EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
by and between
CITADEL COMMUNICATIONS CORPORATION
and
FLCC HOLDINGS, INC.
dated as of January 15, 2001
TABLE OF CONTENTS
Page
ARTICLE I
THE MERGER; CLOSING
1.1. The Merger............................................................1
1.2. Directors and Officers................................................2
1.3. Articles of Incorporation and Bylaws..................................2
ARTICLE II
EFFECT OF THE MERGER ON SECURITIES OF THE COMPANY AND MERGER SUB
2.1. Conversion of Merger Sub Stock........................................2
2.2. Conversion of Company Common Stock....................................3
2.3. Surrender and Payment.................................................3
2.4. Options...............................................................4
2.5. Withholding Rights....................................................5
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3.1. Organization and Good Standing; Organizational Documents..............5
3.2. Capitalization........................................................6
3.3. Subsidiaries..........................................................7
3.4. Authorization; Binding Agreement......................................7
3.5. Governmental Approvals................................................8
3.6. No Violations.........................................................8
3.7. Securities Filings....................................................9
3.8. Litigation; Liabilities...............................................9
3.9. Financial Statements.................................................10
3.10. Absence of Certain Changes...........................................11
3.11. Related Party Transactions...........................................11
3.12. Compliance with Laws; Permits........................................11
3.13. Finders and Investment Bankers.......................................12
3.14. Material Contracts...................................................12
3.15. Employee Benefit Plans...............................................13
3.16. Taxes and Returns....................................................14
3.17. Fairness Opinion.....................................................16
3.18. Takeover Statutes....................................................16
3.19. Company FCC Licenses; Operations of Company Licensed Facilities......16
3.20. Intellectual Property................................................18
3.21. Environmental Matters................................................19
3.22. Property.............................................................21
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
4.1. Organization and Good Standing.......................................21
4.2. Authorization; Binding Agreement.....................................21
4.3. Governmental Approvals...............................................22
4.4. No Violations........................................................22
4.5. Financing............................................................22
4.6. Qualification........................................................22
4.7. Ownership of Company Common Stock....................................22
ARTICLE V
ADDITIONAL COVENANTS OF THE COMPANY
5.1. Conduct of Business of the Company and the Company Subsidiaries......23
5.2. Notification of Certain Matters......................................26
5.3. Access and Information...............................................27
5.4. Stockholder Approval.................................................27
5.5. Reasonable Best Efforts..............................................28
5.6. Public Announcements.................................................28
5.7. Compliance...........................................................29
5.8. Company Benefit Plans................................................29
5.9. No Solicitation......................................................29
5.10. SEC and Stockholder Filings..........................................32
5.11. Takeover Statutes....................................................32
5.12. Debenture and Preferred Stock Offers.................................32
ARTICLE VI
ADDITIONAL COVENANTS OF PARENT
6.1. Notification of Certain Matters......................................33
6.2. Reasonable Best Efforts..............................................33
6.3. Public Announcements.................................................34
6.4. Compliance...........................................................34
6.5. Director and Officer Liability.......................................34
6.6. Formation and Actions of Merger Sub..................................35
6.7. No Purchase of Company Common Stock..................................35
ARTICLE VII
ADDITIONAL COVENANTS OF THE COMPANY AND PARENT
7.1. Proxy Statement......................................................35
ARTICLE VIII
CONDITIONS
8.1. Conditions to Each Party's Obligations...............................36
8.2. Conditions to Obligations of the Company.............................37
8.3. Conditions to Obligations of Parent..................................38
ARTICLE IX
TERMINATION AND ABANDONMENT
9.1. Termination..........................................................39
9.2. Effect of Termination................................................40
ARTICLE X
MISCELLANEOUS
10.1. Confidentiality......................................................41
10.2. Amendment and Modification...........................................42
10.3. Waiver of Compliance; Consents.......................................42
10.4. Survival of Representations and Warranties...........................42
10.5. Notices..............................................................43
10.6. Binding Effect; Assignment...........................................44
10.7. Expenses.............................................................44
10.8. Governing Law........................................................44
10.9. Counterparts.........................................................44
10.10. Interpretation.......................................................44
10.11. Entire Agreement.....................................................45
10.12. Specific Performance.................................................45
10.13. Third Parties........................................................45
INDEX OF DEFINED TERMS
PAGE
Acquisition Agreement.........................................................31
Acquisition Transaction.......................................................32
Affiliate.....................................................................46
Agreement......................................................................1
Articles of Merger.............................................................2
Benefit Plans.................................................................14
CBC...........................................................................10
Certificate of Incorporation...................................................6
Certificates...................................................................3
Closing........................................................................2
Closing Date...................................................................2
Code..........................................................................14
Company........................................................................1
Company Common Stock...........................................................3
Company ERISA Affiliate.......................................................14
Company FCC Licenses..........................................................17
Company Group.................................................................15
Company Licensed Facilities...................................................17
Company Licenses Facility.....................................................17
Company LMA Facilities........................................................17
Company LMA Facility..........................................................17
Company Options................................................................4
Company Permits...............................................................12
Company Preferred Stock........................................................6
Company Proposal..............................................................28
Company Stockholders Meeting..................................................28
Company Subsidiaries...........................................................5
Consent........................................................................8
Debenture Offer...............................................................33
Debentures....................................................................33
Effective Time.................................................................2
End Date......................................................................40
Event.........................................................................11
Exchange Act...................................................................7
Exchange Fund..................................................................3
FCC............................................................................9
Financial Advisor.............................................................32
GAAP..........................................................................11
Governmental Authority.........................................................8
HSR Act........................................................................9
Indemnified Losses............................................................35
Indemnified Person............................................................35
Intellectual Property.........................................................18
Law............................................................................9
Letter of Transmittal..........................................................3
Liens..........................................................................7
Litigation....................................................................10
LMA Facility FCC License......................................................17
LMA Facility FCC Licenses.....................................................17
Material Contract.............................................................12
Merger.........................................................................1
Merger Consideration...........................................................3
Merger Sub.....................................................................1
multi-employer plan...........................................................14
NASD...........................................................................9
Nevada Code....................................................................1
Notice........................................................................30
Parent.........................................................................1
Parent Subsidiaries............................................................3
Paying Agent...................................................................3
person........................................................................46
Preferred Stock...............................................................33
Preferred Stock Offer.........................................................33
Preferred Stock Solicitation..................................................33
Proxy Statement...............................................................36
Representatives...............................................................30
Requisite Consents............................................................33
Requisite Preferred Stock Consents............................................33
SEC............................................................................9
Securities Act.................................................................7
Significant Contracts.........................................................13
Significant Transaction.......................................................13
Solicitation..................................................................33
Station Acquisition Contract..................................................25
subsidiary....................................................................46
Superior Proposal.............................................................32
Surviving Corporation..........................................................1
Takeover Proposal.............................................................31
Takeover Statute..............................................................17
Tax or Taxes..................................................................16
Termination Fee...............................................................41
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "AGREEMENT") is made and entered
into as of January 15, 2001, by and between FLCC Holdings, Inc., a Delaware
corporation ("PARENT") and Citadel Communications Corporation, a
Nevada
corporation (the "COMPANY").
RECITALS
A. The Board of Directors of the Company has approved and adopted and
deems it advisable and in the best interests of the Company to consummate the
merger provided for herein (the "MERGER"), pursuant to which Parent will acquire
all of the common stock of the Company through the merger of FLCC Acquisition
Corp., a to-be-formed wholly owned subsidiary of Parent incorporated in the
state of
Nevada ("MERGER SUB"), with and into the Company upon the terms and
subject to the conditions set forth in this Agreement. The Board of Directors of
Parent has approved and adopted and deems it advisable and in the best interests
of Parent and its stockholders to consummate the Merger upon the terms and
subject to the conditions set forth herein.
B. The parties hereto desire to make certain representations,
warranties, covenants and agreements in connection with the Merger.
NOW, THEREFORE, in consideration of the foregoing, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:
ARTICLE I
THE MERGER; CLOSING
1.1. THE MERGER. Upon the terms and subject to the conditions set forth
in this Agreement:
(a) At the Effective Time, Merger Sub shall be merged with and
into the Company in accordance with the applicable provisions of Chapters 78 and
92A of the
Nevada Revised Statutes (the "
NEVADA CODE"). The Company shall be the
surviving corporation in the Merger (the "SURVIVING CORPORATION") and shall
continue its existence as a corporation under the laws of the State of
Nevada.
As a result of the Merger, the Company shall become a direct, wholly owned
subsidiary of Parent. After the Effective Time, the separate corporate existence
of Merger Sub shall cease. The Merger shall have the effects set forth in
Section 92A.250 of the
Nevada Code.
(b) The closing of the Merger (the "CLOSING") shall take place (a)
at the offices of Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx, Xxx Xxx Xxxx Xxxxx,
Xxx Xxxx, XX 00000, as soon as practicable (but not later than 5 business days)
after the last to be fulfilled or waived of the conditions set forth in Article
VIII (excluding conditions that, by their terms, cannot be satisfied until the
Closing Date, but subject to the fulfillment or waiver of such conditions) shall
be fulfilled or waived in accordance herewith, or (b) at such other time, date
or place as Parent and the Company may agree. The date on which the Closing
occurs is hereinafter referred to as the "CLOSING DATE."
(c) On or before the Closing Date, the parties shall (i) file
articles of merger with respect to the Merger (the "ARTICLES OF MERGER") in such
form as is required by and executed in accordance with the
Nevada Code and (ii)
make all other filings or recordings required under the laws of
Nevada. The
Merger shall become effective at the date and time of the filing of the Articles
of Merger (or such other date and time as may be agreed to by Parent and the
Company and specified in the Articles of Merger as may be permitted by the
Nevada Code). The time at which the Merger becomes effective is referred to in
this Agreement as the "EFFECTIVE TIME."
1.2. DIRECTORS AND OFFICERS. The directors of Merger Sub immediately
prior to the Effective Time shall be the directors of the Surviving Corporation,
as of and after the Effective Time and until their successors are duly appointed
or elected in accordance with the laws of Nevada or until their earlier death,
resignation or removal. The officers of the Company immediately prior to the
Effective Time shall continue as the officers of the Surviving Corporation as of
and after the Effective Time until such time as their successors shall be duly
elected or appointed in accordance with the laws of Nevada or until their
earlier death, resignation or removal.
1.3. ARTICLES OF INCORPORATION AND BYLAWS. The articles of incorporation
and bylaws of Merger Sub immediately prior to the Effective Time shall be
adopted as the articles of incorporation and bylaws of the Surviving Corporation
as of the Effective Time. Such bylaws shall include a provision that the Nevada
Control Share Act, Sections 78.378 to 78.3793 of the Nevada Code, inclusive,
does not apply to any holders of capital stock of the Surviving Corporation or
any successor entity as a result of such holders' acquisition of shares of such
capital stock.
ARTICLE II
EFFECT OF THE MERGER ON SECURITIES OF THE COMPANY
AND MERGER SUB
2.1. CONVERSION OF MERGER SUB STOCK. At the Effective Time, by virtue of
the Merger and without any action on the part of any of the parties, each share
of the common stock of Merger Sub outstanding immediately prior to the Effective
Time shall be converted into and shall become one fully paid and nonassessable
share of common stock of the Surviving Corporation.
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2.2. CONVERSION OF COMPANY COMMON STOCK. (a) Subject to the provisions of
this Agreement, at the Effective Time each issued and outstanding share of
common stock, par value $.001 per share, of the Company ("COMPANY COMMON
STOCK"), shall be converted into the right to receive in cash, without interest,
an amount equal to $26.00 (the "MERGER CONSIDERATION").
(b) As a result of the Merger and without any action on the part
of any holder thereof, at the Effective Time all shares of Company Common Stock
shall cease to be outstanding and shall be canceled and retired and shall cease
to exist, and each holder of shares of Company Common Stock shall thereafter
cease to have any rights with respect to such shares of Company Common Stock,
except the right to receive, without interest, the Merger Consideration upon the
surrender of a certificate representing such shares of Company Common Stock,
together with a duly completed Letter of Transmittal (as defined below), or a
Letter of Transmittal with respect to shares of Company Common Stock held in
book-entry form (the "CERTIFICATES").
(c) Notwithstanding anything contained in this Section 2.2 to the
contrary, each share of Company Common Stock issued and held in the Company's
treasury or by any of the Company's subsidiaries immediately prior to the
Effective Time shall, by virtue of the Merger, cease to be outstanding and shall
be canceled and retired without payment of any consideration therefor.
(d) Notwithstanding the foregoing, each share of Company Common
Stock owned by Parent or any of its subsidiaries ("PARENT SUBSIDIARIES") at the
Effective Time shall, by virtue of the Merger, be canceled and retired without
payment of any consideration therefor.
(e) The Merger Consideration shall be subject to appropriate
adjustment in the event of a stock split, stock dividend or recapitalization
after the date of this Agreement and prior to the Closing applicable to Company
Common Stock.
2.3. SURRENDER AND PAYMENT. (a) Prior to the Effective Time, Parent shall
appoint an agent reasonably acceptable to the Company (the "PAYING AGENT") for
the purpose of exchanging the Certificates for the Merger Consideration. Prior
to or concurrently with the Effective Time, Parent shall deposit with or make
available to the Paying Agent the Merger Consideration to be paid in respect of
the shares of Company Common Stock (the "EXCHANGE FUND"). Promptly after the
Effective Time, Parent will send, or will cause the Paying Agent to send, to
each record holder of shares of Company Common Stock, at the Effective Time, a
letter of transmittal and instructions (which shall specify that the delivery
shall be effected, and risk of loss and title shall pass, only upon proper
delivery of the Certificates to the Paying Agent) for use in such exchange (a
"LETTER OF TRANSMITTAL").
(b) Upon surrender to the Paying Agent of his Certificate together
with a properly completed Letter of Transmittal, each holder of shares of
Company Common
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Stock will be entitled to receive promptly the Merger Consideration in respect
of the shares of Company Common Stock represented by his Certificate. Until so
surrendered, each such Certificate shall represent after the Effective Time, for
all purposes, only the right to receive the Merger Consideration.
(c) If any portion of the Merger Consideration is to be paid to a
person other than the person in whose name the Certificate so surrendered is
registered, it shall be a condition to such payment that such Certificate shall
be properly endorsed or otherwise be in proper form for transfer and that the
person requesting such payment shall pay to the Paying Agent any transfer or
other taxes required as a result of such payment to a person other than the
registered holder of such Certificate, or establish to the satisfaction of the
Paying Agent that such tax has been paid or is not payable.
(d) Any portion of the Exchange Fund made available to or
deposited with the Paying Agent pursuant to this Section 2.3 that remains
unclaimed by the holders of Company Common Stock six months after the Effective
Time shall be returned to Parent, upon demand, and any such holder who has not
exchanged his shares for the Merger Consideration in accordance with this
Section 2.3 prior to that time shall thereafter look only to Parent for payment
of such consideration without any interest thereon. Notwithstanding the
foregoing, Parent shall not be liable to any holder of Company Common Stock for
any amounts paid to a public official pursuant to applicable abandoned property,
escheat or similar laws. Any amounts remaining unclaimed by the holders of
Company Common Stock five years after the Effective Time (or such earlier date,
immediately prior to such time when the amounts would otherwise escheat to or
become property of any Governmental Authority) shall become, to the extent
permitted by applicable law, the property of Parent free and clear of any claims
or interest of any person previously entitled thereto.
