CHANCELLOR RADIO BROADCASTING COMPANY
LOCAL MARKETING AGREEMENT
WITH
SFX BROADCASTING, INC.
FOR
WAPE-FM, JACKSONVILLE, FLORIDA
WFYV-FM, ATLANTIC BEACH, FLORIDA
TABLE OF CONTENTS
1. Agreement Term............................................................2
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2. Programmer's Purchase of Airtime and Provision of Programming.............2
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3. Representations...........................................................3
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4. Consideration.............................................................3
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5. Collection of Accounts Receivable.........................................3
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6. Chancellor Control of the Stations........................................4
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7. Programmer Responsibility.................................................5
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8. Contracts.................................................................7
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9. Employees.................................................................7
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10. Public Affairs Programming................................................8
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11. Additional License Obligations............................................8
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12. Broadcast Stations Programming Policy Statement...........................9
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13. Compliance with Copyright Act.............................................9
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14. Payola....................................................................9
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15. Sales....................................................................10
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16. Local Marketing Agreement Challenge......................................10
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17. Confidential Review......................................................10
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18. Major Defaults: Termination..............................................11
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18.1. Programmer's Major Defaults.......................................11
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18.2. Chancellor's Major Defaults.......................................11
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18.3. Cure Periods......................................................12
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18.4. Termination Upon Occurrence of Major Default......................12
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18.5. Termination Upon Failure of Consummation of Exchange Agreement....12
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19. Liabilities Upon Termination.........................................13
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20. No Format Changes....................................................14
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21. Chancellor's Indemnification.........................................14
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22. Programmer's Indemnification.........................................14
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23. Procedure for Indemnification........................................15
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24. Dispute Over Indemnification.........................................16
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25. Programmer's Remedies for Operational Deficiencies...................16
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26. Force Majeure........................................................16
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27. Other Agreements.....................................................16
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28. Assignment...........................................................17
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29. Entire Agreement.....................................................17
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30. Taxes................................................................17
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31. Headings.............................................................17
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32. Governing Law........................................................17
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33. Notices..............................................................17
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34. Severability.........................................................19
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35. Certifications.......................................................19
(a) Control of Stations.........................................19
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(b) Compliance with Ownership Rules.............................19
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36. No Joint Venture.....................................................19
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37. Beneficiaries........................................................19
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PAYMENT SCHEDULE..............................................................21
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SCHEDULE B - EMPLOYEES........................................................22
ATTACHMENT I - BROADCAST STATIONS PROGRAMMING POLICY STATEMENT................23
I. No Plugola or Payola........................................23
II. Political Broadcasting......................................23
III. Required Announcements......................................23
IV. No Illegal Announcements....................................23
V. Chancellor Discretion Paramount.............................24
ATTACHMENT II - PAYOLA AFFIDAVIT..............................................25
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LOCAL MARKETING AGREEMENT
THIS LOCAL MARKETING AGREEMENT ("LMA" or "Agreement"), is made as of July 31,
1996 by and between SFX BROADCASTING, INC., a Delaware corporation,
(collectively, "SFX" or "Programmer") and CHANCELLOR RADIO BROADCASTING
COMPANY, ("Chancellor") a Delaware corporation.
RECITALS
WHEREAS, SFX owns and operates radio stations WBAB-FM, Babylon, New
York; WBLI- FM, Patchogue, New York; WGBB-AM, Freeport, New York; and WHFM-FM,
Southampton, New York (the "Long Island Stations");
WHEREAS, Chancellor is a party to a certain Asset Purchase Agreement
("Florida Agreement") dated May 14, 1996 among Chancellor and Chancellor
Broadcasting Company and OmniAmerica Group, WAPE-FM License Partnership,
WFYV-FM License Partnership, WEAT-AM License Partnership, WEAT-FM License
Partnership, WXXL License Partnership, WOLL License Partnership and WJHM-FM
License Partnership (collectively "Omni") contemplating, inter alia, the
purchase by Chancellor of substantially all of Omni's assets used or useful in
the operation of Station WAPE-FM, Jacksonville, Florida, and Station WFYV-FM,
Atlantic Beach, Florida (collectively, the "Jacksonville Stations"), including
the related FCC broadcast licenses and authorizations.
WHEREAS, Chancellor and Omni have entered into a Local Marketing
Agreement ("Omni/Florida LMA") dated June 28, 1996, in which Omni wishes to
retain Chancellor to provide programming commencing August 1, 1996 for certain
of Omni's stations, including but not limited to the Jacksonville Stations,
pursuant to the terms and conditions set forth in the Omni/Florida LMA and in
conformity with Omni's stations' policies and practices and the Federal
Communications Commission's ("FCC") rules and regulations concerning such
arrangements;
WHEREAS, Omni has given its written consent to allow Chancellor to
enter into this Agreement with SFX with respect to the Jacksonville Stations;
WHEREAS, Chancellor wishes to retain SFX to provide programming for
the Jacksonville Stations pursuant to the terms and conditions set forth in
this Agreement and in conformity with the Jacksonville Stations' policies and
practices and the Federal Communications Commission's rules and regulations
concerning such arrangements;
WHEREAS, Chancellor will broadcast such programming and sell
advertising that is in conformance with the Jacksonville Stations' policies and
all FCC rules and regulations, including the requirement that the ultimate
control of the Jacksonville Stations be maintained by the owner of the
stations; and
SFX and Chancellor
Jacksonville LMA
Page 2
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WHEREAS, Chancellor and SFX have entered into an Asset Exchange
Agreement dated July 1, 1996 (the "Exchange Agreement"), which would qualify as
a tax free exchange of like-kind assets pursuant to Section 1031 of the
Internal Revenue Code of 1986, as amended, pursuant to which SFX has agreed to
transfer to Chancellor, and Chancellor has agreed to acquire from SFX,
substantially all of the assets and businesses of the Long Island Stations; and
Chancellor has agreed to transfer to SFX, and SFX has agreed to acquire from
Chancellor, substantially all of the assets and businesses of the Jacksonville
Stations.
