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EXHIBIT 10.9
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
AMONG
CHANCELLOR MEDIA CORPORATION,
CAPSTAR BROADCASTING CORPORATION
AND
CBC ACQUISITION COMPANY, INC.
DATED AS OF AUGUST 26, 1998
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TABLE OF CONTENTS
ARTICLE I
THE MERGER
1.1 THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 EFFECTIVE TIME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 CERTIFICATE OF INCORPORATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.5 CERTIFICATES OF DESIGNATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.6 BYLAWS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.7 DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.8 OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.9 EFFECT ON CAPSTAR CAPITAL STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(a) Outstanding Capstar Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(b) Exchange of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(c) Treasury Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.10 EFFECT ON CHANCELLOR CAPITAL STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(a) Outstanding Chancellor Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(b) Treasury Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(c) Outstanding Chancellor Convertible Preferred Stock . . . . . . . . . . . . . . . . . . . . 9
(d) Impact of Stock Splits, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.11 EFFECT ON MERGER SUB CAPITAL STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.12 EXCHANGE OF CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(a) Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(b) Exchange Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(c) Letter of Transmittal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(d) Distributions with Respect to Unexchanged Shares . . . . . . . . . . . . . . . . . . . . . 11
(e) No Further Ownership Rights in Chancellor Common Stock and Chancellor Convertible
Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(f) Termination of Payment Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(g) No Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(h) Withholding of Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.13 DISSENTING SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF CAPSTAR
2.1 ORGANIZATION, STANDING AND CORPORATE POWER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.2 CAPITAL STRUCTURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.3 AUTHORITY; NONCONTRAVENTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.4 CAPSTAR SEC DOCUMENTS; FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.5 ABSENCE OF CERTAIN CHANGES OR EVENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.6 NO EXTRAORDINARY PAYMENTS OR CHANGE IN BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.7 VOTING REQUIREMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
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2.8 STATE TAKEOVER STATUTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.9 CAPSTAR FCC LICENSES; OPERATIONS OF CAPSTAR LICENSED FACILITIES . . . . . . . . . . . . . . . . . . 21
2.10 BROKERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.11 FCC QUALIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.12 COMPLIANCE WITH APPLICABLE LAWS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.13 ABSENCE OF UNDISCLOSED LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
2.14 LITIGATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
2.15 TRANSACTIONS WITH AFFILIATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
2.16 LABOR MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.17 EMPLOYEE ARRANGEMENTS AND BENEFIT PLANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.18 TAX MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
2.19 INTELLECTUAL PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
2.20 ENVIRONMENTAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.21 MATERIAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
2.22 TANGIBLE PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
2.23 OPINION OF FINANCIAL ADVISORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
2.25 NO OTHER REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF CHANCELLOR
3.1 ORGANIZATION, STANDING AND CORPORATE POWER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
3.2 CAPITAL STRUCTURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
3.3 AUTHORITY; NONCONTRAVENTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
3.4 CHANCELLOR SEC DOCUMENTS; FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
3.5 ABSENCE OF CERTAIN CHANGES OR EVENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
3.6 NO EXTRAORDINARY PAYMENTS OR CHANGE IN BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . 38
3.7 BROKERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
3.8 OPINION OF FINANCIAL ADVISOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
3.9 ABSENCE OF UNDISCLOSED LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
3.10 LITIGATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
3.11 TRANSACTIONS WITH AFFILIATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
3.12 VOTING REQUIREMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
3.13 FCC QUALIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
3.14 EMPLOYEE ARRANGEMENTS AND BENEFIT PLANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
3.15 TAX MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
3.16 INTELLECTUAL PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
3.17 ENVIRONMENTAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
3.18 COMPLIANCE WITH APPLICABLE LAWS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
3.19 CHANCELLOR FCC LICENSES; OPERATIONS OF CHANCELLOR LICENSED FACILITIES . . . . . . . . . . . . . . . 43
3.20 STATE TAKEOVER STATUTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
3.21 NO OTHER REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
4.1 ORGANIZATION, STANDING AND CORPORATE POWER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
4.2 CAPITAL STRUCTURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
4.3 AUTHORITY; NONCONTRAVENTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
4.4 NO PRIOR ACTIVITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
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ARTICLE V
ADDITIONAL AGREEMENTS
5.1 PREPARATION OF FORM S-4 AND JOINT PROXY STATEMENT/PROSPECTUS; INFORMATION SUPPLIED . . . . . . . . . 47
5.2 STOCKHOLDER APPROVAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
5.3 ACCESS TO INFORMATION; CONFIDENTIALITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
5.4 PUBLIC ANNOUNCEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
5.5 ACQUISITION PROPOSALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
5.6 CONSENTS, APPROVALS AND FILINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
5.7 AFFILIATES LETTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
5.8 NYSE LISTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
5.9 INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
5.10 LETTER OF CHANCELLOR'S ACCOUNTANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
5.11 LETTER OF CAPSTAR'S ACCOUNTANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
5.12 TRANSACTION STRUCTURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
5.13 SENIOR CREDIT FACILITY CONSENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS PRIOR TO MERGER
6.1 CONDUCT OF BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
6.2 CHANCELLOR STOCK OPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
6.3 OTHER ACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
ARTICLE VII
CONDITIONS PRECEDENT
7.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER . . . . . . . . . . . . . . . . . . . . . 61
(a) Stockholder Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
(b) FCC Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
(c) Governmental and Regulatory Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
(d) HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
(e) No Injunctions or Restraints . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
(f) NYSE Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
(g) Form S-4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
(h) Capstar Disinterested Stockholders Approval . . . . . . . . . . . . . . . . . . . . . . . . 62
(i) Chancellor Disinterested Stockholders Approval . . . . . . . . . . . . . . . . . . . . . . 62
(k) Consent of Senior Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
7.2 CONDITIONS TO OBLIGATIONS OF CAPSTAR AND MERGER SUB . . . . . . . . . . . . . . . . . . . . . . . . 63
(a) Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
(b) Performance of Obligations of Chancellor . . . . . . . . . . . . . . . . . . . . . . . . . 63
(c) Tax Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
7.3 CONDITIONS TO OBLIGATIONS OF CHANCELLOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
(a) Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
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(b) Performance of Obligations of Capstar and Merger Sub. . . . . . . . . . . . . . . . . . . 65
(c) Tax Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
(d) Material Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
(e) Financial Services Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
(f) Parent Registration Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.1 TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
8.2 EFFECT OF TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
8.3 AMENDMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
8.4 EXTENSION; CONSENT; WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
8.5 PROCEDURE FOR TERMINATION, AMENDMENT, EXTENSION, CONSENT OR WAIVER . . . . . . . . . . . . . . . . . 71
ARTICLE IX
SURVIVAL OF PROVISIONS
9.1 SURVIVAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
ARTICLE X
NOTICES
10.1 NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
ARTICLE XI
MISCELLANEOUS
11.1 ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
11.2 EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
11.3 COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
11.4 NO THIRD PARTY BENEFICIARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
11.5 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
11.6 ASSIGNMENT; BINDING EFFECT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
11.7 HEADINGS, GENDER, ETC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
11.8 INVALID PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
11.9 NO RECOURSE AGAINST OTHERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Annexes
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Annex I Form of Amended and Restated Certificate of Incorporation of Capstar
Annex II Form of Affiliate Letter
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LIST OF DEFINED TERMS
Acquisition Proposal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Bear Xxxxxxx . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
XX Xxxxxxxxxx . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Capstar Communications 12-5/8% Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Capstar Radio Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Capstar Communications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Capstar Stockholder Proposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Capstar Significant Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Capstar Stock Option Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Capstar Stock Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Capstar Partners 12% Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Capstar Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Capstar Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Capstar Indemnified Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Capstar M&O Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Capstar Financial Advisory Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Capstar LMA Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Capstar FCC Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Capstar SEC Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Capstar Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Capstar Disclosure Letter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Capstar Licensed Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Capstar Class B Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Capstar Class C Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Capstar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Capstar Class A Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Chancellor FCC Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Chancellor LMA Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Chancellor Stockholders Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Chancellor LMA Facility FCC Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Chancellor Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Chancellor Significant Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Chancellor Stockholders Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Chancellor Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Chancellor Stockholders Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Chancellor Operating Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Chancellor Stock Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Chancellor Stock Option Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Chancellor Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Chancellor SEC Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Chancellor Indemnified Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Chancellor $3.00 Convertible Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Chancellor 7% Convertible Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Chancellor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
v
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Chancellor Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Communications Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
CSFB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
D&O Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Delaware Secretary of State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Delaware Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Dissenting Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Employment Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Environmental Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
FCC Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
FCC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Form S-8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Form S-4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Xxxxxxx Xxxxx . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Governmental Entity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Hazardous Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Xxxxx Muse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
IRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Joint Proxy Statement/Prospectus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
LMA Facility FCC Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Material Breach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Material Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Merger Sub . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Xxxxxx Xxxxxxx . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Parent Nonvoting Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Parent 7% Convertible Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Parent $3.00 Convertible Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Parent Voting Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Payment Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Surviving Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Tax Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Xxxxxxxxxxx . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
vi
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and
entered into as of August 26, 1998, by and among CHANCELLOR MEDIA CORPORATION,
a Delaware corporation ("Chancellor"), CAPSTAR BROADCASTING CORPORATION, a
Delaware corporation ("Capstar"), and CBC ACQUISITION COMPANY, INC., a Delaware
corporation and wholly-owned subsidiary of Capstar ("Merger Sub").
RECITALS
WHEREAS, Chancellor and Capstar and their respective subsidiaries are
engaged in the radio broadcasting business;
WHEREAS, the Board of Directors of each of Chancellor and Capstar deem
it advisable and in the best interests of their respective stockholders to
combine their respective broadcast businesses in a strategic merger;
WHEREAS, subject to the terms and conditions set forth herein, (i) the
Board of Directors of Chancellor, upon the recommendation of a duly authorized
special committee thereof (consisting of independent directors) (the
"Chancellor Special Committee"), has approved the merger of Chancellor with and
into Merger Sub, (ii) the Board of Directors of Capstar, upon the
recommendation of a duly authorized special committee thereof (consisting of
Capstar's independent director) (the "Capstar Special Committee"), has approved
the foregoing merger, and (iii) the Board of Directors of Merger Sub has
approved the foregoing merger;
WHEREAS, concurrently with the execution hereof and as a condition to
Chancellor entering into this Agreement, certain stockholders of Capstar have
entered into a voting agreement with respect to the transactions contemplated
hereby;
WHEREAS, it is the intention of Chancellor, Capstar and Merger Sub
that such merger will qualify as a tax-free reorganization within the meaning
of Section 368(a) of the Internal Revenue Code of 1986, as amended (the
"Code"); and
WHEREAS, Chancellor, Capstar and Merger Sub desire to make certain
representations, warranties, covenants and agreements in connection with such
merger and also to prescribe various conditions to such merger;
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NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER. Subject to the terms and conditions of this
Agreement, at the Effective Time (as defined in Section 1.3), Chancellor shall
merge with and into Merger Sub (the "Merger") in accordance with the General
Corporation Law of the State of Delaware (the "Delaware Code"). At the
Effective Time, the separate corporate existence of Chancellor shall cease and
Merger Sub shall continue as the surviving corporation of the Merger (the
"Surviving Corporation") and as a wholly-owned subsidiary of Capstar under the
laws of the State of Delaware and with all the rights, privileges, immunities
and powers, and subject to all the duties and liabilities, of a corporation
organized under the Delaware Code. The Merger shall have the effects set forth
in the Delaware Code.
1.2 CLOSING. Unless this Agreement shall have been terminated
and the transactions herein contemplated shall have been abandoned pursuant to
Section 8.1, and subject to the satisfaction or waiver of the conditions set
forth in Article VII, the closing of the Merger (the "Closing") will take place
at 10:00 a.m., Dallas, Texas time, on the second business day following the
date on which the last to be fulfilled or waived of the conditions set forth in
Article VII shall be fulfilled or waived in accordance with this Agreement (the
"Closing Date"), at the offices of Weil, Gotshal & Xxxxxx LLP, 000 Xxxxxxxx
Xxxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000, unless another date, time or place is
agreed to in writing by the parties hereto; provided, however, in no event
shall the Closing occur prior to April 15, 1999 and provided, further, that
Chancellor, in its sole discretion, shall have the right to delay the Closing
after satisfaction and waiver of the conditions set forth in Article VII to a
date up to and including July 15, 1999.
1.3 EFFECTIVE TIME. The parties hereto will file with the
Secretary of State of the State of Delaware (the "Delaware Secretary of State")
on the Closing Date (or on such other date as the parties may agree) a
certificate of merger or other appropriate documents, executed in accordance
with the relevant provisions of the Delaware Code, and make all other filings
or recordings required under the Delaware Code in connection with
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the Merger. The Merger shall become effective upon the filing of the
certificate of merger with the Delaware Secretary of State, or at such later
time specified in such certificate of merger (the "Effective Time").
1.4 CERTIFICATE OF INCORPORATION. (a) The Certificate of
Incorporation of Merger Sub in effect immediately prior to the Merger shall be
the Certificate of Incorporation of the Surviving Corporation until thereafter
amended in accordance with its terms and as provided by the Delaware Code.
(b) Concurrently with the execution and delivery of
this Agreement, the Board of Directors of Capstar has adopted a resolution
setting forth and approving an amended and restated Certificate of
Incorporation as set forth in Annex I hereto (the Parent Amended and Restated
Charter"), and directing that such Parent Amended and Restated Charter be
considered by the stockholders of Capstar at the Capstar Stockholders Meeting
(as defined in Section 5.2(a)), all in accordance with the provisions of the
Delaware Code. Prior to the Effective Time of the Merger, Capstar shall file
with the Secretary of State of the State of Delaware a certificate of amendment
to its Certificate of Incorporation setting forth the Parent Amended and
Restated Charter, and from and after the effectiveness of the Parent Amended
and Restated Charter, the name of Capstar shall be changed to Chancellor Media
Corporation (as such, the "Parent").
1.5 CERTIFICATES OF DESIGNATIONS. At the Effective Time, the
Board of Directors of Capstar shall authorize the designation of two series of
preferred stock, $0.01 par value (as defined in Section 1.10(c), the "Parent
Convertible Preferred Stock"), of Parent, so as to permit Parent to issue the
shares of Parent Convertible Preferred Stock pursuant to Section 1.10 hereof,
and the Parent shall file with the Delaware Secretary of State immediately
following the Effective Time the certificates of designations with respect to
the Parent Convertible Preferred Stock pursuant to the Delaware Code.
1.6 BYLAWS. The Bylaws of Merger Sub in effect immediately
prior to the Merger shall be the bylaws of the Surviving Corporation until
thereafter amended in accordance with their terms and as provided by applicable
law.
1.7 DIRECTORS. The directors of Parent at the Effective Time
shall be as set forth below:
Class I Directors
Xxxxx X. xx Xxxxxx
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Xxxxxx Xxxxxx
Xxxxxxx X. Xxxxxx
Xxxxxxxx X. Xxxxxx, Xx.
R. Xxxxxx Xxxxx
Class II Directors
Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxxx
Xxxx X. Xxxxxx
J. Xxxx Xxxxxxx
R. Xxxxxx Xxxxxx
Class III Directors
Xxxxxx X. Xxxxxx, Xx.
Xxxxx X. Xxxxx
Xxxxxxx X. Xxxxxx
Xxxx X. Xxxxxxx
The directors of the Surviving Corporation immediately following the
Effective Time shall be the same as the directors of the Parent set forth in
this Section 1.7, except that such directors will not be classified as to term.
At or prior to the Effective Time, the Board of Directors of Capstar shall
deliver or cause to be delivered to Chancellor the resignations of each of the
then current directors of Capstar that is not designated to be a director of
the Parent as set forth in this Section 1.7, to be effective as of the
Effective Time (the "Board Resignations"), and (ii) certified copies of the
resolutions of the remaining members of the Board of Directors of Capstar
appointing the Board of Directors of Parent as set forth in this Section 1.7,
to be effective as of the Effective Time (the "Board Appointments"). Each
Class I director, Class II director and Class III director of Parent will hold
office from the Effective Time until the 2000, 2001 and 2002 annual meetings of
Parent, respectively, and in all cases, until his or her respective successor
is duly elected or appointed and qualified in the manner provided in the
Certificate of Incorporation or Bylaws of Parent, or as otherwise provided by
applicable law. Each director of the Surviving Corporation will hold office
from the Effective Time until his or her respective successor is duly elected
or appointed and qualified in the manner provided in the Surviving
Corporation's Certificate of Incorporation and Bylaws or as otherwise provided
by applicable law.
1.8 OFFICERS. The initial senior executive officers of Parent
at the Effective Time shall be the officers of Chancellor
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immediately prior to the Effective Time, together with R. Xxxxxx Xxxxx, who
will serve as Vice Chairman of the Board of Directors of Parent. The initial
officers of the Surviving Corporation at the Effective Time shall be the
officers of Chancellor immediately prior to the Effective Time. Each such
officer of Parent and the Surviving Corporation will hold office from the
Effective Time until his respective successor is duly elected or appointed and
qualified in the manner provided in the Certificate of Incorporation and Bylaws
of each of Parent and the Surviving Corporation or as otherwise provided by
applicable law. The names, titles and responsibilities of the other
individuals who initially will hold officerships with Parent shall be
determined by Chancellor and Capstar prior to the Effective Time, and the
election of these persons shall be considered by the Board of Directors of
Parent following the Effective Time.
1.9 EFFECT ON CAPSTAR CAPITAL STOCK.
(a) Outstanding Capstar Common Stock. (i) Each share of
Class A Common Stock, $0.01 par value ("Capstar Class A Common Stock") and
Class C Common Stock, $0.01 par value ("Capstar Class C Common Stock") in each
case of Capstar, issued and outstanding immediately prior to the Effective Time
(other than shares of Capstar Class A Common Stock or Capstar Class C Common
Stock held as treasury shares by Capstar) shall, by virtue of the effectiveness
of the Parent Amended and Restated Charter and without any action on the part
of the holder thereof, be reclassified, changed and converted into 0.4800 of a
validly issued, fully paid and nonassessable share of the common stock, $0.01
par value ("Parent Voting Common Stock"), of Parent (the "Initial Capstar
Voting Common Exchange Ratio"), subject to adjustment as set forth in
subparagraph (iii) below.
(ii) Each share of Class B Common Stock, $0.01 par value
("Capstar Class B Common Stock" and, collectively with Capstar Class A Common
Stock and Capstar Class C Common Stock, the "Capstar Common Stock"), of Capstar
issued and outstanding immediately prior to the Effective Time (other than
shares of Capstar Class B Common Stock held as treasury shares by Capstar)
shall, by virtue of the effectiveness of the Parent Amended and Restated
Charter and without any action on the part of the holder thereof, be
reclassified, changed and converted into 0.4800 of a validly issued, fully paid
and nonassessable share of the nonvoting common stock, $0.01 par value ("Parent
Nonvoting Common Stock" and, collectively with the Parent Voting Common Stock,
the "Parent Common Stock"), of Parent (the "Initial Capstar Nonvoting Common
Exchange Ratio" and, collectively with the Initial Capstar Voting Common
Exchange Ratio, the "Initial Capstar Exchange
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Ratio"), subject to adjustment as set forth in subparagraph (iii) below.
(iii) The Initial Capstar Exchange Ratio shall be
subject to adjustment as follows (as so adjusted, the "Capstar Exchange
Ratio"):
(1) In the event that the Adjusted BCF (as
hereinafter defined) is equal to or less than $245.5 million, the
Capstar Exchange Ratio shall equal 0.4800;
(2) In the event that the Adjusted BCF is greater
than $245.5 million but less than $270.5 million, then the Capstar
Exchange Ratio shall equal (rounded to the nearest ten thousandth) (A)
0.4800, plus (B) the product of (x) 0.0250 times (y) a fraction, the
numerator of which is equal to the amount of Adjusted BCF, minus,
245,500,000, and the denominator of which is 25,000,000; or
(3) In the event that the Adjusted BCF is equal
to or greater than $270.5 million, then the Capstar Exchange Ratio
shall equal 0.5050.
For purposes of this Section 1.9(a)(iii), "Adjusted BCF" means the sum
of (x) $114,500,000 plus (y) the aggregate revenues of Capstar, excluding
revenues of or attributable to the Excluded Assets (as hereinafter defined),
for the period beginning July 1, 1998 and ending on December 31, 1998, minus
the aggregate operating expenses of Capstar, excluding operating expenses
attributable to the Excluded Assets, for such period, in each case determined
using similar methodology to that used for the periods prior to June 30, 1998
and in accordance with generally accepted accounting principles ("GAAP"),
consistently applied, excluding from such expenses and revenues the following
items in a manner consistent with Capstar's past practices: (A) depreciation,
amortization and other non-cash expenses, (B) interest expense, (C) income
taxes, (D) expenses associated with equity-based incentive and compensation
plans and equity interests in Capstar related to awards made prior to the date
of this Agreement or otherwise permitted under this Agreement, (E) fees payable
to Xxxxx Muse (as hereinafter defined) and its affiliates, (F) corporate
overhead of Capstar or any predecessor, (G) fees paid to third parties pursuant
to local marketing agreements or joint sales agreements (other than the
operating expense reimbursement component thereof), (H) gains and losses from
sales of fixed assets, (I) repairs and maintenance expenditures in excess of
$500 per expenditure, (J) transaction costs, including legal fees, other
litigation costs and other
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related expenses (including any bonus payments or severance expenses) of
Capstar or any predecessor incurred in connection with the transactions
contemplated by this Agreement or any other acquisitions by Capstar, and (K)
expenses associated with other nonrecurring items. For purposes of this
Agreement, "Excluded Assets" means: (1) Prophet Systems, and (2) acquisition
and divestiture transactions pending as of the date of this Agreement or
thereafter (other than the acquisition of any of the stations set forth in
Section 1.9(a) of the Capstar Disclosure Letter (as hereinafter defined) to
which Capstar provides programming services pursuant to local marketing
agreements or joint sales agreements in effect as of the date of this
Agreement), including without limitation, pending acquisitions in Albany,
Burlington, Xxxxxxxxx, Portsmouth-Dover-Rochester, Winchester, Lincoln,
Ogallala, Omaha, Shreveport, Wichita, and Spokane.
