July 29, 2008
Exhibit 10.3
Execution Copy
July 29, 2008
Messrs.
X. Xxxxx Xxxx
Xxxx X. Xxxx, and
Xxxxxxx X. Xxxx
000 Xxxx Xxxxx Xxxx
Xxx Xxxxxxx, Xxxxx 00000
X. Xxxxx Xxxx
Xxxx X. Xxxx, and
Xxxxxxx X. Xxxx
000 Xxxx Xxxxx Xxxx
Xxx Xxxxxxx, Xxxxx 00000
Re: Side Letter Agreement
Dear Xxxxx/Xxxx/Xxxxxxx:
This letter agreement relates to the Stockholders Agreement of even date herewith by and among
CC Media Holdings, Inc., BT Triple Crown Merger Co., Inc., Clear Channel Capital IV, LLC, Clear
Channel Capital V, L.P., X. Xxxxx Xxxx, Xxxx X. Xxxx, Xxxxxxx X. Xxxx and the other parties thereto
(the “ Stockholders Agreement ”).
The purpose of this letter agreement is to supplement the agreements of the undersigned
parties that are contained in the Stockholders Agreement. Accordingly, the Company, Capital IV,
Capital V, X. Xxxxx Xxxx, Xxxx X. Xxxx, Xxxxxxx X. Xxxx and the other undersigned Executive
Stockholders hereby agree, on behalf of themselves and their respective Permitted Transferees,
heirs, representatives, successors and permitted assigns, as follows:
1. Whenever the term “Minimum Executive Holding Period” is used in the Stockholders Agreement
in relation to X. Xxxxx Xxxx, Xxxx X. Xxxx or Xxxxxxx X. Xxxx or any of their respective Permitted
Transferees, that term will be deemed to mean the period commencing on the Closing Date and ending
on the date that is the earlier of (a) the seventh anniversary of the Closing Date and (b) the
third anniversary of the closing of the Qualified Public Offering.
2. Each of X. Xxxxx Xxxx, Xxxx X. Xxxx and Xxxxxxx X. Xxxx will be treated as a “Qualifying
Holder” for purposes of the Stockholders Agreement with respect to any period of time during which
such Executive establishes to the reasonable satisfaction of the Company that such Executive is an
“affiliate” of the Company (as that term is used in Rule 144), even if such Executive does not then
hold Shares that represent at least 1% of the then outstanding shares of Common Stock and therefore
would not otherwise then qualify as a “Qualifying Holder” for purposes of the Stockholders
Agreement.
3. Section 7 of the Stockholders Agreement will not apply to X. Xxxxx Xxxx, Xxxx X. Xxxx or
Xxxxxxx X. Xxxx or any of their respective Permitted Transferees, including the respective
undersigned Initial Executive Designee associated with such Executive. Instead, the agreements set
forth in Exhibit A to this letter agreement, together with the capitalized terms used
therein that are defined or referred to in Exhibit B to this letter agreement, will apply
to each such Executive and each of such Executive’s Permitted Transferees as fully as though such
agreements were contained in the Stockholders Agreement as Section 7 thereof and such capitalized
terms were included with the terms defined or referred to in Section 12.2 thereof. Unless otherwise
specified, references to Sections in this letter agreement or in either of the
Exhibits hereto are references to sections of the Stockholders Agreement (which, for purposes of
this sentence, will be deemed to contain, in Section 7 thereof, the agreements set forth in
Exhibit A to this letter agreement and, in Section 12.2 thereof, the capitalized terms used
in such Exhibit or defined in Exhibit B to this letter agreement).
4. This letter agreement applies only to the undersigned parties hereto and does not apply to,
and is not to be construed as applying to, any other current or any future stockholder of the
Company (whether as an amendment or modification of the Stockholders Agreement under Section 11.2
thereof, or otherwise), except for the respective Permitted Transferees of the undersigned
Investors and Executive Stockholders that become party to the Stockholders Agreement in accordance
with its terms.
5. Except to the extent supplemented by this letter agreement or supplemented or otherwise
modified by any subsequent written agreement of the undersigned parties hereto, the terms of the
Stockholders Agreement will apply to each of the undersigned parties to this letter agreement as
set forth therein. Capitalized terms that are used in this letter agreement and/or in any Exhibit
to this letter agreement, but that are not defined in this letter agreement or in either of those
Exhibits, have the respective meanings given to those terms in the Stockholders Agreement as in
effect on the date hereof.
6. This letter agreement may not be orally amended, modified, extended or terminated, nor
shall any purported oral waiver of any of its provisions be effective. This letter agreement may be
amended, modified, extended or terminated, and the provisions hereof may be waived, but only by an
agreement in writing signed by the Company, a Requisite Capital IV Majority and each of the
undersigned Executives who would be affected thereby. No amendment, modification, extension or
termination of Section 7 of the Stockholders Agreement, or any waiver of any of the provisions
thereof, will apply to any of the undersigned Executives, each of whose rights and obligations with
respect to the subject matters of that Section are contained entirely in this letter agreement and
the Exhibits hereto, each as amended, modified, extended, terminated or waived from time to time in
accordance with this paragraph.
7. This letter agreement is being entered into concurrently with the Stockholders Agreement
and, like the Stockholders Agreement, will not become effective until the consummation of the
Merger. If the Stockholders Agreement is terminated in accordance with its terms, this letter
agreement will terminate automatically. If any of the undersigned parties withdraws from the
Stockholders Agreement in accordance with its terms, that party will be deemed to have
simultaneously withdrawn from this letter agreement without the need for any further action on part
of that party or any of the other undersigned parties. No termination (in whole or in part) of, or
withdrawal from, this letter agreement shall relieve any of the undersigned parties of liability
for any breach by that party prior to such termination or withdrawal.
8. No provision in this letter agreement will give, or be construed to give, any legal or
equitable rights hereunder to any Person other than the undersigned parties hereto and their
respective heirs, representatives, successors and permitted assigns.
2
9. Sections 12.1, 13.1, 13.2, 13.4, 13.5, 13.6, 14.1, 14.2 and 14.3 of the Stockholders
Agreement are hereby made part of this letter agreement as if each of those sections of the
Stockholders Agreement were set forth herein, mutatis mutandis.
