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EXHIBIT 10.17
ASSET EXCHANGE AGREEMENT
THIS ASSET EXCHANGE AGREEMENT (this "Agreement") is made as of March 7,
2000 among the company or companies designated as Clear Channel on the signature
page hereto (collectively, "Clear Channel") and the company or companies
designated as Exchange Party on the signature page hereto (collectively,
"Exchange Party").
Recitals
A. Clear Channel owns and operates the following radio broadcast
stations (collectively, the "Clear Channel Stations") pursuant to certain
authorizations issued by the Federal Communications Commission (the "FCC"):
KHKI(FM), Des Moines, Iowa
KGGO(FM), Des Moines, Iowa
WROQ(FM), Anderson, South Carolina
WTPT(FM), Forest City, North Carolina
B. Exchange Party owns and operates the following radio broadcast
stations (collectively, the "Exchange Party Stations") pursuant to certain
authorizations issued by the FCC:
WKDD(FM), Akron, Ohio
WTOU(AM), Akron, Ohio
C. Subject to the terms and conditions set forth herein, the parties
desire to exchange the Clear Channel Station Assets (defined below) and the
Exchange Party Station Assets (defined below). The parties intend the
transaction contemplated by this Agreement to be a like-kind exchange in
accordance with the provisions of Section 1031 of the Internal Revenue Code of
1986, as amended (the "Code").
D. Clear Channel Communications, Inc. (Clear Channel's parent), CCU
Merger Sub, Inc. and AMFM Inc. are parties to an Agreement and Plan of Merger
dated October 2, 1999 (the "AMFM Agreement").
Agreement
NOW, THEREFORE, taking the foregoing into account, and in consideration
of the mutual covenants and agreements set forth herein, the parties, intending
to be legally bound, hereby agree as follows:
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ARTICLE 1: EXCHANGE OF ASSETS
1.1. Clear Channel Station Assets. On the terms and subject to the
conditions hereof, on the Closing Date (defined below), Clear Channel shall
assign, transfer, convey and deliver to Exchange Party, and Exchange Party shall
acquire from Clear Channel, all of the right, title and interest of Clear
Channel in and to all of the assets, properties, interests and rights of Clear
Channel of whatsoever kind and nature, real and personal, tangible and
intangible, which are used exclusively in the operation of the Clear Channel
Stations and specifically described in this Section 1.1, but excluding the Clear
Channel Excluded Assets as hereafter defined (the "Clear Channel Station
Assets"):
(a) all licenses, permits and other authorizations which are
issued to Clear Channel by the FCC with respect to the Clear Channel Stations
(the "Clear Channel FCC Licenses"), including those described on Schedule
1.1(a), including any renewals or modifications thereof between the date hereof
and Closing;
(b) all equipment, electrical devices, antennae, cables, tools,
hardware, office furniture and fixtures, office materials and supplies,
inventory, motor vehicles, spare parts and other tangible personal property of
every kind and description which are used in the operation of the Clear Channel
Stations and listed or described on Schedule 1.1(b), except any retirements or
dispositions thereof made between the date hereof and Closing in the ordinary
course of business and consistent with past practices of Clear Channel (the
"Clear Channel Tangible Personal Property");
(c) all Clear Channel Time Sales Agreements and Clear Channel
Trade Agreements (both defined in Section 2.3), Clear Channel Real Property
Leases (defined in Section 6.7), and other contracts, agreements, and leases
which are used in the operation of the Clear Channel Stations and listed on
Schedule 1.1(c), together with all contracts, agreements, and leases made
between the date hereof and Closing in the ordinary course of business that are
used in the operation of the Clear Channel Stations (the "Clear Channel Station
Contracts");
(d) all of Clear Channel's rights in and to the Clear Channel
Stations' call letters and Clear Channel's rights in and to the trademarks,
trade names, service marks, franchises, copyrights, computer software, programs
and programming material, jingles, slogans, logos, and other intangible property
which are used exclusively in the operation of the Clear Channel Stations and
listed on Schedule 1.1(d) (the "Clear Channel Intangible Property");
(e) Clear Channel's rights in and to all the files, documents,
records, and books of account (or copies thereof) relating exclusively to the
operation of the Clear Channel Stations, including the Clear Channel Stations'
local public files, programming information and studies, blueprints, technical
information and engineering data, advertising studies, marketing and demographic
data, sales correspondence, lists of advertisers, credit and sales
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reports, and logs, but excluding records relating to the Clear Channel Excluded
Assets (defined below); and
(f) any real property which is used exclusively in the operation
of the Clear Channel Stations (including any of Clear Channel's appurtenant
easements and improvements located thereon) and described on Schedule 1.1(f)
(the "Clear Channel Real Property").
The Clear Channel Station Assets shall be transferred to
Exchange Party free and clear of all liens, claims and encumbrances ("Liens")
except for (i) Exchange Party Assumed Obligations (defined below), (ii) liens
for taxes not yet due and payable and for which Exchange Party receives a credit
pursuant to Section 3.3, (iii) such liens, easements, rights of way, building
and use restrictions, exceptions, reservations and limitations that do not in
any material respect detract from the value of the property subject thereto or
impair the use thereof in the ordinary course of the business of the Clear
Channel Stations, and (iv) any items listed on Schedule 1.1(b) (collectively,
"Clear Channel Permitted Liens").
1.2. Clear Channel Excluded Assets. Notwithstanding anything to the
contrary contained herein, the Clear Channel Station Assets shall not include
the following assets along with all rights, title and interest therein (the
"Clear Channel Excluded Assets"):
(a) all cash and cash equivalents of Clear Channel, including
without limitation certificates of deposit, commercial paper, treasury bills,
marketable securities, asset or money market accounts and all such similar
accounts or investments;
(b) all accounts receivable or notes receivable arising in the
operation of the Clear Channel Stations prior to Closing;
(c) all tangible and intangible personal property of Clear Channel
disposed of or consumed in the ordinary course of business of Clear Channel
between the date of this Agreement and Closing;
(d) all Clear Channel Station Contracts that terminate or expire
prior to Closing in the ordinary course of business of Clear Channel;
(e) Clear Channel's name, corporate minute books, charter
documents, corporate stock record books and such other books and records as
pertain to the organization, existence or share capitalization of Clear Channel,
duplicate copies of the records of the Clear Channel Stations, and all records
not relating exclusively to the operation of the Clear Channel Stations;
(f) contracts of insurance, and all insurance proceeds or claims
made thereunder;
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(g) all pension, profit sharing or cash or deferred (Section
401(k)) plans and trusts and the assets thereof and any other employee benefit
plan or arrangement and the assets thereof, if any, maintained by Clear Channel;
and
(h) all rights, properties and assets described on Schedule
1.2(h), and all rights, properties and assets not specifically described in
Section 1.1.
1.3. Exchange Party Station Assets. On the terms and subject to the
conditions hereof, on the Closing Date (defined below), Exchange Party shall
assign, transfer, convey and deliver to Clear Channel, and Clear Channel shall
acquire from Exchange Party, all of the right, title and interest of Exchange
Party in and to all of the assets, properties, interests and rights of Exchange
Party of whatsoever kind and nature, real and personal, tangible and intangible,
which are used exclusively in the operation of the Exchange Party Stations and
specifically described in this Section 1.3, but excluding the Exchange Party
Excluded Assets as hereafter defined (the "Exchange Party Station Assets"):
(a) all licenses, permits and other authorizations which are
issued to Exchange Party by the FCC with respect to the Exchange Party Stations
(the "Exchange Party FCC Licenses"), including those described on Schedule
1.3(a), including any renewals or modifications thereof between the date hereof
and Closing;
(b) all equipment, electrical devices, antennae, cables, tools,
hardware, office furniture and fixtures, office materials and supplies,
inventory, motor vehicles, spare parts and other tangible personal property of
every kind and description which are used in the operation of the Exchange Party
Stations and listed or described on Schedule 1.3(b), except any retirements or
dispositions thereof made between the date hereof and Closing in the ordinary
course of business and consistent with past practices of Exchange Party (the
"Exchange Party Tangible Personal Property");
(c) all Exchange Party Time Sales Agreements and Exchange Party
Trade Agreements (both defined in Section 2.1), Exchange Party Real Property
Leases (defined in Section 7.7), and other contracts, agreements, and leases
which are used in the operation of the Exchange Party Stations and listed on
Schedule 1.3(c), together with all contracts, agreements, and leases made
between the date hereof and Closing in the ordinary course of business that are
used in the operation of the Exchange Party Stations (the "Exchange Party
Station Contracts");
(d) all of Exchange Party's rights in and to the Exchange Party
Stations' call letters and Exchange Party's rights in and to the trademarks,
trade names, service marks, franchises, copyrights, computer software, programs
and programming material, jingles, slogans, logos, and other intangible property
which are used exclusively in the operation of the Exchange Party Stations and
listed on Schedule 1.3(d) (the "Exchange Party Intangible Property");
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(e) Exchange Party's rights in and to all the files, documents,
records, and books of account (or copies thereof) relating exclusively to the
operation of the Exchange Party Stations, including the Exchange Party Stations'
local public files, programming information and studies, blueprints, technical
information and engineering data, advertising studies, marketing and demographic
data, sales correspondence, lists of advertisers, credit and sales reports, and
logs, but excluding records relating to the Exchange Party Excluded Assets
(defined below); and
(f) any real property which is used exclusively in the operation
of the Exchange Party Stations (including any of Exchange Party's appurtenant
easements and improvements located thereon) and described on Schedule 1.3(f)
(the "Exchange Party Real Property").
