1
EXHIBIT 10.32
EXCHANGE AGREEMENT
BETWEEN
SFX BROADCASTING, INC.
SFX BROADCASTING OF KANSAS, INC.,
SFXKS LIMITED PARTNERSHIP,
SFX BROADCASTING OF FLORIDA, INC., AND
SOUTHERN STARR LIMITED PARTNERSHIP
(COLLECTIVELY, THE "SFX PARTIES")
AND
CAPSTAR ACQUISITION COMPANY, INC.
DATED AS OF
MAY 23, 1997
2
TABLE OF CONTENTS
PAGE
----
ARTICLE I
DEFINED TERMS
1.1. Defined Terms . . . . . . . . . . . . . . . . . . . . . . . 2
1.2. References and Titles . . . . . . . . . . . . . . . . . . . 13
1.3. Schedules . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE II
EXCHANGE AND OTHER ACTIONS
2.1. Agreement to Exchange . . . . . . . . . . . . . . . . . . . 14
2.2. SFX Assets . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.3. SFX Excluded Assets . . . . . . . . . . . . . . . . . . . . 15
2.4. Capstar Assets . . . . . . . . . . . . . . . . . . . . . . . 16
2.5. Capstar Excluded Assets . . . . . . . . . . . . . . . . . . 17
2.6. [Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.7. Adjustments and Prorations . . . . . . . . . . . . . . . . . 18
2.8. Assumption of Liabilities and Obligations . . . . . . . . . 20
2.9. Amendment to ▇▇▇▇▇ Agreement . . . . . . . . . . . . . . . . 22
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1. Representations and Warranties Regarding the SFX Parties. . 22
--
3.2. Representations and Warranties Regarding Capstar . . . . . . 32
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1. Conduct of Business by the SFX Parties and Capstar . . . . . 42
4.2. Negative Trade Balance . . . . . . . . . . . . . . . . . . . 44
4.3. Environmental Site Assessments . . . . . . . . . . . . . . . 45
4.4. Broadcast Transmission Interruption . . . . . . . . . . . . 45
ARTICLE V
COVENANTS OF THE SFX PARTIES
5.1. No Solicitation of Transactions . . . . . . . . . . . . . . 46
(i)
3
PAGE
----
5.2. Assistance . . . . . . . . . . . . . . . . . . . . . . . . . 46
5.3. Compliance With Station Licenses . . . . . . . . . . . . . . 46
5.4. Third Party Consents . . . . . . . . . . . . . . . . . . . . 47
5.5. Employee Matters . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE VI
COVENANTS OF CAPSTAR
6.1. No Solicitation of Transactions . . . . . . . . . . . . . . 47
6.2. Assistance . . . . . . . . . . . . . . . . . . . . . . . . . 48
6.3. Compliance With Station Licenses . . . . . . . . . . . . . . 48
6.4. Third Party Consents . . . . . . . . . . . . . . . . . . . . 49
6.5. Employee Matters . . . . . . . . . . . . . . . . . . . . . . 49
6.6. Benchmark Acquisition Indemnification . . . . . . . . . . . 49
ARTICLE VII
MUTUAL COVENANTS
7.1. Access and Information . . . . . . . . . . . . . . . . . . . 49
7.2. Notification of Certain Matters . . . . . . . . . . . . . . 51
7.3. Application for FCC Consents . . . . . . . . . . . . . . . . 51
7.4. Control of Stations . . . . . . . . . . . . . . . . . . . . 52
7.5. Other Governmental Consents . . . . . . . . . . . . . . . . 52
7.6. Brokers or Finders . . . . . . . . . . . . . . . . . . . . . 52
7.7. Bulk Sales Law . . . . . . . . . . . . . . . . . . . . . . . 52
7.8. Risk of Loss - SFX Assets . . . . . . . . . . . . . . . . . 53
7.9. Risk of Loss - Capstar Assets . . . . . . . . . . . . . . . 53
7.10. Additional Agreements . . . . . . . . . . . . . . . . . . . 54
7.11. Accounts Receivable . . . . . . . . . . . . . . . . . . . . 55
ARTICLE VIII
CONDITIONS PRECEDENT
8.1. Conditions to Each Party's Obligation . . . . . . . . . . . 56
8.2. Conditions to Obligation of Capstar . . . . . . . . . . . . 57
8.3. Conditions to Obligation of the SFX Parties . . . . . . . . 58
ARTICLE IX
CLOSING
9.1. Closing . . . . . . . . . . . . . . . . . . . . . . . . . . 60
9.2. Actions to Occur at Closing . . . . . . . . . . . . . . . . 61
(ii)
4
PAGE
----
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
10.1. Termination . . . . . . . . . . . . . . . . . . . . . . . . 64
10.2. Effect of Termination . . . . . . . . . . . . . . . . . . . 66
ARTICLE XI
INDEMNIFICATION
11.1. Indemnification of Capstar . . . . . . . . . . . . . . . . . 67
11.2. Indemnification of the SFX Parties . . . . . . . . . . . . . 67
11.3. Defense of Third-Party Claims . . . . . . . . . . . . . . . 67
11.4. Direct Claims . . . . . . . . . . . . . . . . . . . . . . . 68
11.5. Limitations . . . . . . . . . . . . . . . . . . . . . . . . 68
ARTICLE XII
GENERAL PROVISIONS
12.1. Survival of Representations, Warranties, and Covenants . . . 69
12.2. Further Actions . . . . . . . . . . . . . . . . . . . . . . 70
12.3. Amendment and Modification . . . . . . . . . . . . . . . . . 70
12.4. Waiver of Compliance . . . . . . . . . . . . . . . . . . . . 70
12.5. Specific Performance . . . . . . . . . . . . . . . . . . . . 70
12.6. Severability . . . . . . . . . . . . . . . . . . . . . . . . 70
12.7. Expenses and Obligations . . . . . . . . . . . . . . . . . . 70
12.8. Parties in Interest . . . . . . . . . . . . . . . . . . . . 70
12.9. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 71
12.10. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 72
12.11. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . 72
12.12. Governing Law . . . . . . . . . . . . . . . . . . . . . . . 72
12.13. Public Announcements . . . . . . . . . . . . . . . . . . . . 72
12.14. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . 72
12.15. Director and Officer Liability . . . . . . . . . . . . . . . 73
12.16. No Reversionary Interest . . . . . . . . . . . . . . . . . . 73
12.17. No Waiver Relating to Claims for Fraud . . . . . . . . . . . 73
(iii)
5
Annexes:
Annex A -- The SFX Stations
Annex B -- The Capstar Stations
EXHIBITS:
Exhibit A -- Form of SFX ▇▇▇▇ of Sale and Assignment
Exhibit B -- Form of Capstar ▇▇▇▇ of Sale and Assignment
Exhibit C -- Form of SFX Assumption Agreement
Exhibit D -- Form of Capstar Assumption Agreement
Exhibit E -- Form of Opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P.
Exhibit F -- Form of Opinion of ▇▇▇▇▇▇▇▇▇ & Associates, P.A.
Exhibit G -- Form of Opinion of SFX Broadcasting, Inc.
Exhibit H -- Form of Opinion of ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇, Leader &
▇▇▇▇▇▇▇▇ L.L.P.
Exhibit I -- Form of Release of Claims
SFX SCHEDULES:
Schedule 2.2(j) -- SFX Choses in Action
Schedule 2.3(a) -- Excluded SFX Real Property
Schedule 2.3(i) -- Excluded SFX Personal Property
Schedule 2.8(c) -- SFX Trade Deals
Schedule 3.1(a) -- Qualification to do Business and Good Standing
Schedule 3.1(e) -- SFX Unrecorded Liabilities and Conduct of Business
Schedule 3.1(f) -- SFX Licenses and Permits
Schedule 3.1(g) -- SFX Litigation
Schedule 3.1(h) -- SFX Insurance
Schedule 3.1(i) -- SFX Owned Real Estate
Schedule 3.1(j) -- SFX Leased Real Property
Schedule 3.1(k) -- SFX Personal Property
Schedule 3.1(l) -- SFX Liens and Encumbrances
Schedule 3.1(o) -- Certain SFX Agreements
Schedule 3.1(p) -- SFX Employee Benefit Plans; Labor
Schedule 3.1(q) -- SFX Patents, Trademarks, Etc.
Schedule 8.3(e) -- SFX Real Estate Title Commitment
CAPSTAR SCHEDULES:
Schedule 2.4(j) -- Capstar Choses in Action
Schedule 2.5(a) -- Excluded Capstar Real Property
Schedule 2.5(i) -- Excluded Capstar Personal Property
Schedule 2.8(d) -- Capstar Trade Deals
Schedule 3.2(a) -- Qualification to do Business and Good Standing
Schedule 3.2(e) -- Capstar Unrecorded Liabilities and Conduct of
Business
Schedule 3.2(f) -- Capstar Licenses, Capstar Permits and Investigations
Schedule 3.2(g) -- Capstar Litigation
Schedule 3.2(h) -- Capstar Insurance
Schedule 3.2(i) -- Capstar Owned Real Estate
(iv)
6
Schedule 3.2(j) -- Capstar Leased Real Property
Schedule 3.2(k) -- Capstar Personal Property
Schedule 3.2(l) -- Capstar Liens and Encumbrances
Schedule 3.2(o) -- Certain Capstar Agreements
Schedule 3.2(p) -- Capstar Employee Benefit Plans; Labor
Schedule 3.2(q) -- Capstar Patents, Trademarks, Etc.
Schedule 8.2(e) -- Capstar Real Estate Title Commitment
(v)
7
EXCHANGE AGREEMENT
This EXCHANGE AGREEMENT (this "Agreement") is made and entered into as
of May 23, 1997, between SFX Broadcasting, Inc., a Delaware corporation, SFX
Broadcasting of Kansas, Inc., a Delaware corporation, SFXKS Limited
Partnership, a Delaware limited partnership, SFX Broadcasting of Florida, Inc.,
a Delaware corporation, Southern Starr Limited Partnership, a Delaware limited
partnership (each referred to individually as a "SFX Party" and collectively,
the "SFX Parties"), and Capstar Acquisition Company, Inc., a Delaware
corporation ("Capstar").
R E C I T A L S
A. The SFX Parties are the licensees of and own and operate the
radio stations as listed on Annex A hereto (each referred to individually as a
"SFX Station" and collectively, the "SFX Stations") pursuant to licenses issued
by the Federal Communications Commission ("FCC").
B. Upon completion of the Benchmark Acquisition (as hereinafter
defined), Capstar will be the licensee, owner and operator of each of the radio
stations listed on Annex B hereto (each referred to individually as a "Capstar
Station" and collectively, the "Capstar Stations") pursuant to licenses issued
by the FCC.
C. Each SFX Party desires to exchange substantially all the
assets used or held by it for use in the operation of its SFX Stations, both
tangible and intangible, excluding the SFX Excluded Assets (as hereinafter
defined), for substantially all the assets used or held for use in the
operation of each of the Capstar Stations, both tangible and intangible,
excluding the Capstar Excluded Assets (as hereinafter defined), and by so doing
to acquire the radio broadcast business presently conducted by the Capstar
Stations, upon the terms and conditions hereinafter set forth.
D. Capstar desires to exchange substantially all the assets to be
used or held for use in the operation of each of the Capstar Stations, both
tangible and intangible, excluding the Capstar Excluded Assets, for
substantially all the assets used or held for use in the operation of each of
the SFX Stations, both tangible and intangible, excluding the SFX Excluded
Assets, and by so doing to acquire the radio broadcast business presently
conducted by the SFX Stations, upon the terms and conditions hereinafter set
forth.
8
A G R E E M E N T S
NOW, THEREFORE, in consideration of the respective representations,
warranties, agreements, and conditions hereinafter set forth, and other good
and valuable consideration, the sufficiency of which is hereby acknowledged,
the parties hereto hereby agree as follows:
ARTICLE I
DEFINED TERMS
1.1. DEFINED TERMS. The following terms shall have the following
meanings in this Agreement:
"Affiliate" means, with respect to any person, any other
person controlling, controlled by or under common control with such person.
For purposes of this definition and this Agreement, the term "control" (and
correlative terms) means the power, whether by contract, equity ownership or
otherwise, to direct the policies or management of a person.
"Applicable Laws" means all laws, statutes, rules,
regulations, ordinances, judgments, orders, decrees, injunctions, and writs of
any Governmental Entity having jurisdiction over the SFX Assets or Capstar
Assets, as applicable, or the business or operations of each of the SFX
Stations or the Capstar Stations, as applicable, as may be in effect on or
prior to the Closing .
"Benchmark" means Benchmark Communications Radio Limited
Partnership and its Affiliates.
"Benchmark Agreement" means that certain Agreement and Plan of
Merger, as amended, dated December 9, 1996, by and among Benchmark
Communications Limited Partnership, Benchmark Acquisition, Inc., Benchmark
Radio Acquisition Fund I Limited Partnership, Benchmark Radio Acquisition Fund
IV Limited Partnership, Benchmark Radio Acquisition Fund VII Limited
Partnership, Benchmark Radio Acquisition Fund VIII Limited Partnership, ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Capstar Broadcasting Partners, Inc., and BCR
Holding, Inc.
"Benchmark Acquisition" means the transactions contemplated by
the Benchmark Agreement.
"business day" means any other day than (i) a Saturday or
Sunday or (ii) a day on which commercial banks in New York, New York or Dallas,
Texas are authorized or required to be closed.
"Capstar" means Capstar Acquisition Company, Inc. and its
permitted successors and assigns. After an assignment pursuant to Section
12.14, Capstar shall mean the Affiliate to which this Agreement has been
assigned and Capstar shall no longer mean Capstar Acquisition Company, Inc.
2
9
"Capstar Accounts Receivable" means the rights of Capstar to
cash payment for the sale of advertising time by the Capstar Stations prior to
11:59 p.m. on the day prior to the Closing Date.
"Capstar Applications" has the meaning set forth in Section
7.3
"Capstar Assets" means all the tangible and intangible assets
owned, leased, or licensed by Capstar that are used or held for use in
connection with the business or operations of any of the Capstar Stations, but
specifically excluding therefrom the Capstar Excluded Assets.
"Capstar Assumed Contracts" means (a) those Capstar Contracts
set forth on Schedule 3.1(o) identified as being assumed by the SFX Parties and
all other contracts of Capstar entered into by Benchmark or Capstar in the
ordinary course of business that relate to the Capstar Assets or the business
or operation of the Capstar Assets or any part thereof, (b) all other non-
trade advertising Capstar Contracts for cash entered into by Benchmark or
Capstar for any of the Capstar Stations and which are terminable on not more
than 30 days notice, (c) all Capstar Contracts entered into by Benchmark or
Capstar on or after the date of this Agreement and before the Closing in
accordance with the applicable provisions of Section 4.1, and (d) Capstar Trade
Deals described in Section 2.8.
"Capstar Assumption Agreement" means the Capstar Assumption
Agreement between Capstar and each SFX Party substantially in the form of
Exhibit D.
"Capstar ▇▇▇▇ of Sale and Assignment" means the Capstar ▇▇▇▇
of Sale and Assignment between Capstar and each SFX Party substantially in the
form of Exhibit B.
"Capstar Company Reports" has the meaning set forth in Section
3.2(e).
"Capstar Contracts" means any agreement, contract, or other
binding commitment or arrangement, written or oral (including any amendments
and other modifications thereto), to which Capstar is a party or is otherwise
bound and which affect or relate to the Capstar Assets or the business or
operations of each of the Capstar Stations.
"Capstar Date" means the date of the closing of the Benchmark
Acquisition.
"Capstar Employee Benefit Plan" means an "employee benefit
plan" of Capstar within the meaning of Section 3(3) of ERISA and any bonus,
deferred compensation, incentive compensation, stock ownership, stock purchase,
stock option, phantom stock, vacation, severance, disability, death benefit,
hospitalization or insurance plan providing benefits to any present or former
employee or contractor of Capstar or any member of the Capstar ERISA Group
maintained by any such entity or as to which any such entity has any liability
or obligation.
"Capstar ERISA Group" has the meaning set forth in Section
3.2(p).
"Capstar Excluded Assets" has the meaning set forth in Section
2.5.
3
10
"Capstar FCC Consents" means actions by the FCC granting its
initial consent to the assignment of the Capstar FCC Licenses for each of the
Capstar Stations to the SFX Parties as contemplated by this Agreement.
"Capstar FCC Licenses" means all of the licenses, permits, and
other authorizations issued by the FCC to Capstar and applications of Capstar,
if any, to the FCC relating to or used in the business or operations of each of
the Capstar Stations, including those listed on Schedule 3.2(f), and any
additions thereto between the date hereof and the Closing Date.
"Capstar Final Order" means written action or order issued by
the FCC setting forth the Capstar FCC Consents (without the inclusion of any
adverse conditions affecting the SFX Parties' operation or ownership of any
Capstar Station) and (a) which has not been reversed, stayed, enjoined, set
aside, annulled, or suspended and (b) with respect to which (i) no requests
have been filed for administrative or judicial review, reconsideration, appeal,
or stay, and the time for filing any such requests and for the FCC to set aside
the action on its own motion has expired or (ii) in the event of review,
reconsideration, or appeal, such review, reconsideration, or appeal has been
denied and the time for further review, reconsideration, or appeal has expired.
"Capstar Indemnified Costs" means (a) any and all damages,
losses, claims, liabilities, demands, charges, suits, penalties, costs, and
expenses (including court costs and reasonable attorneys' fees and expenses
incurred in investigating and preparing for any litigation or proceeding) that
any of the Capstar Indemnified Parties incurs and that arise out of any breach
or default by any SFX Party of any of the representations or warranties under
this Agreement or any agreement or document executed in connection herewith;
(b) any and all losses, liabilities, or damages incurred by any of the Capstar
Indemnified Parties resulting from any SFX Party's operation or control of any
of the SFX Stations prior to the Closing Date, including any and all
liabilities arising under the SFX Licenses or the SFX Assumed Contracts which
relate to events occurring prior to the Closing Date (the items in clauses (a)
and (b) being "Capstar Indemnified Representation Costs"); (c) any and all
damages, losses, claims, liabilities, demands, charges, suits, penalties,
costs, and expenses (including court costs and reasonable attorneys' fees and
expenses incurred in investigating and preparing for any litigation or
proceeding) that any of the Capstar Indemnified Parties incurs and that arise
out of any breach or default by any SFX Party of any covenant or agreement
under this Agreement or any agreement or document executed in connection
herewith; (d) any and all obligations or liabilities of any SFX Party under any
contract or agreement not expressly assumed by Capstar pursuant to the terms
hereof; (e) the items indemnified against pursuant to Sections 6.2 and 7.7(a);
and (f) any and all actions, suits, proceedings, claims, demands, assessments,
judgments, costs, and expenses, including reasonable legal fees and expenses,
incident to any of the foregoing; provided, however, that insofar as the items
in this clause (f) relate to the items in clause (a) or (b) above, such items
shall constitute Capstar Indemnified Representation Costs.
"Capstar Indemnified Parties" means Capstar and each officer,
director, employee, consultant, stockholder, and Affiliate of Capstar.
"Capstar Intellectual Property" means all Trademarks, Know-
how, copyrights, copyright registrations and applications for registration,
Patents and all other intellectual property
4
11
rights whether registered or not, licensed to or owned by Capstar relating to
the business or operations of any Capstar Station, including the call letters
of each of the Capstar Stations, and the goodwill related to the foregoing.
"Capstar Leased Real Property" means all of the Capstar's
leasehold interests, easements, licenses, rights to access and rights-of-way
which are used or held for use in the business and operations of any Capstar
Station, including those interests which are identified and described in
Schedule 3.2(j), as modified by any addition or permitted deletion thereto
between the date hereof and the Closing Date.
"Capstar Licenses" means the Capstar FCC Licenses and all
Capstar Permits issued by any Governmental Entity to Capstar relating to or
used or held for use in the business and operations of any Capstar Station,
including those listed on Schedule 3.2(f), with any additions thereto between
the date hereof and the Closing Date.
"Capstar Liens" has the meaning set forth in Section 3.2(l).
"Capstar Negative Trade Balance" has the meaning set forth in
Section 4.2.
"Capstar Owned Real Property" means those parcels of real
property owned in fee and used or held for use by Capstar as described in
Schedule 3.2(i), and all buildings, structures, improvements, and fixtures
thereon, together with all rights of way, easements, privileges, and
appurtenances pertaining or belonging thereto, including any right, title, and
interest of Capstar in and to any street or other property adjoining any
portion of such property.
"Capstar Pension Plans" has the meaning set forth in Section
3.2(p).
"Capstar Permits" has the meaning set forth in Section
3.2(m)(iii).
"Capstar Permitted Encumbrances" means (a) statutory Capstar
Liens for current Taxes not yet due and payable, (b) mechanics', carriers',
workers', repairers', and other similar liens imposed by law arising or
incurred in the ordinary course of business for obligations not yet due, (c) in
the case of leases of vehicles, rolling stock, and other personal property,
encumbrances, which do not, individually or in the aggregate, materially impair
the operation of the business at the facility at which such leased equipment or
other personal property is located, (d) other liens, charges or encumbrances
incidental to the operation of the Capstar Stations or the ownership of the
Capstar Assets which were not incurred in connection with the borrowing of
money or the advance of credit and which, in the aggregate, do not materially
detract from the value of the Capstar Assets or materially interfere with the
use thereof or the operation of the Capstar Stations, and (e) Capstar Liens on
leases of real property arising from the provisions of such leases, including,
in relation to leased real property, any agreements and/or conditions imposed
on the issuance of land use permits, zoning, business licenses, use permits, or
other entitlements of various types issued by any Governmental Entity,
necessary or beneficial to the continued use and occupancy of the Capstar
Assets or the continuation of the operation of any Capstar Station.
5
12
"Capstar Personal Property" means all of the machinery,
equipment (including the transmitter and studio equipment), computer programs,
computer software, tools, motor vehicles, furniture, furnishings, leasehold
improvements, office equipment, inventories, supplies, plant, spare parts, and
other tangible or intangible personal property which are owned or leased by
Capstar for any Capstar Station and which are used or held for use in the
business or operations of any Capstar Station, including the personal property
which is listed on Schedule 3.2(k) hereto, together with any additions thereto
between the date hereof and the Closing Date less any dispositions made in
accordance with Section 4.1. The term Capstar Personal Property shall not
include any of the Capstar Excluded Assets.
"Capstar Real Property" means the Capstar Leased Real Property
and the Capstar Owned Real Property.
"Capstar Station Event" has the meaning set forth in Section
9.1.
"Capstar Station Licenses" has the meaning set forth in
Section 3.2(f).
"Capstar Title Commitment" means the commitment to issue an
owner's title policy as provided in Section 8.3(e).
"Capstar Trade Deals" means the exchanges by a Capstar Station
of its advertising time for goods or services, other than in connection with
the licensing of programs and programming material.
"Capstar Transaction Documents" has the meaning set forth in
Section 3.2(c).
"Capstar Warranty Deed" means a South Carolina general
warranty deed in form and substance reasonably acceptable to each SFX Party and
the Title Company pursuant to which Capstar conveys to the SFX Parties the
Capstar Owned Real Property at the Closing.
"CERCLA" has the meaning set forth in the definition of
Environmental Laws contained in this Section 1.1.
"Choses in Action" means a right to receive or recover
property, debt, or damages on a cause of action, whether pending or not and
whether arising in contract, tort or otherwise. The term shall include rights
to indemnification, damages for breach of warranty or any other event or
circumstance, judgments, settlements, and proceeds from judgments or
settlements.
"Closing" means the consummation of the transactions
contemplated by this Agreement in accordance with the provisions of Article IX.
"Closing Date" means the date of the Closing specified in
Article IX.
"Code" shall mean the United States Internal Revenue Code of
1986, as amended. All references to the Code, U.S. Treasury regulations or
other governmental pronouncements shall
6
13
be deemed to include references to any applicable successor regulations or
amending pronouncement.
"Communications Act" has the meaning set forth in Section
3.1(f).
"Consents" means all governmental consents and approvals,
including the Capstar FCC Consents and the SFX FCC Consents, as appropriate,
and all consents and approvals of third parties, in each case that are
necessary in to consummate the transactions contemplated hereby.
"Employee Pension Benefit Plan" has the meaning set forth in
Section 3(2) of ERISA.
"Environmental Costs or Liabilities" has the meaning set forth
in Section 3.1(m)(iv).
"Environmental Laws" means all Applicable Laws and rules of
common law pertaining to the environment, natural resources, and public or
employee health and safety including the Comprehensive Environmental Response
Compensation and Liability Act (42 U.S.C. Section 9601 et seq.) ("CERCLA"),
the Emergency Planning and Community Right to Know Act and the Superfund
Amendments and Reauthorization Act of 1986, the Resource Conservation and
Recovery Act, the Hazardous and Solid Waste Amendments Act of 1984, the Clean
Air Act, the Clean Water Act, the Toxic Substances Control Act, the Safe
Drinking Water Act, the Occupational Safety and Health Act of 1970, the Oil
Pollution Act of 1990, the Hazardous Materials Transportation Act, and any
similar or analogous statutes, regulations and decisional law of any
Governmental Authority, as each of the foregoing may be amended and in effect
on or prior to the Closing.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"ESA" means Phase I or Phase II environmental site
assessments.
"Exchange Act" means the Securities Exchange Act of 1934 and
the rules and regulations promulgated thereunder.
