EXHIBIT 99(a)
AGREEMENT AND PLAN OF MERGER
AMONG
CHANCELLOR BROADCASTING COMPANY,
CHANCELLOR RADIO BROADCASTING COMPANY
AND
EVERGREEN MEDIA CORPORATION
DATED AS OF FEBRUARY 19, 1997
TABLE OF CONTENTS
ARTICLE I - THE MERGER..................................................... 2
1.1 THE MERGER..................................................... 2
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1.2 CLOSING........................................................ 2
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1.3 EFFECTIVE TIME................................................. 2
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1.4 CERTIFICATE OF INCORPORATION................................... 2
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1.5 CERTIFICATE OF DESIGNATION..................................... 3
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1.6 BYLAWS......................................................... 3
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1.7 DIRECTORS...................................................... 3
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1.8 OFFICERS....................................................... 4
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1.9 EFFECT ON EVERGREEN CAPITAL STOCK.............................. 4
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(a) Outstanding Evergreen Common Stock........................ 4
(b) Exchange of Certificates................................. 5
1.10 EFFECT ON COMPANY CAPITAL STOCK................................ 5
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(a) Outstanding Shares....................................... 5
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(b) Treasury Shares.......................................... 5
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(c) Outstanding Company Convertible Preferred
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Stock.................................................... 5
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(d) Impact of Stock Splits, etc.............................. 5
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1.11 EFFECT ON RADIO BROADCASTING CAPITAL STOCK..................... 6
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(a) Outstanding Common Stock of Radio
Broadcasting............................................. 6
(b) Outstanding 12 1/4% Series A Senior
Cumulative Exchangeable Preferred Stock.................. 6
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(c) Outstanding 12% Exchangeable Preferred Stock............. 6
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1.12 EXCHANGE OF CERTIFICATES....................................... 6
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(a) Paying Agent.............................................. 6
(b) Exchange Procedures...................................... 6
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(c) Letter of Transmittal.................................... 8
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(d) Distributions with Respect to Unexchanged
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Shares................................................... 8
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(e) No Further Ownership Rights in Shares,
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Company Convertible Preferred Stock and Radio
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Broadcasting Preferred Stock............................. 8
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(f) No Fractional Shares..................................... 9
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(g) Termination of Payment Fund.............................. 9
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(h) No Liability............................................. 10
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1.13 DISSENTING SHARES.............................................. 10
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ARTICLE II - REPRESENTATIONS AND WARRANTIES OF EVERGREEN................... 11
2.1 ORGANIZATION, STANDING AND CORPORATE POWER..................... 11
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2.2 CAPITAL STRUCTURE.............................................. 12
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2.3 AUTHORITY; NONCONTRAVENTION.................................... 13
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2.4 SEC DOCUMENTS.................................................. 15
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2.5 ABSENCE OF CERTAIN CHANGES OR EVENTS........................... 16
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2.6 NO EXTRAORDINARY PAYMENTS OR CHANGE IN BENEFITS................ 17
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2.7 VOTING REQUIREMENTS............................................ 17
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2.8 STATE TAKEOVER STATUTES........................................ 17
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2.9 EVERGREEN FCC LICENSES; OPERATIONS OF EVERGREEN
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LICENSED FACILITIES............................................ 18
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2.10 BROKERS........................................................ 19
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2.11 OPINION OF FINANCIAL ADVISOR................................... 19
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2.12 FCC QUALIFICATION.............................................. 19
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2.13 COMPLIANCE WITH APPLICABLE LAWS................................ 19
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2.14 ABSENCE OF UNDISCLOSED LIABILITIES............................. 20
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2.15 LITIGATION..................................................... 20
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2.16 TRANSACTIONS WITH AFFILIATES................................... 20
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ARTICLE III - REPRESENTATIONS AND WARRANTIES OF
THE COMPANY AND RADIO BROADCASTING....................... 21
3.1 ORGANIZATION, STANDING AND CORPORATE POWER..................... 21
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3.2 COMPANY AND RADIO BROADCASTING CAPITAL STRUCTURE............... 21
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3.3 AUTHORITY; NONCONTRAVENTION.................................... 23
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3.4 SEC DOCUMENTS.................................................. 25
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3.5 ABSENCE OF CERTAIN CHANGES OR EVENTS........................... 26
------------------------------------
3.6 NO EXTRAORDINARY PAYMENTS OR CHANGE IN BENEFITS................ 27
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3.7 VOTING REQUIREMENTS............................................ 27
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3.8 STATE TAKEOVER STATUTES........................................ 27
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3.9 COMPANY FCC LICENSES; OPERATIONS OF COMPANY
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LICENSED FACILITIES............................................ 27
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3.10 BROKERS........................................................ 28
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3.11 OPINION OF FINANCIAL ADVISOR................................... 29
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3.12 FCC QUALIFICATION.............................................. 29
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3.13 COMPLIANCE WITH APPLICABLE LAWS................................ 29
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3.14 ABSENCE OF UNDISCLOSED LIABILITIES............................. 30
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3.15 LITIGATION..................................................... 30
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3.16 TRANSACTIONS WITH AFFILIATES................................... 30
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ARTICLE IV - ADDITIONAL AGREEMENTS......................................... 31
4.1 PREPARATION OF FORM S-4 AND THE JOINT PROXY
STATEMENT; INFORMATION SUPPLIED................................ 31
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4.2 MEETINGS OF COMPANY STOCKHOLDERS AND EVERGREEN
STOCKHOLDERS................................................... 32
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4.3 ACCESS TO INFORMATION; CONFIDENTIALITY......................... 33
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4.4 PUBLIC ANNOUNCEMENTS........................................... 34
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4.5 ACQUISITION PROPOSALS.......................................... 34
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4.6 CONSENTS, APPROVALS AND FILINGS................................ 35
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4.7 AFFILIATES LETTERS............................................. 36
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4.8 NASDAQ LISTING................................................. 36
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4.9 STOCKHOLDER LITIGATION......................................... 36
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4.10 INDEMNIFICATION................................................ 36
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4.11 LETTER OF THE COMPANY'S ACCOUNTANTS............................ 37
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4.12 LETTER OF EVERGREEN'S ACCOUNTANTS.............................. 37
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ARTICLE V - COVENANTS RELATING TO CONDUCT OF
BUSINESS PRIOR TO MERGER................................. 38
5.1 CONDUCT OF BUSINESS............................................ 38
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5.2 COMPANY STOCK OPTIONS.......................................... 41
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5.3 OTHER ACTIONS.................................................. 42
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ARTICLE VI - CONDITIONS PRECEDENT.......................................... 42
6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT
THE MERGER..................................................... 42
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(a) Stockholder Approval..................................... 42
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(b) FCC Order................................................ 42
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(c) Governmental and Regulatory Consents..................... 43
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(d) HSR Act.................................................. 43
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(e) No Injunctions or Restraints............................. 43
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(f) Nasdaq Listing........................................... 43
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(g) Form S-4................................................. 43
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6.2 CONDITIONS TO OBLIGATIONS OF EVERGREEN......................... 43
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(a) Representations and Warranties........................... 43
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(b) Performance of Obligations of the Company and
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Radio Broadcasting....................................... 44
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(c) Tax Opinion.............................................. 44
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6.3 CONDITIONS TO OBLIGATION OF THE COMPANY AND RADIO
BROADCASTING................................................... 44
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(a) Representations and Warranties........................... 44
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(b) Performance of Obligations of Evergreen.................. 45
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(c) Tax Opinion.............................................. 45
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ARTICLE VII - TERMINATION, AMENDMENT AND WAIVER............................ 45
7.1 TERMINATION.................................................... 45
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7.2 EFFECT OF TERMINATION.......................................... 46
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7.3 AMENDMENT...................................................... 46
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7.4 EXTENSION; WAIVER.............................................. 47
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7.5 PROCEDURE FOR TERMINATION, AMENDMENT, EXTENSION OR
WAIVER......................................................... 47
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ARTICLE VIII - SURVIVAL OF PROVISIONS...................................... 47
8.1 SURVIVAL....................................................... 47
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ARTICLE IX - NOTICES....................................................... 47
9.1 NOTICES........................................................ 47
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ARTICLE X - MISCELLANEOUS.................................................. 49
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10.1 ENTIRE AGREEMENT............................................... 49
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10.2 EXPENSES....................................................... 49
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10.3 COUNTERPARTS................................................... 49
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10.4 NO THIRD PARTY BENEFICIARY..................................... 50
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10.5 GOVERNING LAW.................................................. 50
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10.6 ASSIGNMENT; BINDING EFFECT..................................... 50
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10.7 HEADINGS, GENDER, ETC.......................................... 50
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10.8 INVALID PROVISIONS............................................. 50
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10.9 VIACOM TRANSACTION............................................. 51
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Annex I Form of Amended and Restated Certificate of
Incorporation
Annex II Form of Bylaws
Exhibit A Form of Affiliate Letter
Exhibit B Form of Certificate of Chancellor Broadcasting
Company
Exhibit C Form of Certificate of Chancellor Radio
Broadcasting Company
Exhibit D Form of Certificate of 5% Stockholder of
Chancellor Broadcasting Company
Exhibit E Form of Certificate of 5% Stockholder of
Chancellor Radio Broadcasting Company
Exhibit F Form of Certificate of Evergreen Media Corporation
Exhibit G Form of Tax Opinion of Xxxxxx & Xxxxxxx
Exhibit H Form of Tax Opinion of Weil, Gotshal & Xxxxxx LLP
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and entered
into as of February 19, 1997, by and among CHANCELLOR BROADCASTING COMPANY, a
Delaware corporation (the "Company"), CHANCELLOR RADIO BROADCASTING COMPANY, a
Delaware corporation and a subsidiary of the Company ("Radio Broadcasting"), and
EVERGREEN MEDIA CORPORATION, a Delaware corporation ("Evergreen").
RECITALS
WHEREAS, the respective Boards of Directors of Evergreen, the Company and
Radio Broadcasting have each approved the merger of the Company and Radio
Broadcasting with and into Evergreen, upon the terms and subject to the
conditions set forth herein;
WHEREAS, as a condition of the willingness of each of Evergreen, Radio
Broadcasting and the Company to enter into this Agreement and effect the
transactions contemplated hereby, contemporaneously with the execution and
delivery of this Agreement (i) certain beneficial and record holders (the
"Principal Company Stockholders") of the Class A Common Stock, $0.01 par value
("Company Class A Common Stock") and Class B Common Stock, $0.01 par value
("Company Class B Common Stock" and collectively with the Company Class A Common
Stock, the "Shares"), of the Company, and (ii) Xxxxx X. Xxxxxxxx, the beneficial
and record holder (the "Principal Evergreen Stockholder") of substantially all
the outstanding Class B Common Stock, $0.01 par value ("Evergreen Class B Common
Stock"), of Evergreen shall enter into an agreement (the "Stockholders
Agreement") providing for certain matters with respect to their respective
Shares and Evergreen Class B Common Stock, including among other things, voting
such Shares and Evergreen Class B Common Stock in favor of the adoption of this
Agreement; and
WHEREAS, Evergreen, Radio Broadcasting and the Company desire to make
certain representations, warranties, covenants and agreements in connection with
such merger and also to prescribe various conditions to such merger;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER. Subject to the terms and conditions of this Agreement, at
the Effective Time (as defined in Section 1.3), the Company and Radio
Broadcasting shall be merged with and into Evergreen (the "Merger"), in a
transaction intended to qualify as a tax-free reorganization under Section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code"), in
accordance with the Delaware General Corporation Law (the "Delaware Code"), and
the separate corporate existences of the Company and Radio Broadcasting shall
cease and Evergreen shall continue as the surviving corporation under the laws
of the State of Delaware (the "Surviving Corporation") with all the rights,
privileges, immunities and powers, and subject to all the duties and
liabilities, of a corporation organized under the Delaware Code. The Merger
shall have the effects set forth in the Delaware Code.
1.2 CLOSING. Unless this Agreement shall have been terminated and the
transactions herein contemplated shall have been abandoned pursuant to Section
7.1, and subject to the satisfaction or waiver of the conditions set forth in
Article VI, the closing of the Merger (the "Closing") will take place at 10:00
a.m., Dallas, Texas time, on the second business day following the date on which
the last to be fulfilled or waived of the conditions set forth in Article VI
shall be fulfilled or waived in accordance with this Agreement (the "Closing
Date"), at the offices of Weil, Gotshal & Xxxxxx LLP, 000 Xxxxxxxx Xxxxx, Xxxxx
0000, Xxxxxx, Xxxxx 00000, unless another date, time or place is agreed to in
writing by the parties hereto.
1.3 EFFECTIVE TIME. The parties hereto will file with the Secretary of
State of the State of Delaware (the "Delaware Secretary of State") on the date
of the Closing (or on such other date as Evergreen, the Company and Radio
Broadcasting may agree) a certificate of merger or other appropriate documents,
executed in accordance with the relevant provisions of the Delaware Code, and
make all other filings or recordings required under the Delaware Code in
connection with the Merger. The Merger shall become effective upon the filing of
the certificate of merger with the Delaware Secretary of State, or at such later
time specified in the certificate of merger (the "Effective Time").
1.4 CERTIFICATE OF INCORPORATION. The Certificate of Incorporation of
Evergreen shall be amended and restated in its entirety as set forth in Annex I
hereto, and as so amended and restated shall be the Certificate of Incorporation
of the
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Surviving Corporation until thereafter amended in accordance with its terms and
as provided by applicable law. From and after the Effective Time, the name of
the Surviving Corporation shall be Chancellor Media Corporation.
1.5 CERTIFICATES OF DESIGNATION. At the Effective Time, the Board of
Directors of the Surviving Corporation shall authorize the designation of three
series of preferred stock, $0.01 par value (collectively, the "Merger Preferred
Stock"), of the Surviving Corporation so as to permit the Surviving Corporation
to issue the shares of Merger Preferred Stock pursuant to Sections 1.10 and 1.11
hereof, and the Surviving Corporation shall file with the Delaware Secretary of
State immediately following the Effective Time a certificate of designations
(the "Certificates of Designation") with respect to each series of Merger
Preferred Stock pursuant to the Delaware Code.
1.6 BYLAWS. The Bylaws of the Surviving Corporation shall be in the form
of Annex II hereto until thereafter amended in accordance with their terms and
as provided by applicable law.
