably withheld, delayed or conditioned, Seller shall:
4.1

.

use commercially reasonable efforts to operate the Station in the
(a)
ordinary course of business (for avoidance of doubt, any expense reductions made consistent
with Seller’s past practices shall be deemed in the- ordinary course of business) and in all
material respects in accordance with FCC rules and regulations and with all other applicable
laws, regulations, mics and orders;
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except with respect to Repacking as set forth in Schedule 1.1 (a)
(b)
and Section 4.1(h), not modify, and in all material respects maintain in full force and effect,
the FCC Licenses;

except in the ordinary course of business, not sell, lease or dispose of or
(0)
agree to sell, lease or dispose of any of the Station Assets unless replaced with similar items of
substantially equal or greater value and utility, or create, assume or permit to exist any Liens
upon the Station Assets, except for Permitted Liens, and not dissolve, liquidate, merge or
consolidate with any other entity;
use commercially reasonable efforts to maintain the Tangible Personal
(d)
Property in the ordinary course of business;

upon reasonable notice, give Buyer and its representatives reasonable
(e)
access during normal business hours to the Station Assets, and furnish Buyer with information
relating to the Station Assets that Buyer may reasonably request, provided that such access
met-Mme
rights shall not be exercised in a manner that interferes with the operation of the Station;

not enter into new Station Contracts that will be binding upon Buyer
(t)
after Closing or amend or terminate any existing Station Contracts, except for Station
Contracts made, amended or terminated with Buyer’s prior written consent;
cooperate with Buyer in timely filing such applications and other
(g)
material as may be required to obtain FCC Consent to the assignment of the FCC Licenses to
Buyer, including, but not limited to, providing the FCC with such information as it may
reasonably request, assisting Buyer in providing such information, where appropriate, and
generally using commercially reasonable efforts to obtain the prompt and timely FCC
Consent; and
take such commercially reasonable steps as are required by the Mt.
(h)
Sutro transmitter site landlord and, in consultation with Buyer as provided by Section 1.10
(Repacking), such other steps as Seller reasonably deems necessary and appropriate, in each
case to enable the Station to meet the Repacking requirements and schedule established by the
FCC.
4. 2

Buyer” 3 Covenants. Between the date hereof and Closing, except as
permitted by this Agieement or with the prior written consent of Seller, which shall not be
unreasonably withheld, delayed or conditioned, Buyer shall.

"

take no aetiOn that would reaSonably be expected to impair its
(a)
qualifications to be the licensee of the Station, materially delay obtaining the FCC Consent,
result in its disqualification under the rules of the FCC to be the licensee of the Station, or that
would require it to obtain a waiver of the FCC Rules in order to obtain the FCC Consent;
‘

cooperate with Seller in timely filing such applications and other
(b)
material as may be required to obtain FCC Consent to the aSSignment of_the FCC Licenses to
Buyer, including, but not limited to, providing the FCC with such information as it may
reasonably request, assisting Seller in providing such information, where appropriate, and
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generally using commercially reasonable efforts to obtain the prompt and timely FCC
Consent; and

after joining in the filing of the application for FCC Consent, apply
(c)
promptly to the FCC for a change in the Station call sign to take effect upon Closing so as to
avoid confusion with Seller’s continuing operation of Station KCSM (FM), San Mateo,
California.

ARTICLE

5:

JOINT COVENANTS

Buyer and Seller hereby covenant and agree as follows:
Control. Buyer shall not, directly or indirectly, control, supervise or direct
5.1
the operation of the Station prior to Closing. Consistent with the Communications Act and the
FCC rules and regulations, control, supervision and direction of the operation of the Station prior
to. Closing shall remain the responsibility of Seller as the holder of the FCC Licenses.
~N.:.-a:;rs-~-

--» ~

5.2
Risk of Loss. Seller shall bear the risk of any loss of or damage to the
Tangible Personal Property located at the Mt. 'Sutro transmitter site and necessary for the
“
operation of the Station as it is operated as of the Effective Date (the utro Eguipmen ”) at all
times until the Closing, and Buyer shall bear the risk of any such loss or damage'thereafter. In
the event that any loss of or material damage to the Sutro Equipment occurs after the Effective
Date but prior to Closing, then upon becoming aware of such loss or material damage, Seller
shall use commercially reasonable efforts to promptly notify Buyer in writing, and it shall be the
responsibility of Seller, prior to Closing, to repair or cause to be repaired or replaced, and to
restore, the affected Sutro Equipment substantially to its condition prior to any such loss, damage
or destruction; provided, that in the event that any Sutro Equipment is not repaired, replaced, or
restored prior to Closing, Buyer, at its sole option, upon written notice to Seller: (a) may elect to
postpone the Closing until the earlier of (A) such time as the property has been repaired,
replaced, .or restored in all material respects, or (B) up to six (6) months from the date when all
other conditions to Closing herein have been satisfied (other than those conditions that by their
nature are to be satisfied at Closing, but subject to the satisfaction of those conditions at such
time); or (b)‘may at any time during such six (6) month period elect to consummate the Closing»
and accept the property in its then condition, in which event the Purchase Price shall be reduced
by the estimated cost of such repair, replacement or restoration of the Sutro Equipment as
determined by an independent third-party engineer agreeable to both Parties, which engineer
Seller and Buyer shall instruct to base the estimate on the least expensive approach that complies
with good engineering practices, considering the timeframe of Repacking. If Buyer shall extend
the time for Closing pursuant to clause (a) above, the provisions of Section 10.1(d) shall be tolled
for such time as Buyer has elected to postpone the Closing pursuant to this Section 5.2 and Seller
is using reasonable best efforts to effect such repair, replacement or restoration, and for five (5)
business days after the property involved has been repaired, replaced or restored in all material
5

respects.
5.3

Consents.

The parties shall use commercially reasonable efforts to obtain any third
(a)
party consents necessary for the assignment of any Station Contract (which commercially
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reasonable efforts shall not require any payment to any such third party), but no such consents
shall be conditions to Closing except for the Required Consents. Receipt of consents designated
with a diamond on Schedule 1.1(0) shall be a condition precedent to Buyer’s obligation to close
under this Agreement (the “Required Consents”).

To the extent that any Station Contract may not be assigned without the
(b)
consent of any third party, and such consent is not obtained prior to Closing, this Agreement and
any assignment executed pursuant to this Agreement shall not constitute an assignment of such
Station Contract; provided, however, with respect to each such Station Contract, Seller and
Buyer shall cooperate to the extent feasible in effecting a lawful and commercially reasonable
arrangement under which Buyer shall receive the benefits under the Station Contract from and
after Closing, and to the extent of the benefits received, Buyer shall pay and perform Seller’s
obligations arising under the Station Contract from and after Closing in accordance with its
terms. This subparagraph 5.3(b) shall not apply to the Required Consents.
5.4
FCC Qualification. Neither Buyer nor any person with an attributable
interest inBury'e-r shall file any application to acquire any station or otherwise operate any station
if, as a result, such action would cause Buyer, or any person with an attributable interest in
Buyer, to have an attributable interest in, and/or seek to acquire an attributable interest in, any
‘station(s) which would involve a greater number of stations than would be permitted, absent an
exemption or waiver, under the Communications Act, or any of the rules, regulations or policies
the FCC, including the F CC’s multiple ownership rules, in effect from time to time, or which
would raise market concentration questions under applicable law.
5.5
Actions. After Closing, if reasonably requested by Seller, Buyer shall
cooperate with Seller in the investigation, defense or prosecution of any action that is pending or
threatened against Seller or its affiliates with respect to the Station, whether or not such action is
subject to a claim for indemnification pursuant to this Agreement; provided, however, that Seller
shall reimburse Buyer for‘the-out—Of-pocket costs (including reasonable attorneys’ fees), if any,
reasonably incurred by Buyer to comply with this Section 5.5.

ARTICLE 6: SELLER CLOSING CONDITIONS
'

The obligation of Seller to consummate the Closing hereunder is subject to satisfaction,
or prior to Closing,‘of each of the following conditions (unless waived in writing by Seller):
6.1

.

at_

Representations and Covenants.

The representations and warranties of Buyer made in this Agreement
(a).
shall be true and correct in'all material respects as of the Closing Date except for changes
permitted or contemplated by the terms of this Agreement.
-

The covenants and agreements to be complied with and performed by
(b),
Buyer at or prior to Closing shall have been complied with and performed in all material
respects.

Seller shall have received a certificate dated as of the Closing Date from
(c)
Buyer executed by an authorized officer of Buyer to the effect that the conditions set forth
in Sections 6.1(a) and Lb) have been satisfied.
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6.2
Proceedings. Neither Seller nor Buyer shall be subject to any court or
governmental order or injunction restraining or prohibiting the consummation of the transactions
contemplated hereby.

FCC Authorization. The FCC Consent shall have been obtained.

6.3

~

6.4
Deliveries. Buyer shall have complied with its obligations set forth
in Section 8.2 (Buyer Documents).

ARTICLE 7: BUYER CLOSING CONDITIONS
The obligation of Buyer to consummate the Closing hereunder is subject to satisfaction,
at or prior to Closing, of each of the following conditions (unless waived in writing by Buyer):

Representations and Covenants.

7.1

The representationsgand warranties of Seller made in this Agreement
(a)
shall be true and correct in all material respects as of the Closing Date except for changes
permitted or contemplated by the terms of this Agreement.

The covenants and agreements to be complied with and performed by
(b)
Seller at or prior to Closing shall have been complied with and performed in all material
'

respects.

