AMENDED AND RESTATED
TAX SHARING AGREEMENT
This AMENDED AND RESTATED TAX SHARING AGREEMENT (this "Agreement"),
effective as of May 27, 1998 among SFX Broadcasting, Inc., a Delaware
corporation ("SFX"), and SFX Entertainment, Inc., a Delaware corporation
("Entertainment") and with respect to Section 5.15 only, SBI Holding
Corporation, a Delaware corporation ("Parent").
RECITALS
WHEREAS, pursuant to the Distribution Agreement SFX has distributed
all of the shares of Entertainment it owns to SFX's stockholders.
WHEREAS, Entertainment and its subsidiaries have been or will be
included in the consolidated Federal Income Tax returns filed by SFX, and
Entertainment and certain of its subsidiaries have been or will be included
with one or more members of the SFX Group in state and local unitary or
combined Income Tax and franchise tax returns.
WHEREAS, the parties desire to set forth their agreement with respect
to the Federal, state, and local Taxes attributable to each of them and their
subsidiaries for all taxable periods beginning before the day following the
date defined herein as the "Distribution Date" (including the effect on such
Taxes of carrybacks and other transactions and occurrences that may arise in
taxable periods ending after the Distribution Date).
WHEREAS, the parties entered into the original Tax Sharing Agreement
effective as of April 20, 1998 (the "Prior Agreement") and desire to amend and
restate their Agreement according to the terms stated in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the parties agree as follows:
ARTICLE I
DEFINITIONS
For purposes of this Agreement, the following definitions shall apply
in addition to those set forth above:
(a) "Adjustment" shall mean a formal notice given by the IRS or any
other relevant taxing authority which either proposes or assesses a change in
any Pre-Distribution Tax Liability or Post-Distribution Tax Liability (in each
case whether creating a Tax Benefit or a Tax Detriment).
(b) "Affiliated Group" shall mean an affiliated group of corporations
within the meaning of section 1504(a) of the Code for the taxable period in
question.
(c) "Carryback Item" shall mean any net operating loss, net capital
loss, unused general business tax credit, or any other Tax Item of the
Entertainment Affiliated Group which under the Code or any other applicable
Income Tax law can be used to generate a Tax Benefit for the SFX Affiliated
Group.
(d) "Code" shall mean the Internal Revenue Code of 1986 (or, if
relevant, the Internal Revenue Code of 1954), as amended, in effect for the
taxable period in question and corresponding provisions of any subsequent
federal tax laws.
(e) "Distribution" shall mean the distribution by SFX of the stock of
Entertainment to the holders of SFX stock pursuant to the terms of the
Distribution Agreement.
(f) "Distribution Agreement" shall mean the distribution agreement
between SFX Broadcasting, Inc. and SFX Entertainment, Inc. dated as of April
20, 1998.
(g) "Distribution Date" shall mean the date on which the Distribution
occurs.
(h) "Entertainment Affiliated Group shall mean, for each taxable
period beginning after the Distribution Date, the Affiliated Group of which
Entertainment is the "common parent" within the meaning of section 1504(a) of
the Code.
(i) "Entertainment Group" shall mean, with respect to any taxable
period, the corporations that were members of the SFX Affiliated Group and that
are members of the Entertainment Affiliated Group immediately after the
Distribution Date, including, without limitation, Entertainment.
(j) "Final Determination" shall mean the final resolution of any tax
liability (including all related interest and penalties) for a taxable period.
A Final Determination shall result from the first to occur of:
(i) The expiration of 30 days after official IRS acceptance
of a Waiver of Restrictions on Assessment and Collection of Deficiency
in Tax and Acceptance of Overassessment on IRS Form 870 or 870-AD (or
any successor comparable form or the expiration of a comparable period
with respect to any comparable agreement or form under the laws of
other jurisdictions), unless, within such period, the taxpayer gives
notice to the
-2-
other party of the taxpayer's intention to attempt to recover all or
part of any amount paid or to be paid pursuant to the Waiver or
comparable form by the filing of a timely claim for refund;
(ii) a decision, judgment, decree, or other order by a court
of competent jurisdiction that has become final and is not subject to
further judicial review (by appeal or otherwise);
(iii) the execution of a closing agreement under section 7121
of the Code or the official acceptance by the IRS of an offer in
compromise under section 7122 of the Code, or comparable agreements
under the laws of other jurisdictions;
(iv) the expiration of the time for filing a claim for refund
or for instituting suit in respect of a claim for refund disallowed in
whole or part by the IRS or any other taxing authority with which a
claim for refund could be or was filed;
(v) any other final disposition of the tax liability for such
period by reason of the expiration of the applicable statute of
limitations; or
(vi) any other event that the parties agree is a final and
irrevocable determination of the liability at issue.
