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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 8, 1998
(October 8, 1998)
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 78216
San Antonio, Texas (Zip Code)
(Address of principal
executive offices)
Registrant's telephone number, including area code: (210) 822-2828
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ITEM 5. OTHER EVENTS.
On October 8, 1998, Clear Channel Communications, Inc., a Texas corporation
(the "Company"), Jacor Communications, Inc., a Delaware corporation ("Jacor"),
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 Jacor, with Jacor 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 Jacor common stock
will be converted into the right to receive the Company's common stock, based
upon the average closing price of the Company's common stock during the 25
consecutive trading days ending on the second trading day prior to the closing
date, as follows:
<TABLE>
<CAPTION>
Average Closing Price Conversion
Of the Company's Stock Number
---------------------- ----------
<S> <C>
Less than or equal to $42.86 1.40
Above $42.86 but less than or equal to $44.44 1.40 to 1.35 ($60.00 in value)
Above $44.44 but less than $50.00 1.35
</TABLE>
If the average closing price is $50.00 or more, the conversion number will
be calculated as the quotient by dividing (A) $67.50 plus the product of $0.675
and the amount by which the average closing price exceeds $50.00, by (B) the
average closing price. Based upon the closing price of the Clear Channel common
stock of $37.00 on Wednesday, October 7, 1998, the merger is valued at
approximately $4.4 billion.
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 8, 1998, the Company and Jacor 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.
Certain statements in this report and in the press release incorporated
herein by reference constitute "forward-looking statements" within the meaning
of the Private Securities Litigation Reform Act of 1995. Such forward-looking
statements involve known and unknown risks, uncertainties and other factors
which may cause the actual results, performance or achievements of the Company
to be materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
2.1 Agreement and Plan of Merger dated October 8, 1998, among Clear
Channel Communications, Inc., Jacor Communications, Inc., and CCU
Merger Sub, Inc.
99.1 Press Release of Clear Channel Communications, Inc. and Jacor
Communications, Inc. issued October 8, 1998.
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 8, 1998 By: /s/ HERBERT W. HILL, JR.
-------------------------
Herbert W. Hill, Jr.
Senior Vice President and
Chief Accounting Officer
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INDEX TO EXHIBITS
2.1 Agreement and Plan of Merger dated October 8, 1998, among Clear Channel
Communications, Inc., Jacor Communications, Inc., and CCU Merger Sub,
Inc.
99.1 Press Release of Clear Channel Communications, Inc. and Jacor
Communications, Inc. issued October 8, 1998.
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EXHIBIT 2.1
================================================================================
AGREEMENT AND PLAN OF MERGER
AMONG
CLEAR CHANNEL COMMUNICATIONS, INC.,
CCU MERGER SUB, INC.
AND
JACOR COMMUNICATIONS, INC.
DATED AS OF OCTOBER 8, 1998
================================================================================
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
ARTICLE I.
THE MERGER
<S> <C> <C>
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 By-Laws of the Surviving Corporation.................................2
Section 1.6. Directors.............................................................................................2
Section 1.7. Officers..............................................................................................3
ARTICLE II.
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
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 and Warrants.......................................................3
Section 2.4. Exchange of Certificates..............................................................................4
Section 2.5. Stock Transfer Books..................................................................................7
ARTICLE III.
REPRESENTATIONS AND WARRANTS OF THE COMPANY
Section 3.1. Organization, Qualification, Etc......................................................................8
Section 3.2. Capital Stock.........................................................................................8
Section 3.3. Corporate Authority Relative to this Agreement. No Violation..........................................9
Section 3.4. Reports and Financial Statements.....................................................................10
Section 3.5. No Undisclosed Liabilities...........................................................................11
Section 3.6. No Violation of Law..................................................................................11
Section 3.7. Environmental Laws and Regulations...................................................................12
Section 3.8. No Undisclosed Employee Benefit Plan Liabilities or
Severance Arrangements...........................................................................12
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....................................14
Section 3.12. Lack of Ownership of Parent Common Stock............................................................14
Section 3.13. Tax Matters.........................................................................................14
Section 3.14. Opinion of Financial Advisor........................................................................15
Section 3.15. Required Vote of the Company Stockholders...........................................................15
Section 3.16. Insurance...........................................................................................15
</TABLE>
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<TABLE>
<S> <C> <C>
Section 3.17. Real Property; Title................................................................................15
Section 3.18. Collective Bargaining Agreements and Labor..........................................................15
Section 3.19. Material Contracts..................................................................................16
Section 3.20. Takeover Statute....................................................................................16
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Section 4.1. Organization, Qualification, Etc.....................................................................16
Section 4.2. Capital Stock........................................................................................17
Section 4.3. Corporate Authority Relative to this Agreement. No Violation........................................17
Section 4.4. Reports and Financial Statements.....................................................................18
Section 4.5. No Undisclosed Liabilities...........................................................................19
Section 4.6. No Violation of Law..................................................................................19
Section 4.7. Environmental Laws and Regulations...................................................................19
Section 4.8. No Undisclosed Employee Benefit Plan Liabilities or
Severance Arrangements...........................................................................20
Section 4.9. Absence of Certain Changes or Events.................................................................20
Section 4.10. Investigations; Litigation..........................................................................20
Section 4.11. Joint Proxy Statement; Registration Statement; Other Information....................................20
Section 4.12. Lack of Ownership of Company Common Stock...........................................................21
Section 4.13. Tax Matters.........................................................................................21
Section 4.14. Required Vote of Parent Stockholders................................................................22
Section 4.15. Opinion of Financial Advisor........................................................................22
Section 4.16. Insurance...........................................................................................22
Section 4.17. Real Property; Title................................................................................22
Section 4.18. Collective Bargaining Agreements and Labor..........................................................22
Section 4.19. Material Contracts..................................................................................22
ARTICLE V.
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 5.1. Conduct of Business by the Company or Parent.........................................................22
Section 5.2. Proxy Material; Registration Statement...............................................................26
Section 5.3. Stockholders' Meeting................................................................................26
Section 5.4. Approvals and Consents; Cooperation..................................................................27
Section 5.5. Access to Information; Confidentiality...............................................................27
Section 5.6. Affiliates...........................................................................................28
Section 5.7. Rights Under Stock Plans.............................................................................28
Section 5.8. Filings; Other Action................................................................................30
Section 5.9. Further Assurances...................................................................................32
Section 5.10. No Inconsistent Activities..........................................................................32
Section 5.11. Director and Officer Liability......................................................................32
</TABLE>
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<TABLE>
<S> <C> <C>
Section 5.12. Accountants' "Comfort" Letters......................................................................34
Section 5.13. Additional Reports..................................................................................34
Section 5.14. Plan of Reorganization..............................................................................35
Section 5.15. Conveyance Taxes....................................................................................35
Section 5.16. Public Announcements................................................................................35
Section 5.17. Employee Plans and Benefits and Employment Contracts................................................35
ARTICLE VI.