Buyer shall have received a certificate dated as of the Closing Date
(0)
from Seller executed by an authorized official of Seller to the effect that—the conditions set
forth in Sections 7.1(a) and (b) have been satisfied.
Proceedings. Neither Seller nor Buyer shall be subject to any court or
governmental order or injunction restraining or prohibiting the consummation of the transactions
contemplated hereby.
‘

7.2

'

FCC Authorization. The FCC Consent shall have been obtained and, unless
'waiv'ed'by‘BUyer, the FCC Consent shall have become a Final Order. 'For purposes of this,
Agreement, the term “Final Order” shall mean that action shall have been taken by the FCC
(including action duly taken‘by the FCC’S staff, pursuant to delegated authority)4which shall not
have been reversed, stayed, enjoined, set aside, annulled or suspended; with respect to which no
timely request for stay, petition for rehearing, appeal or certiorari or ‘sua sponte action of the
FCC with comparable effect shall be pending; and as to which the normal time for filing any
such request, petition, appeal, certiorari or for the taking of any such suasponte action by the
FCC shall have expired or otherwise terminated.
7.3

7.4

in Section

8.1

Deliveries. Seller shall have complied with its obligations set forth
(Seller Documents).

Consents. The Required Consent shall have been obtained, including but
not limited to landlord consents for all studio and transmitter site leases (to the extent such leases
require such consent) being assigned and assumed hereunder.
7.5

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ARTICLE

8:

CLOSING DELIVERIES
Seller Documents. At Closing, Seller shall deliver or cause to be delivered

8.1

to Buyer:

(i)

the certificate described in Section 7.1101;

(ii)

an assignment

(iii)

an assignment and assumption

of FCC authorizations assigning the FCC Licenses

from Seller to Buyer;

of contracts assigning the Station

Contracts from Seller to Buyer;
an assignment and assumption

(iv)
Intangible Assets

(if any) from

of intangible

assets assigning the

Seller to Buyer;

(v)

a

bill of sale conveying thgflangible Personal Property from Seller

(Vi)

a

copy of the Required Consents;

to Buyer;

certified resolutions of Seller’s Board of Trustees approving the
execution, delivery, and performance of this Agreement and the consummation of the
transactions contemplated herein, and the delivery of the closing documents provided for

(vii)

hereunder; and

(viii) any other instruments of conveyance, assignment and transfer that
may be reasonably necessary to convey, transfer and assign the Station Assets from Seller to
Buyer, free and clear of Liens, except for Permitted Liens.
Buyer Documents. At Closing, Buyer shall deliver or cause to be delivered

8.2
to.

Seller

(i)
5
P1ice) and _2.
(R15k

.

the Purchase Price
1.0 6§dzhereof;

1n

accordance with Sections 1.4 (Purchase

of Loss) and
(ii)

the certificate described in Section 6.1(c);

(iii)

an assignment and assumption

of contracts assuming the Station

(iv)

an assignment and assumption

of intangible assets assigning the

Contracts;

Intangible Assets

,

-

(if any) from Seller to Buyer;

a good standing certificate issued by the Secretary of State of
(v)
Buyer’s jurisdiction of formation;

certified resolutions of Buyer’s Board of Directors approving the
(vi)
execution, delivery, and performance of this Agreement and the consummation of the
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transactions contemplated herein, and the delivery of the closing documents provided for
hereunder; and

(vii) such other documents and instruments of assumption that may be
necessary to assume the Assumed Obligations (as defined in Section 1.3).
ARTICLE 9: SURVIVAL; INDEMNIFICATION
Survival.

9.1

Except as provided by Section 1.5 (Deposit) and Section 10.4
(a)
(Liquidated Damages) with respect to Liquidated Damages, the termination of this Agreement
shall not relieve any party of liability for any material breach or default under this Agreement
prior to the date of termination. Notwithstanding anything contained herein to the
contrary, Section 1.5 (Deposit) and Section 11.1 (Expenses) shall survive any termination of this
Agreement.
The representations and warranties in this Agreement, made as of the
(b)
Closing, shall survive for a period of one (1) year from the Closing Date, wheleupon they shall
expire and be of no further force or effect, except (1) those under Section 2.1
(Organization), Section 2.2 (Authorization), Section 2.5 (Taxes), Section 3.1 (Organization)
and Section 3.2 (Authorization) (collectively,.the “Fundamental Representations”), all of "which
shall survive until the expiration of any applicable statute of limitations, and (ii) that if within
such applicable period the indemnified party gives the indemnifying party written notice of a
claim for breach thereof describing in reasonable detail the nature and basis of such claim, then
such claim shall survive until the earlier of resolution of such claim or expiration of the
applicable statute of limitations. The covenants and agreements in this Agreement that are to be
performed after the Closing shall survive until performed and any other covenants and
agreements shall survivefor a period of nine (9) months from the Closing Date.

Indemnification.

9.2

From and after Closing, Seller shall defend, indemnify and hold
(a)
harmless Buyer and its officers, directors, members and employees from and against and in
respect of, and reimburse them for, any and all losses, costs, damages, liabilities and expenses,
including 1easonable attorneys’ fees and expenses (“Damages”) resulting from:
.

.

any material breach by Selle1
this
Agreement; or
of

(i)

made under Article 2

of its rep1esentations

and warranties

(ii)

any material breach by Seller

of any material obligation under this

(iii).

any material breach by Seller

of the Retained Obligations

Agreement; or
(as

defined in Section 1.3); or
the business or operation of the Station before the Effective Time,
(iv)
except for the Assumed Obligations (as defined in Section 1.3); or
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20,

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any third party claim, demand, lawsuit or action resulting from any
(v)
material breach or deviation, as applicable, as described in Section 9.21a)(i Hiv).

Notwithstanding the foregoing or anything else in the Agreement to the
(b)
contrary, Seller shall have no liability to Buyer until Buyer’s aggregate Damages exceed the sum
of Five Thousand Dollars ($5,000) (“Basket”), after which the amount of the Basket shall be
excluded from any calculation of Damages.
From and alter Closing, Buyer shall defend, indemnify and hold
(c)
harmless Seller and its officers, directors, members and employees from and against and in
respect of, and reimburse them for, any and all Damages incurred by Seller in connection any
claim, demand, lawsuit or action arising out of or resulting from:
any material breach by Buyer
(i)
made under this Agreement; or

(ii)

any material breach by Buyer

of its representations

and warranties

of any material obligation under this
'

Agreement; or

(iii)

any material breach by Buyer

of the Assumed Obligations

(as

defined in Section 1.3); or

(iv)

the business or operation

of the Station after the Effective Time,

except for the Retained Obligations; or
any third party claim, demand, lawsuit or action resulting from any
(V)
material breach, or the business or operation of the Station, as applicable, as described in Section
9‘.2( c )1 iH iv ).
'

‘

Notwithstanding the foregoing or anything else in this Agreement to the
contrary, Buyer shall have no liability to Seller until Seller’s aggregate Damages exceed the
Basket, after which the amount of the Basket shall be excluded from any calculation of
Damages?
(d)

,

'

9.3,

Indemnification Procedures for Third Party Claims.

The indemnified party shall give prompt written notice to the
(a)
indenmifying'party of any demand, suit, claim or assertion of liability by third parties that is
subject to indemnification hereunder (a “Claim”), but a failure to give such notice or delaying
su0h notice shall not affectthe indemnified party’srights or the indemnifying party’s obligations
except to the extent the indemnifying party’s ability to remedy, contest, defend or settle with
respect to such Claim is thereby prejudiced and provided that such notice is given Within the time
period described in Section 9.1 (Survival).

The indemnifying party shall have the right to undertake the defense or
(b)
opposition to such Claim with counsel selected by it. In the event that the indemnifying party
does not undertake such defense or opposition in a timely manner,.the indemnified party may
undertake the defense, opposition, compromise or settlement of such Claim with counsel selected
by it and the indemnifying party shall be required to pay for reasonable attorneys’ fees and costs
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incurred by the indemnified party (subject to the right of the indemnifying party to assume
defense of or opposition to such Claim at any time prior to settlement, compromise or final
determination thereof).

Anything in this Agreement to the contrary notwithstanding:

(0)

the indemnified party shall have the right, at its own cost and
expense, to participate in the defense, opposition, compromise or settlement of the Claim;

(i)

the indemnifying party shall not, without the indemnified party’s
(ii)
written consent, settle or compromise any Claim or consent to entry of any judgment that does
not include the givingby the claimant to the indemnified party a release from all liability in
respect of such Claim subject to the limitations herein; and

(iii) in the event that the indemnifying party undertakes defense of or
opposition to any Claim, the indemnified party, by counsel or other representative of its own
choosing and at its sole cost and expense, shall have the right to consult with the indemnifyin'g
party and its counsel concerning such Claim and the indemnifying party and the indemnified
party and their respective counsel shall cooperate in good faith with respect to such Claim.

-

-—

,

In determining the amount of any Damages hereunder, the amount shall
(cl)
be determined after deducting the amount of any insurance proceeds and other third party
recoveries actually received by Seller or Buyer or any of its affiliates in respect thereof (which
proceeds and recoveries Seller or Buyer agrees to use, or to cause any such affiliate to use,
diligent efforts to obtain) and the amount of any tax benefit related thereto. If an
indemnification payment is received by Seller or Buyer, and Seller or Buyer or any of their
affiliates later receives insurance proceeds, other third party recoveries, or tax benefits in
respect of the related Damages, Seller or Buyer shall promptly pay to the other a sum equal to
the lesser of (y) the actual amount of insurance proceeds, other third party recoveries, and tax
benefits or (z) the actual amount of the indemnification payment previously paid by the other
with respect to such Damages. Seller and Buyer shall use, and shall cause its affiliates to use,
commercially reasonable efforts to mitigate the amount of Damages for which it may be
entitled to indemnification hereunder.-

...

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__..

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.._..

9.4

The remedies provided in this Article 9 and in Article 10 shall be the
(a)
exclusive remedies of the parties hereto in connection with the transactions contemplated by
this Agreement, including without limitation any breach or non-performance of any
representation, Warranty, covenant, obligation or agreement contained herein. No party (and
no affiliate of any party) may commence any suit, action or proceeding against any other party
hereto with respect to. the subject matter of this Agreement, Whether in contract, tort or
otherwise, except to enforce such party’s express rights pursuant to this Article 9 or Article 10.
The provisions of Articles 9 and 1_Q were specifically bargained for and reflected in the
amounts payable to Seller in connection with the transactions contemplated hereby.
.