NOW THEREFORE, for and in consideration of the mutual covenants herein
contained, the parties, intending to be legally bound, agree as follows:
1. Agreement Term.
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The term of this Agreement will begin on August 1, 1996
("Commencement Date") and will continue until the Programmer acquires the
assets of the Jacksonville Stations and Chancellor acquires the assets of the
Long Island Stations in accordance with the terms of the Exchange Agreement,
unless earlier terminated in accordance with the provisions set forth herein.
2. Programmer's Purchase of Airtime and Provision of Programming.
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(a) During the term of this Agreement, Programmer shall
transmit programming, including commercials, that it produces or owns to the
Jacksonville Stations twenty-four (24) hours per day Monday through Friday and
for forty-eight (48) hours during Saturday through Sunday, provided that
Chancellor may broadcast up to two (2) hours of programming for the
Jacksonville Stations which is aimed at serving the needs and interests of the
Jacksonville Stations' communities of license during the morning(s) of Saturday
and/or Sunday subject to Section 10 hereto.
(b) To facilitate delivery of programming by Programmer
hereunder, Chancellor hereby grants to Programmer the right for the term of
this Agreement to use substantially all of the equipment located in the
Jacksonville Stations' studios and currently used by Chancellor for
broadcasting programs on the Jacksonville Stations. In addition, Programmer
shall have, and Chancellor hereby grants to Programmer, a license to enter on
the premises currently occupied by the Jacksonville Stations for the purpose of
producing its programming hereunder; provided, however, that Chancellor shall
maintain, for its use, sufficient space at the Jacksonville Stations' studios
to enable Chancellor to conduct its operations and originate programming.
Accordingly, Programmer shall hold Chancellor harmless from all costs, fees and
expenses incurred with respect to any personal injury suffered by any employee
or agent of Programmer while on the property of
SFX and Chancellor
Jacksonville LMA
Page 3
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Chancellor. Programmer shall also be responsible for and shall reimburse
Chancellor for any damage to the property of Chancellor caused by Programmers'
employees or agents.
3. Representations.
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Each of Chancellor and Programmer represent as to itself that
it is authorized to enter into this Agreement and that this Agreement
constitutes the legal, valid and binding obligation of such party, enforceable
against it in accordance with its terms. Programmer hereby represents and
warrants to Chancellor that Programmer is an experienced radio broadcast
station Chancellor and operator and is fully familiar with all pertinent legal
requirements, including but not limited to, the Communications Act of 1934, as
amended (the "Act"), and the Commission's rules, regulations and policies
governing the operation of radio broadcast stations. Programmer will comply
with all legal requirements, including but not limited to the Act and the
Commission's rules, regulations and policies.
4. Consideration.
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During the term of this Agreement, Programmer shall pay
Chancellor the payments set forth on the Payment Schedule annexed hereto.
5. Collection of Accounts Receivable.
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(a) The accounts receivable of the Jacksonville Stations
generated prior to the Commencement Date (the "Pre-LMA Receivables") shall be
and remain the property of Chancellor. Within fifteen (15) days after the
Commencement Date, Chancellor shall furnish Chancellor with a list (certified
by the Chief Financial Officer of Chancellor to be a true and complete list) of
all accounts receivable of Chancellor which remain outstanding as of the
Commencement Date. Chancellor agrees that if, after the Commencement Date, it
shall receive payment, in respect to any Pre-LMA Receivable, Chancellor shall
remit to Chancellor, within five (5) business days after the end of each month,
any amounts received by Chancellor during the preceding month (whether or not
directed on their face to Chancellor), which are in payment for advertising
broadcast by the Jacksonville Stations prior to the Commencement Date.
(b) During the period starting on the Commencement Date and
ending one hundred twenty (120) days thereafter, Chancellor shall use
reasonable efforts, consistent with Chancellor's current billing and collection
practices and in the ordinary course of the business, to assist Chancellor in
the collection of any outstanding Pre-LMA Receivables; provided, however, that,
notwithstanding the foregoing, Chancellor shall be under no obligation to
commence litigation,
SFX and Chancellor
Jacksonville LMA
Page 4
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employ counsel or engage the services of a collection agency to effect
collection. Chancellor shall not make any compromise, adjustment, concession or
settlement of any Pre-LMA Receivable without Chancellor's express written
consent and Chancellor shall be under no obligation to compromise, adjust,
concede or settle any accounts receivable generated after the Commencement Date
or otherwise grant any credit or allowance to effect collection of a Pre-LMA
Receivable. Absent written evidence that an account debtor owing a Pre-LMA
Receivable is disputing in good faith any portion of such Pre-LMA Receivable,
any payments received by Chancellor after the Commencement Date from such
account debtor shall be presumed to represent payment on any undisputed portion
of such Pre-LMA Receivable which is then outstanding (with each such payment
received from such account debtor to be applied first to the most-aged Pre-LMA
Receivable then owing from such account debtor).
(c) Chancellor agrees to remit to Chancellor within 5
business days after the end of each month, any amounts received by Chancellor
during the preceding month (whether or not directed on their face to
Chancellor) which are in payment for advertising generated by the Stations
after the Commencement Date.
(d) Chancellor shall not set-off any claim or amount against
any of the Pre-LMA Receivables.
6. Chancellor Control of the Stations.
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(a) Chancellor will have full authority, power and control
over the management and operations of the Jacksonville Stations during the term
of this Agreement. Chancellor will bear all responsibility for the Jacksonville
Stations' compliance with all applicable provisions of the Act, the rules,
regulations and policies of the FCC and all other applicable laws, including
without limitation, the retention of control over the policies, programming and
operation of the Jacksonville Stations, including the right to preempt
programming which in its good faith judgment it deems unsuitable or contrary to
the public interest. Chancellor shall be solely responsible for and pay in a
timely manner all real and personal property taxes, mortgage fees and expenses
and other real property costs, all studio and transmitter site leases, any
utilities (excluding telephone charges), and all costs and expenses for the
maintenance of all transmitter equipment. Programmer shall cooperate with and
assist Chancellor in complying with all FCC rules and regulations.