(k) "Income Taxes" shall mean all federal, state and local Taxes
imposed upon, or measured by, income (including the federal alternative minimum
tax under Section 55 of the Code), and those franchise, excise and similar
Taxes which have been customarily included in the provision for Income Taxes on
SFX's financial statements, together with all related interest, penalties and
additions to tax.
(l) "Indemnified Party" shall have the meaning ascribed to such term
in Section 4.01(a) of this Agreement.
(m) "Indemnifying Party" shall have the meaning ascribed to such term
in Section 4.01(a) of this Agreement.
(n) "IRS" means the United States Internal Revenue Service or any
successor thereto, including, but not limited to, its agents, representatives,
and attorneys.
(o) "Merger Agreement" shall mean the agreement and plan of merger
among SBI Holding Corporation, SBI Radio Acquisition Corporation and SFX
Broadcasting, Inc. dated as of August 24, 1997.
(p) "Other Taxes" shall mean all Taxes (including all related
interest, penalties and additions to tax) other than Income Taxes.
-3-
(q) "Post-Distribution Tax Liabilities" shall mean the respective
liabilities of the members of the SFX Affiliated Group and the Entertainment
Affiliated Group for Income Taxes for all taxable periods beginning on or after
the day following the Distribution Date.
(r) "Pre-Distribution Tax Liabilities" shall mean the liability of
members of the SFX Affiliated Group for Income Taxes for all taxable periods
beginning before the day following the Distribution Date. A liability described
in the previous sentence is a Pre-Distribution Tax Liability whether the
liability has been previously assessed in whole or in part or is assessed in
whole or in part after the date of this Agreement, and whether the liability is
or was imposed on the SFX Affiliated Group collectively or on any member of
such Group separately.
(s) "SFX Affiliated Group" shall mean, for each taxable period, the
Affiliated Group of which SFX or any successor of SFX is the "common parent"
within the meaning of section 1504(a) of the Code.
(t) "SFX Group" shall mean, with respect to any taxable period, the
corporations that were members of the SFX Affiliated Group during such period
(including, without limitation, SFX), exclusive of the corporations that are
included in the Entertainment Affiliated Group immediately after the
Distribution Date.
(u) "Tax Benefit" shall mean a reduction in the Income Tax liability
of a corporation (or of the Affiliated Group of which it is a member) for any
taxable period. Except as otherwise provided in this Agreement, a Tax Benefit
shall be deemed to have been realized or received from a Tax Item in a taxable
year only if and to the extent that the Income Tax liability of the taxpayer
(or the Affiliated Group of which it is a member) for such period is less than
it would have been if such liability were determined without regard to such Tax
Item.
(v) "Tax Detriment" shall mean an increase in the Income Tax liability
of a corporation (or of the Affiliated Group of which it is a member) for any
taxable period. Except as otherwise provided in this Agreement, a Tax Detriment
(i) shall be deemed to have been realized or suffered from a Tax Item in a
taxable year only if and to the extent that the Income Tax liability of the
taxpayer (or the Affiliated Group of which it is a member) for such period is
greater than it would have been if such liability were determined without
regard to such Tax Item and (ii) shall include the several liability imposed on
a corporation by the provisions of Treasury Regulation ss. 1.1502-6 to the
extent such liability is for Income Taxes for which such corporation is not
responsible pursuant to this Agreement.
(w) "Taxes" shall mean Income Taxes and Other Taxes.
(x) "Tax Item" shall mean any item of income, gain, loss, deduction,
credit, recapture of credit, or any other item which increases or decreases
Income Taxes paid or payable.
-4-
ARTICLE II
FILING OF TAX RETURNS
SECTION 2.01. PRE-DISTRIBUTION TAX RETURNS.