3
If you agree with us that this letter agreement correctly reflects the terms of the agreements
that the Company, Capital IV, Capital V, X. Xxxxx Xxxx, Xxxx X. Xxxx, Xxxxxxx X. Xxxx and the
Initial Executive Designees intend to have supplement their agreements in the Stockholders
Agreement, then please kindly acknowledge the same by signing in the space provided below.
| Sincerely, CC MEDIA HOLDINGS, INC. |
||||
| By: | /s/ Xxxxx X. Xxxxxxxx | |||
| Name: | Xxxxx X. Xxxxxxxx | |||
| Title: | President | |||
| CLEAR CHANNEL CAPITAL IV, LLC |
||||
| By: | /s/ Xxxxxx X. Xxx | |||
| Name: | Xxxxxx X. Xxx | |||
| Title: | Vice President | |||
| CLEAR CHANNEL CAPITAL V, L.P. |
||||
| By: | CC Capital V Manager, LLC, its general partner |
|||
| By: | /s/ Xxxxxx X. Xxx | |||
| Name: | Xxxxxx X. Xxx | |||
| Title: | Vice President | |||
[SIGNATURE PAGE TO LETTER AGREEMENT]
XXXX EXECUTIVES
| X. XXXXX XXXX |
||||
| /s/ X. Xxxxx Xxxx | ||||
| XXXX X. XXXX |
||||
| /s/ Xxxx X. Xxxx | ||||
| XXXXXXX X. XXXX |
||||
| /s/ Xxxxxxx X. Xxxx | ||||
[SIGNATURE PAGE TO LETTER AGREEMENT]
| LLM PARTNERS, LTD. |
||||
| By: | LL XXXX MANAGEMENT, LLC | |||
| By: | /s/ X. Xxxxx Xxxx | |||
| Name: | X. Xxxxx Xxxx | |||
| Title: | Authorized Person | |||
| MPM PARTNERS, LTD. |
||||
| By: | XX XXXX MANAGEMENT, LLC | |||
| By: | /s/ Xxxx X. Xxxx | |||
| Name: | Xxxx X. Xxxx | |||
| Title: | Authorized Person | |||
| RTM PARTNERS, LTD. |
||||
| By: | XX XXXX MANAGEMENT, LLC | |||
| By: | /s/ Xxxxxxx X. Xxxx | |||
| Name: | Xxxxxxx X. Xxxx | |||
| Title: | Authorized Person | |||
6
Exhibit A
| 7. | COMPANY CALL OPTION AND EXECUTIVE SALE RIGHTS. |
7.1. Call Option Upon Termination. Upon any termination of a Xxxx Executive’s
employment with the Company or any of its subsidiaries, the Company will have the right to purchase
Executive Shares held by such Xxxx Executive or any of his Executive Designees or originally issued
to such Xxxx Executive or any of his Executive Designees but held by one or more Persons that
acquired such Shares as Permitted Transferees of such Xxxx Executive or any of such Executive
Designees (as to a given Xxxx Executive, such Xxxx Executive and all such other Persons,
collectively, such Xxxx Executive’s “Call Group”) to the extent, and on the terms and
conditions, specified in this Section 7.1 (each such right, a “Call Option”).
7.1.1. Termination Events; Resulting Call Rights.
(a) Termination due to Death or Disability. If such termination is the
result of the death or Disability of such Xxxx Executive, then the Company will have
the right to purchase all or any portion of the New Option Shares held by such Xxxx
Executive’s Call Group at a per Share price equal to the Fair Market Value thereof.
(b) Termination by the Company other than for Cause or by a Xxxx Executive
for Good Reason. If such termination is the result of (i) a termination by the
Company or any of its subsidiaries other than for Cause (or Disability) or (ii) a
termination by such Xxxx Executive for Good Reason, then, in either such event, the
Company will have the right to purchase all or any portion of the New Option Shares
held by such Xxxx Executive’s Call Group at a per Share price equal to the Fair
Market Value thereof.
(c) Termination for Cause. If such termination is the result of a
termination by the Company or any of its subsidiaries for Cause, then the Company
will have the right to purchase all or any portion of (i) the Vested Restricted
Shares, Purchased Shares and Rollover Option Shares held by such Xxxx Executive’s
Call Group, in each case at a per Share price equal to the respective Fair Market
Value thereof, and (ii) the New Option Shares held by such Call Group at a per Share
price equal to the lesser of the Fair Market Value thereof and the Cost thereof.
(d) Termination by a Xxxx Executive other than for Good Reason. If
such termination is the result of a termination by such Xxxx Executive other than
for Good Reason, then the Company will have the right to purchase all or any portion
of (i) the Purchased Shares and Rollover Option Shares held by such Xxxx Executive’s
Call Group, in each case at a per Share price equal to the respective Fair Market
Value thereof, and (ii) the New Option Shares held by such Call Group at a per Share
price equal to the lesser of the Fair Market Value thereof and the Cost thereof.
(e) Retirement. If such termination is the result of Retirement by
such Xxxx Executive, then the Company will have the right to purchase all or any
portion of the New Option Shares held by such Xxxx Executive’s Call Group at a per
Share price equal to the Fair Market Value thereof.
7.1.2. Notices. Any Call Option may be exercised by delivery of written notice
thereof (the “Call Notice”) to all members of the applicable Call Group from whom
the Company has elected to purchase Shares by no later than the Call Notice Due Date. The
Call Notice shall identify the Shares with respect to which the Company has elected to
exercise the Call Option and the purchase price therefor (as calculated above under the
applicable provision of Section 7.1.1). For purposes of this Section 7, the “Call
Notice Due Date” shall mean the date that is six months after the effective date of the
applicable termination of employment; provided that, as to any Option Shares first
acquired by the applicable Xxxx Executive or any other member of such Xxxx Executive’s Call
Group on or after such date, the Call Notice Due Date shall be extended until the date that
is one month after the date such Option Shares were first acquired by such Xxxx Executive or
other member of such Call Group (such date of acquisition, the “Option Exercise
Date”); provided, further, that in the case of a termination of
employment of a type described in Section 7.1.1(b) or 7.1.1(e): (i) a Call Option may not be
exercised as to any Option Shares, until the date that is six months and one day after the
Option Exercise Date with respect to such Option Shares; and (ii) the “Call Notice Due
Date” shall mean the date that is no later than the later of (x) the date that is six
months after the effective date of such termination of employment and (y) the date that is
nine months after the last Option Exercise Date (in the case of any such Option Shares).
