<PAGE>
CURRENT REPORT FOR ISSUERS SUBJECT TO THE
1934 ACT REPORTING REQUIREMENT
FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): February 28, 2000
SFX ENTERTAINMENT, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 1-14993 13-3977880
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File No.) Identifiation No.)
- -------------------------------------------------------------------------------
650 MADISON AVENUE
16TH FLOOR
NEW YORK, NEW YORK 10022
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(Address of principal executive offices)
Registrant's telephone number, including area code: (212) 838-3100
N/A
- -------------------------------------------------------------------------------
(Former name or former address, if changed since last report.)
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ITEM 5. OTHER EVENTS.
On February 29, 2000, SFX Entertainment, Inc. ("SFX") announced that it
entered into a definitive merger agreement with Clear Channel Communications,
Inc. Under the terms of the agreement, the Class A shareholders of SFX will
receive 0.6 shares of Clear Channel Communications, Inc. common stock for each
SFX share, and Class B shareholders of SFX will receive one share of Clear
Channel Communications, Inc. common stock for each SFX share, on a fixed
exchange basis. The transaction is expected to be consummated early in the
third quarter of 2000, subject to the vote of SFX's stockholders, and customary
regulatory approvals and closing conditions.
The related press release is attached hereto as Exhibit 99.1. The related
merger agreement is attached hereto as Exhibit 10.1.
ITEM 7. EXHIBITS.
(c) Exhibits.
Agreement and Plan of Merger among Clear Channel 10.1
Communications, Inc., CCU II Merger Sub, Inc., and SFX
Entertainment, Inc. dated February 28, 2000
99.1
Press Release dated February 29, 2000
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SFX ENTERTAINMENT, INC.
Dated: February 29, 2000 By: /s/ Howard J. Tytel
--------------------------
Name: Howard J. Tytel
Title: Executive Vice President
General Counsel and
Member of the Office of the
Chairman
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EXHIBIT INDEX
-------------
Description Exhibit
- ----------- -------
Agreement and Plan of Merger among Clear Channel 10.1
Communications, Inc., CCU II Merger Sub, Inc., and SFX
Entertainment, Inc. dated February 28, 2000
99.1
Press Release dated February 29, 2000
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EXHIBIT 10.1
================================================================================
AGREEMENT AND PLAN OF MERGER
AMONG
CLEAR CHANNEL COMMUNICATIONS, INC.,
CCU II MERGER SUB, INC.
AND
SFX ENTERTAINMENT, INC.
DATED AS OF FEBRUARY 28, 2000
================================================================================
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TABLE OF CONTENTS
Page
----
ARTICLE 1. THE MERGER ........................................................2
Section 1.1. The Merger.................................................2
Section 1.2. Closing....................................................2
Section 1.3. Effective Time.............................................2
Section 1.4. Effects of the Merger......................................2
Section 1.5. Certificate of Incorporation and Bylaws of
the Surviving Corporation .................................2
Section 1.6. Directors..................................................3
Section 1.7. Officers...................................................3
ARTICLE 2. EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT
CORPORATIONS; EXCHANGE OF CERTIFICATES ............................3
Section 2.1. Capital Stock of Merger Sub................................3
Section 2.2. Cancellation of Treasury Stock and Parent Owned Stock......3
Section 2.3. Conversion of Company Common Stock.........................3
Section 2.4. Exchange of Certificates...................................4
Section 2.5. Stock Transfer Books.......................................7
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY......................7
Section 3.1. Organization, Qualification, Etc...........................7
Section 3.2. Capital Stock..............................................8
Section 3.3. Corporate Authority Relative to this Agreement;
No Violation...............................................9
Section 3.4. Reports and Financial Statements..........................10
Section 3.5. No Undisclosed Liabilities................................10
Section 3.6. No Violation of Law.......................................11
Section 3.7. Environmental Laws and Regulations........................11
Section 3.8. No Undisclosed Employee Benefit Plan Liabilities or
Severance Arrangements....................................11
Section 3.9. Absence of Certain Changes or Events......................13
Section 3.10. Investigations; Litigation................................14
Section 3.11. Joint Proxy Statement; Registration Statement;
Other Information.........................................14
Section 3.12. Lack of Ownership of Parent Common Stock..................14
Section 3.13. Tax Matters...............................................14
Section 3.14. Opinion of Financial Advisor..............................15
Section 3.15. Required Vote of the Company Stockholders.................15
Section 3.16. Insurance.................................................15
Section 3.17. Real Property; Title......................................16
Section 3.18. Collective Bargaining Agreements and Labor................16
Section 3.19. Material Contracts........................................16
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TABLE OF CONTENTS
(Continued)
Page
----
Section 3.20. Takeover Statute..........................................16
Section 3.21. Transactions With Affiliates..............................17
Section 3.22. Intellectual Property.....................................17
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB...........17
Section 4.1. Organization, Qualification, Etc..........................18
Section 4.2. Capital Stock.............................................18
Section 4.3. Corporate Authority Relative to this Agreement.
No Violation..............................................19
Section 4.4. Reports and Financial Statements..........................20
Section 4.5. No Undisclosed Liabilities................................21
Section 4.6. No Violation of Law.......................................21
Section 4.7. Environmental Laws and Regulations........................21
Section 4.8. No Undisclosed Employee Benefit Plan Liabilities or
Severance Arrangements....................................22
Section 4.9. Absence of Certain Changes or Events......................22
Section 4.10. Investigations; Litigation................................22
Section 4.11. Joint Proxy Statement; Registration Statement;
Other Information.........................................22
Section 4.12. Lack of Ownership of Company Common Stock.................23
Section 4.13. Tax Matters...............................................23
Section 4.14. Required Vote of Parent Stockholders......................23
Section 4.15. Opinion of Financial Advisor..............................24
Section 4.16. Insurance.................................................24
Section 4.17. Real Property; Title......................................24
Section 4.18. Collective Bargaining Agreements and Labor................24
Section 4.19. Material Contracts........................................24
Section 4.20. Takeover Statute..........................................24
ARTICLE 5. COVENANTS RELATING TO CONDUCT OF BUSINESS.........................24
Section 5.1. Conduct of Business by the Company or Parent..............24
Section 5.2. Proxy Material; Registration Statement....................29
Section 5.3. Stockholders' Meeting.....................................30
Section 5.4. Approvals and Consents; Cooperation.......................30
Section 5.5. Access to Information; Confidentiality....................31
Section 5.6. Affiliates................................................32
Section 5.7. Rights Under Stock Plans..................................32
Section 5.8. Filings; Other Action.....................................33
Section 5.9. Further Assurances........................................34
Section 5.10. No Solicitation by the Company............................34
Section 5.11. Director and Officer Liability............................36
Section 5.12. Accountants' "Comfort" Letters............................39
Section 5.13. Additional Reports........................................39
Section 5.14. Plan of Reorganization....................................39
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TABLE OF CONTENTS
(Continued)
Page
----
Section 5.15. Conveyance Taxes..........................................39
Section 5.16. Public Announcements......................................39
Section 5.17. Termination Fee and Expenses..............................40
Section 5.18. Notice of Certain Events..................................41
Section 5.19. Section 16(b) Board Approval..............................42
Section 5.20. Employee Plans and Employment Agreement...................42
ARTICLE 6. CONDITIONS TO THE MERGER..........................................43
Section 6.1. Conditions to the Obligations of Each Party...............43
Section 6.2. Conditions to the Obligations of Parent and Merger Sub....44
Section 6.3. Conditions to the Obligations of the Company..............45
ARTICLE 7. TERMINATION AND AMENDMENT.........................................45
Section 7.1. Termination...............................................45
Section 7.2. Effect of Termination.....................................47
ARTICLE 8. GENERAL PROVISIONS................................................47
Section 8.1. Notices...................................................47
Section 8.2. Definitions...............................................48
Section 8.3. Counterparts..............................................51
Section 8.4. Agreement; No Third-Party Beneficiaries...................51
Section 8.5. Assignment................................................51
Section 8.6. Governing Law.............................................51
Section 8.7. Enforcement...............................................51
Section 8.8. Severability..............................................52
Section 8.9. Interpretation............................................52
Section 8.10. Finders or Brokers........................................52
Section 8.11. Survival of Representations and Warranties................52
Section 8.12. Survival of Covenants and Agreements......................52
Section 8.13. Attorneys' Fees...........................................52
Section 8.14. Amendment.................................................52
Section 8.15. Extension; Waiver.........................................53
Section 8.16. Procedure for Termination, Amendment, Extension
or Waiver.................................................53
iii
<PAGE>
This AGREEMENT AND PLAN OF MERGER, dated as of February 28, 2000, is
entered into by and among Clear Channel Communications, Inc., a Texas
corporation ("Parent"), CCU II Merger Sub, Inc., a Delaware corporation and a
wholly owned subsidiary of Parent ("Merger Sub"), and SFX Entertainment, Inc., a
Delaware corporation (the "Company").
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of Parent and Merger Sub
and the Company have approved the combination of the Company and Parent upon the
terms and subject to the conditions set forth in this Agreement and Plan of
Merger, including, without limitation, the exhibits attached hereto
(collectively, this "Agreement");
WHEREAS, the respective Boards of Directors of Parent and Merger Sub
and the Company have determined that it is advisable and in the best interests
of their respective shareholders for the Merger Sub to merge with and into
Company as set forth below (the "Merger") upon the terms and subject to the
conditions set forth in this Agreement, whereby each issued and outstanding
share of Class A common stock, par value $.01 per share, of the Company
("Company Class A Common Stock"), and each issued and outstanding share of Class
B common stock, par value $.01 per share, of the Company ("Company Class B
Common Stock" and, together with the Company Class A Common Stock, the "Company
Common Stock") other than shares owned directly or indirectly by Parent, Merger
Sub or the Company, will be converted into shares of common stock, par value
$0.10 per share, of Parent ("Parent Common Stock") in accordance with the
provisions of Article 2 of this Agreement;
WHEREAS, as a condition and inducement to Parent's willingness to
enter into this Agreement, concurrently with the execution and delivery of this
Agreement, (a) Parent and certain stockholders of the Company are entering into
voting agreements dated as of the date of this Agreement (collectively, the
"Company Stockholders Voting Agreement") pursuant to which such stockholders
have agreed to vote their shares of Company Common Stock in favor of the
proposal to approve and adopt the Merger, the approval of the Charter Amendment
(as defined herein) and this Agreement, (b) Parent and certain stockholders of
the Company are entering into stockholders agreements, dated as of the date of
this Agreement (collectively, the "Stockholder Agreement"), relating to, among
other things, the recapture by Parent of a specified profit amount that would be
realized by such stockholders in connection with certain specified transactions,
and (c) Parent and Robert F.X. Sillerman, Executive Chairman and a member of the
Board of Directors of the Company are entering into a Nondisclosure and
Noncompetition Agreement, dated as of the date of this Agreement
("Noncompetition Agreement") and a Registration Rights Agreement, dated as of
the date of this Agreement ("Registration Rights Agreement");
WHEREAS, for federal income tax purposes, the Merger is intended to
qualify as a reorganization under the provisions of Section 368(a) of the United
States Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, Parent, Merger Sub and the Company desire to make certain
<PAGE>
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe certain conditions to the Merger.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, Parent, Merger Sub and the Company hereby agree as follows:
ARTICLE 1
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to the conditions set
forth in this Agreement and the Delaware General Corporation Law, as amended
(the "DGCL"), the Merger Sub shall be merged with and into the Company at the
Effective Time (as defined in Section 1.3) of the Merger. Following the Merger,
the separate corporate existence of the Merger Sub shall cease, and the Company
shall continue as the surviving corporation (the "Surviving Corporation") and
shall succeed to and assume all the rights and obligations of the Company and
Merger Sub in accordance with the DGCL.
