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EXHIBIT 2.43
[CHANCELLOR MEDIA CORPORATION OF LOS ANGELES LETTERHEAD]
February 20, 1998
X. Xxxxxx Xxxxx,
President and Chief Executive Officer
Capstar Broadcasting Corporation
000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
re: Chancellor / Capstar Transaction
Dear Xxxxx:
This letter (the "Letter Agreement"), when executed by both parties below,
will set forth the essential terms and conditions of our agreement regarding a
transaction between Chancellor Media Corporation of Los Angeles ("Chancellor")
and Capstar Broadcasting Corporation ("Capstar") (the "Transaction"). The
Transaction contemplates a series of purchases, sales, exchanges and
understandings to be effected over a period of time consisting of the following:
1. Exchange of SFX Assets. Following the closure of the merger between SFX
Broadcasting, Inc. ("SFX") and an affiliate of Capstar (the "Capstar-SFX
Merger"), Capstar (which, following the closing of the Capstar-SFX Merger, shall
also mean SFX and its affiliates) and Chancellor will complete a series of asset
exchanges and/or purchases in which Capstar will exchange the following
properties for broadcast properties to be acquired or paid for by Chancellor
over a period of up to thirty-six (36) months (the "Exchange Period") (provided
that, if Chancellor is determined to be a "related party" (as such term is
defined in Section 1031(f) of the Internal Revenue Code) of either Capstar or
SFX, Chancellor and Capstar agree to hold any SFX Station and Exchange Station,
respectively, for the full, two-year period required by the Code to maintain the
qualification of the transaction as a like-kind exchange, and such holding
period may extend the Exchange Period as necessary):
KBFB-FM Dallas
KTXQ-FM Dallas
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KKRW-FM Houston
KODA-FM Houston
KQUE-AM Houston
KPLN-FM San Diego
KYXY-FM San Diego
WDVE-FM Pittsburgh
WJJJ-FM Pittsburgh
WXDX-FM Pittsburgh
WVTY-FM Pittsburgh
These stations (together, the "SFX Stations") are deemed to have an aggregate
fair market value of $637.5 million. A fair market valuation as to each of the
SFX Stations (the "Station Valuations") is set forth on Schedule A to this
Letter Agreement. The SFX Stations shall be exchanged for (i) radio stations in
Jacksonville and Austin, pursuant to transactions described more specifically in
this letter, and (ii) other radio stations to be identified by Capstar and
acquired or paid for by Chancellor from time to time during the Exchange Period
(all such stations contemplated by (i) and (ii) above, the "Exchange Stations"),
in accordance with the following procedures:
(a) Capstar will identify one or more potential Exchange Stations, at
its sole discretion, during the Exchange Period, to be acquired by Capstar
pursuant to an asset purchase agreement or, as permitted below, to be acquired
by Chancellor pursuant to a stock purchase agreement (an "Exchange Station
Agreement").
(1) If Capstar elects to acquire an Exchange Station pursuant to
an Exchange Station Agreement that is an asset purchase agreement, (i) Capstar
shall negotiate an Exchange Station Agreement with the owner of such Exchange
Station on such terms and conditions as are acceptable to Capstar, (ii)
Chancellor and Capstar shall simultaneously execute Asset Purchase Agreement(s)
(herein so called) acceptable to both Chancellor and Capstar pursuant to which
Chancellor will acquire SFX Station(s), to be identified by Chancellor in its
sole discretion, whose Station Valuation(s) most closely approximate the cash
purchase price (without regard to assumed debt) of the Exchange Station(s), in
exchange for cash in an aggregate amount equal to the fair market value of such
SFX Station(s); (iii) Capstar shall pay any escrow or deposit obligations for
all Exchange Station Agreements; (iv) Capstar shall assign its contractual
rights under the Asset Purchase Agreement(s) to a QI (as defined below) and
Chancellor shall transfer the cash consideration to be paid under such Asset
Purchase Agreement(s) to the QI; and (v) thereafter, Capstar shall assign its
contractual rights under the
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Exchange Station Agreement to the QI who will transfer cash to the owner of the
Exchange Station(s) in return for the transfer of the Exchange Station(s) to
Capstar.
(2) If Capstar elects to have Chancellor acquire an Exchange Station
pursuant to an Exchange Station Agreement that is a stock purchase agreement,
(i) Capstar shall negotiate an Exchange Station Agreement with the owner of such
Exchange Station, on Chancellor's behalf, on such terms and conditions as are
acceptable to Capstar; (ii) Chancellor and Capstar shall simultaneously execute
Asset Exchange Agreement(s) (herein so called) acceptable to both Chancellor and
Capstar pursuant to which Chancellor and Capstar will exchange the Exchange
Station being acquired pursuant to an Exchange Station Agreement and, subject
to (vi) below, all other assets and liabilities of the company purchased by
Chancellor pursuant to the Exchange Station Agreement for the SFX Station(s), to
be identified by Chancellor in its sole discretion, whose Station Valuation(s)
most closely approximate that of the Exchange Stations (i.e., the cash purchase
price to be paid for the stock of the owner of the Exchange Stations after
making appropriate adjustments for working capital); (iii) Capstar shall pay any
escrow or deposit obligations for all Exchange Station Agreements; (iv)
Chancellor shall bear no residual liability or obligation arising from the
breach or failure to perform by the seller under the Exchange Station Agreement;
(v) in each such case, the Asset Exchange Agreement(s) shall provide that, if
the Asset Exchange Agreement is not consummated for any reason other than due to
breach thereof by Chancellor, Capstar will acquire the stock of the Exchange
Station owner for an amount equal to the sum of (x) the purchase price paid by
Chancellor for such stock, (y) Chancellor's transactional costs, and (z) any
capital expenses approved by Capstar and incurred by Chancellor during its
ownership of such stock; and (vi) in each such case, the Asset Exchange
Agreement(s) shall provide that the net working capital of the company being
acquired pursuant to the Exchange Station Agreements that are stock purchase
agreements will be separately transferred to Capstar (if such net working
capital is a positive amount, Capstar shall pay to Chancellor such amount, and
if such net working capital is a negative amount, Chancellor shall pay to
Capstar such amount). In negotiating such Exchange Station Agreements that are
stock purchase agreements, each Exchange Station Agreement must provide that the
seller of the Exchange Station(s) will pay off all debt (other than current
liabilities) of the company being acquired under the Exchange Station Agreement
at or prior to the closing of such Exchange Station Agreement. For two years
from the date that Chancellor acquires the stock of a company pursuant to an
Exchange Station Agreement that is a stock purchase agreement, Chancellor shall
not liquidate such company or cause such company to merge into a member of
Chancellor's consolidated group.