(a) SFX shall file all consolidated Federal Income Tax returns (and
any unitary, combined or consolidated state and local Income Tax returns or tax
returns for Other Taxes filed on a unitary, combined or consolidated basis) for
each member of the SFX Affiliated Group that are required to be filed for
periods beginning before (or beginning and ending on) the Distribution Date and
shall pay all Taxes attributable to these periods, including any deferred
income triggered into income under Treas. Reg. ss. 1.1502-13 and Treas. Reg.
ss. 1.1502-14 and any excess loss accounts taken into income under Treas. Reg.
ss. 1.1502-19. Entertainment acknowledges that Treas. Reg. ss. 1.1502-77(a)
confers certain authority on SFX, as the common parent of the SFX Affiliated
Group, with respect to Federal Income Tax matters for all taxable periods
beginning before the day following the Distribution Date and agrees to enter
into any election or consent reasonably requested by SFX with respect to such
matters for such taxable years. Entertainment agrees (on behalf of itself and
members of the Entertainment Group) (i) not to make any election to exclude any
member of the Entertainment Group from the SFX consolidated Federal Income Tax
return (or any comparable state or local combined or consolidated return) for
taxable periods beginning before (or beginning and ending on) the Distribution
Date and (ii) not to take, advocate or fail to oppose any position relating to
the tax treatment of any transaction occurring prior to the Distribution Date
which is inconsistent with the manner in which such transaction was treated on
the consolidated return of the SFX Affiliated Group for the taxable periods
during which members of the Entertainment Group were members of the SFX
Affiliated Group. SFX agrees not to take, advocate or fail to oppose any
position relating to the tax treatment of any transaction occurring prior to
the Distribution which is inconsistent with the manner in which such
transaction was treated on the consolidated return of the SFX Affiliated Group
for the taxable periods during which members of the Entertainment Group were
members of the SFX Affiliated Group, except for any such actions requested by
Entertainment.
(b) SFX shall be responsible for filing all returns relating to
members of the SFX Group with respect to Other Taxes and with respect to any
Income Taxes as to which consolidated, unitary or combined returns are not made
for a period beginning before (or beginning and ending on) the Distribution
Date. Entertainment shall be responsible for filing all returns relating to
members of the Entertainment Group with respect to Other Taxes and with respect
to any Income Taxes as to which consolidated, unitary or combined returns are
not made for a period beginning before (or beginning and ending on) the
Distribution Date.
SECTION 2.02. POST-DISTRIBUTION TAX RETURNS. For taxable periods
beginning after the Distribution Date: (i) SFX shall be responsible for filing
tax returns relating to members of the SFX Group; and (ii) Entertainment shall
be responsible for filing tax returns relating to members of the Entertainment
Group.
-5-
ARTICLE III
PAYMENT OF TAXES
SECTION 3.01. PRE-DISTRIBUTION CONSOLIDATED INCOME TAXES AND CERTAIN
OTHER TAXES.
(a) So as to enable the SFX Affiliated Group to prepare accurately and
completely the consolidated returns which include the Income Tax liability of
members of the Entertainment Group and in order to provide for accurate
financial reporting for tax periods or portions thereof ending on or before the
Distribution Date, Entertainment shall prepare and submit to SFX, no later than
180 days after the end of each such tax period or portion thereof (or such
later date as consented to by SFX, which consent shall not be unreasonably
withheld), complete draft Federal Income Tax returns reflecting the Tax Items
of the members of the Entertainment Group for each such tax period or portion
thereof, modified as provided in the following sentence and provide such other
information with respect to Income Taxes (or Other Taxes, the returns for which
are filed on a unitary, combined or consolidated basis) as SFX may reasonably
request. Income Taxes shall be calculated (i) using, to the extent permitted by
law, such methods, conventions and principles of taxation and making such
elections as are consistent with the methods, conventions, principles and
elections previously used by the SFX Affiliated Group or such member of the
Entertainment Group in preparing prior Income Tax returns; and (ii) for the
taxable period which ends on the Distribution Date, by apportioning Tax Items
based upon an interim closing of the books of the Entertainment Group as of the
end of the Distribution Date. Entertainment agrees not to make a ratable
allocation election under Treas. Reg. ss. 1.1502-76(b)(2)(ii)(D). Entertainment
shall bear all costs and expenses of preparation and submission of such
information, including accountants' and attorneys' fees.
(b) For taxable periods in which the Entertainment Group is included
in the SFX Affiliated Group, Entertainment shall pay to SFX an amount equal to
the Income Tax liability of the Entertainment Group (and any liability of the
Entertainment Group for Other Taxes the returns for which are filed on a
unitary, combined or consolidated basis), as determined on a separate company
basis; but only to the extent such separate Income Tax Liability of the
Entertainment Group (or separate Other Tax liability of the Entertainment
Group) is not included in the computation of working capital under Section
5.07(i) of the Merger Agreement. In addition, Entertainment shall not be
obligated to SFX under the preceding sentence to the extent the SFX Affiliated
Group's Income Tax Liability for the tax period including the Distribution Date
is less than the Income Tax Liability of the Entertainment Group for the tax
period of the Entertainment Group ending on the Distribution Date as result of
a net operating losses of the SFX Group.