7.1.3. Determination Date. The purchase price for any Shares to be purchased
pursuant to a Call Option shall be determined as of the date the applicable Call Notice is
delivered.
7.1.4. No Modification of Vesting, Etc.. The rights of the Company and the
Investors to purchase Executive Shares under this Section 7.1 are in addition to, and do not
modify, any vesting provisions or other terms of any restricted stock, stock option,
subscription or other agreement or plan applicable to any Executive Shares.
7.1.5. Payments. Any payment required to be made by the Company or the
Investors to a Call Group under any provision of this Section 7.1 shall be made in cash.
7.1.6. Closing.
(a) Except as otherwise agreed in writing by the Company and the Xxxx Executive
whose Call Group’s Executive Shares are the subject of a Call Notice, the closing of
any purchase and sale of Executive Shares pursuant to this Section 7.1 shall take
place at the principal executive office of the Company as soon as reasonably
practicable, and in any event not later than the date that is the later of (i) 15
business days after the delivery of the applicable Call Notice and (ii) five
business days after all determinations of Fair Market Value by a
nationally-recognized investment bank that are required under clause (b) of the
A-2
definition of “Fair Market Value” (any such determination, an
“Appraisal”) in connection with such purchase and sale have become final;
provided that such closing may be extended at the election of a Requisite
Capital IV Majority and the Company solely to the extent necessary to obtain any
applicable governmental or regulatory approval. If the closing of any purchase and
sale of Executive Shares is extended by a Requisite Capital IV Majority pursuant to
Section 7.1.7 or the preceding proviso clause, in either case for more than 30 days
after the delivery of the Call Notice for such Executive Shares, then the aggregate
purchase price therefor shall accrue interest from and after such 30th day at a per
annum interest rate equal to the prime rate as reported by JPMorgan Chase at such
time through the date payment is finally made, such rate of interest to increase by
100 basis points on each three-month anniversary of such 30th day; provided,
however, that in no event will the per annum rate of interest in effect
under this Section 7.1.6(a) exceed 12%. In a case where an Appraisal is conducted
in connection with a purchase and sale of Executive Shares under this Section 7.1,
(A) interest shall begin to accrue under the preceding sentence only if the closing
of such purchase and sale has not occurred within 45 days after the engagement of
the investment bank conducting such Appraisal (in which case all references in the
preceding sentence to such “30th day” will be deemed to be replaced with a reference
to the 45th day after such engagement); and (B) no interest shall be due if the Fair
Market Value of such Executive Shares, as determined by the investment bank
conducting such Appraisal, is not more than 110% of the determination of the Fair
Market Value of such Executive Shares by the Board set forth in the Call Notice for
such Executive Shares. In any event, except as otherwise agreed in writing by the
Company and the Xxxx Executive whose Call Group’s Executive Shares are the subject
thereof, the closing of any purchase and sale of Executive Shares under this Section
7.1 that has been extended or has otherwise been delayed for more than 30 days after
the delivery of the Call Notice for such Executive Shares shall take place as soon
as practicable (and in any event within five business days) after the circumstances
giving rise to such extension or delay no longer exist.
(b) At the closing of any purchase and sale of Executive Shares pursuant to
this Section 7.1, the holders of Shares to be sold shall deliver to the Company
and/or the Investors and any applicable Investor Designees a certificate or
certificates representing the Shares to be purchased by the Company and/or the
Investors and any applicable Investor Designees duly endorsed, or with stock (or
equivalent) powers duly endorsed, for transfer with signature guaranteed, free and
clear of any Adverse Claim, with all necessary stock (or equivalent) transfer tax
stamps affixed, and the Company and/or the Investors and Investor Designees shall
pay to such holder by certified or bank check or wire transfer of immediately
available funds the purchase price of the Shares being purchased by the Company
and/or the Investors, less any taxes required to be withheld in respect of such
purchase and sale under applicable law. The receipt of consideration by any Person
selling Shares pursuant to this Section 7.1 shall be deemed a representation and
warranty by such Person that (a) such Person has full right, title and interest in
and to such Shares, (b) such Person has all necessary power and authority and has
taken all necessary action to sell such Shares as
A-3
contemplated and (c) such Shares are free and clear of any and all Adverse
Claims.
7.1.7. Investor Call Option. If the Company elects not to purchase pursuant to
7.1 all Executive Shares that are held by a Call Group, then the Company shall notify each
Investor and each Investor may purchase, or elect to have one or more Investor Designees
purchase, such Investor’s Ratable Share of the remaining Shares for the same purchase
price(s) and on the same terms and conditions as the Company would be entitled to purchase
such Shares under this Section 7.1; provided, however, that, notwithstanding
the provisions of Section 7.1.6(a), if Investors or Investor Designees elect to take part in
the purchase of such remaining Shares, then a Requisite Capital IV Majority may extend the
closing date for up to 15 business days solely to the extent necessary to obtain equity
financing for such purchase. Without limiting the generality of the foregoing sentence, any
exercise of such right by one or more Investors (or their Investor Designees) shall be made
by notice to the applicable Call Group within the applicable time period set forth in
Section 7.1.2. In addition, if the closing of any purchase and sale of Executive Shares by
the Company pursuant to Section 7.1 is extended in accordance with Section 7.1.6(a) to
obtain any applicable governmental or regulatory approval, then the Company may assign to
the Investors the right to purchase (which the Investors may assign to their respective
Investor Designees) their respective Ratable Shares of the Executive Shares that are the
subject of such purchase and sale for the same purchase price (including interest, if
applicable) and on the same terms and conditions as the Company would be entitled to
purchase such Shares under this Section 7.1. If any Investor agrees to forego its full
Ratable Share of any Shares that it is entitled to purchase under this Section 7.1.7, the
remainder shall be made available to the other Investors in proportion to their respective
Ratable Shares (unless the Investors otherwise agree). The Company or any Investor or
Investor Designee purchasing Executive Shares pursuant to this Section 7.1.7 may, at any
time following the purchase and sale thereof, require that the Executive Shares being
purchased by such Investor or Investor Designee be converted by the Company into shares of
Class C Stock in accordance with the Company’s certificate of incorporation.
