Local Marketing Agreement Exhibit 10.7
LOCAL MARKETING AGREEMENT
This Agreement ("Agreement") is made and entered into this 1st day of
January, 1998, by and between IVES BROADCASTING,INC (hereinafter, "IVES") and
SPECTRUM COMMUNICATIONS, INC. (hereinafter "SPECTRUM"):
WITNESSETH
WHEREAS, Spectrum is the licensee of Broadcast Station WCLS-FM, Oscoda,
Michigan (hereinafter, "STATION"): and,
WHEREAS, Spectrum and Ives have verbally agreed to the terms and conditions
of a certain Purchase and Sale Agreement regarding the assets of the Station
wherein an Application for Assignment of the license of WCLS-FM from Spectrum to
Ives will be submitted to the Federal Communications Commission ("FCC") ; and
WHEREAS, Spectrum has the legal title to all of the physical assets used in
the operation of the Station; and,
WHEREAS, Ives wishes to begin programming the Station and selling
advertising under the direction and supervision of Spectrum while the FCC
reviews the Application For Assignment of the FCC license to Ives; and.
WHEREAS, Ives operates a broadcast programming company able to provide sales
and programming services and is also a multiple licensee of the FCC; and,
WHEREAS, Spectrum and Ives desire to enter into a mutually beneficial Local
Marketing Agreement ("LMA") whereby Ives will provide certain programming and
sales services to Spectrum and Spectrum will provide broadcast facilities over
the Station;
NOW THEREFORE, in consideration of the promises and of the mutual covenants
and agreements contained herein, the parties agree as follows:
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Local Marketing Agreement
1.) Primary Obligation and Licensee. Spectrum and Ives agree to execute this
Local Marketing Agreement with the understanding that the FCC has developed
certain rules and regulations governing Local Marketing Agreements. Each party
further understands that Spectrum is the licensee of the federally licensed
broadcast Station and that certain responsibilities and obligations of licensees
cannot be delegated but must remain the responsibility and obligation of the
licensee. Finally, each party acknowledges that this Local Marketing Agreement,
as drafted and executed, shall not limit those certain obligations and
responsibilities. Spectrum may take whatever action it deems necessary as the
licensee of the Station in order to comply with FCC rules and regulations.
2.) Programming. Ives shall be entitled to provide commercially sponsored
programming to Spectrum for broadcast over the Station. Ives shall provide
programming during all hours of the broadcast day, seven days per week. The
programming provided by Ives shall consist, primarily, of news, information,
entertainment and public service. Spectrum will, however, be ultimately
responsible for assuring that the "Main Studio Rules" of the FCC are complied
with and that the main studios of the Station are located within the city-grade
signal contour.
2.1) Right to Pre-empt Programming. Spectrum, furthermore, shall have the
right to pre-empt any programming offered by Ives for another program deemed to
be of greater national, regional or local interest or importance; in case of an
emergency; or to comply with federal state or local news. Spectrum shall keep a
record of each instance in which it pre-empted the programming offered by Ives.
2.2) Public Affairs Programming. It shall be Spectrum's responsibility to
ascertain the needs and problems of the community to which the Station is
licensed. Specifically, every calendar quarter Spectrum shall place in its
public inspection file, a list of the ten most significant needs and problems of
the community of license. Furthermore, Spectrum shall be responsible for airing
public affairs programs which directly address those needs and problems and it
shall place in its public inspection file a list of those programs which were
aired, each quarter, together with a narrative description of each program
topic, the length of the program, the time and date each program aired and the
guests, if any, which appeared on the program. Spectrum shall notify Ives at the
beginning of each calendar quarter regarding the amount of airtime it will
require for the coming quarter in order to permit the Station to broadcast
programs
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Local Marketing Agreement
responsive to its communities of license. Spectrum's notification shall consist
of the date(s), time(s) and duration(s) of each program. Spectrum shall be
solely responsible for the content of each program and Ives shall have no
control or input over such programs nor shall it complain that any request is
unreasonable.
2.3.) Programming Rights. All programming rights from networks and program
suppliers in effect as of December 31, 1997 shall be assigned by Spectrum to
Ives for use on the Station. Spectrum will assign the rights to specific
programs to Ives for the term of this Agreement. In the event this Agreement is
terminated for any reason, Spectrum will retain the rights to all programming
aired on the Station.
