September 3, 1996
Xx. Xxxxxx Xxxxxx
President
Marketing/Research Partners, Inc.
0000 000xx Xxxxxx, X.X.
Redmond, Washington 98052
Re: PURCHASE OF INTEREST IN NEWSTRACK JOINT VENTURE AND REVISION OF
PRIOR CALL-OUT RESEARCH AGREEMENTS FOR NEWSTRACK AND MEDIABASE
Dear Xxx:
The purpose of this letter is to set forth the basic terms of an agreement
between Premiere Radio Networks, Inc. ("PRNI") and Marketing/Research Partners,
Inc. ("MRPI") with respect to (I.) the purchase by PRNI of MRPI's twenty-five
percent (25%) share ("MRPI Share") of the Newstrack Joint Venture ("Newstrack
JV"), and (ii.) the amendment of prior MRPI agreements to perform call-out
research services for PRNI with respect to Mediabase Research ("MPRN") and the
Newstrack JV.
AMENDMENT OF PRIOR CALL-OUT AGREEMENTS AND CANCELLATION OF NEWSTRACK JOINT
VENTURE AGREEMENT AND CONSIDERATION
The effect of this letter agreement will be to cancel the Newstrack JV
agreement dated March 20, 1995 ("JV Agreement") and amend any prior agreements
with respect to the call-out research services currently being undertaken with
respect to the Newstrack JV and MPRN effective on June 30, 1996 in exchange for
consideration consisting of the following: (I.) $261,250.00 cash, (ii.)
cancellation of the $35,000.00 note payable dated August 10, 1995 ("Note")
effective on June 30, 1996, (iii.) forgiveness of unpaid accrued interest on the
Note through June 30, 1996 in the amount of $1,254.17, (iv.) $31,250.00 cash
relating to a payment for MPRN call-out services, (v.) $56,816.00 net book value
of equipment of the Newstrack JV as of June 30, 1996, (vi.) $75,000.00 of PRNI
trade credits less amounts utilized as of the date hereof (which MRPI has
previously been granted access to), (vii) prepaid asset of the Newstrack JV of
$44,167.00 and (viii.) a payment of $12,617.93 described below. The total
amount of consideration contemplated by this agreement is $473,188.10.
MRPI hereby acknowledges that PRNI had funded the Newstrack JV with a
payment of $66,250.00 cash on or about April 29, 1996 which was paid by the
Newstrack JV to MRPI as a
6
prepayment for call-out research services related to Newstrack (of which
$44,167.00 cash was remaining as a pre-payment on the books and records of the
Newstrack JV as of June 30, 1996). Furthermore, MRPI acknowledges that PRNI has
paid $12,617.93 to MRPI (see Exhibit A). The remaining consideration shall be
delivered to MRPI by PRNI at closing on or about the date hereof.
Upon consummation of this agreement, MRPI understands that it shall no
longer retain any ownership or other interest in the intellectual property of
"Newstrack"or any by-products (other than MRPI's own research methodologies and
database of its respondents which shall remain the property of MRPI). MRPI
further acknowledges that the Newstrack JV shall cease to exist as a separate
entity and PRNI shall no longer be obligated to fund the Newstrack JV.
Furthermore, PRNI understands and acknowledges that MRPI shall no longer be
obligated under the note as of June 30, 1996 and that MRPI shall own all
Newstrack JV property and equipment currently in its possession.
SCOPE OF CALL-OUT RESEARCH SERVICES TO BE PERFORMED BY MRPI FOR NEWSTRACK AND
MPRN
The scope of call-out research services to be performed by MRPI for
Newstrack and MPRN are described in detail on Exhibits B and C attached hereto
and on Exhibit B of the JV Agreement (as amended by Exhibit C attached hereto).
In general, MRPI shall provide such call-out research services for a period
equal to but not greater than (I.) one and a half (1.5) years, or (ii.) until
the number of call-out research telephone calls conducted by MRPI in accordance
with the parameters set forth on Exhibit C attached hereto and Exhibit B of the
JV Agreement with respect to Newstrack is equal to 25,000 calls and the number
of calls conducted by MRPI in accordance with the parameters set forth on
Exhibit B with respect to MPRN is equal to 16,200 calls.