"Existing Capstar ESAs" means environmental site assessments
with respect to the Capstar Real Property.
"Existing SFX ESAs" means environmental site assessments with
respect to the SFX Real Property.
"FCC" has the meaning set forth in the first recital hereto.
"GAAP" means generally accepted accounting principles in the
United States.
"Governmental Entity" means any governmental department,
commission, board, bureau, agency, court or other instrumentality of the United
States or any state, county, parish or municipality, jurisdiction, or other
political subdivision thereof.
7
14
"Hazardous Substances" has the meaning set forth in Section
3.1(m)(iv).
"▇▇▇▇▇ Agreement" means that certain Amended and Restated
Agreement, dated June 19, 1996, between SFX Broadcasting, Inc. and R. ▇▇▇▇▇▇
▇▇▇▇▇.
"HSR Act" has the meaning set forth in Section 3.1(d).
"Indemnification Representation Costs" means the Capstar
Indemnified Representation Costs or the SFX Indemnified Representation Costs,
as the case may be.
"Indemnified Costs" means the Capstar Indemnified Costs or the
SFX Indemnified Costs, as the case may be.
"Indemnified Parties" means the Capstar Indemnified Parties or
the SFX Indemnified Parties, as the case may be.
"Indemnifying Party" means any person who is obligated to
provide indemnification hereunder.
"Know-how" means all plans, ideas, concepts and data, research
records, all promotional literature, customer and supplier lists and similar
data and information and all other confidential or proprietary technical and
business information.
"Knowledge" means, with respect to a specified party hereto,
the actual knowledge of such party and all Station Management, station
engineers, consulting engineers, corporate counsel, and FCC counsel, together
with such additional knowledge as would be acquired by a reasonable person upon
conducting reasonable and diligent inquiry concerning the subject matter in
question.
"Material Adverse Effect" means a material adverse effect on
the business, operations, properties (taken as a whole), condition (financial
or otherwise), results of operations, assets (taken as a whole), liabilities,
or prospects of the Capstar Stations or the SFX Stations, as applicable.
"Multiemployer Plan" has the meaning set forth in Section
3(37) or Section 4001(a)(3) of ERISA.
"Patents" means all patent and patent applications (including
all reissues, divisions, continuations, continuations-in-part, renewals, and
extensions of the foregoing).
"person" means an individual, corporation, partnership,
limited liability company, association, trust, unincorporated organization, or
other entity.
"Release" means a Release of Claims between Capstar and each
SFX Party substantially in the form of Exhibit I.
"Schedules" means the Schedules attached hereto.
8
15
"Securities Act" means the Securities Act of 1933 and the
rules and regulations promulgated thereunder.
"SFX Accounts Receivable" means the rights of an SFX Party to
cash payment for the sale of advertising time by the SFX Stations prior to
11:59 p.m. on the day prior to the Closing Date.
"SFX Applications" has the meaning set forth in Section 7.3
"SFX Assets" means all the tangible and intangible assets
owned, leased, or licensed by each SFX Party that are used or held for use in
connection with the business or operations of any of the SFX Stations, whether
or not reflected on the SFX Financial Statements or SFX Balance Sheets, but
specifically excluding therefrom the SFX Excluded Assets.
"SFX Assumed Contracts" means (a) those SFX Contracts set
forth on Schedule 3.1(o) identified as being assumed by Capstar and all other
contracts of a SFX Party entered into in the ordinary course of business prior
to the date of this Agreement that relate to the SFX Assets or the business or
operation of the SFX Assets or any part thereof, (b) all other non-trade
advertising SFX Contracts for cash entered into by a SFX Party for any of the
SFX Stations prior to the date of this Agreement and which are terminable on
not more than 30 days notice, (c) all SFX Contracts entered into by a SFX Party
on or after the date of this Agreement and before the Closing in accordance
with the applicable provisions of Section 4.1, and (d) SFX Trade Deals
described in Section 2.8.
"SFX Assumption Agreement" means the SFX Assumption Agreement
between Capstar and each SFX Party substantially in the form of Exhibit C.
"SFX Balance Sheets" has the meaning set forth in Section
3.1(e).
"SFX Balance Sheet Date" has the meaning set forth in Section
3.1(e).
"SFX ▇▇▇▇ of Sale and Assignment" means the SFX ▇▇▇▇ of Sale
and Assignment between Capstar and each SFX Party substantially in the form of
Exhibit A.
"SFX Company Reports" has the meaning set forth in Section
3.1(e).
"SFX Contracts" means all agreements, contracts, or other
binding commitments or arrangements, written or oral (including any amendments
and other modifications thereto), to which any SFX Party is a party or is
otherwise bound and which affect or relate to the SFX Assets or the business or
operations of each of the SFX Stations.
"SFX Employee Benefit Plans" means any "employee benefit plan"
of each SFX Party within the meaning of Section 3(3) of ERISA and any bonus,
deferred compensation, incentive compensation, stock ownership, stock purchase,
stock option, phantom stock, vacation, severance, disability, death benefit,
hospitalization or insurance plan providing benefits to any present or former
9
16
employee or contractor of any SFX Party or any member of the SFX ERISA Group
maintained by any such entity or as to which any such entity has any liability
or obligation.
"SFX ERISA Group" has the meaning set forth in Section 3.1(p).
"SFX Excluded Assets" has the meaning set forth in Section
2.3.
"SFX FCC Consents" means actions by the FCC granting its
initial consent to the assignment of the SFX FCC Licenses for each of the SFX
Stations to Capstar as contemplated by this Agreement.
"SFX FCC Licenses" means all of the licenses, permits, and
other authorizations issued by the FCC to each SFX Party and applications of
each SFX Party, if any, to the FCC relating to or used in the business or
operations of each of the SFX Stations, including those listed on Schedule
3.1(f), and any additions thereto between the date hereof and the Closing Date.
"SFX Final Order" means written action or order issued by the
FCC setting forth the SFX FCC Consents (without the inclusion of any adverse
conditions affecting Capstar's operation or ownership of any SFX Party's SFX
Station) and (a) which has not been reversed, stayed, enjoined, set aside,
annulled, or suspended and (b) with respect to which (i) no requests have been
filed for administrative or judicial review, reconsideration, appeal, or stay,
and the time for filing any such requests and for the FCC to set aside the
action on its own motion has expired or (ii) in the event of review,
reconsideration, or appeal, such review, reconsideration, or appeal has been
denied and the time for further review, reconsideration, or appeal has expired.
"SFX Financial Statements" has the meaning set forth in
Section 3.1(e).
"SFX Indemnified Costs" means (a) any and all damages, losses,
claims, liabilities, demands, charges, suits, penalties, costs, and expenses
(including court costs and reasonable attorneys' fees and expenses incurred in
investigating and preparing for any litigation or proceeding) that any of the
SFX Indemnified Parties incurs and that arise out of any breach or default by
Capstar of any of the representations, or warranties under this Agreement or
any agreement or document executed in connection herewith; (b) any and all
losses, liabilities, or damages incurred by any of the SFX Indemnified Parties
resulting from Capstar's operation or control of any of the Capstar Stations
prior to the Closing Date, including any and all liabilities arising under the
Capstar Licenses or the Capstar Assumed Contracts which relate to events
occurring prior to the Closing Date (the items in clause (a) and (b) being
"SFX Indemnified Representation Costs"); (c) any and all damages, losses,
claims, liabilities, demands, charges, suits, penalties, costs, and expenses
(including court costs and reasonable attorneys' fees and expenses incurred in
investigating and preparing for any litigation or proceeding) that any of the
SFX Indemnified Parties incurs and that arise out of any breach or default by
Capstar of any covenant or agreement under this Agreement or any agreement or
document executed in connection herewith; (d) any and all obligations or
liabilities of Capstar under any contract or agreement not expressly assumed by
any SFX Party pursuant to the terms hereof ; (e) the items indemnified against
pursuant to Sections 5.2 and 7.7(b); and (f) any and all actions, suits,
proceedings claims, demands, assessments, judgments, costs, and expenses,
including
10
17
reasonable legal fees and expenses, incident to any of the foregoing; provided,
however, that insofar as the items in this clause (f) relate to the items in
clause (a) or (b) above, such items shall constitute SFX Indemnified
Representation Costs.
"SFX Indemnified Parties" means each SFX Party and each
officer, director, employee, consultant, stockholder, and Affiliate thereof.
"SFX Intellectual Property" means all Trademarks, Know-how,
copyrights, copyright registrations and applications for registration, Patents
and all other intellectual property rights whether registered or not, licensed
to or owned by any SFX Party relating to the business or operations of any SFX
Station, including the call letters of each of the SFX Stations and the
goodwill related to the foregoing.
"SFX Leased Real Property" means all of each SFX Party's
leasehold interests, easements, licenses, rights to access and rights-of-way
which are used or held for use in the business and operations of any SFX
Station, including those interests which are identified and described in
Schedule 3.1(j), as modified by any addition or permitted deletion thereto
between the date hereof and the Closing Date.
"SFX Licenses" means the SFX FCC Licenses and all SFX Permits
issued by any Governmental Entity to each SFX Party relating to or used or held
for use in the business and operations of any SFX Station, including those
listed on Schedule 3.1(f), with any additions thereto between the date hereof
and the Closing Date.
"SFX Liens" has the meaning set forth in Section 3.1(l).
"SFX Negative Trade Balance" has the meaning set forth in
Section 4.2.
"SFX Owned Real Property" means those parcels of real property
owned in fee and used or held for use by each SFX Party as described in
Schedule 3.1(i), and all buildings, structures, improvements, and fixtures
thereon, together with all rights of way, easements, privileges, and
appurtenances pertaining or belonging thereto, including any right, title, and
interest of such SFX Party in and to any street or other property adjoining any
portion of such property.
"SFX Parties" and "SFX Party" have the meaning set forth in
the first paragraph of this Agreement, and it includes their permitted
successors and assigns. After an assignment pursuant to Section 12.14, SFX
Parties and SFX Party shall mean the Affiliate to which this Agreement has been
assigned and SFX Parties and SFX Party shall no longer have the meaning as set
forth in the first paragraph of this Agreement.
"SFX Pension Plans" has the meaning set forth in Schedule
3.1(p).
"SFX Permits" has the meaning set forth in Section
3.1(m)(iii).
11
18
"SFX Permitted Encumbrances" means (a) statutory SFX Liens for
current Taxes not yet due and payable, (b) mechanics', carriers', workers',
repairers', and other similar liens imposed by law arising or incurred in the
ordinary course of business for obligations not yet due, (c) in the case of
leases of vehicles, rolling stock, and other personal property, encumbrances,
which do not, individually or in the aggregate, materially impair the operation
of the business at the facility at which such leased equipment or other
personal property is located, (d) other liens, charges or encumbrances
incidental to the operation of any SFX Station or the ownership of the SFX
Assets which were not incurred in connection with the borrowing of money or the
advance of credit and which, in the aggregate, do not materially detract from
the value of the SFX Assets or materially interfere with the use thereof or the
operation of any SFX Station, and (e) SFX Liens on leases of real property
arising from the provisions of such leases, including, in relation to leased
real property, any agreements and/or conditions imposed on the issuance of land
use permits, zoning, business licenses, use permits, or other entitlements of
various types issued by any Governmental Entity, necessary or beneficial to the
continued use and occupancy of the SFX Assets or the continuation of the
operation of any SFX Station.
"SFX Personal Property" means all of the machinery, equipment
(including the transmitter and studio equipment), computer programs, computer
software, tools, motor vehicles, furniture, furnishings, leasehold
improvements, office equipment, inventories, supplies, plant, spare parts, and
other tangible or intangible personal property which are owned or leased by
each SFX Party for any SFX Station and which are used or held for use in the
business or operations of any SFX Station, including the personal property
which is listed on Schedule 3.1(k) hereto, together with any additions thereto
between the date hereof and the Closing Date less any dispositions made in
accordance with Section 4.1. The term SFX Personal Property shall not include
any of the SFX Excluded Assets.
"SFX Real Property" means the SFX Leased Real Property and the
SFX Owned Real Property.
"SFX Station Event" has the meaning set forth in Section 9.1.
"SFX Station Licenses" has the meaning set forth in Section
3.1(f).
"SFX Title Commitment" means the commitment to issue an
owner's title policy as provided in Section 8.2(e).
"SFX Trade Deals" means the exchanges by a SFX Station of its
advertising time for goods or services, other than in connection with the
licensing of programs and programming material.
"SFX Transaction Documents" has the meaning set forth in
Section 3.1(c).
"SFX Warranty Deed" means a Kansas or Florida general warranty
deed in form and substance reasonably acceptable to Capstar and the Title
Company pursuant to which each SFX Party conveys to Capstar the SFX Owned Real
Property at the Closing.
12
19
"Station Management" has the meaning set forth in Section
4.1(b).
"Tax Returns" means any return, report, information return or
other document (including any related or supporting information) filed or
required to be filed with any Governmental Entity in connection with the
determination, assessment, collection or administration of any Taxes or the
administration of any laws, regulations or administrative requirements relating
to any Taxes.
"Taxes" means taxes, charges, fees, imposts, levies, interest,
penalties, additions to tax or other assessments or fees of any kind,
including, but not limited to, income, corporate, capital, excise, property,
sales, use, turnover, value added and franchise taxes, deductions, withholdings
and customs duties, imposed by any Governmental Entity and any payments with
respect thereto required under any tax-sharing agreement.
"Title Company" means Republic Title of Texas, Inc., ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇.
"Trademarks" means (a) trademarks, service marks, trade names,
trade dress, labels, logos, and all other names and slogans associated with any
products or embodying the goodwill of the business of any Capstar Station or
SFX Station, as applicable, whether or not registered, and any applications or
registrations therefor and (b) any associated goodwill incident thereto.
1.2. REFERENCES AND TITLES. All references in this Agreement to
Exhibits, Schedules, Articles, Sections, subsections, and other subdivisions
refer to the corresponding Exhibits, Schedules, Articles, Sections,
subsections, and other subdivisions of this Agreement unless expressly provided
otherwise. Titles appearing at the beginning of any Articles, Sections,
subsections, or other subdivisions of this Agreement are for convenience only,
do not constitute any part of such Articles, Sections, subsections or other
subdivisions, and shall be disregarded in construing the language contained
therein. The words "this Agreement," "herein," "hereby," "hereunder," " and
"hereof," and words of similar import, refer to this Agreement as a whole and
not to any particular subdivision unless expressly so limited. The words "this
Section," "this subsection," and words of similar import, refer only to the
Sections or subsections hereof in which such words occur. The word "or" is not
exclusive, and the word "including" (in its various forms) means "including
without limitation." Pronouns in masculine, feminine, or neuter genders shall
be construed to state and include any other gender and words, terms, and titles
(including terms defined herein) in the singular form shall be construed to
include the plural and vice versa, unless the context otherwise expressly
requires. Unless the context otherwise requires, all defined terms contained
herein shall include the singular and plural and the conjunctive and
disjunctive forms of such defined terms.
1.3. SCHEDULES.
(a) Any Schedule provided by Capstar under this Agreement
shall be delivered on or before 30 days after the Capstar Date. The
information provided in such Schedules shall be as of the Capstar
Date. In addition, Capstar shall deliver the Existing Capstar ESAs on
or before 30 days after the Capstar Date.
13
20
(b) Any schedule provided by the SFX Parties under this
Agreement shall be delivered on or before 30 days after the date of
this Agreement. The information provided in such schedules shall be
as of the date of this Agreement. In addition, the SFX Parties shall
deliver the existing SFX ESAs on or before 30 days after the date of
this Agreement.
ARTICLE II
EXCHANGE AND OTHER ACTIONS
2.1. AGREEMENT TO EXCHANGE. Subject to the terms and conditions
set forth in this Agreement and except for the SFX Excluded Assets, each of the
SFX Parties hereby agrees that it shall assign, transfer and deliver to Capstar
on the Closing Date, all of the SFX Assets owned or otherwise held by such SFX
Party, free and clear of any SFX Liens or liabilities (except for the SFX
Permitted Encumbrances and liabilities assumed by Capstar in accordance with
Section 2.8) and except for the Capstar Excluded Assets, Capstar hereby agrees
that it shall assign, transfer and deliver to the SFX Parties on the Closing
Date, all of the Capstar Assets, free and clear of any Capstar Liens or
liabilities (except for the Capstar Permitted Encumbrances and liabilities
assumed by the SFX Parties in accordance with Section 2.8)
2.2. SFX ASSETS. The SFX Assets to be assigned, transferred and
delivered by the SFX Parties hereunder shall include the following:
(a) All SFX Personal Property;
(b) All SFX Leased Real Property;
(c) All SFX Owned Real Property;
(d) All SFX Licenses and SFX Permits;
(e) All SFX Assumed Contracts;
(f) All SFX Intellectual Property;
(g) Each of the SFX Station's technical information and
data, machinery and equipment warranties (to the extent such
warranties are assignable), if any, maps, plans, diagrams, blueprints
and schematics relating to such SFX Station, if any, including filings
with the FCC which relate to such SFX Station, and goodwill relating
to the foregoing;
(h) All books and records relating to the business and
operation of any SFX Station (excluding those described in, or
relating to the assets described in, Section 2.3), including (i)
executed copies of the SFX Assumed Contracts, or if no executed
agreement exists, summaries of each SFX Assumed Contract transferred
pursuant to clause (e) above and (ii) all records required by the FCC
to be kept by each SFX Station, subject to the right of each SFX Party
to copy and have such books and records made reasonably available to
14
21
such SFX Party for tax and other legitimate organization purposes for
a period of six years after the Closing Date;
(i) To the extent assignable, all computer programs and
software, and all rights and interests of each SFX Party in and to
computer programs and software used in connection with the business or
operations of any SFX Station;
(j) Except for claims relating to Taxes and all of each
SFX Party's Choses in Action described in Schedule 2.2(j), all of each
SFX Party's Choses in Action; and
(k) All intangible assets of each SFX Party relating to
any SFX Station or the business or operation of any SFX Station not
specifically described above, including goodwill, and all other
assets, other than the SFX Excluded Assets, used or held for use in
connection with any SFX Station or the business of such SFX Party.
2.3. SFX EXCLUDED ASSETS. The SFX Excluded Assets shall consist of
the following:
(a) The SFX Real Property described in Schedule 2.3(a);
(b) Each SFX Party's books and records relating solely to
internal corporate matters and any other books and records not related
to any SFX Station or the business or operations of any SFX Station;
(c) Any claims, rights and interest of each SFX Party in
and to any (i) refunds of Taxes or fees of any nature whatsoever or
(ii) deposits or utility deposits, which, in each case, relate solely
to the period prior to the Closing Date;
(d) All insurance contracts, including the cash surrender
value thereof, and all insurance proceeds or claims made by each SFX
Party relating to property or equipment repaired, replaced or restored
by such SFX Party prior to the Closing Date;
(e) All of the SFX Employee Benefit Plans and all assets
or funds held in trust, or otherwise, associated with or used in
connection with the SFX Employee Benefit Plans;
(f) All of each SFX Party's Choses in Action, if any,
excluded from Section 2.2(j);
(g) All tangible and intangible personal property
disposed of or consumed in the ordinary course of business between the
date of this Agreement and the Closing Date, or as otherwise permitted
under the terms hereof;
(h) Any collective bargaining agreement, any other SFX
Contract not included in the SFX Assumed Contracts, and all SFX
Contracts that have terminated or expired prior to the Closing Date in
the ordinary course of business and as permitted hereunder;
15
22
(i) The personal effects and other personal property, if
any, identified on Schedule 2.3(i);
(j) In each case determined as of 11:59 p.m. on the day
prior to the Closing Date, each SFX Party's cash on hand as of the
Closing Date and all other cash in any of such SFX Party's bank or
savings accounts; notes receivable, letters of credit or other similar
items of each SFX Party; any stocks, bonds, certificates of deposit
and similar investments of each SFX Party; and any other cash
equivalents of each SFX Party; and
(k) All of the SFX Accounts Receivable.
2.4. CAPSTAR ASSETS. The Capstar Assets to be assigned,
transferred and delivered by Capstar hereunder shall include the following:
(a) All Capstar Personal Property;
(b) All Capstar Leased Real Property;
(c) All Capstar Owned Real Property;
(d) All Capstar Licenses and Capstar Permits;
(e) All Capstar Assumed Contracts;
(f) All Capstar Intellectual Property;
(g) Each of the Capstar Station's technical information
and data, machinery and equipment warranties (to the extent such
warranties are assignable), if any, maps, plans, diagrams, blueprints
and schematics relating to such Capstar Station, if any, including
filings with the FCC which relate to such Capstar Station, and
goodwill relating to the foregoing;
(h) All books and records relating to the business and
operation of any of the Capstar Stations (excluding those described
in, or relating to the assets described in, Section 2.5), including
(i) executed copies of the Capstar Assumed Contracts, or if no
executed agreement exists, summaries of each Capstar Assumed Contract
transferred pursuant to clause (e) above and (ii) all records required
by the FCC to be kept by each Capstar Station, subject to the right of
Capstar to copy and have such books and records made reasonably
available to Capstar for tax and other legitimate organization
purposes for a period of six years after the Closing Date;
(i) To the extent assignable, all computer programs and
software, and all rights and interests of Capstar in and to computer
programs and software used in connection with the business or
operations of any Capstar Station;
16
23
(j) Except for claims relating to Taxes and all Capstar's
Choses in Action described in Schedule 2.4(j), all Capstar's Choses in
Action; and
(k) All intangible assets of Capstar relating to any
Capstar Station or the business or operation of any Capstar Station
not specifically described above, including goodwill, and all other
assets, other than the Capstar Excluded Assets, used or held for use
in connection with any Capstar Station or the business of Capstar.
2.5. CAPSTAR EXCLUDED ASSETS. The Capstar Excluded Assets shall
consist of the following:
(a) The Capstar Real Property described in Schedule
2.5(a);
(b) Capstar's books and records relating solely to
internal corporate matters and any other books and records not related
to any Capstar Station or the business or operations of any Capstar
Station;
(c) Any claims, rights and interest of Capstar in and to
any (i) refunds of Taxes or fees of any nature whatsoever or (ii)
deposits or utility deposits, which, in each case, relate solely to
the period prior to the Closing Date;
(d) All insurance contracts, including the cash surrender
value thereof, and all insurance proceeds or claims made by Capstar
relating to property or equipment repaired, replaced or restored by
Capstar prior to the Closing Date;
(e) All of Capstar Employee Benefit Plans and all assets
or funds held in trust, or otherwise, associated with or used in
connection with Capstar Employee Benefit Plans;
(f) All Capstar's Choses in Action, if any, excluded from
Section 2.4(j);
(g) All tangible and intangible personal property
disposed of or consumed in the ordinary course of business between the
date of this Agreement and the Closing Date, or as otherwise permitted
under the terms hereof;
(h) Any collective bargaining agreement, any other
Capstar Contract not included in the Capstar Assumed Contracts, and
all Capstar Contracts that have terminated or expired prior to the
Closing Date in the ordinary course of business and as permitted
hereunder;
(i) The personal effects and other personal property, if
any, identified on Schedule 2.5(i);
(j) In each case determined as of 11:59 p.m. on the day
prior to the Closing Date, Capstar's cash on hand as of the Closing
Date and all other cash in any of Capstar's bank or savings accounts;
notes receivable, letters of credit or other similar items of Capstar;
any
17
24
stocks, bonds, certificates of deposit and similar investments of
Capstar; and any other cash equivalents of Capstar; and
(k) All of the Capstar Accounts Receivable.
2.6. [RESERVED]
2.7. ADJUSTMENTS AND PRORATIONS.
(a) All revenues arising from the operation of the SFX
Stations earned or accrued up until 11:59 p.m. on the day prior to the Closing
Date, and all expenses, costs and liabilities, arising therefrom incurred,
accrued or payable up until such time, including expenses arising under the SFX
Assumed Contracts, tower rentals, business and license fees, utility charges,
real and personal property taxes levied against the SFX Assets, property and
equipment rentals, applicable copyright or other fees, sales and service
charges, other Taxes, wages, salaries, vacation, sick and employee compensation
pay shall be prorated between the SFX Parties and Capstar in accordance with
the principle that (i) each SFX Party shall receive all revenues, refunds and
deposits of such SFX Party held by third parties, and shall be responsible for
all expenses, costs and liabilities incurred, payable or allocable to the
conduct of the business and operations of such SFX Party's SFX Station for the
period ending at 11:59 p.m. on the day prior to the Closing Date and (ii)
Capstar shall receive all revenues earned or accrued and shall be responsible
for all expenses, costs and liabilities incurred, payable or allocable to the
conduct of the business and operations of each SFX Station for the period
commencing on and continuing after the Closing Date. An adjustment and
proration shall be made in favor of Capstar to the extent that Capstar assumes
any liability under any SFX Assumed Contract to refund (or to credit against
payments otherwise due) any security deposit or similar prepayment paid to each
SFX Party by any lessee or other third party which is not otherwise credited to
Capstar. Subject to Capstar's receipt of appropriate estoppel certificates, an
adjustment and proration shall be made in favor of the SFX Parties to the
extent that any SFX Party has made (A) any security deposit under any SFX
Assumed Contract whether or not there is a proration under such SFX Assumed
Contract or (B) other prepayment under any SFX Assumed Contracts for which
there is a proration. Each SFX Party shall be liable for all of the costs of
employee compensation relating to each of the SFX Stations properly
attributable to or accruable on account of service with such SFX Party through
11:59 p.m. on the date prior to the Closing Date, including (1) all Taxes and
related contributions, vacations and sick pay and (2) all group medical, dental
or death benefits for expenses incurred, related to or arising from, events
occurring on or prior to 11:59 p.m. on the date prior to the Closing Date, or
death or disability occurring on or prior to 11:59 p.m. on the date prior to
the Closing Date, whether reported by the Closing Date or thereafter; Capstar
will be liable for all of the costs of employee compensation relating to each
of the SFX Stations, properly attributable or accruable thereafter on account
of service with Capstar. Except as provided in Section 2.8(c), SFX Trade Deals
shall not be adjusted or prorated. Adjustments or prorations pursuant to this
Section 2.7(a) will, insofar as feasible, be determined and paid in accordance
with Section 2.7(c) on the Closing Date based upon each SFX Party's good faith
calculation delivered to Capstar five days prior to the Closing Date and
reasonably approved by Capstar, with final settlement and payment by the
appropriate party occurring pursuant to Section 2.7(d).