The Exchange Party Station Assets shall be transferred to Clear Channel
free and clear of all Liens except for (i) Clear Channel Assumed Obligations
(defined below), (ii) liens for taxes not yet due and payable and for which
Clear Channel receives a credit pursuant to Section 3.3, (iii) such liens,
easements, rights of way, building and use restrictions, exceptions,
reservations and limitations that do not in any material respect detract from
the value of the property subject thereto or impair the use thereof in the
ordinary course of the business of the Exchange Party Stations, and (iv) any
items listed on Schedule 1.3(b) (collectively, "Exchange Party Permitted
Liens").
1.4. Exchange Party Excluded Assets. Notwithstanding anything to the
contrary contained herein, the Exchange Party Station Assets shall not include
the following assets along with all rights, title and interest therein (the
"Exchange Party Excluded Assets"):
(a) all cash and cash equivalents of Exchange Party, including
without limitation certificates of deposit, commercial paper, treasury bills,
marketable securities, asset or money market accounts and all such similar
accounts or investments;
(b) all accounts receivable or notes receivable arising in the
operation of the Exchange Party Stations prior to Closing;
(c) all tangible and intangible personal property of Exchange
Party disposed of or consumed in the ordinary course of business of Exchange
Party between the date of this Agreement and Closing;
(d) all Exchange Party Station Contracts that terminate or expire
prior to Closing in the ordinary course of business of Exchange Party;
(e) Exchange Party's name, corporate minute books, charter
documents, corporate stock record books and such other books and records as
pertain to the organization, existence or share capitalization of Exchange
Party, duplicate copies of the records of the Exchange Party Stations, and all
records not relating exclusively to the operation of the Exchange Party
Stations;
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(f) contracts of insurance, and all insurance proceeds or claims
made thereunder;
(g) all pension, profit sharing or cash or deferred (Section
401(k)) plans and trusts and the assets thereof and any other employee benefit
plan or arrangement and the assets thereof, if any, maintained by Exchange
Party;
(h) any rights, properties or assets described on Schedule 1.4(h),
and all rights, properties and assets not specifically described in Section 1.3;
and
(i) any tangible or intangible right or interest in the Mailbox
Buster business, none of which is used in the business or operation of the
Exchange Party Stations except the Mailbox Buster agreement listed on Schedule
1.3(c).
ARTICLE 2: ASSUMPTION OF OBLIGATIONS
2.1. Clear Channel Assumed Obligations. On the Closing Date, Clear
Channel shall assume the obligations of Exchange Party (the "Clear Channel
Assumed Obligations") arising after Closing under the Exchange Party Station
Contracts, including without limitation all agreements for the sale of
advertising time on the Exchange Party Stations for cash in the ordinary course
of business ("Exchange Party Time Sales Agreements") and all agreements for the
sale of advertising time on the Exchange Party Stations for non-cash
consideration ("Exchange Party Trade Agreements"), but excluding any deferred
compensation, phantom equity and similar obligations (whether or not set forth
in any agreement that is otherwise an Exchange Party Station Contract) (the
"Deferred Compensation Obligations"), which shall be Exchange Party Retained
Obligations and not Clear Channel Assumed Obligations.
2.2. Exchange Party Retained Obligations. Clear Channel does not assume
or agree to discharge or perform and will not be deemed by reason of the
execution and delivery of this Agreement or any agreement, instrument or
document delivered pursuant to or in connection with this Agreement or otherwise
by reason of the consummation of the transactions contemplated hereby, to have
assumed or to have agreed to discharge or perform, any liabilities, obligations
or commitments of Exchange Party of any nature whatsoever whether accrued,
absolute, contingent or otherwise and whether or not disclosed to Clear Channel,
other than the Clear Channel Assumed Obligations (the "Exchange Party Retained
Obligations"). The Exchange Party Retained Obligations shall include all
Deferred Compensation Obligations.
2.3. Exchange Party Assumed Obligations. On the Closing Date, Exchange
Party shall assume the obligations of Clear Channel (the "Exchange Party Assumed
Obligations") arising after Closing under the Clear Channel Station Contracts,
including without limitation all agreements for the sale of advertising time on
the Clear Channel Stations for cash in the ordinary course of business ("Clear
Channel Time Sales Agreements") and all agreements for
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the sale of advertising time on the Clear Channel Stations for non-cash
consideration ("Clear Channel Trade Agreements").
2.4. Clear Channel Retained Obligations. Exchange Party does not assume
or agree to discharge or perform and will not be deemed by reason of the
execution and delivery of this Agreement or any agreement, instrument or
document delivered pursuant to or in connection with this Agreement or otherwise
by reason of the consummation of the transactions contemplated hereby, to have
assumed or to have agreed to discharge or perform, any liabilities, obligations
or commitments of Clear Channel of any nature whatsoever whether accrued,
absolute, contingent or otherwise and whether or not disclosed to Exchange
Party, other than the Exchange Party Assumed Obligations (the "Clear Channel
Retained Obligations").
ARTICLE 3: CASH PAYMENT
3.1. Cash Payment. The parties agree that the aggregate value of the
Clear Channel Station Assets exceeds the aggregate value of the Exchange Party
Station Assets by an amount equal to Fifteen Million Dollars ($15,000,000) (the
"Cash Amount"). Exchange Party shall at Closing (defined below) deliver to Clear
Channel by wire transfer of immediately available funds the Cash Amount, subject
to adjustment pursuant to Sections 3.3 (the "Cash Payment").
3.2. Deposit. Within two (2) business days of the date of this
Agreement (with no Cure Period (defined below)), Exchange Party shall deposit
the sum of Two Million Dollars ($2,000,000) (the "Deposit") with Bank of America
(the "Escrow Agent") pursuant to the Escrow Agreement (the "Escrow Agreement")
of even date herewith among Clear Channel, Exchange Party and the Escrow Agent.
At Closing, the Deposit shall be applied to the Cash Payment and any interest
accrued thereon shall be disbursed to Exchange Party. If this Agreement is
terminated by Clear Channel due to Exchange Party's failure to consummate the
Closing on the Closing Date in accordance with this Agreement or if this
Agreement is otherwise terminated by Clear Channel pursuant to Section 16.1(b),
the Deposit and any interest accrued thereon shall be disbursed to Clear Channel
as partial payment of liquidated damages pursuant to Section 16.2. If this
Agreement is terminated for any other reason, the Deposit and any interest
accrued thereon shall be disbursed to Exchange Party.
3.3. Prorations and Adjustments. Except as otherwise provided herein,
all deposits, reserves and prepaid and deferred income and expenses arising from
the conduct of the business and operations of the Clear Channel Stations and
Exchange Party Stations shall be prorated in accordance with generally accepted
accounting principles as of 11:59 p.m. on the date immediately preceding the
Closing Date. Such prorations shall include, without limitation, all ad valorem,
real estate and other property taxes (but excluding transfer taxes which shall
be paid as set forth in Section 13.1), business and license fees, music and
other license fees (including any retroactive adjustments thereof), utility
expenses, amounts due or to become due under contracts, rents, lease payments,
accrued vacation leave and sick leave for Transferred Employees (defined below)
and similar prepaid and deferred items. Real estate taxes shall be apportioned
on the basis of taxes assessed for the preceding year, with a
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reapportionment, if any, as soon as the new tax rate and valuation can be
ascertained. Except as otherwise provided herein, the prorations and adjustments
contemplated by this Section 3.3, to the extent practicable, shall be made on
the Closing Date. As to those prorations and adjustments not capable of being
ascertained on the Closing Date, an adjustment and proration shall be made
within ninety (90) calendar days of the Closing Date. In the event of any
disputes between the parties as to such adjustments, the amounts not in dispute
shall nonetheless be paid at the time provided herein and such disputes shall be
determined by an independent certified public accountant mutually acceptable to
the parties, and the fees and expenses of such accountant shall be paid one-half
by Clear Channel and one-half by Exchange Party. With respect to Clear Channel
Trade Agreements, if there exists on the Closing Date an aggregate negative
trade balance in excess of $200,000 determined in accordance with GAAP, then
such excess will be treated as prepaid time sales and adjusted as a proration in
Exchange Party's favor, but there shall be no adjustment for any positive trade
balance existing on the Closing Date. With respect to Exchange Party Trade
Agreements, if there exists on the Closing Date an aggregate negative trade
balance in excess of $100,000 determined in accordance with GAAP, then such
excess will be treated as prepaid time sales and adjusted as a proration in
Clear Channel's favor, but there shall be no adjustment for any positive trade
balance existing on the Closing Date. If both parties have a negative trade
balance but neither exceeds the applicable threshold, then (i) if Clear
Channel's negative balance exceeds Exchange Party's negative balance by more
than $150,000, then such excess shall be adjusted in Exchange Party's favor, and
(ii) if Clear Channel's negative balance exceeds Exchange Party's negative
balance by less than $50,000 (or does not exceed the Exchange Party's negative
balance), then the Exchange Party's negative balance shall be adjusted in Clear
Channel's favor.
