1
EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
AMONG
CLEAR CHANNEL COMMUNICATIONS, INC.,
CCMM SUB, INC.
AND
THE XXXXXXXX GROUP, INC.
DATED AS OF OCTOBER 5, 2001
2
TABLE OF CONTENTS
PAGE
----
ARTICLE I THE MERGER ..................................................... 2
SECTION 1.1. The Merger .............................................. 2
SECTION 1.2. Closing ................................................. 2
SECTION 1.3. Effective Time .......................................... 2
SECTION 1.4. Effects of the Merger ................................... 2
SECTION 1.5. Certificate of Incorporation and Bylaws of the
Surviving Corporation .................................. 2
SECTION 1.6. Directors ............................................... 2
SECTION 1.7. Officers ................................................ 3
ARTICLE II EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES ........ 3
SECTION 2.1. Capital Stock of Merger Sub. ............................ 3
SECTION 2.2. Cancellation of Treasury Stock and Parent Owned Stock ... 3
SECTION 2.3. Conversion of Company Common Stock ...................... 3
SECTION 2.4. Exchange of Certificates ................................ 4
SECTION 2.5. Stock Transfer Books .................................... 6
ARTICLE III REPRESENTATIONS AND WARRANTIES OF COMPANY .................... 7
SECTION 3.1. Organization, Qualification, Etc. ....................... 7
SECTION 3.2. Capital Stock ........................................... 8
SECTION 3.3. Corporate Authority Relative to this Agreement; No
Violation .............................................. 9
SECTION 3.4. Reports and Financial Statements ........................ 10
SECTION 3.5. No Undisclosed Liabilities .............................. 10
SECTION 3.6. No Violation of Law ..................................... 10
SECTION 3.7. Environmental Laws and Regulations ...................... 10
SECTION 3.8. No Undisclosed Employee Benefit Plan Liabilities or
Severance Arrangements ................................. 11
SECTION 3.9. Absence of Certain Changes or Events .................... 14
SECTION 3.10. Investigations; Litigation .............................. 14
SECTION 3.11. Proxy Statement; Registration Statement; Other
Information ............................................ 14
SECTION 3.12. Tax Matters ............................................. 14
SECTION 3.13. Opinion of Financial Advisor ............................ 15
SECTION 3.14. Required Vote of Company Stockholders ................... 16
SECTION 3.15. Insurance ............................................... 16
SECTION 3.16. Real Property; Title; Valid Leasehold Interests ......... 16
SECTION 3.17. Collective Bargaining Agreements and Labor .............. 16
SECTION 3.18. Material Contracts ...................................... 16
SECTION 3.19. Takeover Statute ........................................ 17
SECTION 3.20. Transactions With Affiliates ............................ 17
SECTION 3.21. Intellectual Property ................................... 17
i
3
SECTION 3.22. Company FCC Licenses; Operation of Company
Licensed Facilities .................................... 18
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB ....... 20
SECTION 4.1. Organization, Qualification, Etc. ....................... 20
SECTION 4.2. Capital Stock ........................................... 20
SECTION 4.3. Corporate Authority Relative to This Agreement; No
Violation .............................................. 21
SECTION 4.4. Reports and Financial Statements ........................ 22
SECTION 4.5. No Undisclosed Liabilities .............................. 22
SECTION 4.6. No Violation of Law ..................................... 22
SECTION 4.7. Environmental Laws and Regulations ...................... 23
SECTION 4.8. Absence of Certain Changes or Events .................... 23
SECTION 4.9. Investigations; Litigation .............................. 23
SECTION 4.10. Proxy Statement; Registration Statement; Other
Information ............................................ 24
SECTION 4.11. Tax Matters ............................................. 24
ARTICLE V COVENANTS RELATING TO CONDUCT OF BUSINESS ...................... 25
SECTION 5.1. Conduct of Business by Company or Parent ................ 25
SECTION 5.2. Proxy Material; Registration Statement .................. 27
SECTION 5.3. Stockholders' Meeting ................................... 29
SECTION 5.4. Approvals and Consents; Cooperation ..................... 29
SECTION 5.5. Access to Information; Confidentiality .................. 30
SECTION 5.6. Affiliates .............................................. 30
SECTION 5.7. Rights Under Stock Plans ................................ 31
SECTION 5.8. Filings; Other Action ................................... 32
SECTION 5.9. Further Assurances ...................................... 35
SECTION 5.10. No Solicitation ......................................... 35
SECTION 5.11. Director and Officer Liability .......................... 37
SECTION 5.12. Accountants' "Comfort" Letters .......................... 39
SECTION 5.13. Additional Reports ...................................... 39
SECTION 5.14. Plan of Reorganization .................................. 39
SECTION 5.15. Conveyance Taxes; Fees .................................. 40
SECTION 5.16. Public Announcements .................................... 40
SECTION 5.17. Employee Benefits ....................................... 40
SECTION 5.18. Transaction Expenses and Termination Fee ................ 40
ARTICLE VI CONDITIONS TO THE MERGER ...................................... 41
SECTION 6.1. Conditions to the Obligations of each Party ............. 41
SECTION 6.2. Conditions to the Obligations of Parent and Merger Sub. . 42
SECTION 6.3. Conditions to the Obligations of Company ................ 43
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER ............................ 44
SECTION 7.1. Termination or Abandonment .............................. 44
SECTION 7.2. Effect of Termination ................................... 46
ii
4
ARTICLE VIII GENERAL PROVISIONS .......................................... 46
SECTION 8.1. Nonsurvival of Representations and Warranties;
Survival of Certain Covenants .......................... 46
SECTION 8.2. Notices ................................................. 46
SECTION 8.3. Counterparts ............................................ 47
SECTION 8.4. Entire Agreement; No Third-Party Beneficiaries .......... 47
SECTION 8.5. Assignment .............................................. 47
SECTION 8.6. Governing Law ........................................... 48
SECTION 8.7. Enforcement ............................................. 48
SECTION 8.8. Severability ............................................ 48
SECTION 8.9. Headings ................................................ 48
SECTION 8.10. Finders or Brokers ...................................... 48
SECTION 8.11. Amendment ............................................... 48
SECTION 8.12. Extension; Waiver ....................................... 48
SECTION 8.13. Procedure for Termination, Amendment, Extension or
Waiver ................................................. 49
iii
5
INDEX OF DEFINED TERMS
TERM DEFINED IN SECTION
---- ------------------
Acquisition Proposal ..................................... 5.10(a)
Affiliate ................................................ 3.1
Agreement ................................................ Preamble
Antitrust Divestiture Condition .......................... 5.8(b)
Benefit Plan ............................................. 3.8(a)
Business Combination ..................................... 5.10(c)
Certificate of Merger .................................... 1.3
Certificates ............................................. 2.4(b)
Closing Date ............................................. 1.2
Code ..................................................... Preamble
Communications Act ....................................... 3.3
Company .................................................. Preamble
Company Board Recommendation ............................. 5.3
Company Certificate of Incorporation ..................... 1.5(a)
Company Class B Stock .................................... Preamble
Company Common Stock ..................................... Preamble
Company Disclosure Letter ................................ Article III Introduction
Company Group ............................................ 3.12(a)
Company FCC Licenses ..................................... 3.22(a)
Company Filed SEC Reports ................................ 3.5
Company Licensed Facility ................................ 3.22(a)
Company LMA Facility ..................................... 3.22(b)
Company LMA Facility FCC Licenses ........................ 3.22(b)
Company Material Contracts ............................... 3.18(a)
Company Ordinary Common Stock ............................ Preamble
Company Representatives .................................. 5.10(a)
Company SEC Reports ...................................... 3.4
Company Special Meeting .................................. 5.3
Company Stockholder Approval ............................. 5.3
Confidentiality Agreement ................................ 5.5
Conversion Ratio ......................................... 2.3
Conveyance Taxes ......................................... 5.15
Current Employees ........................................ 5.17
DGCL ..................................................... 1.1
Effective Time ........................................... 1.3
Employee ................................................. 3.8(a)
Employee Stock Option Plan ............................... 3.2(a)
Environmental Laws ....................................... 3.7(a)
ERISA .................................................... 3.8(a)
ERISA Affiliate .......................................... 3.8(c)
ESPP ..................................................... 3.2(c)
Exchange Act ............................................. 3.3
i
6
Exchange Agent ........................................... 2.4(a)
Exchange Fund ............................................ 2.4(a)
FCC ...................................................... 3.3
FCC Divestiture Condition ................................ 5.8(c)
GAAP ..................................................... 3.4
Government Antitrust Entity .............................. 5.8(b)
Governmental Entity ...................................... 6.1(c)
HSR Act .................................................. 3.3
Indemnifiable Claim ...................................... 5.11(b)
Indemnitees .............................................. 5.11(b)
Indemnitee Costs ......................................... 5.11(b)
Indemnitee Expenses ...................................... 5.11(b)
Indemnity Agreement ...................................... 5.11(a)
Initial Period ........................................... 7.1
Intellectual Property .................................... 3.21(g)
interested stockholder ................................... 5.10(c)
Jacor .................................................... 4.2(j)
Knowledge ................................................ 3.7(b)
Liens .................................................... 3.1
Material Adverse Effect .................................. 3.1
Material Subsidiary ...................................... 5.10(a)
Merger ................................................... Preamble
Merger Consideration ..................................... 2.3
Merger Sub. .............................................. Preamble
NYSE ..................................................... 5.4(a)(ii)
Option ................................................... 5.7(a)
Parent ................................................... Preamble
Parent Common Stock ...................................... Preamble
Parent Disclosure Letter ................................. Article IV Introduction
Parent Filed SEC Reports ................................. 4.5
Parent Group ............................................. 4.11(a)
Parent Preferred Stock ................................... 4.2
Parent SEC Reports ....................................... 4.4
Pension Plan ............................................. 3.8(b)
person ................................................... 2.4(j)
Plans .................................................... 3.8(b)
Proxy Statement .......................................... 5.2(a)
Purchase Date ............................................ 5.7(c)
Registration Statement ................................... 5.2(a)
SEC ...................................................... 3.4
Securities Act ........................................... 3.1
Significant Subsidiary ................................... 3.1
Subsidiary ............................................... 3.1
Superior Proposal ........................................ 5.10(a)
Surviving Corporation .................................... 1.1
Taxes .................................................... 3.12(a)
ii
7
Tax Returns .............................................. 3.12(a)
Termination Fee .......................................... 5.18(c)
Transaction Expenses ..................................... 5.18(b)
Voting Agreements ........................................ Preamble
iii
8
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, dated October 5, 2001, is entered into
by and among Clear Channel Communications, Inc., a Texas corporation ("PARENT"),
CCMM Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of Parent
("MERGER SUB"), and The Xxxxxxxx Group, Inc., a Delaware corporation
("COMPANY").
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of Parent, Merger Sub and
Company have approved the acquisition of Company by Parent upon the terms and
subject to the conditions set forth in this Agreement and Plan of Merger,
including, without limitation, the exhibits attached hereto (collectively, this
"AGREEMENT");
WHEREAS, the respective Boards of Directors of Parent, Merger Sub and
Company have approved the merger of Merger Sub with and into Company as set
forth below (the "MERGER") upon the terms and subject to the conditions set
forth in this Agreement, whereby each issued and outstanding share of common
stock, par value $0.01 per share, of Company ("COMPANY ORDINARY COMMON STOCK")
and each issued and outstanding share of Class B common stock, par value $0.01
per share, of Company ("COMPANY CLASS B STOCK" and, together with Company
Ordinary Common Stock, "COMPANY COMMON STOCK"), other than shares owned directly
or indirectly by Parent, Merger Sub or Company, will be converted into shares of
common stock, par value $0.10 per share, of Parent ("PARENT COMMON STOCK") in
accordance with the provisions of Article II of this Agreement;
WHEREAS, as a condition and inducement to Parent's willingness to enter
into this Agreement, concurrently with the execution and delivery of this
Agreement, Parent and certain stockholders of Company are entering into voting
agreements dated as of the date of this Agreement (collectively, the "VOTING
AGREEMENTS") pursuant to which each such stockholder has agreed to, among other
things, (a) vote all the shares of Company Ordinary Common Stock held by it in
favor of the proposal to approve and adopt this Agreement and the Merger and (b)
in lieu of any damages to be paid by a stockholder to Parent, the payment to
Parent of a specified amount in connection with the consummation of certain
alternative transactions to the Merger;
WHEREAS, for federal income tax purposes, the Merger is intended to
qualify as a reorganization under the provisions of Section 368(a) of the United
States Internal Revenue Code of 1986, as amended (the "CODE");
WHEREAS, Merger Sub is a direct, wholly-owned subsidiary of Parent formed
solely for the purpose of effecting the Merger and will conduct no activity and
incur no liability or obligation other than as contemplated by this Agreement;
and
WHEREAS, Parent, Merger Sub and Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe certain conditions to the Merger.
1
9
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby,
Parent, Merger Sub and Company hereby agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1 The Merger. Upon the terms and subject to the conditions set
forth in this Agreement and the Delaware General Corporation Law (the "DGCL"),
Merger Sub will be merged with and into Company at the Effective Time of the
Merger. Following the Merger, the separate corporate existence of Merger Sub
will cease, and Company will continue as the surviving corporation (the
"SURVIVING CORPORATION") and will succeed to and assume all the rights and
obligations of Merger Sub in accordance with the DGCL.
SECTION 1.2 Closing. The closing of the Merger will take place at 10:00
a.m. on a date to be specified by the parties which will be no later than the
second business day after the satisfaction or waiver of the conditions set forth
in Article VI (other than those conditions that by their nature are to be
satisfied at the Closing, but subject to the satisfaction or waiver of such
conditions) (the "CLOSING DATE") at the offices of Akin, Gump, Strauss, Xxxxx &
Xxxx, L.L.P., 0000 Xxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000, unless
another date or place is agreed to in writing by the parties hereto.
SECTION 1.3 Effective Time. On the Closing Date, the parties will execute
and file in the office of the Secretary of State of Delaware a certificate of
merger (a "CERTIFICATE OF MERGER") executed in accordance with the DGCL and will
make all other filings or recordings, if any, required under DGCL. The Merger
will become effective at the time of filing of the Certificate of Merger, or at
such later time as is agreed upon by the parties hereto and set forth therein
(such time as the Merger becomes effective is referred to herein as the
"EFFECTIVE TIME").
SECTION 1.4 Effects of the Merger. The Merger will have the effects set
forth in the DGCL.
SECTION 1.5 Certificate of Incorporation and Bylaws of the Surviving
Corporation.
(a) Certificate of Incorporation. The Fourth Restated Certificate of
Incorporation of Company (the "COMPANY CERTIFICATE OF INCORPORATION") as in
effect immediately prior to the Effective Time will become the Certificate of
Incorporation of the Surviving Corporation after the Effective Time, and
thereafter may be amended as provided therein and as permitted by law and this
Agreement.
(b) Bylaws. The Bylaws of Merger Sub as in effect immediately prior
to the Effective Time will become the Bylaws of the Surviving Corporation after
the Effective Time, and thereafter may be amended as provided therein and as
permitted by law and this Agreement.
SECTION 1.6 Directors. The directors of Merger Sub immediately prior to
the Effective Time will become the directors of the Surviving Corporation, until
the earlier of their resignation or removal or until their respective successors
are duly elected and qualified, as the case may be.
2
10
SECTION 1.7 Officers. The officers of Company immediately prior to the
Effective Time will become the officers of the Surviving Corporation, until the
earlier of their resignation or removal or until their respective successors are
duly elected and qualified, as the case may be.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT
CORPORATIONS; EXCHANGE OF CERTIFICATES
SECTION 2.1 Capital Stock of Merger Sub. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holder of any
shares of Company Common Stock or any shares of capital stock of Merger Sub,
each share of common stock, par value $0.01 per share, of Merger Sub issued and
outstanding immediately prior to the Effective Time will be converted into and
become one fully paid and nonassessable share of common stock, par value $0.01
per share, of the Surviving Corporation, and such converted shares,
collectively, will represent all of the issued and outstanding capital stock of
the Surviving Corporation.
SECTION 2.2 Cancellation of Treasury Stock and Parent Owned Stock. As of
the Effective Time, by virtue of the Merger and without any action on the part
of the holder of any shares of Company Common Stock or any shares of capital
stock of Merger Sub, each share of Company Common Stock issued and held,
immediately prior to the Effective Time, in Company's treasury or by any of
Company's direct or indirect wholly-owned subsidiaries, and each share of
Company Common Stock that is owned by Parent, Merger Sub or any other direct or
indirect wholly-owned subsidiary of Parent, will automatically be cancelled and
retired and will cease to exist, and no consideration will be delivered in
exchange therefor.
SECTION 2.3 Conversion of Company Common Stock
(a) Merger Consideration. As of the Effective Time, by virtue of the
Merger and without any action on the part of the holder of any shares of Company
Common Stock or any shares of capital stock of Merger Sub, subject to this
Section 2.3 and Section 2.4(f), each share of Company Ordinary Common Stock and
each share of Company Class B Stock issued and outstanding immediately prior to
the Effective Time (other than shares to be cancelled in accordance with Section
2.2) will be converted into the right to receive 0.35 (the "CONVERSION RATIO")
duly authorized, validly issued, fully paid and nonassessable shares of Parent
Common Stock (together with the amount of cash in lieu of fractional shares
payable pursuant to Section 2.4(f), the "MERGER CONSIDERATION"); provided,
however, that, in any event, if between the date of this Agreement and the
Effective Time, the outstanding shares of Parent Common Stock will have been
changed into a different number of shares or a different class, by reason of any
stock dividend, subdivision, reclassification, recapitalization, split,
combination or exchange of shares, then the Conversion Ratio will be
correspondingly adjusted to the extent appropriate to reflect such stock
dividend, subdivision, reclassification, recapitalization, split, combination or
exchange of shares. As of the Effective Time, all such shares of Company Common
Stock will no longer be outstanding and will automatically be cancelled and
retired and will cease to exist, and each holder of a certificate or a
certificate which immediately prior to the Effective Time represented
outstanding shares of Company Common Stock will cease to have any rights with
respect thereto, except the right to receive the Merger Consideration.
