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EXHIBIT 10.32
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES
000 XXXX XXX XXXXXXX XXXX.
XXXXX 0000
XXXXXX, XXXXX 00000
February 20, 1998
R. Xxxxxx Xxxxx,
President and Chief Executive Officer
Capstar Broadcasting Corporation
000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
re: Chancellor / Capstar Transaction
Dear Xxxxx:
This letter (the "Letter Agreement"), when executed by both
parties below, will set forth the essential terms and conditions of our
agreement regarding a transaction between Chancellor Media Corporation of Los
Angeles ("Chancellor") and Capstar Broadcasting Corporation ("Capstar") (the
"Transaction"). The Transaction contemplates a series of purchases, sales,
exchanges and understandings to be effected over a period of time consisting of
the following:
1. Exchange of SFX Assets. Following the closure of the
merger between SFX Broadcasting, Inc. ("SFX") and an affiliate of Capstar (the
"Capstar-SFX Merger"), Capstar (which, following the closing of the Capstar-SFX
Merger, shall also mean SFX and its affiliates) and Chancellor will complete a
series of asset exchanges and/or purchases in which Capstar will exchange the
following properties for broadcast properties to be acquired or paid for by
Chancellor over a period of up to thirty-six (36) months (the "Exchange
Period") (provided that, if Chancellor is determined to be a "related party"
(as such term is defined in Section 1031(f) of the Internal Revenue Code) of
either Capstar or SFX, Chancellor and Capstar agree to hold any SFX Station and
Exchange Station, respectively, for the full, two-year period required by the
Code to maintain the qualification of the transaction as a like-kind exchange,
and such holding period may extend the Exchange Period as necessary):
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KBFB-FM Dallas
KTXQ-FM Dallas
KKRW-FM Houston
KODA-FM Houston
KQUE-AM Houston
KPLN-FM San Diego
KYXY-FM San Diego
WDVE-FM Pittsburgh
WJJJ-FM Pittsburgh
WXDX-FM Pittsburgh
WVTY-FM Pittsburgh
These stations (together, the "SFX Stations") are deemed to have an aggregate
fair market value of $637.5 million. A fair market valuation as to each of the
SFX Stations (the "Station Valuations") is set forth on Schedule A to this
Letter Agreement. The SFX Stations shall be exchanged for (i) radio stations
in Jacksonville and Austin, pursuant to transactions described more
specifically in this letter, and (ii) other radio stations to be identified by
Capstar and acquired or paid for by Chancellor from time to time during the
Exchange Period (all such stations contemplated by (i) and (ii) above, the
"Exchange Stations"), in accordance with the following procedures:
(a) Capstar will identify one or more potential
Exchange Stations, at its sole discretion, during the Exchange Period, to be
acquired by Capstar pursuant to an asset purchase agreement or, as permitted
below, to be acquired by Chancellor pursuant to a stock purchase agreement (an
"Exchange Station Agreement").
(1) If Capstar elects to acquire an
Exchange Station pursuant to an Exchange Station Agreement that is an asset
purchase agreement, (i) Capstar shall negotiate an Exchange Station Agreement
with the owner of such Exchange Station on such terms and conditions as are
acceptable to Capstar, (ii) Chancellor and Capstar shall simultaneously execute
Asset Purchase Agreement(s) (herein so called) acceptable to both Chancellor
and Capstar pursuant to which Chancellor will acquire SFX Station(s), to be
identified by Chancellor in its sole discretion, whose Station Valuation(s)
most closely approximate the cash purchase price (without regard to assumed
debt) of the Exchange Station(s), in exchange for cash in an aggregate amount
equal to the fair market value of such SFX Station(s); (iii) Capstar shall pay
any escrow or deposit obligations for all Exchange Station Agreements; (iv)
Capstar shall assign its contractual rights under the Asset Purchase
Agreement(s) to a QI (as defined below) and Chancellor shall transfer the cash
consideration to be paid under such Asset Purchase Agreement(s) to the QI; and
(v) thereafter, Capstar shall assign its contractual rights under the
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Exchange Station Agreement to the QI who will transfer cash to the owner of the
Exchange Station(s) in return for the transfer of the Exchange Station(s) to
Capstar.
(2) If Capstar elects to have Chancellor
acquire an Exchange Station pursuant to an Exchange Station Agreement that is a
stock purchase agreement, (i) Capstar shall negotiate an Exchange Station
Agreement with the owner of such Exchange Station, on Chancellor's behalf, on
such terms and conditions as are acceptable to Capstar; (ii) Chancellor and
Capstar shall simultaneously execute Asset Exchange Agreement(s) (herein so
called) acceptable to both Chancellor and Capstar pursuant to which Chancellor
and Capstar will exchange the Exchange Station being acquired pursuant to an
Exchange Station Agreement and , subject to (vi) below, all other assets and
liabilities of the company purchased by Chancellor pursuant to the Exchange
Station Agreement for the SFX Station(s), to be identified by Chancellor in its
sole discretion, whose Station Valuation(s) most closely approximate that of
the Exchange Stations (i.e., the cash purchase price to be paid for the stock
of the owner of the Exchange Stations after making appropriate adjustments for
working capital); (iii) Capstar shall pay any escrow or deposit obligations for
all Exchange Station Agreements; (iv) Chancellor shall bear no residual
liability or obligation arising from the breach or failure to perform by the
seller under the Exchange Station Agreement; (v) in each such case, the Asset
Exchange Agreement(s) shall provide that, if the Asset Exchange Agreement is
not consummated for any reason other than due to breach thereof by Chancellor,
Capstar will acquire the stock of the Exchange Station owner for an amount
equal to the sum of (x) the purchase price paid by Chancellor for such stock,
(y) Chancellor's transactional costs, and (z) any capital expenses approved by
Capstar and incurred by Chancellor during its ownership of such stock; and (vi)
in each such case, the Asset Exchange Agreement(s) shall provide that the net
working capital of the company being acquired pursuant to the Exchange Station
Agreements that are stock purchase agreements will be separately transferred to
Capstar (if such net working capital is a positive amount, Capstar shall pay to
Chancellor such amount, and if such net working capital is a negative amount,
Chancellor shall pay to Capstar such amount). In negotiating such Exchange
Station Agreements that are stock purchase agreements, each Exchange Station
Agreement must provide that the seller of the Exchange Station(s) will pay off
all debt (other than current liabilities) of the company being acquired under
the Exchange Station Agreement at or prior to the closing of such Exchange
Station Agreement. For two years from the date that Chancellor acquires the
stock of a company pursuant to an Exchange Station Agreement that is a stock
purchase agreement, Chancellor shall not liquidate such company or cause such
company to merge into a member of Chancellor's consolidated group.