CONDITIONS TO THE MERGER
Section 6.1. Conditions to the Obligations of Each Party..........................................................36
Section 6.2. Conditions to the Obligations of Parent and Merger Sub...............................................37
Section 6.3. Conditions to the Obligations of the Company.........................................................38
ARTICLE VII.
TERMINATION, AMENDMENT AND WAIVER
Section 7.1. Termination..........................................................................................38
Section 7.2.Effect of Termination..................................................................................40
Section 7.3. Amendment............................................................................................40
Section 7.4. Extension; Waiver....................................................................................41
Section 7.5. Termination Fee......................................................................................41
Section 7.6. Procedure for Termination, Amendment, Extension or Waiver............................................41
ARTICLE VIII.
GENERAL PROVISIONS
Section 8.1. Nonsurvival of Representations.......................................................................41
Section 8.2. Notices..............................................................................................42
Section 8.3. Definitions..........................................................................................43
Section 8.4. Counterparts.........................................................................................44
Section 8.5. Entire Agreement; No Third-Party Beneficiaries.......................................................45
Section 8.6. Assignment...........................................................................................45
Section 8.7. Governing Law........................................................................................45
Section 8.8. Enforcement..........................................................................................45
Section 8.9. Severability.........................................................................................45
Section 8.10. Interpretation......................................................................................45
Section 8.11. Finders or Brokers..................................................................................46
Exhibits
A Form of Company Tax Opinion Representation Letter
B Form of Parent Tax Opinion Representation Letter
</TABLE>
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This AGREEMENT AND PLAN OF MERGER, dated as of October 8,
1998, 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 JACOR COMMUNICATIONS,
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 acquisition of the Company by 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
by 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 II 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 "Fund Voting
Agreement") pursuant to which such stockholders agree 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
agree to vote their shares of Parent Common Stock in favor of the proposal to
approve the issuance of Parent Common Stock in the Merger;
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:
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ARTICLE I.
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 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 VI (the "Closing Date") at such place as the
parties may mutually agree.
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. 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 By-Laws 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.
(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.
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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 II.
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.
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 and Warrants.
(a) 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 a number (the "Conversion
Number") of duly authorized, validly issued and nonassessable shares of Parent
Common Stock (the "Merger Consideration") in accordance with the following:
(i) If the Average Closing Price (as defined in Section 2.3(b)
hereof) is less than or equal to $42.86, the Conversion Number will be 1.4
shares of Parent Common Stock,
(ii) If the Average Closing Price is greater than $42.86 and
less than or equal to $44.44, the Conversion Number will be that number of
shares of Parent Common Stock with a value of $60.00, when measured at the
Average Closing Price,
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(iii) If the Average Closing Price is greater than $44.44 and
less than $50.00, the Conversion Number will be 1.35 shares of Parent Common
Stock, and
(iv) If the Average Closing Price is greater than or equal to
$50.00, the Conversion Number will be the quotient obtained by dividing (A) the
sum of (x) $67.50 plus (y) the result obtained by multiplying $.675 times the
excess of the Average Closing Price over $50.00 by (B) the Average Closing
Price;
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 and the Walk-Away Price (as defined in Section 7.1(j) hereof) shall be
correspondingly adjusted to the extent appropriate to reflect such stock
dividend, 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.
(b) "Average Closing Price" means the average of the closing
prices for a share of Parent Common Stock as reported on the New York Stock
Exchange, Inc. ("NYSE") Composite Transaction Tape (as reported in The Wall
Street Journal or, if not reported thereby, any other authoritative source) for
the twenty-five (25) consecutive trading days ending on the second trading day
prior to the Closing Date.
(c) The Company represents and warrants that the holders of
the Company Common Stock are not entitled to appraisal rights under the
Certificate of Incorporation of the Company.
(d) Company Warrants. Each holder of a warrant to purchase
Company Common Stock ("Company Warrant") issued and outstanding immediately
prior to the Effective Time shall have the right after the Effective Time, upon
payment of the exercise price of such Company Warrant that was in effect
immediately prior to the Effective Time as adjusted pursuant to the Warrant
Agreements (as defined in Section 8.3 hereof), to receive, upon the exercise of
each Company Warrant, the Merger Consideration which such holder would have
received as a result of the Merger had such Company Warrant been exercised
immediately prior to the Effective Time and converted in the Merger into the
Merger Consideration.
Section 2.4. Exchange of Certificates.
(a) Exchange Agent. From and 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 II, through the Exchange Agent, certificates evidencing
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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, 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 such 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 II (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 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
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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 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 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
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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 II 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 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 this Agreement.
(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
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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 III.
REPRESENTATIONS AND WARRANTS 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 duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization, has the corporate 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
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. 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, claims, charges or
encumbrances. There
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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 100,000,000 shares of the Company Common Stock,
2,000,000 shares of the Company's Class A preferred stock, par value $0.01 per
share (the "Company Class A Preferred Stock"), and 2,000,000 shares of the
Company's Class B preferred stock, par value $0.01 per share (the "Company Class
B Preferred Stock," and, together with the Class A Preferred Stock, the "Company
Preferred Stock"). As of October 5, 1998, 51,036,531 shares of the Company
Common Stock and no shares of the Company Preferred Stock were issued and
outstanding. All the outstanding shares of the Company Common Stock have been
validly issued and are fully paid and non-assessable. As of October 8, 1998,
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 and other rights to receive or acquire an aggregate of
15,220,972 shares of the Company Common Stock pursuant to:
(a) the Company's 1993 Stock Option Plan;
(b) the Company's Amended and Restated 1995 Employee
Stock Purchase Plan (the "Company Employee Stock
Purchase Plan");
(c) the Company's 1997 Long-Term Incentive Stock Plan;
(d) the Company's 1997 Non-Employee Directors Stock Plan;
(e) the Company's 1997 Non-Employee Directors Stock
Purchase Plan;
(f) the Company's 1996 Executive Stock Unit Plan;
(g) the Company's non-employee directors stock units;
(h) the Company's non-employee directors stock option
agreements;
(i) the Company's obligations pursuant to the Company-CMM
Limited Partnership Agreement of Limited Partnership,
as amended.
(j) the Company Warrants expiring September 18, 2001;
(k) the Company Warrants expiring February 27, 2002;
(l) the Company's liquid yield option notes due 2011;
(m) the Company's liquid yield option notes due 2018 (the
notes referred to in (l) and (m) being collectively
the "LYONs"); and
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(n) a non-qualified stock option for 100,000 shares.
Except for the issuance of shares of the Company Common Stock
pursuant to the options and other rights referred to in Sections 3.2(a)-(n)
above, since February 3, 1998, 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 Agreement and the transactions
contemplated hereby and thereby. 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 to recommend to such
stockholders that they vote in favor thereof. This Agreement and the Parent
Stockholders Agreement have been duly and validly executed and delivered by the
Company and, assuming this Agreement and the Parent Stockholders 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 Agreement constitute
valid and binding agreements of the Company, enforceable against the Company in
accordance with its 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 Stockholder 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
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to or obligated under any charter, bylaw or contract provision or any
governmental licenses, 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 Stockholder
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 Company has
made available to Parent true and complete copies of:
(a) the Company's Annual Report on Form 10-K filed with the
Securities and Exchange Commission (the "SEC") for the years ended December 31,
1996 and 1997;
(b) the Company's Quarterly Reports on Form 10-Q filed with
the SEC for the quarters ended March 31, 1998 and June 30, 1998;
(c) each definitive proxy statement filed by the Company with
the since SEC since December 31, 1996;
(d) each final prospectus filed by the Company with the SEC
since December 31, 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, 1997.
