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EXHIBIT 10.29
EXECUTION COPY
ESCROW AGREEMENT
THIS ESCROW AGREEMENT, dated as of this 10th day of April,
1997 (this "Agreement"), is by and among Clear Channel Communications, Inc., a
Texas corporation ("Purchaser"), Xxxx X. Xxxxx, as stockholder representative
(the "Stockholder Representative") for each of the persons listed on Exhibit A
hereto and as each such person's attorney in fact and agent pursuant to Section
13(b) of the Stock Purchase Agreement (as defined below), EM Holdings LLC, an
Arizona limited liability company ("Holdings"), and Chase Trust Company of
California, a California corporation, as escrow agent (the "Escrow Agent").
RECITALS
A. Concurrently with the execution and delivery hereof,
Purchaser is acquiring 1793.504 of the issued and outstanding shares of capital
stock of Xxxxx Media Corporation, a Delaware corporation (the "Company"),
pursuant to a Stock Purchase Agreement, dated as of February 25, 1997, as
amended (the "Stock Purchase Agreement"), by and among Purchaser, the Company
and those persons listed on Exhibit A thereto (individually, including Holdings
and both option holders and stockholders as identified on such exhibit, each a
"Stockholder" and collectively, the "Stockholders").
B. Purchaser and the Stockholders desire to set aside a
portion of the consideration to be paid to the Stockholders pursuant to Section
2(b) of the Stock Purchase Agreement, for the purpose of providing Purchaser
with a remedy in the event of a breach by the Company or the Stockholders of
the representations, warranties and covenants made in the Stock Purchase
Agreement.
C. Purchaser and the holders of Company Stock Options
(as defined in the Stock Purchase Agreement) which have not been exercised
prior to the Closing (as defined in the Stock Purchase Agreement) desire to set
aside rights to a portion of the Purchaser Common Stock (as defined in the
Stock Purchase Agreement) to be delivered to holders of Restated Options (as
defined in the Stock Purchase Agreement) upon exercise of such Restated Options
pursuant to the Option Assumption Agreements (as defined in the Stock Purchase
Agreement), for the purpose of providing Purchaser with a remedy in the event
of a breach by the Company or the Stockholders of the representations,
warranties and covenants made in the Stock Purchase Agreement.
D. Purchaser, Holdings and the Company have entered into
that certain Stockholders Agreement, dated as of April 8, 1997 (the
"Stockholders Agreement"), pursuant to which the Holdings Stockholders (as
defined in the Stockholders Agreement) have been granted certain put rights
(the "Put Right"), and obligated themselves with respect to certain purchase
rights (the "Redemption Right"), upon the terms and subject to the conditions
set forth therein.
E. Purchaser and Holdings desire to set aside rights to
a portion of the Purchaser Common Stock to be delivered to the Holdings
Stockholders upon exercise of the Put Right or the Redemption Right, as the
case may be, pursuant to the Stockholders Agreement,
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for the purpose of providing Purchaser with a remedy in the event of a breach
by the Company or the Stockholders of the representations, warranties and
covenants made in the Stock Purchase Agreement.
F. A material condition to the consummation of the
transactions contemplated by the Stock Purchase Agreement is that the parties
hereto enter into this Agreement.
AGREEMENT
NOW THEREFORE, in consideration of the mutual covenants and
premises contained herein and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto agree
as follows:
1. Definitions. Except as hereinafter defined, capitalized terms
used in this Agreement will have the meanings assigned to such terms in the
Stock Purchase Agreement.
"Account" or "Accounts" shall mean ADCO Account(s) and/or
General Account(s).
"ADCO Account" shall have the meaning set forth in Section
4(a).
"ADCO Amount" shall mean $5 million.
"ADCO Contingent Shares" shall mean Contingent Shares
deposited in an ADCO Account.
"ADCO Initial Shares" shall mean a number of shares of
Purchaser Common Stock equal to (a) the ADCO Amount divided by the Average
Share Price, (b) multiplied by a fraction of which the numerator is the sum of
the percentages set forth opposite the names under the captions "Stockholders"
on Exhibit F, and of which the denominator is the sum of the percentages set
forth opposite the names under the captions "Stockholders," "Optionees," and
"Retained Shares" on Exhibit F.
"ADCO Prior Payment" shall mean, in the case of an Optionee or
Holdings, the product of multiplying (a) the respective numbers of Deposited
Contingent Shares previously deposited in such Holder's ADCO Account, by (b)
the Average Share Price.
"ADCO Required Amount" shall mean for an Optionee or for
Holdings the product of multiplying the ADCO Amount times the percentage set
forth opposite their respective names under the captions "Optionees" and
"Retained Shares," on Exhibit F.
"ADCO Required Number" shall mean for an Optionee or Holdings
such number of shares of Purchaser Common Stock as shall be the result of
dividing (a) his ADCO Undeposited Difference, by (b) the Average Share Price.
"ADCO shortfall" shall have the meaning set forth in Section
7(c).