(3) Prior to closing each Exchange
Station Agreement in which Chancellor is the purchaser of stock, as described
in Section 1(a)(2) above, if Capstar, in its
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discretion, shall have negotiated a time brokerage agreement (a "TBA") with the
seller of an Exchange Station, then Chancellor shall, upon execution of the
applicable Asset Exchange Agreement and such TBA, immediately assign the TBA to
Capstar and Chancellor shall have no further liabilities thereunder. Each
Asset Exchange Agreement will provide that, upon the acquisition of stock of
the owner of the Exchange Station by Chancellor, Capstar will operate the
Exchange Station under a TBA as soon as it is permitted to do so under law,
until the closing of such Asset Exchange Agreement, and Capstar shall pay to
Chancellor an annual TBA fee equal to ten percent (10%) of the purchase price
under the Exchange Station Agreement (i.e., the cash purchase price to be paid
for the stock of the owner of the Exchange Stations after making appropriate
adjustments for working capital), such fee to be charged and paid monthly in
arrears. The TBA will provide, to the extent possible, that the net working
capital for the Exchange Station will be transferred to Capstar at the
commencement of the TBA (if such net working capital is a positive amount,
Capstar shall pay to Chancellor such amount, and if such net working capital is
a negative amount, Chancellor shall pay to Capstar such amount). All revenues
and expenses from station operations during such TBA period shall belong to
Capstar, except for any expenses required by FCC rules and policies to be
retained by the licensee. The TBA between Chancellor and Capstar shall provide
for the reimbursement of any expenses required by the FCC rules and policies to
be retained by the licensee and such capital expenditures for the Exchange
Station as Capstar shall approve (it being understood that Chancellor shall not
make any capital expenditures other than those required and paid for by
Capstar).
(b) Chancellor and Capstar shall utilize their
commercially reasonable efforts to cause these acquisitions and exchanges to
occur as expeditiously as possible, including their full cooperation in
obtaining any necessary governmental consents and authorizations.
(c) The foregoing procedures shall be utilized
over the Exchange Period (on such timetable as Capstar shall determine) until
(i) all of the SFX Stations have been exchanged for Exchange Stations, or (ii)
all of the SFX Stations have been sold to Chancellor for cash.
(d) Capstar shall provide to Chancellor
representations and warranties with respect to the SFX Stations and Capstar's
transfer to Chancellor thereof customary in the industry, only with respect to
the following matters: (i) organization, (ii) authorization, (iii) absence of
breaches in connection with the transfer, (iv) qualifications as an FCC
assignor, (v) absence of conflicting orders, (vi) absence of litigation, (vii)
taxes during the period after the Capstar-SFX Merger and (viii) title.
Chancellor shall provide no representations and warranties with respect to the
Exchange Stations except, in the case of the Chancellor Jacksonville Stations
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(as defined in Section 4 below) and Exchange Stations that are acquired by
Chancellor under Exchange Station Agreements that are stock purchase
agreements, as to absence of liens and title defects arising during
Chancellor's ownership of such stations.
(e) It is the intention of the parties that these
transactions shall be treated in a tax-efficient manner, and that, to the
extent permitted by law, the transactions will qualify as like-kind exchanges
under Section 1031 of the Internal Revenue Code. However, all risk of
favorable tax treatment of the transactions to Capstar shall be on Capstar.
(f) Exchange Station Agreements which provide for
the purchase of stock, rather than assets, (i) may not have the effect of
imposing any material tax risk on Chancellor and (ii) shall provide for the
adjustment of the Station Valuations called for in the last sentence of this
Section 1(f) if the aggregate basis which Chancellor would enjoy in the SFX
Stations if it were purchasing such stations in asset acquisitions for cash at
the agreed-upon Station Valuation prices would be decreased by more than $120
million (the "Basket Amount"). (By accepting up to the Basket Amount in
diminished basis, Chancellor only agrees to thereby reduce the amortizable or
depreciable asset value for the SFX Stations, and not to the recognition of
gain which could arise as a result of an exchange that is not qualified under
Section 1031 of the Internal Revenue Code, and Capstar agrees to reimburse
Chancellor for any such gain that causes additional tax obligations for
Chancellor.) If the Basket Amount would be exceeded as a result of a
contemplated transaction, the Station Valuation(s) for the SFX Station(s) to be
exchanged for the station(s) acquired under the stock-based Exchange Station
Agreement(s) shall be reduced in an amount necessary to compensate Chancellor
for the reduction in basis beyond the Basket Amount, and, in such event, the
parties shall proceed with such transaction.
(g) Capstar shall also bear the risk of changes
in regulatory policy (at the Federal Communications Commission ("FCC"),
Department of Justice ("DOJ") or elsewhere) which would require the early
termination of the Chancellor TBA's contemplated by Section 6 of this letter
agreement. If such policy change occurs, and termination of such TBA's is
thereby required, the parties will proceed promptly to consummate a sale for
cash of all remaining SFX Stations from Capstar to Chancellor for a price equal
to the aggregate Station Valuations for such remaining SFX Stations no later
than the last permissible date on which the TBA's are permitted to continue
under the revised policy.
(h) Capstar shall, in good faith, endeavor first
to contract for asset purchases, rather than stock purchases.
(i) All other provisions of this Section 1
notwithstanding, if, by the date that is one hundred eighty (180) days before
the expiration of the Exchange Period, any SFX
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Station has not been exchanged or sold to Chancellor or has not become subject
to an Asset Exchange Agreement or Asset Purchase Agreement, Chancellor shall
have the right to immediately acquire all such remaining SFX Station(s) for a
purchase price in cash equal to the respective Station Valuation(s) for such
SFX Station(s). Accordingly, the parties will no later than such date execute
an Asset Purchase Agreement, with provisions customarily found in such
contracts, and proceed promptly to obtain any necessary government approvals
and proceed as expeditiously as possible toward the consummation of such sales,
which the parties shall use commercially reasonable efforts to cause to occur
on or before the expiration date of the Exchange Period. All Exchange Station
Agreements entered into prior to one hundred eighty days before the expiration
of the Exchange Period must provide that they terminate if not closed within
one year of the original date of such Exchange Station Agreement.
