CHANCELLOR RADIO BROADCASTING COMPANY
LOCAL MARKETING AGREEMENT
WITH
WBLI, INC.
WBLI-FM, INC.
WHFM, INC.
WBAB, INC.
WGBB, INC.
FOR
WBAB-FM, BABYLON, NEW YORK
WBLI-FM, PATCHOGUE, NEW YORK
WGBB-AM, FREEPORT, NEW YORK
WHFM-FM, SOUTHAMPTON, NEW YORK
TABLE OF CONTENTS
1. Agreement Term...........................................................2
2. Programmer's Purchase of Airtime and Provision of Programming............2
3. Representations..........................................................2
4. Consideration............................................................3
5. Collection of Accounts Receivable........................................3
6. SFX Control of the Stations..............................................4
7. Programmer Responsibility................................................5
8. Contracts................................................................6
9. Employees................................................................7
10. Public Affairs Programming...............................................8
11. Additional License Obligations...........................................8
12. Broadcast Stations Programming Policy Statement..........................8
13. Compliance with Copyright Act............................................9
14. Payola...................................................................9
15. Sales....................................................................9
16. Local Marketing Agreement Challenge.....................................10
17. Confidential Review.....................................................10
18. Major Defaults: Termination.............................................10
18.1. Programmer's Major Defaults. ...................................10
18.2. SFX's Major Defaults.............................................11
18.3. Cure Periods.....................................................11
18.4. Termination Upon Occurrence of Major Default.....................12
18.5. Termination Upon Failure of Consummation of Exchange Agreement...12
i
19. Liabilities Upon Termination. .......................................12
20. No Format Changes....................................................13
21. SFX's Indemnification................................................13
22. Programmer's Indemnification.........................................14
23. Procedure for Indemnification........................................14
24. Dispute Over Indemnification.........................................15
25. Programmer's Remedies for Operational Deficiencies...................15
26. Force Majeure........................................................16
27. Other Agreements.....................................................16
28. Assignment...........................................................16
29. Entire Agreement.....................................................16
30. Taxes................................................................16
31. Headings.............................................................17
32. Governing Law........................................................17
33. Notices..............................................................17
34. Severability.........................................................18
35. Certifications.......................................................18
(a) Control of Stations.........................................18
(b) Compliance with Ownership Rules.............................19
36. No Joint Venture.....................................................19
37. Beneficiaries........................................................19
PAYMENT SCHEDULE..............................................................22
ii
SCHEDULE B - EMPLOYEES........................................................24
ATTACHMENT I - BROADCAST STATIONS PROGRAMMING POLICY STATEMENT................25
I. No Plugola or Payola........................................25
II. Political Broadcasting......................................25
III. Required Announcements......................................25
IV. No Illegal Announcements....................................25
V. SFX Discretion Paramount....................................26
ATTACHMENT II - PAYOLA AFFIDAVIT..............................................27
iii
LOCAL MARKETING AGREEMENT
THIS LOCAL MARKETING AGREEMENT ("LMA" or "Agreement"), made as of July 1, 1996
by and between WBLI, Inc., a New York corporation, WBLI-FM, Inc., a Delaware
corporation, WHFM, Inc., a New York Corporation, WBAB, Inc., a New York
corporation, and WGBB, Inc., a New York corporation (collectively, "SFX" or
"Owner" or "Licensee") and CHANCELLOR RADIO BROADCASTING COMPANY, ("Chancellor"
or "Programmer") 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
("Purchase 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. That Purchase Agreement is hereafter
referred to as the "Florida Agreement".
WHEREAS, SFX wishes to retain Chancellor to provide programming for the
Stations pursuant to the terms and conditions set forth in this Agreement and in
conformity with the Stations' policies and practices and the Federal
Communications Commission's ("FCC") rules and regulations concerning such
arrangements;
WHEREAS, Chancellor will broadcast such programming and sell
advertising that is in conformance with the Stations' policies and all FCC rules
and regulations, including the requirement that the ultimate control of the
Stations be maintained by SFX; and
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.
SFX and Chancellor
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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.