(3) Prior to closing each Exchange Station Agreement in which
Chancellor is the purchaser of stock, as described in Section 1(a)(2) above, if
Capstar, in its
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discretion, shall have negotiated a time brokerage agreement (a "TBA") with the
seller of an Exchange Station, then Chancellor shall, upon execution of the
applicable Asset Exchange Agreement and such TBA, immediately assign the TBA to
Capstar and Chancellor shall have no further liabilities thereunder. Each Asset
Exchange Agreement will provide that, upon the acquisition of stock of the owner
of the Exchange Station by Chancellor, Capstar will operate the Exchange Station
under a TBA as soon as it is permitted to do so under law, until the closing of
such Asset Exchange Agreement, and Capstar shall pay to Chancellor an annual TBA
fee equal to ten percent (10%) of the purchase price under the Exchange Station
Agreement (i.e., the cash purchase price to be paid for the stock of the owner
of the Exchange Stations after making appropriate adjustments for working
capital), such fee to be charged and paid monthly in arrears. The TBA will
provide, to the extent possible, that the net working capital for the Exchange
Station will be transferred to Capstar at the commencement of the TBA (if such
net working capital is a positive amount, Capstar shall pay to Chancellor such
amount, and if such net working capital is a negative amount, Chancellor shall
pay to Capstar such amount). All revenues and expenses from station operations
during such TBA period shall belong to Capstar, except for any expenses required
by FCC rules and policies to be retained by the licensee. The TBA between
Chancellor and Capstar shall provide for the reimbursement of any expenses
required by the FCC rules and policies to be retained by the licensee and such
capital expenditures for the Exchange Station as Capstar shall approve (it being
understood that Chancellor shall not make any capital expenditures other than
those required and paid for by Capstar).
(b) Chancellor and Capstar shall utilize their commercially
reasonable efforts to cause these acquisitions and exchanges to occur as
expeditiously as possible, including their full cooperation in obtaining any
necessary governmental consents and authorizations.
(c) The foregoing procedures shall be utilized over the Exchange
Period (on such timetable as Capstar shall determine) until (i) all of the SFX
Stations have been exchanged for Exchange Stations, or (ii) all of the SFX
Stations have been sold to Chancellor for cash.
(d) Capstar shall provide to Chancellor representations and
warranties with respect to the SFX Stations and Xxxxxxx's transfer to Chancellor
thereof customary in the industry, only with respect to the following matters:
(i) organization, (ii) authorization, (iii) absence of breaches in connection
with the transfer, (iv) qualifications as an FCC assignor, (v) absence of
conflicting orders, (vi) absence of litigation, (vii) taxes during the period
after the Capstar-SFX Merger and (viii) title. Chancellor shall provide no
representations and warranties with respect to the Exchange Stations except, in
the case of the Chancellor Jacksonville Stations
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(as defined in Section 4 below) and Exchange Stations that are acquired by
Chancellor under Exchange Station Agreements that are stock purchase agreements,
as to absence of liens and title defects arising during Chancellor's ownership
of such stations.
(e) It is the intention of the parties that these transactions
shall be treated in a tax-efficient manner, and that, to the extent permitted by
law, the transactions will qualify as like-kind exchanges under Section 1031 of
the Internal Revenue Code. However, all risk of favorable tax treatment of the
transactions to Capstar shall be on Capstar.
(f) Exchange Station Agreements which provide for the purchase
of stock, rather than assets, (i) may not have the effect of imposing any
material tax risk on Chancellor and (ii) shall provide for the adjustment of the
Station Valuations called for in the last sentence of this Section 1(f) if the
aggregate basis which Chancellor would enjoy in the SFX Stations if it were
purchasing such stations in asset acquisitions for cash at the agreed-upon
Station Valuation prices would be decreased by more than $120 million (the
"Basket Amount"). (By accepting up to the Basket Amount in diminished basis,
Chancellor only agrees to thereby reduce the amortizable or depreciable asset
value for the SFX Stations, and not to the recognition of gain which could arise
as a result of an exchange that is not qualified under Section 1031 of the
Internal Revenue Code, and Xxxxxxx agrees to reimburse Chancellor for any such
gain that causes additional tax obligations for Chancellor.) If the Basket
Amount would be exceeded as a result of a contemplated transaction, the Station
Valuation(s) for the SFX Station(s) to be exchanged for the station(s) acquired
under the stock-based Exchange Station Agreement(s) shall be reduced in an
amount necessary to compensate Chancellor for the reduction in basis beyond the
Basket Amount, and, in such event, the parties shall proceed with such
transaction.
(g) Capstar shall also bear the risk of changes in regulatory
policy (at the Federal Communications Commission ("FCC"), Department of Justice
("DOJ") or elsewhere) which would require the early termination of the
Chancellor TBA's contemplated by Section 6 of this letter agreement. If such
policy change occurs, and termination of such TBA's is thereby required, the
parties will proceed promptly to consummate a sale for cash of all remaining SFX
Stations from Capstar to Chancellor for a price equal to the aggregate Station
Valuations for such remaining SFX Stations no later than the last permissible
date on which the TBA's are permitted to continue under the revised policy.
(h) Capstar shall, in good faith, endeavor first to contract
for asset purchases, rather than stock purchases.
(i) All other provisions of this Section 1 notwithstanding, if,
by the date that is one hundred eighty (180) days before the expiration of the
Exchange Period, any SFX
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Station has not been exchanged or sold to Chancellor or has not become subject
to an Asset Exchange Agreement or Asset Purchase Agreement, Chancellor shall
have the right to immediately acquire all such remaining SFX Station(s) for a
purchase price in cash equal to the respective Station Valuation(s) for such SFX
Station(s). Accordingly, the parties will no later than such date execute an
Asset Purchase Agreement, with provisions customarily found in such contracts,
and proceed promptly to obtain any necessary government approvals and proceed as
expeditiously as possible toward the consummation of such sales, which the
parties shall use commercially reasonable efforts to cause to occur on or before
the expiration date of the Exchange Period. All Exchange Station Agreements
entered into prior to one hundred eighty days before the expiration of the
Exchange Period must provide that they terminate if not closed within one year
of the original date of such Exchange Station Agreement.
(j) All other provisions of this Section 1 notwithstanding,
Capstar shall have the right, at any time during the Exchange Period, to
designate, upon one hundred twenty (120) days prior written notice, any SFX
Station for sale to Chancellor in cash at a price equal to its Station
Valuation. Upon such designation, the parties shall promptly execute an Asset
Purchase Agreement, with provisions customarily found in such contracts, and
proceed promptly to obtain any necessary government approvals and consummate
that sale.