18
25
(b) All revenues arising from the operation of the
Capstar Stations earned or accrued up until 11:59 p.m. on the day prior to the
Closing Date, and all expenses, costs and liabilities, arising therefrom
incurred, accrued or payable up until such time, including expenses arising
under the Capstar Assumed Contracts, tower rentals, business and license fees,
utility charges, real and personal property taxes levied against the Capstar
Assets, property and equipment rentals, applicable copyright or other fees,
sales and service charges, other Taxes, wages, salaries, vacation, sick and
employee compensation pay shall be prorated between the SFX Parties and Capstar
in accordance with the principle that (i) Capstar shall receive all revenues,
refunds and deposits of Capstar held by third parties, and shall be responsible
for all expenses, costs and liabilities incurred, payable or allocable to the
conduct of the business and operations of each Capstar Station for the period
ending at 11:59 p.m. on the day prior to the Closing Date and (ii) the SFX
Parties shall receive all revenues earned or accrued and shall be responsible
for all expenses, costs and liabilities incurred, payable or allocable to the
conduct of the business and operations of each Capstar Station for the period
commencing on and continuing after the Closing Date. An adjustment and
proration shall be made in favor of the SFX Parties to the extent that a SFX
Party assumes any liability under any Capstar Assumed Contract to refund (or to
credit against payments otherwise due) any security deposit or similar
prepayment paid to Capstar by any lessee or other third party which is not
otherwise credited to such SFX Party. Subject to a SFX Party's receipt of
appropriate estoppel certificates, an adjustment and proration shall be made in
favor of Capstar to the extent that Capstar has made (A) any security deposit
under any Capstar Assumed Contract whether or not there is a proration under
such Capstar Assumed Contract or (B) other prepayment under any Capstar Assumed
Contracts for which there is a proration. Capstar shall be liable for all of
the costs of employee compensation relating to each of the Capstar Stations
properly attributable to or accruable on account of service with the Capstar
through 11:59 p.m. on the date prior to the Closing Date, including (1) all
Taxes and related contributions, vacations and sick pay and (2) all group
medical, dental or death benefits for expenses incurred, related to or arising
from, events occurring on or prior to 11:59 p.m. on the date prior to the
Closing Date, or death or disability occurring on or prior to 11:59 p.m. on the
date prior to the Closing Date, whether reported by the Closing Date or
thereafter; the SFX Parties will be liable for all of the costs of employee
compensation relating to each of the Capstar Stations, properly attributable or
accruable thereafter on account of service with any SFX Party. Except as
provided in Section 2.8(d), Capstar Trade Deals shall not be adjusted or
prorated. Adjustments or prorations pursuant to this Section 2.7(b) will,
insofar as feasible, be determined and paid in accordance with Section 2.7(c)
on the Closing Date based upon Capstar's good faith calculation delivered to
each SFX Party five days prior to the Closing Date and reasonably approved by
each SFX Party, with final settlement and payment by the appropriate party
occurring pursuant to Section 2.7(d).
(c) Based on the initial determination of the adjustments
and prorations in Sections 2.7(a) and 2.7(b), the parties shall:
(i) In the event that the initial determination
of the net adjustments and prorations favors Capstar, the SFX Parties
shall pay to Capstar the excess via wire transfer of immediately
available funds.
19
26
(ii) In the event that the initial determination
of the net adjustments and prorations favors the SFX Parties, Capstar
shall pay to the SFX Parties the excess via wire transfer of
immediately available funds.
(d) (i) Within 60 days after the Closing Date, each
of Capstar and the SFX Parties shall submit to each other a good faith
actual determination of the adjustments or prorations required by
Section 2.7(a) or 2.7(b), as applicable.
(ii) (A) In the event that the actual net
adjustments and prorations favors Capstar, the SFX Parties shall pay
the excess less the amount previously paid to Capstar under Section
2.7(c)(i), if any, to Capstar via wire transfer of immediately
available funds.
(B) In the event that the actual net
adjustments and prorations favors the SFX Parties, Capstar shall pay
the excess less the amount previously paid to the SFX Parties under
Section 2.7(c)(ii), if any, to the SFX Parties via wire transfer of
immediately available funds.
(iii) Each SFX Party's and Capstar's determination
of the amount of adjustments under this Section 2.7(d) shall be made
in accordance with GAAP, consistently applied. Each of Capstar and
the SFX Parties shall request their respective accountants, Coopers &
▇▇▇▇▇▇▇ LLP and Ernst & Young LLP, to consult with each other
regarding preparation of the actual adjustment amounts in this Section
2.7(d). If any SFX Party or Capstar disagrees with the determination
made by the other of any adjustment in this Section 2.7(d), such party
shall give prompt written notice thereof, but in no event later than
20 days after notice of such determination, specifying in reasonable
detail the nature and extent of the disagreement, and the SFX Parties
and Capstar shall have a period of 30 days in which to resolve the
disagreement. If the parties are unable to resolve the disagreement
within the 30-day period, the matter shall be submitted to ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ LLP, an independent certified public accounting firm, which
accounting firm shall be directed to submit a final resolution within
30 days. The accounting firm's determination shall be binding on each
SFX Party and Capstar. Each party shall bear the fees and expenses of
its own representatives, including its independent accountants, if
any, and shall share equally the fees and expenses of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
LLP, if engaged, to resolve any disagreement between the parties.
Within five business days following a final determination hereunder,
the party obligated to make payment will make the payments determined
to be due and owing in accordance with this Section 2.7(d) via wire
transfer of immediately available funds.
2.8. ASSUMPTION OF LIABILITIES AND OBLIGATIONS. (a) As of the
Closing Date, Capstar shall assume and undertake to pay, discharge and perform
all the obligations and liabilities of the SFX Parties relating to each SFX
Station under the SFX Licenses and the SFX Assumed Contracts assumed by Capstar
relating to the time period beginning on or arising out of events occurring on
or after the Closing Date. All other obligations and liabilities of each SFX
Party, including (i) obligations or liabilities under any contract not included
in the SFX Assumed Contracts, (ii) obligations or liabilities under any SFX
Assumed Contract for which a Consent, if required, has
20
27
not been obtained as of the Closing Date, (iii) any obligations and liabilities
arising under the SFX Assumed Contracts that relate to the time period prior to
the Closing Date or arise out of events occurring prior to the Closing Date and
(iv) any forfeiture, claim or pending litigation or proceeding relating to the
business or operations of any SFX Station prior to the Closing Date, shall
remain and be the obligation and liability solely of such SFX Party. Other
than as specified in the first sentence of this Section 2.8(a), Capstar,
directly or indirectly, shall assume no liabilities or obligations of each SFX
Party and shall not be liable therefor.
(b) As of the Closing Date, the SFX Parties shall assume
and undertake to pay, discharge and perform all the obligations and liabilities
of Capstar relating to each Capstar Station under the Capstar Licenses and the
Capstar Assumed Contracts assumed by the SFX Parties relating to the time
period beginning on or arising out of events occurring on or after the Closing
Date. All other obligations and liabilities of Capstar, including (i)
obligations or liabilities under any contract not included in the Capstar
Assumed Contracts, (ii) obligations or liabilities under any Capstar Assumed
Contract for which a Consent, if required, has not been obtained as of the
Closing Date, (iii) any obligations and liabilities arising under the Capstar
Assumed Contracts that relate to the time period prior to the Closing Date or
arise out of events occurring prior to the Closing Date and (iv) any
forfeiture, claim or pending litigation or proceeding relating to the business
or operations of any Capstar Station prior to the Closing Date, shall remain
and be the obligation and liability solely of Capstar. Other than as specified
in the first sentence of this Section 2.8(b), each SFX Party, directly or
indirectly, shall assume no liabilities or obligations of Capstar and shall not
be liable therefor.
(c) Schedule 2.8(c) contains a list of all of the SFX
Trade Deals in effect as of the date hereof and correctly sets forth the
balance, in dollar value, of either (i) each SFX Party's obligations to the
other party under such SFX Trade Deals (denoted by a minus on Schedule 2.8(c))
or (ii) the amount due to each SFX Party under such SFX Trade Deals (reflected
as a positive on Schedule 2.8(c)). On the Closing Date, Capstar shall assume
each SFX Party's obligations under (i) the SFX Trade Deals listed on Schedule
2.8(c) to the extent that the goods or services to be provided by the
advertisers pursuant to such SFX Trade Deals are solely used or useful in
connection with the business or operations of any SFX Station and (ii) all SFX
Trade Deals entered into by each SFX Party between the date hereof and the
Closing Date with the consent of Capstar. The SFX Trade Deals assumed by
Capstar pursuant to the terms of this Section 2.8(c) shall be considered SFX
Assumed Contracts.
(d) Schedule 2.8(d) contains a list of all of the Capstar
Trade Deals in effect as of the Capstar Date and correctly sets forth the
balance, in dollar value, of either (i) Capstar's obligations to the other
party under such Capstar Trade Deals (denoted by a minus on Schedule 2.8(d)) or
(ii) the amount due Capstar under such Capstar Trade Deals (reflected as a
positive on Schedule 2.8(d)). On the Closing Date, the SFX Parties shall
assume Capstar's obligations under (i) the Capstar Trade Deals listed on
Schedule 2.8(d) to the extent that the goods or services to be provided by the
advertisers pursuant to such Capstar Trade Deals are solely used or useful in
connection with the business or operations of any Capstar Station, (ii) all
Capstar Trade Deals entered into by Benchmark between the date hereof and the
Capstar Date with the consent of the SFX Parties, and (iii) all Capstar Trade
Deals entered into by Capstar between the Capstar Date and
21
28
the Closing Date with the consent of the SFX Parties. The Capstar Trade Deals
assumed by the SFX Parties pursuant to the terms of this Section 2.8(d) shall
be considered Capstar Assumed Contracts.
2.9. AMENDMENT TO ▇▇▇▇▇ AGREEMENT Concurrently with the execution
of this Agreement, the SFX Parties shall cause SFX Broadcasting, Inc. to
deliver an executed amendment (with the understanding that such amendment is a
material inducement to Capstar entering into this Agreement) to that certain
Amended and Restated Agreement, dated June 19, 1996, between SFX Broadcasting,
Inc. and R. ▇▇▇▇▇▇ ▇▇▇▇▇ (the "▇▇▇▇▇ Agreement"). The amendment shall delete
Section 3(i) of the ▇▇▇▇▇ Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1. REPRESENTATIONS AND WARRANTIES REGARDING THE SFX PARTIES.
Each SFX Party, jointly and severally, represents and warrants to Capstar as
follows (with the understanding that Capstar is relying on such representations
and warranties in entering into and performing this Agreement).
(a) Organization, Good Standing, Etc.
(i) Each SFX Party that is a corporation is duly
organized, validly existing and in good standing under the laws of the
State of Delaware, has all requisite corporate power and authority to
own, lease and operate its properties and to carry on its business as
now being conducted and is duly qualified and in good standing to do
business in each state listed on Schedule 3.1(a), which states
represent every jurisdiction in which the nature of its business or
the ownership or leasing of its properties makes such qualification
necessary. No SFX Party that is a corporation is in violation of any
provisions of its Articles of Incorporation or Bylaws.
(ii) Each SFX Party that is a limited partnership
is duly formed and validly existing as a limited partnership under the
laws of the State of Delaware, has all requisite power and authority
to own, lease and operate its properties and to carry out its business
as now being conducted and is duly qualified and in good standing to
do business in each state listed on Schedule 3.1(a), which states
represent every jurisdiction in which the nature of its business or
the ownership or leasing of its properties make such qualification
necessary. No SFX Party that is a limited partnership is in violation
of any provisions of its certificate of limited partnership or limited
partnership agreement.
(b) Subsidiaries of the SFX Parties. Each SFX Party does
not own, directly or indirectly, any equity interest in any other corporation,
partnership, or other person or have the right, pursuant to a contract or
otherwise, to acquire any capital stock, equity interest or other similar
investment in any corporation, partnership, or other person.
22
29
(c) Authority. Each SFX Party has full power and
authority to enter into this Agreement, the SFX ▇▇▇▇ of Sale and Assignment,
the SFX Assumption Agreement, and each other agreement, document, and
instrument required to be executed by such SFX Party in accordance herewith
(collectively, the "SFX Transaction Documents") and to consummate the
transactions contemplated hereby or thereby. The execution and delivery of the
SFX Transaction Documents by each SFX Party and the consummation by such SFX
Party of the transactions contemplated hereby or thereby has been duly
authorized by all necessary action on the part of such SFX Party, including,
without limitation, the requisite approval of the holders of the outstanding
capital stock of such SFX Party entitled to vote thereon or the requisite
approval of the partners of such SFX Party entitled to vote thereon, as
applicable. The SFX Transaction Documents have been, or upon execution and
delivery will be, duly executed and delivered and constitute the valid and
binding obligations of each SFX Party enforceable, jointly and severally,
against each of them in accordance with their terms, subject as to
enforceability to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally and to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity).
(d) No Conflict; Required Filings and Consents. The
execution and delivery of the SFX Transaction Documents by each SFX Party does
not and the performance by each SFX Party of the transactions contemplated
hereby or thereby will not, subject to obtaining the consents, approvals,
authorizations, and permits and making the filings described in this Section
3.1(d) or on Schedule 3.1(o), (A) violate, conflict with, or result in any
breach of any provision of such SFX Party's Articles of Incorporation and
Bylaws or certificate of limited partnership and limited partnership agreement,
as applicable, (B) violate, conflict with, or result in a violation or breach
of, or constitute a default (with or without due notice or lapse of time or
both) under, or permit the termination of, or result in the acceleration of, or
entitle any party to accelerate (whether as a result of a change of control of
such SFX Party or otherwise) any obligation, or result in the loss of any
benefit, or give any person the right to require any security to be
repurchased, or give rise to the creation of any lien, charge, security
interest, or encumbrance upon any of the SFX Assets under any of the terms,
conditions, or provisions of any loan or credit agreement, note, bond,
mortgage, indenture, or deed of trust, or any license, lease, agreement, or
other instrument or obligation to which such SFX Party is a party or by which
it or any of the SFX Assets may be bound or subjected, or (C) violate any
order, writ, judgment, injunction, decree, statute, law, rule, or regulation,
of any Governmental Entity applicable to such SFX Party or by which or to which
any of the SFX Assets is bound or subject. No Consent of any Governmental
Entity is required by or with respect to any SFX Party or Affiliate thereof in
connection with the execution and delivery of any SFX Transaction Documents by
any SFX Party or Affiliate thereof or the consummation of the transactions
contemplated hereby or thereby, except for (1) the filing of a premerger
notification report under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended (the "HSR Act") and (2) the SFX FCC Consents (as contemplated
by Section 7.3 hereof).
(e) Reports; Financial Statements; Absence of Certain
Changes or Events.
(i) Each SFX Party has timely filed all forms,
reports, statements, and other documents required to be filed with the
FCC. Each SFX Party has filed all forms,
23
30
reports, statements, and other documents required to be filed with any
and all other Governmental Entities. (All such forms, reports,
statements and other documents required to be filed with the FCC or
any other Governmental Entity are referred to herein, collectively, as
the "SFX Company Reports"). The SFX Company Reports were prepared in
all material respects in accordance with the requirements of
applicable law.
(ii) The SFX Parties have delivered to Capstar
copies of (A) the audited balance sheets of SFX Broadcasting, Inc. as
of December 31, 1995 and December 31, 1996, together with the audited
statements of income and cash flows of SFX Broadcasting, Inc. for the
periods then ended, and the notes thereto, accompanied by the reports
thereon of Ernst & Young LLP, independent public accountants, and (B)
the unaudited balance sheet of SFX Broadcasting, Inc. as of March 31,
1997, together with the related unaudited statements of income for the
periods then ended (such audited and unaudited financial statements
collectively being referred to as the "SFX Financial Statements").
The SFX Financial Statements, including the notes thereto, were
prepared in accordance with GAAP applied on a consistent basis
throughout the periods covered thereby (except to the extent disclosed
therein or required by changes in GAAP) and present accurately the
information purported to be presented therein as of such dates and for
the periods then ended.
(iii) Except as disclosed in Schedule 3.1(e), there
is no liability or obligation of any kind, whether accrued, absolute,
fixed, contingent, or otherwise, of each SFX Party that is not
reflected or reserved against in the SFX Broadcasting, Inc. balance
sheet for the period ended March 31, 1997 (the "SFX Balance Sheets"),
other than (A) liabilities incurred in the ordinary course of business
in a manner consistent with past practice since March 31, 1997 (the
"SFX Balance Sheet Date"), or (B) any such liability or obligation
which would not be required to be presented in financial statements or
the notes thereto prepared in conformity with GAAP applied, in a
manner consistent with past practice, in the preparation of the SFX
Financial Statements.
(iv) Except as disclosed in Schedule 3.1(e), since
the SFX Balance Sheet Date, each SFX Party has conducted its business
only in the ordinary course consistent with past practice and nothing
has occurred that would have been prohibited by Section 4.1 if the
terms of such section had been in effect as of and after the SFX
Balance Sheet Date. Since the SFX Balance Sheet Date, there has not
occurred, and each SFX Party has not incurred or suffered, any event,
circumstance, or fact that could result in a Material Adverse Effect.
Additionally, since the SFX Balance Sheet Date, there has not
occurred, and each SFX Party has not incurred or suffered, any event,
circumstance, or fact that materially impairs the physical assets of
any of the SFX Stations.
(f) Compliance with Applicable Laws: FCC Matters.
(i) The business of each SFX Party has been
conducted in compliance in all material respects with each Applicable
Law. Except as disclosed in Schedule 3.1(f), no investigation or
review by any Governmental Entity with respect to each SFX Party is
pending or, to the Knowledge of such SFX Party, threatened. Without
limiting the generality
24
31
of the foregoing, the each SFX Party has complied with the
Communications Act of 1934, as amended, and all material rules,
regulations and written policies of the FCC thereunder (collectively,
the "Communications Act"), all obligations with respect to equal
employment opportunity under Applicable Law, and all material rules
and regulations of the Federal Aviation Administration applicable to
each of the towers used or held for use by a SFX Station. In
addition, each SFX Party has duly and timely filed, or caused to be so
filed, with the FCC and other appropriate Governmental Entities all
reports, statements, documents, registrations, filings, or submissions
with respect to the operation of each SFX Station and the ownership
thereof, including, applications for renewal of authority required by
Applicable Law to be filed. All such FCC filings complied in all
material respects with Applicable Laws when made, and no deficiencies
have been asserted with respect to any such filings. The material
required by 47 C.F.R. Section 73.3526 to be kept in the public
inspection files of each SFX Station is in such files.
(ii) Schedule 3.1(f) is a true and complete list
of (A) all of the SFX FCC Licenses, including the expiration dates
thereof, as of the date of this Agreement and (B) all other material
licenses, permits, or authorizations issued to each SFX Party by any
other Governmental Entities and held by them as of the date of this
Agreement. Such SFX FCC Licenses, licenses, permits, and
authorizations, and all pending applications for modification,
extension, or renewal thereof or for new licenses, permits,
permissions, or authorizations, are collectively referred to herein as
the "SFX Station Licenses." Schedule 3.1(f) accurately lists the
legally authorized holder(s) of the SFX Station Licenses. The SFX
Station Licenses constitute all the licenses, permits and
authorizations required for the operation of each of the SFX Stations
and the business of each SFX Party, and each of the SFX Station
Licenses is in full force and effect. Each SFX Station has been
operated in all material respects in accordance with the terms of its
station licenses and each SFX Party is otherwise in compliance with,
and have conducted its business so as to comply with, the terms of
such SFX Station Licenses. There are no proceedings pending or, to
the Knowledge of each SFX Party, threatened with respect to such SFX
Party's ownership or operation of any SFX Station which reasonably may
be expected to result in the revocation, material adverse
modification, non-renewal, or suspension of any of the SFX Station
Licenses, the denial of any pending applications for any SFX Station
Licenses, the issuance against such SFX Party of any cease and desist
order, or the imposition of any administrative actions, including the
proposed assessment of fines or penalties, by the FCC or any other
Governmental Entity with respect to any SFX Station Licenses, or which
reasonably may be expected to adversely affect any SFX Station's
ability to operate as currently operated or Capstar's ability to
obtain control of any SFX Station Licenses or to operate any SFX
Station. To the Knowledge of each SFX Party, no other broadcast
station or radio communications facility is causing interference to
any SFX Station's transmissions beyond that which is allowed by FCC
rules and regulations and no SFX Station is causing interference to
any other broadcast station or radio communications facilities'
transmissions beyond that which is allowed by the FCC rules and
regulations. To the knowledge of each SFX Party, there is no reason
to believe that the FCC will not renew any of the SFX Station Licenses
issued by the FCC in the ordinary course of business.
25
32
(iii) Each SFX Party is able to certify on an FCC
Form 314 that it is financially qualified.
(g) Absence of Litigation. Except as set forth on
Schedule 3.1(g), there is no claim, action, suit, inquiry, judicial, or
administrative proceeding, grievance, or arbitration pending or, to the
Knowledge of each SFX Party, threatened against such SFX Party or any of the
SFX Assets by or before any arbitrator or Governmental Entity, nor are there
any investigations relating to such SFX Party or any of the SFX Assets pending
or, to the Knowledge of each SFX Party, threatened by or before any arbitrator
or Governmental Entity. Except as set forth in Schedule 3.1(g), there is no
judgment, decree, injunction, order, determination, award, finding, or letter
of deficiency of any Governmental Entity or arbitrator outstanding against any
each SFX Party or any of the SFX Assets. There is no action, suit, inquiry,
judicial, or administrative proceeding pending or, to the Knowledge of each SFX
Party, threatened against any of the SFX Parties relating to the transactions
contemplated by this Agreement.
(h) Insurance. Since May 1, 1995, each SFX Party or its
predecessor has been insured against such risks as companies engaged in a
similar business would, in accordance with good business practice, customarily
be insured. Schedule 3.1(h) sets forth an accurate summary of all fire,
general liability, malpractice liability, theft, and other forms of insurance
and all fidelity bonds held by or applicable each SFX Party. Except as set
forth on Schedule 3.1(h), the policies of general liability, malpractice
liability, fire, theft, and other insurance maintained with respect to the
operations, assets, or business of each SFX Party provide adequate coverage
against loss. To the Knowledge of each SFX Party, no event has occurred,
including the failure by such SFX Party to give any notice or information or
the delivery of any inaccurate or erroneous notice or information, which limits
or impairs the rights of such SFX Party under any such insurance policies in
such a manner as could have a Material Adverse Effect. Excluding insurance
policies that have expired and been replaced in the ordinary course of
business, no insurance policy has been canceled within the last two years prior
to the date hereof.
(i) SFX Owned Real Property. Schedule 3.1(i) contains an
accurate description of all the SFX Owned Real Property. Each SFX Party has
good and marketable, fee simple, absolute title in and to its SFX Owned Real
Property. Each SFX Party has sufficient title to such easements, rights of way
and other rights appurtenant to its SFX Owned Real Properties as are necessary
to permit ingress and egress to and from its SFX Owned Real Property to a
public way, and the improvements on its SFX Owned Real Property have access to
such sewer, water, gas, electric, telephone and other utilities as are
necessary to allow the business of such SFX Party operated thereon to be
operated in the ordinary course. There is no pending condemnation or similar
proceeding affecting the SFX Owned Real Property or any portion thereof, and to
the Knowledge of each SFX Party, no such action is threatened. Except as set
forth on Schedule 3.1(i), the improvements located on the SFX Owned Real
Property are in sufficiently good condition (except for ordinary wear and tear)
to allow the business of each SFX Party to be operated in the ordinary course
and there has been no damage to such improvements that affects the conduct of
such business in any material respect that has not been repaired or remedied.
Except as set forth on Schedule 3.1(i), there are no lessees or tenants at will
in possession of any portion of any of the SFX Owned Real Property other than
the SFX Parties, whether as lessees, tenants at will, trespassers or
26
33
otherwise. Except as set forth on Schedule 3.1(i), no zoning, building or
other federal, state or municipal law, ordinance, regulation or restriction is
violated in any material respect by the continued maintenance, operation or use
of the SFX Owned Real Property or any tract or portion thereof or interest
therein in its present manner. The current use of the SFX Owned Real Property
and all parts thereof does not violate any restrictive covenants of record
affecting any of the SFX Owned Real Property. All necessary SFX Licenses by
any Governmental Entity with respect to the SFX Owned Real Property have been
obtained, have been validly issued and are in full force and effect.