3.4. Allocation.
(a) Subject to Section 3.1, the values of the assets comprising
the Clear Channel Station Assets and the Exchange Party Station Assets shall be
determined by an appraisal (the "Appraisal") prepared by Bond & ▇▇▇▇▇▇ (whose
fees shall be paid one-half by Clear Channel and one-half by Exchange Party).
Prior to Closing, Clear Channel shall prepare and provide to Exchange Party
schedules which, for each party to this Agreement, show the respective Clear
Channel Station Assets and Exchange Party Station Assets to be conveyed and
acquired and Cash Payment to be made and received at Closing under this
Agreement.
(b) Before or after Closing, Clear Channel shall prepare schedules
(the "Exchange Group Schedules") which (i) divide the Exchange Party Station
Assets and the Clear Channel Station Assets into both "exchange groups" (in
accordance with the like-kind exchange rules covering exchanges of multiple
properties under Treas. Reg. Section 1.1031(j)-1) and residual groups and (ii)
set forth the total value of the assets making up each such exchange group and
residual group (based upon the Appraisal). For tax purposes, the parties shall
report the exchange of assets under this Agreement consistently with the
Exchange Group Schedules and the Appraisal, including without limitation filing
when due IRS Form 8594
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and (if applicable) IRS Form 8824 on the basis of the Exchange Group Schedules
and the Appraisal.
ARTICLE 4: CLOSING
4.1. Closing. The consummation of the exchange of assets under this
Agreement (the "Closing") shall occur on a date (the "Closing Date") and at a
time and place designated solely by Clear Channel after FCC Consent (defined
below) (which date may be before, but shall not be later than, five business
days after closing under the AM FM Agreement), subject to satisfaction or waiver
of the conditions to Closing contained herein (other than those to be satisfied
at Closing). If requested by Clear Channel, prior to Closing the parties shall
hold a pre-closing conference at a time and place designated by Clear Channel,
at which the parties shall provide (for review only) all documents to be
delivered at Closing under this Agreement, each duly executed but undated, and
otherwise confirm their ability to timely consummate the Closing. If Closing
occurs prior to the FCC Consent becoming final (i.e., no longer subject to
appeal), and prior to such finality the FCC Consent is reversed or otherwise set
aside pursuant to a final order of the FCC (or court of competent jurisdiction),
then the parties shall comply with such order in a manner that otherwise
complies with applicable law and returns the parties to the status quo ante in
all material respects (it being understood that in such event Clear Channel may
designate one or more third parties as the transferees of the Clear Channel
Stations).
ARTICLE 5: GOVERNMENTAL CONSENTS
Closing is subject to and conditioned upon (i) prior FCC consent (the
"FCC Consent") to the assignment of the Clear Channel FCC Licenses to Exchange
Party and the Exchange Party FCC Licenses to Clear Channel, (ii) United States
Department of Justice ("DOJ") prior approval (the "DOJ Consent") of the
transactions contemplated hereby, including without limitation any such approval
as may be necessary to enable Clear Channel to consummate the merger under the
AMFM Agreement, and (iii) expiration or termination of any applicable waiting
period ("HSR Clearance") under the HSR Act (defined below).
5.1. FCC. On a date designated by Clear Channel (by notice to Exchange
Party at least one business day in advance), Clear Channel and Exchange Party
shall file applications with the FCC (the "FCC Application") requesting the FCC
Consent. Clear Channel and Exchange Party shall diligently prosecute the FCC
Application and otherwise use their best efforts to obtain the FCC Consent as
soon as possible. If the FCC Consent imposes upon Clear Channel or Exchange
Party any condition (including without limitation in any divestiture condition),
such party shall timely comply therewith.
5.2. HSR. If not previously filed, then within ten (10) days after the
execution of this Agreement, Clear Channel and Exchange Party shall make any
required filings with the Federal Trade Commission and the DOJ pursuant to the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the "HSR Act")
with respect to the transactions contemplated hereby (including a request for
early termination of the waiting period
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thereunder), and shall thereafter promptly respond to all requests received from
such agencies for additional information or documentation.
5.3. General. Clear Channel and Exchange Party shall notify each other
of all documents filed with or received from any governmental agency with
respect to this Agreement or the transactions contemplated hereby. Clear Channel
and Exchange Party shall furnish each other with such information and assistance
as such the other may reasonably request in connection with their preparation of
any governmental filing hereunder. If Exchange Party becomes aware of any fact
relating to it which would prevent or delay the FCC Consent, the DOJ Consent or
HSR Clearance, Exchange Party shall promptly notify Clear Channel thereof and
take such steps as necessary to remove such impediment, including but not
limited to divesting any stations and terminating any agreements to acquire or
program or market any stations.
ARTICLE 6: REPRESENTATIONS AND WARRANTIES OF CLEAR CHANNEL
Clear Channel makes the following representations and warranties to
Exchange Party:
6.1. Organization. Clear Channel is duly organized, validly existing
and in good standing under the laws of the jurisdiction of its organization, and
is qualified to do business in each jurisdiction in which the Clear Channel
Station Assets and the Exchange Party Station Assets are located. Clear Channel
has the requisite power and authority to execute and deliver this Agreement and
all of the other agreements and instruments to be executed and delivered by
Clear Channel pursuant hereto (collectively, the "Clear Channel Ancillary
Agreements"), to consummate the transactions contemplated hereby and thereby and
to comply with the terms, conditions and provisions hereof and thereof.
6.2. Authorization. The execution, delivery and performance of this
Agreement and the Clear Channel Ancillary Agreements by Clear Channel have been
duly authorized and approved by all necessary action of Clear Channel and do not
require any further authorization or consent of Clear Channel. This Agreement
is, and each Clear Channel Ancillary Agreement when executed and delivered by
Clear Channel and the other parties thereto will be, a legal, valid and binding
agreement of Clear Channel enforceable in accordance with its respective terms,
except in each case as such enforceability may be limited by bankruptcy,
moratorium, insolvency, reorganization or other similar laws affecting or
limiting the enforcement of creditors' rights generally and except as such
enforceability is subject to general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at law).
6.3. No Conflicts. Neither the execution and delivery by Clear Channel
of this Agreement and the Clear Channel Ancillary Agreements or the consummation
by Clear Channel of any of the transactions contemplated hereby or thereby nor
compliance by Clear Channel with or fulfillment by Clear Channel of the terms,
conditions and provisions hereof or thereof will: (i) conflict with any
organizational documents of Clear Channel or any law, judgment, order, or decree
to which Clear Channel is subject or, except as set forth on
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Schedule 1.1(c) (which identifies Clear Channel Station Contracts that require
third party consent to assign), any Clear Channel Station Contract; or (ii)
require the approval, consent, authorization or act of, or the making by Clear
Channel of any declaration, filing or registration with, any other third party
or any foreign, federal, state or local court, governmental or regulatory
authority or body, except the FCC Consent and DOJ Consent, and, if applicable,
HSR Clearance.
6.4. FCC Licenses. Clear Channel (or one of the companies comprising
Clear Channel) is the holder of the Clear Channel FCC Licenses described on
Schedule 1.1(a). The Clear Channel FCC Licenses are in full force and effect and
have not been revoked, suspended, canceled, rescinded or terminated and have not
expired. There is not pending any action by or before the FCC to revoke,
suspend, cancel, rescind or materially adversely modify any of the Clear Channel
FCC Licenses (other than proceedings to amend FCC rules of general
applicability), and there is not now issued or outstanding, by or before the
FCC, any order to show cause, notice of violation, notice of apparent liability,
or notice of forfeiture against Clear Channel with respect to the Clear Channel
Stations. The Clear Channel Stations are operating in compliance in all material
respects with the Clear Channel FCC Licenses, the Communications Act of 1934, as
amended (the "Communications Act"), and the rules, regulations and policies of
the FCC. The operation of the Clear Channel Stations does not expose workers or
the general public to levels of radio frequency radiation in excess of the
"Radio Frequency Protection Guides" recommended in "American National Standard
Safety Levels with Respect to Human Exposure to Radio Frequency Electromagnetic
Fields 3 kHz to 300 GHz" (ANSI/IEEE C95.1-1992), issued by the American National
Standards Institute.
