LOCAL MARKETING AGREEMENT
This Local Marketing Agreement (the "Agreement") is made as of December
31, 1997, effective for all purposes on the Effective Date (as defined below),
between Cumulus Broadcasting, Inc. ("Programmer"), Sovereign Communications
Corporation ("Sovereign"), and Madison Radio Group Inc. ("Madison").
Recitals
A. Sovereign holds the license to operate radio broadcast station KZRK-FM
and KZRK-AM (the "Station") pursuant to authorizations issued by the Federal
Communications Commission (the "FCC").
B. Sovereign and Programmer have contemporaneously entered into an Asset
Purchase Agreement (the "Purchase Agreement") which will provide for the
acquisition by Programmer of substantially all of the assets used in connection
with the operation of the Station, on the terms and subject to the conditions
set forth therein.
C. Pending execution of the Purchase Agreement and closing thereunder,
Programmer desires to purchase from Sovereign and Sovereign desires to sell to
Programmer certain airtime on the Stations, all in accordance with the
Communications Act of 1934, as amended, and the rules, regulations, and policies
of the FCC (the "FCC Requirements").
X. Xxxxxxx currently holds the operating assets for the Station other than
the FCC License, although the parties anticipate that Sovereign will hold these
assets at the time of the Closing of the Purchase Agreement. Madison is made a
party to this Agreement because it holds some assets to which the Agreement
refers. Madison and Sovereign shall be referred to collectively as the
"Licensee" for purposes of this agreement, with the reference being to Madison
or Sovereign as the context may require.
NOW, THEREFORE, in consideration of the foregoing premises and of the
mutual covenants, representations, warranties and agreements contained in this
Agreement and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties to this Agreement agree as
follows:
1. Effective Date and Term.
1.1 Effective Date. This Agreement shall become effective for all purposes
on January 1, 1998.
1.2 Term. The term of this Agreement (the "Term") shall begin on the
Effective Date and shall continue until December 31, 1998, unless earlier
terminated in accordance with the provisions set forth in this Agreement.
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2. Purchase of Airtime. Programmer hereby purchases from Licensee all
airtime on the Station during the Term, other than airtime between 7:00 a.m.,
local time and 8:00 a.m., local time on Saturdays, on the terms specified herein
(such purchased airtime period is referred to herein as the "Broadcasting
Period"). During the Broadcasting Period, Licensee shall broadcast on the
Station programming supplied by Programmer (collectively, the "Program" or
"Programs"). Programmer will ensure that the Programs meet technical and quality
standards equal to those of programming broadcast by commercial radio stations
generally in the United States. If Licensee in the reasonable exercise of its
discretion finds that any Program(s) does not meet these standards, then it
shall advise Programmer in writing of the specific technical deficiencies. If
such technical deficiencies have not been corrected within ten (10) days after
receipt of notice, then Licensee shall have no obligation to broadcast such
Program(s) until such time as the technical deficiencies are corrected.
Programmer shall not substantially alter the format of the Station during the
Term.
3. Licensee's Broadcasting Obligations. In consideration for the payments
made and to be made by Programmer hereunder, Licensee shall make available to
Programmer, beginning on the Effective Date, all of the Station's airtime during
the Broadcasting Period and shall cause to be broadcast on the Station the
Programs pursuant to Section 2 hereof. Throughout the Term, unless otherwise
mutually agreed by the parties, Licensee shall maintain the operating power of
the Station at its maximum licensed level and shall operate and maintain in good
working condition the Station's transmission facilities and broadcasting
equipment. Throughout the Term, Licensee shall also, with respect to the
Station:
(a) employ a General Manager (Xxxx Xxxxx) who will report to
Licensee and direct the performance of Licensee's obligations hereunder
and who shall have no employment, consulting, or other material
relationship to Programmer;
(b) employ at least one full time employee to assist the General
Manager in performing Licensee's obligations hereunder, including
maintaining the Station's transmission facilities, and who shall have no
employment, consulting or other material relationship with Programmer;
(c) retain ultimate control over the personnel, finances,
programming and operation of the Station;
(d) maintain a main studio consistent with the FCC Requirements at
which the General Manager and the other full time employee(s) of the
Station will be available during normal business hours;
(e) comply with the FCC Requirements with respect to the
ascertainment of community problems, needs and interests; broadcast
programming responsive thereto; and timely prepare and place in the
Station's public inspection files appropriate documentation thereof;
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(f) comply with all other FCC Requirements which may be applicable
to the operation of the Station.
