1
AMENDED AND RESTATED
AGREEMENT
AND
PLAN OF MERGER
BETWEEN
CLEAR CHANNEL COMMUNICATIONS, INC. ("PARENT")
AND
XXXXXXXX MEDIA SYSTEM, INC. ("XXXXXXXX")
OCTOBER 10, 1996
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TABLE OF CONTENTS
Page
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ARTICLE 1 DEFINITIONS.......................................................................... 2
1.1 Defined Terms............................................................... 2
1.2 References and Titles....................................................... 11
ARTICLE 2 THE MERGER........................................................................... 11
2.1 The Merger. ......................................................................... 11
2.2 Effect of the Merger................................................................. 11
2.3 Governing Instruments, Directors and Officers of the Surviving
Corporation ......................................................................... 11
2.4 Effect on Securities................................................................. 12
2.5 Exchange of Certificates............................................................. 15
2.6 Closing.............................................................................. 19
2.7 Effective Time of the Merger......................................................... 19
2.8 Taking of Necessary Action; Further Action........................................... 20
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF XXXXXXXX........................................... 20
3.1 Organization......................................................................... 20
3.2 Authority and Enforceability......................................................... 20
3.3 Consents and Approvals............................................................... 20
3.4 FCC Matters.......................................................................... 21
3.5 Financial Statements................................................................. 22
3.6 Capital Structure.................................................................... 22
3.7 Absence of Certain Changes or Events................................................. 23
3.8 Litigation. ......................................................................... 25
3.9 Environmental Matters................................................................ 25
3.10 Brokers.............................................................................. 26
3.11 Vote Required........................................................................ 26
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF PARENT,
HEFTEL AND HEFTEL SUB................................................................ 27
4.1 Representations and Warranties of Parent............................................. 27
4.2 Representations and Warranties of Heftel and Heftel Sub.............................. 28
ARTICLE 5 COVENANTS............................................................................ 30
5.1 Conduct by Parent Pending Closing.................................................... 30
5.2 Conduct of Business by Xxxxxxxx Pending Closing...................................... 31
5.3 Conduct of Business by Heftel Pending Closing........................................ 33
5.4 Access to Assets, Personnel and Information.......................................... 36
5.5 No Solicitation...................................................................... 38
5.6 Heftel Stockholders Meeting.......................................................... 38
5.7 Xxxxxxxx Shareholders Meeting........................................................ 39
5.8 Registration Statement and Proxy Statement/Prospectus................................ 39
5.9 Stock Exchange Listing............................................................... 41
5.10 Additional Arrangements.............................................................. 41
5.11 Agreements of Affiliates............................................................. 41
5.12 Public Announcements................................................................. 41
5.13 Notification of Certain Matters...................................................... 42
5.14 Payment of Expenses.................................................................. 42
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5.15 Registration Rights Agreement........................................................ 42
5.16 Employment Agreement................................................................. 42
5.17 Stockholders Agreement............................................................... 42
5.18 Indemnity Agreement.................................................................. 42
5.19 Insurance; Indemnification........................................................... 43
5.20 Parent Registration Rights Agreement................................................. 45
5.21 FCC Approval......................................................................... 45
5.22 Composition of the Board of Directors................................................ 46
ARTICLE 6 CONDITIONS........................................................................... 46
6.1 Conditions to Each Party's Obligation to Effect the Merger........................... 46
6.2 Conditions to Obligations of Parent, Heftel and Heftel Sub. ......................... 47
6.3 Conditions to Obligation of Xxxxxxxx................................................. 49
ARTICLE 7 TERMINATION.......................................................................... 49
7.1 Termination Rights................................................................... 49
7.2 Effect of Termination................................................................ 51
ARTICLE 8 MISCELLANEOUS........................................................................ 52
8.1 Nonsurvival of Representations and Warranties. ...................................... 52
8.2 Amendment. .......................................................................... 52
8.3 Notices.............................................................................. 52
8.4 Counterparts. ....................................................................... 52
8.5 Severability......................................................................... 52
8.6 Entire Agreement; No Third Party Beneficiaries....................................... 53
8.7 Applicable Law. ..................................................................... 53
8.8 No Remedy in Certain Circumstances. ................................................. 53
8.9 Assignment........................................................................... 53
8.10 Indemnification for Negligence....................................................... 54
8.11 Confidentiality Agreements........................................................... 54
8.12 Waivers.............................................................................. 54
8.13 Incorporation........................................................................ 55
Disclosure Letter
EXHIBITS
1.1(a) - Form of Heftel's Second Amended and Restated Certificate of
Incorporation
5.11 - Form of Affiliate Letter
5.15 - Registration Rights Agreement
5.16 - Employment Agreement
5.17 - Stockholders Agreement
5.18 - Indemnity Agreement
5.20 - Parent Registration Rights Agreement
8.9 - Assignment Agreement
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AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
THIS AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER (this
"AGREEMENT") is made and entered into as of the 10th day of October 1996, by and
between CLEAR CHANNEL COMMUNICATIONS, INC., a Texas corporation ("PARENT"), and
XXXXXXXX MEDIA SYSTEM, INC., a Texas corporation ("XXXXXXXX").
Recitals
A. Parent has acquired a majority interest in Heftel Broadcasting
Corporation ("HEFTEL"), a Delaware corporation, by way of a concurrent stock
purchase and tender offer (the "HEFTEL ACQUISITION").
B. The board of directors of each of Parent and Xxxxxxxx determined
that it was in the best interests of its respective shareholders to approve the
merger of Heftel and Xxxxxxxx by means of the merger of a to-be-named wholly
owned subsidiary of Heftel, to be formed under the laws of the State of Texas
immediately following the completion of the Heftel Acquisition ("HEFTEL SUB"),
with and into Xxxxxxxx upon the terms and subject to the conditions set forth in
an Agreement and Plan of Merger (the "ORIGINAL AGREEMENT") made and entered into
as of the 9th day of July 1996, by and between Parent and Xxxxxxxx.
C. To facilitate such merger, upon completion of the Heftel
Acquisition, Parent agrees to propose to Heftel and Heftel Sub that such
entities agree to be bound by the terms of this Agreement as they relate to such
entities and use its reasonable efforts to cause the execution of the
documentation reflecting such agreement to be bound hereby.
D. For federal income tax purposes, it is intended that such merger
qualify as a "reorganization" within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended.
E. Parent and Xxxxxxxx desire to make certain modifications to the
terms of the Original Agreement relating to certain covenants and agreements in
connection with such merger.
NOW, THEREFORE, for and in consideration of the recitals and 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 to this Agreement hereby agree as follows:
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Statement of Agreement
ARTICLE 1
DEFINITIONS
1.1 DEFINED TERMS. As used in this Agreement, each of the following
terms has the meaning given in this Section 1.1 or in the Sections referred to
below:
"AFFILIATE" means, with respect to any Person, each other Person that
directly or indirectly (through one or more intermediaries or otherwise)
controls, is controlled by, or is under common control with such Person.
"AGREEMENT" means this Agreement and Plan of Merger, as amended,
supplemented or modified from time to time.
"ALIEN" means (a) a person who is a citizen of a country other than the
United States; (b) any entity organized under the laws of a government other
than the government of the United States or any state, territory or possession
of the United States; (c) a government other than the government of the United
States or of any state, territory or possession of the United States; and (d) a
representative of, or an individual or entity controlled by, any of the
foregoing.
"ARTICLES OF MERGER" means the articles of merger, prepared and
executed in accordance with the applicable provisions of the TBCA, filed with
the Secretary of State of Texas to reflect the consummation of the Merger.
"ASSIGNMENT AGREEMENT" has the meaning specified in Section 8.9(b).
"BANK CREDIT AGREEMENT" means that certain Second Amended and Restated
Credit Agreement, dated as of August 9, 1994, as amended through the date of the
Original Agreement, among Xxxxxxxx and the other parties thereto.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended, or any successor statutes and any
regulations promulgated thereunder.
"CERCLIS" means the Comprehensive Environmental Response, Compensation
and Liability Information System List.
"CLOSING" means the closing of the Merger and the consummation of the
other transactions contemplated by this Agreement.
"CLOSING DATE" means the date on which the Closing occurs, which date
shall be the business day immediately following the day on which all conditions
precedent have been fully satisfied or waived (or such later date as is agreed
upon by the parties).
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"CLOSING MATERIAL ADVERSE EFFECT" means (a) when used with respect to
Xxxxxxxx, (i) the loss of any Xxxxxxxx FCC License or the inability of Xxxxxxxx
to operate any Xxxxxxxx Station due to the failure to obtain the consent of any
person other than the FCC or any other Governmental Authority (in either case
for which reinstatement or waiver within 90 days is not reasonably likely)
accounting for, in the aggregate, 10% of Xxxxxxxx'x consolidated gross revenue
stated on Xxxxxxxx'x consolidated income statement for the prior quarter, (ii)
the failure of Xxxxxxxx to either (A) refinance the outstanding indebtedness
under the Bank Credit Agreement or any successor credit facility at or prior to
the Effective Time or (B) obtain appropriate waivers so that, in either case, no
defaults will exist thereunder as of the Effective Time arising out of the
transactions contemplated by this Agreement or (iii) any other event, liability,
obligation, judgment or consequence having an adverse economic impact on
Xxxxxxxx and its Affiliates, taken as a whole, in excess of $20 million; and (b)
when used with respect to Heftel, (i) the loss of any Heftel FCC License or the
inability of Heftel to operate any Heftel Station due to the failure to obtain
the consent of any person other than the FCC or any other Governmental Authority
(in either case for which reinstatement or waiver within 90 days is not
reasonably likely) accounting for, in the aggregate, 10% of Heftel's
consolidated gross revenue stated on Heftel's consolidated income statement for
the prior quarter, (ii) the failure of Heftel to either (A) refinance the
outstanding indebtedness under the Heftel Credit Agreement or any successor
credit facility at or prior to the Effective Time or (B) obtain appropriate
waivers so that, in either case, no defaults will exist thereunder as of the
Effective Time arising out of the Heftel Acquisition or the Merger or (iii) any
other event, liability, obligation, judgment or consequence having an adverse
economic impact on Heftel and its Affiliates, taken as a whole, in excess of $40
million. With respect to clauses (a) and (b) above, a Closing Material Adverse
Effect shall not be deemed to have occurred based upon any change in the
financial condition of Xxxxxxxx or Xxxxxx, as the case may be, resulting from
(a) increased competition, (b) events or conditions that affect the radio
broadcasting industry generally and affect all other similarly situated
companies in the radio broadcasting industry or (c) general economic conditions.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMUNICATIONS ACT" means the Communications Act of 1934, as amended.
"CONVERSION NUMBER" means 7.8261.
"COSTS" has the meaning specified in Section 5.19(b).
"DGCL" means the Delaware General Corporation Law.
"DISCLOSURE LETTER" means the DISCLOSURE LETTER attached hereto and any
documents listed on such DISCLOSURE LETTER and expressly incorporated therein by
reference.
"DISSENTING SHAREHOLDER(S)" means holder(s) of Xxxxxxxx Common Stock,
Xxxxxxxx Xxxxxx Preferred and Xxxxxxxx Senior Preferred who have validly
perfected dissenters' rights under Article 5.12 of the TBCA.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
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"EFFECTIVE TIME" has the meaning specified in Section 2.7.
"EMPLOYMENT AGREEMENT" has the meaning specified in Section 5.16.
"ENVIRONMENTAL LAW" means any federal, state, local or foreign statute,
code, ordinance, rule, regulation, policy, guideline, permit, consent, approval,
license, judgment, order, writ, decree, common law, injunction or other
authorization in effect on the date of the Original Agreement or at a previous
time applicable to Xxxxxxxx'x operations relating to (a) emissions, discharges,
releases or threatened releases of Hazardous Materials into the natural
environment, including into ambient air, soil, sediments, land surface or
subsurface, buildings or facilities, surface water, groundwater, publicly-owned
treatment works, septic systems or land; (b) the generation, treatment, storage,
disposal, use, handling, manufacturing, transportation or shipment of Hazardous
Materials; (c) occupational health and safety; or (d) otherwise relating to the
pollution of the environment, solid waste handling treatment or disposal, or
operation or reclamation of oil and gas operations or mines.
"EXCHANGE AGENT" means the transfer agent for shares of Heftel Common
Stock or such other entity selected by Heftel and consented to by Xxxxxxxx,
which consent shall not be unreasonably withheld.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXCHANGE FUND" has the meaning specified in Section 2.5(a).
"FCC" means the Federal Communications Commission.
"GAAP" means generally accepted accounting principles, as recognized by
the U.S. Financial Accounting Standards Board (or any generally recognized
successor).
"GOVERNMENTAL ACTION" means any authorization, application, approval,
consent, exemption, filing, license, notice, registration, permit or other
requirement of, to or with any Governmental Authority.
"GOVERNMENTAL AUTHORITY" means any national, state, county or municipal
government, domestic or foreign, any agency, board, bureau, commission, court,
department or other instrumentality of any such government, or any arbitrator in
any case that has jurisdiction over any of the Xxxxxxxx Companies, Parent, the
Heftel Companies or any of their respective properties or assets, including the
FCC.
"HSR ACT" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended.
"HAZARDOUS MATERIAL" means (a) any "hazardous substance," as defined by
CERCLA; (b) any "hazardous waste" or "solid waste," in either case as defined by
the Resource Conservation and Recovery Act, as amended; (c) any solid,
hazardous, dangerous or toxic chemical, material, waste or substance, within the
meaning of and regulated by any Environmental Law; (d) any radioactive material,
including any naturally occurring radioactive
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material, and any source, special or byproduct material as defined in 42 U.S.C.
2011 et seq. and any amendments or authorizations thereof; (e) any
asbestos-containing materials in any form or condition; (f) any polychlorinated
biphenyls in any form or condition; or (g) petroleum, petroleum hydrocarbons, or
any fraction or byproducts thereof.
"HEFTEL" means Heftel Broadcasting Corporation, a Delaware corporation.
"HEFTEL CERTIFICATE" means a certificate representing shares of Heftel
Common Stock.
"HEFTEL COMMON STOCK" means the Class A Common Stock, par value $.001
per share, of Heftel.
"HEFTEL COMPANIES" means Heftel and the Heftel Subsidiaries.
"HEFTEL CREDIT AGREEMENT" means that certain Credit Agreement, dated
August 19, 1994, among Heftel, its subsidiaries and The Chase Manhattan Bank
(National Association), on its own behalf and as agent.
"HEFTEL DESIGNEES" has the meaning specified in Section 5.22.
"HEFTEL DISCLOSURE DOCUMENTS" means Heftel's Annual Report on Form 10-K
for the fiscal years ended September 30, 1994 and 1995, and Quarterly Reports
for the quarters ended December 31, 1995 and March 31, 1996, and all other
forms, reports, registration statements and other statements and documents filed
by Heftel with the SEC from July 27, 1994 to the date of this Agreement.
"HEFTEL FCC LICENSES" has the meaning specified in Section 5.3(b).
"HEFTEL MATERIAL AGREEMENT(S)" means (a) any written or oral agreement,
contract, commitment or understanding to which Heftel is a party, by which
Heftel is directly or indirectly bound, or to which any asset of Heftel may be
subject, involving total value or consideration in excess of $600,000 and/or,
(b) the Heftel Credit Agreement, as amended and supplemented as of the date
hereof.
"HEFTEL MEETING" means the meeting of the stockholders of Heftel called
for the purpose of voting on the Heftel Proposal.
"HEFTEL PROPOSAL" means, collectively, (a) the proposal to amend and
restate the Restated Certificate of Incorporation of Heftel to read as set forth
in EXHIBIT 1.1(A) hereto, (b) the proposal to approve the issuance of Heftel
Common Stock and New Heftel Class B Common Stock in connection with the Merger
and (c) such other proposals as may be necessary or desirable, including without
limitation, such proposals to approve further amendments of Heftel's certificate
of incorporation to facilitate the transactions contemplated in this Agreement,
which proposals are to be presented to the stockholders of Heftel in the Proxy
Statement/Prospectus.
"HEFTEL STATION" has the meaning specified in Section 5.3(b).
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"HEFTEL SUB" means a to-be-named wholly owned subsidiary of Heftel to
be formed under the laws of the State of Texas.
"HEFTEL SUB COMMON STOCK" means the common stock, par value $.001 per
share, of Heftel Sub.
"HEFTEL SUBSIDIARIES" means Broadcast Investment, Inc., a Florida
corporation; HBC Florida, Inc., a Delaware corporation; HBC Texas, Inc., a
Delaware corporation; KESS-AM License Corp., a Delaware corporation; KICI-AM
License Corp., a Delaware corporation; KLVE-FM License Corp., a Delaware
corporation; KMRT-AM License Corp., a Delaware corporation; KTNQ/KLVE, Inc., a
California corporation; KTNQ-AM License Corp., a Delaware corporation; Mi Casa
Publications, Inc., a California corporation; Radio WADO, Inc., a New Jersey
corporation; Xxxxxxxxx Broadcasting, Inc., a Texas corporation;
Xxxxxxxxx-Xxxxxx- Texas, Inc., a Texas corporation; Spanish Coast to Coast,
Ltd., a Delaware corporation; Spanish Radio Network, a Florida general
partnership; SRN Texas, Inc., a Texas corporation; The Tower Company, Inc., a
Hawaii corporation; Viva Acquisition Corporation, a Florida corporation; Viva
Broadcasting Corporation, a Florida corporation; WADO-AM License Corp., a
Delaware corporation; WGLI-AM License Corp., a Delaware corporation; WQBA-AM
License Corp., a Delaware corporation; WQBA-FM License Corp., a Delaware
corporation; Heftel Broadcasting Texas, L.P.; Xxxxxx XX Texas, Inc.; HBC
Broadcasting Texas, Inc.; HBC Chicago, Inc.; HBC- Las Vegas, Inc.; HBC New York,
Inc.; KCYT-FM License Corp.; KECS-FM License Corp.; KESS-AM License Corp.;
KESS-TV License Corp.; KHCK-FM License Corp.; KICI-FM License Corp; KLSQ-AM
License Corp.; La Oferta, Inc.; License Corp. No. 1; License Corp. No. 2; Viva
America Media Group; WLXX-AM License Corp.; and WPAT-AM License Corp.
"INDEMNIFIED PARTIES" has the meaning specified in Section 5.19(c).
"INDEMNIFYING PARTY" has the meaning specified in Section 5.19(d).
"INDEMNITY AGREEMENT" has the meaning specified in Section 5.18.
"LIEN" means any lien, mortgage, security interest, pledge, deposit,
restriction, burden, encumbrance, rights of a vendor under any title retention
or conditional sale agreement, or lease or other arrangement substantially
equivalent thereto.
"MAJOR XXXXXXXX SHAREHOLDER" means, collectively, XxXxxxx X. Xxxxxxxx,
Xx., XxXxxxx X. Xxxxxxxx, Xx., XxXxxxx X. Xxxxxxxx, Xx., as Custodian for Xxxxx
X. Xxxxxxxx, Xxxxxx X. Xxxxxxxx, Xxxxxxx X. Xxxxxxxx, Xxxx X. Xxxxxxx, Xxxxx
Xxxxx, Xxxxxxx X. Xxxxxx, Xxxxxxx X. del Xxxxxxxx, Xxxx Subordinated Debt
Partners III, L.P., Prime II Management, L.P. and PrimeComm, L.P.
"MATERIAL ADVERSE EFFECT" means (a) when used with respect to Xxxxxxxx,
a result or consequence that would materially adversely affect the condition
(financial or otherwise), results of operations or business of the Xxxxxxxx
Companies (taken as a whole) or the aggregate value of their assets, would
materially impair the ability of the Xxxxxxxx Companies (taken as a whole) to
own, hold, develop and operate their assets, or would impair Xxxxxxxx'x ability
to perform its obligations hereunder or consummate the transactions contemplated
hereby; and (b) when used
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with respect to Heftel, a result or consequence that would materially adversely
affect the condition (financial or otherwise), results of operations or business
of Heftel and its subsidiaries (taken as a whole) or the aggregate value of
their assets, would materially impair the ability of the Heftel Companies (taken
as a whole) to own, hold and operate their assets, or would impair Heftel's or
Heftel Sub's ability to perform its respective obligations hereunder or
consummate the transactions contemplated hereby.
"MERGER" has the meaning specified in Section 2.1.
"MERGER CONSIDERATION" means the product of the Conversion Number and
the Share Price.
"MERGER INDEMNIFIED PARTIES" has the meaning specified in Section
5.19(c).
"NASDAQ" means the National Market System of The Nasdaq Stock Market,
Inc.
"NEW HEFTEL CLASS B COMMON STOCK" means the Class B Common Stock, par
value $.001 per share, of Heftel having the terms, rights and privileges set
forth in EXHIBIT 1.1(A) hereto.
"PARENT" means Clear Channel Communications, Inc., a Texas corporation.
"PARENT REGISTRATION RIGHTS AGREEMENT" has the meaning specified in
Section 5.20.
"PARENT REPRESENTATIVE" means any director, officer, employee, agent,
advisor (including legal, accounting and financial advisors), Affiliate
(including Heftel and Heftel Sub) or other representative of Parent or its
subsidiaries.
"PERMITTED ENCUMBRANCES" means (a) with respect to Xxxxxxxx, (i) Liens
for Taxes, assessments or other governmental charges or levies if the same shall
not at the particular time in question be due and delinquent or (if foreclosure,
distraint, sale or other similar proceedings shall not have been commenced or,
if commenced, shall have been stayed) are being contested in good faith by
appropriate proceedings and if any of the Xxxxxxxx Companies shall have set
aside on its books such reserves (segregated to the extent required by sound
accounting practices) as may be required by or consistent with GAAP and, whether
reserves are set aside or not, are listed on the DISCLOSURE LETTER; (ii) Liens
of carriers, warehousemen, mechanics, laborers, materialmen, landlords, vendors,
workmen and operators arising by operation of law in the ordinary course of
business or by a written agreement existing as of the date of the Original
Agreement and necessary or incident to the proper operation of such Person's
business, properties and related facilities and assets for sums not yet due or
being contested in good faith by appropriate proceedings, if any of the Xxxxxxxx
Companies shall have set aside on its books such reserves (segregated to the
extent required by sound accounting practices) as may be required by or
consistent with GAAP and, whether reserves are set aside or not, are listed on
the DISCLOSURE LETTER; (iii) Liens incurred in the ordinary course of business
in connection with worker's compensation, unemployment insurance and other
social security legislation (other than ERISA) which would not, individually or
in the aggregate, result in a Material Adverse Effect on the Xxxxxxxx Companies;
(iv) Liens incurred in the ordinary course of business to secure the
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performance of bids, tenders, trade contracts, leases, statutory obligations,
surety and appeal bonds, performance and repayment bonds and other obligations
of a like nature; (v) Liens, easements, rights-of-way, restrictions, servitudes,
permits, conditions, covenants, exceptions, reservations and other similar
encumbrances incurred in the ordinary course of business or existing on property
and not materially impairing the value of the assets of any of Xxxxxxxx
Companies or interfering with the ordinary conduct of the business of any of the
Xxxxxxxx Companies or rights to any of their assets; (vi) Liens arising under or
created pursuant to the Bank Credit Agreement or the Term Loan; and (vii) Liens
described on the DISCLOSURE LETTER and (b) with respect to Heftel, (i) Liens for
Taxes, assessments or other governmental charges or levies if the same shall not
at the particular time in question be due and delinquent or (if foreclosure,
distraint, sale or other similar proceedings shall not have been commenced or,
if commenced, shall have been stayed) are being contested in good faith by
appropriate proceedings and if any of the Heftel Companies shall have set aside
on its books such reserves (segregated to the extent required by sound
accounting practices) as may be required by or consistent with GAAP and, whether
reserves are set aside or not, are listed on the Heftel Disclosure Documents;
(ii) Liens of carriers, warehousemen, mechanics, laborers, materialmen,
landlords, vendors, workmen and operators arising by operation of law in the
ordinary course of business or by a written agreement existing as of the date of
the Original Agreement and necessary or incident to the proper operation of such
Person's business, properties and related facilities and assets for sums not yet
due or being contested in good faith by appropriate proceedings, if any of the
Heftel Companies shall have set aside on its books such reserves (segregated to
the extent required by sound accounting practices) as may be required by or
consistent with GAAP and, whether reserves are set aside or not, are listed on
the Heftel Disclosure Documents; (iii) Liens incurred in the ordinary course of
business in connection with worker's compensation, unemployment insurance and
other social security legislation (other than ERISA) which would not,
individually or in the aggregate, result in a Material Adverse Effect on the
Heftel Companies; (iv) Liens incurred in the ordinary course of business to
secure the performance of bids, tenders, trade contracts, leases, statutory
obligations, surety and appeal bonds, performance and repayment bonds and other
obligations of a like nature; (v) Liens, easements, rights-of-way, restrictions,
servitudes, permits, conditions, covenants, exceptions, reservations and other
similar encumbrances incurred in the ordinary course of business or existing on
property and not materially impairing the value of the assets of any of Heftel
Companies or interfering with the ordinary conduct of the business of any of the
Heftel Companies or rights to any of their assets; (vi) Liens arising under or
created pursuant to the Heftel Credit Agreement; and (vii) Liens described on
the Heftel Disclosure Documents.
