<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED JUNE 30, 1999
COMMISSION FILE NO. 333-32259
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES
(Exact Name of Registrant as Specified in its Charter)
<TABLE>
<S> <C>
DELAWARE 75-2451687
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
</TABLE>
1845 WOODALL RODGERS FREEWAY, SUITE 1300, DALLAS, TEXAS 75201
(Address of principal executive offices, including zip code)
(214) 922-8700
(Registrants' telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date: As of July 31, 1999, 1,040
shares of Common Stock, par value $.01 per share, of Chancellor Media
Corporation of Los Angeles were outstanding.
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<PAGE> 2
INDEX
<TABLE>
<CAPTION>
PAGE
NO.
----
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements........................................ 3
Condensed Consolidated Balance Sheets (unaudited)........... 3
Condensed Consolidated Statements of Operations
(unaudited)............................................... 4
Condensed Consolidated Statements of Cash Flows
(unaudited)............................................... 5
Notes to Condensed Consolidated Financial Statements
(unaudited)............................................... 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 12
Item 3. Quantitative and Qualitative Disclosures About Market
Risk...................................................... 19
PART II. OTHER INFORMATION
Item 1. Legal Proceedings........................................... 20
Item 6. Exhibits and Reports on Form 8-K............................ 20
Signature................................................... 23
</TABLE>
2
<PAGE> 3
PART I
ITEM 1. FINANCIAL STATEMENTS
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT FOR SHARE DATA)
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1998 1999
------------ -----------
(UNAUDITED)
<S> <C> <C>
Current assets:
Cash and cash equivalents................................. $ 12,256 $ 22,385
Accounts receivable, less allowance for doubtful accounts
of $15,580 in 1998 and $18,306 in 1999................. 352,646 383,792
Other current assets...................................... 59,909 75,127
---------- ----------
Total current assets.............................. 424,811 481,304
Property and equipment, net................................. 1,388,156 1,365,438
Intangible assets, net...................................... 5,056,047 5,194,552
Other assets, net........................................... 358,893 361,218
---------- ----------
$7,227,907 $7,402,512
========== ==========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable and accrued expenses..................... $ 236,618 $ 221,902
Long-term debt.............................................. 4,096,000 4,420,000
Deferred tax liabilities.................................... 453,134 446,860
Other liabilities........................................... 50,325 49,402
---------- ----------
Total liabilities................................. 4,836,077 5,138,164
---------- ----------
Commitments and contingencies
Stockholder's equity:
Common stock, $.01 par value. 1,040 shares authorized,
issued and outstanding................................. 1 1
Paid-in capital........................................... 2,670,510 2,665,921
Accumulated deficit....................................... (278,681) (401,574)
---------- ----------
Total stockholder's equity........................ 2,391,830 2,264,348
---------- ----------
$7,227,907 $7,402,512
========== ==========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE> 4
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
------------------- ---------------------
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1998 1999 1998 1999
-------- -------- --------- ---------
<S> <C> <C> <C> <C>
Gross revenues................................... $363,590 $490,720 $ 626,011 $ 884,843
Less agency commissions........................ 41,880 56,574 70,744 100,432
-------- -------- --------- ---------
Net revenues........................... 321,710 434,146 555,267 784,411
-------- -------- --------- ---------
Operating expenses:
Operating expenses, excluding depreciation and
amortization................................ 168,843 219,258 316,862 427,768
Depreciation and amortization.................. 103,188 145,139 195,124 292,883
Corporate general and administrative........... 8,276 12,798 15,079 30,612
Non-recurring charges.......................... 59,475 -- 59,475 16,344
-------- -------- --------- ---------
Operating expenses.......................... 339,782 377,195 586,540 767,607
-------- -------- --------- ---------
Operating income (loss)..................... (18,072) 56,951 (31,273) 16,804
-------- -------- --------- ---------
Other (income) expense:
Interest expense, net.......................... 38,785 87,719 87,085 172,111
Gain on disposition of assets.................. (123,845) (12,488) (123,845) (12,406)
Gain on disposition of representation
contracts................................... (11,270) (5,168) (11,270) (8,853)
Other (income) expense......................... (3,559) 200 (3,559) 200
-------- -------- --------- ---------
Other (income) expense, net................. (99,889) 70,263 (51,589) 151,052
-------- -------- --------- ---------
Income (loss) before income taxes........... 81,817 (13,312) 20,316 (134,248)
Income tax expense (benefit)..................... 34,725 2,777 31,784 (24,190)
-------- -------- --------- ---------
Income (loss) before extraordinary
item................................. 47,092 (16,089) (11,468) (110,058)
Extraordinary loss, net of income tax benefit.... 31,865 -- 31,865 --
-------- -------- --------- ---------
Net income (loss)...................... 15,227 (16,089) (43,333) (110,058)
Preferred stock dividends........................ 6,691 -- 16,702 --
-------- -------- --------- ---------
Net income (loss) attributable to common
stock....................................... $ 8,536 $(16,089) $ (60,035) $(110,058)
======== ======== ========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE> 5
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
---------------------
JUNE 30, JUNE 30,
1998 1999
--------- ---------
<S> <C> <C>
Net cash provided by operating activities................... $ 37,863 $ 71,886
--------- ---------
Cash flows from investing activities:
Acquisitions, net of cash acquired........................ (266,328) (364,608)
Proceeds from sale of assets.............................. -- 44,085
Purchases of property and equipment....................... (12,099) (34,372)
Payments made on purchases of representation contracts.... (15,880) (16,249)
Payments received on sales of representation contracts.... 9,822 10,914
Issuance of note receivable from affiliate................ (150,000) --
Payments for equity basis investments..................... -- (6,500)
Other..................................................... (7,647) (13,507)
--------- ---------
Net cash used by investing activities............. (442,132) (380,237)
--------- ---------
Cash flows from financing activities:
Proceeds of long-term debt................................ 445,000 427,000
Payments on long-term debt................................ (740,000) (103,000)
Cash contributed by parent................................ 999,088 20,466
Repurchase of 12% Exchange Debentures..................... (260,519) --
Distribution to parent.................................... -- (13,151)
Dividends to parent....................................... (12,831) (12,835)
Dividends on preferred stock.............................. (28,460) --
Payments for debt issuance costs.......................... (336) --
--------- ---------
Net cash provided by financing activities......... 401,942 318,480
--------- ---------
Increase (decrease) in cash and cash equivalents............ (2,327) 10,129
Cash and cash equivalents at beginning of period............ 16,584 12,256
--------- ---------
Cash and cash equivalents at end of period.................. $ 14,257 $ 22,385
========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
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CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
1. BASIS OF PRESENTATION
The accompanying unaudited interim financial statements include the
accounts of Chancellor Media Corporation of Los Angeles and its subsidiaries
(collectively, the "Company" or "CMCLA"). Chancellor Media Corporation of Los
Angeles is an indirect, wholly owned subsidiary of AMFM Inc. (together with its
subsidiaries, "AMFM", formerly Chancellor Media Corporation). All significant
intercompany balances and transactions have been eliminated in consolidation and
in the opinion of management, all adjustments (consisting of normal recurring
accruals) necessary to present fairly the financial position, results of
operations and cash flows have been recorded. Interim period results are not
necessarily indicative of results to be expected for the year.
These financial statements should be read in conjunction with the
consolidated financial statements and the notes thereto included in CMCLA's
Annual Report on Form 10-K for the year ended December 31, 1998. The year-end
consolidated balance sheet data was derived from the audited financial
statements, but does not include all disclosures required by generally accepted
accounting principles.
Certain reclassifications have been made to prior period consolidated
financial statements to conform to the current period presentation.
2. RECENT DEVELOPMENTS
(a) Completed Transactions
On January 15, 1999, the Company acquired the music production library and
related license agreements of Brown Bag Productions for a purchase price of
$8,483 including direct acquisition costs.
On January 21, 1999 and February 9, 1999, the Company acquired
approximately 4,500 outdoor display faces from Triumph Outdoor Holdings and
certain affiliated companies for $37,006 in cash, including working capital and
direct acquisition costs.
On January 28, 1999, the Company acquired Wincom Broadcasting Corporation
which owns WQAL-FM in Cleveland. The Company had previously been operating
WQAL-FM under a time brokerage agreement effective October 1, 1998. On February
2, 1999, the Company acquired five additional radio stations in Cleveland
including (i) WDOK-FM and WRMR-AM from Independent Group Limited Partnership,
(ii) WZAK-FM from Zapis Communications and (iii) Zebra Broadcasting Corporation
which owned WZJM-FM and WJMO-AM. The six Cleveland stations were acquired for an
aggregate purchase price of $283,758 in cash, including working capital and
direct acquisition costs.
On April 16, 1999, the Company sold WMVP-AM in Chicago to ABC, Inc. for
$21,000 in cash and recognized a pre-tax gain of $14,466. The Company had
previously entered into a time brokerage agreement effective September 10, 1998
to sell the broadcast time of WMVP-AM pending completion of the sale.
On May 24, 1999, the Company sold 466 billboards and outdoor displays in
various markets to PNE Media, LLC for approximately $25,566 in cash. The assets
were accounted for as assets held for sale and no gain or loss was recognized by
the Company upon consummation of the sale. The excess of the carrying amount
over the proceeds has been accounted for as an adjustment to the original
purchase price of the billboards and outdoor displays.
Between January and June 1999, the Company acquired approximately 265
billboards and outdoor displays in various transactions for approximately
$13,765 in cash, including direct acquisition costs.
6
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CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The foregoing acquisitions were accounted for as purchases. Accordingly,
the accompanying consolidated financial statements include the results of
operations of the acquired entities from their respective dates of acquisition.
A summary of the net assets acquired in the six month period ended June 30,
1999 follows:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30,
1999
----------
<S> <C>
Cash and cash equivalents................................ $ 4,360
Accounts receivable, net................................. 6,403
Other current assets..................................... 1,355
Property and equipment................................... 33,335
Intangible assets........................................ 363,315
Accounts payable and accrued expenses.................... (2,663)
Deferred tax liabilities................................. (36,162)
--------
Total net assets acquired...................... 369,943
Less:
Cash and cash equivalents acquired..................... 4,360
Liabilities assumed.................................... 725
Notes payable.......................................... 250
--------
Cash paid for acquisitions............................... $364,608
========
</TABLE>
The unaudited pro forma condensed consolidated results of operations data
for the six months ended June 30, 1998 and 1999, as if the acquisitions and
dispositions through June 30, 1999 occurred at January 1, 1998, follow:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
--------------------
JUNE 30, JUNE 30,
1998 1999
-------- ---------
<S> <C> <C>
Net revenues................................... $703,971 $ 784,944
Net loss....................................... (77,248) (111,772)
</TABLE>
The pro forma results are not necessarily indicative of the financial
results which would have occurred if the transactions had been in effect for the
entire periods presented.
On July 1, 1999, the Company acquired KKFR-FM and KFYI-AM in Phoenix from
The Broadcast Group, Inc. for $90,000 in cash. The Company began operating
KKFR-FM and KFYI-AM under a time brokerage agreement effective November 5, 1998.
(b) Capstar Merger
On July 13, 1999, AMFM, parent company of CMCLA, acquired Capstar
Broadcasting Corporation, a Delaware corporation ("Capstar Broadcasting"). The
acquisition was effected through the merger (the "Capstar Merger") of CMC Merger
Sub, Inc., a Delaware corporation and wholly-owned subsidiary of AMFM, with and
into Capstar Broadcasting, with Capstar Broadcasting as the surviving
corporation. As a result of the Capstar Merger, Capstar Broadcasting became a
direct subsidiary of AMFM. Concurrent with the Capstar Merger, Chancellor Media
Corporation was renamed AMFM Inc.
As a result of the Capstar Merger, all of the then outstanding shares of
Class A common stock, par value $.01 per share, of Capstar Broadcasting
("Capstar Class A Common Stock"), Class B common stock, par
7
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CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
value $.01 per share, of Capstar Broadcasting ("Capstar Class B Common Stock"),
and Class C common stock, par value $.01 per share, of Capstar Broadcasting
("Capstar Class C Common Stock," and collectively with the Capstar Class A
Common Stock and the Capstar Class B Common Stock, the "Capstar Common Stock"),
were converted to the right to receive, in a tax-free exchange, 0.4955 of a
validly issued, fully paid and nonassessable share of AMFM common stock. Based
upon the number of shares of Capstar Common Stock outstanding on May 19, 1999,
the record date for the Capstar Merger, the total consideration paid by AMFM in
the Capstar Merger was approximately 53.5 million shares of AMFM common stock.
AMFM also assumed options, warrants and other equity rights of Capstar
Broadcasting which represent up to an additional 3.3 million shares of AMFM
common stock. AMFM is also assuming approximately $2,100,000 of Capstar
Broadcasting's debt and preferred stock.
On February 20, 1998, the Company entered into an agreement to acquire,
over a period of three years, eleven radio stations from Capstar Broadcasting
for an aggregate purchase price of $637,500. Pursuant to this agreement, the
acquisition of KODA-FM was completed on May 29, 1998 for $143,250. On February
1, 1999, the Company began operating WKNR-AM in Cleveland, a station owned by
Capstar Broadcasting, under a time brokerage agreement. The Company is currently
assessing the effects of the Capstar Merger on the February 20, 1998 purchase
agreement and the WKNR-AM time brokerage agreement.
(c) Outdoor Group Disposition
On June 1, 1999, and as amended on July 12, 1999, the Company entered into
a stock purchase agreement to sell to Lamar Advertising Company ("Lamar") all of
the outstanding common stock of Chancellor Media Outdoor Corporation and
Chancellor Media Whiteco Outdoor Corporation, indirect wholly-owned subsidiaries
of the Company, which together hold all of the Company's assets used in its
outdoor advertising business (the "Outdoor Group"). Under the terms of the stock
purchase agreement and related agreements, AMFM will receive cash proceeds of
$700,000, subject to a net working capital adjustment, and 26,227,273 shares of
Class A common stock, par value $.01 per share, of Lamar ("Lamar Common Stock").
Upon completion of the Outdoor Group disposition, expected to occur in the third
quarter of 1999, AMFM will own approximately 30.0% of the aggregate number of
outstanding shares of Lamar Common Stock.
The unaudited pro forma results of operations for the Outdoor Group, as if
the outdoor acquisitions during 1998 and the first six months of 1999 occurred
at January 1, 1998, were net revenues of $106,178 and $110,307 and net loss of
$23,280 and $12,116 for the six months ended June 30, 1998 and 1999,
respectively.
3. NON-RECURRING CHARGES
In March 1999, the Company recorded a charge of $16,344 which consisted of
the following:
<TABLE>
<S> <C>
Write-off of Petry transaction costs(a).................... $ 4,148
Executive severance costs(b)............................... 12,196
-------
Total............................................ $16,344
=======
</TABLE>
- ---------------
(a) On April 8, 1998, CMCLA entered into an agreement to acquire Petry Media
Corporation, a leading independent television representation firm, for
approximately $127,000. CMCLA terminated the Petry acquisition agreement,
in accordance with its terms, effective April 28, 1999. CMCLA recorded a
charge of $4,148 to write off transaction costs incurred in connection with
the Petry transaction.
(b) On March 15, 1999, AMFM and CMCLA announced an executive realignment which
included (i) the resignation of Jeffrey A. Marcus as CMCLA's President and
Chief Executive Officer; (ii) the resignation of Thomas P. McMillin as
CMCLA's Chief Financial Officer; (iii) the departure of Richard A. B.
8
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CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Gleiner as CMCLA's General Counsel; and (iv) the resignation of Eric C.
Neuman as CMCLA's Senior Vice President -- Strategic Development, each
effective March 15, 1999. CMCLA recorded a charge of $12,196 for executive
severance and other costs.
4. CONTINGENCIES
In July 1998, a stockholder derivative action was commenced in the Delaware
Court of Chancery by a stockholder purporting to act on behalf of AMFM. The
defendants in the case include Hicks, Muse, Tate & Furst Incorporated ("Hicks
Muse"), LIN and certain of AMFM's directors. In connection with AMFM's July 7,
1998 merger agreement with the indirect parent of LIN Television Corporation, a
Delaware corporation ("LIN"), to acquire LIN through a merger (the "LIN
Merger"), the plaintiff alleged that, among other things, (1) Hicks Muse caused
AMFM to pay too high of a price for LIN and (2) the transaction constituted a
breach of fiduciary duty and a waste of corporate assets by Hicks Muse. The
plaintiff sought to enjoin consummation or rescission of the LIN Merger,
compensatory damages, an order requiring that the directors named as defendants
"carry out their fiduciary duties," and attorneys' fees and other costs. The LIN
Merger agreement was terminated on March 15, 1999, and as a result, this action
became moot. The parties have agreed, subject to a number of conditions,
including preparing and finalizing definitive documentation and notice to
stockholders, to a dismissal of the action. In connection with this dismissal,
AMFM's insurance carrier has agreed to pay plaintiff's counsel $275 in legal
fees plus documented expenses of up to $10.
In September 1998, a stockholder class action complaint was filed in the
Delaware Court of Chancery by a stockholder purporting to act individually and
on behalf of all other persons, other than defendants, who own securities of
AMFM and are similarly situated. The defendants named in the case are Chancellor
Media Corporation, Hicks Muse, Thomas O. Hicks, Jeffrey A. Marcus, James E. de
Castro, Eric C. Neuman, Lawrence D. Stuart, Jr., Steven Dinetz, Thomas J.
Hodson, Perry Lewis, John H. Massey and Vernon E. Jordan, Jr. The plaintiff
alleges breach of fiduciary duties, gross mismanagement, gross negligence or
recklessness, and other matters relating to the defendants' actions in
connection with the Capstar Merger. The plaintiff sought to certify the
complaint as a class action, enjoin consummation of the Capstar Merger, order
defendants to account to plaintiff and other alleged class members for damages,
and award attorneys' fees and other costs. The Company believes that the lawsuit
is without merit and intends to vigorously defend the action.
On July 9, 1998, AMFM entered into an agreement to acquire a 50% economic
interest in Grupo Radio Centro, S.A. de C.V. ("Grupo Radio"), an owner and
operator of radio stations in Mexico. On October 15, 1998, AMFM provided notice
to Grupo Radio that it was terminating the acquisition agreement in accordance
with its terms. Grupo Radio and its controlling shareholders requested
arbitration under the terms of the agreement alleging that AMFM wrongfully
terminated the agreement and seeking damages of approximately $80,000. The
arbitration hearings ended on July 6, 1999, and the arbitration panel is to
deliver its draft decision to the International Court of Arbitration of the
International Chamber of Commerce on or before August 30, 1999.
AMFM and the Company are also involved in various other claims and lawsuits
which are generally incidental to its business. AMFM and the Company are also
vigorously contesting all of these matters and believes that the ultimate
resolution of these matters and those mentioned above will not have a material
adverse effect on its consolidated financial position or results of operations.
9
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CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
5. SEGMENT DATA
As of June 30, 1999, the Company conducted business in three distinct
operating segments consisting of radio broadcasting, media representation and
outdoor advertising. Separate financial data for each of the Company's three
business segments is provided below.
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
------------------- -------------------
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1998 1999 1998 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
AMFM Radio Group -- radio broadcasting:
Net revenues..................................... $274,741 $334,406 $475,090 $596,185
Operating expenses............................... 140,604 162,861 263,956 316,982
Depreciation and amortization.................... 90,843 101,419 171,566 206,101
Operating income................................. 41,547 66,031 36,074 65,733
Capital expenditures............................. NA NA 4,857 10,773
Katz -- media representation:
Net revenues..................................... 52,799 48,841 91,470 88,536
Operating expenses............................... 34,069 32,503 64,199 63,251
Depreciation and amortization.................... 9,005 7,685 15,572 15,468
Operating income................................. 8,096 7,135 8,351 6,791
Capital expenditures............................. NA NA 6,952 3,027
Chancellor Outdoor Group -- outdoor advertising:
Net revenues..................................... -- 57,288 -- 110,889
Operating expenses............................... -- 30,283 -- 58,734
Depreciation and amortization.................... -- 32,131 -- 63,527
Operating loss................................... -- (8,185) -- (17,256)
Capital expenditures............................. NA NA -- 16,687
</TABLE>
The segment financial data includes intersegment revenues and expenses
which must be excluded to reconcile to the Company's consolidated financial
statements. In addition, certain depreciation and amortization expenses,
corporate general and administrative expenses, non-recurring charges and
corporate capital expenditures were not allocated to business segments and must
be included to reconcile to the Company's consolidated financial statements.
Reconciling financial data is provided below:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
------------------- -------------------
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1998 1999 1998 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Intersegment net revenues...................... $ 5,830 $6,389 $11,293 $11,199
Intersegment operating expenses................ 5,830 6,389 11,293 11,199
Unallocated depreciation and amortization...... 3,340 3,904 7,986 7,787
Unallocated corporate general and
administrative expenses...................... 4,900 4,126 8,237 14,333
Unallocated non-recurring charges.............. 59,475 -- 59,475 16,344
Unallocated corporate capital expenditures..... NA NA 290 3,885
</TABLE>
6. RECENTLY ISSUED ACCOUNTING PRINCIPLE
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, Accounting for Derivative Instruments
and Hedging Activities. This statement establishes accounting and reporting
standards for derivative instruments and hedging activities. SFAS No. 133, as
amended by SFAS No. 137, is effective for all fiscal quarters of all fiscal
years beginning after June 15, 2000.
10
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CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Management does not anticipate that this statement will have a material impact
on the Company's consolidated financial statements.
7. SUMMARIZED FINANCIAL INFORMATION OF SUBSIDIARY GUARANTORS
The 9 3/8% Senior Subordinated Notes due 2004, the 8 3/4% Senior
Subordinated Notes due 2007, the 10 1/2% Senior Subordinated Notes due 2007, the
8 1/8% Senior Subordinated Notes due 2007, the 9% Senior Subordinated Notes due
2008 and the 8% Senior Notes due 2008 are fully and unconditionally guaranteed,
on a joint and several basis, by all of CMCLA's direct and indirect subsidiaries
other than certain inconsequential subsidiaries (the "Subsidiary Guarantors").
The Subsidiary Guarantors are wholly-owned subsidiaries of CMCLA. Summarized
financial information of the Subsidiary Guarantors as of December 31, 1998 and
June 30, 1999 and for the six months ended June 30, 1999 is presented below.
Separate financial statements and other disclosures concerning the Subsidiary
Guarantors are not presented because management has determined that they are not
material to investors. There are no significant restrictions on distributions
from each of the Subsidiary Guarantors to CMCLA.
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1998 1999
------------ ----------
<S> <C> <C>
Current assets...................................... $ 376,217 $ 423,365
Noncurrent assets................................... 5,530,190 5,786,866
Current liabilities................................. 133,872 112,598
Noncurrent liabilities.............................. 5,744,413 6,140,737
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30,
1999
----------
<S> <C>
Net revenues................................................ $708,927
Operating income............................................ 36,743
Net loss.................................................... (88,086)
</TABLE>
11
<PAGE> 12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GENERAL
Chancellor Media Corporation of Los Angeles (together with its
subsidiaries, the "Company" or "CMCLA"), is an indirect, wholly-owned subsidiary
of AMFM Inc. (together with its subsidiaries, "AMFM"), the largest national
radio broadcasting and related media company. As of August 1, 1999, the AMFM
radio portfolio (including five stations operated under time brokerage ("LMA")
agreements and four stations operated under joint sales agreements) consisted of
464 radio stations (333 FM and 131 AM) throughout the United States and in
Puerto Rico, a national radio network, The AMFM Radio Networks, which broadcasts
advertising and syndicated programming shows to a national audience of
approximately 67.8 million listeners in the United States (including
approximately 59.8 million listeners from AMFM's portfolio of stations) and the
Chancellor Marketing Group, a full-service sales promotion firm developing
integrated marketing programs for Fortune 1000 companies. The media
representation business consists of Katz Media Group, Inc. ("Katz"), a
full-service media representation firm that sells national spot advertising time
for its clients in the radio and television industries throughout the United
States and for the Company's portfolio of stations. The outdoor advertising
business, which was formed on July 31, 1998, consists of the Chancellor Outdoor
Group which, as of August 1, 1999, operated approximately 42,700 outdoor
advertising display faces nationwide. The Company has recently agreed to sell
the Chancellor Outdoor Group (see "Recent Events" below).
See Note 5 to the Condensed Consolidated Financial Statements included
elsewhere in this Form 10-Q for additional information on the Company's business
segments as of June 30, 1999.
The Company's results of operations for the three months and six months
ended June 30, 1999 are not comparable to the results of operations for the
three months and six months ended June 30, 1998 due to the impact of the various
acquisitions and dispositions. The Company completed the following transactions
from July 1, 1998 through June 30, 1999:
- the net acquisition of approximately 42,700 outdoor advertising
billboards and display faces for approximately $1.7 billion in cash;
- the acquisition of 14 radio stations (12 FM and two AM) for approximately
$359.4 million in cash;
- the disposition of one AM radio station for approximately $21.0 million
in cash; and
- the acquisition of various national radio network syndicated programming
shows and related programming or music production libraries, including
American Top Forty with Casey Kasem, for approximately $22.6 million in
cash.
Seasonal revenue fluctuations are common in the radio broadcasting and
outdoor advertising industries and are due primarily to fluctuations in
advertising expenditures by local and national advertisers. Advertising
expenditures are typically lowest in the first calendar quarter and highest in
the second and fourth calendar quarters of each year. The Company's operating
results in any period may be affected by the occurrence of advertising and
promotion expenses that do not produce commensurate revenues in the period in
which the expenditures are made.
RECENT EVENTS
On July 13, 1999, AMFM, parent company of CMCLA, acquired Capstar
Broadcasting Corporation ("Capstar Broadcasting"), which operated 340 radio
stations (241 FM and 99 AM) as of August 1, 1999. The acquisition was effected
through the merger (the "Capstar Merger") of CMC Merger Sub, Inc., a Delaware
corporation and wholly-owned subsidiary of AMFM, with and into Capstar
Broadcasting, with Capstar Broadcasting as the surviving corporation. As a
result of the Capstar Merger, Capstar Broadcasting became a direct subsidiary of
AMFM and all of the then outstanding shares of Capstar Broadcasting common stock
were converted to the right to receive, in a tax-free exchange, 0.4955 of a
validly issued, fully paid and nonassessable share of AMFM common stock. Based
upon the number of shares of Capstar Broadcasting
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<PAGE> 13
common stock outstanding on May 19, 1999, the record date for the Capstar
Merger, the total consideration paid by AMFM in the Capstar Merger was
approximately 53.5 million shares of AMFM common stock. AMFM also assumed
options, warrants and other equity rights of Capstar Broadcasting which
represent up to an additional 3.3 million shares of AMFM common stock. AMFM is
also assuming approximately $2.1 billion of Capstar Broadcasting's debt and
preferred stock. Capstar Broadcasting reported net revenues of $111.9 million
and $182.5 million and operating income of $12.6 million and $24.3 million for
the three months ended June 30, 1998 and 1999, respectively, and net revenues of
$176.0 million and $324.5 million and operating income (loss) of $(3.5) million
and $26.5 million for the six months ended June 30, 1998 and 1999, respectively.
On July 1, 1999, the Company acquired KKFR-FM and KFYI-AM in Phoenix from
The Broadcast Group, Inc. for $90.0 million in cash. The Company began operating
KKFR-FM and KFYI-AM under a time brokerage agreement effective November 5, 1998.
On June 1, 1999, and as amended on July 12, 1999, the Company entered into
a stock purchase agreement to sell to Lamar Advertising Company ("Lamar") all of
the outstanding common stock of Chancellor Media Outdoor Corporation and
Chancellor Media Whiteco Outdoor Corporation, indirect wholly-owned subsidiaries
of the Company, which together hold all of the Company's assets used in its
outdoor advertising business. Under the terms of the stock purchase agreement
and related agreements, AMFM will receive cash proceeds of $700.0 million,
subject to a net working capital adjustment, and 26,227,273 shares of Class A
common stock, par value $.01 per share, of Lamar ("Lamar Common Stock"). The
transaction is expected to be completed during the third quarter of 1999.
RESULTS OF OPERATIONS
Three Months Ended June 30, 1999 Compared To Three Months Ended June 30, 1998
Net revenues for the three months ended June 30, 1999 increased 34.9% to
$434.1 million compared to $321.7 million for the second quarter of 1998.
Operating expenses excluding depreciation and amortization for the three months
ended June 30, 1999 increased 29.9% to $219.3 million compared to $168.8 million
for the three months ended June 30, 1998. The increase in net revenues and
operating expenses was primarily attributable to the net impact of the various
acquisitions and dispositions discussed elsewhere in this Form 10-Q and the
overall net operational improvements, as evidenced by the increase in the
Company's direct operating margin from 47.5% for the three months ended June 30,
1998 to 49.5% for the three months ended June 30, 1999.
Depreciation and amortization for the three months ended June 30, 1999
increased 40.7% to $145.1 million compared to $103.2 million for the second
quarter of 1998. The increase is due to the impact of the acquisitions completed
during 1998 and as of June 30, 1999.
Corporate general and administrative expenses for the three months ended
June 30, 1999 increased 54.6% to $12.8 million compared to $8.3 million for the
second quarter of 1998. The increase is due to the growth of the Company, and
related increase in properties and staff, primarily due to recent acquisitions.
The non-recurring charge of $59.5 million for the second quarter of 1998
represents a one-time charge incurred in connection with the resignation of
Scott K. Ginsburg as President and Chief Executive Officer of the Company in
April 1998.
As a result of the above factors, the Company realized operating income of
$57.0 million for the three months ended June 30, 1999 compared to an operating
loss of $18.1 million for the second quarter of 1998.
Net interest expense for the three months ended June 30, 1999 increased
126.2% to $87.7 million compared to $38.8 million for the same period in 1998.
The net increase in interest expense was primarily due to (i) additional bank
borrowings under CMCLA's senior credit facility, as amended (the "CMCLA Senior
Credit Facility"), required to finance the various acquisitions discussed
elsewhere in this Form 10-Q; (ii) the issuance of the 9% Senior Subordinated
Notes due 2008 (the "9% CMCLA Notes") by CMCLA on
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<PAGE> 14
September 30, 1998; and (iii) the issuance of the 8% Senior Notes due 2008 (the
"8% CMCLA Senior Notes") by CMCLA on November 17, 1998.
The gain on disposition of assets of $12.5 million for the three months
ended June 30, 1999 related primarily to a gain of $14.5 million upon the sale
of WMVP-AM in Chicago to ABC, Inc. on April 16, 1999. The Company recorded a
gain on disposition of assets of $123.8 million for the three months ended June
30, 1998 related to the exchange of WTOP-AM and WGMS-FM in Washington, D.C. and
KZLA-FM in Los Angeles plus $63.0 million in cash for WTJM-FM in New York,
KLDE-FM in Houston and KBIG-FM in Los Angeles.
The Company recorded a gain on disposition of representation contracts of
$5.2 million for the three months ended June 30, 1999 and $11.3 million for the
second quarter of 1998 related to its media representation operations. The gain
represents the sales proceeds received from successor representation firms for
the buyout of existing media representation contracts, net of any remaining
deferred costs associated with obtaining the original representation contract.
While the consolidation of the radio broadcasting industry has resulted in an
increase in buyout activity, the impact on future periods cannot be predicted.
The income tax expense of $2.8 million for the three months ended June 30,
1999 is comprised of current federal, foreign and state income tax expense of
$4.8 million and a deferred federal income tax benefit of $2.0 million.
During the second quarter of 1998, the Company recorded an extraordinary
charge of $31.9 million, net of a tax benefit of $17.2 million, consisting of
the premiums, estimated transaction costs and the write-off of the unamortized
balance of deferred debt issuance costs in connection with the tender offer for
CMCLA's 12% Subordinated Exchange Debentures due 2009 (the "12% Debentures").
Dividends on CMCLA's preferred stock were $6.7 million for the three months
ended June 30, 1998. In May and July 1998, AMFM exchanged its preferred stock of
subsidiaries for the 12% Debentures and CMCLA's 12 1/4% Subordinated Exchange
Debentures due 2008 (the "12 1/4% Debentures").
As a result of the above factors, the Company incurred a $16.1 million net
loss attributable to common stock for the three months ended June 30, 1999
compared to a $8.5 million net income for the second quarter of 1998.
Six Months Ended June 30, 1999 Compared To Six Months Ended June 30, 1998
Net revenues for the six months ended June 30, 1999 increased 41.3% to
$784.4 million compared to $555.3 million for the six months ended June 30,
1998. Operating expenses excluding depreciation and amortization for the six
months ended June 30, 1999 increased 35.0% to $427.8 million compared to $316.9
million for the six months ended June 30, 1998. The increase in net revenues and
operating expenses was primarily attributable to the net impact of the various
acquisitions and dispositions discussed elsewhere in this Form 10-Q and the
overall net operational improvements, as evidenced by the increase in the
Company's direct operating margin from 42.9% for the six months ended June 30,
1998 to 45.5% for the six months ended June 30, 1999.
Depreciation and amortization for the six months ended June 30, 1999
increased 50.1% to $292.9 million compared to $195.1 million for the six months
ended June 30, 1998. The increase is due to the impact of the acquisitions
completed during 1998 and as of June 30, 1999.
Corporate general and administrative expenses for the six months ended June
30, 1999 increased 103.0% to $30.6 million compared to $15.1 million for the six
months ended June 30, 1998. The increase is due to the growth of the Company,
and related increase in properties and staff, primarily due to recent
acquisitions.
In March 1999, the Company recorded non-recurring charges of $16.3 million
related to the write-off of Petry Media Corporation transaction costs and
executive severance and other costs related to the executive management
realignment. The non-recurring charge of $59.5 million for the six months ended
June 30, 1998 represents a one-time charge incurred in connection with the
resignation of Scott K. Ginsburg as President and Chief Executive Officer of the
Company in April 1998.
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<PAGE> 15
As a result of the above factors, the Company realized operating income of
$16.8 million for the six months ended June 30, 1999 compared to an operating
loss of $31.3 million for the six months ended June 30, 1998.
Net interest expense for the six months ended June 30, 1999 increased 97.6%
to $172.1 million compared to $87.1 million for the same period in 1998. The net
increase in interest expense was primarily due to (i) additional bank borrowings
under the CMCLA Senior Credit Facility required to finance the various
acquisitions discussed elsewhere in this Form 10-Q; (ii) the issuance of the 9%
CMCLA Notes on September 30, 1998; and (iii) the issuance of the 8% CMCLA Senior
Notes on November 17, 1998.
The gain on disposition of assets of $12.4 million for the six months ended
June 30, 1999 related primarily to a gain of $14.5 million upon the sale of
WMVP-AM in Chicago to ABC, Inc. on April 16, 1999. The Company recorded a gain
on disposition of assets of $123.8 million for the six months ended June 30,
1998 related to the exchange of WTOP-AM and WGMS-FM in Washington, D.C. and
KZLA-FM in Los Angeles plus $63.0 million in cash for WTJM-FM in New York,
KLDE-FM in Houston and KBIG-FM in Los Angeles.
The Company recorded a gain on disposition of representation contracts of
$8.9 million for the six months ended June 30, 1999 and $11.3 million for the
six months ended June 30, 1998 related to its media representation operations.
The gain represents the sales proceeds received from successor representation
firms for the buyout of existing media representation contracts, net of any
remaining deferred costs associated with obtaining the original representation
contract. While the consolidation of the radio broadcasting industry has
resulted in an increase in buyout activity, the impact on future periods cannot
be predicted.
The income tax benefit of $24.2 million for the six months ended June 30,
1999 is comprised of current federal and state income tax expense of $8.0
million and a deferred federal income tax benefit of $32.2 million.