(iv) On or prior to February 28, 1999, Capstar shall
deliver to Chancellor in writing the calculation of Adjusted BCF, described in
reasonable detail (the "Initial Adjusted BCF Calculation"). Following receipt
of such Initial Adjusted BCF Calculation, Chancellor shall have 14 days within
which to (i) agree in writing to the amount of Adjusted BCF or (ii) provide
Capstar written objection to the calculation of the amount of Adjusted BCF,
setting forth Chancellor's calculation of Adjusted BCF (the "Chancellor
Adjusted BCF Calculation"). If the amount of the Initial Adjusted BCF
Calculation and the Chancellor Adjusted BCF Calculation differ by less than
$2,000,000, the Initial Adjusted BCF Calculation shall be the final
determination of Adjusted BCF. If the amount of the Initial Adjusted BCF
Calculation and the Chancellor Adjusted BCF Calculation differ by $2,000,000 or
more, and Capstar and Chancellor are unable to resolve any disagreements with
respect to the determination or amount of the Adjusted BCF within 14 days
following delivery of the Chancellor Adjusted BCF Calculation to Capstar, the
parties shall refer their remaining differences to the Dallas, Texas office of
Xxxxxx Xxxxxxxx LLP (the "Independent Accountant"), which shall, acting as
arbitrators, determine, only with respect to the remaining differences so
submitted, whether and to what extent the Adjusted BCF set forth in the Initial
Adjusted BCF Calculation requires adjustment. The Independent Accountant's
determination of Adjusted BCF shall be delivered in writing to Chancellor and
Capstar within 20 days following the Independent Accountant's retention and
shall be conclusive and binding upon each of them. In the event of submission
of the Adjusted BCF calculation to the Independent Accountant, (i) in the event
that the Initial Adjusted BCF Calculation is closer to the final Adjusted BCF,
as determined by the Independent Accountant, Chancellor shall pay the fees and
expenses of the Independent Accountant relating to its engagement pursuant
hereto, or (ii) in
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the event that the Chancellor Adjusted BCF Calculation is closer to the final
Adjusted BCF, as determined by the Independent Accountant, Capstar shall pay
the fees and expenses of the Independent Accountant. The parties agree that
the $114,500,000 component of Adjusted BCF is not subject to the procedures set
forth in this Section 1.9(a)(iv).
(b) Exchange of Certificates. Promptly after the
Effective Time (but in no event more than five business days thereafter),
Parent shall require its transfer agent to mail to each record holder of
certificates that immediately prior to the effectiveness of the Parent Amended
and Restated Charter represented shares of Capstar Common Stock which have been
reclassified, converted and exchanged pursuant to the filing of the Parent
Amended and Restated Charter (the "Reclassification"), a form of letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title shall pass, only upon proper delivery of certificates
representing shares of Capstar Common Stock to the transfer agent, and which
shall be in such form and have such provisions as Parent reasonably may
specify) and instructions for use in surrendering such certificates and
receiving the shares of Parent Common Stock to which such holder shall be
entitled therefor pursuant to Section 1.9(a) as a result of the filing and
effectiveness of the Parent Amended and Restated Charter. Pursuant to the
terms of the Parent Amended and Restated Charter, no certificates or scrip
representing fractional shares of Parent Voting Common Stock or Parent
Nonvoting Common Stock shall be issued upon the surrender for exchange of
certificates that immediately prior to the Reclassification represented shares
of Capstar Class A Common Stock, Capstar Class B Common Stock or Capstar Class
C Common Stock which have been converted pursuant to the Reclassification, and
such fractional share interests will not entitle the owner thereof to vote or
any rights of a stockholder of Parent. In lieu of any such fractional shares,
Parent shall satisfy payment with respect to such fractional shares by
delivering to the transfer agent for distribution to the holders of such
fractional shares reasonably promptly following the Reclassification cash
(without interest) in an amount equal to the aggregate amount of all such
fractional shares multiplied by the closing price per share of the Capstar
Class A Common Stock on the New York Stock Exchange on the trading day
immediately prior to the Reclassification.
(c) Treasury Shares. Each share of Capstar Common
Stock which is held as a treasury share by Capstar at the Effective Time shall,
by virtue of effectiveness of the Parent Amended and Restated Charter and
without any action on the part
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of Capstar, be cancelled and retired and cease to exist, without any conversion
thereof.
1.10 EFFECT ON CHANCELLOR CAPITAL STOCK. (a) Outstanding
Chancellor Common Stock. Each of the shares of common stock, $0.01 par value
("Chancellor Common Stock"), of Chancellor issued and outstanding immediately
prior to the Effective Time (other than shares of Chancellor Common Stock held
as treasury shares by Chancellor) shall, by virtue of the Merger and without
any action on the part of the holder thereof, be converted into a right to
receive one validly issued, fully paid and nonassessable share of Parent Voting
Common Stock (the "Chancellor Exchange Ratio"). The shares of Parent Voting
Common Stock to be issued to holders of shares of Chancellor Common Stock in
accordance with this Section 1.10(a) and the shares of Parent Convertible
Preferred Stock to be issued to holders of Chancellor Convertible Preferred
Stock (as hereinafter defined) are referred to collectively as the "Merger
Consideration."
(b) Treasury Shares. Each share of Chancellor Common
Stock issued and outstanding immediately prior to the Effective Time which is
then held as a treasury share by Chancellor shall, by virtue of the Merger and
without any action on the part of Chancellor, be cancelled and retired and
cease to exist, without any conversion thereof.
(c) Outstanding Chancellor Convertible Preferred
Stock. Each share (other than a Dissenting Share, as defined in Section 1.13
below) of 7% Convertible Preferred Stock, $0.01 par value ("Chancellor 7%
Convertible Preferred Stock"), and $3.00 Convertible Exchangeable Preferred
Stock, $0.01 par value ("Chancellor $3.00 Convertible Preferred Stock" and,
collectively with the Chancellor 7% Convertible Preferred Stock, the
"Chancellor Convertible Preferred Stock"), in each case of Chancellor,
outstanding immediately prior to the Effective Time shall be converted into a
right to receive one share of 7% Convertible Preferred Stock, $0.01 par value
("Parent 7% Convertible Preferred Stock"), and $3.00 Convertible Exchangeable
Preferred Stock, $0.01 par value ("Parent $3.00 Convertible Preferred Stock"
and, collectively with the Parent 7% Convertible Preferred Stock, the "Parent
Convertible Preferred Stock"), in each case of Parent, respectively, having
substantially identical powers, preferences and relative rights as the
Chancellor 7% Convertible Preferred Stock and Chancellor $3.00 Convertible
Preferred Stock, respectively, with appropriate changes to the respective
conversion prices thereof in accordance with the terms of their respective
certificates of designations. Dividends on the Parent 7% Convertible Preferred
Stock and Parent $3.00 Convertible Preferred Stock shall accrue from the last
dates
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prior to the Effective Time on which dividends were declared on the shares of
Chancellor 7% Convertible Preferred Stock and Chancellor $3.00 Convertible
Preferred Stock, respectively.
(d) Impact of Stock Splits, etc. In the event of any
change in Capstar Common Stock and/or Chancellor Common Stock between the date
of this Agreement and the Effective Time of the Merger in accordance with the
terms of this Agreement by reason of any stock split, stock dividend,
subdivision, reclassification, recapitalization, combination, exchange of
shares or the like, the number and class of shares of Parent Voting Common
Stock to be issued and delivered in the Merger in exchange for each outstanding
share of Chancellor Common Stock as provided in this Agreement shall be
appropriately adjusted so as to maintain the relative proportionate interests
of the holders of Chancellor Common Stock and Capstar Common Stock.
1.11 EFFECT ON MERGER SUB CAPITAL STOCK. Each share of common
stock, $0.01 par value, of Merger Sub issued and outstanding immediately prior
to the Effective Time shall remain outstanding and be unaffected by the Merger
and, following the Merger, shall thereafter represent all of the issued and
outstanding capital stock of the Surviving Corporation.
1.12 EXCHANGE OF CERTIFICATES.
(a) Paying Agent. Immediately following the Effective
Time, Parent shall deposit with its transfer agent and registrar (the "Paying
Agent"), for the benefit of the holders of Chancellor Common Stock and
Chancellor Convertible Preferred Stock (other than treasury shares and
Dissenting Shares), certificates representing the shares of Parent Voting
Common Stock and Parent Convertible Preferred Stock to be issued to such
holders pursuant to Section 1.10 (such certificates, together with any
dividends or distributions with respect to the shares represented by such
certificates, being hereinafter referred to as the "Payment Fund").
(b) Exchange Procedures. As soon as practicable after
the Effective Time, each holder of an outstanding certificate or certificates
which prior thereto represented shares of Chancellor Common Stock or shares of
Chancellor Convertible Preferred Stock shall, upon surrender to the Paying
Agent of such certificate or certificates and acceptance thereof by the Paying
Agent, be entitled to a certificate representing that number of whole shares of
Parent Voting Common Stock or Parent Convertible Preferred Stock which the
aggregate number of shares of Chancellor Common Stock or shares of Chancellor
Convertible Preferred Stock previously represented by such
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certificate or certificates surrendered shall have been converted into the
right to receive pursuant to Section 1.10 of this Agreement. The Paying Agent
shall accept such certificates upon compliance with such reasonable terms and
conditions as the Paying Agent may impose to effect an orderly exchange thereof
in accordance with its normal exchange practices. If the Merger Consideration
(or any portion thereof) is to be delivered to any person other than the person
in whose name the certificate or certificates representing the shares of
Chancellor Common Stock or shares of Chancellor Convertible Preferred Stock
surrendered in exchange therefor is registered, it shall be a condition to such
exchange that the certificate or certificates so surrendered shall be properly
endorsed or otherwise be in proper form for transfer and that the person
requesting such exchange shall pay to the Paying Agent any transfer or other
Taxes (as defined in Section 2.18) required by reason of the payment of such
consideration to a person other than the registered holder of the
certificate(s) surrendered, or shall establish to the satisfaction of the
Paying Agent that such Tax has been paid or is not applicable. After the
Effective Time, there shall be no further transfer on the records of Chancellor
or its transfer agent of certificates representing shares of Chancellor Common
Stock or Chancellor Convertible Preferred Stock, and if such certificates are
presented to the Surviving Corporation, they shall be cancelled against
delivery of the Merger Consideration as hereinabove provided. Until
surrendered as contemplated by this Section 1.12(b), each certificate
representing shares of Chancellor Common Stock (other than certificates
representing treasury shares to be cancelled in accordance with the terms of
this Agreement) and shares of Chancellor Convertible Preferred Stock (other
than Dissenting Shares), shall be deemed at any time after the Effective Time
to represent only the right to receive upon such surrender the Merger
Consideration without any interest thereon, as contemplated by Section 1.10.
(c) Letter of Transmittal. Promptly after the
Effective Time (but in no event more than five business days thereafter),
Parent shall require the Paying Agent to mail to each record holder of
certificates that immediately prior to the Effective Time represented shares of
Chancellor Common Stock or Chancellor Convertible Preferred Stock which have
been converted pursuant to Section 1.10, a form of letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title shall
pass, only upon proper delivery of certificates representing shares of
Chancellor Common Stock or Chancellor Convertible Preferred Stock to the Paying
Agent, and which shall be in such form and have such provisions as Parent
reasonably may specify) and instructions for use in surrendering such
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certificates and receiving the Merger Consideration to which such holder shall
be entitled therefor pursuant to Section 1.10.
(d) Distributions with Respect to Unexchanged Shares.
No dividends or other distributions with respect to Parent Voting Common Stock
or Parent Convertible Preferred Stock with a record date after the Effective
Time shall be paid to the holder of any certificate that immediately prior to
the Effective Time represented shares of Chancellor Common Stock or Chancellor
Convertible Preferred Stock which have been converted pursuant to Section 1.10,
until the surrender for exchange of such certificate in accordance with this
Article I. Following surrender for exchange of any such certificate, there
shall be paid to the holder of such certificate, without interest, (i) at the
time of such surrender, the amount of dividends or other distributions with a
record date after the Effective Time theretofore paid with respect to the
number of whole shares of Parent Voting Common Stock or Parent Convertible
Preferred Stock into which the shares of Chancellor Common Stock or Chancellor
Convertible Preferred Stock represented by such certificate immediately prior
to the Effective Time were converted pursuant to Section 1.10, 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 such surrender, and with a
payment date subsequent to such surrender, payable with respect to such whole
shares of Parent Voting Common Stock or Parent Convertible Preferred Stock.
(e) No Further Ownership Rights in Chancellor Common
Stock and Chancellor Convertible Preferred Stock. The Merger Consideration
(or, in the case of Dissenting Shares, the cash payment therefor) paid upon the
surrender for exchange of certificates representing shares of Chancellor Common
Stock or Chancellor Convertible Preferred Stock in accordance with the terms of
this Article I shall be deemed to have been issued and paid in full
satisfaction of all rights pertaining to the shares of Chancellor Common Stock
or Chancellor Convertible Preferred Stock theretofore represented by such
certificates, subject, however, to Parent's obligation (if any) to pay any
dividends or make any other distributions with a record date prior to the
Effective Time which may have been declared by Chancellor on the shares of
Chancellor Common Stock or Chancellor Convertible Preferred Stock and which
remain unpaid at the Effective Time. From and after the Effective Time, the
holders of certificates evidencing ownership of shares of Chancellor Common
Stock and Chancellor Convertible Preferred Stock shall cease to have any
further rights with respect to such shares except as provided herein or by
applicable law.
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(f) Termination of Payment Fund. Any portion of the
Payment Fund which remains undistributed to the holders of certificates
representing shares of Chancellor Common Stock or Chancellor Convertible
Preferred Stock for 120 days after the Effective Time shall be delivered to
Parent, upon demand, and any holders of shares of Chancellor Common Stock or
Chancellor Convertible Preferred Stock who have not theretofore complied with
this Article I shall thereafter look only to Parent and only as general
creditors thereof for payment of their claims for any Merger Consideration and
any dividends or distributions with respect to Chancellor Common Stock or
Chancellor Convertible Preferred Stock to which they are entitled pursuant to
this Article I.
(g) No Liability. None of Parent, the Surviving
Corporation or the Paying Agent shall be liable to any person in respect of any
cash, shares, dividends or distributions payable from the Payment Fund
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar law. If any certificates representing shares of Chancellor
Common Stock or Chancellor Convertible Preferred Stock shall not have been
surrendered prior to five years after the Effective Time (or immediately prior
to such earlier date on which any Merger Consideration in respect of such
certificate would otherwise escheat to or become the property of any
Governmental Entity (as defined in Section 2.3)), any such cash, shares,
dividends or distributions payable in respect of such certificate shall, to the
extent permitted by applicable law, become the property of the Parent, free and
clear of all claims or interest of any person previously entitled thereto.
(h) Withholding of Tax. Parent shall be entitled to
deduct and withhold from the Merger Consideration otherwise payable pursuant to
this Agreement to any former holder of Chancellor Common Stock or Chancellor
Convertible Preferred Stock, from payments made in respect of Dissenting
Shares, and from cash payable in lieu of fractional shares of Parent Common
Stock pursuant to the Reclassification if any, such amount as Parent (or any
affiliate thereof) or the Paying Agent is required to deduct and withhold with
respect to the making of such payment under the Code or state, local or foreign
Tax law. To the extent that amounts are so withheld by Parent, such withheld
amounts shall be treated for all purposes of this Agreement as having been paid
to the former holder of Chancellor Common Stock, Chancellor Convertible
Preferred Stock or stockholders of Capstar in respect of which such deduction
and withholding was made by Parent.
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1.13 DISSENTING SHARES. Notwithstanding anything to the
contrary in this Agreement, shares of Chancellor 7% Convertible Preferred Stock
and Chancellor $3.00 Convertible Preferred Stock outstanding immediately prior
to the Effective Time and held by a holder who has not voted in favor of the
Merger or consented thereto and who properly demands in writing appraisal of
such shares of Chancellor 7% Convertible Preferred Stock or Chancellor $3.00
Convertible Preferred Stock, as the case may be, in accordance with Section 262
of the Delaware Code and who shall not have withdrawn such demand or otherwise
have forfeited appraisal rights, shall not be converted into or represent the
right to receive the Merger Consideration therefor ("Dissenting Shares"). Such
stockholders shall be entitled to receive payment of the appraised value of
such shares of Chancellor 7% Convertible Preferred Stock or Chancellor $3.00
Convertible Preferred Stock, as the case may be, held by them in accordance
with the provisions of Section 262 of the Delaware Code, except that all
Dissenting Shares held by stockholders who shall have failed to perfect or who
effectively shall have withdrawn or lost their rights to appraisal of such
securities under Section 262 shall thereupon be deemed to have been converted
into, as of the Effective Time, the right to receive, without any interest
thereon, the Merger Consideration, upon surrender in the manner provided in
this Article I of the certificate or certificates that formerly represented
such securities. Chancellor shall take all actions required to be taken by it
in accordance with Section 262(d) of the Delaware Code with respect to the
holders of Chancellor 7% Convertible Preferred Stock and Chancellor $3.00
Convertible Preferred Stock.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF CAPSTAR
Capstar hereby represents and warrants to Chancellor as follows:
2.1 ORGANIZATION, STANDING AND CORPORATE POWER. Each of
Capstar and the Capstar Significant Subsidiaries (as defined below) is a
corporation, limited partnership or limited liability company duly organized,
validly existing and in good standing under the laws of the jurisdiction in
which it is organized and has the requisite corporate, partnership or limited
liability company power and authority to carry on its business as now being
conducted. Each of Capstar and the Capstar Significant Subsidiaries is duly
qualified to do business and is in good standing in each jurisdiction in which
the nature of its business or the ownership or leasing of its properties makes
such
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qualification necessary, except where the failure to be so qualified could not
reasonably be expected to have a material adverse effect on the business,
properties, results of operations, or condition (financial or otherwise) of
Capstar and its subsidiaries, considered as a whole (other than as a result of
changes in general economic conditions or in economic conditions generally
affecting the radio broadcasting industry) (a "Capstar Material Adverse
Effect"). Capstar has delivered to Chancellor complete and correct copies of
its Certificate of Incorporation and Bylaws, as amended to the date of this
Agreement. For purposes of this Agreement, a "Capstar Significant Subsidiary"
means any subsidiary of Capstar that would constitute a "significant
subsidiary" within the meaning of Rule 1-02 of Regulation S-X of the Securities
and Exchange Commission (the "SEC"). For purposes of this Agreement, a
"subsidiary" of any person shall mean any other entity at least a majority of
the equity interests in which is beneficially owned, directly or indirectly, by
the specified person.
2.2 CAPITAL STRUCTURE. (a) The authorized capital stock of
Capstar consists of (i) 750,000,000 shares of Capstar Class A Common Stock,
(ii) 150,000,000 shares of Capstar Class B Common Stock, (iii) 150,000,000
shares of Capstar Class C Common Stock, and (iv) 100,000,000 shares of
preferred stock, $0.01 par value, none of which shares of preferred stock are
issued and outstanding. At the close of business on August 24, 1998: (A)
33,925,158 shares of Capstar Class A Common Stock were issued and outstanding,
500,000 shares of Capstar Class A Common Stock were reserved for issuance
pursuant to outstanding warrants (the "Class A Warrants") to purchase shares of
Capstar Class A Common Stock, 4,700,000 shares of Capstar Class A Common Stock
were reserved for issuance pursuant to options to purchase Capstar Class A
Common Stock granted under the Capstar Broadcasting Corporation 1998 Amended
and Restated Stock Option Plan (the "Capstar Stock Option Plan"), of which
stock options to purchase 3,841,045 shares of Capstar Class A Common Stock have
been granted to directors, officers or employees of Capstar or others ("Capstar
Stock Options"), and 300,000,000 shares of Capstar Class A Common Stock were
reserved for issuance upon the conversion of shares of Capstar Class B Common
Stock and Capstar Class C Common Stock; (B) 6,081,723 shares of Capstar Class B
Common Stock were issued and outstanding and no shares of Capstar Class B
Common Stock were reserved for issuance for any purpose; (C) 67,589,121 shares
of Capstar Class C Common Stock were issued and outstanding and 2,196,408
shares of Capstar Class C Common Stock were reserved for issuance pursuant to
outstanding warrants (the "Class C Warrants" and, collectively with the Class A
Warrants, the "Warrants") to purchase shares of Capstar Class C Common Stock;
and (D) no shares of Capstar Common Stock were held
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as treasury shares by Capstar or any subsidiary of Capstar. Except as set
forth above or as disclosed in the Capstar Disclosure Letter, at the close of
business on August 24, 1998, no shares of capital stock or other equity
securities of Capstar were authorized, issued, reserved for issuance or
outstanding. All outstanding shares of Capstar Common Stock are, and all
shares which may be issued upon the exercise of outstanding Capstar Stock
Options and Warrants will be, when issued, duly authorized, validly issued,
fully paid and nonassessable and not subject to preemptive rights. No bonds,
debentures, notes or other indebtedness of Capstar or any subsidiary of Capstar
having the right to vote (or convertible into, or exchangeable for, securities
having the right to vote) on any matters on which the stockholders of Capstar
or any subsidiary of Capstar may vote are issued or outstanding. All the
outstanding shares of capital stock or other equity interests of each
subsidiary of Capstar have been validly issued and are fully paid and
nonassessable and (except for the shares of 12% Senior Exchangeable Preferred
Stock, $0.01 par value ("Capstar Partners 12% Preferred Stock"), of Capstar
Broadcasting Partners, Inc., a Delaware corporation ("Capstar Partners") and
the 12-5/8% Series E Cumulative Exchangeable Preferred Stock, $0.01 par value
("Capstar Communications 12-5/8% Preferred Stock"), of Capstar Communications,
Inc. (formerly known as SFX Broadcasting, Inc.) ("Capstar Communications")) are
owned by Capstar, by one or more wholly-owned subsidiaries of Capstar or by
Capstar and one or more such wholly-owned subsidiaries, free and clear of all
pledges, claims, liens, charges, encumbrances and security interests of any
kind or nature whatsoever (collectively, "Liens"), except for Liens arising out
of the senior credit facility of Capstar Radio Broadcasting Partners, Inc., a
Delaware corporation ("Capstar Radio Partners"). Except as set forth above,
except as set forth in the Capstar Disclosure Letter or the Capstar SEC
Documents (as defined in Section 2.4), and except for certain provisions of the
Certificate of Incorporation of Capstar relating to "alien ownership" of the
Capstar Common Stock, neither Capstar nor any subsidiary of Capstar has any
outstanding option, warrant, subscription or other right, agreement or
commitment that either (i) obligates Capstar or any subsidiary of Capstar to
issue, sell or transfer, repurchase, redeem or otherwise acquire or vote any
shares of the capital stock of Capstar or any Capstar Significant Subsidiary or
(ii) restricts the transfer of Capstar Common Stock. Except with respect to
the formation of Merger Sub, from the close of business on August 24, 1998 to
the date hereof, neither Capstar nor any subsidiary of Capstar has issued any
capital stock or securities or other rights convertible into or exercisable or
exchangeable for shares of such capital stock.