(b) Chancellor retains ultimate control over the Jacksonville
Stations and their premises. Accordingly, all employees of Programmer present
at the Jacksonville Stations or on their premises must comply with the policies
and rules promulgated by Chancellor. In no event shall Programmer, or
Programmer's employees, represent, depict, describe or portray Programmer as
SFX and Chancellor
Jacksonville LMA
Page 5
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Chancellor of the Jacksonville Stations. To this end, all employees of
Programmer, whose work involves the Jacksonville Stations, shall be informed as
to Chancellor's ultimate control over the Jacksonville Stations and
Programmer's subordinate capacity, and all printed materials and
promotional announcements shall accurately describe all of the roles and
responsibilities of Chancellor and Programmer.
(c) The Jacksonville Stations' transmission equipment shall
be maintained by Chancellor in a condition consistent with good engineering
practices and in compliance in all material respects with the Act and all other
applicable rules, regulations and technical standards of the FCC. All capital
expenditures reasonably required to maintain the technical quality of the
transmission equipment and its compliance with applicable laws and regulations
shall be made at the sole expense of Chancellor in a timely fashion.
(d) Chancellor shall employ at its expense a management-level
employee at the Jacksonville Stations and such other person for each Long
Island Station as necessary to fulfill Chancellor's duties hereunder and its
obligations under the FCC's rules. A manager shall direct the day-to-day
operations of each Long Island Station and shall report to and be accountable
to Chancellor. Chancellor shall be responsible for the salaries, taxes,
insurance and related costs for all personnel it employs at the Jacksonville
Stations.
(e) Chancellor shall pay all regulatory fees, file all
necessary applications, maintain the Jacksonville Stations' local public
inspection files within the Jacksonville Stations' communities of license and
shall prepare and place in such inspection file all required documents
including, but not limited to the Jacksonville Stations' quarterly issues and
program lists on a timely basis.
7. Programmer Responsibility.
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(a) Programmer shall be solely responsible for all expenses
incurred in the origination and/or delivery of programming from any remote
location and for all operating expenses of the Jacksonville Stations (including
telephone expenses and expenses related to sales, marketing, promotion,
advertising, billing and collections, and traffic), except that Chancellor
shall be responsible for the costs as provided in Section 6 hereof. Programmer
shall cooperate fully with Chancellor in responding to any questions, comment,
inquiry or complaint from any third party, including any governmental authority
or agent thereof, that may relate to or arise from the Jacksonville Stations or
its operations, including the programming. In the event of Programmer's receipt
of any question, comment inquiry or complaint that may relate to or arise from
the Jacksonville Stations or its operations, Programmer shall promptly notify
Chancellor of the same.
SFX and Chancellor
Jacksonville LMA
Page 6
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(b) Programmer shall employ and be solely responsible for the
salaries, taxes, insurance and related costs for all personnel employed by
Programmer (including, without limitation, salespeople, traffic personnel,
board operators and programming staff).
(c) Programmer shall cause the Jacksonville Stations to
transmit any required tests of the Emergency Broadcast System or successor
Emergency Alert System at such times as are directed by Chancellor.
(d) Political Advertising and Announcements. Programmer shall
maintain and deliver to Chancellor all records and information required by the
FCC to be placed in the public inspection files of the Jacksonville Stations
pertaining to the broadcast of political programming and advertisements, in
accordance with the provisions of Sections 73.1940 and 73.3526 of the FCC's
rules and agrees to broadcast sponsored programming addressing political
issues, in accordance with the provisions of Section 73.1212 of the FCC's
rules.
1. Programmer's sale or use of commercial time on the
Jacksonville Stations shall conform to all federal and state laws governing the
sale of political advertising on radio stations. At least ninety (90) days
before the start of any primary or general election campaign, Programmer will
clear with Chancellor the rates to be charged political candidates for public
office and rate cards to be sure that the rates and the rate cards are in
conformance with all laws, including requirements for providing reasonable time
to state and local candidates (as determined by Chancellor).
2. When required by law, Programmer shall sell such
political advertising time only at the Stations' lowest unit rate. Within seven
(7) days after the broadcast of political advertising, Programmer shall review
the commercial spots that have aired on the Jacksonville Stations, so as to
insure that each political candidate was charged the lowest unit rate. In the
event a refund or credit is due, Programmer shall pay such refund or provide
such credits within seven (7) days. The Programmer recognizes candidates' need
to maximize their campaign funds, and thus will provide such rebates or credits
on a more expeditious basis as the election day approaches.
3. Within twenty-four (24) hours of any request to
purchase time on any Jacksonville Station on behalf of a candidate for public
office or to support or urge defeat of an issue on an election ballot,
Programmer will provide documentation of the request, and its disposition, to
Chancellor so that appropriate records can be placed in the Jacksonville
Station's public file.
4. In the event that Programmer fails to provide adequate
broadcast time for the broadcast of paid political programming or advertising by
political candidates, Chancellor
SFX and Chancellor
Jacksonville LMA
Page 7
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shall have the right to preempt commercial announcements supplied by Programmer
to make time available to these political candidates.
5. Programmer shall furnish within its programming, on
behalf of Chancellor, all of the Jacksonville Stations' identification
announcements required by the FCC's rules.
Programmer shall provide information with respect to any of its programming
which is responsive to the public needs and interests of the area served by the
Jacksonville Stations so as to assist Chancellor in the preparation of any
required programming reports, and provide other information to enable
Chancellor to prepare other records, reports and logs required by the FCC or
other local, state or federal governmental agencies.
8. Contracts.
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Programmer shall perform and discharge the obligations of
Chancellor from and after the Commencement Date under the contracts and
agreements listed in the Schedules to the Exchange Agreement as being assumed
by Programmer on the Commencement Date. In addition, Programmer shall perform
and discharge all obligations of the Jacksonville Stations under all trade
agreements from and after the Commencement Date. Programmer will not enter into
any third-party contracts, leases or agreements which will bind Chancellor in
any way except with Chancellor's prior written approval.
