Exhibit 7.6
ESCROW AGREEMENT
THIS ESCROW AGREEMENT, dated as of this 10th day of April, 1997 (this
"AGREEMENT"), is by and among Clear Channel Communications, Inc., a Texas
corporation ("PURCHASER"), Xxxx X. Xxxxx, as stockholder representative (the
"STOCKHOLDER REPRESENTATIVE") for each of the persons listed on Exhibit A hereto
and as each such person's attorney in fact and agent pursuant to Section 13(b)
of the Stock Purchase Agreement (as defined below), EM Holdings LLC, an Arizona
limited liability company ("HOLDINGS"), and Chase Trust Company of California, a
California corporation, as escrow agent (the "ESCROW AGENT").
RECITALS
A. Concurrently with the execution and delivery hereof, Purchaser is
acquiring 1793.504 of the issued and outstanding shares of capital stock of
Xxxxx Media Corporation, a Delaware corporation (the "COMPANY"), pursuant to a
Stock Purchase Agreement, dated as of February 25, 1997, as amended (the "STOCK
PURCHASE AGREEMENT"), by and among Purchaser, the Company and those persons
listed on EXHIBIT A thereto (individually, including Holdings and both option
holders and stockholders as identified on such exhibit, each a "STOCKHOLDER" and
collectively, the "STOCKHOLDERS").
B. Purchaser and the Stockholders desire to set aside a portion of
the consideration to be paid to the Stockholders pursuant to Section 2(b) of the
Stock Purchase Agreement, for the purpose of providing Purchaser with a remedy
in the event of a breach by the Company or the Stockholders of the
representations, warranties and covenants made in the Stock Purchase Agreement.
C. Purchaser and the holders of Company Stock Options (as defined in
the Stock Purchase Agreement) which have not been exercised prior to the Closing
(as defined in the Stock Purchase Agreement) desire to set aside rights to a
portion of the Purchaser Common Stock (as defined in the Stock Purchase
Agreement) to be delivered to holders of Restated Options (as defined in the
Stock Purchase Agreement) upon exercise of such Restated Options pursuant to the
Option Assumption Agreements (as defined in the Stock Purchase Agreement), for
the purpose of providing Purchaser with a remedy in the event of a breach by the
Company or the Stockholders of the representations, warranties and covenants
made in the Stock Purchase Agreement.
D. Purchaser, Holdings and the Company have entered into that
certain Stockholders Agreement, dated as of April 8, 1997 (the "STOCKHOLDERS
AGREEMENT"), pursuant to which the Holdings Stockholders (as defined in the
Stockholders Agreement) have been granted certain put rights (the "PUT RIGHT"),
and obligated themselves with respect to certain purchase rights (the
"REDEMPTION RIGHT"), upon the terms and subject to the conditions set forth
therein.
E. Purchaser and Holdings desire to set aside rights to a portion of
the Purchaser Common Stock to be delivered to the Holdings Stockholders upon
exercise of the Put Right or the Redemption Right, as the case may be, pursuant
to the Stockholders Agreement,
for the purpose of providing Purchaser with a remedy in the event of a breach by
the Company or the Stockholders of the representations, warranties and covenants
made in the Stock Purchase Agreement.
F. A material condition to the consummation of the transactions
contemplated by the Stock Purchase Agreement is that the parties hereto enter
into this Agreement.
AGREEMENT
NOW THEREFORE, in consideration of the mutual covenants and premises
contained herein and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
1. DEFINITIONS. Except as hereinafter defined, capitalized terms used in
this Agreement will have the meanings assigned to such terms in the Stock
Purchase Agreement.
"ACCOUNT" or "ACCOUNTS" shall mean ADCO Account(s) and/or General
Account(s).
"ADCO ACCOUNT" shall have the meaning set forth in Section 4(a).
"ADCO AMOUNT" shall mean $5 million.
"ADCO CONTINGENT SHARES" shall mean Contingent Shares deposited in an
ADCO Account.
"ADCO INITIAL SHARES" shall mean a number of shares of Purchaser
Common Stock equal to (a) the ADCO Amount divided by the Average Share Price,
(b) multiplied by a fraction of which the numerator is the sum of the
percentages set forth opposite the names under the captions "Stockholders" on
Exhibit F, and of which the denominator is the sum of the percentages set forth
opposite the names under the captions "Stockholders," "Optionees," and "Retained
Shares" on Exhibit F.
"ADCO PRIOR PAYMENT" shall mean, in the case of an Optionee or
Holdings, the product of multiplying (a) the respective numbers of Deposited
Contingent Shares previously deposited in such Holder's ADCO Account, by (b) the
Average Share Price.
"ADCO REQUIRED AMOUNT" shall mean for an Optionee or for Holdings the
product of multiplying the ADCO Amount times the percentage set forth opposite
their respective names under the captions "Optionees" and "Retained Shares," on
Exhibit F.
"ADCO REQUIRED NUMBER" shall mean for an Optionee or Holdings such
number of shares of Purchaser Common Stock as shall be the result of dividing
(a) his ADCO Undeposited Difference, by (b) the Average Share Price.
"ADCO SHORTFALL" shall have the meaning set forth in Section 7(c).