During the second quarter of 1998, the Company recorded an extraordinary
charge of $31.9 million, net of a tax benefit of $17.2 million, consisting of
the premiums, estimated transaction costs and the write-off of the unamortized
balance of deferred debt issuance costs in connection with the tender offer for
the 12% Debentures.
Dividends on CMCLA's preferred stock were $16.7 million for the six months
ended June 30, 1998. In May and July 1998, AMFM exchanged its preferred stock of
subsidiaries for CMCLA's 12% Debentures and 12 1/4% Debentures.
As a result of the above factors, the Company incurred a $110.1 million net
loss attributable to common stock for the six months ended June 30, 1999
compared to $60.0 million net loss attributable to common stock for the six
months ended June 30, 1998.
LIQUIDITY AND CAPITAL RESOURCES
Overview
The Company historically has generated sufficient cash flow from operations
to finance its existing operational requirements and debt service requirements,
and the Company anticipates that this will continue to be the case. Operating
activities provided net cash of $37.9 million and $71.9 million for the six
months ended June 30, 1998 and 1999, respectively. The Company has used the
proceeds of bank debt and private and public debt offerings, supplemented by
cash flow from operations not required to fund operational requirements and debt
service, to fund implementation of the Company's acquisition strategy.
AMFM is a holding company with no significant assets other than the capital
stock of its direct and indirect subsidiaries. For the six months ended June 30,
1999 and 1998, CMCLA recorded dividends and distributions to AMFM of
approximately $12.8 million and $26.0 million to allow AMFM to meet its
obligations.
CMCLA's primary source of cash from which to service indebtedness is
through dividends distributed or other payments made to it by its operating
subsidiaries. The instruments governing the Company's
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<PAGE> 16
indebtedness contain certain covenants that restrict or, in some cases, prohibit
the ability of subsidiaries to pay dividends and make other distributions. These
restrictions are not anticipated to have an impact on the Company's ability to
meet its cash obligations.
Debt Outstanding as of June 30, 1999
CMCLA Senior Credit Facility. The CMCLA Senior Credit Facility provides for
aggregate commitments under a revolving loan facility and a term loan facility
of $1.6 billion and $900.0 million, respectively. The term loan facility is
payable in quarterly installments commencing on September 30, 2000 and ending
June 30, 2005. The revolving loan facility requires scheduled annual reductions
of the commitment amount, payable in quarterly installments commencing on
September 30, 2000 and ending on June 30, 2005. At July 31, 1999, the Company
had drawn approximately $1.1 billion of the revolving loan facility and $900.0
million of the term loan facility.
8% CMCLA Senior Notes. The 8% CMCLA Senior Notes are senior unsecured
obligations of CMCLA and rank equal in right of payment to the obligations of
CMCLA under the CMCLA Senior Credit Facility and existing and all other
indebtedness of CMCLA not expressly subordinated to the 8% CMCLA Senior Notes.
However, because the 8% CMCLA Senior Notes are unsecured, the 8% CMCLA Senior
Notes are effectively subordinated in right of payment to CMCLA's secured debt,
including the CMCLA Senior Credit Facility. The 8% CMCLA Senior Notes are fully
and unconditionally guaranteed, on a joint and several basis, by the Subsidiary
Guarantors (as defined below). As of June 30, 1999, the outstanding principal
balance was approximately $750.0 million. Interest payment requirements on the
8% CMCLA Senior Notes are approximately $60.0 million per year.
CMCLA Senior Subordinated Notes. The 9 3/8% CMCLA Senior Subordinated Notes
due 2004, the 8 3/4% CMCLA Senior Subordinated Notes due 2007, the 10 1/2% CMCLA
Senior Subordinated Notes due 2007, the 8 1/8% CMCLA Senior Subordinated Notes
due 2007 and the 9% CMCLA Notes (collectively, the "Subordinated Notes") are
unsecured obligations of CMCLA. The Subordinated Notes are subordinated in right
of payment to all existing and any future senior indebtedness of CMCLA. The
Subordinated Notes are fully and unconditionally guaranteed, on a joint and
several basis, by all of CMCLA's direct and indirect wholly-owned subsidiaries
other than certain inconsequential subsidiaries (the "Subsidiary Guarantors").
As of June 30, 1999, the total outstanding principal balance on the Subordinated
Notes was approximately $1.8 billion. Interest payment requirements on the
Subordinated Notes are approximately $154.9 million per year.
The CMCLA Senior Credit Facility and the indentures governing the 8% CMCLA
Senior Notes and the Subordinated Notes contain customary restrictive covenants,
which, among other things and with certain exceptions, limit the ability of
CMCLA and its subsidiaries to incur additional indebtedness and liens in
connection therewith, enter into certain transactions with affiliates, pay
dividends, consolidate, merge or effect certain asset sales, issue additional
stock, effect an asset swap and make acquisitions. CMCLA is required under the
CMCLA Senior Credit Facility to maintain specified financial ratios, including
leverage, cash flow and debt service coverage ratios (as defined). The Company
is in compliance with these covenants.
Pending Transactions
On July 1, 1999, the Company borrowed $90.0 million on its CMCLA Senior
Credit Facility to complete the acquisition of KKFR-FM and KFYI-AM in Phoenix
from The Broadcast Group, Inc. In light of AMFM's recent acquisition of Capstar
Broadcasting, the Company is currently assessing the effects of the Capstar
Merger on the agreement with Capstar Broadcasting to acquire ten of Capstar
Broadcasting's radio stations for $434.3 million and the $150.0 million note
receivable from Capstar Broadcasting. Accordingly, it is unclear when such
amounts would be required to be borrowed by CMCLA, if at all. The Company
believes that amounts available under the CMCLA Senior Credit Facility will be
used to finance its pending transactions through CMCLA.
The principal liquidity requirements of the Company and its subsidiaries
(in addition to debt service and tax liabilities) will be for working capital,
general corporate purposes, capital expenditures and pending
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acquisitions, and as opportunities arise, to acquire additional radio stations
or complementary broadcast-related businesses. The Company believes that
disposition of certain assets and cash from operating activities, together with
available revolving credit borrowings under the CMCLA Senior Credit Facility,
should be sufficient to permit the Company to meet its obligations. As of August
1, 1999, the Company had available borrowings of $495.0 million under the CMCLA
Senior Credit Facility, subject to financial covenants contained in the credit
facilities and the indentures that govern the indebtedness of the Company's
subsidiaries.
Under the terms of the stock purchase agreement and related agreements with
Lamar, AMFM will receive cash proceeds of $700.0 million, subject to a net
working capital adjustment, and 26,227,273 shares of Lamar Common Stock. The
$700.0 million in proceeds, less transaction costs, will be used to repay
outstanding indebtedness under the CMCLA Senior Credit Facility. The transaction
is expected to be completed during the third quarter of 1999.
In the future, the Company may require additional financing, either in the
form of additional debt or equity securities. The Company evaluates potential
acquisition opportunities on an ongoing basis and has had, and continues to
have, preliminary discussions concerning the purchase of additional stations and
other assets. The Company expects that in connection with the financing of
future acquisitions, it may consider disposing of stations in its current
markets.
Restructuring
In light of AMFM's recent acquisition of Capstar Broadcasting, management
is reviewing opportunities to consolidate facilities and reduce corporate
overhead. Consequently, the Company expects to record a restructuring charge in
the third quarter of 1999.
Non-Cash Stock Option Compensation Charge
The Company expects to record a non-cash charge in connection with stock
options granted to certain employees in the third quarter of 1999. The charge
will total approximately $7.4 million and will be recorded over the vesting
period of one year.
FORWARD LOOKING STATEMENTS
Certain statements used in the preceding and following discussion and
elsewhere in this Quarterly Report on Form 10-Q are forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. These forward-
looking statements about the financial condition, prospects, operations and
business of the Company are generally accompanied by words such as "believes,"
"expects," "plans," "anticipates," "intends," "likely," "estimates," or similar
expressions. These forward-looking statements are subject to risks,
uncertainties and other factors, some of which are beyond the control of the
Company, that could cause actual results to differ materially from those
forecast or anticipated in such forward-looking statements.
These risks, uncertainties and other factors include, but are not limited
to: the potential negative consequences of the substantial indebtedness of the
Company; the restrictions imposed on the Company and its subsidiaries by the
agreements governing its debt instruments; the competitive nature of the radio
broadcasting, outdoor advertising and media representation businesses; the
potential adverse effects on licenses and ownership of regulation of the radio
broadcasting industry; the difficulty of integrating substantial acquisitions
and entering new lines of business; the potential loss of outdoor advertising
space due to the regulation of outdoor advertising; the potential loss of
advertisers due to tobacco and alcohol industry regulation; and the control of
the Company by affiliates of Hicks, Muse, Tate & Furst Incorporated and
potential conflicts of interest relating thereto.
Because such forward-looking statements are subject to risks and
uncertainties, readers are cautioned not to place undue reliance on these
forward-looking statements, which reflect management's view only as of the date
of this Quarterly Report on Form 10-Q. The Company undertakes no obligation to
update such
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statements or publicly release the result of any revisions to these
forward-looking statements which it may make to reflect events or circumstances
after the date of this report or to reflect the occurrence of unanticipated or
unforeseen events.
RECENTLY ISSUED ACCOUNTING PRINCIPLE
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, Accounting for Derivative Instruments
and Hedging Activities. This statement establishes accounting and reporting
standards for derivative instruments and hedging activities. SFAS No. 133, as
amended by SFAS No. 137, is effective for all fiscal quarters of all fiscal
years beginning after June 15, 2000. Management does not anticipate that this
statement will have a material impact on the Company's consolidated financial
statements.
YEAR 2000 ISSUE
Background. The Year 2000 ("Y2K") issue is whether the Company's computer
systems will properly recognize date sensitive information when the year changes
to 2000, or "00." Systems that do not properly recognize such information could
generate erroneous data or cause a system to fail.
State Of Readiness. The Company has substantially completed an inventory
and assessment of its systems and operations to identify any software or
hardware systems, equipment with embedded chips or processors, and
non-information technology systems, such as telephone, voicemail and HVAC
systems, which do not properly recognize dates after December 31, 1999.
Concurrent with its company-wide assessment, the Company has developed and is in
the process of implementing its Y2K compliance program. The Company is utilizing
both internal and external resources to identify its mission critical systems
and, upon identification, to remediate or replace and test systems for Y2K
compliance.
The Company has identified its corporate financial reporting, radio
broadcasting operations (including advertising scheduling and billing systems)
and media representation systems as its mission critical systems to evaluate for
Y2K compliance. The Company has received Y2K compliance certificates from these
application vendors indicating that they are Y2K compliant. The Company is in
the process of testing these systems to ensure their Y2K compliance.
The Company uses proprietary software programs for its outdoor advertising
operations and is in the process of reviewing various modifications and
replacement plans. The Company estimates that approximately 88.5 percent of the
outdoor systems' Y2K remediation and testing had been completed as of July 31,
1999. The remaining remediation efforts are expected to be completed by the end
of the third quarter of 1999.
The list of the Company's mission critical systems may be expanded upon
completion of the Company's inventory and assessment. As part of its acquisition
and consolidation strategy, the Company also assesses and, as necessary,
remediates or replaces the systems of acquired companies and stations with Y2K
compliant systems.
Third Party Relationships. In addition to identifying, assessing and
remediating or replacing its mission critical systems, the Company continues to
assess its exposure from external sources to Y2K. The Company relies on third
party providers for key services such as telecommunications and utilities.
Interruption of these services could, in management's view, have a material
adverse impact on the operations of the Company. The ability of third parties
with which the Company does business to adequately address their Y2K issues is
outside of the Company's control. Therefore, there can be no assurance that the
failure of such third parties to adequately address their Y2K issues will not
have a material adverse effect on the Company's business, financial condition,
cash flows and results of operations. The Company has sent questionnaires to
many of its third party providers, and continues to do so, asking them to update
the Company on the status of their Y2K compliance. Until all questionnaires are
returned and reviewed, the Company will be unable to fully assess the potential
for disruption in its programming and operations arising from this third party
risk. If the Company does not receive reasonable assurance regarding Y2K
compliance from any provider of these services, the Company will then develop
contingency plans, to the extent possible, to address its exposure.
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Costs. Costs specifically associated with the Company's Y2K efforts are
currently expected to be approximately $3.6 million, of which $2.3 million has
been incurred to date. These cost estimates are subject to change once the
Company has fully assessed its systems and as responses are obtained from third
party vendors and service providers. Any change in cost may be material. Funding
of these costs is anticipated to come from cash flows generated by business
operations and/or borrowings under the Company's credit facility.
Risks. The Company is in the process of identifying the most reasonably
likely worst case scenarios that may affect its operations due to Y2K
noncompliance of the Company's systems or the systems of third parties.
Initially, the Company believes that the failure of its radio broadcast systems
and the temporary loss of power at some of its stations due to Y2K noncompliance
are the most reasonably likely worst case scenarios. Many of the Company's
stations and transmitter sites currently have on-site generators in the event of
power outages. As part of the Company's capital improvement program, management
has begun installation of generators at many of its remaining stations and
transmitter sites. The Company believes that the upgrade of the hardware on its
existing radio broadcast systems and the installation of generators at many of
its stations will resolve possible material disruptions in the business
operations of the Company that would result from such risks. The Company may
identify additional worst case scenarios once it has fully assessed its mission
critical systems and obtained responses from the remaining third party vendors
and service providers.
Based on the nature of the Company's business and dispersed geographical
locations, the Company believes that it may experience some disruption in its
business due to the impact of the Y2K issue. Management presently believes,
however, that the Company is taking appropriate steps to assess and control its
Y2K issues. The Company cannot guarantee that there will be no Y2K issues in
spite of these efforts. If the Company does not complete all phases of its Y2K
compliance program and remediations or replacements are not made, are not
completed on time, or are insufficient to prevent systems failures or other
disruptions, the Y2K issue could have a material adverse impact on the Company's
results of operations and financial condition.
Contingency Plans. The Company has begun to develop contingency plans to
mitigate the possible disruption in business operations that may result from the
Company's systems or the systems of third parties that are not Y2K compliant.
The Company has not finished the contingency planning phase. The Company is
continually assessing the status of completion of its Year 2000 compliance
program and, as necessary, will determine the level of contingency plans
necessary.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Management monitors and evaluates changes in market conditions on a regular
basis. Based upon the most recent review, management has determined that there
have been no material changes in market risks since year end. For further
information regarding market risk as of year end, refer to the Company's Annual
Report on Form 10-K for the year ended December 31, 1998.
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PART II
ITEM 1. LEGAL PROCEEDINGS
In the fiscal quarter ended June 30, 1999, neither the Company nor any of
its subsidiaries were parties to, or any of their respective properties subject
to, any new material legal proceedings, and there were no material developments
in the pending legal proceedings reported in CMCLA's Annual Report on Form 10-K
for the fiscal year ended December 31, 1998, as amended, except as described
below. For a description of the Company's other pending legal proceedings, see
Note 4 to the Consolidated Financial Statements included elsewhere in this Form
10-Q.
On July 9, 1998, AMFM entered into an agreement to acquire a 50% economic
interest in Grupo Radio Centro, S.A. de C.V. ("Grupo Radio"), an owner and
operator of radio stations in Mexico. On October 15, 1998, AMFM provided notice
to Grupo Radio that it was terminating the acquisition agreement in accordance
with its terms. Grupo Radio and its controlling shareholders requested
arbitration under the terms of the agreement alleging that AMFM wrongfully
terminated the agreement and seeking damages of approximately $80.0 million. The
arbitration hearings ended on July 6, 1999, and the arbitration panel is to
deliver its draft decision to the International Court of Arbitration of the
International Chamber of Commerce on or before August 30, 1999.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<S> <C>
2.54(a) -- Asset Purchase Agreement, dated as of August 14, 1998, by
and among Chancellor Media Corporation of Illinois,
Chancellor Media Illinois License Corp. and ABC, Inc.
2.55(b) -- Amended and Restated Agreement and Plan of Merger, dated
as of April 29, 1999, among Chancellor Media Corporation,
Capstar Broadcasting Corporation, CBC Acquisition
Company, Inc. and CMC Merger Sub, Inc.
2.56(b) -- Asset Purchase Agreement, dated as of September 15, 1998,
by and between The Broadcast Group, Inc. and Chancellor
Media/Shamrock Broadcasting, Inc.
2.57(c) -- Stock Purchase Agreement, dated as of June 1, 1999, by
and between Lamar Advertising Company and Chancellor
Media Corporation of Los Angeles.
2.58(c) -- Subscription Agreement, dated as of June 1, 1999, by and
between Lamar Advertising Company and Chancellor Media
Corporation of Los Angeles.
2.59(c) -- Voting Agreement, dated as of June 1, 1999, by and among
Lamar Advertising Company, Chancellor Media Corporation
of Los Angeles and Reilly Family Limited Partnership.
2.60(d) -- First Amendment to Amended and Restated Agreement and
Plan of Merger, dated as of June 30, 1999, among
Chancellor Media Corporation, Capstar Broadcasting
Corporation and CMC Merger Sub, Inc.
2.61* -- Second Amended and Restated Stock Purchase Agreement
dated as of August 11, 1999 by and among Lamar
Advertising Company, Lamar Media Corp., Chancellor
Mezzanine Holdings Corporation and Chancellor Media
Corporation of Los Angeles.
2.62* -- Registration Rights Agreement dated as of August 11, 1999
among Lamar Advertising Company, Chancellor Media
Corporation of Los Angeles and Chancellor Mezzanine
Holdings Corporation.
</TABLE>
20
<PAGE> 21
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<S> <C>
2.63* -- Stockholders Agreement dated as of August 11, 1999 among
Lamar Advertising Company and certain of its
stockholders.
2.64* -- Second Amended and Restated Voting Agreement, dated as of
August 11, 1999, among Lamar Advertising Company,
Chancellor Media Corporation of Los Angeles, Chancellor
Mezzanine Holdings Corporation and Reid Family Limited
Partnership.
10.62(e) -- Employment Agreement, dated as of April 29, 1999, among
Chancellor Media Corporation, Chancellor Media
Corporation of Los Angeles and R. Steven Hicks.
10.63(e) -- Employment Agreement, dated as of April 29, 1999, among
Chancellor Media Corporation, Chancellor Media
Corporation of Los Angeles and D. Geoffrey Armstrong.
10.64(e) -- Employment Agreement, dated as of April 29, 1999, among
Chancellor Media Corporation, Chancellor Media
Corporation of Los Angeles and William S. Banowsky
10.65(e) -- Non-Qualified Stock Option Grant Agreement, effective as
of April 9, between Chancellor Media Corporation and
James E. de Castro.
10.66(e) -- Non-Qualified Stock Option Grant Agreement, effective as
of April 9, between Chancellor Media Corporation and
Kenneth J. O'Keefe
10.67(e) -- Non-Qualified Stock Option Grant Agreement, effective as
of April 9, between Chancellor Media Corporation and R.
Steven Hicks.
10.68(e) -- Non-Qualified Stock Option Grant Agreement, effective as
of April 9, between Chancellor Media Corporation and D.
Geoffrey Armstrong.
10.69(e) -- Non-Qualified Stock Grant Agreement, effective as of
April 9, between Chancellor Media Corporation and William
S. Banowsky.
10.70(e) -- Amendment No. 1 to Amended and Restated Employment
Agreement, dated as of May 18, 1999, among Chancellor
Media Corporation, Chancellor Media Corporation of Los
Angeles and James E. de Castro.
10.71(e) -- Employment Agreement, dated as of May 18, 1999, among
Chancellor Media Corporation, Chancellor Media
Corporation of Los Angeles and Kenneth J. O'Keefe.
10.72(e) -- Chancellor Media Corporation 1999 Stock Option Plan.
10.73* -- Termination and Release Agreement, dated July 13, 1999,
by and among Capstar Broadcasting, Capstar Partners,
Hicks, Muse & Co. Partners, L.P. and Chancellor Media
Corporation.
27.1* -- Financial Data Schedule of Chancellor Media Corporation
of Los Angeles.
</TABLE>
- ---------------
* Filed herewith.
(a) Incorporated by reference to the identically numbered exhibit to the
Current Report on Form 8-K of Chancellor Media Corporation and Chancellor
Media Corporation of Los Angeles, as amended, filed on May 5, 1999.
(b) Incorporated by reference to the identically numbered exhibit to the
Quarterly Report on Form 10-Q of Chancellor Media Corporation and
Chancellor Media Corporation of Los Angeles for the quarterly period
ending March 31, 1999.
(c) Incorporated by reference to Exhibits 2.1, 2.2 and 2.3 to the Current
Report on Form 8-K of Chancellor Media Corporation, filed on June 8, 1999.
21
<PAGE> 22
(d) Incorporated by reference to the identically numbered exhibit to
Post-Effective Amendment No. 1 to Registration Statement on Form S-4 of
AMFM Inc. filed with the Securities and Exchange Commission on July 1,
1999.
(e) Incorporated by reference to the identically numbered exhibit to the
Registration Statement on Form S-4 of Chancellor Media Corporation, filed
with the Securities and Exchange Commission on June 8, 1999.
(b) Reports on Form 8-K
1. Current Report on Form 8-K (Items 2 and 7), dated April 16, 1999
and filed May 3, 1999, as amended on May 5, 1999, to announce the sale of
WMVP-AM to ABC, Inc.
2. Current Report on Form 8-K (Items 5 and 7), dated June 1, 1999 and
filed June 8, 1999, to announce the sale of the Company's outdoor
advertising division to Lamar Advertising Company.
22
<PAGE> 23
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, each
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CHANCELLOR MEDIA CORPORATION
OF LOS ANGELES
By: /s/ W. SCHUYLER HANSEN
------------------------------------
W. Schuyler Hansen
Senior Vice President and
Chief Accounting Officer
Date: August 13, 1999
23
<PAGE> 24
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<S> <C>
2.54(a) -- Asset Purchase Agreement, dated as of August 14, 1998, by
and among Chancellor Media Corporation of Illinois,
Chancellor Media Illinois License Corp. and ABC, Inc.
2.55(b) -- Amended and Restated Agreement and Plan of Merger, dated
as of April 29, 1999, among Chancellor Media Corporation,
Capstar Broadcasting Corporation, CBC Acquisition
Company, Inc. and CMC Merger Sub, Inc.
2.56(b) -- Asset Purchase Agreement, dated as of September 15, 1998,
by and between The Broadcast Group, Inc. and Chancellor
Media/Shamrock Broadcasting, Inc.
2.57(c) -- Stock Purchase Agreement, dated as of June 1, 1999, by
and between Lamar Advertising Company and Chancellor
Media Corporation of Los Angeles.
2.58(c) -- Subscription Agreement, dated as of June 1, 1999, by and
between Lamar Advertising Company and Chancellor Media
Corporation of Los Angeles.
2.59(c) -- Voting Agreement, dated as of June 1, 1999, by and among
Lamar Advertising Company, Chancellor Media Corporation
of Los Angeles and Reilly Family Limited Partnership.
2.60(d) -- First Amendment to Amended and Restated Agreement and
Plan of Merger, dated as of June 30, 1999, among
Chancellor Media Corporation, Capstar Broadcasting
Corporation and CMC Merger Sub, Inc.
2.61* -- Second Amended and Restated Stock Purchase Agreement
dated as of August 11, 1999 by and among Lamar
Advertising Company, Lamar Media Corp., Chancellor
Mezzanine Holdings Corporation and Chancellor Media
Corporation of Los Angeles.
2.62* -- Registration Rights Agreement dated as of August 11, 1999
among Lamar Advertising Company, Chancellor Media
Corporation of Los Angeles and Chancellor Mezzanine
Holdings Corporation.
2.63* -- Stockholders Agreement dated as of August 11, 1999 among
Lamar Advertising Company and certain of its
stockholders.
2.64* -- Second Amended and Restated Voting Agreement, dated as of
August 11, 1999, among Lamar Advertising Company,
Chancellor Media Corporation of Los Angeles, Chancellor
Mezzanine Holdings Corporation and Reid Family Limited
Partnership.
10.62(e) -- Employment Agreement, dated as of April 29, 1999, among
Chancellor Media Corporation, Chancellor Media
Corporation of Los Angeles and R. Steven Hicks.
10.63(e) -- Employment Agreement, dated as of April 29, 1999, among
Chancellor Media Corporation, Chancellor Media
Corporation of Los Angeles and D. Geoffrey Armstrong.
10.64(e) -- Employment Agreement, dated as of April 29, 1999, among
Chancellor Media Corporation, Chancellor Media
Corporation of Los Angeles and William S. Banowsky
10.65(e) -- Non-Qualified Stock Option Grant Agreement, effective as
of April 9, between Chancellor Media Corporation and
James E. de Castro.
10.66(e) -- Non-Qualified Stock Option Grant Agreement, effective as
of April 9, between Chancellor Media Corporation and
Kenneth J. O'Keefe
</TABLE>
<PAGE> 25
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<S> <C>
10.67(e) -- Non-Qualified Stock Option Grant Agreement, effective as
of April 9, between Chancellor Media Corporation and R.
Steven Hicks.
10.68(e) -- Non-Qualified Stock Option Grant Agreement, effective as
of April 9, between Chancellor Media Corporation and D.
Geoffrey Armstrong.
10.69(e) -- Non-Qualified Stock Grant Agreement, effective as of
April 9, between Chancellor Media Corporation and William
S. Banowsky.
10.70(e) -- Amendment No. 1 to Amended and Restated Employment
Agreement, dated as of May 18, 1999, among Chancellor
Media Corporation, Chancellor Media Corporation of Los
Angeles and James E. de Castro.
10.71(e) -- Employment Agreement, dated as of May 18, 1999, among
Chancellor Media Corporation, Chancellor Media
Corporation of Los Angeles and Kenneth J. O'Keefe.
10.72(e) -- Chancellor Media Corporation 1999 Stock Option Plan.
10.73* -- Termination and Release Agreement, dated July 13, 1999,
by and among Capstar Broadcasting, Capstar Partners,
Hicks, Muse & Co. Partners, L.P. and Chancellor Media
Corporation.
27.1* -- Financial Data Schedule of Chancellor Media Corporation
of Los Angeles.
</TABLE>
- ---------------
* Filed herewith.
(a) Incorporated by reference to the identically numbered exhibit to the
Current Report on Form 8-K of Chancellor Media Corporation and Chancellor
Media Corporation of Los Angeles, as amended, filed on May 5, 1999.
(b) Incorporated by reference to the identically numbered exhibit to the
Quarterly Report on Form 10-Q of Chancellor Media Corporation and
Chancellor Media Corporation of Los Angeles for the quarterly period
ending March 31, 1999.
(c) Incorporated by reference to Exhibits 2.1, 2.2 and 2.3 to the Current
Report on Form 8-K of Chancellor Media Corporation, filed on June 8, 1999.
(d) Incorporated by reference to the identically numbered exhibit to
Post-Effective Amendment No. 1 to Registration Statement on Form S-4 of
AMFM Inc. filed with the Securities and Exchange Commission on July 1,
1999.
(e) Incorporated by reference to the identically numbered exhibit to the
Registration Statement on Form S-4 of Chancellor Media Corporation, filed
with the Securities and Exchange Commission on June 8, 1999.
<PAGE> 1
EXHIBIT 2.61
================================================================================
SECOND AMENDED AND RESTATED
STOCK PURCHASE AGREEMENT
dated as of
August 11, 1999
by and among
LAMAR ADVERTISING COMPANY
AS PURCHASER PARENT,
LAMAR MEDIA CORP.
AS PURCHASER
and
CHANCELLOR MEZZANINE HOLDINGS CORPORATION
and
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES
AS SELLERS
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
PAGE
<S> <C>
Article 1. PURCHASE AND SALE OF SHARES...................................................................2
Section 1.1. Dividend of Whiteco Shares............................................................2
Section 1.2. Purchase and Sale of Chancellor Shares................................................2
Section 1.3. Purchase Price........................................................................2
Section 1.4. Closing...............................................................................2
Section 1.5. Purchase Price Adjustment.............................................................3
Article 2. REPRESENTATIONS AND WARRANTIES OF SELLERS.....................................................4
Section 2.1. Corporate Organization and Authority of Chancellor Mezzanine and Chancellor LA........5
Section 2.2. No Conflict...........................................................................5
Section 2.3. Corporate Organization of the Company.................................................6
Section 2.4. Capital Stock of the Company..........................................................6
Section 2.5. Subsidiaries..........................................................................6
Section 2.6. Capitalization of Subsidiaries of the Company.........................................6
Section 2.7. Pro Forma Financial Statements........................................................7
Section 2.8. Contracts; No Defaults................................................................7
Section 2.9. Intellectual Property.................................................................9
Section 2.10. Owned Real Property...................................................................9
Section 2.11. Litigation and Proceedings...........................................................10
Section 2.12. Employee Benefit Plans...............................................................10
Section 2.13. Labor Relations......................................................................11
Section 2.14. Legal Compliance.....................................................................12
Section 2.15. Environmental Matters................................................................12
Section 2.16. Taxes................................................................................13
Section 2.17. Governmental Authorities; Consents...................................................14
Section 2.18. Interest in Competitors, Suppliers, and Customers....................................14
Section 2.19. Insurance............................................................................14
Section 2.20. Brokers' Fees........................................................................14
Section 2.21. Events Subsequent to March 31, 1999..................................................14
Section 2.22. Chancellor Mezzanine Securities Act Representations..................................14
</TABLE>
i
<PAGE> 3
TABLE OF CONTENTS
(continued
<TABLE>
<S> <C>
Section 2.23. Chancellor LA Securities Act Representations.........................................16
Section 2.24. Divesture Assets.....................................................................17
Section 2.25. Necessary Lender Approvals...........................................................17
Article 3. REPRESENTATIONS AND WARRANTIES OF PURCHASER AND PURCHASER PARENT.............................17
Section 3.1. Corporate Organization and Authority of Purchaser and Purchaser Parent...............17
Section 3.2. No Conflict..........................................................................18
Section 3.3. Litigation and Proceedings...........................................................18
Section 3.4. Governmental Authorities; Consents...................................................19
Section 3.5. Brokers' Fees........................................................................19
Section 3.6. Capital Structure of Purchaser Parent and Purchaser..................................19
Section 3.7. SEC Documents; Financial Statements..................................................20
Section 3.8. Legal Compliance.....................................................................21
Section 3.9. Interest in Competitors, Suppliers and Customers.....................................21
Section 3.10. State Takeover Statutes..............................................................21
Section 3.11. Subsequent Events....................................................................21
Section 3.12. Securities Act Representations.......................................................21
Section 3.13. Commitment Letters...................................................................22
Article 4. COVENANTS AND AGREEMENTS OF SELLERS.........................................................23
Section 4.1. Preliminary Transactions.............................................................23
Section 4.2. Conduct of Business..................................................................23
Section 4.3. Inspection...........................................................................24
Section 4.4. HSR Act..............................................................................24
Section 4.5. No Solicitations.....................................................................24
Section 4.6. No Solicitation or Hiring............................................................25
Section 4.7. Registration Rights Agreement and Stockholders Agreement.............................25
Section 4.8. Requests for Information.............................................................25
Section 4.9. Payment of Certain Employee Obligations..............................................25
Article 5. COVENANTS AND AGREEMENTS OF PURCHASER AND PURCHASER PARENT...................................25
</TABLE>
ii
<PAGE> 4
TABLE OF CONTENTS
(continued
<TABLE>
<S> <C>
Section 5.1. HSR Act..............................................................................25
Section 5.2. No Use of "Chancellor" Name..........................................................26
Section 5.3. Investigation; Purchaser and Purchaser Parent Acknowledgment.........................26
Section 5.4. No Solicitations or Hiring...........................................................27
Section 5.5. Stockholder Consent..................................................................27
Section 5.6. Definitive Documentation.............................................................27
Section 5.7. Conduct of Business..................................................................28
Section 5.8. Registration Rights Agreement and Stockholders Agreement.............................28
Section 5.9. Inspection...........................................................................28
Article 6. JOINT COVENANTS AND AGREEMENTS..............................................................29
Section 6.1. Confidentiality......................................................................29
Section 6.2. Support of Transaction...............................................................29
Section 6.3. [Intentionally Left Blank]...........................................................30
Section 6.4. Tax Matters..........................................................................30
Section 6.5. Certain Employee Benefits Matters....................................................32
Article 7. CONDITIONS TO OBLIGATIONS...................................................................35
Section 7.1. Conditions to Obligations of Purchaser, Purchaser Parent and Sellers.................35
Section 7.2. Conditions to Obligations of Purchaser and Purchaser Parent..........................35
Section 7.3. Conditions to the Obligations of Sellers.............................................36
Article 8. TERMINATION.................................................................................37
Section 8.1. Termination..........................................................................37
Section 8.2. Effect of Termination................................................................38
Section 8.3. Other Termination....................................................................38
Article 9. INDEMNIFICATION.............................................................................38
Section 9.1. Survival of Representations..........................................................38
Section 9.2. Indemnification of Purchaser and Purchaser Parent....................................39
Section 9.3. Indemnification of Sellers...........................................................39
Section 9.4. Conduct of Proceedings...............................................................39
Section 9.5. Sole Remedy; Time Limitation.........................................................40
</TABLE>
iii
<PAGE> 5
TABLE OF CONTENTS
(continued
<TABLE>
<S> <C> <C>
Article 10. CERTAIN DEFINITIONS.......................................................................40
Article 11. MISCELLANEOUS.............................................................................46
Section 11.1. Waiver...............................................................................46
Section 11.2. Notices..............................................................................46
Section 11.3. Termination of Subscription Agreement................................................48
Section 11.4. Assignment...........................................................................48
Section 11.5. Rights of Third Parties..............................................................48
Section 11.6. Expenses.............................................................................48
Section 11.7. Construction.........................................................................49
Section 11.8. Captions; Counterparts...............................................................49
Section 11.9. Entire Agreement.....................................................................49
Section 11.10. Amendments...........................................................................50
Section 11.11. Publicity............................................................................50
Section 11.12. Dispute Resolution...................................................................50
</TABLE>
iv
<PAGE> 6
<TABLE>
Schedules
<S> <C>
Schedule 2.2: No Conflict
Schedule 2.4: Capitalization of the Company
Schedule 2.5: Subsidiaries of the Company
Schedule 2.6: Capitalization of Subsidiaries of the Company
Schedule 2.7: Pro Forma Financial Statements
Schedule 2.8: Contracts; No Defaults
Schedule 2.9: Intellectual Property
Schedule 2.10: Owned Real Property
Schedule 2.11: Litigation and Proceedings
Schedule 2.12: Employee Benefits Plans
Schedule 2.13: Labor Relations
Schedule 2.14: Legal Compliance
Schedule 2.15: Environmental Matters
Schedule 2.16: Taxes
Schedule 2.17: Governmental Authorities; Consents
Schedule 2.18: Transactions with Affiliates
Schedule 2.21: Events Subsequent to March 31, 1999
Schedule 3.4: Purchaser Governmental Authorities; Consents
Schedule 4.9: Payments of Certain Employee Obligations
Annexes
Annex A: Description of Divestiture Assets
Annex B: Description of Burkett Assets
Annex C: [Intentionally Left Blank]
Annex D: Registration Rights Agreement
Annex E: Stockholders Agreement
Annex F: [Intentionally Left Blank]
Annex G: Voting Agreement
</TABLE>
v
<PAGE> 7
SECOND AMENDED AND RESTATED
STOCK PURCHASE AGREEMENT
This Second Amended and Restated Stock Purchase Agreement (this
"Agreement") is entered into by and among LAMAR ADVERTISING COMPANY, a Delaware
corporation ("Purchaser Parent"), LAMAR MEDIA CORP., a Delaware corporation and
a wholly-owned subsidiary of Purchaser Parent ("Purchaser"), CHANCELLOR
MEZZANINE HOLDINGS CORPORATION, a Delaware corporation ("Chancellor Mezzanine"),
and CHANCELLOR MEDIA CORPORATION OF LOS ANGELES, a Delaware corporation
("Chancellor LA" and, collectively with Chancellor Mezzanine, "Sellers"), as of
this 11th day of August, 1999.