(j) All other provisions of this Section 1
notwithstanding, Capstar shall have the right, at any time during the Exchange
Period, to designate, upon one hundred twenty (120) days prior written notice,
any SFX Station for sale to Chancellor in cash at a price equal to its Station
Valuation. Upon such designation, the parties shall promptly execute an Asset
Purchase Agreement, with provisions customarily found in such contracts, and
proceed promptly to obtain any necessary government approvals and consummate
that sale.
2. Purchase and Sale of KKPN(FM). The parties
acknowledge that, due to the attributable ownership of Hicks, Muse, Xxxx &
Xxxxx Incorporated ("HMTF") in both Chancellor and Capstar, the acquisition by
Capstar or Chancellor of all of the SFX Stations which are licensed to or serve
the Houston, Texas, market, together with KKPN-FM (owned by SFX), would, when
combined with Chancellor's existing Houston properties (including KLDE-FM,
which is being acquired from Bonneville International Corporation
("Bonneville")), exceed the FCC's current multiple ownership limits.
Accordingly, Chancellor and Capstar agree that:
(a) Chancellor will undertake to identify and
obtain a purchaser for KKPN-FM, conditioned only on the closing of the
Capstar-SFX Merger and all necessary governmental approvals. (The Capstar-SFX
Merger is currently expected to close on or before May 15, 1998, and Chancellor
will use its commercially reasonable efforts to contract for the sale of
KKPN-FM in a manner that will eliminate any potential delay in the closing of
the Capstar-SFX Merger). Capstar will execute any necessary agreements to
facilitate the timely sale of KKPN-FM. The KKPN-FM license will be assigned
directly from SFX to the purchaser. Capstar shall have the right to approve
the terms of any KKPN-FM sale agreement other than the purchase price.
(b) Chancellor shall be free to obtain any sale
price it can for KKPN-FM. Fifty Million Dollars ($50,000,000) (the "KKPN
Capstar Price") shall be paid at closing by
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the purchaser of KKPN-FM to Capstar, and any amount of the sale price for
KKPN-FM in excess of the KKPN Capstar Price shall be retained by Chancellor for
its own account. Chancellor may agree to sell KKPN-FM for an amount less than
the KKPN Capstar Price without the consent of Capstar, in which case the entire
sale price shall be paid to Capstar at the closing of the KKPN-FM sale, and
Chancellor will pay the shortfall between the actual sale price and the KKPN
Capstar Price to Capstar at the closing of the sale of KKPN-FM.
(c) If Chancellor has failed by March 1, 1998 to
secure the binding agreement of a qualified purchaser to acquire KKPN-FM,
Capstar shall be permitted to seek and secure such a purchaser. If Capstar has
secured such a purchaser, Chancellor will cooperate in any way reasonably
necessary to consummate the closing of the sale of KKPN-FM to that purchaser,
and Chancellor shall, at the closing of the KKPN-FM sale, pay to Capstar the
difference, if any, between the sale price and the KKPN Capstar Price, up to a
maximum of ten million dollars ($10,000,000).
3. Long Island. Chancellor and Capstar agree that the
Asset Exchange Agreement between SFX and Chancellor dated July 1, 1996 (the
"Chancellor-SFX AEA"), providing for the exchange of SFX's Long Island radio
stations (WBLI-FM, WBAB-FM, WGBB(AM) and WHFM-FM) (the "SFX Long Island
Stations"), shall be terminated at the closing of the Capstar-SFX Merger. The
parties will cooperate in seeking the prompt termination of the DOJ litigation
against Chancellor in connection with Xxxx-Xxxxx-Xxxxxx review of the
Chancellor-SFX AEA (the "DOJ Litigation"). In addition, the parties agree to
the following with regard to the SFX Long Island Stations:
(a) Chancellor shall prepare a motion to dismiss
the DOJ Litigation without prejudice, and shall use its commercially reasonable
efforts to provide such motion no later than February 23, 1998 to DOJ for its
concurrence. The motion shall provide that the DOJ Litigation should be
terminated on the ground that (1) there is no reasonable possibility that the
DOJ Litigation will be completed by September 2, 1998, (2) Chancellor is
unwilling to extend the Chancellor-SFX AEA beyond its current terms and (3)
accordingly, Chancellor has agreed to (i) terminate the Chancellor SFX-AEA as
soon as practicable, but not later than immediately following the first to
occur of (A) the closing of the Capstar-SFX Merger and (B) September 2, 1998,
(ii) not extend the Chancellor-SFX AEA beyond September 2, 1998, (iii)
terminate the time brokerage agreements regarding the SFX Long Island Stations
as soon as practicable, but not later than September 2, 1998, (iv) not acquire
or operate, or agree to acquire or operate, WBAB-FM and WBLI-FM for a period of
three years or such shorter period as Chancellor owns WALK-FM, (v) provide at
least thirty days prior notice to DOJ before acquiring or operating any other
station licensed to Suffolk County, Long Island for a period of three years or
such shorter
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period as Chancellor owns WALK-FM (unless such acquisition or operation is
subject to prior Xxxx-Xxxxx-Xxxxxx notification, in which case such
notification will suffice) and (vi) dispose of WBAB-FM and WBLI-FM
expeditiously in the event that Chancellor acquires such stations for any
reason. Chancellor agrees that, if necessary to obtain concurrence by DOJ to
the motion to dismiss, it shall agree, for purposes of Sections 3(a)(3)(iv) and
3(a)(3)(v) above, to comply with the obligations set forth in such subsections
for a period of up to 10 years. Chancellor shall use its commercially
reasonable efforts to file and prosecute the motion to dismiss upon receipt of
concurrence thereto by DOJ.
(b) Capstar shall be responsible for orderly
disposition of the SFX Long Island Stations. Capstar will commence immediately
to find a purchaser for the SFX Long Island Stations. Such purchaser will be
qualified for prompt approval by both the FCC and DOJ and will not, in the
reasonable opinion of antitrust counsel to Chancellor, inhibit the prompt
termination of the DOJ Litigation. Chancellor and Capstar will cooperate in
(i) the execution of any necessary assignment or sale documents, (ii) the
prosecution of any FCC applications or DOJ approvals which are needed to
facilitate the sale or other disposition of the SFX Long Island Stations, and
(iii) the consummation of the sale or other disposition of the SFX Long Island
Stations to one or more third parties. With respect to this disposition,
Chancellor shall provide to Capstar such financial information regarding the
SFX Long Island Stations in Chancellor's possession as Capstar may reasonably
request.
