Time Brokerage Agreement 5/8/00

TIME BROKERAGE AGREEMENT


TIME BROKERAGE AGREEMENT ("Agreement"), made this 8th day of May, 2000, by and between New World Broadcasters Corp. ("New World"), a Texas corporation, 910 Broadcasting Corp., a Texas corporation ("910 Broadcasting") (collectively, the "Licensees"), Spanish Broadcasting System of San Antonio, Inc., a Delaware corporation (the "Broker") and Spanish Broadcasting System, Inc., a Delaware corporation (the "Parent").


WHEREAS, New World is the Licensee of FM Station KTCY, Pilot Point, Texas pursuant to authorizations issued by the Federal Communications Commission ("FCC").


WHEREAS, 910 Broadcasting is the Licensee of standard broadcast Station KXEB, Sherman, Texas pursuant to authorizations issued by the FCC.


WHEREAS, subject to the prior consent of the FCC, Licensees intend to assign to Broker, the Stations' FCC licenses and certain other assets used in the operation of the Stations.


WHEREAS, the Licensees wish to retain Broker to provide programming for the Stations that is in conformity with Stations' policies and procedures, FCC policies for time brokerage arrangements, and the provisions hereof.


WHEREAS, Broker agrees to use the Stations to broadcast such programming of its selection that is in conformity with all rules, regulations and policies of the FCC, subject to Licensees' full authority to manage and control the operation of the Stations.


WHEREAS, Broker and Licensees agree to cooperate to make this Agreement work to the benefit of the public and both parties and as contemplated in this Agreement.


WHEREAS, Parent and New World are concurrently herewith entering into an Asset Purchase Agreement ("APA").


WHEREAS, Parent and 910 Broadcasting are concurrently herewith entering into a Stock Purchase Agreement ("SPA").


NOW, THEREFORE, in consideration of the above recitals and mutual promises and covenants contained herein, the parties, intending to be legally bound, agree as follows:


SECTION 1. STATION AIR TIME


1.1 REPRESENTATIONS. Both Broker and Programmer represent that they are legally qualified, empowered and able to enter into this Agreement and that the execution, delivery and performance hereof shall not constitute a breach or violation of any material agreement, contract or other obligation to which either party is subject or by which it is bound.


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1.2 EFFECTIVE DATE; TERM. The effective date of this Agreement shall be the date following execution of the APA and the SPA.


The Agreement shall continue in force until terminated pursuant to the provisions of Section 6 of this Agreement.


1.3. SCOPE. During the term of this Agreement, Licensees shall make available to Broker broadcast time upon the Stations as set forth in this Agreement. Broker shall deliver such programming, at its expense, to the Stations' transmitter facilities or other authorized remote control points as reasonably designated by Licensees. Subject to Licensees' reasonable approval, as set forth in this Agreement, Broker shall provide programming of Broker's selection complete with commercial matter, news, public service announcements and other suitable programming to the Licensees up to one hundred sixty-eight hours per week.


1.4 CONSIDERATION. As consideration for the air time made available hereunder Broker shall make payments to Licensees as set forth in ATTACHMENT I.


1.5 LICENSEES OPERATION OF STATIONS. Licensees will have full authority, power and control over the management and operations of the Stations during the term of this Agreement. Licensees will bear all responsibility for Stations' compliance with all applicable provisions of the Communications Act of 1934, as amended (the "Act"), the rules, regulations and policies of the FCC and other applicable laws. Licensees shall be solely responsible for and pay in a timely manner all operating costs of the Stations, including but not limited to, maintenance of the studios and transmitting facilities and costs of electricity, except that Broker shall be responsible for the costs of its programming as provided in Sections 1.7 and 2.3 hereof. Licensees shall employ at its expense management level and other employees consisting of a General Manager and such operational and other personnel as outlined in the budget previously provided to Broker, who will direct the day-to-day operations of the Stations, and who will report to and be accountable to the Licensees. Licensees shall be responsible for the salaries, taxes, insurance and related costs for all personnel employed by the Stations and shall maintain insurance satisfactory to Broker covering the Stations' transmission facilities, and Broker shall be responsible for reimbursing Licensees for such expenses. During the term of this Agreement, Broker agrees to perform, without charge, routine monitoring of the Stations' transmitter performance and tower lighting by remote control, if and when requested by Licensees.


