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EXHIBIT 10.37
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ASSET EXCHANGE AGREEMENT
AMONG
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES,
CHANCELLOR MEDIA LICENSEE COMPANY
AND
SFXTX LIMITED PARTNERSHIP
DATED AS OF MAY __, 1998
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TABLE OF CONTENTS
PAGE
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SCHEDULES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vi
ARTICLE I. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II. EXCHANGE OF ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.1. Exchange of Personal Property, Records and Owned Real Property. . . . . . . . . . . . . . . . . . . . . . . . 10
2.2. Exchange of Real Property Leases. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.3. Exchange of Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.4. Exchange of Station Licenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.5. Exchange of Intellectual Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.6. Cash Payment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.7. Allocation of Values. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.8. Excluded Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.9. Assumption of Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF SFX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.1. Organization and Standing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.2. Authorization of Agreement; No Breach. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.3. Qualification as Assignor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.4. Absence of Conflicting Orders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.5. Absence of Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.6. Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.7. Title. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
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ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF CHANCELLOR AND CHANCELLOR LICENSEE . . . . . . . . . . . . . . . . . . 17
4.1. Title. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE V. COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.1. Employees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.2. Post-Closing Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE VI. CONDITIONS TO THE PARTIES' OBLIGATION TO CLOSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.1. Long Island/Jacksonville Exchange Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.2. Capstar/SFX Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.3. Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.4. Deliveries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE VII. CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
7.1. Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
7.2. Adjustments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
7.3. Documents to be Delivered by Chancellor and Chancellor Licensee. . . . . . . . . . . . . . . . . . . . . . . 22
7.4. Documents to be Delivered by SFX. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE VIII. TRANSFER TAXES; FEES AND EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
8.1. Transfer Taxes and Similar Charges. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
8.2. Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE IX. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
9.1. Indemnification by Chancellor and Chancellor Licensee. . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
9.2. Indemnification by SFX. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
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9.3. Survival of Covenants, Representations and Warranties. . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
9.4. Indemnification Procedures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE X. OTHER PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
10.1. Publicity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
10.2. Benefit and Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10.3. No Third-Party Beneficiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10.4. Nature of Representations and Warranties: Entire Agreement, Amendments, etc. . . . . . . . . . . . . . . . . 29
10.5. Choice of Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.6. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.7. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.8. Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
10.9. Arbitration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
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SCHEDULES
1.1 Houston Contracts
1.2 Houston Intellectual Property
1.3 Houston Personal Property
1.4 Houston Real Property Leases
1.5 Houston Station Licenses
1.6 Jacksonville Contracts
1.7 Jacksonville Intellectual Property
1.8 Jacksonville Owned Real Property
1.9 Jacksonville Personal Property
1.10 Jacksonville Real Property Leases
1.11 Jacksonville Station Licenses
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ASSET EXCHANGE AGREEMENT
ASSET EXCHANGE AGREEMENT, dated as of May ___, 1998, among
Chancellor Media Corporation of Los Angeles, a Delaware corporation
("Chancellor"), Chancellor Media Licensee Company, a Delaware corporation
("Chancellor Licensee") and SFXTX Limited Partnership, a Delaware limited
partnership ("SFX").
WHEREAS, Chancellor and Capstar Broadcasting Corporation, a
Delaware corporation ("Capstar") are parties to an agreement, dated February
20, 1998 (as such agreement may be amended from time to time, the "Master
Agreement"), under which Chancellor and Capstar agreed to exchange, or to cause
their subsidiaries to exchange, certain radio stations pursuant to the terms
and conditions contained in the Master Agreement;
WHEREAS, as part of the Master Agreement, the parties have
agreed to exchange the Jacksonville Stations (as defined below) plus cash in
the amount of Ninety Million Two Hundred and Fifty Thousand Dollars
($90,250,000), for the Houston Station (as defined below);
WHEREAS, Chancellor owns all of the assets used in, held for
use in connection with or necessary for the conduct of the business or
operations of radio stations WAPE-FM and WFYV(FM) (the "Jacksonville
Stations");
WHEREAS, Chancellor Licensee holds the licenses, permits and
authorizations issued by the Federal Communications Commission (the "FCC") for
the operation of the Jacksonville Stations;
WHEREAS, SFX owns all of the assets used in, held for use in
connection with or necessary for the conduct of the business or operations, and
holds the licenses, permits and authorization issued by the FCC for the
operation, of radio station KODA(FM), Houston (the "Houston Station");
WHEREAS, Chancellor and Chancellor Licensee, on the one hand,
and SFX on the other, desire to contemporaneously exchange certain property and
assets used in, held for use in connection with or necessary for the conduct of
the business or operations of the Jacksonville Stations and the Houston Station
(collectively, the "Stations"); and
WHEREAS, Chancellor and Chancellor Licensee, on the one hand,
and SFX on the other, intend to transfer the Stations in a transaction that
will qualify to the maximum extent permissible as a multiple asset "like-kind
exchange" under Section 1031 of the Code (as defined below), and each of
Chancellor, Chancellor Licensee and SFX are willing to take such steps as are
necessary to enable the transactions contemplated hereby to so qualify.
NOW, THEREFORE, in consideration of the mutual covenants,
representations and warranties made herein, and of the mutual benefits to be
derived hereby, the parties hereto agree as follows:
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ARTICLE I.
DEFINITIONS
Unless otherwise stated in this Agreement, the following terms
when used herein shall have the meanings assigned to them below.
1.1. "Accounts Receivable" shall mean the rights to cash
payments for the sale of advertising time by the Stations prior to the Cut-Off
Time.
1.2. "Affiliate" shall mean a Person that directly, or
indirectly through one or more intermediaries, controls, or is controlled by,
or is under common control with, the Person specified.
1.3. "Agreement" shall mean this Asset Exchange Agreement.
1.4. "Business Day" shall mean every day of the week
excluding Saturdays, Sundays and Federal holidays.
1.5. "Closing Date" shall mean the date of this Agreement.
1.6. "Code" shall mean the Internal Revenue Code of 1986,
as amended, together with all regulations and rulings issued thereunder by any
governmental authority.
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1.7. "Contracts" shall mean the Jacksonville Contracts and
the Houston Contracts.
1.8. "Cut-Off Time" shall mean 12:01 a.m., local time, on
the Closing Date.
1.9. "FCC Applications" shall mean the Jacksonville FCC
Applications and the Houston FCC Application.
1.10. "FCC Consents" shall mean the action by the FCC
granting each of the FCC Applications.
1.11. "Houston Assets" shall mean the Houston Contracts,
the Houston Intellectual Property, the Houston Personal Property, the Houston
Real Property Leases, the Houston Records and the Houston Station Licenses.
1.12. "Houston Contracts" shall mean all contracts,
agreements, purchase orders and leases of whatever nature, whether written or
oral, of SFX, used in, held for use in connection with or necessary for the
conduct of the business or operations of the Houston Station or the Houston
Assets, including, without limitation, employment contracts and other
contracts, agreements, purchase orders and leases identified on Schedule 1.1,
but excluding the Houston Real Property Leases.
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1.13. "Houston FCC Application" shall mean the application
or applications that SFX and Chancellor have filed with the FCC requesting its
consent to the assignment of the Houston Station Licenses from SFX to
Chancellor.
1.14. "Houston Intellectual Property" shall mean all SFX's
right, title and interest in and to the United States and foreign trademarks,
service marks, trade names, trade dress, copyrights, and similar rights,
including registrations and applications to register or renew the registration
of any of the foregoing, United States and foreign letters patent and patent
applications, and inventions, processes, designs, formulas, trade secrets,
jingles, know-how, confidential business and technical information, computer
software, data and documentation, and all similar intangible property rights,
tangible embodiments of any of the foregoing (in any medium including
electronic media), and licenses or permits to use any of the foregoing, used
in, held for use in connection with or necessary for the conduct of the
business or operations of the Houston Station or the Houston Assets, including,
without limitation, all intellectual property identified on Schedule 1.2.