"PERSON" means any natural person, corporation, company, limited or
general partnership, joint stock company, joint venture, association, limited
liability company, trust, bank, trust company, land trust, business trust or
other entity or organization, whether or not a Governmental Authority.
"PROXY STATEMENT/PROSPECTUS" means a proxy statement of Heftel in
definitive form relating to the Heftel Meeting, which proxy statement will be
included as a prospectus in the Registration Statement.
"REGISTRATION RIGHTS AGREEMENT" has the meaning specified in Section
5.15.
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"REGISTRATION STATEMENT" means the Registration Statement to be filed
with the SEC by Heftel in connection with the issuance of Heftel Common Stock
and New Heftel Class B Common Stock pursuant to the Merger.
"RESPONSIBLE OFFICER" means, with respect to any Xxxxxxxx Company,
XxXxxxx X. Xxxxxxxx, Xx. or Xxxxxxx X. Xxxxxx, and with respect to any other
corporation, the Chief Executive Officer, President or any Vice President of
such corporation.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SHARE PRICE" means the per share closing sales price of the Heftel
Common Stock on Nasdaq (as reported by The Wall Street Journal, or if not so
reported, by another authoritative source) on the trading day immediately
preceding the Closing Date.
"STOCKHOLDERS AGREEMENT" has the meaning specified in Section 5.17.
"SURVIVING CORPORATION" has the meaning specified in Section 2.2.
"TBCA" means the Texas Business Corporation Act.
"TAXES" means taxes of any kind, levies or other like assessments,
customs, duties, imposts, charges or fees, including income, gross receipts, ad
valorem, value added, excise, real or personal property, asset, sales, use,
license, payroll, transaction, capital, net worth and franchise taxes, estimated
taxes, withholding, employment, social security, workers compensation, utility,
severance, production, unemployment compensation, occupation, premium, windfall
profits, transfer and gains taxes or other governmental taxes imposed or payable
to the United States or any state, local or foreign governmental subdivision or
agency thereof, and in each instance such term shall include any interest,
penalties or additions to tax attributable to any such Tax, including penalties
for the failure to file any federal, state, local or foreign returns,
declarations, reports, estimates, information returns or statements required to
be filed by a Person with respect to any Taxes.
"TENDER OFFER AGREEMENT" means the Tender Offer Agreement, dated June
1, 1996, between Parent and Heftel relating to the Heftel Acquisition, as
amended through the date hereof.
"TENDER OFFER INDEMNIFIED PARTIES" has the meaning specified in Section
5.19(b).
"TERM LOAN" means that certain Loan Agreement, dated as of the date of
the Original Agreement, between TMS Assets California, Inc., a Delaware
corporation, and Parent, as in effect on the date hereof.
"THIRD-PARTY CONSENT" means the consent or approval of any Person other
than Xxxxxxxx, Parent or any Governmental Authority.
"XXXXXXXX" means Xxxxxxxx Media System, Inc., a Texas corporation.
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"XXXXXXXX CERTIFICATE" means a certificate representing shares of
Xxxxxxxx Common Stock, shares of Xxxxxxxx Xxxxxx Preferred or shares of Xxxxxxxx
Senior Preferred, or documents or agreements representing the Xxxxxxxx Warrant.
"XXXXXXXX COMMON STOCK" means the common stock, par value $1.00 per
share, of Xxxxxxxx.
"XXXXXXXX COMPANIES" means Xxxxxxxx and the Xxxxxxxx Subsidiaries.
"XXXXXXXX FCC LICENSES" has the meaning specified in Section 5.2(b).
"XXXXXXXX FINANCIAL STATEMENTS" means the audited and unaudited
consolidated financial statements of Xxxxxxxx and its subsidiaries (including
the related notes with respect to such audited financial statements) for the
years ended December 31, 1994 and 1995, and for the five months ended May 31,
1996.
"XXXXXXXX XXXXXX PREFERRED" means the Junior Preferred Stock, par value
$10 per share, of Xxxxxxxx.
"XXXXXXXX MATERIAL AGREEMENT(S)" means (a) any written or oral
agreement, contract, commitment or understanding to which any of the Xxxxxxxx
Companies is a party, by which any of the Xxxxxxxx Companies is directly or
indirectly bound, or to which any asset of any of the Xxxxxxxx Companies may be
subject, involving total value or consideration in excess of $400,000, (b) the
Bank Credit Agreement and/or (c) the Term Loan, in each case as amended and
supplemented as of the date of the Original Agreement.
"TICHENOR REPRESENTATIVE" means any director, officer, employee, agent,
advisor (including legal, accounting and financial advisors), Affiliate or other
representative of any of the Xxxxxxxx Companies.
"TICHENOR SENIOR PREFERRED" means the 14% Senior Redeemable Cumulative
Preferred Stock, par value $1,000 per share, of Xxxxxxxx.
"XXXXXXXX STATION" has the meaning specified in Section 5.2(b).
"XXXXXXXX SUBSIDIARIES" means WADO Radio, Inc., a Texas corporation;
Xxxxxxxx License Corporation, a Texas corporation; TC Television, Inc., a Texas
corporation; Xxxxxxxx Assets California, Inc., a Delaware corporation; Xxxxxxxx
License California, Inc., a Delaware corporation; Tall Tower Partnership, a
Texas general partnership; and KDOS Limited Partnership, a Texas limited
partnership.
"XXXXXXXX WARRANT" means that certain Warrant Agreement, dated June 15,
1993, entitling Alta Subordinated Debt Partners III, L.P. to purchase such
number of shares of Xxxxxxxx Common Stock as shall equal 4% of the total number
of shares of Xxxxxxxx Common Stock of all classes outstanding on a fully diluted
basis after giving effect to the exercise of all other warrants, options and
rights to acquire any shares of Xxxxxxxx Common Stock and the
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conversion of any convertible securities issued by Tichenor (including without
limitation the Xxxxxxxx Xxxxxx Preferred).
1.2 REFERENCES AND TITLES. All references in this Agreement to
Exhibits, Schedules, Articles, Sections, subsections and other subdivisions
refer to the corresponding Exhibits, Schedules, Articles, Sections, subsections
and other subdivisions of or to this Agreement unless expressly provided
otherwise. Titles appearing at the beginning of any Articles, Sections,
subsections or other subdivisions of this Agreement are for convenience only, do
not constitute any part of this Agreement, and shall be disregarded in
construing the language hereof. The words "THIS AGREEMENT," "HEREIN," "HEREBY,"
"HEREUNDER" and "HEREOF," and words of similar import, refer to this Agreement
as a whole and not to any particular subdivision unless expressly so limited.
The words "THIS ARTICLE," "THIS SECTION" and "THIS SUBSECTION," and words of
similar import, refer only to the Article, Section or subsection hereof in which
such words occur. The word "OR" is not exclusive, and the word "INCLUDING" (in
its various forms) means "INCLUDING WITHOUT LIMITATION." Pronouns in masculine,
feminine or neuter genders shall be construed to state and include any other
gender, and words, terms and titles (including terms defined herein) in the
singular form shall be construed to include the plural and vice versa, unless
the context otherwise requires.
As used in the representations and warranties contained in this
Agreement, the phrase "TO THE KNOWLEDGE" of the representing party shall mean
that Responsible Officers of such representing party, individually or
collectively, either (a) know that the matter being represented and warranted is
true and accurate or (b) have no reason, after reasonable inquiry, to believe
that the matter being represented and warranted is not true and accurate.
ARTICLE 2
THE MERGER
2.1 THE MERGER. Subject to the terms and conditions set forth in this
Agreement and assuming the consummation of the Assignment Agreement pursuant to
Section 8.9, at the Effective Time, Heftel Sub shall be merged with and into
Xxxxxxxx in accordance with the provisions of this Agreement. Such merger is
referred to herein as the "MERGER."
2.2 EFFECT OF THE MERGER. Upon the effectiveness of the Merger, the
separate existence of Heftel Sub shall cease and Xxxxxxxx, as the surviving
corporation in the Merger (the "SURVIVING CORPORATION"), shall continue its
corporate existence under the laws of the State of Texas. The Merger shall have
the effects specified in this Agreement and the TBCA.
2.3 GOVERNING INSTRUMENTS, DIRECTORS AND OFFICERS OF THE SURVIVING
CORPORATION.
(a) The articles of incorporation of Xxxxxxxx, as in effect
immediately prior to the Effective Time, shall be the articles of incorporation
of the Surviving Corporation until duly amended in accordance with its terms and
applicable law.
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(b) The bylaws of Xxxxxxxx, as in effect immediately prior to
the Effective Time, shall be the bylaws of the Surviving Corporation until duly
amended in accordance with their terms and applicable law.
(c) The directors and officers of the Surviving Corporation
from the Effective Time until their respective successors have been duly elected
or appointed in accordance with the articles of incorporation and bylaws of the
Surviving Corporation and applicable law shall be the directors and officers of
Xxxxxxxx.
2.4 EFFECT ON SECURITIES.
(a) HEFTEL SUB COMMON STOCK. At the Effective Time, by virtue of
the Merger and without any action on the part of any holder thereof, each share
of Heftel Sub Common Stock outstanding immediately prior to the Effective Time
shall be converted into one validly issued, fully paid share of Xxxxxxxx Common
Stock.
(b) XXXXXXXX SECURITIES.
(i) XXXXXXXX COMMON STOCK. At the Effective Time, by virtue of
the Merger and without any action on the part of any holder thereof
(but subject to the provisions of Section 2.5(e)), each share of
Xxxxxxxx Common Stock that is issued and outstanding immediately prior
to the Effective Time (other than shares of Xxxxxxxx Common Stock held
by Dissenting Shareholders and Xxxxxxxx Common Stock held by Parent or
any Affiliate of Parent) shall be converted into the right to receive
shares of validly issued, fully paid and nonassessable Heftel Common
Stock, with each such share of Xxxxxxxx Common Stock being converted
into the number of shares of Heftel Common Stock equal to the
Conversion Number. Each share of Xxxxxxxx Common Stock, when so
converted, shall automatically be cancelled and retired, shall cease to
exist and shall no longer be outstanding; and the holder of any
certificate representing any such shares shall cease to have any rights
with respect thereto, except the right to receive the shares of Heftel
Common Stock to be issued in exchange therefor (along with any cash in
lieu of fractional shares of Heftel Common Stock as provided in Section
2.5(e) and any unpaid dividends and distributions with respect to such
shares of Heftel Common Stock as provided in Section 2.5(c)), without
interest, upon the surrender of such certificate in accordance with
Section 2.5.
(ii) XXXXXXXX SENIOR PREFERRED. At the Effective Time, by
virtue of the Merger and without any action on the part of any holder
thereof, each share of Xxxxxxxx Senior Preferred (other than shares of
Xxxxxxxx Senior Preferred held by Dissenting Shareholders) that is
issued and outstanding shall be converted into the right to receive
cash in the amount of $1,000 per share plus all accrued and unpaid
dividends through December 31, 1995. Each share of Xxxxxxxx Senior
Preferred, when so converted, shall automatically be cancelled and
retired, shall cease to exist and shall no longer be outstanding; and
the holder of any certificate representing any such shares shall cease
to have any rights with respect thereto, except the right to receive
the cash to be paid in exchange therefor, without interest, upon the
surrender of such certificate in accordance with Section 2.5.
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(iii) XXXXXXXX XXXXXX PREFERRED. At the Effective Time, by
virtue of the Merger and without any action on the part of any holder
thereof, each share of Xxxxxxxx Xxxxxx Preferred (other than shares of
Xxxxxxxx Xxxxxx Preferred held by Dissenting Shareholders) that is
issued and outstanding prior to the Effective Time shall be converted
into the right to receive shares of validly issued, fully paid and
nonassessable Heftel Common Stock, with each such share being converted
into 4.3478 shares of Heftel Common Stock. Each share of Xxxxxxxx
Xxxxxx Preferred, when so converted, shall automatically be cancelled
and retired, shall cease to exist and shall no longer be outstanding;
and the holder of any certificate representing any such shares shall
cease to have any rights with respect thereto, except the right to
receive the shares of Heftel Common Stock to be issued in exchange
therefor (along with any cash in lieu of fractional shares of Heftel
Common Stock as provided in Section 2.5(e) and any unpaid dividends and
distributions with respect to such shares of Heftel Common Stock as
provided in Section 2.5(c)), without interest, upon the surrender of
such certificate in accordance with Section 2.5.
(iv) XXXXXXXX TREASURY STOCK. At the Effective Time, by virtue
of the Merger, all shares of Xxxxxxxx Common Stock and Xxxxxxxx Xxxxxx
Preferred that are issued and held as treasury stock shall be cancelled
and retired and shall cease to exist, and no shares of Heftel Common
Stock or other consideration shall be paid or payable in exchange
therefor.
(v) XXXXXXXX COMMON STOCK HELD BY PARENT. At the Effective
Time, by virtue of the Merger and without any action on the part of any
holder thereof (but subject to the provisions of Section 2.5(e)), each
share of Xxxxxxxx Common Stock that is issued and outstanding
immediately prior to the Effective Time and held by Parent or any
Affiliate of Parent shall be converted into the right to receive shares
of validly issued, fully paid and nonassessable New Heftel Class B
Common Stock, with each such share of Xxxxxxxx Common Stock being
converted into the number of shares of New Heftel Class B Common Stock
equal to the Conversion Number. Each share of Xxxxxxxx Common Stock,
when so converted, shall automatically be cancelled and retired, shall
cease to exist and shall no longer be outstanding; and the holder of
any certificate representing any such shares shall cease to have any
rights with respect thereto, except the right to receive the shares of
New Heftel Class B Common Stock to be issued in exchange therefor
(along with any cash in lieu of fractional shares of New Heftel Class B
Common Stock as provided in Section 2.5(e) and any unpaid dividends and
distributions with respect to such shares of New Heftel Class B Common
Stock as provided in Section 2.5(c)), without interest, upon the
surrender of such certificate in accordance with Section 2.5.
(vi) XXXXXXXX WARRANT. At the Effective Time, by virtue of the
Merger and without any action on the part of the holder thereof, the
Xxxxxxxx Warrant, if outstanding as of the Effective Time, shall be
converted into the right to receive 180,000 shares of validly issued,
fully paid and nonassessable Heftel Common Stock. The Xxxxxxxx Warrant,
when so converted, shall automatically be cancelled and retired, shall
cease to exist and shall no longer be outstanding; and the holder of
the Xxxxxxxx Warrant shall cease to have any rights with respect
thereto, except the right to receive the
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shares of Heftel Common Stock to be issued in exchange therefor and any
unpaid dividends and distributions with respect to such shares of
Heftel Common Stock as provided in Section 2.5(c), without interest,
upon the surrender of such warrant in accordance with Section 2.5.
(vii) NO ADDITIONAL RIGHTS. Except as provided in this Section
2.4(b) or as otherwise agreed to by the parties, (A) the provisions of
any other plan, program or arrangement providing for the issuance or
grant of any other interest in respect of the capital stock of the
Xxxxxxxx Companies shall become null and void, and (B) the Xxxxxxxx
Companies shall use all reasonable efforts to ensure that, following
the Effective Time, no holder of options or rights or any participant
in any plan, program or arrangement shall have any right thereunder to
acquire any equity securities of the Xxxxxxxx Companies, Parent,
Heftel, Heftel Sub or any direct or indirect subsidiary thereof.
(viii) SHARES OF DISSENTING SHAREHOLDERS. Any issued and
outstanding shares of Xxxxxxxx Common Stock, Xxxxxxxx Senior Preferred
or Xxxxxxxx Xxxxxx Preferred held by a Dissenting Shareholder shall be
converted into the right to receive such consideration as may be
determined to be due to such Dissenting Shareholder pursuant to the
TBCA; provided, however, shares of Xxxxxxxx Common Stock, Xxxxxxxx
Senior Preferred or Xxxxxxxx Xxxxxx Preferred outstanding at the
Effective Time and held by a Dissenting Shareholder who shall, after
the Effective Time, withdraw his demand for payment or lose his
dissenters' right as provided in the TBCA, shall be deemed to be
converted, as of the Effective Time, into the right to receive the
shares of Heftel Common Stock or cash specified in Section 2.4(b)(i),
(ii) and (iii), respectively, in accordance with the procedures
specified in Section 2.5(b). Xxxxxxxx shall give Parent (or, if after
consummation of the Assignment Agreement, Heftel) (A) prompt notice of
any written demands for such payment, withdrawals of demands for such
payment and any other instruments served pursuant to the TBCA received
by Xxxxxxxx, and (B) the opportunity to direct all negotiations and
proceedings with respect to demands for such payment under the TBCA.
Xxxxxxxx will not voluntarily make any payment with respect to any
demands for dissenters' rights and will not, except with the prior
written consent of Parent (or, if after consummation of the Assignment
Agreement, Heftel), settle or offer to settle any such demands.
(ix) HEFTEL COMMON STOCK HELD BY PARENT. At the Effective
Time, by virtue of the Merger and without any action on the part of
Parent or any Affiliate of Parent (but subject to the provisions of
Section 2.5(e)), each share of Heftel Common Stock that is issued and
outstanding immediately prior to the Effective Time and held by Parent
or any Affiliate of Parent shall be converted into the right to receive
one (1) share of validly issued, fully paid and nonassessable New
Heftel Class B Common Stock. Each share of Heftel Common Stock, when so
converted, shall automatically be cancelled and retired, shall cease to
exist and shall no longer be outstanding; and the holder of any
certificate representing any such shares shall cease to have any rights
with respect thereto, except the right to receive the shares of New
Heftel Class B Common Stock to be issued in exchange therefor (along
with any unpaid dividends and distributions with respect to such shares
of New Heftel Class B Common Stock as provided in Section 2.5(c)),
without interest, upon the surrender of such certificate in accordance
with Section 2.5.
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2.5 EXCHANGE OF CERTIFICATES.
(a) EXCHANGE FUND. At or prior to the Effective Time, Heftel shall
deposit with the Exchange Agent: (i) for the benefit of the holders of (A)
shares of Xxxxxxxx Common Stock (other than Parent and Affiliates of Parent),
(B) shares of Xxxxxxxx Xxxxxx Preferred and (C) the Xxxxxxxx Warrant, if
outstanding as of the Effective Time, and for exchange in accordance with this
Agreement, certificates representing the shares of Heftel Common Stock to be
issued in exchange for such Xxxxxxxx securities pursuant to Section 2.4(b)(i),
(iii) and (vi), respectively; (ii) for the benefit of the holders of Xxxxxxxx
Senior Preferred, cash in the amount of $3,000,000; (iii) for the benefit of
Parent and Affiliates of Parent, certificates representing shares of New Heftel
Class B Common Stock to be issued pursuant to Section 2.4(b)(v) and (ix); and
(iv) cash in an amount sufficient to provide for the payments to be made in lieu
of issuing any fractional shares of Heftel Common Stock or New Heftel Class B
Common Stock as provided in Section 2.5(e). Additionally, subject to the
provisions of Section 2.5(f), Heftel shall, if and when a payment date has
occurred with respect to a dividend or distribution that has been declared
subsequent to the Effective Time, deposit with the Exchange Agent an amount in
cash (or property of like kind to that which is the subject of such dividend or
distribution) equal to the dividend or distribution per share of Heftel Common
Stock times the number of shares of Heftel Common Stock evidenced by Xxxxxxxx
Certificates theretofore representing Xxxxxxxx Common Stock, Xxxxxxxx Xxxxxx
Preferred and the Xxxxxxxx Warrant that have not theretofore been surrendered
for exchange in accordance with this Section 2.5. The cash to be paid in
conversion of the Xxxxxxxx Senior Preferred, such shares of Heftel Common Stock
and New Heftel Class B Common Stock, together with any dividends or
distributions with respect thereto (as provided in Section 2.5(c)), are referred
to herein as the "EXCHANGE FUND." The Exchange Agent, pursuant to irrevocable
instructions consistent with the terms of this Agreement, shall deliver the
Heftel Common Stock to be issued pursuant to Section 2.4(b)(i), (iii) and (vi),
respectively, the New Heftel Class B Common Stock to be issued pursuant to
Section 2.4(b)(v) and (ix), the cash to be paid pursuant to Section 2.4(b)(ii),
and cash in an amount sufficient to provide for the payments to be made in lieu
of issuing any fractional shares of Heftel Common Stock or New Heftel Class B
Common Stock as provided in Section 2.5(e) out of the Exchange Fund, and the
Exchange Fund shall not be used for any other purpose whatsoever. The Exchange
Agent shall not be entitled to vote or exercise any rights of ownership with
respect to the Heftel Common Stock or the New Heftel Class B Common Stock held
by it from time to time hereunder, except that it shall receive and hold all
dividends or other distributions paid or distributed with respect thereto for
the account of Persons entitled thereto.
(b) EXCHANGE PROCEDURES.