3.) FCC Responsibilities. Spectrum is the licensee of the Station and does
not delegate any responsibilities as licensee by this Agreement. Ives
understands and acknowledges that Spectrum's primary obligation and
responsibility is to provide services to its community of license. Should any
portion of this Agreement be deemed to contradict Spectrum's primary
responsibility and obligation as a FCC licensee, it may notify Ives of the
inconsistency and unilaterally modify this Agreement, if so advised by its FCC
counsel. Unilateral modification of this Agreement by Spectrum under these
specific circumstances shall not be considered a breach by Spectrum of its
responsibilities or obligations to Ives. Should the FCC revise any of its rules
and regulations regarding joint station operations or local marketing
agreements, Spectrum shall, with the assistance of counsel, immediately prepare
an appropriate revision to this Agreement and submit the changes to Ives. Those
changes shall take effect immediately upon delivery to Ives and Ives's consent
shall not be necessary for those changes to be implemented.
Spectrum shall maintain its own public inspection file within the community
of License. Spectrum shall also be responsible for maintaining the Station's
logs as well as the political files (requests for political air-time /
disposition of requests for political air-time). Spectrum shall be solely
responsible for the maintenance of that file, but Ives shall be responsible for
the marketing and sale of any political air-time.
If the studios of Ives are to be located beyond the city-limits of the
community of license. Spectrum shall install and maintain, at its own expense, a
local studio and a toll-free telephone number for use by the Station's
listeners.
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Local Marketing Agreement
Any and all written correspondence, official or from listeners addressed to
Spectrum shall be delivered to Spectrum, unopened. Spectrum shall be responsible
for responding to all written or telephone inquiries related to Station
operations.
It shall be Spectrum's responsibility to make certain that all Station
identification announcements are aired in accordance with FCC rules and
regulations. Spectrum shall also be responsible for the filing of all annual
reports required by FCC rules and regulations and shall be the only party which
shall communicate with the FCC either directly or through its own FCC counsel.
Spectrum shall separately pay for all of its own FCC, State or Local legal
representation.
4.) Compliance with Federal and State Laws. Should any term of this
Agreement contradict any FCC rule or regulation or any state or local law, the
parties agree to immediately modify the Agreement in order to comply with
appropriate regulations. Neither party shall be in breach of this Agreement, nor
shall one party be financially obligated to the other, should a required
modification of this Agreement become necessary for these purposes.
5.) Marketing Services. Ives shall provide broadcast sales and programming
services to Spectrum with regard to the Station. These services shall include
music program and news services, administrative services and sales services.
Spectrum shall provide its own general manager, unless a general manager is
available at all times as provided by Ives. Spectrum shall comply with the FCC's
"meaningful presence" regulations and will have its own management presence at
the Station during normal business hours. Spectrum shall separately pay, from
its own funds, any salaries for its own management employees. Spectrum shall
have the exclusive right to supervise its own employees. Ives shall have the
right to promote its programming to the general public and to market and sell
commercial time to be included in said programming, including the right to sell
in combination with any other radio station provided that advertising is offered
separately on each station as well as in combination, as required by FCC Rules
and Regulations. All revenue derived from the sale of advertising and commercial
time and all accounts receivable related thereto shall be the property of Ives.
Ives shall be permitted to establish advertising rates with the advice and
consent of Spectrum.
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Local Marketing Agreement
5.1) Specific Services Included. Ives shall be responsible for the salaries,
taxes, and insurance and related costs of its own employees and Station
operations. Ives shall also oversee and take ultimate responsibility for
advertising and program practices regarding the Station. Ives will be
responsible for and implement systems to monitor each Station's Equal
Opportunity Employment Program, community access to the facilities of the
Station, lowest unit charge and reasonable access and other requirements
contained in the FCC's political rules. Ives shall also be solely responsible,
at its expense, for all maintenance engineering for the transmitter facilities
of the Station.
5.2) Duration of Agreement. This Agreement shall continue for a period not
to exceed one year from the date hereof. Renewal of this Agreement shall be
automatic if not terminated by one or both parties. This Agreement shall also
terminate in the event that the Application for Assignment of License from
Spectrum to Ives contemplated by the Purchase and Sale Agreement between the
parties is granted and that such FCC approval becomes a "Final" Order. In that
event, this Agreement shall terminate on the "closing" date as established by
the parties.