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"ADCO Shortfall Responsibility" shall mean, for any Holder
with an ADCO Undeposited Difference after distribution of Escrow Funds pursuant
to Section 7(c), the product of multiplying (a) the amount of any ADCO
shortfall, up to the sum of all ADCO Undeposited Differences, by (b) a fraction
of which the numerator is such Holder's ADCO Undeposited Difference, and the
denominator is the sum of all ADCO Undeposited Differences, all as of the date
of distribution.
"ADCO Undeposited Difference" shall mean, at any time, in the
aggregate, the sum the ADCO Required Amounts for all Optionees and for
Holdings, less the aggregate amount of ADCO Prior Payments for all such
Holders; and for each Optionee or for Holdings, the ADCO Required Amount for
such Holder less his ADCO Prior Payments.
"Average Disbursement Share Price" shall mean the average
closing price of Purchaser Common Stock on the NYSE during the 10 trading days
beginning 13 trading days prior to, as applicable, (a) the date of any
disbursement of Escrowed Funds, or (b) the date of determination under Section
5 or 7.
"Claim" shall mean a claim for Damages incurred by Purchaser
pursuant to Section 12 of the Stock Purchase Agreement.
"Claim Date" shall have the meaning set forth in Section 5
hereof.
"Claim Expiration Time" shall mean the day prior to the first
anniversary of the Closing. If such day is not a Business Day or a trading day
on the NYSE, solely for purposes of the valuations required herein, the Escrow
Agent shall deem the Claim Expiration Time to be the next previous Business Day
which was a trading day on the NYSE.
"Claim Notice" shall have the meaning set forth in Section 5
hereof.
"Company" shall have the meaning set forth in Recital A
hereof.
"Contingent Shares" shall mean shares of Purchaser Common
Stock issued after the Closing on behalf of Optionees in respect of Restated
Options, and on behalf of Holdings in respect of the Put Right or the
Redemption Right, as the case may be.
"Damage Amount" shall have the meaning set forth in Section 5
hereof.
"Deposited Contingent Shares" shall mean at any time the
Contingent Shares deposited with the Escrow Agent.
"Escrow Agent" shall have the meaning set forth in the heading
hereof.
"Escrow Amount" shall mean $35 million.
"Escrowed Funds" shall have the meaning set forth in Section 4
hereof.
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"Escrowed Shares" shall mean the Initial Shares, the ADCO
Initial Shares, and any Deposited Contingent Shares.
"Exhibit F" shall mean Exhibit F to the Stock Purchase
Agreement.
"Final Instruction" shall have the meaning set forth in
Section 6 hereof.
"General Account" or "General Accounts" shall have the meaning
set forth in Section 4(a) hereof.
"Holders" shall mean the Stockholders, including Holdings with
respect to the Retained Shares.
"Holdings" shall have the meaning set forth in the heading
hereof.
"Indemnifiable Amount" shall mean those amounts for which
Purchaser is entitled to indemnity pursuant to Section 12(a) of the Stock
Purchase Agreement.
"Initial Shares" shall mean a number of shares of Purchaser
Common Stock equal to (a) the Escrow Amount divided by the Average Share Price,
(b) multiplied by a fraction of which the numerator is the sum of the
percentages set forth opposite the names under the caption "Stockholders" on
Exhibit F, and of which the denominator is the sum of the percentages set forth
opposite the names under the captions "Stockholders," "Optionees," and
"Retained Shares" on Exhibit F.
"Net Number" shall mean, as to an Optionee, the number of
shares of Purchaser Common Stock issued upon any exercise of a Restated Option,
minus the number of shares which is equal to the result of dividing the
aggregate exercise price of the portion of the Restated Option which was
exercised by the closing price per share of Purchaser Common Stock on the NYSE
on the trading day prior to the date of exercise of the Restated Option.
"Optionees" shall mean Stockholders who at the date hereof
hold unexercised Restated Options.
"Prior Payment" shall mean, in the case of an Optionee or
Holdings, the product of multiplying (a) the respective numbers of Deposited
Contingent Shares previously deposited on behalf of such Holder in such
Holder's General Account, by (b) the Average Share Price.
"Pro rata in proportion to their respective ownership of
Escrowed Shares" shall mean, as of the date of determination, the balance(s)
remaining in such Stockholder's General Account(s) or ADCO Account(s), as the
case may be.
"Purchaser" shall have the meaning set forth in the heading
hereof.
"Put Right" shall have the meaning set forth in Recital D
hereof.
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"Redemption Right" shall have the meaning set forth in Recital
D hereof.
"Reduction Formula" shall mean that number of shares of
Purchaser Common Stock equal to the lesser of the result of (a) dividing a
Holder's Shortfall Responsibility (or ADCO Shortfall Responsibility, as the
case may be) by the Average Share Price (which is the number of shares which
otherwise would be required to be deposited in Escrow); and (b) dividing a
Holder's Shortfall Responsibility (or ADCO Shortfall Responsibility, as the
case may be) by the Average Disbursement Share Price as of the date of
determination (which is the number of shares, if available in the subject
Account, which otherwise would be required to be distributed from the Escrow to
satisfy the applicable Damage Amount).
"Required Amount" shall mean for an Optionee or for Holdings
the product of multiplying the Escrow Amount times the percentage set forth
opposite their respective names under the captions "Optionees" and "Retained
Shares," on Exhibit F.