(i) As soon as reasonably practicable after the Effective
Time, Heftel shall cause the Exchange Agent to mail to each holder
of record of a Xxxxxxxx Certificate that, immediately prior to the
Effective Time, represented (A) shares of Xxxxxxxx Common Stock,
(B) shares of Xxxxxxxx Xxxxxx Preferred, (C) the Xxxxxxxx Warrant,
if outstanding as of the Effective Time, or (D) Xxxxxxxx Senior
Preferred, which was converted pursuant to Section 2.4(b), a
letter of transmittal to be used to effect the exchange of such
Xxxxxxxx Certificate, along with instructions for using such
letter of transmittal to effect such exchange. As soon as
reasonably practicable after the Effective Time, Heftel shall
cause the Exchange Agent to mail to Parent and each Affiliate of
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Parent that holds Heftel Common Stock that immediately prior to
the Effective Time was converted into the right to receive New
Heftel Class B Common Stock pursuant to Section 2.4(b)(ix), a
letter of transmittal to be used to effect the exchange of such
Heftel Common Stock, along with instructions for using such letter
of transmittal to effect such exchange. The letter of transmittal
(or the instructions thereto) shall specify that delivery of any
Xxxxxxxx Certificate or Heftel Common Stock, as applicable, shall
be effected, and risk of loss and title thereto shall pass, only
upon delivery of thereof to the Exchange Agent and shall be in
such form and have such other provisions as Heftel may reasonably
specify.
(ii) Upon surrender to the Exchange Agent of a Xxxxxxxx
Certificate for cancellation, together with a duly completed and
executed letter of transmittal and any other required documents
(including, in the case of any Person constituting an "affiliate"
of Xxxxxxxx for purposes of Rule 145(c) and (d) under the
Securities Act, a written agreement from such Person as described
in Section 5.11, if not theretofore delivered to Heftel), (A) (x)
the holder (other than Parent and Affiliates of Parent) of such
Xxxxxxxx Certificate (other than Xxxxxxxx Certificates
representing Xxxxxxxx Senior Preferred) shall be entitled to
receive in exchange therefor a Heftel Certificate representing the
number of whole shares of Heftel Common Stock that such holder has
the right to receive pursuant to Section 2.4(b)(i), (iii), or
(vi), as the case may be, any cash in lieu of fractional shares of
Heftel Common Stock as provided in Section 2.5(e), and any unpaid
dividends and distributions that such holder has the right to
receive pursuant to Section 2.5(c) (after giving effect to any
required withholding of taxes), (y) Parent and Affiliates of
Parent holding a Xxxxxxxx Certificate shall be entitled to receive
in exchange therefor a certificate representing the number of
whole shares of New Heftel Class B Common Stock that such holder
has the right to receive pursuant to Section 2.4(b)(i)(v), any
cash in lieu of fractional shares of New Heftel Class B Common
Stock as provided in Section 2.5(e), and any unpaid dividends and
distributions that such holder has the right to receive pursuant
to Section 2.5(c) (after giving effect to any required withholding
of taxes), and (z) the holder of such Xxxxxxxx Certificate
representing Xxxxxxxx Senior Preferred shall be entitled to
receive in exchange therefor cash pursuant to Section 2.4(b)(ii);
and (B) the Xxxxxxxx Certificate so surrendered shall forthwith be
cancelled. No interest shall be paid or accrued on the cash in
lieu of fractional shares and unpaid dividends and distributions,
if any, payable to holders of Xxxxxxxx Certificates. Upon
surrender to the Exchange Agent by Parent or an Affiliate of
Parent of a certificate representing Heftel Common Stock for
cancellation, together with a duly completed and executed letter
of transmittal and any other required documents, the holder of
such certificate shall be entitled to receive in exchange therefor
a certificate representing the number of whole shares of New
Heftel Class B Common Stock that such holder has the right to
receive pursuant to Section 2.4(b)(ix), and any unpaid dividends
and distributions that such holder has the right to receive
pursuant to Section 2.5(c) (after giving effect to any required
withholding of taxes) and the certificate so surrendered shall
forthwith be cancelled. No interest shall be paid or accrued on
the unpaid dividends and distributions, if any, payable to holders
of the certificates representing Heftel Common Stock surrendered
for cancellation.
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(iii) In the event of a transfer of ownership of Xxxxxxxx
Common Stock, Xxxxxxxx Xxxxxx Preferred or the Xxxxxxxx Warrant,
if outstanding as of the Effective Time, that is not registered in
the transfer records of Xxxxxxxx, a Heftel Certificate
representing the appropriate number of shares of Heftel Common
Stock (along with any cash in lieu of fractional shares and any
unpaid dividends and distributions that such holder has the right
to receive) may be issued or paid to a transferee if the Xxxxxxxx
Certificate representing such Xxxxxxxx securities is presented to
the Exchange Agent accompanied by all documents required to
evidence and effect such transfer and to evidence that any
applicable stock transfer or similar taxes have been paid.
(iv) Until surrendered as contemplated by this Section
2.5(b), (A) each Xxxxxxxx Certificate (other than Xxxxxxxx
Certificates representing Xxxxxxxx Senior Preferred and Xxxxxxxx
Certificates representing Heftel Common Stock owned by Parent and
Affiliates of Parent) shall be deemed at any time after the
Effective Time to represent only the right to receive upon such
surrender a Heftel Certificate representing shares of Heftel
Common Stock as provided in Section 2.4(b)(i), (iii) or (vi), as
the case may be (along with any cash in lieu of fractional shares
and any unpaid dividends and distributions), (B) each Xxxxxxxx
Certificate representing Xxxxxxxx Senior Preferred shall be deemed
at any time after the Effective Time to represent only the right
to receive upon such surrender cash as provided in Section
2.4(b)(ii), (C) each certificate representing Heftel Common Stock
held by Parent and any Affiliate of Parent shall be deemed at any
time after the Effective Time to represent only the right to
receive upon such surrender a certificate representing shares of
New Heftel Class B Common Stock as provided in Section 2.4(b)(ix)
(along with any unpaid dividends and distributions), and (D) each
Xxxxxxxx Certificate held by Parent and Affiliates of Parent shall
be deemed at any time after the Effective Time to represent only
the right to receive upon such surrender a certificate
representing New Heftel Class B Common Stock as provided in
Section 2.4(b)(v) (along with any cash in lieu of fractional
shares and any unpaid dividends and distributions).
(c) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No dividends
or other distributions with respect to Heftel Common Stock declared or made
after the Effective Time with a record date after the Effective Time shall be
paid to the holder of any unsurrendered Xxxxxxxx Certificate. Subject to the
effect of applicable laws, (i) at the time of the surrender of a Xxxxxxxx
Certificate for exchange in accordance with the provisions of this Section 2.5,
there shall be paid to the surrendering holder, without interest, the amount of
dividends or other distributions (having a record date after the Effective Time
but on or prior to surrender and a payment date on or prior to surrender)
theretofore paid with respect to the number of whole shares of Heftel Common
Stock or New Heftel Class B Common Stock, as applicable, that such holder is
entitled to receive (less the amount of any withholding taxes that may be
required with respect thereto); and (ii) at the appropriate payment date, there
shall be paid to the surrendering holder, without interest, the amount of
dividends or other distributions (having a record date after the Effective Time
but on or prior to surrender and a payment date subsequent to surrender) payable
with respect to the number of whole shares of Heftel Common Stock or New Heftel
Class B Common Stock, as applicable, that such holder receives (less the amount
of any withholding taxes that may be required with respect thereto). Subject to
the effect of applicable laws, (i) at the time Parent or an Affiliate of Parent
surrenders Heftel Common Stock for
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exchange in accordance with the provisions of Section 2.4(b)(ix) and this
Section 2.5, there shall be paid to the surrendering holder, without interest,
the amount of dividends or other distributions (having a record date after the
Effective Time but on or prior to surrender and a payment date on or prior to
surrender) theretofore paid with respect to the number of whole shares of New
Heftel Class B Common Stock that such holder is entitled to receive (less the
amount of any withholding taxes that may be required with respect thereto); and
(ii) at the appropriate payment date, there shall be paid to the surrendering
holder, without interest, the amount of dividends or other distributions (having
a record date after the Effective Time but on or prior to surrender and a
payment date subsequent to surrender) payable with respect to the number of
whole shares of New Heftel Class B Common Stock that such holder receives (less
the amount of any withholding taxes that may be required with respect thereto).
(d) NO FURTHER OWNERSHIP RIGHTS IN XXXXXXXX SECURITIES. All shares
of Heftel Common Stock and New Heftel Class B Common Stock, as applicable,
issued upon the surrender for exchange of (i) shares of Xxxxxxxx Common Stock,
(ii) shares of Xxxxxxxx Xxxxxx Preferred and (iii) the Xxxxxxxx Warrant, if
outstanding as of the Effective Time, in accordance with the terms hereof
(including any cash paid pursuant to Section 2.5(c) or (e)) and the cash paid
upon the surrender for exchange of Xxxxxxxx Senior Preferred shall be deemed to
have been issued in full satisfaction of all rights pertaining to such Xxxxxxxx
securities. After the Effective Time, there shall be no further registration of
transfers on the Surviving Corporation's stock transfer books or other records
of the shares of Xxxxxxxx Common Stock, Xxxxxxxx Senior Preferred, Xxxxxxxx
Xxxxxx Preferred or the Xxxxxxxx Warrant, in each case that were outstanding
immediately prior to the Effective Time. If, after the Effective Time, a
Xxxxxxxx Certificate is presented to the Surviving Corporation for any reason,
it shall be cancelled and exchanged as provided in this Section 2.5.
(e) TREATMENT OF FRACTIONAL SHARES. No Heftel Certificates or
scrip representing fractional shares of Heftel Common Stock or New Heftel Class
B Common Stock, as applicable, shall be issued in the Merger and, except as
provided in this Section 2.5(e), no dividend or other distribution, stock split
or interest shall relate to any such fractional share, and such fractional share
shall not entitle the owner thereof to vote or to any other rights of a
stockholder of Heftel. In lieu of any fractional share of Heftel Common Stock or
New Heftel Class B Common Stock, as applicable, to which a holder of Xxxxxxxx
Common Stock, Xxxxxxxx Xxxxxx Preferred or the Xxxxxxxx Warrant, if outstanding
as of the Effective Time, would otherwise be entitled, such holder, upon
surrender of a Xxxxxxxx Certificate as described in this Section, shall be paid
an amount in cash (without interest) determined by multiplying (i) the Share
Price by (ii) the fraction of a share of Heftel Common Stock or New Heftel Class
B Common Stock to which such holder would otherwise be entitled, in which case
Heftel shall make available to the Exchange Agent, without regard to any other
cash being provided to the Exchange Agent, the amount of cash necessary to make
such payments.
(f) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange Fund
and cash held by the Exchange Agent in accordance with the terms of this Section
2.5 that remains unclaimed by the former shareholders of Xxxxxxxx for a period
of one year following the Effective Time shall be delivered to Heftel, upon
demand. Thereafter, any former securityholders of Tichenor who have not
theretofore complied with the provisions of this Section 2.5 shall look only to
Heftel for payment of their claim for Heftel Common Stock or New Heftel
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Class B Common Stock, any cash in lieu of fractional shares of Heftel Common
Stock or New Heftel Class B Common Stock and any dividends or distributions with
respect to Heftel Common Stock or New Heftel Class B Common Stock (all without
interest).
(g) NO LIABILITY. Neither Parent, Heftel, Heftel Sub, Xxxxxxxx,
the Surviving Corporation, the Exchange Agent nor any other Person shall be
liable to any former holder of Xxxxxxxx securities for any amount properly
delivered to any public official pursuant to any applicable abandoned property,
escheat or similar law. Any amounts remaining unclaimed by former holders of
Xxxxxxxx Common Stock, Xxxxxxxx Xxxxxx Preferred, Xxxxxxxx Senior Preferred or
the Xxxxxxxx Warrant, if outstanding as of the Effective Time, for a period of
three years following the Effective Time (or such earlier date immediately prior
to the time at which such amounts would otherwise escheat to or become property
of any governmental entity) shall, to the extent permitted by applicable law,
become the property of Heftel, free and clear of any claims or interest of any
such holders or their successors, assigns or personal representatives previously
entitled thereto.
(h) LOST, STOLEN, OR DESTROYED XXXXXXXX CERTIFICATES. If any
Xxxxxxxx Certificate shall have been lost, stolen or destroyed, upon the making
of an affidavit of that fact by the Person claiming such Xxxxxxxx Certificate to
be lost, stolen or destroyed and, if required by Heftel, the posting by such
Person of a bond, in such reasonable amount as Heftel may direct, as indemnity
against any claim that may be made against it with respect to such Xxxxxxxx
Certificate, the Exchange Agent shall issue in exchange for such lost, stolen or
destroyed Xxxxxxxx Certificate the shares of Heftel Common Stock (along with any
cash in lieu of fractional shares pursuant to Section 2.5(e) and any unpaid
dividends and distributions pursuant to Section 2.5(c)) or cash (with respect to
Xxxxxxxx Senior Preferred) deliverable with respect thereto pursuant to this
Agreement.
(i) EXCHANGE AT CLOSING. Notwithstanding the provisions of Section
2.5(b), each record holder of a Xxxxxxxx Certificate who surrenders such
Xxxxxxxx Certificate for cancellation to the Surviving Corporation at the
Closing, together with a duly executed letter of transmittal (which shall be
available at the Closing), shall be entitled to receive in exchange therefor (i)
cash in the amount such holder has the right to receive pursuant to Section
2.4(b)(ii), payable in cash or by wire transfer of immediately available funds
on the Closing Date, or (ii) certificates representing Heftel Common Stock in
the amount such holder has the right to receive pursuant to Section 2.4(b)(i),
(iii), (v) or (vi).
2.6 CLOSING. The Closing shall take place on the Closing Date at such
time and place as is agreed upon by Heftel and Xxxxxxxx.
2.7 EFFECTIVE TIME OF THE MERGER. The Merger shall become effective
immediately when a Certificate of Merger is issued by the Secretary of State of
Texas or at such time thereafter as is provided in the Articles of Merger (the
"EFFECTIVE TIME"). As soon as practicable after the Closing, the Articles of
Merger shall be filed, and the Effective Time shall occur, on the Closing Date;
provided, however, that the Articles of Merger may be filed prior to the Closing
Date or prior to the Closing so long as it provides for an effective time that
occurs on the Closing Date immediately after the Closing.
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2.8 TAKING OF NECESSARY ACTION; FURTHER ACTION. Subject to the
provisions of Section 8.9, each of Parent, Heftel, Heftel Sub and Xxxxxxxx shall
use all reasonable efforts to take all such actions as may be necessary or
appropriate in order to effectuate the Merger under the TBCA as promptly as
commercially practicable. If, at any time after the Effective Time, any further
action is necessary or desirable to carry out the purposes of this Agreement and
to vest the Surviving Corporation with full right, title and possession to all
assets, property, rights, privileges, powers and franchises of either of Heftel
Sub or Xxxxxxxx, the officers and directors of the Surviving Corporation are
fully authorized, in the name of the Surviving Corporation or otherwise to take,
and shall take, all such lawful and necessary action.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF TICHENOR
Xxxxxxxx hereby represents and warrants to Parent (and upon
consummation of the Assignment Agreement, to Heftel and Heftel Sub), as of the
date of the Original Agreement, as follows:
3.1 ORGANIZATION. Each of the Xxxxxxxx Companies (a) is a corporation
or partnership duly organized, validly existing and in good standing under the
laws of its state of organization, (b) has the requisite power and authority to
own, lease and operate its properties and to conduct its business as it is
presently being conducted, and (c) is duly qualified to do business as a foreign
entity, and is in good standing, in each jurisdiction where the character of the
properties owned or leased by it or the nature of its activities makes such
qualification necessary (except where any failure to be so qualified as a
foreign entity or to be in good standing would not, individually or in the
aggregate, have a Material Adverse Effect on Xxxxxxxx). Copies of the
certificate or articles of incorporation and bylaws, or partnership agreement of
each of the Xxxxxxxx Companies have heretofore been delivered to Parent, and
such copies are accurate and complete as of the date of the Original Agreement.
Xxxxxxxx has no corporate or other subsidiaries other than the Xxxxxxxx
Subsidiaries.
3.2 AUTHORITY AND ENFORCEABILITY. Xxxxxxxx has the requisite corporate
power and authority to enter into and deliver this Agreement and to consummate
the transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been
duly and validly authorized by all necessary corporate action on the part of
Xxxxxxxx, and no other corporate proceedings on the part of Xxxxxxxx are
necessary to authorize the execution or delivery of this Agreement or, other
than the approval of the Merger and this Agreement by the shareholders of
Xxxxxxxx, to consummate the transactions contemplated hereby. This Agreement has
been duly and validly executed and delivered by Xxxxxxxx and (assuming that this
Agreement constitutes a valid and binding obligation of Parent and, upon
consummation of the Assignment Agreement, Heftel and Heftel Sub) constitutes a
valid and binding obligation of Xxxxxxxx enforceable against Xxxxxxxx in
accordance with its terms.
3.3 CONSENTS AND APPROVALS. No consent, approval, order or
authorization of, registration, declaration or filing with, or permit from, any
Governmental Authority is required
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by or with respect to any of the Xxxxxxxx Companies in connection with the
execution and delivery of this Agreement by Xxxxxxxx or the consummation by
Xxxxxxxx of the transactions contemplated hereby, except for the following: (a)
any such consent, approval, order, authorization, registration, declaration,
filing or permit which the failure to obtain or make would not, individually or
in the aggregate, have a Material Adverse Effect on Xxxxxxxx; (b) the filing of
the Articles of Merger with the Secretary of State of Texas pursuant to the
provisions of the TBCA; (c) the filing of a pre-merger notification report by
Xxxxxxxx under the HSR Act and the expiration or termination of the applicable
waiting period; (d) compliance with the Exchange Act and the Securities Act and
the rules and regulations of the SEC thereunder as may be required in connection
with this Agreement and the transactions contemplated hereby and the obtaining
from the SEC of such orders as may be so required; (e) such filings and
approvals as may be required by any applicable state securities, "blue sky" or
takeover laws or Environmental Laws; (f) such filings and approvals as may be
required by any foreign pre-merger notification, securities, corporate or other
law, rule or regulation; and (g) such filings and approvals as may be required
by the FCC and the Communications Act. Except as set forth in the DISCLOSURE
LETTER, no Third-Party Consent is required by or with respect to any of the
Xxxxxxxx Companies in connection with the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby.
3.4 FCC MATTERS.
(a) Xxxxxxxx holds the Xxxxxxxx FCC Licenses set forth and
described in the DISCLOSURE LETTER. The Xxxxxxxx FCC Licenses constitute all of
the licenses, permits and authorizations from the FCC that are necessary or
required for and/or used in the business and operations of the Xxxxxxxx
Stations, except where the failure to hold any such Xxxxxxxx FCC License would
not have a Material Adverse Effect on Xxxxxxxx. The Xxxxxxxx FCC Licenses are
valid and in full force and effect through the dates set forth in the DISCLOSURE
LETTER unimpaired by any condition which could have a Material Adverse Effect on
Xxxxxxxx. Except as set forth in the DISCLOSURE LETTER, no application, action
or proceeding is pending for the renewal or modification of any of the Xxxxxxxx
FCC Licenses, and, except for actions or proceedings affecting radio broadcast
stations generally, no application, complaint, action or proceeding is pending
or, to Xxxxxxxx'x knowledge, threatened that may result in the (i) denial of an
application for renewal, (ii) the revocation, modification, non-renewal or
suspension of any of the Xxxxxxxx FCC Licenses, (iii) the issuance of a
cease-and-desist order or (iv) the imposition of any administrative or judicial
sanction with respect to any of the Xxxxxxxx Stations.
(b) There is not now issued or outstanding or, to Xxxxxxxx'x
knowledge, threatened any investigation, proceeding, notice of violation or
material complaint against Xxxxxxxx at the FCC. Xxxxxxxx has no knowledge of any
Person who has manifested an intention to contest the renewal of any Xxxxxxxx
FCC License for any of the Xxxxxxxx Stations.
(c) The Xxxxxxxx Stations, their respective physical facilities,
electrical and mechanical systems and transmitting and studio equipment are
being operated in all material respects in compliance with the specifications of
the applicable Xxxxxxxx FCC Licenses. Xxxxxxxx has complied in all material
respects with all requirements of the FCC and the Federal Aviation
Administration with respect to the construction and/or alteration of Xxxxxxxx'x
antenna structures, and "no hazard" determinations for each antenna structure
have been obtained.
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(d) Xxxxxxxx and the Xxxxxxxx Stations are in compliance in all
material respects with the Communications Act.
(e) Xxxxxxxx knows of no facts, conditions or events relating to
Xxxxxxxx or the Xxxxxxxx Stations that might cause the FCC to have a legally
valid basis to refuse to approve the change of control of the Xxxxxxxx FCC
Licenses as provided for in this Agreement or not to renew any of the Xxxxxxxx
FCC Licenses in the ordinary course.
(f) In accordance with the Communications Act, (i) Xxxxxxxx has
not issued to Aliens, either individually or in the aggregate, in excess of 25%
of the total number of shares of capital stock of Xxxxxxxx outstanding at any
time and has not permitted the transfer on the books of Xxxxxxxx of any capital
stock to any Alien that would result in Aliens holding in excess of 25% of the
total number of shares of capital stock of Xxxxxxxx then outstanding and (ii) no
Alien or Aliens are entitled to vote or direct or control the vote of more than
25% of (A) the total number of shares of capital stock of Xxxxxxxx outstanding
and entitled to vote generally for the election of directors, or (B) the total
voting power of all shares of capital stock of Xxxxxxxx outstanding and entitled
to vote generally for the election of directors.
3.5 FINANCIAL STATEMENTS. The Xxxxxxxx Financial Statements were
prepared in conformity with GAAP applied on a consistent basis during the
periods involved (except the unaudited statements do not account for income
taxes in conformity with GAAP and other items as may be indicated in the notes
thereto) and present fairly, in all material respects, the consolidated
financial position of Xxxxxxxx and the Xxxxxxxx Subsidiaries as of their
respective dates and for the periods then ended, and the consolidated results of
their operations and, with respect to the audited Xxxxxxxx Financial Statements,
their consolidated cash flows for the years then ended.
3.6 CAPITAL STRUCTURE.
(a) The authorized capital stock of Xxxxxxxx consists of 9,897,000
shares of Xxxxxxxx Common Stock, 100,000 shares of Xxxxxxxx Xxxxxx Preferred and
3,000 shares of Xxxxxxxx Senior Preferred.
(b) There are issued and outstanding (i) 684,168.93 shares of
Xxxxxxxx Common Stock, (ii) 35,772.48 shares of Xxxxxxxx Xxxxxx Preferred, (iii)
3,000 shares of Xxxxxxxx Senior Preferred and (iv) the Xxxxxxxx Warrant relating
to 28,161.70 shares of Xxxxxxxx Common Stock. 59,535.16 shares of Xxxxxxxx
Common Stock and 1,057 shares of Xxxxxxxx Xxxxxx Preferred are held by Xxxxxxxx
as treasury stock.
(c) Except as set forth in Section 3.6(b), there are outstanding
(i) no shares of capital stock or other voting securities of Xxxxxxxx, (ii) no
securities of Xxxxxxxx or any other Person convertible into or exchangeable or
exercisable for shares of capital stock or other voting securities of Xxxxxxxx,
and (iii) except as set forth in the DISCLOSURE LETTER, no subscriptions,
options, warrants, calls, rights (including preemptive rights), commitments,
understandings or agreements to which Xxxxxxxx is a party or by which it is
bound obligating Xxxxxxxx to issue, deliver, sell, purchase, redeem, acquire or
register shares of capital stock or other voting securities of Xxxxxxxx (or
securities convertible into or exchangeable or exercisable for shares
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of capital stock or other voting securities of Xxxxxxxx) or obligating Xxxxxxxx
to grant, extend or enter into any such subscription, option, warrant, call,
right, commitment, understanding or agreement.