.

Remedies Exclusive.
‘

Without limiting the foregoing and notWithstandin g anything that may
(b)
be expressed or implied in this Agreement, Seller and Buyer each agree and acknowledge that
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their only recourse hereunder is against the other. Without limiting the generality of the
foregoing sentence, Seller and Buyer each agree and acknowledge that (a) no recourse shall be
had against any past, cuirent or future affiliate, shareholder, director, officer, employee, agent,
trustee, board or other governing entity, or attorney of the other (collectively, the “Excluded
Persons”), with respect to the subject matter of this Agreement, and (b) neither it nor any of its
affiliates shall commence any suit, action or proceeding against any Excluded Person with
respect to the subject matter of this Agreement, whether in contract, tort or otherwise.
_

9.5
Tax Treatment of Indemnity Payments. It is the intention of the parties to
treat any indemnity payment made under this Agreement as an adjustment to the purchase price
for all purposes, and the parties agree to file their tax returns accordingly.

ARTICLE 10: TERMINATION; SPECIFIC PERFORMANCE; LIMITATION OF LIABILITY
10.1
Termination. Subject to Section 9.1 (Survival), this Agreement may be
terminated prior to Closing as follows:

(a)

by mutual written consent of Buyer and Seller;

by written notice of Buyer to Seller if Seller breaches its representations
(b)
or warranties or defaults in the performance of its obligations or covenants set forth in this
Agreement and such breach or default is material in the context of the transactions
contemplated hereby and is not cured within the Cure Period (as defined in Section 10.2);
by written notice of Seller to Buyer if Buyer breaches its representations
(c)
or warranties or defaults in the performance of its obligations or covenants set forth in this
Agreement and such breach or default is material in the context of the transactions
contemplated hereby and is not cured within the Cure Period; provided, however, that the Cure
Period shall not apply to Buyer’s obligations to make the Deposit on the date hereof and to
pay the Purchase Price at Closing; or
.

by written notice of Seller to Buyer or Buyer to Seller, as long as the
terminating party is not in breach of any of its representations or warranties or in default in the
performance of any of its obligations or covenants set forth in this Agreement, if Closing does
not occur by the date twelve (12) months after the date of this Agreement.
(d)

,

-

.

-

Cure Period. Each party shall .give the other party prompt written notice
upon learning of any breach or default by the other party under this Agreement. The term “Cfie
Period” as used herein means a period commencing on the date Buyer or Seller receives from the
other'wr‘itten notice of breach or default hereunder and continuing until the earlier of (i) twenty
(20) calendar days thereaiter or (ii) the. Closing Date; provided, however, that if the breach or
default is non—monetary and cannot reasonably be cured within such period but can be cured
before the Closing Date, and if diligent efforts to cure promptly commence, then the Cure Period
shall continue as long as such diligent efforts to cure continue, but not beyond the Closing Date.
10.2

~

10.3
Specific Performance. Notwithstanding Section 9.4; a), in the event of
failure or threatened failure by either party to comply with the terms of this Agreement, the other
party shall be entitled to an injunction restraining such failure or threatened failure and, subject
to obtaining any necessary FCC consent, to enforce this Agreement by a decree of specific
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performance requiring compliance with this Agreement. If a party brings an action to enforce
specific performance under this Agreement, the other party shall waive the defense that there is
an adequate remedy at law and waive any requirement to post a bond or other security.

Liguidated Damages. If Seller terminates this Agreement pursuant
to Section 10.110), then Seller shall be entitled to the Deposit and such payment shall constitute
liquidated damages and the sole remedy of Seller for a breach by Buyer of this Agreement. The
parties acknowledge and agree that payment of such amount shall constitute payment of
liquidated damages and is not a penalty and that the liquidated damages amount is reasonable in
light of the substantial but indeterminate harm anticipated to be caused by material breach or
default under this Agreement, the difficulty of proof of loss and damages, the inconvenience and
non-feasibility of otherwise obtaining an adequate remedy, and the value of the transactions to be
consummated hereunder. In addition, if Buyer contests Seller’s right to the Deposit, then the
prevailing party in any action by Seller to enforce its right to the Deposit shall be entitled to
payment by the other party of the reasonable attorneys’ fees incurred by the prevailing. party in
such action.“
10.4

,

”at";

.a

Limitation of Liability. Notwithstanding anything in this Agreement to the
contrary, neither party shall have any liability to the other under any circumstances for special,
indirect, consequential, punitive or exemplary damages or similar damages of any kind,
including any damages calculated using a “multiplier” or any other similar method, whether or
not foreseeable, occasioned by any failure to perform or the breach or default of any
representation, covenant, warranty or other obligation under this Agreement, whether based in
10.5

«1..

.v

negligence or otherwise.
Special Termination Right of Buvel. Subject to Section 9.1 (Survival), in
10.6
addition to the termination 11 ghts set forth 1n Section 10.1 (Termination), Buyer may terminate
this Agreement prior to Closing as set forth in this Section 10.6:

Buyer may terminate this Agreement by written notice to Seller if
(a)
LocusPoint Networks LLC (“LPN”) or any party affiliated with LPN files with the FCC any
petition or opposition to the FCC Application or to Seller’s or Buyer’s qualifications to hold a
broadcast license, and as a result'of such filing, either (1) FCC Consent is delayed more than
six (6) months after the date on which the FCC Application is filed and it is not then
reasonably foreseeable that FCC Consent will be obtained within sixty (60) days the1eafter Or
(ii) FCC Consent 1s delayed more than eight (8) months after the date on which the FCC
Application IS filed.
'

.

Buyer may te1minate this Agreement by written notice to Seller if LPN
or any party affiliated with LPN initiates any legal or equitable action to oppOse, obstruct or
delay the sale of the Station Assets by Selle1 or purchase of the StatiOn Assets by Buyer and
thereby obtains an order from a court of competent jurisdiction that IS legally binding on one
or both parties to this Agreement that (i) by its terms prevents the Closing; (ii) by its terms
imposes conditions on the Closing that either Buyer or Seller are not willing or able to satisfy
within ten (10) days after the date on which all other closing conditions set forth in Articles 6
and 1 have been met or waived; or (iii) otherwise delays the Closing for more than eight (8)
months after the date on which the FCC Application is filed.
(b)

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Buyer may terminate this Agreement by written notice to Seller if
(c)
Buyer is for any reason made a pa1ty to any legal or equitable action by LPN or Seller arising
out of the dispute between LPN and Seller that is the subject of the litigation described in
Schedule 2.10.

In the event that Buyer forebears from exercising its rights to terminate
(d)
under Section 10.61
and Buyer deems it necessary or advisable to incur legal costs and
other related expenses in connection with responding to or defending against any claims or
assertions relating to Buyer, then the Purchase Price shall be reduced by such costs and
expenses reasonably incurred by Buyer prior to Closing; provided, that Buyer shall notify
Seller of such expenses as they are incurred (i.e, within ten (10) days of receiving each
invoice). Notwithstanding the immediately foregoing sentence, at any time after such
expenses incurred by Buyer exceed Seventy—Five Thousand Dollars ($75,000.00) in the
aggregate, Seller shall have the right to reimburse such expenses to Buyer and terminate this
Agreement without further liability to Buyer by giving Buyer ten (10) days’ notice of its intent
to do so; unless Buyer gives notice to Seller within such 10-day notice period that it agrees to
pay such expenses in excess ofa$75,000 going forward.

c),

ARTICLE

11:

MISCELLANEOUS

11.1
Expenses. Each party shall be solely responsible for all costs and expenses
incurred by it in connection with the negotiation, preparation and performance of and compliance
with the terms of this Agreement. Transfer or sales or use taxes, fees and charges applicable to
the transfer of the Station Assets under this Agreement, if any, shall be paid one-half by Buyer
and one-half by Seller. Each party is responsible for any commission, brokerage fee, advisory
fee or other similar payment that arises as a result of any agreement or action of it or any party
acting on its behalf in connection with this Agreement or the transactions contemplated hereby.

Further Assurances. After Closing, each party shall from time to time, at the
request of and without further cost or expense to the other, execute and deliver such other
instruments of conveyance and assumption and take such other actions as may reasonably be
requested 1n order to more effectively consummate the transactions contemplated hereby.
l

1.2.

-

,

'

Assignment Neither party may assign all or part of thls Agreement without
the prior written consent of the other party hereto. The terms of this Agreement shall bind and
inure to the benefit of the parties’ respectiVe successors and any permitted assigns, and no
assignment shall relieve any partyof any obligation or liability under this Agreement.
,11.3--

11.4
Notices Any notice pursuant to this Agreement shall be'111 writing and shall
be deemed delivered on the date of personal delivery or confirmed facsimile transmission 01
confirmed delivery by a nationally recognized overnight courier service, and shall be addressed
as follows (or to such other address as any party may request by written notice):

.

4

To Seller:

San Mateo Community College District
3401 ‘CSM Drive
San Mateo, California 94402

Attn: Executive Vice Chancellor

_

19

_

4833-7934-574l.v8

_

 .

BOARD REPORT NO. 1'7-9-1okistupdated).

25

Execution Version

with copies to:

Kathy Blackwood
San Mateo County Community College District
3401 CSM Drive
San Mateo, California 94402

and

Pillsbury Winthrop
1200

—

17th St. SW

Washington, DC 20036
Attn: John Hane
Rural California Broadcasting Corporation
5850 Labath Avenue
Rohnert Park, CA 94928
Attn: Nancy Dobbs, President and CEO

To Buyer:
~

Gray Miller Persh 1111?;
1200 New Hampshire Avenue NW, Suite
Washington, DC 20036
Attn: Todd D. Gray

with copy to:

7

410-7 ..,._

Amendments. No amendment or waiver of compliance with any provision
hereof or consent pursuant to this Agreement shall be effective unless evidenced by an
instrument in writing signed by the party against whom enforcement of such amendment, waiver,
or consent is sought.
11.5

Entire Agreement. This Agreement (including the Schedules hereto)
constitutes the entire agreement and understanding among the parties hereto with respect to the
subject matter hereof, and supersedes all prior agreements and understandings with respect to the
subject matter hereof. No party makes any representation or warranty with respect to the
transactions contemplated by this Agreement except as expressly set forth in this Agreement and
each party hereby confirms that it has not relied upon any representations or statements, whether
written or oral, except those representations and warranties set forth in Article 2 and 3 of this
“
Agreement.
11.6

‘

‘

*

-

.