(c) At the closing of the sale of the SFX Long
Island Stations, Capstar shall pay to Chancellor an amount equal to the fees of
Chancellor's DOJ litigation counsel in connection with the DOJ Litigation from
and after September 5, 1997.
(d) Except with respect to the obligations under
Section 3(a), if for any reason the parties fail to consummate their
obligations regarding the SFX Long Island Stations, the remainder of the
Transaction shall not be affected thereby.
4. Jacksonville. As soon as practicable after the date
hereof, Chancellor and Capstar will enter into an Asset Exchange Agreement (the
"Jacksonville Asset Exchange Agreement") under which Chancellor will exchange
stations WAPE-FM and WFYV(FM) (the "Chancellor Jacksonville Stations"), plus
$90,250,000 in cash, for KODA(FM), Houston (the "Jacksonville Exchange"), on
the following terms:
(a) The Chancellor Jacksonville Stations shall be
valued at Fifty Three Million Dollars ($53,000,000) for purposes of the
Jacksonville Exchange.
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(b) The closing of the Jacksonville Exchange
shall be conditioned upon (i) the termination (without legal challenge by any
party) of the Chancellor-SFX AEA and (ii) the prior or contemporaneous closing
of the Capstar-SFX Merger.
(c) The Jacksonville Exchange shall not be
included in any computation of the Basket Amount or any reduction of
Chancellor's tax basis as contemplated by Section 1(f).
5. Austin. Capstar's agreement dated December 22, 1997
to acquire stations KASE-FM and KVET-AM-FM, Austin, Texas (the "Austin
Stations") for a purchase price of $90,250,000 (the "Austin Acquisition
Agreement") will be treated as an Exchange Station Agreement for purposes of
Section 1 of this letter agreement. Capstar shall assign its contractual
rights under the Jacksonville Asset Exchange Agreement to a QI and Chancellor
shall transfer the cash consideration to be paid under the Jacksonville Asset
Exchange Agreement to the QI at the closing of such transaction. Thereafter,
Capstar will assign the Austin Acquisition Agreement to the QI, who will
transfer cash to the owner of the Austin Stations in return for the transfer of
the Austin Stations to Capstar. If the closing under the Jacksonville Asset
Exchange Agreement is not consummated simultaneously with the closing of the
Capstar-SFX Merger, then for the period from the closing of the Capstar-SFX
Merger until the date that the Jacksonville Asset Exchange Agreement is
consummated, Chancellor shall be paid an amount per month equal to the
difference between the cost of capital that would be necessary for Chancellor
to acquire KODA(FM) and the amount of the monthly TBA fee that is paid by
Chancellor to operate KODA(FM) under a TBA pursuant to Section 6 of this letter
agreement.
6. Time Brokerage Agreements. Chancellor will commence
operations of each and all of the SFX Stations (which are not otherwise
acquired by Chancellor on the Capstar-SFX Merger closing date) under separate
time brokerage agreements (the "TBA's") under the following conditions:
(a) No TBA shall commence until all necessary
Xxxx-Xxxxx-Xxxxxx waiting periods have expired or DOJ has otherwise approved
such operations.
(b) The TBA's shall otherwise commence on the
earlier of (i) the Capstar-SFX Merger closing date, or (ii) such earlier date
as may be acceptable to Chancellor and is approved and agreed to by SFX. The
commencement date for the TBA for each SFX Station may be determined
independently, and the delay of one such TBA shall not preclude earlier
commencement of any other TBA which meets these conditions. Each TBA shall be
for a ten year term, with a five year renewal option, subject to termination
upon the closing of the contemplated exchange or purchase by Chancellor.
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(c) The TBA's shall utilize form agreements for
such operations customary in the radio industry, and shall provide for the sale
of substantially all of the programming time on each such SFX Station to
Chancellor. All revenues and expenses from station operations during the TBA
period shall belong to Chancellor, except for any expenses required by FCC
rules or policies to be retained by the licensee. The TBA's shall provide for
the reimbursement of any expenses required by the FCC rules and policies to be
retained by the licensee and such capital expenditures for the SFX Station as
Chancellor shall approve (it being understood that Capstar shall not make any
capital expenditures other than those required and paid for by Chancellor).
(d) The TBA fee shall be charged and paid monthly
in arrears during the period of TBA operations, and the monthly fee shall be an
amount equal to ten percent (10%) of the Station Valuation, divided by twelve.
The TBA fee for each SFX Station so operated shall be paid to SFX during the
period prior to the Capstar-SFX Merger closing (if such TBA is permitted by
SFX) and to Capstar thereafter.
7. WFAS Sale. Capstar agrees to (i) use commercially
reasonable efforts to file all necessary notifications and obtain termination
or expiration of the waiting period required under the Xxxx-Xxxxx-Xxxxxx act
with respect to the disposition of station WFAS-FM to Westchester Radio, L.L.C.
(FCC File No. BAL-971009GE) and (ii) assuming such waiting period has expired
or been terminated, consummate such disposition on or before the date
designated by Chancellor upon 10 business days' prior notice for its closing
under an Asset Exchange Agreement between Chancellor and Bonneville (FCC File
Nos. XXXX-000000XX, XXXX-000000XX, XXXX-000000XX, XXXX-000000XX, XXXX-000000XX,
and BAL-971014GK).
8. Damages.
(a) The following shall apply to breaches of this
Letter Agreement, any Asset Exchange Agreement or any Asset Purchase Agreement:
(i) In the event that Chancellor
materially breaches this Letter Agreement, and Capstar is not also in material
breach thereof, then if the Capstar-SFX Merger is terminated as a result of
Chancellor's material breach of this Letter Agreement, Capstar is not in
material breach of the Capstar-SFX Merger Agreement (other than breaches that
would not have occurred but for Chancellor's material breach of this Letter
Agreement), and SFX obtains the liquidated damages provided for in the
Capstar-SFX Merger Agreement, Capstar shall receive from Chancellor liquidated
damages in the amount of $100,000,000 (for purposes of this Section 8(a)(i), a
"material breach" is limited to the failure by Chancellor to close the
Transaction at the
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time of the proposed closing of the Capstar-SFX Merger, after all of the
conditions to Chancellor's obligations to close have been satisfied).