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2.3 AUTHORITY; NONCONTRAVENTION. Capstar has the requisite
corporate power and authority to enter into this Agreement and, subject to the
approval of its stockholders (the "Capstar Stockholders Approval") with respect
to the approval and adoption of the Parent Amended and Restated Charter, the
issuance of shares of Parent Voting Common Stock in the Merger, the issuance of
shares of Parent Voting Common Stock to be issued upon the conversion of the
Parent Convertible Preferred Stock (the "Underlying Parent Common Stock"), and
the adoption of the Chancellor Stock Option Plans (as defined in Section 3.2)
(the "Capstar Stockholder Proposals"), to consummate the transactions
contemplated by this Agreement. The execution and delivery of this Agreement
by Capstar and the consummation by Capstar of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part
of Capstar, subject to the Capstar Stockholders Approval. This Agreement has
been duly executed and delivered by Capstar and, assuming this Agreement
constitutes the valid and binding agreement of each of the other parties
hereto, constitutes a valid and binding obligation of Capstar, enforceable
against it in accordance with its terms except that the enforcement thereof may
be limited by (a) bankruptcy, insolvency, reorganization, moratorium or similar
laws now or hereafter in effect relating to creditor's rights generally and (b)
general principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity). Except as disclosed in the
Capstar Disclosure Letter and subject to receipt of the Capstar Stockholders
Approval and the filing of the Parent Amended and Restated Charter and the
certificates of designations referred to in Section 1.5, the execution and
delivery of this Agreement do not, and the consummation of the transactions
contemplated by this Agreement and compliance with the provisions hereof will
not, (i) except with respect to the issuance of shares of Parent Voting Common
Stock and Parent Convertible Preferred Stock pursuant to this Agreement, which
will be effected following the filing of the Parent Amended and Restated
Charter, conflict with any of the provisions of the Certificate of
Incorporation or Bylaws of Capstar or the comparable documents of any Capstar
Significant Subsidiary, (ii) subject to the governmental filings and other
matters referred to in the following sentence, conflict with, result in a
breach of or default (with or without notice or lapse of time, or both) under,
or give rise to a right of termination, cancellation or acceleration of any
obligation or loss of a material benefit under, or require the consent of any
person under, any indenture or other agreement, permit, concession, franchise,
license or similar instrument or undertaking to which Capstar or any of the
Capstar Significant Subsidiaries is a party or by which Capstar or any of the
Capstar Significant Subsidiaries or any of their assets is bound or affected,
(iii)
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result in an obligation by Capstar, the Surviving Corporation, Chancellor, or
any of their respective subsidiaries to redeem, repurchase or retire (or offer
to redeem, repurchase or retire) any indebtedness of Capstar or any of its
subsidiaries outstanding as of the date hereof or equity security of Capstar or
any of its subsidiaries outstanding as of the date hereof, or (iv) subject to
the governmental filings and other matters referred to in the following
sentence, contravene any law, rule or regulation of any state or of the United
States or any political subdivision thereof or therein, or any order, writ,
judgment, injunction, decree, determination or award currently in effect,
except, in the cases of the foregoing clauses (ii) through (iv), for
conflicts, breaches, defaults or other consequences (collectively, "breaches")
that, individually or in the aggregate, could not reasonably be expected to
have a Capstar Material Adverse Effect or to materially hinder Capstar's
ability to consummate the transactions contemplated by this Agreement. No
consent, approval or authorization of, or declaration or filing with, or notice
to, any governmental agency or regulatory authority (a "Governmental Entity")
which has not been received or made, is required by or with respect to Capstar
or any of the Capstar Significant Subsidiaries in connection with the execution
and delivery of this Agreement by Capstar or the consummation by Capstar of the
transactions contemplated hereby, except for (i) the filing of premerger
notification and report forms under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), with respect to the
Merger and the termination or earlier expiration of the applicable waiting
period thereunder, (ii) such filings with and approvals required by the Federal
Communications Commission or any successor entity (the "FCC") under the
Communications Act of 1934, as amended, and the rules, regulations and policies
of the FCC promulgated thereunder (collectively, the "Communications Act")
including those required in connection with the transfer of control of Capstar
FCC Licenses (as defined in Section 2.9) for the operation of the Capstar
Licensed Facilities, (iii) the filing of a registration statement under the
Securities Act with respect to the issuance of shares of Parent Voting Common
Stock and Parent Convertible Preferred Stock in the Merger, (iv) a proxy
statement to be filed with the SEC by Capstar relating to the Capstar
Stockholders Approval (such proxy statement, as amended or supplemented from
time to time, the "Joint Proxy Statement/Prospectus"), (v) any filing required
by the New York Stock Exchange with respect to the issuance of shares of Parent
Voting Common Stock in the Merger, upon exercise of the Chancellor Stock
Options issued pursuant to the Chancellor Stock Option Plans and upon
conversion of Parent Convertible Preferred Stock, (vi) such reports under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), as may be
required in connection with this Agreement and
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the transactions contemplated by this Agreement, (vii) such filings and
consents as may be required under any environmental, health or safety law or
regulation pertaining to any notification, disclosure or required approval
triggered by the Merger or the other transactions contemplated by this
Agreement, (viii) such filings as may be required in connection with statutory
provisions and regulations relating to real property transfer gains taxes and
real property transfer taxes, and (ix) the filing with the Delaware Secretary
of State of the certificate of designations for the Parent Convertible
Preferred Stock in accordance with Section 1.5.
2.4 CAPSTAR SEC DOCUMENTS; FINANCIAL STATEMENTS. (i) Capstar
has filed with the SEC a Registration Statement on Form S-1, as amended (the
"IPO Registration Statement"), with respect to the registration of an initial
public offering of the Capstar Class A Common Stock pursuant to the Prospectus
dated May 26, 1998 contained in such IPO Registration Statement, and has filed
all required reports, schedules, forms, statements and other documents with the
SEC since the effective date of the IPO Registration Statement (such IPO
Registration Statement and reports, schedules, forms, statements and other
documents and any other documents filed with the SEC by Capstar, Capstar
Partners, Capstar Radio Partners and Capstar Communications and publicly
available prior to the date of this Agreement are hereinafter referred to as
the "Capstar SEC Documents"); (ii) as of their respective dates, the Capstar
SEC Documents complied in all material respects with the requirements of the
Securities Act of 1933, as amended (the "Securities Act"), or the Exchange Act,
as the case may be, and the rules and regulations of the SEC promulgated
thereunder applicable to such Capstar SEC Documents, and none of the Capstar
SEC Documents as of such dates contained any untrue statement of a material
fact or omitted to state a 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; and (iii) as of their
respective dates, the consolidated financial statements of Capstar and its
predecessors included in the Capstar SEC Documents complied as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, have been prepared in
accordance with GAAP applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto or, in the case of unaudited
statements, as permitted by Rule 10-01 of Regulation S-X) and fairly present,
in all material respects, the consolidated financial position of Capstar and
its consolidated subsidiaries (or its predecessors and their respective
consolidated subsidiaries) as of the dates thereof and the consolidated results
of their operations and cash flows for
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the periods then ended (on the basis stated therein and subject, in the case of
unaudited quarterly statements, to normal year-end audit adjustments).
2.5 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed
in the Capstar SEC Documents or the Capstar Disclosure Letter, or as otherwise
agreed to in writing after the date hereof by Chancellor, or as expressly
permitted by this Agreement, since the date of the most recent audited
financial statements of Capstar contained in the Capstar SEC Documents, Capstar
and its subsidiaries have conducted their business only in the ordinary course,
and there has not been (i) any change which could reasonably be expected to
have a Capstar Material Adverse Effect (including as a result of the
consummation of the transactions contemplated by this Agreement), (ii) to the
date of this Agreement, any declaration, setting aside or payment of any
dividend or other distribution (whether in cash, stock or property) with
respect to any of Capstar's outstanding capital stock, (iii) to the date of
this Agreement, any split, combination or reclassification of any of its
outstanding capital stock or any issuance or the authorization of any issuance
of any other securities in respect of, in lieu of or in substitution for shares
of its outstanding capital stock, (iv) to the date of this Agreement, (x) any
granting by Capstar or any of its subsidiaries to any director, officer or
other employee or independent contractor of Capstar or any of its subsidiaries
of any increase in compensation or acceleration of benefits as a result of
which the annual compensation payable with respect thereto would exceed
$150,000, except under employment agreements in effect as of the date of the
most recent audited financial statements of Capstar contained in the Capstar
SEC Documents, (y) any granting by Capstar or any of its subsidiaries to any
director, officer or other employee or independent contractor of any increase
in, or acceleration of benefits in respect of, severance or termination pay, or
pay in connection with any change of control of Capstar, except in the ordinary
course of business consistent with prior practice or as was required under any
employment, severance or termination agreements in effect as of the date of the
most recent audited financial statements of Capstar contained in the Capstar
SEC Documents, or (z) any entry by Capstar or any of its subsidiaries into any
employment, severance, change of control, or termination or similar agreement
as a result of which the annual compensation payable with respect thereto would
exceed $150,000 with any director, executive officer or other employee or
independent contractor, or (v) any change in accounting methods, principles or
practices by Capstar or any of its subsidiaries materially affecting its
assets, liability or business, except insofar as may have been required by a
change in generally accepted accounting principles.
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2.6 NO EXTRAORDINARY PAYMENTS OR CHANGE IN BENEFITS. Except as
disclosed in the Capstar Disclosure Letter or in the Capstar SEC Documents, no
current or former director, officer, employee or independent contractor of
Capstar or any of its subsidiaries is entitled to receive any payment under any
agreement, arrangement or policy (written or oral) relating to employment,
severance, change of control, termination, stock options, stock purchases,
compensation, deferred compensation, fringe benefits or other employee benefits
currently in effect (collectively, the "Capstar Benefit Plans"), nor will any
benefit received or to be received by any current or former director, officer,
employee or independent contractor of Capstar or any of its subsidiaries under
any Capstar Benefit Plan be accelerated or modified, as a result of or in
connection with the execution and delivery of, or the consummation of the
transactions contemplated by, this Agreement.
2.7 VOTING REQUIREMENTS. The affirmative vote of the holders
of (a) a majority of the outstanding shares of Capstar Class A Common Stock
voting as a single class with respect to the approval and adoption of the
Parent Amended and Restated Charter, (b) a majority of the outstanding shares
of Capstar Class C Common Stock voting as a single class with respect to the
approval and adoption of the Parent Amended and Restated Charter, (c) a
majority of the voting power of the outstanding shares of Capstar Class A
Common Stock and Capstar Class C Common Stock, voting as a single class as
provided in Capstar's Certificate of Incorporation, with respect to the
adoption of the Parent Amended and Restated Charter, and (d) a majority of the
voting power of the outstanding shares of Capstar Class A Common Stock and
Capstar Class C Common Stock represented in person or by proxy at the Capstar
Stockholders Meeting and entitled to vote thereon, voting as a single class as
provided in Capstar's Certificate of Incorporation, with respect to (i) the
approval and issuance of the Parent Voting Common Stock in the Merger, (ii) the
issuance of the Underlying Parent Common Stock upon conversion of the Parent
Convertible Preferred Stock, and (iii) the approval and adoption of the
Chancellor Stock Option Plans and any amendments thereto, are the only votes of
the holders of any class or series of Capstar's capital stock necessary by law
to approve the Capstar Stockholder Proposals.
2.8 STATE TAKEOVER STATUTES. The Board of Directors of Capstar
has approved the terms of this Agreement and the consummation of the
transactions contemplated by this Agreement, and such approval is sufficient to
render inapplicable to the Merger and the other transactions contemplated by
this Agreement the provisions of Section 203 of the Delaware Code. To
Capstar's
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knowledge, no other state takeover statute or similar statute or regulation
applies or purports to apply to the Merger, this Agreement or any of the
transactions contemplated by this Agreement and no provision of the Certificate
of Incorporation, Bylaws or other governing instrument of Capstar or any of its
subsidiaries would, directly or indirectly, restrict or impair the ability of
Capstar to consummate the transactions contemplated by this Agreement.
2.9 CAPSTAR FCC LICENSES; OPERATIONS OF CAPSTAR LICENSED
FACILITIES. Capstar and its subsidiaries have operated the radio stations for
which Capstar and any of its subsidiaries hold licenses from the FCC, in each
case which are owned or operated by Capstar and its subsidiaries (each a
"Capstar Licensed Facility" and collectively the "Capstar Licensed
Facilities"), in material compliance with the terms of the licenses issued by
the FCC to Capstar and its subsidiaries (the "Capstar FCC Licenses"), and in
material compliance with the Communications Act, except where the failure to do
so could not, individually or in the aggregate, reasonably be expected to have
a Capstar Material Adverse Effect. To the knowledge of Capstar, each broadcast
radio station for which Capstar or any of its subsidiaries provides programming
and advertising services pursuant to a local marketing agreement (each a
"Capstar LMA Facility" and collectively the "Capstar LMA Facilities") has been
operated in material compliance with the terms of the licenses issued by the
FCC to the owner of such Capstar LMA Facility (each an "LMA Facility FCC
License" and collectively the "LMA Facility FCC Licenses"). Capstar has, and
its subsidiaries have, timely filed or made all applications, reports and other
disclosures required by the FCC to be made with respect to the Capstar Licensed
Facilities and have timely paid all FCC regulatory fees with respect thereto,
except where the failure to do so could not, individually or in the aggregate,
reasonably be expected to have a Capstar Material Adverse Effect. Capstar and
each of its subsidiaries have, and are the authorized legal holders of, all the
Capstar FCC Licenses necessary or used in the operation of the businesses of
the Capstar Licensed Facilities as presently operated. To the knowledge of
Capstar, the third-parties with which Capstar or its subsidiaries have entered
into local marketing agreements with respect to the Capstar LMA Facilities
have, and are the authorized legal holders of, the LMA Facility FCC License
necessary or used in the operation of the business of the respective Capstar
LMA Facility to which such local marketing agreement relates. All Capstar FCC
Licenses and, to the knowledge of Capstar, LMA Facility FCC Licenses are
validly held and are in full force and effect, unimpaired by any act or
omission of Capstar, each of its subsidiaries (or, to Capstar's knowledge,
their respective predecessors) or their respective
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officers, employees or agents, except where such impairments could not,
individually or in the aggregate, reasonably be expected to have a Capstar
Material Adverse Effect. As of the date hereof, except as set forth in the
Capstar Disclosure Letter, no application, action or proceeding is pending for
the renewal of any Capstar FCC License or, to the knowledge of Capstar, LMA
Facility FCC License as to which any petition to deny has been filed and, to
Capstar's knowledge, there is not now before the FCC any material
investigation, proceeding, notice of violation or order of forfeiture relating
to any Capstar Licensed Facility or Capstar LMA Facility that, if adversely
determined, could reasonably be expected to have a Capstar Material Adverse
Effect, and Capstar is not aware of any basis that could reasonably be expected
to cause the FCC not to renew any of the Capstar FCC Licenses or the LMA
Facility FCC Licenses (other than proceedings to amend FCC rules or the
Communications Act of general applicability to the radio broadcast industry).
There is not now pending and, to Capstar's knowledge, there is not threatened,
any action by or before the FCC to revoke, suspend, cancel, rescind or modify
in any material respect any of the Capstar FCC Licenses or, to the knowledge of
Capstar, any of the LMA Facility FCC Licenses that, if adversely determined,
could reasonably be expected to have a Capstar Material Adverse Effect (other
than proceedings to amend FCC rules or the Communications Act of general
applicability to the radio broadcast industry).
2.10 BROKERS. Except with respect to Xxxxx, Muse & Co.
Partners, L.P. ("Xxxxx Muse"), Credit Suisse First Boston Corporation ("CSFB"),
XX Xxxxxxxxxx, a division of BT Alex. Xxxxx Incorporated ("XX Xxxxxxxxxx") and
Bear, Xxxxxxx & Co. Inc. ("Bear Xxxxxxx"), all negotiations relating to this
Agreement and the transactions contemplated hereby have been carried out by
Capstar directly with Chancellor without the intervention of any person on
behalf of Capstar in such a manner as to give rise to any valid claim by any
person against Capstar, Chancellor, the Surviving Corporation or any subsidiary
of any of them for a finder's fee, brokerage commission, or similar payment.
The Capstar Disclosure Letter sets forth a written summary of the terms of its
agreement relating to the transactions contemplated by this Agreement with
CSFB, XX Xxxxxxxxxx and Bear Xxxxxxx, and Section 7.3(e) of this Agreement sets
forth a summary of the terms of its agreement relating to the transactions
contemplated by this Agreement with Xxxxx Muse, and Capstar has no other
agreements or understandings (written or oral) with respect to such services.
2.11 FCC QUALIFICATION. Capstar and its subsidiaries are fully
qualified under the Communications Act to be the transferors of control of the
Capstar FCC Licenses. Except as
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disclosed in the Capstar Disclosure Letter, Capstar is not aware of any facts
or circumstances relating to the FCC qualifications of Capstar or any of its
subsidiaries that would prevent the FCC's granting the FCC Form 315 Transfer of
Control Application to be filed with respect to the Merger.
2.12 COMPLIANCE WITH APPLICABLE LAWS. Each of Capstar and its
subsidiaries has in effect all federal, state, local and foreign governmental
approvals, authorizations, certificates, filings, franchises, licenses,
notices, permits and rights (collectively, "Permits") necessary for it to own,
lease or operate its properties and assets and to carry on its business as now
conducted, other than such Permits the absence of which could not, individually
or in the aggregate, reasonably be expected to have a Capstar Material Adverse
Effect, and there has occurred no default under any such Permit other than such
defaults which, individually or in the aggregate, could not reasonably be
expected to have a Capstar Material Adverse Effect. Except as disclosed in the
Capstar Disclosure Letter, Capstar and its subsidiaries are in compliance with
all applicable statutes, laws, ordinances, rules, orders and regulations of any
Governmental Entity, except for such noncompliance which, individually or in
the aggregate, could not reasonably be expected to have a Capstar Material
Adverse Effect.
2.13 ABSENCE OF UNDISCLOSED LIABILITIES. Except for (x)
liabilities disclosed in the Capstar SEC Documents, (y) current liabilities
incurred by Capstar and its subsidiaries in the ordinary course of business
consistent with past practices since the date of the most recent consolidated
balance sheet of Capstar set forth in the Capstar SEC Documents and (z)
liabilities contemplated by this Agreement or disclosed in the Capstar
Disclosure Letter, Capstar and its subsidiaries do not have any material
indebtedness, obligations or liabilities of any kind (whether accrued,
absolute, contingent or otherwise) (i) required by GAAP to be reflected on a
consolidated balance sheet of Capstar and its consolidated subsidiaries or in
the notes, exhibits or schedules thereto or (ii) which reasonably could be
expected to have a Capstar Material Adverse Effect.
2.14 LITIGATION. Except as disclosed in the Capstar SEC
Documents or the Capstar Disclosure Letter, to the date of this Agreement,
there is no litigation, administrative action, arbitration or other proceeding
pending against Capstar or any of its subsidiaries or, to the knowledge of
Capstar, threatened that, individually or in the aggregate, could reasonably be
expected to (i) have a Capstar Material Adverse Effect or (ii) prevent, or
significantly delay, the consummation of the transactions contemplated by this
Agreement. Except as set forth
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in the Capstar Disclosure Letter or in the Capstar SEC Documents, to the date
of this Agreement, there is no judgment, order, injunction or decree of any
Governmental Entity outstanding against Capstar or any of its subsidiaries
that, individually or in the aggregate, could reasonably be expected to have
any effect referred to in the foregoing clauses (i) and (ii) of this Section
2.14.
2.15 TRANSACTIONS WITH AFFILIATES. Other than the transactions
contemplated by this Agreement, or except to the extent disclosed in the
Capstar SEC Documents or in the Capstar Disclosure Letter, there have been no
transactions, agreements, arrangements or understandings between Capstar or its
subsidiaries, on the one hand, and Capstar's affiliates (other than
subsidiaries of Capstar) or any other person, on the other hand, that would be
required to be disclosed under Item 404 of Regulation S-K under the Securities
Act.
2.16 LABOR MATTERS. Except as set forth in the Capstar
Disclosure Letter or in the Capstar SEC Documents, (i) neither Capstar nor any
of its subsidiaries is a party to any labor or collective bargaining agreement,
and no employees of Capstar or any of its subsidiaries are represented by any
labor organization, (ii) to the knowledge of Capstar, there are no material
representation or certification proceedings, or petitions seeking a
representation proceeding, pending or threatened to be brought or filed with
the National Labor Relations Board or any other labor relations tribunal or
authority and (iii) to the knowledge of Capstar, there are no material
organizing activities involving Capstar or any of its subsidiaries with respect
to any group of employees of Capstar or its subsidiaries.