(j) SFX Leased Real Property. Schedule 3.1(j) contains
an accurate description of all the leasehold interests relating to the business
and operations of each of the SFX Stations as now conducted. Each lease
described in Schedule 3.1(j) is a valid and binding obligation of the
applicable SFX Party and is in full force and effect without amendment other
than as described in Schedule 3.1(j). Except as otherwise disclosed on
Schedule 3.1(j), each SFX Party is not, and to the Knowledge of such SFX Party,
no other party is, in default under any lease described in Schedule 3.1(j).
Subject to obtaining the Consents disclosed in Schedule 3.1(j), each SFX Party
has the full legal power and authority to assign its rights under the
applicable leases listed in Schedule 3.1(j) to Capstar. All leasehold
interests listed in Schedule 3.1(j) (including the improvements thereon) are
available for immediate use in the conduct of the business and operations of
each of the SFX Stations as currently conducted.
(k) SFX Personal Property. Schedule 3.1(k) contains a
description of the items of SFX Personal Property (having a replacement cost of
not less than $5,000 for each item) which comprise all SFX Personal Property
used or held for use in connection with the business and operations of each SFX
Station or which permit the operation of each SFX Station as now conducted.
Except as set forth on Schedule 3.1(k), each SFX Party has good title to, or a
valid leasehold or license interest in, all such SFX Party's SFX Personal
Property and none of the SFX Personal Property is subject to any SFX Lien or
other encumbrances, except for SFX Permitted Encumbrances. Each SFX Party is
not, and to the Knowledge of such SFX Party, no other party is, in default
under any of the leases, licenses and other SFX Contracts relating to the SFX
Personal Property. Except as otherwise disclosed in Schedule 3.1(k), the SFX
Personal Property (i) is in good operating condition and repair (ordinary wear
and tear excepted), (ii) is available for immediate use in the business and
operation of each of the SFX Stations as currently conducted and (iii) permits
each of the SFX Stations to operate in accordance with the terms of their
respective SFX FCC Licenses, and the rules and regulations of the FCC, and with
all other applicable federal, state and local statutes, ordinances, rules and
regulations.
(l) SFX Liens and Encumbrances. All of the SFX Assets,
including leases, are free and clear of all liens, pledges, claims, security
interests, restrictions, mortgages, tenancies, and other possessory interests,
conditional sale or other title retention agreements, assessments, easements,
rights of way, covenants, restrictions, rights of first refusal, defects in
title, encroachments, and other burdens, options or encumbrances of any kind
(collectively, the "SFX Liens") except (i) SFX Permitted Encumbrances and (ii)
SFX Liens set forth on Schedule 3.1(l) (the SFX Liens referred to in clauses
(i) and (ii) being "SFX Permitted Liens"). At the Closing, all of the SFX
Assets shall be free and clear of all SFX Liens other than SFX Permitted
Encumbrances.
27
34
(m) Environmental Matters. Except as expressly disclosed
in the Existing SFX ESAs:
(i) The real property and facilities owned,
operated, and leased by each SFX Party and the operations of such SFX
Party thereon comply and have at all times complied in all material
respects with all Applicable Laws and rules of common law pertaining
to the environment, natural resources, and public or employee health
and safety, including all Environmental Laws;
(ii) No judicial proceedings are pending or, to
the Knowledge of each SFX Party, threatened against such SFX Party
alleging the violation of any Environmental Laws, and there are no
administrative proceedings pending or, to the Knowledge of each SFX
Party, threatened against such SFX Party, alleging the violation of
any Environmental Laws and no notice from any Governmental Entity or
any private or public person has been received by each SFX Party
claiming any violation of any Environmental Laws in connection with
any real property or facility owned, operated or leased by such SFX
Party, or requiring any remediation, clean-up, modification, repairs,
work, construction, alterations, or installations on or in connection
with any real property or facility owned, operated or leased by such
SFX Party that are necessary to comply with any Environmental Laws and
that have not been complied with or otherwise resolved to the
satisfaction of the party giving notice;
(iii) All permits, registrations, licenses,
authorizations, and the like ("SFX Permits") required to be obtained
or filed by each SFX Party under any Environmental Laws in connection
with such SFX Party's operations, including those activities relating
to the generation, use, storage, treatment, disposal, release, or
remediation of Hazardous Substances (as such term is defined in
Section 3.1(m)(iv) hereof), have been duly obtained or filed, and such
SFX Party is and has at all times been in full compliance in all
material respects with the terms and conditions of all such SFX
Permits;
(iv) All Hazardous Substances used or generated by
each SFX Party or any of its predecessors on, in, or under any of the
owned, operated, or leased real property or facilities are and have at
all times been generated, stored, used, treated, disposed of, and
released by such persons or on their behalf in such manner as not to
result in any Environmental Costs or Liabilities. "Hazardous
Substances" means (A) any hazardous materials, hazardous wastes,
hazardous substances, toxic wastes, and toxic substances as those or
similar terms are defined under any Environmental Laws; (B) any
asbestos or any material which contains any hydrated mineral silicate,
including chrysolite, amosite, crocidolite, tremolite, anthophylite
and/or actinolite, whether friable or non-friable; (C) PCBs, or PCB-
containing materials, or fluids; (D) radon; (E) any other hazardous,
radioactive, toxic or noxious substance, material, pollutant,
contaminant, constituent, or solid, liquid or gaseous waste; (F) any
petroleum, petroleum hydrocarbons, petroleum products, crude oil and
any fractions or derivatives thereof, any oil or gas exploration or
production waste, and any natural gas, synthetic gas and any mixtures
thereof; (G) any substance that, whether by its nature or its use, is
subject to regulation under any Environmental Laws or with respect to
which any Environmental Laws or Governmental
28
35
Entity requires environmental investigation, monitoring or
remediation; and (H) any underground storage tanks, dikes, or
impoundments as defined under any Environmental Laws. "Environmental
Costs or Liabilities" means any losses, liabilities, obligations,
damages, fines, penalties, judgments, settlements, actions, claims,
costs and expenses (including, without limitation, reasonable fees,
disbursements and expenses of legal counsel, experts, engineers and
consultants, and the costs of investigation or feasibility studies and
performance of remedial or removal actions and cleanup activities) in
connection with (1) any Environmental Laws, (2) order of, or contract
of such SFX Party with, any Governmental Entity or any private or
public persons or (3) any exposure of any person or property to
Hazardous Substances;
(v) There are not now, nor have there been in the
past, on, in or under any property or facilities when owned, leased,
or operated by each SFX Party or when owned, leased, or operated by
any of its predecessors, any Hazardous Substances that are in a
condition or location that violates any Environmental Law or that
reasonably could be expected to require remediation under any
Environmental Laws or give rise to a claim for damages or compensation
by any affected person or to any Environmental Costs or Liabilities;
and
(vi) Each SFX Party has not received, and to the
Knowledge of such SFX Party, does not expect to receive, any
notification from any source advising such SFX Party that: (A) it is
a potentially responsible party under CERCLA or any other
Environmental Laws; (B) any real property or facility currently or
previously owned, operated, or leased by it is identified or proposed
for listing as a federal National Priorities List ("NPL") (or
state-equivalent) site or a Comprehensive Environmental Response,
Compensation and Liability Information System ("CERCLIS") list (or
state-equivalent) site; and (C) any facility to which it has ever
transported or otherwise arranged for the disposal of Hazardous
Substances is identified or proposed for listing as an NPL (or
state-equivalent) site or CERCLIS (or state- equivalent) site.
(n) Taxes. Each SFX Party has filed or caused to be
filed all Tax Returns affecting the SFX Stations or the SFX Assets which are
required to be filed by such SFX Party, all such Tax Returns which have been
filed are accurate and complete, and such SFX Party has timely paid all Taxes
shown on such returns or on any Tax assessment received by such SFX Party to
the extent that such Taxes have become due. There are no SFX Liens for Taxes
upon the SFX Stations or the SFX Assets except for the SFX Permitted
Encumbrances. Each SFX Party has not received notice of any Tax deficiency or
delinquency. No Internal Revenue Service audit of any of the SFX Parties is
pending or, to the Knowledge of each SFX Party, threatened, and the results of
any completed audits are properly reflected in the SFX Financial Statements.
All monies required to be withheld by each SFX Party from employees or
collected from customers for Taxes and the portion of any Taxes to be paid by
each SFX Party to governmental agencies or set aside in accounts for such
purposes have been so paid or set aside, or such monies have been reserved
against and entered upon the books and are reflected in the SFX Balance Sheet.
There are no legal, administrative, or tax proceedings pursuant to which any of
the SFX Parties is or could be made liable for any taxes,
29
36
penalties, interest, or other charges, the liability for which could extend to
Capstar as transferee of the business of the SFX Stations.
(o) Certain Agreements.
(i) Schedule 3.1(o) hereto lists each (A)
employment or consulting SFX Contract which is not terminable without
liability or penalty on 30 days or less notice, (B) SFX Contract
under which any party thereto remains obligated to provide goods or
services having a value, or to make payments aggregating, in excess of
$50,000 per year, and (C) other SFX Contract that is material to the
operation of the SFX Stations or to each SFX Party's business, in any
such case to which such SFX Party is a party or such SFX Party or the
SFX Assets are bound. Each such SFX Contract described in Schedule
3.1(o) or required to be so described is a valid and binding
obligation of the applicable SFX Party and is in full force and effect
without amendment. Each SFX Party and, to the Knowledge of such SFX
Party, each other party to such SFX Contracts, has performed in all
material respects the obligations required to be performed by it under
such SFX Contracts and is not (with or without lapse of time or the
giving of notice, or both) in breach or default thereunder. Schedule
3.1(o) identifies, as to each such SFX Contract listed thereon,
whether the consent of the other party thereto is required, and the
amount of any payments required, in order for such SFX Contract to
continue in full force and effect upon the consummation of the
transactions contemplated hereby or whether such SFX Contract can be
canceled by the other party without liability to such other party due
to the consummation of the transactions contemplated hereby. A
complete copy of each written SFX Contract and a description of each
oral SFX Contract set forth in Schedule 3.1(o) has been provided to
Capstar prior to the date of this Agreement.
(ii) Each SFX Party is not a party to any oral or
written agreement, plan or arrangement with any employee or other
station or broadcast personnel (whether an employee, consultant or an
independent contractor) of such SFX Party (A) the benefits of which
are contingent, or the terms of which are materially altered, upon, or
result from, the occurrence of a transaction involving such SFX Party
of the nature of any of the transactions contemplated by this
Agreement, (B) providing severance benefits longer than forty-five
days or other benefits after the termination of employment or other
contractual relationship regardless of the reason for such termination
and regardless of whether such termination is before or after a change
of control, (C) under which any person may receive payments subject to
the tax imposed by Section 4999 of the Code or (D) any of the benefits
of which will be increased, or the vesting of benefits of which will
be accelerated, by the occurrence of any of the transactions
contemplated by this Agreement or the value of any of the benefits of
which will be calculated on the basis of any of the transactions
contemplated by this Agreement.
30
37
(p) ERISA Compliance; Labor.
(i) The present value of all accrued benefits
(vested and unvested) under all the SFX Employee Pension Benefit
Plans, which any of the SFX Parties or any other trades or businesses
under common control within the meaning of Section 4001(b)(1) of ERISA
with each SFX Party (collectively, the "SFX ERISA Group") maintains,
or to which each SFX Party or any member of the SFX ERISA Group is or
has been obligated to contribute (the "SFX Pension Plans"), did not,
as of the respective last annual valuation dates for such SFX Pension
Plans, exceed the value of the assets of such SFX Pension Plan
allocable to such benefits. None of such SFX Pension Plans subject to
Title IV of ERISA or any of their related trusts has been terminated
or partially terminated. Neither any SFX Party nor any member of the
SFX ERISA Group has contributed or been obligated to contribute to any
Multiemployer Plan. Except as set forth on Schedule 3.1(p), neither
any SFX Party nor any member of the SFX ERISA Group has any SFX
Employee Benefit Plans. With respect to the SFX Employee Benefit
Plans, no event has occurred and, to the Knowledge of each SFX Party,
there exists no condition or set of circumstances in connection with
which any SFX Party or any member of the SFX ERISA Group could be
subject to any liability under the terms of such SFX Employee Benefit
Plans or Applicable Laws, other than any condition or set of
circumstances that could not reasonably be expected to have a Material
Adverse Effect.
(ii) True, correct, and complete copies of each of
the SFX Employee Benefit Plans, and related trusts, if applicable,
have been furnished to Capstar, along with the most recent report
filed on Form 5500 and summary plan description with respect to each
SFX Employee Benefit Plan required to file Form 5500. The execution
and delivery of this Agreement and the consummation of the
transactions contemplated hereby will not (i) require any SFX Party to
make a larger contribution or pay greater benefits under any SFX
Employee Benefit Plan or employment agreement or (ii) create or give
rise to any additional vested rights or service credits under any SFX
Employee Benefit Plan.
(iii) None of the SFX Parties is a party to any
collective bargaining agreement. No SFX Party has agreed to recognize
any union or other collective bargaining representative, nor has any
union or other collective bargaining representative been certified as
the exclusive bargaining representative of any of its employees. Each
SFX Party (A) is, and has always been since January 1, 1995, in
substantial compliance with all applicable laws regarding labor,
employment and employment practices, terms and conditions of
employment, equal employment opportunity, employee benefits,
affirmative action, wages and hours, plant closing and mass layoff,
occupational safety and health, immigration, and workers'
compensation, (B) is not engaged, nor has it since January 1, 1995,
engaged, in any unfair labor practices, and has no, and has not had
since January 1, 1995, any, unfair labor practice charges or
complaints before the National Labor Relations Board pending or, to
the Knowledge of such SFX Party, threatened against it, (C) has no,
and has not had since January 1, 1995, any, grievances, arbitrations,
or other proceedings arising or asserted to arise under any collective
bargaining agreement, pending or, to the Knowledge of such SFX Party,
threatened, against it and (D) has no, and has not had since January
1, 1995, any, charges,
31
38
complaints, or proceedings before the Equal Employment Opportunity
Commission, Department of Labor or any other Governmental Entity
responsible for regulating employment practices, pending, or, to the
Knowledge of such SFX Party, threatened against it. There is no labor
strike, slowdown, work stoppage or lockout pending or, to the
Knowledge of each SFX Party, threatened against or affecting such SFX
Party, and none of the SFX Parties has experienced any labor strike,
slowdown, work stoppage or lockout since January 1, 1995. To the
Knowledge of each SFX Party no union organizational campaign or
representation petition is currently pending with respect to any of
the employees of each SFX Party.
(q) Patents, Trademarks, Etc. Schedule 3.1(q) is a true
and complete list of all of the SFX Intellectual Property. Except as set forth
on Schedule 3.1(q), each SFX Party owns or has the unencumbered right to use
pursuant to a valid, binding, and enforceable license agreement or other
contract or arrangement all such SFX Party's SFX Intellectual Property. To the
Knowledge of each SFX Party, such SFX Party is not infringing any such SFX
Intellectual Property, and such SFX Party is not aware of any infringement by
others of any of the SFX Intellectual Property owned by such SFX Party.
(r) SFX Assets. The SFX Assets and the SFX Excluded
Assets include all assets used or held for use in connection with the business
and operations of the SFX Stations as currently conducted.
(s) No Dispositions. Since the SFX Balance Sheet Date,
there has not occurred any sale, lease, transfer, assignment, abandonment or
other disposition of any of the assets of any SFX Station other than any
disposition of (i) obsolete property, (ii) property in connection with the
acquisition of replacement property of equal value, or (iii) assets having, in
the aggregate, a value of less than $5,000 disposed of in the ordinary course
of business and consistent with past practices.
(t) Disclosure. No representation or warranty by each
SFX Party contained in this Agreement or in any certificate furnished pursuant
to this Agreement contains or will contain any untrue statement of a material
fact, or omits or will omit to state any material fact necessary, in light of
the circumstances under which it was or will be made, in order to make the
statements herein or therein not misleading.
3.2. REPRESENTATIONS AND WARRANTIES REGARDING CAPSTAR. Capstar
represents and warrants to each SFX Party as follows (with the understanding
that (i) the representations and warranties contained in Sections 3.2(a),
3.2(b), 3.2(c), and 3.2(d) are made as of the date of this Agreement, (ii) the
representations and warranties contained in Sections 3.2(e) through 3.2(u) are
made as of the Capstar Date, and (iii) each SFX Party is relying on such
representations and warranties in entering into and performing this Agreement),
provided, however, that for purposes of this Section 3.2, any representations
or warranties given pursuant to Sections 3.2(e) through 3.2(u) shall be deemed
made with respect to events, acts or omissions occurring or conditions coming
into existence on or after the Capstar Date.
32
39
(a) Organization, Good Standing, Etc. Capstar is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware, has all requisite corporate power and authority
to own, lease and operate its properties and to carry on its business as now
being conducted and is duly qualified and in good standing to do business in
each state listed on Schedule 3.2(a), which states represent every jurisdiction
in which the nature of its business or the ownership or leasing of its
properties makes such qualification necessary. Capstar is not in violation of
any provisions of its Articles of Incorporation or Bylaws.
(b) Subsidiaries of Capstar. Capstar does not own,
directly or indirectly, any equity interest in any other corporation,
partnership, or other person or have the right, pursuant to a contract or
otherwise, to acquire any capital stock, equity interest or other similar
investment in any corporation, partnership, or other person.
(c) Authority. Capstar has all requisite corporate power
and authority to enter into this Agreement, the Capstar ▇▇▇▇ of Sale and
Assignment, the Capstar Assumption Agreement, and each other agreement,
document, and instrument required to be executed by Capstar in accordance
herewith (collectively, the "Capstar Transaction Documents") and to consummate
the transactions contemplated hereby or thereby. The execution and delivery of
the Capstar Transaction Documents by Capstar and the consummation by Capstar of
the transactions contemplated hereby or thereby have been duly authorized by
all necessary action on the part of Capstar, including, without limitation, the
requisite approval of the holders of the outstanding capital stock of Capstar
entitled to vote thereon. The Capstar Transaction Documents have been, or upon
execution and delivery will be, duly executed and delivered and constitute the
valid and binding obligations of Capstar enforceable against it in accordance
with their terms, subject as to enforceability to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally and to general principles of
equity (regardless of whether enforcement is sought in a proceeding at law or
in equity).
(d) No Conflict; Required Filings and Consents. The
execution and delivery of the Capstar Transaction Documents by Capstar do not
and the performance by Capstar of the transactions contemplated hereby or
thereby will not, subject to obtaining the consents, approvals, authorizations,
fairness opinions and permits and making the filings described in this Section
3.2(d) or on Schedule 3.2(o), (A) violate, conflict with, or result in any
breach of any provision of Capstar's Articles of Incorporation and Bylaws, (B)
violate, conflict with, or result in a violation or breach of, or constitute a
default (with or without due notice or lapse of time or both) under, or permit
the termination of, or result in the acceleration of, or entitle any party to
accelerate (whether as a result of a change of control of Capstar or otherwise)
any obligation, or result in the loss of any benefit, or give any person the
right to require any security to be repurchased, or give rise to the creation
of any lien, charge, security interest, or encumbrance upon any of the Capstar
Assets under any of the terms, conditions, or provisions of any loan or credit
agreement, note, bond, mortgage, indenture, or deed of trust, or any license,
lease, agreement, or other instrument or obligation to which Capstar is a party
or by which it or any of the Capstar Assets may be bound or subjected, or (C)
violate any order, writ, judgment, injunction, decree, statute, law, rule, or
regulation, of any Governmental Entity applicable to Capstar or by which or to
which any of the Capstar Assets is bound or subject. No Consent of any
Governmental Entity is required by or with respect to Capstar or Affiliate
thereof in connection with
33
40
the execution and delivery of any Capstar Transaction Documents by Capstar or
Affiliate thereof or the consummation of the transactions contemplated hereby
or thereby, except for (1) the filing of a premerger notification report under
the HSR Act and (2) the Capstar FCC Consents (as contemplated by Section 7.3
hereof).
34
41
(e) Reports; Absence of Certain Changes or Events.
(i) Capstar has timely filed all forms, reports,
statements, and other documents required to be filed with the FCC.
Capstar has filed all forms, reports, statements, and other documents
required to be filed with any and all other Governmental Entities.
(All such forms, reports, statements and other documents required to
be filed with the FCC or any other Governmental Entity are referred to
herein, collectively, as the "Capstar Company Reports"). The Company
Reports were prepared in all material respects in accordance with the
requirements of applicable law.
(ii) Except as disclosed in Schedule 3.2(e), since
the Capstar Date, Capstar has conducted its business only in the
ordinary course consistent with past practice and nothing has occurred
that would have been prohibited by Section 4.1 if the terms of such
section had been in effect as of and after the Capstar Date. Since
the Capstar Date, there has not occurred, and Capstar has not incurred
or suffered, any event, circumstance, or fact that could result in a
Material Adverse Effect. Additionally, since the Capstar Date, there
has not occurred, and Capstar has not incurred or suffered, any event,
circumstance, or fact that materially impairs the physical assets of
any of the Capstar Stations.
(f) Compliance with Applicable Laws: FCC Matters.
(i) The business of Capstar has been conducted in
compliance in all material respects with each Applicable Law. Except
as disclosed in Schedule 3.2(f), no investigation or review by any
Governmental Entity with respect to Capstar is pending or, to the
Knowledge of Capstar, threatened. Without limiting the generality of
the foregoing, Capstar has complied with the Communications Act, all
obligations with respect to equal employment opportunity under
Applicable Law, and all material rules and regulations of the Federal
Aviation Administration applicable to each of the towers used or held
for use by a Capstar Station. In addition, Capstar has duly and
timely filed, or caused to be so filed, with the FCC and other
appropriate Governmental Entities all reports, statements, documents,
registrations, filings, or submissions with respect to the operation
of each Capstar Station and the ownership thereof, including,
applications for renewal of authority required by Applicable Law to be
filed. All such FCC filings complied in all material respects with
Applicable Laws when made, and no deficiencies have been asserted with
respect to any such filings. The material required by 47 C.F.R.
Section 73.3526 to be kept in the public inspection files of each
Capstar Station is in such files.
(ii) Schedule 3.2(f) is a true and complete list
of (A) all of the Capstar FCC Licenses, including the expiration dates
thereof, as of the Capstar Date and (B) all other material licenses,
permits, or authorizations issued to Capstar by any other Governmental
Entities and held by it as of the Capstar Date. Such Capstar FCC
Licenses, licenses, permits, and authorizations, and all pending
applications for modification, extension, or renewal thereof or for
new licenses, permits, permissions, or authorizations, are
collectively referred to herein as the "Capstar Station Licenses."
Schedule 3.2(f) accurately lists the legally authorized holder(s) of
the Capstar Station Licenses. The Capstar Station Licenses constitute
35
42
all the licenses, permits and authorizations required for the
operation of each of the Capstar Stations and the business of Capstar,
and each of the Capstar Station Licenses is in full force and effect.
Each of the Capstar Stations has been operated in all material
respects in accordance with the terms of its Capstar Station Licenses
and Capstar is otherwise in compliance with, and has conducted its
business so as to comply with, the terms of such Capstar Station
Licenses. There are no proceedings pending or, to the Knowledge of
Capstar, threatened with respect to Capstar's ownership or operation
of any Capstar Station which reasonably may be expected to result in
the revocation, material adverse modification, non-renewal, or
suspension of any of the Capstar Station Licenses, the denial of any
pending applications for any Capstar Station Licenses, the issuance
against Capstar of any cease and desist order, or the imposition of
any administrative actions, including the proposed assessment of fines
or penalties, by the FCC or any other Governmental Entity with respect
to any Capstar Station Licenses, or which reasonably may be expected
to adversely affect any Capstar Station's ability to operate as
currently operated or any of the SFX Parties' ability to obtain
control of any Capstar Station Licenses or to operate any Capstar
Station. To the Knowledge of Capstar, no other broadcast station or
radio communications facility is causing interference to any Capstar
Station's transmissions beyond that which is allowed by FCC rules and
regulations and no Capstar Station is causing interference to any
other broadcast station or radio communications facilities'
transmissions beyond that which is allowed by the FCC rules and
regulations. To the knowledge of Capstar, there is no reason to
believe that the FCC will not renew any of the Capstar Station
Licenses issued by the FCC in the ordinary course of business.
(iii) Capstar is able to certify on an FCC Form 314
that it is financially qualified.
(g) Absence of Litigation. Except as set forth on
Schedule 3.2(g), as of the Capstar Date there is no claim, action, suit,
inquiry, judicial, or administrative proceeding, grievance, or arbitration
pending or, to the Knowledge of Capstar, threatened against Capstar or any of
the Capstar Assets by or before any arbitrator or Governmental Entity, nor are
there any investigations relating to Capstar or any of the Capstar Assets
pending or, to the Knowledge of Capstar, threatened by or before any arbitrator
or Governmental Entity. Except as set forth in Schedule 3.2(g), there is no
judgment, decree, injunction, order, determination, award, finding, or letter
of deficiency of any Governmental Entity or arbitrator outstanding against
Capstar or any of the Capstar Assets. There is no action, suit, inquiry,
judicial, or administrative proceeding pending or, to the Knowledge of Capstar,
threatened against Capstar relating to the transactions contemplated by this
Agreement.