(ii) In the event that Chancellor
materially breaches this Letter Agreement, and Capstar is not also in material
breach thereof , then if Capstar is not in material breach of the Capstar-SFX
Merger Agreement, and the Capstar-SFX Merger is deferred beyond June 1, 1998 as
a result of Chancellor's material breach of this Letter Agreement but is
ultimately closed, Capstar shall receive liquidated damages in an amount equal
to $35,000,000, plus an amount equal to all amounts paid by Capstar to the SFX
security holders to extend the date of the Capstar-SFX Merger from June 1,
1998, up to a maximum of $50,000,000 (i.e., the aggregate maximum damages
permissible under this clause is $85,000,000) (for purposes of this Section
8(a)(ii), a "material breach" is limited to the failure by Chancellor to close
the Transaction at the time of the proposed closing of the Capstar-SFX Merger,
after all of the conditions to Chancellor's obligations to close have been
satisfied).
(iii) In the event that Chancellor
materially breaches any Asset Exchange Agreement or Asset Purchase Agreement
after the Capstar-SFX Merger has closed, then (A) if such material breach is
"willful" (as defined in Section 8(a)(iv) below), Capstar shall have the right
to terminate such Asset Exchange Agreement or Asset Purchase Agreement and the
TBA for the relevant SFX Station(s) and the Letter Agreement and any other
Definitive Agreement (as defined in Section 14 below) and seek actual damages
for such material breach, subject to Capstar's duty to use its commercially
reasonable efforts to mitigate its damages caused by such material breach
(provided, however, that Capstar shall in all events be obligated to prepay the
Note (as defined below) as set forth in Paragraph 9 of the attached Loan Term
Sheet (as defined below) as a result of such termination, without any right of
setoff for such actual damages) and (B) if such material breach is not
"willful," Capstar shall have the right to terminate such Asset Exchange
Agreement or Asset Purchase Agreement and the TBA for the relevant SFX
Station(s), but not the Letter Agreement or any other Definitive Agreement, and
seek actual damages for such material breach, subject to Capstar's duty to use
its commercially reasonable efforts to mitigate its damages caused by such
material breach, provided, that if Chancellor materially breaches another Asset
Exchange Agreement or Asset Purchase Agreement (whether or not "willful"),
Capstar shall have the right to terminate such other Asset Exchange Agreement
or Asset Purchase Agreement and the TBA for the relevant SFX Station(s) and the
Letter Agreement and any other Definitive Agreement, and seek actual damages
for such material breach, subject to Capstar's duty to use its commercially
reasonable efforts to mitigate its damages caused by such material breach
(provided, however, that Capstar will in all events be obligated to prepay the
Note as set forth in Paragraph 9 of the Loan Term Sheet as a result of such
termination, without any right of setoff for such actual damages). (For
purposes of this
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Section 8(a)(iii), a "material breach" shall be the failure of Chancellor to
close any post-Capstar-SFX Merger Exchange after all of the conditions to
Chancellor's obligations to close have been satisfied, or any other material
breach under the respective Asset Exchange Agreement or Asset Purchase
Agreement; provided that, with respect to any material breach other than a
failure to close after all conditions to close have been satisfied, such
material breach is not cured by Chancellor within 30 days of written notice
provided by Capstar of such material breach).
(iv) A "willful" material breach shall
mean (A) a material breach by the breaching party, (B) written notice by the
other party of such material breach and (C) the failure to use commercially
reasonable efforts to cure such material breach within 30 days after receipt of
such notice. For purposes of this definition of "willful," no party shall
claim that a material breach is "willful" on the ground that it is incurable;
provided, however, that if the material breach has not been cured within such
30 day period, and the non-breaching party extends the cure period, then the
material breach shall be deemed to be "willful" unless during the extended cure
period the breaching party continues to use commercially reasonable efforts to
cure the breach.
(b) Other than as set forth in Section 8(a)(i)
and Section 8(a)(ii), Capstar shall not be entitled to liquidated damages from
Chancellor.
(c) In the event Chancellor's material breach of
this Letter Agreement occurs prior to the closing of the Capstar-SFX Merger,
Capstar shall in good faith attempt to proceed with the closing of the
Capstar-SFX Merger by seeking to obtain acceptable alternative financing to
replace the financing for the Capstar-SFX Merger that would otherwise be
realized as a result of the Transaction.
(d) To secure a portion of the liquidated damage
obligations hereunder, Chancellor shall, upon the date that the rights and
obligations under this Letter Agreement become effective under Section 14,
deposit into escrow an irrevocable letter of credit in the amount of
$35,000,000, which may be drawn upon by Capstar after its release from such
escrow. The letter of credit shall be applied to Chancellor's liquidated
damage obligations set forth above; provided, that immediately upon the closing
of the Capstar-SFX Merger, such letter of credit shall be returned to
Chancellor.
(e) If the Capstar-SFX Merger is terminated as a
result of Capstar's material breach thereunder (other than breaches that would
not have occurred but for Chancellor's material breach of this Letter
Agreement), then (i) if such material breach is "willful" (as defined in
Section 8(a)(iv) above), Capstar shall reimburse Chancellor for its
out-of-pocket expenses incurred in connection with this Transaction, up to a
maximum of $5 million,
13
R. Xxxxxx Xxxxx
February 20, 1998
Page 13
and Chancellor shall be entitled to seek its additional actual damages for such
breach and (ii) if such material breach is not "willful" (as defined in Section
8(a)(iv) above), Capstar shall reimburse Chancellor for its out-of-pocket
expenses incurred in connection with this Transaction, up to a maximum of $5
million. Nothing in this Section 8(e) is intended to limit Chancellor's rights
to seek actual damages for breaches by Capstar of this Letter Agreement or any
Definitive Agreement.
(f) If the Capstar-SFX Merger is terminated as a
result of SFX's breach thereunder, Chancellor shall, at its option, be entitled
to one-third of any recovery that Capstar is able to obtain as a result of such
breach, provided, that in exercising this option, Chancellor shall be obligated
to reimburse Capstar for one-third of Capstar's costs in seeking such recovery
as such costs are incurred.
(g) Except as set forth in Section 8(a)(iii) and
Section 8(e), nothing in this Section 8 shall be construed to prohibit Capstar
or Chancellor from seeking actual damages for breaches of this Letter Agreement
or any the Definitive Agreement that are not covered by liquidated damage
provisions.