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"ADCO SHORTFALL RESPONSIBILITY" shall mean, for any Holder with an
ADCO Undeposited Difference after distribution of Escrow Funds pursuant to
Section 7(c), the product of multiplying (a) the amount of any ADCO shortfall,
up to the sum of all ADCO Undeposited Differences, by (b) a fraction of which
the numerator is such Holder's ADCO Undeposited Difference, and the denominator
is the sum of all ADCO Undeposited Differences, all as of the date of
distribution.
"ADCO UNDEPOSITED DIFFERENCE" shall mean, at any time, in the
aggregate, the sum the ADCO Required Amounts for all Optionees and for Holdings,
less the aggregate amount of ADCO Prior Payments for all such Holders; and for
each Optionee or for Holdings, the ADCO Required Amount for such Holder less his
ADCO Prior Payments.
"AVERAGE DISBURSEMENT SHARE PRICE" shall mean the average closing
price of Purchaser Common Stock on the NYSE during the 10 trading days beginning
13 trading days prior to, as applicable, (a) the date of any disbursement of
Escrowed Funds, or (b) the date of determination under Section 5 or 7.
"CLAIM" shall mean a claim for Damages incurred by Purchaser pursuant
to Section 12 of the Stock Purchase Agreement.
"CLAIM DATE" shall have the meaning set forth in Section 5 hereof.
"CLAIM EXPIRATION TIME" shall mean the day prior to the first
anniversary of the Closing. If such day is not a Business Day or a trading day
on the NYSE, solely for purposes of the valuations required herein, the Escrow
Agent shall deem the Claim Expiration Time to be the next previous Business Day
which was a trading day on the NYSE.
"CLAIM NOTICE" shall have the meaning set forth in Section 5 hereof.
"COMPANY" shall have the meaning set forth in Recital A hereof.
"CONTINGENT SHARES" shall mean shares of Purchaser Common Stock issued
after the Closing on behalf of Optionees in respect of Restated Options, and on
behalf of Holdings in respect of the Put Right or the Redemption Right, as the
case may be.
"DAMAGE AMOUNT" shall have the meaning set forth in Section 5 hereof.
"DEPOSITED CONTINGENT SHARES" shall mean at any time the Contingent
Shares deposited with the Escrow Agent.
"ESCROW AGENT" shall have the meaning set forth in the heading hereof.
"ESCROW AMOUNT" shall mean $35 million.
"ESCROWED FUNDS" shall have the meaning set forth in Section 4 hereof.
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"ESCROWED SHARES" shall mean the Initial Shares, the ADCO Initial
Shares, and any Deposited Contingent Shares.
"EXHIBIT F" shall mean Exhibit F to the Stock Purchase Agreement.
"FINAL INSTRUCTION" shall have the meaning set forth in Section 6
hereof.
"GENERAL ACCOUNT" or "GENERAL ACCOUNTS" shall have the meaning set
forth in Section 4(a) hereof.
"HOLDERS" shall mean the Stockholders, including Holdings with respect
to the Retained Shares.
"HOLDINGS" shall have the meaning set forth in the heading hereof.
"INDEMNIFIABLE AMOUNT" shall mean those amounts for which Purchaser is
entitled to indemnity pursuant to Section 12(a) of the Stock Purchase Agreement.
"INITIAL SHARES" shall mean a number of shares of Purchaser Common
Stock equal to (a) the Escrow Amount divided by the Average Share Price, (b)
multiplied by a fraction of which the numerator is the sum of the percentages
set forth opposite the names under the caption "Stockholders" on Exhibit F, and
of which the denominator is the sum of the percentages set forth opposite the
names under the captions "Stockholders," "Optionees," and "Retained Shares" on
Exhibit F.
"NET NUMBER" shall mean, as to an Optionee, the number of shares of
Purchaser Common Stock issued upon any exercise of a Restated Option, minus the
number of shares which is equal to the result of dividing the aggregate exercise
price of the portion of the Restated Option which was exercised by the closing
price per share of Purchaser Common Stock on the NYSE on the trading day prior
to the date of exercise of the Restated Option.
"OPTIONEES" shall mean Stockholders who at the date hereof hold
unexercised Restated Options.
"PRIOR PAYMENT" shall mean, in the case of an Optionee or Holdings,
the product of multiplying (a) the respective numbers of Deposited Contingent
Shares previously deposited on behalf of such Holder in such Holder's General
Account, by (b) the Average Share Price.
"PRO RATA IN PROPORTION TO THEIR RESPECTIVE OWNERSHIP OF ESCROWED
SHARES" shall mean, as of the date of determination, the balance(s) remaining in
such Stockholder's General Account(s) or ADCO Account(s), as the case may be.
"PURCHASER" shall have the meaning set forth in the heading hereof.
"PUT RIGHT" shall have the meaning set forth in Recital D hereof.
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"REDEMPTION RIGHT" shall have the meaning set forth in Recital D
hereof.
"REDUCTION FORMULA" shall mean that number of shares of Purchaser
Common Stock equal to the lesser of the result of (a) dividing a Holder's
Shortfall Responsibility (or ADCO Shortfall Responsibility, as the case may be)
by the Average Share Price (which is the number of shares which otherwise would
be required to be deposited in Escrow); and (b) dividing a Holder's Shortfall
Responsibility (or ADCO Shortfall Responsibility, as the case may be) by the
Average Disbursement Share Price as of the date of determination (which is the
number of shares, if available in the subject Account, which otherwise would be
required to be distributed from the Escrow to satisfy the applicable Damage
Amount).