2.4. OPTIONS. The Company shall use its reasonable best efforts to cause:
(i) each option granted by the Company to purchase shares of Company Common
Stock (the "COMPANY OPTIONS") with an exercise price per share equal to or
greater than the Merger Consideration to be irrevocably cancelled with only
nominal consideration therefor; and (ii) each Company Option outstanding after
application of clause (i) to be fully vested and converted immediately prior to
the Effective Time into the right to receive an amount of cash, without
interest, equal to (x) the excess of the Merger Consideration over such exercise
price per share of Company Common Stock subject to such Company Option
multiplied by (y) the number of shares of Company Common Stock subject to such
option immediately prior to the Effective Time. The Company shall take all
action necessary to give effect to this Section 2.4 in full (including, without
limitation, obtaining consents from the holders of Company Options to the
cancellation or conversion thereof, as applicable, in accordance with this
Section 2.4). The Parent shall cause the Surviving Corporation to pay any
amounts required to be paid under this Section 2.4 as promptly as practicable
following the Effective Time.
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2.5. WITHHOLDING RIGHTS. Parent shall be entitled to deduct and withhold
from the consideration otherwise payable to any holder of Company Common Stock
or Company Options pursuant to this Article II such amounts as it is required to
deduct and withhold with respect to the making of such payment under any
provision of federal, state, local or foreign tax law. If Parent so withholds
amounts and remits such amounts to the appropriate authorities, such amounts
shall be treated for all purposes as having been paid to the holder of Company
Common Stock or Company Options, as the case may be, in respect of which Parent
made such deduction and withholding.
2.6. LOST, STOLEN OR DESTROYED CERTIFICATES. In the event that any
Certificate has been lost, stolen or destroyed, upon the making of an affidavit
of that fact by the person claiming such Certificate to be lost, stolen or
destroyed and, if required by Parent, the posting by such person of a bond in
such reasonable amount as Parent may direct as indemnity against any claim that
may be made against it with respect to such certificate, Parent will, in
exchange for such lost, stolen or destroyed Certificate, pay or cause to be paid
the amounts deliverable in respect thereof pursuant to Section 2.3.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as disclosed in the Securities Filings or in a separate disclosure
schedule, which has been delivered by the Company to Parent prior to the
execution of this Agreement (the "COMPANY DISCLOSURE SCHEDULE") (each section of
which qualifies the correspondingly numbered representation and warranty or
covenant to the extent specified therein and such other representations and
warranties or covenants to the extent a matter in such section is disclosed in
such a way as to make its relevance to the information called for by such other
representation and warranty or covenant readily apparent), the Company hereby
represents and warrants as of the date hereof to Parent as follows:
3.1. ORGANIZATION AND GOOD STANDING; ORGANIZATIONAL DOCUMENTS. (a) The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Nevada. Each of the Company's direct and indirect
subsidiaries (the "COMPANY SUBSIDIARIES") is a corporation or other business
entity duly organized, validly existing and in good standing under the laws of
the jurisdiction of its incorporation or organization. Each of the Company and
the Company Subsidiaries is qualified or licensed to do business as a foreign
corporation or other business entity, as applicable, and is in good standing, in
each jurisdiction where the character of its properties owned, operated or
leased or the nature of its activities makes such qualification necessary,
except where the failure to be so qualified or licensed would not, individually
or in the aggregate, constitute a Company Material Adverse Effect. The term
"Company Material Adverse Effect" means any change, effect, circumstance or
event that is or is reasonably likely to (i) be materially adverse to the
business, results of operations or financial condition or prospects of the
Company and its subsidiaries taken as a whole, other than
5
any change, effect, circumstance or event relating to or resulting from (A)
general changes in the radio industry or the advertising markets, (B) changes in
general economic conditions or securities markets in general or (C) this
Agreement or the transactions contemplated hereby or the announcement thereof or
(ii) materially adversely effect the ability of the Company to perform its
obligations under this Agreement or timely consummate the transactions
contemplated by this Agreement. The Company and the Company Subsidiaries have
all requisite corporate or similar organizational power and all governmental
licenses, authorizations, consents and approvals required to carry on their
respective businesses as they are now being conducted and necessary to own,
operate and lease their properties and assets, except those licenses,
authorizations, consents and approvals, the failure of which to possess does
not, individually, or in the aggregate, constitute a Company Material Adverse
Effect.
(b) The Company has furnished or otherwise made available to
Parent a complete and correct copy of the Company's Amended and Restated
Certificate of Incorporation and all amendments thereto, as currently in effect
("ARTICLES OF INCORPORATION"), and Bylaws. Such Articles of Incorporation and
Bylaws and all similar organizational documents of the Company Subsidiaries are
in full force and effect. The Company is not in violation of its Articles of
Incorporation or Bylaws and, except as does not, individually or in the
aggregate, constitute a Company Material Adverse Effect, none of the Company
Subsidiaries is in violation of any similar organizational documents of such
Company Subsidiary.
3.2. CAPITALIZATION. As of the date hereof, the authorized capital stock
of the Company consists of 200,000,000 shares of Company Common Stock,
19,033,122 shares of preferred stock, par value $.001 per share (the "COMPANY
PREFERRED STOCK") and 20,000,000 shares of undesignated preferred stock. Of such
authorized shares, as of the date hereof, there are issued and outstanding
37,006,138 shares of Company Common Stock, no shares of Company Common Stock are
issued and held in the treasury of Company, no shares of the Company Preferred
Stock or undesignated preferred stock are outstanding, and no other capital
stock of the Company is issued or outstanding. All issued and outstanding shares
of Company Common Stock are duly authorized, validly issued and outstanding,
fully paid and nonassessable and were issued free of preemptive rights in
compliance with applicable corporate and securities Laws. There are no
outstanding rights, including stock appreciation rights, subscriptions,
warrants, puts, calls, unsatisfied preemptive rights, options or other
agreements of any kind relating to, or the value of which is tied to the value
of, any of the outstanding, authorized but not issued, unauthorized or treasury
shares of the capital stock or any other security of the Company, and there is
no authorized or outstanding security of any kind convertible into or
exchangeable for any such capital stock or other security. There are no
restrictions imposed by the Company upon the transfer of or otherwise pertaining
to the securities (including, but not limited to, the ability to pay dividends
thereon) or retained earnings of the Company and the Company Subsidiaries or the
ownership thereof other than those imposed by the Securities Act of 1933, as
amended, and the rules and regulations thereunder (the "SECURITIES ACT"), the
Securities Exchange Act of 1934, as amended, and
6
the rules and regulations thereunder (the "EXCHANGE ACT"), the Communications
Act, applicable state securities Laws, applicable corporate law or the Company's
Articles of Incorporation.
3.3. SUBSIDIARIES. The Company does not own, directly or indirectly, any
capital stock or other proprietary interest in any company, association, trust,
partnership, joint venture or other entity. Each Company Subsidiary is, directly
or indirectly, wholly owned by the Company and all of the capital stock and
other interests of the Company Subsidiaries so held by the Company are owned by
it, free and clear of any Lien. All of the outstanding shares of capital stock
in each of the Company Subsidiaries are duly authorized, validly issued and
outstanding, fully paid and nonassessable, and were issued free of preemptive
rights in compliance with applicable corporate and securities Laws. There are no
irrevocable proxies or similar obligations with respect to such capital stock of
the Company Subsidiaries held by the Company and no equity securities or other
interests of any of the Company Subsidiaries are or may become required to be
issued or purchased by reason of any options, warrants, rights to subscribe to,
puts, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into or exchangeable for, shares of any capital
stock of any Company Subsidiary, and there are no contracts, commitments,
understandings or arrangements by which any Company Subsidiary is bound to issue
additional shares of its capital stock, or options, warrants or rights to
purchase or acquire any additional shares of its capital stock or securities
convertible into or exchangeable for such shares. The term "LIENS" means, with
respect to any asset, any mortgage, lien, pledge, charge, security interest or
encumbrance of any kind in respect of such asset.
3.4. AUTHORIZATION; BINDING AGREEMENT. (a) The Company has all requisite
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. This Agreement, the execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby, including, but not limited to, the Merger, have been duly
and validly authorized by the Company's Board of Directors, and no other
corporate proceedings on the part of the Company or any Company Subsidiary are
necessary to authorize the execution and delivery of this Agreement or to
consummate the transactions contemplated hereby (other than the approval and
adoption of this Agreement and the transactions contemplated hereby by the
stockholders of the Company in accordance with the Nevada Code and the Articles
of Incorporation and Bylaws of the Company) and the filing and recordation of
appropriate merger documents as required by the Nevada Code. This Agreement has
been duly and validly executed and delivered by the Company and, assuming the
due authorization, execution and delivery of the Agreement by Parent,
constitutes the legal, valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms.
(b) The affirmative vote of the holders of a majority of the
Company Common Stock entitled to vote at a duly called meeting of stockholders
at which a quorum is present is the only vote of the holders of any class or
series of capital stock of the Company or any of the Company Subsidiaries
required to approve the Merger and this
7
Agreement. No other vote of the stockholders or directors of the Company or any
of the Company Subsidiaries is required by law, the articles of incorporation or
bylaws of the Company or any of the Company Subsidiaries or otherwise in order
for the Company to consummate the Merger and the transactions contemplated
hereby.
(c) As of the date hereof, the Board of Directors of the Company,
at a meeting duly called and held, has (i) determined that this Agreement and
the transactions contemplated hereby are advisable and are fair to and in the
best interests of the Company and has approved the same and (ii) resolved to
recommend that the Company's stockholders approve this Agreement and the
transactions contemplated herein.
(d) The Company has not adopted a shareholder rights plan or any
similar plan or instrument.
3.5. GOVERNMENTAL APPROVALS. No consent, approval, waiver or
authorization of, notice to or declaration or filing with ("CONSENT") any nation
or government, any state or other political subdivision thereof, any person,
authority or body exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government including, without
limitation, any governmental or regulatory authority, agency, department, board,
commission or instrumentality, any court, tribunal or arbitrator and any
self-regulatory organization ("GOVERNMENTAL AUTHORITY") on the part of the
Company or any of the Company Subsidiaries is required in connection with the
execution or delivery by the Company of this Agreement or the consummation by
the Company of the transactions contemplated hereby other than (i) the filing of
the Articles of Merger with the Secretary of State of the State of Nevada in
accordance with the Nevada Code, (ii) filings with the Securities and Exchange
Commission (the "SEC"), the National Association of Securities Dealers (the
"NASD") and the Nasdaq National Market, (iii) Consents from or with Governmental
Authorities set forth in Schedule 3.5 of the Company Disclosure Schedule, (iv)
Consents required under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder (the "HSR
ACT"), (v) any filings required or approvals necessary pursuant to any state
securities or "blue sky" laws, (vi) any filings with and approvals and
authorizations of the Federal Communications Commission or any successor entity
(the "FCC") as may be required under the Communications Act of 1934, as amended,
and the rules, regulations and policies of the FCC thereunder (collectively, the
"COMMUNICATIONS ACT"), including, without limitation, filings and approvals in
connection with the transfer of control of the Company FCC Licenses, and (vii)
those Consents that, if they were not obtained or made, would not, individually
or in the aggregate, constitute a Company Material Adverse Effect.
3.6. NO VIOLATIONS. The execution and delivery of this Agreement, the
consummation by the Company of the transactions contemplated hereby and
compliance by the Company with any of the provisions hereof will not (i)
conflict with or result in any breach of any provision of the articles of
incorporation or bylaws or other organizational documents of the Company or any
of the Company Subsidiaries, (ii) require any Consent under or result in a
violation or breach of, or constitute (with or
8
without due notice or lapse of time or both) a default (or give rise to any
right of termination, cancellation or acceleration of the performance required)
under any of the terms, conditions or provisions of any Material Contract or
other material obligation to which the Company or any Company Subsidiary is a
party or by which any of them or any of their properties or assets may be bound,
(iii) result in the creation or imposition of any Lien upon any of the assets of
the Company or any Company Subsidiary, or (iv) subject to obtaining the Consents
from Governmental Authorities referred to in Section 3.5 above and the
expiration of the HSR waiting period, conflict with or violate any applicable
provision of any constitution, treaty, statute, law, code, rule, regulation,
ordinance, policy or order of any Governmental Authority or other matters having
the force of law including, but not limited to, any orders, decisions,
injunctions, judgments, awards and decrees of or agreements with any court or
other Governmental Authority ("LAW") currently in effect to which the Company or
any Company Subsidiary or its or any of their respective assets or properties
are subject, except in the case of clauses (ii), (iii) and (iv) above, for any
deviations from the foregoing which do not, individually or in the aggregate,
constitute a Company Material Adverse Effect.
3.7. SECURITIES FILINGS. As of their respective dates, or as of the date
of the last amendment thereof, if amended after filing, none of the Securities
Filings (including all schedules thereto and disclosure documents incorporated
by reference therein), contained or, as to Securities Filings subsequent to the
date hereof, will contain, any untrue statement of a material fact or omitted
or, as to Securities Filings subsequent to the date hereof, will omit, to state
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Each of the Securities Filings was filed in a timely manner and
at the time of filing or as of the date of the last amendment thereof, if
amended after filing, complied or, as to Securities Filings subsequent to the
date hereof, will comply with the Exchange Act, the Securities Act, the
Communications Act or other applicable Law except those failures to timely file
or comply which do not or will not, individually or in the aggregate, constitute
a Company Material Adverse Effect. The term "SECURITY FILINGS" means (i) the
Company's and Citadel Broadcasting Company's ("CBC") Annual Reports on Form
10-K, as amended, for the years ended December 31, 1998 and 1999, as filed with
the SEC, (ii) the Company's proxy statements relating to all of the meetings of
stockholders (whether annual or special) of the Company since January 1, 1998,
as filed with the SEC and (iii) all other reports, statements and registration
statements and amendments thereto (including, without limitation, Quarterly
Reports on Form 10-Q and Current Reports on Form 8-K, as amended) filed by the
Company or CBC, as applicable, with the SEC since January 1, 1998, together with
those reports or other documents of the type described in clauses (i) though
(iii) above, subsequently provided or required to be provided pursuant to this
Agreement.
3.8. LITIGATION; LIABILITIES. (a) As of the date hereof, there is no
action, cause of action, claim, demand, suit, proceeding, citation, summons,
subpoena, inquiry or investigation of any nature, civil, criminal, regulatory or
otherwise, in law or in equity, by or before any court, tribunal, arbitrator,
the FCC or other Governmental Authority ("LITIGATION") pending or, to the
knowledge of the Company, threatened against the
9
Company or any Company Subsidiaries, any officer, director, employee or agent
thereof, in his or her capacity as such, or as a fiduciary with respect to any
Benefit Plan of the Company or any Company Subsidiaries or otherwise relating to
the Company or any Company Subsidiaries or the securities of any of them, or any
properties or rights of the Company or any Company Subsidiaries or any Benefit
Plan of the Company or any Company Subsidiaries, except as does not,
individually or in the aggregate, constitute a Company Material Adverse Effect.
