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AGREEMENT AND PLAN OF MERGER
Among
CLEAR CHANNEL COMMUNICATIONS, INC.,
CCMM SUB, INC.
and
THE ACKERLEY GROUP, INC.
Dated as of October 5, 2001
------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I THE MERGER 2
SECTION 1.1. The Merger............................................2
SECTION 1.2. Closing...............................................2
SECTION 1.3. Effective Time........................................2
SECTION 1.4. Effects of the Merger.................................2
SECTION 1.5. Certificate of Incorporation and Bylaws of the
Surviving Corporation.................................2
SECTION 1.6. Directors.............................................3
SECTION 1.7. Officers..............................................3
ARTICLE II EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT
CORPORATIONS; EXCHANGE OF CERTIFICATES...............3
SECTION 2.1. Capital Stock of Merger Sub...........................3
SECTION 2.2. Cancellation of Treasury Stock and
Parent Owned Stock....................................3
SECTION 2.3. Conversion of Company Common Stock....................3
SECTION 2.4. Exchange of Certificates..............................4
SECTION 2.5. Stock Transfer Books..................................7
ARTICLE III REPRESENTATIONS AND WARRANTIES OF COMPANY.......................7
SECTION 3.1. Organization, Qualification, Etc......................7
SECTION 3.2. Capital Stock.........................................9
SECTION 3.3. Corporate Authority Relative to this Agreement;
No Violation..........................................9
SECTION 3.4. Reports and Financial Statements.....................10
SECTION 3.5. No Undisclosed Liabilities...........................11
SECTION 3.6. No Violation of Law..................................11
SECTION 3.7. Environmental Laws and Regulations...................11
SECTION 3.8. No Undisclosed Employee Benefit Plan Liabilities
or Severance Arrangements............................12
SECTION 3.9. Absence of Certain Changes or Events.................15
SECTION 3.10. Investigations; Litigation...........................15
SECTION 3.11. Proxy Statement; Registration Statement;
Other Information....................................15
SECTION 3.12. Tax Matters..........................................15
SECTION 3.13. Opinion of Financial Advisor.........................16
SECTION 3.14. Required Vote of Company Stockholders................17
SECTION 3.15. Insurance............................................17
SECTION 3.16. Real Property; Title; Valid Leasehold Interests......17
SECTION 3.17. Collective Bargaining Agreements and Labor...........17
SECTION 3.18. Material Contracts...................................18
SECTION 3.19. Takeover Statute.....................................18
SECTION 3.20. Transactions With Affiliates.........................18
SECTION 3.21. Intellectual Property................................18
SECTION 3.22. Company FCC Licenses; Operation of Company Licensed
Facilities...........................................20
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB.........21
SECTION 4.1. Organization, Qualification, Etc.....................21
SECTION 4.2. Capital Stock........................................22
SECTION 4.3. Corporate Authority Relative to This Agreement;
No Violation.........................................23
SECTION 4.4. Reports and Financial Statements.....................23
SECTION 4.5. No Undisclosed Liabilities...........................24
SECTION 4.6. No Violation of Law..................................24
SECTION 4.7. Environmental Laws and Regulations...................24
SECTION 4.8. Absence of Certain Changes or Events.................25
SECTION 4.9. Investigations; Litigation...........................25
SECTION 4.10. Proxy Statement; Registration Statement; Other
Information..........................................25
SECTION 4.11. Tax Matters..........................................26
ARTICLE V COVENANTS RELATING TO CONDUCT OF BUSINESS........................27
SECTION 5.1. Conduct of Business by Company or Parent.............27
SECTION 5.2. Proxy Material; Registration Statement...............29
SECTION 5.3. Stockholders' Meeting................................31
SECTION 5.4. Approvals and Consents; Cooperation..................31
SECTION 5.5. Access to Information; Confidentiality...............32
SECTION 5.6. Affiliates...........................................32
SECTION 5.7. Rights Under Stock Plans.............................33
SECTION 5.8. Filings; Other Action................................34
SECTION 5.9. Further Assurances...................................37
SECTION 5.10. No Solicitation......................................37
SECTION 5.11. Director and Officer Liability.......................39
SECTION 5.12. Accountants' "Comfort" Letters.......................41
SECTION 5.13. Additional Reports...................................41
SECTION 5.14. Plan of Reorganization...............................42
SECTION 5.15. Conveyance Taxes; Fees...............................42
SECTION 5.16. Public Announcements.................................42
SECTION 5.17. Employee Benefits....................................42
SECTION 5.18. Transaction Expenses and Termination Fee.............43
ARTICLE VI CONDITIONS TO THE MERGER........................................44
SECTION 6.1. Conditions to the Obligations of each Party..........44
SECTION 6.2. Conditions to the Obligations of Parent and Merger
Sub..................................................45
SECTION 6.3. Conditions to the Obligations of Company.............46
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER..............................46
SECTION 7.1. Termination or Abandonment...........................46
SECTION 7.2. Effect of Termination................................48
ARTICLE VIII GENERAL PROVISIONS............................................49
SECTION 8.1. Nonsurvival of Representations and Warranties;
Survival of Certain Covenants........................49
SECTION 8.2. Notices..............................................49
SECTION 8.3. Counterparts.........................................50
SECTION 8.4. Entire Agreement; No Third-Party Beneficiaries.......50
SECTION 8.5. Assignment...........................................50
SECTION 8.6. Governing Law........................................50
SECTION 8.7. Enforcement..........................................51
SECTION 8.8. Severability.........................................51
SECTION 8.9. Headings.............................................51
SECTION 8.10. Finders or Brokers...................................51
SECTION 8.11. Amendment............................................51
SECTION 8.12. Extension; Waiver....................................52
SECTION 8.13. Procedure for Termination, Amendment, Extension or
Waiver...............................................52
<PAGE>
INDEX OF DEFINED TERMS
Term Defined in Section
---- ------------------
Acquisition Proposal.....................................................5.10(a)
Affiliate....................................................................3.1
Agreement...............................................................Preamble
Antitrust Divestiture Condition..........................................5.8(b)
Benefit Plan.............................................................3.8(a)
Business Combination....................................................5.10(c)
Certificate of Merger.......................................................1.3
Certificates..............................................................2.4(b)
Closing Date................................................................1.2
Code................................................................ ...Preamble
Communications Act..........................................................3.3
Company.............................................................. ..Preamble
Company Board Recommendation................................................5.3
Company Certificate of Incorporation.....................................1.5(a)
Company Class B Stock..................................................Preamble
Company Common Stock...................................................Preamble
Company Disclosure Letter..............................Article III Introduction
Company Group...........................................................3.12(a)
Company FCC Licenses.....................................................3.22(a)
Company Filed SEC Reports...................................................3.5
Company Licensed Facility...............................................3.22(a)
Company LMA Facility....................................................3.22(b)
Company LMA Facility FCC Licenses.......................................3.22(b)
Company Material Contracts..............................................3.18(a)
Company Ordinary Common Stock..........................................Preamble
Company Representatives.................................................5.10(a)
Company SEC Reports.........................................................3.4
Company Special Meeting.....................................................5.3
Company Stockholder Approval................................................5.3
Confidentiality Agreement...................................................5.5
Conversion Ratio............................................................2.3
Conveyance Taxes...........................................................5.15
Current Employees..........................................................5.17
DGCL.........................................................................1.1
Effective Time..............................................................1.3
Employee ................................................................3.8(a)
Employee Stock Option Plan...............................................3.2(a)
Environmental Laws.......................................................3.7(a)
ERISA....................................................................3.8(a)
ERISA Affiliate..........................................................3.8(c)
ESPP.....................................................................3.2(c)
Exchange Act................................................................3.3
Exchange Agent...........................................................2.4(a)
Exchange Fund............................................................2.4(a)
FCC.........................................................................3.3
FCC Divestiture Condition................................................5.8(c)
GAAP.........................................................................3.4
Government Antitrust Entity..............................................5.8(b)
Governmental Entity......................................................6.1(c)
HSR Act.....................................................................3.3
Indemnifiable Claim.....................................................5.11(b)
Indemnitees..............................................................5.11(b)
Indemnitee Costs........................................................5.11(b)
Indemnitee Expenses.....................................................5.11(b)
Indemnity Agreement.....................................................5.11(a)
Initial Period..............................................................7.1
Intellectual Property...................................................3.21(g)
interested stockholder..................................................5.10(c)
Jacor.....................................................................4.2(j)
Knowledge.................................................................3.7(b)
Liens........................................................................3.1
Material Adverse Effect.....................................................3.1
Material Subsidiary.....................................................5.10(a)
Merger..................................................................Preamble
Merger Consideration........................................................2.3
Merger Sub.............................................................Preamble
NYSE..................................................................5.4(a)(ii)
Option....................................................................5.7(a)
Parent..................................................................Preamble
Parent Common Stock....................................................Preamble
Parent Disclosure Letter................................Article IV Introduction
Parent Filed SEC Reports....................................................4.5
Parent Group............................................................4.11(a)
Parent Preferred Stock......................................................4.2
Parent SEC Reports..........................................................4.4
Pension Plan.............................................................3.8(b)
person....................................................................2.4(j)
Plans.....................................................................3.8(b)
Proxy Statement..........................................................5.2(a)
Purchase Date............................................................5.7(c)
Registration Statement...................................................5.2(a)
SEC..........................................................................3.4
Securities Act..............................................................3.1
Significant Subsidiary......................................................3.1
Subsidiary..................................................................3.1
Superior Proposal.......................................................5.10(a)
Surviving Corporation.......................................................1.1
Taxes....................................................................3.12(a)
Tax Returns.............................................................3.12(a)
Termination Fee.........................................................5.18(c)
Transaction Expenses....................................................5.18(b)
Voting Agreements............................................... .......Preamble
<PAGE>
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, dated October 5, 2001, is entered into
by and among Clear Channel Communications, Inc., a Texas corporation ("Parent"),
CCMM Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of Parent
("Merger Sub"), and The Ackerley Group, Inc., a Delaware corporation
("Company").
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of Parent, Merger Sub and
Company have approved the acquisition of Company by Parent upon the terms and
subject to the conditions set forth in this Agreement and Plan of Merger,
including, without limitation, the exhibits attached hereto (collectively, this
"Agreement");
WHEREAS, the respective Boards of Directors of Parent, Merger Sub and
Company have approved the merger of Merger Sub with and into Company as set
forth below (the "Merger") upon the terms and subject to the conditions set
forth in this Agreement, whereby each issued and outstanding share of common
stock, par value $0.01 per share, of Company ("Company Ordinary Common Stock")
and each issued and outstanding share of Class B common stock, par value $0.01
per share, of Company ("Company Class B Stock" and, together with Company
Ordinary Common Stock, "Company Common Stock"), other than shares owned directly
or indirectly by Parent, Merger Sub or Company, will be converted into shares of
common stock, par value $0.10 per share, of Parent ("Parent Common Stock") in
accordance with the provisions of Article II of this Agreement;
WHEREAS, as a condition and inducement to Parent's willingness to enter
into this Agreement, concurrently with the execution and delivery of this
Agreement, Parent and certain stockholders of Company are entering into voting
agreements dated as of the date of this Agreement (collectively, the "Voting
Agreements") pursuant to which each such stockholder has agreed to, among other
things, (a) vote all the shares of Company Ordinary Common Stock held by it in
favor of the proposal to approve and adopt this Agreement and the Merger and (b)
in lieu of any damages to be paid by a stockholder to Parent, the payment to
Parent of a specified amount in connection with the consummation of certain
alternative transactions to the Merger;
WHEREAS, for federal income tax purposes, the Merger is intended to qualify
as a reorganization under the provisions of Section 368(a) of the United States
Internal Revenue Code of 1986, as amended (the "Code");
WHEREAS, Merger Sub is a direct, wholly-owned subsidiary of Parent formed
solely for the purpose of effecting the Merger and will conduct no activity and
incur no liability or obligation other than as contemplated by this Agreement;
and
WHEREAS, Parent, Merger Sub and Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe certain conditions to the Merger.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby,
Parent, Merger Sub and Company hereby agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1 The Merger. Upon the terms and subject to the conditions set forth
in this Agreement and the Delaware General Corporation Law (the "DGCL"), Merger
Sub will be merged with and into Company at the Effective Time of the Merger.
