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EXHIBIT 10.14
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
AMONG
CAPSTAR RADIO BROADCASTING PARTNERS, INC.,
TBC RADIO ACQUISITION CORP.
AND
TRIATHLON BROADCASTING COMPANY
DATED AS OF JULY 23, 1998
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TABLE OF CONTENTS
PAGE
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ARTICLE 1
THE MERGER
SECTION 1.01. The Merger . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.02. Closing . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.03. Effective Time . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.04. Effects of the Merger . . . . . . . . . . . . . . . . . . . 2
SECTION 1.05. Certificate of Incorporation and By-laws . . . . . . . . . . 2
SECTION 1.06. Directors . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 1.07. Officers . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE 2
EFFECT OF THE MERGER ON THE SECURITIES OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
SECTION 2.01. Effect on Capital Stock and Derivative Securities . . . . . 3
SECTION 2.02. Exchange of Certificates . . . . . . . . . . . . . . . . . . 6
SECTION 2.03. Warrants, Options and SARs . . . . . . . . . . . . . . . . . 8
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. Representations and Warranties of the Company . . . . . . . 9
SECTION 3.02. Representations and Warranties of Parent and Sub . . . . . . 31
ARTICLE 4
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 4.01. Conduct of Business . . . . . . . . . . . . . . . . . . . . 33
SECTION 4.02. No Solicitation . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 4.03. Stockholders Meeting . . . . . . . . . . . . . . . . . . . . 39
SECTION 4.04. Assistance . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 4.05. Releases . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 4.06. Termination of Certain Affiliate Transactions . . . . . . . 41
SECTION 4.07. Signal Downgrade/Upgrade . . . . . . . . . . . . . . . . . . 41
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ARTICLE 5
ADDITIONAL AGREEMENTS
SECTION 5.01. Access to Information; Confidentiality . . . . . . . . . . . 41
SECTION 5.02. Reasonable Efforts . . . . . . . . . . . . . . . . . . . . . 42
SECTION 5.03. Benefit Plans; Vacation . . . . . . . . . . . . . . . . . . 44
SECTION 5.04. Indemnification, Exculpation and Insurance . . . . . . . . . 45
SECTION 5.05. Fees and Expenses; Deposit . . . . . . . . . . . . . . . . . 46
SECTION 5.06. Public Announcements . . . . . . . . . . . . . . . . . . . . 49
SECTION 5.07. Closing Extension . . . . . . . . . . . . . . . . . . . . . 49
SECTION 5.08. Citadel JSA . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 5.09. Environmental Assessments . . . . . . . . . . . . . . . . . 52
SECTION 5.10. Conversion of Class D Common Stock . . . . . . . . . . . . . 54
SECTION 5.11. Acquisition of Antelope Creek Property . . . . . . . . . . . 54
ARTICLE 6
CONDITIONS PRECEDENT
SECTION 6.01. Conditions to Each Party's Obligation To Effect the Merger . 55
SECTION 6.02. Conditions to Obligations of Parent and Sub . . . . . . . . 56
SECTION 6.03. Conditions to Obligation of the Company . . . . . . . . . . 58
ARTICLE 7
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.01. Termination . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 7.02. Effect of Termination . . . . . . . . . . . . . . . . . . . 61
SECTION 7.03. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . 61
ARTICLE 8
GENERAL PROVISIONS
SECTION 8.01. Nonsurvival of Representations and Warranties . . . . . . . 61
SECTION 8.02. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 8.03. Definitions . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 8.04. Interpretation . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 8.05. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 8.06. Entire Agreement; No Third-Party Beneficiaries . . . . . . . 67
SECTION 8.07. Governing Law . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 8.08. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 8.09. Enforcement . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 8.10. Director and Officer Liability . . . . . . . . . . . . . . . 68
SECTION 8.11. Termination Date . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 8.12. Binding Effect . . . . . . . . . . . . . . . . . . . . . . . 69
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Schedule A Principal Stockholders
Schedule B Series B Preferred Stockholders
Schedule C Class D Shares to be Converted
Annex A Form of Release Agreement
Annex B Form of Escrow Agreement
Annex C Form of Letter of Credit
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement") is entered into
as of July 23, 1998, among Capstar Radio Broadcasting Partners, Inc., a
Delaware corporation ("Parent"), TBC Radio Acquisition Corp., a Delaware
corporation and a wholly owned subsidiary of Parent ("Sub"), and Triathlon
Broadcasting Company, a Delaware corporation (the "Company").
WHEREAS, the respective Boards of Directors of Parent, Sub and the
Company, and Parent acting as the sole stockholder of Sub, have approved the
merger of Sub with and into the Company (the "Merger"), upon the terms and
subject to the conditions set forth in this Agreement;
WHEREAS, as a condition of the willingness of Parent and Sub to enter
into this Agreement, simultaneously with the execution of this Agreement by the
parties hereto, each of the record holders of outstanding capital stock of the
Company listed on Schedule A attached hereto (collectively, the "Principal
Stockholders") is entering into a Stockholder Agreement dated as of the date
hereof (collectively, the "Stockholder Agreements") with Parent, Sub and the
Company which provides, among other things, that, subject to the terms and
conditions thereof, each of the Principal Stockholders will vote all shares of
Capital Stock (as defined in Section 2.01(c)(i)) with respect to which such
Principal Stockholder possesses the power to vote or direct the vote thereof
(whether by direct ownership, voting trust, voting agreement, proxy or
otherwise) in favor of the Merger and the approval and adoption of this
Agreement and the transactions contemplated hereby to the extent such shares
are entitled to vote thereon;
WHEREAS, as a condition to the willingness of Parent and Sub to enter
into this Agreement, simultaneously with the execution of this Agreement by the
parties hereto, each of the record holders of outstanding Series B Convertible
Preferred Stock, par value $.01 per share, of the Company ("Series B Preferred
Stock") listed on Schedule B attached hereto (collectively, the "Series B
Preferred Stockholders") is entering into a Series B Agreement dated as of the
date hereof (the "Series B Agreement") with Parent and the Company;
WHEREAS, contemporaneously with the execution and delivery hereof,
Xxxxxx Xxxxx has entered into a Termination Agreement (the "Termination
Agreement") with Parent and the Company, which establishes the terms and
provisions under which such individual's employment with the Company shall
terminate;
WHEREAS, the Board of Directors of the Company has approved for
purposes of Section 203 of the Delaware General Corporation Law (the "DGCL")
the terms of the Stockholder Agreements and the transactions contemplated
thereby;
WHEREAS, Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger;
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NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties agree as
follows:
ARTICLE 1.
THE MERGER
SECTION 1.01. THE MERGER. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the DGCL, Sub
shall be merged with and into the Company at the Effective Time (as defined in
Section 1.03). Following the Effective Time, the separate corporate existence
of Sub shall cease and the Company shall continue as the surviving corporation
(the "Surviving Corporation") and shall succeed to and assume all the rights
and obligations of Sub in accordance with the DGCL.
SECTION 1.02. CLOSING. Subject to the provisions of Article 6, the
closing of the Merger (the "Closing") will take place at the offices of Xxxxxx
& Xxxxxx L.L.P., 0000 Xxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000, on the
earlier of (i) April 30, 1999 (as such date may be extended pursuant to Section
5.07), or (ii) such time, date or place as Parent shall specify by providing
written notice to the Company at least five (5) business days prior to such
date, provided that, at any time and from time to time prior to the occurrence
of the Closing, the date of Closing specified in any such notice may be delayed
by Parent on up to three separate occasions to a date not later than the
Termination Date by Parent delivering written notice to the Company at any time
prior to the occurrence of the Closing (the "Closing Date"), provided that upon
the third of such delays, Parent will pay the Company $25,000 within five
business days after the date such notice is given.
SECTION 1.03. EFFECTIVE TIME. Subject to the provisions of this
Agreement, as soon as practicable on the Closing Date, the parties shall file a
certificate of merger or other appropriate documents (in any such case, the
"Certificate of Merger") executed in accordance with the relevant provisions of
the DGCL and shall make all other filings or recordings required under the
DGCL. The Merger shall become effective at such time as the Certificate of
Merger is duly filed with the Delaware Secretary of State, or at such other
time as Sub and the Company shall agree should be specified, and is so
specified, in the Certificate of Merger (the time the Merger becomes effective
being hereinafter referred to as the "Effective Time").
SECTION 1.04. EFFECTS OF THE MERGER. The Merger shall have the
effects set forth in Section 259 of the DGCL.
SECTION 1.05. CERTIFICATE OF INCORPORATION AND BY-LAWS.
(a) The certificate of incorporation of the Company as in
effect immediately prior to the Effective Time shall be the certificate of
incorporation of the Surviving Corporation until thereafter changed or amended
as provided therein or by applicable law.
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(b) The by-laws of Sub as in effect at the Effective Time
shall be the by-laws of the Surviving Corporation until thereafter changed or
amended as provided therein or by applicable law.
SECTION 1.06. DIRECTORS. The directors of Sub immediately prior to
the Effective Time shall be 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.
SECTION 1.07. OFFICERS. The officers of Sub immediately prior to
the Effective Time shall be 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 2.
EFFECT OF THE MERGER ON THE SECURITIES OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
SECTION 2.01. EFFECT ON CAPITAL STOCK AND DERIVATIVE SECURITIES.
As of the Effective Time, by virtue of the Merger and without any action on the
part of the holder of any shares of the capital stock of the Company or Sub:
(a) CAPITAL STOCK OF SUB. Each issued and outstanding
share of capital stock of Sub shall be converted into and become a number of
fully paid and nonassessable shares of Class A Common Stock, par value $.01 per
share, of the Surviving Corporation equal to the quotient realized by dividing
(i) the sum of the aggregate number of shares of Class A Common Stock (as
defined in Section 2.01(b)(i)) determined on a fully-diluted basis immediately
prior to the Effective Time by (ii) the aggregate number of shares of capital
stock of Sub issued and outstanding immediately prior to the Effective Time.
The term "on a fully-diluted basis" shall mean, as of any date, the number of
shares of Class A Common Stock then outstanding (including any Dissenting
Shares (as defined in Section 2.01(e)) and shares of Class A Common Stock that
are owned by and held in the treasury of the Company), together with the
aggregate number of shares of Class A Common Stock that the Company may be
required, as of such date or thereafter, to issue (with or without notice,
lapse of time or the action of any third party) pursuant to any outstanding
securities, options, warrants, commitments, agreements, arrangements or
undertakings of any kind (including, without limitation, the Options, Warrants
(as such terms are defined in Section 2.03) and all Preferred Stock (as defined
in Section 8.03) and assuming the maximum number of shares of Common Stock (as
defined in Section 2.01(b)(iv)) issuable thereunder).
(b) CONVERSION OF COMMON STOCK.
(i) Each issued and outstanding share of Class A
Common Stock, par value $.01 per share, of the Company ("Class A
Common Stock") (other than shares to be canceled in accordance with
Section 2.01(d) and Dissenting Shares) shall be converted into the
right to receive the Common Per Share Price (as defined in Section
8.03) (the "Class A
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Merger Consideration"), payable to the holder thereof in cash, without
any interest thereon, upon surrender of the certificate representing
such share; and all such shares of Class A Common Stock shall no
longer be outstanding and automatically shall be canceled and retired
and shall cease to exist, and each holder of a certificate
representing any such shares of Class A Common Stock shall cease to
have any rights with respect thereto, except the right to receive the
Class A Merger Consideration to be paid in consideration therefor upon
surrender of such certificate in accordance with Section 2.02, without
interest.
(ii) Each issued and outstanding share of Class B
Common Stock, par value $.01 per share, of the Company ("Class B
Common Stock") (other than shares to be canceled in accordance with
Section 2.01(d) and Dissenting Shares) shall be converted into the
right to receive the Common Per Share Price (the "Class B Merger
Consideration"), payable to the holder thereof in cash, without any
interest thereon, upon surrender of the certificate representing such
share; and all such shares of Class B Common Stock shall no longer be
outstanding and automatically shall be canceled and retired and shall
cease to exist, and each holder of a certificate representing any such
shares of Class B Common Stock shall cease to have any rights with
respect thereto, except the right to receive the Class B Merger
Consideration to be paid in consideration therefor upon surrender of
such certificate in accordance with Section 2.02, without interest.
(iii) Each issued and outstanding share of Class C
Common Stock, par value $.01 per share, of the Company ("Class C
Common Stock") (other than shares to be canceled in accordance with
Section 2.01(d) and Dissenting Shares) shall be converted into the
right to receive the Common Per Share Price (the "Class C Merger
Consideration"), payable to the holder thereof in cash, without any
interest thereon, upon surrender of the certificate representing such
share; and all such shares of Class C Common Stock shall no longer be
outstanding and automatically shall be canceled and retired and shall
cease to exist, and each holder of a certificate representing any such
shares of Class C Common Stock shall cease to have any rights with
respect thereto, except the right to receive the Class C Merger
Consideration to be paid in consideration therefor upon surrender of
such certificate in accordance with Section 2.02, without interest.
(iv) Each issued and outstanding share of Class D
Common Stock, par value $.01 per share, of the Company ("Class D
Common Stock" and together with the Class A Common Stock, the Class B
Common Stock and the Class C Common Stock, the "Common Stock") (other
than shares to be canceled in accordance with Section 2.01(d) and
Dissenting Shares) shall be converted into the right to receive the
Common Per Share Price (the "Class D Merger Consideration" and,
together with the Class A Merger Consideration, the Class B Merger
Consideration and the Class C Merger Consideration, the "Common Stock
Merger Consideration"), payable to the holder thereof in cash, without
any interest thereon, upon surrender of the certificate representing
such share; and all such shares of Class D Common Stock shall no
longer be outstanding and automatically shall be canceled and retired
and shall cease to exist, and each holder of a certificate
representing any such shares of Class D Common Stock shall cease to
have any rights with respect thereto, except
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the right to receive the Class D Merger Consideration to be paid in
consideration therefor upon surrender of such certificate in
accordance with Section 2.02, without interest.
(c) CONVERSION OF THE PREFERRED STOCK AND DEPOSITARY
SHARES.
(i) Each issued and outstanding share of 9%
Mandatory Convertible Preferred Stock, par value $.01 per share, of
the Company ("Mandatory Preferred Stock"; the Common Stock, the
Mandatory Preferred Stock and the Series B Preferred Stock are
sometimes collectively referred to herein as the "Capital Stock")
(other than shares to be canceled in accordance with Section 2.01(d)
and Dissenting Shares) shall be converted into the right to receive
the Mandatory Preferred Per Share Price (as defined in Section 8.03)
(the "Mandatory Preferred Merger Consideration"), payable to the
holder thereof in cash, without any interest thereon, upon surrender
of the certificate representing such share; and all such shares of
Mandatory Preferred Stock shall no longer be outstanding and
automatically shall be canceled and retired and shall cease to exist,
and each holder of a certificate representing any such shares of
Mandatory Preferred Stock shall cease to have any rights with respect
thereto, except the right to receive the Mandatory Preferred Merger
Consideration to be paid in consideration therefor upon surrender of
such certificate in accordance with Section 2.02, without interest.
(ii) Each Depositary Share shall be converted into
the right to receive the Depositary Share Merger Consideration (as
defined in Section 8.03), payable to the holder thereof in cash,
without any interest thereon, upon surrender and exchange of the
receipt representing such Depositary Share. The Company shall
cooperate with Parent in notifying the Depositary (as defined in
Section 8.03) to establish the duties and responsibilities of the
Depositary, on terms reasonably acceptable to Parent, in distributing
the Depositary Share Merger Consideration (as defined in Section 8.03)
to holders of Depositary Shares.
(iii) Each issued and outstanding share of Series B
Preferred Stock (other than shares to be canceled in accordance with
Section 2.01(d) and Dissenting Shares) shall be converted into the
right to receive $.01 (the "Series B Merger Consideration" and,
together with the Common Stock Merger Consideration and the Mandatory
Preferred Merger Consideration, the "Merger Consideration"), payable
to the holder thereof in cash, without any interest thereon, upon
surrender of the certificate representing such share; and all such
shares of Series B Preferred Stock shall no longer be outstanding and
automatically shall be canceled and retired and shall cease to exist,
and each holder of a certificate representing any such shares of
Series B Preferred Stock shall cease to have any rights with respect
thereto, except the right to receive $.01 per share to be paid in
consideration therefor upon surrender of such certificate in
accordance with Section 2.02, without interest.
(d) CANCELLATION OF TREASURY STOCK AND PARENT-OWNED
STOCK. Each share of Common Stock and Preferred Stock that is owned by the
Company or by any wholly-owned Subsidiary (as defined in Section 8.03) of the
Company and each share of Common Stock and Preferred Stock that is owned by
Parent, Sub or any other wholly-owned Subsidiary of Parent
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automatically shall be canceled and retired and shall cease to exist, and no
consideration shall be delivered in exchange therefor.
(e) DISSENTING SHARES. Notwithstanding anything in this
Agreement to the contrary, shares of Common Stock and Preferred Stock that are
issued and outstanding immediately prior to the Effective Time and that are
held by stockholders who properly have exercised appraisal rights with respect
thereto under Section 262 of the DGCL (the "Dissenting Shares") shall not be
converted into the right to receive the consideration therefor specified in
this Section 2.01, but the holders of Dissenting Shares shall be entitled to
receive such payment as shall be determined pursuant to Section 262 of the
DGCL; provided, however, that if any such holder shall have failed to perfect
or shall withdraw or lose the right to appraisal and payment under the DGCL,
each such holder's shares of Common Stock or Preferred Stock thereupon shall be
deemed to have been converted as of the Effective Time into the right to
receive the consideration therefor specified in this Section 2.01, without any
interest thereon, as provided in Section 2.02, and such shares shall no longer
be Dissenting Shares.
SECTION 2.02. EXCHANGE OF CERTIFICATES.
(a) PAYING AGENT. At or prior to the Effective Time,
Parent shall enter into an agreement with a bank or trust Company mutually
acceptable to Parent and the Company (the "Paying Agent"), which shall provide
that Parent shall deposit with the Paying Agent immediately after the Effective
Time, for the benefit of the holders of shares of Common Stock and shares of
Preferred Stock for exchange in accordance with this Article 2, through the
Paying Agent, cash in the aggregate amount required to make the payments
specified in Section 2.01, in respect of the Common Stock and the Preferred
Stock issued and outstanding at the Effective Time (other than Dissenting
Shares and shares canceled in accordance with Section 2.01(d)), such sum of
cash being hereinafter referred to as the "Exchange Fund." The Paying Agent
shall, pursuant to irrevocable instructions, deliver cash in exchange for
surrendered certificates representing Common Stock or Preferred Stock in
accordance with Sections 2.01 and 2.02.
(b) EXCHANGE PROCEDURES. As soon as reasonably
practicable after the Effective Time but no later than three business days
following the Effective Time, the Paying Agent shall mail to each holder of
record of a certificate or certificates which immediately prior to the
Effective Time represented outstanding shares of Common Stock or Preferred
Stock (collectively, the "Certificates"), (i) a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title to
the Certificates shall pass, only upon delivery of the Certificates to the
Paying Agent and shall be in such form and have such other provisions as Parent
may reasonably specify) and (ii) instructions for use in effecting the
surrender of the Certificates in exchange for the consideration payable
therefor pursuant to Section 2.01. Upon surrender of a Certificate for
cancellation to the Paying Agent or to such other agent or agents as may be
appointed by Parent, together with such letter of transmittal, duly executed,
and such other documents as may reasonably be required by the Paying Agent, the
holder of such Certificate shall be entitled to receive in exchange therefor
the consideration which such holder has the right to receive pursuant to the
provisions of this Article 2, and the Certificate so surrendered shall
forthwith be canceled. If any
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holder of Common Stock or Preferred Stock shall be unable to surrender such
holder's Certificates because such Certificates have been lost, stolen or
destroyed, such holder may deliver in lieu thereof an affidavit and indemnity
agreement in form and substance reasonably satisfactory to the Parent. In the
event payment is requested to be made to a person other than the person in
whose name a surrendered Certificate is registered in the books of the Company,
cash representing the consideration payable pursuant to Section 2.01 may be
paid to a Person other than the Person in whose name the Certificate so
surrendered is registered if such Certificate shall be properly endorsed or
otherwise be in proper form for transfer and the Person requesting such payment
shall pay any transfer or other Taxes (as defined in Section 3.01(j)(ix))
required by reason of payment of the consideration specified in Section 2.01 to
a Person other than the registered holder of such Certificate or establish to
the satisfaction of Parent that such Tax has been paid or is not applicable.
Until surrendered as contemplated by this Section 2.02, each Certificate shall
be deemed at any time after the Effective Time to represent only the right to
receive upon such surrender the consideration specified in this Article 2. No
interest will be paid or will accrue on any cash payable to holders of
Certificates pursuant to the provisions of this Article 2.
(c) TRANSFER BOOKS. At and after the Effective Time,
there shall be no transfers on the stock transfer books of the Company of the
shares of Common Stock or shares of Preferred Stock which were outstanding
immediately prior to the Effective Time. On or after the Effective Time, any
Certificates presented to the Surviving Corporation or the Paying Agent for any
reason, except notations thereon that a stockholder has elected to exercise his
rights to appraisal pursuant to Delaware law, shall be canceled and exchanged
as provided in this Article 2.
(d) TERMINATION OF EXCHANGE FUND. Any portion of the
Exchange Fund which remains undistributed to the holders of the Certificates
for one year after the Effective Time shall be delivered to Parent, upon
demand, and any holders of the Certificates who have not theretofore complied
with this Article 2 shall thereafter look only to Parent for payment of the
consideration therefor specified in this Article 2.
(e) NO LIABILITY. None of Parent, Sub, the Company or the
Paying Agent shall be liable to any Person in respect of any cash from the
Exchange Fund delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
(f) INVESTMENT OF EXCHANGE FUND. The Paying Agent shall
invest any cash included in the Exchange Fund, as directed by Parent, on a
daily basis, provided that any such investment is guaranteed as to payment of
principal and interest by the federal government of the United States. Any
interest and other income resulting from such investments shall be paid to
Parent.
(g) WITHHOLDING OF TAX. Parent shall be entitled to
deduct and withhold from the Merger Consideration otherwise payable pursuant to
this Agreement to any former holder of Capital Stock such amount as Parent (or
any Affiliate thereof) or the Paying Agent is required to deduct and withhold
with respect to the making of such payment under the United States Internal
Revenue Code of 1986, as amended (the "Code"), or state, local or foreign Tax
law. To the extent that amounts are so withheld by Parent, such withheld
amounts shall be treated for all purposes of
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this Agreement as having been paid to the former holder of Capital Stock in
respect of which such deduction and withholding was made by Parent.
SECTION 2.03. WARRANTS, OPTIONS AND SARS.
(a) WARRANTS. At the Effective Time, each then
outstanding warrant to purchase shares of Common Stock pursuant to the Warrants
to purchase Class A Common Stock dated September 7, 1995 (the "Warrant
Agreement") (whether or not then presently exercisable) (collectively, the
"Warrants"), shall continue to be outstanding subject to the respective terms
and conditions of the agreements relating thereto and, subsequent to the
Effective Time, shall be exercisable for cash, with each agreement evidencing
the Warrants immediately prior to the Effective Time evidencing the right to
receive (without payment of the per share exercise price of such Warrant) an
amount in cash, without any interest thereon, for each share of Class A Common
Stock subject to such Warrant, equal to the difference between the Common Per
Share Price and the per share exercise price of such Warrant to the extent such
difference is a positive number, less any applicable withholding Taxes. The
aggregate consideration payable to each Warrant holder shall be rounded to the
nearest xxxxx. The surrender of a Warrant to the Company in exchange for the
consideration set forth in this Section 2.03(a) shall, to the extent permitted
by law, be deemed a release of any and all rights the holder had or may have
had in respect of such Warrant.
