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ASSET EXCHANGE AGREEMENT
dated as of September 24, 1996
among
WHFS, INC.,
LIBERTY BROADCASTING OF MARYLAND INCORPORATED,
SFX BROADCASTING, INC.
and
CBS INC.
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TABLE OF CONTENTS
Page
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ARTICLE 1
EXCHANGE OF ASSETS
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1.1 Transfer of SFX Station Assets.............................. 1
1.2 SFX Excluded Assets......................................... 3
1.3 Transfer of CBS Stations Assets............................. 4
1.4 CBS Excluded Assets......................................... 6
ARTICLE 2
ASSUMPTION OF OBLIGATIONS
-------------------------
2.1 Assumption of Obligations by CBS............................ 6
2.2 SFX Retained Liabilities.................................... 7
2.3 Assumption of Obligations by SFX............................ 7
2.4 CBS Retained Liabilities.................................... 7
ARTICLE 3
PRORATION AND VALUATION
-----------------------
3.1 Proration of Income and Expenses............................ 8
3.2 Value of Exchanged Assets................................... 8
ARTICLE 4
CLOSING
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4.1 Closing..................................................... 9
Contents, p. 2
Page
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ARTICLE 5
GOVERNMENTAL CONSENTS
---------------------
5.1 FCC Consent................................................. 10
5.2 FCC Applications............................................ 10
5.3 Compliance with HSRA........................................ 11
Contents, p. 3
Page
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ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF SFX AND SFX
---------------------------------------------
BROADCASTING
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6.1 Organization and Standing................................... 11
6.2 Authorization and Binding Obligation........................ 11
6.3 Absence of Conflicting Agreements or Required
Consents.................................................. 12
6.4 Government Authorizations................................... 12
6.5 Compliance with Regulations................................. 13
6.6 Taxes....................................................... 14
6.7 Personal Property........................................... 14
6.8 Real Property............................................... 15
6.9 Contracts................................................... 16
6.10 Sufficiency of Assets....................................... 16
6.11 Environmental; Industrial Hygiene and Safety................ 16
6.12 SFX Intellectual Property................................... 17
6.13 Financial Statements........................................ 17
6.14 Personnel................................................... 18
6.15 SFX Employee Benefit Plans.................................. 18
6.16 Litigation.................................................. 19
6.17 Compliance with Laws........................................ 19
6.18 Commissions or Finder's Fees................................ 20
6.19 Insurance................................................... 20
6.20 Undisclosed Obligations..................................... 20
6.21 No Material Adverse Change.................................. 20
ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF CBS
-------------------------------------
7.1 Organization and Standing................................... 21
7.2 Authorization and Binding Obligations....................... 21
7.3 Absence of Conflicting Agreements or Required
Consents.................................................. 21
7.4 Government Authorizations................................... 22
7.5 Compliance with Regulations................................. 23
7.6 Taxes....................................................... 23
Contents, p. 4
Page
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7.7 Personal Property........................................... 24
7.8 Real Property............................................... 24
7.9 Contracts................................................... 25
7.10 Sufficiency of Assets....................................... 26
7.11 Environmental; Industrial Hygiene and
Safety.................................................... 26
7.12 CBS Intellectual Property................................... 26
7.13 Financial Statements........................................ 27
7.14 Personnel................................................... 27
7.15 Employee Benefit Plans...................................... 28
7.16 Litigation.................................................. 28
7.17 Compliance with Laws........................................ 29
7.18 Commissions or Finder's Fees................................ 29
7.19 Insurance................................................... 29
7.20 Undisclosed Obligations..................................... 29
7.21 No Material Adverse Change.................................. 29
ARTICLE 8
COVENANTS OF SFX
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8.1 Records..................................................... 30
8.2 Employee Matters............................................ 30
8.3 Sales Representation Agreement.............................. 31
ARTICLE 9
COVENANTS OF CBS
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9.1 Records..................................................... 31
9.2 Employee Matters............................................ 32
9.3 Sales Representative Agreement.............................. 33
ARTICLE 10
MUTUAL COVENANTS
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Contents, p. 5
Page
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10.1 Pre-Closing Covenants....................................... 33
10.2 Notification................................................ 37
10.3 No Inconsistent Action...................................... 37
10.4 Closing Covenant............................................ 37
10.5 Other Items................................................. 37
10.6 Conditions.................................................. 37
10.7 Confidentiality............................................. 38
10.8 Cooperation................................................. 38
10.9 Control of Stations......................................... 38
10.10 Consents to Assignment...................................... 38
10.11 Waiver of Compliance with Bulk Sales Law.................... 39
10.12 Accounts Receivable......................................... 39
10.13 Completion of Schedules..................................... 39
ARTICLE 11
CONDITIONS OF CLOSING BY CBS
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11.1 Representations, Warranties and Covenants................... 40
11.2 Governmental Consents....................................... 41
11.3 Governmental Authorizations................................. 41
11.4 Adverse Proceedings......................................... 41
11.5 Legal Opinion............................................... 41
11.6 Board Approval.............................................. 41
11.7 Third-Party Consents........................................ 42
11.8 Closing Documents........................................... 42
11.9 Financing Statements........................................ 42
11.10 Environmental Condition..................................... 42
11.11 Due Diligence............................................... 42
ARTICLE 12
CONDITIONS OF CLOSING BY SFX AND SFX
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BROADCASTING
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12.1 Representations, Warranties and Covenants................... 43
12.2 Governmental Consents....................................... 43
Contents, p. 6
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12.3 Government Authorization.................................... 43
12.4 Adverse Proceedings......................................... 43
12.5 Legal Opinion............................................... 44
12.6 Third-Party Consents........................................ 44
12.7 Closing Documents........................................... 44
12.8 Financing Statements........................................ 44
12.9 Environmental Condition..................................... 44
12.10 Due Diligence............................................... 44
ARTICLE 13
EXPENSES; TRANSFER TAXES; AND FEES
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13.1 Expenses; Transfer Taxes.................................... 44
13.2 Appraisal Fee............................................... 45
ARTICLE 14
DOCUMENTS TO BE DELIVERED AT CLOSING
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14.1 SFX's Documents............................................. 45
14.2 CBS's Documents............................................. 46
ARTICLE 15
INDEMNIFICATION
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15.1 SFX's Indemnities........................................... 47
15.2 CBS's Indemnities........................................... 48
15.3 Survival of Representations and Warranties.................. 48
15.4 Procedures.................................................. 49
15.5 Limits on and Conditions of Indemnification................. 50
ARTICLE 16
TERMINATION RIGHTS
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Contents, p. 7
Page
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16.1 Termination................................................. 51
16.2 Liability................................................... 52
16.3 Unwind...................................................... 52
ARTICLE 17
MISCELLANEOUS PROVISIONS
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17.1 Specific Performance........................................ 52
17.2 Risk of Loss................................................ 52
17.3 Further Assurances.......................................... 53
17.4 Benefit and Assignment...................................... 53
17.5 Headings.................................................... 53
17.6 Governing Law............................................... 53
17.7 Notices..................................................... 53
17.8 Counterparts................................................ 54
17.9 No Third Party Beneficiaries................................ 54
17.10 Public Announcements........................................ 54
17.11 Exclusive Jurisdiction and Consent to Service
to Process................................................ 54
17.12 Severability................................................ 55
17.13 Amendments and Waivers...................................... 55
17.14 Certain Definitions and Usage............................... 55
17.15 Entire Agreement............................................ 56
Schedule 1.2.5 SFX Excluded Assets
Schedule 1.4.5 CBS Excluded Assets
Schedule 3.2 Value of Exchanged Assets
Schedule 6.3 No Conflicts, etc.
Schedule 6.4 SFX Station Licenses and FCC Matters
Schedule 6.7 SFX Tangible Personal Property
Schedule 6.8 SFX Real Estate and SFX Real Estate
Contracts
Schedule 6.9 SFX Contracts
Schedule 6.11 SFX Environmental Matters
Schedule 6.12 SFX Intellectual Property
Schedule 6.13 SFX Financial Statements
Contents , p.4
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Schedule 6.14 SFX Station Personnel, etc.
Schedule 6.15 SFX Employee Benefit Plans
Schedule 6.16 SFX Litigation
Schedule 6.17 SFX Compliance with Laws
Schedule 6.19 SFX Insurance Policies
Schedule 6.20 SFX Other Liabilities
Schedule 6.21 SFX Material Adverse Change
Schedule 7.3 No Conflicts, etc.
Schedule 7.4 CBS Stations Licenses and FCC Matters
Schedule 7.7 CBS Tangible Personal Property
Schedule 7.8 CBS Real Estate Contracts
Schedule 7.9 CBS Contracts
Schedule 7.11 CBS Environmental Matters
Schedule 7.12 CBS Intellectual Property
Schedule 7.13 CBS Financial Statements
Schedule 7.14 CBS Stations Personnel, etc.
Schedule 7.15 CBS Employee Benefit Plans
Schedule 7.16 CBS Litigation
Schedule 7.17 CBS Compliance with Laws
Schedule 7.19 CBS Insurance Policies
Schedule 7.20 CBS Other Liabilities
Schedule 7.21 CBS Material Adverse Change
Schedule 11.5 SFX Legal Opinion
Schedule 12.5 CBS Legal Opinion
EXECUTION COPY
ASSET EXCHANGE AGREEMENT
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THIS ASSET EXCHANGE AGREEMENT (the "Agreement") is made and entered
into as of this 25th day of September, 1996, by and among WHFS, INC. and
LIBERTY BROADCASTING OF MARYLAND INCORPORATED, both of which are Maryland
corporations (collectively, "SFX"), and SFX BROADCASTING, INC., a Delaware
corporation ("SFX Broadcasting"), and all the foregoing corporations have their
principal place of business at ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
and CBS INC. ("CBS"), a New York corporation with its principal place of
business at ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇.
W I T N E S S E T H:
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WHEREAS, SFX owns and operates radio station WHFS-FM in Washington,
D.C. (the "SFX Station") pursuant to licenses issued by the Federal
Communications Commission ("FCC"); and
WHEREAS, CBS owns and operates radio station KTXQ-FM in Fort Worth,
Texas and KRRW(FM) in Dallas, Texas (collectively, the "CBS Stations") pursuant
to licenses issued by the FCC; and
WHEREAS, SFX and CBS desire to exchange certain assets of the SFX
Station for certain assets of the CBS Stations, on the terms and subject to the
conditions set forth herein; and
WHEREAS, the transaction contemplated by this Agreement is intended to
be a like-kind exchange of assets between SFX and CBS in accordance with the
provisions of Section 1031 of the Internal Revenue Code of 1986, as amended
(the "Code").
2
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and agreements hereinafter set forth, the parties hereto,
intending to be legally bound, hereby agree as follows:
ARTICLE 1
EXCHANGE OF ASSETS
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1.1 Transfer of SFX Station Assets. On the Closing Date, SFX shall
exchange, assign, transfer and convey to CBS, and CBS shall acquire and assume
from SFX, substantially all of the assets, properties, interests and rights of
SFX of whatsoever kind and nature, real and personal, tangible and intangible,
owned or leased by SFX, which are used or held for use primarily in the
operation of the SFX Station, and which, in the case of physical or tangible
assets and properties, are located at the SFX Station's broadcasting studios,
offices and transmitter site in Washington, D.C., as the same shall exist on
the Closing Date, including the following (but excluding the assets specified
in Section 1.2) (the "SFX Station Assets"):
1.1.1 all of SFX's rights in and to the licenses, permits and other
authorizations issued to SFX by any governmental authority and included in the
SFX Station Assets, including those issued by the FCC (the latter hereafter
referred to as the "SFX Station Licenses") described in Schedule 6.4 along with
renewals or modifications of such items between the date hereof and the Closing
Date as well as all of SFX's rights in and to the call letters "WHFS-FM";
1.1.2 all of SFX's owned real estate used or held for use primarily in
the operation of the SFX Station, including the land, building and fixtures,
more fully described in Section 6.8 and Schedule 6.8, together with any
additions thereto between the date hereof and the Closing Date (the "SFX Real
Estate");
3
1.1.3 all equipment, office furniture and fixtures, office materials
and supplies, inventory, spare parts and other tangible personal property of
every kind and description, and SFX's rights therein, owned, leased or held by
SFX for use primarily in the operation of the SFX Station, together with any
replacements of equal quality thereof and additions thereto, made between the
date hereof and the Closing Date, and less any retirements or dispositions
thereof made between the date hereof and the Closing Date in the ordinary
course of business and consistent with past practices of SFX and in accordance
with this Agreement;
1.1.4 all of SFX's rights in and under certain contracts, agreements
or leases, written or oral, described in Schedules 6.8 and 6.9 (the "SFX
Contracts");
1.1.5 all of SFX's rights in and to the trademarks, trade names,
service marks, franchises, copyrights, including registrations and applications
for registration of any of them, jingles, logos and slogans or licenses to use
the same described in Schedule 6.12 (the "SFX Intellectual Property") and any
additions thereto between the date hereof and the Closing Date;
1.1.6 all of SFX's rights in and to the files, records, and books of
account, which are located at the premises of the SFX Station or are used or
held for use primarily in the operation of the SFX Station, including
programming information and studies, technical information and engineering
data, news and advertising studies or consulting reports, marketing and
demographic data, sales correspondence, lists of advertisers, promotional
materials, credit and sales reports and filings with the FCC, copies of all
written SFX Contracts to be assigned hereunder, employee records, logs and all
software programs used primarily in connection with the operation of the SFX
Station; and
1.1.7 all of SFX's rights under manufacturers' and
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vendors' warranties relating to items included in the SFX Station Assets and
all similar rights against third parties relating to items included in the SFX
Station Assets.
The SFX Station Assets shall be transferred to CBS free and clear of
all debts, security interests, mortgages, trusts, claims, pledges, conditional
sales agreements or other liens, liabilities and encumbrances whatsoever
("Liens").