RECITALS:
WHEREAS, Chancellor LA is the sole record and beneficial owner of one
thousand (1,000) shares (the "Company Shares") of the common stock, par value
$0.01 per share, of Chancellor Media Outdoor Corporation, a Delaware corporation
(the "Company"), which Company Shares constitute all of the issued and
outstanding shares of the capital stock of the Company;
WHEREAS, the Company is the sole record and beneficial owner of one
thousand (1,000) shares (the "Whiteco Shares" and, together with the Company
Shares, the "Chancellor Shares") of the common stock, par value $0.01 per share,
of Chancellor Media Whiteco Outdoor Corporation, a Delaware corporation and a
wholly owned subsidiary of the Company ("Whiteco"), which Whiteco Shares
constitute all of the issued and outstanding shares of the capital stock of
Whiteco;
WHEREAS, pursuant to that certain Stock Purchase Agreement dated as of
June 1, 1999 (the "Original Agreement"), Chancellor LA agreed to sell to
Purchaser, and Purchaser agreed to purchase from Chancellor LA, the Company
Shares, upon the terms and subject to the conditions set forth in the Original
Agreement;
WHEREAS, the Original Agreement was amended and restated as of July 12,
1999 (the "Restated Agreement");
WHEREAS, the parties desire to amend certain provisions of the Restated
Agreement pursuant to this Agreement, with this Agreement being deemed to amend
and restate the Restated Agreement in its entirety; and
WHEREAS, certain capitalized terms used herein have the meanings
assigned to them in Article 10 hereof.
AGREEMENT:
In consideration of the mutual covenants and agreements contained
herein, and other good and valuable consideration, the receipt and adequacy of
which is hereby acknowledged, the parties hereto agree as follows:
<PAGE> 8
ARTICLE 1.
PURCHASE AND SALE OF SHARES
Section 1.1. Dividend of Whiteco Shares. On the Closing Date, and
immediately prior to the Closing, (i) the Company will effect a dividend to its
immediate parent corporation, Chancellor LA, of the Whiteco Shares and (ii)
Chancellor LA will cause the Whiteco Shares to be distributed as a dividend with
such shares ultimately being held by Chancellor Mezzanine. Such dividends are
referred to herein collectively as the "Dividend."
Section 1.2. Purchase and Sale of Chancellor Shares. Upon the terms and
subject to the conditions contained herein, on the Closing Date and immediately
after the Dividend is effected, (i) Chancellor Mezzanine will sell, convey and
transfer to Purchaser, and Purchaser will purchase and acquire from Chancellor
Mezzanine, the Whiteco Shares, and (ii) Chancellor LA will sell, convey and
transfer to Purchaser, and Purchaser will purchase and acquire from Chancellor
LA, the Company Shares.
Section 1.3. Purchase Price. Upon the terms and subject to the
conditions contained herein, on the Closing Date, (a) as consideration for the
Whiteco Shares, (i) Purchaser will pay to Chancellor Mezzanine Ten Million
Dollars ($10,000,000) (the "Whiteco Cash Consideration") and (ii) Purchaser
Parent will issue to Chancellor Mezzanine the number of shares of Class A Common
Stock, par value $0.001, of Purchaser Parent ("Purchaser Parent Class A Common
Stock") as shall represent an aggregate value of Nine Hundred Forty Million
Dollars ($940,000,000), valued based on the closing price of such shares on the
Nasdaq National Market on the trading day immediately prior to the Closing Date,
but in no event more than 26,227,273 of such shares (the "Lamar Mezzanine
Shares") and (b) as consideration for the Company Shares, (i) Purchaser will pay
to Chancellor LA Six Hundred Ninety Million Dollars ($690,000,000) (the "Company
Cash Consideration" and, collectively with the Whiteco Cash Consideration, the
"Cash Consideration") and (ii) Purchaser Parent will issue to Chancellor LA the
positive number of shares of Purchaser Parent Class A Common Stock, if any,
obtained by subtracting the number of Lamar Mezzanine Shares from 26,227,273
(the "Lamar LA Shares" and, collectively with the Lamar Mezzanine Shares, the
"Lamar Shares"), subject to the adjustments set forth in Section 1.5 hereof (the
"Total Consideration").
Section 1.4. Closing.
(a) The consummation of the purchase and sale of the
Chancellor Shares (the "Closing") shall take place at 10:00 a.m., local time, on
the tenth (10th) Business Day following the satisfaction of the conditions to
the obligations of the parties set forth in Article 7 hereof, at the offices of
Sellers, 1845 Woodall Rodgers Freeway, Suite 1300, Dallas, Texas, or at such
other time or place as Sellers and Purchaser may agree in writing (the day on
which the Closing takes place being referred to herein as the "Closing Date").
(b) At the Closing, (i) Chancellor Mezzanine shall deliver or
cause to be delivered to Purchaser (A) one or more stock certificates evidencing
the Whiteco Shares, duly endorsed in blank or accompanied by a stock power duly
executed in blank, and (B) the other documents required to be delivered by
Chancellor Mezzanine pursuant to Article 7 hereof, and
2
<PAGE> 9
(ii) Chancellor LA shall deliver or cause to be delivered to Purchaser (A) one
or more stock certificates evidencing the Company Shares, duly endorsed in blank
or accompanied by a stock power duly executed in blank, and (B) the other
documents required to be delivered by Chancellor LA pursuant to Article 7
hereof.
(c) At the Closing, (i) Purchaser Parent shall deliver or
cause to be delivered to (A) Chancellor Mezzanine one or more stock certificates
evidencing the Lamar Mezzanine Shares and (B) Chancellor LA one or more stock
certificates evidencing the Lamar LA Shares, if any, (ii) Purchaser shall pay to
(X) Chancellor Mezzanine the Whiteco Cash Consideration and (Y) Chancellor LA
the Company Cash Consideration in each case, prior to giving effect to any
adjustment provided for in Section 1.5 hereof, and in each case by intrabank
transfer or wire transfer of immediately available funds to an account or
accounts designated in writing by Chancellor Mezzanine and Chancellor LA,
respectively, and (iii) each of Purchaser and Purchaser Parent shall deliver to
each Seller the documents required to be delivered by Purchaser and Purchaser
Parent to such Seller pursuant to Article 7 hereof.
Section 1.5. Purchase Price Adjustment.
(a) As soon as reasonably practicable following the Closing
Date, and in any event within forty-five (45) calendar days thereof, Chancellor
LA shall prepare and deliver to Purchaser (i) a consolidated balance sheet of
the Company as of the Closing (after giving effect to the Preliminary
Transactions but prior to giving effect to the Dividend) which shall be audited
by PricewaterhouseCoopers LLP ("PWC"), together with the related audit report of
such firm (the "Closing Balance Sheet"), and (ii) a calculation of the Net
Working Capital of the Company as set forth on the Closing Balance Sheet (the
"Closing Date Net Working Capital"). The Closing Balance Sheet shall be prepared
in accordance with United States generally accepted accounting principles
("GAAP") consistent with the preparation of the Pro Forma Balance Sheet, and
shall fairly present the consolidated financial position of the Company
(including Whiteco) as of the Closing. "Net Working Capital" shall mean (i)
current assets of the Company, minus (ii) current liabilities of the Company.
Current liabilities of the Company shall (A) include, without limitation, any
severance payments provided on Schedule 2.13 which have been paid, or will be
paid, by the Company or its Subsidiaries and which are accrued and incurred
after the Closing but prior to the time of the calculation of Closing Date Net
Working Capital pursuant to this Section 1.5(a), and (B) exclude, without
limitation, any liability of the Company or its Subsidiaries, including, but not
limited to, any liability for Taxes and severance payments, which Chancellor LA
has agreed to or is otherwise obligated to pay. Notwithstanding the foregoing,
in calculating Net Working Capital, all intercompany payables and receivables
between Chancellor LA, the Company and its Subsidiaries shall be disregarded.
(b) Upon delivery of the Closing Balance Sheet, Chancellor LA
will provide Purchaser with access to its records and will use commercially
reasonable efforts to provide Purchaser and its accountants access to the work
papers of PWC, to the extent reasonably related to Purchaser's evaluation of the
Closing Balance Sheet and the calculation of the Closing Date Net Working
Capital. The Purchaser may dispute the calculation of the Closing Date Net
Working Capital or any element of the Closing Balance Sheet relevant thereto, by
notifying Chancellor LA of such disagreement in writing, setting forth in detail
the particulars of
3
<PAGE> 10
such disagreement, within thirty (30) calendar days after its receipt of the
Closing Balance Sheet; provided that the basis of any such dispute shall be
limited to the failure of the calculation of Closing Date Net Working Capital or
any amount reflected on the Closing Balance Sheet to have been determined in
accordance with GAAP applied on a basis consistent with this Section 1.5. In the
event that Purchaser does not provide such a notice of disagreement within such
thirty (30) calendar day period, Purchaser shall be deemed to have accepted the
Closing Balance Sheet and the calculation of the Closing Date Net Working
Capital delivered by Chancellor LA, which shall be final, binding and conclusive
for all purposes hereunder. In the event any such notice of disagreement is
timely provided, Purchaser and Chancellor LA shall use commercially reasonable
efforts for a period of thirty (30) calendar days (or such longer period as they
may mutually agree) to resolve any disagreements with respect to the calculation
of the Closing Date Net Working Capital. If, at the end of such period, they are
unable to resolve such disagreements, then the Chicago, Illinois office of Ernst
& Young LLP (or such other independent accounting firm of recognized national
standing as may be mutually selected by Purchaser and Chancellor LA) (the
"Auditor") shall resolve any remaining disagreements. The Auditor shall
determine as promptly as practicable, but in any event within thirty (30)
calendar days of the date on which such dispute is referred to the Auditor,
whether the Closing Balance Sheet was prepared in accordance with the standards
set forth in Section 1.5(a) and (only with respect to the remaining
disagreements submitted to the Auditor) whether and to what extent (if any) the
Closing Date Net Working Capital requires adjustment. The fees and expenses of
the Auditor shall be paid one-half by Purchaser and one-half by Chancellor LA.
The determination of the Auditor shall be final, conclusive and binding on the
parties. The date on which the Closing Date Net Working Capital is finally
determined in accordance with this Section 1.5(b) is hereinafter referred as to
the "Determination Date."
(c) The "Adjustment Amount," shall mean the difference between
(i) the Closing Date Net Working Capital, and (ii) Twelve Million Dollars
($12,000,000) (the "Minimum Net Working Capital"). If the Closing Date Net
Working Capital exceeds the Minimum Net Working Capital, then, promptly and in
any event within five (5) Business Days following the Determination Date,
Purchaser shall pay to Chancellor LA, by wire transfer of immediately available
funds to an account designated in writing by Chancellor LA, the Adjustment
Amount, together with interest on such amount from the Closing Date to the date
of payment at the prime rate of interest (the "Applicable Rate") published in
the "Money Rates" column of the Eastern Edition of The Wall Street Journal (or
the average of such rates if more than one rate is indicated) on the Closing
Date. If the Minimum Net Working Capital exceeds the Closing Date Net Working
Capital, then, promptly and in any event within five (5) Business Days following
the Determination Date, Chancellor LA shall pay to Purchaser, by wire transfer
of immediately available funds to an account designated in writing by Purchaser,
the Adjustment Amount, together with interest on such amount from the Closing
Date to the date of payment at the Applicable Rate.
ARTICLE 2.
REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers, jointly and severally, represent and warrant to Purchaser and
Purchaser Parent that as of the date of this Agreement (provided, however, that
any representation or
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warranty made herein that relates (i) solely to Chancellor Mezzanine is being
made solely by Chancellor Mezzanine or (ii) solely to Chancellor LA is being
made solely by Chancellor LA):
Section 2.1. Corporate Organization and Authority of Chancellor
Mezzanine and Chancellor LA.
(a) Chancellor Mezzanine has been duly incorporated and is
validly existing as a corporation in good standing under the laws of the State
of Delaware and has the corporate power and authority to enter into and perform
its obligations under this Agreement. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been
duly and validly authorized and approved by the Board of Directors of Chancellor
Mezzanine, and no other corporate proceeding on the part of Chancellor Mezzanine
is necessary to authorize this Agreement or the transactions contemplated
hereby. This Agreement has been duly and validly executed and delivered by
Chancellor Mezzanine and, assuming this Agreement constitutes a valid and
binding agreement of each of Purchaser, Purchaser Parent and Chancellor LA,
constitutes a legally valid and binding obligation of Chancellor Mezzanine,
enforceable against Chancellor Mezzanine in accordance with its terms, subject
to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors' rights generally and subject,
as to enforceability, to general principles of equity.
(b) Chancellor LA has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Delaware and has the corporate power and authority to enter into and perform its
obligations under this Agreement. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly authorized and approved by the Board of Directors of Chancellor LA, and
no other corporate proceeding on the part of Chancellor LA is necessary to
authorize this Agreement or the transactions contemplated hereby. This Agreement
has been duly and validly executed and delivered by Chancellor LA and, assuming
this Agreement constitutes a valid and binding agreement of each of Purchaser,
Purchaser Parent and Chancellor Mezzanine, constitutes a legally valid and
binding obligation of Chancellor LA, enforceable against Chancellor LA in
accordance with its terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors' rights generally and subject, as to enforceability, to general
principles of equity.
Section 2.2. No Conflict. Except as set forth on Schedule 2.2, the
execution and delivery of this Agreement by each of Chancellor Mezzanine and
Chancellor LA and the consummation of the transactions contemplated hereby do
not and will not violate any provision of, or result in the breach of: (a) any
law, rule or regulation of any Governmental Authority, any Contract listed
pursuant to Section 2.8(a), or any order, judgment or decree applicable to such
entity, the Company or any Subsidiary of the Company, or terminate or result in
the termination of any such Contract, or result in the creation of any Lien,
charge or encumbrance upon any of the properties or assets of such entity, the
Company or any Subsidiary of the Company, or constitute an event which, after
notice or lapse of time or both, would result in any such violation, breach,
acceleration, termination or creation of a Lien; or (b) the Certificate of
Incorporation, Bylaws or other organizational documents of such entity, the
Company or any Subsidiary of the Company.
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Section 2.3. Corporate Organization of the Company. The Company has
been duly incorporated and is validly existing as a corporation in good standing
under the laws of the State of Delaware and has the corporate power and
authority to own or lease its properties and to conduct the Business as it is
now being conducted. The copies of the Certificate of Incorporation and Bylaws
of the Company previously delivered by the Company to Purchaser are true,
correct and complete. The Company is duly licensed or qualified and in good
standing as a foreign corporation in each jurisdiction in which the ownership of
its property or the character of its activities is such as to require it to be
so licensed or qualified, except where the failure to be so licensed or
qualified would not have a material adverse effect on the business, operations
or financial condition of the Company and its Subsidiaries, taken as a whole.
Section 2.4. Capital Stock of the Company. The Company Shares
constitute all the issued and outstanding shares of capital stock of the
Company. The Company Shares have been duly authorized and validly issued and are
fully paid and nonassessable and were not issued in violation of any preemptive
rights. There are no options, warrants, agreements, arrangements, or other
rights relating to the capital stock of the Company or other securities
exercisable or exchangeable for any capital stock of the Company that either (i)
obligates the Company to issue, sell, transfer, repurchase, redeem or otherwise
acquire or vote any shares of its capital stock, or (ii) restricts the transfer
of its capital stock. Chancellor LA is the sole record and beneficial owner of
the Company Shares and owns the Company Shares free and clear of any Liens other
than the Liens described on Schedule 2.4 hereto.
Section 2.5. Subsidiaries. Set forth on Schedule 2.5 is a list of all
Subsidiaries of the Company. Each Subsidiary of the Company has been duly formed
and is validly existing under the laws of the jurisdiction of its formation and
has the corporate or limited liability company power and authority, as
applicable, to own or lease its properties and to conduct its business as it is
now being conducted. The Company has previously provided, or shall provide prior
to the Closing, to Purchaser copies of the organizational documents of each
Subsidiary of the Company, and such copies are true, correct and complete. Each
such Subsidiary is duly licensed or qualified and in good standing in each
jurisdiction in which its ownership of property or the character of its
activities is such as to require such Subsidiary to be so licensed or qualified,
except where the failure to be so licensed or qualified would not have a
material adverse effect on the business, operations or financial condition of
the Company and its Subsidiaries, taken as a whole. The jurisdiction of
incorporation or organization of the Subsidiaries of the Company are set forth
on Schedule 2.5 hereto.
Section 2.6. Capitalization of Subsidiaries of the Company.
(a) Except as set forth on Schedule 2.6 or in the last
sentence of this Section 2.6, (i) each Subsidiary of the Company including,
without limitation, Whiteco prior to the Dividend, is wholly-owned of record and
beneficially by the Company or another wholly-owned Subsidiary of the Company,
and (ii) the ownership interests of the Company in each such Subsidiary are
owned of record and beneficially by the Company, free and clear of any Liens
other than Liens described on Schedule 2.6 hereto. Except as set forth on
Schedule 2.6, there are no options, warrants, agreements, arrangements or other
rights relating to, or other securities exercisable or exchangeable for, any
capital stock or other equity security of any Subsidiary of the
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Company that either (i) obligates any Subsidiary of the Company to issue, sell,
transfer, repurchase, redeem or otherwise acquire or vote any shares of capital
stock of any Subsidiary of the Company, or (ii) restricts the transfer of the
capital stock of any Subsidiary of the Company.
(b) The Whiteco Shares constitute all the issued and
outstanding shares of capital stock of Whiteco. The Whiteco Shares have been
duly authorized and validly issued and are fully paid and nonassessable and were
not issued in violation of any preemptive rights. On the Closing Date,
immediately prior to the Closing (after giving effect to the Dividend), Whiteco,
which, as of the date hereof, is a wholly-owned Subsidiary of the Company, will
be a wholly-owned Subsidiary of Chancellor Mezzanine.
Section 2.7. Pro Forma Financial Statements. Attached as Schedule 2.7
hereto are (i) the unaudited consolidated balance sheet of the Company as of
March 31, 1999 (the "Pro Forma Balance Sheet"), which has been adjusted to give
effect to the Preliminary Transactions, including any accruals for Taxes
associated therewith, as if such transactions had been consummated on such date,
and (ii) the unaudited consolidated statement of operations of the Company for
the twelve-month period ended March 31, 1999, which has been adjusted to give
effect to the Preliminary Transactions as if such transactions had been
consummated on April 1, 1998 (the "Pro Forma Statement of Operations"). The Pro
Forma Balance Sheet was prepared in accordance with the books and records of
Chancellor LA and its Subsidiaries and fairly presents the assets and
liabilities of the Company as of March 31, 1999, after giving effect to the
Preliminary Transactions as if the Preliminary Transactions had been consummated
on such date, and the Pro Forma Statement of Operations was prepared in
accordance with the books and records of Chancellor LA and its Subsidiaries and
fairly present the results of operations of the Company for the twelve-month
period ended March 31, 1999, after giving effect to the Preliminary Transactions
as if such transactions had been consummated on April 1, 1998, to the extent
required by GAAP, subject to the notes and ancillary information included in
such financial statements.
Section 2.8. Contracts; No Defaults.
(a) Schedule 2.8 contains a listing of all Contracts described
in clauses (i) through (xi) below to which the Company or any of its
Subsidiaries is a party, other than any such Contract (A) which will be
terminated at or prior to the Closing, or (B) as to which the Company and its
Subsidiaries will have no further liability following the Closing. True, correct
and complete copies of contracts referred to in clauses (i)-(xi) below have been
delivered to or made available to Purchaser and its agents and representatives.
(i) Each Contract providing for the performance of
services or the delivery of goods and/or materials by or to the Company
or any of its Subsidiaries entered into outside the ordinary course of
business of the Company and its Subsidiaries and which provides for
consideration to be furnished to or by the Company or any of its
Subsidiaries of value in excess of $150,000 in any one year;
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(ii) Each note, debenture, other evidence of
indebtedness, guarantee, loan, credit or financing agreement or
instrument or other contract for money borrowed, including any
agreement or commitment for future loans, credit or financing;
(iii) Each lease, rental or occupancy agreement
involving aggregate payments in excess of $150,000 in any one year;
(iv) Each material licensing agreement or other
Contract with respect to patents, trademarks, copyrights, or other
intellectual property, including agreements with current or former
employees, consultants, or contractors regarding the appropriation or
the nondisclosure of Intellectual Property (as hereinafter defined)
other than customary employee, vendor and other non-disclosure
agreements;
(v) Each collective bargaining agreement or other
Contract to or with any labor union or other employee representative of
a group of employees relating to wages, hours, and other conditions of
employment;
(vi) Each joint venture agreement, partnership
agreement, or limited liability company agreement;
(vii) Each material distribution, franchise, license,
sales, commission, consulting or agency agreement for advertising to be
provided to the Company or its Subsidiaries, excluding Advertising
Contracts, providing for annual payments in excess of $150,000, which
are not cancelable on thirty (30) calendar days' notice;
(viii) Each material option to buy any property, real
or personal, or material options to sell any Owned Real Property or
personal property;
(ix) Each Contract (except personal property leases
and construction contracts) involving expenditures or liabilities in
excess of $250,000, or otherwise material to the Business; and
(x) Each material Contract containing covenants
limiting the freedom of the Company or its Subsidiaries to engage in
the Business or compete with any Person other than in connection with
any license agreements to which Chancellor LA is a party (other than
provisions in any lease that limit the type of advertising messages or
advertising that may be displayed on outdoor advertising structures or
the types of advertisers);
(xi) Each written employment or severance agreement
pertaining to the Business to which either the Company or any of its
Affiliates is a party with any employee which may not be terminated at
will, or by giving notice of thirty (30) calendar days or less, without
cost or penalty.
(b) Except as set forth on Schedule 2.8, no condition exists
or event has occurred which, with notice or lapse of time or both, would
constitute a default by the Company
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or any of its Subsidiaries under the Contracts listed pursuant to paragraph (a)
of this Section 2.8, or, to the best knowledge of the Company, any other party
thereto.
(c) Except as set forth on Schedule 2.8, to the Company's
knowledge, all of the Contracts set forth on Schedule 2.8 are valid and in full
force and effect. The Company and its Subsidiaries have duly performed all of
their material obligations under such Contracts to the extent those obligations
to perform have accrued, and no violation of, or default or breach under, such
Contracts by the Company or its Subsidiaries, or, to the Company's knowledge,
any other party has occurred, and neither the Company nor its Subsidiaries, nor,
to the Company's knowledge, any other party has repudiated any provisions
thereof. Since November 30, 1998, to the Company's knowledge, the Company and
its Subsidiaries have performed, in all material respects, their obligations
under the Advertising Contracts and agreements for Leased Real Property, to the
extent those obligations to perform have accrued.
Section 2.9. Intellectual Property. Schedule 2.9 lists each material
patent, registered trademark, service mark or trade name or registered copyright
and applications for any of the foregoing (collectively, "Intellectual
Property"), held by the Company or any of its Subsidiaries and used in the
operation of the Business. The Contracts listed on Schedule 2.8 include all
material license or sublicense agreements entered into by the Company or any of
its Subsidiaries in connection with the conduct of the Business with respect to
any patent, trademark, service mark, logo, trade name or copyright to which the
Company or any of its Subsidiaries is a party and which is material to the
operation of the Business, as presently being conducted. Except as set forth on
Schedule 2.9, to the best knowledge of the Company, (i) the Company or one of
its Subsidiaries has good title to, or has the right to use pursuant to license,
sublicense, agreement or permission each such item of Intellectual Property
owned or used by it, free and clear of any Liens other than Permitted Liens, and
(ii) there is no claim of infringement pending or threatened against the Company
or any of its Subsidiaries relating to any item of Intellectual Property used in
the operation of the Business, as presently conducted.
Section 2.10. Owned Real Property.
(a) Schedule 2.10 lists all Owned Real Property. The Company
or one of its Subsidiaries has (or at the Closing will have) good and marketable
fee simple title to all Owned Real Property, subject only to any (i) Permitted
Liens, (ii) Lien constituting a lease, sublease or occupancy agreement that
gives any third party any right to occupy any portion of the Owned Real
Property, and (iii) Lien reflected on any survey or in any title report made
available to Purchaser prior to the date of this Agreement.
(b) Except as set forth on Schedule 2.10, there are no pending
or, to the knowledge of Chancellor LA, threatened condemnation proceedings with
respect to any portion of Owned Real Property, or litigation or administrative
actions relating to any portion of Owned Real Property.
(c) All Owned Real Property and the improvements thereon are
supplied with utilities and other services necessary for the operation of such
facilities as currently operated.
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Section 2.11. Litigation and Proceedings. Except as set forth on
Schedule 2.11, there are no lawsuits, actions, suits, claims or other
proceedings at law or in equity, or to the knowledge of the Company,
investigations, before or by any court or Governmental Authority or before any
arbitrator pending or, to the knowledge of the Company, threatened, against the
Company or any of its Subsidiaries (a) in which the relief sought includes
damages in excess of $100,000 in any individual case, (b) seeking as of the date
hereof to delay, limit or enjoin the transactions contemplated by this
Agreement, or (c) that would materially impair the ability of Chancellor
Mezzanine, Chancellor LA, the Company or its Subsidiaries to perform their
obligations hereunder. Except as set forth on Schedule 2.11, there is no
unsatisfied judgment, order or decree requiring payment in excess of $100,000 or
any open injunction binding upon the Company or any of its Subsidiaries. Neither
the Company nor any of its Subsidiaries is in default with respect to or subject
to any judgment, order, writ, injunction or decree of any court or governmental
agency in any material matter.
Section 2.12. Employee Benefit Plans.
(a) Definitions. The following terms, when used in this
Section 2.12, shall have the following meanings. Any of these terms may, unless
the context otherwise requires, be used in the singular or the plural depending
on the reference.
(i) Employee Plans. "Employee Plans" shall mean all
Multiemployer Plans, Pension Plans and Welfare Plans.
(ii) ERISA. "ERISA" shall mean the Employee
Retirement Income Security Act of 1974, as amended.
(iii) Multiemployer Plan. "Multiemployer Plan" shall
mean any "multiemployer plan," as defined in Section 4001(a)(3) of
ERISA, (A) to which the Company or any of its Subsidiaries maintains,
administers, contributes or is required to contribute, and (B) which
covers any employee or former employee of the Company or any of its
Subsidiaries (with respect to their relationship with such entities).
(iv) PBGC. "PBGC" shall mean the Pension Benefits
Guaranty Corporation.
(v) Pension Plan. "Pension Plan" shall mean any
"employee pension benefit plan" as defined in Section 3(2) of ERISA
(other than a Multiemployer Plan) (A) which the Company or any of its
Subsidiaries maintains, administers, contributes to or is required to
contribute to, and (B) which covers any employee or former employee of
the Company or any of its Subsidiaries (with respect to their
relationship with such entities).
(vi) Welfare Plan. "Welfare Plan" shall mean any
"employee welfare benefit plan" as defined in Section 3(1) of ERISA,
(A) which the Company or any of its Subsidiaries maintains,
administers, contributes to or is required to contribute to, and
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(B) which covers any employee or former employee of the Company or any
of its Subsidiaries (with respect to their relationship with such
entities).
(b) Disclosure. Schedule 2.12 contains a complete list of
Employee Plans.
(c) Representations. Chancellor LA represents and warrants as
follows:
(i) Pension Plans
(A) Except as set forth on Schedule
2.12, each Pension Plan and each related trust agreement,
annuity contract or other funding instrument which is intended
to be qualified and tax-exempt under the provisions of Code
Sections 401(a) and 501(a) has been determined by the Internal
Revenue Service to be so qualified and tax-exempt or
application for such determination has been made.
(B) Except as set forth on Schedule
2.12, each Pension Plan and each related trust agreement,
annuity contract or other funding instrument is in material
compliance with its terms and, both as to form and in
operation, with the requirements prescribed by any and all
statutes, orders, rules and regulations which are applicable
to such plans, including without limitation ERISA and the
Code.
(C) The Company does not sponsor,
and has not sponsored at any time during the five (5) year
period ending on the Closing Date, a Pension Plan that is
subject to Title IV of ERISA. None of the Company, nor any of
its Subsidiaries has incurred any material liability, directly
or indirectly, for breach of any provision of ERISA.
(ii) Multiemployer Plans. None of the
Company, Chancellor Mezzanine, Chancellor LA or any Subsidiary of any
of the foregoing, has been a participating employer in, or has assumed
any liabilities under, a Multiemployer Plan at any time during the five
(5) year period ending on the Closing Date.
(iii) Welfare Plans. Except as set forth on
Schedule 2.12, each Welfare Plan is in material compliance with its
terms and, both as to form and operation, with the requirements
prescribed by any and all statutes, orders, rules and regulations which
are applicable to such Welfare Plan, including without limitation ERISA
and the Code.
Section 2.13. Labor Relations. Schedule 2.13 contains a list of all
collective bargaining agreements to which the Company or any of its Subsidiaries
is a party and all written employment or severance agreements pertaining to the
Business to which either the Company or any of its Affiliates is a party with
respect to any employee, which may not be terminated at will, or by giving
notice of thirty (30) calendar days or less, without cost or penalty, to employ
or terminate executive officers or other personnel, or that will result in the
payment by, or the creation of, any commitment or obligation (absolute or
contingent) to pay on behalf of Purchaser, Chancellor Mezzanine, Chancellor LA,
the Company or any Subsidiaries of the Company, any severance,
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termination, "golden parachute" or other similar payments as a result of the
consummation of the transactions contemplated hereby. Chancellor LA has
delivered or made available to Purchaser true, correct and complete copies of
each such Contract, as amended to date. Except as set forth on Schedule 2.13, in
the last twelve (12) months, neither the Company nor its Subsidiaries have
experienced any attempt by organized labor or its representatives to make the
Company or its Subsidiaries conform to demands of organized labor relating to
its employees or enter into a binding agreement with organized labor that would
cover the employees. Except as set forth on Schedule 2.13, there is no labor
strike or labor disturbance pending or, to Chancellor LA's knowledge, threatened
against the Company or its Subsidiaries, and in the past three (3) years the
Company and its Subsidiaries have not experienced a work stoppage or other labor
difficulty. The Company and its Subsidiaries are in material compliance with all
applicable laws respecting employment practices, employee documentation, terms
and conditions of employment and wages and hours and, to Chancellor LA's
knowledge, neither the Company nor its Subsidiaries has engaged in any unfair
labor practice. There is no unfair labor practice charge or complaint against
the Company or its Subsidiaries pending, or to the knowledge of Chancellor LA,
threatened before the National Labor Relations Board or any other domestic or
foreign government agency arising out of the conduct of the business of the
Company or its Subsidiaries.
Section 2.14. Legal Compliance. Except with respect to matters set
forth on Schedule 2.14, and compliance with Environmental Laws (as to which
certain representations and warranties are made pursuant to Section 2.15), the
Company and each of its Subsidiaries is in compliance with all laws (including
rules and regulations thereunder) of federal, state, local and foreign
governments (and all agencies thereof) applicable thereto, except where such
instances of noncompliance would not have a material adverse effect on the
business, operations or financial condition of the Company and its Subsidiaries,
taken as a whole.
Section 2.15. Environmental Matters. Except as set forth on Schedule
2.15, (i) the Company and each of its Subsidiaries is in compliance with all
Environmental Laws, except where such instances of noncompliance would not have
a material adverse effect on the business, operations or financial condition of
the Company and its Subsidiaries, (ii) neither the Company nor any of its
Subsidiaries has any liability under any Environmental Law which is material to
the business, operations or financial condition of the Company and its
Subsidiaries, (iii) no notices of any violation or alleged violation of any
Environmental Law relating to the operations or properties of the Company or any
of its Subsidiaries have been received by the Company or any of its
Subsidiaries, (iv) to the knowledge of Chancellor LA, there are no
circumstances, based on currently available information, that are reasonably
likely to prevent such compliance, except where such instances would not have a
material adverse effect on the business, operations or financial condition of
the Company and its Subsidiaries, (v) to the knowledge of Chancellor LA, there
are no underground storage tanks, above-ground storage tanks, or polychlorinated
biphenyls located on, in or under Owned Real Property or real property leased by
the Company or its Subsidiaries, except in compliance with Environmental Laws,
except where such instances would not have a material adverse effect on the
business, operations or financial condition of the Company and its Subsidiaries,
and (vi) no hazardous substances, wastes or materials, as defined by
Environmental Laws, have been stored, released, recycled or disposed of, on,
under or at any such property such that the property is currently subject to a
lawful order by a Governmental Authority that requires remediation of such
property, except where such instances would not have
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a material adverse effect on the business, operations or financial condition of
the Company and its Subsidiaries.
Section 2.16. Taxes. Except as set forth on Schedule 2.16:
(a) The Company and each of its Subsidiaries have timely filed
all income Tax Returns required to be filed by it (subject to any applicable
extensions). Each Affiliated Group with which the Company or its Subsidiaries
files a consolidated, combined or unitary Tax Return has timely filed all such
income Tax Returns that it was required to file (subject to any applicable
extensions) for each taxable period during which the Company or its Subsidiaries
was a member of the group;
(b) Each of the Company and its Subsidiaries has duly paid in
full (or there has been paid on its behalf) or will have established (or there
will have been established on its behalf) an adequate reserve on the Closing
Balance Sheet for all Taxes that are payable or may become payable by the
Company or its Subsidiaries (i) in respect of any taxable period ending on or
before the Closing Date and (y) for any taxable period that begins before the
Closing Date and ends thereafter, to the extent such Taxes are attributable to
the portion of such period ending on the Closing Date under the terms of Section
6.4(b);
(c) The Company and each Subsidiary has withheld and paid over
all Taxes required to have been withheld and paid over on or before the Closing
Date, and complied with all information reporting and backup withholding
requirements required to be complied with on or before the Closing Date,
including maintenance of required records with respect thereto, in connection
with amounts paid or owing to any employer, creditor, independent contractor or
other third party. There are no Liens on any of the assets of the Company or any
of its Subsidiaries with respect to Taxes, other than liens for Taxes not yet
due and payable or for Taxes being contested in good faith through appropriate
proceedings and for which reserves have been or will be established on the
Closing Balance Sheet in accordance with GAAP;
(d) None of the Company or any of its Subsidiaries has waived
any law or regulation fixing, or consenting to the extension of, any period of
time for assessment of any Taxes which waiver or consent is currently in effect.
None of Chancellor Mezzanine, Chancellor LA or any of their stockholders has
waived any law or regulation fixing, or consenting to the extension of, any
period of time for assessment of any Taxes of the Company or any of the
Subsidiaries which waiver or consent is currently in effect. There is no pending
examination or proceeding by any authority or agency with respect to the Company
or any Subsidiary relating to the assessment or collection of Taxes;
(e) There will not be as of the Closing Date any outstanding
balances of deferred gain or loss accounts related to deferred intercompany
transactions with respect to the Company or its Subsidiaries under Treasury
Regulation Section 1.1502-13. As of the Closing Date, neither the Company nor
any of its Subsidiaries will have any obligation or will have any obligation
that could arise under any Tax sharing agreement between it and another entity;
and
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(f) None of the Company, any of its Subsidiaries or any
stockholders of the Company has made or will become obligated to make, as a
result of the sale of the Company Shares or the Whiteco Shares, any payments
that would be nondeductible by the Company or its Subsidiaries (in whole or in
part) pursuant to Section 280G of the Code.