"Required Number" shall mean for an Optionee or Holdings such
number of shares of Purchaser Common Stock as shall be the result of dividing
(a) his Undeposited Difference, by (b) the Average Share Price.
"reserve" shall have the meaning set forth in Section 7
hereof.
"Respective Percentages" shall mean the indicated respective
percentages set forth opposite a Stockholder's, Optionee's or Holdings' name on
Exhibit F.
"shortfall" shall have the meaning set forth in Section 7(d)
hereof.
"Shortfall Responsibility" shall mean, for any Holder with an
Undeposited Difference after distribution of Escrow Funds pursuant to Section
7(d), the product of multiplying (a) the amount of any shortfall, up to the
sum of all Undeposited Differences, by (b) a fraction of which the numerator is
such Holder's Undeposited Difference, and the denominator is the sum of all
Undeposited Differences, all as of the date of distribution.
"Stockholder Representative" shall have the meaning set forth
in the heading hereof.
"Stockholder" or "Stockholders" shall have the meaning set
forth in Recital A hereof.
"Stockholders Agreement" shall have the meaning set forth in
Recital D hereof.
"Stock Purchase Agreement" shall have the meaning set forth in
Recital A hereof.
"Total Escrow Amount" shall mean the ADCO Amount and the
Escrow Amount (or $40 million).
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"Undeposited Difference" shall mean, at any time, in the
aggregate, the sum of the Required Amounts for all Optionees and for Holdings,
less the aggregate amount of Prior Payments for all such Holders; and for each
Optionee or for Holdings, the Required Amount for such Holder less his Prior
Payments.
2. Appointment of Escrow Agent. Purchaser, Holdings and the
Stockholder Representative hereby designate and appoint Escrow Agent as escrow
agent for the purposes set forth herein, and the Escrow Agent hereby accepts
such appointment on the terms herein provided.
3. Deposit of Escrowed Shares.
(a) Simultaneously with the execution and delivery of
this Agreement, Purchaser, on behalf of the Stockholders and for the benefit of
Purchaser, shall deliver to the Escrow Agent one or more certificates
registered in the name of the Escrow Agent representing a number of shares of
Purchaser Common Stock equal to (i) the Initial Shares, and (ii) the ADCO
Initial Shares. In addition, the Optionees and Holdings hereby assign to the
Escrow Agent, for the benefit of Purchaser, their rights, as described in
Recitals C and E, to such number of Contingent Shares, as may be required of
each of the Optionees and Holdings hereunder. Upon such deposit, the duties
and obligations of each of the parties to this Agreement will commence.
(b) If, prior to the termination of this Agreement, any
Restated Options are exercised in whole or in part, a number of shares of
Purchaser Common Stock issuable upon such exercise equal to the lesser of (i)
the Net Number, or (ii) sum of the Required Number and the ADCO Required
Number, shall be delivered to the Escrow Agent and registered in the name of
the Escrow Agent, and such shares shall become and thereafter be Escrowed
Shares. Deposits first will be made to the ADCO Account and then to the
General Account. Notwithstanding the foregoing, the ADCO Required Number need
not be deposited if at the time of exercise there shall have been a final
distribution of Escrowed Funds pursuant to Section 7(c).
(c) If, prior to the termination of this Agreement, the
Put Right is exercised, in whole or in part, or the Redemption Right is
exercised, a number of shares of Purchaser Common Stock issuable upon such
exercise equal to the sum of the Required Number and the ADCO Required Number
shall be delivered to the Escrow Agent and registered in the name of the Escrow
Agent, and such shares shall become and thereafter be Escrowed Shares.
Deposits first will be made to the ADCO Account and then to the General
Account. Notwithstanding the foregoing, the ADCO Required Number need not be
deposited if at the time of exercise there shall have been a final distribution
of Escrowed Funds pursuant to Section 7(c).
4. Maintenance of Escrow.
(a) The Escrow Agent shall hold the Escrowed Shares in
escrow, and shall maintain and disburse the Escrowed Shares, pursuant to this
Agreement. The Escrow Agent shall establish separate accounts in respect of
any (i) Initial Shares (one for each Stockholder in respect of whom Initial
Shares were deposited), (ii) Deposited Contingent Shares other than
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ADCO Contingent Shares (one for each Optionee in respect of the exercise of
Restated Options and one for Holdings in respect of the exercise of the Put
Right or the Redemption Right) (the accounts in sub-paragraphs (i) and (ii)
individually a "General Account" and collectively, the "General Accounts"),
(iii) ADCO Initial Shares (one for each Stockholder in respect of whom ADCO
Initial Shares were deposited), and (iv) ADCO Contingent Shares (one for each
Optionee in respect of the exercise of Restated Options and one for Holdings in
respect of the exercise of the Put Right or the Redemption Right in each case
resulting in a deposit of ADCO Contingent Shares) (the accounts in
subparagraphs (iii) and (iv) individually an "ADCO Account" and collectively,
the "ADCO Accounts"), (v) and shall credit to such respective General Accounts
or ADCO Accounts, as the case may be, any stock splits or dividends payable in
stock or other securities, that are received with respect to such Initial
Shares, ADCO Initial Shares, or Deposited Contingent Shares.
