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EXHIBIT 2.1
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STOCK PURCHASE AGREEMENT
dated as of
June 1, 1999
by and between
XXXXX ADVERTISING COMPANY
and
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES
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TABLE OF CONTENTS
PAGE
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ARTICLE 1. PURCHASE AND SALE OF SHARES............................................................................1
Section 1.1. Purchase and Sale of Chancellor Shares...............................................1
Section 1.2. Purchase Price.......................................................................1
Section 1.3. Closing..............................................................................1
Section 1.4. Purchase Price Adjustment............................................................2
ARTICLE 2. REPRESENTATIONS AND WARRANTIES OF SELLER...............................................................4
Section 2.1. Corporate Organization and Authority of Seller.......................................4
Section 2.2. No Conflict..........................................................................4
Section 2.3. Corporate Organization of the Company................................................4
Section 2.4. Capital Stock of the Company.........................................................4
Section 2.5. Subsidiaries.........................................................................5
Section 2.6. Capitalization of Subsidiaries of the Company........................................5
Section 2.7. Pro Forma Financial Statements.......................................................5
Section 2.8. Contracts; No Defaults...............................................................6
Section 2.9. Intellectual Property................................................................7
Section 2.10. Owned Real Property..................................................................8
Section 2.11. Litigation and Proceedings...........................................................8
Section 2.12. Employee Benefit Plans...............................................................8
Section 2.13. Labor Relations.....................................................................10
Section 2.14. Legal Compliance....................................................................10
Section 2.15. Environmental Matters...............................................................10
Section 2.16. Taxes...............................................................................11
Section 2.17. Governmental Authorities; Consents..................................................12
Section 2.18. Interest in Competitors, Suppliers, and Customers...................................12
Section 2.19. Insurance...........................................................................12
Section 2.20. Brokers' Fees.......................................................................12
Section 2.21. Events Subsequent to March 31, 1999.................................................13
Section 2.22. Securities Act Representations......................................................13
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF PURCHASER...........................................................14
Section 3.1. Corporate Organization and Authority of Purchaser...................................14
Section 3.2. No Conflict.........................................................................14
Section 3.3. Litigation and Proceedings..........................................................15
Section 3.4. Governmental Authorities; Consents..................................................15
Section 3.5. Brokers' Fees.......................................................................15
Section 3.6. Capital Structure...................................................................15
Section 3.7. SEC Documents; Financial Statements.................................................16
Section 3.8. Legal Compliance....................................................................17
Section 3.9. Interest in Competitors, Suppliers and Customers....................................17
Section 3.10. State Takeover Statutes.............................................................17
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Section 3.11. Events Subsequent to March 31, 1999.................................................17
Section 3.12. Securities Act Representations......................................................17
ARTICLE 4. COVENANTS AND AGREEMENTS OF SELLER....................................................................18
Section 4.1. Preliminary Transactions............................................................18
Section 4.2. Conduct of Business.................................................................19
Section 4.3. Inspection..........................................................................20
Section 4.4. HSR Act.............................................................................20
Section 4.5. No Solicitations....................................................................20
Section 4.6. No Solicitation or Hiring...........................................................20
Section 4.7. Registration Rights Agreement and Stockholders Agreement............................20
Section 4.8. Requests for Information............................................................21
Section 4.9. Necessary Lender Approvals..........................................................21
ARTICLE 5. COVENANTS AND AGREEMENTS OF PURCHASER.................................................................21
Section 5.1. HSR Act.............................................................................21
Section 5.2. No Use of "Chancellor" Name.........................................................22
Section 5.3. Investigation; Purchaser Acknowledgment.............................................22
Section 5.4. No Solicitations or Hiring..........................................................23
Section 5.5. Stockholder Consent.................................................................23
Section 5.6. Commitment Letters; Definitive Documentation........................................23
Section 5.7. Conduct of Business.................................................................24
Section 5.8. Registration Rights Agreement and Stockholders Agreement............................25
Section 5.9. Inspection..........................................................................25
ARTICLE 6. JOINT COVENANTS AND AGREEMENTS........................................................................25
Section 6.1. Confidentiality.....................................................................25
Section 6.2. Support of Transaction..............................................................26
Section 6.3. [Intentionally Left Blank]..........................................................26
Section 6.4. Tax Matters.........................................................................26
Section 6.5. Certain Employee Benefits Matters...................................................28
ARTICLE 7. CONDITIONS TO OBLIGATIONS.............................................................................31
Section 7.1. Conditions to Obligations of Purchaser and Seller...................................31
Section 7.2. Conditions to Obligations of Purchaser..............................................31
Section 7.3. Conditions to the Obligations of Seller.............................................32
ARTICLE 8. TERMINATION...........................................................................................33
Section 8.1. Termination.........................................................................33
Section 8.2. Effect of Termination...............................................................34
Section 8.3. Other Termination...................................................................34
ARTICLE 9. INDEMNIFICATION.......................................................................................34
Section 9.1. Survival of Representations.........................................................34
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Section 9.2. Indemnification.....................................................................35
Section 9.3. Conduct of Proceedings..............................................................35
Section 9.4. Sole Remedy; Time Limitation........................................................36
ARTICLE 10. CERTAIN DEFINITIONS..................................................................................36
ARTICLE 11. MISCELLANEOUS........................................................................................41
Section 11.1. Waiver..............................................................................41
Section 11.2. Notices.............................................................................41
Section 11.3. Assignment..........................................................................42
Section 11.4. Rights of Third Parties.............................................................42
Section 11.5. Expenses............................................................................42
Section 11.6. Construction........................................................................43
Section 11.7. Captions; Counterparts..............................................................43
Section 11.8. Entire Agreement....................................................................43
Section 11.9. Amendments..........................................................................43
Section 11.10. Publicity...........................................................................43
Section 11.11. Dispute Resolution..................................................................43
Section 11.12. Modification of Agreement...........................................................44
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Schedules
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Schedule 2.2: No Conflict
Schedule 2.4: Capitalization of the Company
Schedule 2.5: Subsidiaries of the Company
Schedule 2.6: Capitalization of Subsidiaries of the Company
Schedule 2.7: Pro Forma Financial Statements
Schedule 2.8: Contracts; No Defaults
Schedule 2.9: Intellectual Property
Schedule 2.10: Owned Real Property
Schedule 2.11: Litigation and Proceedings
Schedule 2.12: Employee Benefits Plans
Schedule 2.13: Labor Relations
Schedule 2.14: Legal Compliance
Schedule 2.15: Environmental Matters
Schedule 2.16: Taxes
Schedule 2.17: Governmental Authorities; Consents
Schedule 2.18: Transactions with Affiliates
Schedule 2.21: Events Subsequent to March 31, 1999
Schedule 3.4: Purchaser Governmental Authorities; Consents
Annexes
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Annex A: Description of Divestiture Assets
Annex B: Description of Xxxxxxx Assets
Annex C: [Intentionally Left Blank]
Annex D: Registration Rights Agreement
Annex E: Stockholders Agreement
Annex F: Subscription Agreement
Annex G: Voting Agreement
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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement") is entered into
by and between XXXXX ADVERTISING COMPANY, a Delaware corporation ("Purchaser"),
and CHANCELLOR MEDIA CORPORATION OF LOS ANGELES, a Delaware corporation
("Seller"), as of this 1st day of June, 1999.
RECITALS:
WHEREAS, Seller is the sole record and beneficial owner of one
thousand (1,000) shares (the "Chancellor Shares") of the common stock, par value
$0.01 per share (the "Common Stock"), of Chancellor Media Outdoor Corporation, a
Delaware corporation (the "Company"), which Chancellor Shares constitute all of
the issued and outstanding shares of the capital stock of the Company;
WHEREAS, upon the terms and subject to the conditions set forth
herein, Seller desires to sell to Purchaser, and Purchaser desires to purchase
from Seller, the Chancellor Shares; and
WHEREAS, certain capitalized terms used herein have the meanings
assigned to them in Article 10 hereof.
AGREEMENT:
In consideration of the mutual covenants and agreements contained
herein, and other good and valuable consideration, the receipt and adequacy of
which is hereby acknowledged, the parties hereto agree as follows:
ARTICLE 1.
PURCHASE AND SALE OF SHARES
Section 1.1. Purchase and Sale of Chancellor Shares. Upon the terms and
subject to the conditions contained herein, on the Closing Date, Seller will
sell, convey and transfer to Purchaser, and Purchaser will purchase and acquire
from Seller, the Chancellor Shares.
Section 1.2. Purchase Price. Upon the terms and subject to the
conditions contained herein, as consideration for the Chancellor Shares,
Purchaser will pay to Seller, on the Closing Date and in the manner specified in
Section 1.3(c) hereof, One Billion Two Hundred One Million One Hundred
Seventy-One Thousand Eight Hundred Eighty-One Dollars ($1,201,171,881) (the
"Cash Consideration") and 11,647,727 shares of the Class A Common Stock, par
value $0.001, of Purchaser (collectively, the "Xxxxx Shares"), subject to the
adjustments set forth in Section 1.4 hereof (the "Total Consideration").
Section 1.3. Closing.
(a) The consummation of the purchase and sale of the
Chancellor Shares (the "Closing") shall take place at 10:00 a.m., local time, on
the tenth (10th) Business Day
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following the satisfaction of the conditions to the obligations of the parties
set forth in Article 7 hereof, at the offices of Seller, 0000 Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx, or at such other time or place as Seller and
Purchaser may agree in writing (the day on which the Closing takes place being
referred to herein as the "Closing Date").
(b) At the Closing, Seller shall deliver or cause to be
delivered to Purchaser (i) one or more stock certificates evidencing the
Chancellor Shares, duly endorsed in blank or accompanied by a stock power duly
executed in blank, and (ii) the other documents required to be delivered by
Seller pursuant to Article 7 hereof.
(c) At the Closing, Purchaser shall (i) pay to Seller the
Cash Consideration (determined prior to giving effect to any adjustment provided
for in Section 1.4 hereof) by intra-bank transfer or wire transfer of
immediately available funds to an account designated in writing by Seller, (ii)
deliver or cause to be delivered to Seller one or more stock certificates
evidencing the Xxxxx Shares, and (iii) deliver to Seller the documents required
to be delivered by Purchaser pursuant to Article 7 hereof. Notwithstanding the
foregoing, purely for the sake of convenience and to avoid the unnecessary
expense of multiple wire transfers of offsetting wire amounts, Purchaser may net
against the amount of any wire transfer to be made to Seller on the Closing Date
pursuant to this Agreement any amount otherwise required to be wired by Seller
to Purchaser on the Closing Date pursuant to the Subscription Agreement.
Section 1.4. Purchase Price Adjustment.
(a) As soon as reasonably practicable following the Closing
Date, and in any event within forty-five (45) calendar days thereof, Seller
shall prepare and deliver to Purchaser (i) a consolidated balance sheet of the
Company as of the Closing (after giving effect to the Preliminary Transactions)
which shall be audited by PriceWaterhouseCoopers LLP ("PWC"), together with the
related audit report of such firm (the "Closing Balance Sheet"), and (ii) a
calculation of the Net Working Capital of the Company as set forth on the
Closing Balance Sheet (the "Closing Date Net Working Capital"). The Closing
Balance Sheet shall be prepared in accordance with United States generally
accepted accounting principles ("GAAP") consistent with the preparation of the
Pro Forma Balance Sheet, and shall fairly present the consolidated financial
position of the Company as of the Closing. "Net Working Capital" shall mean (i)
current assets of the Company, minus (ii) current liabilities of the Company.
Current liabilities of the Company shall (x) include, without limitation, any
severance payments provided on Schedule 2.13 which have been paid, or will be
paid, by the Company or its Subsidiaries and which are accrued and incurred
after the Closing but prior to the time of the calculation of Closing Date Net
Working Capital pursuant to this Section 1.4(a), and (y) exclude, without
limitation, any liability of the Company or its Subsidiaries, including, but not
limited to any liability for Taxes and severance payments, which Seller has
agreed to or is otherwise obligated to pay. Notwithstanding the foregoing, in
calculating Net Working Capital, all intercompany payables and receivables
between Seller, the Company and its Subsidiaries shall be disregarded.
(b) Upon delivery of the Closing Balance Sheet, Seller will
provide Purchaser with access to its records and will use commercially
reasonable efforts to provide Purchaser and its accountants access to the work
papers of PWC, to the extent reasonably related
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to Purchaser's evaluation of the Closing Balance Sheet and the calculation of
the Closing Date Net Working Capital. The Purchaser may dispute the calculation
of the Closing Date Net Working Capital or any element of the Closing Balance
Sheet relevant thereto, by notifying Seller of such disagreement in writing,
setting forth in detail the particulars of such disagreement, within thirty (30)
calendar days after its receipt of the Closing Balance Sheet; provided that the
basis of any such dispute shall be limited to the failure of the calculation of
Closing Date Net Working Capital or any amount reflected on the Closing Balance
Sheet to have been determined in accordance with GAAP applied on a basis
consistent with this Section 1.4. In the event that Purchaser does not provide
such a notice of disagreement within such thirty (30) calendar day period,
Purchaser shall be deemed to have accepted the Closing Balance Sheet and the
calculation of the Closing Date Net Working Capital delivered by Seller, which
shall be final, binding and conclusive for all purposes hereunder. In the event
any such notice of disagreement is timely provided, Purchaser and Seller shall
use commercially reasonable efforts for a period of thirty (30) calendar days
(or such longer period as they may mutually agree) to resolve any disagreements
with respect to the calculation of the Closing Date Net Working Capital. If, at
the end of such period, they are unable to resolve such disagreements, then the
Chicago, Illinois office of Ernst & Young LLP (or such other independent
accounting firm of recognized national standing as may be mutually selected by
Purchaser and Seller) (the "Auditor") shall resolve any remaining disagreements.
The Auditor shall determine as promptly as practicable, but in any event within
thirty (30) calendar days of the date on which such dispute is referred to the
Auditor, whether the Closing Balance Sheet was prepared in accordance with the
standards set forth in Section 1.4(a) and (only with respect to the remaining
disagreements submitted to the Auditor) whether and to what extent (if any) the
Closing Date Net Working Capital requires adjustment. The fees and expenses of
the Auditor shall be paid one-half by Purchaser and one-half by Seller. The
determination of the Auditor shall be final, conclusive and binding on the
parties. The date on which the Closing Date Net Working Capital is finally
determined in accordance with this Section 1.4(b) is hereinafter referred as to
the "Determination Date."