‘

~

,

.

-

~

Severability‘. If any court or governmental authority holds any provision in
this Agreement invalid, illegal or unenforceable under any applicable law, then, so long as no
party is deprived of the benefits of this Agreement in any material respect, this Agreement shall
be construed with the invalid, illegal or unenforceable provision deleted and the validity, legality
and enforceability of the remaining provisions contained herein shall not be affected or impaired
thereby.
11.7

_.

,

V,

.

_

11.8
No Beneficiaries. Nothing in this Agreement expressed or implied is
intended or shall be construed to give any rights to any person or entity Other than the parties
hereto and their successors and permitted assigns.

Governing Law and Venue. The~e0nstruction and performance of this
Agreement shall be governed by the laws of the State of California without giving effect to the
11.9"

_
_

20 4833-7934~5741.v8

_

 ,..

,...,

BOARDREPORTFKX1%9JOM5umdMHD

.

Execution Version

choice of law provisions thereof. Any action to enforce the terms of this Agreement shall be
brought in the courts of the State of California with venue lying in the County of San Mateo.

Construction. The parties hereto have participated jointly in the negotiation
documents and instruments
contemplated herein, all provisions shall be construed as if drafted jointly by the parties, and no
presumption or burden of proof shall arise favoring or disfavoring any party by virtue of
authoring any of the provisions.
11.10

and drafting

of this Agreement and the other agreements,

11.11

of which will

each
same agreement.

Counterparts. This Agreement may be executed in separate counterparts,
original and all of which together will constitute one and the

be deemed an

I

[SIGNATURE PAGE. FOLLOWS]

-214833-7934-5741N8

26

 '

BOARD REPORT NO. 17—9-1045 (Updated)

.

_

4

,

'2‘7

.

.e

.

SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT
IN WITNESS WHEREOF, the parties have executed this Agreement

as

ofthe

date first set forth above.

San Mateo County Community
'
College Dis

Rural California Broadcasting
Corporation

By:

By:

Printed/R {)Vl
Title:

%flb/0

0/10 I: cry/0

Printed:

r

Title:

_

22

_

48331-793467“ .v8

 '

BOARD REPORT NO.

17—9-liih‘13

\Updated)

~
»

i

.
~

_

,

.

,

28

7

SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT

IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.

San Mateo County Community
College District

By:

Rural California Broadcasting
Corp tion
.

W7;
A"

Printed:

Prin ed: M

Title:

Title: @494)-

\/

(D 5 B 573

ga EEO

- 22. _
4833-7934-574158

 ’

BOARD REPORT NO. 17—9-1043 (Updated)

29

List of Schedules

1.1(a)

—

FCC Licenses

1.1(b)

—

Tangible Personal Property

1.1(0)

—

Station Contracts

1.2(1)

—

Other Excluded Assets

1.6

—

Repacking Expenses

1.7

—

Additional Consideration

2.10

—

Seller Litigation

4833—7934-5741.v8.

-.

 ‘

BOARD REPORTNO. l7—9-104B(Updated)

-

.1

.

.

.

.

.

Schedule 1.1(a)

FCC Licenses, Applications, and Authorizations
1.

Television broadcast station license (FCC file no. BLEDT-20091124AHY).

file no. BREDT-20140721AEJ; expires

2. License renewal authorization (FCC
12/1/2022).
3.

*Construction permit authorizing minor modification of BLEDT—20091124AHY
to specify operation on Channel 27 (FCC File No. 0000028093).

4.

Television broadcast station auxiliary antenna license (FCC file no. BXLEDT20120621AA‘B).

5.

Earth Station license E040364 (FCC file no. SES-REG-20040909—01357; expires
9/9/2019).
V

6.

_

FCC Form 399, Incentive Auction Relocation Reimbursement (file number
0000028092), filed July 11, 2017, and pending with the FCC.

*Pursuant to the FCC’s process of “repacking” television broadcast stations, Seller has
been assigned to Transition Phase 8, and is required to complete construction and testing
of Station’s authorized Channel 27 facilities on or before January 18, 2020. The Station
must discontinue operations on its pre—auction channel on or before March 13, 2020
(together, the “Repacking Deadlines”). See FCC Public Notice “Incentive Auction
Closing and Channel Reassignment Public Notice”, DA 17-314 (released April 13, 2017).
NOTWITHSTANDING ANYTHING IN THE AGREEMENT OR THE SCHEDULES
THERETO TO THE CONTRARY, SELLER MAKES NO REPRESENTATION OR
WARRANTY REGARDING THE FEASIBILITY OR ABILITY OF SELLER 0R
BUYER TO MEET THE FCC’ S REPACKING DEADLINES.

-

ii

4833-7934-5741N8

3'01,

 BOARD REPORT NO. 17-9-1045 (Updated)

31

Schedule 1.1(b)

Tangible Personal Property
Property subject to Liens identified with. a diamond (0).

Mt. Sutro Transmitter Site Equipment

TRANSMITTER EQUIPMENT
TRANSMITTER
LOCAL NAME
DTV ANTENNA

MANUFACTURER

MODEL

STATUS

ACTIVE

SYSTEM

WAVEGUIDE
COMBINER

43

ACTIVE

DIELECTRIC

HARRIS DTV TV

XMTR

HARRIS

MISCELLANEOUS
SUTRO SITE
EQUIPMENT

MISCELLANEOUS

DHD90P4

ACTIVE

:_..;..:-

VI;

..

Other Tangible Personal Property

...

MASTER CONTROL EQUIPMENT
MCR LOCAL NAME

MANUFACTURER

MODEL

STATUS

DAB407-

4;“

-.

AES PATCH BAY

4MKII

ADC

_

Active

PP12226RS-

SDI/HD PATCH BAY

.._.-..i.._..,i.

SVJT—BK

Active

SYSTEMS

FS-l

Active

AJA VIDEO
SYSTEMS

FS-l

Active

Titan

Active

ADC
AgA VIDEO
‘

AJA-l FRAME SYNC
~

A

.

AJA-2 FRAME SYNC
SUNDANCE

'

AUTOMATION

AVID

KVM #1

"AVOCENT

AMX 5130

Active

KVM #10

AVOCENT

AMX 5130

Active

KVM #2

AVOCENT

Am 5130

Active

KVM #3

AVOCENT

AMX 5130

Active

KVM #4

AVOCENT

AMX 5130

Active

'

KVM #5

AVOCENT

AMX 5130

Active

KVM #6

AVOCENT

AMX 5130

Active

KVM #7

AVOCENT

AMX 5130

Active

KVM #34

AVOCENT

AMX 5130

Active

4833-7934-5741N8

 ’\

BOARD REPORT NO. 17-9-IUZ¥B’(Updated)

32

KVM #9

AVOCENT

AMX 5130

KVM BASE STATION

AVOCENT

AMX 5010

Active

EVERTZ

HD9625LGAEAS Plus BP

Active

EVERTZ KEYER #1

EVERTZ

9625LGA Pltis
EAS

Active

EVERTZ KEYER #2

EVERTZ

9625LGA

Active

EVERTZ

9625LGA Plus
EAS

Active
Active
Active?

EVERTZ I-ID KEYER

EVERTZ KEYER #3

‘

EVERTZ KEYER #4

EVERTZ

9625LGA Plus
EAS

MONITOR WALL
ENGINE - MC

EVERTZ

MVP

DPSl
SYNCRONIZER/TBC

LEITCH

DPS 575

.

DPSZ

Active

Active
A~._..

SYNCRONIZER/TBC

LEITCI-I

DPS 575

MASSLOGGER

MASSTECII

ML-350—015

20 RACKS AND 3OKF T

MIDDLE
ATLANTIC /

WIRING

BELDEN

Active
out

MBDIAPORT 4CH

01"

service

Active

1

OMNEON

MIP-5322

NEEDIAPORT 4CH 2

OMNEON

MH’-5322

MULTIPORT

OMNEON

PR-MIP-S 501

Active

MULTIPORT 2

OMNEON

PR-MIP-S 501

Active

OMNEON CONTROL
SERVER

OMNEON

NCM 2003

Active

PROBROWSB’ PROXY
GEN l

OMNEON

MPB-l 002-G

inactive

PROBROWSE PROXY
'
GEN 2

OMNEON

MPB-lODZ-G

inactive
inactive

Active

Active
4

f

'

1

'

'

PROBROWSB SERVER

:OMNEON

MPB-lOOlHC

DVC PRO VCR 4

PANASONIC

AJ-SD930

Active

DVC PRO VCR 8

PANASONIC

AJ-SD930

Active

DVC PRO VCR

PANASONIC

SD255

inactive

DVC PRO VCR

PANASONIC

_SD255

inactive

DVC PRO VCR

PANASONIC

SD255

inactive

XD 'CAM VCR

SONY

PDWHDI 500

Active

HD CAM VCR

SONY

HDW-1'800

Active

DVW-M2006

Active

-

.

‘

~

.