3
11
SECTION 2.4 Exchange of Certificates.
(a) Exchange Agent. From and after the Effective Time, Parent will
make available to a bank or trust company designated by Parent and reasonably
satisfactory to Company (the "EXCHANGE AGENT"), for the benefit of the holders
of Company Common Stock for exchange in accordance with this Article II, through
the Exchange Agent, certificates evidencing such number of shares of Parent
Common Stock issuable to holders of Company Common Stock in the Merger pursuant
to Section 2.3 and an amount of cash payable to the holders of Company Common
Stock pursuant to Section 2.4(d) and Section 2.4(f) (such certificates for
shares of Parent Common Stock, together with any dividends or distributions with
respect thereto and cash in lieu of fractional shares as contemplated by Section
2.4(f), being hereinafter referred to as the "EXCHANGE FUND"). The Exchange
Agent will, pursuant to irrevocable instructions, deliver the Merger
Consideration contemplated to be issued pursuant to Section 2.3, together with
any dividends or distributions with respect thereto, and the cash in lieu of
fractional shares of Parent Common Stock to which such holders are entitled
pursuant to Section 2.4(f) hereof out of the Exchange Fund. Except as
contemplated by Section 2.4(g) hereof, the Exchange Fund will not be used for
any other purpose.
(b) Exchange Procedures. As promptly as practicable after the
Effective Time, Parent will cause the Exchange Agent to mail to each holder of a
certificate or certificates which immediately prior to the Effective Time
represented outstanding shares of Company Common Stock (the "CERTIFICATES") (i)
a letter of transmittal (which will be in customary form and will specify that
delivery will be effected, and risk of loss and title to the Certificates will
pass, only upon proper delivery of the Certificates to the Exchange Agent) and
(ii) instructions for use in effecting the surrender of the Certificates in
exchange for certificates evidencing shares of Parent Common Stock, together
with any dividends or distributions with respect thereto or cash in lieu of
fractional shares of Parent Common Stock to which such holder is entitled
pursuant to Section 2.4(f) hereof.
(c) Exchange of Certificates. Upon surrender to the Exchange Agent
of a Certificate for cancellation, together with such letter of transmittal,
duly executed and completed in accordance with the instructions thereto, and
such other documents as may be reasonably required pursuant to such
instructions, the holder of such Certificate will be entitled to receive in
exchange therefor a certificate representing that number of whole shares of
Parent Common Stock which such holder's shares of Company Common Stock have been
converted into pursuant to this Article II (and any cash in lieu of any
fractional shares of Parent Common Stock to which such holder is entitled
pursuant to Section 2.4(f) and any dividends or other distributions to which
such holder is entitled pursuant to Section 2.4(d)), and the Certificate so
surrendered will forthwith be cancelled. In the event of a transfer of ownership
of shares of Company Common Stock which is not registered in the transfer
records of Company, shares of Parent Common Stock, cash in lieu of any
fractional shares of Parent Common Stock to which such holder is entitled
pursuant to Section 2.4(f) and any dividends or other distributions to which
such holder is entitled pursuant to Section 2.4(d) may be issued to a transferee
if the Certificate representing such shares of Company Common Stock is presented
to the Exchange Agent, accompanied by all documents required to evidence and
effect such transfer and by evidence that any applicable stock transfer taxes
have been paid. Until surrendered as contemplated by this Section 2.4, each
Certificate will be deemed at all times after the Effective
4
12
Time to represent only the right to receive upon such surrender the number of
whole shares of Parent Common Stock into which the shares of Company Common
Stock formerly represented thereby have been converted, cash in lieu of any
fractional shares of Parent Common Stock to which such holder is entitled
pursuant to Section 2.4(f) and any dividends or other distributions to which
such holder is entitled pursuant to Section 2.4(d).
(d) Distributions with Respect to Unexchanged Shares of Parent
Common Stock. No dividends or other distributions declared or made after the
Effective Time with respect to Parent Common Stock with a record date after the
Effective Time will be paid to the holder of any unsurrendered Certificate with
respect to the shares of Parent Common Stock represented thereby, and no cash
payment in lieu of any fractional shares will be paid to any such holder
pursuant to Section 2.4(f), until the holder of such Certificate surrenders such
Certificate. Subject to the effect of escheat, tax or other applicable laws,
following surrender of any such Certificate, there will be paid to the holder of
the certificates representing whole shares of Parent Common Stock issued in
exchange therefor, without interest, (i) promptly, the amount of any cash
payable with respect to a fractional share of Parent Common Stock to which such
holder is entitled pursuant to Section 2.4(f) and the amount of dividends or
other distributions with a record date after the Effective Time and theretofore
paid with respect to such whole shares of Parent Common Stock, and (ii) at the
appropriate payment date, the amount of dividends or other distributions, with a
record date after the Effective Time but prior to surrender and a payment date
occurring after surrender, payable with respect to such whole shares of Parent
Common Stock.
(e) No Further Rights in Company Common Stock. All shares of Parent
Common Stock issued upon conversion of the shares of Company Common Stock in
accordance with the terms hereof (including cash paid pursuant to Section 2.4(d)
or Section 2.4(f)) will be deemed to have been issued in full satisfaction of
all rights pertaining to such shares of Company Common Stock.
(f) No Fractional Shares.
(i) No certificates or scrip representing fractional shares of
Parent Common Stock will be issued upon the surrender for exchange of
Certificates, no dividend or distribution of Parent will relate to such
fractional share interests and such fractional share interests will not entitle
the owner thereof to vote or to any rights of a stockholder of Parent.
(ii) In lieu of the issuance of certificates or scrip
representing fractional shares of Parent Common Stock, Parent will pay each
holder of Company Common Stock an amount in cash equal to the product obtained
by multiplying (A) the fractional share interest to which such holder (after
taking into account all shares of Company Common Stock held at the Effective
Time by such holder) would otherwise be entitled by (B) the average of the
closing prices for a share of Parent Common Stock as reported on the NYSE
Composite Transaction Tape (as reported in THE WALL STREET JOURNAL, or, if not
reported thereby, any other authoritative source) for the five trading days
immediately preceding the Closing Date.
(iii) As soon as practicable after the determination of the
amount of cash, if any, to be paid to holders of Company Common Stock with
respect to any fractional
5
13
share interests, the Exchange Agent will make available such amounts to such
holders of Company Common Stock subject to and in accordance with the terms of
Section 2.4(d).
(g) Termination of Exchange Fund. Any portion of the Exchange Fund
(including any shares of Parent Common Stock) which remains undistributed to the
holders of Company Common Stock for nine months after the Effective Time will be
delivered to Parent, upon demand, and any holders of Company Common Stock who
have not theretofore complied with this Article II will thereafter look only to
Parent for the Merger Consideration, any cash in lieu of fractional shares of
Parent Common Stock to which they are entitled pursuant to Section 2.4(f) and
any dividends or other distributions with respect to Parent Common Stock to
which they are entitled pursuant to Section 2.4(d).
(h) No Liability. None of the Exchange Agent, Parent nor the
Surviving Corporation will be liable to any holder of shares of Company Common
Stock for any such shares of Parent Common Stock (or dividends or distributions
with respect thereto) or cash delivered to a public official pursuant to any
abandoned property, escheat or similar law.
(i) Withholding Rights. Each of the Surviving Corporation and Parent
will be entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of shares of Company Common Stock such
amounts as it is required to deduct and withhold with respect to the making of
such payment under the Code, or any provision of state, local or foreign tax
law. To the extent that amounts are so withheld by the Surviving Corporation or
Parent, as the case may be, such withheld amounts will be treated for all
purposes of this Agreement as having been paid to the holder of the shares of
Company Common Stock in respect of which such deduction and withholding was made
by the Surviving Corporation or Parent, as the case may be.
(j) Lost Certificates. If any Certificate will have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required by
the Surviving Corporation, the posting by such person of a bond, in such
reasonable amount as the Surviving Corporation may direct, as indemnity against
any claim that may be made against it with respect to such Certificate, the
Exchange Agent will issue in exchange for such lost, stolen or destroyed
Certificate the Merger Consideration, any cash in lieu of fractional shares of
Parent Common Stock to which the holders thereof are entitled pursuant to
Section 2.4(f) and any dividends or other distributions to which the holders
thereof are entitled pursuant to this Agreement. For the purposes of this
Agreement, "PERSON" means any natural person, firm, individual, business trust,
trust, association, corporation, partnership, joint venture, company,
unincorporated entity or Governmental Entity.
SECTION 2.5 Stock Transfer Books. At the Effective Time, the stock
transfer books of Company will be closed and there will be no further
registration of transfers of shares of Company Common Stock thereafter on the
records of Company. From and after the Effective Time, the holders of
Certificates representing shares of Company Common Stock outstanding immediately
prior to the Effective Time will cease to have any rights with respect to such
shares of Company Common Stock, except as otherwise provided herein or by law.
On or after the Effective Time, any Certificates presented to the Exchange Agent
or Parent for any reason will be converted into the Merger Consideration, any
cash in lieu of fractional shares of Parent
6
14
Common Stock to which the holders thereof are entitled pursuant to Section
2.4(f) and any dividends or other distributions to which the holders thereof are
entitled pursuant to Section 2.4(d).
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF COMPANY
Except as set forth in the disclosure letter delivered by Company to
Parent on the date of this Agreement ("COMPANY DISCLOSURE LETTER"), Company
hereby represents and warrants to Parent and Merger Sub as follows:
SECTION 3.1 Organization, Qualification, Etc. Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has the corporate power and authority to own its
properties and assets and to carry on its business as it is now being conducted
and is duly qualified to do business and is in good standing in each
jurisdiction in which the ownership of its properties or the conduct of its
business requires such qualification, except for jurisdictions in which such
failure to be so qualified or to be in good standing would not, in the
aggregate, reasonably be expected to have a Material Adverse Effect on Company.
The copies of Company's charter and bylaws which have been made available for
inspection by Parent are complete and correct and in full force and effect on
the date of this Agreement. Each of Company's Subsidiaries is a corporation,
limited partnership or limited liability company duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation or organization, has the corporate, limited partnership or limited
liability company power and authority to own its properties and to carry on its
business as it is now being conducted, and is duly qualified to do business and
is in good standing in each jurisdiction in which the ownership of its property
or the conduct of its business requires such qualification, except for
jurisdictions in which such failure to be so qualified or to be in good standing
would not, in the aggregate, reasonably be expected to have a Material Adverse
Effect on Company. Company has made available for inspection by Parent true and
correct copies of the charter and bylaws of each significant Subsidiary (as
defined in Regulation S-X promulgated under the Securities Act of 1933, as
amended (the "SECURITIES ACT")) ("SIGNIFICANT SUBSIDIARY") and each such
organizational document is in full force and effect on the date of this
Agreement. All the outstanding shares of capital stock of, or other ownership
interests in, Company's Subsidiaries are validly issued, fully paid and
nonassessable and are owned by Company, directly or indirectly, free and clear
of any encumbrance, hypothecation, infringement, lien, mortgage, pledge,
restriction, security interest, title retention or other security arrangement,
or any adverse right or interest, charge or claim of any nature whatsoever of,
on, or with respect to any asset, property or property interest, not including
(i) liens for water and sewer charges and current taxes not yet due and payable
or being contested in good faith, (ii) mechanics', carriers', workers',
repairers', materialmen's, warehousemen's and other similar liens arising or
incurred in the ordinary course of business (iii) all liens approved in writing
by Parent or (iv) restrictions on transfer imposed by federal or state
securities laws ("LIENS"). There are no existing options, rights of first
refusal, preemptive rights, calls or commitments of any character relating to
the issued or unissued capital stock or other securities of, or other ownership
interests in, any Subsidiary of Company.
7
15
For purposes of this Agreement, "MATERIAL ADVERSE EFFECT" means, when used
in connection with Company or Parent, any change or effect that (i) is
materially adverse to the business, financial condition or results of operations
of such party and its Subsidiaries taken as a whole or (ii) substantially
impairs or delays the consummation of the transactions contemplated hereby;
provided, however, in either such event, "MATERIAL ADVERSE EFFECT" will not
include any change or effect that results from any legal, financial or other
effects on or to Company and its Subsidiaries taken as a whole, Parent and its
Subsidiaries taken as a whole, or their respective businesses taken as a whole,
that may arise from or are in any way related to: (A) any public or nonpublic
discussion initiated by or involving public officials, any announcement,
development, action or potential action, settlement, negotiation, legislation,
proposed or enacted, judicial decision, order, judgment or change in status of
any nature or type, which contemplates, proposes, threatens or results in any
voluntary or nonvoluntary cessation of or a legal ban or restrictions on the use
of the outdoor advertising services of any person, (including Company, Parent or
any of their respective Subsidiaries) by any person or group of persons seeking
to advertise tobacco products or products containing alcohol; (B) any economic
conditions affecting the outdoor advertising services industry as a whole; and
(C) any economic conditions affecting the radio industry as a whole.
For purposes of this Agreement, "AFFILIATE" of any person means another
person that directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with, such first person.
For purposes of this Agreement, "SUBSIDIARY" or "SUBSIDIARIES" of any
person means another person, an amount of the voting securities, other voting
ownership or voting partnership interests of which is sufficient to elect at
least a majority of its board of directors or other governing body (or, if there
are no such voting interests, 50% or more of the equity interests of which) is
owned directly or indirectly by such first person.
For purposes of this Agreement, with respect to any person, "KNOWLEDGE"
means the actual knowledge of the executive officers of such person.
SECTION 3.2 Capital Stock. The authorized stock of Company consists of
50,000,000 shares of Company Ordinary Common Stock and 11,406,510 shares of
Company Class B Stock. As of September 21, 2001, 24,078,472 shares of Company
Ordinary Common Stock and 11,020,622 shares of Company Class B Stock were issued
and outstanding. All the outstanding shares of Company Ordinary Common Stock and
Company Class B Stock have been validly issued and are fully paid and
nonassessable. As of September 21, 2001, there were no outstanding
subscriptions, options, warrants, rights or other arrangements or commitments
obligating Company to issue any shares of its stock other than:
(a) options or other rights to receive or acquire 612,000 shares of
Company Ordinary Common Stock pursuant to the Fifth Amended and Restated
Employees Stock Option Plan, as amended and restated in 2001 (the "EMPLOYEE
STOCK OPTION PLAN");
(b) rights to acquire the number of shares of Company Ordinary
Common Stock eligible to be purchased pursuant to the Non-employee-Directors'
Equity Compensation Plan; and
8
16
(c) rights to acquire the number of shares of Company Ordinary
Common Stock eligible to be purchased pursuant to payroll deductions under
Company's Employee Stock Purchase Plan (the "ESPP") for purchase periods ending
prior to the Closing Date.
Except for the issuance of shares of Company Ordinary Common Stock
pursuant to the options and other rights referred to in Section 3.2(a) and
Section 3.2(b) above and except as provided for in Section 5.1(a)(viii), since
December 31, 2000, no shares of Company Common Stock have been issued.
SECTION 3.3 Corporate Authority Relative to this Agreement; No Violation.
Company has the corporate power and authority to enter into this Agreement and
to carry out its obligations hereunder. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been
duly and validly authorized by the Board of Directors of Company and, except for
the approval of its stockholders, no other corporate proceedings on the part of
Company are necessary to authorize this Agreement and the transactions
contemplated hereby. As of the date of this Agreement, the Board of Directors of
Company has determined that the transactions contemplated by this Agreement are
advisable and in the best interest of its stockholders and to recommend to such
stockholders that they vote in favor thereof. This Agreement has been duly and
validly executed and delivered by Company and, assuming this Agreement has been
duly and validly executed and delivered by the other parties hereto, this
Agreement constitutes a valid and binding agreement of Company, enforceable
against Company in accordance with its terms (except insofar as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting creditors' rights generally, or by principles
governing the availability of equitable remedies). Company is not subject to or
obligated under any charter, bylaw or contract provision or any license,
franchise or permit, or subject to any order or decree, which would be breached
or violated by its executing or, subject to the approval of its stockholders,
carrying out this Agreement, except for any breaches or violations which would
not, in the case of any contract provision, license, franchise, permit, order or
decree, in the aggregate, reasonably be expected to have a Material Adverse
Effect on Company. Other than in connection with or in compliance with the
provisions of the DGCL, the Securities Act, the Securities Exchange Act of 1934,
as amended (the "EXCHANGE ACT"), the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended (the "HSR ACT"), applicable approvals of the Federal
Communications Commission (the "FCC") pursuant to the Communications Act of
1934, as amended, and any regulations promulgated thereunder (the
"COMMUNICATIONS ACT"), Section 4043 of ERISA, any other competition, antitrust
and investment laws and the securities or blue sky or antitrust laws of the
various states, and, other than the filing of the Certificate of Merger with the
Delaware Secretary of State and any necessary state filings to maintain the good
standing or qualification of the Surviving Corporation, no authorization,
consent or approval of, or filing with, any Governmental Entity is necessary for
the consummation by Company of the transactions contemplated by this Agreement,
except for such authorizations, consents, approvals or filings, the failure to
obtain or make which would not, in the aggregate, reasonably be expected to have
a Material Adverse Effect on Company; provided that Company makes no
representation with respect to such of the foregoing as are required by reason
of the regulatory status of Parent or any of its Subsidiaries or facts
specifically pertaining to any of them.
9
17
SECTION 3.4 Reports and Financial Statements. Since January 1, 1999,
Company has timely filed all material reports, registration statements and other
filings required to be filed by it with the U.S. Securities and Exchange
Commission (the "SEC") under the rules and regulations of the SEC (collectively,
the "COMPANY SEC REPORTS"). As of their respective dates, the Company SEC
Reports (i) complied as to form in all material respects with the applicable
requirements of the Securities Act, the Exchange Act and the rules and
regulations promulgated thereunder and (ii) 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 light of the
circumstances under which they were made, not misleading; provided, that the
foregoing clause (ii) will not apply to the financial statements included in
Company SEC Reports (which are covered by the following sentence). The audited
consolidated financial statements and unaudited consolidated interim financial
statements included in Company SEC Reports (including any related notes and
schedules) fairly present in all material respects the financial position of
Company and its consolidated Subsidiaries as of the dates thereof and the
results of operations and cash flows for the periods or as of the dates then
ended (subject, where appropriate, to normal year-end adjustments), in each case
in accordance with generally accepted accounting principles in the United States
("GAAP") consistently applied during the periods involved (except as otherwise
disclosed in the notes thereto and except that the unaudited financial
statements therein do not contain all of the footnote disclosures required by
GAAP).
