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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
PAGE
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ARTICLE I.
THE MERGER
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
Section 3.17. Real Property; Title . . . . . . . . . . . . . . . . . . .15
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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
Section 5.12. Accountants' "Comfort" Letters . . . . . . . . . . . . . .34
Section 5.13. Additional Reports . . . . . . . . . . . . . . . . . . . .34
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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
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A Form of Company Tax Opinion Representation Letter
B Form of Parent Tax Opinion Representation Letter
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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:
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,
(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
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(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 such
number of shares of Parent Common Stock issuable to holders of Company Common
Stock
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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 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).
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(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 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
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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 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
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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 are no existing options, rights of first refusal,
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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
(n) a non-qualified stock option for 100,000 shares.
-9-
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 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
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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.
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)
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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.
-12-
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.
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
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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).
SECTION 3.13. TAX MATTERS.
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(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 approve the Merger. No other vote of the
stockholders of the Company is required by law or
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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:
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
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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;
(c) the 1994 Non-Qualified Stock Option Plan;
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(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 that the unaudited financial
statements therein do not contain all of the
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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,
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occurrence, development or state of circumstances or facts that has had a
Material Adverse Effect on Parent.
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
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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 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.
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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 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;
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(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;
(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
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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;
(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
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(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:
(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
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Statement (as hereinafter defined) and a form of proxy, in connection with
the vote of each of the Company's and the Parent's stockholders with respect
to the matters contemplated hereby (such proxy statement/prospectus, together
with any amendments thereof or supplements thereto, in each case in the form
or forms mailed to the Company's and the Parent's stockholders, is herein
called the "JOINT PROXY STATEMENT").
(b) Parent will 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.
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SECTION 5.4. APPROVALS AND CONSENTS; COOPERATION.
(a) The Company and Parent shall together, or pursuant to an
allocation of responsibility to be agreed upon between them:
(i) as soon as is reasonably practicable take all such action as
may be required under state blue sky or securities laws in connection with
the transactions contemplated by this Agreement;
(ii) promptly prepare and file with the NYSE 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
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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
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
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(y) the number of shares of Parent Common Stock to which such assumed 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
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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.
(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,
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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 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
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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 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
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fiduciary liability insurance covering the Indemnitees who are currently
covered by the Company's existing officers' and directors' or fiduciary
liability insurance policies on terms no less advantageous to such
indemnified parties than such existing insurance; PROVIDED, HOWEVER, that
neither Parent nor the Surviving Corporation will be required in order to
maintain such policies to pay an annual premium in excess of 150% of the
greater of (i) the last annual premium paid by the Company prior to the date
of this Agreement and (ii) the annual premium for the year in which the
Closing occurs (the "CAP"); and PROVIDED, FURTHER, that, if equivalent
coverage cannot be obtained, or can be obtained only by paying an annual
premium in excess of the Cap, then Parent shall, or shall cause the Surviving
Corporation to, maintain policies that, in Parent's good faith judgment,
provide the maximum coverage available at an annual premium equal to the Cap.
(c) In addition to the other rights provided for in this Section
5.11 and not in limitation thereof, for six 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.
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(d) Notwithstanding any other provisions hereof, the obligations
of the Company, the Surviving Corporation and Parent contained in this
Section 5.11 shall be binding upon the successors and assigns of Parent and
the Surviving Corporation. In the event the Company or the Surviving
Corporation or any of their respective successors or assigns (i) consolidates
with or merges into any other Person or (ii) transfers all or substantially
all of its properties or assets to any Person, then, and in each case, proper
provision shall be made so that successors and assigns of the Company or the
Surviving Corporation, as the case may be, honor the indemnification
obligations set forth in this Section 5.11.
(e) The obligations of the Company, the Surviving Corporation,
and Parent under this Section 5.11 shall survive the consummation of the
Merger and shall not be terminated or modified in such a manner as to
adversely affect any Indemnitee to whom this Section 5.11 applies without the
consent of such affected Indemnitee (it being expressly agreed that the
Indemnitees to whom this Section 5.11 applies shall be third party
beneficiaries of this Section 5.11, each of whom may enforce the provisions
of this Section 5.11).