6.5. Taxes. Clear Channel has, in respect of the Clear Channel
Stations' business, filed all foreign, federal, state, county and local income,
excise, property, sales, use, franchise and other tax returns and reports which
are required to have been filed by it under applicable law and has paid all
taxes which have become due pursuant to such returns or pursuant to any
assessments which have become payable.
6.6. Personal Property. Schedule 1.1(b) contains a list of all material
items of Clear Channel Tangible Personal Property included in the Clear Channel
Station Assets. Clear Channel has title to the Clear Channel Tangible Personal
Property free and clear of Liens other than Clear Channel Permitted Liens. The
items of Clear Channel Tangible Personal Property listed on Schedule 1.1(b) are
in all material respects in good working condition, ordinary wear and tear
excepted.
6.7. Real Property. Schedule 1.1(f) contains a description of all Clear
Channel Real Property included in the Clear Channel Station Assets. Clear
Channel has fee simple title to the owned Clear Channel Real Property ("Clear
Channel Owned Real Property") free and clear of Liens other than Clear Channel
Permitted Liens. Schedule 1.1(f) includes a description of each real property
lease or similar agreement included in the Clear Channel Station Assets (the
"Clear Channel Real Property Leases"). The Clear Channel Owned Real Property
includes, and the Clear Channel Real Property Leases provide, access to the
Clear
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Channel Stations' facilities. To Clear Channel's knowledge, the Clear Channel
Real Property is not subject to any suit for condemnation or other taking by any
public authority.
6.8. Contracts. Each of the Clear Channel Station Contracts (including
without limitation each of the Clear Channel Real Property Leases) is in effect
and is binding upon Clear Channel and, to Clear Channel's knowledge, the other
parties thereto (subject to bankruptcy, insolvency, reorganization or other
similar laws relating to or affecting the enforcement of creditors' rights
generally). Clear Channel has performed its obligations under each of the Clear
Channel Station Contracts in all material respects, and is not in material
default thereunder, and to Clear Channel's knowledge, no other party to any of
the Clear Channel Station Contracts is in default thereunder in any material
respect.
6.9. Environmental. Except as set forth in any environmental report
delivered by Clear Channel to Exchange Party prior to the date of this Agreement
and except as set forth on Schedule 1.1(f), to Clear Channel's knowledge, no
hazardous or toxic substance or waste regulated under any applicable
environmental, health or safety law has been generated, stored, transported or
released on, in, from or to the Clear Channel Real Property included in the
Clear Channel Station Assets. Except as set forth in any environmental report
delivered by Clear Channel to Exchange Party prior to the date of this Agreement
and except as set forth on Schedule 1.1(f), to Clear Channel's knowledge, Clear
Channel has complied in all material respects with all environmental, health and
safety laws applicable to the Clear Channel Stations.
6.10. Intangible Property. Schedule 1.1(d) contains a description of
the material Clear Channel Intangible Property included in the Clear Channel
Station Assets. Except as set forth on Schedule 1.1(d), Clear Channel has
received no notice of any claim that its use of the Clear Channel Intangible
Property infringes upon any third party rights and to Clear Channel's knowledge
such use does not so infringe in any material respect. Except as set forth on
Schedule 1.1(d), Clear Channel owns or has the right to use the Clear Channel
Intangible Property free and clear of Liens other than Clear Channel Permitted
Liens.
6.11. Compliance with Law. Clear Channel has complied in all material
respects with all laws, regulations, rules, writs, injunctions, ordinances,
franchises, decrees or orders of any court or of any foreign, federal, state,
municipal or other governmental authority which are applicable to the operation
of the Clear Channel Stations. There is no action, suit or proceeding pending or
threatened against Clear Channel in respect of the Clear Channel Stations that
will subject Exchange Party to liability or which questions the legality or
propriety of the transactions contemplated by this Agreement. To Clear Channel's
knowledge, there are no governmental claims or investigations pending or
threatened against Clear Channel in respect of the Clear Channel Stations
(except those affecting the industry generally).
6.12. No Finder. No broker, finder or other person is entitled to a
commission, brokerage fee or other similar payment in connection with this
Agreement or the transactions contemplated hereby as a result of any agreement
or action of Clear Channel or any party acting on Clear Channel's behalf.
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6.13. Qualification. Clear Channel is legally, financially and
otherwise qualified to be the licensee of, acquire, own and operate the Exchange
Party Stations under the Communications Act and the rules, regulations and
policies of the FCC. There are no facts that would, under existing law and the
existing rules, regulations, policies and procedures of the FCC, disqualify
Clear Channel as an assignee of the Exchange Party FCC Licenses or as the owner
and operator of the Exchange Party Stations. No request by Clear Channel for
waiver of any FCC rule or policy is necessary for the FCC Consent to be
obtained. There is no action, suit or proceeding pending or threatened against
Clear Channel which could materially adversely affect Clear Channel's ability to
perform its obligations hereunder.
6.14. Financial Statements. Clear Channel has delivered to Exchange
Party copies of the unaudited results of operations of the Clear Channel
Stations for the twelve months ended December 31, 1999, prepared in accordance
with the books and records of the Clear Channel Stations, which do not overstate
the revenues of the Clear Channel Stations, and, based upon the respective
internal allocation practices of the entities comprising Clear Channel, do not
understate the expenses of the Clear Channel Stations, in either case for the
applicable period in any material respect.
ARTICLE 7: REPRESENTATIONS AND WARRANTIES OF EXCHANGE PARTY
Exchange Party makes the following representations and warranties to
Clear Channel:
7.1. Organization. Exchange Party is duly organized, validly existing
and in good standing under the laws of the jurisdiction of its organization, and
is qualified to do business in each jurisdiction in which the Exchange Party
Station Assets and the Clear Channel Station Assets are located. Exchange Party
has the requisite power and authority to execute and deliver this Agreement and
all of the other agreements and instruments to be executed and delivered by
Exchange Party pursuant hereto (collectively, the "Exchange Party Ancillary
Agreements"), to consummate the transactions contemplated hereby and thereby and
to comply with the terms, conditions and provisions hereof and thereof.
7.2. Authorization. The execution, delivery and performance of this
Agreement and the Exchange Party Ancillary Agreements by Exchange Party have
been duly authorized and approved by all necessary action of Exchange Party and
do not require any further authorization or consent of Exchange Party. This
Agreement is, and each Exchange Party Ancillary Agreement when executed and
delivered by Exchange Party and the other parties thereto will be, a legal,
valid and binding agreement of Exchange Party enforceable in accordance with its
respective terms, except in each case as such enforceability may be limited by
bankruptcy, moratorium, insolvency, reorganization or other similar laws
affecting or limiting the enforcement of creditors' rights generally and except
as such enforceability is subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
7.3. No Conflicts. Neither the execution and delivery by Exchange Party
of this Agreement and the Exchange Party Ancillary Agreements or the
consummation by Exchange
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Party of any of the transactions contemplated hereby or thereby nor compliance
by Exchange Party with or fulfillment by Exchange Party of the terms, conditions
and provisions hereof or thereof will: (i) conflict with any organizational
documents of Exchange Party or any law, judgment, order, or decree to which
Exchange Party is subject or, except as set forth on Schedule 1.3(c) (which
identifies Exchange Party Station Contracts that require third party consent to
assign), any Exchange Party Station Contract; or (ii) require the approval,
consent, authorization or act of, or the making by Exchange Party of any
declaration, filing or registration with, any other third party or any foreign,
federal, state or local court, governmental or regulatory authority or body,
except the FCC Consent and DOJ Consent and, if applicable, HSR Clearance.
7.4. FCC Licenses. Exchange Party is the holder of the Exchange Party
FCC Licenses described on Schedule 1.3(a). The Exchange Party FCC Licenses are
in full force and effect and have not been revoked, suspended, canceled,
rescinded or terminated and have not expired. There is not pending any action by
or before the FCC to revoke, suspend, cancel, rescind or materially adversely
modify any of the Exchange Party FCC Licenses (other than proceedings to amend
FCC rules of general applicability), and there is not now issued or outstanding,
by or before the FCC, any order to show cause, notice of violation, notice of
apparent liability, or notice of forfeiture against Exchange Party with respect
to the Exchange Party Stations. The Exchange Party Stations are operating in
compliance in all material respects with the Exchange Party FCC Licenses, the
Communications Act, and the rules, regulations and policies of the FCC. The
operation of the Exchange Party Stations does not expose workers or the general
public to levels of radio frequency radiation in excess of the "Radio Frequency
Protection Guides" recommended in "American National Standard Safety Levels with
Respect to Human Exposure to Radio Frequency Electromagnetic Fields 3 kHz to 300
GHz" (ANSI/IEEE C95.1-1992), issued by the American National Standards
Institute.