(b) OPTIONS. At the Effective Time, each then
outstanding option to purchase shares of Common Stock granted by the Company
(whether or not then presently vested or exercisable) (collectively, the
"Options"), shall be canceled, and each holder of a canceled Option shall be
entitled `to receive, as soon as practicable (but in no event later than one
business day) after the Effective Time, in consideration for the cancellation
of such Option, an amount in cash, without any interest thereon, for each share
of Common Stock subject to such Option equal to the difference between the
Common Per Share Price and the per share exercise price of such Option to the
extent such difference is a positive number, less any applicable withholding
Taxes. Each agreement evidencing the Options immediately prior to the
Effective Time that are settled pursuant to this Section shall be deemed for
all purposes to evidence solely the right to receive the consideration per
Option as provided in this Section 2.03(b). The aggregate cash consideration
payable to each holder of Options shall be rounded up to the nearest xxxxx.
The surrender of an Option to the Company in exchange for the consideration set
forth in this Section 2.03(b) shall, to the extent permitted by law, be deemed
a release of any and all rights the holder had or may have had in respect of
such Option.
(c) STOCK APPRECIATION RIGHTS. At the Effective Time,
each then outstanding stock appreciation right with respect to shares of Common
Stock granted by the Company (whether or not presently exercisable)
(collectively, the "SARs") shall be canceled, and each holder of a canceled SAR
shall be entitled to receive, as soon as practicable (but in no event later
than one business day) after the Effective Time, in consideration for the
cancellation of such SAR, an amount in cash, without any interest thereon, for
each share of Common Stock subject to such SAR equal to (i) with respect to
each then outstanding 1996 SAR (as defined in Section 8.03), one-half of the
difference between $0.01 and the Common Per Share Price or (ii) with respect to
each then
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outstanding 1995 SAR (as defined in Section 8.03) and all other outstanding
SARs, the difference between the Common Per Share Price and the per share base
price of such SAR to the extent such difference is a positive number, in all
cases less any applicable withholding Taxes. Each agreement evidencing the
SARs immediately prior to the Effective Time that are settled pursuant to this
Section 2.03(c) shall be deemed for all purposes to evidence solely the right
to receive the consideration per SAR as provided in this Section 2.03(c). The
aggregate consideration payable to each SAR holder shall be rounded up to the
nearest xxxxx. The surrender of a SAR to the Company in exchange for the
consideration set forth in this Section 2.03(c) shall, to the extent permitted
by law, be deemed a release of any and all rights the holder had or may have
had in respect of such SAR.
(d) OPTION AND SAR TRANSFER BOOKS. At and after the
Effective Time, there shall be no transfers on the books of the Company of the
Options or SARs which were outstanding immediately prior to the Effective Time.
On or after the Effective Time, any certificates or agreements evidencing
Options or SARs presented to the Surviving Corporation for any reason shall be
canceled and exchanged as provided in this Article 2.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The
Company represents and warrants to Parent and Sub as follows:
(a) ORGANIZATION, STANDING AND CORPORATE POWER. Each of
the Company and each of its Subsidiaries (as defined in Section 8.03) is a
corporation or other entity duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is incorporated or
organized and has the requisite corporate or other such entity power and
authority to carry on its business as now being conducted. Each of the Company
and each of its Subsidiaries is duly qualified or licensed to do business and
is in good standing in each jurisdiction in which the nature of its business or
the ownership or leasing of its properties makes such qualification or
licensing necessary, other than in such jurisdictions where the failure to be
so qualified or licensed or to be in good standing individually or in the
aggregate could not reasonably be expected to have a Material Adverse Effect
(as defined in Section 8.03) on the Company. The Company has delivered (or, in
the case of the Company's Subsidiaries, made available) to Parent prior to the
execution of this Agreement complete and correct copies of its certificate of
incorporation and by-laws, as in effect on the date of this Agreement, and the
certificate of incorporation and by-laws (or comparable organizational
documents) of its Subsidiaries, in each case as amended to date.
(b) SUBSIDIARIES. Section 3.01(b)(i) of the Company
Disclosure Schedule (as defined in Section 8.03) sets forth a true and complete
list, as of the date hereof, of each Subsidiary of the Company, together with
the jurisdiction of incorporation or organization and the percentage of each
Subsidiary's outstanding capital stock or other equity interests owned by the
Company or another Subsidiary of the Company. Except as set forth in Section
3.01(b)(ii) of the Company Disclosure Schedule, all the outstanding shares of
capital stock of, or other ownership interests in,
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each Subsidiary of the Company have been validly issued and (with respect to
corporate Subsidiaries) are fully paid and nonassessable and are owned directly
or indirectly by the Company, free and clear of all pledges, claims, liens,
charges, encumbrances and security interests of any kind or nature whatsoever
(collectively, "Liens"). Except for the capital stock of its Subsidiaries and
the partnership interests listed in Section 3.01(b)(iii) of the Company
Disclosure Schedule, as of the date hereof, the Company does not own, directly
or indirectly, any capital stock or other ownership interest in any
corporation, limited liability company, partnership, joint venture or other
entity.
(c) CAPITAL STRUCTURE.
(i) The authorized capital stock of Company
consists of 30,000,000 shares of Class A Common Stock, 1,689,256
shares of Class B Common Stock, 367,344 shares of Class C Common
Stock, 1,444,366 shares of Class D Common Stock and 4,000,000 shares
of preferred stock, par value $.01 per share ("Authorized Preferred
Stock"), of which, as of the date of this Agreement, (A) 3,172,533
shares of Class A Common Stock are issued and outstanding, (B) 244,890
shares of Class B Common Stock are issued and outstanding, (C) 31,000
shares of Class C Common Stock are issued and outstanding, (D)
1,444,366 shares of Class D Common Stock are issued and outstanding,
(E) 600,000 shares of Authorized Preferred Stock are designated as
Series B Preferred Stock, 565,000 shares of which are issued and
outstanding, (F) 598,000 of the Authorized Preferred Stock are
designated as Mandatory Preferred Stock, 583,400 shares of which are
issued and outstanding, and (G) no shares of Class A Common Stock,
Class B Common Stock, Class C Common Stock or Class D Common Stock are
held by the Company in its treasury or by any of the Company's
Subsidiaries.
(ii) As of the date hereof, there are no bonds,
debentures, notes or other indebtedness issued or outstanding having
the right to vote on any matters on which holders of Common Stock or
Authorized Preferred Stock may vote, including without limitation the
Merger.
(iii) Section 3.01(c)(iii) of the Company's
Disclosure Schedule sets forth a complete and correct list as of the
date hereof, of each holder of record of shares of Class B Common
Stock, Class C Common Stock, Class D Common Stock and Series B
Preferred Stock and, in each case, the number of shares held of record
by each such holder.
(iv) Giving effect to the applicable provisions of
the Company's Amended and Restated Certificate of Incorporation (the
"Restated Certificate"), the Certificate of Designation of Series B
Convertible Preferred Stock (the "Series B Designation"), the
Certificate of Designations of Preferred Stock of Triathlon
Broadcasting Company to be designated 9% Mandatory Convertible
Preferred Stock (the "Mandatory Designation") and all other
instruments affecting the rights of holders of Capital Stock to which
the Company is a party or is bound (which, if any, other than the
Restated Certificate, the Series B Designation, the Mandatory
Designation and the Transaction Documents (as defined in Section
8.03), are set forth in Section 3.01(c)(iv) of the Company Disclosure
Schedule):
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(A) each outstanding share of Class D
Common Stock is convertible into one share of Class A Common
Stock or, in the event of an occurrence set forth in paragraph
4.2(f)(iii)(B) of Article Four of the Restated Certificate,
one share of Class B Common Stock, in each case subject to any
necessary FCC (as defined in Section 3.01(d)(iii)) approval
and approval under the HSR Act (as defined in Section
3.01(d)(iii)); other than as set forth in paragraph
4.2(f)(iii)(B) of the Restated Certificate and any
restrictions or required approval of the FCC or under the HSR
Act, there are no restrictions or limitations, contractual or
otherwise, binding upon the Company or to which the Company is
subject that prohibit or limit the right of a holder of Class
D Common Stock to convert shares of Class D Common Stock into
shares of Class A Common Stock or Class B Common Stock; and
the conversion of any Class D Common Stock into shares of
Class A Common Stock or Class B Common Stock will not violate
or result in or constitute a default under the Credit
Agreement or any other loan or credit agreement, note, bond,
mortgage, indenture, lease, permit, concession, franchise,
license or any other contract, agreement, arrangement or
understanding to which the Company is a party or by which it
or any of its properties or assets are bound;
(B) as of the date hereof, no event has
occurred permitting any outstanding shares of Series B
Preferred Stock to become convertible into any shares of
Capital Stock; and
(C) as of the date hereof, each
outstanding share of Mandatory Preferred Stock is convertible
into 8.33 shares of Class A Common Stock, and no event has
occurred requiring any adjustment to the Redemption Rate (as
defined in paragraph 6(a) of the Mandatory Designation),
pursuant to paragraph 8 of the Mandatory Designation or
otherwise, or the Optional Conversion Rate (as defined in
Paragraph 7(a) of the Mandatory Designation), pursuant to
paragraph 8 of the Mandatory Designation or otherwise.
(v) Except as set forth in Section 3.01(c)(v) of
the Company Disclosure Schedule, there are no outstanding stock
options, stock appreciation rights or other rights to receive shares
of Capital Stock granted under the Option Plans. Without limiting the
generality of the foregoing, except as set forth in Section 3.01(c)(v)
of the Company Disclosure Schedule, there are no outstanding "Options"
as defined in the Option Plans. Section 3.01(c)(v) of the Company
Disclosure Schedule sets forth a complete and correct list, as of the
date hereof, of the holders of all Warrants, Options and SARs, and the
number, class and series of shares subject to each such Warrant,
Option and SAR, and the exercise or base prices thereof. Except for
the Options, Warrants, Class B Common Stock, Class C Common Stock,
Class D Common Stock, Series B Preferred Stock and Mandatory Preferred
Stock (as to which no more than 7,388,728 shares of Class A Common
Stock and, except for 1,444,366 shares of Class B Common Stock
issuable upon conversion of outstanding Class D Common Stock, no
shares of any other class or series of Capital Stock are issuable upon
exercise or conversion thereof, as applicable) and, except as set
forth above or in Section
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3.01(c)(v) of the Company Disclosure Schedule, there are no
outstanding securities, options, warrants, calls, rights, commitments,
agreements, arrangements or undertakings of any kind to which the
Company or any of its Subsidiaries is a party or by which any of them
is bound obligating the Company or any of its Subsidiaries to issue,
deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock or other voting securities of the Company or
of any of its Subsidiaries or obligating the Company or any of its
Subsidiaries to issue, grant, extend or enter into any such security,
option, warrant, call, right, commitment, agreement, arrangement or
undertaking ("Derivative Securities"). Except as set forth in the
Mandatory Designation, the Series B Designation and in Section
3.01(c)(iv) of the Company Disclosure Schedule, there are no
outstanding contractual obligations of the Company or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any shares of
capital stock of the Company or any of its Subsidiaries, and during
the period commencing on March 4, 1996, and ending on July 31, 1997,
the Company took such actions as necessary to satisfy the requirements
of paragraph 9 of the Mandatory Designation and has not at any time
been required to repurchase any shares of Mandatory Preferred Stock
pursuant to paragraph 9 of the Mandatory Designation.
(vi) All outstanding shares of capital stock of
the Company and its Subsidiaries are, and all shares which may be
issued will be, when issued, duly authorized, validly issued, fully
paid and nonassessable and not subject to preemptive or similar
rights.
(vii) Except as contemplated hereby or in the other
Transaction Documents or as set forth in Section 3.01(c)(vii) of the
Company Disclosure Schedule, there are not as of the date hereof and
there will not be at the Effective Time any stockholder agreements,
voting agreements or trusts, proxies or other agreements or
contractual obligations to which the Company or any Subsidiary is a
party or bound with respect to the voting or disposition of any shares
of the capital stock of the Company or any of its Subsidiaries and, to
the Company's knowledge, as of the date hereof, there are no other
stockholder agreements, voting agreements or trusts, proxies or other
agreements or contractual obligations among the stockholders of the
Company with respect to the voting or disposition of any shares of the
capital stock of the Company or any of its Subsidiaries.
(d) AUTHORITY; NONCONTRAVENTION.
(i) The Company has all requisite corporate power
and authority to enter into this Agreement and the other Transaction
Documents to which it is a party and, subject to the Stockholder
Approval (as defined in Section 3.01(k)), to consummate the
transactions contemplated by the Transaction Documents. The execution
and delivery of the Transaction Documents by the Company and the
consummation by the Company of the transactions contemplated by the
Transaction Documents have been duly authorized by all necessary
corporate action on the part of the Company, subject to the
Stockholder Approval. Each of the Transaction Documents to which the
Company is a party has been duly executed and delivered by the Company
and constitutes a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms.
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(ii) Except as disclosed in Section 3.01(d)(ii) of
the Company Disclosure Schedule, the execution and delivery by the
Company of the Transaction Documents to which the Company is a party
do not, and compliance by the Company with the provisions of the
Transaction Documents will not, conflict with, or result in any
violation of, or default (with or without notice or lapse of time, or
both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or loss of a material benefit under, or
result in the creation of any Lien upon any of the properties or
assets of the Company or any of its Subsidiaries under, (i) subject
to, with respect to the Merger, Stockholder Approval, the certificate
of incorporation or by-laws of the Company or the comparable
organizational documents of any of its Subsidiaries, (ii) subject to
the consents and other matters referred to in Section 3.01(d)(iii),
any loan or credit agreement, note, bond, mortgage, indenture, lease
or other agreement, instrument, permit, concession, franchise or
license applicable to the Company or any of its Subsidiaries or their
respective properties or assets, including without limitation those
agreements set forth in Section 3.01(o)(v) of the Company Disclosure
Schedule or (iii) subject to the governmental filings and other
matters referred to in Section 3.01(d)(iii), any judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to the
Company or any of its Subsidiaries or their respective properties or
assets, other than, in the case of clauses (ii) and (iii), any such
conflicts, violations, defaults, rights, Liens, judgments, orders,
decrees, statutes, laws, ordinances, rules or regulations that
individually or in the aggregate could not reasonably be expected to
(x) have a Material Adverse Effect on the Company, (y) impair the
ability of the Company to perform its obligations under any of the
Transaction Documents in any material respect or (z) delay in any
material respect or prevent the consummation of any of the
transactions contemplated by the Transaction Documents.
(iii) No consent, approval, order or authorization
of, or registration, declaration or filing with, any Federal, state or
local government or any court, administrative or regulatory agency or
commission or other governmental authority or agency (a "Governmental
Entity") or other Person, is required by or with respect to the
Company or any of its Subsidiaries in connection with the execution
and delivery of the Transaction Documents by the Company or the
consummation by the Company of the transactions contemplated by the
Transaction Documents, except for (1) the filing of a premerger
notification and report form by the Company under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the
"HSR Act"); (2) the filing with the Securities and Exchange Commission
(the "SEC") of (A) a proxy statement relating to the Stockholders
Meeting (as defined in Section 4.03), as amended or supplemented from
time to time (the "Proxy Statement") and (B) such reports under
Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), as may be required in connection with
the Transaction Documents and the transactions contemplated by the
Transaction Documents; (3) the filing of the Certificate of Merger
with the Delaware Secretary of State and appropriate documents with
the relevant authorities of other states in which the Company is
qualified to do business; (4) such filings with and approvals and
authorizations of the Federal Communications Commission or any
successor entity (the "FCC") as may be required under the
Communications Act of 1934, as amended, and the rules, regulations and
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policies of the FCC thereunder (collectively, the "Communications
Act"), including filings and approvals in connection with the transfer
of control of the FCC Licenses (as defined in Section 3.01(p)); (5)
such other filings and consents as may be required under any
environmental, health or safety law or regulation pertaining to any
notification, disclosure or required approval necessitated by the
Merger or the transactions contemplated by the Transaction Documents;
(6) such consents, approvals, orders or authorizations the failure of
which to be made or obtained could not reasonably be expected to have
a Material Adverse Effect on the Company, impair the ability of the
Company to perform its obligations under this Agreement in any
material respect or delay in any material respect or prevent the
consummation of the transactions contemplated by the Transaction
Documents; and (7) as disclosed in Section 3.01(d)(iii) of the Company
Disclosure Schedule.
(e) FILED DOCUMENTS; UNDISCLOSED LIABILITIES.
(i) The Company and its Subsidiaries have filed,
except, in the case of (B) and (C), where the failure to file could
not reasonably be expected to have a Material Adverse Effect on the
Company, and delivered or made available to Parent true and complete
copies of, all reports, schedules, forms, statements and other
documents required to be filed with (A) the SEC (collectively, the
"Company SEC Documents"), (B) any applicable state securities
authorities (collectively, the "Blue Sky Reports") and (C) any other
Governmental Entities including the FCC (collectively, the "Other
Company Reports").
(ii) As of their respective dates, the Company SEC
Documents and Blue Sky Reports complied in all material respects with
the requirements of the Securities Act, the Exchange Act, or
applicable state securities laws, as the case may be, and the rules
and regulations of the SEC and applicable state securities authorities
promulgated thereunder applicable to such Company SEC Documents and
Blue Sky Reports; and the Other Company Reports were prepared in all
material respects in accordance with the requirements of applicable
law. None of the Company SEC Documents when filed contained any
untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they
were made, not misleading. Except to the extent that information
contained in any Company SEC Documents has been revised or superseded
by a later filed Company SEC Document, none of the Company SEC
Documents contains any untrue statement of a material fact or omits 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.
(iii) The Company's Consolidated Balance Sheets as
of December 31, 1996 and 1997, and the Company's Consolidated
Statements of Operations, Cash Flows and Stockholders' Equity for the
years ended December 31, 1995, 1996 and 1997, included in the
Company's Form 10-K for the year ended December 31, 1997, as filed
with the SEC (the "Form 10-K"), and the Company's Consolidated Balance
Sheets as of March 31, 1998, and the Company's Consolidated Statements
of Operations, Cash Flows and Stockholders' Equity
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for the three months ended March 31, 1998, included in the Company's
Form 10-Q for the period ended March 31, 1998, as filed with the SEC
(the "Form 10-Q") (collectively, the "Current Financial Statements"),
comply as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with generally
accepted accounting principles (except, in the case of unaudited
statements, as permitted by Form 10-Q of the SEC and pro forma
financial statements as required by SEC Regulation S-X) applied on a
consistent basis during the periods involved (except as may be
indicated in the notes thereto) and fairly present in all material
respects the consolidated financial position of the Company and its
Subsidiaries on a consolidated basis as of the dates thereof and the
consolidated results of their operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to
normal year-end audit adjustments).
(iv) Except (A) as set forth on Section 3.01(e) of
the Company Disclosure Schedule, (B) as set forth in the Current
Financial Statements, (C) liabilities and obligations incurred in the
ordinary course of business consistent with past practice since
December 31, 1997, and (D) liabilities under the Transaction
Documents, neither the Company nor any of its Subsidiaries has any
material liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) required by generally accepted
accounting principles to be recognized or disclosed on a consolidated
balance sheet of the Company and its consolidated Subsidiaries or in
the notes thereto.
(f) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as
disclosed in the Form 10-Q, as contemplated by the Transaction Documents or as
disclosed in Section 3.01(f) of the Company Disclosure Schedule, since December
31, 1997, each of the Company and its Subsidiaries have conducted their
business only in the ordinary course consistent with past practice, and there
has not been (i) any declaration, setting aside or payment of any dividend or
other distribution (whether in cash, stock or property) with respect to any
capital stock of the Company (other than regular cash dividends on shares of
Mandatory Preferred Stock declared and paid on each scheduled quarterly record
date and payment date, respectively, in accordance with the terms of the
Mandatory Designation as in effect on the date hereof), (ii) any split,
combination or reclassification of any capital stock of the Company or any of
its Subsidiaries or (other than issuances of shares of Class A Common Stock
upon the exercise of Options or Warrants and/or issuances of Class A Common
Stock and/or Class B Common Stock upon conversion after the date hereof of
shares of Capital Stock outstanding on December 31, 1997) any issuance or the
authorization of any issuance of any other securities in respect of, in lieu of
or in substitution for shares of capital stock of the Company or any of its
Subsidiaries, (iii) (x) any granting by the Company or any of its Subsidiaries
to any executive officer or other key employee of the Company or any of its
Subsidiaries of any increase in compensation, except for normal increases in
the ordinary course of business consistent with past practice or as required
under employment or other agreements or benefit arrangements in effect as of
December 31, 1997, or (y) any granting by the Company or any of its
Subsidiaries to any such executive officer of any increase in severance or
termination pay, except as was required under any employment, severance,
termination or other agreements or benefit arrangements in effect as of
December 31, 1997, (iv) except as required by a change in generally accepted
accounting principles,
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any change in accounting methods, principles or practices by the Company or any
of its Subsidiaries materially affecting its assets, liabilities or business or
(v) any event, circumstance, or fact that has resulted in a Material Adverse
Change in the Company.
(g) LITIGATION. Except as disclosed in the Form 10-K, the
Form 10-Q or in Section 3.01(g) of the Company Disclosure Schedule, there is no
suit, action, proceeding or indemnification claim (including any proceeding by
or before the FCC but excluding proceedings of general applicability to the
radio industry and proceedings by or before any Federal Antitrust Agencies (as
defined in Section 5.02(b)) or the FCC relating to the transactions
contemplated hereby and proceedings arising under the Communications Act
relating to such transactions) pending or, to the knowledge of the Company,
threatened against or affecting the Company or any of its Subsidiaries that,
individually or in the aggregate, reasonably could be expected to (i) have a
Material Adverse Effect on the Company or any of its Subsidiaries, (ii) impair
the ability of the Company to perform its obligations under the Transaction
Documents in any material respect or (iii) delay in any material respect or
prevent the consummation of any of the transactions contemplated by the
Transaction Documents, nor is there any judgment, decree, injunction, rule or
order of any Governmental Entity or arbitrator outstanding against the Company
or any of its Subsidiaries which reasonably could be expected to have, any
effect referred to in clause (i), (ii) or (iii) above, except for any suit,
action or proceeding asserted after the date hereof by any stockholders of the
Company in connection with any of the transactions contemplated by the
Transaction Documents.
(h) ABSENCE OF CHANGES IN BENEFIT PLANS. Except (x) as
disclosed in Section 3.01(h) of the Company Disclosure Schedule, (y) for normal
increases in the ordinary course of business consistent with past practice or
as required by law or (z) as contemplated by the Transaction Documents, since
December 31, 1997, there has not been any adoption or amendment in any material
respect by the Company or any of its Subsidiaries of any collective bargaining
agreement or any bonus, pension, profit sharing, deferred compensation,
incentive compensation, stock ownership, stock purchase, stock option, phantom
stock, retirement, vacation, severance, disability, death benefit,
hospitalization, medical or other material plan providing material benefits to
any current or former employee, officer or director of the Company or any of
its Subsidiaries. Without limiting the foregoing, except as disclosed in
Section 3.01(h) of the Company Disclosure Schedule, since December 31, 1997,
there has not been any change in any actuarial or other assumption used to
calculate funding obligations with respect to any Pension Plan (as defined
below), or in the manner in which contributions to any Pension Plan are made or
the basis on which such contributions are determined. Except as disclosed in
Section 3.01(h) of the Company Disclosure Schedule and except for the
Termination Agreement, there exist no employment, consulting or severance
agreements currently in effect between the Company or any of its Subsidiaries
and any current or former employee, officer or director of the Company or any
of its Subsidiaries providing for annual base compensation or other payments
(including amounts payable upon consummation of the transactions contemplated
by the Transaction Documents) in excess of $100,000.