1.2 SFX Excluded Assets. Notwithstanding anything to the contrary
contained herein, it is expressly understood and agreed that the SFX Station
Assets shall not include the following assets along with all rights, title and
interest therein (the "SFX Excluded Assets"):
1.2.1 all cash, cash equivalents or similar type investments of SFX,
such as certificates of deposit, Treasury bills and other marketable securities
on hand and/or in banks;
1.2.2 all of SFX's accounts receivable for services performed by SFX
in connection with its operation of the SFX Station prior to the Closing Date;
1.2.3 SFX's corporate seal, minute books, charter documents, corporate
stock record books and such other books and records as pertain to the
organization, existence or share capitalization of SFX and duplicate copies of
such records as are necessary to enable SFX to file its tax returns and reports
as well as any other records or materials relating to SFX generally and not
involving specific aspects of the SFX Station's operations;
1.2.4 the use of the name and ▇▇▇▇ SFX Broadcasting and any derivation
therefrom;
1.2.5 all other rights, interests or intangible assets of SFX which
are not used in or held for use primarily in the
5
operation of the SFX Station or which are listed in Schedule 1.2.5; and
1.2.6 all profit sharing or cash or deferred (Section 401(k)) plans
and trusts and the assets thereof and any other employee benefit plan or
arrangement and the assets thereof, if any, maintained by SFX for the SFX
Station.
1.3 Transfer of CBS Stations Assets. On the Closing Date, CBS shall
exchange, transfer, assign and convey to SFX, and SFX shall acquire and assume
from CBS, substantially all of the assets, properties, interests and rights of
CBS of whatsoever kind and nature, real and personal, tangible and intangible,
owned or leased by CBS, which are used or held for use primarily in the
operation of the CBS Stations, and which, in the case of physical or tangible
assets and properties, are located at the CBS Stations' broadcasting studios,
offices and transmitter sites in Fort Worth and Dallas, Texas, as the same
shall exist on the Closing Date, including the following (but excluding the
assets specified in Section 1.4) (the "CBS Stations Assets"):
1.3.1 all of CBS's rights in and to the licenses, permits and other
authorizations issued to CBS by any governmental authority and included in the
CBS Stations Assets, including those issued by the FCC (the latter hereafter
referred to as the "CBS Stations Licenses") described in Schedule 7.4 along
with renewals or modifications of such items between the date hereof and the
Closing Date as well as all of CBS's rights in and to the call letters
"KKRW-FM";
1.3.2 all of CBS's rights to lease and use the real estate used or
held for use primarily in the operation of the CBS Stations, including the
land, building and fixtures, more fully described in Section 7.8 and Schedule
7.8, together with any additions thereto between the date hereof and the
Closing Date (the "CBS Real Estate");
1.3.3 all equipment, office furniture and fixtures, office materials
and supplies, inventory, spare parts and other tangible personal property of
every kind and description, and CBS's rights therein, owned, leased or held by
CBS for use primarily in the operation of the CBS Stations, together with any
replacements of equal quality thereof and additions thereto, made
6
between the date hereof and the Closing Date, and less any retirements or
dispositions thereof made between the date hereof and the Closing Date in the
ordinary course of business and consistent with past practices of CBS and in
accordance with this Agreement;
1.3.4 all of CBS's rights in and under certain contracts, agreements
or leases, written or oral, described in Schedules 7.8 and 7.9 (the "CBS
Contracts");
1.3.5 all of CBS's rights in and to the trademarks, trade names,
service marks, franchises, copyrights, including registrations and applications
for registration of any of them, jingles, logos and slogans or licenses to use
the same described in Schedule 7.12 (the "CBS Intellectual Property") and any
additions thereto between the date hereof and the Closing Date;
1.3.6 all of CBS's rights in and to the files, records, and books of
account, which are located at the premises of the CBS Stations or are used or
held for use primarily in the operation of the CBS Stations, including
programming information and studies, technical information and engineering
data, news and advertising studies or consulting reports, marketing and
demographic data, sales correspondence, lists of advertisers, promotional
materials, credit and sales reports and filings with the FCC, copies of all
written CBS Contracts to be assigned hereunder, employee records, logs and all
software programs used primarily in connection with the operation of the CBS
Stations; and
1.3.7 all of CBS's rights under manufacturers' and vendors' warranties
relating to items included in the CBS Stations Assets and all similar rights
against third parties relating to items included in the CBS Stations Assets.
The CBS Stations Assets shall be transferred to SFX free and clear of
all Liens.
1.4 CBS Excluded Assets. Notwithstanding anything to the contrary
contained herein, it is expressly understood and agreed that the CBS Stations
Assets shall not include the following
APITAL PRINTING SYSTEMS]
7
assets along with all rights, title and interest therein (the "CBS Excluded
Assets"):
1.4.1 all cash, cash equivalents or similar type investments of CBS,
such as certificates of deposit, Treasury bills and other marketable securities
on hand and/or in banks;
1.4.2 all of CBS's accounts receivable for services performed by CBS
in connection with its operation of the CBS Stations prior to the Closing Date;
1.4.3 CBS's corporate seal, minute books, charter documents, corporate
stock record books and such other books and records as pertain to the
organization, existence or share capitalization of CBS and duplicate copies of
such records as are necessary to enable CBS to file its tax returns and reports
as well as any other records or materials relating to CBS generally and not
involving specific aspects of the CBS Stations' operations;
1.4.4 the use of the name and ▇▇▇▇ CBS, CBS Broadcasting and any
derivation therefrom;
1.4.5 all other rights, interests or intangible assets of CBS which
are not used in or held for use primarily in the operation of the CBS Stations
or which are listed in Schedule 1.4.5; and
1.4.6 all profit sharing or cash or deferred (Section 401(k)) plans
and trusts and the assets thereof and any other employee benefit plan or
arrangement and the assets thereof, if any, maintained by CBS for the CBS
Stations.
ARTICLE 2
ASSUMPTION OF OBLIGATIONS
-------------------------
2.1 Assumption of Obligations by CBS. Subject to the provisions of
this Section 2.1 and Section 2.2, on the Closing Date, CBS shall assume and
undertake to pay, satisfy or discharge the liabilities, obligations and
commitments of SFX arising or to be performed on or after the Closing Date
under (i) the SFX
8
Contracts listed in Schedules 6.8 and 6.9 and (ii) any other contracts entered
into between the date hereof and the Closing Date which CBS may in its sole
discretion expressly agree in writing to assume. All of the foregoing
liabilities and obligations shall be referred to herein collectively as the
"CBS Assumed Liabilities."
2.2 SFX Retained Liabilities. Except as expressly set forth in Section
2.1, CBS shall not assume or be deemed to assume, under this Agreement or
otherwise by reason of the transactions contemplated hereby, any liabilities,
obligations or commitments of SFX of any nature whatsoever. All of such
liabilities and obligations shall be referred to herein collectively as the
"SFX Retained Liabilities."
2.3 Assumption of Obligations by SFX. Subject to the provisions of
this Section 2.3 and Section 2.4, on the Closing Date, SFX shall assume and
undertake to pay, satisfy or discharge the liabilities, obligations and
commitments of CBS arising or to be performed on or after the Closing Date
under (i) the CBS Contracts listed in Schedules 7.8 and 7.9 and (ii) any other
contracts entered into between the date hereof and the Closing Date which SFX
may in its sole discretion expressly agree in writing to assume. All of the
foregoing liabilities and obligations shall be referred to herein collectively
as the "SFX Assumed Liabilities."
2.4 CBS Retained Liabilities. Except as expressly set forth in Section
2.3, SFX expressly does not, and shall not, assume or be deemed to assume,
under this Agreement or otherwise by reason of the transactions contemplated
hereby, any liabilities, obligations or commitments of CBS of any nature
whatsoever. All of such liabilities and obligations shall be referred to herein
collectively as the "CBS Retained Liabilities."
9
ARTICLE 3
PRORATION AND VALUATION
-----------------------
3.1 Proration of Income and Expenses.
3.1.1 Except as otherwise provided herein, all income and expenses
arising from the conduct of the business and operations of the SFX Station and
the CBS Stations shall be prorated between CBS and SFX in accordance with
generally accepted accounting principles as of the Closing Date. Such
prorations shall include all real estate and other property taxes (but
excluding taxes arising by reason of the transfer of the SFX Station Assets and
CBS Stations Assets (collectively referred to as the "Station Assets") as
contemplated hereby, which, shall be paid as set forth in Article 13), business
and license fees, music and other license fees, wages and salaries of
employees, including accruals up to the Closing Date for bonuses, commissions,
sick pay and similar prepaid and deferred items (but excluding vacation which
shall be governed by Sections 8.2.3 and 9.2.3) attributable to the ownership
and operation of the SFX Station and the CBS Stations (collectively referred to
as the "Stations").
3.1.2 The prorations and adjustments contemplated by this Section, to
the extent practicable, shall be made on the Closing Date and the party owing
any net amount hereunder shall pay such amount to the other party on such date.
As to those prorations and adjustments not capable of being ascertained on the
Closing Date, an adjustment and proration shall be made within ninety (90)
calendar days of the Closing Date.
3.1.3 In the event of any disputes between the parties as to such
adjustments, the amounts not in dispute shall nonetheless be paid at the time
provided in Section 3.1.2 and such disputes shall be determined by an
independent certified public accountant mutually acceptable to the parties, and
the fees and expenses of such accountant shall be paid one-half by SFX and
one-half by CBS.
3.2 Value of Exchanged Assets. As set forth on Schedule 3.2 which
shall be agreed upon and delivered at the
10
Closing, (a) the SFX Station Assets consisting of tangible personal property
are being exchanged for the CBS Stations Assets consisting of tangible personal
property; (b) the SFX Station Assets, if any, consisting of real property are
being exchanged for the CBS Stations Assets, if any, consisting of real
property; and (c) the SFX Station Assets consisting of intangible property are
being exchanged for the CBS Stations Assets consisting of intangible property.
The parties further agree that the values on the Closing Date of the respective
SFX Station Assets and the respective CBS Stations Assets will be based on an
appraisal of such assets by an independent valuation firm selected by CBS and
approved by SFX. The appraised values will be reflected on Schedule 3.2 and the
parties will not take any position inconsistent with such values and will
prepare and file all returns and reports relating to the exchange contemplated
by this Agreement, including all federal, state and local income tax returns,
in a manner which is consistent with Schedule 3.2.
ARTICLE 4
CLOSING
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4.1 Closing. Except as otherwise mutually agreed upon by SFX and CBS,
the consummation of the transactions contemplated herein (the "Closing") shall
occur within ten (10) business days after the FCC Consent (as defined in
Section 5.1) has been obtained (whether or not the order giving the FCC Consent
has become final) and the expiration of the applicable waiting period under the
HSRA (as defined in Section 5.3), or such other date as may be mutually agreed
to by the parties but in no event later than June 30, 1997 ("Closing Date").
The Closing shall be deemed effective as of 11:59 p.m. on the Closing Date. The
Closing shall be held at the offices of SFX in New York or at such other place
as the parties hereto may agree.
11
ARTICLE 5
GOVERNMENTAL CONSENTS
---------------------
5.1 FCC Consent. It is specifically understood and agreed by CBS and
SFX that the Closing and the assignment of the SFX Station Licenses and the CBS
Stations Licenses (collectively referred to as the "Station Licenses") and the
transfer of the Station Assets is expressly conditioned on and is subject to
the prior consent and approval of the FCC (whether or not the order giving the
FCC Consent has become final) ("FCC Consent") without the imposition of any
conditions on the transfer of the Station Licenses which are materially adverse
to either party.
5.2 FCC Applications. Promptly upon the execution of this Agreement,
the parties shall proceed to prepare for filing the necessary FCC applications
for assignment of the Station Licenses (the "FCC Applications"), which shall be
filed no later than ten (10) business days after the date hereof. SFX and CBS
shall thereafter prosecute the FCC Applications with all reasonable diligence
and otherwise use their best efforts to obtain the grant of the FCC
Applications as expeditiously as practicable (but neither SFX nor CBS shall
have any obligation to satisfy complainants or the FCC by taking any steps
which would have a Material Adverse Effect (as defined in Section 17.14) on it
or any of its Affiliates (as defined in Section 17.14) or with respect to the
SFX Station Assets or the CBS Stations Assets, as applicable). If the FCC
Consent imposes any condition on either party hereto, such party shall use its
best efforts to comply with such condition; provided, however, that neither
party shall be required hereunder to comply with any condition which would have
a Material Adverse Effect on it or any of its Affiliates or with respect to the
SFX Station Assets or the CBS Stations Assets, as applicable. If
reconsideration or judicial review is sought with respect to the FCC Consent,
the party affected shall vigorously oppose such efforts for reconsideration or
judicial review; provided, however, that nothing herein shall be construed to
limit either party's right to terminate this Agreement pursuant to Article 16.
5.3 Compliance with HSRA. SFX and CBS shall make or cause to be made
in a timely fashion, and in any event within fifteen
12
(15) business days after the date hereof, all filings which are required in
connection with the transactions contemplated hereby under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended ("HSRA"), and
shall furnish to the other party all information that the other reasonably
requests in connection with such filings. The parties shall promptly comply
with all requests for further documents and information made by any
governmental department or agency in connection with such filings and shall use
their best efforts to obtain early termination of all waiting periods under the
HSRA. The transfer of the Station Assets hereunder is conditioned upon the
expiration of the applicable waiting period under the HSRA without the
institution of any action with respect to the consummation of the transactions
contemplated hereunder.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF SFX AND SFX BROADCASTING
----------------------------------------------------------
SFX and SFX Broadcasting hereby make the following representations and
warranties to CBS, each of which is true and correct on the date hereof, shall
remain true and correct for the period specified in Section 15.3, shall be
unaffected by any investigation heretofore or hereafter made by CBS, or any
notice to CBS other than in the schedules to this Agreement and shall survive
the Closing.
6.1 Organization and Standing. Each of SFX and SFX Broadcasting is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and is duly qualified to do business in the State
of Texas. SFX has the corporate power and authority to own, lease and operate
the SFX Station Assets and to carry on the business of the SFX Station as now
being conducted and as proposed to be conducted by SFX between the date hereof
and the Closing Date.
6.2 Authorization and Binding Obligation. SFX and SFX Broadcasting
have the corporate power and authority to enter into and perform this Agreement
and the transactions contemplated hereby, and SFX's and SFX Broadcasting's
execution, delivery and performance of this Agreement, and the transactions
contemplated
13
hereby have been duly and validly authorized by all necessary corporate action
on their part. This Agreement has been duly executed and delivered by SFX and
SFX Broadcasting and this Agreement constitutes, and the agreements to be
executed in connection herewith will constitute, the valid and binding
obligation of SFX and SFX Broadcasting enforceable against SFX and SFX
Broadcasting in accordance with their terms.