5.3) Responsibility for Payments. Ives shall pay for the costs of all
Station operations during the term of this Agreement, as specified above. Ives
shall maintain separate checking accounts and banking relationships over which
Spectrum will have no control Under no circumstances shall Ives pay compensation
of any type, direct or indirect, to any employee of Spectrum. For its own
employees and operations, Spectrum shall be solely responsible for the salaries,
taxes, insurance and related costs. Neither party may not bind or obligate the
other party to any liability, monetary or otherwise, unless the obligee consents
in advance, in writing. Ives shall have no authority to hire any employee for
Spectrum nor shall Ives indicate to any employee that Spectrum will become its
eventual employer in the event this Agreement is terminated.
5.4) Payment for Services and Operations. Ives shall be responsible for the
payment of expenses for other salaries, commissions, bonuses, royalties, dues,
subscriptions, office supplies, sales materials, advertising, utilities,
professional fees, legal fees (except the separate legal fees of Spectrum),
insurance, fines and engineering materials associated with the operation of the
Station. Ives will be responsible for all other costs of operations of the
Station unless specifically excerpted in this Agreement.
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Local Marketing Agreement
5.5) Payment to Spectrum. This Agreement shall commence on January 1, 1998.
Ives shall pay a monthly fee to Spectrum in the amount of ten dollars ($10.00)
which shall be paid on the first day Ives begins to provide services under this
Agreement. Ives will, thereafter, pay $10.00 to Spectrum on the first day of
every month throughout the term of this Agreement.
6.0) Barter Agreements. All barter agreements must be mutually agreed upon
by the parties to this Agreement.
7.0) Studio Facilities and Transmission Equipment. As of December 31, 1997,
all physical equipment used in Station operations is owned by Spectrum. All
documents of title, ownership and warranty for such property shall belong to and
be held by Spectrum. From and after the date of this Agreement, Ives has brought
into the Station premises certain technical equipment which shall remain the
sole property of Ives during and after the termination of this Agreement.
Spectrum, however, shall be responsible for transmitter maintenance and
operation in accordance with FCC rules and regulations.
8.0) Ives's Indemnification. Ives shall, during the term of this Agreement,
indemnify, defend and hold Spectrum harmless from and against any and all
claims, losses, costs, liabilities, damages, FCC forfeitures, and expenses
(including reasonable legal fees and other expenses incidental thereto) of every
kind, nature and description, arising out of the content of any Ives broadcast.
8.1) Spectrum Indemnification. Spectrum shall, for one year commencing on
the date Ives begins to provide services to Spectrum and for one year after the
expiration of this Agreement, indemnify: defend and hold Ives harmless from and
against any and all claims, losses, costs, liabilities, damages, FCC
forfeitures, and expenses (including reasonable legal fees and other expenses
incidental thereto) of every kind, nature and description, arising out of (i)
Spectrum's broadcasts under this Agreement; (ii) any obligation of Spectrum
arising prior to (or appropriately incurred by Spectrum during) the term of this
Agreement.
9.0) Accounting and Auditing. All accounting shall be performed in-house by
Ives. Standard accounting principals shall apply to all transactions entered
with proper accounting documentation for all entries. Upon reasonable advance
notice during regular business hours,
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Local Marketing Agreement
Spectrum shall have access to all accounting records and shall have the right to
employ separate accounting and audit services at its own expense.
9.1) Accounts Payable. All accounts payable must be posted during the month
in which the invoice was received. Accounts payable shall be performed by a
person selected by the general manager of Ives. Auditing may be conducted by
Spectrum at any reasonable time upon advanced notice. Ives shall have no
authority to pay any of the separate expenses of Spectrum nor shall Ives have
any check-writing authority for Spectrum. Ives shall not assume, nor shall he be
responsible for, any of the obligations or debts of Spectrum related to
Spectrum's operation of the Station and specifically the operations of the
Station prior to January 1, 1998, except the following accounts payables: (i) up
to $2,000 of Spectrum's trade payables; (ii) $2,573 to Personal Lenders for
Station equipment; (iii) and $300 to Xxxxx Satellite.