1.15. "Houston Personal Property" shall mean all equipment,
office furniture and fixtures, office materials and supplies, inventory, spare
parts and other tangible personal property owned or leased by SFX used in, held
for use in connection with or necessary for the conduct of the business or
operations of the Houston Station or the Houston Assets including, without
limitation, all of those items identified on Schedule 1.3.
1.16. "Houston Real Property Leases" shall mean all of
SFX's leases, subleases, licenses and occupancy agreements, including any
amendments thereto, relating to real property used in, held for use in
connection with or necessary for the conduct of the business or operations of
the Houston Station or the Houston Assets, including, without limitation, those
items identified on Schedule 1.4, together with all easements and other
appurtenances for the benefit thereof.
1.17. "Houston Records" shall mean all files, records
(including but not limited to copies of the general ledger and accounts
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receivable records), logs, program materials, programs, lists, music libraries,
public inspection files that relate to the Houston Station and all proprietary
information and data, maps, plans, diagrams, blueprints, schematics and
technical drawings, engineering records, and FCC applications and filings
maintained with respect to the Houston Station pursuant to the rules and
regulations of the FCC.
1.18. "Houston Required Consents" shall mean any rights,
privileges and obligations under any Houston Contract identified as "Material"
on the Schedules to this Agreement, to be assigned pursuant to this Agreement,
that are not capable of being assigned without the consent, approval or waiver
of a third person or entity.
1.19. "Houston Station Licenses" shall mean the licenses,
permits and other authorizations issued by the FCC, the Federal Aviation
Administration (the "FAA") and any other federal, state or local governmental
or regulatory authorities in connection with the business or operations of the
Houston Station or the Houston Assets including, without limitation, the
licenses, permits and other authorizations identified on Schedule 1.5.
1.20. "HSRA" shall mean the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended, and the regulations adopted thereunder.
1.21. "Jacksonville Assets" shall mean the Jacksonville
Contracts, the Jacksonville Intellectual Property, the Jacksonville Personal
Property, the Jacksonville Owned Real Property, the Jacksonville Real Property
Leases, the Jacksonville Records and the Jacksonville Station Licenses.
1.22. "Jacksonville Contracts" shall mean all contracts,
agreements, purchase orders and leases of whatever nature, whether written or
oral, of Chancellor, used in, held for use in connection with or necessary for
the conduct of the
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business or operations of the Jacksonville Stations or the Jacksonville Assets,
including, without limitation, employment contracts and other contracts,
agreements, purchase orders and leases identified on Schedule 1.6, but
excluding the Jacksonville Real Property Leases.
1.23. "Jacksonville FCC Applications" shall mean the
application or applications that Chancellor and SFX have filed with the FCC
requesting its consent to the assignment of the Jacksonville Stations Licenses
from Chancellor to SFX.
1.24. "Jacksonville Intellectual Property" shall mean all
of Chancellor's right, title and interest in and to the United States and
foreign trademarks, service marks, trade names, trade dress, copyrights, and
similar rights, including registrations and applications to register or renew
the registration of any of the foregoing, United States and foreign letters
patent and patent applications, and inventions, processes, designs, formulas,
trade secrets, jingles, know-how, confidential business and technical
information, computer software, data and documentation, and all similar
intangible property rights, tangible embodiments of any of the foregoing (in
any medium including electronic media), and licenses or permits to use any of
the foregoing, used in, held for use in connection with or necessary for the
conduct of the business or operations of the Jacksonville Stations or the
Jacksonville Assets including, without limitation, all intellectual property
identified on Schedule 1.7.
1.25. "Jacksonville LMA" shall mean the Local Marketing
Agreement, dated July 1, 1996, as amended, between Chancellor Radio
Broadcasting Company ("CRBC") and SFX Broadcasting, Inc. ("SFX Broadcasting"),
providing for the sale of substantially all of the programming time on the
Jacksonville Stations from CRBC to SFX Broadcasting.
1.26. "Jacksonville Owned Real Property" shall mean all
real property and interests in real property owned by Chancellor and used in,
held for use in connection with, necessary for the conduct of or otherwise
material to, the business or operations of the Jacksonville Stations or the
Jacksonville Assets, together with all easements and other appurtenances for
the benefit thereof, all of which is identified on Schedule 1.8.
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1.27. "Jacksonville Personal Property" shall mean all
equipment, office furniture and fixtures, office materials and supplies,
inventory, spare parts and other tangible personal property owned or leased by
Chancellor used in, held for use in connection with or necessary for the
conduct of the business or operations of the Jacksonville Stations or the
Jacksonville Assets, including, without limitation, all of those items
identified on Schedule 1.9.
1.28. "Jacksonville Real Property Leases" shall mean all of
Chancellor's leases, subleases, licenses and occupancy agreements, including
any amendments thereto, relating to real property used in, held for use in
connection with or necessary for the conduct of the business or operations of
the Jacksonville Stations or the Jacksonville Assets, including, without
limitation, those items identified on Schedule 1.10, together with all
easements and other appurtenances for the benefit thereof.
1.29. "Jacksonville Records" shall mean all files, records
(including but not limited to copies of the general ledger and accounts
receivable records), logs, program materials, programs, lists, music libraries,
public inspection files that relate solely to the Jacksonville Stations and all
proprietary information and data, maps, plans, diagrams, blueprints, schematics
and technical drawings, engineering records, and FCC applications and filings
maintained solely with respect to the Jacksonville Stations pursuant to the
rules and regulations of the FCC.
1.30. "Jacksonville Required Consents" shall mean any
rights, privileges and obligations under any Jacksonville Contract identified
as "Material" on the Schedules to this Agreement, to be assigned pursuant to
this Agreement, that are not capable of being assigned without the consent,
approval or waiver of a third person or entity.
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1.31. "Jacksonville Station Licenses" shall mean the
licenses, permits and other authorizations issued by the FCC, the FAA and any
other federal, state or local governmental or regulatory authorities in
connection with the business or operations of the Jacksonville Stations or the
Jacksonville Assets including without limitation, the licenses, permits and
other authorizations identified on Schedule 1.11.
1.32. "Liens" shall mean all debts, liens, charges,
security interests, mortgages, pledges, judgments, trusts, adverse claims,
liabilities, encumbrances and other impairments of title.
1.33. "Permitted Liens" shall mean (i) statutory Liens for
current Taxes not yet due and payable, or being contested in good faith by
appropriate proceedings, (ii) mechanics', carriers', workers', repairers', and
other similar Liens imposed by law arising or incurred in the ordinary course
of business for obligations which are not overdue for a period of more than 90
days or which are being contested in good faith by appropriate proceedings,
(iii) in the case of leases of vehicles, rolling stock, and other personal
property, encumbrances, which do not, individually or in the aggregate,
materially impair the operation of the business at the facility at which such
leased equipment or other personal property is located, (iv) liens on leases of
real property arising from the provisions of such leases, including, in
relation to leased real property, any agreements and/or conditions imposed on
the issuance of land use permits, zoning, business licenses, use permits, or
other entitlements of various types issued by any governmental entity,
necessary or beneficial to the continued use and occupancy of the Houston
Assets or the Jacksonville Assets, as applicable, or the continuation of the
operation of any Station, (v) pledges or deposits made in the ordinary course
of business in connection with workers' compensation, unemployment insurance
and other social security legislation, (vi) unviolated zoning regulations and
restrictive covenants and easements of record which do not detract from the
value of the Houston Real Property or the Jacksonville Real Property, as
applicable, and do not materially and adversely affect, impair or interfere
with the use of any property affected thereby, and (vii) public utility
easements of record, in customary form, to serve the Houston Real Property or
the Jacksonville Real Property, as applicable.