Section 1.2 Closing. The closing of the Merger shall take place at 10:00
a.m. on a date to be specified by the parties which shall be no later than the
second business day after the satisfaction or waiver of the conditions set forth
in Article 6 (the "Closing Date") at the offices of Akin, Gump, Strauss, Hauer &
Feld, L.L.P., 300 Convent Street, Suite 1500, San Antonio, Texas 78205, unless
another date, time or place is agreed in writing by the parties hereto.
Section 1.3 Effective Time. On the Closing Date, the parties shall execute
and file in the office of the Secretary of State of Delaware a certificate of
merger (a "Certificate of Merger") executed in accordance with the DGCL and
shall make all other filings or recordings, and take such other and further
action as may be required under the DGCL in connection with the Merger. The
Merger shall become effective at the time of filing of the Certificate of
Merger, or at such later time as is agreed upon by the parties hereto and set
forth therein (such time as the Merger becomes effective is referred to herein
as the "Effective Time").
Section 1.4 Effects of the Merger. The Merger shall have the effects set
forth in the DGCL.
Section 1.5 Certificate of Incorporation and Bylaws of the Surviving
Corporation.
(a) The Amended and Restated Certificate of Incorporation of the
Company as in effect immediately prior to the Effective Time shall be the
Certificate of Incorporation of the Surviving Corporation after the Effective
Time, and thereafter may be amended as provided therein and as permitted by law
and this Agreement.
(b) The By-Laws of the Merger Sub as in effect immediately prior to the
Effective Time shall become the By-Laws of the Surviving Corporation after the
Effective Time, and thereafter may be amended as provided therein and as
permitted by law and this Agreement.
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<PAGE>
Section 1.6 Directors. The directors of the Merger Sub immediately prior to
the Effective Time shall become the directors of the Surviving Corporation,
until the earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
Section 1.7 Officers. The officers of the Company immediately prior to the
Effective Time shall become the officers of the Surviving Corporation, until the
earlier of their resignation or removal or until their respective successors are
duly elected and qualified, as the case may be.
ARTICLE 2
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS;
EXCHANGE OF CERTIFICATES
Section 2.1 Capital Stock of Merger Sub. As of the Effective Time, by virtue
of the Merger and without any action on the part of the holder of any shares of
Company Common Stock or any shares of capital stock of Merger Sub, each share of
common stock, par value $0.01 per share, of Merger Sub issued and outstanding
immediately prior to the Effective Time shall be converted into and become
80,000 fully paid and non-assessable shares of the Class A common stock, par
value $.01 per share, of the Surviving Corporation, and 3,000 fully paid and
non-assessable shares of the Class B common stock, par value $.01 per share, of
the Surviving Corporation, and such shares shall, following the Merger,
represent all of the issued and outstanding capital stock of the Surviving
Corporation.
Section 2.2 Cancellation of Treasury Stock and Parent Owned Stock. As of the
Effective Time, by virtue of the Merger and without any action on the part of
the holder of any shares of Company Common Stock or any shares of capital stock
of Merger Sub, each share of Company Common Stock issued and held, immediately
prior to the Effective Time, in the Company's treasury or by any of the
Company's direct or indirect wholly owned subsidiaries, and each share of
Company Common Stock that is owned by Parent, Merger Sub or any other direct or
indirect wholly-owned subsidiary of Parent, shall automatically be canceled and
retired and shall cease to exist, and no consideration shall be delivered in
exchange therefor.
Section 2.3 Conversion of Company Common Stock. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holder of any
shares of Company Common Stock or any shares of capital stock of Merger Sub,
subject to this Section 2.3 and Section 2.4(f), each share of Company Class A
Common Stock issued and outstanding immediately prior to the Effective Time
(other than shares to be canceled in accordance with Section 2.2) shall be
converted into 0.60 (the "Class A Conversion Number") of duly authorized,
validly issued and nonassessable shares of Parent Common Stock; and each share
of Company Class B Common Stock issued and outstanding immediately prior to the
Effective Time (other than shares to be cancelled in accordance with Section
2.2) shall be converted into 1.0 (the "Class B Conversion Number") of duly
authorized, validly issued and nonassessable shares of Parent Common Stock;
provided, however, that, in any event, if between the date of this Agreement and
the Effective Time, the outstanding shares of Parent Common Stock shall have
been changed into a different number of shares or a different class of shares,
by reason of any declared or completed stock dividend, subdivision,
reclassification, recapitalization, split, combination or exchange of shares,
the Class A
3
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Conversion Number and the Class B Conversion Number shall be correspondingly
adjusted to the extent appropriate to reflect such stock dividend, subdivision,
reclassification, recapitalization, split, combination or exchange of shares.
The shares of Parent Common Stock to be issued to holders of Company Common
Stock in accordance with this Section 2.3 and the amount in cash to be paid in
lieu of fractional shares in accordance with Section 2.4(f)(ii) are collectively
referred to as the "Merger Consideration". As of the Effective Time, all shares
of Company Common Stock shall no longer be outstanding and shall automatically
be canceled and retired and shall cease to exist, and each holder of a
certificate or certificates which immediately prior to the Effective Time
represented outstanding shares of Company Common Stock shall cease to have any
rights with respect thereto, except the right to receive the Merger
Consideration. The Company represents and warrants that the holders of the
Company Class A Common Stock will not be entitled to appraisal rights in the
Merger.
Section 2.4 Exchange of Certificates.
(a) Exchange Agent. Promptly after the Effective Time, Parent shall
deliver to a bank or trust company designated by Parent and reasonably
satisfactory to the Company (the "Exchange Agent"), for the benefit of the
holders of shares of Company Common Stock, for exchange in accordance with this
Article 2, through the Exchange Agent, certificates evidencing such number of
shares of Parent Common Stock issuable to holders of Company Common Stock in the
Merger pursuant to Section 2.3 and cash in an amount required to be paid
pursuant to Section 2.4(d) and 2.4(f) (such certificates for shares of Parent
Common Stock, together with any dividends or distributions with respect thereto
and cash, being hereinafter referred to as the "Exchange Fund"). The Exchange
Agent shall, pursuant to irrevocable instructions, deliver, out of the Exchange
Fund, to holders of Company Common Stock, Parent Common Stock contemplated to be
issued pursuant to Section 2.3 (and any dividends or other distributions to
which such holders are entitled pursuant to Section 2.4(d)) and the cash in lieu
of fractional shares of Parent Common Stock to which such holders are entitled
to pursuant to Section 2.4(f) hereof, out of the Exchange Fund. Except as
contemplated by Section 2.4(g) hereof, the Exchange Fund shall not be used for
any other purpose.
(b) Exchange Procedures. As promptly as practicable after the Effective
Time, Parent shall cause the Exchange Agent to mail to each holder of a
certificate or certificates (the "Certificates") which immediately prior to the
Effective Time represented outstanding shares of Company Common Stock (other
than shares cancelled in accordance with Section 2.2 (the "Cancelled Shares"))
(i) a letter of transmittal (which shall be in customary form and shall specify
that delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon proper delivery of the Certificates to the Exchange Agent)
and (ii) instructions for use in effecting the surrender of the Certificates in
exchange for certificates evidencing shares of Parent Common Stock, or cash in
lieu of fractional shares of Parent Common Stock to which such holder is
entitled pursuant to Section 2.4(f) hereof.
(c) Exchange of Certificates. Upon surrender to the Exchange Agent of a
Certificate for cancellation, together with a letter of transmittal, duly
executed and completed in accordance with the instructions thereto, and such
other documents as may be reasonably required pursuant to such instructions, the
holder of such Certificate shall be entitled to receive in
4
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exchange therefor a certificate representing that number of whole shares of
Parent Common Stock which such holder's shares of Company Common Stock shall
have been converted into pursuant to this Article 2 (and any cash in lieu of any
fractional shares of Parent Common Stock to which such holder is entitled
pursuant to Section 2.4(f) and any dividends or other distributions to which
such holder is entitled pursuant to Section 2.4(d)), and the Certificate so
surrendered shall forthwith be canceled. In the event of a transfer of ownership
of shares of Company Common Stock which is not registered in the transfer
records of the Company, shares of Parent Common Stock, cash in lieu of any
fractional shares of Parent Common Stock to which such holder is entitled
pursuant to Section 2.4(f) and any dividends or other distributions to which
such holder is entitled pursuant to Section 2.4(d) may be issued to a transferee
if the Certificate representing such shares of Company Common Stock is presented
to the Exchange Agent, accompanied by all documents required to evidence and
effect such transfer and by evidence that any applicable stock transfer taxes
have been paid. Until surrendered as contemplated by this Section 2.4, each
Certificate shall be deemed at all times after the Effective Time to represent
only the right to receive upon such surrender the number of whole shares of
Parent Common Stock into which the shares of Company Common Stock formerly
represented thereby have been converted, cash in lieu of any fractional shares
of Parent Common Stock to which such holder is entitled pursuant to Section
2.4(f) and any dividends or other distributions to which such holder is entitled
pursuant to Section 2.4(d).
(d) Distributions with Respect to Unexchanged Shares of Parent Common
Stock. No dividends or other distributions declared or made after the Effective
Time with respect to Parent Common Stock with a record date after the Effective
Time shall be paid to the holder of any unsurrendered Certificate with respect
to the shares of Parent Common Stock represented thereby, and no cash payment in
lieu of any fractional shares shall be paid to any such holder pursuant to
Section 2.4(f), until the holder of such Certificate shall surrender such
Certificate. Subject to the effect of escheat, tax or other applicable laws,
following surrender of any such Certificate, there shall be paid promptly to the
holder of such Certificate representing whole shares of Parent Common Stock
issued in exchange therefor, without interest, (i) the amount of dividends and
other distributions with a record date after the Effective Time and theretofore
paid with respect to such whole shares of Parent Common Stock, (ii) at the
appropriate payment date, the amount of dividends and other distributions, with
a record date after the Effective Time but prior to surrender and a payment date
occurring after surrender, payable with respect to such whole shares of Parent
Common Stock and (iii) the amount of any cash payable with respect to a
fractional share of Parent Common Stock to which such holder is entitled
pursuant to Section 2.4(f).
(e) No Further Rights in Company Common Stock. All shares of Parent
Common Stock into which the shares of Company Common Stock shall be converted in
accordance with the terms hereof (including any cash paid pursuant to Section
2.4(d) or 2.4(f)) shall be deemed to have been issued in full satisfaction of
all rights pertaining to such shares of Company Common Stock.
(f) No Fractional Shares.