4. Consideration. In consideration of the airtime made available to
Programmer pursuant to this Agreement, Programmer shall pay Licensee as set
forth in Appendix A attached hereto.
5. Operation, Ownership and Control of the Stations.
5.1 Control Vested in Licensee. Notwithstanding anything to the contrary
in this Agreement, as long as Licensee remains the FCC licensee of the Stations,
Licensee will have full authority, power and control over the operation of the
Station and over all persons employed by it. Licensee will bear the
responsibility for the Station's compliance with, and shall cause the Station to
comply with, all applicable laws, including the FCC Requirements. Nothing
contained herein shall prevent or hinder Licensee from: (a) rejecting or
refusing Programs that Licensee believes in good faith to be unsuitable or
contrary to the public interest; (b) substituting programs which Licensee
believes in good faith to be of greater local or national importance or which
are designed to address the problems, needs and interests of the local
community: (c) preempting any Program in the event of a local, territorial or
national emergency; (d) refusing to broadcast any Program that does not meet the
FCC Requirements; or (e) deleting any commercial announcements that do not
comply with the FCC Requirements or the requirements of the Federal Trade
Commission, or any state, local or federal law.
5.2 Notice of Complaints. Programmer will immediately serve Licensee with
notice and a copy of any letters of complaint that Programmer receives
concerning any Program for Licensee's review and inclusion in its public
inspection files. Licensee will immediately serve Programmer with notice and a
copy of any letters of complaint that it receives concerning any Program.
5.3 Programmer Access to the Station's Studios. During the Term, Licensee
shall make available to Programmer for no additional consideration the areas in
the Station's studios as may be reasonably necessary or appropriate for
Programmer to exercise its rights and perform its obligations under this
Agreement. Programmer shall, to the extent commercially feasible, use Licensee's
current studios and other facilities to exercise its rights and perform its
obligations under this Agreement.
5.4 Employees. Programmer shall employ and be responsible for the
salaries, taxes, insurance, and related costs for all personnel used in the
production of the programs supplied to the Station hereunder, and all other
costs incurred by Programmer for the production of such programs. Licensee shall
pay all compensation owed to its employees up to and including the Effective
Date. Programmer may, after the Effective Date, employ those of Licensee's
employees as Programmer may elect on terms and conditions determined by
Programmer in Programmer's sole discretion, other than those employees employed
by Licensee in the operation of the Station after the Effective Date, who shall
remain in Licensee's sole employ and control. Upon termination of this
Agreement, Licensee shall be free to re-employ Programmer's employees on such
terms and conditions as may
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be determined by Licensee.
5.5 Mutual Cooperation. Programmer and Licensee agree to cooperate
reasonably with each other as necessary to fulfill their rights and obligations
hereunder.
6. Program Rights and Music Licenses. During the Term, Licensee shall make
available to Programmer for its use, on the dates and at the times specified by
Programmer, all of Licensee's rights to programs under any program rights
agreements of the Stations (together with the music licenses described below,
the "Program Rights Agreements"). Licensee shall use its best efforts to secure
all consents, if any, from third parties that are necessary to permit Programmer
to use the programs under Program Rights Agreements. Licensee shall maintain all
necessary performing rights licenses to musical compositions included in any
Program, subject to reimbursement by Programmer for the cost thereof under
Section 4 and Appendix A of this Agreement.
7. Programs to Serve the Public Interest. Licensee acknowledges that it is
familiar with the type of programming Programmer intends to provide and has
determined that the broadcast of such programming on the Station would serve the
public interest and is otherwise suitable. Programmer shall cooperate with
Licensee to ensure that the Programs include material that is responsive to
community problems, needs, and interests.