---------------
The term of this Agreement will begin on July 1, 1996
("Commencement Date") and will continue until the Programmer acquires the assets
of the Long Island Stations and the Owner acquires the assets of the
Jacksonville 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.
--------------------------------------------------------------
(a) During the term of this Agreement, Programmer shall
transmit programming, including commercials, that it produces or owns to the
Long Island Stations twenty-four (24) hours per day Monday through Friday and
for forty-eight (48) hours during Saturday through Sunday, provided that SFX may
broadcast up to two (2) hours of programming for the Long Island Stations which
is aimed at serving the needs and interests of the Long Island 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, SFX hereby grants to Programmer the right for the term of this
Agreement to use substantially all of the equipment located in the Stations'
studios and currently used by SFX for broadcasting programs on the Stations. In
addition, Programmer shall have, and SFX hereby grants to Programmer, a license
to enter on the premises currently occupied by the Stations for the purpose of
producing its programming hereunder; provided, however, that SFX shall maintain,
for its use, sufficient space at the Stations' studios to enable SFX to conduct
its operations and originate programming.
Accordingly, Programmer shall hold SFX 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. Programmer shall also be
responsible for and shall reimburse SFX for any damage to the property of SFX
caused by Programmers' employees or agents.
3. Representations.
----------------
Each of SFX 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
SFX and Chancellor
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warrants to SFX that Programmer is an experienced radio broadcast station owner
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.
--------------
During the term of this Agreement, Programmer shall pay SFX
the payments set forth on the Payment Schedule annexed hereto.
5. Collection of Accounts Receivable.
----------------------------------
(a) The accounts receivable of the Long Island Stations
generated prior to the Commencement Date (the "Pre-LMA Receivables") shall be
and remain the property of SFX. Within fifteen (15) days after the Commencement
Date, SFX shall furnish Chancellor with a list (certified by the Chief Financial
Officer of SFX to be a true and complete list) of all accounts receivable of SFX
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 SFX, 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 SFX), which are in payment for
advertising broadcast by the Station 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 SFX's current billing and collection practices and in
the ordinary course of the business, to assist SFX in the collection of any
outstanding Pre-LMA Receivables; provided, however, that, notwithstanding the
foregoing, Chancellor shall be under no obligation to commence litigation,
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 SFX'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
SFX and Chancellor
Local Marketing Agreement
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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) SFX agrees to remit to Chancellor within 5 business days
after the end of each month, any amounts received by SFX 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. SFX Control of the Stations.
----------------------------
(a) SFX will have full authority, power and control over the
management and operations of the Long Island Stations during the term of this
Agreement. SFX will bear all responsibility for the Long Island 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
Long Island Stations, including the right to preempt programming which in its
good faith judgment it deems unsuitable or contrary to the public interest. SFX
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 SFX in complying with all FCC rules
and regulations.
(b) SFX retains ultimate control over the Long Island Stations
and their premises. Accordingly, all employees of Programmer present at the Long
Island Stations or on their premises must comply with the policies and rules
promulgated by SFX. In no event shall Programmer, or Programmer's employees,
represent, depict, describe or portray Programmer as the Licensee of the Long
Island Stations. To this end, all employees of Programmer, whose work involves
the Long Island Stations, shall be informed as to SFX's ultimate control over
the Long Island Stations and Programmer's subordinate capacity, and all printed
materials and promotional announcements shall accurately describe all of the
roles and responsibilities of SFX and Programmer.
(c) The Long Island Stations' transmission equipment shall be
maintained by SFX 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
SFX and Chancellor
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equipment and its compliance with applicable laws and regulations shall be made
at the sole expense of SFX in a timely fashion.
(d) SFX shall employ at its expense a management-level
employee at the Long Island Stations and such other person for each Long Island
Station as necessary to fulfill SFX'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 SFX. SFX shall be
responsible for the salaries, taxes, insurance and related costs for all
personnel it employs at the Long Island Stations.
(e) SFX shall pay all regulatory fees, file all necessary
applications, maintain the Long Island Stations' local public inspection files
within the Long Island Stations' communities of license and shall prepare and
place in such inspection file all required documents including, but not limited
to the Long Island Stations' quarterly issues and program lists on a timely
basis.