(c) The "Adjustment Amount," shall mean the difference
between (i) the Closing Date Net Working Capital, and (ii) Twelve Million
Dollars ($12,000,000) (the "Minimum Net Working Capital"). If the Closing Date
Net Working Capital exceeds the Minimum Net Working Capital, then, promptly and
in any event within five (5) Business Days following the Determination Date,
Purchaser shall pay to Seller, by wire transfer of immediately available funds
to an account designated in writing by Seller, the Adjustment Amount, together
with interest on such amount from the Closing Date to the date of payment at the
prime rate of interest (the "Applicable Rate") published in the "Money Rates"
column of the Eastern Edition of The Wall Street Journal (or the average of such
rates if more than one rate is indicated) on the Closing Date. If the Minimum
Net Working Capital exceeds the Closing Date Net Working Capital, then, promptly
and in any event within five (5) Business Days following the Determination Date,
Seller shall pay to Purchaser, by wire transfer of immediately available funds
to an account designated in writing by Purchaser, the Adjustment Amount,
together with interest on such amount from the Closing Date to the date of
payment at the Applicable Rate.
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ARTICLE 2.
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Purchaser that as of the date of
this Agreement:
Section 2.1. Corporate Organization and Authority of Seller. Seller has
been duly incorporated and is validly existing as a corporation in good standing
under the laws of the State of Delaware and has the corporate power and
authority to enter into and perform its obligations under this Agreement. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized and
approved by the Board of Directors of Seller, and no other corporate proceeding
on the part of Seller is necessary to authorize this Agreement or the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Seller and, assuming this Agreement constitutes a
valid and binding agreement of Purchaser, constitutes a legally valid and
binding obligation of Seller, enforceable against Seller in accordance with its
terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights
generally and subject, as to enforceability, to general principles of equity.
Section 2.2. No Conflict. Except as set forth on Schedule 2.2, the
execution and delivery of this Agreement by Seller and the consummation of the
transactions contemplated hereby do not and will not violate any provision of,
or result in the breach of: (a) any law, rule or regulation of any Governmental
Authority, any Contract listed pursuant to Section 2.8(a), or any order,
judgment or decree applicable to Seller, the Company or any Subsidiary of the
Company, or terminate or result in the termination of any such Contract, or
result in the creation of any Lien, charge or encumbrance upon any of the
properties or assets of Seller, the Company or any Subsidiary of the Company, or
constitute an event which, after notice or lapse of time or both, would result
in any such violation, breach, acceleration, termination or creation of a Lien;
or (b) the Certificate of Incorporation, Bylaws or other organizational
documents of Seller, the Company or any Subsidiary of the Company.
Section 2.3. Corporate Organization of the Company. The Company has
been duly incorporated and is validly existing as a corporation in good standing
under the laws of the State of Delaware and has the corporate power and
authority to own or lease its properties and to conduct the Business as it is
now being conducted. The copies of the Certificate of Incorporation and Bylaws
of the Company previously delivered by the Company to Purchaser are true,
correct and complete. The Company is duly licensed or qualified and in good
standing as a foreign corporation in each jurisdiction in which the ownership of
its property or the character of its activities is such as to require it to be
so licensed or qualified, except where the failure to be so licensed or
qualified would not have a material adverse effect on the business, operations
or financial condition of the Company and its Subsidiaries, taken as a whole.
Section 2.4. Capital Stock of the Company. The Chancellor Shares
constitute all the issued and outstanding shares of capital stock of the
Company. The Chancellor Shares have been duly authorized and validly issued and
are fully paid and nonassessable and were not issued in violation of any
preemptive rights. There are no options, warrants, agreements, arrangements, or
other rights relating to the capital stock of the Company or other securities
exercisable or
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exchangeable for any capital stock of the Company that either (i) obligates the
Company to issue, sell, transfer, repurchase, redeem or otherwise acquire or
vote any shares of its capital stock, or (ii) restricts the transfer of its
capital stock. Seller is the sole record and beneficial owner of the Chancellor
Shares and owns the Chancellor Shares free and clear of any Liens other than the
Liens described on Schedule 2.4 hereto.
Section 2.5. Subsidiaries. Set forth on Schedule 2.5 is a list of all
Subsidiaries of the Company. Each Subsidiary of the Company has been duly formed
and is validly existing under the laws of the jurisdiction of its formation and
has the corporate or limited liability company power and authority, as
applicable, to own or lease its properties and to conduct its business as it is
now being conducted. The Company has previously provided, or shall provide prior
to the Closing, to Purchaser copies of the organizational documents of each
Subsidiary of the Company, and such copies are true, correct and complete. Each
such Subsidiary is duly licensed or qualified and in good standing in each
jurisdiction in which its ownership of property or the character of its
activities is such as to require such Subsidiary to be so licensed or qualified,
except where the failure to be so licensed or qualified would not have a
material adverse effect on the business, operations or financial condition of
the Company and its Subsidiaries, taken as a whole. The jurisdiction of
incorporation or organization of the Subsidiaries of the Company are set forth
on Schedule 2.5 hereto.
Section 2.6. Capitalization of Subsidiaries of the Company. Except as
set forth on Schedule 2.6, (i) each Subsidiary of the Company is wholly-owned of
record and beneficially by the Company or another wholly-owned Subsidiary of the
Company, and (ii) the ownership interests of the Company in each such Subsidiary
are owned of record and beneficially by the Company, free and clear of any Liens
other than Liens described on Schedule 2.6 hereto. Except as set forth on
Schedule 2.6, there are no options, warrants, agreements, arrangements or other
rights relating to, or other securities exercisable or exchangeable for, any
capital stock or other equity security of any Subsidiary of the Company that
either (i) obligates any Subsidiary of the Company to issue, sell, transfer,
repurchase, redeem or otherwise acquire or vote any shares of capital stock of
any Subsidiary of the Company, or (ii) restricts the transfer of the capital
stock of any Subsidiary of the Company.
Section 2.7. Pro Forma Financial Statements. Attached as Schedule 2.7
hereto are (i) the unaudited consolidated balance sheet of the Company as of
March 31, 1999 (the "Pro Forma Balance Sheet"), which has been adjusted to give
effect to the Preliminary Transactions, including any accruals for Taxes
associated therewith, as if such transactions had been consummated on such date,
and (ii) the unaudited consolidated statement of operations of the Company for
the twelve-month period ended March 31, 1999, which has been adjusted to give
effect to the Preliminary Transactions as if such transactions had been
consummated on April 1, 1998 (the "Pro Forma Statement of Operations"). The Pro
Forma Balance Sheet was prepared in accordance with the books and records of
Seller and its Subsidiaries and fairly presents the assets and liabilities of
the Company as of March 31, 1999, after giving effect to the Preliminary
Transactions as if the Preliminary Transactions had been consummated on such
date, and the Pro Forma Statement of Operations was prepared in accordance with
the books and records of Seller and its Subsidiaries and fairly present the
results of operations of the Company for the twelve-month period ended March 31,
1999, after giving effect to the Preliminary Transactions as if such
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transactions had been consummated on April 1, 1998, to the extent required by
GAAP, subject to the notes and ancillary information included in such financial
statements.
Section 2.8. Contracts; No Defaults.
(a) Schedule 2.8 contains a listing of all Contracts
described in clauses (i) through (xi) below to which the Company or any of its
Subsidiaries is a party, other than any such Contract (A) which will be
terminated at or prior to the Closing, or (B) as to which the Company and its
Subsidiaries will have no further liability following the Closing. True, correct
and complete copies of contracts referred to in clauses (i)-(xi) below have been
delivered to or made available to Purchaser and its agents and representatives.
(i) Each Contract providing for the performance of
services or the delivery of goods and/or materials by or to the
Company or any of its Subsidiaries entered into outside the
ordinary course of business of the Company and its Subsidiaries
and which provides for consideration to be furnished to or by the
Company or any of its Subsidiaries of value in excess of $150,000
in any one year;
(ii) Each note, debenture, other evidence of
indebtedness, guarantee, loan, credit or financing agreement or
instrument or other contract for money borrowed, including any
agreement or commitment for future loans, credit or financing;
(iii) Each lease, rental or occupancy agreement
involving aggregate payments in excess of $150,000 in any one
year;
(iv) Each material licensing agreement or other
Contract with respect to patents, trademarks, copyrights, or other
intellectual property, including agreements with current or former
employees, consultants, or contractors regarding the appropriation
or the nondisclosure of Intellectual Property (as hereinafter
defined) other than customary employee, vendor and other
non-disclosure agreements;
(v) Each collective bargaining agreement or other
Contract to or with any labor union or other employee
representative of a group of employees relating to wages, hours,
and other conditions of employment;
(vi) Each joint venture agreement, partnership
agreement, or limited liability company agreement;
(vii) Each material distribution, franchise,
license, sales, commission, consulting or agency agreement for
advertising to be provided to the Company or its Subsidiaries,
excluding Advertising Contracts, providing for annual payments in
excess of $150,000, which are not cancelable on thirty (30)
calendar days' notice;
(viii) Each material option to buy any property,
real or personal, or material options to sell any Owned Real
Property or personal property;
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(ix) Each Contract (except personal property leases
and construction contracts) involving expenditures or liabilities
in excess of $250,000, or otherwise material to the Business; and
(x) Each material Contract containing covenants
limiting the freedom of the Company or its Subsidiaries to engage
in the Business or compete with any Person other than in
connection with any license agreements to which Seller is a party
(other than provisions in any lease that limit the type of
advertising messages or advertising that may be displayed on
outdoor advertising structures or the types of advertisers);
(xi) Each written employment or severance agreement
pertaining to the Business to which either the Company or any of
its Affiliates is a party with any employee which may not be
terminated at will, or by giving notice of thirty (30) calendar
days or less, without cost or penalty.
(b) Except as set forth on Schedule 2.8, no condition exists
or event has occurred which, with notice or lapse of time or both, would
constitute a default by the Company or any of its Subsidiaries under the
Contracts listed pursuant to paragraph (a) of this Section 2.8, or, to the best
knowledge of the Company, any other party thereto.
(c) Except as set forth on Schedule 2.8, to the Company's
knowledge, all of the Contracts set forth on Schedule 2.8 are valid and in full
force and effect. The Company and its Subsidiaries have duly performed all of
their material obligations under such Contracts to the extent those obligations
to perform have accrued, and no violation of, or default or breach under, such
Contracts by the Company or its Subsidiaries, or, to the Company's knowledge,
any other party has occurred, and neither the Company nor its Subsidiaries, nor,
to the Company's knowledge, any other party has repudiated any provisions
thereof. Since November 30, 1998, to the Company's knowledge, the Company and
its Subsidiaries have performed, in all material respects, their obligations
under the Advertising Contracts and agreements for Leased Real Property, to the
extent those obligations to perform have accrued.
Section 2.9. Intellectual Property. Schedule 2.9 lists each material
patent, registered trademark, service xxxx or trade name or registered copyright
and applications for any of the foregoing (collectively, "Intellectual
Property"), held by the Company or any of its Subsidiaries and used in the
operation of the Business. The Contracts listed on Schedule 2.8 include all
material license or sublicense agreements entered into by the Company or any of
its Subsidiaries in connection with the conduct of the Business with respect to
any patent, trademark, service xxxx, logo, trade name or copyright to which the
Company or any of its Subsidiaries is a party and which is material to the
operation of the Business, as presently being conducted. Except as set forth on
Schedule 2.9, to the best knowledge of the Company, (i) the Company or one of
its Subsidiaries has good title to, or has the right to use pursuant to license,
sublicense, agreement or permission each such item of Intellectual Property
owned or used by it, free and clear of any Liens other than Permitted Liens, and
(ii) there is no claim of infringement pending or threatened against the Company
or any of its Subsidiaries relating to any item of Intellectual Property used in
the operation of the Business, as presently conducted.
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Section 2.10. Owned Real Property.
(a) Schedule 2.10 lists all Owned Real Property. The Company
or one of its Subsidiaries has (or at the Closing will have) good and marketable
fee simple title to all Owned Real Property, subject only to any (i) Permitted
Liens, (ii) Lien constituting a lease, sublease or occupancy agreement that
gives any third party any right to occupy any portion of the Owned Real
Property, and (iii) Lien reflected on any survey or in any title report made
available to Purchaser prior to the date of this Agreement.
(b) Except as set forth on Schedule 2.10, there are no
pending or, to the knowledge of Seller, threatened condemnation proceedings with
respect to any portion of Owned Real Property, or litigation or administrative
actions relating to any portion of Owned Real Property.
(c) All Owned Real Property and the improvements thereon are
supplied with utilities and other services necessary for the operation of such
facilities as currently operated.
Section 2.11. Litigation and Proceedings. Except as set forth on
Schedule 2.11, there are no lawsuits, actions, suits, claims or other
proceedings at law or in equity, or to the knowledge of the Company,
investigations, before or by any court or Governmental Authority or before any
arbitrator pending or, to the knowledge of the Company, threatened, against the
Company or any of its Subsidiaries (a) in which the relief sought includes
damages in excess of $100,000 in any individual case, (b) seeking as of the date
hereof to delay, limit or enjoin the transactions contemplated by this
Agreement, or (c) that would materially impair the ability of Seller, the
Company or its Subsidiaries to perform their obligations hereunder. Except as
set forth on Schedule 2.11, there is no unsatisfied judgment, order or decree
requiring payment in excess of $100,000 or any open injunction binding upon the
Company or any of its Subsidiaries. Neither the Company nor any of its
Subsidiaries is in default with respect to or subject to any judgment, order,
writ, injunction or decree of any court or governmental agency in any material
matter.
Section 2.12. Employee Benefit Plans.
(a) Definitions. The following terms, when used in this
Section 2.12, shall have the following meanings. Any of these terms may, unless
the context otherwise requires, be used in the singular or the plural depending
on the reference.
(i) Employee Plans. "Employee Plans" shall mean all
Multiemployer Plans, Pension Plans and Welfare Plans.
(ii) ERISA. "ERISA" shall mean the Employee
Retirement Income Security Act of 1974, as amended.
(iii) Multiemployer Plan. "Multiemployer Plan" shall
mean any "multiemployer plan," as defined in Section 4001(a)(3) of
ERISA, (A) to which the Company or any of its Subsidiaries
maintains, administers, contributes or is required to
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contribute, and (B) which covers any employee or former employee
of the Company or any of its Subsidiaries (with respect to their
relationship with such entities).
(iv) PBGC. "PBGC" shall mean the Pension Benefits
Guaranty Corporation.
(v) Pension Plan. "Pension Plan" shall mean any
"employee pension benefit plan" as defined in Section 3(2) of
ERISA (other than a Multiemployer Plan) (A) which the Company or
any of its Subsidiaries maintains, administers, contributes to or
is required to contribute to, and (B) which covers any employee or
former employee of the Company or any of its Subsidiaries (with
respect to their relationship with such entities).
(vi) Welfare Plan. "Welfare Plan" shall mean any
"employee welfare benefit plan" as defined in Section 3(1) of
ERISA, (A) which the Company or any of its Subsidiaries maintains,
administers, contributes to or is required to contribute to, and
(B) which covers any employee or former employee of the Company or
any of its Subsidiaries (with respect to their relationship with
such entities).