(b) Neither the Company nor any of the Company Subsidiaries has or
is subject to any liabilities (absolute, accrued, contingent or otherwise),
except liabilities or obligations which do not, individually or in the
aggregate, constitute a Company Material Adverse Effect.
3.9. FINANCIAL STATEMENTS. (a) Each of the consolidated balance sheets of
the Company and the Company Subsidiaries (including all related notes) included
in the financial statements contained in the Securities Filings (or incorporated
therein by reference) present fairly, in all material respects, the consolidated
financial position of the Company and the Company Subsidiaries as of the
respective dates indicated, and each of the statements of consolidated
operations, statements of consolidated cash flows and statements of consolidated
common stock and other stockholders' equity of the Company and the Company
Subsidiaries (including all related notes) contained in such financial
statements present fairly, in all material respects, the consolidated results of
operations and cash flows of the Company and the Company Subsidiaries for the
respective periods indicated, in each case in conformity with U.S. generally
accepted accounting principles ("GAAP") applied on a consistent basis throughout
the periods involved (except for changes in accounting principles disclosed in
the notes thereto) and the rules and regulations of the SEC, except that
unaudited interim financial statements are subject to normal and recurring
year-end adjustments and any other adjustments described therein and do not
include certain notes and other information which may be required by GAAP but
which are not required under the Exchange Act. The financial statements included
in the Securities Filings are in all material respects in accordance with the
books and records of the Company and the Company Subsidiaries.
(b) Each of the consolidated balance sheets of CBC and it subsidiaries
(including all related notes) included in the financial statements contained in
the Securities Filings (or incorporated therein by reference) present fairly, in
all material respects, the consolidated financial position of CBC and it
subsidiaries as of the respective dates indicated, and each of the statements of
consolidated operations, statements of consolidated cash flows and statements of
consolidated common stock and other stockholders' equity of CBC and it
subsidiaries (including all related notes) contained in such financial
statements present fairly, in all material respects, the consolidated results of
operations and cash flows of CBC and it subsidiaries for the respective periods
indicated, in each case in conformity with GAAP applied on a consistent basis
throughout the periods involved (except for changes in accounting principles
disclosed in the notes thereto) and the rules and regulations of the SEC, except
that unaudited interim financial statements are subject to normal and recurring
year-end adjustments and any other
10
adjustments described therein and do not include certain notes and other
information which may be required by GAAP but which are not required under the
Exchange Act. The financial statements included in the Securities Filings are in
all material respects in accordance with the books and records of CBC and its
subsidiaries.
3.10. ABSENCE OF CERTAIN CHANGES. Since September 30, 2000, there has not
been: (i) any event, occurrence, fact, condition, change, development or effect
("EVENT") that, individually or in the aggregate, constitutes a Company Material
Adverse Effect; (ii) any declaration, payment or setting aside for payment of
any dividend (except to the Company or any Company Subsidiary wholly owned by
the Company) or other distribution or any redemption, purchase or other
acquisition of any shares of capital stock or securities of the Company or any
Company Subsidiary; (iii) any return of any capital or other distribution of
assets to stockholders of the Company or any Company Subsidiary (except to the
Company or any Company Subsidiary wholly owned by the Company); (iv) any
acquisition (by merger, consolidation, acquisition of stock or assets or
otherwise) of any person or business; or (v) any material change by the Company
to its accounting policies, practices, or methods, except, in the case of each
of the foregoing clauses (i) through (v), as expressly contemplated by this
Agreement.
3.11. RELATED PARTY TRANSACTIONS. Since September 30, 2000, the Company
has not entered into any relationship or transaction of a sort that would be
required to be disclosed by the Company pursuant to Item 404 of Regulation S-K
of the Securities Act.
3.12. COMPLIANCE WITH LAWS; PERMITS. (a) Neither the Company nor any of
the Company Subsidiaries is in conflict with, or in default or violation of any
Law in any jurisdiction, foreign or domestic, applicable to the Company or any
of the Company Subsidiaries or by which its or any of their respective assets or
properties is bound or affected, except for such conflicts, defaults or
violations which do not, individually or in the aggregate, constitute a Company
Material Adverse Effect.
(b) The Company and the Company Subsidiaries hold all permits,
licenses, easements, rights-of-way, variances, exemptions, consents,
certificates, orders and approvals which are material to the operation of the
businesses of the Company and the Company Subsidiaries (collectively, the
"COMPANY PERMITS"), except where the failure to hold such Company Permits does
not, individually or in the aggregate, constitute a Company Material Adverse
Effect. The Company and the Company Subsidiaries are in compliance with the
terms of the Company Permits except where the failure to so comply, individually
or in the aggregate, does not constitute a Company Material Adverse Effect.
(c) None of the Company, any Company Subsidiary or, to the knowledge
of the Company, any director, officer, agent, employee or other person acting on
behalf of any of the foregoing has used any corporate funds for unlawful
contributions, payments, gifts or entertainment or for the payment of other
unlawful expenses relating to political activity, or made any direct or indirect
unlawful payments to governmental or regulatory officials or others, which
constitutes, individually or in the aggregate, a
11
Company Material Adverse Effect.
3.13. FINDERS AND INVESTMENT BANKERS. Neither the Company and the Company
Subsidiaries nor any of their respective officers or directors has employed any
broker or finder or incurred any liability for any brokerage fees, commissions
or finders' fees in connection with the transactions contemplated hereby other
than pursuant to the agreements with Credit Suisse First Boston Corporation,
accurate and complete copies of which have been provided to Parent.
3.14. MATERIAL CONTRACTS. (a) Neither the Company nor any Company
Subsidiary is a party or is subject to any note, bond, mortgage, indenture,
contract, lease, license, agreement, understanding, instrument, bid or proposal
that is required to be described in or filed as an exhibit to any Securities
Filing ("MATERIAL CONTRACT") that is not so described in or filed as required by
the Securities Act or the Exchange Act, as the case may be.
(b) The Company Disclosure Schedule sets forth a true and complete
list of the following, true and complete copies of which have been provided or
made available to Parent:
(i) all contracts, agreements or other instruments related to any
Significant Transaction pursuant to which the Company or any Company
Subsidiary has any obligations (whether absolute, accrued, asserted,
unasserted or contingent or otherwise, and whether pursuant to any earn-out
or post-closing adjustment) to issue any shares of capital stock or other
securities of the Company or any securities of any Company Subsidiary or
deliver any other consideration as part of any such Significant
Transaction. For purposes of this Agreement, "SIGNIFICANT TRANSACTION"
shall mean any acquisition or disposition of (A) any business, limited
liability company, association or other business organization or division
thereof or any material partnership interest or material joint venture
interest, (B) any material assets or properties other than in the ordinary
course of business or (C) any radio broadcast station; and
(ii) each employment contract, agreement or other instrument to
which the Company or any Company Subsidiary is a party or by which the
Company or any Company Subsidiary otherwise is bound with any senior
management employee of the Company or any Company Subsidiary.
(c) (i) Each contract or agreement disclosed or required to be
disclosed in Schedule 3.14 of the Company Disclosure Schedule and each Material
Contract (collectively, the "SIGNIFICANT CONTRACTS") is in full force and effect
and constitutes a legal, valid, binding and enforceable obligation of the
Company and each Company Subsidiary to the extent any such entity is a party
thereto and, to the knowledge of the Company, each other party thereto.
(ii) No Consent of any person is needed in order that each
such
12
Significant Contract shall continue in full force and effect in accordance
with its terms without penalty, acceleration or rights of early termination
by reason of the consummation of the transactions contemplated herein,
except for Consents the absence of which do not, individually or in the
aggregate, constitute a Company Material Adverse Effect.
(iii) Neither the Company nor any Company Subsidiary is in
violation or breach of or default under (nor does there exist any condition
which upon the passage of time or the giving of notice would cause such
violation or default under) any such Significant Contract; nor to the
Company's knowledge is any other party to any such Significant Contract in
violation or breach of or default under (nor does there exist any condition
which upon the passage of time or the giving of notice would cause such
violation or default under) any such Significant Contract in each case
where such violation or breach, individually or in the aggregate,
constitutes a Company Material Adverse Effect.
3.15. EMPLOYEE BENEFIT PLANS. (a) Section 3.15 of the Company Disclosure
Schedule sets forth a complete list of all material "employee benefit plans" (as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")), bonus, pension, profit sharing, deferred compensation,
incentive compensation, excess benefit, stock, stock option, severance,
termination pay, change in control or other material employee benefit plans,
programs, arrangements or agreements currently maintained, or contributed to, or
required to be maintained or contributed to, by the Company or any Company
Subsidiary for the benefit of any current or former employees, officers,
directors or independent contractors of the Company or any Company Subsidiary
and with respect to which the Company or any Company Subsidiary has any
liability (collectively, the "BENEFIT PLANS"). The Company has delivered or made
available to Parent true, complete and correct copies of each Benefit Plan.
(b) Each Benefit Plan has been administered in accordance with its
terms and in compliance with the applicable provisions of ERISA (including,
without limitation, the making of all contributions and payments), the Internal
Revenue Code of 1986, as amended (the "CODE"), and other applicable law, except
where the failure to so administer or comply does not, individually or in the
aggregate, constitute a Company Material Adverse Effect. All Benefit Plans
intended to be qualified under Section 401(a) of the Code are so qualified and
have been the subject of favorable determination letters from the Internal
Revenue Service, and, to the knowledge of the Company, no circumstances exist
that could result in the loss of such qualified status.
(c) Neither the Company nor any Company Subsidiary, nor any current
or former "Company ERISA Affiliate," has incurred any material liability under
Title IV of ERISA or Section 412 of the Code that constitutes, individually or
in the aggregate, a Company Material Adverse Effect. For purposes of this
Agreement, a "COMPANY ERISA AFFILIATE" is a person or entity that is considered
one employer with the Company under Section 4001(a)(15) of ERISA or Section 414
of the Code. No Benefit Plan is subject to Title IV of ERISA or Section 412 of
the Code, and no Benefit Plan is a "multi-employer
13
plan" (as defined in Section 3(37) of ERISA).
(d) With respect to any Benefit Plan that is an employee welfare
benefit plan (as defined in Section 3(l) of ERISA), (i) no such Benefit Plan
provides benefits, including without limitation, death or medical benefits,
beyond termination of employment or retirement other than (A) coverage mandated
by statute or (B) death or retirement benefits under a Benefit Plan qualified
under Section 401(a) of the Code, and (ii) each such Benefit Plan (including any
such Plan covering retirees or other former employees) may be amended or
terminated without liability that would, individually or in the aggregate,
constitute a Company Material Adverse Effect.
(e) There is no pending or, to the Company's knowledge, threatened
litigation relating to employment, termination of employment, compensation or
employee benefits involving the Company or any Company Subsidiary which, if
determined adversely to the Company or any Company Subsidiary, would,
individually or in the aggregate, constitute a Company Material Adverse Effect.
(f) In the event that any individual is classified by the Company or
any Company Subsidiary as a non-employee (such as an independent contractor,
leased employee, consultant or special consultant) and is later reclassified as
an employee upon governmental or judicial review, notwithstanding such
reclassification, no such individual shall be eligible to participate in any
Benefit Plan, except where such eligibility would, individually or in the
aggregate, constitute a Company Material Adverse Effect.
(g) The execution of, and performance of the transactions
contemplated in, this Agreement will not (either alone or upon the occurrence of
any additional or subsequent events) (i) constitute an event under any Benefit
Plan that will or may result in any payment (whether of severance pay or
otherwise), acceleration, forgiveness of indebtedness, vesting, distribution,
increase in benefits or obligation to fund benefits with respect to any employee
of the Company or any Company Subsidiary, or (ii) result in the triggering or
imposition of any restrictions or limitations on the right of the Company or
Parent to cause any such Benefit Plan to be amended or terminated (or which
would result in any materially adverse consequence for so doing). No payment or
benefit that will or may be made by the Company, Parent, or any of their
respective subsidiaries or affiliates with respect to any employee of the
Company or any Company Subsidiary under any Benefit Plan in connection with the
transactions contemplated by this Agreement will be characterized as an "excess
parachute payment," within the meaning of Section 280G(b)(1) of the Code.
(h) Neither the Company nor any Company Subsidiary is a party to any
collective bargaining agreement covering any current or former employees of
either of them. There are no union organizational efforts pending or, to the
Company's knowledge, threatened involving any employees of the Company or any
Company Subsidiary.
3.16. TAXES AND RETURNS. (a) (i) All Tax Returns required to be filed by
or on behalf of the Company, each of the Company Subsidiaries, and each
affiliated, combined,
14
consolidated or unitary group of which the Company or any of the Company
Subsidiaries is or has been a member (a "COMPANY GROUP") have been timely filed
in the manner prescribed by law, and all such Tax Returns are true, complete and
accurate except to the extent any failures to file or failures to be true,
correct or accurate would not, individually or in the aggregate, constitute a
Company Material Adverse Effect; (ii) all Taxes due and owing by the Company,
any Company Subsidiary or any Company Group have been timely paid, or adequately
reserved for in accordance with GAAP, except to the extent any failure to pay or
reserve does not, individually or in the aggregate, constitute a Company
Material Adverse Effect; (iii) there are no claims or assessments presently
pending against the Company, any Company Subsidiary or any Company Group, for
any alleged Tax deficiency, and the Company does not know of any threatened
claims or assessments against the Company, any Company Subsidiary or any Company
Group for any alleged Tax deficiency, which in either case if upheld would,
individually or in the aggregate, constitute a Company Material Adverse Effect;
(iv) to the knowledge of the Company, no issues have been raised in any audit or
tax examination of the Company, any of the Company Subsidiaries or any Company
Group which, if determined adversely, would, individually or in the aggregate,
constitute a Company Material Adverse Effect; (v) there are no Liens for Taxes
on any asset of the Company or any Company Subsidiary, except for Liens for
Taxes not yet due and payable and Liens for Taxes that could not, individually
or in the aggregate, reasonably be expected to have a Company Material Adverse
Effect; and (vi) the Company and each of the Company Subsidiaries has complied
in all respects with all rules and regulations relating to the withholding of
Taxes (including, without limitation, employee-related Taxes), except for
failures to comply that would not, individually or in the aggregate, constitute
a Company Material Adverse Effect.
(b) Except as set forth on Schedule 3.16(c) of the Company
Disclosure Schedule, (i) to the Company's knowledge, no taxing authority in any
jurisdiction where the Company or any Company Subsidiary does not file Tax
Returns has made a claim, assertion or threat that the Company or Company
Subsidiary is or may be subject to Tax in such jurisdiction and (ii) neither the
Company nor any Company Subsidiary has agreed to any adjustment under Section
481(a) of the Code (or analogous provisions of state, local or foreign law), as
a result of a change of accounting method or otherwise, or has disposed of any
assets under the installment method pursuant to Section 453 of the Code, in each
case under this clause (ii) which would require the inclusion of a material
amount in income after the Effective Date.