‘

DIGIBETA VCR

SONY

MULIT MONITOR

WOHLER/MARSH

(MANY)

ALL

Active

‘
RACK MT

PANASONIC

-

Active

iv ..
48'33-7934-5741.v8

 /
BOARD REPORT NO. 17-9-104B (Updated)

33

MONITORS(3)
19" MONITORS

(MANY)

’SAMSUNG

DEKOCAST C

PINNACLE

DEKOCAST

DVD RECORDER

PIONEER

PRV-LXl

inactive

SENCORE ATLAS IRD

SENCORE

MRD 3187A

Active

SENCORE ATLAS IRD

SENCORE

MRD 3187A

Active

Active

Active

SENCORE ATLAS IRD

SENCORE

MRD 3187A

Active

IRD A

THOMSON

RX8200

Active

IRD B

THOMSON

RX8200

Active

IRD

C

THOMSON

RX8200

Active

IRD D

THOMSON

RX8200

Active

IRD E

THOMSON

RX8200

Active

IRD F

THOMSON

RX8200

Active

SYNCRONIZER

SNELL & WILCOX

TBS 180AV

Active

DIGI BETA

SONY

DVWMZOOO

Active

QCZ MONITOR

SONY

BVM-DZOFIU

Active

QC3 MONITOR

SONY

BVM-D20F1U

inactive

M2/MUXMX5

MULTIPLEXER (2)

TAN DBERG
_

‘

SD ASI RECEIVER #1

TANDBERG

TANDBERG

i.

‘

SD ASI RECEIVER #3

Active

AS

Active

TTlZéQ/DIRB

-

.

,

Active

'I‘T1260/DIRB

.

SD ASI RECEIVER #2

620

TTlZGO/DIRB
AS

.

TANDBERG

AS

Active

,

M2/ENC/E57l
SD ENCODER #1

TANDBERG

O/ATSC

Active

TANDBERG

M2/ENC/E571
0/A'ISC

Active

4

SD' ENCODER #2

'

'

'

‘

SD ENCODER #3

'"

‘

M2/ENC/ES71
0/ATSC

.

_

TANDBERG

Active

M2/ENC/E57‘l
SD ENCODER #4

.

JUPITER CONTROL
SYSTEM
.

.

-

TANDBERG

O/ATSC

Active

THOMSON

Jupiter

inactive

~

'

'

ROUTER CNTRL
PANELS(4)

THOMSON

Various

Active

SI—l

THOMSON

SI-3000C

Active

SI-Z

THOMSON

31-3 00 0C

Active

TRINIX ROUTER

THOMSON

Trinix
DV33128

Active

VENUS ROUTER

THOMSON,

Venus

Active

-

v4833-7934-5741N8

 BOARD REPORT NO. 17-9-1643 (Updated)

VM-l

THOMSON

VM-3 000C

Active

QCl AUDIO

WOIILER

AMPl-DA

Active

AUDIO

WOHLER

AMP I-DA

Active

WAVEFORM
MONITOR

TEKTRONIX

7120

Active

WAVEFORM
RASTERIZER

TEKTRONIX

7020

Active

LOCAL NAME

MANUFACTURER

MODEL

STATUS

BATTERY BELT #1

ANTON BAUER

30/13

ACTIVE

BATTERY BELT #2

ANTON BAUER

30/13

ACTIVE

DIONIC 90 #3

ANTON BAUER

Dionic 90

out of
service

DIONIC 90 #4

ANTON BAUER

Dionic 90

service

DIONIC 90 #5

ANTON BAUER

Dionic 90

out of
service

DIONIC 90 #6

ANTON BAUER

Dionic 90

out of
service

ANTON BAUER

Quad 2702

service

KIT

K5600

K0200/4OOIBN
DOUB+3

ACTIVE

FIELD MIXER

SHURE

F P32A

ACTIVE

QCZ-

PRODUCTION

\

outof

QUAD 2702

out of

-

POWERCI—IARGER

JOKER NEWS COMBO

'

FIELD MIXER

,

INACTI
VE

SHURE

M67

FIELD MONITOR

SONY

PVM—8041Q

Aspect ratio converter

Picolink

ACTIVE
Active

XDCAMHD
CAMCORDER

SONY

PDWF-335L

ACTIVE

ZSG—200M

ACTIVE

KHIOEX3:6B
IRSE

ACTIVE

'

FIELD CAMERA
ZOOM CONTROL

,
,

‘

.

CAN ON
'

XDCAM WIDE ANGLE

'

LENS

CANON
‘

' '

‘

-

KHZIEXSJ

XDCAM ZOOM LENS

CANON

IRSE SX12

ACTIVE

TRIPOD SYSTEM

Vinten

Vision

ACTIVE

-

4-

,

‘

10

TRIPOD SYSTEM
(matte box)

O'CONNOR

50

ACTIVE

MATTE BOX

VOCAS

M13625

ACTIVE

Lavalier Microphone

Sony

ECM- 66

Active

Lavalicr Microphone

Sony

ECM- 66

Active

XDCAM HD DISC
DRIVE

SONY

PDW-Ul

Active

- vi. 4833-7934-5741 .v8

 BOARD REPORT NO.

17—9—1048

(Updated)

XDCAM HD DISC
DRIVE

35

PDW-Ul

SONY

Active

~vii4833—7934-5741.v8

 vBOARDREPORTNO.«l-7—9-103B(Updated)

..

36

-

.

Schedule 1.1(c)

Station Contracts
9

Transmitter site lease between Sutro Tower, Inc. and San Mateo County Community
College District dated January 16, 2003, as amended May 22, 2014, extended term
through February 28, 2020 (“Sutro Lease”).

9

Repacking services agreement, Sutro Tower, Inc. and San Mateo County Community
College District dated July 31, 2017, term concurrent with Sutro Lease.

o

Designates Station Contract requiring third party consent.

—

-

viii 4833-7934-5741.v8

 ‘

BOARD REPORT NO. 17-9-1043 (Ufia‘ated)

37

Schedule 1.2(1)

Other Excluded Assets
The Rejected Personal Property.

-ix4833-7934-5741.v8

 BOARD REPORTNO. 17—9-1043 (Updated). I

‘

.

38

,

Schedule 1.6

Unreimbursed Repacking Expenses

None.

4833-7934—5741N8

 ,BOARDREPOR-TNO. 17-9-10231Updatéd)...

39

-

4.

_

Schedule 1.7

Additional Consideration
1.

.

Television and Radio Announcements. Beginning on the date of Closing and
ending on the date five (5) years thereafter, Buyer shall make available to Seller, at no
cost to Seller, on-air' underwriting announcement spots of up to thirty (30) seconds in
length on KRCB TV 22 and on KRCB FM RADIO 91. Each month Buyer shall
produce one (1) announcement for Seller, based on copy provided by Seller, to
describe to the Buyer's broadcast area (including but not limited to the San Francisco
North Bay Region), its activities and initiatives for the benefit of Seller's. alumni,
prospective students and parents (the ”Messages"). In the alternative, Seller may
provide pre-produced announcement to Buyer in a manner and format reasonably
acceptable to Buyer. Seller shall be responsible for scheduling the. Messages with
Buyer on a monthly use—it-or—lose—it basis, and for providing the copy or preproduced announcements to Buyer at least fourteen (14) days prior to Seller‘s first
desired broadcast date. Buyer will schedule five (5) monthly spot placements on
KRCB TV 22 and ten (10) monthly spot placements on KRCB FM RADIO 91.
Buyer shall run all Messages between the hours of 6 am and midnight local time on a
run—of-schedule basis with approximately equal distribution across dayparts. Should
Seller not elect to utilize any Messages by the end of any month, such unused
Messages shall be forfeited and may not be carried forward to future months (and any
order that is not timely placed by Seller shall be deemed used). Buyer will provide to
Seller each month a written summary of when (date and time) the Messages aired on
KRCB TV 22 and on KRCB FM RADIO 91 in the previous month, provided that
Seller informs Buyer to whom and where this "proof-of-performance" documentation
should be sent., The Messages shall conform to the regulations and policies
applicable to noncommercial educational broadcasting, including public TV and radio
industry standards, and Buyer shall have the right to preempt or reject any Message(s)
and otherwise maintain control over the programming of the stations .in order to
comply with applicable laws (including without limitation FCC rules and regulations)
and Buyer’s standards and practices, which Buyer shall apply to the Messages on a
uniform and non—discriminatory basis ascompared to all other underwriting
announcements broadcast by each respective station. Buyer shall make-good any
preempted or rejected Messages subject to Seller timely providing make—good copy
or pre-produced announcements. Notwithstanding anything in the Agreement or in
this Schedule 1.7, Seller has no obligation make use of the Messages.

Student Internships. At the beginning of the first semester (of Seller’s student
campuses) following the date of Closing, or another date mutually'agreed upon by the
parties, until three (3-) years thereafter, pursuant to an appropriate internship site
agreement between Seller and Buyer with provisions that are customary for
community college student internships. (but excluding any payments from Seller to
Buyer), Buyer shall work with Seller to provide training, in the form of educational
internships, at Buyer‘s studio and office location for up to six of Seller's students per
..

xi ,_
4833-7934-5741N8

.__,,

_;_......

.

._‘r1____\._)-'—.'——l‘._

._;_.

4..

s.‘_...

~....:..-.u.;...r._«.

,

a

-

~

~

 BOARDREPORTNQ17-9—1-04B(Updated).

-

..

40

.

year (three (3) students per semester) working in Buyer's marketing, development,
production, telecommunications, and social media departments. The objective of the
training and educational internship program is to provide Seller's students with
applicable working experiences that allow the Seller's students to learn and gain
onsite training from Buyer's staff. Buyer and Seller agree to cooperate during the
three (3) year period in designing and implementing the actual educational internship
program. Buyer and Seller will mutually agree on the number of hours the students
will work on a weekly basis and the number of weeks per year that the training and
educational internship will be offered. Transportation to and from Buyer’s studio and
office location is the responsibility of the individual students and/or the Seller's
educational program. Each year Buyer and Seller will review and evaluate the
established educational internship program to consider whether operational and
content modifications are necessary and appropriate. The educational internships
training shall be unpaid, unless the nature and scope of the responsibilities performed
is appropriate: for paid services, as determined by Buyer in its reasonable good-faith
discretion, in which case Buyer shall make payment for such services. In the first
year'of the student training pursuant to this Agreement, Buyer and Seller will make
reasonable efforts to establish and be operational with the training and educational
internship program on or before six (6) weeks prior to the commencement of the first
semester. Notwithstanding anything in the Agreement or in this Schedule 1.7, Seller
shall have no obligation to make use of the student internships.