1.34. "Person" shall mean an individual, corporation,
partnership, limited liability company, association, trust or other entity or
organization, including a government or political subdivision or an agency or
instrumentality thereof.
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1.35. "Proration Items" shall mean all revenues, refunds,
deposits and prepaid expenses of the Stations and any power and utility
charges, business and license fees (including retroactive adjustments thereof),
sales and service charges, commissions, special assessments, prepaid rental
payments, real estate and other property taxes and assessments with respect to
real property, prepaid cash time sales agreements, program license fees,
broadcast rights fees, accrued vacation, unused sick leave and other similar
prepaid and deferred items and any other operating expenses incurred in the
ordinary course of business.
1.36. "Real Property Leases" shall mean the Jacksonville
Real Property Leases and the Houston Real Property Leases.
1.37. "Station Licenses" shall mean the Jacksonville
Station Licenses and the Houston Station Licenses.
1.38. "Tax" shall mean any federal, state, local or foreign
income, alternative, minimum, accumulated earnings, personal holding company,
franchise, unincorporated business, capital stock, profits, windfall profits,
gross receipts, sales, use, value added, transfer, registration, stamp,
premium, excise, customs duties, severance, environmental (including taxes
under Section 59A of the Code), real property, personal property, ad valorem,
occupancy, license, occupation, employment, payroll, social security,
disability, unemployment, workers' compensation, withholding, estimated or
similar tax, duty, fee, assessment or other governmental charge or deficiencies
thereof (including all interest and penalties thereon and additions thereto).
1.39. Additional Defined Terms. As used herein, the
following terms shall have the meanings defined in the introduction, recitals
or section indicated below:
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Appraisals Section 2.7(a)
Capstar/SFX Merger Section 6.2
Cash Consideration Section 2.6
Chancellor Indemnitees Section 9.2(a)
Closing Section 7.1
FCC Recitals
Final Proration Amount Section 7.2(b)
Houston Accounts Receivable Section 5.2(b)
Houston Schedule of Accounts Receivable Section 5.2(b)
Houston Station Recitals
Indemnified Party Section 9.4
Indemnifying Party Section 9.4
Jacksonville Stations Recitals
Long Island/Jacksonville Exchange Agreement Section 6.1(a)
Losses Section 9.1(a)
Master Agreement Recitals
Proration Amount Section 7.2(a)
Section 1031 Schedule Section 2.7(b)
SFX Indemnitees Section 9.1(a)
Stations Recitals
ARTICLE II.
EXCHANGE OF ASSETS
2.1. Exchange of Personal Property, Records and Owned Real
Property. Concurrently with the execution of this Agreement, (i) Chancellor
shall assign, transfer, convey and deliver or cause to be assigned,
transferred, conveyed or delivered to SFX the Jacksonville Personal Property,
the Jacksonville Records and the Jacksonville Owned Real Property and (ii) SFX
shall assign, transfer, convey and deliver or cause to be assigned,
transferred, conveyed or delivered to Chancellor the Houston Personal Property,
the Houston Records and the Houston Owned Real Property.
2.2. Exchange of Real Property Leases. Concurrently with
the execution of this Agreement, (a) Chancellor shall assign or cause to be
assigned to SFX all of its rights, privileges and obligations under the
Jacksonville Real Property Leases and (b) SFX shall assign or cause to be
assigned to Chancellor all of its rights, privileges and obligations under the
Houston Real Property Leases.
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2.3. Exchange of Contracts. (a) Subject to (b) and (c)
below, concurrently with the execution of this Agreement, (i) Chancellor shall
assign or cause to be assigned to SFX all of its rights, privileges and
obligations under the Jacksonville Contracts and (ii) SFX shall assign or cause
to be assigned to Chancellor all of its rights, privileges and obligations
under the Houston Contracts.
(b) With respect to any consents, approvals and
waivers required for the assignment of the rights, privileges and obligations
under the Houston Contracts which have not been received prior to the date
hereof, SFX shall use commercially reasonable efforts to obtain such consents,
approvals and waivers after the Closing Date. During the period between the
Closing Date and the date that SFX obtains such consent, SFX shall act as
Chancellor's agent in connection with such contract and the parties shall
cooperate to cause Chancellor to receive the benefit of the rights and
privileges under such contract in exchange for performance by Chancellor of all
of SFX's obligations under such contract (including but not limited to the
payment to SFX of all amounts due under the contract on and after the Cut-Off
Time for services provided by SFX).
(c) With respect to any consents, approvals and
waivers required for the assignment of the rights, privileges and obligations
under the Jacksonville Contracts which have not been received prior to the date
hereof, Chancellor shall use commercially reasonable efforts to obtain such
consents, approvals and waivers after the Closing Date. During the period
between the Closing Date and the date that Chancellor obtains such consent,
Chancellor shall act as SFX's agent in connection with such contract and the
parties shall cooperate to cause SFX to receive the benefit of the rights and
privileges under such contract in exchange for performance by SFX of all of
Chancellor's obligations under such contract (including but not limited to the
payment to Chancellor of all amounts due under the contract on and after the
Cut-Off Time for services provided by Chancellor).
2.4. Exchange of Station Licenses. Concurrently with the
execution of this Agreement, (a) Chancellor and Chancellor Licensee shall
assign or cause to be assigned to SFX all of their right, title and interest in
and to the Jacksonville Station Licenses, and (b) SFX shall assign or cause to
be assigned to Chancellor and Chancellor Licensee all of SFX's right, title and
interest in and to the Houston Station Licenses.
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2.5. Exchange of Intellectual Property. Concurrently with
the execution of this Agreement, (a) Chancellor shall assign or cause to be
assigned to SFX the Jacksonville Intellectual Property and (b) SFX shall assign
or cause to be assigned to Chancellor the Houston Intellectual Property.
2.6. Cash Payment. As additional consideration for the
exchange of the Houston Assets for the Jacksonville Assets, Chancellor is
paying an aggregate amount of Ninety Million Two Hundred and Fifty Thousand
Dollars ($90,250,000) to SFX at Closing (the "Cash Consideration") by wire
transfer of immediately available funds to a Qualified Intermediary as defined
in Treas. Reg. Section 1.1031(k)-1(g)(4).
2.7. Allocation of Values. (a) Chancellor, Chancellor
Licensee and SFX agree that the fair market value of all the assets included in
the Houston Assets is One Hundred and Forty-Three Million Two Hundred and Fifty
Thousand Dollars ($143,250,000) and that the fair market value of all of the
assets included in the Jacksonville Assets is Fifty-Three Million Dollars
($53,000,000). The fair market value of the Houston Assets and the
Jacksonville Assets shall be allocated on the basis of appraisals (the
"Appraisals") to be prepared by Broadcast Investment Analysts, whose fees and
expenses shall be borne equally by Chancellor and SFX. The parties shall
direct Broadcast Investment Analysts to deliver the Appraisals promptly after
the execution hereof and to set forth in the Appraisals the fair market value
of each asset included in the Houston Assets and Jacksonville Assets.
(b) Within 30 days of the receipt of the
Appraisals, Chancellor and SFX shall prepare a schedule (the "Section 1031
Schedule") that sets forth the "exchange groups" and "residual groups" (as each
quoted term is defined by Treas. Reg. 1.1031(j)), together with each asset
included in the Houston and Jacksonville Assets that belongs to the relevant
exchange group or residual group. Chancellor and SFX shall cooperate in good
faith to resolve any issues relating to the Section 1031 Schedule in order to
agree on a single final Section 1031 Schedule.