9. Employees.
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Schedule B hereto contains a listing of the name, salary or
compensation and job description of all employees of the Jacksonville Stations
as of May 15, 1996. Pursuant to Section 14.7 of the Exchange Agreement as of
the Commencement Date, the current Jacksonville Stations employees will become
employees of the Programmer; however, Programmer may terminate current
employees of the Jacksonville Stations without cause thirty (30) days from the
execution of the Exchange Agreement. If the number of terminated employees
exceeds ten (10) or in the aggregate the severance liability amount of the
terminated employees from the Jacksonville Stations exceeds One Hundred
Thousand Dollars ($100,000), then the Programmer shall be responsible to pay
for any severance amounts exceeding the first One Hundred Thousand Dollars
($100,000). Chancellor shall be responsible to pay for any severance amounts
associated with only the first ten (10) terminated employees, as designated by
Programmer, but in no event will Chancellor be liable for any severance amounts
exceeding One Hundred Thousand Dollars ($100,000). Chancellor agrees to
maintain at its own expense one management level employee and one other
employee for each Long Island Station.
SFX and Chancellor
Jacksonville LMA
Page 8
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Commencing subsequent to the execution of the LMAs, Chancellor shall
make available to each of the Jacksonville Stations' personnel during normal
business hours for Programmer to interview prior to the Commencement Date.
Programmer shall notify Chancellor of the names of employees to whom Programmer
shall offer employment (herein referred to as "Transferred Employees").
Chancellor hereby consents to Programmer making such offers of employment
relating to the Jacksonville Stations subject to the effectiveness of the LMAs
between the parties. Chancellor shall be responsible for all obligations or
liabilities to those employees not offered employment by Programmer, and
Programmer shall have no obligations with respect to those employees (herein
referred to as "Retained Employees").
No earlier than thirty (30) days after the execution of the Exchange
Agreement, Programmer shall submit confirmation letters to the Jacksonville
Stations' Management, on-air talent and other key employees which it intends to
offer employment, to which confirmation letters shall set forth the terms of
employment currently in effect between said employee and Chancellor, including,
but not limited to, matters concerning salary, bonuses, vacation time,
non-compete provisions (if any), benefits, termination rights, loans (if any)
and any other pertinent provisions thereof. Receipt of the confirmation letters
signed by the perspective management, on-air talent and other key employees is
a condition precedent to Programmer making any offers of continued employment.
10. Public Affairs Programming.
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Notwithstanding any other provision of this Agreement,
Programmer recognizes that Chancellor has certain obligations to broadcast
programming to meet the needs and interests of the community of license for the
Jacksonville Stations. Chancellor shall have the right to air specific
programming on issues of importance to the local community. Nothing in this
Agreement shall abrogate the unrestricted authority of Chancellor to discharge
its obligations to the public and to comply with the law, rules and policies of
the FCC with respect to meeting the ascertained needs and interests of the
public. Accordingly, Chancellor may broadcast public affairs programming as
outlined in Section 2 hereof. Chancellor may air this programming in either one
two (2) hour block or any combination of half hour or full hour blocks of time
during the hours of 6 a.m. to 9 a.m. on Saturday and/or Sunday.
11. Additional License Obligations.
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Although both parties shall cooperate in the broadcast of
emergency information over the Stations, Chancellor shall also retain the right
to interrupt Programmer's programming in case of an emergency or for
programming which, in the reasonable good faith judgment of Chancellor, is of
overriding public importance. Chancellor shall also coordinate with Programmer
the
SFX and Chancellor
Jacksonville LMA
Page 9
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Jacksonville Stations' hourly station identification announcements to be
aired in accordance with FCC rules. Chancellor shall continue to maintain a
main studio, as that term is defined by the FCC, within each of the
Jacksonville Stations' principal community contours and shall staff it as
required by the FCC. Chancellor shall be responsible for the salaries, taxes,
insurance and related costs for all personnel it employs at the Jacksonville
Stations and shall maintain insurance at its present levels covering the
Jacksonville Stations' transmission facilities. In addition, Chancellor shall
pay any federal regulatory fees, maintain its local public inspection file
within the Jacksonville Stations' communities of license
and shall prepare and place in such public inspection file all required
documents including, but not limited to, its quarterly issues and program lists
on a timely basis. Chancellor shall also receive and respond to telephone
inquiries from the general public. Programmer shall provide Chancellor with
information with respect to certain of Programmer's programs which may be
included in Chancellor's quarterly issues and programs lists.
12. Broadcast Stations Programming Policy Statement.
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Chancellor has adopted and will enforce a Broadcast Stations
Programming Policy Statement (the "Policy Statement"), a copy of which appears
as Attachment I hereto and which may be amended to meet changing regulatory
requirements by Chancellor upon reasonable advance written notice to
Programmer. Programmer agrees and covenants to comply in all material respects
with the Policy Statement and with all rules and regulations of the FCC. If
Chancellor reasonably determines that a program, commercial or other material
supplied by Programmer does not comply with the Policy Statement, or if
Chancellor reasonably believes that some or all of a program, commercial or
other material is unsuitable or contrary to the public interest, it may suspend
or cancel such program, commercial or other material and shall provide written
notice to Programmer of such decision. Programmer shall provide programs only
in accordance with the Policy Statement and FCC requirements. All advertising
spots and promotional material or announcements shall comply with applicable
federal, state and local regulation and policies and the Policy Statement, and
shall be produced in accordance with quality standards established by
Chancellor.
13. Compliance with Copyright Act.
------------------------------
Programmer represents and warrants to Chancellor that
Programmer has full authority to broadcast its programming on the Jacksonville
Stations and the Programmer shall not broadcast any material in violation of
any law, rule, regulation or the Copyright Act. All music supplied by
Programmer shall be: (i) licensed by ASCAP, BMI or SESAC; (ii) in the public
domain; or (iii) cleared at the source by Programmer. Chancellor will maintain
as appropriate its own ASCAP, BMI and SESAC licenses for the performance of
Programmer's programs and Programmer shall reimburse Chancellor for the costs
of such licenses obtained by Chancellor within thirty (30) days
SFX and Chancellor
Jacksonville LMA
Page 10
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when paid. The right to use the programming and to authorize its use in any
manner shall be and remain vested in Programmer.
14. Payola.
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Programmer agrees that neither it nor its employees or agents
will 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 Programmer and merchants or
advertisers, unless the third party providing such compensation, gift or
gratuity 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 FCC requirements. Programmer agrees to execute and to
provide Chancellor with payola Affidavits from itself, and all of its employees
and agents who are involved with providing programming on the Jacksonville
Stations, at such times as Chancellor may reasonably request, substantially in
the form attached hereto as Attachment II.