(d) All outstanding shares of Xxxxxxxx capital stock are validly
issued, fully paid and nonassessable and, except as set forth in the DISCLOSURE
LETTER, are not subject to any preemptive right.
(e) Except as set forth in the DISCLOSURE LETTER, all outstanding
shares of capital stock and other voting securities of each of the Xxxxxxxx
Subsidiaries are owned, directly or indirectly, by Xxxxxxxx, free and clear of
all Liens, claims and options of any nature (except for Permitted Encumbrances).
Except as set forth in the DISCLOSURE LETTER, there are outstanding (i) no
securities of the Xxxxxxxx Subsidiaries or any other Person convertible into or
exchangeable or exercisable for shares of capital stock or other voting
securities of the Xxxxxxxx Subsidiaries, and (ii) no subscriptions, options,
warrants, calls, rights (including preemptive rights), commitments,
understandings or agreements to which any of the Xxxxxxxx Subsidiaries is a
party or by which it is bound obligating any of the Xxxxxxxx Subsidiaries to
issue, deliver, sell, purchase, redeem or acquire shares of capital stock or
other voting securities of any of the Xxxxxxxx Subsidiaries (or securities
convertible into or exchangeable or exercisable for shares of capital stock or
other voting securities of any of the Xxxxxxxx Subsidiaries) or obligating any
of the Xxxxxxxx Subsidiaries to grant, extend or enter into any such
subscription, option, warrant, call, right, commitment, understanding or
agreement.
(f) Except as otherwise set forth in the DISCLOSURE LETTER, there
is no shareholder agreement, voting trust or other agreement or understanding to
which Xxxxxxxx is a party or by which it is bound relating to the voting of any
shares of the capital stock of any of the Xxxxxxxx Companies.
3.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as otherwise set
forth in the DISCLOSURE LETTER or as contemplated by this Agreement, since May
31, 1996, the Xxxxxxxx Companies, taken as a whole, have not suffered any
Material Adverse Effect resulting from any activities pursuant to which the
Xxxxxxxx Companies:
(a) Discharged or satisfied any Lien or paid any obligation or
liability, absolute or contingent, other than current liabilities incurred and
paid in the ordinary course of business and consistent with past practices;
(b) Paid or declared any dividends or distributions, purchased,
redeemed, acquired or retired any indebtedness, stock or other securities from
its shareholders, other securityholders or any other Person, made any loans or
advances or guaranteed any loans or advances to any Person (other than loans,
advances or guaranties made to subsidiaries or in the ordinary course of
business and consistent with past practices);
(c) Except for Permitted Encumbrances, suffered or permitted any
Lien to arise or be granted or created against or upon any of its assets;
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(d) Cancelled, waived or released any rights or claims against, or
indebtedness owed by, third parties in excess of $25,000;
(e) Amended its certificate or articles of incorporation or
bylaws;
(f) Made or permitted any amendment, supplement, modification or
termination of any Xxxxxxxx Material Agreement;
(g) Sold, leased, transferred, assigned or otherwise disposed of
any assets that, individually or in the aggregate, had a value at the time of
such lease, transfer, assignment or disposition of $500,000 or more (and, in
each case where a sale, lease, transfer, assignment or other disposition was
made, it was made for fair consideration in the ordinary course of business);
(h) Paid, loaned or advanced (other than the payment, advance or
reimbursement of expenses in the ordinary course of business) any amounts to, or
sold, transferred or leased any of its assets to, or entered into any other
transactions with, any of its Affiliates, other than loans and advances to
Xxxxxxxx Subsidiaries;
(i) Made any material change in any of the accounting principles
followed by it or the method of applying such principles;
(j) Entered into any material transactions (other than as
contemplated by this Agreement) except in the ordinary course of business and
consistent with past practices;
(k) Accelerated, terminated or cancelled any agreement, contract,
lease or license (or series of related agreements, contracts, leases and
licenses) involving more than $100,000 to which any of the Xxxxxxxx Companies is
a party or by which any of them is bound;
(l) Issued any note, bond or other debt security or created,
incurred, assumed or guaranteed any indebtedness for borrowed money or
capitalized lease obligations involving more than $100,000 in the aggregate
(other than pursuant to the Bank Credit Agreement or the Term Loan);
(m) Delayed or postponed the payment of accounts payable and other
liabilities outside the ordinary course of business;
(n) Issued, sold or otherwise disposed of any of its capital stock
or granted any options, warrants or other rights to purchase or obtain
(including upon conversion, exchange or exercise) any of its capital stock;
(o) Expended or committed to expend capital in excess of $500,000;
(p) Made any change in tax elections or the manner taxes are
reported;
(q) Accelerated the vesting period of any option or warrant; or
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(r) Agreed, whether in writing or otherwise, to do any of the
foregoing.
3.8 LITIGATION. Except as otherwise set forth in the DISCLOSURE LETTER,
(a) no litigation, arbitration, investigation or other proceeding of any
Governmental Authority is pending or, to the knowledge of Xxxxxxxx, threatened
against any of the Xxxxxxxx Companies or their respective assets which, if
adversely determined, could reasonably be expected to have a Material Adverse
Effect on Xxxxxxxx; (b) Xxxxxxxx has no knowledge of any facts that are likely
to give rise to any litigation, arbitration, investigation or other proceeding
of any Governmental Authority which, individually or in the aggregate, is
reasonably likely to have a Material Adverse Effect on Xxxxxxxx; and (c) no
Xxxxxxxx Company is subject to any outstanding injunction, judgment, order,
decree or ruling. There is no litigation, proceeding or investigation pending
or, to the knowledge of Xxxxxxxx, threatened against or affecting any of the
Xxxxxxxx Companies that questions the validity or enforceability of this
Agreement or any other document, instrument or agreement to be executed and
delivered by Xxxxxxxx in connection with the transactions contemplated hereby.
3.9 ENVIRONMENTAL MATTERS. Except as set forth in the DISCLOSURE
LETTER, to the knowledge of Xxxxxxxx:
(a) Each of the Xxxxxxxx Companies has conducted its business and
operated its assets, and is conducting its business and operating its assets, in
material compliance with all applicable Environmental Laws;
(b) None of the Xxxxxxxx Companies has been notified by any
Governmental Authority or other third party that any of the operations or assets
of any of the Xxxxxxxx Companies is the subject of any investigation or inquiry
by any Governmental Authority or other third party evaluating whether any
material remedial action is needed to respond to a release or threatened release
of any Hazardous Material or to the improper storage or disposal (including
storage or disposal at offsite locations) of any Hazardous Material;
(c) None of the Xxxxxxxx Companies and no other Person has filed
any notice under any federal, state or local law indicating that (i) any of the
Xxxxxxxx Companies is responsible for the improper release into the environment,
or the improper storage or disposal, of any Hazardous Material, or (ii) any
Hazardous Material is improperly stored or disposed of upon any property of any
of the Xxxxxxxx Companies;
(d) None of the Xxxxxxxx Companies has any material contingent
liability in connection with (i) the release or threatened release into the
environment at, beneath or on any property now or previously owned or leased by
any of the Xxxxxxxx Companies, or (ii) the storage or disposal, of any Hazardous
Material;
(e) None of the Xxxxxxxx Companies has received any claim,
complaint, notice, inquiry or request for information involving any matter which
remains unresolved as of the date of the Original Agreement with respect to any
alleged violation of any Environmental Law or regarding potential liability
under any Environmental Law relating to operations or conditions of any
facilities or property (including off-site storage or disposal of any Hazardous
Material
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from such facilities or property) currently or formerly owned, leased or
operated by any of the Xxxxxxxx Companies;
(f) No property now or previously owned, leased or operated by any
of the Xxxxxxxx Companies is listed on the National Priorities List pursuant to
CERCLA or on the CERCLIS or on any other federal or state list as sites
requiring investigation or cleanup;
(g) None of the Xxxxxxxx Companies is directly transporting, has
directly transported, is directly arranging for the transportation of, or has
directly arranged for the transportation of any Hazardous Material to any
location which is listed on the National Priorities List pursuant to CERCLA, on
the CERCLIS or on any similar federal or state list or which is the subject of
federal, state or local enforcement actions or other investigations that may
lead to material claims against such company for remedial work, damage to
natural resources or personal injury, including claims under CERCLA;
(h) There are no sites, locations or operations at which any of
the Xxxxxxxx Companies is currently undertaking, or except as disclosed in the
DISCLOSURE LETTER, has completed, any remedial or response action relating to
any such disposal or release, as required by Environmental Laws; and
(i) All underground storage tanks and solid waste disposal
facilities owned or operated by the Xxxxxxxx Companies are used and operated in
material compliance with Environmental Laws.
3.10 BROKERS. Except as set forth on the DISCLOSURE LETTER, no broker,
finder, investment banker or other Person is or will be, in connection with the
transactions contemplated by this Agreement, entitled to any brokerage, finder's
or other fee or compensation based on any arrangement or agreement made by or on
behalf of Xxxxxxxx and for which Parent, Heftel, Heftel Sub or any of the
Xxxxxxxx Companies will have any obligation or liability.
3.11 VOTE REQUIRED. The affirmative vote or written consent of the
holders of a majority of the outstanding shares of each of the Xxxxxxxx Common
Stock, Xxxxxxxx Xxxxxx Preferred and Xxxxxxxx Senior Preferred and the
affirmative vote of the Xxxxxxxx Common Stock and the Xxxxxxxx Xxxxxx Preferred
voting together as a single class, as provided in Xxxxxxxx'x articles of
incorporation, as amended, are the only votes of the holders of any class or
series of Xxxxxxxx capital stock or other voting securities necessary to approve
this Agreement, the Merger and the transactions contemplated hereby. As of the
date hereof, the affirmative written consent of the Xxxxxxxx Senior Preferred to
approve this Agreement and the Merger has been obtained.
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PARENT,
HEFTEL AND HEFTEL SUB
4.1 REPRESENTATIONS AND WARRANTIES OF PARENT. Parent hereby represents
and warrants to Xxxxxxxx as follows:
(a) ORGANIZATION. Parent (i) is a corporation duly organized,
validly existing and in good standing under the laws of the state of Texas, (ii)
has the requisite power and authority to own, lease and operate its properties
and to conduct its business as it is presently being conducted, and (iii) is
duly qualified to do business as a foreign corporation, and is in good standing,
in each jurisdiction where the character of the properties owned or leased by it
or the nature of its activities makes such qualification necessary (except where
any failure to be so qualified as a foreign corporation or to be in good
standing would not, individually or in the aggregate, have a material adverse
effect on Parent). Copies of the articles of incorporation and bylaws of Parent
have heretofore been delivered to Xxxxxxxx, and such copies are accurate and
complete as of the date of the Original Agreement.
(b) AUTHORITY AND ENFORCEABILITY. Parent has the requisite
corporate power and authority to enter into and deliver this Agreement and to
consummate the transactions applicable to Parent contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions applicable to Parent contemplated hereby have been duly and validly
authorized by all necessary corporate action on the part of Parent, and, other
than the approval of the Heftel Proposal by the board of directors and
stockholders of Heftel, no other corporate proceedings on the part of Parent are
necessary to authorize the execution or delivery of this Agreement. This
Agreement has been duly and validly executed and delivered by Parent and
(assuming that this Agreement constitutes a valid and binding obligation of
Xxxxxxxx) constitutes a valid and binding obligation of Parent enforceable
against Parent in accordance with its terms.
(c) CONSENTS AND APPROVALS. No consent, approval, order or
authorization of, registration, declaration or filing with, or permit from, any
Governmental Authority is required by or with respect to Parent in connection
with the execution and delivery of this Agreement by Parent, except for the
following: (i) any such consent, approval, order, authorization, registration,
declaration, filing or permit which the failure to obtain or make would not,
individually or in the aggregate, have a material adverse effect on Parent and
its subsidiaries taken as a whole; (ii) the filing of the Articles of Merger
with the Secretary of State of Texas pursuant to the provisions of the TBCA;
(iii) the filing of a pre-merger notification report by Parent under the HSR Act
and the expiration or termination of the applicable waiting period; (iv)
compliance with the Exchange Act and the Securities Act and the rules and
regulations of the SEC thereunder as may be required in connection with this
Agreement and the transactions contemplated hereby and the obtaining from the
SEC of such orders as may be so required; (v) the filing with Nasdaq of a
listing application relating to the shares of Heftel Common Stock to be issued
pursuant to the Merger and the obtaining from Nasdaq of its approvals thereof;
(vi) such filings and approvals as may be required by any applicable state
securities, "blue sky" or takeover laws or Environmental Laws; and (vii) such
filings and approvals as may be required
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by any foreign pre-merger notification, securities, corporate or other law, rule
or regulation and (viii) such filings and approvals as may be required by the
FCC and the Communications Act. No Third-Party Consent is required by or with
respect to Parent in connection with the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby, except
for (i) any such Third-Party Consent which the failure to obtain would not,
individually or in the aggregate, have a material adverse effect on Parent, and
(ii) the valid approval of the Heftel Proposal by the stockholders of Heftel.
(d) BROKERS. No broker, finder, investment banker or other Person
is or will be, in connection with the Merger, entitled to any brokerage,
finder's or other fee or compensation based on any arrangement or agreement made
by or on behalf of Parent and for which Parent, Heftel or Heftel Sub or any of
the Xxxxxxxx Companies will have any obligation or liability.
4.2 REPRESENTATIONS AND WARRANTIES OF HEFTEL AND HEFTEL SUB. Upon
consummation of the Assignment Agreement pursuant to Section 8.9, Heftel and
Heftel Sub shall be deemed to have jointly and severally represented and
warranted to Xxxxxxxx as of such date as follows:
(a) ORGANIZATION. Each of the Heftel Companies (i) is a
corporation or partnership duly organized, validly existing and in good standing
under the laws of its state of organization, (ii) has the requisite power and
authority to own, lease and operate its properties and to conduct its business
as it is presently being conducted, and (iii) is duly qualified to do business
as a foreign entity, and is in good standing, in each jurisdiction where the
character of the properties owned or leased by it or the nature of its
activities makes such qualification necessary (except where any failure to be so
qualified as a foreign corporation or to be in good standing would not,
individually or in the aggregate, have a Material Adverse Effect on Heftel).
Copies of the certificate or articles of incorporation and bylaws, or
partnership agreement, of each of the Heftel Companies have heretofore been
delivered to Xxxxxxxx, and such copies are accurate and complete as of the date
of the Assignment Agreement.
(b) AUTHORITY AND ENFORCEABILITY. Each of Heftel and Heftel Sub
has the requisite corporate power and authority to enter into and deliver this
Agreement and to consummate the transactions contemplated hereby. The Board of
Directors of Heftel has taken all necessary action to exempt the transactions
contemplated herein from the provisions of Section 203 of the DGCL. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action on the part of Heftel and Heftel Sub, including
approval by the board of directors and stockholders of Heftel and Heftel Sub,
and, other than the approval of the Heftel Proposal by the stockholders of
Heftel and Heftel Sub, no other corporate proceedings on the part of Heftel or
Heftel Sub are necessary to authorize the execution or delivery of this
Agreement. This Agreement has been duly and validly executed and delivered by
Heftel and Heftel Sub and (assuming that this Agreement constitutes a valid and
binding obligation of Xxxxxxxx) constitutes a valid and binding obligation of
Heftel enforceable against Heftel in accordance with its terms.
(c) CONSENTS AND APPROVALS. No consent, approval, order or
authorization of, registration, declaration or filing with, or permit from, any
Governmental Authority is required by or with respect to Heftel or Heftel Sub in
connection with the execution and delivery
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of this Agreement by Heftel and Heftel Sub or the consummation by Heftel and
Heftel Sub of the transactions contemplated hereby, except for the following:
(i) any such consent, approval, order, authorization, registration, declaration,
filing or permit which the failure to obtain or make would not, individually or
in the aggregate, have a Material Adverse Effect on Heftel; (ii) the filing of
the Articles of Merger with the Secretary of State of Texas pursuant to the
provisions of the TBCA; (iii) the filing of a pre-merger notification report by
Heftel under the HSR Act and the expiration or termination of the applicable
waiting period; (iv) the filing with the SEC of the Registration Statement and
such reports under Section 13(a) of the Exchange Act and such other compliance
with the Exchange Act and the Securities Act and the rules and regulations of
the SEC thereunder as may be required in connection with this Agreement and the
transactions contemplated hereby and the obtaining from the SEC of such orders
as may be so required; (v) the filing with Nasdaq of a listing application
relating to the shares of Heftel Common Stock to be issued pursuant to the
Merger and the obtaining from Nasdaq of its approvals thereof; (vi) such filings
and approvals as may be required by any applicable state securities, "blue sky"
or takeover laws or Environmental Laws; (vii) such filings and approvals as may
be required by any foreign pre-merger notification, securities, corporate or
other law, rule or regulation; and (viii) such filings and approvals as may be
required by the FCC and the Communications Act. No Third-Party Consent is
required by or with respect to Heftel or Heftel Sub in connection with the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby, except for (i) consent of the lenders pursuant to the
Heftel Credit Agreement, (ii) any such Third-Party Consent which the failure to
obtain would not, individually or in the aggregate, have a Material Adverse
Effect on Heftel, and (iii) the valid approval of the Heftel Proposal by the
stockholders of Heftel.
(d) CAPITALIZATION. As of June 1, 1996, the authorized capital
stock of Heftel and the number, class and/or series of the shares of the capital
stock of Heftel outstanding or reserved as of the date thereof was as set forth
below. All of the outstanding shares of the capital stock of Heftel are validly
issued, fully paid, nonassessable and free of preemptive rights, and all
outstanding securities convertible into Heftel Common Stock are duly authorized
and validly issued. Except as set forth below, as of June 1, 1996, there were no
shares of capital stock or other securities of Heftel outstanding and no
outstanding options, warrants, rights (including any preemptive rights), calls
or commitments of any character whatsoever to which Heftel is a party or is
bound, requiring the issuance, sale, transfer or registration by Heftel of any
shares of capital stock of Heftel or any securities convertible into or
exchangeable or exercisable for, or rights to purchase or otherwise acquire, any
shares of capital stock of Heftel.
HEFTEL CAPITALIZATION
Class Authorized Outstanding
----- ---------- -----------
Class A Common Stock 30,000,000 6,336,610
$0.001 par value
Class B Common Stock 7,000,000 3,769,176
$0.001 par value
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Preferred Stock 5,000,000 335,634
$0.001 par value shares of Series A
As of June 1, 1996, Heftel has outstanding options to purchase 591,839 shares of
Class A Common Stock and outstanding warrants to purchase 850,106 shares of
Class B Common Stock.
(e) FINANCIAL STATEMENTS OF HEFTEL. As of their respective dates,
Heftel's Annual Report on Form 10-K for the fiscal years ended September 30,
1994 and 1995, and Quarterly Reports for the quarters ended December 31, 1995
and March 31, 1996, and all other forms, reports, registration statements and
other statements and documents filed by Heftel with the SEC since July 27, 1994
did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. All of the consolidated financial statements of Heftel included or
incorporated by reference in the Forms 10-K and 10-Q filed with the SEC prior to
the date of the Original Agreement were prepared in accordance with generally
accepted accounting principles consistently applied (except, as to the quarterly
financials, for normal year-end adjustments), and present fairly the financial
position, results of operations and changes in financial position of Heftel and
its consolidated subsidiaries as of the dates and for the periods indicated. All
of the consolidated financial statements of Heftel included or incorporated by
reference in the Forms 10-K and 10-Q filed with the SEC between the date of the
Original Agreement and the Closing Date will be prepared in accordance with
generally accepted accounting principles consistently applied (except, as to the
quarterly financials, for normal year-end adjustments), and will present fairly
the financial position, results of operations and changes in financial position
of Heftel and its consolidated subsidiaries as of the dates and for the periods
indicated.
(f) BROKERS. No broker, finder, investment banker or other Person
is or will be, in connection with Merger, entitled to any brokerage, finder's or
other fee or compensation based on any arrangement or agreement made by or on
behalf of Heftel or Heftel Sub and for which Parent, Heftel or Heftel Sub or any
of the Xxxxxxxx Companies will have any obligation or liability.
(g) VOTE REQUIRED. The affirmative votes or written consents of
the holders of a majority of the outstanding shares of Heftel Common Stock and
Heftel Sub Common Stock are the only votes of the holders of any class or series
of Heftel or Heftel Sub, respectively, capital stock or other voting securities
necessary to approve the Heftel Proposal.
ARTICLE 5
COVENANTS
5.1 CONDUCT BY PARENT PENDING CLOSING. Subject to Section 8.9(b),
Parent covenants and agrees with Xxxxxxxx that, from the date of this Agreement
until the earlier to occur of the termination of this Agreement pursuant to
Section 7 and the Effective Time, without the prior written consent of Xxxxxxxx:
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(a) Parent will (i) use its reasonable efforts to cause Heftel to
approve and execute the Assignment Agreement and (ii) use its reasonable best
efforts to obtain all required approvals from the FCC in connection with this
Agreement and the transactions contemplated herein.
(b) Parent will not (i) waive the performance by Heftel of any
covenants of Heftel contained in the Tender Offer Agreement, (ii) waive the
satisfaction of any conditions precedent of Parent or Clear Channel Radio, Inc.
to the obligation to close the transactions contemplated by the Tender Offer
Agreement, or (iii) amend any of the covenants, conditions, or termination
provisions contained in the Tender Offer Agreement, in each case without the
prior consent of Xxxxxxxx, which consent shall not be unreasonably withheld.
(c) Parent will not engage in any practice or take any action that
would cause, or permit by inaction, any of the representations and warranties
contained in Section 4.1(a), (c) or (d) to become untrue.
5.2 CONDUCT OF BUSINESS BY XXXXXXXX PENDING CLOSING. Xxxxxxxx
covenants and agrees with Parent and, upon consummation of the Assignment
Agreement pursuant to Section 8.9, with Heftel and Heftel Sub, that, from the
date of this Agreement until the Effective Time, each of the Xxxxxxxx Companies
will conduct its business only in the ordinary and usual course consistent with
past practices, except as set forth in the DISCLOSURE LETTER. Notwithstanding
the preceding sentence, Xxxxxxxx covenants and agrees with Parent and, upon
consummation of the Assignment Agreement pursuant to Section 8.9, with Heftel
and Heftel Sub, that, except as specifically contemplated in this Agreement,
from the date of this Agreement until the Effective Time, without the prior
written consent of Parent (or Heftel subsequent to the consummation of the
Assignment Agreement pursuant to Section 8.9):
(a) None of the Xxxxxxxx Companies will (i) amend its certificate
or articles of incorporation or bylaws; (ii) split, combine or reclassify any of
its outstanding capital stock; (iii) except as set forth in the DISCLOSURE
LETTER, declare, set aside or pay any dividends or other distributions (whether
payable in cash, property or securities) with respect to its capital stock; (iv)
issue, sell or agree to issue or sell any securities, including its capital
stock, any rights, options or warrants to acquire its capital stock, or
securities convertible into or exchangeable or exercisable for its capital stock
(other than shares of Xxxxxxxx Common Stock issued pursuant to the exercise of
the Xxxxxxxx Warrant); (v) except as set forth in the DISCLOSURE LETTER,
purchase, cancel, retire, redeem or otherwise acquire any of its outstanding
capital stock or other securities; (vi) merge or consolidate with, or transfer
all or substantially all of its assets to, another corporation or other business
entity; (vii) liquidate, wind-up or dissolve (or suffer any liquidation or
dissolution); or (viii) enter into any contract, agreement, commitment or
arrangement with respect to any of the foregoing.