2. Purchase and Sale of KKPN(FM). The parties acknowledge that, due
to the attributable ownership of Hicks, Muse, Xxxx & Xxxxx Incorporated ("HMTF")
in both Chancellor and Capstar, the acquisition by Capstar or Chancellor of all
of the SFX Stations which are licensed to or serve the Houston, Texas, market,
together with KKPN-FM (owned by SFX), would, when combined with Chancellor's
existing Houston properties (including KLDE-FM, which is being acquired from
Bonneville International Corporation ("Bonneville")), exceed the FCC's current
multiple ownership limits. Accordingly, Chancellor and Xxxxxxx agree that:
(a) Chancellor will undertake to identify and obtain a
purchaser for KKPN-FM, conditioned only on the closing of the Capstar-SFX Merger
and all necessary governmental approvals. (The Capstar-SFX Merger is currently
expected to close on or before May 15, 1998, and Chancellor will use its
commercially reasonable efforts to contract for the sale of KKPN-FM in a manner
that will eliminate any potential delay in the closing of the Capstar-SFX
Merger). Capstar will execute any necessary agreements to facilitate the timely
sale of KKPN-FM. The KKPN-FM license will be assigned directly from SFX to the
purchaser. Capstar shall have the right to approve the terms of any KKPN-FM sale
agreement other than the purchase price.
(b) Chancellor shall be free to obtain any sale price it can
for KKPN-FM. Fifty Million Dollars ($50,000,000) (the "KKPN Capstar Price")
shall be paid at closing by
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the purchaser of KKPN-FM to Capstar, and any amount of the sale price for
KKPN-FM in excess of the KKPN Capstar Price shall be retained by Chancellor for
its own account. Chancellor may agree to sell KKPN-FM for an amount less than
the KKPN Capstar Price without the consent of Capstar, in which case the entire
sale price shall be paid to Capstar at the closing of the KKPN-FM sale, and
Chancellor will pay the shortfall between the actual sale price and the KKPN
Capstar Price to Capstar at the closing of the sale of KKPN-FM.
(c) If Chancellor has failed by March 1, 1998 to secure the
binding agreement of a qualified purchaser to acquire KKPN-FM, Capstar shall be
permitted to seek and secure such a purchaser. If Capstar has secured such a
purchaser, Chancellor will cooperate in any way reasonably necessary to
consummate the closing of the sale of KKPN-FM to that purchaser, and Chancellor
shall, at the closing of the KKPN-FM sale, pay to Capstar the difference, if
any, between the sale price and the KKPN Capstar Price, up to a maximum of ten
million dollars ($10,000,000).
3. Long Island. Chancellor and Capstar agree that the Asset Exchange
Agreement between SFX and Chancellor dated July 1, 1996 (the "Chancellor-SFX
AEA"), providing for the exchange of SFX's Long Island radio stations (WBLI-FM,
WBAB-FM, WGBB(AM) and WHFM-FM) (the "SFX Long Island Stations"), shall be
terminated at the closing of the Capstar-SFX Merger. The parties will cooperate
in seeking the prompt termination of the DOJ litigation against Chancellor in
connection with Xxxx-Xxxxx-Xxxxxx review of the Chancellor-SFX AEA (the "DOJ
Litigation"). In addition, the parties agree to the following with regard to the
SFX Long Island Stations:
(a) Chancellor shall prepare a motion to dismiss the DOJ
Litigation without prejudice, and shall use its commercially reasonable efforts
to provide such motion no later than February 23, 1998 to DOJ for its
concurrence. The motion shall provide that the DOJ Litigation should be
terminated on the ground that (1) there is no reasonable possibility that the
DOJ Litigation will be completed by September 2, 1998, (2) Chancellor is
unwilling to extend the Chancellor-SFX AEA beyond its current terms and (3)
accordingly, Chancellor has agreed to (i) terminate the Chancellor SFX-AEA as
soon as practicable, but not later than immediately following the first to occur
of (A) the closing of the Capstar-SFX Merger and (B) September 2, 1998, (ii) not
extend the Chancellor-SFX AEA beyond September 2, 1998, (iii) terminate the time
brokerage agreements regarding the SFX Long Island Stations as soon as
practicable, but not later than September 2, 1998, (iv) not acquire or operate,
or agree to acquire or operate, WBAB-FM and WBLI-FM for a period of three years
or such shorter period as Chancellor owns WALK-FM, (v) provide at least thirty
days prior notice to DOJ before acquiring or operating any other station
licensed to Suffolk County, Long Island for a period of three years or such
shorter
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period as Chancellor owns WALK-FM (unless such acquisition or operation is
subject to prior Xxxx-Xxxxx-Xxxxxx notification, in which case such notification
will suffice) and (vi) dispose of WBAB-FM and WBLI-FM expeditiously in the event
that Chancellor acquires such stations for any reason. Chancellor agrees that,
if necessary to obtain concurrence by DOJ to the motion to dismiss, it shall
agree, for purposes of Sections 3(a)(3)(iv) and 3(a)(3)(v) above, to comply with
the obligations set forth in such subsections for a period of up to 10 years.
Chancellor shall use its commercially reasonable efforts to file and prosecute
the motion to dismiss upon receipt of concurrence thereto by DOJ.
(b) Capstar shall be responsible for orderly disposition of the
SFX Long Island Stations. Capstar will commence immediately to find a purchaser
for the SFX Long Island Stations. Such purchaser will be qualified for prompt
approval by both the FCC and DOJ and will not, in the reasonable opinion of
antitrust counsel to Chancellor, inhibit the prompt termination of the DOJ
Litigation. Chancellor and Capstar will cooperate in (i) the execution of any
necessary assignment or sale documents, (ii) the prosecution of any FCC
applications or DOJ approvals which are needed to facilitate the sale or other
disposition of the SFX Long Island Stations, and (iii) the consummation of the
sale or other disposition of the SFX Long Island Stations to one or more third
parties. With respect to this disposition, Chancellor shall provide to Capstar
such financial information regarding the SFX Long Island Stations in
Chancellor's possession as Capstar may reasonably request.
(c) At the closing of the sale of the SFX Long Island Stations,
Capstar shall pay to Chancellor an amount equal to the fees of Chancellor's DOJ
litigation counsel in connection with the DOJ Litigation from and after
September 5, 1997.
(d) Except with respect to the obligations under Section 3(a),
if for any reason the parties fail to consummate their obligations regarding the
SFX Long Island Stations, the remainder of the Transaction shall not be affected
thereby.