SECTION 3.02. RESPONSIBILITY FOR TAX ADJUSTMENTS.
(a) Entertainment shall pay, reimburse and indemnify SFX as common
parent of the SFX Affiliated Group for any Pre-Distribution Tax Liabilities
arising from an Adjustment with respect to a Tax Item of a member of the
Entertainment Group; and
-6-
(b) SFX shall pay, reimburse and indemnify Entertainment as common
parent of the Entertainment Affiliated Group for:
(i) any Tax Benefit derived by the SFX Group from an
Adjustment with respect to a Tax Item of a member of the Entertainment
Group; and
(ii) any Tax Detriment suffered by any member of the
Entertainment Group from an Adjustment with respect to a Tax Item of a
member of the SFX Group.
SECTION 3.03. NON-CONSOLIDATED OTHER TAXES AND INCOME TAXES. Unless
otherwise provided in this Agreement, the SFX Group shall pay all Other Taxes
and any Income Taxes as to which consolidated, unitary or combined returns are
not made (and shall be entitled to receive and retain all refunds of such
Taxes) that are attributable to members of the SFX Group. Unless otherwise
provided in this Agreement, the Entertainment Group shall pay all Other Taxes
and any Income Taxes as to which consolidated, unitary or combined returns are
not made (and shall be entitled to receive and retain all refunds of such
Taxes) which are attributable to members of the Entertainment Group.
SECTION 3.04. CARRYBACKS.
(a) To the extent that any carryback period for a Carryback Item would
include any taxable period beginning before the day following the Distribution
Date, Entertainment agrees to elect (under section 172(b)(3) of the Code and,
to the extent feasible, any similar provision of any applicable state or local
Income Tax law) to relinquish such carryback period as to any Carryback Item
which could thereby be used to create or carry forward a Tax Benefit for the
SFX Group (in which event no payment shall be due from SFX to Entertainment in
respect of such Carryback Item). SFX shall not elect to retain any net
operating loss carryovers or capital loss carryovers of the Entertainment
Group.
(b) If, notwithstanding the foregoing, for any taxable period ending
after the Distribution Date, a Carryback Item is incurred, then SFX shall pay
to Entertainment an amount equal to the Tax Benefit (adjusted as provided in
the next sentence) obtained by the SFX Affiliated Group in any taxable year as
a direct consequence of the Carryback Item. In determining the Tax Benefit
obtained by SFX with respect to a taxable year, if, in addition to the
Entertainment Group Carryback Items, there are also any Tax Items or Carryback
Items generated by the SFX Group which are properly taken into account in
determining the Income Tax liability of the SFX Affiliated Group for such
taxable year, SFX shall be credited with a pro rata portion of any resulting
Tax Benefit; the amount of such Tax Benefit to be paid to Entertainment shall
be reduced by the present value (determined at the then applicable short-term
Federal rate under the Code) of any future Tax Detriment that may be suffered
by any member of the SFX Group as a consequence of such Entertainment Group
Carryback Item. Entertainment agrees to indemnify and hold the SFX Group
harmless from any Taxes resulting from the disallowance of a Tax Benefit which
previously resulted in a payment from SFX to Entertainment under this Section
3.04(b).
-7-
(c) SFX shall cooperate fully in obtaining the Tax Benefit
attributable to any Carryback Item, but any reasonable out-of-pocket expenses
incurred by SFX that are directly attributable to such efforts shall be borne
by Entertainment. In lieu of such cooperation, SFX may elect to pay to
Entertainment the Tax Benefit which would have been payable under this section
if such Carryback Item were allowed.
(d) Any refund of Tax (including any interest thereon) attributable to
the SFX Affiliated Group for any period beginning before (or beginning and
ending on) the Distribution Date shall be the property of SFX and any refund of
Tax (including any interest thereon) attributable to the Entertainment Group
for the period beginning before (or beginning and ending on) the Distribution
Date shall be the property of Entertainment.