(b) All stock splits or dividends payable in stock or
other securities that are made by Purchaser with respect to the Escrowed Shares
while such shares are held by the Escrow Agent shall be registered in the name
of the Escrow Agent, deposited in escrow and governed by this Agreement. The
Escrowed Shares, such stock or other dividends deposited in escrow and any cash
in lieu of fractional shares of Purchaser Common Stock are collectively
referred to in this Agreement as the "Escrowed Funds." All other dividends or
distributions made by Purchaser with respect to the Escrowed Shares while such
shares are held by the Escrow Agent shall be delivered to the Holders by the
Escrow Agent pro rata in accordance with their respective ownership of Escrowed
Shares at the time of such distribution, and such dividends or distributions
shall be made to each such Holder as soon as practicable after receipt by the
Escrow Agent of such dividends or distributions.
5. Purchaser's Right to Assert Claim to Escrowed Funds.
Purchaser shall have the right to make one or more Claims on or prior to the
Claim Expiration Time by delivering a notice of such Claim (a "Claim Notice")
to the Stockholder Representative and the Escrow Agent prior to such time (the
date of such notice, the "Claim Date"). If Purchaser asserts a Claim, such
Claim Notice shall state with particularity (i) the basis for the Claim,
together with sufficient facts relating thereto so that the Stockholder
Representative may reasonably evaluate such Claim, (ii) Purchaser's estimate of
the amount that equals the aggregate amount of such Indemnifiable Amount (the
"Damage Amount") (it being understood that such estimate shall not preclude
Purchaser from revising such Damage Amount by notice to the Stockholder
Representative and the Escrow Agent and thereafter such revised amount shall
become the Damage Amount for all purposes hereunder), and (iii) a calculation
of the number of Escrowed Shares to be disbursed from the Escrow Funds in
connection with such Damage Amount (for purposes of such calculation, each
share of Purchaser Common Stock shall be valued at the Average Disbursement
Share Price).
6. Determination of Valid Damage Amount; Final Instruction. For
purposes of this Agreement, a "Final Instruction" shall mean a written notice
given to the Escrow Agent directing the disbursement of Escrowed Funds in
respect of a Damage Amount (which had previously been set forth in a Claim
Notice properly delivered in accordance with the provisions of Section 5
hereof), and shall be signed both by Purchaser and by the Stockholder
Representative except as otherwise provided below in clause (b) or (d). A
Final Instruction shall
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be delivered to the Escrow Agent under the following circumstances, and
accompanied by the indicated documentation:
(a) If the Stockholder Representative disputes either the
validity, amount or calculation of the Claim and/or the Damage Amount, the
Stockholder Representative shall give written notice of such dispute to
Purchaser, with a copy to the Escrow Agent, within twenty (20) Business Days
after the delivery of the Claim Notice by Purchaser to the Stockholder
Representative. In such circumstances, no Final Instruction may be given to
the Escrow Agent except as provided in (c) or (d) below.
(b) If the Stockholder Representative fails to respond to
the Claim Notice within twenty (20) Business Days after the delivery to the
Stockholder Representative and the Escrow Agent of the Claim Notice, or if the
Stockholder Representative notifies the Escrow Agent that there is no dispute
with respect to the Claim and the Damage Amount, Purchaser shall have the right
to deliver to the Escrow Agent a Final Instruction, signed only by Purchaser,
with respect to the Claim and the Damage Amount.
(c) If the Stockholder Representative and Purchaser reach
an agreement with respect to the proper determination of the Claim and the
Damage Amount, the Stockholder Representative and Purchaser shall give to the
Escrow Agent a Final Instruction, signed by both the Stockholder Representative
and Purchaser, with respect to the Claim and the Damage Amount.
(d) If the Stockholder Representative and Purchaser are
unable to reach an agreement with respect to the proper determination of the
Claim and/or the Damage Amount, the disputed Claim and/or the Damage Amount
shall be submitted by Purchaser and the Stockholder Representative to court
action to be conducted New Castle County, State of Delaware, as provided in
Section 20 of the Stock Purchase Agreement. Upon final, non-appealable
resolution of such disputed Claim and/or the Damage Amount, either the
Stockholder Representative or Purchaser shall have the right to deliver to the
Escrow Agent a Final Instruction with respect to the Claim and the Damage
Amount based on and in compliance with the resolution of such court action,
signed only by the Stockholder Representative or by Purchaser, as the case may
be, and accompanied by a copy of any judgment or other court order with respect
thereto.
Upon receipt of a Final Instruction in accordance with this
Section, the Escrow Agent shall value the Escrowed Funds based on the valuation
procedures set forth in Section 8 hereof and shall distribute the Escrowed
Funds in accordance with Section 7 hereof. Notwithstanding anything to the
contrary in the foregoing, in no event shall the Escrow Agent distribute any
portion of the Escrowed Funds to Purchaser with respect to any Claim Notice
received by the Escrow Agent after the Claim Expiration Time.
The Stockholder Representative acknowledges that a Claim
Notice has been made in respect of the ADCO Claim (as defined in the Stock
Purchase Agreement) in the amount of the ADCO Amount, which Claim will be
treated as a disputed Claim subject to resolution as provided in Section 6(a).
