Asset Exchange Agreement

ASSET EXCHANGE AGREEMENT


THIS ASSET EXCHANGE AGREEMENT (the "Agreement") is made and entered into this 1st day of May, 1996, by and between SFX BROADCASTING OF TEXAS (KRLD), INC.; SFX BROADCASTING OF TEXAS (KRLD) LICENSEE, INC.; SFX BROADCASTING OF TEXAS (TSN), INC.; SFX BROADCASTING OF TEXAS (TSN) LICENSEE, INC. (the four foregoing entities are collectively referred to as "SFX"); and SFX BROADCASTING OF THE SOUTHWEST, INC. and SFX BROADCASTING, INC. (the two foregoing entities are collectively referred to as "SFX Broadcasting"), all of the foregoing entities are Delaware corporations with their principal place of business at 600 Congress Avenue, Suite 1270, Austin, Texas 78701-3234, and CBS INC., a New York corporation with its principal place of business at 51 W. 52nd Street, New York, New York 10019-6188 ("CBS").


W I T N E S S E T H:


WHEREAS, SFX owns and operates radio station KRLD-AM in Dallas, Texas and The Texas State Network ("TSN") (collectively the "SFX Station") pursuant to licenses issued by the Federal Communications Commission ("FCC"); and


WHEREAS, CBS owns and operates radio station KKRW-FM in Houston, Texas (the "CBS Station") pursuant to a license issued by the FCC; and


WHEREAS, SFX and CBS desire to exchange certain assets of the SFX Station for certain assets of the CBS Station, on the terms and subject to the conditions set forth herein; and


WHEREAS, the transaction contemplated by this Agreement is intended to be a like-kind exchange of assets between SFX and CBS in accordance with the provisions of Section 1031 of the Internal Revenue Code of 1986, as amended (the "Code").


NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants and agreements hereinafter set forth, the parties hereto, intending to be legally bound, hereby agree as follows:


ARTICLE 1
EXCHANGE OF ASSETS


1.1 Transfer of SFX Station Assets. On the Closing Date, SFX shall exchange, assign, transfer and convey to CBS, and CBS shall acquire and assume from SFX, substantially all of the assets, properties, interests and rights of SFX of whatsoever kind and nature, real and personal, tangible and intangible, owned or leased by SFX, which are used or held for use primarily in the operation of the SFX Station, and which, in the case of physical or tangible assets and properties, are located at the SFX Station's broadcasting studios, offices and transmitter site


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in Dallas, Texas, as the same shall exist on the Closing Date, including but not limited to the following (but excluding the assets specified in Section 1.2 hereof) (the "SFX Station Assets"):


1.1.1 all of SFX's rights in and to the licenses, permits and other authorizations issued to SFX by any governmental authority and included in the SFX Station Assets, including those issued by the FCC (the latter hereafter referred to as the "SFX Station Licenses") described in Schedule 6.4 along with renewals or modifications of such items between the date hereof and the Closing Date as well as all of SFX's rights in and to the call letters "KRLD-AM";


1.1.2 all of SFX's owned real estate used or held for use in the operation of the SFX Station, including the land, building and fixtures, more fully described in Section 6.8 hereto, together with any additions thereto between the date hereof and the Closing Date (the "SFX Real Estate");


1.1.3 all equipment, office furniture and fixtures, office materials and supplies, inventory, spare parts and other tangible personal property of every kind and description, and SFX's rights therein, owned, leased or held by SFX with respect to the SFX Station, together with any replacements of equal quality thereof and additions thereto, made between the date hereof and the Closing Date, and less any retirements or dispositions thereof made between the date hereof and the Closing Date in the ordinary course of business and consistent with past practices of SFX and in accordance with this Agreement;


1.1.4 all of SFX's rights in and under certain contracts, agreements or leases, written or oral, included in the SFX Station Assets, described in Schedules 6.8 and 6.9 (the "SFX Contracts");


1.1.5 all of SFX's rights in and to the trademarks, trade names, service marks, franchises, copyrights, including registrations and applications for registration of any of them, jingles, logos and slogans or licenses to use the same described in Schedule 6.12 (the "SFX Intellectual Property") and any additions thereto between the date hereof and the Closing Date;


1.1.6 all of SFX's rights in and to the files, records, and books of account, which are located at the premises of the SFX Station or are used or held for use primarily in the operation of the SFX Station, including, without limitation, programming information and studies, technical information and engineering data, news and advertising studies or consulting reports, marketing and demographic data, sales correspondence, lists of advertisers, promotional materials, credit and sales reports and filings with the FCC, copies of all written SFX Contracts to be assigned hereunder, employee records, logs and all software programs used in connection with the operation of the SFX Station; and


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1.1.7 all of SFX's rights under manufacturers' and vendors' warranties relating to items included in the SFX Station Assets and all similar rights against third parties relating to items included in the SFX Station Assets.