Section 2.17. Governmental Authorities; Consents. Assuming the truth
and completeness of the representations and warranties of Purchaser contained in
this Agreement, no consent, approval or authorization of, or designation,
declaration or filing with, any Governmental Authority or other third party is
required on the part of Chancellor Mezzanine or Chancellor LA with respect to
each of such parties' execution or delivery of this Agreement or the
consummation of the transactions contemplated hereby, except for (i) applicable
requirements of the HSR Act, or (ii) as otherwise disclosed in Schedule 2.17.
Section 2.18. Interest in Competitors, Suppliers, and Customers. Except
as set forth on Schedule 2.18 attached hereto, to the knowledge of Chancellor
LA, no stockholder, officer, or director of Chancellor Media Corporation or any
Affiliate of any such stockholder, officer, or director has any ownership
interest in any competitor, supplier, or customer of the Company or any property
used in the operation of the Business.
Section 2.19. Insurance. All material assets and properties of the
Company and its Subsidiaries are covered by valid and currently effective
insurance policies or programs of self-insurance in such types and amounts as
are consistent with customary practices and standards of companies engaged in
businesses similar to that of the Company and its Subsidiaries.
Section 2.20. Brokers' Fees. No broker, finder, investment banker or
other Person is entitled to any brokerage fee, finders' fee or other commission
in connection with the transactions contemplated by this Agreement based upon
arrangements made by the Company or any of its Affiliates, except for any
arrangement with Morgan Stanley Dean Witter & Co. or Greenhill & Co., LLC, for
which Chancellor LA shall be solely responsible.
Section 2.21. Events Subsequent to March 31, 1999. Except as set forth
on Schedule 2.21, from March 31, 1999 to the date hereof, there has not occurred
any material adverse change in the business, financial condition or results of
operations of the Company or its Subsidiaries, taken as a whole.
Section 2.22. Chancellor Mezzanine Securities Act Representations.
(a) Chancellor Mezzanine is acquiring the Lamar Mezzanine
Shares for investment for its own account, not as a nominee or agent, and not
with a view to the resale or distribution of any part thereof in violation of
the Securities Act. Chancellor Mezzanine does not have any present intention of
selling, granting any participation in, or otherwise distributing the Lamar
Mezzanine Shares otherwise than pursuant to an effective registration statement
under the Securities Act or in a transaction exempt from the registration
requirements under the Securities Act and applicable state securities laws.
Other than the possible contribution of the Lamar Mezzanine Shares to a
Subsidiary, Chancellor Mezzanine does not have any contract,
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undertaking, agreement or arrangement with any Person to sell, transfer or grant
participations to such Person or to any third Person, with respect to any of the
Lamar Mezzanine Shares.
(b) Chancellor Mezzanine acknowledges that the issuance of the
Lamar Mezzanine Shares will not be registered under the Securities Act or any
state securities laws on the basis of a claimed exemption by Purchaser Parent
that the issuance of the Lamar Mezzanine Shares as provided for herein is exempt
from registration under the Securities Act and applicable state securities laws.
Chancellor Mezzanine acknowledges that the availability of such exemptions is
predicated in part on Chancellor Mezzanine's representations set forth in this
Section 2.22 and that Purchaser Parent is relying on such representations.
(c) Chancellor Mezzanine has received all the information it
considers necessary or appropriate for deciding whether to accept the Lamar
Mezzanine Shares. Chancellor Mezzanine has had an opportunity to ask questions
of and to receive answers from Purchaser and Purchaser Parent regarding the
terms and conditions of the issuance of the Lamar Mezzanine Shares and the
business, properties, financial condition and prospects of Purchaser and
Purchaser Parent and to obtain additional information (to the extent Purchaser
or Purchaser Parent possessed such information or could acquire it without
unreasonable effort or expense) necessary to verify the accuracy of any
information furnished to Chancellor Mezzanine or to which Chancellor Mezzanine
had access.
(d) Chancellor Mezzanine acknowledges that it is able to bear
the economic risk of the investment in the Lamar Mezzanine Shares, and has such
knowledge and experience in financial and business matters that it is capable of
evaluating the benefits and risks of the investment in the Lamar Mezzanine
Shares.
(e) Chancellor Mezzanine is an "accredited investor" as
defined in Rule 501(a) of Regulation D promulgated under the Securities Act.
(f) Chancellor Mezzanine acknowledges that the Lamar Mezzanine
Shares may not be sold, transferred or otherwise disposed of without
registration under the Securities Act or an applicable exemption therefrom and
that in the absence of any effective registration statement covering the Lamar
Mezzanine Shares or an available exemption from registration under the
Securities Act, the Lamar Mezzanine Shares must be held indefinitely. Chancellor
Mezzanine further acknowledges that the Lamar Mezzanine Shares may not be sold
pursuant to Rule 144 promulgated under the Securities Act unless all of the
conditions of that rule are met.
(g) Chancellor Mezzanine acknowledges that each certificate
representing any of the Lamar Mezzanine Shares will be endorsed with a legend
substantially similar to the following:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR PURSUANT TO THE
SECURITIES OR "BLUE SKY" LAWS OF ANY STATE. SUCH SECURITIES MAY NOT BE
OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE
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ASSIGNED, EXCEPT PURSUANT TO (i) A REGISTRATION STATEMENT WITH RESPECT
TO SUCH SECURITIES WHICH IS EFFECTIVE UNDER SUCH ACT, (ii) RULE 144
UNDER SUCH ACT, OR (iii) ANY OTHER EXEMPTION FROM REGISTRATION UNDER
SUCH ACT.
Section 2.23. Chancellor LA Securities Act Representations.
(a) Chancellor LA is acquiring the Lamar LA Shares for
investment for its own account, not as a nominee or agent, and not with a view
to the resale or distribution of any part thereof in violation of the Securities
Act. Chancellor LA does not have any present intention of selling, granting any
participation in, or otherwise distributing the Lamar LA Shares otherwise than
pursuant to an effective registration statement under the Securities Act or in a
transaction exempt from the registration requirements under the Securities Act
and applicable state securities laws. Chancellor LA does not have any contract,
undertaking, agreement or arrangement with any Person to sell, transfer or grant
participations to such Person or to any third Person, with respect to any of the
Lamar LA Shares.
(b) Chancellor LA acknowledges that the issuance of the Lamar
LA Shares will not be registered under the Securities Act or any state
securities laws on the basis of a claimed exemption by Purchaser Parent that the
issuance of the Lamar LA Shares as provided for herein is exempt from
registration under the Securities Act and applicable state securities laws.
Chancellor LA acknowledges that the availability of such exemptions is
predicated in part on Chancellor LA's representations set forth in this Section
2.23 and that Purchaser Parent is relying on such representations.
(c) Chancellor LA has received all the information it
considers necessary or appropriate for deciding whether to accept the Lamar LA
Shares. Chancellor LA has had an opportunity to ask questions of and to receive
answers from Purchaser and Purchaser Parent regarding the terms and conditions
of the issuance of the Lamar LA Shares and the business, properties, financial
condition and prospects of Purchaser and Purchaser Parent and to obtain
additional information (to the extent Purchaser or Purchaser Parent possessed
such information or could acquire it without unreasonable effort or expense)
necessary to verify the accuracy of any information furnished to Chancellor LA
or to which Chancellor LA had access.
(d) Chancellor LA acknowledges that it is able to bear the
economic risk of the investment in the Lamar LA Shares, and has such knowledge
and experience in financial and business matters that it is capable of
evaluating the benefits and risks of the investment in the Lamar LA Shares.
(e) Chancellor LA is an "accredited investor" as defined in
Rule 501(a) of Regulation D promulgated under the Securities Act.
(f) Chancellor LA acknowledges that the Lamar LA Shares may
not be sold, transferred or otherwise disposed of without registration under the
Securities Act or an applicable exemption therefrom and that in the absence of
any effective registration statement covering the Lamar LA Shares or an
available exemption from registration under the Securities
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<PAGE> 23
Act, the Lamar LA Shares must be held indefinitely. Chancellor LA further
acknowledges that the Lamar LA Shares may not be sold pursuant to Rule 144
promulgated under the Securities Act unless all of the conditions of that rule
are met.
(g) Chancellor LA acknowledges that each certificate
representing any of the Lamar LA Shares will be endorsed with a legend
substantially similar to the following:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR PURSUANT TO THE
SECURITIES OR "BLUE SKY" LAWS OF ANY STATE. SUCH SECURITIES MAY NOT BE
OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE
ASSIGNED, EXCEPT PURSUANT TO (i) A REGISTRATION STATEMENT WITH RESPECT
TO SUCH SECURITIES WHICH IS EFFECTIVE UNDER SUCH ACT, (ii) RULE 144
UNDER SUCH ACT, OR (iii) ANY OTHER EXEMPTION FROM REGISTRATION UNDER
SUCH ACT.
Section 2.24. Divesture Assets. Chancellor LA has effected the sale or
other disposal of the outdoor advertising assets mandated by the United States
Department of Justice pursuant to the Final Judgments, as more particularly
described on Annex A hereto (the "Divestiture Assets").
Section 2.25. Necessary Lender Approvals. Chancellor LA has received
all necessary approvals and consents from its senior Lenders to the consummation
of the transactions contemplated hereby, including, without limitation, the
Dividend and releases from any and all applicable Liens created by such Lenders
and releases from any and all guarantees of each of the Company and its
Subsidiaries, in each case, effective as of the Closing, a copy of which
approval and consent has been delivered to Purchaser.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES
OF PURCHASER AND PURCHASER PARENT
Purchaser and Purchaser Parent, jointly and severally,
represent and warrant to each Seller that, as of the date of this Agreement:
Section 3.1. Corporate Organization and Authority of Purchaser and
Purchaser Parent.
(a) Purchaser has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Delaware and has the corporate power and authority to enter into and perform its
obligations under this Agreement. The execution and delivery of this Agreement
by Purchaser and the consummation of the transactions contemplated hereby have
been duly and validly authorized and approved by the Board of Directors of
Purchaser and no other corporate proceeding on the part of Purchaser is
necessary to authorize this Agreement or the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by Purchaser
and, assuming this Agreement constitutes a valid and binding agreement of each
Seller, constitutes a legally valid and binding obligation of
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Purchaser, enforceable against Purchaser in accordance with its terms, subject
to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors' rights generally and subject,
as to enforceability, to general principles of equity.
(b) Purchaser Parent has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Delaware and has the corporate power and authority to enter into and perform its
obligations under this Agreement. The execution and delivery of this Agreement
by Purchaser Parent and the consummation of the transactions contemplated hereby
have been duly and validly authorized and approved by the Board of Directors of
Purchaser Parent, and except for the consent of the stockholders of Purchaser
Parent provided in Section 5.5 hereof, no other corporate proceeding on the part
of Purchaser Parent is necessary to authorize this Agreement or the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by Purchaser Parent and, assuming this Agreement constitutes a valid
and binding agreement of each Seller, constitutes a legally valid and binding
obligation of Purchaser Parent , enforceable against Purchaser Parent in
accordance with its terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors' rights generally and subject, as to enforceability, to general
principles of equity.
Section 3.2. No Conflict. The execution and delivery of this Agreement
by each of Purchaser and Purchaser Parent and the consummation of the
transactions contemplated hereby does not and will not violate any provision of,
or result in the breach of: (a) any applicable law, rule or regulation of any
Governmental Authority, or any agreement, indenture or other instrument to which
such entity is a party or by which such entity may be bound, or of any order,
judgment or decree applicable to such entity, or terminate or result in the
termination of any such agreement, indenture or instrument, or result in the
creation of any Lien, charge or encumbrance upon any of the properties or assets
of Purchaser or constitute an event which, after notice or lapse of time or
both, would result in any such violation, breach, acceleration, termination or
creation of a Lien; or (b) the Certificate of Incorporation, Bylaws, or other
organizational documents of such entity.
Section 3.3. Litigation and Proceedings. Except as disclosed in the
Purchaser SEC Documents or the Purchaser Parent SEC Documents, there are no
lawsuits, actions, suits, claims or other proceedings at law or in equity, or,
to the knowledge of Purchaser or Purchaser Parent, investigations, before or by
any court or Governmental Authority or before any arbitrator pending or, to the
knowledge of Purchaser or Purchaser Parent, threatened, against Purchaser,
Purchaser Parent or any of their Affiliates which, if determined adversely,
could reasonably be expected to have a material adverse effect on (a) the
ability of each of Purchaser and Purchaser Parent to enter into and perform its
obligations under this Agreement, or (b) the business, financial condition or
results of operations of Purchaser or Purchaser Parent. There is no unsatisfied
judgment, order or decree or any open injunction binding upon Purchaser or
Purchaser Parent or any of their Affiliates which could reasonably be expected
to have a material adverse effect on the ability of each of Purchaser and
Purchaser Parent to enter into and perform its obligations under this Agreement.
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Section 3.4. Governmental Authorities; Consents. Assuming the truth and
completeness of the representations and warranties of each Seller contained in
this Agreement, no consent, approval or authorization of, or designation,
declaration or filing with, any governmental authority or other third party is
required on the part of Purchaser or Purchaser Parent with respect to
Purchaser's and Purchaser Parent's execution or delivery of this Agreement or
the consummation of the transactions contemplated hereby, except for (i)
applicable requirements of the HSR Act or (ii) the preparation and filing of a
proxy or information statement of Purchaser Parent with the Securities and
Exchange Commission (the "SEC") pursuant to Section 5.5.
Section 3.5. Brokers' Fees. No broker, finder, investment banker or
other Person is entitled to any brokerage fee, finders' fee or other commission
in connection with the transactions contemplated by this Agreement based upon
arrangements made by Purchaser, Purchaser Parent or any of their Affiliates.
Section 3.6. Capital Structure of Purchaser Parent and Purchaser.
(a) The authorized capital stock of Purchaser Parent consists
of (i) 125,000,000 shares of Purchaser Parent Class A Common Stock, (ii)
37,500,000 shares of Class B Common Stock, par value $0.001 per share (the
"Purchaser Parent Class B Common Stock"), of Purchaser Parent, (iii) 10,000
shares of Class A Preferred Stock, $638.00 par value per share (the "Purchaser
Parent Class A Preferred Stock"), of Purchaser Parent, and (iv) 1,000,000 shares
of Preferred Stock, $0.001 par value per share (the "Purchaser Parent Preferred
Stock"), of Purchaser Parent. At the close of business on August 4, 1999 (a)
43,568,340 shares of Purchaser Parent Class A Common Stock were issued and
outstanding, (b) no more than 1,000,000 shares of Purchaser Parent Class A
Common Stock were reserved for issuance pursuant to outstanding options (the
"Purchaser Parent Stock Options") to purchase shares of Purchaser Parent Class A
Common Stock granted under Purchaser Parent's 1996 Equity Incentive Plan, (c)
17,700,000 shares of Purchaser Parent Class A Common Stock were reserved for
issuance upon conversion of outstanding shares of Purchaser Parent Class B
Common Stock, (d) 17,699,997 shares of Purchaser Parent Class B Common Stock
were issued and outstanding, (e) 5,719.49 shares of Purchaser Parent Class A
Preferred Stock were issued and outstanding, and (f) no shares of Purchaser
Parent Class A Common Stock, Purchaser Parent Class B Common Stock, Purchaser
Parent Class A Preferred Stock or Purchaser Parent Preferred Stock were held as
treasury shares by Purchaser Parent or any Subsidiary of Purchaser Parent.
Except as set forth above, at the close of business on August 4, 1999, no shares
of capital stock or other equity securities of Purchaser Parent were authorized,
issued, reserved for issuance or outstanding. All outstanding shares of capital
stock of Purchaser Parent are, and all shares which may be issued (1) upon the
exercise of outstanding Purchaser Parent Stock Options, or (2) to Chancellor
Mezzanine and Chancellor LA pursuant to the terms of this Agreement will be,
when issued, duly authorized, validly issued, fully paid and nonassessable and
not subject to preemptive rights. No bonds, debentures, notes or other
indebtedness of Purchaser Parent or any Subsidiary of Purchaser Parent having
the right to vote (or convertible into, or exchangeable for, securities having
the right to vote) on any matters on which the stockholders of Purchaser Parent
or any Subsidiary of Purchaser Parent may vote are issued or outstanding. All
the outstanding shares of capital stock or other equity interests of each
Subsidiary of Purchaser Parent have been validly issued and are fully paid and
nonassessable and are owned by Purchaser Parent, by one or more wholly-owned
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subsidiaries of Purchaser Parent or by Purchaser Parent and one or more such
wholly-owned subsidiaries, free and clear of all Liens. Except as set forth
above, or except as set forth in Purchaser Parent SEC Documents (as defined in
Section 3.7), neither Purchaser Parent nor any Subsidiary of Purchaser Parent
has any outstanding option, warrant, agreement, arrangement or other rights,
relating to the capital stock of Purchaser Parent or any Subsidiary of Purchaser
Parent that either (x) obligates Purchaser Parent or any Subsidiary of Purchaser
Parent to issue, sell or transfer, repurchase, redeem, purchase, register for
sale or otherwise acquire or vote any shares of the capital stock or other
equity securities of Purchaser Parent or any of its Subsidiaries or (y)
restricts the transfer of the Purchaser Parent Class A Common Stock. From the
close of business on August 4, 1999, neither Purchaser Parent nor any Subsidiary
of Purchaser Parent has issued any capital stock or securities or other rights
convertible into or exercisable or exchangeable for shares of such capital
stock, other than any issuances of shares of Purchaser Parent Class A Common
Stock pursuant to the exercise of Purchaser Parent Stock Options outstanding on
the date hereof.
(b) The authorized capital stock of Purchaser consists of
1,000 shares of common stock, par value $.01 per share (the "Purchaser Common
Stock"). As of the date hereof, 100 shares of Purchaser Common Stock were issued
and outstanding. All outstanding shares of capital stock of Purchaser are owned
beneficially and of record by Purchaser Parent and are duly authorized, validly
owned, fully paid and nonassessable and not subject to preemptive rights.
Section
3.7. SEC Documents; Financial Statements. (i) Each of Purchaser and
Purchaser Parent has filed with the SEC all required reports, schedules, forms,
statements and other documents since, with respect to Purchaser, Purchaser's
initial public offering and, with respect to Purchaser Parent, the Restructuring
(such reports, schedules, forms, statements and any other documents filed with
the SEC and publicly available prior to the date of this Agreement are
hereinafter referred to as the "Purchaser SEC Documents" and the "Purchaser
Parent SEC Documents," respectively); (ii) as of their respective dates, the
Purchaser SEC Documents and the Purchaser Parent SEC Documents complied in all
material respects with the requirements of the Securities Act of 1933, as
amended (the "Securities Act"), or the Securities and Exchange Act of 1934, as
amended (the "Exchange Act"), as the case may be, and the rules and regulations
of the SEC promulgated thereunder applicable to such Purchaser SEC Documents and
such Purchaser Parent SEC Documents, and none of the Purchaser SEC Documents or
the Purchaser Parent SEC Documents as of such dates contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading; and (iii) as of
their respective dates, the consolidated financial statements of (a) Purchaser
and its predecessors included in the Purchaser SEC Documents and (b) Purchaser
Parent and its predecessors included in the Purchaser Parent SEC Documents
complied as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, have been prepared in accordance with GAAP applied on a consistent
basis during the periods involved (except as may be indicated in the notes
thereto or, in the case of unaudited statements, as permitted by Rule 10-01 of
Regulation S-X) and fairly present, in all material respects, the consolidated
financial position of Purchaser and Purchaser Parent, as the case may be, and
their respective consolidated Subsidiaries (or predecessors and their respective
consolidated Subsidiaries) as of the dates thereof and the consolidated results
of their operations
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and cash flows for the periods then ended (on the basis stated therein and
subject, in the case of unaudited quarterly statements, to normal year-end audit
adjustments).
Section 3.8. Legal Compliance. Except with respect to matters disclosed
in the Purchaser SEC Documents or the Purchaser Parent SEC Documents, Purchaser
Parent and each of its Subsidiaries (including, without limitation, Purchaser)
is in compliance with all laws (including rules and regulations thereunder) of
federal, state, local and foreign governments (and all agencies thereof)
applicable thereto, except where such instances of noncompliance would not have
a material adverse effect on the business, operations or financial condition of
Purchaser Parent and its Subsidiaries, taken as a whole.
Section 3.9. Interest in Competitors, Suppliers and Customers. Except
as set forth on Schedule 3.9, to the knowledge of Purchaser or Purchaser Parent,
no stockholder, officer, or director of Purchaser or Purchaser Parent or any
Affiliate of any such stockholder, officer or director has any ownership
interest in any competitor, supplier, or customer of Purchaser or any property
used in the operation of the business of Purchaser or Purchaser Parent.
Section 3.10. State Takeover Statutes. The Board of Directors of each
of Purchaser and Purchaser Parent has approved the terms of this Agreement and
the consummation of the transactions contemplated by this Agreement and such
approval is sufficient to render the provisions of Section 203 of the Delaware
General Corporation Law inapplicable to the acquisition of the Lamar Shares and
the other transactions contemplated by this Agreement. To the knowledge of
Purchaser or Purchaser Parent, no other state takeover statute or similar
statute or regulation applies or purports to apply to the acquisition of the
Lamar Shares to be issued pursuant to this Agreement or any of the transactions
contemplated hereby.
Section 3.11. Subsequent Events.
(a) From March 31, 1999 to the date hereof, there has not
occurred any material adverse change in the business, financial condition or
results of operations of Purchaser.
(b) From the date of incorporation of Purchaser Parent to the
date hereof, there has not occurred any material adverse change in the business,
financial condition or results of operations of Purchaser Parent.
Section 3.12. Securities Act Representations.
(a) Purchaser is acquiring the Company Shares and the Whiteco
Shares for investment for its own account, not as a nominee or agent, and not
with a view to the resale or distribution of any part thereof in violation of
the Securities Act. Other than the possible contribution of the Company Shares
or the Whiteco Shares to a Subsidiary, Purchaser does not have any present
intention of selling, granting any participation in, or otherwise distributing
any of the Company Shares or the Whiteco Shares otherwise than pursuant to an
effective registration statement under the Securities Act or in a transaction
exempt from the registration requirements under the Securities Act and
applicable state securities laws. Purchaser does not have any contract,
undertaking, agreement or arrangement with any Person to sell, transfer or grant
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participations to such Person or to any third Person, with respect to any of the
Company Shares or the Whiteco Shares.
(b) Purchaser acknowledges neither the sale of the Company
Shares nor the Whiteco Shares will be registered under the Securities Act or any
state securities laws on the basis of a claimed exemption by either Seller that
the sale of the Company Shares and the Whiteco Shares as provided for herein is
exempt from registration under the Securities Act and applicable state
securities laws. Purchaser acknowledges that the availability of such exemptions
is predicated in part on Purchaser's representations set forth in this Section
3.12 and that each Seller is relying on such representations.
(c) Purchaser has received all the information it considers
necessary or appropriate for deciding whether to accept the Company Shares and
the Whiteco Shares. Purchaser has had an opportunity to ask questions of and to
receive answers from each Seller regarding the terms and conditions of the sale
of the Company Shares and the Whiteco Shares and the business, properties,
financial condition and prospects of each Seller and to obtain additional
information (to the extent either Seller possessed such information or could
acquire it without unreasonable effort or expense) necessary to verify the
accuracy of any information furnished to Purchaser or to which Purchaser had
access.
(d) Purchaser acknowledges that it is able to bear the
economic risk of the investment in the Company Shares and the Whiteco Shares,
and has such knowledge and experience in financial and business matters that it
is capable of evaluating the benefits and risks of the investment in the Company
Shares and the Whiteco Shares.
(e) Purchaser is an "accredited investor" as defined in Rule
501(a) of Regulation D promulgated under the Securities Act.
(f) Purchaser acknowledges that neither the Company Shares nor
the Whiteco Shares may be sold, transferred or otherwise disposed of without
registration under the Securities Act or an applicable exemption therefrom and
that in the absence of any effective registration statement covering such Shares
or an available exemption from registration under the Securities Act, the
Company Shares and the Whiteco Shares must be held indefinitely. Purchaser
further acknowledges that the neither the Company Shares nor the Whiteco Shares
may be sold pursuant to Rule 144 promulgated under the Securities Act unless all
of the conditions of that rule are met.
Section 3.13. Commitment Letters. Purchaser has delivered to Chancellor
LA a letter of its lenders committing to fund no less than Seven Hundred Million
Dollars ($700,000,000) at Closing specifically for the transactions contemplated
by this Agreement (the "Commitment Letter"). Such Commitment Letter contains no
conditions to the funding of such amounts, other than those which are customary
for transactions of the type contemplated hereunder. The Commitment Letter shall
remain in full force and effect until the date on which Definitive Documentation
(as defined in Section 5.6(a)) has been executed, is binding and has been
delivered to Chancellor LA.
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ARTICLE 4.
COVENANTS AND AGREEMENTS OF SELLERS
Section 4.1. Preliminary Transactions. Prior to or concurrent with the
Closing, Chancellor LA shall cause the Company and its Subsidiaries to effect,
or cause to be effected, the acquisition of outdoor advertising assets pursuant
to the Compromise Settlement Agreement and Mutual Release between the Company,
Chancellor Media Corporation, Randy Burkett and Jeffrey Burkett, dated May 5,
1999, and the Asset Purchase Agreement between Whiteco and Randy Burkett, dated
May 5, 1999, all as more particularly described on Annex B hereto (the "Burkett
Assets"). The transactions contemplated by (i) the sale or other disposal of the
Divestiture Assets and (ii) the acquisition of the Burkett Assets shall be
referred to herein, collectively, as the "Preliminary Transactions."
Section 4.2. Conduct of Business. From the date hereof through the
Closing, Chancellor LA shall use commercially reasonable efforts to cause the
Company and each of its Subsidiaries, except as may be necessary to effect the
Preliminary Transactions and except as otherwise contemplated by this Agreement
or as consented to by Purchaser or Purchase Parent in writing (which consent
will not be unreasonably withheld), to operate its business in the ordinary
course and substantially in accordance with past practice and use commercially
reasonable efforts not to take any action inconsistent with this Agreement.
Without limiting the generality of the foregoing, unless consented to by
Purchaser or Purchaser Parent in writing (which consent shall not be
unreasonably withheld), Chancellor LA shall cause the Company and each of its
Subsidiaries not to, except as contemplated by this Agreement:
(a) change or amend its Certificate of Incorporation, Bylaws
or other organizational documents, except as otherwise required by law;
(b) (i) enter into, extend, materially modify, terminate or
renew any Contract of a type required to be listed on Schedule 2.8, except in
the ordinary course of business, or (ii) settle or otherwise resolve any
financial issue, claim or adjustment under any such Contract;
(c) sell, assign, transfer, convey, lease or otherwise dispose
of any material assets or properties, except in the ordinary course of business;
(d) except as otherwise required by law, take any action with
respect to the grant of any severance or termination pay (otherwise than
pursuant to policies or agreements of the Company or any of its Subsidiaries in
effect on the date hereof) which will become due and payable from the Company or
any of its Subsidiaries on or after the Closing Date; make any change in the key
management structure of the Company or any of its Subsidiaries, including,
without limitation, the hiring of additional officers or the terminations of
existing officers, other than in the ordinary course of business;
(e) acquire by merger or consolidation with, or merge or
consolidate with, or purchase substantially all of the assets of, or otherwise
acquire any material assets or business of any corporation, partnership,
association or other business organization or division thereof;
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(f) make any material loans or advances to any partnership,
firm or corporation, or, except for expenses incurred in the ordinary course of
business, any individual;
(g) amend any Employee Plan or increase the salary of any
management Employee, except in the ordinary course of business;
(h) alter in any material respect the past practices of the
Company or its Subsidiaries with respect to the collection of receivables or
payment of payables; or
(i) enter into any agreement, or otherwise become obligated,
to do any action prohibited hereunder; provided, however, that none of the
foregoing shall restrict or prohibit the consummation of the Dividend.
Section 4.3. Inspection. Subject to confidentiality obligations and
similar restrictions that may be applicable to information furnished to any
Seller, the Company or any Subsidiary of the Company by third parties that may
be in the possession of any Seller or the Company from time to time, Chancellor
LA shall afford to Purchaser, Purchaser Parent and their accountants, counsel
and other representatives reasonable access, during normal business hours, to
the properties, books, contracts, commitments, tax returns, records and
appropriate officers and employees of the Company and its Subsidiaries, and
shall furnish such representatives with all financial and operating data and
other information concerning the affairs of the Company and its Subsidiaries as
they may reasonably request.
Section 4.4. HSR Act.
(a) In connection with the transactions contemplated by this
Agreement, each Seller (and, to the extent required, its Affiliates) shall
comply promptly with the notification and reporting requirements of the HSR Act
and use reasonable best efforts to obtain early termination of the waiting
period under the HSR Act. Each Seller shall promptly comply with any additional
requests for information, including requests for production of documents and
production of witnesses for interviews or depositions, by any Antitrust
Authority.
(b) Neither the Company nor any of its Subsidiaries shall
acquire any outdoor advertising assets in any county in which the (i) Company or
its Subsidiaries and (ii) Purchaser or its Affiliates, own a material number of
outdoor advertising assets. For purposes of this Section 4.4(b), "a material
number of outdoor advertising assets" shall mean a significant number of outdoor
advertising assets in a county, given the total number of outdoor advertising
assets in that county.
Section 4.5. No Solicitations. From the date hereof through the
Closing, each Seller shall not, and shall not knowingly permit its Affiliates,
officers, directors, employees, representatives and agents to, directly or
indirectly, encourage, solicit, participate in, initiate or conduct discussions
or negotiations with, or provide any information to, any Person or group of
Persons (other than Purchaser, Purchaser Parent or any of their Affiliates)
concerning any merger, sale of assets, sale of shares of capital stock or
similar transactions involving the Company or any Subsidiary or division of the
Company.
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Section 4.6. No Solicitation or Hiring. For a period of five (5) years
following the Closing, each Seller shall not, directly or indirectly, hire or
offer employment to any employee of the Business whose employment is continued
by Purchaser after the Closing Date, unless (a) Purchaser or Purchase Parent
first terminates the employment of such employee or gives its prior written
consent to such employment or offer of employment, (b) such employee contacts a
Seller regarding employment opportunities, (c) such employee responds to any
general solicitation by any Seller for employment by such Seller, or (d) the
employment of such employee by Purchaser or Purchase Parent has been terminated.
Section 4.7. Registration Rights Agreement and Stockholders Agreement.
Each of Chancellor Mezzanine and Chancellor LA shall, on the Closing Date,
execute and deliver to Purchaser Parent each of the Registration Rights
Agreement and the Stockholders Agreement.
Section 4.8. Requests for Information. Each Seller shall cooperate with
Purchaser Parent in Purchaser Parent's preparation and filing with the SEC of a
preliminary proxy or information statement, as applicable, as provided in
Section 5.5, including providing Purchaser Parent with such information about
such Seller, the Company and its Subsidiaries, for use in connection with any
such preliminary proxy or information statement as Purchaser Parent may
reasonably request. The information so provided by each Seller shall not contain
any untrue statement or alleged untrue statement of a material fact or any
omission of a material fact required to be stated therein or necessary to make
such statements not misleading, but only to the extent that such untrue
statement or omission is contained in any written information so furnished by
such Seller specifically for inclusion in such preliminary proxy or information
statement.
Section 4.9. Payment of Certain Employee Obligations. From and after
the Closing Date, Chancellor LA shall pay any severance obligations and any
payments to enforce non-competition provisions (whether such payments are
voluntary or not), arising pursuant to the contracts set forth on Schedule 4.9.
ARTICLE 5.
COVENANTS AND AGREEMENTS OF PURCHASER AND PURCHASER PARENT
Section 5.1. HSR Act.
(a) In connection with the transactions contemplated by this
Agreement, Purchaser and Purchaser Parent (and, to the extent required, their
Affiliates) shall comply promptly with the notification and reporting
requirements of the HSR Act and use reasonable best efforts to obtain early
termination of the waiting period under the HSR Act. Purchaser and Purchaser
Parent shall comply promptly with any additional requests for information,
including requests for production of documents and production of witnesses for
interviews or depositions, by any Antitrust Authorities.
(b) In connection with the transactions contemplated hereby,
Purchaser and Purchaser Parent shall take any and all steps needed to cause the
transactions contemplated
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by this Agreement and the Ancillary Agreements to be consummated at the earliest
practicable time, and no later than November 30, 1999.
(c) Neither Purchaser nor Purchaser Parent shall, nor shall
any of their Affiliates, agents or representatives, take, or fail to take, any
action which is intended, or is reasonably likely, to impede, hinder or delay
approval of the transactions contemplated by this Agreement by the Antitrust
Authorities.
(d) No Seller need give Purchaser or Purchaser Parent prior
notice or any opportunity to cure a breach of this Section 5.1 prior to the
exercise by any Seller of its right to terminate this Agreement in the event of
such breach by Purchaser or Purchaser Parent, in accordance with Section 8.1.
Section 5.2. No Use of "Chancellor" Name. Promptly following the
Closing, each of Purchaser and Purchaser Parent shall take all necessary action
to cause the name of the Company and its Subsidiaries to be changed to a name
specified in a writing and delivered to Sellers by Purchaser and Purchaser
Parent at least ten (10) Business Days prior to the Closing. Following the
Closing, Purchaser, Purchaser Parent the Company and its Subsidiaries shall have
no rights to the name "Chancellor" or any variant thereof or any trademark,
service mark, trade dress, logo or trade name including the name "Chancellor" or
any name similar to it. Following the Closing, each of Purchaser and Purchaser
Parent shall cause the Company and each Affiliate of Purchaser and Purchaser
Parent to refrain from making any use of the name "Chancellor" or any variant
thereof or any trademark, service mark, trade dress, logo or trade name
including the name "Chancellor" or any name similar to it within a commercially
reasonable period of time.
Section 5.3. Investigation; Purchaser and Purchaser Parent
Acknowledgment.
(a) As of the date hereof, each of Purchaser and Purchaser
Parent acknowledges and agrees that (i) it has made its own inquiry and
investigation into, and, based thereon, has formed an independent judgment
concerning, the Company, its Subsidiaries and the Business, (ii) in the course
of such inquiry, neither Purchaser nor Purchaser Parent has become aware of any
facts which would cause or constitute a breach of any representation or warranty
of either Seller set forth herein, and (iii) it has been furnished with or given
adequate access to such information about the Company, its Subsidiaries and the
Business as it has requested.
(b) In connection with Purchaser's and Purchaser Parent's
investigation of the Company, its Subsidiaries and the Business, each of
Purchaser and Purchaser Parent has received from Chancellor LA certain
projections, forecasts, plans and budget information concerning the Company, its
Subsidiaries and the Business. Each of Purchaser and Purchaser Parent
acknowledges that there are uncertainties inherent in attempting to make such
projections, forecasts, plans and budgets; that each of Purchaser and Purchaser
Parent is familiar with such uncertainties; each of Purchaser and Purchaser
Parent is taking full responsibility for making its own evaluation of the
adequacy and accuracy of all estimates, projections, forecasts, plans and
budgets so furnished to it; and that neither Purchaser nor Purchaser Parent will
assert any claim against either Seller or any of either Seller's directors,
officers, employees, agents, stockholders,
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Affiliates, consultants, counsel, accountants, or representatives, or hold such
Seller or any such persons liable, with respect thereto.
(c) Each of Purchaser and Purchaser Parent acknowledges that
no Seller makes any representations or warranties concerning the Company, its
Subsidiaries, their respective assets or the Business, other than as expressly
set forth in Article 2 hereof, and that each Seller expressly disclaims all
other representations and warranties, including, without limitation, any
warranty of merchantability or fitness for a particular purpose.
Section 5.4. No Solicitations or Hiring. Prior to Closing, without the
prior consent of Chancellor LA, each of Purchaser and Purchaser Parent shall
not, and shall not knowingly permit its Affiliates, officers, directors,
employees, representatives and agents to, directly or indirectly, hire, offer,
participate in, or initiate negotiations concerning, employment to or with any
employee of the Company or any of its Subsidiaries.
