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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report
(Date of earliest event reported):
October 5, 1999
(October 2, 1999)
CLEAR CHANNEL COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
Texas 1-9645 74-1787536
(State or other jurisdiction (Commission File Number) (IRS Employer
incorporation) Identification No.)
200 Concord Plaza, Suite 600
San Antonio, Texas 78216
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code: (210) 822-2828
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ITEM 5. OTHER EVENTS.
On October 2, 1999, Clear Channel Communications, Inc., a Texas
corporation (the "Company"), AMFM Inc., a Delaware corporation ("AMFM"), and CCU
Merger Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of the
Company ("Sub"), entered into an Agreement and Plan of Merger (the "Merger
Agreement"), pursuant to which Sub will be merged (the "Merger") with and into
AMFM, with AMFM surviving the Merger and continuing its operations as a
wholly-owned subsidiary of the Company. The Merger will be a tax-free,
stock-for-stock transaction.
Upon the terms and subject to the conditions set forth in the Merger Agreement,
upon consummation of the Merger, each share of AMFM common stock will be
converted into the right to receive .94 shares of the Company's common stock.
A copy of the Merger Agreement is filed herewith as Exhibit 2.1 and is
incorporated herein by reference. The foregoing description is qualified in its
entirety by reference to the full text of the Merger Agreement.
On October 4, 1999, the Company and AMFM issued a joint press release
announcing the Merger Agreement, which is filed herewith as Exhibit 99.1 and is
incorporated herein by reference.
Consummation of the Merger is subject to numerous conditions, including
the receipt of all regulatory approvals and stockholder approvals by both
companies' shareholders.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
4.1 Agreement and Plan of Merger dated October 2, 1999,
among Clear Channel Communications, Inc., AMFM, Inc.,
and CCU Merger Sub, Inc.
99.1 Press Release of Clear Channel Communications, Inc.
and AMFM Inc. issued October 4, 1999.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Clear Channel Communications, Inc.
Date: October 5, 1999 By: /s/ HERBERT W. HILL, JR.
-------------------------------
Herbert W. Hill, Jr.
Senior Vice President and
Chief Reporting Officer
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INDEX TO EXHIBITS
4.1 Agreement and Plan of Merger dated October 2, 1999, among Clear Channel
Communications, Inc., AMFM, Inc., and CCU Merger Sub, Inc.
99.1 Press Release of Clear Channel Communications, Inc. and AMFM Inc.
issued October 4, 1999.
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EXHIBIT 4.1
--------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
AMONG
CLEAR CHANNEL COMMUNICATIONS, INC.,
CCU MERGER SUB, INC.
AND
AMFM INC.
DATED AS OF OCTOBER 2, 1999
--------------------------------------------------------------------------------
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TABLE OF CONTENTS
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ARTICLE 1. THE MERGER 2
Section 1.1. The Merger 2
Section 1.2. Closing 2
Section 1.3. Effective Time 2
Section 1.4. Effects of the Merger 2
Section 1.5. Certificate of Incorporation and Bylaws of the
Surviving Corporation 2
Section 1.6. Directors 3
Section 1.7. Officers 3
ARTICLE 2. EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT
CORPORATIONS; EXCHANGE OF CERTIFICATES 3
Section 2.1. Capital Stock of Merger Sub 3
Section 2.2. Cancellation of Treasury Stock and Parent Owned
Stock 3
Section 2.3. Conversion of Company Common Stock 3
Section 2.4. Exchange of Certificates 4
Section 2.5. Stock Transfer Books 7
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY 7
Section 3.1. Organization, Qualification, Etc. 7
Section 3.2. Capital Stock 8
Section 3.3. Corporate Authority Relative to this Agreement;
No Violation 8
Section 3.4. Reports and Financial Statements 9
Section 3.5. No Undisclosed Liabilities 10
Section 3.6. No Violation of Law 10
Section 3.7. Environmental Laws and Regulations 11
Section 3.8. No Undisclosed Employee Benefit Plan Liabilities
or Severance Arrangements 11
Section 3.9. Absence of Certain Changes or Events 13
Section 3.10. Investigations; Litigation 13
Section 3.11 Joint Proxy Statement; Registration Statement;
Other Information 13
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Section 3.12. Lack of Ownership of Parent Common Stock 14
Section 3.13. Tax Matters 14
Section 3.14. Opinion of Financial 14
Section 3.15. Required Vote of the Company Stockholders 15
Section 3.16. Insurance 15
Section 3.17. Real Property; Title 15
Section 3.18. Collective Bargaining Agreements and Labor 15
Section 3.19 Material Contracts 15
Section 3.20. Takeover Statute 16
Section 3.21. Company FCC License; Operations of Company
Licensed Facilities 16
Section 3.22. Transactions With Affiliates 17
Section 3.23. Intellectual Property 17
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB 18
Section 4.1. Organization, Qualification, Etc. 18
Section 4.2. Capital Stock 19
Section 4.3. Corporate Authority Relative to this Agreement;
No Violation 20
Section 4.4. Reports and Financial Statements 21
Section 4.5. No Undisclosed Liabilities 22
Section 4.6. No Violation of Law 22
Section 4.7. Environmental Laws and Regulations 22
Section 4.8. No Undisclosed Employee Benefit Plan Liabilities 22
Section 4.9. Absence of Certain Changes or Events 22
Section 4.10. Investigations; Litigation 23
Section 4.11. Joint Proxy Statement; Registration Statement;
Other Information 23
Section 4.12. Lack of Ownership of Company Common Stock 23
Section 4.13. Tax Matters 23
Section 4.14. Required Vote of Parent Stockholders 24
Section 4.15. Opinion of Financial Advisor 24
Section 4.16. Insurance 24
Section 4.17. Real Property; Title 25
Section 4.18. Collective Bargaining Agreements and Labor 25
Section 4.19. Material Contracts 25
Section 4.20. Takeover Statute 25
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Section 4.21. ParentFCC License; Operations of Parent
Licensed Facilities 25
ARTICLE 5. COVENANTS RELATING TO CONDUCT OF BUSINESS 26
Section 5.1. Conduct of Business by the Company or Parent 26
Section 5.2. Proxy Material; Registration Statement 30
Section 5.3. Stockholders' Meeting 30
Section 5.4. Approvals and Consents; Cooperation 31
Section 5.5. Access to Information; Confidentiality 32
Section 5.6. Affiliates 32
Section 5.7. Rights Under Stock Plans 32
Section 5.8. Filings; Other Action 33
Section 5.9. Further Assurances 35
Section 5.10. No Inconsistent Activities 35
Section 5.11. Director and Officer Liability 38
Section 5.12. Accountants' "Comfort" Letters 40
Section 5.13. Additional Reports 40
Section 5.14. Plan of Reorganization 40
Section 5.15. Conveyance Taxes 40
Section 5.16. Public Announcements 40
Section 5.17. Board and Vice Chairman 41
Section 5.18. Expenses 41
Section 5.19. Notice of Certain Events 43
Section 5.20. Withdrawal, Modification or Change in Board
Recommendation 44
Section 5.21. Employee Plans and Benefits and Employment
Contracts 44
Section 5.22. Redemption or Conversion of Preferred Stock 45
Section 5.23. Section 16(b) Board Approval 45
ARTICLE 6. CONDITIONS TO THE MERGER 45
Section 6.1. Conditions to the Obligations of Each Party 45
Section 6.2. Conditions to the Obligations of Parent
and Merger Sub 47
Section 6.3. Conditions to the Obligations of the Company 47
ARTICLE 7. TERMINATION AND AMENDMENT 48
Section 7.1. Termination 48
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Section 7.2. Effect of Termination 50
ARTICLE 8. GENERAL PROVISIONS 50
Section 8.1. Notices 50
Section 8.2. Definitions 51
Section 8.3. Counterparts 53
Section 8.4. Entire Agreement; No Third-Party Beneficiaries 53
Section 8.5. Assignment 53
Section 8.6. Governing Law 53
Section 8.7. Enforcement 53
Section 8.8. Severability 54
Section 8.9. Interpretation 54
Section 8.10. Survival of Representations and Warranties 54
Section 8.11. Survival of Covenants and Agreements 54
Section 8.12. Attorneys' Fees 54
Section 8.13. Amendment 54
Section 8.14. Extension; Waiver 54
Section 8.15. Procedure for Termination, Amendment, Extension
or Waiver 55
Section 8.16. No Recourse Against Others 55
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This AGREEMENT AND PLAN OF MERGER, dated as of October 2,
1999, is entered into by and among CLEAR CHANNEL COMMUNICATIONS, INC., a Texas
corporation ("Parent"), CCU MERGER SUB, INC., a Delaware corporation and a
wholly owned subsidiary of Parent ("Merger Sub"), and AMFM INC., a Delaware
corporation (the "Company").
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of Parent, Merger
Sub and the Company have approved the combination of the Company and Parent upon
the terms and subject to the conditions set forth in this Agreement and Plan of
Merger, including, without limitation, the exhibits attached hereto
(collectively, this "Agreement");
WHEREAS, the respective Boards of Directors of Parent, Merger
Sub and the Company have determined that it is advisable and in the best
interests of their respective shareholders for Merger Sub to merge with and into
the Company as set forth below (the "Merger") upon the terms and subject to the
conditions set forth in this Agreement, whereby each issued and outstanding
share of common stock, par value $.01 per share, of the Company ("Company Common
Stock"), other than shares owned directly or indirectly by Parent, Merger Sub or
the Company, will be converted into shares of common stock, par value $0.10 per
share, of Parent ("Parent Common Stock") in accordance with the provisions of
Article 2 of this Agreement;
WHEREAS, as a condition and inducement to Parent's and the
Company's willingness to enter into this Agreement, concurrently with the
execution and delivery of this Agreement, (i) Parent and certain stockholders of
the Company (the "Voting Stockholders") are entering into voting agreements
dated as of the date of this Agreement (collectively, the "Company Stockholders
Voting Agreement") pursuant to which such stockholders have agreed to vote their
shares of Company Common Stock in favor of the proposal to approve and adopt the
Merger and this Agreement and (ii) the Company and certain stockholders of
Parent are entering into a Voting Agreement dated as of the date of this
Agreement (the "Parent Stockholders Voting Agreement") pursuant to which such
stockholders have agreed to vote their shares of Parent Common Stock in favor of
the proposals (x) to approve the issuance of Parent Common Stock in the Merger
and (y) to elect certain director nominees to the Board of Directors of Parent;
WHEREAS, as a condition and inducement to Parent's and the
Company's willingness to enter into this Agreement, concurrently with the
execution and delivery of this Agreement, Parent, certain stockholders of the
Company and certain stockholders of Parent entered into a Shareholders Agreement
(the "Shareholders Agreement") relating to, among other things, the acquisition
and disposition of Parent Common Stock subsequent to the Merger;
WHEREAS, the respective Boards of Directors of Parent and the
Company have approved the Parent Stockholders Voting Agreement and the Company
Stockholders Voting Agreement, and the Board of Directors of Parent has approved
the Shareholders Agreement;
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WHEREAS, for federal income tax purposes, the Merger is
intended to qualify as a reorganization under the provisions of Section 368(a)
of the United States Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, Parent, Merger Sub and the Company desire to make
certain representations, warranties, covenants and agreements in connection with
the Merger and also to prescribe certain conditions to the Merger.
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements herein contained, and intending to be legally
bound hereby, Parent, Merger Sub and the Company hereby agree as follows:
ARTICLE 1.
THE MERGER
Section 1.1. The Merger. Upon the terms and subject to the
conditions set forth in this Agreement and the Delaware General Corporation Law
(the "DGCL"), Merger Sub shall be merged with and into the Company at the
Effective Time (as defined in Section 1.3) of the Merger. Following the Merger,
the separate corporate existence of Merger Sub shall cease, and the Company
shall continue as the surviving corporation (the "Surviving Corporation") and
shall succeed to and assume all the rights and obligations of the Company and
Merger Sub in accordance with the DGCL.
Section 1.2. Closing. The closing of the Merger shall take
place at 10:00 a.m. on a date to be specified by the parties which shall be no
later than the second business day after the satisfaction or waiver of the
conditions set forth in Article 6 (the "Closing Date") at the offices of Akin,
Gump, Strauss, Hauer & Feld, L.L.P., 1700 Pacific Avenue, Suite 4100, Dallas,
Texas 75201, unless another date, time or place is agreed to in writing by the
parties hereto.
Section 1.3. Effective Time. On the Closing Date, the parties
shall execute and file in the office of the Secretary of State of Delaware a
certificate of merger (a "Certificate of Merger") executed in accordance with
the DGCL and shall make all other filings or recordings, and take such other and
further action as may be required under the DGCL in connection with the Merger.
The Merger shall become effective at the time of filing of the Certificate of
Merger, or at such later time as is agreed upon by the parties hereto and set
forth therein (such time as the Merger becomes effective is referred to herein
as the "Effective Time").
Section 1.4. Effects of the Merger. The Merger shall have the
effects set forth in the DGCL.
Section 1.5. Certificate of Incorporation and Bylaws of the
Surviving Corporation.
(a) The Certificate of Incorporation of the Company as in
effect immediately prior to the Effective Time shall become the Certificate of
Incorporation of the Surviving Corporation after the Effective Time, and
thereafter may be amended as provided therein and as permitted by law and this
Agreement.
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(b) The By-Laws of the Merger Sub as in effect immediately
prior to the Effective Time shall become the By-Laws of the Surviving
Corporation after the Effective Time, and thereafter may be amended as provided
therein and as permitted by law and this Agreement.
Section 1.6. Directors. The directors of the Merger Sub
immediately prior to the Effective Time shall become the directors of the
Surviving Corporation, until the earlier of their resignation or removal or
until their respective successors are duly elected and qualified, as the case
may be.
Section 1.7. Officers. The officers of the Company immediately
prior to the Effective Time shall become the officers of the Surviving
Corporation, until the earlier of their resignation or removal or until their
respective successors are duly elected and qualified, as the case may be.
ARTICLE 2.
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT
CORPORATIONS; EXCHANGE OF CERTIFICATES
Section 2.1. Capital Stock of Merger Sub. As of the Effective
Time, by virtue of the Merger and without any action on the part of the holder
of any shares of Company Common Stock or any shares of capital stock of Merger
Sub, each share of common stock, par value $0.01 per share, of Merger Sub issued
and outstanding immediately prior to the Effective Time shall be converted into
and become one fully paid and nonassessable share of common stock, par value
$0.01 per share, of the Surviving Corporation, and such shares shall,
collectively, represent all of the issued and outstanding capital stock of the
Surviving Corporation.
Section 2.2. Cancellation of Treasury Stock and Parent Owned
Stock. As of the Effective Time, by virtue of the Merger and without any action
on the part of the holder of any shares of Company Common Stock or any shares of
capital stock of Merger Sub, each share of Company Common Stock issued and held,
immediately prior to the Effective Time, in the Company's treasury or by any of
the Company's direct or indirect wholly owned subsidiaries, and each share of
Company Common Stock that is owned by Parent, Merger Sub or any other subsidiary
of Parent, shall automatically be canceled and retired and shall cease to exist,
and no consideration shall be delivered in exchange therefor.
Section 2.3. Conversion of Company Common Stock. As of the
Effective Time, by virtue of the Merger and without any action on the part of
the holder of any shares of Company Common Stock or any shares of capital stock
of Merger Sub, subject to this Section 2.3 and Section 2.4(f), each share of
Company Common Stock issued and outstanding immediately prior to the Effective
Time (other than shares to be canceled in accordance with Section 2.2 (the
"Canceled Shares")) shall be converted into 0.94 (the "Conversion Number") of a
duly authorized, validly issued and nonassessable share of Parent Common Stock
(the "Merger Consideration"); provided, however, that, in any event, if between
the date of this Agreement and the Effective Time, the outstanding shares of
Parent Common Stock shall have been changed into a different number of shares or
a different class, by reason of any declared or completed stock dividend,
subdivision, reclassification, recapitalization, split, combination or exchange
of shares, the Conversion Number shall be correspondingly adjusted to the extent
appropriate to reflect such stock dividend,
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subdivision, reclassification, recapitalization, split, combination or exchange
of shares. As of the Effective Time, all such shares of Company Common Stock
shall no longer be outstanding and shall automatically be canceled and retired
and shall cease to exist, and each holder of a certificate or a certificate
which immediately prior to the Effective Time represented outstanding shares of
Company Common Stock shall cease to have any rights with respect thereto, except
the right to receive the Merger Consideration. The Company represents and
warrants that the holders of the Company Common Stock are not entitled to
appraisal rights.
Section 2.4. Exchange of Certificates.
(a) Exchange Agent. Promptly after the Effective Time, Parent
shall deliver to a bank or trust company designated by Parent and reasonably
satisfactory to the Company (the "Exchange Agent"), for the benefit of the
holders of shares of Company Common Stock for exchange in accordance with this
Article 2, through the Exchange Agent, certificates evidencing such number of
shares of Parent Common Stock issuable to holders of Company Common Stock in the
Merger pursuant to Section 2.3 and cash in an amount required to be paid
pursuant to Sections 2.4(d) and 2.4(f) (such certificates for shares of Parent
Common Stock, together with any dividends or distributions with respect thereto
and cash, being hereinafter referred to as the "Exchange Fund"). The Exchange
Agent shall, pursuant to irrevocable instructions, deliver, out of the Exchange
Fund, to holders of Company Common Stock the Parent Common Stock contemplated to
be issued pursuant to Section 2.3 (and any dividends or other distributions to
which such holder is entitled pursuant to Section 2.4(d)), and the cash in lieu
of fractional shares of Parent Common Stock to which such holders are entitled
to pursuant to Section 2.4(f) hereof out of the Exchange Fund. Except as
contemplated by Section 2.4(g) hereof, the Exchange Fund shall not be used for
any other purpose.
(b) Exchange Procedures. As promptly as practicable after the
Effective Time (but in no event more than five business days thereafter) Parent
shall cause the Exchange Agent to mail to each holder of a certificate or
certificates (the "Certificates") which immediately prior to the Effective Time
represented outstanding shares of Company Common Stock (other than Canceled
Shares) (i) a letter of transmittal (which shall be in customary form and shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon proper delivery of the Certificates to the
Exchange Agent) and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for certificates evidencing shares of Parent Common
Stock, or cash in lieu of fractional shares of Parent Common Stock to which such
holder is entitled pursuant to Section 2.4(f) hereof.
(c) Exchange of Certificates. Upon surrender to the Exchange
Agent of a Certificate for cancellation, together with a letter of transmittal,
duly executed and completed in accordance with the instructions thereto, and
such other documents as may be reasonably required pursuant to such
instructions, the holder of such Certificate shall be entitled to receive in
exchange therefor a certificate representing that number of whole shares of
Parent Common Stock which such holder's shares of Company Common Stock have been
converted into pursuant to this Article 2 (and any cash in lieu of any
fractional shares of Parent Common Stock to which such holder is entitled
pursuant to Section 2.4(f) and any dividends or other distributions to which
such holder is entitled pursuant to Section 2.4(d)), and the Certificate so
surrendered shall forthwith be canceled. In the event of a transfer of ownership
of shares of Company Common Stock which is not registered in the transfer
records of the Company, shares of Parent Common Stock, cash in lieu of any
fractional shares of Parent Common Stock to which such holder is entitled
pursuant to Section 2.4(f) and any dividends or other distributions to which
such holder is entitled pursuant to Section 2.4(d) may be issued to a transferee
if the Certificate representing such shares of
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Company Common Stock is presented to the Exchange Agent, accompanied by all
documents required to evidence and effect such transfer and by evidence that any
applicable stock transfer taxes have been paid. Until surrendered as
contemplated by this Section 2.4, each Certificate shall be deemed at all times
after the Effective Time to represent only the right to receive upon such
surrender the number of whole shares of Parent Common Stock into which the
shares of Company Common Stock formerly represented thereby have been converted,
cash in lieu of any fractional shares of Parent Common Stock to which such
holder is entitled pursuant to Section 2.4(f) and any dividends or other
distributions to which such holder is entitled pursuant to Section 2.4(d).
(d) Distributions with Respect to Unexchanged Shares of Parent
Common Stock. No dividends or other distributions declared or made after the
Effective Time with respect to Parent Common Stock with a record date after the
Effective Time shall be paid to the holder of any unsurrendered Certificate with
respect to the shares of Parent Common Stock represented thereby, and no cash
payment in lieu of any fractional shares shall be paid to any such holder
pursuant to Section 2.4(f), until the holder of such Certificate shall surrender
such Certificate. Subject to the effect of escheat, tax or other applicable
laws, following surrender of any such Certificate, there shall be paid promptly
to the holder of the Certificates representing whole shares of Parent Common
Stock issued in exchange therefor, without interest, (i) promptly, the amount of
any cash payable with respect to a fractional share of Parent Common Stock to
which such holder is entitled pursuant to Section 2.4(f) and the amount of
dividends or other distributions with a record date after the Effective Time and
theretofore paid with respect to such whole shares of Parent Common Stock, and
(ii) at the appropriate payment date, the amount of dividends or other
distributions, with a record date after the Effective Time but prior to
surrender and a payment date occurring after surrender, payable with respect to
such whole shares of Parent Common Stock.