SECTION 3.5 No Undisclosed Liabilities. Neither Company nor any of its
Subsidiaries has any liabilities or obligations of any nature, whether or not
accrued, contingent or otherwise, that would be required by GAAP to be reflected
on a consolidated balance sheet, except liabilities or obligations (a) reflected
in any of the Company SEC Reports filed and publicly available prior to the date
of this Agreement (as amended to the date of this Agreement, the "COMPANY FILED
SEC REPORTS"), (b) incurred since December 31, 2000 in the ordinary course of
business in accordance with past practice or (c) which would not, in the
aggregate, reasonably be expected to have a Material Adverse Effect on Company.
SECTION 3.6 No Violation of Law. The businesses of Company and its
Subsidiaries are not being conducted in violation of any law, ordinance or
regulation of any Governmental Entity applicable to them (provided that no
representation or warranty is made in this Section 3.6 with respect to
Environmental Laws which are dealt with exclusively in Section 3.7) except (a)
as described in any of the Company Filed SEC Reports and (b) for violations
which would not, in the aggregate, reasonably be expected to have a Material
Adverse Effect on Company. Company and its Subsidiaries have all permits,
licenses and governmental authorizations material to ownership or occupancy of
their respective properties and assets and the carrying on of their respective
businesses, except for such permits, licenses and governmental authorizations
the failure of which to have would not, in the aggregate, reasonably be expected
to have a Material Adverse Effect on Company.
SECTION 3.7 Environmental Laws and Regulations. The representations and
warranties set forth in this Section 3.7 will be the exclusive representations
and warranties of Company with respect to the subject matter hereof. Except as
described in any of the Company Filed SEC Reports, and except as would not, in
the aggregate, reasonably be expected to have a Material Adverse Effect on
Company:
10
18
(a) Compliance with Laws. Company and each of its Subsidiaries is in
material compliance with all applicable federal, state, local and foreign laws
and regulations currently in effect relating to pollution or protection of human
health or the environment (including, without limitation, ambient air, surface
water, ground water, land surface or subsurface strata) (collectively,
"ENVIRONMENTAL LAWS"), which compliance includes, but is not limited to, the
possession by Company and its Subsidiaries of material permits and other
governmental authorizations required under applicable Environmental Laws, and
compliance with the terms and conditions thereof;
(b) Environmental Actions. Neither Company nor any of its
Subsidiaries has received written notice of, nor, to the Knowledge of Company,
is Company the subject of, any pending actions, causes of action, claims,
investigations, demands or notices by any person alleging liability under or
noncompliance with any Environmental Law or that Company or any Subsidiary is a
potentially responsible party at any Superfund site or state-equivalent site;
(c) No Hazardous Substances. To the Knowledge of Company, there are
no hazardous or toxic substances or materials (as those terms are defined by
applicable Environmental Laws) at a concentration or level which requires
remedial action under any Environmental Law at, on, under or in any real
property currently or formerly owned or leased by Company or any Subsidiary;
(d) Material Compliance. To the Knowledge of Company, there are no
circumstances that are reasonably likely to prevent or interfere with material
compliance with Environmental Laws by Company or its Subsidiaries in the future;
(e) No Disposal or Release. To the Knowledge of Company, Company and
its Subsidiaries have not disposed of or released hazardous or toxic substances
or materials (as those terms are defined by applicable Environmental Laws) at a
concentration or level which requires remedial action under any Environmental
Law at any real property currently owned by or leased to Company or any
Subsidiary or at any other real property; and
(f) No Environmental Indemnification. Neither Company nor its
Subsidiaries have agreed in writing to indemnify any predecessor or other party
with respect to any environmental liability, other than customary indemnity
provisions contained in agreements entered into in the ordinary course of
business.
SECTION 3.8 No Undisclosed Employee Benefit Plan Liabilities or Severance
Arrangements.
(a) Employee Benefit Plans. Each plan, program, policy, contract,
agreement or other arrangement providing for severance, termination pay, stock
or stock related awards, change in control, employment agreement, deferred
compensation or other employee benefits of any kind, whether formal or informal,
funded or unfunded, written or oral, including, without limitation, each
"EMPLOYEE BENEFIT PLAN," within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended and any regulations
promulgated or proposed thereunder ("ERISA") (each a "BENEFIT PLAN") is listed
in Section 3.8(a) of the Company Disclosure Letter other than any Benefit Plan
which has an annual cost of less than
11
19
fifty thousand dollars ($50,000). True and complete copies of all (i) Benefit
Plans, including, but not limited to, any trust instruments and insurance
contracts forming a part of any Benefit Plans, and all amendments thereto; (ii)
the most recent reports (Series 5500 and all schedules thereto), if any,
required under ERISA or the Code in connection with each Benefit Plan or related
trust; (iii) the most recent determination letters received from the Internal
Revenue Service, if any, for each Benefit Plan and related trust which is
intended to satisfy the requirements of Section 401(a) of the Code; (iv) the
most recent summary plan description together with the most recent summary of
material modifications, if any, required under ERISA with respect to each
Benefit Plan; and (v) all material communications to any current, former, or
retired employee, officer, consultant, independent contractor, agent or director
of Company or any Subsidiary ("EMPLOYEE") relating to each Benefit Plan have
been provided or made available to Parent.
(b) Compliance. All employee benefit plans covering Employees other
than "MULTIEMPLOYER PLANS" within the meaning of Section 3(37) of ERISA (the
"Plans"), to the extent subject to ERISA, are in material compliance with ERISA,
the Code, and all other applicable law. Each Plan which is an "EMPLOYEE PENSION
BENEFIT PLAN" within the meaning of Section 3(2) of ERISA ("PENSION PLAN") and
which is intended to be qualified under Section 401(a) of the Code, has received
a favorable determination letter from the Internal Revenue Service with respect
to "TRA" (as defined in Section 1 of Rev. Proc. 93-39), and Company has no
Knowledge of any circumstances likely to result in revocation of any such
favorable determination letter. There is no material pending or, to the
Knowledge of Company, threatened litigation relating to the Plans. Neither
Company nor any of its Subsidiaries has engaged in a transaction with respect to
any Plan that, assuming the taxable period of such transaction expired as of the
date of this Agreement, could subject Company or any Subsidiary to a tax or
penalty imposed by either Section 4975 of the Code or Section 502(i) of ERISA in
an amount which would be material.
(c) No Liabilities. No liability under Subtitle C or D of Title IV
of ERISA has been or is expected to be incurred by Company or any Subsidiary
with respect to any ongoing, frozen or terminated "SINGLE-EMPLOYER PLAN," within
the meaning of Section 4001(a)(15) of ERISA currently or formerly maintained by
any of them, or a single employer plan of any entity which is considered one
employer with Company under Section 4001 of ERISA or Section 414 of the Code (an
"ERISA AFFILIATE"). No "ACCUMULATED FUNDING DEFICIENCY" as defined in Section
412 of the Code (whether or not waived) has been incurred with respect to any
ongoing, frozen or terminated single-employer plan maintained by Company, its
Subsidiaries or any ERISA Affiliates that has not been satisfied in full.
Neither Company nor any of its subsidiaries has provided, or is required to
provide, security to any Pension Plan or to any single-employer plan of an ERISA
Affiliate pursuant to Section 401(a)(29) of the Code. Under each Pension Plan
which is a single-employer plan, as of the last day of the most recent plan year
ended prior to the date hereof, the actuarially determined present value of all
"BENEFIT LIABILITIES", within the meaning of Section 4001(a)(16) of ERISA (as
determined on the basis of the actuarial assumptions contained in the Plan's
most recent actuarial valuation), did not exceed the then current value of the
assets of such Plan, and there has been no material change in the financial
condition of such Plan since the last day of the most recent plan year. Company
and its Subsidiaries have not incurred and do not expect to incur any withdrawal
liability with respect to a multiemployer plan under Subtitle E of Title IV of
ERISA. The withdrawal liability of Company and its Subsidiaries under each
Benefit Plan which is a multiemployer plan to which
12
20
Company or any of its Subsidiaries has contributed during the preceding 12
months, determined as if a "COMPLETE WITHDRAWAL" within the meaning of Section
4203 of ERISA had occurred as of the date hereof, would not, in the aggregate,
reasonably be expected to have a Material Adverse Effect on Company. No notice
of a "REPORTABLE EVENT", within the meaning of Section 4043 of ERISA for which
the 30-day reporting requirement has not been waived, has been required to be
filed for any Plans or by any ERISA Affiliate within the 12-month period ending
on the date hereof or will be required to be filed in connection with the
transactions contemplated by this Agreement.
(d) Contributions. All contributions required to be made under the
terms of any Benefit Plan have been timely made or have been reflected on the
Company Filed SEC Reports in all material respects.
(e) Retiree Obligations. Neither Company nor any of its Subsidiaries
has any obligations for retiree health and life benefits under any Benefit Plan.
(f) No Severance, Acceleration or Violation. The consummation of the
transactions contemplated by this Agreement will not (x) entitle any Employees
to severance pay, (y) accelerate the time of payment or vesting or trigger any
payment or funding (through a grantor trust or otherwise) of compensation or
benefits under, increase the amount payable or trigger any other material
obligation pursuant to, any of the Benefit Plans or (z) result in any breach or
violation of, or a default under, any of the Benefit Plans.
(g) Excess Parachute Payments. Any amount that could be received
(whether in cash, property, or vesting of property) as a result of the
transactions contemplated by this Agreement (or their termination of service) by
any officer, director, employee or independent contractor of Company or any of
its Subsidiaries, who is a "DISQUALIFIED INDIVIDUAL" (as defined in proposed
Treasury Regulation Section 1.280G-1), under any employment arrangement or
Benefit Plan would not be characterized as an "EXCESS PARACHUTE PAYMENT" (as
defined in Section 280G of the Code).
(h) Non-U.S. Employees. No Benefit Plan has ever been maintained
primarily or exclusively for the benefit of Employees who are not citizens or
residents of the United States.
(i) Compliance. Except as would not, in the aggregate, reasonably be
expected to have a Material Adverse Effect on Company, each of Company and its
Subsidiaries (i) has correctly categorized all Employees as either employees or
independent contractors for federal tax purposes, and is in compliance with all
applicable federal, state and local laws, rules and regulations (domestic and
foreign) respecting their employment, employment practices, labor, terms and
conditions of employment and wages and hours, in each case, with respect to
Employees; (ii) has withheld all amounts required by law or by agreement to be
withheld from the wages, salaries and other payments to Employees; (iii) is not
liable for any arrears of wages or any taxes or any penalty for failure to
comply with any of the foregoing; (iv) is not liable for any payment to any
trust or other fund or to any governmental or administrative authority, with
respect to unemployment compensation benefits, social security or other benefits
for Employees; and (v) has provided Employees with the benefits to which they
are entitled pursuant to the terms of all Benefit Plans.
13
21
(j) No Prepayment or Prefunding. Company has not prepaid or
prefunded any material welfare plan through a trust, reserve, premium
stabilization or similar account, other than pursuant to any insurance contract
which does not include a "FUND" as defined in Sections 419(e)(3) and (4) of the
Code.
SECTION 3.9 Absence of Certain Changes or Events. Except as disclosed in
the Company Filed SEC Reports or as required or permitted by this Agreement,
since December 31, 2000, the businesses of Company and its Subsidiaries have
been conducted in all material respects in the ordinary course and from such
date to the date of this Agreement there has not been any event, occurrence,
development or state of circumstances or facts that would, in the aggregate,
reasonably be expected to have a Material Adverse Effect on Company. Since
December 31, 2000, no dividends or distributions have been declared or paid on
or made with respect to the shares of capital stock or other equity interests of
Company or its Subsidiaries nor have any such shares been repurchased or
redeemed, other than dividends or distributions paid to Company or a Subsidiary.
SECTION 3.10 Investigations; Litigation. Except as described in any of the
Company Filed SEC Reports:
(a) No Governmental Investigation. To the Knowledge of Company, no
investigation or review by any Governmental Entity with respect to Company or
any of its Subsidiaries which would, in the aggregate, reasonably be expected to
have a Material Adverse Effect on Company is pending nor has any Governmental
Entity notified Company in writing of an intention to conduct the same; and
(b) No Actions. There are no actions, suits or proceedings pending
(or, to Company's Knowledge, threatened) against or affecting Company or its
Subsidiaries, or any of their respective properties at law or in equity, or
before any federal, state, local or foreign Governmental Entity which would, in
the aggregate, reasonably be expected to have a Material Adverse Effect on
Company.
SECTION 3.11 Proxy Statement; Registration Statement; Other Information.
None of the information with respect to Company or its Subsidiaries to be
included in the Proxy Statement or the Registration Statement will, in the case
of the Proxy Statement or any amendments thereof or supplements thereto, at the
time of the mailing of the Proxy Statement or any amendments or supplements
thereto, and at the time of the Company Special Meeting, or, in the case of the
Registration Statement, at the time it becomes effective or at the time of any
post-effective amendment, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading, except that no representation is made by Company
with respect to information supplied in writing by Parent or any Affiliate of
Parent specifically for inclusion in the Proxy Statement. The Proxy Statement
will comply as to form in all material respects with the provisions of the
Exchange Act and the rules and regulations promulgated thereunder.
SECTION 3.12 Tax Matters.
14
22
(a) Company Group Tax Returns. All federal, state, local and foreign
returns, reports or similar statements (including the attached schedules)
required to be filed with respect to any Tax, including, without limitation, any
information return, claim for refund, amended return or declaration of estimated
Tax ("TAX RETURNS") required to be filed by or on behalf of Company, each of its
Subsidiaries, and each affiliated, combined, consolidated or unitary group of
which Company or any of its Subsidiaries is a member (a "COMPANY GROUP") have
been timely filed or requests for extensions of time to file such returns or
reports have been timely filed and granted and have not expired, and all Tax
Returns filed are complete and accurate, except to the extent any failure to
file or any inaccuracies in filed Tax Returns would not, in the aggregate,
reasonably be expected to have a Material Adverse Effect on Company. Any and all
federal, state, local, foreign or other taxes of any kind (together with any and
all interest, penalties, additions to tax and additional amounts imposed with
respect thereto) imposed by any taxing authority, including, without limitation,
taxes or other charges on or with respect to income, franchises, windfall or
other profits, gross receipts, property, sales, use, transfer, capital stock,
payroll, employment, social security, workers' compensation, unemployment
compensation, or net worth, and taxes or other charges in the nature of excise,
withholding, ad valorem or value added ("TAXES") due and owing by Company, any
Subsidiary of Company or any Company Group have been paid, or adequately
reserved for, except to the extent any failure to pay or reserve would not, in
the aggregate, reasonably be expected to have a Material Adverse Effect on
Company. There is no audit examination, deficiency assessment, refund
litigation, proposed adjustment or matter in controversy with respect to any
Taxes due and owing by Company, any Subsidiary of Company or any Company Group,
nor has Company or any Subsidiary of Company filed any waiver of the statute of
limitations applicable to the assessment or collection of any Tax, in each case,
which would, in the aggregate, reasonably be expected to have a Material Adverse
Effect on Company. All assessments for Taxes due and owing by Company, any
Subsidiary of Company or any Company Group with respect to completed and settled
examinations or concluded litigation have been paid. Neither Company nor any
Subsidiary of Company is a party to any tax indemnity agreement, tax sharing
agreement or other agreement under which Company or any Subsidiary of Company
could become liable to another person as a result of the imposition of a Tax
upon any person, or the assessment or collection of such a Tax, except for such
agreements as would not, in the aggregate, reasonably be expected to have a
Material Adverse Effect on Company. As soon as practicable after the public
announcement of the Agreement, Company will provide Parent with written
schedules of (i) the taxable years of Company for which the statutes of
limitations with respect to federal income Taxes have not expired, and (ii) with
respect to federal income Taxes, those years for which examinations have been
completed, those years for which examinations are presently being conducted, and
those years for which examinations have not yet been initiated. Company and each
of its Subsidiaries has complied in all material respects with all rules and
regulations relating to the withholding of Taxes, except to the extent any such
failures to comply would not, in the aggregate, reasonably be expected to have a
Material Adverse Effect on Company.
(b) Tax-Free Reorganization. Neither Company nor any of its
Subsidiaries knows of any fact or has taken, or failed to take, any action that
could prevent the Merger from qualifying as a reorganization within the meaning
of Section 368(a) of the Code.
SECTION 3.13 Opinion of Financial Advisor. The Board of Directors of
Company has received the opinion of Credit Suisse First Boston dated the date of
this
15
23
Agreement, to the effect that, as of such date, the Conversion Ratio is fair to
the holders of Company Ordinary Common Stock from a financial point of view. A
copy of the written opinion of Credit Suisse First Boston will be delivered to
Parent as soon as practicable after the date of this Agreement.
SECTION 3.14 Required Vote of Company Stockholders. The affirmative vote
of the holders of a majority of the voting power of the outstanding shares of
Company Common Stock (with the holders of Company Ordinary Common Stock and the
holders of Company Class B Common Stock voting together as a single class) is
required to approve the Merger. No other vote of the stockholders of Company is
required by law, the Company Certificate of Incorporation or Bylaws of Company
or otherwise in order for Company to consummate the Merger and the transactions
contemplated hereby.
SECTION 3.15 Insurance. Company and its Subsidiaries have insurance
policies, including without limitation fire, casualty and other liability
insurance policies, that are customary for the industry in which it operates and
such policies are in full force and effect, except for the failure to have or
maintain in full force and effect such policies as would not, in the aggregate,
reasonably be expected to have a Material Adverse Effect on Company.