7.5. Taxes. Exchange Party has, in respect of the Exchange Party
Stations' business, filed all foreign, federal, state, county and local income,
excise, property, sales, use, franchise and other tax returns and reports which
are required to have been filed by it under applicable law and has paid all
taxes which have become due pursuant to such returns or pursuant to any
assessments which have become payable.
7.6. Personal Property. Schedule 1.3(b) contains a list of all material
items of Exchange Party Tangible Personal Property included in the Exchange
Party Station Assets. Exchange Party has title to the Exchange Party Tangible
Personal Property free and clear of Liens other than Exchange Party Permitted
Liens. The items of Exchange Party Tangible Personal Property listed on Schedule
1.3(b) are in all material respects in good working condition ordinary wear and
tear excepted.
7.7. Real Property. Schedule 1.3(f) contains a description of all
Exchange Party Real Property included in the Exchange Party Station Assets.
Exchange Party has fee simple title to the owned Exchange Party Real Property
("Exchange Party Owned Real Property") free and clear of Liens other than
Exchange Party Permitted Liens. Schedule 1.3(f) includes a description of each
real property lease or similar agreement included in the Exchange Party
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Station Assets (the "Exchange Party Real Property Leases"). The Exchange Party
Owned Real Property includes, and the Exchange Party Real Property Leases
provide, access to the Exchange Party Stations' facilities. To Exchange Party's
knowledge, the Exchange Party Real Property is not subject to any suit for
condemnation or other taking by any public authority.
7.8. Contracts. Each of the Exchange Party Station Contracts (including
without limitation each of the Exchange Party Real Property Leases) is in effect
and is binding upon Exchange Party and, to Exchange Party's knowledge, the other
parties thereto (subject to bankruptcy, insolvency, reorganization or other
similar laws relating to or affecting the enforcement of creditors' rights
generally). Exchange Party has performed its obligations under each of the
Exchange Party Station Contracts in all material respects, and is not in
material default thereunder, and to Exchange Party's knowledge, no other party
to any of the Exchange Party Station Contracts is in default thereunder in any
material respect.
7.9. Environmental. Except as set forth in any environmental report
delivered by Exchange Party to Clear Channel prior to the date of this Agreement
and except as set forth on Schedule 1.3(f), to Exchange Party's knowledge, no
hazardous or toxic substance or waste regulated under any applicable
environmental, health or safety law has been generated, stored, transported or
released on, in, from or to the Exchange Party Real Property included in the
Exchange Party Station Assets. Except as set forth in any environmental report
delivered by Exchange Party to Clear Channel prior to the date of this Agreement
and except as set forth on Schedule 1.3(f), to Exchange Party's knowledge,
Exchange Party has complied in all material respects with all environmental,
health and safety laws applicable to the Exchange Party Stations.
7.10. Intangible Property. Schedule 1.3(d) contains a description of
the material Exchange Party Intangible Property included in the Exchange Party
Station Assets. Except as set forth on Schedule 1.3(d), Exchange Party has
received no notice of any claim that its use of the Exchange Party Intangible
Property infringes upon any third party rights and to Exchange Party's knowledge
such use does not so infringe in any material respect. Except as set forth on
Schedule 1.3(d), Exchange Party owns or has the right to use the Exchange Party
Intangible Property free and clear of Liens other than Exchange Party Permitted
Liens.
7.11. Compliance with Law. Exchange Party has complied in all material
respects with all laws, regulations, rules, writs, injunctions, ordinances,
franchises, decrees or orders of any court or of any foreign, federal, state,
municipal or other governmental authority which are applicable to the operation
of the Exchange Party Stations. There is no action, suit or proceeding pending
or threatened against Exchange Party in respect of the Exchange Party Stations
that will subject Clear Channel to liability or which questions the legality or
propriety of the transactions contemplated by this Agreement. To Exchange Party
`s knowledge, there are no governmental claims or investigations pending or
threatened against Exchange Party in respect of the Exchange Party Stations
(except those affecting the industry generally).
7.12. No Finder. No broker, finder or other person is entitled to a
commission, brokerage fee or other similar payment in connection with this
Agreement or the transactions
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contemplated hereby as a result of any agreement or action of Exchange Party or
any party acting on Exchange Party `s behalf.
7.13. Qualification. Exchange Party is legally, financially and
otherwise qualified to be the licensee of, acquire, own and operate the Clear
Channel Stations under the Communications Act and the rules, regulations and
policies of the FCC. There are no facts that would, under existing law and the
existing rules, regulations, policies and procedures of the FCC, disqualify
Exchange Party as an assignee of the Clear Channel FCC Licenses or as the owner
and operator of the Clear Channel Stations. No request by Exchange Party for
waiver of any FCC rule or policy is necessary for the FCC Consent to be
obtained. There is no action, suit or proceeding pending or threatened against
Exchange Party which could materially adversely affect Exchange Party's ability
to perform its obligations hereunder. Exchange Party has and will have available
on the Closing Date sufficient funds to enable it to consummate the transactions
contemplated hereby.
7.14. Financial Statements. Exchange Party has delivered to Clear
Channel copies of the unaudited results of operations of the Exchange Party
Stations for the twelve months ended December 31, 1999, prepared in accordance
with the books and records of the Exchange Party Stations, which do not
overstate the revenues of the Exchange Party Stations, and, based upon the
respective internal allocation practices of the entities comprising Exchange
Party, do not understate the expenses of the Exchange Party Stations, in either
case for the applicable period in any material respect.
ARTICLE 8: ACCOUNTS RECEIVABLE
8.1. Clear Channel Accounts Receivable. All accounts receivable arising
prior to the Closing Date in connection with the operation of the Clear Channel
Stations, including but not limited to accounts receivable for advertising
revenues for programs and announcements performed prior to the Closing Date and
other broadcast revenues for services performed prior to the Closing Date, shall
remain the property of Clear Channel (the "Clear Channel Accounts Receivable")
and Exchange Party shall not acquire any right or interest therein. For a period
of six months from Closing (the "Collection Period"), Exchange Party shall
collect the Clear Channel Accounts Receivable in the normal and ordinary course
of Exchange Party's business and shall apply all such amounts collected to the
debtor's oldest account receivable first. Exchange Party's obligation shall not
extend to the institution of litigation, employment of counsel or a collection
agency or any other extraordinary means of collection. During the Collection
Period, neither Clear Channel or its agents shall make any direct solicitation
of any such account debtor for collection purposes or institute litigation for
the collection of amounts due. Any amounts relating to the Clear Channel
Accounts Receivable that are paid directly to Clear Channel shall be retained by
Clear Channel (and it shall inform Exchange Party thereof). Within ten calendar
days after the end of each month, Exchange Party shall make a payment to Clear
Channel equal to the amount of all collections of Clear Channel Accounts
Receivable during the preceding month. At the end of the Collection Period, any
remaining Clear Channel Accounts Receivable shall be returned to Clear Channel
for collection.
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8.2. Exchange Party Accounts Receivable. All accounts receivable
arising prior to the Closing Date in connection with the operation of the
Exchange Party Stations, including but not limited to accounts receivable for
advertising revenues for programs and announcements performed prior to the
Closing Date and other broadcast revenues for services performed prior to the
Closing Date, shall remain the property of Exchange Party (the "Exchange Party
Accounts Receivable") and Clear Channel shall not acquire any right or interest
therein. During the Collection Period, Clear Channel shall collect the Exchange
Party Accounts Receivable in the normal and ordinary course of Clear Channel's
business and shall apply all such amounts collected to the debtor's oldest
account receivable first. Clear Channel's obligation shall not extend to the
institution of litigation, employment of counsel or a collection agency or any
other extraordinary means of collection. During the Collection Period, neither
Exchange Party or its agents shall make any direct solicitation of any such
account debtor for collection purposes or institute litigation for the
collection of amounts due. Any amounts relating to the Exchange Party Accounts
Receivable that are paid directly to Exchange Party shall be retained by
Exchange Party (and it shall inform Clear Channel thereof). Within ten calendar
days after the end of each month, Clear Channel shall make a payment to Exchange
Party equal to the amount of all collections of Exchange Party Accounts
Receivable during the preceding month. At the end of the Collection Period, any
remaining Exchange Party Accounts Receivable shall be returned to Exchange Party
for collection.