2.17 EMPLOYEE ARRANGEMENTS AND BENEFIT PLANS. (a) The Capstar
Disclosure Letter sets forth a complete and correct list of (i) all Capstar
Benefit Plans, including all employee benefit plans within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA") presently sponsored by Capstar or any of its subsidiaries, and (ii)
all persons with whom Capstar or its subsidiaries have written employment,
severance, termination, change-in-control or indemnification agreements
(collectively, the "Employment Arrangements"), under which Capstar or any of
its subsidiaries has any obligation or liability (contingent or otherwise),
except for any Employment Arrangement which (x) provides for annual
compensation (excluding benefits) of $150,000 or less, (y) has an unexpired
term of or can be terminated (before, on or after a change in control) in less
than one year from the date hereof without additional cost or penalty or (z)
relates to agreements
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for on-air talent entered into in the ordinary course of business consistent
with past practices. Except as set forth in the Capstar SEC Documents or in
the Capstar Disclosure Letter and except as could not, individually or in the
aggregate, reasonably be expected to have a Capstar Material Adverse Effect:
(A) each Capstar Benefit Plan has been administered and is in compliance with
the terms of such plan and all applicable laws, rules and regulations, (B) no
"reportable event" (as such term is used in section 4043 of ERISA) (other than
those events for which the 30 day notice has been waived pursuant to the
regulations), "prohibited transaction" (as such term is used in section 406 of
ERISA or section 4975 of the Code) or "accumulated funding deficiency" (as such
term is used in section 412 or 4971 of the Code) has heretofore occurred with
respect to any Capstar Benefit Plan and (C) each Capstar Benefit Plan intended
to qualify under Section 401(a) of the Code has received a favorable
determination from the United States Internal Revenue Service ("IRS") regarding
its qualified status and no notice has been received from the IRS with respect
to the revocation of such qualification.
(b) To the date of this Agreement, there is no
litigation or administrative or other proceeding involving any Capstar Benefit
Plan or Employment Arrangement nor has Capstar or any of its subsidiaries
received written notice that any such proceeding is threatened, in each case
where an adverse determination could reasonably be expected to have a Capstar
Material Adverse Effect. Except as set forth in the Capstar Disclosure Letter,
neither Capstar nor any of its subsidiaries has contributed to any
"multiemployer plan" (within the meaning of section 3(37) of ERISA) and neither
Capstar nor any of its subsidiaries has incurred, nor, to the best of Capstar's
knowledge, is reasonably likely to incur any withdrawal liability which remains
unsatisfied in an amount which could reasonably be expected to have a Capstar
Material Adverse Effect. The termination of, or withdrawal from, any Capstar
Benefit Plan or multiemployer plan to which Capstar or its subsidiaries
contributes, on or prior to the Closing Date, will not subject Capstar or any
of its subsidiaries to any liability under Title IV of ERISA that could
reasonably be expected to have a Capstar Material Adverse Effect.
2.18 TAX MATTERS. Except as set forth in the Capstar Disclosure
Letter or in the Capstar SEC Documents, (A) Capstar and each of its
subsidiaries have timely filed with the appropriate taxing authorities all
material Tax Returns (as defined below) required to be filed through the date
hereof and will timely file any such material Tax Returns required to be filed
on or prior to the Closing Date (except those under valid extension) and all
such Tax Returns are and will be true and
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correct in all material respects, (B) all Taxes (as defined below) of Capstar
and each of its subsidiaries shown to be due on the Tax Returns described in
(A) above have been or will be timely paid, (C) no material deficiencies for
any Taxes have been proposed, asserted or assessed against Capstar or any of
its subsidiaries that have not been fully paid or adequately provided for in
the appropriate financial statements of Capstar and its subsidiaries, and no
power of attorney with respect to any Taxes has been executed or filed with any
taxing authority and no material issues relating to Taxes have been raised in
writing by any governmental authority during any presently pending audit or
examination, (D) Capstar and its subsidiaries are not now subject to audit by
any taxing authority and no waivers of statutes of limitation with respect to
the Tax Returns have been given by or requested in writing from Capstar or any
of its subsidiaries, (E) there are no material liens for Taxes (other than for
Taxes not yet due and payable) on any assets of Capstar or any of its
subsidiaries, (F) neither Capstar nor any of its subsidiaries is a party to or
bound by (nor will any of them become a party to or bound by) any tax
indemnity, tax sharing, tax allocation agreement, or similar agreement,
arrangement or practice with respect to Taxes, (G) neither Capstar nor any of
its subsidiaries has ever been a member of an affiliated group of corporations
within the meaning of Section 1504 of the Code, other than the affiliated group
of which Capstar is the common parent, (H) neither Capstar nor any of its
subsidiaries has filed a consent pursuant to the collapsible corporation
provisions of Section 341(f) of the Code (or any corresponding provision of
state or local law) or agreed to have Section 341(f)(2) of the Code (or any
corresponding provisions of state or local law) apply to any disposition of any
asset owned by Capstar or any of its subsidiaries, as the case may be, (l)
neither Capstar nor any of its subsidiaries has agreed to make, nor is any
required to make, any adjustment under Section 481(a) of the Code or any
similar provision of state, local or foreign law by reason of a change in
accounting method or otherwise, (J) Capstar and its subsidiaries have complied
in all material respects with all applicable laws, rules and regulations
relating to withholding of Taxes and (K) no property owned by Capstar or any of
its subsidiaries (i) is property required to be treated as being owned by
another person pursuant to the provisions of Section 168(f)(8) of the Internal
Revenue Code of 1954, as amended and in effect immediately prior to the
enactment of the Tax Reform Act of 1986; (ii) constitutes "tax exempt use
property" within the meaning of Section 168(h)(l) of the Code; or (iii) is tax
exempt bond financed property within the meaning of Section 168(g) of the Code.
As used in this Agreement, "Tax Return" shall mean any return, report,
claim for refund, estimate, information return or
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statement or other similar document relating to or required to be filed with
any governmental authority with respect to Taxes, including any schedule or
attachment thereto, and including any amendment thereof. As used in this
Agreement, "Taxes" shall mean all federal, state, local and foreign taxes,
duties, levies or similar charges of any kind, including but not limited to
those measured by or referred to as income, gross receipts, sales, use, ad
valorem, franchise, profits, license, withholding, payroll, employment, excise,
severance, stamp, occupation, premium, value added, property or windfall
profits taxes, customs, duties or similar fees, assessments or charges of any
kind whatsoever, together with any interest and any penalties, additions to tax
or additional amounts imposed by any governmental authority, domestic or
foreign.
2.19 INTELLECTUAL PROPERTY. Except as set forth in the Capstar
Disclosure Letter and except to the extent that the inaccuracy of any of the
following (or the circumstances giving rise to such inaccuracy), individually
or in the aggregate, could not reasonably be expected to have a Capstar
Material Adverse Effect: (a) Capstar and each of its subsidiaries owns, or is
licensed to use (in each case, free and clear of any Liens), all Intellectual
Property (as defined below) used in or necessary for the conduct of its
business as currently conducted; (b) the use of any Intellectual Property by
Capstar and its subsidiaries does not infringe on or otherwise violate the
rights of any person and is in accordance with any applicable license pursuant
to which Capstar or any subsidiary acquired the right to use any Intellectual
Property; (c) to the knowledge of Capstar, no person is challenging, infringing
on or otherwise violating any right of Capstar or any of its subsidiaries with
respect to any Intellectual Property owned by and/or licensed to Capstar or its
subsidiaries; and (d) neither Capstar nor any of its subsidiaries has received
any written notice of any pending claim with respect to any Intellectual
Property used by Capstar and its subsidiaries and to its knowledge no
Intellectual Property owned and/or licensed by Capstar or its subsidiaries is
being used or enforced in a manner that would result in the abandonment,
cancellation or unenforceability of such Intellectual Property.
For purposes of this Agreement, "Intellectual Property" shall mean
trademarks, service marks, brand names and other indications of origin, the
goodwill associated with the foregoing and registrations in any jurisdiction
of, and applications in any jurisdiction to register, the foregoing, including
any extension, modification or renewal of any such registration or application;
inventions, discoveries and ideas, whether patentable or not, in any
jurisdiction; patents, applications for patents (including, without limitation,
divisions, continuations, continuations in
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part and renewal applications), and any renewals, extensions or reissues
thereof, in any jurisdiction; nonpublic information, trade secrets and
confidential information and rights in any jurisdiction to limit the use or
disclosure thereof by any person; writings and other works, whether
copyrightable or not, in any jurisdiction; registrations or applications for
registration of copyrights in any jurisdiction, and any renewals or extensions
thereof; any similar intellectual property or proprietary rights; and any
claims or causes of action arising out of or relating to any infringement or
misappropriation of any of the foregoing.
2.20 ENVIRONMENTAL MATTERS. Except as disclosed in the Capstar
SEC Documents or in the Capstar Disclosure Letter and except as could not
reasonably be expected to have a Capstar Material Adverse Effect: (i) the
operations of Capstar and its subsidiaries have been and are in compliance with
all Environmental Laws (as defined below) and with all Permits required by
Environmental Laws, (ii) to the date of this Agreement, there are no pending
or, to the knowledge of Capstar, threatened, actions, suits, claims,
investigations or other proceedings (collectively, "Actions") under or pursuant
to Environmental Laws against Capstar or its subsidiaries or involving any real
property currently or, to the knowledge of Capstar, formerly owned, operated or
leased by Capstar or its subsidiaries, (iii) Capstar and its subsidiaries are
not subject to any Environmental Liabilities (as defined below), and, to the
knowledge of Capstar, no facts, circumstances or conditions relating to,
arising from, associated with or attributable to any real property currently
or, to the knowledge of Capstar, formerly owned, operated or leased by Capstar
or its subsidiaries or operations thereon that could reasonably be expected to
result in Environmental Liabilities, (iv) all real property owned and to the
knowledge of Capstar all real property operated or leased by Capstar or its
subsidiaries is free of contamination from Hazardous Material (as defined
below) and (v) there is not now, nor, to the knowledge of Capstar, has there
been in the past, on, in or under any real property owned, leased or operated
by Capstar or any of its predecessors (a) any underground storage tanks,
above-ground storage tanks, dikes or impoundments containing Hazardous
Materials, (b) any asbestos-containing materials, (c) any polychlorinated
biphenyls, or (d) any radioactive substances.
As used in this Agreement, "Environmental Laws" means any and all
federal, state, local or municipal laws, rules, orders, regulations, statutes,
ordinances, codes, decisions, injunctions, orders, decrees, requirements of any
Governmental Entity, any and all common law requirements, rules and bases of
liability
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regulating, relating to or imposing liability or standards of conduct
concerning pollution, Hazardous Materials or protection of human health or the
environment, as currently in effect and includes, but is not limited to, the
Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA"), 42 U.S.C. Section 9601 et seq., the Hazardous Materials
Transportation Act 49 U.S.C. Section 1801 et seq., the Resource Conservation
and Recovery Act ("RCRA"), 42 U.S.C. Section 6901 et seq., the Clean Water
Act, 33 U.S.C. Section 1251 et seq., the Clean Air Act, 33 U.S.C. Section
2601 et seq., the Toxic Substances Control Act, 15 U.S.C. Section 2601 et
seq., the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C., Section
136 et seq., and the Oil Pollution Act of 1990, 33 U.S.C. Section 2701 et
seq., as such laws have been amended or supplemented, and the regulations
promulgated pursuant thereto, and all analogous state or local statutes. As
used in this Agreement, "Environmental Liabilities" with respect to any person
means any and all liabilities of or relating to such person or any of its
subsidiaries (including any entity which is, in whole or in part, a predecessor
of such person or any of such subsidiaries), whether vested or unvested,
contingent or fixed, actual or potential, known or unknown, which (i) arise
under or relate to matters covered by Environmental Laws and (ii) relate to
actions occurring or conditions existing on or prior to the Closing Date. As
used in this Agreement, "Hazardous Materials" means any hazardous or toxic
substances, materials or wastes, defined, listed, classified or regulated as
such in or under any Environmental Laws which includes, but is not limited to,
petroleum, petroleum products, friable asbestos, urea formaldehyde and
polychlorinated biphenyls.
2.21 MATERIAL AGREEMENTS. (a) Except as disclosed in the
Capstar Disclosure Letter, from and after the date of filing of the Capstar SEC
Documents to the date of this Agreement, neither Capstar nor any of its
subsidiaries has entered into any contract, agreement or other document or
instrument (other than this Agreement) that would be required to be filed with
the SEC or any material amendment, modification or waiver under any contract,
agreement or other document or instrument (other than any such amendments,
modifications or waivers entered into following the date of this Agreement in
connection with the transactions contemplated hereby) that was previously filed
with the SEC or would be required to be so filed.
(b) Except as filed as an exhibit to the Capstar SEC
Documents or as set forth in the Capstar Disclosure Letter, to the date of this
Agreement, neither Capstar nor any of its subsidiaries is a party to or has
entered into or made any material amendment or modification to or granted any
material waiver under any contract, agreement, document or instrument that
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Capstar would be required to file under Item 601 of Regulation S-K promulgated
under the Exchange Act as an Exhibit to Form 10-K (collectively, the "Material
Agreements").
(c) Each of the Material Agreements is valid and
enforceable against Capstar in accordance with its terms, and there is no
default under any Material Agreements either by Capstar or any of its
subsidiaries which is a party to such Material Agreements or, to the knowledge
of Capstar, by any other party thereto, and no event has occurred that with the
lapse of time or the giving of notice or both would constitute a default
thereunder by Capstar or, to the knowledge of Capstar, any other party thereto,
in any such case in which such default or event could reasonably be expected to
have a Capstar Material Adverse Effect. In addition, neither Capstar nor any
subsidiary of Capstar is in material breach of any Material Agreement
(including any breach which would give rise to a right to terminate any such
agreement). To the date of this Agreement, neither Capstar nor any subsidiary
of Capstar has received any written notice (or to the knowledge of Capstar any
other notice) of default or termination under any Material Agreement, and to
the knowledge of Capstar, there exists no basis for any assertion of a right of
default or termination under such agreements. To the date of this Agreement,
neither Capstar nor any subsidiary of Capstar has received any written notice
(or to the knowledge of Capstar any other notice) of the exercise of a put
option or other right pursuant to which Capstar or any of its subsidiaries
would be obligated to purchase capital stock or assets relating to any Capstar
LMA Facility.
2.22 TANGIBLE PROPERTY. All of the assets of Capstar and the
Capstar Significant Subsidiaries are in good operating condition, reasonable
wear and tear excepted, and usable in the ordinary course of business, except
where the failure to be in such condition or so usable could not, individually
or in the aggregate, reasonably be expected to have a Capstar Material Adverse
Effect.
2.23 OPINION OF FINANCIAL ADVISORS. (a) The Capstar Special
Committee has received the opinion of Bear Xxxxxxx, dated the date hereof, to
the effect that, as of such date, the applicable exchange ratio is fair, from a
financial point of view, to the public holders of Capstar Class A Common Stock.
(b) The Board of Directors of Capstar has received the
opinions of each of CSFB and XX Xxxxxxxxxx, dated the date of this Agreement,
to the effect that, as of such date, the Capstar Exchange Ratio is fair, from a
financial point of view, to the holders of Capstar Common Stock.
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2.24 PARENT VOTING COMMON STOCK AND PARENT CONVERTIBLE PREFERRED
STOCK. The shares of Parent Voting Common Stock and Parent Convertible
Preferred Stock to be issued in the Merger will be, upon delivery against
receipt of the shares of Chancellor Common Stock or Chancellor Convertible
Preferred Stock, as applicable, for which such shares will be issued in
accordance with Section 1.10 of this Agreement, duly authorized, validly
issued, fully paid and nonassessable. The shares of Underlying Parent Common
Stock to be issued upon the conversion of the Parent Convertible Preferred
Stock when issued in accordance with the certificate of designations with
respect thereto will be duly authorized, validly issued, fully paid and
nonassessable. The shares of Parent Voting Common Stock to be issued pursuant
to the Chancellor Stock Options issued under the Chancellor Stock Option Plans
will be, upon delivery of the exercise price therefor in accordance with the
terms of the Chancellor Stock Option Plans and agreements pursuant to which
such Chancellor Stock Options were issued, duly authorized, validly issued,
fully paid and nonassessable.
2.25 NO OTHER REPRESENTATIONS AND WARRANTIES. Except for the
representations and warranties made by Capstar as expressly set forth in this
Agreement or in any certificate or document delivered pursuant this Agreement,
neither Capstar nor any of its affiliates has made and shall not be construed
as having made to Chancellor or to any affiliate thereof any representation or
warranty of any kind.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF CHANCELLOR
Chancellor represents and warrants to Capstar as follows:
3.1 ORGANIZATION, STANDING AND CORPORATE POWER. Each of
Chancellor and the Chancellor Significant Subsidiaries (as defined below) is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction in which it is incorporated and has the requisite
corporate power and authority to carry on its business as now being conducted.
Each of Chancellor and the Chancellor Significant Subsidiaries is duly
qualified to do business and is in good standing in each jurisdiction in which
the nature of its business or the ownership or leasing of its properties makes
such qualification necessary, except where the failure to be so qualified could
not reasonably be expected to have a material adverse effect on the business,
properties, results of operations, or condition (financial or otherwise) of
Chancellor and its subsidiaries, considered as a
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whole (other than as a result of changes in general economic conditions or in
economic conditions generally affecting the radio broadcasting industry) (a
"Chancellor Material Adverse Effect"). Chancellor has delivered to Capstar
complete and correct copies of its Certificate of Incorporation and Bylaws, as
amended to the date of this Agreement. For purposes of this Agreement, a
"Chancellor Significant Subsidiary" means any subsidiary of Chancellor that
would constitute a "significant subsidiary" within the meaning of Rule 1-02 of
Regulation S-X of the SEC.
3.2 CAPITAL STRUCTURE. The authorized capital stock of
Chancellor consists of (i) 75,000,000 shares of Chancellor Class A Common
Stock, none of which are issued and outstanding, (ii) 200,000,000 shares of
Chancellor Common Stock and (iii) 50,000,000 shares of preferred stock, $0.01
par value, of which (x) 2,200,000 shares have been designated as 7% Convertible
Preferred Stock and (y) 6,000,000 shares have been designated as $3.00
Convertible Exchangeable Preferred Stock. At the close of business on August
24, 1998: (i) 142,355,677 shares of Chancellor Common Stock were issued and
outstanding, 14,149,671 shares of Chancellor Common Stock were reserved for
issuance pursuant to outstanding options or warrants to purchase Chancellor
Common Stock which have been granted to directors, officers or employees of
Chancellor or others ("Chancellor Stock Options"), 18,059,088 shares of
Chancellor Common Stock were reserved for issuance upon the conversion of the
Chancellor Convertible Preferred Stock, and no shares of Chancellor Common
Stock were held as treasury shares by Chancellor or any subsidiary of
Chancellor; (ii) 2,200,000 shares of Chancellor 7% Convertible Preferred Stock
were issued and outstanding; (iii) 6,000,000 shares of Chancellor $3.00
Convertible Preferred Stock were issued and outstanding; and (iv) no shares of
Chancellor Convertible Preferred Stock were held as treasury shares by
Chancellor or any subsidiary of Chancellor. Except as set forth above or
disclosed in writing by Chancellor to Capstar in a disclosure letter (the
"Chancellor Disclosure Letter") delivered to Capstar prior to the execution and
delivery of this Agreement, at the close of business on August 24, 1998, no
shares of capital stock or other equity securities of Chancellor were
authorized, issued, reserved for issuance or outstanding. All outstanding
shares of capital stock of Chancellor are, and all shares which may be issued
pursuant to Chancellor's stock option plans, as amended to the date hereof (the
"Chancellor Stock Option Plans"), or upon the exercise of outstanding
Chancellor Stock Options or upon the conversion of outstanding shares of
Chancellor Convertible Preferred Stock will be, when issued, duly authorized,
validly issued, fully paid and nonassessable and not subject to preemptive
rights. No bonds, debentures, notes or other indebtedness of Chancellor or any
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subsidiary of Chancellor having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matters on which
the stockholders of Chancellor or any subsidiary of Chancellor may vote are
issued or outstanding. All the outstanding shares of capital stock of each
subsidiary of Chancellor have been validly issued and are fully paid and
nonassessable and (except for the shares of 12-1/4% Series A Senior Cumulative
Exchangeable Preferred Stock, $0.01 par value, of Chancellor Media Corporation
of Los Angeles, a Delaware corporation (the "Chancellor Operating
Subsidiary")), are owned by Chancellor, by one or more wholly-owned
subsidiaries of Chancellor or by Chancellor and one or more such wholly-owned
subsidiaries, free and clear of all Liens, except for Liens arising out of the
senior credit facility of Chancellor Operating Subsidiary and those that,
individually or in the aggregate, could not reasonably be expected to have a
Chancellor Material Adverse Effect. Except as set forth above or in the
Chancellor Disclosure Letter and in that certain Amended and Restated
Stockholders Agreement, dated as of February 14, 1996, as amended by the First
Amendment to Amended and Restated Stockholders Agreement dated as of September
4, 1997, among Chancellor and the stockholders parties thereto (the "Chancellor
Stockholders Agreement") (which restricts the transfer of shares of Chancellor
Common Stock by the parties to the Chancellor Stockholders Agreement in certain
circumstances), and except for certain provisions of the Certificate of
Incorporation of Chancellor relating to "alien ownership" of the Chancellor
Common Stock, neither Chancellor nor any subsidiary of Chancellor has any
outstanding option, warrant, subscription or other right, agreement or
commitment that either (i) obligates Chancellor or any subsidiary of Chancellor
to issue, sell or transfer, repurchase, redeem or otherwise acquire or vote any
shares of the capital stock of Chancellor or any Chancellor Significant
Subsidiary or (ii) restricts the transfer of Chancellor Common Stock. From the
close of business on August 24, 1998 to the date hereof, neither Chancellor nor
any subsidiary of Chancellor has issued any capital stock or securities or
other rights convertible into or exercisable or exchangeable for shares of such
capital stock, other than shares of Chancellor Common Stock issued upon the
exercise of Chancellor Stock Options outstanding on August 24, 1998 or upon the
conversion of shares of Chancellor Convertible Preferred Stock outstanding on
August 24, 1998.