(i) ERISA COMPLIANCE. Except as disclosed in Section
3.01(i) of the Company Disclosure Schedule:
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(i) The Company has delivered or made available
to Parent each "employee pension benefit plan" (as defined in Section
3(2) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")) (a "Pension Plan"), each "employee welfare benefit
plan" (as defined in Section 3(1) of ERISA) (a "Welfare Plan"), each
stock option, stock purchase, deferred compensation plan or
arrangement, employment agreement, severance plan or agreement,
consulting agreement and each other employee fringe benefit plan or
arrangement maintained, contributed to or required to be maintained or
contributed to by the Company, any of its Subsidiaries or any other
Person or entity that, together with the Company, is treated as a
single employer under Section 414(b), (c), (m) or (o) of the Code
(each, a "Commonly Controlled Entity"), which is currently in effect
for the benefit of any current or former employees, officers,
directors or independent contractors of the Company or any of its
Subsidiaries or with respect to which the Company or any Commonly
Controlled Entity has any material contingent liability (collectively,
"Benefit Plans"). The Company has delivered or made available to
Parent true, complete and correct copies of (w) the most recent annual
report on Form 5500 filed with the Internal Revenue Service with
respect to each Benefit Plan for which the filing of any such report
is required by ERISA or the Code, (x) the most recent summary plan
description for each Benefit Plan for which the preparation of any
such summary plan description is required by ERISA, (y) each currently
effective trust agreement, insurance or group annuity contract and
each other funding or financing arrangement relating to any Benefit
Plan and (z) a schedule of employer expenses with respect to each
Benefit Plan for the current plan year of each Benefit Plan.
(ii) Each Benefit Plan has been administered in
material compliance with its terms, the applicable provisions of
ERISA, the Code and all other applicable laws and the terms of all
applicable collective bargaining agreements. To the knowledge of the
Company, there are no investigations by any governmental agency,
termination proceedings or other claims (except routine claims for
benefits payable under the Benefit Plans), suits or proceedings
pending or threatened against any Benefit Plan or asserting any rights
or claims to benefits under any Benefit Plan that, individually or in
the aggregate, reasonably could be expected to result in a Material
Adverse Effect on the Company.
(iii) (A) No Pension Plan is subject to the minimum
funding standards imposed by Section 412 of the Code.
(iv) Each Pension Plan that is intended to be a
tax-qualified plan has been the subject of a determination letter from
the Internal Revenue Service to the effect that such Pension Plan and
related trust is qualified and exempt from Federal income taxes under
Sections 401(a) and 501(a), respectively, of the Code; to the
knowledge of the Company, no such determination letter has been
revoked, revocation of such letter has not been threatened nor has
such Pension Plan been amended since the effective date of its most
recent determination letter in any respect that would adversely affect
its qualification. The Company has delivered or made available to
Parent a copy of the most recent determination letter received with
respect to each Pension Plan for which such a letter has been issued,
as well as a copy of any pending application for a determination
letter. To the knowledge of the
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Company, no event has occurred that could subject the Company or any
Pension Plan to any liability under Section 502 of ERISA that,
individually or in the aggregate, reasonably could be expected to
result in a Material Adverse Effect on the Company.
(v) (A) Neither the Company nor any of its
Subsidiaries has engaged in a "prohibited transaction" (as defined in
Section 4975 of the Code or Section 406 of ERISA) that involves the
assets of any Benefit Plan that reasonably could be expected to
subject the Company, any of its Subsidiaries, any employee of the
Company or its Subsidiaries or, to the knowledge of the Company, a
non-employee trustee, non-employee administrator or other non-employee
fiduciary of any trust created under any Benefit Plan to any Tax or
penalty on prohibited transactions imposed by Section 4975 of the Code
that, individually or in the aggregate, reasonably could be expected
to result in a Material Adverse Effect on the Company; (B) within the
past five years, the Company has not maintained any Pension Plan that
is subject to Title IV of ERISA; and (C) none of the Company, any of
its Subsidiaries or, to the knowledge of the Company, any non-employee
trustee, non-employee administrator or other non-employee fiduciary of
any Benefit Plan has breached the fiduciary duty provisions of ERISA
or any other applicable law in a manner that, individually or in the
aggregate, has had or is reasonably likely to result in a Material
Adverse Effect on the Company.
(vi) No Commonly Controlled Entity sponsors any
Pension Plan that is a "defined benefit pension plan" (as defined in
Section 3(35) of ERISA) (a "Defined Benefit Plan").
(vii) No Commonly Controlled Entity has incurred
any liability under Title IV of ERISA.
(viii) No Commonly Controlled Entity has engaged in
a transaction described in Section 4069 of ERISA that could subject
the Company to liability at any time after the date hereof that
individually, or in the aggregate, reasonably could be expected to
result in a Material Adverse Effect on the Company.
(ix) No Commonly Controlled Entity has withdrawn
from any multi- employer plan (as defined in Section 3(37) or
4001(a)(3) of ERISA) where such withdrawal has resulted in any
"withdrawal liability" (as defined in Section 4201 of ERISA) that has
not been fully paid.
(x) Prior to the date hereof, the Company has
made available to Parent copies of all agreements and Benefit Plans
under which any employee of the Company or any of its Subsidiaries
will be entitled to any additional benefits or any acceleration of the
time of payment or vesting of any benefits under any Benefit Plan or
under any employment, severance, termination or compensation agreement
as a result of the transactions contemplated by this Agreement and
Section 3.01(i) of the Company Disclosure Schedule
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sets forth any severance payments contained in such agreements or
Benefit Plans which provide for payments in excess of $100,000 to any
such employee.
(xi) No Benefit Plan provides that payments
pursuant to such Benefit Plan may be made in securities of a Commonly
Controlled Entity, nor does any trust maintained pursuant to any
Benefit Plan hold any securities of a Commonly Controlled Entity.
(xii) Notwithstanding any of the foregoing to the
contrary, the representations and warranties of this Section 3.01(i),
other than clauses (i) and (ix), shall not apply to any multi-employer
plan (as defined in Section 3(37) or 4001(a)(3) of ERISA), nor shall
they apply with respect to any actions or omissions of a Pension Plan
prototype plan sponsor of which the Company has no knowledge.
(j) TAXES.
(i) Each of the Company, its Subsidiaries and any
affiliated, consolidated, combined, unitary or similar group of which
the Company or any of its Subsidiaries is or was a member (a "Tax
Group") has filed all federal, state and other material tax returns
and reports required to be filed by it or requests for extensions to
file such returns or reports have been timely filed, granted and have
not expired, except to the extent that such failures to file or to
have extensions granted that remain in effect individually or in the
aggregate could not reasonably be expected to have a Material Adverse
Effect on the Company. All returns filed by the Company, each of its
Subsidiaries and any Tax Group are complete and accurate in all
material respects to the knowledge of the Company. The Company and
each of its Subsidiaries has paid (or the Company has paid on its
behalf) all Taxes shown as due on such returns, and the Current
Financial Statements reflect an adequate reserve for all Taxes payable
by the Company and its Subsidiaries for all taxable periods and
portions thereof accrued through the date of such financial
statements.
(ii) No deficiencies for any Taxes have been
proposed, asserted or assessed against the Company or any of its
Subsidiaries that are not adequately reserved for, except for
deficiencies that individually or in the aggregate could not
reasonably be expected to have a Material Adverse Effect on the
Company, and no requests for waivers of the time to assess any such
Taxes have been granted or are pending that, individually or in the
aggregate, reasonably could be expected to have a Material Adverse
Effect on the Company. The statute of limitations on assessment or
collection of any Federal income taxes due from the Company, any of
its Subsidiaries or any Tax Group has expired for all taxable years of
the Company, any of its Subsidiaries or any Tax Group through 1991. No
audit or other proceeding by any court, governmental or regulatory
authority or similar Person is pending in regard to any material Taxes
due from or with respect to the Company or any of its Subsidiaries or
any material tax return filed by, or with respect to the Company, any
of its Subsidiaries or any Tax Group, other than normal and routine
audits by non-federal governmental authorities. None of the assets or
properties of the Company or any of its Subsidiaries is subject to any
tax lien, other than any such liens for Taxes which are not yet
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due and payable, which may thereafter be paid without penalty or the
validity of which is being contested in good faith by appropriate
proceedings and for which adequate reserves are being maintained in
accordance with generally accepted accounting principles ("Permitted
Tax Liens").
(iii) No consent to the application of Section
341(f)(2) of the Code (or any predecessor provision) has been made or
filed by or with respect to the Company or, for so long as the Company
has owned any Subsidiary, by or with respect to such Subsidiary. None
of the Company or any of its Subsidiaries has agreed to make any
material adjustment pursuant to Section 481(a) of the Code (or any
predecessor provision) by reason of any change in any accounting
method, and there is no application pending with any taxing authority
requesting permission for any changes in any accounting method of the
Company or any of its Subsidiaries which, in each respective case,
will or would reasonably cause the Company or any of its Subsidiaries
to include any material adjustment in taxable income for any taxable
period (or portion thereof) ending after the Closing Date.
(iv) Except as set forth in the Form 10-K or the
Form 10-Q, neither the Company nor any of its Subsidiaries is a party
to, is bound by, or has any obligation under, any tax sharing
agreement, tax allocation agreement or similar contract, agreement or
arrangement.
(v) Neither the Company nor any of its
Subsidiaries has executed or entered into with the Internal Revenue
Service, or any taxing authority, a closing agreement pursuant to
Section 7121 of the Code or any similar provision of state, local,
foreign or other income tax law, which will require any increase in
taxable income or alternative minimum taxable income, or any reduction
in tax credits for, the Company or any of its Subsidiaries for a
taxable period ending after the Closing Date.
(vi) Except as disclosed in Section 3.1(j) of the
Company Disclosure Schedule, there is no contract, agreement, plan or
arrangement covering any person that, individually or collectively,
could give rise to the payment of any amount by the Company or any
Subsidiary that would not be deductible by the Company or any of its
Subsidiaries by reason of Section 280G of the Code or that would
constitute compensation whose deductibility is limited under Section
162(m) of the Code.
(vii) The Company is not a party to nor has it
assumed any "corporate acquisition indebtedness" as defined in Section
279(b) of the Code or any obligations described in Section 279(a) of
the Code.
(viii) There are no excess loss accounts or deferred
intercompany transactions between the Company and/or any of its
Subsidiaries within the meaning of Treas. Reg. Sections 1.1502-13 or
1.1502-19, respectively.
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(ix) As used in this Agreement, "Taxes" shall
include all Federal, state and local income, franchise, use, property,
sales, excise and other taxes, tariffs or governmental charges of any
nature whatsoever, domestic or foreign, including any interest,
penalties or additions with respect thereto.
(k) VOTING REQUIREMENTS. The affirmative vote of the
holders of a majority of the voting power of all outstanding shares of Class A
Common Stock, Class B Common Stock and Mandatory Preferred Stock, voting as a
single class, is the only vote of the holders of any class or series of
Company's capital stock necessary to approve and adopt this Agreement and the
Merger. The votes required in the preceding sentence are collectively referred
to herein as the "Stockholder Approval."
(l) STATE TAKEOVER STATUTES. The Board of Directors of
the Company has approved the terms of this Agreement and the Stockholder
Agreements and the consummation of the Merger and the other transactions
contemplated by this Agreement and the Stockholder Agreements, and such
approval is sufficient to render inapplicable to the Merger and the other
transactions contemplated by this Agreement and the Stockholder Agreements, the
restrictions on business combinations set forth in Section 203 of the DGCL. To
the Company's knowledge, no other state takeover statute or similar statute or
regulation applies or purports to apply to the Merger, this Agreement, the
Stockholder Agreements or any of the transactions contemplated by this
Agreement or the Stockholder Agreements, and no provision of the certificate of
incorporation, by-laws or other governing instruments of the Company or any of
its Subsidiaries would, directly or indirectly, restrict or impair the ability
of Parent to vote, or otherwise to exercise the rights of a stockholder with
respect to, shares of the Company and its Subsidiaries that may be acquired or
controlled by Parent.
(m) LABOR MATTERS. Neither the Company nor any of its
Subsidiaries is the subject of any suit, action or proceeding which is pending
or, to the knowledge of the Company, threatened, asserting that the Company or
any of its Subsidiaries has committed an unfair labor practice (within the
meaning of the National Labor Relations Act or applicable state statutes) or
seeking to compel the Company or any of its Subsidiaries to bargain with any
labor organization as to wages and conditions of employment, in any such case,
that reasonably could be expected to result in a material liability of the
Company and its Subsidiaries. No strike or other labor dispute involving the
Company or any of its Subsidiaries is pending or, to the knowledge of the
Company, threatened, and, to the knowledge of the Company, there is no activity
involving any employees of the Company or any of its Subsidiaries seeking to
certify a collective bargaining unit or engaging in any other organizational
activity, except for any such dispute or activity which could not reasonably be
expected to have a Material Adverse Effect on the Company.
(n) COMPLIANCE WITH APPLICABLE LAWS. Each of the Company
and each of its Subsidiaries has in effect all Federal, state and local
governmental approvals, authorizations, certificates, filings, franchises,
licenses, notices, permits and rights ("Permits") necessary for it to own,
lease or operate its properties and assets and to carry on its business as now
conducted, and there has occurred no default under any such Permit, except for
the lack of Permits and for defaults
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under Permits which lack or defaults, individually or in the aggregate, could
not reasonably be expected to (i) have a Material Adverse Effect on the
Company, (ii) impair the ability of the Company to perform its obligations
under this Agreement in any material respect or (iii) delay in any material
respect or prevent the consummation of the transactions contemplated by this
Agreement. Except as disclosed in the Form 10-K or the Form 10-Q, the Company
and its Subsidiaries are in compliance with all applicable statutes, laws,
ordinances, rules, orders and regulations of any Governmental Entity, except
for possible noncompliance which, individually or in the aggregate, could not
reasonably be expected to (x) have a Material Adverse Effect on the Company,
(y) impair the ability of the Company to perform its obligations under this
Agreement in any material respect or (z) delay in any material respect or
prevent the consummation of the transactions contemplated by this Agreement.
(o) CONTRACTS; DEBT INSTRUMENTS.
(i) Section 3.01(o)(i) of the Company Disclosure
Schedule lists all defaults that, to the Company's knowledge,
currently exist, or that have existed at any time since December 31,
1997, and all conditions which upon the passage of time or the giving
of notice would cause a violation or default, under the Credit
Agreement (as defined in Section 8.03) (collectively, "Credit
Defaults"), and identifies each such Credit Default that currently
exists and each such Credit Default with respect to which a waiver or
forbearance has been requested or obtained.
(ii) Except as disclosed in Sections 3.01(o)(i)
and 3.02(o)(ii) of the Company Disclosure Schedule, neither the
Company nor any of its Subsidiaries is in violation of or in default
under (nor does there exist any condition which upon the passage of
time or the giving of notice would cause such a violation of or
default under) any loan or credit agreement, note, bond, mortgage,
indenture, lease, permit, concession, franchise, license or any other
contract, agreement, arrangement or understanding to which it is a
party or by which it or any of its properties or assets is bound,
except for violations or defaults that, individually or in the
aggregate, could not reasonably be expected to (x) have a Material
Adverse Effect on the Company, (y) impair the ability of the Company
to perform its obligations under this Agreement in any material
respect or (z) delay in any material respect or prevent the
consummation of the transactions contemplated by this Agreement. The
agreements described in Section 3.01(o) of the Company Disclosure
Schedule are in full force and effect and are binding on the Company
and each of the Subsidiaries to the extent any such entity is a party
thereto.
(iii) The Company has made available to Parent (x)
true and correct copies of the Credit Agreement and all other loan or
credit agreements, notes, bonds, mortgages, indentures and other
agreements and instruments pursuant to which any Indebtedness of the
Company or any of its Subsidiaries in an aggregate principal amount in
excess of $50,000 is outstanding or may be incurred and (y) accurate
information regarding the respective principal amounts outstanding
thereunder as of the date hereof. For purposes of this
Agreement,"Indebtedness" shall mean, with respect to any Person,
without duplication, (A)
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all obligations of such Person for borrowed money, or with respect to
deposits or advances of any kind to such Person, (B) all obligations
of such Person evidenced by bonds, debentures, notes or similar
instruments, (C) all obligations of such Person under conditional sale
or other title retention agreements relating to property purchased by
such Person, (D) all obligations of such Person issued or assumed as
the deferred purchase price of property or services (excluding
obligations of such Person to creditors for raw materials, inventory,
services and supplies incurred in the ordinary course of such Person's
business), (E) all capitalized lease obligations of such Person, (F)
all obligations of others secured by a Lien on property or assets
owned or acquired by such Person, whether or not the obligations
secured thereby have been assumed, (G) all obligations of such Person
under interest rate or currency hedging transactions (valued at the
termination value thereof), (H) all letters of credit issued for the
account of such Person and (I) all guarantees and arrangements having
the economic effect of a guarantee of such Person of any Indebtedness
of any other Person.
(iv) Except for agreements that are terminable by
the Company upon not more than 60 days prior notice without payment of
any termination fee or other amounts (other than commissions earned
prior to termination), neither the Company nor any of its Subsidiaries
is a party to any sales representation, commission, agent or similar
agreement or arrangement with any person related to the sale of
advertising or other air time to be provided by the Company's
broadcast operations.
(v) Section 3.01(o)(v) of the Company Disclosure
Schedule sets forth a true and complete list of the following, true
and complete copies of which have been provided or made available to
Parent:
(A) all joint sales agreements ("JSAs")
and local marketing agreements ("LMAs") to which the Company
or any Subsidiary of the Company is a party or by which the
Company or any Subsidiary of the Company is otherwise bound;
except as set forth in Section 3.01(o)(v) of the Company
Disclosure Schedule, no JMAs or LMAs set forth therein require
the payment by the Company or any Subsidiary of the Company of
any renewal or similar fees to maintain such agreements in
force;
(B) each other contract, agreement or
other instrument to which the Company or any Subsidiary of the
Company is a party or by which the Company or any Subsidiary
of the Company otherwise is bound that by its terms reasonably
could be expected to require the future payment by or to the
Company or any Subsidiary of the Company of $50,000 or more
or, in the case of employment agreements with any employee of
the Company or its Subsidiaries entered into in the ordinary
course of business consistent with past practice, $100,000 or
more;
(C) all contracts, agreements or other
instruments to which the Company or any Subsidiary of the
Company is a party or otherwise is bound which by its terms
prohibits or restricts the rights of the Company or any
Subsidiary of the
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Company to conduct broadcast operations in any market or
geographic region or prohibits or restricts the right of any
other party to such contract, agreement or instrument to
conduct broadcast operations in any market or geographic
region.
Each contract or agreement disclosed or required to be disclosed in
Section 3.01(o)(v) of the Company Disclosure Schedule is in full force
and effect and constitutes a legal, valid and binding obligation of
the Company and each Subsidiary of the Company to the extent any such
entity is a party thereto and, to the knowledge of the Company, each
other party thereto. Neither the Seller nor the Company has received
from any other party to such contract or agreement any notice, whether
written or oral, of termination or intention to terminate such
contract or agreement. Except as set forth in Section 3.01(o)(v) of
the Company Disclosure Schedule, neither the Company nor, to the
knowledge of the Company, any other party to such contract or
agreement is in violation or breach of or default under any such
contract or agreement (or with or without notice or lapse of time or
both, would be in violation or breach of or default under any such
contract or agreement), which violation, breach or default has had or
reasonably could be expected to have a Material Adverse Effect on the
Company. Except as set forth in Section 3.01(o)(v) of the Company
Disclosure Schedule, none of the contracts or agreements disclosed or
required to be disclosed therein contains any change of control or
similar provision that would give the other party thereto the right to
terminate any such contract or agreement as a result of the execution
and delivery of this Agreement or the consummation of the Merger.
(p) FCC LICENSES; OPERATIONS OF LICENSED FACILITIES. The
Company and its Subsidiaries have operated the radio stations for which the
Company or any of its Subsidiaries holds licenses from the FCC (the "Licensed
Facilities") in material compliance with the terms of the Permits issued by the
FCC to the Company and its Subsidiaries for the operation of the Licensed
Facilities (the "FCC Licenses"), and the Communications Act, except for
possible non-compliance which could not reasonably be expected to (i) have a
Material Adverse Effect on the Company, (ii) impair the ability of the Company
to perform its obligations under this Agreement in any material respect or
(iii) delay in any material respect or prevent the consummation of the
transactions contemplated by this Agreement. The Company and its Subsidiaries
have filed or made all applications, reports and other disclosures required by
the FCC to be filed or made with respect to the Licensed Facilities and have
paid all FCC regulatory fees with respect thereto except for possible filings,
disclosures or payments that if not so filed, disclosed or paid could not
reasonably be expected to (x) have a Material Adverse Effect on the Company,
(y) impair the ability of the Company to perform its obligations under this
Agreement in any material respect or (z) delay in any material respect or
prevent the consummation of the transactions contemplated by this Agreement.
The Company and each of its Subsidiaries are the authorized legal holders of
all FCC Licenses necessary or used in the operation of the businesses of the
Licensed Facilities as presently operated except where the absence of such FCC
Licenses could not reasonably be expected to have a Material Adverse Effect on
the Company. All such FCC Licenses are validly held and are in full force and
effect, unimpaired by any act or omission of the Company, each of its
Subsidiaries or their respective officers, employees or agents, except for such
lack of being in full force and effect or for such impairment that (A) could
not reasonably be expected to have a Material Adverse Effect on the
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Company, (B) could not reasonably be expected to prevent the continued
operation of the Licensed Facilities as presently operated, (C) could not
reasonably be expected to impair the ability of the Company to perform its
obligations under this Agreement in any material respect and (D) could not
reasonably be expected to delay in any material respect or prevent the
consummation of the transactions contemplated by this Agreement. Except as
disclosed in Section 3.01(p) of the Company Disclosure Schedule, as of the date
hereof, no application, action or proceeding is pending for the renewal or
major modification of any of the FCC Licenses and, to the Company's knowledge,
there is not now before the FCC any material investigation, proceeding, notice
of violation, order of forfeiture or complaint against the Company or any of
its Subsidiaries relating to any of the Licensed Facilities that, if adversely
decided, reasonably could be expected to have a Material Adverse Effect on the
Company, impair the ability of the Company to perform its obligations under
this Agreement in any material respect or delay in any material respect or
prevent the consummation of the transactions contemplated by this Agreement
(and the Company is not aware of any basis that would cause the FCC not to
renew any of the FCC Licenses that are renewable). Except as disclosed in
Section 3.01(p) of the Company Disclosure Schedule, there is not now pending
and, to the Company's knowledge, there is not threatened, any action by or
before the FCC to revoke, suspend, cancel, rescind or modify in any material
respect any of the FCC Licenses that, if adversely decided, reasonably could be
expected to have a Material Adverse Effect on the Company.
