Document:

exv4w4

Exhibit 4.4

REGISTRATION RIGHTS AGREEMENT

     This REGISTRATION RIGHTS AGREEMENT dated June 3, 2011 (this “Agreement”) is entered
into by and among Bancolombia S.A., a Colombian banking institution incorporated under the laws of
the Republic of Colombia as a sociedad anónima (the “Company”) and J.P. Morgan Securities
LLC (“J.P. Morgan”) and Merrill Lynch, Pierce, Fenner & Smith Incorporated (“Merrill
Lynch”), as representatives of the several initial purchasers named in Schedule 1 to the
Purchase Agreement (as defined below) (together, the “Initial Purchasers”).

     The Company and the Initial Purchasers are parties to the Purchase Agreement dated May 24,
2011 (the “Purchase Agreement”), which provides for the sale by the Company to the several
Initial Purchasers of U.S.$1,000,000,000 aggregate principal amount of the Company’s 5.95% Senior
Notes due 2021 (the “Securities”). As an inducement to the Initial Purchasers to enter
into the Purchase Agreement, the Company has agreed to provide to each Initial Purchaser and its
direct and indirect transferees the registration rights set forth in this Agreement. The execution
and delivery of this Agreement is a condition to the closing under the Purchase Agreement.

     In consideration of the foregoing, the parties hereto agree as follows:

     1. Definitions. As used in this Agreement, the following terms shall have the
following meanings:

     “Business Day” shall mean any day that is not a Saturday, Sunday or other day on which
commercial banks in New York City are authorized or required by law to remain closed.

     “Company” shall have the meaning set forth in the preamble and shall also include the
Company’s successors.

     “Depositary” means The Depository Trust Company until a successor Depositary should
have become Depositary pursuant to the applicable provisions of the Indenture, and thereafter
“Depositary” should mean such successor Depositary.

     “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to
time.

     “Exchange Dates” shall have the meaning set forth in Section 2(a)(ii) hereof.

     “Exchange Offer” shall mean the exchange offer by the Company of Exchange Securities
for Registrable Securities pursuant to Section 2(a) hereof.

     “Exchange Offer Registration” shall mean a registration under the Securities Act
effected pursuant to Section 2(a) hereof.

     “Exchange Offer Registration Statement” shall mean an exchange offer registration
statement on Form F-4 (or, if applicable, on another appropriate form) and all

 

 

amendments and supplements to such registration statement, in each case including the
Prospectus contained therein or deemed a part thereof, all exhibits thereto and any document
incorporated by reference therein.

     “Exchange Securities” shall mean senior notes issued by the Company under the
Indenture containing terms identical to the Securities (except that the Exchange Securities will
not be subject to restrictions on transfer or to any increase in annual interest rate for failure
to comply with this Agreement) and to be offered to Holders of Securities in exchange for
Securities pursuant to the Exchange Offer.

     “FINRA” means the Financial Industry Regulatory Authority, Inc.

     “Free Writing Prospectus” means each free writing prospectus (as defined in Rule 405
under the Securities Act) prepared by or on behalf of the Company or used or referred to by the
Company in connection with the sale of the Securities or the Exchange Securities.

     “Holders” shall mean the Initial Purchasers, for so long as they own any Registrable
Securities, and each of its successors, assigns and direct and indirect transferees who become
owners of Registrable Securities under the Indenture; provided that, for purposes of
Section 4 and Section 5 hereof, the term “Holders” shall include Participating Broker-Dealers.

     “Indemnified Person” shall have the meaning set forth in Section 5(c) hereof.

     “Indemnifying Person” shall have the meaning set forth in Section 5(c) hereof.

     “Indenture” shall mean the Indenture relating to the Securities dated as of June 3,
2011, between the Company and The Bank of New York Mellon, as trustee, registrar, paying agent and
transfer agent, as the same may be amended from time to time in accordance with the terms thereof.

     “Initial Purchasers” shall have the meaning set forth in the preamble.

     “Inspector” shall have the meaning set forth in Section 3(a)(xvi) hereof.

     “Issuer Information” shall have the meaning set forth in Section 5(a) hereof.

     “J.P. Morgan” shall have the meaning set forth in the preamble.

     “Majority Holders” shall mean the Holders of a majority of the aggregate principal
amount of the outstanding Registrable Securities; provided that whenever the consent or
approval of Holders of a specified percentage of Registrable Securities is required hereunder, any
Registrable Securities owned directly or indirectly by the Company or any of its affiliates shall
not be counted in determining whether such consent or approval was given by the Holders of such
required percentage or amount; and provided, further, that if the Company shall
issue any additional Securities under the Indenture prior to consummation of the Exchange Offer or,
if applicable, the

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effectiveness of any Shelf Registration Statement, such additional Securities and the
Registrable Securities to which this Agreement relates shall be treated together as one class for
purposes of determining whether the consent or approval of Holders of a specified percentage of
Registrable Securities has been obtained.

     “Merrill Lynch” shall have the meaning set forth in the preamble.

     “Notice and Questionnaire” shall mean a notice of registration statement and selling
security holder questionnaire distributed to a Holder by the Company upon receipt of a Shelf
Request from such Holder.

     “NYSE” shall mean the New York Stock Exchange.

     “Participating Broker-Dealers” shall have the meaning set forth in Section 4(a)
hereof.

     “Participating Holder” shall mean any Holder of Registrable Securities that has
returned a completed and signed Notice and Questionnaire to the Company in accordance with Section
2(b) hereof.

     “Person” shall mean an individual, partnership, limited liability company,
corporation, trust or unincorporated organization, or a government or agency or political
subdivision thereof.

     “Prospectus” shall mean the prospectus included in, or, pursuant to the rules and
regulations of the Securities Act, deemed a part of, a Registration Statement, including any
preliminary prospectus, and any such prospectus as amended or supplemented by any prospectus
supplement, including a prospectus supplement with respect to the terms of the offering of any
portion of the Registrable Securities covered by a Shelf Registration Statement, and by all other
amendments and supplements to such prospectus, and in each case including any document incorporated
by reference therein.

     “Purchase Agreement” shall have the meaning set forth in the preamble.

     “Registrable Securities” shall mean the Securities; provided that the
Securities shall cease to be Registrable Securities (i) when a Registration Statement with respect
to such Securities has become effective under the Securities Act and such Securities have been
exchanged or disposed of pursuant to such Registration Statement, (ii) when such Securities are
sold pursuant to Rule 144 under the Securities Act (or any similar provision then in force, but not
Rule 144A), if following such resale such Securities do not bear any restrictive legend relating to
the Securities Act and do not bear a restricted CUSIP number, (iii) when such Securities cease to
be outstanding or (iv) except in the case of Securities that otherwise remain Registrable
Securities and that are held by an Initial Purchaser and that are ineligible to be exchanged in the
Exchange Offer, when the Exchange Offer is consummated.

     “Registration Default” shall mean the occurrence of any of the following: (i) the
Exchange Offer is not completed on or prior to the Target Registration Date, (ii) the Shelf

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Registration Statement, if required pursuant to Section 2(b)(i) or Section 2(b)(ii) hereof,
has not become effective on or prior to the Target Registration Date, (iii) if the Company receives
a Shelf Request pursuant to Section 2(b)(iii), and the Shelf Registration Statement required to be
filed thereby has not become effective by the later of (a) the Target Registration Date and (b) 90
days after delivery of such Shelf Request, (iv) the Shelf Registration Statement, if required by
this Agreement, has become effective and thereafter ceases to be effective or the Prospectus
contained therein ceases to be usable, in each case whether or not permitted by this Agreement, at
any time during the Shelf Effectiveness Period, and such failure to remain effective or usable
exists for more than 30 days (whether or not consecutive) in any 12-month period or (v) the Shelf
Registration Statement, if required by this Agreement, has become effective and thereafter, on more
than two occasions in any 12-month period during the Shelf Effectiveness Period, the Shelf
Registration Statement ceases to be effective or the Prospectus contained therein ceases to be
usable, in each case whether or not permitted by this Agreement.

     “Registration Expenses” shall mean any and all expenses incident to performance of or
compliance by the Company and with this Agreement, including without limitation: (i) all SEC, stock
exchange or FINRA registration and filing fees, (ii) all fees and expenses incurred in connection
with compliance with state securities or blue sky laws (including reasonable fees and disbursements
of counsel for any Underwriters or Holders in connection with blue sky qualification of any
Exchange Securities or Registrable Securities), (iii) all expenses of any Persons in preparing or
assisting in preparing, word processing, printing and distributing any Registration Statement, any
Prospectus, any Free Writing Prospectus and any amendments or supplements thereto, any underwriting
agreements, securities sales agreements or other similar agreements and any other documents
relating to the performance of and compliance with this Agreement, (iv) all rating agency fees, (v)
all fees and disbursements relating to the qualification of the Indenture under applicable
securities laws, (vi) the fees and disbursements of the Trustee and its counsel, (vii) the fees and
disbursements of U.S. and Colombian and other counsel for the Company and, in the case of a Shelf
Registration Statement, the fees and disbursements of one U.S. counsel, and if applicable, one
Colombian counsel, for the Participating Holders (which counsel shall be selected by the
Participating Holders holding a majority of the aggregate principal amount of Registrable
Securities held by such Participating Holders and which counsel may also be counsel for the Initial
Purchasers), (viii) all fees relating to the listing of the Registrable Securities or Exchange
Securities, as the case may be, on the NYSE and (ix) the fees and disbursements of the independent
registered public accountants of the Company, including the expenses of any special audits or
“comfort” letters required by or incident to the performance of and compliance with this Agreement,
but excluding fees and expenses of counsel to the Underwriters (other than fees and expenses set
forth in clause (ii) above) or the Holders and underwriting discounts and commissions, brokerage
commissions and transfer taxes, if any, relating to the sale or disposition of Registrable
Securities by a Holder.

     “Registration Statement” shall mean any registration statement of the Company that
covers any of the Exchange Securities or Registrable Securities pursuant to the provisions of this
Agreement and all amendments and supplements to any such registration statement, including
post-effective amendments, in each case including the

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Prospectus contained therein or deemed a part thereof, all exhibits thereto and any document
incorporated by reference therein.

     “SEC” shall mean the United States Securities and Exchange Commission or any successor
agency or government body performing the functions currently performed by the United States
Securities and Exchange Commission.

     “Securities” shall have the meaning set forth in the preamble.

     “Securities Act” shall mean the Securities Act of 1933, as amended from time to time.

     “Shelf Effectiveness Period” shall have the meaning set forth in Section 2(b) hereof.

     “Shelf Registration” shall mean a registration effected pursuant to Section 2(b)
hereof.

     “Shelf Registration Statement” shall mean a “shelf” registration statement of the
Company that covers all or a portion of the Registrable Securities (but no other securities unless
approved by a majority in aggregate principal amount of the Securities held by the Participating
Holders) on an appropriate form under Rule 415 under the Securities Act, or any similar rule that
may be adopted by the SEC, and all amendments and supplements to such registration statement,
including post-effective amendments, in each case including the Prospectus contained therein or
deemed a part thereof, all exhibits thereto and any document incorporated by reference therein.

     “Shelf Request” shall have the meaning set forth in Section 2(b) hereof.

     “Staff” shall mean the staff of the SEC.

     “Target Registration Date” shall mean May 24, 2012.

     “Trust Indenture Act” shall mean the Trust Indenture Act of 1939, as amended from time
to time.

     “Trustee” shall mean the trustee with respect to the Securities under the Indenture.

     “Underwriter” shall have the meaning set forth in Section 3(e) hereof.

     “Underwritten Offering” shall mean an offering in which Registrable Securities are
sold to an Underwriter for reoffering to the public.

     2. Registration Under the Securities Act. (a) To the extent not prohibited by any
applicable law or applicable interpretations of the Staff (as determined by the Company upon the
reasonable advice of counsel), the Company shall use commercially reasonable efforts to (x) cause
to be filed an Exchange Offer Registration Statement covering an offer to the Holders to exchange
all the Registrable Securities for Exchange

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Securities no later than 270 days from the date of issuance of the Securities and (y) have
such Registration Statement become and remain effective until the earlier of (i) 180 days from the
date on which the Registration Statement is declared effective and (ii) the date on which a
Participating Broker-Dealer is no longer required to deliver a prospectus in connection with
market-making or other trading activities. The Company shall commence the Exchange Offer promptly
after the Exchange Offer Registration Statement is declared effective by the SEC and use its
commercially reasonable efforts to complete the Exchange Offer not later than 60 days after such
effective date.