(b) Disclosure. Schedule 2.12 contains a complete list of
Employee Plans.
(c) Representations. Except as set forth in Schedule 2.12,
the Company represents and warrants as follows:
(i) Pension Plans
(A) Except as set forth on Schedule 2.12,
each Pension Plan and each related trust agreement, annuity
contract or other funding instrument which is intended to be
qualified and tax-exempt under the provisions of Code Sections
401(a) and 501(a) has been determined by the Internal Revenue
Service to be so qualified and tax-exempt or application for
such determination has been made.
(B) Except as set forth on Schedule 2.12,
each Pension Plan and each related trust agreement, annuity
contract or other funding instrument is in material compliance
with its terms and, both as to form and in operation, with the
requirements prescribed by any and all statutes, orders, rules
and regulations which are applicable to such plans, including
without limitation ERISA and the Code.
(C) The Company does not sponsor, and has
not sponsored at any time during the five (5) year period
ending on the Closing Date, a Pension Plan that is subject to
Title IV of ERISA. None of the Company, nor any of its
Subsidiaries has incurred any material liability, directly or
indirectly, for breach of any provision of ERISA.
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(ii) Multiemployer Plans. Neither the Company nor
Seller, nor any Subsidiary of either, has been a participating
employer in, or has assumed any liabilities under, a Multiemployer
Plan at any time during the five (5) year period ending on the
Closing Date.
(iii) Welfare Plans. Except as set forth on Schedule
2.12, each Welfare Plan is in material compliance with its terms
and, both as to form and operation, with the requirements
prescribed by any and all statutes, orders, rules and regulations
which are applicable to such Welfare Plan, including without
limitation ERISA and the Code.
Section 2.13. Labor Relations. Schedule 2.13 contains a list of all
collective bargaining agreements to which the Company or any of its Subsidiaries
is a party and all written employment or severance agreements pertaining to the
Business to which either the Company or any of its Affiliates is a party with
respect to any employee, which may not be terminated at will, or by giving
notice of thirty (30) calendar days or less, without cost or penalty, to employ
or terminate executive officers or other personnel, or that will result in the
payment by, or the creation of, any commitment or obligation (absolute or
contingent) to pay on behalf of Purchaser, Seller, the Company or its
Subsidiaries, any severance, termination, "golden parachute" or other similar
payments as a result of the consummation of the transactions contemplated
hereby. Seller has delivered or made available to Purchaser true, correct and
complete copies of each such Contract, as amended to date. Except as set forth
on Schedule 2.13, in the last twelve (12) months, neither the Company nor its
Subsidiaries have experienced any attempt by organized labor or its
representatives to make the Company or its Subsidiaries conform to demands of
organized labor relating to its employees or enter into a binding agreement with
organized labor that would cover the employees. Except as set forth on Schedule
2.13, there is no labor strike or labor disturbance pending or, to Seller's
knowledge, threatened against the Company or its Subsidiaries, and in the past
three (3) years the Company and its Subsidiaries have not experienced a work
stoppage or other labor difficulty. The Company and its Subsidiaries are in
material compliance with all applicable laws respecting employment practices,
employee documentation, terms and conditions of employment and wages and hours
and, to the Company's knowledge, neither the Company nor its Subsidiaries has
engaged in any unfair labor practice. There is no unfair labor practice charge
or complaint against the Company or its Subsidiaries pending, or to the
knowledge of the Company, threatened before the National Labor Relations Board
or any other domestic or foreign government agency arising out of the conduct of
the business of the Company or its Subsidiaries.
Section 2.14. Legal Compliance. Except with respect to matters set
forth on Schedule 2.14, and compliance with Environmental Laws (as to which
certain representations and warranties are made pursuant to Section 2.15), the
Company and each of its Subsidiaries is in compliance with all laws (including
rules and regulations thereunder) of federal, state, local and foreign
governments (and all agencies thereof) applicable thereto, except where such
instances of noncompliance would not have a material adverse effect on the
business, operations or financial condition of the Company and its Subsidiaries,
taken as a whole.
Section 2.15. Environmental Matters. Except as set forth on Schedule
2.15, (i) the Company and each of its Subsidiaries is in compliance with all
Environmental Laws, except where
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such instances of noncompliance would not have a material adverse effect on the
business, operations or financial condition of the Company and its Subsidiaries,
(ii) neither the Company nor any of its Subsidiaries has any liability under any
Environmental Law which is material to the business, operations or financial
condition of the Company and its Subsidiaries, (iii) no notices of any violation
or alleged violation of any Environmental Law relating to the operations or
properties of the Company or any of its Subsidiaries have been received by the
Company or any of its Subsidiaries, (iv) to the knowledge of the Company, there
are no circumstances, based on currently available information, that are
reasonably likely to prevent such compliance, except where such instances would
not have a material adverse effect on the business, operations or financial
condition of the Company and its Subsidiaries, (v) to the knowledge of the
Company, there are no underground storage tanks, above-ground storage tanks, or
polychlorinated biphenyls located on, in or under Owned Real Property or real
property leased by the Company or its Subsidiaries, except in compliance with
Environmental Laws, except where such instances would not have a material
adverse effect on the business, operations or financial condition of the Company
and its Subsidiaries, and (vi) no hazardous substances, wastes or materials, as
defined by Environmental Laws, have been stored, released, recycled or disposed
of, on, under or at any such property such that the property is currently
subject to a lawful order by a Governmental Authority that requires remediation
of such property, except where such instances would not have a material adverse
effect on the business, operations or financial condition of the Company and its
Subsidiaries.
Section 2.16. Taxes. Except as set forth on Schedule 2.16:
(a) The Company and each of its Subsidiaries have timely
filed all income Tax Returns required to be filed by it (subject to any
applicable extensions). Each Affiliated Group with which the Company or its
Subsidiaries files a consolidated, combined or unitary Tax Return has timely
filed all such income Tax Returns that it was required to file (subject to any
applicable extensions) for each taxable period during which the Company or its
Subsidiaries was a member of the group;
(b) each of the Company and its Subsidiaries has duly paid in
full (or there has been paid on its behalf) or has established (or there has
been established on its behalf) an adequate reserve on the Closing Balance Sheet
for all Taxes that are payable or may become payable by the Company or its
Subsidiaries (i) in respect of any taxable period ending on or before the
Closing Date and (y) for any taxable period that begins before the Closing Date
and ends thereafter, to the extent such Taxes are attributable to the portion of
such period ending on the Closing Date under the terms of Section 6.4(b);
(c) The Company and each Subsidiary has withheld and paid
over all Taxes required to have been withheld and paid over on or before the
Closing Date, and complied with all information reporting and backup withholding
requirements required to be complied with on or before the Closing Date,
including maintenance of required records with respect thereto, in connection
with amounts paid or owing to any employer, creditor, independent contractor or
other third party. There are no Liens on any of the assets of the Company or any
of its Subsidiaries with respect to Taxes, other than liens for Taxes not yet
due and payable or for Taxes
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being contested in good faith through appropriate proceedings and for which
reserves have been or will be established on the Closing Balance Sheet in
accordance with GAAP;
(d) None of the Company or any of its Subsidiaries has waived
any law or regulation fixing, or consenting to the extension of, any period of
time for assessment of any Taxes which waiver or consent is currently in effect.
None of the Seller or any of its stockholders has waived any law or regulation
fixing, or consenting to the extension of, any period of time for assessment of
any Taxes of the Company or any of the Subsidiaries which waiver or consent is
currently in effect. There is no pending examination or proceeding by any
authority or agency with respect to the Company or any Subsidiary relating to
the assessment or collection of Taxes;
(e) There will not be as of the Closing Date any outstanding
balances of deferred gain or loss accounts related to deferred intercompany
transactions with respect to the Company or its Subsidiaries under Treasury
Regulation Section 1.1502-13. As of the Closing Date, neither the Company nor
any of its Subsidiaries will have any obligation or will have any obligation
that could arise under any Tax sharing agreement between it and another entity;
and
(f) None of the Company, any of its Subsidiaries or any
stockholders of the Company has made or will become obligated to make as a
result of the sale of the Shares any payments that would be nondeductible by the
Company or its Subsidiaries (in whole or in part) pursuant to Section 280G of
the Code.
Section 2.17. Governmental Authorities; Consents. Assuming the truth
and completeness of the representations and warranties of Purchaser contained in
this Agreement, no consent, approval or authorization of, or designation,
declaration or filing with, any governmental authority or other third party is
required on the part of Seller with respect to Seller's execution or delivery of
this Agreement or the consummation of the transactions contemplated hereby,
except for (i) applicable requirements of the HSR Act, or (ii) as otherwise
disclosed in Schedule 2.17.
Section 2.18. Interest in Competitors, Suppliers, and Customers. Except
as set forth on Schedule 2.18 attached hereto, to the knowledge of Seller, no
stockholder, officer, or director of Chancellor Media Corporation or any
Affiliate of any such stockholder, officer, or director has any ownership
interest in any competitor, supplier, or customer of the Company or any property
used in the operation of the Business.
Section 2.19. Insurance. All material assets and properties of the
Company and its Subsidiaries are covered by valid and currently effective
insurance policies or programs of self-insurance in such types and amounts as
are consistent with customary practices and standards of companies engaged in
businesses similar to that of the Company and its Subsidiaries.
Section 2.20. Brokers' Fees. No broker, finder, investment banker or
other Person is entitled to any brokerage fee, finders' fee or other commission
in connection with the transactions contemplated by this Agreement based upon
arrangements made by the Company or any of its Affiliates, except for any
arrangement with Xxxxxx Xxxxxxx Xxxx Xxxxxx & Co. or Xxxxxxxxx & Co., LLC, for
which Seller shall be solely responsible.
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Section 2.21. Events Subsequent to March 31, 1999. Except as set forth
on Schedule 2.21, from March 31, 1999 to the date hereof, there has not occurred
any material adverse change in the business, financial condition or results of
operations of the Company or its Subsidiaries, taken as a whole.
Section 2.22. Securities Act Representations.
(a) Seller is acquiring the Xxxxx Shares for investment for
its own account, not as a nominee or agent, and not with a view to the resale or
distribution of any part thereof in violation of the Securities Act. Seller does
not have any present intention of selling, granting any participation in, or
otherwise distributing the Xxxxx Shares otherwise than pursuant to an effective
registration statement under the Securities Act or in a transaction exempt from
the registration requirements under the Securities Act and applicable state
securities laws. Seller does not have any contract, undertaking, agreement or
arrangement with any Person to sell, transfer or grant participations to such
Person or to any third Person, with respect to any of the Xxxxx Shares.
(b) Seller acknowledges that the issuance of the Xxxxx Shares
will not be registered under the Securities Act or any state securities laws on
the basis of a claimed exemption by Purchaser that the issuance of the Xxxxx
Shares as provided for herein is exempt from registration under the Securities
Act and applicable state securities laws. Seller acknowledges that the
availability of such exemptions is predicated in part on Seller's
representations set forth in this Section and that Purchaser is relying on such
representations.
(c) Seller has received all the information it considers
necessary or appropriate for deciding whether to accept the Xxxxx Shares. Seller
has had an opportunity to ask questions of and to receive answers from Purchaser
regarding the terms and conditions of the issuance of the Xxxxx Shares and the
business, properties, financial condition and prospects of Seller and to obtain
additional information (to the extent Seller possessed such information or could
acquire it without unreasonable effort or expense) necessary to verify the
accuracy of any information furnished to Seller or to which Seller had access.
(d) Seller acknowledges that it is able to bear the economic
risk of the investment in the Xxxxx Shares, and has such knowledge and
experience in financial and business matters that it is capable of evaluating
the benefits and risks of the investment in the Xxxxx Shares.
(e) Seller is an "accredited investor" as defined in Rule
501(a) of Regulation D promulgated under the Securities Act.
(f) Seller acknowledges that the Xxxxx Shares may not be
sold, transferred or otherwise disposed of without registration under the
Securities Act or an applicable exemption therefrom and that in the absence of
any effective registration statement covering the Xxxxx Shares or an available
exemption from registration under the Securities Act, the Xxxxx Shares must be
held indefinitely. Seller further acknowledges that the Xxxxx Shares may not be
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sold pursuant to Rule 144 promulgated under the Securities Act unless all of the
conditions of that rule are met.
(g) Seller acknowledges that each certificate representing
any of the Xxxxx Shares will be endorsed with a legend substantially similar to
the following:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR
PURSUANT TO THE SECURITIES OR "BLUE SKY" LAWS OF ANY STATE. SUCH
SECURITIES MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE ASSIGNED, EXCEPT PURSUANT TO (i) A
REGISTRATION STATEMENT WITH RESPECT TO SUCH SECURITIES WHICH IS
EFFECTIVE UNDER SUCH ACT, (ii) RULE 144 UNDER SUCH ACT, OR (iii)
ANY OTHER EXEMPTION FROM REGISTRATION UNDER SUCH ACT.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Seller that, as of the
date of this Agreement:
Section 3.1. Corporate Organization and Authority of Purchaser.
Purchaser has been duly incorporated and is validly existing as a corporation in
good standing under the laws of the State of Delaware and has the corporate
power and authority to enter into and perform its obligations under this
Agreement. The execution and delivery of this Agreement by Purchaser and the
consummation of the transactions contemplated hereby have been duly and validly
authorized and approved by the Board of Directors of Purchaser, and except for
the consent of the stockholders of Purchaser provided in Section 5.5 hereof, no
other corporate proceeding on the part of Purchaser is necessary to authorize
this Agreement or the transactions contemplated hereby. This Agreement has been
duly and validly executed and delivered by Purchaser and, assuming this
Agreement constitutes a valid and binding agreement of Seller, constitutes a
legally valid and binding obligation of Purchaser, enforceable against Purchaser
in accordance with its terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors' rights generally and subject, as to enforceability, to general
principles of equity.
Section 3.2. No Conflict. The execution and delivery of this Agreement
by Purchaser and the consummation of the transactions contemplated hereby does
not and will not violate any provision of, or result in the breach of: (a) any
applicable law, rule or regulation of any Governmental Authority, or any
agreement, indenture or other instrument to which Purchaser is a party or by
which Purchaser may be bound, or of any order, judgment or decree applicable to
Purchaser, or terminate or result in the termination of any such agreement,
indenture or instrument, or result in the creation of any Lien, charge or
encumbrance upon any of the properties or assets of Purchaser or constitute an
event which, after notice or lapse of time or both, would result in any such
violation, breach, acceleration, termination or creation of a Lien; or (b) the
Certificate of Incorporation, Bylaws, or other organizational documents of
Purchaser.