4. Jacksonville. As soon as practicable after the date hereof,
Chancellor and Capstar will enter into an Asset Exchange Agreement (the
"Jacksonville Asset Exchange Agreement") under which Chancellor will exchange
stations WAPE-FM and WFYV(FM) (the "Chancellor Jacksonville Stations"), plus
$90,250,000 in cash, for KODA(FM), Houston (the "Jacksonville Exchange"), on the
following terms:
(a) The Chancellor Jacksonville Stations shall be valued at
Fifty Three Million Dollars ($53,000,000) for purposes of the Jacksonville
Exchange.
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(b) The closing of the Jacksonville Exchange shall be
conditioned upon (i) the termination (without legal challenge by any party) of
the Chancellor-SFX AEA and (ii) the prior or contemporaneous closing of the
Capstar-SFX Merger.
(c) The Jacksonville Exchange shall not be included in any
computation of the Basket Amount or any reduction of Chancellor's tax basis as
contemplated by Section 1(f).
5. Austin. Capstar's agreement dated December 22, 1997 to acquire
stations KASE-FM and KVET-AM-FM, Austin, Texas (the "Austin Stations") for a
purchase price of $90,250,000 (the "Austin Acquisition Agreement") will be
treated as an Exchange Station Agreement for purposes of Section 1 of this
letter agreement. Capstar shall assign its contractual rights under the
Jacksonville Asset Exchange Agreement to a QI and Chancellor shall transfer the
cash consideration to be paid under the Jacksonville Asset Exchange Agreement to
the QI at the closing of such transaction. Thereafter, Xxxxxxx will assign the
Austin Acquisition Agreement to the QI, who will transfer cash to the owner of
the Austin Stations in return for the transfer of the Austin Stations to
Capstar. If the closing under the Jacksonville Asset Exchange Agreement is not
consummated simultaneously with the closing of the Capstar-SFX Merger, then for
the period from the closing of the Capstar-SFX Merger until the date that the
Jacksonville Asset Exchange Agreement is consummated, Chancellor shall be paid
an amount per month equal to the difference between the cost of capital that
would be necessary for Chancellor to acquire KODA(FM) and the amount of the
monthly TBA fee that is paid by Chancellor to operate KODA(FM) under a TBA
pursuant to Section 6 of this letter agreement.
6. Time Brokerage Agreements. Chancellor will commence operations of
each and all of the SFX Stations (which are not otherwise acquired by Chancellor
on the Capstar-SFX Merger closing date) under separate time brokerage agreements
(the "TBA's") under the following conditions:
(a) No TBA shall commence until all necessary Xxxx-Xxxxx-Xxxxxx
waiting periods have expired or DOJ has otherwise approved such operations.
(b) The TBA's shall otherwise commence on the earlier of (i) the
Capstar-SFX Merger closing date, or (ii) such earlier date as may be acceptable
to Chancellor and is approved and agreed to by SFX. The commencement date for
the TBA for each SFX Station may be determined independently, and the delay of
one such TBA shall not preclude earlier commencement of any other TBA which
meets these conditions. Each TBA shall be for a ten year term, with a five year
renewal option, subject to termination upon the closing of the contemplated
exchange or purchase by Chancellor.
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(c) The TBA's shall utilize form agreements for such operations
customary in the radio industry, and shall provide for the sale of substantially
all of the programming time on each such SFX Station to Chancellor. All revenues
and expenses from station operations during the TBA period shall belong to
Chancellor, except for any expenses required by FCC rules or policies to be
retained by the licensee. The TBA's shall provide for the reimbursement of any
expenses required by the FCC rules and policies to be retained by the licensee
and such capital expenditures for the SFX Station as Chancellor shall approve
(it being understood that Capstar shall not make any capital expenditures other
than those required and paid for by Chancellor).
(d) The TBA fee shall be charged and paid monthly in arrears
during the period of TBA operations, and the monthly fee shall be an amount
equal to ten percent (10%) of the Station Valuation, divided by twelve. The TBA
fee for each SFX Station so operated shall be paid to SFX during the period
prior to the Capstar-SFX Merger closing (if such TBA is permitted by SFX) and to
Capstar thereafter.
7. WFAS Sale. Capstar agrees to (i) use commercially reasonable
efforts to file all necessary notifications and obtain termination or expiration
of the waiting period required under the Xxxx-Xxxxx-Xxxxxx act with respect to
the disposition of station WFAS-FM to Westchester Radio, L.L.C. (FCC File No.
BAL-971009GE) and (ii) assuming such waiting period has expired or been
terminated, consummate such disposition on or before the date designated by
Chancellor upon 10 business days' prior notice for its closing under an Asset
Exchange Agreement between Chancellor and Bonneville (FCC File Nos.
XXXX-000000XX, XXXX-000000XX, XXXX-000000XX, XXXX-000000XX, XXXX-000000XX, and
BAL-971014GK).
8. Damages.
(a) The following shall apply to breaches of this Letter
Agreement, any Asset Exchange Agreement or any Asset Purchase Agreement:
(i) In the event that Chancellor materially breaches this
Letter Agreement, and Capstar is not also in material breach thereof, then if
the Capstar-SFX Merger is terminated as a result of Chancellor's material breach
of this Letter Agreement, Capstar is not in material breach of the Capstar-SFX
Merger Agreement (other than breaches that would not have occurred but for
Chancellor's material breach of this Letter Agreement), and SFX obtains the
liquidated damages provided for in the Capstar-SFX Merger Agreement, Capstar
shall receive from Chancellor liquidated damages in the amount of $100,000,000
(for purposes of this Section 8(a)(i), a "material breach" is limited to the
failure by Chancellor to close the Transaction at the
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time of the proposed closing of the Capstar-SFX Merger, after all of the
conditions to Chancellor's obligations to close have been satisfied).
(ii) In the event that Chancellor materially breaches this
Letter Agreement, and Capstar is not also in material breach thereof, then if
Capstar is not in material breach of the Capstar-SFX Merger Agreement, and the
Capstar-SFX Merger is deferred beyond June 1, 1998 as a result of Chancellor's
material breach of this Letter Agreement but is ultimately closed, Capstar shall
receive liquidated damages in an amount equal to $35,000,000, plus an amount
equal to all amounts paid by Capstar to the SFX security holders to extend the
date of the Capstar-SFX Merger from June 1, 1998, up to a maximum of $50,000,000
(i.e., the aggregate maximum damages permissible under this clause is
$85,000,000) (for purposes of this Section 8(a)(ii), a "material breach" is
limited to the failure by Chancellor to close the Transaction at the time of the
proposed closing of the Capstar-SFX Merger, after all of the conditions to
Chancellor's obligations to close have been satisfied).