SECTION 3.05. RESPONSIBILITY FOR DISTRIBUTION TAXES. Subject to
Section 4.01, Entertainment and any successor corporation shall be responsible
for, and shall indemnify and hold harmless SFX and each member of the SFX Group
from Income Taxes, Other Taxes and all reasonable out-of-pocket costs and
expenses arising out of, based upon or attributable to the Distribution, but,
in the case of Income Taxes, only to the extent such Income Taxes are based
upon any gain recognized by the SFX Group as a result of the Distribution in
excess of the net operating losses of the SFX Affiliated Group that are
available to offset such gain in the tax period including the Distribution
(without regard to subsequent tax years). SFX agrees to consult in good faith
with Entertainment regarding the amount of gain, if any, recognized by SFX as a
result of the Distribution.
SECTION 3.06. PAYMENT.
(a) GENERAL. If SFX is required to make a payment to a member of the
Entertainment Group under this Agreement, such payment shall be made to
Entertainment or any successor corporation as the parent of the Entertainment
Affiliated Group, and any payment due under this Agreement from any member of
the Entertainment Group to SFX shall be made by Entertainment to SFX or any
successor corporation as common parent of the SFX Group. Subject to Section
3.06(b), the payment shall be made by the earlier of (i) 20 days after SFX (or
a member of the Entertainment Group, as applicable) (x) receives a refund
(including, without limitation, a refund in the form of a credit against tax
liability) or realizes a reduction in its tax liability (including, without
limitation, estimated Taxes) or (y) makes a tax payment (including, without
limitation, any payment made in connection with either an estimated or annual
tax liability), (ii) 20 days after a Final Determination with respect to such
tax or (iii) 20 days after the determination by the parties or pursuant to
Article V that such payment is due. The amount of any payment required to be
made by any party to another under this Agreement shall be an amount which,
after subtraction of any additional federal, state or local Taxes payable by
the recipient in respect of the receipt of such payment, is equal to the amount
payable hereunder. SFX and Entertainment agree that, without limiting the
ultimate payment obligation of the payor set forth in the preceding sentence,
to the extent there is substantial authority (within the meaning of section
6662 of the Code) for such position or such position is otherwise permissible
under applicable law, any payment shall be reported as non-deductible and
non-taxable.
-8-
(b) ESTIMATED PAYMENTS FOR DISTRIBUTION TAXES. Notwithstanding
anything to the contrary in this Agreement, in the case of Income Taxes payable
by the SFX Group as a result of the Distribution ("Distribution Taxes"), the
parties agree that the following procedures (collectively, the "Method") shall
be applicable to estimated Distribution Taxes: (i) SFX shall make the payment
of its estimated Taxes on the following basis: 50% on June 15, 1998, 25% on
September 15, 1998 and 25% on December 15, 1998, (ii) the amount of
Distribution Taxes shall be computed without reducing SFX's basis in its
Entertainment stock by the amount of any payments under this Agreement and
(iii) the payments by Entertainment to SFX provided for under this Section
3.06(b) shall include a "gross-up" as provided for in the penultimate sentence
of Section 3.06(a). SFX agrees to give Entertainment notice of the amount
payable by Entertainment hereunder at least five days prior to the payment of
such estimated Taxes. Entertainment agrees to wire the amount payable hereunder
to the bank designated by SFX in its notice, in immediately available funds, on
or before 10:30 a.m., New York, New York time on the following dates
corresponding to SFX's payment of estimated Taxes:
Estimated Tax Payment Date Indemnity Payment Date
-------------------------- ----------------------
June 15, 1998 June 30, 1998
September 15, 1998 September 30, 1998
December 15, 1998 December 31, 1998
The amount payable by Entertainment on each Indemnity Payment Date set forth
above (the "Indemnity Amount") shall be adjusted as follows: (i) in the case of
the indemnity payable on June 30, 1998, the Indemnity Amount shall be reduced
by an amount equal to 5 days of simple interest on the Indemnity Amount at a
rate of 5%; (ii) in the case of the indemnity payable on September 30, 1998,
the Indemnity Amount shall be reduced by an amount equal to 5 days of simple
interest on the Indemnity Amount at a rate of 7.5%; and (iii) in the case of
the indemnity payable on December 31, 1998, the Indemnity Amount shall be
reduced by an amount equal to 4 days of simple interest on the Indemnity Amount
at a rate of 7.5%. SFX's payment of its estimated Distribution Taxes pursuant
to the Method shall not in any way limit Entertainment's indemnity obligations
in this Agreement, except that Entertainment shall have no liability for, and
SFX shall indemnify and hold harmless Entertainment against any penalties and
interest resulting from the use of procedures (ii) and (iii) of the Method to
pay the SFX Group's estimated Taxes under this Section 3.06(b).