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,
1997, the Company 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.
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Section 3.5. No Undisclosed Liabilities. 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 FCC licensees.
Section 3.7. Environmental Laws and Regulations. Except as
described in any of the Company SEC Reports, (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 non-compliance 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.
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Section 3.8. No Undisclosed Employee Benefit Plan Liabilities
or Severance Arrangements. Except as described in any of the Company SEC
Reports, all "employee benefit plans," as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA") (including
any multi-employer plan as defined in Section 3(37) of ERISA), maintained or
contributed to by the Company or its Subsidiaries are in compliance with all
applicable provisions of ERISA, the Code and any other applicable laws except
for violations that would not in the aggregate have a Material Adverse Effect on
the Company. To the Knowledge of the Company, none of the Company nor its
Subsidiaries with respect to such plans has engaged in a "prohibited
transaction" within the meaning of Section 4975 of the Code or Title I, Part 4
of ERISA except for transactions (i) which are exempt under applicable law,
regulations and administrative exemptions or (ii) which in the aggregate would
not have a Material Adverse Effect on the Company, and the Company and its
Subsidiaries do not have any liabilities or obligations with respect to any such
employee benefit plans, whether or not accrued, contingent (including any
potential material withdrawal liability with respect to any such multi-employer
plans) or otherwise, except (a) as described in any of the Company SEC Reports
or previously disclosed in writing to Parent and (b) for instances of
non-compliance transactions or liabilities or obligations that would not in the
aggregate have a Material Adverse Effect on the Company. To the Knowledge of the
Company, no employee of the Company will be entitled to any additional benefits
or any acceleration of the time of payment or vesting of any benefits under any
employee incentive or benefit plan, program or arrangement as a result of the
transactions contemplated by this Agreement. The Company has previously made
available to Parent a true and correct copy of the Company's 401(k) plan and the
Form 5500 and the audit report (which fairly represents, in all material
respects, the financial condition and results of operations of such plan)
related thereto. The Company and its Subsidiaries do not maintain any employee
benefit pension plan which is subject to Title IV of ERISA. The Company's 401(k)
Plan is exempt from federal income taxation under Section 501 of the Code, and,
to the Knowledge of the Company, nothing has occurred with respect to the
operation of such plan which could cause the loss of such qualification or
exemption or the imposition of any lien, penalty, or tax under ERISA or the Code
which would in the aggregate have a Material Adverse Effect on the Company, and
the Company and its Subsidiaries have not received any material adverse notice
concerning the 401(k) plan from the Internal Revenue Service, the Department of
Labor or the Pension Benefit Guaranty Corporation ("PBGC") within the four years
preceding the date of this Agreement. None of the Company nor any Subsidiary has
incurred any outstanding liability under Section 4062 of ERISA to the PBGC, to a
trust established under Section 4041 or 4042 of ERISA, or to a trustee appointed
under Section 4042 of ERISA, except for such liabilities as would not in the
aggregate have a Material Adverse Effect on the Company. None of the Company's
employee benefit plans contain any provisions which would prohibit the
transactions contemplated by this Agreement. As of the Closing Date, no payment
that is owed or may become due any director, officer, employee, or agent of the
Company or a Subsidiary will be non-deductible by the Company or any Subsidiary
by reason of Section 280G of the Code or under Section 4999 of the Code.
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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, 1998, the businesses of the Company and its Subsidiaries
have been conducted in all material respects in the ordinary course and 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,
1998, 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 Subsidiary.
Section 3.10. Investigations; Litigation. 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; and
(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.
To the Knowledge of the Company, the Company Disclosure Letter
lists all of the pending litigation of 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 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.
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).
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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 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. The Company has provided Parent with written
schedules of (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.
Section 3.14. Opinion of Financial Advisor. The Board of
Directors of the Company has received the opinion of Donaldson, Lufkin &
Jenrette Securities Corporation ("DLJ") dated the date of this Agreement, to the
effect that, as of such date, the Exchange Ratio (as defined therein) is fair to
the Company's stockholders from a financial point of view. A copy of the written
opinion of DLJ 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
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approve the Merger. 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. 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. The Company's 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.
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. 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. Neither the Company 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 the Company 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 the Company.
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.
ARTICLE IV.
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:
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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 or partnership duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation or organization, has the
corporate 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 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, claims, charges or encumbrances, 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 600,000,000 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 September 30, 1998, 248,454,892 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 September 30, 1998, 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 17,562,510
shares of Parent Common Stock pursuant to:
(a) the 1984 Incentive Stock Option Plan of Parent;
(b) the 1994 Incentive Stock Option Plan of Parent;
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(c) the 1994 Non-Qualified Stock Option Plan;
(d) the Parent Director's non-Qualified Stock Option
Plan;
(e) the 1998 Stock Incentive Plan.
(f) the Stockholders Agreement, dated April 9, 1997, by and
among Parent, Eller Media Corporation, and EM Holdings, L.L.C.;
(g) various other option agreements with officers or employees
of the Parent or the Parent's Subsidiaries, option assumption agreements, and
incentive compensation grants; and
(h) Parent's 2-5/8% Senior Convertible Notes due 2003,
convertible into Parent Common Stock.
Section 4.3. Corporate Authority Relative to this Agreement.
No Violation. Each of Parent and Merger Sub has the corporate power and
authority to enter into this Agreement, the Registration Rights Agreement dated
the date hereof between Parent and the Voting Stockholders (the "Registration
Rights Agreement" and, together with the Fund Voting Agreement, the "Ancillary
Agreements") and the Fund 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 Boards of
Directors of Parent and Merger Sub and except for the approval of the issuance
of shares of Parent Common Stock in the Merger by the holders of a majority of
the outstanding shares of Parent Common Stock actually present and voting at the
Parent Special Meeting, no other corporate or stockholder proceedings on the
part of Parent or Merger Sub are necessary to authorize this Agreement, the
Ancillary Agreements, the issuance of the Parent Common Stock and the other
transactions contemplated hereby. The Board of Directors of each of Parent and
Merger Sub has determined that the transactions contemplated by this Agreement
are advisable and in the best interest of its stockholders and 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 Merger Sub and, assuming this Agreement and the Ancillary Agreements have
been duly and validly executed and delivered by the other parties hereto, 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 and Merger Sub, enforceable against each of them in
accordance with its 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 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
"Parent Required Approvals"), no authorization, consent or approval of, or
filing
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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, by-law 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.