(i) No certificates or scrip representing fractional shares of
Parent
5
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Common Stock shall be issued upon the surrender for exchange of Certificates, no
dividend or distribution of Parent shall relate to such fractional share
interests and such fractional share interests will not entitle the owner thereof
to vote or to any rights of a stockholder of Parent.
(ii) In lieu of the issuance of fractional shares, each holder of
Company Common Stock shall be entitled to receive an amount in cash equal to the
product obtained by multiplying (A) the fractional share interest to which such
holder (after taking into account all shares of Company Common Stock held at the
Effective Time by such holder) would otherwise be entitled by (B) the closing
price for a share of Parent Common Stock as reported on the New York Stock
Exchange ("NYSE") Composite Transaction Tape (as reported in The Wall Street
Journal or, if not reported thereby, any other authoritative source) on the last
trading day prior to the Closing Date.
(g) Termination of Exchange Fund. Any portion of the Exchange Fund
(including any shares of Parent Common Stock) which remains undistributed to the
holders of Company Common Stock for six months after the Effective Time shall be
delivered to Parent, upon demand, and any holders of Company Common Stock who
have not theretofore complied with this Article 2 shall thereafter look only to
Parent for, and Parent shall deliver, the applicable Merger Consideration, any
cash in lieu of fractional shares of Parent Common Stock to which they are
entitled pursuant to Section 2.4(f) and any dividends or other distributions
with respect to Parent Common Stock to which they are entitled pursuant to
Section 2.4(d). Any portion of the Exchange Fund remaining unclaimed by holders
of shares of Company Common Stock as of a date which is immediately prior to
such time as such amounts would otherwise escheat to or become property of any
government entity shall, to the extent permitted by applicable law, become the
property of Parent free and clear of any claims or interest of any Person
previously entitled thereto.
(h) No Liability. None of the Exchange Agent, Parent nor the Surviving
Corporation shall be liable to any holder of shares of Company Common Stock for
any such shares of Parent Common Stock (or dividends or distributions with
respect thereto) or cash delivered to a public official pursuant to any
abandoned property, escheat or similar law.
(i) Withholding Rights. Each of the Surviving Corporation and the
Exchange Agent shall be entitled to deduct and withhold from the consideration
otherwise payable pursuant to this Agreement to any holder of shares of Company
Common Stock such amounts as it is required to deduct and withhold with respect
to the making of such payment under the Code, or any provision of state, local
or foreign tax law. To the extent that amounts are so properly withheld by the
Surviving Corporation or the Exchange Agent, as the case may be, such withheld
amounts shall be treated for all purposes of this Agreement as having been paid
to the holder of the shares of Company Common Stock, in respect of which such
deduction and withholding was made by the Surviving Corporation or the Exchange
Agent, as the case may be.
(j) Lost Certificates. If any Certificate shall have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the Person
claiming such Certificate to be lost, stolen or destroyed and, if required by
the Surviving Corporation, the posting by such Person of a bond, in such
reasonable amount as the Surviving Corporation may direct, as
6
<PAGE>
indemnity against any claim that may be made against it with respect to such
Certificate, the Exchange Agent will issue in exchange for such lost, stolen or
destroyed Certificate the applicable Merger Consideration, any cash in lieu of
fractional shares of Parent Common Stock to which the holder thereof is entitled
pursuant to Section 2.4(f) and any dividends or other distributions to which the
holder thereof is entitled pursuant to Section 2.4(d).
(k) Further Assurances. If, at any time after the Effective Time, the
Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of either of the Merger Sub or the Company acquired or to
be acquired by the Surviving Corporation as a result of, or in connection with,
the Merger or otherwise to carry out this Agreement, the officers of the
Surviving Corporation shall be authorized to execute and deliver, in the name
and on behalf of each of the Merger Sub and the Company or otherwise, all such
deeds, bills of sale, assignments and assurances and to take and do, in such
names and on such behalves or otherwise, all such other actions and things as
may be necessary or desirable to vest, perfect or confirm any and all right,
title and interest in, to and under such rights, properties or assets in the
Surviving Corporation or otherwise to carry out the purposes of this Agreement.
Section 2.5 Stock Transfer Books. At the Effective Time, the stock transfer
books of the Company shall be closed and there shall be no further registration
of transfers of shares of Company Common Stock thereafter on the records of the
Company. From and after the Effective Time, the holders of Certificates
representing shares of Company Common Stock outstanding immediately prior to the
Effective Time shall cease to have any rights with respect to such shares of
Company Common Stock, except as otherwise provided herein or by law. On or after
the Effective Time, any Certificates presented to the Exchange Agent (or Parent
for any reason) shall promptly be exchanged for certificates representing shares
of Parent Common Stock, any cash in lieu of fractional shares of Parent Common
Stock to which the holders thereof are entitled pursuant to Section 2.4(f) and
any dividends or other distributions to which the holders thereof are entitled
pursuant to Section 2.4(d).
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Merger Sub
that, except as set forth in the disclosure letter delivered by the Company to
Parent and Merger Sub on the date of this Agreement (the "Company Disclosure
Letter"):
Section 3.1 Organization, Qualification, Etc. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has the corporate power and authority to own its
properties and assets and to carry on its business as it is now being conducted
and is duly qualified to do business and is in good standing in each
jurisdiction in which the ownership of its properties or the conduct of its
business requires such qualification, except for jurisdictions in which such
failure to be so qualified or to be in good standing would not in the aggregate
reasonably be expected to have a Material Adverse Effect on
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the Company. The copies of the Company's Amended and Restated Certificate of
Incorporation and By-laws which have been made available to Parent are complete
and correct and in full force and effect on the date of this Agreement. Each of
the Company's Significant Subsidiaries (as defined in Regulation S-X promulgated
under the Securities Act of 1933, as amended (the "Securities Act")) (a) is a
corporation, general partnership, limited partnership or limited liability
company duly organized, validly existing and in good standing under the laws of
its jurisdiction of incorporation or organization, (b) has the corporate,
general partnership, limited partnership or limited liability company power and
authority to own its properties and to carry on its business as it is now being
conducted, and (c) is duly qualified to do business and is in good standing in
each jurisdiction in which the ownership of its property or the conduct of its
business requires such qualification, except in the case of clauses (a) and (c)
for jurisdictions in which such failure to be so qualified or to be in good
standing would not in the aggregate reasonably be expected to have a Material
Adverse Effect on the Company and except in the case of clause (b) for such
exceptions as would not in the aggregate reasonably be expected to have a
Material Adverse Effect on the Company. All the outstanding shares of capital
stock of, or other ownership interests in, the Company's Subsidiaries are (y)
validly issued, fully paid and nonassessable and (z) owned by the Company,
directly or indirectly, free and clear of all Liens, except in the case of
clause (y) for such exceptions as would not in the aggregate reasonably be
expected to have a Material Adverse Effect on the Company and except in the case
of clause (z) for restrictions and Liens contained in credit agreements and
similar instruments to which the Company is a Party and except for such
exceptions as are disclosed in the Company SEC Reports and those that would be
immaterial to the Company and its Subsidiaries, taken as a whole. Except as set
forth in the Company SEC Reports, there are no outstanding subscriptions,
options, warrants, rights of first refusal, preemptive rights, calls or rights
or other arrangements or commitments of any character obligating any Subsidiary
of the Company to issue any capital stock or other securities of, or other
ownership interests in, any Subsidiary of the Company, except those that would
be immaterial to the Company and its Subsidiaries, taken as a whole.
Section 3.2 Capital Stock. The authorized capital stock of the Company
consists of 100,000,000 shares of Company Class A Common Stock, 10,000,000
shares of Company Class B Common Stock and 25,000,000 shares of preferred stock,
$.01 par value per share ("Preferred Stock"). As of February 24, 2000,
64,116,270 shares of Company Class A Common Stock and 2,545,557 shares of
Company Class B Common Stock were issued and outstanding, 112,529 shares of
Company Class A Common Stock were held in treasury and no shares of Preferred
Stock were issued and outstanding. All the outstanding shares of the Company
Common Stock have been validly issued and are fully paid and non-assessable. As
of the date of this Agreement, there are no outstanding subscriptions, options,
warrants, rights or other arrangements or commitments, rights of first refusal,
preemptive rights, calls or rights obligating the Company to issue any capital
stock or other securities of, or other ownership interests in, the Company,
other than options, warrants and other rights to receive or acquire an aggregate
of 9,867,512 shares of the Company Class A Common Stock pursuant to the
Company's stock option plans, as amended (the "Company Stock Option Plans") and
the options and warrants described in Section 3.2 of the Company Disclosure
Letter.
Except for the issuance of shares of the Company Common Stock pursuant
to (i) the Company Stock Option Plans, (ii) in connection with acquisitions
permitted under Section
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5.1 of this Agreement and (iii) the options and warrants referred to in
Section 3.2 of the Company's Disclosure Letter, since February 24, 2000, no
shares of the Company Common Stock have been issued.
Section 3.3 Corporate Authority Relative to this Agreement; No Violation.
The Company has the corporate power and authority to enter into this Agreement
and to carry out its obligations hereunder. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been
duly and validly authorized by the Board of Directors of the Company and, except
for the approval and adoption of the agreement of merger (as such term is used
in Section 251 of the DGCL) contained in this Agreement, the approval of the
Merger and the approval of the amendment to the Company's Amended and Restated
Certificate of Incorporation to repeal Section 5.7 thereof (the "Charter
Amendment"), by the holders of a majority of the outstanding shares of Company
Common Stock (with the holders of Company Class A Common Stock and the holders
of Company Class B Common Stock voting together as a single class) and the
affirmative vote of the holders of a majority of the outstanding shares of each
of the Company Class A Common Stock and Company Class B Common Stock voting as
separate classes, no other corporate proceedings on the part of the Company are
necessary to authorize this Agreement and the transactions contemplated hereby.
As of the date of this Agreement, the Board of Directors of the Company has
determined that the transactions contemplated by this Agreement are advisable
and in the best interest of its stockholders and, subject to the provisions
contained in Section 5.10, to recommend to such stockholders that they vote in
favor thereof. This Agreement has been duly and validly executed and delivered
by the Company and, assuming this Agreement has been duly and validly executed
and delivered by the other parties hereto, and subject to the Company
Stockholder Approval (as defined in Section 5.3 hereof), this Agreement
constitutes a valid and binding agreement of the Company, enforceable against
the Company in accordance with its terms (except insofar as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' rights generally, or by principles governing
the availability of equitable remedies). Other than in connection with or in
compliance with the provisions of the Securities Act, the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), the rules of the NYSE, the Hart
Scott Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), any
non-United States competition, antitrust and investment laws and the securities
or blue sky laws of the various states, and, other than the filing of the
Certificate of Merger with the Delaware Secretary of State and any necessary
state filings to maintain the good standing or qualification of the Surviving
Corporation and its Subsidiaries (collectively, the "Company Required
Approvals"), no authorization, consent or approval of, or filing with, any
governmental body or authority is necessary for the consummation by the Company
of the transactions contemplated by this Agreement, except for such
authorizations, consents, approvals or filings, the failure to obtain or make
which would not, in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Company; provided that the Company makes no representation
with respect to such of the foregoing as are required by reason of the
regulatory status of Parent or any of its Subsidiaries or facts specifically
pertaining to any of them. Except for the Company Required Approvals, the
Company is not subject to or obligated under any charter, bylaw, material
contract or any governmental license, franchise or permit, or subject to any
order or decree, which would be breached or violated by its executing or,
subject to the approval of its stockholders, carrying out this Agreement, except
for any breaches or violations which would not, in the
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aggregate, reasonably be expected to have a Material Adverse Effect on the
Company.