9. Houston/Pittsburgh. The parties will use their
commercially reasonable efforts to obtain DOJ approval of the Capstar-SFX
Merger and the Transaction. In this regard, the parties agree that WTAE-AM,
Pittsburgh, may be required to be divested to obtain DOJ approval of the
Capstar-SFX Merger and the Transaction. With respect to WTAE-AM, Capstar
shall undertake to identify and obtain a purchaser for such station. Capstar
shall be free to obtain any sale price it can for WTAE-AM and shall control all
aspects of the sale procedure. Capstar shall bear all risk related to the sale
of WTAE-AM, including without limitation risk of loss of the liquidated damages
under the Capstar-SFX Merger Agreement.
10. Note. In connection with the Transaction, Chancellor
will, upon the occurrence of the conditions set forth in the term sheet
attached hereto and by this reference made a part hereof (the "Loan Term
Sheet"), provide a $250 million aggregate principal amount loan to Capstar
immediately prior to the closing of the Capstar-SFX Merger. The obligations of
Capstar under such loan will be evidenced by a note (the "Note"), which will
have the essential terms set forth in the Loan Term Sheet.
11. Conditions. The parties' obligations under this
Letter Agreement and each Definitive Agreement are conditioned on the
following: (i) receipt of all necessary FCC approvals; and (ii) expiration or
termination of any necessary waiting periods that may be required under the
Xxxx-Xxxxx-Xxxxxx Act. Chancellor's obligations under this Letter Agreement
and each Definitive Agreement are further conditioned on the following: (w)
the investment of
14
R. Xxxxxx Xxxxx
February 20, 1998
Page 14
no less than $650 million, in equity securities of Capstar that are subordinate
to the Note, between January 1, 1998 and the closing of the Capstar-SFX Merger;
(x) at the closing of the Capstar-SFX Merger, HMTF and its affiliates shall own
more than 50% of all of the common equity of Capstar; (y) the absence on the
closing date of the Capstar-SFX Merger of any material breach of any covenant,
obligation, representation or warranty by Capstar, SFX and their subsidiaries
under any material debt instrument; and (z) the absence on the closing date of
the Capstar-SFX Merger of any material breach of any covenant, obligation,
representation or warranty by Capstar under this Letter Agreement (both before
and after giving effect to the consummation of the Transaction and the
acquisition by Chancellor of the Note). In the event of a Material Adverse
Effect (as defined in the Capstar-SFX Merger Agreement) on SFX related in any
material respect to the SFX Stations prior to the closing of the Capstar-SFX
Merger, Capstar must obtain Chancellor's consent prior to any waiver of such
Material Adverse Effect, and if Chancellor does not consent to such a waiver,
Chancellor shall have the right to terminate this Letter Agreement. The
parties agree that, (1) in the event of any reduction in purchase price under
the Capstar-SFX Merger that is negotiated as a result of such a Material
Adverse Effect on SFX related in any material respect to the SFX Stations,
Chancellor shall be entitled to share pro rata in any such reduction (i.e., to
the proportional extent that such Material Adverse Effect affects the SFX
Station(s)), to be reflected in an appropriate reduction in the Station
Valuations for the SFX Stations to be acquired by Chancellor hereunder and (2)
in the event of any other reduction in the purchase price under the Capstar-SFX
Merger that is negotiated by Capstar, Chancellor shall be entitled to share pro
rata in any such reduction, to be reflected in an appropriate reduction in the
Station Valuations for the SFX Stations to be acquired by Chancellor hereunder.
12. Governmental Approvals. As soon as reasonably
practicable after the date that the rights and obligations under this Letter
Agreement become effective under Section 14, Chancellor and Capstar will submit
this Letter Agreement to the DOJ and the FCC in order to obtain all necessary
government approvals for the Transaction.
13. Arbitration. The parties agree that any dispute
arising out of or relating to this Letter Agreement or any Definitive 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 13 shall not
apply with regard to any
15
R. Xxxxxx Xxxxx
February 20, 1998
Page 15
equitable remedies to which any party may be entitled under this Letter
Agreement or any Definitive Agreement.
14. Conditions Precedent. Except as set forth in Section
16, the rights and obligations of the parties under this Letter Agreement
(including, without limitation, Chancellor's obligation to provide the letter
of credit referred to in Section 8(d) above) shall not become effective until
(i) approval of the Transaction by a majority of disinterested directors of
Chancellor, (ii) approval of the Transaction by the board of directors of
Chancellor, (iii) receipt by Chancellor of a fairness opinion from a national
investment banking firm regarding the Transaction, (iv) approval of the
Transaction by the Limited Partnership Advisory Committee of Hicks, Muse, Xxxx
& Xxxxx Equity Fund III, L.P., and receipt by such committee of a fairness
opinion regarding the Transaction from a national investment banking firm, and
(v) approval of the Transaction by the board of directors of Capstar. The
parties shall have twenty-one days after the date hereof to obtain such
approvals and opinions (the "Approval Period"). Each party shall promptly
provide any information reasonably requested by the other party and deemed
necessary by the other party to obtain such approvals and opinions. The
appropriate party shall notify the other in writing immediately upon
satisfaction of each condition precedent.
15. Acquisition Proposals. During the Approval Period,
Capstar shall not, nor shall it authorize or permit any officer, director,
employee, affiliate of, or any investment banker, attorney or other advisor or
representative of Capstar to, directly or indirectly, (i) solicit, initiate or
encourage the submission of any Acquisition Proposal (as defined below) or (ii)
participate in any discussions or negotiations regarding, or furnish to any
person any information with respect to, or take any other action that
constitutes, or may reasonably be expected to lead to, any Acquisition
Proposal. During the Approval Period, Capstar will notify Chancellor
immediately of any inquiries or proposals with respect to any Acquisition
Proposal that is received by, or any such negotiations or discussions that are
sought to be initiated with, Capstar. An "Acquisition Proposal" means any
proposal with respect to an acquisition of all or any portion of the SFX
Stations, other than the transactions contemplated hereby.
16. Binding Nature. The parties agree that this Letter
Agreement, including the Loan Term Sheet, sets forth the essential terms and
conditions regarding the Transaction, and the parties intend by their
signatures to be bound thereby. If the rights and obligations under this
Letter Agreement have not become effective under Section 14 by the end of the
Approval Period, this Letter Agreement shall automatically terminate.
Notwithstanding the provisions of Section 14, the rights and obligations under
Sections 3(a), 7, 13, 15 and 16 of this Letter Agreement shall become effective
immediately upon execution of this Letter Agreement (other than the rights and
obligations contained in Section 7(ii), which shall become effective
immediately upon
16
R. Xxxxxx Xxxxx
February 20, 1998
Page 16
satisfaction of the conditions contained in Sections 14(i), 14(ii) and
14(iii)). The parties shall use their commercially reasonable efforts to
negotiate and finalize forms of Asset Exchange Agreement, Asset Purchase
Agreement, TBA, Note, and associated security documents (together, and upon the
execution thereof, the "Definitive Agreements"). Attached to this Letter
Agreement is the form of press release that will be jointly-issued by
Chancellor and Capstar immediately after execution. This Letter Agreement
shall be governed by and construed under the laws of the State of Texas.