Section 5.5. Stockholder Consent.
(a) As soon as practicable following the date of this
Agreement, Purchaser Parent shall prepare and file with the SEC a preliminary
proxy or information statement, as applicable, with respect to its proposal to
issue the Lamar Shares and shall use its best efforts to cause the proxy or
information statement to be mailed to Purchaser Parent 's stockholders as
promptly as practicable after the review process at the SEC has been completed.
(b) Purchaser Parent agrees and represents and warrants that
the proxy or information statement will not, at the date it is first mailed to
Purchaser Parent's stockholders or at the time of the Purchaser Parent's
stockholders meeting, if any, contain any statement which, at the time and in
light of the circumstances under which it is made, is false or misleading with
respect to any material fact, or omits to state any material fact necessary in
order to make the statements therein not false or misleading or necessary to
correct any statement in any earlier communication with respect to the
solicitation of a proxy for the same meeting or subject matter thereof which has
become false or misleading except for information provided to Purchaser Parent
by any Seller, for inclusion therein, as to which Purchaser Parent makes no such
representation or warranty. Purchaser Parent agrees that the proxy or
information statement will comply as to form in all material respects with the
requirements of the Exchange Act and the rules and regulations promulgated
thereunder.
(c) Purchaser Parent agrees that it will take all action
necessary in accordance with applicable law and its Certificate of Incorporation
and Bylaws to convene a meeting of its stockholders or obtain the written
consent of its stockholders for the approval of the issuance of the Lamar
Shares. Purchaser Parent will use its best efforts to obtain the approval of its
stockholders as soon as practicable after the date hereof.
Section 5.6. Definitive Documentation.
(a) Purchaser will deliver to Chancellor LA, on or prior to
August 14, 1999, definitive agreements (which have been executed and delivered
by the applicable parties and
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which are binding), reflecting the commitment by equity and/or senior debt
sources reasonably satisfactory to Chancellor LA to provide funding to
Purchaser at or prior to Closing in an aggregate amount equal to at least
$700,000,000 (the "Definitive Documentation"). The Definitive Documentation
shall contain no conditions to the funding of such amounts, other than those
which are customary for transactions of the type contemplated hereunder. The
Definitive Documentation must remain in full force and effect until the
Closing.
(b) Concurrently with the delivery of the Definitive
Documentation, an executive officer of Purchaser will certify to Sellers, in
writing, that (i) Purchaser currently is meeting the covenants under its
existing lending facility and other existing instruments of indebtedness, and
(ii) Purchaser has no reason to believe that it will be unable to meet the
covenants set forth under the Definitive Documentation.
(c) If the Purchaser fails to deliver the Definitive
Documentation and the Certificate provided for in Section 5.6(b) by August 14,
1999, then Sellers shall have the right, by delivery of written notice to
Purchaser within the five (5) calendar days following August 14, 1999, to elect
to terminate this Agreement. In the event of termination by Sellers pursuant to
this Section 5.6(c), this Agreement shall forthwith become void and have no
effect, without any liability on the part of any party hereto or their
respective Affiliates, officers, directors or stockholders.
Section 5.7. Conduct of Business. From the date hereof through the
Closing, each of Purchaser and Purchaser Parent shall use commercially
reasonable efforts to operate its business in the ordinary course and
substantially in accordance with past practice and use commercially reasonable
efforts not to take any action inconsistent with this Agreement. Without
limiting the generality of the foregoing, unless consented to by Sellers in
writing, neither Purchaser nor Purchaser Parent shall:
(a) change or amend its certificate of incorporation, bylaws
or other organizational documents, except as otherwise required by law; or
(b) take any action that would be prohibited by Article IV the
Stockholders Agreement if such agreement were in effect.
Section 5.8. Registration Rights Agreement and Stockholders Agreement.
Purchaser Parent shall, on the Closing Date, execute and deliver to Sellers the
Registration Rights Agreement. Each of Purchaser Parent and Reilly Family
Limited Partnership, a Louisiana limited partnership and a stockholder of
Purchaser Parent ("RFLP"), shall, on the Closing Date, execute and deliver to
Sellers the Stockholders Agreement.
Section 5.9. Inspection. Subject to confidentiality obligations and
similar restrictions that may be applicable to information furnished to
Purchaser or Purchaser Parent by third parties that may be in the possession of
Purchaser or Purchaser Parent from time to time, each of Purchaser and Purchaser
Parent shall afford to Sellers and their accountants, counsel and other
representatives reasonable access, during normal business hours, to the
properties, books, contracts, commitments, tax returns, records and appropriate
officers and employees of the
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Purchaser and Purchaser Parent, and shall furnish such representatives with all
financial and operating data and other information concerning the affairs of the
Purchaser and Purchaser Parent as they may reasonably request.
ARTICLE 6.
JOINT COVENANTS AND AGREEMENTS
Section 6.1. Confidentiality.
(a) Except for any governmental filings required in order to
complete the transactions contemplated herein and as Sellers, Purchaser and
Purchaser Parent may otherwise agree or consent in writing, all information
received by Purchaser, Purchaser Parent and Sellers and their respective
representatives in contemplation, or pursuant to the terms, of this Agreement
shall be kept in confidence by the receiving party and its representatives;
provided, however, that any party hereto may disclose such information to (i)
its legal and financial advisors, lenders, financing sources and their
respective legal advisors and representatives, and (ii) such third parties as
are reasonably necessary to negotiate or consummate the sale or other
disposition by Purchaser or Purchaser Parent of assets or lines of business of
the Company or any of its Subsidiaries pursuant to a request or governmental
order by any Antitrust Authority, so long as such Persons agree to maintain the
confidentiality of such information in accordance with this Section 6.1. If the
transactions contemplated hereby shall fail to be consummated, all copies of
documents or extracts thereof containing information and data as to one of the
other parties, including all information prepared by the receiving party's
representatives may be destroyed at the option of the receiving party, with
notice of such destruction (or return) to be confirmed in writing to the
disclosing party. Any information not so destroyed (or returned) will remain
subject to these confidentiality provisions (notwithstanding any termination of
this Agreement) until the fifth (5th) anniversary of the Closing Date.
(b) The foregoing confidentiality provisions shall not apply
to such portions of the information received which (i) are or become generally
available to the public through no action by the receiving party or by such
party's representatives, (ii) are or become available to the receiving party on
a nonconfidential basis from a source, other than the disclosing party or its
representatives, which the receiving party believes, after reasonable inquiry,
is not prohibited from disclosing such portions to it by a contractual legal or
fiduciary obligation, or (iii) are required by law to be disclosed, and shall
not apply to any disclosure by Purchaser or Purchaser Parent after the Closing
of any information disclosed by the Company.
Section 6.2. Support of Transaction. Purchaser, Purchaser Parent and
each Seller shall each (i) use commercially reasonable efforts to assemble,
prepare and file any information (and, as needed, to supplement such
information) as may be reasonably necessary to obtain as promptly as practicable
all governmental and regulatory consents required to be obtained in connection
with the transactions contemplated hereby, (ii) use commercially reasonable
efforts to obtain all material consents and approvals of third parties that any
of Purchaser, Purchaser Parent, either Seller, or their respective Affiliates
are required to obtain in order to consummate the transactions contemplated
hereby, (iii) take such other action as may reasonably be necessary or as
another party may reasonably request to satisfy the conditions of Article 7 or
otherwise to comply with
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this Agreement, and (iv) provide the other parties, and such other parties
employees, officers, accountants, lawyers, financial advisors and other
representatives with access to its personnel, properties, business and records
under all reasonable circumstances.
Section 6.3. [Intentionally Left Blank].
Section 6.4. Tax Matters. The following provisions shall govern the
allocation of responsibility as between Purchaser and Purchaser Parent, on the
one hand, and Sellers, on the other hand, for certain Tax matters following the
Closing Date:
(a) Chancellor LA shall prepare and file (or cause to be
prepared and filed) in a timely manner all Tax Returns for the Company and its
Subsidiaries that relate to tax periods that end on or before the Closing Date.
All such Tax Returns shall be prepared in a manner consistent with past
practices. Purchaser shall prepare and file (or cause to be prepared and filed)
in a timely manner all other Tax Returns for the Company and any of its
Subsidiaries. All Tax Returns prepared by the Purchaser for any Straddle Period
shall be prepared in a manner consistent with past practices.
(b) In order to apportion any Taxes that relate to a Straddle
Period, the parties hereto will, to the extent permitted by applicable law,
elect with the relevant taxing authorities to treat for all purposes the Closing
Date as the last day of a taxable period of the Company and of its Subsidiaries,
and such period shall be treated as a "Short Period" and a "Pre-Closing Period"
for purposes of this Agreement. In any case where applicable law does not permit
the Closing Date to be treated as the last day of a Short Period, then for
purposes of this Agreement, the portion of such Taxes that is attributable to
the operation of the Company or any of its Subsidiaries for the "Pre-Closing
Partial Period" (as defined below) shall be (i) in the case of Taxes that are
not based on income gross receipts, the total amount of such Taxes for the
period in question multiplied by a fraction, the numerator of which is the
number of days in the Pre-Closing Partial Period and the denominator of which is
the number of days in the entire period in question and (ii) in the case of any
Taxes that are based on income or gross receipts, the Taxes that would be due
with respect to the Straddle Period, if such Straddle Period were a Short
Period. "Pre-Closing Partial Period" means with respect to any Taxes imposed on
the Company or any of its Subsidiaries for which the Closing Date is not the
last day of the Short Period, the period of time beginning on the first day of
the actual taxable period that includes (but does not end on) the Closing Date
and ending on and including the Closing Date.
(c) Each of Purchaser and Purchaser Parent covenants that it
will not, and it will not cause or permit the Company, the Company's
Subsidiaries or any Affiliate of the Purchaser or Purchaser Parent to, (i) take
any action on the Closing Date other than in the ordinary course of business,
including, but not limited to, the distribution of any dividend or the
effectuation of any redemption that could give rise to any Tax liability of any
Seller or any of their Affiliates, (ii) make any election or deemed election
under Section 338 of the Code (or any analogous or similar rules in any relevant
tax jurisdiction), or (iii) make or change any tax election, amend any Tax
Return, take any action, omit to take any action or enter into any transaction,
in each case, that results in any increased Tax liability, reduction of any Tax
Asset of any Seller, the Company or any Subsidiary of the Company in respect of
any period that ends on
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or before the Closing Date or any Straddle Period without obtaining the Sellers'
consent, which consent shall not be unreasonably withheld.
(d) Each Seller or the parent of the consolidated group of
which each of them is a member may, at its or their option, elect to reattribute
certain Tax Assets of the Company or of any Subsidiary of the Company pursuant
to Treasury Regulations Section 1.1502-20(g).
(e) Sellers, Purchaser and Purchaser Parent agree to give
prompt notice to each other of any proposed adjustment to Taxes for periods for
which the other may have liability under this Agreement. Sellers, Purchaser and
Purchaser Parent shall cooperate with each other in the conduct of any audit or
other proceedings involving the Company or any of its Subsidiaries for such
periods and each may participate at its own expense. Purchaser and Purchaser
Parent shall cause powers of attorney authorizing Sellers or its representative
to represent the Company and its Subsidiaries before the relevant taxing
authority and such other documents as are reasonably necessary for Sellers or
their representative to control the conduct of any such audit; provided,
however, that Sellers shall not compromise or settle any such audit without
obtaining Purchaser's consent, which consent shall not be unreasonably withheld,
if such compromise or settlement would result in an increased Tax liability or a
reduction in any Tax Assets or have the effect of increasing any Tax liability
of the Company, any of its Subsidiaries, Purchaser or Purchaser Parent in each
case for any taxable period ending after the Closing Date.
(f) Purchaser and Purchaser Parent shall make (or cause to be
made), an election under Section 172(b)(3) of the Code (or any analogous or
similar rules in any relevant tax jurisdiction, to the extent permitted by law)
to relinquish the entire carryback period with respect to any net operating loss
attributable by the Company or any of its Subsidiaries in any taxable period
beginning after the Closing Date that could be carried back to a taxable year of
the Company and its Subsidiaries ending on or before the Closing Date. Except
for any carrybacks of Tax credits, neither Seller nor any Affiliate of either
Seller shall be required to pay to Purchaser, Purchaser Parent, the Company or
the Company's Subsidiaries any refund or credit of Taxes that results from the
carryback to any tax period ending on or before the Closing Date of any net
operating loss, capital credit or other Tax Asset attributable to the Company or
any of its Subsidiaries from any tax period beginning after the Closing Date.
(g) Sellers, Purchaser and Purchaser Parent agree to furnish
or cause to be furnished to each other, upon request, as promptly as
practicable, such information and assistance (including access to books and
records) relating to the Company or any of its Subsidiaries as is reasonably
necessary for the preparation of any Tax Return, claim for refund or audit, and
the prosecution or defense of any claim, suit or proceeding relating to any
proposed adjustment.
(h) After the Closing, Purchaser shall pay to Chancellor LA
any refunds of or credits for Taxes (net of any income Tax liability incurred as
a result of receiving such refund or credit) relating to the Company or any of
its Subsidiaries for periods ending on or before the Closing Date and for
Pre-Closing Partial Periods except to the extent any such refund or credit is
reflected as an asset on the Closing Balance Sheet. Purchaser shall cause powers
of attorneys authorizing Chancellor LA or its representatives to represent the
Company and its Subsidiaries
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before the relevant taxing authority and such other documents as are reasonably
necessary for Chancellor LA or its representatives to receive any refunds or
credits that Chancellor LA is entitled to receive pursuant to the preceding
sentence; provided, however, that Chancellor LA shall not be permitted to file
for any refund or credit without obtaining the Purchaser's consent, which
consent shall not be unreasonably withheld, if the receipt of such refund or
credit would have the effect of increasing any Tax liability or reducing any Tax
Asset of the Company, any of its Subsidiaries, Purchaser or Purchaser Parent
(except for an increase of income Tax liability incurred as a result of
receiving such refund or credit) for any taxable period ending after the Closing
Date.
(i) Sellers, Purchaser and Purchaser Parent agree that all
transfer documentary, sales, use, stamp, registration and other similar Taxes
("Conveyance Taxes") incurred solely as a result of a change of control of the
Company or its Subsidiaries occurring upon consummation of this Agreement shall
be borne 50% by Purchaser and 50% by Chancellor LA. Chancellor LA's liability
for its share of Conveyance Taxes shall be discharged exclusively through an
accrual on the Closing Balance Sheet of its share of Conveyance Taxes.
(j) Chancellor LA shall be liable for and shall pay all Taxes
(i) of the Company or any of the Company's Subsidiaries in respect of any
taxable period ending on or before the Closing Date; (ii) of the Company or any
of the Company's Subsidiaries in respect of any Straddle Period to the extent
such Taxes are attributable to the Pre-Closing Partial Period as determined in
Section 6.4(b); (iii) that are imposed on the Company or any of the Company's
Subsidiaries under Treasury Regulation 1.1502-6 (or any similar provision of
state, local or foreign law) as a transferee or successor with respect to any
taxable period ending on or before the Closing Date or with respect to any
Pre-Closing Partial Period; (iv) imposed on the Company or any of the Company's
Subsidiaries pursuant to any Tax sharing agreement existing as of the Closing
Date; provided, however, that in each case Chancellor LA shall not be liable for
and shall not be required to pay such Taxes to the extent such Taxes are accrued
on the Closing Balance Sheet; and (v) of the Company or any of the Company's
Subsidiaries resulting from the payment of the Dividend for any taxable period,
whether such period begins before or after the Closing.
Section 6.5. Certain Employee Benefits Matters.
(a) Purchaser shall or shall cause the Company and its
Subsidiaries to employ, effective as of the Closing Date, each of the employees
of the Company and its Subsidiaries who are, immediately prior to the Closing,
actively employed or on vacation, leave of absence, disability or sick leave or
lay-off (the "Transferred Employees"). For purposes of vacation entitlement
only, Purchaser shall cause Purchaser's employee benefit plans to recognize all
service for the purpose of determining vesting of benefits, participation
eligibility and benefit accrual by Transferred Employees with the Company, any
of its Subsidiaries and Chancellor LA, including service with predecessor
employers to the extent that such service was recognized by the analogous plans
of the Company, any of its Subsidiaries or either Seller such that no break or
interruption of employment or participation shall be deemed to have occurred
with respect to the Transferred Employees by reason of the transactions
contemplated by this Agreement.
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(b) Purchaser agrees that any pre-existing condition
exclusions or waiting periods imposed under Purchaser's welfare benefit plans
will be no more restrictive than the analogous provisions under the applicable
plans of Chancellor LA or the Company (and shall be applied utilizing the
service crediting rules set forth in the last sentence of Section 6.5(a)) with
respect to any Transferred Employee and his or her covered dependents and
Purchaser (or Purchaser's employee benefit plans) shall assume all liabilities
relating to all claims by Transferred Employees (and their dependents and
beneficiaries) for benefits under all medical, dental, employee assistance,
life, accidental death and dismemberment, dependent life, short- and long-term
disability plans which are submitted on and after the Closing Date (including
claims related to hospital stays commenced on or before the Closing Date).
Purchaser shall provide that any expenses incurred under any Welfare Plan by a
Transferred Employee or his or her covered dependents during the plan year that
includes the Closing Date shall be taken into account under any applicable
health plan maintained by Purchaser for such plan year for purposes of
satisfying applicable deductible, coinsurance and maximum out-of-pocket
provisions.
(c) Purchaser shall provide continuation coverage to
Transferred Employees and former employees of the Company and its Subsidiaries
(and their covered dependents and qualified beneficiaries) who are receiving
continuation coverage required under Code Section 4980B(f) ("COBRA Continuation
Coverage") at the Closing, with respect to whom a qualifying event occurred
prior to the Closing and for which the applicable election period for COBRA
Continuation Coverage has not expired as of the Closing Date, or with respect to
whom a qualifying event occurs as a result of the Closing of the transaction
contemplated by this Agreement in compliance with the provisions of Code Section
4980B and ERISA Section 601 et seq.
(d) Savings Plans.
(i) As soon as is practicable after the Closing Date,
but effective as of such date, Purchaser shall adopt or designate a
401(k) Savings Plan (the "Purchaser Savings Plan") and shall establish
a trust pursuant thereto (the "Purchaser Savings Trust"). As soon as is
practicable after the Closing Date, Purchaser shall furnish to Sellers
a determination letter finding the Purchaser Savings Plan and the
Purchaser Savings Trust to be qualified and tax-exempt under Sections
401(a) and 501(a) of the Code.
(ii) As soon as practicable after Sellers' receipt of
a copy of such letter, Sellers shall cause the Chancellor Media
Corporation 401(k) Savings Plan (the "Seller Savings Plan") and the
Trust pursuant thereto (the "Seller Savings Trust") to transfer to the
Purchaser Savings Plan and Purchaser Savings Trust the accounts under
the Seller Savings Plan and the Seller Savings Trust (and the assets
and liabilities therein) attributable to any employee of the Company as
of immediately prior to the Closing Date or any employee of either
Seller or any of their Affiliates, in any case, who will continue their
employment with or shall become an employee, of the Company or
Purchaser or any of its Affiliates as of the Closing Date (the
"Employees"). Sellers shall cause all of such accounts to be fully
vested upon such transfer. Such transfer shall be made in the form of
cash. Such transfer shall satisfy the requirements of Code Sections
401(a)(12) and 414(l)
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and the regulations pursuant thereto. Prior to such transfer, Purchaser
will provide Sellers with such documents and other information as
Sellers shall reasonably request to assure itself that the Purchaser
Savings Plan and the Purchaser Savings Trust contain participant loan
provisions and procedures necessary to effect the orderly transfer of
participant loan balances associated with the transfer of assets. Prior
to such transfer, Sellers will provide Purchaser with such documents
and other information as Purchaser shall reasonably request to assure
itself that the Seller Savings Plan and Seller Savings Trust are
qualified and tax-exempt under the provisions of Code Sections 401(a)
and 501(a) respectively as of the date of such transfer. The Purchaser
Savings Plan shall preserve for the Employees all benefits, rights and
features as required under Section 411(d)(6) of the Code and Purchaser
agrees not to eliminate the ability to make participant loans without
giving all participants in the Purchaser Savings Plan at least three
(3) months advance notice. Sellers shall provide to Purchaser copies of
such personnel and other records of Sellers pertaining to the Employees
and such records of any agent or representative of either Seller, in
each case pertaining to the Seller Savings Plan and Seller Savings
Trust and as Purchaser may reasonably request in order to administer
and manage the accounts and assets transferred to the Purchaser Savings
Plan and Purchaser Savings Trust. Upon such transfer, the Purchaser
Savings Plan shall assume all liabilities and obligations whatsoever
with respect to all amounts transferred from the Seller Savings Plan
and Seller Savings Trust to the Purchaser Savings Plan and Purchaser
Savings Trust in respect of the Employees and each Seller and its
Affiliates and the Seller Savings Plan and Seller Savings Trust shall
be relieved of all such liabilities and obligations. Purchaser and
Sellers shall cooperate in the filing of documents required by the
transfer of assets and liabilities described herein.
(iii) The Purchaser Savings Plan shall preserve for
the Employees all of their benefits accrued under the Seller Savings
Plan as of the date of transfer. The Purchaser Savings Plan shall also
provide that an Employee's period of employment with either Seller, the
Company, any of their Subsidiaries or any predecessor thereof (as
applicable) for which credit was given under the Seller Savings Plan
shall be given equivalent credit under the Purchaser Savings Plan to
the effect that if any Employee becomes an employee of the Company or
Purchaser as of the Closing Date, or thereafter by reason of recall, no
interruption in participation, benefit accrual or vesting service shall
be deemed to have occurred for such Employee under the Purchaser
Savings Plan by reason of the change in employment contemplated by this
Agreement. The Purchaser Savings Plan shall further contain all such
provisions as are necessary for the transfer not to cause Seller
Savings Plan to fail to satisfy requirements of Code Sections 401(a) or
401(k).
(iv) As soon as is practicable after the Closing Date
and prior to the transfer contemplated under this Section 6.5(d),
Sellers and Purchaser shall make such filings as are required under
Code Section 6058(b) with respect to such transfers including the
filing of form 5310-A.
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(e) Purchaser shall be liable for all obligations with respect
to claims of Transferred Employees for workers compensation for incidents
remaining unpaid on the Closing Date to the extent reflected as a liability or
reserved for on the Closing Balance Sheet.
(f) Nothing contained in this Agreement shall confer upon any
Transferred Employee any rights with respect to continuance of employment by
Purchaser, nor shall any provision of this Agreement create any third party
beneficiary rights in any Transferred Employee, any beneficiary or dependents
thereof, or any collective bargaining representative thereof.
(g) Notwithstanding the foregoing provisions of this Section
6.5, Sellers agree to cause the termination, prior to the Closing (the
"Pre-Closing Terminations"), of any Transferred Employees that Purchaser or
Purchaser Parent requests in writing at least ten (10) days prior to the Closing
Date; provided, that the indemnification provisions set forth in Section 9.3
shall apply.
ARTICLE 7.
CONDITIONS TO OBLIGATIONS
Section 7.1. Conditions to Obligations of Purchaser, Purchaser Parent
and Sellers. The obligations of Purchaser, Purchaser Parent and Sellers to
consummate, or cause to be consummated, the transactions contemplated hereby are
subject to the satisfaction of the following conditions, any one or more of
which may be waived in writing by such parties:
(a) There shall not be in force any order or decree, statute,
rule or regulation nor shall there be on file any complaint by a governmental
agency seeking an order or decree, restraining, enjoining or prohibiting the
consummation of the transactions contemplated hereby, and none of Purchaser,
Purchaser Parent or either Seller shall have received notice from any
Governmental Authority that it has determined to institute any suit or
proceeding to restrain or enjoin the consummation of the transactions
contemplated hereby or to nullify or render ineffective this Agreement if
consummated, or to take any other action which would result in the prohibition
or a material change in the terms of the transactions contemplated hereby.
(b) In connection with the consummation of the transactions
contemplated by this Agreement, Chancellor LA shall have obtained all necessary
approvals and consents to the consummation of the transactions contemplated
hereby from its senior lenders, including without limitation, the Dividend and
releases from any and all applicable Liens created by such lenders and releases
from any and all guarantees of each of the Company and its Subsidiaries.
(c) The issuance of the Lamar Shares shall have been duly
approved by the stockholders of Purchaser Parent.
Section 7.2. Conditions to Obligations of Purchaser and
Purchaser Parent. The obligations of Purchaser and Purchaser Parent to
consummate, or cause to be consummated, the transactions contemplated by this
Agreement are subject to the satisfaction of the following additional
conditions, any one or more of which may be waived in writing by Purchaser and
Purchaser Parent:
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(a) Each of the representations and warranties of each Seller
contained in this Agreement shall be true and correct both on the date hereof
and as of the Closing, as if made anew at and as of that time (unless to the
extent that any such representations and warranties expressly relate to an
earlier time, in which case they shall be true and correct at such earlier
time), and each of the covenants and agreements of each Seller to be performed
as of or prior to the Closing shall have been duly performed, except in each
case for changes after the date hereof which are contemplated or expressly
permitted by this Agreement, except where (i) the failure of the representations
and warranties to be true and correct, or (ii) the failure of the covenants and
agreements to be performed, as the case may be, would not have a material
adverse effect on the business, operations or financial condition of the Company
and its Subsidiaries, taken as a whole.
(b) Chancellor LA shall have delivered to Purchaser and
Purchaser Parent a certificate signed by an officer of Chancellor LA, dated the
Closing, certifying that, to the best of the knowledge and belief of such
officer, the conditions specified in Section 7.1(b), as they relate to
Chancellor LA, and Section 7.2(a), to the extent they relate to Chancellor LA,
have been fulfilled.
(c) Chancellor Mezzanine shall have delivered to Purchaser and
Purchaser Parent a certificate signed by an officer of Chancellor Mezzanine,
dated the Closing, certifying that, to the best of the knowledge and belief of
such officer, the conditions precedent specified in Section 7.2(a), to the
extent they relate to Chancellor Mezzanine, have been fulfilled.
(d) Any consent required for the consummation of the
transactions contemplated hereby under any Contract required to be listed on
Schedule 2.8 hereto or for the continued enjoyment by the Company and its
Subsidiaries of the benefits of any such Contract after the Closing shall have
been obtained, except where the failure to obtain such consent would not have a
material adverse effect on the business, operations or financial condition of
the Company and its Subsidiaries, taken as a whole.
(e) Each Seller shall have duly executed and delivered the
Registration Rights Agreement.
(f) Each Seller shall have duly executed and delivered the
Stockholders Agreement.
(g) Each Seller shall have delivered, or caused to be
delivered, to Purchaser and Purchaser Parent an executed affidavit, dated not
more than 30 days prior to the Closing Date, in accordance with Code Section
1445(b)(2) and Treasury Regulation Section 1.1445-2(b), which statement
certifies that such Seller is not a foreign person and sets forth such Seller's
name, taxpayer identification number and address.
(h) As of the Closing, Sellers shall have caused to be
eliminated all intercompany receivables and payables between any Seller, the
Company and its Subsidiaries.
Section 7.3. Conditions to the Obligations of Sellers. The obligation
of each Seller to consummate the transactions contemplated by this Agreement is
subject to the satisfaction of the
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following additional conditions, any one or more of which may be waived in
writing by each Seller:
(a) All waiting periods under the HSR Act applicable to the
transactions contemplated hereby shall have expired or been terminated.
(b) Each of the representations and warranties of Purchaser
and Purchaser Parent contained in this Agreement shall be true and correct in
all material respects both on the date hereof and as of the Closing, as if made
anew at and as of that time (unless to the extent that any such representations
and warranties expressly relate to an earlier time, in which case they shall be
true and correct at such earlier time), and each of the covenants and agreements
of Purchaser and Purchaser Parent to be performed as of or prior to the Closing
shall have been duly performed in all material respects, except in each case for
changes after the date hereof which are contemplated or expressly permitted by
this Agreement.
(c) Purchaser shall have delivered to each Seller a
certificate signed by an officer of Purchaser, dated the Closing, certifying
that, to the best of the knowledge and belief of such officer, the conditions
specified in Section 7.3(b), to the extent they relate to Purchaser, have been
fulfilled.
(d) Purchaser Parent shall have delivered to each Seller a
certificate signed by an officer of Purchaser Parent, dated the Closing
certifying that, to the best of the knowledge and belief of such officer, the
conditions specified in Section 7.3(b), to the extent they relate to Purchaser
Parent, have been fulfilled.
(e) Purchaser Parent shall have duly executed and delivered
the Registration Rights Agreement.
(f) Purchaser Parent shall have duly executed and delivered
the Stockholders Agreement.
ARTICLE 8.
TERMINATION
Section 8.1. Termination. This Agreement may be terminated and the
transactions contemplated hereby abandoned:
(a) By mutual written consent of the parties at any time prior
to the Closing.
(b) Prior to the Closing, by written notice to Sellers from
Purchaser and Purchaser Parent, if (i) there is any material breach of any
representation, warranty, covenant or agreement on the part of either Seller set
forth in this Agreement, or if a representation or warranty of either Seller
shall be untrue in any material respect, in either case, such that the condition
specified in Section 8.2(a) hereof would not be satisfied at the Closing (a
"Terminating Seller Breach"), except that, if such Terminating Seller Breach is
curable by any Seller through the exercise of commercially reasonable efforts,
then, for a period of up to thirty (30) calendar
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days, but only as long as any Seller continues to use commercially reasonable
efforts to cure such Terminating Seller Breach (the "Seller Cure Period"), such
termination shall not be effective, and such termination shall become effective
only if the Terminating Seller Breach is not cured within the Seller Cure
Period, (ii) the Closing has not occurred on or before December 1, 1999, other
than as a result of (A) a breach of a representation, warranty, covenant or
agreement of Purchaser or Purchaser Parent, or (B) a failure of all waiting
periods under the HSR Act applicable to the transactions contemplated hereby to
have expired or been terminated, or (iii) consummation of any of the
transactions contemplated hereby is enjoined, prohibited or otherwise restrained
by the terms of a final, non-appealable order or judgment of a court of
competent jurisdiction.
(c) Prior to the Closing, by written notice to Purchaser and
Purchaser Parent from either Seller, if (i) there is any material breach of any
representation, warranty, covenant or agreement on the part of Purchaser or
Purchaser Parent set forth in this Agreement, or if a representation or warranty
of Purchaser or Purchaser Parent shall be untrue in any material respect, in
either case, such that the condition specified in Section 8.3(a) hereof would
not be satisfied at the Closing, except as expressly provided in Sections 5.1
and 5.6 hereof (a "Terminating Purchaser Breach"), except that, if such
Terminating Purchaser Breach is curable by Purchaser or Purchaser Parent through
the exercise of commercially reasonable efforts, then, for a period of up to
thirty (30) calendar days, but only as long as Purchaser or Purchaser Parent
continues to exercise such commercially reasonable efforts to cure such
Terminating Purchaser Breach (the "Purchaser Cure Period"), such termination
shall not be effective, and such termination shall become effective only if the
Terminating Purchaser Breach is not cured within the Purchaser Cure Period, (ii)
the Closing has not occurred on or before December 1, 1999, other than as a
result of a breach of a representation, warranty, covenant or agreement of
either Seller, or (iii) consummation of any of the transactions contemplated
hereby is enjoined, prohibited or otherwise restrained by the terms of a final,
non-appealable order or judgment of a court of competent jurisdiction.
Section 8.2. Effect of Termination. In the event of termination of this
Agreement pursuant to Section 8.1, this Agreement shall forthwith become void
and have no effect, without any liability on the part of any party hereto or
their respective Affiliates, officers, directors or stockholders, other than
liability of either Seller or of Purchaser or Purchaser Parent, as the case may
be, for such party's breaches of this Agreement occurring prior to such
termination. The provisions of Sections 6.1, 11.7, 11.11 and 11.12 hereof shall
survive any termination of this Agreement.
Section 8.3. Other Termination. This Agreement may also be terminated
pursuant to Sections 5.6(d) or 4.9(b) hereof. The effect of a termination of
this Agreement pursuant to either Section 5.6(d) or 4.9(b) shall have the effect
set forth in Section 5.6(d) or 4.9(b), as the case may be.
ARTICLE 9.
INDEMNIFICATION
Section 9.1. Survival of Representations. The representations and
warranties of each Seller contained herein shall survive the Closing for a
period of twelve (12) months following the
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Closing Date; provided that, the representations and warranties of Sellers set
forth in Sections 2.4 and 2.6 shall survive without limitation; provided further
that the representations and warranties of Sellers set forth in Section 2.16
shall survive for a period equal to the applicable statute of limitations for
all Taxes imposed as a result of any breach of Section 2.16. None of the
representations and warranties of Purchaser or Purchaser Parent contained herein
shall survive the Closing.
Section 9.2. Indemnification of Purchaser and Purchaser Parent.
(a) Each Seller shall indemnify and hold each of Purchaser and
Purchaser Parent and its officers, directors, employees and Affiliates harmless
from any damage, claim, liability or expense, including, without limitation,
reasonable attorneys' fees (collectively "Damages"), arising out of or relating
to the breach of any warranty, representation, covenant or agreement of such
Seller contained in this Agreement.
(b) Notwithstanding the foregoing, (i) neither Purchaser nor
Purchaser Parent shall be entitled to indemnification for any Damages unless and
until the amount of all Damages for which Purchaser or Purchaser Parent is
entitled to indemnification exceeds Two Million Five Hundred Thousand Dollars
($2,500,000) (the "Threshold Amount"), at which time Purchaser and Purchaser
Parent shall be entitled to indemnification only for all such Damages sustained
by Purchaser and Purchaser Parent to the extent that the amount of such Damages
exceeds the Threshold Amount, (ii) in no event shall the aggregate amount of
Damages for which Purchaser and Purchaser Parent shall be entitled to
indemnification exceed Twenty-Five Million Dollars ($25,000,000), and (iii) the
amount of Damages for which Purchaser and Purchaser Parent are entitled to
indemnification shall be reduced by (A) any tax benefit or deduction allowable
as a result of the incurrence of such Damages or the facts or circumstances
giving rise thereto, and (B) any insurance recoveries or other indemnities,
contributions or similar payments recoverable from any third party as a result
of the incurrence of such Damages or the facts or circumstances giving rise
thereto.
(c) Each of Purchaser and Purchaser Parent hereby agrees to
take, and to cause its Affiliates to take, all reasonable steps to mitigate any
Damages incurred or to be incurred by Purchaser, Purchaser Parent or their
respective Affiliates upon and after becoming aware of any event which could
reasonably be expected to give rise to any Damages.
Section 9.3. Indemnification of Sellers. Each of Purchaser and
Purchaser Parent shall indemnify and hold each of Chancellor LA and Chancellor
Mezzanine and its officers, directors, employees and Affiliates (the "Seller
Indemnitees") harmless from any damage, claim, liability or expense, including,
without limitation, reasonable attorney's fees, arising out of or relating to
the Pre-Closing Terminations, including without limitation, under the Worker
Adjustment and Retraining Notification Act ("WARN") or any state law similar to
WARN, that would not have been a damage, claim, liability or expense of any
Seller Indemnitee if such Pre-Closing Terminations had actually occurred after
the Closing.