(q) ENVIRONMENTAL MATTERS. Section 3.01(q)(i) of the
Company Disclosure Schedule sets forth a true and complete list of all Phase I,
Phase II or similar reports currently in the possession of the Company or that
have been prepared for or on behalf of or at the direction of the Company
regarding the environmental condition of any real properties or facilities that
currently are, or in the past have been, leased, owned or operated by the
Company or any of its Subsidiaries ("Environmental Reports"), and true and
correct copies of all Environmental Reports in the possession of the Company or
that, to the Company's knowledge, are available to the Company have been
delivered to Parent. Except as disclosed in Section 3.01(q) of the Company
Disclosure Schedule or in the Environmental Reports, to the knowledge of the
Company:
(i) the real property and facilities owned by the
Company or any of its Subsidiaries and the operations of the Company
or any of its Subsidiaries thereon comply in all material respects
with all Environmental Laws;
(ii) no judicial proceedings are pending or
threatened against the Company or any of its Subsidiaries alleging the
violation of any Environmental Laws, and there are no administrative
proceedings pending or threatened against the Company or any of its
Subsidiaries alleging the material violation of any Environmental Laws
and no written notice from any Governmental Entity or any private or
public Person has been received by the Company or any of its
Subsidiaries claiming any material violation of any Environmental Laws
in connection with any real property or facility owned by the Company
or any of its Subsidiaries, or requiring any material remediation,
clean-up, modification, repairs, work, construction, alterations, or
installations on or in connection with any real property or facility
owned, operated or leased by the Company or any of its Subsidiaries
that are necessary to
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comply with any Environmental Laws and that have not been complied
with or otherwise resolved to the satisfaction of the party giving
such notice;
(iii) all material Permits required to be obtained
or filed by the Company or any of its Subsidiaries under any
Environmental Laws in connection with the Company's or any of its
Subsidiaries' operations, including those activities relating to the
generation, use, storage, treatment, disposal, release, or remediation
of Hazardous Substances (as such term is defined in Section
3.01(q)(iv) hereof), have been duly obtained or filed, and the Company
and each of its Subsidiaries are in compliance in all material
respects with the terms and conditions of all such Permits;
(iv) all Hazardous Substances used or generated by
the Company or any of its Subsidiaries on, in, or under any of the
Company's or any of its Subsidiaries owned, operated, or leased real
property or facilities are and have at all times been generated,
stored, used, treated, disposed of, and released by such Persons or on
their behalf in such manner as not to result in any material
Environmental Costs or Liabilities. "Hazardous Substances" means (A)
any hazardous materials, hazardous wastes, hazardous substances, toxic
wastes, and toxic substances as those or similar terms are defined
under any Environmental Laws; (B) any asbestos or any material which
contains any hydrated mineral silicate, including chrysolite, amosite,
crocidolite, tremolite, anthophylite and/or actinolite, whether
friable or non-friable; (C) PCBs, or PCB-containing materials, or
fluids; (D) radon; (E) any other hazardous, radioactive, toxic or
noxious substance, material, pollutant, contaminant, constituent, or
solid, liquid or gaseous waste regulated under any Environmental Law;
(F) any petroleum, petroleum hydrocarbons, petroleum products, crude
oil and any fractions or derivatives thereof, any oil or gas
exploration or production waste, and any natural gas, synthetic gas
and any mixtures thereof; and (G) any substance that, whether by its
nature or its use, is subject to regulation under any Environmental
Laws or with respect to which any Environmental Laws or Governmental
Entity requires environmental investigation, monitoring or
remediation. "Environmental Costs or Liabilities" means any material
losses, liabilities, obligations, damages, fines, penalties,
judgments, settlements, actions, claims, costs and expenses
(including, without limitation, reasonable fees, disbursements and
expenses of legal counsel, experts, engineers and consultants, and the
reasonable costs of investigation or feasibility studies and
performance of remedial or removal actions and cleanup activities) in
connection with (A) any violation of any Environmental Laws, (B) order
of, or contract of the Company or any of its Subsidiaries with, any
Governmental Entity or any private or public Persons arising out of or
resulting from the treatment, storage, disposal or release by the
Company or any of its Subsidiaries of any Hazardous Substances in
material violation of any Environmental Law or (C) a claim by any
private or public Person arising out of any material exposure of any
Person or property to Hazardous Substances in material violation of
any Environmental Law;
(v) there are not now, nor have there been in
the past, on, in or under any property or facilities when owned by the
Company or any of its Subsidiaries or when owned, leased or operated
by any of their predecessors, any Hazardous Substances that are in a
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condition or location that materially violates any Environmental Law
or that has required or reasonably could be expected to require any
material remediation under any Environmental Laws or give rise to a
claim for material damages or compensation by any affected Person or
to any material Environmental Costs or Liabilities and that have not
been cured, complied with, remediated, or resolved to the satisfaction
of such affected Person or paid or resolved in all material respects;
and
(vi) neither the Company nor any of its
Subsidiaries has received any written notification from any source
advising the Company or any of its Subsidiaries that: (A) it is a
potentially responsible party under CERCLA or any other Environmental
Laws; (B) any real property or facility currently or previously owned,
operated, or leased by it is identified or proposed for listing as a
federal National Priorities List ("NPL") (or state-equivalent) site or
a Comprehensive Environmental Response, Compensation and Liability
Information System ("CERCLIS") list (or state-equivalent) site; or (C)
any facility to which it has ever transported or otherwise arranged
for the disposal of Hazardous Substances is identified or proposed for
listing as an NPL (or state-equivalent) site or CERCLIS (or
state-equivalent) site.
(r) BOARD RECOMMENDATION. As of the date hereof, the
Board of Directors of the Company, at a meeting duly called and held, has (i)
determined that this Agreement and the transactions contemplated hereby are
advisable and are fair to and in the best interests of the Company's
stockholders and have approved the same and (ii) resolved to recommend that the
Company's stockholders approve this Agreement and the transactions contemplated
herein.
(s) PROPERTY.
(i) Section 3.01(s)(i) of the Company Disclosure
Schedule sets forth all of the real property owned in fee by the
Company and its Subsidiaries that are material to the conduct of
business of the Company and its Subsidiaries, taken as a whole. Each
of the Company and its Subsidiaries owns fee title to each parcel of
real property owned by it free and clear of all Liens, except for
Permitted Liens (as defined in this Section 3.01(s)).
(ii) With respect to the tangible properties and
assets of the Company and its Subsidiaries (excluding real property)
that are material to the conduct of the broadcast operations of the
Company and its Subsidiaries, the Company and its Subsidiaries have
good title to, or hold pursuant to valid and enforceable leases, all
such properties and assets, with only such exceptions as, individually
or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect on the Company and subject to the Permitted
Liens. All of the assets of the Company and its Subsidiaries have
been maintained and repaired for their continued operation and are in
good operating condition, reasonable wear and tear excepted, and
usable in the ordinary course of business, except where the failure to
be in such repair or condition or so usable individually or in the
aggregate could not reasonably be expected to have a Material Adverse
Effect on the Company.
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(iii) Section 3.01(s)(ii) of the Company Disclosure
Schedule sets forth each lease, sublease, license, sublicense or other
agreement (collectively, the "Property Leases") under which the
Company or any of its Subsidiaries uses or occupies or has the right
to use or occupy, now or in the future, any real property or personal
property material to the conduct of the businesses of the Company and
its Subsidiaries, taken as a whole or any real property leased or
licensed by the Company or its Subsidiaries. Except to the extent
that (x) it could not reasonably be expected to have a Material
Adverse Effect on the Company, or (y) the term of such Property Lease
has expired or been terminated and the Company or its Subsidiaries
continues to use or occupy any of the subject property on a period to
period basis (i.e., "month to month"), each Property Lease is valid,
binding and in full force and effect, all rent and other sums and
charges which are due and payable by the Company and its Subsidiaries
as tenants thereunder are current except as set forth in Section
3.01(s)(ii) of the Company Disclosure Schedule, and neither the
Company nor any of its Subsidiaries has received actual notice that
any party thereto is in default in any material respect under any
lease, sublease, license, sublicense or use or occupancy agreement
listed in Section 3.01(s)(ii) of the Company Disclosure Schedule. Each
of the Company and its Subsidiaries has a valid leasehold interest
(including subleasehold and subleasehold estates) and/or right of use
under a license or sublicense agreement or other possessory rights in
each location used or occupied for broadcast purposes (whether office,
studio, tower, transmitter building and/or antenna) leased, subleased,
subsubleased, licensed, sublicensed or used by it free and clear of
all Liens, except for Permitted Liens.
(iv) As used in this Agreement, "Permitted Liens"
shall mean: (i) statutory liens securing payments not yet delinquent
or the validity of which are being contested in good faith by
appropriate actions, (ii) purchase money liens arising in the ordinary
course, (iii) liens for Taxes and special assessments (e.g., for
municipal improvements) not yet due and payable and/or delinquent,
(iv) liens reflected or reserved against in the unaudited balance
sheet of the Company dated as of March 31, 1998, included in the Form
10-Q (which have not been discharged), (v) liens which in the
aggregate do not materially detract from the value for use for
broadcasting purposes or materially impair the present and continued
use of the properties or assets subject thereto in the usual and
normal conduct of the radio broadcast business of the Company and its
Subsidiaries, (vi) liens on leases, subleases, sub-subleases,
easements, licenses, rights of use, rights to access and rights of way
arising from the provisions of such agreements or benefitting or
created by any superior estate, right or interest which is prior in
right or prior in lien to that of the subject lease, sublease,
sub-sublease, easement, license, right of use, right to access or
right of way, (vii) any liens set forth in the title policies,
endorsements, title commitments, title certificates and title reports
relating to the Company's interests in real property identified in
Section 3.01(s)(iv) of the Company Disclosure Schedule, true and
correct copies of which have been made available to Parent and Sub,
(viii) any leases, subleases, occupancy agreements or licenses set
forth in Section 3.01(s) of the Company Disclosure Schedule, (ix) the
lien of any and all security agreements, documents, mortgages and
deeds of trust held by, or for the benefit of, AT&T Commercial Finance
Corporation and/or Union Bank of California, as co-lenders under the
Credit Agreement, and their respective successors and assigns, (x) any
state of facts
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that an accurate survey or personal inspection of the Company's real
property (whether owned, leased or licensed) would show, provided same
does not material adversely affect the use thereof for their present
broadcasting purposes, (xi) encroachments of xxxxxx, areas, cellar
steps or doors, trim, copings, retaining walls, bay windows,
balconies, sidewalk elevators, fences, fire escapes, cornices,
foundations, footings and similar projections, if any, on, over or
under any of the Company's real property (whether owned, leased or
licensed) or the streets or sidewalks abutting any of such real
property, and the rights of governmental authorities to require the
removal of any such projections and variations between record lines of
such real property and retaining walls and the like, if any, (xii) any
easements or rights of use, if any, created in favor of any public
utility or municipal department or agency for electricity, steam, gas,
telephone, cable television, water, sewer or other services in any
street or avenue abutting the Company's real property (whether owned,
leased or licensed), and the right, if any, to use and maintain wires,
cables, terminal boxes, lines, service connections, poles, mains and
facilities servicing any of such real property or in, on, over or
across any of such real property, (xiii) covenants, easements,
restrictions, agreements, consents and other instruments, now of
record, provided same do not materially adversely interfere with the
use of the Company's real property (whether owned, leased or licensed)
for their present broadcast purposes, (xiv) variations, if any,
between tax lot lines and property lines, (xv) deviations, if any, of
fences or shrubs from property lines, (xvi) any other declaration or
instrument affecting any of the Company's real property (whether
owned, leased or licensed) necessary or appropriate to comply with any
law, ordinance, regulation, zoning resolution or requirement of
applicable governmental authorities or any other public authority,
applicable to the maintenance, demolition, construction, alteration,
repair or restoration of the improvements at the Company's real
property (whether owned, leased or licensed), which does not
materially adversely affect the use of thereof for their present
broadcast purposes, (xvii) the provisions of the applicable zoning
resolution and other regulations, resolutions and ordinances and any
amendments thereto now or hereafter adopted, provided same do not
materially adversely interfere with the use of the Company's real
property for their present broadcast purposes, (xviii) Liens described
in the Form 10-K or Form 10-Q, and (xix) any other Liens set forth in
Section 3.01(s) of the Company Disclosure Schedule. For the purposes
hereof "Company's real property" and "Company's interests in real
property" shall include the real property and interests therein owned
or held (as leasehold interests or otherwise) respectively by the
Company and/or its Subsidiaries.
(t) AFFILIATE RELATIONSHIPS. Except as set forth in
Sections 3.01(c)(vii) and 3.01(t) of the Company Disclosure Schedule or as
contemplated in the Transaction Documents (including Section 4.01(a)(vi)
hereof), no director, officer, Affiliate or "associate" (as such term is
defined in Rule 12b-2 under the Exchange Act) of the Company (other than any of
its wholly-owned Subsidiaries) (i) currently is a party to any transaction
which would be required to be disclosed by the Company under Item 404 of
Regulation S-K of the Securities Act, (ii) has any outstanding indebtedness or
other similar obligations to the Company or any of its Subsidiaries that,
individually or in the aggregate, exceed $60,000 or (iii) is otherwise a party
to any contract, arrangement or understanding with the Company or any of its
Subsidiaries that, individually or in the aggregate, require any payments or
create liabilities or obligations of any party thereto in excess of $60,000
(the
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transactions and relationships described in clauses (i), (ii) and (iii)
collectively referred to as "Affiliate Relationships").
(u) ACQUISITIONS; RELATED OBLIGATIONS.
(i) Except as disclosed in Section 3.01(u) of the
Company Disclosure Schedule or in the Form 10-K, since December 31,
1995, neither the Company nor any Subsidiary of the Company has
engaged in any Significant Transaction or entered into or become bound
by any agreement or binding obligation to engage in any Significant
Transaction. For purposes of this Agreement, "Significant
Transaction" shall mean (A) any acquisition or disposition of (1) any
business, limited liability company, association or other business
organization or division thereof or any material partnership interest
or material joint venture interest, (2) any material assets or
properties other than in the ordinary course of business or (3) any
radio broadcast station, (B) any disposition of any Subsidiary of the
Company or (C) any acquisition of any subsidiary or other business
enterprise from any third party.
(ii) Except as disclosed in Section 3.01(u) of the
Company Disclosure Schedule, neither the Company nor any Subsidiary of
the Company is a party to or bound by any written contract or other
binding agreement (whether written or oral), related to any
Significant Transaction (whether engaged in before or after December
31, 1995) pursuant to which the Company or any Subsidiary of the
Company has any continuing indemnity obligations (whether absolute,
accrued, asserted or unasserted, contingent or otherwise) to any third
party or any obligations (whether absolute, accrued, asserted,
unasserted or contingent or otherwise, and whether pursuant to any
earn-out or post- closing adjustment) to issue any shares of Capital
Stock or other securities of the Company or any securities of any
Subsidiary of the Company or otherwise provide additional, or refund
amounts received as, purchase consideration as part of any such
Significant Transaction. The Company has not received (as of the date
hereof) any written or, to the Company's knowledge, any other demand
or threatened demand for indemnification or issuance of Capital Stock
or other securities of the Company under any contract or agreement set
forth in Section 3.01(u) of the Company Disclosure Statement that was
not satisfied in full on or prior to December 31, 1997.
(v) BROKERS.
(i) Except for the engagement by the Company of
Xxxxxxx, Xxxxx & Co. ("GSC"), neither the Company nor any Subsidiary
of the Company has engaged any broker or finder or incurred any
liability for any brokerage fees, commissions or finders' fees in
connection with the transactions contemplated by this Agreement. The
fees, commissions, expenses and other amounts payable by the Company
to GSC with respect to the transactions contemplated by this Agreement
shall be calculated pursuant to the engagement letter agreement dated
October 28, 1997, between GSC and the Company.
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(ii) The Board of Directors of the Company (or the
Independent Committee) has received from GSC a fairness opinion
related to the transactions contemplated by this Agreement, in form
and substance acceptable to the Board of Directors of the Company,
indicating that the terms of this Merger are fair, from a financial
point of view, to the holders of Common Stock of the Company.
SECTION 3.02. REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB.
Parent and Sub represent and warrant to the Company as follows:
(a) ORGANIZATION, STANDING AND CORPORATE POWER. Each of
Parent and Sub is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is incorporated and has
the requisite corporate power and authority to carry on its business as now
being conducted or currently proposed to be conducted. Each of Parent and Sub
is duly qualified or licensed to do business and is in good standing in each
jurisdiction in which the nature of its business or the ownership or leasing of
its properties makes such qualification or licensing necessary, other than in
such jurisdictions where the failure to be so qualified or licensed or to be in
good standing individually or in the aggregate could not reasonably be expected
to have a Material Adverse Effect on Parent or materially impair or delay the
consummation of the transactions contemplated by this Agreement. Parent has
delivered to the Company prior to the execution of this Agreement complete and
correct copies of its certificate of incorporation and by-laws and the
certificate of incorporation and by-laws of Sub, in each case as amended to the
date hereof.
(b) AUTHORITY; NON-CONTRAVENTION.
(i) Each of Parent and Sub has all requisite
corporate power and authority to execute and deliver the Transaction
Documents to which it is a party and to consummate the transactions
contemplated by the Transaction Documents. The execution and delivery
by each of Parent and Sub of the Transaction Documents to which it is
a party and the consummation by Parent and Sub of the transactions
contemplated by the Transaction Documents have been unanimously
approved by the Board of Directors of Parent and Sub and duly
authorized by all necessary corporate action on the part of Parent and
Sub, and no other corporate proceedings on the part of Parent and Sub
are necessary to authorize the Transaction Documents or to consummate
such transactions. No vote of Parent stockholders is required to
approve the Transaction Documents or the transactions contemplated
hereby. Each of the Transaction Documents has been duly executed and
delivered by Parent and Sub and, assuming due authorization, execution
and delivery of the Transaction Documents by the Company and the other
parties thereto, constitutes a valid and binding obligation of Parent
and Sub, enforceable against Parent and Sub in accordance with its
terms.
(ii) The execution and delivery by each of Parent
and Sub of the Transaction Documents to which it is a party do not,
and the consummation of the transactions contemplated by the
Transaction Documents and compliance with the provisions of the
Transaction Documents by Parent or Sub, as the case may be, will not,
conflict with,
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or result in any violation of, or default (with or without notice or
lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or loss of a material
benefit under, or result in the creation of any Lien upon any of the
properties or assets of Parent, Sub or any of Parent's other
Subsidiaries under, (i) the articles or certificate of incorporation
or by-laws of Parent and Sub, (ii) any loan or credit agreement, note,
bond, mortgage, indenture, lease or other agreement, instrument,
permit, concession, franchise or license applicable to Parent, Sub or
such other Subsidiary or their respective properties or assets or
(iii) subject to the governmental filings and other matters referred
to in the following sentence and subject to such divestitures of radio
stations attributable to Parent as are required for compliance with
the provisions of the Communications Act and FCC regulations regarding
radio multiple ownership, any judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to Parent, Sub or such other
Subsidiary or their respective properties or assets, other than, in
the case of clauses (ii) and (iii), any such conflicts, violations,
defaults, rights, Liens, judgments, orders, decrees, statutes, laws,
ordinances, rules or regulations that individually or in the aggregate
could not reasonably be expected to (x) have a Material Adverse Effect
on Parent, (y) impair the ability of Parent and Sub to perform their
respective obligations under the Transaction Documents in any material
respect or (z) delay in any material respect or prevent the
consummation of any of the transactions contemplated by the
Transaction Documents. No consent, approval, order or authorization
of, or registration, declaration or filing with, any Governmental
Entity is required by or with respect to Parent or Sub in connection
with the execution and delivery of the Transaction Documents or the
consummation by Parent or Sub, as the case may be, of any of the
transactions contemplated by the Transaction Documents, except for (1)
the filing of a pre-Merger notification and report form by Parent
under the HSR Act; (2) the filing of the Certificate of Merger with
the Delaware Secretary of State and appropriate documents with the
relevant authorities of other states in which the Company is qualified
to do business; (3) such filings with and approvals of the FCC as may
be required under the Communications Act, including filings and
approvals in connection with the transfer of control of the FCC
Licenses; and (4) such consents, approvals, orders or authorizations
the failure of which to be made or obtained could not reasonably be
expected to have a Material Adverse Effect on Parent, impair the
ability of Parent to perform its obligations in any material respect
or delay in any material respect or prevent the consummation of the
transactions contemplated by this Agreement.
(c) INFORMATION SUPPLIED. None of the information
supplied or to be supplied by Parent or Sub specifically for inclusion or
incorporation by reference in the Proxy Statement will, at the date the Proxy
Statement is first mailed to the Company's stockholders or at the time of the
Stockholders Meeting, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
are made, not misleading.
(d) FINANCING. Parent has available, or at the Closing
will have available, sufficient funds (through existing credit arrangements or
otherwise) to enable it to consummate the transactions contemplated by the
Transaction Documents on their respective terms and conditions.
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Parent's and Sub's obligations hereunder are not subject to any conditions
regarding their ability to obtain financing for the consummation of the
transactions contemplated by the Transaction Documents. Parent and Sub are
each able to lawfully certify in the FCC Applications (as defined in Section
5.02(b)) that it is financially qualified to consummate the transactions
contemplated hereby.
(e) LITIGATION. There is no suit, action, proceeding or
indemnification claim (including any proceeding by or before the FCC but
excluding proceedings of general applicability to the radio industry) pending
or, to the knowledge of Parent, threatened against or affecting Parent or any
of its Subsidiaries that individually or in the aggregate reasonably could be
expected to (i) impair the ability of Parent or Sub to perform its obligations
under the Transaction Documents in any material respect or (ii) delay in any
material respect or prevent the consummation of any of the transactions
contemplated by the Transaction Documents, nor is there any judgment, decree,
injunction, rule or order of any Governmental Entity or arbitrator outstanding
against Parent or any of its Subsidiaries having, or which reasonably could be
expected to have, any effect referred to in clause (i) or (ii) above, except
for any suit, action or proceeding asserted after the date hereof by any
stockholders of the Company in connection with any of the transactions
contemplated by this Agreement.
ARTICLE 4.
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 4.01. CONDUCT OF BUSINESS.
(a) CONDUCT OF BUSINESS BY THE COMPANY. During the period
from the date of this Agreement to the Effective Time, except as contemplated
by the Transaction Documents and the transactions contemplated thereby, the
Company shall, and shall cause its Subsidiaries to, carry on their respective
businesses in the usual, regular and ordinary course in substantially the same
manner as heretofore conducted and in compliance in all material respects with
all applicable laws and regulations (including the Communications Act). Without
limiting the generality of the foregoing, during the period from the date of
this Agreement to the Effective Time, except as contemplated by the Transaction
Documents and the transactions contemplated thereby, the Company shall not, and
shall not permit any of its Subsidiaries to, without the consent of Parent:
(i) (A) except as set forth in Section 4.01(a)(i)
of the Company Disclosure Schedule, declare, set aside or pay any
dividends on, or make any other distributions in respect of, any of
its capital stock, other than dividends and distributions by a direct
or indirect wholly owned Subsidiary of the Company to its parent and
scheduled quarterly cash dividends on outstanding shares of Mandatory
Preferred Stock, payable in arrears on the dates and as set forth in
accordance with the present terms contained in the Mandatory
Designation, (B) split, combine or reclassify any of its capital stock
or (other than issuances of Class A Common Stock upon the exercise of
Options or Warrants outstanding, and in accordance with their terms as
in effect, as of the date hereof and issuances of Common
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Stock upon conversion of outstanding Capital Stock in accordance with
the terms of the instruments governing the rights of the holders
thereof as in effect on the date hereof) issue or authorize the
issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock or (C) except pursuant to
the terms of the Series B Designation as in effect on the date hereof,
purchase, redeem or otherwise acquire any shares of capital stock of
the Company or any of its Subsidiaries or any other securities thereof
or any rights, warrants or options to acquire any such shares or other
securities;
(ii) except as set forth in Section 4.01(a)(ii) of
the Company Disclosure Schedule, issue, deliver, sell, pledge or
otherwise encumber any shares of its capital stock, any other voting
securities or any securities convertible into, or any rights, warrants
or options to acquire, any such shares, voting securities or
convertible securities other than (A) the issuance of Class A Common
Stock upon the exercise of Options outstanding on the date of this
Agreement and in accordance with their present terms, (B) the issuance
of Class A Common Stock upon conversion of the Class B Common Stock,
the Class C Common Stock, Class D Common Stock or any Mandatory
Preferred Stock, in each case in accordance with their present terms
as contained in the Restated Certificate or the Mandatory Designation,
as applicable, (C) the issuance of Class B Common Stock upon the
conversion of Class D Common Stock in accordance with the present
terms contained in the Restated Certificate, and (D) the issuance of
Class A Common Stock upon the exercise of Warrants outstanding on the
date of this Agreement and in accordance with their present terms.