7.2. Certain Public Sale Rights. Upon any termination of a Xxxx Executive’s
employment with the Company or any its subsidiaries, such Xxxx Executive, each of his Executive
Designees and each Person holding Executive Shares who acquired them as a Permitted Transferee of
such Xxxx Executive or any of such Executive Designees (as to a given Xxxx Executive, such Xxxx
Executive and all such other Persons, collectively, such Xxxx Executive’s “Sale Group”)
will have the right, subject to Section 7.2.2 and Sections 3.3, 3.5, 3.6 and 3.7, to sell shares of
Common Stock to the public pursuant to Rule 144, to the extent, and on the terms and conditions,
specified in this Section 7.2 (any such sale, a “Permitted Public Transfer”),
notwithstanding that such a Transfer might not otherwise then be permitted by Section 3.1.4.
Executive Shares sold in Permitted Public Transfers pursuant to this Section 7.2 shall conclusively
be deemed thereafter not to be Shares under this Agreement.
7.2.1. Termination Events; Resulting Public Sale Rights.
A-4
(a) Termination due to Death or Disability. If such termination is the
result of the death or Disability of such Xxxx Executive, then, subject to Section
7.2.2, at any time during the respective Permitted Sale Period applicable to such
Executive Shares, each member of such Xxxx Executive’s Sale Group will have the
right to sell in one or more Permitted Public Transfers all or any portion of the
Vested Restricted Shares, Purchased Shares, Rollover Option Shares and New Option
Shares held by such member (other than any New Option Shares that are then subject
to a valid Call Notice under Section 7.1.2).
(b) Termination by Company other than for Cause or Termination by Xxxx
Executive for Good Reason. If such termination is the result of (i) a
termination by the Company or any of its subsidiaries other than for Cause or (ii) a
termination by such Xxxx Executive for Good Reason, then, in either such event,
subject to Section 7.2.2, at any time during the respective Permitted Sale Period
applicable to such Executive Shares, each member of such Xxxx Executive’s Sale Group
will have the right to sell in one or more Permitted Public Transfers all or any
portion of the Vested Restricted Shares, Purchased Shares and Rollover Option Shares
held by such member.
(c) Retirement. If such termination is the result of the Retirement of
such Xxxx Executive, then, subject to Section 7.2.2, at any time during the
Permitted Sale Period applicable to such Executive Shares, each member of such Xxxx
Executive’s Sale Group will have the right to sell in one or more Permitted Public
Transfers all or any portion of the Vested Restricted Shares held by such member.
7.2.2. Rights of First Offer. If a member of a Sale Group proposes to make a
Permitted Public Transfer of any shares of Common Stock in accordance with Section 7.2.1,
then, prior to making such Permitted Public Transfer, such member (the “Transferring
Executive Stockholder”) must comply with this Section 7.2.2.
(a) Notice. The Transferring Executive Stockholder shall notify the
Company and each of the Investors of such Transferring Executive Stockholder’s
intention to make a Permitted Public Transfer (the “ROFO Notice”). The ROFO
Notice shall identify the number of Shares that are the subject of the proposed
Permitted Public Transfer (the “ROFO Shares”) and shall constitute an
irrevocable offer to Transfer the ROFO Shares to the Company and the Investors and
their respective Investor Designees, on the basis described in this Section 7.2.2,
for the per Share purchase price set forth in the ROFO Notice (the “ROFO
Price”).
(b) Company Option. The Company will have the right to purchase all or
any portion of the ROFO Shares by giving written notice (the “Company Acceptance
Notice”) to the Transferring Executive Stockholder and the Investors as to the
number of ROFO Shares that the Company is willing to purchase by no later than the
date that is five business days after the date the ROFO Notice is effective (the
“Company ROFO Period”).
A-5
(c) Investor Option. If the Company does not elect to purchase all of
the ROFO Shares by the end of the Company ROFO Period, the Transferring Executive
Stockholder shall provide the Investors with an additional notice (the “Second
ROFO Notice”) on the last day of the Company ROFO Period that identifies the
ROFO Shares that the Company has declined to purchase (the “Remaining ROFO
Shares”). Each Investor will have the right to purchase, or to cause one or
more of its Investor Designees to purchase, up to such Investor’s Ratable Share of
the Remaining Shares by giving written notice (an “Investor Acceptance
Notice”) to the Transferring Executive Stockholder and the other Investors as to
the number of Remaining ROFO Shares that such Investor and/or its Investor Designees
are willing to purchase by no later than the date that is two business days after
the date the Second ROFO Notice is effective (the “Extended ROFO Period”);
provided that if any Investor declines to purchase (and does not designate
any Persons to purchase as such Investor’s Investor Designees) such Investor’s
Ratable Share of the Remaining ROFO Shares, the Remaining ROFO Shares that such
Investor has declined to purchase shall be made available to the each of the other
Investors and their respective Investor Designees that have delivered an Investor
Acceptance Notice pro rata to such Investors’ respective Ratable Shares unless any
such other Investor has specified in its Investor Acceptance Notice an unwillingness
to participate in such a reallocation. The Company or any Investor or Investor
Designee purchasing Remaining ROFO Shares pursuant to this Section 7.2.2 may, at any
time following the purchase and sale thereof, require that such Remaining ROFO
Shares be converted by the Company into shares of Class C Stock in accordance with
the Company’s certificate of incorporation.
(d) Closing.