(c) The statutes of limitations for the federal income Tax Returns
of the Company and the Company Subsidiaries (including, without limitation, any
Company Group) have expired or otherwise have been closed for all taxable
periods ending on or before December 31, 1996.
(d) For purposes of this Agreement, (i) "TAX" or "TAXES" means all
taxes, levies or other like assessments, charges or fees (including estimated
taxes, charges and fees), including, without limitation, income, corporation,
advance corporation, gross receipts, transfer, excise, property, sales, use,
value-added, license, payroll, withholding,
15
social security and franchise or other governmental taxes or charges, imposed by
the United States or any state, county, local or foreign government or
subdivision or agency thereof, any liability for taxes, levies or other like
assessments, charges or fees of another person pursuant to Treasury Regulation
Section 1.1502-6 or any similar or analogous provision of applicable law or
otherwise (including, without limitation, under a tax sharing or other
agreement) and such term shall include any interest, penalties or additions to
tax attributable to such taxes, levies or other like assessments, charges or
fees and (ii) "TAX RETURN" means any report, return, statement, declaration or
other written information required to be supplied to a taxing or other
Governmental Authority in connection with Taxes.
3.17. FAIRNESS OPINION. The Company's Board of Directors received from
Credit Suisse First Boston Corporation an opinion to the effect that the Merger
Consideration is fair to the holders of the shares of Company Common Stock from
a financial point of view.
3.18. TAKEOVER STATUTES. No "business combination," "fair price,"
"moratorium," "control share acquisition" or other similar antitakeover statute
or regulation enacted under state or federal laws in the United States,
including, without limitation, Sections 78.378 to 78.3793, inclusive, and 78.411
to 78.444, inclusive, of the Nevada Code (each a "TAKEOVER STATUTE") applicable
to the Company or any of the Company Subsidiaries is applicable to the Merger,
this Agreement or the other transactions contemplated hereby.
3.19. COMPANY FCC LICENSES; OPERATIONS OF COMPANY LICENSED FACILITIES. The
Company and the Company Subsidiaries have operated the radio stations for which
the Company and any of the Company Subsidiaries are the authorized legal holders
of licenses from the FCC, in each case which are owned or operated by the
Company and the Company Subsidiaries (each a "COMPANY LICENSED FACILITY" and
collectively the "COMPANY LICENSED FACILITIES"), in material compliance with the
terms of the licenses issued by the FCC to the Company and the Company
Subsidiaries (the "COMPANY FCC LICENSES"), and in material compliance with the
Communications Act, except where the failure to do so would not, individually or
in the aggregate, constitute a Company Material Adverse Effect. The Company FCC
Licenses constitute all of the licenses, permits and authorizations from the FCC
that are necessary, required for and/or used in the business and operations of
the Company Licensed Facilities as presently conducted. The Company Subsidiaries
which are FCC licensees are financially qualified, and are otherwise qualified,
to be FCC licensees. The Company's activities in connection with each broadcast
radio station for which the Company or any of the Company Subsidiaries provides
programming and advertising services pursuant to a local marketing agreement
(each a "COMPANY LMA FACILITY" and collectively the "COMPANY LMA FACILITIES")
have been in compliance with the Communications Act and the rules, regulations
and policies of the FCC, except where the failure to do so would not,
individually or in the aggregate, constitute a Company Material Adverse Effect.
The Company has, and each of the Company Subsidiaries has, timely filed or made
all applications, reports and other disclosures required by the FCC to be made
with respect to Company Licensed Facilities
16
and has timely paid all FCC regulatory fees with respect thereto, except where
the failure to do so would not, individually or in the aggregate, constitute a
Company Material Adverse Effect. The Company and each of the Company
Subsidiaries have, and are the authorized legal holders of, all Company FCC
Licenses necessary, required or used in the operation of the businesses of
Company Licensed Facilities as presently operated. To the knowledge of the
Company, the third parties with which the Company or the Company Subsidiaries
have entered into local marketing agreements with respect to Company LMA
Facilities have, and are the authorized legal holders of, the FCC licenses
necessary or used in the operation of the business of the respective Company LMA
Facility (each an "LMA FACILITY FCC LICENSE" and collectively the "LMA FACILITY
FCC LICENSES") to which such local marketing agreement relates. All Company FCC
Licenses and, to the knowledge of the Company, LMA Facility FCC Licenses are
validly held and are in full force and effect, unimpaired by any act or omission
of the Company, any of the Company Subsidiaries (or, to the Company's knowledge,
their respective predecessors) or their respective officers, employees or
agents, except where such impairments would not, individually or in the
aggregate, constitute a Company Material Adverse Effect. No application, action
or proceeding is pending for the renewal of any Company FCC License or, to the
knowledge of the Company, LMA Facility FCC License as to which any petition to
deny has been filed and, to the Company's knowledge, there is not pending before
the FCC any material complaint, investigation, proceeding, notice of violation
or order of forfeiture relating to any Company Licensed Facility or Company LMA
Facility that, if adversely determined, would, individually or in the aggregate,
constitute a Company Material Adverse Effect, and the Company has no knowledge
of any facts, events or conditions that could reasonably be expected to cause
the FCC (i) not to renew or to revoke, rescind, suspend or adversely modify any
of Company FCC Licenses or the LMA Facility FCC Licenses (other than proceedings
to amend FCC rules or the Communications Act of general applicability to the
radio broadcasting industry) or (ii) impose any fines, forfeitures or
administrative sanctions which would, individually or in the aggregate,
constitute a Company Material Adverse Effect. There is not pending and, to
Company's knowledge, there is not threatened, any action by or before the FCC to
revoke, suspend, cancel, rescind or modify in any material respect any of
Company FCC Licenses or, to the knowledge of the Company, any of the LMA
Facility FCC Licenses that, if adversely determined, would, individually or in
the aggregate, constitute a Company Material Adverse Effect (other than
proceedings to amend FCC rules or the Communications Act of general
applicability to the radio broadcast industry). There are no facts, conditions
or events relating to the Company or the Company Subsidiaries or any of the
Company Licensed Facilities Stations that could reasonably be expected to cause
the FCC to deny the transfer of control of any of the Company FCC Licenses to
Parent (assuming Parent is qualified to hold the Company FCC Licenses) or the
imposition of any materially adverse condition by the FCC in connection with
approval of the transfer of control of the Company FCC Licenses to Parent (other
than proceedings to amend FCC rules or the Communications Act of general
applicability to the radio broadcast industry).
17
3.20. INTELLECTUAL PROPERTY. Except to the extent that the inaccuracy of
any of the following, individually or in the aggregate, would not individually
or in the aggregate constitute a Company Material Adverse Effect: (a) in each
jurisdiction in which the Company has conducted, conducts or proposes to conduct
its business, the Company and each of the Company Subsidiaries either (1) is the
sole and exclusive owner of, with all right, title and interest in and to, each
item of Company Intellectual Property free and clear of any Liens, or (2) has a
valid and enforceable license to use each item of Company Intellectual Property
free and clear of any Liens (and, for each of (a)(1) or (a)(2), the consummation
of the transactions contemplated hereby will not alter or impair any such
rights); (b) the use of any Company Intellectual Property does not infringe on,
interfere with, misappropriate or otherwise violate or come into conflict with
the rights of any Person and is in accordance with, and does not breach, any
applicable license pursuant to which the Company or any Company Subsidiary
acquired the right to use any Company Intellectual Property, and the Company or
any Company Subsidiary has not received any Notice so alleging (including any
claim that the Company or any of the Company Subsidiaries must license or
refrain from using any Intellectual Property of any other Person); (c) to the
knowledge of the Company, no Person is challenging, infringing on, interfering
with, misappropriating or otherwise violating or coming into conflict with any
right of the Company or any of the Company Subsidiaries with respect to any
Company Intellectual Property; (d) the Company and the Company Subsidiaries have
taken all reasonable action to maintain and protect the Company Intellectual
Property and, to the knowledge of the Company, no Company Intellectual Property
is being used or enforced in a manner that would result in the abandonment,
cancellation or unenforceability of such Intellectual Property; (e) the Company
Intellectual Property is all the Intellectual Property that is necessary for the
conduct of the business of the Company and the Company Subsidiaries as it has
been, is, and is presently proposed to be conducted; and (f) all employees,
agents and contractors who have contributed to or participated in the conception
and development of the Company Intellectual Property on behalf of the Company or
any of the Company Subsidiaries have (1) executed nondisclosure agreements, and
(2) been a party to enforceable and appropriate instruments of assignment
(including work for hire agreements with respect to any copyrights) in favor of
the Company or one of the Company Subsidiaries in accordance with applicable
Law, that have conveyed to the Company or one of the Company Subsidiaries full,
effective, exclusive and original ownership in and to all Company Intellectual
Property arising from the efforts of such personnel.
For purposes of this Agreement, "INTELLECTUAL PROPERTY" shall mean
all (i) trademarks, service marks, brand names, trade dress, trade names, domain
names, and other indications of origin, all goodwill associated with the
foregoing and registrations and applications in connection with the foregoing in
any jurisdiction, including any extension, modification or renewal of any such
registration or application; (ii) inventions, discoveries and ideas, whether
patentable or not, in any jurisdiction; (iii) patents, applications for patents
(including, without limitation, divisions, continuations, continuations-in-part,
and renewal applications), and any renewals, extensions, revisions,
reexaminations or reissues thereof, in any jurisdiction; (iv) nonpublic
information, trade
18
secrets and confidential information and rights in any jurisdiction to limit the
use or disclosure thereof by any Person; (v) writings and other works, whether
copyrightable or not, in any jurisdiction; (vi) copyrights and copyrightable
works, and all registrations, applications and any renewals thereof; (vii) any
similar intellectual property or proprietary rights; (viii) all computer
software (including data and related documentation); (ix) all licenses,
sublicenses, agreements, or permissions related to any of the foregoing
categories of intellectual property; and (x) any claims or causes of action
arising out of or relating to any infringement or misappropriation of any of the
foregoing. For the purposes of this Agreement, "COMPANY INTELLECTUAL PROPERTY"
shall mean all Intellectual Property which is used or has been used in
connection with the business of the Company or any of the Company Subsidiaries.
3.21. ENVIRONMENTAL MATTERS. Except with respect to clauses (i) through
(v) as would not, individually or in the aggregate, constitute a Company
Material Adverse Effect:
(i) The Company and the Company Subsidiaries (a) are in
compliance with all applicable Environmental Laws, and (b) have obtained,
and are in compliance with, all permits, licenses, authorizations,
registrations and other governmental consents required by applicable
Environmental Laws ("ENVIRONMENTAL PERMITS"), and have made all appropriate
filings for issuance or renewal of such Environmental Permits.
(ii) There is no contamination of, and there have been no
releases or threatened releases of Hazardous Materials at the Facilities
(or, to the knowledge of the Company, any real property formerly owned,
leased or operated by the Company or any of the Company Subsidiaries (or
any predecessor of the Company or any of the Company Subsidiaries)).
(iii) There are no claims, notices (including, without
limitation, notices that the Company or any of the Company Subsidiaries
(or, to the Company's knowledge, any predecessor of the Company or any of
the Company Subsidiaries or any person whose liability has been retained or
assumed contractually by the Company or any of the Company Subsidiaries) is
or may be a potentially responsible person or otherwise liable in
connection with any site or other location containing Hazardous Materials
or used for the storage, handling, treatment, processing, disposal,
generation or transportation of Hazardous Materials), civil, criminal or
administrative actions, suits, hearings, investigations, inquiries or
proceedings pending or, to the knowledge of the Company, threatened that
are based on or related to any Environmental Matters relating to the
business of the Company or any of the Company Subsidiaries.
(iv) To the Company's knowledge, there are no past or present
conditions, events, circumstances, facts, activities, practices, incidents,
actions, omissions or plans that may (a) interfere with or prevent
continued compliance by the Company or any of the Company Subsidiaries with
Environmental Laws and
19
the requirements of Environmental Permits or (b) give rise to any liability
or other obligation under any Environmental Laws.
(v) Neither the Facilities, nor (to the knowledge of the
Company) any property formerly owned, leased, or operated by the Company or
any of the Company Subsidiaries, nor (to the knowledge of the Company) any
site at or to which the Company or any of the Company Subsidiaries has
disposed of, transported, or arranged for the transportation of, any
Hazardous Materials, has been listed on, or proposed for listing on, the
National Priorities List, the Comprehensive Environmental Response,
Compensation and Liability Information System ("CERCLIS") list, or any
comparable state list of properties to be investigated and/or remediated.
(vi) For the purposes of this Section, the following terms shall
have the meanings indicated:
"ENVIRONMENTAL LAWS" means any foreign, federal, state or local law,
statute, ordinance, rule or regulation governing Environmental Matters, as the
same have been or may be amended from time to time, including any common law
cause of action providing any right or remedy relating to Environmental Matters,
all indemnity agreements and other contractual obligations (including leases,
asset purchase and
merger agreements) relating to Environmental Matters, and all
applicable judicial and administrative decisions, orders, and decrees relating
to Environmental Matters.
"ENVIRONMENTAL MATTER" means any matter arising out of, relating to,
or resulting from pollution, contamination, protection of the environment, human
health or safety, health or safety of employees, sanitation, and any matters
relating to emissions, discharges, disseminations, releases or threatened
releases, of Hazardous Materials into the air (indoor and outdoor), surface
water, groundwater, soil, land surface or subsurface, buildings, facilities,
real or personal property or fixtures or otherwise arising out of, relating to,
or resulting from the manufacture, processing, distribution, use, treatment,
storage, disposal, transport, handling, release or threatened release of
Hazardous Materials.
"FACILITIES" means all real property owned, leased, or operated by
the Company or any of its Subsidiaries and any buildings, facilities, machinery,
equipment, furniture, leasehold and other improvements, fixtures, vehicles,
structures, any related capital items and other tangible property located on,
in, under, or above the real property of the Company or any of its Subsidiaries.
"HAZARDOUS MATERIALS" means any pollutants, contaminants, toxic or
hazardous or extremely hazardous substances, materials, wastes, constituents,
compounds, chemicals, natural or man-made elements or forces (including, without
limitation, petroleum or any by-products or fractions thereof, any form of
natural gas, lead, asbestos and asbestos-containing materials ("ACM"), building
construction materials and debris, polychlorinated biphenyls ("PCBS") and
PCB-containing equipment,
20
radon and other radioactive elements, ionizing radiation, electromagnetic field
radiation and other non-ionizing radiation, sonic forces and other natural
forces, infectious, carcinogenic, mutagenic, or etiologic agents, pesticides,
defoliants, explosives, flammables, corrosives and urea formaldehyde foam
insulation) that are regulated by, or may now or in the future form the basis of
liability under, any Environmental Laws.