Carriage of KCSM(FM) video channel via TV Digital Broadcast. Beginning at
the Closing, and for five (5) years thereafter, Buyer will maintain carriage of the
KCSM(FM) video channel as broadcast on the Station as of the Effective Date (the
“ {CSMtFM) Stream”). Carriage of the KCSM(FM) Stream shall in all cases be
consistent with FCC requirements for noncommercial educational stations and
Sections 73.503 and 73.621 of the FCC rules. Buyer’s retransmission of the
KCSM(FM) Stream will include the slide show featuring the Jazz Datebook,
community events and Jazz Trivia substantially as they are carried as of the Effective
Date, provided that Seller continues to produce and furnish such features to Buyer.
Seller shall be responsible for providing: the KCSM(FM) Stream to Buyer via‘a
technological solution in an ASI encoded format that the Buyer, in its reasonable
discretion, deems appropriate for integration into the Station’s multi—channel digital
stream. Seller shall be solely responsible for the costs of production and encoding of
the KCSM(FM) Stream, for the costs of prov1dmg the KCSM(FM) Stream to Buyer,
and for the content of the KCSM(FM) Str,eam and shall obtain and maintain
commercially reasonable media perils msurance for Buyer's broadcast of the
KCSM(FM) Stream with such insurance including Buyer as an additional named
insured. ‘Buyer, at its sole discretion, shall have the exclusive right to preempt or
reject any Specific programming of the KCSM(FM) Stream if Buyer, in its reasonable
judgment, concludes that such programming does not serVe the public interest, or that
alternate programming or alternative program scheduling, would better address local
needs. As between the parties, all right, title and interest in and to the KCSM(FM)
Stream, and the right to authorize the use of the KCSM(FM) Stream in any manner
and in any media whatsoever, shall be and remain vested at all times solely in Seller.
-

‘

‘

_

xii .

4833-7934-5741N8‘

 BOARD REPORTNO. 17-9-1053 (Updated)

.

1.

.

I

.

.

Seller shall secure, at its sole .cost and expense, any rights licenses that might be
necessary for the transmission of the KCSM(FM) Stream over the Station.
Notwithstanding anything in the Agreement or in this Schedule 1.7, Seller shall have
no obligation to continue providing the KCSM(FM) Stream to Buyer and Seller does
not grant any rights to Buyer with respect to the KCSM(FM) Stream.
.

Local Programs. Each month during the five (5) year period immediately following
Closing, Buyer will broadcast on its primary (.1 or equivalent) channel up to thirty

“M

(30) minutes per month of Seller-produced video programming (each, a
Program”) in a timeslot of Buyer’s choice in pre-prime or on Weekends. Seller will
give notice of its intent to provide a Local Program and its total run time at least two
(2) months in advance of the calendar month in which it intends to provide such
Local Program (e. g'., Seller will give notice no later than September 30 with respect to
Local Program to air in December). Each Local Program must be delivered to Buyer
no later than one (1) month in advance of the calendar month in which Seller wishes
the Local Program to air. Local Programs must adhere to F CC. requirements for noncommercial stationsffifmply with Buyer’s reasonable technical standards, and be
delivered by Seller to Buyer in a mutually agreeable manner. Buyer, at its sole
discretion, shall have the right to preempt or reject any Local Program provided by
Seller if Buyer, in its reasonable judgment, concludes that such Local Program does
not serve the public interest, or that alternate programming would better address local
needs. Notwithstanding anything in the Agreement or in this Schedule 1.7, Seller
shall have no obligation to provide any Local Prog1am 01 to make use of the rights
g1 anted to Buye1 herein.

-

xiii

4833-7934-5741.v8

.41

 BOARD REPORT NO.

17-9—1041:

.42.

(Updated)

Schedule 2.10

Seller Litigation
Seller has sued LocusPoint Networks, LLC, LocusPoint II KCSM, LLC and
PricewaterhouseCoopers Advisory Services LLC, and LocusPoint Networks, LLC and
LocusPoint II KCSM, LLC have sued Seller, in Superior Court of the State of California,
County of San Mateo, in each case raising claims arising out of a series of agreements
between LocusPoint Networks, LLC and Seller regarding a potential sale of Station in the
FCC’s broadcast incentive auction. ‘See San Mateo County Community College District,
at al vs. LocusPoint Networks, LLC, ET. AL., l7—CIV—01534; LocusPoint Networks, LLC,
et al vs. San Mateo County Community College Dist-riot, l7-CIV-Olt550. LocusPoint
Networks, LLC has asserted to Seller that it believes those same agreements give
LocusPoint Networks, LLC the right to block the sale of Station at this time. Seller
disputes LocusPoint Networks, LLC’s assertions for a number of reasons, including
without limitation that LocusPoint Networks,- LLC materially breached the agreements
such that the provisions LocusPoint NetworksTL‘EC has stated it relies upon for its
assertions no longer bind Seller, and because any security interest LocusPoint Networks,
LLC may hold is limited to the proceeds of the sale of certain assets used in the operation
of the Station and does not extend to the assetsthemselves.

-

xiv

—

4833-7934~5741.v8

 =5;

BOARDREpomzno.radiate-(updated)

.
=_

~ -. ,-:

.

43151“

q

‘. ESCRC‘W SERViCiiS

.

22 Battery Street, Suite 914, San Francisco, CA. 94111
*‘
Telephone: 415.735.3645 Facsimile: 415.358.5732

This Escrow Company holds California Department of BusineSS OVerslght Escrow License No. 9635091

Escrow No.1008957
:-

ESCROW lNSTRUCTlON AND AGREEMENT

,

This Escrowinstruction and Agreement (”instruction”) dated September 22, 2017, shall not be binding
on MCGovern E5crow Services, inc. (”Escrow Agent”) until acknowledged and executed”by all persons
Identified as principals herein.

This Agreement is entered into by and betWeen SAN MATEO COUNTY COMMUNITY COLLEGE DiSTRlCT,
a California Community College District (”Seller”), RURAL CALIFORNIA BROADCASTlNG CORPORATiON, a
California non-profit and nonstock corporation (”Buyer”), and the Escrow Agent. Seller and Buyer are
sometimes referred to collectively as the ”Parties, and each individually Is a ”Party".
WHEREAS, Seller and Buyer have entered into an Asset Purchase Agreement dated September

22, 2017 the (”Agreement”).
WHEREAS, under the terms of the Agreement the Seller desires to sell and assign to Buyer, and
Buyerwishes to buy and take assignment of, certain assets ofSeiler and the FCC Licenses ofthat certain

noncommercial educational television station known. as
conditions set forth In the Agreement.

KSCM-TV (the

”Station”), underterms and

WHEREAS, under the terms of the Agreement Buyer shall make a cash deposit, in immediately
available funds, in the amount of Nine Hundred Sixty'Thousand and No/lOOUS ($960,000.00).

NOW, iT-IEREFORE, the Parties desire to establish an escrow account in which $960,000.00 (the
"Escrow Funds”) will be deposited hereto by Buyer.
1.

of Funds
or before September

Deposit

.

On

22, 2017 (the "Closing Date”), Buyer-shall cause to be deposited hereto

.

the Escrow Funds.
V

The Escrow Funds are to be deposited in the form
Escrow Services, lnc., Escrow No. 100895.
a.

{$33-87 57-947 i,v6
'

-

-.—

x—

-~1-.»,.........c...

’

.

Upon receipt of the Escrow Funds that have been deemed collected, the Escrow/Agent is
instructed to invest the Escrow Funds in one or more federally insured, interest bearing
account. All interest accrued on the Escrow Funds shall'be credited to Rural California
Broadcasting Corporation for taxation purposes and reported as such.

.

'

ofa wire transfer payable toiycovern
.

'

~;

 BOARD REPORTNO. 17-9—1043 (Updated)

.

.

-

.
_

.

‘

44

.

.

.

_

Escrow No. 100895

b.

2.

Concurrent with the execution of this Escrow Agreement, Buyer shall deliver to escrow:
i.
A copy of the Certificate of Incorporation as filed with the California Secretary of
State, and a Resolution designating signing authority for the corporation.
ii.
Customer identification form from the officers and/or any other signing
authority of Buyer as required for bank interest bearing account purposes.
iii.
lRS form W—Q, Request for Taxpayer Identification Number and Certification
from Rural California Broadcasting Corporation.

Disbursement of Funds
On or before three (3) business days prior to the Closing as defined in the Agreement, or three
(3) business days prior to any other disbursement of Escrow Funds, Seller and Buyer shail submit
to escrow mutual written instruction as to:
a.

Any and all prorations and adjustments to be made between the Parties, and

b.

The disbursement

c.

Any other disbursement of the Escrow Funds as contemplated in the Agreement.

of the Escrow Funds to Seller and the accrued interest to Buyer, or

Obligation to Disburse
Notwithstanding any provision to the contrary herein (or in the General Provisions attached),
Escrow Agent shall effect the delivery and disbursement of the Escrow Property as set out in
Section 2. within three (3) business days of receipt of the required authorization and instruction
from the Parties.
4.

-5.

Duties of Escrow Agent
Escrow Agent will not be liable for actions or omissions hereunder, except for its own gross
negligence, bad faith or willful misconductand,.except With respect toclair'ns based upon such
gross negligence, bad faith or willful misconduct, such actions or omissions as are successfully
asserted against Escrow Agent. Buyer and Seller shall jointly and severally indemnify and hold
harmless Escrow Agent (and any successor Escrow Agent) from and against any and all losses,
liabilities, claims, actions, damages and expenses, including reasonable attorney’s fees and
disbursements, arising out of and in connection with this Agreement. Without limiting the
foregoing, Escrow Agent will in no event be liable with respect to any action taken or omitted to
be taken by it in good faith in accordance with any Written notice of Buyer delivered to Escrow
Agent"In accordance with this Agreement. Each of Buyer and Seller hereby releases, waives,
discharges and coVenants not to sue the Escrow Agent for any action taken or omitted to be
taken under this Agreement except to the extent caused by Escrow Agent’ 5 gross negligence,
bad faith or willful misconduct.