3.3 AUTHORITY; NONCONTRAVENTION. Chancellor has the requisite
corporate power and authority to enter into this Agreement and, subject to the
approval of its stockholders as set forth in Section 5.2(b) with respect to the
approval of this Agreement and the consummation of the Merger (the "Chancellor
Stockholders Approval"), to consummate the transactions
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contemplated by this Agreement. The execution and delivery of this Agreement
by Chancellor and the consummation by Chancellor of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of Chancellor, subject, in the case of the Merger, to the
Chancellor Stockholders Approval. This Agreement has been duly executed and
delivered by Chancellor and, assuming this Agreement constitutes the valid and
binding agreement of each of the other parties hereto, constitutes a valid and
binding obligation of Chancellor, enforceable against it in accordance with its
terms except that the enforcement thereof may be limited by (a) bankruptcy,
insolvency, reorganization, moratorium or similar laws now or hereafter in
effect relating to creditor's rights generally and (b) general principles of
equity (regardless of whether enforceability is considered in a proceeding at
law or in equity). Except as set forth in the Chancellor Disclosure Letter,
the execution and delivery of this Agreement do not, and the consummation of
the transactions contemplated by this Agreement and compliance with the
provisions hereof will not, (i) conflict with any of the provisions of the
Certificate of Incorporation or Bylaws of Chancellor or the comparable
documents of any subsidiary of Chancellor, (ii) subject to the governmental
filings and other matters referred to in the following sentence, conflict with,
result in a breach of or default (with or without notice or lapse of time, or
both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or loss of a material benefit under, or require
the consent of any person under, any indenture or other agreement, permit,
concession, franchise, license or similar instrument or undertaking to which
Chancellor or any of its subsidiaries is a party or by which Chancellor or any
of its subsidiaries or any of their assets is bound or affected, (iii) result
in an obligation by Chancellor or any of its subsidiaries to redeem, repurchase
or retire (or offer to redeem, repurchase or retire) any indebtedness of
Chancellor or any of its subsidiaries outstanding as of the date hereof or
equity security of Chancellor or any of its subsidiaries outstanding as of the
date hereof, or (iv) subject to the governmental filings and other matters
referred to in the following sentence, contravene any law, rule or regulation
of any state or of the United States or any political subdivision thereof or
therein, or any order, writ, judgment, injunction, decree, determination or
award currently in effect, except, in the cases of the foregoing clauses (ii)
through (iv), for breaches that, individually or in the aggregate, could not
reasonably be expected to have a Chancellor Material Adverse Effect or to
materially hinder Chancellor's ability to consummate the transactions
contemplated by this Agreement. No consent, approval or authorization of, or
declaration or filing with, or notice to, any Governmental Entity which has not
been received or
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made, is required by or with respect to Chancellor or any of its subsidiaries
in connection with the execution and delivery of this Agreement by Chancellor
or the consummation by Chancellor of the transactions contemplated hereby,
except for (i) the filing of premerger notification and report forms under the
HSR Act with respect to the Merger and the termination or earlier expiration of
the applicable waiting period thereunder, (ii) such filings with and approvals
required by the FCC under the Communications Act, including those required in
connection with the acquisition of control of the Capstar FCC Licenses for the
operation of the Capstar Licensed Facilities, (iii) the filing of the
Certificate of Merger with the Delaware Secretary of State and appropriate
documents with the relevant authorities of other states in which Chancellor is
qualified to do business, (iv) the Joint Proxy Statement/Prospectus to be filed
with the SEC by Chancellor relating to the Chancellor Stockholders Approval,
(v) the filing of such reports under the Exchange Act as may be required in
connection with this Agreement and the transactions contemplated by this
Agreement, (vi) such filings and consents as may be required under any
environmental, health or safety law or regulation pertaining to any
notification, disclosure or required approval triggered by the Merger or the
other transactions contemplated by this Agreement, and (vii) such filings as
may be required in connection with statutory provisions and regulations
relating to real property transfer gains taxes and real property transfer
taxes.
3.4 CHANCELLOR SEC DOCUMENTS; FINANCIAL STATEMENTS. (i)
Chancellor and its predecessors have filed all required reports, schedules,
forms, statements and other documents with the SEC since January 1, 1995 (such
reports, schedules, forms, statements and other documents and any other
documents filed with the SEC and publicly available prior to the date of this
Agreement are hereinafter referred to as the "Chancellor SEC Documents"); (ii)
as of their respective dates, the Chancellor SEC Documents complied in all
material respects with the requirements of the Securities Act or the Exchange
Act, as the case may be, and the rules and regulations of the SEC promulgated
thereunder applicable to such Chancellor SEC Documents, and none of the
Chancellor SEC Documents as of such dates contained any untrue statement of a
material fact or omitted to state a 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; and (iii) as of their
respective dates, the consolidated financial statements of Chancellor and its
predecessors included in the SEC Documents complied as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, have been prepared in accordance
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with generally accepted accounting principles applied on a consistent basis
during the periods involved (except as may be indicated in the notes thereto
or, in the case of unaudited statements, as permitted by Rule 10-01 of
Regulation S-X) and fairly present, in all material respects, the consolidated
financial position of Chancellor and its consolidated subsidiaries (or its
predecessors and their respective consolidated subsidiaries) as of the dates
thereof and the consolidated results of their operations and cash flows for the
periods then ended (on the basis stated therein and subject, in the case of
unaudited quarterly statements, to normal year-end audit adjustments).
3.5 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed
in the Chancellor SEC Documents or except as disclosed in the Chancellor
Disclosure Letter, or as otherwise agreed to in writing after the date hereof
by Capstar, or as expressly permitted by this Agreement, since the date of the
most recent audited financial statements included in the Chancellor SEC
Documents, Chancellor and its subsidiaries have conducted their business only
in the ordinary course, and there has not been (i) any change which could
reasonably be expected to have a Chancellor Material Adverse Effect (including
as a result of the consummation of the transactions contemplated by this
Agreement), (ii) any declaration, setting aside or payment of any dividend or
other distribution (whether in cash, stock or property) with respect to any of
Chancellor's currently outstanding capital stock (other than the payment of
regular cash dividends on the Chancellor 7% Convertible Preferred Stock and
Chancellor $3.00 Convertible Preferred Stock, in each case in accordance with
usual record and payment dates), (iii) any split, combination or
reclassification of any of its outstanding capital stock or any issuance or the
authorization of any issuance of any other securities in respect of, in lieu of
or in substitution for shares of its outstanding capital stock, (iv) (x) any
granting by Chancellor or any of its subsidiaries to any director, officer or
other employee or independent contractor of Chancellor or any of its
subsidiaries of any increase in compensation or acceleration of benefits,
except in the ordinary course of business consistent with prior practice or as
was required under employment agreements in effect as of the date of the most
recent audited financial statements included in the Chancellor SEC Documents,
(y) any granting by Chancellor or any of its subsidiaries to any director,
officer or other employee or independent contractor of any increase in, or
acceleration of benefits in respect of, severance or termination pay, or pay in
connection with any change of control of Chancellor, except in the ordinary
course of business consistent with prior practice or as was required under any
employment, severance or termination agreements in effect as
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of the date of the most recent audited financial statements included in the
Chancellor SEC Documents or (z) any entry by Chancellor or any of its
subsidiaries into any employment, severance, change of control, or termination
or similar agreement with any director, executive officer or other employee or
independent contractor other than in the ordinary course of business consistent
with past practices, or (v) any change in accounting methods, principles or
practices by Chancellor or any of its subsidiaries materially affecting its
assets, liability or business, except insofar as may have been required by a
change in generally accepted accounting principles.
3.6 NO EXTRAORDINARY PAYMENTS OR CHANGE IN BENEFITS. Except as
disclosed in the Chancellor Disclosure Letter, no current or former director,
officer, employee or independent contractor of Chancellor or any of its
subsidiaries is entitled to receive any payment under any agreement,
arrangement or policy (written or oral) relating to employment, severance,
change of control, termination, stock options, stock purchases, compensation,
deferred compensation, fringe benefits or other employee benefits currently in
effect (collectively, the "Chancellor Benefit Plans"), nor will any benefit
received or to be received by any current or former director, officer, employee
or independent contractor of Chancellor or any of its subsidiaries under any
Chancellor Benefit Plan be accelerated or modified, as a result of or in
connection with the execution and delivery of, or the consummation of the
transactions contemplated by, this Agreement.
3.7 BROKERS. Except with respect to Salomon Brothers Inc. and
Xxxxx Xxxxxx Inc., collectively doing business as Xxxxxxx Xxxxx Barney
("Xxxxxxx Xxxxx Xxxxxx"), Xxxxxxxxxxx Xxxxxxx & Co. ("Xxxxxxxxxxx"), Xxxxxx
Xxxxxxx & Co. Incorporated ("Xxxxxx Xxxxxxx") and Xxxxxxx, Xxxxx & Co.
("Xxxxxxx Sachs"), all negotiations relating to this Agreement and the
transactions contemplated hereby have been carried out by Chancellor directly
with Capstar without the intervention of any person on behalf of Chancellor in
such a manner as to give rise to any valid claim by any person against
Chancellor, Capstar, the Surviving Corporation or any subsidiary of any of them
for a finder's fee, brokerage commission, or similar payment. The Chancellor
Disclosure Letter sets forth a written summary of the terms of its agreements
relating to the transactions contemplated by this Agreement with Xxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxx, Xxxxxx Xxxxxxx and Xxxxxxx Xxxxx, and Chancellor has no
other agreements or understandings (written or oral) with respect to such
services.
3.8 OPINION OF FINANCIAL ADVISOR. (a) The Chancellor Special
Committee has received the opinion of Xxxxxxxxxxx, dated
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the date hereof, to the effect that, as of such date, the Chancellor Exchange
Ratio is fair, from a financial point of view, to Chancellor and the holders of
Chancellor Common Stock.
(b) The Chancellor Special Committee has received the
opinion of Xxxxxxx Xxxxx Xxxxxx, dated the date hereof, to the effect that, as
of such date, the Chancellor Exchange Ratio is fair, from a financial point of
view, to the holders of Chancellor Common Stock who are not affiliated with
Hicks, Muse, Xxxx & Xxxxx.
3.9 ABSENCE OF UNDISCLOSED LIABILITIES. Except as disclosed
in the Chancellor SEC Documents and except for liabilities contemplated by this
Agreement or disclosed in the Chancellor Disclosure Letter, Chancellor and its
subsidiaries do not have any material indebtedness, obligations or liabilities
of any kind (whether accrued, absolute, contingent or otherwise) (i) required
by GAAP to be reflected on a consolidated balance sheet of Chancellor and its
consolidated subsidiaries or in the notes, exhibits or schedules thereto or
(ii) which reasonably could be expected to have a Chancellor Material Adverse
Effect.
3.10 LITIGATION. Except as disclosed in the Chancellor SEC
Documents or in the Chancellor Disclosure Letter, to the date of this
Agreement, there is no litigation, administrative action, arbitration or other
proceeding pending against Chancellor or any of its subsidiaries or, to the
knowledge of Chancellor, threatened that, individually or in the aggregate,
could reasonably be expected to (i) have a Chancellor Material Adverse Effect
or (ii) prevent, or significantly delay the consummation of the transactions
contemplated by this Agreement. Except as set forth in the Chancellor SEC
Documents, to the date of this Agreement, there is no judgment, order,
injunction or decree of any Governmental Entity outstanding against Chancellor
or any of its subsidiaries that, individually or in the aggregate, could
reasonably be expected to have any effect referred to in the foregoing clauses
(i) and (ii) of this Section 3.10.
3.11 TRANSACTIONS WITH AFFILIATES. Other than the transactions
contemplated by this Agreement or except to the extent disclosed in the
Chancellor SEC Documents or in the Chancellor Disclosure Letter, there have
been no transactions, agreements, arrangements or understandings between
Chancellor or its subsidiaries, on the one hand, and Chancellor's affiliates
(other than subsidiaries of Chancellor) or any other person, on the other hand,
that would be required to be disclosed under Item 404 of Regulation S-K under
the Securities Act.
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3.12 VOTING REQUIREMENTS. The affirmative vote of a majority of
the outstanding shares of Chancellor Common Stock with respect to the adoption
of this Agreement is the only vote of the holders of any class or series of
Chancellor's capital stock necessary by law to approve this Agreement and the
transactions contemplated by this Agreement.
3.13 FCC QUALIFICATION. Chancellor and its subsidiaries are
fully qualified under the Communications Act to be the transferees of control
of the Capstar FCC Licenses. Except as disclosed in the Chancellor Disclosure
Letter, Chancellor is not aware of any facts or circumstances relating to the
FCC qualifications of Chancellor or any of its subsidiaries that would prevent
the FCC's granting the FCC Form 315 Transfer of Control Application to be filed
with respect to the Merger.
3.14 EMPLOYEE ARRANGEMENTS AND BENEFIT PLANS. (a) Except as
set forth in the Chancellor SEC Documents or in the Chancellor Disclosure
Letter and except as could not, individually or in the aggregate, reasonably be
expected to have a Chancellor Material Adverse Effect: (A) each Chancellor
Benefit Plan has been administered and is in compliance with the terms of such
plan and all applicable laws, rules and regulations, (B) no "reportable event"
(as such term is used in section 4043 of ERISA) (other than those events for
which the 30 day notice has been waived pursuant to the regulations),
"prohibited transaction" (as such term is used in section 406 of ERISA or
section 4975 of the Code) or "accumulated funding deficiency" (as such term is
used in section 412 or 4971 of the Code) has heretofore occurred with respect
to any Chancellor Benefit Plan and (C) each Chancellor Benefit Plan intended to
qualify under Section 401(a) of the Code has received a favorable determination
from the IRS regarding its qualified status and no notice has been received
from the IRS with respect to the revocation of such qualification.
(b) To the date of this Agreement, there is no
litigation or administrative or other proceeding involving any Chancellor
Benefit Plan nor has Chancellor or its subsidiaries received written notice
that any such proceeding is threatened, in each case where an adverse
determination could reasonably be expected to have a Chancellor Material
Adverse Effect. Neither Chancellor nor any of its subsidiaries has incurred,
nor, to the best of Chancellor's knowledge, is reasonably likely to incur any
withdrawal liability with respect to any "multiemployer plan" (within the
meaning of section 3(37) of ERISA) which remains unsatisfied in an amount which
could reasonably be expected to have a Chancellor Material Adverse Effect. The
termination of, or withdrawal from, any Chancellor Benefit Plan or
multiemployer plan to which Chancellor or its subsidiaries contributes, on or
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prior to the Closing Date, will not subject Chancellor or any of its
subsidiaries to any liability under Title IV of ERISA that could reasonably be
expected to have a Chancellor Material Adverse Effect.
3.15 TAX MATTERS. Except as set forth in the Chancellor
Disclosure Letter or the Chancellor SEC Documents, (A) Chancellor and each of
its subsidiaries have timely filed with the appropriate taxing authorities all
material Tax Returns required to be filed through the date hereof and will
timely file any such material Tax Returns required to be filed on or prior to
the Closing Date (except those under valid extension) and all such Tax Returns
are and will be true and correct in all material respects, (B) all Taxes of
Chancellor and each of its subsidiaries shown to be due on the Tax Returns
described in (A) above have been or will be timely paid, (C) no material
deficiencies for any Taxes have been proposed, asserted or assessed against
Chancellor or any of its subsidiaries that have not been fully paid or
adequately provided for in the appropriate financial statements of Chancellor
and its subsidiaries, and no power of attorney with respect to any Taxes has
been executed or filed with any taxing authority and no material issues
relating to Taxes have been raised in writing by any governmental authority
during any presently pending audit or examination, (D) Chancellor and its
subsidiaries are not now subject to audit by any taxing authority and no
waivers of statutes of limitation with respect to the Tax Returns have been
given by or requested in writing from Chancellor or any of its subsidiaries,
(E) there are no material liens for Taxes (other than for Taxes not yet due and
payable) on any assets of Chancellor or any of its subsidiaries, (F) neither
Chancellor nor any of its subsidiaries is a party to or bound by (nor will any
of them become a party to or bound by) any tax indemnity, tax sharing, tax
allocation agreement, or similar agreement, arrangement or practice with
respect to Taxes, (G) neither Chancellor nor any of its subsidiaries has ever
been a member of an affiliated group of corporations within the meaning of
Section 1504 of the Code, other than the affiliated group of which Chancellor
is the common parent, (H) neither Chancellor nor any of its subsidiaries has
filed a consent pursuant to the collapsible corporation provisions of Section
341(f) of the Code (or any corresponding provision of state or local law) or
agreed to have Section 341(f)(2) of the Code (or any corresponding provisions
of state or local law) apply to any disposition of any asset owned by
Chancellor or any of its subsidiaries, as the case may be, (I) neither
Chancellor nor any of its subsidiaries has agreed to make, nor is any required
to make, any adjustment under Section 481(a) of the Code or any similar
provision of state, local or foreign law by reason of a change in accounting
method or
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otherwise, (J) Chancellor and its subsidiaries have complied in all material
respects with all applicable laws, rules and regulations relating to
withholding of Taxes and (K) no property owned by Chancellor or any of its
subsidiaries (i) is property required to be treated as being owned by another
person pursuant to the provisions of Section 168(f)(8) of the Internal Revenue
Code of 1954, as amended and in effect immediately prior to the enactment of
the Tax Reform Act of 1986; (ii) constitutes "tax exempt use property" within
the meaning of Section 168(h)(l) of the Code; or (iii) is tax exempt bond
financed property within the meaning of Section 168(g) of the Code.
3.16 INTELLECTUAL PROPERTY. Except as set forth in the
Chancellor Disclosure Letter or the Chancellor SEC Documents and except to the
extent that the inaccuracy of any of the following (or the circumstances giving
rise to such inaccuracy), individually or in the aggregate, could not
reasonably be expected to have a Chancellor Material Adverse Effect: (a)
Chancellor and each of its subsidiaries owns, or is licensed to use (in each
case, free and clear of any Liens), all Intellectual Property used in or
necessary for the conduct of its business as currently conducted; (b) the use
of any Intellectual Property by Chancellor and its subsidiaries does not
infringe on or otherwise violate the rights of any person and is in accordance
with any applicable license pursuant to which Chancellor or any subsidiary
acquired the right to use any Intellectual Property; and (c) to the knowledge
of Chancellor, no person is challenging, infringing on or otherwise violating
any right of Chancellor or any of its subsidiaries with respect to any
Intellectual Property owned by and/or licensed to Chancellor or its
subsidiaries; and (d) neither Chancellor nor any of its subsidiaries has
received any written notice of any pending claim with respect to any
Intellectual Property used by Chancellor and its subsidiaries and to its
knowledge no Intellectual Property owned and/or licensed by Chancellor or its
subsidiaries is being used or enforced in a manner that would result in the
abandonment, cancellation or unenforceability of such Intellectual Property.
3.17 ENVIRONMENTAL MATTERS. Except as disclosed in the
Chancellor SEC Documents or in the Chancellor Disclosure Letter and except as
could not reasonably be expected to have a Chancellor Material Adverse Effect
(i) the operations of Chancellor and its subsidiaries have been and are in
compliance with all Environmental Laws and with all Permits required by
Environmental Laws, (ii) to the date of this Agreement, there are no pending
or, to the knowledge of Chancellor, threatened, Actions under or pursuant to
Environmental Laws against Chancellor or its subsidiaries or involving any real
property currently or, to the knowledge of Chancellor, formerly owned,
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operated or leased by Chancellor or its subsidiaries, (iii) Chancellor and its
subsidiaries are not subject to any Environmental Liabilities, and, to the
knowledge of Chancellor, no facts, circumstances or conditions relating to,
arising from, associated with or attributable to any real property currently
or, to the knowledge of Chancellor, formerly owned, operated or leased by
Chancellor or its subsidiaries or operations thereon that could reasonably be
expected to result in Environmental Liabilities, (iv) all real property owned
and to the knowledge of Chancellor all real property operated or leased by
Chancellor or its subsidiaries is free of contamination from Hazardous Material
and (v) there is not now, nor, to the knowledge of Chancellor, has there been
in the past, on, in or under any real property owned, leased or operated by
Chancellor or any of its predecessors (a) any underground storage tanks,
above-ground storage tanks, dikes or impoundments containing Hazardous
Materials, (b) any asbestos-containing materials, (c) any polychlorinated
biphenyls, or (d) any radioactive substances.
3.18 COMPLIANCE WITH APPLICABLE LAWS. Each of Chancellor and
its subsidiaries has in effect all Permits necessary for it to own, lease or
operate its properties and assets and to carry on its business as now
conducted, other than such Permits the absence of which could not, individually
or in the aggregate, reasonably be expected to have a Chancellor Material
Adverse Effect, and there has occurred no default under any such Permit other
than such defaults which, individually or in the aggregate, could not
reasonably be expected to have a Chancellor Material Adverse Effect. Except as
disclosed in the Chancellor Disclosure Letter, Chancellor and its subsidiaries
are in compliance with all applicable statutes, laws, ordinances, rules, orders
and regulations of any Governmental Entity, except for such noncompliance
which, individually or in the aggregate, could not reasonably be expected to
have a Chancellor Material Adverse Effect.
