Time Brokerage Agreement

TIME BROKERAGE AGREEMENT


Time Brokerage Agreement ("Agreement") dated as of June 15, 2000, by and among REPCOM, INC., a Minnesota corporation, and SARTELL FM, INC., a Minnesota corporation (collectively "Licensees") and REGENT BROADCASTING OF ST. CLOUD, INC., a Delaware corporation ("Broker").


WHEREAS, Licensees are the licensees of radio stations KLZZ-FM and KXSS-AM, Waite Park, Minnesota, and KKSR-FM, Sartell, Minnesota (referred to herein as the "Stations"); and


WHEREAS, Licensees and Licensees' sole stockholder and Broker's sole shareholder have entered into an Agreement of Merger, dated June 15, 2000 (the "Merger Agreement") contemplating the acquisition by Broker of the Stations as a result of the merger of Licensees' sole stockholder into Broker's sole stockholder, Regent Broadcasting, Inc.; and


WHEREAS, Licensees, while maintaining control over the Stations' finances, personnel matters and programming desire to accept and broadcast programming supplied by Broker on the Stations subject to the terms and conditions set forth herein.


NOW, THEREFORE, for and in consideration of the mutual covenants herein contained, the parties hereto have agreed and do agree as follows:


1. Air Time and Transmission Services. Licensees agree, beginning July 1, 2000 (the "Commencement Date"), to make the Stations' studio and broadcast facilities available to Broker, and to broadcast, or cause to be broadcast, on the Stations, according to the terms hereof, programming designated and provided by Broker (the "Programming").


2. Payments. Broker hereby agrees to pay Licensees the amounts specified in Attachment A for the right, from and after the Commencement Date, to broadcast the Programming on the terms and conditions herein provided. Payments of the Monthly Fee (as defined in Attachment A), are due and payable in full on the first day of each calendar month for which such payment is intended to be applied and shall be prorated for any partial calendar month at the beginning or end of the term hereof. The failure of Licensees to demand or insist upon prompt payment in accordance herewith shall not constitute a waiver of its right to do so. Broker shall receive a payment credit for any Programming not broadcast by the Stations (a "Credit"), such Credit to be determined by multiplying the monthly payment by the ratio of the amount of time preempted or not accepted to the total number of hours of Programming each month. No credit shall be due on account of any Programming rejected for failure to comply with the standards for Programming set forth in this Agreement.


3. Term. The term of this Agreement shall begin on the Commencement Date and end on the earliest of (i) the Closing Date, as defined in the Merger Agreement, or (ii) the date which is


2


ten (10) days following any termination of the Merger Agreement, in accordance with the terms thereof (such date hereinafter referred to as the "Termination Date," and such period of time as the "Term").


4. Programming. Broker shall furnish or cause to be furnished the Programming, which shall be an entertainment format of Broker's choice, provided that no format change shall be made without the delivery to Security Title and Guaranty Agency, Inc., as Escrow Agent, of a $100,000 letter of credit which the Escrow Agent shall hold under the terms of a Deposit Escrow Agreement of even date among StarCom, Inc., Regent Broadcasting, Inc., and Escrow Agent, and which StarCom, Inc. shall be entitled to draw upon to the extent of any costs which Licensees may incur as a result of undoing any such format change in the event this Agreement is terminated other than by reason of a default by Licensees, and may include, without limitation, news, promotions (including on-air giveaways), contests, syndicated programs, barter programs, paid-for programs, locally-produced programs, advertising commercial matter, including that in both program or spot announcement forms, and public service information; provided, however, that the Programming on the Stations shall include news, public service announcements and other programming on issues of importance to the local community as reasonably requested by Licensees. The Programming shall be consistent with the standards set forth in Attachment B. All actions or activities of Broker under this Agreement, and all Programming provided by Broker shall be in accordance with (i) the Communications Act of 1934, as amended; (ii) Federal Communications Commission (the "FCC") rules, requirements and policies, including, without limitation, the FCC's rules on plugola/payola, lotteries, Station identification, minimum operating schedule, sponsorship identification, political programming and political advertising rates; (iii) all applicable federal, state and local regulations and policies; and (iv) generally accepted quality standards consistent with Licensees' past practices. Broker agrees that, if in the sole, good faith judgment of the Licensees or the Stations' General Manager, Broker does not comply with the standards of this paragraph, Licensees may suspend or cancel any Programming not in compliance. Broker shall not be entitled to a Credit for Programming not broadcast over the Stations on account of any Programming rejected for failure to comply with the standards for Programming set forth in this Section 4. The right to use the Programming and to authorize its use in any manner and in any media whatsoever shall be, and remain, vested solely in Broker, subject in all events to the rights, if any, of others in such Programming.