Section 3.4 Reports and Financial Statements. The following reports, proxy
statements and prospectuses filed by the Company with the SEC are publicly
available:
(a) the Company's Annual Report on Form 10-K filed with the Securities
and Exchange Commission (the "SEC") for the year ended December 31, 1998;
(b) the Company's Quarterly Reports on Form 10-Q filed with the SEC for
the quarters ended March 31, 1999, June 30, 1999 and September 30, 1999;
(c) each definitive proxy statement filed by the Company with the SEC
since April 27, 1998;
(d) each final prospectus filed by the Company with the SEC since
April 27, 1998, except any final prospectus on Form S-8; and
(e) all Current Reports on Form 8-K filed by the Company with the SEC
since December 31, 1998.
As of their respective dates, such reports, proxy statements, and
prospectuses filed on or prior to the date of this Agreement (collectively, the
"Company SEC Reports") (i) complied as to form in all material respects with the
applicable requirements of the Securities Act, the Exchange Act and the rules
and regulations promulgated thereunder and (ii) did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided, that the
foregoing clause (ii) shall not apply to the financial statements included in
the Company SEC Reports (which are covered by the following sentence). The
audited consolidated financial statements and unaudited consolidated interim
financial statements included in the Company SEC Reports (including any related
notes and schedules) fairly present in all material respects the financial
position of the Company and its consolidated Subsidiaries as of the dates
thereof and their results of operations and cash flows for the periods then
ended (subject, where appropriate, to normal year-end adjustments), in each case
in accordance with past practice and generally accepted accounting principles in
the United States ("GAAP") consistently applied during the periods involved
(except as otherwise disclosed in the notes thereto and except that the
unaudited financial statements therein do not contain all of the footnote
disclosures required by GAAP). Since April 27, 1998, the Company has timely
filed all material reports, registration statements and other filings required
to be filed by it with the SEC under the rules and regulations of the SEC.
Section 3.5 No Undisclosed Liabilities. As of the date of this Agreement,
neither the Company nor any of its Subsidiaries has any liabilities or
obligations of any nature, whether or not accrued, contingent or otherwise, of a
type required by GAAP to be reflected on a consolidated balance sheet except (a)
liabilities or obligations reflected in any of the Company SEC Reports, (b)
liabilities or obligations incurred since September 30, 1999 in the ordinary
course of the Company's business and (c) liabilities or obligations which would
not in the aggregate reasonably be expected
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to have a Material Adverse Effect on the Company.
Section 3.6 No Violation of Law. The businesses of the Company and its
Subsidiaries are not being conducted in violation of any law, ordinance or
regulation of any governmental body or authority (provided that no
representation or warranty is made in this Section 3.6 with respect to
Environmental Laws (as defined in Section 3.7 below) which are dealt with
exclusively in Section 3.7) except (a) as described in any of the Company SEC
Reports and (b) for violations or possible violations which would not in the
aggregate reasonably be expected to have a Material Adverse Effect on the
Company. The Company and its Subsidiaries have all permits, licenses and
governmental authorizations material to ownership or occupancy of their
respective properties and assets and the carrying on of their respective
businesses, except for such permits, licenses and governmental authorizations
the failure of which to have would not reasonably be expected to have in the
aggregate a Material Adverse Effect on the Company.
Section 3.7 Environmental Laws and Regulations. Except as described in any
of the Company SEC Reports, (a) to the Knowledge of the Company, the Company and
each of its Subsidiaries is in material compliance with all applicable federal,
state, local and foreign laws and regulations relating to pollution or
protection of human health or the environment (including, without limitation,
ambient air, surface water, ground water, land surface or subsurface strata)
(collectively, "Environmental Laws" ), except for noncompliance which would not
in the aggregate reasonably be expected to have a Material Adverse Effect on the
Company, which compliance includes, but is not limited to, the possession by the
Company and its Subsidiaries of material permits and other governmental
authorizations required under applicable Environmental Laws, and material
compliance with the terms and conditions thereof, (b) neither the Company nor
any of its Subsidiaries has received written notice of, or, to the Knowledge of
the Company, is the subject of, any actions, causes of action, claims,
investigations, demands or notices by any Person alleging liability under, or
non-compliance with, any Environmental Law or that the Company or any Subsidiary
is a potentially responsible party at any Superfund site or state equivalent
site ("Environmental Claims") which would in the aggregate reasonably be
expected to have a Material Adverse Effect on the Company, (c) to the Knowledge
of the Company, there are no circumstances that are reasonably likely to prevent
or interfere with such material compliance in the future, (d) to the Knowledge
of the Company, the Company and its Subsidiaries have not disposed of or
released hazardous materials (at a concentration or level which requires
remedial action under any Environmental Law) at any real property currently
owned or leased by the Company or any Subsidiary or at any other real property,
except for such disposals or releases as would not in the aggregate reasonably
be expected to have a Material Adverse Effect on the Company, and (e) neither
the Company nor its Subsidiaries have agreed to indemnify any predecessor or
other party with respect to any environmental liability, other than customary
indemnity provisions contained in agreements entered into in the ordinary course
of business and provisions which would not in the aggregate reasonably be
expected to have a Material Adverse Effect on the Company.
Section 3.8 No Undisclosed Employee Benefit Plan Liabilities or Severance
Arrangements.
(a) All benefit and compensation plans, contracts, policies, agreements
or other arrangements providing for compensation, severance, termination pay,
performance
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awards, stock or stock related awards, fringe benefits, change in control,
employment agreement, deferred compensation or other employee benefits of any
kind, whether formal or informal, funded or unfunded, written or oral, or
arrangements covering current employees or former employees of the Company and
its Subsidiaries (all such current and former employees of the Company and its
Subsidiaries being herein referred to as the "Employees") and current or former
directors of the Company, including, but not limited to, "employee benefit
plans" within the meaning of Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") (the "Benefit Plans") are listed on
Section 3.8(a) of the Company Disclosure Letter, except for those plans,
contracts, policies or other arrangements that are not material to the Company
and its Subsidiaries, taken as a whole. There are no "change in control" or
similar provisions covering current employees of the Company or any of its
Subsidiaries, and, to the Knowledge of the Company, covering any former
employees of the Company or any of its Subsidiaries, other than those set forth
in the Benefit Plans identified on Section 3.8(a) of the Company Disclosure
Letter and except for such exceptions as would not in the aggregate reasonably
be expected to have a Material Adverse Effect on the Company.
(b) All employee benefit plans within the meaning of Section 3(3) of
ERISA, other than "multiemployer plans" within the meaning of Section 3(37) of
ERISA, covering Employees (the "Plans"), to the extent subject to ERISA or the
Code, are in substantial compliance with ERISA, the Code, and all other
applicable law, except for such exceptions as would not in the aggregate
reasonably be expected to have a Material Adverse Effect on the Company. Each
Plan which is an "employee pension benefit plan" within the meaning of Section
3(2) of ERISA ("Pension Plan") and which is intended to be qualified under
Section 401(a) of the Code, has received a favorable determination letter from
the Internal Revenue Service, or operates as a standardized prototype plan, or
is operating within the remedial amendment period and may still obtain a
favorable determination letter from the Internal Revenue Service and, to the
Company's Knowledge, there exists no circumstances likely to result in
revocation of any such favorable determination letter, except, in each case, for
such exceptions as would not in the aggregate reasonably be expected to have a
Material Adverse Effect on the Company. There is no material pending or, to the
Knowledge of the Company, threatened litigation relating to the Plans except for
such litigation as would not in the aggregate reasonably be expected to have a
Material Adverse Effect on the Company. Except for such exceptions as would not
in the aggregate reasonably be expected to have a Material Adverse Effect on the
Company, neither the Company nor any of its Subsidiaries has engaged in a
transaction with respect to any Plan that, assuming the taxable period of such
transaction expired as of the date of this Agreement, could subject the Company
or any Subsidiary to a tax or penalty imposed by either Section 4975 of the Code
or Section 502(i) of ERISA in an amount which would be material.
(c) No current or former Pension Plan of the Company or any of its
Subsidiaries, or any entity which is considered one employer with the Company
under Section 4001 of ERISA or Section 414 of the Code (an "ERISA Affiliate"),
is or has been subject to Title IV of ERISA or Section 412 of the Code within
the past six years, except for such exceptions as would not in the aggregate
reasonably be expected to have a Material Adverse Effect on the Company.
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(d) All contributions required to be made under the terms of any
Benefit Plan have been timely made or have been reflected on the audited
financial statements of the Company, except for such exceptions as would not in
the aggregate reasonably be expected to have a Material Adverse Effect on the
Company.
(e) Neither the Company nor any of its Subsidiaries has any obligations
for retiree health and life benefits under any Benefit Plan, except for those
under collective bargaining agreements existing on the date of this Agreement
and such exceptions as would not in the aggregate reasonably be expected to have
a Material Adverse Effect on the Company.
(f) Except for such exceptions as would not in the aggregate reasonably
be expected to have a Material Adverse Effect on the Company, the consummation
of the transactions contemplated by this Agreement will not, solely as a result
of such consummation, (i) entitle any Employees to severance pay, (ii)
accelerate the time of payment or vesting or trigger any payment or funding
(through a grantor trust or otherwise) of compensation or benefits under,
materially increase the amount payable or trigger any other material obligation
pursuant to, any of the Benefit Plans (other than the Company Stock Option Plans
and the options and warrants described in Section 3.2 of the Company Disclosure
Letter) or (iii) result in any breach or violation of, or a default under, any
of the Benefit Plans.
(g) Any amount that could be received (whether in cash, property, or
vesting of property) as a result of the transactions contemplated by this
Agreement by any officer, director, employee or independent contractor of the
Company or any of its Subsidiaries, who is a "disqualified individual" (as
defined in proposed Treasury Regulation Section 1.280G-1), under any employment
arrangement or Benefit Plan would not be characterized as an "excess parachute
payment" (as defined in Section 280G of the Code) except for such exceptions as
would not in the aggregate reasonably be expected to have a Material Adverse
Effect on the Company.
(h) All Benefit Plans covering current or former non-U.S. Employees
comply in all material respects with applicable law, except for such exceptions
as would not in the aggregate reasonably be expected to have a Material Adverse
Effect on the Company. No unfunded liabilities exist with respect to any Benefit
Plan that covers such non-U.S. Employees, except for such exceptions as would
not in the aggregate reasonably be expected to have a Material Adverse Effect on
the Company.