(h) Insurance. Since the Capstar Date, Capstar has been
insured against such risks as companies engaged in a similar business would, in
accordance with good business practice, customarily be insured. Schedule
3.2(h) sets forth an accurate summary of all fire, general liability,
malpractice liability, theft, and other forms of insurance and all fidelity
bonds held by or applicable to Capstar. Except as set forth on Schedule
3.2(h), the policies of general liability, malpractice liability, fire, theft,
and other insurance maintained with respect to the operations, assets, or
business of Capstar provide adequate coverage against loss. To the Knowledge
of Capstar, no event has occurred, including the failure by Capstar to give any
notice or information or the delivery of any
36
43
inaccurate or erroneous notice or information, which limits or impairs the
rights of Capstar under any such insurance policies in such a manner as could
have a Material Adverse Effect. Excluding insurance policies that have expired
and been replaced in the ordinary course of business, no insurance policy has
been canceled within the last two years prior to the date hereof.
(i) Capstar Owned Real Property. Schedule 3.2(i)
contains an accurate description of all the Capstar Owned Real Property.
Capstar has good and marketable, fee simple, absolute title in and to the
Capstar Owned Real Property. Capstar has sufficient title to such easements,
rights of way and other rights appurtenant to each of the Capstar Owned Real
Properties as are necessary to permit ingress and egress to and from the
Capstar Owned Real Property to a public way, and the improvements on the
Capstar Owned Real Property have access to such sewer, water, gas, electric,
telephone and other utilities as are necessary to allow the business of Capstar
operated thereon to be operated in the ordinary course. There is no pending
condemnation or similar proceeding affecting the Capstar Owned Real Property or
any portion thereof, and to the Knowledge of Capstar, no such action is
threatened. Except as set forth on Schedule 3.2(i), the improvements located
on the Capstar Owned Real Property are in sufficiently good condition (except
for ordinary wear and tear) to allow the business of Capstar to be operated in
the ordinary course and there has been no damage to such improvements that
affects the conduct of such business in any material respect that has not been
repaired or remedied. Except as set forth on Schedule 3.2(i), there are no
lessees or tenants at will in possession of any portion of any of the Capstar
Owned Real Property other than Capstar, whether as lessees, tenants at will,
trespassers or otherwise. Except as set forth on Schedule 3.2(i), no zoning,
building or other federal, state or municipal law, ordinance, regulation or
restriction is violated in any material respect by the continued maintenance,
operation or use of the Capstar Owned Real Property or any tract or portion
thereof or interest therein in its present manner. The current use of the
Capstar Owned Real Property and all parts thereof does not violate any
restrictive covenants of record affecting any of the Capstar Owned Real
Property. All necessary Capstar Licenses by any Governmental Entity with
respect to the Capstar Owned Real Property have been obtained, have been
validly issued and are in full force and effect.
(j) Capstar Leased Real Property. Schedule 3.2(j)
contains an accurate description of all the leasehold interests relating to the
business and operations of each of the Capstar Stations as now conducted. Each
lease described in Schedule 3.2(j) is a valid and binding obligation of Capstar
and is in full force and effect without amendment other than as described in
Schedule 3.2(j). Except as otherwise disclosed on Schedule 3.2(j), Capstar is
not, and to the Knowledge of Capstar, no other party is, in default under any
lease described in Schedule 3.2(j). Subject to obtaining the Consents
disclosed in Schedule 3.2(j), Capstar has the full legal power and authority to
assign its rights under the leases listed in Schedule 3.2(j) to the SFX
Parties. All leasehold interests listed in Schedule 3.2(j) (including the
improvements thereon) are available for immediate use in the conduct of the
business and operations of each of the Capstar Stations as currently conducted.
(k) Capstar Personal Property. Schedule 3.2(k) contains
a description of the items of Capstar Personal Property (having a replacement
cost of not less than $5,000 for each item) which comprise all Capstar Personal
Property used or held for use in connection with the business and operations of
each Capstar Station or which permit the operation of each Capstar Station as
now
37
44
conducted. Except as set forth on Schedule 3.2(k), Capstar has good title to,
or a valid leasehold or license interest in, all Capstar Personal Property and
none of the Capstar Personal Property is subject to any Capstar Lien or other
encumbrances, except for Capstar Permitted Encumbrances. Capstar is not, and
to the Knowledge of Capstar, no other party is, in default under any of the
leases, licenses and other Capstar Contracts relating to the Capstar Personal
Property. Except as otherwise disclosed in Schedule 3.2(k), the Capstar
Personal Property (i) is in good operating condition and repair (ordinary wear
and tear excepted), (ii) is available for immediate use in the business and
operation of each of the Capstar Stations as currently conducted and (iii)
permits each of the Capstar Stations to operate in accordance with the terms of
their respective Capstar FCC Licenses, and the rules and regulations of the
FCC, and with all other applicable federal, state and local statutes,
ordinances, rules and regulations.
(l) Liens and Encumbrances. All of the Capstar Assets,
including leases, are free and clear of all liens, pledges, claims, security
interests, restrictions, mortgages, tenancies, and other possessory interests,
conditional sale or other title retention agreements, assessments, easements,
rights of way, covenants, restrictions, rights of first refusal, defects in
title, encroachments, and other burdens, options or encumbrances of any kind
(collectively, the "Capstar Liens") except (i) Capstar Permitted Encumbrances
and (ii) Capstar Liens set forth on Schedule 3.2(l) (the Capstar Liens referred
to in clauses (i) and (ii) being "Capstar Permitted Liens"). At the Closing,
all of the Capstar Assets shall be free and clear of all Capstar Liens other
than Capstar Permitted Encumbrances.
(m) Environmental Matters. Except as expressly disclosed
in the Existing Capstar ESAs:
(i) The real property and facilities owned,
operated, and leased by Capstar and the operations of Capstar thereon
comply and have at all times complied in all material respects with
all Applicable Laws and rules of common law pertaining to the
environment, natural resources, and public or employee health and
safety, including all Environmental Laws;
(ii) No judicial proceedings are pending or, to
the Knowledge of Capstar, threatened against Capstar alleging the
violation of any Environmental Laws, and there are no administrative
proceedings pending or, to the Knowledge of Capstar, threatened
against Capstar, alleging the violation of any Environmental Laws and
no notice from any Governmental Entity or any private or public person
has been received by Capstar claiming any violation of any
Environmental Laws in connection with any real property or facility
owned, operated or leased by Capstar, or requiring any remediation,
clean-up, modification, repairs, work, construction, alterations, or
installations on or in connection with any real property or facility
owned, operated or leased by Capstar that are necessary to comply with
any Environmental Laws and that have not been complied with or
otherwise resolved to the satisfaction of the party giving notice;
(iii) All permits, registrations, licenses,
authorizations, and the like ("Capstar Permits") required to be
obtained or filed by Capstar under any Environmental Laws in
connection with Capstar's operations, including those activities
relating to the
38
45
generation, use, storage, treatment, disposal, release, or remediation
of Hazardous Substances have been duly obtained or filed, and Capstar
is and has at all times been in full compliance in all material
respects with the terms and conditions of all such Permits;
(iv) All Hazardous Substances used or generated by
Capstar or any of its predecessors on, in, or under any of the owned,
operated, or leased real property or facilities are and have at all
times been generated, stored, used, treated, disposed of, and released
by such persons or on their behalf in such manner as not to result in
any Environmental Costs or Liabilities;
(v) There are not now, nor have there been in the
past, on, in or under any property or facilities when owned, leased,
or operated by Capstar or when owned, leased, or operated by any of
its predecessors, any Hazardous Substances that are in a condition or
location that violates any Environmental Law or that reasonably could
be expected to require remediation under any Environmental Laws or
give rise to a claim for damages or compensation by any affected
person or to any Environmental Costs or Liabilities; and
(vi) Capstar has not received, and to the
Knowledge of Capstar, does not expect to receive, any notification
from any source advising Capstar that: (A) it is a potentially
responsible party under CERCLA or any other Environmental Laws; (B)
any real property or facility currently or previously owned, operated,
or leased by it is identified or proposed for listing as a federal NPL
(or state- equivalent) site or a CERCLIS list (or state-equivalent)
site; and (C) any facility to which it has ever transported or
otherwise arranged for the disposal of Hazardous Substances is
identified or proposed for listing as an NPL (or state-equivalent)
site or CERCLIS (or state- equivalent) site.
(n) Taxes. Capstar has filed or caused to be filed all
Tax Returns affecting the Capstar Stations or the Capstar Assets which are
required to be filed by Capstar, all such Tax Returns which have been filed are
accurate and complete, and Capstar has timely paid all Taxes shown on such
returns or on any Tax assessment received by Capstar to the extent that such
Taxes have become due. There are no Capstar Liens for Taxes upon the Capstar
Stations or the Capstar Assets except for the Capstar Permitted Encumbrances.
Capstar has not received notice of any Tax deficiency or delinquency. No
Internal Revenue Service audit of Capstar is pending or, to the Knowledge of
Capstar, threatened. All monies required to be withheld by Capstar from
employees or collected from customers for Taxes and the portion of any Taxes to
be paid by Capstar to governmental agencies or set aside in accounts for such
purposes have been so paid or set aside, or such monies have been reserved
against. There are no legal, administrative, or tax proceedings pursuant to
which Capstar is or could be made liable for any taxes, penalties, interest, or
other charges, the liability for which could extend to the SFX Parties as
transferee of the business of the Capstar Stations.
(o) Certain Agreements.
(i) Schedule 3.2(o) hereto lists each (A)
employment or consulting Capstar Contract which is not terminable
without liability or penalty on 30 days or less
39
46
notice, (B) Capstar Contract under which any party thereto remains
obligated to provide goods or services having a value, or to make
payments aggregating, in excess of $50,000 per year, and (C) other
Capstar Contract that is material to the operation of the Capstar
Stations or to Capstar's business, in any such case to which Capstar
is a party or Capstar or the Capstar Assets are bound. Each such
Capstar Contract described in Schedule 3.2(o) or required to be so
described is a valid and binding obligation of Capstar and is in full
force and effect without amendment. Capstar and, to the Knowledge of
Capstar, each other party to such Capstar Contracts, has performed in
all material respects the obligations required to be performed by it
under such Capstar Contracts and is not (with or without lapse of time
or the giving of notice, or both) in breach or default thereunder.
Schedule 3.2(o) identifies, as to each such Capstar Contract listed
thereon, whether the consent of the other party thereto is required,
and the amounts of any payment required, in order for such Capstar
Contract to continue in full force and effect upon the consummation of
the transactions contemplated hereby or whether such Capstar Contract
can be canceled by the other party without liability to such other
party due to the consummation of the transactions contemplated hereby.
A complete copy of each written Capstar Contract and a description of
each oral Capstar Contract set forth in Schedule 3.2(o) shall be
provided to the SFX Parties within 30 days of the Capstar Date.
(ii) Capstar is not a party to any oral or written
agreement, plan or arrangement with any employee or other station or
broadcast personnel (whether an employee, consultant or an independent
contractor) of Capstar (A) the benefits of which are contingent, or
the terms of which are materially altered, upon, or result from, the
occurrence of a transaction involving Capstar of the nature of any of
the transactions contemplated by this Agreement, (B) providing
severance benefits longer than forty-five days or other benefits after
the termination of employment or other contractual relationship
regardless of the reason for such termination and regardless of
whether such termination is before or after a change of control, (C)
under which any person may receive payments subject to the tax imposed
by Section 4999 of the Code or (D) any of the benefits of which will
be increased, or the vesting of benefits of which will be accelerated,
by the occurrence of any of the transactions contemplated by this
Agreement or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by
this Agreement.
(p) ERISA Compliance; Labor.
(i) The present value of all accrued benefits
(vested and unvested) under all the Capstar Employee Pension Benefit
Plans, which Capstar or any other trades or businesses under common
control within the meaning of Section 4001(b)(1) of ERISA with Capstar
(collectively, the "Capstar ERISA Group") maintains, or to which
Capstar or any member of the Capstar ERISA Group is or has been
obligated to contribute (the "Capstar Pension Plans"), did not, as of
the respective last annual valuation dates for such Capstar Pension
Plans, exceed the value of the assets of such Capstar Pension Plan
allocable to such benefits. None of such Capstar Pension Plans
subject to Title IV of ERISA or any of their related trusts has been
terminated or partially terminated. Neither Capstar or any member of
the Capstar ERISA Group has contributed or been obligated to
contribute to any
40
47
Multiemployer Plan. Except as set forth on Schedule 3.2(p), neither
Capstar nor any member of the Capstar ERISA Group has any Capstar
Employee Benefit Plans. With respect to the Capstar Employee Benefit
Plans, no event has occurred and, to the Knowledge of Capstar, there
exists no condition or set of circumstances in connection with which
Capstar or any member of the Capstar ERISA Group could be subject to
any liability under the terms of such Capstar Employee Benefit Plans
or Applicable Laws, other than any condition or set of circumstances
that could not reasonably be expected to have a Material Adverse
Affect.
(ii) True, correct, and complete copies of each of
the Capstar Employee Benefit Plans, and related trusts, if applicable,
have been furnished to the SFX Parties, along with the most recent
report filed on Form 5500 and summary plan description with respect to
each Capstar Employee Benefit Plan required to file Form 5500. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby will not (i) require Capstar to make
a larger contribution or pay greater benefits under any Capstar
Employee Benefit Plan or employment agreement or (ii) create or give
rise to any additional vested rights or service credits under any
Capstar Employee Benefit Plan.
(iii) Capstar is not a party to any collective
bargaining agreement. Capstar has not agreed to recognize any union
or other collective bargaining representative, nor has any union or
other collective bargaining representative been certified as the
exclusive bargaining representative of any of its employees. Capstar
(A) is, and has always been since the Capstar Date, in substantial
compliance with all applicable laws regarding labor, employment and
employment practices, terms and conditions of employment, equal
employment opportunity, employee benefits, affirmative action, wages
and hours, plant closing and mass layoff, occupational safety and
health, immigration, and workers' compensation, (B) is not engaged,
nor has it since the Capstar Date, engaged, in any unfair labor
practices, and has no, and has not had since the Capstar Date, any,
unfair labor practice charges or complaints before the National Labor
Relations Board pending or, to the Knowledge of Capstar threatened
against it, (C) has no, and has not had since the Capstar Date, any,
grievances, arbitrations, or other proceedings arising or asserted to
arise under any collective bargaining agreement, pending or, to the
Knowledge of Capstar threatened, against it and (D) has no, and has
not had since the Capstar Date, any, charges, complaints, or
proceedings before the Equal Employment Opportunity Commission,
Department of Labor or any other Governmental Entity responsible for
regulating employment practices, pending, or, to Capstar's Knowledge,
threatened against it. There is no labor strike, slowdown, work
stoppage or lockout pending or, to the Knowledge of Capstar,
threatened against or affecting Capstar, and Capstar has not
experienced any labor strike, slowdown, work stoppage or lockout since
the Capstar Date. To the Knowledge of Capstar, no union
organizational campaign or representation petition is currently
pending with respect to any of the employees of Capstar.
(q) Patents, Trademarks, Etc. Schedule 3.2(q) is a true
and complete list of all of the Capstar Intellectual Property. Except as set
forth on Schedule 3.2(q), Capstar owns or has the unencumbered right to use
pursuant to a valid, binding, and enforceable license agreement or other
contract or arrangement all such Capstar Intellectual Property. To the
Knowledge of Capstar,
41
48
Capstar is not infringing any such Capstar Intellectual Property, and Capstar
is not aware of any infringement by others of any of the Intellectual Property
owned by Capstar.
(r) Assets. The Capstar Assets and the Capstar Excluded
Assets include all assets used or held for use in connection with the business
and operations of the Capstar Stations as currently conducted.
(s) No Dispositions. Since the Capstar Date, there has
not occurred any sale, lease, transfer, assignment, abandonment or other
disposition of any of the assets of any Capstar Station other than any
disposition of (i) obsolete property, (ii) property in connection with the
acquisition of replacement property of equal value, or (iii) assets having, in
the aggregate, a value of less than $5,000 disposed of in the ordinary course
of business and consistent with past practices.
(t) Disclosure. No representation or warranty by Capstar
contained in this Agreement or in any certificate furnished pursuant to this
Agreement contains or will contain any untrue statement of a material fact, or
omits or will omit to state any material fact necessary, in light of the
circumstances under which it was or will be made, in order to make the
statements herein or therein not misleading.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1. CONDUCT OF BUSINESS BY THE SFX PARTIES AND CAPSTAR. Each SFX
Party hereby agrees that, from the date of this Agreement until the Closing, it
will not (except as contemplated by this Agreement or to the extent that
Capstar shall otherwise consent in writing), and Capstar hereby agrees that,
from the Capstar Date until the Closing, it will not (except as contemplated by
this Agreement or to the extent that any SFX Party shall otherwise consent in
writing) (for purposes of this Section 4.1 each SFX Party and Capstar each
being a "Party"):
(a) conduct its business in any manner except in the
ordinary course consistent with past practice;
(b) fail to use all commercially reasonable efforts to
preserve intact the its present business organization and to keep available the
services of its present officers, station managerial personnel (including the
General Manager, Station Manager, General Sales Manager, Local Sales Manager,
Programming Director, and Business Manager, or persons performing comparable
duties, of each of its stations (collectively, the "Station Management")) and
over-the-air employees or independent contractors and preserve its
relationships with customers, suppliers and others having business dealings
with it;
(c) fail to use commercially reasonable efforts to
maintain the Capstar Assets or SFX Assets, as applicable, in their current
condition, except for ordinary wear and tear and damage by casualty governed by
Section 7.9 or Section 7.10, as applicable;
42
49
(d) fail to use all commercially reasonable efforts to
maintain the present format of the Capstar Stations or SFX Stations, as
applicable, and with programming consistent with past practices;
(e) except for amendments, terminations (without payment
of penalty or damages), renewals, or failures to renew (without payment of
penalty or damages) of employment agreements with over-the-air personnel in the
ordinary course of business and consistent with past practice (subject to prior
consultation with the other Party reasonably in advance thereof), materially
amend, terminate, or fail to use all commercially reasonable efforts to renew
any material SFX Contract or Capstar Contract, as applicable (i.e., a contract
or agreement of the type required to be described in Schedule 3.1(o) or
Schedule 3.2(o)) (provided that a Party shall not be required to renew any
material SFX Contract or material Capstar Contract, as applicable, on terms
that are less favorable to such Party), or default in any material respect (or
take or omit to take any action that, with or without the giving notice or
passage of time, would constitute a material default) under any material SFX
Contract or material Capstar Contract, as applicable, or enter into any new
material SFX Contract or material Capstar Contract, as applicable;
(f) except for a merger or consolidation, with or into an
Affiliate, merge or consolidate with or into any other legal entity, dissolve,
or liquidate;
(g) except as required by the terms and provisions of
written contracts between a Party and an employee thereof as in existence on
the date of this Agreement for each SFX Party and the Capstar Date for Capstar,
adopt or amend any Employee Benefit Plan or collective bargaining agreement, or
increase in any manner the compensation or fringe benefits of any Station
Manager, officer, director, or employee or other station and broadcast
personnel (whether employees or independent contractors), except as required by
law;
(h) terminate any employee of any of the SFX Stations or
Capstar Stations, as applicable, without prior consultation with the other
Party regarding the basis for such termination;
(i) acquire (including, without limitation, by merger,
consolidation, or the acquisition of any equity interest or assets) or sell
(whether by merger, consolidation, or the sale of an equity interest or
assets), lease, or dispose of any SFX Assets or Capstar Assets, as applicable,
except in the ordinary course of business and consistent with past practice or,
even if in the ordinary course of business and consistent with past practices
(other than sales of surplus or obsolete equipment), whether in one or more
transactions, in no event involving an Capstar Asset or SFX Asset, as
applicable, or Capstar Assets or SFX Assets, as applicable, having an aggregate
fair market value in excess of $50,000;
(j) mortgage, pledge, or subject to any material SFX Lien
or material Capstar Lien, as applicable, other than SFX Permitted Liens or
Capstar Permitted Liens, as applicable, any of the SFX Assets or Capstar
Assets, as applicable;
43
50
(k) except as required by GAAP, applicable law, or
circumstances which did not exist as of the SFX Balance Sheet Date or Capstar
Date, as applicable, change any of the material accounting principles or
practices used by it;
(l) change in any material respect its existing practices
and procedures with respect to the collection of accounts receivable of the SFX
Stations or Capstar Station, as applicable, and, except with respect to good
faith attempts consistent with past practice to obtain payment of a past due
receivable, or except in accordance with existing practices, a contested
receivable, offer to discount the amount of any outstanding receivable or
extend any other incentive (whether to the account debtor or any employee or
third party responsible for the collection of receivables) to accelerate the
collection thereof;
(m) change any SFX Station's or Capstar Station's, as
applicable, advertising rates or policies, procedures or methods in connection
with the sale of advertising time in a manner expected to accelerate the
receipt of cash payments or fail to incur annual advertising and promotional
department expenses in cash and trade other than as budgeted for 1997;
(n) enter into, or enter into negotiations or discussions
regarding the SFX Stations or the Capstar Stations, as applicable, with any
person other than the other Party with respect to any local marketing
agreement, time brokerage agreement, joint sales agreement, or any other
similar agreement; or
(o) agree to or make any commitment, orally or in
writing, to take any actions prohibited by this Agreement;
provided, however, that Capstar hereby agrees that, from the date of this
Agreement until the Closing, it will not take any actions prohibited by
Sections 4.1(a), 4.1(f), and 4.1(o).
4.2. NEGATIVE TRADE BALANCE.
(a) Each SFX Party shall use commercially reasonable
efforts to ensure that the SFX Negative Trade Balance, as defined below, of the
SFX Stations, taken as a whole, does not exceed $25,000 in the aggregate at the
Closing Date, provided that such excess will be a pre-Closing Date operating
expense of the SFX Parties that shall serve as an adjustment in favor of
Capstar under Section 2.7. "SFX Negative Trade Balance" means the difference,
if negative, between the value of time owed under barter agreements to which
any of the SFX Stations is a party or by which any of them is bound and the
value of the goods and services to be received under such agreements.
(b) Capstar shall use commercially reasonable efforts to
ensure that the Capstar Negative Trade Balance, as defined below, of the
Capstar Stations, taken as a whole, does not exceed $25,000 in the aggregate at
the Closing Date, provided that such excess will be a pre-Closing Date
operating expense of Capstar that shall serve as an adjustment in favor of the
SFX Parties under Section 2.7. "Capstar Negative Trade Balance" means the
difference, if negative, between the value of time owed under barter agreements
to which any of the Capstar Stations is a party or by which any of them is
bound and the value of the goods and services to be received under such
agreements.
44
51
4.3. ENVIRONMENTAL SITE ASSESSMENTS.
(a) If Capstar or its lenders or other financing sources
require Phase I or Phase II ESAs, each SFX Party covenants and agrees that,
upon written notice from Capstar to any SFX Party identifying the locations at
which such ESAs are required: (i) if such SFX Party has previously performed
an ESA on such location, such SFX Party will provide copies of such Existing
ESAs to Capstar and (ii) if such SFX Party has not previously performed an ESA
on such location, such SFX Party shall cause to be performed by a nationally
recognized and duly qualified environmental consultant reasonably acceptable to
Capstar and such SFX Party an ESA at such location. The ESAs which are to be
conducted for the benefit of Capstar shall be performed in a manner that at a
minimum satisfies the requirements of ASTM Practice E 1527-94. Each SFX Party
covenants and agrees that, upon receipt of the notice referred to above, it
shall diligently pursue the performance of the requisite ESAs to their
completion, with final copies of the Phase I ESA reports (and, if applicable,
Phase II ESA reports) made available to Capstar by no later than 45 days
following the date on which such SFX Party receives the notice referred to
above. The cost of any Phase I or Phase II ESA shall be borne by Capstar.
(b) If any SFX Party or its lenders or other financing
sources require Phase I or Phase II ESAs, Capstar covenants and agrees that,
upon written notice from such SFX Party to Capstar identifying the locations at
which such ESAs are required: (i) if Capstar has previously performed an ESA
on such location, Capstar will provide copies of such Existing ESAs to the SFX
Parties, and (ii) if Capstar has not previously performed an ESA on such
location, Capstar shall cause to be performed by a nationally recognized and
duly qualified environmental consultant reasonably acceptable to such SFX Party
and Capstar an ESA at such location. The ESAs which are to be conducted for
the benefit of such SFX Party shall be performed in a manner that at a minimum
satisfies the requirements of ASTM Practice E 1527-94. Capstar covenants and
agrees that, upon receipt of the notice referred to above, it shall diligently
pursue the performance of the requisite ESAs to their completion, with final
copies of the Phase I ESA reports (and, if applicable, Phase II ESA reports)
made available to such SFX Party by no later than 45 days following the date on
which Capstar receives the notice referred to above. The cost of any Phase I
or Phase II ESA shall be borne by the SFX Parties.
4.4. BROADCAST TRANSMISSION INTERRUPTION.
(a) If after the Capstar Date and before the Closing the
regular broadcast transmission of any Capstar Station in the normal and usual
manner is interrupted for a period of two (2) consecutive hours or more,
excluding normal and routine maintenance, Capstar shall give prompt written
notice thereof to the SFX Parties.
(b) If before the Closing the regular broadcast
transmission of any SFX Station in the normal and usual manner is interrupted
for a period of two (2) consecutive hours or more, excluding normal and routine
maintenance, the SFX Parties shall give prompt written notice thereof to
Capstar.