(iii) amend its certificate of incorporation,
by-laws or other comparable organizational documents;
(iv) except and to the extent as set forth in
Section 4.01(a)(iv) and (v) of the Company Disclosure Schedule and as
contemplated by Section 5.11, acquire or agree to acquire by merging
or consolidating with, or by purchasing a substantial portion of the
assets of, or by any other manner, (A) any business or any
corporation, limited liability company, partnership, joint venture,
association or other business organization or division thereof, (B)
any assets that individually or in the aggregate are material to the
Company and its Subsidiaries taken as a whole or (C) any broadcast
radio stations;
(v) except and to the extent as set forth in
Section 4.01(a)(iv) and (v) of the Company Disclosure Schedule, sell,
lease, license, mortgage or otherwise encumber or subject to any Lien
(other than Permitted Liens) or otherwise dispose of (A) any of its
properties or assets, other than in the ordinary course of business
consistent with past practices of the Company, but, with respect to
sales or dispositions, in no event involving an asset having a fair
market value in excess of $50,000 unless such asset is replaced with
an asset or assets of substantially equal values or (B) any broadcast
radio stations;
(vi) except as set forth in Section 4.01(a)(vi) of
the Company Disclosure Schedule, except to finance capital
expenditures permitted by clause (vii) below, except as contemplated
by Section 5.11, and except for borrowings for working capital
purposes not
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in excess of $60,500,000 (including amounts outstanding under the
Credit Agreement) at any one time outstanding incurred in the ordinary
course of business consistent with past practice and except for
intercompany Indebtedness between the Company and any of its
Subsidiaries or between such Subsidiaries, (A) incur or guarantee any
Indebtedness for borrowed money or any other Indebtedness, not to
exceed $50,000 in the aggregate at any one time incurred or guaranteed
in the ordinary course of business, or (B) make any loans, advances or
capital contributions to, or investments in, any other Person, other
than to the Company or any direct or indirect wholly owned Subsidiary
of the Company or to officers and employees of the Company or any of
its Subsidiaries for travel, business or relocation expenses in the
ordinary course of business;
(vii) except as set forth under the caption
"Committed Projects" in Section 4.01(a)(vii) of the Company Disclosure
Schedule, make or agree to make any new capital expenditures which in
the aggregate are in excess of $25,000; provided, however, that with
the consent of Parent, the Company may make additional capital
expenditures (which consent shall not be unreasonably withheld with
respect to those capital expenditures set forth under the caption
"Proposed Projects" in Section 4.01(a)(vii) of the Company Disclosure
Schedule or capital expenditures to the extent required to replace or
repair property and equipment of the Company damaged after the date of
this Agreement);
(viii) make any tax election that reasonably could
be expected to have a Material Adverse Effect on the Company or settle
or compromise any material income Tax liability;
(ix) except as set forth in Section 4.01(a)(ix) of
the Company Disclosure Schedule or as required by law (or, with
respect to the Citadel JSA (as defined in Section 5.08), as permitted
under Section 5.08), and except in the ordinary course of business and
as could not reasonably be expected to have a Material Adverse Effect
on the Company, modify, amend, terminate or fail to renew (to the
extent such contract or agreement can be unilaterally renewed by the
Company of any of its Subsidiaries) any contract or agreement to which
the Company or any Subsidiary is a party, including the Credit
Agreement, or waive, release or assign any material rights or claims
thereunder;
(x) make any material change to its accounting
methods, principles or practices, except as may be required by
generally accepted accounting principles;
(xi) fail to act in the ordinary course of
business consistent with past practices of the Company exercising
commercially reasonable care to (A) preserve substantially intact the
Company's and each of its Subsidiaries' present business organization,
(B) keep available the services of any employee with an employment
contract with the Company or any of its Subsidiaries, and (C) preserve
its present relationships with customers, suppliers and others having
business dealings with them;
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(xii) fail to use commercially reasonable efforts
to maintain the material assets of the Company and each of its
Subsidiaries in their current physical condition, except for ordinary
wear and tear and damage, provided that nothing contained herein shall
be deemed to require the Company or its Subsidiaries to undertake or
complete any capital improvements or replacements;
(xiii) merge or consolidate with or into any other
legal entity or dissolve or liquidate any of its Subsidiaries;
(xiv) except as set forth in Section 4.01(a)(xiv)
of the Company Disclosure Schedule and as required by the terms and
provisions of the Termination Agreement or other written contracts
between the Company or any of its Subsidiaries and an employee thereof
as in existence on the date of this Agreement or except in connection
with the extension of any collective bargaining agreements, (A) adopt
or amend any Benefit Plan other than in the ordinary course of
business consistent with past practice or as required by law, (B)
change the vacation policy with respect to the accrual, loss or use of
vacation time with respect to any employee of the Company or its
Subsidiaries, (C) materially increase in any manner the aggregate
compensation or fringe benefits (including, without limitation,
commissions) of any officer, director, or employee or other station
and broadcast personnel of the Company or any of its Subsidiaries
(whether employees or independent contractors) other than as required
by law, (D) pay any discretionary bonuses to any employee or
consultant of the Company or any Subsidiary of the Company or (E) make
any loans to any employee or consultant of the Company or any
Subsidiary of the Company in lieu of any bonus otherwise required to
be paid or determined in the discretion of the Board of Directors of
the Company as payable to any employee or consultant of the Company or
any Subsidiary of the Company;
(xv) except as set forth in Section 4.01(a)(xv) of
the Company Disclosure Schedule, pay, discharge, or satisfy any
material (on a consolidated basis for the Company and its Subsidiaries
taken as a whole) claims, liabilities, or obligations (absolute,
accrued, asserted or unasserted, contingent or otherwise), other than
in the ordinary course of business consistent with past practice, or
fail to pay or otherwise satisfy (except if being contested in good
faith) any material (on a consolidated basis for the Company and its
Subsidiaries taken as a whole) accounts payable, liabilities, or
obligations when due and payable;
(xvi) except as set forth in Section 4.01(a)(xvi)
of the Company Disclosure Schedule, enter into any agreement with any
Person other than Parent or any of the Company's Subsidiaries with
respect to any local marketing agreement, time brokerage agreement,
joint sales agreement, non-compete agreement or any other similar
agreement;
(xvii) engage in any Affiliate Relationships or
other transactions with any of its Affiliates (other than among the
Company and its Subsidiaries and among such Subsidiaries), other than
transactions disclosed in Section 4.01(a)(xvii) of the Company
Disclosure Schedule which could not reasonably be expected to have a
Material Adverse Effect on the Company, impair the ability of the
Company to perform its obligations under
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the Transaction Documents in any material respect or delay in any
material respect or prevent the consummation of the transactions
contemplated by the Transaction Documents;
(xviii) fail to declare and pay in cash on each
scheduled quarterly record date and payment date, respectively, all
accrued and unpaid dividends on outstanding Mandatory Preferred Stock,
subject to restrictions imposed by the Credit Agreement or under
applicable laws;
(xix) take any action that would cause or result in
any adjustment to the Redemption Rate or Optional Conversion Rate
(each as defined in the Mandatory Designation) as provided in
paragraph 8 of the Mandatory Designation or otherwise;
(xx) except as disclosed on Section 4.01(xx) of
the Company Disclosure Schedule, enter into any contract or agreement
which, if in effect as of the date hereof, would have been required to
be disclosed in Section 3.01(o)(v) of the Company Disclosure Schedule;
or
(xxi) authorize, or commit or agree to take, any of
the foregoing actions.
(b) OTHER ACTIONS. The Company and Parent shall not, and
shall not permit any of their respective Subsidiaries to, except as otherwise
expressly permitted by the Transaction Documents, take any action that would,
or that could reasonably be expected to, result in (i) any of the
representations and warranties of such party set forth in this Agreement that
are qualified as to materiality becoming untrue, (ii) any of such
representations and warranties that are not so qualified becoming untrue in any
material respect or (iii) any of the conditions to the Merger set forth in
Article 6 not being satisfied. In addition, the Company further covenants that
from and after the date hereof until the Effective Time, without the prior
written consent of Parent, the Company shall not, except as otherwise set forth
in Section 4.01(b) of the Company Disclosure Schedule, take any action that
could reasonably be expected to (x) impair or delay in any material respect
obtaining the FCC Consent (as defined in Section 6.01(b)) or complying with or
satisfying the terms thereof or (y) result in imposition of materially adverse
conditions on the FCC Consent. On and prior to the Effective Time, Parent and
Sub shall remain qualified under the Communications Act and otherwise to
consummate the transactions contemplated herein, subject to such divestitures
of radio stations attributable to Parent as are required for compliance with
the provisions of the Communications Act and FCC regulations regarding radio
multiple ownership.
(c) ADVICE OF CHANGES. The Company and Parent shall
promptly advise the other party orally and in writing of (i) any representation
or warranty made by the advising party contained in this Agreement that is
qualified as to materiality becoming untrue or inaccurate in any respect or any
such representation or warranty that is not so qualified becoming untrue or
inaccurate in any material respect, (ii) the failure by the advising party to
comply with or satisfy in any material respect any covenant, condition or
agreement to be complied with or satisfied by the advising party under this
Agreement or (iii) any change or event having, or which reasonably could be
expected to have,
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a Material Adverse Effect on such party or on the truth of its respective
representations and warranties or the ability of the conditions set forth in
Article 6 to be satisfied; provided, however, that no such notification shall
affect the representations, warranties, covenants or agreements of the parties
or the conditions to the obligations of the parties under this Agreement.
(d) NOTIFICATION OF CERTAIN MATTERS. If Parent (or its
Affiliates) or the Company receives an administrative or other order or
notification relating to any violation or claimed violation of the rules and
regulations of the FCC, or of any Governmental Entity, that could affect
Parent's, Sub's or the Company's ability to consummate the transactions
contemplated hereby, or should Parent (or its Affiliates) or the Company become
aware of any fact (including any change in law or regulations (or any
interpretation thereof by the FCC)) relating to the qualifications of Parent
(and its controlling Persons) that reasonably could be expected to cause the
FCC to withhold its consent to the transfer of control of the FCC Licenses
contemplated hereunder, Parent or the Company, as the case may be, shall
promptly notify the other party thereof and the Company shall use all
reasonable efforts to take such steps as may be necessary, to remove any such
impediment of the Company to consummate the transactions contemplated by this
Agreement. In addition, Parent or the Company, as the case may be, shall give
to the other party prompt written notice of (i) the occurrence, or failure to
occur, of any event of which it becomes aware that has caused or that would be
likely to cause any representation or warranty of Parent and Sub or the
Company, as the case may be, contained in this Agreement to be untrue or
inaccurate at any time from the date hereof to the Closing Date, and (ii) the
failure of Parent and Sub or the Company, as the case may be, or any officer,
director, employee or agent thereof, to comply with or satisfy in any material
respect any covenant, condition or agreement to be complied with or satisfied
by it hereunder. No such notification shall affect the representations or
warranties of the parties or the conditions to their respective obligations
hereunder.
SECTION 4.02. NO SOLICITATION.
(a) From and after the date hereof until the termination
of this Agreement, neither the Company nor any of its Subsidiaries, nor any of
their respective officers, directors, representatives, agents or Affiliates
(including, without limitation, any investment banker, attorney or accountant
retained by the Company or any of its Subsidiaries) (collectively,
"Representatives") will, and the Company will cause the employees and
Representatives of the Company and its Subsidiaries not to, directly or
indirectly, (i) solicit, initiate or encourage the submission of any Takeover
Proposal (as defined in Section 8.03), (ii) enter into any agreement with
respect to any Takeover Proposal or give any approval of the type referred to
in Section 3.01(l) with respect to any Takeover Proposal or (iii) participate
in any discussions or negotiations regarding, or furnish to any Person any
information with respect to, or take any other action to facilitate any
inquiries or the making of any proposal that constitutes, or may reasonably be
expected to lead to, any Takeover Proposal; provided, however, that if at any
time prior to the receipt of the Stockholder Approval, the Board of Directors
of the Company determines in good faith, based on the advice of outside
counsel, that it is necessary to do so in order to comply with its fiduciary
duties to the Company's stockholders under applicable law, the Company (and its
Representatives) may, in response to an unsolicited Takeover Proposal of the
sort referred to in clause (x) of the definition of "Superior
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Proposal" as contained in Section 8.03 that involves consideration to the
Company's stockholders with a value that the Company's Board of Directors
reasonably believes, after receiving advice from the Company's financial
advisor, is superior to the consideration provided for in the Merger, and
subject to compliance with Section 4.02(c), (x) furnish information with
respect to the Company pursuant to a customary confidentiality agreement
(having terms substantially similar to those contained in the Confidentiality
Agreement (as defined in Section 5.01)) to any Person making such proposal and
(y) participate in negotiations regarding such proposal. The Company shall
immediately cease and cause to be terminated any existing solicitation,
initiation, encouragement, activity, discussion or negotiation with any parties
conducted heretofore by the Company or any Representatives with respect to any
Takeover Proposal existing on the date hereof. Without limiting the foregoing,
it is understood that any violation of the restrictions set forth in the
preceding sentence by any Representative of the Company or any of its
Subsidiaries, whether or not such Person is purporting to act on behalf of the
Company or any of its Subsidiaries or otherwise, shall be deemed to be a breach
of this Section 4.02(a) by the Company.
(b) Neither the Board of Directors of the Company nor any
committee thereof (including without limitation the Independent Committee)
shall (x) withdraw or modify, or propose to withdraw or modify, in a manner
adverse to Parent, the approval (including, without limitation, either the
Board of Directors' or the Independent Committee's resolution providing for
such approval) or recommendation by such Board of Directors or such committee
of this Agreement or the Merger or (y) approve or recommend, or propose to
approve or recommend, any Takeover Proposal, except in the case of clause (x)
or (y), in connection with a Superior Proposal (as defined in Section 8.03) and
then only at or after the termination of this Agreement pursuant to Section
7.01(c).
(c) In addition to the obligations of the Company set
forth in paragraphs (a) and (b) of this Section 4.02, the Company promptly
shall advise Parent orally and in writing of any request for information or of
any Takeover Proposal or any inquiry with respect to or which could reasonably
be expected to lead to any Takeover Proposal, the identity of the Person making
any such request, Takeover Proposal or inquiry and all the terms and conditions
thereof. The Company will keep Parent fully informed of the status and details
(including amendments or proposed amendments) of any such request, Takeover
Proposal or inquiry.
(d) Nothing contained in this Section 4.02 shall prohibit
the Company from taking and disclosing to its stockholders a position
contemplated by Rule 14d-9 or Rule 14e-2 promulgated under the Exchange Act;
provided, however, neither the Company nor its Board of Directors nor any
committee thereof shall, except as permitted by Section 4.02(b), withdraw or
modify, or propose to withdraw or modify, its approval or recommendation with
respect to this Agreement or the Merger (including, without limitation, either
the Board of Directors' or the Independent Committee's resolution providing for
such approval) or approve or recommend, or propose to approve or recommend, a
Takeover Proposal.
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SECTION 4.03. STOCKHOLDERS MEETING.
(a) The Company will, as soon as practicable following
the date of this Agreement duly call, give notice of, convene and hold a
meeting of its stockholders (the "Stockholders Meeting") for the purpose of
obtaining the Stockholder Approval. Without limiting the generality of the
foregoing, the Company agrees that its obligations pursuant to the first
sentence of this Section 4.03 shall not be affected by the commencement, public
proposal, public disclosure or communication to the Company of any Takeover
Proposal. The Company will, through its Board of Directors and the Independent
Committee, recommend to its stockholders the approval and adoption of this
Agreement and the Merger and such recommendation and approval shall be set
forth in the Proxy Statement, except to the extent that the Board of Directors
of the Company shall have withdrawn or modified its approval or recommendation
of this Agreement or the Merger and terminated this Agreement in accordance
with Section 7.01(c).
(b) The Company shall prepare and file a preliminary
Proxy Statement with the SEC within six weeks following the date of this
Agreement and shall use its commercially reasonable efforts to respond to any
comments of the SEC or its staff, and, to the extent permitted by law, to cause
the Proxy Statement to be mailed to the Company's stockholders as promptly as
practicable after responding to all such comments to the satisfaction of the
SEC staff and in any event at least twenty (20) business days prior to the
Stockholders Meeting. The Company shall notify Parent promptly of the receipt
of any comments from the SEC or its staff and of any request by the SEC or its
staff for amendments or supplements to the Proxy Statement or for additional
information and will supply Parent with copies of all correspondences between
the Company or any of its representatives, on the one hand, and the SEC or its
staff, on the other hand, with respect to the Proxy Statement or the Merger.
Prior to the filing of the Proxy Statement or any amendment thereto with the
SEC, the Company shall provide the Parent and its legal counsel with a
reasonable opportunity to review and comment on such document. If at any time
prior to the Stockholders Meeting there shall occur any event that should be
set forth in an amendment or supplement to the Proxy Statement, the Company
shall promptly prepare and mail to its stockholders such an amendment or
supplement. The Company shall not mail any Proxy Statement, or any amendment
or supplement thereto, to which Parent reasonably objects. Parent shall
cooperate with and provide such information as is reasonably requested by the
Company in the preparation of the Proxy Statement or any amendment or
supplement thereto.
SECTION 4.04. ASSISTANCE. If Parent requests, the Company will
cooperate, and the Company will cause each of its Subsidiaries and will request
its accountants, at the sole cost and expense of Parent, to cooperate in all
reasonable respects in connection with any financing efforts of Parent or its
Affiliates (including providing reasonable assistance in the preparation of one
or more registration statements or other offering documents relating to debt
and/or equity financing) and any other filings that may be made by Parent or
its Affiliates with the SEC, all at the sole expense of Parent and during
normal business hours, upon reasonable prior notice and in such manner as will
not unreasonably interfere with the conduct of the Company's or any of its
Subsidiaries' businesses. Subject to the foregoing, the Company shall, and
shall cause each of its Subsidiaries to, (i) furnish to its independent
accountants (or, if requested by Parent to Parent's independent public
accountants), such customary management representation letters as its
accountants may reasonably require of the Company as a condition to its
execution of any required
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accountants' consents necessary in connection with the delivery of any
"comfort" letters requested by financing sources of Parent or its Affiliates,
and (ii) furnish to Parent all financial statements (audited and unaudited) and
other information in the possession of the Company or any of its Subsidiaries
or their representatives or agents as Parent shall reasonably determine is
required in connection with such financing.
SECTION 4.05. RELEASES. The Company shall (a) use its commercially
reasonable efforts to receive, prior to the Effective Time, an Option, SAR and
Warrant Surrender Agreement, Release and Waiver in substantially the form
attached hereto as Annex A (a "Release Agreement") from each Person (other than
the Persons named in Section 4.05 of the Company Disclosure Schedule (the
"Executive Group")) who is the holder of any Options or SARs and (b) obtain
from each member of the Executive Group a Release Agreement.
SECTION 4.06. TERMINATION OF CERTAIN AFFILIATE TRANSACTIONS. At or
prior to the Effective Time, the Company will amend or terminate each of the
agreements set forth Part I of Section 4.06 of the Company Disclosure Schedule,
and all other Affiliate Relationships then existing other than those set forth
in Part II of Section 4.06 of the Company Disclosure Schedule, in each case
without any liability to, or fees or payments by, the Company or any of its
Subsidiaries resulting from such termination (other than payments made pursuant
to the express terms of the agreements related to periods or services provided
prior to the termination date of such agreements) except as expressly set forth
in Part I of Section 4.06 of the Company Disclosure Schedule, and so that as of
and after the Effective Time none of the Company, the Surviving Corporation or
any of their Subsidiaries will have any liability or obligations thereunder.
SECTION 4.07. SIGNAL DOWNGRADE/UPGRADE. The Company shall use
commercially reasonable efforts to execute an agreement with Saga
Communications of Iowa, Inc. ("Saga") on terms reasonably acceptable to Parent
(the "Saga Agreement") for the downgrade, if necessary, of Saga's signal for
KIOA-FM, Des Moines, Iowa, from Channel 227C to 227C1, and the upgrade by the
Company of its signal for KTNP(FM), Bennington, Nebraska, from 227A to 227C3.
The Company shall use commercially reasonable efforts to obtain the FCC's
consent for such downgrade and upgrade.
ARTICLE 5.
ADDITIONAL AGREEMENTS
SECTION 5.01. ACCESS TO INFORMATION; CONFIDENTIALITY.
(a) The Company shall, and shall cause its Subsidiaries
to, afford to Parent and to the officers, employees, accountants, counsel,
financial advisors, lenders and other representatives of Parent, reasonable
access during normal business hours during the period prior to the Effective
Time to all their respective properties, books, contracts, commitments,
personnel and records and, during such period, the Company shall, and shall
cause its Subsidiaries to, prepare or cause to be prepared, or furnish promptly
to Parent (a) a copy of each report, schedule, registration statement and
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other document filed by it during such period pursuant to the requirements of
Federal or state securities laws and (b) all other information concerning its
business, properties and personnel as Parent may reasonably request. Except as
required by law or the rules or regulations of the Nasdaq Stock Market or any
national stock exchange, Parent agrees that, until the earlier of (i) two years
from the date of this Agreement and (ii) the Effective Time, Parent will not,
and will cause its Subsidiaries and Representatives not to, disclose, in whole
or in part, to any other Person any nonpublic information obtained from the
Company other than to Representatives of Parent in connection with an
evaluation of the transactions contemplated by this Agreement, and Parent will
not, and will cause its Subsidiaries and the Representatives of the Parent and
its Subsidiaries not to, use any of such nonpublic information to directly or
indirectly divert or attempt to divert any business, customer or employee of
the Company or any of its Subsidiaries.
(b) Parent and Sub shall prepare or cause to be prepared,
and furnish promptly to the Company such information concerning the business,
properties and personnel of Parent and Sub as the Company may reasonably
request for including in the Proxy Statement or as otherwise required to be
included in any filings required to be made by the Company with any
Governmental Entity in connection with the transactions contemplated by this
Agreement. Except as required by law or the rules of regulations of the Nasdaq
Stock Market or any national stock exchange, the Company agrees that, until the
earlier of (i) two years from the date of this Agreement and (ii) the Effective
Time, the Company will not, and will cause its Subsidiaries and the
Representatives of the Company and its Subsidiaries not to, without the prior
written consent of Parent, disclose, in whole or in part, to any other Person
any nonpublic information obtained from Parent that is not provided for use in
the Proxy Statement, other than to Representatives of the Company and its
Subsidiaries in connection with the preparation for the consummation of the
transactions contemplated by this Agreement, and the Company will not, and will
cause its Subsidiaries and the Representatives of the Company and its
Subsidiaries not to, use any of such nonpublic information to directly or
indirectly divert or attempt to divert any business, customer or employee of
Parent or any of its Subsidiaries.
SECTION 5.02. REASONABLE EFFORTS.