8. Programming Standards. Programmer shall use its best efforts to ensure
that the Programs conform to all FCC Requirements applicable to broadcast radio
stations.
9. Expenses, Revenues and Accounts Receivable.
9.1 Expenses. The Station's cash expenses arising or relating to the
period before the Effective Date shall be the responsibility of Licensee, and
Programmer shall not be obligated to reimburse Licensee for any expenses
allocable to such period. During the Term, Programmer will reimburse Licensee
for its expenses incurred in accordance with Section 4 hereof. Programmer shall
be solely responsible for all expenses attributable to the origination and/or
delivery of the Programs by Programmer to Licensee.
9.2 Cash Accounts Receivable, Advertising and Programming Revenues.
(a) Promptly after the Effective Date, Licensee shall furnish to
Programmer a list of the Accounts Receivable (not more than 60 days past due at
the Effective Date) that arose out of the operations of the Stations as of the
close of business on the day preceding the Effective Date but are due and
payable thereafter. For a period of 120 days after the Effective Date,
Programmer, as Licensee's agent, shall, without compensation, collect the
accounts receivable for Licensee. Licensee shall be responsible for collection
of Accounts Receivable which are more than 60 days past due as of the Effective
Date. At the end of the 120-day period, Programmer shall remit to Licensee the
amount collected by Programmer during that month with respect to the Accounts
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Receivable and Programmer shall provide Licensee with a report setting for the
Accounts Receivable collected by Programmer that month. Programmer shall furnish
Licensee with such records and other information as Licensee may reasonably
require to verify the amounts collected by Programmer with respect to the
Accounts Receivable. Upon five days' prior written notice from Licensee,
Programmer shall terminate all collection efforts on behalf of Licensee with
respect to the Accounts Receivable specified in the notice and those Accounts
Receivable shall no longer be considered Accounts Receivable for purposes of
this section 9.2. Programmer shall set all commercial advertising during the
Broadcasting Period for its own account and shall be entitled to collect all
Accounts Receivable arising thereunder. At the end of the 120-day collection
period, the Programmer will turn back to the Licensee all of the accounts
receivable of the Station as of the Closing Date owing to the Licensee which
have not yet been collected. The Programmer will thereafter have no further
responsibility with respect to the collection of such receivables, which shall
remain the exclusive property of the Licensee from that point, and Licensee
shall be free to take all commercially reasonable measures to collect such
receivables.
(b) For the purpose of determining amounts collected by Programmer with
respect to the Accounts Receivable, (i) in the absence of a bona fide dispute
between an account debtor and Licensee, all payments by an account debtor shall
first be applied to Accounts Receivable due from the account debtor, and (ii)
any amount received by Programmer which is from an account debtor to Licensee
who claims to have a bona fide dispute with Licensee shall be deemed to have
been received with respect to the accounts receivable due Programmer to the
extent of such dispute.
(c) Programmer shall not be required to retain a collection agency, bring
any suit, or take any other action out of the ordinary course of business to
collect any of the Accounts Receivable. Programmer shall not compromise, settle
or adjust the amount of any of the Accounts Receivable without the written
consent of Licensee.
(d) Programmer's obligation to collect and remit Accounts Receivable
hereunder shall continue, at the option of Licensee, in the event of termination
of this Agreement pursuant to Section 11.5 hereof.
9.3 Political Time. Licensee shall, with respect to the Station, 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 broadcasting provisions of the FCC
Requirements. Programmer shall cooperate with Licensee in complying with such
provisions, and shall supply promptly to Licensee such information reasonably
requested by Licensee for such purposes. Licensee, in consultation with
Programmer, will develop a statement which discloses its political broadcasting
rates and policies to political candidates, and Programmer will follow those
respective policies in the sale of political programming an advertising for the
Station. Programmer shall provide any rebates due to political advertisers and
release advertising availabilities to Licensee during the Broadcasting Period
sufficient to permit Licensee to comply with political broadcasting
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provisions of the FCC Requirements. Revenues received by Licensee as a result of
any such release of advertising time shall be for the account of Programmer.