ARTICLE 9: COVENANTS
9.1. Clear Channel's Covenants. Clear Channel covenants and agrees with
respect to the Clear Channel Stations that, between the date hereof and Closing,
except as permitted by this Agreement or with the prior written consent of
Exchange Party, which shall not be unreasonably withheld, Clear Channel shall:
(a) operate the Clear Channel Stations in the ordinary course of
business consistent with past practice and in all material respects in
accordance with FCC rules and regulations and with all other applicable laws,
regulations, rules and orders;
(b) not, other than in the ordinary course of business in
accordance with past practice, sell, lease or dispose of or agree to sell, lease
or dispose of any of the Clear Channel Station Assets, or create, assume or
permit to exist any Liens upon the Clear Channel Station Assets, except for
Clear Channel Permitted Liens;
(c) make available to Exchange Party, and authorize its
accountants to cooperate and make available to Exchange Party, at Exchange
Party's expense and reasonable request such financial information regarding the
Clear Channel Stations as is maintained by Clear Channel on a basis not
consolidated with other stations;
(d) furnish Exchange Party with such information relating to the
Clear Channel Station Assets as Exchange Party may reasonably request, at
Exchange Party's expense and provided such request does not interfere
unreasonably with the business of the Clear Channel Stations; and
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(e) after Clear Channel publicly announces the transaction
contemplated by this Agreement and files this Agreement with the FCC, then, when
reasonably requested by Exchange Party, provide Exchange Party access to the
Clear Channel Station facilities that are included in the Clear Channel Station
Assets during the stations' normal business hours (including without limitation
to conduct environmental reviews), provided such access does not interfere
unreasonably with the business of the Clear Channel Stations.
9.2. Exchange Party's Covenants. Exchange Party covenants and agrees
with respect to the Exchange Party Stations that, between the date hereof and
Closing, except as permitted by this Agreement or with the prior written consent
of Clear Channel, which shall not be unreasonably withheld, Exchange Party
shall:
(a) operate the Exchange Party Stations in the ordinary course of
business consistent with past practice and in all material respects in
accordance with FCC rules and regulations and with all other applicable laws,
regulations, rules and orders;
(b) not, other than in the ordinary course of business in
accordance with past practice, sell, lease or dispose of or agree to sell, lease
or dispose of any of the Exchange Party Station Assets, or create, assume or
permit to exist any Liens upon the Exchange Party Station Assets, except for
Exchange Party Permitted Liens;
(c) make available to Clear Channel, and authorize its accountants
to cooperate and make available to Clear Channel, at Clear Channel's expense and
reasonable request such financial information regarding the Exchange Party
Stations as is maintained by Exchange Party on a basis not consolidated with
other stations;
(d) furnish Clear Channel with such information relating to the
Exchange Party Station Assets as Clear Channel may reasonably request, at Clear
Channel's expense and provided such request does not unreasonably with the
business of the Exchange Party Stations; and,
(e) after Clear Channel publicly announces the transaction
contemplated by this Agreement and files this Agreement with the FCC, then, when
reasonably requested by Clear Channel, provide Clear Channel access to the
Exchange Party Station facilities that are included in the Exchange Party
Station Assets during the stations' normal business hours (including without
limitation to conduct environmental reviews), provided such access does not
interfere unreasonably with the business of the Exchange Party Stations.
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ARTICLE 10: JOINT COVENANTS
Clear Channel and Exchange Party hereby covenant and agree that between
the date hereof and Closing:
10.1. Cooperation. Subject to express limitations contained elsewhere
herein, each party (i) shall cooperate fully with one another in taking any
reasonable actions (including without limitation, reasonable actions to obtain
the required consent of any governmental instrumentality or any third party)
necessary or helpful to accomplish the transactions contemplated by this
Agreement, including but not limited to the prompt satisfaction of any condition
to Closing set forth herein, and (ii) shall not take any action that conflicts
with its obligations hereunder or that causes its representations and warranties
to become untrue in any material respect.
10.2. Control of Stations. Neither party shall, directly or indirectly,
control, supervise or direct the operations of the other party's stations prior
to Closing. Such operations, including complete control and supervision of all
programs, employees and policies, shall be the sole responsibility of the FCC
licensee thereof.
10.3. Consents to Assignment. The parties shall use commercially
reasonable efforts to obtain any third party consents necessary for the
assignment of any Clear Channel Station Contract or Exchange Party Station
Contract (which shall not require any payment to any such third party). To the
extent that any such contract may not be assigned without the consent of any
third party, and such consent is not obtained prior to Closing, this Agreement
and any assignment executed pursuant hereto shall not constitute an assignment
thereof, but to the extent permitted by law shall constitute an equitable
assignment and assumption of rights and obligations thereunder, with the
conveying party making available to the acquiring party the benefits thereof and
the acquiring party performing the obligations thereunder on the conveying
party's behalf.
10.4. Employee Matters.
(a) Each party shall promptly deliver to the other a list (with
name, position and base salary) of those of its employees who perform services
for the stations subject to this Agreement, and shall update such list prior to
Closing. The acquiring party (at its sole discretion) may interview and elect to
hire upon Closing any such employees of the Clear Channel Stations or Exchange
Party Stations (as the case may be), but not any other employees of the
conveying party; provided, however, that, with respect to the employees of the
Greenville area Clear Channel Stations who also perform services for other radio
stations, the parties will cooperate to equitably allocate such shared
employees. Employees available for solicitation and hire (as provided above) to
whom the acquiring party offers post-Closing employment (and does not rescind
such offer) are referred to herein as "Designated Employees." The acquiring
party is obligated to hire only those employees that are under employment
contracts (and assume the obligations and liabilities under such employment
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contracts) which are included in the Clear Channel Station Contracts or Exchange
Party Station Contracts. During the period from the date of this Agreement until
the date twelve (12) months after Closing, neither party shall solicit or hire
the other party's Designated Employees (except to retain them until Closing) or
the other party's other employees in the markets in which the Stations are
located (including any shared employees allocated to the other).
(b) With respect to Designated Employees hired by the acquiring
party ("Transferred Employees"), to the extent permitted by law the conveying
party shall provide access to its personnel records and such other information
as may be reasonably requested prior to Closing. With respect to such hired
employees, the conveying party shall be responsible for the payment of all
compensation and accrued employee benefits payable by it until Closing and
thereafter the acquiring party shall be responsible for all such obligations
payable by it. The acquiring party shall cause all employees it hires to be
eligible to participate in its "employee welfare benefit plans" and "employee
pension benefit plans" (as defined in Section 3(1) and 3(2) of ERISA,
respectively) in which similarly situated employees are generally eligible to
participate; provided, however, that all such employees and their spouses and
dependents shall be eligible for coverage immediately after Closing (and shall
not be excluded from coverage on account of any pre-existing condition) to the
extent provided under such employee welfare benefit plans. For purposes of any
length of service requirements, waiting periods, vesting periods or differential
benefits based on length of service in any such employee welfare benefit plans
for which such employees may be eligible after Closing, the acquiring party
shall ensure that service with the conveying party shall be deemed to have been
service with the acquiring party. No such service credit must be granted with
respect to participation or eligibility in any employee pension benefit plan. In
addition, the acquiring party shall ensure that each such employee receives
credit under any welfare benefit plan of the acquiring party for any deductibles
or co-payments paid by such employees and dependents for the current plan year
under a plan maintained by the conveying party. Notwithstanding any other
provision contained herein, the acquiring party shall grant credit to each such
employee for all unused sick leave accrued as of Closing as an employee of the
conveying party. Notwithstanding any other provision contained herein, the
acquiring party shall assume and discharge the conveying party's liabilities for
the payment of all unused vacation leave accrued by such employees as of
Closing.
(c) From and after the Closing, each party shall cooperate with
the reasonable requests of the other to continue to withhold from the pay checks
of Transferred Employees who have outstanding loan balances in any conveying
party 401(k) savings plan, and the acquiring party shall remit such withheld
amounts to the conveying party in a timely fashion such that the outstanding
loans do not go into default.
10.5. 1031 Exchange. At or prior to Closing, Clear Channel may assign
its rights under this Agreement (in whole or in part) to a qualified
intermediary (as defined in Treasury regulation section 1.1031(k)-1(g)(4)) or
similar entity or arrangement ("Qualified Intermediary"). Upon any such
assignment, Clear Channel shall promptly give written notice thereof to Exchange
Party and Exchange Party shall cooperate with the reasonable requests of Clear
Channel and any Qualified Intermediary in connection therewith. Without limiting
the
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generality of the foregoing, if Clear Channel gives notice of such agreement,
Exchange Party shall (i) promptly provide Clear Channel with written
acknowledgment of such notice and (ii) at Closing, convey all or part of the
Exchange Party Station Assets and make all or part of the Cash Payment (each as
designated in writing by the Qualified Intermediary) to or on behalf of the
Qualified Intermediary (which payment and conveyance shall, to the extent
thereof, satisfy the obligation of Exchange Party to make such conveyance and
payment hereunder). Clear Channel's assignment to a Qualified Intermediary will
not relieve Clear Channel of any of its duties or obligations under this
Agreement or the Clear Channel Ancillary Agreements. Except for the obligations
of Exchange Party set forth in this Section, Exchange Party shall not have any
liability or obligation to Clear Channel for the failure of such other exchange
to qualify as a like kind exchange under Section 1031 of the Code unless such
failure is the result of the material breach or default by Exchange Party under
this Agreement.