Following the Merger, the separate corporate existence of Merger Sub will cease,
and Company will continue as the surviving corporation (the "Surviving
Corporation") and will succeed to and assume all the rights and obligations of
Merger Sub in accordance with the DGCL.
SECTION 1.2 Closing. The closing of the Merger will take place at 10:00 a.m. on
a date to be specified by the parties which will be no later than the second
business day after the satisfaction or waiver of the conditions set forth in
Article VI (other than those conditions that by their nature are to be satisfied
at the Closing, but subject to the satisfaction or waiver of such conditions)
(the "Closing Date") at the offices of Akin, Gump, Strauss, Hauer & Feld,
L.L.P., 1700 Pacific Avenue, Suite 4100, Dallas, Texas 75201, unless another
date or place is agreed to in writing by the parties hereto.
SECTION 1.3 Effective Time. On the Closing Date, the parties will execute and
file in the office of the Secretary of State of Delaware a certificate of merger
(a "Certificate of Merger") executed in accordance with the DGCL and will make
all other filings or recordings, if any, required under DGCL. The Merger will
become effective at the time of filing of the Certificate of Merger, or at such
later time as is agreed upon by the parties hereto and set forth therein (such
time as the Merger becomes effective is referred to herein as the "Effective
Time").
SECTION 1.4 Effects of the Merger. The Merger will have the effects set forth in
the DGCL.
SECTION 1.5 Certificate of Incorporation and Bylaws of the Surviving
Corporation.
(a) Certificate of Incorporation. The Fourth Restated Certificate of
Incorporation of Company (the "Company Certificate of Incorporation") as in
effect immediately prior to the Effective Time will become the Certificate of
Incorporation of the Surviving Corporation after the Effective Time, and
thereafter may be amended as provided therein and as permitted by law and this
Agreement.
(b) Bylaws. The Bylaws of Merger Sub as in effect immediately prior to the
Effective Time will become the Bylaws of the Surviving Corporation after the
Effective Time, and thereafter may be amended as provided therein and as
permitted by law and this Agreement.
SECTION 1.6 Directors. The directors of Merger Sub immediately prior to the
Effective Time will become the directors of the Surviving Corporation, until the
earlier of their resignation or removal or until their respective successors are
duly elected and qualified, as the case may be.
SECTION 1.7 Officers. The officers of Company immediately prior to the Effective
Time will become the officers of the Surviving Corporation, until the earlier of
their resignation or removal or until their respective successors are duly
elected and qualified, as the case may be.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT
CORPORATIONS; EXCHANGE OF CERTIFICATES
SECTION 2. 1Capital Stock of Merger Sub. As of the Effective Time, by virtue of
the Merger and without any action on the part of the holder of any shares of
Company Common Stock or any shares of capital stock of Merger Sub, each share of
common stock, par value $0.01 per share, of Merger Sub issued and outstanding
immediately prior to the Effective Time will be converted into and become one
fully paid and nonassessable share of common stock, par value $0.01 per share,
of the Surviving Corporation, and such converted shares, collectively, will
represent all of the issued and outstanding capital stock of the Surviving
Corporation.
SECTION 2.2 Cancellation of Treasury Stock and Parent Owned Stock. As of the
Effective Time, by virtue of the Merger and without any action on the part of
the holder of any shares of Company Common Stock or any shares of capital stock
of Merger Sub, each share of Company Common Stock issued and held, immediately
prior to the Effective Time, in Company's treasury or by any of Company's direct
or indirect wholly-owned subsidiaries, and each share of Company Common Stock
that is owned by Parent, Merger Sub or any other direct or indirect wholly-owned
subsidiary of Parent, will automatically be cancelled and retired and will cease
to exist, and no consideration will be delivered in exchange therefor.
SECTION 2.3 Conversion of Company Common Stock
(a) Merger Consideration. As of the Effective Time, by virtue of the Merger
and without any action on the part of the holder of any shares of Company Common
Stock or any shares of capital stock of Merger Sub, subject to this Section 2.3
and Section 2.4(f), each share of Company Ordinary Common Stock and each share
of Company Class B Stock issued and outstanding immediately prior to the
Effective Time (other than shares to be cancelled in accordance with Section
2.2) will be converted into the right to receive 0.35 (the "Conversion Ratio")
duly authorized, validly issued, fully paid and nonassessable shares of Parent
Common Stock (together with the amount of cash in lieu of fractional shares
payable pursuant to Section 2.4(f), the "Merger Consideration"); provided,
however, that, in any event, if between the date of this Agreement and the
Effective Time, the outstanding shares of Parent Common Stock will have been
changed into a different number of shares or a different class, by reason of any
stock dividend, subdivision, reclassification, recapitalization, split,
combination or exchange of shares, then the Conversion Ratio will be
correspondingly adjusted to the extent appropriate to reflect such stock
dividend, subdivision, reclassification, recapitalization, split, combination or
exchange of shares. As of the Effective Time, all such shares of Company Common
Stock will no longer be outstanding and will automatically be cancelled and
retired and will cease to exist, and each holder of a certificate or a
certificate which immediately prior to the Effective Time represented
outstanding shares of Company Common Stock will cease to have any rights with
respect thereto, except the right to receive the Merger Consideration.
SECTION 2.4 Exchange of Certificates.
(a) Exchange Agent. From and after the Effective Time, Parent will make
available to a bank or trust company designated by Parent and reasonably
satisfactory to Company (the "Exchange Agent"), for the benefit of the holders
of Company Common Stock for exchange in accordance with this Article II, through
the Exchange Agent, certificates evidencing such number of shares of Parent
Common Stock issuable to holders of Company Common Stock in the Merger pursuant
to Section 2.3 and an amount of cash payable to the holders of Company Common
Stock pursuant to Section 2.4(d) and Section 2.4(f) (such certificates for
shares of Parent Common Stock, together with any dividends or distributions with
respect thereto and cash in lieu of fractional shares as contemplated by Section
2.4(f), being hereinafter referred to as the "Exchange Fund"). The Exchange
Agent will, pursuant to irrevocable instructions, deliver the Merger
Consideration contemplated to be issued pursuant to Section 2.3, together with
any dividends or distributions with respect thereto, and the cash in lieu of
fractional shares of Parent Common Stock to which such holders are entitled
pursuant to Section 2.4(f) hereof out of the Exchange Fund. Except as
contemplated by Section 2.4(g) hereof, the Exchange Fund will not be used for
any other purpose.
(b) Exchange Procedures. As promptly as practicable after the Effective
Time, Parent will cause the Exchange Agent to mail to each holder of a
certificate or certificates which immediately prior to the Effective Time
represented outstanding shares of Company Common Stock (the "Certificates") (i)
a letter of transmittal (which will be in customary form and will specify that
delivery will be effected, and risk of loss and title to the Certificates will
pass, only upon proper delivery of the Certificates to the Exchange Agent) and
(ii) instructions for use in effecting the surrender of the Certificates in
exchange for certificates evidencing shares of Parent Common Stock, together
with any dividends or distributions with respect thereto or cash in lieu of
fractional shares of Parent Common Stock to which such holder is entitled
pursuant to Section 2.4(f) hereof.
(c) Exchange of Certificates. Upon surrender to the Exchange Agent of a
Certificate for cancellation, together with such letter of transmittal, duly
executed and completed in accordance with the instructions thereto, and such
other documents as may be reasonably required pursuant to such instructions, the
holder of such Certificate will be entitled to receive in exchange therefor a
certificate representing that number of whole shares of Parent Common Stock
which such holder's shares of Company Common Stock have been converted into
pursuant to this Article II (and any cash in lieu of any fractional shares of
Parent Common Stock to which such holder is entitled pursuant to Section 2.4(f)
and any dividends or other distributions to which such holder is entitled
pursuant to Section 2.4(d)), and the Certificate so surrendered will forthwith
be cancelled. In the event of a transfer of ownership of shares of Company
Common Stock which is not registered in the transfer records of Company, shares
of Parent Common Stock, cash in lieu of any fractional shares of Parent Common
Stock to which such holder is entitled pursuant to Section 2.4(f) and any
dividends or other distributions to which such holder is entitled pursuant to
Section 2.4(d) may be issued to a transferee if the Certificate representing
such shares of Company Common Stock is presented to the Exchange Agent,
accompanied by all documents required to evidence and effect such transfer and
by evidence that any applicable stock transfer taxes have been paid. Until
surrendered as contemplated by this Section 2.4, each Certificate will be deemed
at all times after the Effective Time to represent only the right to receive
upon such surrender the number of whole shares of Parent Common Stock into which
the shares of Company Common Stock formerly represented thereby have been
converted, cash in lieu of any fractional shares of Parent Common Stock to which
such holder is entitled pursuant to Section 2.4(f) and any dividends or other
distributions to which such holder is entitled pursuant to Section 2.4(d).
(d) Distributions with Respect to Unexchanged Shares of Parent Common
Stock. No dividends or other distributions declared or made after the Effective
Time with respect to Parent Common Stock with a record date after the Effective
Time will be paid to the holder of any unsurrendered Certificate with respect to
the shares of Parent Common Stock represented thereby, and no cash payment in
lieu of any fractional shares will be paid to any such holder pursuant to
Section 2.4(f), until the holder of such Certificate surrenders such
Certificate. Subject to the effect of escheat, tax or other applicable laws,
following surrender of any such Certificate, there will be paid to the holder of
the certificates representing whole shares of Parent Common Stock issued in
exchange therefor, without interest, (i) promptly, the amount of any cash
payable with respect to a fractional share of Parent Common Stock to which such
holder is entitled pursuant to Section 2.4(f) and the amount of dividends or
other distributions with a record date after the Effective Time and theretofore
paid with respect to such whole shares of Parent Common Stock, and (ii) at the
appropriate payment date, the amount of dividends or other distributions, with a
record date after the Effective Time but prior to surrender and a payment date
occurring after surrender, payable with respect to such whole shares of Parent
Common Stock.
(e) No Further Rights in Company Common Stock. All shares of Parent Common
Stock issued upon conversion of the shares of Company Common Stock in accordance
with the terms hereof (including cash paid pursuant to Section 2.4(d) or Section
2.4(f)) will be deemed to have been issued in full satisfaction of all rights
pertaining to such shares of Company Common Stock.
(f) No Fractional Shares.