(iii) In the event that Chancellor materially breaches any Asset
Exchange Agreement or Asset Purchase Agreement after the Capstar-SFX Merger has
closed, then (A) if such material breach is "willful" (as defined in Section
8(a)(iv) below), Capstar shall have the right to terminate such Asset Exchange
Agreement or Asset Purchase Agreement and the TBA for the relevant SFX
Station(s) and the Letter Agreement and any other Definitive Agreement (as
defined in Section 14 below) and seek actual damages for such material breach,
subject to Capstar's duty to use its commercially reasonable efforts to mitigate
its damages caused by such material breach (provided, however, that Capstar
shall in all events be obligated to prepay the Note (as defined below) as set
forth in Paragraph 9 of the attached Loan Term Sheet (as defined below) as a
result of such termination, without any right of setoff for such actual damages)
and (B) if such material breach is not "willful," Capstar shall have the right
to terminate such Asset Exchange Agreement or Asset Purchase Agreement and the
TBA for the relevant SFX Station(s), but not the Letter Agreement or any other
Definitive Agreement, and seek actual damages for such material breach, subject
to Capstar's duty to use its commercially reasonable efforts to mitigate its
damages caused by such material breach, provided, that if Chancellor materially
breaches another Asset Exchange Agreement or Asset Purchase Agreement (whether
or not "willful"), Capstar shall have the right to terminate such other Asset
Exchange Agreement or Asset Purchase Agreement and the TBA for the relevant SFX
Station(s) and the Letter Agreement and any other Definitive Agreement, and seek
actual damages for such material breach, subject to Capstar's duty to use its
commercially reasonable efforts to mitigate its damages caused by such material
breach (provided, however, that Capstar will in all events be obligated to
prepay the Note as set forth in Paragraph 9 of the Loan Term Sheet as a result
of such termination, without any right of setoff for such actual damages). (For
purposes of this
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Section 8(a)(iii), a "material breach" shall be the failure of Chancellor to
close any post-Capstar-SFX Merger Exchange after all of the conditions to
Chancellor's obligations to close have been satisfied, or any other material
breach under the respective Asset Exchange Agreement or Asset Purchase
Agreement; provided that, with respect to any material breach other than a
failure to close after all conditions to close have been satisfied, such
material breach is not cured by Chancellor within 30 days of written notice
provided by Capstar of such material breach).
(iv) A "willful" material breach shall mean (A) a material
breach by the breaching party, (B) written notice by the other party of such
material breach and (C) the failure to use commercially reasonable efforts to
cure such material breach within 30 days after receipt of such notice. For
purposes of this definition of "willful," no party shall claim that a material
breach is "willful" on the ground that it is incurable; provided, however, that
if the material breach has not been cured within such 30 day period, and the
non-breaching party extends the cure period, then the material breach shall be
deemed to be "willful" unless during the extended cure period the breaching
party continues to use commercially reasonable efforts to cure the breach.
(b) Other than as set forth in Section 8(a)(i) and Section 8(a)(ii),
Capstar shall not be entitled to liquidated damages from Chancellor.
(c) In the event Chancellor's material breach of this Letter
Agreement occurs prior to the closing of the Capstar-SFX Merger, Capstar shall
in good faith attempt to proceed with the closing of the Capstar-SFX Merger by
seeking to obtain acceptable alternative financing to replace the financing for
the Capstar-SFX Merger that would otherwise be realized as a result of the
Transaction.
(d) To secure a portion of the liquidated damage obligations
hereunder, Chancellor shall, upon the date that the rights and obligations under
this Letter Agreement become effective under Section 14, deposit into escrow an
irrevocable letter of credit in the amount of $35,000,000, which may be drawn
upon by Capstar after its release from such escrow. The letter of credit shall
be applied to Chancellor's liquidated damage obligations set forth above;
provided, that immediately upon the closing of the Capstar-SFX Merger, such
letter of credit shall be returned to Chancellor.
(e) If the Capstar-SFX Merger is terminated as a result of Capstar's
material breach thereunder (other than breaches that would not have occurred but
for Chancellor's material breach of this Letter Agreement), then (i) if such
material breach is "willful" (as defined in Section 8(a)(iv) above), Capstar
shall reimburse Chancellor for its out-of-pocket expenses incurred in connection
with this Transaction, up to a maximum of $5 million,
13
X. Xxxxxx Xxxxx
February 20, 1998
Page 13
and Chancellor shall be entitled to seek its additional actual damages for such
breach and (ii) if such material breach is not "willful" (as defined in Section
8(a)(iv) above), Capstar shall reimburse Chancellor for its out-of-pocket
expenses incurred in connection with this Transaction, up to a maximum of $5
million. Nothing in this Section 8(e) is intended to limit Chancellor's rights
to seek actual damages for breaches by Capstar of this Letter Agreement or any
Definitive Agreement.
(f) If the Capstar-SFX Merger is terminated as a result of SFX's
breach thereunder, Chancellor shall, at its option, be entitled to one-third of
any recovery that Capstar is able to obtain as a result of such breach,
provided, that in exercising this option, Chancellor shall be obligated to
reimburse Capstar for one-third of Capstar's costs in seeking such recovery as
such costs are incurred.
(g) Except as set forth in Section 8(a)(iii) and Section 8(e),
nothing in this Section 8 shall be construed to prohibit Capstar or Chancellor
from seeking actual damages for breaches of this Letter Agreement or any the
Definitive Agreement that are not covered by liquidated damage provisions.
9. Houston/Pittsburgh. The parties will use their commercially reasonable
efforts to obtain DOJ approval of the Capstar-SFX Merger and the Transaction. In
this regard, the parties agree that WTAE-AM, Pittsburgh, may be required to be
divested to obtain DOJ approval of the Capstar-SFX Merger and the Transaction.
With respect to WTAE-AM, Capstar shall undertake to identify and obtain a
purchaser for such station. Capstar shall be free to obtain any sale price it
can for WTAE-AM and shall control all aspects of the sale procedure. Capstar
shall bear all risk related to the sale of WTAE-AM, including without limitation
risk of loss of the liquidated damages under the Capstar-SFX Merger Agreement.
10. Note. In connection with the Transaction, Chancellor will, upon the
occurrence of the conditions set forth in the term sheet attached hereto and by
this reference made a part hereof (the "Loan Term Sheet"), provide a $250
million aggregate principal amount loan to Capstar immediately prior to the
closing of the Capstar-SFX Merger. The obligations of Capstar under such loan
will be evidenced by a note (the "Note"), which will have the essential terms
set forth in the Loan Term Sheet.