6.3 Absence of Conflicting Agreements or Required Consents. Except as
set forth in Article 5 with respect to governmental consents, Schedules 6.8 and
6.9 with respect to consents required in connection with the assignment of
certain SFX Contracts and as set forth in Schedule 6.3 with respect to any
other consents, the execution, delivery and performance of this Agreement by
SFX and SFX Broadcasting: (a) do not require the consent of any third party;
(b) will not conflict with, result in a breach of, or constitute a violation of
or default under, the provisions of SFX's or SFX Broadcasting's articles of
incorporation or By-laws or any applicable law, judgment, order, injunction,
decree, rule, regulation or ruling of any governmental authority to which any
of SFX or SFX Broadcasting is a party or by which they or the SFX Station
Assets are bound; (c) will not, either alone or with the giving of notice or
the passage of time, or both, conflict with, constitute grounds for termination
of or result in a breach of the terms, conditions or provisions of, or
constitute a default under, any SFX Contract, agreement, instrument, license or
permit to which SFX, SFX Broadcasting or the SFX Station Assets are now
subject; and (d) will not result in the creation of any Lien on any of the SFX
Station Assets.
6.4 Government Authorizations. Schedule 6.4 contains a true and
complete list of the SFX Station Licenses and other material licenses, permits
or other authorizations from governmental and regulatory authorities which are
required for the lawful conduct of the business and operations of the SFX
Station in the manner and to the full extent it is presently conducted. SFX is
the authorized legal holder of the SFX Station Licenses and other licenses,
permits and authorizations listed in Schedule 6.4, none of which is subject to
any restrictions or conditions which would limit in any respect the full
operation of the SFX Station as now operated. Except as set forth in Schedule
6.4, there are no applications, complaints or
14
proceedings pending or, to the best of SFX's knowledge, threatened as of the
date hereof before the FCC relating to the business or operations of the SFX
Station other than applications, complaints or proceedings which affect the
broadcasting industry generally. SFX has delivered to CBS true and complete
copies of the SFX Station Licenses, including any and all amendments and other
modifications thereto. The SFX Station Licenses and the other licenses, permits
or other authorizations from governmental and regulatory authorities listed in
Schedule 6.4 are in good standing, are in full force and effect and are
unimpaired by any act or omission of SFX or its officers, directors or
employees; and the operation of the SFX Station is in accordance with the SFX
Station Licenses and the underlying construction permits. No proceedings are
pending or, to the knowledge of SFX, are threatened which may result in the
revocation, modification, non-renewal or suspension of the SFX Station
Licenses, the denial of any pending applications, the issuance of any cease and
desist order, the imposition of any administrative actions by the FCC with
respect to the SFX Station Licenses or which may affect SFX's ability to
continue to operate the SFX Station as it is currently operated. The SFX
Station is licensed by the FCC to operate, and is operating, with maximum
facilities for its class. The SFX Station is not short-spaced, on a
grandfathered basis or otherwise, to any existing station, outstanding
construction permit or pending application therefor, or to any existing or
proposed broadcast radio allotment. SFX has not received any complaint that the
SFX Station is causing objectionable interference to the transmissions of any
other broadcast station or communications facility. To the best of SFX's
knowledge, no other broadcast station or communications facility is causing
objectionable interference to the Station's transmissions or the public's
reception of such transmissions. SFX has no reason to believe that the SFX
Station Licenses will not be renewed in the ordinary course. All material
reports, forms and statements required to be filed by SFX with the FCC with
respect to the SFX Station since the grant of the last renewal of the SFX
Station Licenses have been filed and are substantially complete and accurate.
To the best of SFX's knowledge, there are no facts which, under the
Communications Act of 1934, as amended, or the existing rules and regulations
of the FCC, would disqualify SFX as an assignor of the SFX Station Licenses or
an assignee of the CBS Stations Licenses.
15
6.5 Compliance with Regulations. The operation of the SFX Station and
all of the SFX Station Assets are in compliance with (i) all applicable
engineering standards required to be met under applicable FCC rules, and (ii)
all other applicable federal, state and local rules, regulations, requirements
and policies, including all applicable painting and lighting requirements of
the FCC and the Federal Aviation Administration and ANSI Radiation Standards
C95.1 - 1982 to the extent required to be met under applicable FCC rules and
regulations, and there are no existing claims known to SFX to the contrary.
6.6 Taxes. All federal, state and local income, franchise, sales, use,
property, excise, payroll and other tax returns and reports required to be
filed by law where the failure to file such returns on a duly and timely basis
could result in a Lien on the SFX Station Assets or the imposition on CBS of
any liability for taxes or assessments have been duly and timely filed in the
proper form with the appropriate governmental authority. All taxes, fees and
assessments of whatever nature due or payable pursuant to such returns or
otherwise have been paid, except for such amounts as are being contested
diligently, in the appropriate forum and in good faith, where the failure to
pay or contest such amounts could result in a Lien on the SFX Station Assets or
the imposition on CBS of any liability for any taxes or assessments. There are
no tax audits pending and no outstanding agreements or waivers extending the
statutory period of limitations applicable to any federal, state or local
income tax return for any period, the result of which could result in a Lien on
the SFX Station Assets or the imposition on CBS of any liability for any taxes
or assessments. There are no governmental investigations or other legal,
administrative or tax proceedings pursuant to which SFX is or could be made
liable for any taxes, penalties, interest or other charges, the liability for
which could extend to CBS as transferee of the SFX Station Assets, or which
could result in a Lien on the SFX Station Assets and, to the best of SFX's
knowledge, no event has occurred that could impose on CBS any liability for any
taxes, penalties or interest due or to become due from SFX.
6.7 Personal Property. Schedule 6.7 contains a list of all tangible
personal property and assets owned or held by SFX and used primarily in the
conduct of the business and operations of
16
the SFX Station. Except as disclosed in Schedule 6.7, and except as may be
subject to lease agreements of SFX listed on Schedule 6.9, SFX owns and has,
and will have on the Closing Date, good and marketable title to all such
property (and to all other tangible personal property and assets to be
transferred to CBS hereunder), and none of such property is, or at the Closing
will be, subject to any Lien. All of the items of the tangible personal
property and assets included in the SFX Station Assets are in good operating
condition (ordinary wear and tear excepted) and are available for immediate use
in the conduct of the business and operations of the SFX Station. The technical
equipment, constituting a part of the tangible personal property transferred
hereunder, has been maintained in accordance with industry practice and is in
good operating condition (ordinary wear and tear excepted) and complies with
all applicable rules and regulations of the FCC and the terms of the SFX
Station Licenses.
6.8 Real Property.
6.8.1 Schedule 6.8 contains a complete and accurate list of all real
property owned and leased by SFX which is used primarily by the SFX Station and
all agreements, leases and contracts of SFX relating to the towers,
transmitter, booster, studio site and offices of the SFX Station (collectively
the "SFX Real Estate Contracts") and a list of the applicable leases.
6.8.2 The SFX Real Estate Contracts listed on Schedule 6.8 constitute
valid and binding obligations of SFX and, to the best of SFX's knowledge, of
all other persons purported to be parties thereto and are in full force and
effect as of the date hereof and will on the Closing Date constitute valid and
binding obligations of SFX and, to the best of SFX's knowledge, of all other
persons purported to be parties thereto and shall be in full force and effect.
SFX is not in default under any of such SFX Real Estate Contracts and has not
received or given written notice of any default thereunder from or to any of
the other parties thereto and will not have received any such notice at or
prior to the Closing. To the best of SFX's knowledge, there are no present
disputes or claims with respect to offsets or defenses by either landlord or
tenant against the other under any such lease. SFX has delivered to CBS true
and complete
17
copies of all SFX Real Estate Contracts.
6.8.3 SFX has and shall convey to CBS good and insurable fee simple
title to the owned SFX Real Estate free and clear of any Liens. Each parcel of
SFX Real Estate has all appropriate easements and access required to ensure
uninterrupted use thereof. All buildings, structures, improvements and fixtures
comprising part of the real properties owned or leased by SFX in the operation
of the SFX Station are in good operating condition (ordinary wear and tear
excepted).
6.9 Contracts. Schedule 6.9 lists the SFX Contracts as of the date of this
Agreement which are to be assumed by CBS as of the Closing Date. Those SFX
Contracts requiring the consent of a third party to assignment which SFX and
CBS agree are critical to the consummation of the transactions contemplated
hereby are identified as "SFX Material Contracts" and are so marked on Schedule
6.9. Except as noted in Schedule 6.9, SFX has delivered to CBS true and
complete copies of all written SFX Contracts, including any and all amendments
and other modifications to such SFX Contracts, and written summaries of all
oral SFX Contracts. All such SFX Contracts are valid, binding and enforceable
by SFX in accordance with their respective terms. SFX has complied with all
such SFX Contracts and is not in default under any of such SFX Contracts, and
to the best of SFX's knowledge, no other contracting party is in default under
any of such SFX Contracts. No other party to any such SFX Contract has made or
asserted, or, to the best of SFX's knowledge has, any defense, setoff or
counterclaim under any such SFX Contract, no such other party has exercised any
option granted to it to cancel or terminate its agreement, to shorten the term
of its agreement, or to renew or extend the term of its agreement and SFX has
not received any notice to that effect. Schedule 6.9 also contains a true and
complete current trade barter summary with respect to the SFX Station,
including applicable asset and liability balances with respect thereto (which
trade barter summary shall be updated as of the Closing).
6.10 Sufficiency of Assets. The SFX Station Assets and all other rights to
be conveyed to CBS hereunder are sufficient to carry on the conduct of the
operation of the SFX Station as presently conducted.
18
6.11 Environmental; Industrial Hygiene and Safety. SFX has complied and is
in compliance with the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, 42 U.S.C. ▇▇.▇▇. 9601 et seq. ("CERCLA"),
Toxic Substances Control Act, 15 U.S.C. ▇▇.▇▇. 2601 et seq. ("TSCA"), the
Resource Conservation and Recovery Act of 1976, 42 U.S.C. ▇▇.▇▇. 6901 et seq.
as amended ("RCRA"), the Occupational Safety and Health Act of 1970, 19 U.S.C.
ss.651 et seq. as amended ("OSHA"), and all other federal, state and local
environmental, industrial hygiene and safety laws, rules and regulations
applicable to the SFX Station and its operations, including the FCC's
guidelines regarding RF radiation. SFX has not unlawfully disposed of any
hazardous waste (as defined below) or hazardous substance including
Polychlorinated Byphenyls ("PCBs") in connection with the operation of the SFX
Station. Except as set forth on Schedule 6.11, the technical equipment included
in the SFX Station Assets does not contain any PCBs. No hazardous waste has
been disposed of by SFX, and to the best of SFX's knowledge, no hazardous waste
has been disposed of by any other person, on the SFX Real Estate. As used in
this Agreement, the term "hazardous waste" shall mean as defined in RCRA and in
the equivalent state statute under Texas law. Except as set forth on Schedule
6.11, there are no underground tanks at the SFX Station. Except as set forth on
Schedule 6.11, there is no asbestos insulation or other asbestos-containing
materials at the SFX Station.
6.12 SFX Intellectual Property. Schedule 6.12 is a true and complete list
of all SFX Intellectual Property applied for, issued to or owned by SFX or
under which SFX is a licensee, and used or held for use primarily in the
conduct of the business and operations of the SFX Station referred to in
Section 1.1.5 (but excluding those included in the SFX Excluded Assets and
referred to in Section 1.2). Except as set forth on Schedule 6.12, there are no
agreements with third parties which limit or restrict the right of the SFX
Station to use or register any of the SFX Intellectual Property. The SFX
Station is not being operated in a manner that infringes any trademark,
copyright or other intellectual property right of any third party or otherwise
violates the rights of any third party, and no claim has been made or, to the
best of SFX's knowledge, threatened, alleging any such violation. To the best
of SFX's knowledge, there has been no violation by others of any right of SFX
in any of the SFX
19
Intellectual Property. Except as set forth on Schedule 6.12, all registrations
for the SFX Intellectual Property are valid and in good standing. True and
complete copies of all documents relating to the SFX Intellectual Property have
been delivered or made available to CBS.
6.13 Financial Statements. Set forth in Schedule 6.13 are complete copies
of the unaudited statements of operating income for the SFX Station for the
periods from January 1, 1995 to December 31, 1995 and January 1, 1996 through
June 30, 1996, and the unaudited balance sheets for the SFX Station dated as of
December 31, 1995 and June 30, 1996 (the "SFX Financial Statements"). The SFX
Financial Statements for the 1996 periods are subject to certain normal
year-end adjustments. The SFX Financial Statements are true and correct in all
material respects and have been prepared in accordance with the books and
records of SFX and in accordance with the policies and procedures of SFX
applicable thereto, consistently applied, which differ from generally accepted
accounting principles in the respects set forth in Schedule 6.13. The SFX
Financial Statements fairly present in all material respects the financial
condition and results of operations of the SFX Station for the periods
indicated.
6.14 Personnel.
6.14.1 Schedule 6.14 contains a true and complete list of all persons
employed at the SFX Station, including a description of material compensation
arrangements (other than employee benefit plans set forth in Schedule 6.15) and
a list of other terms of any and all agreements affecting such persons. SFX has
not received notification that any of the current key employees of SFX at the
SFX Station presently plan to terminate their employment, whether by reason of
the transactions contemplated hereby or otherwise.
6.14.2 SFX is not a party to any contract with any labor organization,
nor has SFX agreed to recognize any union or other collective bargaining unit,
nor has any union or other collective bargaining unit been certified as
representing any of SFX's employees at the SFX Station. SFX has no knowledge of
any organizational effort currently being made or threatened by or on
20
behalf of any labor union with respect to any of SFX's employees at the SFX
Station.
6.14.3 Except as disclosed in Schedule 6.14, SFX has complied with all
laws relating to the employment of labor, including the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), and those laws relating to
wages, hours, collective bargaining, unemployment insurance, workers'
compensation, equal employment opportunity and payment and withholding of taxes
in connection with the operation of the SFX Station.