SECTION 3.16 Real Property; Title; Valid Leasehold Interests. Company has
previously provided or made available to Parent a true and complete list of all
real property owned by Company or its Subsidiaries which is material to the
business of Company and its Subsidiaries taken as a whole. Company or its
Subsidiaries have good and marketable title to all such properties except where
the failure to have such title would not, in the aggregate, reasonably be
expected to have a Material Adverse Effect on Company. With respect to all
leases for the use or occupancy of real estate owned by a third party to which
Company or a Subsidiary is a party, such leases are in full force and effect as
of the date of this Agreement, and no party thereto is in default or breach
under any such lease except, in each case, as would not, in the aggregate,
reasonably be expected to have a Material Adverse Effect on Company.
SECTION 3.17 Collective Bargaining Agreements and Labor. Company has
previously provided or made available to Parent all labor or collective
bargaining agreements which pertain to a material number of the employees of
Company and its Subsidiaries. There are no pending complaints, charges or claims
against Company or its Subsidiaries filed with any public or governmental
authority, arbitrator or court based upon the employment or termination by
Company of any individual, except for such complaints, charges or claims which
if adversely determined would not, in the aggregate, reasonably be expected to
have a Material Adverse Effect on Company. Further, there is no outstanding
demand, and to the Knowledge of Company, no threat exists which would reasonably
be expected to give rise to a demand, for recognition with respect to any
Company employee by any labor organization.
SECTION 3.18 Material Contracts.
(a) Material Contracts. Neither Company nor any of its Subsidiaries
has entered into any contract, agreement or other document or instrument (other
than this Agreement) that is currently in effect and requires the remaining
payment (regardless of the nature of such payment) over the term of such
contract, agreement or other document or instrument (including, without
16
24
limitation, during any automatic renewal periods) in excess of one million
dollars ($1,000,000) (a "COMPANY MATERIAL CONTRACT") or any material amendment,
modification or waiver under any Company Material Contract (other than any such
amendments, modifications or waivers entered into following the date of this
Agreement in connection with the transactions contemplated hereby).
(b) Enforceability of Material Contracts. Each of the Company
Material Contracts is valid and enforceable against Company in accordance with
its terms, and there is no default under any Company Material Contracts either
by Company or any of its Subsidiaries which is a party to such Company Material
Contracts or, to the Knowledge of Company, by any other party thereto, and no
event has occurred that with the lapse of time or the giving of notice or both
would constitute a default thereunder by Company or, to the Knowledge of
Company, any other party thereto. Neither Company nor any Subsidiary of Company
has received any written notice of default or termination under any Company
Material Contract.
SECTION 3.19 Takeover Statute. The Board of Directors of Company has
approved this Agreement and the transactions contemplated hereby (including the
execution and delivery of the Voting Agreement) and, such approval constitutes
approval of the Merger and the other transactions contemplated hereby (including
the execution and delivery of the Voting Agreement) by the Board of Directors of
Company under the provisions of Section 203 of the DGCL such that Section 203 of
the DGCL does not apply to this Agreement and the transactions contemplated
hereby. To the Knowledge of Company, no other state takeover statute is
applicable to the Merger or the other transactions contemplated hereby.
SECTION 3.20 Transactions With Affiliates. Other than the transactions
contemplated by this Agreement or except to the extent disclosed in the Company
Filed SEC Reports, there have been no transactions, agreements, arrangements or
understandings between Company or its Subsidiaries, on the one hand, and
Company's Affiliates (other than Subsidiaries of Company) or any other person,
on the other hand, that would be required to be disclosed under Item 404 of
Regulation S-K under the Securities Act.
SECTION 3.21 Intellectual Property. Except as would not, in the aggregate,
reasonably be expected to have a Material Adverse Effect on Company:
(a) Ownership of Intellectual Property. Company and each of its
Subsidiaries owns and possesses all right, title and interest in and to, or is
licensed to use (in each case, free and clear of any Liens), all Intellectual
Property necessary for the operation of its business as currently conducted, all
items of such Intellectual Property are valid, subsisting and enforceable, and
Company is unaware of any fact which, individually or in the aggregate, could
reasonably be determined to detrimentally affect the validity, ownership or
enforceability of such items of Intellectual Property;
(b) No Violation by Company. To Company's Knowledge, the activities
of Company and its Subsidiaries, including the operation of Company's business
as currently conducted by Company and its Subsidiaries, do not infringe or
otherwise violate the Intellectual Property rights of any person and are in
accordance in all material respects with any applicable
17
25
license pursuant to which Company or any Subsidiary acquired the right to use
any applicable Intellectual Property;
(c) No Violation by Third Parties. To the Knowledge of Company, no
person is challenging, infringing or otherwise violating any material right of
Company or any of its Subsidiaries with respect to any Intellectual Property
owned or used by Company or its Subsidiaries;
(d) No Claims. Neither Company nor any of its Subsidiaries has
received any written notice of any pending claim with respect to any
Intellectual Property owned or used by Company and its Subsidiaries and no
action is pending in any administrative or judicial proceeding with respect to
any Intellectual Property owned by Company and its Subsidiaries;
(e) No Abandonment. To the Knowledge of Company, no Intellectual
Property owned by Company or its Subsidiaries is being used or enforced in a
manner that may result in the abandonment, cancellation or unenforceability of
such Intellectual Property, except with respect to any such Intellectual
Property which Company or any of its Subsidiaries has decided in its reasonable
business judgment to abandon or permit to be cancelled;
(f) No Judgments. To the Knowledge of Company, no item of
Intellectual Property owned by Company is subject to any outstanding order,
judgment or decree; and
(g) Definition of Intellectual Property. For purposes of this
Agreement, "INTELLECTUAL PROPERTY" will mean trademarks, service marks, brand
names, trade dress, logos, trade names, domain names, corporate names and other
indications of origin, the goodwill associated with the foregoing and
registrations in any jurisdiction of, and applications in any jurisdiction to
register, the foregoing, including any extension, modification or renewal of any
such registration or application; inventions, discoveries, designs and ideas,
whether patentable or not, in any jurisdiction; patents, applications for
patents (including, without limitation, divisions, continuations, continuations
in part and renewal applications), and any renewals, extensions, reexaminations
or reissues thereof, in any jurisdiction; design registrations and applications,
in any jurisdiction; nonpublic information, trade secrets and confidential
information (including know-how, technical data, manufacturing and production
processes and techniques, customer and supplier lists, pricing and cost
information, and business and marketing plans and proposals) and rights in any
jurisdiction to limit the use or disclosure thereof by any person; writings,
computer software, and other works, whether copyrightable or not, in any
jurisdiction; registrations or applications for registration of copyrights in
any jurisdiction, and any renewals or extensions thereof; and any similar
intellectual property or proprietary rights.
SECTION 3.22 Company FCC Licenses; Operation of Company Licensed
Facilities. Except as would not, in the aggregate, reasonably be expected to
have a Material Adverse Effect on Company:
(a) Company and its Subsidiaries have operated the television and
radio stations for which Company and any of its Subsidiaries hold licenses from
the FCC, in each case which are owned or operated by Company and its
Subsidiaries (each a "COMPANY LICENSED FACILITY" and collectively, the "COMPANY
LICENSED FACILITIES"), in compliance with the terms of the
18
26
licenses issued by the FCC to Company and its Subsidiaries (the "COMPANY FCC
LICENSES"), and in compliance with the Communications Act;
(b) To the Knowledge of Company, each broadcast television and radio
station for which Company or any of its Subsidiaries provides programming or
advertising services pursuant to a local marketing or joint sales agreement
(each a "COMPANY LMA FACILITY") and collectively, the "COMPANY LMA FACILITIES")
has been operated in compliance with the terms of the licenses issued by the FCC
to the owner of such Company LMA Facility (each a "COMPANY LMA FACILITY FCC
LICENSE" and collectively, the "COMPANY LMA FACILITY FCC LICENSES");
(c) Company has, and each of its Subsidiaries has, timely filed or
made all applications, reports and other disclosures required by the FCC to be
made with respect to Company Licensed Facilities and has timely paid all FCC
regulatory fees with respect thereto;
(d) Company and each of its Subsidiaries have, and are the
authorized legal holders of, all Company FCC Licenses necessary for or used in
the operation of the business of Company Licensed Facilities;
(e) To the Knowledge of Company, the third parties with which
Company or its Subsidiaries have entered into local marketing agreements or
joint sales agreements with respect to Company LMA Facilities have, and are the
authorized legal holders of, the Company LMA Facility FCC Licenses necessary for
or used in the operation of the business of the respective Company LMA Facility
to which such local marketing or joint sales agreement relates;
(f) All Company FCC Licenses and, to the Knowledge of Company,
Company LMA Facility FCC Licenses, are validly held and are in full force and
effect, unimpaired by any act or omission of Company, any of its Subsidiaries
(or their respective predecessors) or their respective officers, employees or
agents;
(g) There is not before the FCC any investigation, proceeding,
notice of violation or order of forfeiture relating to any Company Licensed
Facility or Company LMA Facility;
(h) No application, action or proceeding is pending for the renewal
of any Company FCC Licenses or, to the Knowledge of Company, Company LMA
Facility FCC License, and, to the Knowledge of Company, there is no basis for
the FCC not to renew any of Company FCC Licenses or the Company LMA Facility FCC
Licenses (other than proceedings to amend FCC rules or the Communications Act of
general applicability to the broadcast industry);
(i) There is not pending and, to the Knowledge of Company, there is
not threatened any action by or before the FCC to revoke, suspend, cancel,
rescind or modify any of Company FCC Licenses or any of the Company LMA Facility
FCC Licenses (other than proceedings to amend FCC rules or the Communications
Act of general applicability to the broadcast industry); and
(j) Neither Company nor any of its Subsidiaries has any applications
pending before the FCC.
19
27
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Except as set forth in the disclosure letter delivered by Parent and
Merger Sub to Company on the date of this Agreement (the "PARENT DISCLOSURE
LETTER"), Parent and Merger Sub hereby jointly and severally represent and
warrant to Company as follows:
SECTION 4.1. Organization, Qualification, Etc. Each of Parent and
Merger Sub is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization and has the
corporate power and authority to own its properties and assets and to carry on
its business as it is now being conducted and is duly qualified to do business
and is in good standing in each jurisdiction in which the ownership of its
properties or the conduct of its business requires such qualification, except
for jurisdictions in which such failure to be so qualified or to be in good
standing would not, in the aggregate, reasonably be expected to have a Material
Adverse Effect on Parent. The copies of Parent's Articles of Incorporation, as
amended, and Amended and Restated Bylaws and Merger Sub's charter and bylaws
which have been made available to Company are complete and correct and in full
force and effect on the date of this Agreement. Each of Parent's Significant
Subsidiaries is a corporation, partnership or limited liability company duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization, has the corporate, partnership or
limited liability company power and authority to own its properties and to carry
on its business as it is now being conducted, and is duly qualified to do
business and is in good standing in each jurisdiction in which the ownership of
its property or the conduct of its business requires such qualification, except
for jurisdictions in which such failure to be so qualified or to be in good
standing would not, in the aggregate, reasonably be expected to have a Material
Adverse Effect on Parent. Except as disclosed in Parent Filed SEC Reports, all
the outstanding shares of capital stock of, or other ownership interests in,
Parent's Significant Subsidiaries and Merger Sub are validly issued, fully paid
and nonassessable and are owned by Parent, directly or indirectly, free and
clear of all Liens, except for restrictions contained in credit agreements and
similar instruments to which Parent is a party. Except as disclosed in the
Parent Filed SEC Reports, there are no existing options (except for those set
forth in Section 4.2 below), rights of first refusal, preemptive rights, calls
or commitments of any character relating to the issued or unissued capital stock
or other securities of, or other ownership interests in, any Significant
Subsidiary of Parent or Merger Sub.
SECTION 4.2. Capital Stock. The authorized capital stock of Parent
consists of 1,500,000,000 shares of Parent Common Stock, par value $0.10 per
share, and 2,000,000 shares of Class A Preferred Stock, par value $1.00 per
share, and 8,000,000 shares of Class B Preferred Stock, par value $1.00 per
share (such Class A Preferred Stock and the Class B Preferred Stock together,
the "PARENT PREFERRED STOCK"). The shares of Parent Common Stock to be issued in
the Merger or upon the exercise of Company stock options, warrants, conversion
rights or other rights or upon vesting or payment of other Company equity-based
awards thereafter will, when issued, be validly issued fully paid and
nonassessable. As of September 21, 2001, 597,458,849 shares of Parent Common
Stock and no shares of Parent Preferred Stock were issued and outstanding. All
the outstanding shares of Parent Common Stock have been validly issued and are
fully paid and nonassessable. As of September 21, 2001, there were no
outstanding subscriptions, options, warrants, rights or other arrangements or
commitments obligating Parent
20
28
to issue any shares of its capital stock other than options and other rights to
receive or acquire an aggregate of up to 65,111,885 shares of Parent Common
Stock pursuant to:
(a) the 1984 Incentive Stock Option Plan of Parent;
(b) the 1994 Non-Qualified Stock Option Plan;
(c) Parent Director's Nonqualified Stock Option Plan;
(d) the 1998 Stock Incentive Plan;
(e) the 2001 Stock Incentive Plan;
(f) the 2000 Employee Stock Purchase Plan;
(g) various other option agreements with officers or employees
of Parent or Parent's Subsidiaries, option assumption agreements, and incentive
compensation grants;
(h) Parent's 2 5/8% Senior Convertible Notes due 2003,
convertible into Parent Common Stock;
(i) Parent's 1 1/2% Senior Convertible Notes due 2002,
convertible into Parent Common Stock;
(j) the warrants of Jacor Communications, Inc. ("JACOR")
assumed by Parent;
(k) Jacor liquid yield option notes due 2001; and
(l) Jacor liquid yield option notes due 2018.
SECTION 4.3. Corporate Authority Relative to This Agreement; No
Violation. Each of Parent and Merger Sub has the corporate power and authority
to enter into this Agreement and to carry out its obligations hereunder. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Boards of Directors of Parent and Merger Sub and no other corporate or
stockholder proceedings on the part of Parent or Merger Sub are necessary to
authorize this Agreement, the issuance of Parent Common Stock and the other
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Parent and Merger Sub and, assuming this Agreement has
been duly and validly executed and delivered by the other parties hereto, this
Agreement constitutes a valid and binding agreement of Parent and Merger Sub,
enforceable against each of them in accordance with its terms (except insofar as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally, or by principles governing the availability of equitable remedies).
Neither Parent nor Merger Sub is subject to or obligated under any charter,
bylaw or contract provision or any license, franchise or permit, or subject to
any order or decree, which would be breached or violated by its executing or
carrying out this Agreement, except for any breaches or violations which would
not, in the aggregate, reasonably be expected to have a Material Adverse Effect
on Parent. Other than in connection with or in compliance with the
21
29
provisions of the DGCL, the Securities Act, the Exchange Act, the HSR Act, the
Communications Act, Section 4043 of ERISA, any non-United States competition,
antitrust and investments laws and the securities, blue sky or antitrust laws of
the various states, and, other than the filing of the Certificate of Merger with
the Delaware Secretary of State and any necessary state filings to maintain the
good standing or qualification of the Surviving Corporation, no authorization,
consent or approval of, or filing with, any Governmental Entity is necessary for
the consummation by Parent of the transactions contemplated by this Agreement,
except for such authorizations, consents, approvals or filings, the failure to
obtain or make which would not, in the aggregate, reasonably be expected to have
a Material Adverse Effect on Parent; provided that Parent makes no
representation with respect to such of the foregoing as are required by reason
of the regulatory status of Company or any of its Significant Subsidiaries or
facts specifically pertaining to any of them.
SECTION 4.4. Reports and Financial Statements(a). Since January 1,
1999, Parent has timely filed all material reports, registration statements and
other filings required to be filed by it with the SEC under the rules and
regulations of the SEC (collectively, the "PARENT SEC REPORTS"). As of their
respective dates, the Parent SEC Reports (i) complied as to form in all material
respects with the applicable requirements of the Securities Act, the Exchange
Act, and the rules and regulations promulgated thereunder and (ii) 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
light of the circumstances under which they were made, not misleading; provided,
that the foregoing clause (ii) will not apply to the financial statements
included in the Parent SEC Reports (which are covered by the following
sentence). The audited consolidated financial statements and unaudited
consolidated interim financial statements included in the Parent SEC Reports
(including any related notes and schedules) fairly present in all material
respects the financial position of Parent and its consolidated Subsidiaries as
of the dates thereof and the results of their operations and their cash flows
for the periods or as of the dates then ended (subject, where appropriate, to
normal year-end adjustments), in each case in accordance with GAAP consistently
applied during the periods involved (except as otherwise disclosed in the notes
thereto and except that the unaudited financial statements therein do not
contain all of the footnote disclosures required by GAAP).
SECTION 4.5. No Undisclosed Liabilities. Neither Parent nor any of its
Subsidiaries has any liabilities or obligations of any nature, whether or not
accrued, contingent or otherwise, that would be required by GAAP to be reflected
on a consolidated balance sheet, except liabilities or obligations (a) reflected
in any of the Parent SEC Reports filed and publicly available prior to the date
of this Agreement (as amended to the date of this Agreement, the "PARENT FILED
SEC REPORTS"), (b) incurred since December 31, 2000 in the ordinary course of
business consistent with past practice or (c) which would not, in the aggregate,
reasonably be expected to have a Material Adverse Effect on Parent.
SECTION 4.6. No Violation of Law. The businesses of Parent and its
Subsidiaries are not being conducted in violation of any law, ordinance or
regulation of any Governmental Entity (provided that no representation or
warranty is made in this Section 4.6 with respect to Environmental Laws) except
(a) as described in any of the Parent Filed SEC Reports and (b) for violations
which would not, in the aggregate, reasonably be expected to have a Material
Adverse Effect on Parent.