3.22. PROPERTY. As of the date hereof, the Company and the Company
Subsidiaries have good and marketable title to all real properties owned by them
except where the failure to have such title, individually or in the aggregate,
would not constitute a Company Material Adverse Effect.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
The Parent hereby represents and warrants as of the date hereof, with
respect to Parent, and as of the Closing Date with respect to Merger Sub, to the
Company as follows:
4.1. ORGANIZATION AND GOOD STANDING. Parent and Merger Sub are
corporations duly organized, validly existing and in good standing under the
laws of the States of Delaware and Nevada, respectively. Each of Parent and
Merger Sub is qualified to do business as a foreign corporation in each
jurisdiction in which the failure to be so qualified would, individually or in
the aggregate, constitute a Parent Material Adverse Effect. The term "PARENT
MATERIAL ADVERSE EFFECT" means any change, effect, circumstance or event that is
or is reasonably likely to materially adversely effect the ability of Parent and
Merger Sub to perform their obligations set forth in this Agreement or timely
consummate the transactions contemplated by this Agreement.
4.2. AUTHORIZATION; BINDING AGREEMENT. Parent and Merger Sub each have
all requisite corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. This
Agreement, the execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly and validly authorized by
each of Parent's and Merger Sub's Board of Directors and by Parent in its
capacity as sole stockholder of Merger Sub, and no other corporate proceedings
on the part of Parent or Merger Sub are necessary to authorize the execution and
delivery of this Agreement or to consummate the transactions contemplated hereby
other than the filing and recordation of appropriate merger documents as
required by the Nevada Code. This Agreement has been duly and validly executed
and delivered by each of Parent and Merger Sub and, assuming the due
authorization, execution and delivery of this Agreement by the Company,
constitutes the legal, valid and binding agreements of both Parent and Merger
Sub, enforceable against Parent and Merger Sub in accordance with its terms.
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4.3. GOVERNMENTAL APPROVALS. No Consent from or with any Governmental
Authority on the part of Parent or Merger Sub is required in connection with the
execution or delivery by each of Parent and Merger Sub of this Agreement or the
consummation by each of Parent and Merger Sub of the transactions contemplated
hereby other than (i) the filing of the Articles of Merger with the Secretary of
State of the State of Nevada in accordance with the Nevada Code, (ii) filings
with the SEC and state securities laws administrators, (iii) Consents under the
HSR Act, (iv) any filings with and approvals and authorizations of the FCC as
may be required under the Communications Act, including, without limitation,
filings and approvals in connection with the transfer of control of the Company
FCC Licenses and (v) those Consents that, if they were not obtained or made,
would not constitute a Parent Material Adverse Effect.
4.4. NO VIOLATIONS. The execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby and compliance by each of
Parent and Merger Sub with any of the provisions hereof will not (i) conflict
with or result in any breach of any provision of the articles of incorporation
or bylaws or other governing instruments of Parent or Merger Sub, (ii) require
any Consent under or result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default (or give rise to any
right of termination, cancellation or acceleration or augment the performance
required) under any of the terms, conditions or provisions of any material
obligation to which Parent or Merger Sub is a party or by which any of them or
any of their properties or assets may be bound, (iii) result in the creation or
imposition of any Lien upon any of the assets of Parent or any Merger Sub, or
(iv) subject to obtaining the Consents from Governmental Authorities referred to
in Section 4.3 above and the expiration of the HSR waiting period, conflict with
or violate any applicable provision of any Law currently in effect to which
Parent or Merger Sub or its or any of their respective assets or properties are
subject, except in the case of clauses (ii), (iii) and (iv) above, for any
deviations from the foregoing which would not, individually or in the aggregate,
constitute a Parent Material Adverse Effect.
4.5. FINANCING. Parent and/or Merger Sub will have available funds
sufficient to consummate the Merger and all of the other transactions
contemplated hereby.
4.6. QUALIFICATION. To the Parent's knowledge, Parent is qualified under
the Communications Act and the existing rules, regulations and policies of the
FCC to control the Company FCC Licenses.
4.7. OWNERSHIP OF COMPANY COMMON STOCK. Neither Parent nor Merger Sub nor
any of their affiliates or associates (each as defined in Chapter 78 of the
Nevada Code) beneficially owns any shares of Company Common Stock.
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ARTICLE V
ADDITIONAL COVENANTS OF THE COMPANY
The Company covenants and agrees as follows:
5.1. CONDUCT OF BUSINESS OF THE COMPANY AND THE COMPANY SUBSIDIARIES.
Except as expressly contemplated by this Agreement or as set forth in the
Company Disclosure Schedule, during the period from the date of this Agreement
to the Effective Time, the Company shall conduct, and it shall cause the Company
Subsidiaries to conduct, its or their respective businesses in the ordinary
course and consistent with past practice, subject to the limitations contained
in this Agreement, to maintain the validity of the Company FCC Licenses and
comply in all material respects with all requirements of the Company FCC
Licenses, the Communications Act and the rules and regulations of the FCC, and
the Company shall, and it shall cause the Company Subsidiaries to, use its or
their respective reasonable best efforts to preserve intact its or their
respective business organizations, to keep available the services of its or
their respective officers, agents and employees and to maintain satisfactory
relationships with all persons with whom any of them does business. Without
limiting the generality of the foregoing, and except as otherwise expressly
provided in this Agreement or disclosed in the Company Disclosure Schedule,
after the date of this Agreement and prior to the Effective Time, neither the
Company nor any Company Subsidiary will, without the prior written consent of
Parent (which will not be unreasonably withheld or delayed):
(i) amend or propose to amend its articles of incorporation,
certificates of designation or bylaws (or comparable governing
instruments);
(ii) authorize for issuance, issue, grant, sell, pledge, dispose of
or propose to issue, grant, sell, pledge or dispose of any shares of, or
any options, warrants, commitments, subscriptions or rights of any kind to
acquire or sell any shares of, the capital stock or other securities of the
Company or any Company Subsidiary including, but not limited to, any
securities convertible into or exchangeable for shares of capital stock of
any class of the Company or any Company Subsidiary, except for the issuance
of shares of Company Common Stock pursuant to the exercise of the Company
Options outstanding on the date of this Agreement and described in Schedule
5.1(ii) of the Company Disclosure Schedule in accordance with their present
terms;
(iii) split, combine or reclassify any shares of its capital stock
or declare, pay or set aside any dividend or other distribution (whether in
cash, stock or property or any combination thereof) in respect of its
capital stock, other than dividends or distributions to the Company or a
Company Subsidiary wholly owned by the Company, or redeem, purchase or
otherwise acquire or offer to acquire any shares of its capital stock or
other securities;
23
(iv) (a) create, incur, assume or suffer to exist any Indebtedness,
except refinancings of existing Indebtedness on terms and conditions
prevailing in the market; (b) assume, guarantee, endorse or otherwise
become liable or responsible (whether directly, indirectly, contingently or
otherwise) for the obligations of any person; (c) make any capital
expenditures or make any loans, advances or capital contributions to, or
investments in, any other person (other than to a Company Subsidiary and
customary travel, relocation or business advances or loans to employees
made in the ordinary course of business consistent with past practice);
provided that, the Company and Company Subsidiaries may make capital
expenditures that are in the ordinary course of business consistent with
past practice and in accordance in all material respects with the current
capital budget for the Company previously furnished to Parent; (d) acquire
or agree to acquire by merging or consolidating with, or by purchasing a
substantial portion of the assets of, or by any other manner, (i) any
business or any corporation, limited liability company, partnership, joint
venture, association or other business organization or division thereof,
(ii) any assets that individually or in the aggregate are material to the
Company and the Company Subsidiaries taken as a whole or (iii) any
broadcast radio stations (except pursuant to a contract specified in
Schedule 5.1(iv)(iii) of the Company Disclosure Schedule (a "STATION
ACQUISITION CONTRACT")) unless the sole consideration paid by the Company
or any Company Subsidiaries for all such acquisitions is cash not exceeding
$5 million in the aggregate; or (e) or sell, transfer, mortgage, pledge or
otherwise dispose of, or encumber, or agree to sell, transfer, mortgage,
pledge or otherwise dispose of or encumber, any assets or properties other
than to secure debt permitted under (a) of this clause (iv) and other than
transfers in the ordinary course of business consistent with past practice.
The term "INDEBTEDNESS" means, with respect to any person, without
duplication, (A) all obligations of such person for borrowed money, or with
respect to deposits or advances of any kind to such person, (B) all
obligations of such person evidenced by bonds, debentures, notes or similar
instruments, (C) all obligations of such person under conditional sale or
other title retention agreements relating to property purchased by such
person, (D) all obligations of such person issued or assumed as the
deferred purchase price of property or services (excluding obligations of
such person to creditors for raw materials, inventory, services and
supplies incurred in the ordinary course of such person's business), (E)
all capitalized lease obligations of such person, (F) all obligations of
such person under interest rate or currency hedging or swap transactions
(valued at the termination value thereof), (G) all performance bonds or
letters of credit issued for the account of such person and (H) all
guarantees and arrangements having the economic effect of a guarantee of
such person of any Indebtedness of any other person.
(v) increase in any material respect the compensation of any of
its officers or employees or enter into, establish, amend or terminate any
employment, consulting, retention, management continuity, change in
control, collective bargaining, bonus or other incentive compensation,
profit sharing,
24
health or other welfare, stock option or other equity, pension, retirement,
vacation, severance, deferred compensation or other compensation or benefit
plan, policy, agreement, trust, fund or arrangement with, for or in respect
of, any stockholder, officer, director, other employee, agent, consultant
or affiliate other than (a) as required pursuant to the terms of agreements
in effect on the date of this Agreement, or (b) in the ordinary course of
business consistent with past practice;
(vi) enter into any material lease or amend any material lease of
real property other than in the ordinary course of business consistent with
past practice;
(vii) make or rescind any express or deemed election relating to
Taxes of the Company, unless required to do so by applicable Law;
(viii) settle or compromise any material Tax liability of the Company
or agree to an extension of a statute of limitations with respect to the
assessment or determination of Taxes;
(ix) file or cause to be filed any amended Tax Return with respect
to the Company or any Company Subsidiaries or file or cause to be filed any
claim for refund of Taxes paid by or on behalf of the Company or any
Company Subsidiaries;
(x) prepare or file any Tax Return of the Company inconsistent
with past practice in preparing or filing similar Tax Returns in prior
periods or, on any such Tax Return, take any position, make any election,
or adopt any method that is inconsistent with positions taken, elections
made or methods used in preparing or filing similar Tax Returns in prior
periods, in each case except to the extent required by Law;
(xi) except in the ordinary course of business and as would not
constitute a Company Material Adverse Effect, modify, amend, terminate or
fail to renew (to the extent such contract or agreement can be unilaterally
renewed by the Company or any Company Subsidiary) any contract or agreement
to which the Company or any Company Subsidiary is a party, or waive,
release or assign any material rights or claims thereunder; provided that
neither the Company nor any Company Subsidiary shall amend in any material
respect any Station Acquisition Contract or waive, release or assign any
material rights or claims thereunder without the prior written consent of
Parent;
(xii) make any material change to its accounting methods, principles
or practices, except as may be required by GAAP;
(xiii) fail to use commercially reasonable efforts to maintain the
material assets of the Company and each of the Company Subsidiaries in
their current
25
physical condition, except for ordinary wear and tear and damage;
(xiv) pay, discharge, or satisfy any material (on a consolidated
basis for the Company and the Company Subsidiaries taken as a whole) claim,
liabilities, or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than in the ordinary course of business
consistent with past practice, or fail to pay or otherwise satisfy (except
if being contested in good faith) any material (on a consolidated basis for
the Company and the Company Subsidiaries taken as a whole) accounts
payable, liabilities, or obligations when due and payable;
(xv) enter into any LMA, time brokerage agreement or JSA other than
in the ordinary course of and involving amounts not in excess of $2 million
in the aggregate or any non-compete agreement whereby the Company or any
Company Subsidiary agrees not to compete;
(xvi) enter into any Significant Contract, other than in the
ordinary course and involving amounts not in excess of $2 million in the
aggregate;
(xvii) adopt a shareholder rights plan or any similar plan or
instrument which would have the effect of impairing or delaying the
consummation of the Merger;
(xviii) waive any of its rights under, or release any other party from
such other party's obligations under, or amend any provision of, any
standstill agreement; or
(xix) authorize, or commit or agree to take, any of the foregoing
actions.
Furthermore, the Company covenants that from and after the date of this
Agreement, unless Parent shall otherwise expressly consent in writing, the
Company shall, and the Company shall cause each of the Company Subsidiaries to,
use its or their reasonable best efforts to comply in all material respects with
all Laws applicable to it or any of its properties, assets or business and
maintain in full force and effect all Permits necessary for, or otherwise
material to, such business.
5.2. NOTIFICATION OF CERTAIN MATTERS. The Company shall give prompt
notice to Parent if any of the following occurs after the date of this
Agreement: (i) any notice of, or other communication relating to, a material
default or Event which, with notice or lapse of time or both, would become a
material default under any Material Contract; (ii) receipt of any notice or
other communication in writing from any person alleging that the Consent of such
person is or may be required in connection with the transactions contemplated by
this Agreement, other than a Consent disclosed pursuant to Section 3.5, 3.6 or
3.14(d)(ii) above or not required to be disclosed pursuant to the terms thereof;
(iii) receipt of any material notice or other communication from any
Governmental Authority (including, but not limited to, the NASD, any securities
exchange or the FCC) in
26
connection with the transactions contemplated by this Agreement; (iv) the
occurrence of any Event or Events which individually or in the aggregate, is
reasonably likely to have a Company Material Adverse Effect; (v) the
commencement or threat of any Litigation involving or affecting the Company or
any Company Subsidiary, or any of their respective properties or assets, or, to
its knowledge, any employee, agent, director or officer of the Company or any
Company Subsidiary, in his or her capacity as such or as a fiduciary under a
Benefit Plan of the Company, which, if pending on the date hereof, would have
been required to have been disclosed in or pursuant to this Agreement or which
relates to the consummation of the Merger, or any material development in
connection with any Litigation disclosed by the Company in or pursuant to this
Agreement or the Securities Filings; (vi) the occurrence of any Event that
causes or is reasonably likely to cause a breach by the Company of any provision
of this Agreement, and (vii) the occurrence of any Event that, had it occurred
prior to the date of this Agreement without any additional disclosure hereunder,
would have constituted a Company Material Adverse Effect. If the Company
receives an administrative or other order or notification relating to any
violation or claimed violation of the rules and regulations of the FCC, or of
any other Governmental Entity, that could affect Parent's, Merger Sub's or the
Company's ability to consummate the transactions contemplated hereby, or should
the Company become aware of any fact (including any change in law or regulations
(or any interpretation thereof) by the FCC) that is reasonably likely to cause
the FCC to withhold its consent to the transfer of control of the Company FCC
Licenses contemplated hereunder, the Company shall promptly notify the Parent
and the Company shall use reasonable best efforts to take such steps as may be
necessary, to remove any such impediment of the Company to consummate the
transactions contemplated by this Agreement.