"REQUIRED AMOUNT" shall mean for an Optionee or for Holdings the
product of multiplying the Escrow Amount times the percentage set forth opposite
their respective names under the captions "Optionees" and "Retained Shares," on
Exhibit F.
"REQUIRED NUMBER" shall mean for an Optionee or Holdings such number
of shares of Purchaser Common Stock as shall be the result of dividing (a) his
Undeposited Difference, by (b) the Average Share Price.
"RESERVE" shall have the meaning set forth in Section 7 hereof.
"RESPECTIVE PERCENTAGES" shall mean the indicated respective
percentages set forth opposite a Stockholder's, Optionee's or Holdings' name on
Exhibit F.
"SHORTFALL" shall have the meaning set forth in Section 7(d) hereof.
"SHORTFALL RESPONSIBILITY" shall mean, for any Holder with an
Undeposited Difference after distribution of Escrow Funds pursuant to Section
7(d), the product of multiplying (a) the amount of any shortfall, up to the sum
of all Undeposited Differences, by (b) a fraction of which the numerator is such
Holder's Undeposited Difference, and the denominator is the sum of all
Undeposited Differences, all as of the date of distribution.
"STOCKHOLDER REPRESENTATIVE" shall have the meaning set forth in the
heading hereof.
"STOCKHOLDER" or "STOCKHOLDERS" shall have the meaning set forth in
Recital A hereof.
"STOCKHOLDERS AGREEMENT" shall have the meaning set forth in Recital D
hereof.
"STOCK PURCHASE AGREEMENT" shall have the meaning set forth in Recital
A hereof.
"TOTAL ESCROW AMOUNT" shall mean the ADCO Amount and the Escrow Amount
(or $40 million).
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"UNDEPOSITED DIFFERENCE" shall mean, at any time, in the aggregate,
the sum of the Required Amounts for all Optionees and for Holdings, less the
aggregate amount of Prior Payments for all such Holders; and for each Optionee
or for Holdings, the Required Amount for such Holder less his Prior Payments.
2. APPOINTMENT OF ESCROW AGENT. Purchaser, Holdings and the Stockholder
Representative hereby designate and appoint Escrow Agent as escrow agent for the
purposes set forth herein, and the Escrow Agent hereby accepts such appointment
on the terms herein provided.
3. DEPOSIT OF ESCROWED SHARES.
(a) Simultaneously with the execution and delivery of this Agreement,
Purchaser, on behalf of the Stockholders and for the benefit of Purchaser, shall
deliver to the Escrow Agent one or more certificates registered in the name of
the Escrow Agent representing a number of shares of Purchaser Common Stock equal
to (i) the Initial Shares, and (ii) the ADCO Initial Shares. In addition, the
Optionees and Holdings hereby assign to the Escrow Agent, for the benefit of
Purchaser, their rights, as described in Recitals C and E, to such number of
Contingent Shares, as may be required of each of the Optionees and Holdings
hereunder. Upon such deposit, the duties and obligations of each of the parties
to this Agreement will commence.
(b) If, prior to the termination of this Agreement, any Restated
Options are exercised in whole or in part, a number of shares of Purchaser
Common Stock issuable upon such exercise equal to the lesser of (i) the Net
Number, or (ii) sum of the Required Number and the ADCO Required Number, shall
be delivered to the Escrow Agent and registered in the name of the Escrow Agent,
and such shares shall become and thereafter be Escrowed Shares. Deposits first
will be made to the ADCO Account and then to the General Account.
Notwithstanding the foregoing, the ADCO Required Number need not be deposited if
at the time of exercise there shall have been a final distribution of Escrowed
Funds pursuant to Section 7(c).
(c) If, prior to the termination of this Agreement, the Put Right is
exercised, in whole or in part, or the Redemption Right is exercised, a number
of shares of Purchaser Common Stock issuable upon such exercise equal to the sum
of the Required Number and the ADCO Required Number shall be delivered to the
Escrow Agent and registered in the name of the Escrow Agent, and such shares
shall become and thereafter be Escrowed Shares. Deposits first will be made to
the ADCO Account and then to the General Account. Notwithstanding the
foregoing, the ADCO Required Number need not be deposited if at the time of
exercise there shall have been a final distribution of Escrowed Funds pursuant
to Section 7(c).
4. MAINTENANCE OF ESCROW.
(a) The Escrow Agent shall hold the Escrowed Shares in escrow, and
shall maintain and disburse the Escrowed Shares, pursuant to this Agreement.
The Escrow Agent shall establish separate accounts in respect of any (i) Initial
Shares (one for each Stockholder in respect of whom Initial Shares were
deposited), (ii) Deposited Contingent Shares other than
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ADCO Contingent Shares (one for each Optionee in respect of the exercise of
Restated Options and one for Holdings in respect of the exercise of the Put
Right or the Redemption Right) (the accounts in sub-paragraphs (i) and (ii)
individually a "GENERAL ACCOUNT" and collectively, the "GENERAL ACCOUNTS"),
(iii) ADCO Initial Shares (one for each Stockholder in respect of whom ADCO
Initial Shares were deposited), and (iv) ADCO Contingent Shares (one for each
Optionee in respect of the exercise of Restated Options and one for Holdings in
respect of the exercise of the Put Right or the Redemption Right in each case
resulting in a deposit of ADCO Contingent Shares) (the accounts in subparagraphs
(iii) and (iv) individually an "ADCO ACCOUNT" and collectively, the "ADCO
ACCOUNTS"), (v) and shall credit to such respective General Accounts or ADCO
Accounts, as the case may be, any stock splits or dividends payable in stock or
other securities, that are received with respect to such Initial Shares, ADCO
Initial Shares, or Deposited Contingent Shares.