(b) None of the Xxxxxxxx Companies will (i) except as set forth in
the DISCLOSURE LETTER, acquire any corporation, partnership or other business
entity or any interest therein having a transaction value, individually or in
the aggregate, in excess of $15 million; (ii) except as set forth in the
DISCLOSURE LETTER, sell, lease or sublease, transfer or otherwise dispose of or
mortgage, pledge or otherwise encumber any assets that have a value at the time
of such sale, lease, sublease, transfer or disposition in excess of $600,000,
individually, or
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$3 million, in the aggregate; (iii) except as set forth in the DISCLOSURE
LETTER, sell, transfer or otherwise dispose of or mortgage, pledge or otherwise
encumber any securities of any other Person (including any capital stock or
other securities in the Xxxxxxxx Subsidiaries); (iv) except as set forth in the
DISCLOSURE LETTER, make any material loans, advances or capital contributions
to, or investments in, any Person in excess of $7.5 million in the aggregate
(other than loans or advances made to Xxxxxxxx Subsidiaries, or made in the
ordinary course of business and consistent with past practices); (v) apply to
the FCC for any construction permit that would have a Material Adverse Effect on
the current operations of any of the radio stations owned by any of the Xxxxxxxx
Companies (individually, a "XXXXXXXX STATION"); (vi) terminate or fail to renew
any FCC licenses for the Xxxxxxxx Stations (the "XXXXXXXX FCC LICENSES"); (vii)
fail to operate any Xxxxxxxx Station in accordance with the Communications Act,
the rules, regulations and policies of the FCC and the terms of the Xxxxxxxx FCC
Licenses, which failure would result in a Material Adverse Effect on Xxxxxxxx;
(viii) fail to file in a timely manner any applications to renew a Xxxxxxxx FCC
License; (ix) enter into any agreement or transaction with any, or modify the
terms of any existing agreement with any, Affiliate; or (x) enter into any
contract, agreement, commitment or arrangement with respect to any of the
foregoing.
(c) None of the Xxxxxxxx Companies, other than with respect to
intercompany transactions, will (i) permit to be outstanding at any time under
the Bank Credit Agreement indebtedness for borrowed money in excess of an
aggregate of $50 million; (ii) except as set forth in the DISCLOSURE LETTER,
incur any indebtedness for borrowed money other than under the Bank Credit
Agreement or the Term Loan; (iii) except as set forth in the DISCLOSURE LETTER,
assume, endorse (other than endorsements of negotiable instruments in the
ordinary course of business), guarantee or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the liabilities or
obligations of any Person other than another Xxxxxxxx Company; or (iv) enter
into any contract, agreement, commitment or arrangement with respect to any of
the foregoing.
(d) The Xxxxxxxx Companies will operate, maintain and otherwise
deal with their property and assets in accordance with good and prudent business
practices and in accordance with all applicable contracts and agreements and all
applicable laws, rules and regulations, except where any failure would not have
a Material Adverse Effect on Xxxxxxxx.
(e) None of the Xxxxxxxx Companies will (i) enter into, or
otherwise become liable or obligated under or pursuant to, (A) any employee
benefit, pension or other plan (whether or not subject to ERISA), or (B) any
other stock option, stock purchase, incentive or deferred compensation plans or
arrangements or other fringe benefit plan (other than obligations that are
mandated by the terms of agreements or plans existing as of the date of the
Original Agreement); (ii) except for payments made pursuant to any employee
benefit plan of Xxxxxxxx or any plan, agreement or arrangement described in the
DISCLOSURE LETTER, grant, or otherwise become liable for or obligated to pay,
any severance or termination payments, bonuses or increases in compensation or
benefits (other than payments, bonuses or increases that are mandated by the
terms of agreements or plans existing as of the date of the Original Agreement
or that are paid in the ordinary course of business, consistent with past
practices, and not individually or in the aggregate material in amount) to, or
forgive any indebtedness of, any employee or consultant; or (iii) enter into any
contract, agreement, commitment or arrangement to do any of the foregoing.
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(f) None of the Xxxxxxxx Companies will create, incur, assume or
permit to exist any Lien on any of its assets, except for Permitted
Encumbrances, and except in the ordinary course of business.
(g) The Xxxxxxxx Companies will (i) pay all Taxes, assessments and
other governmental charges imposed upon any of their assets or with respect to
their franchises, business, income or assets before any penalty or interest
accrues thereon; (ii) pay all claims (including claims for labor, services,
materials and supplies) that have become due and payable and which by law have
or may become a Lien upon any of their assets prior to the time when any penalty
or fine shall be incurred with respect thereto or any such Lien shall be imposed
thereon; and (iii) comply in all material respects with the requirements of all
applicable laws, rules, regulations and orders of any Governmental Authority,
obtain or take all Governmental Actions necessary in the operation of their
businesses, and comply with and enforce the provisions of all Xxxxxxxx Material
Agreements, except where the failure to so comply, obtain, take or enforce will
not have a Material Adverse Effect on Xxxxxxxx, including paying, when due, all
rentals, royalties, expenses and other liabilities relating to their businesses
or assets; provided, however, that the Xxxxxxxx Companies may contest the
imposition of any such Taxes, assessments and other governmental charges, any
such claim, or the requirements of any applicable law, rule, regulation or order
or any Xxxxxxxx Material Agreement if done so in good faith by appropriate
proceedings and if adequate reserves are established in accordance with GAAP or
as may be determined as sufficient by Xxxxxxxx'x board of directors.
(h) The Xxxxxxxx Companies will maintain adequate insurance
consistent with industry practice.
(i) The Xxxxxxxx Companies will at all times preserve and keep in
full force and effect their corporate existence and rights and franchises
material to their performance under this Agreement.
(j) Xxxxxxxx will not engage in any practice or take any action
that would cause, or permit by inaction, any of the representations and
warranties made by it in Article 3 to become untrue.
(k) Xxxxxxxx shall use its reasonable best efforts to obtain all
necessary lender approval required under the Bank Credit Agreement to the
consummation of the Merger or, with the cooperation of Heftel, to refinance such
indebtedness on terms reasonably acceptable to Heftel to the extent that the
parties determine that it is reasonably foreseeable that such approval will not
be forthcoming. Xxxxxxxx shall keep Heftel fully informed of the status of
obtaining such consent, or the likelihood of obtaining such refinancing, as the
case may be, promptly upon the occurrence of any material developments relating
thereto.
5.3 CONDUCT OF BUSINESS BY HEFTEL PENDING CLOSING. Heftel covenants
and agrees with Xxxxxxxx that, from the date of the consummation of the Heftel
Acquisition until the Effective Time, each of the Heftel Companies will conduct
its business only in the ordinary and usual course consistent with past
practices, except as set forth in the Heftel Disclosure Documents.
Notwithstanding the preceding sentence, Heftel covenants and agrees with
Xxxxxxxx
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that, except as specifically contemplated in this Agreement, from the date of
the consummation of the Heftel Acquisition until the Effective Time, without the
prior written consent of Xxxxxxxx:
(a) Heftel will not (i) amend its certificate of incorporation or
bylaws, except as set forth in the Heftel Proposal; (ii) split, combine or
reclassify any of its outstanding capital stock, except as contemplated by this
Agreement; (iii) except as set forth in the Heftel Disclosure Documents,
declare, set aside or pay any dividends or other distributions (whether payable
in cash, property or securities) with respect to its capital stock; (iv) issue,
sell or agree to issue or sell any securities, including its capital stock, any
rights, options or warrants to acquire its capital stock, or securities
convertible into or exchangeable or exercisable for its capital stock (other
than securities issued pursuant to obligations disclosed in the Tender Offer
Agreement); (v) except pursuant to obligations disclosed in the Tender Offer
Agreement, purchase, cancel, retire, redeem or otherwise acquire any of its
outstanding capital stock or other securities; (vi) merge or consolidate with,
or transfer all or substantially all of its assets to, another corporation or
other business entity; (vii) liquidate, wind-up or dissolve (or suffer any
liquidation or dissolution); or (viii) enter into any contract, agreement,
commitment or arrangement with respect to any of the foregoing, except as set
forth in this Agreement.
(b) The Heftel Companies will not (i) except as set forth in the
Heftel Disclosure Documents, acquire any corporation, partnership or other
business entity or any interest therein having a transaction value, individually
or in the aggregate, in excess of $15 million; (ii) except as set forth in the
Heftel Disclosure Documents, sell, lease or sublease, transfer or otherwise
dispose of or mortgage, pledge or otherwise encumber any assets that have a
value at the time of such sale, lease, sublease, transfer or disposition in
excess of $600,000, individually, or $3 million, in the aggregate; (iii) except
as set forth in the Heftel Disclosure Documents, sell, transfer or otherwise
dispose of or mortgage, pledge or otherwise encumber any securities of any other
Person (including any capital stock or other securities in the Heftel
Subsidiaries); (iv) except as set forth in the Heftel Disclosure Documents, make
any material loans, advances or capital contributions to, or investments in, any
Person in excess of $7.5 million in the aggregate (other than loans or advances
made to the Heftel Subsidiaries, or made in the ordinary course of business and
consistent with past practices); (v) apply to the FCC for any construction
permit that would have a material adverse effect on the current operations of
any of the radio stations owned by Heftel (individually, a "HEFTEL STATION");
(vi) terminate or fail to renew any FCC licenses for the Heftel Stations (the
"HEFTEL FCC LICENSES"); (vii) fail to operate any Heftel Station in accordance
with the Communications Act, the rules, regulations and policies of the FCC and
the terms of the Heftel FCC Licenses, which failure would result in a Material
Adverse Effect on Heftel; (viii) fail to file in a timely manner any
applications to renew a Heftel FCC License; (ix) enter into any agreement or
transaction with any, or modify the terms of any existing agreement with any,
Affiliate; or (x) enter into any contract, agreement, commitment or arrangement
with respect to any of the foregoing.
(c) Neither Heftel nor any Heftel Subsidiary will, other than with
respect to intercompany transactions, (i) permit to be outstanding at any time
under the Heftel Credit Agreement indebtedness for borrowed money in excess of
an aggregate of $175 million; (ii) except as set forth in the Heftel Disclosure
Documents, incur any indebtedness for borrowed money other than under the Heftel
Credit Agreement; (iii) except as set forth in the Heftel Disclosure Documents,
assume, endorse (other than endorsements of negotiable instruments in
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the ordinary course of business), guarantee or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the liabilities or
obligations of any Person other than another Heftel Company; or (v) enter into
any contract, agreement, commitment or arrangement with respect to any of the
foregoing.
(d) Heftel and each Heftel Subsidiary will operate, maintain and
otherwise deal with their property and assets in accordance with good and
prudent business practices and in accordance with all applicable contracts and
agreements and all applicable laws, rules and regulations, except where any
failure would not have a Material Adverse Effect on Heftel.
(e) Neither Heftel nor any Heftel Subsidiary will (i) enter into,
or otherwise become liable or obligated under or pursuant to, (A) any employee
benefit, pension or other plan (whether or not subject to ERISA), or (B) any
other stock option, stock purchase, incentive or deferred compensation plans or
arrangements or other fringe benefit plan (other than obligations mandated by
the terms of agreements or plans existing as of the date of the Original
Agreement); (ii) except for payments made pursuant to any employee benefit plan
of Heftel or any plan, agreement or arrangement in effect as of the date of the
Assignment Agreement and described in the Heftel Disclosure Documents, grant, or
otherwise become liable for or obligated to pay, any severance or termination
payments, bonuses or increases in compensation or benefits (other than payments,
bonuses or increases that are mandated by the terms of agreements or plans
existing as of the date of the Assignment Agreement or that are paid in the
ordinary course of business, consistent with past practices, and not
individually or in the aggregate material in amount) to, or forgive any
indebtedness of, any employee or consultant; or (iii) enter into any contract,
agreement, commitment or arrangement to do any of the foregoing.
(f) Neither Heftel nor any Heftel Subsidiary will create, incur,
assume or permit to exist any Lien on any of its assets, except for Permitted
Encumbrances, and except in the ordinary course of business.
(g) Heftel and each Heftel Subsidiary will (i) pay all Taxes,
assessments and other governmental charges imposed upon any of their assets or
with respect to their franchises, business, income or assets before any penalty
or interest accrues thereon; (ii) pay all claims (including claims for labor,
services, materials and supplies) that have become due and payable and which by
law have or may become a Lien upon any of their assets prior to the time when
any penalty or fine shall be incurred with respect thereto or any such Lien
shall be imposed thereon; and (iii) comply in all material respects with the
requirements of all applicable laws, rules, regulations and orders of any
Governmental Authority, obtain or take all Governmental Actions necessary in the
operation of their businesses, and comply with and enforce the provisions of all
Heftel Material Agreements, except where the failure to so comply, obtain, take
or enforce will not have a Material Adverse Effect on Heftel, including paying,
when due, all rentals, royalties, expenses and other liabilities relating to
their businesses or assets; provided, however, the Heftel Companies may contest
the imposition of any such Taxes, assessments and other governmental charges,
any such claim, or the requirements of any applicable law, rule, regulation or
order or any Heftel Material Agreement if done so in good faith by appropriate
proceedings and if adequate reserves are established in accordance with GAAP or
as may be determined as sufficient by Heftel's board of directors.
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(h) The Heftel Companies will maintain adequate insurance
consistent with industry practice.
(i) Heftel and each Heftel Subsidiary will at all times preserve
and keep in full force and effect their corporate existence and rights and
franchises material to their performance under this Agreement.
(j) Heftel will not engage in any practice or take any action that
would cause, or permit by inaction, any of the representations and warranties
made by it in Section 4.2 to become untrue.
(k) Heftel shall use its reasonable best efforts to obtain all
necessary lender approval required under the Heftel Credit Agreement to the
consummation of the Merger or, with the cooperation of Xxxxxxxx, to refinance
such indebtedness on terms reasonably acceptable to Heftel to the extent that
Heftel determines that it is reasonably foreseeable that such approval will not
be forthcoming. Heftel shall keep Xxxxxxxx fully informed of the status of
obtaining such consent, or the likelihood of obtaining such refinancing, as the
case may be, promptly upon the occurrence of any material developments relating
thereto.
5.4 ACCESS TO ASSETS, PERSONNEL AND INFORMATION.
(a) From the date of the Original Agreement until the Effective
Time, Xxxxxxxx shall, upon reasonable notice, afford to Parent and the Parent
Representatives, at Parent's sole risk and expense, reasonable access during
normal business hours to any of the assets, books and records, contracts,
executive officers, management employees, representatives, agents and facilities
of the Xxxxxxxx Companies and shall, upon request, furnish promptly to Parent
(at Parent's expense) a copy of any file, book, record, contract, permit,
correspondence, or other written information, document or data concerning any of
the Xxxxxxxx Companies (or any of their respective assets) that is within the
possession or control of Xxxxxxxx. During such period, upon reasonable notice,
Xxxxxxxx will make available to a reasonable number of Parent Representatives
adequate office space and facilities at the principal office facility of
Xxxxxxxx in Dallas, Texas.
(b) Upon request by Xxxxxxxx, Parent shall use its reasonable best
efforts to cause Heftel to afford to Xxxxxxxx and the Xxxxxxxx Representatives
prior to the consummation of the Assignment Agreement such access to Heftel and
the Heftel Subsidiaries as described in Section 5.4(c) and (e), subject to the
execution of a mutually acceptable confidentiality agreement between Heftel and
Xxxxxxxx.
(c) From the date of the consummation of the Assignment Agreement
until the Effective Time, Heftel shall, upon reasonable notice, afford to
Xxxxxxxx and the Xxxxxxxx Representatives, at Xxxxxxxx'x sole risk and expense,
reasonable access during normal business hours to any of the assets, books and
records, contracts, management employees, representatives, agents and facilities
of Heftel and the Heftel Subsidiaries and shall, upon request, furnish promptly
to Xxxxxxxx (at Xxxxxxxx'x expense) a copy of any file, book, record, contract,
permit, correspondence, or other written information, document or data
concerning Heftel (or any of its assets) that is within the possession or
control of Heftel. During such period, upon reasonable
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40
notice, Heftel will make available to a reasonable number of Xxxxxxxx
Representatives adequate office space and facilities at the principal office
facility of Heftel in Las Vegas, Nevada.
(d) From the date of the Original Agreement until the Effective
Time, Xxxxxxxx will fully and accurately disclose, and will cause each of the
Xxxxxxxx Subsidiaries to fully and accurately disclose, to Parent and the Parent
Representatives all information that is (i) reasonably requested by Parent or
any of the Parent Representatives, (ii) known to any of the Xxxxxxxx Companies
and (iii) relevant in any manner or degree to the value, ownership, use,
operation, development or transferability of the assets of any of the Xxxxxxxx
Companies.
(e) From the date of the consummation of the Assignment Agreement
until the Effective Time, Heftel will fully and accurately disclose, and will
cause each of the Heftel Subsidiaries to fully and accurately disclose, to
Xxxxxxxx and the Xxxxxxxx Representatives all information that is (i) reasonably
requested by Xxxxxxxx or any of the Xxxxxxxx Representatives, (ii) known to
Heftel and the Heftel Subsidiaries and (iii) relevant in any manner or degree to
the value, ownership, use, operation, development or transferability of the
assets of Heftel and the Heftel Subsidiaries.
(f) From the date of the consummation of the Assignment Agreement
until the Effective Time, Heftel shall (i) furnish to Xxxxxxxx, promptly upon
receipt or filing (as the case may be), a copy of each communication between
Heftel and the SEC after such date relating to the Merger or the Registration
Statement and each report, schedule, registration statement or other document
filed by Heftel with the SEC after such date relating to the Merger and (ii)
promptly advise Xxxxxxxx of the substance of any oral communications between
Heftel and the SEC relating to the Merger or the Registration Statement.
(g) Xxxxxxxx will (and will cause the Xxxxxxxx Subsidiaries and
the Xxxxxxxx Representatives to) fully cooperate in all reasonable respects with
Parent and the Parent Representatives in connection with Parent's examinations,
evaluations and investigations described in this Section 5.4.
(h) Heftel will (and will cause the Heftel Subsidiaries and the
Heftel Representatives to) fully cooperate in all reasonable respects with
Xxxxxxxx and the Xxxxxxxx Representatives in connection with Xxxxxxxx'x
examinations, evaluations and investigations described in this Section 5.4.
(i) Xxxxxxxx agrees that it will not (and will cause the Xxxxxxxx
Representatives not to), Parent agrees that it will not (and will cause the
Parent Representatives not to), and Heftel agrees that it will not (and will
cause the Heftel Representatives not to), use any confidential information
obtained pursuant to this Section 5.4 for any purpose unrelated to the
consummation of the transactions contemplated by this Agreement and will
maintain the confidential nature of such information.
(j) Notwithstanding anything in this Section 5.4 to the
contrary, (i) Xxxxxxxx shall not be obligated under the terms of this Section
5.4 to disclose to Parent or the Parent Representatives, or grant Parent or the
Parent Representatives access to, information that is within Xxxxxxxx'x
possession or control but subject to a valid and binding confidentiality
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41
agreement with a third party without first obtaining the consent of such third
party, and Xxxxxxxx, to the extent reasonably requested by Parent, will use its
reasonable best efforts to obtain any such consent, and (ii) Heftel shall not be
obligated under the terms of this Section 5.4 to disclose to Xxxxxxxx or the
Xxxxxxxx Representatives, or xxxxx Xxxxxxxx or the Xxxxxxxx Representatives
access to, information that is within Heftel's possession or control but subject
to a valid and binding confidentiality agreement with a third party without
first obtaining the consent of such third party, and Heftel, to the extent
reasonably requested by Xxxxxxxx, will use its reasonable best efforts to obtain
any such consent.
5.5 NO SOLICITATION.
(a) XXXXXXXX.
(i) Immediately following the execution of this
Agreement, Xxxxxxxx will (and will cause each of the Xxxxxxxx
Representatives to) terminate any and all existing activities,
discussions and negotiations with third parties (other than
Parent) with respect to any possible transaction involving the
acquisition of the Xxxxxxxx Common Stock or the merger or
other business combination of Xxxxxxxx with or into any such
third party.
(ii) Xxxxxxxx will not (and will cause the Xxxxxxxx
Representatives not to) solicit, initiate or knowingly
encourage the submission of, any offer or proposal to acquire
all or any part of the Xxxxxxxx Common Stock or all or any
material portion of the assets or business of Xxxxxxxx (other
than the transactions contemplated by this Agreement), whether
by merger, purchase of assets, tender offer, exchange offer or
otherwise.
(b) HEFTEL.
(i) Immediately following the consummation of the
Assignment Agreement, Heftel will (and will cause each of the
Heftel Representatives to) terminate any and all existing
activities, discussions and negotiations with third parties
(other than Parent and Xxxxxxxx) with respect to any possible
transaction involving the acquisition of the Heftel Common
Stock or the merger or other business combination of Heftel
with or into any such third party.
(ii) Until the earlier to occur of the termination of
this Agreement pursuant to Section 7 and the Effective Time,
Heftel will not (and will cause the Heftel Representatives not
to) solicit, initiate or knowingly encourage the submission
of, any offer or proposal to acquire all or any part of the
Heftel Common Stock or all or any material portion of the
assets or business of Heftel (other than the transactions
contemplated by the Heftel Acquisition or this Agreement),
whether by merger, purchase of assets, tender offer, exchange
offer or otherwise.
5.6 HEFTEL STOCKHOLDERS MEETING. Subject to Section 8.9(b),
Parent shall use its reasonable best efforts to cause Heftel to take all action
necessary in accordance with applicable
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law and Heftel's certificate of incorporation and bylaws to convene a meeting of
its stockholders as promptly as practicable after the successful completion of
the Heftel Acquisition for the purpose of voting on the Heftel Proposal. Subject
to the exercise of its fiduciary duties as described in Section 8.9(b), the
board of directors of Heftel shall recommend approval of the Heftel Proposal and
shall take all lawful action to solicit such approval, including timely mailing
the Proxy Statement/Prospectus to the stockholders of Heftel. Notwithstanding
the above, however, the following shall be conditions to the mailing of the
Proxy Statement/Prospectus:
(a) Heftel shall have received an opinion from a nationally
recognized firm of investment bankers or financial advisors selected by Heftel
(which opinion shall be acceptable in form and substance to Heftel) to the
effect that the Merger consideration to be paid by Heftel is fair to the Heftel
stockholders from a financial point of view, and such opinion shall not have
been withdrawn, revoked or modified.
(b) Heftel and Xxxxxxxx shall have received a letter from a
nationally recognized firm of independent public accountants, dated as of the
date the Proxy Statement/Prospectus is first mailed to Heftel's stockholders,
addressed to Heftel and Xxxxxxxx, in form and substance reasonably satisfactory
to Heftel and Xxxxxxxx, in connection with such accountants' review of certain
financial and accounting matters contained in the Proxy Statement/Prospectus and
the Registration Statement.