1.7 DIRECTORS. The directors of the Surviving Corporation at the Effective
Time shall be as set forth below:
Class I Directors
Xxxx X. Xxxxxx
Xxxxx X. Xxxxx
Xxxxxxx Xxxxx-Xxxx
Class II Directors
Xxxxxxxx X. Xxxxxx, Xx.
Xxxxxx Xxxxxx
Xxxxxxx X. Xxxxxx
Xxxxx X. xx Xxxxxx
Class III Directors
Xxxxxx X. Xxxxx
Xxxxx X. Xxxxxxxx
Xxxx X. Xxxxxx
Xxxxxx X. Xxxxxx
Each Class I director, Class II director and Class III director identified
as such above will hold office from the Effective Time until the 1998, 1999 and
2000 annual meetings of the Surviving Corporation, respectively, and in all
cases, until
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his or her respective successor is duly elected or appointed and qualified in
the manner provided in the Certificate of Incorporation or Bylaws of the
Surviving Corporation, or as otherwise provided by applicable law.
1.8 OFFICERS. The initial senior executive officers of the Surviving
Corporation at the Effective Time shall be as set forth below:
Xxxxxx X. Xxxxx Chairman of the Board
Xxxxx X. Xxxxxxxx President and Chief Executive
Officer
Xxxxxx Xxxxxx Co-Chief Operating Officer
Xxxxx X. xx Xxxxxx Co-Chief Operating Officer
Xxxxxxx X. Xxxxxx Chief Financial Officer
Each such officer will hold office from the Effective Time until his
respective successor is duly elected or appointed and qualified in the manner
provided in the Certificate of Incorporation or Bylaws of the Surviving
Corporation, or as otherwise provided by applicable law. The names, titles and
responsibilities of the other individuals who initially will hold officerships
with the Surviving Corporation shall be determined by Evergreen and the Company
prior to the Effective Time, and the election of these persons shall be
considered by the Board of Directors of the Surviving Corporation immediately
following the Effective Time.
1.9 EFFECT ON EVERGREEN CAPITAL STOCK. (a) Outstanding Evergreen Common
Stock. Each of the shares of Evergreen Class B Common Stock and Class A Common
Stock, $0.01 par value, of Evergreen ("Evergreen Class A Common Stock" and
collectively with the Evergreen Class B Common Stock, the "Evergreen Common
Stock") issued and outstanding immediately prior to the Effective Time (other
than shares of Evergreen Common Stock held as treasury shares by Evergreen)
shall, by virtue of the Merger and without any action on the part of the holder
thereof, be converted into a right to receive one validly issued, fully paid and
nonassessable share of the common stock, $0.01 par value ("Surviving Corporation
Common Stock"), of the Surviving Corporation.
(b) Exchange of Certificates. Evergreen shall instruct its transfer
agent that from and after the Effective Time, upon the presentation for transfer
of any shares of Evergreen Common Stock or at the request of any holder thereof,
the transfer agent
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shall issue to the transferee or holder thereof certificates representing that
number of shares of Surviving Corporation Common Stock into which such shares of
Evergreen Common Stock were converted pursuant to this Agreement.
1.10 EFFECT ON COMPANY CAPITAL STOCK. (a) Outstanding Shares. Each of the
Shares of the Company issued and outstanding immediately prior to the Effective
Time (other than Shares held as treasury shares by the Company) shall, by virtue
of the Merger and without any action on the part of the holder thereof, be
converted into a right to receive 0.9091 validly issued, fully paid and
nonassessable shares of Surviving Corporation Common Stock (the "Exchange
Ratio"). The shares of Surviving Corporation Common Stock to be issued to
holders of Shares in accordance with this Section 1.10(a), any cash to be paid
in accordance with Section 1.12(f) in lieu of fractional shares of Surviving
Corporation Common Stock, and the shares of Merger Preferred Stock to be issued
to holders of Company Convertible Preferred Stock (as hereinafter defined) and
Radio Broadcasting Preferred Stock (as hereinafter defined) are referred to
collectively as the "Merger Consideration."
(b) Treasury Shares. Each Share issued and outstanding
immediately prior to the Effective Time which is then held as a treasury share
by the Company shall, by virtue of the Merger and without any action on the part
of the Company, be cancelled and retired and cease to exist, without any
conversion thereof.
(c) Outstanding Company Convertible Preferred Stock. Each share
(other than a Dissenting Share, as defined in Section 1.14 below) of 7%
Convertible Preferred Stock, par value $0.01 per share ("Company Convertible
Preferred Stock"), of the Company outstanding immediately prior to the Effective
Time shall be converted into one share of preferred stock of the Surviving
Corporation having substantially identical powers, preferences and relative
rights as the Company Convertible Preferred Stock.
(d) Impact of Stock Splits, etc. In the event of any change in
Evergreen Common Stock and/or Shares between the date of this Agreement and the
Effective Time of the Merger by reason of any stock split, stock dividend,
subdivision, reclassification, recapitalization, combination, exchange of shares
or the like, the number and class of shares of Surviving Corporation Common
Stock to be issued and delivered in the Merger in exchange for each outstanding
Share as provided in this Agreement shall be proportionately adjusted.
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1.11 EFFECT ON RADIO BROADCASTING CAPITAL STOCK. (a) Outstanding Common
Stock of Radio Broadcasting. Each of the shares of common stock, $0.01 par
value, of Radio Broadcasting issued and outstanding immediately prior to the
Merger shall, by virtue of the Merger, be cancelled, and no consideration shall
be delivered in exchange therefor.
(b) Outstanding 12 1/4% Series A Senior Cumulative Exchangeable
Preferred Stock. Each share (other than a Dissenting Share) of 12 1/4% Series A
Senior Cumulative Exchangeable Preferred Stock, par value $0.01 per share
("Radio Broadcasting 12 1/4% Preferred Stock"), of Radio Broadcasting
outstanding immediately prior to the Effective Time shall be converted into one
share of preferred stock of the Surviving Corporation having substantially
identical powers, preferences and relative rights as the Radio Broadcasting 12
1/4% Preferred Stock.
(c) Outstanding 12% Exchangeable Preferred Stock. Each share
(other than a Dissenting Share) of 12% Exchangeable Preferred Stock, par value
$0.01 per share ("Radio Broadcasting 12% Preferred Stock" and, collectively with
Radio Broadcasting 12 1/4% Preferred Stock, the "Radio Broadcasting Preferred
Stock"), of Radio Broadcasting outstanding immediately prior to the Effective
Time shall be converted into one share of preferred stock of the Surviving
Corporation having substantially identical powers, preferences and relative
rights as the Radio Broadcasting 12% Preferred Stock.
1.12 EXCHANGE OF CERTIFICATES. (a) Paying Agent. As of the Effective Time,
the Surviving Corporation shall deposit with its transfer agent and registrar
(the "Paying Agent"), for the benefit of the holders of Shares, Company
Convertible Preferred Stock and Radio Broadcasting Preferred Stock, other than
holders of Dissenting Shares, certificates representing the shares of Surviving
Corporation Common Stock and Merger Preferred Stock to be issued to such holders
pursuant to Sections 1.10 and 1.11 (such certificates, together with any
dividends or distributions with respect to such certificates and any cash paid
in lieu of fractional shares pursuant to Section 1.12(f), being hereinafter
referred to as the "Payment Fund").
(b) Exchange Procedures. As soon as practicable after the
Effective Time, each holder of an outstanding certificate or certificates which
prior thereto represented Shares, shares of Company Convertible Preferred Stock
or shares of Radio Broadcasting Preferred Stock shall, upon surrender to the
Paying Agent of such certificate or certificates and acceptance thereof by the
Paying Agent, be entitled to a
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certificate representing that number of whole shares of Surviving Corporation
Common Stock or Merger Preferred Stock which the aggregate number of Shares,
shares of Company Convertible Preferred Stock or shares of Radio Broadcasting
Preferred Stock previously represented by such certificate or certificates
surrendered shall have been converted into the right to receive pursuant to
Sections 1.10 and 1.11 of this Agreement (with respect to the Surviving
Corporation Common Stock, including any cash to be received in lieu of
fractional shares, as provided in Section 1.12(f) below). The Paying Agent shall
accept such certificates upon compliance with such reasonable terms and
conditions as the Paying Agent may impose to effect an orderly exchange thereof
in accordance with its normal exchange practices. If the Merger Consideration
(or any portion thereof) is to be delivered to any person other than the person
in whose name the certificate or certificates representing Shares, shares of
Company Convertible Preferred Stock or shares of Radio Broadcasting Preferred
Stock surrendered in exchange therefor is registered, it shall be a condition to
such exchange that the certificate or certificates so surrendered shall be
properly endorsed or otherwise be in proper form for transfer and that the
person requesting such exchange shall pay to the Paying Agent any transfer or
other taxes required by reason of the payment of such consideration to a person
other than the registered holder of the certificate(s) surrendered, or shall
establish to the satisfaction of the Paying Agent that such tax has been paid or
is not applicable. After the Effective Time, there shall be no further transfer
on the records of the Company, Radio Broadcasting or their respective transfer
agents of certificates representing Shares, shares of Company Convertible
Preferred Stock or shares of Radio Broadcasting Preferred Stock and if such
certificates are presented to the Company or Radio Broadcasting for transfer,
they shall be cancelled against delivery of the Merger Consideration as
hereinabove provided. Until surrendered as contemplated by this Section 1.12(b),
each certificate representing Shares, shares of Company Convertible Preferred
Stock and shares of Radio Broadcasting Preferred Stock (other than certificates
representing treasury Shares to be cancelled in accordance with Section
1.10(b)), shall be deemed at any time after the Effective Time to represent only
the right to receive upon such surrender the Merger Consideration, without any
interest thereon, as contemplated by Sections 1.10 and 1.11.
(c) Letter of Transmittal. Promptly after the Effective Time (but
in no event more than five business days thereafter), the Surviving Corporation
shall require the Paying Agent to mail to each record holder of certificates
that immediately prior to the Effective Time represented Shares, shares of
Company Convertible Preferred Stock or shares of Radio
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Broadcasting Preferred Stock which have been converted pursuant to Sections 1.10
and 1.11, a form of letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title shall pass, only upon proper
delivery of certificates representing Shares, shares of Company Convertible
Preferred Stock or shares of Radio Broadcasting Preferred Stock to the Paying
Agent, and which shall be in such form and have such provisions as the Surviving
Corporation reasonably may specify) and instructions for use in surrendering
such certificates and receiving the consideration to which such holder shall be
entitled therefor pursuant to Sections 1.10 and 1.11.
(d) Distributions with Respect to Unexchanged Shares. No
dividends or other distributions with respect to Surviving Corporation Common
Stock or Merger Preferred Stock with a record date after the Effective Time
shall be paid to the holder of any certificate that immediately prior to the
Effective Time represented Shares, shares of Company Convertible Preferred Stock
or shares of Radio Broadcasting Preferred Stock which have been converted
pursuant to Sections 1.10 or 1.11, until the surrender for exchange of such
certificate in accordance with this Article I. Following surrender for exchange
of any such certificate, there shall be paid to the holder of such certificate,
without interest, (i) at the time of such surrender, the amount of dividends or
other distributions with a record date after the Effective Time theretofore paid
with respect to the number of whole shares of Surviving Corporation Common Stock
or Merger Preferred Stock into which the Shares, shares of Company Convertible
Preferred Stock or shares of Radio Broadcasting Preferred Stock represented by
such certificate immediately prior to the Effective Time were converted pursuant
to Sections 1.10 or 1.11, and (ii) at the appropriate payment date, the amount
of dividends or other distributions with a record date after the Effective Time,
but prior to such surrender, and with a payment date subsequent to such
surrender, payable with respect to such whole shares of Surviving Corporation
Common Stock or Merger Preferred Stock.
(e) No Further Ownership Rights in Shares, Company Convertible
Preferred Stock and Radio Broadcasting Preferred Stock. The Merger Consideration
(or, in respect of Dissenting Shares, the cash payment therefor) paid upon the
surrender for exchange of certificates representing Shares, shares of Company
Convertible Preferred Stock or shares of Radio Broadcasting Preferred Stock in
accordance with the terms of this Article I shall be deemed to have been issued
and paid in full satisfaction of all rights pertaining to the Shares, shares of
Company Convertible Preferred Stock or shares of Radio Broadcasting Preferred
Stock theretofore represented by such certificates,
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subject, however, to the Surviving Corporation's obligation (if any) to pay any
dividends or make any other distributions with a record date prior to the
Effective Time which may have been declared by the Company or Radio
Broadcasting, as appropriate, on the Shares, shares of Company Convertible
Preferred Stock, or shares of Radio Broadcasting Preferred Stock in accordance
with the terms of this Agreement (or, with respect to the Company Convertible
Preferred Stock and Radio Broadcasting Preferred Stock, in accordance with their
respective terms) or prior to the date of this Agreement and which remain unpaid
at the Effective Time.
(f) No Fractional Shares. No certificates or scrip representing
fractional shares of Surviving Corporation Common Stock shall be issued upon the
surrender for exchange of certificates that immediately prior to the Effective
Time represented Shares which have been converted pursuant to Section 1.10, and
each holder of Shares who would otherwise have been entitled to receive a
fraction of a share of Surviving Corporation Common Stock (after taking into
account all certificates delivered by such holder) shall receive, in lieu
thereof, cash (without interest) in an amount equal to such fractional part of a
share of Surviving Corporation Common Stock multiplied by the closing price per
share of Evergreen Class A Common Stock on the Nasdaq National Market on the
trading day immediately prior to the Effective Time.
(g) Termination of Payment Fund. Any portion of the Payment Fund
which remains undistributed to the holders of the certificates representing
Shares, shares of Company Convertible Preferred Stock or shares of Radio
Broadcasting Preferred Stock for 120 days after the Effective Time shall be
delivered to the Surviving Corporation, upon demand, and any holders of Shares,
shares of Company Convertible Preferred Stock or shares of Radio Broadcasting
Preferred Stock who have not theretofore complied with this Article I shall
thereafter look only to the Surviving Corporation and only as general creditors
thereof for payment of their claims for any Merger Consideration and any
dividends or distributions with respect to Surviving Corporation Common Stock or
Merger Preferred Stock.
