LOCAL MARKETING AGREEMENT

 

                                                                   Exhibit 99.2

 

 

                                                               EXECUTION COPY

 

 

                            LOCAL MARKETING AGREEMENT

 

         This Local Marketing Agreement (the "Agreement"), made as of the 14th

day of July 2005, is between Infinity Radio Inc., a Delaware corporation

("Licensee"), and NextMedia Operating, Inc., a Delaware corporation

("Programmer").

 

                                    RECITALS

 

         Licensee is the licensee of and operates radio broadcast station

KEZR(FM), San Jose, California (Facility ID No. 1176), and radio broadcast

station KBAY(FM), Gilroy, California (Facility ID No. 35401) (each of the

foregoing, a "Station," and collectively, the "Stations").

 

         Licensee and Programmer are parties to an asset purchase agreement of

even date herewith (the "Purchase Agreement"), pursuant to which Licensee has

agreed to sell and Programmer, together with NM Licensing LLC, a Delaware

limited liability company, has agreed to purchase the Stations on the terms and

conditions set forth therein. Capitalized terms used but not defined in this

Agreement shall have the meanings set forth in the Purchase Agreement.

 

         Pending consummation of the transactions provided in the Purchase

Agreement, Programmer desires to acquire time on the Stations for its

programming and advertising time, subject to the limitations set forth herein

and in accordance with the rules, regulations and policies of the Federal

Communications Commission (the "FCC").

 

         Therefore, for and in consideration of the mutual covenants herein

contained, and for other good and valuable consideration, the receipt and

sufficiency of which are hereby acknowledged, the parties agree as follows:

 

1.       SALE OF TIME

 

         1.1 Broadcast of Programming. During the Term (as defined below),

Licensee shall make available broadcast time on the Stations for the broadcast

of Programmer's programs (the "Programming") for up to 168 hours a week except

for: (i) downtime occasioned by routine maintenance consistent with prior

practice and upon 48 hours prior notice to Programmer; (ii) 2 hours between 5:00

a.m. and 9:00 a.m. on Sunday mornings on Station KBAY(FM) and 2 hours between

5:00 a.m. and 9:00 a.m. on Sunday mornings on Station KEZR(FM) and at other

times mutually agreeable to Licensee and Programmer during which time Licensee

may broadcast programming designed to address the concerns, needs and interests

of the Stations' listeners; (iii) times when Programmer's programs are not

accepted or are preempted by Licensee in accordance with this Agreement; and

(iv) times when the Stations are not broadcasting because of Force Majeure

Events (as defined below).

 

         1.2 Advertising and Programming Revenues. During the broadcast time on

the Stations made available to Programmer pursuant to the terms of this

Agreement, Programmer shall have full authority to sell for its own account

commercial time on the Stations. Programmer shall retain all revenues from the

 

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broadcast or sale of all advertising time on any and all of the Stations and all

other sources of revenue and advertising, to the extent the foregoing relate to

programming provided for broadcast on the Stations by Programmer or to the

extent such revenues relate solely to the actions or activities of Programmer

related to any or all of the Stations on or after the Commencement Date, and all

the same shall be the sole and exclusive assets of Programmer.

 

         1.3 Force Majeure. Any failure or impairment of facilities, any delay

or interruption in broadcasting the Programming, or any failure at any time to

furnish the facilities, in whole or in part, for broadcasting, due to acts of

God, strikes or threats thereof, war, acts of terrorism, civil disturbance,

force majeure, or any other causes beyond the reasonable control of Licensee or

Programmer (collectively, "Force Majeure Events"), shall not constitute a breach

of this Agreement, and neither Licensee nor Programmer, as the case may be, will

be liable to the other party therefor.

