Time Brokerage Agreement

TIME BROKERAGE AGREEMENT


BY AND AMONG


ENTERTAINMENT COMMUNICATIONS, INC.,


TUSCALOOSA BROADCASTING, INC.,


SINCLAIR RADIO OF PORTLAND LICENSEE, INC.


AND


SINCLAIR RADIO OF ROCHESTER LICENSEE, INC.


DATED AS OF JANUARY 26, 1998


================================================================================


TABLE OF SCHEDULES AND EXHIBITS
-------------------------------


Schedule 1.1 Programming


Schedule 1.2 Compensation


Schedule 2.1 Programming Policy Statement


Schedule 4.1 Excluded Contracts


Schedule 11.1 Time Broker's Actions and Proceedings


Schedule 11.2 Licensee's Actions and Proceedings


TABLE OF CONTENTS
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Page
---- ARTICLE I. SALE OF TIME.....................................................1


Section 1.1. Broadcast of Programming.........................1
Section 1.2. Payment..........................................1
Section 1.3. Term.............................................2
ARTICLE II. PROGRAMMING AND OPERATING STANDARDS AND PRACTICES................2


Section 2.1. Compliance with Standards........................2
Section 2.2. Political Broadcasts.............................2
Section 2.3. Handling of Communications.......................2
Section 2.4. Preemption.......................................3
Section 2.5. Broadcasting Obligations of Licensee.............3
Section 2.6. Rights in Programs...............................4
Section 2.7. "Payola" and "Plugola"...........................4
Section 2.8. Advertising and Programming......................4
Section 2.9. Format and Transmitter Location..................4
Section 2.10. Compliance with Laws.............................4
Section 2.11. Certifications...................................5


ARTICLE III. RESPONSIBILITY FOR EMPLOYEES AND EXPENSES........................5


Section 3.1. Time Broker's Employees..........................5
Section 3.2. Licensee's Employees.............................5
Section 3.3. Time Broker's Expenses...........................5
Section 3.4. Operating Expenses...............................6
Section 3.5. Employee Matters.................................6


ARTICLE IV. ASSIGNMENT OF CERTAIN AGREEMENTS AND RIGHTS......................8


Section 4.1. Assignment.......................................8
Section 4.2. Proration........................................9
Section 4.3. Accounts Receivable..............................9


ARTICLE V. OPERATION OF STATION............................................10


ARTICLE VI. GRANT OF LICENSES...............................................10


Section 6.1. License to Use Station Facilities...............10
Section 6.2. License of Intellectual Property................11


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ARTICLE VII. INDEMNIFICATION.................................................11


Section 7.1. Indemnification Rights..........................11
Section 7.2. Procedures......................................11


ARTICLE VIII. DEFAULT.........................................................12


Section 8.1. Time Broker Events of Default...................12
Section 8.2. Licensee's Events of Default....................12
Section 8.3. Cure Periods....................................12
Section 8.4. Other Defaults..................................13


ARTICLE IX. TERMINATION.....................................................13


Section 9.1. Termination.....................................13
Section 9.2. Certain Matters Upon Termination................14


ARTICLE X. REMEDIES .......................................................15


ARTICLE XI. CERTAIN REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE PARTIES................................................15


Section 11.1. Representations and Warranties of Time Broker..15
Section 11.2. Representations, Warranties and Covenants of
Licensee......................................16


ARTICLE XII. MISCELLANEOUS...................................................17


Section 12.1. Modification and Waiver........................17
Section 12.2. No Waiver; Remedies Cumulative.................17
Section 12.3. Construction...................................17
Section 12.4. Headings.......................................17
Section 12.5. Successors and Assigns.........................17
Section 12.6. Force Majeure..................................17
Section 12.7. Broker.........................................18
Section 12.8. Counterpart Signatures.........................18
Section 12.9. Notices........................................18
Section 12.10. Entire Agreement...............................19
Section 12.11. Severability...................................19
Section 12.12. No Joint Venture...............................19
Section 12.13. Damage to Stations.............................20
Section 12.14. Noninterference................................20
Section 12.15. Regulatory Changes.............................20


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TIME BROKERAGE AGREEMENT


This Time Brokerage Agreement (this "Agreement") is made as of the 26th day of January, 1998, by and among Entertainment Communications, Inc., a Pennsylvania corporation ("Time Broker"), and Tuscaloosa Broadcasting, Inc., a Maryland corporation ("Tuscaloosa"), Sinclair Radio of Portland Licensee, Inc., a Maryland corporation ("SRPLI") and Sinclair Radio of Rochester Licensee, Inc., a Maryland corporation ("SRRLI") (Tuscaloosa, SRPLI and SRRLI are sometimes collectively referred to herein as "Licensee").