11. Conditions. The parties' obligations under this Letter Agreement
and each Definitive Agreement are conditioned on the following: (i) receipt of
all necessary FCC approvals; and (ii) expiration or termination of any necessary
waiting periods that may be required under the Xxxx-Xxxxx-Xxxxxx Act.
Chancellor's obligations under this Letter Agreement and each Definitive
Agreement are further conditioned on the following: (w) the investment of
14
X. Xxxxxx Xxxxx
February 20, 1998
Page 14
no less than $650 million, in equity securities of Capstar that are subordinate
to the Note, between January 1, 1998 and the closing of the Capstar-SFX Merger;
(x) at the closing of the Capstar-SFX Merger, HMTF and its affiliates shall own
more than 50% of all of the common equity of Capstar; (y) the absence on the
closing date of the Capstar-SFX Merger of any material breach of any covenant,
obligation, representation or warranty by Capstar, SFX and their subsidiaries
under any material debt instrument; and (z) the absence on the closing date of
the Capstar-SFX Merger of any material breach of any covenant, obligation,
representation or warranty by Capstar under this Letter Agreement (both before
and after giving effect to the consummation of the Transaction and the
acquisition by Chancellor of the Note). In the event of a Material Adverse
Effect (as defined in the Capstar-SFX Merger Agreement) on SFX related in any
material respect to the SFX Stations prior to the closing of the Capstar-SFX
Merger, Capstar must obtain Chancellor's consent prior to any waiver of such
Material Adverse Effect, and if Chancellor does not consent to such a waiver,
Chancellor shall have the right to terminate this Letter Agreement. The parties
agree that, (1) in the event of any reduction in purchase price under the
Capstar-SFX Merger that is negotiated as a result of such a Material Adverse
Effect on SFX related in any material respect to the SFX Stations, Chancellor
shall be entitled to share pro rata in any such reduction (i.e., to the
proportional extent that such Material Adverse Effect affects the SFX
Station(s)), to be reflected in an appropriate reduction in the Station
Valuations for the SFX Stations to be acquired by Chancellor xxxxxxxxx and (2)
in the event of any other reduction in the purchase price under the Capstar-SFX
Merger that is negotiated by Capstar, Chancellor shall be entitled to share pro
rata in any such reduction, to be reflected in an appropriate reduction in the
Station Valuations for the SFX Stations to be acquired by Chancellor hereunder.
12. Governmental Approvals. As soon as reasonably practicable after
the date that the rights and obligations under this Letter Agreement become
effective under Section 14, Chancellor and Capstar will submit this Letter
Agreement to the DOJ and the FCC in order to obtain all necessary government
approvals for the Transaction.
13. Arbitration. The parties agree that any dispute arising out of or
relating to this Letter Agreement or any Definitive Agreement or the breach,
termination, validity hereof or thereof shall be finally settled by arbitration
conducted expeditiously in accordance with the Center for Public Resources Rules
for Nonadministered Arbitration of Business Disputes. The Center for Public
Resources shall appoint a neutral advisor from its National CPR Panel. The
arbitration advisor shall be governed by the United States Arbitration Act, 9
U.S.C. xx.xx. 1-16, and judgment upon the award rendered by the arbitrators may
be entered by any court having jurisdiction thereof. The place of arbitration
shall be Dallas, Texas. Notwithstanding anything to the contrary contained
herein, the provisions of this Section 13 shall not apply with regard to any
15
X. Xxxxxx Xxxxx
February 20, 1998
Page 15
equitable remedies to which any party may be entitled under this Letter
Agreement or any Definitive Agreement.
14. Conditions Precedent. Except as set forth in Section 16, the
rights and obligations of the parties under this Letter Agreement (including,
without limitation, Chancellor's obligation to provide the letter of credit
referred to in Section 8(d) above) shall not become effective until (i) approval
of the Transaction by a majority of disinterested directors of Chancellor, (ii)
approval of the Transaction by the board of directors of Chancellor, (iii)
receipt by Chancellor of a fairness opinion from a national investment banking
firm regarding the Transaction, (iv) approval of the Transaction by the Limited
Partnership Advisory Committee of Hicks, Muse, Xxxx & Xxxxx Equity Fund III,
L.P., and receipt by such committee of a fairness opinion regarding the
Transaction from a national investment banking firm, and (v) approval of the
Transaction by the board of directors of Capstar. The parties shall have
twenty-one days after the date hereof to obtain such approvals and opinions (the
"Approval Period"). Each party shall promptly provide any information reasonably
requested by the other party and deemed necessary by the other party to obtain
such approvals and opinions. The appropriate party shall notify the other in
writing immediately upon satisfaction of each condition precedent.
15. Acquisition Proposals. During the Approval Period, Capstar
shall not, nor shall it authorize or permit any officer, director, employee,
affiliate of, or any investment banker, attorney or other advisor or
representative of Capstar to, directly or indirectly, (i) solicit, initiate or
encourage the submission of any Acquisition Proposal (as defined below) or (ii)
participate in any discussions or negotiations regarding, or furnish to any
person any information with respect to, or take any other action that
constitutes, or may reasonably be expected to lead to, any Acquisition Proposal.
During the Approval Period, Xxxxxxx will notify Chancellor immediately of any
inquiries or proposals with respect to any Acquisition Proposal that is received
by, or any such negotiations or discussions that are sought to be initiated
with, Capstar. An "Acquisition Proposal" means any proposal with respect to an
acquisition of all or any portion of the SFX Stations, other than the
transactions contemplated hereby.
16. Binding Nature. The parties agree that this Letter Agreement,
including the Loan Term Sheet, sets forth the essential terms and conditions
regarding the Transaction, and the parties intend by their signatures to be
bound thereby. If the rights and obligations under this Letter Agreement have
not become effective under Section 14 by the end of the Approval Period, this
Letter Agreement shall automatically terminate. Notwithstanding the provisions
of Section 14, the rights and obligations under Sections 3(a), 7, 13, 15 and 16
of this Letter Agreement shall become effective immediately upon execution of
this Letter Agreement (other than the rights and obligations contained in
Section 7(ii), which shall become effective immediately upon
16
X. Xxxxxx Xxxxx
February 20, 1998
Page 16
satisfaction of the conditions contained in Sections 14(i), 14(ii) and 14(iii)).
The parties shall use their commercially reasonable efforts to negotiate and
finalize forms of Asset Exchange Agreement, Asset Purchase Agreement, TBA, Note,
and associated security documents (together, and upon the execution thereof, the
"Definitive Agreements"). Attached to this Letter Agreement is the form of press
release that will be jointly-issued by Chancellor and Xxxxxxx immediately after
execution. This Letter Agreement shall be governed by and construed under the
laws of the State of Texas.