The existence and estimation of the ADCO Claim (and the definition
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of the ADCO Amount) shall not preclude Purchaser from making an additional
Claim against the Escrow Amount in connection with the ADCO Claim, it being
understood that the Total Escrow Amount shall be available if and to the extent
required to satisfy the ADCO Claim (with amounts first being charged against
the ADCO Amount and thereafter against the Escrow Amount).
7. Distribution of Escrowed Funds.
(a) If Purchaser fails to make a Claim on or prior to the
Claim Expiration Time in accordance with Section 5 hereof or if any and all
Claims have been resolved and paid at such time, then as promptly as
practicable thereafter (and in no event later than ten (10) Business Days
following the Claim Expiration Time), the Escrow Agent shall deliver the
Escrowed Shares with all other Escrowed Funds relating to such Escrowed Shares
to the Holders pro rata in accordance with their respective ownership of
Escrowed Shares at the time of such distribution.
(b) If Purchaser timely makes a Claim or Claims as to
which there has been no Final Instruction by the expiration of the Claim
Expiration Time, the Escrow Agent promptly shall, at the Claim Expiration Time,
(i) multiply the aggregate Damage Amount of all such Claims by 110% (including
110% of the Damage Amount of the ADCO Claim (if any) less the sum of the
aggregate ADCO Undeposited Differences and the fair value determined as
provided in clause (iii) of this paragraph of all ADCO Accounts) (the
"reserve"), (ii) for each General Account, multiply the reserve by the
Respective Percentage applicable to the General Account (those opposite Holder
names under the caption "Stockholders" being applicable to Initial Shares
Accounts and those opposite Holder names under the captions "Optionees" and
"Retained Shares" being applicable to Deposited Contingent Share Accounts),
(iii) determine the fair value (which for each share of Purchaser Common Stock
shall be deemed to be the Average Disbursement Share Price) at the Claim
Expiration Time of each Holder's Account(s), and (iv) distribute to each Holder
the amount of any excess in his General Account(s) over the reserve applicable
to such General Account(s).
(c) Upon receipt of a Final Instruction with respect to
the ADCO Claim, the Escrow Agent promptly shall, on the date of such receipt,
(i) multiply the final Damage Amount for such ADCO Claim by the applicable
Respective Percentage(s) (as more particularly described in clause (b) (ii)
above), (ii) determine in accordance with Section 8 the fair value on such date
of each Holder's ADCO Account(s), (iii) distribute to each Holder the amount of
any excess of the amount(s) determined in (ii) over the amount(s) determined in
(i), and (iv) distribute the balance of property held in the ADCO Accounts to
Purchaser. If any portion of the Damages Amount relating to the ADCO Claim
shall remain unsatisfied as a result of ADCO Undeposited Differences in respect
of Optionees and/or Holdings (an "ADCO shortfall"), the Escrow Agent shall (x)
determine the amount thereof, up to the sum of all ADCO Undeposited
Differences, (y) calculate the ADCO Shortfall Responsibility of each Holder
with an ADCO Undeposited Difference, and (z) notify Purchaser and such Holders
of its determination. For each Holder with an ADCO Shortfall Responsibility,
Purchaser shall thereupon reduce the number of shares of Purchaser Common Stock
issuable upon exercise of such Holder's Restated Options or Put Right or
Redemption Right, as the case may be, by the number of shares determined by the
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Reduction Formula. To the extent the foregoing does not completely satisfy the
ADCO Claim, any balance will be satisfied from General Accounts, subject to
paragraph (d).
(d) After the Claim Expiration Time, upon receipt of a
Final Instruction with respect to all Claims, the Escrow Agent promptly shall,
on the date of such receipt, (i) multiply the final unsatisfied Damage Amount
(including the Damage Amount of the ADCO Claim less the sum (if any) of the
aggregate ADCO Undeposited Differences and the fair value determined in
accordance with clause (ii) of this paragraph) of all ADCO Accounts) by the
applicable Respective Percentage(s) (as more particularly described in clause
(b)(ii) above), (ii) determine in accordance with Section 8 the fair value on
such date of receipt of each Holder's Account(s), (iii) distribute to each
Holder the amount of any excess of the amount(s) determined in (ii) over the
amount(s) determined in (i), and (iv) distribute the balance of property held
in the General Accounts to Purchaser. If any portion of the Damage Amount
shall remain unsatisfied as a result of an Undeposited Difference in respect of
Optionees and/or Holdings (a "shortfall"), the Escrow Agent shall (x) determine
the amount thereof, up to the sum of all Undeposited Differences, (y) calculate
the Shortfall Responsibility of each Holder with an Undeposited Difference, and
(z) notify Purchaser and such Holders of its determinations. For each Holder
with a Shortfall Responsibility, Purchaser shall thereupon reduce the number of
shares of Purchaser Common Stock issuable upon exercise of such Holder's
Restated Options or Put Right or Redemption Right, as the case may be, by the
number of shares determined by the Reduction Formula.
8. Valuation of Escrowed Shares; Fractional Shares. For purposes
of determining the number of Escrowed Shares to be disbursed from the Escrow
Funds under this Agreement with respect to a Damage Amount, each share of
Purchaser Common Stock shall be valued at the Average Disbursement Share Price
and fractional shares shall be rounded to the nearest whole number.