5.3. ACCESS AND INFORMATION. Between the date of this Agreement and the
Effective Time, the Company shall give, and shall cause each of the Company
Subsidiaries to give, and shall direct its financial advisors, accountants and
legal counsel to give, upon reasonable notice, Parent, its lenders, financial
advisors, accountants and legal counsel and their respective authorized
representatives at all reasonable times access to all offices and other
facilities and to all contracts, agreements, commitments, Tax Returns (and
supporting schedules), books and records of or pertaining to the Company and the
Company Subsidiaries, shall permit the foregoing to make such reasonable
inspections as they may require and will cause its officers promptly to furnish
Parent with (a) such financial and operating data and other information with
respect to the business and properties of the Company and the Company
Subsidiaries as Parent may from time to time reasonably request and (b) a copy
of each material report, schedule and other document filed or received by the
Company or any of the Company Subsidiaries pursuant to the requirements of
applicable securities laws or the NASD. The foregoing access will be subject to
restrictions contained in confidentiality agreements to which the Company is
subject; provided that the Company shall use its reasonable best efforts to
obtain waivers of such restrictions.
5.4. STOCKHOLDER APPROVAL. As soon as practicable, the Company will take
all steps necessary to duly call, give notice of, convene and hold a meeting of
its
27
stockholders (the "COMPANY STOCKHOLDERS MEETING") for the purpose of
approving this Agreement and the Merger and the transactions contemplated hereby
and for such other purposes as may be consented to by Parent (whose consent
shall not be unreasonably withheld) and the Company in connection with
effectuating the transactions contemplated hereby (the "COMPANY PROPOSAL").
Except as otherwise contemplated by this Agreement and subject to the exercise
of the fiduciary duties of the Company's directors, the Board of Directors of
the Company (i) shall recommend to the stockholders of the Company that they
approve the Company Proposal, and (ii) shall use its reasonable best efforts to
obtain any necessary approval by the Company's stockholders of the Company
Proposal.
5.5. REASONABLE BEST EFFORTS. Subject to the terms and conditions herein
provided, the Company agrees to use its reasonable best efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, all things
necessary, proper or advisable to consummate and make effective as promptly as
practicable the Merger and the other transactions contemplated by this Agreement
including, but not limited to (i) obtaining any third party Consent (excluding
any Consents the failure of which to obtain would have a DE MINIMIS effect)
required in connection with the execution and delivery by the Company of this
Agreement or the consummation by the Company of the transactions contemplated
hereby, (ii) the defending of any Litigation against the Company or any Company
Subsidiary challenging this Agreement or the consummation of the transactions
contemplated hereby (such as in connection with the transfer of control of the
FCC Licenses), including seeking to have any stay or temporary restraining order
entered by any court or Governmental Authority vacated or reversed, (iii)
obtaining all Consents from Governmental Authorities required for the
consummation of the Merger and the transactions contemplated hereby, (iv)
promptly making all necessary filings under the HSR Act, the Communications Act
and any other applicable Law, including any filing required to be made with the
SEC pursuant to the Securities Act or the Exchange Act and (v) providing all
necessary cooperation in connection with the arrangement by Parent and Merger
Sub of financing of the transaction, including without limitation, the executing
and delivering of any commitment letters, underwriting or placement agreements,
pledge and security documents, other definitive financing documents, or other
requested certificates or documents, in each case, which will not be effective
until the Effective Time. Upon the terms and subject to the conditions hereof,
the Company agrees to use its reasonable best efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary to
satisfy the conditions of the Closing set forth herein. The Company will consult
with counsel for Parent as to, and will permit such counsel to participate in,
at Parent's expense, any Litigation referred to in clause (ii) above brought
against or involving the Company or any Company Subsidiary. The Company further
covenants that from and after the date hereof until the Effective Time, without
the prior written consent of Parent, the Company shall not, and shall cause each
Company Subsidiary to not, take any action that is reasonably likely to (x)
impair or delay in any material respect obtaining the FCC Consent or complying
with or satisfying the terms thereof or (y) result in imposition of materially
adverse conditions in the FCC Consent.
5.6. PUBLIC ANNOUNCEMENTS. So long as this Agreement is in effect, the
Company shall not, and shall cause its affiliates not to, issue or cause the
publication of
28
any press release or any other announcement with respect to the Merger, the
Company Proposal or the transactions contemplated by this Agreement without the
consent of Parent which shall not be unreasonably withheld or delayed, except
when such release or announcement is required by applicable Law or any
applicable listing agreement with, or rules or regulations of, the NASD or any
securities exchange, in which case the Company, to the extent practicable, prior
to making such announcement, shall consult with Parent regarding the same.
5.7. COMPLIANCE. In consummating the Merger and the transactions
contemplated hereby, the Company shall comply, and cause the Company
Subsidiaries to comply or to be in compliance, in all material respects, with
all applicable Laws.
5.8. COMPANY BENEFIT PLANS. From the date of this Agreement through the
Effective Time, no discretionary award or grant under any Benefit Plan shall be
made without the consent of Parent (not to be unreasonably withheld or delayed);
nor shall the Company or a Company Subsidiary take any action or permit any
action to be taken to accelerate the vesting of any warrants or options
previously granted pursuant to any such Benefit Plan except as specifically
required pursuant to the terms thereof as in effect on the date of this
Agreement. Neither the Company nor any Company Subsidiary shall make any
amendment to any Benefit Plan or any awards thereunder which is not required by
Law without the consent of Parent (not to be unreasonably withheld or delayed).
The Company shall promptly notify Parent upon making any such amendment which is
required to be made by Law.
5.9. NO SOLICITATION. (a) Neither the Company nor any Company Subsidiary,
nor any of their respective officers, directors, employees, agents, affiliates,
accountants, counsel, investment bankers, financial advisors or other
representatives (collectively, "REPRESENTATIVES") shall, (i) directly or
indirectly, initiate, solicit or encourage, or take any action to facilitate the
making of, any Takeover Proposal, or (ii) directly or indirectly engage in any
discussions or negotiations with, or provide any information or data to, or
afford any access to the properties, books or records of the Company or any
Company Subsidiary to, or otherwise assist, facilitate or encourage, any person
(other than Parent or any affiliate or associate thereof) relating to any
Takeover Proposal; provided, however, that at any time prior to the Company
Stockholders Meeting, the Company may, in response to a Superior Proposal (as
defined below) which was not solicited by it and which did not otherwise result
from a breach of this Section 5.9(a), and subject to providing prior written
notice of its decision to take such action to Parent (the "NOTICE") and
compliance with Section 5.9(c), following delivery of the Notice (x) furnish
information with respect to the Company, or the Company Subsidiaries to any
person making a Superior Proposal pursuant to a customary confidentiality
agreement and (y) participate in discussions and negotiations regarding such
Superior Proposal but, in each case, only if the Company's Board of Directors
determines, after consultation with its outside counsel, that failure to furnish
such information or to participate in such discussions or negotiations would be
inconsistent with the compliance by the Company's Board of Directors with its
fiduciary duties to stockholders imposed by Law. The
29
Company shall keep Parent apprised of any such discussions and negotiations
promptly after they occur.
(b) Except as set forth below, neither the Board of Directors of the
Company, nor any committee thereof, shall (x) withdraw or modify, or propose to
withdraw or modify, in a manner adverse to Parent, the Board of Directors'
approval or recommendation of the Merger or this Agreement, (y) approve any
letter of intent, agreement in principle, acquisition agreement or similar
agreement (other than a confidentiality agreement in connection with a Superior
Proposal which is entered into by the Company in accordance with Section 5.9(a))
relating to any Takeover Proposal (each, an "ACQUISITION AGREEMENT"), or (z)
approve or recommend, or propose to approve or recommend, any Takeover Proposal.
Notwithstanding the foregoing, in response to a Superior Proposal which was not
solicited by the Company, and which did not otherwise result from a breach of
Section 5.9(a), the Board of Directors of the Company may, subject to the
immediately following sentence, terminate this Agreement pursuant to and subject
to the terms of Section 9.1(f) and, concurrently with such termination, cause
the Company, to enter into an Acquisition Agreement with respect to a Superior
Proposal, but only if the Company's Board of Directors determines, after
consultation with its outside counsel, that failure to terminate this
Merger
Agreement and accept the Superior Proposal would be inconsistent with the
compliance by the Company's Board of Directors with its fiduciary duties to
stockholders imposed by Law. Such actions may be taken by the Company's Board of
Directors only if it has delivered to Parent prior to or on the 60th day
following the date of this
Merger Agreement written notice of the intent of the
Company's Board of Directors to take such actions, together with a copy of the
related Acquisition Agreement and a description of any terms of the Takeover
Proposal not contained therein. The Board of Directors shall not take such
actions until the fifth business day following such notice. If during such five
business day period Parent informs the Company that it may make an alternative
proposal, the Company's Board of Directors shall establish a bidding procedure
pursuant to which Parent and the person making the Superior Proposal shall have
the opportunity to make their respective bids to the Company's Board of
Directors. The Company shall accept Parent's offer unless the Company's Board of
Directors shall have determined that the competing bid is more favorable to the
Company's stockholders from a financial point of view as compared to Parent's
bid, taking into account the factors discussed in the definition of a Superior
Proposal.
(c) The Company promptly shall advise the Parent orally and in
writing of any Takeover Proposal with respect to or that could reasonably be
expected to lead to any Takeover Proposal, the identity of the person making any
such Takeover Proposal and the material terms of any such Takeover Proposal. The
Company shall keep the Parent fully informed of the status and material terms of
any such Takeover Proposal.
(d) The Company and each Company Subsidiary and each of their
Representatives shall immediately cease and cause to be terminated all existing
discussions and negotiations, if any, with any other persons conducted
heretofore with
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respect to any Takeover Proposal.
For purposes of this Agreement, a "TAKEOVER PROPOSAL" means any
inquiry, proposal or offer from any person relating to (i) any direct or
indirect acquisition or purchase of a business that constitutes 50% or more of
the net revenues, net income or assets of the Company and the Company
Subsidiaries, taken as a whole, or 50% or more of the common stock or voting
power (or of securities or rights convertible into or exercisable for such
common stock or voting power) of the Company or CBC, (ii) any tender offer or
exchange offer that if consummated would result in any person beneficially
owning 50% or more of the common stock or voting power (or of securities or
rights convertible into or exercisable for such common stock or voting power) of
the Company or CBC, or (iii) any merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction involving the
Company, or any of its Subsidiaries that constitutes 50% or more of the net
revenues, net income or assets of the Company, and its Subsidiaries taken as a
whole, in each case other than the transactions contemplated by this Agreement.
Each of the transactions referred to in clauses (i) - (iii) of the foregoing
definition of Takeover Proposal, other than the Merger proposed by this
Agreement, is referred to herein as an "ACQUISITION TRANSACTION."
For purposes of this Agreement, a "SUPERIOR PROPOSAL" means any
written proposal made by a third party to acquire, directly or indirectly,
including pursuant to a tender offer, exchange offer, merger, consolidation,
business combination, recapitalization, liquidation, dissolution or similar
transaction, for consideration consisting of cash and/or securities, more than
50% of the combined voting power of the shares of Company Common Stock then
outstanding or more than 50% of the assets of the Company and its Subsidiaries,
taken together, with respect to which (x) the Board of Directors of the Company
determines in its good faith judgment (based on the advice of a financial
advisor of nationally recognized reputation (the "FINANCIAL ADVISOR") and such
other matters as the Board of Directors of the Company deems relevant, which
shall include without limitation the likelihood of consummation, taking into
account the advice of FCC counsel, and the trading market and liquidity of any
securities offered in connection with the Superior Proposal) that the terms of
the proposal are more favorable to the Company's stockholders from a financial
point of view as compared to the Merger, and (y) if the proposal (1) is subject
to a financing condition or (2) involves consideration that is not entirely cash
or does not permit stockholders to receive the payment of the offered
consideration in respect of all shares at the same time, the Company's Board of
Directors has been furnished with a written opinion of the Financial Advisor to
the effect that (in the case of clause (1)) the proposal is readily financeable
and (in the case of clause (2)) that such proposal provides a higher value per
share than the consideration per share pursuant to the Merger.
(e) Nothing contained in this Agreement shall prohibit the Company's
Board of Directors from taking and disclosing to its stockholders a position
contemplated by Rule 14d-9 and Rule 14e-2 promulgated under the Exchange Act.
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5.10. SEC AND STOCKHOLDER FILINGS. The Company shall send to Parent a copy
of all public reports and materials as and when it sends the same to its
stockholders, the SEC or any state or foreign securities commission.
5.11. TAKEOVER STATUTES. If any Takeover Statute is or may become
applicable to the Merger or the transactions contemplated hereby, the Company
and the members of its Board of Directors will grant such approvals and will
take such other actions as are necessary so that the Merger and the other
transactions contemplated by this Agreement may be consummated as promptly as
practicable on the terms contemplated hereby and will otherwise act to eliminate
or minimize the effects of any Takeover Statute on the Merger and any of the
transactions contemplated hereby.
5.12. DEBENTURE AND PREFERRED STOCK OFFERS. (a) Following the approval by
the Company's stockholders of the Company Proposal pursuant to Section 5.4, upon
the written request of Parent, the Company shall cause CBC, at Parent's expense,
to commence (i) an offer (the "DEBENTURE OFFER") to purchase all of the
outstanding 10.25% guaranteed senior subordinated notes due 2007 and 9.25%
guaranteed senior subordinated notes due 2008 issued by it (collectively, the
"DEBENTURES"), and (ii) a solicitation as part of the Debenture Offer (the
"SOLICITATION") of consents to amendments to the indentures relating to the
Debentures from the holders of not less than a majority in aggregate principal
amount of the Debentures outstanding (the consents from such holders, the
"REQUISITE CONSENTS"). The Debenture Offer and Solicitation (including the
amendments) shall be on terms determined by Parent, provided that CBC shall not
be required to purchase the Debentures pursuant to the Debenture Offer, and the
proposed amendments, if approved, shall not become effective, unless the Merger
is consummated or being consummated simultaneously therewith. The Company agrees
that promptly following the date the Requisite Consents are obtained CBC will
execute supplemental indentures containing the proposed amendments that by their
terms shall become operative only upon consummation of the Debenture Offer.
(b) Following the approval by the Company's stockholders of the
Company Proposal pursuant to Section 5.4, upon the written request of Parent,
the Company shall cause CBC, at Parent's expense, to commence (i) an offer (the
"PREFERRED STOCK OFFER") to redeem all of the outstanding shares of 13.25%
Exchangeable Preferred Stock issued by it (the "PREFERRED STOCK") and (ii) a
solicitation as part of the Preferred Stock Offer (the "PREFERRED STOCK
SOLICITATION") of consents to amendments to the terms of each series of the
Preferred Stock from the holders of not less than a majority of the outstanding
shares of each series of Preferred Stock (the consents from such holders, the
"REQUISITE PREFERRED STOCK CONSENTS"). The Offer and Preferred Stock
Solicitation (including the amendments) shall be on terms determined by Parent,
provided that the Company shall not be required to purchase the Preferred Stock
pursuant to the Preferred Stock Offer, and the proposed amendments, if approved,
shall not become effective, unless the Merger is consummated or being
consummated simultaneously therewith.