17
X. Xxxxxx Xxxxx
February 20, 1998
Page 17
Please confirm your agreement with the foregoing by executing this letter
on behalf of Xxxxxxx and returning a copy to me.
Sincerely,
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES
By: /s/ Xxxxx X. Xxxxxxxx
---------------------------------------------------------
Xxxxx X. Xxxxxxxx, President and Chief Executive Officer
CAPSTAR BROADCASTING CORPORATION
By: /s/ X. Xxxxxx Xxxxx
---------------------------------------------------------
X. Xxxxxx Xxxxx, President and Chief Executive Officer
18
TERM SHEET
12% SUBORDINATED SECURED NOTE
1. Security: 12% Subordinated Secured Note (the "Note")
2. Borrower: Capstar Broadcasting Corporation ("Capstar").
3. Lender: Chancellor Media Corporation of Los Angeles
("Chancellor").
4. Interest: 12% per annum accruing from the date of issuance, payable
quarterly (subject to Capstar's Deferral Election right
and/or to adjustment, in each case, as set forth below).
Of such amount, 5/6 shall be payable in cash and 1/6
shall, at Capstar's option, either be payable in cash or
added to the principal amount of the Note. To the extent
that any amount not paid in cash is so added to the
principal amount, such amount shall bear interest at the
rate otherwise applicable to the principal amount.
Capstar represents to Chancellor that, at the closing of
the Capstar-SFX Merger, no provision contained or to be
contained in its material debt instruments shall
expressly prohibit interest payments on the Note, it
being understood that financial covenants contained in
such instruments may prevent, directly or indirectly,
such interest payments at a later time.
Upon a Deferral Election, the interest rate on the Note
for the quarterly period in which such Deferral Election
is made (i.e., the quarterly period immediately preceding
the date on which an interest payment is due (the
"Deferred Quarter")) shall increase from 12% per annum to
14% per annum (the "Increased Rate"), of which 6/7 shall
be payable in cash and 1/7 shall, at Capstar's option,
either be payable in cash or added to the principal
amount of the Note. To the extent that any amount not
paid in cash is so added to the principal amount, such
amount shall
19
bear interest at the rate otherwise applicable to the
principal amount. The Increased Rate shall apply from
the beginning of the Deferred Quarter until the payment
by Capstar of all deferred interest in cash.
If Capstar shall not have completed acquisitions during
the Exchange Period (excluding the Jacksonville Exchange
and the acquisition of the Austin Stations) (x) with an
aggregate purchase price of $100 million by the first
anniversary of the issue date of the Note, (y) with an
aggregate purchase price of $200 million by the end of
the second anniversary of the issue date of the Note, and
(z) with an aggregate purchase price of $300 million by
the end of the third anniversary of the issue date of the
Note, in each case, that are subject to the procedures
described in Section 1 of this Letter Agreement, the
Increased Rate that would apply during any Deferral
Election during each such 12 month period, if any, shall
be increased from 14% per annum to 16% per annum, of
which 7/8 shall be payable in cash and 1/8 shall, at
Capstar's option, either be payable in cash or added to
the principal amount of the Note. To the extent that any
amount not paid in cash is so added to the principal
amount, such amount shall bear interest at the rate
otherwise applicable to the principal amount.
5. Amount at Initial Aggregate commitment of $250 million.
Issuance:
6. Term of Note: Due on the 20th anniversary of issuance or earlier as
provided herein.
7. Ranking: Subordinated, on terms acceptable to Xxxxxxx's senior
lenders, to all indebtedness of Capstar. Subject to
the subordination provisions, any new securities will
not prohibit or limit payment of interest on, or
prepayment of, the Note.
2
20
8. Capstar Prepayment
Rights: Prepayable at option of Capstar any time in increments
of $1,000 principal amount plus accrued interest;
provided, that any optional prepayment by Capstar shall
not affect Chancellor's prepayment rights described in
paragraph 9 below.
Any prepayment payments made hereunder shall be applied
first to accrued interest and thereafter to principal.
9. Capstar Prepayment
Obligations: Chancellor will have the right (but not the obligation)
to require Capstar to prepay that portion of the Note
equal to 50% of the cash purchase price payable by
Chancellor under an Asset Purchase Agreement or 50% of
the cash purchase price payable by Chancellor under an
Exchange Station Agreement that is a stock purchase
agreement (i.e., the cash purchase price to be paid for
the stock of the owner of the Exchange Stations after
making appropriate adjustments for working capital), upon
the consummation of the purchase of an SFX Station under
an Asset Purchase Agreement or the purchase of stock
under an Exchange Station Agreement that is a stock
purchase agreement.
Chancellor will have the option to require Capstar to
prepay any remaining portion of the Note (including
accrued interest) if Chancellor has given notice of
prepayment on the first to occur of (i) 30 days prior to
the closing of the transfer of the final SFX Station to
Chancellor under an Asset Purchase Agreement or Asset
Exchange Agreement and (ii) Chancellor's election under
Section 1(i) of this Letter Agreement to purchase all
remaining SFX Stations for cash, in either case, such
prepayment to occur on the closing of the acquisitions
referred to in clauses (i) or (ii), as applicable, above.
3
21
In the event of a Deferral Election (as defined in
paragraph 12 below), Chancellor's right to require
Capstar to prepay a portion of the Note shall be
increased such that Chancellor may, with respect to such
Deferral Election, require Capstar to prepay that portion
of the Note equal to a percentage of the purchase price
set forth in the first paragraph of this Paragraph 9
equal to (x) 50% plus (y) the product of 50% multiplied
by a fraction, the numerator of which is the number of
days of such Deferral Election and the denominator of
which is 360.