(e) No Further Rights in Company Common Stock. All shares of
Parent Common Stock issued upon conversion of the shares of Company Common Stock
in accordance with the terms hereof (including any cash paid pursuant to Section
2.4(d) or (f)) shall be deemed to have been issued in full satisfaction of all
rights pertaining to such shares of Company Common Stock.
(f) No Fractional Shares.
(i) No certificates or scrip representing fractional
shares of Parent Common Stock shall be issued upon the surrender for
exchange of Certificates, no dividend or distribution of Parent shall
relate to such fractional share interests and such fractional share
interests will not entitle the owner thereof to vote or to any rights
of a stockholder of Parent.
(ii) In lieu of the issuance of fractional shares,
each holder of Company Common Stock shall be entitled to receive an
amount in cash equal to the
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product obtained by multiplying (A) the fractional share interest to
which such holder (after taking into account all shares of Company
Common Stock held at the Effective Time by such holder) would otherwise
be entitled by (B) the closing price for a share of Parent Common Stock
as reported on the NYSE Composite Transaction Tape (as reported in The
Wall Street Journal or, if not reported thereby, any other
authoritative source) on the last trading day prior to the Closing
Date.
(g) Termination of Exchange Fund. Any portion of the Exchange
Fund (including any shares of Parent Common Stock) which remains undistributed
to the holders of Company Common Stock for six months after the Effective Time
shall be delivered to Parent, upon demand, and any holders of Company Common
Stock who have not theretofore complied with this Article 2 shall thereafter
look only to Parent for, and Parent shall deliver, the applicable Merger
Consideration, any cash in lieu of fractional shares of Parent Common Stock to
which they are entitled pursuant to Section 2.4(f) and any dividends or other
distributions with respect to the Parent Common Stock to which they are entitled
pursuant to Section 2.4(d). Any portion of the Exchange Fund remaining unclaimed
by holders of shares of Company Common Stock as of a date which is immediately
prior to such time as such amounts would otherwise escheat to or become property
of any government entity shall, to the extent permitted by applicable law,
become the property of Parent free and clear of any claims or interest of any
Person previously entitled thereto.
(h) No Liability. None of the Exchange Agent, Parent nor the
Surviving Corporation shall be liable to any holder of shares of Company Common
Stock for any such shares of Parent Common Stock (or dividends or distributions
with respect thereto) or cash delivered to a public official pursuant to any
abandoned property, escheat or similar law.
(i) Withholding Rights. Each of the Surviving Corporation and
the Exchange Agent shall be entitled to deduct and withhold from the
consideration otherwise payable pursuant to this Agreement to any holder of
shares of Company Common Stock such amounts as it is required to deduct and
withhold with respect to the making of such payment under the Code, or any
provision of state, local or foreign tax law. To the extent that amounts are so
withheld by the Surviving Corporation or the Exchange Agent, as the case may be,
such withheld amounts shall be treated for all purposes of this Agreement as
having been paid to the holder of the shares of Company Common Stock in respect
of which such deduction and withholding was made by the Surviving Corporation or
the Exchange Agent, as the case may be.
(j) Lost Certificates. If any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
Person claiming such Certificate to be lost, stolen or destroyed and, if
required by the Surviving Corporation, the posting by such Person of a bond, in
such reasonable amount as the Surviving Corporation may direct, as indemnity
against any claim that may be made against it with respect to such Certificate,
the Exchange Agent will issue in exchange for such lost, stolen or destroyed
Certificate the applicable Merger Consideration, any cash in lieu of fractional
shares of Parent Common Stock to which the holder thereof is entitled pursuant
to Section 2.4(f) and any dividends or other distributions to which the holder
thereof is entitled pursuant to this Agreement.
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(k) Further Assurances. If, at any time after the Effective
Time, the Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments, assurances or any other actions or things are
necessary or desirable to vest, perfect or confirm of record or otherwise in the
Surviving Corporation its right, title or interest in, to or under any of the
rights, properties or assets of either of the Merger Sub or the Company acquired
or to be acquired by the Surviving Corporation as a result of, or in connection
with, the Merger or otherwise to carry out this Agreement, the officers of the
Surviving Corporation shall be authorized to execute and deliver, in the name
and on behalf of each of the Merger Sub and the Company or otherwise, all such
deeds, bills of sale, assignments and assurances and to take and do, in such
names and on such behalves or otherwise, all such other actions and things as
may be necessary or desirable to vest, perfect or confirm any and all right,
title and interest in, to and under such rights, properties or assets in the
Surviving Corporation or otherwise to carry out the purposes of this Agreement.
Section 2.5. Stock Transfer Books. At the Effective Time, the
stock transfer books of the Company shall be closed and there shall be no
further registration of transfers of shares of Company Common Stock thereafter
on the records of the Company. From and after the Effective Time, the holders of
Certificates representing shares of Company Common Stock outstanding immediately
prior to the Effective Time shall cease to have any rights with respect to such
shares of Company Common Stock, except as otherwise provided herein or by law.
On or after the Effective Time, any Certificates presented to the Exchange Agent
(or Parent for any reason) shall be converted into shares of Parent Common
Stock, any cash in lieu of fractional shares of Parent Common Stock to which the
holders thereof are entitled pursuant to Section 2.4(f) and any dividends or
other distributions to which the holders thereof are entitled pursuant to
Section 2.4(d).
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and
Merger Sub that, except as set forth in the disclosure letter delivered by the
Company to Parent and Merger Sub on the date hereof (the "Company Disclosure
Letter"):
Section 3.1. Organization, Qualification, Etc. The Company is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has the corporate power and authority to own
its properties and assets and to carry on its business as it is now being
conducted and is duly qualified to do business and is in good standing in each
jurisdiction in which the ownership of its properties or the conduct of its
business requires such qualification, except for jurisdictions in which such
failure to be so qualified or to be in good standing would not in the aggregate
have a Material Adverse Effect on the Company. The copies of the Company's
charter and by-laws which have been made available to Parent are complete and
correct and in full force and effect on the date hereof. Each of the Company's
Significant Subsidiaries (as defined in Regulation S-X promulgated under the
Securities Act of 1933, as amended (the "Securities Act")) is a corporation,
limited partnership or limited liability company duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation or organization, has the corporate, limited partnership or limited
liability company power and authority to own its properties and to carry on its
business as it is now being conducted, and is duly qualified to do business and
is in good standing in each jurisdiction in which the
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ownership of its property or the conduct of its business requires such
qualification, except for jurisdictions in which such failure to be so qualified
or to be in good standing would not in the aggregate have a Material Adverse
Effect on the Company. Except as set forth in Section 3.1 of the Company
Disclosure Letter, all the outstanding shares of capital stock of, or other
ownership interests in, the Company's Subsidiaries are validly issued, fully
paid and non-assessable and are owned by the Company, directly or indirectly,
free and clear of all Liens, except for Liens arising out of the senior credit
facilities of Capstar Radio Broadcasting Partners, Inc. and Chancellor Media
Corporation of Los Angeles, as the same may be amended, supplemented or
otherwise modified in accordance with this Agreement and any renewal, extension,
refunding, restructuring, replacement or refinancing thereof in accordance with
this Agreement (collectively, the "Company Credit Agreement") and the $150
million promissory note dated May 29, 1999, made payable by Capstar Broadcasting
Corporation to the Company. There are no existing options, rights of first
refusal, preemptive rights, calls or commitments of any character relating to
the issued or unissued capital stock or other securities of, or other ownership
interests in, any Subsidiary of the Company.
Section 3.2. Capital Stock. The authorized capital stock of
the Company consists of 750,000,000 shares of the Company Common Stock and
50,000,000 shares of the Company's preferred stock, par value $0.01 per share,
of which 2,200,000 shares have been designated as 7% Convertible Preferred Stock
(the "7% Convertible Preferred Stock"). At the close of business on September
30, 1999, 209,641,983 shares of the Company Common Stock and 2,200,000 shares of
the 7% Convertible Preferred Stock were issued and outstanding. All the
outstanding shares of the Company Common Stock and the 7% Convertible Preferred
Stock have been validly issued and are fully paid and non-assessable. As of the
date hereof, there were no outstanding subscriptions, options, warrants, rights
or other arrangements or commitments obligating the Company to issue any shares
of its stock other than options, warrants and other rights to receive or acquire
an aggregate of 27,891,187 shares of the Company Common Stock pursuant to the
Company's stock option plans, as amended (the "Company Stock Option Plans"),
options and warrants described in Section 3.2 of the Company Disclosure Letter.
Except for the issuance of shares of the Company Common Stock
pursuant to the options and warrants and other rights referred to in Section 3.2
of the Company Disclosure Letter, from September 30, 1999 to the date hereof, no
shares of the Company Common Stock have been issued.
Section 3.3. Corporate Authority Relative to this Agreement;
No Violation. The Company has the corporate power and authority to enter into
this Agreement and the Parent Stockholders Voting Agreement and to carry out its
obligations hereunder and thereunder. The execution and delivery of this
Agreement and the Parent Stockholders Voting Agreement and the consummation of
the transactions contemplated hereby and thereby have been duly and validly
authorized by the Board of Directors of the Company and, except for the approval
and adoption of the agreement of merger (as such term is used in Section 251 of
the DGCL) contained in this Agreement and the approval of the Merger by the
holders of a majority of the outstanding shares of Company Common Stock, no
other corporate proceedings on the part of the Company are necessary to
authorize this Agreement, the Parent Stockholders Voting Agreement and the
transactions contemplated hereby and thereby. As of the date hereof, the Board
of Directors of the Company has determined that the transactions contemplated by
this Agreement are advisable and in the best interest of its stockholders and,
subject to the provisions contained in Sections 5.10 and 5.20, to
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recommend to such stockholders that they vote in favor thereof. This Agreement
and the Parent Stockholders Voting Agreement have been duly and validly executed
and delivered by the Company and, assuming this Agreement and the Parent
Stockholders Voting Agreement have been duly and validly executed and delivered
by the other parties hereto and thereto, and subject to the Company Stockholder
Approval (as defined in Section 5.3 hereof) this Agreement and the Parent
Stockholders Voting Agreement constitute valid and binding agreements of the
Company, enforceable against the Company in accordance with their respective
terms (except insofar as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally, or by principles governing the availability of equitable
remedies). Other than in connection with or in compliance with the provisions of
the DGCL, the Securities Act, the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), the Hart Scott Rodino Antitrust Improvements Act of 1976,
as amended (the "HSR Act"), applicable approvals of the Federal Communications
Commission (the "FCC") pursuant to the Communications Act of 1934, as amended,
and any regulations promulgated thereunder (the "Communications Act"), any
non-United States competition, antitrust and investment laws and the securities
or blue sky laws of the various states, and, other than the filing of the
Certificate of Merger with the Delaware Secretary of State and any necessary
state filings to maintain the good standing or qualification of the Surviving
Corporation (collectively, the "Company Required Approvals"), no authorization,
consent or approval of, or filing with, any governmental body or authority is
necessary for the consummation by the Company of the transactions contemplated
by this Agreement or the Parent Stockholders Voting Agreement, except for such
authorizations, consents, approvals or filings, the failure to obtain or make
which would not, in the aggregate, have a Material Adverse Effect on the
Company; provided that the Company makes no representation with respect to such
of the foregoing as are required by reason of the regulatory status of Parent or
any of its Subsidiaries or facts specifically pertaining to any of them. Except
for the Company Required Approvals, the Company is not subject to or obligated
under any charter, bylaw or contract provision or any governmental license,
franchise or permit, or subject to any order or decree, which would be breached
or violated by its executing or, subject to the approval of its stockholders,
carrying out this Agreement or the Parent Stockholders Voting Agreement, except
for any breaches or violations which would not, in the aggregate, have a
Material Adverse Effect on the Company.
Section 3.4. Reports and Financial Statements. The following
reports, proxy statements and prospectuses filed by the Company and its
predecessors with the SEC are publicly available:
(a) the Company's (and its predecessors') Annual Reports on
Form 10-K, as amended, filed with the Securities and Exchange Commission (the
"SEC") for the years ended December 31, 1996, 1997 and 1998;
(b) the Company's Quarterly Reports on Form 10-Q, as amended,
filed with the SEC for the quarters ended March 31, 1999 and June 30, 1999;
(c) each definitive proxy statement filed by the Company and
its predecessors with the SEC since January 1, 1996;
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(d) each final prospectus filed by the Company and its
predecessors with the SEC since January 1, 1996, except any final prospectus on
Form S-8; and
(e) all Current Reports on Form 8-K filed by the Company with
the SEC since December 31, 1998.
As of their respective dates, such reports, proxy statements,
and prospectuses filed on or prior to the date hereof (collectively, the
"Company SEC Reports") (i) complied as to form in all material respects with the
applicable requirements of the Securities Act, the Exchange Act and the rules
and regulations promulgated thereunder and (ii) did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided that the
foregoing clause (ii) shall not apply to the financial statements included in
the Company SEC Reports (which are covered by the following sentence). The
audited consolidated financial statements and unaudited consolidated interim
financial statements included in the Company SEC Reports (including any related
notes and schedules) fairly present in all material respects the financial
position of the Company and its consolidated Subsidiaries as of the dates
thereof and their results of operations and cash flows for the periods or as of
the dates then ended (subject, where appropriate, to normal year-end
adjustments), in each case in accordance with past practice and generally
accepted accounting principles in the United States ("GAAP") consistently
applied during the periods involved (except as otherwise disclosed in the notes
thereto and except that the unaudited financial statements therein do not
contain all of the footnote disclosures required by GAAP). Since January 1, 1996
and to the date hereof, the Company and its predecessors have timely filed all
material reports, registration statements and other filings required to be filed
by it with the SEC under the rules and regulations of the SEC.
Section 3.5. No Undisclosed Liabilities. As of the date
hereof, neither the Company nor any of its Subsidiaries has any liabilities or
obligations of any nature, whether or not accrued, contingent or otherwise, of a
type required by GAAP to be reflected on a consolidated balance sheet, except
(a) liabilities or obligations reflected in any of the Company SEC Reports and
(b) liabilities or obligations which would not in the aggregate have a Material
Adverse Effect on the Company.
Section 3.6. No Violation of Law. The businesses of the
Company and its Subsidiaries are not being conducted in violation of any law,
ordinance or regulation of any governmental body or authority (provided that no
representation or warranty is made in this Section 3.6 with respect to
Environmental Laws (as defined in Section 3.7 below) which are dealt with
exclusively in Section 3.7), except (a) as described in any of the Company SEC
Reports and (b) for violations or possible violations which would not in the
aggregate have a Material Adverse Effect on the Company. The Company and its
Subsidiaries have all permits, licenses and governmental authorizations material
to ownership or occupancy of their respective properties and assets and the
carrying on of their respective businesses, except for such permits, licenses
and governmental authorizations the failure of which to have would not have in
the aggregate a Material Adverse Effect on the Company. To the best Knowledge of
the Company, the Company's Subsidiaries which are FCC licensees are financially
qualified, and are otherwise qualified to be
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FCC licensees. The representations and warranties contained in this Section 3.6
are made as of the date hereof.
Section 3.7. Environmental Laws and Regulations. Except as
described in any of the Company SEC Reports, as of the date hereof (a) the
Company and each of its Subsidiaries is in material compliance with all
applicable federal, state, local and foreign laws and regulations relating to
pollution or protection of human health or the environment (including, without
limitation, ambient air, surface water, ground water, land surface or subsurface
strata) (collectively, "Environmental Laws"), except for noncompliance which
would not in the aggregate have a Material Adverse Effect on the Company, which
compliance includes, but is not limited to, the possession by the Company and
its Subsidiaries of material permits and other governmental authorizations
required under applicable Environmental Laws, and material compliance with the
terms and conditions thereof, (b) neither the Company nor any of its
Subsidiaries has received written notice of, or, to the Knowledge of the
Company, is the subject of, any actions, causes of action, claims,
investigations, demands or notices by any Person alleging liability under or
non-compliance with any Environmental Law or that the Company or any Subsidiary
is a potentially responsible party at any Superfund site or state equivalent
site ("Environmental Claims") which would in the aggregate have a Material
Adverse Effect on the Company, (c) to the Knowledge of the Company, there are no
circumstances that are reasonably likely to prevent or interfere with such
material compliance in the future, (d) to the Knowledge of the Company, the
Company and its Subsidiaries have not disposed of or released hazardous
materials (at a concentration or level which requires remedial action under any
Environmental Law) at any real property currently owned or leased by the Company
or any Subsidiary or at any other real property, except for such disposals or
releases as would not in the aggregate have a Material Adverse Effect on the
Company, and (e) neither the Company nor its Subsidiaries have agreed to
indemnify any predecessor or other party with respect to any environmental
liability, other than customary indemnity provisions contained in agreements
entered into in the ordinary course of business which would not in the aggregate
have a Material Adverse Effect on the Company.
Section 3.8. No Undisclosed Employee Benefit Plan Liabilities
or Severance Arrangements. Except to the extent that, in the aggregate,
violations of Section 3.8(a) through (e) would not result in a Material Adverse
Effect on the Company, as of the date hereof:
(a) All benefit and compensation plans, contracts, policies,
agreement or other arrangement providing for compensation, severance,
termination pay, performance awards, stock or stock related awards, fringe
benefits, change in control, employment agreement, deferred compensation or
other employee benefits of any kind, whether formal or informal, funded or
unfunded, written or oral and whether or not legally binding, or arrangements
covering current employees at the Company's corporate offices in Austin, Boston,
Chicago and Dallas, and, to the Knowledge of the Company, covering any other
employees or former employees of the Company and its Subsidiaries (all current
and former employees of the Company and its subsidiaries being herein referred
to as the "Employees") and current or former directors of the Company,
including, but not limited to, "employee benefit plans" within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA") (the "Benefit Plans") are listed on Section 3.8(a) of the Company
Disclosure Letter. There are no "change in control" or similar provisions
covering current employees at the Company's corporate offices in Austin, Boston,
Chicago and Dallas, and, to the Knowledge of the Company,
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covering any other employees or former employees of the Company and its
Subsidiaries other than those set forth in the Benefit Plans identified on
Section 3.8(a) of the Company Disclosure Letter.
(b) All employee benefit plans, other than "multiemployer
plans" within the meaning of Section 3(37) of ERISA, covering Employees (the
"Plans"), to the extent subject to ERISA, are in substantial compliance with
ERISA, the Code, and all other applicable law. Each Plan which is an "employee
pension benefit plan" within the meaning of Section 3(2) of ERISA ("Pension
Plan") and which is intended to be qualified under Section 401(a) of the Code,
has received a favorable determination letter from the Internal Revenue Service
with respect to "TRA" (as defined in Section 1 of Rev. Proc. 93-39) or is
operating within the remedial amendment period and may still obtain a favorable
determination letter from the Internal Revenue Service, and the Company has no
Knowledge of any circumstances likely to result in revocation of any such
favorable determination letter. There is no material pending or, to the
Knowledge of the Company, threatened litigation relating to the Plans. Neither
the Company nor any of its Subsidiaries has engaged in a transaction with
respect to any Plan that, assuming the taxable period of such transaction
expired as of the date hereof, could subject the Company or any Subsidiary to a
tax or penalty imposed by either Section 4975 of the Code or Section 502(i) of
ERISA in an amount which would be material.
(c) No current or former Pension Plan of the Company or any of
its Subsidiaries, or any entity which is considered one employer with the
Company under Section 4001 of ERISA or Section 414 of the Code (an "ERISA
Affiliate"), is or has been subject to Title IV of ERISA or Section 412 of the
Code within the past six years.
(d) All contributions required to be made under the terms of
any Benefit Plan have been timely made or have been reflected on the audited
financial statements of the Company.
(e) Neither the Company nor any of its Subsidiaries has any
obligations for retiree health and life benefits under any Benefit Plan.
(f) The consummation of the transactions contemplated by this
Agreement will not, solely as a result of such consummation, (x) entitle any
Employees of the Company or any of the Subsidiaries to severance pay, (y)
accelerate the time of payment or vesting or trigger any payment or funding
(through a grantor trust or otherwise) of compensation or benefits under,
increase the amount payable or trigger any other material obligation pursuant
to, any of the Benefit Plans or (z) result in any breach or violation of, or a
default under, any of the Benefit Plans.
(g) Any amount that could be received (whether in cash,
property, or vesting of property) as a result of the transaction contemplated by
this Agreement by any officer, director, employee or independent contractor of
the Company or any of its subsidiaries, who is a "disqualified individual" (as
defined in proposed Treasury Regulation Section 1.280G-1), under any employment
arrangement or Benefit Plan would not be characterized as an "excess parachute
payment" (as defined in Section 280G of the Code).
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(h) All Benefit Plans covering current or former non-U.S.
Employees comply in all material respects with applicable law. No unfunded
liabilities exist with respect to any Benefit Plan that covers such non-U.S.
Employees.