1.6 LICENSEES REPRESENTATION AND WARRANTIES. Licensees represent and warrant as follows:


(a) Licensees own and hold all licenses and other permits and authorizations necessary for the operation of the Stations, and such licenses, permits and authorizations are and will be in full force and effect throughout the term of this Agreement. There is not now pending, or to Licensees' best knowledge, threatened, any action by the FCC or by any other party to revoke, cancel, suspend, refuse to renew or modify adversely any of such licenses, permits or authorizations. Licensees are not in material violation of any statute, ordinance, rule, regulation, policy, order or decree of any federal, state or local entity, court or authority having jurisdiction


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over it or the Stations, which would have an adverse effect upon the Licensees, the Stations or upon Licensees' ability to perform this Agreement. All reports and applications required to be filed with the FCC or any other governmental body have been, and during the course of the term of this Agreement, will be filed in a timely and complete manner. During the term of this Agreement, Licensees shall not dispose of, transfer, assign or pledge any of Stations' assets and properties except with the prior written consent of the Broker, if such action would adversely affect Licensees' performance hereunder or the business and operations of Stations permitted hereby.


(b) Licensees shall pay, in a timely fashion, all of the expenses incurred in operating the Stations including salaries and benefits of its employees, lease payments, utilities, taxes, programming expenses, etc., as set forth in ATTACHMENT II (except those for which a good faith dispute has been raised with the vendor or taxing authority); shall provide Broker with a certificate of such timely payment within thirty (30) days of the end of each month; and shall be reimbursed by Broker for those payments listed on ATTACHMENT II.


1.7 BROKER RESPONSIBILITY. Broker shall be solely responsible for any expenses incurred in the origination and/or delivery of programming from any remote location and for any publicity or promotional expenses incurred by Broker, including, without limitation, ASCAP, BMI and SESAC music license fees for all programming provided by Broker. Such payments by Broker shall be in addition to any other payments to be made by Broker under this Agreement.


1.8 CONTRACTS. Broker will enter into no third-party contracts, leases or agreements which will bind Licensees in any way except with Licensees' prior written approval, such approval shall not be unreasonably withheld.


1.9 STATION OPERATIONs. With respect to the operation of the Stations, Licensees shall notify Broker prior to: (i) making any changes in management personnel; (ii) entering into any material contractual obligations in excess of $10,000 individually or $50,000 in the aggregate; (iii) purchasing equipment with value in excess of $25,000; or (iv) making any other material changes in the operation of the Stations.


SECTION 2. STATIONS' OBLIGATION TO COMMUNITIES OF LICENSE


2.1. LICENSEES AUTHORITY. Notwithstanding any other provision of this Agreement, Broker recognizes that Licensees have certain obligations to broadcast programming to meet the needs and interests of the respective communities of license. From time to time, the Licensees shall air specific programming on issues of importance to the respective local communities. Nothing in this Agreement shall abrogate the unrestricted authority of the Licensees to discharge their obligation to the public and to comply with the Act and the rules and policies of the FCC.


2.2. ADDITIONAL LICENSEES OBLIGATIONS. Although both parties shall cooperate in the broadcast of emergency information over the Stations, Licensees shall also retain the right to interrupt Broker's programming in case of an emergency or for programming which, in the reasonable good faith judgment of Licensees, is of greater local or national public importance. Licensees shall also coordinate with Broker the Stations' hourly station identification and any


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other announcements required to be aired by FCC rules. Licensees shall continue to maintain a main studio, as that term is defined by the FCC, within each Station's principal community contour, shall maintain its local public inspection file in accordance with FCC rules, regulations and policies, and shall prepare and place in such inspection file or files in a timely manner all material required by Section 73.3526 of the FCC's Rules. Broker shall, upon request by Licensees, provide Licensees with such information concerning Broker's programs and advertising as is necessary to assist Licensees in the preparation of such information. Licensees shall also maintain the stations' logs, receive and respond to telephone inquiries, and control and oversee any remote control point which may be established for the Stations.


2.3 RESPONSIBILITY FOR EMPLOYEES AND EXPENSES. Broker shall employ and be solely responsible for the salaries, taxes, insurance and related costs for all personnel used in the production of its programming (including, but not limited to, salespeople, technical staff, traffic personnel, board operators and programming staff). Licensees will provide and be responsible for the Stations' personnel necessary for the broadcast transmission of their own programs (including, without limitation, the Stations' General Manager and such operational and other personnel as may be necessary or appropriate), and will be responsible for the salaries, taxes, benefits, insurance and related costs for all the Licensees' employees used in the broadcast transmission of its programs and necessary to other aspects of Stations' operation subject to reimbursement pursuant to Section 1.7(b) hereof. Whenever on the Stations' premises, all personnel shall be subject to the overall supervision of Licensees' General Manager.