(a) Upon the terms and subject to the conditions set
forth in this Agreement, each of the parties agrees to use reasonable efforts
to take, or cause to be taken, all actions, and to do, or cause to be done, and
to assist and cooperate with the other parties in doing, all things necessary,
proper or advisable to consummate and make effective, in the most expeditious
manner practicable, the Merger and the other transactions contemplated by the
Transaction Documents, including (i) the obtaining of all necessary consents,
approvals or waivers from third parties ("Third Party Consents"), (ii) the
defending of any lawsuits or other legal proceedings, whether judicial or
administrative, challenging any of the Transaction Documents or the
consummation of the transactions contemplated by the Transaction Documents
(such as in connection with the transfer of control of the FCC Licenses),
including seeking to have any stay or temporary restraining order entered by
any court or other Governmental Entity vacated or reversed, (iii) the waiver
from the lenders under the Credit Agreement of all prepayment premiums,
penalties and fees payable under the terms of the Credit Agreement and (iv) the
execution and delivery of any additional instruments necessary to consummate
the transactions contemplated by, and to fully carry out the purposes of, the
Transaction
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Documents. Except for making the filings contemplated in Section 5.02(b),
notwithstanding anything to the contrary contained in this Agreement, nothing
in this Agreement shall obligate Parent or Sub to use reasonable efforts to
obtain approval of the FCC Applications or clearance under the HSR Act and the
grant of any waivers in connection therewith. However, notwithstanding the
preceding sentence, Parent shall obtain approval of the FCC Applications (as
defined in Section 5.02(b)) and clearance under the HSR Act and the grant of
any waivers in connection therewith prior to the Termination Date (as defined
in Section 7.01(b)(ii)) unless the failure to obtain such clearance, consents
and waivers is primarily the result of Acts or Changes. For purposes of this
Agreement "Acts or Changes" shall mean (A) acts or omissions on the part of the
Company or any of its Subsidiaries in conducting their respective operations
and activities other than relating to the number of licenses or amount of
revenues in a particular market and other than relating to the Citadel JSA, (B)
a breach by the Company of its obligations under this Agreement, or (C) a
statutory change or enactment made by Congress which (1) decreases the number
of radio licenses which an entity may own nationally or locally or (2)
adversely relates to the concentration of radio licenses which an entity may
own in a market and, as a result of the change or enactment referred to in
either clause (1) or (2) above, Parent's performance of its obligations under
this Agreement would result in a Material Adverse Effect on Parent and its
Attributable Entities, taken as a whole. For purposes of the preceding
sentence, "Attributable Entities" shall mean Parent and any entities whose
radio licenses would be attributable to Parent under applicable FCC rules or
regulations or under the HSR Act.
(b) In connection with and without limiting the
foregoing, Parent and the Company shall file the applications (the "FCC
Applications") with the FCC for the transfer of control of the FCC Licenses
contemplated hereunder within 21 business days after the date hereof.
Additionally, as soon as practicable after the date of this Agreement, but in
no event more than 21 business days after the date of this Agreement, Parent
and the Company will file or will cause to be filed all notifications and
documents in connection with this Agreement required to be filed pursuant to
the HSR Act, and the rules and regulations promulgated under the HSR Act.
Parent and the Company will make or cause to be made all such other filings and
submissions under the HSR Act and regulations thereunder required to consummate
the transactions contemplated by this Agreement. Both Parent and the Company
will request early termination of the waiting period imposed by the HSR Act.
Parent and the Company will coordinate and cooperate with one another in
exchanging information and reasonable assistance as the other may request in
connection with notifications or other filings made under the HSR Act. Parent
and the Company shall keep the other party apprised of the status of any
inquiries made by the U.S. Department of Justice, Antitrust Division, or the
Federal Trade Commission (collectively, the "Federal Antitrust Agencies"), with
respect to the transactions contemplated by this Agreement. Both Parent and the
Company shall use their best efforts to cause a termination of the waiting
period imposed by the HSR Act without the entry by a court of competent
jurisdiction of an order enjoining the consummation of or the transactions
contemplated by this Agreement; provided that, Parent shall consent to the
divestiture of such properties as may be necessary to receive approval by the
Federal Antitrust Agencies without entry of such an injunction; provided,
however, that Parent and Sub (and their Affiliates) shall not be required by
this provision to divest any interest they may hold in any television station.
Parent shall pay all expenses and assume all obligations with respect to such
divestitures. As may be reasonably
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requested by Parent, and subject to the receipt of confidentiality agreements
reasonably acceptable to the Company, the Company shall provide to potential
third party buyers identified by Parent reasonable access to the business,
assets and operations of the Company and its Subsidiaries, on a basis
consistent with that described in Section 5.01, as may be necessary to
cooperate with Parent in connection with its efforts to effectuate,
contemporaneously with the Effective Time, divestitures of the assets and
properties of the Company and its Subsidiaries, and the Company shall otherwise
reasonably cooperate with Parent by making any required governmental filing in
connection with such divestitures. If control of Parent and Sub will change
during the pendency of the FCC Applications, Parent shall amend the FCC
Applications accordingly as may be necessary so long as such amendment does not
delay the Closing beyond the Termination Date.
(c) In connection with and without limiting the
foregoing, the Company and its Board of Directors shall (i) take all action
necessary to ensure that no state takeover statute or similar statute or
regulation is or becomes applicable to the Merger, this Agreement, the
Stockholder Agreements or any of the other transactions contemplated by this
Agreement or the Stockholder Agreements and (ii) if any state takeover statute
or similar statute or regulation becomes applicable to the Merger, this
Agreement, the Stockholder Agreements or any other transaction contemplated by
this Agreement or the Stockholder Agreements, take all action necessary to
ensure that the Merger and the other transactions contemplated by this
Agreement and the Stockholder Agreements may be consummated as promptly as
practicable on the terms contemplated by this Agreement and the Stockholder
Agreements and otherwise to minimize the effect of such statute or regulation
on the Merger and the other transactions contemplated by this Agreement and the
Stockholder Agreements.
SECTION 5.03. BENEFIT PLANS; VACATION.
(i) Parent shall take such action as may be
necessary so that on and after the Effective Time and for one year
thereafter, directors (who are employees of the Company or any of its
Subsidiaries), officers and employees of the Company and its
Subsidiaries shall be provided employee benefits, plans and programs
(including but not limited to incentive compensation, deferred
compensation, pension, life insurance, medical (which eligibility
shall not be subject to any exclusions for any pre-existing conditions
if such individual has met the participation requirements of such
benefits, plans or programs of the Company or its Subsidiaries),
profit sharing (including 401(k), severance, salary continuation and
fringe benefits) which are no less favorable in the aggregate than
those generally available to similarly situated directors, officers
and employees of Capstar Broadcasting Corporation and its
Subsidiaries. For purposes of eligibility to participate and vesting
in all benefits provided to directors, officers and employees, the
directors, officers and employees of the Company and its Subsidiaries
will be credited with their years of service with the Company and its
Subsidiaries and prior employers to the extent service with the
Company and its Subsidiaries and prior employers is taken into account
under plans of the Company and its Subsidiaries. Upon termination of
any health plan of the Company or any of its Subsidiaries, individuals
who were directors, officers or employees of the Company or its
Subsidiaries at the Effective Time shall, if employed by the Company
and its Subsidiaries, become eligible to participate in such health
plans established by Parent. Amounts paid before the Effective Time by
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directors, officers and employees of the Company and its Subsidiaries
under any health plans of the Company shall after the Effective Time
be taken into account in applying deductible and out-of-pocket limits
applicable under the health plans of Parent provided as of the
Effective Time to the same extent as if such amounts had been paid
under such health plans of Parent.
(ii) Parent shall permit and shall cause the
Surviving Corporation to permit all individuals who are employees of
the Company and its Subsidiaries immediately prior to the Effective
Time to retain and take any paid vacation days accrued but not taken
or lost under the Company's and its Subsidiaries' vacation policies
prior to the Effective Time, provided that such vacation days are
taken or paid in lieu of being taken within one year after the
Effective Time.
SECTION 5.04. INDEMNIFICATION, EXCULPATION AND INSURANCE.
(a) The certificate of incorporation and by-laws of the
Surviving Corporation shall contain provisions no less favorable with respect
to exculpation, indemnification and advancement of expenses than are set forth
in the certificate of incorporation and by-laws of the Company, as in effect on
the date hereof, which provisions shall not be amended, repealed or otherwise
modified for a period of six years from the Effective Time in any manner that
would affect adversely the rights thereunder of (i) individuals who at any time
prior to the Effective Time were directors, officers or employees or agents of
the Company or any of its Subsidiaries or (ii) any of Xxxxxx Xxxxx, Xxxxxx F.
X. Sillerman, any member of the Sillerman Group or each of their respective
officers, directors, employees, agents and shareholders, unless such
modification shall be required by law.
(b) From and after the Effective Time, Parent and the
Surviving Corporation shall indemnify, defend and hold harmless each Person who
is now, or has been at any time prior to the date of this Agreement or who
becomes prior to the Effective Time, an officer, director, employee or agent of
the Company or any of its Subsidiaries and each of Xxxxxx Xxxxx, Xxxxxx F. X.
Sillerman, any member of the Sillerman Group and each of their respective
officers, directors, employees, agents and shareholders (collectively, the
"Indemnified Parties"), to the same extent as such Indemnified Parties were
indemnified by the Company and its Subsidiaries as of the date of the
Agreement, against all losses, reasonable expenses (including reasonable
attorneys' fees), claims, damages, liabilities or amounts that are paid in
settlement of, or otherwise in connection with, any threatened or actual claim,
action, suit, proceeding or investigation (a "Claim"), based in whole or in
part on or arising in whole or in part out of the fact that the Indemnified
Party (or the Person controlled by the Indemnified Party) is or was a director,
officer, employee, agent, representative or consultant of the Company or any of
its Subsidiaries and pertaining to any matter existing or arising out of
actions or omissions occurring at or prior to the Effective Time (including
without limitation any claim arising out of this Agreement or any of the
transactions contemplated hereby), whether asserted or claimed prior to, at or
after the Effective Time, in each case to the fullest extent permitted under
Delaware law, and shall pay any expenses, as incurred, in advance of the final
disposition of any such action or proceeding to each Indemnified Party to the
fullest extent permitted under Delaware law. Without limiting the foregoing,
in the event any such Claim is brought against any
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of the Indemnified Parties, (i) such Indemnified Parties may retain counsel
(including local counsel) satisfactory to them and which shall be reasonably
satisfactory to Parent and the Surviving Corporation and they shall pay all
reasonable fees and expenses of such counsel for such Indemnified Parties; and
(ii) Parent and the Surviving Corporation shall use all reasonable efforts to
assist in the defense of any such Claim, provided that Parent and the Surviving
Corporation shall not be liable for any settlement effected without their
written consent, which consent, however, shall not be unreasonably withheld or
delayed. Notwithstanding the foregoing, nothing contained in this Section 5.04
shall be deemed to grant any right to any Indemnified Party which is not
permitted to be granted to an officer, director or employee of Parent under
Delaware law, assuming for such purposes that Parent's certificate of
incorporation and bylaws provide for the maximum indemnification permitted by
law.
(c) Parent will cause to be maintained for a period of
not less than six years from the Effective Time the Company's current
directors' and officers' insurance and indemnification policy to the extent
that it provides coverage for events occurring prior to the Effective Time
("D&O Insurance") for all Persons who are directors and officers of the Company
or otherwise are covered by the D&O Insurance on the date of this Agreement, so
long as the annual premium therefor would not be in excess of 200% of the last
annual premium therefor paid prior to the date of this Agreement (the "Maximum
Premium"); provided, however, that Parent may, in lieu of maintaining such
existing D&O Insurance as provided above, cause coverage to be provided under
any policy maintained for the benefit of Parent or any of its Subsidiaries, so
long as the terms thereof are no less advantageous to the intended
beneficiaries thereof than the existing D&O Insurance. If the existing D&O
Insurance expires, is terminated or canceled during such six-year period,
Parent will use all reasonable efforts to cause to be obtained as much D&O
Insurance as can be obtained for the remainder of such period for an annualized
premium not in excess of the Maximum Premium, on terms and conditions no less
advantageous to the covered Persons than the existing D&O Insurance. The
Company represents to Parent that the Maximum Premium is $234,000.
SECTION 5.05. FEES AND EXPENSES; DEPOSIT.
(a) Except as provided below in this Section 5.05, and as
provided in Section 5.11 and Section 7.02, and except for FCC filing fees in
connection with the filing of the FCC Applications and filing fees under the
HSR Act in connection with the transactions contemplated by this Agreement, 50%
of which shall be paid by Parent and 50% of which shall be paid by the Company,
all fees and expenses incurred in connection with the Merger, this Agreement,
the Stockholder Agreements and the transactions contemplated by this Agreement
and the Stockholder Agreements shall be paid by the party incurring such fees
or expenses, whether or not the Merger is consummated.
(b) The Company shall pay, or shall cause to be paid, in
same day funds to Parent, or its designee, the following specified termination
fee (the "Termination Fee") if this Agreement is terminated as follows: (i) if
this Agreement is terminated pursuant to Section 7.01(b)(i), then a Termination
Fee of $2,500,000 shall be payable; (ii) if this Agreement is terminated
pursuant to Section 7.01(f), then a Termination Fee of $1,666,667 shall be
payable; or (iii) if this Agreement
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is terminated pursuant to Section 7.01(c) or (d) (including a conditional
termination pursuant to the proviso contained in Section 7.01(d)), then a
Termination Fee of $5,000,000 shall be payable contemporaneously with such
termination.
(c) In the event that this Agreement is terminated
pursuant to Section 7.01(b)(i) and within one year of such termination
definitive documentation with respect to a Takeover Proposal has been entered
into or 50% or more of the outstanding shares of Common Stock or voting
securities representing 50% or more of the voting power of the outstanding
capital stock of the Company (giving effect to the conversion of outstanding
Mandatory Preferred Stock to Class A Common Stock if, and at the rate at which,
the Mandatory Preferred Stock is then convertible into shares of Class A Common
Stock) has been acquired pursuant to a tender offer made as a Takeover
Proposal, then the Company shall pay, or shall cause to be paid,
contemporaneously with the consummation of the acquisition pursuant to such
Takeover Proposal or acquisition pursuant to such Tender Offer, in same day
funds to Parent, or its designee, an additional amount of Termination Fee in an
amount equal to $2,500,000.
(d) In the event that this Agreement is terminated
pursuant to Section 7.01(b)(i), 7.01(c), 7.01(d) or 7.01(e), the Company shall
pay upon demand, or shall cause to be paid, in same day funds to Parent, or its
designee, such amount as may be required to reimburse Parent and its Affiliates
(the "Reimbursement Amount") for all reasonable out-of-pocket fees, costs and
expenses incurred by any of them in connection with their due diligence efforts
or the transactions contemplated hereby, including, without limitation, (i)
fees, costs and expenses of accountants, counsel, financial advisors and other
similar advisors, (ii) fees paid to any Governmental Entity, (iii) costs of all
Phase I Assessments and Phase II Assessments and (iv) fees, costs and expenses
paid or payable to third parties under any financing commitments or similar
arrangements or in connection with financing transactions or efforts,
including, without limitation, any purchaser or underwriter's discounts
relating to the sale of the debt or equity financing or (except for the
principal amount payable in connection therewith, but including all accrued
interest payable in connection therewith) the making of any repurchase offer in
respect of such financing (collectively, "Expenses"); provided however, the
Reimbursement Amount shall not exceed (x) $1,000,000 in the case of a
termination under either Section 7.01(b)(i), 7.01(c) or 7.01(d) and (y) $50,000
in the case of a termination under Section 7.01(e).
(e) The Termination Fee and Reimbursement Amount shall be
paid by the Company without reservation of rights or protests and the Company
upon making such payment shall be deemed to have released and waived any and
all rights that it may have to recover such amounts.
(f) Concurrently with the execution of this Agreement, in
order to secure Parent's and Sub's performance under this Agreement and as
security for damages that may be payable by Parent or Sub to the Company
hereunder, Parent shall place into escrow pursuant to the Deposit Escrow
Agreement in the form attached as Annex B hereto (the "Escrow Agreement") an
irrevocable letter of credit (the "Letter of Credit") in the sum of $9,000,000
substantially in the form attached
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as Annex C hereto. The Letter of Credit will provide that the Company can draw
the amount thereof after its release to the Company from the Escrow Agreement.
(g) If this Agreement is terminated pursuant to (i)
Section 7.01(b)(ii) and as of such Termination Date the conditions set forth in
Sections 6.01(b), Section 6.01(c) or both Sections 6.01(b) and 6.01(c) have not
been fulfilled other than a nonfulfillment primarily due to Acts or Changes;
(ii) Section 7.01(b)(iii) and such order, injunction, decree, ruling or other
action is entered or taken by the FCC (or any court of competent jurisdiction
and arises under the Communications Act) or any Federal Antitrust Agency and is
not primarily due to Acts or Changes; (iii) Section 7.01(b)(iv) by the Company;
(iv) Section 7.01(b)(vi); (v) Section 7.01(b)(ii) and as of such Termination
Date the condition set forth in Section 6.01(d) is not satisfied as a result of
a Mandatory Preferred Preliminary Order (as defined in Section 5.07), (vi)
Section 7.01(b)(ii) and as of such Termination Date the conditions in Section
6.01 and all conditions in Section 6.02 other than Section 6.02(d) shall have
been satisfied, then Parent and Company shall promptly instruct the escrow
agent under the Escrow Agreement to release the Escrowed Property (as defined
in the Escrow Agreement) to the Company and Parent promptly shall pay to the
Company, by wire transfer in immediately available funds to an account
designated in writing by the Company, an additional amount of $3,000,000 (the
"Cash Fee"), and the Escrowed Property and the Cash Fee (collectively, the
"Parent Fee") shall constitute liquidated damages. The parties agree that the
foregoing liquidated damages are reasonable considering all the circumstances
existing as of the date hereof and constitute the parties' good faith estimate
of the actual damages reasonably expected to result from the termination of
this Agreement as described in this Section 5.05(g). Except as contemplated by
Section 5.05(i) and Section 5.11, the Company agrees that, to the fullest
extent permitted by law, the Company's right to payment of such liquidated
damages as provided in this Section 5.05(g) shall be its sole and exclusive
remedy if the Closing does not occur because of a termination of this Agreement
as described in this Section 5.05(g) or with respect to any damages whatsoever
that the Company may suffer or allege to suffer as a result of any Claim or
cause of action asserted by the Company relating to or arising from breaches of
the representations, warranties or covenants of Parent or Sub contained in this
Agreement and to be made or performed at or prior to the Closing. If this
Agreement is terminated either by Parent or the Company pursuant to any
provision of Section 7.01 other than a termination described in clauses (i),
(ii), (iii), (iv), (v) or (vi) of this Section 5.05(g), then, Parent and the
Company shall instruct the escrow agent under the Escrow Agreement to release
the Letter of Credit to Parent. Each of clauses (i) through (vi) of this
Section 5.05(g) is independent from each other and nothing in any one clause
modifies or limits any other clause.
(h) As a condition to the release of the Escrowed
Property and the payment of the Cash Fee to the Company under Section 5.05(g),
the Company shall deliver to the Parent an agreement which irrevocably and
unconditionally releases, acquits, and forever discharges Parent and Sub and
their respective successors, assigns, officers, directors, employees, agents,
stockholders, Subsidiaries, Parent companies and other Affiliates (corporate or
otherwise) (the "Released Parties") of and from any and all Released Claims,
including, without limitation, all Released Claims arising out of, based upon,
resulting from or relating to the negotiation, execution, performance, breach
or otherwise related to or arising out of the Transaction Documents or any
agreement entered into in connection therewith or related thereto. "Released
Claims" as used herein shall mean any and all
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charges, complaints, claims, causes of action, promises, agreements, rights to
payment, rights to any equitable remedy, rights to any equitable subordination,
demands, debts, liabilities, express or implied contracts, obligations of
payment or performance, rights of offset or recoupment, accounts, damages,
costs, losses or expenses (including attorneys' and other professional fees and
expenses) held by the Company or any of its Subsidiaries, whether known or
unknown, matured or unmatured, suspected or unsuspected, liquidated or
unliquidated, absolute or contingent, direct or derivative relating to the
transactions contemplated by the Transaction Documents, provided, however, that
Released Claims shall not include claims for unpaid expenses and interest
described in Section 5.05(i) relating to the release of the Escrowed Property,
the payment of the Cash Fee or delivery of the Escrowed Property, or for any
escrow expenses unpaid by Parent and withheld by the escrow agent from the
Escrowed Property pursuant to the Escrow Agreement.
(i) In the event that this Agreement is terminated and
Parent and the Company do not promptly agree on who is entitled to the Escrowed
Property and the Cash Fee then, upon a Final Determination (as defined in the
Escrow Agreement), which shall be binding with respect to the whole of the
Parent Fee, the non-prevailing party shall pay to the prevailing party (x) the
amount of the reasonable fees and expenses actually incurred by the prevailing
party in connection with obtaining the Final Determination and (y) if the
Company is the prevailing party, interest on the face amount of the Parent Fee
at the annual rate of 10% commencing as of the date of the termination or
purported termination of this Agreement and ending as of (A) with respect to
the Escrowed Property, the date that the Escrowed Property has been released
from escrow to the prevailing party and (B) with respect to the Cash Fee, the
date the full amount of the Cash Fee has been tendered for delivery to the
Company as provided in Section 5.05(g).
SECTION 5.06. PUBLIC ANNOUNCEMENTS. Parent and Sub, on the one
hand, and the Company, on the other hand, will consult with each other before
issuing, and provide each other the opportunity to review, comment upon and
concur with, any press release or other public statements with respect to the
transactions contemplated by this Agreement, including the Merger, and shall
not issue any such press release or make any such public statement prior to
such consultation, except as may be required by applicable law, court process
or by obligations pursuant to any listing agreement with any national
securities exchange or the National Association of Securities Dealers, Inc. The
parties agree that the initial press release(s) to be issued with respect to
the transactions contemplated by this Agreement and the Stockholder Agreements
shall be in the form(s) heretofore agreed to by the parties.
SECTION 5.07. CLOSING EXTENSION.
(a) Extension. Subject to Section 1.02, Parent may
extend the initial Termination Date set forth in Section 7.01(b)(ii)(A) for up
to three calendar months, in Half-Month Intervals (as defined in Section 8.03),
by providing the Company notice of its election to do so on or prior to the
then scheduled Termination Date. In the event that Parent elects to extend the
Termination Date pursuant to the immediately preceding sentence, the Common Per
Share Price shall be increased by $.125 and the Mandatory Preferred Per Share
Price shall be increased by $1.04 for each Half-Month
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Interval (or portion thereof) that the Termination Date is extended, beginning
on the first day of each such Half-Month Interval; provided, however, that no
such increase shall be paid if:
(A)(i) all conditions to the obligations of Parent
and Sub to effect the Merger set forth in Section 6.01 have been
satisfied, except for the conditions set forth in either Section
6.01(b), 6.01(c) or both Sections 6.01(b) and 6.01(c), as applicable,
(ii) the failure to satisfy the conditions set forth in either Section
6.01(b), 6.01(c) or both Sections 6.01(b) and 6.01(c), as applicable,
is primarily the result of Acts or Changes and (iii) all the
conditions to the obligations of Parent and Sub to effect the Merger
set forth in Section 6.02 (other than Sections 6.02(c) and 6.02(d))
have been satisfied or waived by Parent and Sub; provided, that if
within ten business days after the later of the satisfaction of the
conditions in Section 6.01(b) and the satisfaction of the conditions
in Section 6.01(c) (the "Satisfaction Date"), Parent fails to
consummate the Merger, the Common Per Share Price shall be increased
by $.125 and the Mandatory Preferred Per Share Price shall be
increased by $1.04 for each Half-Month Interval beginning as of the
first Half-Month Interval which commences after the Satisfaction Date;
or
(B)(i) the Merger shall be restrained or otherwise
prohibited by a temporary or preliminary judicial order, decree,
ruling or other action arising from claims or litigation involving the
Company and its stockholders (collectively, the "Preliminary Order")
and (ii) Parent delivers to the Company on or prior to the applicable
Termination Date written notice to the effect that it shall consummate
the Merger within ten business days after the lifting or withdrawal of
the Preliminary Order; provided, that, if the Preliminary Order is
entered, issued, made or rendered in a Mandatory Preferred Proceeding
(as defined in Section 8.03) on the grounds or basis of, solely or
among other grounds or bases, the Mandatory Preferred Per Share Price
or any other treatment of the Mandatory Preferred Stock pursuant to
this Agreement (a "Mandatory Preferred Preliminary Order") and the
Mandatory Preferred Preliminary Order has not been lifted or withdrawn
by the close of business on June 15, 1999, then Parent may extend the
Termination Date until July 31, 1999, in Half-Month Intervals, but the
Common Per Share Price shall be increased by $.125 and the Mandatory
Preferred Per Share Price shall be increased by $1.04 for each Half-
Month Interval (or portion thereof) that the Termination Date is so
extended, beginning on June 16, 1999; and provided, further, that, if,
within ten business days after the date of the lifting or withdrawal
of the Preliminary Order, Parent fails to consummate the Merger and
such failure is not due to the Company's failure to fulfill any of the
conditions contained in Sections 6.01, Section 6.02 or both Sections
6.01 and 6.02 that are to be fulfilled by it, the Common Per Share
Price shall be increased by $0.25 and the Mandatory Preferred Per
Share Price shall be increased by $2.08 for each Half-Month Interval
(or portion thereof) after the initial Termination Date provided for
herein (and the increase in the Common Per Share Price and the
Mandatory Preferred Per Share Price provided for in the immediately
preceding proviso shall not apply). In the event that the Preliminary
Order has not been lifted or withdrawn by the close of business on
July 31, 1999, then either Parent or the Company may extend the date
of the Closing for an additional 45 days by delivering, prior to
August 1, 1999, written notice to the other party to such effect. In
the event that (x) neither Parent nor the Company elects to extend the
Closing for such additional 45-day period or (y) either Parent or the
Company elects to
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extend the Closing for such 45-day period and the Preliminary Order
has not been lifted or withdrawn prior to the end of such 45-day
period, then this Agreement shall terminate without any liability or
obligation on the part of either party other than payment of fees and
expenses pursuant to Section 5.05(a) and the obligation to release the
Letter of Credit to Parent, unless such Preliminary Order is a
Mandatory Preferred Preliminary Order in which case this Agreement
shall not automatically terminate and the provisions of Section 7.01
and 5.05 shall apply; or
(C) to the extent that the Termination Date is
extended solely as a result of the operation of Section 7.01(f).