     The Company shall commence the Exchange Offer by mailing the related Prospectus, appropriate
letters of transmittal and other accompanying documents to each Holder stating, in addition to such
other disclosures as are required by applicable law, substantially the following:

	(i)	 	that the Exchange Offer is being made pursuant to this Agreement and that all Registrable
Securities validly tendered and not properly withdrawn will be accepted for exchange;

	(ii)	 	the dates of acceptance for exchange (which shall be a period of at least 20 Business Days
from the date such notice is mailed) (the “Exchange Dates”);

	(iii)	 	that any Registrable Security not tendered will remain outstanding and continue to accrue
interest but will not retain any rights under this Agreement, except as otherwise specified
herein;

	(iv)	 	that any Holder electing to have a Registrable Security exchanged pursuant to the Exchange
Offer will be required to (A) surrender such Registrable Security, together with the
appropriate letters of transmittal, to the institution and at the address and in the manner
specified in the notice, or (B) effect such exchange otherwise in compliance with the
applicable procedures of the depositary for such Registrable Security, in each case prior to
the close of business on the last Exchange Date; and

	(v)	 	that any Holder will be entitled to withdraw its election, not later than the close of
business on the last Exchange Date, by (A) sending to the institution and at the address
specified in the notice, a telegram, facsimile transmission or letter setting forth the name
of such Holder, the principal amount of Registrable Securities delivered for exchange and a
statement that such Holder is withdrawing its election to have such Securities exchanged or
(B) effecting such withdrawal in compliance with the applicable procedures of the depositary
for the Registrable Securities.

     As a condition to participating in the Exchange Offer, a Holder will be required to represent
to the Company that (1) any Exchange Securities to be received by it will be acquired in the
ordinary course of its business, (2) at the time of the commencement of the Exchange Offer it has
no arrangement or understanding with any Person to participate in the distribution (within the
meaning of the Securities Act) of the Exchange Securities

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in violation of the provisions of the Securities Act, (3) it is not an “affiliate” (within the
meaning of Rule 405 under the Securities Act) of the Company and (4) if such Holder is a
broker-dealer that will receive Exchange Securities for its own account in exchange for Registrable
Securities that were acquired as a result of market-making or other trading activities, then such
Holder will deliver a Prospectus (or, to the extent permitted by law, make available a Prospectus
to purchasers) in connection with any resale of such Exchange Securities.

     As soon as practicable after the last Exchange Date, the Company shall:

	(I)	 	accept for exchange Registrable Securities or portions thereof validly tendered and not
properly withdrawn pursuant to the Exchange Offer; and

	(II)	 	deliver, or cause to be delivered, to the Trustee for cancellation all Registrable Securities
or portions thereof so accepted for exchange by the Company and issue, and cause the Trustee
to promptly authenticate and deliver to each Holder, Exchange Securities equal in principal
amount to the principal amount of the Registrable Securities tendered by such Holder.

     The Company shall use its commercially reasonable efforts to complete the Exchange Offer as
provided above and shall comply with the applicable requirements of the Securities Act, the
Exchange Act and other applicable laws and regulations in connection with the Exchange Offer. The
Exchange Offer shall not be subject to any conditions, other than that the Exchange Offer does not
violate any applicable law or applicable interpretations of the Staff.

     (b) In the event that (i) the Company determines that the Exchange Offer Registration provided
for in Section 2(a) hereof is not available or the Exchange Offer may not be completed as soon as
practicable after the last Exchange Date because it would violate any applicable law or applicable
interpretations of the Staff, (ii) the Exchange Offer is not for any other reason completed by the
Target Registration Date or (iii) upon receipt of a written request (a “Shelf Request”)
from any Initial Purchaser representing that it holds Registrable Securities that are or were
ineligible to be exchanged in the Exchange Offer, the Company shall use its commercially reasonable
efforts to cause to be filed as soon as practicable after such determination date or Shelf Request,
as the case may be, a Shelf Registration Statement providing for the sale of all the Registrable
Securities by the Holders thereof and to have such Shelf Registration Statement become effective;
provided that no Holder will be entitled to have any Registrable Securities included in any
Shelf Registration Statement, or entitled to use the prospectus forming a part of such Shelf
Registration Statement, until such Holder shall have delivered a completed and signed Notice and
Questionnaire and provided such other information regarding such Holder to the Company as is
contemplated by Section 3(b) hereof.

     In the event that the Company is required to file a Shelf Registration Statement pursuant to
clause (iii) of the preceding sentence, the Company shall use its commercially reasonable efforts
to file and have become effective both an Exchange Offer Registration

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Statement pursuant to Section 2(a) hereof with respect to all Registrable Securities and a
Shelf Registration Statement (which may be a combined Registration Statement with the Exchange
Offer Registration Statement) with respect to offers and sales of Registrable Securities held by
the Initial Purchasers after completion of the Exchange Offer.

     The Company agrees to use its commercially reasonable efforts to keep the Shelf Registration
Statement continuously effective until the Securities cease to be Registrable Securities (the
“Shelf Effectiveness Period”). The Company further agrees to supplement or amend the Shelf
Registration Statement, the related Prospectus and any Free Writing Prospectus if required by the
rules, regulations or instructions applicable to the registration form used by the Company for such
Shelf Registration Statement or by the Securities Act or by any other rules and regulations
thereunder or if reasonably requested by a Holder of Registrable Securities with respect to
information relating to such Holder, and to use its commercially reasonable efforts to cause any
such amendment to become effective, if required, and such Shelf Registration Statement, Prospectus
or Free Writing Prospectus, as the case may be, to become usable as soon as thereafter practicable.
The Company agrees to furnish to the Participating Holders copies of any such supplement or
amendment promptly after its being used or filed with the SEC.

     (c) The Company shall pay all Registration Expenses in connection with any registration
pursuant to Section 2(a) or Section 2(b) hereof. Each Holder shall pay all underwriting discounts
and commissions, brokerage commissions and transfer taxes, if any, relating to the sale or
disposition of such Holder’s Registrable Securities pursuant to the Shelf Registration Statement.

     (d) An Exchange Offer Registration Statement pursuant to Section 2(a) hereof will not be
deemed to have become effective unless it has been declared effective by the SEC. A Shelf
Registration Statement pursuant to Section 2(b) hereof will not be deemed to have become effective
unless it has been declared effective by the SEC or is automatically effective upon filing with the
SEC as provided by Rule 462 under the Securities Act.

     If a Registration Default occurs, the interest rate on the Registrable Securities will be
increased by (i) 0.25% per annum for the first 90-day period beginning on the day immediately
following such Registration Default and (ii) an additional 0.25% per annum with respect to each
subsequent 90-day period, in each case until and including the date such Registration Default ends,
up to a maximum increase of 1.00% per annum. A Registration Default ends when the Securities cease
to be Registrable Securities or, if earlier, (1) in the case of a Registration Default under clause
(i) of the definition thereof, when the Exchange Offer is completed, (2) in the case of a
Registration Default under clause (ii) or clause (iii) of the definition thereof, when the Shelf
Registration Statement becomes effective or (3) in the case of a Registration Default under clause
(iv) or clause (v) of the definition thereof, when the Shelf Registration Statement again becomes
effective or the Prospectus again becomes usable. If at any time more than one Registration
Default has occurred and is continuing, then, until the next date that there is no Registration
Default, the increase in interest rate provided for by this paragraph shall apply as if there
occurred a single Registration Default that begins on the date that the

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earliest such Registration Default occurred and ends on such next date that there is no
Registration Default.

     (e) A Registration Default shall be deemed not to have occurred and be continuing in relation
to a Shelf Registration Statement or the related Prospectus if (i) such Registration Default has
occurred solely as a result of (x) the filing of a post-effective amendment to such Shelf
Registration Statement to incorporate annual audited financial information with respect to the
Company where such post-effective amendment is not yet effective and needs to be declared effective
to permit Holders to use the related Prospectus or (y) other material events, with respect to the
Company that would need to be described in such Shelf Registration Statement or the related
Prospectus and (ii) in the case of clause (y), the Company is proceeding promptly and in good faith
to amend or supplement such Shelf Registration Statement and related prospectus to describe such
events; provided, however, that in any case if such Registration Default occurs for
a period of 45 days, whether or not consecutive, additional interest shall be payable in accordance
with the above paragraph from the day such Registration Default occurs until such Registration
Default is cured, provided that any such delay in the Registration Statement becoming
effective shall extend the Target Registration Date by a corresponding number of days of such
delay;

     (f) Any amounts of additional interest due pursuant to Section 2(d) will be payable in cash on
the regular interest payment dates with respect to the Securities. The amount of additional
interest will be determined by multiplying the applicable additional interest rate by the principal
amount of the Securities and further multiplied by a fraction, the numerator of which is the number
of days such additional interest rate was applicable during such period (determined on the basis of
a 360 day year comprised of twelve 30 day months), and the denominator of which is 360.

     (g) Without limiting the remedies available to the Initial Purchasers and the Holders, the
Company acknowledges that any failure by the Company to comply with its obligations under Section
2(a) and Section 2(b) hereof may result in material irreparable injury to the Initial Purchasers or
the Holders for which there is no adequate remedy at law, that it will not be possible to measure
damages for such injuries precisely and that, in the event of any such failure, the Initial
Purchasers or any Holder may obtain such relief as may be required to specifically enforce the
Company’s obligations under Section 2(a) and Section 2(b) hereof.

     3. Registration Procedures. (a) In connection with its obligations pursuant to
Section 2(a) and Section 2(b) hereof, the Company shall as soon as practicable:

     (i) prepare and file with the SEC a Registration Statement on the appropriate form under the
Securities Act, which form (A) shall be selected by the Company, (B) shall, in the case of a Shelf
Registration, be available for the sale of the Registrable Securities by the Holders thereof and
(C) shall comply as to form in all material respects with the requirements of the applicable form
and include all financial statements required by the SEC to be filed therewith; and use its
commercially reasonable efforts to cause

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such Registration Statement to become effective and remain effective for the applicable period
in accordance with Section 2 hereof;

     (ii) prepare and file with the SEC such amendments and post-effective amendments to each
Registration Statement as may be necessary to keep such Registration Statement effective for the
applicable period in accordance with Section 2 hereof and cause each Prospectus to be supplemented
by any required prospectus supplement and, as so supplemented, to be filed pursuant to Rule 424
under the Securities Act; and keep each Prospectus current during the period described in Section
4(3) of and Rule 174 under the Securities Act that is applicable to transactions by brokers or
dealers with respect to the Registrable Securities or Exchange Securities;

     (iii) to the extent any Free Writing Prospectus is used, file with the SEC any Free Writing
Prospectus that is required to be filed by the Company with the SEC in accordance with the
Securities Act and to retain any Free Writing Prospectus not required to be filed;

     (iv) in the case of a Shelf Registration, furnish to each Participating Holder, to counsel for
the Initial Purchasers, to counsel for such Participating Holders and to each Underwriter of an
Underwritten Offering of Registrable Securities, if any, without charge, as many copies of each
Prospectus, preliminary prospectus or Free Writing Prospectus, and any amendment or supplement
thereto, as such Participating Holder, counsel or Underwriter may reasonably request in order to
facilitate the sale or other disposition of the Registrable Securities thereunder; and, subject to
Section 3(c) hereof, the Company consents to the use of such Prospectus, preliminary prospectus or
such Free Writing Prospectus and any amendment or supplement thereto in accordance with applicable
law by each of the Participating Holders and any such Underwriters in connection with the offering
and sale of the Registrable Securities covered by and in the manner described in such Prospectus,
preliminary prospectus or such Free Writing Prospectus or any amendment or supplement thereto in
accordance with applicable law;

     (v) use its commercially reasonable efforts to register or qualify the Registrable Securities
under all applicable state securities or blue sky laws of such jurisdictions as any Participating
Holder shall reasonably request in writing by the time the applicable Registration Statement
becomes effective; cooperate with such Participating Holders in connection with any filings
required to be made with FINRA; and do any and all other acts and things that may be reasonably
necessary or advisable to enable each Participating Holder to complete the disposition in each such
jurisdiction of the Registrable Securities owned by such Participating Holder; provided
that the Company shall not be required to (1) qualify as a foreign corporation or other entity or
as a dealer in securities in any such jurisdiction where it would not otherwise be required to so
qualify, (2) file any general consent to service of process in any such jurisdiction or (3) subject
itself to taxation in any such jurisdiction if it is not so subject;

     (vi) notify counsel for the Initial Purchasers and, in the case of a Shelf Registration,
notify each Participating Holder and counsel for such Participating Holders promptly and, if
requested by any such Participating Holder or counsel, confirm such