 

         1.4 Main Studio and Studio Equipment. Programmer shall originate the

Programming from Licensee's existing office and studio facilities for the

Stations located at 190 Park Center Plaza, Suite 200, San Jose, California (the

"Main Studio"), using the studio equipment located in the Main Studio (the

"Studio Equipment"). To enable Programmer to fulfill its obligations hereunder,

Licensee shall make the Main Studio and Studio Equipment available, for no

additional consideration, to Programmer for its use for the production of the

Programming and sale of advertising under this Agreement. Programmer shall not

allow any other persons other than its employees, advisors, consultants or

representatives to enter the Main Studio without the express prior permission of

Licensee. Programmer agrees to take reasonable care of the Main Studio and the

Studio Equipment, subject to ordinary wear and tear. Programmer agrees to

indemnify and hold harmless Licensee and its Affiliates from any and all claims

for damages for injuries to or death of persons and for damages to property

arising out of Programmer's use and/or occupancy of the Main Studio or the

Studio Equipment. On the Commencement Date, Licensee shall transfer title to all

vehicles used in the operation of the Stations to Programmer, subject to

Programmer's obligation to return such vehicles to Licensee as provided in

Section 8.2(a)(vi).

 

         1.5 Payments. In consideration of the rights granted under this

Agreement, Programmer shall pay Licensee the fee and reimburse certain of

Licensee's costs as provided in Schedule 1.5 hereto.

 

         1.6 Term. The term of this Agreement (the "Term") shall commence at

12:01 a.m., San Jose, California time (the "LMA Effective Time"), one (1)

business day after the expiration or early termination of any waiting period

applicable to the Purchase Agreement under the Hart-Scott-Rodino Antitrust

Improvements Act of 1976, as amended (the "Commencement Date"), and shall

terminate on the earlier of (a) 12:01 a.m. on the date of the consummation of

the purchase of the Stations pursuant to the Purchase Agreement, (b) 12:01 a.m.

on the date which is six (6) months after the date of the termination of the

Purchase Agreement for any reason other than the closing thereunder, except

that, if the Purchase Agreement is terminated, Licensee shall have the option to

 

 

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terminate this Agreement upon thirty (30) days written notice to Programmer, and

(c) such time as this Agreement is terminated in accordance with its terms

pursuant to Section 8.

 

         1.7 License to Use Call Sign and Trademarks. Licensee hereby grants

Programmer a license to use Licensee's call signs and trademarks and names used

primarily in the operation of the Stations (the "Marks") in connection with the

broadcast and promotion of the Programming during the Term. Programmer agrees

that the nature and quality of all services rendered by it in connection with

the Marks shall conform to reasonable quality standards set by and under the

control of Licensee. If Licensee becomes aware of any fact which in its opinion

indicates that Programmer is using the Marks in connection with programming that

does not conform with Licensee's reasonable quality standards, Licensee may

notify Programmer in writing of such facts and request that Programmer conform

its use of the Marks to Licensee's reasonable quality standards. If Programmer

does not immediately conform its use of the Marks, Licensee may terminate the

license granted hereby upon written notice to Programmer. Programmer agrees to

cooperate with Licensee to control the nature and use of the Marks, to supply

Licensee with audio tapes and uses of the Marks upon Licensee's reasonable

request, and to use the Marks only in connection with its providing programming

on the Stations hereunder. Programmer further agrees to notify Licensee in

writing of any legal action commenced against it which relates to the Marks or

to the quality of the Programming within ten (10) days of notice to Programmer

of such action.

 

2.       OBLIGATIONS AND RIGHTS OF LICENSEE

 

         Programmer acknowledges and agrees that Licensee is and shall remain

responsible for operating the Stations in the public interest and controlling

the day-to-day operations of the Stations in conformance with its FCC licenses,

permits and authorizations. Without limiting the generality of the foregoing,

Licensee and Programmer agree as follows:

 

         2.1 Licensee's Absolute Right to Reject Programming. Licensee shall

have the absolute right to reject any Programming, including advertising

announcements or other material, which Licensee in its sole discretion deems

contrary to the public interest, the Communications Act of 1934, as amended (the

"Communications Act"), or the FCC's rules, regulations and policies (the

"Rules," and together with the Communications Act, the "Communications Laws").