10.6. Trust. Notwithstanding anything in this Agreement to the
contrary, Clear Channel may at it option assign this Agreement (in whole or
part) and assign and transfer the Clear Channel Station Assets (in whole or in
part) to a trustee to hold and operate pursuant to a trust agreement, provided
such trustee assumes Clear Channel's duties and obligations hereunder with
respect to the Clear Channel Station Assets held in such trust, and Clear
Channel shall not thereby be relieved of its obligations hereunder.
ARTICLE 11: CONDITIONS OF CLOSING BY CLEAR CHANNEL
The obligations of Clear Channel hereunder are, at its option, subject
to satisfaction, at or prior to Closing, of each of the following conditions:
11.1. Representations, Warranties and Covenants. The representations
and warranties of Exchange Party made in this Agreement shall be true and
correct in all material respects as of the Closing Date except for changes
permitted or contemplated by the terms of this Agreement, and the covenants and
agreements to be complied with and performed by Exchange Party at or prior to
Closing shall have been complied with or performed in all material respects.
Clear Channel shall have received a certificate dated as of the Closing Date
from Exchange Party, executed by an authorized officer of Exchange Party to the
effect that the conditions set forth in this Section have been satisfied.
11.2. Governmental Consents. The FCC Consent and DOJ Consent, and, if
applicable, HSR Clearance, shall have been obtained, and no court or
governmental order prohibiting Closing shall be in effect.
11.3. AMFM Closing. The closing under the AMFM Agreement shall have
been consummated.
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ARTICLE 12: CONDITIONS OF CLOSING BY EXCHANGE PARTY
The obligations of Exchange Party hereunder are, at its option, subject
to satisfaction, at or prior to Closing, of each of the following conditions:
12.1. Representations, Warranties and Covenants. The representations
and warranties of Clear Channel made in this Agreement shall be true and correct
in all material respects as of the Closing Date except for changes permitted or
contemplated by the terms of this Agreement, and the covenants and agreements to
be complied with and performed by Clear Channel at or prior to Closing shall
have been complied with or performed in all material respects. Exchange Party
shall have received a certificate dated as of the Closing Date from Clear
Channel, executed by an authorized officer of Clear Channel, to the effect that
the conditions set forth in this Section have been satisfied.
12.2. Governmental Consents. The FCC Consent and DOJ Consent, and, if
applicable, HSR Clearance, shall have been obtained, and no court or
governmental order prohibiting Closing shall be in effect.
ARTICLE 13: EXPENSES
13.1. Expenses. Each party 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, except that (i)
all recordation, transfer and documentary taxes, fees and charges, and any
excise, sales or use taxes, applicable to the transfer of the Clear Channel
Station Assets and Exchange Party Station Assets shall be paid by Exchange
Party, (ii) all FCC filing fees shall be paid equally by Clear Channel and
Exchange Party, and (iii) all HSR Act filing fees and expenses shall be paid
equally by Clear Channel and Exchange Party.
ARTICLE 14: DOCUMENTS TO BE DELIVERED AT CLOSING
14.1. Clear Channel's Documents. At Closing, Clear Channel shall
deliver or cause to be delivered to Exchange Party:
(i) certified copies of resolutions authorizing its execution,
delivery and performance of this Agreement, including the consummation of the
transactions contemplated hereby;
(ii) the certificate described in Section 12.1;
(iii) such bills of sale, assignments, special warranty deeds,
documents of title and other instruments of conveyance, assignment and transfer
as may be necessary to convey, transfer and assign the Clear Channel Station
Assets to Exchange Party, free and clear of Liens, except for Clear Channel
Permitted Liens; and
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(iv) such documents and instruments of assumption as may be
necessary to assume the Clear Channel Assumed Obligations.
14.2. Exchange Party's Documents. At Closing, Exchange Party shall
deliver or cause to be delivered to Clear Channel:
(i) the certified copies of resolutions authorizing its execution,
delivery and performance of this Agreement, including the consummation of the
transactions contemplated hereby;
(ii) the certificate described in Section 11.1;
(iii) such bills of sale, assignments, special warranty deeds,
documents of title and other instruments of conveyance, assignment and transfer
as may be necessary to convey, transfer and assign the Exchange Party Station
Assets to Clear Channel, free and clear of Liens, except for Exchange Party
Permitted Liens;
(iv) such documents and instruments of assumption as may be
necessary to assume the Clear Channel Assumed Obligations; and
(v) the Cash Payment in accordance with Section 3.1 hereof.
ARTICLE 15: SURVIVAL; INDEMNIFICATION.
15.1. Survival. The covenants, agreements, representations and
warranties in this Agreement shall survive Closing for a period of twelve (12)
months from the Closing Date whereupon they shall expire and be of no further
force or effect, except those under (i) this Article 15 that relate to Damages
(defined below) for which written notice is given by the indemnified party to
the indemnifying party prior to the expiration, which shall survive until
resolved and (ii) Sections 2.1 and 2.3 (Assumed Obligations), 3.3 (Adjustments),
3.4 (Allocation), 8.1 and 8.2 (Accounts Receivable) and 13.1 (Expenses)
(collectively, the "Payment Provisions"), and indemnification obligations with
respect to such provisions, which shall survive until performed.
15.2. Indemnification.
(a) From and after the Closing, Clear Channel shall defend,
indemnify and hold harmless Exchange Party from and against any and all losses,
costs, damages, liabilities and expenses, including reasonable attorneys' fees
and expenses ("Damages") incurred by Exchange Party arising out of or resulting
from: (i) any breach or default by Clear Channel under this Agreement; (ii) the
Clear Channel Retained Obligations or the business or operation of the Clear
Channel Stations before Closing; or (iii) the Clear Channel Assumed Obligations
or the business or operation of the Exchange Party Stations after Closing;
provided, however, that for matters other than the Payment Provisions (i) Clear
Channel shall have no liability to Exchange Party hereunder until, and only to
the extent that, Exchange Party's aggregate
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Damages exceed $50,000 and (ii) the maximum liability of Clear Channel hereunder
shall be $10,000,000.
(b) From and after the Closing, Exchange Party shall defend,
indemnify and hold harmless Clear Channel from and against any and all Damages
incurred by Clear Channel arising out of or resulting from: (i) any breach or
default by Exchange Party under this Agreement; (ii) the Exchange Party Retained
Obligations or the business or operation of the Exchange Party Stations before
Closing or (iii) the Exchange Party Assumed Obligations or the business or
operation of the Clear Channel Stations after Closing; provided, however, that
for matters other than the Payment Provisions and the Cash Payment (i) Exchange
Party shall have no liability to Clear Channel hereunder until, and only to the
extent that, Clear Channel's aggregate Damages exceed $50,000 and (ii) the
maximum liability of Exchange Party hereunder shall be $10,000,000.
15.3. Procedures. The indemnified party shall give prompt written
notice to the indemnifying party of any demand, suit, claim or assertion of
liability by third parties or other circumstances that could give rise to an
indemnification obligation hereunder against the indemnifying party (a "Claim"),
but a failure to give such notice or delaying such notice shall not affect the
indemnified party's right to indemnification and the indemnifying party's
obligation to indemnify as set forth in this Agreement, except to the extent the
indemnifying party's ability to remedy, contest, defend or settle with respect
to such Claim is thereby prejudiced. The obligations and liabilities of the
parties with respect to any Claim shall be subject to the following additional
terms and conditions:
(a) The indemnifying party shall have the right to undertake, by
counsel or other representatives of its own choosing, the defense or opposition
to such Claim.
(b) In the event that the indemnifying party shall elect not to
undertake such defense or opposition, or, within twenty (20) days after written
notice (which shall include sufficient description of background information
explaining the basis for such Claim) of any such Claim from the indemnified
party, the indemnifying party shall fail to undertake to defend or oppose, the
indemnified party (upon further written notice to the indemnifying party) shall
have the right to undertake the defense, opposition, compromise or settlement of
such Claim, by counsel or other representatives of its own choosing, on behalf
of and for the account and risk of the indemnifying party (subject to the right
of the indemnifying party to assume defense of or opposition to such Claim at
any time prior to settlement, compromise or final determination thereof).
(c) Anything herein to the contrary notwithstanding: (i) the
indemnified party shall have the right, at its own cost and expense, to
participate in the defense, opposition, compromise or settlement of the Claim;
(ii) the indemnifying party shall not, without the indemnified party's written
consent, settle or compromise any Claim or consent to entry of any judgment
which does not include as an unconditional term thereof the giving by the
claimant or the plaintiff to the indemnified party of a release from all
liability in respect of such Claim; and (iii) in the event that the indemnifying
party undertakes defense of or
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opposition to any Claim, the indemnified party, by counsel or other
representative of its own choosing and at its sole cost and expense, shall have
the right to consult with the indemnifying party and its counsel or other
representatives concerning such Claim and the indemnifying party and the
indemnified party and their respective counsel or other representatives shall
cooperate in good faith with respect to such Claim.