3.19 CHANCELLOR FCC LICENSES; OPERATIONS OF CHANCELLOR LICENSED
FACILITIES. Chancellor and its subsidiaries have operated the radio stations
for which Chancellor and any of its subsidiaries hold licenses from the FCC, in
each case which are owned or operated by Chancellor and its subsidiaries (each
a "Chancellor Licensed Facility" and collectively the "Chancellor Licensed
Facilities"), in material compliance with the terms of the licenses issued by
the FCC to Chancellor and its subsidiaries (the "Chancellor FCC Licenses"), and
in material compliance with the Communications Act, except where the failure to
do so could not, individually or in the aggregate, reasonably be expected to
have a Chancellor Material Adverse Effect. To the knowledge of Chancellor,
each broadcast radio station for which Chancellor or
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any of its subsidiaries provides programming and advertising services pursuant
to a local marketing agreement (each a "Chancellor LMA Facility" and
collectively the "Chancellor LMA Facilities") has been operated in material
compliance with the terms of the licenses issued by the FCC to the owner of
such Chancellor LMA Facility (each an "Chancellor LMA Facility FCC License" and
collectively the "Chancellor LMA Facility FCC Licenses"). Chancellor has, and
its subsidiaries have, timely filed or made all applications, reports and other
disclosures required by the FCC to be made with respect to the Chancellor
Licensed Facilities and have timely paid all FCC regulatory fees with respect
thereto, except where the failure to do so could not, individually or in the
aggregate, reasonably be expected to have a Chancellor Material Adverse Effect.
Chancellor and each of its subsidiaries have, and are the authorized legal
holders of, all the Chancellor FCC Licenses necessary or used in the operation
of the businesses of the Chancellor Licensed Facilities as presently operated.
To the knowledge of Chancellor, the third-parties with which Chancellor or its
subsidiaries have entered into local marketing agreements with respect to the
Chancellor LMA Facilities have, and are the authorized legal holders of, the
Chancellor LMA Facility FCC License necessary or used in the operation of the
business of the respective Chancellor LMA Facility to which such local
marketing agreement relates. All Chancellor FCC Licenses and, to the knowledge
of Chancellor, Chancellor LMA Facility FCC Licenses are validly held and are in
full force and effect, unimpaired by any act or omission of Chancellor, each of
its subsidiaries (or, to Chancellor's knowledge, their respective predecessors)
or their respective officers, employees or agents, except where such
impairments could not, individually or in the aggregate, reasonably be expected
to have a Chancellor Material Adverse Effect. As of the date hereof, except as
set forth in the Chancellor Disclosure Letter, no application, action or
proceeding is pending for the renewal of any Chancellor FCC License or, to the
knowledge of Chancellor, Chancellor LMA Facility FCC License as to which any
petition to deny has been filed and, to Chancellor's knowledge, there is not
now before the FCC any material investigation, proceeding, notice of violation
or order of forfeiture relating to any Chancellor Licensed Facility or
Chancellor LMA Facility that, if adversely determined, could reasonably be
expected to have a Chancellor Material Adverse Effect, and Chancellor is not
aware of any basis that could reasonably be expected to cause the FCC not to
renew any of the Chancellor FCC Licenses or the Chancellor LMA Facility FCC
Licenses (other than proceedings to amend FCC rules or the Communications Act
of general applicability to the radio broadcast industry). There is not now
pending and, to Chancellor's knowledge, there is not threatened, any action by
or
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before the FCC to revoke, suspend, cancel, rescind or modify in any material
respect any of the Chancellor FCC Licenses or to the knowledge of Chancellor,
any of the Chancellor LMA Facility FCC Licenses that, if adversely determined,
could reasonably be expected to have a Chancellor Material Adverse Effect
(other than proceedings to amend FCC rules or the Communications Act of general
applicability to the radio broadcast industry).
3.20 STATE TAKEOVER STATUTES. The Board of Directors of
Chancellor has approved the terms of this Agreement and the consummation of the
transactions contemplated by this Agreement, and such approval is sufficient to
render inapplicable to the Merger and the other transactions contemplated by
this Agreement the provisions of Section 203 of the Delaware Code. To
Chancellor's knowledge, no other state takeover statute or similar statute or
regulation applies or purports to apply to the Merger, this Agreement or any of
the transactions contemplated by this Agreement and no provision of the
Certificate of Incorporation, Bylaws or other governing instrument of
Chancellor or any of its subsidiaries would, directly or indirectly, restrict
or impair the ability of Chancellor to consummate the transactions contemplated
by this Agreement.
3.21 NO OTHER REPRESENTATIONS AND WARRANTIES. Except for the
representations and warranties made by Chancellor as expressly set forth in
this Agreement or in any certificate or document delivered pursuant this
Agreement, neither Chancellor nor any of its affiliates has made and shall not
be construed as having made to Capstar or to any affiliate thereof any
representation or warranty of any kind.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF MERGER SUB
Merger Sub represents and warrants to Capstar and Chancellor as
follows:
4.1 ORGANIZATION, STANDING AND CORPORATE POWER. Merger Sub is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has the requisite corporate power and
authority to carry on its business as now being conducted. Merger Sub is duly
qualified to do business and in good standing in each jurisdiction in which the
nature of its business or the ownership or leasing of its properties would make
such qualification necessary, except where the failure to be so qualified could
not reasonably be expected to have a Capstar Material Adverse Effect.
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4.2 CAPITAL STRUCTURE. The authorized capital stock of Merger
Sub consists of 1,000 shares of common stock, $0.01 par value, all of which are
issued and outstanding and, except as set forth in the Capstar Disclosure
Letter, owned of record and beneficially by Capstar, free and clear of all
Liens. All outstanding shares of capital stock of Merger Sub are duly
authorized, validly issued, fully paid and nonassessable and not subject to
preemptive rights. Merger Sub has no outstanding options, warrants,
subscriptions or other rights, agreements or commitments that obligates it to
issue, sell or transfer, repurchase, redeem or otherwise acquire or vote any
shares of the capital stock of Merger Sub.
4.3 AUTHORITY; NONCONTRAVENTION. Merger Sub has all requisite
corporate power and authority to enter into this Agreement and to consummate
the transactions contemplated by this Agreement. The execution and delivery of
this Agreement by Merger Sub and the consummation by it of the transactions
contemplated by this Agreement, have been duly authorized by all necessary
corporate action on the part of Merger Sub, including all necessary stockholder
approval. This Agreement has been duly executed and delivered by Merger Sub,
and, assuming this Agreement constitutes the valid and binding agreement of
Chancellor and Capstar, constitutes a valid and binding obligation of Merger
Sub enforceable against it in accordance with its terms except that the
enforcement thereof may be limited by (a) bankruptcy, insolvency,
reorganization, moratorium or similar laws now or hereafter in effect relating
to creditor's rights generally and (b) general principles of equity (regardless
of whether enforceability is considered in a proceeding at law or in equity).
The execution and delivery of this Agreement do not, and the consummation of
the transactions contemplated by this Agreement and compliance with the
provisions of this Agreement will not, (i) conflict with any of the provisions
of the Certificate of Incorporation or Bylaws of Merger Sub, or (ii) subject to
the governmental filings and other matters referred to in the following
sentence, contravene any law, rule or regulation of any state or of the United
States or any political subdivision thereof or therein, or any order, writ,
judgment, injunction, decree, determination or award currently in effect. No
consent, approval or authorization of, or declaration or filing with, or notice
to, any Governmental Entity which has not been received or made is required by
or with respect to Merger Sub in connection with the execution and delivery of
this Agreement by it or the consummation by it of any of the transactions
contemplated by this Agreement, except for (i) the filing of premerger
notification and report forms under the HSR Act with respect to the Merger and
the termination or earlier expiration of the applicable waiting periods
thereunder, (ii) such filings with and
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approvals required by the FCC under the Communications Act including those
required in connection with the transfer of control of the Capstar FCC Licenses
for the operation of the Capstar Licensed Facilities, and (iii) the filing of a
certificate of merger with the Delaware Secretary of State, and appropriate
documents with the relevant authorities of the other states in which Chancellor
is qualified to do business.
4.4 NO PRIOR ACTIVITIES. Except for this Agreement and as set
forth in the Capstar Disclosure Letter, Merger Sub (i) has not entered into any
agreements or arrangements with any person or (ii) is not subject to or bound
by any obligation or undertaking. Except as contemplated by this Agreement,
Merger Sub has not engaged, directly or indirectly, in any business activities
of any type or kind.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 PREPARATION OF FORM S-4 AND JOINT PROXY
STATEMENT/PROSPECTUS; INFORMATION SUPPLIED.
(a) As soon as practicable following the date of this
Agreement, (i) Chancellor and Capstar shall prepare and file with the SEC the
Joint Proxy Statement/Prospectus and (ii) Capstar and Chancellor shall prepare
and file a Registration Statement on Form S-4 (the "Form S-4") with respect to
the registration of the issuance of shares of Parent Voting Common Stock and
Parent Convertible Preferred Stock in the Merger, of which the Joint Proxy
Statement/Prospectus will form a part. Each of Chancellor and Capstar shall
use its reasonable best efforts to have the Form S-4 declared effective under
the Securities Act as promptly as practicable after such filing. Chancellor
shall use its reasonable best efforts to cause the Joint Proxy
Statement/Prospectus to be mailed to Chancellor's stockholders, and Capstar
shall use its reasonable best efforts to cause the Joint Proxy
Statement/Prospectus to be mailed to Capstar's stockholders, in each case as
promptly as practicable after the Form S-4 is declared effective under the
Securities Act. Capstar shall also take any action (other than qualifying to
do business in any jurisdiction in which it is not now so qualified or take any
action that would subject it to the service of process in suits, other than as
to matters and transactions relating to the Form S-4, in any jurisdiction where
it is not so subject) required to be taken under any applicable state
securities laws in connection with the issuance of the Parent Voting Common
Stock and Parent Convertible Preferred Stock in the
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Merger and Chancellor shall furnish all information concerning itself and the
holders of shares of Chancellor Common Stock and Chancellor Convertible
Preferred Stock as may be reasonably requested in connection with any such
action.
(b) Capstar agrees and represents and warrants that
the information supplied or to be supplied by it specifically for inclusion or
incorporation by reference in the (i) Form S-4 will not, at the time the Form
S-4 is filed with the SEC, at any time it is amended or supplemented or at the
time it becomes effective under the Securities Act, 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 are made, not misleading, or (ii) the
Joint Proxy Statement/Prospectus will not, at the date it is first mailed to
Capstar's stockholders or at the time of the Capstar Stockholders Meeting (as
defined in Section 5.2(a)), contain any statement which, at the time and in
light of the circumstances under which it is made, is false or misleading with
respect to any material fact, or omits to state any material fact necessary in
order to make the statements therein not false or misleading or necessary to
correct any statement in any earlier communication with respect to the
solicitation of a proxy for the same meeting or subject matter thereof which
has become false or misleading. Capstar agrees that the Form S-4 will comply
as to form in all material respects with the requirements of the Securities Act
and the rules and regulations promulgated thereunder and Capstar agrees that
the Joint Proxy Statement/Prospectus will comply as to form in all material
respects with the requirements of the Exchange Act and the rules and
regulations promulgated thereunder, except in each case with respect to
statements made or incorporated by reference in the Form S-4 or the Joint Proxy
Statement/Prospectus supplied by Chancellor specifically for inclusion or
incorporation by reference therein as to which Capstar assumes no
responsibility.
(c) Chancellor agrees and represents and warrants that
the information supplied or to be supplied by it specifically for inclusion or
incorporation by reference in (i) the Form S-4 will not, at the time the Form
S-4 is filed with the SEC, at any time it is amended or supplemented or at the
time it becomes effective under the Securities Act, 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 are made, not misleading, or (ii) the
Joint Proxy Statement/Prospectus will not, at the date it is first mailed to
Chancellor's stockholders or at the time of the Chancellor Stockholders
Meeting, contain any statement which, at the time
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and in light of the circumstances under which it is made, is false or
misleading with respect to any material fact, or omits to state any material
fact necessary in order to make the statements therein not false or misleading
or necessary to correct any statement in any earlier communication with respect
to the solicitation of a proxy for the same meeting or subject matter thereof
which has become false or misleading.
5.2 STOCKHOLDER APPROVAL. (a) Capstar agrees that it will
take all action necessary in accordance with applicable law and its Certificate
of Incorporation and Bylaws to convene a meeting of its stockholders (the
"Capstar Stockholders Meeting") to submit this Agreement and the Parent Amended
and Restated Charter, together (subject to Section 5.5(b) below) with the
affirmative recommendation of the Capstar Special Committee and Capstar's Board
of Directors, to Capstar's stockholders so that they may consider and vote upon
the approval of the Capstar Stockholder Proposals. Capstar will use its best
efforts to hold the Capstar Stockholders Meeting as soon as reasonable after
the date hereof and, so long as the recommendation of the Capstar Special
Committee or the Board of Directors of Capstar has not been withdrawn or
modified in accordance with Section 5.5(b), to obtain the favorable votes of
its stockholders. Except as may otherwise be permitted by Section 5.5(b)
below, the Capstar Special Committee and the Board of Directors of Capstar
shall recommend to its stockholders that they vote in favor of the Capstar
Stockholder Proposals. Without limiting the generality of the foregoing,
Capstar agrees that its obligations pursuant to the first two sentences of this
Section 5.2(a) shall not be affected by (i) the commencement, public proposal,
public disclosure or communication to Chancellor of any Acquisition Proposal
(as defined in Section 5.5(c) below) or (ii) the withdrawal or modification by
Capstar Special Committee or the Board of Directors of Capstar of its approval
or recommendation of the Capstar Stockholder Proposals in accordance with
Section 5.5(b) below, except with respect to a withdrawal or modification of
the affirmative recommendation of the Capstar Special Committee or the Board of
Directors of Capstar to Capstar stockholders at the Capstar Stockholders
Meeting in accordance with Section 5.5(b) or in the event Capstar elects to
terminate this Agreement in accordance with Section 8.1(b)(ix).
(b) Chancellor agrees that it will take all action necessary in
accordance with applicable law and its Certificate of Incorporation and Bylaws
to convene a meeting of its stockholders (the "Chancellor Stockholders
Meeting") to submit this Agreement, together (subject to the proviso of the
last sentence of this Section 5.2(b)) with the affirmative recommendation of
the Chancellor Special Committee and
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Chancellor's Board of Directors, to the Chancellor's stockholders so that they
may consider and vote upon the adoption of this Agreement. Chancellor will use
its best efforts to hold the Chancellor Stockholders Meeting as soon as
reasonable after the date hereof and, so long as the recommendation of the
Chancellor Special Committee or the Board of Directors of Chancellor has not
been withdrawn or modified in accordance with this Section 5.2(b), to obtain
the favorable votes of its stockholders. The Chancellor Special Committee and
the Board of Directors of Chancellor shall recommend to its stockholders that
they vote in favor of the adoption of this Agreement; provided, however, that
in the event that the Chancellor Special Committee or the Board of Directors of
Chancellor determines in good faith, following consultation with and after
considering the advice of outside counsel, that in order to comply with its
fiduciary duties to stockholders under applicable law it is necessary for the
Chancellor Special Committee or the full Board of Directors of Chancellor to
withdraw or modify, in a manner materially adverse to Capstar, its approval or
recommendation of this Agreement or the Merger, then the Chancellor Special
Committee or the full Board of Directors of Chancellor shall be entitled to (A)
withdraw or modify such recommendation without breaching the terms of this
Agreement or (B) terminate this Agreement in accordance with Section 8.1(b)(x);
provided, further, that in the event of any such withdrawal or modification of
such recommendation by the Chancellor Special Committee or the full Board of
Directors of Chancellor in which Chancellor does not elect to terminate this
Agreement pursuant to Section 8.1(b)(x), such modification or withdrawal shall
not affect the obligation of Chancellor's Board of Directors to call and
convene the Chancellor Stockholders Meeting and submit this Agreement to the
Chancellor stockholders for a vote thereon in accordance with this Section
5.2(b) and 5.2(c) hereof.
(c) Unless this Agreement is first terminated in accordance
with Section 8.1(b)(ix) or 8.1(b)(x), each of Chancellor and Capstar agrees to
cooperate and use its respective best efforts to hold the Chancellor
Stockholders Meeting and the Capstar Stockholders Meeting on the same day.
5.3 ACCESS TO INFORMATION; CONFIDENTIALITY. Upon reasonable
notice, each of Chancellor and Capstar shall, and shall cause each of its
respective subsidiaries to, afford to the other parties hereto and to their
respective officers, employees, counsel, financial advisors and other
representatives reasonable access during normal business hours during the
period prior to the Effective Time to all its properties, books, contracts,
commitments, personnel and records and, during such period, each of Chancellor
and Capstar shall, and shall cause each of its
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respective subsidiaries to, furnish as promptly as practicable to the other
parties hereto such information concerning its business, properties, financial
condition, operations and personnel as such parties may from time to time
reasonably request, subject to restrictions as to confidentiality contained in
any agreements in effect as of the date of this Agreement to which either
Chancellor or Capstar is a party, provided that Chancellor or Capstar, as the
case may be, shall use its reasonable best efforts to obtain consent to the
waiver of any such restrictions upon the request of the other party. Without
limiting the foregoing, Capstar shall provide promptly to Chancellor all weekly
pacing reports and monthly financial statements prepared by Capstar or any of
its subsidiaries in the ordinary course of business. Except as required by
law, each of the Chancellor and Capstar will hold, and will cause its
respective directors, officers, partners, employees, accountants, counsel,
financial advisors and other representatives and affiliates to hold, any
nonpublic information obtained from Capstar or Chancellor, respectively, in
confidence to the extent required by and in accordance with the provisions of
the letter dated August 1, 1998, between Chancellor and Capstar (the
"Confidentiality Agreement"), and each of Chancellor and Capstar agrees that
prior to the Effective Time neither party will use any of such nonpublic
information to directly or indirectly divert or attempt to divert any business,
customer or employee of the other.
5.4 PUBLIC ANNOUNCEMENTS. Chancellor and Capstar agree that
each of them will consult with the other before issuing, and will provide each
other the opportunity to review and comment upon, any press release or other
public statements with respect to the transactions contemplated by this
Agreement, including the Merger, and shall not issue any such press release or
make any such public statement prior to such consultation, except as may be
required by applicable law, court process or by obligations pursuant to rules
of any national securities exchange or The Nasdaq Stock Market (to the extent
applicable to them).
5.5 ACQUISITION PROPOSALS. (a) Except as may otherwise be
provided in Section 5.5(e), from and after the date hereof, without the prior
written consent of Chancellor, Capstar shall not, and shall not authorize or
permit any of its subsidiaries to, and shall direct and use its best efforts to
cause its and its subsidiaries' respective directors, officers, partners,
employees, agents, accountants, counsel, financial advisors and other
representatives and affiliates (collectively, "Representatives") not to, (i)
directly or indirectly, solicit, initiate or encourage (including by way of
furnishing information or assistance) or take any other action to facilitate
any
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inquiries or the making of any proposal which constitutes or may reasonably be
expected to lead to an Acquisition Proposal (as defined below) or (ii) enter
into or participate in any discussions or negotiations regarding any
Acquisition Proposal. As of the date of this Agreement, Capstar shall
immediately cease and terminate any existing solicitation, initiation,
encouragement, activity, discussion or negotiation with any persons conducted
heretofore by it or its Representatives with respect to the foregoing. Except
as may otherwise be provided by Section 5.5(e), Capstar agrees not to release
any third party from, or waive any provision of, any standstill agreement to
which it is a party or any confidentiality agreement between it and another
person who has made, or who may reasonably be considered likely to make, an
Acquisition Proposal. Capstar agrees that it will notify Chancellor orally and
in writing promptly (but in any event within 24 hours) of any such inquiries,
offers or proposals (including, without limitation, the terms and conditions of
any such proposal but, at Capstar's discretion, excluding the identity of such
third party).
(b) Neither the Board of Directors of Capstar nor any
committee thereof shall (i) withdraw or modify, or propose to withdraw or
modify, in a manner adverse to Chancellor, the approval or recommendation by
such Board of Directors or committee thereof of the Capstar Stockholder
Proposals, (ii) approve or recommend, or propose to approve or recommend, any
Acquisition Proposal or (iii) cause Capstar to enter into any letter of intent,
agreement in principle, acquisition agreement or other similar agreement
related to any Acquisition Proposal; provided, however, that in the event that
the Capstar Special Committee or the Board of Directors of Capstar determines
in good faith, following consultation with and after considering the advice of
outside counsel, that in order to comply with its fiduciary duties to
stockholders under applicable law it is necessary for the Capstar Special
Committee or the full Board of Directors of Capstar to withdraw or modify, in a
manner materially adverse to Chancellor, its approval or recommendation of the
Capstar Stockholder Proposals, then the Capstar Special Committee or the full
Board of Directors of Capstar shall be entitled to (A) withdraw or modify such
recommendation without breaching the terms of this Agreement or (B) terminate
this Agreement in accordance with Section 8.1(b)(ix); provided, further, that
in the event of any such withdrawal or modification of such recommendation by
the Capstar Special Committee or the full Board of Directors of Capstar in
which Capstar does not elect to terminate this Agreement pursuant to Section
8.1(b)(ix), such modification or withdrawal shall not affect the obligation of
Capstar's Board of Directors to call and convene the Capstar Stockholders
Meeting and submit the Capstar Stockholder Proposals
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to the Capstar stockholders for a vote thereon in accordance with Section
5.2(a) and 5.2(c) hereof.
(c) For purposes of this Agreement, an "Acquisition
Proposal" means any written proposal or offer from any person (other than
Chancellor or any of its subsidiaries) for a tender or exchange offer, merger,
consolidation, other business combination, recapitalization, liquidation,
dissolution or similar transaction involving Capstar or any Capstar Significant
Subsidiary, or any proposal to acquire in any manner a substantial equity
interest in, or a substantial portion of the assets of, Capstar or a Capstar
Significant Subsidiary.