22
30
SECTION 4.7. Environmental Laws and Regulations. The representations
and warranties set forth in this Section 4.7 will be the exclusive
representations and warranties of Parent and Merger Sub with respect to the
subject matter hereof. Except as described in any of the Parent Filed SEC
Reports, and except as would not, in the aggregate, reasonably be expected to
have a Material Adverse Effect on Parent:
(a) Compliance with Laws. Parent and each of its Subsidiaries
is in material compliance with all applicable Environmental Laws, which
compliance includes, but is not limited to, the possession by Parent and its
Subsidiaries of material permits and other governmental authorizations required
under applicable Environmental Laws, and compliance with the terms and
conditions thereof;
(b) Environmental Actions. Neither Parent nor any of its
Subsidiaries has received written notice of, nor, to the Knowledge of Parent, is
the subject of, any pending actions, causes of action, claims, investigations,
demands or notices by any person alleging liability under or noncompliance with
any Environmental Law or that Parent or any Subsidiary is a potentially
responsible party at any Superfund site or state-equivalent site; and
(c) Material Compliance. To the Knowledge of Parent, there are
no circumstances that are reasonably likely to prevent or interfere with
compliance with Environmental Laws by Parent or its Subsidiaries in the future.
SECTION 4.8. Absence of Certain Changes or Events. Except as disclosed
in the Parent Filed SEC Reports or as required or permitted by this Agreement,
since December 31, 2000, the businesses of Parent and its Subsidiaries have been
conducted in all material respects in the ordinary course and from such date to
the date of this Agreement there has not been any event, occurrence, development
or state of circumstances or facts that would, in the aggregate, reasonably be
expected to have a Material Adverse Effect on Parent. Since December 31, 2000,
no dividends or distributions have been declared or paid on or made with respect
to the shares of capital stock or other equity interests of Parent nor have any
such shares been repurchased or redeemed.
SECTION 4.9. Investigations; Litigation. Except as described in any of
the Parent Filed SEC Reports:
(a) No Governmental Investigations. To the Knowledge of
Parent, no investigation or review by any Governmental Entity with respect to
Parent or any of its Subsidiaries which would, in the aggregate, reasonably be
expected to have a Material Adverse Effect on Parent is pending nor has any
Governmental Entity notified Parent in writing of an intention to conduct the
same; and
(b) No Actions. There are no actions, suits or proceedings
pending (or, to Parent's Knowledge, threatened) against or affecting Parent or
its Subsidiaries, or any of their respective properties at law or in equity, or
before any federal, state, local or foreign Governmental Entity which would, in
the aggregate, reasonably be expected to have a Material Adverse Effect on
Parent.
23
31
SECTION 4.10. Proxy Statement; Registration Statement; Other
Information. None of the information with respect to Parent or its Significant
Subsidiaries to be included in the Proxy Statement or the Registration Statement
will, in the case of the Proxy Statement or any amendments thereof or
supplements thereto, at the time of the mailing of the Proxy Statement or any
amendments or supplements thereto, and at the time of the Company Special
Meeting, or, in the case of the Registration Statement, at the time it becomes
effective or at the time of any post-effective amendment, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading, except that no
representation is made by Parent or Merger Sub with respect to information
supplied in writing by Company or any Affiliate of Company specifically for
inclusion in the Proxy Statement or the Registration Statement. Each of the
Proxy Statement and the Registration Statement will comply as to form in all
material respects with the provisions of the Exchange Act and the rules and
regulations promulgated thereunder.
SECTION 4.11. Tax Matters.
(a) Parent Group Tax Returns. All federal, state, local and
foreign Tax Returns required to be filed by or on behalf of Parent, each of its
Subsidiaries, and each affiliated, combined, consolidated or unitary group of
which Parent or any of its Subsidiaries is a member (a "PARENT GROUP") have been
timely filed or requests for extensions of time to file such returns or reports
have been timely filed and granted and have not expired, and all Tax Returns
filed are complete and accurate, except to the extent any failure to file or any
inaccuracies in filed Tax Returns would not, in the aggregate, reasonably be
expected to have a Material Adverse Effect on Parent. All Taxes due and owing by
Parent, any Subsidiary of Parent or any Parent Group have been paid, or
adequately reserved for, except to the extent any failure to pay or reserve
would not, in the aggregate, reasonably be expected to have a Material Adverse
Effect on Parent. There is no audit examination, deficiency assessment, refund
litigation, proposed adjustment or matter in controversy with respect to any
Taxes due and owing by Parent, any Subsidiary of Parent or any Parent Group, nor
has Parent or any Subsidiary of Parent filed any waiver of the statute of
limitations applicable to the assessment or collection of any Tax, in each case,
which would, in the aggregate, reasonably be expected to have a Material Adverse
Effect on Parent. All assessments for Taxes due and owing by Parent, any
Subsidiary of Parent or any Parent Group with respect to completed and settled
examinations or concluded litigation have been paid. Neither Parent nor any
Subsidiary of Parent is a party to any tax indemnity agreement, tax sharing
agreement or other agreement under which Parent or any Subsidiary of Parent
could become liable to another person as a result of the imposition of a Tax
upon any person, or the assessment or collection of such a Tax, except for such
agreements as would not, in the aggregate, reasonably be expected to have a
Material Adverse Effect on Parent. As soon as practicable after the public
announcement of the Merger Agreement, Parent will provide Company with written
schedules of (i) the taxable years of Parent for which the statutes of
limitations with respect to federal income Taxes have not expired, and (ii) with
respect to federal income Taxes, those years for which examinations have been
completed, those years for which examinations are presently being conducted, and
those years for which examinations have not yet been initiated. Parent and each
of its Subsidiaries has complied in all material respects with all rules and
regulations relating to the withholding of Taxes, except to the extent any such
failure to comply would not, in the aggregate, reasonably be expected to have a
Material Adverse
24
32
Effect on Parent. Merger Sub is a direct, wholly-owned subsidiary of Parent
formed solely for the purpose of effecting the Merger and has conducted no
activity and has incurred no liability or obligation other than as contemplated
by this Agreement.
(b) Tax-Free Reorganization. Neither Parent nor any of its
Subsidiaries knows of any fact or has taken, or failed to take, any action that
could prevent the Merger from qualifying as a reorganization within the meaning
of Section 368(a) of the Code.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 5.1. Conduct of Business by Company or Parent. Prior to the
Effective Time or the date, if any, on which this Agreement is earlier
terminated pursuant to Section 7.1, and except as consented to in writing by the
other parties hereto (which consent will not be unreasonably withheld), as set
forth in the Company Disclosure Letter or the Parent Disclosure Letter or as may
be permitted pursuant to this Agreement:
(a) Covenants of Company. Company:
(i) will, and will cause each of its Subsidiaries to,
conduct its operations in all material respects according to their ordinary and
usual course of business;
(ii) will, and will cause each of its Significant
Subsidiaries to, use reasonable efforts to (A) preserve intact its business
organizations and goodwill, (B) keep available the services of its officers and
employees as a group, and (C) maintain satisfactory relationships with
suppliers, distributors, customers and others having business relationships with
them;
(iii) will notify Parent as soon as practicable of
any emergency or other change in the normal course of its or its Subsidiaries'
respective businesses or in the operation of its or its Subsidiaries' respective
properties and of any complaints, investigations or hearings (or communications
indicating that the same may be contemplated) of any governmental body or
authority;
(iv) will not authorize or pay any dividends on or
make any distribution with respect to its outstanding shares of stock;
(v) except for the agreements or arrangements
relating to the retention and severance plans and arrangements set forth in
Section 3.8(f) of the Company Disclosure Letter, will not, and will not permit
any of its Subsidiaries to, enter into or amend any employment, severance or
similar agreements or arrangements with any of their respective directors or
executive officers;
(vi) will not, and will not permit any of its
Subsidiaries to, authorize, propose or announce an intention to authorize or
propose, or enter into an agreement with respect to, any merger, consolidation
or business combination, any acquisition of a material amount of assets or
securities, any disposition of assets or securities or any release or
relinquishment of any material contract rights, in each case, except in the
ordinary course;
25
33
(vii) will not propose or adopt any amendments to its
certificate of incorporation or bylaws;
(viii) will not, and will not permit any of its
Subsidiaries to, (A) issue any shares of their capital stock, except upon
exercise of rights or options issued pursuant to existing employee incentive or
benefit plans, programs or arrangements and nonemployee director plans
(including, without limitation, shares issued in connection with stock grants or
awards or the exercise of rights or options granted in the ordinary course of
business consistent with past practice pursuant to such plans, programs or
arrangements) or (B) effect any stock split not previously announced or (C)
otherwise change its capitalization as it existed on September 21, 2001, except
as contemplated herein;
(ix) will not, and will not permit any of its
Subsidiaries to, grant, confer or award any options, warrants, conversion rights
or other rights, not existing on the date of this Agreement, to acquire any
shares of its capital stock (other than rights under the ESPP for offering
periods beginning after the date of this Agreement or agreements or arrangements
entered into as permitted by clause (v) of this Section 5.1(a));
(x) will not, and will not permit any of its
Subsidiaries to, purchase or redeem any shares of its stock or pay any cash
bonuses (except for cash bonuses pursuant to agreements or employee incentive or
benefit plans, programs or arrangements or non-employee director plans existing
on the date of this Agreement or agreements or arrangements entered into as
permitted by clause (v) of this Section 5.1(a)); provided, however, Company may
adopt a bonus plan as an incentive to employees to remain with Company through
and until the Closing Date in an amount to be mutually agreed to by Parent and
Company;
(xi) will not, and will not permit any of its
Subsidiaries to, amend the terms of their respective employee benefit plans,
programs or arrangements or any severance or similar agreements or arrangements
in existence on the date of this Agreement (except as required by law or to
maintain tax-qualified status), or adopt any new employee benefit plans,
programs or arrangements or any severance or similar agreements or arrangements
(except for agreements or arrangements entered into as permitted by clause (v)
of this Section 5.1(a)); provided, however, Company may change the renewal date
on which plan premiums are adjusted under Company's medical and dental plans
from November to January;
(xii) will not, and will not permit any of its
Subsidiaries to, incur any additional indebtedness for borrowed money, except
for indebtedness (A) in connection with interest payments on any of Company's
outstanding public debt, or (B) pursuant to credit facilities, indentures and
other arrangements in existence on the date of this Agreement;
(xiii) will not, and will not permit any of its
Subsidiaries to, incur any capital expenditures in excess of five million
dollars ($5,000,000), except for amounts budgeted for in Company's capital
budgets previously provided to Parent;
(xiv) will not, and will not permit any of its
Subsidiaries to, except with respect to sign location related contracts or
leases, sales or advertising contracts or other
26
34
agreements contemplated by or permitted pursuant to this Agreement, enter into
any Company Material Contract;
(xv) will not, and will not permit any of its
Subsidiaries to, enter into an agreement with any Affiliate of Company, any
family member of any Affiliate of Company or any stockholder who owns more than
10% of the outstanding capital stock of Company;
(xvi) will not, and will not permit any of its
Subsidiaries to, make any material Tax election or settle or compromise any
material Tax liability;
(xvii) will not, unless required by law, rule or
regulation, call any meeting of the stockholders of Company, regardless of
whether a special meeting or otherwise, until this Agreement is terminated in
accordance with its terms; and
(xviii) will not, and will not permit any of its
Subsidiaries to, agree, in writing or otherwise, to take any of the foregoing
actions in paragraphs (iv)-(xvii) above or take any action which would make any
representation or warranty in Article III hereof untrue or incorrect.
(b) Covenants of Parent. Parent:
(i) will, and will cause each of its Subsidiaries to,
conduct its operations, in all material respects, according to their ordinary
and usual course of business; provided, however, that nothing contained in this
proviso will limit Parent's ability to authorize or propose, or enter into, an
agreement with respect to any acquisitions or to issue any debt or equity
securities;
(ii) will take all action necessary to cause Merger
Sub to perform its obligations under this Agreement and to consummate the Merger
on the terms and conditions set forth in this Agreement;
(iii) will not authorize or pay any cash dividends on
or make any cash distribution with respect to its outstanding shares of stock;
and
(iv) will not, and will not permit any of its
Subsidiaries to agree, in writing or otherwise, to take any of the foregoing
actions listed in clause (iii) or take any action which would make any
representation or warranty in Article IV hereof untrue or incorrect.
SECTION 5.2. Proxy Material; Registration Statement.
(a) Proxy and Registration Statement. As promptly as
practicable after the execution of this Agreement, Company will prepare and file
with the SEC a proxy statement relating to the meeting of Company's stockholders
to be held in connection with the Merger (together with any amendments thereof
or supplements thereto, in each case in the form or forms mailed to Company's
stockholders, the "PROXY STATEMENT") and Parent will prepare and file with the
SEC a registration statement on Form S-4 (together with all amendments thereto,
the "REGISTRATION STATEMENT") in which the Proxy Statement will be included as a
prospectus, in connection with the registration under the Securities Act of the
shares of Parent Common Stock
27
35
to be issued to the stockholders of Company pursuant to the Merger. Each of
Parent and Company will use its reasonable efforts to cause the Registration
Statement to become effective as promptly as practicable, and, prior to the
effective date of the Registration Statement, Parent will take all or any action
required under any applicable federal or state securities laws in connection
with the issuance of share of Parent Common Stock in the Merger. Each of Parent
and Company will furnish all information concerning it and the holders of its
capital stock as the other may reasonably request in connection with such
actions and the preparation of the Registration Statement and Proxy Statement.
As promptly as practicable after the Registration Statement will become
effective, Company will mail the Proxy Statement to its stockholders. The Proxy
Statement will include the recommendation of the Board of Directors of Company
in favor of the Merger (subject to Section 5.10 hereof).
Subject to Section 5.10 hereof, neither the Proxy Statement nor the
Registration Statement will be filed with the SEC by, and no amendment or
supplement to the Proxy Statement or the Registration Statement will be made by,
Parent or Company without the approval of the other party (which approval will
not be unreasonably withheld or delayed). Parent and Company each will advise
the other, promptly after it receives notice thereof, of the time when the
Registration Statement has become effective or any supplement or amendment has
been filed, of the issuance of any stop order, the suspension of the
qualification of Parent Common Stock issuable in connection with the Merger for
offering or sale in any jurisdiction, or any request by the SEC for amendment of
the Proxy Statement or the Registration Statement or comments thereon and
responses thereto or requests by the SEC for additional information.
(b) Accuracy of Information Furnished by Parent. The
information supplied by Parent for inclusion in the Registration Statement and
the Proxy Statement will not, at (i) the time the Registration Statement is
declared effective, (ii) the time the Proxy Statement (or any amendment thereof
or supplement thereto) is first mailed to the stockholders of Company, (iii) the
time of the Company Special Meeting, and (iv) the Effective Time, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein not
misleading. If at any time prior to the Effective Time any event or circumstance
relating to Parent or any of its officers or directors should be discovered by
Parent which should be set forth in an amendment or a supplement to the
Registration Statement or Proxy Statement, Parent will promptly inform Company.
All documents that Parent is responsible for filing with the SEC in connection
with the transactions contemplated herein will comply as to form and substance
in all material respects with the applicable requirements of the Securities Act
and the rules and regulations thereunder and the Exchange Act and the rules and
regulations thereunder.
(c) Accuracy of Information Furnished by Company. The
information supplied by Company for inclusion in the Registration Statement and
the Proxy Statement will not, at (i) the time the Registration Statement is
declared effective, (ii) the time the Proxy Statement (or any amendment thereof
or supplement thereto) is first mailed to the stockholders of Company, (iii) the
time of the Company Special Meeting, and (iv) the Effective Time, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein not
misleading. If at any time prior to the Effective Time any event or circumstance
relating to Company or any of its officers or directors should be discovered by
Company which should be set forth in an amendment or a supplement to
28
36
the Registration Statement or Proxy Statement, Company will promptly inform
Parent. All documents that Company is responsible for filing with the SEC in
connection with the transactions contemplated herein will comply as to form and
substance in all material respects with the applicable requirements of the
Securities Act and the rules and regulations thereunder and the Exchange Act and
the rules and regulations thereunder.
SECTION 5.3. Stockholders' Meeting. Company will, in accordance with
applicable law and the Company Certificate of Incorporation and its Bylaws duly
call, give notice of, convene and hold a special meeting (which, as may be duly
adjourned, the "COMPANY SPECIAL MEETING") of its stockholders for the purpose of
approving and adopting the agreement of merger (as such term is used in Section
251 of the DGCL) set forth in this Agreement and approving the Merger, in each
case by the holders of a majority of the voting power of the outstanding shares
of Company Common Stock (with the holders of Company Ordinary Common Stock and
the holders of Company Class B Common Stock voting together as a single class)
(the "COMPANY STOCKHOLDER APPROVAL"). Company will use its reasonable efforts to
cause the Company Special Meeting to occur within seventy five (75) days after
the date on which the Registration Statement becomes effective, but not earlier
than twenty (20) business days after the date the Proxy Statement is first
mailed to stockholders. Company will include in the Proxy Statement the
recommendation of its Board of Directors ("COMPANY BOARD RECOMMENDATION") that
its stockholders vote in favor of the Company Stockholder Approval, subject to
the right to withdraw, modify or change such recommendation in accordance with
Section 5.10 of this Agreement. If, after the Initial Period, the Board of
Directors of Company withdraws, modifies or changes its recommendation of this
Agreement or the Merger in a manner adverse to Parent or resolves to do any of
the foregoing, Company will nevertheless remain obligated to call, give notice
of, convene and hold the Company Special Meeting within the time period
specified above. Company will (a) cause its transfer agent to make stock
transfer records relating to Company available to the extent reasonably
necessary to effectuate the intent of this Agreement, and (b) otherwise render
reasonable assistance to Parent in the solicitation of proxies by Parent in
favor of approval of this Agreement and the Merger; provided, however, Company
will not be obligated to take the actions under clause (b) if Company has taken
any of the actions contemplated by the second sentence of Section 5.10(d).
SECTION 5.4. Approvals and Consents; Cooperation.