(f) Parent shall, and shall cause the Surviving Corporation to,
advance all 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).
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SECTION 5.14. PLAN OF REORGANIZATION. This Agreement is intended
to constitute a "plan of reorganization" within the meaning of Section
1.368-2(g) of the income tax regulations promulgated under the Code. From and
after the date of this Agreement and until the Effective Time, each party
hereto shall use its reasonable efforts to cause the Merger to qualify, and
will not knowingly take any actions or cause any actions to be taken which
could prevent the Merger from qualifying, as a reorganization under the
provisions of Section 368(a) of the Code. Following the Effective Time,
neither the Surviving Corporation, Parent nor any of their affiliates shall
knowingly take any action or knowingly cause any action to be taken which
would cause the Merger to fail to qualify as a reorganization under Section
368(a) of the Code.
SECTION 5.15. CONVEYANCE TAXES. Each of Parent and the Company,
respectively, shall timely pay any real property transfer or gains, sales,
use, transfer, value added, stock transfer and stamp taxes, any transfer,
recording, registration and other fees, and any similar taxes or fees not
including any income tax, gross receipt tax or any similar tax measured with
respect to gross or net income (collectively, the "CONVEYANCE TAXES") imposed
on it at or prior to the Effective Time in connection with the transactions
contemplated hereunder that are required to be paid in connection therewith.
Parent and the Company shall cooperate in the preparation, execution and
filing of all Tax Returns, questionnaires, applications, or other documents
regarding any such Conveyance Taxes.
SECTION 5.16. PUBLIC ANNOUNCEMENTS. The initial press release
relating to this Agreement shall be a joint press release mutually agreed
upon by Parent and the Company. Unless otherwise required by applicable law
or the requirements of any listing agreement with any 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
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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 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,
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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.
(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
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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.
(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:
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(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
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
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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 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,
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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 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.
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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 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
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(b) if to Parent or Merger Sub, to:
Clear Channel Communications, Inc.
200 Concord Plaza
Suite 600
San Antonio, Texas 78216
Attention: Randall Mays
Facsimile No.: (210) 822-2299
with a copy to:
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
1700 Pacific Avenue
Suite 4100
Dallas, Texas 75201
Attention: 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.
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(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.
(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.
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(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 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.
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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 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 A
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
300 Convent Street, Suite 1500
San Antonio, Texas 78205
Cleary, Gottlieb, Steen & Hamilton
One Liberty Plaza
New York, New York 10006
Dear Sirs:
On behalf of Jacor Communications, Inc. (the "Company"), the
undersigned, in connection with the opinions to be delivered by your firms
pursuant to Section 6.1(h) of the Agreement and Plan of Merger dated October
8, 1998 (the "Agreement") among Parent, Merger Sub and the Company(1),
recognizing that each of you will rely on this certificate in delivering said
opinions, hereby certifies that the descriptions of the facts contained in
the Registration Statement and the Proxy Statement completely and accurately
describe the Merger and the transactions leading up thereto and further that:
1. The Merger will be consummated solely in compliance with the
material terms and conditions of the Agreement and none of the material terms
and conditions thereof have been waived or modified.
2. The value of the Continuing Proprietary Interest (as defined
below), as of the Effective Time), will be at least 50 percent of the value,
as of the Effective Time, of the Existing Proprietary Interest (as defined
below) of the Company. For purposes of this paragraph 2:
(a) The Continuing Proprietary Interest means all of the shares of
outstanding Company Common Stock as of the Effective Time, other than shares
of
- -----------------------------
(1) For purposes of this certificate, capitalized terms used and not
otherwise defined herein shall have the meaning ascribed thereto in the
Agreement.