(i) No certificates or scrip representing fractional shares of Parent
Common Stock will be issued upon the surrender for exchange of
Certificates, no dividend or distribution of Parent will relate to such
fractional share interests and such fractional share interests will not
entitle the owner thereof to vote or to any rights of a stockholder of
Parent.
(ii) In lieu of the issuance of certificates or scrip representing
fractional shares of Parent Common Stock, Parent will pay each holder of
Company Common Stock an amount in cash equal to the product obtained by
multiplying (A) the fractional share interest to which such holder (after
taking into account all shares of Company Common Stock held at the
Effective Time by such holder) would otherwise be entitled by (B) the
average of the closing prices for a share of Parent Common Stock as
reported on the NYSE Composite Transaction Tape (as reported in THE WALL
STREET JOURNAL, or, if not reported thereby, any other authoritative
source) for the five trading days immediately preceding the Closing Date.
(iii) As soon as practicable after the determination of the amount of
cash, if any, to be paid to holders of Company Common Stock with respect to
any fractional share interests, the Exchange Agent will make available such
amounts to such holders of Company Common Stock subject to and in
accordance with the terms of Section 2.4(d).
(g) Termination of Exchange Fund. Any portion of the Exchange Fund
(including any shares of Parent Common Stock) which remains undistributed to the
holders of Company Common Stock for nine months after the Effective Time will be
delivered to Parent, upon demand, and any holders of Company Common Stock who
have not theretofore complied with this Article II will thereafter look only to
Parent for the Merger Consideration, any cash in lieu of fractional shares of
Parent Common Stock to which they are entitled pursuant to Section 2.4(f) and
any dividends or other distributions with respect to Parent Common Stock to
which they are entitled pursuant to Section 2.4(d).
(h) No Liability. None of the Exchange Agent, Parent nor the Surviving
Corporation will be liable to any holder of shares of Company Common Stock for
any such shares of Parent Common Stock (or dividends or distributions with
respect thereto) or cash delivered to a public official pursuant to any
abandoned property, escheat or similar law.
(i) Withholding Rights. Each of the Surviving Corporation and Parent will
be entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of shares of Company Common Stock such
amounts as it is required to deduct and withhold with respect to the making of
such payment under the Code, or any provision of state, local or foreign tax
law. To the extent that amounts are so withheld by the Surviving Corporation or
Parent, as the case may be, such withheld amounts will be treated for all
purposes of this Agreement as having been paid to the holder of the shares of
Company Common Stock in respect of which such deduction and withholding was made
by the Surviving Corporation or Parent, as the case may be.
(j) Lost Certificates. If any Certificate will have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and, if required by the
Surviving Corporation, the posting by such person of a bond, in such reasonable
amount as the Surviving Corporation may direct, as indemnity against any claim
that may be made against it with respect to such Certificate, the Exchange Agent
will issue in exchange for such lost, stolen or destroyed Certificate the Merger
Consideration, any cash in lieu of fractional shares of Parent Common Stock to
which the holders thereof are entitled pursuant to Section 2.4(f) and any
dividends or other distributions to which the holders thereof are entitled
pursuant to this Agreement. For the purposes of this Agreement, "person" means
any natural person, firm, individual, business trust, trust, association,
corporation, partnership, joint venture, company, unincorporated entity or
Governmental Entity.
SECTION 2.5 Stock Transfer Books. At the Effective Time, the stock transfer
books of Company will be closed and there will be no further registration of
transfers of shares of Company Common Stock thereafter on the records of
Company. From and after the Effective Time, the holders of Certificates
representing shares of Company Common Stock outstanding immediately prior to the
Effective Time will cease to have any rights with respect to such shares of
Company Common Stock, except as otherwise provided herein or by law. On or after
the Effective Time, any Certificates presented to the Exchange Agent or Parent
for any reason will be converted into the Merger Consideration, any cash in lieu
of fractional shares of Parent Common Stock to which the holders thereof are
entitled pursuant to Section 2.4(f) and any dividends or other distributions to
which the holders thereof are entitled pursuant to Section 2.4(d).
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF COMPANY
Except as set forth in the disclosure letter delivered by Company to Parent
on the date of this Agreement ("Company Disclosure Letter"), Company hereby
represents and warrants to Parent and Merger Sub as follows:
SECTION 3.1 Organization, Qualification, Etc. Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has the corporate power and authority to own its properties and
assets and to carry on its business as it is now being conducted and is duly
qualified to do business and is in good standing in each jurisdiction in which
the ownership of its properties or the conduct of its business requires such
qualification, except for jurisdictions in which such failure to be so qualified
or to be in good standing would not, in the aggregate, reasonably be expected to
have a Material Adverse Effect on Company. The copies of Company's charter and
bylaws which have been made available for inspection by Parent are complete and
correct and in full force and effect on the date of this Agreement. Each of
Company's Subsidiaries is a corporation, limited partnership or limited
liability company duly organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation or organization, has the
corporate, limited partnership or limited liability company power and authority
to own its properties and to carry on its business as it is now being conducted,
and is duly qualified to do business and is in good standing in each
jurisdiction in which the ownership of its property or the conduct of its
business requires such qualification, except for jurisdictions in which such
failure to be so qualified or to be in good standing would not, in the
aggregate, reasonably be expected to have a Material Adverse Effect on Company.
Company has made available for inspection by Parent true and correct copies of
the charter and bylaws of each significant Subsidiary (as defined in Regulation
S-X promulgated under the Securities Act of 1933, as amended (the "Securities
Act")) ("Significant Subsidiary") and each such organizational document is in
full force and effect on the date of this Agreement. All the outstanding shares
of capital stock of, or other ownership interests in, Company's Subsidiaries are
validly issued, fully paid and nonassessable and are owned by Company, directly
or indirectly, free and clear of any encumbrance, hypothecation, infringement,
lien, mortgage, pledge, restriction, security interest, title retention or other
security arrangement, or any adverse right or interest, charge or claim of any
nature whatsoever of, on, or with respect to any asset, property or property
interest, not including (i) liens for water and sewer charges and current taxes
not yet due and payable or being contested in good faith, (ii) mechanics',
carriers', workers', repairers', materialmen's, warehousemen's and other similar
liens arising or incurred in the ordinary course of business (iii) all liens
approved in writing by Parent or (iv) restrictions on transfer imposed by
federal or state securities laws ("Liens"). There are no existing options,
rights of first refusal, preemptive rights, calls or commitments of any
character relating to the issued or unissued capital stock or other securities
of, or other ownership interests in, any Subsidiary of Company.
For purposes of this Agreement, "Material Adverse Effect" means, when used in
connection with Company or Parent, any change or effect that (i) is materially
adverse to the business, financial condition or results of operations of such
party and its Subsidiaries taken as a whole or (ii) substantially impairs or
delays the consummation of the transactions contemplated hereby; provided,
however, in either such event, "Material Adverse Effect" will not include any
change or effect that results from any legal, financial or other effects on or
to Company and its Subsidiaries taken as a whole, Parent and its Subsidiaries
taken as a whole, or their respective businesses taken as a whole, that may
arise from or are in any way related to: (A) any public or nonpublic discussion
initiated by or involving public officials, any announcement, development,
action or potential action, settlement, negotiation, legislation, proposed or
enacted, judicial decision, order, judgment or change in status of any nature or
type, which contemplates, proposes, threatens or results in any voluntary or
nonvoluntary cessation of or a legal ban or restrictions on the use of the
outdoor advertising services of any person, (including Company, Parent or any of
their respective Subsidiaries) by any person or group of persons seeking to
advertise tobacco products or products containing alcohol; (B) any economic
conditions affecting the outdoor advertising services industry as a whole; and
(C) any economic conditions affecting the radio industry as a whole.
For purposes of this Agreement, "Affiliate" of any person means another person
that directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such first person.
For purposes of this Agreement, "Subsidiary" or "Subsidiaries" of any person
means another person, an amount of the voting securities, other voting ownership
or voting partnership interests of which is sufficient to elect at least a
majority of its board of directors or other governing body (or, if there are no
such voting interests, 50% or more of the equity interests of which) is owned
directly or indirectly by such first person.
For purposes of this Agreement, with respect to any person, "Knowledge" means
the actual knowledge of the executive officers of such person.
SECTION 3.2 Capital Stock. The authorized stock of Company consists of
50,000,000 shares of Company Ordinary Common Stock and 11,406,510 shares of
Company Class B Stock. As of September 21, 2001, 24,078,472 shares of Company
Ordinary Common Stock and 11,020,622 shares of Company Class B Stock were issued
and outstanding. All the outstanding shares of Company Ordinary Common Stock and
Company Class B Stock have been validly issued and are fully paid and
nonassessable. As of September 21, 2001, there were no outstanding
subscriptions, options, warrants, rights or other arrangements or commitments
obligating Company to issue any shares of its stock other than:
(a) options or other rights to receive or acquire 612,000 shares of Company
Ordinary Common Stock pursuant to the Fifth Amended and Restated Employees Stock
Option Plan, as amended and restated in 2001 (the "Employee Stock Option Plan");
(b) rights to acquire the number of shares of Company Ordinary Common Stock
eligible to be purchased pursuant to the Non-employee-Directors' Equity
Compensation Plan; and
(c) rights to acquire the number of shares of Company Ordinary Common Stock
eligible to be purchased pursuant to payroll deductions under Company's Employee
Stock Purchase Plan (the "ESPP") for purchase periods ending prior to the
Closing Date.
Except for the issuance of shares of Company Ordinary Common Stock pursuant to
the options and other rights referred to in Section 3.2(a) and Section 3.2(b)
above and except as provided for in Section 5.1(a)(viii), since December 31,
2000, no shares of Company Common Stock have been issued.
SECTION 3.3 Corporate Authority Relative to this Agreement; No Violation.
Company has the corporate power and authority to enter into this Agreement and
to carry out its obligations hereunder. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been
duly and validly authorized by the Board of Directors of Company and, except for
the approval of its stockholders, no other corporate proceedings on the part of
Company are necessary to authorize this Agreement and the transactions
contemplated hereby. As of the date of this Agreement, the Board of Directors of
Company has determined that the transactions contemplated by this Agreement are
advisable and in the best interest of its stockholders and to recommend to such
stockholders that they vote in favor thereof. This Agreement has been duly and
validly executed and delivered by Company and, assuming this Agreement has been
duly and validly executed and delivered by the other parties hereto, this
Agreement constitutes a valid and binding agreement of Company, enforceable
against Company in accordance with its terms (except insofar as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting creditors' rights generally, or by principles
governing the availability of equitable remedies). Company is not subject to or
obligated under any charter, bylaw or contract provision or any license,
franchise or permit, or subject to any order or decree, which would be breached
or violated by its executing or, subject to the approval of its stockholders,
carrying out this Agreement, except for any breaches or violations which would
not, in the case of any contract provision, license, franchise, permit, order or
decree, in the aggregate, reasonably be expected to have a Material Adverse
Effect on Company. Other than in connection with or in compliance with the
provisions of the DGCL, the Securities Act, the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended (the "HSR Act"), applicable approvals of the Federal
Communications Commission (the "FCC") pursuant to the Communications Act of
1934, as amended, and any regulations promulgated thereunder (the
"Communications Act"), Section 4043 of ERISA, any other competition, antitrust
and investment laws and the securities or blue sky or antitrust laws of the
various states, and, other than the filing of the Certificate of Merger with the
Delaware Secretary of State and any necessary state filings to maintain the good
standing or qualification of the Surviving Corporation, no authorization,
consent or approval of, or filing with, any Governmental Entity is necessary for
the consummation by Company of the transactions contemplated by this Agreement,
except for such authorizations, consents, approvals or filings, the failure to
obtain or make which would not, in the aggregate, reasonably be expected to have
a Material Adverse Effect on Company; provided that Company makes no
representation with respect to such of the foregoing as are required by reason
of the regulatory status of Parent or any of its Subsidiaries or facts
specifically pertaining to any of them.