The SFX Station Assets shall be transferred to CBS free and clear of all debts, security interests, mortgages, trusts, claims, pledges, conditional sales agreements or other liens, liabilities and encumbrances whatsoever.


1.2 SFX Excluded Assets. Notwithstanding anything to the contrary contained herein, it is expressly understood and agreed that the SFX Station Assets shall not include the following assets along with all rights, title and interest therein which shall be referred to as the "SFX Excluded Assets":


1.2.1 all cash, cash equivalents or similar type investments of SFX, such as certificates of deposit, Treasury bills and other marketable securities on hand and/or in banks;


1.2.2 all of SFX's accounts receivable for services performed by SFX in connection with its operation of the SFX Station prior to the Closing Date;


1.2.3 the contract of the SFX Station with the Texas Rangers Baseball Club (the "Rangers Contract") and any and all personnel agreements or arrangements and operating agreements, including reciprocal trade arrangements, that are related to the performance of the Rangers Contract (the "Ancillary Agreements");


1.2.4 SFX's corporate seal, minute books, charter documents, corporate stock record books and such other books and records as pertain to the organization, existence or share capitalization of SFX and duplicate copies of such records as are necessary to enable SFX to file its tax returns and reports as well as any other records or materials relating to SFX generally and not involving specific aspects of the SFX Station's operations;


1.2.5 the use of the name and mark SFX Broadcasting and any derivation therefrom;


1.2.6 all other rights, interests or intangible assets of SFX which are not used in or held for use primarily in the operation of the SFX Station or which are listed in Schedule 1.2.6 hereto; and


1.2.7 all profit sharing or cash or deferred (Section 401(k)) plans and trusts and the assets thereof and any other employee benefit plan or arrangement and the assets thereof, if any, maintained by SFX for the SFX Station.


1.3 Transfer of CBS Assets. On the Closing Date, CBS shall exchange, transfer, assign and convey to SFX, and SFX shall acquire and assume from CBS, substantially all of the assets,


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properties, interests and rights of CBS of whatsoever kind and nature, real and personal, tangible and intangible, owned or leased by CBS, which are used or held for use primarily in the operation of the CBS Station, and which, in the case of physical or tangible assets and properties, are located at the CBS Station's broadcasting studios, offices and transmitter sites in Houston, Texas, as the same shall exist on the Closing Date, including but not limited to the following (but excluding the assets specified in Section 1.4 hereof) (the "CBS Station Assets"):


1.3.1 all of CBS's rights in and to the licenses, permits and other authorizations issued to CBS by any governmental authority and included in the CBS Station Assets, including those issued by the FCC (the latter hereafter referred to as the "CBS Station License") described in Schedule 7.4 along with renewals or modifications of such items between the date hereof and the Closing Date as well as all of CBS's rights in and to the call letters "KKRW-FM";


1.3.2 all of CBS's rights to use the real estate used or held for use in the operation of the CBS Station, including the land, building and fixtures, more fully described in Section 7.8 hereto, together with any additions thereto between the date hereof and the Closing Date (the "CBS Real Estate");


1.3.3 all equipment, office furniture and fixtures, office materials and supplies, inventory, spare parts and other tangible personal property of every kind and description, and CBS's rights therein, owned, leased or held by CBS with respect to the CBS Station, together with any replacements of equal quality thereof and additions thereto, made between the date hereof and the Closing Date, and less any retirements or dispositions thereof made between the date hereof and the Closing Date in the ordinary course of business and consistent with past practices of CBS and in accordance with this Agreement;


1.3.4 all of CBS's rights in and under certain contracts, agreements or leases, written or oral, included in the CBS Station Assets, described in Schedules 7.8 and 7.9 (the "CBS Contracts");


1.3.5 all of CBS's rights in and to the trademarks, trade names, service marks, franchises, copyrights, including registrations and applications for registration of any of them, jingles, logos and slogans or licenses to use the same described in Schedule 7.12 (the "CBS Intellectual Property") and any additions thereto between the date hereof and the Closing Date;


1.3.6 all of CBS's rights in and to the files, records, and books of account, which are located at the premises of the CBS Station or are used or held for use primarily in the operation of the CBS Station, including, without limitation, programming information and studies, technical information and


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engineering data, news and advertising studies or consulting reports, marketing and demographic data, sales correspondence, lists of advertisers, promotional materials, credit and sales reports and filings with the FCC, copies of all written CBS Contracts to be assigned hereunder, employee records, logs and all software programs used in connection with the operation of the CBS Station; and


1.3.7 all of CBS's rights under manufacturers' and vendors' warranties relating to items included in the CBS Station Assets and all similar rights against third parties relating to items included in the CBS Station Assets.