Section 3.9. Absence of Certain Changes or Events. Other than
as disclosed in the Company SEC Reports or previously disclosed in writing to
Parent, since June 30, 1999 to the date hereof, (a) the businesses of the
Company and its Subsidiaries have been conducted in all material respects in the
ordinary course and (b) there has not been any event, occurrence, development or
state of circumstances or facts that has had a Material Adverse Effect on the
Company. Since June 30, 1999 to the date hereof, no dividends or distributions
have been declared or paid on or made with respect to the shares of capital
stock or other equity interests of the Company or its Subsidiaries nor have any
such shares been repurchased or redeemed, other than dividends or distributions
paid to the Company or a wholly-owned Subsidiary.
Section 3.10. Investigations; Litigation. As of the date
hereof, except as described in any of the Company SEC Reports or previously
disclosed in writing to Parent:
(a) to the Knowledge of the Company, no investigation or
review by any governmental body or authority with respect to the Company or any
of its Subsidiaries which would in the aggregate have a Material Adverse Effect
on the Company is pending nor has any governmental body or authority notified
the Company of an intention to conduct the same;
(b) there are no actions, suits or proceedings pending (or, to
the Company's Knowledge, threatened) against or affecting the Company or its
Subsidiaries, or any of their respective properties or before any federal,
state, local or foreign governmental body or authority, which, in the aggregate,
are reasonably likely to have a Material Adverse Effect on the Company; and
(c) to the Knowledge of the Company, the Company SEC Reports
or the Company Disclosure Letter lists all of the pending litigation of the
Company that individually or in the aggregate could reasonably be expected to
have a Material Adverse Effect on the Company.
Section 3.11. Joint Proxy Statement; Registration Statement;
Other Information. None of the information with respect to the Company or its
Subsidiaries to be included in the Joint Proxy Statement (as defined in Section
5.2) or the Registration Statement (as defined in Section 5.2) will, in the case
of the Joint Proxy Statement or any amendments thereof or supplements thereto,
at the time of the mailing of the Joint Proxy Statement or any amendments or
supplements thereto, and at the time of the Company Special Meeting (as defined
in Section 5.3), or, in the case of the Registration Statement, at the time it
becomes effective or at the time of any post-effective amendment, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading, except
that no representation is made by the Company with respect to information
supplied in writing by Parent, Merger Sub or any affiliate of Parent
specifically for inclusion in the Joint Proxy Statement. The Joint Proxy
Statement (as it relates to the Company) will comply as to form in all material
respects with the provisions of the Exchange Act and the rules and regulations
promulgated thereunder.
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Section 3.12. Lack of Ownership of Parent Common Stock.
Neither the Company nor any of its Subsidiaries owns any shares of Parent Common
Stock or other securities convertible into shares of Parent Common Stock
(exclusive of any shares owned by the Company's employee benefit plans).
Section 3.13. Tax Matters.
(a) All federal, state, local and foreign Tax Returns required
to be filed by or on behalf of the Company, each of its Subsidiaries, and each
affiliated, combined, consolidated or unitary group of which the Company or any
of its Subsidiaries is or was a member (a "Company Group") have been timely
filed or requests for extensions to file such returns or reports have been
timely filed and granted and have not expired, and all returns filed are
complete and accurate except to the extent any failure to file or any
inaccuracies in filed returns would not, individually or in the aggregate, have
a Material Adverse Effect on the Company. All Taxes due and owing by the
Company, any Subsidiary of the Company or any Company Group have been paid, or
adequately reserved for, except to the extent any failure to pay or reserve
would not, individually or in the aggregate, have a Material Adverse Effect on
the Company. There is no audit examination, deficiency, refund litigation,
proposed adjustment or matter in controversy with respect to any Taxes due and
owing by the Company, any Subsidiary of the Company or any Company Group nor has
the Company or any Subsidiary filed any waiver of the statute of limitations
applicable to the assessment or collection of any Tax, in each case, which
would, individually or in the aggregate, have a Material Adverse Effect on the
Company. All assessments for Taxes due and owing by the Company, any Subsidiary
of the Company or any Company Group with respect to completed and settled
examinations or concluded litigation have been paid. Neither the Company nor any
Subsidiary is a party to any tax indemnity agreement, tax sharing agreement or
other agreement under which the Company or any Subsidiary could become liable to
another Person as a result of the imposition of a Tax upon any Person, or the
assessment or collection of a Tax, except for such agreements as would not in
the aggregate have a Material Adverse Effect on the Company. The Company has
provided or made available to Parent information relating to (i) the taxable
years of the Company for which the statutes of limitations with respect to
federal income Taxes have not expired, and (ii) with respect to federal income
Taxes, those years for which examinations have been completed, those years for
which examinations are presently being conducted, and those years for which
examinations have not yet been initiated. The Company and each of its
Subsidiaries has complied in all material respects with all rules and
regulations relating to the withholding of Taxes, except to the extent any such
failure to comply would not, individually or in the aggregate, have a Material
Adverse Effect on the Company.
(b) Neither the Company nor any of its Subsidiaries has
Knowledge of any fact or has taken any action that could reasonably be expected
to prevent the Merger from qualifying as a reorganization within the meaning of
Section 368(a) of the Code.
The representations and warranties contained in this Section
3.13 are made as of the date hereof.
Section 3.14. Opinion of Financial Advisor. The Board of
Directors of the Company has received the oral opinion of Morgan Stanley Dean
Witter, to the effect that, as of
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October 2, 1999 the Conversion Number is fair to the Company's stockholders from
a financial point of view. A copy of the written opinion of Morgan Stanley Dean
Witter will be delivered to Parent as soon as practicable after the date of this
Agreement.
Section 3.15. Required Vote of the Company Stockholders. The
affirmative vote of the holders of a majority of the outstanding shares of the
Company Common Stock is required to adopt this Agreement. No other vote of the
stockholders of the Company is required by law or the charter or By-laws of the
Company in order for the Company to consummate the Merger and the transactions
contemplated hereby.
Section 3.16. Insurance. Except to the extent that the lack of
a policy could reasonably be expected to have a Material Adverse Effect on the
Company, as of the date hereof, the Company and its Subsidiaries have insurance
policies, including without limitation policies of life, fire, health and other
casualty and liability insurance, that the Company believes is sufficient for
its business and operations.
Section 3.17. Real Property; Title. As of the date hereof, the
Company and its Subsidiaries have good and marketable title to all real
properties owned by them except where the failure to have such title would not
in the aggregate have a Material Adverse Effect on the Company.
Section 3.18. Collective Bargaining Agreements and Labor. The
Company has previously made available to Parent all labor or collective
bargaining agreements in effect as of the date of this Agreement which pertain
to a material number of the employees of the Company and its Subsidiaries. As of
the date hereof, there are no pending complaints, charges or claims against the
Company or its Subsidiaries filed with any public or governmental authority,
arbitrator or court based upon the employment or termination by the Company of
any individual, except for such complaints, charges or claims which if adversely
determined would not in the aggregate have a Material Adverse Effect on the
Company.
Section 3.19. Material Contracts.
(a) Except as disclosed in the Company Disclosure Letter, from
and after the date of filing of the Company SEC Reports, neither the Company nor
any of its Subsidiaries has entered into any contract, agreement or other
document or instrument (other than this Agreement) that would be required to be
filed with the SEC or any material amendment, modification or waiver under any
contract, agreement or other document or instrument (other than any such
amendments, modifications or waivers entered into following the date of this
Agreement in connection with the transactions contemplated hereby) that was
previously filed with the SEC or would be required to be so filed.
(b) Except as filed as an exhibit to the Company SEC Reports
or as set forth in the Company Disclosure Letter, neither the Company nor any of
its Subsidiaries is a party to or has entered into or made any material
amendment or modification to or granted any material waiver under any contract,
agreement, document or instrument that the Company would be required to file
under Item 601 of Regulation S-K promulgated under the Securities Act as an
Exhibit to Form 10-K (collectively, the "Material Agreements").
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(c) Each of the Material Agreements is valid and enforceable
against the Company in accordance with its terms, and there is no default under
any Material Agreements either by the Company or any of its Subsidiaries which
is a party to such Material Agreements or, to the Knowledge of the Company, by
any other party thereto, and no event has occurred that with the lapse of time
or the giving of notice or both would constitute a default thereunder by the
Company or, to the Knowledge of the Company, any other party thereto, in any
such case in which such default or event could reasonably be expected to have a
Material Adverse Effect on the Company. In addition, neither the Company nor any
Subsidiary of the Company is in breach of any Material Agreement (including any
breach which would give rise to a right to terminate any such agreement) that
has caused a Material Adverse Effect on the Company. To the date of this
Agreement, neither the Company nor any Subsidiary of the Company has received
any written notice (or to the Knowledge of the Company any other notice) of
default or termination under any Material Agreement, and to the Knowledge of the
Company, there exists no basis for any assertion of a right of default or
termination under such agreements. To the date of this Agreement, neither the
Company nor any Subsidiary of the Company has received any written notice (or to
the Knowledge of the Company any other notice) of the exercise of a put option
or other right pursuant to which the Company or any of its Subsidiaries would be
obligated to purchase capital stock or assets relating to any Company LMA
Facility (as defined in Section 3.21).
The representations and warranties contained in this Section
3.19 are made as of the date hereof.
Section 3.20. Takeover Statute. The Board of Directors of the
Company has approved this Agreement and the transactions contemplated hereby
and, assuming the accuracy of Parent's representation and warranty contained in
Section 4.12, such approval constitutes approval of the Merger and the other
transactions contemplated hereby by the Board of Directors of the Company under
the provisions of Section 203 of the DGCL such that Section 203 of the DGCL does
not apply to this Agreement and the transactions contemplated hereby. To the
Knowledge of the Company, no other state takeover statute is applicable to the
Merger or the other transactions contemplated hereby.
Section 3.21. Company FCC License; Operations of Company
Licensed Facilities. The Company and its Subsidiaries have operated the radio
stations for which the Company and any of its Subsidiaries hold licenses from
the FCC, in each case which are owned or operated by the Company and its
Subsidiaries (each a "Company Licensed Facility" and collectively the "Company
Licensed Facilities"), in material compliance with the terms of the licenses
issued by the FCC to the Company and its Subsidiaries (the "Company FCC
Licenses"), and in material compliance with the Communications Act, except where
the failure to do so could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on the Company. To the Knowledge of
the Company, each broadcast radio station for which the Company or any of its
Subsidiaries provides programming and advertising services pursuant to a local
marketing agreement (each a "Company LMA Facility" and collectively the "Company
LMA Facilities") has been operated in compliance with the terms of the licenses
issued by the FCC to the owner of such Company LMA Facility (each an "LMA
Facility FCC License" and collectively the "LMA Facility FCC Licenses") except
where the failure to do so could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on the Company. The
Company has, and each of its Subsidiaries
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has, timely filed or made all applications, reports and other disclosures
required by the FCC to be made with respect to Company Licensed Facilities and
has timely paid all FCC regulatory fees with respect thereto, except where the
failure to do so could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on the Company. The Company and each
of its Subsidiaries have, and are the authorized legal holders of, all Company
FCC Licenses necessary or used in the operation of the businesses of Company
Licensed Facilities as presently operated. To the Knowledge of the Company, the
third-parties with which the Company or its Subsidiaries have entered into local
marketing agreements with respect to Company LMA Facilities have, and are the
authorized legal holders of, the LMA Facility FCC License necessary or used in
the operation of the business of the respective Company LMA Facility to which
such local marketing agreement relates. All Company FCC Licenses and, to the
Knowledge of the Company, LMA Facility FCC Licenses are validly held and are in
full force and effect, unimpaired by any act or omission of the Company, any of
its Subsidiaries (or, to the Company's Knowledge, their respective predecessors)
or their respective officers, employees or agents, except where such impairments
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on the Company. Except as set forth in Company
Disclosure Letter, no application, action or proceeding is pending for the
renewal of any Company FCC License or, to the Knowledge of the Company, LMA
Facility FCC License as to which any petition to deny has been filed and, to
Company's Knowledge, there is not before the FCC any material investigation,
proceeding, notice of violation or order of forfeiture relating to any Company
Licensed Facility or Company LMA Facility that, if adversely determined, could
reasonably be expected to have a Material Adverse Effect on the Company, and the
Company has no Knowledge of any basis that could reasonably be expected to cause
the FCC not to renew any of Company FCC Licenses or the LMA Facility FCC
Licenses (other than proceedings to amend FCC rules or the Communications Act of
general applicability to the radio broadcast industry). There is not pending
and, to Company's Knowledge, there is not threatened, any action by or before
the FCC to revoke, suspend, cancel, rescind or modify in any material respect
any of Company FCC Licenses or, to the Knowledge of the Company, any of the LMA
Facility FCC Licenses that, if adversely determined, could reasonably be
expected to have a Material Adverse Effect on the Company (other than
proceedings to amend FCC rules or the Communications Act of general
applicability to the radio broadcast industry). The representations and
warranties contained in this Section 3.21 are made as of the date hereof.
Section 3.22. Transactions With Affiliates. Other than the
transactions contemplated by this Agreement, or except to the extent disclosed
in the Company SEC Reports or in the Company Disclosure Letter, as of the date
hereof there have been no transactions, agreements, arrangements or
understandings between the Company or its Subsidiaries, on the one hand, and the
Company's affiliates (other than Subsidiaries of the Company) or any other
Person, on the other hand, that would be required to be disclosed under Item 404
of Regulation S-K under the Securities Act.
Section 3.23. Intellectual Property. Except as set forth in
the Company Disclosure Letter and except to the extent that the inaccuracy of
any of the following (or the circumstances giving rise to such inaccuracy),
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect on the Company: (a) the Company and each of its
Subsidiaries owns, or is licensed to use (in each case, free and clear of any
Liens), all Intellectual Property (as defined below) used in or necessary for
the conduct of its business as currently conducted; (b) the use of any
Intellectual Property by the Company and its Subsidiaries does not infringe on
or
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otherwise violate the rights of any Person and is in accordance with any
applicable license pursuant to which the Company or any Subsidiary acquired the
right to use any Intellectual Property; (c) to the Knowledge of the Company, no
Person is challenging, infringing on or otherwise violating any right of the
Company or any of its Subsidiaries with respect to any Intellectual Property
owned by and/or licensed to the Company or its Subsidiaries; and (d) neither the
Company nor any of its Subsidiaries has received any written notice of any
pending claim with respect to any Intellectual Property used by the Company and
its Subsidiaries and to the Knowledge of the Company no Intellectual Property
owned and/or licensed by the Company or its Subsidiaries is being used or
enforced in a manner that would result in the abandonment, cancellation or
unenforceability of such Intellectual Property. For purposes of this Agreement,
"Intellectual Property" shall mean trademarks, service marks, brand names and
other indications of origin, the goodwill associated with the foregoing and
registrations in any jurisdiction of, and applications in any jurisdiction to
register, the foregoing, including any extension, modification or renewal of any
such registration or application; inventions, discoveries and ideas, whether
patentable or not, in any jurisdiction; patents, applications for patents
(including, without limitation, divisions, continuations, continuations in part
and renewal applications), and any renewals, extensions or reissues thereof, in
any jurisdiction; nonpublic information, trade secrets and confidential
information and rights in any jurisdiction to limit the use or disclosure
thereof by any Person; writings and other works, whether copyrightable or not,
in any jurisdiction; registrations or applications for registration of
copyrights in any jurisdiction, and any renewals or extensions thereof; any
similar intellectual property or proprietary rights; and any claims or causes of
action arising out of or relating to any infringement or misappropriation of any
of the foregoing. The representations and warranties contained in this Section
3.23 are made as of the date hereof.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub hereby jointly and severally represent
and warrant to the Company that except as set forth in the Parent Disclosure
Letter delivered to the Company on the date hereof:
Section 4.1. Organization, Qualification, Etc. Each of Parent
and Merger Sub is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization and has the
corporate power and authority to own its properties and assets and to carry on
its business as it is now being conducted and is duly qualified to do business
and is in good standing in each jurisdiction in which the ownership of its
properties or the conduct of its business requires such qualification, except
for jurisdictions in which such failure to be so qualified or to be in good
standing would not in the aggregate have a Material Adverse Effect on Parent or
Merger Sub. The copies of Parent's Articles of Incorporation, as amended, and
Amended and Restated By-laws and Merger Sub's charter and by-laws which have
been made available to the Company are complete and correct and in full force
and effect on the date hereof. Each of Parent's Significant Subsidiaries is a
corporation, partnership or limited liability company duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation or organization, has the corporate, partnership or limited
liability company power and authority to own its properties and to carry on its
business as it is now being conducted, and is duly qualified to do business and
is in good standing in each jurisdiction in which the ownership of its property
or the conduct of its
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business requires such qualification, except for jurisdictions in which such
failure to be so qualified or to be in good standing would not in the aggregate
have a Material Adverse Effect on Parent or Merger Sub. All the outstanding
shares of capital stock of, or other ownership interests in, Parent's
Subsidiaries and Merger Sub are validly issued, fully paid and non-assessable
and are owned by Parent, directly or indirectly, free and clear of all Liens,
except for restrictions contained in credit agreements and similar instruments
to which Parent is a party. Except as disclosed in the Parent SEC Reports, there
are no existing options (except for those set forth in Section 4.2 below),
rights of first refusal, preemptive rights, calls or commitments of any
character relating to the issued or unissued capital stock or other securities
of, or other ownership interests in, any Subsidiary of Parent or Merger Sub.
Section 4.2. Capital Stock. The authorized capital stock of
Parent consists of 900,000,000 shares of Parent Common Stock, and 2,000,000
shares of Class A Preferred Stock, par value $1.00 per share and 8,000,000
shares of Class B Preferred Stock, par value $1.00 per share (collectively, the
"Parent Preferred Stock"). The shares of Parent Common Stock to be issued in the
Merger or upon the exercise of the Company stock options, warrants, conversion
rights or other rights or upon vesting or payment of other Company equity-based
awards thereafter will, when issued, be validly issued fully paid and
non-assessable. As of the date hereof, 338,398,684 shares of Parent Common Stock
and no shares of Parent Preferred Stock were issued and outstanding. All the
outstanding shares of Parent Common Stock have been validly issued and are fully
paid and non-assessable. As of the date hereof, there were no outstanding
subscriptions, options, warrants, rights or other arrangements or commitments
obligating Parent to issue any shares of its capital stock other than options
and other rights to receive or acquire an aggregate of 30,097,952 shares of
Parent Common Stock pursuant to:
(a) the 1994 Incentive Stock Option Plan of Parent;
(b) the 1994 Non-Qualified Stock Option Plan;
(c) the Parent Director's Non-Qualified Stock Option Plan;
(d) the 1998 Stock Incentive Plan;
(e) various other option agreements with officers or employees
of the Parent or the Parent's Subsidiaries, option assumption agreements, and
incentive compensation grants;
(f) Parent's 2-5/8% Senior Convertible Notes due 2003,
convertible into Parent Common Stock;
(g) the warrants of Jacor Communications, Inc. ("Jacor")
assumed by Parent;
(h) Jacor LYONs due 2011; and
(i) Jacor LYONs due 2018.
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Section 4.3. Corporate Authority Relative to this Agreement;
No Violation.
(a) Parent has the corporate power and authority to enter into
this Agreement, the Registration Rights Agreement dated the date hereof between
Parent and certain stockholders of the Company (the "Registration Rights
Agreement" and, together with the Company Stockholders Voting Agreement and the
Shareholders Agreement, the "Ancillary Agreements"), the Shareholders Agreement
and the Company Stockholders Voting Agreement and to carry out its obligations
hereunder and thereunder. The execution and delivery of this Agreement and the
Ancillary Agreements and the consummation of the transactions contemplated
hereby and thereby have been duly and validly authorized by the Board of
Directors of Parent and except for the Parent Stockholder Approval (as defined
in Section 5.3 hereof), no other corporate or stockholder proceedings on the
part of Parent are necessary to authorize this Agreement, the Ancillary
Agreements, the issuance of the Parent Common Stock and the other transactions
contemplated hereby and thereby. As of the date hereof, the Board of Directors
of Parent has determined that the transactions contemplated by this Agreement
are advisable and in the best interest of its stockholders and, subject to the
provisions contained in Sections 5.10 and 5.20, to recommend to such
stockholders that they vote in favor thereof. This Agreement and the Ancillary
Agreements have been duly and validly executed and delivered by Parent and,
assuming this Agreement and the Ancillary Agreements have been duly and validly
executed and delivered by the other parties hereto and thereto, and subject to
the Parent Stockholder Approval (as defined in Section 5.3 hereof), this
Agreement and the Ancillary Agreements constitute valid and binding agreements
of Parent, enforceable against it in accordance with their respective terms
(except insofar as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally, or by principles governing the availability of equitable
remedies). Other than in connection with or in compliance with the provisions of
the DGCL, the Securities Act, the Exchange Act, the HSR Act, the Communications
Act, any non-United States competition, antitrust and investments laws, the
securities or blue sky laws of the various states and the rules of the New York
Stock Exchange, and, other than the filing of the Certificate of Merger with the
Delaware Secretary of State and any necessary state filings to maintain the good
standing or qualification of the Surviving Corporation (collectively, the
"Parent Required Approvals"), no authorization, consent or approval of, or
filing with, any governmental body or authority is necessary for the
consummation by Parent of the transactions contemplated by this Agreement or the
Ancillary Agreements, except for such authorizations, consents, approvals or
filings, the failure to obtain or make which would not, in the aggregate, have a
Material Adverse Effect on Parent; provided that Parent makes no representation
with respect to such of the foregoing as are required by reason of the
regulatory status of the Company or any of its Subsidiaries or facts
specifically pertaining to any of them. Except for the Parent Required
Approvals, neither Parent nor Merger Sub is subject to or obligated under any
charter, bylaw or contract provision or any governmental license, franchise or
permit, or subject to any order or decree, which would be breached or violated
by its executing or carrying out this Agreement or the Ancillary Agreements,
except for any breaches or violations which would not, in the aggregate, have a
Material Adverse Effect on Parent.