(c) Chancellor and Chancellor Licensee, as
necessary, shall prepare IRS Form 8594 and IRS Form 8824 reflecting the fair
market value of the Assets they transferred and received as determined in
accordance with the above provisions and shall forward such forms to SFX within
thirty (30) days after receipt of the Appraisals. SFX shall prepare IRS Form
8594 and IRS Form 8824 reflecting the fair market value of the Assets it
transferred and received as determined in accordance with the above provisions
and shall forward such forms to Chancellor and Chancellor Licensee within
thirty (30) days after receipt of the Appraisals. Each of Chancellor,
Chancellor Licensee and SFX, as necessary, shall file with their respective
federal income tax returns, for the tax year in which the Closing occurs, IRS
Form 8594 and IRS Form 8824 as prepared in accordance
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with the foregoing. Each of Chancellor, Chancellor Licensee and SFX, as
necessary, shall deliver to the other parties hereto a copy of the IRS Form
8594 and IRS Form 8824 as filed with their respective federal income tax return
within thirty days of the filing of such return. Chancellor, Chancellor
Licensee and SFX hereto hereby covenant and agree with each other that they
will not take a position on any income tax return that is in any way
inconsistent with the terms of this Section 2.7.
(d) Notwithstanding any other provision of this
Agreement, the provisions of this Section 2.7 shall survive the Closing without
limitation.
2.8. Excluded Assets. (a) Notwithstanding anything to
the contrary set forth herein, the Jacksonville Assets shall not include the
following:
(i) all books and records related solely
to internal corporate/partnership matters and any
other books and records not related to the business
or operations of the Jacksonville Stations and any
books and records that Chancellor is required by law
to retain, all general ledger and accounts receivable
records, and all payables records and invoices,
provided that, at SFX's request, Chancellor shall
provide SFX, at SFX's expense, with copies of such
records covering the period that Chancellor Licensee
was licensee of the Jacksonville Stations;
(ii) all books, records, and other
intangible assets related solely to Chancellor's and
Chancellor Licensee's internal corporate matters and
not related to the operation of the Jacksonville
Stations;
(iii) all claims, rights, and interest in
and to any refunds for federal, state, or local
franchise, income, or other Taxes or fees of any
nature whatsoever relating to Taxes and fees for
which Chancellor or Chancellor Licensee is the
responsible party;
(iv) Chancellor's cash on hand as of the
Cut-Off Time and all other cash in any bank account
of Chancellor; any and all cash equivalents,
certificates of deposit, bonds, repurchase
agreements, letters of credit, marketable securities,
or other similar items;
(v) all insurance policies;
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(vi) all employee plans of Chancellor
related to the Jacksonville Stations, including all
trusts and other funding arrangements and the assets
and liabilities;
(vii) the rights of Chancellor under this
Agreement or any other agreement executed in
connection herewith; and
(viii) the capital stock of any subsidiary
of Chancellor.
(b) Notwithstanding anything to the contrary set
forth herein, the Houston Assets shall not include the following:
(i) all Accounts Receivable;
(ii) all books and records related solely
to internal corporate/partnership matters and any
other books and records not related to the business
or operations of the Houston Stations and any books
and records that SFX is required by law to retain,
all general ledger and accounts receivable records
and all payables records and invoices, provided that,
at Chancellor's request, SFX shall provide
Chancellor, at Chancellor's expense, with copies of
such records covering the period that SFX was
licensee of the Houston Station;
(iii) all books, records, and other
intangible assets related solely to SFX's internal
corporate matters and not related to the operation of
the Houston Station;
(iv) all claims, rights, and interest in
and to any refunds for federal, state, or local
franchise, income, or other Taxes or fees of any
nature whatsoever relating to Taxes and fees for
which SFX is the responsible party;
(v) SFX's cash on hand as of the Cut-Off
Time and all other cash in any bank account of SFX,
any and all cash equivalents, certificates of
deposit, bonds, repurchase agreements, letters of
credit, marketable securities, or other similar
items;
(vi) all insurance policies;
(vii) all employee plans of SFX related to
the Houston Station, including all trusts and other
funding arrangements and the assets and liabilities
thereof;
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(viii) the rights of SFX under this
Agreement or any other agreement executed in
connection herewith; and
(ix) the capital stock of any subsidiary
of SFX.
2.9. Assumption of Liabilities. (a) Chancellor shall
not assume or undertake to pay, satisfy or discharge any liabilities,
obligations, commitments or responsibilities of SFX except for those arising
under Houston Contracts and Houston Real Property Leases assumed by Chancellor
under this Agreement and then, with respect to liabilities, obligations,
commitments or responsibilities under any such Houston Contract or Houston Real
Property Lease, only those liabilities, obligations, commitments and
responsibilities accruing after and relating exclusively to the operation of
the Houston Station after the date on which such Houston Contract or Houston
Real Property Lease was assumed by Chancellor.
(b) SFX shall not assume or undertake to pay,
satisfy or discharge any liabilities, obligations, commitments or
responsibilities of Chancellor except for those arising under Jacksonville
Contracts or Jacksonville Real Property Leases assumed by SFX under this
Agreement and then, with respect to liabilities, obligations, commitments or
responsibilities under any such Jacksonville Contract or Jacksonville Real
Property Lease, only those liabilities, obligations, commitments and
responsibilities accruing after and relating exclusively to the operation of
the Jacksonville Stations after the date on which such Jacksonville Contract or
Jacksonville Real Property Lease was assumed by SFX.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF SFX
SFX represents and warrants to Chancellor and Chancellor
Licensee as follows:
3.1. Organization and Standing. SFX is a limited
partnership duly formed, validly existing and in good standing under the laws
of the State of Delaware, is duly qualified to do business in, and is in good
standing in each jurisdiction where such qualification is necessary except for
those jurisdictions where the failure to be so qualified could not,
individually or in the aggregate, have a material adverse effect. SFX has all
necessary organizational power and authority to own, lease and operate the
Houston Assets and to carry on the business and operations of the Houston
Station as now conducted and as proposed to be conducted by it between the date
hereof and the Closing Date.
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3.2. Authorization of Agreement; No Breach. SFX has all
necessary organizational power and authority to execute, deliver and perform
this Agreement and such other agreements as are necessary to consummate the
transactions contemplated hereby. Subject to the receipt of the consents and
approvals required elsewhere herein, this Agreement constitutes the legally
valid and binding obligation of SFX, enforceable against SFX in accordance with
its terms, except as such enforceability may be limited by bankruptcy and laws
affecting the enforcement of creditors' rights generally or equitable
principles. Assuming that said consents and approvals are obtained, neither
such execution, delivery and performance nor compliance by SFX with the terms
and provisions hereof will conflict with or result in a breach of any of the
terms, conditions or provisions of the organizational documents of SFX or any
material judgment, order injunction, decree, regulation or ruling of any court
or any other governmental authority to which SFX is subject or any material
agreement or contract to which SFX is a party or to which SFX is subject, or
constitute a material default thereunder.
3.3. Qualification as Assignor. No facts exist which,
under the Communications Act of 1934, as amended, or the existing rules and
regulations of the FCC, would disqualify SFX as an assignor of the FCC Licenses
to be assigned to Chancellor Licensee hereunder.
3.4. Absence of Conflicting Orders. SFX is not subject to
any judgment, award, order, writ, injunction, arbitration decision or decree
which prohibits or prevents the performance of this Agreement or the
consummation of any transaction contemplated under this Agreement, and there is
no litigation, administrative action, arbitration, proceeding or investigation
pending, or to SFX's knowledge, threatened, against SFX or its Affiliates, or
affecting SFX or its Affiliates in any federal, state or local court or before
any administrative agency or arbitrator that would adversely affect SFX's
ability to perform its obligations under this Agreement or would prohibit the
consummation of the transactions contemplated hereunder.