The CBS Station Assets shall be transferred to SFX free and clear of all debts, security interests, mortgages, trusts, claims, pledges, conditional sales agreements or other liens, liabilities and encumbrances whatsoever.


1.4 CBS Excluded Assets. Notwithstanding anything to the contrary contained herein, it is expressly understood and agreed that the CBS Station Assets shall not include the following assets along with all rights, title and interest therein which shall be referred to as the "CBS Excluded Assets":


1.4.1 all cash, cash equivalents or similar type investments of CBS, such as certificates of deposit, Treasury bills and other marketable securities on hand and/or in banks;


1.4.2 all of CBS's accounts receivable for services performed by CBS in connection with its operation of the CBS Station prior to the Closing Date;


1.4.3 CBS's corporate seal, minute books, charter documents, corporate stock record books and such other books and records as pertain to the organization, existence or share capitalization of CBS and duplicate copies of such records as are necessary to enable CBS to file its tax returns and reports as well as any other records or materials relating to CBS generally and not involving specific aspects of the CBS Station's operations;


1.4.4 the use of the name and mark CBS Broadcasting and any derivation therefrom;


1.4.5 all other rights, interests or intangible assets of CBS which are not used in or held for use primarily in the operation of the CBS Station or which are listed in Schedule 1.4.5 hereto; and


1.4.6 all profit sharing or cash or deferred (Section 401(k)) plans and trusts and the assets thereof and any other employee benefit plan or arrangement and the assets thereof, if any, maintained by CBS for the CBS Station.


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ARTICLE 2
ASSUMPTION OF OBLIGATIONS


2.1 Assumption of Obligations by CBS. Subject to the provisions of this Section 2.1 and Section 2.2, on the Closing Date, CBS shall assume and undertake to pay, satisfy or discharge the liabilities, obligations and commitments of SFX arising or to be performed on or after the Closing Date under (i) the SFX Contracts listed in Schedules 6.8 and 6.9 and (ii) any other contracts entered into between the date hereof and the Closing Date which CBS may in its sole discretion expressly agree in writing to assume. All of the foregoing liabilities and obligations shall be referred to herein collectively as the "CBS Assumed Liabilities."


2.2 SFX Retained Liabilities. Except as set forth in Section 2.1 hereof, CBS shall not assume or be deemed to assume, under this Agreement or otherwise by reason of the transactions contemplated hereby, any liabilities, obligations or commitments of SFX of any nature whatsoever, including the Rangers Contract and the Ancillary Agreements. All of such liabilities and obligations shall be referred to herein collectively as the "SFX Retained Liabilities."


2.3 Assumption of Obligations by SFX. Subject to the provisions of this Section 2.3 and Section 2.4, on the Closing Date, SFX shall assume and undertake to pay, satisfy or discharge the liabilities, obligations and commitments of CBS arising or to be performed on or after the Closing Date under (i) the CBS Contracts listed in Schedules 7.8 and 7.9 and (ii) any other contracts entered into between the date hereof and the Closing Date which SFX may in its sole discretion expressly agree in writing to assume. All of the foregoing liabilities and obligations shall be referred to herein collectively as the "SFX Assumed Liabilities."


2.4 CBS Retained Liabilities. Except as set forth in Section 2.3 hereof, SFX expressly does not, and shall not, assume or be deemed to assume, under this Agreement or otherwise by reason of the transactions contemplated hereby, any liabilities, obligations or commitments of CBS of any nature whatsoever. All of such liabilities and obligations shall be referred to herein collectively as the "CBS Retained Liabilities."


ARTICLE 3
PRORATION AND VALUATION


3.1 Proration of Income and Expenses.


3.1.1 Except as otherwise provided herein, all income and expenses arising from the conduct of the business and operations of the SFX Station and CBS Station shall be prorated between CBS and SFX in accordance with generally accepted accounting principles as of the Closing Date. Such prorations


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shall include, without limitation, all real estate and other property taxes (but excluding taxes arising by reason of the transfer of the SFX Station Assets and CBS Station Assets (collectively referred to as the "Station Assets") as contemplated hereby, which, shall be paid as set forth in Article 13 of this Agreement), business and license fees, music and other license fees, wages and salaries of employees, including accruals up to the Closing Date for bonuses, commissions, sick pay and similar prepaid and deferred items (but excluding vacation which shall be governed by Sections 8.2.3 and 9.2.3) attributable to the ownership and operation of the SFX Station and the CBS Station (collectively referred to as the "Stations").