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Section 3.3. Litigation and Proceedings. Except as disclosed in the
Purchaser SEC Documents, there are no lawsuits, actions, suits, claims or other
proceedings at law or in equity, or, to the knowledge of Purchaser,
investigations, before or by any court or Governmental Authority or before any
arbitrator pending or, to the knowledge of Purchaser, threatened, against
Purchaser or any of its Affiliates which, if determined adversely, could
reasonably be expected to have a material adverse effect on (a) the ability of
Purchaser to enter into and perform its obligations under this Agreement, or (b)
the business, financial condition or results of operations of Purchaser. There
is no unsatisfied judgment, order or decree or any open injunction binding upon
Purchaser or any of its Affiliates which could reasonably be expected to have a
material adverse effect on the ability of Purchaser to enter into and perform
its obligations under this Agreement.
Section 3.4. Governmental Authorities; Consents. Assuming the truth and
completeness of the representations and warranties of Seller contained in this
Agreement, no consent, approval or authorization of, or designation, declaration
or filing with, any governmental authority or other third party is required on
the part of Purchaser with respect to Purchaser's execution or delivery of this
Agreement or the consummation of the transactions contemplated hereby, except
for (i) applicable requirements of the HSR Act or (ii) the preparation and
filing of a proxy or information statement of Purchaser with the Securities and
Exchange Commission (the "SEC") pursuant to Section 5.5.
Section 3.5. Brokers' Fees. No broker, finder, investment banker or
other Person is entitled to any brokerage fee, finders' fee or other commission
in connection with the transactions contemplated by this Agreement based upon
arrangements made by Purchaser or any of its Affiliates.
Section 3.6. Capital Structure. The authorized capital stock of
Purchaser consists of (i) 125,000,000 shares of Class A Common Stock (the
"Purchaser Class A Common Stock"), of Purchaser, (ii) 37,500,000 shares of Class
B Common Stock, par value $0.001 per share (the "Purchaser Class B Common
Stock"), of Purchaser, (iii) 10,000 shares of Purchaser Class A Preferred Stock,
$638.00 par value per share (the "Purchaser Class A Preferred Stock"), of
Purchaser, and (iv) 1,000,000 shares of Preferred Stock, $0.001 par value per
share (the "Purchaser Preferred Stock"), of Purchaser. At the close of business
on May 31, 1999 (a) 43,514,283 shares of Purchaser Class A Common Stock were
issued and outstanding, (b) no more than 1,000,000 shares of Purchaser Class A
Common Stock were reserved for issuance pursuant to outstanding options (the
"Purchaser Stock Options") to purchase shares of Purchaser Class A Common Stock
granted under Purchaser's 1996 Equity Incentive Plan, (c) 17,700,000 shares of
Purchaser Class A Common Stock were reserved for issuance upon conversion of
outstanding shares of Purchaser Class B Common Stock, (d) 17,699,997 shares of
Purchaser Class B Common Stock were issued and outstanding, (e) 5,719.49 shares
of Purchaser Class A Preferred Stock were issued and outstanding, and (f) no
shares of Purchaser Class A Common Stock, Purchaser Class B Common Stock,
Purchaser Class A Preferred Stock or Purchaser Preferred Stock were held as
treasury shares by Purchaser or any Subsidiary of Purchaser. Except as set forth
above, at the close of business on May 31, 1999, no shares of capital stock or
other equity securities of Purchaser were authorized, issued, reserved for
issuance or outstanding. All outstanding shares of capital stock of Purchaser
are, and all shares which may be issued (1)
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upon the exercise of outstanding Purchaser Stock Options, or (2) to Seller
pursuant to the terms of this Agreement and the Subscription Agreement will be,
when issued, duly authorized, validly issued, fully paid and nonassessable and
not subject to preemptive rights. No bonds, debentures, notes or other
indebtedness of Purchaser or any Subsidiary of Purchaser having the right to
vote (or convertible into, or exchangeable for, securities having the right to
vote) on any matters on which the stockholders of Purchaser or any Subsidiary of
Purchaser may vote are issued or outstanding. All the outstanding shares of
capital stock or other equity interests of each Subsidiary of Purchaser have
been validly issued and are fully paid and nonassessable and are owned by
Purchaser, by one or more wholly-owned subsidiaries of Purchaser or by Purchaser
and one or more such wholly-owned subsidiaries, free and clear of all Liens.
Except as set forth above, or except as set forth in Purchaser SEC Documents (as
defined in Section 3.7), neither Purchaser nor any Subsidiary of Purchaser has
any outstanding option, warrant, agreement, arrangement or other rights,
relating to the capital stock of Purchaser or any Subsidiary of Purchaser that
either (x) obligates Purchaser or any Subsidiary of Purchaser to issue, sell or
transfer, repurchase, redeem, purchase, register for sale or otherwise acquire
or vote any shares of the capital stock or other equity securities of Purchaser
or any of its Subsidiaries or (y) restricts the transfer of the Purchaser Class
A Common Stock. From the close of business on May 31, 1999, neither Purchaser
nor any Subsidiary of Purchaser has issued any capital stock or securities or
other rights convertible into or exercisable or exchangeable for shares of such
capital stock, other than any issuances of shares of Purchaser Class A Common
Stock pursuant to the exercise of Purchaser Stock Options outstanding on the
date hereof.
Section 3.7. SEC Documents; Financial Statements. (i) Purchaser has
filed with the SEC all required reports, schedules, forms, statements and other
documents since its initial public offering (such reports, schedules, forms,
statements and any other documents filed with the SEC and publicly available
prior to the date of this Agreement are hereinafter referred to as the
"Purchaser SEC Documents"); (ii) as of their respective dates, the Purchaser SEC
Documents complied in all material respects with the requirements of the
Securities Act of 1933, as amended (the "Securities Act"), or the Securities and
Exchange Act of 1934, as amended (the "Exchange Act"), as the case may be, and
the rules and regulations of the SEC promulgated thereunder applicable to such
Purchaser SEC Documents, and none of the Purchaser SEC Documents as of such
dates contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading; and (iii) as of their respective dates, the consolidated
financial statements of Purchaser and its predecessors included in the Purchaser
SEC Documents complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with GAAP applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto or, in the case of unaudited statements, as permitted by Rule
10-01 of Regulation S-X) and fairly present, in all material respects, the
consolidated financial position of Purchaser and its consolidated Subsidiaries
(or its predecessors and their respective consolidated Subsidiaries) as of the
dates thereof and the consolidated results of their operations and cash flows
for the periods then ended (on the basis stated therein and subject, in the case
of unaudited quarterly statements, to normal year-end audit adjustments).
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Section 3.8. Legal Compliance. Except with respect to matters disclosed
in the Purchaser SEC Documents, Purchaser and each of its Subsidiaries is in
compliance with all laws (including rules and regulations thereunder) of
federal, state, local and foreign governments (and all agencies thereof)
applicable thereto, except where such instances of noncompliance would not have
a material adverse effect on the business, operations or financial condition of
Purchaser and its Subsidiaries, taken as a whole.
Section 3.9. Interest in Competitors, Suppliers and Customers. Except
as set forth on Schedule 3.9, to the knowledge of Purchaser, no stockholder,
officer, or director of Purchaser or any Affiliate of any such stockholder,
officer or director has any ownership interest in any competitor, supplier, or
customer of Purchaser or any property used in the operation of the business of
Purchaser.
Section 3.10. State Takeover Statutes. The Board of Directors of
Purchaser has approved the terms of this Agreement, the Subscription Agreement
and the consummation of the transactions contemplated by this Agreement and the
Subscription Agreement, and such approval is sufficient to render the provisions
of Section 203 of the Delaware General Corporation Law inapplicable to the
acquisition of the Xxxxx Shares and the shares to be issued pursuant to the
Subscription Agreement and the other transactions contemplated by this
Agreement. To Purchaser's knowledge, no other state takeover statute or similar
statute or regulation applies or purports to apply to the acquisition of the
Xxxxx Shares and the shares of Purchaser Class A Common Stock to be issued
pursuant to the Subscription Agreement (the "Xxxxx Supplemental Shares"), this
Agreement or the Subscription Agreement or any of the transactions contemplated
by this Agreement or the Subscription Agreement.
Section 3.11. Events Subsequent to March 31, 1999. From March 31, 1999
to the date hereof, there has not occurred any material adverse change in the
business, financial condition or results of operations of Purchaser.
Section 3.12. Securities Act Representations.
(a) Purchaser is acquiring the Chancellor Shares for
investment for its own account, not as a nominee or agent, and not with a view
to the resale or distribution of any part thereof in violation of the Securities
Act. Purchaser does not have any present intention of selling, granting any
participation in, or otherwise distributing the Chancellor Shares otherwise than
pursuant to an effective registration statement under the Securities Act or in a
transaction exempt from the registration requirements under the Securities Act
and applicable state securities laws. Purchaser does not have any contract,
undertaking, agreement or arrangement with any Person to sell, transfer or grant
participations to such Person or to any third Person, with respect to any of the
Chancellor Shares.
(b) Purchaser acknowledges that the sale of the Chancellor
Shares will not be registered under the Securities Act or any state securities
laws on the basis of a claimed exemption by Seller that the sale of the
Chancellor Shares as provided for herein is exempt from registration under the
Securities Act and applicable state securities laws. Purchaser acknowledges
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that the availability of such exemptions is predicated in part on Purchaser's
representations set forth in this Section and that Seller is relying on such
representations.
(c) Purchaser has received all the information it considers
necessary or appropriate for deciding whether to accept the Chancellor Shares.
Purchaser has had an opportunity to ask questions of and to receive answers from
Seller regarding the terms and conditions of the sale of the Chancellor Shares
and the business, properties, financial condition and prospects of Seller and to
obtain additional information (to the extent Seller possessed such information
or could acquire it without unreasonable effort or expense) necessary to verify
the accuracy of any information furnished to Purchaser or to which Purchaser had
access.
(d) Purchaser acknowledges that it is able to bear the
economic risk of the investment in the Chancellor Shares, and has such knowledge
and experience in financial and business matters that it is capable of
evaluating the benefits and risks of the investment in the Chancellor Shares.
(e) Purchaser is an "accredited investor" as defined in Rule
501(a) of Regulation D promulgated under the Securities Act.
(f) Purchaser acknowledges that the Chancellor Shares may not
be sold, transferred or otherwise disposed of without registration under the
Securities Act or an applicable exemption therefrom and that in the absence of
any effective registration statement covering the Chancellor Shares or an
available exemption from registration under the Securities Act, the Chancellor
Shares must be held indefinitely. Purchaser further acknowledges that the
Chancellor Shares may not be sold pursuant to Rule 144 promulgated under the
Securities Act unless all of the conditions of that rule are met.
ARTICLE 4.
COVENANTS AND AGREEMENTS OF SELLER
Section 4.1. Preliminary Transactions. Prior to or concurrent with the
Closing, Seller shall effect, or cause to be effected, the following
transactions (collectively, the "Preliminary Transactions"):
(i) the sale or other disposal of the outdoor advertising
assets mandated by the United States Department of Justice pursuant to
the Final Judgments in a manner which causes the elimination of any
objection by any Antitrust Authority to the transactions contemplated
hereby, as more particularly described on Annex A hereto (the
"Divestiture Assets"); and
(ii) the acquisition of outdoor advertising assets pursuant to
the Compromise Settlement Agreement and Mutual Release between the
Company, Chancellor Media Corporation, Xxxxx Xxxxxxx and Xxxxxxx
Xxxxxxx, dated May 5, 1999, and the Asset Purchase Agreement between
Chancellor Media Whiteco Outdoor Corporation and Xxxxx Xxxxxxx, dated
May 5, 1999, all as more particularly described on Annex B hereto (the
"Xxxxxxx Assets").
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Section 4.2. Conduct of Business. From the date hereof through the
Closing, Seller shall use commercially reasonable efforts to cause the Company
and each of its Subsidiaries, except as may be necessary to effect the
Preliminary Transactions and except as otherwise contemplated by this Agreement
or as consented to by Purchaser in writing (which consent will not be
unreasonably withheld), to operate its business in the ordinary course and
substantially in accordance with past practice and use commercially reasonable
efforts not to take any action inconsistent with this Agreement. Without
limiting the generality of the foregoing, unless consented to by Purchaser in
writing (which consent shall not be unreasonably withheld), Seller shall cause
the Company and each of its Subsidiaries not to, except as contemplated by this
Agreement:
(a) change or amend its Certificate of Incorporation, Bylaws
or other organizational documents, except as otherwise required by law;
(b) (i) enter into, extend, materially modify, terminate or
renew any Contract of a type required to be listed on Schedule 2.8, except in
the ordinary course of business, or (ii) settle or otherwise resolve any
financial issue, claim or adjustment under any such Contract;
(c) sell, assign, transfer, convey, lease or otherwise
dispose of any material assets or properties, except in the ordinary course of
business;
(d) except as otherwise required by law, take any action with
respect to the grant of any severance or termination pay (otherwise than
pursuant to policies or agreements of the Company or any of its Subsidiaries in
effect on the date hereof) which will become due and payable from the Company or
any of its Subsidiaries on or after the Closing Date; make any change in the key
management structure of the Company or any of its Subsidiaries, including,
without limitation, the hiring of additional officers or the terminations of
existing officers, other than in the ordinary course of business;
(e) acquire by merger or consolidation with, or merge or
consolidate with, or purchase substantially all of the assets of, or otherwise
acquire any material assets or business of any corporation, partnership,
association or other business organization or division thereof;
(f) make any material loans or advances to any partnership,
firm or corporation, or, except for expenses incurred in the ordinary course of
business, any individual;
(g) amend any Employee Plan or increase the salary of any
management Employee, except in the ordinary course of business;
(h) alter in any material respect the past practices of the
Company or its Subsidiaries with respect to the collection of receivables or
payment of payables; or
(i) enter into any agreement, or otherwise become obligated,
to do any action prohibited hereunder.
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Section 4.3. Inspection. Subject to confidentiality obligations and
similar restrictions that may be applicable to information furnished to Seller,
the Company or any Subsidiary of the Company by third parties that may be in
possession of Seller or the Company from time to time, Seller shall afford to
Purchaser and its accountants, counsel and other representatives reasonable
access, during normal business hours, to the properties, books, contracts,
commitments, tax returns, records and appropriate officers and employees of the
Company and its Subsidiaries, and shall furnish such representatives with all
financial and operating data and other information concerning the affairs of the
Company and its Subsidiaries as they may reasonably request.
Section 4.4. HSR Act.
(a) In connection with the transactions contemplated by this
Agreement and the Subscription Agreement, Seller (and, to the extent required,
its Affiliates) shall comply promptly with the notification and reporting
requirements of the HSR Act and use reasonable best efforts to obtain early
termination of the waiting period under the HSR Act. Seller shall promptly
comply with any additional requests for information, including requests for
production of documents and production of witnesses for interviews or
depositions, by any Antitrust Authority.
(b) Neither the Company nor any of its Subsidiaries shall
acquire any outdoor advertising assets in any county in which the (i) Company or
its Subsidiaries and (ii) Purchaser or its Affiliates, own a material number of
outdoor advertising assets. For purposes of this Section 4.4(b), "a material
number of outdoor advertising assets" shall mean a significant number of outdoor
advertising assets in a county, given the total number of outdoor advertising
assets in that county.