(h) No Liability. None of Evergreen, the Company, Radio
Broadcasting, the Surviving Corporation or the Paying Agent shall be liable to
any person in respect of any cash, shares, dividends or distributions payable
from the Payment Fund delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law. If any certificates representing
Shares, shares of Company Convertible Preferred Stock or shares of Radio
Broadcasting Preferred Stock shall not
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have been surrendered prior to five years after the Effective Time (or
immediately prior to such earlier date on which any Merger Consideration in
respect of such certificate would otherwise escheat to or become the property of
any Governmental Entity (as defined in Section 2.3)), any such cash, shares,
dividends or distributions payable in respect of such certificate shall, to the
extent permitted by applicable law, become the property of the Surviving
Corporation, free and clear of all claims or interest of any person previously
entitled thereto.
1.13 DISSENTING SHARES. Notwithstanding anything herein to the contrary in
this Agreement, shares of Company Convertible Preferred Stock or Radio
Broadcasting Preferred Stock, as applicable, outstanding immediately prior to
the Effective Time and held by a holder who has not voted in favor of the Merger
or consented thereto and who properly demands in writing appraisal of such
shares of Company Convertible Preferred Stock or Radio Broadcasting Preferred
Stock in accordance with Section 262 of the Delaware Code and who shall not have
withdrawn such demand or otherwise have forfeited appraisal rights, shall not be
converted into or represent the right to receive the Merger Consideration
therefor ("Dissenting Shares"). Such stockholders shall be entitled to receive
payment of the appraised value of such shares of Company Convertible Preferred
Stock or Radio Broadcasting Preferred Stock, as the case may be, held by them in
accordance with the provisions of Section 262 of the Delaware Code, except that
all Dissenting Shares held by stockholders who shall have failed to perfect or
who effectively shall have withdrawn or lost their rights to appraisal of such
securities under Section 262 shall thereupon be deemed to have been converted
into, as of the Effective Time, the right to receive, without any interest
thereon, the applicable Merger Consideration, upon surrender, in the manner
provided in this Article I, of the certificate or certificates that formerly
represented such securities. The Company shall take all actions required to be
taken by it in accordance with Section 262(d)(1) of the Delaware Code with
respect to the holders of Company Convertible Preferred Stock as of the record
date for the Stockholders Meeting (as defined in Section 4.2(a)) and shall
otherwise comply with the provisions of Section 262 of the Delaware Code. The
Surviving Corporation shall, within ten days after the Effective Time, take all
actions required to be taken by it pursuant to Section 262(d)(2) of the Delaware
Code with respect to all holders of record, as of the Effective Time, of the
Radio Broadcasting Preferred Stock. The Company shall give Evergreen prompt
written notice of any demands for appraisal received by the Company with respect
to the Company Convertible Preferred Stock, withdrawals of such demands, and any
other instruments served pursuant to Delaware law and received by the Company,
and Evergreen shall have the right to participate in
10
all negotiations and proceedings with respect to such demands. Prior to the
Effective Time, the Company shall not, except with the prior written consent of
Evergreen, make any payments with respect to any demands for appraisal, or
settle or offer to settle, any such demands.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF EVERGREEN
Evergreen hereby represents and warrants to the Company and Radio
Broadcasting as follows:
2.1 ORGANIZATION, STANDING AND CORPORATE POWER. Evergreen and each of its
Significant Subsidiaries (as defined below) is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction in
which it is incorporated and has the requisite corporate power and authority to
carry on its business as now being conducted. Evergreen and each of its
Significant Subsidiaries is duly qualified to do business and is in good
standing in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification necessary,
except where the failure to be so qualified could not reasonably be expected to
have a material adverse effect on the business, properties, results of
operations, or condition (financial or otherwise) of Evergreen and its
subsidiaries, considered as a whole (an "Evergreen Material Adverse Effect");
provided, however, that for purposes of Sections 2.13, 2.14, 2.15 and 2.16, no
fact, event or circumstance shall be deemed to constitute an Evergreen Material
Adverse Effect unless, in addition to otherwise satisfying the elements of the
definition given above, the relevant fact, event or circumstance not disclosed
pursuant to such representations would be material facts or circumstances, the
omission of which in a document filed with the SEC (as hereinafter defined)
pursuant to the Exchange Act would be such as to cause the statements contained
in such filings to be misleading within the meaning of Rule 10b-5 under the
Exchange Act. Evergreen has delivered to the Company and Radio Broadcasting
complete and correct copies of its Certificate of Incorporation and Bylaws, as
amended to the date of this Agreement. For purposes of this Agreement, a
"Significant Subsidiary" of any person means any subsidiary of such person that
would constitute a "significant subsidiary" within the meaning of Rule 1-02 of
Regulation S-X of the Securities and Exchange Commission (the "SEC").
2.2 CAPITAL STRUCTURE. The authorized capital stock of Evergreen consists
of (i) 75,000,000 shares of Evergreen Class A Common Stock, (ii) 4,500,000
shares of Evergreen Class B Common
11
Stock and (iii) 6,000,000 shares of preferred stock, $0.01 par value (the
"Preferred Stock"). At the close of business on February 18, 1997: (i)
39,100,750 shares of Evergreen Class A Common Stock were issued and outstanding,
1,720,091 shares of Evergreen Class A Common Stock were reserved for issuance
pursuant to outstanding options or warrants to purchase Evergreen Class A Common
Stock which have been granted to directors, officers or employees of Evergreen
or others ("Evergreen Stock Options"); (ii) 3,114,066 shares of Evergreen Class
B Common Stock were issued and outstanding and no shares of Evergreen Class B
Common Stock were reserved for issuance for any purpose; and (iii) no shares of
Preferred Stock were issued and outstanding. Except as set forth above, at the
close of business on February 18, 1997, no shares of capital stock or other
equity securities of Evergreen were authorized, issued, reserved for issuance or
outstanding. All outstanding shares of capital stock of Evergreen are, and all
shares which may be issued pursuant to Evergreen's stock option plans, as
amended to the date hereof (the "Evergreen Stock Option Plans"), or any
outstanding Evergreen Stock Options 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 Evergreen or any
subsidiary of Evergreen 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 Evergreen or any subsidiary of Evergreen may vote are issued
or outstanding. All the outstanding shares of capital stock of each subsidiary
of Evergreen have been validly issued and are fully paid and nonassessable and
are owned by Evergreen, by one or more wholly-owned subsidiaries of Evergreen or
by Evergreen and one or more such wholly-owned subsidiaries, free and clear of
all pledges, claims, liens, charges, encumbrances and security interests of any
kind or nature whatsoever (collectively, "Liens"), except for Liens arising out
of Evergreen Media Corporation of Los Angeles' ("EMCLA") senior credit facility
and senior notes and those that, individually or in the aggregate, could not
reasonably be expected to have an Evergreen Material Adverse Effect. Except as
set forth above and except for certain provisions of the Certificate of
Incorporation of Evergreen relating to transfers of Evergreen Class B Common
Stock and to "alien ownership", neither Evergreen nor any subsidiary of
Evergreen has any outstanding option, warrant, subscription or other right,
agreement or commitment that either (i) obligates Evergreen or any subsidiary of
Evergreen to issue, sell or transfer, repurchase, redeem or otherwise acquire or
vote any shares of the capital stock of Evergreen or any Significant Subsidiary
of Evergreen or (ii) restricts the transfer of Evergreen Common Stock. No shares
of capital stock of Evergreen are owned of record or beneficially by any
subsidiary of
12
Evergreen. Since the close of business on February 18, 1997 to the date hereof,
neither Evergreen nor any subsidiary of Evergreen has issued any capital stock
or securities or other rights convertible into or exercisable or exchangeable
for shares of such capital stock other than securities issued upon the exercise
of Evergreen Stock Options outstanding on February 18, 1997 or other convertible
securities outstanding on February 18, 1997.
2.3 AUTHORITY; NONCONTRAVENTION. Evergreen has the requisite corporate
power and authority to enter into this Agreement and, subject to the approval of
its stockholders as set forth in Section 6.1(a) with respect to the consummation
of the Merger (the "Evergreen Stockholder Approval"), to consummate the
transactions contemplated by this Agreement. The execution and delivery of this
Agreement by Evergreen and the consummation by Evergreen of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of Evergreen, subject, in the case of the Merger and issuance of
Evergreen Common Stock in the Merger, to the Evergreen Stockholder Approval.
This Agreement has been duly executed and delivered by Evergreen and, assuming
this Agreement constitutes the valid and binding agreement of the Company and
Radio Broadcasting, constitutes a valid and binding obligation of Evergreen,
enforceable against Evergreen in accordance with its terms except that the
enforcement thereof may be limited by (a) bankruptcy, insolvency,
reorganization, moratorium or similar laws now or hereafter in effect relating
to creditor's rights generally and (b) general principles of equity (regardless
of whether enforceability is considered in a proceeding at law or in equity).
The execution and delivery of this Agreement do not, and the consummation of the
transactions contemplated by this Agreement and compliance with the provisions
hereof will not, (i) conflict with any of the provisions of the Certificate of
Incorporation or Bylaws of Evergreen or the comparable documents of any
subsidiary of Evergreen, (ii) subject to the governmental filings and other
matters referred to in the following sentence, conflict with, result in a breach
of or default (with or without notice or lapse of time, or both) under, or give
rise to a right of termination, cancellation or acceleration of any obligation
or loss of a material benefit under, or require the consent of any person under,
any indenture or other agreement, permit, concession, franchise, license or
similar instrument or undertaking to which Evergreen or any of its subsidiaries
is a party or by which Evergreen or any of its subsidiaries or any of their
assets is bound or affected, (iii) result in an obligation by Evergreen, the
Surviving Corporation or any of their respective subsidiaries to redeem,
repurchase or retire (or offer to redeem, repurchase or retire) any outstanding
debt (other than
13
EMCLA's senior credit facility and senior notes) or equity security of
Evergreen, the Surviving Corporation or any of their respective subsidiaries, or
(iv) subject to the governmental filings and other matters referred to in the
following sentence, contravene any law, rule or regulation of any state or of
the United States or any political subdivision thereof or therein, or any order,
writ, judgment, injunction, decree, determination or award currently in effect,
except for (x) conflicts, breaches, defaults or other consequences
(collectively, "breaches") referred to above with respect to EMCLA's senior
credit facility and senior notes, (y) breaches resulting from the Surviving
Corporation's ownership of radio stations in certain markets where such
ownership may be in excess of the numerical limits imposed on local multiple
radio station ownership under the Telecommunications Act of 1996, together with
the rules and regulations thereunder (collectively, the "1996 Telecom Act") or
where such ownership otherwise may be subject to challenge by any Governmental
Entity under any antitrust or similar law, rule or regulation, or (z) breaches
that, individually or in the aggregate, could not reasonably be expected to have
an Evergreen Material Adverse Effect or to materially hinder Evergreen's ability
to consummate the transactions contemplated by this Agreement. No consent,
approval or authorization of, or declaration or filing with, or notice to, any
governmental agency or regulatory authority (a "Governmental Entity") which has
not been received or made, is required by or with respect to Evergreen or any of
its subsidiaries in connection with the execution and delivery of this Agreement
by Evergreen or the consummation by Evergreen of the transactions contemplated
hereby, except for (i) the filing of premerger notification and report forms
under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), with respect to the Merger and the termination or earlier expiration
of the applicable waiting periods thereunder, (ii) such filings with and
approvals required by the Federal Communications Commission or any successor
entity (the "FCC") under the Communications Act of 1934, as amended, and the
rules, regulations and policies of the FCC promulgated thereunder (collectively,
the "Communications Act") including those required in connection with the
transfer of control of FCC Licenses (as defined in Section 3.9) for the
operation of the Company Licensed Facilities (as defined in Section 3.9) and the
transfer of control of the Evergreen FCC Licenses (as defined in Section 2.9),
(iii) the filing of (x) the registration statement on Form S-4 to be filed with
the SEC by Evergreen in connection with the issuance of Surviving Corporation
Common Stock and, if required to be registered under the Securities Act, the
Merger Preferred Stock in the Merger (the "Form S-4") and the declaration of
effectiveness of the Form S-4 by the SEC, (y) a proxy statement to be filed with
the SEC by
14
Evergreen relating to the Evergreen Stockholder Approval (such proxy statement,
together with the proxy statement relating to the approval of this Agreement and
the Merger by the holders of Shares (the "Company Stockholder Approval"), in
each case as amended or supplemented from time to time, the "Joint Proxy
Statement"), and (z) such reports under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), as may be required in connection with this
Agreement and the transactions contemplated by this Agreement, and (iv) the
filing of the certificate of merger with the Delaware Secretary of State and
appropriate documents with the relevant authorities of other states in which the
Company and Radio Broadcasting is qualified to do business.
2.4 SEC DOCUMENTS. (i) Evergreen has filed all required reports,
schedules, forms, statements and other documents with the SEC since January 1,
1995 (such reports, schedules, forms, statements and other documents are
hereinafter referred to as the "SEC Documents"); (ii) as of their respective
dates, the SEC Documents complied with the requirements of the Securities Act of
1933, as amended (the "Securities Act"), or the Exchange Act, as the case may
be, and the rules and regulations of the SEC promulgated thereunder applicable
to such SEC Documents, and none of the 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) the consolidated financial statements of Evergreen
included in the SEC Documents comply 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 generally
accepted accounting principles applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto or, in the case of
unaudited statements, as permitted by Rule 10-01 of Regulation S-X) and fairly
present, in all material respects, the consolidated financial position of
Evergreen and its 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).