5.7 XXXXXXXX SHAREHOLDERS MEETING. Xxxxxxxx shall take all
necessary action in accordance with applicable law and its articles of
incorporation and bylaws to convene a meeting of its shareholders as promptly
as practicable after the date hereof for the purpose of voting on a proposal
to approve this Agreement and the Merger.
5.8 REGISTRATION STATEMENT AND PROXY STATEMENT/PROSPECTUS.
(a) Heftel and Xxxxxxxx shall cooperate and promptly prepare
the Registration Statement, and Heftel shall file the Registration Statement
with the SEC as soon as practicable after the execution and delivery of the
Assignment Agreement and in any event not later than 45 days after such date.
Heftel shall use its reasonable best efforts, and Xxxxxxxx shall cooperate with
Heftel (including furnishing all information concerning Xxxxxxxx and the holders
of Xxxxxxxx Common Stock as may be reasonably requested by Heftel), to have the
Registration Statement declared effective under the Securities Act as promptly
as practicable after such filing. Heftel shall use its reasonable efforts, and
Xxxxxxxx shall cooperate with Heftel to obtain all necessary state securities
laws or "blue sky" permits, approvals and registrations in connection with the
issuance of Heftel Common Stock pursuant to the Merger.
(b) Heftel and Xxxxxxxx will cause the Registration Statement
(including the Proxy Statement/Prospectus), at the time it becomes effective
under the Securities Act, to comply as to form in all material respects with the
applicable provisions of the Securities Act, the Exchange Act and the rules and
regulations of the SEC thereunder.
(c) Xxxxxxxx hereby covenants and agrees with Parent and
Heftel that (i) the Registration Statement (at the time it becomes effective
under the Securities Act and at the Effective Time) will not contain an untrue
statement of a material fact or omit to state a material
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fact required to be stated therein or necessary to make the statements therein
not misleading (provided, however, that this clause (i) shall apply only to
information contained in the Registration Statement that was supplied by
Xxxxxxxx specifically for inclusion therein); and (ii) the Proxy
Statement/Prospectus (at the time it is first mailed to stockholders of Heftel,
at the time of the Heftel Meeting, and at the Effective Time) will not contain
an untrue statement of a material fact or omit 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 are made, not misleading (provided,
however, that this clause (ii) shall apply only to information contained in the
Registration Statement that was supplied by Xxxxxxxx specifically for inclusion
therein). If, at any time prior to the Effective Time, any event with respect to
Xxxxxxxx, or with respect to other information supplied by Xxxxxxxx specifically
for inclusion in the Registration Statement, occurs and such event is required
to be described in an amendment to the Registration Statement, Xxxxxxxx shall
promptly notify Heftel of such occurrence and shall cooperate with Heftel in the
preparation and filing of such amendment. If, at any time prior to the Effective
Time, any event with respect to Xxxxxxxx, or with respect to other information
included in the Proxy Statement/Prospectus, occurs and such event is required to
be described in a supplement to the Proxy Statement/Prospectus, such event shall
be so described and such supplement shall be promptly prepared, filed and
disseminated.
(d) Heftel, upon consummation of the Assignment Agreement,
covenants and agrees with Xxxxxxxx that (i) the Registration Statement (at the
time it becomes effective under the Securities Act and at the Effective Time)
will not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading (provided, however, that this clause (i) shall not apply
to any information contained in the Registration Statement that was supplied by
Xxxxxxxx specifically for inclusion therein); and (ii) the Proxy
Statement/Prospectus (at the time it is first mailed to shareholders of Heftel,
at the time of the Heftel Meeting, and at the Effective Time) will not contain
an untrue statement of a material fact or omit 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 are made, not misleading (provided,
however, that this clause (ii) shall not apply to any information contained in
the Registration Statement that was supplied by Xxxxxxxx specifically for
inclusion therein). If, at any time prior to the Effective Time, any event with
respect to Heftel, or with respect to other information included in the
Registration Statement, occurs and such event is required to be described in an
amendment to the Registration Statement, such event shall be so described and
such amendment shall be promptly prepared and filed. If, at any time prior to
the Effective Time, any event with respect to Heftel, or with respect to other
information supplied by Heftel specifically for inclusion in the Proxy
Statement/Prospectus, occurs and such event is required to be described in a
supplement to the Proxy Statement/Prospectus, Heftel shall promptly notify
Xxxxxxxx of such occurrence and shall prepare, file and disseminate such
supplement.
(e) Heftel shall use its reasonable efforts to advise
Xxxxxxxx, promptly after it receives notice thereof, of the time when the
Registration Statement has become effective under the Securities Act, the
issuance of any stop order with respect to the Registration Statement, the
suspension of the qualification of the Heftel Common Stock issuable in
connection with the Merger for offering or sale in any jurisdiction, or any
comments or requests for additional information by the SEC with respect to the
Registration Statement.
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5.9 STOCK EXCHANGE LISTING. Heftel shall cause the shares of
Heftel Common Stock to be issued in the Merger to be approved for listing on
Nasdaq, subject to official notice of issuance, prior to the Closing Date.
5.10 ADDITIONAL ARRANGEMENTS. Subject to the terms and conditions
herein provided, each of Parent, Xxxxxxxx and Xxxxxx shall take, or cause to be
taken, all action and shall do, or cause to be done, all things necessary,
appropriate or desirable under the HSR Act, the Communications Act and any other
applicable laws and regulations or under applicable governing agreements to
consummate and make effective the transactions contemplated by this Agreement,
including using its reasonable efforts to obtain all necessary waivers, consents
and approvals and effecting all necessary registrations and filings. Parent and
Xxxxxxxx agree to commence, within 15 days after the date of the Original
Agreement, the filing and approval process with the FCC with respect to the
transactions contemplated by this Agreement. Each of Parent, Xxxxxxxx and Xxxxxx
shall use reasonable best efforts to take, or cause to be taken, all action or
shall do, or cause to be done, all things necessary, appropriate or desirable to
cause the covenants and conditions applicable to the transactions contemplated
hereby to be performed or satisfied as soon as practicable, including all
filings and approvals required by the FCC and the Communications Act. If Closing
does not occur within 20 days after the date of the FCC's Final Order, each of
Parent, Heftel and Xxxxxxxx agree to request approval from the FCC to extend the
Closing so that the Closing contemplated hereunder will not violate any FCC
rules or regulations. In addition, if any Governmental Authority shall have
issued any order, decree, ruling or injunction, or taken any other action that
would have the effect of restraining, enjoining or otherwise prohibiting or
preventing the consummation of the transactions contemplated hereby, each of
Xxxxxxxx and Heftel shall use its reasonable efforts to have such order, decree,
ruling or injunction or other action declared ineffective as soon as
practicable. Nothing contained in this Agreement shall require Parent to take
any action that would result in a violation of Section 203 of the DGCL.
5.11 AGREEMENTS OF AFFILIATES. At least 30 days prior to the
Effective Time, Xxxxxxxx shall cause to be prepared and delivered to Heftel a
list identifying all Persons who, at the time of the approval of this Agreement
and the Merger by the shareholders of Xxxxxxxx, may be deemed to be "affiliates"
of Xxxxxxxx as that term is used in paragraphs (c) and (d) of Rule 145 under the
Securities Act. Xxxxxxxx shall use its best efforts to cause each Person who is
identified as an affiliate of Xxxxxxxx in such list to execute and deliver to
Heftel, on or prior to the Closing Date, a written agreement, in the form
attached hereto as EXHIBIT 5.11 (if such Person has not executed and delivered
an agreement substantially to the same effect contemporaneously with the
execution of this Agreement). Heftel shall be entitled to place legends as
specified in such agreements on the Heftel Certificates representing any Heftel
Common Stock to be issued to such Persons in the Merger.
5.12 PUBLIC ANNOUNCEMENTS. Prior to the Closing, Xxxxxxxx and
Parent (and Heftel after consummation of the Assignment Agreement) will consult
with each other before issuing any press release or otherwise making any public
statements with respect to the transactions contemplated by this Agreement and
shall not issue any press release or make any such public statement prior to
obtaining the approval of the other party; provided, however, that such approval
shall not be required where such release or announcement is required by
applicable law; and provided further, that Xxxxxxxx, Parent or Heftel may
respond to inquiries by the press or
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others regarding the transactions contemplated by this Agreement, so long as
such responses are consistent with such party's previously issued press
releases.
5.13 NOTIFICATION OF CERTAIN MATTERS. Xxxxxxxx shall give prompt
notice to Parent (or Heftel after consummation of the Assignment Agreement) of
(a) any representation or warranty contained in Article 3 being untrue or
inaccurate when made, (b) the occurrence of any event or development that would
cause (or could reasonably be expected to cause) any representation or warranty
contained in Article 3 to be untrue or inaccurate on the Closing Date, or (c)
any failure of Xxxxxxxx to comply with or satisfy any covenant, condition, or
agreement to be complied with or satisfied by it hereunder. Parent shall give
prompt notice to Xxxxxxxx of (a) any representation or warranty made by Parent
in Section 4.1 being untrue or inaccurate when made, (b) the occurrence of any
event or development that would cause (or could reasonably be expected to cause)
any representation or warranty made by Parent in Section 4.1 to be untrue or
inaccurate on the Closing Date, or (c) any failure of Parent to comply with or
satisfy any covenant, condition, or agreement to be complied with or satisfied
by it hereunder. Heftel shall give prompt notice to Xxxxxxxx of (a) any
representation or warranty by Heftel contained in Section 4.2 being untrue or
inaccurate when made, (b) the occurrence of any event or development that would
cause (or could reasonably be expected to cause) any representation or warranty
by Heftel contained in Section 4.2 to be untrue or inaccurate on the Closing
Date, or (c) any failure of Heftel to comply with or satisfy any covenant,
condition, or agreement to be complied with or satisfied by it hereunder.
5.14 PAYMENT OF EXPENSES. Each party hereto shall pay its own
expenses incident to preparing for, entering into and carrying out this
Agreement and the consummation of the transactions contemplated hereby, whether
or not the Merger shall be consummated, except that (a) the fee for filing the
Registration Statement with the SEC shall be borne by Heftel; (b) the costs and
expenses associated with printing the Proxy Statement/Prospectus shall be borne
by Heftel; and (c) the costs and expenses associated with mailing the Proxy
Statement/Prospectus to the stockholders of Heftel, and soliciting the votes of
the stockholders of Heftel, shall be borne by Heftel.
5.15 REGISTRATION RIGHTS AGREEMENT. Heftel, Parent and the
Major Xxxxxxxx Shareholders shall enter into a Registration Rights Agreement in
the form attached hereto as EXHIBIT 5.15 (the "REGISTRATION RIGHTS AGREEMENT"),
at the Closing.
5.16 EMPLOYMENT AGREEMENT. Heftel and XxXxxxx X. Xxxxxxxx, Xx.
shall enter into an Employment Agreement, in the form attached hereto as EXHIBIT
5.16 (the "EMPLOYMENT AGREEMENT"), at the Closing.
5.17 STOCKHOLDERS AGREEMENT. Heftel and Parent shall enter into
a stockholders Agreement, in the form attached hereto as EXHIBIT 5.17 (the
"STOCKHOLDERS AGREEMENT").
5.18 INDEMNITY AGREEMENT. Heftel shall enter into an Indemnity
Agreement (each, an "INDEMNITY AGREEMENT") in the form of EXHIBIT 5.18 hereto,
with each of Heftel Designees.
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5.19 INSURANCE; INDEMNIFICATION.
(a) INSURANCE. Heftel shall cause the Surviving Corporation
to, at or immediately prior to the Effective Time, maintain a six year director
and officer liability insurance run-off policy from the same carrier as the
carrier providing such coverage to Xxxxxxxx at the Effective Time and to not
terminate such policy prior to the sixth anniversary of the Effective Time.
Heftel shall use its reasonable best efforts to maintain the director and
officer liability insurance policy for directors and officers of Heftel as in
effect as of the date of the Original Agreement or such other director and
officer liability insurance policy containing terms and coverage reasonably
acceptable to Xxxxxxxx and Xxxxxx, and such policy shall remain in full force
and effect immediately following the Effective Time.
(b) INDEMNIFICATION BY PARENT. Parent shall indemnify and hold
harmless (i) Xxxxxxxx, (ii) each Person who is, has been at any time prior to
the date of the Original Agreement, or becomes prior to the Effective Time, an
officer or director of any of the Xxxxxxxx Companies, and (iii) each Person who
is, has been at any time prior to the date of the Original Agreement or becomes
prior to the Effective Time a shareholder of Xxxxxxxx (collectively, the "TENDER
OFFER INDEMNIFIED PARTIES") against all losses, claims, damages, liabilities,
costs or expenses (including attorneys' fees), judgments and amounts paid in
settlement (collectively, "COSTS") in connection with any claim, action, suit,
proceeding or investigation by any Person other than any party hereto, any
Tender Offer Indemnified Party or their respective Affiliates arising out of or
pertaining to acts, omissions, misstatements or omissions of material facts, or
alleged acts or omissions, or alleged misstatements or omissions of material
facts, by Xxxxxxxx or by such officer, director or shareholder acting in such
capacity of any of the Xxxxxxxx Companies, which acts, omissions, misstatements
or omissions of material facts, relate to the Heftel Acquisition; provided,
however, that Parent shall be under no obligation to indemnify any Tender Offer
Indemnified Party pursuant to this Section 5.19(b) for any Costs resulting from
the gross negligence or willful misconduct of the Tender Offer Indemnified
Party.
(c) INDEMNIFICATION BY HEFTEL. From and after the Effective
Time, Heftel shall indemnify and hold harmless (i) each Person who is, has been
at any time prior to the date of the Original Agreement, or becomes prior to the
Effective time, an officer or director of any of the Xxxxxxxx Companies, and
(ii) each Person who is, has been at any time prior to the date of the Original
Agreement or becomes prior to the Effective Time a shareholder of Xxxxxxxx
(collectively, the "MERGER INDEMNIFIED PARTIES" and, together with the Tender
Offer Indemnified Parties, the "INDEMNIFIED PARTIES") against all Costs in
connection with any claim, action, suit, proceeding or investigation by any
Person other than any party hereto, any Indemnified Party or their respective
Affiliates arising out of or pertaining to acts, omissions, misstatements or
omissions of material facts, or alleged acts or omissions or alleged
misstatements or omissions of material facts, by him acting in his capacity as
an officer, director or shareholder of any of the Xxxxxxxx Companies, which
acts, omissions, misstatements or omissions of material facts, relate to the
Merger or the Proxy Statement/Prospectus; provided, however, that Heftel shall
be under no obligation to indemnify any Merger Indemnified Party pursuant to
this Section 5.19(c) for any Costs resulting from the gross negligence or
willful misconduct of the Merger Indemnified Party or (y) information provided
by the Merger Indemnified Party for inclusion in the Proxy Statement/Prospectus.
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(d) INDEMNIFICATION PROCEDURES. The procedures
associated with the indemnification set forth in Sections 5.19(b) and (c) shall
be as follows:
(i) Promptly after receipt by an Indemnified Party of
notice of the commencement of any action, suit or proceeding,
such Indemnified Party shall, if a claim in respect of Section
5.19(b) or (c) is to be made against Parent or Heftel, as the
case may be (the "INDEMNIFYING PARTY"), under this Agreement,
notify the Indemnifying Party of the commencement thereof.
With respect to any such action, suit or proceeding as to
which an Indemnified Party notifies the Indemnifying Party of
the commencement thereof:
(A) Except as otherwise provided below, to the extent
that it may wish, the Indemnifying Party shall be
entitled to assume the defense thereof and to employ
counsel chosen by it. After notice from the
Indemnifying Party to the Indemnified Party of its
election to so assume the defense thereof, the
Indemnifying Party shall not be liable to the
Indemnified Party under this Agreement for any legal
or other expenses subsequently incurred by the
Indemnified Party in connection with the defense
thereof other than reasonable costs of investigation
or as otherwise provided below. The Indemnified Party
shall have the right to employ counsel of his or its
own choosing in such action, suit or proceeding but
the fees and expenses of such counsel incurred after
notice from the Indemnifying Party of assumption by
the Indemnifying Party of the defense thereof shall
be at the expense of the Indemnified Party unless (x)
the employment of counsel by the Indemnified Party
has been specifically authorized by the Indemnifying
Party, such authorization to be conclusively
established by action by disinterested members of the
board of directors of the Indemnifying Party; (y)
representation by the same counsel of both the
Indemnified Party and the Indemnifying Party would,
in the reasonable judgment of either of the
Indemnified Party or the Indemnifying Party, be
inappropriate due to an actual or potential conflict
of interest between the Indemnifying Party and the
Indemnified Party in the conduct of the defense of
such action, such conflict of interest to be
conclusively established by an opinion of counsel to
either the Indemnifying Party or the Indemnified
Party to such effect; or (z) the Indemnifying Party
shall not in fact have employed counsel to assume the
defense of such action, in each of which cases the
fees and expenses of counsel shall be paid by the
Indemnifying Party. Notwithstanding the foregoing, if
an insurance company has supplied directors' and
officers' liability insurance covering an action,
suit or proceeding, then such insurance company shall
employ counsel to conduct the defense of such action,
suit or proceeding unless the Indemnified Party and
the Indemnifying Party reasonably concur in writing
that such counsel is unacceptable.
(B) The Indemnified Party shall cooperate with the
Indemnifying Party in all aspects of the conduct of
the defense of any action and in connection therewith
shall, among other things, make its books, records,
executive
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officers, representatives and agents available as
reasonably requested or required by the Indemnifying
Party.
(C) The Indemnifying Party shall not be liable to
indemnify the Indemnified Party under Section 5.19(b)
or (c) for any amounts paid in settlement of any
action or claim effected without its written consent.
The Indemnifying Party may settle any action or claim
without the consent of the Indemnified Party provided
that such settlement would not impose any liability,
penalty or limitation on the Indemnified Party and
that the parties bringing such claim release the
Indemnified Party from all liability relating to such
claim in connection with such settlement. Neither the
Indemnifying Party nor the Indemnified Party shall
unreasonably withhold consent to any proposed
settlement.
(ii) The Indemnifying Party shall not be liable to
make any payment under Sections 5.19(b) or (c) of this
Agreement in connection with any action, suit or proceeding
against the Indemnified Party to the extent the Indemnified
Party has otherwise received payment of the amounts otherwise
payable by the Indemnifying Party hereunder.
(iii)In the event the Indemnifying Party makes any
payment under this Agreement, the Indemnifying Party shall be
subrogated, to the extent of such payment, to all rights of
recovery of the Indemnified Party with respect thereto, and
the Indemnified Party shall execute all agreements,
instruments, certificates or other documents and do or cause
to be done all things necessary or appropriate to secure such
recovery rights to the Indemnifying Party including, without
limitation, executing such documents as shall enable the
Indemnifying Party to bring an action or suit to enforce such
recovery rights.
(iv) The provisions of this Section 5.19 are intended
to be for the benefit of, and shall be enforceable by, the
parties hereto and each Indemnified Party and their respective
Affiliates and each of their respective heirs and
representatives.
5.20 PARENT REGISTRATION RIGHTS AGREEMENT. Heftel and Parent shall
enter into a Registration Rights Agreement in the form attached hereto as
EXHIBIT 5.20 (the "PARENT REGISTRATION RIGHTS AGREEMENT"), at or prior to
Closing, and the Parent Registration Rights Agreement shall be in full force and
effect on the Closing Date.
5.21 FCC APPROVAL. Subject to the terms and conditions herein
provided, Parent and Heftel will use their respective commercially reasonable
efforts to comply with the cross-interest policy of the FCC upon consummation of
the Merger, including taking commercially reasonable steps to reduce Parent's
ownership of the Heftel Common Stock and the New Heftel Class B Common Stock to
331/3% or less of the total number of such shares outstanding at the Effective
Time of the Merger or otherwise taking commercially reasonable steps to comply
with or obtain a waiver from such cross-interest policy of the FCC, provided
that it shall not be considered commercially reasonable efforts of Parent or
Heftel for Parent to take action that would cause
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it to incur short-swing profit liability under Section 16(b) of the Exchange
Act. In the event Parent and Heftel have not complied with such or obtained a
waiver from such policy prior to the Effective Time, Parent may place any shares
of New Heftel Class B Common Stock above 33-1/3% of the total number of shares
of Heftel Common Stock and New Heftel Class B Common Stock outstanding at the
Effective Time in a disposition trust for sale thereunder, the terms of which
trust would be subject to FCC approval. Each party hereto agrees and consents to
make certain changes and modifications to any certificate or document,
including, but not limited to, the Second Amended and Restated Certificate of
Incorporation of Heftel, the Registration Rights Agreement, the Employment
Agreement, the Stockholders Agreement, the Indemnity Agreement, the Parent
Registration Rights Agreement and the Assignment Agreement, in order to conform
such documents to the provisions set forth in this Section 5.21.
5.22 COMPOSITION OF THE BOARD OF DIRECTORS. Immediately prior to
the Effective Time, Heftel will take such actions necessary such that five
designees of Xxxxxxxx (such designees being herein referred to as the "HEFTEL
DESIGNEES") shall constitute the entire Board of Directors of Heftel immediately
after the Effective Time; provided, that each Heftel Designee shall consent to
his designation and provide Heftel for inclusion in the Proxy
Statement/Prospectus such information concerning himself as is required to
comply with the Securities Act and the rules and regulations promulgated
thereunder.
ARTICLE 6
CONDITIONS
6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.
The respective obligations of each party to effect the Merger shall be subject
to the satisfaction, at or prior to the Closing Date, of the following
conditions:
(a) COMPLETION OF HEFTEL ACQUISITION. Parent shall have
consummated the Heftel Acquisition.
(b) HEFTEL AND HEFTEL SUB BOARD APPROVAL. The boards of
directors of each of Heftel and Heftel Sub shall have approved the Merger and
this Agreement and have executed the Assignment Agreement, and such approval
shall be in full force and effect at the Closing.
(c) SHAREHOLDER APPROVAL. The Merger and this Agreement
shall have been duly and validly approved and adopted by the shareholders of
Xxxxxxxx, and the Heftel Proposal shall have been duly and validly approved and
adopted by the shareholders of Heftel and Heftel Sub, all as required by the
TBCA, the DGCL (to the extent necessary to exempt such transactions from the
provisions of Section 203 thereof), Nasdaq and the charter and bylaws of
Xxxxxxxx, Xxxxxx and Xxxxxx Sub.
(d) OTHER APPROVALS. The waiting period applicable to the
consummation of the Merger under the HSR Act shall have expired or been
terminated and all filings required to be made prior to the Effective Time with,
and all consents, approvals, permits and authorizations required to be obtained
prior to the Effective Time from the FCC or any other Governmental Authority in
connection with the execution and delivery of this Agreement and the
consummation
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of the transactions contemplated hereby by Xxxxxxxx, Parent, Heftel and Heftel
Sub shall have been made or obtained (as the case may be), except where the
failure to obtain such consents, approvals, permits and authorizations would not
be reasonably likely to result in a Material Adverse Effect on Heftel (assuming
the Merger has taken place) or to materially adversely affect the consummation
of the Merger.