(b) All stock splits or dividends payable in stock or other
securities that are made by Purchaser with respect to the Escrowed Shares while
such shares are held by the Escrow Agent shall be registered in the name of the
Escrow Agent, deposited in escrow and governed by this Agreement. The Escrowed
Shares, such stock or other dividends deposited in escrow and any cash in lieu
of fractional shares of Purchaser Common Stock are collectively referred to in
this Agreement as the "ESCROWED FUNDS." All other dividends or distributions
made by Purchaser with respect to the Escrowed Shares while such shares are held
by the Escrow Agent shall be delivered to the Holders by the Escrow Agent pro
rata in accordance with their respective ownership of Escrowed Shares at the
time of such distribution, and such dividends or distributions shall be made to
each such Holder as soon as practicable after receipt by the Escrow Agent of
such dividends or distributions.
5. PURCHASER'S RIGHT TO ASSERT CLAIM TO ESCROWED FUNDS. Purchaser shall
have the right to make one or more Claims on or prior to the Claim Expiration
Time by delivering a notice of such Claim (a "CLAIM NOTICE") to the Stockholder
Representative and the Escrow Agent prior to such time (the date of such notice,
the "CLAIM DATE"). If Purchaser asserts a Claim, such Claim Notice shall state
with particularity (i) the basis for the Claim, together with sufficient facts
relating thereto so that the Stockholder Representative may reasonably evaluate
such Claim, (ii) Purchaser's estimate of the amount that equals the aggregate
amount of such Indemnifiable Amount (the "DAMAGE AMOUNT") (it being understood
that such estimate shall not preclude Purchaser from revising such Damage Amount
by notice to the Stockholder Representative and the Escrow Agent and thereafter
such revised amount shall become the Damage Amount for all purposes hereunder),
and (iii) a calculation of the number of Escrowed Shares to be disbursed from
the Escrow Funds in connection with such Damage Amount (for purposes of such
calculation, each share of Purchaser Common Stock shall be valued at the Average
Disbursement Share Price).
6. DETERMINATION OF VALID DAMAGE AMOUNT; FINAL INSTRUCTION. For purposes
of this Agreement, a "FINAL INSTRUCTION" shall mean a written notice given to
the Escrow Agent directing the disbursement of Escrowed Funds in respect of a
Damage Amount (which had previously been set forth in a Claim Notice properly
delivered in accordance with the provisions of Section 5 hereof), and shall be
signed both by Purchaser and by the Stockholder Representative except as
otherwise provided below in clause (b) or (d). A Final Instruction shall
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be delivered to the Escrow Agent under the following circumstances, and
accompanied by the indicated documentation:
(a) If the Stockholder Representative disputes either the validity,
amount or calculation of the Claim and/or the Damage Amount, the Stockholder
Representative shall give written notice of such dispute to Purchaser, with a
copy to the Escrow Agent, within twenty (20) Business Days after the delivery of
the Claim Notice by Purchaser to the Stockholder Representative. In such
circumstances, no Final Instruction may be given to the Escrow Agent except as
provided in (c) or (d) below.
(b) If the Stockholder Representative fails to respond to the Claim
Notice within twenty (20) Business Days after the delivery to the Stockholder
Representative and the Escrow Agent of the Claim Notice, or if the Stockholder
Representative notifies the Escrow Agent that there is no dispute with respect
to the Claim and the Damage Amount, Purchaser shall have the right to deliver to
the Escrow Agent a Final Instruction, signed only by Purchaser, with respect to
the Claim and the Damage Amount.
(c) If the Stockholder Representative and Purchaser reach an
agreement with respect to the proper determination of the Claim and the Damage
Amount, the Stockholder Representative and Purchaser shall give to the Escrow
Agent a Final Instruction, signed by both the Stockholder Representative and
Purchaser, with respect to the Claim and the Damage Amount.
(d) If the Stockholder Representative and Purchaser are unable to
reach an agreement with respect to the proper determination of the Claim and/or
the Damage Amount, the disputed Claim and/or the Damage Amount shall be
submitted by Purchaser and the Stockholder Representative to court action to be
conducted New Castle County, State of Delaware, as provided in Section 20 of the
Stock Purchase Agreement. Upon final, non-appealable resolution of such
disputed Claim and/or the Damage Amount, either the Stockholder Representative
or Purchaser shall have the right to deliver to the Escrow Agent a Final
Instruction with respect to the Claim and the Damage Amount based on and in
compliance with the resolution of such court action, signed only by the
Stockholder Representative or by Purchaser, as the case may be, and accompanied
by a copy of any judgment or other court order with respect thereto.
Upon receipt of a Final Instruction in accordance with this Section,
the Escrow Agent shall value the Escrowed Funds based on the valuation
procedures set forth in Section 8 hereof and shall distribute the Escrowed Funds
in accordance with Section 7 hereof. Notwithstanding anything to the contrary
in the foregoing, in no event shall the Escrow Agent distribute any portion of
the Escrowed Funds to Purchaser with respect to any Claim Notice received by the
Escrow Agent after the Claim Expiration Time.