(d) All claims not disputed shall be paid by the indemnifying
party within thirty (30) days after receiving notice of the Claim. "Disputed
Claims" shall mean claims for Damages by an indemnified party which the
indemnifying party objects to in writing within thirty (30) days after receiving
notice of the Claim. In the event there is a Disputed Claim with respect to any
Damages, the indemnifying party shall be required to pay the indemnified party
the amount of such Damages for which the indemnifying party has, pursuant to a
final determination, been found liable within ten (10) days after there is a
final determination with respect to such Disputed Claim. A final determination
of a Disputed Claim shall be (i) a judgment of any court determining the
validity of a Disputed Claim, if no appeal is pending from such judgment and if
the time to appeal therefrom has elapsed; (ii) an award of any arbitration
determining the validity of such disputed claim, if there is not pending any
motion to set aside such award and if the time within which to move to set aside
such award has elapsed; (iii) a written termination of the dispute with respect
to such claim signed by the parties thereto or their attorneys; (iv) a written
acknowledgment of the indemnifying party that it no longer disputes the validity
of such claim; or (v) such other evidence of final determination of a disputed
claim as shall be acceptable to the parties. No undertaking of defense or
opposition to a Claim shall be construed as an acknowledgment by such party that
it is liable to the party claiming indemnification with respect to the Claim at
issue or other similar Claims.
ARTICLE 16: TERMINATION
16.1. Termination. This Agreement may be terminated at any time prior
to Closing as follows:
(a) by mutual written consent of Clear Channel and Exchange Party;
(b) by written notice of Clear Channel to Exchange Party if
Exchange Party (i) does not satisfy the conditions or perform the obligations to
be satisfied or performed by it on the Closing Date; or (ii) otherwise breaches
in any material respect any of its representations or warranties or defaults in
any material respect in the performance of any of its covenants or agreements
herein contained and such breach or default is not cured within the Cure Period
(defined below)
(c) by written notice of Exchange Party to Clear Channel if Clear
Channel (i) does not satisfy the conditions or perform the obligations to be
satisfied or performed by it on the Closing Date; or (ii) otherwise breaches in
any material respect any of its representations or warranties or defaults in any
material respect in the performance of any of its covenants or agreements herein
contained and such breach or default is not cured within the Cure Period
(defined below)
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(d) by written notice of either party to the other if the FCC
denies the FCC Application;
(e) by written notice of Clear Channel to Exchange Party if the
Closing shall not have been consummated on or before the date four months after
the date of this Agreement; or
(f) by written notice of Clear Channel to Exchange Party if the
AMFM Agreement is terminated or expires.
The term "Cure Period" as used herein means a period commencing the
date a party receives from the other written notice of breach or default
hereunder and continuing until the earlier of (i) thirty (30) days thereafter or
(ii) the Closing Date; provided, however, that if the breach or default cannot
reasonably be cured within such period but can be cured before the Closing Date,
and if diligent efforts to cure promptly commence, then the Cure Period shall
continue as long as such diligent efforts to cure continue, but not beyond the
Closing Date. Except as set forth below, the termination of this Agreement shall
not relieve any party of any liability for breach or default under this
Agreement prior to the date of termination. Notwithstanding anything contained
herein to the contrary, Section 13.1 shall survive any termination of this
Agreement.
16.2. Liquidated Damages. If this Agreement is terminated by Clear
Channel due to Exchange Party's failure to consummate the Closing on the Closing
Date in accordance with this Agreement or if this Agreement is otherwise
terminated by Clear Channel pursuant to Section 16.1(b), then Exchange Party
shall pay Clear Channel as liquidated damages the sum of Five Million Dollars
($5,000,000) which, if elected by and paid to Clear Channel, shall be Clear
Channel's sole and exclusive remedy hereunder. It is understood and agreed that
such liquidated damages amount represents the parties' reasonable estimate of
actual damages and does not constitute a penalty.
ARTICLE 17: MISCELLANEOUS PROVISIONS
17.1. Casualty Loss. In the event any loss or damage of the Clear
Channel Station Assets or the Exchange Party Station Assets exists on the
Closing Date, the parties shall consummate the Closing and after Closing the
parties shall cooperate to repair or replace (as appropriate under the
circumstances) the lost or damaged items at the conveying party's reasonable
expense.
17.2. Further Assurances. After the Closing, each party shall from time
to time, at the request of and without further cost or expense to the other,
execute and deliver such other instruments and take such other actions as may
reasonably be requested in order to more effectively consummate the transactions
contemplated hereby to exchange assets and assume obligations as contemplated by
this Agreement.
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17.3. Assignment. Except as set forth in Sections 10.5 (1031 Exchange)
and 10.6 (Trust), neither party may assign this Agreement without the prior
written consent of the other party hereto, provided that, only if it is
consistent with the exchanges to be made hereunder (as determined pursuant to
Section 3.4), any party may assign its right to acquire one or more Stations to
one or more Affiliates of such party if such assignment does not delay the
governmental consents contemplated by Article 5 (or otherwise delay Closing),
the representations made by it under this Agreement are true with respect to the
assignee(s), and the assigning party gives the other party prior written notice
thereof. No such assignment shall relieve the assigning party of any obligation
or liability under this Agreement. With respect to any permitted assignment, the
parties shall take all such actions as are reasonably necessary to effectuate
such assignment, including but not limited to cooperating in any appropriate
filings with the FCC or other governmental authorities. All covenants,
agreements, statements, representations, warranties and indemnities in this
Agreement by and on behalf of any of the parties hereto shall bind and inure to
the benefit of their respective successors and permitted assigns of the parties
hereto.
17.4. Amendments. 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 waiver, amendment, change, extension or discharge is sought.
17.5. Headings. The headings set forth in this Agreement are for
convenience only and will not control or affect the meaning or construction of
the provisions of this Agreement.
17.6. Governing Law. The construction and performance of this Agreement
shall be governed by the laws of the State of Texas without giving effect to the
choice of law provisions thereof.
17.7. Notices. Any notice, demand or request required or permitted to
be given under the provisions of this Agreement shall be in writing, including
by facsimile, and shall be deemed to have been received on the date of personal
delivery, on the third day after deposit in the U.S. mail if mailed by
registered or certified mail, postage prepaid and return receipt requested, on
the day after delivery to a nationally recognized overnight courier service if
sent by an overnight delivery service for next morning delivery or when
delivered by facsimile transmission, and shall be addressed as follows (or to
such other address as any party may request by written notice):
if to Clear Channel: c/o Clear Channel Broadcasting, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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with a copy (which shall not
constitute notice) to: Wiley, Rein & Fielding
▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
if to Exchange Party: Barnstable Broadcasting, Inc.
Two ▇▇▇▇▇▇ Executive Park
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not
constitute notice) to: ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ & Handler, L.L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
17.8. 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.
17.9. No Third Party Beneficiaries. Nothing herein expressed or implied
is intended or shall be construed to confer upon or give to any person or entity
other than the parties hereto and their successors or permitted assigns, any
rights or remedies under or by reason of this Agreement.
17.10. Severability. The parties agree that if one or more provisions
contained in this Agreement shall be deemed or held to be invalid, illegal or
unenforceable in any respect under any applicable law, this Agreement shall be
construed with the invalid, illegal or unenforceable provision deleted, and the
validity, legality and enforceability of the remaining provisions contained
herein shall not be affected or impaired thereby.
17.11. Entire Agreement. This Agreement embodies the entire agreement
and understanding of the parties hereto and supersedes any and all prior
agreements, arrangements and understandings relating to the matters provided for
herein. This Agreement does not supersede any confidentiality agreement relating
to the Clear Channel Stations.
[SIGNATURE PAGE FOLLOWS]
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SIGNATURE PAGE TO ASSET EXCHANGE AGREEMENT
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.
CLEAR CHANNEL: CLEAR CHANNEL BROADCASTING, INC.
CLEAR CHANNEL BROADCASTING LICENSES, INC.
By:
------------------------------------
Name:
Title:
CAPSTAR RADIO OPERATING COMPANY
By:
------------------------------------
Name:
Title:
CAPSTAR TX LIMITED PARTNERSHIP
By:
------------------------------------
Name:
Title:
EXCHANGE PARTY: BARNSTABLE BROADCASTING, INC.
By:
------------------------------------
Name:
Title:
OBC BROADCASTING, INC.
By:
------------------------------------
Name:
Title:
TWO RIVERS BROADCASTING LIMITED PARTNERSHIP
By:
------------------------------------
Name:
Title:
30
Clear Channel Schedules
1.1(a) - FCC Licenses
1.1(b) - Tangible Personal Property
1.1(c) - Station Contracts
1.1(d) - Intangible Property
1.1(f) - Real Property
1.2(h) - Excluded Assets
Exchange Party Schedules
1.3(a) - FCC Licenses
1.3(b) - Tangible Personal Property
1.3(c) - Station Contracts
1.3(d) - Intangible Property
1.3(f) - Real Property
1.4(h) - Excluded Assets