6.15 SFX Employee Benefit Plans. Schedule 6.15 contains a true and
complete list of each written and unwritten pension, retirement,
profit-sharing, deferred compensation bonus, incentive, performance, stock
option, medical, hospitalization, vision, dental or other health, life,
disability, severance, termination or other employee benefit plan, program,
arrangement, agreement, policy or understanding applicable to the employees of
the SFX Station (each, a "SFX Employee Benefit Plan"). Each SFX Employee
Benefit Plan complies in all material respects, and has been operated and
administered in all material respects in accordance with, all applicable
requirements of all laws and regulations of any public body or authority,
including the Consolidated Omnibus Budget Reconciliation Act ("COBRA") and the
regulations thereunder, and no "reportable event", "prohibited transaction" (as
such terms are defined in ERISA and the Code, as applicable) or termination has
occurred with respect to any SFX Employee Benefit Plan. All contributions
required under applicable law or the terms of the SFX Employee Benefit Plans
have been made within the time prescribed. CBS shall have no obligations or
liabilities under such SFX Employee Benefit Plans on or after the Closing Date
and any benefits due to any employee of the SFX Station under such SFX Employee
Benefit Plans shall be the sole responsibility of SFX.
6.16 Litigation. Except as set forth in Schedule 6.16, as of the date
hereof, SFX is subject to no judgment, award, order, writ, injunction,
arbitration decision or decree affecting the conduct of the business of the SFX
Station or the SFX Station Assets, and there is no litigation, investigation or
proceeding pending or, to the best of SFX's knowledge, threatened, against
21
SFX with respect to the SFX Station in any federal, state or local court, or
before any administrative agency or arbitrator (including any proceeding which
seeks the forfeiture of, or opposes the renewal of, the SFX Station Licenses),
or before any other tribunal duly authorized to resolve disputes, or which
seeks to enjoin or prohibit, or otherwise questions the validity of, any action
taken or to be taken pursuant to or in connection with this Agreement. In
particular, but without limiting the generality of the foregoing, there are no
applications, complaints or proceedings pending or, to the best of SFX's
knowledge, threatened before the FCC or any other governmental organization
with respect to the business or operations of the SFX Station other than
applications, complaints or proceedings which affect the broadcasting industry
generally.
6.17 Compliance With Laws. Except as set forth in Schedule 6.17, SFX has
not received any notice asserting any non-compliance by it in connection with
the business or operation of the SFX Station with any applicable statute, rule
or regulation, whether federal, state or local. SFX is not in default with
respect to any judgment, order, injunction or decree of any court,
administrative agency or other governmental authority or any other tribunal
duly authorized to resolve disputes in connection with the business or
operation of the SFX Station. SFX is in compliance with all laws, regulations
and governmental orders applicable to the conduct of the business or operation
of the SFX Station, and its present use of the SFX Station Assets does not
violate any of such laws, regulations or orders.
6.18 Commissions or Finder's Fees. None of SFX, SFX Broadcasting, their
affiliates nor any person or entity acting on behalf of any of the foregoing
has agreed to pay a commission, finder's fee or similar payment in connection
with this Agreement or any matter related hereto to any person or entity.
6.19 Insurance. SFX currently maintains in full force and effect the
property damage, liability and other insurance coverages with respect to the
SFX Station Assets which are listed on Schedule 6.19.
6.20 Undisclosed Obligations. Except as reflected in the SFX Financial
Statements or as disclosed on Schedule 6.20 or on
22
any other Schedule to this Agreement, SFX does not have any liability or
obligation of any kind with respect to the SFX Station or the SFX Station
Assets, whether accrued, absolute, fixed or contingent, known or unknown, other
than liabilities and obligations not being assumed by CBS.
6.21 No Material Adverse Change. Except as set forth on Schedule 6.21,
since June 30, 1996, there has been no change in circumstances which has had a
Material Adverse Effect on the SFX Station, nor to the best knowledge of SFX is
any such change threatened, nor has there been any damage, destruction or loss
which could reasonably be expected to have a Material Adverse Effect on the SFX
Station, whether or not covered by insurance.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF CBS
-------------------------------------
CBS hereby makes the following representations and warranties to SFX and
SFX Broadcasting, each of which is true and correct on the date hereof, shall
remain true and correct for the period specified in Section 15.3, shall be
unaffected by any investigation heretofore or hereafter made by SFX or SFX
Broadcasting, or any notice to SFX or SFX Broadcasting other than in the
Schedules to this Agreement and shall survive the Closing.
7.1 Organization and Standing. CBS is a corporation duly organized,
validly existing and in good standing under the laws of the State of New York,
is duly qualified to do business in the State of Texas, and has the corporate
power and authority to own, lease and operate the CBS Stations Assets and to
carry on the business of the CBS Stations as now being conducted and as
proposed to be conducted by CBS between the date hereof and the Closing Date.
7.2 Authorization and Binding Obligation. Subject to the approval of the
Westinghouse Electric Corporation ("WELCO") and CBS Boards, CBS has the
corporate power and authority to enter into and perform this Agreement and the
transactions contemplated hereby, and CBS's execution, delivery and performance
of this Agreement, and the transactions contemplated hereby have been
23
duly and validly authorized by all necessary corporate action on its part. This
Agreement has been duly executed and delivered by CBS and this Agreement
constitutes, and the agreements to be executed in connection herewith will
constitute, the valid and binding obligation of CBS enforceable against CBS in
accordance with their terms.
7.3 Absence of Conflicting Agreements or Required Consents. Except for the
approval of the WELCO and CBS Boards and as set forth in Article 5 with respect
to governmental consents, Schedules 7.8 and 7.9 with respect to consents
required in connection with the assignment of certain CBS Contracts and as set
forth in Schedule 7.3 with respect to any other consents, the execution,
delivery and performance of this Agreement by CBS: (a) do not require the
consent of any third party; (b) will not conflict with, result in a breach of,
or constitute a violation of or default under, the provisions of CBS's articles
of incorporation or By-laws or any applicable law, judgment, order, injunction,
decree, rule, regulation or ruling of any governmental authority to which CBS
is a party or by which it or the CBS Stations Assets are bound; (c) will not,
either alone or with the giving of notice or the passage of time, or both,
conflict with, constitute grounds for termination of or result in a breach of
the terms, conditions or provisions of, or constitute a default under, any CBS
Contract, agreement, instrument, license or permit to which CBS or the CBS
Stations Assets are now subject; and (d) will not result in the creation of any
Lien on any of the CBS Stations Assets.
7.4 Government Authorizations. Schedule 7.4 contains a true and complete
list of the CBS Stations Licenses and other material licenses, permits or other
authorizations from governmental and regulatory authorities which are required
for the lawful conduct of the business and operations of the CBS Stations in
the manner and to the full extent it is presently conducted. CBS is the
authorized legal holder of the CBS Stations Licenses and other licenses,
permits and authorizations listed in Schedule 7.4, none of which is subject to
any restrictions or conditions which would limit in any respect the full
operation of the Station as now operated. Except as set forth in Schedule 7.4,
there are no applications, complaints or proceedings pending or, to the best of
CBS's knowledge,
24
threatened as of the date hereof before the FCC relating to the business or
operations of the CBS Stations other than applications, complaints or
proceedings which affect the broadcasting industry generally. CBS has delivered
to SFX a true and complete copy of the CBS Stations Licenses, including any and
all amendments and other modifications thereto. The CBS Stations Licenses and
the other licenses, permits or other authorizations from governmental and
regulatory authorities listed in Schedule 7.4 are in good standing, are in full
force and effect and are unimpaired by any act or omission of CBS or its
officers, directors or employees; and the operation of the CBS Stations is in
accordance with the CBS Stations Licenses and the underlying construction
permits. No proceedings are pending or, to the knowledge of CBS, are threatened
which may result in the revocation, modification, non-renewal or suspension of
the CBS Stations Licenses, the denial of any pending applications, the issuance
of any cease and desist order, the imposition of any administrative actions by
the FCC with respect to the CBS Stations Licenses or which may affect CBS's
ability to continue to operate the CBS Stations as it is currently operated.
The CBS Stations is licensed by the FCC to operate, and is operating, with
maximum facilities for its class. The CBS Stations is not short-spaced, on a
grandfathered basis or otherwise, to any existing station, outstanding
construction permit or pending application therefor, or to any existing or
proposed broadcast radio allotment. CBS has not received any complaint that the
CBS Stations is causing objectionable interference to the transmissions of any
other broadcast station or communications facility. To the best of CBS's
knowledge, no other broadcast station or communications facility is causing
objectionable interference to the CBS Stations' transmissions or the public's
reception of such transmissions. CBS has no reason to believe that the CBS
Stations Licenses will not be renewed in the ordinary course. All material
reports, forms and statements required to be filed by CBS with the FCC with
respect to the CBS Stations since the grant of the last renewal of the CBS
Stations Licenses have been filed and are substantially complete and accurate.
To the best of CBS's knowledge, there are no facts which, under the
Communications Act of 1934, as amended, or the existing rules and regulations
of the FCC, would disqualify CBS as an assignor of the CBS Stations Licenses or
an assignee of the SFX Station Licenses.
25
7.5 Compliance with Regulations. The operation of the CBS Stations and all
of the CBS Stations Assets are in compliance with (i) all applicable
engineering standards required to be met under applicable FCC rules, and (ii)
all other applicable federal, state and local rules, regulations, requirements
and policies, including all applicable painting and lighting requirements of
the FCC and the Federal Aviation Administration and ANSI Radiation Standards
C95.1 - 1982 to the extent required to be met under applicable FCC rules and
regulations, and there are no existing claims known to CBS to the contrary.
7.6 Taxes. All federal, state and local income, franchise, sales, use,
property, excise, payroll and other tax returns and reports required to be
filed by law where the failure to file such returns on a duly and timely basis
could result in a Lien on the CBS Stations Assets or the imposition on SFX of
any liability for taxes or assessments have been duly and timely filed in the
proper form with the appropriate governmental authority. All taxes, fees and
assessments of whatever nature due or payable pursuant to such returns or
otherwise have been paid, except for such amounts as are being contested
diligently, in the appropriate forum and in good faith, where the failure to
pay or contest such amounts could result in a Lien on the CBS Stations Assets
or the imposition on SFX of any liability for any taxes or assessments. There
are no tax audits pending and no outstanding agreements or waivers extending
the statutory period of limitations applicable to any federal, state or local
income tax return for any period, the result of which could result in a Lien on
the CBS Stations Assets or the imposition on SFX of any liability for any taxes
or assessments. There are no governmental investigations or other legal,
administrative or tax proceedings pursuant to which CBS is or could be made
liable for any taxes, penalties, interest or other charges, the liability for
which could extend to SFX as transferee of the CBS Stations Assets, or which
could result in a Lien on the CBS Stations Assets and, to the best of CBS's
knowledge, no event has occurred that could impose on SFX any liability for any
taxes, penalties or interest due or to become due from CBS.
7.7 Personal Property. Schedule 7.7 contains a list of all tangible
personal property and assets owned or held by CBS and used primarily in the
conduct of the business and operations of
26
the CBS Stations. Except as disclosed in Schedule 7.7, and except as may be
subject to lease agreements of CBS listed on Schedule 7.9, CBS owns and has,
and will have on the Closing Date, good and marketable title to all such
property (and to all other tangible personal property and assets to be
transferred to CBS hereunder), and none of such property is, or at the Closing
will be, subject to any Lien. All of the items of the tangible personal
property and assets included in the CBS Stations Assets are in good operating
condition (ordinary wear and tear excepted) and are available for immediate use
in the conduct of the business and operations of the CBS Stations. The
technical equipment, constituting a part of the tangible personal property
transferred hereunder, has been maintained in accordance with industry practice
and is in good operating condition (ordinary wear and tear excepted) and
complies with all applicable rules and regulations of the FCC and the terms of
the CBS Stations Licenses.
7.8 Real Property.
7.8.1 Schedule 7.8 contains a complete and accurate list of all real
property leased by CBS which is used primarily by the CBS Stations and all
agreements, leases and contracts of CBS relating to the towers, transmitter,
booster, studio site and offices of the CBS Stations (collectively the "CBS
Real Estate Contracts") and a list of the applicable leases.
7.8.2 The CBS Real Estate Contracts listed on Schedule 7.8 constitute
valid and binding obligations of CBS and, to the best of CBS's knowledge, of
all other persons purported to be parties thereto and are in full force and
effect as of the date hereof and will on the Closing Date constitute valid and
binding obligations of CBS and, to the best of CBS's knowledge, of all other
persons purported to be parties thereto and shall be in full force and effect.
CBS is not in default under any of the CBS Real Estate Contracts and has not
received or given written notice of any default thereunder from or to any of
the other parties thereto and will not have received any such notice at or
prior to the Closing. To the best of CBS's knowledge, there are no present
disputes or claims with respect to offsets or defenses by either landlord or
tenant against the other under any such lease. CBS has delivered to SFX true
and complete copies of all
27
CBS Real Estate Contracts.
7.8.3 Each parcel of CBS Real Estate has all appropriate easements and
access required to ensure uninterrupted use thereof. All buildings, structures,
improvements and fixtures comprising part of the real properties owned or
leased by CBS in the operation of the CBS Stations are in good operating
condition (ordinary wear and tear excepted).
7.9 Contracts. Schedule 7.9 lists the CBS Contracts as of the date of this
Agreement which are to be assumed by SFX as of the Closing Date. Those CBS
Contracts requiring the consent of a third party to assignment which CBS and
SFX agree are critical to the consummation of the transactions contemplated
hereby are identified as "CBS Material Contracts" and are so marked on Schedule
7.9. Except as noted in Schedule 7.9, CBS has delivered to SFX true and
complete copies of all written CBS Contracts, including any and all amendments
and other modifications to such CBS Contracts, and written summaries of all
oral CBS Contracts. All such CBS Contracts are valid, binding and enforceable
by CBS in accordance with their respective terms. CBS has complied with all
such CBS Contracts and is not in default under any of such CBS Contracts, and
to the best of CBS's knowledge, no other contracting party is in default under
any of such CBS Contracts. No other party to any such CBS Contract has made or
asserted, or, to the best of CBS's knowledge has, any defense, setoff or
counterclaim under any such CBS Contract, no such other party has exercised any
option granted to it to cancel or terminate its agreement, to shorten the term
of its agreement, or to renew or extend the term of its agreement and CBS has
not received any notice to that effect. Schedule 7.9 also contains a true and
complete current trade barter summary with respect to the CBS Stations,
including applicable asset and liability balances with respect thereto (which
trade barter summary shall be updated as of the Closing).