Upon the consummation of the transactions contemplated by that certain Asset Purchase Agreement, dated July 16, 1997, among Sinclair Broadcast Group, Inc. ("Sinclair") and various subsidiaries of Heritage Media Corporation ("HMC") (control of which subsidiaries, on August 20, 1997, was transferred to William G. Evans, Trustee) (HMC is sometimes collectively referred to with its subsidiaries as "Heritage"), SRPLI will become the licensee of broadcast stations KKSN(AM), Vancouver, Washington, KKSN-FM, Portland, Oregon and KKRH(FM), Salem, Oregon (collectively, the "Portland Stations"), and SRRLI will become the licensee of broadcast stations WKLX(FM), Rochester, New York, WBEE(FM), Rochester, New York, WBBF(AM), Rochester, New York and WQRV(FM), Avon, New York (collectively, the "Rochester Stations" and together with the Portland Stations, the "Stations"). Time Broker and Licensee desire to enter into an agreement providing for the programming and sale, upon the acquisition by Licensee of the Stations from Heritage, of substantially all of the broadcast time of the Stations to Time Broker, subject to and in compliance with the rules and policies of the Federal Communications Commission (the "FCC").


Simultaneously herewith, Time Broker and Licensee are entering into an Asset Purchase Agreement (the "Purchase Agreement") providing for the acquisition by Time Broker of the Stations.


Accordingly, in consideration of the foregoing and of the mutual promises, covenants, and conditions set forth below, the parties agree as follows:


ARTICLE I.
SALE OF TIME


Section 1.1. Broadcast of Programming. Effective upon the date (the "Commencement Date") that is the later to occur of (a) the date that Licensee acquires the Stations from Heritage or (b) the date that is ten (10) business days after the expiration or early termination of any waiting period applicable to the transfer of the Stations to Time Broker under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), Licensee shall broadcast on the Stations, or cause to be broadcast on the Stations, programs which are presented to it by Time Broker as described in greater detail on Schedule 1.1 (the "Programming").


Section 1.2. Payment. Time Broker shall pay Licensee for broadcast of the Programming the amounts set forth in Schedule 1.2 (the "Monthly Payment"), subject to adjustment as set forth in Sections 2.4 and 2.5 below. All payments shall be made by wire
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transfer of immediately-available funds by the last business day of each calendar month, in arrears, to which such payment pertains.


Section 1.3. Term. This Agreement shall commence on the Commencement Date and shall terminate on the earlier of (i) 12:01 a.m. on the Closing Date (as defined in the Purchase Agreement) under the Purchase Agreement, (ii) the date the Purchase Agreement is terminated, or (iii) the date this Agreement is terminated pursuant to Section 9.1 hereof.


ARTICLE II.
PROGRAMMING AND OPERATING STANDARDS AND PRACTICES


Section 2.1. Compliance with Standards. All Programming delivered by Time Broker during the term of this Agreement shall be in accordance with applicable statutes, FCC requirements and the programming policies set forth on Schedule 2.1. Licensee reserves the right to refuse to broadcast any Programming containing matter which the Licensee believes is unsuitable or not consistent with the needs and interests of its service area or may be violative of any right of any third party, or which may constitute a "personal attack" as that term is and has been defined by the FCC or which Licensee reasonably determines is, or in the reasonable opinion of Licensee may be deemed to be, indecent (and not broadcast during the safe harbor for indecent programming established by the FCC) or obscene by the FCC or any court or other regulatory body with authority over Licensee or the Station.