(b) Merger Sub has the corporate power and authority to enter
into this Agreement and to carry out its obligations hereunder. The execution
and delivery of this Agreement and the consummation of the transaction
contemplated hereby have been duly and
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validly authorized by the Board of Directors of Merger Sub, and no other
corporate or stockholder proceedings on the part of Merger Sub are necessary to
authorize this Agreement and the transactions contemplated hereby. The Board of
Directors of Merger Sub has determined that the transactions contemplated by
this Agreement are advisable and in the best interest of its stockholders and
recommends to such stockholders that they vote in favor thereof. This Agreement
has been duly and validly executed and delivered by Merger Sub and, assuming
this Agreement has been duly and validly executed and delivered by the other
parties hereto, this Agreement constitutes a valid and binding agreement of
Merger Sub, enforceable against it in accordance with its terms (except insofar
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar loss affecting creditors' rights
generally, or by principles governing the available of equitable remedies). This
Agreement has been approved by Parent, as the sole stockholder of Merger Sub.
Section 4.4. Reports and Financial Statements. The following
reports, proxy statements and prospectuses filed by Parent with the SEC are
publicly available:
(a) Parent's Annual Reports on Form 10-K filed with the SEC
for each of the years ended December 31, 1996, 1997 and 1998;
(b) Parent's Quarterly Reports on Form 10-Q filed with the SEC
for the quarters ended March 31, 1999 and June 30, 1999;
(c) each definitive proxy statement filed by Parent with the
SEC since January 1, 1996;
(d) each final prospectus filed by Parent with the SEC since
January 1, 1996, except any final prospectus on Form S-8; and
(e) all Current Reports on Form 8-K filed by Parent with the
SEC since December 31, 1998.
As of their respective dates, such reports, proxy statements
and prospectuses filed on or prior to the date hereof (collectively, "Parent SEC
Reports") (i) complied as to form in all material respect with the applicable
requirements of the Securities Act, the Exchange Act, and the rules and
regulations promulgated thereunder and (ii) did not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided that the
foregoing clause (ii) shall not apply to the financial statements included in
the Parent SEC Reports (which are covered by the following sentence). The
audited consolidated financial statements and unaudited consolidated interim
financial statements included in the Parent SEC Reports (including any related
notes and schedules) fairly present in all material respects the financial
position of Parent and its consolidated Subsidiaries as of the dates thereof and
the results of their operations and their cash flows for the periods or as of
the dates then ended (subject, where appropriate, to normal year-end
adjustments), in each case in accordance with GAAP consistently applied during
the periods involved (except as otherwise disclosed in the notes thereto and
except that the unaudited financial statements therein do not contain all of the
footnote disclosures required by GAAP). Since January 1, 1996 and to the date
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hereof, Parent has timely filed all material reports, registration statements
and other filings required to be filed by it with the SEC under the rules and
regulations of the SEC.
Section 4.5. No Undisclosed Liabilities. As of the date
hereof, neither Parent nor any of its Subsidiaries has any liabilities or
obligations of any nature, whether or not accrued, contingent or otherwise, of a
type required by GAAP to be reflected on a consolidated balance sheet, except
(a) liabilities or obligations reflected in any of the Parent SEC Reports and
(b) liabilities or obligations which would not in the aggregate have a Material
Adverse Effect on Parent.
Section 4.6. No Violation of Law. The businesses of Parent and
its Subsidiaries are not being conducted in violation of any law, ordinance or
regulation of any governmental body or authority (provided that no
representation or warranty is made in this Section 4.6 with respect to
Environmental Laws) except (a) as described in any of the Parent SEC Reports and
(b) for violations or possible violations which would not in the aggregate have
a Material Adverse Effect on Parent. Parent and its Subsidiaries have all
permits, licenses and governmental authorizations material to ownership or
occupancy of their respective properties and assets and the carrying on of their
respective businesses, except for such permits, licenses and governmental
authorizations the failure of which to have would not have in the aggregate a
Material Adverse Effect on Parent. To the best Knowledge of Parent, Parent's
Subsidiaries which are FCC licensees are financially qualified, and are
otherwise qualified to be FCC licensees. The representations and warranties
contained in this Section 4.6 are made as of the date hereof.
Section 4.7. Environmental Laws and Regulations. Except as
described in any of the Parent SEC Reports, as of the date hereof (a) Parent and
each of its Subsidiaries is in material compliance with all applicable
Environmental Laws, except for non-compliance which would not in the aggregate
have a Material Adverse Effect on Parent, which compliance includes, but is not
limited to, the possession by Parent and its Subsidiaries of material permits
and other governmental authorizations required under applicable Environmental
Laws, and material compliance with the terms and conditions thereof; (b) neither
Parent nor any of its Subsidiaries has received written notice of, or, to the
Knowledge of Parent, is the subject of, any Environmental Claims which would in
the aggregate have a Material Adverse Effect on Parent; and (c) to the Knowledge
of Parent, there are no circumstances that are reasonably likely to prevent or
interfere with such material compliance in the future.
Section 4.8. No Undisclosed Employee Benefit Plan Liabilities.
Except as described in any of the Parent SEC Reports or as otherwise set forth
on Section 4.8 of the Parent Disclosure Letter, as of the date hereof all
"employee benefit plans" as defined in Section 3(3) of ERISA, maintained or
contributed to by Parent or its Subsidiaries are in material compliance with
their terms and all applicable provisions of ERISA, the Code and any other
applicable legislation, and Parent and its Subsidiaries do not have any
liabilities or obligations with respect to any such employee benefit plans,
whether or not accrued, contingent or otherwise, except (a) as described in any
of the Parent SEC Reports and (b) for instances of noncompliance or liabilities
or obligations that would not in the aggregate have a Material Adverse Effect on
Parent.
Section 4.9. Absence of Certain Changes or Events. Other than
as disclosed in the Parent SEC Reports, since June 30, 1999 to the date hereof,
(a) the businesses of Parent and its
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Subsidiaries have been conducted in all material respects in the ordinary course
and (b) there has not been any event, occurrence, development or state of
circumstances or facts that has had a Material Adverse Effect on Parent.
Section 4.10. Investigations; Litigation. As of the date
hereof, except as described in any of the Parent SEC Reports or previously
disclosed in writing to the Company:
(a) to the Knowledge of Parent, no investigation or review by
any governmental body or authority with respect to Parent or any of its
Subsidiaries which would in the aggregate have a Material Adverse Effect on
Parent is pending nor has any governmental body or authority notified Parent of
an intention to conduct the same;
(b) there are no actions, suits or proceedings pending (or, to
Parent's Knowledge, threatened) against or affecting Parent or its Subsidiaries,
or any of their respective properties, or before any federal, state, local or
foreign governmental body or authority which in the aggregate is reasonably
likely to have a Material Adverse Effect on Parent; and
(c) to the Knowledge of Parent, the Parent SEC Reports or the
Parent Disclosure Letter lists all of the pending litigation of Parent that
individually or in the aggregate could reasonably be expected to have a Material
Adverse Effect on Parent.
Section 4.11. Joint Proxy Statement; Registration Statement;
Other Information. None of the information with respect to Parent or its
Subsidiaries to be included in the Joint Proxy Statement (as defined in Section
5.2) or the Registration Statement (as defined in Section 5.2) will, in the case
of the Joint Proxy Statement or any amendments thereof or supplements thereto,
at the time of the mailing of the Proxy Statement or any amendments or
supplements thereto, and at the time of the Company Special Meeting, or, in the
case of the Registration Statement, at the time it becomes effective or at the
time of any post-effective amendment, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, except that no representation is
made by Parent or Merger Sub with respect to information supplied in writing by
the Company or any affiliate of the Company specifically for inclusion in the
Joint Proxy Statement or the Registration Statement. Each of the Joint Proxy
Statement (as it relates to Parent) and Registration Statement will comply as to
form in all material respects with the provisions of the Exchange Act and the
rules and regulations promulgated thereunder.
Section 4.12. Lack of Ownership of Company Common Stock.
Neither Parent nor any of its Subsidiaries owns any shares of Company Common
Stock or other securities convertible into shares of Company Common Stock
(exclusive of any shares owned by Parent's employee benefit plans).
Section 4.13. Tax Matters.
(a) All federal, state, local and foreign Tax Returns required
to be filed by or on behalf of Parent, each of its Subsidiaries, and each
affiliated, combined, consolidated or unitary group of which Parent or any of
its Subsidiaries is or was a member (a "Parent Group")
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have been timely filed or requests for extensions to file such returns or
reports have been timely filed and granted and have not expired, and all returns
filed are complete and accurate except to the extent any failure to file or any
inaccuracies in filed returns would not, individually or in the aggregate, have
a Material Adverse Effect on Parent. All Taxes due and owing by Parent, any
Subsidiary of Parent or any Parent Group have been paid, or adequately reserved
for, except to the extent any failure to pay or reserve would not, individually
or in the aggregate, have a Material Adverse Effect on Parent. As of the date
hereof, there is no audit examination, deficiency, refund litigation, proposed
adjustment or matter in controversy with respect to any Taxes due and owing by
Parent, any Subsidiary of Parent or any Parent Group which would, individually
or in the aggregate, have a Material Adverse Effect on Parent. All assessments
for Taxes due and owing by Parent, any Subsidiary of Parent or any Parent Group
with respect to completed and settled examinations or concluded litigation have
been paid. Parent has provided or made available to the Company information
relating to (i) the taxable years of Parent for which the statutes of
limitations with respect to federal income Taxes have not expired, and (ii) with
respect to federal income Taxes, those years for which examinations have been
completed, those years for which examinations are presently being conducted, and
those years for which examinations have not yet been initiated. Parent and each
of its Subsidiaries has complied in all material respects with all rules and
regulations relating to the withholding of Taxes, except to the extent any such
failure to comply would not, individually or in the aggregate, have a Material
Adverse Effect on Parent.
(b) Neither Parent nor any of its Subsidiaries has Knowledge
of any fact or has taken any action that could reasonably be expected to prevent
the Merger from qualifying as a reorganization within the meaning of Section
368(a) of the Code.
Section 4.14. Required Vote of Parent Stockholders. Other than
(i) the affirmative vote approving the issuance of shares of Parent Common Stock
to the stockholders of the Company in the Merger by the holders of a majority of
the outstanding shares of Parent Common Stock actually present and voting and
(ii) a plurality vote of the holders of Parent Common Stock electing the
Director Nominees (as defined in Section 5.17) to Parent's Board of Directors,
no other vote of the stockholders of Parent or Merger Sub is required by law,
the charter or By-laws of Parent or Merger Sub in order for Parent and Merger
Sub to consummate the Merger and the transactions contemplated hereby.
Section 4.15. Opinion of Financial Advisor. The Board of
Directors of Parent has received the opinion of Salomon Smith Barney Inc.
("SSB") dated the date of this Agreement to the effect that, as of such date,
the Conversion Number is fair from a financial point of view to Parent. A copy
of the written opinion of SSB will be delivered to the Company as soon as
practicable after the date of this Agreement.
Section 4.16. Insurance. Except to the extent that the lack of
a policy could reasonably be expected to have a Material Adverse Effect on
Parent, as of the date hereof, Parent and its Subsidiaries have insurance
policies, including without limitation policies of life, fire, health and other
casualty and liability insurance, that Parent believes is sufficient for its
business and operations.
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Section 4.17. Real Property; Title. As of the date hereof,
Parent and its Subsidiaries have good and marketable title to all real
properties owned by it except where the failure to have such title would not in
the aggregate have a Material Adverse Effect on Parent.
Section 4.18. Collective Bargaining Agreements and Labor. As
of the date hereof, there are no pending complaints, charges or claims against
Parent or its Subsidiaries filed with any public or governmental authority,
arbitrator or court based upon the employment or termination by Parent of any
individual, except for such complaints, charges or claims which if adversely
determined would not in the aggregate have a Material Adverse Effect on Parent.
Section 4.19. Material Contracts. As of the date hereof,
neither Parent nor any of its Subsidiaries Knows of, or has received notice of,
any violation or default under any material contract (as such term is defined in
item 601(b)(10) of Regulation S-K of the SEC) to which Parent or any of its
Subsidiaries is a party except for such violations or defaults as would not in
the aggregate have a Material Adverse Effect on Parent.
Section 4.20. Takeover Statute. The Board of Directors of
Parent has approved this Agreement and the transactions contemplated hereby and,
assuming the accuracy of the Company's representation and warranty contained in
Section 3.12, such approval constitutes approval of the Merger and the other
transactions contemplated hereby by the Board of Directors of Parent under the
provisions of Article 13.03 of the Texas Business Corporation Act (the "TBCA")
such that Article 13.03 of the TBCA does not apply to this Agreement and the
transactions contemplated hereby. To the Knowledge of Parent, no other state
takeover statute is applicable to the Merger or the other transactions
contemplated hereby.
Section 4.21. Parent FCC License; Operations of Parent
Licensed Facilities. Parent and its Subsidiaries have operated the radio
stations for which Parent and any of its Subsidiaries hold licenses from the
FCC, in each case which are owned or operated by Parent and its Subsidiaries
(each a "Parent Licensed Facility" and collectively the "Parent Licensed
Facilities"), in material compliance with the terms of the licenses issued by
the FCC to Parent and its Subsidiaries (the "Parent FCC Licenses"), and in
material compliance with the Communications Act, except where the failure to do
so could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on Parent. To the Knowledge of Parent, each broadcast
radio station for which Parent or any of its Subsidiaries provides programming
and advertising services pursuant to a local marketing agreement (each a "Parent
LMA Facility" and collectively the "Parent LMA Facilities") has been operated in
compliance with the terms of the licenses issued by the FCC to the owner of such
Parent LMA Facility (each an "LMA Facility FCC License" and collectively the
"LMA Facility FCC Licenses") except where the failure to do so could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on Parent. Parent has, and each of its Subsidiaries have, timely
filed or made all applications, reports and other disclosures required by the
FCC to be made with respect to Parent Licensed Facilities and has timely paid
all FCC regulatory fees with respect thereto, except where the failure to do so
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on Parent. Parent and each of its Subsidiaries have, and
are the authorized legal holders of, all Parent FCC Licenses necessary or used
in the operation of the businesses of Parent Licensed Facilities as presently
operated. To the Knowledge of Parent, the third-parties with which Parent or its
Subsidiaries have entered into local marketing agreements with respect to Parent
LMA Facilities have, and are the
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authorized legal holders of, the LMA Facility FCC License necessary or used in
the operation of the business of the respective Parent LMA Facility to which
such local marketing agreement relates. All Parent FCC Licenses and, to the
Knowledge of Parent, LMA Facility FCC Licenses are validly held and are in full
force and effect, unimpaired by any act or omission of Parent, any of its
Subsidiaries (or, to Parent's Knowledge, their respective predecessors) or their
respective officers, employees or agents, except where such impairments could
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on Parent. Except as set forth in Parent Disclosure Letter, no
application, action or proceeding is pending for the renewal of any Parent FCC
License or, to the Knowledge of Parent, LMA Facility FCC License as to which any
petition to deny has been filed and, to Parent's Knowledge, there is not before
the FCC any material investigation, proceeding, notice of violation or order of
forfeiture relating to any Parent Licensed Facility or Parent LMA Facility that,
if adversely determined, could reasonably be expected to have a Material Adverse
Effect on Parent, and Parent has no Knowledge of any basis that could reasonably
be expected to cause the FCC not to renew any of Parent FCC Licenses or the LMA
Facility FCC Licenses (other than proceedings to amend FCC rules or the
Communications Act of general applicability to the radio broadcast industry).
There is not pending and, to Parent's Knowledge, there is not threatened, any
action by or before the FCC to revoke, suspend, cancel, rescind or modify in any
material respect any of Parent FCC Licenses or, to the Knowledge of Parent, any
of the LMA Facility FCC Licenses that, if adversely determined, could reasonably
be expected to have a Material Adverse Effect on Parent (other than proceedings
to amend FCC rules or the Communications Act of general applicability to the
radio broadcast industry). The representations and warranties contained in this
Section 4.21 are made as of the date hereof.
ARTICLE 5.
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 5.1. Conduct of Business by the Company or Parent.
Except as contemplated by this Agreement and in the Company Disclosure Letter or
the Parent Disclosure Letter, or as necessary or appropriate to satisfy the
obligations hereunder, prior to the Effective Time or the date, if any, on which
this Agreement is earlier terminated pursuant to Section 7.1, and except as may
be agreed to by the other parties hereto or as may be permitted pursuant to this
Agreement:
(a) The Company:
(i) shall, and shall cause each of its Subsidiaries
to, conduct its operations according to their ordinary and usual course
of business;
(ii) shall use its reasonable efforts, and cause each
of its Subsidiaries to use its reasonable efforts, consistent with
prudent business practice to (A) preserve intact its business
organizations and goodwill in all material respects, (B) keep available
the services of its officers and employees as a group, subject to
changes in the ordinary course, and (C) maintain satisfactory
relationships with suppliers, distributors, customers and others having
business relationships with them, in each case as a group;
(iii) shall notify Parent of any emergency or other
change in the normal course of its or its Subsidiaries' respective
businesses or in the operation of its or its
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Subsidiaries' respective properties and of any complaints,
investigations or hearings (or communications indicating that the same
may be contemplated) of any governmental body or authority if such
emergency, change, complaint, investigation or hearing could have a
Material Adverse Effect on the Company;
(iv) shall not authorize or pay any dividends on or
make any distribution with respect to its outstanding shares of stock;
(v) shall not, and shall not permit any of its
Subsidiaries to, enter into or amend any severance or similar
agreements or arrangements which would be triggered by the transactions
contemplated hereby, with any of their respective directors or
employees, except for the payment of stay bonuses and severance
mutually agreed to by Parent and the Company;
(vi) shall not, without the consent of Parent, which
consent shall not be unreasonably withheld, enter into any new written
employment, consulting or salary continuation agreement with any
employee or director which, in any case, has a term of more than one
year or compensation at an annual rate in excess of $150,000 or, grant
any increases in the compensation or benefits to any employee or
director, other than as required by any agreement in existence prior to
the date hereof and other than (a) compensation increases not in excess
of 10% per year of such Person's compensation and (b) bonus increases
not in excess of 10% per year of such Person's bonus from the preceding
year;
(vii) shall not, and shall not permit any of its
Subsidiaries to, authorize, propose or announce an intention to
authorize or propose, or enter into an agreement with respect to, (x)
any merger, consolidation or business combination, any acquisition of
an assets or securities, any disposition of assets or securities in any
case, involving consideration in excess of $2 million individually or
$25 million in the aggregate, and except for acquisitions previously
disclosed in the Company Disclosure Letter or (y) any release or
relinquishment of any material contract rights;
(viii) shall not propose or adopt any amendments to
its corporate charter or By-laws;
(ix) shall not, and shall not permit any of its
Subsidiaries to, (A) issue any shares of their capital stock, except
upon exercise of rights under the Company Stock Option Plans, warrants
listed in Section 3.2 of the Company Disclosure Letter, the 7%
Convertible Preferred Stock, any other agreement or arrangement
referred to in Section 3.2 of the Company Disclosure Letter, options
issued pursuant to existing employee incentive or benefit plans,
programs or arrangements and non-employee director plans (including,
without limitation, shares issued in connection with stock grants or
awards or the exercise of rights or options granted in the ordinary
course of business consistent with past practice pursuant to such
plans, programs or arrangements) or (B) effect any stock split not
previously announced or (C) otherwise change the capitalization of the
Company as it existed on the date hereof, except as contemplated
herein;
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(x) without the consent of Parent, which consent
shall not be unreasonably withheld, shall not, and shall not permit any
of its Subsidiaries to, grant, confer or award any options, warrants,
conversion rights or other rights, to acquire any shares of its capital
stock, other than as required in any employment or other agreement in
existence prior to the date hereof;
(xi) shall not, and shall not permit any of its
Subsidiaries to, except in the ordinary course of business in
connection with employee incentive and benefit plans, programs or
arrangements in existence on the date hereof, purchase, exchange,
convert or redeem any shares of its stock other than shares of 7%
Convertible Preferred Stock and preferred stock of Subsidiaries;
(xii) shall not, and shall not permit any of its
Subsidiaries to amend in any significant respect the terms of their
respective Benefit Plans, including but not limited to employee benefit
plans, programs or arrangements in existence on the date hereof, or
adopt any new employee benefit plans, programs or arrangements, as
required by law or to maintain tax qualified status or as requested by
the Internal Revenue Service in order to receive a determination letter
for such employee benefit plan;
(xiii) shall not, and shall not permit any of its
Subsidiaries to, amend the Company Credit Agreement, enter into any
loan agreement as borrower or as lender, incur indebtedness that is
subject to any prepayment penalty or for which the Company or its
Subsidiaries are obligated to pay any discount, origination or similar
fees, or grant any Liens on any of its assets;
(xiv) shall not, and shall not permit any of its
Subsidiaries to, except with respect to agreements contemplated by or
permitted pursuant to this Agreement, enter into any material agreement
with aggregate consideration of $2.0 million per year;
(xv) shall not, and shall not permit any of its
Subsidiaries, to enter into an agreement with any Affiliate of the
Company, any family member of any Affiliate of the Company or any
stockholder who owns more than 10% of the outstanding capital stock of
the Company;
(xvi) shall not, and shall not permit any of its
Subsidiaries to make any material Tax election or settle or compromise
any material Tax liability, other than in connection with currently
pending proceedings or other than in the ordinary course of business;
(xvii) shall not enter into, amend, or extend any
material collective bargaining or other labor agreement, except as
required by law and except in the ordinary course of business
consistent in all material respects with past practices;
(xviii) shall not, and shall not permit any of its
Subsidiaries to, make any acquisition, by means of a merger or
otherwise, of assets or securities, or any sale, lease, encumbrance or
other disposition of assets or securities, or enter into any similar
transaction, or enter into an agreement to effect any of the foregoing,
in each case which
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would reasonably be expected to adversely affect the ability of the
Company to consummate the transactions contemplated by this Agreement
or materially delay obtaining any consents or approvals of any
Governmental Entity required under this Agreement or otherwise delay
the Closing; and
(xix) shall not agree, or permit any of its
Subsidiaries to agree, in writing or otherwise, to take any of the
foregoing actions described in clauses (iv) through (xviii) or take any
action which would make any representation or warranty in Article 3
hereof untrue or incorrect.