Section 4.4. Reports and Financial Statements. Parent has
previously made available to the Company true and complete copies of:
(a) Parent's Annual Reports on Form 10-K filed with the SEC
for each of the years ended December 31, 1996 and 1997;
(b) Parent's Quarterly Reports on Form 10-Q filed with the SEC
for the quarters ended March 31, 1998 and June 30, 1998;
(c) each definitive proxy statement filed by Parent with the
SEC since December 31, 1996;
(d) each final prospectus filed by Parent with the SEC since
December 31, 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, 1997.
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
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that the unaudited financial statements therein do not contain all of the
footnote disclosures required by GAAP). Since January 1, 1997, 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. 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.
Section 4.7. Environmental Laws and Regulations. Except as
described in any of the Parent SEC Reports, (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
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
or Severance Arrangements. Except as described in any of the Parent SEC Reports,
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 all
applicable provisions of ERISA and the Code, 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. No employee of Parent will be entitled to
any additional benefits or any acceleration of the time of payment or vesting of
any benefits under any employee incentive or benefit plan, program or
arrangement as a result of the transactions contemplated by this Agreement.
Section 4.9. Absence of Certain Changes or Events. Other than
as disclosed in the Parent SEC Reports, since June 30, 1998, the businesses of
Parent and its Subsidiaries have been conducted in all material respects in the
ordinary course and there has not been any event, occurrence, development or
state of circumstances or facts that has had a Material Adverse Effect on
Parent.
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Section 4.10. Investigations; Litigation. 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; and
(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.
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 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 a member (a "Parent 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 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. There
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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. As soon as practicable after the public announcement of the Merger
Agreement, Parent will provide the Company with written schedules of (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 knows 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. The
affirmative vote of the holders of a majority of the outstanding shares of
Parent Common Stock actually present and voting at the Parent Special Meeting
(provided that at least 50% of the outstanding shares of Parent Common Stock are
actually voted) is required to approve the issuance of Parent Common Stock in
the Merger. 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 Exchange Ratio (as defined therein) 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. 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.
Section 4.17. Real Property; Title. Parent has 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.
Section 4.18. Collective Bargaining Agreements and Labor.
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
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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. 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.
ARTICLE V.
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 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, except for the
payment of stay bonuses as provided in Section 5.1(a)(vi) hereof, with any of
their respective directors or executive officers;
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(vi) shall not, other than in the ordinary course of business
consistent in all material respects with past practice and other than agreements
with respect to the payment of reasonable stay bonuses, enter into any new
written material employment, consulting or salary continuation agreements with
any officers or directors or any employees whose employment agreements provide
for an annual base salary in excess of $150,000 and have a term in excess of one
year ("Key Employees"), or, other than increases in the ordinary course of
business, grant any material increases in the compensation or benefits to
officers, directors, and Key Employees;
(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, any merger, consolidation or business
combination, any acquisition of a material amount of assets or securities, any
disposition of assets or securities or any release or relinquishment of any
material contract rights not in the ordinary course of business, except for (A)
acquisitions previously disclosed in the Company Disclosure Letter and (B)
acquisitions for cash within the scope of or related to the Company's existing
business in which the aggregate consideration is less than the sum of (x) fifty
million dollars ($50,000,000), (y) the monthly increase in the Company's
Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA")
multiplied by 2.5, provided, that pro forma EBITDA is in excess of two hundred
and seventy one million dollars ($271,000,000) for the trailing twelve (12)
month period and (z) ten percent (10%) of the total proceeds of any equity share
capital issued by Parent, in each case which would not materially delay or
impair the ability of the Company to perform its obligations under this
Agreement;
(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 Plans (as defined in Section 5.7), the Company Warrants,
the LYONs, any other agreement or arrangement referred to in Section 3.2 or 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 June
30, 1998, except as contemplated herein;
(x) except as consistent with past practice but, in any event,
not in an amount in excess of 316,667 shares of Company Common Stock in the
aggregate, and except for rights to participate in the Company Employee Stock
Purchase Plan, 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, provided, that, the Company shall
not acquire shares of Company Common Stock except for such purchases by the
Company made in connection with the Company's 401(k) plan;
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(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 or redeem any shares of its stock;
(xii) shall not, and shall not permit any of its Subsidiaries
to amend in any significant respect the terms of their respective employee
benefit plans, programs or arrangements in existence on the date hereof, or
adopt any new employee benefit plans, programs or arrangements except (A) that
the Company may amend any annual incentive plan existing on the date hereof to
provide for prorated incentive bonus awards related to performance for the
period ending on the Closing Date consistent with the target for any such annual
incentive plan for 1998, and (B) in the ordinary course of business, 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 in any material respect its Revolving Credit Agreement or enter into
any loan agreement as borrower, or, except as consistent with past practice, as
lender;
(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, except for any contract involving sports broadcast
rights;
(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, buy, sell or trade any equity security of Parent including,
without limitation, entering into any put, call, option, swap, collar or any
other derivative transaction which has a similar economic effect; 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 III hereof untrue or incorrect.
(b) The Parent:
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(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 SEC or required by GAAP;
(vi) shall not, and shall not permit any of its Subsidiaries
to, buy, sell or trade any equity security of Parent including, without
limitation, entering into any put, call, option, swap, collar or any other
derivative transaction which has a similar economic effect; and
(vii) 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 (vi) or take any action which would make any
representation or warranty in Article IV hereof untrue or incorrect.
Section 5.2. Proxy Material; Registration Statement.
(a) The Company and the Parent will as promptly as practicable
following the date of this Agreement, 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").
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(b) Parent will as promptly as practicable following the date
of this Agreement, prepare and file with the SEC a registration statement of the
Parent on Form S-4 (such registration statement together with all and any
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 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 the 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
as soon as practicable for the 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, and in the case of
Parent, approving the issuance of shares of Parent Common Stock to the
stockholders of the Company in the Merger, by the holders of, in the case of the
Company, a majority of the outstanding shares of Company Common Stock and, in
the case of Parent, a majority of the outstanding shares of Parent Common Stock
actually present and voting (the "Company Stockholder Approval" and the "Parent
Stockholder Approval," as the case may be). Parent and the Company agree to use
their reasonable efforts to cause the Special Meetings to occur within
forty-five (45) days after the date on which the Registration Statement becomes
effective. 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, in the case of the Company, subject to the right to
change such recommendation or terminate this Agreement following receipt of a
Superior Proposal as defined in Section 5.10.
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:
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(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 and such other
stock exchanges as shall be agreed upon 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;
(iii) cooperate with one another in order to lift any
injunctions or remove any other impediment to the consummation of the
transactions contemplated herein; and
(iv) 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.
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 8.3 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
Agreement, dated August 24, 1998, between the Parent and the Company or the
Confidentiality Agreement dated October 7, 1998
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between the Company and Parent, as the case may be (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 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.
Section 5.7. Rights Under Stock Plans.