15. Sales.
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Programmer shall retain all revenues from the sale of
advertising time within the programming it provides to Chancellor and pay all
expenses attributable thereto. Programmer may sell advertising, consistent with
applicable rules, regulations and the Policy Statement, on the Jacksonville
Stations in combination with any other broadcast stations of its choosing.
Programmer 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 Chancellor.
Chancellor shall retain all revenues from the sale of the Jacksonville
Stations' advertising during the hours each week in which Chancellor airs its
own nonentertainment programming.
16. Local Marketing Agreement Challenge.
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If this Agreement is challenged at the FCC, counsel for
Chancellor and counsel for Programmer shall defend the Agreement and the
parties' performance thereunder throughout all FCC proceedings with Programmer
and Chancellor each being responsible for its own costs. If portions of this
Agreement do not receive the approval of the FCC staff, then the parties shall
reform the Agreement subject to their respective reasonable business judgment
and advise of counsel or, at
SFX and Chancellor
Jacksonville LMA
Page 11
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Chancellor's or Programmer's option, seek reversal of the staff decision and
approval from the full Commission on appeal.
17. Confidential Review.
--------------------
Prior to providing any programming by Programmer to Chancellor
under this Agreement, Programmer shall acquaint Chancellor with the nature and
type of the programming to be provided. Chancellor, solely for the purpose of
ensuring Programmer's compliance with the law, FCC rules and the Jacksonville
Stations' policies, shall be entitled to review and pre-empt at its discretion
from time to time on a confidential basis any programming material and any other
documents it may reasonably request, including all rate cards and disclosure
statements related to Programmer's political advertising. Programmer shall
promptly provide Chancellor with copies of all correspondence and complaints
received from the public as well as copies of all program logs and promotional
materials.
18. Major Defaults: Termination.
----------------------------
18.1. Programmer's Major Defaults. The occurrence of any of
the following, after the expiration of the applicable cure periods, if any, will
be deemed to be a "Major Default" by Programmer under this Agreement:
(a) Programmer's failure to timely pay any of the
consideration provided for in Section 4 and the Payment Schedule annexed hereto
or other payments required hereunder;
(b) Except as otherwise provided for in this Agreement, the
failure of Programmer to supply the programs for broadcast on the Jacksonville
Stations in accordance with Section 2 hereof;
(c) Any termination of this Agreement by Programmer other than
as permitted in Section 18.4 or 18.5; or
(d) In the event of a voluntary filing by Programmer (or
involuntary filing with respect to Programmer not vacated with ninety (90) days
after such filing) of a petition for reorganization or dissolution under
federal bankruptcy laws or under substantially equivalent state laws.
18.2. Chancellor's Major Defaults. The occurrence of any of
the following, after the expiration of the applicable cure periods, if any, will
be deemed to be a "Major Default" by
SFX and Chancellor
Jacksonville LMA
Page 12
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Chancellor under this Agreement:
(a) Except as otherwise provided for in this Agreement, the
failure of Chancellor to broadcast the programs supplied by Programmer in
accordance with Section 2 hereof;
(b) Any termination of this Agreement by Chancellor other than
as permitted in Section 18.4 or 18.5; or
(c) In the event of a voluntary filing by Chancellor (or
involuntary filing with respect to Chancellor not vacated with ninety (90) days
after such filing) of a petition for reorganization or dissolution under federal
bankruptcy laws or under substantially equivalent state laws.
18.3. Cure Periods. The cure periods before any event listed
in Section 18.1 or 18.2 shall become a Major Default are as follows:
(a) Payment by Programmer. The consideration to be paid to
Chancellor must be received by Chancellor within five (5) days after Chancellor
gives written notice of non-payment to Programmer.
(b) Certain Matters. There shall be no cure period for:
(i) a termination by Programmer described in Section
18.1(c); or
(ii) a termination by Chancellor described in Section
18.2(b) hereof.
(c) Programs and Broadcast Matters. With respect to
Programmer's failure to provide programs referred to in Section 18.1(b) hereof
or Chancellor's failure to broadcast programs referred to in Section 18.2(a)
hereof, the period allowed for cure shall be three (3) business days from the
giving of written notice of such failure to the defaulting party by the
non-defaulting party.
(d) Other Matters. With respect to all matters capable of
being cured other than those described in Sections 18.3(a), 18.3(b) or 18.3(c)
above, the cure period shall be ten (10) business days after written notice to
the defaulting party is given by the non-defaulting party or, with respect to
matters that through the exercise of reasonable diligence cannot be cured
within such ten (10) day period, such longer period not to exceed ninety (90)
days as is reasonably necessary to effect such cure through the exercise of
reasonable diligence.
SFX and Chancellor
Jacksonville LMA
Page 13
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18.4. Termination Upon Occurrence of Major Default. Upon the
--------------------------------------------
occurrence and continuation of a Major Default the non-defaulting party may
terminate this Agreement by giving written notice to the defaulting party
within sixty (60) days of such occurrence, provided that the non-defaulting
party has not also committed a Major Default hereunder which has not been
waived. Such written notice shall specify a termination date which is not less
than seven (7) days nor more than ninety (90) days from the date such notice is
given. In the event the non-defaulting party does not exercise such right of
termination by giving such written notice within such sixty (60) day period,
then the Major Default giving rise to such right of termination shall be deemed
waived and the Agreement shall continue in full force and effect.
18.5. Termination Upon Failure of Consummation of Exchange
----------------------------------------------------
Agreement. Notwithstanding any other provision hereof, this Agreement may be
terminated by either party at any time following termination of the Exchange
Agreement.