ARTICLE IV
COOPERATION AND EXCHANGE OF INFORMATION
SECTION 4.01. MATTERS GIVING RISE TO INDEMNITY.
(a) NOTICE. If any tax authority shall propose an Adjustment to the
tax liability of either Entertainment or SFX ("Indemnified Party") which would
result, if such Adjustment were to be confirmed by a Final Determination, in a
loss against which the other party ("Indemnifying Party") may be required to
indemnify Indemnified Party pursuant to this Agreement, Indemnified Party shall
-9-
promptly notify Indemnifying Party thereof in writing. Such notice to
Indemnifying Party shall include sufficient information with respect to the
issues as to which indemnity may be sought to enable Indemnifying Party to
determine whether to request Indemnified Party to contest the Adjustment.
(b) CONDUCT OF EXAMINATIONS. Indemnified Party shall keep Indemnifying
Party informed as to the status and progress of all matters materially related
to any issue that arises on the audit of Indemnified Party's tax returns that
could give rise to an obligation of Indemnifying Party to make payments to
Indemnified Party hereunder. Indemnified Party shall discuss with
representatives of Indemnifying Party the course and conduct of all material
matters that are the subject of this Agreement and shall permit such
representatives to participate in discussions with such tax authorities.
Indemnified Party will consider in good faith written proposals in connection
with contesting such Adjustment that Indemnifying Party shall submit to it from
time to time, provided that Indemnified Party shall control the nature of all
action to be taken to contest such Adjustment.
(c) CONTEST RIGHTS AND CONDITIONS. Upon receipt of any formal notice
from the IRS (including, without limitation, a 30-day letter) or any other tax
authority proposing an Adjustment which could impose liability on Indemnifying
Party hereunder, Indemnified Party shall promptly give notice thereof to
Indemnifying Party, and Indemnified Party will contest such Adjustment if
Indemnifying Party shall so request in writing within 20 days of Indemnifying
Party's receipt of such notice from Indemnified Party. In no event, however,
shall Indemnified Party be required to contest any Adjustment unless coincident
with Indemnifying Party's request (A) Indemnified Party shall have received (i)
an indemnity from Indemnifying Party for any Income Taxes, Other Taxes and all
other liability, expense or loss arising out of or relating to the Indemnifying
Party's issues involved in the contest or claim (including, without limitation,
all out-of pocket expenses, costs, reasonable legal, accounting, engineers' and
other professional fees and disbursements, but excluding any independent
expense incurred by Indemnified Party for the purpose of monitoring the
progress of the issue) and (ii) an opinion of independent tax counsel to
Indemnifying Party (which counsel shall be reasonably acceptable to Indemnified
Party) to the effect that a reasonable basis exists for contesting the
Adjustment to the extent that the contest involves such issues; and (B) if such
contest is to be conducted in a manner requiring payment of a proposed tax
deficiency, Indemnifying Party shall have advanced to Indemnified Party, on an
interest-free basis, an amount sufficient to make payment of the proposed tax
deficiency attributable to the Adjustment, together with any required interest
or penalties in respect of such proposed tax deficiency. If any funds are
advanced by Indemnifying Party in connection with any tax contest, any refund
received to the extent fairly attributable to such advance shall be returned to
Indemnifying Party, together with any interest thereon paid by the relevant
taxing authority, promptly upon Indemnified Party's receipt of such funds. If
Indemnifying Party shall have requested Indemnified Party to contest an
Adjustment and complied with each of the terms and conditions set forth above,
such contest shall be conducted by independent tax counsel selected by
Indemnifying Party and reasonably acceptable to Indemnified Party.
(d) SETTLEMENT; RELEASE OF INDEMNIFICATION. If Indemnifying Party
shall have requested Indemnified Party to contest an Adjustment and complied
with each of the terms and conditions set
-10-
forth above, Indemnified Party shall not settle or compromise any Adjustment
for which indemnity is sought hereunder without the written consent of
Indemnifying Party (which consent shall not be unreasonably withheld) unless it
simultaneously releases Indemnifying Party from its obligations to indemnify
and reimburse Indemnified Party with respect to the issues so settled or
compromised, and in the event that Indemnified Party concludes such a
settlement or compromise without Indemnifying Party's written consent,
Indemnifying Party shall be deemed conclusively to have been so released. If
Indemnifying Party shall fail to request Indemnified Party to contest any
Adjustment or shall fail to comply with the terms and conditions entitling it
to make such request as set forth in subparagraph (c), Indemnified Party may in
its sole discretion elect to contest (or not contest) such Adjustment with
counsel selected by it and may at any time settle or compromise the matter
without the consent of Indemnifying Party and without releasing its rights to
indemnity from Indemnifying Party. If Indemnifying Party shall be willing to
accept any settlement proposed by any taxing authority with respect to an issue
as to which Indemnifying Party has an indemnity obligation hereunder, but
Indemnified Party refuses to approve such settlement, Indemnifying Party's
obligation to indemnify Indemnified Party with respect to such issue shall
thereafter be limited in amount to the amount Indemnifying Party would have
been required to pay pursuant to such settlement.