17
R. Xxxxxx Xxxxx
February 20, 1998
Page 17
Please confirm your agreement with the foregoing by executing
this letter on behalf of Capstar and returning a copy to me.
Sincerely,
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES
By: ____________________________________________________________________
Xxxxx X. Xxxxxxxx, President and Chief Executive Officer
CAPSTAR BROADCASTING CORPORATION
By: ____________________________________________________________________
R. Xxxxxx Xxxxx, President and Chief Executive Officer
18
TERM SHEET
12% SUBORDINATED SECURED NOTE
1. Security: 12% Subordinated Secured Note (the "Note")
2. Borrower: Capstar Broadcasting Corporation ("Capstar").
3. Lender: Chancellor Media Corporation of Los Angeles
("Chancellor").
4. Interest: 12% per annum accruing from the date of issuance, payable
quarterly (subject to Capstar's Deferral Election right
and/or to adjustment, in each case, as set forth below).
Of such amount, 5/6 shall be payable in cash and 1/6
shall, at Capstar's option, either be payable in cash or
added to the principal amount of the Note. To the extent
that any amount not paid in cash is so added to the
principal amount, such amount shall bear interest at the
rate otherwise applicable to the principal amount.
Capstar represents to Chancellor that, at the closing of
the Capstar-SFX Merger, no provision contained or to be
contained in its material debt instruments shall expressly
prohibit interest payments on the Note, it being
understood that financial covenants contained in such
instruments may prevent, directly or indirectly, such
interest payments at a later time.
Upon a Deferral Election, the interest rate on the Note
for the quarterly period in which such Deferral Election
is made (i.e., the quarterly period immediately preceding
the date on which an interest payment is due (the
"Deferred Quarter")) shall increase from 12% per annum to
14% per annum (the "Increased Rate"), of which 6/7 shall
be payable in cash and 1/7 shall, at Capstar's option,
either be payable in cash or added to the principal amount
of the Note. To the extent that any amount not paid in
cash is so added to the principal amount, such amount
19
shall bear interest at the rate otherwise applicable to
the principal amount. The Increased Rate shall apply from
the beginning of the Deferred Quarter until the payment by
Capstar of all deferred interest in cash.
If Capstar shall not have completed acquisitions during
the Exchange Period (excluding the Jacksonville Exchange
and the acquisition of the Austin Stations) (x) with an
aggregate purchase price of $100 million by the first
anniversary of the issue date of the Note, (y) with an
aggregate purchase price of $200 million by the end of the
second anniversary of the issue date of the Note, and (z)
with an aggregate purchase price of $300 million by the
end of the third anniversary of the issue date of the
Note, in each case, that are subject to the procedures
described in Section 1 of this Letter Agreement, the
Increased Rate that would apply during any Deferral
Election during each such 12 month period, if any, shall
be increased from 14% per annum to 16% per annum, of which
7/8 shall be payable in cash and 1/8 shall, at Capstar's
option, either be payable in cash or added to the
principal amount of the Note. To the extent that any
amount not paid in cash is so added to the principal
amount, such amount shall bear interest at the rate
otherwise applicable to the principal amount.
5. Amount at Initial Issuance: Aggregate commitment of $250 million.
6. Term of Note: Due on the 20th anniversary of issuance or earlier as
provided herein.
7. Ranking: Subordinated, on terms acceptable to Capstar's senior
lenders, to all indebtedness of Capstar. Subject to the
subordination provisions, any new securities will not
prohibit or limit payment of interest on, or prepayment
of, the Note.
2
20
8. Capstar Prepayment Rights: Prepayable at option of Capstar any time in increments of
$1,000 principal amount plus accrued interest; provided,
that any optional prepayment by Capstar shall not affect
Chancellor's prepayment rights described in paragraph 9
below.
Any prepayment payments made hereunder shall be applied
first to accrued interest and thereafter to principal.
9. Capstar Prepayment Obligations: Chancellor will have the right (but not the obligation) to
require Capstar to prepay that portion of the Note equal
to 50% of the cash purchase price payable by Chancellor
under an Asset Purchase Agreement or 50% of the cash
purchase price payable by Chancellor under an Exchange
Station Agreement that is a stock purchase agreement
(i.e., the cash purchase price to be paid for the stock of
the owner of the Exchange Stations after making
appropriate adjustments for working capital), upon the
consummation of the purchase of an SFX Station under an
Asset Purchase Agreement or the purchase of stock under an
Exchange Station Agreement that is a stock purchase
agreement.
Chancellor will have the option to require Capstar to
prepay any remaining portion of the Note (including
accrued interest) if Chancellor has given notice of
prepayment on the first to occur of (i) 30 days prior to
the closing of the transfer of the final SFX Station to
Chancellor under an Asset Purchase Agreement or Asset
Exchange Agreement and (ii) Chancellor's election under
Section 1(i) of this Letter Agreement to purchase all
remaining SFX Stations for cash, in either case, such
prepayment to occur on the closing of the acquisitions
referred to in clauses (i) or (ii), as applicable, above.
3
21
In the event of a Deferral Election (as defined in
paragraph 12 below), Chancellor's right to require Capstar
to prepay a portion of the Note shall be increased such
that Chancellor may, with respect to such Deferral
Election, require Capstar to prepay that portion of the
Note equal to a percentage of the purchase price set forth
in the first paragraph of this Paragraph 9 equal to (x)
50% plus (y) the product of 50% multiplied by a fraction,
the numerator of which is the number of days of such
Deferral Election and the denominator of which is 360.