(i) Except as otherwise agreed in writing by the Transferring Executive
Stockholder, the Company and a Requisite Capital IV Majority, the closing of
any purchase and sale of ROFO Shares by the Company and/or the Investors or
their Investor Designees pursuant to this Section 7.2 shall take place at
the principal office of the Company as soon as reasonably practicable and in
no event later than 15 business days after the delivery of the applicable
ROFO Notice; provided that if any Investors or their Investor
Designees are participating in such purchase and sale, such closing may be
extended solely to the extent necessary to obtain equity financing for such
purchase for an additional 15 business days by a Requisite Capital IV
Majority; provided, further, that, in any case, such closing
may be extended at the election of a Requisite Capital IV Majority and the
Company solely to the extent necessary to obtain any applicable governmental
or regulatory approval. If the closing of any purchase and sale of ROFO
Shares is extended by a Requisite Capital IV Majority pursuant to either or
both of the two preceding proviso clauses for more than 30 days after the
delivery of the applicable ROFO Notice, then the aggregate purchase price
therefor shall accrue interest from and after such 30th day at a per annum
interest rate equal to the prime rate as reported by
A-6
JPMorgan Chase at such time through the date payment is finally made,
such rate of interest to increase by 100 basis points on each three-month
anniversary of such 30th day; provided, however, that in no
event will the per annum rate of interest in effect under this Section
7.2.2(d) exceed 12%. In any event, except as otherwise agreed in writing by
the Transferring Executive Stockholder, the Company and a Requisite Capital
IV Majority, the closing of any purchase and sale of ROFO Shares under this
Section 7.2.2 that has been extended or has otherwise been delayed for more
than 30 days after the delivery of the ROFO Notice under this Section 7.2.2
for such purchase and sale shall take place as soon as practicable (and in
any event within five business days) after the circumstances giving rise to
such extension or delay no longer exist.
(ii) At such closing, the Transferring Executive Stockholder shall
deliver to the Company and/or the Investors and any applicable Investor
Designees a certificate or certificates representing the ROFO Shares to be
purchased by the Company and/or the Investors and any applicable Investor
Designees duly endorsed, or with stock powers duly endorsed, for transfer
with signature guaranteed, free and clear of any Adverse Claim, with any
necessary stock transfer tax stamps affixed, and the Company and/or the
Investors and any Investor Designees shall pay to the Transferring
Executive Stockholder the purchase price for the respective ROFO Shares that
the Company and/or the Investors and any Investor Designees are purchasing
by certified or bank check or wire transfer of immediately available funds,
less any taxes required to be withheld in respect of the purchase and sale
of any of such ROFO Shares under applicable law. The receipt of
consideration for any ROFO Shares being sold pursuant to this Section 7.2
shall be deemed a representation and warranty by the Transferring Executive
Stockholder that (a) the Transferring Executive Stockholder has full right,
title and interest in and to such ROFO Shares, (b) the Transferring
Executive Stockholder has all necessary power and authority and has taken
all necessary action to sell such ROFO Shares as contemplated and (c) such
ROFO Shares are free and clear of any and all Adverse Claims.
(e) Permitted Public Sale. If the Company, the Investors and the
Investor Designees do not purchase all of the ROFO Shares in accordance with this
Section 7.2.2, then the Transferring Executive Stockholder may proceed with a
Permitted Public Transfer with respect to the remaining balance of the ROFO Shares
until the end of the respective Permitted Sale Period, but shall not Transfer any
other shares of Common Stock in a Permitted Public Transfer without first complying
with this Section 7.2.2. In addition, except as otherwise agreed by the
Transferring Executive Stockholder, the Company and a Requisite Capital IV Majority,
if, at any time during such Permitted Sale Period, the Transferring Executive
Stockholder desires to make a Permitted Public Transfer of any such ROFO Shares for
a per Share price that is less than 95% of the ROFO Price, then such Transferring
Executive Stockholder must once again comply with the
A-7
provisions of this Section 7.2.2 before doing so; provided,
however, that each applicable period for giving notice to which reference is
made in Section 7.2.2(b) and 7.2.2(c) will be one business day or such longer period
as the Transferring Executive Stockholder, the Company and a Requisite Capital IV
Majority may agree.
7.3. Put Option.
7.3.1. Restricted Shares. Until the end of a Permitted Sale Period following
the termination of the employment of any Xxxx Executive with the Company or any of its
subsidiaries during which such Xxxx Executive and the other members of his Sale Group are
permitted to sell Vested Restricted Shares in Permitted Public Transfers in accordance with
Section 7.2 such Xxxx Executive will have the right to require the Company to purchase all
or any portion of such Vested Restricted Shares at a per Share price equal to the Fair
Market Value thereof (such right, the “Restricted Stock Put Option”), determined as
of the Closing (in the case of a termination of employment of a type described in Section
7.2.1(a) or 7.2.1(b)) or as of the date the Put Notice related thereto is delivered (in the
case of a termination of employment of a type described in Section 7.2.1(c)).
7.3.2. Other Shares. If, following any termination of the employment of any
Xxxx Executive with the Company or any of its subsidiaries that is of a type described in
Section 7.2.1(a) or 7.2.1(b), such Xxxx Executive and the other members of such Xxxx
Executive’s Sale Group comply with the requirements of Section 7.2 and use commercially
reasonable good faith efforts to sell in Permitted Public Transfers the Purchased Shares,
Rollover Option Shares and, in the case of a termination of employment of a type described
in Section 7.2.1(a), New Option Shares they are permitted to sell under Section 7.2, but are
unable to sell all such Executive Shares by the end of the Permitted Sale Period applicable
thereto, then, subject to the terms and conditions of this Section 7.3, such Xxxx Executive
will have the right to require the Company to purchase under this Section 7.3.2 all or any
portion of such Executive Shares that have not been sold (any such Executive Shares,
“Other Put Eligible Shares”), in each case at a per Share price equal to the
respective Fair Market Value thereof (such right, the “Other Stock Put Option”; the
Restricted Stock Put Option and the Other Stock Put Option, each a “Put Option”),
determined as of the date on which the Put Notice applicable thereto is delivered.
7.3.3. Exercise; Notice. Subject to the terms and conditions of this Section
7.3, (a) a Xxxx Executive may exercise the Restricted Stock Put Option with respect to all
or any portion of the Vested Restricted Shares held by such Xxxx Executive and the other
members of his Sale Group on a single occasion by delivery of written notice (a “Put
Notice”) on any date during the respective Permitted Sale Period applicable such Vested
Restricted Shares; and (b) a Xxxx Executive may exercise the Other Stock Put Option with
respect to all or any portion of the Other Put Eligible Shares held by such Xxxx Executive
and the other members of his Sale Group by delivery of written notice (a “Put
Notice”) on the first business day after the last day of the respective Permitted Sale
Period applicable to such Other Put Eligible Shares.