(b) The Parent:
(i) shall, and shall cause each of its Subsidiaries
to, conduct its operations according to their ordinary and usual course
of business; provided, however, that nothing contained in this proviso
shall limit Parent's ability to authorize or propose, or enter into, an
agreement with respect to any acquisitions or to issue any debt or
equity securities;
(ii) shall take all action necessary to cause Merger
Sub to perform its obligations under this Agreement and to consummate
the Merger on the terms and conditions set forth in this Agreement;
(iii) shall and shall cause Merger Sub to vote all
shares of Company Common Stock, if any, beneficially owned by Merger
Sub or its affiliates in favor of adoption and approval of the Merger
and this Agreement at the Company Special Meeting (as defined in
Section 5.3);
(iv) shall not, and shall not permit any of its
Subsidiaries to, make any acquisition, by means of a merger or
otherwise, of assets or securities, or any sale, lease, encumbrance or
other disposition of assets or securities, or enter into any similar
transaction, or enter into an agreement to effect any of the foregoing,
in each case which would reasonably be expected to adversely affect the
ability of Parent to consummate the transactions contemplated by this
Agreement or materially delay obtaining any consents or approvals of
any Governmental Entity required under this Agreement or otherwise
delay the Closing;
(v) shall not, and shall not permit any of its
Subsidiaries to, change any of the accounting principles or practices
used by it or any of its Subsidiaries, except as required by the
Securities Exchange Commission (the "SEC") or required by GAAP;
(vi) shall use its reasonable efforts, and cause each
of its Subsidiaries to use its reasonable efforts, consistent with
prudent business practice to (A) preserve intact its business
organizations and goodwill in all material respects, (B) keep available
the services of its officers and employees as a group, subject to
changes in the ordinary course, and (C) maintain satisfactory
relationships with suppliers, distributors, customers and others having
business relationships with them, in each case as a group;
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(vii) shall not authorize or pay any dividends on or
make any distribution with respect to its outstanding shares of stock;
(viii) shall not propose or adopt any amendments to
its corporate charter or By-laws other than as necessary to effect the
changes contemplated by this Agreement; and
(ix) shall not agree, or permit any of its
Subsidiaries to agree, in writing or otherwise, to take any of the
foregoing actions described in clauses (iv) through (viii) or take any
action which would make any representation or warranty in Article 4
hereof untrue or incorrect.
Section 5.2. Proxy Material; Registration Statement.
(a) The Company and the Parent will confer with each other
concerning receipt of the necessary regulatory approval set forth in Section
5.8, and not less than ninety (90) days prior to the anticipated receipt of such
approvals, the Company and Parent will prepare and file with the SEC, will use
its reasonable efforts to have cleared by the SEC and thereafter mail to its
stockholders as promptly as practicable, a joint proxy statement that will be
the same proxy statement/prospectus contained in the Registration Statement (as
hereinafter defined) and a form of proxy, in connection with the vote of each of
the Company's and the Parent's stockholders with respect to the matters
contemplated hereby (such proxy statement/prospectus, together with any
amendments thereof or supplements thereto, in each case in the form or forms
mailed to the Company's and the Parent's stockholders, is herein called the
"Joint Proxy Statement").
(b) Parent will prepare and, on the date mutually agreed to by
the parties, file with the SEC a registration statement of the Parent on Form
S-4 (such registration statement together with any and all amendments and
supplements thereto, being herein referred to as the "Registration Statement"),
which shall include the Joint Proxy Statement. Such Registration Statement shall
be used for the purposes of registering with the SEC and with applicable state
securities authorities the issuance of Parent Common Stock to holders of Company
Common Stock in connection with the Merger. In addition, each of Parent and the
Company will upon reasonable advance notice provide the other with all
information and other data as may be reasonably requested by Parent or the
Company, as the case may be, in connection with the preparation and filing of
the Registration Statement and the Joint Proxy Statement.
(c) The Parent shall use its best efforts to cause the
Registration Statement to become effective under the Securities Act and
applicable state securities laws at the earliest practicable date after filing
the Registration Statement and to remain effective until the Effective Time.
Section 5.3. Stockholders' Meeting. Each of the Company and
Parent shall, in accordance with applicable law and their respective Certificate
or Articles of Incorporation and By-laws duly call, give notice of, convene and
hold a special meeting (which, as may be duly adjourned, shall be referred to as
the "Parent Special Meeting" or the "Company Special Meeting," as the case may
be, and, together as the "Special Meetings") of its respective stockholders for
the
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purpose of, in the case of the Company, approving and adopting the agreement of
merger (as such term is used in Section 251 of the DGCL) set forth in this
Agreement and approving the Merger by the holders of a majority of the
outstanding shares of Company Common Stock (the "Company Stockholder Approval")
and in the case of Parent, (i) approving the issuance of shares of Parent Common
Stock to the stockholders of the Company in the Merger by the holders of a
majority of the outstanding shares of Parent Common Stock actually present and
voting and (ii) electing the Director Nominees (as defined in Section 5.17) to
Parent's Board of Directors by a plurality vote of the holders of Parent Common
Stock (collectively, the "Parent Stockholder Approval"). Parent and the Company
agree to use their reasonable efforts to cause the Special Meetings to occur
within sixty (60) days after the date on which the Registration Statement
becomes effective but not sooner than twenty (20) business days after the date
the Joint Proxy Statement is first mailed to stockholders. Each of Parent and
the Company shall include in the Joint Proxy Statement the recommendation of
their Boards of Directors that stockholders vote in favor of the Company
Stockholder Approval or the Parent Stockholder Approval, as the case may be; in
each case subject to the duties of the respective Boards of Directors to make
any further disclosure to the stockholders (which shall not, unless expressly
stated, constitute a withdrawal or adverse modification of such recommendation)
and, subject to the right to change such recommendation or terminate this
Agreement following receipt of a Company Superior Proposal or Parent Superior
Proposal, as applicable, or subject to the right to change such recommendation
in accordance with Section 5.20. Each of Parent and the Company agrees to
cooperate and use its respective best efforts to hold the Parent Special Meeting
and the Company Special Meeting on the same day. If the Company's Board of
Directors withdraws, modifies or changes its recommendation of this Agreement or
the Merger in a manner adverse to Parent or resolves to do any of the foregoing,
the Company shall remain obligated to call, give notice of, convene and hold the
Company Special Meeting.
Section 5.4. Approvals and Consents; Cooperation.
(a) The Company and Parent shall together, or pursuant to an
allocation of responsibility to be agreed upon between them:
(i) as soon as is reasonably practicable take all
such action as may be required under state blue sky or securities laws
in connection with the transactions contemplated by this Agreement;
(ii) promptly prepare and file with the NYSE listing
applications covering the shares of Parent Common Stock issuable in the
Merger or upon exercise of the Company stock options, warrants,
conversion rights or other rights or vesting or payment of other
Company equity based awards and use its reasonable best efforts to
obtain, prior to the Effective Time, approval for the listing of such
Parent Common Stock, subject only to official notice of issuance; and
(iii) cooperate with one another in obtaining the
opinions described in Section 6.1(h) of this Agreement.
(b) Subject to the limitations contained in Section 5.2, the
Company and Parent shall each furnish to one another and to one another's
counsel all such information as may be required in order to effect the foregoing
actions.
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Section 5.5. Access to Information; Confidentiality. As
permitted by law, each of the Company and Parent shall, upon reasonable notice
to an Executive Officer (as defined in Section 8.2 hereof) of the Company or
Parent, as the case may be, afford to the other party, and to such party's
authorized officers, employees, accountants, counsel, financial advisors and
other representatives, reasonable access during normal business hours, in a
manner so as not to interfere with the normal operations of the Company or
Parent and their Subsidiaries of either and subject to reasonable restrictions
imposed by an Executive Officer of the Company or Parent, as the case may be,
during the period prior to the Effective Time to all the properties, books,
contracts, commitments and records of the Company or Parent and its
Subsidiaries, and during such period, the Company or Parent shall furnish
promptly to the other party (a) a copy of each report, schedule, registration
statement and other document filed by it or its subsidiaries during such period
pursuant to the requirements of applicable federal or state securities laws and
(b) all other information concerning its business, properties and personnel as
the other party may reasonably request. Notwithstanding anything to the contrary
in this Agreement, neither party nor any or its Subsidiaries shall be required
to disclose any information to the other party or its authorized representatives
if doing so would (i) violate any federal, state, local or foreign law, rule or
regulation to which such party or any of its Subsidiaries is subject; or (ii)
directly or indirectly affect either party's competitive position in any of the
markets in which either party operates or in respect of the activities in which
either party is engaged. No investigation or information furnished pursuant to
this Section 5.5 shall affect any representations or warranties made by the
parties herein or the conditions to the obligations of the parties to consummate
the Merger. Each party will keep such information provided to it by the other
party confidential in accordance with the terms of the Confidentiality
Agreements between Parent and the Company, dated February 8, 1999 and September
27, 1999, respectively (the "Confidentiality Agreements"), the terms of which
are incorporated herein by reference, as if such information were Evaluation
Material (as such term is defined in the Confidentiality Agreements).
Section 5.6. Affiliates. The Company shall, prior to the
Effective Time, deliver to Parent a list (reasonably satisfactory to counsel for
Parent), setting forth the names and addresses of all Persons who are, at the
time of the Company Special Meeting, in the Company's reasonable judgment,
"affiliates" of the Company for purposes of Rule 145 under the Securities Act.
The Company shall furnish such information and documents as Parent may
reasonably request for the purpose of reviewing such list. The Company will use
its reasonable efforts to cause its affiliates to deliver to Parent not later
that 10 days prior to the date of the Company Special Meeting, a written
agreement substantially in the form attached as Exhibit 5.6, and will use its
reasonable efforts to cause Persons or entities who become "affiliates" after
such date but prior to the Closing Date to execute and deliver these agreements
at least 5 days prior to the Closing Date.
Section 5.7. Rights Under Stock Plans.
(a) Each outstanding option or warrant to purchase shares of
Company Common Stock ("Option") granted under the Company Stock Option Plans or
otherwise, which is outstanding immediately prior to the Effective Time, whether
or not then exercisable, shall be assumed by Parent and deemed to constitute an
option or warrant to acquire, on the same terms and conditions, mutatis mutandis
(including, without limitation adjustments for any stock dividend, subdivision,
reclassification, recapitalization, split, combination, exchange of shares or
similar transaction), as were applicable under such Option prior to the
Effective Time, the number of shares of Parent Common Stock as the holder of
such Option would have been
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entitled to receive pursuant to the Merger had such holder exercised such Option
in full immediately prior to the Effective Time (not taking into account whether
or not such Option was in fact exercisable) at a price per share equal to (x)
the aggregate exercise price for Company Common Stock purchasable pursuant to
such Option divided by (y) the Conversion Number; provided that the number of
shares of Parent Common Stock that may be purchased upon exercise of any such
Option shall not include any fractional share and, upon exercise of such Option,
a cash payment shall be made for any fractional share based upon the last sale
price per share of Parent Common Stock on the trading day immediately preceding
the date of exercise. From and after the Effective Time, Parent and the
Surviving Corporation shall comply with the terms of the Company Stock Option
Plans and the agreements governing any Options. The adjustments provided herein
with respect to any Options that are "incentive stock options" (as defined in
Section 422 of the Code) shall be effected in a manner consistent with Section
424(a) of the Code.
(b) Parent shall cause to be taken all corporate action
necessary to reserve for issuance a sufficient number of shares of Parent Common
Stock for delivery upon exercise of Options in accordance with this Section 5.7.
As promptly as practicable after the Effective Time, Parent shall use its
reasonable efforts to cause the Parent Common Stock subject to assumed Options
to be registered under the Securities Act pursuant to a registration statement
on Form S-8 (or any successor or other appropriate forms) and shall use its
reasonable efforts to cause the effectiveness of such registration statement
(and current status of the prospectus or prospectuses contained therein) to
occur promptly after the Effective Time and to be maintained for so long as such
Options remain outstanding.
Section 5.8. Filings; Other Action.
(a) Subject to the terms and conditions herein provided, the
Company and Parent shall (i) promptly make their respective filings and
thereafter make any other required submissions under the HSR Act and the
Communications Act, (ii) use reasonable efforts to cooperate with one another in
(A) determining whether any filings are required to be made with, or consents,
permits, authorizations or approvals are required to be obtained from, any third
party, the United States government or any agencies, departments or
instrumentalities thereof or other governmental or regulatory bodies or
authorities of federal, state, local and foreign jurisdictions in connection
with the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby and thereby and (B) timely making all such
filings and timely seeking all such consents, permits, authorizations or
approvals, and (iii) take, or cause to be taken, all other actions and do, or
cause to be done, all other things necessary, proper or advisable to consummate
and make effective the transactions contemplated hereby, including, without
limitation, taking or undertaking all such further action as may be necessary to
resolve such objections, if any, as the FCC, the Federal Trade Commission, the
Antitrust Division of the Department of Justice, state antitrust enforcement
authorities or competition authorities of any other nation or other jurisdiction
or any other Person may assert under relevant antitrust, competition or
communications laws with respect to the transactions contemplated hereby,
subject to Parent's right to direct such actions and things to be done set forth
in Section 5.8(b) below.
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(b) Without limiting the generality of the undertakings
pursuant to Section 5.8(a): (i) each of Parent and the Company shall provide
promptly to the FCC or to Governmental Entities with regulatory jurisdiction
over enforcement of any applicable antitrust laws (each, a "Government Antitrust
Entity") information and documents requested by the FCC or such Government
Antitrust Entity or necessary, proper or advisable to permit consummation of the
transactions contemplated by this Agreement; (ii) without in any way limiting
the provisions of Section 5.8(a)(i) above, each of Parent and the Company shall
file any Notification and Report Form and related material required under the
HSR Act as soon as practicable after the date hereof, and thereafter use its
best efforts to certify as soon as practicable its substantial compliance with
any requests for additional information or documentary material that may be made
under the HSR Act unless Parent in its reasonable judgment determines that it is
reasonable in the circumstances not to comply substantially with any requests
for additional information and documentary material under the HSR Act; (iii)
Parent shall proffer its willingness to (A) sell or otherwise dispose of, or
hold separate and agree to sell or otherwise dispose of, such assets, categories
of assets or businesses of the Company or Parent or either's respective
Subsidiaries, (B) terminate such existing relationships and contractual rights
and obligations of the Company or Parent or either's respective Subsidiaries,
(C) amend or terminate such existing licenses or other intellectual property
agreements and to enter into such new licenses or other intellectual property
agreements of the Company or Parent or either's respective Subsidiaries, (D)
terminate any venture or arrangement and (E) effectuate any change or
restructuring of the Company's or Parent's ownership, including, without
limitation, the withdrawal or removal of officers or directors or the conversion
or repurchase of equity securities of Parent or the Company (and, in each case,
to enter into agreements or stipulate to the entry of an order or decree or file
appropriate applications with the FCC or the relevant Government Antitrust
Entity giving effect thereto) in each case with respect to the foregoing clauses
(A), (B), (C), (D) or (E) (each a "Divestiture Condition"), if such action is
likely to be necessary for the purpose of avoiding or preventing any action or
inaction by the FCC or any Government Antitrust Entity which would restrain,
enjoin or otherwise prevent or materially delay consummation of the transactions
contemplated by this Agreement prior to the Termination Date; (iv) Parent shall
take promptly, in the event that any permanent or preliminary injunction or
other order is entered or becomes reasonably foreseeable to be entered in any
proceeding that would make consummation of the transactions contemplated hereby
in accordance with the terms of this Agreement unlawful or that would prevent or
delay consummation of the transactions contemplated hereby, any and all steps
(including the appeal thereof, the posting of a bond or the taking of the steps
contemplated by clause (iii) of this subsection (b)) necessary to vacate, modify
or suspend such injunction or order so as to permit such consummation prior to
the Termination Date; (v) each of the Company and Parent will keep the other
informed of any material communication, and provide to the other copies of all
correspondence, between it (or its advisors) and the FCC or any Government
Antitrust Entity relating to this Agreement or any of the matters described in
this Section 5.8(b); and (vi) each of the Company and Parent shall permit the
other to review any material communication to be given by it to, and shall
consult with each other in advance of any telephonic calls, meeting or
conference with, the FCC or any Government Antitrust Entity and, to the extent
permitted, give the other party the opportunity to attend and participate in
such telephonic calls, meetings and conferences. Notwithstanding any of the
foregoing, (i) no failure to obtain termination of the waiting period under the
HSR Act or consent of the FCC shall be deemed to be a breach
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hereunder by the Company or (to the extent that such failure to obtain
termination of the waiting period under the HSR Act or consent of the FCC
resulted from the ownership of assets by the Company or its Subsidiaries not
owned on the date hereof or from ownership of assets by Affiliates of the
Company other than those set forth on Schedule 4.2 of the Shareholders
Agreement), by Parent and (ii) subject to the limitations in clause (i) above,
any Divestiture Condition imposed or requested by any Governmental Entity shall
not excuse Parent from its obligation to consummate the transactions
contemplated hereby, and the failure of the Merger to occur by reason of the
imposition or request of such a Divestiture Condition or the failure of Parent
to discharge, satisfy or remove such a Divestiture Condition shall be deemed a
material breach by Parent of Section 5.8 of this Agreement. Subject to the
foregoing, Parent shall be principally responsible for and in control of the
process of dealing with the FCC or any Government Antitrust Entity relating to
its obligations under subsections (b) (iii) and (b) (iv) hereof, including the
negotiation and determination of any actions proposed to be taken by the Company
or Parent or either's respective Subsidiaries. Notwithstanding the provisions of
Section 5.8(a) and 5.8(b), in the event that either Parent or the Company is
requested, as a condition to obtaining the approval of the FCC or any Government
Antitrust Entity to the transactions contemplated hereunder, to take any action
arising from a Material Change and such action if taken would have a Material
Adverse Effect on the combined consolidated businesses, assets, operations or
prospects of Parent and the Company, then Parent shall not be required to take
such action and no failure by Parent to take such action shall be deemed a
breach of this Section 5.8 or of any other provisions of this Agreement. For
purposes of the preceding sentence, "Material Change" shall mean a change in the
Communications Act, in the policies of the FCC in implementing or enforcing the
Communications Act or in the policies of any Government Antitrust Entity in
implementing or enforcing the Antitrust Laws, in each case which is adopted on
or after the date hereof (it being expressly understood and agreed that the
revisions to the FCC broadcast multiple ownership and attribution rules which
were adopted by the FCC on August 5, 1999 and which take effect on November 16,
1999 shall not be considered material changes for purposes of this sentence),
and which imposes an implicit or explicit national limit on the number of radio
stations that may be directly or indirectly owned by a Person or the effect of
any such changed policies or laws is to impose a national limit on the number of
radio stations that may be directly or indirectly owned by a Person.
(c) If the Company or Parent is required to take any action
with respect to a Divestiture Condition in order to comply with this Section
5.8, the Company or Parent may take such action concurrently with the closing of
the Merger on the Closing Date, and nothing in this Agreement shall require the
Company or Parent to take such action prior to the Closing Date.