SECTION 4.02. TAX RETURN INFORMATION. Without limiting Section 4.01
hereof, SFX and Entertainment agree to cooperate fully with each other in
connection with the preparation of any tax return or claim for refund or in
conducting any audit or other proceeding in respect of Taxes for all open
taxable periods. Such cooperation shall include making personnel and records
available promptly and within 30 days (or such other period as may be
reasonable under the circumstances) after a request for such personnel or
records is made by the tax-imposing authority or the other party, in either
such case at the expense of the requesting party or the party whose Taxes are
being examined by the tax-imposing authority. If any member of the SFX Group or
the Entertainment Group, as the case may be, fails to provide any information
requested pursuant to this section, then the requesting party shall have the
right to engage a public accountant of its choice to gather such information.
Entertainment and SFX agree to permit any such public accountant full access to
all appropriate records or other information in the possession of any member of
the SFX Group or the Entertainment Group, as the case may be, during reasonable
business hours, and to reimburse or pay directly all costs and expenses in
connection with the engagement of such public accountant.
SFX agrees to indemnify and hold harmless each member of the
Entertainment Group and its officers and employees, and Entertainment agrees to
indemnify and hold harmless each member of the SFX Group and its officers and
employees, against any cost, fine, penalty or other expense of any kind
attributable to the negligence or misconduct of a member of the SFX Group or
the Entertainment Group, as the case may be, in supplying a member of the other
group with inaccurate or incomplete information.
SECTION 4.03. RECORD RETENTION. SFX and Entertainment agree to retain
all records which may contain information or provide evidence relevant to the
determination of the Income Tax liability of the SFX Affiliated Group or the
Entertainment Affiliated Group or the shareholders of either for any taxable
period until such time as a Final Determination occurs with respect to such
taxable period, provided, however, that such records need not be retained
longer than 20 years after
-11-
the end of the latest taxable period to which they relate so long as such
records are offered to the other party before they are destroyed by the party
that possesses them.
ARTICLE V
MISCELLANEOUS
SECTION 5.01. EFFECTIVE DATE AND TERM OF AGREEMENT. This Agreement
shall become effective as of the day immediately prior to the Distribution
Date. Except as otherwise expressly provided herein, the respective covenants
of the parties contained herein shall continue in full force and effect
indefinitely.
SECTION 5.02. PRIOR TAX-SHARING AGREEMENTS. At the time this Agreement
becomes effective, this Agreement shall supersede any other tax-sharing or
allocation agreement or arrangement in effect between members of the SFX Group
and members of the Entertainment Group prior to the date hereof.
SECTION 5.03. ELECTION UNDER SECTION 1552 OF THE CODE. Nothing in this
Agreement is intended to change or otherwise affect any election made by or on
behalf of the SFX Affiliated Group with respect to the calculation of earnings
and profits under section 1552 of the Code or applicable Treasury Regulations.
SFX, in its sole discretion, is authorized to seek any change in the method of
calculating earnings and profits as it deems desirable, provided, however, that
no such change shall modify the rights or obligations of the parties hereto.
SECTION 5.04. INJUNCTIONS. The parties acknowledge that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with its specific terms or were otherwise
breached. The parties hereto shall be entitled to an injunction or injunctions
to prevent breaches of the provisions of this Agreement and to enforce
specifically the terms and provisions hereof in any court having jurisdiction,
such remedy being in addition to any other remedy to which they may be entitled
at law or in equity.
SECTION 5.05. SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to
be invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any thereof which may be hereafter declared invalid, void or
unenforceable. In the event that any such term, provision, covenant or
restriction is held to be invalid, void or unenforceable, the parties hereto
shall use their best efforts to find and employ an alternate means to achieve
the same or substantially the same result as that contemplated by such term,
provision, covenant or restriction.