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advice in writing (1) when a Registration Statement has become effective, when any
post-effective amendment thereto has been filed and becomes effective, when any Free Writing
Prospectus has been filed or any amendment or supplement to the Prospectus or any Free Writing
Prospectus has been filed, (2) of any request by the SEC or any state securities authority for
amendments and supplements to a Registration Statement, Prospectus or any Free Writing Prospectus
or for additional information after the Registration Statement has become effective, (3) of the
issuance by the SEC or any state securities authority of any stop order suspending the
effectiveness of a Registration Statement or the initiation of any proceedings for that purpose,
including the receipt by the Company of any notice of objection of the SEC to the use of a Shelf
Registration Statement or any post-effective amendment thereto pursuant to Rule 401(g)(2) under the
Securities Act, (4) if, between the applicable effective date of a Shelf Registration Statement and
the closing of any sale of Registrable Securities covered thereby, the representations and
warranties of the Company contained in any underwriting agreement, securities sales agreement or
other similar agreement, if any, relating to an offering of such Registrable Securities cease to be
true and correct in all material respects or if the Company or receives any notification with
respect to the suspension of the qualification of the Registrable Securities for sale in any
jurisdiction or the initiation of any proceeding for such purpose, (5) of the happening of any
event during the period a Registration Statement is effective that makes any statement made in such
Registration Statement or the related Prospectus or any Free Writing Prospectus untrue in any
material respect or that requires the making of any changes in such Registration Statement or
Prospectus or any Free Writing Prospectus in order to make the statements therein not misleading
and (6) of any determination by the Company that a post-effective amendment to a Registration
Statement or any amendment or supplement to the Prospectus or any Free Writing Prospectus would be
appropriate;

     (vii) use its commercially reasonable efforts to obtain the withdrawal of any order suspending
the effectiveness of a Registration Statement or, in the case of a Shelf Registration, the
resolution of any objection of the SEC pursuant to Rule 401(g)(2) under the Securities Act,
including by filing an amendment to such Registration Statement on the proper form, at the earliest
possible moment and provide immediate notice to each Holder or Participating Holder of the
withdrawal of any such order or such resolution;

     (viii) use all commercially reasonable efforts to obtain all necessary corporate approvals and
the consent or approval of each Colombian or U.S. governmental agency or authority, whether federal
or state that may be required to effect the Exchange Offer and the offering and sale of Exchange
Securities, and file all necessary notices, reports and information with the Colombian Finance
Superintendency and the Colombian Central Bank in connection therewith;

     (ix) in the case of a Shelf Registration, furnish to each Participating Holder, without
charge, at least one conformed copy of each Registration Statement and any post-effective amendment
thereto (without any documents incorporated therein by reference or exhibits thereto, unless
requested);

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     (x) in the case of a Shelf Registration, cooperate with the Participating Holders to
facilitate the timely preparation and delivery of certificates representing Registrable Securities
to be sold and not bearing any restrictive legends and enable such Registrable Securities to be
issued in such denominations and registered in such names (consistent with the provisions of the
Indenture) as such Participating Holders may reasonably request at least one Business Day prior to
the closing of any sale of Registrable Securities;

     (xi) upon the occurrence of any event contemplated by Section 3(a)(vi)(5) hereof, use its
commercially reasonable efforts to prepare and file with the SEC a supplement or post-effective
amendment to the applicable Exchange Offer Registration Statement or Shelf Registration Statement
or the related Prospectus or any Free Writing Prospectus or any document incorporated therein by
reference or file any other required document so that, as thereafter delivered (or, to the extent
permitted by law, made available) to purchasers of the Registrable Securities, such Prospectus or
Free Writing Prospectus, as the case may be, will not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and the Company shall notify the
Participating Holders (in the case of a Shelf Registration Statement) and the Initial Purchasers
and any Participating Broker-Dealers known to the Company (in the case of an Exchange Offer
Registration Statement) to suspend use of the Prospectus or any Free Writing Prospectus as promptly
as practicable after the occurrence of such an event, and such Participating Holders, such
Participating Broker-Dealers and the Initial Purchasesr, as applicable, hereby agree to suspend use
of the Prospectus or any Free Writing Prospectus, as the case may be, until the Company has amended
or supplemented the Prospectus or the Free Writing Prospectus, as the case may be, to correct such
misstatement or omission;

     (xii) a reasonable time prior to the filing of any Registration Statement, any Prospectus, any
Free Writing Prospectus, any amendment to a Registration Statement or amendment or supplement to a
Prospectus or a Free Writing Prospectus or of any document that is to be incorporated by reference
into a Registration Statement, a Prospectus or a Free Writing Prospectus after initial filing of a
Registration Statement, provide copies of such document to the Initial Purchasers and their counsel
(and, in the case of a Shelf Registration Statement, to the Participating Holders and their
counsel) and make such of the representatives of the Company as shall be reasonably requested by
the Initial Purchasers or their counsel (and, in the case of a Shelf Registration Statement, the
Participating Holders or their counsel) available for discussion of such document; and the Company
shall not, at any time after initial filing of a Registration Statement, use or file any
Prospectus, any Free Writing Prospectus, any amendment of or supplement to a Registration Statement
or a Prospectus or a Free Writing Prospectus, or any document that is to be incorporated by
reference into a Registration Statement, a Prospectus or a Free Writing Prospectus, of which the
Initial Purchasers and their counsel (and, in the case of a Shelf Registration Statement, the
Participating Holders and their counsel) shall not have previously been advised and furnished a
copy or to which the Initial Purchasers or their counsel (and, in the case of a Shelf Registration
Statement, the Participating Holders or their counsel) shall reasonably object; provided,
however, that this paragraph

12

 

shall not apply to the Company’s annual report on Form 20-F, its current reports on Form 6-K,
other than such current reports required to be filed in connection with the Exchange Offer, or any
other documents required to be filed pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange
Act;

     (xiii) obtain CUSIP and ISIN numbers for all Exchange Securities or Registrable Securities, as
the case may be, not later than the initial effective date of a Registration Statement, and provide
the Trustee with printed or word-processed certificates for the Exchange Securities or Registrable
Securities, as the case may be, in a form eligible for deposit with the Depositary;

     (xiv) take all reasonable action necessary to ensure that the Registrable Securities or the
Exchange Securities, as the case may be, at the time of the consummation of the Exchange Offer (or
as soon as reasonably practicable thereafter) are listed on the NYSE;

     (xv) cause the Indenture to be qualified under the Trust Indenture Act in connection with the
registration of the Exchange Securities or Registrable Securities, as the case may be; cooperate
with the Trustee and the Holders to effect such changes to the Indenture as may be required for the
Indenture to be so qualified in accordance with the terms of the Trust Indenture Act; and execute,
and use its commercially reasonable efforts to cause the Trustee to execute, all documents as may
be required to effect such changes and all other forms and documents required to be filed with the
SEC to enable the Indenture to be so qualified in a timely manner;

     (xvi) in the case of a Shelf Registration, make available for inspection by a representative
of the Participating Holders (an “Inspector”), any Underwriter participating in any
disposition pursuant to such Shelf Registration Statement, any attorneys and accountants designated
by a majority in aggregate principal amount of the Securities held by the Participating Holders and
any attorneys and accountants designated by such Underwriter, at reasonable times and in a
reasonable manner, all pertinent financial and other records, documents and properties of the
Company and its subsidiaries, and cause the respective officers, directors and employees of the
Company to supply all information reasonably requested by any such Inspector, Underwriter, attorney
or accountant in connection with a Shelf Registration Statement; provided that if any such
information is identified by the Company as being confidential or proprietary, each Person
receiving such information shall take such actions as are reasonably necessary to protect the
confidentiality of such information and such information shall be used only in connection with such
Shelf Registration Statement, unless disclosure thereof is required to be made under compulsion of
law, by order or act of any court or governmental or regulatory authority or body or such
information has become available (not in violation of this agreement) to the public generally;

     (xvii) in the case of a Shelf Registration, use its commercially reasonable efforts to cause
all Registrable Securities to be listed on any securities exchange or any automated quotation
system on which similar securities issued or guaranteed by the

13

 

Company are then listed if requested by the Majority Holders, to the extent such Registrable
Securities satisfy applicable listing requirements;

     (xviii) if reasonably requested by any Participating Holder, promptly include in a Prospectus
supplement or post-effective amendment such information with respect to such Participating Holder
as such Participating Holder reasonably requests to be included therein and make all required
filings of such Prospectus supplement or such post-effective amendment as soon as the Company has
received notification of the matters to be so included in such filing; and

     (xix) in the case of a Shelf Registration, enter into such customary agreements and take all
such other actions in connection therewith (including those requested by the Holders of a majority
in principal amount of the Registrable Securities covered by the Shelf Registration Statement) in
order to expedite or facilitate the disposition of such Registrable Securities including, but not
limited to, an Underwritten Offering and in such connection, (1) to the extent possible, make such
representations and warranties and customary indemnity and contribution provisions to the
Participating Holders and any Underwriters of such Registrable Securities with respect to the
business of the Company and its subsidiaries and the Registration Statement, Prospectus, any Free
Writing Prospectus and documents incorporated by reference or deemed incorporated by reference, if
any, in each case, in form, substance and scope as are customarily made by issuers to underwriters
in underwritten offerings and confirm the same if and when requested, (2) obtain opinions of
counsel to the Company (which counsel and opinions, in form, scope and substance, shall be
reasonably satisfactory to the Participating Holders and such Underwriters and their respective
counsel) addressed to each Participating Holder and Underwriter of Registrable Securities, covering
the matters customarily covered in opinions requested in underwritten offerings, (3) obtain
“comfort” letters from the independent registered public accountants of the Company (and, if
necessary, any other registered public accountant of any subsidiary of the Company, or of any
business acquired by the Company for which financial statements and financial data are or are
required to be included in the Registration Statement) addressed to each Participating Holder (to
the extent permitted by applicable professional standards) and Underwriter of Registrable
Securities, such letters to be in customary form and covering matters of the type customarily
covered in “comfort” letters in connection with underwritten offerings, including but not limited
to financial information contained in any preliminary prospectus, Prospectus or Free Writing
Prospectus and (4) deliver such documents and certificates as may be reasonably requested by the
Holders of a majority in principal amount of the Registrable Securities being sold or the
Underwriters, and which are customarily delivered in underwritten offerings, to evidence the
continued validity of the representations and warranties of the Company made pursuant to clause (1)
above and to evidence compliance with any customary conditions contained in an underwriting
agreement.

     (b) In the case of a Shelf Registration Statement, the Company may require each Holder of
Registrable Securities to furnish to the Company a Notice and Questionnaire and such other
information regarding such Holder and the proposed

14

 

disposition by such Holder of such Registrable Securities as the Company may from time to time
reasonably request in writing.

     (c) Each Participating Holder agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 3(a)(vi)(3) or Section 3(a)(vi)(5) hereof,
such Participating Holder will forthwith discontinue disposition of Registrable Securities pursuant
to the Shelf Registration Statement until such Participating Holder’s receipt of the copies of the
supplemented or amended Prospectus and any Free Writing Prospectus contemplated by Section 3(a)(x)
hereof and, if so directed by the Company, such Participating Holder will deliver to the Company
all copies in its possession, other than permanent file copies then in such Participating Holder’s
possession, of the Prospectus and any Free Writing Prospectus covering such Registrable Securities
that is current at the time of receipt of such notice.

     (d) If the Company shall give any notice to suspend the disposition of Registrable Securities
pursuant to a Registration Statement, the Company shall extend the period during which such
Registration Statement shall be maintained effective pursuant to this Agreement by the number of
days during the period from and including the date of the giving of such notice to and including
the date when the Holders of such Registrable Securities shall have received copies of the
supplemented or amended Prospectus or any Free Writing Prospectus necessary to resume such
dispositions. A Registration Default shall be deemed to have occurred if the Company shall give
any such notice more than twice during any 365-day period or any such suspension shall exceed 30
days.

     (e) The Participating Holders who desire to do so may sell such Registrable Securities in an
Underwritten Offering. In any such Underwritten Offering, the investment bank or investment banks
and manager or managers (each an “Underwriter”) that will administer the offering will be
selected by the Holders of a majority in principal amount of the Registrable Securities included in
such offering.

     4. Participation of Broker-Dealers in Exchange Offer. (a) The Staff has taken the
position that any broker-dealer that receives Exchange Securities for its own account in the
Exchange Offer in exchange for Securities that were acquired by such broker-dealer as a result of
market-making or other trading activities (a “Participating Broker-Dealer”) may be deemed
to be an “underwriter” within the meaning of the Securities Act and must deliver a prospectus
meeting the requirements of the Securities Act in connection with any resale of such Exchange
Securities.

     The Company understands that it is the Staff’s position that if the Prospectus contained in
the Exchange Offer Registration Statement includes a plan of distribution containing a statement to
the above effect and the means by which Participating Broker-Dealers may resell the Exchange
Securities, without naming the Participating Broker-Dealers or specifying the amount of Exchange
Securities owned by them, such Prospectus may be delivered by Participating Broker-Dealers (or, to
the extent permitted by law, made available to purchasers) to satisfy their prospectus delivery
obligation under the Securities Act in connection with resales of Exchange Securities for their own

15

 

accounts, so long as the Prospectus otherwise meets the requirements of the Securities Act.