2.5 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in the SEC
Documents filed and publicly available prior to the date of this Agreement (the
"Filed SEC Documents") and except as disclosed in writing by Evergreen to the
Company prior to the execution and delivery of the Agreement, or as it relates
to the Viacom Transaction (as defined in Section 10.9) or as
15
otherwise agreed to in writing after the date hereof by the Company and
Evergreen, since the date of the most recent audited financial statements
included in the Filed SEC Documents, Evergreen and its subsidiaries have
conducted their business only in the ordinary course, and there has not been (i)
any change which could reasonably be expected to have an Evergreen Material
Adverse Effect (including as a result of the consummation of the transactions
contemplated by this Agreement), (ii) any declaration, setting aside or payment
of any dividend or other distribution (whether in cash, stock or property) with
respect to any of Evergreen's currently outstanding capital stock, (iii) any
split, combination or reclassification of any of its outstanding capital stock
or any issuance or the authorization of any issuance of any other securities in
respect of, in lieu of or in substitution for shares of its outstanding capital
stock, (iv) (x) any granting by Evergreen or any of its subsidiaries to any
director, officer or other employee or independent contractor of Evergreen or
any of its subsidiaries of any increase in compensation or acceleration of
benefits, except in the ordinary course of business consistent with prior
practice or as was required under employment agreements in effect as of the date
of the most recent audited financial statements included in the Filed SEC
Documents, (y) any granting by Evergreen or any of its subsidiaries to any
director, officer or other employee or independent contractor of any increase
in, or acceleration of benefits in respect of, severance or termination pay, or
pay in connection with any change of control of Evergreen, except in the
ordinary course of business consistent with prior practice or as was required
under any employment, severance or termination agreements in effect as of the
date of the most recent audited financial statements included in the Filed SEC
Documents or (z) any entry by Evergreen or any of its subsidiaries into any
employment, severance, change of control, or termination or similar agreement
with any director, executive officer or other employee or independent
contractor, or (v) any change in accounting methods, principles or practices by
Evergreen or any of its subsidiaries materially affecting its assets, liability
or business, except insofar as may have been required by a change in generally
accepted accounting principles.
2.6 NO EXTRAORDINARY PAYMENTS OR CHANGE IN BENEFITS. Except as disclosed
in writing by Evergreen to the Company prior to the execution and delivery of
the Agreement, no current or former director, officer, employee or independent
contractor of Evergreen or any of its subsidiaries is entitled to receive any
payment under any agreement, arrangement or policy (written or oral) relating to
employment, severance, change of control, termination, stock options, stock
purchases, compensation, deferred compensation, fringe benefits or other
employee benefits
16
currently in effect (collectively, the "Evergreen Benefit Plans"), nor will any
benefit received or to be received by any current or former director, officer,
employee or independent contractor of Evergreen or any of its subsidiaries under
any Evergreen Benefit Plan be accelerated or modified, as a result of or in
connection with the execution and delivery of, or the consummation of the
transactions contemplated by, this Agreement.
2.7 VOTING REQUIREMENTS. The affirmative vote of the holders of at least a
majority of the votes entitled to be cast by the holders of the outstanding
Evergreen Common Stock, voting as a single class, entitled to vote thereon at
the Evergreen Stockholders Meeting (as hereinafter defined) with respect to the
approval of this Agreement, the Merger and the issuance of shares of Evergreen
Common Stock in the Merger is the only vote of the holders of any class or
series of Evergreen's capital stock necessary to approve this Agreement and the
transactions contemplated by this Agreement.
2.8 STATE TAKEOVER STATUTES. The Board of Directors of Evergreen has
approved the terms of this Agreement and the Stockholders Agreement and the
consummation of the transactions contemplated by this Agreement and by the
Stockholders Agreement, and such approval is sufficient to render inapplicable
to the Merger and the other transactions contemplated by this Agreement and by
the Stockholders Agreement the provisions of Section 203 of the Delaware Code.
To Evergreen's knowledge, no other state takeover statute or similar statute or
regulation applies or purports to apply to the Merger, this Agreement, the
Stockholders Agreement or any of the transactions contemplated by this Agreement
or the Stockholders Agreement and no provision of the Certificate of
Incorporation, Bylaws or other governing instrument of Evergreen or any of its
subsidiaries would, directly or indirectly, restrict or impair the ability of
Evergreen or Evergreen to consummate the transactions contemplated by this
Agreement or the Stockholders Agreement.
2.9 EVERGREEN FCC LICENSES; OPERATIONS OF EVERGREEN LICENSED FACILITIES.
Evergreen and its subsidiaries have operated the radio stations for which
Evergreen and any of its subsidiaries holds licenses from the FCC, in each case
which are owned or operated by Evergreen and its subsidiaries (the "Evergreen
Licensed Facilities",) in material compliance with the terms of the licenses
issued by the FCC to Evergreen and its subsidiaries (the "Evergreen FCC
Licenses") (complete and correct copies of each of which have been made
available to the Company and Radio Broadcasting), and in material compliance
with the Communications Act, except where the failure to do so could not,
individually or in the aggregate, reasonably be expected to have
17
an Evergreen Material Adverse Effect. Evergreen and its subsidiaries have, since
acquired by Evergreen, timely filed or made all applications, reports and other
disclosures required by the FCC to be made with respect to the Evergreen
Licensed Facilities and have timely paid all FCC regulatory fees with respect
thereto, except where the failure to do so could not, individually or in the
aggregate, reasonably be expected to have an Evergreen Material Adverse Effect.
Evergreen and each of its subsidiaries have, and are the authorized legal
holders of, all the Evergreen FCC Licenses necessary or used in the operation of
the businesses of the Evergreen Licensed Facilities as presently operated. All
such Evergreen FCC Licenses are validly held and are in full force and effect,
unimpaired by any act or omission of Evergreen, each of its subsidiaries (or, to
Evergreen's knowledge, their respective predecessors) or their respective
officers, employees or agents, except where such impairments could not,
individually or in the aggregate, reasonably be expected to have an Evergreen
Material Adverse Effect. As of the date hereof, except as disclosed in writing
by Evergreen to the Company prior to the execution and delivery of this
Agreement, no application, action or proceeding is pending for the renewal or
material modification of any of the Evergreen FCC Licenses and, to Evergreen's
knowledge, there is not now before the FCC any material investigation,
proceeding, notice of violation, order of forfeiture or complaint relating to
any Evergreen Licensed Facility that, if adversely determined, could reasonably
be expected to have an Evergreen Material Adverse Effect, and Evergreen is not
aware of any basis that would cause the FCC not to renew any of the Evergreen
FCC Licenses. There is not now pending and, to Evergreen's knowledge, there is
not threatened, any action by or before the FCC to revoke, suspend, cancel,
rescind or modify in any material respect any of the Evergreen FCC Licenses
that, if adversely determined, could reasonably be expected to have an Evergreen
Material Adverse Effect (other than proceedings to amend FCC rules or the
Communications Act of general applicability to the radio industry).
2.10 BROKERS. Except with respect to Wasserstein, Perella & Co.
("Xxxxxxxxxxx"), all negotiations relating to this Agreement and the
transactions contemplated hereby have been carried out by Evergreen directly
with the Company and Radio Broadcasting, without the intervention of any person
on behalf of Evergreen in such a manner as to give rise to any valid claim by
any person against Evergreen, the Company, the Surviving Corporation or any
subsidiary of any of them for a finder's fee, brokerage commission, or similar
payment. Evergreen has provided the Company with a written summary of the terms
of its agreement with Xxxxxxxxxxx, and Evergreen has no other agreements or
understandings (written or oral) with respect to such services.
18
2.11 OPINION OF FINANCIAL ADVISOR. Evergreen has received the opinion of
Xxxxxxxxxxx, dated the date hereof, to the effect that, as of such date, the
Exchange Ratio is fair, from a financial point of view, to Evergreen.
2.12 FCC QUALIFICATION. Evergreen and its subsidiaries are fully qualified
under the Communication Act to be the transferees of control of the Company FCC
Licenses (as hereinafter defined); provided, however, that the parties recognize
that the consummation of the Merger could cause the Surviving Corporation to
exceed in certain cases the numerical limits on local multiple radio station
ownership imposed by Section 202(b) of the 1996 Telecom Act and that a waiver of
these limits may be required prior to the grant of such transfer of control of
the Evergreen FCC Licenses and Company FCC Licenses. Each individual or entity
that is an officer, director or attributable stockholder of Evergreen that is
proposed to be an officer, director or attributable stockholder of the Surviving
Corporation is fully qualified under the Communications Act to be an officer,
director or attributable stockholder of the Surviving Corporation.
2.13 COMPLIANCE WITH APPLICABLE LAWS. Each of Evergreen and its
subsidiaries has in effect all Federal, state, local and foreign governmental
approvals, authorizations, certificates, filings, franchises, licenses, notices,
permits and rights ("Permits") necessary for it to own, lease or operate its
properties and assets and to carry on its business as now conducted other than
such Permits the absence of which would not, individually or in the aggregate,
have an Evergreen Material Adverse Effect, and there has occurred no default
under any such Permit other than such defaults which, individually or in the
aggregate, would not have an Evergreen Material Adverse Effect. Except as
disclosed in the Filed Evergreen SEC Documents, Evergreen and its subsidiaries
are in compliance with all applicable statutes, laws, ordinances, rules orders
and regulations of any Governmental Entity, except for such noncompliance which
individually or in the aggregate would not have a Evergreen Material Adverse
Effect.
2.14 ABSENCE OF UNDISCLOSED LIABILITIES. Except as disclosed in the Filed
Evergreen SEC Documents, and except for (A) liabilities contemplated by this
Agreement or disclosed in writing by Evergreen to the Company prior to the
execution and delivery of this Agreement, and (B) EMCLA's obligations with
respect to the Viacom Transaction, Evergreen and its subsidiaries do not have
any material indebtedness, obligations or liabilities of any kind (whether
accrued, absolute, contingent or otherwise) (i) required by GAAP to be reflected
on a consolidated balance
19
sheet of Evergreen and its consolidated subsidiaries or in the notes, exhibits
or schedules thereto or (ii) which reasonably could be expected to have an
Evergreen Material Adverse Effect.
2.15 LITIGATION. Except as disclosed in the Filed Evergreen SEC Documents,
there is no litigation, administrative action, arbitration or other proceeding
pending against Evergreen or any of its subsidiaries or, to the knowledge of
Evergreen, threatened that, individually or in the aggregate, could reasonably
be expected to (i) have an Evergreen Material Adverse Effect or (ii) prevent, or
significantly delay the consummation of the transactions contemplated by this
Agreement. Except as set forth in the Filed Evergreen SEC Documents, there is no
judgment, order, injunction or decree of any Governmental Entity outstanding
against Evergreen or any of its subsidiaries that, individually or in the
aggregate, could reasonably be expected to have any effect referred to in the
foregoing clauses (i) and (ii) of this Section 2.14.
2.16 TRANSACTIONS WITH AFFILIATES. Other than the transactions
contemplated by this Agreement, the Viacom Transaction and except to the extent
disclosed in the Filed Evergreen SEC Documents or disclosed in writing to the
Company by Evergreen prior to the execution and delivery of this Agreement,
there have been no transactions, agreements, arrangements or understandings
between Evergreen or its subsidiaries, on the one hand, and Evergreen's
affiliates (other than subsidiaries of Evergreen) or any other person, on the
other hand, that would be required to be disclosed under Item 404 of Regulation
S-K under the Securities Act.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
AND RADIO BROADCASTING
The Company and Radio Broadcasting hereby, jointly and severally,
represent and warrant to Evergreen as follows:
3.1 ORGANIZATION, STANDING AND CORPORATE POWER. The Company and each of
its Significant Subsidiaries (including Radio Broadcasting) is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction in which it is incorporated and has the requisite corporate power
and authority to carry on its business as now being conducted. The Company and
each of its Significant Subsidiaries is duly qualified to do business and is in
good standing in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification necessary,
20
except where the failure to be so qualified could not reasonably be expected to
have a material adverse effect on the business, properties, results of
operations or condition (financial or otherwise) of the Company and its
subsidiaries, considered as a whole (a "Company Material Adverse Effect");
provided, however, that for purposes of Sections 3.13, 3.14, 3.15 and 3.16, no
fact, event or circumstance shall be deemed to constitute a Company Material
Adverse Effect unless in addition to otherwise specifying the elements of the
definition given above, the relevant event, fact or circumstance not disclosed
pursuant to such representations would be a material fact, event or
circumstance, the omission of which in a document filed with the SEC pursuant to
the Exchange Act would be such as to cause the statements contained in such
filing to be misleading within the meaning of Rule 10b-5 under the Exchange Act.
Each of the Company and Radio Broadcasting have delivered to Evergreen complete
and correct copies of its Certificate of Incorporation and Bylaws, as amended to
the date of this Agreement.
3.2 COMPANY AND RADIO BROADCASTING CAPITAL STRUCTURE. The authorized
capital stock of the Company consists of (i) 40,000,000 shares of Company Class
A Common Stock, (ii) 10,000,000 shares of Company Class B Common Stock, (iii)
10,000,000 shares of Class C Common Stock, $0.01 par value ("Company Class C
Common Stock"), of the Company, and (iv) 10,000,000 shares of preferred stock,
$0.01 par value, of which 2,300,000 have been designated as Company Convertible
Preferred Stock. The authorized capital stock of Radio Broadcasting consists of
1,000 shares of common stock, $0.01 par value ("Radio Broadcasting Common
Stock"), and 10,000,000 shares of preferred stock, $0.01 par value, of which
1,000,000 have been designated as Radio Broadcasting 12 1/4% Preferred Stock and
3,600,000 have been designated as Radio Broadcasting 12% Preferred Stock. At the
close of business on February 18, 1997: (i) 10,437,212 shares of Company Class A
Common Stock were issued and outstanding, 1,926,152 shares of Company Class A
Common Stock were reserved for issuance pursuant to outstanding options or
warrants to purchase shares of Company Class A Common Stock which have been
granted to directors, officers or employees of the Company or others ("Company
Stock Options"), 3,343,465 shares of Company Class A Common Stock were reserved
for issuance upon conversion of the Company Convertible Preferred Stock, and
8,547,910 shares of Company Class A Common Stock were reserved for issuance upon
the conversion of the Company Class B Common Stock; (ii) 8,547,910 shares of
Company Class B Common Stock were issued and outstanding and no shares of
Company Class B Common Stock were reserved for issuance for any purpose; (iii)
no shares of Company Class C Common Stock were issued and outstanding and none
may be issued in the future; and (iv) 2,200,000 shares of Company
21
Convertible Preferred Stock were issued and outstanding, no shares of Company
Convertible Preferred Stock were held in the treasury of the Company and no
shares of Company Convertible Preferred Stock were reserved for issuance for any
purpose. At the close of business on February 18, 1997: (i) 1,000 shares of
Radio Broadcasting Common Stock were issued and outstanding and no shares of
Radio Broadcasting Common Stock were reserved for issuance for any purpose; (ii)
1,000,000 shares of Radio Broadcasting 12 1/4% Preferred Stock were issued and
outstanding, no shares of Radio Broadcasting 12 1/4% Preferred Stock were held
in treasury by Radio Broadcasting and no shares of Radio Broadcasting 12 1/4%
Preferred Stock were reserved for issuance for any purpose; and (iii) 2,000,000
shares of Radio Broadcasting 12% Preferred Stock were issued and outstanding, no
shares of Radio Broadcasting 12% Preferred Stock were held in treasury by Radio
Broadcasting and 1,600,000 shares of Radio Broadcasting 12% Preferred Stock were
reserved for issuance in lieu cash dividends. Except as set forth above, at the
close of business on February 18, 1997, no shares of capital stock or other
equity securities of the Company and Radio Broadcasting were authorized, issued,
reserved for issuance or outstanding. All outstanding shares of capital stock of
the Company and Radio Broadcasting, and all shares which may be issued pursuant
to the Company's stock option plans, as amended to the date hereof (the "Company
Stock Option Plans") or any outstanding Company Stock Options 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 the Company or any subsidiary of the Company 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 the Company or any subsidiary of the
Company may vote are issued or outstanding. All the outstanding shares of
capital stock of each subsidiary of the Company have been validly issued and are
fully paid and nonassessable and, except for the Radio Broadcasting Preferred
Stock, are owned by the Company or its subsidiaries, free and clear of all
Liens, except for Liens arising out of the Radio Broadcasting's senior credit
facility and those that, individually or in the aggregate, could not reasonably
be expected to have a Company Material Adverse Effect. Except as set forth above
and except (i) for certain provisions of the Certificate of Incorporation and
Bylaws of the Company relating to transfers of the Company Class B Common Stock
and "alien ownership", and (ii) as provided in the Exchange and Registration
Rights Agreement entered into by Radio Broadcasting in connection with the sale
of the Radio Broadcasting 12% Preferred Stock, neither the Company nor any
subsidiary of the Company has any outstanding option, warrant, subscription or
other right, agreement or commitment that either (i) obligates the Company or
22
any subsidiary of the Company to issue, sell or transfer, repurchase, redeem or
otherwise acquire or vote any shares of the capital stock of the Company or any
Significant Subsidiary of the Company or (ii) restricts the transfer of Shares.