October X, 1998
Page 2
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Company Common Stock: (i) exchanged in the Merger for consideration other
than Parent Common Stock, but not including shares of Company Common Stock
surrendered by Parent in exchange for a direct interest in the Company, (ii)
acquired in connection with the Merger (other than in exchange for Parent
Common Stock) by Parent or by a person related to Parent (within the meaning
of Treasury Regulations Section 1.368-1(e)(3)), (iii) exchanged in the Merger
for Parent Company stock that, pursuant to a plan or intent existing as of
the Effective Time, is either redeemed by Parent or acquired (other than in
exchange of Parent Common Stock) by a person related to Parent (within the
meaning of Treasury Regulations Section 1.368-1(e)(3), or (iv) acquired prior
to the Effective Time and in connection with the Merger by persons related to
the Company (within the meaning of Treasury Regulation Section
1.368-1(e)(3)(i)(B)), other than in exchange for Parent Common Stock;
(b) The Existing Proprietary Interest means: (i) all of the shares
of outstanding Company Common Stock as of the Effective Time (including
shares acquired prior to the Effective Time and in connection with the Merger
by persons related to the Company (within the meaning of Treasury Regulations
Section 1.368-1(e)(3)(i)(B)), (ii) shares of Company Common Stock redeemed
prior to the Effective Time and in connection with the Merger, and (iii) the
amount of any extraordinary distributions made by the Company with respect to
the Company Common Stock prior to the Effective Time and in connection with
the Merger. For purposes of this paragraph 2(b), extraordinary distributions
will not include periodic dividends that are consistent with the Company's
historic dividend practice;
(c) An acquisition of Parent Common Stock or Company Common Stock
by a person acting as an intermediary for Parent or the Company, or a person
related to Parent or the Company (within the meaning of Treasury Regulation
Section 1.368-1(e)(3)) will be treated as made by Parent, Company or the
related person, respectively; and
(d) Any reference to Parent or Company includes a reference to any
successor or predecessor of such corporation to the extent provided in
Treasury Regulation Section 1.368-1(e)(5).
3. The Company and the stockholders of the Company will each pay their
respective expenses, if any, incurred in connection with the Merger.
October X, 1998
Page 3
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4. Following the Merger, the Company will hold at least 90 percent of
the fair market value of the net assets and at least 70 percent of the fair
market value of the gross assets that the Company held immediately prior to
the Merger (including the sales proceeds from any disposition of any assets
prior to or subsequent to the Merger and in contemplation thereof), and the
Company will hold at least 90 percent of the fair market value of the net
assets and at least 70 percent of the fair market value of the gross assets
that the Merger Sub held immediately prior to the Merger. For purposes of
this representation, Company assets used to pay its reorganization expenses
and all redemptions and distributions (except for regular, normal dividends)
made by the Company immediately preceding or in contemplation of, the Merger
will be included as assets of the Company prior to the Merger.
5. Except as provided in Annex I attached herewith, immediately prior
to the time of the Merger, the Company will not have outstanding any
warrants, options, convertible securities or any other type of right pursuant
to which any person could acquire Company Common Stock.
6. In the Merger, shares of Company Common Stock representing control
of the Company, as defined in Section 368(c)(1) of the Code, will be
exchanged solely for Parent Common Stock. For purposes of this
representation, shares of Company Common Stock exchanged for cash or other
property originating with Parent will be treated as outstanding stock of the
Company on the date of the Merger.
7. The Company has no plan or intention of issuing additional shares
of Company Common Stock that would result in parent losing control of the
Company within the meaning of Section 368(c)(1) of the Code.
8. The Company is not an investment company as defined in Section
368(a)(2)(F)(iii) and (iv) of the Code.
9. The Company will not take, and the Company is not aware of any plan
or intention of Company stockholders to take, any position on any federal,
state or local income or franchise tax return, or take any other tax
reporting position, that is inconsistent with the treatment of the Merger as
a reorganization within the meaning of Section 368(a) of the Code, unless
otherwise required by a "determination" (as defined in Section 1313(a)(1) of
the Code) or by applicable state or local income or franchise tax law.
October X, 1998
Page 4
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10. None of the compensation received by any stockholder-employee of
the Company in respect of periods at or prior to the Effective Time
represents separate consideration for, or is allocable to, any of their
Company Common Stock. None of the Parent Common Stock that will be received
by company stockholder-employees in the Merger represents separately
bargained-for consideration which is allocable to any employment agreement or
arrangement. The compensation paid to any shareholder-employees will be for
services actually rendered and will be determined by bargaining at
arm's-length.
11. There is no intercorporate indebtedness existing between Parent and
the Company or between Merger Sub and the Company that was issued or
acquired, or will be settled, at a discount.