10. Call Letters and Frequency. During the Term, Licensee (i) shall retain
all rights (except as provided in the following sentence) to the Station's call
letters and trade names, (ii) shall not change the call letters, and (iii) shall
not seek FCC consent to a modification of facilities which would specify a
frequency change or have a material adverse effect upon the presently authorized
coverage of the Station. Programmer shall include in the Programs for the
Station an announcement in a form reasonably satisfactory to the Licensee in
accordance with the FCC Requirements to identify such Station, as well as any
other announcements required by the FCC Requirements.
11. Events of Default and Termination.
11.1 Programmer's Events of Default. The occurrence and continuation of
any of the following will be deemed an Event of Default by Programmer under this
Agreement:
(a) Programmer fails to make LMA Payments;
(b) Programmer fails to observe or perform any other material
covenant, condition or agreement contained in this Agreement; or
(c) Programmer breaches or violates any material representation or
warranty made by it under this Agreement.
11.2 Licensee's Events of Default. The occurrence and continuation of any
of the following will be deemed an Event of Default by Licensee under this
Agreement:
(a) Licensee fails to observe or perform any material covenant,
condition or agreement contained in this Agreement; or
(b) Licensee breaches or violates any material representation or
warranty made by it under this Agreement.
11.3 Cure Period. The defaulting party shall have thirty (30) days from
the date on which Programmer has provided Licensee or Licensee has provided
Programmer, as the case may be, with written notice specifying the Event(s) of
Default to curer any such Event(s) of Default. If the Event of Default cannot be
cured by the defaulting party within such time period but commercially
reasonably efforts are being made to effect a cure or otherwise secure or
protect the interests of the non-defaulting party (in which case, if successful,
the Event of Default shall be deemed cured), then the defaulting party shall
have an additional period not to exceed thirty (30) days to effect a cure or a
deemed cure; provided, however, that such additional thirty-day period shall not
be available in the case of a default under Section 11.1(a) above.
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11.4 Termination for Uncured Event of Default. If an Event of Default by
Programmer has not been cured or deemed cured within the period set forth in
Section 11.3 above, then Licensee may terminate this Agreement, effective
immediately upon written notice to Programmer, and pursue all remedies available
at law or in equity for breach of this Agreement. If an Event of Default by
Licensee has not been cured or deemed cured within the periods set forth in
Section 11.3 above, then Programmer may terminate this Agreement, effective
immediately upon written notice to Licensee, and pursue all remedies available
at law or in equity for breach of this Agreement.
11.5 Termination Upon Failure or Consummation of the Purchase Agreement.
Notwithstanding any other provision hereof, this Agreement may be terminated by
Licensee or Programmer upon thirty (30) days' prior written notice at any time
following termination of the Purchase Agreement in accordance with the terms
thereof. This Agreement shall terminate immediately upon the Closing Date (as
defined in the Purchase Agreement).
11.6 Termination by Licensee To Satisfy the FCC Requirements. If Licensee
is required by the FCC to terminate this Agreement by an FCC order which has
become a Final Order as that term is defined in the Purchase Agreement),
Licensee shall, or, if the FCC orders that this Agreement be terminated before
its order becomes a Final Order and this Agreement cannot be revised to comply
with applicable FCC Requirements as contemplated by Section 20 hereof, Licensee
may, upon at least sixty (60) days' written notice to Programmer (or such
shorter period as may be required by the FCC) terminate this Agreement.
11.7 Termination by Programmer. Programmer may unilaterally terminate this
Agreement during the term upon one hundred twenty (120) days' written notice to
Licensee.
12. Certain Representations, Warranties and Covenants.
12.1 Mutual Representations Concerning This Agreement. Licensee represents
and warrants as follows: (a) Licensee is a corporation incorporated under the
laws of Texas, (b) Licensee has the power and authority to enter into and
perform this Agreement; and (c) the execution, delivery and performance of this
Agreement by Licensee does not conflict with any other agreement to which
Licensee is a party.