(a) Stock Options and Stock Appreciation Rights. Each
outstanding option to purchase shares of Company Common Stock ("Option") and
each outstanding stock appreciation right relating to appreciation in the value
of a share of Company Common Stock ("SAR") granted under the Company's 1993
Stock Option Plan, the Non-Employee Director Stock Option Agreements, the 1997
Long-Term Incentive Plan or the 1997 Non-Employee Director Stock Plan (the
"Company Stock Plans"), which is outstanding immediately prior to the Effective
Time, whether or not then exercisable, shall, if necessary, accelerate and
become exercisable one (1) day prior to the Effective Time. The Option or SAR,
as the case may be, shall be assumed by Parent and deemed to constitute (A) with
respect to each Option, an option 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 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
number of shares of Parent Common Stock deemed purchasable pursuant to such
assumed Option and (B) with respect to each SAR, a stock appreciation right,
having 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 to such SAR immediately prior to the Effective
Time, with respect to the number of shares of Parent Common Stock that a holder
of a number of shares of Company Common Stock equal to the number of such shares
subject to such SAR immediately prior to the Effective Time would have been
entitled to receive pursuant to the Merger, at an exercise price per share equal
to (x) the aggregate exercise price for Company Common Stock subject to such SAR
divided by (y) the number of shares of Parent Common Stock to which such assumed
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SAR relates; provided, that each such assumed Option and SAR shall, immediately
following the Effective Time, become and be immediately exercisable in full and
shall remain exercisable until the expiration of its term; and provided,
further, that the number of shares of Parent Common Stock that may be purchased
upon exercise of any such assumed Option or that shall be subject to any such
assumed SAR shall not include any fractional share and, upon exercise of such
assumed Option or SAR, 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 Plans. 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) Stock Units. Prior to or at the Effective Time, the
Company shall transfer to each participant in the Company's Executive Stock Unit
Plan (the "SUP") and to each holder of a Stock Unit under a Non-Employee
Director Stock Unit Agreement (a "Stock Unit Agreement") a number of shares of
Company Common Stock equal to the number of Stock Units (within the meaning of
the SUP or Stock Unit Agreement, respectively) then credited to a Stock Unit
Account (within the meaning of the SUP or Stock Unit Agreement, respectively)
maintained for the benefit of such participant or holder of such Stock Unit,
less any shares withheld by the Company to satisfy federal, state and local tax
obligations required by law to be withheld with respect to any grant, exercise
or payment made (excluding any Stock Unit that has prior to such time been
converted to cash or paid out in shares of Common Stock). Each share so
transferred shall be converted into the Merger Consideration in accordance with
Section 2.3 hereof.
(c) Reservation and Registration of Shares. 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. Within three Business Days after the Effective
Time, Parent shall use its best 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 best efforts to cause the effectiveness of such registration
statement (and current status of the prospectus or prospectuses contained
therein) to be maintained for so long as such Options remain outstanding.
(d) Stock Purchase Plan. The Company shall take such action as
is necessary to cause the ending date of the then current offering period under
the Company's Employee Stock Purchase Plan to be immediately following the last
anticipated payroll date occurring prior to the Effective Time (the "Final
Purchase Date"). On the Final Purchase Date, the Company shall apply the funds
credited as of such date under such plan within each participant's payroll
withholding account to the purchase of whole shares of Company Common Stock in
accordance with the terms of such Company employee stock purchase plan. Any cash
balance remaining in a participant's account which is insufficient to purchase
an additional whole share of Company Common Stock shall be refunded to such
participant as soon as practicable following the Final Purchase Date. Each share
of Company Common Stock so purchased shall be converted into the Merger
Consideration in accordance with Section 2.3 hereof.
Section 5.8. Filings; Other Action.
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(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.
(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 ("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; (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 and (C) amend or terminate such existing
licenses or other intellectual property agreements and to enter into such new
licenses or other intellectual property agreements (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) or (C), if such action is likely to be necessary for the purpose of
avoiding or preventing any action 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
deadline specified in Section 7.1(b) hereof; (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
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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 deadline specified in Section 7.1 (b); (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, 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 hereunder by the Company. 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. 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 to the
transactions contemplated hereunder, to take any action which arises from a
material change in the Communications Act, or in the policies of the FCC in
implementing or enforcing the Communications Act, which action if taken would
have a Material Adverse Effect on the combined consolidated businesses, assets
or operations of Parent and Company, then neither Parent nor the Company shall
be required to take such action and no failure by either Parent or the Company
to take such actions shall be deemed a breach of this Section 5.8 or of any
other provisions of this Agreement.
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. 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 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
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 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 or entity that makes an unsolicited bona fide
proposal to enter into a business combination with the Company pursuant to an
Acquisition Proposal which the Company's Board of Directors determines in good
faith is more favorable from a financial point
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of view to the Company's stockholders than the transactions contemplated by this
Agreement (a "Superior Proposal") so long as prior to furnishing such
information to, or entering into discussions or negotiations with, such a person
or entity, 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 or entity from whom the Company has
received an executed confidentiality agreement in form and substance similar to
the Confidentiality Agreements. The Company shall notify Parent orally and in
writing of the fact that it received inquiries, offers or proposals with respect
to an Acquisition Proposal, within 24 hours after the Company obtains Knowledge
of the receipt thereof, and shall give Parent five (5) business days' advance
notice (which notice shall include the terms and conditions of such proposal) of
any agreement to be entered into with, or any information supplied to, any
person or entity making such inquiry, offer or proposal. Nothing contained
herein shall prohibit the Company from disclosing to its shareholders the
statement required by Rule 14e-2(a) under the Exchange Act with respect to an
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 Acquisition Proposal. Except in connection with a
Superior Proposal, the Company agrees to enforce and not to waive or release any
confidentiality agreements which any persons have entered into with the Company.
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 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 and
the Company's By-laws 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 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");
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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 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, directors
or employees of the Company or any of its Subsidiaries, and the heirs,
executors, trustees, fiduciaries and administrators of such officers, directors
or employees (collectively, the "Indemnitees") against all losses, Expenses (as
hereinafter defined), claims, damages, liabilities, 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, officer or employee 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
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
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 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, "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
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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 Expenses to any Indemnitee incurred enforcing the indemnity or
other obligations provided for in this Section 5.11.
Section 5.12. Accountants' "Comfort" Letters. The Company and
Parent will each use reasonable best 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. The Company and Parent shall
each 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 and 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 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
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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 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. 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) Until December 31, 1999, the Surviving Corporation and its
Subsidiaries will continue to provide to current and former employees of the
Company or its Subsidiaries (excluding employees covered by collective
bargaining agreements) the employee compensation, benefit plans, severance
benefits, programs, policies and arrangements, that are currently being provided
by the Company and its Subsidiaries to such employees and former employees.
Furthermore, the Company's 401(k) plan shall not thereafter be merged into
Parent's 401(k) plan nor shall Parent's 401(k) plan be merged into the Company's
401(k) plan unless and until a closing agreement has been entered into with the
Internal Revenue Service providing that Parent's 401(k) plan qualifies under
Section 401(a) of the Code through the date of such closing agreement. Nothing
in this Section 5.17(b) shall be deemed to prevent the Surviving Corporation or
any of its Subsidiaries from making any change required by law.