Termination of Escrow
a. The date of termination is upon the distribution of the Escrow Property pursuant to this
Agreement; provided, however, in the event any funds remain in the account on the first
(1“) anniversary of the date of these escrow instructions and Agreement, these escrow
instructions and Agreement shail be renewed on an annual basis until all such funds are
disbursed subject to the terms of Section 5.(b) below.
~

.

.

4833-8757-947 l.v6

.

 BOARD REPORTNO.17—9—102i’B‘(Updated)

,

,

..

.

'45

_.

Escrow‘ No. 100895

b.

Should Escrow Agent at any time and for any reason desire to be relieved of its obligations
as escrow holder hereunder, the Escrow Agent shall give written notice of its desire to be
relieved to the Parties. The Parties shall, within (30) days of the receipt of such notice,
appoint a successor escrow agent and instruct Escrow Agent to deliver the Escrow Funds
hereunder to the successor escrow agent. if Escrow Agent is not notified of the
appointment of a successor escrow agent within sixty (60) days of its transmission of notice
under this Section, Escrow Agent shall hold the Escrow Funds untii: (i) it receives the
authorization and instruction described in Section 2; (ii) it receives a court order instructing
it to disburse the Escrow Funds; or (iii) it files a suit in interpieader and deposits Escrow
Funds with the court.

independent Review
The Parties have made their own determination as to whether the language in this Instruction
memorialize their own respective Agreement, are not usurious, and/or come under any
consumer protection laws. McGovern Escrow Services, inc. makes no representations or
warranties with respect to the terms and conditions of the Agreement. The Parties further
represent and warrant that each has received sufficient information, either through said party’s
own legal counsel or other sources of said party' 5 own selection, so as to be able to make an
intelligent and informed judgment whether to enter into the Agreement, along with this Escrow
instruction and Agreement. Each undersigned party further state that each has read the
document(s) in their entirety prior to executing each such document, and that each has
executed the documents voluntarily, with competence and capacity to contract and with the
kn0wledge of the terms significance and legal effect of each such document.

"

‘
The Asset Purchase Agreement
This Escrow instruction is executed for the purpose of enabling the Escrow Agent to complete
this transaction, but is in no way intended to modify, amend, supersede or in any way change
the Asset Purchase Agreement, dated September 14, 2017 and entered into prior to this Escrow
instruction and Agreement. Escrow Agent is not a party to and is not to be concerned with said
Agreement or any matters contained therein, and is responsible only for such matters as are
specifically set out in these instructions.

invalidity Provision
Should any provision of this Agreement be found invalid, such invalidity shall not in any way
affect the remaining provision of this Agreement.

W

This Parties hereto shall not assign any of its rights or delegate any of this duties under this
Agreement without prior written consent of the other party and any unauthorized assignment
or delegation shall be void and of no effect.

cu

4833-8757-9471N6

 BOARD REPORT NO.

17—9—1041;

(Updated)

46

Escrow No. 100895

Escrow No. 100895

10. Notices

All notices, requests, consents and other communications hereunder to any party pursuant to
this Note will be deemed to be sufficient if contained in a written instrument delivered
personally or mailed by certified or registered mail postage prepaid or sent electronically by
confirmed email transmission, addressed as set forth below, or to such other address as may
hereinafter be designated in writing by the recipient to the sender pursuant to this Section 10.
Any such notice shall be effective (i) when personally delivered, (ii) one (1) business day after it
has been deposited with a nationally-recognized overnight courier, duly addressed and postage
prepaid, (iii) two (2) business days after it has been deposited in the United States mail, duly
addressed and postage prepaid, or (iv) on the business day of confirmed transmission by
facsimile or email. Any party may change such party's address for notice by written notice to
the other parties pursuant to the provisions of this Section 10.
To Seller:
‘

To Buyer:
-

Saii'Mateo Community College District

Rural California Broadcasting Corporation

3401 CSM Drive

5850 Labath Avenue

San Mateo, CA 94402
Attn: Executive Vice Chancellor

Attn: Nancy Dobbs, President and

Emai!: blackwoodk@smccd.edu

Email: nancy_dobbs@krcb.org

Rohnert Park, CA 94928
CEO

To McGovern Escrow Services, inc:

Ms. Elizabeth McGovern

McGovern Escrow Services, inc.
22 Battery Street, Suite 914
San Francisco, Ca 94111

Email: elizabeth@mcgovernescrow.com
11. Compensation

Funds
as

,

.

.

,

..

,.

.

a

.

forthe payment of eScrow fees and charges shall

,

be exclusively paid by Buyer and Seller

described in the attached Escrow Fee schedule (”Exhibit A”).

12. Amendment

of Escrow

This Agreement may not be amended except in writing, executed by the Parties and the Escrow
Agent. This Agre'ement‘may be executed in counterparts, each of Which so executed shall be
deemed an original, irrespective of the date of execution and delivery, and the counterparts

shall constitute one and the same document.

4833-8757-9471.v6

 BOARD REPORT NO. 17-9-1648 (Updated)

47

Escrow No. 100895

13. Governing Law and Assignment

This Agreement shall be construed in accordance with and governed by the laws

of the State of
California and shall be binding upon the parties hereto and their respective successors, heirs,
personal representatives and permitted assigns; provided, however, that any asslgnment or

transfer by any party of its rights under this Agreement or with reSpect to the Escrow Funds
shall be void as against the Escrow Agent unless (a) written notice thereof shall be given to the
Escrow Agent; and (b) the Escrow Agent shall have consented in writing to such assignment or
transfer‘
14. Court Orders

Escrow Agent is hereby authorized, in its exclusive discretion,

to obey and comply with all final
and non-appealable writs, orders, judgments or decrees issued by any court or administrative
agency affecting any money, documents or other assets or items held by Escrow Agent. Escrow
Agent shall not be liable to any of the Parties hereto, their successors, heirs or personal
representatives by reasun'of' Escrow Agent’s compliance with such writs, orders, judgments or
decrees.
15. USA Patriot Act Notice

The Escrow Agent notifies the Parties hereto that pursuant to the requirements of the USA

Patriot Act (Title ll of Pub.

L.

107-56, signed into law October 26, 2001) (the ”Act”), the Escrow

Agent is required to obtain, verify and record information that identifies the Parties to this
lnstruction and Agreement, which information includes the name and address of the Parties and

other information that will allow Escrow Agent to identify them in accordance with the Act.

4833-8757347 I .V6

 BOARD REPORT NO.

17—9-1041;

48

(Updated)

Escrow No. 100895

EXHIBIT A
Escrow Peg Agreement

n at
consideration for complying with the Escrow lnstru ction and Agreement dated SeptemberMOlZ
Pacific Retirement Services, Inc. agrees to pay all applicable fees to McGovern Escrow Services, inc., as
detailed below:
In

$3,000.00

Escrow Set-Up and Documentation Fee
(Due upon execution and delivery of the Escrow Instruction and Agreement)

25.00
30.00
150.00
350.00

Check disbursement fee per instrument
Wire transfer fee per event
Account reconciliation reports, as requested
Annual Maintenance Fee

Agreed and authorized by:
SELLER:

San

Mateo Cou

BUYER:
rty

Community College District,

Rural California Broadcasting Corporation
a California non-profit and nonstock

corporation
Signature:
Date:
I

'

Signature:
.

Date;

'

Signature:

_

,4

Date:

4833-8757341] .ViS

 *

BOARD REPORT NO. 17-9-104§(Updated)

r

49

Escrow No. 100895
‘

EXHIBIT A

L. /2 g

Escrow Fee Agreement

D.)
for complying with the Escrow Instruction and Agreement dated SeptembeMON,
Pacific Retirement Services, Inc. agrees to pay all applicable fees to McGovern Escrow Services, Inc., as
In consideration

detailed below:
$3,000.00

Escrow Set-Up and Documentation Fee
(Due upon execution and delivery of the Escrow Instruction and Agreement)

25.00
30.00
150.00
350.00

Check disbursement fee per instrument

Wire transfer fee per event
Account reconciliation re ports, as requested
Annual Maintenance Fee

Agreed and authorized by:
SELLER:

BUYER:

'

San Mateo County Community College District,
A California Community College District

~

~

Rural California Broadcasting Corporation
California on- profit and nonstock

a

corporationCL/a4
'

Signature:

Signature},

Date:

Signature:
Date:

Date:
-

‘

‘

:

-

Signature:
Date:

—

7

”1-027

"

7%

" Z/ff’

‘77//:"// ‘7

4833-87574?“ I .v6

 BOARD REPORT NO. 17-9-1053 (Updated)

50

Escrow No. 100895

W
A

In accordance with this Escrow instruction and Agreement dated September £31017, the names of the

persons who are authorized to give written instructions on behalf of each of the Parties hereof, and
exemplars of their respective signatures are as follows:

SELLER:

San M

BUYER:

to County Community'Coilege District,

‘

ia Communi-

,

Rural California Broadcasting Corporation
California non-profit and nonstock

fluid

a

corporation

Signatu re

Signature

Printed Name

jii‘wmm
Til

ye

Printed Name

Moira?“

em a;

£9:

a:

Firm. Qfi Trufl‘e‘if

ignature

.

Title
Signature

Printed Name

Printed Name

Title

Title

Numberofsignatures raqulred:

.1

~

Number of signatures required:

4833-8751847] .V6

 ~

l
5]

BOARD REPORT NO. 17-9-1023 (Updated)

Escrow No. 100895

EXHIBIT 8

42:

1L

in accordance with this Escrow Instruction and Agreement dated September)¢2017, the names of the
persons who are authorized to give written instructions on behalf of each of the Parties hereof, and

exemplars of their respective signatures are as follows:

SELLER:

BUYER:

San Mateo County Community College District,
A California Community College District

Rural California Broadcasting Corporation
California non-profit and nonstock
c poration
a

2&4-

[Lei/Luau
Signature

Printed Name

Pri
I

Title
Signature

//
Ul’rlw
'

Iignature
'

adName (
gulf/M’é— ll

T'l
rte

K
D079)?»

f
\

0/6/10

.r¢P-:='~¢~'c_

Signature

.