Section 4.5. No Solicitations. From the date hereof through the
Closing, Seller shall not, and shall not knowingly permit its Affiliates,
officers, directors, employees, representatives and agents to, directly or
indirectly, encourage, solicit, participate in, initiate or conduct discussions
or negotiations with, or provide any information to, any Person or group of
Persons (other than Purchaser or any of its Affiliates) concerning any merger,
sale of assets, sale of shares of capital stock or similar transactions
involving the Company or any Subsidiary or division of the Company.
Section 4.6. No Solicitation or Hiring. For a period of five (5) years
following the Closing, Seller shall not, directly or indirectly, hire or offer
employment to any employee of the Business whose employment is continued by
Purchaser after the Closing Date, unless (a) Purchaser first terminates the
employment of such employee or gives its prior written consent to such
employment or offer of employment, (b) such employee contacts Seller regarding
employment opportunities, (c) such employee responds to any general solicitation
by Seller for employment by Seller, or (d) the employment of such employee by
Purchaser has been terminated.
Section 4.7. Registration Rights Agreement and Stockholders Agreement.
Seller shall, on the Closing Date, execute and deliver to Purchaser each of the
Registration Rights Agreement and the Stockholders Agreement.
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Section 4.8. Requests for Information. Seller shall cooperate with
Purchaser in Purchaser's preparation and filing with the SEC of a preliminary
proxy or information statement, as applicable, as provided in Section 5.5,
including providing Purchaser with such information about Seller, the Company
and its Subsidiaries, for use in connection with any such preliminary proxy or
information statement as Purchaser may reasonably request. The information so
provided by Seller shall not contain any untrue statement or alleged untrue
statement of a material fact or any omission of a material fact required to be
stated therein or necessary to make such statements not misleading, but only to
the extent that such untrue statement or omission is contained in any written
information so furnished by Seller specifically for inclusion in such
preliminary proxy or information statement.
Section 4.9. Necessary Lender Approvals.
(a) Seller shall have delivered to Purchaser within sixty
(60) calendar days of the date hereof, a certificate signed by an officer of
Seller certifying that Seller has received all necessary approvals and consents
from its senior lenders to the consummation of the transactions contemplated
hereby, including, without limitation, releases from any and all applicable
Liens created by such lenders and releases from any and all guarantees of each
of the Company and its Subsidiaries (the "Approvals Certificate").
(b) The Approvals Certificate shall contain no conditions to
the effectiveness of such consent other than the occurrence of the Closing and
other customary conditions and will contain a certification that Seller has no
reason to believe that it will be unable to meet the conditions to the
effectiveness of such consent.
(c) If Seller is unable to deliver the Approvals Certificate
within the sixty (60) calendar day period specified in subparagraph (a) above,
then Purchaser shall have the right, by delivery of written notice to Seller
within five (5) calendar days following the expiration of such sixty (60)
calendar day period, to elect to terminate this Agreement. In the event of
termination by Purchaser pursuant to this Section 4.9(b), this Agreement shall
forthwith become void and have no effect, without any liability on the part of
any party hereto or their respective Affiliates, officers, directors or
stockholders.
(d) Purchaser need not give Seller prior notice nor any
opportunity to cure a breach of this Section 4.9 prior to the exercise by
Purchaser of the right to terminate this Agreement in the event of such breach
by Seller, in accordance with Section 8.1.
ARTICLE 5.
COVENANTS AND AGREEMENTS OF PURCHASER
Section 5.1. HSR Act.
(a) In connection with the transactions contemplated by this
Agreement and the Subscription Agreement, Purchaser (and, to the extent
required, its Affiliates) shall comply promptly with the notification and
reporting requirements of the HSR Act and use reasonable best efforts to obtain
early termination of the waiting period under the HSR Act.
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Purchaser shall comply promptly with any additional requests for information,
including requests for production of documents and production of witnesses for
interviews or depositions, by any Antitrust Authorities.
(b) In connection with the transactions contemplated hereby,
Purchaser shall take any and all steps needed to cause the transactions
contemplated by this Agreement and the Ancillary Agreements to be consummated at
the earliest practicable time, and no later than November 30, 1999.
(c) Purchaser shall not, nor shall any of its Affiliates,
agents or representatives, take, or fail to take, any action which is intended,
or is reasonably likely, to impede, hinder or delay approval of the transactions
contemplated by this Agreement by the Antitrust Authorities.
(d) Seller need not give Purchaser prior notice nor any
opportunity to cure a breach of this Section 5.1 prior to the exercise by Seller
of its right to terminate this Agreement in the event of such breach by
Purchaser, in accordance with Section 8.1.
Section 5.2. No Use of "Chancellor" Name. Promptly following the
Closing, Purchaser shall take all necessary action to cause the name of the
Company and its Subsidiaries to be changed to a name specified in a writing and
delivered to Seller by Purchaser at least ten (10) Business Days prior to the
Closing. Following the Closing, Purchaser, the Company and its Subsidiaries
shall have no rights to the name "Chancellor" or any variant thereof or any
trademark, service xxxx, trade dress, logo or trade name including the name
"Chancellor" or any name similar to it. Following the Closing, Purchaser shall
cause the Company and each Affiliate of Purchaser to refrain from making any use
of the name "Chancellor" or any variant thereof or any trademark, service xxxx,
trade dress, logo or trade name including the name "Chancellor" or any name
similar to it within a commercially reasonable period of time.
Section 5.3. Investigation; Purchaser Acknowledgment.
(a) As of the date hereof, Purchaser acknowledges and agrees
that (i) it has made its own inquiry and investigation into, and, based thereon,
has formed an independent judgment concerning, the Company, its Subsidiaries and
the Business, (ii) in the course of such inquiry, Purchaser has not become aware
of any facts which would cause or constitute a breach of any representation or
warranty of Seller set forth herein, and (iii) it has been furnished with or
given adequate access to such information about the Company, its Subsidiaries
and the Business as it has requested.
(b) In connection with Purchaser's investigation of the
Company, its Subsidiaries and the Business, Purchaser has received from Seller
certain projections, forecasts, plans and budget information concerning the
Company, its Subsidiaries and the Business. Purchaser acknowledges that there
are uncertainties inherent in attempting to make such projections, forecasts,
plans and budgets; that Purchaser is familiar with such uncertainties; Purchaser
is taking full responsibility for making its own evaluation of the adequacy and
accuracy of all estimates, projections, forecasts, plans and budgets so
furnished to it; and that Purchaser
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will not assert any claim against Seller or any of its directors, officers,
employees, agents, stockholders, Affiliates, consultants, counsel, accountants,
or representatives, or hold Seller or any such persons liable, with respect
thereto.
(c) Purchaser acknowledges that Seller makes no
representations or warranties concerning the Company, its Subsidiaries, their
respective assets or the Business, other than as expressly set forth in Article
2 hereof, and that Seller expressly disclaims all other representations and
warranties, including, without limitation, any warranty of merchantability or
fitness for a particular purpose.
Section 5.4. No Solicitations or Hiring. Prior to Closing, without the
prior consent of Seller, Purchaser shall not, and shall not knowingly permit its
Affiliates, officers, directors, employees, representatives and agents to,
directly or indirectly, hire, offer, participate in, or initiate negotiations
concerning, employment to or with any employee of the Company.
Section 5.5. Stockholder Consent.
(a) As soon as practicable following the date of this
Agreement, Purchaser shall prepare and file with the SEC a preliminary proxy or
information statement, as applicable, with respect to its proposal to issue the
Xxxxx Shares and the Xxxxx Supplemental Shares and shall use its best efforts to
cause the proxy or information statement to be mailed to Purchaser's
stockholders as promptly as practicable after the review process at the SEC has
been completed.
(b) Purchaser agrees and represents and warrants the proxy or
information statement will not, at the date it is first mailed to Purchaser's
stockholders or at the time of the Purchaser's stockholders meeting, if any,
contain any statement which, at the time and in light of the circumstances under
which it is made, is false or misleading with respect to any material fact, or
omits to state any material fact necessary in order to make the statements
therein not false or misleading or necessary to correct any statement in any
earlier communication with respect to the solicitation of a proxy for the same
meeting or subject matter thereof which has become false or misleading except
for information provided to Purchaser by Buyer, for inclusion therein, as to
which Purchaser makes no such representation or warranty. Purchaser agrees that
the proxy or information statement will comply as to form in all material
respects with the requirements of the Securities Exchange Act of 1934 and the
rules and regulations promulgated thereunder.
(c) Purchaser agrees that it will take all action necessary
in accordance with applicable law and its Certificate of Incorporation and
Bylaws to convene a meeting of its stockholders or obtain the written consent of
its stockholders for the approval of the issuance of the Xxxxx Shares and the
Xxxxx Supplemental Shares. Purchaser will use its best efforts to obtain the
stockholders approval as soon as practicable after the date hereof.
Section 5.6. Commitment Letters; Definitive Documentation. (a)
Purchaser shall deliver to Seller within fifteen (15) calendar days of the date
hereof, a letter of its lenders committing to fund no less than Seven Hundred
Million Dollars ($700,000,000) at Closing specifically for the
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transactions contemplated by this Agreement (the "Commitment Letter"). Such
Commitment Letter shall contain no conditions to the funding of such amounts,
other than those which are customary for transactions of the type contemplated
hereunder. The Commitment Letters must remain in full force and effect until the
date on which Definitive Documentation have been executed, are binding and have
been delivered to Seller.
(b) Purchaser will deliver to Seller, on or prior to the date
which is sixty (60) calendar days following the date of this Agreement,
definitive agreements (which have been executed and delivered by the applicable
parties and which are binding), reflecting the commitment by equity and/or
senior debt sources reasonably satisfactory to Seller to provide funding to
Purchaser at or prior to Closing in an aggregate amount equal to at least
$700,000,000 (the "Definitive Documentation"). The Definitive Documentation
shall contain no conditions to the funding of such amounts, other than those
which are customary for transactions of the type contemplated hereunder. The
Definitive Documentation must remain in full force and effect until the Closing.
(c) Concurrently with the delivery of the Definitive
Documentation, an executive officer of Purchaser will certify to Seller, in
writing, that (i) Purchaser currently is meeting the covenants under its
existing lending facility and other existing instruments of indebtedness, and
(ii) Purchaser has no reason to believe that it will be unable to meet the
covenants set forth under the Definitive Documentation.
(d) If Purchaser fails to deliver the Commitment Letters
referred to in subparagraph (a) above within the fifteen (15) calendar day
period specified above, then Seller shall have the right, by delivery of written
notice to Purchaser within five (5) calendar days following the expiration of
such fifteen (15) calendar day period, to elect to terminate this Agreement. If
the Purchaser fails to deliver the Definitive Documentation and the Certificate
provided for in Section 5.6(c) within the sixty (60) calendar day period
specified in subparagraph (b) above, then Seller shall have the right, by
delivery of written notice to Purchaser within five (5) calendar days following
the expiration of such sixty (60) calendar day period, to elect to terminate
this Agreement. In the event of termination by Seller pursuant to this Section
5.6(d), this Agreement shall forthwith become void and have no effect, without
any liability on the part of any party hereto or their respective Affiliates,
officers, directors or stockholders.
Section 5.7. Conduct of Business. From the date hereof through the
Closing, Purchaser shall use commercially reasonable efforts to operate its
business in the ordinary course and substantially in accordance with past
practice and use commercially reasonable efforts not to take any action
inconsistent with this Agreement. Without limiting the generality of the
foregoing, unless consented to by Seller in writing, Purchaser shall not:
(a) change or amend its certificate of incorporation, bylaws
or other organizational documents, except as otherwise required by law; or
(b) take any action that would be prohibited by Article IV
the Stockholders Agreement if such agreement were in effect.
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Section 5.8. Registration Rights Agreement and Stockholders Agreement.
Purchaser shall, on the Closing Date, execute and deliver to Seller the
Registration Rights Agreement. Each of Purchaser and Xxxxxx Family Limited
Partnership, a Louisiana limited partnership and a stockholder of Purchaser
("RFLP") shall, on the Closing Date, execute and deliver to Seller the
Stockholders Agreement.
Section 5.9. Inspection. Subject to confidentiality obligations and
similar restrictions that may be applicable to information furnished to
Purchaser by third parties that may be in possession of Purchaser from time to
time, Purchaser shall afford to Seller and its accountants, counsel and other
representatives reasonable access, during normal business hours, to the
properties, books, contracts, commitments, tax returns, records and appropriate
officers and employees of the Purchaser, and shall furnish such representatives
with all financial and operating data and other information concerning the
affairs of the Purchaser as they may reasonably request.
ARTICLE 6.
JOINT COVENANTS AND AGREEMENTS
Section 6.1. Confidentiality.
(a) Except for any governmental filings required in order to
complete the transactions contemplated herein and as Seller and Purchaser may
otherwise agree or consent in writing, all information received by Purchaser and
Seller and their respective representatives in contemplation, or pursuant to the
terms, of this Agreement shall be kept in confidence by the receiving party and
its representatives; provided, however, that any party hereto may disclose such
information to (i) its legal and financial advisors, lenders, financing sources
and their respective legal advisors and representatives, and (ii) such third
parties as are reasonably necessary to negotiate or consummate the sale or other
disposition by Purchaser of assets or lines of business of the Company or any of
its Subsidiaries pursuant to a request or governmental order by any Antitrust
Authority, so long as such Persons agree to maintain the confidentiality of such
information in accordance with this Section 6.1. If the transactions
contemplated hereby shall fail to be consummated, all copies of documents or
extracts thereof containing information and data as to one of the other parties,
including all information prepared by the receiving party's representatives may
be destroyed at the option of the receiving party, with notice of such
destruction (or return) to be confirmed in writing to the disclosing party. Any
information not so destroyed (or returned) will remain subject to these
confidentiality provisions (notwithstanding any termination of this Agreement)
until the fifth (5th) anniversary of the date of this Agreement.
(b) The foregoing confidentiality provisions shall not apply
to such portions of the information received which (i) are or become generally
available to the public through no action by the receiving party or by such
party's representatives, (ii) are or become available to the receiving party on
a nonconfidential basis from a source, other than the disclosing party or its
representatives, which the receiving party believes, after reasonable inquiry,
is not prohibited from disclosing such portions to it by a contractual legal or
fiduciary obligation, or (iii) are required by law to be disclosed, and shall
not apply to any disclosure by Purchaser after the Closing of any information
disclosed by the Company.