Section 2.2. Political Broadcasts. Time Broker shall maintain and deliver to Licensee all records and information required by the FCC to be placed in the public inspection files of the Stations pertaining to the broadcast of political programming and controversial issue advertisements, in accordance with the provisions of Sections 73.1212 and 73.3526 of the FCC's rules, and agrees to broadcast sponsored programming addressing political issues or controversial subjects of public importance, in accordance with the provisions of Section 73.1212 of the FCC's rules. Time Broker shall consult and cooperate with Licensee and adhere to all applicable statutes and the rules, regulations and policies of the FCC, as announced from time to time, with respect to the carriage of political advertisements and programming and the charges permitted therefor. Time Broker shall promptly provide to Licensee such documentation relating to such programming as Licensee is required to maintain in its public inspection files or as Licensee shall reasonably request. Licensee shall be responsible for the maintenance of the public inspection files of the Stations.


Section 2.3. Handling of Communications. Time Broker shall cooperate with Licensee in promptly responding to all mail, cables, telegrams or telephone calls directed to the Stations in connection with the Programming provided by Time Broker or any other matter relevant to its responsibilities hereunder. Promptly upon receipt, Time Broker shall provide copies of all such correspondence to Licensee. Time Broker shall promptly advise Licensee of any public or FCC complaint or inquiry known to Time Broker concerning such Programming, and shall provide Licensee with copies of any letters to Time Broker from the public, including complaints concerning such Programming. Upon Licensee's request, Time Broker shall provide Licensee with such information as will allow Licensee to respond to such complaints and inquiries. Notwithstanding the foregoing, Licensee shall handle all matters or inquiries relating


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to FCC complaints and any other matters required to be handled by Licensee under the rules and regulations of the FCC.


Section 2.4. Preemption. Licensee may, from time to time, preempt portions of the Programming to broadcast emergency information or programs it deems would better serve the public interest. Time Broker shall be notified at least one week in advance of any preemption of any of the Programming for the purpose of broadcasting programs Licensee deems necessary to better serve the public interest unless such advance notice is impossible or impractical, in which case Licensee shall notify Time Broker promptly upon making such determination. In the event of any such preemption, Time Broker shall be entitled to a credit against any other amounts due Licensee under this Agreement in an amount equal to the product of (a) the Monthly Payment and (b) the result of dividing the number of hours so affected by the aggregate number of hours available for Programming during such month. Licensee represents and covenants that preemption pursuant to this Section 2.4 shall only occur to the extent Licensee deems necessary to carry out its obligations as an FCC licensee, and expressly agrees that its right of preemption shall not be exercised for the commercial advantage of Licensee or others.


Section 2.5. Broadcasting Obligations of Licensee. During the term of this Agreement, except as set forth in Sections 2.1 and 2.4 and this Section 2.5, Licensee will broadcast the Programming in its entirety (including commercials), without interruption, deletion or addition of any kind:


i. Licensee may temporarily refrain from broadcasting the Programming from the main transmitter of each Station between the hours of 12:30 a.m. and 5:30 a.m. (or at such other time in the event that weather conditions or contractual arrangements relating to transmitter sites dealing with the exposure of humans to RF radiation so require or as may otherwise be required under compelling circumstances that cannot be rescheduled between the hours of 12:30 a.m. and 5:30 a.m.) in order to perform normal, customary and routine maintenance on the Station's main transmitting facilities; provided, that Licensee shall provide written notice to Time Broker of its intent to refrain from broadcasting the Programming from the main transmitter of each Station at least forty-eight (48) hours in advance, except when an emergency requires such suspension, and provided further that Licensee shall use its best efforts to minimize the impact, frequency and duration of such interruptions, including without limitation by way of use of any auxiliary transmitter that may be available for the applicable Station; and


ii. Licensee may temporarily cease broadcasting the Programming from the main transmitter of each Station as a result of a technical malfunction, natural disaster, act of public enemy, act of God, or any other cause beyond the control of Licensee; provided that in any such case, Licensee will act expediently and use its best efforts to resume the broadcast of the Programming from the main transmitter of each Station as quickly as the applicable circumstances will allow, and will use its best efforts to broadcast the Programming from any auxiliary transmitter that may be available for the applicable Station.