SECTION 3.4 Reports and Financial Statements. Since January 1, 1999, Company has
timely filed all material reports, registration statements and other filings
required to be filed by it with the U.S. Securities and Exchange Commission (the
"SEC") under the rules and regulations of the SEC (collectively, the "Company
SEC Reports"). As of their respective dates, the Company SEC Reports (i)
complied as to form in all material respects with the applicable requirements of
the Securities Act, the Exchange Act and the rules and regulations promulgated
thereunder and (ii) did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading; provided, that the foregoing clause (ii) will not apply to
the financial statements included in Company SEC Reports (which are covered by
the following sentence). The audited consolidated financial statements and
unaudited consolidated interim financial statements included in Company SEC
Reports (including any related notes and schedules) fairly present in all
material respects the financial position of Company and its consolidated
Subsidiaries as of the dates thereof and the results of operations and cash
flows for the periods or as of the dates then ended (subject, where appropriate,
to normal year-end adjustments), in each case in accordance with generally
accepted accounting principles in the United States ("GAAP") consistently
applied during the periods involved (except as otherwise disclosed in the notes
thereto and except that the unaudited financial statements therein do not
contain all of the footnote disclosures required by GAAP).
SECTION 3.5 No Undisclosed Liabilities. Neither Company nor any of its
Subsidiaries has any liabilities or obligations of any nature, whether or not
accrued, contingent or otherwise, that would be required by GAAP to be reflected
on a consolidated balance sheet, except liabilities or obligations (a) reflected
in any of the Company SEC Reports filed and publicly available prior to the date
of this Agreement (as amended to the date of this Agreement, the "Company Filed
SEC Reports"), (b) incurred since December 31, 2000 in the ordinary course of
business in accordance with past practice or (c) which would not, in the
aggregate, reasonably be expected to have a Material Adverse Effect on Company.
SECTION 3.6 No Violation of Law. The businesses of Company and its Subsidiaries
are not being conducted in violation of any law, ordinance or regulation of any
Governmental Entity applicable to them (provided that no representation or
warranty is made in this Section 3.6 with respect to Environmental Laws which
are dealt with exclusively in Section 3.7) except (a) as described in any of the
Company Filed SEC Reports and (b) for violations which would not, in the
aggregate, reasonably be expected to have a Material Adverse Effect on Company.
Company and its Subsidiaries have all permits, licenses and governmental
authorizations material to ownership or occupancy of their respective properties
and assets and the carrying on of their respective businesses, except for such
permits, licenses and governmental authorizations the failure of which to have
would not, in the aggregate, reasonably be expected to have a Material Adverse
Effect on Company.
SECTION 3.7 Environmental Laws and Regulations. The representations and
warranties set forth in this Section 3.7 will be the exclusive representations
and warranties of Company with respect to the subject matter hereof. Except as
described in any of the Company Filed SEC Reports, and except as would not, in
the aggregate, reasonably be expected to have a Material Adverse Effect on
Company:
(a) Compliance with Laws. Company and each of its Subsidiaries is in
material compliance with all applicable federal, state, local and foreign laws
and regulations currently in effect relating to pollution or protection of human
health or the environment (including, without limitation, ambient air, surface
water, ground water, land surface or subsurface strata) (collectively,
"Environmental Laws"), which compliance includes, but is not limited to, the
possession by Company and its Subsidiaries of material permits and other
governmental authorizations required under applicable Environmental Laws, and
compliance with the terms and conditions thereof;
(b) Environmental Actions. Neither Company nor any of its Subsidiaries has
received written notice of, nor, to the Knowledge of Company, is Company the
subject of, any pending actions, causes of action, claims, investigations,
demands or notices by any person alleging liability under or noncompliance with
any Environmental Law or that Company or any Subsidiary is a potentially
responsible party at any Superfund site or state-equivalent site;
(c) No Hazardous Substances. To the Knowledge of Company, there are no
hazardous or toxic substances or materials (as those terms are defined by
applicable Environmental Laws) at a concentration or level which requires
remedial action under any Environmental Law at, on, under or in any real
property currently or formerly owned or leased by Company or any Subsidiary;
(d) Material Compliance. To the Knowledge of Company, there are no
circumstances that are reasonably likely to prevent or interfere with material
compliance with Environmental Laws by Company or its Subsidiaries in the future;
(e) No Disposal or Release. To the Knowledge of Company, Company and its
Subsidiaries have not disposed of or released hazardous or toxic substances or
materials (as those terms are defined by applicable Environmental Laws) at a
concentration or level which requires remedial action under any Environmental
Law at any real property currently owned by or leased to Company or any
Subsidiary or at any other real property; and
(f) No Environmental Indemnification. Neither Company nor its Subsidiaries
have agreed in writing to indemnify any predecessor or other party with respect
to any environmental liability, other than customary indemnity provisions
contained in agreements entered into in the ordinary course of business.
SECTION 3.8 No Undisclosed Employee Benefit Plan Liabilities or Severance
Arrangements.
(a) Employee Benefit Plans. Each plan, program, policy, contract, agreement
or other arrangement providing for severance, termination pay, stock or stock
related awards, change in control, employment agreement, deferred compensation
or other employee benefits of any kind, whether formal or informal, funded or
unfunded, written or oral, including, without limitation, each "employee benefit
plan," within the meaning of Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended and any regulations promulgated or proposed
thereunder ("ERISA") (each a "Benefit Plan") is listed in Section 3.8(a) of the
Company Disclosure Letter other than any Benefit Plan which has an annual cost
of less than fifty thousand dollars ($50,000). True and complete copies of all
(i) Benefit Plans, including, but not limited to, any trust instruments and
insurance contracts forming a part of any Benefit Plans, and all amendments
thereto; (ii) the most recent reports (Series 5500 and all schedules thereto),
if any, required under ERISA or the Code in connection with each Benefit Plan or
related trust; (iii) the most recent determination letters received from the
Internal Revenue Service, if any, for each Benefit Plan and related trust which
is intended to satisfy the requirements of Section 401(a) of the Code; (iv) the
most recent summary plan description together with the most recent summary of
material modifications, if any, required under ERISA with respect to each
Benefit Plan; and (v) all material communications to any current, former, or
retired employee, officer, consultant, independent contractor, agent or director
of Company or any Subsidiary ("Employee") relating to each Benefit Plan have
been provided or made available to Parent.
(b) Compliance. All employee benefit plans covering Employees other than
"multiemployer plans" within the meaning of Section 3(37) of ERISA (the
"Plans"), to the extent subject to ERISA, are in material compliance with ERISA,
the Code, and all other applicable law. Each Plan which is an "employee pension
benefit plan" within the meaning of Section 3(2) of ERISA ("Pension Plan") and
which is intended to be qualified under Section 401(a) of the Code, has received
a favorable determination letter from the Internal Revenue Service with respect
to "TRA" (as defined in Section 1 of Rev. Proc. 93-39), and Company has no
Knowledge of any circumstances likely to result in revocation of any such
favorable determination letter. There is no material pending or, to the
Knowledge of Company, threatened litigation relating to the Plans. Neither
Company nor any of its Subsidiaries has engaged in a transaction with respect to
any Plan that, assuming the taxable period of such transaction expired as of the
date of this Agreement, could subject Company or any Subsidiary to a tax or
penalty imposed by either Section 4975 of the Code or Section 502(i) of ERISA in
an amount which would be material.
(c) No Liabilities. No liability under Subtitle C or D of Title IV of ERISA
has been or is expected to be incurred by Company or any Subsidiary with respect
to any ongoing, frozen or terminated "single-employer plan," within the meaning
of Section 4001(a)(15) of ERISA currently or formerly maintained by any of them,
or a single employer plan of any entity which is considered one employer with
Company under Section 4001 of ERISA or Section 414 of the Code (an "ERISA
Affiliate"). No "accumulated funding deficiency" as defined in Section 412 of
the Code (whether or not waived) has been incurred with respect to any ongoing,
frozen or terminated single-employer plan maintained by Company, its
Subsidiaries or any ERISA Affiliates that has not been satisfied in full.
Neither Company nor any of its subsidiaries has provided, or is required to
provide, security to any Pension Plan or to any single-employer plan of an ERISA
Affiliate pursuant to Section 401(a)(29) of the Code. Under each Pension Plan
which is a single-employer plan, as of the last day of the most recent plan year
ended prior to the date hereof, the actuarially determined present value of all
"benefit liabilities", within the meaning of Section 4001(a)(16) of ERISA (as
determined on the basis of the actuarial assumptions contained in the Plan's
most recent actuarial valuation), did not exceed the then current value of the
assets of such Plan, and there has been no material change in the financial
condition of such Plan since the last day of the most recent plan year. Company
and its Subsidiaries have not incurred and do not expect to incur any withdrawal
liability with respect to a multiemployer plan under Subtitle E of Title IV of
ERISA. The withdrawal liability of Company and its Subsidiaries under each
Benefit Plan which is a multiemployer plan to which Company or any of its
Subsidiaries has contributed during the preceding 12 months, determined as if a
"complete withdrawal" within the meaning of Section 4203 of ERISA had occurred
as of the date hereof, would not, in the aggregate, reasonably be expected to
have a Material Adverse Effect on Company. No notice of a "reportable event",
within the meaning of Section 4043 of ERISA for which the 30-day reporting
requirement has not been waived, has been required to be filed for any Plans or
by any ERISA Affiliate within the 12-month period ending on the date hereof or
will be required to be filed in connection with the transactions contemplated by
this Agreement.
(d) Contributions. All contributions required to be made under the terms of
any Benefit Plan have been timely made or have been reflected on the Company
Filed SEC Reports in all material respects.
(e) Retiree Obligations. Neither Company nor any of its Subsidiaries has
any obligations for retiree health and life benefits under any Benefit Plan.
(f) No Severance, Acceleration or Violation. The consummation of the
transactions contemplated by this Agreement will not (x) entitle any Employees
to severance pay, (y) accelerate the time of payment or vesting or trigger any
payment or funding (through a grantor trust or otherwise) of compensation or
benefits under, increase the amount payable or trigger any other material
obligation pursuant to, any of the Benefit Plans or (z) result in any breach or
violation of, or a default under, any of the Benefit Plans.
(g) Excess Parachute Payments. Any amount that could be received (whether
in cash, property, or vesting of property) as a result of the transactions
contemplated by this Agreement (or their termination of service) by any officer,
director, employee or independent contractor of Company or any of its
Subsidiaries, who is a "disqualified individual" (as defined in proposed
Treasury Regulation Section 1.280G-1), under any employment arrangement or
Benefit Plan would not be characterized as an "excess parachute payment" (as
defined in Section 280G of the Code).