(e) SECURITIES LAW MATTERS. The Registration Statement
shall have been declared effective by the SEC under the Securities Act and shall
be effective at the Effective Time, and no stop order suspending such
effectiveness shall have been issued, no action, suit, proceeding or
investigation by the SEC to suspend such effectiveness shall have been initiated
and be continuing, and all necessary approvals under state securities laws
relating to the issuance or trading of the Heftel Common Stock to be issued in
the Merger shall have been received.
(f) 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 prior to invoking this condition, each party shall have complied fully with
its obligations under Section 5.9 and, in addition, shall use all reasonable
efforts to have any such decree, ruling, injunction or order vacated, except as
otherwise contemplated by this Agreement.
(G) ACCOUNTANTS' LETTER. Heftel and Xxxxxxxx shall have
received a letter from a nationally recognized firm of independent public
accountants, immediately prior to the Effective Date, in form and substance
reasonably satisfactory to Heftel, dated as of the Effective Date and addressed
to Heftel and Xxxxxxxx, which letter shall address matters as are customary for
transactions similar to those contemplated in this Agreement.
(h) FCC LICENSES. All FCC licenses, approvals and
authorizations contemplated by this Agreement shall have been granted and shall
have become final (except that the requirement that such licenses, approvals and
authorizations be final may be waived by Heftel and Xxxxxxxx).
6.2 CONDITIONS TO OBLIGATIONS OF PARENT, HEFTEL AND HEFTEL SUB.
The obligations of Parent (or Heftel and Heftel Sub upon consummation of the
Assignment Agreement pursuant to Section 8.9) to effect the Merger are subject
to the satisfaction of the following conditions, any or all of which may be
waived in whole or in part by Parent (or Heftel and Heftel Sub, as the case may
be):
(a) REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Xxxxxxxx set forth in Article 3 shall be true and correct as
of the Closing Date as though made on and as of that time, and Heftel shall have
received a certificate signed by the chief executive officer or chief financial
officer of Xxxxxxxx to such effect; provided, however, that this Section 6.2(a)
shall be deemed to have been satisfied even if such representations and
warranties are not true and correct, unless the failure of any such
representations and warranties to be so true and correct would have a Material
Adverse Effect on Xxxxxxxx.
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(b) PERFORMANCE OF COVENANTS AND AGREEMENTS BY XXXXXXXX.
Xxxxxxxx shall have performed in all material respects all covenants and
agreements required to be performed by it under this Agreement at or prior to
the Closing Date, and Heftel shall have received a certificate signed by the
chief executive officer or chief financial officer of Xxxxxxxx to such effect.
(c) LETTERS FROM XXXXXXXX AFFILIATES. Heftel shall have
received from each Person named in the list referred to in Section 5.11 an
executed copy of the agreement described in Section 5.11.
(d) NO ADVERSE CHANGE. From the date of this Agreement
through the Closing, there shall not have occurred any change in the condition
(financial or otherwise), operations or business of any of the Xxxxxxxx
Companies that would have or would be reasonably likely to result in a Closing
Material Adverse Effect on Xxxxxxxx.
(e) FAIRNESS OPINION. The fairness opinion described in
Section 5.6(a) shall not have been withdrawn, revoked, or modified.
(f) STOCKHOLDERS AGREEMENT. The Major Xxxxxxxx
Shareholders shall have executed the Stockholders Agreement, which shall be in
full force and effect on the Closing Date.
(g) EMPLOYMENT AGREEMENT. XxXxxxx X. Xxxxxxxx, Xx.
shall have executed the Employment Agreement, which shall be in full force and
effect on the Closing Date.
(h) WARRANT HOLDER AGREEMENT. The holder of the Xxxxxxxx
Warrant and Xxxxxxxx shall have executed an agreement, dated as of the date of
the Original Agreement, pursuant to which such holder shall, among other things,
agree (i) neither to exercise (except as set forth in such agreement) nor
transfer the Xxxxxxxx Warrant at any time on or prior to the Effective Time and
(ii) to exchange such Xxxxxxxx Warrant pursuant to this Agreement, and such
agreement shall be in full force and effect on the Closing Date.
(i) AGREEMENT WITH SHAREHOLDER. Prime II Management,
L.P., a Delaware limited partnership, and PrimeComm, L.P., a Delaware limited
partnership (together, "PRIMECOMM"), shall have executed an agreement, dated the
date of the Original Agreement, pursuant to which PrimeComm, among other things,
consents to the Merger and the Merger Agreement and agrees (a) not to transfer
its Xxxxxxxx Common Stock and (b) that its rights and obligations under certain
agreements with Xxxxxxxx shall terminate at the Effective Time, and such
agreement shall be in full force and effect on the Closing Date.
(j) DISSENTING SHAREHOLDERS. Holders of not more than
three percent (3%) of any outstanding class of Xxxxxxxx capital stock (Xxxxxxxx
Common Stock, Xxxxxxxx Xxxxxx Preferred and Xxxxxxxx Senior Preferred) shall
have exercised their right to dissent from the Merger under the TBCA.
(k) HEFTEL ACQUISITION. At least six months and one day
shall have passed subsequent to the consummation of the Heftel Acquisition.
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6.3 CONDITIONS TO OBLIGATION OF XXXXXXXX. The obligation of
Xxxxxxxx to effect the Merger is subject to the satisfaction of the following
conditions, any or all of which may be waived in whole or in part by Tichenor:
(a) REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Parent, Heftel and Heftel Sub set forth in Article 4 shall be
true and correct as of the closing date as though made on and as of that time,
and tichenor shall have received a certificate signed by the chief executive
officer or the chief financial officer of Parent to such effect with regard to
the representations and warranties of Parent contained in Section 4.1 and of
Heftel to such effect with regard to the representations and warranties of
Heftel and Heftel Sub contained in Section 4.2; provided, however, that this
Section 6.3(a) shall be deemed to have been satisfied even if such
representations and warranties are not true and correct, unless the failure of
any such representations and warranties to be so true and correct would have a
Material Adverse Effect on Heftel.
(b) PERFORMANCE OF COVENANTS AND AGREEMENTS BY PARENT.
Parent shall have performed in all material respects all covenants and
agreements required to be performed by them under this Agreement at or prior to
the Closing Date, and Xxxxxxxx shall have received a certificate signed by the
chief executive officer or the chief financial officer of Parent to such effect.
(C) PERFORMANCE OF COVENANTS AND AGREEMENTS BY HEFTEL AND
HEFTEL SUB. Heftel and Heftel Sub shall have performed in all material respects
all covenants and agreements required to be performed by them under this
Agreement at or prior to the Closing Date, and Tichenor shall have received a
certificate signed by the chief executive officer or the chief financial officer
of Heftel to such effect.
(d) NO ADVERSE CHANGE. From the date of the Original
Agreement through the Closing, there shall not have occurred any change in the
condition (financial or otherwise), operations or business of Heftel that would
have or would be reasonably likely to result in a Closing Material Adverse
Effect on Heftel.
(E) NASDAQ LISTING. The shares of Heftel Common Stock
issuable pursuant to the Merger shall have been authorized for listing on
Nasdaq, subject to official notice of issuance.
ARTICLE 7
TERMINATION
7.1 TERMINATION RIGHTS. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time:
(a) Automatically pursuant to Section 8.9;
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(b) By mutual written consent of Parent and Xxxxxxxx
prior to the consummation of the Assignment Agreement or of Heftel and Xxxxxxxx
thereafter;
(c) By either Xxxxxxxx or Parent (or Heftel after
consummation of the Assignment Agreement) if (i) the Merger has not been
consummated by March 31, 1997 (provided, however, that the right to terminate
this Agreement pursuant to this clause (i) shall not be available to any party
whose breach of any representation or warranty or failure to perform any
covenant or agreement under this Agreement has been the cause of or resulted in
the failure of the Merger to occur on or before such date); (ii) any
Governmental Authority shall have issued an order, decree or ruling or taken any
other action permanently restraining, enjoining or otherwise prohibiting the
Merger and such order, decree, ruling or other action shall have become final
and nonappealable (provided, however, that the right to terminate this Agreement
pursuant to this clause (ii) shall not be available to any party until such
party has used all reasonable efforts to remove such injunction, order or
decree); or (iii) if the Heftel Proposal shall fail to receive the requisite
vote for approval at the Heftel Meeting;
(d) By parent (or Heftel after consummation of the
Assignment Agreement) if (i) there has been a breach of the representations and
warranties made by Xxxxxxxx in Article 3 of this Agreement which will have a
Material Adverse Effect on Xxxxxxxx (provided, however, that Parent (or Heftel
after consummation of the Assignment Agreement) shall not be entitled to
terminate this Agreement pursuant to this clause (i) unless Parent (or Heftel
after consummation of the Assignment Agreement) has given Xxxxxxxx at least 30
days prior notice of such breach, Xxxxxxxx has failed to cure such breach within
such 30-day period, and the condition described in Section 6.2(a), other than
the provision thereof relating to the certificate signed by the chief executive
officer or chief financial officer of Xxxxxxxx, would not be satisfied if the
Closing were to occur on the day on which Parent (or Heftel after consummation
of the Assignment Agreement) gives Xxxxxxxx notice of such termination); or (ii)
Xxxxxxxx has failed to comply in any material respect with any of its covenants
or agreements contained in this Agreement and such failure has not been, or
cannot be, cured within a reasonable time after notice and demand for cure
thereof;
(e) By Xxxxxxxx if (i) there has been a breach of the
representations and warranties made by Parent in Section 4.1 of this Agreement
which will have a Material Adverse Effect on Xxxxxxxx (provided, however, that
Xxxxxxxx shall not be entitled to terminate this Agreement pursuant to this
clause (i) unless Xxxxxxxx has given Parent at least 30 days prior notice of
such breach, Parent has failed to cure such breach within such 30-day period,
and the condition described in Section 6.3(a), other than the provision thereof
relating to the certificate signed by the chief executive officer or chief
financial officer of Parent, would not be satisfied if the Closing were to occur
on the day on which Xxxxxxxx gives Parent notice of such termination); (ii)
there has been a breach of the representations and warranties made by Heftel and
Heftel Sub in Section 4.2 of this Agreement (provided, however, that Xxxxxxxx
shall not be entitled to terminate this Agreement pursuant to this clause (i)
unless Xxxxxxxx has given Heftel at least 30 days prior notice of such breach,
Heftel has failed to cure such breach within such 30- day period, and the
condition described in Section 6.3(a), other than the provision thereof relating
to the certificate signed by the chief executive officer or chief financial
officer of Heftel, would not be satisfied if the Closing were to occur on the
day on which Xxxxxxxx gives Xxxxxx notice of such termination); (iii) Parent,
Heftel or Heftel Sub has failed to comply in any material
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respect with any of its respective covenants or agreements contained in this
Agreement, and, in either such case, such breach or failure has not been, or
cannot be, cured within a reasonable time after notice and a demand for cure
thereof; or (iv) if prior to the execution of the Assignment Agreement but
subsequent to the consummation of the Heftel Acquisition, Heftel would have
failed to comply in any material respect with any of its covenants or agreements
under this Agreement had the Assignment Agreement been executed at the time of
such failure to comply, and, in either such case, such breach or failure has not
been, or cannot be, cured within a reasonable time after notice and a demand for
cure thereof;
(f) By Xxxxxxxx if, subsequent to the consummation of the
Heftel Acquisition, the aggregate number of shares of Heftel Common Stock owned
by Parent and its Affiliates is more than 90% of the Heftel Common Stock then
outstanding;
(g) By Xxxxxxxx if, prior to consummation of the
Assignment Agreement, Heftel breaches any covenant contained in the Tender Offer
Agreement which will result in a Material Adverse Effect on Heftel; and
(h) Automatically upon termination of the Tender Offer
Agreement prior to the consummation of the Heftel Acquisition.
7.2 EFFECT OF TERMINATION. If this Agreement is terminated by
either Xxxxxxxx or Parent (or Heftel after consummation of the Assignment
Agreement) pursuant to the provisions of Section 7.1, this Agreement shall
forthwith become void except for, and there shall be no further obligation on
the part of any party hereto or its respective Affiliates, directors, officers,
or shareholders, except pursuant to, the provisions of Sections 5.4(i), 5.14,
5.19(b) and (d), Article 8 and any confidentiality agreement between any of the
parties hereto (which shall continue pursuant to their terms). The parties
acknowledge that the sole and exclusive remedy of any party to this Agreement
with respect to a breach of a representation or warranty contained herein shall
be the right to terminate this Agreement in accordance with and subject to the
provisions of this Section 7; provided, however, that a termination of this
Agreement shall not relieve any party hereto from any liability for damages
incurred as a result of a breach by such party of its covenants hereunder
occurring prior to such termination other than those covenants contained in
Sections 5.1(c), 5.2(j) and 5.3(j), and the provisions of Section 5.13 regarding
notification of inaccuracies with respect to representations and warranties and
the occurrence events or developments that could cause (or could reasonably be
expected to cause) any representation or warranty contained in this Agreement to
be untrue or inaccurate on the Closing Date. Each party hereby covenants never
to institute, directly or indirectly, any action or proceeding of any kind
against any other party hereto based on or arising out of, or in any manner
related to, the breach of a representation or warranty contained herein or the
covenants contained in Sections 5.1(c), 5.2(j) or 5.3(j) or the provisions of
Sections 5.13 referenced in the immediately preceding sentence.
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ARTICLE 8
MISCELLANEOUS
8.1 NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
representations and warranties contained in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the consummation of the
Merger.
8.2 AMENDMENT. This Agreement may be amended by the parties
hereto at any time before or after approval of the Merger and this Merger
Agreement by the shareholders of Xxxxxxxx; provided, however, that after any
such approval, no amendment shall be made that by law requires further approval
by such shareholders without such further approval. This Agreement may not be
amended except by a written instrument signed on behalf of each of the parties
hereto.
8.3 NOTICES. Any notice or other communication required or
permitted hereunder shall be in writing and either delivered personally, by
facsimile transmission or by registered or certified mail (postage prepaid and
return receipt requested) and shall be deemed given when received (or, if
mailed, five business days after the date of mailing) at the following addresses
or facsimile transmission numbers (or at such other address or facsimile
transmission number for a party as shall be specified by like notice):
(a) If to Parent: 000 Xxxxxxx Xxxxx, Xxxxx 000, Xxx
Xxxxxxx, Xxxxx 00000, Attention: Xxxxxxx X. Xxxx (facsimile transmission
number: 210-822-2299), with a copy (which shall not constitute notice) to Akin,
Gump, Strauss, Xxxxx & Xxxx, L.L.P., NationsBank Plaza, 000 Xxxxxxx Xxxxxx,
Xxxxx 0000, Xxx Xxxxxxx, XX 00000, Attention: Xxxxxxx X. Mount (facsimile
transmission number: 210-224-2035).
(b) If to Xxxxxxxx: 000 Xxxxxxxx Xxxxx, Xxxxx 0000,
Xxxxxx, Xxxxx 00000, Attention: XxXxxxx X. Xxxxxxxx, Xx. (facsimile transmission
number: (000) 000-0000), with a copy (which shall not constitute notice) to
Xxxxxxx X. Xxxxxxx, Xxxxxx & Xxxxxx L.L.P., 3700 Xxxxxxx Xxxx Center, 0000 Xxxx
Xxxxxx, Xxxxxx, XX 00000-0000 (facsimile transmission number: 214-220-7716).
8.4 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
8.5 SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, such provision shall be
interpreted to be only so broad as is enforceable.
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8.6 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. This Agreement
(together with the confidentiality agreements and the documents and instruments
delivered by the parties in connection with this Agreement) (a) constitutes the
entire agreement and supersedes all other prior agreements and understandings,
both written and oral, among the parties with respect to the subject matter
hereof; and (b) except as provided in Article 2 and Section 5.19, is solely for
the benefit of the parties hereto and their respective successors, legal
representatives and permitted assigns and does not confer on any other person
any rights or remedies hereunder. Furthermore, Heftel and Heftel Sub shall have
no rights or obligations under this Agreement until such time as the Assignment
Agreement has been consummated.
8.7 APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED IN ALL
RESPECTS, INCLUDING VALIDITY, INTERPRETATION AND EFFECT, BY THE LAWS OF THE
STATE OF TEXAS REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER
APPLICABLE PRINCIPLES OF CONFLICTS OF LAWS THEREOF.
8.8 NO REMEDY IN CERTAIN CIRCUMSTANCES. Each party agrees that,
should any court or other competent authority hold any provision of this
Agreement or part hereof to be null, void or unenforceable, or order any party
to take any action inconsistent herewith or not to take an action consistent
herewith or required hereby, the validity, legality and enforceability of the
remaining provisions and obligations contained or set forth herein shall not in
any way be affected or impaired thereby, unless the foregoing inconsistent
action or the failure to take an action constitutes a material breach of this
Agreement or makes this Agreement impossible to perform, in which case this
Agreement shall terminate pursuant to Article 7. Except as otherwise
contemplated by this Agreement, to the extent that a party hereto took an action
inconsistent herewith or failed to take action consistent herewith or required
hereby pursuant to an order or judgment of a court or other competent
Governmental Authority, such party shall not incur any liability or obligation
unless such party breached its obligations under Section 5.9 or did not in good
faith seek to resist or object to the imposition or entering of such order or
judgment.
8.9 ASSIGNMENT.
(a) ASSIGNMENT BY XXXXXXXX. Neither this Agreement nor
any of the rights, interests or obligations hereunder shall be assigned by
Xxxxxxxx (whether by operation of law or otherwise) without the prior written
consent of the other parties.
(b) ASSIGNMENT BY PARENT. Within ten (10) business days
of the consummation of the Heftel Acquisition, Parent shall submit this
Agreement to Heftel and Heftel Sub for approval and execution of an agreement in
the form attached hereto as EXHIBIT 8.9 (the "ASSIGNMENT AGREEMENT") pursuant to
which Heftel and Heftel Sub will agree that the terms and provisions of this
Agreement relating to them shall be binding upon them as if Heftel and Heftel
Sub were original parties to this Agreement. Promptly after such submission, the
board of directors of each of Heftel and Heftel Sub shall, in their own
independent exercise of their respective fiduciary obligations, either approve
the Merger and submit the Heftel Proposal to the stockholders of Heftel for
approval and the Merger and this Agreement to the shareholders of Heftel Sub for
their approval, or reject the Merger, in which case this Agreement shall
terminate without liability to any party hereto except to the extent expressly
otherwise provided herein.
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Subject to the boards of directors of Heftel and Heftel Sub exercising their
respective fiduciary obligations with respect to their approval or rejection of
the Merger, the exercise of which shall be made solely by such boards of
directors, Parent shall use its reasonable efforts to cause Heftel and Heftel
Sub to consummate the Merger. Upon execution of the Assignment Agreement by
Heftel and Heftel Sub, all parties hereto shall be deemed to have accepted the
assumption of obligations and rights by Heftel and Heftel Sub and no other
action on the part of any such party is intended to be required; provided that
all parties hereto shall execute such instruments and otherwise provide such
cooperation as shall reasonably be requested by Parent to implement such
assignment. Subject to the foregoing, this Agreement will be binding upon, inure
to the benefit of and be enforceable by the parties and their respective
successors and permitted assigns.
8.10 INDEMNIFICATION FOR NEGLIGENCE. THE INDEMNITIES CONTAINED IN
SECTION 5.19(B) AND (C) SHALL EXTEND TO THE INDEMNIFIED PARTIES NOTWITHSTANDING
THE SOLE OR CONCURRENT NEGLIGENCE OF EVERY KIND OR CHARACTER WHATSOEVER, WHETHER
ACTIVE OR PASSIVE, WHETHER AN AFFIRMATIVE ACT OR AN OMISSION, INCLUDING WITHOUT
LIMITATION, ALL TYPES OF NEGLIGENT CONDUCT IDENTIFIED IN THE RESTATEMENT
(SECOND) OF TORTS OF ONE OR MORE OF THE INDEMNIFIED PARTES OR BY REASON OF
STRICT LIABILITY IMPOSED WITHOUT FAULT ON ANY ONE OR MORE OF THE INDEMNIFIED
PARTIES. TO THE EXTENT THAT AN INDEMNIFIED PARTY IS FOUND TO HAVE COMMITTED AN
ACT OF GROSS NEGLIGENCE OR WILFUL MISCONDUCT, THIS CONTRACTUAL OBLIGATION OF
INDEMNIFICATION SHALL CONTINUE BUT SHALL ONLY EXTEND TO THE PORTION OF THE CLAIM
THAT IS DEEMED TO HAVE OCCURRED BY REASON OF EVENTS OTHER THAN THE GROSS
NEGLIGENCE OR WILFUL MISCONDUCT OF THE INDEMNIFIED PARTY.
8.11 CONFIDENTIALITY AGREEMENTS. Any confidentiality agreement
between any of the parties hereto shall remain in full force and effect
following the execution of this Agreement until terminated as described in
Section 7.2, is hereby incorporated herein by reference and shall constitute a
part of this Agreement for all purposes; provided, however, that any standstill
provisions contained therein will, effective as of the Closing, be deemed to
have been waived to the extent necessary for the parties to consummate the
Merger in accordance with the terms of this Agreement.
8.12 WAIVERS. At any time prior to the Effective Time, the parties
hereto may, to the extent legally allowed, (a) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(b) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto, and (c) waive performance
of any of the covenants or agreements, or satisfaction of any of the conditions,
contained herein. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid only if set forth in a written instrument
signed on behalf of such party. Except as provided in this Agreement, no action
taken pursuant to this Agreement, including any investigation by or on behalf of
any party, shall be deemed to constitute a waiver by the party taking such
action of compliance with any representations, warranties, covenants or
agreements contained in this Agreement. The waiver by any party hereto of a
breach of any provision hereof shall not operate or be construed as a waiver of
any prior or subsequent breach of the same or any other provisions hereof.
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8.13 INCORPORATION. Exhibits and Schedules referred to herein are
attached to and by this reference incorporated herein for all purposes.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives, on the date first written
above.
"Xxxxxxxx" "Parent"
XXXXXXXX MEDIA SYSTEM, INC. CLEAR CHANNEL COMMUNICATIONS,
INC.
By:/s/ XXXXXXX X. XXXXXXXX, XX. By:/s/ X. XXXXX XXXX
-------------------------------- --------------------------------
Name: XxXxxxx X. Xxxxxxxx, Xx. Name: X. Xxxxx Xxxx
Title: President and Chief Title: President and Chief
Executive Officer Executive Officer
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EXHIBIT 1.1(A)
SECOND AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
HEFTEL BROADCASTING CORPORATION
1. Name. The name of the Corporation is Heftel Broadcasting
Corporation.
2. Registered Office. The address of its registered office in
the State of Delaware is Corporation Trust Center, 0000 Xxxxxx Xxxxxx, xx xxx
Xxxx xx Xxxxxxxxxx, Xxxxxx of New Castle. The name of its registered agent at
such address is The Corporation Trust Company.
3. Business. The nature of the business or purpose of the
Corporation is to engage in any lawful act or activity for which corporations
may be organized under the General Corporation Law of Delaware.