5. Special Events. Licensees reserve the right in their discretion, and without liability, to preempt, delay or delete any of the broadcasts of the Programming and to substitute programming which in Licensees' judgment is of greater local, regional or national importance. In all such cases, Licensees shall use their best efforts to give Broker reasonable notice of their intention to preempt such Programming, and, in the event of such preemption, Broker shall receive a payment credit for the Programming so omitted consistent with the intent and pursuant to the terms of Section 2 hereof.


6. Advertising and Programming Revenues. Broker shall retain all advertising and other revenues, and all accounts receivable, with respect to Programming broadcast during the Term, and relating to the Programming it delivers to the Stations for broadcast during the Term, including without limitation, promotion-related revenues. Licensees and Broker each shall have the right, at their own expense, to seek copyright royalty payments for their own programming. Broker may sell


3


advertising on the Stations in combination with the sale of advertising on other broadcasting stations of its choosing, subject to compliance with applicable law.


7. Station Facilities. Subject to the qualifications set forth in this Agreement, throughout the term of this Agreement, Licensees shall make the facilities and equipment of the Stations in good operating condition and repair available to Broker for operation and broadcast with the maximum authorized facilities twenty-four (24) hours a day, seven (7) days a week, except for downtime occasioned by either (i) emergency maintenance or (ii) routine maintenance not to exceed two (2) hours each Sunday morning between the hours of 12 midnight and 5:00 a.m., and except for such programs and announcements prepared by and put on the air by Licensees in order to meet local needs and issues requirements, said programs and announcements not to exceed one (1) hour each Sunday morning at a mutually agreed upon time between the hours of 5:00 a.m. and 7:00 a.m. Broker shall not be entitled to a Credit for Programming not broadcast over the Stations for periods specified in this Section 7 hereof. To the extent practicable, any maintenance work affecting the operation of the Stations at full power shall be scheduled upon at least forty-eight (48) hours prior notice with the agreement of Broker, such agreement not to be unreasonably withheld.


8. Right of Access. Broker and Broker's employees or agents shall at all times be afforded reasonable access to the Stations in order to perform their duties in connection with the production and transmission of the Programming over the facilities of the Stations. Broker shall have the right to relocate to Broker's premises or to install at Licensees' and/or Broker's premises, and to maintain throughout the term of this Agreement, at Broker's expense, any microwave studio/transmitter relay equipment, telephone lines, transmitter remote control, monitoring devices or any other equipment necessary for the proper transmission of the Programming on the Stations, and Licensees and Broker shall take all steps reasonably necessary to prepare and file any applications with the FCC to effectuate such proper transmission. If this Agreement is terminated other than for reason of a default by Licensees and the parties do not close the Merger Agreement, Broker shall reimburse Licensees for the cost of putting all such changes back to the condition they were in on the date of this Agreement and for the amount, if any, by which the Stations' Barter Payable exceeds by more than $25,000 the aggregate net value of the Stations' Barter Receivable, as of the Termination Date.


9. Force Majeure. Any failure or impairment of facilities or any delay or interruption in broadcasting the Programming, or failure at any time to furnish facilities, in whole or in part, for broadcasting, due to acts of God, strikes, or threats thereof, force majeure, or due to causes beyond the control of Licensees, shall not constitute a breach of this Agreement, and Licensees shall not be liable to Broker for any damages or adjustments for such failure, impairment, delay or interruption, except to the extent of allowing in each such case an appropriate payment credit for Programming available to Licensees but not carried consistent with the intent and pursuant to the terms of Section 2 hereof.


10. Licensees Control of Stations. Notwithstanding anything to the contrary in this Agreement, Licensees shall have full authority, control and power over the operation of the Stations during the period of this Agreement. Licensees shall retain control, said control to be reasonably exercised, over the policies, programming and operations of the Stations, including, without limitation, the right to decide whether to accept or reject any Programming or advertisements, the


4


right to preempt any Programming in order to broadcast a program deemed by Licensees to be of greater national, regional, or local interest, and the right to take any other actions necessary for compliance with the laws of the United States; the laws of the relevant states; the rules, regulations, and policies of the FCC (including without limitation the prohibition on unauthorized transfers of control); and the rules, regulations and policies of other federal governmental authorities, including without limitation the Federal Trade Commission and the Department of Justice. Licensees shall be responsible for ensuring that FCC requirements are met with respect to ascertainment of the problems, needs and interests of the community, public service programming, main studio staffing, maintenance of public inspection files and the preparation of quarterly issues/programs lists. Broker shall, upon request by Licensees, provide Licensees with information with respect to such of Broker's programs which are responsive to the problems, needs and interests of the community, so as to assist Licensees in the preparation of required quarterly issues/programs lists, and shall provide upon request other information to enable Licensees to prepare other records, reports and logs required by the FCC or other local, state or federal governmental agencies. Whenever on the Stations' premises, all Broker personnel shall be subject to the supervision and the direction of Licensees' designated personnel.