A-8
7.3.4. Determination Date; Payment. The purchase price for any Executive
Shares that are the subject of a valid Put Notice (any such Executive Shares, “Put
Shares”) shall be determined as of the applicable date specified in Section 7.3.1 (in
the case of the Restricted Stock Put Option) or in Section 7.3.2 (in the case of the Other
Stock Put Option). The Company shall deliver the applicable Xxxx Executive a written notice
setting forth such purchase price within five business days following the receipt of any
applicable Put Notice. Any payment required to be made by the Company or the Investors or
any Investor Designees to the applicable Call Group under any provision of this Section 7.3
shall be made in cash.
7.3.5. Restricted Payments.
(a) If (i) any payment of cash by the Company otherwise required by this
Section 7.3 or any distribution to the Company from any of its subsidiaries of cash
in the amount of any payment otherwise required to be made by the Company under this
Section 7.3 would result in, or give rise to, a breach or violation of, or any
default or right or cause of action under, any agreement of the Company or any of
its subsidiaries that relates to indebtedness, or (ii) the Board determines in good
faith that the authorization or making of any such payment or distribution (A) would
be detrimental to the Company and its subsidiaries given their financial condition
and liquidity requirements at such time or (B) would constitute a violation of law
or of the Board’s fiduciary duties, then, in either case (i) or (ii), the Company
will have the right to postpone the making of such payment until such time as it may
do so, or may cause a distribution from any of its subsidiaries to do so, without
giving rise to any of the circumstances described in clause (i) or (ii). Without
duplication of any interest chargeable under Section 7.3.6, any payments that are
required to be postponed under this Section 7.3.5, if postponed for more than a
30-day period, shall accrue interest from and after the end of such 30-day period at
a per annum rate equal to the prime rate as reported by JPMorgan Chase at such time
through the date payment is finally made, such rate of interest to increase by 100
basis points on each three-month anniversary of the end of such 30-day period;
provided, however, that in no event will the per annum rate of
interest in effect under this Section 7.3.5 exceed 12%. The Company shall pay any
amount required under Section 7.3 (together with interest accrued thereon, as
calculated in accordance with this Section 7.3.5) that is postponed in accordance
with this Section 7.3.5 as soon as practicable (and in any event within five
business days) after the Company can do so without giving rise to any of the
circumstances described in clause (i) or (ii) of this Section 7.3.5.
(b) The Company agrees to use good faith efforts to resist any amendment
proposed by its current or future lenders to the terms of the senior credit facility
of the Company and its subsidiaries that by its express terms would prevent the
Company from satisfying its obligations under any valid Put Option without availing
itself of the provisions of Section 7.3.5(a); provided, however,
that nothing in this Section 7.3.5(b) will prevent the Company from agreeing to such
an amendment if it believes that doing so is in the best interests of the Company.
A-9
7.3.6. Closing.
(a) Except as otherwise agreed in writing by the Company, a Requisite Capital
IV Majority and the Xxxx Executive exercising the applicable Put Option, the closing
of any purchase and sale of Put Shares pursuant to the exercise of any Put Option
pursuant to this Section 7.3 shall take place at the principal office of the Company
as soon as reasonably practicable and in no event later than the date that is the
later of (i) 15 business days after the delivery of the Put Notice applicable to
such Put Option and (ii) five business days after all Appraisals, if any, conducted
in connection with such Put Option have become final; provided that such
closing may be extended at the election of a Requisite Capital IV Majority and the
Company solely to the extent necessary to obtain any applicable governmental or
regulatory approval. If the closing of any purchase and sale of Put Shares is
extended by a Requisite Capital IV Majority pursuant to Section 7.3.7 or the
preceding proviso clause, in either case for more than 30 days after the delivery of
the applicable Put Notice, then the purchase price therefor shall accrue from and
after the 30th day at a per annum interest rate equal to the prime rate as reported
by JPMorgan Chase at such time through the date payment is finally made, such rate
of interest to increase by 100 basis points on each three-month anniversary of such
30th day; provided, however, that in no event will the per annum
rate of interest in effect under this Section 7.3.6 exceed 12%. In a case where an
Appraisal is conducted in connection with a purchase and sale of Put Shares under
this Section 7.3, (A) interest shall begin to accrue under the preceding sentence
only if the closing of such purchase and sale has not occurred within 45 days after
the engagement of the investment bank conducting such Appraisal (in which case all
references in the preceding sentence to such “30th day” will be deemed to be
replaced with a reference to the 45th day after such engagement); and (B) no
interest shall be due if the Fair Market Value of such Put Shares, as determined by
the investment bank conducting such Appraisal, is not more than 110% of the
determination of the Fair Market Value of such Put Shares by the Board set forth in
the Put Notice applicable to such Put Shares. In any event, except as otherwise
agreed in writing by the Company, a Requisite Capital IV Majority and the Xxxx
Executive exercising the applicable Put Option, the closing of any purchase and sale
of Put Shares under this Section 7.3 that has been extended or has otherwise been
delayed for more than 30 days under this Section 7.3 after the delivery of the Put
Notice for such Put Shares shall take place as soon as practicable (and in any event
within five business days) after the circumstances giving rise to such extension or
delay no longer exist.
(b) At the closing of any purchase and sale of Put Shares following the
exercise of any Put Option, each member of the Sale Group selling Put Shares shall
deliver to the Company and/or the Investors and any applicable Investor Designees a
certificate or certificates representing the Shares to be purchased by the Company
and/or the Investors or any applicable Investor Designees duly endorsed, or with
stock powers duly endorsed, for transfer with signature guaranteed, free and clear
of any Adverse Claim, with any necessary stock transfer tax stamps affixed, and the
Company and/or the Investors and Investor
A-10
Designees shall pay to such member the purchase price for such Put Shares by
certified or bank check or wire transfer of immediately available funds, less any
taxes or other amounts required to be withheld under applicable law. The receipt of
consideration for any Shares being sold pursuant to any Put Option shall be deemed a
representation and warranty by the Person receiving such consideration that (a) such
Person has full right, title and interest in and to such Shares, (b) such Person has
all necessary power and authority and has taken all necessary action to sell such
Shares as contemplated and (c) such Shares are free and clear of any and all Adverse
Claims.