(d) Nothing contained in this Section 5.5 shall
prohibit the Board of Directors of Capstar from taking and disclosing to its
stockholders a position in accordance with Rules 14d-9 and 14e-2 under the
Exchange Act with respect to a tender offer or any exchange offer commenced by
a third party.
(e) In the event that Capstar notifies Chancellor of
the existence of any inquiries, offers or proposals in accordance with Section
5.5(a), the Capstar Special Committee or the Board of Directors of Capstar may,
or authorize Capstar to, engage in discussions or negotiations with a third
party who (without any solicitation or initiation, directly or indirectly, by
or with Capstar or any of its Representatives after the date of this Agreement)
seeks to initiate such discussions or negotiations and may, or authorize
Capstar to, furnish such third party information concerning Capstar and its
business, properties and assets and may release such third party from, or waive
any provision of, any standstill or confidentiality agreement with respect to
such third party, provided that such action is consistent with the fiduciary
duties of the Capstar Special Committee or the full Board of Directors of
Capstar under applicable law, as determined by the Capstar Special Committee or
the Board of Directors in good faith following consultation with and after
considering the advice of outside counsel.
5.6 CONSENTS, APPROVALS AND FILINGS. Chancellor and Capstar
will make and cause their respective subsidiaries and, to the extent necessary,
their other affiliates to make all necessary filings, including, without
limitation, those required under the HSR Act, the Securities Act, the Exchange
Act, and the Communications Act (including filing an application with the FCC
for the transfer of control of the Capstar FCC Licenses, which the parties
shall file as soon as practicable (and in any event not more than 20 business
days) after the date of this Agreement), in order to facilitate the prompt
consummation of the Merger and the other transactions contemplated by this
Agreement.
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In addition, Chancellor and Capstar will each use its best efforts, and will
cooperate fully and in good faith with each other, (i) to comply as promptly as
practicable with all governmental requirements applicable to the Merger and the
other transactions contemplated by this Agreement, and (ii) to obtain as
promptly as practicable all necessary permits, orders or other consents of
Governmental Entities and consents of all third parties necessary for the
consummation of the Merger and the other transactions contemplated by this
Agreement, including without limitation, the consent of the FCC to the transfer
of control of the Capstar FCC Licenses. Each of Chancellor and Capstar shall
use its best efforts to promptly provide such information and communications to
Governmental Entities as such Governmental Entities may reasonably request.
Each of the parties hereto shall provide to the other parties copies of all
applications in advance of filing or submission of such applications to
Governmental Entities in connection with this Agreement and shall make such
revisions thereto as reasonably requested by each other party hereto. Each of
the parties hereto shall provide to the other parties the opportunity to
participate in all meetings and material conversations with Governmental
Entities with respect to the matters contemplated by this Agreement.
5.7 AFFILIATES LETTERS. Prior to the Closing Date, Chancellor
shall deliver to Capstar a letter identifying all persons who, at the time the
Merger is submitted for approval to the stockholders, may be deemed to be an
"affiliate" of such party for purposes of Rule 145 under the Securities Act.
Chancellor shall use its best efforts to cause each such person to deliver to
Capstar on or prior to the Closing Date a written agreement substantially in
the form attached as Annex II hereto.
5.8 NYSE LISTING. Capstar shall use its best efforts to cause
the shares of Parent Voting Common Stock to be issued (a) in the Merger, (b)
upon the exercise of the Chancellor Stock Options issued under the Chancellor
Stock Option Plans, and (c) upon conversion of the Parent Convertible Preferred
Stock to be approved for listing on the New York Stock Exchange at the
Effective Time.
5.9 INDEMNIFICATION. The Certificate of Incorporation of the
Surviving Corporation shall contain the provisions with respect to
indemnification contained in the certificate of incorporation of Chancellor, as
in effect on the date hereof, and none of such provisions shall be amended,
repealed or otherwise modified for a period of six years after the Effective
Time in any manner that would adversely affect the rights thereunder of
individuals who at any time prior to the Effective Time were
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directors or officers of Chancellor, or any of its respective subsidiaries (the
"Chancellor Indemnified Parties") in respect of actions or omissions occurring
at or prior to the Effective Time (including, without limitation, the
transactions contemplated by this Agreement), unless such modification is
required by law. The Parent Amended and Restated Charter shall contain the
provisions with respect to indemnification contained in the certificate of
incorporation of Capstar, as in effect on the date hereof, and none of such
provisions shall be amended, repealed or otherwise modified for a period of six
years after the Effective Time in any manner that would adversely affect the
rights thereunder of individuals who at any time prior to the Effective Time
were directors or officers of Capstar, or any of its respective subsidiaries
(the "Capstar Indemnified Parties" and, collectively with the Chancellor
Indemnified Parties, the "Indemnified Parties") in respect of actions or
omissions occurring at or prior to the Effective Time (including, without
limitation, the transactions contemplated by this Agreement), unless such
modification is required by law. If commercially available, Parent will cause
to be maintained for a period of not less than six years from the Effective
Time Capstar's and Chancellor's current directors' and officers' insurance and
indemnification policies to the extent that they provide coverage for events
occurring prior to the Effective Time (the "D&O Insurance") for all persons who
are directors and executive officers of Chancellor and Capstar, as the case may
be, on the date of this Agreement, so long as the annual premium therefor would
not be in excess of 250% of the last annual premium paid prior to the date of
this Agreement in either case; provided, however, that Parent or its
subsidiaries may, in lieu of maintaining such existing D&O Insurance as
provided above, cause coverage to be provided under any policy maintained for
the benefit of Parent and its subsidiaries so long as the terms thereof are not
less advantageous to the beneficiaries thereof than the existing D&O Insurance.
Immediately following the Effective Time, Parent shall (i) enter into
agreements with the members of the board of directors of Parent (the "Parent
Board") that were not theretofore members of the Capstar board of directors
providing for indemnification on substantially identical terms as the
agreements of Capstar with the current directors of Capstar and (ii) use its
commercially reasonable efforts to obtain additional directors and officers
insurance policy for Parent in an amount equal to at least $25 million to cover
members of the Parent Board for facts and circumstances arising after the
Effective Time. The provisions of this Section 5.9 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party and members of
the Parent Board, his heirs and his personal representatives and shall be
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binding on all successors and assigns of Parent and the Surviving Corporation.
5.10 LETTER OF CHANCELLOR'S ACCOUNTANTS. Chancellor shall use
its reasonable best efforts to cause to be delivered to Capstar a letter of
PricewaterhouseCoopers LLP, Chancellor's independent public accountants, and
any other independent public accountants whose report would be required to be
included in the Form S-4 pursuant to the rules and regulations under the
Securities Act, each dated a date within two business days before the date on
which the Form S-4 shall become effective and an additional letter from each of
them dated a date within two business days before the Closing Date, each
addressed to such party, in form and substance reasonably satisfactory to
Capstar and customary in scope and substance for letters delivered by
independent public accountants in connection with registration statements
similar to the Form S-4.
5.11 LETTER OF CAPSTAR'S ACCOUNTANTS. Capstar shall use its
reasonable best efforts to cause to be delivered to Chancellor, a letter of
PricewaterhouseCoopers LLP, Capstar's independent public accountants, and any
other independent public accountants whose report would be required to be
included in the Form S-4 pursuant to the rules and regulations under the
Securities Act, each dated a date within two business days before the date on
which the Form S-4 shall become effective and an additional letter from each of
them dated a date within two business days before the Closing Date, each
addressed to such party, in form and substance reasonably satisfactory to
Chancellor and customary in scope and substance for letters delivered by
independent public accountants in connection with registration statements
similar to the Form S-4.
5.12 TRANSACTION STRUCTURE. In the event that Chancellor shall
determine, in its sole discretion, that a merger of Capstar with and into
Chancellor or a direct or indirect subsidiary of Chancellor is in the best
interest of Chancellor and the stockholders of Chancellor, Capstar agrees to
negotiate in good faith with Chancellor to amend this Agreement in accordance
with Section 8.3 to effect the transactions contemplated by this Agreement on
identical economic terms (determined as of the date of this Agreement) to the
holders of Capstar Common Stock, Chancellor Common Stock and Chancellor
Convertible Preferred Stock. In the event that Chancellor shall make a
determination in accordance with this Section 5.12, each of Chancellor and
Capstar shall use its reasonable best efforts to take all action necessary to
amend this Agreement in accordance therewith prior to the mailing of the Joint
Proxy Statement/Prospectus to the stockholders of each of Capstar and
Chancellor.
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5.13 SENIOR CREDIT FACILITY CONSENTS. Prior to Closing, each of
Chancellor and Capstar agrees to use its commercially reasonable efforts to
obtain the consent of lenders under their respective senior secured credit
facilities in order to consummate the Merger and the transactions contemplated
by this Agreement. In the event that either Chancellor or Capstar is unable to
obtain such consent upon commercially reasonable terms (giving effect to the
overall capitalization of Parent and its consolidated subsidiaries following
the Effective Time), each of Chancellor and Capstar agree to cooperate with the
other party in obtaining refinancing of such senior secured credit facility
upon terms and conditions that are mutually agreed upon in good faith by each
party.
ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS PRIOR TO MERGER
6.1 CONDUCT OF BUSINESS.
(a) Except as expressly contemplated by this
Agreement, during the period from the date of this Agreement to the Effective
Time, Capstar shall, and shall cause its subsidiaries to, act and carry on
their respective businesses in the ordinary course of business and, to the
extent consistent therewith, use reasonable efforts to preserve intact their
current business organizations, keep available the services of their current
officers and employees and preserve the goodwill of those engaged in material
business relationships with them. Without limiting the generality of the
foregoing, during the period from the date of this Agreement to the Effective
Time and except as contemplated by this Agreement or as set forth in the
Capstar SEC Documents or the Capstar Disclosure Letter, Capstar shall not, and
shall not permit any of its subsidiaries to, without the prior consent of
Chancellor (which shall not be unreasonably delayed or withheld):
(i) (w) declare, set aside or pay any
dividends on, or make any other distributions (whether in cash, stock or
property) in respect of, any of its or its subsidiaries' outstanding capital
stock (except dividends and distributions by a direct or indirect wholly owned
subsidiary of Capstar to its parent and regularly scheduled dividend payments
on the 12% Senior Exchangeable Preferred Stock of Capstar Partners and 12-5/8%
Series E Cumulative Preferred Stock of Capstar Communications), (x) split,
combine or reclassify any of its outstanding capital stock or issue or
authorize the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its outstanding capital stock, (y) except in
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connection with the termination of the employment of any employees, purchase,
redeem or otherwise acquire any shares of outstanding capital stock or any
rights, warrants or options to acquire any such shares, or (z) issue, sell,
grant, pledge or otherwise encumber any shares of its capital stock, any other
equity securities or any securities convertible into, or any rights, warrants
or options to acquire, any such shares, equity securities or convertible
securities (other than (A) upon the exercise of Capstar Stock Options
outstanding on the date of this Agreement, (B) pursuant to employment
agreements or other contractual arrangements in effect on the date of this
Agreement, and (C) issuances of stock of any direct or indirect wholly-owned
subsidiary of Capstar to its parent);
(ii) amend its Certificate of Incorporation,
Bylaws or other comparable charter or organizational documents;
(iii) acquire any business (including the assets
thereof) or any corporation, partnership, joint venture, association or other
business organization or division thereof;
(iv) sell, mortgage or otherwise encumber or
subject to any Lien or otherwise dispose of any of its properties or assets
that are material to Capstar and its subsidiaries, taken as whole, other than
bank Liens on any radio station assets acquired by Capstar or any of its
subsidiaries in accordance with the terms of this Agreement;
(v) (x) other than working capital borrowings
in the ordinary course of business and consistent with past practices or
borrowings used for the purpose of any radio station or other acquisition
permitted by the terms of this Agreement, incur any indebtedness for borrowed
money or guarantee any such indebtedness of another person, other than
indebtedness owing to or guarantees of indebtedness owing to Capstar or any of
its direct or indirect wholly-owned subsidiaries or (y) make any material loans
or advances to any other person, other than to Capstar or any of its direct or
indirect wholly-owned subsidiaries and other than routine advances to employees
consistent with past practices;
(vi) make any Tax election or settle or
compromise any Tax liability that could reasonably be expected to be material
to Capstar and its subsidiaries, taken as a whole or change its Tax or
accounting methods, policies, practice or procedures, except as required by
GAAP;
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(vii) pay, discharge, settle or satisfy any
material claims, liabilities or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise), other than the payment, discharge or
satisfaction, in the ordinary course of business consistent with past practice
or in accordance with their terms, of liabilities reflected or reserved against
in, or contemplated by, the most recent consolidated financial statements (or
the notes thereto) of Capstar included in the Capstar SEC Documents or incurred
since the date of such financial statements in the ordinary course of business
consistent with past practice;
(viii) make any material commitments or
agreements for capital expenditures or capital additions or betterments except
as materially consistent with the budget for capital expenditures as of the
date of this Agreement, in the ordinary course of business consistent with past
practices and for acquisitions of radio station assets, including radio towers
related thereto, in accordance with the terms of this Agreement;
(ix) except as may be required by law:
(A) other than in the ordinary course of
business and consistent with past practices, make any representation
or promise, oral or written, to any employee or former director,
officer or employee of Capstar or any of its subsidiaries which is
inconsistent with the terms of any Capstar Benefit Plan;
(B) other than in the ordinary course
of business and consistent with past practices, make any change to, or
amend in any way, the contracts, salaries, wages, or other
compensation of any director, employee or any agent or consultant of
Capstar or any of its subsidiaries other than routine changes or
amendments that are required under existing contracts;
(C) except for renewals in the
ordinary course of business consistent with past practices, adopt,
enter into, amend, alter or terminate, partially or completely, any
Capstar Benefit Plan, or any election made pursuant to the provisions
of any Capstar Benefit Plan, to accelerate any payments, obligations
or vesting schedules under any Capstar Benefit Plan; or
(D) other than in the ordinary course
of business consistent with past practices, approve any general or
company-wide pay increases for employees;
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(x) except in the ordinary course of business,
modify, amend or terminate any material agreement, permit, concession,
franchise, license or similar instrument to which Capstar or any of its
subsidiaries is a party or waive, release or assign any material rights or
claims thereunder; or
(xi) authorize any of, or commit or agree to
take any of, the foregoing actions.
6.2 CHANCELLOR STOCK OPTIONS. (a) At the Effective Time,
each Chancellor Stock Option that is outstanding and unexercised immediately
prior to the Effective Time shall be deemed to have been assumed by Parent,
without further action by Parent, the Surviving Corporation or the holders of
such options, and shall thereafter be deemed to be an option to acquire shares
of Parent Voting Common Stock in such amount and at the exercise price provided
below and otherwise having the same terms and conditions as are in effect
immediately prior to the Effective Time (except to the extent that such terms
and conditions may be altered in accordance with their terms as a result of the
transactions contemplated hereby):
(i) the number of shares of Parent Voting
Common Stock to be subject to the new option shall be equal to the product of
(x) the number of shares of Chancellor Common Stock subject to the original
option and (y) the Chancellor Exchange Ratio; and
(ii) the exercise price per share of Parent
Voting Common Stock under the new option shall be equal to (x) the exercise
price per share of Chancellor Common Stock under the original option divided by
(y) the Chancellor Exchange Ratio.
The adjustments provided herein to any options which 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) At the Effective Time and following receipt of the
Capstar Stockholders Approval, Parent shall approve and adopt the Chancellor
Stock Option Plans (including any amendment thereto adopted and approved by the
Board of Directors of Chancellor prior to the Capstar Stockholders Meeting and
included in the Capstar Stockholder Proposals) and assume the obligations of
Chancellor thereunder, with such changes thereto as may be necessary to reflect
the consummation of the transactions contemplated hereby. Nothing in this
Section 6.2(b) shall be construed to prevent Parent in any way from terminating
or freezing the benefits under any such plans (subject to the rights
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of the holders of the Chancellor Stock Options thereunder) and adopting one or
more new stock option plans, as approved by the Board of Directors of Parent
following the Effective Time.
(c) Promptly following the Effective Time, Parent
shall use its reasonable best efforts to file with the SEC a Registration
Statement on Form S-8 (or an amendment to any such form of Capstar currently on
file with the SEC that is available therefor) (the "Form S-8") for the purpose
of registering the shares of Parent Voting Common Stock issuable upon the
exercise of the Chancellor Stock Options issued or issuable under the
Chancellor Stock Option Plans, and Parent shall use its reasonable best efforts
to have the Form S-8 (or any post-effective amendment thereto) declared
effective under the Securities Act as soon as practicable after such filing.
6.3 OTHER ACTIONS. Neither Chancellor nor Capstar shall, and
neither of them shall permit any of their respective subsidiaries to, take any
action that would, or that could reasonably be expected to, result in any of
the conditions of the Merger set forth in Article VII not being satisfied.
ARTICLE VII
CONDITIONS PRECEDENT
7.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.
The respective obligation of each party to effect the Merger is subject to the
satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Stockholder Approval. The Capstar Stockholders
Approval and Chancellor Stockholders Approval shall have been obtained
in accordance with the requirements of the Delaware Code.
(b) FCC Order. The FCC shall have issued an order
(the "FCC Order") approving the transfers of control pursuant to the
Merger of the Capstar FCC Licenses for the operation of the Capstar
Licensed Facilities without the imposition of any conditions or
restrictions that could reasonably be expected to have a Capstar
Material Adverse Effect, and which FCC Order has not been reversed,
stayed, enjoined, set aside or suspended and with respect to which no
timely request for stay, petition for reconsideration or appeal has
been filed and as to which the time period for filing of any such
appeal or request for reconsideration or for any sua sponte action by
the FCC with respect to the FCC
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Order has expired, or, in the event that such a filing or review sua
sponte has occurred, as to which such filing or review shall have been
disposed of favorably to the grant of the FCC Order and the time
period for seeking further relief with respect thereto shall have
expired without any request for such further relief having been filed
or review initiated.
(c) Governmental and Regulatory Consents. All
required consents, approvals, permits and authorizations to the
consummation of the Merger shall be obtained from any Governmental
Entity (other than the FCC) whose consent, approval, permission or
authorization is required by reason of a change in law after the date
of this Agreement, unless the failure to obtain such consent,
approval, permission or authorization could not reasonably be expected
to have a Capstar Material Adverse Effect, or to materially and
adversely affect the validity or enforceability of this Agreement or
the Merger.
(d) HSR Act. The waiting period (and any extension
thereof) applicable to the Merger under the HSR Act shall have been
terminated or shall have otherwise expired.
(e) No Injunctions or Restraints. No temporary
restraining order, preliminary or permanent injunction or other order
issued by any court of competent jurisdiction or other legal restraint
or prohibition preventing the consummation of the Merger shall be in
effect; provided, however, that the party invoking this condition
shall use its reasonable best efforts to have any such order or
injunction vacated.
(f) NYSE Listing. The shares of Parent Voting Common
Stock issuable pursuant to the Merger shall have been approved for
listing on the New York Stock Exchange.
(g) Form S-4. The Form S-4 shall have become
effective under the Securities Act and shall not be the subject of any
stop order or proceedings seeking a stop order.
(h) Capstar Disinterested Stockholders Approval. At
the Capstar Stockholders Meeting, a majority of the shares of Capstar
Class A Common Stock that are present (in person or by proxy) and
entitled to vote at such meeting and which are beneficially owned by a
holder other than Xxxxxx X. Xxxxx, R. Xxxxxx Xxxxx or any of their
respective affiliates shall have been voted in favor of the Capstar
Stockholder
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Proposals (the "Capstar Disinterested Stockholders Approval"),
excluding the approval and adoption of the Chancellor Stock Option
Plans or any amendments thereto.
(i) Chancellor Disinterested Stockholders Approval.
At the Chancellor Stockholders Meeting, a majority of the shares of
Chancellor Common Stock that are present (in person or by proxy) and
entitled to vote at such meeting and which are beneficially owned by a
holder other than Xxxxxx X. Xxxxx and his affiliates shall have been
voted in favor of the adoption of this Agreement (the "Chancellor
Disinterested Stockholders Approval").
(j) Dissenting Shares. Holders of not more than 10%
of the outstanding shares of Chancellor Convertible Preferred Stock
shall have properly demanded appraisal rights for their shares under
the Delaware Code.
(k) Consent of Senior Lenders. Each of Chancellor and
Capstar shall have received (i) all necessary consents under their
respective senior secured credit facilities in order to consummate the
Merger and the transactions contemplated by this Agreement, or (ii) a
firm commitment of senior secured financing from a nationally
recognized commercial bank or syndicate of banks in amounts sufficient
to refinance all of the outstanding indebtedness under their
respective senior secured credit facilities at the Closing.
7.2 CONDITIONS TO OBLIGATIONS OF CAPSTAR AND MERGER SUB. The
obligation of Capstar and Merger Sub to effect the Merger is further subject to
the following conditions:
(a) Representations and Warranties. The
representations and warranties of Chancellor contained in this
Agreement shall have been true and correct on the date of this
Agreement and shall be true and correct at and as of the Closing Date
as though made at and as of such time (except to the extent that any
such representations and warranties expressly relate only to an
earlier time, in which case they shall have been true and correct at
such earlier time); provided, however, that this condition shall be
deemed to have been satisfied unless the individual or aggregate
impact of all inaccuracies of such representations and warranties
(without regard to any materiality or Chancellor Material Adverse
Effect qualifier(s) contained therein) could reasonably be expected to
have a material adverse effect on the condition (financial or
otherwise) of Chancellor and its subsidiaries, considered as a whole,
and except to the extent that any inaccuracies of such
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representations and warranties are a result of changes in the United
States financial markets generally or in national, regional or local
economic conditions generally, or are a result of matters arising
after the date hereof that affect the broadcast industry generally.
Chancellor shall have delivered to Capstar and Merger Sub a
certificate dated as of the Closing Date, signed by a senior executive
officer of Chancellor, to the effect set forth in this Section 7.2(a).
(b) Performance of Obligations of Chancellor.