(h) Non-U.S. Employees. No Benefit Plan has ever been maintained primarily
or exclusively for the benefit of Employees who are not citizens or residents of
the United States.
(i) Compliance. Except as would not, in the aggregate, reasonably be
expected to have a Material Adverse Effect on Company, each of Company and its
Subsidiaries (i) has correctly categorized all Employees as either employees or
independent contractors for federal tax purposes, and is in compliance with all
applicable federal, state and local laws, rules and regulations (domestic and
foreign) respecting their employment, employment practices, labor, terms and
conditions of employment and wages and hours, in each case, with respect to
Employees; (ii) has withheld all amounts required by law or by agreement to be
withheld from the wages, salaries and other payments to Employees; (iii) is not
liable for any arrears of wages or any taxes or any penalty for failure to
comply with any of the foregoing; (iv) is not liable for any payment to any
trust or other fund or to any governmental or administrative authority, with
respect to unemployment compensation benefits, social security or other benefits
for Employees; and (v) has provided Employees with the benefits to which they
are entitled pursuant to the terms of all Benefit Plans.
(j) No Prepayment or Prefunding. Company has not prepaid or prefunded any
material welfare plan through a trust, reserve, premium stabilization or similar
account, other than pursuant to any insurance contract which does not include a
"fund" as defined in Sections 419(e)(3) and (4) of the Code.
SECTION 3.9 Absence of Certain Changes or Events. Except as disclosed in the
Company Filed SEC Reports or as required or permitted by this Agreement, since
December 31, 2000, the businesses of Company and its Subsidiaries have been
conducted in all material respects in the ordinary course and from such date to
the date of this Agreement there has not been any event, occurrence, development
or state of circumstances or facts that would, in the aggregate, reasonably be
expected to have a Material Adverse Effect on Company. Since December 31, 2000,
no dividends or distributions have been declared or paid on or made with respect
to the shares of capital stock or other equity interests of Company or its
Subsidiaries nor have any such shares been repurchased or redeemed, other than
dividends or distributions paid to Company or a Subsidiary.
SECTION 3.10 Investigations; Litigation. Except as described in any of the
Company Filed SEC Reports:
(a) No Governmental Investigation. To the Knowledge of Company, no
investigation or review by any Governmental Entity with respect to Company or
any of its Subsidiaries which would, in the aggregate, reasonably be expected to
have a Material Adverse Effect on Company is pending nor has any Governmental
Entity notified Company in writing of an intention to conduct the same; and
(b) No Actions. There are no actions, suits or proceedings pending (or, to
Company's Knowledge, threatened) against or affecting Company or its
Subsidiaries, or any of their respective properties at law or in equity, or
before any federal, state, local or foreign Governmental Entity which would, in
the aggregate, reasonably be expected to have a Material Adverse Effect on
Company.
SECTION 3.11 Proxy Statement; Registration Statement; Other Information. None of
the information with respect to Company or its Subsidiaries to be included in
the Proxy Statement or the Registration Statement will, in the case of the Proxy
Statement or any amendments thereof or supplements thereto, at the time of the
mailing of the Proxy Statement or any amendments or supplements thereto, and at
the time of the Company Special Meeting, or, in the case of the Registration
Statement, at the time it becomes effective or at the time of any post-effective
amendment, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, except that no representation is made by Company with respect to
information supplied in writing by Parent or any Affiliate of Parent
specifically for inclusion in the Proxy Statement. The Proxy Statement will
comply as to form in all material respects with the provisions of the Exchange
Act and the rules and regulations promulgated thereunder.
SECTION 3.12 Tax Matters.
(a) Company Group Tax Returns. All federal, state, local and foreign
returns, reports or similar statements (including the attached schedules)
required to be filed with respect to any Tax, including, without limitation, any
information return, claim for refund, amended return or declaration of estimated
Tax ("Tax Returns") required to be filed by or on behalf of Company, each of its
Subsidiaries, and each affiliated, combined, consolidated or unitary group of
which Company or any of its Subsidiaries is a member (a "Company Group") have
been timely filed or requests for extensions of time to file such returns or
reports have been timely filed and granted and have not expired, and all Tax
Returns filed are complete and accurate, except to the extent any failure to
file or any inaccuracies in filed Tax Returns would not, in the aggregate,
reasonably be expected to have a Material Adverse Effect on Company. Any and all
federal, state, local, foreign or other taxes of any kind (together with any and
all interest, penalties, additions to tax and additional amounts imposed with
respect thereto) imposed by any taxing authority, including, without limitation,
taxes or other charges on or with respect to income, franchises, windfall or
other profits, gross receipts, property, sales, use, transfer, capital stock,
payroll, employment, social security, workers' compensation, unemployment
compensation, or net worth, and taxes or other charges in the nature of excise,
withholding, ad valorem or value added ("Taxes") due and owing by Company, any
Subsidiary of Company or any Company Group have been paid, or adequately
reserved for, except to the extent any failure to pay or reserve would not, in
the aggregate, reasonably be expected to have a Material Adverse Effect on
Company. There is no audit examination, deficiency assessment, refund
litigation, proposed adjustment or matter in controversy with respect to any
Taxes due and owing by Company, any Subsidiary of Company or any Company Group,
nor has Company or any Subsidiary of Company filed any waiver of the statute of
limitations applicable to the assessment or collection of any Tax, in each case,
which would, in the aggregate, reasonably be expected to have a Material Adverse
Effect on Company. All assessments for Taxes due and owing by Company, any
Subsidiary of Company or any Company Group with respect to completed and settled
examinations or concluded litigation have been paid. Neither Company nor any
Subsidiary of Company is a party to any tax indemnity agreement, tax sharing
agreement or other agreement under which Company or any Subsidiary of Company
could become liable to another person as a result of the imposition of a Tax
upon any person, or the assessment or collection of such a Tax, except for such
agreements as would not, in the aggregate, reasonably be expected to have a
Material Adverse Effect on Company. As soon as practicable after the public
announcement of the Agreement, Company will provide Parent with written
schedules of (i) the taxable years of Company for which the statutes of
limitations with respect to federal income Taxes have not expired, and (ii) with
respect to federal income Taxes, those years for which examinations have been
completed, those years for which examinations are presently being conducted, and
those years for which examinations have not yet been initiated. Company and each
of its Subsidiaries has complied in all material respects with all rules and
regulations relating to the withholding of Taxes, except to the extent any such
failures to comply would not, in the aggregate, reasonably be expected to have a
Material Adverse Effect on Company.
(b) Tax-Free Reorganization. Neither Company nor any of its Subsidiaries
knows of any fact or has taken, or failed to take, any action that could prevent
the Merger from qualifying as a reorganization within the meaning of Section
368(a) of the Code.
SECTION 3.13 Opinion of Financial Advisor. The Board of Directors of Company has
received the opinion of Credit Suisse First Boston dated the date of this
Agreement, to the effect that, as of such date, the Conversion Ratio is fair to
the holders of Company Ordinary Common Stock from a financial point of view. A
copy of the written opinion of Credit Suisse First Boston will be delivered to
Parent as soon as practicable after the date of this Agreement.
SECTION 3.14 Required Vote of Company Stockholders. The affirmative vote of the
holders of a majority of the voting power of the outstanding shares of Company
Common Stock (with the holders of Company Ordinary Common Stock and the holders
of Company Class B Common Stock voting together as a single class) is required
to approve the Merger. No other vote of the stockholders of Company is required
by law, the Company Certificate of Incorporation or Bylaws of Company or
otherwise in order for Company to consummate the Merger and the transactions
contemplated hereby.
SECTION 3.15 Insurance. Company and its Subsidiaries have insurance policies,
including without limitation fire, casualty and other liability insurance
policies, that are customary for the industry in which it operates and such
policies are in full force and effect, except for the failure to have or
maintain in full force and effect such policies as would not, in the aggregate,
reasonably be expected to have a Material Adverse Effect on Company.
SECTION 3.16 Real Property; Title; Valid Leasehold Interests. Company has
previously provided or made available to Parent a true and complete list of all
real property owned by Company or its Subsidiaries which is material to the
business of Company and its Subsidiaries taken as a whole. Company or its
Subsidiaries have good and marketable title to all such properties except where
the failure to have such title would not, in the aggregate, reasonably be
expected to have a Material Adverse Effect on Company. With respect to all
leases for the use or occupancy of real estate owned by a third party to which
Company or a Subsidiary is a party, such leases are in full force and effect as
of the date of this Agreement, and no party thereto is in default or breach
under any such lease except, in each case, as would not, in the aggregate,
reasonably be expected to have a Material Adverse Effect on Company.
SECTION 3.17 Collective Bargaining Agreements and Labor. Company has previously
provided or made available to Parent all labor or collective bargaining
agreements which pertain to a material number of the employees of Company and
its Subsidiaries. There are no pending complaints, charges or claims against
Company or its Subsidiaries filed with any public or governmental authority,
arbitrator or court based upon the employment or termination by Company of any
individual, except for such complaints, charges or claims which if adversely
determined would not, in the aggregate, reasonably be expected to have a
Material Adverse Effect on Company. Further, there is no outstanding demand, and
to the Knowledge of Company, no threat exists which would reasonably be expected
to give rise to a demand, for recognition with respect to any Company employee
by any labor organization.
SECTION 3.18 Material Contracts.
(a) Material Contracts. Neither Company nor any of its Subsidiaries has
entered into any contract, agreement or other document or instrument (other than
this Agreement) that is currently in effect and requires the remaining payment
(regardless of the nature of such payment) over the term of such contract,
agreement or other document or instrument (including, without limitation, during
any automatic renewal periods) in excess of one million dollars ($1,000,000) (a
"Company Material Contract") or any material amendment, modification or waiver
under any Company Material Contract (other than any such amendments,
modifications or waivers entered into following the date of this Agreement in
connection with the transactions contemplated hereby).
(b) Enforceability of Material Contracts. Each of the Company Material
Contracts is valid and enforceable against Company in accordance with its terms,
and there is no default under any Company Material Contracts either by Company
or any of its Subsidiaries which is a party to such Company Material Contracts
or, to the Knowledge of Company, by any other party thereto, and no event has
occurred that with the lapse of time or the giving of notice or both would
constitute a default thereunder by Company or, to the Knowledge of Company, any
other party thereto. Neither Company nor any Subsidiary of Company has received
any written notice of default or termination under any Company Material
Contract.
SECTION 3.19 Takeover Statute. The Board of Directors of Company has approved
this Agreement and the transactions contemplated hereby (including the execution
and delivery of the Voting Agreement) and, such approval constitutes approval of
the Merger and the other transactions contemplated hereby (including the
execution and delivery of the Voting Agreement) by the Board of Directors of
Company under the provisions of Section 203 of the DGCL such that Section 203 of
the DGCL does not apply to this Agreement and the transactions contemplated
hereby. To the Knowledge of Company, no other state takeover statute is
applicable to the Merger or the other transactions contemplated hereby.
SECTION 3.20 Transactions With Affiliates. Other than the transactions
contemplated by this Agreement or except to the extent disclosed in the Company
Filed SEC Reports, there have been no transactions, agreements, arrangements or
understandings between Company or its Subsidiaries, on the one hand, and
Company's Affiliates (other than Subsidiaries of Company) or any other person,
on the other hand, that would be required to be disclosed under Item 404 of
Regulation S-K under the Securities Act.