Section 9.4. Conduct of Proceedings. If any claim, action, suit or
proceeding covered by the foregoing agreements to indemnify and hold harmless (a
"Proceeding") shall arise, the
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party seeking indemnification (the "Indemnified Party") shall give written
notice thereof to the party from whom indemnification is being sought (the
"Indemnifying Party") promptly after the Indemnified Party, learns of the
existence of such Proceeding; provided, however, that failure of the Indemnified
Party to give any such Indemnifying Party prompt notice shall not bar the right
of the Indemnified Party to indemnification unless such failure has materially
prejudiced the Indemnifying Party's ability to defend the Proceeding. The
Indemnifying Party shall have the right to employ counsel reasonably acceptable
to the Indemnified Party to defend against any such Proceeding, or to
compromise, settle or otherwise dispose of the same, if such Indemnifying Party
deems it advisable to do so (in its reasonable judgment), all at the expense of
such Indemnifying Party; provided that, such Indemnifying Party shall not
settle, or consent to entry of any judgment in any Proceeding, without obtaining
a release of the Indemnified Party from, or agreeing to indemnify the
Indemnified Party for, all damages in respect of the claims underlying such
Proceeding. The parties will fully cooperate in any such action, and shall make
available to each other any books or records useful for the defense of any such
Proceeding. If any Indemnifying Party against whom an indemnification claim is
made fails to acknowledge in writing its obligation to defend against or settle
such Proceeding within thirty (30) days after receiving notice thereof from an
Indemnified Party (or such shorter time specified in the notice as the
circumstances of the matter may dictate), such Indemnified Party shall have the
right to undertake the defense and settlement of any such Proceeding, at such
Indemnifying Party's expense; provided that, if such Indemnified Party assumes
the defense of any such Proceeding, such Indemnified Party shall not settle such
Proceeding prior to final judgment thereon or forego any appeal with respect
thereto without the prior written consent of such Indemnifying Party (which
consent may not be unreasonably withheld).
Section 9.5. Sole Remedy; Time Limitation. After the Closing has
occurred, the right to indemnification under this Article 9 shall be the
exclusive remedy of Purchaser and Purchaser Parent hereto in connection with any
breach by either Seller of its representations, warranties, covenants or
agreements contained herein. Notwithstanding the foregoing provisions of this
Article 9, neither Seller shall have any responsibility or obligation with
respect to any claim for indemnification asserted pursuant to this Article 9
unless such claim is asserted in writing by Purchaser and Purchaser Parent to
such Seller within the survival period provided in Section 9.1.
ARTICLE 10.
CERTAIN DEFINITIONS
As used herein, the following terms shall have the following
meanings:
"Action" means any action, suit, arbitration or other
proceeding by or before any Governmental Authority.
"Adjustment Amount" has the meaning specified in Section 1.5.
"Advertising Contracts" means Chancellor LA's and its
Subsidiaries' interest in Contracts for outdoor advertising displays by
customers and clients of Chancellor LA and its Subsidiaries.
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"Affiliate" means, with respect to any specified Person, any
Person that, directly or indirectly, controls, is controlled by, or is under
common control with, such specified Person, through one or more intermediaries
or otherwise.
"Affiliated Group" means any affiliated group within the
meaning of Code Section 1504(a).
"Agreement" has the meaning specified in the Preamble hereto.
"Ancillary Agreements" shall mean the Registration Rights
Agreement, the Stockholders Agreement, and the Voting Agreement.
"Antitrust Authorities" means the Antitrust Division of the
United Stated Department of Justice, the United States Federal Trade Commission
or the antitrust or competition law authorities of any other jurisdiction
(whether United States, foreign or multinational).
"Applicable Rate" has the meaning specified in Section 1.5.
"Approvals Certificate" has the meaning specified in Section
4.9(a).
"Auditor" has the meaning specified in Section 1.5.
"Burkett Assets" has the meaning specified in Section 4.1.
"Business" means the outdoor advertising business conducted by
the Company and its Subsidiaries.
"Business Day" means any day that is not a Saturday, Sunday or
other day on which banks are required or authorized by law to be closed in New
York, New York.
"Cash Consideration" has the meaning specified in Section 1.3.
"Chancellor LA" has the meaning specified in the Preamble
hereto.
"Chancellor Mezzanine" has the meaning specified in the
Preamble hereto.
"Chancellor Shares" has the meaning specified in the Preamble
hereto.
"Closing" has the meaning specified in Section 1.4.
"Closing Balance Sheet" has the meaning specified in Section
1.5.
"Closing Date" has the meaning specified in Section 1.4.
"Closing Date Net Working Capital" has the meaning specified
in Section 1.5.
"COBRA Continuation Coverage" has the meaning specified in
Section 6.5.
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"Code" means the Internal Revenue Code of 1986, as amended.
"Commitment Letter" has the meaning specified in Section 5.6.
"Company" has the meaning specified in the Recitals hereof.
"Company Cash Consideration" has the meaning specified in
Section 1.3.
"Company Shares" has the meaning specified in the Recitals
hereof.
"Confidentiality Agreement" has the meaning specified in
Section 11.8.
"Contracts" means any contracts, agreements, subcontracts or
leases.
"Conveyance Taxes" has the meaning specified in Section 6.4.
"Damages" has the meaning specified in Section 9.2.
"Definitive Documentation" has the meaning specified in
Section 5.6.
"Determination Date" has the meaning specified in Section 1.5.
"Divestiture Assets" has the meaning specified in Section 4.1.
"Dividend" has the meaning specified in Section 1.1.
"Employees" has the meaning specified in Section 6.5.
"Employee Plans" has the meaning specified in Section 2.12.
"Environmental Laws" means, collectively, all applicable U.S.
federal, state or local laws, statutes, ordinances, rules, regulations, codes or
common law relating to health, safety, pollution or protection of the
environment, as in effect as of the date hereof.
"ERISA" has the meaning specified in Section 2.12.
"Exchange Act" has the meaning specified in Section 3.7.
"Final Judgments" means (i) the Final Judgments of the United
States District Court for the District of Columbia in the case of U.S. v.
Chancellor Media and Cans & Company, filed November 12, 1998, and (ii) the Final
Judgment of the United States District Court for the District of Columbia in the
case of U.S. v. Chancellor Media and Whiteco Industries, et al., filed November
25, 1998.
"GAAP" has the meaning specified in Section 1.5.
"Governmental Authority" means any Federal, state, municipal
or local government, governmental authority, regulatory or administrative
agency.
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"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, and the rules and regulations promulgated thereunder.
"Indemnified Party" has the meaning specified in Section 9.4.
"Indemnifying Party" has the meaning specified in Section 9.4
"Intellectual Property" has the meaning specified in Section
2.9.
"IRS" means the United States Internal Revenue Service.
"Lamar LA Shares" has the meaning specified in Section 1.3.
"Lamar Mezzanine Shares" has the meaning specified in Section
1.3.
"Lamar Shares" has the meaning specified in Section 1.3.
"Leased Real Property" means all real property leases to which
the Company or any of its Subsidiaries are a party.
"Lien" means any mortgage, deed of trust, pledge,
hypothecation, encumbrance, security interest or other lien of any kind.
"Minimum Net Working Capital" has the meaning specified in
Section 1.5.
"Multiemployer Plan" has the meaning specified in Section
2.12.
"Net Working Capital" has the meaning specified in Section
1.5.
"Original Agreement" has the meaning specified in the Recitals
hereof.
"Owned Real Property" means all real property owned by the
Company or any of its Subsidiaries.
"PBGC" has the meaning specified in Section 2.12.
"Pension Plan" has the meaning specified in Section 2.12.
"Permits" means all licenses, permits, approvals,
authorizations or consents of any Governmental Authority, whether federal,
foreign, state, municipal or local, pertaining to the Business.
"Permitted Liens" means (i) mechanics, materialmen's and
similar Liens with respect to any amounts not yet due and payable or which are
being contested in good faith through appropriate proceedings, (ii) Liens for
Taxes not yet due and payable or which are being contested in good faith through
appropriate proceedings, (iii) Liens arising in connection with the sale of
foreign receivables, (iv) Liens on goods in transit incurred pursuant to
documentary letters of credit, (v) Liens securing rental payments under capital
lease agreements, (vi) Liens arising in
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favor of the United States Government as a result of progress payment clauses
contained in any Contract, (vii) encumbrances and restrictions on real property
that do not materially interfere with the present uses of such real property,
and (viii) other Liens arising in the ordinary course of business and not
incurred in connection with the borrowing of money.
"Person" means any individual, firm, corporation, partnership,
limited liability company, incorporated or unincorporated association, joint
venture, joint stock company, governmental agency or instrumentality or other
entity of any kind.
"Pre-Closing Partial Period" has the meaning specified in
Section 6.4.
"Pre-Closing Termination" has the meaning specified in Section
6.5.
"Preliminary Transactions" has the meaning specified in
Section 4.1.
"Proceeding" has the meaning specified in Section 9.4.
"Pro Forma Balance Sheet" has the meaning specified in Section
2.7.
"Pro Forma Statement of Operations" has the meaning specified
in Section 2.7.
"Purchaser" has the meaning specified in the Preamble hereto.
"Purchaser Cure Period" has the meaning specified in Section
8.1.
"Purchaser Parent" has the meaning specified in the Preamble
hereto.
"Purchaser Parent Class A Common Stock" has the meaning
specified in Section 1.3.
"Purchaser Parent Class A Preferred Stock" has the meaning
specified in Section 3.6.
"Purchaser Parent Class B Common Stock" has the meaning
specified in Section 3.6.
"Purchaser Parent Preferred Stock" has the meaning
specified in Section 3.6.
"Purchaser Parent SEC Documents" has the meaning specified in
Section 3.7.
"Purchaser Parent Stock Options" has the meaning specified in
Section 3.6.
"Purchaser Savings Plan" has the meaning specified in Section
6.5.
"Purchaser Savings Trust" has the meaning specified in Section
6.5.
"Purchaser SEC Documents" has the meaning specified in Section
3.7.
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"PWC" has the meaning specified in Section 1.5.
"Registration Rights Agreement" means the Registration Rights
Agreement among Purchaser Parent and each Seller, dated the Closing Date, in the
form attached as Annex D.
"Restructuring" means the corporate restructuring effected by
Purchaser on July 20, 1999, pursuant to which Purchaser became the wholly owned
subsidiary of Purchaser Parent.
"RFLP" has the meaning specified in Section 5.8.
"SEC" has the meaning specified in Section 3.4.
"Securities Act" has the meaning specified in Section 3.7.
"Seller Indemnitees" has the meaning specified in Section 9.3.
"Sellers" has the meaning specified in the Preamble hereto.
"Seller Cure Period" has the meaning specified in Section 8.1.
"Seller Savings Plan" has the meaning specified in Section
6.5.
"Seller Savings Trust" has the meaning specified in Section
6.5.
"Stockholders Agreement" means that Stockholders Agreement
among Purchaser Parent, each Seller and the other signatories listed therein,
dated as of the Closing Date, in the form attached as Annex E.
"Straddle Period" means any taxable period which begins before
and ends after the Closing Date.
"Subsidiary" means, with respect to any Person, a corporation
or other entity of which 50% of more of the voting power of the equity
securities or equity interests is owned, directly or indirectly, by such Person.
Except as otherwise expressly provided herein, references to Subsidiaries of the
Company shall be deemed to include Whiteco.
"Tax" or "Taxes" means all income, gross receipts, sales, use,
employment, franchise, profits, property or other fees, stamp duties,
assessments or similar charges (whether payable directly or by withholding),
together with any interest and any penalties or additions to tax imposed by any
tax authority with respect thereto.
"Tax Asset" means any net operating loss, net capital loss,
investment tax credit, foreign tax credit, charitable deduction or any other
credit or tax attribute which could reduce Taxes (including, without limitation,
deductions and credits related to alternative minimum taxes).
"Tax Returns" means all returns and reports (including
elections, declarations, disclosure schedules, estimates and information
returns, claims for refund, or statements of any
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kind or nature relating to Taxes, in any schedule or amendment thereto and any
amendment thereof) required to be supplied to a Tax authority relating to Taxes.
"Terminating Purchaser Breach" has the meaning specified in
Section 8.1.
"Terminating Seller Breach" has the meaning specified in
Section 8.1.
"Threshold Amount" has the meaning specified in Section 9.2.
"Total Consideration" has the meaning specified in Section
1.3.
"Transferred Employees" has the meaning specified in Section
6.5.
"Treasury Regulations" means the regulations issued pursuant
to the Code.
"Voting Agreement" means the Amended and Restated Voting
Agreement among Purchaser, each Seller and RFLP, dated the date hereof, in the
form attached as Annex G.
"WARN" has the meaning specified in Section 9.3.
"Welfare Plan" has the meaning specified in Section 2.12.
"Whiteco" has the meaning specified in the Recitals hereof.
"Whiteco Cash Consideration" has the meaning specified in
Section 1.3.
"Whiteco Shares" has the meaning specified in the Recitals
hereof.
ARTICLE 11.
MISCELLANEOUS
Section 11.1. Waiver. Any party to this Agreement may, at any time
prior to the Closing, waive any of the terms or conditions of this Agreement or
agree to an amendment or modification to this Agreement by an agreement in
writing executed in the same manner as this Agreement.
Section 11.2. Notices. All notices and other communications among the
parties shall be in writing and shall be deemed to have been duly given when (i)
delivered in person, or (ii) five (5) calendar days after posting in the United
States mail having been sent registered or certified mail return receipt
requested, or (iii) delivered by telecopy and promptly confirmed by delivery in
person or post as aforesaid in each case, with postage prepaid, addressed as
follows:
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<PAGE> 53
(a) If to Purchaser or Purchaser Parent, to:
Lamar Advertising Company
5551 Corporate Boulevard
Baton Rouge, Louisiana 70808
Attention: Keith Istre
Telecopy No.: (225) 923-0658
with copies to:
Jones, Walker, Waechter, Poitevent,
Carrere & Denegre, L.L.P.
5th Floor
Four United Plaza
8555 United Plaza Boulevard
Baton Rouge, Louisiana 70809
Attention: Brad J. Axelrod
Telecopy No.: (225) 231-3336
(b) If to Chancellor LA, to:
Chancellor Media Corporation of Los Angeles
1845 Woodall Rogers Freeway
Suite 1300
Dallas, Texas 75201
Attention: General Counsel
Telecopy No.: (512) 340-7890
with copies to:
Latham & Watkins
1001 Pennsylvania Avenue, N.W.
Suite 1300
Washington, D.C. 20004-2502
Attention: Eric L. Bernthal
Telecopy No.: (202) 637-2201
and
Weil, Gotshal & Manges LLP
100 Crescent Court, Suite 1300
Dallas, Texas 75201-6950
Attention: Michael A. Saslaw
Telecopy No.: (214) 746-7777
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<PAGE> 54
(c) If to Chancellor Mezzanine, to:
Chancellor Mezzanine Holdings Corporation
1845 Woodall Rogers Freeway
Suite 1300
Dallas, Texas 75201
Attention: General Counsel
Telecopy No.: (512) 340-7890
with copies to:
Latham & Watkins
1001 Pennsylvania Avenue, N.W.
Suite 1300
Washington, D.C. 20004-2502
Attention: Eric L. Bernthal
Telecopy No.: (202) 637-2201
and
Weil, Gotshal & Manges LLP
100 Crescent Court, Suite 1300
Dallas, Texas 75201-6950
Attention: Michael A. Saslaw
Telecopy No.: (214) 746-7777
or to such other address or addresses as the parties may from time to time
designate in writing.
Section 11.3. Termination of Subscription Agreement. Chancellor LA and
Purchaser have terminated that certain Subscription Agreement, dated as of June
1, 1999, by and between Chancellor LA and Purchaser. Such termination was
effective as of July 12, 1999 and such Subscription Agreement was thereby deemed
to be void and of no further force and effect, without any liability on the part
of Chancellor LA or Purchaser or any of their respective Affiliates.
Section 11.4. Assignment. No party hereto shall assign this Agreement
or any part hereof without the prior written consent of the other parties.
Subject to the foregoing, this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective permitted successors and
assigns.
Section 11.5. Rights of Third Parties. Nothing expressed or implied in
this Agreement is intended or shall be construed to confer upon or give any
Person, other than the parties hereto, any right or remedies under or by reason
of this Agreement.
Section 11.6. Expenses. Each party hereto shall bear its own expenses
incurred in connection with this Agreement and the transactions herein
contemplated whether or not such transactions shall be consummated, including,
without limitation, all fees of its legal counsel,
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<PAGE> 55
financial advisers and accountants; provided, however, that (i) the fees and
expenses of the Auditors, if any, shall be paid one-half by Purchaser and
one-half by Chancellor LA, (ii) all Conveyance Taxes imposed as a result of the
sale of the Chancellor Shares and the Lamar Shares shall be paid by Sellers,
Purchaser and Purchaser Parent as set forth in Section 6.4(i), and (iii) all
fees paid to Antitrust Authorities in connection with compliance with the
notification and reporting requirements of the HSR Act for the transactions
contemplated hereby, shall be paid by Purchaser.
Section 11.7. Construction. This Agreement shall be construed and
enforced in accordance with the internal laws, and not the law of conflicts, of
the State of Delaware. Unless otherwise stated, references to Sections,
Articles, Schedules or Annexes refer to the Sections, Articles, Schedules and
Annexes to this Agreement. As used herein, the phrase "to the knowledge" of any
Person shall mean the actual knowledge of such Person's executive officers after
due inquiry. The parties to this Agreement participated jointly in the
negotiation and drafting of this Agreement. If any ambiguity or question of
intent or interpretation shall arise with respect to this Agreement, then this
Agreement shall be construed as if drafted jointly by the parties and no
presumption or burden of proof will arise favoring or disfavoring any party to
this Agreement by virtue of the authorship of any provision of this Agreement.
Section 11.8. Captions; Counterparts. The captions in this Agreement
are for convenience only and shall not be considered a part of or affect the
construction or interpretation of any provision of this Agreement. This
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
Section 11.9. Entire Agreement. This Agreement (together with the
Ancillary Agreements, Schedules and Annexes to this Agreement, which, although
they may be bound separately, constitute part of this Agreement) and that
certain Confidentiality Agreement between Purchaser and Chancellor LA (the
"Confidentiality Agreement") constitute the entire agreement among the parties
and supersede any other agreements, whether written or oral, that may have been
made or entered into by or among any of the parties hereto or any of their
respective Subsidiaries relating to the transactions contemplated hereby. No
representations, warranties, covenants, understandings, agreements, oral or
otherwise, relating to the transactions contemplated by this Agreement exist
between the parties except as expressly set forth in this Agreement and the
Confidentiality Agreement. This Agreement supersedes the Original Agreement and
the Restated Agreement in their entirety, and the Original Agreement and
Restated Agreement shall be of no further force and effect; provided, however,
that the Schedules and Annexes delivered with the Original Agreement (other than
Schedules 2.8 and 4.9 and Annexes D, E and G which are attached hereto) shall be
deemed to constitute a part of this Agreement. Except as otherwise expressly
provided herein, (i) references to "the date hereof" or "the date of this
Agreement" shall be deemed to refer to June 1, 1999 (the date of the Original
Agreement) and (ii) all representations and warranties set forth in this
Agreement shall be deemed to be made as of June 1, 1999 (the date of the
Original Agreement), except that representations and warranties that relate
solely to Chancellor Mezzanine, unless otherwise expressly provided herein,
shall be deemed to be made as of July 12, 1999, and representations and
warranties that
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<PAGE> 56
relate solely to Purchaser Parent, unless otherwise provided herein, shall be
deemed to be made as of the date this Agreement was executed and delivered.
Section 11.10. Amendments. This Agreement may be amended or modified in
whole or in part, only by a duly authorized agreement in writing executed in the
same manner as this Agreement and which makes reference to this Agreement.
Section 11.11. Publicity. All press releases or other public
communications of any nature whatsoever relating to the transactions
contemplated by this Agreement, and the method of the release for publication
thereof, shall be subject to the prior mutual approval of Purchaser, Purchaser
Parent and Sellers, which approval shall not be unreasonably withheld by any
party; provided, however, that, nothing herein shall prevent any party from
publishing such press releases or other public communications as such party may
consider necessary in order to satisfy such party's legal or contractual
obligations after such consultation with the other parties hereto as is
reasonable under the circumstances.
Section 11.12. Dispute Resolution. Any and all disputes arising out of
or relating to this contract, or the breach, termination or validity thereof,
shall be resolved by final and binding, confidential arbitration in accordance
with the then current Center for Public Resources Institute for Dispute
Resolution Rules for Non-Administered Arbitration of Business Disputes, by a
sole arbitrator selected from among the Center for Public Resources Panel of
Distinguished Neutrals. The arbitration shall be governed by the United States
Arbitration Act, 9 U.S.C. 1-16, and judgment upon the award rendered by the
arbitrator may be entered by any court having jurisdiction thereof. Neither
party nor the arbitrator shall disclose the existence, content or results of any
arbitration hereunder without the prior written consent of all parties. The
place of arbitration shall be Chicago, Illinois. The costs of the arbitrator and
all expenses relating to the arbitration (exclusive of legal fees) shall be
borne equally by the parties. The arbitrator may award reasonable attorneys'
fees to the prevailing party at the arbitrator's sole discretion.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF the parties have hereunto caused this Agreement to
be duly executed as of the date first above written.
LAMAR ADVERTISING COMPANY
By: /s/ KEITH ISTRE
-------------------------------
Name:
Title:
LAMAR MEDIA CORP.
By: /s/ KEITH ISTRE
-------------------------------
Name:
Title:
CHANCELLOR MEZZANINE HOLDINGS CORPORATION
By: /S/ WILLIAM S. BANOWSKY, JR.
--------------------------------------
Name: William S. Banowsky, Jr.
Title: Executive Vice President
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES
By: /S/ WILLIAM S. BANOWSKY, JR.
--------------------------------------
Name: William S. Banowsky, Jr.
Title: Executive Vice President
<PAGE> 1
EXHIBIT 2.62
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT dated as of _________, 1999 (this
"Agreement"), among Lamar Advertising Company, a Delaware corporation (the
"Issuer"), Chancellor Media Corporation of Los Angeles, a Delaware Corporation
("Chancellor LA"), and Chancellor Mezzanine Holdings Corporation, a Delaware
corporation ("Chancellor Mezzanine").
WHEREAS, this Agreement is being entered into in connection with the
closing of the transactions contemplated by the Purchase Agreement referred to
below.
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises, representations, warranties, covenants and agreements contained
herein, the parties hereto, intending to be legally bound hereby, agree as
follows:
ARTICLE 1
DEFINITIONS
SECTION 1.1 Definitions. The following terms, as used herein, shall
have the following respective meanings:
"Commission" means the Securities and Exchange Commission or any
successor governmental body or agency.
"Common Stock" means the Class A Common Stock, par value $0.001 per
share, of the Issuer and any capital stock into which such Common Stock
thereafter may be changed.
"Demand Registration" has the meaning ascribed thereto in Section
2.2(a).
"Demand Request" has the meaning ascribed thereto in Section 2.2(a).
"Disadvantageous Condition" has the meaning ascribed thereto in Section
2.4.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Excluded Registration" means a registration under the Securities Act
of (i) securities pursuant to one or more Demand Registrations pursuant to
Section 2.2 hereof, (ii) securities registered on Form S-8 under the Securities
Act or any similar successor form and (iii) securities registered to effect the
acquisition of or combination with another business entity.
"Holder" means (i) Chancellor LA, (ii) Chancellor Mezzanine and (iii)
any direct or indirect transferee of Chancellor LA or Chancellor Mezzanine who
shall agree to be bound by the terms of this Agreement.
"Person" or "person" means any individual, corporation, partnership,
limited liability company, joint venture, association, joint-stock company,
trust, unincorporated organization or government or other agency or political
subdivision thereof.
<PAGE> 2
"Piggyback Registration" has the meaning ascribed thereto in Section
2.3(a).
"Purchase Agreement" means the Second Amended and Restated Stock
Purchase Agreement dated as of August ___, 1999, among the Issuer, Lamar Media
Corp., a Delaware corporation and wholly-owned subsidiary of the Issuer
(formerly known as Lamar Advertising Company), Chancellor LA and Chancellor
Mezzanine.
"Registrable Securities" means, at any time, any shares of Common Stock
owned by the Holders, whether owned on the date hereof or acquired hereafter;
provided, however, that Registrable Securities shall not include any shares of
Common Stock (i) the sale of which has been registered pursuant to the
Securities Act and which shares have been sold pursuant to such registration or
(ii) which have been sold pursuant to Rule 144 of the Commission under the
Securities Act.
"Registration Expenses" means any and all expenses incident to
performance of or compliance with any registration of securities pursuant to
Article 2, including, without limitation, (i) all registration and filing fees,
(ii) all fees and expenses associated with filings required to be made with the
NASD (including, if applicable, the fees and expenses of any "qualified
independent underwriter" as such term is defined in Rule 2720(b)(15) of the NASD
Conduct Rules, and of its counsel), as may be required by the rules and
regulations of the NASD, (iii) fees and expenses of compliance with securities
or "blue sky" laws (including reasonable fees and disbursements of counsel in
connection with "blue sky" qualifications of the Registrable Shares), (iv)
rating agency fees, (v) printing expenses (including expenses of printing
certificates for the Registrable Shares in a form eligible for deposit with The
Depository Trust Company and of printing prospectuses if the printing of
prospectuses is requested by a holder of Registrable Shares), (vi) messenger and
delivery expenses, (vii) the Issuer's internal expenses (including, without
limitation, all salaries and expenses of its officers and employees performing
legal or accounting duties), (viii) the fees and expenses incurred in connection
with any listing of the Registrable Shares, (ix) fees and expenses of counsel
for the Issuer and its independent certified public accountants (including the
expenses of any special audit or "cold comfort" letters required by or incident
to such performance), (x) Securities Act liability insurance (if the Issuer
elects to obtain such insurance), (xi) the fees and expenses of any special
experts retained by the Issuer in connection with such registration, (xii) the
fees and expenses of other persons retained by the Issuer and (xiii) reasonable
fees and expenses of one firm of counsel for the Selling Holders (which shall be
selected by the Holders of a majority of the Registrable Securities being
included in any particular registration statement).
"Required Shelf Registration" has the meaning ascribed thereto in
Section 2.1.
"Rule 144" means Rule 144 (or any successor rule to similar effect)
promulgated under the Securities Act.
"Rule 145" means Rule 145 (or any successor rule to similar effect)
promulgated under the Securities Act.
"Rule 415 Offering" means an offering on a delayed or continuous basis
pursuant to Rule 415 (or any successor rule to similar effect) promulgated under
the Securities Act.
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<PAGE> 3
"Securities Act" means the Securities Act of 1933, as amended.
"Seller Affiliates" has the meaning ascribed thereto in Section 2.8.
"Selling Holder" means any Holder who sells Registrable Securities
pursuant to a public offering registered hereunder.
"Shelf Registration" means the registration under the Securities Act of
a Rule 415 Offering.
"Shelf Registration Statement" means a registration statement intended
to effect a Shelf Registration.
"Shelf Termination Date" has the meaning ascribed thereto in Section
2.1(c).
SECTION 1.2 Internal References. Unless the context indicates
otherwise, references to Articles, Sections and paragraphs shall refer to the
corresponding articles, sections and paragraphs in this Agreement, and
references to the parties shall mean the parties to this Agreement.
ARTICLE 2
REGISTRATION RIGHTS
SECTION 2.1 Shelf Registration. At any time after the date that is ten
months from the date hereof, if requested by a Holder or Holders holding a
majority in interest of the Registrable Securities, as soon as practicable (but
in any event not more than 15 days) after such request, the Issuer shall prepare
and file with the Commission a Shelf Registration Statement on an appropriate
form that shall include all Registrable Securities, and which shall not include
any other securities (the "Required Shelf Registration"). The Issuer shall use
its reasonable best efforts to cause such Shelf Registration Statement to be
declared effective as soon as practicable after such request; provided, however,
that the Issuer shall have no obligation to cause such Shelf Registration
Statement to be declared effective on a date that is prior to the first
anniversary of this Agreement. Notwithstanding anything else contained in this
Agreement, the Issuer shall only be obligated to keep such Shelf Registration
Statement effective until the earliest of:
(a) (i) 12 months after the date such Shelf Registration
Statement has been declared effective, provided that such 12-month period shall
be extended by (1) the length of any period during which the Issuer delays in
maintaining the Shelf Registration Statement current pursuant to Section 2.4,
(2) the length of any period (in which such Shelf Registration Statement is
required to be effective hereunder) during which such Shelf Registration
Statement is not maintained effective, and (3) such number of days that equals
the number of days elapsing from (x) the date the written notice contemplated by
Section 2.6(e) below is given by the Issuer to (y) the date on which the Issuer
delivers to the Holders of Registrable Securities the supplement or amendment
contemplated by Section 2.6(e) below;
(b) such time as all Registrable Securities have been sold or
disposed of thereunder or sold, transferred or otherwise disposed of to a Person
that is not a Holder; and
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<PAGE> 4
(c) such time as all securities owned by the Holders have
ceased to be Registrable Securities (the earliest of (a), (b) and (c) being the
"Shelf Termination Date").
The Required Shelf Registration shall not be counted as a Demand Registration
for purposes of Section 2.2 of this Agreement.
SECTION 2.2 Demand Registration.
(a) At any time after the date that is ten months from the
date hereof, upon written notice to the Issuer from a Holder or Holders holding
a majority in interest of the Registrable Securities (a "Demand Request")
requesting that the Issuer effect the registration under the Securities Act of
any or all of the Registrable Securities held by such requesting Holders, which
notice shall specify the intended method or methods of disposition of such
Registrable Securities, the Issuer shall prepare as soon as practicable and,
within 15 days after such request, file with the Commission a registration
statement with respect to such Registrable Securities and thereafter use its
reasonable best efforts to cause such registration statement to be declared
effective under the Securities Act for purposes of dispositions in accordance
with the intended method or methods of disposition stated in such request within
30 days after the filing of such registration statement; provided, however, that
the Issuer shall have no obligation to (i) cause such registration statement
filed pursuant to this Section 2.2 to be declared effective on a date that is
prior to the first anniversary of this Agreement or (ii) cause such registration
statement filed pursuant to this Section 2.2 to be declared effective during any
period during which a Shelf Registration Statement filed pursuant to Section 2.1
remains effective. Notwithstanding any other provision of this Agreement to the
contrary:
(i) the Holders may collectively exercise their
Demand Request rights for registration of their Registrable Securities
under this Section 2.2(a) on not more than three occasions (any such
registration being referred to herein as a "Demand Registration");
(ii) the method of disposition requested by Holders
in connection with any Demand Registration may not, without the
Issuer's written consent, be a Rule 415 Offering;
(iii) the Issuer shall not be required to effect a
Demand Registration hereunder if all securities owned by the Holders
have ceased to be Registrable Securities; and
(iv) the Issuer shall not be required to effect more
than one Demand Registration during any 12 month period.
(b) Notwithstanding any other provision of this Agreement to
the contrary, a Demand Registration requested by Holders pursuant to this
Section 2.2 shall not be deemed to have been effected, and, therefore, not
requested and the rights of each Holder shall be deemed not to have been
exercised for purposes of paragraph (a) above, (i) if such Demand Registration
has not become effective under the Securities Act or (ii) if such Demand
Registration, after it became effective under the Securities Act, was not
maintained effective under the Securities Act (including, without limitation, if
it was interfered with by any stop order, injunctions or other
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<PAGE> 5
order or requirement the Commission or other governmental agency or court) for
at least 30 days (or such shorter period ending when all the Registrable
Securities covered thereby have been disposed of pursuant thereto) and, as a
result thereof, the Registrable Securities requested to be registered cannot be
distributed in accordance with the plan of distribution set forth in the related
registration statement. The Holders shall be deemed not to have exercised a
Demand Request under Section 2.2 if the Demand Registration related to such
Demand Request is delayed or not effected in the circumstances set forth in this
clause (b).
(c) The Issuer shall have the right to cause the registration
of additional shares of Common Stock for sale for the account of the Issuer, but
not for the account of any other Person, in the registration of Registrable
Securities requested by the Holders pursuant to Section 2.2(a) above, provided,
that if such Holders are advised by the lead or managing underwriter referred to
in Section 2.2(e) that, in such underwriter's good faith view, all or a part of
such Registrable Securities and additional shares of Common Stock cannot be sold
or the inclusion of such Registrable Securities and additional shares of Common
Stock in such registration would be likely to have a material adverse effect on
the price, timing or distribution of the offering and sale of the Registrable
Securities and additional equity securities then contemplated, then the number
of securities that can, in the good faith view of such underwriter, be sold in
such offering without so materially adversely affecting such offering shall be
allocated first, pro rata among the requesting Holders on the basis of the
relative number requested to be included therein by each such Holder and then
second, to the Issuer. The Holders of the Registrable Securities to be offered
pursuant to paragraph (a) above may require that any such additional equity
securities be included by the Issuer in the offering proposed by such Holders on
the same conditions as the Registrable Securities that are included therein. If,
in the case of any registration pursuant to a Demand Request, the Holders making
such Demand Request are advised by the lead or managing underwriter referred to
in Section 2.2(e) that, in such underwriter's good faith view, all or a part of
such Registrable Securities cannot be sold or the inclusion of such Registrable
Securities in such registration would be likely to have a material adverse
effect on the price, timing or distribution of the offering and sale of the
Registrable Securities then contemplated, then such Holders will have the right,
within 15 days following such advice from such underwriter, to elect to
terminate such Demand Request, in which case the Holders shall be deemed not to
have exercised a Demand Request pursuant to Section 2.2 hereof.
(d) Within 10 days after delivery of a Demand Request by a
Holder, the Issuer shall provide a written notice to each Holder, advising such
Holder of its right to include any or all of the Registrable Securities held by
such Holder for sale pursuant to the Demand Registration and advising such
Holder of procedures to enable such Holder to elect to so include Registrable
Securities for sale in the Demand Registration as each such Holder may request.
Any Holder may, within 20 days of delivery to such Holder of a notice pursuant
to this Section 2.2(d), elect to so include such portion of its Registrable
Securities in the Demand Registration by written notice to such effect to the
Issuer specifying the number of Registrable Securities desired to be so included
by such Holder.
(e) In the event that any public offering pursuant to either
Section 2.1 or 2.2 of this Agreement shall involve, in whole or in part, an
underwritten offering, the Holders of a majority of the Registrable Securities
being included in such underwritten offering shall have the right to designate
an underwriter or underwriters as the lead or managing underwriters of such
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<PAGE> 6
underwritten offering; provided, that such selection shall be subject to the
consent of the Issuer, which consent shall not be unreasonably withheld or
delayed.
SECTION 2.3 Piggyback Registrations.
(a) Each time the Issuer proposes to register any of its
equity securities (other than pursuant to an Excluded Registration) under the
Securities Act for sale to the public (whether for the account of the Issuer or
the account of any securityholder of the Issuer ) and the form of registration
statement to be used permits the registration of Registrable Securities, the
Issuer shall give prompt written notice to each Holder (which notice shall be
given not less than thirty (30) days prior to the effective date of the Issuer's
registration statement), which notice shall offer each such Holder the
opportunity to include any or all of its Registrable Securities in such
registration statement (a "Piggyback Registration"), subject to the limitations
contained in Section 2.3(b) below. Each Holder who desires to have its
Registrable Securities included in such registration statement shall so advise
the Issuer in writing (stating the number of Registrable Securities desired to
be registered) within 20 days after the date of such notice from the Issuer. Any
Holder shall have the right to withdraw such Holder's request for inclusion of
such Holder's Registrable Securities in any registration statement pursuant to
this Section 2.3 by giving written notice to the Issuer of such withdrawal.
Subject to Section 2.3(b) below, the Issuer shall include in such registration
statement all such Registrable Securities so requested to be included therein;
provided, however, that the Issuer may at any time withdraw or cease proceeding
with any such registration if it shall at the same time withdraw or cease
proceeding with the registration of all other equity securities originally
proposed to be registered.