The Stockholder Representative acknowledges that a Claim Notice has
been made in respect of the ADCO Claim (as defined in the Stock Purchase
Agreement) in the amount of the ADCO Amount, which Claim will be treated as a
disputed Claim subject to resolution as provided in Section 6(a). The existence
and estimation of the ADCO Claim (and the definition
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of the ADCO Amount) shall not preclude Purchaser from making an additional Claim
against the Escrow Amount in connection with the ADCO Claim, it being understood
that the Total Escrow Amount shall be available if and to the extent required to
satisfy the ADCO Claim (with amounts first being charged against the ADCO Amount
and thereafter against the Escrow Amount).
7. DISTRIBUTION OF ESCROWED FUNDS.
(a) If Purchaser fails to make a Claim on or prior to the Claim
Expiration Time in accordance with Section 5 hereof or if any and all Claims
have been resolved and paid at such time, then as promptly as practicable
thereafter (and in no event later than ten (10) Business Days following the
Claim Expiration Time), the Escrow Agent shall deliver the Escrowed Shares with
all other Escrowed Funds relating to such Escrowed Shares to the Holders pro
rata in accordance with their respective ownership of Escrowed Shares at the
time of such distribution.
(b) If Purchaser timely makes a Claim or Claims as to which there has
been no Final Instruction by the expiration of the Claim Expiration Time, the
Escrow Agent promptly shall, at the Claim Expiration Time, (i) multiply the
aggregate Damage Amount of all such Claims by 110% (including 110% of the Damage
Amount of the ADCO Claim (if any) less the sum of the aggregate ADCO Undeposited
Differences and the fair value determined as provided in clause (iii) of this
paragraph of all ADCO Accounts) (the "reserve"), (ii) for each General Account,
multiply the reserve by the Respective Percentage applicable to the General
Account (those opposite Holder names under the caption "Stockholders" being
applicable to Initial Shares Accounts and those opposite Holder names under the
captions "Optionees" and "Retained Shares" being applicable to Deposited
Contingent Share Accounts), (iii) determine the fair value (which for each share
of Purchaser Common Stock shall be deemed to be the Average Disbursement Share
Price) at the Claim Expiration Time of each Holder's Account(s), and (iv)
distribute to each Holder the amount of any excess in his General Account(s)
over the reserve applicable to such General Account(s).
(c) Upon receipt of a Final Instruction with respect to the ADCO
Claim, the Escrow Agent promptly shall, on the date of such receipt, (i)
multiply the final Damage Amount for such ADCO Claim by the applicable
Respective Percentage(s) (as more particularly described in clause (b) (ii)
above), (ii) determine in accordance with Section 8 the fair value on such date
of each Holder's ADCO Account(s), (iii) distribute to each Holder the amount of
any excess of the amount(s) determined in (ii) over the amount(s) determined in
(i), and (iv) distribute the balance of property held in the ADCO Accounts to
Purchaser. If any portion of the Damages Amount relating to the ADCO Claim
shall remain unsatisfied as a result of ADCO Undeposited Differences in respect
of Optionees and/or Holdings (an "ADCO shortfall"), the Escrow Agent shall (x)
determine the amount thereof, up to the sum of all ADCO Undeposited Differences,
(y) calculate the ADCO Shortfall Responsibility of each Holder with an ADCO
Undeposited Difference, and (z) notify Purchaser and such Holders of its
determination. For each Holder with an ADCO Shortfall Responsibility, Purchaser
shall thereupon reduce the number of shares of Purchaser Common Stock issuable
upon exercise of such Holder's Restated Options or Put Right or Redemption
Right, as the case may be, by the number of shares determined by the
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Reduction Formula. To the extent the foregoing does not completely satisfy the
ADCO Claim, any balance will be satisfied from General Accounts, subject to
paragraph (d).
(d) After the Claim Expiration Time, upon receipt of a Final
Instruction with respect to all Claims, the Escrow Agent promptly shall, on the
date of such receipt, (i) multiply the final unsatisfied Damage Amount
(including the Damage Amount of the ADCO Claim less the sum (if any) of the
aggregate ADCO Undeposited Differences and the fair value determined in
accordance with clause (ii) of this paragraph) of all ADCO Accounts) by the
applicable Respective Percentage(s) (as more particularly described in clause
(b)(ii) above), (ii) determine in accordance with Section 8 the fair value on
such date of receipt of each Holder's Account(s), (iii) distribute to each
Holder the amount of any excess of the amount(s) determined in (ii) over the
amount(s) determined in (i), and (iv) distribute the balance of property held in
the General Accounts to Purchaser. If any portion of the Damage Amount shall
remain unsatisfied as a result of an Undeposited Difference in respect of
Optionees and/or Holdings (a "shortfall"), the Escrow Agent shall (x) determine
the amount thereof, up to the sum of all Undeposited Differences, (y) calculate
the Shortfall Responsibility of each Holder with an Undeposited Difference, and
(z) notify Purchaser and such Holders of its determinations. For each Holder
with a Shortfall Responsibility, Purchaser shall thereupon reduce the number of
shares of Purchaser Common Stock issuable upon exercise of such Holder's
Restated Options or Put Right or Redemption Right, as the case may be, by the
number of shares determined by the Reduction Formula.