7.10 Sufficiency of Assets. The CBS Stations Assets and all other rights
to be conveyed to SFX hereunder are sufficient to carry on the conduct of the
operation of the CBS Stations as presently conducted.
7.11 Environmental; Industrial Hygiene and Safety. CBS has
28
complied and is in compliance with CERCLA, TSCA, RCRA, OSHA and all other
federal, state and local environmental, industrial hygiene and safety laws,
rules and regulations applicable to the CBS Stations and their operation,
including the FCC's guidelines regarding RF radiation. CBS has not unlawfully
disposed of any hazardous waste or hazardous substance including PCBs in
connection with the operation of the CBS Stations. Except as set forth on
Schedule 7.11, the technical equipment included in the CBS Stations Assets does
not contain any PCBs. No hazardous waste has been disposed of by CBS, and to
the best of CBS's knowledge, no hazardous waste has been disposed of by any
other person, on the CBS Real Estate. Except as set forth on Schedule 7.11,
there are no underground tanks at the CBS Stations. Except as set forth on
Schedule 7.11, there is no asbestos insulation or other asbestos-containing
materials at the CBS Stations.
7.12 CBS Intellectual Property. Schedule 7.12 is a true and complete list
of all CBS Intellectual Property applied for, issued to or owned by CBS or
under which CBS is a licensee, and used or held for use primarily in the
conduct of the business and operations of the CBS Stations referred to in
Section 1.3.5 (but excluding those included in the Excluded Assets and referred
to in Section 1.4). Except as set forth on Schedule 7.12, there are no
agreements with third parties which limit or restrict the right of the CBS
Stations to use or register any of the CBS Intellectual Property. The CBS
Stations is not being operated in a manner that infringes any trademark,
copyright or other intellectual property right of any third party or otherwise
violates the rights of any third party, and no claim has been made or, to the
best of CBS's knowledge, threatened alleging any such violation. To the best of
CBS's knowledge, there has been no violation by others of any right of CBS in
any of the CBS Intellectual Property. Except as set forth on Schedule 7.12, all
registrations for the CBS Intellectual Property are valid and in good standing.
True and complete copies of all documents relating to the CBS Intellectual
Property have been delivered or made available to SFX.
7.13 Financial Statements. Set forth in Schedule 7.13 are complete copies
of the unaudited statements of operating income for the CBS Stations for the
periods from January 1, 1995 to
29
December 31, 1995 and January 1, 1996 through June 30, 1996, and the unaudited
balance sheets for the CBS Stations dated as of December 31, 1995 and June 30,
1996 (the "CBS Financial Statements"). The CBS Financial Statements have been
prepared on a historic basis and do not include the effect of the
Westinghouse/CBS acquisition. The CBS Financial Statements for the 1996 periods
are subject to certain normal year-end adjustments. The CBS Financial
Statements are true and correct in all material respects and have been prepared
in accordance with the books and records of CBS and in accordance with the
policies and procedures of CBS applicable thereto, which differ from generally
accepted accounting principles in the respects set forth in Schedule 7.13. The
CBS Financial Statements fairly present in all material respects the financial
condition and results of operations of the CBS Stations for the periods
indicated.
7.14 Personnel.
7.14.1 Schedule 7.14 contains a true and complete list of all persons
employed at the CBS Stations, including a description of material compensation
arrangements (other than employee benefit plans set forth in Schedule 7.15) and
a list of other terms of any and all agreements affecting such persons. CBS has
not received notification that any of the current key employees of CBS at the
CBS Stations presently plan to terminate their employment, whether by reason of
the transactions contemplated hereby or otherwise.
7.14.2 CBS is not a party to any contract with any labor organization,
nor has CBS agreed to recognize any union or other collective bargaining unit,
nor has any union or other collective bargaining unit been certified as
representing any of CBS's employees at the CBS Stations. CBS has no knowledge
of any organizational effort currently being made or threatened by or on behalf
of any labor union with respect to any of CBS's employees at the CBS Stations.
7.14.3 Except as disclosed in Schedule 7.14.3, CBS has complied with
all laws relating to the employment of labor, including ERISA, and those laws
relating to wages, hours, collective bargaining, unemployment insurance,
workers'
30
compensation, equal employment opportunity and payment and withholding of taxes
in connection with the operation of the CBS Stations.
7.15 Employee Benefit Plans. Schedule 7.15 contains a true and complete
list of each written and unwritten pension, retirement, profit-sharing,
deferred compensation bonus, incentive, performance, stock option, medical,
hospitalization, vision, dental or other health, life, disability, severance,
termination or other employee benefit plan, program, arrangement, agreement,
policy or understanding applicable to the employees of the CBS Stations (each,
a "CBS Employee Benefit Plan"). Each CBS Employee Benefit Plan complies in all
material respects, and has been operated and administered in all material
respects in accordance with, all applicable requirements of all laws and
regulations of any public body or authority, including COBRA and the
regulations thereunder, and no "reportable event", "prohibited transaction" (as
such terms are defined in ERISA and the Code, as applicable) or termination has
occurred with respect to any CBS Employee Benefit Plan. All contributions
required under applicable law or the terms of the CBS Employee Benefit Plans
have been made within the time prescribed. SFX shall have no obligations or
liabilities under such CBS Employee Benefit Plans on or after the Closing Date
and any benefits due to any employee of the CBS Stations under such CBS
Employee Benefit Plans shall be the sole responsibility of CBS.
7.16 Litigation. Except as set forth in Schedule 7.16, as of the date
hereof, CBS is subject to no judgment, award, order, writ, injunction,
arbitration decision or decree affecting the conduct of the business of the CBS
Stations or the CBS Stations Assets, and there is no litigation, investigation
or proceeding pending or, to the best of CBS's knowledge, threatened, against
CBS with respect to the CBS Stations in any federal, state or local court, or
before any administrative agency or arbitrator (including any proceeding which
seeks the forfeiture of, or opposes the renewal of, the CBS Stations Licenses),
or before any other tribunal duly authorized to resolve disputes, or which
seeks to enjoin or prohibit, or otherwise questions the validity of, any action
taken or to be taken pursuant to or in connection with this Agreement. In
particular, but without limiting the generality of the foregoing, there are no
applications,
31
complaints or proceedings pending or, to the best of CBS's knowledge,
threatened before the FCC or any other governmental organization with respect
to the business or operations of the CBS Stations other than applications,
complaints or proceedings which affect the broadcasting industry generally.
7.17 Compliance With Laws. Except as set forth in Schedule 7.17, CBS has
not received any notice asserting any non-compliance by it in connection with
the business or operation of the CBS Stations with any applicable statute, rule
or regulation, whether federal, state or local. CBS is not in default with
respect to any judgment, order, injunction or decree of any court,
administrative agency or other governmental authority or any other tribunal
duly authorized to resolve disputes in connection with the business or
operation of the CBS Stations. CBS is in compliance with all laws, regulations
and governmental orders applicable to the conduct of the business or operation
of the CBS Stations, and its present use of the CBS Stations Assets does not
violate any of such laws, regulations or orders.
7.18 Commissions or Finder's Fees. Neither CBS nor any person or entity
acting on its behalf has agreed to pay a commission, finder's fee or similar
payment in connection with this Agreement or any matter related hereto to any
person or entity.
7.19 Insurance. CBS currently maintains in full force and effect the
property damage, liability and other insurance coverages with respect to the
CBS Stations Assets which are listed on Schedule 7.19.
7.20 Undisclosed Obligations. Except as reflected in the CBS Financial
Statements or as disclosed on Schedule 7.20 or on any other Schedule to this
Agreement, CBS does not have any liability or obligation of any kind with
respect to the CBS Stations or the CBS Stations Assets, whether accrued,
absolute, fixed or contingent, known or unknown, other than liabilities and
obligations not being assumed by SFX.
7.21 No Material Adverse Change. Except as set forth on Schedule 7.21,
since June 30, 1996, there has been no change in circumstances which has had a
Material Adverse Effect on the CBS
32
Stations, nor to the best knowledge of CBS is any such change threatened, nor
has there been any damage, destruction or loss which could reasonably be
expected to have a Material Adverse Effect on the CBS Stations, whether or not
covered by insurance.
ARTICLE 8
COVENANTS OF SFX
----------------
8.1 Records. SFX, for a period of seven (7) years following the Closing
Date, shall make available during normal business hours for audit and
inspection by CBS and its representatives for any reasonable purpose all
records, files, documents and correspondence transferred to it hereunder in
connection with the CBS Stations with respect to taxes, regulation and
litigation; provided, however, that SFX may dispose of or destroy any such
records, files, documents and correspondence during such period after giving
CBS sixty (60) days' written notice to permit CBS, at its expense, to examine,
duplicate or take possession of such records, files, documents and
correspondence. During such period, SFX shall make available to CBS at CBS's
expense upon reasonable written request, and consistent with the business
requirements of SFX, personnel of SFX to assist CBS in locating and obtaining
records and files with respect to the CBS Stations for periods prior to the
Closing Date.
8.2 Employee Matters.
8.2.1 On the Closing Date, SFX shall offer employment at will to all
but up to five (5) of the employees of the CBS Stations employed on that date
by CBS, including each employee on an approved leave of absence ("CBS Leave of
Absence Employee") (collectively, "New Employees of SFX"). The employment for
employees of the CBS Stations actively employed on the Closing Date who receive
offers of employment will commence on the Closing Date and the employment for
CBS Leave of Absence Employees who receive offers of employment will commence
on the dates that such leaves terminate. SFX shall notify CBS of those
employees to whom it will so offer employment at least thirty (30) days prior
to the Closing Date. CBS shall be responsible
33
for severance payments which may be applicable under its employee benefit plans
to any employees to whom SFX is not so required to offer employment.
8.2.2 CBS shall be responsible for all salary and benefits of the
employees of the CBS Stations for the period prior to the Closing Date and all
salary and benefits of each CBS Leave of Absence Employee until such CBS Leave
of Absence Employee returns to work after the Closing Date and is offered
employment pursuant to Section 8.2.1 with SFX. All employees of the CBS
Stations except CBS Leave of Absence Employees shall cease active participation
in all of CBS's employee benefit plans on the Closing Date, in accordance with
the terms of such plans.
8.2.3 All New Employees of SFX shall receive credit for eligibility
and vesting purposes (but not for the purpose of benefit accrual) for years of
service with CBS under all employee benefit plans and programs maintained for
employees of SFX (excluding severance). CBS shall cause its employee benefit
plans to grant each New Employee of SFX credit for service with SFX for the
purposes of eligibility and vesting (but not for the purpose of benefit
accrual). During the remainder of the calendar year in which the Closing
occurs, all New Employees of SFX shall be eligible to take whatever remaining
vacation they had with CBS as of the Closing Date. CBS shall pay the amount of
such vacation liability to SFX on the Closing Date.
8.3 Sales Representation Agreement. SFX agrees to terminate its national
sales representation agreement with McGavren Guild effective as of the Closing
Date.
ARTICLE 9
COVENANTS OF CBS
----------------
9.1 Records. CBS, for a period of seven (7) years following the Closing
Date, shall make available during normal business hours for audit and
inspection by SFX and its representatives for any reasonable purpose all
records, files, documents and correspondence transferred to it hereunder in
connection with the SFX Station with respect to taxes, regulation
34
and litigation; provided, however, that CBS may dispose of or destroy any such
records, files, documents and correspondence during such period after giving
SFX sixty (60) days' written notice to permit SFX, at its expense, to examine,
duplicate or take possession of such records, files, documents and
correspondence. During such period, CBS shall make available to SFX at SFX's
expense upon reasonable written request, and consistent with the business
requirements of CBS, personnel of CBS to assist SFX in locating and obtaining
records and files with respect to the SFX Station for periods prior to the
Closing Date.
9.2 Employee Matters.
9.2.1 On the Closing Date, CBS shall offer employment at will to all
but up to five (5) of the employees of the SFX Station employed on that date by
SFX, including each employee on an approved leave of absence ("SFX Leave of
Absence Employee") (collectively, "New Employees of CBS"). The employment for
employees of the SFX Station actively employed on the Closing Date who receive
offers of employment will commence on the Closing Date and the employment for
SFX Leave of Absence Employees who receive offers of employment will commence
on the dates that such leaves terminate. CBS shall notify SFX of those
employees to whom it will so offer employment at least thirty (30) days prior
to the Closing Date. SFX shall be responsible for severance payments which may
be applicable under its employee benefit plans to any employees to whom CBS is
not so required to offer employment.
9.2.2 SFX shall be responsible for all salary and benefits of the
employees of the SFX Station for the period prior to the Closing Date and all
salary and benefits of each SFX Leave of Absence Employee until such SFX Leave
of Absence Employee returns to work after the Closing Date and is offered
employment pursuant to Section 9.2.1 with CBS. All employees of the SFX Station
except SFX Leave of Absence Employees shall cease active participation in all
of SFX's employee benefit plans on the Closing Date, in accordance with the
terms of such plans.
9.2.3 All New Employees of CBS shall receive credit for eligibility
and vesting purposes (but not for the purpose of
35
benefit accrual) for years of service with SFX under all employee benefit plans
and programs maintained for employees of CBS (excluding severance). SFX shall
cause its employee benefit plans to grant each New Employee of CBS credit for
service with CBS for the purposes of eligibility and vesting (but not for the
purpose of benefit accrual). During the remainder of the calendar year in which
the Closing occurs, all New Employees of CBS shall be eligible to take whatever
remaining vacation they had with SFX as of the Closing Date. SFX shall pay the
amount of such vacation liability to CBS on the Closing Date.
9.3 Sales Representative Agreement. CBS agrees to terminate its national
sales representation agreement with CBS Radio Representatives effective as of
the Closing Date.