3.5. Absence of Litigation. There is no material action,
suit, investigation, claim, arbitration, litigation or similar proceeding,
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nor any order, decree or judgment pending or, to SFX's knowledge, threatened,
against SFX, the Houston Assets or the Houston Station before any governmental
authority.
3.6. Taxes. No event has occurred that could impose on
Chancellor any liability for any taxes, penalties or interest due or to become
due from SFX from any taxing authority.
3.7. Title. SFX is the valid and legal holder of the
Houston Station Licenses. SFX has a valid leasehold interest in all Houston
Leased Property. SFX has good and marketable title to the Houston Personal
Property and the Houston Intellectual Property, free and clear of any Liens,
except for Permitted Liens and Liens that will be removed at or prior to
Closing.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF
CHANCELLOR AND CHANCELLOR LICENSEE
Chancellor and Chancellor Licensee represent and warrant to
SFX, as follows:
4.1. Title. Chancellor Licensee is the valid and legal
holder of the Jacksonville Station Licenses. Chancellor has good and
marketable fee simple title to all fee estates included in the Jacksonville
Real Property and good title to all other owned Jacksonville Real Property, in
each case free and clear of all Liens, except for Permitted Liens and Liens
that will be removed at or prior to Closing. Chancellor has a valid leasehold
interest in the Jacksonville Leased Property. Chancellor has good and
marketable title to Jacksonville Personal Property and the Jacksonville
Intellectual Property, free and clear of any Liens, except for Permitted Liens
and Liens that will be removed at or prior to Closing.
ARTICLE V.
COVENANTS
SFX, Chancellor and Chancellor Licensee covenant and agree
that for the applicable periods set forth below, they shall act in accordance
with the following:
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5.1. Employees. (a) As of the Closing Date, SFX is
terminating all of its employees at the Houston Station (other than those
employees that are employed pursuant to written employment contracts, which
employment contracts shall be assigned to Chancellor). SFX shall be liable for
all severance and other similar benefits to which such employees are entitled
as a result of their employment by SFX prior to the Closing Date under all
employee plans, applicable law or otherwise. Chancellor or Chancellor Licensee
may, but shall not be obligated to, offer employment to each of those employees
previously employed by SFX to be terminated as of the Closing Date. Such offer
of employment shall be under any terms and conditions that Chancellor or
Chancellor Licensee deems appropriate.
(b) As of the Closing Date, Chancellor is
terminating all of its employees at the Jacksonville Stations (other than those
employees that are employed pursuant to written employment contracts, which
employment contracts shall be assigned to SFX). Chancellor shall be liable for
all severance and other similar benefits to which such employees are entitled
as a result of their employment by Chancellor prior to the Closing Date under
all employee plans, applicable law or otherwise. SFX may, but shall not be
obligated to, offer employment to each of those employees previously employed
by Chancellor to be terminated as of the Closing Date. Such offer of
employment shall be under any terms and conditions that SFX deems appropriate.
5.2. Post-Closing Covenants. (a) For a period of six
years after the Closing Date, each party agrees to make available to the other
party after Closing, upon request, any records, files, documents and
correspondence of the Stations, the Jacksonville Assets or the Houston Assets
that are reasonably determined by such party to be necessary or appropriate in
connection with the filing of any report with a governmental agency or the
prosecution or defense of any claim, legal action, counterclaim, suit,
arbitration, governmental investigation, or other legal, administrative, or tax
proceeding, to which the requesting party is a party. The requesting party
shall reimburse the other party for any expenses incurred pursuant to this
Section 5.2, including reimbursement for the time of any of such party's
employees, including any employee of the Station that is the subject of such
request. Each party shall exercise its rights under this Section 5.2 so as not
to unreasonably interfere with or disrupt the operations of the other party.
For a period of six years after the Closing Date, at least 30 days prior to
discarding or destroying any books or records relating to the Jacksonville
Assets or the Houston Assets that are being exchanged hereunder, each party
shall give the other party notice of its intended action and an opportunity for
such other party to retain any of the books or records proposed to be discarded
or destroyed by such party.
(b) Within ten (10) days following the Closing,
SFX shall deliver to Chancellor a schedule of accounts receivable of the
Houston Station as of the Cut-Off Time (the "Houston Schedule of Accounts
Receivable"). Chancellor agrees to collect for SFX all accounts
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receivable for broadcasts on the Houston Station which occur prior to the
Cut-Off Time (the "Houston Accounts Receivable") as shown on the Houston
Schedule of Accounts Receivable for a period of ninety (90) days following the
Closing. SFX will, at the Closing, provide Chancellor a power of attorney or
other required authorization for the limited purpose of allowing Chancellor to
endorse and deposit checks and other instruments received in payment of such
Houston Accounts Receivable. All payments received by Chancellor from any
customer whose name appears in the Houston Schedule of Accounts Receivable and
who is also a customer of Chancellor shall be credited as payment of the
account or invoice designated by such customer. In the absence of any such
designation by the customer, payments shall be first credited to the oldest
invoice which is not disputed by said customer. Chancellor shall keep accurate
records of the payment received by it on such Houston Accounts Receivable and
SFX shall have access at reasonable times to Chancellor's records to verify
such status of the Houston Accounts Receivable. Chancellor shall promptly
deposit amounts collected with respect to the Houston Accounts Receivables into
an account designated by SFX. Within thirty (30) days after the last business
day of each calendar month, Chancellor shall remit to SFX a written accounting
of amounts previously collected by Chancellor on such Houston Accounts
Receivable and an accounts receivable aging report for those Houston Accounts
Receivable still outstanding. Any Houston Accounts Receivable that have not
been collected within such ninety (90) day period shall be returned to SFX,
together with all records in connection therewith including, but not limited to
a final accounting of the Houston Accounts Receivable still outstanding.
Chancellor shall not have the right to compromise, settle or adjust the amounts
of any such Houston Accounts Receivable without SFX's prior written consent.
Except to remit collected Houston Accounts Receivable in accordance herewith,
Chancellor shall have no liability or obligation to SFX with respect to the
collection of SFX's accounts and shall not be obligated to take any action to
collect such accounts.
ARTICLE VI.
CONDITIONS TO THE PARTIES' OBLIGATION TO CLOSE
Concurrently with, or prior to the execution and delivery of
this Agreement, the following actions shall have occurred:
6.1. Long Island/Jacksonville Exchange Agreement. The
Asset Exchange Agreement between SFX Broadcasting and Chancellor dated July 1,
1996, as amended, providing for the exchange of SFX Broadcasting's Long Island
radio stations for the Jacksonville Stations (the "Long Island/Jacksonville
Exchange Agreement"), shall have been terminated without legal challenge by any
party.
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6.2. Capstar/SFX Merger. The merger between SFX
Broadcasting and an affiliate of Capstar (the "Capstar/SFX Merger") shall have
closed, either prior to, or contemporaneous with, the closing of this
Agreement.
6.3. Litigation. No action, suit, proceeding, litigation
or investigation shall be pending or threatened by any governmental authority
which questions the validity or legality of this Agreement or any action taken
or to be taken in connection herewith or the consummation of the transactions
contemplated hereby. No injunction or other order issued by a court of
competent jurisdiction restraining or prohibiting the consummation of the
transactions contemplated by this Agreement shall be in effect.
6.4. Deliveries. Chancellor, Chancellor Licensee and SFX
shall have made all the deliveries set forth in Section 7.3 and Section 7.4,
respectively.
ARTICLE VII.
CLOSING
7.1. Closing. Subject to the terms and conditions of this
Agreement, the closing of this transaction (the "Closing") shall take place on
the date hereof. The Closing shall be held at 10:00 a.m. in the offices of
Weil, Gotshal, & ▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or at
such other place or time as the parties may agree.