SECTION 5.06. ASSIGNMENT. Except by operation of law or in connection
with the sale of all or substantially all the assets of a party hereto, this
Agreement shall not be assignable, in whole or
-12-
in part, directly or indirectly, by any party hereby without the written
consent of the other party; and any attempt to assign any rights or obligations
arising under this Agreement without such consent shall be void; provided,
however, that the provisions of this Agreement shall be binding upon, inure to
the benefit of and be enforceable by the parties hereto and their respective
successors and permitted assigns.
SECTION 5.07. FURTHER ASSURANCES. Subject to the provisions hereof,
the parties hereto shall make, execute, acknowledge and deliver such other
instruments and documents, and take all such other actions, as may be
reasonably required in order to effectuate the purposes of this Agreement and
to cause the performance as contemplated by this Agreement. Subject to the
provisions hereof, each of the parties shall, in connection with entering into
this Agreement, performing its obligations hereunder and taking any and all
actions relating hereto, comply with all applicable laws, regulations, orders
and decrees, obtain all required consents and approvals and make all required
filings with any governmental agency, other regulatory or administrative
agency, commission or similar authority and promptly provide the other parties
with all such information as they may reasonably request in order to be able to
comply with the provisions of this sentence.
SECTION 5.08. PARTIES IN INTEREST. Except as herein otherwise
specifically provided, nothing in this Agreement expressed or implied is
intended to confer any right or benefit upon any person, firm or corporation
other than the parties and their respective successors and permitted assigns.
SECTION 5.09. WAIVERS, ETC. No failure or delay on the part of the
parties in exercising any power or right hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power,
or any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. No modification or waiver of any provision of this Agreement
nor consent to any departure by the parties therefrom shall in any event be
effective unless the same shall be in writing, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given.
SECTION 5.10. SETOFF. All payments to be made by any party under this
Agreement shall be made without setoff, counterclaim or withholding, all of
which are expressly waived.
SECTION 5.11. CHANGE OF LAW. If, due to any change in applicable law
or regulations or the interpretation thereof by any court of law or other
governing body having jurisdiction subsequent to the date of this Agreement,
performance of any provision of this Agreement or any transaction contemplated
thereby shall become impracticable or impossible, the parties hereto shall use
their best efforts to find and employ an alternative means to achieve the same
or substantially the same result as that contemplated by such provision.
SECTION 5.12. HEADINGS. Descriptive headings are for convenience only
and shall not control or affect the meaning or construction of any provision of
this Agreement.
-13-
SECTION 5.13. COUNTERPARTS. For the convenience of the parties, any
number of counterparts of this Agreement may be executed by the parties hereto,
and each such executed counterpart shall be, and shall be deemed to be, an
original instrument.
SECTION 5.14. NOTICES. All notices, consents, requests, instructions,
approvals and other communications provided for herein shall be validly given,
made or served, if in writing and delivered personally, by telegram or sent by
registered mail, postage prepaid to
SFX at: SFX Broadcasting, Inc.
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Entertainment at: SFX Entertainment, Inc.
000 Xxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
or to such other address as any party may, from time to time, designate in a
written notice given in a like manner. Notice given by telegram shall be deemed
delivered when received by the recipient. Notice given by mail as set out above
shall be deemed delivered five calendar days after the date the same is mailed.
SECTION 5.15. AMENDMENT AND MODIFICATION. This Agreement may be
amended, modified, supplemented, waived or otherwise modified or terminated
only by written agreement of SFX and Entertainment and with the consent of
Parent, which consent shall not be unreasonably withheld.
SECTION 5.16. GOVERNING LAW. This Agreement shall be governed by and
construed and enforced in accordance with the domestic substantive laws of The
State of Delaware without regard to any choice or conflict of laws rule or
provision that would cause the application of the domestic substantive laws of
any other jurisdiction.
SECTION 5.17. PRIOR AGREEMENT. This Agreement shall supercede in all
respects the Prior Agreement.
-14-
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
duly executed by their respective officers, each of whom is duly authorized,
all as of the day and year first above written.
SFX BROADCASTING INC.
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------
Title: Chief Financial Officer
-----------------------------
SFX ENTERTAINMENT, INC.
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------
Title: Chief Financial Officer
-----------------------------
SBI HOLDING CORPORATION,
with respect to Section
5.15 only.
By: /s/ Xxxxxxx X. Xxxxxxxx, Xx.
--------------------------------
Name: Xxxxxxx X. Xxxxxxxx, Xx.
------------------------------
Title: Vice President -
Chief Legal Officer
-----------------------------
-15-