(a) Approvals and Consents. Company and Parent will together,
or pursuant to an allocation of responsibility to be agreed upon between them:
(i) as soon as is reasonably practicable take all
such action as may be required under state blue sky or securities laws in
connection with the transactions contemplated by this Agreement;
(ii) promptly prepare and file with the New York
Stock Exchange, Inc. (the "NYSE") and such other stock exchanges as will be
agreed upon listing applications covering the shares of Parent Common Stock
issuable in the Merger or upon exercise of Company stock options, warrants,
conversion rights or other rights or vesting or payment of other Company
equity-based awards and use its reasonable efforts to obtain, prior to the
29
37
Effective Time, approval for the listing of such Parent Common Stock, subject
only to official notice of issuance;
(iii) in addition to their respective obligations
contained in Section 5.8, cooperate with one another in order to lift any
injunctions or remove any other impediment to the consummation of the
transactions contemplated herein; and
(iv) cooperate with one another in obtaining opinions
of Xxxxx Xxxxxxxxxx LLP, special counsel to Company, and Akin, Gump, Strauss,
Hauer, & Xxxx, L.L.P., counsel to Parent, dated as of the Closing Date, to the
effect that the Merger qualifies as a reorganization under the provisions of
Section 368(a) of the Code. In connection therewith, each of Company and Parent
will deliver to Xxxxx Xxxxxxxxxx LLP and Akin, Gump, Strauss, Hauer, & Xxxx,
L.L.P. such representation letters as reasonably requested by Xxxxx Xxxxxxxxxx
LLP and Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P.
(b) Cooperation. Subject to the limitations contained in
Section 5.2, Company and Parent will each furnish to one another and to one
another's counsel all such information as may be reasonably required in order to
effect the foregoing actions and each represents and warrants to the other that
no information furnished by it in connection with such actions or otherwise in
connection with the consummation of the transactions contemplated by this
Agreement will contain any untrue statement of a material fact or omit to state
a material fact required to be stated in order to make any information so
furnished, in light of the circumstances under which it is so furnished, not
misleading.
SECTION 5.5. Access to Information; Confidentiality. As permitted by
law, Company will afford to Parent, and to Parent's officers, employees,
accountants, counsel, financial advisors and other representatives, reasonable
access during normal business hours during the period prior to the Effective
Time to all the properties, books, contracts, commitments and records of Company
and its subsidiaries, and during such period, Company will furnish promptly to
Parent (a) a copy of each report, schedule, registration statement and other
document filed by it or its subsidiaries during such period pursuant to the
requirements of applicable federal or state securities laws and (b) all other
information concerning its business, properties and personnel as Parent may
reasonably request; provided, that Parent will use its reasonable efforts to
minimize the disruption to the operations of the business of Company.
Notwithstanding anything to the contrary in this Agreement, neither Company nor
any or its Subsidiaries will be required to disclose any information to Parent
or its authorized representatives if doing so could violate any federal, state,
local or foreign law, rule or regulation to which Company or any of its
Subsidiaries is subject. Parent will keep such information provided to it by
Company confidential in accordance with the terms of the Confidentiality
Agreement, dated August 7, 2001, between Parent and Company (the
"CONFIDENTIALITY AGREEMENT").
SECTION 5.6. Affiliates. Company will, prior to the Effective Time,
deliver to Parent a list (reasonably satisfactory to counsel for Parent),
setting forth the names and addresses of all persons who are, at the time of the
Company Special Meeting, in Company's reasonable judgment, "AFFILIATES" of
Company for purposes of Rule 145 under the Securities Act. Company will make
available for inspection such information and documents as Parent may reasonably
request for the purpose of reviewing such list. Company will use its reasonable
efforts to cause
30
38
all persons who (a) are, on the date of this Agreement, "AFFILIATES" of Company
(for purposes of Rule 145 under the Securities Act) to execute and deliver to
Parent not later than ten (10) days prior to the date of the Company Special
Meeting, a written agreement substantially in the form attached as Exhibit 5.6,
with such modifications as may be appropriate, and (b) become "AFFILIATES" of
Company (for purposes of Rule 145 under the Securities Act) after the date of
the Company Special Meeting to execute and deliver to Parent not later than five
(5) days prior to the Closing Date a written agreement substantially in the form
attached as Exhibit 5.6, with such modifications as may be appropriate.
SECTION 5.7. Rights Under Stock Plans.
(a) Assumption of Options by Parent. At the Effective Time,
each outstanding option to purchase shares of Company Common Stock ("OPTION")
granted under the Employee Stock Option Plan or otherwise, which is outstanding
immediately prior to the Effective Time, whether or not then exercisable, will
vest and become exercisable and will be assumed by Parent and deemed to
constitute an option to acquire, on the same terms and conditions, mutatis
mutandis (including without limitation adjustments for any stock dividend,
subdivision, reclassification, recapitalization, split, combination, exchange of
shares or similar transaction), as were applicable under such Option or
agreement prior to the Effective Time, the number of shares of Parent Common
Stock as the holder of such Option would have been entitled to receive pursuant
to the Merger had such holder exercised such Option in full immediately prior to
the Effective Time (not taking into account whether or not such Option was in
fact exercisable) at a price per share equal to (i) the aggregate exercise price
for Company Common Stock purchasable pursuant to such Option divided by (ii) the
Conversion Ratio; provided, that the number of shares of Parent Common Stock
that may be purchased upon exercise of any such Option or agreement will not
include any fractional share and, upon exercise of such Option or agreement, a
cash payment will be made for any fractional share based upon the last sale
price per share of Parent Common Stock on the trading day immediately preceding
the date of exercise. From and after the Effective Time, Parent and the
Surviving Corporation will comply with the terms of the Employee Stock Option
Plan and the agreements governing any Options. The adjustments provided herein
with respect to any Options that are "INCENTIVE STOCK OPTIONS" (as defined in
Section 422 of the Code) will be effected in a manner consistent with Section
424(a) of the Code.
(b) Reservation of Shares; Form S-8. Parent will cause to be
taken all corporate action necessary to reserve for issuance a sufficient number
of shares of Parent Common Stock for delivery upon exercise of Options in
accordance with this Section 5.7. As promptly as practicable after the Effective
Time, Parent will cause Parent Common Stock subject to assumed Options to be
registered under the Securities Act pursuant to a registration statement on Form
S-8 (or any successor or other appropriate forms) and will use its reasonable
efforts to cause the effectiveness of such registration statement (and current
status of the prospectus or prospectuses contained therein) to occur promptly
after the Effective Time and to be maintained for so long as such Options remain
outstanding.
(c) Employee Stock Purchase Plan. Prior to the Closing Date,
Company will take all necessary action pursuant to the ESPP to provide that, on
the business day prior to the Closing Date (the "PURCHASE DATE"), the ESPP will
be terminated and no further offering will be made and that all amounts
allocated to each participant's account under the ESPP will thereupon, at the
31
39
election of the participant either (i) be used to purchase from Company
newly-issued whole shares of Company Ordinary Common Stock at a price equal to
90% of the closing price per share of Company Ordinary Common Stock on the first
day of the then-current offering period, or on the Purchase Date, whichever is
less, or (ii) refunded to the participant. At the Effective Time, any shares of
Company Ordinary Common Stock so purchased will be treated as provided in
Section 2.3 of this Agreement.
(d) Non-employee Directors' Equity Compensation Plan. Prior to
the Closing Date, Company will take all necessary action pursuant to its
Non-employee Directors' Equity Compensation Plan to provide that, on the
Purchase Date, the Non-employee Directors' Equity Compensation Plan will be
terminated and that all amounts deferred under the Non-employee Directors'
Equity Compensation Plan for the plan quarter in which the Purchase Date occurs
will be used to purchase newly-issued whole shares of Company Ordinary Common
Stock in accordance with the terms of the Plan as if the Purchase Date was a
"QUARTER DATE" (as defined under the Non-employee Directors' Equity Compensation
Plan). At the Effective Time, any shares of Company Ordinary Common Stock so
purchased will be treated as provided in Section 2.3 of this Agreement.
SECTION 5.8. Filings; Other Action.
(a) Governmental Approvals. Subject to the terms and
conditions herein provided, Company and Parent will (i) promptly make their
respective filings and thereafter make any other required submissions under the
HSR Act and the Communications Act, (ii) use reasonable efforts to cooperate
with one another in (A) determining whether any filings are required to be made
with, or consents, permits, authorizations or approvals are required to be
obtained from, any third party, the United States government or any agencies,
departments or instrumentalities thereof or other governmental or regulatory
bodies or authorities of federal, state, local and foreign jurisdictions in
connection with the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby and (B) timely making all
such filings and timely seeking all such consents, permits, authorizations or
approvals, and (iii) use reasonable efforts to take, or cause to be taken, all
other actions and do, or cause to be done, all other things necessary, proper or
advisable to consummate and make effective the transactions contemplated hereby,
including, without limitation, taking all such further action as reasonably may
be necessary to resolve such objections, if any, as the FCC, the Federal Trade
Commission, the Antitrust Division of the Department of Justice, state antitrust
enforcement authorities or competition authorities of any other nation or other
jurisdiction or any other person may assert under relevant antitrust,
competition or communications laws with respect to the transactions contemplated
hereby.
(b) Other Antitrust Matters. Without limiting the generality
of the undertakings pursuant to this Section 5.8, Parent and Company agree to
take or cause to be taken the following actions: (i) provide promptly to
Governmental Entities with regulatory jurisdiction over enforcement of any
applicable antitrust laws ("GOVERNMENT ANTITRUST ENTITY") information and
documents requested by any Government Antitrust Entity or necessary, proper or
advisable to permit consummation of the transactions contemplated by this
Agreement; (ii) without in any way limiting the provisions of Section 5.8(a)(i)
above, file any Notification and Report Form and related material required under
the HSR Act as soon as practicable after the date of this
32
40
Agreement, and, if deemed advisable by Parent, thereafter use its reasonable
efforts to certify as soon as practicable its substantial compliance with any
requests for additional information or documentary material that may be made
under the HSR Act; and (iii) the proffer by each of Parent and Company of its
willingness to (A) sell or otherwise dispose of, or hold separate and agree to
sell or otherwise dispose of, such assets, categories of assets or businesses of
Company or its Subsidiaries or, if deemed advisable by Parent, of Parent or its
Subsidiaries, (B) terminate such existing relationships and contractual rights
and obligations of Company, and (C) amend or terminate such existing licenses or
other intellectual property agreements and enter into such new licenses or other
intellectual property agreements of Company (and, in each case, to enter into
agreements with the relevant Government Antitrust Entity with respect thereto)
in each case with respect to the foregoing clauses (A), (B) or (C) (each an
"ANTITRUST DIVESTITURE CONDITION"), if such action is necessary to avoid or
prevent any action by any Government Antitrust Entity which would restrain,
enjoin or otherwise prevent consummation of the transactions contemplated by
this Agreement; provided, however, that the consummation of each such action or
transaction contemplated by this clause (iii) will be conditioned on
consummation of the Merger. Each of Company and Parent will keep the other
informed of any material communication (including, without limitation, any
meeting, conference or telephonic call) and will provide to the other copies of
all correspondence between it (or its advisors) and any Government Antitrust
Entity relating to this Agreement or any of the matters described in this
Section 5.8(b), and each of Company and Parent will permit the other to review
any material communication to be given by it to any Government Antitrust Entity.
Without limiting the immediately preceding sentence, Company will consult with
Parent in advance (to the extent practicable on any call initiated by any
Antitrust Government Entity) of any telephonic call, meeting or conference with
any Government Antitrust Entity and, to the extent permitted by such Government
Antitrust Entity, give Parent the opportunity to attend and participate in such
telephonic calls, meetings and conferences. Company agrees to use its reasonable
efforts to ensure that all telephonic calls and meetings with a Government
Antitrust Entity regarding the transactions contemplated hereby or any of the
matters described in this Section 5.8(b) will include representatives of Parent.
Except as expressly provided in this Section 5.8(b) (i) no failure by Parent or
Company to obtain termination of the waiting period under the HSR Act will be
deemed to be a breach hereunder, and (ii) no Antitrust Divestiture Condition
imposed or requested by any Governmental Entity will excuse Company or Parent
from its obligation to consummate the transactions contemplated hereby, provided
that no Antitrust Divestiture Condition is, in Parent's judgment, individually
or in the aggregate, reasonably likely to have a Material Adverse Effect on
Parent or Company and that each Antitrust Divestiture Condition is conditioned
upon the consummation of the Merger. Parent will be principally responsible for
and in control of the process of dealing with any Government Antitrust Entity
with respect to the transactions contemplated hereby, including the timing
(subject to the express limitations on timing set forth in this Section 5.8(b)),
negotiation and determination of any actions proposed to be taken by Company or
Parent or either's respective Subsidiaries. Without limiting the foregoing, with
respect to any television or radio stations or outdoor advertising assets owned
or operated by Company or any of its Subsidiaries that are identified by Parent,
if requested by Parent, Company will provide prospective buyers with customary
access and due diligence information, subject to customary confidentiality
arrangements reasonably satisfactory to Company, and will enter into divestiture
purchase agreements, the consummation of which will be conditioned upon the
consummation of the Merger. Notwithstanding the foregoing in this
33
41
Section 5.8(b), neither of Parent or Company will be required to take any action
under this Section 5.8(b) that is inconsistent with applicable law.
(c) FCC Approvals. Without limiting the generality of the
undertakings pursuant to this Section 5.8, Parent and Company agree to take or
cause to be taken the following actions: (i) provide promptly to the FCC
information and documents requested by the FCC or necessary, proper or advisable
to permit consummation of the transactions contemplated by this Agreement, and
thereafter use its reasonable efforts to comply with any requests for additional
information or documentary material that may be made under the Communications
Act; and (ii) the proffer by each of Parent and Company of its willingness to
(A) sell or otherwise dispose of, or hold separate and agree to sell or
otherwise dispose of, or transfer to an interim custodian, such assets,
categories of assets or businesses of Company or its Subsidiaries or, if deemed
advisable by Parent, of Parent or its Subsidiaries, and (B) terminate such
existing relationships and contractual rights and obligations of Company and
(and, in each case, to enter into agreements with the FCC giving effect thereto)
in each case with respect to the foregoing clauses (A) or (B) (each an "FCC
DIVESTITURE CONDITION"), if such action is necessary or reasonably advisable for
the purpose of promptly obtaining the FCC's approval of the transactions
contemplated by this Agreement; provided, however, that the consummation of each
such action or transaction contemplated by this clause (ii) will be conditioned
on consummation of the Merger. Each of Company and Parent will keep the other
informed of any material communication (including, without limitation, any
meeting, conference or telephonic call), and will provide the other copies of
all correspondence between it (or its advisors) and the FCC, and each of Company
and Parent will permit the other to review any material communication to be
given by it to the FCC. Without limiting the immediately preceding sentence,
Company will consult with Parent in advance (to the extent practicable on any
call initiated by the FCC) of any telephonic call, meeting or conference with,
the FCC and, to the extent permitted by the FCC, give Parent the opportunity to
attend and participate in such telephonic calls, meetings and conferences.
Company agrees to use its reasonable efforts to ensure that all telephonic calls
and meetings with the FCC regarding the transactions contemplated hereby or any
of the matters described in this Section 5.8(c) will include representatives of
Parent. Except as expressly provided in this Section 5.8(c), no FCC Divestiture
Condition imposed or requested by the FCC will excuse Company or Parent from its
obligation to consummate the transactions contemplated hereby, provided that no
FCC Divestiture Condition is, in Parent's judgment, individually or in the
aggregate, reasonably likely to have a Material Adverse Effect on Parent or
Company and that each FCC Divestiture Condition is conditioned upon the
consummation of the Merger. Parent will be principally responsible for and in
control of the process of dealing with the FCC with respect to the transactions
contemplated hereby, including the timing (subject to the express limitations on
timing set forth in this Section 5.8(c)), negotiation and determination of any
actions proposed to be taken by Company or Parent or either's respective
Subsidiaries. Without limiting the foregoing, (i) the FCC applications
contemplated herein will include a request for a twelve-month waiver of the
FCC's radio-television cross-ownership rule, and (ii) with respect to any
television or radio stations owned or operated by Company or any of its
Subsidiaries that are identified by Parent, if requested by Parent, Company will
provide prospective buyers with customary access and due diligence information,
subject to customary confidentiality arrangements reasonably satisfactory to
Company, and will enter into divestiture purchase agreements, the consummation
of which will be conditioned upon the consummation of the
34
42
Merger. Notwithstanding the foregoing in this Section 5.8(c), neither of Parent
or Company will be required to take any action under this Section 5.8(c) that is
inconsistent with applicable law.
SECTION 5.9. Further Assurances. In case at any time after the
Effective Time any further action is reasonably necessary or desirable to carry
out the purposes of this Agreement, the proper officers of Company and Parent
will use reasonable efforts to take all such necessary action.
SECTION 5.10. No Solicitation.
(a) No Solicitation. Company agrees that from the date of this
Agreement through the Effective Time, it will not, directly or indirectly, nor
will it permit any of its Subsidiaries to, nor will it authorize or knowingly
permit any officer, director or employee of, or any investment banker, attorney,
accountant or other advisor or representative of, Company or any of its
Subsidiaries (collectively, the "COMPANY REPRESENTATIVES") to directly or
indirectly through another person, solicit or initiate or knowingly encourage,
induce or facilitate the making, submission or announcement of any Acquisition
Proposal, or participate in any substantive discussions or negotiations
regarding, or furnish to any Person any information with respect to any proposal
that constitutes, or would reasonably be expected to lead to, any Acquisition
Proposal, or approve, endorse or recommend any Acquisition Proposal, or enter
into any letter of intent, agreement in principle, acquisition agreement or
other document or contract contemplating or otherwise relating to an Acquisition
Proposal; provided, however, that the foregoing will not prohibit Company until
the expiration of the Initial Period from furnishing information to or entering
into substantive discussions or negotiations with any person that makes an
unsolicited bona fide proposal to enter into a business combination with Company
pursuant to an Acquisition Proposal which the Board of Directors of Company in
good faith determines is a Superior Proposal or which the Board of Directors of
Company in good faith determines could reasonably be expected to lead to a
Superior Proposal, so long as:
(i) prior to furnishing any information to, or
entering into substantive discussions with, such a person Company provides
written and oral notice to Parent to the effect that it is furnishing
information to, or entering into substantive discussions with, a person from
whom Company will have received an executed confidentiality agreement in form
and substance similar to the Confidentiality Agreement prior to furnishing such
information;
(ii) such notice will include the terms and
conditions of such Acquisition Proposal or any agreement proposed by, or any
information supplied to, any such person;
(iii) simultaneously with furnishing any nonpublic
information to any such person, Company furnishes such nonpublic information to
Parent (to the extent that such nonpublic information has not been previously
furnished by Company to Parent);
(iv) Company, its Subsidiaries and Company
Representatives are in compliance with the provisions of this Section 5.10 in
all material respects;
35
43
(v) such unsolicited bona fide proposal is made by a
third party that the Board of Directors of Company determines in good faith has
the financial capability to consummate a Superior Proposal; and
(vi) the Board of Directors of Company, after
consulting with outside legal counsel to Company, determines in good faith that
such action is consistent with the fiduciary duties of the Board of Directors of
Company to stockholders of Company under applicable law.