Chancellor shall have performed in all material respects all
obligations required to be performed by it under this Agreement at or
prior to the Closing Date, and Capstar shall have received a
certificate signed on behalf of Chancellor by a senior executive
officer of Chancellor to such effect.
(c) Tax Opinion. Capstar shall have received an
opinion of Xxxxxx & Xxxxxx L.L.P., dated as of the Closing Date, to
the effect that (i) the Merger will constitute a reorganization under
Section 368(a) of the Code, (ii) Chancellor, Merger Sub and Capstar
will each be a party to the reorganization under Section 368(b) of the
Code, (iii) no gain or loss will be recognized by Capstar, Merger Sub
or Chancellor by reason of the Merger, and (iv) no gain or loss will
be recognized by the stockholders of Capstar by reason of the
amendment and restatement of Capstar's Certificate of Incorporation
contemplated by Section 1.4, except with respect to cash received in
lieu of fractional shares of Parent Common Stock. In rendering such
opinion, Xxxxxx & Xxxxxx L.L.P. shall receive and may rely upon
representations contained in certificates of Chancellor, Merger Sub
and Capstar.
7.3 CONDITIONS TO OBLIGATIONS OF CHANCELLOR. The obligations
of Chancellor to effect the Merger is further subject to the following
conditions:
(a) Representations and Warranties. The
representations and warranties of each of Capstar and Merger Sub
contained in this Agreement shall have been true and correct on the
date of this Agreement and shall be true and correct at and as of the
Closing Date as though made at and as of such time (except to the
extent that any such representations and warranties expressly relate
only to an earlier time, in which case they shall have been true and
correct at such earlier time); provided, however, that this condition
shall be deemed to have been satisfied unless the
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individual or aggregate impact of all inaccuracies of such
representations and warranties (without regard to any materiality or
Capstar Material Adverse Effect qualifier(s) contained therein) could
reasonably be expected to have a material adverse effect on the
condition (financial or otherwise) of Capstar (or, following the
Effective Time, the Parent) and its subsidiaries, considered as a
whole, and except to the extent that any inaccuracies of such
representations and warranties are a result of changes in the United
States financial markets generally or in national, regional or local
economic conditions generally, or are a result of matters arising
after the date hereof that affect the broadcast industry generally.
Each of Capstar and Merger Sub shall have delivered to Chancellor a
certificate dated as of the Closing Date, signed by a senior executive
officer of each of them, to the effect set forth in this Section
7.3(a).
(b) Performance of Obligations of Capstar and Merger
Sub. Each of Capstar and Merger Sub shall have performed in all
material respects all obligations required to be performed by it under
this Agreement at or prior to the Closing Date, including without
limitation, the filing of the Parent Amended and Restated Charter with
the Delaware Secretary of State and delivery of the Board Resignations
and the Board Appointments, and Chancellor shall have received a
certificate signed on behalf of each of Capstar and Merger Sub by a
senior executive officer of each of them to such effect.
(c) Tax Opinion. Chancellor shall have received an
opinion of Weil, Gotshal & Xxxxxx LLP, dated as of the Closing Date,
to the effect that (i) the Merger will constitute a reorganization
under Section 368(a) of the Code, (ii) Chancellor, Merger Sub and
Capstar will each be a party to the reorganization under Section
368(b) of the Code, and (iii) no gain or loss will be recognized by
the stockholders of Chancellor on the receipt pursuant to the Merger
of shares of Parent Voting Common Stock or Parent Convertible
Preferred Stock in exchange for shares of Chancellor Common Stock or
shares of Chancellor Convertible Preferred Stock, respectively, except
with respect to cash received for Dissenting Shares. In rendering
such opinion, Weil, Gotshal & Xxxxxx LLP shall receive and may rely
upon representations contained in certificates of Chancellor, Merger
Sub and Capstar.
(d) Material Agreements. Capstar and its subsidiaries
shall have received any necessary consents
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required as a result of the Merger and transactions contemplated by
this Agreement with respect to each Material Agreement. A true and
correct list of which Material Agreements require such consents is set
forth in the Capstar Disclosure Letter.
(e) Financial Services Agreements. Capstar and
certain of its subsidiaries and Xxxxx Muse shall have entered into an
amendment to each of the Monitoring and Oversight Agreement (the
"Capstar M&O Agreement") between Xxxxx Muse and Capstar, the
Monitoring and Oversight Agreement (the "Partners M&O Agreement")
between Xxxxx Muse and Capstar Partners, the Financial Advisory
Agreement (the "Capstar Financial Advisory Agreement") between Xxxxx
Muse and Capstar, and the Financial Advisory Agreement (the "Partners
Financial Advisory Agreement") between Xxxxx Muse and Partners, that
provide (i) the Partners M&O Agreement will be terminated at the
Effective Time with no further obligation of any party thereto, (ii)
the Partners Financial Advisory Agreement will be terminated at the
Effective Time with no further obligation of any party thereto, (iii)
the Capstar M&O Agreement will be terminated at the Effective Time
and, in consideration therefor, Capstar shall deliver to Xxxxx Muse at
Closing a one-time cash payment of $14,202,000, (iv) Xxxxx Muse will
receive a fee from Capstar of $17,500,000 in cash, payable at Closing,
in satisfaction of its services performed under the Capstar Financial
Advisory Agreement in connection with the Merger, and (v) the Capstar
Financial Advisory Agreement would be modified to provide that
following the Closing Date, Xxxxx Muse will be entitled to be Parent's
financial advisor on certain transactions of Parent and its
consolidated subsidiaries following the Closing as follows: (a) on any
acquisition, disposition or exchange transaction (an "M&A
Transaction") for which Parent or any such subsidiaries retain any
Financial Advisor (as hereinafter defined), Xxxxx Muse shall be
entitled to serve as a co-advisor on such transaction and shall have
the right to mutually agree with the Company upon the selection of any
such Financial Advisor or Financial Advisors so retained and, unless
mutually agreed to otherwise by Xxxxx Muse and Parent, Xxxxx Muse
would be entitled to receive a "market fee" for its services in
connection therewith of no less than 50% of the aggregate fees paid to
all such advisors (including Xxxxx Muse), (b) on any M&A Transaction
of Parent or any of its subsidiaries for which a Financial Advisor is
not retained by Parent or any of its subsidiaries but has a
transaction value in excess of $500 million, Xxxxx Muse would be the
exclusive financial advisor of Parent and its subsidiaries and receive
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a "market fee" for its services in connection therewith, and (c) on
any underwriting, loan syndication, equity placement or other
financing transaction (a "Financing Transaction") in which Parent or
any of its subsidiaries retain one or more Financial Advisors, Xxxxx
Muse would have the right to mutually agree with Parent on the
selection of each such Financial Advisor in connection with such
Financing Transaction; provided, however, that following the Closing,
the amendment of the Capstar Financial Advisory Agreement will
supersede any other similar financial advisory agreements between
Xxxxx Muse (or any of its affiliates) and Parent or any of its
post-Closing consolidated subsidiaries then in effect, including
without limitation, the financial advisory agreement among Xxxxx Muse
and Chancellor (as successor to Ranger Equity Holdings Corporation)
and certain of its indirect subsidiaries (but only when and if the
merger of Ranger Equity Holdings Corporation with Chancellor has been
consummated). For purposes of this Agreement, a "Financial Advisor"
is defined as any investment bank, commercial bank, underwriter,
arranging or syndication agent or other person or entity that provides
investment banking, underwriting, financial advice, valuation or other
similar services with respect to any M&A Transaction or Financing
Transaction; provided, however, that a Financial Advisor shall not
include ordinary business brokers such as Star Media, Inc., Media
Venture Partners, Ltd. or similar companies.
(f) Parent Registration Rights Agreement. Capstar
shall have entered into an agreement with the holders of Chancellor
Common Stock at the Effective Time that, after giving effect to the
Merger and the issuance of shares of Parent Voting Common Stock
therein, will own at least 1% of the outstanding shares of Parent
Voting Common Stock immediately following the Effective Time,
providing for rights of registration under the Securities Act of all
shares of Parent Voting Common Stock held by such holders following
the Merger on substantially similar terms as are provided for in that
certain Amended and Restated Stockholders Agreement, dated as of
February 14, 1996, as amended, among Chancellor and each holder of
Chancellor Common Stock party thereto as of the Effective Time (the
"Chancellor Stockholders Agreement").
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ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.1 TERMINATION. This Agreement may be terminated and the
Merger abandoned as follows:
(a) at any time prior to the Effective Time, whether
before or after receipt of the Chancellor Stockholders Approval or the
Capstar Stockholders Approval, by mutual written consent of Chancellor
and Capstar;
(b) at any time prior to the Effective Time, whether
before or after receipt of the Chancellor Stockholders Approval or the
Capstar Stockholders Approval:
(i) by Chancellor or Capstar if the Capstar
Stockholders Approval shall not have been obtained after
submission by the Board of Directors of Capstar of the
Capstar Stockholder Proposals for approval by the common
stockholders of Capstar at a special meeting called for such
purpose in accordance with Section 5.2(a);
(ii) by Capstar or Chancellor if the Chancellor
Stockholders Approval shall not have been obtained after
submission by the Board of Directors of Chancellor of this
Agreement for adoption by the common stockholders of
Chancellor at a special meeting called for such purpose in
accordance with Section 5.2(b);
(iii)by Chancellor or Capstar if the Merger shall
not have been consummated on or before July 15, 1999, unless
the failure to consummate the Merger is the result of a
willful and material breach of this Agreement by the party
seeking to terminate this Agreement;
(iv) by Chancellor or Capstar if any Governmental
Entity shall have issued an order, decree or ruling or taken
any other action permanently enjoining, restraining or
otherwise prohibiting the Merger and such order, decree,
ruling or other action shall have become final and
nonappealable;
(v) by Chancellor or Capstar in the event of a
breach by the other party of any representation,
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warranty, covenant or other agreement contained in this Agreement
which (A) would give rise to the failure of a condition set forth in
Section 7.2(a) or (b) or Section 7.3(a) or (b), as applicable, and (B)
cannot be or has not been cured within 30 days after the giving of
written notice to the breaching party of such breach (a "Material
Breach"), provided that the terminating party is not then in Material
Breach of any representation, warranty, covenant or other agreement
contained in this Agreement;
(vi) by Chancellor if Capstar shall have
breached the requirements of Section 5.5 hereof, unless
Chancellor shall at such time be in Material Breach of any
representation, warranty, covenant or other agreement
contained in this Agreement;
(vii) by Capstar or Chancellor if the Capstar
Disinterested Stockholders Approval shall not have been
obtained at the Capstar Stockholders meeting; or
(viii) by Capstar or Chancellor if the Chancellor
Disinterested Stockholders Approval shall not have been
obtained at the Chancellor Stockholders meeting;
(ix) by Capstar if the Board of Directors of
Capstar or the Capstar Special Committee has determined in
good faith, following consultation with and after
considering the advice of outside counsel, that in order to
comply with its fiduciary duties to stockholders under
applicable law it is necessary for the Capstar Special
Committee or the full Board of Directors of Capstar to
withdraw or modify, in a manner materially adverse to
Chancellor, its approval or recommendation of this
Agreement or the Merger in accordance with Section 5.5(b);
or
(x) by Chancellor if the Board of Directors of
Chancellor or the Chancellor Special Committee has
determined in good faith, following consultation with and
after considering the advice of outside counsel, that in
order to comply with its fiduciary duties to stockholders
under applicable law it is necessary for the Chancellor
Special Committee or the full Board of Directors of
Chancellor to withdraw or modify, in a manner materially
adverse to Capstar, its approval or recommendation of this
Agreement or the Merger in accordance with Section 5.2(b)
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8.2 EFFECT OF TERMINATION. (a) In the event that Chancellor
or Capstar terminates this Agreement as provided in Section 8.1(a), 8.1(b)(iii)
or 8.1(b)(iv), this Agreement shall forthwith become void and have no effect,
without any liability or obligation on the part of Chancellor or Capstar, other
than the last sentence of Section 5.3 and Sections 2.10, 3.7, 8.2 and 11.2.
(b) In the event that this Agreement is terminated by
Chancellor pursuant to Section 8.1(b)(v) or 8.1(b)(vi) or by Capstar or
Chancellor pursuant to Section 8.1(b)(i) or 8.1(b)(vii), Capstar shall promptly
reimburse Chancellor for all substantiated out-of-pocket costs and expenses
incurred by them in connection with this Agreement and the transactions
contemplated hereby, including, without limitation, costs and expenses of
accountants, attorneys and financial advisors. In the event that this
Agreement is terminated by Capstar pursuant to Section 8.1(b)(v) or by
Chancellor or Capstar pursuant to Section 8.1(b)(ii) or 8.1(b)(viii),
Chancellor shall promptly reimburse Capstar for all substantiated out-of-pocket
costs and expenses incurred by it in connection with this Agreement and the
transactions contemplated hereby, including, without limitation, costs and
expenses of accountants, attorneys and financial advisors.
(c) In the event that this Agreement is terminated by
Capstar pursuant to Section 8.1(b)(ix) or by Chancellor pursuant to Section
8.1(b)(x), the party electing to terminate this Agreement shall, concurrently
with such termination, pay to the non-terminating party (by wire transfer of
immediately available funds) an amount of $50,000,000 in cash (the "Termination
Fee").
(d) This Agreement shall not be deemed to have been
validly terminated until all payments contemplated by Section 8.2(b) and 8.2(c)
shall have been made in full. In the event of a termination pursuant to
Sections 8.1(b)(i), 8.1(b)(ii), 8.1(b)(v), 8.1(b)(vi), 8.1(b)(vii) or
8.1(b)(viii), the reimbursement of expenses by the breaching party pursuant to
Section 8.2(b) shall be the parties sole remedy unless the termination resulted
from a willful material breach of the representations, warranties, covenants or
other agreements in this Agreement, in which case the non-breaching party may
seek damages or any other appropriate remedy at law or in equity. In the event
of a termination pursuant to Sections 8.1(b)(ix) or 8.1(b)(x), the payment of
the Termination Fee by Capstar or Chancellor, as applicable, pursuant to
Section 8.2(c) shall be the non-terminating party's sole remedy.
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8.3 AMENDMENT. Subject to the applicable provisions of the
Delaware Code, at any time prior to the Effective Time, the parties hereto may
modify or amend this Agreement, by written agreement executed and delivered by
duly authorized officers of the respective parties; provided, however, that
after the Chancellor Stockholders Approval has been obtained, no amendment
shall be made which reduces the consideration payable in the Merger or
adversely affects the rights of Chancellor's stockholders hereunder without the
approval of such stockholders. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties.
8.4 EXTENSION; CONSENT; 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 of the other parties
contained in this Agreement or in any document delivered pursuant to this
Agreement or (c) subject to Section 8.3, waive compliance with any of the
agreements or conditions of the other parties contained in this Agreement or
consent to any action requiring consent pursuant to this Agreement. Any
agreement on the part of a party to any such extension, waiver or consent 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 such rights.
8.5 PROCEDURE FOR TERMINATION, AMENDMENT, EXTENSION, CONSENT OR
WAIVER. A termination of this Agreement pursuant to Section 8.1, an amendment
of this Agreement pursuant to Section 8.3 or an extension, consent or waiver
pursuant to Section 8.4 shall, in order to be effective, require in the case of
each of Chancellor or Capstar, action by its Board of Directors and each of the
Chancellor Special Committee and the Capstar Special Committee.
ARTICLE IX
SURVIVAL OF PROVISIONS
9.1 SURVIVAL. The representations and warranties of
Chancellor, Merger Sub and Capstar made in this Agreement, or in any
certificate, respectively, delivered by any of them pursuant to this Agreement,
will not survive the Closing.
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ARTICLE X
NOTICES
10.1 NOTICES. All notices and other communications under this
Agreement must be in writing and will be deemed to have been duly given if
delivered, telecopied or mailed, by certified mail, return receipt requested,
first-class postage prepaid, to the parties at the following addresses:
If to Chancellor or Merger Sub, to:
Chancellor Media Corporation
000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
with copies to:
Weil, Gotshal & Xxxxxx LLP
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
and
Xxxxxxxx & Xxxxxx, P.C.
0000 Xxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxx X. Xxxxxxx, Xx.
Facsimile: (000) 000-0000
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If to Capstar, to:
Capstar Broadcasting Corporation
000 Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: R. Xxxxxx Xxxxx
Xxxxxxx X. Xxxxxxxx, Xx.
Facsimile: (000) 000-0000
and
c/o Hicks, Muse, Xxxx & Xxxxx Incorporated
000 Xxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxxx X. Xxxxxx, Xx.
Facsimile: (000) 000-0000
with copies to:
Xxxxxx & Xxxxxx L.L.P.
0000 Xxxxxxxx Xxxx Xxxxxx
0000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
and:
R. Xxxxxx Xxxxxx
Southern Methodist University
X.X. Xxx 000000
Xxxxxx, Xxxxx 00000-0000
Facsimile: (000) 000-0000
and:
Xxxxxx & Xxxx, LLP
0000 Xxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxx X. Xxxxxxxx
Facsimile: (000) 000-0000
All notices and other communications required or permitted under this Agreement
that are addressed as provided in this Article X will, if delivered personally,
be deemed given upon delivery, will, if delivered by telecopy, be deemed
delivered when
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confirmed and will, if delivered by mail in the manner described above, be
deemed given on the third business day after the day it is deposited in a
regular depository of the United States mail. Any party from time to time may
change its address for the purpose of notices to that party by giving a similar
notice specifying a new address, but no such notice will be deemed to have been
given until it is actually received by the party sought to be charged with the
contents thereof.
ARTICLE XI
MISCELLANEOUS
11.1 ENTIRE AGREEMENT. Except for the documents executed by
Chancellor and Capstar pursuant hereto, this Agreement supersedes all prior
discussions and agreements between the parties with respect to the subject
matter of this Agreement, and this Agreement (including the exhibits hereto and
other documents delivered in connection herewith) and the Confidentiality
Agreement contain the sole and entire agreement between the parties hereto with
respect to the subject matter hereof.
11.2 EXPENSES. Except as provided in Section 8.2, whether or
not the Merger is consummated, each of Chancellor and Capstar will pay its own
costs and expenses incident to preparing for, entering into and carrying out
this Agreement and the consummation of the transactions contemplated hereby;
provided, that the fees and expenses incurred in connection with (i) the
filings and registrations with the Department of Justice and Federal Trade
Commission pursuant to the HSR Act, (ii) the filings with the FCC under the
Communications Act, and (iii) the printing, mailing and distribution of the
Joint Proxy Statement/Prospectus and the preparation and filing of the Form
S-4, shall be borne equally by Chancellor and Capstar. In the event of any
lawsuit or other judicial proceeding brought by either party to enforce any of
the provisions of this Agreement, the losing party in such proceeding shall
reimburse the prevailing party's fees and expenses incurred in connection
therewith, including the fees and expenses of its attorneys.
11.3 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which will be deemed an original, but all of which
will constitute one and the same instrument and shall become effective when one
or more counterparts have been signed by each of the parties and delivered to
the other parties.
11.4 NO THIRD PARTY BENEFICIARY. Except for Section 5.9, the
terms and provisions of this Agreement are intended solely
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for the benefit of the parties hereto (including their respective Boards of
Directors and the Capstar Special Committee and Chancellor Special Committee),
and their respective successors or assigns, and it is not the intention of the
parties to confer third-party beneficiary rights upon any other person.
11.5 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts
of laws thereof.
11.6 ASSIGNMENT; BINDING EFFECT. 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
without the prior written consent of the other parties, and any such assignment
that is not consented to shall be null and void. 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.
11.7 HEADINGS, GENDER, ETC. The headings used in this Agreement
have been inserted for convenience and do not constitute matter to be construed
or interpreted in connection with this Agreement. Unless the context of this
Agreement otherwise requires, (a) words of any gender are deemed to include
each other gender; (b) words using the singular or plural number also include
the plural or singular number, respectively; (c) the terms "hereof," "herein,"
"hereby," "hereto," and derivative or similar words refer to this entire
Agreement; (d) the terms "Article" or "Section" refer to the specified Article
or Section of this Agreement; (e) all references to "dollars" or "$" refer to
currency of the United States of America; (f) the term "person" shall include
any natural person, corporation, limited liability company, general
partnership, limited partnership, or other entity, enterprise, authority or
business organization; and (g) the term "or" is not exclusive.
11.8 INVALID PROVISIONS. If any provision of this Agreement is
held to be illegal, invalid, or unenforceable under any present or future law,
and if the rights or obligations of Capstar or Chancellor under this Agreement
will not be materially and adversely affected thereby, (a) such provision will
be fully severable; (b) this Agreement will be construed and enforced as if
such illegal, invalid, or unenforceable provision had never comprised a part
hereof; and (c) the remaining provisions of this Agreement will remain in full
force and effect and will not be affected by the illegal, invalid, or
unenforceable provision or by its severance herefrom.
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11.9 NO RECOURSE AGAINST OTHERS. No past, present or future
director, officer, employee, stockholder, incorporator or partner, as such, of
Chancellor, Capstar, Merger Sub or the Surviving Corporation shall have any
liability for any obligations of Chancellor, Capstar, Merger Sub or the
Surviving Corporation under this Agreement or for any claim based on, in
respect of or by reason of such obligations or their creation.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officers of Chancellor, Capstar and Merger Sub
effective as of the date first written above.
CHANCELLOR MEDIA CORPORATION
By: /s/ XXXX X. XXXXXX
----------------------------------
Name: Xxxx X. Xxxxxx
Title:
CAPSTAR BROADCASTING CORPORATION
By: /s/ XXXXXXX X. XXXXXXXX, XX.
----------------------------------
Name: Xxxxxxx X. Xxxxxxxx, Xx.
Title: Executive Vice President
CBC ACQUISITION COMPANY, INC.
By: /s/ XXXXXXX X. XXXXXXXX, XX.
----------------------------------
Name: Xxxxxxx X. Xxxxxxxx, Xx.
Title: Vice President