7. Programmer Responsibility.
--------------------------
(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 Long Island Stations (including
telephone expenses and expenses related to sales, marketing, promotion,
advertising, billing and collections, and traffic), except that SFX shall be
responsible for the costs as provided in Section 6 hereof. Programmer shall
cooperate fully with SFX 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 Long Island 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
Long Island Stations or its operations, Programmer shall promptly notify SFX of
the same.
(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 Long Island Stations to
transmit any required tests of the Emergency Broadcast System or successor
Emergency Alert System at such times as are directed by SFX.
(d) Political Advertising and Announcements. Programmer shall
maintain and deliver to SFX all records and information required by the FCC to
be placed in the public inspection
SFX and Chancellor
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files of the Long Island 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 Long Island 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 Licensee 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 the Licensee).
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 Long Island 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 Long Island 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
Licensee so that appropriate records can be placed in the Long Island 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, Licensee 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 SFX, all of the Long Island 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 Long Island Stations so as to assist SFX in the
preparation of any required programming reports, and provide other information
to enable SFX to prepare other records, reports and logs required by the FCC or
other local, state or federal governmental agencies.
SFX and Chancellor
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8. Contracts.
----------
Programmer shall perform and discharge the obligations of SFX
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 Long Island 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 SFX in any way except with SFX's
prior written approval.
9. Employees.
----------
Schedule B hereto contains a listing of the name, salary or
compensation and job description of all employees of the Long Island Stations as
of June 17, 1996. Pursuant to Section 14.7 of the Exchange Agreement as of the
Commencement Date, the current Long Island Stations employees will become
employees of the Programmer; however, Programmer may terminate current employees
of the Long Island 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 Long Island 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). Owner 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
Owner be liable for any severance amounts exceeding One Hundred Thousand Dollars
($100,000). Owner agrees to maintain at its own expense one management level
employee and one other employee for each Long Island Station.
Commencing subsequent to the execution of the LMAs, Owner shall make
available to each of the Long Island Stations' personnel during normal business
hours for Programmer to interview prior to the Commencement Date. Programmer
shall notify Owner of the names of employees to whom Programmer shall offer
employment (herein referred to as "Transferred Employees"). Owner hereby
consents to Programmer making such offers of employment relating to the Long
Island Stations subject to the effectiveness of the LMAs between the parties.
Owner 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
SFX and Chancellor
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shall submit confirmation letters to the Long Island 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 Owner, 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.
---------------------------
Notwithstanding any other provision of this Agreement,
Programmer recognizes that SFX has certain obligations to broadcast programming
to meet the needs and interests of the community of license for the Long Island
Stations. SFX 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 SFX 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, SFX may broadcast
public affairs programming as outlined in Section 2 hereof. SFX 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.
-------------------------------
Although both parties shall cooperate in the broadcast of
emergency information over the Stations, SFX 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 SFX, is of overriding public
importance. SFX shall also coordinate with Programmer the Long Island Stations'
hourly station identification announcements to be aired in accordance with FCC
rules. SFX shall continue to maintain a main studio, as that term is defined by
the FCC, within each of the Long Island Stations' principal community contours
and shall staff it as required by the FCC. SFX shall be responsible for the
salaries, taxes, insurance and related costs for all personnel it employs at the
Long Island Stations and shall maintain insurance at its present levels covering
the Long Island Stations' transmission facilities. In addition, SFX shall pay
any federal regulatory fees, maintain its local public inspection file within
the Long Island 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. SFX shall also
receive and respond to telephone inquiries from the general public. Programmer
shall provide SFX with information with respect to certain of Programmer's
programs which may be included in SFX's quarterly issues and programs
SFX and Chancellor
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lists.
12. Broadcast Stations Programming Policy Statement.
------------------------------------------------
SFX 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 SFX 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 SFX
reasonably determines that a program, commercial or other material supplied by
Programmer does not comply with the Policy Statement, or if SFX 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 SFX.