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Section 6.2. Support of Transaction. Purchaser and Seller shall each
(i) use commercially reasonable efforts to assemble, prepare and file any
information (and, as needed, to supplement such information) as may be
reasonably necessary to obtain as promptly as practicable all governmental and
regulatory consents required to be obtained in connection with the transactions
contemplated hereby, (ii) use commercially reasonable efforts to obtain all
material consents and approvals of third parties that any of Purchaser, Seller,
or their respective Affiliates are required to obtain in order to consummate the
transactions contemplated hereby, (iii) take such other action as may reasonably
be necessary or as another party may reasonably request to satisfy the
conditions of Article 7 or otherwise to comply with this Agreement, and (iv)
provide the other parties, and such other party's employees, officers,
accountants, lawyers, financial advisors and other representatives with access
to its personnel, properties, business and records under all reasonable
circumstances.
Section 6.3. [Intentionally Left Blank].
Section 6.4. Tax Matters. The following provisions shall govern the
allocation of responsibility as between Purchaser and Seller for certain Tax
matters following the Closing Date:
(a) Seller shall prepare and file (or cause to be prepared
and filed) in a timely manner all Tax Returns for the Company and its
Subsidiaries that relate to tax periods that end on or before the Closing Date.
All such Tax Returns shall be prepared in a manner consistent with past
practices. Purchaser shall prepare and file (or cause to be prepared and filed)
in a timely manner all other Tax Returns for the Company and any of its
Subsidiaries. All Tax Returns prepared by the Purchaser for any Straddle Period
shall be prepared in a manner consistent with past practices.
(b) In order to apportion any Taxes that relate to a Straddle
Period, the parties hereto will, to the extent permitted by applicable law,
elect with the relevant taxing authorities to treat for all purposes the Closing
Date as the last day of a taxable period of the Company and of its Subsidiaries,
and such period shall be treated as a "Short Period" and a "Pre-Closing Period"
for purposes of this Agreement. In any case where applicable law does not permit
the Closing Date to be treated as the last day of a Short Period, then for
purposes of this Agreement, the portion of such Taxes that is attributable to
the operation of the Company or any of its Subsidiaries for the "Pre-Closing
Partial Period" (as defined below) shall be (i) in the case of Taxes that are
not based on income gross receipts, the total amount of such Taxes for the
period in question multiplied by a fraction, the numerator of which is the
number of days in the Pre-Closing Partial Period and the denominator of which is
the number of days in the entire period in question and (ii) in the case of any
Taxes that are based on income or gross receipts, the Taxes that would be due
with respect to the Straddle Period, if such Straddle Period were a Short
Period. "Pre-Closing Partial Period" means with respect to any Taxes imposed on
the Company or any of its Subsidiaries for which the Closing Date is not the
last day of the Short Period, the period of time beginning on the first day of
the actual taxable period that includes (but does not end on) the Closing Date
and ending on and including the Closing Date.
(c) Purchaser covenants that it will not, and it will not
cause or permit the Company, the Company's Subsidiaries or any Affiliate of the
Purchaser to, (i) take any action
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on the Closing Date other than in the ordinary course of business, including,
but not limited to, the distribution of any dividend or the effectuation of any
redemption that could give rise to any Tax liability of the Seller or its
Affiliates, (ii) make any election or deemed election under Section 338 of the
Code (or any analogous or similar rules in any relevant tax jurisdiction), or
(iii) make or change any tax election, amend any Tax Return, take any action,
omit to take any action or enter into any transaction, in each case, that
results in any increased Tax liability, reduction of any Tax Asset of the
Seller, the Company or any Subsidiary of the Company in respect of any period
that ends on or before the Closing Date or any Straddle Period without obtaining
the Seller's consent, which consent shall not be unreasonably withheld.
(d) Seller or the parent of the consolidated group of which
it is a member may, at its or their option, elect to reattribute certain Tax
Assets of the Company or of any Subsidiary of the Company pursuant to Treasury
Regulations Section 1.1502-20(g).
(e) Seller and Purchaser agree to give prompt notice to each
other of any proposed adjustment to Taxes for periods for which the other may
have liability under this Agreement. Seller and Purchaser shall cooperate with
each other in the conduct of any audit or other proceedings involving the
Company or any of its Subsidiaries for such periods and each may participate at
its own expense. Purchaser shall cause powers of attorney authorizing Seller or
its representative to represent the Company and its Subsidiaries before the
relevant taxing authority and such other documents as are reasonably necessary
for Seller or its representative to control the conduct of any such audit;
provided, however, that Seller shall not compromise or settle any such audit
without obtaining Purchaser's consent, which consent shall not be unreasonably
withheld, if such compromise or settlement would result in an increased Tax
liability or a reduction in any Tax Assets or have the effect of increasing any
Tax liability of the Company, any of its Subsidiaries or the Purchaser, in each
case for any taxable period ending after the Closing Date.
(f) Purchaser shall make (or cause to be made), an election
under Section 172(b)(3) of the Code (or any analogous or similar rules in any
relevant tax jurisdiction, to the extent permitted by law) to relinquish the
entire carryback period with respect to any net operating loss attributable by
the Company or any of its Subsidiaries in any taxable period beginning after the
Closing Date that could be carried back to a taxable year of the Company and its
Subsidiaries ending on or before the Closing Date. Except for any carrybacks of
Tax Credits, neither Seller nor any Affiliate thereof shall be required to pay
to Purchaser, the Company or the Company's Subsidiaries any refund or credit of
Taxes that results from the carryback to any tax period ending on or before the
Closing Date of any net operating loss, capital credit or other Tax Asset
attributable to the Company or any of its Subsidiaries from any tax period
beginning after the Closing Date.
(g) Seller and Purchaser agree to furnish or cause to be
furnished to each other, upon request, as promptly as practicable, such
information and assistance (including access to books and records) relating to
the Company or any of its Subsidiaries as is reasonably necessary for the
preparation of any Tax Return, claim for refund or audit, and the prosecution or
defense of any claim, suit or proceeding relating to any proposed adjustment.
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(h) After the Closing, Purchaser shall pay to Seller any
refunds of or credits for Taxes (net of any income Tax liability incurred as a
result of receiving such refund or credit) relating to the Company or any of its
Subsidiaries for periods ending on or before the Closing Date and for
Pre-Closing Partial Periods except to the extent any such refund or credit is
reflected as an asset on the Closing Balance Sheet. Purchaser shall cause powers
of attorneys authorizing Seller or its representatives to represent the Company
and its Subsidiaries before the relevant taxing authority and such other
documents as are reasonably necessary for Seller or its representative to
receive any refunds or credits that Seller is entitled to receive pursuant to
the preceding sentence; provided, however, that Seller shall not be permitted to
file for any refund or credit without obtaining the Purchaser's consent, which
consent shall not be unreasonably withheld, if the receipt of such refund or
credit would have the effect of increasing any Tax liability or reducing any Tax
Asset of the Company, any of its Subsidiaries or the Purchaser (except for an
increase of income Tax liability incurred as a result of receiving such refund
or credit) for any taxable period ending after the Closing Date.
(i) Seller and Purchaser agree that all transfer documentary,
sales, use, stamp, registration and other similar Taxes ("Conveyance Taxes")
incurred solely as a result of a change of control of the Company or its
Subsidiaries occurring upon consummation of this Agreement shall be borne 50% by
Purchaser and 50% by Seller. Seller's liability for its share of conveyance
Taxes shall be discharged exclusively through an accrual on the Closing Balance
Sheet of its share of Conveyance Taxes.
(j) Seller shall be liable for and shall pay all Taxes (i) of
the Company or any of the Company's Subsidiaries in respect of any taxable
period ending on or before the Closing Date; (ii) of the Company or any of the
Company's Subsidiaries in respect of any Straddle Period to the extent such
Taxes are attributable to the Pre-Closing Partial Period as determined in
Section 6.4(b); (iii) that are imposed on the Company or any of the Company's
Subsidiaries under Treasury Regulation 1.1502-6 (or any similar provision of
state, local or foreign law) as a transferee or successor with respect to any
taxable period ending on or before the Closing Date or with respect to any
Pre-Closing Partial Period and (iv) imposed on the Company or any of the
Company's Subsidiaries pursuant to any Tax sharing agreement existing as of the
Closing Date; provided, however, that in each case Seller shall not be liable
for and shall not be required to pay such Taxes to the extent such Taxes are
accrued on the Closing Balance Sheet.
Section 6.5. Certain Employee Benefits Matters.
(a) Purchaser shall or shall cause the Company and its
Subsidiaries to employ, effective as of the Closing Date, each of the employees
of the Company and its Subsidiaries who are, immediately prior to the Closing,
actively employed or on vacation, leave of absence, disability or sick leave or
lay-off (the "Transferred Employees"). For purposes of vacation entitlement
only, Purchaser shall cause Purchaser's employee benefit plans to recognize all
service for the purpose of determining vesting of benefits, participation
eligibility and benefit accrual by Transferred Employees with the Company, any
of its Subsidiaries and Seller, including service with predecessor employers to
the extent that such service was recognized by the analogous plans of the
Company, any of its Subsidiaries or Seller such that no break or
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interruption of employment or participation shall be deemed to have occurred
with respect to the Transferred Employees by reason of the transactions
contemplated by this Agreement.
(b) Purchaser agrees that any pre-existing condition
exclusions or waiting periods imposed under Purchaser's welfare benefit plans
will be no more restrictive than the analogous provisions under the applicable
plans of Seller or the company (and shall be applied utilizing the service
crediting rules set forth in the last sentence of Section 6.5(a)) with respect
to any Transferred Employee and his or her covered dependents and Purchaser (or
Purchaser's employee benefit plans) shall assume all liabilities relating to all
claims by Transferred Employees (and their dependents and beneficiaries) for
benefits under all medical, dental, employee assistance, life, accidental death
and dismemberment, dependent life, short- and long-term disability plans which
are submitted on and after the Closing Date (including claims related to
hospital stays commenced on or before the Closing Date). Purchaser shall provide
that any expenses incurred under any Welfare Plan by a Transferred Employee or
his or her covered dependents during the plan year that includes the Closing
Date shall be taken into account under any applicable health plan maintained by
Purchaser for such plan year for purposes of satisfying applicable deductible,
coinsurance and maximum out-of-pocket provisions.
(c) Purchaser shall provide continuation coverage to
Transferred Employees and former employees of the Company and its Subsidiaries
(and their covered dependents and qualified beneficiaries) who are receiving
continuation coverage required under Code Section 4980B(f) ("COBRA Continuation
Coverage") at the Closing, with respect to whom a qualifying event occurred
prior to the Closing and for which the applicable election period for COBRA
Continuation Coverage has not expired as of the Closing Date, or with respect to
whom a qualifying event occurs as a result of the Closing of the transaction
contemplated by this Agreement in compliance with the provisions of Code Section
4980B and ERISA Section 601 et seq.
(d) Savings Plans.
(i) As soon as is practicable after the Closing
Date, but effective as of such date, Purchaser shall adopt or
designate a 401(k) Savings Plan (the "Purchaser Savings Plan") and
shall establish a trust pursuant thereto (the "Purchaser Savings
Trust"). As soon as is practicable after the Closing Date,
Purchaser shall furnish to Seller a determination letter finding
the Purchaser Savings Plan and the Purchaser Savings Trust to be
qualified and tax-exempt under Sections 401(a) and 501(a) of the
Code.
(ii) As soon as practicable after Seller's receipt
of a copy of such letter, Seller, shall cause the Chancellor Media
Corporation 401(k) Savings Plan (the "Seller Savings Plan") and
the Trust pursuant thereto (the "Seller Savings Trust") to
transfer to the Purchaser Savings Plan and Purchaser Savings Trust
the accounts under the Seller Savings Plan and the Seller Savings
Trust (and the assets and liabilities therein) attributable to any
employee of the Company as of immediately prior to the Closing
Date or any employee of Seller or any of its affiliates, in any
case, who will continue their employment with or shall become an
employee, of the Company or Purchaser or any of its
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Affiliates as of the Closing Date (the "Employees"). Seller shall
cause all of such accounts to be fully vested upon such transfer.
Such transfer shall be made in the form of cash. Such transfer
shall satisfy the requirements of Code Sections 401(a)(12) and
414(l) and the regulations pursuant thereto. Prior to such
transfer, Purchaser will provide Seller with such documents and
other information as Seller shall reasonably request to assure
itself that the Purchaser Savings Plan and the Purchaser Savings
Trust contain participant loan provisions and procedures necessary
to effect the orderly transfer of participant loan balances
associated with the transfer of assets. Prior to such transfer,
Seller will provide Purchaser with such documents and other
information as Purchaser shall reasonably request to assure itself
that the Seller Savings Plan and Seller Savings Trust are
qualified and tax-exempt under the provisions of Code Sections
401(a) and 501(a) respectively as of the date of such transfer.
The Purchaser Savings Plan shall preserve for the Employees all
benefits, rights and features as required under Section 411(d)(6)
of the Code and Purchaser agrees not to eliminate the ability to
make participant loans without giving all participants in the
Purchaser Savings Plan at least three (3) months advance notice
and participant loans, and such Plan shall provide for future
participant loans from current account balances. Seller shall
provide to Purchaser copies of such personnel and other records of
Seller pertaining to the Employees and such records of any agent
or representative of Seller, in each case pertaining to the Seller
Savings Plan and Seller Savings Trust and as Purchaser may
reasonably request in order to administer and manage the accounts
and assets transferred to the Purchaser Savings Plan and Purchaser
Savings Trust. Upon such transfer, the Purchaser Savings Plan
shall assume all liabilities and obligations whatsoever with
respect to all amounts transferred from the Seller Savings Plan
and Seller Savings Trust to the Purchaser Savings Plan and
Purchaser Savings Trust in respect of the Employees and each of
Seller and its affiliates and the Seller Savings Plan and Seller
Savings Trust shall be relieved of all such liabilities and
obligations. Purchaser and Seller shall cooperate in the filing of
documents required by the transfer of assets and liabilities
described herein.
(iii) The Purchaser Savings Plan shall preserve for
the Employees all of their benefits accrued under the Seller
Savings Plan as of the date of transfer. The Purchaser Savings
Plan shall also provide that an Employee's period of employment
with Seller, the Company, any of their Subsidiaries or any
predecessor thereof (as applicable) for which credit was given
under the Seller Savings Plan shall be given equivalent credit
under the Purchaser Savings Plan to the effect that if any
Employee becomes an employee of the Company or Purchaser as of the
Closing Date, or thereafter by reason of recall, no interruption
in participation, benefit accrual or vesting service shall be
deemed to have occurred for such Employee under the Purchaser
Savings Plan by reason of the change in employment contemplated by
this Agreement. The Purchaser Savings Plan shall further contain
all such provisions as are necessary for the transfer not to cause
Seller Savings Plan to fail to satisfy requirements of Code
Sections 401(a) or 401(k).
(iv) As soon as is practicable after the Closing
Date and prior to the transfer contemplated under this Section
6.5(d), Seller and Purchaser shall make such
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filings as are required under Code Section 6058(b) with respect to
such transfers including the filing of form 5310-A.