45
52
ARTICLE V
COVENANTS OF THE SFX PARTIES
5.1. NO SOLICITATION OF TRANSACTIONS. No SFX Party shall, directly
or indirectly, through any officer, director, stockholder, employee, agent,
financial advisor, banker or other representative, or otherwise, solicit,
initiate, or encourage the submission of any proposal or offer from any person
relating to any acquisition or purchase of all or any material portion of the
SFX Assets or any equity interest in any of the SFX Parties or any merger,
consolidation, share exchange, business combination, or other similar
transaction with any SFX Party or participate in any negotiations regarding, or
furnish to any other person any information with respect to, or otherwise
cooperate in any way with, or assist or participate in, facilitate, or
encourage, any effort or attempt by any other person to do or seek any of the
foregoing. Each SFX Party shall immediately communicate to Capstar the
material terms of any such proposal (and the identity of the party making such
proposal) which it may receive and, if such proposal is in writing, such SFX
Party shall promptly deliver a copy of such proposal to Capstar. Each SFX
Party agrees not to release any third party from, or waive any provision of,
any confidentiality or standstill agreement to which such SFX Party is a party.
Each SFX Party immediately shall cease and cause to be terminated all existing
discussions or negotiations with any parties conducted heretofore with respect
to any of the foregoing.
5.2. ASSISTANCE. If Capstar requests, each SFX Party will
cooperate, and will cause its accountants to cooperate, in all reasonable
respects with any financing efforts of Capstar or its Affiliates (including
providing assistance in the preparation of one or more registration statements
or other offering documents relating to debt and/or equity financing) and any
other filings that may be made by Capstar or its Affiliates with the SEC, all
at the sole expense of Capstar. Each SFX Party (a) shall furnish to its
independent accountants (or, if requested by Capstar to Capstar's independent
public accountants), such customary management representation letters as its
accountants may require of such SFX Party as a condition to its execution of
any required accountants' consents necessary in connection with the delivery of
any "comfort" letters requested by financing sources of Capstar or its
Affiliates and (b) shall furnish to Capstar all financial statements (audited
and unaudited) and other information in the possession of such SFX Party or its
representatives or agents as Capstar shall reasonably determine is necessary or
appropriate in connection with such financing. Capstar will indemnify and hold
harmless each SFX Party and its, officers, directors, and controlling persons
against any and all claims, losses, liabilities, damages, costs, or expenses
(including reasonable attorneys' fees and expenses) that may arise out of or
with respect to the financing efforts by Capstar or its Affiliates, including
any registration statement, prospectus, offering documents, and other filings
related thereto; provided, however, that subject to the limitations and
provisions of this Agreement, nothing herein shall prevent Capstar from
asserting any claim for breach of representation or warranty under this
Agreement.
5.3. COMPLIANCE WITH STATION LICENSES. Each SFX Party shall cause
the SFX Stations to be operated in accordance with the SFX Station Licenses and
all applicable rules and regulations of the FCC and in compliance with all
other applicable laws, regulations, rules, and orders. Each SFX Party shall
use all commercially reasonable efforts not to cause or permit any of the SFX
Station Licenses to expire or be surrendered, adversely modified, or
terminated. Each SFX Party
46
53
shall file or cause to be filed with the FCC all applications (including
license renewals) or other documents required to be filed in connection with
the operation of the SFX Stations. In addition, if requested by Capstar and at
Capstar's sole expense, such SFX Party shall file or cause to be filed with the
FCC modification applications and applications for new, specifically identified
frequencies that may be useful in connection with the operation of the SFX
Stations. Should the FCC institute any proceedings for the suspension,
revocation or adverse modification of any of the SFX Station Licenses or any
forfeiture proceedings, each SFX Party will use all commercially reasonable
efforts to promptly contest such proceedings and to seek to have such
proceedings terminated in a manner that is favorable to the SFX Stations. Each
SFX Party will use all commercially reasonable efforts to maintain the FCC
construction permits (if any) listed in Schedule 3.1(f) in effect until the
applicable construction projects are timely completed and to diligently
prosecute all pending FCC applications listed in Schedule 3.1(f). If any SFX
Party (or its FCC counsel) receives an administrative or other order or
notification relating to any violation or claimed violation of the rules and
regulations of the FCC, or of any other Governmental Entity, or should any SFX
Party (or its FCC counsel) become aware of any fact relating to the
qualifications of Capstar that reasonably could be expected to cause the FCC to
withhold its consent to the assignment of the SFX Station Licenses, such SFX
Party shall promptly notify Capstar in writing and use its commercially
reasonable efforts to take such steps as may be necessary to remove any such
impediment to the transactions contemplated by this Agreement.
5.4. THIRD PARTY CONSENTS. After the date hereof and prior to the
Closing, each SFX Party shall use all commercially reasonable efforts to obtain
the written consent from any party to an agreement or instrument identified in
Schedule 3.1(o) or any other SFX Assumed Contract which is required to permit
the consummation of the transactions contemplated hereby.
5.5. EMPLOYEE MATTERS. Each SFX Party will use its reasonable
efforts to determine at least ten days prior to the Closing Date those
employees of Capstar whom they desire to extend offers of employment. Any
offers so extended by such SFX Party shall be on such terms and conditions that
such SFX Party shall determine in its sole discretion. Each SFX Party will
give Capstar prompt notice of the names of any employee of Capstar who such SFX
Party has determined not to extend an offer of employment. Capstar waives any
claims against the SFX Parties and any of Capstar's employees who are extended
an offer of employment by a SFX Party arising from such employment by such SFX
Party including any claims arising under any employment agreement or
non-competition agreement between such person and Capstar.
ARTICLE VI
COVENANTS OF CAPSTAR
6.1. NO SOLICITATION OF TRANSACTIONS. Capstar shall not, directly
or indirectly, through any officer, director, stockholder, employee, agent,
financial advisor, banker or other representative, or otherwise, solicit,
initiate, or encourage the submission of any proposal or offer from any person
relating to any acquisition or purchase of all or any material portion of the
Capstar Assets or any equity interest in Capstar or any merger, consolidation,
share exchange, business combination, or other similar transaction with Capstar
or participate in any negotiations regarding, or furnish to any
47
54
other person any information with respect to, or otherwise cooperate in any way
with, or assist or participate in, facilitate, or encourage, any effort or
attempt by any other person to do or seek any of the foregoing. Capstar shall
immediately communicate to the SFX Parties the material terms of any such
proposal (and the identity of the party making such proposal) which it may
receive and, if such proposal is in writing, Capstar shall promptly deliver a
copy of such proposal to the SFX Parties. Capstar agrees not to release any
third party from, or waive any provision of, any confidentiality or standstill
agreement to which Capstar is a party. Capstar immediately shall cease and
cause to be terminated all existing discussions or negotiations with any
parties conducted heretofore with respect to any of the foregoing.
6.2. ASSISTANCE. If a SFX Party requests, Capstar will cooperate,
and will cause its accountants to cooperate, in all reasonable respects with
any financing efforts of such SFX Party or its Affiliates (including providing
assistance in the preparation of one or more registration statements or other
offering documents relating to debt and/or equity financing) and any other
filings that may be made by such SFX Party or its Affiliates with the SEC, all
at the sole expense of such SFX Party. Capstar (a) shall furnish to its
independent accountants (or, if requested by a SFX Party to such SFX Party's
independent public accountants), such customary management representation
letters as its accountants may require of Capstar as a condition to its
execution of any required accountants' consents necessary in connection with
the delivery of any "comfort" letters requested by financing sources of such
SFX Party or its Affiliates and (b) shall furnish to such SFX Party all
financial statements (audited and unaudited) and other information in the
possession of Capstar or its representatives or agents as such SFX Party shall
reasonably determine is necessary or appropriate in connection with such
financing. Each SFX Party will indemnify and hold harmless Capstar and its,
officers, directors, and controlling persons against any and all claims,
losses, liabilities, damages, costs, or expenses (including reasonable
attorneys' fees and expenses) that may arise out of or with respect to the
financing efforts by such SFX Party or its Affiliates, including any
registration statement, prospectus, offering documents, and other filings
related thereto; provided, however, that subject to the limitations and
provisions of this Agreement, nothing herein shall prevent the SFX Parties from
asserting any claim for breach of representation or warranty under this
Agreement. Nothing in this Section 6.2 shall require Capstar to breach any
confidentiality agreement made in connection with the Benchmark Acquisition.
6.3. COMPLIANCE WITH STATION LICENSES. Capstar shall cause the
Capstar Stations to be operated in accordance with the Capstar Station Licenses
and all applicable rules and regulations of the FCC and in compliance with all
other applicable laws, regulations, rules, and orders. Capstar shall use all
commercially reasonable efforts not to cause or permit any of the Capstar
Station Licenses to expire or be surrendered, adversely modified, or
terminated. Capstar shall file or cause to be filed with the FCC all
applications (including license renewals) or other documents required to be
filed in connection with the operation of the Capstar Stations. In addition,
if requested by the SFX Parties and at the SFX Parties' sole expense, Capstar
shall file or cause to be filed with the FCC modification applications and
applications for new, specifically identified frequencies that may be useful in
connection with the operation of the Capstar Stations. Should the FCC
institute any proceedings for the suspension, revocation or adverse
modification of any of the Capstar Station Licenses or any forfeiture
proceedings, Capstar will use all commercially reasonable efforts to promptly
contest such proceedings and to seek to have such proceedings terminated in a
manner that
48
55
is favorable to the Capstar Stations. Capstar will use all commercially
reasonable efforts to maintain the FCC construction permits (if any) listed in
Schedule 3.2(f) in effect until the applicable construction projects are timely
completed and to diligently prosecute all pending FCC applications listed in
Schedule 3.2(f). If Capstar (or its FCC counsel) receives an administrative or
other order or notification relating to any violation or claimed violation of
the rules and regulations of the FCC, or of any other Governmental Entity, or
should Capstar (or its FCC counsel) become aware of any fact relating to the
qualifications of any SFX Party that reasonably could be expected to cause the
FCC to withhold its consent to the assignment of the Capstar Station Licenses,
Capstar shall promptly notify such SFX Party in writing and use its
commercially reasonable efforts to take such steps as may be necessary to
remove any such impediment to the transactions contemplated by this Agreement.
This Section 6.3 shall apply only after the Capstar Date.
6.4. THIRD PARTY CONSENTS. After the Capstar Date and prior to the
Closing, Capstar shall use all commercially reasonable efforts to obtain the
written consent from any party to an agreement or instrument identified in
Schedule 3.2(o) or any other Capstar Assumed Contract which is required to
permit the consummation of the transactions contemplated hereby.
6.5. EMPLOYEE MATTERS. Capstar will use its reasonable efforts to
determine at least ten days prior to the Closing Date those employees of each
SFX Party whom it desires to extend offers of employment. Any offers so
extended by Capstar shall be on such terms and conditions that Capstar shall
determine in its sole discretion. Capstar will give each SFX Party prompt
notice of the names of any employee of such SFX Party who Capstar has
determined not to extend an offer of employment. Each SFX Party waives any
claims against Capstar and any of such SFX Party's employees who are extended
an offer of employment by Capstar arising from such employment by Capstar
including any claims arising under any employment agreement or non-competition
agreement between such person and any SFX Party.
6.6. BENCHMARK ACQUISITION INDEMNIFICATION. If requested by the
SFX Parties, Capstar shall use reasonable efforts to enforce its right to
indemnification with respect to the Capstar Stations under the Benchmark
Agreement. Capstar shall cooperate with the SFX Parties in any lawful and
economically feasible arrangement to provide that the SFX Parties shall receive
the benefits from any recovery under the Benchmark Agreement with respect to
the Capstar Stations, provided, however, that the SFX Parties shall undertake
to pay or satisfy any and all expenses for the enjoyment of such benefit.
ARTICLE VII
MUTUAL COVENANTS
7.1. ACCESS AND INFORMATION.
(a) Until the Closing, subject only to applicable rules
and regulations of the FCC, each SFX Party and Capstar, as the case may be,
shall afford the other and its representatives (including accountants and
counsel) full access, during normal business hours, upon reasonable notice and
in such manner as will not unreasonably interfere with the conduct of the
business, to all
49
56
its properties, books, records, and all other information with respect to its
business, together with the opportunity to make copies of such books, records,
and other documents and to discuss its business with such of its officers,
directors, station managerial personnel (including the Station Management of
each Capstar Station or SFX Station, as applicable), accountants, consultants,
and counsel as the other deems reasonably necessary or appropriate for the
purposes of familiarizing itself with the SFX Stations or Capstar Stations, as
appropriate, including the right to visit the SFX Stations or the Capstar
Stations, as applicable. In furtherance of the foregoing, each SFX Party and
Capstar shall authorize and instruct their respective independent public
accountants to meet with each other to discuss the business and accounts of
each SFX Party and Capstar and to make available (with the opportunity to make
copies) to either the SFX Parties or Capstar and their representatives,
including their independent public accountants, all the work papers of their
respective accountants related to the audit of the consolidated financial
statements of SFX Broadcasting, Inc. or Capstar, as applicable.
(b) Within 30 days after the end of each calendar month,
each SFX Party and Capstar shall deliver to each other, for each of the Capstar
Stations or SFX Stations, as applicable, and for each other as a whole, monthly
operating statements (in a form consistent with the monthly operating
statements previously supplied to each other) prepared in the ordinary course
of business for internal purposes. In addition, within 45 days after the end
of each calendar quarter, each SFX Party and Capstar, for each of the Capstar
Stations or SFX Stations, as applicable, quarterly statements prepared in the
ordinary course for internal purposes containing a detailed listing of all
trade and barter agreements of each Capstar Station or SFX Station, as
applicable, showing the status of all such agreements as of the end of the
quarter. Each SFX Party and Capstar shall deliver to each other the rating
books and such other ratings information subscribed to by each party including,
without limitation, Arbitrends, Accuratings or any other written information
reflective of the quantitative or qualitative nature of the audiences of the
Capstar Stations or SFX Stations, as applicable, for each of the Capstar
Stations or SFX Stations, as applicable, upon receipt of the same by any
officer or director of either party. Each SFX Party and Capstar shall instruct
its respective Station Management to provide such information and reports to
each other's corporate officers promptly upon receipt by such Station
Management. In addition, as soon as the same are distributed to each parties'
officers or directors, each SFX Party and Capstar will provide each other with
copies of each Capstar Station's or SFX Station's, as applicable, weekly sales
pacing reports.
(c) Without duplication of Section 7.1(b), at such time
as either party provides the same to its lenders, they shall provide the other
party with copies of the financial statements and other information delivered
by such party to such lenders.
(d) Capstar and each SFX Party acknowledge that the
confidential information and data obtained or possessed by each of them,
including the information gathered under this Section 7.1, concerning the
business affairs of the SFX Stations and Capstar Stations, as applicable, (the
"Confidential Information") is, until Closing, the property of the SFX Parties
and Capstar, respectively. Therefore, Capstar and each SFX Party agree that
they will not disclose to any person or use for their own account any of the
Confidential Information unless and to the extent that such Confidential
Information (a) is required to be disclosed by law or pursuant to a judicial
order or decree, or (b) becomes generally known to and available for use by the
public other than as a result of the act or omission to act of Capstar or any
SFX Party, as applicable. Capstar and each SFX
50
57
Party, as applicable, agree to deliver to the other, at any time before the
Closing, all memoranda, notes, plan, records, reports, and other documents (and
copies thereof) relating to the conduct of the SFX Stations and Capstar
Stations, as applicable, of which they may then possess or have under their
control.
(e) Notwithstanding the foregoing, Sections 7.1(a),
7.1(b), and 7.1(c) shall apply to Capstar only after the Capstar Date.
7.2. NOTIFICATION OF CERTAIN MATTERS.
(a) Each SFX Party and Capstar shall give prompt written
notice to each other of (i) the occurrence, or failure to occur, of any event
of which it becomes aware that has caused or that would be likely to cause any
representation or warranty of such party contained in this Agreement to be
untrue or inaccurate in any material respect at any time from the date hereof
to the Closing Date, (ii) the failure of such party, or any officer, director,
employee, or agent of such party, to comply with or satisfy in any material
respect any covenant, condition, or agreement to be complied with or satisfied
by it hereunder, (iii) the occurrence of a Station Event (as defined in Section
9.1), and (iv) the occurrence of any threat made to such party by any General
Manager, Station Manager, General Sales Manager, Programming Director, or on-
air talent of a Capstar Station or SFX Station, as applicable, to resign or
otherwise terminate their employment or independent contractor relationship
with such party. No such notification shall affect the representations or
warranties of the parties or the conditions to their respective obligations
hereunder. Notwithstanding the foregoing, Section 7.2(a)(iii) and 7.2(a)(iv)
shall apply to Capstar only after the Capstar Date.
(b) If any SFX Party or Capstar (or their respective FCC
counsel) receive an administrative or other order or notification relating to
any violation or claimed violation of the rules and regulations of the FCC, or
of any Governmental Entity, that could affect such party's ability to
consummate the transactions contemplated hereby, such party shall promptly
notify the other party thereof and shall use its commercially reasonable
efforts to take such steps as may be necessary to remove any such impediment to
the transactions contemplated by this Agreement; provided, however, that no
party shall be required pursuant to this Section 7.2(b) to divest itself or
cause any Affiliate thereof to divest itself of any media business or interest
therein.
7.3. APPLICATION FOR FCC CONSENTS. By the tenth business day after
the Capstar Date, each SFX Party will, and will cause all necessary persons or
entities to join in one or more applications filed with the FCC requesting the
FCC's written consent to the assignment of the SFX FCC Licenses, pursuant to
this Agreement (the "SFX Applications"), and Capstar will, and will cause all
necessary persons or entities to join in one or more applications filed with
the FCC requesting the FCC's written consent to the assignment of the Capstar
FCC Licenses, pursuant to this Agreement (the "Capstar Applications" and
together with the SFX Applications, the "Applications"). The parties will take
all proper steps reasonably necessary (a) to diligently prosecute the
Applications and (b) to obtain the Capstar FCC Consents and SFX FCC Consents.
The failure by any party to timely file or diligently prosecute its portion of
any Application shall be a material breach of this
51
58
Agreement; provided, however, that no party shall be required pursuant to this
Section 7.3 to divest itself or cause any Affiliate thereof to divest itself of
any media business or interest therein.
7.4. CONTROL OF STATIONS. This Agreement shall not be consummated
until after the Capstar FCC Consents and the SFX FCC Consents with respect to
the Applications referred to in Section 7.3 are granted and have become Capstar
Final Orders and SFX Final Orders unless Capstar or any SFX Party, as
applicable, waives the SFX Final Orders or the Capstar Final Orders, as
applicable. Between the date of this Agreement and the Closing Date, Capstar
will not directly or indirectly control, supervise or direct the operation of
the SFX Stations. Further, between the date of this Agreement and the Closing
Date, the SFX Parties shall, directly or indirectly, supervise and control the
operation of the SFX Stations. Such operation shall be the sole responsibility
of the SFX Parties. In addition, between the date of this Agreement and the
Closing Date, the SFX Parties will not directly or indirectly control,
supervise or direct the operation of the Capstar Stations. Further, between
the Capstar Date and the Closing Date, Capstar shall, directly or indirectly,
supervise and control the operation of the Capstar Stations. Such operation
shall be the sole responsibility of Capstar.
7.5. OTHER GOVERNMENTAL CONSENTS. Promptly following the execution
of this Agreement, the parties shall proceed to prepare and file with the
appropriate Governmental Entities (other than the FCC) such requests, reports,
or notifications as may be required in connection with this Agreement and shall
diligently and expeditiously prosecute, and shall cooperate fully with each
other in the prosecution of, such matters. Without limiting the foregoing,
promptly following the execution of this Agreement, the parties shall (a) file
with the Federal Trade Commission and the Antitrust Division of the Department
of Justice the notifications and other information (if any) required to be
filed under the HSR Act with respect to the transactions contemplated hereby
and shall use their commercially reasonable efforts to cause all applicable
waiting periods under the HSR Act to expire or be terminated as of the earliest
possible date and (b) make all necessary filings and, thereafter, make any
other required submissions with respect to the transactions contemplated hereby
under the Securities Act and the rules and regulations thereunder and any other
applicable federal or state securities laws. Nothing in this Section 7.5 shall
require any party to divest itself or to cause any Affiliate thereof to divest
itself of any media business or interest therein.
7.6. BROKERS OR FINDERS. Each SFX Party, jointly and severally,
and Capstar represents and warrants that it has not engaged an agent, broker,
investment banker, or other person who will be entitled to any broker's or
finder's fee or any commission or similar fee payable by the other party in
connection with any of the transactions contemplated by this Agreement.
7.7. BULK SALES LAW.
(a) Capstar agrees to waive compliance by each SFX Party
with the requirements of any bulk sales or fraudulent conveyance statute, and
each SFX Party agrees to indemnify and hold Capstar harmless against any claim
made against Capstar by any creditor of any SFX Party as a result of a failure
to comply with any such statute.
52
59
(b) Each SFX Party agrees to waive compliance by Capstar
with the requirements of any bulk sales or fraudulent conveyance statute, and
Capstar agrees to indemnify and hold each SFX Party harmless against any claim
made against such SFX Party by any creditor of Capstar as a result of a failure
to comply with any such statute.
7.8. RISK OF LOSS - SFX ASSETS.
(a) The risk of any loss, damage, impairment,
confiscation, or condemnation of any of the SFX Assets from any cause
whatsoever shall be borne by the SFX Parties at all times prior to the Closing.
In the event of any such loss, damage, impairment, confiscation, or
condemnation, whether or not covered by insurance, each SFX Party shall
promptly notify Capstar of such loss, damage, impairment, confiscation, or
condemnation.
(b) If the SFX Parties, at their expense, repair,
replace, or restore such SFX Assets to their prior condition to the
satisfaction of Capstar before the Closing, the SFX Parties shall be entitled
to all insurance proceeds and condemnation awards, if any, by reason of such
award or loss.
(c) If the SFX Parties do not or cannot restore or
replace lost, damaged, impaired, confiscated or condemned SFX Assets having a
replacement cost in excess of $100,000 in the aggregate or informs Capstar that
they do not intend to restore or replace such SFX Assets, Capstar may at its
option:
(i) terminate this Agreement by notice forthwith
without any further obligation hereunder; or
(ii) proceed to the Closing of this Agreement
without the SFX Parties completing the restoration and replacement of
such SFX Assets, provided that each SFX Party shall assign all rights
under applicable insurance policies and condemnation awards, if any,
to Capstar; and in such event, each SFX Party shall have no further
liability with respect to the condition of the SFX Assets directly
attributable to the loss, damage, impairment, confiscation, or
condemnation.
(d) Capstar will notify each SFX Party of a decision
under the options described in Section 7.8(c)(i) or (ii) above within ten
business days after any SFX Party's notice to Capstar of the damage or
destruction of SFX Assets and the estimate of the costs to repair or replace;
provided, however, that if such SFX Party states that it intends to restore the
damaged SFX Assets and if such SFX Party has not restored such damaged SFX
Assets immediately prior to the Closing Date, notwithstanding Capstar's prior
delivery of a notice to proceed pursuant to this Section 7.8(d), Capstar shall
have the right to either postpone the Closing or terminate this Agreement by
notice forthwith.
7.9. RISK OF LOSS - CAPSTAR ASSETS.
(a) The risk of any loss, damage, impairment,
confiscation, or condemnation of any of the Capstar Assets from any cause
whatsoever shall be borne by Capstar at all times prior to
53
60
the Closing. In the event of any such loss, damage, impairment, confiscation,
or condemnation, whether or not covered by insurance, Capstar shall promptly
notify a SFX Party of such loss, damage, impairment, confiscation, or
condemnation.
(b) If Capstar, at its expense, repairs, replaces, or
restores such Capstar Assets to their prior condition to the satisfaction of a
SFX Party before the Closing, Capstar shall be entitled to all insurance
proceeds and condemnation awards, if any, by reason of such award or loss.
(c) If Capstar does not or cannot restore or replace
lost, damaged, impaired, confiscated or condemned Capstar Assets having a
replacement cost in excess of $100,000 in the aggregate or informs a SFX Party
that it does not intend to restore or replace such Capstar Assets, the SFX
Parties may at their option:
(i) terminate this Agreement by notice forthwith
without any further obligation hereunder; or
(ii) proceed to the Closing of this Agreement
without Capstar completing the restoration and replacement of such
Capstar Assets, provided that Capstar shall assign all rights under
applicable insurance policies and condemnation awards, if any, to the
SFX Parties; and in such event, Capstar shall have no further
liability with respect to the condition of the Capstar Assets directly
attributable to the loss, damage, impairment, confiscation, or
condemnation.
(d) The SFX Parties will notify Capstar of a decision
under the options described in Section 7.9(c)(i) or (ii) above within ten
business days after Capstar's notice to a SFX Party of the damage or
destruction of Capstar Assets and the estimate of the costs to repair or
replace; provided, however, that if Capstar states that it intends to restore
the damaged Capstar Assets and if Capstar has not restored such damaged Capstar
Assets immediately prior to the Closing Date, notwithstanding the SFX Parties'
prior delivery of a notice to proceed pursuant to this Section 7.9(d), the SFX
Parties shall have the right to either postpone the Closing or terminate this
Agreement by notice forthwith.