(b) Mandatory Preferred Preliminary Order. In the event
any Mandatory Preferred Preliminary Order is entered, issued, made, or rendered
that prohibits or restricts the ability of any of the parties to this Agreement
to consummate the transactions contemplated hereby, including the Stockholders
Meeting or the Merger, the Company and Parent shall cooperate and use
commercially reasonable efforts to promptly cause such prohibitions or
restrictions to be lifted, including without limitation, with respect to the
Company, taking steps necessary to appeal any such action. Subject to the
foregoing sentence, notwithstanding any other provisions of this Agreement to
the contrary, Parent and Sub acknowledge and agree that none of the treatment
of the Mandatory Preferred Stock as contemplated by this Agreement, the
bringing of any Mandatory Preferred Proceeding, or any change, effect, event or
occurrence arising therefrom or the resolution thereof that is materially
adverse to the business, properties, assets, condition (financial or
otherwise), results of operations or prospects of the Company or its
Subsidiaries shall, in any case (i) constitute a breach of any representation
or warranty made by the Company in any Transaction Document, or (ii) constitute
a default, nonsatisfaction or violation by the Company of any covenant,
condition or agreement contained in any Transaction Document.
SECTION 5.08. CITADEL JSA.
(a) Notwithstanding Section 4.01(ix), without the prior
written consent of Parent, the Company may at any time, at its option,
terminate the Joint Sales Agreement dated December 15, 1995, between Pourtales
Radio Partnership, Pourtales Holdings, Inc., Springs Radio, Inc. and KVUU/KSSS,
Inc. (collectively, the "JSA Group") and Citadel Broadcasting Company
("Citadel") (the "Citadel JSA"); provided that in the event the termination of
the Citadel JSA results or reasonably could be expected to result in any
payment becoming due from the Company to Citadel then the Company shall not
terminate the Citadel JSA without the prior consent of Parent, which consent
shall not be unreasonably withheld. Notwithstanding the foregoing or anything
contained herein to the contrary, Parent and Sub acknowledge and agree that the
termination of the Citadel JSA by the Company as permitted in this Section 5.08
and/or by any member of the JSA Group, the termination of the Citadel JSA as
required by an order of the United States Department of Justice to which the
Company or any member of the JSA Group is subject, the bringing of any suit,
action, proceeding or claim relating to or arising from or in connection with
the Citadel JSA or its termination, the entering, issuance or rendering of any
award, decision, injunction, judgment, order,
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ruling, decree, or verdict by any court, administrative agency, or other
governmental body or by any arbitrator relating to the Citadel JSA or its
termination, or any change, effect, event or occurrence arising under the
Citadel JSA or as a result of the termination of the Citadel JSA that is
materially adverse to the business, properties, assets, condition (financial or
otherwise), results of operations or prospects of the Company and its
Subsidiaries shall not, in any case, (i) constitute a breach of any
representation or warranty made by the Company in the Transaction Documents, or
(ii) constitute a default, non-satisfaction or violation by the Company of any
covenant, condition or agreement contained in the Transaction Documents.
(b) The Company agrees to cooperate, and to take such
action within its control to cause each member of the JSA Group to cooperate
with Parent and Sub in their efforts to reach a mutually satisfactory
arrangement with the DOJ and Citadel regarding the Citadel JSA, unless the
Citadel JSA shall have been terminated as permitted by Section 5.08(a).
SECTION 5.09. ENVIRONMENTAL ASSESSMENTS.
(a) On or prior to the date of this Agreement, Parent has
delivered to the Company a written notice identifying, with respect to the
parcels of real property for which Environmental Reports were delivered as
contemplated by Section 3.01(q) (the "ER Properties"), those parcels of the ER
Property with respect to which Parent will require additional Phase I or Phase
II environmental assessments to be prepared ("Open ER Properties").
(b) Within 15 business days after the date of this
Agreement, Parent may request, and upon such request the Company shall cause to
be performed by an environmental consultant mutually agreed to by the Company
and Parent, a Phase I environmental assessment audit (the "Phase I Assessment")
with respect to any of the Open ER Properties or any other of the Company's
real property or any facilities owned, operated or leased by the Company or any
of its Subsidiaries (other than the ER Properties with respect to which a Phase
I Assessment was delivered at least five business days prior to the date of
this Agreement and which was not designated as an Open ER Property) and the
improvements and other assets located thereon. Parent will bear the costs and
expenses of the Phase I Assessments. The Phase I Assessments are to be
conducted for the mutual benefit of the Company and Parent and shall be
performed in a manner that at a minimum satisfies the requirements of ASTM
Practice E 1527-94. The Company covenants and agrees that, upon receipt of the
notice referred to above, it shall diligently pursue the performance of the
requisite Phase I Assessments to their completion, with draft copies of the
Phase I Assessments made available to Parent by no later than 45 days after
delivery to the Company of Parent's request therefor.
(c) Parent may request a Phase II environmental
assessment (a "Phase II Assessment") within 15 business days after the date of
this Agreement with respect to any Open ER Property for which a Phase I
Assessment is not requested pursuant to Section 5.09(b), and within 15 business
days after delivery to the Company of a notice of Environmental Exceptions with
respect to any Open ER Property or other Company real property for which a
Phase I Assessment is requested pursuant to Section 5.09(b). Upon each such
request, the Company shall cause to be
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performed by an environmental consultant mutually agreed to by the Company and
Parent a Phase II Assessment of such property and the improvements and other
assets located thereon; provided, however, the Company shall not be obligated
to cause a Phase II Assessment to be performed with respect to any leased real
property unless the Company is able to obtain written consent for the Phase II
Assessment from the landlord, which consent the Company shall use its best
efforts to obtain. Parent will bear the costs and expenses of the Phase II
Assessment. The Company covenants and agrees that, upon receipt of the notice
referred to above, it shall diligently pursue the performance of the requisite
Phase II Assessments to their completion, with draft copies of the Phase II
Assessments made available to Parent by no later than 60 days after delivery to
the Company of Parent's request therefor. The Phase II Assessments are to be
conducted for the mutual benefit of the Company and Parent, and each Phase II
Assessment shall be performed in a manner reasonably anticipated to identify
(i) the presence of Hazardous Substances on or affecting the Company property
to which the Phase II Assessment relates; (ii) any other environmental
conditions existing at the property that reasonably could be expected to (A)
adversely affect the use of such real property as currently used by the Company
and its Subsidiaries, (B) to require the Surviving Corporation to engage in
remediation or corrective action to cleanup or stabilize such conditions or (C)
subject the Surviving Corporation to third party liability or sanctions, fines,
or penalties by a Governmental Entity as a result of the existence or migration
of any such environmental conditions; and (iii) any violation of Environmental
Laws upon or associated with such real property or any improvements or assets
located therein (collectively, "Environmental Exceptions") and shall include an
estimate of the total cost of remediating or taking other actions to clean up
or stabilize, to the extent required under applicable law or as otherwise
necessary to enable the Surviving Corporation to continue its broadcast
operations as presently conducted, such Environmental Exceptions (collectively,
the "Estimated Remediation Costs").
(d) If the Estimated Remediation Costs exceeds $500,000
in the aggregate, then Parent shall have the right, exercisable by written
notice given to the Company within five (5) business days after Parent's
receipt of the final Phase II Assessment requested pursuant to this Section
5.09, to elect to terminate this Agreement; provided, that, upon the giving by
Parent of written notice electing to terminate this Agreement pursuant to this
Section, 5.09(d), Parent and the Company agree to cooperate in good faith to
attempt to determine (i) Estimated Remediation Costs related to any parcel of
the Company's real property that may be abandoned and/or the leasehold interest
with respect thereto terminated by the Company and its Subsidiaries prior to
the Effective Time without any future material liability with respect to any
Environmental Exceptions related thereto ("Abandoned Property"), (ii) the costs
of terminating any such leasehold interests or abandoning such Abandoned
Property, as applicable (including without limitation estimated future
liabilities with respect to any Environmental Exceptions related thereto), and
acquiring replacement real property (in fee or by leasehold) as reasonably
acceptable to Parent and sufficient to permit continued operation by the
Surviving Corporation as previously conducted on the Abandoned Property
("Replacement Costs") and (iii) if any real property interest may be abandoned
as contemplated in clause (i) of this Section 5.09(d), to identify and procure
replacement property as contemplated by clause (ii) of this Section 5.09(d),
and, if within 60 days after the giving of such notice, Parent and the Company
agree that (A) the Estimated Remediation Cost less (B) the Estimated
Remediation Cost related to any Abandoned Property plus (C) all Replacement
Costs do
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not exceed $500,000, then Parent shall not have the right to terminate this
Agreement pursuant to this Section 5.09(d). If Parent and the Company fail to
reach such agreement within the 60 day period referred to in the preceding
sentence, this Agreement shall terminate at the close of business on such 60th
day.
SECTION 5.10. CONVERSION OF CLASS D COMMON STOCK. The Company
agrees that, except as Parent and the Company may otherwise jointly determine
in their sole discretion, within ten business days after the date of this
Agreement, the Company shall file with the FCC a Form 316 application (the
"Form 316 Application") for any necessary FCC authorization for the conversion
of shares of Class D Common Stock to shares of Class B Common Stock by those
Persons and in such amounts as set forth on Schedule C attached hereto. In the
event that the FCC staff formally or informally advises the Company that FCC
authorization is not needed for the stock conversion specified in the Form 316
Application, the Company shall within five (5) business days thereafter (the
"Dismissal Date") file a letter with the FCC requesting dismissal of the Form
316 Application.
SECTION 5.11. ACQUISITION OF ANTELOPE CREEK PROPERTY.
(a) As soon as practicable after the execution of this
Agreement, to the extent permitted by the Credit Agreement:
(i) The Company will use commercially reasonable
efforts to negotiate and complete remaining documentation (the
"Acquisition Documents") pursuant to which a newly formed Subsidiary
of the Company or one of its Subsidiaries will purchase the parcel of
real property (and the improvements situated therein) located at 0000
Xxxxxxxx Xxxxx Xxxxx in Lincoln, Lancaster County, Nebraska (the
"Target Property"), provided (A) that Parent will be entitled to
participate in the negotiation of such documentation and (B) neither
the Company nor any Subsidiary will (x) enter into any Acquisition
Documents until Parent has consented thereto in writing, which consent
may be withheld by parent in its sole discretion or (y) be required to
enter into any Acquisition Documents prior to completion of the
Financing Documents as provided in Section 5.11(a)(ii) or after the
termination of this Agreement; and
(ii) Parent and the Company will negotiate in good
faith to complete definitive documentation (the "Financing Documents")
in a form reasonably acceptable to the parties pursuant to which
Parent will provide to the Company nonrecourse financing in an
original principal amount equal to the purchase price for the Target
Station as agreed to by Parent (the "Target Financing").
(b) Upon completion of the Acquisition Documents and the
Financing Documents, Parent will fund, simultaneously with the acquisition of
the Target Property pursuant to the Acquisition Documents, the Target Financing
in an amount equal to the purchase price for the Target Property, and the
Company will direct such funding to be made, on behalf of the Company, directly
to the seller of the Target Property.
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(c) The Company shall engage counsel reasonably
acceptable to the Parent to represent the Company in negotiating the
Acquisition Documents and the Financing Documents. Parent will reimburse,
subject to the terms of Section 5.11(d), the Company for all costs and expenses
(including reasonable attorneys' fees but excluding costs related to employees
and other in-house personnel of the Company and its Subsidiaries) incurred by
the Company in negotiating the Financing Documents and the Acquisition
Documents and in connection with the acquisition of the Target Property,
whether or not consummated ("Target Costs and Expenses").
(d) At any time prior to the consummation of the
acquisition by the Company of the Target Property pursuant to the Acquisition
Documents, Parent may suspend or terminate the obligations of Parent and the
Company under this Section 5.11 by providing written notice to the Company, in
which case the Company shall cease all efforts related to the Acquisition
Documents, the Financing Documents and the acquisition of the Target Property;
provided that any such notice shall not affect Parent's obligations under
Section 5.11(c) to pay the Target Costs and Expenses accrued or incurred prior
to the Company's receipt of such notice; provided further, that if the Company
does not cease its efforts related to the Acquisition Documents, the Financing
Documents and the acquisition of the Target Property notwithstanding the terms
of this Section 5.11(d), the Company shall bear the Target Costs and Expenses
accrued or incurred on and after the date of the Company's receipt of such
notice.
(e) The Company shall use commercially reasonable efforts
to attempt to obtain the consent under the Credit Agreement for the
transactions contemplated by this Section 5.11.
(f) Any change, effect, event or occurrence arising under
the Acquisition Documents, the Financing Documents or otherwise in connection
with the acquisition of the Target Property that is materially adverse to the
business, properties, assets, condition (financial or otherwise), results of
operations or prospects of the Company and its Subsidiaries shall not, in any
case, (i) constitute a breach of any representation or warranty made by the
Company in the Transaction Documents, or (ii) constitute a default, non-
satisfaction or violation by the Company of any covenant, condition or
agreement contained in the Transaction Documents.
ARTICLE 6.
CONDITIONS PRECEDENT
SECTION 6.01. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligation of each party to effect the Merger is subject
to the satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) STOCKHOLDER APPROVAL. The Stockholder Approval shall
have been obtained.
(b) FCC CONSENTS. The FCC shall have issued the FCC
consent ("FCC Consent") approving the applications for transfer of control of
the FCC Licenses for the operation of the Licensed Facilities in connection
with the Merger.
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(c) HSR ACT. The applicable waiting period under the HSR
Act shall have expired or terminated.
(d) NO INJUNCTIONS OR RESTRAINTS. No statute, rule,
regulation, executive order, decree, temporary restraining order, preliminary
or permanent injunction or other order enacted, entered, promulgated, enforced
or issued by any court of competent jurisdiction or other Governmental Entity
preventing the consummation of the Merger shall be in effect.
SECTION 6.02. CONDITIONS TO OBLIGATIONS OF PARENT AND SUB. The
obligations of Parent and Sub to effect the Merger are further subject to
satisfaction or waiver of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations
and warranties of the Company set forth in this Agreement shall be true and
correct as of the date of this Agreement and as of the Closing Date as though
made on and as of the Closing Date, except to the extent such representations
and warranties expressly relate to an earlier date (in which case as of such
date; provided, however, that this condition shall be deemed to have been
satisfied unless the individual or aggregate impact of all inaccuracies of such
representations and warranties (without regard to any materiality or Material
Adverse Effect qualifier(s) contained therein) reasonably could be expected to
have a Material Adverse Effect on the Company, and except to the extent that
any inaccuracies of such representations and warranties are a result of changes
in the United States financial markets generally or are a result of matters
arising after the date hereof that affect the broadcast industry generally.
Parent shall have received a certificate signed on behalf of the Company by the
chief executive officer and the chief financial officer of the Company to such
effect.
(b) PERFORMANCE OF OBLIGATIONS OF THE COMPANY. The
Company shall have performed in all material respects all obligations required
to be performed by it under this Agreement at or prior to the Closing Date, and
Parent shall have received a certificate signed on behalf of the Company by the
chief executive officer and the chief financial officer of the Company to such
effect.
(c) FCC CONSENT. The FCC Consent shall not contain any
conditions that would be materially adverse to either the Parent, the Surviving
Corporation or their Affiliates and such conditions are primarily the result of
Acts or Changes.
(d) FINAL ORDER. The FCC Consent shall be a Final Order.
A "Final Order" shall be an action by the FCC (i) that has not been reversed,
stayed, enjoined, set aside, annulled or suspended, (ii) with respect to which
no timely request for stay or review, petition for reconsideration or appeal
has been filed by a non-party to this Agreement (or an Affiliate of Parent) or
the FCC Applications or sua sponte action of the FCC with comparable effect is
pending and (iii) as to which the normal time for filing any such request,
petition or appeal or for the taking of any such sua sponte action by the FCC
has expired.
(e) RELEASE AGREEMENTS. The Release Agreement from each
member of the Executive Group as contemplated in Section 4.05 shall have been
obtained.
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(f) THIRD PARTY CONSENTS. All Third Party Consents, other
than with respect to the Credit Agreement and other than those the failure of
which to obtain could not reasonably be expected to have a Material Adverse
Effect on the Company, shall have been obtained.
(g) AFFILIATE TRANSACTIONS. The Company shall have
terminated all Affiliate Relationships listed on Part I of Schedule 4.06 and
shall have complied in all material respects with its covenant in Section 4.06.
(h) BROKERAGE FEE. The Company shall have obtained, and
provided a copy to Parent, of a final invoice from GSC with respect to all
fees, commissions, expenses and other amounts payable by the Company to GSC
with respect to the transactions contemplated by this Agreement and the
aggregate amount thereof (including amounts paid by the Company prior to the
date of such invoice, which amounts shall be reflected on such invoice) shall
not exceed $1,500,000.
(i) CAPITALIZATION. There shall not be outstanding:
(i) any capital stock of the Company other than:
(A) a number of shares of Common Stock
equal to or less than the sum of (1) 4,892,789, (2) the number
of shares of Class A Common Stock issued upon the conversion
of shares of Mandatory Preferred Stock converted to Class A
Common Stock prior to the Effective Time, and (3) 509,050 less
the number of shares of Common Stock subject to then
outstanding Warrants and Options; and
(B) a number of shares of Mandatory
Preferred Stock equal to or less than 583,400 less the number
of shares of Mandatory Preferred Stock converted to Class A
Common Stock prior to the Effective Time; and
(C) a number of shares of Series B
Preferred Stock equal to 565,000; or
(ii) any Derivative Securities other than Options
and Warrants to purchase a number of shares of Class A Common Stock
equal to or less than 509,050 less the number of shares of Common
Stock for which Warrants and Options have been exercised from and
after the date of this Agreement;
(iii) capital stock of the Company and Derivative
Securities outstanding other than as set forth in (i) and (ii) above
("Excess Equity") for which Equity Consideration of $500,000 (plus the
exercise or base price of any such Derivative Security which has been
exercised after the date hereof and received by the Company) or less
(the "Equity Limit") would be payable pursuant to Article II of this
Agreement;
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provided that the condition in this Section 6.02(i) shall be deemed to be
satisfied even if the Equity Consideration to be paid pursuant to Article II of
this Agreement for such Excess Equity exceeds the Equity Limit to the extent
the amount of such excess is (i) applied to reduce by like amount the
consideration to be paid by Parent or Sub pursuant to the Transaction Documents
(other than by a decrease in the Equity Consideration) or (ii) or paid to
Parent by a third party, in each case in a manner reasonably acceptable to
Parent (including payments, in the case of payments provided for in clause
(ii), to adjust for tax liability, if any).
SECTION 6.03. CONDITIONS TO OBLIGATION OF THE COMPANY. The
obligation of the Company to effect the Merger is further subject to
satisfaction or waiver of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Parent and Sub set forth in this Agreement shall be true and
correct as of the date of this Agreement and as of the Closing Date as though
made on and as of the Closing Date, except to the extent such representations
and warranties expressly relate to an earlier date (in which case as of such
date); provided, however, that this condition shall be deemed to have been
satisfied unless the individual or aggregate impact of all inaccuracies of such
representations and warranties (without regard to any materiality or Material
Adverse Effect qualifier(s) contained therein) reasonably could be expected to
have a material adverse effect on Parent's ability to perform its obligations
under the Transaction Documents. The Company shall have received a certificate
signed on behalf of Parent by an executive officer of Parent to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF PARENT AND SUB. Parent
and Sub shall have performed in all material respects all obligations required
to be performed by them under this Agreement at or prior to the Closing Date,
and the Company shall have received a certificate signed on behalf of Parent by
an executive officer of Parent to such effect.
ARTICLE 7.