9.2) Accounts Receivable. All Accounts Receivable shall be posted for the
month that the advertising schedule or purchase was provided to the client. This
practice shall be consistent with the manner that Ives currently posts accounts
receivables for its own broadcast properties.
9.3) Programming Employees. Ives shall furnish or cause to be furnished the
personnel and material for the production of the programming provided by this
Agreement. Ives shall employ and be responsible for salaries, taxes, insurance
and related costs for all personnel used in the production of its programming,
sales efforts, administrative functions, and on-air broadcasting.
10.0) Contract Spots. Ives specifically agrees to air all of the commercial
matter required pursuant to any Programming Contract entered-into between any
program service supplier and Spectrum.
11.0) Payables and Receivables. It shall be the responsibility of Spectrum
to pay for all of its own Station operation expenses, other than those expenses
outlined in this LMA, up to and including 12:01 AM on the date Ives begins to
provide services under this Agreement. All expenses incurred after that time and
dates, other than expenses specifically to be paid by Spectrum, shall be the
sole responsibility of Ives. Commencing January 1, 1998 at 12.01 a.m.,
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Local Marketing Agreement
all of the receivables of the Station shall be the property of Ives. Receivables
of the Station which have accrued prior to that date shall remain the property
of Spectrum.
12.0) Notices. All notices required or permitted to be given hereunder shall
be in writing, sent by United States Certified Mail and addressed as follows:
IF TO SPECTRUM: Xxxxx Xxxxxxx, Chairman
Spectrum Communications, Inc.
000 Xxxxx Xxxxxx Xxxx
Xxxxx X
Xxxxxxx, Xxxxxxxx 00000
IF TO IVES: Xxxx Xxxxxx
Ives Communications, Inc.
0000 X-00 Xxxx
Xxxxxx, Xxxxxxxx 00000
WITH A COPY TO: Xxxxxxx Xxxxxx, Esq.
0000 Xxxxx Xxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
13.0) Entire Agreement. The foregoing constitutes the entire and whole
Agreement of the parties. Failure of any party hereto to enforce any provisions
of this Agreement shall not be construed to be a waiver of such provision, not
in any way to affect the validity of this Agreement or any part hereof, or the
right of any party thereafter to enforce each and every such provision. No
waiver of any breach of this Agreement shall be held to constitute a waiver of
any other or subsequent breach.
14.0) Agreement Binding. This Agreement shall be binding upon and shall
insure to the benefit of the parties hereto, their heirs, personal
representatives, successors and assigns but shall not be assigned without the
express written consent of the parties. An assignment shall not relieve the
parties of their obligations to guarantee the prompt performance of any and all
of the obligations hereunder. This Agreement shall be construed in accordance
with the
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Local Marketing Agreement
rules of the Federal Communications Commission and the State of Michigan. This
Agreement is entered in whole or in part in the State of Michigan.
15.0) Counterparts. This Agreement may be signed in one or more
counterparts, each of which shall be considered an original counterpart, and
shall become a binding Agreement when the parties shall have each executed one
counterpart.
16.0) Corporate Authority and Individual Authority of the Parties. Spectrum
Communications, Inc. is a corporation, duly organized in the State of Michigan.
The Board of Directors of Spectrum have authorized Xxxxx Xxxxxxx, as Chairman,
to enter-into this Agreement. No other corporate action is necessary in order to
make the signature of Xxxxx Xxxxxxx binding as to Spectrum with regard to this
Local Marketing Agreement.
Ives Communications, Inc. is a corporation, duly organized in the State of
Michigan. The Board of Directors of Ives have authorized Xxxxxx X. Xxxxxxx, as
President and Chief Executive Officer, to enter-into this Agreement. No other
corporate action is necessary in order to make the signature of Xxxxxx X.
Xxxxxxx binding as to Ives with regard to this Local Marketing Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as
of the date first written above.
SPECTRUM COMMUNICATIONS, INC.
By: /s/ Xxxxx Xxxxxxx
----------------------------------
XXXXX XXXXXXX, CHAIRMAN
IVES COMMUNICATIONS, INC.
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------
XXXXXX X. XXXXXXX, PRESIDENT
AND CHIEF EXECUTIVE OFFICER
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