(d) Purchaser shall be liable for all obligations with
respect to claims of Transferred Employees for workers compensation for
incidents remaining unpaid on the Closing Date to the extent reflected as a
liability or reserved for on the Closing Balance Sheet.
(e) Nothing contained in this Agreement shall confer upon any
Transferred Employee any rights with respect to continuance of employment by
Purchaser, nor shall any provision of this Agreement create any third party
beneficiary rights in any Transferred Employee, any beneficiary or dependents
thereof, or any collective bargaining representative thereof.
ARTICLE 7.
CONDITIONS TO OBLIGATIONS
Section 7.1. Conditions to Obligations of Purchaser and Seller. The
obligations of Purchaser and Seller to consummate, or cause to be consummated,
the transactions contemplated hereby are subject to the satisfaction of the
following conditions, any one or more of which may be waived in writing by such
parties:
(a) There shall not be in force any order or decree, statute,
rule or regulation nor shall there be on file any complaint by a governmental
agency seeking an order or decree, restraining, enjoining or prohibiting the
consummation of the transactions contemplated hereby, and neither Purchaser nor
Seller shall have received notice from any Governmental Authority that it has
determined to institute any suit or proceeding to restrain or enjoin the
consummation of the transactions contemplated hereby or to nullify or render
ineffective this Agreement if consummated, or to take any other action which
would result in the prohibition or a material change in the terms of the
transactions contemplated hereby.
(b) In connection with the consummation of the transactions
contemplated by this Agreement, Seller shall have obtained all necessary
approvals and consents to the consummation of the transactions contemplated
hereby from its senior lenders, including without limitation, releases from any
and all applicable Liens created by such lenders and releases from any and all
guarantees of each of the Company and its Subsidiaries.
(c) The issuance of the Xxxxx Shares and the Xxxxx
Supplemental Shares shall have been duly approved by the stockholders of
Purchaser.
Section 7.2. Conditions to Obligations of Purchaser. The obligations of
Purchaser to consummate, or cause to be consummated, the transactions
contemplated by this Agreement are subject to the satisfaction of the following
additional conditions, any one or more of which may be waived in writing by
Purchaser:
(a) Each of the representations and warranties of Seller
contained in this Agreement shall be true and correct both on the date hereof
and as of the Closing, as if made anew at and as of that time (unless to the
extent that any such representations and warranties
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expressly relate to an earlier time, in which case they shall be true and
correct at such earlier time), and each of the covenants and agreements of
Seller to be performed as of or prior to the Closing shall have been duly
performed, except in each case for changes after the date hereof which are
contemplated or expressly permitted by this Agreement, except where (i) the
failure of the representations and warranties to be true and correct, or (ii)
the failure of the covenants and agreements to be performed, as the case may be,
would not have a material adverse effect on the business, operations or
financial condition of the Company and its Subsidiaries, taken as a whole.
(b) Seller shall have delivered to Purchaser a certificate
signed by an officer of Seller, dated the Closing, certifying that, to the best
of the knowledge and belief of such officer, the conditions specified in Section
7.1(b), as they relate to Seller, and subsection 7.2(a) have been fulfilled.
(c) Any consent required for the consummation of the
transactions contemplated hereby under any Contract required to be listed on
Schedule 2.8 hereto or for the continued enjoyment by the Company and its
Subsidiaries of the benefits of any such Contract after the Closing shall have
been obtained, except where the failure to obtain such consent would not have a
material adverse effect on the business, operations or financial condition of
the Company and its Subsidiaries, taken as a whole.
(d) Seller shall have duly executed and delivered the
Registration Rights Agreement.
(e) Seller shall have duly executed and delivered the
Stockholders Agreement.
(f) The Subscription Agreement shall be and, since the date
hereof, shall have been, in full force and effect, and all conditions to the
consummation of the transactions contemplated by the Subscription Agreement
(other than the Closing) shall have been satisfied.
(g) Seller shall have delivered, or caused to be delivered,
to Purchaser an executed affidavit, dated not more than 30 days prior to the
Closing Date, in accordance with Code Section 1445(b)(2) and Treasury Regulation
Section 1.1445-2(b), which statement certifies that Seller is not a foreign
person and sets forth Seller's name, taxpayer identification number and address.
(h) As of the Closing, Seller shall have caused to be
eliminated all intercompany receivables and payables between Seller, the Company
and its Subsidiaries.
Section 7.3. Conditions to the Obligations of Seller. The obligation of
Seller to consummate the transactions contemplated by this Agreement is subject
to the satisfaction of the following additional conditions, any one or more of
which may be waived in writing by Seller:
(a) All waiting periods under the HSR Act applicable to the
transactions contemplated hereby and under the Subscription Agreement shall have
expired or been terminated.
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(b) Each of the representations and warranties of Purchaser
contained in this Agreement shall be true and correct in all material respects
both on the date hereof and as of the Closing, as if made anew at and as of that
time (unless to the extent that any such representations and warranties
expressly relate to an earlier time, in which case they shall be true and
correct at such earlier time), and each of the covenants and agreements of
Purchaser to be performed as of or prior to the Closing shall have been duly
performed in all material respects, except in each case for changes after the
date hereof which are contemplated or expressly permitted by this Agreement.
(c) Purchaser shall have delivered to Seller a certificate
signed by an officer of Purchaser, dated the Closing, certifying that, to the
best of the knowledge and belief of such officer, the conditions specified in
Section 7.1(b), as they relate to Purchaser, and subsection 7.3(a) have been
fulfilled.
(d) Purchaser shall have duly executed and delivered the
Registration Rights Agreement.
(e) Purchaser shall have duly executed and delivered the
Stockholders Agreement.
(f) The Subscription Agreement shall be and, since the date
hereof, shall have been, in full force and effect, and all conditions to the
consummation of the transactions contemplated by the Subscription Agreement
(other than the Closing) shall have been satisfied.
ARTICLE 8.
TERMINATION
Section 8.1. Termination. This Agreement may be terminated and the
transactions contemplated hereby abandoned:
(a) By mutual written consent of the parties at any time
prior to the Closing.
(b) Prior to the Closing, by written notice to Seller from
Purchaser, if (i) there is any material breach of any representation, warranty,
covenant or agreement on the part of Seller set forth in this Agreement, or if a
representation or warranty of Seller shall be untrue in any material respect, in
either case, such that the condition specified in Section 7.2(a) hereof would
not be satisfied at the Closing (a "Terminating Seller Breach"), except that, if
such Terminating Seller Breach is curable by Seller through the exercise of
commercially reasonable efforts, then, for a period of up to thirty (30)
calendar days, but only as long as Seller continues to use commercially
reasonable efforts to cure such Terminating Seller Breach (the "Seller Cure
Period"), such termination shall not be effective, and such termination shall
become effective only if the Terminating Seller Breach is not cured within the
Seller Cure Period, (ii) the Closing has not occurred on or before December 1,
1999, other than as a result of (A) a breach of a representation, warranty,
covenant or agreement of Purchaser, or (B) a failure of all waiting periods
under the HSR Act applicable to the transactions contemplated hereby and under
the
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Subscription Agreement to have expired or been terminated, or (iii) consummation
of any of the transactions contemplated hereby is enjoined, prohibited or
otherwise restrained by the terms of a final, non-appealable order or judgment
of a court of competent jurisdiction.
(c) Prior to the Closing, by written notice to Purchaser from
Seller, if (i) there is any material breach of any representation, warranty,
covenant or agreement on the part of Purchaser set forth in this Agreement, or
if a representation or warranty of Purchaser shall be untrue in any material
respect, in either case, such that the condition specified in Section 7.3(a)
hereof would not be satisfied at the Closing, except as expressly provided in
Sections 5.1 and 5.6 hereof (a "Terminating Purchaser Breach"), except that, if
such Terminating Purchaser Breach is curable by Purchaser through the exercise
of commercially reasonable efforts, then, for a period of up to thirty (30)
calendar days, but only as long as Purchaser continues to exercise such
commercially reasonable efforts to cure such Terminating Purchaser Breach (the
"Purchaser Cure Period"), such termination shall not be effective, and such
termination shall become effective only if the Terminating Purchaser Breach is
not cured within the Purchaser Cure Period, (ii) the Closing has not occurred on
or before December 1, 1999, other than as a result of a breach of a
representation, warranty, covenant or agreement of Seller, or (iii) consummation
of any of the transactions contemplated hereby is enjoined, prohibited or
otherwise restrained by the terms of a final, non-appealable order or judgment
of a court of competent jurisdiction.
Section 8.2. Effect of Termination. In the event of termination of this
Agreement pursuant to Section 8.1, this Agreement shall forthwith become void
and have no effect, without any liability on the part of any party hereto or
their respective Affiliates, officers, directors or stockholders, other than
liability of Seller or Purchaser as the case may be, for breaches of this
Agreement occurring prior to such termination. The provisions of Sections 6.1,
11.6, 11.11 and 11.12 hereof shall survive any termination of this Agreement.
Section 8.3. Other Termination. This Agreement may also be terminated
pursuant to Sections 5.6(d) or 4.9(b) hereof. The effect of a termination of
this Agreement pursuant to either Section 5.6(d) or 4.9(b) shall have the effect
set forth in Section 5.6(d) or 4.9(b), as the case may be.
ARTICLE 9.
INDEMNIFICATION
Section 9.1. Survival of Representations. The representations and
warranties of Seller contained herein shall survive the Closing for a period of
twelve (12) months following the Closing Date; provided that, the
representations and warranties of Seller set forth in Sections 2.4 shall survive
without limitation; provided further that the representations and warranties of
Seller set forth in Section 2.16 shall survive for a period equal to the
applicable statute of limitations for all Taxes imposed as a result of any
breach of Section 2.16. None of the representations and warranties of Purchaser
contained herein shall survive the Closing.
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Section 9.2. Indemnification.
(a) Seller shall indemnify and hold Purchaser and its
officers, directors, employees and Affiliates harmless from any damage, claim,
liability or expense, including, without limitation, reasonable attorneys' fees
(collectively "Damages"), arising out of or relating to the breach of any
warranty, representation, covenant or agreement of Seller contained in this
Agreement.
(b) Notwithstanding the foregoing, (i) Purchaser shall not be
entitled to indemnification for any Damages unless and until the amount of all
Damages for which Purchaser is entitled to indemnification exceeds Two Million
Five Hundred Thousand Dollars ($2,500,000) (the "Threshold Amount"), at which
time Purchaser shall be entitled to indemnification only for all such Damages
sustained by Purchaser to the extent that the amount of such Damages exceeds the
Threshold Amount, (ii) in no event shall the aggregate amount of Damages for
which Purchaser shall be entitled to indemnification exceed Twenty-Five Million
Dollars ($25,000,000), and (iii) the amount of Damages for which Purchaser is
entitled to indemnification shall be reduced by (A) any tax benefit or deduction
allowable as a result of the incurrence of such Damages or the facts or
circumstances giving rise thereto, and (B) any insurance recoveries or other
indemnities, contributions or similar payments recoverable from any third party
as a result of the incurrence of such Damages or the facts or circumstances
giving rise thereto.
(c) Purchaser hereto agrees to take, and to cause its
Affiliates to take, all reasonable steps to mitigate any Damages incurred or to
be incurred by Purchaser or its Affiliates upon and after becoming aware of any
event which could reasonably be expected to give rise to any Damages.
Section 9.3. Conduct of Proceedings. If any claim, action, suit or
proceeding covered by the foregoing agreements to indemnify and hold harmless (a
"Proceeding") shall arise, Purchaser shall give written notice thereof to Seller
promptly after Purchaser learns of the existence of such Proceeding; provided,
however, that Purchaser's failure to give Seller prompt notice shall not bar
Purchaser's right to indemnification unless such failure has materially
prejudiced the Seller's ability to defend the Proceeding. Seller shall have the
right to employ counsel reasonably acceptable to Purchaser to defend against any
such Proceeding, or to compromise, settle or otherwise dispose of the same, if
Seller deems it advisable to do so (in its reasonable judgment), all at the
expense of Seller; provided that, Seller shall not settle, or consent to entry
of any judgment in any Proceeding, without obtaining a release of Purchaser
from, or agreeing to indemnify Purchaser for, all damages in respect of the
claims underlying such Proceeding. The parties will fully cooperate in any such
action, and shall make available to each other any books or records useful for
the defense of any such Proceeding. If Seller fails to acknowledge in writing
its obligation to defend against or settle such Proceeding within thirty (30)
days after receiving notice thereof from Purchaser (or such shorter time
specified in the notice as the circumstances of the matter may dictate),
Purchaser shall have the right to undertake the defense and settlement of any
such Proceeding, at Seller's expense; provided that, if the Purchaser assumes
the defense of any such Proceeding, Purchaser shall not settle such Proceeding
prior to final judgment thereon or forego any appeal with respect thereto
without the prior written consent of the Seller (which consent may not be
unreasonably withheld).
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Section 9.4. Sole Remedy; Time Limitation. After the Closing has
occurred, the right to indemnification under this Article 9 shall be the
exclusive remedy of Purchaser hereto in connection with any breach by Seller of
its representations, warranties, covenants or agreements contained herein.
Notwithstanding the foregoing provisions of this Article 9, Seller shall have no
responsibility or obligation with respect to any claim for indemnification
asserted pursuant to this Article 9 unless such claim is asserted in writing by
Purchaser to Seller within the survival period provided in Section 9.1.
ARTICLE 10.
CERTAIN DEFINITIONS
As used herein, the following terms shall have the following
meanings:
"Action" means any action, suit, arbitration or other proceeding
by or before any Governmental Authority.
"Adjustment Amount" has the meaning specified in Section 1.4.
"Advertising Contracts" means Seller's and its Subsidiaries'
interest in Contracts for outdoor advertising displays by customers and clients
of Seller and its Subsidiaries.
"Affiliate" means, with respect to any specified Person, any
Person that, directly or indirectly, controls, is controlled by, or is under
common control with, such specified Person, through one or more intermediaries
or otherwise.
"Affiliated Group" means any affiliated group within the meaning
of Code Section 1504(a).
"Agreement" has the meaning specified in the Preamble hereto.
"Ancillary Agreements" shall mean the Registration Rights
Agreement, the Stockholders Agreement, and the Voting Agreement.
"Antitrust Authorities" means the Antitrust Division of the United
Stated Department of Justice, the United States Federal Trade Commission or the
antitrust or competition law authorities of any other jurisdiction (whether
United States, foreign or multinational).
"Applicable Rate" has the meaning specified in Section 1.4.
"Approvals Certificate" has the meaning specified in Section
4.9(a).
"Auditor" has the meaning specified in Section 1.4.
"Xxxxxxx Assets" has the meaning specified in Section 4.1.
"Business" means the outdoor advertising business conducted by the
Company and its Subsidiaries.
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"Business Day" means any day that is not a Saturday, Sunday or
other day on which banks are required or authorized by law to be closed in New
York, New York.