In the event of any interruption pursuant to this Section (other than (a) interruption pursuant to Section 2.5(i) occurring between the hours of 12:30 a.m. and 5:30 a.m. and (b)


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interruption pursuant to Section 2.5(ii)), if Licensee is not able to broadcast the Programming from an available auxiliary transmitter, Time Broker shall be entitled to a credit against the Monthly Payment or any other sums due hereunder, in an amount equal to the product of (a) the Monthly Payment and (b) the result of dividing the number of hours so affected by the aggregate number of hours available for Programming during such month.


Section 2.6. Rights in Programs. All right, title and interest in and to the Programming, and the right to authorize the use of the Programming in any manner and in any media whatsoever, shall be and remain vested at all times solely in Time Broker.


Section 2.7. "Payola" and "Plugola". Time Broker agrees that it will not accept any gift, gratuity or other consideration, including, but not limited to, a commission, discount, bonus, material supplies or other merchandise, services or labor (collectively, the "Consideration"), directly or indirectly, from any person or company for the playing of records, the presentation of any programming or the broadcast of any commercial announcement over the Stations unless the payor is identified in the program for which Consideration was provided as having paid for or furnished such Consideration, in accordance with the Communications Act of 1934, as amended (the "Communications Act") and the FCC requirements. It is further understood and agreed that no commercial message, plugs, or undue reference shall be made in programming presented over the Stations to any business venture, profit-making activity or other interest (other than non-commercial announcements for bona fide charities, church activities or other public service activities) unless the payor is identified in the program for which Consideration was provided as having paid for or furnished such Consideration, in accordance with the Communications Act and the FCC requirements. In addition, Time Broker agrees that it will take steps, including the continuation of Licensee's system for periodic execution of affidavits, reasonably designed to assure that it, its employees and agents comply with this Section 2.7.


Section 2.8. Advertising and Programming. Beginning with the Commencement Date, Time Broker shall be solely responsible for any expenses incurred in connection with and shall be entitled to all revenue from the sale of advertising or program time in the Programming. Except as otherwise provided herein, Time Broker does not assume any obligation of Licensee under any contract or advertising arrangement entered into by Licensee on or after the Commencement Date. Licensee shall indemnify Time Broker for the amount of any lost revenue caused by any sale of advertising time made by Licensee that would lower the Station's lowest unit charge for political advertising.


Section 2.9. Format and Transmitter Locations. During the term of this Agreement, except as otherwise consented to in writing by Licensee or as otherwise provided in the following sentence, Time Broker agrees that it will not make any material changes in the Stations' existing programming formats or seek to change the location of any of the Stations' studio or transmitting facilities. Notwithstanding the foregoing, (i) the parties expressly agree that Time Broker, in its sole discretion, is permitted during the term of this Agreement to exchange the programming formats on KKSN(AM) and KFXX(AM) (which is owned and operated by Time Broker) (it being understood that, should this Agreement terminate other than as a result of the Closing (as defined in the Purchase Agreement) under the Purchase Agreement,


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Time Broker shall, promptly upon such termination, change the programming formats on each such station back to their programming formats substantially as they exist on the date of this Agreement) and (ii) Licensee agrees that it will not unreasonably withhold consent to any request by Time Broker to change the programming format for WBBF(AM).


Section 2.10. Compliance with Laws. At all times during the term of this Agreement, Time Broker and Licensee shall comply in all material respects with all applicable federal, state and local laws, rules and regulations.


Section 2.11. Certifications. Pursuant to Section 73.3555(a)(3)(ii) of the FCC's rules, Licensee certifies that it maintains ultimate control over the Station's facilities, including specifically control over station finances, personnel and programming, and Time Broker certifies that this Agreement complies with the provisions of Section 73.3555(a) of the FCC's rules.


ARTICLE III.
RESPONSIBILITY FOR EMPLOYEES AND EXPENSES


Section 3.1. Time Broker's Employees. Time Broker shall employ and be responsible for the payment of salaries, taxes, insurance and all other costs related to all personnel used in the production of the Programming. Except as provided in Section 3.5 with respect to Transferred Employees, Time Broker will not incur any liability on account of Licensee's employees arising and accruing prior to the Commencement Date including, without limitation, any such liability on account of unemployment insurance contributions, termination and severance payments, accrued sick leave or accrued vacation.