11. Responsibility for Employees and Expenses. Licensees shall employ two full time employees at the main studio(s) of the Stations, one of whom shall be a manager, both of whom shall report to and be accountable to Licensees, and who shall be ultimately responsible for the day-to-day operation of the Stations. Licensees shall be directly responsible for paying the salaries, taxes, insurance and related costs for such employees (the "Licensees Employee Expenses"). Licensees shall be responsible for paying directly (i) transmitter site rent/mortgage for the Stations; (ii) costs for maintenance and repair of the transmission and other technical equipment; (iii) costs for capital improvements and replacements; and (iv) transmitter site utilities for the Stations ("Licensees Transmitter Expenses"). Licensees shall be responsible for paying directly all income taxes relating to Licensees' earnings from this arrangement. Broker shall employ and be responsible for the salaries, taxes, insurance and related costs for all personnel used in the production of the Programming (including, without limitation, salespeople, traffic personnel, administrative and programming staff). Excluding those expenses for which Licensees are making payments as set forth in this Section 11, during the Term, Broker shall be responsible for paying all other expenses reasonably and directly related to the continued operation of the Stations subject to the covenants of the parties to this Agreement (the "Other Expenses"), and further subject to the ultimate authority, control and power of Licensees.


11.1 Employee Matters.


11.1.1 Licensees shall be responsible for the payment of all compensation and accrued employee benefits payable to all of Licensees' employees through the Commencement Date.


11.1.2 Licensees acknowledge and agree that Licensees, and not Broker, are and shall be solely responsible for any and all insurance, supplemental pension, deferred compensation, retirement and any other benefits, and related costs, premiums and claims due, to become due, committed or otherwise promised to any person who, up to the Commencement Date is a retiree, former employee, or current employee of Licensees, relating to the period up to the


5


Commencement Date. Broker shall assume no employee benefit plans, programs or practices, whether or not set forth in writing, maintained by Licensees at any time.


12. Station Agreements.


12.1. Assignment and Assumption of Station Agreements. On the Commencement Date, Licensees shall assign to Broker and Broker shall assume, subject to the provisions of this Section 12, the obligations of Licensees arising or to be performed on and after the Commencement Date (except to the extent such obligations represent liabilities for activities, events or transactions occurring, or conditions existing, on or prior to the Commencement Date) under (a) all of the contracts which comprise Station Assets (as defined in the Merger Agreement), excluding (i) contracts and agreements relating to the Licensees Employee Expenses, (ii) contracts and agreements relating to the Licensees Transmitter Expenses, (iii) Licensees' financing agreements and (iv) corporate level contracts and agreements, except, if any, those listed on Attachment C (collectively, the contracts and agreements to be assigned by Licensees and assumed by Broker are referred to as the "Station Agreements") and (b) all sales commissions payable to Licensees' sales and other personnel under advertising contracts assigned to or administered by Broker. Licensees have delivered to Buyer true and complete copies of all Station Agreements, including any and all amendments and other modifications thereto. All of the Station Agreements are in full force and effect and are valid, binding and enforceable in accordance with their respective terms, except as limited by laws affecting creditors' rights or equitable principles generally. Licensees have complied in all respects with all Station Agreements and are not in default beyond any applicable grace periods, and, to the best of Licensees' knowledge, no other contracting party is in default under any of the terms thereof. Licensees represent and warrant that the Station Agreements are freely assignable, or, if consent of the other contracting party to the assignment is required, Licensees to use their reasonable best efforts to obtain such consent as promptly as practicable. As of the Commencement Date, Licensees shall have paid all amounts due on and shall have performed all obligations due under the Station Agreements as of that date.


12.2 Consents to Assignment. To the extent that any Station Agreement is not capable of being assigned, transferred, delivered or subleased without the waiver or consent of any third person (including a government or governmental unit), or if such assignment, transfer, delivery or sublease or attempted assignment, transfer, delivery or sublease would constitute a breach thereof or a violation of any law or regulation, this Agreement and any assignment executed pursuant thereto shall not constitute an assignment, transfer, delivery or sublease or an attempted assignment, transfer, delivery or sublease thereof. In those cases where consents, assignments, releases and/or waivers have not been obtained at or prior to the Commencement Date to the transfer and assignment to Broker of any Station Agreement, this Agreement and any assignment executed pursuant hereto, to the extent permitted by law, shall constitute an equitable assignment by Licensees to Broker of all of Licensees' rights, benefits, title and interest in and to the Station Agreements, and where necessary or appropriate, Broker shall be deemed to be Licensees' agent for the purpose of completion, fulfilling and discharging all of Licensees' rights and liabilities arising after the Commencement Date under such Station Agreements. Licensees shall use their reasonable best efforts to provide Broker with the financial and business benefits of such Station Agreements (including, without limitation, permitting Broker to enforce any rights of Licensees arising under such Station Agreements), and Broker ...