Section 5.9. Further Assurances. In case at any time after the
Effective Time any further action is necessary or desirable to carry out the
purposes of this Agreement, the proper officers of the Company and Parent shall
take all such necessary action.
Section 5.10. No Inconsistent Activities.
(a) In light of the consideration given by the Board of
Directors of the Company prior to the execution of this Agreement to, among
other things, the transactions contemplated hereby, and to various alternatives
to the transactions contemplated by this Agreement, and in light of the
Company's representations contained in Section 3.14, the
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Company agrees that it shall not, nor shall it permit any of its Subsidiaries
to, nor shall it authorize or expressly permit any officer, director or employee
of, or any investment banker, attorney or other advisor or representative of,
the Company or any of its Subsidiaries to, directly or indirectly, solicit or
initiate, or encourage the submission of, any Company Acquisition Proposal, or
participate in any discussions or negotiations regarding, or furnish to any
Person any information with respect to, or take any other action to facilitate
any inquiries or the making of any proposal that constitutes, or may reasonably
be expected to lead to, any Company Acquisition Proposal; provided, however,
that the foregoing shall not prohibit the Company's Board of Directors from
furnishing information to or entering into discussions or negotiations with, any
Person that makes an unsolicited bona fide proposal to enter into a business
combination with the Company pursuant to a Company Acquisition Proposal which
the Company's Board of Directors determines in good faith is more favorable from
a financial point of view to the Company's stockholders than the transactions
contemplated by this Agreement (a "Company Superior Proposal") so long as (i)
prior to furnishing such information to, or entering into discussions or
negotiations with, such a Person, the Company provides two (2) business days'
advance written notice to Parent to the effect that it is furnishing information
to, or entering into discussions or negotiations with, a Person from whom the
Company shall have received an executed confidentiality agreement in form and
substance similar to the Confidentiality Agreements prior to furnishing such
information, (ii) such unsolicited bona fide proposal relating to a Company
Superior Proposal is made by a third party that the Company's Board of Directors
determines in good faith has the good faith intent to proceed with negotiations
to consider, and the financial capability to consummate, such Company Superior
Proposal, (iii) the Company's Board of Directors, after duly considering the
written advice of outside legal counsel to the Company, determines in good faith
that such action is required for the Company's Board of Directors to comply with
its fiduciary duties to stockholders imposed by applicable law and (iv) the
Company uses all reasonable efforts to keep Parent informed in all material
respects of the status and terms of any such negotiations or discussions
(including without limitation the identity of the Person with whom such
negotiations or discussions are being held) and provides Parent copies of such
written proposals and any amendments or revisions thereto or correspondence
related thereto. The Company shall notify Parent orally and in writing of the
fact that it received inquiries, offers or proposals with respect to a Company
Acquisition Proposal, within 24 hours after the Company obtains Knowledge of the
receipt thereof. Nothing contained herein shall prohibit the Company from
disclosing to its stockholders a position as contemplated by Rules 14d-9 and
14e-2(a) promulgated under the Exchange Act with respect to a Company
Acquisition Proposal by means of a tender offer. The Company will immediately
cease and cause to be terminated any existing activities, discussions or
negotiations with any other Person that have been conducted heretofore with
respect to a potential Company Acquisition Proposal and will take the necessary
steps to inform its officers, directors, employees, agents, attorneys,
accountants, financial advisors and other representatives of the obligations
undertaken in this Section 5.10(a). The Board of Directors of the Company shall
not approve or recommend, or propose to approve or recommend, a Company
Acquisition Proposal; provided, however, that the Board of Directors of the
Company may approve and recommend a Company Superior Proposal. Nothing in this
Section 5.10(a) shall (x) permit the Company to enter into an agreement with
respect to a Company Acquisition Proposal during the term of this Agreement (it
being agreed that during the term of this Agreement, the Company shall not enter
into any letter of intent, agreement in principle, acquisition agreement or
other similar agreement
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with any Person that provides for, or in any way facilitates, a Company
Acquisition Proposal) or (y) affect any other obligation of the Company under
this Agreement.
(b) In light of the consideration given by the Board of
Directors of Parent prior to the execution of this Agreement to, among other
things, the transactions contemplated hereby, and to various alternatives to the
transactions contemplated by this Agreement, and in light of Parent's
representations contained in Section 4.15, Parent agrees that it shall not, nor
shall it permit any of its Subsidiaries to, nor shall it authorize or expressly
permit any officer, director or employee of, or any investment banker, attorney
or other advisor or representative of, Parent or any of its Subsidiaries to,
directly or indirectly, solicit or initiate, or encourage the submission of, any
Parent Acquisition Proposal, or participate in any discussions or negotiations
regarding, or furnish to any Person any information with respect to, or take any
other action to facilitate any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, any Parent Acquisition
Proposal; provided, however, that the foregoing shall not prohibit Parent's
Board of Directors from furnishing information to or entering into discussions
or negotiations with, any Person that makes an unsolicited bona fide proposal to
enter into a business combination with Parent pursuant to a Parent Acquisition
Proposal which Parent's Board of Directors determines in good faith is more
favorable from a financial point of view to Parent's shareholders than the
transactions contemplated by this Agreement (a "Parent Superior Proposal") so
long as (i) prior to furnishing such information to, or entering into
discussions or negotiations with, such a Person, Parent provides two (2)
business days' advance written notice to the Company to the effect that it is
furnishing information to, or entering into discussions or negotiations with, a
Person from whom Parent shall have received an executed confidentiality
agreement in form and substance similar to the Confidentiality Agreements prior
to furnishing such information, (ii) such unsolicited bona fide proposal
relating to a Parent Superior Proposal is made by a third party that Parent's
Board of Directors determines in good faith has the good faith intent to proceed
with negotiations to consider, and the financial capability to consummate, such
Parent Superior Proposal, (iii) Parent's Board of Directors, after duly
considering the written advice of outside legal counsel to Parent, determines in
good faith that such action is required for Parent's Board of Directors to
comply with its fiduciary duties to shareholders imposed by applicable law and
(iv) Parent uses all reasonable efforts to keep the Company informed in all
material respects of the status and terms of any such negotiations or
discussions (including without limitation the identity of the Person with whom
such negotiations or discussions are being held) and provides the Company copies
of such written proposals and any amendments or revisions thereto or
correspondence related thereto. Parent shall notify the Company orally and in
writing of the fact that it received inquiries, offers or proposals with respect
to a Parent Acquisition Proposal, within 24 hours after Parent obtains Knowledge
of the receipt thereof. Nothing contained herein shall prohibit Parent from
disclosing to its shareholders a position as contemplated by Rules 14d-9 and
14e-2(a) promulgated under the Exchange Act with respect to a Parent Acquisition
Proposal by means of a tender offer. Parent will immediately cease and cause to
be terminated any existing activities, discussions or negotiations with any
other Person that have been conducted heretofore with respect to a potential
Parent Acquisition Proposal and will take the necessary steps to inform its
officers, directors, employees, agents, attorneys, accountants, financial
advisors and other representatives of the obligations undertaken in this Section
5.10(b). The Board of Directors of Parent shall not approve or recommend, or
propose to approve or recommend, a Parent Acquisition Proposal;
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provided, however, that the Board of Directors of Parent may approve and
recommend a Parent Superior Proposal. Nothing in this Section 5.10(b) shall (x)
permit Parent to enter into an agreement with respect to a Parent Acquisition
Proposal during the term of this Agreement (it being agreed that during the term
of this Agreement, Parent shall not enter into any letter of intent, agreement
in principle, acquisition agreement or other similar agreement with any person
that provides for, or in any way facilitates, a Parent Acquisition Proposal) or
(y) affect any other obligation of Parent under this Agreement.
Section 5.11. Director and Officer Liability.
(a) Parent, Merger Sub and the Company agree that all rights
to indemnification and all limitations on liability existing in favor of any
Indemnitee (as defined below) as provided in the Company Certificate of
Incorporation, Company By-laws, charter or By-laws of any Subsidiary of the
Company or any Indemnity Agreement (as defined below) shall survive the Merger
and continue in full force and effect. To the extent permitted by (i) the DGCL,
(ii) the Company's Certificate of Incorporation, the Company's By-laws, the
charter or By-laws of any Subsidiary of the Company or (iii) any agreement
providing for indemnification by the Company or any Subsidiary of the Company of
any Indemnitee in effect on the date of this Agreement (including any indemnity
provisions contained in any agreement providing for the registration of
securities) (each, an "Indemnity Agreement"), advancement of Indemnitee Expenses
(as defined below) pursuant to this Section 5.11 shall be mandatory rather than
permissive and the Surviving Corporation and Parent shall advance Costs (as
defined below) in connection with such indemnification. Parent shall, and shall
cause the Surviving Corporation to, expressly assume and honor in accordance
with their terms all Indemnity Agreements.
(b) For a period of six (6) years after the Effective Time,
Parent shall, or shall cause the Surviving Corporation to, maintain officers'
and directors' liability insurance and fiduciary liability insurance covering
the Indemnitees who are currently covered by the Company's existing officers'
and directors' or fiduciary liability insurance policies on terms no less
advantageous to such indemnified parties than such existing insurance; provided,
however, that neither Parent nor the Surviving Corporation will be required in
order to maintain such policies to pay an annual premium in excess of 150% of
the greater of (i) the last annual premium paid by the Company prior to the date
of this Agreement and (ii) the annual premium for the year in which the Closing
occurs (the "Cap"); and provided, further, that, if equivalent coverage cannot
be obtained, or can be obtained only by paying an annual premium in excess of
the Cap, then Parent shall, or shall cause the Surviving Corporation to,
maintain policies that, in Parent's good faith judgment, provide the maximum
coverage available at an annual premium equal to the Cap.
(c) In addition to the other rights provided for in this
Section 5.11 and not in limitation thereof, for six (6) years from and after the
Effective Time, Parent shall, and shall cause the Surviving Corporation to, to
the fullest extent permitted by applicable law, (i) indemnify and hold harmless
the individuals who on or prior to the Effective Time were officers or directors
of the Company or any of its Subsidiaries, and the heirs, executors, trustees,
fiduciaries and administrators of such officers or directors (collectively, the
"Indemnitees") against all losses, Indemnitee Expenses (as hereinafter defined),
claims, damages, liabilities,
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judgments, or amounts paid in settlement (collectively, "Costs") in respect to
any threatened, pending or completed claim, action, suit or proceeding, whether
criminal, civil, administrative or investigative based on, or arising out of or
relating to the fact that such person is or was a director or officer of the
Company or any of its Subsidiaries and arising out of acts or omissions
occurring on or prior to the Effective Time (including, without limitation, in
respect of acts or omissions in connection with this Agreement and the
transactions contemplated hereby) (an "Indemnifiable Claim") and (ii) advance to
such Indemnitees all Indemnitee Expenses incurred in connection with any
Indemnifiable Claim promptly after receipt of reasonably detailed statements
therefor; provided that, except as otherwise provided pursuant to any Indemnity
Agreement, the person to whom Indemnitee Expenses are to be advanced provides an
undertaking to repay such advances if it is ultimately determined that such
person is not entitled to indemnification from Parent or the Surviving
Corporation. In the event any Indemnifiable Claim is asserted or made within
such six year period, all rights to indemnification and advancement of
Indemnitee Expenses in respect of any such Indemnifiable Claim shall continue
until such Indemnifiable Claim is disposed of or all judgments, orders, decrees
or other rulings in connection with such Indemnifiable Claim are fully
satisfied; provided, however, that Parent shall not be liable for any settlement
effected without its written consent (which consent shall not be unreasonably
withheld or delayed). Except as otherwise may be provided pursuant to any
Indemnity Agreement, the Indemnitees as a group may retain only one law firm
with respect to each related matter except to the extent there is, in the
opinion of counsel to an Indemnitee, under applicable standards of professional
conduct, a conflict on any significant issue between positions of any two or
more Indemnitees. For the purposes of this Section 5.11, "Indemnitee Expenses"
shall include reasonable attorneys' fees and all other costs, charges and
expenses paid or incurred in connection with investigating, defending, being a
witness in or participating in (including on appeal), or preparing to defend, be
a witness in or participate in any Indemnifiable Claim.
(d) Notwithstanding any other provisions hereof, the
obligations of the Company, the Surviving Corporation and Parent contained in
this Section 5.11 shall be binding upon the successors and assigns of Parent and
the Surviving Corporation. In the event the Company or the Surviving Corporation
or any of their respective successors or assigns (i) consolidates with or merges
into any other Person or (ii) transfers all or substantially all of its
properties or assets to any Person, then, and in each case, proper provision
shall be made so that successors and assigns of the Company or the Surviving
Corporation, as the case may be, honor the indemnification obligations set forth
in this Section 5.11.
(e) The obligations of the Company, the Surviving Corporation,
and Parent under this Section 5.11 shall survive the consummation of the Merger
and shall not be terminated or modified in such a manner as to adversely affect
any Indemnitee to whom this Section 5.11 applies without the consent of such
affected Indemnitee (it being expressly agreed that the Indemnitees to whom this
Section 5.11 applies shall be third party beneficiaries of this Section 5.11,
each of whom may enforce the provisions of this Section 5.11).
(f) Parent shall, and shall cause the Surviving Corporation
to, advance all Indemnitee Expenses to any Indemnitee incurred enforcing the
indemnity or other obligations provided for in this Section 5.11.
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Section 5.12. Accountants' "Comfort" Letters. The Company and
Parent will each use reasonable efforts to cause to be delivered to each other
letters from their respective independent accountants, dated a date within two
business days before the effective date of the Registration Statement, in form
reasonably satisfactory to the recipient and customary in scope for comfort
letters delivered by independent accountants in connection with registration
statements on Form S-4 under the Securities Act.
Section 5.13. Additional Reports. Each of the Company and
Parent shall furnish to the other copies of any reports of the type referred to
in Sections 3.4 and 4.4 which it files with the SEC on or after the date hereof,
and the Company or Parent, as the case may be, represents and warrants that as
of the respective dates thereof, such reports will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statement therein, in light of the
circumstances under which they were made, not misleading; provided that the
foregoing shall not apply to the financial statements contained therein (which
are covered by the following sentence). Any consolidated financial statements
included in such reports (including any related notes and schedules) will fairly
present, in all material respects, the financial position of the Company and its
consolidated Subsidiaries or Parent and its consolidated Subsidiaries, as the
case may be, as of the dates thereof and their results of operations and changes
in financial position or other information included therein for the periods or
as of the date then ended (subject, where appropriate, to normal year-end
adjustments), in each case in accordance with GAAP consistently applied during
the periods involved (except as otherwise disclosed in the notes thereto and
except that such unaudited financial statements other than year-end financial
statements will not include all of the notes required by GAAP).
Section 5.14. Plan of Reorganization. This Agreement is
intended to constitute a "plan of reorganization" within the meaning of Section
1.368-2(g) of the income tax regulations promulgated under the Code. From and
after the date of this Agreement and until the Effective Time, each party hereto
shall use its reasonable efforts to cause the Merger to qualify, and will not
knowingly take any actions or cause any actions to be taken which could prevent
the Merger from qualifying, as a reorganization under the provisions of Section
368(a) of the Code. Following the Effective Time, neither the Surviving
Corporation, Parent nor any of their affiliates shall knowingly take any action
or knowingly cause any action to be taken which would cause the Merger to fail
to qualify as a reorganization under Section 368(a) of the Code.
Section 5.15. Conveyance Taxes. Each of Parent and the
Company, respectively, shall timely pay any real property transfer or gains,
sales, use, transfer, value added, stock transfer and stamp taxes, any transfer,
recording, registration and other fees, and any similar taxes or fees not
including any income tax, gross receipt tax or any similar tax measured with
respect to gross or net income (collectively, the "Conveyance Taxes") imposed on
it at or prior to the Effective Time in connection with the transactions
contemplated hereunder that are required to be paid in connection therewith.
Parent and the Company shall cooperate in the preparation, execution and filing
of all Tax Returns, questionnaires, applications, or other documents regarding
any such Conveyance Taxes.
Section 5.16. Public Announcements. The initial press release
relating to this Agreement shall be a joint press release mutually agreed upon
by Parent and the Company. Unless otherwise required by applicable law or the
requirements of any listing agreement with any
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applicable stock exchange, Parent and the Company shall each use their
reasonable efforts to consult with each other before issuing any press release
or otherwise making any public statements with respect to this Agreement or any
transaction contemplated by this Agreement and shall not issue any such press
release or make any such public statement prior to such consultation.
Section 5.17. Board and Vice Chairman.
(a) Parent shall take such action as shall be required to
cause Parent's Board of Directors immediately after the Effective Time to be
increased by five (5) members. Prior to the mailing to stockholders of the Joint
Proxy Statement, the Company's Board of Directors shall select five (5)
individuals (the "Director Nominees") for nomination as directors of Parent,
which nominees shall include Robert Crandall, Vernon E. Jordan, Jr., Perry J.
Lewis (the "Named Nominees") and Thomas O. Hicks and either Michael J. Levitt,
Lawrence D. Stuart, Jr. or Jack D. Furst (collectively with Thomas O. Hicks, the
"Hicks Muse Partners"). Prior to mailing of the Joint Proxy Statement, Parent
may, at its option, elect effective prior to the Effective Time to reduce the
size of its Board of Directors to seven (7) members. If Parent exercises such
option, immediately after the Effective Time, Parent's Board will be increased
by four (4) members and the Director Nominees shall consist of two of the Named
Nominees (as mutually agreed by the Company and Parent), Thomas O. Hicks and
either Michael J. Levitt, Lawrence D. Stuart, Jr. or Jack D. Furst. The Director
Nominees shall be nominated to stand for election as directors of Parent at the
Parent Special Meeting. If an individual so selected and nominated consents to
serve as director, Parent shall use all reasonable efforts to cause such
individual to be elected to its Board of Directors by the Parent's stockholders
at the Parent Special Meeting, effective as of the Effective Time, for a term
expiring at Parent's next annual meeting of stockholders following the Effective
Time subject to being renominated as a director at the discretion of Parent's
Board of Directors. If at any time prior to the Effective Time, any Director
Nominee that is a Hicks Muse Partner does not consent or shall be unable to
serve as a director at the Effective Time, the Company shall designate another
Hicks Muse Partner to serve in such individual's place and if at any time prior
to the Effective Time any Director Nominee other than a Hicks Muse Partner does
not consent or shall be unable to serve as a director at the Effective Time, the
Company and Parent shall mutually agree as to a substitute Director Nominee who
is not a member of the Company's management and who is not affiliated with
Hicks, Muse, Tate & Furst Incorporated to serve in such individual's place.
(b) Immediately subsequent to the Effective Time, Thomas O.
Hicks shall be appointed Vice Chairman of Parent until the earlier of his
resignation or removal or until his successor is duly elected and qualified, as
the case may be.
Section 5.18. Expenses.
(a) Except as provided in paragraphs (c) and (d), all Expenses
(as defined below) incurred by the parties hereto shall be borne solely and
entirely by the party that has incurred such Expenses; provided, however, that
if this Agreement is terminated for any reason, then the allocable share of
Parent and the Company for all Expenses (including any fees and expenses of
accountants, experts, and consultants, but excluding the fees and expenses of
legal counsel and investment bankers) related to preparing, printing, filing and
mailing the Registration Statement, the Joint Proxy Statement and all SEC and
other regulatory filing fees
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incurred in connection with the Registration Statement, Joint Proxy Statement
and HSR Act and the Communications Act, shall be allocated one-half each.
(b) "Expenses" as used in this Agreement shall include all
reasonable out-of-pocket expenses (including, without limitation, all reasonable
fees and expenses of counsel, accountants, investment bankers, experts and
consultants to a party hereto and its affiliates) incurred by a party or on its
behalf in connection with or related to the authorization, preparation,
negotiation, execution and performance of this Agreement, the preparation,
printing, filing and mailing of the Registration Statement, the Joint Proxy
Statement, the solicitation of stockholder approvals, requisite HSR Act and
Communications Act filings and all other matters related to the consummation of
the transactions contemplated hereby.