7.10. ADDITIONAL AGREEMENTS.
(a) Subject to the terms and conditions of this
Agreement, each of the parties hereto will use its commercially reasonable
efforts to do, or cause to be taken all action and to do, or cause to be done,
all things necessary, proper, or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement. If at any time after the Closing Date, any further action is
necessary or desirable to carry out the purposes of this Agreement, the parties
to this Agreement and their duly authorized representatives shall take all such
action.
(b) Without limiting the generality of the foregoing
Section 7.10(a), if, after the Closing Date, any SFX Party seeks
indemnification or recovery from one or more other parties to a Capstar Assumed
Contract, or otherwise seeks to enforce such Capstar Assumed Contract, and,
54
61
in order to obtain such indemnification, recovery or enforcement, it is
necessary for Capstar to initiate a suit, participate in any enforcement
proceeding or otherwise provide assistance to such SFX Party, then, at the
request and the sole expense of such SFX Party, Capstar shall take such action
as such SFX Party may reasonably request in connection with such SFX Party's
efforts to obtain such indemnification, recovery or enforcement.
(c) Without limiting the generality of the foregoing
Section 7.10(a), if, after the Closing Date, Capstar seeks indemnification or
recovery from one or more other parties to a SFX Assumed Contract, or otherwise
seeks to enforce such SFX Assumed Contract, and, in order to obtain such
indemnification, recovery or enforcement, it is necessary for any SFX Party to
initiate a suit, participate in any enforcement proceeding or otherwise provide
assistance to Capstar, then, at the request and the sole expense of Capstar,
such SFX Party shall take such action as Capstar may reasonably request in
connection with Capstar's efforts to obtain such indemnification, recovery or
enforcement.
7.11. ACCOUNTS RECEIVABLE.
(a) All SFX Accounts Receivable shall remain the property
of the SFX Parties. Each SFX Party hereby authorizes Capstar, however, to
collect such receivables for a period of 120 days after the Closing. Each SFX
Party shall deliver to Capstar a complete and detailed statement of each
account within three days after Closing and Capstar shall use its reasonable
efforts, consistent with its customary collection practices for its own
accounts receivable, without compensation, to collect each SFX Account
Receivable during such 120 days. During that period Capstar shall provide to
each SFX Party a detailed bi-monthly statement of the SFX Accounts Receivable
showing amounts collected to the date, and amounts outstanding as of the same
date, and, within 15 days of the end of the period covered by such statement,
deliver to a SFX Party the SFX Accounts Receivable report and a check for the
amounts collected during such period. All payments received by Capstar during
the 120-day period following the Closing Date from a person obligated with
respect to a SFX Account Receivable shall be applied first to the SFX Parties'
account and, only after full satisfaction thereof, to Capstar's account;
provided, however, that if such person has, in the reasonable opinion of
Capstar, a legitimate dispute with respect to such SFX Account Receivable and
Capstar also has an account receivable from such person, Capstar shall notify
the SFX Party of such dispute. If after 30 days following notification of such
SFX Party, no resolution to the dispute has been reached by such person and
such SFX Party, the payment shall be applied first to Capstar's account and
only after the earlier to occur of full satisfaction of Capstar's account or
resolution of such dispute, to such SFX Party's account. Capstar shall not be
required to refer any SFX Account Receivable to a collection agency or an
attorney for collection, nor shall it compromise, settle, or adjust any SFX
Account Receivable having a value in excess of $5,000 without receiving the
approval of any SFX Party. Each SFX Party shall take no action with respect to
the SFX Accounts Receivable, such as litigation, until the expiration of such
120-day period. Following the expiration of said 120-day period, each SFX
Party shall be free to take such action as such SFX Party may in its sole
discretion determine to collect any SFX Accounts Receivable then outstanding.
(b) All Capstar Accounts Receivable shall remain the
property of Capstar. Capstar hereby authorizes each SFX Party, however, to
collect such receivables for a period of 120
55
62
days after the Closing. Capstar shall deliver to a SFX Party a complete and
detailed statement of each account within three days after Closing and such SFX
Party shall use its reasonable efforts, consistent with their customary
collection practices for their own accounts receivable, without compensation,
to collect each Capstar Account Receivable during such 120 days. During that
period such SFX Party shall provide to Capstar a detailed bi-monthly statement
of the Capstar Accounts Receivable showing amounts collected to the date, and
amounts outstanding as of the same date, and, within 15 days of the end of the
period covered by such statement, deliver to Capstar the Capstar Accounts
Receivable report and a check for the amounts collected during such period. All
payments received by such SFX Party during the 120-day period following the
Closing Date from a person obligated with respect to a Capstar Account
Receivable shall be applied first to Capstar's account and, only after full
satisfaction thereof, to such SFX Party's account; provided, however, that if
such person has, in the reasonable opinion of such SFX Party, a legitimate
dispute with respect to such Capstar Account Receivable and such SFX Party also
has an account receivable from such person, such SFX Party shall notify
Capstar of such dispute. If after 30 days following notification of Capstar,
no resolution to the dispute has been reached by such person and Capstar, the
payment shall be applied first to such SFX Party's account and only after the
earlier to occur of full satisfaction of such SFX Party's account or resolution
of such dispute, to Capstar's account. Such SFX Party shall not be required to
refer any Capstar Account Receivable to a collection agency or an attorney for
collection, nor shall they compromise, settle, or adjust any Capstar Account
Receivable having a value in excess of $5,000 without receiving the approval of
Capstar. Capstar shall take no action with respect to the Capstar Accounts
Receivable, such as litigation, until the expiration of such 120-day period.
Following the expiration of said 120-day period, Capstar shall be free to take
such action as Capstar may in its sole discretion determine to collect any
Capstar Accounts Receivable then outstanding.
ARTICLE VIII
CONDITIONS PRECEDENT
8.1. CONDITIONS TO EACH PARTY'S OBLIGATION. The respective
obligations of Capstar and each SFX Party to effect the transactions
contemplated hereby are subject to the satisfaction (or, in the case of the
conditions specified in the last two sentences of Section 8.l(a), the waiver by
Capstar and the SFX Parties, respectively) on or prior to the Closing Date of
the following conditions:
(a) Consents and Approvals. All authorizations,
consents, orders, or approvals of, or declarations or filings with, or
expirations of waiting periods imposed by, any Governmental Entity necessary
for the consummation of the transactions contemplated by this Agreement shall
have been filed, occurred, or been obtained. The SFX FCC Consents shall have
become SFX Final Orders and shall be in form and substance satisfactory to
Capstar. The Capstar FCC Consents shall have become Capstar Final Orders and
shall be in form and substance satisfactory to each SFX Party.
(b) No Injunctions or Restraints. No temporary
restraining order, preliminary or permanent injunction, or other order issued
by any court of competent jurisdiction or other legal
56
63
restraint or prohibition preventing the consummation of the transactions
contemplated hereby shall be in effect.
(c) No Action. No action shall have been taken nor any
statute, rule, or regulation shall have been enacted by any Governmental Entity
that makes the consummation of the transactions contemplated hereby illegal.
(d) Benchmark Acquisition. The Benchmark Acquisition
shall have been consummated and all of the conditions to closing such
acquisition shall have been satisfied.
8.2. CONDITIONS TO OBLIGATION OF CAPSTAR. The obligation of
Capstar to effect the transactions contemplated hereby is subject to the
satisfaction of the following conditions unless waived, in whole or in part, by
Capstar:
(a) Representations and Warranties. The representations
and warranties of each SFX Party set forth in this Agreement shall be true and
correct in all material respects (provided that any representation or warranty
of each SFX Party contained herein that is qualified by a materiality standard
shall not be further qualified hereby) as of the date of this Agreement and as
of the Closing Date as though made on and as of the Closing Date except to the
extent that any inaccuracies in such representations or warranties (without
regard to materiality (including Material Adverse Effect) qualifications) do
not and would not reasonably be expected to, have a Material Adverse Effect on
each SFX Party taken as a whole. In addition, Capstar shall have received a
certificate to such effect signed on behalf of each SFX Party by the chief
executive officer or by the chief financial officer of each SFX Party.
(b) Performance of Obligations. Each SFX Party shall
have performed in all material respects all obligations required to be
performed by it under this Agreement prior to the Closing Date, and Capstar
shall have received a certificate to such effect signed on behalf of each SFX
Party by the chief executive officer or by the chief financial officer of each
SFX Party.
(c) Consents Under Agreements. Capstar shall have been
furnished with evidence reasonably satisfactory to it of the consent or
approval of each person that is a party to a SFX Contract identified in
Schedule 3.1(o) whose consent or approval shall be required in order to permit
the consummation of the transactions contemplated hereby and such consent or
approval shall be in form and substance satisfactory to Capstar.
(d) Legal Opinions. Capstar shall have received from
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, counsel for the SFX Parties, such opinions dated the Closing
Date, in substantially the form attached as Exhibit G hereto, which opinions,
if requested by Capstar, shall expressly provide that they may be relied upon
by Capstar's lenders, underwriters, or other sources of financing with respect
to the transactions contemplated hereby. Capstar shall have received from
▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇, Leader & ▇▇▇▇▇▇▇▇ L.L.P., FCC counsel to the SFX
Parties, an opinion relating to FCC matters, dated the Closing Date, in
substantially the form as Exhibit H hereto, which opinions, if requested by
Capstar shall expressly provide that they may be relied upon by Capstar's
lenders, underwriters, or other sources of financing with respect to the
transactions contemplated hereby.
57
64
(e) Real Estate Title Commitment. Within 30 days after
the date of this Agreement, each SFX Party, at Capstar's sole cost and expense,
shall have obtained a preliminary report on title to the SFX Owned Real
Property covering a date subsequent to the date of this Agreement, issued by
the Title Company, which preliminary report shall contain a commitment (the
"SFX Title Commitments") of the Title Company to issue an owner's title
insurance policy at Capstar's cost as Capstar may reasonably require (the "SFX
Title Policy") insuring the fee simple absolute interest of Capstar in the SFX
Owned Real Property. The SFX Title Commitments shall be in the amount set
forth in Schedule 8.2(e) and shall be subject only to the standard printed
exceptions and: (i) liens of current state and local property taxes which are
not delinquent or subject to penalty; (ii) unviolated zoning regulations and
restrictive covenants and easements of record which do not detract from the
value of the SFX Owned Real Property and do not materially and adversely
affect, impair or interfere with the use of any property affected thereby as
heretofore used by each SFX Party or the SFX Stations; (iii) public utility
easements of record, in customary form, to serve the SFX Owned Real Property;
and (iv) SFX Permitted Encumbrances. Such title policy shall be issued on the
Closing Date.
(f) Survey. If requested by Capstar, each SFX Party, at
Capstar's sole cost and expense, shall have obtained a survey of the SFX Owned
Real Property as of a date subsequent to the date hereof which shall: (i) be
prepared by a registered land surveyor reasonably acceptable to Capstar; (ii)
be certified to the Title Company and to Capstar; and (iii) show with respect
to the SFX Owned Real Property: (A) the legal description of the SFX Owned
Real Property (which shall be the same as the SFX Title Policy pertaining
thereto); (B) all buildings, structures and improvements thereon and all
restrictions of record and other restrictions that have been established by an
applicable zoning or building code or ordinance and all easements or rights of
way across or serving the SFX Owned Real Property (including any off-site
easements affecting or appurtenant thereto); (C) no encroachments upon the SFX
Owned Real Property or adjoining parcels by buildings, structures or
improvements and no other survey defects; (D) access to such parcel from a
public street; and (E) a flood certification reasonably satisfactory to Capstar
to the effect that no portion of the SFX Owned Real Property is located within
a flood hazard area.
(g) Fairness Opinion. Capstar shall have received a
written opinion from an independent investment banking firm of nationally
recognized standing that the transactions contemplated by this Agreement are
fair to Capstar from a financial point of view.
(h) Closing Deliveries. All documents, instruments,
certificates or other items required to be delivered by each SFX Party pursuant
to Section 9.2 shall have been delivered.
8.3. CONDITIONS TO OBLIGATION OF THE SFX PARTIES. The obligation
of the SFX Parties to effect the transactions contemplated hereby is subject to
the satisfaction of the following conditions unless waived, in whole or in
part, by any SFX Party:
(a) Representations and Warranties. The representations
and warranties of Capstar set forth in this Agreement shall be true and correct
in all material respects (provided that any representation or warranty of
Capstar contained herein that is qualified by a materiality standard shall not
be further qualified hereby) as of the date of this Agreement (unless otherwise
limited to
58
65
events, acts or omissions occurring or conditions coming into existence on or
after the closing of the Benchmark Acquisition) and as of the Closing Date as
though made on and as of the Closing Date except to the extent that any
inaccuracies in such representations or warranties (without regard to
materiality (including Material Adverse Effect) qualifications) do not and
would not reasonably be expected to, have a Material Adverse Effect on Capstar
taken as a whole. In addition, the SFX Parties shall have received a
certificate to such effect signed on behalf of Capstar by the chief executive
officer or by the chief financial officer of Capstar.
(b) Performance of Obligations. Capstar shall have
performed in all material respects all obligations required to be performed by
it under this Agreement prior to the Closing Date, and the SFX Parties shall
have received a certificate to such effect signed on behalf of Capstar by the
chief executive officer or by the chief financial officer of Capstar.
(c) Consents Under Agreements. The SFX Parties shall
have been furnished with evidence reasonably satisfactory to them of the
consent or approval of each person that is a party to a Capstar Contract
identified in Schedule 3.2(o) whose consent or approval shall be required in
order to permit the consummation of the transactions contemplated hereby and
such consent or approval shall be in form and substance satisfactory to the SFX
Parties.
(d) Legal Opinions. The SFX Parties shall have received
from ▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P., counsel to Capstar, an opinion, dated the Closing
Date, in substantially the form attached as Exhibit E hereto, which opinions,
if requested by the SFX Parties, shall expressly provide that they may be
relied upon by the SFX Parties' lenders, underwriters, or other sources of
financing with respect to the transactions contemplated hereby. The SFX
Parties shall have received from ▇▇▇▇▇▇▇▇▇ & Associates, P.A., FCC counsel to
Capstar, an opinion relating to FCC matters, dated the Closing Date, in
substantially the form as Exhibit F hereto, which opinions, if requested by the
SFX Parties shall expressly provide that they may be relied upon by the SFX
Parties' lenders, underwriters, or other sources of financing with respect to
the transactions contemplated hereby.
(e) Real Estate Title Commitment. Within 30 days after
the Capstar Date, Capstar, at the SFX Parties' sole cost and expense, shall
have obtained a preliminary report on title to the Capstar Owned Real Property
covering a date subsequent to the date of this Agreement, issued by the Title
Company, which preliminary report shall contain a commitment (the "Capstar
Title Commitment") of the Title Company to issue an owner's title insurance
policy at the SFX Parties' cost as the SFX Parties may reasonably require (the
"Capstar Title Policy") insuring the fee simple absolute interest of a SFX
Party in the Capstar Owned Real Property. The Capstar Title Commitment shall
be in the amount set forth in Schedule 8.3(e) and shall be subject only to the
standard printed exceptions and: (i) liens of current state and local property
taxes which are not delinquent or subject to penalty; (ii) unviolated zoning
regulations and restrictive covenants and easements of record which do not
detract from the value of the Capstar Owned Real Property and do not materially
and adversely affect, impair or interfere with the use of any property affected
thereby as heretofore used by Capstar or the Capstar Stations; (iii) public
utility easements of record, in customary form, to serve the Capstar Owned Real
Property; and (iv) Capstar Permitted Encumbrances. Such title policy shall be
issued on the Closing Date.
59
66
(f) Survey. If requested by the SFX Parties, Capstar, at
the SFX Parties' sole cost and expense, shall have obtained a survey of the
Capstar Owned Real Property as of a date subsequent to the Capstar Date which
shall: (i) be prepared by a registered land surveyor reasonably acceptable to
the SFX Parties; (ii) be certified to the Title Company and to the SFX Parties;
and (iii) show with respect to the Capstar Owned Real Property: (A) the legal
description of the Capstar Owned Real Property (which shall be the same as the
Capstar Title Policy pertaining thereto); (B) all buildings, structures and
improvements thereon and all restrictions of record and other restrictions that
have been established by an applicable zoning or building code or ordinance and
all easements or rights of way across or serving the Capstar Owned Real
Property (including any off-site easements affecting or appurtenant thereto);
(C) no encroachments upon the Capstar Owned Real Property or adjoining parcels
by buildings, structures or improvements and no other survey defects; (D)
access to such parcel from a public street; and (E) a flood certification
reasonably satisfactory to the SFX Parties to the effect that no portion of the
Capstar Owned Real Property is located within a flood hazard area.
(g) Closing Deliveries. All documents, instruments,
certificates or other items required to be delivered by Capstar pursuant to
Section 9.2 shall have been delivered.
ARTICLE IX
CLOSING
9.1. CLOSING. Subject to the satisfaction or waiver of the
conditions set forth in Article VIII, or at such other place and time as any
SFX Party and Capstar may agree, the Closing will take place at the offices of
▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P., Dallas, Texas, at 10:00 a.m., local time, on the 10th
business day after the latest to occur of the day on which (i) the SFX FCC
Consents have been granted by SFX Final Order or (ii) the Capstar FCC Consents
have been granted by Capstar Final Order (the "Closing Date"). Notwithstanding
the foregoing:
(a) In the case of a Capstar Station Event (as defined
below), (i) if the Cessation Date (as defined below) is 60 days or less after
the Event Date (as defined below), the SFX Parties, in their discretion, may
extend the Closing Date to a date not later than the 30th day after the
Cessation Date, (ii) if the Cessation Date is more than 60, but less than 90,
days after the Event Date, the SFX Parties, in their discretion, shall elect on
the first to occur of the 10th business day after the Cessation Date or the
90th day (or, if not a business day, the next business day) after the Event
Date (the "SFX Election Date") to either (A) close the transactions
contemplated by this Agreement on the later to occur of the fifth business day
after the SFX Election Date or the 90th day (or, if not a business day, the
next business day) after the Event Date or (B) terminate this Agreement, or
(iii) if the Cessation Date has not occurred by the 90th day after the Event
Date, then on the 90th day (or, if not a business day, the next business day)
after the Event Date, the SFX Parties, in their discretion, shall elect to
close the transactions contemplated by this Agreement on the fifth business day
thereafter or terminate this Agreement;
60
67
(b) In the case of a SFX Station Event (as defined
below), (i) if the Cessation Date (as defined below) is 60 days or less after
the Event Date (as defined below), Capstar, in its discretion, may extend the
Closing Date to a date not later than the 30th day after the Cessation Date,
(ii) if the Cessation Date is more than 60, but less than 90, days after the
Event Date, Capstar, in its discretion, shall elect on the first to occur of
the 10th business day after the Cessation Date or the 90th day (or, if not a
business day, the next business day) after the Event Date (the "Capstar
Election Date") to either (A) close the transactions contemplated by this
Agreement on the later to occur of the fifth business day after the Capstar
Election Date or the 90th day (or, if not a business day, the next business
day) after the Event Date or (B) terminate this Agreement, or (iii) if the
Cessation Date has not occurred by the 90th day after the Event Date, then on
the 90th day (or, if not a business day, the next business day) after the Event
Date, Capstar, in its discretion, shall elect to close the transactions
contemplated by this Agreement on the fifth business day thereafter or
terminate this Agreement;
(c) If a Cure Period (as defined in Sections 10.1(c)(i)
and 10.1(d)(1)) has not ended on or before the Closing Date, the Closing Date
shall be extended to the end of the Cure Period; and
(d) If the Closing does not occur within 80 days after
the date of both the SFX Final Order and the Capstar Final Order, the parties
shall request approval from the FCC to extend the Closing so that the Closing
contemplated hereunder will not violate any FCC rules or regulations.
For purposes of this Agreement, a "Capstar Station Event" shall mean
any act of nature (including fires, floods, earthquakes, and storms), calamity,
casualty or condemnation or the act or omission to act of any state or federal
regulatory agency having jurisdiction over the Capstar Stations that has caused
one or more Capstar Station(s) not to be operating in a manner substantially
consistent with the operations conducted before such act, omission, calamity,
casualty, condemnation or agency action occurred or not in compliance with the
respective Capstar Station License(s); a "SFX Station Event" shall mean any act
of nature (including fires, floods, earthquakes, and storms), calamity,
casualty or condemnation or the act or omission to act of any state or federal
regulatory agency having jurisdiction over any SFX Station that has caused one
or more SFX Station(s) not to be operating in a manner substantially consistent
with the operations conducted before such act, omission, calamity, casualty,
condemnation or agency action occurred or not in compliance with the respective
SFX Station License(s); an "Event Date" shall mean the date on which a Capstar
Station Event or SFX Station Event, as applicable, occurs; and a "Cessation
Date" shall mean the date on which a Capstar Station Event or SFX Station
Event, as applicable, ends.
9.2. ACTIONS TO OCCUR AT CLOSING.
(a) At the Closing, the SFX Parties shall deliver to
Capstar the following:
(i) Certificates. The certificates referred to
in Section 8.2(a) and (b);
(ii) Assumption Agreements. A counterpart of the
SFX Assumption Agreement and the Capstar Assumption Agreement executed by each
SFX Party;
61
68
(iii) Legal Opinions. The opinions of counsel
referred to in Section 8.2(d);
(iv) Transfer Documents. The duly executed SFX
▇▇▇▇ of Sale and Assignment, together with any other assignments and other
transfer documents as requested by Capstar;
(v) Consents; Acknowledgments. The original of
each Consent;
(vi) Estoppel Certificates. Estoppel certificates
from the lessor(s) of the SFX Leased Real Property in a form and substance
satisfactory to Capstar and its lenders or other financing sources;
(vii) Licenses, Contracts, Business Records, Etc.
To the extent they are in the possession of any SFX Party, copies of all SFX
Licenses, SFX Assumed Contracts, blueprints, schematics, working drawings,
plans, projections, statistics, engineering records and all files and records
used by each SFX Party in connection with a SFX Station's business and
operations, which copies shall be available at the Closing or at a SFX
Station's principal business offices;
(viii) SFX Warranty Deed. A SFX Warranty Deed
executed by each SFX Party conveying fee simple title to the SFX Owned Real
Property to Capstar, subject only to the SFX Permitted Encumbrances, in proper
statutory form for recording together with documentary stamps affixed thereto;
(ix) No-Lien Affidavit. A standard No-Lien
Affidavit executed by each SFX Party, which shall be in the recordable form and
otherwise satisfactory to the Title Company in order to delete the standard
printed exceptions relating to mechanics' liens and parties-in-possession;
(x) GAP Affidavit. An affidavit, if requested by
the Title Company, as may be necessary to insure the gap between the effective
date of the SFX Title Commitment to and through the date of the recordation of
the deed to the SFX Owned Real Property;
(xi) Title Requirements. Such other documents as
shall be reasonably required by the Title Company as called for or required
under the terms of any title policy obtained or issued to Capstar;
(xii) Section 1445(b)(2) Affidavit. Capstar shall
receive from the chief executive officer or chief financial officer of each SFX
Party a non-foreign affidavit within the meaning of section 1445(b)(2) of the
Code; and
(xiii) Organizational Documents. True and complete
copies of their Articles of Incorporation, Bylaws, certificate of limited
partnership, or limited partnership agreement, as applicable, as in effect on
the Closing Date.
(b) At the Closing, Capstar shall deliver to the SFX
Parties the following:
62
69
(i) Certificates. The certificates described
in Section 8.3(a) and (b);
(ii) Assumption Agreements. A counterpart of the
Capstar Assumption Agreement and the SFX Assumption Agreement executed by
Capstar;
(iii) Legal Opinions. The opinions of counsel
referred to in Section 8.3(d);
(iv) Transfer Documents. The duly executed
Capstar ▇▇▇▇ of Sale and Assignment, together with any other assignments and
other transfer documents as requested by the SFX Parties;
(v) Consents; Acknowledgments. The original of
each Consent;
(vi) Estoppel Certificates. Estoppel certificates
from the lessor(s) of the Capstar Leased Real Property in a form and substance
satisfactory to the SFX Parties and their lenders or other financing sources;
(vii) Licenses, Contracts, Business Records, Etc.
To the extent they are in the possession of Capstar, copies of all Capstar
Licenses, Capstar Assumed Contracts, blueprints, schematics, working drawings,
plans, projections, statistics, engineering records and all files and records
used by Capstar in connection with a Capstar Station's business and operations,
which copies shall be available at the Closing or at a Capstar Station's
principal business offices;
(viii) Capstar Warranty Deed. A Capstar Warranty
Deed executed by Capstar conveying fee simple title to the Capstar Owned Real
Property to the SFX Parties, subject only to the Capstar Permitted
Encumbrances, in proper statutory form for recording together with documentary
stamps affixed thereto;
(ix) No-Lien Affidavit. A standard No-Lien
Affidavit executed by Capstar, which shall be in the recordable form and
otherwise satisfactory to the Title Company in order to delete the standard
printed exceptions relating to mechanics' liens and parties-in-possession;
(x) GAP Affidavit. An affidavit, if requested by
the Title Company, as may be necessary to insure the gap between the effective
date of the Capstar Title Commitment to and through the date of the recordation
of the deed to the Capstar Owned Real Property;
(xi) Title Requirements. Such other documents as
shall be reasonably required by the Title Company as called for or required
under the terms of any title policy obtained or issued to the SFX Parties;
(xii) Section 1445(b)(2) Affidavit. The SFX
Parties shall receive from the chief executive officer or chief financial
officer of Capstar a non-foreign affidavit within the meaning of section
1445(b)(2) of the Code; and
63
70
(xiii) Articles of Incorporation and Bylaws. True
and complete copies of its Articles of Incorporation and Bylaws, as in effect
on the Closing Date.