7.3.7. Assignment. The Company may at any time assign its obligation, in whole
or in part, to purchase any Put Shares that are subject to a valid Put Option to any
Investors that agree in writing to accept the same. If one or more Investors agree in
writing to accept such obligation, in whole or in part, then each of those Investors may
elect to purchase (or elect to have an Investor Designee purchase) up to such Investor’s
Ratable Share of the Put Shares in question for the same purchase price(s) (including any
interest thereon, if applicable) and on the same terms and conditions as the Company would
be required to purchase such Put Shares under this Section 7.3; provided,
however, that, notwithstanding the provisions of Section 7.3.6(a), if Investors or
Investor Designees take part in a purchase and sale of Put Shares, then a Requisite Capital
IV Majority may extend the closing date for up to 15 business days solely to the extent
necessary to obtain equity financing for such purchase; provided, further,
however, that Investors and Investor Designees taking part in any such purchase and
sale of Put Shares may not avail themselves of the provisions of Section 7.3.5 to postpone
the payment of such purchase price(s) (or interest thereon, if applicable), it being
understood that if any such Investor or Investor Designee assigns the obligation to purchase
any such Put Shares back to the Company (which the Company will be obligated to accept
without condition), the provisions of Section 7.3.5 will be available to the Company and
applicable to the purchase and sale of such Put Shares. The Company or any Investor or
Investor Designee purchasing Put Shares pursuant to this Section 7.3.7 may require, at any
time following the purchase and sale thereof, that such Put Shares be converted by the
Company into shares of Class C Stock in accordance with the Company’s certificate of
incorporation.
7.4. Acknowledgment. Each Xxxx Executive and each of his Executive Designees
acknowledges and agrees that none of the Company, any Investor, any Investor Designee or any Person
that is directly or indirectly affiliated with the Company, any Investor, any Investor Designee and
exercises any rights, or performs any obligations, under any of Sections 7.1, 7.2 or 7.3 (in each
case including as a director, officer, manager, employee, agent or otherwise) has any duty or
obligation to disclose to any of such Executive’s Call Group or Sale Group, and no member of any
such Call Group or Sale Group shall have any right to be advised of, any material information
regarding the Company or any of its subsidiaries or otherwise at any time prior to, upon, or in
connection with any termination of an Xxxx Executive’s employment with the Company or any of its
subsidiaries or upon the exercise of any Call Option, Put Option or other right to purchase Shares
under this Section 7 or otherwise in connection with any purchase of Shares in accordance with the
terms of any of Sections 7.1, 7.2 or 7.3.
A-11
7.5. Period. The provisions of Sections 7.1, 7.2 and 7.3 shall terminate upon the
earlier of (a) the occurrence of a Change of Control and (b) the closing of the Qualified Public
Offering.
A-12
Exhibit B
Definitions
“Appraisal” has the meaning set forth in Section 7.16.
“Call Group” has the meaning set forth in Section 7.1.
“Call Notice” has the meaning set forth in Section 7.1.2.
“Call Notice Due Date” has the meaning set forth in Section 7.1.2.
“Call Option” has the meaning set forth in Section 7.1.
“Cause” when used in relation to a Xxxx Executive, has the meaning given to such term
in the respective Employment Agreement to which such Xxxx Executive is a party.
“Company Acceptance Notice” has the meaning set forth in Section 7.2.2.
“Company ROFO Period” has the meaning set forth in Section 7.2.2.
“Comparable Company” means, in relation to the Company during any given period of time
following the termination of employment of a Xxxx Executive, any corporation that during such time
has Publicly-Traded Shares and an amount of Publicly-Held Shares that have an aggregate value that
is not less than 90%, or greater than 110%, of the aggregate value of the Company’s Publicly-Held
Shares during such time and that the Board and such Xxxx Executive mutually agree is otherwise
comparable to the Company.
“Cost” means, with respect to any Executive Share, the purchase price paid for such
Executive Share by the original holder thereof, less any distributions received with respect to
such Executive Share.
“Extended ROFO Period” has the meaning set forth in Section 7.2.2.
“Fair Market Value” will be determined with respect to any Share as of any given date
under clause (a) or (b) below, whichever is applicable to such Share under the circumstances,
except that in all cases for purposes of this Agreement the “Fair Market Value” of a Restricted
Share as of the Closing Date will be deemed to equal $36.00 (subject to appropriate adjustment as
determined by the Company for any stock split, reverse stock split or similar transaction affecting
the Class A Stock that occurs after the Closing Date):
(a) if, on such date, the Company has Publicly-Traded Shares and the average weekly
reported volume of trading in the Company’s Publicly-Traded Shares during the calendar weeks
falling in the 30 calendar days preceding such date is at least equal to 50% of the median
of the average weekly reported volumes of trading in the Publicly-Traded Shares of
Comparable Companies during those same calendar weeks, then the “Fair Market Value” of such
Share will be the average closing trading-price of the Company’s Publicly-Traded Shares
during all of the trading days in that 30 calendar-day period; or
(b) if the foregoing clause (a) is not applicable, then the “Fair Market Value” of such
Share as of such date will be as determined by the Board in good faith; provided
that if, not later than ten business days after being delivered notice of any such
determination pursuant to Section 7.1 or 7.3, as applicable, the Xxxx Executive whose Call
Group or Sale Group, as the case may be, has Executive Shares subject to such determination
delivers written notice to the Board of his objection to such determination, then the “Fair
Market Value” of such Share will be as determined by a nationally-recognized investment bank
that is mutually acceptable to the Board and the applicable Xxxx Executive (which bank shall
be selected by no later than ten business days after the applicable Xxxx Executive delivers
such objection to the Board), whose determination will be binding on the Company and such
Xxxx Executive and all members of his Call Group or Sale Group, as applicable, and whose
fees and expenses shall be paid for by the Company.
“Good Reason” when used in relation to a Xxxx Executive, has the meaning given to such
term in the respective Employment Agreement to which such Xxxx Executive is a party.
“Investor Acceptance Notice” has the meaning set forth in Section 7.2.2.