SECTION 3.21 Intellectual Property. Except as would not, in the aggregate,
reasonably be expected to have a Material Adverse Effect on Company:
(a) Ownership of Intellectual Property. Company and each of its
Subsidiaries owns and possesses all right, title and interest in and to, or is
licensed to use (in each case, free and clear of any Liens), all Intellectual
Property necessary for the operation of its business as currently conducted, all
items of such Intellectual Property are valid, subsisting and enforceable, and
Company is unaware of any fact which, individually or in the aggregate, could
reasonably be determined to detrimentally affect the validity, ownership or
enforceability of such items of Intellectual Property;
(b) No Violation by Company. To Company's Knowledge, the activities of
Company and its Subsidiaries, including the operation of Company's business as
currently conducted by Company and its Subsidiaries, do not infringe or
otherwise violate the Intellectual Property rights of any person and are in
accordance in all material respects with any applicable license pursuant to
which Company or any Subsidiary acquired the right to use any applicable
Intellectual Property;
(c) No Violation by Third Parties. To the Knowledge of Company, no person
is challenging, infringing or otherwise violating any material right of Company
or any of its Subsidiaries with respect to any Intellectual Property owned or
used by Company or its Subsidiaries;
(d) No Claims. Neither Company nor any of its Subsidiaries has received any
written notice of any pending claim with respect to any Intellectual Property
owned or used by Company and its Subsidiaries and no action is pending in any
administrative or judicial proceeding with respect to any Intellectual Property
owned by Company and its Subsidiaries;
(e) No Abandonment. To the Knowledge of Company, no Intellectual Property
owned by Company or its Subsidiaries is being used or enforced in a manner that
may result in the abandonment, cancellation or unenforceability of such
Intellectual Property, except with respect to any such Intellectual Property
which Company or any of its Subsidiaries has decided in its reasonable business
judgment to abandon or permit to be cancelled;
(f) No Judgments. To the Knowledge of Company, no item of Intellectual
Property owned by Company is subject to any outstanding order, judgment or
decree; and
(g) Definition of Intellectual Property. For purposes of this Agreement,
"Intellectual Property" will mean trademarks, service marks, brand names, trade
dress, logos, trade names, domain names, corporate names and other indications
of origin, the goodwill associated with the foregoing and registrations in any
jurisdiction of, and applications in any jurisdiction to register, the
foregoing, including any extension, modification or renewal of any such
registration or application; inventions, discoveries, designs and ideas, whether
patentable or not, in any jurisdiction; patents, applications for patents
(including, without limitation, divisions, continuations, continuations in part
and renewal applications), and any renewals, extensions, reexaminations or
reissues thereof, in any jurisdiction; design registrations and applications, in
any jurisdiction; nonpublic information, trade secrets and confidential
information (including know-how, technical data, manufacturing and production
processes and techniques, customer and supplier lists, pricing and cost
information, and business and marketing plans and proposals) and rights in any
jurisdiction to limit the use or disclosure thereof by any person; writings,
computer software, and other works, whether copyrightable or not, in any
jurisdiction; registrations or applications for registration of copyrights in
any jurisdiction, and any renewals or extensions thereof; and any similar
intellectual property or proprietary rights.
SECTION 3.22 Company FCC Licenses; Operation of Company Licensed Facilities.
Except as would not, in the aggregate, reasonably be expected to have a Material
Adverse Effect on Company:
(a) Company and its Subsidiaries have operated the television and radio
stations for which Company and any of its Subsidiaries hold licenses from the
FCC, in each case which are owned or operated by Company and its Subsidiaries
(each a "Company Licensed Facility" and collectively, the "Company Licensed
Facilities"), in compliance with the terms of the licenses issued by the FCC to
Company and its Subsidiaries (the "Company FCC Licenses"), and in compliance
with the Communications Act;
(b) To the Knowledge of Company, each broadcast television and radio
station for which Company or any of its Subsidiaries provides programming or
advertising services pursuant to a local marketing or joint sales agreement
(each a "Company LMA Facility") and collectively, the "Company LMA Facilities")
has been operated in compliance with the terms of the licenses issued by the FCC
to the owner of such Company LMA Facility (each a "Company LMA Facility FCC
License" and collectively, the "Company LMA Facility FCC Licenses");
(c) Company has, and each of its Subsidiaries has, timely filed or made all
applications, reports and other disclosures required by the FCC to be made with
respect to Company Licensed Facilities and has timely paid all FCC regulatory
fees with respect thereto;
(d) Company and each of its Subsidiaries have, and are the authorized legal
holders of, all Company FCC Licenses necessary for or used in the operation of
the business of Company Licensed Facilities;
(e) To the Knowledge of Company, the third parties with which Company or
its Subsidiaries have entered into local marketing agreements or joint sales
agreements with respect to Company LMA Facilities have, and are the authorized
legal holders of, the Company LMA Facility FCC Licenses necessary for or used in
the operation of the business of the respective Company LMA Facility to which
such local marketing or joint sales agreement relates;
(f) All Company FCC Licenses and, to the Knowledge of Company, Company LMA
Facility FCC Licenses, are validly held and are in full force and effect,
unimpaired by any act or omission of Company, any of its Subsidiaries (or their
respective predecessors) or their respective officers, employees or agents;
(g) There is not before the FCC any investigation, proceeding, notice of
violation or order of forfeiture relating to any Company Licensed Facility or
Company LMA Facility;
(h) No application, action or proceeding is pending for the renewal of any
Company FCC Licenses or, to the Knowledge of Company, Company LMA Facility FCC
License, and, to the Knowledge of Company, there is no basis for the FCC not to
renew any of Company FCC Licenses or the Company LMA Facility FCC Licenses
(other than proceedings to amend FCC rules or the Communications Act of general
applicability to the broadcast industry);
(i) There is not pending and, to the Knowledge of Company, there is not
threatened any action by or before the FCC to revoke, suspend, cancel, rescind
or modify any of Company FCC Licenses or any of the Company LMA Facility FCC
Licenses (other than proceedings to amend FCC rules or the Communications Act of
general applicability to the broadcast industry); and
(j) Neither Company nor any of its Subsidiaries has any applications
pending before the FCC.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Except as set forth in the disclosure letter delivered by Parent and Merger
Sub to Company on the date of this Agreement (the "Parent Disclosure Letter"),
Parent and Merger Sub hereby jointly and severally represent and warrant to
Company as follows:
SECTION 4.1 Organization, Qualification, Etc. Each of Parent and Merger Sub is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of organization and has the corporate power and authority to
own its properties and assets and to carry on its business as it is now being
conducted and is duly qualified to do business and is in good standing in each
jurisdiction in which the ownership of its properties or the conduct of its
business requires such qualification, except for jurisdictions in which such
failure to be so qualified or to be in good standing would not, in the
aggregate, reasonably be expected to have a Material Adverse Effect on Parent.
The copies of Parent's Articles of Incorporation, as amended, and Amended and
Restated Bylaws and Merger Sub's charter and bylaws which have been made
available to Company are complete and correct and in full force and effect on
the date of this Agreement. Each of Parent's Significant Subsidiaries is a
corporation, partnership or limited liability company duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation or organization, has the corporate, partnership or limited
liability company power and authority to own its properties and to carry on its
business as it is now being conducted, and is duly qualified to do business and
is in good standing in each jurisdiction in which the ownership of its property
or the conduct of its business requires such qualification, except for
jurisdictions in which such failure to be so qualified or to be in good standing
would not, in the aggregate, reasonably be expected to have a Material Adverse
Effect on Parent. Except as disclosed in Parent Filed SEC Reports, all the
outstanding shares of capital stock of, or other ownership interests in,
Parent's Significant Subsidiaries and Merger Sub are validly issued, fully paid
and nonassessable and are owned by Parent, directly or indirectly, free and
clear of all Liens, except for restrictions contained in credit agreements and
similar instruments to which Parent is a party. Except as disclosed in the
Parent Filed SEC Reports, there are no existing options (except for those set
forth in Section 4.2 below), rights of first refusal, preemptive rights, calls
or commitments of any character relating to the issued or unissued capital stock
or other securities of, or other ownership interests in, any Significant
Subsidiary of Parent or Merger Sub.
SECTION 4.2 Capital Stock. The authorized capital stock of Parent consists of
1,500,000,000 shares of Parent Common Stock, par value $0.10 per share, and
2,000,000 shares of Class A Preferred Stock, par value $1.00 per share, and
8,000,000 shares of Class B Preferred Stock, par value $1.00 per share (such
Class A Preferred Stock and the Class B Preferred Stock together, the "Parent
Preferred Stock"). The shares of Parent Common Stock to be issued in the Merger
or upon the exercise of Company stock options, warrants, conversion rights or
other rights or upon vesting or payment of other Company equity-based awards
thereafter will, when issued, be validly issued fully paid and nonassessable. As
of September 21, 2001, 597,458,849 shares of Parent Common Stock and no shares
of Parent Preferred Stock were issued and outstanding. All the outstanding
shares of Parent Common Stock have been validly issued and are fully paid and
nonassessable. As of September 21, 2001, there were no outstanding
subscriptions, options, warrants, rights or other arrangements or commitments
obligating Parent to issue any shares of its capital stock other than options
and other rights to receive or acquire an aggregate of up to 65,111,885 shares
of Parent Common Stock pursuant to:
(a) the 1984 Incentive Stock Option Plan of Parent;
(b) the 1994 Non-Qualified Stock Option Plan;
(c) Parent Director's Nonqualified Stock Option Plan;
(d) the 1998 Stock Incentive Plan;
(e) the 2001 Stock Incentive Plan;
(f) the 2000 Employee Stock Purchase Plan;
(g) various other option agreements with officers or employees of Parent
or Parent's Subsidiaries, option assumption agreements, and incentive
compensation grants;
(h) Parent's 2 5/8% Senior Convertible Notes due 2003, convertible into
Parent Common Stock;
(i) Parent's 11/2% Senior Convertible Notes due 2002, convertible into
Parent Common Stock;
(j) the warrants of Jacor Communications, Inc. ("Jacor") assumed by Parent;
(k) Jacor liquid yield option notes due 2001; and
(l) Jacor liquid yield option notes due 2018.
SECTION 4.3 Corporate Authority Relative to This Agreement; No Violation. Each
of Parent and Merger Sub has the corporate power and authority to enter into
this Agreement and to carry out its obligations hereunder. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly and validly authorized by the Boards of Directors of
Parent and Merger Sub and no other corporate or stockholder proceedings on the
part of Parent or Merger Sub are necessary to authorize this Agreement, the
issuance of Parent Common Stock and the other transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by Parent and
Merger Sub and, assuming this Agreement has been duly and validly executed and
delivered by the other parties hereto, this Agreement constitutes a valid and
binding agreement of Parent and Merger Sub, enforceable against each of them in
accordance with its terms (except insofar as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally, or by principles governing the
availability of equitable remedies). Neither Parent nor Merger Sub is subject to
or obligated under any charter, bylaw or contract provision or any license,
franchise or permit, or subject to any order or decree, which would be breached
or violated by its executing or carrying out this Agreement, except for any
breaches or violations which would not, in the aggregate, reasonably be expected
to have a Material Adverse Effect on Parent. Other than in connection with or in
compliance with the provisions of the DGCL, the Securities Act, the Exchange
Act, the HSR Act, the Communications Act, Section 4043 of ERISA, any non-United
States competition, antitrust and investments laws and the securities, blue sky
or antitrust laws of the various states, and, other than the filing of the
Certificate of Merger with the Delaware Secretary of State and any necessary
state filings to maintain the good standing or qualification of the Surviving
Corporation, no authorization, consent or approval of, or filing with, any
Governmental Entity is necessary for the consummation by Parent of the
transactions contemplated by this Agreement, except for such authorizations,
consents, approvals or filings, the failure to obtain or make which would not,
in the aggregate, reasonably be expected to have a Material Adverse Effect on
Parent; provided that Parent makes no representation with respect to such of the
foregoing as are required by reason of the regulatory status of Company or any
of its Significant Subsidiaries or facts specifically pertaining to any of them.