(c) The Company agrees that, if (i) Parent terminates this
Agreement pursuant to Section 7.1(g), (ii) the Company terminates this Agreement
pursuant to Section 7.1(h), (iii) Parent terminates this Agreement pursuant to
Section 7.1(d) or Parent terminates this Agreement pursuant to Section 7.1(b) at
a time that a Company Breach (as defined in Section 7.1(d)) exists, (iv) this
Agreement terminates pursuant to Section 7.1(f) due to the failure to receive
Company Stockholder Approval and prior to the Company Special Meeting the
Company's Board of Directors withdrew, modified or changed its recommendation of
this Agreement or the Merger in a manner adverse to Parent or resolved to do any
of the foregoing or (v) this Agreement terminates pursuant to Section 7.1(f) due
to the failure to receive Company Stockholder Approval and in each case
described in clauses (iii) and (v) within eighteen months after the termination
of this Agreement (A) a transaction is consummated, which transaction, if
offered or proposed, would constitute a Company Acquisition Proposal, (B) a
definitive agreement (the execution and delivery of which has been authorized by
the boards of directors, or comparable bodies, that would if consummated
constitute a Company Acquisition Proposal) for such a transaction is entered
into (and in the case described in clause (v) such transaction is consummated
whether or not within such eighteen-month period) or (C) any Person shall have
acquired beneficial ownership or the right to acquire beneficial ownership of,
or any "group" (as such term is defined under Section 13(d) of the Exchange Act
and the rules and regulations promulgated hereunder), shall have been formed
that beneficially owns, or has the right to acquire beneficial ownership of,
outstanding shares of capital stock of the Company then representing 50% or more
of the combined power to vote generally for the election of directors, then upon
the first to occur of any such case the Company shall pay to Parent a
Termination Fee of $700 million, plus the reasonably documented Expenses of
Parent up to $25 million. Parent may assert its right to the Termination Fee and
Expenses under one or more cases set forth under this Section 5.18(c), but in no
event shall Parent receive more than one Termination Fee and Expenses under this
Section 5.18(c). To the extent permitted by law, the payments under this Section
5.18(c) are in addition to any liability that a party hereto otherwise has for a
breach of this Agreement.
(d) Parent agrees that, if (i) the Company terminates this
Agreement pursuant to Section 7.1(i), (ii) Parent terminates this Agreement
pursuant to Section 7.1(j), (iii) the Company terminates this Agreement pursuant
to Section 7.1(c) or the Company terminates this Agreement pursuant to Section
7.1(b) at a time that a Parent Breach (as defined in Section 7.1(c)) exists or
(iv) this Agreement terminates pursuant to Section 7.1(f) due to the failure to
receive Parent Stockholder Approval and in each case described in clauses (iii)
and (iv) within eighteen
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months after the termination of this Agreement (A) a transaction is consummated,
which transaction, if offered or proposed, would constitute a Parent Acquisition
Proposal, (B) a definitive agreement (the execution and delivery of which has
been authorized by the boards of directors, or comparable bodies, that would if
consummated constitute a Parent Acquisition Proposal) for such a transaction is
entered into (and in the case described in clause (iv) such transaction is
consummated whether or not within such eighteen-month period) or (C) any Person
shall have acquired beneficial ownership or the right to acquire beneficial
ownership of, or any "group" (as such term is defined under Section 13(d) of the
Exchange Act and the rules and regulations promulgated hereunder), shall have
been formed that beneficially owns, or has the right to acquire beneficial
ownership of, outstanding shares of capital stock of Parent then representing
50% or more of the combined power to vote generally for the election of
directors, then upon the first to occur of any such case Parent shall pay to the
Company a Termination Fee of $1 billion, plus the reasonably documented Expenses
of the Company up to $25 million. The Company may assert its right to the
Termination Fee and Expenses under one or more cases set forth in this Section
5.18(d), but in no event shall the Company receive more than one Termination Fee
and Expenses under this Section 5.18(d). To the extent permitted by law, the
payments under this Section 5.18(d) are in addition to any liability that a
party hereto has for a breach of this Agreement.
Section 5.19. Notice of Certain Events. Each party to this
Agreement shall promptly as reasonably practicable notify the other parties
hereto of:
(a) any notice or other communication from any Person alleging
that the consent of such Person (or other Person) is or may be required in
connection with the transactions contemplated by this Agreement;
(b) any notice or other communication from any Governmental
Entity in connection with the transactions contemplated by this Agreement;
(c) any actions, suits, claims, investigations or proceedings
commenced or, to the best of its Knowledge, threatened against, relating to or
involving or otherwise affecting it or any actions, suits, claims,
investigations or proceedings commenced or, to the best of its Knowledge,
threatened against, its Subsidiaries which, if pending on the date of this
Agreement, would have been required to have been disclosed pursuant to Article 3
or which relate to the consummation of the transactions contemplated by this
Agreement;
(d) any notice of, or other communication relating to, a
default or event that, with notice or lapse of time or both, would become a
default, received by it or any of its Subsidiaries subsequent to the date of
this Agreement, under any material agreement; and
(e) any Material Adverse Effect of the Company or Material
Adverse Effect of Parent or the occurrence of any event which is reasonably
likely to result in a Material Adverse Effect of the Company or a Material
Adverse Effect of Parent, as the case may be.
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Section 5.20. Withdrawal, Modification or Change in Board
Recommendation.
(a) The Company's Board of Directors shall not withdraw,
modify or change its recommendation of this Agreement or the Merger in a manner
adverse to Parent or resolve to do any of the foregoing, except (i) if the Board
of Directors of the Company approves and recommends a Company Superior Proposal
in accordance with Section 5.10(a) or (ii) in matters other than those relating
to a Company Superior Proposal, to the extent the Company's Board of Directors,
after duly considering the written advice of outside legal counsel to the
Company determines in good faith that such action is required for the Company's
Board of Directors to comply with its fiduciary duties to stockholders imposed
by applicable law. Any withdrawal, modification or change in the recommendation
of the Company's Board of Directors of this Agreement or the Merger made in
accordance with this Section 5.20(a) shall not be in breach of the Company's
representations, warranties or covenants contained in this Agreement.
(b) The Parent's Board of Directors shall not withdraw, modify
or change its recommendation of this Agreement or vote in favor of the Parent
Stockholder Approval in a manner adverse to the Company or resolved to do any of
the foregoing except (i) if the Board of Directors of Parent approves and
recommends a Parent Superior Proposal in accordance with Section 5.10(b) or (ii)
in matters other than those relating to a Parent Superior Proposal, to the
extent Parent's Board of Directors, after duly considering the written advice of
outside legal counsel to Parent determines in good faith that such action is
required for Parent's Board of Directors to comply with its fiduciary duties to
stockholders imposed by applicable law. Any withdrawal, modification or change
in the recommendation of Parent's Board of Directors of this Agreement or the
Merger made in accordance with this Section 5.20(b) shall not be in breach of
Parent's representations, warranties or covenants contained in this Agreement.
Section 5.21. Employee Plans and Benefits and Employment
Contracts.
(a) From and after the Effective Time, the Surviving
Corporation and its Subsidiaries will honor in accordance with their terms all
existing employment, severance, consulting and salary continuation agreements
between the Company or any of its Subsidiaries and any current or former
officer, director, employee or consultant of the Company or any of its
Subsidiaries or group of such officers, directors, employees or consultants.
(b) As soon as administratively feasible following the Closing
Date, the Surviving Corporation and its Subsidiaries shall or the Parent shall
cause the Surviving Corporation and it Subsidiaries to, provide employees of the
Company or its Subsidiaries (excluding employees covered by collective
bargaining agreements) the employee benefit plans, severance benefits, programs,
policies and arrangements that are no less favorable in the aggregate than such
programs and policies provided to similarly situated employees of Parent and its
Subsidiaries.
(c) To the extent permitted under applicable law, each
employee of the Company or its Subsidiaries shall be given credit for all
service with the Company or its Subsidiaries (or service credited by the Company
or its Subsidiaries) under all employee benefit plans, programs, policies and
arrangements maintained by the Surviving Corporation in which they participate
or in which they become participants for all purposes including, without
limitation, service for purposes of determining (i) short-term and long-term
disability benefits; (ii) severance benefits; (iii) vacation benefits; and (iv)
vesting, eligibility and accrued benefits
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under any qualified, non-qualified, and welfare benefit plan. All pre-existing
conditions and exclusions shall be waived and expenses incurred by any employee
for deductibles and co-payments in the portion of the year prior to the date an
employee first became a participant in such plan shall be credited to the
benefit of such employee under such plan in the year in which such employee's
participation commenced.
Section 5.22. Redemption or Conversion of Preferred Stock.
Prior to the Closing Date, the Company shall redeem or convert all of its
outstanding 7% Convertible Preferred Stock.
Section 5.23. Section 16(b) Board Approval.
(a) Prior to Closing, the Board of Directors of Parent shall,
by resolution duly adopted by such Board of Directors or a duly authorized
committee of "non-employee directors" thereof, approve and adopt, for purposes
of exemption from "short-swing" liability under Section 16(b) of the Exchange
Act, the acquisition of Parent Common Stock at the Effective Time by officers
and directors of Parent (including officers or directors of the Company who
become, prior to, at, or following the Effective Time of the Merger, officers or
directors of Parent) as a result of the conversion of shares of Company Common
Stock in the Merger and the assumption of the Options by Parent at the Effective
Time. Such resolution shall set forth the name of the applicable "insiders" for
purposes of Section 16 of the Exchange Act, the number of securities to be
acquired by each individual, that the approval is being granted to exempt the
transaction under Rule 16b-3 under the Exchange Act, and, for the Options to be
assumed by Parent at the Effective Time, the material terms of the options and
warrants to purchase Parent Common Stock acquired by such insiders as a result
of the assumption by Parent of such Options.
(b) Prior to Closing, the Board of Directors of the Company
shall, by resolution duly adopted by such Board of Directors or a duly
authorized committee of "non-employee directors" thereof, approve and adopt, for
purposes of exemption from "short-swing" liability under Section 16(b) of the
Exchange Act, the conversion at the Effective Time of the shares of the Company
Common Stock held by officers and directors of the Company into shares of Parent
Common Stock as a result of the conversion of shares in the Merger, and the
assumption by Parent at the Effective Time of the Options of the officers and
directors of the Company. Such resolution shall set forth the name of the
applicable "insiders" for purposes of Section 16 of the Exchange Act and, for
each "insider," the number of shares of Company Common Stock to be converted
into shares of Parent Common Stock at the Effective Time, the number and
material terms of the Options to be assumed by Parent at the Effective Time, and
that the approval is being granted to exempt the transaction under Rule 16b-3
under the Exchange Act.
ARTICLE 6.
CONDITIONS TO THE MERGER
Section 6.1. Conditions to the Obligations of Each Party. The
obligations of the Company, Parent and Merger Sub to consummate the Merger are
subject to the satisfaction or waiver on or prior to the Closing Date of the
following conditions:
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(a) Registration Statement. The Registration Statement shall
have become effective under the Securities Act and no stop order suspending the
effectiveness of the Registration Statement shall have been issued by the SEC
and no proceeding for that purpose shall have been initiated by the SEC.
(b) Stockholder Approvals. The Parent Stockholder Approval and
the Company Stockholder Approval shall have been obtained.
(c) No Injunction or Restraint. No statute, rule, regulation,
executive order, decree, preliminary or permanent injunction or restraining
order shall have been enacted, entered, promulgated or enforced by any
Governmental Entity which prohibits the consummation of the transactions
contemplated hereby.
(d) Consents. All consents and approvals (other than any
consent or approval required pursuant to or in connection with the Antitrust
Laws) of Governmental Entities (other than the FCC) necessary for consummation
of the transactions contemplated hereby shall have been obtained, other than
those which, if not obtained, would not in the aggregate have a Material Adverse
Effect on the Company or Parent.
(e) HSR Act. Any waiting period (and any extension thereof)
applicable to the consummation of the Merger under the HSR Act shall have
expired or been terminated.
(f) Communications Act. All orders and approvals of the FCC
required in connection with the consummation of the transactions contemplated
hereby shall have been obtained or made, whether or not any appeal or request
for reconsideration of such order is pending, or whether the time for filing any
such appeal or request for reconsideration or for any sua sponte action by the
FCC has expired; provided, however, Parent may elect to consummate the Merger on
an initial order from the FCC.
(g) Stock Exchange Listing. The shares of Parent Common Stock
to be issued in the Merger or upon exercise of the Options shall have been
authorized for listing on the NYSE, subject to official notice of listing.
(h) Tax Opinion. Each of the Company and Parent shall have
received prior to the effectiveness of the Registration Statement an opinion of
its tax counsel, Vinson & Elkins L.L.P., and Akin, Gump, Strauss, Hauer & Feld,
L.L.P., respectively, in form and substance reasonably satisfactory to the
Company and Parent, as applicable, to the effect that, the Merger will qualify
for federal income tax purposes as a reorganization within the meaning of
Section 368(a) of the Code, that the Company, Parent and Merger Sub will each be
a "party to the reorganization" within the meaning of Section 368(b) of the
Code, and that accordingly none of the Company, Parent and Merger Sub shall
recognize gain or loss for federal income tax purposes as a result of the Merger
and stockholders of the Company will not recognize gain or loss for federal
income tax purposes on the receipt pursuant to the Merger of Parent Common Stock
in exchange for shares of Company Common Stock, except with respect to cash
received in lieu of fractional shares of Parent Common Stock. In rendering such
opinion, Vinson & Elkins L.L.P. and Akin, Gump, Strauss, Hauer & Feld, L.L.P.
shall receive and may rely upon representations contained in certificates of
Parent, Merger Sub and the Company.
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Section 6.2. Conditions to the Obligations of Parent and
Merger Sub. The obligations of Parent and Merger Sub to consummate the Merger
are subject to the satisfaction or waiver by Parent on or prior to the Closing
Date of the following further conditions:
(a) Each of the representations and warranties of the Company
set forth in this Agreement shall be true and correct in all material respects
as of the date of this Agreement and (except to the extent such representations
and warranties speak expressly as of an earlier date) as of the Effective Time
as though made on and as of the Effective Time; provided, however, that this
condition shall be deemed to have been satisfied unless the individual or
aggregate impact of all inaccuracies of such representations and warranties
(without regard to any materiality or Material Adverse Effect qualifier(s)
contained in any and each such representation or warranty) would have a Material
Adverse Effect on the Company. Parent shall have received a certificate signed
on behalf of the Company by the Chief Executive Officer and the Chief Financial
Officer of the Company to such effect.
(b) The Company shall have performed in all material respects
all obligations required to be performed by it under this Agreement at or prior
to the Effective Time, and Parent shall have received a certificate signed on
behalf of the Company by the Chief Executive Officer and the Chief Financial
Officer of the Company to such effect.
(c) The Company shall have completed the redemption or
conversion in full of its outstanding 7% Convertible Preferred Stock.
Section 6.3. Conditions to the Obligations of the Company. The
obligations of the Company to consummate the Merger are subject to the
satisfaction or waiver by the Company on or prior to the Closing Date of the
following further conditions:
(a) Each of the representations and warranties of Parent and
Merger Sub set forth in his Agreement shall be true and correct in all material
respects as of the date of this Agreement and (except to the extent such
representations and warranties speak expressly as of an earlier date) as of the
Effective Time as though made on and as of the Effective Time; provided,
however, that this condition shall be deemed to have been satisfied unless the
individual or aggregate impact of all inaccuracies of such representations and
warranties (without regard to any materiality or Material Adverse Effect
qualifier(s) contained in any and each such representation or warranty) would
have a Material Adverse Effect on Parent. The Company shall have received a
certificate signed on behalf of Parent by the Chief Executive Officer and the
Chief Financial Officer of Parent to such effect.
(b) Parent shall have performed in all material respects all
obligations required to be performed by it under this Agreement at or prior to
the Effective Time, and the Company shall have received a certificate signed on
behalf of Parent by the Chief Executive Officer and the Chief Financial Officer
of the Company to such effect.
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ARTICLE 7.
TERMINATION AND AMENDMENT
Section 7.1. Termination. This Agreement may be terminated at
any time prior to the Effective Time, whether before or after approval by the
stockholders of Parent or the Company:
(a) by the mutual written consent of Parent and the Company;
(b) by either Parent or the Company if the Effective Time
shall not have occurred on or before March 31, 2001 (the "Termination Date");
provided that the party seeking to terminate this Agreement pursuant to this
Section 7.1(b) shall not have breached in any material respect its obligations
under this Agreement in any manner that shall have proximately contributed to
the failure to consummate the Merger on or before the Termination Date; and
provided, further, that Parent shall have no right to terminate this Agreement
under this paragraph (b) if the Merger shall not have become effective prior to
the Termination Date due to Parent's failure to satisfy or remove a Divestiture
Condition to the extent required by Section 5.8, which failure shall constitute
a material breach of this Agreement by Parent; and provided, further, the
Termination Date shall be extended until no later than September 30, 2001 to the
extent that the only condition to the consummation of the Merger that has failed
to be satisfied by the parties hereto is the termination of the waiting period
under the HSR Act or the receipt of FCC consent in either case due to the assets
of RCN Corporation owned on the date hereof;
(c) by the Company, if there has occurred a breach by Parent
of any representation, warranty, covenant or other agreement contained in this
Agreement which (A) would give rise to the failure of a condition set forth in
Section 6.3(a) or (b) and (B) cannot be or has not been cured within twenty
business days after the giving of written notice to Parent of such breach,
provided that in no event shall such twenty-business day period extend beyond
the Termination Date; provided, however, that there shall be no cure period for
Parent's breach of Section 5.10(b) or 5.20(b) or any breach by Parent that
relates to one or more Divestiture Conditions to the extent required by Section
5.8 (a "Parent Breach");
(d) by Parent, if there has occurred a breach by the Company
of any representation, warranty, covenant or other agreement contained in this
Agreement which (A) would give rise to the failure of a condition set forth in
Section 6.2(a) or (b) and (B) cannot be or has not been cured within twenty
business days after the giving of written notice to the Company of such breach,
provided that in no event shall such twenty-business day period extend beyond
the Termination Date; provided, however, that there shall be no cure period for
the Company's breach of Section 5.10(a) or 5.20(a) (a "Company Breach");
(e) by either the Company or Parent, if there shall be any
applicable law, rule or regulation that makes consummation of the Merger illegal
or if any judgment, injunction, order or decree of a court or other Governmental
Entity of competent jurisdiction shall restrain or prohibit the consummation of
the Merger, and such judgment, injunction, order or decree shall become final
and nonappealable; provided, that Parent shall have no right to terminate this
Agreement under this paragraph (e) if the condition set forth in this paragraph
(e) shall not be satisfied due to Parent's failure to satisfy or remove a
Divestiture Condition to the extent required by Section 5.8, which failure shall
constitute a material breach of this Agreement by Parent;
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(f) by either the Company or Parent, if the stockholder
approvals referred to in Section 5.3 shall not have been obtained by reason of
the failure to obtain the requisite vote upon a vote at a duly held meeting of
stockholders or at any adjournment or postponement thereof;
(g) by Parent, if (i) the Board of Directors of the Company
withdraws, modifies or changes its recommendation of this Agreement or the
Merger in a manner adverse to Parent or shall have resolved to do any of the
foregoing or the Board of Directors of the Company shall have recommended to the
stockholders of the Company any Company Acquisition Proposal or resolved to do
so; (ii) a tender offer or exchange offer for outstanding shares of capital
stock of the Company then representing 50% or more of the combined power to vote
generally for the election of directors is commenced, and the Board of Directors
of the Company does not, within the applicable period required by law, recommend
that stockholders not tender their shares into such tender or exchange offer; or
(iii) the Company's Board of Directors fails to call or hold the Company Special
Meeting by reason of the receipt of a Company Acquisition Proposal;
(h) by the Company, if the Company shall have given notice to
Parent advising Parent that the Company has received, and intends to accept, a
Company Superior Proposal from a third party in accordance with Section 5.10(a),
advising Parent that the Company intends to terminate this Agreement in
accordance with this Section 7.1(h) and makes payment as required pursuant to
Section 5.18(c) of this Agreement and of the Expenses for which the Company is
responsible under Section 5.18(c) of this Agreement both by wire transfer of
immediately available funds upon the acceptance of the Company Superior Proposal
and as a condition to termination under this section 7.1(h). The Company shall
not be permitted to terminate this Agreement pursuant to this Section 7.1(h)
unless it has provided Parent the requisite notices under Section 5.10 and the
Company shall, and shall cause its respective financial and legal advisors to,
negotiate in good faith with Parent for at least 72 hours to make such
adjustments in the terms and conditions of this Agreement as would enable the
Company to proceed with the transactions contemplated herein. It is acknowledged
by Parent that such negotiations with Parent shall be conducted in a manner
consistent with the fiduciary duties of the Company's Board of Directors;
(i) by the Company, if (i) the Board of Directors of Parent
withdraws, modifies or changes its recommendation of this Agreement or to vote
in favor of the Parent Stockholder Approval in a manner adverse to the Company
or shall have resolved to do any of the foregoing or the Board of Directors of
Parent shall have recommended to the shareholders of Parent any Parent
Acquisition Proposal or resolved to do so; or (ii) a tender offer or exchange
offer for outstanding shares of capital stock of Parent then representing 50% or
more of the combined power to vote generally for the election of directors is
commenced, and the Board of Directors of Parent does not, within the applicable
period required by law, recommend that shareholders not tender their shares into
such tender or exchange offer; or (iii) Parent's Board of Directors fails to
call or hold the Parent Special Meeting by reason of the receipt of a Parent
Acquisition Proposal; or
(j) by Parent, if Parent shall have given notice to the
Company advising the Company that Parent has received, and intends to accept, a
Parent Superior Proposal from a third
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party in accordance with Section 5.10(b), advising the Company that Parent
intends to terminate this Agreement in accordance with this Section 7.1(j) and
makes payment as required pursuant to Section 5.18(d) of this Agreement and of
the Expenses for which Parent is responsible under Section 5.18(d) of this
Agreement both by wire transfer of immediately available funds upon the
acceptance of the Parent Superior Proposal and as a condition to termination
under this Section 7.1(j). Parent shall not be permitted to terminate this
Agreement pursuant to this Section 7.1(j) unless it has provided the Company the
requisite notices under Section 5.10 and Parent shall, and shall cause its
respective financial and legal advisors to, negotiate in good faith with the
Company for at least 72 hours to make such adjustments in the terms and
conditions of this Agreement as would enable Parent to proceed with the
transactions contemplated herein. It is acknowledged by the Company that such
negotiations with the Company shall be conducted in a manner consistent with the
fiduciary duties of Parent's Board of Directors.