(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
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they become participants for purposes of eligibility, vesting and benefit
accrual including, without limitation, for purposes of determining (i)
short-term and long-term disability benefits; (ii) severance benefits; (iii)
vacation benefits; and (iv) benefits under any retirement plan
(d) This Section 5.17, which shall survive the consummation of
the Merger at the Effective Time and shall continue without limit, is intended
to benefit and bind the Company, Parent, the Surviving Corporation and any
person or entity referenced in this Section 5.17, each of whom may enforce the
provisions of this Section 5.17 (whether or not parties to this Agreement).
ARTICLE VI.
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:
(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. This Agreement shall have been
approved by the requisite affirmative vote of the stockholders of the Company in
accordance with the Company's Certificate of Incorporation, as amended, and the
DGCL. The issuance of Parent Common Stock in the Merger shall have been approved
by the requisite affirmative vote of the stockholders of Parent.
(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. No action or proceeding (other than any action or
proceeding pursuant to or in connection with the Antitrust Laws) by any
Governmental Entity shall have been commenced (and be pending), or, to the
knowledge of the parties hereto, threatened, against the Company or Parent or
any of their respective affiliates, partners, associates, officers or directors,
or any officers or directors of such partners, seeking to prevent or delay the
transactions contemplated hereby or challenging any of the terms of provisions
of this Agreement or seeking material damages in connection therewith.
(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.
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(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.
(g) Stock Exchange Listing. The shares of Parent Common Stock
to be issued in the Merger 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 an opinion of its tax counsel, Cleary, Gottlieb, Steen & Hamilton, and
Akin, Gump, Strauss, Hauer & Feld, L.L.P., respectively, in form and substance
reasonably satisfactory to it, and dated on or about the Closing Date, to the
effect that, on the basis of the facts, representations and assumptions set
forth in such opinions which are consistent with the state of the facts existing
at the Closing Date, 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 except to the
extent they receive cash in lieu of fractional shares of Parent Common Stock. In
rendering such opinions, Cleary, Gottlieb, Steen & Hamilton and Akin, Gump,
Strauss, Hauer & Feld, L.L.P. may require and rely as to factual matters,
exclusively and without independent verification, upon representations and
covenants of officers of the Company and Parent substantially in the form of
Exhibits A and B.
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) Company Representations and Warranties. The
representations and warranties of the Company contained herein shall be true and
correct in all respects as of the Effective Time with the same effect as though
made as of the Effective Time except for such exceptions and qualifications
which, in the aggregate, for all such representations and warranties would not
have a Material Adverse Effect on the Company and except (i) for changes
specifically permitted by the terms of this Agreement and (ii) that the accuracy
of representations and warranties that by their terms speak as of the date of
this Agreement or some other date will be determined as of such date.
(b) The Company shall have performed in all material respects
all material obligations and complied in all material respects with all material
agreements and covenants required by this Agreement to be performed or complied
with by it prior to the Effective Time.
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(c) The Company shall have delivered to Parent a certificate,
dated the Effective Time and signed by its Chief Executive Officer, Chief
Financial Officer or a Senior Vice President, certifying to both such effects.
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) Parent and Merger Sub Representations and Warranties. The
representations and warranties of Parent and Merger Sub contained herein shall
be true and correct in all respects as of the Effective Time with the same
effect as though made as of the Effective Time except for such exceptions and
qualifications which, in the aggregate, for all such representations and
warranties would not have a Material Adverse Effect on Parent and except (i) for
changes specifically permitted by the terms of this Agreement and (ii) that the
accuracy of representations and warranties that by their terms speak as of the
date of this Agreement or some other date will be determined as of such date.
(b) Parent shall have performed in all material respects all
material obligations and complied in all material respects with all material
agreements and covenants required by this Agreement to be performed or complied
with by it prior to the Effective Time.
(c) Parent shall have delivered to the Company a certificate,
dated the Effective Time and signed by its Chief Executive Officer, Chief
Financial Officer or a Senior Vice President, certifying to both such effects.
ARTICLE VII.
TERMINATION, AMENDMENT AND WAIVER
Section 7.1. Termination. This Agreement may be terminated at
any time prior to the Effective Time, whether before or after approval by the
shareholders of the Company or of Parent:
(a) by mutual written consent of Parent and the Company, if
the Board of Directors of each so determines by the affirmative vote of a
majority of the members its entire Board of Directors;
(b) by Parent (provided that Parent is not then in material
breach of any representation, warranty, covenant or other agreement contained
herein), upon a breach of any representation, warranty, covenant or agreement on
the part of the Company set forth in this Agreement, or if any representation or
warranty of the Company shall have become untrue, in either case continuing ten
(10) days following notice to the Company of such breach or untruth and of a
nature such that the conditions set forth in Section 6.2(a) or Section 6.2(b),
as the case may be, would be incapable of being satisfied by October 8, 1999;
provided that, in any case, a willful breach
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shall be deemed to cause such conditions to be incapable of being satisfied for
purposes of this Section 7.1(b).
(c) by the Company (provided that the Company is not then in
material breach of any representation, warranty, covenant or other agreement
contained herein), upon a breach of any representation, warranty, covenant or
agreement on the part of Parent or Merger Sub set forth in this Agreement, or if
any representation or warranty of Parent or Merger Sub shall have become untrue,
in either case continuing ten (10) days following notice to Parent of such
breach or untruth and of a nature such that the conditions set forth in Section
6.3(a) or Section 6.3(b), as the case may be, would be incapable of being
satisfied by October 8, 1999; provided that, in any case a willful breach shall
be deemed to cause such conditions to be incapable of being satisfied for
purposes of this Section 7.1(c);
(d) by either Parent or the Company (provided that the party
seeking to so terminate this Agreement is not then in material breach of Section
5.4(a)(iii) or 5.8) if any Governmental Entity shall have issued an order,
decree or ruling or taken any other action permanently enjoining, restraining or
otherwise prohibiting the consummation of the Merger and such order, decree or
filing or other action shall have become final and nonappealable;
(e) by either Parent or the Company, if the Merger shall not
have occurred by October 8, 1999, unless the failure to consummate the Merger is
the result of a breach of covenant set forth in this Agreement or material
breach of any representation or warranty set forth in this Agreement by the
party seeking to terminate this Agreement;
(f) by either Parent or the Company (provided that if the
terminating party is the Company, the Company shall not be in material breach of
any of its obligations hereunder) if any approval of the shareholders of the
Company required for the consummation of the Merger shall not have been obtained
by reason of the failure to obtain the required vote at the Company Special
Meeting or at any adjournment or postponement thereof;
(g) by either Parent or the Company (provided that if the
terminating party is Parent, Parent shall not be in material breach of any of
its obligations hereunder) if any approval of the shareholders of Parent
required for the consummation of the Merger shall not have been obtained by
reason of the failure to obtain the required vote at the Parent Special Meeting
or at any adjournment or postponement thereof;
(h) by the Company, if, prior to approval of the Merger by its
shareholders, a Superior Proposal has been made; provided, however, that before
the Company may terminate this Agreement pursuant to this subsection 7.1(h), the
Company shall give notice to Parent of the proposed termination under subsection
7.1(h) (which notice may be the notice provided under Section 5.10) and Parent,
within five (5) days of receipt of such notice, shall have the right, in its
sole discretion, to offer to amend this Agreement to provide for terms
substantially similar to those of the Superior Proposal and the Company shall
negotiate in good faith with Parent with respect to such proposed amendment;
provided, further, that if Parent and the Company are unable to reach an
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agreement with respect to the Parent's proposed amendment within such five (5)
day period, the Company may terminate this Agreement pursuant to this subsection
7.1(h);
(i) by Parent, if the Board of Directors of the Company (i)
withdraws or modifies adversely its recommendation of the Merger, (ii)
recommends an Acquisition Proposal to Company shareholders or (iii) fails to
call or hold the Company Special Meeting by reason of the receipt by the Company
of an Acquisition Proposal; provided, that the parties agree that disclosure
made by the Company regarding an Acquisition Proposal shall not, unless
expressly stated, be treated as or deemed to be a withdrawal or adverse
modification of any favorable recommendation of the Merger by the Board of
Directors of the Company;
(j) by the Company upon notice to Parent, authorized by the
Board of Directors of the Company and delivered to Parent on one of the two
trading days prior to the Closing Date if the Average Closing Price is less than
or equal to $37.50 (the "Walk-Away Price"); or
(k) by the Company upon notice to Parent, authorized by the
Board of Directors of the Company and delivered to Parent at any time, if for a
twenty-five (25) consecutive trading day period commencing after the date of
this Agreement and ending within 5 trading days of such notice the average of
the closing prices for Parent Common Stock on the NYSE Composite Transaction
Tape (as reported in The Wall Street Journal or, if not reported thereby, any
other authoritative source) is less than or equal to the Walk-Away Price.