     (b) In light of the above, and notwithstanding the other provisions of this Agreement, the
Company agrees to amend or supplement the Prospectus contained in the Exchange Offer Registration
Statement for a period of up to 180 days after the last Exchange Date (as such period may be
extended pursuant to Section 3(d) hereof), in order to expedite or facilitate the disposition of
any Exchange Securities by Participating Broker-Dealers consistent with the positions of the Staff
recited in Section 4(a) above. The Company further agrees that Participating Broker-Dealers shall
be authorized to deliver such Prospectus (or, to the extent permitted by law, make available)
during such period in connection with the resales contemplated by this Section 4.

     (c) The Initial Purchasers shall have no liability to the Company or any Holder with respect
to any request that they may make pursuant to Section 4(b) hereof.

     5. Indemnification and Contribution. (a) The Company agrees to indemnify and hold
harmless (i) the Initial Purchasers and each Holder, their respective affiliates, directors and
officers and each Person, if any, who controls the Initial Purchasers or any Holder within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, from and against any
and all losses, claims, damages and liabilities (including, without limitation, legal fees and
other expenses incurred in connection with any suit, action or proceeding or any claim asserted, as
such fees and expenses are incurred), joint or several, that arise out of, or are based upon, (1)
any untrue statement or alleged untrue statement of a material fact contained in any Registration
Statement or any omission or alleged omission to state therein a material fact required to be
stated therein or necessary in order to make the statements therein not misleading, or (2) any
untrue statement or alleged untrue statement of a material fact contained in any Prospectus, any
Free Writing Prospectus or any “issuer information” (“Issuer Information”) filed or
required to be filed pursuant to Rule 433(d) under the Securities Act, or any omission or alleged
omission to state therein a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, in each case except insofar
as such losses, claims, damages or liabilities arise out of, or are based upon, any untrue
statement or omission or alleged untrue statement or omission made in reliance upon and in
conformity with any information relating to any Initial Purchaser, information relating to any
Holder furnished to the Company in writing through any Initial Purchaser or any selling Holder,
respectively, expressly for use therein. In connection with any Underwritten Offering permitted by
Section 3, the Company will also enter into a customary underwriting agreement containing customary
indemnification provisions to the same extent as provided above.

     (b) Each Holder agrees, severally and not jointly, to indemnify and hold harmless the Company,
the Initial Purchaser and the other selling Holders, the directors of the Company, each officer of
the Company who signed the Registration Statement and each Person, if any, who controls the
Company, the Initial Purchaser and any other selling Holder within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act to the same extent as the indemnity set forth in
paragraph (a) above, but

16

 

only with respect to any losses, claims, damages or liabilities that arise out of, or are
based upon, any untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with any information relating to such Holder furnished to the
Company in writing by such Holder expressly for use in any Registration Statement, any Prospectus
and any Free Writing Prospectus.

     (c) If any suit, action, proceeding (including any governmental or regulatory investigation),
claim or demand shall be brought or asserted against any Person in respect of which indemnification
may be sought pursuant to either paragraph (a) or (b) above, such Person (the “Indemnified
Person”) shall promptly notify the Person against whom such indemnification may be sought (the
“Indemnifying Person”) in writing; provided that the failure to notify the
Indemnifying Person shall not relieve it from any liability that it may have under paragraph (a) or
(b) above except to the extent that it has been materially prejudiced (through the forfeiture of
substantive rights or defenses) by such failure; and provided, further, that the
failure to notify the Indemnifying Person shall not relieve it from any liability that it may have
to an Indemnified Person otherwise than under paragraph (a) or (b) above. If any such proceeding
shall be brought or asserted against an Indemnified Person and it shall have notified the
Indemnifying Person thereof, the Indemnifying Person shall retain counsel reasonably satisfactory
to the Indemnified Person to represent the Indemnified Person and any others entitled to
indemnification pursuant to this Section 5 that the Indemnifying Person may designate in such
proceeding and shall pay the fees and expenses of such proceeding and shall pay the fees and
expenses of such counsel related to such proceeding, as incurred. In any such proceeding, any
Indemnified Person shall have the right to retain its own counsel, but the fees and expenses of
such counsel shall be at the expense of such Indemnified Person unless (i) the Indemnifying Person
and the Indemnified Person shall have mutually agreed to the contrary; (ii) the Indemnifying Person
has failed within a reasonable time to retain counsel reasonably satisfactory to the Indemnified
Person; (iii) the Indemnified Person shall have reasonably concluded that there may be legal
defenses available to it that are different from or in addition to those available to the
Indemnifying Person; or (iv) the named parties in any such proceeding (including any impleaded
parties) include both the Indemnifying Person and the Indemnified Person and representation of both
parties by the same counsel would be inappropriate due to actual or potential differing interests
between them. It is understood and agreed that the Indemnifying Person shall not, in connection
with any proceeding or related proceeding in the same jurisdiction, be liable for the fees and
expenses of more than one separate firm (in addition to any local counsel) for all Indemnified
Persons, and that all such fees and expenses shall be reimbursed as they are incurred. Any such
separate firm (x) for any Initial Purchaser, its affiliates, directors and officers and any control
Persons of such Initial Purchaser shall be designated in writing by Merrill Lynch and J.P. Morgan,
as representatives of the Initial Purchasers, (y) for any Holder, its directors and officers and
any control Persons of such Holder shall be designated in writing by the Majority Holders and (z)
in all other cases shall be designated in writing by the Company. The Indemnifying Person shall
not be liable for any settlement of any proceeding effected without its written consent, but if
settled with such consent or if there be a final judgment for the plaintiff, the Indemnifying
Person agrees to indemnify each Indemnified Person from and against any loss or liability by reason
of such settlement or judgment. Notwithstanding the foregoing sentence, if at any time an
Indemnified Person

17

 

shall have requested that an Indemnifying Person reimburse the Indemnified Person for fees and
expenses of counsel as contemplated by this paragraph, the Indemnifying Person shall be liable for
any settlement of any proceeding effected without its written consent if (i) such settlement is
entered into more than 30 days after receipt by the Indemnifying Person of such request and (ii)
the Indemnifying Person shall not have reimbursed the Indemnified Person in accordance with such
request prior to the date of such settlement. No Indemnifying Person shall, without the written
consent of the Indemnified Person, effect any settlement of any pending or threatened proceeding in
respect of which any Indemnified Person is or could have been a party and indemnification could
have been sought hereunder by such Indemnified Person, unless such settlement (A) includes an
unconditional release of such Indemnified Person, in form and substance reasonably satisfactory to
such Indemnified Person, from all liability on claims that are the subject matter of such
proceeding and (B) does not include any statement as to or any admission of fault, culpability or a
failure to act by or on behalf of any Indemnified Person.

     (d) If the indemnification provided for in paragraphs (a) and (b) above is unavailable to an
Indemnified Person or insufficient in respect of any losses, claims, damages or liabilities
referred to therein, then each Indemnifying Person under such paragraph, in lieu of indemnifying
such Indemnified Person thereunder, shall contribute to the amount paid or payable by such
Indemnified Person as a result of such losses, claims, damages or liabilities (i) in such
proportion as is appropriate to reflect the relative benefits received by the Company from the
offering of the Securities and the Exchange Securities, on the one hand, and by the Holders from
receiving Securities or Exchange Securities registered under the Securities Act, on the other hand,
or (ii) if the allocation provided by clause (i) is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred to in clause (i)
but also the relative fault of the Company on the one hand and the Holders on the other in
connection with the statements or omissions that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The relative fault of the
Company on the one hand and the Holders on the other shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the Company or by the
Holders and the parties’ relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.

     (e) The Company and the Holders agree that it would not be just and equitable if contribution
pursuant to this Section 5 were determined by pro rata allocation (even if the
Holders were treated as one entity for such purpose) or by any other method of allocation that does
not take account of the equitable considerations referred to in paragraph (d) above. The amount
paid or payable by an Indemnified Person as a result of the losses, claims, damages and liabilities
referred to in paragraph (d) above shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses incurred by such Indemnified Person in connection with any such
action or claim. Notwithstanding the provisions of this Section 5, in no event shall a Holder be
required to contribute any amount in excess of the amount by which the total price at which the
Securities or Exchange Securities sold by such Holder exceeds the amount of any damages that such
Holder has otherwise been required to pay by reason of such untrue or alleged

18

 

untrue statement or omission or alleged omission. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent misrepresentation. The Holders’
obligations to contribute pursuant to this Section 5 are several and not joint.

     (f) The remedies provided for in this Section 5 are not exclusive and shall not limit any
rights or remedies that may otherwise be available to any Indemnified Person at law or in equity.

     (g) The indemnity and contribution provisions contained in this Section 5 shall remain
operative and in full force and effect regardless of (i) any termination of this Agreement, (ii)
any investigation made by or on behalf of the Initial Purchasers or any Holder or any Person
controlling the Initial Purchaser or any Holder, or by or on behalf of the Company or the officers
or directors of or any Person controlling the Company, (iii) acceptance of any of the Exchange
Securities and (iv) any sale of Registrable Securities pursuant to a Shelf Registration Statement.

     6. General. (a) No Inconsistent Agreements. The Company represents, warrants and
agrees that (i) the rights granted to the Holders do not in any way conflict with and are not
inconsistent with the rights granted to the holders of any other outstanding securities issued by
the Company under any other agreement and (ii) the Company has not entered into, or on or after the
date of this Agreement will enter into, any agreement that is inconsistent with the rights granted
to the Holders of Registrable Securities in this Agreement or otherwise conflicts with the
provisions hereof.

     (b) Amendments and Waivers. The provisions of this Agreement, including the provisions of
this sentence, may not be amended, modified or supplemented, and waivers or consents to departures
from the provisions hereof may not be given unless the Company has obtained the written consent of
Holders of at least a majority in aggregate principal amount of the outstanding Registrable
Securities affected by such amendment, modification, supplement, waiver or consent;
provided that no amendment, modification, supplement, waiver or consent to any departure
from the provisions of Section 5 hereof shall be effective as against any Holder of Registrable
Securities unless consented to in writing by such Holder. Any amendments, modifications,
supplements, waivers or consents pursuant to this Section 6(b) shall be by a writing executed by
each of the parties hereto.

     (c) Notices. All notices and other communications provided for or permitted hereunder shall
be made in writing by hand-delivery, registered first-class mail, telecopier, or any courier
guaranteeing overnight delivery (i) if to a Holder, at the most current address given by such
Holder to the Company by means of a notice given in accordance with the provisions of this Section
6(c), which address initially is, with respect to the Initial Purchasers, the address set forth in
the Purchase Agreement; (ii) if to the Company, initially at the Company’s address set forth in the
Purchase Agreement and thereafter at such other address, notice of which is given in accordance
with the provisions of this Section 6(c); and (iv) to such other persons at their respective
addresses

19

 

as provided in the Purchase Agreement and thereafter at such other address, notice of which is
given in accordance with the provisions of this Section 6(c). All such notices and communications
shall be deemed to have been duly given: at the time delivered by hand, if personally delivered;
five Business Days after being deposited in the mail, postage prepaid, if mailed; when receipt is
acknowledged, if telecopied; and on the next Business Day if timely delivered to an air courier
guaranteeing overnight delivery. Copies of all such notices, demands or other communications shall
be concurrently delivered by the Person giving the same to the Trustee, at the address specified in
the Indenture.

     (d) Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon
the successors, assigns and transferees of each of the parties, including, without limitation and
without the need for an express assignment, subsequent Holders; provided that nothing
herein shall be deemed to permit any assignment, transfer or other disposition of Registrable
Securities in violation of the terms of the Purchase Agreement or the Indenture. If any transferee
of any Holder shall acquire Registrable Securities in any manner, whether by operation of law or
otherwise, such Registrable Securities shall be held subject to all the terms of this Agreement,
and by taking and holding such Registrable Securities such Person shall be conclusively deemed to
have agreed to be bound by and to perform all of the terms and provisions of this Agreement and
such Person shall be entitled to receive the benefits hereof. The Initial Purchasers (in their
capacity as Initial Purchasers) shall have no liability or obligation to the Company with respect
to any failure by a Holder to comply with, or any breach by any Holder of, any of the obligations
of such Holder under this Agreement.

     (e) Third Party Beneficiaries. Each Holder shall be a third party beneficiary to the
agreements made hereunder between the Company, on the one hand, and the Initial Purchasers, on the
other hand, and shall have the right to enforce such agreements directly to the extent it deems
such enforcement necessary or advisable to protect its rights or the rights of other Holders
hereunder.