SECTION 4.4 Reports and Financial Statements(a). Since January 1, 1999, Parent
has timely filed all material reports, registration statements and other filings
required to be filed by it with the SEC under the rules and regulations of the
SEC (collectively, the "Parent SEC Reports"). As of their respective dates, the
Parent SEC Reports (i) complied as to form in all material respects with the
applicable requirements of the Securities Act, the Exchange Act, and the rules
and regulations promulgated thereunder and (ii) did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided, that the
foregoing clause (ii) will not apply to the financial statements included in the
Parent SEC Reports (which are covered by the following sentence). The audited
consolidated financial statements and unaudited consolidated interim financial
statements included in the Parent SEC Reports (including any related notes and
schedules) fairly present in all material respects the financial position of
Parent and its consolidated Subsidiaries as of the dates thereof and the results
of their operations and their cash flows for the periods or as of the dates then
ended (subject, where appropriate, to normal year-end adjustments), in each case
in accordance with GAAP consistently applied during the periods involved (except
as otherwise disclosed in the notes thereto and except that the unaudited
financial statements therein do not contain all of the footnote disclosures
required by GAAP).
SECTION 4.5 No Undisclosed Liabilities. Neither Parent nor any of its
Subsidiaries has any liabilities or obligations of any nature, whether or not
accrued, contingent or otherwise, that would be required by GAAP to be reflected
on a consolidated balance sheet, except liabilities or obligations (a) reflected
in any of the Parent SEC Reports filed and publicly available prior to the date
of this Agreement (as amended to the date of this Agreement, the "Parent Filed
SEC Reports"), (b) incurred since December 31, 2000 in the ordinary course of
business consistent with past practice or (c) which would not, in the aggregate,
reasonably be expected to have a Material Adverse Effect on Parent.
SECTION 4.6 No Violation of Law. The businesses of Parent and its Subsidiaries
are not being conducted in violation of any law, ordinance or regulation of any
Governmental Entity (provided that no representation or warranty is made in this
Section 4.6 with respect to Environmental Laws) except (a) as described in any
of the Parent Filed SEC Reports and (b) for violations which would not, in the
aggregate, reasonably be expected to have a Material Adverse Effect on Parent.
SECTION 4.7 Environmental Laws and Regulations. The representations and
warranties set forth in this Section 4.7 will be the exclusive representations
and warranties of Parent and Merger Sub with respect to the subject matter
hereof. Except as described in any of the Parent Filed SEC Reports, and except
as would not, in the aggregate, reasonably be expected to have a Material
Adverse Effect on Parent:
(a) Compliance with Laws. Parent and each of its Subsidiaries is in
material compliance with all applicable Environmental Laws, which compliance
includes, but is not limited to, the possession by Parent and its Subsidiaries
of material permits and other governmental authorizations required under
applicable Environmental Laws, and compliance with the terms and conditions
thereof;
(b) Environmental Actions. Neither Parent nor any of its Subsidiaries has
received written notice of, nor, to the Knowledge of Parent, is the subject of,
any pending actions, causes of action, claims, investigations, demands or
notices by any person alleging liability under or noncompliance with any
Environmental Law or that Parent or any Subsidiary is a potentially responsible
party at any Superfund site or state-equivalent site; and
(c) Material Compliance. To the Knowledge of Parent, there are no
circumstances that are reasonably likely to prevent or interfere with compliance
with Environmental Laws by Parent or its Subsidiaries in the future.
SECTION 4.8 Absence of Certain Changes or Events. Except as disclosed in the
Parent Filed SEC Reports or as required or permitted by this Agreement, since
December 31, 2000, the businesses of Parent and its Subsidiaries have been
conducted in all material respects in the ordinary course and from such date to
the date of this Agreement there has not been any event, occurrence, development
or state of circumstances or facts that would, in the aggregate, reasonably be
expected to have a Material Adverse Effect on Parent. Since December 31, 2000,
no dividends or distributions have been declared or paid on or made with respect
to the shares of capital stock or other equity interests of Parent nor have any
such shares been repurchased or redeemed.
SECTION 4.9 Investigations; Litigation. Except as described in any of the Parent
Filed SEC Reports:
(a) No Governmental Investigations. To the Knowledge of Parent, no
investigation or review by any Governmental Entity with respect to Parent or any
of its Subsidiaries which would, in the aggregate, reasonably be expected to
have a Material Adverse Effect on Parent is pending nor has any Governmental
Entity notified Parent in writing of an intention to conduct the same; and
(b) No Actions. There are no actions, suits or proceedings pending (or, to
Parent's Knowledge, threatened) against or affecting Parent or its Subsidiaries,
or any of their respective properties at law or in equity, or before any
federal, state, local or foreign Governmental Entity which would, in the
aggregate, reasonably be expected to have a Material Adverse Effect on Parent.
SECTION 4.10 Proxy Statement; Registration Statement; Other Information. None of
the information with respect to Parent or its Significant Subsidiaries to be
included in the Proxy Statement or the Registration Statement will, in the case
of the Proxy Statement or any amendments thereof or supplements thereto, at the
time of the mailing of the Proxy Statement or any amendments or supplements
thereto, and at the time of the Company Special Meeting, or, in the case of the
Registration Statement, at the time it becomes effective or at the time of any
post-effective amendment, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading, except that no representation is made by Parent
or Merger Sub with respect to information supplied in writing by Company or any
Affiliate of Company specifically for inclusion in the Proxy Statement or the
Registration Statement. Each of the Proxy Statement and the Registration
Statement will comply as to form in all material respects with the provisions of
the Exchange Act and the rules and regulations promulgated thereunder.
SECTION 4.11 Tax Matters.
(a) Parent Group Tax Returns. All federal, state, local and foreign Tax
Returns required to be filed by or on behalf of Parent, each of its
Subsidiaries, and each affiliated, combined, consolidated or unitary group of
which Parent or any of its Subsidiaries is a member (a "Parent Group") have been
timely filed or requests for extensions of time to file such returns or reports
have been timely filed and granted and have not expired, and all Tax Returns
filed are complete and accurate, except to the extent any failure to file or any
inaccuracies in filed Tax Returns would not, in the aggregate, reasonably be
expected to have a Material Adverse Effect on Parent. All Taxes due and owing by
Parent, any Subsidiary of Parent or any Parent Group have been paid, or
adequately reserved for, except to the extent any failure to pay or reserve
would not, in the aggregate, reasonably be expected to have a Material Adverse
Effect on Parent. There is no audit examination, deficiency assessment, refund
litigation, proposed adjustment or matter in controversy with respect to any
Taxes due and owing by Parent, any Subsidiary of Parent or any Parent Group, nor
has Parent or any Subsidiary of Parent filed any waiver of the statute of
limitations applicable to the assessment or collection of any Tax, in each case,
which would, in the aggregate, reasonably be expected to have a Material Adverse
Effect on Parent. All assessments for Taxes due and owing by Parent, any
Subsidiary of Parent or any Parent Group with respect to completed and settled
examinations or concluded litigation have been paid. Neither Parent nor any
Subsidiary of Parent is a party to any tax indemnity agreement, tax sharing
agreement or other agreement under which Parent or any Subsidiary of Parent
could become liable to another person as a result of the imposition of a Tax
upon any person, or the assessment or collection of such a Tax, except for such
agreements as would not, in the aggregate, reasonably be expected to have a
Material Adverse Effect on Parent. As soon as practicable after the public
announcement of the Merger Agreement, Parent will provide Company with written
schedules of (i) the taxable years of Parent for which the statutes of
limitations with respect to federal income Taxes have not expired, and (ii) with
respect to federal income Taxes, those years for which examinations have been
completed, those years for which examinations are presently being conducted, and
those years for which examinations have not yet been initiated. Parent and each
of its Subsidiaries has complied in all material respects with all rules and
regulations relating to the withholding of Taxes, except to the extent any such
failure to comply would not, in the aggregate, reasonably be expected to have a
Material Adverse Effect on Parent. Merger Sub is a direct, wholly-owned
subsidiary of Parent formed solely for the purpose of effecting the Merger and
has conducted no activity and has incurred no liability or obligation other than
as contemplated by this Agreement.