Licensee reserves the right to refuse to broadcast any Programming containing

any matter that Licensee in its sole discretion believes is, or may be

determined by the FCC or any court or other regulatory body with authority over

Licensee or the Stations to be, violative of any third party intellectual

property rights, defamatory, indecent, obscene, profane or otherwise in

violation of law. Licensee may take any other actions necessary to ensure the

Stations' operations comply with the laws of the United States, the laws of the

State of California, the Communications Laws (including the prohibition on

unauthorized transfers of control), and the rules, regulations and policies of

other federal government authorities, including the Federal Trade Commission and

the Department of Justice. Licensee may suspend, cancel or refuse to broadcast

 

 

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any portion of the Programming pursuant to this Section 2.1 without reduction or

offset in the payments due Licensee under this Agreement.

 

         2.2 Licensee's Right to Preempt Programming for Special Events and

Public Interest Programming. Licensee shall have the absolute right to preempt

Programming in order to broadcast a program deemed by Licensee, in its sole

discretion, to be of greater national, regional or local public interest or

significance, or to provide public service programming, and to use part or all

of the hours of operation of the Stations for the broadcast of events of special

importance. In all such cases, Licensee will use commercially reasonable efforts

to give Programmer reasonable advance notice of its intention to preempt the

Programming. Licensee may preempt the Programming under this Section 2.2 without

reduction or offset in the payments due Licensee under this Agreement.

 

         2.3 Licensee's Public Service Programming. Licensee shall have the

right to preempt Programming in order to broadcast public service programming at

the times set forth in Section 1.1 hereof.

 

         2.4 Political Advertising, Public File, Etc. The parties acknowledge

that Licensee is ultimately responsible for complying with the Communications

Laws with respect to (a) the carriage of political advertisements and

programming (including, without limitation, the rights of candidates and, as

appropriate, others to equal opportunities, lowest unit charge and reasonable

access); (b) the broadcast and nature of public service programming; (c) the

maintenance of political and public inspection files and the Stations' logs; (d)

the ascertainment of issues of community concern and (e) the preparation of all

quarterly issues/programs lists.

 

         2.5 Maintenance and Repair of Transmission Facilities. Licensee shall

use commercially reasonable efforts to maintain the Stations' transmission

equipment and facilities, including the antennas, transmitters and transmission

lines, in good operating condition, and Licensee shall continue to contract with

local utility companies for the delivery of electrical power to the Stations'

transmitting facilities at all times in order to ensure operation of the

Stations. Licensee shall undertake such repairs as are necessary to maintain

full-time operation of the Stations with their maximum authorized facilities as

expeditiously as reasonably possible following the occurrence of any loss or

damage preventing such operation.

 

         2.6 Main Studio. Licensee shall maintain a main studio for the Stations

as required under the Communications Laws.

 

3.       OBLIGATIONS AND RIGHTS OF PROGRAMMER

 

         Programmer shall not take any action, or omit to take any action,

inconsistent with Licensee's obligations under the Communications Laws to retain

ultimate responsibility for the programming and technical operations of the

Stations. Whenever at the Main Studio or otherwise on the Stations' premises,

all of Programmer's personnel shall be subject to the supervision and the

 

 

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direction of the General Manager and/or the Stations' Chief Operator. Without

limiting the generality of the foregoing, Programmer agrees as follows:

 

         3.1 Compliance with Laws and Station Policies. Programmer has advised

Licensee of the nature of the Programming. Programmer will make no material

changes in the Programming after the Commencement Date without the prior written

consent of Licensee, which shall not be unreasonably withheld. All Programming

shall conform in all material respects to all applicable provisions of the

Communications Laws, all other laws or regulations applicable to the broadcast

of programming by the Stations, and the programming regulations prescribed in

Schedule 3.1 hereto. At no time during the Term shall Programmer or its

employees or agents represent, hold out, describe or portray Programmer as the

licensee of the Stations.

 

         3.2 Cooperation with Licensee. Programmer, on behalf of Licensee, shall

furnish or insert within the Programming all Station identification

announcements required by the Communications Laws, and shall, upon request by

Licensee, provide (a) information about Programming that is responsive to the

public needs and interests of the area served by the Stations, so as to assist

Licensee in the preparation of any required programming reports, and (b) other

information to enable Licensee to prepare other records, reports and logs

required by the FCC or other local, state or federal governmental agencies.