Section 3.9 Absence of Certain Changes or Events. Other than as disclosed in
the Company SEC Reports or previously disclosed in writing to Parent, since
September 30, 1999 and to the date of this Agreement, the businesses of the
Company and its Subsidiaries have been conducted in all material respects in the
ordinary course and there has not been any event, occurrence, development or
state of circumstances or facts that has had a Material Adverse Effect on the
Company. Since September 30, 1999 and to the date of this Agreement, no
dividends or distributions have been declared or paid on or made with respect to
the shares of capital stock or other equity interests of the Company or its
Subsidiaries nor have any such shares been repurchased
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or redeemed, other than dividends or distributions paid to the Company or a
wholly-owned Subsidiary and other than dividends, distributions, repurchases and
redemptions with respect to equity interests in Subsidiaries not exceeding $2.0
million in the aggregate.
Section 3.10 Investigations; Litigation. Except as described in any of the
Company SEC Reports or previously disclosed in writing to Parent:
(a) to the Knowledge of the Company, no investigation or review by any
governmental body or authority with respect to the Company or any of its
Subsidiaries which would in the aggregate reasonably be expected to have a
Material Adverse Effect on the Company is pending nor has any governmental body
or authority notified the Company in writing of an intention to conduct the
same; and
(b) there are no actions, suits or proceedings pending (or, to the
Company's Knowledge, threatened) against or affecting the Company or its
Subsidiaries, or any of their respective properties or before any federal,
state, local or foreign governmental body or authority, which, in the aggregate,
are reasonably likely to have a Material Adverse Effect on the Company.
Section 3.11 Proxy Statement; Registration Statement; Other Information. The
information, taken as a whole, with respect to the Company or its Subsidiaries
to be included in the Proxy Statement (as defined in Section 5.2) or the
Registration Statement (as defined in Section 5.2) will not, in the case of the
Proxy Statement or any amendments thereof or supplements thereto, at the time of
the mailing of the Proxy Statement or any amendments or supplements thereto, and
at the time of the Company Special Meeting (as defined in Section 5.3), or, in
the case of the Registration Statement, at the time it becomes effective or at
the effective time of any post-effective amendment, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, except that no
representation is made by the Company with respect to information supplied in
writing by Parent, Merger Sub or any affiliate of Parent specifically for
inclusion in the Proxy Statement. The Proxy Statement (as it relates to the
Company) will comply as to form in all material respects with the provisions of
the Exchange Act and the rules and regulations promulgated thereunder.
Section 3.12 Lack of Ownership of Parent Common Stock. Neither the Company
nor any of its Subsidiaries owns any shares of Parent Common Stock or other
securities convertible into shares of Parent Common Stock (exclusive of any
shares owned by the Company's Benefit Plans).
Section 3.13 Tax Matters.
(a) All federal, state, local and foreign Tax Returns required to be
filed by or on behalf of the Company, each of its Subsidiaries, and each
affiliated, combined, consolidated or unitary group of which the Company or any
of its Subsidiaries or was a member (a "Company Group") have been timely filed
or requests for extensions to file such returns or reports have been timely
filed and granted and have not expired, and all returns filed are complete and
accurate except to the extent any failure to file or any inaccuracies in filed
returns would not,
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individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Company. All Taxes due and owing by the Company, any
Subsidiary of the Company or any Company Group have been paid, or adequately
reserved for, except to the extent any failure to pay or reserve would not,
individually or in the aggregate reasonably be expected to have a Material
Adverse Effect on the Company. There is no audit examination, deficiency, refund
litigation, proposed adjustment or matter in controversy with respect to any
Taxes due and owing by the Company, any Subsidiary of the Company or any Company
Group nor has the Company or any Subsidiary filed any waiver of the statute of
limitations applicable to the assessment or collection of any Tax, in each case,
which would, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on the Company. All assessments for Taxes due and owing
by the Company, any Subsidiary of the Company or any Company Group with respect
to completed and settled examinations or concluded litigation have been paid.
Neither the Company nor any Subsidiary is a party to any tax indemnity
agreement, tax sharing agreement or other agreement under which the Company or
any Subsidiary could become liable to another Person as a result of the
imposition of a Tax upon any Person, or the assessment or collection of a Tax,
except for such agreements as would not in the aggregate reasonably be expected
to have a Material Adverse Effect on the Company. The Company and each of its
Subsidiaries has complied in all material respects with all rules and
regulations relating to the withholding of Taxes, except to the extent any such
failure to comply would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on the Company.
(b) Neither the Company nor any of its Subsidiaries has Knowledge of
any fact or has taken any action that could reasonably be expected to prevent
the Merger from qualifying as a reorganization within the meaning of Section
368(a) of the Code.
Section 3.14 Opinion of Financial Advisors. On the date of this Agreement,
the Board of Directors of the Company has received an oral opinion from Bear,
Stearns & Co. and the Special Committee of the Board of Directors of the Company
has received an oral opinion from Lehman Brothers (together with Bear, Stearns &
Co., the "Financial Advisors") to the effect that, as of the date of this
Agreement, the Class A Conversion Number is fair to the holders of Company Class
A Common Stock from a financial point of view. Copies of the written opinions of
the Financial Advisors, substantially in the forms previously submitted to
Parent, will be delivered to Parent as soon as practicable after the date of
this Agreement.
Section 3.15 Required Vote of the Company Stockholders. The affirmative vote
of the holders of a majority of the outstanding shares of the Company Common
Stock (with the holders of Company Class A Common Stock and the holders of
Company Class B Common Stock voting together as a single class) and the
affirmative vote of the holders of a majority of the outstanding shares of each
of the Company Class A Common Stock and Company Class B Common Stock voting as
separate classes is required to adopt this Agreement, the Merger and the Charter
Amendment. No other vote of the stockholders of the Company is required by law
or the charter or Bylaws of the Company in order for the Company to consummate
the Merger and the transactions contemplated hereby.
Section 3.16 Insurance. Except to the extent that the lack of a policy would
not reasonably be expected to have a Material Adverse Effect on the Company, the
Company and its
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Subsidiaries have insurance policies, including, without limitation, policies of
fire and other casualty and liability insurance, that the Company believes are
sufficient for the respective businesses and operations of the Company and its
Subsidiaries.
Section 3.17 Real Property; Title. The Company and its Subsidiaries have
good and marketable title subject to Permitted Liens to all real properties
owned by them, except where the failure to have such title would not in the
aggregate reasonably be expected to have a Material Adverse Effect on the
Company.
Section 3.18 Collective Bargaining Agreements and Labor. The Company has
previously made available to Parent all labor or collective bargaining
agreements in effect as of the date of this Agreement which pertain to a
material number of the employees of the Company and its Subsidiaries. As of the
date of this Agreement, there are no pending complaints, charges or claims
against the Company or its Subsidiaries filed with any public or governmental
authority, arbitrator or court based upon the employment or termination by the
Company of any individual, except for such complaints, charges or claims which
if adversely determined would not in the aggregate have a Material Adverse
Effect on the Company.
Section 3.19 Material Contracts.
(a) Neither the Company nor any of its Subsidiaries has Knowledge of,
or has received notice of, any violation or default under any material contract
(as such term is defined in item 601(b)(10) of Regulation S-K of the SEC) to
which the Company or any of its Subsidiaries is a party, except for such
violations or defaults as would not in the aggregate reasonably be expected to
have a Material Adverse Effect on the Company.
(b) Neither the Company nor any of its Subsidiaries is (i) in violation
of or default under any contract or agreement that restricts its ability to
compete or otherwise conduct its business as presently conducted, except for
such violations or defaults as would not in the aggregate reasonably be expected
to have a Material Adverse Effect on the Company or (ii) a party to, or bound
by, any contract or agreement that restricts or would restrict the ability of
the Company, Parent or any of their respective Subsidiaries from competing or
otherwise conducting their respective businesses as such businesses are
conducted on the date of this Agreement, except for such restrictions that would
not in the aggregate reasonably be expected to have a Material Adverse Effect on
Parent or the Company.
Section 3.20 Takeover Statute. The Board of Directors of the Company, having
considered the Company Stockholders Voting Agreement, the Stockholder Agreement,
the Noncompetition Agreement and the Registration Rights Agreement, has approved
this Agreement and the transactions contemplated hereby and thereby and,
assuming the accuracy of Parent's representation and warranty contained in
Section 4.12, such approval constitutes approval of the Merger and the other
transactions contemplated hereby by the Board of Directors of the Company under
the provisions of Section 203 of the DGCL, such that the restrictions of Section
203 of the DGCL do not apply to this Agreement and the transactions contemplated
hereby, including the Merger. Except as provided in Section 4.20 below, to the
Knowledge of the Company, no other state takeover statute is applicable to the
Merger or the other transactions contemplated hereby.
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Section 3.21 Transactions With Affiliates. Other than the transactions
contemplated by this Agreement or except to the extent disclosed in the Company
SEC Reports, there have been no transactions, agreements, arrangements or
understandings between the Company or its Subsidiaries, on the one hand, and the
Company's Affiliates (other than Subsidiaries of the Company) or any other
Person, on the other hand, that would be required to be disclosed under Item 404
of Regulation S-K under the Securities Act.
Section 3.22 Intellectual Property. Except to the extent disclosed in the
Company SEC Reports and except to the extent that the inaccuracy of any of the
following (or the circumstances giving rise to such inaccuracy), individually or
in the aggregate, would not reasonably be expected to have a Material Adverse
Effect on the Company: (a) the Company and each of its Subsidiaries owns, or is
licensed to use (in each case, free and clear of any Liens), all Intellectual
Property (as defined below) necessary for the conduct of its business as
currently conducted; (b) to the Company's Knowledge, the use of any Intellectual
Property by the Company and its Subsidiaries does not infringe on or otherwise
violate the rights of any Person and is in accordance in all material respects
with any applicable license pursuant to which the Company or any Subsidiary
acquired the right to use any Intellectual Property; (c) as of the date of this
Agreement, to the Knowledge of the Company, no Person is challenging, infringing
on or otherwise violating any material right of the Company or any of its
Subsidiaries with respect to any Intellectual Property owned by and/or licensed
to the Company or its Subsidiaries; and (d) as of the date of this Agreement,
neither the Company nor any of its Subsidiaries has received any written notice
of any pending claim with respect to any Intellectual Property used by the
Company and its Subsidiaries and, to the Knowledge of the Company, no
Intellectual Property owned and/or licensed by the Company or its Subsidiaries
is being used or enforced in a manner that would result in the abandonment,
cancellation or unenforceability of such Intellectual Property. For purposes of
this Agreement, "Intellectual Property" shall mean trademarks, service marks,
brand names and other indications of origin, the goodwill associated with the
foregoing and registrations in any jurisdiction of, and applications in any
jurisdiction to register, the foregoing, including any extension, modification
or renewal of any such registration or application; inventions, discoveries and
ideas, whether patentable or not, in any jurisdiction; patents, applications for
patents (including, without limitation, divisions, continuations, continuations
in part and renewal applications), and any renewals, extensions or reissues
thereof, in any jurisdiction; nonpublic information, trade secrets and
confidential information and rights in any jurisdiction to limit the use or
disclosure thereof by any Person; writings and other works, whether
copyrightable or not, in any jurisdiction; registrations or applications for
registration of copyrights in any jurisdiction, and any renewals or extensions
thereof; any similar intellectual property or proprietary rights; and any claims
or causes of action arising out of or relating to any infringement or
misappropriation of any of the foregoing.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub hereby jointly and severally represent and
warrant to the Company that except as set forth in the disclosure letter
delivered to the Company on the date of this Agreement ("Parent Disclosure
Letter"):
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Section 4.1 Organization, Qualification, Etc. Each of Parent and Merger Sub
is a corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization and has the corporate power and
authority to own its properties and assets and to carry on its business as it is
now being conducted and is duly qualified to do business and is in good standing
in each jurisdiction in which the ownership of its properties or the conduct of
its business requires such qualification, except for jurisdictions in which such
failure to be so qualified or to be in good standing would not in the aggregate
reasonably be expected to have a Material Adverse Effect on Parent or Merger
Sub. The copies of Parent's Articles of Incorporation, as amended, and Amended
and Restated By-laws and Merger Sub's charter and by-laws which have been made
available to the Company are complete and correct and in full force and effect
on the date of this Agreement. Each of Parent's Significant Subsidiaries (a) is
a corporation, partnership or limited liability company duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation or organization, (b) has the corporate, partnership or limited
liability company power and authority to own its properties and to carry on its
business as it is now being conducted, and (c) is duly qualified to do business
and is in good standing in each jurisdiction in which the ownership of its
property or the conduct of its business requires such qualification, except in
case of clauses (a) and (c) for jurisdictions in which such failure to be so
qualified or to be in good standing would not in the aggregate reasonably be
expected to have a Material Adverse Effect on Parent or Merger Sub and except in
the case of clause (b) for such exceptions as would not in the aggregate
reasonably be expected to have a Material Adverse Effect on Parent or Merger
Sub. All the outstanding shares of capital stock of, or other ownership
interests in, Parent's Subsidiaries and Merger Sub are (y) validly issued, fully
paid and non-assessable and (z) owned by Parent, directly or indirectly, free
and clear of all Liens, except in the case of clause (y) for such exceptions as
would not in the aggregate reasonably be expected to have a Material Adverse
Effect on Parent and except in the case of clause (z) for restrictions contained
in credit agreements and similar instruments to which Parent is a party and for
such exceptions as would be immaterial to Parent. Except as disclosed in Parent
SEC Reports, there are no outstanding subscriptions, warrants, options (except
for those set forth in Section 4.2 below), rights of first refusal, preemptive
rights, calls or rights or other arrangements or commitments obligating any
Subsidiary of the Parent or Merger Sub to issue any capital stock or other
securities of, or other ownership interests in, any Subsidiary of Parent or
Merger Sub, except as would be immaterial to Parent.