19. Liabilities Upon Termination.
-----------------------------
(a) Programmer shall be solely responsible for all of its
liabilities, debts and obligations incident to its purchase of broadcast time
hereunder, including, without limitation, accounts payable and unaired
advertisements, but not for Chancellor's federal, state, and local tax
liabilities associated with Programmer's payments to Chancellor as provided
herein. Upon termination pursuant to Sections 18.4 or 18.5 hereto, Chancellor
shall be under no further obligation to make available to Programmer any
broadcast time or broadcast transmission facilities, provided that Chancellor
agrees that it will cooperate reasonably with Programmer to discharge in
exchange for reasonable compensation any remaining obligations of Programmer in
the form of air time following the termination date. At the date of
termination, Programmer shall return to Chancellor any equipment or property of
the Jacksonville Stations used by Programmer, its employees or agents, in
substantially the same condition as such equipment existed on the Commencement
Date, shall restore Chancellor's technical facilities to substantially the same
condition as such facilities existed on the Commencement Date, ordinary wear
and tear excepted, shall reassign to Chancellor all contracts and agreements
relating to the Jacksonville Stations listed on the Schedules to the Exchange
Agreement which were assumed by Programmer upon the Commencement Date, and
shall otherwise take such actions to restore to the extent then practicable the
parties hereto to their respective positions prior to the Commencement Date.
(b) Upon termination of this Agreement pursuant to this
Section 18 or as a result of the expiration of the term of this Agreement other
than by the Closing under the Exchange Agreement, each party shall be free to
pursue any and all remedies available to it at law, in equity or otherwise. All
amounts accrued or payable to Chancellor up to the date of termination which
have
SFX and Chancellor
Jacksonville LMA
Page 14
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not been paid shall be immediately due and payable. Programmer shall, in
addition to its other legal and equitable rights and remedies under this
Agreement or under applicable law, be entitled immediately to cease providing
any further programs to be broadcast on the Jacksonville Stations, and all
amounts which have been prepaid to Chancellor for any partial month beyond the
termination shall be immediately due and payable to Programmer. Programmer shall
return all confidential information with respect to the Jacksonville Stations to
Chancellor. Programmer shall reassign all of Chancellor's accounts receivable to
Chancellor. Programmer shall remit to Chancellor all amounts collected with
respect to Chancellor's accounts receivable within five (5) business days of
termination hereunder.
Upon termination, Programmer shall be responsible for debts
and obligations resulting from the use of the Jacksonville Stations' air time
and equipment by Programmer including, without limitation, accounts payable and
net barter balances in excess of Fifty Thousand Dollars ($ 50,000), relating to
the period on and after the date of this Agreement and up to the termination of
this Agreement and shall be entitled to the revenues and other credits for that
period.
20. No Format Changes.
------------------
Until such time has elapsed pursuant to Section 22.11 to
terminate this Agreement, Programmer shall not materially change the
entertainment format of the Jacksonville Stations.
21. Chancellor's Indemnification.
-----------------------------
Chancellor shall indemnify, defend, hold and save Programmer
harmless from and against any and all claims, losses, costs, liabilities,
damages, FCC forfeitures, and expenses, including counsel fees, of every kind,
nature, and description, including libel, slander, illegal competition or trade
practices, or infringement of trade marks or program titles, violation of
rights of privacy, and infringement of copyrights and proprietary rights
arising out of:
(a) Chancellor's operation of the Jacksonville Stations (not
including the operation of the Jacksonville Stations by Programmer) under this
Agreement, and
(b) breach of any warranty, representation, covenant,
agreement or obligation of Chancellor contained in this Agreement.
22. Programmer's Indemnification.
-----------------------------
SFX and Chancellor
Jacksonville LMA
Page 15
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Programmer shall indemnify, defend, hold and save Chancellor
harmless from and against any and all claims, losses, costs, liabilities,
damages, FCC forfeitures, and expenses, including counsel fees, of every kind,
nature, and description, including libel, slander, illegal competition or trade
practices, or infringement of trade marks or program titles, violation of
rights of privacy, and infringement of copyrights and proprietary rights
arising out of:
(a) the programming furnished by Programmer under this
Agreement,
(b) the actions or failure to act of its employees or agents
under this Agreement and
(c) breach of any warranty, representation, covenant,
agreement or obligation of Programmer contained in this Agreement.
23. Procedure for Indemnification.
------------------------------
The party seeking indemnification under this paragraph
("Indemnitee") shall give the party from whom it seeks indemnification
("Indemnitor") prompt notice, as provided herein, of the assertion of such a
claim provided, however, that the failure to give notice of a claim within a
reasonable time shall only relieve the Indemnitor of liability to the extent it
is materially prejudiced thereby. Promptly after receipt of written notice, as
provided herein, of a claim by a person or entity not a party to this
Agreement, the Indemnitor shall assume the defense of such claim; provided,
however, that:
(a) If the Indemnitor fails, within a reasonable time after
receipt of notice of such claim, to assume the defense thereof, the Indemnitee
shall have the right to undertake the defense, compromise, and settlement of
such claim on behalf of and for the account and risk of Indemnitor, subject to
the right of the Indemnitor (upon notifying the Indemnitee of its election to
do so) to assume the defense of such claim at any time prior to the settlement,
compromise, judgment, or other final determination thereof;
(b) If in the reasonable judgment of the Indemnitee, based
upon the advise of its counsel, a direct or indirect conflict of interest
exists between the Indemnitee and Indemnitor, the Indemnitee shall (upon
notifying the Indemnitor of its election to do so) have the right to undertake
the defense, compromise, and settlement of such claim on behalf of and for the
account and risk of Indemnitor (it being understood and agreed that the
Indemnitor shall not be entitled to assume the defense of such claim);
SFX and Chancellor
Jacksonville LMA
Page 16
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(c) If the Indemnitee in its sole discretion elects, it shall
(upon notifying the Indemnitor of its election to do so) be entitled to employ
separate counsel and to participate in the defense of such claim, but the fee
and expenses of counsel so employed shall (except as contemplated by clauses
(a) and (b) above) be borne solely by Indemnitee;
(d) The Indemnitor shall not settle or compromise any claim
or consent to the entry of any judgment that does not include as an
unconditional term thereof the grant by the claimant or plaintiff to each
Indemnitee of a release from any and all liability in respect thereof; and
(e) The Indemnitor shall not settle or compromise any claim
in any manner, or consent to the entry of any judgment, that could reasonably
be expected to have a material adverse effect on the Indemnitee.