Section 7.2. Effect of Termination. In the event of
termination of the Agreement and the abandonment of the Merger pursuant to this
Article 7, all obligations of the parties shall terminate, except the
obligations of the parties pursuant to this Section 7.2 and except for the
provisions of Sections 5.16, 5.18, the last sentence of Section 5.5 and Article
8 (other than Sections 8.10 and 8.11), provided that nothing herein shall
relieve any party from liability for any breaches hereof which at a minimum
shall be the Expenses of the non-breaching party.
ARTICLE 8.
GENERAL PROVISIONS
Section 8.1. Notices. All notices, requests, claims, demands
and other communications under this Agreement shall be in writing and shall be
deemed given if delivered personally or sent by facsimile transmission or
overnight courier (providing proof of delivery) to the parties at the following
addresses (or at such address for a party as shall be specified by like notice):
(a) if to the Company, to:
AMFM Inc.
1845 Woodall Rogers Freeway
Suite 1300
Dallas, Texas 75201
Attention: William S. Banowsky, Jr.
Facsimile No.: (214) 922-8700
with a copy to:
Vinson & Elkins L.L.P.
2001 Ross Avenue
Suite 3700
Dallas, Texas 75201
Attention: Michael D. Wortley
Facsimile No.: (214) 220-7716
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(b) if to Parent or Merger Sub, to:
Clear Channel Communications, Inc.
200 Concord Plaza
Suite 600
San Antonio, Texas 78216-6940
Attention: Randall T. Mays
Facsimile No.: (210) 822-2299
with a copy to:
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
1700 Pacific Avenue
Suite 4100
Dallas, Texas 75201
Attention: Michael E. Dillard, P.C.
Facsimile No.: (214) 969-4343
Section 8.2. Definitions. For purposes of this Agreement:
(a) "Affiliate" of any Person means another Person that
directly or indirectly, through one or more intermediaries controls, is
controlled by, or is under common control with, such first Person.
(b) "Antitrust Laws" mean and include the Sherman Act, as
amended, the Clayton Act, as amended, the HSR Act, the Federal Trade Commission
Act, as amended, and all other federal, state or foreign statutes, rules,
regulations, orders, decrees, administrative and judicial doctrines and other
laws that are designed or intended to prohibit, restrict or regulate actions
having the purpose or effect of monopolization or restraint of trade.
(c) "Company Acquisition Proposal" means any offer or proposal
for, or any indication of interest in (whether or not in writing and whether or
not delivered to the Company's stockholders generally), a merger, consolidation,
liquidation, reorganization, tender offer, exchange offer, consolidation or
other business combination directly or indirectly involving the Company or any
of its Subsidiaries or the acquisition of a substantial equity interest in or a
substantial portion of the assets of, any such entity, other than the
transactions contemplated by this Agreement.
(d) "Control" (including the terms "controlled by" and "under
common control with") means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.
(e) "Executive Officer" means, with respect to the Company, as
applicable, those executive officers of the Company, listed on Exhibit 8.2(e)(i)
hereto and with respect to Parent, those executive officers of Parent listed on
Exhibit 8.2(e)(ii) hereto.
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(f) "Governmental Entity" means any government or any agency,
bureau, board, commission, court, department, official, political subdivision,
tribunal or other instrumentality of any government, whether federal, state or
local, domestic or foreign.
(g) "Knowledge", "Know" or "Known" means, with respect to the
matter in question, if any of the Executive Officers of the Company or Parent,
as the case may be, has actual knowledge of such matter.
(h) "Lien" means any encumbrance, hypothecation, infringement,
lien, mortgage, pledge, restriction, security interest, title retention or other
security arrangement, or any adverse right or interest, charge or claim of any
nature whatsoever of, on, or with respect to any asset, property or property
interest; provided, however, that the term "lien" shall not include (i) liens
for water and sewer charges and current taxes not yet due and payable or being
contested in good faith, (ii) mechanics', carriers', workers', repairers',
materialmen's, warehousemen's and other similar liens arising or incurred in the
ordinary course of business (iii) all liens approved in writing by the other
party hereto or (iv) restrictions on transfer imposed by federal or state
securities laws.
(i) "Material Adverse Effect" means, any adverse change in the
business, financial condition or results of operations of the Company or Parent,
as the case may be, or its respective Subsidiaries that is material to the
Company or Parent, as the case may be, and its respective Subsidiaries taken as
a whole.
(j) "Parent Acquisition Proposal" means any offer or proposal
for, or any indication of interest in (whether or not in writing and whether or
not delivered to Parent's shareholders generally), a merger, consolidation,
liquidation, reorganization, tender offer, exchange offer, consolidation or
other business combination directly or indirectly involving Parent or any of its
Subsidiaries or the acquisition of a substantial equity interest in or a
substantial portion of the assets of, any such entity, other than the
transactions contemplated by this Agreement.
(k) "Person" means any natural person, firm, individual,
business trust, trust, association, corporation, partnership, joint venture,
company, unincorporated entity or Governmental Entity.
(l) "Subsidiary" or "Subsidiaries" of any Person means another
Person, an amount of the voting securities, other voting ownership or voting
partnership interests of which is sufficient to elect at least a majority of its
board of directors or other governing body (or, if there are no such voting
interests, 50% or more of the equity interests of which) is owned directly or
indirectly by such first Person.
(m) "Taxes" means any and all federal, state, local, foreign
or other taxes of any kind (together with any and all interest, penalties,
additions to tax and additional amounts imposed with respect thereto) imposed by
any taxing authority, including, without limitation, taxes or other charges on
or with respect to income, franchises, windfall or other profits, gross
receipts, property, sales, use, transfer, capital stock, payroll, employment,
social security,
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58
workers' compensation, unemployment compensation, or net worth, and taxes or
other charges in the nature of excise, withholding, ad valorem or value added.
(n) "Tax Return" means any return, report or similar statement
(including the attached schedules) required to be filed with respect to any Tax,
including, without limitation, any information return, claim for refund, amended
return or declaration of estimated Tax.
Section 8.3. Counterparts. This Agreement may be executed in
one or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other parties, it being
understood that all parties need not sign the same counterpart.
Section 8.4. Entire Agreement; No Third-Party Beneficiaries.
This Agreement constitutes the entire agreement, and supersedes all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter of this Agreement (provided, however, that the
provisions of the Confidentiality Agreements shall remain valid and in effect)
and, except for the provisions of Article 2 and Sections 5.7 and 5.11, is not
intended to confer upon any Person other than the parties any rights or remedies
hereunder.
Section 8.5. Assignment. Neither this Agreement nor any of the
rights, interests or obligations under this Agreement shall be assigned, in
whole or in part, by operation of law or otherwise by any of the parties hereto
without the prior written consent of the other parties, except that Merger Sub
may assign, in its sole discretion, any or all of its rights, interests and
obligations under this Agreement to Parent or to any direct or indirect wholly
owned subsidiary of Parent, but no such assignment shall relieve Merger Sub of
any of its obligations under this Agreement. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of, and be enforceable
by, the parties and their respective successors and assigns.
Section 8.6. Governing Law. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of Delaware, without
regard to any applicable conflicts of law.
Section 8.7. Enforcement. The parties agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any court of the
United States located in the State of Texas or in Texas state court, this being
in addition to any other remedy to which they are entitled at law or in equity.
In addition, each of the parties hereto (a) consents to submit itself to the
personal jurisdiction of any federal court located in the State of Texas or any
Texas state court in the event any dispute arises out of this Agreement or any
of the transactions contemplated by this Agreement, (b) agrees that it will not
attempt to deny or defeat such personal jurisdiction by motion or other request
for leave from any such court and (c) agrees that it will not bring any action
relating to this Agreement or any of the transactions contemplated by this
Agreement in any court other than a federal or state court sitting in the State
of Texas.
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Section 8.8. Severability. Any term or provision of this
Agreement which is invalid or unenforceable in any jurisdiction shall, as to
that jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable, such provision shall be
interpreted to be only so broad as is enforceable.
Section 8.9. Interpretation. Headings of the Articles and
Sections of this Agreement are for convenience of the parties only, and shall be
given no substantive or interpretive effect whatsoever. The disclosure of any
matter in any Section of a Disclosure Letter hereto shall not be deemed to
constitute an admission by any party or to otherwise imply that any such matter
is material or may have a Material Adverse Effect for purposes of this
Agreement.
Section 8.10. Survival of Representations and Warranties. The
representations and warranties of the parties contained in this Agreement shall
not survive the Effective Time.
Section 8.11. Survival of Covenants and Agreements. The
covenants and agreements of the parties to be performed after the Effective Time
contained in this Agreement shall survive the Effective Time.
Section 8.12. Attorneys' Fees. If any action or law or equity,
including an action for declaratory relief, is brought to enforce or interpret
any provision of this Agreement, the prevailing party shall be entitled to
recover reasonable attorneys' fees and expenses from the other party, which fees
and expenses shall be in addition to any other relief which may be awarded.
Section 8.13. Amendment. This Agreement may be amended by the
parties at any time before or after approval hereof by the stockholders of the
Company and Parent; provided, however, that after such stockholder approval
there shall not be made any amendment that by law requires further approval by
the stockholders of the Company or Parent without the further approval of such
stockholders. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties.
Section 8.14. Extension; Waiver. At any time prior to the
Effective Time, the parties may (a) extend the time for the performance of any
of the obligations or other acts of the other parties, (b) waive any
inaccuracies in the representations and warranties contained in this Agreement
or in any document delivered pursuant to this Agreement or (c) subject to the
proviso of Section 8.13, waive compliance with any of the agreements or
conditions contained in this Agreement. Any agreement on the part of a party to
any such extension or waiver shall be valid only if set forth in an instrument
in writing, signed on behalf of such party. The failure of any party to this
Agreement to assert any of its rights under this Agreement or otherwise shall
not constitute a waiver of those rights.
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Section 8.15. Procedure for Termination, Amendment, Extension
or Waiver. A termination of this Agreement or other action attributed to the
Board of Directors pursuant to Section 7.1, an amendment of this Agreement
pursuant to Section 8.13 or an extension or waiver pursuant to Section 8.14
shall, in order to be effective, require in the case of Parent, Merger Sub or
the Company, action by its Board of Directors, acting by the affirmative vote of
a majority of the members of the entire Board of Directors.
Section 8.16. No Recourse Against Others. No past, present or
future director, officer, employee, stockholder, incorporator or partner, as
such, of Parent, the Company, Merger Sub or the Surviving Corporation shall have
any liability for any obligations of Parent, the Company, Merger Sub or the
Surviving Corporation under this Agreement or for any claim based on, in respect
of or by reason of such obligations or their creation.
[SIGNATURE PAGE FOLLOWS]
61
MERGER AGREEMENT SIGNATURE PAGE
IN WITNESS WHEREOF, Parent, Merger Sub and the Company have
caused this Agreement to be signed by their respective officers thereunto duly
authorized, all as of the date first written above.
CLEAR CHANNEL COMMUNICATIONS, INC.
By: /s/ RANDALL T. MAYS
-----------------------------------------
Name: Randall T. Mays
Title: Executive Vice President and
Chief Financial Officer
CCU MERGER SUB, INC.
By: /s/ RANDALL T. MAYS
-----------------------------------------
Name: Randall T. Mays
Title: Executive Vice President and
Chief Financial Officer
AMFM INC.
By: /s/ THOMAS O. HICKS
-----------------------------------------
Name: Thomas O. Hicks
Title: Chairman and Chief Executive Officer
S-1
1
EXHIBIT 99.1
CLEAR CHANNEL COMMUNICATIONS, INC.
[LOGO]
$56 BILLION MERGER BETWEEN CLEAR CHANNEL
COMMUNICATIONS AND AMFM INC. TO CREATE THE WORLD'S
LARGEST OUT-OF-HOME MEDIA COMPANY
SAN ANTONIO and DALLAS, Texas - October 4, 1999 - Clear Channel Communications,
Inc. (NYSE: CCU) and AMFM Inc. (NYSE: AFM) today announced that they have
entered into a definitive merger agreement to create the world's largest
out-of-home media entity. After anticipated divestitures required to gain
regulatory approval, the combined company will have operations in 32 countries
including approximately 830 radio stations and more than 425,000 outdoor
displays as well as 19 television stations and significant equity interests in
other leading radio broadcasting and outdoor advertising entities.
Pursuant to the Telecommunications Act of 1996 and other regulatory guidelines,
it is expected that collectively Clear Channel and AMFM may divest approximately
125 radio stations to secure regulatory approval for the merger. The station
sales resulting from the merger should serve the public interest by increasing
the diversity and ownership of radio broadcasting properties.
The proposed merger-of-equals values AMFM at $23.5 billion, including the
assumption of approximately $6.1 billion of AMFM debt. The combined entity will
be called Clear Channel Communications. Lowry Mays will remain Chairman and CEO
and Thomas O. Hicks, currently the Chairman and Chief Executive Officer of AMFM
Inc., will serve as Vice Chairman of the combined entity. Mark Mays will
continue to serve as Clear Channel's President and Chief Operating Officer, and
Randall Mays as Executive Vice President and Chief Financial Officer. The Board
of Directors of the new company will consist of the current eight members of the
Clear Channel Board and five members of the AMFM Board to be designated by AMFM.
Lowry Mays said, "This merger creates the world's pre-eminent out-of-home media
enterprise focused on the fast-growing radio and outdoor advertising sectors.
Over the past several years Clear Channel has successfully focused on the
out-of-home opportunity because of its compelling fundamentals, driven by an
increasingly mobile society that spends more time driving, listening to the
radio and viewing outdoor displays. As a result of this growing trend
-more-
2
CLEAR CHANNEL COMMUNICATIONS/AMFM INC., 10/4/99 page 2
and a recognition of the high degree of cost-effectiveness it makes possible,
advertisers have increasingly relied on out-of-home media to reach consumers. By
combining Clear Channel's broad portfolio of out-of-home assets with AMFM's
leading portfolio of well-clustered, well-managed, highly rated and
geographically diversified radio operations, including a significant major
market presence, we will not only be the undisputed industry leader, but will
have the financial, programming, management and distribution resources to best
serve the needs of this exciting, growing, global marketplace."
Tom Hicks said, "Clear Channel is the model of success in out-of-home media, and
Lowry, Mark and Randall Mays have adeptly driven the company's growth through a
combination of vision, superior operating results and financially astute,
strategically sound acquisitions. These efforts have attracted a tremendous
level of deserved respect from its partners, as well as from the advertising and
financial communities. Combining the Clear Channel and AMFM assets will create
significant operating and financial value through an entity with world-class
operating management and local programming, content and branding spanning 32
countries. We are delighted to bring such an attractive transaction to our
shareholders as it underscores our commitment to growth, our employees, our
advertisers and the consumer marketplace which embraces out-of-home media for
its local content, accessibility and low-cost, high-entertainment value. We are
even more delighted that as a stock-for-stock transaction, our shareholders will
be able to participate fully in what we believe is the tremendous upside
potential of the combined enterprise."
Under the terms of the agreement, AMFM shareholders will receive 0.94 shares of
Clear Channel Communications Inc. common stock, on a fixed exchange basis, for
each share of AMFM Inc. held on the record date of the transaction (expected to
be set for the second half of 2000). After giving effect to the transaction,
which is expected to be a tax-free exchange, Clear Channel Communications will
have approximately 582 million fully diluted common shares, with current AMFM
shareholders owning approximately 37% and current Clear Channel Communications
shareholders owning approximately 63% of the combined enterprise.
CLEAR CHANNEL/AMFM COMBINED ASSETS
The combined entity will become the world's premier out-of-home media company
reaching local, national and international consumers through a complementary
portfolio of radio stations, radio broadcast networks, outdoor advertising
displays and television stations located in 32 countries. Subject to actions
taken to obtain regulatory clearances (it is expected that approximately 125
radio stations will be divested to comply with ownership limits), the merged
company will include:
o 830 radio stations in 187 U.S. markets after anticipated divestitures;
-more-
3
CLEAR CHANNEL COMMUNICATIONS/AMFM INC., 10/4/99 page 3
o Equity interests in over 240 radio stations internationally primarily in
Australia, New Zealand, Mexico, Norway, England and the Czech Republic;
o 425,000 outdoor displays. Clear Channel provides outdoor advertising
services in over 35 domestic markets and 29 international markets;
o 19 television stations which are affiliated with various television
networks, including FOX, UPN, ABC, NBC and CBS; and
o Katz Media, the only full-service media representation firm in the United
States serving multiple types of electronic media.
Mr. Mays concluded, "I look forward to working with Tom Hicks and AMFM's great
radio operating team led by Jim de Castro as well as Randy Michaels and their
teams, in extending Clear Channel's unsurpassed record of growth for the benefit
of our shareholders, advertisers, audiences and employees. We also believe the
merger and the divestiture of certain stations may create new acquisition
opportunities for minority-owned broadcasting entities, a sector that the Clear
Channel organization is committed to supporting."
The merger has been approved by the Boards of Directors of both AMFM Inc. and
Clear Channel Communications, Inc. The transaction is expected to be consummated
in the second half of 2000, subject to a vote by stockholders of both companies,
FCC and other regulatory approvals (including expiration of the applicable
Hart-Scott-Rodino waiting period) and other customary closing conditions. Hicks,
Muse, Tate & Furst Incorporated and its affiliates, AMFM's largest shareholders
with approximately 27% of AMFM's outstanding shares, and Lowry Mays who holds
approximately 9% of Clear Channel's outstanding shares, have indicated they will
vote in favor of the transaction.
Salomon Smith Barney acted as financial advisor to Clear Channel and Morgan
Stanley Dean Witter & Co., Greenhill & Company, Deutsche Banc Alex Brown and
Chase Securities, Inc. served as financial advisors to AMFM.
ABOUT CLEAR CHANNEL COMMUNICATIONS
Clear Channel Communications, Inc. (http://www.clearchannel.com/) is a global
leader in the out-of-home advertising industry with radio and television
stations and outdoor displays in 32 countries around the world. Including
announced transactions, Clear Channel operates 512 radio and 19 television
stations in the United States and has equity interests in over 240 radio
stations internationally. Clear Channel also operates more than 425,000 outdoor
advertising displays.
-more-
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CLEAR CHANNEL COMMUNICATIONS/AMFM INC., 10/4/99 page 4
ABOUT AMFM INC.
AMFM Inc., the nation's largest radio broadcasting entity, consists of the AMFM
Radio Group, including the AMFM Radio Networks and the Chancellor Marketing
Group, and the AMFM New Media Group, including Katz Media and AMFM's Internet
operations. Reflecting announced transactions, AMFM Radio Group with
approximately 443 stations in 100 markets reaches a weekly listener base of 64
million people. The AMFM Radio Networks offers syndicated programming
nationwide. Chancellor Marketing Group is a full-service sales promotion firm
developing integrated marketing programs for Fortune 1000 companies. AMFM's Katz
Media is the only full-service media representation firm in the United States
serving multiple types of electronic media. AMFM's Internet operations focus on
developing AMFM's e-commerce web sites, streaming online broadcasts of AMFM's
on-air programming and other media, and promoting emerging Internet and new
media concerns.
AMFM Inc. was formed in January 1994 with the acquisition of two radio stations
in Sacramento, California by Hicks, Muse, Tate & Furst Incorporated. Upon
completion of the proposed merger between AMFM and Clear Channel, Hicks, Muse,
Tate & Furst Incorporated and its affiliates will own approximately 10% of Clear
Channel Communications and will be the Company's largest shareholder.
CONTACT:
Randall Mays D. Geoffrey Armstrong
Chief Financial Officer Chief Financial Officer
Clear Channel Communications Inc. AMFM Inc.
210/822-2828 214/922-8700
Joseph N. Jaffoni
Stewart A. Lewack
Jaffoni & Collins Incorporated
212/835-8500; afm@jcir.com
This news announcement contains certain forward-looking statements that are
based upon current expectations and involve certain risks and uncertainties
within the meaning of the U.S. Private Securities Litigation Reform Act of 1995.
Key risks are described in Clear Channel's and AMFM's reports filed with the
U.S. Securities and Exchange Commission. Readers should note that these
statements may be impacted by several factors, including economic changes and
changes in the broadcasting industry generally, the ability of Clear Channel and
AMFM to consummate a merger and successfully integrate operations and,
accordingly, the Company's actual performance and results may vary from those
stated herein and Clear Channel and AMFM undertake no obligation to update the
information contained herein.
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