9. Reliance by Escrow Agent; Liability of Escrow Agent. The
Escrow Agent shall be protected in acting upon any written notice, request,
waiver, consent, certificate, receipt, authorization or other paper or document
that the Escrow Agent believes to be genuine and what it purports to be. The
Escrow Agent may confer with its own corporate or outside legal counsel in the
event of any dispute or question as to the construction of any of the
provisions hereof, or its duties hereunder, and shall incur no liability and
shall be fully protected in acting in accordance with the written opinions of
such counsel. The duties of the Escrow Agent hereunder will be limited to the
observance of the express provisions of this Agreement. The Escrow Agent will
not be subject to, or be obliged to recognize, any other agreement between the
parties hereto or directions or instructions not specifically set forth as
provided for herein. The Escrow Agent will not make any payment or
disbursement from or out of the Escrow Funds that is not expressly authorized
pursuant to this Agreement. The Escrow Agent may rely upon and act upon any
instrument received by it pursuant to the provisions of this Agreement that it
reasonably believes to be genuine and in conformity with the requirements of
this Agreement. The Escrow Agent shall not be held liable for any error in
judgment made in good faith by an officer of the Escrow Agent unless it shall
be proved that the Escrow Agent was grossly negligent in ascertaining the
pertinent facts or acted intentionally in bad faith. The Escrow Agent will not
be liable for any action taken or not taken by it under the terms hereof in the
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absence of breach of its obligations hereunder or gross negligence or willful
misconduct on its part. Anything in this Agreement to the contrary
notwithstanding, in no event shall the Escrow Agent be liable for special,
indirect or consequential loss or damage of any kind whatsoever (including, but
not limited to, lost profits), even if the Escrow Agent had been advised of the
likelihood of such loss or damage and regardless of the form of action.
10. Indemnification of Escrow Agent. Purchaser, on the one hand,
and the Stockholders collectively (and severally, pro rata in proportion to
their Respective Percentages) on the other, will indemnify and hold the Escrow
Agent harmless from and against any and all losses, costs, damages or expenses
(including, but not limited to, reasonable attorneys' fees) it may sustain by
reason of its service as Escrow Agent hereunder, and except such losses, costs,
damages or expenses (including, but not limited to, reasonable attorneys' fees)
incurred by reason of such acts or omissions for which the Escrow Agent is
liable or responsible under the last sentence of Section 9 hereof. Any
indemnification amounts payable pursuant to this Section 10 shall be paid
one-half by the Purchaser, on the one hand, and one-half by the Stockholders
collectively, on the other.
11. Stockholder Representative; Successor Stockholder
Representative.
(a) The Holders have made, constituted and appointed the
Stockholder Representative as their agent and authorized and empowered him to
fulfill the role of Stockholder Representative hereunder. In the event of the
resignation of the Stockholder Representative, the resigning Stockholder
Representative shall appoint a successor either from among the Stockholders or
who shall otherwise be acceptable to Purchaser and who shall agree in writing
to accept such appointment, and the resigning Stockholder Representative's
resignation shall not be effective until such a successor shall exist. The
Holders entitled to receive a majority of the Escrowed Shares may remove the
Stockholder Representative at any time. If a Stockholder Representative should
die or become incapacitated or be removed by the Holders pursuant to this
Section 12, his successor shall be appointed within 21 days of his death or
incapacity by the remaining Holders entitled to receive a majority of the
Escrowed Shares, and such successor either shall be a Stockholder or shall
otherwise be acceptable to Purchaser. If the Holders fail to appoint a
successor within such 21- day period, then Purchaser shall have the right to
appoint the successor from among the Stockholders. The choice of a successor
Stockholder Representative appointed in any manner permitted above shall be
final and binding upon all of the Holders. The decisions and actions of any
successor Stockholder Representative shall be, for all purposes, those of a
Stockholder Representative as if originally named herein.
(b) Each Holder has made, constituted and appointed the
Stockholder Representative as such person's true and lawful attorney in fact
and agent, for such person and in such person's name, (i) to receive all
notices and communications directed to such Holder under this Agreement and the
Stock Purchase Agreement, (ii) to execute and deliver any and all documents
required to be executed and delivered by such Holder pursuant to this Agreement
in order to effect the transactions contemplated hereby, and (iii) to execute
and deliver all instruments and documents of every kind incident to the
foregoing to all intents and purposes and with the same effect as such Holder
could do personally. Notwithstanding the foregoing, except with respect to
administrative and other ministerial tasks, the Stockholder Representative
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is required and entitled to act only at the written direction of Holders
entitled to receive a majority of the Escrowed Shares.
(c) It is acknowledged by the Holders appointing the
Stockholder Representative that the designation of the Stockholder
Representative as attorney-in-fact is coupled with an interest and is binding
upon such Holders notwithstanding the death, incapacity or dissolution of any
such Holder. If any such event shall occur prior to the completion of the
transactions contemplated by this Agreement, the Stockholder Representative is,
nevertheless, to the extent that he is legally able to do so, authorized and
directed to complete all transactions and act pursuant to this authority as if
such event had not occurred. Purchaser is entitled to deal solely with the
Stockholder Representative in connection with this Agreement and is entitled to
rely upon the provisions hereof and the authority granted to the Stockholder
Representative to act on behalf of the Holders.