No shares of capital stock of the Company are owned of record or beneficially by
any subsidiary of the Company. Since the close of business on February 18, 1997
to the date hereof, neither the Company nor any subsidiary of the Company has
issued any capital stock or securities or other rights convertible into or
exercisable or exchangeable for capital stock other than securities issued upon
the exercise of Company Stock Options outstanding on February 18, 1997 or other
convertible securities outstanding on February 18, 1997.
3.3 AUTHORITY; NONCONTRAVENTION. Each of the Company and Radio
Broadcasting has all requisite corporate power and authority to enter into this
Agreement and, subject to the Company Stockholder Approval, to consummate the
transactions contemplated by this Agreement. The execution and delivery of this
Agreement by each of the Company and Radio Broadcasting and the consummation by
each of them of the transactions contemplated by this Agreement have been duly
authorized by all necessary corporate action on the part of the Company and
Radio Broadcasting, subject, in the case of the consummation of the Merger, to
the Company Stockholder Approval. The Company has executed a written consent as
stockholder of Radio Broadcasting approving the Merger and this Agreement, and
such written consent is the only vote of any stockholders of Radio Broadcasting
required in connection with the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby. This Agreement has been
duly executed and delivered by the Company and Radio Broadcasting and, assuming
this Agreement constitutes the valid and binding agreement of Evergreen,
constitutes a valid and binding obligation of each of the Company and Radio
Broadcasting, enforceable against each of them in accordance with its terms
except that the enforcement thereof may be limited by (a) bankruptcy,
insolvency, reorganization, moratorium or similar laws now or hereafter in
effect relating to creditor's rights generally and (b) general principles of
equity (regardless of whether enforceability is considered in a proceeding at
law or in equity). The execution and delivery of this Agreement do not, and the
consummation of the transactions contemplated by this Agreement and compliance
with the provisions of this Agreement will not (i) conflict with any of the
provisions of the Certificate of Incorporation or Bylaws of the Company or the
comparable documents of any subsidiary of the Company, (ii) subject to the
governmental filings and other matters referred to in the following sentence,
conflict with, result in a breach of or default (with or without notice or lapse
23
of time, or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or loss of a material benefit under, or require
the consent of any person under, any indenture, or other agreement, permit,
concession, franchise, license or similar instrument or undertaking to which the
Company or any of its subsidiaries is a party or by which the Company or any of
its subsidiaries or any of their assets is bound or affected, (iii) except as
may be the case with respect to Dissenting Shares, result in an obligation by
the Company, the Surviving Corporation or any of their respective subsidiaries
to redeem, repurchase or retire (or offer to redeem, repurchase or retire) any
outstanding debt (other than Radio Broadcasting's senior credit facility) or
equity security of the Company, the Surviving Corporation or any of their
respective subsidiaries, or (iv) subject to the governmental filings and other
matters referred to in the following sentence, contravene any law, rule or
regulation of any state or of the United States or any political subdivision
thereof or therein, or any order, writ, judgment, injunction, decree,
determination or award currently in effect, except for (x) breaches with respect
to the Radio Broadcasting's senior credit facility, (y) breaches resulting from
the Surviving Corporation's ownership of radio stations in certain markets where
such ownership may be in excess of the numerical limits imposed on local
multiple radio station ownership under the 1996 Telecom Act or where such
ownership otherwise may be subject to challenge by any Governmental Entity under
any antitrust or similar law, rule or regulation, or (z) breaches that,
individually or in the aggregate, could not reasonably be expected to have a
Company Material Adverse Effect or to materially hinder the Company's and Radio
Broadcasting's ability to consummate the transactions contemplated by this
Agreement. No consent, approval or authorization of, or declaration or filing
with, or notice to, any Governmental Entity which has not been received or made
is required by or with respect to the Company or Radio Broadcasting in
connection with the execution and delivery of this Agreement by the Company and
Radio Broadcasting or the consummation by the Company and Radio Broadcasting of
any of the transactions contemplated by this Agreement, except for (i) the
filing of premerger notification and report forms under the HSR Act with respect
to the Merger, (ii) such filings with and approvals required by the FCC under
the Communications Act including those required in connection with the transfer
of the Company FCC Licenses (as defined in Section 3.9) for the operation of the
Company Licensed Facilities (as defined in Section 3.9), (iii) the Joint Proxy
Statement relating to the Company Stockholder Approval and such reports under
the Exchange Act as may be required in connection with this Agreement and the
transactions contemplated by this Agreement, and (iv) the filing of the
certificate of merger with the
24
Delaware Secretary of State, and appropriate documents with the relevant
authorities of the other states in which the Company and Radio Broadcasting are
qualified to do business.
3.4 SEC DOCUMENTS. The Company and its subsidiaries have filed all
required reports, schedules, forms, statements and other documents with the SEC
since January 1, 1995 (the "Company SEC Documents"). As of their respective
dates, the Company SEC Documents complied with the requirements of the
Securities Act or the Exchange Act, as the case may be, and the rules and
regulations of the SEC promulgated thereunder applicable to such Company SEC
Documents, and none of the Company 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. The
financial statements of the Company included in the Company SEC Documents comply
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 generally accepted accounting principles applied on
a consistent basis during the periods involved (except as may be indicated in
the notes thereto or, in the case of unaudited statements, as permitted by Rule
10-01 of Regulation S-X) and fairly present, in all material respects, the
consolidated or combined financial position of the Company and its subsidiaries
as of the dates thereof and the consolidated or combined results of their
operations and cash flows for the periods then ended (on the basis stated
therein and subject, in the case of unaudited statements, to normal year-end
audit adjustments).
3.5 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in the
Company SEC Documents filed and publicly available prior to the date of this
Agreement (the "Filed Company SEC Documents") and except as set forth on
Schedule 3.5 hereto or as it relates to the Viacom Transaction or as otherwise
disclosed in writing by the Company to Evergreen prior to the execution and
delivery of this Agreement, since the date of the most recent audited financial
statements included in the Filed Company SEC Documents, the Company and its
subsidiaries have conducted their business only in the ordinary course, and
there has not been (i) any change which could reasonably be expected to have a
Company Material Adverse Effect (including as a result of the consummation of
the transactions contemplated by this Agreement), (ii) any declaration, setting
aside or payment of any dividend or distribution (whether in cash, stock or
property) with respect to any of the Company's outstanding capital stock (other
than the payment of regular cash dividends on the Company Convertible
25
Preferred Stock in accordance with usual record and payment dates), (iii) any
split, combination or reclassification of any of its outstanding capital stock
or any issuance or the authorization of any issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock, (iv)
(x) any granting by the Company or any of its subsidiaries to any director,
officer or other employee or independent contractor of the Company or any of its
subsidiaries of any increase in compensation or acceleration of benefits, except
in the ordinary course of business consistent with prior practice or as was
required under employment agreements in effect as of the date of the most recent
audited financial statements included in the Filed Company SEC Documents, (y)
any granting by the Company or any of its subsidiaries to any director, officer
or other employee or independent contractor of any increase in, or acceleration
of benefits in respect of, severance or termination pay, or pay in connection
with any change of control of the Company, except in the ordinary course of
business consistent with prior practice or as was required under any employment,
severance or termination agreements in effect as of the date of the most recent
audited financial statements included in the Filed Company SEC Documents or (z)
any entry by the Company or any of its subsidiaries into any employment,
severance, change of control, or termination or similar agreement with any such
director, officer or other employee or independent contractor, or (v) any change
in accounting methods, principles or practices by the Company or any of its
subsidiaries materially affecting its assets, liability or business, except
insofar as may have been required by a change in generally accepted accounting
principles.
3.6 NO EXTRAORDINARY PAYMENTS OR CHANGE IN BENEFITS. No current or former
director, officer, employee or independent contractor of the Company or any of
its subsidiaries is entitled to receive any payment under any agreement,
arrangement or policy (written or oral) relating to employment, severance,
change of control, termination, stock options, stock purchases, compensation,
fringe benefits or other employee benefits currently in effect (collectively,
the "Company Benefit Plans"), nor will any benefit received or to be received by
any current or former director, officer, employee or independent contractor of
the Company or any of its subsidiaries under any Company Benefit Plan be
accelerated or modified, as a result of or in connection with the execution and
delivery of, or the consummation of the transactions contemplated by, this
Agreement.
3.7 VOTING REQUIREMENTS. The affirmative vote of the Principal Company
Stockholders with respect to the approval of this Agreement and the Merger are
the only votes of the holders
26
of any class or series of the Company's capital stock necessary to approve this
Agreement and the transactions contemplated by this Agreement.
3.8 STATE TAKEOVER STATUTES. The Board of Directors of the Company has
approved the terms of this Agreement and the Stockholders Agreement and the
consummation of the transactions contemplated by this Agreement and by the
Stockholders Agreement, and such approval is sufficient to render inapplicable
to the Merger and the other transactions contemplated by this Agreement and by
the Stockholders Agreement the provisions of Section 203 of the Delaware Code.
To the Company's knowledge, no other state takeover statute or similar statute
or regulation applies or purports to apply to the Merger, this Agreement, the
Stockholders Agreement or any of the transactions contemplated by this Agreement
or the Stockholders Agreement and no provision of the Certificate of
Incorporation, Bylaws or other governing instrument of the Company or any of its
subsidiaries would, directly or indirectly, restrict or impair the ability of
the Company or Evergreen to consummate the transactions contemplated by this
Agreement or the Stockholders Agreement.
3.9 COMPANY FCC LICENSES; OPERATIONS OF COMPANY LICENSED FACILITIES. The
Company and its subsidiaries have operated the radio stations for which the
Company and any of its subsidiaries holds licenses from the FCC, in each case
which are owned or operated by the Company and its subsidiaries (the "Company
Licensed Facilities") in material compliance with the terms of the licenses
issued by the FCC to the Company and its subsidiaries (the "Company FCC
Licenses") (complete and correct copies of each of which have been made
available to Evergreen), and in material compliance with the Communications Act,
except where the failure to do so could not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect. The Company
and its subsidiaries have, since acquired by the Company, timely filed or made
all applications, reports and other disclosures required by the FCC to be made
with respect to the Company Licensed Facilities and have timely paid all FCC
regulatory fees with respect thereto, except where the failure to do so could
not, individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect. The Company and each of its subsidiaries have, and are
the authorized legal holders of, all the Company FCC Licenses necessary or used
in the operation of the businesses of the Company Licensed Facilities as
presently operated. All such Company FCC Licenses are validly held and are in
full force and effect, unimpaired by any act or omission of the Company, each of
its subsidiaries (or to the Company's and Radio Broadcasting's knowledge, their
respective predecessors) or their respective
27
officers, employees or agents, except where such impairments could not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect. As of the date hereof, except as disclosed in writing
by the Company to Evergreen prior to the execution and delivery of this
Agreement, no application, action or proceeding is pending for the renewal or
material modification of any of the Company FCC Licenses and, to the best of the
Company's knowledge, there is not now before the FCC any material investigation,
proceeding, notice of violation, order of forfeiture or complaint against the
Company or any of its subsidiaries relating to the Company Licensed Facilities
that, if adversely determined, would have a Company Material Adverse Effect, and
the Company is not aware of any basis that would cause the FCC not to renew any
of the Company FCC Licenses. There is not now pending and, to the Company's
knowledge, there is not threatened, any action by or before the FCC to revoke,
suspend, cancel rescind or modify in any material respect any of the Company FCC
Licenses that, if adversely determined, would have a Company Material Adverse
Effect (other than proceedings to amend FCC rules or the Communications Act of
general applicability to the radio industry).
3.10 BROKERS. Except with respect to HM2/Management Partners, L.P. ("Xxxxx
Muse") Star Media, Inc. ("Star Media"), Xxxxxxxxx & Co., LLC ("Greenhill") and
Xxxxxxx Xxxxx & Co. ("Xxxxxxx Sachs"), all negotiations relating to this
Agreement, the transactions contemplated hereby and by the Viacom Transaction
have been carried out by the Company directly with Evergreen, without the
intervention of any person on behalf of the Company in such a manner as to give
rise to any valid claim by any person against the Company, Evergreen, the
Surviving Corporation or any subsidiary of any of them for a finder's fee,
brokerage commission, or similar payment. The Company has provided Evergreen
with a written summary of the terms of its agreements with Xxxxx Muse, Star
Media, Greenhill and Xxxxxxx Xxxxx,, and the Company has no other agreements or
understandings (written or oral) with respect to such services.