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.01. TERMINATION. This Agreement may be terminated prior
to the Effective Time whether before or after approval of the matters presented
in connection with the Merger by the stockholders of the Company:
(a) by mutual written consent of Parent, Sub and the
Company by mutual action of their respective Boards of Directors;
(b) by either Parent or the Company:
(i) (A) if, upon a vote at a duly held
Stockholders Meeting or any adjournment thereof at which the
Stockholder Approval shall have been voted upon, the Stockholder
Approval shall not have been obtained or (B) unless (1) prohibited by
an event described in either clause (iii), (v) or (vi) of this Section
7.01(b), (2) prohibited by an order,
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injunction, decree or ruling or any other action entered, issued, made
or rendered by a Governmental Entity or (3) resulting from any act or
omission of Parent or Sub or their Affiliates, as of 11:59 p.m.,
central time, of the day immediately prior to the Termination Date
either (x) no Stockholders Meeting shall have been held or (y) if held
no vote shall have been taken in respect of the Stockholder Approval;
(ii) if the Merger shall not have been consummated
on or before the Termination Date; the term "Termination Date" shall
mean 11:59 p.m., central time, on (A) April 30, 1999 or (B) if such
date has been extended by Parent as provided in Section 5.07 or by the
operation of Section 7.01(f), the date as so extended;
(iii) if any Governmental Entity shall have issued
an order, injunction, decree or ruling or taken any other action
permanently enjoining, restraining or otherwise permanently
prohibiting the Merger and such order, injunction, decree, ruling or
other action shall have become final and nonappealable (other than a
judicial order, decree, ruling or other action contemplated by Section
7.01(b)(v) or 7.01(b)(vi));
(iv) in the event of a breach by the other party
of any representation, warranty, covenant or other agreement contained
in this Agreement which (A) would give rise to the failure of a
condition set forth in Section 6.02(a) or (b) or Section 6.03(a) or
(b), as applicable, and (B) cannot be or has not been cured within
thirty (30) days after the giving of written notice to the breaching
party of such breach provided in no event shall such thirty (30) day
period extend beyond the Termination Date (a "Material Breach")
(provided that the terminating party is not then in Material Breach of
any representation, warranty, covenant or other agreement contained in
this Agreement);
(v) if the Merger shall have been permanently
restrained, enjoined or otherwise permanently prohibited by a judicial
order, decree, ruling or other action arising from Claims or
litigation involving the Company and its stockholders (other than a
Mandatory Preferred Proceeding);
(vi) if the Merger shall have been permanently
restrained, enjoined or otherwise permanently prohibited by a judicial
order, decree, ruling or other action entered, issued, made or
rendered in a Mandatory Preferred Proceeding on the ground or basis
of, solely or among other grounds or bases, the Mandatory Preferred
Per Share Price or any other treatment of the Mandatory Preferred
Stock pursuant to this Agreement;
(c) by the Company prior to obtaining the Stockholder
Approval, if (i) the Board of Directors of the Company shall have determined in
good faith, based on the advice of outside counsel, that it is necessary, in
order to comply with its fiduciary duties to the Company's stockholders under
applicable law, to terminate this Agreement to enter into an agreement with
respect to or to consummate a transaction constituting a Superior Proposal,
(ii) the Company shall have given notice to Parent advising Parent that the
Company has received a Superior Proposal from a third party, specifying the
material terms and conditions of such Superior Proposal (including the
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identity of the third party) and the material terms and conditions of any
agreements or arrangements to be entered into in connection with a Superior
Proposal with respect to the Principal Stockholders and that the Company
intends to terminate this Agreement in accordance with this Section 7.01(c),
and (iii) either (A) Parent shall not have revised its takeover proposal within
five business days after the date on which such notice is deemed to have been
given to Parent, or (B) if Parent within such period shall have revised its
takeover proposal, the Board of Directors of the Company, after receiving
advice from the Company's financial advisor, shall have determined in its good
faith reasonable judgment that the third party's Takeover Proposal is superior
to Parent's revised takeover proposal; provided that the Company may not effect
such termination pursuant to this Section 7.01(c) unless the Company has
contemporaneously with such termination tendered payment to Parent, or its
designee, of the Termination Fee and the Reimbursement Amount (if and to the
extent that Parent has provided to the Company documentation reasonably
acceptable to the Company in support of the amounts claimed) that is due Parent
or its designee pursuant to Section 5.05;
(d) by Parent if (i) the Board of Directors or the
Independent Committee of the Company shall have failed in the Proxy Statement
to make the recommendation contemplated by Section 4.03, (ii) a tender offer or
exchange offer for 50% or more of the outstanding shares of Common Stock or
voting securities representing 50% or more of the voting power of the
outstanding capital stock of the Company (giving effect to the conversion of
outstanding Mandatory Preferred Stock to Class A Common Stock if, and at the
rate at which, the Mandatory Preferred Stock is then convertible into shares of
Class A Common Stock) is commenced (other than by the Company or its
Affiliates) and the Board of Directors of the Company fails to timely recommend
against the stockholders of the Company tendering their shares into such tender
offer or exchange offer, or (iii) a Takeover Proposal has been publicly
announced by the Company and the Board of Directors of the Company shall fail
to publicly reaffirm its approval or recommendation of the Merger and this
Agreement on or before the tenth business day following the date on which such
Takeover Proposal shall have been announced; provided that Parent in exercising
its termination rights hereunder may condition the effectiveness of such
termination upon receipt of the Termination Fee and Reimbursement Amount (if
and to the extent that Parent has provided to the Company documentation
reasonably acceptable to the Company in support of the amounts claimed) that
are due Parent or its designee pursuant to Section 5.05;
(e) by Parent if Parent has the right to terminate this
Agreement pursuant to Section 5.09;
(f) By Parent, if, at any time after the date hereof, the
condition in Section 6.02(i) would not be satisfied if the Closing were being
held at such time, upon five days written notice of termination hereunder;
provided, that, if at any time prior to the delivery by Parent of such
termination notice, the Company delivers notice to Parent that the condition in
Section 6.02(i) would not be satisfied if the Closing were being held at the
time of such notice, then Parent shall not have the right to terminate this
Agreement pursuant to this Section 7.01(f) for fifteen days. If, after such
fifteen days, the condition in Section 6.02(i) remains unsatisfied, then Parent
may terminate this Agreement within two business days. If Parent does not so
terminate this Agreement, then Parent shall no longer be entitled to terminate
this Agreement pursuant to this Section 7.01(f) unless the
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Equity Consideration payable for the Excess Equity increases from the amount
payable at the date Parent was entitled to terminate the Agreement. If, prior
to the effective date of any termination by Parent under this Section 7.01(f),
the condition in Section 6.02(i) is satisfied, then Parent shall no longer have
a right to terminate this Agreement pursuant to this Section 7.01(f) unless
such condition again becomes unsatisfied.
(g) by Parent if the Saga Agreement has not been entered
into as provided in Section 4.07 on or before August 15, 1998; provided that if
the Company gives written notice to Parent at any time after this date of this
Agreement that the Company does not intend to enter into the Saga Agreement as
provided in Section 4.07, then Parent may terminate this Agreement by giving
written notice to the Company on or after the tenth day after Parent's receipt
of such notice, and if Parent does not terminate this Agreement within such
ten-day period, Parent no longer shall be entitled to terminate this Agreement
pursuant to this Section 7.01(g).
SECTION 7.02. EFFECT OF TERMINATION. In the event of termination of
this Agreement by either the Company or Parent as provided in Section 7.01,
this Agreement shall forthwith become void and have no effect, without any
liability or obligation on the part of Parent, Sub or the Company, (i) other
than the provisions of the last sentence of Section 5.01(a), Section 5.05,
Section 5.11, this Section 7.02 and Article 8, and (ii) except to the extent
that such termination results from the Material Breach by a party of any of its
representations, warranties, covenants or agreements set forth in this
Agreement, in which case subject to Section 5.05 the non-breaching party will
be entitled to recover damages and its Expenses.
SECTION 7.03. AMENDMENT. Subject to the applicable provisions of
the DGCL, at any time prior to the Effective Time, the parties hereto may
modify or amend this Agreement, by written agreement executed and delivered by
duly authorized officers of the respective parties; provided, however, that
after the Stockholder Approval has been obtained, no amendment shall be made
which reduces the consideration payable in the Merger or adversely affects the
rights of the Company's stockholders hereunder without the approval of such
stockholders. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties.
ARTICLE 8.
GENERAL PROVISIONS
SECTION 8.01. NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. None
of the representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time. This
Section 8.01 shall not limit any covenant or agreement of the parties which by
its terms contemplates performance after the Effective Time.
SECTION 8.02. NOTICES. All notices, requests, claims, demands and
other communications under this Agreement shall be in writing and shall be
deemed given if delivered personally, telecopied (which is confirmed) or sent
by overnight courier (providing proof of delivery)
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to the parties at the following addresses (or at such other address for a party
as shall be specified by like notice):
(a) if to Parent or Sub, to
Capstar Broadcasting Corporation
000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Telecopy No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxx, Xx.
with a copy to:
Xxxxxx & Xxxxxx L.L.P.
0000 Xxxxxxxx Xxxx Xxxxxx
0000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Telecopy No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxx
and
(b) if to the Company, to
Triathlon Broadcasting Company
Symphony Towers
000 X Xxxxxx, Xxxxx 0000
Xxx Xxxxx, Xxxxxxxxxx 00000
Telecopy No.: (000) 000-0000
Attention: Xxxxxx Xxxxx
with a copy to:
Xxxxx & XxXxxxxx
Two Xxxxx Center
0000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Telecopy No.: (000) 000-0000
Attention: Xxxx Xxxxxxxx
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SECTION 8.03. DEFINITIONS. For purposes of this Agreement:
(a) "1996 SARs" means the stock appreciation rights
granted pursuant to Cash-Only Stock Appreciation Rights Agreements dated
January 31, 1996, between the Company and each of Xxxxxxx Xxxxxxxxx and Xxxxx
X. Xxxxxx, III, providing for the grant to each individual of cash-only stock
appreciation rights in respect of 2,000 shares of Class A Common Stock.
(b) "1995 SARs" means the stock appreciation rights
granted pursuant to Cash-Only Stock Appreciation Rights Agreements dated
October 30, 1995, between the Company and each of Xxxxxxx Xxxxxxxxx, Xxxxx X.
Xxxxxx, III, and Xxxx X. Xxxxxx, providing for the grant to each individual of
cash-only stock appreciation rights in respect of 1,000 shares, 1,000 shares
and 5,000 shares, respectively, of Class A Common Stock.
(c) "Acts and Changes" has the meaning assigned thereto
in Section 5.02(a).
(d) an "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, an Affiliate of the Company shall be deemed to include all
members of the Sillerman Group;
(e) "Affiliate Relationship" has the meaning assigned
thereto in Section 3.01(t).
(f) "Business Day" or "business day" means any day other
than a Saturday, Sunday or other day on which commercial banks in Dallas, Texas
or New York, New York are authorized or required to close by applicable law.
(g) "Claim" has the meaning assigned thereto in Section
5.04(b).
(h) "Common Per Share Price" means $13.00, as such amount
may be increased pursuant to Section 5.07.
(i) "Company Disclosure Schedule" means the Disclosure
Schedule delivered by the Company to Parent prior to the execution of this
Agreement.
(j) "Credit Agreement" means, collectively, (a) the
Amended and Restated Loan Agreement dated as of May 30, 1997, among Triathlon
Broadcasting of Wichita, Inc., Triathlon Broadcasting of Lincoln, Inc.,
Triathlon Broadcasting of Omaha, Inc., Triathlon Broadcasting of Spokane, Inc.,
Triathlon Broadcasting of Tri-Cities, Inc., Triathlon Broadcasting of Colorado
Springs, Inc., Triathlon Broadcasting of Little Rock, Inc. and AT&T Commercial
Finance Corporation, as administrative agent, and the other lenders named
therein, as amended, and (b) any and all guaranty, security and other
agreements or documents executed and delivered in connection therewith, as each
has been successively extended, renewed or modified.
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(k) "Deposit Agreement" means the Deposit Agreement dated
as of March 8, 1996, among the Company, the holders of Depositary Shares and
ChaseMellon Shareholder Services as the depositary.
(l) "Depositary" means ChaseMellon Shareholder Services,
as depositary under the Deposit Agreement, or any successor depositary of the
Depositary Shares.
(m) "Depositary Share Merger Consideration" means an
amount of cash per Depositary Share equal to 10% of the Mandatory Preferred Per
Share Price.
(n) "Depositary Shares" means the Depositary Shares, each
representing a one-tenth interest in a share of Mandatory Preferred Stock, on
deposit with ChaseMellon Shareholder Services, as depositary.
(o) "Environmental Laws" means all applicable laws and
rules of common law pertaining to the environment and natural resources,
including the Comprehensive Environmental Response Compensation and Liability
Act (42 U.S.C. ss. 9601 et seq.) ("CERCLA"), the Emergency Planning and
Community Right to Know Act, the Superfund Amendments and Reauthorization Act
of 1986, the Resource Conservation and Recovery Act, the Hazardous and Solid
Waste Amendments Act of 1984, the Clean Air Act, the Clean Water Act, the Toxic
Substances Control Act, the Safe Drinking Water Act, the Oil Pollution Act of
1990, the Hazardous Materials Transportation Act, and any similar or analogous
statutes, regulations and decisional law of any governmental authority, as each
of the foregoing may be amended and in effect on or prior to the Closing;
(p) "Equity Consideration" means the aggregate of the
Merger Consideration, the Option Consideration, the SAR Consideration and the
Warrant Consideration.
(q) "Equity Limit" has the meaning assigned thereto in
Section 6.02(i);
(r) "Estimated Remediation Costs" has the meaning
assigned thereto in Section 5.09;
(s) "Expenses" has the meaning assigned thereto in
Section 5.05(d);
(t) "FCC" has the meaning assigned thereto in Section
3.01(d);
(u) "Federal Antitrust Agencies" has the meaning assigned
thereto in Section 5.02(b);
(v) "Governmental Entity" has the meaning assigned
thereto in Section 3.01(d)(iii).
(w) "Half-Month Interval" means, (x) with respect to each
extension of a Termination Date pursuant to Section 5.07, if the Termination
Date being extended is the last day
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of a calendar month (without regard to the effect of Section 8.11), the period
beginning on the first day of the next succeeding calendar month occurring
after the Termination Date then being extended (giving effect to Section 8.11)
and ending on the fifteenth calendar day of such succeeding calendar month,
subject to Section 8.11, or (y) if the Termination Date being extended is the
fifteenth calendar day of a calendar month (as established by a prior extension
of the Termination Date by a Half-Month Interval and without regard to the
effect of Section 8.11), the period beginning on the first day after the later
of (1) the fifteenth day of that calendar month or (2) the Termination Date
being extended (giving effect to Section 8.11) and ending on the last day of
that calendar month, subject to Section 8.11.
(x) "Indebtedness" has the meaning assigned thereto in
Section 3.01(o)(iii);
(y) "Mandatory Preferred Per Share Price" means $108.30,
plus any accrued but unpaid dividends on the Mandatory Preferred Stock accrued
as of and through the date immediately prior to the Effective Time, as such
amount may be increased pursuant to Section 5.07.
(z) "Mandatory Preferred Proceeding" means any action,
suit or proceeding commenced after the date hereof against the Company or any
director, officer, employee, agent, representative or consultant of the Company
by any holder of the Mandatory Preferred Stock that requests an order,
injunction, decree or ruling or any other action enjoining, restraining or
otherwise prohibiting the Merger on the grounds or basis of, solely or among
other grounds or bases, the Mandatory Preferred Per Share Price or any other
treatment of the Mandatory Preferred Stock pursuant to this Agreement.
(aa) "Material Adverse Change" or "Material Adverse
Effect" means, when used in connection with the Company or Parent, any change,
effect, event or occurrence that is materially adverse to the business,
properties, assets, condition (financial or otherwise) or results of operations
of such party and its Subsidiaries taken as a whole, other than any change,
effect, event or occurrence relating to the United States economy in general or
to the United States radio broadcasting industry in general, and, as
applicable, not specifically relating to the Company or Parent or their
respective Subsidiaries.
(bb) "Option Consideration" means the aggregate
consideration payable pursuant to Section 2.03(b) with respect to Options
outstanding as of the Effective Time.
(cc) "Option Plans" means the Company's 1995 Stock Option
Plan and the Company's 1996 Stock Option Plan.
(dd) "Permitted Liens" has the meaning assigned thereto in
Section 3.01(s)(iv);
(ee) "Person" means an individual, corporation,
partnership, limited liability company, joint venture, association, trust,
unincorporated organization or other entity;
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(ff) "Preferred Stock" means the Series B Preferred Stock
and the Mandatory Preferred Stock.
(gg) "Saga Agreement" has the meaning assigned thereto in
Section 4.06.
(hh) "SAR Consideration" means the aggregate consideration
payable pursuant to Section 2.03(c) with respect to SARs outstanding as of the
Effective Time.
(ii) "Sillerman Group" means Xxxxxx F. X. Sillerman,
Sillerman Communications Management Corporation, Sillerman Communications
Corporation and all other Affiliates of Xxxxxx F. X. Sillerman.
(jj) "Stockholder Approval" has the meaning assigned
thereto in Section 3.01(k).
(kk) a "Subsidiary" 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.
(ll) "Superior Proposal" means (x) a bona fide Takeover
Proposal to acquire, directly or indirectly, for consideration consisting of
cash and/or securities, more than 50% of the shares and/or voting power of
Common Stock then outstanding, voting securities representing 50% or more of
the voting power of the outstanding capital stock of the Company (giving effect
to the conversion of outstanding Mandatory Preferred Stock to Class A Common
Stock if, and at the rate at which, the Mandatory Preferred Stock is then
convertible into shares of Class A Common Stock), or all or substantially all
the assets of the Company, and (y) otherwise on terms which the Board of
Directors of the Company determines in its good faith reasonable judgment to be
more favorable to the Company's stockholders than the Merger (based on the
opinion of the Company's independent financial advisor that the value of the
consideration provided for in such proposal is superior to the value of the
consideration provided for in the Merger), for which financing, to the extent
required, is then committed or which, in the good faith reasonable judgment of
the Board of Directors of the Company, based on advice from the Company's
independent financial advisor, is reasonably capable of being financed by such
third party and for which the Board of Directors of the Company determines, in
its good faith reasonable judgment, that such proposed transaction is
reasonably likely to be consummated without undue delay.
(mm) "Takeover Proposal" means any proposal for a merger,
consolidation or other business combination involving the Company or any
proposal or offer to acquire in any manner, directly or indirectly, an equity
interest in, more than 25% of the voting power (giving effect to the conversion
of outstanding Mandatory Preferred Stock to Class A Common Stock if, and at the
rate at which, the Mandatory Preferred Stock is then convertible into shares of
Class A Common Stock) of, or a substantial portion of the assets of, the
Company and its Subsidiaries, taken as a whole;
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provided, however, that such term does not include the transactions
contemplated by the Transaction Documents.
(nn) "Taxes" has the meaning assigned thereto in Section
3.01(j)(ix).
(oo) "Termination Date" has the meaning assigned thereto
in Section 7.01(b)(ii).
(pp) "Transaction Documents" means this Agreement, the
Escrow Agreement, the Stockholders Agreements, the Release Agreements, the
Series B Agreements and the Termination Agreement.
(qq) "Voting securities" or "voting power" means, with
respect to any Person, all outstanding securities entitled to vote generally on
the election of directors of that Person.
(rr) "Warrant Consideration" means the aggregate
consideration payable pursuant to Section 2.03(a) with respect to Warrants
outstanding as of the Effective Time.
SECTION 8.04. INTERPRETATION. When a reference is made in this
Agreement to an Article, Section or Annex, such reference shall be to an
Article or Section of, or an Annex to, this Agreement unless otherwise
indicated. The table of contents and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include," "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation." The words "hereof," "herein" and "hereunder"
and words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement. All
terms defined in this Agreement shall have the defined meanings when used in
any certificate or other document made or delivered pursuant hereto unless
otherwise defined therein. The definitions contained in this Agreement are
applicable to the singular as well as the plural forms of such terms and to the
masculine as well as to the feminine and neuter genders of such term. Any
agreement, instrument or statute defined or referred to herein or in any
agreement or instrument that is referred to herein means such agreement,
instrument or statute as from time to time amended, modified or supplemented,
including (in the case of agreements or instruments) by waiver or consent and
(in the case of statutes) by succession of comparable successor statutes and
references to all attachments thereto and instruments incorporated therein.
References to a Person are also to its permitted successors and assigns and, in
the case of an individual, to his heirs and estate, as applicable.
SECTION 8.05. COUNTERPARTS. This Agreement may be executed in one
or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other parties.
SECTION 8.06. ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. This
Agreement (including the documents and instruments referred to herein) (a)
constitute the entire agreement, and supersede all prior agreements and
understandings, both written and oral, among the parties with
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respect to the subject matter of this Agreement and (b) except for the
provisions of Article 2 and Section 5.04 are not intended to confer upon any
Person other than the parties any rights or remedies.
SECTION 8.07. GOVERNING LAW. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of Delaware, regardless
of the laws that might otherwise govern under applicable principles of
conflicts of laws thereof.
SECTION 8.08. ASSIGNMENT. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto, whether by operation of law or otherwise; provided, however,
that (i) upon notice to the Company and without releasing Parent or Sub from
any of their obligations or liabilities hereunder, Parent or Sub may assign or
delegate any or all of their rights or obligations under this Agreement to any
Affiliate thereof, to any purchaser of all or substantially all of the assets
of Parent or Sub, or any Person with or into which Parent, Sub or Capstar
Broadcasting Corporation merges or consolidates, and (ii) nothing in this
Agreement shall limit Parent's or Sub's ability to make a collateral assignment
of its rights under this Agreement to any institutional lender that provides
funds to Parent or Sub without the consent of the Company. The Company shall
execute an acknowledgment of such assignment(s) and collateral assignments in
such forms as Parent or its institutional lenders may from time to time
reasonably request; provided, however, that unless written notice is given to
the Company that any such collateral assignment has been foreclosed upon, the
Company shall be entitled to deal exclusively with Parent as to any matters
arising under this Agreement or any of the other agreements delivered pursuant
hereto. In the event of such an assignment, the provisions of this Agreement
shall inure to the benefit of and be binding on such successors and assignees.
SECTION 8.09. ENFORCEMENT. The Company agrees that irreparable
damage would occur and that Parent would not have any adequate remedy at law 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 Parent shall 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 Federal court located in the
State of Delaware or in Delaware state court, this being in addition to any
other remedy to which it is 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 court sitting in the State of
Delaware or a Delaware state court.
SECTION 8.10. DIRECTOR AND OFFICER LIABILITY. The directors,
officers, and stockholders of Parent and its Affiliates shall not have any
personal liability or obligation arising under this Agreement (including any
Claims that the Company may assert) other than as an assignee of this Agreement
or as otherwise provided herein. Except to the extent that a person is a party
signatory thereto in his personal capacity, the directors, officers and
stockholders of the Company
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and their respective Affiliates shall not have any personal liability or
obligation arising under this Agreement (including any Claims that Parent or
Sub may assert).
SECTION 8.11. TERMINATION DATE. Notwithstanding any provision of
this Agreement to the contrary, in the event that any Termination Date provided
for hereunder (including any Termination Date occurring at the end of any Half-
Month Interval) shall fall on a non-Business Day, then such Termination Date
automatically shall be extended to the first Business Day following such
scheduled Termination Date.
SECTION 8.12. BINDING EFFECT. This Agreement is binding upon and
will inure to the benefit of the parties and their respective successors and
permitted assigns.
[The rest of this page has intentionally been left blank.]
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IN WITNESS WHEREOF, Parent, Sub and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the date first written above.
CAPSTAR RADIO BROADCASTING
PARTNERS, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx, Xx.
-----------------------------
Xxxxxxx X. Xxxxxxxx, Xx.
Vice President
TBC RADIO ACQUISITION CORP.
By: /s/ Xxxxxxx X. Xxxxxxxx, Xx.
-----------------------------
Xxxxxxx X. Xxxxxxxx, Xx.
Vice President
TRIATHLON BROADCASTING COMPANY
By: /s/
-----------------------------
Name:
--------------------------------
Title:
-------------------------------
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SCHEDULE A
CLASS A CLASS B CLASS C CLASS D SERIES B DEPOSITARY
COMMON STOCK COMMON STOCK COMMON STOCK COMMON STOCK PREFERRED STOCK SHARES
------------ ------------ ------------ ------------ --------------- ------
Xxxxxx Xxxxx 0 144,890(1)(2) 0 0 60,000 0
Xxxxxx F. X. Sillerman 0 86,000(3) 0 136,852.06 404,200 0
The Tomorrow Foundation, Inc. 0 0 0 1,000,000 0 0
Xxxxxx X. Xxxxx 0 14,000(3) 0 185,068.94 65,800 0
_____________________________________________________
(1) Xx. Xxxxx has sole voting power, pursuant to a Voting Trust Agreement,
with respect to the 86,000 shares of Class B Common Stock held of
record by Xxxxxx F. X. Sillerman and the 14,000 shares of Class B
Common Stock held of record by Xxxxxx X. Xxxxx; 35,294 shares are
pledged to the Company to secure a loan from the Company to Xx. Xxxxx
in the amount of $150,000.
(2) Subject to a right of first refusal granted to Radio Investors Inc.
with respect to any sale of these shares to a third party at the
proposed sale price.
(3) Subject to the Voting Trust Agreement referred to in note (1).
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SCHEDULE B
SHARES OF SERIES B
PREFERRED STOCK OWNED
Xxxx X. Xxxxxx 3,000
Xxxxxx X. Xxxxxxx 2,000
C. Xxxxx Xxxxxxxx 30,000
--------
35,000
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SCHEDULE C
==========================================================================================
STOCKHOLDER NO. OF SHARES OF
CLASS D SHARES TO BE CONVERTED
------------------------------------------------------------------------------------------
Xxxxxx Xxxxxxxxx 136,852.06
------------------------------------------------------------------------------------------
The Tomorrow Foundation, Inc. 320,000
------------------------------------------------------------------------------------------
Xxxxxx Xxxxx 185,068.94
==========================================================================================