4. Capital Structure.
4.1 Authorized Shares. The total number of shares of
capital stock which the Corporation shall have authority to issue is
105,000,000 shares, consisting of three classes of capital stock:
(a) 50,000,000 shares of Class A Common Stock,
par value $.001 per share (the "Class A Shares");
(b) 50,000,000 shares of Class B Common Stock,
par value $.001 per share (the "Class B Shares" and, together with the Class A
Shares, the "Common Shares"); and
(c) 5,000,000 shares of Preferred Stock, par
value $.001 per share (the "Preferred Stock").
4.2 Designations, Preferences, etc.
(a) Preferred Stock. The Preferred Stock may be
issued in one or more series. The provisions of this Paragraph 4.2 are subject
to the provisions of Paragraph 5.10 hereof. The Corporation's Board of
Directors is authorized, subject to limitations prescribed by law, to provide
for the issuance of the shares of Preferred Stock in series, and by filing a
certificate pursuant to the applicable law of the State of Delaware, to
establish from time to time the number of shares to be included in each such
series, to determine the powers, designations, preferences and relative,
participating, optional or other special rights, including voting rights, and
the qualifications, limitations or restrictions thereof, of each series of
Preferred Stock and may increase or decrease the number of shares within each
such series; provided, however, that the Corporation's Board of Directors may
not decrease the number of
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shares within a series to less than the number of shares within such series
that are then outstanding and may not increase the number of shares within a
series above the total number of authorized shares of Preferred Stock for which
the powers, designations, preferences and rights have not otherwise been set
forth herein. The authority of the Board of Directors with respect to each
series shall include, but not be limited to, determination of the following:
(i) The number of shares constituting that series
and the distinctive designation of that series;
(ii) The dividend rate on the shares of that
series, whether dividends shall be cumulative, and, if so, from which date or
dates, and the relative rights of priority, if any, of payment of dividends on
shares of that series;
(iii) Whether that series shall have voting rights,
in addition to the voting rights provided by law, and, if so, the terms of such
voting rights;
(iv) Whether that series shall have conversion
privileges, and, if so, the terms and conditions of such conversion, including
provision for adjustment of the conversion rate in such events as the Board of
Directors shall determine;
(v) Whether or not the shares of that series
shall be redeemable, and if so, the terms and conditions of such redemption,
including the date or date upon or after which they shall be redeemable, and
the amount per share payable in case of redemption, which amount may vary under
different conditions and at different redemption dates;
(vi) Whether that series shall have a sinking fund
for the redemption or purchase of shares of that series, and, if so, the terms
and amount of such sinking fund; and
(vii) The rights of the shares of that series in
the event of voluntary or involuntary liquidation, dissolution or winding up of
the Corporation, and the relative rights of priority, if any, of payment of
shares of that series.
(b) Common Shares. The designations,
preferences, powers, qualifications and privileges of the Common Shares shall
be as set forth in Article Five below.
5. Common Shares.
5.1 Identical Rights. Except as herein otherwise
expressly provided in this Article Five, all Common Shares shall be identical
and shall entitle the holders thereof to the same rights and privileges.
5.2 Dividends.
(a) When, as, and if dividends are declared by
the Corporation's Board of Directors, whether payable in cash, property,
securities or rights of the Corporation or any other entity, the holders of
Common Shares shall be entitled to share equally in and to receive, in
accordance with the number of Common Shares held by each such holder, all such
dividends,
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except that if dividends are payable in Common Shares, such stock dividends
shall be payable at the same rate on each class of Common Shares and shall be
payable only in Class A Shares to holders of Class A Shares and in Class B
Shares to holders of Class B Shares.
(b) Dividends payable under this Paragraph 5.2
shall be paid to the holders of record of the outstanding Common Shares as
their names shall appear on the stock register of the Corporation on the record
date fixed by the Board of Directors in advance of declaration and payment of
each dividend. Any Common Shares issued as a dividend pursuant to this
Paragraph 5.2 shall, when so issued, be duly authorized, validly issued, fully
paid and non-assessable, and free of all liens and charges. The Corporation
shall not issue fractions of Common Shares on payment of such dividend but
shall issue a whole number of shares to such holder of Common Shares rounded up
or down in the Corporation's sole discretion to the nearest whole number,
without compensation to the stockholder whose fractional share has been rounded
down or from any stockholder whose fractional share has been rounded up.
5.3 Stock Splits. The Corporation shall not in any
manner subdivide (by any stock split, reclassification, stock dividend,
recapitalization or otherwise) or combine the outstanding shares of one class
of Common Shares unless the outstanding shares of all classes of Common Shares
shall be proportionately subdivided or combined.
5.4 Liquidation Rights. Upon any voluntary or
involuntary liquidation, dissolution or winding-up of the affairs of the
Corporation, after payment shall have been made to holders of outstanding
Preferred Stock, if any, of the full amount to which they are entitled pursuant
to this Second Restated Certificate of Incorporation and any resolutions that
may be adopted from time to time by the Corporation's Board of Directors (for
the purpose of fixing the designations, preferences, rights and restrictions of
any series of Preferred Stock), the holders of Common Shares shall be entitled
to share ratably in accordance with the number of Common Shares held by each
such holder, in all remaining assets of the Corporation available for
distribution among the holders of Common Shares, whether such assets are
capital, surplus or earnings. For purposes of this Paragraph 5.4, neither the
consolidation or merger of the Corporation with or into any other corporation
or corporations pursuant to which the stockholders of the Corporation receive
capital stock and/or other securities (including debt securities) of the
acquiring corporation (or of the direct or indirect parent corporation of the
acquiring corporation), nor the sale, lease or transfer by the Corporation of
all or any part of its assets, nor the reduction of the capital stock of the
Corporation, shall be deemed to be a voluntary or involuntary liquidation,
dissolution or winding up of the Corporation as those terms are used in this
Paragraph 5.4.
5.5 Voting Rights. The holders of the Class A Shares
shall vote on all matters submitted to a vote of the stockholders, with each
Class A Share entitled to one vote. The holders of Class B Shares shall have no
voting rights, except as provided in Paragraph 5.10 and as otherwise provided
by law. The holders of Common Shares are not entitled to cumulate votes in the
election of any directors.
5.6 No Preemptive or Subscription Rights. No holder of
Common Shares shall be entitled to preemptive or subscription rights.
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5.7 Conversion Rights.
(a) Automatic Conversion of Class B Shares. Each
Class B Share shall convert automatically into one fully paid and
non-assessable Class A Share upon its sale, gift or other transfer to a person
or entity other than Clear Channel Communications, Inc., a Texas corporation
("CCC") or an Affiliate of CCC (an "Event of Automatic Conversion"). For
purposes of this Article 5, an "Affiliate of CCC" shall mean (i) any
corporation of which CCC is, directly or indirectly, the beneficial owner of
50% or more of the combined voting power of all classes of equity securities,
(ii) any partnership, joint venture or unincorporated organization for which
CCC possesses, directly or indirectly, the power to direct or cause the
direction of the management and policies, whether through the ownership of
voting securities, by contract or otherwise or (iii) any person or other entity
that controls, is controlled by, or is under common control with CCC.
Notwithstanding anything to the contrary set forth
herein, any holder of Class B Shares may pledge his Class B Shares to a pledgee
pursuant to a bona fide pledge of such shares as collateral security for
indebtedness due to the pledgee without causing an automatic conversion into
Class A Shares. In the event of foreclosure or other similar action by a
pledgee, such pledged Class B Shares shall be converted automatically, without
any act or deed on the part of the Corporation or any other person, into Class
A Shares as provided in this Paragraph 5.7, unless such foreclosure or similar
action is taken by CCC or an Affiliate of CCC.
(b) Automatic Conversion Procedure. Promptly
upon the occurrence of an Event of Automatic Conversion, the holder of Class B
Shares shall surrender the certificate or certificates therefor, duly endorsed
in blank or accompanied by proper instruments of transfer, at the office of the
Corporation, or of any transfer agent for the Class A Shares, and shall give
written notice to the Corporation, at such office: (i) stating that the shares
are being converted pursuant to an Event of Automatic Conversion into Class A
Shares as provided in Paragraph 5.7(a), (ii) specifying the Event of Automatic
Conversion (and, if the occurrence of such event is within the control of the
transferor, stating the transferor's intent to effect an Event of Automatic
Conversion), (iii) identifying the number of Class B Shares being converted,
and (iv) setting out the name or names (with addresses) and denominations in
which the certificate or certificates for Class A Shares shall be issued and
shall include instructions for delivery thereof. Delivery of such notice
together with the certificates representing the Class B Shares shall obligate
the Corporation or its transfer agent to issue and deliver at such stated
address to such stated transferee a certificate or certificates for the number
of Class A Shares to which such transferee is entitled, registered in the name
of such transferee.
To the extent permitted by law, conversion pursuant
to an Event of Automatic Conversion shall be deemed to have been effected as of
the date on which the Event of Automatic Conversion occurred (such time being
the "Conversion Time"). The person entitled to receive the Class A Shares
issuable upon such conversion shall be treated for all purposes as the record
holder of such Class A Shares at and as of the Conversion Time, and the right
of such person as a holder of Class B Shares shall cease and terminate at and
as of the Conversion Time, in each case without regard to any failure by the
holder to deliver the certificates or the notice required by this subparagraph
(b).
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(c) Voluntary Conversion of Class B Shares. Each
Class B Share shall be convertible, at the option of its holder, into one fully
paid and non-assessable Class A Share at any time.
(d) Voluntary Conversion Procedure for Class B
Shares. At the time of a voluntary conversion, the holder of Class B Shares
shall deliver to the office of the Corporation or any transfer agent for the
Class A Shares (i) the certificate or certificates representing the Class B
Shares to be converted, duly endorsed in blank or accompanied by proper
instruments of transfer, and (ii) written notice to the Corporation stating
that such holder elects to convert such share or shares and stating the name
and addresses in which each certificate for Class A Shares is to be issued.
Conversion shall be deemed to have been effected at the close of business on
the date the Corporation received the Class B Shares to be converted and such
notice, and the person exercising such voluntary conversion shall be deemed to
be the holder of record of the number of Class A Shares issuable upon such
conversion at such time. The Corporation shall promptly deliver certificates
evidencing the appropriate number of Class A Shares to the person set forth in
the notice.
(e) Voluntary Conversion of Class A Shares. Each
Class A Share held by CCC or any Affiliate of CCC shall be convertible, at the
option of its holder, into one fully paid and non-assessable Class B Share at
any time.
(f) Voluntary Conversion Procedure for Class A
Shares. At the time of a voluntary conversion, the holder of Class A Shares
shall deliver to the office of the Corporation or any transfer agent for the
Class B Shares (i) the certificate or certificates representing the Class A
Shares to be converted, duly endorsed in blank or accompanied by proper
instruments of transfer, and (ii) written notice to the Corporation stating
that such holder elects to convert such share or shares and stating the name
and addresses in which each certificate for Class B Shares is to be issued.
Conversion shall be deemed to have been effected at the close of business on
the date the Corporation received the Class A Shares to be converted and such
notice, and the person exercising such voluntary conversion shall be deemed to
be the holder of record of the number of Class B Shares issuable upon such
conversion at such time. The Corporation shall promptly deliver certificates
evidencing the appropriate number of Class B Shares to the person set forth in
the notice.
(g) Unconverted Shares. In the event of the
conversion of less than all of the Class B Shares evidenced by a certificate
surrendered to the Corporation in accordance with the procedures of Paragraph
5.7(b) or 5.7(d), the Corporation shall execute and deliver to, or upon the
written order of the holder of such certificate, without charge to such holder,
a new certificate evidencing the number of Class B Shares not converted. In
the event of the conversion of less than all of the Class A Shares evidenced by
a certificate surrendered to the Corporation in accordance with the procedures
of Paragraph 5.7(f), the Corporation shall execute and deliver to, or upon the
written order of the holder of such certificate, without charge to such holder,
a new certificate evidencing the number of Class A Shares not converted.
(h) Reissue of Shares. Class B Shares that are
exchanged for Class A Shares as provided herein shall continue to be authorized
Class B Shares and available for reissue by the Corporation as determined by
the Board of Directors. Class A Shares that are
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exchanged for Class B Shares as provided herein shall continue to be authorized
Class A Shares and available for reissue by the Corporation as determined by
the Board of Directors.
(i) Reservation. The Corporation hereby reserves
and shall at all times reserve and keep available, out of its authorized and
unissued Class A Shares, for the purposes of effecting conversions, such number
of duly authorized Class A Shares as shall from time to time be sufficient to
effect the conversion of all outstanding Class B Shares. The Corporation
hereby reserves and shall at all times reserve and keep available, out of its
authorized and unissued Class B Shares, for the purposes of effecting
conversions, such number of duly authorized Class B Shares as shall from time
to time be sufficient to effect the conversion of all outstanding Class A
Shares. The Corporation covenants that all the Class A Shares or the Class B
Shares, as the case may be, so issuable shall, when so issued, be duly and
validly issued, fully paid and non-assessable, and free from liens and charges
with respect to the issue.
5.8 Consideration on Merger, Consolidation, etc. In any
merger, consolidation or business combination, the consideration to be received
per share by the holders of Class A Shares and Class B Shares must be identical
for each class of stock, except that in any such transaction in which shares of
common stock are to be distributed, such shares may differ as to voting rights
to the extent that voting rights now differ among the Class A Shares and the
Class B Shares.
5.9 Transfer of Class B Shares. If a holder of Class B
Shares desires to transfer Class B Shares to CCC or an Affiliate of CCC, such
holder shall deliver to the Secretary of the Corporation (a) the certificate or
certificates representing the Class B Shares, duly endorsed in blank or
accompanied by proper instruments of transfer and (b) written notice to the
Corporation stating that such holder elects to transfer such shares and stating
the name and addresses in which each certificate for Class B Shares is to be
issued. Class B Shares shall not be transferred on the books of the
Corporation until all of the conditions set forth in the foregoing clauses (a)
and (b) are satisfied.
5.10 Restrictions and Limitations. So long as CCC and any
Affiliate of CCC collectively own 20% of the outstanding Class A Shares
(calculated as if all Class B Shares owned, or deemed as owned, by CCC and any
Affiliate of CCC had been converted to outstanding Class A Shares), the
Corporation shall not, and shall not permit any subsidiary to, without the vote
or written consent by the holders of a majority of the Class B Shares voting as
a single class, with each Class B Share entitled to one vote:
(a) Effect any sale, lease, assignment, transfer
or other conveyance of all or substantially all of the assets of the
Corporation, or any merger or consolidation involving the Corporation where the
stockholders of the Corporation immediately prior to such merger or
consolidation do not own at least 50% of the capital stock of the surviving
entity immediately thereafter, or any reclassification or any recapitalization,
or any dissolution, liquidation, or winding up of the Corporation;
(b) Authorize, issue, or obligate itself to
issue, any shares of Preferred Stock;
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(c) Make or permit any amendment to the
Corporation's certificate of incorporation, as amended from time to time, that
adversely affects the rights of the holders of Class B Shares;
(d) Declare or pay any non-cash dividends on or
declare or make any other non-cash distribution, direct or indirect, on account
of the Common Shares or set apart any amount other than cash for any such
purpose; or
(e) Make or permit any amendment or modification
to any Article of the Corporation's certificate of incorporation, as amended
from time to time, concerning the Corporation's capital stock, including, but
not limited to, Article Four or Article Five hereof.
6. Existence. The Corporation is to have perpetual existence.
7. Bylaws. In furtherance and not in limitation of the powers
conferred by statute, the Board of Directors is expressly authorized to make,
alter or repeal the bylaws of the Corporation.
8. Elections, Meetings and Books. Elections of directors need
not be by written ballot unless the bylaws of the Corporation shall so provide.
Meetings of stockholders may be held within or without the State of Delaware,
as the bylaws may provide. The books of the Corporation may be kept (subject to
any provision contained in the statutes) outside the State of Delaware at such
place or places as may be designated from time to time by the board of
directors or in the bylaws of the Corporation.
9. Amendment. The Corporation reserves the right to amend,
alter, change or repeal any provision contained in this Second Amended and
Restated Certificate of Incorporation, in the manner now or hereafter
prescribed by statute, and all rights conferred upon stockholders herein are
granted subject to this reservation.
10. Limitation on Director Liability. No director shall be
personally liable to the Corporation or any of its stockholders for monetary
damages for breach of fiduciary duty as a director, except for liability (a)
for any breach of the director's duty of loyalty to the Corporation or its
stockholders, (b) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (c) under Section 174 of
the Delaware General Corporation Law, or (d) for any transaction from which the
director derived an improper personal benefit. If the Delaware General
Corporation Law hereafter is amended to authorize the further elimination or
limitation of the liability of directors, then the liability of a director of
the Corporation, in addition to the limitations on personal liability provided
herein, shall be limited to the fullest extent permitted by the amended
Delaware General Corporation Law. Any repeal or modification of this Article
shall be prospective only, and shall not adversely affect any limitation on the
personal liability of a director of the Corporation existing at the time of
such repeal or modification.
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11. Indemnification.
11.1 General. Each person who was or is made a party to
or threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative, including
a grand jury proceeding and an action by the Corporation (individually, a
"Proceeding") by reason of the fact that he or she, or a person of whom he or
she is the legal representative, is or was a director or officer of the
Corporation or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation or of a
partnership, joint venture, trust or other enterprise, including service with
respect to employee benefit plans, whether the basis of such proceeding is
alleged action in an official capacity as a director, officer, employee or
agent or in any other capacity while serving as a director, officer, employee
or agent, shall be indemnified and held harmless by the Corporation to the
fullest extent authorized by the Delaware General Corporation Law, as the same
exists or may hereafter be amended (but, in the case of any such amendment,
only to the extent that such amendment permits the Corporation to provide
broader indemnification rights than said law permitted the Corporation to
provide prior to such amendment), against all expense, liability and loss
(including attorneys' fees, judgments, fines, excise taxes under the Employee
Retirement Income Security Act of 1974 or penalties and amounts paid or to be
paid in settlement) reasonably incurred or suffered by such person in
connection with the Proceeding (collectively, "Covered Expenses") and such
indemnification shall continue as to the person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of his or
her heirs, executors and administrators; provided, however, that, except as
provided in Paragraph 11.2, the Corporation shall indemnify any such person
seeking indemnification in connection with a Proceeding (or part thereof)
initiated by such person only if such Proceeding (or part thereof) was
authorized by the Board of Directors of the Corporation. The right to
indemnification conferred in this Article shall be a contract right and shall
include the right to be paid by the Corporation the expenses incurred in
defending any such Proceeding in advance of its final disposition; provided,
however, that if required by the Delaware General Corporation Law, the payment
of such expenses incurred by a director or officer in his or her capacity as a
director or officer (and not in any other capacity in which service was or is
rendered by such person while a director or officer, including, without
limitation, service to an employee benefit plan) in advance of the final
disposition of a Proceeding shall be made only upon delivery to the Corporation
of an undertaking, by or on behalf of such director or officer, to repay all
amounts so advanced if it shall ultimately be determined that such director or
officer is not entitled to be indemnified under this Article or otherwise. The
Corporation may, by action of its Board of Directors, provide indemnification
to employees and agents of the Corporation with the same scope and effect as
the foregoing indemnification of directors and officers.
11.2 Failure to Pay Claims. If a claim under Paragraph
11.1 is not paid in full by the Corporation within thirty (30) days after the
Corporation has received a written claim, the claimant may at any time
thereafter bring suit against the Corporation to recover the unpaid amount of
the claim and, if successful in whole or part, the claimant shall be entitled
to be paid also the expense of prosecuting such claim. It shall be a defense
to any such action (other than an action brought to enforce a claim for
expenses incurred in defending any proceeding in advance of its final
disposition when the required undertaking, if any is required, has been
tendered to the Corporation) that the claimant has not met the standards of
conduct which make it permissible under the Delaware General Corporation Law
for the Corporation to indemnify
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the claimant for the amount claimed, but the burden of proving such defense
shall be on the Corporation. Neither the failure of the Corporation (including
its Board of Directors, independent legal counsel or its stockholders) to have
made a determination prior to the commencement of such action that
indemnification of the claimant is proper in the circumstances because he or
she has met the applicable standard of conduct set forth in the Delaware
General Corporation Law, nor an actual determination by the Corporation
(including its Board of Directors, independent legal counsel or its
stockholders) that the claimant has not met such applicable standard of
conduct, shall be a defense to the action or create a presumption that the
claimant has not met the applicable standard of conduct.
11.3 Not Exclusive. The right to indemnification and the
payment of expenses incurred in defending a Proceeding in advance of its final
disposition conferred in this Article 11 shall not be exclusive of any other
right which any person may have or hereafter acquire under any statute,
provision of this Second Amended and Restated Certificate of Incorporation,
bylaw, agreement, vote of stockholders or disinterested directors or otherwise.
11.4 Insurance. The Corporation may maintain insurance,
at its expense, to protect itself and any director, officer, employee or agent
of the Corporation or another corporation, partnership, joint venture, trust or
other enterprise against any Covered Expenses, whether or not the Corporation
would have the power to indemnify such person against such expense, liability
or loss under the Delaware General Corporation Law.
11.5 Definition of the Corporation. As used in this
Article, references to "the Corporation" shall include, in addition to the
resulting or surviving corporation, any constituent corporation absorbed in a
consolidation or merger which, if its separate existence had continued, would
have had power and authority to indemnify its directors, officers, employees
and agents, so that any person who is or was a director, officer, employee or
agent of such constituent corporation, or is or was serving at the request of
such constituent corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
shall stand in the same position under the provisions of this Article with
respect to the resulting or surviving corporation as he would have with respect
to such constituent corporation if its separate existence had continued.
11.6 Severability. If this Article or any portion hereof
shall be invalidated on any ground by any court of competent jurisdiction, then
the Corporation shall nevertheless indemnify each director, officer, employee
and agent of the Corporation as to any Covered Expenses to the fullest extent
permitted by any applicable portion of this Article that shall not have been
invalidated or by any other applicable law.
12. Participation of Non-Citizens. The following provisions are
included for the purpose of ensuring that control and management of the
Corporation remains with loyal citizens of the United States and/or
corporations formed under the laws of the United States or any of the states of
the United States, as required by the Communications Act of 1934, as the same
may be amended from time to time:
12.1 The Corporation shall not issue to "Aliens" (which
term shall include (a) a person who is a citizen of a country other than the
United States; (b) any entity organized under
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the laws of a government other than the government of the United States or any
state, territory or possession of the United States; (c) a government other
than the government of the United States or of any state, territory or
possession of the United States; and (d) a representative of, or an individual
or entity controlled by, any of the foregoing), either individually or in the
aggregate, in excess of 25% of the total number of shares of capital stock of
the Corporation outstanding at any time and shall seek not to permit the
transfer on the books of the Corporation of any capital stock to any Alien that
would result in Aliens holding in excess of 25% of the total number of shares
of capital stock of the Corporation then outstanding.
12.2 Notwithstanding Paragraph 12.1, no Alien or Aliens
shall be entitled to vote or direct or control the vote of more than 25% of (a)
the total number of shares of capital stock of the Corporation outstanding and
entitled to vote at any time and from time to time, or (b) the total voting
power of all shares of capital stock of the Corporation outstanding and
entitled to vote at any time and from time to time, generally, in the election
of directors.
12.3 The Board of Directors of the Corporation shall have
all powers necessary to implement the provisions of this Article 12.
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