Section 7.2. Effect of Termination. In the event of
termination of this Agreement by either the Company or Parent as provided in
Section 7.1, this Agreement shall forthwith become void and have no effect,
without any liability or obligation on the part of Parent, Sub or the Company or
their respective officers or directors, except as set forth in the last sentence
of Section 5.5, Section 7.5 and Article VIII which shall survive termination and
except to the extent that such termination results from the breach by a party of
any of its representations, warranties, covenants or agreements set forth in
this Agreement.
Section 7.3. Amendment. This Agreement may be amended by the
parties at any time before or after approval hereof by the shareholders of the
Company and Parent; provided, however, that after such shareholder approval
there shall not be made any amendment that by law requires further approval by
the shareholders of the Company or Parent without the further approval of such
shareholders. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties.
Section 7.4. 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 7.3, 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
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assert any of its rights under this Agreement or otherwise shall not constitute
a waiver of those rights.
Section 7.5. Termination Fee. (a) In the event (i) the Company
terminates this Agreement pursuant to Section 7.1(h) or (ii) Parent terminates
this Agreement pursuant to Section 7.1(i), then the Company shall pay Parent an
amount equal to One Hundred Fifteen Million Dollars ($115,000,000) (the
"Termination Fee") by wire transfer of immediately available funds upon the
occurrence of such event, and as a condition to termination in the case of
termination pursuant to Section 7.1(h).
(b) In the event (i) Company Stockholder Approval is not
received, (ii) prior to the Company Special Meeting there shall have been an
Acquisition Proposal made and (iii) within six (6) months from the termination
of the Agreement, the Company shall have entered into an agreement for, and
within eighteen (18) months from such termination shall have consummated, a
transaction substantially in the form proposed in such Acquisition Proposal with
the party that made such Acquisition Proposal, then the Company shall pay Parent
an amount equal to the Termination Fee by wire transfer of immediately available
funds, payable upon consummation of such transaction. .
(c) The Company agrees that the agreements contained in this
Section 7.5 are an integral part of the transactions contemplated by this
Agreement.
(d) The payment by the Company of the Termination Fee
pursuant to the preceding sentence, shall be Parent's and Merger Sub's exclusive
remedy against the Company other than for a willful breach by the Company of
Section 5.10.
Section 7.6. 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 7.3 or an extension or waiver pursuant to Section 7.4 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.
ARTICLE VIII.
GENERAL PROVISIONS
Section 8.1. Nonsurvival of Representations. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time. This Section 8.1
shall not limit any covenant or agreement of the parties which by its terms
contemplates performance after the Effective Time.
Section 8.2. Notices. All notices, requests, claims, demands
and other communications under this Agreement shall be in writing and shall be
deemed given if delivered
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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:
Jacor Communications, Inc.
50 E. RiverCenter Blvd.
Suite 1200
Covington, KY 41011
Attention: Randy Michaels
Facsimile No.: (606) 655-9354
with a copy to:
Graydon Head & Ritchey
511 Walnut Street
1900 Fifth Third Center
Cincinnati, OH 45202
Attention: Richard G. Schmalzl
Facsimile No.: (513) 651-3836
and to:
Cleary, Gottlieb, Steen & Hamilton
One Liberty Plaza
New York, New York 10006
Attention: William A. Groll
Facsimile No.: (212) 225-3999
(b) if to Parent or Merger Sub, to:
Clear Channel Communications, Inc.
200 Concord Plaza
Suite 600
San Antonio, Texas 78216
Attention: Randall Mays
Facsimile No.: (210) 822-2299
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with a copy to:
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
1700 Pacific Avenue
Suite 4100
Dallas, Texas 75201
Attention: Ford Lacy, P.C.
Facsimile No.: (214) 969-4343
Section 8.3. Definitions. For purposes of this Agreement:
(a) "Acquisition Proposal" means any proposal (whether or not
in writing and whether or not delivered to the Company's shareholders generally)
for a merger, consolidation, liquidation, reorganization, tender offer or other
business combination involving the Company or any proposal or offer to acquire
in any manner, directly or indirectly, at least 50% of the voting securities of,
or all or substantially all of the assets of, the Company or any of its
subsidiaries, other than the transactions contemplated by this Agreement.
(b) "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.
(c) "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.
(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) "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.
(f) "Knowledge", "Know" or "Known" means, with respect to the
matter in question, if any of the executive officers of the Company or Parent,
listed on Schedule 8.3(g) hereof, as the case may be, has actual knowledge of
such matter.
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(g) "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.
(h) "Material Adverse Change" or "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, excluding any such adverse change
that is due to (i) any sales or dispositions or other actions pursuant to
Section 5.8 or (ii) the announcement or anticipated consummation of the
transactions contemplated by this Agreement.
(i) "Person" means any natural person, firm, individual,
business trust, trust, association, corporation, partnership, joint venture,
company, unincorporated entity or Governmental Entity.
(j) "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.
(k) "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, workers' compensation, unemployment compensation, or net worth,
and taxes or other charges in the nature of excise, withholding, ad valorem or
value added.
(l) "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.
(m) "Warrant Agreements" shall mean the agreements between the
Company and Keycorp Shareholder Services Inc. dated September 18, 1996 and
February 27, 1997.
Section 8.4. 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
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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 8.5. 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 II and Sections 5.7, 5.11 and 5.17, is
not intended to confer upon any person other than the parties any rights or
remedies hereunder.