13. Compliance with Copyright Act.
------------------------------
Programmer represents and warrants to SFX that Programmer has
full authority to broadcast its programming on the Long Island 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, SESAC or BMI; (ii) in the public domain; or (iii) cleared at
the source by Programmer. SFX will maintain as appropriate its own ASCAP, BMI
and SESAC licenses for the performance of Programmer's programs and Programmer
shall reimburse SFX for the costs of such licenses obtained by SFX within thirty
(30) days 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.
-------
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
SFX and Chancellor
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having paid for or furnished such Consideration, in accordance with the
Communications Act and FCC requirements. Programmer agrees to execute and to
provide SFX with payola Affidavits from itself, and all of its employees and
agents who are involved with providing programming on the Long Island Stations,
at such times as SFX may reasonably request, substantially in the form attached
hereto as Attachment II.
15. Sales.
------
Programmer shall retain all revenues from the sale of
advertising time within the programming it provides to SFX and pay all expenses
attributable thereto. Programmer may sell advertising, consistent with
applicable rules, regulations and the Policy Statement, on the Long Island
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 SFX. SFX
shall retain all revenues from the sale of the Long Island Stations' advertising
during the hours each week in which SFX airs its own nonentertainment
programming.
16. Local Marketing Agreement Challenge.
------------------------------------
If this Agreement is challenged at the FCC, counsel for SFX
and counsel for Programmer shall defend the Agreement and the parties'
performance thereunder throughout all FCC proceedings with Programmer and SFX
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'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 SFX under
this Agreement, Programmer shall acquaint SFX with the nature and type of the
programming to be provided. SFX, solely for the purpose of ensuring Programmer's
compliance with the law, FCC rules and the Long Island 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 SFX
with copies of all correspondence and
SFX and Chancellor
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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 Long Island
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. SFX'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 under this Agreement:
(a) Except as otherwise provided for in this Agreement, the
failure of SFX to broadcast the programs supplied by Programmer in accordance
with Section 2 hereof;
(b) Any termination of this Agreement by SFX other than as
permitted in Section 18.4 or 18.5; or
(c) In the event of a voluntary filing by SFX (or involuntary
filing with respect to SFX 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
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shall become a Major Default are as follows:
(a) Payment by Programmer. The consideration to be paid to SFX
must be received by SFX within five (5) days after SFX 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 SFX 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 SFX'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.
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.
-----------------------------
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(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 SFX's federal, state, and local tax liabilities
associated with Programmer's payments to SFX as provided herein. Upon
termination pursuant to Sections 18.4 or 18.5 hereto, SFX shall be under no
further obligation to make available to Programmer any broadcast time or
broadcast transmission facilities, provided that SFX 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 SFX any equipment or property of the Long Island Stations used by
Programmer, its employees or agents, in substantially the same condition as such
equipment existed on the Commencement Date, shall restore SFX's technical
facilities to substantially the same condition as such facilities existed on the
Commencement Date, ordinary wear and tear excepted, shall reassign to SFX all
contracts and agreements relating to the Long Island 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 SFX up to the date of termination which have 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 Long Island Stations, and all amounts which have been
prepaid to SFX 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 Long Island Stations to the SFX. Programmer
shall reassign all of SFX's accounts receivable to SFX. Programmer shall remit
to SFX all amounts collected with respect to SFX'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 Long Island 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.
------------------
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Until such time has elapsed pursuant to Section 22.11 to
terminate this Agreement, Programmer shall not materially change the
entertainment format of the Long Island Stations.
21. SFX's Indemnification.
----------------------
SFX 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) SFX's operation of the Long Island Stations (not including
the operation of the Long Island Stations by Programmer) under this Agreement,
and
(b) breach of any warranty, representation, covenant,
agreement or obligation of SFX contained in this Agreement.
22. Programmer's Indemnification.
-----------------------------
Programmer shall indemnify, defend, hold and save SFX 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
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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);
(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
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Local Marketing Agreement
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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 Long Island Stations are operating from its authorized
auxiliary antenna, if any of the normal broadcast transmissions of the Long
Island Stations are interrupted, interfered with, or in any way impaired with so
that the Long Island Stations are not operating at full licensed power and
antenna height or are off the air, or in the event that SFX 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 Long Island Stations' operations are deficient, the Long Island
Stations' programming is preempted or the Long Island Stations are off the air.