Without limiting the foregoing, it is agreed that any violation of the
restrictions set forth in Section 5.10(a)(i)-(vi) by any Company Representative
will be deemed to be a breach of this Section 5.10 by Company. For purposes of
this Agreement, (A) "ACQUISITION PROPOSAL" means any offer or proposal for, or
any indication of interest in (whether or not in writing and whether or not
delivered to Company's stockholders generally), from any person relating to any
(i) direct or indirect acquisition or purchase of a business that constitutes
15% or more of the net revenues, net income or the assets of Company and its
Subsidiaries taken as a whole, (ii) direct or indirect acquisition or purchase
of 15% or more of any class of equity securities of Company or any of its
Subsidiaries whose business constitutes 15% or more of the net revenues, net
income or assets of Company and its Subsidiaries, taken as a whole (each, a
"MATERIAL SUBSIDIARY"), (iii) tender offer or exchange offer that if consummated
would result in any person beneficially owning 15% more of any class of equity
securities of Company or of any of its Material Subsidiaries, or (iv) merger,
consolidation, business combination, recapitalization, liquidation, dissolution,
share exchange or similar transaction involving Company or any of its Material
Subsidiaries, other than the transactions contemplated by this Agreement and (B)
"SUPERIOR PROPOSAL" means an Acquisition Proposal which the Board of Directors
of Company in good faith determines (after consultation with a financial advisor
of nationally recognized reputation and after taking into account all factors
deemed relevant by the Board of Directors of Company, including but not limited
to timing, breakup fees, expense reimbursement provisions, type of consideration
and conditions to consummation) that the consideration to the then holders of
Company Common Stock is superior from a financial point of view to the
consideration provided for in this Agreement.
(b) Notification. Company will notify Parent in writing of the
fact that it received inquiries, offers or proposals with respect to an
Acquisition Proposal within 24 hours after Company obtains Knowledge of the
receipt thereof and Company will use all reasonable efforts to inform Parent
promptly of all material developments with respect to the status and the terms
of any such substantive discussions or negotiations (including without
limitation the identity of the person with whom such substantive discussions are
being held) and uses its reasonable efforts to provide Parent copies of such
written proposals and any material amendments or revisions thereto or material
correspondence related thereto. Company will immediately cease and cause to be
terminated any existing activities, discussions or negotiations with any other
person that have been conducted heretofore with respect to a potential
Acquisition Proposal. Company agrees to inform Company Representatives of the
obligations undertaken in this Section 5.10; provided, however, that nothing
contained in this Agreement will prevent the Board of Directors of Company from
referring any third-party to this Section 5.10.
36
44
(c) No Release or Waiver or Approval. Company agrees not to
(i) release or permit the release of any person from, or to waive or permit the
waiver of any provision of, any confidentiality, "STANDSTILL" or similar
agreement to which Company or any of its Subsidiaries is a party, and will use
its reasonable efforts to enforce or cause to be enforced each such agreement at
the request of Parent, and (ii) approve of any "BUSINESS COMBINATION" or any
transaction in which a person or entity becomes an "INTERESTED STOCKHOLDER" of
Company (in each case, as defined in Section 203 of the DGCL) other than such
approval (A) given in connection with the Merger or (B) which by its terms
becomes effective only upon the termination of this Agreement in compliance with
the terms of Section 7.1(i).
(d) No Action to be Taken. Except as expressly permitted by
this Section 5.10, neither the Board of Directors of Company nor any committee
thereof will (i) withdraw, modify or change, or propose publicly to withdraw,
modify or change, in a manner adverse to Parent, the approval or recommendation
by such Board of Directors of the Merger or this Agreement or (ii) approve or
recommend, or propose publicly to approve or recommend, any Acquisition
Proposal. Notwithstanding the foregoing, in the event that the Board of
Directors of Company determines in good faith, after consultation with outside
counsel, that it is necessary to do so in order to act in a manner consistent
with its fiduciary duties to Company's stockholders under applicable law, the
Board of Directors of Company may take any action otherwise prohibited by the
immediately preceding sentence.
(e) Compliance with Exchange Act and Disclosure Obligations.
Nothing contained in this Section 5.10 will prohibit Company from taking and
disclosing to its stockholders a position contemplated by Rule 14d-9 and
14e-2(a) promulgated under the Exchange Act, from engaging in discussions with
any person for the sole purpose of clarifying a bona fide unsolicited proposal
or from making any disclosure to Company's stockholders if, in the good faith
judgment of the Board of Directors of Company, after consultation with outside
counsel, failure to so discuss or disclose would be inconsistent with its or the
Board of Directors' obligations under applicable law.
SECTION 5.11. Director and Officer Liability.
(a) Survival of Indemnification. Parent, Merger Sub and
Company agree that all rights to indemnification and all limitations on
liability existing in favor of any Indemnitee as provided in the Company
Certificate of Incorporation, Bylaws of Company or any Indemnity Agreement will
survive the Merger and continue in full force and effect. To the extent
permitted by (i) the DGCL, or (ii) the Company Certificate of Incorporation and
the Bylaws of Company, advancement of Indemnitee Expenses pursuant to this
Section 5.11 will be mandatory rather than permissive and the Surviving
Corporation and Parent will advance Indemnitee Costs in connection with such
indemnification. Parent will, and will cause the Surviving Corporation to,
expressly assume and honor in accordance with their terms any agreement
providing for indemnification by Company or any Subsidiary of Company of any
Indemnitee previously made available for inspection by Parent in effect on the
date of this Agreement (including any indemnity provisions contained in any
agreement providing for the registration of securities) (each, an "INDEMNITY
AGREEMENT").
37
45
(b) Indemnification by Parent and Surviving Corporation. In
addition to the other rights provided for in this Section 5.11 and not in
limitation thereof, from and after the Effective Time, Parent will, and will
cause the Surviving Corporation to, to the fullest extent permitted by
applicable law, (i) indemnify and hold harmless the individuals who on or prior
to the Effective Time were officers, directors or employees of Company or any of
its Subsidiaries, and the heirs, executors, trustees, fiduciaries and
administrators of such officers, directors or employees (collectively, the
"INDEMNITEES") against all losses, Indemnitee Expenses (as hereinafter defined),
claims, damages, liabilities, judgments, or amounts paid in settlement
(collectively, "INDEMNITEE COSTS") in respect to any threatened, pending or
completed claim, action, suit or proceeding, whether criminal, civil,
administrative or investigative based on, or arising out of or relating to the
fact that such person is or was a director, officer or employee of Company or
any of its Subsidiaries and arising out of acts or omissions occurring on or
prior to the Effective Time (including, without limitation, in respect of acts
or omissions in connection with this Agreement and the transactions contemplated
hereby) (an "INDEMNIFIABLE CLAIM") and (ii) advance to such Indemnitees all
Indemnitee Expenses incurred in connection with any Indemnifiable Claim promptly
after receipt of reasonably detailed statements therefor; provided, that, the
person to whom Indemnitee Expenses are to be advanced would be required to repay
such advances if it is ultimately determined that such person is not entitled to
indemnification from Parent or the Surviving Corporation. Parent will not be
liable for any settlement effected without its written consent (which consent
will not be unreasonably withheld or delayed). Except as otherwise may be
provided pursuant to any Indemnity Agreement, the Indemnitees as a group may
retain only one law firm with respect to each related matter except to the
extent there is, in the opinion of counsel to an Indemnitee, under applicable
standards of professional conduct, a conflict on any significant issue between
positions of any two or more Indemnitees. For the purposes of this Section 5.11,
"INDEMNITEE EXPENSES" will include reasonable attorneys' fees and all other
costs, charges and expenses paid or incurred in connection with investigating,
defending, being a witness in or participating in (including on appeal), or
preparing to defend, be a witness in or participate in any Indemnifiable Claim.
(c) Binding Effect on Successors and Assigns. Notwithstanding
any other provisions hereof, the obligations of Company, the Surviving
Corporation and Parent contained in this Section 5.11 will be binding upon the
successors and assigns of Parent and the Surviving Corporation. In the event
Company or the Surviving Corporation or any of their respective successors or
assigns (i) consolidates with or merges into any other person or (ii) transfers
all or substantially all of its properties or assets to any person, then, and in
each case, proper provision will be made so that successors and assigns of
Company or the Surviving Corporation, as the case may be, honor the
indemnification obligations set forth in this Section 5.11.
(d) Termination or Modification of Indemnification
Obligations. The obligations of Company, the Surviving Corporation, and Parent
under this Section 5.11 will not be terminated or modified in such a manner as
to adversely affect any Indemnitee to whom this Section 5.11 applies without the
consent of such affected Indemnitee (it being expressly agreed that the
Indemnitees to whom this Section 5.11 applies will be third party beneficiaries
of this Section 5.11).
38
46
(e) Advancement of Indemnitee Expenses. Parent will, and will
cause the Surviving Corporation to, advance all Indemnitee Expenses to any
Indemnitee incurred by enforcing the indemnity or other obligations provided for
in this Section 5.11.
(f) Continuation of Insurance Policy. For a period of six
years after the Effective Time, Parent will cause to be maintained in effect the
current directors and officers liability insurance policies maintained by
Company (provided that Parent may substitute policies of at least the same
coverage with other terms and conditions that are no less advantageous to the
Indemnitee, and provided further that the annual premiums to be paid with
respect to the maintenance of such policies during such six year period will not
exceed one hundred fifty percent (150%) of the annual premium paid by Company
for such policies as of the date of this Agreement with respect to claims
arising from facts or events that occurred prior to the Effective Time.
SECTION 5.12. Accountants' "Comfort" Letters. Company and Parent will
each use reasonable efforts to cause to be delivered to each other letters from
their respective independent accountants, dated a date within two business days
before the effective date of the Registration Statement, in form reasonably
satisfactory to the recipient and customary in scope for comfort letters
delivered by independent accountants in connection with registration statements
on Form S-4 under the Securities Act.
SECTION 5.13. Additional Reports. Company and Parent will each furnish
to the other copies of any reports which it files with the SEC on or after the
date of this Agreement, and Company and Parent, as the case may be, represents
and warrants that as of the respective dates thereof, such reports will 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 statement therein, in
light of the circumstances under which they were made, not misleading; provided,
that the foregoing will not apply to the financial statements contained therein
(which are covered by the following sentence). Any consolidated financial
statements included in such reports (including any related notes and schedules)
will fairly present in all material respects the financial position of Company
and its consolidated Subsidiaries or Parent and its consolidated Subsidiaries,
as the case may be, as of the dates thereof and the results of operations and
changes in financial position or other information included therein for the
periods or as of the date then ended (subject, where appropriate, to normal
year-end adjustments), in each case in accordance with GAAP consistently applied
during the periods involved (except as otherwise disclosed in the notes thereto
and except that such financial statements will not include all of the notes
required by GAAP).
SECTION 5.14. Plan of Reorganization. This Agreement constitutes a
"PLAN OF REORGANIZATION" within the meaning of Sections 1.368-2(g) and
1.368-3(a) of the income tax regulations promulgated under the Code. From and
after the date of this Agreement and until the Effective Time, each party hereto
will use its reasonable efforts to cause the Merger to qualify, and will not
take, or fail to take, any action or cause, or fail to cause, any action to be
taken which could prevent the Merger from qualifying, as a reorganization under
the provisions of Section 368(a) of the Code. Following the Effective Time,
neither the Surviving Corporation, Parent nor any of their Affiliates will take,
or fail to take, any action or cause, or fail to cause,
39
47
any action to be taken which could cause the Merger to fail to qualify as a
reorganization under Section 368(a) of the Code.
SECTION 5.15. Conveyance Taxes; Fees. Each of Parent and Company,
respectively, will timely pay any real property transfer or gains, sales, use,
transfer, value added, stock transfer and stamp taxes, any transfer, recording,
registration and other fees, and any similar taxes or fees not including any
income tax, gross receipt tax or any similar tax measured with respect to gross
or net income (collectively, the "CONVEYANCE TAXES") imposed on it at or prior
to the Effective Time in connection with the transactions contemplated hereunder
that are required to be paid in connection therewith. Parent and Company will
cooperate in the preparation, execution and filing of all Tax Returns,
questionnaires, applications, or other documents regarding any such Conveyance
Taxes.
SECTION 5.16. Public Announcements. Unless otherwise required by
applicable law or the requirements of any listing agreement with any applicable
stock exchange, Parent and Company will each use their reasonable efforts to
consult with each other before issuing any press release or otherwise making any
public statements with respect to this Agreement or any transaction contemplated
by this Agreement and will not issue any such press release or make any such
public statement prior to such consultation.
SECTION 5.17. Employee Benefits. Until December 31 of the calendar year
in which the Closing occurs, Parent will provide or cause to be provided to the
current employees of Company (the "CURRENT EMPLOYEES") benefits that are
comparable in the aggregate (other than plans or benefits providing for the
issuance of Company stock) to the benefits currently provided to the Current
Employees, and thereafter will provide the Current Employees with benefits
comparable to those provided to similarly-situated employees of Parent. From and
after the Closing Date, Parent will recognize any prior service of Current
Employees as of the Closing Date for all purposes other than benefit accrual
under Parent benefit plans and Parent's benefits arrangements in which they
become participants. Notwithstanding the foregoing, Parent will credit any prior
service of the Current Employees with Company or its Subsidiaries (to the extent
credited by Company and its Subsidiaries) for purposes of level of benefits
under Parent vacation pay plans in which they become participants. Parent and
Company agree that where applicable with respect to any medical or dental
benefit plan of Parent, Parent will waive, with respect to any Current
Employees, any pre-existing condition exclusion and actively-at-work
requirements, to the extent such exclusion or requirement would not have applied
under the applicable plan of Company or any of its subsidiaries. Following the
Closing Date, Parent will cause the Surviving Corporation to discharge all
obligations under the retention and severance plans and agreements to be entered
into as set forth in Section 3.8(f) of the Company Disclosure Letter.
SECTION 5.18. Transaction Expenses and Termination Fee.
(a) Expense Allocation. Except as provided in Section 5.18(c),
all Transaction Expenses incurred by the parties hereto will be borne solely and
entirely by the party that incurred such Transaction Expenses.
(b) Definition. "TRANSACTION EXPENSES" as used in this
Agreement will include all reasonable, actual and documented out-of-pocket
expenses (including, without limitation, all
40
48
reasonable fees and expenses of counsel, accountants and investment bankers to a
party hereto and its Affiliates) incurred by a party or on its behalf in
connection with or related to the authorization, preparation, negotiation,
execution and performance of this Agreement, the preparation, printing, filing
and mailing of the Registration Statement, the Proxy Statement, the solicitation
of stockholder approval, requisite HSR Act filings and all other matters related
to the consummation of the transactions contemplated hereby.
(c) Payment of Transaction Expenses and Termination Fee.
Company agrees that, if:
(i) Company or Parent terminates this Agreement
pursuant to Section 7.1(f);
(ii) (A) Parent terminates this Agreement pursuant to
Section 7.1(g), (B) at any time after the date of this Agreement an Acquisition
Proposal will have been publicly announced and (C) within fifteen (15) months of
the termination of this Agreement, Company enters into a definitive agreement
with any third party with respect to a transaction similar to an Acquisition
Proposal or any such transaction is consummated;
(iii) Parent terminates this Agreement pursuant to
Section 7.1(h); or
(iv) Company terminates this Agreement pursuant to
Section 7.1(i);
then Company will pay by wire transfer of immediately
available funds to Parent a termination fee in an amount equal to seventeen
million, two hundred fifty thousand dollars ($17,250,000) (the "TERMINATION
FEE") plus the actual and documented Transaction Expenses of Parent up to seven
million, five hundred thousand dollars ($7,500,000). For purposes of Section
5.18(c)(ii) only, "ACQUISITION PROPOSAL" will have the meaning otherwise
assigned to the term "ACQUISITION PROPOSAL," except that the references to "15%"
in such definition will be deemed to be references to "50%."
(d) Payment of Transaction Expenses. Company agrees that, if
Parent rightfully terminates this Agreement pursuant to Section 7.1(d), then
Company will pay by wire transfer of immediately available funds to Parent the
actual and documented Transaction Expenses of Parent up to seven million, five
hundred thousand dollars ($7,500,000). The payment of the Transaction Expenses
under this Section 5.18(d) will not relieve any party of any liability or
damages resulting from any breach by that party of any of its representations,
warranties, covenants or agreements set forth in this Agreement; provided,
however, that Company may offset the amount of any such liability or damages
payable by Company by an amount equal to the Transaction Expenses actually paid
by Company to Parent pursuant to this Section 5.18(d).
ARTICLE VI
CONDITIONS TO THE MERGER
SECTION 6.1. Conditions to the Obligations of each Party. The
obligations of Company, Parent and Merger Sub to consummate the Merger are
subject to the satisfaction or waiver on or prior to the Closing Date of the
following conditions:
41
49
(a) Registration Statement. The Registration Statement will
have become effective under the Securities Act and no stop order suspending the
effectiveness of the Registration Statement will have been issued by the SEC and
no proceeding for that purpose will have been initiated by the SEC.