12. The Company is not under jurisdiction of a court in a Title 11 or
similar case within the meaning of Section 368(a)(3)(A) of the Code.
13. The Merger Agreement and the documents described in Section 5.5 of
the Merger Agreement represent the entire understanding of the Company,
Parent and Merger Sub with respect to the Merger.
14. The Company Common Stock will be surrendered pursuant to the Merger
in an arms-length exchange, and the Parent Common Stock received in exchange
therefor represents the sole bargained-for consideration therefor. The fair
market value of the Parent Common Stock received by each holder of Company
Common Stock will be approximately equal to the fair market value of the
Company Common Stock surrendered in the Merger.
15. There will be no dissenters to the Merger.
16. On the date of the merger, the fair market value of the assets of
the Company will exceed the sum of its liabilities plus the liabilities, if
any, to which the assets are subject.
17. Following the Merger, the Company will continue its historic
business or use a significant portion of its business assets in a business.
18. The Company has no reason to believe that the certifications made
by Parent in the letter dated the date hereof and attached hereto as Exhibit A
are not true,
October X, 1998
Page 5
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correct and complete in all material respects. It is understood for purposes
of this representation that the Company has neither investigated nor verified
the accuracy of such Parent certifications.
I understand that Cleary, Gottlieb, Steen & Hamilton as counsel for the
Company and Akin, Gump, Strauss, Hauer & Feld, L.L.P. as counsel for Parent
will rely on this certificate in rendering their respective opinions
concerning certain of the federal income tax consequences of the Merger and
hereby commit to inform them if, for any reason, any of the foregoing
representations becomes untrue, incorrect or incomplete at or prior to the
Effective Time.
Jacor Communications, Inc.
By:
----------------------------
Its:
----------------------------
Exhibit B
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
300 Convent Street, Suite 1500
San Antonio, Texas 78205
Cleary, Gottlieb, Steen & Hamilton
One Liberty Plaza
New York, New York 10006
Dear Sirs:
On behalf of Parent and Merger Sub, the undersigned, in connection with
the opinions to be delivered by your firms pursuant to Section 6.1(h) of the
Agreement and Plan of Merger dated October 8, 1998 (the "Agreement") among
Parent, Merger Sub and the Company,(1) recognizing that each of you will rely
on this certificate in delivering said opinions, hereby certifies that the
descriptions of the facts contained in the Registration Statement and the
Proxy Statement completely and accurately describe the Merger and the
transactions leading up thereto and further that:
1. The Merger will be consummated solely in compliance with the
material terms and conditions of the Agreement and none of the material terms
and conditions thereof have been waived or modified.
2. Except in the Merger, neither Parent nor Merger Sub (nor any other
subsidiary of Parent) has acquired or prior to the Merger will acquire, or
has owned in the past five (5) years, any shares of Company Common Stock.
3. Cash payments to be made to stockholders of the Company in lieu of
fractional shares of Parent Common Stock that would otherwise be issued to
such stockholders in the Merger will be made for the purpose of saving Parent
the expense and
- ----------------------------
(1) For purposes of this certificate, capitalized terms used and not otherwise
defined herein shall have the meaning ascribed thereto in the Agreement.
October X, 1998
Page 2
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inconvenience of issuing and transferring fractional shares of Parent Common
Stock, and do not represent separately bargained for consideration.
4. Prior to the Merger, Parent will own all of the capital stock of
Merger Sub. Parent has no plan or intention to cause the Company to issue
additional shares of its stock that would result in Parent owning less than
all of the capital stock of the Company after the Merger.
5. Parent has no plan or intention, following the Merger, directly or
indirectly, to reacquire any of the Parent Common Stock issued in the Merger.
6. Following the Merger, the qualified group, as defined in Treasury
Regulation Section 1.368-1(d)(4)(ii), of which Parent is a member, will
continue the Company's historic business or use a significant portion of its
historic business assets in a business.
7. Parent and Merger Sub will each pay their respective expenses, if
any, incurred in connection with this Merger.
8. Neither Parent nor Merger Sub is an investment company as defined
in Section 368(a)(2)(F)(iii) and (iv) of the Code.