7.2. Adjustments. (a) Within thirty (30) days after the
Closing Date, Chancellor and SFX shall make a good faith estimate of the
adjustment to the Cash Consideration customary in radio broadcast station
transactions for Proration Items (the "Proration Amount") to reflect that all
Proration Items of the Stations shall be apportioned between Chancellor and SFX
in accordance with the principles that (i) Chancellor, in the case of the
Jacksonville Stations, and SFX, in the case of the Houston Station shall
receive the benefit of all revenues, refunds, deposits and prepaid expenses,
and shall be responsible for all expenses, costs and liabilities allocable to
the conduct of the businesses or operations of such Stations, for the period
prior to the Cut-Off Time, and (ii) Chancellor, in the case of the Houston
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Station, and SFX, in the case of the Jacksonville Stations, shall receive the
benefit of all revenues, refunds, deposits and prepaid expenses, and shall be
responsible for all expenses, costs and liabilities allocable to the conduct of
the businesses or operations of such Stations, from and after the Closing Date.
In determining such adjustments, adjustments shall be made for contracts for
the sale of advertising time for consideration other than cash ("Trade
Agreements") only to the extent of any Net Negative Trade Balance (as defined
below) and only to the extent that the Net Negative Trade Balance exceeds
$50,000 on the Houston Station, in the case of SFX, or $50,000 on the
Jacksonville Stations, in the case of Chancellor. "Net Negative Trade Balance"
means the extent, if any, to which the value (at current rates for time on the
applicable Station as of the Cut-Off Time) of unfulfilled obligations of the
applicable Station under Trade Agreements exceed the stated value of any
consideration yet to be received by such Station pursuant to such Trade
Agreements. Determinations pursuant to this Section 7.2 shall be made in
accordance with generally accepted accounting principles consistently applied
for the period prior to the Closing Date.
(b) Within ninety (90) days after the Closing
Date, Chancellor and SFX shall deliver to each other in writing and in
reasonable detail a good faith final determination of the Proration Amount
determined as of the Closing Date under Section 7.2(a) (the "Final Proration
Amount"). Each of Chancellor and SFX shall provide the other with reasonable
access to the properties, books and records relating to the Stations for the
purpose of determining the Final Proration Amount. If Chancellor or SFX
disagree with the amounts of the Final Proration Amount, they shall so notify
each other in writing within thirty (30) days after the date of receipt of the
Final Proration Amount, specifying in detail any point of disagreement;
provided however, that if either Chancellor or SFX fails to notify the other
party of such disagreement within such thirty (30) day period, the
determination of the Final Proration Amounts shall be final, conclusive and
binding on each of Chancellor and SFX. After the receipt of any notice of
disagreement, each party shall negotiate in good faith to resolve any
disagreements regarding the Final Proration Amount. If any such disagreement
cannot be resolved by the parties within thirty (30) days after notice has been
received of the existence of such disagreement, the parties shall jointly
select a nationally recognized independent public accounting firm (which has
not performed any services for either Chancellor or SFX or any of their
respective subsidiaries at any time during the two (2) year period prior to the
date such firm is selected (the "Accounting Firm")), to review the
determination of the Final Proration Amount and to resolve as soon as possible
all points of disagreement raised by either party. All determinations made by
the Accounting Firm with respect to the Final Proration Amount shall be final,
conclusive and binding on the parties. The fees and expenses of the Accounting
Firm incurred in connection with any such determination shall be shared
one-half by Chancellor and one-half by SFX.
Upon determination of the Final Proration Amount, the
appropriate party shall pay such amounts in cash, within two (2) business days
following the final determination of the Final Proration Amount. Any amounts
paid pursuant to this Section 7.2(b) shall be by wire transfer of immediately
available funds for credit to the recipient at a bank account identified by
such recipient in writing.
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Chancellor and SFX agree that prior to the date of the final
determination of the Final Proration Amount pursuant to this Section 7.2(b) (by
the Accounting Firm or otherwise), neither party will destroy any records
pertaining to, or necessary for, the final determination of the Final Proration
Amount.
7.3. Documents to be Delivered by Chancellor and
Chancellor Licensee. Concurrently with the execution and delivery of this
Agreement, Chancellor has delivered to SFX the following:
(a) instruments of conveyance and transfer, in
form and substance reasonably satisfactory to counsel to SFX, effecting the
assignment, transfer, conveyance and delivery of the Jacksonville Assets to
SFX, including, but not limited to, the following:
(i) assignments of the Jacksonville
Station Licenses,
(ii) bills of sale for the Jacksonville
Personal Property;
(iii) assignments of Jacksonville Real
Property Leases and Jacksonville Contracts (including
copies of all Jacksonville Required Consents); and
(iv) assignment of the Jacksonville
Intellectual Property.
(b) certified resolutions of the board of
directors and shareholders (if required by law) of Chancellor and Chancellor
Licensee authorizing the execution, delivery and performance of this Agreement;
(c) a special warranty deed, in a form recordable
in the State of Florida, for each parcel of the Jacksonville Owned Real
Property, which deed shall convey insurable, fee simple title for that parcel
free and clear of all Liens, subject to standard title exceptions and survey
exceptions, none of which will impair or interfere with the continued use of
such parcel as such is currently used; and
(d) such other documents as may reasonably be
requested by SFX's counsel.
7.4. Documents to be Delivered by SFX. At the Closing,
SFX shall deliver or cause to be delivered to Chancellor and Chancellor
Licensee the following:
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(a) instruments of conveyance and transfer, in
form and substance reasonably satisfactory to counsel to Chancellor, effecting
the assignment, transfer, conveyance and delivery of the Houston Assets to
Chancellor and Chancellor Licensee including, but not limited to, the
following:
(i) assignments of the Houston Station
Licenses;
(ii) bills of sale for the Houston
Personal Property;
(iii) assignments of Houston Real Property
Leases and Houston Contracts (including copies of all
Houston Required Consents); and
(iv) assignment of the Houston
Intellectual Property.
(b) certified resolutions of the board of
directors and shareholders (if required by law) of SFX authorizing the
execution, delivery and performance of this Agreement;
(c) an affidavit to the effect that SFX is not a
"foreign person" within the meaning of Section 1445 of the Code;
(d) such other documents as may reasonably be
requested by counsel to Chancellor and Chancellor Licensee.
ARTICLE VIII.
TRANSFER TAXES; FEES AND EXPENSES
8.1. Transfer Taxes and Similar Charges. All costs of
transferring the Jacksonville Assets and the Houston Assets in accordance with
this Agreement shall be allocated among the parties as follows:
(a) Chancellor shall pay any and all Taxes that
may be imposed by any taxing authority in the nature of sales or use Taxes as a
result of the transfer of the Jacksonville Assets from Chancellor to SFX. SFX
shall pay any and all Taxes that may be imposed by any taxing authority in the
nature of sales or use Taxes as a result of the transfer of the Houston Assets
from SFX to Chancellor; and
(b) all other costs and expenses of transferring
the Jacksonville Assets and the Houston Assets, including, without limitation,
fees related to the governmental consents referred to in Article III, shall be
divided equally between Chancellor and SFX.
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(c) As between Chancellor and SFX, the party that
has the primary responsibility under applicable law for filing any return in
respect of Taxes described in this Section 8.1 shall prepare such return,
subject to the other party's approval, which approval shall not be unreasonably
withheld, and timely file such return.
8.2. Expenses. Except as set forth in Section 8.1, each
party hereto shall be solely responsible for all costs and expenses incurred by
it in connection with the negotiation, preparation and performance of and
compliance with the terms of this Agreement.
ARTICLE IX.