(b) Tax-Free Reorganization. Neither Parent nor any of its Subsidiaries
knows of any fact or has taken, or failed to take, any action that could prevent
the Merger from qualifying as a reorganization within the meaning of Section
368(a) of the Code.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 5.1 Conduct of Business by Company or Parent. Prior to the Effective
Time or the date, if any, on which this Agreement is earlier terminated pursuant
to Section 7.1, and except as consented to in writing by the other parties
hereto (which consent will not be unreasonably withheld), as set forth in the
Company Disclosure Letter or the Parent Disclosure Letter or as may be permitted
pursuant to this Agreement:
(a) Covenants of Company. Company:
(i) will, and will cause each of its Subsidiaries to, conduct its
operations in all material respects according to their ordinary and usual
course of business;
(ii) will, and will cause each of its Significant Subsidiaries to, use
reasonable efforts to (A) preserve intact its business organizations and
goodwill, (B) keep available the services of its officers and employees as
a group, and (C) maintain satisfactory relationships with suppliers,
distributors, customers and others having business relationships with them;
(iii) will notify Parent as soon as practicable of any emergency or
other change in the normal course of its or its Subsidiaries' respective
businesses or in the operation of its or its Subsidiaries' respective
properties and of any complaints, investigations or hearings (or
communications indicating that the same may be contemplated) of any
governmental body or authority;
(iv) will not authorize or pay any dividends on or make any
distribution with respect to its outstanding shares of stock;
(v) except for the agreements or arrangements relating to the
retention and severance plans and arrangements set forth in Section 3.8(f)
of the Company Disclosure Letter, will not, and will not permit any of its
Subsidiaries to, enter into or amend any employment, severance or similar
agreements or arrangements with any of their respective directors or
executive officers;
(vi) will not, and will not permit any of its Subsidiaries to,
authorize, propose or announce an intention to authorize or propose, or
enter into an agreement with respect to, any merger, consolidation or
business combination, any acquisition of a material amount of assets or
securities, any disposition of assets or securities or any release or
relinquishment of any material contract rights, in each case, except in the
ordinary course;
(vii) will not propose or adopt any amendments to its certificate of
incorporation or bylaws;
(viii) will not, and will not permit any of its Subsidiaries to, (A)
issue any shares of their capital stock, except upon exercise of rights or
options issued pursuant to existing employee incentive or benefit plans,
programs or arrangements and nonemployee director plans (including, without
limitation, shares issued in connection with stock grants or awards or the
exercise of rights or options granted in the ordinary course of business
consistent with past practice pursuant to such plans, programs or
arrangements) or (B) effect any stock split not previously announced or (C)
otherwise change its capitalization as it existed on September 21, 2001,
except as contemplated herein;
(ix) will not, and will not permit any of its Subsidiaries to, grant,
confer or award any options, warrants, conversion rights or other rights,
not existing on the date of this Agreement, to acquire any shares of its
capital stock (other than rights under the ESPP for offering periods
beginning after the date of this Agreement or agreements or arrangements
entered into as permitted by clause (v) of this Section 5.1(a));
(x) will not, and will not permit any of its Subsidiaries to, purchase
or redeem any shares of its stock or pay any cash bonuses (except for cash
bonuses pursuant to agreements or employee incentive or benefit plans,
programs or arrangements or non-employee director plans existing on the
date of this Agreement or agreements or arrangements entered into as
permitted by clause (v) of this Section 5.1(a)); provided, however, Company
may adopt a bonus plan as an incentive to employees to remain with Company
through and until the Closing Date in an amount to be mutually agreed to by
Parent and Company;
(xi) will not, and will not permit any of its Subsidiaries to, amend
the terms of their respective employee benefit plans, programs or
arrangements or any severance or similar agreements or arrangements in
existence on the date of this Agreement (except as required by law or to
maintain tax-qualified status), or adopt any new employee benefit plans,
programs or arrangements or any severance or similar agreements or
arrangements (except for agreements or arrangements entered into as
permitted by clause (v) of this Section 5.1(a)); provided, however, Company
may change the renewal date on which plan premiums are adjusted under
Company's medical and dental plans from November to January;
(xii) will not, and will not permit any of its Subsidiaries to, incur
any additional indebtedness for borrowed money, except for indebtedness (A)
in connection with interest payments on any of Company's outstanding public
debt, or (B) pursuant to credit facilities, indentures and other
arrangements in existence on the date of this Agreement;
(xiii) will not, and will not permit any of its Subsidiaries to, incur
any capital expenditures in excess of five million dollars ($5,000,000),
except for amounts budgeted for in Company's capital budgets previously
provided to Parent;
(xiv) will not, and will not permit any of its Subsidiaries to, except
with respect to sign location related contracts or leases, sales or
advertising contracts or other agreements contemplated by or permitted
pursuant to this Agreement, enter into any Company Material Contract;
(xv) will not, and will not permit any of its Subsidiaries to, enter
into an agreement with any Affiliate of Company, any family member of any
Affiliate of Company or any stockholder who owns more than 10% of the
outstanding capital stock of Company;
(xvi) will not, and will not permit any of its Subsidiaries to, make
any material Tax election or settle or compromise any material Tax
liability;
(xvii) will not, unless required by law, rule or regulation, call any
meeting of the stockholders of Company, regardless of whether a special
meeting or otherwise, until this Agreement is terminated in accordance with
its terms; and
(xviii) will not, and will not permit any of its Subsidiaries to,
agree, in writing or otherwise, to take any of the foregoing actions in
paragraphs (iv)-(xvii) above or take any action which would make any
representation or warranty in Article III hereof untrue or incorrect.
(b) Covenants of Parent. Parent:
(i) will, and will cause each of its Subsidiaries to, conduct its
operations, in all material respects, according to their ordinary and usual
course of business; provided, however, that nothing contained in this
proviso will limit Parent's ability to authorize or propose, or enter into,
an agreement with respect to any acquisitions or to issue any debt or
equity securities;
(ii) will take all action necessary to cause Merger Sub to perform its
obligations under this Agreement and to consummate the Merger on the terms
and conditions set forth in this Agreement;
(iii) will not authorize or pay any cash dividends on or make any cash
distribution with respect to its outstanding shares of stock; and
(iv) will not, and will not permit any of its Subsidiaries to agree,
in writing or otherwise, to take any of the foregoing actions listed in
clause (iii) or take any action which would make any representation or
warranty in Article IV hereof untrue or incorrect.
SECTION 5.2 Proxy Material; Registration Statement.
(a) Proxy and Registration Statement. As promptly as practicable after the
execution of this Agreement, Company will prepare and file with the SEC a proxy
statement relating to the meeting of Company's stockholders to be held in
connection with the Merger (together with any amendments thereof or supplements
thereto, in each case in the form or forms mailed to Company's stockholders, the
"Proxy Statement") and Parent will prepare and file with the SEC a registration
statement on Form S-4 (together with all amendments thereto, the "Registration
Statement") in which the Proxy Statement will be included as a prospectus, in
connection with the registration under the Securities Act of the shares of
Parent Common Stock to be issued to the stockholders of Company pursuant to the
Merger. Each of Parent and Company will use its reasonable efforts to cause the
Registration Statement to become effective as promptly as practicable, and,
prior to the effective date of the Registration Statement, Parent will take all
or any action required under any applicable federal or state securities laws in
connection with the issuance of share of Parent Common Stock in the Merger. Each
of Parent and Company will furnish all information concerning it and the holders
of its capital stock as the other may reasonably request in connection with such
actions and the preparation of the Registration Statement and Proxy Statement.
As promptly as practicable after the Registration Statement will become
effective, Company will mail the Proxy Statement to its stockholders. The Proxy
Statement will include the recommendation of the Board of Directors of Company
in favor of the Merger (subject to Section 5.10 hereof).
Subject to Section 5.10 hereof, neither the Proxy Statement nor the
Registration Statement will be filed with the SEC by, and no amendment or
supplement to the Proxy Statement or the Registration Statement will be made by,
Parent or Company without the approval of the other party (which approval will
not be unreasonably withheld or delayed). Parent and Company each will advise
the other, promptly after it receives notice thereof, of the time when the
Registration Statement has become effective or any supplement or amendment has
been filed, of the issuance of any stop order, the suspension of the
qualification of Parent Common Stock issuable in connection with the Merger for
offering or sale in any jurisdiction, or any request by the SEC for amendment of
the Proxy Statement or the Registration Statement or comments thereon and
responses thereto or requests by the SEC for additional information.
(b) Accuracy of Information Furnished by Parent. The information supplied
by Parent for inclusion in the Registration Statement and the Proxy Statement
will not, at (i) the time the Registration Statement is declared effective, (ii)
the time the Proxy Statement (or any amendment thereof or supplement thereto) is
first mailed to the stockholders of Company, (iii) the time of the Company
Special Meeting, and (iv) the Effective Time, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein not misleading. If at any
time prior to the Effective Time any event or circumstance relating to Parent or
any of its officers or directors should be discovered by Parent which should be
set forth in an amendment or a supplement to the Registration Statement or Proxy
Statement, Parent will promptly inform Company. All documents that Parent is
responsible for filing with the SEC in connection with the transactions
contemplated herein will comply as to form and substance in all material
respects with the applicable requirements of the Securities Act and the rules
and regulations thereunder and the Exchange Act and the rules and regulations
thereunder.
(c) Accuracy of Information Furnished by Company. The information supplied
by Company for inclusion in the Registration Statement and the Proxy Statement
will not, at (i) the time the Registration Statement is declared effective, (ii)
the time the Proxy Statement (or any amendment thereof or supplement thereto) is
first mailed to the stockholders of Company, (iii) the time of the Company
Special Meeting, and (iv) the Effective Time, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein not misleading. If at any
time prior to the Effective Time any event or circumstance relating to Company
or any of its officers or directors should be discovered by Company which should
be set forth in an amendment or a supplement to the Registration Statement or
Proxy Statement, Company will promptly inform Parent. All documents that Company
is responsible for filing with the SEC in connection with the transactions
contemplated herein will comply as to form and substance in all material
respects with the applicable requirements of the Securities Act and the rules
and regulations thereunder and the Exchange Act and the rules and regulations
thereunder.
SECTION 5.3 Stockholders' Meeting. Company will, in accordance with applicable
law and the Company Certificate of Incorporation and its Bylaws duly call, give
notice of, convene and hold a special meeting (which, as may be duly adjourned,
the "Company Special Meeting") of its stockholders for the purpose of approving
and adopting the agreement of merger (as such term is used in Section 251 of the
DGCL) set forth in this Agreement and approving the Merger, in each case by the
holders of a majority of the voting power of the outstanding shares of Company
Common Stock (with the holders of Company Ordinary Common Stock and the holders
of Company Class B Common Stock voting together as a single class) (the "Company
Stockholder Approval"). Company will use its reasonable efforts to cause the
Company Special Meeting to occur within seventy five (75) days after the date on
which the Registration Statement becomes effective, but not earlier than twenty
(20) business days after the date the Proxy Statement is first mailed to
stockholders. Company will include in the Proxy Statement the recommendation of
its Board of Directors ("Company Board Recommendation") that its stockholders
vote in favor of the Company Stockholder Approval, subject to the right to
withdraw, modify or change such recommendation in accordance with Section 5.10
of this Agreement. If, after the Initial Period, the Board of Directors of
Company withdraws, modifies or changes its recommendation of this Agreement or
the Merger in a manner adverse to Parent or resolves to do any of the foregoing,
Company will nevertheless remain obligated to call, give notice of, convene and
hold the Company Special Meeting within the time period specified above. Company
will (a) cause its transfer agent to make stock transfer records relating to
Company available to the extent reasonably necessary to effectuate the intent of
this Agreement, and (b) otherwise render reasonable assistance to Parent in the
solicitation of proxies by Parent in favor of approval of this Agreement and the
Merger; provided, however, Company will not be obligated to take the actions
under clause (b) if Company has taken any of the actions contemplated by the
second sentence of Section 5.10(d).
SECTION 5.4 Approvals and Consents; Cooperation.
(a) Approvals and Consents. Company and Parent will together, or pursuant
to an allocation of responsibility to be agreed upon between them:
(i) as soon as is reasonably practicable take all such action as may
be required under state blue sky or securities laws in connection with the
transactions contemplated by this Agreement;
(ii) promptly prepare and file with the New York Stock Exchange, Inc.
(the "NYSE") and such other stock exchanges as will be agreed upon listing
applications covering the shares of Parent Common Stock issuable in the
Merger or upon exercise of Company stock options, warrants, conversion
rights or other rights or vesting or payment of other Company equity-based
awards and use its reasonable efforts to obtain, prior to the Effective
Time, approval for the listing of such Parent Common Stock, subject only to
official notice of issuance;
(iii) in addition to their respective obligations contained in Section
5.8, cooperate with one another in order to lift any injunctions or remove
any other impediment to the consummation of the transactions contemplated
herein; and
(iv) cooperate with one another in obtaining opinions of Dewey
Ballantine LLP, special counsel to Company, and Akin, Gump, Strauss, Hauer,
& Feld, L.L.P., counsel to Parent, dated as of the Closing Date, to the
effect that the Merger qualifies as a reorganization under the provisions
of Section 368(a) of the Code. In connection therewith, each of Company and
Parent will deliver to Dewey Ballantine LLP and Akin, Gump, Strauss, Hauer,
& Feld, L.L.P. such representation letters as reasonably requested by Dewey
Ballantine LLP and Akin, Gump, Strauss, Hauer & Feld, L.L.P.
(b) Cooperation. Subject to the limitations contained in Section 5.2,
Company and Parent will each furnish to one another and to one another's counsel
all such information as may be reasonabl |