Section 4.2 Capital Stock. The authorized capital stock of Parent consists
of 900,000,000 shares of Parent Common Stock, and 2,000,000 shares of Class A
Preferred Stock, par value $1.00 per share and 8,000,000 shares of Class B
Preferred Stock, par value $1.00 per share (collectively, the "Parent Preferred
Stock"). The shares of Parent Common Stock to be issued in the Merger or upon
the exercise of the Company stock options, warrants, conversion rights or other
rights or upon vesting or payment of other Company equity-based awards
thereafter will, when issued, be validly issued fully paid and non-assessable.
As of February 24, 2000, 338,807,036 shares of Parent Common Stock and no shares
of Parent Preferred Stock were issued and outstanding and 12,829 shares of
Parent Common Stock held in treasury. All the outstanding shares of Parent
Common Stock have been validly issued and are fully paid and non-assessable. As
of the date of this Agreement, there are no outstanding subscriptions, options,
warrants, rights or other arrangements or commitments, rights of first refusal,
pre-emptive rights, calls or rights obligating Parent to issue capital stock or
other securities of, or other ownership interests in the Parent other than
options and other rights to receive or acquire an aggregate of up to 42,575,482
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shares of Parent Common Stock pursuant to:
(a) the 1984 Incentive Stock Option Plan of Parent;
(b) the 1994 Non-Qualified Stock Option Plan;
(c) Parent Director's Non-Qualified Stock Option Plan;
(d) the 1998 Stock Incentive Plan;
(e) the 2000 Employee Stock Purchase Plan;
(f) various other option agreements with officers or employees of
Parent or Parent's Subsidiaries, option assumption agreements, and incentive
compensation grants;
(g) Parent's 2-5/8% Senior Convertible Notes due 2003, convertible into
Parent Common Stock;
(h) Parent's 1-1/2% Senior Convertible Notes due 2002, convertible into
Parent Common Stock;
(i) the warrants of Jacor Communications, Inc. ("Jacor") assumed by
Parent;
(j) Jacor liquid yield option notes due 2011; and
(k) Jacor liquid yield option notes due 2018.
Section 4.3 Corporate Authority Relative to this Agreement. No Violation.
(a) Parent has the corporate power and authority to enter into this
Agreement, the Registration Rights Agreement, the Company Stockholders Voting
Agreement and the Stockholder Agreement (collectively, the "Ancillary
Agreements"), the Stockholder Agreement and the Company Stockholders Voting
Agreement and to carry out its obligations hereunder and thereunder. The
execution and delivery of this Agreement and the Ancillary Agreements and the
consummation of the transactions contemplated hereby and thereby have been duly
and validly authorized by the Board of Directors of Parent and no other
corporate or stockholder proceedings on the part of Parent are necessary to
authorize this Agreement, the Ancillary Agreements, the issuance of Parent
Common Stock in connection with the Merger and the other transactions
contemplated hereby and thereby. This Agreement and the Ancillary Agreements
have been duly and validly executed and delivered by Parent and, assuming this
Agreement and the Ancillary Agreements have been duly and validly executed and
delivered by the other parties hereto and thereto, this Agreement and the
Ancillary Agreements constitute valid and binding agreements of Parent,
enforceable against it in accordance with their respective terms (except insofar
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally, or by principles governing the availability of equitable remedies).
Other than in connection with or in compliance with the provisions of the DGCL,
the Securities Act, the Exchange Act, the HSR Act, any non-United
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States competition, antitrust and investments laws and the securities or blue
sky laws of the various states and the rules of the NYSE, and, other than the
filing of the Certificate of Merger with the Delaware Secretary of State, and
any necessary state filings to maintain the good standing or qualification of
the Surviving Corporation (collectively, the "Parent Required Approvals"), no
authorization, consent or approval of, or filing with, any governmental body or
authority is necessary for the consummation by Parent of the transactions
contemplated by this Agreement or the Ancillary Agreements, except for such
authorizations, consents, approvals or filings, the failure to obtain or make
which would not, in the aggregate, have a Material Adverse Effect on Parent;
provided that Parent makes no representation with respect to such of the
foregoing as are required by reason of the regulatory status of the Company or
any of its Subsidiaries or facts specifically pertaining to any of them. Except
for Parent Required Approvals, neither Parent nor Merger Sub is subject to or
obligated under any charter, bylaw or contract provision or any governmental
license, franchise or permit, or subject to any order or decree, which would be
breached or violated by its executing or carrying out this Agreement or the
Ancillary Agreements, except for any breaches or violations which would not, in
the aggregate, reasonably be expected to have a Material Adverse Effect on
Parent.
(b) Merger Sub has the corporate power and authority to enter into this
Agreement and to carry out its obligations hereunder. The execution and delivery
of this Agreement and the consummation of the transaction contemplated hereby
have been duly and validly authorized by the Board of Directors of Merger Sub,
and no other corporate or stockholder proceedings on the part of Merger Sub are
necessary to authorize this Agreement and the transactions contemplated hereby.
The Board of Directors of Merger Sub has determined that the transactions
contemplated by this Agreement are advisable and in the best interest of its
stockholder and recommends to such stockholder that it vote in favor thereof.
This Agreement has been duly and validly executed and delivered by Merger Sub
and, assuming this Agreement has been duly and validly executed and delivered by
the Company, this Agreement constitutes a valid and binding agreement of Merger
Sub, enforceable against it in accordance with its terms (except insofar as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar loss affecting creditors' rights
generally, or by principles governing the available of equitable remedies). This
Agreement has been approved by Parent as the sole stockholder of Merger Sub.
(c) Merger Sub was formed solely for the purpose of engaging in the
transactions contemplated by this Agreement.
(d) All of the outstanding capital stock of Merger Sub is owned
directly or indirectly by Parent.
Section 4.4 Reports and Financial Statements. The following reports, proxy
statements and prospectuses filed by Parent with the SEC are publicly available:
(a) Parent's Annual Reports on Form 10-K filed with the SEC for each of
the years ended December 31, 1996, 1997 and 1998;
(b) Parent's Quarterly Reports on Form 10-Q filed with the SEC for the
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quarters ended March 31, 1999, June 30, 1999 and September 30, 1999;
(c) each definitive proxy statement filed by Parent with the SEC since
January 1, 1996;
(d) each final prospectus filed by Parent with the SEC since
January 1, 1996, except any final prospectus on Form S-8; and
(e) all Current Reports on Form 8-K filed by Parent with the SEC since
December 31, 1998.
As of their respective dates, such reports, proxy statements and
prospectuses filed on or prior to the date of this Agreement (collectively,
"Parent SEC Reports") (i) complied as to form in all material respect with the
applicable requirements of the Securities Act, the Exchange Act, and the rules
and regulations promulgated thereunder and (ii) did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided, that the
foregoing clause (ii) shall not apply to the financial statements included in
Parent SEC Reports (which are covered by the following sentence). The audited
consolidated financial statements and unaudited consolidated interim financial
statements included in Parent SEC Reports (including any related notes and
schedules) fairly present in all material respects the financial position of
Parent and its consolidated Subsidiaries as of the dates thereof and the results
of their operations and their cash flows for the periods then ended (subject,
where appropriate, to normal year-end adjustments), in each case in accordance
with GAAP consistently applied during the periods involved (except as otherwise
disclosed in the notes thereto and except that the unaudited financial
statements therein do not contain all of the footnote disclosures required by
GAAP). Since January 1, 1996, Parent has timely filed all material reports,
registration statements and other filings required to be filed by it with the
SEC under the rules and regulations of the SEC.
Section 4.5 No Undisclosed Liabilities. As of the date of this Agreement,
neither Parent nor any of its Subsidiaries has any liabilities or obligations of
any nature, whether or not accrued, contingent or otherwise, of a type required
by GAAP to be reflected on a consolidated balance sheet except (a) liabilities
or obligations reflected in any of Parent SEC Reports, (b) liabilities or
obligations incurred since September 30, 1999 in the ordinary course of Parent's
business and (c) liabilities or obligations which would not in the aggregate
reasonably be expected to have a Material Adverse Effect on Parent.
Section 4.6 No Violation of Law. The businesses of Parent and its
Subsidiaries are not being conducted in violation of any law, ordinance or
regulation of any governmental body or authority, including the Federal
Communications Commission (provided that no representation or warranty is made
in this Section 4.6 with respect to Environmental Laws) except (a) as described
in any of Parent SEC Reports and (b) for violations or possible violations which
would not in the aggregate reasonably be expected to have a Material Adverse
Effect on Parent.