24. Dispute Over Indemnification.
-----------------------------
If upon presentation of a claim for indemnity hereunder, the
Indemnitor does not agree that all, or part, of such claim is subject to the
indemnification obligations imposed upon it pursuant to this Agreement, it
shall promptly so notify the Indemnitee. Thereupon, the parties shall attempt
to resolve their dispute, including where appropriate reaching an agreement as
to that portion of the claim, if any, which both concede is subject to
indemnification. To the extent that the parties are unable to reach some
compromise within thirty (30) days thereafter, the parties shall be free to
pursue all appropriate legal and equitable remedies.
25. Programmer's Remedies for Operational Deficiencies.
---------------------------------------------------
Except as set forth in this Section 25, and except for
reductions in power or interruptions occurring between the hours of 12:00
midnight and 6:00 a.m. as a result of maintenance or repairs or during such
periods that the Jacksonville Stations are operating from its authorized
auxiliary antenna, if any of the normal broadcast transmissions of the
Jacksonville Stations are interrupted, interfered with, or in any way impaired
with so that the Jacksonville Stations are not operating at full licensed power
and antenna height or are off the air, or in the event that Chancellor preempts
Chancellor's programming, Programmer shall be entitled to an equitable
reduction in the amount of its monthly fee which is proportionate to the period
of time that the Jacksonville Stations' operations are deficient, the
Jacksonville Stations' programming is preempted or the Jacksonville Stations
are off the air.
SFX and Chancellor
Jacksonville LMA
Page 17
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26. Force Majeure.
--------------
Any failure or impairment of the Jacksonville Stations'
facilities or any delay or interruption in the broadcast of programs, or
failure at any time to furnish facilities, in whole or in part, for broadcast
due to Acts of God, strikes, lockouts, material or labor restrictions by any
governmental authority, civil riot, floods and any other cause not reasonably
within the control of Chancellor (including any obligation of Chancellor to
reduce power or suspend operation to avoid occupational exposure to harmful RF
radiation), shall not constitute a breach of this Agreement and Chancellor will
not be liable to Programmer.
27. Other Agreements.
-----------------
During the term of this Agreement, Chancellor will not enter
into any other local marketing, program provision, local management or similar
agreement with any third party with respect to the Jacksonville Stations.
28. Assignment.
-----------
This Agreement shall be binding upon and inure to the benefit
of the parties hereto, their successors and assigns, including specifically any
purchaser of the Jacksonville Stations from Chancellor. Neither party may
assign its rights without the prior written consent of the other party which
consent shall not be unreasonably withheld.
29. Entire Agreement.
-----------------
This Agreement, and the Attachments hereto, embody the entire
agreement and understanding of the parties and supersede any and all prior
agreements, arrangements and understandings relating to matters provided for
herein. No amendment, waiver of compliance with any provision or condition
hereof, or consent pursuant to this Agreement will be effective unless
evidenced by an instrument in writing signed by the parties.
30. Taxes.
------
Chancellor and Programmer shall each pay its own ad valorem
taxes, if any, which may be assessed on such party's respective personal
property for the periods that such items are owned by such party. Each party
shall be responsible for any sales tax imposed on advertising aired during the
programming provided by that party.
SFX and Chancellor
Jacksonville LMA
Page 18
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31. Headings.
---------
The headings are for convenience only and will not control or
affect the meaning or construction of the provisions of this Agreement.
32. Governing Law.
--------------
The obligations of Chancellor and Programmer are subject to
applicable federal, state and local law, rules and regulations, including, but
not limited to, the Act and the Rules and Regulations of the FCC. The
construction and performance of the Agreement will be governed by the laws of
the State of Florida.
33. Notices.
--------
Any notice, demand or request required or permitted to be
given under the provisions of this Agreement shall be in writing and shall be
deemed to have been duly delivered and received on the date of personal
delivery; on the third day after deposit in the U.S. mail if mailed by
registered or certified mail, postage prepaid and return receipt requested; on
the day after delivery to a nationally recognized overnight courier service if
sent by an overnight delivery service for next morning delivery and shall be
addressed to the following addresses:
To Chancellor: Chancellor Broadcasting Company
12655 N. Central Expressway, Suite 321
Dallas, Texas 75243
Attention: Mr. Steven Dinetz
Telecopier number: (214) 239-0220
Copy to: Matthew L. Leibowitz, Esq.
Leibowitz & Associates
One S.E. Third Avenue, Suite 1450
Miami, FL 33131
Telephone number: (305) 530-1322
Telecopier number: (305) 530-9417
To Programmer: Robert F.X. Sillerman
SFX Broadcasting, Inc.
SFX and Chancellor
Jacksonville LMA
Page 19
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150 E. 58th Street
New York, NY 10155
Telecopier number: (212) 753-3188
Copy to: Richard A. Liese, Esq.
Chancellor Broadcasting, Inc.
150 E. 58th Street
New York, NY 10155
Telecopier number: (212) 753-3188
The date of any such notice and service thereof shall be
deemed to be:
(a) the day of delivery if hand delivered or delivered by
overnight courier;
(b) the day of delivery as indicated on the return receipt if
dispatched by mail, or
(c) the date of telecopy transmission as indicated on the
telecopier transmission report provided that any telecopy transmission shall
not be effective unless a paper copy sent by
overnight courier on the date of the telecopy transmission is delivered.
Either party may change its address for the purpose of notice
by giving notice of such change in accordance with the provisions of this
paragraph.
34. Severability.
-------------
If any provision of this Agreement or the application thereof
to any person or circumstances shall be invalid or unenforceable to any extent,
the remainder of this Agreement and the application of such provision to other
persons or circumstances shall not be affected thereby and shall be enforced to
the greatest extent permitted by law.
35. Certifications.
---------------
(a) Control of Stations. Chancellor hereby verifies that it
will maintain control of the Jacksonville Stations and their facilities,
including specifically control over the Jacksonville Stations' finances,
personnel and programming during the term of this Agreement.
(b) Compliance with Ownership Rules. Programmer hereby
verifies that the arrangement contemplated by this Agreement complies with the
provisions of Section 73.3555(a)
SFX and Chancellor
Jacksonville LMA
Page 20
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of the rules and regulations of the FCC.
36. No Joint Venture.
-----------------
The parties agree that nothing herein shall constitute a
joint venture or partnership between them.