SECTION 3. STATIONS' PROGRAMMING POLICIES


3.1 BROADCAST STATION PROGRAMMING POLICY STATEMENT. Licensees have adopted and will enforce a Broadcast Station Programming Policy Statement (the "Policy Statement"), a copy of which appears as ATTACHMENT III hereto and which may be amended in a reasonable manner from time to time by Licensees upon notice to Broker. Broker agrees and covenants to comply in all material respects with the Policy Statement, to all rules and regulations of the FCC, and to all changes subsequently made by Licensees or the FCC. Broker shall furnish or cause to be furnished the artistic personnel and material for the programs as provided by this Agreement and all programs shall be prepared and presented in conformity with the rules, regulations and policies of the FCC and with the Policy Statement set forth in Attachment III hereto. All advertising spots and promotional material or announcements shall comply with applicable federal, state and local regulations and policies and shall be produced in accordance with quality standards established by Broker. If Licensees reasonably determine that a program supplied by Broker is unsatisfactory or unsuitable or contrary to the public interest, or does not comply with the Policy Statement it may, upon prior written notice to Broker, suspend or cancel such program without liability to Broker. Licensees will use all reasonable efforts to provide such written notice to Broker prior to the suspension or cancellation of such program.


3.2 LICENSEES CONTROL OF PROGRAMMING. Broker recognizes that the Licensees have full authority to control the operation of the Stations. The parties agree that Licensees' authority includes but is not limited to the right to reject or refuse such portions of the Broker's programming which Licensees


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reasonably believe to be unsatisfactory, unsuitable or contrary to the public interest. Broker shall have the right to change the programming supplied to Licensees and shall give Licensees at least twenty-four (24) hours notice of substantial and material changes in such programming.


3.3 BROKER COMPLIANCE WITH COPYRIGHT ACT. Broker represents and warrants to Licensees that Broker has full authority to broadcast its programming on the Stations, and that Broker shall not broadcast any material in violation of the Copyright Act. All music supplied by Broker shall be: (i) licensed by ASCAP, SESAC or BMI; (ii) in the public domain; or (iii) cleared at the source by Broker. Subject to reimbursement pursuant to Section 1.7, Licensees will maintain ASCAP, BMI and SESAC licenses as necessary. The right to use the programming and to authorize its use in any manner shall be and remain vested in Broker.


3.4 SALES. Broker shall retain all revenues from the sale of advertising time within the programming it provides to the Licensees. Broker shall be responsible for payment of the commissions due to any national sales representative engaged by it for the purpose of selling national advertising which is carried during the programming it provides to Licensees.


3.5 PAYOLA. Broker agrees that it will not accept any consideration, compensation, gift or gratuity of any kind whatsoever, regardless of its value or form, including, but not limited to, a commission, discount, bonus, material, supplies or other merchandise, services or labor (collectively "Consideration"), whether or not pursuant to written contracts or agreements between Broker and merchants or advertisers, unless the payer is identified in the program for which Consideration was provided as having paid for or furnished such Consideration, in accordance with the Act and FCC requirements. Broker agrees to annually, or more frequently at the request of the Licensees, execute and provide Licensees with a Payola Affidavit from each of its employees involved with the Stations substantially in the form attached hereto as Attachment IV.


3.6 COOPERATION ON PROGRAMMING. Licensees shall, on a regular basis, cooperate with Broker to assess the issues of concern to their community and address those issues in their public service programming. Broker, in cooperation with Licensees, will endeavor to ensure that programming responsive to the needs and interests of the respective communities of license and surrounding area is broadcast, in compliance with applicable FCC requirements. Licensees will describe those issues and the programming that is broadcast in response to those issues and place issues/programs lists in the Stations' public inspection files as required by FCC rules. Further, Licensees may request, and Broker shall provide, information concerning such of Broker's programs as are responsive to community issues so as to assist Licensees in the satisfaction of their public service programming obligations.


3.7 STAFFING REQUIREMENTS. Licensees will be in full compliance with the main studio staff requirements as specified by the FCC.


SECTION 4. INDEMNIFICATION


4.1 BROKER'S INDEMNIFICATION. Broker shall indemnify and hold harmless Licensees from and against any and all claims, losses, costs, liabilities, damages, FCC forfeitures and expenses (including reasonable legal


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fees and other expenses incidental thereto) of every kind, nature and description (collectively, "Damages") resulting from (i) Broker's breach of any representation, warranty, covenant or agreement contained in thi ...