Section 3.2. Licensee's Employees. Licensee shall employ and be responsible for the payment of salaries, taxes, insurance and all other costs related to the personnel necessary to fulfill its obligations as Licensee and under this Agreement, and to produce Licensee's programming on the Stations subject to reimbursement as provided in Schedule 1.2. Time Broker shall have no authority and shall not supervise persons in the employ of Licensee after the Commencement Date. Licensee acknowledges that its employees may have access to certain confidential information of Time Broker. Licensee shall, therefore, inform its employees of the confidential nature of such information and require that each such employee keep such information confidential.


Section 3.3. Time Broker's Expenses. Time Broker shall pay for all costs associated with the production and delivery of the Programming, including but not limited to (i) all ASCAP, BMI, SESAC and other copyright fees, (ii) any expenses incurred in connection with its sale of advertising time hereunder (including without limitation sales commissions) in connection with the Programming and (iii) the salaries, taxes, insurance and related costs for all of Time Broker's personnel used in the production of the Programming and all of Time Broker's sales personnel (including salespeople, traffic personnel, and programming staff).


Section 3.4. Operating Expenses. Licensee shall be responsible for the payment when due of all fees and expenses relating to operation and maintenance of the Stations to the extent necessary for Licensee to maintain the licensed transmitting capability of the
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Stations and to fulfill its obligations as an FCC licensee, including, without limitation, salaries, benefits and similar expenses for Licensee's employees, Licensee's federal, state and local taxes, rent, utilities (excluding telephone), maintenance and repairs at each of the Station's transmitter and studio sites, any capital expense at each of the Station's transmitter and studio sites, insurance on the Stations' equipment, insurance deductibles on claims on the Stations' equipment, and ad valorem property taxes, subject to reimbursement as provided in Schedule 1.2.


Section 3.5. Employee Matters.


3.5.1 On the Commencement Date, Time Broker shall offer employment to each of the employees of the Stations (including those on leave of absence, whether short-term, long-term, family, maternity, disability, paid, unpaid or other), other than those employees that are retained by Licensee pursuant to Section 3.2 above during the term of this Agreement, at a comparable salary, position and place of employment as held by each such employee immediately prior to the Commencement Date (such employees who are given such offers of employment are referred to herein as the "Transferred Employees"). Nothing in this Section 3.5.1 is intended to guarantee employment for any Transferred Employee for any length of time after the Commencement Date.


3.5.2 Except as provided otherwise in this Section 3.5, Licensee shall pay, discharge and be responsible for (a) all salary and wages arising out of or relating to the employment of the employees of the Stations prior to the Commencement Date and (b) any employee benefits arising under the Benefit Plans (as defined in the Purchase Agreement) of Licensee and their Affiliates during the period prior to the Commencement Date. From and after the Commencement Date, Time Broker shall pay, discharge and be responsible for all salary, wages and benefits arising out of or relating to the employment of the Transferred Employees by Time Broker on and after the Commencement Date. Time Broker shall be responsible for all severance Liabilities (as such term is defined in the Purchase Agreement), and all COBRA Liabilities for any Transferred Employees of the Stations terminated on or after the Commencement Date.


3.5.3 Time Broker shall cause all Transferred Employees as of the Commencement Date to be eligible to participate in the "employee welfare benefit plans" and "employee pension benefit plans" (as defined in Section 3(1) and 3(2) of ERISA, respectively) of Time Broker in which similarly situated employees of Time Broker are generally eligible to participate; provided, however, that all Transferred Employees and their spouses and dependents shall be eligible for coverage immediately after the Commencement Date (and shall not be excluded from coverage on account of any preexisting condition) to the extent provided under such plans with respect to Transferred Employees.


3.5.4 For purposes of any length of service requirements, waiting periods, vesting periods or differential benefits based on length of service in any such plan for which a Transferred Employee may be eligible after the Commencement Date, Time Broker shall ensure that, to the extent permitted by law, service by such Transferred Employee with Heritage, Licensee or any Affiliate of Heritage or Licensee shall be deemed to have been service with the Time Broker. In addition, Time Broker shall ensure that each Transferred Employee receives credit under any welfare benefit plan of Time Broker for any deductibles or co-payments paid by


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