37. Beneficiaries.
--------------
Nothing in this Agreement, express or implied, is intended to
confer on any person other than the parties hereto and their respective
successors and assigns any rights, remedies, obligations, or liabilities under
or by reason of this Agreement.
SFX and Chancellor
Jacksonville LMA
Page 21
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
the day and year first above written.
CHANCELLOR RADIO BROADCASTING COMPANY
By: ______________________________
Eric W. Neumann
Sr. Vice President of Finance
SFX BROADCASTING, INC.
By: ______________________________
Robert F. X. Sillerman
Executive Chairman & CEO
SFX and Chancellor
Jacksonville LMA
Page 22
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PAYMENT SCHEDULE
In exchange for the air time supplied to Programmer pursuant to this
Agreement, Programmer shall pay SFX Three Hundred Seventy Five Thousand Dollars
($375,000) per month until the Jacksonville Stations LMA goes into effect. Once
the Jacksonville Stations LMA goes into effect, the amounts payable to SFX
shall be reduced to Twenty Five Thousand Dollars ($25,000) per month. If the
Jacksonville Stations LMA is implemented before November 1, 1996, the monthly
payment obligation after November 1, 1996 shall be zero dollars ($0.00). In the
event that the Jacksonville Stations LMA is never entered into, the monthly
payments will remain at Three Hundred Seventy Five Thousand Dollars ($375,000)
per month. The first monthly payment to SFX is due and payable on July 1, 1996,
and each successive payment is due on the first day of each month thereafter.
The monthly fee shall be reduced pro rata for any partial month at the
beginning or end of the term of this Agreement.
SFX and Chancellor
Jacksonville LMA
Page 23
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SCHEDULE B
EMPLOYEES
SFX and Chancellor
Jacksonville LMA
Page 24
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ATTACHMENT I
BROADCAST STATIONS PROGRAMMING POLICY STATEMENT
Programmer agrees to cooperate with Chancellor in the broadcasting of
programs of the highest possible standard of excellence and for this purpose to
observe the following regulations in the preparation, writing and broadcasting
of its programs. Further Programmer agrees that all material broadcast on the
Jacksonville Stations shall comply with all federal, state and local applicable
laws, rules and regulation.
I. No Plugola or Payola.
---------------------
The broadcast of any material for which any money, service or
other valuable consideration is directly or indirectly paid, or promised to or
charged or accepted by, the Programmer, from any person, shall be prohibited,
unless, at the time the same is broadcast, it is announced as paid for or
furnished by such person.
II. Political Broadcasting.
-----------------------
Within thirty (30) days of the Commencement Date, Programmer
shall provide Chancellor with a written political advertising disclosure
statement which fully and accurately discloses how the Programmer sells
programming and advertising time and which makes parties purchasing political
programming and advertising time fully aware of the lowest unit charge
provisions of Section 315 of the Act. In addition, at least thirty (30) days
before the start of any primary or election campaign, Programmer will clear
with the Jacksonville Stations' general managers the rates Programmer will
charge for the time to be sold to candidates to make certain that the rate
charges is in conformance with the applicable law and Stations policy.
III. Required Announcements.
-----------------------
Programmer shall broadcast (i) an announcement in a form
satisfactory to Chancellor at the beginning of each hour to identify the
Jacksonville Stations and (ii) any other announcements that may be required by
law, regulation or Chancellor's Stations policy.
IV. No Illegal Announcements.
-------------------------
No announcements, broadcasts or promotions prohibited by
federal, state or local law shall be made over the Jacksonville Stations. This
prohibition specifically includes, but is not
SFX and Chancellor
Jacksonville LMA
Page 25
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limited to, any and all programming or other broadcast material concerning
tobacco or alcohol related products which are unlawful. The airing of any
broadcast material concerning contests, lotteries or games must be conducted in
accordance with allapplicable law, including FCC rules and regulations. Any
obscene, indecent, or fraudulent programming is prohibited. All sponsored
programming or other broadcast material must be identified in accordance with
applicable law, including FCC rules and regulations.
V. Chancellor Discretion Paramount.
--------------------------------
In accordance with Chancellor's responsibility under the
Communications Act of 1934, as amended, and the Rules and Regulations of the
Federal Communications Commission, Chancellor reserves the right to reject or
terminate any advertising proposed to be presented or being presented over the
Jacksonville Stations, which is in conflict with Jacksonville Stations'
policies or which Chancellor or its general manager's reasonable judgement
would not serve the public interest.
In any case where questions of policy or interpretation arise,
Programmer should submit the same to Chancellor for decision before making any
commitments in connection therewith.
SFX and Chancellor
Jacksonville LMA
Page 26
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ATTACHMENT II
PAYOLA AFFIDAVIT
City of_____________________________)
County of___________________________) ss.:
State of____________________________)
I,_________________________, having first been duly sworn, hereby
state that I have read and will comply with the provisions of Section 317 and
507 of the Communications Act of 1934, as amended, copies of which are attached
hereto, I also have read and will comply with the provisions of the Commission's
Sponsorship Identification Rule (73.1212), a copy of which is attached hereto.
I also will comply with the policy of this Station, _________________
(insert call letters here), which prohibits every employee
having any voice in the selection of broadcast matter from (a) engaging in any
outside business or economic activity which would create a conflict of interest
in the selection of broadcast matter; (b) accepting any favors, loans,
entertainment or other consideration from persons seeking the airing of any
broadcast matter in return thereof, and (c) promoting over the air (except by
means of an appropriate commercial announcement) any activity or matter in which
the employee has a direct or indirect financial interest.
I understand that receiving or agreeing to receive anything of value
from a third party for the broadcast of any program material over the Stations
is a crime, unless the agreed payment is disclosed to the Stations before
broadcast of the program material. This crime, commonly called "payola", is
punishable by one year in prison and a fine of up to $10,000.
During the past year, I have not been promised or paid anything of
value directly or indirectly by a third party for the broadcast of any
programming material over the Stations.
_____________________________________
Affiant
SFX and Chancellor
Jacksonville LMA
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The foregoing instrument was acknowledged before me this _____________
day of ______________________, 1996 by _______________________________________,
who is personally known to me or who has produced as identification.
___________________________________
Notary Public
My commission expires: _____________________________________