8. VALUATION OF ESCROWED SHARES; FRACTIONAL SHARES. For purposes of
determining the number of Escrowed Shares to be disbursed from the Escrow Funds
under this Agreement with respect to a Damage Amount, each share of Purchaser
Common Stock shall be valued at the Average Disbursement Share Price and
fractional shares shall be rounded to the nearest whole number.
9. RELIANCE BY ESCROW AGENT; LIABILITY OF ESCROW AGENT. The Escrow Agent
shall be protected in acting upon any written notice, request, waiver, consent,
certificate, receipt, authorization or other paper or document that the Escrow
Agent believes to be genuine and what it purports to be. The Escrow Agent may
confer with its own corporate or outside legal counsel in the event of any
dispute or question as to the construction of any of the provisions hereof, or
its duties hereunder, and shall incur no liability and shall be fully protected
in acting in accordance with the written opinions of such counsel. The duties
of the Escrow Agent hereunder will be limited to the observance of the express
provisions of this Agreement. The Escrow Agent will not be subject to, or be
obliged to recognize, any other agreement between the parties hereto or
directions or instructions not specifically set forth as provided for herein.
The Escrow Agent will not make any payment or disbursement from or out of the
Escrow Funds that is not expressly authorized pursuant to this Agreement. The
Escrow Agent may rely upon and act upon any instrument received by it pursuant
to the provisions of this Agreement that it reasonably believes to be genuine
and in conformity with the requirements of this Agreement. The Escrow Agent
shall not be held liable for any error in judgment made in good faith by an
officer of the Escrow Agent unless it shall be proved that the Escrow Agent was
grossly negligent in ascertaining the pertinent facts or acted intentionally in
bad faith. The Escrow Agent will not be liable for any action taken or not
taken by it under the terms hereof in the
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absence of breach of its obligations hereunder or gross negligence or willful
misconduct on its part. Anything in this Agreement to the contrary
notwithstanding, in no event shall the Escrow Agent be liable for special,
indirect or consequential loss or damage of any kind whatsoever (including, but
not limited to, lost profits), even if the Escrow Agent had been advised of the
likelihood of such loss or damage and regardless of the form of action.
10. INDEMNIFICATION OF ESCROW AGENT. Purchaser, on the one hand, and the
Stockholders collectively (and severally, pro rata in proportion to their
Respective Percentages) on the other, will indemnify and hold the Escrow Agent
harmless from and against any and all losses, costs, damages or expenses
(including, but not limited to, reasonable attorneys' fees) it may sustain by
reason of its service as Escrow Agent hereunder, and except such losses, costs,
damages or expenses (including, but not limited to, reasonable attorneys' fees)
incurred by reason of such acts or omissions for which the Escrow Agent is
liable or responsible under the last sentence of Section 9 hereof. Any
indemnification amounts payable pursuant to this Section 10 shall be paid
one-half by the Purchaser, on the one hand, and one-half by the Stockholders
collectively, on the other.
11. STOCKHOLDER REPRESENTATIVE; SUCCESSOR STOCKHOLDER REPRESENTATIVE.
(a) The Holders have made, constituted and appointed the Stockholder
Representative as their agent and authorized and empowered him to fulfill the
role of Stockholder Representative hereunder. In the event of the resignation
of the Stockholder Representative, the resigning Stockholder Representative
shall appoint a successor either from among the Stockholders or who shall
otherwise be acceptable to Purchaser and who shall agree in writing to accept
such appointment, and the resigning Stockholder Representative's resignation
shall not be effective until such a successor shall exist. The Holders entitled
to receive a majority of the Escrowed Shares may remove the Stockholder
Representative at any time. If a Stockholder Representative should die or
become incapacitated or be removed by the Holders pursuant to this Section 12,
his successor shall be appointed within 21 days of his death or incapacity by
the remaining Holders entitled to receive a majority of the Escrowed Shares, and
such successor either shall be a Stockholder or shall otherwise be acceptable to
Purchaser. If the Holders fail to appoint a successor within such 21-day
period, then Purchaser shall have the right to appoint the successor from among
the Stockholders. The choice of a successor Stockholder Representative
appointed in any manner permitted above shall be final and binding upon all of
the Holders. The decisions and actions of any successor Stockholder
Representative shall be, for all purposes, those of a Stockholder Representative
as if originally named herein.
(b) Each Holder has made, constituted and appointed the Stockholder
Representative as such person's true and lawful attorney in fact and agent, for
such person and in such person's name, (i) to receive all notices and
communications directed to such Holder under this Agreement and the Stock
Purchase Agreement, (ii) to execute and deliver any and all documents required
to be executed and delivered by such Holder pursuant to this Agreement in order
to effect the transactions contemplated hereby, and (iii) to execute and deliver
all instruments and documents of every kind incident to the foregoing to all
intents and purposes and with the same effect as such Holder could do
personally. Notwithstanding the foregoing, except with respect to
administrative and other ministerial tasks, the Stockholder Representative
11
is required and entitled to act only at the written direction of Holders
entitled to receive a majority of the Escrowed Shares.