(d) The Stockholder Representative's acceptance of his
duties under this Agreement is subject to the following terms and conditions,
which the parties hereto agree shall govern and control with respect to his
rights, duties, liabilities and immunities as Stockholder Representative (but
not in his capacity as a Stockholder or as an officer, director, or employee of
the Company):
(i) The Stockholder Representative makes no
representation and has no responsibility as to the validity of this Agreement
or of any other instrument referred to herein, or as to the correctness of any
statement contained herein, and he shall not be required to inquire as to the
performance of any obligation under this Agreement.
(ii) The Stockholder Representative shall be
protected in acting upon written notice, request, waiver, consent, receipt or
other paper or document, not only as to its due execution and the validity and
effectiveness of its provisions, but also as to the truth of any information
therein contained, which he in good faith believes to be genuine and what it
purports to be.
(iii) The Stockholder Representative shall not be
liable for any error of judgment, or for any act done or step taken or omitted
by him in good faith, or for any mistake of fact or law, or for anything which
he may do or refrain from doing in connection therewith, except his own gross
negligence or willful misconduct.
(iv) The Stockholder Representative may consult
with competent and responsible legal counsel selected by him, and he shall not
be liable for any action taken or omitted by him in good faith in accordance
with the advice of such counsel.
(v) The Holders shall bear pro rata all expenses
(including transfer taxes and other governmental charges) incurred by the
Stockholder Representative in connection with his duties hereunder and shall
indemnify him against and save him harmless from any and all claims,
liabilities, costs, payments and expenses, including fees of counsel (who may
be selected by the Stockholder Representative), for anything done or omitted by
him in the
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performance of this Agreement or the Stock Purchase Agreement, except as a
result of his own gross negligence or willful misconduct.
(vi) The Stockholder Representative shall have no
duties or responsibilities except those expressly set forth herein and in the
Stock Purchase Agreement. He shall not be bound by any modification of this
Agreement or the Stock Purchase Agreement unless in writing and signed by the
other parties hereto or thereto and if his duties as Stockholder Representative
hereunder or thereunder are affected, unless he shall have given prior written
consent thereto.
12. Fees and Expenses of the Escrow Agent. All fees of the Escrow
Agent for its services hereunder, together with any expenses reasonably
incurred by the Escrow Agent in connection with this Agreement, shall be paid
one- half by Purchaser, on the one hand, and one-half by the Holders
collectively, on the other.
13. Resignation of the Escrow Agent. The Escrow Agent may resign
from its duties hereunder by giving each of the parties hereto not less than
sixty (60) days prior written notice of the effective date of such resignation
(which effective date shall be at least sixty (60) days after the date such
notice is given). The parties hereto intend that a substitute Escrow Agent
will be appointed by mutual agreement of Purchaser and the Stockholder
Representative to fulfill the duties of the Escrow Agent hereunder for the
remaining term of this Agreement in the event of the Escrow Agent's
resignation. If on or before the effective date of such resignation, a
substitute Escrow Agent has not been appointed, the Escrow Agent will thereupon
deposit the Escrowed Funds into the registry of a court of competent
jurisdiction.
14. Successor Escrow Agent. Any corporation into which the Escrow
Agent in its individual capacity may be merged or converted or with which it
may be consolidated, or any corporation resulting from any merger, conversion
or consolidation to which the Escrow Agent in its individual capacity shall be
a party, or any corporation to which substantially all the corporate trust
business of the Escrow Agent in its individual capacity may be transferred,
shall be the Escrow Agent under this Agreement without further act.
15. Designees for Instructions. Purchaser, may, by notice to the
Escrow Agent, designate one or more persons who will execute notices and from
whom the Escrow Agent may take instructions hereunder. Such designations may
be changed from time to time upon notice to the Escrow Agent from Purchaser.
The Escrow Agent will be entitled to rely conclusively on any notices or
instructions from any person so designated by Purchaser.
16. Inspection. All property held as part of the escrow shall at
all times be clearly identified as being held by the Escrow Agent hereunder.
Any party hereto may at any time during the Escrow Agent's business hours (with
reasonable notice) inspect any records or reports relating to the Escrowed
Funds.
17. Voting of Escrowed Shares. With respect to any matter on
which the Escrowed Shares or any other shares of Purchaser Common Stock in the
Escrowed Funds are entitled to vote, the Escrow Agent shall seek voting
instructions from the Holders. With respect to Holders
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who timely provide such instruction, the Escrow Agent shall vote the Escrowed
Shares that would be distributed to such Holders (assuming no Claim is made) in
accordance with the instructions received by such Holders, but shall not
otherwise vote such shares.