3.11 OPINION OF FINANCIAL ADVISOR. The Company has received the opinions
of Greenhill and Xxxxxxx Xxxxx, dated the date hereof, to the effect that, as of
such date, the Exchange Ratio is fair, from a financial point of view, to the
Company's stockholders.
28
3.12 FCC QUALIFICATION. The Company and its subsidiaries are fully
qualified under the Communications Act to be the transferors of control of the
Company FCC Licenses; provided, however, that the parties recognize that the
consummation of the Merger could cause the Surviving Corporation and Xxxxxx X.
Xxxxx to exceed in certain cases the numerical limits on local multiple radio
station ownership imposed by Section 202(b) of the 1996 Telecom Act and that a
waiver of these limits may be required prior to the grant of such transfer of
control of the Evergreen FCC Licenses and Company FCC Licenses. Each individual
or entity that is an officer, director or attributable stockholder of the
Company that is proposed to be an officer, director or attributable stockholder
of the Surviving Corporation is fully qualified under the Communications Act to
be an officer, director or attributable stockholder of the Surviving Corporation
other than with respect to the numerical limits on multiple ownership described
in the preceding sentence.
3.13 COMPLIANCE WITH APPLICABLE LAWS. Each of the Company and its
subsidiaries has in effect all Federal, state, local and foreign governmental
Permits necessary for it to own, lease or operate its properties and assets and
to carry on its business as now conducted other than such Permits the absence of
which would not, individually or in the aggregate, have a Company Material
Adverse Effect, and there has occurred no default under any such Permit other
than such defaults which, individually or in the aggregate, would not have a
Company Material Adverse Effect. Except as disclosed in the Filed Company SEC
Documents, the Company and its subsidiaries are in compliance with all
applicable statutes, laws, ordinances, rules orders and regulations of any
Governmental Entity, except for such noncompliance which individually or in the
aggregate would not have a Company Material Adverse Effect.
3.14 ABSENCE OF UNDISCLOSED LIABILITIES. Except as disclosed in the Filed
Company SEC Documents, and except for (A) liabilities contemplated by this
Agreement or disclosed in writing by the Company to Evergreen prior to the
execution and delivery of this Agreement, and (B) the Company's and Radio
Broadcasting's obligations with respect to the Viacom Transaction, the Company
and its subsidiaries do not have any material indebtedness, obligations or
liabilities of any kind (whether accrued, absolute, contingent or otherwise) (i)
required by GAAP to be reflected on a consolidated balance sheet of the Company
and its consolidated subsidiaries or in the notes, exhibits or schedules thereto
or (ii) which reasonably could be expected to have a Company Material Adverse
Effect.
29
3.15 LITIGATION. Except as disclosed in the Filed Company SEC Documents,
there is no litigation, administrative action, arbitration or other proceeding
pending against the Company or any of its subsidiaries or, to the knowledge of
the Company, threatened that, individually or in the aggregate, could reasonably
be expected to (i) have a Company Material Adverse Effect or (ii) prevent, or
significantly delay the consummation of the transactions contemplated by this
Agreement. Except as set forth in the Filed Company SEC Documents, there is no
judgment, order, injunction or decree of any Governmental Entity outstanding
against the Company or any of its subsidiaries that, individually or in the
aggregate, could reasonably be expected to have any effect referred to in the
foregoing clauses (i) and (ii) of this Section 3.15.
3.16 TRANSACTIONS WITH AFFILIATES. Other than the transactions
contemplated by this Agreement, the Viacom Transaction and except to the extent
disclosed in the Filed Company SEC Documents or disclosed in writing by
Chancellor to Evergreen prior to the execution and delivery of this Agreement,
there have been no transactions, agreements, arrangements or understandings
between the Company or its subsidiaries, on the one hand, and the Company's
affiliates (other than subsidiaries of the Company) or any other person, on the
other hand, that would be required to be disclosed under Item 404 of Regulation
S-K under the Securities Act.
ARTICLE IV
ADDITIONAL AGREEMENTS
4.1 PREPARATION OF FORM S-4 AND THE JOINT PROXY STATEMENT; INFORMATION
SUPPLIED. (a) As soon as practicable following the date of this Agreement, the
Company and Evergreen shall prepare and file with the SEC the Joint Proxy
Statement and Evergreen shall prepare and file with the SEC the Form S-4, in
which the Joint Proxy Statement will be included as a prospectus. Each of the
Company and Evergreen shall use its best efforts to have the Form S-4 declared
effective under the Securities Act as promptly as practicable after such filing.
The Company will use its best efforts to cause the Joint Proxy Statement to be
mailed to the Company's stockholders, and Evergreen will use its best efforts to
cause the Joint Proxy Statement to be mailed to Evergreen's stockholders, in
each case as promptly as practicable after the Form S-4 is declared effective
under the Securities Act. Evergreen shall also take any action (other than
qualifying to do business in any jurisdiction in which it is not now so
qualified or take any action that would subject it to the service of process in
suits, other than as to matters and transactions
30
relating to the Form S-4, in any jurisdiction where it is not so subject)
required to be taken under any applicable state securities laws in connection
with the issuance of Evergreen Common Stock in the Merger and the Company shall
furnish all information concerning the Company and the holders of the Shares as
may be reasonably requested in connection with any such action.
(b) The Company agrees that none of the information supplied or
to be supplied by the Company specifically for inclusion or incorporation by
reference in (i) the Form S-4 will not, at the time the Form S-4 is filed with
the SEC, at any time it is amended or supplemented or at the time it becomes
effective under the Securities Act, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading, or (ii) the Joint Proxy Statement
will not, at the date it is first mailed to the Company's stockholders or at the
time of the Stockholders Meeting (as defined in Section 4.2), 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. The Company
agrees that the Joint Proxy Statement will comply as to form in all material
respects with the requirements of the Exchange Act and the rules and regulations
thereunder, except with respect to statements made or incorporated by reference
therein based on information supplied by Evergreen specifically for inclusion or
incorporated by reference in the Joint Proxy Statement.
(c) Evergreen agrees that none of the information supplied or to
be supplied by Evergreen specifically for inclusion or incorporation by
reference in (i) the Form S-4 will not, at the time the Form S-4 is filed with
the SEC, at any time it is amended or supplemented or at the time it becomes
effective under the Securities Act, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading, or (ii) the Joint Proxy Statement
will not, at the date the Joint Proxy Statement is first mailed to Evergreen's
stockholders, 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
31
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. Evergreen agrees that the
Form S-4 will comply as to form in all material respects with the requirements
of the Securities Act and the rules and regulations promulgated thereunder and
the Joint Proxy Statement will comply as to form in all material respects with
the requirements of the Exchange Act and the rules and regulations promulgated
thereunder, except with respect to statements made or incorporated by reference
in either the Form S-4 or the Joint Proxy Statement based on information
supplied by the Company specifically for inclusion or incorporation by reference
therein.
4.2 MEETINGS OF COMPANY STOCKHOLDERS AND EVERGREEN STOCKHOLDERS. (a) The
Company will take all action necessary in accordance with applicable law and its
Certificate of Incorporation and Bylaws to convene a meeting of its stockholders
(the "Stockholders Meeting") to submit this Agreement, together with the
affirmative recommendation of the Company's Board of Directors, to the Company's
stockholders so that they may consider and vote upon the approval of this
Agreement. The Company will use its best efforts to hold the Stockholders
Meeting as soon as practicable after the date hereof and to obtain the favorable
votes of its stockholders. Pursuant to the Stockholders Agreement, the Principal
Company Stockholders have agreed to vote all Shares owned by them or for which
they have the right to vote in favor of the approval of this Agreement and the
Merger, which vote the Company represents and warrants shall be sufficient to
obtain the Company Stockholder Approval.
(b) Evergreen will take all action necessary in accordance with applicable
law and its Certificate of Incorporation and Bylaws to convene a meeting of its
stockholders (the "Evergreen Stockholders Meeting") to submit this Agreement,
together with the affirmative recommendation of Evergreen's Board of Directors,
to Evergreen's stockholders so that they may consider and vote upon the approval
of this Agreement. Evergreen will use its best efforts to hold the Evergreen
Stockholders Meeting as soon as practicable after the date hereof and to obtain
the favorable votes of its stockholders. Pursuant to the Stockholders Agreement,
the Principal Evergreen Stockholder has agreed to vote all shares of Evergreen
Common Stock owned by him or for which he has the right to vote in favor of the
approval of this Agreement and the Merger.
(c) Each of Evergreen and the Company agrees to cooperate and use its
respective best efforts to hold the Evergreen
32
Stockholders Meeting and the Stockholders Meeting on the same day.
4.3 ACCESS TO INFORMATION; CONFIDENTIALITY. Upon reasonable notice, each
of the Company and Evergreen shall, and shall cause each of its respective
subsidiaries to, afford to the other party and to the officers, employees,
counsel, financial advisors and other representatives of such other party
reasonable access during normal business hours during the period prior to the
Effective Time to all its properties, books, contracts, commitments, personnel
and records and, during such period, each of the Company and Evergreen shall,
and shall cause each of its respective subsidiaries to, furnish as promptly as
practicable to the other party such information concerning its business,
properties, financial condition, operations and personnel as such other party
may from time to time reasonably request. Except as required by law, each of the
Company and Evergreen will hold, and will cause its respective directors,
officers, partners, employees, accountants, counsel, financial advisors and
other representatives and affiliates to hold, any nonpublic information obtained
from Evergreen or the Company, respectively, in confidence to the extent
required by and in accordance with the provisions of the letters dated January
27, 1997, each between Evergreen and the Company (collectively, the
"Confidentiality Agreements"), and each of the Company and Evergreen agrees that
prior to the Effective Time neither party will use any of such nonpublic
information to directly or indirectly divert or attempt to divert any business,
customer or employee of the other.
4.4 PUBLIC ANNOUNCEMENTS. Evergreen, on the one hand, and the Company, on
the other hand, will consult with each other before issuing, and provide each
other the opportunity to review and comment upon, any press release or other
public statements with respect to the transactions contemplated by this
Agreement, including the Merger, and shall not issue any such press release or
make any such public statement prior to such consultation, except as may be
required by applicable law, court process or by obligations pursuant to rules of
The Nasdaq Stock Market.
4.5 ACQUISITION PROPOSALS. (a) The Company shall not, nor shall it permit
any of its subsidiaries to, nor shall it authorize or permit any officer,
director or employee of, or any investment banker, attorney or other advisor or
representative of, the Company or any of its subsidiaries to, directly or
indirectly, (i) solicit, initiate or encourage the submission of any Acquisition
Proposal (as hereinafter defined) or (ii) participate in any discussions or
negotiations regarding, or furnish to any person any information with respect
to, or take any other action to facilitate any inquiries or the making of any
33
proposal that constitutes, or may reasonably be expected to lead to, any
Acquisition Proposal. The Company will notify Evergreen immediately of any
inquiries or proposals with respect to any Acquisition Proposal that is received
by, or any such negotiations or discussions that are sought to be initiated
with, the Company. For purposes of this Agreement, "Acquisition Proposal" means
any proposal with respect to a merger, consolidation, share exchange or similar
transaction involving the Company or Evergreen or any Significant Subsidiary of
the Company or Evergreen, or any purchase of all or any significant portion of
the assets of the Company or Evergreen or any Significant Subsidiary of the
Company or Evergreen, or any equity interest in the Company or Evergreen or any
Significant Subsidiary of the Company or Evergreen, other than the transactions
contemplated hereby; provided, however, that an Acquisition Proposal shall not
include a currently planned acquisition or disposition of broadcast properties
disclosed in writing prior to execution and delivery of this Agreement by either
the Company or Evergreen to the other.
(b) Evergreen shall not, nor shall it permit any of its
subsidiaries to, nor shall it authorize or permit any officer, director or
employee of, or any investment banker, attorney or other advisor or
representative of, Evergreen or any of its subsidiaries to, directly or
indirectly, (i) solicit, initiate or encourage the submission of any Acquisition
Proposal or (ii) participate in any discussions or negotiations regarding, or
furnish to any person any information with respect to, or take any other action
to facilitate any inquiries or the making of any proposal that constitutes, or
may be reasonably be expected to lead to, any Acquisition Proposal. Evergreen
will notify the Company immediately of any inquiries or proposals with respect
to any Acquisition Proposal that is received by, or any negotiations or
discussions that are sought to be initiated with, Evergreen.
(c) Nothing contained in this Section 4.5 shall prohibit the
respective Board of Directors of the Company or Evergreen from taking and
disclosing to its stockholders a position in accordance with Rules 14d-9 and
14e-2 under the Exchange Act with respect to a tender offer or any exchange
offer commenced by a third party.
4.6 CONSENTS, APPROVALS AND FILINGS. The Company and Evergreen will make
and cause their respective subsidiaries and, to the extent necessary, their
other affiliates to make all necessary filings, as soon as practicable,
including, without limitation, those required under the HSR Act, the Securities
Act, the Exchange Act, and the Communications Act (including filing an
application with the FCC for the transfer of control of the
34
Company FCC Licenses and the Evergreen FCC Licenses, which the parties shall
file as soon as practicable (and in any event not more than 30 days) after the
date of this Agreement), in order to facilitate prompt consummation of the
Merger and the other transactions contemplated by this Agreement. In addition,
the Company and Evergreen will each use its best efforts, and will cooperate
fully and in good faith with each other, (i) to comply as promptly as
practicable with all governmental requirements applicable to the Merger and the
other transactions contemplated by this Agreement and the Viacom Transaction,
and (ii) to obtain as promptly as practicable all necessary permits, orders or
other consents of Governmental Entities and consents of all third parties
necessary for the consummation of the Merger and the other transactions
contemplated by this Agreement and the Viacom Transaction, including without
limitation, the consent of the FCC to the transfer of control of the Company FCC
Licenses and the Evergreen FCC Licenses, and the transfer of any FCC licenses in
connection with the Viacom Transaction. Each of the Company and Evergreen shall
use its best efforts to promptly provide such information and communications to
Governmental Entities as such Governmental Entities may reasonably request. Each
of the parties shall provide to the other party copies of all applications in
advance of filing or submission of such applications to Governmental Entities in
connection with this Agreement and shall make such revisions thereto as
reasonably requested by such other party. Each party shall provide to the other
party the opportunity to participate in all meetings and material conversations
with Governmental Entities.