3.1.2 The prorations and adjustments contemplated by this Section, to the extent practicable, shall be made on the Closing Date and the party owing any net amount hereunder shall pay such amount to the other party on such date. As to those prorations and adjustments not capable of being ascertained on the Closing Date, an adjustment and proration shall be made within ninety (90) calendar days of the Closing Date.


3.1.3 In the event of any disputes between the parties as to such adjustments, the amounts not in dispute shall nonetheless be paid at the time provided in Section 3.1.2 and such disputes shall be determined by an independent certified public accountant mutually acceptable to the parties, and the fees and expenses of such accountant shall be paid one-half by SFX and one-half by CBS.


3.2 Value of Exchanged Assets. As set forth on Schedule 3.2 which shall be agreed upon and delivered at the Closing, (a) the SFX Station Assets consisting of tangible personal property are being exchanged for the CBS Station Assets consisting of tangible personal property; (b) the SFX Assets consisting of real property are being exchanged for the CBS Assets consisting of real property; and (c) the SFX Station Assets consisting of intangible property are being exchanged for the CBS Station Assets consisting of intangible property. The parties further agree that the values on the Closing Date of the respective SFX Station Assets and the respective CBS Station Assets will be based on an appraisal of such assets by an independent valuation firm selected by CBS and approved by SFX. The appraised values will be reflected on Schedule 3.2 and the parties will not take any position inconsistent with such values and will prepare and file all returns and reports relating to the exchange contemplated by this Agreement, including all federal, state and local income tax returns, in a manner which is consistent with Schedule 3.2.


ARTICLE 4
CLOSING


4.1 Closing. Except as otherwise mutually agreed upon by SFX and CBS, the consummation of the transactions contemplated


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herein (the "Closing") shall occur within ten (10) business days after the FCC Consent as defined in Section 5.1 has been obtained and the expiration of the applicable waiting period under the HSRA as defined in Section 5.3, or such other date as may be mutually agreed to by the parties but in no event later than December 31, 1996 ("Closing Date"); provided, however, that neither party shall be required to close before the FCC Consent has become a Final Order if any petition to deny is filed against the FCC assignment application for the proposed transaction. The Closing shall be deemed effective as of 11:59 p.m. on the Closing Date. For purposes of this Agreement, "Final Order" means action by the FCC consenting to the assignments contemplated by this Agreement which is not reversed, stayed, enjoined, set aside, annulled or suspended, and with respect to which action no timely request for stay, petition for rehearing, or appeal is pending, and as to which the time for filing any such request, petition or appeal or reconsideration by the FCC on its own motion has expired. The Closing shall be held at the offices of SFX in New York or at such other place as the parties hereto may agree.


ARTICLE 5
GOVERNMENTAL CONSENTS


5.1 FCC Consent. It is specifically understood and agreed by CBS and SFX that the Closing and the assignment of the SFX Station License and the CBS Station License (collectively referred to as the "Station Licenses") and the transfer of the Station Assets is expressly conditioned on and is subject to the prior consent and approval of the FCC ("FCC Consent") without the imposition of any conditions on the transfer of the Station Licenses which are materially adverse to either party.


5.2 FCC Applications. Promptly upon the execution of this Agreement, the parties shall proceed to prepare for filing the necessary FCC applications for assignment of the Station Licenses (the "FCC Applications"), which shall be filed no later than ten (10) business days after the date hereof. SFX and CBS shall thereafter prosecute the FCC Applications with all reasonable diligence and otherwise use their best efforts to obtain the grant of the FCC Applications as expeditiously as practicable (but neither SFX nor CBS shall have any obligation to satisfy complainants or the FCC by taking any steps which would have a Material Adverse Effect on it or any of its Affiliates). If the FCC Consent imposes any condition on either party hereto, such party shall use its best efforts to comply with such condition; provided, however, that neither party shall be required hereunder to comply with any condition which would have a Material Adverse Effect on it or any of its Affiliates. If reconsideration or judicial review is sought with respect to the FCC Consent, the party affected shall vigorously oppose such efforts for reconsideration or judicial review; provided, however, that nothing herein shall be construed to limit either party's right to terminate this Agreement pursuant to Article 16 hereof.


