Exhibit 10.12
SERVICES AGREEMENT
THIS AGREEMENT, made and entered into as of this 23rd day of March, 1998,
by and between STRATFORD RESEARCH, INC., a Georgia corporation ("STRATFORD") and
CUMULUS MEDIA INC., an Illinois corporation (the "Company") (STRATFORD and the
Company shall be referred to collectively as the "Parties").
R E C I T A L S:
WHEREAS, the Company is in the business of identifying and entering into
acquisitions of media properties;
WHEREAS, STRATFORD has expertise and resources in the areas of radio market
research, format identification, and programming; and
WHEREAS, the Company wishes to outsource the provision of these services to
STRATFORD.
NOW, THEREFORE, the Parties agree as follows:
1. Term. The effective date of this Agreement shall be March 23, 1998
("Effective Date") and it shall continue in effect until the third anniversary
of the Effective Date unless terminated before then as provided below.
2. Provision of Services. The Company agrees to purchase, and STRATFORD
agrees to provide, services under the terms and conditions described herein.
3. Duties of Service Provider. STRATFORD has and will maintain a staff
trained and experienced in radio programming, market research, and format
identification. Such staff is and will be adequate for the performance of
STRATFORD's duties under this Agreement. Services to be rendered by STRATFORD
under this Agreement shall include the services identified in Exhibit A to this
Agreement. In addition to the services of its own staff, STRATFORD shall, after
consultation with the Company regarding services to be rendered at the Company's
request, arrange for and coordinate the services of other professionals and
experts, such as audience research groups (Arbitron) or other outside service
providers. Such use of service providers other than STRATFORD shall be at the
expense of the Company. STRATFORD shall report to and be accountable to the
Chief Executive Officer of the Company in connection with the performance of its
services under this Agreement.
4. Compensation. In consideration of the services to be provided by
STRATFORD, the Company agrees to pay STRATFORD the amounts listed in Exhibit B
to this Agreement. Such amounts shall be due and payable upon the closing of the
transactions which relate to the services provided. In addition, the Company
shall promptly, but in no event later than thirty (30) days,
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reimburse STRATFORD for all of its documented out-of-pocket and direct expenses
incurred in connection with the performance of its services under this
Agreement. In the event that a transaction is not consummated, Company will
reimburse STRATFORD for services approved by the Company and provided by
STRATFORD, including all travel-related expenses. Such services will include,
but not be limited to, due diligence work in connectionwith the proposed
transactions: (1) market visits; (2) consulting during a period in which a
station which is a prospective acquisition target is under a Local Marketing
("LMA") Agreement with the Company; and (3) market research performed during the
LMA or due diligence periods.
5. Termination. This Agreement may be terminated for cause by either
Party upon thirty (30) days' notice. "Cause" for this purpose shall consist of a
Party's failure substantially to perform its duties under this Agreement.
Otherwise the Agreement shall terminate upon the expiration of the term
described in Section 1 above. Notwithstanding the termination of the Agreement,
STRATFORD shall be entitled to compensation for services provided through the
termination date.
6. Renewal. The Agreement shall be renewed for an additional twelve-month
term beyond the initial term, unless either Party provides written notice to the
other Party no later than thirty (30) days before the expiration of the initial
term, of its intent to terminate the Agreement. Fees for the renewal period
shall be mutually agreed by the Company, but shall be not less than ten (10)
percent or more than twenty (20) percent higher than the fees for the initial
term.
7. Amendment. This Agreement can be modified or amended only by a writing
signed by the parties hereto.
8. Entire Agreement. This Agreement reflects the sole understanding of
the Parties with respect to the subject matter hereof and supersedes and
replaces any agreement (whether oral or written) between the Parties with
respect to the subject matter hereof.
9. Assignment. Neither party may assign its rights or obligations
hereunder without the prior written consent of the other party; provided,
however, that this agreement will be assumable by and binding on any successor
in interest of the Company without the prior written consent of STRATFORD.
10. Governing Law. The Agreement shall be governed by and construed in
accordance with the laws of the State of Wisconsin.
IN WITNESS WHEREOF, the undersigned have executed this Services Agreement
as of the date first above written.
STRATFORD RESEARCH, INC. CUMULUS MEDIA INC.
By: By:
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Title: Title:
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EXHIBIT A
Services to be Provided by STRATFORD
A. Provide a wide range of market research and ratings analyses to Cumulus
stations. These shall include, but not be limited to:
1. Strategic Market Studies (Brand Studies) custom designed to provide
Cumulus with information necessary to develop each market's individual
and collective strategic plans.
2. Perceptual Tracking Studies to provide listener feedback on the
perceived strengths and vulnerabilities of Cumulus' stations as well
as their competitors.
3. Music Testing to ensure that Cumulus stations' playlist (the lifeblood
of a music station) is on target with the needs of its listeners.
4. Quick strike studies used tactically to adadress specific concerns
prior to a major investment decision being made.
5. Focus Groups to provide qualitative feedback on promotional campaigns
including television, direct mail, outdoor and marketing concepts.
6. Ratings Analysis studies to track key performance measures in Arbitron
Data and spot market trends which will impact strategic planning.
7. Customer Satisfaction Studies to measure and track the awareness,
performance nad perceptions of Cumulus sales organizations with local
advertisers agianst those of both radio and other media in the market.
8 Employee Satisfaction Studies to measure and track the attitudes of
Cumulus employees towards management, work environment, sense fo
corporate culture, pay, benefits, station/company policy, and
co-workers.
B. Provide Program Consulting to Cumulus Stations:
1. Provide objective, structured and intensive guidance to each station's
programming director and key talent within the framework of their
strategic plan of action.
2. Use weekly aircheck sessions with programming directors to critique
station and provide guidance on formatic,s music rotations and
production values.
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3. Daily availability to answer questions and solve problems with
individual programming directors (e.g. clock adjustments, music
software issues, marketing, etc.)
4. Responsible for auditioning new product in for air play (new music
adds).
5. Weekly music calls by format with each programming director to discuss
new music and set policy for adds.
6. Work with programming directors to ensure successful implementation of
music testing.
7. Tri-annual market visits to review strategy, listen to the market and
conduct an audit of the music scheduling software to insure that
programming director is rotating music properly followed by a
comprehensive visit report delivered to programming director, market
manager and director of programming.
8. Publish monthly newsletter exclusively for Cumulus stations to provide
industry perspective, idea sharing and Company news with 500+
programming staff.
9. Assist in the development and evolution of each station's programming
web sites.
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EXHIBIT B
A. Market Research
1. Stratford will receive a one-time, pre-acquisition fee of $25,000 to
conduct a Market Optimization Study for each market that Cumulus
proposes to enter and in which the Company executes a purchase
agreement. This fee will be subject to a five (5) percent increase per
year over the three years of the term of this agreement.
2. Stratford will receive a minimum of $25,000, per Cumulus market, to
perform services outlined in Exhibit A, paragraph A. Stratford and the
Chief Executive Officer of Cumulus may negotiate fees in excess of
$25,000 for particular markets on a case-by-case basis, subject to the
prior approval of the Chief Executive Officer, depending on
competitive market conditions. This fee will be subject to a five (5)
percent increase per year over the three years of this service
agreement.
3. Stratford will assume the budgeted amount of research expenditure in
applicable markets that Cumulus acquires.
B. Program Consulting
1. During the term of this Agreement, Stratford will perform all services
outlined in Exhibit A, Paragraph B above, for the following fee:
Year One: $900.00 per month per FM station
Year Two: $1000.00 per month per FM station
Year Three: $1100.00 per month per FM station
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