     (f) Counterparts. This Agreement may be executed in any number of counterparts and by the
parties hereto in separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same agreement.

     (g) Headings. The headings in this Agreement are for convenience of reference only, are not a
part of this Agreement and shall not limit or otherwise affect the meaning hereof.

     (h) Governing Law. This Agreement and any claim, counterclaim or dispute of any kind or
nature whatsoever arising out of or in any way relating to this Agreement, directly or indirectly,
shall be governed by, and construed in accordance with, the laws of the State of New York.

     (i) Jurisdiction, Venue and Service of Process. Each of the parties hereto hereby submits to
the jurisdiction of any U.S. federal or New York state court in the

20

 

Borough of Manhattan, The City of New York, in respect of actions brought against any such
party as a defendant, in any legal suit, action or proceeding based on or arising under this
Agreement and agrees that all claims in respect of such suit or proceeding may be determined in any
such court. Each of the parties hereto hereby waives any right to the jurisdiction of other courts
to which it may be entitled on account of place of residence or domicile and waives, to the extent
permitted by law, the defense of an inconvenient forum or objections to personal jurisdiction with
respect to the maintenance of such legal suit, action or proceeding. The Initial Purchasers and
the Company (on its behalf and, to the extent permitted by applicable law, on behalf of its
affiliates) waive all right to trial by jury in any action, proceeding or counterclaim (whether
based upon contract, tort or otherwise) in any way arising out of or relating to this Agreement.
The Company shall maintain an office or agent for service of process in the Borough of Manhattan,
The City of New York, where notices to and demands upon the Company in respect of this Agreement
may be served. Initially this agent will be CT Corporation System (the “Process Agent”),
and the Company will agree not to change the designation of such agent without prior notice to the
Initial Purchasers and the Trustee and designation of a replacement agent in the Borough of
Manhattan, The City of New York. To the extent that the Company has or hereafter may acquire any
immunity (sovereign or otherwise) from any legal action, suit or proceeding, from jurisdiction of
any court or from set-off or any legal process (whether service or notice, attachment in aid or
otherwise) with respect to itself or any of its property, the Company hereby irrevocably waives and
agrees not to plead or claim such immunity in respect of its obligations under this Agreement.

     (j) Judgment Currency. The Company agrees to indemnify the Initial Purchasers against any
loss incurred by the Initial Purchaser as a result of any judgment or order being given or made for
any amount due hereunder and such judgment or order being expressed and paid in a currency (the
“Judgment Currency”) other than United States dollars and as a result of any variation as
between (i) the rate of exchange at which the United States dollar amount is converted into the
Judgment Currency for the purpose of such judgment or order, and (ii) the rate of exchange at which
the Initial Purchasers are able to purchase United States dollars, on the nearest business day
following the date of judgment, with the amount of the Judgment Currency actually received by the
Initial Purchaser. The foregoing indemnity shall constitute a separate and independent obligation
of the Company and shall continue in full force and effect notwithstanding any such judgment or
order as aforesaid. The term “rate of exchange” shall include any premiums and costs of exchange
payable in connection with the purchase of, or conversion into, the relevant currency.

     (k) Foreign Taxes. All payments by the Company to the Initial Purchasers hereunder shall be
made free and clear of, and without deduction or withholding for or on account of, any and all
present and future income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions
or withholdings, now or hereinafter imposed, levied, collected, withheld or assessed by the
government of the Republic of Colombia or any other jurisdiction from or through which payment is
made or deemed to be made, or any political subdivision thereof or therein excluding (i) any such
tax imposed by reason of the Initial Purchasers having some present or former connection with any
such

21

 

jurisdiction other than their participation as the Initial Purchasers hereunder, and the
receipt of payments hereunder, and (ii) any income or franchise tax on the overall net income of
the Initial Purchasers imposed by the United States or by the State of New York or any political
subdivision of the United States or of the States of New York (all such non-excluded taxes,
“Foreign Taxes”). If the Company is prevented by operation of law or otherwise from
paying, causing to be paid or remitting that portion of amounts payable hereunder represented by
Foreign Taxes withheld or deducted, then amounts payable under this Agreement shall be increased to
such amount as is necessary to yield and remit to the Initial Purchasers an amount that, after
withholding or deduction of all Foreign Taxes (including all Foreign Taxes payable on such
increased payments) equals the amount that would have been payable if no Foreign Taxes applied.

     (l) Entire Agreement; Severability. This Agreement contains the entire agreement between the
parties relating to the subject matter hereof and supersedes all oral statements and prior writings
with respect thereto. If any term, provision, covenant or restriction contained in this Agreement
is held by a court of competent jurisdiction to be invalid, void or unenforceable or against public
policy, the remainder of the terms, provisions, covenants and restrictions contained herein shall
remain in full force and effect and shall in no way be affected, impaired or invalidated. The
Company and the Initial Purchasers shall endeavor in good faith negotiations to replace the
invalid, void or unenforceable provisions with valid provisions the economic effect of which comes
as close as possible to that of the invalid, void or unenforceable provisions.

22

 

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written
above.

	 	 	 	 	 
	 	BANCOLOMBIA S.A.

 	 
	 	By  	/s/ Jaime Alberto Velásquez Botero
 	 
	 	 	Name:  	Jaime Alberto Velásquez Botero 	 
	 	 	Title:  	Chief Financial Officer 	 
	 

Confirmed and accepted as of the date first above written:

	 	 	 	 	 
	 	MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED

 	 
	 	By  	/s/ Max Volkov
 	 
	 	 	Authorized Signatory 	 
	 	 	 	 
	 
	 	J.P. MORGAN SECURITIES LLC

 	 
	 	By  	/s/ George Baptista
 	 
	 	 	Authorized Signatory 	 
	 	 	 	 
	 

For themselves and the other several Initial Purchasers named in Schedule 1 to the
Purchase Agreement.eh1100480_form8ka-ex1001.htm

Exhibit 10.1

 

Execution Version

 

LOCAL PROGRAMMING AND MARKETING AGREEMENT

 

THIS LOCAL PROGRAMMING AND MARKETING AGREEMENT (this “Agreement”) is made as of June 20, 2011 among Emmis Radio, LLC (“Emmis Radio”),  Emmis Radio License, LLC (“Emmis Radio License”) and Merlin Media, LLC (“Company,” and together with Emmis Radio and Emmis Radio License , “Licensees” and each as a “Licensee”), and LMA Merlin Media, LLC (“Programmer”).

 

Recitals

 

A.           Licensees own and operate radio stations: (i) WKQX(FM), 101.1 MHz, Channel 266, Chicago, IL (FIN 19525), (ii) WRXP(FM), 101.9 MHz, Channel 270, New York, NY (FIN 67846) and (iii) WLUP-FM, 97.9 MHz, Channel 250, Chicago, IL (FIN 73233) (collectively, the “Stations”, and each, a “Station”).  The Stations transmit their signals in both analog and digital modes pursuant to licenses issued by the Federal Communications Commission (the “FCC”).

 

B.           Licensees desire to obtain programming for the Stations, and Programmer desires to provide programming for broadcast on the Stations on the terms set forth in this Agreement.

 

C.           Licensees and certain Affiliates of Programmer are parties to a Purchase Agreement of even date herewith (the “Purchase Agreement”) with respect to the equity interests in an entity that will own the Stations.  Capitalized terms not otherwise defined herein have the meanings set out in the Purchase Agreement.

 

Agreement

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties, intending to be legally bound, hereby agree as follows:

 

1.           Term.  The term of this Agreement (the “Term”) will begin at 12:01 a.m. on such date as is designated by Programmer, upon at least five (5) business days prior written notice to Licensees, which date is reasonably acceptable to Licensees and shall be no earlier than fifteen (15) days following the date hereof and no later than forty five (45) days following the date hereof, or if later, then the date five (5) business days after the date of expiration or termination of the waiting period under the HSR Act (the “LMA Effective Date”), and will continue until terminated in accordance with the provisions hereof.

 

2.           Programming.  During the Term, Programmer shall purchase from Licensees the analog and digital airtime of the Stations for the price and on the terms specified below, and shall transmit to Licensees programming that it produces or owns (the “Programs”) for broadcast on the Stations twenty-four (24) hours per day, seven (7) days per week.  Licensees may, at their sole discretion upon reasonable notice to Programmer, and without limitation of Licensees’ rights under Section 6 hereof, provide programming for the period from 6:00 a.m. to 8:00 a.m. local time each Sunday morning (any such programming provided by Licensees, being the “Licensee Programming”).  Programmer will supply the Programs at its own cost to the Stations’ origination facilities in a manner that ensures that the parties meet technical and quality standards 

 

  

  

  

 

at least equal to those of the Stations’ broadcasts prior to commencement of the Term.  Notwithstanding anything herein to the contrary, the Stations shall continue to broadcast any programming required to be aired under the terms of the Assumed Contracts.

 

3.           Broadcasting.  Subject to the provisions of Sections 2 and 6 hereof, during the Term, Licensees shall make available to Programmer the entire analog and digital programming capacity of the Stations for the broadcast of Programs.  To the extent reasonably necessary to perform this Agreement, during the Term, Licensees shall provide Programmer with the benefits of any Assets, including the Assumed Contracts and any Contracts that are used by the Stations but are not Assumed Contracts (as designated by Programmer), and Programmer shall perform the obligations of Licensees thereunder.

 

4.           Advertising.

 

(a)           Licensees shall retain all of the Stations’ accounts receivable existing prior to the LMA Effective Date.  Programmer shall promptly pay over to Licensees any such accounts receivable it receives, without offset, and Programmer shall not collect any such accounts receivable unpaid and due to Licensees.

 

(b)           During the Term, Programmer will be exclusively responsible for the sale of advertising on the Stations and for the collection of accounts receivable arising therefrom, and Programmer shall be entitled to all such collections, and to all other revenues generated by the Stations, including on-line advertising and other website related revenues, and other “non-traditional revenue” streams.  Licensees shall promptly pay over to Programmer any of Programmer’s accounts receivable it receives, without offset.  All contracts for advertising on the Stations which may be entered into by Programmer shall terminate upon termination of this Agreement (other than a termination of this Agreement at Closing under the Purchase Agreement).

 

5.           Payments.  For the broadcast of the Programs and the other benefits made available to Programmer pursuant to this Agreement, during the Term, Programmer shall pay Licensees as set forth on Schedule A attached hereto.

 

6.           Control.

 

(a)           Notwithstanding anything to the contrary in this Agreement, Licensees shall have full authority, power and control over the operation of the Stations and over all persons working at the Stations during the Term.  Without limiting the generality of the foregoing, Licensees will: (1) employ a manager for each market in which the Stations are located, who will report to Licensees and will direct the day-to-day operations of the applicable Stations, and who shall have no employment, consulting or other relationship with Programmer, (2) employ a second employee for each market in which the Stations are located, who will report and be solely accountable to the applicable manager, and (3) retain control over the policies, programming and operations of the Stations.

 

(b)           Nothing contained herein shall prevent Licensees from (i) rejecting or refusing programs which Licensees in good faith believe to be contrary to the public interest, or (ii) substituting programs which Licensees in good faith believe to be of greater local or national 

 

 

  

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importance or which are designed to address the problems, needs and interests of the local communities.  Without limiting the preceding sentence, Licensees reserve the right to (i) refuse to broadcast any Program containing matter which violates any right of any third party or which does not meet the requirements of the rules, regulations, and policies of the FCC, (ii) preempt any Program in the event of a local, state, or national emergency, or (iii) delete any commercial announcements that do not comply with the requirements of the FCC’s sponsorship identification policy.  Notwithstanding the foregoing, Licensees shall not exercise their rights under this Section 6(b) for commercial advantage or in any manner other than pursuant to a good faith determination that such exercise is reasonably necessary to comply with their obligations as holder of the FCC licenses for the Stations.

 

(c)           Programmer shall cooperate with Licensees to ensure that Emergency Alert System transmissions are properly performed in accordance with Licensees’ instructions.  Programmer will immediately serve Licensees with notice and a copy of any letters of complaint it receives concerning any Program for review by Licensees and inclusion in the applicable Station’s public inspection file.

 

7.           Programs.

 

(a)           Programmer shall ensure that the contents of the Programs conform to all FCC rules, regulations and policies.  Programmer shall consult with Licensees in the selection of the Programs to ensure that the Programs’ content contains matters responsive to issues of public concern in the local communities, as those issues are made known to Programmer by Licensees.  On or before January 5, April 5, July 5 and October 5 of every year during the Term, Programmer shall provide to Licensees a list of significant community issues addressed in the Programs during the preceding quarter and the specific Programs that addressed such issues.