18. Notices. All notices, requests, demands and other
communications which are required or may be given under this Agreement shall be
in writing and shall be deemed to have been duly given when received if
personally delivered; when transmitted if transmitted by telecopy, electronic
or digital transmission method; the day after it is sent, if sent for next day
delivery to a domestic address by recognized overnight delivery service (e.g.,
Federal Express); and upon receipt, if sent by certified or registered mail,
return receipt requested. Notwithstanding the foregoing, a Claim Notice
delivered pursuant to Section 5 hereof and a Final Instruction provided
pursuant to Section 6 hereof shall be deemed to have been duly given only if
delivered personally, by recognized overnight delivery or by certified or
registered mail and if receipt of such Claim Notice or such Final Instruction,
as the case may be, was acknowledged in writing. In each case notice shall be
sent to:
(a) If to Purchaser: Clear Channel Communications, Inc.
000 Xxxxxxx Xxxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to: Clear Channel Communications, Inc.
000 Xxxxxxx Xxxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Piper & Marbury L.L.P.
00 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: X.X. Xxxxx, Xx., Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
(b) If to the Stockholder Representative:
Xxxx X. Xxxxx, Esq.
c/x Xxxxx Media Corporation
0000 Xxxx Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
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with a copy to: H & F Investors III, Inc.
Xxx Xxxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxxx, Xx.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Heller, Ehrman, White & XxXxxxxxx
000 Xxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Xxxxxx & Xxxxxxx
000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
(c) If to Holdings: Xxxx Xxxxx
c/x Xxxxx Media Corporation
0000 X. Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Xxxxx X. Xxxxx
c/x Xxxxx Media Corporation
0000 X. Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to: Xxxx X. Xxxxx, Esq.
c/x Xxxxx Media Corporation
0000 X. Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
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00
Xxxxxx & Xxxxxxx
000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
(d) If to the Escrow Agent: Chase Trust Company of California
000 Xxxxxxxxxx Xx., Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
or to such other place and with such other copies as either party may designate
as to itself by written notice to the others.
19. Assignment; Binding Effect. Neither this Agreement nor any of
the rights or obligations hereunder may be assigned by any party without the
prior written consent of the other parties. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
20. Amendment and Termination. This Agreement may be amended or
modified by and upon written notice to the Escrow Agent given jointly by
Purchaser, Holdings and the Stockholder Representative, but the duties and
responsibilities of the Escrow Agent may not be increased without its written
consent. This Agreement will terminate on the date on which all the Escrowed
Funds have been distributed in accordance with the terms set forth herein.
21. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
22. Severability and Further Assurances. This Agreement
constitutes the entire agreement among the parties and supersedes all prior and
contemporaneous agreements and undertakings on the parties in connection
herewith. No failure or delay of the Escrow Agent in exercising any right,
power or remedy may be, or may be deemed to be, a waiver thereof; nor may any
single or partial exercise of any right, power or remedy preclude any other or
further exercise of any right, power or remedy. In the event that any one or
more of the provisions contained in this Agreement, shall, for any reason, be
held to be invalid, illegal or unenforceable in any respect, then to the
maximum extent permitted by law, such invalidity, illegality or
unenforceability shall not affect any other provision of this Agreement. Each
of the parties hereto shall, at the request of any other party, deliver to the
requesting party all further documents or other assurances as may reasonably be
necessary or desirable in connection with this Agreement.
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23. Titles. The titles, captions or headings of the Sections
herein are for convenience of reference only and are not intended to be a part
of or to affect the meaning or interpretation of this Agreement.
24. Governing Law. This Agreement shall be construed and enforced
in accordance with the laws of the State of Delaware without regard to the
principles of conflicts of laws.
25. Tax Reporting. Unless otherwise required by Treasury
Regulations issued in the future, the parties will treat the Escrowed Shares
and any other shares of Purchaser Common Stock deposited with the Escrow Agent
hereunder for purposes of Section 468B(g) of the Internal Revenue Code of 1986,
as amended, and for all other income tax purposes as being owned by the Holders
during the period such shares are held in escrow, and therefore any income
earned on such shares during such period will be allocated and reported to the
Holders as such income is earned. The parties will make any elections or
filings required to characterize such shares in a manner consistent with the
preceding sentence. Each party to this Agreement (other than the Escrow
Agent), including the Stockholder Representative on behalf of each Stockholder,
shall provide a completed I.R.S. Form W-8 or Form W-9 to the Escrow Agent at
the signing of this Agreement. For purposes of reporting to tax authorities,
the Escrow Agent will treat all income earned by the escrow as paid upon
distribution. Purchaser, the Stockholder Representative, Holdings and the
Stockholders, jointly and severally, covenant and agree to indemnify and hold
the Escrow Agent harmless against all liability for tax withholding and/or
reporting for any payments made by the Escrow Agent pursuant to this Agreement
(it, being agreed; however, that as between the parties each is responsible for
its or his tax payments or reporting).
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have executed this
Escrow Agreement as of the date first written above.
CLEAR CHANNEL COMMUNICATIONS, INC.
By
--------------------------------------
Name:
Title:
EM HOLDINGS LLC
By
--------------------------------------
Xxxx Xxxxx
Managing Member
CHASE TRUST COMPANY OF CALIFORNIA
By
--------------------------------------
Xxxx X. Xxxxxx
Assistant Vice President,
As Escrow Agent
----------------------------------------
Xxxx X. Xxxxx, as
Stockholder Representative