(b) If the managing underwriter of an offering involving a
request for Piggyback Registration advises the Issuer in writing (with a copy to
the Holders requesting inclusion of their Registrable Securities) that, in such
underwriter's good faith view, the inclusion of any Registrable Securities
pursuant to Section 2.3(a) above would be likely to have a material adverse
effect on the price, timing or distribution of such offering, then (i) the
number of such Holder's or Holders' Registrable Securities to be included in the
registration statement for such offering may, subject to the provisions of the
immediately following sentence, be reduced to an amount which, in the judgment
of the managing underwriter, would no longer be likely to have a material
adverse effect on the price, timing or distribution of such offering or (ii) if
no such reduction would, in the judgment of the managing underwriter, eliminate
such likelihood of a material adverse effect on the price, timing or
distribution of such offering, then the Issuer may, subject to the provisions of
the immediately following sentence, exclude all such Registrable Securities from
such registration statement. Any reduction in the number of Registrable
Securities to be included in the registration statement for such offering
pursuant to the immediately preceding sentence shall be effected by the
inclusion in such registration statement of (A) first, (p) if such registration
was initiated by the Issuer for the sale of securities for its own account, any
and all securities for sale by the Issuer or (q) if such registration was
initiated by any other Person pursuant to the exercise of demand registration
rights, any and all securities for sale by such Person pursuant to such exercise
of demand registration rights, (B) second, any Registrable Shares requested to
be included in such registration, pro rata based on the ratio which such
Holder's requested Registrable Securities bears to the total number of
Registrable Securities requested to be included in such registration statement
by all Holders who have requested that their Registrable Securities be included
in such registration statement, and (C) third, pro rata
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<PAGE> 7
among any other securities requested to be included in such registration by
other Persons pursuant to the exercise of contractual registration rights
granted by the Issuer. If as a result of the provisions of this Section 2.3(b)
any Holder shall not be entitled to include all Registrable Securities in a
registration that such Holder has requested to be so included, such Holder may
withdraw such Holder's request to include any Registrable Securities in such
registration statement. No Holder may participate in any registration statement
hereunder unless such Holder (x) agrees to sell such Holder's Registrable
Securities on the basis provided in any underwriting arrangements approved by
the Issuer relating to such registration statement and (y) completes and
executes all questionnaires, powers of attorney, indemnities, underwriting
agreements, and other documents reasonably required under the terms of such
underwriting arrangements; provided, however, that no such Holder shall be
required to make any representations or warranties in connection with any such
registration other than representations and warranties as to (1) such Holder's
ownership of its Registrable Securities to be transferred free and clear of all
liens, claims, and encumbrances, (2) such Holder's power and authority to effect
such transfer, and (3) such matters pertaining to compliance with securities
laws as may be reasonably requested; provided further, however, that the
obligation of such Holder to indemnify pursuant to any such underwriting
arrangements shall be several, not joint and several, among such Holders selling
Registrable Securities, and the liability of each such Holder will be in
proportion thereto, and provided further that such liability will be limited to
the net amount received by such Holder from the sale of its Registrable
Securities pursuant to such registration statement.
SECTION 2.4 Certain Delay Rights. Notwithstanding any other provision
of this Agreement to the contrary, if at any time while the Required Shelf
Registration is effective the Issuer provides written notice to each Holder that
in the good faith and reasonable judgment of the Board of Directors of the
Issuer it would be materially disadvantageous to the Issuer (because the sale of
Registrable Securities covered by such registration statement or the disclosure
of information therein or in any related prospectus or prospectus supplement
would materially interfere with any acquisition, financing or other material
event or transaction in connection with which a registration of securities under
the Securities Act for the account of the Issuer is then intended or the public
disclosure of which at the time would be materially prejudicial to the Issuer (a
"Disadvantageous Condition")) for sales of Registrable Securities thereunder to
then be permitted, and setting forth the general reasons for such judgment, the
Issuer may refrain from maintaining current the prospectus contained in the
Shelf Registration Statement until such Disadvantageous Condition no longer
exists (notice of which the Issuer shall promptly deliver in writing to each
Holder). Furthermore, notwithstanding anything else contained in this Agreement,
with respect to any registration statement filed, or to be filed, pursuant to
Section 2.2 of this Agreement, if the Issuer provides written notice to each
Holder that in the good faith and reasonable judgment of the Board of Directors
of the Issuer it would be materially disadvantageous to the Issuer (because of a
Disadvantageous Condition) for such a registration statement to be maintained
effective, or to be filed and become effective, and setting forth the general
reasons for such judgment, the Issuer shall be entitled to cause such
registration statement to be withdrawn or the effectiveness of such registration
statement terminated, or, in the event no registration statement has yet been
filed, shall be entitled not to file any such registration statement, until such
Disadvantageous Condition no longer exists (notice of which the Issuer shall
promptly deliver in writing to each Holder). With respect to each Holder, upon
the receipt by such Holder of any such notice of a Disadvantageous Condition (i)
in connection with the Required Shelf Registration, such Holder shall forthwith
discontinue use of the
7
<PAGE> 8
prospectus and any prospectus supplement under such registration statement and
shall suspend sales of Registrable Securities until such Disadvantageous
Condition no longer exists and (ii) in connection with the Required Shelf
Registration or the Demand Registration, as applicable, if so directed by the
Issuer by notice as aforesaid, such Holder will deliver to the Issuer all
copies, other than permanent filed copies then in such Holder's possession, of
the prospectus and prospectus supplements then covering such Registrable
Securities at the time of receipt of such notice as aforesaid. Notwithstanding
anything else contained in this Agreement, (x) neither the filing nor the
effectiveness of any registration statement under Section 2.2 of this Agreement
may be delayed for more than a total of 60 days pursuant to this Section 2.4 and
(y) the maintaining current of a prospectus (and the suspension of sales of
Registrable Securities) in connection with the Required Shelf Registration may
not be delayed under this Section 2.4 for more than a total of 60 days in any
six-month period. If, in the case of any registration pursuant to a Demand
Request, the Issuer provides notice to the applicable Holders of a
Disadvantageous Condition, then such Holders will have the right, within 15 days
following such notice from the Issuer, to elect to terminate such Demand
Request, in which case the Holders shall be deemed not to have exercised a
Demand Request pursuant to Section 2.2 hereof.
SECTION 2.5 Expenses. Except as provided herein, the Issuer shall pay
all Registration Expenses with respect to each registration hereunder, whether
or not any registration statement becomes effective. Notwithstanding the
foregoing, (i) each Holder and the Issuer shall be responsible for its own
internal administrative and similar costs, which shall not constitute
Registration Expenses, (ii) each Holder shall be responsible for the legal fees
and expenses of its own counsel (except as provided in the definition of
Registration Expenses) and (iii) each Holder shall be responsible for all
underwriting discounts and commissions, selling or placement agent or broker
fees and commissions, and transfer taxes, if any, in connection with the sale of
securities by such Holder.
SECTION 2.6 Registration and Qualification. If and whenever the Issuer
is required to effect the registration of any Registrable Securities under the
Securities Act as provided in this Agreement, the Issuer shall as promptly as
practicable:
(a) prepare, file and cause to become effective a registration
statement under the Securities Act relating to the Registrable Securities to be
offered in accordance with the intended method of disposition thereof;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective and
to comply with the provisions of the Securities Act with respect to the
disposition of all Registrable Securities (i) in the case of the Required Shelf
Registration, until the Shelf Termination Date, (ii) in the case of a Demand
Registration or Piggyback Registration, for a period of not less than 180 days
(or such shorter period as is necessary for underwriters in an underwritten
offering to sell unsold allotments), provided, that such 180-day period shall be
extended for such number of days that equals the number of days elapsing from
(x) the date the written notice contemplated by paragraph (e) below is given by
the Issuer to (y) the date on which the Issuer delivers to the Holders of
Registrable Securities the supplement or amendment contemplated by paragraph (e)
below;
8
<PAGE> 9
(c) furnish to the Holders of Registrable Securities and to
any underwriter of such Registrable Securities (i) such number of conformed
copies of such registration statement and of each such amendment and supplement
thereto (in each case including all exhibits), (ii) such number of copies of the
prospectus included in such registration statement (including each preliminary
prospectus), in conformity with the requirements of the Securities Act, and
(iii) such documents incorporated by reference in such registration statement or
prospectus, as the Holders of Registrable Securities or such underwriter may
reasonably request in order to facilitate the disposition of the Registrable
Shares owned by such Holder or the sale of such securities by such underwriter
(it being understood that, subject to Section 2.4 of this Agreement and the
requirements of the Securities Act and applicable state securities laws, the
Issuer consents to the use of the prospectus and any amendment or supplement
thereto by each Holder of Registrable Securities and any underwriter of such
Registrable Securities in connection with the offering and sale of the
Registrable Shares covered by the registration statement of which such
prospectus, amendment or supplement is a part);
(d) in the case of any underwritten offering, furnish to each
Selling Holder and any underwriter of Registrable Securities an opinion of
counsel for the Issuer and a "cold comfort" letter signed by the independent
public accountants who have audited the financial statements of the Issuer
included in the applicable registration statement, in each such case covering
substantially such matters with respect to such registration statement (and the
prospectus included therein) and the related offering as are customarily covered
in opinions of issuer's counsel with respect thereto and in accountants' letters
delivered to underwriters in underwritten public offerings of securities and
such other matters as any such Selling Holder or underwriter may reasonably
request;
(e) promptly notify each Selling Holder and each underwriter
of Registrable Securities in writing (i) at any time when a prospectus relating
to a registration pursuant to this Agreement is required to be delivered under
the Securities Act, of the happening of any event as a result of which the
prospectus included in such registration statement, as then in effect, includes
an untrue statement of a material fact or omits to state any 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, and (ii)
of any request by the Commission or any other regulatory body having
jurisdiction for any additional information or amendment or supplement to any
registration statement or other document relating to such offering, and in
either such case, at the request of any Selling Holder or underwriter, promptly
prepare and furnish to each Selling Holder and underwriter a reasonable number
of copies of a supplement to or an amendment of such prospectus as may be
necessary so that, as thereafter delivered to the purchasers of such Registrable
Securities, such prospectus shall not include an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
are made, not misleading;
(f) cause all such Registrable Securities covered by such
registration to be listed on each securities exchange and included for quotation
on each automated interdealer quotation system on which the Common Stock is then
listed or included for quotation;
(g) provide a CUSIP number for the Registrable Shares included
in any registration statement not later than the effective date of such
registration statement;
9
<PAGE> 10
(h) cooperate with each Selling Holder and each underwriter
participating in the disposition of Registrable Securities and their respective
counsel in connection with any filings required to be made with the NASD;
(i) during the period when a prospectus is required to be
delivered under the Securities Act, promptly file all documents required to be
filed with the Commission pursuant to Sections 13(a), 13(c), 14 or 15(d) of the
Exchange Act;
(j) prepare and file with the Commission promptly any
amendments or supplements to such registration statement or prospectus which, in
the opinion of counsel for the Issuer or the managing underwriter, are required
in connection with the distribution of the Registrable Securities;
(k) advise each Selling Holder, promptly after it shall
receive notice or obtain knowledge thereof, of the issuance of any stop order by
the Commission suspending the effectiveness of any registration statement or the
initiation or threatening of any proceeding for such purpose and promptly use
its commercially reasonable efforts to prevent the issuance of any stop order or
to obtain its withdrawal at the earliest possible moment if such stop order
should be issued;
(l) use reasonable efforts to assist the Holders in the
marketing of Common Stock in connection with underwritten offerings hereunder
(including using reasonable efforts to have officers of the Issuer attend "road
shows" and analyst or investor presentations scheduled in connection with such
registration); and
(m) furnish for delivery in connection with the closing of any
offering of Registrable Securities pursuant to a registration effected pursuant
to this Agreement unlegended certificates representing ownership of the
Registrable Securities being sold in such denominations as shall be requested by
the Selling Holders or the underwriters.
SECTION 2.7 Underwriting; Due Diligence.
(a) If requested by the underwriters for any underwritten
offering of Registrable Securities pursuant to a registration requested under
this Article 2, the Issuer shall enter into an underwriting agreement with such
underwriters for such offering, which agreement will contain such
representations and warranties by the Issuer and such other terms and provisions
as are customarily contained in underwriting agreements with respect to
secondary distributions.
(b) In connection with the preparation and filing of each
registration statement registering Registrable Securities under the Securities
Act pursuant to this Article 2, the Issuer shall give the Holders of such
Registrable Securities and the underwriters, if any, and their respective
counsel and accountants, such reasonable and customary access to its books,
records and properties and such opportunities to discuss the business and
affairs of the Issuer with its officers and the independent public accounts who
have certified the financial statements of the Issuer as shall be necessary, in
the opinion of such Holders and such underwriters or their respective counsel,
to conduct a reasonable investigation within the meaning of the Securities Act;
provided that (i) each Holder and the underwriters and their respective counsel
and accountants shall have entered into a confidentiality agreement reasonably
acceptable to the
10
<PAGE> 11
Issuer and (ii) the Holders of such Registrable Securities and the underwriters
and their respective counsel and accountants shall use their reasonable best
efforts to minimize the disruption to the Issuer's business and coordinate any
such investigation of the books, records and properties of the Issuer and any
such discussions with the Issuer's officers and accountants so that all such
investigations occur at the same time and all such discussions occur at the same
time.
SECTION 2.8 Indemnification.
(a) The Issuer agrees to indemnify and reimburse, to the
fullest extent permitted by law, each Selling Holder, and each of its employees,
advisors, agents, representatives, partners, officers, and directors and each
Person who controls such seller of Registrable Securities (within the meaning of
the Securities Act or the Exchange Act) and any agent or investment advisor
thereof (collectively, the "Seller Affiliates") against any and all losses,
claims, damages, liabilities, and expenses, joint or several (including, without
limitation, reasonable attorneys' fees and disbursements except as limited by
Section 2.8(c) below) based upon, arising out of, related to or resulting from
any untrue or alleged untrue statement of a material fact contained in any
registration statement, prospectus, or preliminary prospectus or any amendment
thereof or supplement thereto, or any omission or alleged omission of a material
fact required to be stated therein or necessary to make the statements therein
not misleading, except insofar as the same are made in reliance upon and in
strict conformity with information furnished in writing to the Issuer by such
Selling Holder or any Seller Affiliate for use therein or arise from such
Selling Holder's or any Seller Affiliate's failure to deliver a copy of the
registration statement or prospectus or any amendments or supplements thereto
after the Issuer has furnished such Selling Holder or Seller Affiliate with a
sufficient number of copies of the same. The reimbursements required by this
Section 2.8(a) will be made by periodic payments during the course of the
investigation or defense, as and when bills are received or expenses incurred.
(b) In connection with any registration statement in which a
Selling Holder is participating, each such Selling Holder will furnish to the
Issuer in writing such information and affidavits as the Issuer reasonably
requests for use in connection with any such registration statement or
prospectus and, to the fullest extent permitted by law, each such Selling Holder
will indemnify the Issuer and its directors and officers and each Person who
controls the Issuer (within the meaning of the Securities Act or the Exchange
Act) against any and all losses, claims, damages, liabilities, and expenses
(including, without limitation, reasonable attorneys' fees and disbursements
except as limited by Section 2.8(c) below) resulting from: (i) any untrue
statement or alleged untrue statement of a material fact contained in the
registration statement, prospectus, or any preliminary prospectus or any
amendment thereof or supplement thereto, or any omission or alleged omission of
a material fact required to be stated therein or necessary to make the
statements therein not misleading, but only to the extent that such untrue
statement or alleged untrue statement or omission or alleged omission is
contained in any information or affidavit so furnished in writing by such
Selling Holder or any of its Seller Affiliates specifically for inclusion in the
registration statement; or (ii) such Selling Holder's or any Seller Affiliate's
failure to deliver a copy of the registration statement or prospectus or any
amendments or supplements thereto after the Issuer has furnished such Selling
Holder or Seller Affiliate with a sufficient number of copies of the same;
provided, that the obligation to indemnify will be
11
<PAGE> 12
several, not joint and several, among such Selling Holders, and the liability of
each such Selling Holder will be in proportion to, and provided further that
such liability will be limited to, the net amount received by such Selling
Holder from the sale of Registrable Securities pursuant to such registration
statement; provided, however, that such Selling Holder shall not be liable in
any such case to the extent that, prior to the filing of any such registration
statement or prospectus or amendment thereof or supplement thereto, such Selling
Holder has furnished in writing to the Issuer information expressly for use in
such registration statement or prospectus or any amendment thereof or supplement
thereto which corrected or made not misleading information previously furnished
to the Issuer.
(c) Any Person entitled to indemnification hereunder will give
prompt written notice to the indemnifying party of any claim with respect to
which it seeks indemnification (provided that the failure to give such notice
shall not limit the rights of such Person except to the extent such failure
prejudiced the indemnifying party) and permit such indemnifying party to assume
the defense of such claim; provided, however, that any Person entitled to
indemnification hereunder shall have the right to employ separate counsel and to
participate in the defense of such claim, but the fees and expenses of such
counsel shall be at the expense of such Person unless (i) the indemnifying party
has agreed to pay such fees or expenses, (ii) the indemnifying party shall have
failed to assume the defense of such claim or (iii) in the reasonable opinion of
counsel to such indemnified party, a conflict of interest between such
indemnified and indemnifying parties may exist with respect to such claim. If
such defense is not assumed by the indemnifying party as permitted hereunder,
the indemnifying party will not be subject to any liability for any settlement
made by the indemnified party without its consent (but such consent will not be
unreasonably withheld or delayed). If such defense is assumed by the
indemnifying party pursuant to the provisions hereof, such indemnifying party
shall not settle or otherwise compromise the applicable claim unless (A) such
settlement or compromise contains a full and unconditional release of the
indemnified party or (B) the indemnified party otherwise consents in writing. An
indemnifying party who is not entitled to, or elects not to, assume the defense
of a claim will not be obligated to pay the fees and expenses of more than one
counsel for all parties indemnified by such indemnifying party with respect to
such claim, unless in the reasonable judgment of any indemnified party, a
conflict of interest may exist between such indemnified party and any other of
such indemnified parties with respect to such claim, in which event the
indemnifying party shall be obligated to pay the reasonable fees and
disbursements of such additional counsel or counsels.
(d) Each party hereto agrees that, if for any reason the
indemnification provisions contemplated by Section 2.8(a) or Section 2.8(b) are
unavailable to or insufficient to hold harmless an indemnified party in respect
of any losses, claims, damages, liabilities, or expenses (or actions in respect
thereof) referred to therein, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of such losses,
claims, liabilities, or expenses (or actions in respect thereof) in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party and the indemnified party in connection with the actions which resulted in
the losses, claims, damages, liabilities or expenses as well as any other
relevant equitable considerations. The relative fault of such indemnifying party
and indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information supplied by
such indemnifying party or indemnified party, and the parties'
12
<PAGE> 13
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The parties hereto agree that it would not
be just and equitable if contribution pursuant to this Section 2.8(d) were
determined by pro rata allocation (even if the Holders or any underwriters or
all of them were treated as one entity for such purpose) or by any other method
of allocation which does not take account of the equitable considerations
referred to in this Section 2.8(d). The amount paid or payable by an indemnified
party as a result of the losses, claims, damages, liabilities, or expenses (or
actions in respect thereof) referred to above shall be deemed to include any
legal or other fees or expenses reasonably incurred by such indemnified party in
connection with investigating or, except as provided in Section 2.8(c) above,
defending any such action or claim. Notwithstanding the provisions of this
Section 2.8(d), no Holder shall be required to contribute an amount greater than
the dollar amount by which the net proceeds received by such Holder with respect
to the sale of any Registrable Securities exceeds the amount of damages which
such Holder has otherwise been required to pay by reason of such statement or
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentation. The Holders'
obligations in this Section 2.8(d) to contribute shall be several in proportion
to the amount of Registrable Securities registered by them and not joint.
If indemnification is available under this Section 2.8, the
indemnifying parties shall indemnify each indemnified party to the full extent
provided in Section 2.8(a) and Section 2.8(b) without regard to the relative
fault of said indemnifying party or indemnified party or any other equitable
consideration provided for in this Section 2.8(d) subject, in the case of the
Holders, to the limited dollar amounts set forth in Section 2.8(b).
The indemnification and contribution provided for under this Agreement
shall be in addition to any liability which any party may otherwise have to any
other party and shall remain in full force and effect regardless of any
investigation made by or on behalf of the indemnified party or any officer,
director, or controlling Person of such indemnified party and will survive the
transfer of the Common Stock and the termination of this Agreement.
SECTION 2.9 Issuer's Existing Shelf Registration. The Issuer shall use
its reasonable best efforts to cause the Issuer's Shelf Registration Statement
which was filed by the Issuer prior to the date hereof (the "Existing Shelf
Registration Statement") to be amended to contain a provision for the inclusion
in such Shelf Registration Statement of shares for sale for the account of
stockholders of the Issuer. In the event that the Issuer, after the expiration
of the twelve month period immediately following the date hereof, proposes to
effect any offering under the Existing Shelf Registration Statement (other than
to effect the acquisition of or combination with another business entity), it
shall permit each Holder to include its Registrable Securities on substantially
the same terms and subject to substantially the same conditions and limitations
(including, but not limited to, indemnification provisions) as would be the case
in connection with a registration that is the subject of Section 2.3 hereof. The
Issuer will promptly file any prospectus supplements as are necessary to reflect
the inclusion in any such registration of any Registrable Securities included in
such registration by any Holder pursuant to this Section 2.9.
13
<PAGE> 14
ARTICLE 3
MISCELLANEOUS
SECTION 3.1 Entire Agreement. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all other prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter hereof.
SECTION 3.2 Successors and Assigns. Whether or not an express
assignment has been made pursuant to the provisions of this Agreement,
provisions of this Agreement that are for the Holders' benefit as the holders of
any Common Stock are, except as otherwise expressly provided herein, also for
the benefit of, and enforceable by, all subsequent holders of such Common Stock,
except as otherwise expressly provided herein. This Agreement shall be binding
upon the Issuer, each Holder, and, except as otherwise expressly provided
herein, their respective heirs, devisees, successors and assigns.
SECTION 3.3 Duplicate Originals. All parties may sign any number of
copies of this Agreement. Each signed copy shall be an original, but all of them
together shall represent the same agreement.
SECTION 3.4 Amendments, Waivers, Etc. This Agreement may not be
amended, changed, supplemented, waived or otherwise modified or terminated,
except upon the execution and delivery of a written agreement executed by the
Issuer and Holders representing a majority of the Registrable Securities then
held by all Holders.
SECTION 3.5 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if given) by hand delivery or telecopy, or by
any courier service, such as Federal Express, providing proof of delivery. All
communications hereunder shall be delivered to the respective parties at the
address or telecopy number set forth on the signature pages hereto (unless such
contact information in the case of the Holders is updated by written notice from
the affected Holder to the Issuer).
SECTION 3.6 Severability. Whenever possible, each provision or portion
of any provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law, but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
SECTION 3.7 No Waiver. The failure of any party hereto to exercise any
right, power or remedy provided under this Agreement or otherwise available in
respect hereof at law or in equity, or to insist upon compliance by any other
party hereto with its obligations hereunder, and any custom or practice of the
parties at variance with the terms hereof, shall not constitute a
14
<PAGE> 15
waiver by such party of its right to exercise any such or other right, power or
remedy or to demand such compliance.
SECTION 3.8 No Third Party Beneficiaries. Except as expressly provided
in Section 2.8; this Agreement is not intended to be for the benefit of, and
shall not be enforceable by, any Person who or which is not a party hereto;
provided, that, this Agreement is also intended to be for the benefit of and is
enforceable by each Holder.
SECTION 3.9 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD
TO PRINCIPLES OF CONFLICT OF LAWS.
SECTION 3.10 Descriptive Headings. The descriptive headings used herein
are inserted for convenience of reference only and are not intended to be part
of or to affect the meaning or interpretation of this Agreement.
SECTION 3.11 Counterparts. This Agreement may be executed in
counterpart, each of which shall be deemed to be an original, but all of which,
taken together, shall constitute one and the same Agreement.
15
<PAGE> 16
IN WITNESS WHEREOF, the Issuer and the Holders have caused this
Agreement to be duly executed as of the day and year first above written.
LAMAR ADVERTISING COMPANY
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Address:
Lamar Advertising Company
5551 Corporate Boulevard
Baton Rouge, Louisiana 70808
Attention: Keith Istre
Fax: (225) 923-0658
<PAGE> 17
HOLDERS:
CHANCELLOR MEDIA CORPORATION OF
LOS ANGELES
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Address:
1845 Woodall Rodgers Freeway
Suite 1300
Dallas, Texas 75201
Attention: General Counsel
Fax: (512) 340-7890
CHANCELLOR MEZZANINE HOLDINGS
CORPORATION
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Address:
1845 Woodall Rodgers Freeway
Suite 1300
Dallas, Texas 75201
Attention: General Counsel
Fax: (512) 340-7890
<PAGE> 1
Exhibit 2.63
STOCKHOLDERS AGREEMENT
BY AND AMONG
LAMAR ADVERTISING COMPANY
AND
SIGNATORIES LISTED HEREIN
-----------------------------------
Dated as of _______, 1999
-----------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
PAGE
Article 1 DEFINITIONS.......................................................................1
Section 1.1 Definitions..................................................................1
Section 1.2 Rules of Construction........................................................4
Article 2 MANAGEMENT OF THE COMPANY AND CERTAIN ACTIVITIES..................................4
Section 2.1 Board of Directors...........................................................4
2.1.1 Board Representation.........................................................4
2.1.2 Vacancies....................................................................4
2.1.3 Committee Representation.....................................................5
2.1.4 Costs and Expenses...........................................................5
2.1.5 Other Activities of the Holders; Fiduciary Duties............................5
Article 3 CHANCELLOR LOCK-UP................................................................5
Section 3.1 Lock-Up Agreement............................................................5
Article 4 CERTAIN LIMITATIONS...............................................................6
Section 4.1 Transactions with Affiliates.................................................6
Section 4.2 Other Significant Transactions...............................................6
Article 5 LEGENDS...........................................................................7
Section 5.1 Restrictive Legends..........................................................7
5.1.1 Securities Act Legend........................................................7
5.1.2 Other Legends................................................................7
Section 5.2 Termination of Certain Restrictions..........................................7
Article 6 TERMINATION.......................................................................8
Section 6.1 Termination..................................................................8
Article 7 MISCELLANEOUS.....................................................................8
Section 7.1 Financial Statements.........................................................8
Section 7.2 Notices......................................................................9
Section 7.3 Voting of Holders............................................................9
Section 7.4 Governing Law...............................................................10
Section 7.5 Successors and Assigns......................................................10
Section 7.6 Duplicate Originals.........................................................10
</TABLE>
i
<PAGE> 3
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<S> <C> <C>
Section 7.7 Severability................................................................10
Section 7.8 No Waivers; Amendments......................................................10
Section 7.9 Entire Agreement............................................................10
</TABLE>
ii
<PAGE> 4
STOCKHOLDERS AGREEMENT
THIS STOCKHOLDERS AGREEMENT (this "Stockholders Agreement") dated as of
________, 1999, is entered into by and among Lamar Advertising Company, a
Delaware corporation (including its successors, the "Company"), and the
securityholders of the Company listed on the signature pages hereof, or who may
execute counterpart signature pages hereto following the date hereof.
In consideration of the premises, mutual covenants and agreements
hereinafter contained and for other good and valuable consideration, the receipt
and adequacy of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE 1
DEFINITIONS
SECTION 1.1 DEFINITIONS.
"AFFILIATE" means, with respect to any Person, any Person who,
directly or indirectly, controls, is controlled by or is under common
control with that Person. For purposes of this definition, "control"
when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise.
"BENEFICIALLY OWN" OR "BENEFICIAL OWNERSHIP" means beneficial
ownership determined in accordance with Rule 13d-3 promulgated under
the Exchange Act.
"CHANCELLOR LA" means Chancellor Media Corporation of Los
Angeles, a Delaware corporation.
"CHANCELLOR DESIGNEE" shall have the meaning provided in
Section 2.1.1(a) hereof.
"CHANCELLOR HOLDERS" means, collectively, Chancellor LA,
Chancellor Mezzanine and any Affiliates of Chancellor LA or Chancellor
Mezzanine who then are parties to this Stockholders Agreement and who
own any Common Stock or Common Stock Equivalents or any interest
therein.
"CHANCELLOR MEZZANINE" means Chancellor Mezzanine Holdings
Corporation, a Delaware corporation.
"CHANGE OF CONTROL" means the occurrence of one or more of the
following events: (i) a majority of the Board of Directors of the
Company shall consist of Persons who are not Continuing Directors, or
(ii) the failure by Reilly and the Chancellor Holders collectively to
Beneficially Own securities
<PAGE> 5
having more than 50% of the ordinary voting power for the election of
directors of the Company.
"CLASS A COMMON STOCK" means shares of the Class A Common
Stock, par value $.001 per share, of the Company, and any capital stock
into which such Class A Common Stock hereafter may be changed.
"CLASS B COMMON STOCK" means shares of the Class B Common
Stock, par value $.001 per share, of the Company, and any capital
stock, other than Class A Common Stock, into which such Class B Common
Stock hereafter may be changed.
"COMMON STOCK" means, collectively, the Class A Common Stock
and the Class B Common Stock.
"COMMON STOCK EQUIVALENTS" means, without duplication with any
other Common Stock or Common Stock Equivalents, any security of the
Company which is convertible into, exercisable for or exchangeable for,
directly or indirectly, Common Stock of the Company, whether at the
time of issuance or upon the passage of time or the occurrence of some
future event.
"COMPANY" shall have the meaning provided in the introductory
paragraph hereof.
"CONTINUING DIRECTOR" means, as of the date of determination,
any Person who (i) is a Chancellor Designee, (ii) was a member of the
Board of Directors of the Company as of the date hereof, (iii) was
nominated for election or elected to the Board of Directors of the
Company with the affirmative vote of a majority of the Continuing
Directors who were members of the Board of Directors of the Company at
the time of such nomination or election or (iv) is a representative of
Reilly or an Affiliate of Reilly.
"EBITDA" shall have the meaning provided in Section 7.1
hereof.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated by the SEC
thereunder.
"FULLY-DILUTED COMMON STOCK" means, at any time, the then
outstanding Common Stock of the Company plus (without duplication) all
shares of Common Stock issuable, whether at such time or upon the
passage of time or the occurrence of future events, upon the conversion
or exchange of all then outstanding Common Stock Equivalents.
"GAAP" means generally accepted accounting principles.
"GROUP" means a group of related persons for purposes of
Section 13(d) of the Exchange Act.
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<PAGE> 6
"HOLDER" means (i) any Person (other than the Company) listed
on the signature pages hereof as of the date of this Stockholders
Agreement and (ii) any direct or indirect transferee of any such Person
who elects to become a party to this Stockholders Agreement by
executing and delivering a counterpart signature page hereto.
"MAJORITY CHANCELLOR HOLDERS" means Chancellor Holders owning
Common Stock and/or Common Stock Equivalents representing a majority of
the Fully-Diluted Common Stock then owned by all Chancellor Holders.
"PERSON" or "PERSON" means any individual, corporation,
partnership, limited liability company, joint venture, association,
joint-stock company, trust, unincorporated organization or government
or other agency or political subdivision thereof.
"PURCHASE AGREEMENT" means the Second Amended and Restated
Stock Purchase Agreement, date as of August ____, 1999, by and among
the Company, Lamar Media Corp., a Delaware corporation and wholly-owned
subsidiary of the Company (formerly known as Lamar Advertising
Company),Chancellor Mezzanine and Chancellor LA.
"REILLY" means, collectively, the Reilly Family Limited
Partnership, a Louisiana limited partnership ("RFLP"), and any
Affiliates of RFLP (other than the Company and any of its Subsidiaries)
who then are parties to this Stockholders Agreement and who own any
Common Stock or Common Stock Equivalents or any interest therein.
"SEC" means the U. S. Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated by the SEC thereunder.
"STOCKHOLDERS AGREEMENT" means this Stockholders Agreement, as
such from time to time may be amended.
"SUBSIDIARY" of any Person means (i) a corporation a majority
of whose outstanding shares of capital stock or other equity interests
with voting power, under ordinary circumstances, to elect directors, is
at the time, directly or indirectly, owned by such Person, by one or
more subsidiaries of such Person or by such Person and one or more
subsidiaries of such Person, and (ii) any other Person (other than a
corporation) in which such Person, a subsidiary of such Person or such
Person and one or more subsidiaries of such Person, directly or
indirectly, at the date of determination thereof, has (x) at least a
majority ownership interest or (y) the power to elect or direct the
election of the directors or other governing body of such Person.
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<PAGE> 7
SECTION 1.2 RULES OF CONSTRUCTION. Unless the context otherwise
requires
(1) a term has the meaning assigned to it;
(2) "or" is not exclusive;
(3) words in the singular include the plural, and
words in the plural include the singular;
(4) provisions apply to successive events and
transactions; and
(5) "herein," "hereof" and other words of similar
import refer to this Stockholders Agreement as a whole and not
to any particular Article, Section or other subdivision.
ARTICLE 2
MANAGEMENT OF THE COMPANY AND CERTAIN ACTIVITIES
SECTION 2.1 BOARD OF DIRECTORS.
2.1.1 Board Representation.
(a) From and following the date hereof, the Board of Directors
of the Company shall consist of ten (10) individuals. The Majority Chancellor
Holders will be entitled to designate two (2) directors (each a "Chancellor
Designee"). The existence of the right, pursuant to this Section 2.1.1(a), on
the part of the Majority Chancellor Holders to designate certain directors will
in no way limit or impair the right of the Majority Chancellor Holders to vote
their shares of capital stock of the Company as they see fit with respect to the
election of persons to fill seats on the Board of Directors other than the seats
filled as a result of the designation rights under this Section 2.1.1(a).
(b) The Company, from time to time at each appropriate time,
will cause each of the persons theretofore serving as Chancellor Designees (or
other persons designated by the Majority Chancellor Holders as new Chancellor
Designees in replacement of such persons) to be nominated and recommended by the
Board of Directors of the Company for reelection to the Board of Directors of
the Company by the stockholders of the Company upon any expiration of their
respective terms of office.
2.1.2 Vacancies. If, prior to his election to the Board of
Directors of the Company pursuant to Section 2.1.1 hereof, any Chancellor
Designee shall be unable or unwilling to serve as a director of the Company,
then the Majority Chancellor Holders shall be entitled to designate a
replacement Chancellor Designee. If, following an election to the Board of
Directors of the Company pursuant to Section 2.1.1 hereof, any Chancellor
Designee shall resign or be removed or be unable to serve for any reason prior
to the expiration of his term as a director of the Company, then the Majority
Chancellor Holders shall, within thirty (30) days of such event, notify the
Board of Directors of the Company in writing of a replacement Chancellor
Designee, and the Board of Directors
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<PAGE> 8
shall appoint such replacement Chancellor Designee to fill the unexpired term of
the director who such new Chancellor Designee is replacing. If the Majority
Chancellor Holders request that any Chancellor Designee be removed as a director
(with or without cause) by written notice thereof to the Company, then each of
the Holders shall vote all of its or his capital stock in favor of such removal
upon such request.
2.1.3 Committee Representation. So long as the Chancellor
Holders are entitled to designate any director under Section 2.1.1, at least one
(1) of the Chancellor Designees shall be permitted to serve on each committee of
the Board of Directors of the Company (provided that, if such committee has
eligibility requirements that are imposed by a Person other than the Company,
such as independence requirements for the independent committee of the Board of
Directors of the Company, such designee meets those requirements).
Notwithstanding the foregoing, the Executive Committee of the Board of Directors
of the Company shall not be required to have a Chancellor Designee serving on
such committee so long as (i) the actions of such committee are restricted to
the day to day management of the Company in the ordinary course of business and
(ii) each of such actions of such committee is not material to the Company and
its Subsidiaries, taken as a whole.