“Investor Designee” means, in relation to any Investor, any Person designated by such
Investor to purchase Executive Shares under Section 7.1, 7.2 or 7.3.
“Xxxx Executive” means each of X. Xxxxx Xxxx, Xxxx X. Xxxx and Xxxxxxx X. Xxxx.
“New Options” means, as to any Xxxx Executive or his Permitted Transferees, Options
that are Shares but are not Rollover Options.
“New Option Shares” means Shares acquired upon exercise of a New Option.
“Option Exercise Date” has the meaning set forth in Section 7.1.2.
“Option Shares” means Shares acquired upon exercise of an Option that is a Share.
“Other Put Eligible Shares” has the meaning set forth in Section 7.3.2.
“Other Stock Put Option” has the meaning set forth in Section 7.3.2.
“Permitted Public Transfer” has the meaning set forth in Section 7.2.
“Permitted Sale Period” means (a) with respect to any Restricted Shares held by a
member of a Xxxx Executive’s Sale Group, the period commencing on the effective date of the Xxxx
Executive’s termination of employment with the Company or any of its subsidiaries and ending on the
earlier of (i) the 90th day thereafter or (ii) March 1st of the year following the calendar year in
which the Xxxx Executive’s termination of employment occurs; or (b) with respect to any other
Executive Shares held by a member of a Xxxx Executive’s Sale Group, the period commencing on the
effective date of the Xxxx Executive’s termination of employment with the Company or any of its
subsidiaries and ending on the six-month anniversary thereof.
B-2
“Publicly-Held Shares” means, as of any given time, with respect to any class of
common stock of a corporation that is registered under Section 12 of the Exchange Act, the total
number of issued and outstanding shares of such class, as set forth in the most recent report filed
by such corporation under the Securities Act or the Exchange Act (excluding, for purposes of this
definition, all of the issued and outstanding shares of such class, if any, that are beneficially
owned by any Person (or group of Persons reporting as a group under the Exchange Act) that
beneficially owns 25% or more of such total number of reported issued and outstanding shares).
“Publicly-Traded Shares” means, in relation to any corporation as of any given time,
shares of such corporation’s common stock that are then issued and outstanding and belong to a
class of common stock that is (a) registered under Section 12 of the Exchange Act and (b) listed on
a national securities exchange, authorized for quotation in the automated quotations system of
national securities association or traded over-the-counter.
“Purchased Shares” means, as to any Xxxx Executive or Executive Designee or any of
their respective Permitted Transferees: (a) all Shares originally purchased by or issued to such
Xxxx Executive or Executive Designee (i) pursuant to the Subscription Agreement to which such Xxxx
Executive or Executive Designee is party, (ii) in connection with the Closing in substitution of
shares of restricted stock of Clear Channel granted to such Xxxx Executive on or about May 22, 2007
or (iii) pursuant to Section 5; and (b) all other Executive Shares designated as “Purchased Shares”
by a Requisite Capital IV Majority.
“Put Notice” has the meaning set forth in Section 7.3.3.
“Put Option” has the meaning set forth in Section 7.3.
“Put Shares” has the meaning set forth in Section 7.3.4.
“Ratable Share” means:
(a) as to any Investor, with respect to any Executive Shares that the Investors have a
right to purchase under Section 7.1.7, a number of such Executive Shares equal to the
product of (i) the aggregate number of such Executive Shares multiplied by (ii) a fraction,
the numerator of which is the number of Shares held by that Investor as of the date the
Investors are notified of or otherwise acquire their right to purchase such Executive
Shares, and the denominator of which is the aggregate number of Shares held by all Investors
as of that date;
(b) as to any Investor, with respect to any Remaining ROFO Shares that the Investors
have a right to purchase under Section 7.2.2, a number of such Remaining ROFO Shares equal
to the product of (i) the aggregate number of such Remaining ROFO Shares multiplied by (ii)
a fraction, the numerator of which is the number of Shares held by that Investor as of the
date of the applicable Second ROFO Notice, and the denominator of which is the aggregate
number of Shares held by all Investors as of that date; or
(c) as to any Investor, with respect to any Put Shares that the Investors are notified
of their opportunity to purchase under Section 7.3.7, a number of such Put
B-3
Shares equal to the product of (i) the aggregate number of such Put Shares multiplied
by (ii) a fraction, the numerator of which is the number of Shares held by that Investor as
of the date the Investors are notified of their opportunity to purchase such Put Shares, and
the denominator of which is the aggregate number of Shares held by all Investors as of that
date.
“Remaining ROFO Shares” has the meaning set forth in Section 7.2.2.
“Restricted Shares” means, as to Xxxx X. Xxxx or any of his Permitted Transferees or
Xxxxxxx X. Xxxx or any of his Permitted Transferees, as the case may be, the respective Shares
originally granted to such Xxxx Executive pursuant to the terms of the respective Restricted Stock
Agreement dated as of the Closing Date between the Company and such Xxxx Executive.
“Restricted Stock Put Option” has the meaning set forth in Section 7.3.1.
“Retirement” means, with respect to any Xxxx Executive, such Xxxx Executive’s
retirement from service with the Company and its subsidiaries (a) after attaining 62 years of age
or (b) after attaining 60 years of age and completing 36 months of service after the Closing.
“ROFO Notice” has the meaning set forth in Section 7.2.2.
“ROFO Price” has the meaning set forth in Section 7.2.2.
“ROFO Shares” has the meaning set forth in Section 7.2.2.
“Rollover Options” means, as to any Xxxx Executive or any Permitted Transferee of any
such Xxxx Executive, Options governed by the terms of the respective Rollover Option Agreement
dated as of the Closing Date between the Company and such Xxxx Executive.
“Rollover Option Shares” means Shares acquired upon exercise of a Rollover Option.
“Sale Group” has the meaning set forth in Section 7.2.
“Second ROFO Period” has the meaning set forth in Section 7.2.2.
“Transferring Executive Stockholder” has the meaning set forth in Section 7.2.2.
“Unvested Restricted Shares” means, as of any given time, Restricted Shares that are
not then Vested Executive Shares.
“Vested Restricted Shares” means, as of any given time, Restricted Shares that are
then Vested Executive Shares.
B-4