1/

‘WN\
f”???

£14 c-’/'(/,:—"/ucg. R

Printed Name

Printed
Name
‘

Title

Title

Number of signatures required:

Number of signatures required:

S 7: ”ff/IV

__

<Qb/VWO
0” L (1)

4833-8757-94HN6

 BOARD REPORTNO.17-9-1041’3wpdated)'~

"

..

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52

_

Escrow No. 100895

GENERAL PROVISIONS
1.

DEPOSITS. All funds received in escrow shall be deposited with other escrow funds in a non-interest bearing
general escrow account or accounts of McGovern Escrow Services, unless otherwise instructed in writing.
OTHER AGREEMENTS. Unless othen/vise specifically provided herein in writing, Escrow Agent is not to be
required to read, understand, interpret, or be concerned in any manner whatsoever with any conditional
sales contract, purchase agreement, lease contract, security agreement or other agreement, written or
oral, of any kind whatsoever, and is not responsible for the delivery of any papers other than described
herein. Escrow Agent'Is not a party to, or bound by any agreement which may be deposited under,
evidenced by, or which may arise out of these instructions.
AGENCY RESPONSIBILITIES. Escrow Agent is to make no examination of the property being transferred
herein or of the condition of or the title thereto. Escrow Agent acts as a depository only and is not
responsible or liable in any manner whatever for sufficiency, correctness, genuineness or validity of any
instrument deposited with it hereunder, or with respect to the form or execution of the same, or the
identity, authority, or right of any person executing or depositing the same.
DEFAULTS. Escrow Agent shall not be required to take or be bound by notice of any default of any person,
or take- any action with respect to such default involving any expense or liability, unless notice in writing is
given to the Escrow Agent at the address set forth above, of such default by the undersigned or any of
them, and unless Escrow Agent is indemnified in a manner satisfactory to it against any and all expense and

liability.
NOTICES. Escrow Agent shall be protected acting upon any notice, request, waiver, consent, receipt or
other paper or document reasonably believed by Escrow Agent to be signed by the property party or

parties.
JUDGMENT. Escrow Agent shall not be liable for any error of judgment or for any act done or step taken or
omitted by it in good faith or for any mistake or fact of law, or for anything which it may do or refrain from
doing in connection herewith, except its own gross negligence or willful misconduct, and Escrow Agent shall
have no duties to anyone except those signing these instructions.
COUNSEL Escrow Agent may advise with legal counsel of its choice in the event of any dispute or question
as to the construction of these instructions, or Escrow Agent’s duties hereunder and Escrow Agent shall
incur no liability and shall be fully protected in acting in accordance with the opinion and instructions of its
counsel. Further, the parties hereto shall reimburse Escrow Agent for the costs, expenses and attorney's
fees incurred by Escrow Agent for such advice and counsel. Escrow Agent is hereby authorized to deduct
Seller and Buyer portion of such costs, expenses and attorneys fees from any funds held in escrow.
DISAGREEMENTS. In the event of any disagreement between the undersigned or any of them, and/or the
persons named in these instructions, and/or any other person, resulting in adverse claims and demands
being made in connection with or focany papers, money or property involved herein or affected hereby,
Escrow Agent shall be entitled at its option to refuse to comply with any such claim or demand, as long as
such disagreements shall continue, and in so doing Escrow Agent shall not be or become liable for damages
or interest to the undersigned or any of them or to any person for its failure or refusal to comply with such
conflicting or adverse demands, and Escrow Agent shall be entitled to continue to refrain and refuse to act

until.
1. The rights of the adverse claimant had been finally adjudicated in a court assuming and having
jurisdiction of the parties and the money, papers and property involved herein or affected hereby
and/or
2. All differences shall have been adjusted by agreement and Escrow Agent shall have been notified
thereof in writing signed by all of the persons interested.
b. Notwithstanding the foregoing, however, in the event of any, such disagreement, Escrow Agent in its
sole discretion may (a) file a suit in interpleader for the purpose of having the respective rights of the
claimants adjudicated, and then deposit with the court all documents and property held hereunder, and
the Parties agree'to pay all costs and expenses incurred by Escrow Agent in such action, including
attorneys fees, and such costs and expenses shall be included in the judgment in any such action or

a.

-

4833-3757-947iss

 BOARD REPORT NO.

17—9—10433‘wpdaied)

53

Escrow No. 100895

10.

11.
12.

13.

14.

15.
.

16.

(b) submit the matter to the American Arbitration Association, who will name a single arbitrator to
conduct an arbitration in San Francisco, California to determine the respective rights of claimants in
accordance with the Commercial Arbitration Rules of the American Arbitration Association. All costs and
expenses, including attorney’s fees incurred with respect to the arbitration by Escrow Agent shall he paid
by the Parties in equal proportions. The arbitration award shall be final and without appeal. A judgment
upon the award may be entered in any court having jurisdiction of the parties.
INDEMNITY. In consideration of acceptance of this appointment by Escrow Agent, the Parties agree to
defend, indemnify and hold Escrow Agent harmless as to any liability incurred by Escrow Agent to any
person, firm or corporation by reason of its having accepted same or in carrying out any of the terms hereof,
and to reimburse Escrow Agent for all its expenses, including among other things, counsel fees and court
costs incurred by reason of its position or actions taken pursuant to these Escrow Instructions. Subject to
Section 4 of the Agreement, the Principals hereby agree that the Escrow Agent shall not be liable to any of
them for any action taken by Escrow Agent pursuant to and authorized by the terms hereof.
COURT ORDERS. Escrow Agent is hereby authorized in its exclusive discretion, to obey and comply with all
writs, orders, judgments or decrees issued by any court or administrative agency affecting any money,
documents or other securities or writings held by Escrow Agent. Escrow Agent shall not be liable to any of
the parties hereto, their successors, heirs or personal representatives, by reason of Escrow Agent’s
compliance with such writsf‘ai‘ders'; judgments or decrees. Notwithstanding such writ, order, judgment or
decree ls later reversed, modified, set aside or vacated.
USURY. Escrow Agent is not to be concerned with any question or usury in the processing of this escrow
and Escrow Agent is hereby released of any responsibility or liability therefore.
AMENDMENTS TO ESCROW lNSTRUCTIONS. These instructions shall not be subject to rescission or
modification except by receipt by Escrow Agent at the address above of written instructions signed by all of
the parties hereto or their successors in interest and no such modification shall be effective unless and until
consented to in writing by Escrow Agent.
SIGNATURES. These instructions may be executed in counterparts, each of which so executed shall be
deemed as an original, irrespective of the date of its execution and delivery; and such counterparts together
with shall constitute one and the same instrument.
COMPLETE AGREEMENT. These instructions constitute the complete agreement between the Parties and
Escrow Agent, with respect to the subject matters referred to in these instructions. These instructions
supersede all prior contemporaneous negotiations, promises, covenants, agreements and representations
of every nature whatsoever with respect to the subject matters referred to in these instructions, all of which
have become merged and finally integrated into these instructions. Each of the parties understands that in
the event of any subsequent litigation, controversy or dispute concerning any of the terms, conditions or
provisions of these instructions, no party shall be permitted to offer or to introduce any oral evidence
concerning any oral promises, agreements, representations or statements relating to the subject matters of
'
these instructions not set forth herein In writing.
SEVERABILITY. In case any provision In these instructions shall be invalid, illegal or unenforceable, such
provision shall be severai from the remained of these instructidns, and the validity, legality or enforceability
of the remaining provisions shall not in any way be affected or impaired thereby.
APPLICABLE LAW. These instructions and the rights and obligations of the parties thereto shall be governed
by the laws of the State of California.

-

4833-8757-947! ;v6
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 -'.,,

BOARDREPORTNO.17c-9-»10£il§(Updat'ed)

..

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54

,

Escrow No. 100895

17. SURVIVAL OF REPRESENTATION. Ail representations and warranties set forth herein shall survive the
closing of escrow.
18. BINDING 0F SUCCESSORS. The parties intend that these instructions will be binding upon and for the
benefit of the parties hereto and their respective successors and assigns.

The Paities each hereby state that they have read the foregoing Escrow Instruction and Agreement,
understand and agree to it, and acknowledge receipt of a copy of it.
iN WlTNESS WHEREOF, the Parties have caused this

Agreementto

be executed as

of mega: day of

September, 2017.

SELLER:

A

~._E3i.'.-!!’~_£R:

4

San Mat

ity Communit

olle’ District

California/munity Col

Signatur.

5_

net

MM;
‘

.

Rural California Broadcasting Corporation
3 Ca non-profit and nonstock corporation

E

Signature:

McGovern Escrow Services, inc. a California corporation

By:

_____________________

Elizabeth McGovern, President

30
4333-3757-947ma

 5'

ABOARD REPORTNO..17.-9-10‘4‘l‘3(Updatedim

.

.

55

,

Escrow No. 100895

17. SURVIVAL OF REPRESENTATION. All representations and warranties set forth herein shall survive

the

closing of escrow.
18. BINDING OF SUCCESSORS. The parties intend that these instructions will be binding upon and for the
benefit of the parties hereto and their respective successors and assigns.

The Parties each hereby state that they have read the foregoing Escrow Instruction and Agreement,
understand and agree to it, and acknowledge receipt of a copy of it.
D

'23-#

IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed as

of

September, 2017.

this

“newer”?

,

day of

SELLER:

BUYER:

San Mateo County Community College District

Rural California Broadcasting Corporation
3 Ca non-profit and nonstock corporation__

A California Community College District

L [Z S

.

A

»

/?/é?~éj
-

Signature:

Signature:

Date:

Date:

McGovern Escrow Se

5.

Inc. a California

”7";17“)

:~

.

9/// (if/2 / 7
0”

corporation

.yfl/
Elizabeth McG

ern, President

'

4333-1375734” .vb