ARTICLE 10
MUTUAL COVENANTS
----------------
10.1 Pre-Closing Covenants. SFX and CBS covenant and agree with respect to
the SFX Station and CBS Stations, respectively, that between the date hereof
and the Closing Date, except as expressly permitted by this Agreement or with
the prior written consent of the other party, they shall act in accordance with
the following:
10.1.1 Each party shall conduct the business and operations of its
Station(s) in the ordinary and prudent course of business, and shall use all
reasonable efforts, consistent with its past practices, (i) to preserve the
ongoing operations and assets of its Station(s), (ii) to preserve the goodwill
and business of the advertisers, suppliers and others having business relations
with its Station(s), (iii) to retain the services of the employees of its
Station(s), and (iv) to maintain the independent identity of its Station(s).
Neither party shall:
(i) sell or dispose of or commit to sell or dispose of any of its
Station Assets;
36
(ii) enter into any commitment for capital expenditures for which the
other party would be liable after the Closing Date;
(iii) sell broadcast time on a prepaid basis (other than in the course
of existing Station credit practices) or introduce any deeply discounted
promotions for the sale of advertising time at its Station(s);
(iv) enter into any collective bargaining or, negotiation (the status
of which will be regularly communicated to the other party) or otherwise, make
any commitment or incur any liability to any labor organization relating to any
Station employee (to the extent the foregoing does not violate applicable law);
(v) grant or agree to grant any general increases in the rates of
salaries or compensation payable to employees of its Station(s) (except for
increases substantially in accordance with existing employment practice);
(vi) grant or agree to grant any specific bonus or increase to any
executive or management employee of its Station(s) (except for increases
substantially in accordance with existing employment practice);
(vii) provide for any new pension, retirement or other employment
benefits for employees of its Station(s) or any increases in any existing
benefits (except for increases substantially in accordance with existing
employment practice);
(viii) modify, change or terminate any of the SFX Contracts or the SFX
Real Estate Contracts, in the case of SFX, or any of the CBS Contracts or the
CBS Real Estate Contracts, in the case of CBS;
(ix) introduce any material changes in the broadcast hours or in the
format of its Station(s) or any other material change in the programming
policies of its Station(s); or
(x) enter into any transaction or make or enter into any contract or
commitment which by reason of its size or otherwise is not in the ordinary
course of business.
37
10.1.2 Each party shall operate its Station(s) in accordance with FCC
rules and regulations and its Station Licenses and with all other laws,
regulations, rules and orders, and shall not cause or permit by any act, or
failure to act, its Station Licenses to expire, be surrendered, adversely
modified, or otherwise terminated, or the FCC to institute any proceedings for
the suspension, revocation or adverse modification of its Station Licenses, or
fail to prosecute with due diligence any pending applications to the FCC.
10.1.3 Should any fact relating to either party which would cause the
FCC to deny its consent to the transactions contemplated by this Agreement come
to either party's attention, such party will promptly notify the other party
thereof and will use all 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 the transactions contemplated by the
Agreement and Plan of Merger dated as of June 20, 1996, among WELCO, Infinity
Broadcasting Corporation and R Acquisition Corp., pursuant to which Infinity
will become a wholly owned subsidiary of Westinghouse, including pending
filings seeking FCC and other regulatory approval or clearance thereof, shall
not be considered an impediment as contemplated in this Section 10.1.3.
10.1.4 Each party will provide the other party prompt written notice
of any change in any of the information contained in the representations and
warranties made in Article 6 or 7 or any Schedules referred to herein or
attached hereto.
10.1.5 Each party shall give or cause its Station(s) to give the other
party's counsel, accountants, engineers and other representatives, at the other
party's reasonable request, full and reasonable access during normal business
hours to all of such party's personnel, properties, books, Contracts, reports
and records including financial information and tax returns relating to its
Station(s), to all real estate, buildings and equipment relating to its
Station(s), and to the employees of its Station(s) in order that the other
party may have full opportunity to make such investigation as it desires of the
affairs of its Station(s) and to furnish the other party with information, and
copies of all documents and agreements including
38
financial and operating data and other information concerning the financial
condition, results of operations and business of its Station(s), that the other
party may reasonably request in connection with the preparation of audited and
unaudited Station- level financial statements. Both parties agree that any
audits shall be at the sole expense and staffing of the party requesting such
audits. Each party shall have the right to perform a Phase 1 environmental
audit with respect to the real estate and operations of the other party's
Station(s), and the industrial hygiene and safety condition thereof. In the
event that the party performing the audit believes that any further
environmental investigation is required as a result of the conclusions of any
Phase 1 environmental audit report, the parties will consult with each other
and mutually agree on the scope of any additional environmental investigation.
The rights of each party under this Section 10.1.5 shall not be exercised in
such a manner as to interfere unreasonably with the business of the other
party's Station(s).
10.1.6 Within fifteen (15) days of the end of each month, each party
shall deliver to the other party an unaudited statement of revenue and expenses
of its Station(s) and a balance sheet for the month then ended (collectively,
the "Interim Financial Statements"). The Interim Financial Statements shall be
prepared in accordance with practices consistent with those followed in the
preparation of the SFX Financial Statements and the CBS Financial Statements,
as applicable, delivered pursuant to Sections 6.13 and 7.13, respectively. Such
Interim Financial Statements shall be true and complete in all material
respects and fairly present in all material respects the financial condition
and results of operation of each party's Station(s) for the periods covered by
such statements. Each party shall furnish to the other party any and all
information customarily prepared by such party concerning the financial
condition of its Station(s) that the other party may reasonably request.
10.1.7 Each party shall use all reasonable efforts (but shall not be
required to make any payment) to obtain any third party consents necessary for
the assignment of its Contracts to the other party, provided that no payment
shall be made by the Station(s) of the party seeking such consent, and no
Contract shall be modified to increase the amount payable
39
thereunder or to otherwise modify the terms thereof in a manner adverse to such
Station(s), in order to obtain any such consent without first obtaining the
written consent of the other party.
10.1.8 Each party shall also use its best efforts to cause advertisers
on its Station(s) to use the air time available under trade and barter
contracts and agreements prior to the Closing Date and will not enter into any
new barter agreements at its Station(s) unless it discharges or satisfies over
90% of the liability contained in the existing agreements for such advertisers
prior to the Closing Date or receives the permission of the other party. Each
party will also confirm in writing with the existing clients of its Station(s)
prior to the Closing Date their trade balances contained on the trade report
for its Station(s) in order to verify the accuracy of the balances. Trade
agreements that have expired or will expire prior to the Closing Date shall not
be extended without the approval of the other party. Each party will also use
its best efforts to bring its Station's overall trade position to zero prior to
the Closing Date.
10.2 Notification.
10.2.1 Each party shall notify the other party of any material
litigation, arbitration or administrative proceeding pending or, to its
knowledge, threatened against the other party which challenges the transactions
contemplated hereby.
10.2.2 Each party shall promptly notify the other party if the normal
broadcast transmissions of its Station(s) are interrupted, interfered with or
in any way impaired, and shall provide the other party with prompt written
notice of the problem and the measures being taken to correct such problem. If
any such Station is not restored so that operation is resumed to full licensed
power and antenna height within five (5) days of such event, or if more than
three (3) such events occur within any thirty (30) day period, or if the
applicable Station shall be off the air for more than seventy-two (72)
consecutive hours, then the other party shall have the right to terminate this
Agreement.
10.3 No Inconsistent Action. Neither party shall take any action which is
materially inconsistent with its obligations
40
under this Agreement.
10.4 Closing Covenant. On the Closing Date, each party shall transfer,
convey, assign and deliver to the other party its Station Assets and each party
shall assume its Assumed Liabilities as provided in Articles 1 and 2.
10.5 Other Items. Except as otherwise specifically contemplated by this
Agreement, until the Closing Date, each party shall (i) maintain in full force
and effect such property damages, liability and other insurance coverage with
respect to its Station Assets as it currently has in effect, and (ii) maintain
its inventory levels (including office supplies, spare parts, tubes, equipment
and the like) at levels consistent with the normal and ordinary course of
operation of its Station(s).
10.6 Conditions. If any event should occur, either within or without the
control of any party hereto, which would prevent fulfillment of the conditions
upon the obligations of any party hereto to consummate the transactions
contemplated by this Agreement, the parties hereto shall use their best efforts
to cure the event as expeditiously as possible.
10.7 Confidentiality. CBS and SFX shall each keep confidential all
information obtained by it with respect to the other party in connection with
this Agreement and the transactions contemplated hereby and will use such
information solely in connection with the transactions contemplated hereby,
pursuant to the terms and conditions of the Confidentiality Agreement between
them dated September 20, 1996 (the "Confidentiality Agreement"). If the
transactions contemplated hereby are not consummated for any reason, the
parties shall continue to be bound by such Confidentiality Agreement, and each
party shall return to the other party, without retaining a copy thereof, any
schedules, documents or other written information obtained from the other party
in connection with this Agreement and the transactions contemplated hereby.
10.8 Cooperation. CBS and SFX shall cooperate fully with each other in
taking any actions, including actions to obtain the required consent of any
governmental instrumentality or any third
41
party necessary or helpful to accomplish the transactions contemplated by this
Agreement; provided, however, that no party shall be required to take any
action which would have a Material Adverse Effect upon it or any of its
Affiliates or with respect to the SFX Station or the CBS Stations, as
applicable. Each party shall also make available to the other party after the
Closing Date, upon reasonable request, such of its personnel who were employees
of the other party's Station(s) prior to the Closing Date whose assistance or
participation is reasonably requested by the other party in anticipation of,
preparation for or the prosecution or defense of existing or future litigation,
tax returns or other matters relating to the period prior to the Closing Date.
10.9 Control of Stations. Neither party shall, directly or indirectly,
control, supervise or direct the operations of the other party's Station(s).
Such operations, including complete control and supervision of all station
programs, employees and policies, shall be the sole responsibility of the party
owning such Station(s).
10.10 Consents to Assignment. To the extent that any Contract (other than
a Material Contract) identified in the Schedules is not capable of being sold,
assigned, transferred, delivered or subleased without the waiver or consent of
any third person (including a government or governmental unit), or if such
sale, assignment, transfer, delivery or sublease or attempted sale, assignment,
transfer, delivery or sublease would constitute a breach thereof or a violation
of any law or regulation, this Agreement and any assignment executed pursuant
hereto shall not constitute a sale, assignment, transfer, delivery or sublease
or an attempted sale, assignment, transfer, delivery or sublease thereof. In
those cases where consents, assignments, releases and/or waivers have not been
obtained at or prior to the Closing Date to the transfer and assignment to the
other party of the Contracts, this Agreement and any assignment executed
pursuant hereto, to the extent permitted by law, shall constitute an equitable
assignment by the assigning party to the other party of all of the assigning
party's rights, benefits, title and interest in and to the Contracts, and where
necessary or appropriate, the other party shall be deemed to be the assigning
party's agent for the purpose of completing, fulfilling and discharging all of
the
42
assigning party's rights and liabilities arising after the Closing Date under
such Contracts. The assigning party shall use all reasonable efforts to provide
the other party with the benefits of such Contracts (including permitting the
other party to enforce any rights of the assigning party arising under such
Contracts), and the other party shall, to the extent the assigning party is
provided with the benefits of such Contracts, assume, perform and in due course
pay and discharge all debts, obligations and liabilities of the assigning party
under such Contracts.
10.11 Waiver of Compliance with Bulk Sales Law. Each party waives
compliance by the other party with the provisions of any "bulk sales" law
applicable to the transactions contemplated hereby; provided, that each party
agrees to indemnify the other party pursuant to Section 15 for such
noncompliance.
10.12 Accounts Receivable.
10.12.1 Both parties acknowledge that all accounts receivable of the
other party for services performed by such other party in connection with the
operation of its Station(s) prior to the Closing Date ("Closing Accounts
Receivable"), shall remain the property of the other party.
10.12.2 After the Closing Date and until such time as an account
receivable has aged for 120 days, SFX and CBS shall each use reasonable efforts
to collect, in the manner regularly pursued by SFX and CBS in the ordinary
course of their business, such of the other party's Closing Accounts Receivable
as are collectible. SFX and CBS will each furnish to the other party a complete
list of the other party's Closing Accounts Receivable within twenty (20) days
after the Closing Date. Any funds received after the Closing Date by either
party with respect to the other party's Closing Accounts Receivables shall be
forwarded directly to SFX or CBS as applicable, for deposit and processing. If
any Closing Accounts Receivable are received by SFX or CBS in combination with
accounts receivable arising after the Closing Date, SFX or CBS will deposit
such funds into its own account and remit such portions of the funds received
applicable to the other party's Closing Accounts Receivable along with backup
documentation by the 15th day of the following month. Each party
43
will supply the other party with a Closing Accounts Receivable aging report for
such other party's Closing Accounts Receivable on a monthly basis to track the
remaining outstanding Closing Accounts Receivable of such other party until
both parties mutually agree to discontinue such reports. Neither SFX nor CBS
shall be required or authorized to institute any litigation or employ counsel
or to utilize any means of collection outside of the ordinary course of
business with respect to any of the other party's Closing Accounts Receivable,
respectively, unless authorized in writing by the other party. All payments
received from account debtors on account of Closing Accounts Receivable shall
be applied to the account debtor's oldest accounts receivable first, except to
the extent that an account debtor shall specify that its payments relate to a
specific invoice. Both parties will make reasonable efforts to handle ongoing
customers in a manner that helps to insure the continuity of such customer's
business with the other party's Station(s).
10.13 Completion of Schedules. As soon as practicable after the date
hereof (and in any event by October 1, 1996), each party shall deliver to the
other party a complete set of the schedules contemplated by this Agreement.
ARTICLE 11
CONDITIONS OF CLOSING BY CBS
----------------------------
The obligations of CBS hereunder are, at its option, subject to
satisfaction, at or prior to the Closing Date, of each of the following
conditions:
11.1 Representations, Warranties and Covenants.
11.1.1 All representations and warranties of SFX and SFX Broadcasting
made in this Agreement, or in any Schedule or document delivered pursuant
hereto, shall be true and complete in all material respects as of the date
hereof and on and as of the Closing Date as if made on and as of that date
(unless an earlier date is expressly provided for therein), except for changes
expressly permitted or contemplated by the terms of this Agreement.
44
11.1.2 All of the terms, covenants and conditions to be complied with
and performed by SFX and SFX Broadcasting on or prior to Closing Date shall
have been complied with or performed in all material respects.