In the event that Capstar and its subsidiaries acquire
stations during the Exchange Period that are not acquired
in compliance with the procedures set forth in Section 1
of this Letter Agreement (a "Non-Exchange Acquisition"),
Chancellor shall have the right (but not the obligation)
to require Capstar to prepay, at the closing of any such
Non-Exchange Acquisition, that portion of the Note equal
to 100% of the amount that Capstar pays in such
Non-Exchange Acquisitions. This paragraph shall not
apply to (i) transactions of Capstar and its subsidiaries
to acquire stations that are the subject of binding
agreements and pending as of the date that the rights and
obligations under this Letter Agreement become effective
under Section 14of this Letter Agreement or the
reinvestment of proceeds from the sale of radio stations
WFAS-FM, WZZN-FM, WRKI-FM, WAXB-FM, WPUT-AM, WTAE-AM,
WJDX-FM and the SFX Long Island Stations, (ii) the
reinvestment of proceeds of station sales of Capstar and
its subsidiaries that are closed prior to the date that
the rights and obligations under this Letter Agreement
become effective under Section 14 of this Letter
Agreement or that are the subject of
4
22
binding agreements and pending as of the date that the
rights and obligations under this Letter Agreement become
effective under Section 14 of this Letter Agreement, (iii)
the investment into SBI Holding Corporation or its
subsidiaries of proceeds of station sales consummated
between the date that the rights and obligations under this
Letter Agreement become effective under Section 14 of this
Letter Agreement and the date that the Capstar-SFX Merger is
consummated, (iv) other acquisitions during the Exchange
Period with a maximum aggregate purchase price of $20
million and (v) acquisitions of radio stations by SFX or its
subsidiaries from Capstar or its subsidiaries or by Capstar
or its subsidiaries from SFX or its subsidiaries.
In the event that Capstar terminates the Letter Agreement
or any Definitive Agreement pursuant to Section
8(a)(iii)(A) of the Letter Agreement, Capstar shall have
the obligation to prepay all principal and accrued
interest under the Note within three years of the date of
such termination. In the event that Capstar terminates
the Letter Agreement or any Definitive Agreement pursuant
to Section 8(a)(iii)(B) of the Letter Agreement, Capstar
shall have the obligation to prepay all principal and
accrued interest under the Note immediately upon such
termination.
Any prepayment payments made hereunder shall be applied
first to accrued interest and thereafter to principal.
Capstar represents to Chancellor that, at the closing of
the Capstar-SFX Merger, no provision contained or to be
contained in its material debt instruments shall
expressly prohibit the satisfaction of Capstar's
prepayment obligations under the Note, it being
understood that financial
5
23
covenants contained in such instruments may prevent,
directly or indirectly, the satisfaction of such prepayment
obligation at a later time.
10. Security for (i) Senior perfected pledge by Capstar of common stock of
Capstar's Capstar Broadcasting Partners, Inc. (100%), (ii) senior
Prepayment perfected pledge by Capstar of common stock of SBI Holding
Obligations; Corporation (a majority interest), and (iii) senior
Guarantee: perfected pledge of all common stock of SFX. In addition,
SBI Holding Corporation shall provide a full and
unconditional senior guarantee of Capstar's prepayment
obligations.
11. Covenants: Debt Incurrence. SBI Holding Corporation and its
subsidiaries will not be permitted, directly or indirectly,
to incur, create, assume, guarantee, acquire or become
liable for indebtedness except in compliance with a 9:1
consolidated indebtedness to trailing four-quarter EBITDA
ratio. Capstar and its subsidiaries will not be permitted,
directly or indirectly, to incur create, assume, guarantee,
acquire or become liable for indebtedness except in
compliance with a 9.5:1 consolidated indebtedness to
trailing four-quarter EBITDA ratio. In each case, the
aggregate liquidation preference of all preferred stock of
the entity and its consolidated subsidiaries shall be
counted as indebtedness. These debt incurrence calculations
will be made in a manner consistent with leverage ratio
calculations (including pro forma adjustments) under the
senior credit agreement of Capstar Radio Broadcasting
Partners, Inc. (as such agreement may be amended or amended
and restated), provided, that for purposes of calculating
leverage ratios hereunder, Capstar and SBI Holding
Corporation shall be entitled during 1998 to include in
their respective EBITDA calculations at least $10 million
and $4 million, respectively, in net revenues from The AMFM
6
24
Network (whether or not such amounts are actually received),
or such higher amount if the net revenues actually received
by Capstar and SBI Holding Corporation from The AMFM Network
exceed such amounts. Borrowings under working capital lines
of credit of Capstar and its subsidiaries and SBI Holding
Corporation and its subsidiaries shall not count as debt,
except to the extent that the aggregate borrowings under
such lines of credit exceed $50 million, provided, that,
subject to the foregoing limitations, SBI Holding
Corporation may only exclude working capital borrowings
under such lines of credit for the purposes of calculating
its leverage ratio to the extent that it or its subsidiaries
have actually borrowed such amounts.
Restricted Payments. Capstar shall be restricted from
declaring or making payments, dividends and other
distributions on all securities of Capstar that are junior
in right of payment of interest, dividends, distributions or
dissolution or liquidation payments, and from purchasing,
redeeming, retiring or otherwise acquiring any securities of
Capstar that are junior in right of payment of interest,
dividends, distributions or dissolution or liquidation
payments or warrants, rights or options to acquire such
securities, except that, subject to (i) timely payment by
Capstar of all interest on the Note when due and (ii)
compliance with all other obligations under the Note,
Capstar shall be able to make restricted payments in an
aggregate amount equal to $10 million.
12. Deferral Election; Capstar may, at its option but to the Increased Rate as
Events of Default: provided in paragraph 4 above, elect to defer the
payment of any cash interest due under the Note until
Capstar is obligated to prepay the Note or otherwise pay
the Note upon
7
25
its maturity (a "Deferral Election").
The following shall constitute Events of Default: (i) the
failure to pay the principal on the Note when such principal
becomes due and payable (at maturity, upon optional or
mandatory prepayment, or otherwise); (ii) a default in the
observance or performance of any other obligation, covenant
or agreement under the Note; and (iii) the bankruptcy,
insolvency or reorganization affecting Capstar or any of its
significant subsidiaries.
Upon an Event of Default, Chancellor shall be entitled to
any remedy available to it. Without limiting the foregoing,
upon an Event of Default, all principal and accrued but
unpaid interest on the Note shall, without any action by
Chancellor, become immediately due and payable.
8
26
SCHEDULE A
STATION VALUATIONS
------------------
----------------------- ------------------------------
STATION VALUATION
----------------------- ------------------------------
KBFB-FM $55,000,000
----------------------- ------------------------------
KTXQ-FM $55,000,000
----------------------- ------------------------------
KKRW-FM $83,250,000
----------------------- ------------------------------
KODA-FM $143,250,000
----------------------- ------------------------------
KQUE-AM $15,000,000
----------------------- ------------------------------
KPLN-FM $35,000,000
----------------------- ------------------------------
KYXY-FM $83,000,000
----------------------- ------------------------------
WDVE-FM $83,000,000
----------------------- ------------------------------
WJJJ-FM $20,000,000
----------------------- ------------------------------
WXDX-FM $30,000,000
----------------------- ------------------------------
WVTY-FM $35,000,000
----------------------- ------------------------------