Programmer represents and warrants as follows: (a) Programmer is a
corporation duly organized, validly existing and in good standing under the laws
of Nevada; (b) Programmer has the requisite corporate power and authority to
enter into and perform this Agreement; (c) the execution, delivery and
performance of this Agreement have been duly authorized by all necessary
corporate action of Programmer; and (d) the execution, delivery and performance
of this Agreement by Programmer does not conflict with any other agreement to
which Programmer is a party.
12.2 Program Rights and Barter Agreements. Licensee represents and
warrants that (i) it is current in all payment obligations and is not otherwise
in default under the Program Rights Agreements and (ii) there are no Barter
Agreements as defined in the Asset Purchase Agreement
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which extend beyond the Effective Date and which exceed in the aggregate Five
Thousand Dollars ($5,000).
12.3 Compliance with FCC Requirements. Programmer represents, warrants and
covenants that its execution and performance of this Agreement is, and will
remain, in compliance with the FCC Requirements, including without limitation,
47 C.F.R. ss. 73.3555.
13. Modification and Waiver; Remedies Cumulative. No modification or
waiver of any provision of this Agreement will be effective unless in writing
and signed by all parties. No failure or delay on the part of Programmer or
Licensee in exercising any right or power under this Agreement will operate as a
waiver of such right or power, nor will any single or partial exercise of any
such rights or power or the exercise of any other right or power operate as a
waiver. Except as otherwise provided in this Agreement, the rights and remedies
provided in this Agreement are cumulative and are not exclusive of any rights or
remedies which a party may otherwise have.
14. Assignment. This Agreement shall be binding upon and inure to the
benefit of the parties hereto, their successors and permitted assigns.
Notwithstanding the foregoing, no party may assign its rights or obligations
under this Agreement without the prior written consent of the other party;
provided, however, that Programmer may assign and delegate its rights and
obligations under this Agreement to a party that controls, or is controlled by,
or is under common control with, Programmer, and who is qualified under any
applicable FCC Requirement, upon notice to, but without the prior written
consent of Licensee.
15. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of Texas without regard to any conflicts-of-law rules
that might apply the laws of another jurisdiction or jurisdictions.
16. Notices. Notices required to be provided by this Agreement shall be
given in the manner provided and to the persons specified in the Purchase
Agreement.
17. Entire Agreement. This Agreement embodies the entire understanding
among the parties with respect to the subject matter hereof, and supersedes any
prior or contemporaneous written or oral agreement between the parties regarding
such subject matter.
18. Relationship of Parties. Programmer and Licensee are not, and shall
not be deemed to be, agents, partners, or representatives of each other.
19. Force Majeure. The failure of a party hereto to comply with its
obligations under this Agreement due to acts of God, strikes or threats thereof
or force majeure or due to causes beyond such party's control will not
constitute an Event of Default under Section 11 of this Agreement and no party
will be liable to the others therefore. Programmer and Licensee each agree to
exercise its commercially reasonable efforts to remedy any such conditions
affecting its own facilities as soon as practicable.
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20. Subject to Laws; Invalidity. The obligations of the parties under this
Agreement are subject to the FCC Requirements and all other applicable laws. The
parties acknowledge that this Agreement is intended to comply with FCC
Requirements. However, in the event that the FCC determines that the continued
performance of this Agreement is in violation of the FCC Requirements, each
party will use its commercially reasonable efforts to comply with the FCC
Requirements or will in good faith contest or seek to reverse any such action or
agree on the terms of a revision to this Agreement, in each case, on a time
schedule sufficient to meet the FCC Requirements and so long as the fundamental
nature of the business arrangement between the parties evidenced by this
Agreement is maintained. If any provision of this Agreement is otherwise held to
be illegal, invalid, or unenforceable under present or future laws, then such
provision shall be fully severable, this Agreement shall be construed and
enforced as if such provision had never comprised a part thereof, and the
remaining provisions shall remain in full force and effect, in each case so long
as the fundamental nature of the business arrangement between programmer and
Licensee has been maintained.