The amount and price of calls shall be subject to adjustment as negotiated
in good faith between PRNI and MRPI in the event there is a material change in
scope (including changes in the duration of calls, changes in the markets
covered, etc.) of the call-out research made or to be made at the request of
PRNI. Should there be a change in scope requiring fewer calls for or reduced
call-out research efforts with respect to either or both of Newstrack and/or
MPRN, then PRNI, at its discretion, may allocate the remaining calls or call-out
research efforts between either of the two services.
ALLOCATION OF CONSIDERATION
In consideration for PRNI's willingness to prepay the above-described
amounts to MRPI in connection with call-out research services described herein
and in consideration for PRNI's willingness to remit the monies which may be
owed to MRPI in connection with Item 14., "Purchase Option", set forth in JV
Agreement, MRPI has agreed to provide call-out research services to PRNI at its
cost which approximates 50% of the amounts previously charged for call-out
research services to PRNI and the Newstrack JV.
The following shall be the amount of the consideration allocable to
call-out research services agreed to between PRNI and MRPI:
7
No. of Amount Total
Calls Per Call Discount Amount*
----- -------- -------- -------
Newstrack - cash 25,000 $6.00 50% $ 75,000.00
Newstrack - barter 25,000 $1.20 50% 15,000.00
Mediabse - barter 16,200 $2.78 50% 22,500.00
Mediabase - cash 16,200 $7.10 50% 57,500.00
------------
$ 170,000.00
------------
------------
* - The amount per week is $1,298.00 and $1,374.00 with respect to
Newstrack and Mediabase, respectively.
The balance of the consideration, or $303,188.10 shall be allocated to
PRNI's purchase of MRPI's 25% share of the Newstrack JV as follows:
Covenant not to compete $ 10,000.00
Newstrack intellectual property 255,688.10
------------
265,688.10
Barter credits 37,500.00
------------
Total purchase price $ 303,188.10
------------
------------
COVENANT NOT TO COMPETE
In order to induce PRNI to enter into this agreement, MRPI xxxxxx agrees to
not compete with PRNI to the extent set forth in this section.
MRPI agrees, for a period of two (2) years from the date hereof, that it or
Xxxxx Xxxxxxx and Xxxxxx Xxxxxx shall not, directly or indirectly, own, manage,
operate, actively participate in the operation of, advise, consult or be
employed by an entity other than PRNI that syndicates the results of weekly
topic-tracking research and software for use by News/Talk radio stations on a
barter basis in North America. MRPI agrees that the time scope and geographic
limitations set forth hereof are reasonable, are properly required for the
adequate protection of the business of PRNI; and that in the event such time
limitation and geographic scope is deemed to be unreasonable by a final decision
of a court of competent jurisdiction, MRPI agrees to submit to such revision or
modification thereof as said court shall deem reasonable.
XXXX agrees that a breach of this section will cause irreparable injury and
damage to PRNI, and that the remedies at law for any such breach would be
inadequate. In addition to any other rights and remedies to which PRNI may be
entitled should MRPI breach this section, then PRNI shall be entitled to
injunctive relief in addition to its actual provable damages.
8
RIGHT OF FIRST REFUSAL
MRPI shall have the right of first refusal to continue providing the
call-out research and fielding information to PRNI with respect to Newstrack.
MRPI shall have ten (10) business days to match any bona fide offer submitted by
a third party in writing to PRNI (which offer shall be transmitted to MRPI for
evaluation). If MRPI matches the third party offer both in terms of price,
scope, and service quality, PRNI shall be obligated to select MRPI to continue
providing call-out research and fielding. The term of such services shall be at
least equal to the term contemplated by any third party bona fide offer that is
submitted. The right of first refusal, however, shall not apply in the event
PRNI performs such call-out research and fielding services internally.
CANCELLATION OF CALL-OUT RESEARCH SERVICE AND CROSS-COLLATERALIZATION
Either MRPI or PRNI may cancel their agreement with respect to call-out
research services by notification in writing via certified mail, facsimile or
overnight courier to the other party with 60 days written notice.