11.1.3 CBS shall have received a certificate, dated as of the Closing
Date, executed by an officer of SFX and SFX Broadcasting, to the effect that
the conditions set forth in Sections 11.1.1 and 11.1.2 have been satisfied.
11.2 Governmental Consents. The conditions specified in Sections 5.1, 5.2
and 5.3 shall have been satisfied.
11.3 Governmental Authorizations. SFX shall be the holder of the SFX
Station Licenses and all other material licenses, permits and other
authorizations listed in Schedule 6.4, and there shall not have been any
modification of any of such licenses, permits and other authorizations which
has a Material Adverse Effect on the SFX Station or the conduct of its business
and operations. No proceeding shall be pending which seeks or the effect of
which reasonably could be to revoke, cancel, fail to renew, suspend or modify
materially and adversely the SFX Station Licenses or any other material
licenses, permits or other authorizations of the SFX Station.
11.4 Adverse Proceedings. No suit, action, claim or governmental
proceeding shall be pending against, and no order, decree or judgment of any
court, agency or other governmental authority shall have been rendered against,
any party hereto which would render it unlawful, as of the Closing Date, to
effect the transactions contemplated by this Agreement in accordance with its
terms.
11.5 Legal Opinion. SFX shall have delivered to CBS a written opinion of
its in-house corporate counsel, dated as of the Closing Date, with respect to
the matters set forth in Schedule 11.5, in a form satisfactory to CBS and SFX.
11.6 Board Approval. The WELCO and CBS Boards shall have authorized the
transactions to be consummated by CBS at the Closing.
45
11.7 Third-Party Consents. SFX shall have obtained and shall have
delivered to CBS all third-party consents to the SFX Material Contracts.
11.8 Closing Documents. SFX shall have delivered or caused to be delivered
to CBS, on the Closing Date, all deeds, bills of sale, endorsements, assignment
and other instruments of conveyance and transfer reasonably satisfactory in
form and substance to CBS, effecting the sale, transfer, assignment and
conveyance of the SFX Station Assets to CBS and the assumption of the SFX
Assumed Liabilities, including each of the documents required to be delivered
pursuant to Article 14.
11.9 Financing Statements. SFX shall have delivered to CBS releases under
the Uniform Commercial Code of any financing statements filed against any of
the SFX Station Assets in the jurisdictions in which the SFX Station Assets are
and have been located since such SFX Station Assets were acquired by SFX.
11.10 Environmental Condition. CBS shall have been satisfied in its
reasonable discretion that any environmental conditions identified in the Phase
1 environmental audit report with respect to the SFX Real Estate and operations
of the SFX Station, and the environmental and industrial hygiene and safety
condition of the SFX Real Estate and operations of the SFX Station, shall have
been or are scheduled to be satisfactorily remediated.
11.11 Due Diligence. (a) On or Prior to October 10, 1996. CBS shall have
been satisfied that its due diligence review of the SFX Station, the SFX
Station Assets and the CBS Assumed Liabilities shall not have revealed any fact
or circumstance which shall have caused CBS to believe in good faith that
proceeding with the transactions contemplated hereby would adversely affect
CBS; provided, however, that this condition shall irrevocably be deemed
satisfied for all purposes hereunder if CBS shall not have described any such
facts and circumstances in reasonable detail in writing to SFX on or prior to
October 10, 1996.
(b) Prior to October 16, 1996. CBS shall have been satisfied that its
due diligence review of the SFX Schedules (and
46
the underlying agreements, documents and other information referred to or
directly supporting the information set forth in the SFX Schedules) shall not
have revealed facts and circumstances that are materially different, taken as a
whole, from the facts and circumstances as known to CBS on the date hereof and
that such differences could reasonably be expected to materially adversely
affect the SFX Station Assets, or that any such difference so identified shall
have been or shall be resolved to the reasonable satisfaction of CBS; provided,
however, that this condition shall irrevocably be deemed satisfied for all
purposes hereunder with respect to any such differences that CBS shall not have
described in reasonable detail in writing to SFX prior to October 16, 1996.
ARTICLE 12
CONDITIONS OF CLOSING BY SFX AND SFX BROADCASTING
-------------------------------------------------
The obligations of SFX and SFX Broadcasting hereunder are, at its option,
subject to satisfaction, at or prior to the Closing Date, of each of the
following conditions:
12.1 Representations, Warranties and Covenants.
12.1.1 All representations and warranties of CBS made in this
Agreement, or in any Schedule or document delivered pursuant hereto, shall be
true and complete in all material respects as of the date hereof and on and as
of the Closing Date as if made on and as of that date (unless an earlier date
is expressly provided for therein), except for changes expressly permitted or
contemplated by the terms of this Agreement.
12.1.2 All of the terms, covenants and conditions to be complied with
and performed by CBS on or prior to the Closing Date shall have been complied
with or performed in all material respects.
12.1.3 SFX shall have received a certificate, dated as of the Closing
Date, executed by an officer of CBS, to the effect that the conditions set
forth in Sections 12.1.1 and 12.1.2 have been satisfied.
47
12.2 Governmental Consents. The conditions specified in Sections 5.1, 5.2
and 5.3 shall have been satisfied.
12.3 Government Authorizations. CBS shall be the holder of the CBS
Stations Licenses and all other material licenses, permits and other
authorizations listed in Schedule 7.4, and there shall not have been any
modification of any of such licenses, permits and other authorizations which
has a Material Adverse Effect on the CBS Stations or the conduct of its
business and operations. No proceeding shall be pending which seeks or the
effect of which reasonably could be to revoke, cancel, fail to renew, suspend
or modify materially and adversely the CBS Stations Licenses or any other
material licenses, permits or other authorizations of the CBS Stations.
12.4 Adverse Proceedings. No suit, action, claim or governmental
proceeding shall be pending against, and no other, decree or judgment of any
court, agency or other governmental authority shall have been rendered against,
any party hereto which would render it unlawful, as of the Closing Date, to
effect the transactions contemplated by this Agreement in accordance with its
terms.
12.5 Legal Opinion. CBS shall have delivered to SFX an opinion of its
counsel, an employee of CBS, dated as of the Closing Date, with respect to the
matters set forth in Schedule 12.5 in a form satisfactory to CBS and SFX.
12.6 Third-Party Consents. CBS shall have obtained and shall have
delivered to SFX all third-party consents to the CBS Material Contracts.
12.7 Closing. CBS shall have delivered or caused to be delivered to SFX,
on the Closing Date, all deeds, bills of sale, endorsements, assignment and
other instruments of conveyance and transfer reasonably satisfactory in form
and substance to SFX, effecting the sale, transfer, assignment and conveyance
of the CBS Stations Assets to SFX and the assumption by CBS of the CBS Assumed
Liabilities, including each of the documents required to be delivered pursuant
to Article 14.
12.8 Financing Statements. CBS shall have delivered to SFX
48
releases under the Uniform Commercial Code of any financing statements filed
against any of the CBS Stations Assets in the jurisdictions in which the CBS
Stations Assets are and have been located since such CBS Stations Assets were
acquired by CBS.
12.9 Environmental. SFX shall have been satisfied in its reasonable
discretion that any environmental conditions identified in the Phase 1
environmental audit report with respect to the CBS Real Estate and operations
of the CBS Stations, and the environmental and industrial hygiene and safety
condition of the CBS Real Estate and operations of the CBS Stations, shall have
been or are scheduled to be satisfactorily remediated.
12.10 Due Diligence. (a) On or Prior to October 10, 1996. SFX shall have
been satisfied that its due diligence review of the CBS Stations, the CBS
Stations Assets and the SFX Assumed Liabilities shall not have revealed any
fact or circumstance which shall have caused SFX to believe in good faith that
proceeding with the transactions contemplated hereby would adversely affect
SFX; provided, however, that this condition shall irrevocably be deemed
satisfied for all purposes hereunder if SFX shall not have described any such
facts and circumstances in reasonable detail in writing to CBS on or prior to
October 10, 1996.
(b) Prior to October 16, 1996. SFX shall have been satisfied that its
due diligence review of the CBS Schedules (and the underlying agreements,
documents and other information referred to or directly supporting the
information set forth in the CBS Schedules) shall not have revealed facts and
circumstances that are materially different, taken as a whole, from the facts
and circumstances as known to SFX on the date hereof and that such differences
could reasonably be expected to materially adversely affect the CBS Stations
Assets, or that any such difference so identified shall have been or shall be
resolved to the reasonable satisfaction of SFX; provided, however, that this
condition shall irrevocably be deemed satisfied for all purposes hereunder with
respect to any such differences that SFX shall not have described in reasonable
detail in writing to CBS prior to October 16, 1996.
49
ARTICLE 13
EXPENSES; TRANSFER TAXES; AND FEES
----------------------------------
13.1 Expenses; Transfer Taxes. Except as set forth in Section 13.2, each
party hereto shall be solely responsible for all costs and expense incurred by
it in connection with the negotiation, preparation and performance of and
compliance with the terms of this Agreement, including all recordation,
transfer and documentary taxes and fees, and any excise, sales or use taxes,
associated with transferring its Station Assets in accordance with this
Agreement, and any filing or grant fees imposed by any governmental authority,
the consent of which is required to the transactions contemplated hereby.
13.2 Appraisal Fee. The appraisal fee of the independent valuation firm
selected in accordance with Section 3.2 shall be borne equally by CBS and SFX.
ARTICLE 14
DOCUMENTS TO BE DELIVERED AT CLOSING
------------------------------------
14.1 SFX's Documents. At the Closing, SFX and SFX Broadcasting shall
deliver or cause to be delivered to CBS the following:
14.1.1 ▇▇▇▇ of sale, general warranty deed, assignments and other good
and sufficient instruments of conveyance, transfer and assignment, all in form
and substance reasonably satisfactory to counsel for CBS, as shall be effective
to vest in CBS or its permitted assignees, good and marketable title in and to
the SFX Station Assets transferred pursuant to this Agreement in accordance
with the terms of this Agreement;
14.1.2 Certified resolutions of the Boards of Directors of SFX and SFX
Broadcasting approving the execution and delivery of this Agreement and each of
the other documents and authorizing the consummation of the transactions
contemplated hereby and thereby;
50
14.1.3 A certificate, dated the Closing Date, by SFX and SFX
Broadcasting in the form described in Section 11.1.3;
14.1.4 At the time and place of Closing, originals or copies of all
program, operations, transmissions, or maintenance logs and all other records
required to be maintained by the FCC with respect to the SFX Station, including
the SFX's Station's public file, shall be left at the SFX Station and thereby
delivered to CBS;
14.1.5 An assignment and assumption agreement or agreements reasonably
satisfactory in form and substance to counsel to CBS effecting the assumption
of the SFX Assumed Liabilities;
14.1.6 Certificates of Good Standing for SFX and SFX Broadcasting from
the States of Delaware and Texas certified as of a date not more than thirty
(30) days before the Closing Date;
14.1.7 The opinion of SFX's counsel referenced in Section ll.5; and
14.1.8 Such additional information and materials as CBS shall have
reasonably requested.
14.2 CBS's Documents. At the Closing, CBS shall deliver or cause to be
delivered to SFX and SFX Broadcasting the following:
14.2.1 ▇▇▇▇ of sale, assignments and other good and sufficient
instruments of conveyance, transfer and assignment, all in form and substance
reasonably satisfactory to counsel for SFX, as shall be effective to vest in
SFX or its permitted assignees, good and marketable title in and to the CBS
Stations Assets transferred pursuant to this Agreement in accordance with the
terms of this Agreement;
14.2.2 Certified resolutions of the Board of Directors of CBS and
WELCO approving the execution and delivery of this Agreement and each of the
other documents and agreements referred to herein and authorizing the
consummation of the transactions contemplated hereby and thereby;
51
14.2.3 A certificate, dated the Closing Date, by CBS in the form
described in Section 12.1.3;
14.2.4 At the time and place of Closing, CBS's originals or copies of
all program, operations, transmissions, or maintenance logs and all other
records required to be maintained by the FCC with respect to the CBS Stations,
including the CBS Stations' public file, shall be left at the CBS Stations and
thereby delivered to SFX;
14.2.5 An assignment and assumption agreement or agreements reasonably
satisfactory in form and substance to counsel to SFX effecting the assumption
of the CBS Assumed Liabilities;
14.2.6 Certificates of Good Standing for CBS from the States of New
York and Texas dated not more than thirty (30) days before the Closing Date;
14.2.7 The opinion of CBS's counsel referenced in Section 12.5; and
14.2.8 Such additional information and materials as SFX shall have
reasonably requested.
ARTICLE 15
INDEMNIFICATION
---------------
15.1 SFX's Indemnities. SFX and SFX Broadcasting hereby agree to
indemnify, defend and hold harmless CBS, its Affiliates and their respective
officers and directors (the "CBS Indemnitees") with respect to any and all
demands, claims, actions, suits, proceedings, assessments, judgments, costs,
losses, damages, liabilities and expenses (including interest, penalties, court
costs and reasonable attorneys' fees)
52
(collectively "Damages") asserted against, resulting from, imposed upon or
incurred by the CBS Indemnitees directly or indirectly relating to or arising
out of:
15.1.1 The breach by SFX or SFX Broadcasting of any of their
representations or warranties, or failure by SFX or SFX Broadcasting to perform
any covenants, conditions or agreements of SFX or SFX Broadcasting set forth in
this Agreement;
15.1.2 The SFX Assumed Liabilities;
15.1.3 The SFX Retained Liabilities;
15.1.4 Any employee benefit plan maintained by SFX;
15.1.5 Any failure by SFX to comply with any "bulk sales" law
applicable to the transactions contemplated hereby; and
15.1.6 Any and all claims, liabilities or obligations of any nature,
absolute or contingent, relating to the business and operation of the SFX
Station prior to the Closing Date.