21. Reciprocal Indemnity.
21.1 Indemnification by Programmer.Programmer shall indemnify, defend, and
hold harmless Licensee from and against any and all claims, losses, costs,
liabilities, damages, and expenses (including reasonable attorneys' fees and
other expenses incidental thereto) of every kind, nature and description,
including but not limited to those relating to copyright infringement (except as
may result from a breach of the warranty in Section 6 hereof by Licensee),
libel, slander, defamation or invasion of privacy, arising out of: (a)
Programmer's broadcasts of the Programs; (b) any misrepresentation or breach of
any warranty of Programmer; or (c) any breach of any covenant, agreement, or
obligation of Programmer. If Programmer is required to indemnify Licensee as a
result of programs broadcast hereunder which are supplied by a third party
pursuant to a contract with Licensee, it is agreed that Programmer shall be
subrogated to any rights which Licensee may have against such third party,
including the right to indemnification by such third party.
21.2 Indemnification by Licensee. Licensee shall indemnify, defend, and
hold harmless Licensee from and against any and all claims, losses, costs,
liabilities, damages, and expenses (including reasonable attorneys' fees and
other expenses incidental thereto) of every kind, nature and description,
including but not limited to those relating to copyright infringement (except as
may result from a breach of the warranty in Section 6 hereof by Licensee),
libel, slander, defamation or invasion of privacy, arising out of: (a)
Licensee's broadcast of programs on its own behalf, other than Programs; (b) any
misrepresentation or breach of any warranty of Licensee; or (c) any breach of
any covenant, agreement, or obligation of Licensee. If Programmer is required to
indemnify Licensee as a result of programs broadcast hereunder which are
supplied by a third party pursuant to a contract with Licensee, it is agreed
that Programmer shall be subrogated to any rights which Licensee may have
against such third party, including the right to indemnification by such third
party.
22. Covenant Not to Compete. For a period of three (3) years from the
Effective Date,
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Licensee will not engage directly or indirectly in any business that the
Licensee conducts as of the Closing Date in the Amarillo, Texas Area of
Demographic Influence.
23. Headings. The headings of the sections of this Agreement are inserted
for convenience only and shall not be deemed to constitute part of this
Agreement or to affect the construction hereof.
24. Counterparts. This Agreement may be signed in any number of
counterparts with the same effect as if the signature on each such counterpart
were upon the same instrument.
25. Survival. All representations, warranties, covenants and agreements
made by any party in this Agreement or pursuant hereto shall survive execution
and delivery of this Agreement.
* * * * *
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IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by
their respective duly authorized officers as of the date first written above.
PROGRAMMER: CUMULUS BROADCASTING, INC.
By:_____________________________
Xxxxxxx Xxxxxxx
Chairman
LICENSEE: SOVEREIGN COMMUNICATIONS CORPORATION
By:_____________________________
Printed Name:___________________
Title:__________________________
LICENSEE: MADISON RADIO GROUP INC.
By:_____________________________
Printed Name:___________________
Title:__________________________
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APPENDIX A
LMA PAYMENTS
In consideration of the airtime made available to Programmer pursuant to
this Agreement, during the Term, during the Term, Programmer shall reimburse
Licensee on a monthly basis, in arrears, the Station Expenses (defined below)
for the prior month for which Licensee has submitted to Programmer a written
reimbursement request supported by appropriate documentation of expenses. The
term "Station Expenses" as used herein means the reasonable and prudent expense
actually incurred by Licensee in operating the Stations in compliance with the
terms of this Agreement (including without limitation Sections 3 and 6) and
consistent with past practice (except for changes resulting from the
transactions contemplated by this Agreement), including without limitation,
those expenses set forth on Attachment 1 hereto.
In addition, Programmer shall pay Licensee a monthly LMA fee, equal to the
greater of (1) One Thousand Dollars ($1,000), or (2) fifty (50) percent of the
broadcast cash flow, defined as the total revenues of the Station, less barter,
commissions and expenses, plus amortization and depreciation.
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