Section 8.6. 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 8.7. 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 8.8. 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 Delaware or in Delaware 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 Delaware
or any Delaware 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 Delaware.
Section 8.9. 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 8.10. 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
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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 8.11. Finders or Brokers. Except for DLJ and Equity
Group Investments, Inc., with respect to the Company, and SSB, with respect to
Parent, a copy of whose engagement agreements have been provided by the Company
and Parent to the other, neither the Company nor Parent nor any of their
respective Subsidiaries has employed any investment banker, broker, finder or
intermediary in connection with the transactions contemplated hereby who might
be entitled to any fee or any commission in connection with or upon consummation
of the Merger.
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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 MAYS
-------------------------------
Name: Randall Mays
Title: Chief Financial Officer
CCU MERGER SUB, INC.
By: /s/ RANDALL MAYS
-------------------------------
Name: Randall Mays
Title: Chief Financial Officer
JACOR COMMUNICATIONS, INC.
By: /s/ R. CHRISTOPHER WEBER
-------------------------------
Name: R. Christopher Weber
Title: Chief Financial Officer
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EXHIBIT 99.1
[CLEAR CHANNEL COMMUNICATIONS, INC. LETTERHEAD]
CLEAR CHANNEL COMMUNICATIONS, INC.
Houston Lane, VP - Finance
210.822.2828
JACOR COMMUNICATIONS, INC.
Pam Taylor, SVP, Communications
606.655.6523
CLEAR CHANNEL AND JACOR TO MERGE
SAN ANTONIO, TX AND COVINGTON, KY, OCTOBER 8, 1998: Clear Channel
Communications, Inc. (NYSE: CCU) and Jacor Communications, Inc. (Nasdaq: JCOR)
announced today the signing of a definitive merger agreement for a tax-free,
stock-for-stock transaction. Based upon the closing price of the Clear Channel
common stock of $37.00 on Wednesday, October 7, 1998, the merger is valued at
approximately $4.4 billion (including the assumption of Jacor's debt).
Upon completion of the merger, the combined entity will be the country's second
largest radio company in terms of radio stations and third largest ranked by
total radio revenue as well as the world's largest out-of-home advertising
company. The combined company will own and/or operate 454 radio stations in 101
domestic markets. In total the combined company will have operations in 117
domestic markets. (See attached list of the combined company's domestic
operations.)
In the merger, each share of Jacor common stock will be converted into Clear
Channel common stock, based upon the average closing price of Clear Channel
common stock during the 25 consecutive trading days ending on the second trading
day prior to the closing date, as follows:
<TABLE>
<CAPTION>
AVERAGE CLOSING PRICE CONVERSION
OF CLEAR CHANNEL STOCK NUMBER
<S> <C>
Less than or equal to $42.86................................1.400
Above $42.86 but less than or equal to $44.44.....1.400 to 1.350 ($60.00 in value)
Above $44.44 but less than $50.00...........................1.350
</TABLE>
If the average closing price is $50.00 or more, the Conversion Number will be
calculated as the quotient obtained by dividing (A) $67.50 plus the product of
$.675 and the amount by which the average closing price exceeds $50.00, by (B)
the average closing price.
Based upon the October 7, 1998 closing price of Clear Channel common stock, each
Jacor share of common stock would be converted into 1.4 shares of Clear Channel
common stock. This represents a 29% premium over the Jacor closing price of
$40.125. Upon completion of the merger, Jacor stockholders will own
approximately 25% of the combined company, based on the number of shares of
Clear Channel common stock currently outstanding.
2
The Board of Directors of both Clear Channel and Jacor have approved the merger.
As part of this transaction, the Zell/Chilmark Fund L.P., Jacor's largest
stockholder owning approximately 27% of Jacor's outstanding common stock, and
members of the Mays family owning approximately 15% of Clear Channel's common
stock, have committed to vote their shares in favor of this transaction.
Completion of the merger is subject to customary closing conditions including
regulatory approvals and stockholder approvals by both companies shareholders.
Clear Channel and Jacor expect to close the merger by September 30, 1999. It is
anticipated that the merger will be immediately accretive to Clear Channel's
after tax cash flow.
Jacor will operate as a separate subsidiary of Clear Channel and no significant
changes are expected to its operations. Randy Michaels will continue as Jacor's
Chief Executive Officer and Bobby Lawrence will continue as Jacor's President
together with the continued participation of the Jacor management.
Lowry Mays, Chief Executive Officer of Clear Channel, stated, "I am excited
about our merger with such an outstanding broadcasting company as Jacor. This
transaction is financially attractive, strategically compelling and
operationally complementary. The combination of our radio assets, coupled with
the overlap with our outdoor operations, creates and provides an outstanding
platform for future growth that will benefit the stockholders, advertisers and
employees of both companies. Randy Michaels and his talented team will be a
significant asset to Clear Channel and we welcome them to our family."
Said Michaels, "This is an exciting time for Jacor. Combining Jacor's
outstanding radio stations, programmers, network and sticks with Clear
Channel's strong and diversified radio, television and outdoor operation
creates a media powerhouse. There's a tremendous amount of synergy created by
this merger, and the beauty is it flows both ways. Under the Clear Channel
umbrella, we will continue to acquire strong stations, develop the stick
portfolio and produce state of the art programming through our brand management
team. This business combination will further enhance Premiere Radio Networks
which recently took the #1 network rank in the Summer "RADAR" survey. Clear
Channel has been an outstanding performer in our industry for many years and
we're excited about joining such a high quality operation. And now, finally, we
can put all the rumors to rest and get busy running radio stations."
Salomon Smith Barney acted as financial advisor to Clear Channel for the
merger. Donaldson, Lufkin & Jenrette Securities Corporation acted as financial
advisor to Jacor.
Clear Channel Communications, Inc. is a global diversified media company.
Including pending acquisitions, the Company operates, or is affiliated with, 625
radio stations, 19 television stations and approximately 220,000 outdoor
advertising displays in 25 countries worldwide. The Company also owns 29% of
Heftel Broadcasting Corporation (NASDAQ:HBCCA), the largest Spanish-language
radio broadcaster in the U.S.
Jacor is the nation's second largest radio company measured by total stations.
Including announced pending acquisitions, Jacor now owns, operates or represents
230 radio stations in 55 broadcast areas and WKRC-TV in Cincinnati.
Additionally, Jacor and its wholly owned subsidiary Premiere Radio Networks
combine to form the third largest provider of syndicated radio programming in
the country, syndicating the nation's leading radio talk shows which include The
Rush Limbaugh Show, The Dr. Laura Schlessinger Show, Dr. Dean Edell and Art
Bell's overnight programs, "Dreamland" and "Coast to Coast." Jacor also owns NSN
Network Services, a satellite systems integration company that provides design,
communications technology and support to establish and maintain global satellite
connectivity to companies worldwide. Jacor plans to pursue growth through
continued acquisitions of complementary radio stations in existing broadcast
locations, and radio groups or individual stations with significant presence in
other attractive domestic and international locations. Additionally, Jacor plans
to grow in other broadcast related products and businesses.