9. Neither Parent nor Merger Sub will take any position on any
federal, state or local income or franchise tax return, or take any other tax
reporting position, that is inconsistent with the treatment of the Merger as
a reorganization within the meaning of Section 368(a) of the Code, unless
otherwise required by a "determination" (as defined in Section 1313(a)(1) of
the Code) or by applicable state or local income or franchise tax law.
10. None of the compensation received by any stockholder-employee of
the Company in respect of periods after the Effective Time represents
separate consideration for, or is allocable to, any of their Company Common
Stock. None of the Parent Common Stock that will be received by Company
stockholder-employees in the Merger represents separately bargained-for
consideration that is allocable to any employment agreement or arrangement.
The compensation paid to any shareholder-employees will be for services
actually rendered and will be determined by bargaining at arm's-length.
11. No stock of Merger Sub will be issued in the Merger.
October X, 1998
Page 3
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12. There is no intercorporate indebtedness existing between Parent and
the Company or between Merger Sub and the Company that was issued or
acquired, or will be settled, at a discount.
13. The Merger Agreement and the documents described in Section 5.5 of
the Merger Agreement represent the entire understanding of the Company,
Parent and Merger Sub with respect to the Merger.
14. Merger Sub is a corporation newly formed for the purpose of
participating in the Merger and at no time prior to the Merger has had assets
(other than nominal assets contributed upon the formation of Merger Sub,
which assets will be held by the Company following the Merger) or business
operations. Merger Sub will have no liabilities assumed by the Company, and
will not transfer to the Company any assets subject to liabilities in the
Merger.
15. Following the Merger, the Company will hold at least 90 percent of
the fair market value of the net assets and at least 70 percent of the fair
market value of the gross assets that the Company held immediately prior to
the Merger, and the Company will hold at least 90 percent of the fair market
value of the net assets (including the sales proceeds from any disposition of
any assets prior to or subsequent to the Merger and in contemplation thereof)
and at least 70 percent of the fair market value of the gross assets that the
Merger Sub held immediately prior to the Merger. For purposes of this
representation, Company assets used to pay its reorganization expenses and
all redemptions and distributions (except for regular, normal dividends) made
by the Company immediately preceding or in contemplation of, the Merger will
be included as assets of the Company prior to the Merger.
16. Parent will not assume any liabilities of the Company or any of the
Company's Subsidiaries.
17. The Company Common Stock will be surrendered pursuant to the Merger
in an arms-length exchange, and the Parent Common Stock received in exchange
therefor represents the sole bargained-for consideration therefor. The fair
market value of the Parent Common Stock received by each holder of Company
Common Stock will be approximately equal to the fair market value of the
Company Common Stock surrendered in the Merger.
18. There will be no dissenters to the Merger.
October X, 1998
Page 4
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19. Parent has no plan or intention to liquidate the Company; to merge
the Company with or into another corporation; to sell or otherwise dispose of
the Company Common Stock except for transfers of stock described in Treasury
Regulation Section 1.368-2(k)(2); or to cause the Company to sell or
otherwise dispose of any of the assets acquired from Merger Sub, except for
dispositions in the ordinary course of business or transfers described in
Treasury Regulation Section 1.368-2(k)(2).
20. Parent has no reason to believe that the certifications made by the
Company in the letter dated the date hereof and attached hereto as Exhibit A
are not true, correct and complete in all material respects. It is
understood for purposes of this representation that Parent has neither
investigated nor verified the accuracy of such Company certifications.
I understand that Cleary, Gottlieb, Steen & Hamilton as counsel for the
Company and Akin, Gump, Strauss, Hauer & Feld, L.L.P. as counsel for Parent
will rely on this certificate in rendering their opinion concerning certain
federal income tax consequences of the Merger and hereby commit to inform
them if, for any reason, any of the foregoing representations becomes untrue,
incorrect or incomplete at or prior to the Effective Time.
Clear Channel Communications, Inc.
By:
-----------------------------------
Its:
-----------------------------------
Schedule 8.3(g)
"KNOWLEDGE" OFFICERS
The Company:
Randy Michaels
Bobby Lawrence
Chris Weber
Paul Solomon
Jon Berry
Parent:
Lowry Mays
Mark Mays
Randall Mays
Ken Wyker
Herb Hill