15.2 CBS's Indemnities. CBS hereby agrees to indemnify, defend and hold
harmless SFX, SFX Broadcasting, their Affiliates and their respective officers
and directors (the "SFX Indemnitees") with respect to any and all Damages
asserted against, resulting from, imposed upon or incurred by the SFX
Indemnitees directly or indirectly relating to or arising out of:
15.2.1 The breach by CBS of any of its representations, warranties, or
failure by CBS to perform any covenants, conditions or agreements of CBS set
forth in this Agreement;
15.2.2 The CBS Assumed Liabilities;
15.2.3 The CBS Retained Liabilities;
15.2.4 Any employee benefit plan maintained by CBS;
15.2.5 Any failure by CBS to comply with any "bulk
53
sales" law applicable to the transactions contemplated hereby; and
15.2.6 Any and all claims, liabilities or obligations of any nature,
absolute or contingent, relating to the business and operation of the CBS
Stations prior to the Closing Date.
15.3 Survival of Representations and Warranties. The representations and
warranties contained herein shall survive the Closing for a period of two (2)
years following the Closing Date, except for the representation and warranty
with respect to taxes set forth in Sections 6.6 and 7.6, which shall survive
until the expiration of any statutes of limitations applicable with respect to
such taxes, and the representations and warranties with respect to title set
forth in Sections 6.7, 6.8.3, 7.7 and 7.8.3 and the environmental
representations in Sections 6.11 and 7.11 which shall survive the Closing for
five years, and upon the expiration of such periods shall lapse and be of no
further effect unless a specific claim shall have been made or an action shall
have been commenced before such date.
15.4 Procedures.
15.4.1 Promptly after the receipt by either party (the "Indemnified
Party") of notice of (a) any claim or (b) the commencement of any action or
proceeding which may entitle such party to indemnification under this Section,
such party shall give the other party (the "Indemnifying Party") written notice
of such claim or the commencement of such action or proceeding and shall permit
the Indemnifying Party to assume the defense of any such claim or any
litigation resulting from such claim.
15.4.2 If the Indemnifying Party assumes the defense of any such claim
or litigation resulting therefrom, the obligations of the Indemnifying Party as
to such claim shall be limited to taking all steps necessary in the defense or
settlement of such claim or litigation resulting therefrom and to holding the
Indemnified Party harmless from and against any Damages caused by or arising
out of any settlement approved by the Indemnifying Party or any judgment in
connection with such claim or litigation resulting therefrom; however, the
Indemnified Party may participate, at its expense, in the defense of such
54
claim or litigation provided that the Indemnifying Party shall direct and
control the defense of such claim or litigation. The Indemnified Party shall
cooperate and make available all books and records reasonably necessary and
useful in connection with the defense. The Indemnifying Party shall not, in the
defense of such claim or any litigation resulting therefrom, consent to entry
of any judgment, except with the written consent of the Indemnified Party, or
enter into any settlement, except with the written consent of the Indemnified
Party, which does not include as an unconditional term thereof the giving by
the claimant or the plaintiff to the Indemnified Party of a release from all
liability in respect of such claim or litigation.
15.4.3 If the Indemnifying Party shall not assume the defense of any
such claim or litigation resulting therefrom within 45 days after notice
thereof from the Indemnified Party, the Indemnified Party may, but shall have
no obligation to, defend against such claim or litigation in such manner as it
may deem appropriate, and the Indemnified Party may compromise or settle such
claim or litigation without the Indemnifying Party's consent. The Indemnifying
Party shall promptly reimburse the Indemnified Party for the amount of all
expenses, legal or otherwise, incurred by the Indemnified Party in connection
with the defense against or settlement of such claim or litigation. If no
settlement of the claim or litigation is made, the Indemnifying Party shall
promptly reimburse the Indemnified Party for the amount of any judgment
rendered with respect to such claim or in such litigation and of all expenses,
legal or otherwise, incurred by the Indemnified Party in the defense against
such claim or litigation.
15.5 Limits on and Conditions of Indemnification.
15.5.1 Threshold Amount. Neither party shall be liable to the other
party for any Damages under this Agreement resulting from the falsity or breach
of any of the representations or warranties set forth in Articles 6 or 7,
except to the extent that the aggregate amount of such Damages exceeds the
amount of $100,000 (the "Threshold Amount"); provided, however, that once such
aggregate has been exceeded, such party shall be liable for the amount of all
Damages, including the Threshold Amount.
55
15.5.2 Consequential Damages. Neither party shall be liable to or
indemnify the other party for Damages arising out of any loss or interruption
of business, profits, business opportunities or goodwill, loss of use of
facilities, cost of capital, claims of customers, or any other indirect,
special or consequential damages or any cost or expense related to such
Damages. The limitation against liability contained herein shall apply whether
the action in which recovery of Damages is sought is based on contract, tort
(including sole, concurrent or other negligence and strict liability), statute
or otherwise. To the extent permitted by law, any statutory remedies which are
inconsistent with the provisions of these terms are waived.
15.5.3 Other Limitations. Neither party shall be liable to or
indemnify the other party for Damages to the extent that the same are: (a)
caused, contributed to or exacerbated by the other party; or (b) recovered from
any third party (including any insurance proceeds).
15.5.4 Exclusive Remedy. The remedies provided for under this Article
15 and Section 17.1 shall be the exclusive remedies of the parties with respect
to the matters covered by this Agreement. Neither party shall be entitled to a
rescission of this Agreement.
15.5.5 Assignment of Claims. In the event that any of the Damages for
which an Indemnifying Party is responsible or allegedly responsible hereunder
are recoverable or potentially recoverable against any third party at the time
when payment is due under this Article 15, then, the Indemnified Party shall
assign any and all rights that it may have that are related in any fashion to
the Damages or the facts or circumstances giving rise thereto to the
Indemnifying Party as a condition to any payment due under this Article 15, or,
if such rights are not assignable under applicable law or otherwise, the
Indemnified Party hereunder shall attempt in good faith to collect any and all
damages and losses on account thereof from such third party for the benefit of,
and at the expense and direction of, the Indemnifying Party.
56
ARTICLE 16
TERMINATION RIGHTS
------------------
16.1 Termination.
16.1.1 This Agreement may be terminated by either CBS or SFX, if the
party seeking to terminate is not in material default or breach of this
Agreement, upon written notice to the other upon the occurrence of any of the
following (so long as such party seeking termination is not itself at such time
in material breach of its representations, warranties, covenants or agreements
set forth herein):
(a) if any condition set forth herein to the obligations of the
party seeking to terminate has not been satisfied or waived on or
prior to the Closing Date; or
(b) if the FCC denies the FCC Application of such party or
designates it for a trial-type hearing; or
(c) if the Closing shall not have occurred by June 30, 1997; or
(d) if any of the conditions described in Section 10.2.2 which
permit termination shall occur; or
(e) if there shall be in effect any judgment, final decree or
order that would prevent or make unlawful the Closing of the
transactions contemplated by this Agreement.
16.1.2 This Agreement may be terminated by mutual agreement of the
parties hereto.
16.2 Liability. The termination of this Agreement under Section 16.1 shall
not relieve any party of any liability for breach of this Agreement prior to
the date of termination.
16.3 Unwind. In the event that the FCC requires the parties to unwind the
transactions contemplated hereby after the Closing has occurred, the parties
will mutually agree on the arrangements necessary to put the parties in the
positions they
57
were in prior to the Closing.
ARTICLE 17
MISCELLANEOUS PROVISIONS
------------------------
17.1 Specific Performance. SFX and CBS each recognize and acknowledge
that, in the event that either party shall fail to perform its obligations to
consummate the transactions contemplated hereby, money damages alone will not
be adequate to compensate such party for its injury. SFX and CBS, therefore,
each agree and acknowledge that, in the event of their failure to perform their
obligation to consummate the transactions contemplated hereby, the other party
shall be entitled, in addition to any action for monetary damages, and in
addition to any other rights and remedies on account of such failure, to
specific performance of the terms of this Agreement and of the other party's
obligation to consummate the transactions contemplated hereby. If any action is
brought by either party to enforce this Agreement, the other party shall waive
the defense that there is an adequate remedy at law.
17.2 Risk of Loss. The risk of loss or damage to any of the SFX Station
Assets prior to the Closing Date shall be upon SFX. In consultation with CBS,
SFX shall repair, replace and restore any such damaged or lost SFX Station
Asset to its prior condition as soon as possible and in no event later than the
Closing Date. The risk of loss or damage to any of the CBS Stations Assets
prior to the Closing Date shall be upon CBS. In consultation with SFX, CBS
shall repair, replace and restore any such damaged or lost CBS Stations Asset
to its prior condition as soon as possible and in no event later than the
Closing Date.
17.3 Further Assurances. After the Closing, each party shall, from time to
time, at the request of and without further cost or expense to the other party,
execute and deliver such other instruments of conveyance and transfer and take
such other actions as may reasonably be requested in order to more effectively
consummate the transactions contemplated hereby to vest in such party good and
marketable title to the assets being transferred hereunder, and each party
shall from time to time, at
58
the request of and without further cost or expense to the other party, execute
and deliver such other instruments and take such other actions as may
reasonably be requested in order to more effectively relieve such party of any
obligations being assumed by the other party hereunder.
17.4 Benefit and Assignment. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns. No party may voluntarily or involuntarily
assign its interest under this Agreement without the prior written consent of
the other party, except for any assignment to an Affiliate of either party in
which case SFX or CBS, as the case may be, shall remain fully obligated under
this Agreement as an assignor.
17.5 Headings. The table of contents and headings set forth in this
Agreement are for convenience only and will not control or affect the meaning
or construction of the provisions of this Agreement.
17.6 Governing Law. The construction and performance of this Agreement
shall be governed by the laws of the State of New York without giving effect to
the choice of law provisions thereof.
17.7 Notices. Any notice, demand or request required or permitted to be
given under the provisions of this Agreement shall be in writing and shall be
deemed to have been duly delivered and received on the date of personal
delivery or on the third day after deposit in the U.S. mail, if mailed by
registered or certified mail, postage prepaid and return receipt requested, or
on the day after delivery to a nationally recognized overnight courier service
for next morning delivery, or by fax transmission with confirmed receipt by the
other party, and shall be addressed
59
to the following addresses, or to such other address as any party may request,
pursuant to this Section 17.7:
To SFX or SFX
Broadcasting: SFX Broadcasting, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ F. X. Sillerman
Copy to: SFX Broadcasting, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
To CBS: CBS Inc.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇
Copy to: CBS Inc.
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Law Department,
▇. ▇. ▇▇▇▇▇▇▇▇▇
17.8 Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original and all of which
together will constitute one and the same instrument.
17.9 No Third Party Beneficiaries. Nothing herein expressed or implied is
intended or shall be construed to confer upon or give to any person or entity
other than the parties hereto and their successors or permitted assigns, any
rights or remedies under or by reason of this Agreement.
17.10 Public Announcements. SFX, SFX Broadcasting and CBS shall consult
with each other before issuing any press releases or otherwise making any
public statements with respect to this Agreement and the transactions
contemplated hereby and shall not issue any such press release or make any
public statement without the consent of the other, except as may be required by
law.
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17.11 Exclusive Jurisdiction and Consent to Service of Process. The
parties agree that any legal action, suit or proceeding arising out of or
relating to this Agreement or the transactions contemplated hereby, shall be
instituted in a Federal or state court sitting in New York, New York, which
shall be the exclusive jurisdiction and venue of said legal proceedings and
each party hereto waives any objection which such party may now or hereafter
have to the laying of venue of any such action, suit or proceeding, and
irrevocably submits to the jurisdiction of any such court in any such action,
suit or proceeding. Any and all service of process and any other notice in any
such action, suit or proceeding shall be effective against such party (or the
subsidiary of such party) when transmitted in accordance with Section 17.7.
Nothing contained herein shall be deemed to affect the right of any party
hereto to serve process in any manner permitted by law.
17.12 Severability. The parties agree that if one or more provisions
contained in this Agreement shall be deemed or held to be invalid, illegal or
unenforceable in any respect under any applicable law, this Agreement shall be
construed with the invalid, illegal or unenforceable provision deleted, and the
validity, legality and enforceability of the remaining provisions contained
herein shall not be affected or impaired thereby.
17.13 Amendments and Waivers. No amendment, waiver of compliance with any
provision or condition hereof or consent pursuant to this Agreement shall be
effective unless evidenced by an instrument in writing signed by the party
against whom enforcement of any waiver, amendment, change, extension or
discharge is sought.
17.14 Certain Definitions and Usage. For all purposes of this Agreement,
except as otherwise expressly provided, the following terms have the following
meanings:
"Affiliate" means an entity that directly, or indirectly through one
or more intermediaries, controls, or is controlled by, or is under common
control with, any party.
"Material Adverse Effect" means a material adverse effect on, or
material adverse change in, (i) the SFX
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Station Assets or CBS Stations Assets, taken as a whole, (ii) the
business, results of operations or financial or other condition of the SFX
Station or the CBS Stations, or (ii) the ability of SFX or CBS to perform
their respective obligations under this Agreement. "person" means any
individual, corporation, partnership, firm, joint venture, association,
unincorporated organization, or other entity.
When a reference is made in this Agreement to an Article, Section or
Schedule, such reference shall be to an Article, Section or Schedule of this
Agreement unless otherwise indicated. Whenever the words "included", "includes"
or "including" are used in this Agreement, they shall be deemed to be followed
by the words "without limitation". All accounting terms not defined in this
Agreement shall have the meanings determined by generally accepted accounting
principles as in effect from time to time. The words "hereof", "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement. The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as well
as to the feminine and neuter genders of such term, and references to a person
are also to its permitted successors and assigns.
17.15 Entire Agreement. This Agreement and the Schedules hereto and the
ancillary documents provided for herein embody the entire agreement and
understanding of the parties hereto relating to the matters provided for herein
and supersede any and all prior agreements, arrangements and understandings
relating to the matters provided for herein.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year first above written.
WHFS, INC.
By: /s/ ▇▇▇▇▇▇ F.X. Sillerman
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Name: ▇▇▇▇▇▇ F.X. Sillerman
Title: President
▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇
INCORPORATED
By: /s/ ▇▇▇▇▇▇ F.X. Sillerman
-------------------------------------------
Name: ▇▇▇▇▇▇ F.X. Sillerman
Title: President
SFX BROADCASTING, INC.
By: /s/ ▇▇▇▇▇▇ F.X. Sillerman
-------------------------------------------
Name: ▇▇▇▇▇▇ F.X. Sillerman
Title: Chairman of the Board and
Chief Executive Officer
CBS INC.
By: /s/ ▇▇▇ ▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇ ▇▇▇▇▇
Title: President