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ARTICLE VI
ADDITIONAL COVENANTS OF PARENT
Parent covenants and agrees as follows:
6.1. NOTIFICATION OF CERTAIN MATTERS. Parent shall give prompt notice to
the Company if any of the following occurs after the date of this Agreement: (i)
receipt of any notice or other communication in writing from any person alleging
that the Consent of such person is or may be required in connection with the
transactions contemplated by this Agreement, other than a Consent disclosed
pursuant to Section 4.3 or 4.4 above or not required to be disclosed pursuant to
the terms thereof; (ii) receipt of any material notice or other communication
from any Governmental Authority (including, but not limited to, the NASD, any
other securities exchange or the FCC) in connection with the transactions
contemplated by this Agreement; (iii) the occurrence of any Event or Events
which, individually or in the aggregate, is reasonably likely to have a Parent
Material Adverse Effect; (iv) the commencement or threat of any Litigation
involving or affecting Parent or Merger Sub, or any of their respective
properties or assets, or, to its knowledge, any employee, agent, director or
officer of Parent or Merger Sub, in his or her capacity as such or as a
fiduciary under a Benefit Plan of Parent, which relates to the consummation of
the Merger; and (v) the occurrence of any Event that is reasonably likely to
cause a breach by Parent of any provision of this Agreement.
6.2. REASONABLE BEST EFFORTS. Subject to the terms and conditions herein
provided, Parent agrees to use its reasonable best efforts to take, or cause to
be taken, all actions, and to do, or cause to be done, all things necessary,
proper or advisable to consummate and make effective as promptly as practicable
the Merger and the other transactions contemplated by this Agreement including,
but not limited to (i) obtaining any third party Consent (excluding any Consents
the failure of which to obtain would have a DE MINIMIS effect) required in
connection with the execution and delivery by Parent and Merger Sub of this
Agreement or the consummation by Parent and Merger Sub of the transactions
contemplated hereby, (ii) the defending of any Litigation against Parent or
Merger Sub challenging this Agreement or the consummation of the transactions
contemplated hereby (such as in connection with the transfer of control of the
Company FCC Licenses), including seeking to have any stay or temporary
restraining order entered by any court or Governmental Authority vacated or
reversed, (iii) obtaining all Consents from Governmental Authorities required
for the consummation of the Merger and the transactions contemplated hereby, and
(iv) promptly making all necessary filings under the HSR Act, the Communications
Act and any other applicable Law, including any filing required to be made with
the SEC pursuant to the Securities Act or the Exchange Act. Upon the terms and
subject to the conditions hereof, Parent agrees to use its reasonable best
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary to satisfy the other conditions of the Closing set
forth herein.
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6.3. PUBLIC ANNOUNCEMENTS. So long as this Agreement is in effect, Parent
shall not, and shall cause its affiliates not to, issue or cause the publication
of any press release or any other announcement with respect to the Merger, or
the transactions contemplated by this Agreement without the consent of the
Company which shall not be unreasonably withheld or delayed, except when such
release or announcement is required by applicable Law or any applicable listing
agreement with, or rules or regulations of, the NASD or any securities exchange,
in which case Parent, to the extent practicable, prior to making such
announcement, shall consult with the Company regarding the same.
6.4. COMPLIANCE. In consummating the Merger and the transactions
contemplated hereby, Parent shall comply, and cause the Merger Sub to comply or
to be in compliance, in all material respects, with all applicable Laws.
6.5. DIRECTOR AND OFFICER LIABILITY. (a) The Surviving Corporation shall
indemnify and hold harmless and advance expenses to the present and former
officers and directors of the Company, and each person who prior to the
Effective Time becomes an officer or director of the Company (each an
"INDEMNIFIED PERSON"), in respect of acts or omissions by them in their
capacities as such occurring at or prior to the Effective Time (including,
without limitation, for acts or omissions occurring in connection with this
Agreement and the consummation of the Merger) to the fullest extent permissible
under applicable law (collectively, the "INDEMNIFIED LOSSES"). The Surviving
Corporation shall periodically advance or reimburse each Indemnified Person for
all reasonable fees and expenses of counsel constituting Indemnified Losses as
such fees and expenses are incurred; provided that such Indemnified Person shall
agree in writing to promptly repay to the Surviving Corporation the amount of
any such reimbursement if it shall be judicially determined by judgment or order
not subject to further appeal or discretionary review that such Indemnified
Person is not entitled to be indemnified by the Surviving Corporation in
connection with such matter.
(b) For the six years following the Effective Time, the Surviving
Corporation shall provide officers' and directors' liability insurance in
respect of acts or omissions occurring prior to the Effective Time (including,
without limitation, for acts or omissions occurring in connection with this
Agreement and the consummation of the Merger) covering each Indemnified Person
currently covered by the Company's officers' and directors' liability insurance
policy on terms with respect to coverage and amount (including with respect to
the payment of attorney's fees) no less favorable than those of such policy in
effect on the date hereof (which policies have been made available by the
Company to Parent); provided that if the aggregate annual premiums for such
insurance during such period shall exceed 300% of the per annum rate of premium
paid by the Company as of the date hereof for such insurance, then the Surviving
Corporation shall provide a policy with the best coverage as shall then be
available at 300% of such rate.
(c) The rights of each Indemnified Person and his or her heirs and
legal representatives under this Section 6.5 shall be in addition to any rights
such Indemnified Person may have under the Articles of Incorporation or Bylaws
of the
34
Company, any agreement providing for indemnification, or under the laws of the
State of Nevada or any other applicable Laws. These rights shall survive
consummation of the Merger and are intended to benefit, and shall be enforceable
by, each Indemnified Person.
6.6. FORMATION AND ACTIONS OF MERGER SUB. Parent shall take all necessary
actions in connection with the formation and qualification of Merger Sub, and
shall cause Merger Sub to take all actions required on its part for the
consummation of the Merger and the consummation of the transactions contemplated
hereby.
6.7. NO PURCHASE OF COMPANY COMMON STOCK. Except as otherwise provided
for in this Agreement, neither Parent, nor any of its subsidiaries, affiliates
or associates (each as defined in Chapter 78 of the Nevada Code), shall, prior
to the Effective Time, (i) beneficially acquire any shares of Company Common
Stock or (ii) enter into any agreement, arrangement or understanding, whether or
not in writing, with any person who beneficially owns, or whose affiliates or
associates beneficially own, directly or indirectly, any Company Common Stock,
for the purpose of acquiring, holding, voting or disposing of any Company Common
Stock.
6.8. MAINTENANCE OF BENEFIT PLANS. For a period beginning at the
Effective Time and continuing for 12 months thereafter, Parent shall maintain or
cause to be maintained the employee pension and welfare benefit plans (as
defined in Section 3(3) of ERISA) maintained by the Company Subsidiaries
immediately prior to the Effective Time or shall maintain employee pension and
welfare benefit plans providing benefit levels substantially comparable in the
aggregate to those maintained by the Company immediately prior to the Effective
Time. Parent shall grant transferred employees credit for all service recognized
by the Company or a Company Subsidiary immediately prior to the Effective Time
other than for purposes of benefit accrual.
ARTICLE VII
ADDITIONAL COVENANTS OF THE COMPANY AND PARENT
7.1. PROXY STATEMENT. Parent and the Company shall cooperate and promptly
prepare and the Company shall file with the SEC as soon as practicable a proxy
statement with respect to the Company Stockholders Meeting (the "PROXY
STATEMENT"). The Company will cause the Proxy Statement to comply as to form in
all material respects with the applicable provisions of the Exchange Act and the
rules and regulations thereunder. The Company shall use all reasonable efforts,
and Parent will cooperate with the Company, to have the Proxy Statement cleared
by the SEC as promptly as practicable. The Company shall, as promptly as
practicable, provide copies of any written comments (other than DE MINIMIS
comments) received from the SEC with respect to the Proxy Statement to Parent
and advise Parent of any verbal comments with respect to the Proxy Statement
received from the SEC. The Company agrees that the Proxy Statement and each
amendment or supplement thereto at the time of mailing thereof and at the time
of the Company Stockholders Meeting will not include an untrue statement of a
material fact
35
or omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading; provided, however, that the foregoing shall not apply to
the extent that any such untrue statement of a material fact or omission to
state a material fact was made by the Company in reliance upon and in conformity
with written information concerning Parent furnished to the Company by Parent
specifically for use in the Proxy Statement. Parent agrees that the written
information provided by it for inclusion in the Proxy Statement and each
amendment or supplement thereto, at the time of mailing thereof and at the time
of the Company Stockholders Meeting, will not include an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. No amendment or supplement to the Proxy
Statement will be made by the Company without the approval of Parent (not to be
unreasonably withheld or delayed). The Company will advise Parent promptly of
any request by the SEC for amendment of the Proxy Statement or comments thereon
and responses thereto or requests by the SEC for additional information.
Whenever any event or condition affecting the Company or Parent occurs that is
required to be set forth in an amendment or supplement to the Proxy Statement,
such party will promptly inform the other of such occurrence and cooperate in
filing with the SEC or its staff or any other government officials, and in
mailing to stockholders of the Company, such amendment or supplement.
ARTICLE VIII
CONDITIONS
8.1. CONDITIONS TO EACH PARTY'S OBLIGATIONS. The respective obligations
of each party to effect the Merger shall be subject to the fulfillment or waiver
on or prior to the Closing Date of the following conditions:
8.1.1. COMPANY STOCKHOLDER APPROVAL. The Merger shall have been
approved at or prior to the Effective Time by the requisite vote of the
stockholders of the Company in accordance with the Nevada Code and the Company's
Articles of Incorporation.
8.1.2. NO INJUNCTION OR ACTION. No order, statute, rule, regulation,
executive order, stay, decree, judgment or injunction shall have been enacted,
entered, promulgated or enforced by any court or other Governmental Authority,
which prohibits or prevents the consummation of the Merger and which has not
been vacated, dismissed or withdrawn by the Effective Time. Parent and the
Company shall use their reasonable best efforts to have any of the foregoing
vacated, dismissed or withdrawn on or prior to the Effective Time.
8.1.3. FCC CONSENT. The FCC shall have granted its consent (the "FCC
CONSENT") approving the transfers of control pursuant to the Merger of the
Company FCC Licenses for the operation of the Licensed Facilities without the
imposition of any
36
conditions or restrictions that, individually or in the aggregate, constitute a
Company Material Adverse Effect, and which FCC Consent 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
Consent 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 Consent 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.
8.1.4. GOVERNMENTAL APPROVALS. All waivers, consents, approvals,
orders and authorizations of, and notices, reports and filings with,
Governmental Authorities necessary for the consummation of the transactions
contemplated hereby (other than those matters addressed in Sections 8.1.3 and
8.1.5) shall have been obtained or made and shall be in full force and effect
without the imposition of any terms, conditions, restrictions or limitations,
except for the imposition of any terms, conditions, restrictions and limitations
in respect of, and failures to have obtained or made, or failures to be in full
force and effect of, such waivers, consents, approvals, orders, authorizations,
notices, reports or filings which, individually or in the aggregate, do not
constitute a Company Material Adverse Effect.
8.1.5. HSR ACT. The waiting period (or any extension thereof)
applicable to the Merger under the HSR Act shall have expired or been
terminated.
8.2. CONDITIONS TO OBLIGATIONS OF THE COMPANY. The obligation of the
Company to effect the Merger shall be subject to the fulfillment on or prior to
the Closing Date of the following additional conditions, any one or more of
which may be waived by the Company:
8.2.1. PARENT REPRESENTATION AND WARRANTIES. The representations and
warranties of Parent contained in this Agreement shall be true and correct when
made, and as of the Closing Date as if made on and as of such date (provided
that such representations and warranties which are expressly made as of a
specific date need be true and correct only as of such specific date), except to
the extent that any failures of such representations and warranties to be so
true and correct, do not, individually or in the aggregate, constitute a Parent
Material Adverse Effect (disregarding for these purposes any materiality, Parent
Material Adverse Effect or corollary qualifications contained therein).
8.2.2. PERFORMANCE BY PARENT. Parent shall have performed and
complied in all material respects with all of the material covenants and
agreements required by this Agreement to be performed or complied with by Parent
on or prior to the Closing Date.
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8.2.3. NO MATERIAL ADVERSE CHANGE. There shall not have occurred
after the date hereof any Event or Events that, individually or the aggregate,
constitute a Parent Material Adverse Effect.
8.2.4. CERTIFICATES AND OTHER DELIVERIES. Parent shall have
delivered to the Company a certificate executed on its behalf by its Chief
Executive Officer to the effect that the conditions set forth in Subsections
8.2.1, 8.2.2 and 8.2.3, above, have been satisfied.
8.3. CONDITIONS TO OBLIGATIONS OF PARENT. The obligations of Parent to
effect the Merger shall be subject to the fulfillment on or prior to the Closing
Date of the following additional conditions, any one or more of which may be
waived by Parent:
8.3.1. COMPANY REPRESENTATIONS AND WARRANTIES. The representations
and warranties of the Company contained in this Agreement shall be true and
correct when made and as of the Closing Date as if made on and as of such date
(provided that such representations and warranties which are by their express
provisions made as of a specific date need be true and correct only as of such
specific date), except to the extent that any failures of such representations
and warranties to be so true and correct, do not, individually or the aggregate,
constitute a Company Material Adverse Effect (disregarding for these purposes
any materiality, Company Material Adverse Effect or corollary qualifications
contained therein).
8.3.2. PERFORMANCE BY THE COMPANY. The Company shall have performed
and complied in all material respects with all the material covenants and
agreements required by this Agreement to be performed or complied with by the
Company on or prior to the Closing Date.
8.3.3. NO MATERIAL ADVERSE CHANGE. There shall have not occurred
after the date hereof any Event or Events that, individually or in the
aggregate, constitute a Company Material Adverse Effect.
8.3.4. CERTIFICATES AND OTHER DELIVERIES. The Company shall have
delivered, or caused to be delivered, to Parent (i) a certificate executed on
its behalf by its Chief Executive Officer to the effect that the conditions set
forth in Subsections 8.3.1, 8.3.2 and 8.3.3, above, have been satisfied; (ii) a
certificate of good standing from the Secretary of State of the State of Nevada
stating that the Company is a validly existing corporation in good standing;
(iii) duly adopted resolutions of the Board of Directors of the Company
approving the execution, delivery and performance of this Agreement and the
instruments contemplated hereby and of the stockholders of the Company approving
the Company Proposal, certified by the Secretary or an Assistant Secretary of
the Company; and (iv) a true and complete copy of the Articles of Incorporation
of the Company certified by the Secretary of State of the State of Nevada, and a
true and complete copy of the Bylaws of the Company certified by the Secretary
or an Assistant Secretary of the Company.
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8.3.5. OPINION OF FCC COUNSEL. Parent shall have received an
opinion, addressed to it and dated as of the Closing Date, from Wiley, Rein &
Fielding, FCC counsel to the Company, in the form attached hereto as Exhibit I
provided that such opinions may be made subject to a Company Material Adverse
Effect qualification.