26. Force Majeure.
--------------
Any failure or impairment of the Long Island 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 SFX (including any obligation of SFX to reduce power or
suspend operation to avoid occupational exposure to harmful RF radiation), shall
not constitute a breach of this Agreement and SFX will not be liable to
Programmer.
27. Other Agreements.
-----------------
During the term of this Agreement, SFX will not enter into any
other local marketing, program provision, local management or similar agreement
with any third party with respect to the Long Island Stations.
28. Assignment.
-----------
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This Agreement shall be binding upon and inure to the benefit
of the parties hereto, their successors and assignees, including specifically
any purchaser of the Long Island Stations from SFX. 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.
------
SFX 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.
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 SFX 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 New York.
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
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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 Programmer: 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 SFX: Robert F.X. Sillerman
SFX Broadcasting, Inc.
150 E. 58th Street
New York, NY 10155
Telecopier number: (212) 753-3188
Copy to: Richard A. Liese, Esq.
SFX 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;
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(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. SFX hereby verifies that it will
maintain control of the Long Island Stations and their facilities, including
specifically control over the Long Island 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) 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.
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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: ______________________________
Steven Dinetz
President
WBLI, Inc.
By: ______________________________
Robert F. X. Sillerman
Executive Chairman & CEO
WBLI-FM, Inc.
By: ______________________________
Robert F. X. Sillerman
Executive Chairman & CEO
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WHFM, Inc.
By: ______________________________
Robert F. X. Sillerman
Executive Chairman & CEO
WBAB, Inc.
By: ______________________________
Robert F. X. Sillerman
Executive Chairman & CEO
WGBB, Inc.
By: ______________________________
Robert F. X. Sillerman
Executive Chairman & CEO
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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.
Long Island LMA & Facility Fee
Monthly LMA Fee - Jul $ 375,000
Monthly LMA Fee - Aug $ 25,000
Monthly LMA Fee - Sep $ 25,000
Monthly LMA Fee - Oct $ 25,000
Monthly LMA Fee - Nov $ 0
Technical:
Salaries - Engineers/Managers $ 6,567
Utilities - Transmitter Sites $ 12,300
Maintenance - Transmitter Sites $ 3,108
Leases - Transmitter Sites $ 3,275
Total Technical $ 25,250
General & Administrative:
Salaries - Receptionist $ 1,917
Payroll - 8.5% Average $ 558
Health Insurance estimate $ 750
Office/Studio Rent $ 1,258
Office/Studio Maintenance $ 3,958
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Office/Studio Utilities $ 0
Office/Studio Tax $ 0
Property Tax $ 8,567
General Insurance $ 7,167
Workmans Comp (3 employees est.) $ 200
Total General and Administrative $ 24,375
Monthly Facility Fee $ 49,625
Annualized Facility Fee $ 595,498
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SCHEDULE B
EMPLOYEES
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ATTACHMENT I
BROADCAST STATIONS PROGRAMMING POLICY STATEMENT
Programmer agrees to cooperate with SFX 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 Long
Island 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 SFX 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 Long Island
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 SFX at the beginning of each hour to identify the Long Island
Stations and (ii) any other announcements that may be required by law,
regulation or SFX's Stations policy.
IV. No Illegal Announcements.
-------------------------
No announcements, broadcasts or promotions prohibited by
federal, state or local law shall be made over the Long Island Stations. This
prohibition specifically includes, but is not limited
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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 all applicable 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. SFX Discretion Paramount.
-------------------------
In accordance with SFX's responsibility under the
Communications Act of 1934, as amended, and the Rules and Regulations of the
Federal Communications Commission, SFX reserves the right to reject or terminate
any advertising proposed to be presented or being presented over the Long Island
Stations, which is in conflict with Long Island Stations' policies or which SFX
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 SFX for decision before making any
commitments in connection therewith.
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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
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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: _____________________________________