4.7 AFFILIATES LETTERS. Prior to the Closing Date, the Company shall
deliver to Evergreen a letter identifying all persons who may be, at the time
the Merger is submitted for approval to the stockholders of the Company,
"affiliates" of the Company for purposes of Rule 145 under the Securities Act.
The Company shall use its best efforts to cause each such person to deliver to
Evergreen on or prior to the Closing Date a written agreement substantially in
the form attached as Exhibit A hereto.
4.8 NASDAQ LISTING. Evergreen shall use its best efforts to cause the
shares of Surviving Corporation Common Stock to be issued in the Merger to be
approved for quotation on the Nasdaq National Market, subject to official notice
of issuance, prior to the Closing Date.
4.9 STOCKHOLDER LITIGATION. Each of the Company and Evergreen shall give
the other party the opportunity to participate in the defense or settlement of
any stockholder litigation against it and its directors relating to the
transactions contemplated by this Agreement; provided, however,
35
that no such settlement shall be agreed to by the Company or Evergreen without
the other party's consent, which consent shall not be unreasonably withheld.
4.10 INDEMNIFICATION. The Certificate of Incorporation and Bylaws of the
Surviving Corporation and each of its subsidiaries shall contain, respectively,
the provisions with respect to indemnification set forth in the Amended and
Restated Certificate of Incorporation of the Surviving Corporation attached
hereto as Annex I and the Bylaws of the Surviving Corporation attached hereto as
Annex II, and such provisions shall not be amended, repealed or otherwise
modified for a period of six years after the Effective Time in any manner that
would adversely affect the rights thereunder of individuals who at any time
prior to the Effective Time were directors or officers of the Company or
Evergreen or any of their respective subsidiaries (the "Indemnified Parties") in
respect of actions or omissions occurring at or prior to the Effective Time
(including, without limitation, the transactions contemplated by this
Agreement), unless such modification is required by law. Evergreen will cause to
be maintained for a period of not less than six years from the Effective Time
the Company's current directors' and officers' insurance and indemnification
policies to the extent that they provide coverage for events occurring prior to
the Effective Time (the "D&O Insurance") for all persons who are directors and
executive officers of the Company or Evergreen on the date of this Agreement, so
long as the annual premium therefor would not be in excess of 250% of the last
annual premium paid prior to the date of this Agreement; provided, however, that
the Surviving Corporation may, in lieu of maintaining such existing D&O
Insurance as provided above, cause coverage to be provided under any policy
maintained for the benefit of Evergreen or any of its subsidiaries so long as
the terms thereof are not less advantageous to the beneficiaries thereof than
the existing D&O Insurance. The provisions of this Section 4.10 are intended to
be for the benefit of, and shall be enforceable by, each Indemnified Party, his
heirs and his personal representatives and shall be binding on all successors
and assigns of Evergreen, the Company and the Surviving Corporation.
4.11 LETTER OF THE COMPANY'S ACCOUNTANTS. The Company shall use its
reasonable best efforts to cause to be delivered to Evergreen a letter of
Coopers & Xxxxxxx LLP, the Company's independent public accountants, and any
other independent public accountants whose report would be required to be
included in the Form S-4 pursuant to the rules and regulations under the
Securities Act, each dated a date within two business days before the date on
which the Form S-4 shall become effective and an
36
additional letter from each of them dated a date within two business days before
the Closing Date, each addressed to Evergreen, in form and substance reasonably
satisfactory to Evergreen and customary in scope and substance for letters
delivered by independent public accountants in connection with registration
statements similar to the Form S-4.
4.12 LETTER OF EVERGREEN'S ACCOUNTANTS. Evergreen shall use its reasonable
best efforts to cause to be delivered to the Company a letter of KPMG Peat
Marwick LLP, Evergreen's independent public accountants, and any other
independent public accountants whose report would be required to be included in
the Form S-4 pursuant to the rules and regulations under the Securities Act,
each dated a date within two business days before the date on which the Form S-4
shall become effective and an additional letter from each of them dated a date
within two business days before the Closing Date, each addressed to the Company,
in form and substance reasonably satisfactory to the Company and customary in
scope and substance for letters delivered by independent public accountants in
connection with registration statements similar to the Form S-4.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS PRIOR TO MERGER
5.1 CONDUCT OF BUSINESS. Except as contemplated by this Agreement, during
the period from the date of this Agreement to the Effective Time, the Company
and Evergreen shall, and shall cause their respective subsidiaries to, act and
carry on their respective businesses in the ordinary course of business and, to
the extent consistent therewith, use reasonable efforts to preserve intact their
current business organizations, keep available the services of their current
officers and employees and preserve the goodwill of those engaged in material
business relationships with them. Without limiting the generality of the
foregoing, during the period from the date of this Agreement to the Effective
Time and except as set forth in the Filed Company SEC Documents or the Filed
Evergreen SEC Documents (including any pending station acquisitions,
dispositions and/or swaps and the financing thereof described therein), as
applicable, or in connection with the Viacom Transaction or as otherwise
disclosed in writing by one party hereto to the other parties hereto prior to
the execution and delivery of this Agreement, the Company and Evergreen shall
not, and shall not permit any of their respective subsidiaries to, without the
prior consent of the other party hereto:
37
(i) (w) declare, set aside or pay any dividends
on, or make any other distributions (whether in cash, stock or property) in
respect of, any of the Company's or Evergreen's or any of their respective
subsidiaries' outstanding capital stock (other than, with respect to the Company
and its subsidiaries, the payment of regular cash dividends by the Company on
the Company Convertible Preferred Stock and the payment by Radio Broadcasting of
dividends on the Radio Broadcasting 12% Preferred Stock in additional shares of
such preferred stock, in each case in accordance with usual record and payment
dates), (x) split, combine or reclassify any of its outstanding capital stock or
issue or authorize the issuance of any other securities in respect of, in lieu
of or in substitution for shares of its outstanding capital stock, (y) purchase,
redeem or otherwise acquire any shares of outstanding capital stock or any
rights, warrants or options to acquire any such shares (other than, with respect
to the Company and its subsidiaries, in connection with Radio Broadcasting's
offer to exchange its 12% Series A Exchangeable Preferred Stock for the Radio
Broadcasting 12% Preferred Stock (the "Exchange Offer")), or (z) issue, sell,
grant, pledge or otherwise encumber any shares of its capital stock, any other
equity securities or any securities convertible into, or any rights, warrants or
options to acquire, any such shares, equity securities or convertible securities
other than (1) upon the exercise of Company Stock Options and Evergreen Stock
Options outstanding on the date of this Agreement, (2) pursuant to employment
agreements or other contractual arrangements in effect on the date of this
Agreement, or (3) with respect to the Company and its subsidiaries, in
connection with the Exchange Offer or upon the conversion of the Company
Convertible Preferred Stock;
(ii) amend its Certificate of Incorporation,
Bylaws or other comparable charter or organizational documents (other than, in
the case of Radio Broadcasting, as necessary to consummate the Exchange Offer);
(iii) acquire any business (including the assets
thereof) or any corporation, partnership, joint venture,
association or other business organization or division thereof;
(iv) sell, mortgage or otherwise encumber or
subject to any Lien or otherwise dispose of any of its properties or assets that
are material to the Company or Evergreen and their respective subsidiaries taken
as a whole;
(v) (x) other than working capital borrowings
in the ordinary course of business and consistent with past
practices incur any indebtedness for borrowed money or guarantee
38
any such indebtedness of another person, other than indebtedness owing to or
guarantees of indebtedness owing to the Company or Evergreen or any of their
respective direct or indirect wholly-owned subsidiaries or (y) make any material
loans or advances to any other person, other than to the Company or Evergreen,
or to any of their respective direct or indirect wholly-owned subsidiaries and
other than routine advances to employees;
(vi) make any tax election or settle or
compromise any income tax liability that could reasonably be expected to be
material to the Company or Evergreen and their respective subsidiaries taken as
a whole;
(vii) pay, discharge, settle or satisfy any
material claims, liabilities or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise), other than the payment, discharge or
satisfaction, in the ordinary course of business consistent with past practice
or in accordance with their terms, of liabilities reflected or reserved against
in, or contemplated by, the most recent consolidated financial statements (or
the notes thereto) of the Company or Evergreen included in the Filed Company SEC
Documents or the Filed Evergreen SEC Documents, respectively, or incurred since
the date of such financial statements in the ordinary course of business
consistent with past practice;
(viii) make any material commitments or agreements
for capital expenditures or capital additions or betterments except as
materially consistent with the budget for capital expenditures as of the date of
this Agreement and consistent with past practices;
(ix) except as may be required by law,
(1) other than in the ordinary course of
business and consistent with past practices, make any representation or
promise, oral or written, to any employee or former director, officer or
employee of the Company or Evergreen or any of their respective
subsidiaries which is inconsistent with the terms of any Company Benefit
Plan or Evergreen Benefit Plan, respectively;
(2) other than in the ordinary course of
business and consistent with past practices, make any change to, or amend
in any way, the contracts, salaries, wages, or other compensation of any
director, employee or any agent or consultant of the Company or Evergreen
or any of their
39
respective subsidiaries other than routine changes or amendments that are
required under existing contracts;
(3) adopt, enter into, amend, alter or
terminate, partially or completely, any Company Benefit Plan or Evergreen
Benefit Plan or any election made pursuant to the provisions of any
Company Benefit Plan or Evergreen Benefit Plan, to accelerate any
payments, obligations or vesting schedules under any Company Benefit Plan
or Evergreen Benefit Plan; or
(4) other than in the ordinary course of
business consistent with past practices, approve any general
or company-wide pay increases for employees;
(x) except in the ordinary course of business,
modify, amend or terminate any material agreement, permit, concession,
franchise, license or similar instrument to which the Company or Evergreen or
any of their respective subsidiaries is a party or waive, release or assign any
material rights or claims thereunder; or
(xi) authorize any of, or commit or agree to
take any of, the foregoing actions.
Notwithstanding the foregoing, nothing herein shall prevent Evergreen or
the Company from selling or acquiring (or agreeing to sell or acquire) all or
substantially all of the assets (by purchase, stock purchase, merger or
otherwise) of one or more radio broadcast stations and entering into financing
transactions in connection therewith, provided that the value of the
consideration (as determined in good faith by the Board of Directors of the
Company or Evergreen, as the case may be) to be paid or received (as
appropriate) in such transactions does not exceed $100,000,000 in the aggregate
for all such radio stations.
5.2 COMPANY STOCK OPTIONS. At the Effective Time, each Company Stock
Option shall be deemed to have been assumed by Evergreen, without further action
by Evergreen, and shall thereafter be deemed an option to acquire, on the same
terms and conditions as were applicable under such Company Stock Option, that
number of shares of Surviving Corporation Common Stock that would have been
received in respect of such Company Stock Option if it had been exercised
immediately prior to the Effective Time (such Company Stock Options assumed by
Evergreen, the "Assumed Chancellor Stock Options"); provided, however, that, for
each optionholder, (i) the aggregate fair market value of Surviving Corporation
Common Stock subject to Assumed Chancellor Stock Options immediately after the
Effective Time shall not exceed the
40
aggregate exercise price thereof by more than the excess of the aggregate fair
market value of Company Common Stock subject to Company Stock Options
immediately before the Effective Time over the aggregate exercise price thereof
and (ii) on a share-by-share comparison, the ratio of the exercise price of the
Assumed Chancellor Stock Option to the fair market value of the Surviving
Corporation Common Stock immediately after the Effective Time is no more
favorable to the optionholder than the ratio of the exercise price of the
Company Stock Option to the fair market value of the Company Common Stock
immediately before the Effective Time; and provided, further, that no fractional
shares shall be issued on the exercise of such Assumed Chancellor Stock Option
and, in lieu thereof, the holder of such Assumed Chancellor Stock Option shall
only be entitled to a cash payment in the amount of such fraction multiplied by
the closing price per share of Surviving Corporation Common Stock on the Nasdaq
National Market on the business day immediately prior to the date of such
exercise.
5.3 OTHER ACTIONS. The Company and Evergreen shall not, and shall not
permit any of their respective subsidiaries to, take any action that would, or
that could reasonably be expected to, result in any of the conditions of the
Merger set forth in Article VI not being satisfied.
ARTICLE VI
CONDITIONS PRECEDENT
6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligation of each party to effect the Merger is subject to the
satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Stockholder Approval. The Company Stockholder
Approval and the Evergreen Stockholder Approval shall have
been obtained.
(b) FCC Order. The FCC shall have issued an order (the "FCC
Order") approving the transfer of the Company FCC Licenses for the
operation of the Company Licensed Facilities pursuant to the Merger
without the imposition of any conditions or restrictions that would have a
material adverse effect on the business, properties, results of
operations, or condition (financial or otherwise) of the Surviving
Corporation and its subsidiaries, considered as a whole (a "Surviving
Corporation Material Adverse Effect"), and which FCC Order has not been
reversed, stayed, enjoined,
41
set aside or suspended and with respect to which no timely request for
stay, petition for reconsideration or appeal has been filed and as to
which the time period for filing of any such appeal or request for
reconsideration or for any sua sponte action by the FCC with respect to
the FCC Order has expired, or, in the event that such a filing or review
sua sponte has occurred, as to which such filing or review shall have been
disposed of favorably to the grant of the FCC Order and the time period
for seeking further relief with respect thereto shall have expired without
any request for such further relief having been filed or review initiated;
provided, however, that notwithstanding anything in this Agreement to the
contrary, that reasonable conditions of divestiture of certain Company
Licensed Facilities or Evergreen Licensed Facilities to comply with the
multiple ownership requirements under the Telecom Act shall not be deemed
to result in a Surviving Corporation Material Adverse Effect.
(c) Governmental and Regulatory Consents. All required consents,
approvals, permits and authorizations to the consummation of the
transactions contemplated hereby by the Company, Radio Broadcasting and
Evergreen shall be obtained from any Governmental Entity (other than the
FCC) whose consent, approval, permission or authorization is required by
reason of a change in law after the date of this Agreement, unless the
failure to obtain such consent, approval, permission or authorization
could not reasonably be expected to have a Surviving Corporation Material
Adverse Effect, or to materially and adversely affect the validity or
enforceability of this Agreement or the Merger.
(d) HSR Act. The waiting period (and any extension thereof)
applicable to the Merger under the HSR Act shall have been terminated or
shall have otherwise expired.
(e) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing
the consummation of the Merger shall be in effect; provided, however, that
the party invoking this condition shall use best reasonable efforts to
have any such order or injunction vacated.