"Cash Consideration" has the meaning specified in Section 1.2.
"Chancellor Shares" has the meaning specified in the Recitals
hereto.
"Closing" has the meaning specified in Section 1.3.
"Closing Balance Sheet" has the meaning specified in Section 1.4.
"Closing Date" has the meaning specified in Section 1.3.
"Closing Date Net Working Capital" has the meaning specified in
Section 1.4.
"COBRA Continuation Coverage" has the meaning specified in Section
6.5.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commitment Letter" has the meaning specified in Section 5.6.
"Common Stock" has the meaning specified in the Recitals hereof.
"Company" has the meaning specified in the Recitals hereof.
"Confidentiality Agreement" has the meaning specified in Section
11.8.
"Contracts" means any contracts, agreements, subcontracts or
leases.
"Conveyance Taxes" has the meaning specified in Section 6.4.
"Damages" has the meaning specified in Section 9.2.
"Definitive Documentation" has the meaning specified in Section
5.6.
"Determination Date" has the meaning specified in Section 1.4.
"Divestiture Assets" has the meaning specified in Section 4.1.
"Employees" has the meaning specified in Section 6.5.
"Employee Plans" has the meaning specified in Section 2.12.
"Environmental Laws" means, collectively, all applicable U.S.
federal, state or local laws, statutes, ordinances, rules, regulations, codes or
common law relating to health, safety, pollution or protection of the
environment, as in effect as of the date hereof.
"ERISA" has the meaning specified in Section 2.12.
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"Exchange Act" has the meaning specified in Section 3.7.
"Final Judgments" means (i) the Final Judgments of the United
States District Court for the District of Columbia in the case of U.S. x.
Xxxxxxxxxx Media and Cans & Company, filed November 12, 1998, and (ii) the Final
Judgment of the United States District Court for the District of Columbia in the
case of U.S. x. Xxxxxxxxxx Media and Whiteco Industries, et al., filed November
25, 1998.
"GAAP" has the meaning specified in Section 1.4.
"Governmental Authority" means any Federal, state, municipal or
local government, governmental authority, regulatory or administrative agency.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended, and the rules and regulations promulgated thereunder.
"Indemnified Party" has the meaning specified in Section 9.3.
"Intellectual Property" has the meaning specified in Section 2.9.
"IRS" means the United States Internal Revenue Service.
"Xxxxx Shares" has the meaning specified in Section 1.2.
"Xxxxx Supplemental Shares" has the meaning specified in Section
3.10.
"Leased Real Property" means all real property leases to which
Seller or any of its Subsidiaries are a party.
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
encumbrance, security interest or other lien of any kind.
"Minimum Net Working Capital" has the meaning specified in Section
1.4.
"Multiemployer Plan" has the meaning specified in Section 2.12.
"Net Working Capital" has the meaning specified in Section 1.4.
"Owned Real Property" means all real property owned by the Company
or any of its Subsidiaries.
"PBGC" has the meaning specified in Section 2.12.
"Pension Plan" has the meaning specified in Section 2.12.
"Permits" means all licenses, permits, approvals, authorizations
or consents of any Governmental Authority, whether federal, foreign, state,
municipal or local, pertaining to the Business.
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"Permitted Liens" means (i) mechanics, materialmen's and similar
Liens with respect to any amounts not yet due and payable or which are being
contested in good faith through appropriate proceedings, (ii) Liens for Taxes
not yet due and payable or which are being contested in good faith through
appropriate proceedings, (iii) Liens arising in connection with the sale of
foreign receivables, (iv) Liens on goods in transit incurred pursuant to
documentary letters of credit, (v) Liens securing rental payments under capital
lease agreements, (vi) Liens arising in favor of the United States Government as
a result of progress payment clauses contained in any Contract, (vii)
encumbrances and restrictions on real property that do not materially interfere
with the present uses of such real property, and (viii) other Liens arising in
the ordinary course of business and not incurred in connection with the
borrowing of money.
"Person" means any individual, firm, corporation, partnership,
limited liability company, incorporated or unincorporated association, joint
venture, joint stock company, governmental agency or instrumentality or other
entity of any kind.
"Pre-Closing Partial Period" has the meaning specified in Section
6.4.
"Preliminary Transactions" has the meaning specified in Section
4.1.
"Proceeding" has the meaning specified in Section 9.3.
"Pro Forma Balance Sheet" has the meaning specified in Section
2.7.
"Pro Forma Statement of Operations" has the meaning specified in
Section 2.7.
"Purchaser" has the meaning specified in the Preamble hereto.
"Purchaser Class A Common Stock" has the meaning specified in Section 3.6.
"Purchaser Class A Preferred Stock" has the meaning specified in
Section 3.6.
"Purchaser Class B Common Stock" has the meaning specified in
Section 3.6.
"Purchaser Cure Period" has the meaning specified in Section 8.1.
"Purchaser Preferred Stock" has the meaning specified in Section
3.6.
"Purchaser Savings Plan" has the meaning specified in Section 6.5.
"Purchaser Savings Trust" has the meaning specified in Section
6.5.
"Purchaser SEC Documents" has the meaning specified in Section
3.7.
"Purchaser Shares" has the meaning specified in Section 5.5.
"Purchaser Stock Options" has the meaning specified in Section
3.6.
"PWC" has the meaning specified in Section 1.4.
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"Registration Rights Agreement" means the Registration Rights
Agreement between Purchaser and Seller, dated the Closing Date, in the form
attached as Annex D.
"RFLP" has the meaning specified in Section 5.8.
"SEC" has the meaning specified in Section 3.4.
"Securities Act" has the meaning specified in Section 3.7.
"Seller" has the meaning specified in the Preamble hereto.
"Seller Cure Period" has the meaning specified in Section 8.1.
"Seller Savings Plan" has the meaning specified in Section 6.5.
"Seller Savings Trust" has the meaning specified in Section 6.5.
"Stockholders Agreement" means that Stockholders Agreement among
Purchaser, Seller and the other signatories listed therein, dated as of the
Closing Date, in the form attached as Annex E.
"Straddle Period" means any taxable period which begins before and
ends after the Closing Date.
"Subscription Agreement" means that Subscription Agreement between
Purchaser and Seller, dated the date hereof, in the form attached as Annex F.
"Subsidiary" means, with respect to any Person, a corporation or
other entity of which 50% of more of the voting power of the equity securities
or equity interests is owned, directly or indirectly, by such Person.
"Tax" or "Taxes" means all income, gross receipts, sales, use,
employment, franchise, profits, property or other fees, stamp duties,
assessments or similar charges (whether payable directly or by withholding),
together with any interest and any penalties or additions to tax imposed by any
tax authority with respect thereto.
"Tax Asset" means any net operating loss, net capital loss,
investment tax credit, foreign tax credit, charitable deduction or any other
credit or tax attribute which could reduce Taxes (including, without limitation,
deductions and credits related to alternative minimum taxes).
"Tax Returns" means all returns and reports (including elections,
declarations, disclosure schedules, estimates and information returns, claims
for refund, or statements of any kind or nature relating to Taxes, in any
schedule or amendment thereto and any amendment thereof) required to be supplied
to a Tax authority relating to Taxes.
"Terminating Purchaser Breach" has the meaning specified in
Section 8.1.
"Terminating Seller Breach" has the meaning specified in Section
8.1.
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"Threshold Amount" has the meaning specified in Section 9.2.
"Total Consideration" has the meaning specified in Section 1.2.
"Transferred Employees" has the meaning specified in Section 6.5.
"Treasury Regulations" means the regulations issued pursuant to
the Code.
"Voting Agreement" means the Voting Agreement between Purchaser
and Seller dated the date hereof, in the form attached as Annex G.
"Welfare Plan" has the meaning specified in Section 2.12.
ARTICLE 11.
MISCELLANEOUS
Section 11.1. Waiver. Either party to this Agreement may, at any time
prior to the Closing, waive any of the terms or conditions of this Agreement or
agree to an amendment or modification to this Agreement by an agreement in
writing executed in the same manner as this Agreement.
Section 11.2. Notices. All notices and other communications among the
parties shall be in writing and shall be deemed to have been duly given when (i)
delivered in person, or (ii) five (5) calendar days after posting in the United
States mail having been sent registered or certified mail return receipt
requested, or (iii) delivered by telecopy and promptly confirmed by delivery in
person or post as aforesaid in each case, with postage prepaid, addressed as
follows:
(a) If to Purchaser, to:
Xxxxx Advertising Company
0000 Xxxxxxxxx Xxxxxxxxx
Xxxxx Xxxxx, Xxxxxxxxx 00000
Attention: Xxxxx Xxxxx
Telecopy No.:
with copies to:
Jones, Walker, Waechter, Poitevent, Carrere
& Xxxxxxx, L.L.P.
0xx Xxxxx
Xxxx Xxxxxx Xxxxx
0000 Xxxxxx Xxxxx Xxxxxxxxx
Xxxxx Xxxxx, Xxxxxxxxx 00000
Attention: Xxxx X. Xxxxxxx
Telecopy No.: (000) 000-0000
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(b) If to Seller, to:
Chancellor Media Corporation of Los Angeles
0000 Xxxxxxx Xxxxxx Xxxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: General Counsel
Telecopy No.: (000) 000-0000
with copies to:
Xxxxxx & Xxxxxxx
0000 Xxxxxxxxxxxx Xxxxxx, X.X.
Xxxxx 0000
Xxxxxxxxxx, X.X. 00000-0000
Attention: Xxxx X. Xxxxxxxx
Telecopy No.: (000) 000-0000
and
Weil, Gotshal & Xxxxxx LLP
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxx
Telecopy No.: (000) 000-0000
or to such other address or addresses as the parties may from time to time
designate in writing.
Section 11.3. Assignment. Neither party hereto shall assign this
Agreement or any part hereof without the prior written consent of the other
party. Subject to the foregoing, this Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective permitted successors
and assigns.
Section 11.4. Rights of Third Parties. Nothing expressed or implied in
this Agreement is intended or shall be construed to confer upon or give any
Person, other than the parties hereto, any right or remedies under or by reason
of this Agreement.
Section 11.5. Expenses. Each party hereto shall bear its own expenses
incurred in connection with this Agreement and the transactions herein
contemplated whether or not such transactions shall be consummated, including,
without limitation, all fees of its legal counsel, financial advisers and
accountants; provided, however, that (i) the fees and expenses of the Auditors,
if any, shall be paid one-half by Purchaser and one-half by Seller, (ii) all
Conveyance Taxes imposed as a result of the sale of the Chancellor Shares and
the Xxxxx Shares shall be paid by Seller and Purchaser as set forth in Section
6.4(i), and (iii) all fees paid to Antitrust Authorities in connection with
compliance with the notification and reporting requirements of the HSR Act for
the transactions contemplated hereby, shall be paid by Purchaser.
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Section 11.6. Construction. This Agreement shall be construed and
enforced in accordance with the internal laws, and not the law of conflicts, of
the State of Delaware. Unless otherwise stated, references to Sections,
Articles, Schedules or Annexes refer to the Sections, Articles, Schedules and
Annexes to this Agreement. As used herein, the phrase "to the knowledge" of any
Person shall mean the actual knowledge of such Person's executive officers after
due inquiry. The parties to this Agreement participated jointly in the
negotiation and drafting of this Agreement. If any ambiguity or question of
intent or interpretation shall arise with respect to this Agreement, then this
Agreement shall be construed as if drafted jointly by the parties and no
presumption or burden of proof will arise favoring or disfavoring any party to
this Agreement by virtue of the authorship of any provision of this Agreement.
Section 11.7. Captions; Counterparts. The captions in this Agreement
are for convenience only and shall not be considered a part of or affect the
construction or interpretation of any provision of this Agreement. This
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
Section 11.8. Entire Agreement. This Agreement (together with the
Ancillary Agreements, Schedules and Annexes to this Agreement, which, although
they may be bound separately, constitute part of this Agreement) and that
certain Confidentiality Agreement between Purchaser and Seller (the
"Confidentiality Agreement") constitute the entire agreement among the parties
and supersede any other agreements, whether written or oral, that may have been
made or entered into by or among any of the parties hereto or any of their
respective Subsidiaries relating to the transactions contemplated hereby. No
representations, warranties, covenants, understandings, agreements, oral or
otherwise, relating to the transactions contemplated by this Agreement exist
between the parties except as expressly set forth in this Agreement and the
Confidentiality Agreement.
Section 11.9. Amendments. This Agreement may be amended or modified in
whole or in part, only by a duly authorized agreement in writing executed in the
same manner as this Agreement and which makes reference to this Agreement.
Section 11.10. Publicity. All press releases or other public
communications of any nature whatsoever relating to the transactions
contemplated by this Agreement, and the method of the release for publication
thereof, shall be subject to the prior mutual approval of Purchaser and Seller,
which approval shall not be unreasonably withheld by any party; provided,
however, that, nothing herein shall prevent any party from publishing such press
releases or other public communications as such party may consider necessary in
order to satisfy such party's legal or contractual obligations after such
consultation with the other parties hereto as is reasonable under the
circumstances.
Section 11.11. Dispute Resolution. Any and all disputes arising out of
or relating to this contract, or the breach, termination or validity thereof,
shall be resolved by final and binding, confidential arbitration in accordance
with the then current Center for Public Resources Institute for Dispute
Resolution Rules for Non-Administered Arbitration of Business Disputes, by a
sole arbitrator selected from among the Center for Public Resources Panel of
Distinguished Neutrals.
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The arbitration shall be governed by the United States Arbitration Act, 9 U.S.C.
1-16, and judgment upon the award rendered by the arbitrator may be entered by
any court having jurisdiction thereof. Neither party nor the arbitrator shall
disclose the existence, content or results of any arbitration hereunder without
the prior written consent of all parties. The place of arbitration shall be
Chicago, Illinois. The costs of the arbitrator and all expenses relating to the
arbitration (exclusive of legal fees) shall be borne equally by the parties. The
arbitrator may award reasonable attorneys' fees to the prevailing party at the
arbitrator's sole discretion.
Section 11.12. Modification of Agreement. Purchaser agrees that if so
requested by Seller, the transactions contemplated hereby will be restructured
as a reorganization under Section 368(a) of the Internal Revenue Code of 1986,
as amended, and that the Agreement will be amended as necessary to reflect such
restructuring.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF the parties have hereunto caused this
Agreement to be duly executed as of the date first above written.
XXXXX ADVERTISING COMPANY
By: /s/ XXXXX XXXXX
---------------------------------------
Name: Xxxxx Xxxxx
Title: Chief Financial Officer
CHANCELLOR MEDIA CORPORATION OF
LOS ANGELES
By: /s/ XXXXXXX X. XXXXXXXX, XX.
---------------------------------------
Name: Xxxxxxx X. Xxxxxxxx, Xx.
Title: Executive Vice President