In the event that Capstar and its subsidiaries acquire
stations during the Exchange Period that are not acquired
in compliance with the procedures set forth in Section 1
of this Letter Agreement (a "Non-Exchange Acquisition"),
Chancellor shall have the right (but not the obligation)
to require Capstar to prepay, at the closing of any such
Non-Exchange Acquisition, that portion of the Note equal
to 100% of the amount that Capstar pays in such Non-
Exchange Acquisitions. This paragraph shall not apply to
(i) transactions of Capstar and its subsidiaries to
acquire stations that are the subject of binding
agreements and pending as of the date that the rights and
obligations under this Letter Agreement become effective
under Section 14of this Letter Agreement or the
reinvestment of proceeds from the sale of radio stations
WFAS-FM, WZZN-FM, WRKI-FM, WAXB-FM, WPUT-AM, WTAE-AM,
WJDX-FM and the SFX Long Island Stations, (ii) the
reinvestment of proceeds of station sales of Capstar and
its subsidiaries that are closed prior to the date that
the rights and obligations under this Letter Agreement
become effective under Section 14 of this Letter Agreement
or that are the subject of binding agreements and pending
4
22
as of the date that the rights and obligations under this
Letter Agreement become effective under Section 14 of this
Letter Agreement, (iii) the investment into SBI Holding
Corporation or its subsidiaries of proceeds of station
sales consummated between the date that the rights and
obligations under this Letter Agreement become effective
under Section 14 of this Letter Agreement and the date that
the Capstar-SFX Merger is consummated, (iv) other
acquisitions during the Exchange Period with a maximum
aggregate purchase price of $20 million and (v)
acquisitions of radio stations by SFX or its subsidiaries
from Capstar or its subsidiaries or by Capstar or its
subsidiaries from SFX or its subsidiaries.
In the event that Capstar terminates the Letter Agreement
or any Definitive Agreement pursuant to Section
8(a)(iii)(A) of the Letter Agreement, Capstar shall have
the obligation to prepay all principal and accrued
interest under the Note within three years of the date of
such termination. In the event that Capstar terminates
the Letter Agreement or any Definitive Agreement pursuant
to Section 8(a)(iii)(B) of the Letter Agreement, Capstar
shall have the obligation to prepay all principal and
accrued interest under the Note immediately upon such
termination.
Any prepayment payments made hereunder shall be applied
first to accrued interest and thereafter to principal.
Capstar represents to Chancellor that, at the closing of
the Capstar-SFX Merger, no provision contained or to be
contained in its material debt instruments shall expressly
prohibit the satisfaction of Capstar's prepayment
obligations under the Note, it being understood that
financial covenants contained in such instruments may
prevent, directly or indirectly, the satisfaction of such
prepayment obligations at a later time.
5
23
10. Security for Capstar's Prepayment Obligations; (i) Senior perfected pledge by Capstar of common stock of
Guarantee: Capstar Broadcasting Partners, Inc. (100%), (ii) senior
perfected pledge by Capstar of common stock of SBI Holding
Corporation (a majority interest), and (iii) senior
perfected pledge of all common stock of SFX. In addition,
SBI Holding Corporation shall provide a full and
unconditional senior guarantee of Capstar's prepayment
obligations.
11. Covenants: Debt Incurrence. SBI Holding Corporation and its
subsidiaries will not be permitted, directly or
indirectly, to incur, create, assume, guarantee, acquire
or become liable for indebtedness except in compliance
with a 9:1 consolidated indebtedness to trailing four-
quarter EBITDA ratio. Capstar and its subsidiaries will
not be permitted, directly or indirectly, to incur create,
assume, guarantee, acquire or become liable for
indebtedness except in compliance with a 9.5:1
consolidated indebtedness to trailing four-quarter EBITDA
ratio. In each case, the aggregate liquidation preference
of all preferred stock of the entity and its consolidated
subsidiaries shall be counted as indebtedness. These debt
incurrence calculations will be made in a manner
consistent with leverage ratio calculations (including pro
forma adjustments) under the senior credit agreement of
Capstar Radio Broadcasting Partners, Inc. (as such
agreement may be amended or amended and restated),
provided, that for purposes of calculating leverage ratios
hereunder, Capstar and SBI Holding Corporation shall be
entitled during 1998 to include in their respective EBITDA
calculations at least $10 million and $4 million,
respectively, in net revenues from The AMFM Network
6
24
(whether or not such amounts are actually received), or
such higher amount if the net revenues actually received
by Capstar and SBI Holding Corporation from The AMFM
Network exceed such amounts. Borrowings under working
capital lines of credit of Capstar and its subsidiaries
and SBI Holding Corporation and its subsidiaries shall not
count as debt, except to the extent that the aggregate
borrowings under such lines of credit exceed $50 million,
provided, that, subject to the foregoing limitations, SBI
Holding Corporation may only exclude working capital
borrowings under such lines of credit for the purposes of
calculating its leverage ratio to the extent that it or
its subsidiaries have actually borrowed such amounts.
Restricted Payments. Capstar shall be restricted from
declaring or making payments, dividends and other
distributions on all securities of Capstar that are junior
in right of payment of interest, dividends, distributions
or dissolution or liquidation payments, and from
purchasing, redeeming, retiring or otherwise acquiring any
securities of Capstar that are junior in right of payment
of interest, dividends, distributions or dissolution or
liquidation payments or warrants, rights or options to
acquire such securities, except that, subject to (i)
timely payment by Capstar of all interest on the Note when
due and (ii) compliance with all other obligations under
the Note, Capstar shall be able to make restricted
payments in an aggregate amount equal to $10 million.
12. Deferral Election; Events of Default: Capstar may, at its option but subject to the Increased
Rate as provided in paragraph 4 above, elect to defer the
payment of any cash interest due under the Note until
Capstar is obligated to prepay the Note or otherwise pay
the Note upon its maturity (a "Deferral Election").
7
25
The following shall constitute Events of Default: (i) the
failure to pay the principal on the Note when such
principal becomes due and payable (at maturity, upon
optional or mandatory prepayment, or otherwise); (ii) a
default in the observance or performance of any other
obligation, covenant or agreement under the Note; and
(iii) the bankruptcy, insolvency or reorganization
affecting Capstar or any of its significant subsidiaries.
Upon an Event of Default, Chancellor shall be entitled to
any remedy available to it. Without limiting the
foregoing, upon an Event of Default, all principal and
accrued but unpaid interest on the Note shall, without any
action by Chancellor, become immediately due and payable.
8
26
SCHEDULE A
STATION VALUATIONS
STATION VALUATION
-----------------------------------------------------------
KBFB-FM $55,000,000
KTXQ-FM $55,000,000
KKRW-FM $83,250,000
KODA-FM $143,250,000
KQUE-AM $15,000,000
KPLN-FM $35,000,000
KYXY-FM $83,000,000
WDVE-FM $83,000,000
WJJJ-FM $20,000,000
WXDX-FM $30,000,000
WVTY-FM $35,000,000