(c) It is acknowledged by the Holders appointing the Stockholder
Representative that the designation of the Stockholder Representative as
attorney-in-fact is coupled with an interest and is binding upon such Holders
notwithstanding the death, incapacity or dissolution of any such Holder. If any
such event shall occur prior to the completion of the transactions contemplated
by this Agreement, the Stockholder Representative is, nevertheless, to the
extent that he is legally able to do so, authorized and directed to complete all
transactions and act pursuant to this authority as if such event had not
occurred. Purchaser is entitled to deal solely with the Stockholder
Representative in connection with this Agreement and is entitled to rely upon
the provisions hereof and the authority granted to the Stockholder
Representative to act on behalf of the Holders.
(d) The Stockholder Representative's acceptance of his duties under
this Agreement is subject to the following terms and conditions, which the
parties hereto agree shall govern and control with respect to his rights,
duties, liabilities and immunities as Stockholder Representative (but not in his
capacity as a Stockholder or as an officer, director, or employee of the
Company):
(i) The Stockholder Representative makes no representation
and has no responsibility as to the validity of this Agreement or of any other
instrument referred to herein, or as to the correctness of any statement
contained herein, and he shall not be required to inquire as to the performance
of any obligation under this Agreement.
(ii) The Stockholder Representative shall be protected in
acting upon written notice, request, waiver, consent, receipt or other paper or
document, not only as to its due execution and the validity and effectiveness of
its provisions, but also as to the truth of any information therein contained,
which he in good faith believes to be genuine and what it purports to be.
(iii) The Stockholder Representative shall not be liable for
any error of judgment, or for any act done or step taken or omitted by him in
good faith, or for any mistake of fact or law, or for anything which he may do
or refrain from doing in connection therewith, except his own gross negligence
or willful misconduct.
(iv) The Stockholder Representative may consult with
competent and responsible legal counsel selected by him, and he shall not be
liable for any action taken or omitted by him in good faith in accordance with
the advice of such counsel.
(v) The Holders shall bear pro rata all expenses (including
transfer taxes and other governmental charges) incurred by the Stockholder
Representative in connection with his duties hereunder and shall indemnify him
against and save him harmless from any and all claims, liabilities, costs,
payments and expenses, including fees of counsel (who may be selected by the
Stockholder Representative), for anything done or omitted by him in the
12
performance of this Agreement or the Stock Purchase Agreement, except as a
result of his own gross negligence or willful misconduct.
(vi) The Stockholder Representative shall have no duties or
responsibilities except those expressly set forth herein and in the Stock
Purchase Agreement. He shall not be bound by any modification of this Agreement
or the Stock Purchase Agreement unless in writing and signed by the other
parties hereto or thereto and if his duties as Stockholder Representative
hereunder or thereunder are affected, unless he shall have given prior written
consent thereto.
12. FEES AND EXPENSES OF THE ESCROW AGENT. All fees of the Escrow Agent
for its services hereunder, together with any expenses reasonably incurred by
the Escrow Agent in connection with this Agreement, shall be paid one-half by
Purchaser, on the one hand, and one-half by the Holders collectively, on the
other.
13. RESIGNATION OF THE ESCROW AGENT. The Escrow Agent may resign from its
duties hereunder by giving each of the parties hereto not less than sixty
(60) days prior written notice of the effective date of such resignation (which
effective date shall be at least sixty (60) days after the date such notice is
given). The parties hereto intend that a substitute Escrow Agent will be
appointed by mutual agreement of Purchaser and the Stockholder Representative to
fulfill the duties of the Escrow Agent hereunder for the remaining term of this
Agreement in the event of the Escrow Agent's resignation. If on or before the
effective date of such resignation, a substitute Escrow Agent has not been
appointed, the Escrow Agent will thereupon deposit the Escrowed Funds into the
registry of a court of competent jurisdiction.
14. SUCCESSOR ESCROW AGENT. Any corporation into which the Escrow Agent
in its individual capacity may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Escrow Agent in its individual capacity shall be a
party, or any corporation to which substantially all the corporate trust
business of the Escrow Agent in its individual capacity may be transferred,
shall be the Escrow Agent under this Agreement without further act.
15. DESIGNEES FOR INSTRUCTIONS. Purchaser, may, by notice to the Escrow
Agent, designate one or more persons who will execute notices and from whom the
Escrow Agent may take instructions hereunder. Such designations may be changed
from time to time upon notice to the Escrow Agent from Purchaser. The Escrow
Agent will be entitled to rely conclusively on any notices or instructions from
any person so designated by Purchaser.
16. INSPECTION. All property held as part of the escrow shall at all
times be clearly identified as being held by the Escrow Agent hereunder. Any
party hereto may at any time during the Escrow Agent's business hours (with
reasonable notice) inspect any records or reports relating to the Escrowed
Funds.
17. VOTING OF ESCROWED SHARES. With respect to any matter on which the
Escrowed Shares or any other shares of Purchaser Common Stock in the Escrowed
Funds are entitled to vote, the Escrow Agent shall seek voting instructions from
the Holders. With respect to Holders
13
who timely provide such instruction, the Escrow Agent shall vote the Escrowed
Shares that would be distributed to such Holders (assuming no Claim is made) in
accordance with the instructions received by such Holders, but shall not
otherwise vote such shares.
18. NOTICES. All notices, requests, demands and other communications
which are required or may be given under this Agreement shall be in writing and
shall be deemed to have been duly given when received if personally delivered;
when transmitted if transmitted by telecopy, electronic or digital transmission
method; the day after it is sent, if sent for next day delivery to a domestic
address by recognized overnight delivery service (E.G., Federal Express); and
upon receipt, if sent by certified or registered mail, return receipt requested.