(f) Nasdaq Listing. The shares of Surviving
Corporation Common Stock issuable to the Company's
stockholders pursuant to this Agreement shall have been
42
approved for quotation on the Nasdaq National Market, subject to official
notice of issuance.
(g) Form S-4. The Form S-4 shall have become effective under the
Securities Act and shall not be the subject of any stop order or
proceedings seeking a stop order.
6.2 CONDITIONS TO OBLIGATIONS OF EVERGREEN. The obligation of Evergreen to
effect the Merger are further subject to the following conditions:
(a) Representations and Warranties. The representations and
warranties of the Company and Radio Broadcasting contained in this
Agreement shall have been true and correct on the date of this Agreement
(except to the extent that they expressly relate only to an earlier time,
in which case they shall have been true and correct as of such earlier
time), other than such breaches of representations and warranties which in
the aggregate could not reasonably be expected to have a Company Material
Adverse Effect. The Company and Radio Broadcasting shall have delivered to
Evergreen a certificate dated as of the Closing Date, signed by a senior
executive officer of the Company and Radio Broadcasting, to the effect set
forth in this Section 6.2(a).
(b) Performance of Obligations of the Company and Radio
Broadcasting. The Company and Radio Broadcasting shall have performed in
all material respects all obligations required to be performed by it under
this Agreement at or prior to the Closing Date, and Evergreen shall have
received a certificate signed on behalf of the Company and Radio
Broadcasting by a senior executive officer of the Company and Radio
Broadcasting to such effect.
(c) Tax Opinion. Evergreen shall have received an opinion of
Xxxxxx & Xxxxxxx, dated the Closing Date, substantially in the form of
Exhibit G, to the effect that (i) the Merger will be treated for federal
income tax purposes as a reorganization within the meaning of Section
368(a) of the Code; (ii) each of Evergreen, the Company and Radio
Broadcasting will be a party to the reorganization within the meaning of
Section 368(b) of the Code; (iii) no gain or loss will be recognized by
the Company, Radio Broadcasting or Evergreen as a result of the Merger;
and (iv) no gain or loss will be recognized by any holder of Evergreen
Class A Common Stock or Evergreen Class B Common Stock on the exchange of
such stock for shares of Surviving
43
Corporation Common Stock pursuant to the Merger. In rendering such
opinion, Xxxxxx & Xxxxxxx shall receive and may rely upon representations
contained in certificates of Evergreen, the Company, Radio Broadcasting,
and certain stockholders of the Company and Radio Broadcasting,
substantially in the form of Exhibits B through F.
6.3 CONDITIONS TO OBLIGATION OF THE COMPANY AND RADIO BROADCASTING. The
obligation of the Company and Radio Broadcasting to effect the Merger is further
subject to the following conditions:
(a) Representations and Warranties. The representations and
warranties of Evergreen contained in this Agreement shall have been true
and correct on the date of this Agreement (except to the extent that they
expressly relate only to an earlier time, in which case they shall have
been true and correct as of such earlier time), other than such breaches
of representations and warranties which in the aggregate could not
reasonably be expected to have an Evergreen Material Adverse Effect.
Evergreen shall have delivered to the Company and Radio Broadcasting a
certificate dated as of the Closing Date, signed by a senior executive
officer of Evergreen, to the effect set forth in this Section 6.3(a).
(b) Performance of Obligations of Evergreen. Evergreen shall have
performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing Date, and
the Company shall have received a certificate signed on behalf of
Evergreen by a senior executive officer of Evergreen to such effect.
(c) Tax Opinion. The Company shall have received an opinion of
Weil, Gotshal & Xxxxxx LLP, dated as of the Closing Date and substantially
in the form of Exhibit H, to the effect that the Merger will be treated as
a reorganization under Section 368(a) of the Code and that no gain or loss
will be recognized by the stockholders of the Company and of Radio
Broadcasting on the receipt pursuant to the Merger of shares of Surviving
Corporation Common Stock or Merger Preferred Stock in exchange for Shares,
shares of Company Convertible Preferred Stock and/or shares of Radio
Broadcasting Preferred Stock, except with respect to cash received by
dissenters or in lieu of fractional shares of Surviving Corporation Common
Stock. In rendering such opinion, Weil, Gotshal & Xxxxxx LLP shall receive
and may rely upon representations contained in certificates of
44
Evergreen, the Company, Radio Broadcasting, and certain stockholders of
the Company and Radio Broadcasting, substantially in the form of Exhibits
B through F.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1 TERMINATION. This Agreement may be terminated and abandoned at any
time prior to the Effective Time, whether before or after approval of matters
presented in connection with the Merger by the stockholders of the Company or
Evergreen:
(a) by mutual written consent of Evergreen and the
Company;
(b) by either Evergreen or the Company:
(i) if, upon a vote at a duly held Stockholders Meeting
or Evergreen Stockholders Meeting or any adjournment thereof, any
required approval of the stockholders of the Company or
Evergreen, as the case
may be, shall not have been obtained;
(ii) if the Merger shall not have been consummated on or
before February 19, 1998, unless the failure to consummate the
Merger is the result of a willful and material breach of this
Agreement by the party seeking to terminate this Agreement;
(iii) if any Governmental Entity shall have issued an
order, decree or ruling or taken any other action permanently
enjoining, restraining or otherwise prohibiting the Merger and
such order, decree, ruling or other action shall have become
final and nonappealable; or
(iv) if the other party hereto shall have breached the
requirements of Sections 4.2 or 4.5 hereof, unless the party
seeking to invoke this clause (iv) shall at such time be in
material breach of this Agreement.
7.2 EFFECT OF TERMINATION. In the event of termination of this Agreement
by either the Company or Evergreen as provided in Section 7.1, this Agreement
shall forthwith become void and have no effect, without any liability or
obligation on the part of Evergreen or the Company, other than the last sentence
of
45
Section 4.3 and Sections 2.10, 3.10, 7.2 and 10.2. Nothing contained in this
Section 7.2 shall relieve any party from any liability resulting from any
material breach of the representations, warranties, covenants or agreements set
forth in this Agreement.
7.3 AMENDMENT. Subject to the applicable provisions of the Delaware Code,
at any time prior to the Effective Time, the parties hereto may modify or amend
this Agreement, by written agreement executed and delivered by duly authorized
officers of the respective parties; provided, however, that after the Company
Stockholder Approval and Evergreen Stockholder Approval has been obtained, no
amendment shall be made which reduces the consideration payable in the Merger or
adversely affects the rights of the Company's or Evergreen's stockholders
hereunder without the approval of their respective stockholders. This Agreement
may not be amended except by an instrument in writing signed on behalf of each
of the parties.
7.4 EXTENSION; WAIVER. At any time prior to the Effective Time, the
parties may (a) extend the time for the performance of any of the obligations or
other acts of the other parties, (b) waive any inaccuracies in the
representations and warranties of the other parties contained in this Agreement
or in any document delivered pursuant to this Agreement or (c) subject to
Section 7.3, waive compliance with any of the agreements or conditions of the
other parties contained in this Agreement. Any agreement on the part of a party
to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party. The failure of any party
to this Agreement to assert any of its rights under this Agreement or otherwise
shall not constitute a waiver of such rights.
7.5 PROCEDURE FOR TERMINATION, AMENDMENT, EXTENSION OR WAIVER. A
termination of this Agreement pursuant to Section 7.1, an amendment of this
Agreement pursuant to Section 7.3 or an extension or waiver pursuant to Section
7.4 shall, in order to be effective, require in the case of Evergreen or the
Company, action by its Board of Directors or the duly authorized designee of its
Board of Directors.
ARTICLE VIII
SURVIVAL OF PROVISIONS
8.1 SURVIVAL. The representations and warranties
respectively required to be made by the Company and Evergreen in
this Agreement, or in any certificate, respectively, delivered by
46
the Company or Evergreen pursuant to Section 6.2 or Section 6.3 hereof will not
survive the Closing.
ARTICLE IX
NOTICES
9.1 NOTICES. All notices and other communications under this Agreement
must be in writing and will be deemed to have been duly given if delivered,
telecopied or mailed, by certified mail, return receipt requested, first-class
postage prepaid, to the parties at the following addresses:
If to Evergreen, to:
Evergreen Media Corporation
000 Xxxx Xxx Xxxxxxx Xxxxxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with copies to:
Xxxxxx & Xxxxxxx
0000 Xxxxxxxxxxxx Xxx., X.X.
Xxxxx 0000
Xxxxxxxxxx, X.X. 00000
Attention:Xxxx X. Xxxxxxxx, Esq.
Xxxxxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
If to the Company or Radio Broadcasting, to:
Chancellor Broadcasting Company
00000 X. Xxxxxxx Xxxxxxxxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxx Xxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
47
With copies to:
Hicks, Muse, Xxxx & Xxxxx Incorporated
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxx
Xxxxxxxx X. Xxxxxx, Xx.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
and
Weil, Gotshal & Xxxxxx LLP
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
All notices and other communications required or permitted under this Agreement
that are addressed as provided in this Article IX will, if delivered personally,
be deemed given upon delivery, will, if delivered by telecopy, be deemed
delivered when confirmed and will, if delivered by mail in the manner described
above, be deemed given on the third business day after the day it is deposited
in a regular depository of the United States mail. Any party from time to time
may change its address for the purpose of notices to that party by giving a
similar notice specifying a new address, but no such notice will be deemed to
have been given until it is actually received by the party sought to be charged
with the contents thereof.
ARTICLE X
MISCELLANEOUS
10.1 ENTIRE AGREEMENT. Except for documents executed by the Company and
Evergreen pursuant hereto, this Agreement supersedes all prior discussions and
agreements between the parties with respect to the subject matter of this
Agreement, and this Agreement (including the exhibits hereto and other documents
delivered in connection herewith), the Stockholders Agreement and the
Confidentiality Agreements contain the sole and entire agreement between the
parties hereto with respect to the subject matter hereof.
10.2 EXPENSES. Whether or not the Merger is consummated, each of the
Company and Evergreen will pay its own costs and
48
expenses incident to preparing for, entering into and carrying out this
Agreement and the consummation of the transactions contemplated hereby; provided
that the fees and expenses incurred in connection with (i) the filings and
registrations with the Department of Justice and Federal Trade Commission
pursuant to the HSR Act, (ii) the filings with the FCC under the Communications
Act, and (iii) the printing, mailing and distribution of the Joint Proxy
Statement and the preparation and filing of the Form S-4, shall be borne equally
by Evergreen and the Company.
10.3 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original, but all of which will
constitute one and the same instrument and shall become effective when one or
more counterparts have been signed by each of the parties and delivered to the
other parties.
10.4 NO THIRD PARTY BENEFICIARY. Except as otherwise provided herein, the
terms and provisions of this Agreement are intended solely for the benefit of
the parties hereto, and their respective successors or assigns, and it is not
the intention of the parties to confer third-party beneficiary rights upon any
other person.
10.5 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws thereof.
10.6 ASSIGNMENT; BINDING EFFECT. Neither this Agreement nor any of the
rights, interests or obligations under this Agreement shall be assigned, in
whole or in part, by operation of law or otherwise by any of the parties without
the prior written consent of the other parties, and any such assignment that is
not consented to shall be null and void. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable by,
the parties and their respective successors and assigns.
10.7 HEADINGS, GENDER, ETC. The headings used in this Agreement have been
inserted for convenience and do not constitute matter to be construed or
interpreted in connection with this Agreement. Unless the context of this
Agreement otherwise requires, (a) words of any gender are deemed to include each
other gender; (b) words using the singular or plural number also include the
plural or singular number, respectively; (c) the terms "hereof," "herein,"
"hereby," "hereto," and derivative or similar words refer to this entire
Agreement; (d) the terms "Article" or "Section" refer to the specified Article
or Section
49
of this Agreement; (e) all references to "dollars" or "$" refer to currency of
the United States of America; and (f) the term "person" shall include any
natural person, corporation, limited liability company, general partnership,
limited partnership, or other entity, enterprise, authority or business
organization.
10.8 INVALID PROVISIONS. If any provision of this Agreement is held to be
illegal, invalid, or unenforceable under any present or future law, and if the
rights or obligations of the Company or Evergreen under this Agreement will not
be materially and adversely affected thereby, (a) such provision will be fully
severable; (b) this Agreement will be construed and enforced as if such illegal,
invalid, or unenforceable provision had never comprised a part hereof; and (c)
the remaining provisions of this Agreement will remain in full force and effect
and will not be affected by the illegal, invalid, or unenforceable provision or
by its severance herefrom.
10.9 VIACOM TRANSACTION. On February 16, 1997, EMCLA and Viacom
International Inc. ("Viacom") entered into a Stock Purchase Agreement (the
"Viacom Purchase Agreement") whereby EMCLA agreed to purchase all the
outstanding shares of stock of certain subsidiaries of Viacom that own and
operate the radio broadcast stations described in the Viacom Purchase Agreement.
Concurrently with the execution and delivery of this Agreement, Evergreen,
EMCLA, the Company and Radio Broadcasting have entered into an agreement (the
"Joint Purchase Agreement") whereby, as between Evergreen and the Company, the
Company has agreed to assume certain obligations under the Viacom Purchase
Agreement and Evergreen has agreed to grant to the Company certain rights under
the Viacom Purchase Agreement. Notwithstanding any provision hereof to the
contrary, no provision of this Agreement shall be deemed to prohibit any
transaction contemplated by the Joint Purchase Agreement or the Viacom Purchase
Agreement. The transactions contemplated by the Viacom Purchase Agreement and
the Joint Purchase Agreement are referred to collectively as the "Viacom
Transaction."
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the duly authorized officers of the Company, Radio Broadcasting and Evergreen
effective as of the date first written above.
CHANCELLOR BROADCASTING COMPANY
By: /s/ Xxxxxx X. Xxxxx
---------------------------
Name: Xxxxxx X. Xxxxx
Title: Chairman
CHANCELLOR RADIO BROADCASTING
COMPANY
By: /s/ Xxxxxx X. Xxxxx
---------------------------
Name: Xxxxxx X. Xxxxx
Title: Chairman
EVERGREEN MEDIA CORPORATION
By: /s/ Xxxxx X. Xxxxxxxx
---------------------------
Name: Xxxxx X.Xxxxxxxx
Title: Chairman and Chief Executive
Officer