2.1.4 Costs and Expenses. The Company will pay all reasonable
out-of-pocket expenses incurred by the Chancellor Designees in connection with
the participation by directors in meetings of the Board of Directors (and
committees thereof) of the Company.
2.1.5 Other Activities of the Holders; Fiduciary Duties. It is
understood and accepted that the Holders and their Affiliates have interests in
other business ventures which may be in conflict with the activities of the
Company and its Subsidiaries and that, subject to applicable law, nothing in
this Stockholders Agreement shall limit the current or future business
activities of the Holders whether or not such activities are competitive with
those of the Company and its Subsidiaries. Nothing in this Stockholders
Agreement, express or implied, shall relieve any officer or director of the
Company or any of its Subsidiaries, or any Holder, of any fiduciary or other
duties or obligations they may have to the Company's stockholders.
ARTICLE 3
CHANCELLOR LOCK-UP
SECTION 3.1 LOCK-UP AGREEMENT. Each of Chancellor LA and Chancellor
Mezzanine agrees that, until that date that is twelve (12) months following the
date hereof, such entity will not sell or otherwise transfer any of the shares
of Common Stock acquired pursuant to the Purchase Agreement, or any interest
therein; provided, however, that this Section 3.1 shall not prohibit the
transfer of any such shares (or any interest therein) (i) to any Affiliate of
Chancellor LA or Chancellor Mezzanine in compliance with the other provisions of
this Stockholders Agreement, (ii) in a transaction approved by the Board of
Directors of the Company or (iii) pursuant to a bona fide pledge of such
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<PAGE> 9
shares to a lender or in connection with a foreclosure (or similar proceeding or
remedy) effected with respect to any such pledge.
ARTICLE 4
CERTAIN LIMITATIONS
SECTION 4.1 TRANSACTIONS WITH AFFILIATES. The Company will not, nor
will it permit any of its Subsidiaries to, directly or indirectly, enter into or
engage in any transaction with or for the benefit of any of its Affiliates
(other than transactions between the Company and a wholly owned Subsidiary of
the Company or among wholly owned Subsidiaries of the Company), except for any
such transaction which (i) has been approved in advance in writing by the
Majority Chancellor Holders or (ii) is on terms no less favorable than those
that might reasonably have been obtained in a comparable transaction on an
arm's-length basis from a person that is not an Affiliate. With respect to the
requirement set forth in clause (ii) of the immediately preceding sentence, for
a transaction or series of related transactions involving a value of $1,000,000
or more, such determination will be made in good faith by a majority of the
members of the Board of Directors of the Company and a majority of the
disinterested members of the Board of Directors of the Company, and for a
transaction or series of transactions involving a value of $5,000,000 or more,
the Board of Directors of the Company must receive an opinion from a nationally
recognized investment banking firm that such transaction is (or that such series
of transactions are) fair, from a financial point of view, to the Company or
such Subsidiary, as applicable. Notwithstanding the foregoing, the restrictions
set forth in this Section 4.1 shall not apply to reasonable and customary
directors' fees, reasonable and customary directors' or officers'
indemnification arrangements, or reasonable and customary compensatory
arrangements with officers of the Company.
SECTION 4.2 OTHER SIGNIFICANT TRANSACTIONS. Subject to the provisions
set forth in this Section 4.2, without the prior written approval of the
Majority Chancellor Holders, neither the Company nor any of the Holders will
take any action which would result in (and the Company will not permit any of
its Subsidiaries to take any action which would result in) (i) a Change of
Control or (ii) the acquisition or disposition by the Company and/or any of its
Subsidiaries, in a single transaction or a series of related transactions, of
assets (which shall include, without limitation, capital stock or other equity
interests in any Person) with an aggregate fair market value of $500,000,000 or
more. Notwithstanding the foregoing, the restrictions set forth in this Section
4.2 shall not apply to (a) any transaction pursuant to which all Persons who
owned Common Stock immediately prior to such transaction cease to own any equity
interest in the Company or, if applicable, in the entity that is the successor
to the Company as a result of such transaction, (b) any merger in which all
Persons who owned Common Stock immediately prior to such merger are permitted to
exercise statutory appraisal rights, or (c) any sale of substantially all of the
assets of the Company to a Person that is not an Affiliate of the Company if the
net proceeds of such sale are promptly distributed to the holders of Common
Stock.
6
<PAGE> 10
ARTICLE 5
LEGENDS
SECTION 5.1 RESTRICTIVE LEGENDS.
5.1.1 Securities Act Legend. Except as otherwise provided in
Section 5.2 hereof, each certificate evidencing shares of Common Stock issued on
or after the date hereof to a Holder or to a subsequent transferee of such
Holder, shall be stamped or otherwise imprinted with a legend in substantially
the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR PURSUANT TO THE SECURITIES OR
"BLUE SKY" LAWS OF ANY STATE. SUCH SECURITIES MAY NOT BE OFFERED, SOLD,
TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE ASSIGNED, EXCEPT PURSUANT TO (i)
A REGISTRATION STATEMENT WITH RESPECT TO SUCH SECURITIES WHICH IS EFFECTIVE
UNDER SUCH ACT, (ii) RULE 144 UNDER SUCH ACT, OR (iii) ANY OTHER EXEMPTION FROM
REGISTRATION UNDER SUCH ACT.
5.1.2 Other Legends. Each certificate evidencing shares of
Common Stock or Common Stock Equivalents, where applicable, issued on or after
the date hereof to a Holder or a subsequent transferee of such Holder shall be
stamped or otherwise imprinted with a legend in substantially the following
form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON TRANSFER, VOTING AND OTHER TERMS AND CONDITIONS SET FORTH IN THE
STOCKHOLDERS AGREEMENT DATED AS OF ______________, 1999, A COPY OF WHICH MAY BE
OBTAINED FROM THE COMPANY AT ITS PRINCIPAL EXECUTIVE OFFICES.
SECTION 5.2 TERMINATION OF CERTAIN RESTRICTIONS. Notwithstanding the
foregoing provisions of this Article 5, the legend requirements of Section 5.1.1
shall terminate as to any Common Stock (i) when and so long as such Common Stock
shall have been effectively registered under the Securities Act and disposed of
pursuant thereto or (ii) when the Company shall have received an opinion of
counsel reasonably satisfactory to it that such Common Stock may be transferred
without registration thereof under the Securities Act and that such legend may
be removed. Whenever the restrictions imposed by Section 5.1.1 shall terminate
as to any Common Stock, the Holder thereof shall be entitled to receive from the
Company, at the Company's expense, a new certificate evidencing such shares of
Common Stock not bearing the restrictive legend set forth in Section 5.1.1.
7
<PAGE> 11
ARTICLE 6
TERMINATION
SECTION 6.1 TERMINATION. The provisions of this Stockholders Agreement
shall terminate on the earlier of (i) the date that is ten (10) years following
the date of this Stockholders Agreement and (ii) such date that the Chancellor
Holders collectively no longer Beneficially Own at least ten percent (10%) of
the Fully-Diluted Common Stock. Notwithstanding the foregoing, Section 7.1
hereof shall remain in full force and effect for so long as (and only for so
long as) the information to be provided to Chancellor LA or Chancellor Mezzanine
under such Section 7.1 is necessary for such entity in connection with the
preparation of its financial statements.
ARTICLE 7
MISCELLANEOUS
SECTION 7.1 FINANCIAL STATEMENTS. The Company shall deliver to
Chancellor LA and Chancellor Mezzanine the following, together with management's
discussion and analysis of financial condition and results of operations for the
relevant fiscal periods, in writing:
(a) as soon as available and in any event within 80 days after
the end of each fiscal year of the Company, (i) an audited consolidated balance
sheet or equivalent statement of financial position of the Company and its
Subsidiaries and the related consolidated statements of income, cash flows, and
changes in stockholders' equity for such fiscal year, setting forth in each case
in comparative form the figures for the previous fiscal year, and (ii) a
statement of earnings before interest, taxes, depreciation and amortization as
per the consolidated financial statements of the Company and its Subsidiaries
prepared in accordance with GAAP ("EBITDA") for such fiscal year, all presented
in accordance with GAAP and reported on as to fairness of presentation,
accounting principles and consistency, and otherwise by independent public
accountants; and
(b) as soon as available and in any event within 35 days after
the end of each calendar quarter of each fiscal year of the Company, (i) an
unaudited consolidated balance sheet or equivalent statement of financial
position of the Company and its Subsidiaries as of the end of each such calendar
quarter, as applicable, and the related consolidated statements of income and
cash flows for the portion of the Company's fiscal year ended at the end of each
such calendar quarter setting forth in comparative form in the case of such
statements of income and cash flows the figures for the corresponding calendar
quarter of the previous fiscal year, and (ii) a statement of EBITDA for such
calendar quarter, all presented in accordance with GAAP and certified as to
fairness of presentation, accounting principles and consistency by an officer of
the Company.
8
<PAGE> 12
SECTION 7.2 NOTICES. Any notices or other communications required or
permitted hereunder shall be in writing, and shall be sufficiently given if made
by hand delivery, by telex, by telecopier, by registered or certified mail,
postage prepaid, return receipt requested, or by overnight courier, addressed as
follows (or at such other address as may be substituted by notice given as
herein provided):
If to the Company:
Lamar Advertising Company
5551 Corporate Boulevard
Baton Rouge, Louisiana 70808
Attention: Keith Istre
Fax: (225) 923-0658
With copies to:
Jones, Walker, Waechter, Poitevent,
Carrere & Denegre, L.L.P.
5th Floor
Four United Plaza
8555 United Plaza Boulevard
Baton Rouge, Louisiana 70809
Attention: Brad J. Axelrod
Fax: (225) 231-3336
If to any Holder, at its address listed on the signature pages hereof.
Any notice or communication hereunder shall be deemed to have been
given or made as of the date so delivered if personally delivered; when answered
back, if telexed; when receipt is acknowledged, if telecopied; five (5) calendar
days after mailing if sent by registered or certified mail (except that a notice
of change of address shall not be deemed to have been given until actually
received by the addressee); and one (1) business day after delivery to a
reputable overnight courier service guaranteeing next business day delivery.
Failure to mail a notice or communication to a Holder or any defect in
it shall not affect its sufficiency with respect to other Holders. If a notice
or communication is mailed in the manner provided above, it is duly given,
whether or not the addressee receives it.
SECTION 7.3 VOTING OF HOLDERS. Each Holder shall vote his or its shares
of Voting Stock at any regular or special meeting of stockholders of the Company
or in any written consent executed in lieu of such a meeting of stockholders and
shall take all other lawful actions (including using its, his or her
commercially reasonable efforts to cause the Board of Directors of the Company
to take all such actions) necessary to give effect to the agreements contained
in this Stockholders Agreement (including but not limited to the election of the
Chancellor Designees) and to ensure that the certificate of incorporation and
bylaws of the Company as in effect at any time hereafter do not
9
<PAGE> 13
conflict in any respect with the provisions of this Stockholders Agreement. In
order to effectuate the provisions of this Stockholders Agreement, each Holder
hereby agrees that when any action or vote is required to be taken by such
Holder pursuant to this Stockholders Agreement, such Holder shall use his
commercially reasonable efforts to call, or cause the appropriate officers and
directors of the Company to call, a special or annual meeting of stockholders of
the Company, as the case may be, or execute or cause to be executed a consent in
writing in lieu of any such meetings pursuant to the General Corporation Law of
the State of Delaware, as amended from time to time, or any successor statutes.
SECTION 7.4 GOVERNING LAW. THIS STOCKHOLDERS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE,
WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
SECTION 7.5 SUCCESSORS AND ASSIGNS. This Stockholders Agreement shall
be binding upon the Company, each Holder, and their respective successors and
permitted assigns.
SECTION 7.6 DUPLICATE ORIGINALS. All parties may sign any number of
copies of this Stockholders Agreement. Each signed copy shall be an original,
but all of them together shall represent the same agreement.
SECTION 7.7 SEVERABILITY. In case any provision in this Stockholders
Agreement shall be held invalid, illegal or unenforceable in any respect for any
reason, the validity, legality and enforceability of any such provision in every
other respect and the remaining provisions shall not in any way be affected or
impaired thereby.
SECTION 7.8 NO WAIVERS; AMENDMENTS.
7.8.1 No failure or delay on the part of the Company or any
Holder in exercising any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy preclude any other or further exercise thereof or the exercise
of any other right, power or remedy. The remedies provided for herein are
cumulative and are not exclusive of any remedies that may be available to the
Company or any Holder at law or in equity or otherwise.
7.8.2 Any provision of this Stockholders Agreement may be
amended or waived if, but only if, such amendment or waiver is in writing and is
signed by the Company, the Holders holding at least a majority of the
Fully-Diluted Common Stock held by all Holders and by the Majority Chancellor
Holders.
SECTION 7.9 ENTIRE AGREEMENT. This Stockholders Agreement contains the
entire agreement among the parties with respect to the subject matter hereof and
supersedes all prior agreements and understandings with respect to such subject
matter.
[SIGNATURE PAGES FOLLOW]
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<PAGE> 14
LAMAR ADVERTISING COMPANY
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
<PAGE> 15
HOLDERS:
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
Address:
1845 Woodall Rogers Freeway
Suite 1300
Dallas, Texas 75201
Attention: General Counsel
Fax: (512) 340-7890
With copies to:
Weil, Gotshal & Manges LLP
100 Crescent Court
Suite 1300
Dallas, Texas 75201-6950
Attention: Michael A. Saslaw
Fax: (214) 746-7777
and
Latham & Watkins
1001 Pennsylvania Avenue, N.W.
Suite 1300
Washington, D.C. 20004-2502
Attention: Eric L. Bernthal
Fax: (202) 637-2201
<PAGE> 16
CHANCELLOR MEZZANINE HOLDINGS CORPORATION
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
Address:
1845 Woodall Rogers Freeway
Suite 1300
Dallas, Texas 75201
Attention: General Counsel
Fax: (512) 340-7890
With copies to:
Weil, Gotshal & Manges LLP
100 Crescent Court
Suite 1300
Dallas, Texas 75201-6950
Attention: Michael A. Saslaw
Fax: (214) 746-7777
and
Latham & Watkins
1001 Pennsylvania Avenue, N.W.
Suite 1300
Washington, D.C. 20004-2502
Attention: Eric L. Bernthal
Fax: (202) 637-2201
<PAGE> 17
REILLY FAMILY LIMITED PARTNERSHIP
By:
------------------------------
Name Kevin P. Reilly, Jr.
Title: General Partner
Address:
c/o Lamar Advertising Company
5551 Corporate Boulevard
Baton Rouge, Louisiana 70808
Attention: Kevin P. Reilly, Jr.
Fax: (225) 923-0658
<PAGE> 1
EXHIBIT 2.64
ANNEX G
SECOND AMENDED AND RESTATED VOTING AGREEMENT
THIS SECOND AMENDED AND RESTATED VOTING AGREEMENT (this "Agreement"),
dated as of August 11, 1999, among LAMAR ADVERTISING COMPANY, a Delaware
corporation (the "Company"), CHANCELLOR MEDIA CORPORATION OF LOS ANGELES, a
Delaware corporation ("Chancellor LA"), CHANCELLOR MEZZANINE HOLDINGS
CORPORATION, a Delaware corporation ("Chancellor Mezzanine"), and REILLY FAMILY
LIMITED PARTNERSHIP, a Louisiana limited partnership (the "Stockholder").
WHEREAS, Lamar Media Corp. (formerly known as Lamar Advertising
Company), a Delaware corporation and a wholly-owned subsidiary of the Company
("LMC"), and Chancellor LA entered into (i) that certain Stock Purchase
Agreement dated as of June 1, 1999 (the "Original Purchase Agreement") and (ii)
that certain Subscription Agreement, dated as of June 1, 1999 (the "Subscription
Agreement");
WHEREAS, LMC, Chancellor LA and Chancellor Mezzanine entered into that
certain Amended and Restated Stock Purchase Agreement, dated as of July 12, 1999
(the "Restated Purchase Agreement"), in order to (i) terminate the Subscription
Agreement and (ii) amend and restate the Original Purchase Agreement in its
entirety;
WHEREAS, the Company, LMC, Chancellor LA and Chancellor Mezzanine are
entering into that certain Second Amended and Restated Stock Purchase Agreement
of even date herewith (the "Purchase Agreement"), in order to amend and restate
the Restated Purchase Agreement;
WHEREAS, the Purchase Agreement contemplates the issuance and sale of
shares (collectively, the "Company Shares") of Class A Common Stock, par value
$0.001 per share, of the Company ("Class A Common Stock"), to Chancellor LA and
Chancellor Mezzanine upon the terms and subject to the conditions set forth in
the Purchase Agreement;
WHEREAS, all of the shares of Class A Common Stock and Class B Common
Stock, $0.001 par value per share, of the Company ("Class B Common Stock"), that
are held of record as of the date hereof by the Stockholder or over which the
Stockholder has the power to direct the vote, together with any shares of
capital stock of the Company acquired by the Stockholder after the date hereof
and during the term of this Agreement, including upon exercise of any option or
warrant, are collectively referred to herein as the "Subject Shares;" and
WHEREAS, as a condition to its willingness to enter into the Original
Purchase Agreement, Chancellor LA requested that the Stockholder enter into, and
the Stockholder agreed to enter into, that certain Voting Agreement dated as of
June 1, 1999 (the "Original Voting Agreement");
WHEREAS, the Original Voting Agreement was amended and restated as of
July 12, 1999 (the "Restated Voting Agreement"); and
<PAGE> 2
WHEREAS, the parties are entering into this Agreement in order to amend
and restate the Restated Voting Agreement to reflect changes that are
appropriate as a result of the parties' execution and delivery of the Purchase
Agreement;
NOW, THEREFORE, in consideration of Chancellor LA and Chancellor
Mezzanine entering into the Purchase Agreement, and in consideration of the
premises and the representations, warranties and agreements contained herein,
the parties agree as follows:
1. Representations and Warranties of the Stockholders. The Stockholder
hereby represents and warrants to Chancellor LA and Chancellor Mezzanine as of
the date hereof as follows:
(a) Authority; Noncontravention. The Stockholder has
all requisite power and authority to enter into this Agreement
and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement by the Stockholder,
and the consummation of the transactions contemplated hereby,
have been duly authorized by all necessary partnership action
on the part of the Stockholder. This Agreement has been duly
authorized, executed and delivered by the Stockholder and
constitutes a valid and binding obligation of the Stockholder
enforceable in accordance with its terms. The execution and
delivery of this Agreement do not, and the consummation of the
transactions contemplated hereby and compliance with the terms
hereof (including Section 3 of this Agreement) will not,
conflict with, or result in any violation of, or default (with
or without notice or lapse of time or both) under any
provision of, the certificate of limited partnership, the
partnership agreement or any other partnership organizational
documents of the Stockholder, or any trust agreement, loan or
credit agreement, note, bond, mortgage, indenture, lease or
other agreement, instrument, permit, concession, franchise,
license, judgment, order, notice, decree, statute, law,
ordinance, rule or regulation applicable to the Stockholder or
to the Stockholder's property or assets.
(b) The Subject Shares. The Stockholder is the record
or beneficial owner of, and has good and marketable title to,
the Subject Shares, free and clear of any claims, liens,
encumbrances and security interests whatsoever. The
Stockholder has the sole right to vote the Subject Shares.
None of the Subject Shares is subject to any voting trust or
other agreement (other than the Stockholders Agreement, among
the parties hereto, of even date herewith (the "Stockholders
Agreement")), arrangement or restriction with respect to the
voting of the Subject Shares as required by this Agreement.
2. Representations and Warranties of Chancellor LA and Chancellor
Mezzanine. Each of Chancellor LA and Chancellor Mezzanine hereby represents and
warrants to the Stockholder as of the date hereof that (i) such entity has all
requisite
2
<PAGE> 3
corporate power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby; (ii) the execution and delivery of this
Agreement by such entity, and the consummation of the transactions contemplated
hereby, have been duly authorized by all necessary corporate action on the part
of such entity; (iii) this Agreement has been duly executed and delivered by
such entity and constitutes a valid and binding obligation of such entity
enforceable in accordance with its terms; and (iv) the execution and delivery of
this Agreement do not, and the consummation of the transactions contemplated
hereby and compliance with the terms hereof will not, conflict with, or result
in any violation of, or default (with or without notice or lapse of time or
both) under any provision of, the certificate of incorporation or bylaws of such
entity, any trust agreement, loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession, franchise,
license, judgment, order, notice, decree, statute, law, ordinance, rule or
regulation applicable to such entity or to such entity's property or assets.
3. Covenants of the Stockholder. Until the termination of this
Agreement in accordance with Section 6, the Stockholder agrees as follows:
(a) At any meeting of stockholders of the Company
called to vote upon the approval and authorization of the
issuance of the Company Shares, as contemplated by the
Purchase Agreement, or at any adjournment thereof or in any
other circumstances upon which a vote, consent or other
approval (including by written consent) with respect to the
approval and authorization of the issuance of the Company
Shares, is sought, the Stockholder shall vote (or cause to be
voted) the Subject Shares in favor of such proposals and any
of the other transactions contemplated by the Purchase
Agreement. The Stockholder further agrees (i) not to convert
any Subject Shares that are shares of Class B Common Stock
into shares of Class A Common Stock and (ii) not to waive or
otherwise forfeit its right to have each Subject Share that is
a share of Class B Common Stock be entitled to ten (10) votes
per share.
(b) Except as provided in the immediately following
sentence of this Section 3(b), the Stockholder agrees not to
(i) sell, transfer, pledge, assign or otherwise dispose of
(including by gift) (collectively, the "Transfer"), or enter
into any contract, option or other arrangement (including any
profit sharing agreement) with respect to the Transfer of the
Subject Shares to any person, or (ii) enter into any voting
arrangement, whether by proxy, voting agreement or otherwise
(other than the Amended and Restated Stockholders Agreement to
be entered into in connection with the closing of the
transactions contemplated by the Purchase Agreement (the
"Stockholders Agreement")), with respect to any capital stock
of the Company, and agrees not to commit or agree to take any
of the foregoing actions. Notwithstanding the foregoing, the
Stockholder shall have the right, for tax or estate planning
purposes, to Transfer the Subject Shares to a transferee
provided that, as a condition to any such Transfer, each such
transferee shall execute and deliver to Chancellor LA
3
<PAGE> 4
and Chancellor Mezzanine a counterpart of this Agreement and
expressly agree to be bound hereby.
(c) Until after the earlier of (i) the consummation
of the transactions contemplated by the Purchase Agreement and
(ii) the termination of the Purchase Agreement, the
Stockholder shall use all reasonable efforts to take, or cause
to be taken, all actions, and to do, or cause to be done, and
to assist and cooperate with Chancellor LA and Chancellor
Mezzanine in doing, all things necessary, proper or advisable
to consummate and make effective, in the most expeditious
manner practicable, the transactions contemplated by the
Purchase Agreement.
(d) Immediately prior to the closing of the
transactions contemplated by the Purchase Agreement (the
"Purchase Closing"), the Stockholder shall execute and deliver
to each of the Company, Chancellor LA and Chancellor
Mezzanine, the Stockholders Agreement, dated as of the date of
the Purchase Closing, the form of which is attached to the
Purchase Agreement as Annex E, as required by Section 7.3(e)
of the Purchase Agreement.
4. Further Assurances. The Stockholder will, from time to time, execute
and deliver, or cause to be executed and delivered, such additional or further
consents, documents and other instruments as Chancellor LA and Chancellor
Mezzanine may reasonably request for the purpose of effectively carrying out the
transactions contemplated by this Agreement.
5. Assignment. Neither party hereto shall assign this Agreement or any
part hereof without the prior written consent of the other party. Subject to the
foregoing, this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective permitted successors and assigns.
6. Termination. This Agreement shall terminate upon the earlier of (a)
the termination of the Purchase Agreement in accordance with the terms thereof,
or (b) the closing of the transactions contemplated thereby.
7. General Provisions.
(a) Amendments. This Agreement may not be amended
except by an instrument in writing signed by each of the
parties hereto.
(b) Notice. All notices and other communications
hereunder shall be in writing and shall be deemed given if
delivered personally or sent by overnight courier (providing
proof of delivery) to the Company, Chancellor LA and
Chancellor Mezzanine in accordance with Section 11.2 of the
Purchase Agreement and to the Stockholder at its address set
forth on the signature pages hereto (or at such other address
for a party as shall be specified by like written notice).
4
<PAGE> 5
(c) Interpretation. When a reference is made in this
Agreement to Sections, such reference shall be to a Section to
this Agreement unless otherwise indicated. The headings
contained in this Agreement are for reference purposes only
and shall not affect in any way the meaning or interpretation
of this Agreement. Wherever the words "include," "includes" or
"including" are used in this Agreement, they shall be deemed
to be followed by the words "without limitation."
(d) Counterparts. This Agreement may be executed in
one or more counterparts, all of which shall be considered one
and the same agreement, and shall become effective when one or
more of the counterparts have been signed by each of the
parties and delivered to the other party, it being understood
that each party need not sign the same counterpart.
(e) Entire Agreement; No Third-Party Beneficiaries.
This Agreement (including the documents and instruments
referred to herein) (i) constitutes the entire agreement and
supersedes all prior agreements and understandings, both
written and oral, among the parties with respect to the
subject matter hereof and (ii) is not intended to confer upon
any person other than the parties hereto any rights or
remedies hereunder.
(f) Governing Law. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
DELAWARE REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE GOVERN
UNDER APPLICABLE PRINCIPLES OF CONFLICTS OF LAW THEREOF.
8. Enforcement. The parties agree that irreparable damage would occur
in the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any competent court of the United
States located in the State of Delaware or in a Delaware state court, this being
in addition to any other remedy to which they are entitled at law or in equity.
In addition, each of the parties hereto (i) consents to submit such party to the
personal jurisdiction of any Federal court in the event any dispute arises out
of this Agreement or any of the transactions contemplated hereby, (ii) agrees
that such party will not attempt to deny or defeat such personal jurisdiction by
motion or other request for leave from any such court, (iii) agrees that such
party will not bring any action relating to this Agreement or the transactions
contemplated hereby in any court other than a Federal court sitting in the state
of Delaware or a Delaware state court and (iv) waives any right to trial by jury
with respect to any claim or proceeding related to or arising out of this
Agreement or any of the transactions contemplated hereby.
[The remainder of this page is intentionally left blank.]
5
<PAGE> 6
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be duly executed as of the date first written above.
LAMAR ADVERTISING COMPANY
By: /s/ KEITH ISTRE
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
CHANCELLOR MEZZANINE HOLDINGS CORPORATION
By: /s/ WILLIAM S. BANOWSKY, JR.
-----------------------------------
Name: William S. Banowsky, Jr.
Title: Executive Vice President
CHANCELLOR MEDIA CORPORATION OF
LOS ANGELES
By: /s/ WILLIAM S. BANOWSKY, JR.
-----------------------------------
Name: William S. Banowsky, Jr.
Title: Executive Vice President
REILLY FAMILY LIMITED PARTNERSHIP
By: /s/ KEVIN P. REILLY, JR.
-----------------------------------
Name: Kevin P. Reilly, Jr.
Title: General Partner
<PAGE> 1
EXHIBIT 10.73
TERMINATION AND RELEASE AGREEMENT
This TERMINATION AND RELEASE AGREEMENT (this "Agreement") is made and
entered into as of July 13, 1999, by and among Capstar Broadcasting Corporation
(the "Company"), a Delaware corporation, Capstar Broadcasting Partners, Inc.
("Partners"), a Delaware corporation, and Hicks, Muse & Co. Partners, L.P.
(together with its successors, "HMCo"), a Texas limited partnership, and, for
the limited purposes set forth in Sections 4 and 5 of this Agreement, is joined
in by Chancellor Media Corporation, a Delaware corporation to be renamed AMFM
Inc. ("Chancellor"), with respect to (i) that certain Financial Advisory
Agreement, dated July 1, 1997, between the Company and HMCo attached hereto as
Exhibit A (the "Company Financial Advisory Agreement"); (ii) that certain
Monitoring and Oversight Agreement, dated July 1, 1997, between the Company and
HMCo attached hereto as Exhibit B (the "Company M&O Agreement" and, together,
with the Company Financial Advisory Agreement, the "Company Financial Services
Agreements"); (iii) that certain Financial Advisory Agreement, dated October 16,
1996, between Partners and HMCo attached hereto as Exhibit C ("Partners
Financial Advisory Agreement"); and (iv) that certain Monitoring and Oversight
Agreement, dated October 16, 1996, between Partners and HMCo attached hereto as
Exhibit D ("Partners M&O Agreement" and, together, with the Partners Financial
Advisory Agreement, the "Partners Financial Services Agreements," and, together,
with the Company Financial Services Agreements, the "Financial Services
Agreements").
WHEREAS, pursuant to the terms of the Amended and Restated Agreement
and Plan of Merger (the "Merger Agreement"), dated as of April 29, 1999 and
amended on June 30, 1999, by and among Chancellor, CBC Acquisition Company,
Inc., a Delaware corporation, CMC Merger Sub, Inc., a Delaware corporation, and
the Company, it is a condition precedent to Chancellor's obligation to
consummate the Merger that the parties hereto terminate the Financial Services
Agreements. Each capitalized term not defined herein shall have the meaning
assigned to such term in the Merger Agreement.
NOW, THEREFORE, intending to be legally bound and in consideration for
the mutual covenants and agreements contained in this Agreement and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. The Company, Partners, and HMCo hereby agree that the Financial
Services Agreements and any exhibits thereto shall terminate and be of no
further force and effect on any of the parties thereto, effective as of the
Effective Time, except that (i) Section 4 of each of the Financial Services
Agreements shall survive the termination of such agreements to the extent that
HMCo is entitled to an expense reimbursement for any services rendered in
accordance with the terms thereof prior to the Effective Time; (ii) Section 5 of
each of the Financial Services Agreements shall survive the termination of such
agreements, and HMCo shall be entitled to indemnity under Section 5, with
respect to any services rendered by HMCo prior to the Effective Time in
accordance with the terms of such agreements; and (iii) Section 6 of each of the
Financial Services Agreements shall survive the termination of such agreements.
<PAGE> 2
2. Except for any claim that the Company or Partners or their
respective successors or assigns may in the future have against HMCo under
Section 6 of each of the Financial Services Agreements, each of the Company and
Partners hereby irrevocably and unconditionally releases, acquits and forever
discharges HMCo, and each of its past, present or future successors, assigns,
employees, agents, stockholders, partners, subsidiaries, parent companies, other
affiliates (corporate or otherwise), and legal representatives, including their
past, present or future officers and directors, and each of them, of and from
any and all Released Claims (as defined herein), arising out of, based upon,
resulting from or relating to the negotiation, execution, performance, breach or
otherwise related to or arising out of each of the Financial Services
Agreements. "Released Claims" as used herein shall mean any and all charges,
complaints, claims, causes of action, promises, agreements, rights to payment,
rights to any equitable remedy, rights to any equitable subordination, demands,
debts, liabilities, express or implied contracts, obligations of payment or
performance, rights of offset or recoupment, accounts, damages, costs, losses or
expenses (including attorneys' and other professional fees and expenses) held by
any party hereto, whether known or unknown, matured or unmatured, suspected or
unsuspected, liquidated or unliquidated, absolute or contingent, direct or
derivative.
3. Except to the extent that Sections 4 and 5 of each of the Financial
Services Agreements survives the termination of such agreements as provided in
clauses (i) and (ii) of Section 1 hereof, HMCo hereby irrevocably and
unconditionally releases, acquits and forever discharges the Company and
Partners, and each of their respective past, present or future successors,
assigns, employees, agents, stockholders, partners, subsidiaries, parent
companies, other affiliates (corporate or otherwise), and legal representatives,
including their past, present or future officers and directors, and each of
them, of and from any and all Released Claims, arising out of, based upon,
resulting from or relating to the negotiation, execution, performance, breach or
otherwise related to or arising out of the Financial Services Agreements.
4. At the Effective Time and in consideration for the termination of
the Company M&O Agreement and, subject to Paragraph 1 hereof, in full
satisfaction of all obligations under the Company M&O Agreement, Chancellor
shall enter into a stock option agreement with HMCo, in substantially the form
attached hereto as Exhibit E, which grants HMCo an option to purchase up to
634,517 shares of common stock, par value $.01 per share ("Chancellor Common
Stock"), of Chancellor at a per share exercise price of $52.00.
5. At the Effective Time and in consideration for the termination of
the Company Financial Advisory Agreement and, subject to Paragraph 1 hereof, in
full satisfaction of all obligations under the Company Financial Advisory
Agreement, the Company shall pay, or cause to be paid, to HMCo an amount equal
to $10,000,000, payable in cash or by wire transfer of immediately available
funds to an account designated by HMCo, and Chancellor shall enter into a stock
option agreement with HMCo, in substantially the form attached hereto as Exhibit
E, which grants HMCo an option to purchase up to 335,099 shares of Chancellor
Common Stock at a per share exercise price of $52.00.
2
<PAGE> 3
6. Should any provision of this Agreement be declared or be determined
to be illegal, invalid, or otherwise unenforceable, the validity of the
remaining parts, terms, and provisions hereof will not be affected thereby but
such will remain valid and enforceable, and said illegal or invalid parts,
terms, or provisions shall be deemed not to be a part of this Agreement.
7. This Agreement shall be construed, interpreted, and enforced in
accordance with the laws of the State of Texas, excluding any choice-of-law
provisions thereof.
8. This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument, and the signature of any party to any
counterpart shall be deemed a signature to, and may be appended, any other
counterpart.
[REMAINDER OF THIS PAGE IS INTENTIONALLY BLANK]
3
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed, all as of the date first written above.
CAPSTAR BROADCASTING CORPORATION
By: /s/ WILLIAM S. BANOWSKY, JR.
-------------------------------------
Name: William S. Banowsky, Jr.
-----------------------------------
Title: Executive Vice President &
General Council
-----------------------------------
CAPSTAR BROADCASTING PARTNERS, INC.
By: /s/ WILLIAM S. BANOWSKY, JR.
-------------------------------------
Name: William S. Banowsky, Jr.
-----------------------------------
Title: Executive Vice President &
General Council
-----------------------------------
HICKS, MUSE & CO. PARTNERS, L.P.
By: HM PARTNERS INC., ITS GENERAL PARTNER
By: /s/ JACK D. FURST
-------------------------------------
Name: Jack D. Furst
-----------------------------------
Title: Partner
-----------------------------------
This Agreement is joined in by Chancellor
for the limited purposes set forth in
Sections 4 and 5 of this Agreement:
CHANCELLOR MEDIA CORPORATION
By: /s/ THOMAS O. HICKS
-------------------------------------
Name: THOMAS O. HICKS
-----------------------------------
Title: Chief Executive Officer
-----------------------------------
S-1
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM 6/30/99
CONSOLIDATED FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 22,385
<SECURITIES> 0
<RECEIVABLES> 402,098
<ALLOWANCES> 18,306
<INVENTORY> 0
<CURRENT-ASSETS> 75,127
<PP&E> 1,501,034
<DEPRECIATION> 135,596
<TOTAL-ASSETS> 7,402,512
<CURRENT-LIABILITIES> 221,902
<BONDS> 4,420,000
0
0
<COMMON> 1
<OTHER-SE> 2,264,347
<TOTAL-LIABILITY-AND-EQUITY> 7,402,512
<SALES> 784,411
<TOTAL-REVENUES> 784,411
<CGS> 100,432
<TOTAL-COSTS> 767,607
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 172,111
<INCOME-PRETAX> (134,248)
<INCOME-TAX> (24,190)
<INCOME-CONTINUING> (110,058)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (110,058)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