INDEMNIFICATION
9.1. Indemnification by Chancellor and Chancellor
Licensee. (a) Chancellor and Chancellor Licensee agree to indemnify and hold
harmless SFX, its Affiliates and the officers, directors, partners, employees,
agents, advisers and representatives of SFX and its Affiliates ("SFX
Indemnitees") from and against, and pay or reimburse each SFX Indemnitee for,
any and all claims, liabilities, obligations, losses, fines, costs, royalties,
proceedings, deficiencies or damages (whether absolute, accrued, conditional or
otherwise and whether or not resulting from third party claims), including
out-of-pocket expenses and reasonable attorneys' and accountants' fees incurred
in connection with the investigation or defense thereof or in asserting any of
their respective rights hereunder (collectively, "Losses"), resulting from or
arising out of:
(i) any inaccuracy of any representation
or warranty made by Chancellor or Chancellor Licensee
herein or in any certificate, document or instrument
delivered to SFX pursuant to Section 7.3;
(ii) any failure of Chancellor or
Chancellor Licensee to perform any covenant or
agreement hereunder;
(iii) any claims of third parties with
respect to the business and operations of the
Jacksonville Stations or the ownership of the
Jacksonville Assets prior to the commencement of the
Jacksonville LMA not expressly assumed by SFX under
Section 2.9 hereof or under the Jacksonville LMA;
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(iv) any liabilities, obligations,
commitments or responsibilities of Chancellor or
Chancellor Licensee not expressly assumed by SFX
under Section 2.9;
(v) any failure of Chancellor or
Chancellor Licensee to comply with applicable bulk
sales laws (in consideration of which indemnification
obligation SFX hereby waives compliance by Chancellor
or Chancellor Licensee with any applicable bulk sales
laws);
(vi) any liabilities, obligations,
commitments or responsibilities of SFX expressly
assumed by Chancellor or Chancellor Licensee pursuant
to Section 2.9; and
(vii) the ownership of the Houston Assets
or the operation of the Houston Station subsequent to
the Closing, except to the extent such Loss results
from any inaccuracy of any representation or warranty
made by SFX herein or in any certificate, document or
instrument delivered to Chancellor or Chancellor
Licensee pursuant to Section 7.4 or any failure of
SFX to perform any covenant or agreement hereunder.
(b) Limitations on Indemnification.
(i) Notwithstanding anything in Section
9.1(a) of this Agreement to the contrary, neither
Chancellor nor Chancellor Licensee shall be required
to make any indemnification payments until the
aggregate amount of Losses resulting from or arising
out of the matters referred to in Section 9.1(a)
exceeds One Hundred Thousand Dollars ($100,000) in
the aggregate; provided that if the aggregate amount
of such Losses exceeds such amount, Chancellor and
Chancellor Licensee shall be required to indemnify
SFX Indemnitees for all Losses indemnifiable under
Section 9.1(a) without regard to such One Hundred
Thousand Dollar ($100,000) limitation.
(ii) Chancellor's and Chancellor
Licensee's obligations to make any indemnification
payments of any kind under Section 9.l(a) shall be
limited to Two Million Six Hundred Fifty Thousand
Dollars ($2,650,000) in the aggregate.
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9.2. Indemnification by SFX. (a) General. SFX agrees to
indemnify and hold harmless Chancellor, Chancellor Licensee and their
Affiliates and the officers, directors, partners, employees, agents, advisers
and representatives of Chancellor, Chancellor Licensee and their Affiliates
("Chancellor Indemnitees") from and against, and pay or reimburse each
Chancellor Indemnitee for, any and all Losses resulting from or arising out of:
(i) any inaccuracy in any representation
or warranty made by SFX herein or in any certificate,
document or instrument delivered to Chancellor or
Chancellor Licensee pursuant to Section 7.4;
(ii) any failure of SFX to perform any
covenant or agreement hereunder;
(iii) any claims of third parties with
respect to the business and operations of the Houston
Station or the ownership of the Houston Assets prior
to the Closing not expressly assumed by Chancellor or
Chancellor Licensee under Section 2.9;
(iv) any liabilities, obligations,
commitments or responsibilities of SFX not expressly
assumed by Chancellor or Chancellor Licensee under
Section 2.9;
(v) any failure of SFX to comply with
applicable bulk sales laws (in consideration of which
indemnification obligation Chancellor and Chancellor
Licensee hereby waives compliance by SFX with any
applicable bulk sales laws);
(vi) any liabilities, obligations,
commitments or responsibilities of Chancellor or
Chancellor Licensee expressly assumed by SFX pursuant
to Section 2.9; and
(vii) the ownership of the Jacksonville
Assets or the operation of the Jacksonville Stations
subsequent to the Closing, except to the extent such
Loss results from any inaccuracy of any
representation or warranty made by Chancellor or
Chancellor Licensee herein or in any certificate,
document or instrument delivered to SFX pursuant to
Section 7.3 or any failure of Chancellor or
Chancellor Licensee to perform any covenant or
agreement hereunder.
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(b) Limitations on Indemnification.
(i) Notwithstanding anything in Section
9.2(a) of this Agreement to the contrary, SFX shall
not be required to make any indemnification payments
until the aggregate amount of Losses resulting from
or arising out of the matters referred to in Section
9.2(a) exceeds One Hundred Thousand Dollars
($100,000); provided that if the aggregate amount of
such Losses exceeds such amount, SFX shall be
required to indemnify Chancellor Indemnitees for all
Losses indemnifiable under Section 9.2(a) without
regard to such One Hundred Thousand Dollar ($100,000)
limitation.
(ii) SFX's obligation to make any
indemnification payments of any kind under Section
9.2(a) shall be limited to Seven Million One Hundred
Sixty Two Thousand Five Hundred Dollars ($7,162,500)
in the aggregate.
9.3. Survival of Covenants, Representations and
Warranties. The provisions hereof, which by their terms are to be performed
and observed after the Closing Date, and the several representations,
warranties, indemnities and agreements of Chancellor, Chancellor Licensee and
SFX herein contained shall survive the Closing Date hereunder for eighteen
months following the Closing Date, provided, that notwithstanding the
foregoing, the representations and warranties set forth in (i) Section 3.7 and
4.1, to the extent relating to title to the applicable assets, shall survive
the Closing Date forever and (ii) Section 3.6 shall survive the Closing Date
for the applicable statutes of limitation period plus sixty (60) days. No
claim for indemnification may be made pursuant to this Article IX after the
applicable survival periods set forth in this Section 9.3 (except that all
claims which are properly asserted prior to the expiration of the applicable
survival periods set forth in this Section 9.3 shall survive with respect to
such claims until the final resolution thereof).
9.4. Indemnification Procedures. In the case of any claim
asserted by a third party against a party entitled to indemnification under
this Agreement (the "Indemnified Party"), notice shall be given by the
Indemnified Party to the party required to provide indemnification (the
"Indemnifying Party") promptly after such Indemnified Party has actual
knowledge of any claim as to which indemnity may be sought, and the Indemnified
Party shall permit the Indemnifying Party (at the expense of such Indemnifying
Party) to assume the defense of any claim or any litigation resulting
therefrom, provided that (a) the counsel for the Indemnifying Party who shall
conduct the defense of such claim or litigation shall be reasonably
satisfactory to the Indemnified Party, (b) the Indemnified Party may
participate in such defense at such Indemnified Party's expense, and (c) the
omission by any Indemnified Party to give notice as
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provided herein shall not relieve the Indemnifying Party of its indemnification
obligation under this Agreement except to the extent that such omission results
in a failure of actual notice to the Indemnifying Party and such Indemnifying
Party is materially damaged as a result of such failure to give notice. Except
with the prior written consent of the Indemnified Party, no Indemnifying Party,
in the defense of any such claim or litigation, shall consent to entry of any
judgment or order, interim or otherwise, or enter into any settlement that
provides for injunctive or other nonmonetary relief affecting the Indemnified
Party or that does not include as an unconditional term thereof the giving by
each claimant or plaintiff to such Indemnified Party of a release from all
liability with respect to such claim or litigation. In the event that the
Indemnified Party shall in good faith determine that the conduct of the defense
of any claim subject to indemnification hereunder or any proposed settlement of
any such claim by the Indemnifying Party might be expected to affect adversely
the Indemnified Party's tax liability or the ability of the Indemnified Party
to conduct the business of the Station or Stations acquired by such Indemnified
Party hereunder or that the Indemnified Party may have available to it one or
more defenses or counterclaims that are inconsistent with one or more of those
that may be available to the Indemnifying Party in respect of such claim or any
litigation relating thereto, the Indemnified Party shall have the right at all
times to take over and assume control over the defense, settlement,
negotiations or litigation relating to any such claim at the sole cost of the
Indemnifying Party, provided that if the Indemnified Party does so take over
and assume control, the Indemnified Party shall not settle such claim or
litigation without the written consent of the Indemnifying Party, such consent
not to be unreasonably withheld. In the event that the Indemnifying Party does
not accept the defense of any matter as above provided, the Indemnified Party
shall have the full right to defend against any such claim or demand and shall
be entitled to settle or agree to pay in full such claim or demand.