In the event PRNI or MRPI cancel their agreement(s) with respect to
call-out research services provided, or if MRPI is unable to perform the
call-out research services under this agreement for any reason, MRPI shall
refund to PRNI the value of any unrealized call-out research services. The
amount of such refund shall be determined by the greater of (I.) the number of
calls which are remaining multiplied by the amount charged by MRPI for such
calls set forth in this agreement above, or (ii.) the number of weeks remaining
within the one-year period.
If MRPI is unable to refund the amounts owed to PRNI, PRNI may, upon
notification to MRPI, offset and recoup the amount of the unrealized advances
paid under this agreement for call-out research services against amounts which
may be owed, if any, for uncompleted calls or call-our services, against amounts
which may be owed by PRNI to MRPI under the Network Radio Sales Agreement dated
February 1, 1996 by and between MRPI and PRNI.
ENTIRE AGREEMENT
This agreement and its exhibits constitutes the entire agreement between
PRNI and MRPI with respect to the cancellation of, and XXXX's purchase of MRPI's
25% interest in the Newstrack JV; and with respect to call-out research services
to be provided by MRPI for MPRN and Newstrack. This agreement is binding upon
the assigns and successors of each of PRNI and MRPI. This agreement shall be
governed by the laws of the State of California.
This agreement shall be binding and shall inure to the benefit of the
parties hereto and their respective successors and assigns.
9
Very truly yours,
Premiere Radio Networks, Inc.
/s/ Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx
Senior Vice President
AGREED:
Marketing/Research Partners, Inc. Premiere Radio Networks, Inc.
/s/ Xxxxxx Xxxxxx /s/ Xxxxxx X. Xxxxxx
----------------------------- -----------------------------
Xxxxxx Xxxxxx, President Xxxxxx X. Xxxxxx, Senior Vice
President
10
PREPAYMENT CHECK NO. 14614 $12,617.93
EXHIBIT A
11
CALL-OUT RESEARCH STUDY PARAMETERS - MEDIABASE
EXHIBIT B
MEDIABASE
Six formats are tested fifty (50) weeks per year. Respondents are P-1's to
the format being tested. The geographic area surveyed is the New York, Chicago,
Atlanta, Dallas, and Los Angeles ARB MSA's. Respondents are played song hook
tapes provided by Premiere Radio Networks, Inc. And asked to rate the songs. The
number of hooks on each tape is fifty (50) for CHR, AOR, Alternative, A/C,
Country, and Urban formats. Oldies, 70's, and Classic are 100. Respondents can
be used a maximum of three times over the course of a three month period. Test
results are modemed to Premiere.
TOTAL # #
FORMAT DEMOGRAPHIC SAMPLE MALE FEMALE
HIT 18-34 50 17 33
AOR 18-34 50 17 33
ALTERNATIVE 18-34 50 33 17
A/C 25-44 50 25 25
COUNTRY 25-44 50 17 33
URBAN 18-34 50 25 25
Three formats are tested six (6) times throughout the year:
TOTAL # #
FORMAT DEMOGRAPHIC SAMPLE MALE FEMALE
OLDIES 35-54 100 50 50
70's 35-54 100 50 50
CLASSIC 35-54 100 50 50
12
CALL-OUT RESEARCH PARAMETERS - NEWSTRACK
EXHIBIT C
NEWSTRACK
Each market is surveyed a total of 25 weeks throughout the course of the year.
Respondents must cume a news or talk radio station. The number of respondents
per market per week is fifty (50). Respondents are read a list of twenty (20)
news topics and asked to tell if they want to hear that topic more, the same, or
less on the radio. In addition questions about personalities in the market are
asked, along with eight (8) topics of the week. All topics and names of
personalities are provided by Premiere. The markets are:
GROUP 1 GROUP 2
New York Boston
Washington D.C. Miami
Tampa Philadelphia
St. Louis Dallas
Houston Detroit
Pittsburgh Chicago
Minneapolis Cleveland
Denver Seattle
San Francisco San Diego
Phoenix Los Angeles
13