Section 4.7 Environmental Laws and Regulations. Except as described in any
of Parent
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SEC Reports, (a) to the Knowledge of Parent, Parent and each of its Subsidiaries
is in material compliance with all applicable Environmental Laws, except for
non-compliance which would not in the aggregate reasonably be expected to have a
Material Adverse Effect on Parent, which compliance includes, but is not limited
to, the possession by Parent and its Subsidiaries of material permits and other
governmental authorizations required under applicable Environmental Laws, and
compliance with the terms and conditions thereof; (b) neither Parent nor any of
its Subsidiaries has received written notice of, or, to the Knowledge of Parent,
is the subject of, any Environmental Claims which would in the aggregate
reasonably be expected to have a Material Adverse Effect on Parent; and (c) to
the Knowledge of Parent, there are no circumstances that are reasonably likely
to prevent or interfere with such material compliance in the future.
Section 4.8 No Undisclosed Employee Benefit Plan Liabilities or Severance
Arrangements. Except as described in any of Parent SEC Reports, all "employee
benefit plans" as defined in Section 3(3) of ERISA, maintained or contributed to
by Parent or its Subsidiaries are in material compliance with their terms and
all applicable provisions of ERISA, the Code and any other applicable
legislation, and Parent and its Subsidiaries do not have any liabilities or
obligations with respect to any such employee benefit plans, whether or not
accrued, contingent or otherwise, except (a) as described in any of Parent SEC
Reports and (b) for instances of noncompliance or liabilities or obligations
that would not in the aggregate reasonably be expected to have a Material
Adverse Effect on Parent.
Section 4.9 Absence of Certain Changes or Events. Other than as disclosed in
Parent SEC Reports, since September 30, 1999 and to the date of this Agreement,
the businesses of Parent and its Subsidiaries have been conducted in all
material respects in the ordinary course and there has not been any event,
occurrence, development or state of circumstances or facts that has had a
Material Adverse Effect on Parent.
Section 4.10 Investigations; Litigation. Except as described in any of
Parent SEC Reports or previously disclosed in writing to the Company:
(a) to the Knowledge of Parent, no investigation or review by any
governmental body or authority with respect to Parent or any of its Subsidiaries
which would in the aggregate reasonably be expected to have a Material Adverse
Effect on Parent is pending nor has any governmental body or authority notified
Parent in writing of an intention to conduct the same; and
(b) there are no actions, suits or proceedings pending (or, to Parent's
Knowledge, threatened) against or affecting Parent or its Subsidiaries, or any
of their respective properties, or before any federal, state, local or foreign
governmental body or authority which in the aggregate is reasonably likely to
have a Material Adverse Effect on Parent.
Section 4.11 Proxy Statement; Registration Statement; Other Information. The
information, taken as a whole, with respect to Parent or its Subsidiaries to be
included in the Proxy Statement (as defined in Section 5.2) or the Registration
Statement (as defined in Section 5.2) will not, in the case of the Proxy
Statement or any amendments thereof or supplements thereto, at the
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time of the mailing of the Proxy Statement or any amendments or supplements
thereto, and at the time of the Company Special Meeting, or, in the case of the
Registration Statement, at the time it becomes effective or at the effective
time of any post-effective amendment, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, except that no representation is
made by Parent or Merger Sub with respect to information supplied in writing by
the Company or any affiliate of the Company specifically for inclusion in the
Proxy Statement or the Registration Statement. Each of the Proxy Statement and
Registration Statement will comply as to form in all material respects with the
provisions of the Exchange Act and the rules and regulations promulgated
thereunder.
Section 4.12 Ownership of Company Common Stock. Parent and its Subsidiaries
and other Affiliates beneficially own, in the aggregate, less than 10% of the
outstanding shares of Class A Common Stock or other securities convertible into
shares of Class A Common Stock.
Section 4.13 Tax Matters.
(a) All federal, state, local and foreign Tax Returns required to be
filed by or on behalf of Parent, each of its Subsidiaries, and each affiliated,
combined, consolidated or unitary group of which Parent or any of its
Subsidiaries is or was a member (a "Parent Group") have been timely filed or
requests for extensions to file such returns or reports have been timely filed
and granted and have not expired, and all returns filed are complete and
accurate except to the extent any failure to file or any inaccuracies in filed
returns would not, individually or in the aggregate, have a Material Adverse
Effect on Parent. All Taxes due and owing by Parent, any Subsidiary of Parent or
any Parent Group have been paid, or adequately reserved for, except to the
extent any failure to pay or reserve would not, individually or in the
aggregate, have a Material Adverse Effect on Parent. There is no audit
examination, deficiency, refund litigation, proposed adjustment or matter in
controversy with respect to any Taxes due and owing by Parent, any Subsidiary of
Parent or any Parent Group nor has Parent, any Subsidiary of Parent or any
Parent Group filed any waiver of the statute of limitations applicable to the
assessment or collection of any Tax, in each case, which could individually or
in the aggregate reasonably be expected to have a Material Adverse Effect on
Parent. All assessments for Taxes due and owing by Parent, any Subsidiary of
Parent or any Parent Group with respect to completed and settled examinations or
concluded litigation have been paid. Parent and each of its Subsidiaries has
complied in all material respects with all rules and regulations relating to the
withholding of Taxes, except to the extent any such failure to comply would not,
individually or in the aggregate, have a Material Adverse Effect on Parent.
(b) Neither Parent nor any of its Subsidiaries has Knowledge of any
fact or has taken any action that could reasonably be expected to prevent the
Merger from qualifying as a reorganization within the meaning of Section 368(a)
of the Code.
Section 4.14 Required Vote of Stockholders. Other than the affirmative vote
of the holders of a majority of the outstanding shares of Merger Sub to adopt
this Agreement and approve the Merger, no other vote of the stockholders of
Parent or Merger Sub is required by law, the charter or Bylaws of Parent or
Merger Sub in order for Parent and Merger Sub to consummate the Merger and the
transactions contemplated hereby.
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Section 4.15 Opinion of Financial Advisor. The Board of Directors of Parent
has received the opinion of Salomon Smith Barney Inc. ("Financial Advisor")
dated the date of this Agreement to the effect that, as of such date, the
Exchange Ratios (as defined therein) are fair from a financial point of view to
Parent. A copy of the written opinion of the Financial Advisor will be delivered
to the Company as soon as practicable after the date of this Agreement.
Section 4.16 Insurance. Except to the extent that the lack of a policy would
not reasonably be expected to have a Material Adverse Effect on Parent, Parent
and its Subsidiaries have insurance policies, including without limitation
policies of fire and other casualty and liability insurance, that Parent
believes are sufficient for the respective businesses and operations of Parent
and its Subsidiaries.
Section 4.17 Real Property; Title. Parent and its Subsidiaries have good and
marketable title subject to Permitted Liens to all real properties owned by it,
except where the failure to have such title would not in the aggregate
reasonably be expected to have a Material Adverse Effect on Parent.
Section 4.18 Collective Bargaining Agreements and Labor. As of the date of
this Agreement, there are no pending complaints, charges or claims against
Parent or its Subsidiaries filed with any public or governmental authority,
arbitrator or court based upon the employment or termination by Parent of any
individual, except for such complaints, charges or claims which if adversely
determined would not in the aggregate have a Material Adverse Effect on Parent.
Section 4.19 Material Contracts. Neither Parent nor any of its Subsidiaries
has Knowledge of, or has received notice of, any violation or default under any
material contract (as such term is defined in item 601(b)(10) of Regulation S-K
of the SEC) to which Parent or any of its Subsidiaries is a party, except for
such violations or defaults as would not in the aggregate reasonably be expected
to have a Material Adverse Effect on Parent.
Section 4.20 Takeover Statute. The Board of Directors of Parent has approved
this Agreement, the Company Stockholders Voting Agreement, the Stockholders
Agreement, the Noncompetition Agreement and Registration Rights Agreement and
the transactions contemplated hereby and thereby and, assuming the accuracy of
the Company's representation and warranty contained in Section 3.12, such
approval constitutes approval of the Merger and the other transactions
contemplated hereby and thereby by the Board of Directors of Parent under the
provisions of Article 13.03 of the Texas Business Corporation Act (the "TBCA"),
such that Article 13.03 of the TBCA does not apply to this Agreement and the
transactions contemplated hereby and thereby. Except as provided in Section 3.20
above, to the Knowledge of Parent, no other state takeover statute is applicable
to the Merger or the other transactions contemplated hereby.