Notwithstanding the foregoing, the Indemnifying Party shall still provide
indemnification to the Indemnified Party. In any event, the Indemnifying Party
and the Indemnified Party shall cooperate in the defense of any claim or
litigation subject to this Section 9.3 and the records of each shall be
available to the other with respect to such defense.
ARTICLE X.
OTHER PROVISIONS
10.1. Publicity. Except as required by applicable law or
with the other parties' express written consent, no party to this Agreement nor
any Affiliate of any party shall issue any press release or make any public
statement (oral or written) regarding the transactions contemplated by this
Agreement.
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10.2. Benefit and Assignment. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns. None of SFX, Chancellor or Chancellor
Licensee may assign this Agreement without the prior written consent of SFX, in
the case of any such assignment by Chancellor and Chancellor Licensee, or
Chancellor, in the case of any such assignment by SFX, except that:
(a) SFX may assign its rights and obligations
under this Agreement to one or more Affiliates of SFX, provided that any such
assignment shall not relieve SFX from any of its obligations under this
Agreement and provided that any such assignment does not delay the Closing
Date. Furthermore, SFX may assign its rights to receive the Cash Consideration
under this Agreement to a "qualified intermediary" as defined in Treas. Reg.
Section 1.1031(k)-1(g)(4), subject to all of Chancellor's and Chancellor
Licensee's rights and obligations hereunder, and shall promptly provide written
notice of such assignment to all parties hereto. Chancellor and Chancellor
Licensee shall cooperate with all reasonable requests of SFX and the "qualified
intermediary" in arranging and effecting the deferred like-kind exchange as one
which qualifies under Section 1031 of the Code. Without limiting the generality
of the foregoing, Chancellor and Chancellor Licensee shall acknowledge in
writing the notification by SFX of the assignment to the "qualified
intermediary" of its rights to receive the Cash Consideration and other rights
hereunder and Chancellor and Chancellor Licensee hereby agree to pay the Cash
Consideration to the "qualified intermediary" rather than to SFX.
(b) Chancellor and Chancellor Licensee may assign
their rights and obligations under this Agreement to one or more Affiliates of
Chancellor or Chancellor Licensee, provided that any such assignment shall not
relieve Chancellor or Chancellor Licensee from any of their obligations under
this Agreement and provided that any such assignment does not delay the Closing
Date.
10.3. No Third-Party Beneficiaries. Nothing in this
Agreement shall confer any rights upon any person or entity other than the
parties hereto and their respective permitted successors and assigns.
10.4. Nature of Representations and Warranties: Entire
Agreement, Amendments, etc. (a) It is the explicit intent and understanding
of each of the parties hereto that neither party, nor any of its Affiliates,
representatives or agents, is making any representation or warranty whatsoever,
oral or written, express or implied, other than those set forth in Articles IV
and V.
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(b) The Master Agreement (and the agreements
contemplated thereby), the Jacksonville LMA, this Agreement and the exhibits
and schedules hereto constitute the entire agreement and understanding of the
parties hereto and supersede any and all prior agreements, arrangements and
understandings relating to the matters provided for herein or therein.
(c) No amendment, waiver of compliance with any
provision or condition hereof, or consent pursuant to this Agreement shall be
effective unless evidenced by an instrument in writing signed by the party
against whom enforcement of any amendment, waiver or consent is sought.
10.5. Choice of Law. The construction and performance of
this Agreement shall be governed by the laws of the State of Texas without
regard to its principles of conflict of laws.
10.6. Notices. All notices, requests, demands, letters,
waivers and other communications required or permitted to be given under this
Agreement shall be in writing and shall be deemed to have been duly given if
(a) delivered personally, (b) mailed, certified or registered mail with postage
prepaid, (c) sent by next-day or overnight mail or delivery or (d) sent by fax,
as follows:
To Chancellor and Chancellor Licensee:
c/o Chancellor Media Corporation
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President and Chief
Executive Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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To SFX:
c/o Capstar Broadcasting Corporation
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: R. ▇▇▇▇▇▇ ▇▇▇▇▇, President and Chief
Executive Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Copies to:
c/o Capstar Broadcasting Corporation
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, General Counsel
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other person or address as any party shall specify by notice in
writing to the party entitled to notice. All such notices, requests, demands,
letters, waivers and other communications shall be deemed to have been received
(w) if by personal delivery, on the day such delivery, (x) if by certified or
registered mail, on the third Business Day after the mailing thereof, (y) if by
next-day or overnight mail or delivery, on the first Business day after the
mailing thereof or (z) if by fax, on the day on which such fax was sent,
provided that the sender receive confirmation of such delivery.
10.7. Counterparts. This Agreement may be executed in one
or more counterparts, each of which will be deemed an original and all of which
together will constitute one and the same instrument.
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10.8. Further Assurances. SFX shall at any time and from
time to time after the Closing execute and deliver to Chancellor and Chancellor
Licensee such further assignments, conveyances and other written assurances as
Chancellor and Chancellor Licensee may reasonably request in order to vest and
confirm in Chancellor and Chancellor Licensee (or their permitted assignees)
the title and rights to and in all of the Houston Assets to be and intended to
be assigned, transferred, conveyed and delivered hereunder. Chancellor and
Chancellor Licensee shall at any time and from time to time after the Closing
execute and deliver to SFX such further assignments, conveyances and other
written assurances as SFX may reasonably request in order to vest and confirm
in SFX (or its permitted assignees) the title and rights to and in all of the
Jacksonville Assets to be and intended to be assigned, transferred, conveyed
and delivered hereunder.
10.9. Arbitration. Chancellor, Chancellor Licensee and SFX
agree that any dispute arising out of or relating to this Agreement or the
breach, termination, validity hereof or thereof shall be finally settled by
arbitration conducted expeditiously in accordance with the Center for Public
Resources Rules for Nonadministered Arbitration of Business Disputes. The
Center for Public Resources shall appoint a neutral advisor from its National
CPR Panel. The arbitration advisor shall be governed by the United States
Arbitration Act, 9 U.S.C. Sections 1-16, and judgment upon the award rendered
by the arbitrators may be entered by any court having jurisdiction thereof.
The place of arbitration shall be Dallas, Texas. Notwithstanding anything to
the contrary contained herein, the provisions of this Section 10.9 shall not
apply with regard to any equitable remedies to which any party may be entitled
under this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first written above.
CHANCELLOR MEDIA CORPORATION
OF LOS ANGELES
By:
-----------------------------------
Name:
Title:
CHANCELLOR MEDIA LICENSEE COMPANY
By:
-----------------------------------
Name:
Title:
SFXTX LIMITED PARTNERSHIP
By: SFX GP, Inc.
By:
-----------------------------------
Name:
Title:
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