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
10.1. TERMINATION. This Agreement may be terminated prior to the
Closing:
(a) by mutual consent of Capstar and each SFX Party; or
(b) by either Capstar or the SFX Parties:
(i) if a court of competent jurisdiction or other
Governmental Entity shall have issued an order, decree, or ruling or taken any
other action (which order, decree or ruling the parties hereto shall use their
best efforts to lift), in each case permanently restraining, enjoining, or
otherwise prohibiting the transactions contemplated by this Agreement, and such
order, decree, ruling, or other action shall have become final and
nonappealable;
(ii) if, for any reason, the FCC denies or
dismisses any of the Capstar Applications or SFX Applications and the time for
reconsideration or court review under the Communications Act with respect to
such denial or dismissal has expired and there is not pending with respect
thereto a timely filed petition for reconsideration or request for review;
(iii) if, for any reason, any of the Capstar
Applications or SFX Applications is designated for an evidentiary hearing by
the FCC;
(iv) if the Closing shall not have occurred by the
later of May 1, 1998, or the date to which the Closing Date is extended
pursuant to the second sentence of Section 9.1; provided, however, that the
right to terminate this Agreement under this clause (iv) shall not be available
to any party whose breach of this Agreement has been the cause of, or resulted
in, the failure of the Closing to occur on or before such date; or
(c) by Capstar:
(i) if there shall have been any material breach
(which breach shall not have been cured within 20 days (the "Cure Period")
following receipt by an SFX Party of written notice of such breach) on the part
of any SFX Party of (A) any representation or warranty set forth in this
Agreement (provided that any representation or warranty of a party contained
herein that is qualified by a materiality standard or a Material Adverse Effect
qualification shall not be further qualified hereby), which breach or breaches,
when aggregated with any other such breaches, has or would reasonably be
expected to have a Material Adverse Effect on the SFX Assets or on Capstar's
ability to operate the SFX Stations in substantially the same manner as they
are presently operated by each SFX Party or (B) any covenant or agreement;
64
71
(ii) pursuant to the provisions of Section 7.8;
(iii) with respect to a SFX Station Event, at its
option, as provided in the second sentence of Section 9.1;
(iv) if the FCC grants any of the SFX Applications
with any adverse conditions not generally imposed on grants of such
applications and the time for reconsideration or court review under the
Communications Act with respect to such adverse conditions has expired and
there is not pending with respect thereto a timely filed petition for
reconsideration or request for review;
(v) If within twenty (20) days after the receipt
from the SFX Parties of the Schedules, the Existing SFX ESAs, and underlying
documentation, as contemplated by this Agreement, Capstar in its sole and
absolute discretion is not satisfied with the information contained therein; or
(d) by the SFX Parties:
(i) if there shall have been any material breach
(which breach shall not have been cured within 20 days (the "Cure Period")
following receipt by Capstar of written notice of such breach) on the part of
Capstar of (A) any representation or warranty set forth in this Agreement
(provided that any representation or warranty of a party contained herein that
is qualified by a materiality standard or a Material Adverse Effect
qualification shall not be further qualified hereby), which breach or breaches,
when aggregated with any other such breaches, has or would reasonably be
expected to have a Material Adverse Effect on the Capstar Assets or on the SFX
Parties' ability to operate the Capstar Stations in substantially the same
manner as they shall be operated by Capstar after the Capstar Date or (B) any
covenant or agreement;
(ii) pursuant to the provisions of Section 7.9;
(iii) with respect to a Capstar Station Event, at
its option, as provided in the second sentence of Section 9.1;
(iv) if the FCC grants any of the Capstar
Applications with any adverse conditions not generally imposed on grants of
such applications and the time for reconsideration or court review under the
Communications Act with respect to such adverse conditions has expired and
there is not pending with respect thereto a timely filed petition for
reconsideration or request for review;
(v) if within twenty (20) days after the receipt
from Capstar the Schedules, the Existing Capstar ESAs, and underlying
documentation, as contemplated by this Agreement, the SFX Parties in their sole
and absolute discretion are not satisfied with the information contained
therein.
65
72
For purposes of subsections 10.1(c)(iv) and 10.1(d)(iv), the parties
acknowledge and agree that the FCC's imposition of Equal Employment Opportunity
reporting conditions shall not be deemed to constitute "adverse conditions"
within the meaning of such subsection. The right of any party hereto to
terminate this Agreement pursuant to this Section 10.1 shall remain operative
and in full force and effect regardless of any investigation made by or on
behalf of any party hereto, any person controlling any such party or any of
their respective officers, directors, employees, accountants, consultants,
legal counsel, agents, or other representatives whether prior to or after the
execution of this Agreement. Notwithstanding anything in the foregoing to the
contrary, no party that is in material breach of this Agreement shall be
entitled to terminate this Agreement except with the consent of the other
party.
10.2. EFFECT OF TERMINATION.
(a) In the event of a termination of this Agreement by
any SFX Party or Capstar as provided above, there shall be no liability on the
part of Capstar or any SFX Party, except for liability arising out of a breach
of this Agreement.
(b) If this Agreement is terminated by the SFX Parties
pursuant to Section 10.1(d)(i), the parties agree and acknowledge that the SFX
Parties will suffer damages that are not practicable to ascertain.
Accordingly, in such event and if within 10 business days after termination of
this Agreement by the SFX Parties pursuant to Section 10.1(d)(i), each SFX
Party delivers to Capstar a written demand for liquidated damages, subject to
Capstar's receipt of a counterpart of the Release executed by each of the SFX
Parties, the SFX Parties shall be entitled to the sum of $2,000,000 as
liquidated damages payable by Capstar within 10 business days after receipt of
the SFX Parties' written demand. The parties agree that the foregoing
liquidated damages are reasonable considering all the circumstances existing as
of the date hereof and constitute the parties' good faith estimate of the
actual damages reasonably expected to result from the termination of this
Agreement by the SFX Parties pursuant to Section 10.1(d)(i). Each SFX Party
agrees that, to the fullest extent permitted by law, such SFX Party's right to
payment of such liquidated damages as provided in this Section 10.2(b) shall be
its sole and exclusive remedy if the Closing does not occur with respect to any
damages whatsoever that such SFX Party may suffer or allege to suffer as a
result of any claim or cause of action asserted by the SFX Parties relating to
or arising from breaches of the representations, warranties or covenants of
Capstar contained in this Agreement and to be made or performed at or prior to
the Closing.
(c) If this Agreement is terminated by Capstar pursuant
to Section 10.1(c)(i), the parties agree and acknowledge that Capstar will
suffer damages that are not practicable to ascertain. Accordingly, in such
event and if within 10 business days after termination of this Agreement by
Capstar pursuant to Section 10.1(c)(i), Capstar delivers to any SFX Party a
written demand for liquidated damages, subject to such SFX Party's receipt of a
counterpart of the Release executed by Capstar, Capstar shall be entitled to
the sum of $2,000,000 as liquidated damages payable by the SFX Parties within
10 business days after receipt of Capstar's written demand. The parties agree
that the foregoing liquidated damages are reasonable considering all the
circumstances existing as of the date hereof and constitute the parties' good
faith estimate of the actual damages reasonably expected to result from the
termination of this Agreement by Capstar pursuant to Section 10.1(c)(i).
Capstar
66
73
agrees that, to the fullest extent permitted by law, Capstar's right to payment
of such liquidated damages as provided in this Section 10.2(d) shall be its
sole and exclusive remedy if the Closing does not occur with respect to any
damages whatsoever that Capstar may suffer or allege to suffer as a result of
any claim or cause of action asserted by Capstar relating to or arising from
breaches of the representations, warranties or covenants of any SFX Party
contained in this Agreement and to be made or performed at or prior to the
Closing.
ARTICLE XI
INDEMNIFICATION
11.1. INDEMNIFICATION OF CAPSTAR. Subject to the provisions of this
Article XI, each SFX Party, jointly and severally, agrees to indemnify and hold
harmless the Capstar Indemnified Parties from and against any and all Capstar
Indemnified Costs.
11.2. INDEMNIFICATION OF THE SFX PARTIES. Subject to the provisions
of this Article XI, Capstar agrees to indemnify and hold harmless the SFX
Indemnified Parties from and against any and all SFX Indemnified Costs.
11.3. DEFENSE OF THIRD-PARTY CLAIMS. An Indemnified Party shall
give prompt written notice to any entity or person who is obligated to provide
indemnification hereunder (an "Indemnifying Party") of the commencement or
assertion of any action, proceeding, demand, or claim by a third party
(collectively, a "third-party action") in respect of which such Indemnified
Party shall seek indemnification hereunder. Any failure so to notify an
Indemnifying Party shall not relieve such Indemnifying Party from any liability
that it, he, or she may have to such Indemnified Party under this Article XI
unless the failure to give such notice materially and adversely prejudices such
Indemnifying Party. The Indemnifying Party shall have the right to assume
control of the defense of, settle, or otherwise dispose of such third-party
action on such terms as they deem appropriate; provided, however, that:
(a) The Indemnified Party shall be entitled, at its own
expense, to participate in the defense of such third-party action (provided,
however, that the Indemnifying Party shall pay the attorneys' fees of the
Indemnified Party if (i) the employment of separate counsel shall have been
authorized in writing by any such Indemnifying Party in connection with the
defense of such third-party action, (ii) the Indemnifying Party shall not have
employed counsel reasonably satisfactory to the Indemnified Party to have
charge of such third-party action, (iii) the Indemnified Party shall have
reasonably concluded that there may be defenses available to such Indemnified
Party that are different from or additional to those available to the
Indemnifying Party, or (iv) the Indemnified Party's counsel shall have advised
the Indemnified Party in writing, with a copy delivered to the Indemnifying
Party, that there is a conflict of interest that could make it inappropriate
under applicable standards of professional conduct to have common counsel);
(b) The Indemnifying Party shall obtain the prior written
approval of the Indemnified Party before entering into or making any
settlement, compromise, admission, or
67
74
acknowledgment of the validity of such third-party action or any liability in
respect thereof if, pursuant to or as a result of such settlement, compromise,
admission, or acknowledgment, injunctive or other equitable relief would be
imposed against the Indemnified Party or if, in the opinion of the Indemnified
Party, such settlement, compromise, admission, or acknowledgment could have an
adverse effect on its business;
(c) No Indemnifying Party shall consent to the entry of
any judgment or enter into any settlement that does not include as an
unconditional term thereof the giving by each claimant or plaintiff to each
Indemnified Party of a release from all liability in respect of such third-
party action; and
(d) The Indemnifying Party shall not be entitled to
control (but shall be entitled to participate at its own expense in the defense
of), and the Indemnified Party shall be entitled to have sole control over, the
defense or settlement, compromise, admission, or acknowledgment of any third-
party action (i) as to which the Indemnifying Party fails to assume the defense
within a reasonable length of time or (ii) to the extent the third-party action
seeks an order, injunction, or other equitable relief against the Indemnified
Party which, if successful, would materially adversely affect the business,
operations, assets, or financial condition of the Indemnified Party; provided,
however, that the Indemnified Party shall make no settlement, compromise,
admission, or acknowledgment that would give rise to liability on the part of
any Indemnifying Party without the prior written consent of such Indemnifying
Party.
The parties hereto shall extend reasonable cooperation in connection with the
defense of any third-party action pursuant to this Article XI and, in
connection therewith, shall furnish such records, information, and testimony
and attend such conferences, discovery proceedings, hearings, trials, and
appeals as may be reasonably requested.
11.4. DIRECT CLAIMS. In any case in which an Indemnified Party
seeks indemnification hereunder which is not subject to Section 11.3 because no
third-party action is involved, the Indemnified Party shall notify the
Indemnifying Party in writing of any Indemnified Costs which such Indemnified
Party claims are subject to indemnification under the terms hereof. The
failure of the Indemnified Party to exercise promptness in such notification
shall not amount to a waiver of such claim unless the resulting delay
materially prejudices the position of the Indemnifying Party with respect to
such claim.
11.5. LIMITATIONS. Subject to Section 12.17 hereof, the following
provisions of this Section 11.5 shall be applicable after the time of the
Closing:
(a) Minimum Loss. No Indemnifying Party shall be
required to indemnify an Indemnified Party for Indemnified Representation Costs
unless and until the aggregate amount of such Indemnified Representation Costs
for which the Indemnified Party is otherwise entitled to indemnification
pursuant to this Article XI exceeds $100,000 (the "Minimum Loss"). After the
Minimum Loss is exceeded, the Indemnified Party shall be entitled to be paid
the entire amount of its Indemnified Representation Costs, subject to the
limitations on recovery and recourse set forth in this Section 11.5 and subject
to the exception contained in Section 12.17. For purposes of
68
75
determining the aggregate amount of Minimum Loss suffered by an Indemnified
Party, each representation and warranty contained in this Agreement for which
indemnification can be or is sought hereunder shall be read (including for
purposes of determining whether a breach of such representation or warranty has
occurred) without regard to materiality (including Material Adverse Effect)
qualifications that may be contained therein. In addition, in determining
whether an Indemnifying Party shall be required to indemnify an Indemnified
Party under this Article XI, once the Minimum Loss requirement set forth in
this clause (a) has been satisfied, each representation and warranty contained
in this Agreement for which indemnification can be or is sought hereunder shall
be read (including for purposes of determining whether a breach of such
representation or warranty has occurred) without regard to materiality
(including Material Adverse Effect) qualifications that may be contained
therein.
(b) Limitation as to Time. No Indemnifying Party shall
be liable for any Indemnified Representation Costs pursuant to this Article XI
unless a written claim for indemnification in accordance with Section 11.3 or
11.4 is given by the Indemnified Party to the Indemnifying Party with respect
thereto on or before the first anniversary of the Closing Date, except that
this time limitation shall not apply to any claims contemplated by Section
12.17.
(c) Limitation as to Amount. Subject to Section 12.17
hereof, no Indemnifying Party shall be liable for any Indemnified
Representation Costs pursuant to this Article XI in excess of $1,000,000.
(d) Other Indemnified Costs. The provisions of this
Section 11.5 shall only be applicable to Indemnified Representation Costs and
shall not be applicable to any other Indemnified Costs.
ARTICLE XII
GENERAL PROVISIONS
12.1. SURVIVAL OF REPRESENTATIONS, WARRANTIES, AND COVENANTS.
Regardless of any investigation at any time made by or on behalf of any party
hereto or of any information any party may have in respect thereof, each of the
representations and warranties made hereunder or pursuant hereto or in
connection with the transactions contemplated hereby shall survive the Closing.
Except as otherwise provided in the next two sentences, the representations and
warranties set forth in this Agreement shall terminate on the first anniversary
of the Closing Date. Following the date of termination of a representation or
warranty, no claim can be brought with respect to a breach of such
representation or warranty, but no such termination shall affect any claim for
a breach of a representation or warranty that was asserted before the date of
termination. To the extent that such are performable after the Closing, each
of the covenants and agreements contained in each of the Transaction documents
shall survive the Closing indefinitely. Article I, Article X, Article XI, this
Article XII, Section 7.1(d), Section 7.8, and Section 7.9 shall survive the
termination of this Agreement.
69
76
12.2. FURTHER ACTIONS. After the Closing Date, each party shall
execute and deliver such other certificates, agreements, conveyances, and other
documents, and take such other action, as may be reasonably requested by the
other party in order to transfer and assign to, and vest in, such party the SFX
Assets or the Capstar Assets, as the case may be, pursuant to the terms of
this Agreement.
12.3. AMENDMENT AND MODIFICATION. This Agreement may not be amended
except by an instrument in writing signed by the parties hereto.
12.4. WAIVER OF COMPLIANCE. Any failure of Capstar on the one hand,
or any SFX Party, on the other hand, to comply with any obligation, covenant,
agreement, or condition contained herein may be waived only if set forth in an
instrument in writing signed by the party or parties to be bound thereby, but
such waiver or failure to insist upon strict compliance with such obligation,
covenant, agreement or condition shall not operate as a waiver of, or estoppel
with respect to, any other failure.
12.5. SPECIFIC PERFORMANCE. The parties recognize that in the event
one party should refuse to perform under the provisions of this Agreement,
monetary damages alone will not be adequate. The other party shall therefore
be entitled, in addition to any other remedies which may be available,
including money damages, to obtain specific performance of the terms of this
Agreement. In the event of any action to enforce this Agreement specifically,
both parties hereby waive the defense that there is an adequate remedy at law.
12.6. SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal, or incapable of being enforced by any rule of
applicable law, or public policy, all other conditions and provisions of this
Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated herein are not
affected in any manner materially adverse to any party. Upon such
determination that any term or other provision is invalid, illegal, or
incapable of being enforced, the parties hereto shall negotiate in good faith
to modify this Agreement so as to effect the original intent of the parties as
closely as possible in a mutually acceptable manner in order that the
transactions contemplated herein are consummated as originally contemplated to
the fullest extent possible.
12.7. EXPENSES AND OBLIGATIONS. Except as otherwise expressly
provided in this Agreement or as provided by law, all costs and expenses
incurred by the parties hereto in connection with the consummation of the
transactions contemplated hereby shall be borne solely and entirely by the
party which has incurred such expenses. Notwithstanding the foregoing, (a) all
sales taxes relating to the transfer of the Capstar Assets from Capstar to the
SFX Parties shall be paid by Capstar and (b) all sales taxes relating to the
transfer of the SFX Assets from each SFX Party to Capstar shall be paid by the
SFX Parties. In the event of a dispute between the parties in connection with
this Agreement and the transactions contemplated hereby, each of the parties
hereto hereby agrees that the prevailing party shall be entitled to
reimbursement by the other party of reasonable legal fees and expenses incurred
in connection with any action or proceeding.
12.8. PARTIES IN INTEREST. This Agreement shall be binding upon
and, except as provided below, inure solely to the benefit of each party hereto
and their successors and assigns, and nothing in this Agreement, except as set
forth below, express or implied, is intended to confer upon any other
70
77
person (other than the Indemnified Parties as provided in Article XI) any
rights or remedies of any nature whatsoever under or by reason of this
Agreement.
12.9. NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally or mailed by
registered or certified mail (return receipt requested) to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(a) If to Capstar, to
Capstar Acquisition Company, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to
▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P.
3700 ▇▇▇▇▇▇▇▇ ▇▇▇▇ Center
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Capstar Broadcasting Partners
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇▇▇ & Associates, P.A.
Suntrust International Center
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
71
78
(b) If to the SFX Parties, to
SFX Broadcasting, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
12.10. COUNTERPARTS. This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, all of which
shall be considered one and the same agreement and shall become effective when
one or more counterparts have been signed by each of the parties and delivered
to the other parties, it being understood that all parties need not sign the
same counterpart.
12.11. ENTIRE AGREEMENT. This Agreement (which term shall be deemed
to include the exhibits and schedules hereto and the other certificates,
documents and instruments delivered hereunder) constitutes the entire agreement
of the parties hereto and supersedes all prior agreements, letters of intent
and understandings, both written and oral, among the parties with respect to
the subject matter hereof. There are no representations or warranties,
agreements, or covenants other than those expressly set forth in this
Agreement.
12.12. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS.
12.13. PUBLIC ANNOUNCEMENTS. Except as required by law, the SFX
Parties and Capstar shall consult with each other before issuing any press
release or otherwise making any public statements with respect to this
Agreement or the transactions contemplated hereby and shall not issue any such
press release or make any such public statement prior to such consultation.
Prior to the Closing, neither the SFX Parties nor Capstar will issue any other
press release or otherwise make any public statements regarding their business,
except as may be required by applicable law. A report filed with a
governmental agency shall not be a public statement.
12.14. ASSIGNMENT.
(a) Neither this Agreement nor any of the rights,
interests, or obligations hereunder shall be assigned by any of the parties
hereto, whether by operation of law or otherwise.
(b) Notwithstanding subsection (a) of this Section 12.14,
(i) upon notice to the SFX Parties, Capstar may
assign or delegate any or all of its rights or obligations under this
Agreement to any Affiliate of Capstar,
(ii) nothing in this Agreement shall limit
Capstar's ability to make a collateral assignment of its rights under
this Agreement, without the consent of any SFX Party, to any
institutional lender that provides funds to Capstar,
72
79
(iii) upon notice to the Capstar, each SFX Party
may assign or delegate any or all of its rights or obligations under
this Agreement to any Affiliate of any SFX Party, and
(iv) nothing in this Agreement shall limit any
SFX Party's ability to make a collateral assignment of its rights
under this Agreement, without the consent of Capstar, to any
institutional lender that provides funds to such SFX Party.
Once an assignment and assumption occurs pursuant to Section 12.14(b)(i) above,
such Affiliate shall assume all liabilities and obligations of Capstar
Acquisition Company, Inc. under this Agreement, and Capstar Acquisition
Company, Inc. shall be released from all liabilities and obligations pursuant
to this Agreement. Once an assignment and assumption occurs pursuant to
Section 12.14(b)(iii) above, such Affiliate shall assume all liabilities and
obligations of each SFX Party under this Agreement, and each SFX Party shall be
released from all liabilities and obligations pursuant to this Agreement. Each
party shall execute an acknowledgment of such assignment(s) and collateral
assignments in such forms as the other party or its institutional lenders may
from time to time reasonably request; provided, however, that unless written
notice is given to such party that any such collateral assignment has been
foreclosed upon, such party shall be entitled to deal exclusively with the
other party as to any matters arising under this Agreement or any of the other
agreements delivered pursuant hereto. In the event of such an assignment, the
provisions of this Agreement shall inure to the benefit of and be binding on
Capstar's or each of the SFX Parties' assigns.
12.15. DIRECTOR AND OFFICER LIABILITY.
(a) The directors, officers, and stockholders of Capstar and its
Affiliates shall not have any personal liability or obligation arising under
this Agreement (including any claims that any SFX Party may assert) other than
as an assignee of this Agreement.
(b) The directors, officers, and stockholders of each SFX Party
and its Affiliates shall not have any personal liability or obligation arising
under this Agreement (including any claims that Capstar may assert) other than
as an assignee of this Agreement.
12.16. NO REVERSIONARY INTEREST. The parties expressly agree,
pursuant to Section 73.1150 of the FCC's rules, that no SFX Party retains any
right to reassignment of any of the SFX FCC Licenses in the future, or to
operate or use the facilities of the SFX Stations for any period beyond the
Closing Date, and that Capstar does not retain any right to reassignment of any
of the Capstar FCC Licenses in the future, or to operate or use the facilities
of the Capstar Stations for any period beyond the Closing Date.
12.17. NO WAIVER RELATING TO CLAIMS FOR FRAUD. The liability of any
party under Article XI shall be in addition to, and not exclusive of any other
liability that such party may have at law or equity based on such party's
fraudulent acts or omissions. None of the provisions set forth in this
Agreement, including but not limited to the provisions set forth in Section
11.5(a) (relating to Minimum Loss), 11.5(b) (relating to limitations on the
period of time during which a claim for indemnification may be brought), or
11.5(c) (relating to limitations on the amount of indemnification costs), shall
be deemed a waiver by any party to this Agreement of any right or remedy which
such
73
80
party may have at law or equity based on any other party's fraudulent acts or
omissions, nor shall any such provisions limit, or be deemed to limit, (i) the
amounts of recovery sought or awarded in any such claim for fraud, (ii) the
time period during which a claim for fraud may be brought, or (iii) the
recourse which any such party may seek against another party with respect to a
claim for fraud; provided, that with respect to such rights and remedies at law
or equity, the parties further acknowledge and agree that none of the
provisions of this Section 12.17, nor any reference to this Section 12.17
throughout this Agreement, shall be deemed a waiver of any defenses which may
be available in respect of actions or claims for fraud, including but not
limited to, defenses of statutes of limitations or limitations of damages.
74
81
IN WITNESS WHEREOF, each of the SFX Parties and Capstar have caused
this Agreement to be signed, all as of the date first written above.
SFX BROADCASTING, INC.
By: /S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------------
Title: Vice President
----------------------------------------
SFX BROADCASTING OF KANSAS, INC.
By: /S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------------
Title: Vice President
----------------------------------------
SFXKS LIMITED PARTNERSHIP
By: SFX GP, Inc.
Its General Partner
By: /S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------------
Title: Vice President
----------------------------------------
SFX BROADCASTING OF FLORIDA, INC.
By: /S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------------
Title: Vice President
----------------------------------------
SOUTHERN STARR LIMITED PARTNERSHIP
By: Southern Starr Communications, Inc.
Its General Partner
By: /S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------------
Title: Vice President
----------------------------------------
▇-▇
▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ COMPANY, INC.
By: /S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.R
---------------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
-------------------------------------------------
Its: Vice President
--------------------------------------------------
S-2
83
ANNEX A
THE SFX STATIONS
CALL LETTERS LOCATION
------------ --------
KKRD-FM WICHITA, KANSAS
KRZZ-FM WICHITA, KANSAS
KNSS-AM WICHITA, KANSAS
WGNE-FM DAYTONA, FLORIDA
84
ANNEX B
THE CAPSTAR STATIONS
CALL LETTERS LOCATION
------------ --------
WFSC-FM GREENVILLE - SPARTANBURG, SOUTH CAROLINA
WFNQ-FM GREENVILLE - SPARTANBURG, SOUTH CAROLINA
WESC-AM GREENVILLE - SPARTANBURG, SOUTH CAROLINA