 

(b)           Licensees shall oversee and take ultimate responsibility with respect to the provision of equal opportunities, lowest unit charge and reasonable access to political candidates and compliance with the political broadcast rules of the FCC.  During the Term, Programmer shall cooperate with Licensees as Licensees comply with their political broadcast responsibilities, and shall supply such information promptly to Licensees as may be necessary to comply with the political broadcasting provisions of the FCC rules, the Communications Act of 1934, as amended, and federal election laws.  Programmer shall release advertising availabilities to Licensees during the Term as necessary to permit Licensees to comply with the political broadcast rules of the FCC; provided, however, that revenues received by Licensees as a result of any such release of advertising time shall be remitted to Programmer within seven (7) days.

 

(c)           During the Term, subject to Section 5, Licensees and Programmer will maintain music licenses with respect to the Stations and the Programs, as appropriate.

 

8.           Operations.

 

(a)           During the Term and subject to the terms and conditions of this Agreement, Licensees shall, subject to Section 5:

 

(i)           operate and maintain the Stations in accordance with the rules and regulations of the FCC and the FCC Licenses in all material respects and file all ownership 

 

  

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reports, employment reports, applications, responses and other documents required to be filed during such period;

 

(ii)           maintain in full force and effect the FCC Licenses;

 

(iii)           comply in all material respects with all laws, rules, regulations, ordinances, orders, judgments and decrees applicable to the Stations and Licensees’ employees thereof;

 

(iv)           use commercially reasonable efforts to timely renew the leases for the Stations’ transmitter sites on the terms and conditions set out therein; and

 

(v)           use commercially reasonable efforts to enforce Licensees’ rights under the Real Estate Leases as reasonably necessary to protect and preserve the use of the real property subject to such Real Estate Leases.

 

(b)           Subject to Section 5, Licensees shall be responsible for timely paying all of the operating expenses of the Stations that are required by FCC rules, regulations and policies to the extent required by such rules, regulations and policies, including: (i) all lease payments for the Stations’ transmitter sites, whether in use or not, and all taxes and other costs incident thereto, including insurance costs, (ii) all utility costs (telephone, electricity, etc.) relating to the transmitter sites, (iii) all maintenance and repair costs for the transmitting equipment, (iv) all costs, including utilities, taxes, insurance and maintenance, relating to the lease of the building housing the main studio, (v) all maintenance and repair costs for the Stations’ studio equipment and any equipment used to link the Stations’ studios and transmitting facilities, (vi) the salaries, taxes, insurance and related costs for Licensees’ personnel of the Stations and (vii) all regulatory or filing fees.

 

(c)           Programmer shall be responsible for the salaries, taxes, insurance and other costs for all personnel used in the production of the Programs and the cost of delivering the Programs to the Stations.

 

(d)           Licensees shall maintain all of the Stations’ equipment and facilities, including the studios, origination equipment, studio transmitter links, transmitter building, antennas, transmitters and transmission lines in normal operating condition consistent with the general practice of Licensees, Licensees’ parent and their affiliated companies at the broadcast stations they control, and Licensees shall continue to contract with local utility companies for the delivery of electrical power to the Stations’ studios and transmitting facilities at all times in order to operate the Stations in the Ordinary Course of Business of the Stations.  Licensees shall, subject to the reimbursement obligations of Programmer under Section 5, undertake such repairs with respect to the Stations’ facilities located at the Stations’ respective main and auxiliary transmitter sites (but not at the Stations’ studio sites) as are reasonably necessary to restore the operation of the Stations within licensed parameters following the occurrence of any loss or damage preventing such operation at any Station.  Such restoration of Station operation shall be made consistent with the repair and restoration practice of Licensees and Licensees’ Affiliates at the broadcast stations they control following the occurrence of any loss or damage preventing such operation.

 

 

  

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9.           Format and Call Sign.  During the Term, Licensees will retain all rights to the call letters of the Stations or any other call letters which may be assigned by the FCC for use by the Stations, and will ensure that proper station identification announcements are made with such call letters in accordance with FCC rules and regulations; provided, that subject to Licensees’ consent, which shall not be unreasonably delayed, conditioned or withheld, (a) at the reasonable request of Programmer, Licensees shall file a request with the FCC for a change in any such Station’s call sign and (b) Programmer shall be entitled to change the format of any Station.  Programmer shall include in the Programs an announcement at the beginning of each hour of such Programs to identify such call letters, as well as any other announcements required by the rules and regulations of the FCC.

 

10.           Employees.

 

(a)           At any time following the date hereof and prior to the LMA Effective Date, Programmer may, in its sole discretion, make offers of employment with Programmer to any or all of the Current Station Employees, to be effective as of the LMA Effective Date (provided that the offer of employment for any employee who serves as the manager or second employee pursuant to Section 6(a) shall be effective as of the Closing (as defined in the Contribution Agreement) and, with respect to any such employee, all references in this Section 10 to the LMA Effective Date shall be deemed to refer to the date of the Closing). Beginning immediately following the date of this Agreement, Emmis Radio shall provide Programmer with the opportunity to interview the Current Station Employees (including any such employees hired after the date hereof) (and Emmis Radio and Programmer shall work in good faith to schedule such interviews at such times as would not unreasonably interfere with such Current Station Employees’ duties), and with any information regarding the Current Station Employees that Programmer reasonably requests in connection therewith, consistent with applicable Law, in order to determine the Current Station Employees to whom Programmer will offer employment. Programmer shall notify Emmis Radio of each Current Station Employee who accepts employment with Programmer pursuant to this Section 10 (each such employee, a “Hired Employee”) as soon as practicable after such acceptance. Effective as of the LMA Effective Date, Emmis Radio shall terminate the employment of each Hired Employee and each Hired Employee shall commence employment with Programmer. On or prior to the LMA Effective Date, Emmis Radio shall provide, to the extent not prohibited by applicable Law, in written or electronic form, Programmer with originals or copies of all records and files relating to the Hired Employees.  Programmer shall not, following the LMA Effective Date, without the consent of the individuals to whom such records or files relate or as permitted or required by applicable Law, use or disclose such records or files (or information contained therein) for purposes (i) other than those for which such information was collected or (ii) which do not relate directly to the carrying on of the business at the Stations or to the carrying out of the purposes for which the transactions contemplated by this Agreement were implemented. Notwithstanding anything herein to the contrary, Programmer shall not have any responsibility for, and Emmis Radio shall retain and hold Programmer harmless and indemnify Programmer with respect to, any and all claims, losses, Liabilities, damages, expenses and other obligations (including statutory or contractual severance benefits) arising as a result of the actual or constructive termination of the employment of any employee of Emmis Communications Corporation or any of its subsidiaries as a result of the transactions contemplated hereby, including as a result of Programmer’s selection of Current Station Employees to whom to offer employment hereunder; provided that 

 

  

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Programmer shall be responsible for, and Programmer shall retain and hold Emmis Radio harmless and indemnify Emmis Radio with respect to, any and all claims, losses, Liabilities, damages, expenses and other obligations arising solely as a result of Programmer’s violation of applicable Law in selecting Current Station Employees to whom to offer employment hereunder (the “Employee Offer Liabilities”). If Programmer has not established as of the LMA Effective Date medical and dental insurance plans (the “New Welfare Plans”) for the benefit of Hired Employees that are substantially comparable to the medical and dental insurance plans provided by Emmis Radio and its Affiliates to such Hired Employees immediately prior to the LMA Effective Date (the “Current Welfare Plans”), then with respect to each Hired Employee who elects to receive continuation medical and dental coverage under the medical and dental insurance plans provided by Emmis Radio and its Affiliates to such Hired Employees immediately prior to the LMA Effective Date (the “Current Welfare Plans”) pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), Programmer shall promptly reimburse such Hired Employee for the amount of COBRA premiums paid by such Hired Employee for such continuation coverage in respect of the period commencing on the LMA Effective Date and ending on the date on which such Hired Employee becomes eligible to participate in the New Welfare Plans (but such reimbursement obligation shall be limited to the amount by which such premiums exceed the premiums that such Hired Employee would have been required to pay for such coverages had such Hired Employee remained an active Station Employee of Emmis Radio during such period).

(b)           Notwithstanding anything to the contrary in this Section 10, (i) Programmer agrees that the provisions of this Section 10 shall be subject to any applicable provisions of a collective bargaining agreement in respect of Hired Employees, to the extent such provisions are inconsistent with or otherwise in conflict with the provisions of any such collective bargaining agreement, and (ii) Programmer shall be permitted to make changes to any Represented Employee’s compensation and benefits to the extent permitted under the applicable collective bargaining agreement. Notwithstanding the foregoing, it is agreed and understood by Emmis Radio that Programmer is not assuming any of the contribution history of Emmis Radio for contributions made on, before or after the LMA Effective Date to any Multiemployer Plans to which Emmis Radio has or had an obligation to contribute and that Programmer is not assuming any withdrawal liability under any of the Multiemployer Plans.

(c)           With respect to all Contributors Plans, Licensees shall retain sponsorship of all such Contributors Plans and shall retain all commitments, Liabilities and obligations thereunder, whether arising before, on or after the LMA Effective Date, and Programmer shall not assume sponsorship of, contribute to or maintain any such Contributors Plans and shall not assume any commitment, Liability or obligation thereunder, whether arising before, on or after the LMA Effective Date. Following the LMA Effective Date: (i) Emmis Radio shall retain liability and responsibility for all employment and employee benefits-related Liabilities, obligations, claims and losses (other than Employee Offer Liabilities) that (A) relate to any Hired Employee (or any dependent or beneficiary of any Hired Employee) and are incurred or arise on or prior to the LMA Effective Date or (B) are incurred or arise at any time and relate to any employee of Emmis Communications Corporation or any of its subsidiaries other than the Hired Employees, and Programmer shall have no liability or responsibility for any such Liabilities, obligations, claims or losses; and (ii) Programmer shall be solely responsible for (A) all employment and 

 

  

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employee-benefits related Liabilities, obligations, claims and losses that relate to any Hired Employee (or any dependent or beneficiary of any Hired Employee) and are incurred or arise after the LMA Effective Date, and (B) the Employee Offer Liabilities, and Emmis Radio shall have no liability or responsibility for any such Liabilities, obligations, claims or losses, or the Employee Offer Liabilities.

(d)           Emmis Radio shall make a prorated annual bonus payment to each Hired Employee who remains employed with Emmis Radio or its subsidiaries through the LMA Effective Date, the amount (if any) of which shall equal the product of such Hired Employee’s target annual bonus and a fraction, the numerator of which is the number of days in the calendar year during which the LMA Effective Date occurs that elapse prior to the LMA Effective Date, and the denominator of which is 365, except that such amount shall only be payable to the extent such Hired Employee is, as of the LMA Effective Date, performing “on plan” in respect of such target bonus. Each such prorated bonus shall be paid as soon as practicable following the LMA Effective Date. Emmis Radio shall pay to each Hired Employee all amounts in respect of vacation days and other paid time off accrued but not taken by such Hired Employee on or prior to the LMA Effective Date, and Programmer shall have no obligation to honor such accrued vacation days or paid time off after the LMA Effective Date and shall have no other commitment, Liability or obligation for, and Emmis Radio and its Affiliates shall hold Programmer harmless with respect to, all such amounts payable to any Hired Employee. After the LMA Effective Date, each Hired Employee’s eligibility for vacation and other paid time off shall be determined under Programmer’s vacation policy.

(e)           Emmis Radio and Programmer hereby agree to follow the alternate procedure for United States employment tax withholding as provided in Section 5 of Rev. Proc. 2004-53, I.R.B. 2004-34. Accordingly, Emmis Radio and its Affiliates shall have no United States employment tax reporting responsibilities, and Programmer shall have full United States employment tax reporting responsibilities, for Hired Employees following the close of business on the LMA Effective Date.

(f)           Within five (5) Business Days following the LMA Effective Date, Emmis Radio shall notify Programmer of any “employment loss” (as defined in the WARN Act) experienced by any Station Employees during the 90-day period prior to the LMA Effective Date.