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5.3 Compliance with HSRA. SFX and CBS shall make or cause to be made in a timely fashion, and in any event within fifteen (15) business days after the date hereof, all filings which are required in connection with the transactions contemplated hereby under the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended ("HSRA"), and shall furnish to the other party all information that the other reasonably requests in connection with such filings. The parties shall promptly comply with all requests for further documents and information made by any governmental department or agency in connection with such filings and shall use their best efforts to obtain early termination of all waiting periods under the HSRA. The transfer of the Station Assets hereunder is conditioned upon the expiration of the applicable waiting period under the HSRA without the institution of any action with respect to the consummation of the transactions contemplated hereunder.


ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF SFX AND SFX BROADCASTING


SFX and SFX Broadcasting hereby make the following representations and warranties to CBS, each of which is true and correct on the date hereof, shall remain true and correct for the period specified in Section 15.3, shall be unaffected by any investigation heretofore or hereafter made by CBS, or any notice to CBS other than in the Schedules to this Agreement and shall survive the Closing.


6.1 Organization and Standing. Each of the entities included within SFX and SFX Broadcasting is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and is duly qualified to do business in the State of Texas. SFX has the corporate power and authority to own, lease and operate the SFX Station Assets and to carry on the business of the SFX Station as now being conducted and as proposed to be conducted by SFX between the date hereof and the Closing Date.


6.2 Authorization and Binding Obligation. SFX and SFX Broadcasting have the corporate power and authority to enter into and perform this Agreement and the transactions contemplated hereby, and SFX's and SFX Broadcasting's execution, delivery and performance of this Agreement, and the transactions contemplated hereby have been duly and validly authorized by all necessary corporate action on their part. This Agreement has been duly executed and delivered by SFX and SFX Broadcasting and this Agreement constitutes, and the agreements to be executed in connection herewith will constitute the valid and binding obligation of SFX and SFX Broadcasting enforceable in accordance with their terms.


6.3 Absence of Conflicting Agreements or Required Consents. Except as set forth in Article 5 with respect to governmental consents, Schedules 6.8 and 6.9 with respect to


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consents required in connection with the assignment of certain SFX Contracts and as set forth in Schedule 6.3 with respect to any other consents, the execution, delivery and performance of this Agreement by SFX and SFX Broadcasting: (a) do not require the consent of any third party; (b) will not conflict with, result in a breach of, or constitute a violation of or default under, the provisions of SFX's or SFX Broadcasting's articles of incorporation or By-laws or any applicable law, judgment, order, injunction, decree, rule, regulation or ruling of any governmental authority to which any of SFX or SFX Broadcasting is a party or by which they or the SFX Station Assets are bound; (c) will not, either alone or with the giving of notice or the passage of time, or both, conflict with, constitute grounds for termination of or result in a breach of the terms, conditions or provisions of, or constitute a default under, any SFX Contract, agreement, instrument, license or permit to which SFX, SFX Broadcasting or the SFX Station Assets are now subject; and (d) will not result in the creation of any lien, charge or encumbrance on any of the SFX Station Assets.


6.4 Government Authorizations. Schedule 6.4 hereto contains a true and complete list of the SFX Station Licenses and other material licenses, permits or other authorizations from governmental and regulatory authorities which are required for the lawful conduct of the business and operations of the SFX Station in the manner and to the full extent it is presently conducted. SFX is the authorized legal holder of the SFX Station Licenses and other licenses, permits and authorizations listed in Schedule 6.4, none of which is subject to any restrictions or conditions which would limit in any respect the full operation of the SFX Station as now operated. Except as set forth in Schedule 6.4, there are no applications, complaints or proceedings pending or, to the best of SFX's knowledge, threatened as of the date hereof before the FCC relating to the business or operations of the SFX Station other than applications, complaints or proceedings which affect the broadcasting industry generally. SFX has delivered to CBS true and complete copies of the SFX Station Licenses, including any and all amendments and other modifications thereto. The SFX Station Licenses and the other licenses, permits or other authorizations from governmental and regulatory authorities listed in Schedule 6.4 are in good standing, are in full force and effect and are unimpaired by any act or omission of SFX or its officers, directors or employees; and the operation of the SFX Station is in accordance with the SFX Station Licenses and the underlying construction permits. No proceedings are pending or, to the knowledge of SFX, are threatened which may result in the revocation, modification, non-renewal or suspension of the SFX Station Licenses, the denial of any pending applic ...