(b) Company Stockholder Approval. This Agreement will have
been approved by the requisite affirmative vote of the stockholders of Company
in accordance with the Company Certificate of Incorporation and the DGCL.
(c) No Injunction or Restraint. No statute, rule, regulation,
executive order, decree, preliminary or permanent injunction or restraining
order will have been enacted, entered or enforced by government or any agency,
bureau, board, commission, court, department, official, political subdivision,
tribunal or other instrumentality of any government, whether federal, state or
local, domestic or foreign ("GOVERNMENTAL ENTITY") which prohibits the
consummation of the transactions contemplated hereby. No action or proceeding by
any Governmental Entity will have been commenced (and be pending) against
Company or Parent or any of their respective Affiliates, partners, associates,
officers or directors, or any officers or directors of such partners, seeking to
prevent or delay the transactions contemplated hereby or challenging any of the
material terms or provisions of this Agreement or seeking material damages in
connection therewith.
(d) Consents. All consents and approvals (other than any
consent or approval required pursuant to or in connection with antitrust laws,
including the Xxxxxxx Act, as amended, the Xxxxxxx Act, as amended, the HSR Act,
the Federal Trade Commission Act, as amended, and all other federal, state or
foreign statutes, rules, regulations, orders, decrees, administrative and
judicial doctrines and other laws that are designed or intended to prohibit,
restrict or regulate actions having the purpose or effect of monopolization or
restraint of trade, or the Communications Act) of Governmental Entities or any
person necessary for consummation of the transactions contemplated hereby will
have been obtained, other than those which, if not obtained, would not, in the
aggregate, reasonably be expected to have a Material Adverse Effect.
(e) HSR Act. Any waiting period (and any extension thereof)
applicable to the consummation of the Merger under the HSR Act will have expired
or been terminated.
(f) Communications Act. All orders and approvals of the FCC
required in connection with the consummation of the transactions contemplated
hereby will have been obtained or made, whether or not any appeal or request for
reconsideration of such order is pending, or whether the time for filing any
such appeal or request for reconsideration or for any sua sponte action by the
FCC has expired; provided, however, Parent may elect to consummate the Merger on
an initial order from the FCC.
(g) Stock Exchange Listing. The shares of Parent Common Stock
to be issued in the Merger will have been authorized for listing on the NYSE,
subject to official notice of listing.
SECTION 6.2. Conditions to the Obligations of Parent and Merger Sub.
The obligations of Parent and Merger Sub to consummate the Merger are subject to
the satisfaction or waiver by Parent on or prior to the Closing Date of the
following further conditions:
42
50
(a) Performance of Covenants; Accuracy of Representations and
Warranties. Company will have performed in all material respects its obligations
under this Agreement (which for purposes of Section 5.1(a)(xiv) will be deemed
to be Company Material Contracts not in excess of five million dollars
($5,000,000) in the aggregate) required to be performed by it at or prior to the
Effective Time and the representations and warranties of Company contained in
this Agreement, to the extent qualified with respect to materiality will be true
and correct in all respects, and to the extent not so qualified will be true and
correct in all material respects (which for purposes of Section 3.18 will be
deemed to be Company Material Contracts not in excess of ten million dollars
($10,000,000) in the aggregate), in each case as of the date of this Agreement
and at and as of the Effective Time as if made at and as of such time, except
that the accuracy of representations and warranties that by their terms speak as
of the date of this Agreement or some other date will be determined as of such
date, and Parent will have received a certificate of an executive officer of
Company as to the satisfaction of this condition;
(b) No Material Adverse Change. From the date of this
Agreement through the Effective Time, no event, development or condition has
occurred which, in the aggregate, has had or could reasonably be expected to
have, a Material Adverse Effect on Company.
(c) Tax Opinion. Parent will have received an opinion of its
tax counsel, Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P., in form and substance
reasonably satisfactory to it, and dated on the Closing Date, to the effect that
the Merger will qualify for federal income tax purposes as a reorganization
within the meaning of Section 368(a) of the Code. In rendering such opinion,
Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P. may rely upon reasonably requested
representation letters of Company and Parent and upon certain facts and
customary assumptions set forth in the opinion.
SECTION 6.3. Conditions to the Obligations of Company. The obligations
of Company to consummate the Merger are subject to the satisfaction or waiver by
Company on or prior to the Closing Date of the following further conditions:
(a) Performance of Covenants; Accuracy of Representations and
Warranties. Each of Parent and Merger Sub will have performed in all material
respects its obligations under this Agreement required to be performed by it at
or prior to the Effective Time and the representations and warranties of Parent
and Merger Sub contained in this Agreement, to the extent qualified with respect
to materiality will be true and correct in all respects, and to the extent not
so qualified will be true and correct in all material respects, in each case as
of the date of this Agreement and at and as of the Effective Time as if made at
and as of such time, except that the accuracy of representations and warranties
that by their terms speak as of the date of this Agreement or some other date
will be determined as of such date, and Company will have received a certificate
of an executive officer of each of Parent and Merger Sub as to the satisfaction
of this condition;
(b) No Material Adverse Change. From the date of this
Agreement through the Effective Time, no event, development or condition has
occurred which, in the aggregate, has had or could reasonably be expected to
have, a Material Adverse Effect on Parent.
43
51
(c) Tax Opinion. Company will have received an opinion of its
special tax counsel, Xxxxx Xxxxxxxxxx LLP, in form and substance reasonably
satisfactory to it, and dated on the Closing Date, to the effect that the Merger
will qualify for federal income tax purposes as a reorganization within the
meaning of Section 368(a) of the Code. In rendering such opinion, Xxxxx
Xxxxxxxxxx LLP may rely upon reasonably requested representation letters of
Company and Parent and upon certain facts and customary assumptions set forth in
the opinion.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.1. Termination or Abandonment. Notwithstanding anything
contained in this Agreement to the contrary, this Agreement may be terminated
and abandoned at any time prior to the Effective Time, whether before or after
any approval of the matters presented in connection with the Merger by the
stockholders of Company:
(a) by the mutual written consent of Company and Parent;
(b) by either Company or Parent, if the Effective Time will
not have occurred on or before the date one year after the date of this
Agreement; provided, that the party seeking to terminate this Agreement pursuant
to this Section 7.1(b) will not have breached in any material respect its
obligations under this Agreement in any manner that will have proximately
contributed to the failure to consummate the Merger on or before such date.
(c) by Company, if there has been a material breach by Parent
of any representation, warranty, covenant or agreement set forth in this
Agreement which breach (if susceptible to cure) has not been cured in all
material respects within twenty business days following receipt by Parent of
notice of such breach;
(d) by Parent, if there has been a material breach by Company
of any representation, warranty (which for purposes of Section 3.18 will be
deemed to be Company Material Contracts in excess of ten million dollars
($10,000,000) in the aggregate), covenant or agreement (which for purposes of
Section 5.1(a)(xiv) will be deemed to be Company Material Contracts in excess of
five million dollars ($5,000,000) in the aggregate) set forth in this Agreement
which breach (if susceptible to cure) has not been cured in all material
respects within twenty business days following receipt by Company of notice of
such breach;
(e) by either Company or Parent, if (i) there is a law, rule
or regulation that makes the consummation of the Merger illegal or otherwise
prohibited or (ii) any judgment, injunction, order or decree of a court or other
Governmental Entity of competent jurisdiction is entered that permanently
restrains, enjoins or otherwise prohibits either Company or Parent from
consummating the Merger and such judgment, injunction, order or decree will have
become final and nonappealable;
(f) by either Company or Parent, if the Company Stockholder
Approval referred to in Section 5.3 will not have been obtained by reason of the
failure to obtain the required vote at the Company Special Meeting or at any
postponement or adjournment thereof;
44
52
(g) by Parent, if: (i) the Board of Directors of Company will
have failed to recommend that Company's stockholders vote to adopt this
Agreement, or will have withdrawn or modified in a manner adverse to Parent the
Company Board Recommendation; (ii) Company will have failed to include in the
Proxy Statement the Company Board Recommendation or a statement to the effect
that the Board of Directors of Company has determined and believes that the
Merger is in the best interests of Company's stockholders; (iii) the Board of
Directors of Company fails to publicly reaffirm the Company Board
Recommendation, or fails to reaffirm its determination that the Merger is in the
best interests of Company's stockholders, within ten business days after Parent
reasonably requests in writing that such recommendation or determination be
reaffirmed; (iv) the Board of Directors of Company will have approved, endorsed
or recommended any Acquisition Proposal; (v) Company will have entered into any
letter of intent, acquisition agreement or similar agreement relating to any
Acquisition Proposal; (vi) a tender or exchange offer relating to any shares of
the Company Common Stock will have been commenced and Company will not have sent
to its security holders, within ten business days after the commencement of such
tender or exchange offer, a statement disclosing that Company recommends
rejection of such tender or exchange offer; (vii) an Acquisition Proposal is
publicly announced, and Company fails to issue a press release that reaffirms
the Company Board Recommendation within ten business days after such Acquisition
Proposal is announced or (viii) Company or any of its Subsidiaries or any
Company Representative will have violated in a material respect the restrictions
set forth in Section 5.10;
(h) by Parent, if Company will have failed to hold the Company
Special Meeting within seventy-five (75) days after the Form S-4 Registration
Statement is declared effective under the Securities Act; provided that such
failure is not due to circumstances beyond the reasonable control of Company,
including, without limitation, the existence of any statute, rule, regulation,
executive order, decree, preliminary injunction or restraining order enjoining,
preventing, prohibiting or delaying the Company Special Meeting; and
(i) by Company, but only until the expiration of the Initial
Period, if the Board of Directors of Company (i) has received a Superior
Proposal and (ii) after consultation with outside legal counsel to Company,
determines in good faith that such action is consistent with the fiduciary
duties of the Board of Directors to Company's stockholders under applicable law,
but only after 72 hours following Parent's receipt of written notice advising
Parent that the Board of Directors of Company is prepared to do so, and only if,
during such 72-hour period, Company and its advisors will have negotiated in
good faith with Parent to make such adjustments in the terms and conditions of
this Agreement as would enable the parties to proceed with the transactions
contemplated herein on such adjusted terms.
For purposes of this Agreement, "INITIAL PERIOD" means a period
commencing on the day following the date of this Agreement and ending at 5:00
p.m. Dallas, Texas time on the thirtieth (30th) calendar day after such
commencement; provided, however, that such period will be extended (and all such
extensions occurring in accordance herewith being deemed within the definition
of Initial Period) (i) for a period of up to ten (10) additional business days
after the date of delivery by Company to Parent of the notice specified in
Section 5.10(a)(i), so that at least ten (10) business days elapse between the
delivery by Company of the notice specified in Section 5.10(a)(i) and the
expiration of the Initial Period (exclusive of the extensions provided in
clauses (ii) and (iii) of this definition); (ii) during the 72 hour period
referred to in Section 7.1(i);
45
53
and (iii) if, during the 72 hour period referred to in Section 7.1(i), Parent
and Company have agreed to proceed with the transactions contemplated herein on
adjusted terms, for a period of up to 72 hours from the time of such agreement.
The party desiring to terminate this Agreement pursuant to this Section
7.1 will give written notice of such termination to the other party, specifying
the provision pursuant to which such termination is effected.
SECTION 7.2. Effect of Termination. If this Agreement is terminated
pursuant to Section 7.1, then this Agreement will become void and have no effect
with no liability or obligation on the part of Parent, Merger Sub or Company,
except that (a) the agreements contained in the last sentence of Section 5.5
(Access to Information; Confidentiality), Section 5.15 (Public Announcements),
Section 5.18 (Transaction Expenses and Termination Fee), this Section 7.2
(Effect of Termination) and Article VIII (General Provisions) will survive the
termination hereof and (b) no such termination will relieve any party of any
liability or damages resulting from any breach by that party of any of its
representations, warranties, covenants or agreements set forth in this
Agreement.
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.1. Nonsurvival of Representations and Warranties; Survival of
Certain Covenants. Except as provided in the immediately following sentence,
none of the representations, warranties, covenants or agreements in this
Agreement or in any instrument delivered pursuant to this Agreement will survive
the Effective Time. This Section 8.1 will not limit in any manner whatsoever any
covenant or agreement of the parties the terms of which contemplate performance
after the Effective Time. Nothing contained in this Section 8.1 will relieve any
party from liability for any willful breach of this Agreement.
SECTION 8.2. Notices. All notices, requests, claims, demands and other
communications under this Agreement will be in writing and will be deemed given
if delivered personally or sent by overnight courier (providing proof of
delivery) to the parties at the following addresses (or at such address for a
party as will be specified by like notice):
(a) if to Company, to:
The Xxxxxxxx Group, Inc.
0000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxxxxxx X. Xxxxxxxx
Facsimile No.: (000) 000-0000
46
54
with a copy to:
Xxxxx Xxxxxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Facsimile No.: (000) 000-0000
(b) if to Parent or Merger Sub, to:
Clear Channel Communications, Inc.
000 Xxxx Xxxxx Xxxx
Xxx Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxx
Facsimile No.: (000) 000-0000
with a copy to:
Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P.
0000 Xxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: J. Xxxxxxx Xxxxxx, Xx., P.C.
Facsimile No.: (000) 000-0000
SECTION 8.3. Counterparts. This Agreement may be executed in one or
more counterparts, all of which will be considered one and the same agreement
and will become effective when one 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.
SECTION 8.4. Entire Agreement; No Third-Party Beneficiaries. This
Agreement constitutes the entire agreement, and supersedes all prior agreements
and understandings, both written and oral, among the parties with respect to the
subject matter of this Agreement (provided, however, that the provisions of the
Confidentiality Agreement will remain valid and in effect) and, except for the
provisions of Article II (Effect of the Merger), Section 5.7 (Rights Under Stock
Plans) and Section 5.11 (Director and Officer Liability) is not intended to
confer upon any person other than the parties any rights or remedies hereunder.
SECTION 8.5. Assignment. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement will be assigned, in whole or in
part, by operation of law or otherwise by any of the parties hereto without the
prior written consent of the other parties, except that Merger Sub may assign,
in its sole discretion, any or all of its rights, interests and obligations
under this Agreement to Parent or to any direct or indirect wholly-owned
subsidiary of Parent, but no such assignment will relieve Merger Sub of any of
its obligations under this Agreement. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of, and be enforceable by,
the parties and their respective successors and assigns.
47
55
SECTION 8.6. Governing Law. This Agreement will be governed by, and
construed in accordance with, the laws of the State of Delaware, without regard
to any applicable conflicts of law.
SECTION 8.7. Enforcement. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties will be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States
located in the State of Delaware or in Delaware state court, this being in
addition to any other remedy to which they are entitled at law or in equity. In
addition, each of the parties hereto (a) consents to submit itself to the
personal jurisdiction of any federal court located in the State of Delaware or
any Delaware state court in the event any dispute arises out of this Agreement
or any of the transactions contemplated by this Agreement, (b) agrees that it
will not attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court and (c) agrees that it will not bring any
action relating to this Agreement or any of the transactions contemplated by
this Agreement in any court other than a federal or state court sitting in the
State of Delaware.
SECTION 8.8. Severability. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction will, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable, such provision will be
interpreted to be only so broad as is enforceable.
SECTION 8.9. Headings. Headings of the Articles and Sections of this
Agreement are for convenience of the parties only, and will be given no
substantive or interpretive effect whatsoever.
SECTION 8.10. Finders or Brokers. Except for Credit Suisse First Boston
with respect to Company, a copy of whose engagement agreement has been or will
be provided to Parent, and Xxxxxxx Xxxxx Xxxxxx with respect to Parent, a copy
of whose engagement agreement has been or will be provided to Company, neither
Company nor Parent nor any of their respective Subsidiaries has employed any
investment banker, broker, finder or intermediary in connection with the
transactions contemplated hereby who might be entitled to any fee or any
commission in connection with or upon consummation of the Merger.
SECTION 8.11. Amendment. This Agreement may be amended by the parties
at any time before or after approval hereof by the stockholders of Company and
Parent; provided, however, that after such stockholder approval there will not
be made any amendment that by law requires further approval by the stockholders
of Company or Parent without the further approval of such stockholders. This
Agreement may not be amended except by an instrument in writing signed on behalf
of each of the parties.
SECTION 8.12. Extension; Waiver. At any time prior to the Effective
Time, the parties may (a) extend the time for the performance of any of the
obligations or other acts of the
48
56
other parties, (b) waive any inaccuracies in the representations and warranties
contained in this Agreement or in any document delivered pursuant to this
Agreement or (c) subject to the proviso of Section 8.11, waive compliance with
any of the agreements or conditions contained in this Agreement. Any agreement
on the part of a party to any such extension or waiver will be valid only if set
forth in an instrument in writing, signed on behalf of such party. The failure
of any party to this Agreement to assert any of its rights under this Agreement
or otherwise will not constitute a waiver of those rights.
SECTION 8.13. Procedure for Termination, Amendment, Extension or
Waiver. A termination of this Agreement or other action attributed to the Board
of Directors pursuant to Section 7.1, an amendment of this Agreement pursuant to
Section 8.11 or an extension or waiver pursuant to Section 8.12 will, in order
to be effective, require in the case of Parent, Merger Sub or Company, action by
its Board of Directors, acting by the affirmative vote of a majority of the
members of the entire Board of Directors.
[SIGNATURE PAGE FOLLOWS]
49
57
IN WITNESS WHEREOF, Parent, Merger Sub and Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the date first written above.
CLEAR CHANNEL COMMUNICATIONS, INC.
By: /s/ Xxxxxxx X. Xxxx
--------------------------------------------
Name: Xxxxxxx X. Xxxx
Title: Executive Vice President and
Chief Financial Officer
CCMM SUB, INC.
By: /s/ Xxxxxxx X. Xxxx
--------------------------------------------
Name: Xxxxxxx X. Xxxx
Title: Executive Vice President and
Chief Financial Officer
THE XXXXXXXX GROUP, INC.
By: /s/ Xxxxxxxxxxx X. Xxxxxxxx
--------------------------------------------
Name: Xxxxxxxxxxx X. Xxxxxxxx
Title: President
1