(g)           From the date of this Agreement through the earlier of (i) the LMA Effective Date or (ii) the date this Agreement is terminated in accordance with Section 14, except as set forth in Schedule 10(g) or as consented to by the GTCR Investors in writing in advance (which consent shall not be unreasonably conditioned, withheld, delayed or denied), Emmis Radio shall not, except as otherwise expressly contemplated by this Agreement, the Purchase Agreement or the Contribution Agreement: (i) except to the extent Licensee deems necessary or appropriate to preserve the business of the Stations, as required to comply with any collective bargaining agreement or Contributors Plan (in each case as in effect on the date of this Agreement), or as required to comply with applicable Law, (A) grant any loan or any increase in the compensation or benefits of, or pay any bonus to, any Station Employee, (B) pay to any Station Employee any compensation or benefit not provided for under any Contributors Plan, other than the payment of cash compensation in the Ordinary Course of Business of the Stations, (C) grant any increase in 

 

  

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severance, change of control, retention, termination or similar compensation or benefits to any Station Employee, (D) adopt, establish, enter into, amend, modify or terminate any Contributors Plan, (E) grant any awards under any Contributors Plan to any Station Employee (including the grant of stock-based or stock-related awards, or the removal of existing restrictions in any Contract or Contributors Plan or awards made thereunder), (F) enter into any trust, annuity or insurance Contract or similar agreement or take any other action to fund or otherwise secure the payment of any compensation or benefit for any Station Employee or (G) take any action to accelerate the time of vesting or payment of any compensation or benefit to any Station Employee; (ii) modify or terminate any collective bargaining agreement or other labor union Contract, or enter into any collective bargaining agreement or other labor union Contract with respect to the Stations, except in the Ordinary Course of Business of the Stations and after consultation with the Company, or take any act reasonably expected to cause a material breach under any collective bargaining agreement, or waive any material right under any collective bargaining agreement with respect to the Stations; or (iii) (A) terminate the employment of any Current Station Employee outside of the Ordinary Course of Business or (B) transfer any Current Station Employee to a Retained Station or transfer any employee of any Retained Station to a Station.

(h)           For the avoidance of doubt, the provisions of this Section 10 are for the sole benefit of the parties to this Agreement and nothing herein, expressed or implied, is intended or shall be construed to confer upon or give to any person (including any Station Employee or other current or former employee of Emmis Communications Corporation or any of its subsidiaries), other than the parties hereto and their respective permitted successors and assigns, any legal or equitable or other rights or remedies (including with respect to the matters provided for in this Section 10) under or by reason of any provision of this Agreement. Nothing in this Section 10 shall amend, or be deemed to amend (or prevent the amendment or termination of) any Contributors Plan or any compensation or benefit plan of Programmer or its Affiliates. The Programmer shall have no obligation to employ or retain the services of any Hired Employee for any period of time and, except as specifically provided in this Section 10, Programmer shall be entitled to modify any compensation or benefits provided to, and any other terms or conditions of employment of, any such employees in its absolute discretion.

11.           Facilities and Shared Services.

 

(a)           During the Term, subject to any necessary landlord consent, Licensees shall provide Programmer access to and the use of the space at Licensees’ studios and offices for the Stations as described on Schedule B hereto (the “Current Studio and Office Space”) (for purposes of conducting Programmer’s business with respect to the Stations pursuant to this Agreement and for no other purpose).  When on Licensees’ premises, Programmer’s personnel shall not (i) act contrary to the terms of any lease for the premises, (ii) create any lien, claim or encumbrance on the premises, or (iii) interfere with the business or operation of Licensees’ stations or Licensees’ use of such premises.  This Section is subject and subordinate to the Real Estate Leases for such studio and office facilities and does not constitute a grant of any real property interest, and if such lease expires or is terminated for any reason, then Licensees shall give Programmer prompt notice of such termination within two (2) business days of Licensees’ obtaining knowledge thereof, and Programmer’s right to use the facilities under this Agreement shall end with the termination of such Real Estate Leases.

 

  

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(b)           In addition, during the Term, subject to Section 5, Licensees shall, and shall cause their affiliates to, provide to Programmer the “Services,” as defined in that certain Transition and Shared Services Agreement to be signed at Closing by Company and Emmis Radio (the “TSSA”).  With respect to the provision of such Services pursuant to this Section 11(b), Programmer shall pay Licensees for such Services as set forth in the TSSA.  Furthermore, Article 2 (Services), Article 3 (Required Consents), Section 4.2, Article 5 (Compensation; Financial Provisions), Article 6 (Confidentiality), Article 7 (Reports Meetings; Personnel), Article 8 (Indemnification) and Section 9.6 (Force Majeure) of the TSSA shall apply during the Term with respect to such Services, and such provisions are hereby incorporated herein by this reference with Programmer being substituted for Company.

 

12.           Representations and Warranties of Licensees.

 

Licensees, jointly and severally, make the following representations and warranties to Programmer as of the date of this Agreement:

 

(a)           Organization.  Each of Emmis Radio, Emmis Radio License, and  Company has been duly formed and is validly existing as a limited liability company  in good standing under the Laws of the jurisdiction of its organization.  The copies of the Organizational Documents of Licensees previously made available by Licensees to Programmer are true, correct and complete.  Each of Emmis Radio, Emmis Radio License and Company has the requisite limited liability company power and authority to own or lease all of its properties and assets and to carry on its business with respect to the Stations as it is now being conducted and is duly licensed or qualified and in good standing as a foreign corporation or limited liability company in each jurisdiction in which the ownership of its property or the character of its activities with respect to or in connection with the Stations is such as to require it to be so licensed or qualified, except where the failure to be so licensed or qualified would not have a Material Adverse Effect.  No other jurisdiction has demanded, requested or otherwise indicated that either Licensee is required so to qualify on account of the ownership, leasing or operation of its assets and properties with respect to or in connection with the Stations, or the conduct of the business of any of the Stations, except where the failure to qualify would not have a Material Adverse Effect.

 

(b)           Authorization and Binding Obligation.  Each of Emmis Radio, Emmis Radio License and Company have all requisite limited liability company power and authority to execute, deliver and perform this Agreement, and each of Emmis Radio, Emmis Radio License and Company will have as of the LMA Effective Date all requisite corporate or other organizational power and authority to execute, deliver and perform this Agreement.  This Agreement has been duly and validly authorized, executed and delivered by each of Emmis Radio, Emmis Radio License and Company and constitutes a valid and legally binding obligation of each of Emmis Radio, Emmis Radio License and Company (assuming that this Agreement constitutes a valid and legally binding obligation of Programmer), enforceable in accordance with its terms and conditions, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and similar Laws of general applicability relating to or affecting creditors’ rights, or by general equity principles, including principles of commercial reasonableness, good faith and fair dealing.

 

13.           Representations and Warranties of Programmer.

 

 

  

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Programmer makes the following representations and warranties to Licensees as of the date of this Agreement:

 

(a)           Organizational and Standing.  Programmer is duly formed, validly existing and in good standing under the laws of the State of Delaware with full power and authority to conduct its business as it is presently being conducted, to own and lease its properties and assets.

 

(b)           Authorization and Binding Obligation.  The execution, delivery and performance of this Agreement have been duly authorized by Programmer.  This Agreement constitutes a valid and binding obligation of Programmer, enforceable in accordance with its terms.  The execution and delivery by Programmer of this Agreement and the fulfillment of and compliance with the respective terms hereof by Programmer do not and will not (i) conflict with or result in a breach of the terms, conditions or provisions of, (ii) constitute a default under, (iii) give any third party the right to modify, terminate or accelerate any obligation under, (iv) result in a violation of or (v) require any authorization, consent, approval, exemption or other action by or notice to any court or administrative or governmental body pursuant to, Programmer’s Organizational Documents, or any law, statute, rule or regulation to which Programmer is subject, or any agreement, instrument, order, judgment or decree to which such Investor is a party or by which it is bound.

 

14.           Termination.  This Agreement shall terminate as follows:

 

(a)           automatically upon Closing under the Purchase Agreement;

 

(b)           by written notice of Licensees to Programmer or Programmer to Licensees in the event of any expiration or termination of the Purchase Agreement in accordance with the terms thereof prior to the Closing Date thereunder;

 

(c)           by written notice of Licensees to Programmer if Programmer fails to pay when due any payment required under this Agreement and such failure is not cured within five (5) business days following written notice of Licensees to Programmer, but no more than two such cure periods shall be permitted in any six-month period;

 

(d)           by written notice of Licensees to Programmer if Programmer fails to observe or perform any of its other obligations contained in this Agreement in any material respect or breaches any representation or warranty made by it under this Agreement in any material respect and such failure or breach is not cured within ten (10) business days after written notice of Licensees to Programmer, provided, that if the failure or breach is non-monetary and is susceptible of cure but not within such time period and if Programmer has undertaken and is continuing diligent efforts to cure and an additional delay does not materially adversely affect Licensees, then, in that event, the cure period shall be extended at Programmer’s request for up to thirty (30) additional calendar days as long as Programmer continues to diligently pursue such cure during that additional 30-day period; and

 

(e)           by written notice of Programmer to Licensees if Licensees fail to observe or perform any of their obligations contained in this Agreement in any material respect or breach any representation or warranty made by them under this Agreement in any material respect and 

 

  

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such failure or breach is not cured within ten (10) business days after written notice of Programmer to Licensees, provided, that if the failure or breach is susceptible of cure but not within such time period and if Licensees have undertaken and are continuing diligent efforts to cure and an additional delay does not materially adversely affect Programmer, then, in that event, the cure period shall be extended at Licensees’ request for up to thirty (30) additional calendar days as long as Licensees continue to diligently pursue such cure during that additional 30-day period.  Failure of Licensees to broadcast the Programs due to facility maintenance, repair or modification, or due to any reason outside of Licensees’ reasonable control, shall not constitute a breach or default by Licensees under this Agreement, so long as Licensees are using commercially reasonable efforts to resume such broadcasts, subject to the reimbursement obligations of Programmer under Section 5.

 

15.           Remedies

.  Termination of this Agreement shall not relieve any party of any liability for breach or default under this Agreement prior to the date of termination.  In the event of a breach or default by a party under this Agreement, the other party shall be entitled to all remedies at law or in equity; provided that if this Agreement is terminated for any reason other than at Closing under the Purchase Agreement, the parties agree to cooperate with one another and to take all actions necessary to rescind this Agreement and return the parties to the status quo ante; and provided, further, that if this Agreement is terminated pursuant to Section 14(b) hereof, or the Purchase Agreement is otherwise terminated by any party thereto in accordance with its terms, the remedies available to the parties under this Agreement shall be those set forth in the Purchase Agreement, as if the rights and obligations in this Agreement were contained therein.

 

16.           Indemnification.

 

(a)           Programmer shall indemnify and hold Licensees, their officers, directors, members, partners, Affiliates and employees harmless against any and all loss, liability, cost and expense (including reasonable attorneys’ fees) arising from (i) the broadcast of the Programs on the Stations, including without limitation all liability for indecency, libel, slander, illegal competition or trade practice, infringement of trademarks, trade names, or program titles, violation of rights of privacy, and infringement of copyrights and proprietary rights or any other violation of third party rights or FCC rules or other applicable law, (ii) any breach or default by Programmer under this Agreement or (iii) any negligent or willful misconduct of Programmer or its agents, guests or representatives at the Stations’ studios, offices, transmitters or other facilities.

 

(b)           Licensees shall indemnify and hold Programmer, its officers, directors, shareholders, members, partners, Affiliates and employees harmless against any and all loss, liability, cost and expense (including reasonable attorneys’ fees) arising from (i) the broadcast of the Licensee Programming on the Stations, including without limitation all liability for indecency, libel, slander, illegal competition or trade practice, infringement of trademarks, trade names, or program titles, violation of rights of privacy, and infringement of copyrights and proprietary rights or any other violation of third party rights or FCC rules or other applicable law, or (ii) any breach or default by Licensees under this Agreement.

 

(c)           The indemnified party shall give prompt written notice to the indemnifying party of any demand, suit, claim or assertion of liability by third parties that is 

 

  

11

  

 

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 16(f).

 

(d)           The indemnifying party shall have the right to undertake the defense or 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 at the indemnifying party’s cost (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).

 

(e)           Anything herein to the contrary notwithstanding:

 

(i)           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;

 

(ii)           the indemnifying party shall not, without the indemnified party’s written consent, settle or compromise any Claim or consent to entry of any judgment which does not include the giving by the claimant to the indemnified party of a release from all liability in respect of such Claim; 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 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.

 

(f)           The obligations under this Section shall be subject to the limitations set forth in Section 15 and shall survive any termination of this Agreement.

 

17.           Insurance.

 

(a)           Throughout the Term of this Agreement, Licensees shall maintain general liability, property and umbrella insurance policies for the Assets and the operation of the Stations consistent with the practice of Licensees and their Affiliates at the other broadcast stations under their control, but in any event no less than $1,000,000 for general liability, $25,000,000 for umbrella coverage and property coverage no less than the fair market value of the property (but Licensees have no obligation to carry business interruption insurance).  Additionally, Licensees shall maintain workers compensation coverage for the employees required to fulfill Licensees’ main studio staffing obligations under FCC rules and policies.