Programmer shall maintain and deliver to Licensee all records and information

required by the FCC to be placed in the public inspection file of the Stations,

including all records and information pertaining to the broadcast of political

programming and advertisements, in accordance with the provisions of Sections

73.1943 and 73.3526 of the Rules and The Bipartisan Campaign Reform Act of 2002.

Programmer additionally agrees that broadcasts of sponsored programming

addressing political issues or controversial subjects of public importance will

comply with the provisions of Section 73.1212 of the Rules. Programmer shall

consult with Licensee and adhere strictly to all applicable provisions of the

Communications Laws, with respect to the carriage of political advertisements

and political programming (including, without limitation, the rights of

candidates and, as appropriate, other parties, to "equal opportunities") and the

charges permitted for such programming or announcements. Programmer shall

cooperate with Licensee to ensure compliance with the Rules regarding Emergency

Alert System tests and alerts.

 

         3.3 Payola and Plugola. Programmer shall provide to Licensee in advance

any information known to Programmer regarding any money or other consideration

which has been paid or accepted, or has been promised to be paid or to be

accepted, for the inclusion of any matter as a part of any programming or

commercial material to be supplied to Licensee by Programmer for broadcast on

the Stations, unless the party making or accepting such payment is identified in

the program as having paid for or furnished such consideration in accordance

with the Communications Laws. Commercial matter with obvious sponsorship

identification will not require disclosure beyond the sponsorship identification

contained in the commercial copy. Programmer shall at all times endeavor to

proceed in good faith to comply with the requirements of Sections 317 and 507 of

the Communications Act and the related Rules.

 

 

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         3.4 Handling of Communications. Programmer shall provide Licensee with

the original or a copy of any correspondence from a member of the public

relating to the Programming to enable Licensee to comply with the requirements

of the Communications Laws, including those regarding the maintenance of the

public inspection file. Licensee shall not be required to receive or handle

mail, facsimiles, e-mails or telephone calls in connection with the Programming

unless Licensee has agreed to do so in writing. Licensee shall promptly forward

to Programmer all correspondence, payments, communications or other information

and/or documents which it receives and which relate to the Programming,

including without limitation, invoices, billing inquiries, checks, money orders,

wire transfers or other payments for services or advertising.

 

         3.5 Compliance with Copyright Act. Programmer shall not broadcast any

material on the Stations in violation of the Copyright Act or the rights of any

Person. All music supplied by Programmer shall be (a) licensed by a music

licensing agent such as ASCAP, BMI, or SESAC, (b) in the public domain or (c)

cleared at the source by Programmer. Licensee shall not be obligated to pay any

music licensing fees or other similar expenses required in connection with the

material broadcast by Programmer on the Stations.

 

4.       RESPONSIBILITY FOR EMPLOYEES AND EXPENSES

 

         4.1 Licensee's Responsibility for Employees and Expenses.

 

         (a) Licensee will employ a full-time management-level employee for the

Stations (the "General Manager"), who shall report and be solely accountable to

Licensee and shall be responsible for overseeing the operations of the Stations,

and a staff-level employee, who shall report to and assist the General Manager

in the performance of his or her duties. Licensee shall also retain a qualified

Chief Operator, as that term is defined in the Communications Laws, for the

Stations. The Chief Operator shall have the duties and responsibilities of a

"Chief Operator" under the Communications Laws.

 

         (b) Subject to Schedule 1.5 hereto, Licensee shall be responsible for

timely paying: (i) all lease payments for the Stations' transmitter sites,

whether in use or not, and all taxes and other costs incident thereto, including

insurance costs, (ii) all utility costs (telephone, electricity, etc.) relating

to the transmitter sites, (iii) all maintenance and repair costs for the

transmitting equipment that are Licensee's responsibility under Section 2.5,

(iv) all costs, including utilities, taxes, insurance and maintenance, relating

to the ownership of the building housing the Main Studio, (v) the salaries,

taxes, insurance and related costs for Licensee's Station personnel and (vi) all

FCC regulatory or filing fees.