Notwithstanding the foregoing, a Claim Notice delivered pursuant to Section 5
hereof and a Final Instruction provided pursuant to Section 6 hereof shall be
deemed to have been duly given only if delivered personally, by recognized
overnight delivery or by certified or registered mail and if receipt of such
Claim Notice or such Final Instruction, as the case may be, was acknowledged in
writing. In each case notice shall be sent to:
(a) If to Purchaser: Clear Channel Communications, Inc.
000 Xxxxxxx Xxxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to: Clear Channel Communications, Inc.
000 Xxxxxxx Xxxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Piper & Marbury L.L.P.
00 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: X.X. Xxxxx, Xx., Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
(b) If to the Stockholder Representative:
Xxxx X. Xxxxx, Esq.
c/x Xxxxx Media Corporation
0000 Xxxx Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
14
with a copy to: H & F Investors III, Inc.
Xxx Xxxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxxx, Xx.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Heller, Ehrman, White & XxXxxxxxx
000 Xxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Xxxxxx & Xxxxxxx
000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
(c) If to Holdings: Xxxx Xxxxx
c/x Xxxxx Media Corporation
0000 X. Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Xxxxx X. Xxxxx
c/x Xxxxx Media Corporation
0000 X. Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to: Xxxx X. Xxxxx, Esq.
c/x Xxxxx Media Corporation
0000 X. Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
00
Xxxxxx & Xxxxxxx
000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
(d) If to the Escrow Agent: Chase Trust Company of California
000 Xxxxxxxxxx Xx., Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
or to such other place and with such other copies as either party may designate
as to itself by written notice to the others.
19. ASSIGNMENT; BINDING EFFECT. Neither this Agreement nor any of the
rights or obligations hereunder may be assigned by any party without the prior
written consent of the other parties. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns.
20. AMENDMENT AND TERMINATION. This Agreement may be amended or modified
by and upon written notice to the Escrow Agent given jointly by Purchaser,
Holdings and the Stockholder Representative, but the duties and responsibilities
of the Escrow Agent may not be increased without its written consent. This
Agreement will terminate on the date on which all the Escrowed Funds have been
distributed in accordance with the terms set forth herein.
21. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
22. SEVERABILITY AND FURTHER ASSURANCES. This Agreement constitutes the
entire agreement among the parties and supersedes all prior and contemporaneous
agreements and undertakings on the parties in connection herewith. No failure
or delay of the Escrow Agent in exercising any right, power or remedy may be, or
may be deemed to be, a waiver thereof; nor may any single or partial exercise of
any right, power or remedy preclude any other or further exercise of any right,
power or remedy. In the event that any one or more of the provisions contained
in this Agreement, shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, then to the maximum extent permitted by law, such
invalidity, illegality or unenforceability shall not affect any other provision
of this Agreement. Each of the parties hereto shall, at the request of any
other party, deliver to the requesting party all further documents or other
assurances as may reasonably be necessary or desirable in connection with this
Agreement.
16
23. TITLES. The titles, captions or headings of the Sections herein are
for convenience of reference only and are not intended to be a part of or to
affect the meaning or interpretation of this Agreement.
24. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with the laws of the State of Delaware without regard to the
principles of conflicts of laws.
25. TAX REPORTING. Unless otherwise required by Treasury Regulations
issued in the future, the parties will treat the Escrowed Shares and any other
shares of Purchaser Common Stock deposited with the Escrow Agent hereunder for
purposes of Section 468B(g) of the Internal Revenue Code of 1986, as amended,
and for all other income tax purposes as being owned by the Holders during the
period such shares are held in escrow, and therefore any income earned on such
shares during such period will be allocated and reported to the Holders as such
income is earned. The parties will make any elections or filings required to
characterize such shares in a manner consistent with the preceding sentence.
Each party to this Agreement (other than the Escrow Agent), including the
Stockholder Representative on behalf of each Stockholder, shall provide a
completed I.R.S. Form W-8 or Form W-9 to the Escrow Agent at the signing of this
Agreement. For purposes of reporting to tax authorities, the Escrow Agent will
treat all income earned by the escrow as paid upon distribution. Purchaser, the
Stockholder Representative, Holdings and the Stockholders, jointly and
severally, covenant and agree to indemnify and hold the Escrow Agent harmless
against all liability for tax withholding and/or reporting for any payments made
by the Escrow Agent pursuant to this Agreement (it, being agreed; however, that
as between the parties each is responsible for its or his tax payments or
reporting).
[SIGNATURE PAGE FOLLOWS]
17
IN WITNESS WHEREOF, the parties hereto have executed this Escrow
Agreement as of the date first written above.
CLEAR CHANNEL COMMUNICATIONS, INC.
By /s/ Xxxxxxx Xxxx
----------------------------
Name: Xxxxxxx Xxxx
Title: CEO
EM HOLDINGS LLC
By /s/ Xxxx Xxxxx
----------------------------
Xxxx Xxxxx
Managing Member
CHASE TRUST COMPANY OF CALIFORNIA
By /s/ Xxxx X. Xxxxxx
----------------------------
Xxxx X. Xxxxxx
Assistant Vice President,
As Escrow Agent
/s/ Xxxx X. Xxxxx
-------------------------------
Xxxx X. Xxxxx, as
Stockholder Representative