 

(b)           Throughout the Term of this Agreement, Programmer shall maintain the following levels of insurance in connection with its operations pursuant to this Agreement:

 

 

  

12

  

 

	
General Liability

	
    $1,000,000

	
Media Liability

	
    $5,000,000

	
Umbrella Coverage

	
    $10,000,000

Additionally, Programmer shall maintain workers compensation coverage on all employees performing services at the Stations’ studios or transmitter sites and property coverage, including business interruption coverage appropriate for the Stations’ operations.

 

18.           Assignment.

 

(a)           Neither party may assign this Agreement without the prior written consent of the other party hereto.  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.  The terms of this Agreement shall bind and inure to the benefit of the parties’ respective successors and any permitted assigns.  No assignment shall relieve a party of any obligation or liability under this Agreement.

 

(b)           Programmer consents to Licensees’ pledging, assigning and granting, for the benefit of the financial institutions identified as agents or lenders under that certain Amended and Restated Revolving Credit and Term Loan Agreement dated as of November 2, 2006, as amended, by and among Emmis Radio, Emmis Communications Corporation and the financial institutions identified therein from time to time as lenders (the “Credit Agreement”) a continuing security interest and lien on all of Licensees’ right, title and interest in and to all rights held by the Licensees and the rights to payment of money owing to the Licensees and all payments received by such Licensees (whether in cash or otherwise), in each case, under this Agreement.

 

19.           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.

 

20.           Miscellaneous.

 

(a)           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.

 

(b)           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):

 

	
if to Licensees:

	
c/o Emmis Operating Company

One Emmis Plaza

 

 

  

13

  

 

	
 

	
40 Monument Circle

Suite 700

Indianapolis, Indiana 46204

Attn: Scott Enright

Tel: (317) 684-6565

Facsimile: (317) 684-5583

 

	
with copies (which shall

not constitute notice) to:

 

 

	
Paul, Weiss, Rifkind, Wharton & Garrison

1285 Avenue of the Americas

New York, New York 10019-6064

Attn: James M. Dubin and Kelley D. Parker

Tel: (212) 373-3000

Facsimile: (212) 373-2393

 

	  	
Wiley Rein LLP

1776 K Street, N.W.

Washington, D.C. 20006

Attn: John E. Fiorini, III

Tel: (202) 719-7000

Facsimile:  (202) 719-7049

 

	
if to Programmer:

	
LMA Merlin Media, LLC

300 N. LaSalle Street

Suite 5600

Chicago, IL 60654

Attn: Christian McGrath

Tel: (312) 382-2200

Facsimile: (312) 382-2201

 

	
with copies (which shall

not constitute notice) to:

	
GTCR LLC

300 N. LaSalle Street

Suite 5600

Chicago, IL 60654

Attn: Christian McGrath

Tel: (312) 382-2200

Facsimile: (312) 382-2201

 

	  	
Latham & Watkins LLP

885 Third Avenue

New York, NY 10022

Attn:  Edward Sonnenschein

Tel: (212) 906-1200

Facsimile.:  (212) 751-4864

 

	  	
Latham & Watkins LLP

555 11th St. NW

Suite 1000

  

14

  

 

	  	
Washington, DC 20004

Attn: Eric Bernthal and Nicholas P. Luongo

Tel: (202) 637-2200

Facsimile: (202) 637-2201

(c)           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.

 

(d)           This Agreement is not intended to be, and shall not be construed as, an agreement to form a partnership, agency relationship, or joint venture between the parties.  Neither party shall be authorized to act as an agent of or otherwise to represent the other party.

 

(e)           The construction and performance of this Agreement shall be governed by the laws of the State of New York without giving effect to the choice of law provisions thereof.  Venue for any action to enforce a party’s rights hereunder shall be in the appropriate state or federal court located in New York, New York.

 

(f)           This Agreement (including the Exhibits and Schedules hereto), together with the Purchase Agreement and Transition Services Agreement of even date herewith constitute 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.

 

21.           FCC Compliance.

 

(a)           The obligations of the parties under this Agreement are subject to the rules, regulations and policies of the FCC and all other applicable laws.  Licensees may file a copy of this Agreement with the FCC and place a copy of this Agreement in the Stations’ public inspection files.

 

(b)           Licensees certify that they maintain ultimate control over the Stations’ facilities including, specifically, control over the Stations’ finances, personnel and programming. Programmer certifies that this Agreement complies with the provisions of 47 C.F.R. Sections 73.3555(a) and (c).

 

(c)           In accordance with Paragraphs 49 and 50 of United States Federal Communications Commission Report and Order No. FCC 07-217, Programmer shall not discriminate in any contract for advertising on the Stations on the basis of race or gender, and all such contracts shall be evaluated, negotiated and completed without regard to race or gender.  Programmer shall include a clause to such effect in all contracts for advertising on the Stations, and if requested shall provide written confirmation of compliance with such requirement.

 

22.           Repair and Maintenance.

 

(a)           As of the date hereof, the Stations have certain main and auxiliary 

 

  

15

  

 

transmitting facilities.  From time to time the Stations may need to reduce power or cease transmitting from a transmitting facility for maintenance and repair.  Licensees shall use commercially reasonable efforts to schedule any routine maintenance or repairs to the Stations’ transmitting facilities such that each of the Stations is continuously operating from one of its transmitting facilities at all times within such Station’s licensed parameters.

 

(b)           Licensees shall use commercially reasonable efforts to coordinate with Programmer with respect to scheduling routine maintenance to the Stations’ main transmitting facilities in a manner to minimize disruption of programming and advertising.

 

(c)           To the extent reasonably possible, Licensees shall schedule maintenance and repairs requiring material power reduction or material interruption of service from the Stations’ main transmitting facilities on weekends or during the hours of 12:00 a.m. to 6:00 a.m.

 

(d)           Reduction in power to the Stations or interruption of transmissions from the Stations pursuant to this Section 22 shall not be deemed a breach of Licensees’ obligations under this Agreement.

 

[SIGNATURE PAGE FOLLOWS]

 

 

 

 

 

 

 

 

 

 

 

 

  

16

  

IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first set forth above.

 

Programmer

	 	
LMA MERLIN MEDIA, LLC

 

	 
	 	 	 	 
	
 

	
By: 

	/s/ Philip A. Canfield	 
	 	 	Name:  Philip A. Canfield 	 
	 	 	Title:    Vice President	 
	 	 	 	 

 

Licensees

	 	

EMMIS RADIO, LLC

By: Emmis Operating Company, its manager

	 
	 	 	 	 
	
 

	
By: 

	/s/ J. Scott Enright	 
	 	 	Name:  J. Scott Enright	 
	 	 	Title:     Executive Vice President	 
	 	 	 	 

 

	 	

EMMIS RADIO LICENSE, LLC

By: Emmis Operating Company, its manager

	 
	 	 	 	 
	
 

	
By: 

	/s/ J. Scott Enright	 
	 	 	Name:  J. Scott Enright	 
	 	 	Title:     Executive Vice President	 
	 	 	 	 

 

 

 

[Signature Page to Local Programming and Marketing Agreement]

  

  

  

 

	 	

MERLIN MEDIA, LLC

By: Emmis Radio Holding Corporation, its manager

 

	 
	 	 	 	 
	
 

	
By: 

	/s/ J. Scott Enright	 
	 	 	Name:  J. Scott Enright	 
	 	 	Title:     Executive Vice President	 

 

 

  

  

  

Schedule A

1.           Programmer shall reimburse Licensees for all operating, maintenance and capital expenses incurred by Licensees in the ordinary course of business and associated with the ownership and operation of the Stations at or after the LMA Effective Date and through the end of the Term, including without limitation as set forth below in this paragraph 1 (collectively, the “Station Expenses”) subject to the terms and conditions of this Schedule A.  Such reimbursement by Programmer to Licensees is referred to herein as the “Expense Reimbursement”.  Any Station Expense that straddles the Term and any period beginning or ending before or after the Term that is not clearly allocable to periods before or after the Term shall be prorated between Licensees and Programmer on the basis of the number of days elapsed.  The Station Expenses may include, without limitation:

 

(a)           all lease payments under the Real Estate Leases (for shared sites, in accordance with the principles set forth below);

 

(b)           all utility costs (telephone, electricity, water, etc.) to the extent relating to the Stations;

 

(c)           all personal and real property taxes and commercial rent taxes, to the extent relating to the Stations;

 

(d)           insurance costs to the extent relating to the Stations;

 

(e)           all FCC regulatory fees and filing fees with respect to applications or other filings relating to the Stations, excluding any filing fees or other expenses arising out of the transactions contemplated by the Purchase Agreement;

 

(f)           necessary or ordinary and customary repair and maintenance costs for the Stations’ equipment and facilities, including without limitation the towers, antennas, transmitters, and transmission lines; provided that to the extent Programmer reimburses Licensees for any costs for which insurance proceeds are paid to Licensees, Licensees shall pay Programmer an amount equal to any such insurance proceeds actually received;

 

(g)           capital expenditures or improvements, provided that Programmer shall have the right to approve any reimbursable capital expenditures over $10,000 in the aggregate during the Term, but Licensees may incur non-reimbursable capital expenditures in excess of such amount if they elect; and

 

(h)           all ordinary and customary salaries, taxes, insurance, benefits and related costs of Licensees’ two employees (per market) described in Section 6(a) hereof.

 

Notwithstanding anything herein to the contrary, Programmer shall have the right to pay directly all Station Expenses identified in clauses (e) and (f) above to the extent permitted by applicable Law.

 

Lease expenses –For the New York studio and office facilities (which are shared with other stations owned by Licensees), all lease payments shall be allocated among the New York 

 

  

  

  

 

Station and such other stations based upon relative square footage used.  For any New York transmission facilities which are shared with other stations owned by Licensees, all lease payments shall be allocated among the New York Station and such other stations based upon number of stations using the sites.

 

Non-lease shared expenses – For other non-lease expenses in New York that relate to the New York Station and other stations owned by Licensees, expenses shall be allocated among the New York Station and such other stations with one-third (1/3) allocated to the New York Station and two-thirds (2/3) allocated to such other stations.

 

Corporate systems  – The reimbursement rate for Licensees’ corporate-level systems shall be based upon the number of stations using such systems.

 

Build-out  – If any build-out is done at the New York studio and office facilities to bifurcate space, Programmer shall pay the entire cost of such build-out.

 

2.           Notwithstanding anything to the contrary contained in this Schedule A or in this Agreement, the Station Expenses shall not include, and Programmer shall not be responsible for or be required to reimburse for any of the following:

 

(a)           Licensees’ franchise, income, and similar taxes based on or measured by net income;

 

(b)           interest on and principal of loans and/or indebtedness and other fees, charges, costs and expenses relating to loans and/or indebtedness;

 

(c)           legal, accounting and other professional fees and expenses, including, without limitation, any in connection with or arising out of this Agreement, the Contribution Agreement and/or the Purchase Agreement, and/or the negotiation, administration, interpretation or closing of this Agreement, the Contribution Agreement, and/or the Purchase Agreement, and/or the transactions contemplated hereby and thereby; and

 

(d)           salaries, taxes, insurance, benefits and related costs of Licensee’s employees, other than the two employees (per market) described in Section 6 hereof, but without limiting Programmer’s reimbursement obligations under the TSSA.

 

3.           Programmer shall pay the Expense Reimbursement to Licensees within 15 days after delivery to Programmer of an invoice from Licensees, which such invoice shall provide reasonable detail and back-up documentation.

 

4.           In addition to the Expense Reimbursement, Programmer shall pay to Licensees a fixed fee of Two Hundred Thousand Dollars ($200,000) per month during the Term, such payment to be made on or before the 15th day of each month.  The monthly fixed fee shall be prorated for any partial calendar month during the Term.

 

5.           If a Program is not broadcast on a Station due to a failure by Licensees to perform any of their covenants or obligations in this Agreement, then Programmer shall receive a pro rata credit against the Section 4 monthly fee payable hereunder (based on the non-broadcast time in relation to the total broadcast time in the applicable month).

  

  

  

Schedule B

New York studio and office facility – See attached diagram.

Chicago studio and office facility – All space under the Chicago Stations’ studio and office lease, except for a reasonable amount of space for the two employees of Licensees and the space currently used by three employees of an Affiliate of Licensees (who shall vacate such space within sixty (60) days after the LMA Effective Date).

 

 

 

 

 

 

 

  

  

  

Schedule 10(g)

 

 List of Exceptions to 10(g)

 

	
1)

	
Those Station Employees not hired by Programmer at the Effective Date will be provided severance based on the attached schedule.

 

	
2)

	
Severance plans may be revised to ensure that severance payable is reduced by any amounts that would be payable during any notice period required to be given under the Worker Adjustment and Retraining Notification Act and similar state laws.

 

	
3)

	
Licensees may terminate as of the Effective Date any Current Station Employee who is not a Hired Employee.

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