 

         4.2 Programmer's Responsibility for Employees and Expenses.

 

         (a) Programmer shall be responsible for the artistic personnel and

material for the production of the Programming to be provided under this

Agreement. Programmer shall provide any transmitter duty operators required for

the operation of the Stations during any period when the Programming is being

 

 

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broadcast. Programmer shall employ and be responsible for the salaries, taxes,

insurance and related costs for all of its own personnel and facilities used in

fulfillment of its rights and obligations under this Agreement.

 

         (b) Programmer shall be responsible for timely paying all costs

associated with production and listener responses, including utility costs, fees

to ASCAP, BMI and SESAC, any other copyright fees, and all other costs or

expenses attributable to the Programming that is delivered by Programmer for

broadcast on the Stations. In addition, Programmer shall be responsible for

timely paying all salaries, taxes, insurance and related costs of personnel

other than the Licensee's Station personnel. Programmer shall also timely pay

all maintenance and repair costs for the Main Studio and Studio Equipment. The

parties acknowledge and agree that Programmer shall obtain its own ASCAP, BMI

and SESAC licenses as of the Commencement Date and shall not use, operate under,

or be responsible for the payment of any fees in connection with, the ASCAP, BMI

or SESAC licenses held by Licensee.

 

         (c) Programmer shall maintain at its expense and with reputable

insurance companies commercially reasonable coverage for broadcaster's liability

insurance, worker's compensation insurance and commercial general liability

insurance.

 

         4.3 Station Employees.

 

         (a) Transferred Employees.

                                                                               

                (i) Except as set forth on Schedule 4.3, Programmer shall offer

employment to each Station Employee (as defined in the Purchase Agreement) who

is employed immediately prior to the LMA Effective Time and who is not on

authorized leave of absence, sick leave, short or long term disability leave,

military leave or layoff with recall rights. For the purposes hereof, all

Station Employees who accept Programmer's offer of employment are hereinafter

referred to collectively as the "Transferred Employees," and the "Employment

Commencement Date" as referred to herein shall mean the LMA Effective Time.

Programmer shall employ at-will those Transferred Employees who do not have

employment agreements with Licensee at the same monetary compensation as such

employees are currently earning. The initial terms and conditions of employment

for those Transferred Employees who have employment agreements, including

account executive agreements and bonus term sheets, with the Licensee shall be

dictated by such employment agreements. Programmer may modify, alter or

terminate any of the terms and conditions of employment of the Transferred

Employees. Nothing in this Agreement shall prevent Programmer from terminating

the employment of any Transferred Employee at any time after the LMA Effective

Time.

 

                (ii) Except as otherwise expressly provided herein or in the

Purchase Agreement, Programmer shall not assume any claims, liabilities, or

obligations of Seller as an employer incurred prior to the Effective Time,

including liabilities for wages, supplemental unemployment benefits, severance

benefits, retirement benefits, Federal Consolidated Omnibus Budget

Reconciliation Act of 1985 benefits, Federal Family and Medical Leave Act of

 

 

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1993 benefits, Federal Workers Adjustment and Retraining Notification Act

obligations and liabilities, or any other employee benefits, withholding Tax

liabilities, workers' compensation, or unemployment compensation benefits or

premiums, hospitalization or medical claims, occupational disease or disability

claims, or other claims attributable in whole or in part to employment or

termination by Seller or arising out of any labor matter involving Seller as an

employer, and any claims, liabilities and obligations arising from or relating

to the Employee Benefit Plans (as defined in the Purchase Agreement).

 

                (iii) To the extent permitted under Programmer's plans and

subject to the requirements of Programmer's plan administrator, (i) Programmer

shall cause all Transferred Employees to be eligible to participate in its

"employee welfare benefit plans" (as defined in Section 3(1) of ERISA) and its

"defined contribution plans" (as defined in Section 414(i) of the Code) to the

extent Programmer's similarly-situated employees are generally eligible to

participate, (ii) all Transferred Employees and their spouses and dependents

shall be eligible for coverage immediately after the Employment Commencement

Date (and shall not be excluded from coverage under any employee welfare benefit

plan that is a group health plan on account of any pre-existing condition, as

long as such condition was covered under Programmer's group health plan), (iii)

for purposes of