ARTICLE IX
TERMINATION AND ABANDONMENT
9.1. TERMINATION. This Agreement may be terminated at any time prior to
the Effective Time, whether before or after approval of this Agreement and the
Merger by the stockholders of the Company:
(a) by mutual consent of the Company and Parent;
(b) (1) by the Company (provided that the Company is not then in
material breach of any representation, warranty, covenant or other agreement
contained herein), if there has been a breach by Parent of any of its
representations, warranties, covenants or agreements contained in this Agreement
that would cause the condition set forth in Section 8.2.1 or Section 8.2.2 not
to be satisfied and, in either such case, such breach or condition is not
curable or, if curable, has not been promptly cured within 30 days following
receipt by Parent of written notice of such breach; (2) by Parent (provided that
Parent is not then in material breach of any representation, warranty, covenant
or other agreement contained herein), if there has been a breach by the Company
of any of its representations, warranties, covenants or agreements contained in
this Agreement, that would cause the condition set forth in Section 8.3.1 or
Section 8.3.2 not to be satisfied and such breach or condition is not curable
or, or if curable, has not been promptly cured within 30 days following receipt
by the Company of written notice of such breach;
(c) by either Parent or the Company if any decree, permanent
injunction, judgment, order or other action by any court of competent
jurisdiction, any arbitrator or any Governmental Authority preventing or
prohibiting consummation of the Merger shall have become final and nonappealable
(so long as the party seeking termination is not in breach of Section 5.5 or
Section 6.2 hereof);
(d) by either Parent or the Company if the Merger shall not have
been consummated before the "END DATE", which shall be January 16, 2002;
provided that a party shall not be permitted to terminate this Agreement
pursuant to this paragraph (d) if the failure of the Effective Time to occur by
the End Date shall be due to the failure of such party to perform or observe in
all material respects the covenants and agreements of such party set forth
herein;
(e) by either Parent or the Company if the transactions contemplated
by this Agreement shall fail to receive the requisite vote for approval and
adoption by the stockholders of the Company at the Company Stockholders Meeting
or any adjournment
39
or postponement thereof; provided that the right to terminate this Agreement
under this Section 9.1(e) shall not be available to any party whose failure to
fulfill any obligation under this Agreement has been the cause of, or resulted
in, the failure of such approval to have been obtained;
(f) by the Company, in accordance with Section 5.9(b), provided,
however, in order for the termination of this Agreement pursuant to this Section
9.1(f) to be deemed effective, the Company shall have complied with all
provisions contained in Sections 5.9(a), (b) and (c), including the notice
provisions therein, and with the applicable requirements of Section 9.2,
including the payment of the Termination Fee and Expenses; or
(g) by Parent, if the Board of Directors of the Company shall have
withdrawn, or modified or changed, in a manner adverse to Parent or Merger Sub,
its approval or recommendation of the Merger and/or the Company Proposal.
9.2. EFFECT OF TERMINATION. (a) In the event of the termination of this
Agreement by either the Company or Parent pursuant to Section 9.1, this
Agreement shall forthwith become void, there shall be no liability under this
Agreement on the part of Parent or the Company, other than the provisions of
this Section 9.2, Section 10.1 and Section 10.7, and except to the extent that
such termination results from the material breach by a party of any of its
representations, warranties, covenants or agreements set forth in this
Agreement.
(b) The Company and Parent agree that in order to compensate Parent
and its affiliates, including Forstmann Little & Co. and its affiliates, for
incurring the costs and expenses related to the transactions contemplated hereby
and the foregoing by Forstmann Little & Co. or its affiliates of the opportunity
with respect to the Company in connection herewith, the Company shall pay to
Forstmann Little & Co. and its affiliates, in such manner as is designated by
Forstmann Little & Co., an aggregate amount equal to the Expenses (as defined in
Section 9.2(d) below), not to exceed $10 million, plus $20 million (the
"TERMINATION FEE"), as follows: (1) if the Company or Parent shall terminate
this Agreement pursuant to Section 9.1(e), at any time after the date of this
Agreement and prior to the date of the Company Stockholders Meeting an
Acquisition Proposal shall have been publicly announced, and within 12 months of
the termination of this Agreement the Company enters into a definite agreement
with respect to an Acquisition Transaction, (2) if Parent shall terminate this
Agreement pursuant to Section 9.1(b)(2) in connection with a willful and
material breach by the Company of any of its representatives, warranties,
covenants or agreements set forth in this Agreement and within 12 months of the
termination of this Agreement the Company enters into a definitive agreement
with respect to an Acquisition Proposal, (3) if the Company shall terminate this
Agreement pursuant to Section 9.1(f), or (4) if Parent shall terminate this
Agreement pursuant to Section 9.1(g).
(c) The Termination Fee and Expenses required to be paid pursuant to
40
clauses (1) or (2) of Section 9.2(b) shall be paid not later than five business
days after the Company enters into a definitive agreement with respect to an
Acquisition Proposal. The Termination Fee and Expenses to be paid pursuant to
clauses (3) or (4) of Section 9.2(b) shall be paid concurrently with notice of
termination of this Agreement by the Company.
(d) The term "EXPENSES" shall mean all out-of-pocket expenses
incurred by Parent and its affiliates in connection with this Agreement and the
transactions contemplated hereby, including, without limitation, fees and
expenses of accountants, attorneys and financial advisors, all costs of Parent
and its affiliates relating to the financing of the Merger (including, without
limitation, advisory and commitment fees and reasonable fees and expenses of
counsel to potential lenders), costs and expenses otherwise borne by Parent and
its affiliates pursuant to Section 10.7 and costs incurred in connection with
the Preferred Stock Offer and Debenture Offer.
(e) All payments under this Section 9.2 shall be made by wire
transfer of immediately available funds to an account designated by the
recipient of such funds.
(f) The Company acknowledges that the agreements contained in this
Section 9.2 are an integral part of the transactions contemplated by this
Agreement, and that, without these agreements, the Parent would not enter into
this Agreement. Accordingly, if the Company fails to promptly pay any amounts
owing pursuant to this Section 9.2 when due, the Company shall in addition
thereto pay to the Parent and its affiliates all costs and expenses (including
fees and disbursements of counsel) incurred in collecting such amounts, together
with interest on such amounts (or any unpaid portion thereof) from the date such
payment was required to be made until the date such payment is received by the
Parent and its affiliates at the prime rate of Chase Manhattan as in effect from
time to time during such period.
ARTICLE X
MISCELLANEOUS
10.1. CONFIDENTIALITY. Unless (i) otherwise expressly provided in this
Agreement, (ii) required by applicable Law, (iii) necessary to secure any
required Consents as to which the other party has been advised, or (iv)
consented to in writing by Parent and the Company, this Agreement and any
information or documents furnished in connection herewith shall be kept strictly
confidential by the Company and the Company Subsidiaries, Parent and the Parent
Subsidiaries, and their respective officers, directors, employees and agents.
Prior to any disclosure pursuant to the preceding sentence, the party intending
to make such disclosure shall consult with the other party to the extent
practicable regarding the nature and extent of the disclosure. Subject to the
preceding sentence, nothing contained herein shall preclude disclosures to the
extent necessary to comply with accounting, SEC and other disclosure obligations
imposed by applicable Law. To the extent required by such disclosure
obligations, Parent or the Company, after consultation with the other party to
the extent practicable, may file with the SEC any
41
written communications relating to the Merger and the transactions contemplated
hereby pursuant to Regulation 14A promulgated under the Securities Act. Parent
and the Company shall cooperate with the other and provide such information and
documents as may be required in connection with any such filings. In the event
the Merger is not consummated, Parent and the Company shall return to the other
all documents furnished by the other and all copies thereof made by such party
and will hold in absolute confidence all information obtained from the other
party except to the extent (i) such party is required to disclose such
information by Law or such disclosure is necessary in connection with the
pursuit or defense of a claim, (ii) such information was known by such party
prior to such disclosure or was thereafter developed or obtained by such party
independent of such disclosure, (iii) such party received such information on a
non-confidential basis from a source, other than the other party, which is not
known by such party to be bound by a confidentiality obligation with respect
thereto or (iv) such information becomes generally available to the public or is
otherwise no longer confidential. Prior to any disclosure of information
pursuant to the exception in clause (i) of the preceding sentence, the party
intending to disclose the same shall so notify the party which provided the same
to the extent practicable in order that such party may seek a protective order
or other appropriate remedy should it choose to do so.
10.2. AMENDMENT AND MODIFICATION. To the extent permitted by applicable
Law, this Agreement may be amended, modified or supplemented only by a written
agreement among the Company, Parent and Merger Sub, whether before or after
approval of this Agreement and the Merger by the stockholders of the Company,
except that following approval by the stockholders of the Company, there shall
be no amendment or change to the provisions hereof with respect to the Merger
Consideration without further approval by the stockholders of the Company, and
no other amendment shall be made which by law requires further approval by such
stockholders without such further approval.
10.3. WAIVER OF COMPLIANCE; CONSENTS. Any failure of the Company on the
one hand, or Parent or Merger Sub on the other hand, to comply with any
obligation, covenant, agreement or condition herein may be waived by Parent on
the one hand, or the Company on the other hand, only by a written instrument
signed by the party granting such waiver, but such waiver or failure to insist
upon strict compliance with such obligation, covenant, agreement or condition
shall not operate as a waiver of, or estoppel with respect to, any subsequent or
other failure. Whenever this Agreement requires or permits consent by or on
behalf of any party hereto, such consent shall be given in writing in a manner
consistent with the requirements for a waiver of compliance as set forth in this
Section 10.3.
10.4. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The respective
representations and warranties of the Company and Parent contained herein or in
any certificates or other documents delivered prior to or at the Closing shall
survive the execution and delivery of this Agreement, notwithstanding any
investigation made or information obtained by the other party, but shall
terminate at the Effective Time.
42
10.5. NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given when delivered in person, by
facsimile, receipt confirmed, or on the next business day when sent by overnight
courier or on the second succeeding business day when sent by registered or
certified mail (postage prepaid, return receipt requested) to the respective
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
(i) if to Company, to:
Citadel Communications Corporation
City Center West, Suite 400
0000 Xxxx Xxxx Xxxx.
Xxx Xxxxx, XX 00000
Attention: Xxxxx Xxxxxx
Fax: (000) 000-0000
with a copy to:
Xxxxxx Xxxxxxx Xxxxxx & Xxxxxxx, LLC
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxxxxx, Esq.
Fax: (000) 000-0000
and
(ii) (a) if to Parent, to:
FLCC Holdings, Inc.
c/o Forstmann Little & Co.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx
Fax : (000) 000-0000
(b) if to Merger Sub, to:
FLCC Acquisition Corp.
c/o Forstmann Little & Co.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx
Fax : (000) 000-0000
In each case, with a copy to:
43
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxxx, Esq.
Telecopy: (000) 000-0000
10.6. BINDING EFFECT; ASSIGNMENT. This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns. Neither this Agreement nor
any of the rights, interests or obligations hereunder shall be assigned by any
of the parties hereto prior to the Effective Time without the prior written
consent of the other parties hereto; provided, that any and all rights of Parent
and Merger Sub may be assigned to any person newly formed and directly or
indirectly wholly owned by Parent for the purpose of effectuating the
transactions contemplated hereby; provided, however, that no such assignment
shall be permitted if the effect thereof would be to require an additional
consent of the Company's stockholders.
10.7. EXPENSES. All costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such costs or expenses.
10.8. GOVERNING LAW. This Agreement shall be deemed to be made in, and in
all respects shall be interpreted, construed and governed by and in accordance
with the internal laws of, the State of New York, except that Nevada law
(including, without limitation, any Law related to any fiduciary duty, duty of
loyalty, or other duty or obligation of the Company's Board of Directors with
respect to the Merger or this Agreement) shall apply to the Merger; and the
parties hereto consent to the jurisdiction of the courts of or in the State of
New York in connection with any dispute or controversy relating to or arising
out of this Agreement and the transactions contemplated hereby.
10.9. COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
10.10. INTERPRETATION. The article and section headings contained in this
Agreement are solely for the purpose of reference, are not part of the agreement
of the parties and shall not in any way affect the meaning or interpretation of
this Agreement. No rule of construction shall apply to this Agreement which
construes ambiguous language in favor of or against any party by reason of that
party's role in drafting this Agreement. As used in this Agreement, (i) the term
"person" shall mean and include an individual, a partnership, a joint venture, a
corporation, a limited liability company, a trust, an association, an
unincorporated organization, a Governmental Authority and any other entity; (ii)
the term "affiliate," with respect to any person, shall mean and include any
person controlling, controlled by or under common control with such person; and
(iii) the term "subsidiary" of any specified person shall mean any corporation
50 percent or
44
more of the outstanding voting power of which, or any partnership, joint
venture, limited liability company or other entity 50 percent or more of the
total equity interest of which, is directly or indirectly owned by such
specified person.
10.11. ENTIRE AGREEMENT. This Agreement and the other agreements, documents
or instruments referred to herein or executed in connection herewith including,
but not limited to, the Side Letter between the parties hereto dated as of the
date hereof and the Company Disclosure Schedule, which schedule is incorporated
herein by reference, embody the entire agreement and understanding of the
parties hereto in respect of the subject matter contained herein. There are no
restrictions, promises, representations, warranties, covenants, or undertakings,
other than those expressly set forth or referred to herein. This Agreement
supersedes all prior agreements and the understandings between the parties with
respect to such subject matter.
10.12. SPECIFIC PERFORMANCE. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions in this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. Accordingly, the parties further agree that each party shall be
entitled to an injunction or restraining order to prevent breaches hereof or
thereof and to enforce specifically the terms and provisions hereof or thereof
in any court of the United States or any state having jurisdiction, this being
in addition to any other right or remedy to which such party may be entitled
under this Agreement, at law or in equity.
10.13. THIRD PARTIES. Nothing contained in this Agreement or in any
instrument or document executed by any party in connection with the transactions
contemplated hereby shall create any rights in, or be deemed to have been
executed for the benefit of, any person that is not a party hereto or thereto,
or, a successor or permitted assign of such a party; provided, however, that the
parties hereto specifically acknowledge that the provisions of Section 6.5 above
are intended to be for the benefit of, and shall enforceable by, the officers
and directors of the Company and/or the Company Subsidiaries affected thereby
and their heirs and representatives; and provided further, that the parties
hereto specifically acknowledge that the provisions of Section 9.2 above are
intended to be for the benefit of, and shall be enforceable by, Forstmann Little
& Co. and its affiliates.
[Remainder of Page Intentionally Left Blank]
45
IN WITNESS WHEREOF, Parent and the Company have caused this Agreement to be
signed and delivered by their respective duly authorized officers as of the date
first above written.
CITADEL COMMUNICATIONS CORPORTION
By: /s/ Xxxxxxxx X. Xxxxxx
----------------------
Name: Xxxxxxxx X. Xxxxxx
Title: Chairman, Chief Executive Officer and
President
FLCC HOLDINGS, INC.
By: /s/ Xxxxxx X. Xxxxxxx
----------------------
Name: Xxxxxx X. Xxxxxxx
Title: President