ARTICLE 5
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 5.1 Conduct of Business by the Company or Parent. Except as
contemplated by this Agreement or as set forth in the Company Disclosure Letter
or Parent Disclosure Letter, or as necessary or appropriate to satisfy the
obligations hereunder or to comply with applicable Law or
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stock exchange regulations, between the date of this Agreement and prior to the
Effective Time or the date, if any, on which this Agreement is earlier
terminated pursuant to Section 7.1, and except as may be agreed to by the other
parties hereto or as may be permitted pursuant to this Agreement:
(a) The Company:
(i) shall, and shall cause each of its Subsidiaries to, conduct
its operations according to their ordinary and usual course of business;
(ii) shall use its reasonable efforts, and cause each of its
Subsidiaries to use its reasonable efforts, consistent with prudent business
practice to (A) preserve intact its business organization and goodwill in all
material respects, (B) keep available the services of its officers and key
employees, subject to changes in the ordinary course, and (C) maintain
satisfactory relationships with suppliers, distributors, customers and others
having significant business relationships with them, in each case as a group;
(iii) shall notify Parent of any emergency or other change in the
normal course of its or its Subsidiaries' respective businesses or in the
operation of its or its Subsidiaries' respective properties and of any
complaints, investigations or hearings (or communications indicating that the
same may be contemplated) of any governmental body or authority if such
emergency, change, complaint, investigation or hearing would reasonably be
expected to have a Material Adverse Effect on the Company;
(iv) shall not authorize or pay any dividends on or make any
distribution with respect to its outstanding shares of capital stock;
(v) shall not, and shall not permit any of its Subsidiaries to,
enter into or amend any severance or similar agreements or arrangements which
would be triggered by the transactions contemplated hereby, with any of their
respective directors or employees, except to the extent required by Law or the
terms of any agreement or Benefit Plan in existence on the date hereof or any
collective bargaining agreement entered into in the ordinary course of business;
(vi) shall not, and shall not permit any of its Subsidiaries to,
without the consent of Parent, which consent shall not be unreasonably withheld,
enter into any new written employment, consulting or salary continuation
agreement with any employee or director which, in any case, has a term of more
than one year or compensation at an annual rate in excess of $150,000, or grant
any increases in the compensation or benefits to any management employee,
officer or director, other than as required by any agreement or Benefit Plan in
existence on the date of this Agreement and other than (A) salary increases not
in excess of 10% per year of such Person's compensation which increases are
awarded in the ordinary course of business, and (B) wages and benefits to
employees pursuant to collective bargaining agreements entered into in the
ordinary course of business;
(vii) shall not, and shall not permit any of its Subsidiaries to,
authorize, propose or announce an intention to authorize or propose, or enter
into or consummate an agreement with respect to (x) any new Internet initiative,
(y) any merger, consolidation or business combination, any acquisition of any
assets or securities, or any disposition of assets or
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securities involving consideration (including stock, debt and all contingent
payments) in excess of $50 million in the aggregate, provided that any merger,
business combination or other acquisition undertaken by the Company is in a line
of business the same as or related to the line of business of the Company and
its Subsidiaries as of the date of this Agreement or (z) any release or
relinquishment of any material contract rights;
(viii) shall not propose or adopt any amendments to its corporate
charter or By-laws (except as contemplated by this Agreement);
(ix) shall not, and shall not permit any of its Subsidiaries to,
(A) issue any shares of their capital stock (other than with respect to
issuances by Subsidiaries, to the Company or a wholly-owned subsidiary of the
Company), except (y) upon exercise of options under the Company Stock Option
Plans existing on the date of this Agreement and the options and warrants listed
in Section 3.2 of the Company Disclosure Letter and (z) shares of capital stock
issued in connection with acquisitions permitted under this Section 5.1 or (B)
effect any stock split not previously announced or (C) otherwise change the
capitalization of the Company as it existed on the date of this Agreement,
except as contemplated by or permitted under this Agreement;
(x) without the consent of Parent, which consent shall not be
unreasonably withheld, shall not, and shall not permit any of its Subsidiaries
to, grant, confer or award any options, warrants, conversion rights or other
rights to acquire any shares of its capital stock, other than as required in any
employment or other agreement or pursuant to any Benefit Plan in existence on
the date of this Agreement or as otherwise contemplated by or permitted under
this Agreement;
(xi) shall not, and shall not permit any of its Subsidiaries to,
except in the ordinary course of business in connection with employee incentive
and benefit plans, programs or arrangements in existence on the date of this
Agreement, purchase, exchange, convert, or redeem any shares of the Company's
capital stock other than shares of preferred stock of Subsidiaries;
(xii) shall not, and shall not permit any of its Subsidiaries to,
amend in any significant respect the terms of their respective Benefit Plans,
including but not limited to employee benefit plans, programs or arrangements in
existence on the date of this Agreement, or adopt any new employee benefit
plans, programs or arrangements, except as required by law, by the terms of any
Benefit Plan or agreement in existence on the date of this Agreement, by the
terms of any collective bargaining agreement entered into in the ordinary course
of business or to maintain tax qualified status or as requested by the Internal
Revenue Service in order to receive a determination letter for such employee
benefit plan;
(xiii) shall not, and shall not permit any of its Subsidiaries to,
enter into any credit facilities or other loan agreements as borrower or as
lender, amend any existing credit facility or loan agreement to increase the
borrowing availability thereunder or increase applicable prepayment penalties or
incur indebtedness that is subject to any prepayment penalty or for which the
Company or its Subsidiaries are obligated to pay any discount, origination or
similar
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fees, or grant any Liens on any of its assets; provided, however, that nothing
in this clause shall limit the ability of the Company or any of its Subsidiaries
to incur indebtedness or grant Liens under their respective credit facilities or
other loan agreements existing on the date of this Agreement;
(xiv) except as contemplated by or permitted under this Agreement,
shall not, and shall not permit any of its Subsidiaries to (a) enter into any
material agreement with aggregate consideration in excess of $5.0 million per
year or (b) make any cash touring advance or upfront guarantee in excess of $10
million individually or $30 million in the aggregate;
(xv) shall not, and shall not permit any of its Subsidiaries to,
enter into an agreement or arrangement with any Affiliate of the Company, any
family member of any Affiliate of the Company or any stockholder who owns more
than 10% of the outstanding capital stock of the Company;
(xvi) shall not, and shall not permit any of its Subsidiaries to,
make any material Tax election or settle or compromise any material Tax
liability, other than in connection with currently pending proceedings or other
than in the ordinary course of business consistent in all material respects with
past practices;
(xvii) shall not, and shall not permit any of its Subsidiaries to,
enter into, amend, or extend any material collective bargaining or other labor
agreement, except as required by law and except in the ordinary course of
business consistent in all material respects with past practices;
(xviii) except as may be required by applicable Law or the terms
of any agreement in existence on the date of this Agreement, shall not, and
shall not permit any of its Subsidiaries to, make any acquisition, by means of a
merger or otherwise, of assets or securities, or any sale, lease, encumbrance or
other disposition of assets or securities, or enter into any similar
transaction, or enter into an agreement to effect any of the foregoing, in each
case which would reasonably be expected to adversely affect the ability of the
Company to consummate the transactions contemplated by this Agreement or
materially delay obtaining any consents or approvals of any Governmental Entity
required under this Agreement or otherwise materially delay the Closing; and
(xix) shall not agree, or permit any of its Subsidiaries to agree,
in writing or otherwise, to take any of the foregoing actions described in
clauses (iv) through (xviii) or take any action that is intended or would
reasonably be expected to result in any of the conditions to the Merger set
forth in Article 6 not being satisfied, except, in each case, as may be required
by applicable Law.
(b) Parent:
(i) shall, and shall cause each of its Subsidiaries to, conduct
its operations according to their ordinary and usual course of business;
provided, however, that nothing contained in this clause shall limit Parent's
ability to authorize or propose, or enter into
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or amend, an agreement with respect to any acquisitions or credit facilities or
to issue or refinance any debt or equity securities, provided that any such
acquisition or issuance of securities would not reasonably be expected to
adversely affect the ability of Parent or Merger Sub to consummate the
transactions contemplated by this Agreement or materially delay obtaining any
consents or approvals of any Government Entity required under this Agreement or
otherwise materially delay the Closing;;
(ii) shall take all action necessary to cause Merger Sub to
perform its obligations under this Agreement and to consummate the Merger on the
terms and conditions set forth in this Agreement;
(iii) shall and shall cause Merger Sub to vote all shares of
Company Common Stock, if any, beneficially owned by Parent, Merger Sub or their
Affiliates in favor of adoption and approval of the Merger and this Agreement at
the Company Special Meeting (as defined in Section 5.3);
(iv) except as may be required by applicable Law or the terms of
any agreement in existence on the date of this Agreement, shall not, and shall
not permit any of its Subsidiaries to, make any acquisition, by means of a
merger or otherwise, of assets or securities, or any sale, lease, encumbrance or
other disposition of assets or securities, or enter into any similar
transaction, or enter into an agreement to effect any of the foregoing, in each
case which would reasonably be expected to adversely affect the ability of
Parent to consummate the transactions contemplated by this Agreement or
materially delay obtaining any consents or approvals of any Governmental Entity
required under this Agreement or otherwise materially delay the Closing;
(v) shall not, and shall not permit any of its Subsidiaries to,
change any of the accounting principles or practices used by it or any of its
Subsidiaries, except as required by the Securities Exchange Commission (the
"SEC") or required by GAAP;
(vi) shall not authorize or pay any dividends on or make any
distribution with respect to its outstanding shares of capital stock;
(vii) shall not propose or adopt any amendments to its corporate
charter or By-laws;
(viii) shall not agree, or permit any of its Subsidiaries to
agree, in writing or otherwise, to take any of the foregoing actions described
in clauses (iv) through (vii) or take any action that is intended or would
reasonably be expected to result in any of the conditions to the Merger set
forth in Article 6 not being satisfied, except, in each case, as may be required
by applicable Law; and
(ix) shall use its reasonable efforts, and cause each of its
Subsidiaries to use its reasonable efforts, consistent with prudent business
practice to (A) preserve intact its business organization and goodwill in all
material respects, (B) keep available the services of its officers and key
employees, subject to changes in the ordinary course, and (C) maintain
satisfactory relationships with suppliers, distributors, customers and others
having significant
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business relationships with them, in each case as a group.
Section 5.2 Proxy Material; Registration Statement.
(a) As promptly as practicable after the execution of this Agreement,
the Company shall prepare and file with the SEC a proxy statement relating to
the meeting of the Company's stockholders to be held in connection with the
Merger (together with any amendments thereof or supplements thereto, in each
case in the form or forms mailed to the Company's stockholders, the "Proxy
Statement") and Parent shall prepare and file with the SEC a registration
statement on Form S-4 (together with all amendments thereto, the "Registration
Statement") in which the Proxy Statement shall be included as a prospectus, in
connection with the registration under the Securities Act of the shares of
Parent Common Stock to be issued to the stockholders of the Company pursuant to
the Merger. Each of Parent and the Company will use all reasonable efforts to
cause the Registration Statement to become effective as promptly as practicable,
and, prior to the effective date of the Registration Statement, Parent shall
take all or any action required under any applicable federal or state securities
laws in connection with the issuance of shares of Parent Common Stock in the
Merger. Each of Parent and the Company shall furnish all information concerning
it and the holders of its capital stock as the other may reasonably request in
connection with such actions and the preparation of the Registration Statement
and Proxy Statement. As promptly as practicable after the Registration Statement
shall have become effective, the Company shall mail the Proxy Statement to its
stockholders. The Proxy Statement shall include the recommendation of the Board
of Directors of the Company in favor of the Merger (subject to Section 5.10(d)
hereof) and the Charter Amendment.
Subject to Section 5.10(d) hereof, no amendment or supplement to the
Proxy Statement or the Registration Statement will be made by Parent or the
Company without the approval of the other party (which approval shall not be
unreasonably withheld or delayed). Parent and the Company each will advise the
other, promptly after it receives notice thereof, of the time when the
Registration Statement has become effective or any supplement or amendment has
been filed, of the issuance of any stop order, the suspension of the
qualification of the Parent Common Stock issuable in connection with the Merger
for offering or sale in any jurisdiction, or any request by the SEC for
amendment of the Proxy Statement or the Registration Statement or comments
thereon and responses thereto or requests by the SEC for additional information.
(b) The information supplied by Parent for inclusion in the
Registration Statement and the Proxy Statement shall not, at (1) the time the
Registration Statement is declared effective, (2) the time the Proxy Statement
(or any amendment thereof or supplement thereto) is first mailed to the
stockholders of the Company, (3) the time of the Company Special Meeting, and
(4) the Effective Time, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein not misleading. If at any time prior to the
Effective Time any event or circumstance relating to Parent or any of its
Subsidiaries, or their respective officers or directors, should be discovered by
Parent which should be set forth in an amendment or a supplement to the
Registration Statement or Proxy Statement, Parent shall promptly inform the
Company. All documents that Parent is responsible for filing with the SEC in
connection with the transactions contemplated herein will comply as to form and
substance in all material respects with the
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applicable requirements of the Securities Act and the rules and regulations
thereunder and the Exchange Act and the rules and regulations thereunder.
(c) The information supplied by the Company for inclusion in the
Registration Statement and the Proxy Statement shall not, at (1) the time the
Registration Statement is declared effective, (2) the time the Proxy Statement
(or any amendment thereof or supplement thereto) is first mailed to the
stockholders of the Company, (3) the time of the Company Special Meeting, and
(4) the Effective Time, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein not misleading. If at any time prior to the
Effective Time any event or circumstance relating to the Company or any of its
Subsidiaries, or their respective officers or directors, should be discovered by
the Company which should be set forth in an amendment or a supplement to the
Registration Statement or Proxy Statement, the Company shall promptly inform
Parent. All documents that the Company is responsible for filing with the SEC in
connection with the transactions contemplated herein will comply as to form and
substance in all material respects with the applicable requirements of the
Securities Act and the rules and regulations thereunder and the Exchange Act and
the rules and regulations thereunder.
Section 5.3 Stockholders' Meeting. The Company shall, in accordance with
applicable law and its Amended and Restated Certificate of Incorporation and
By-laws duly call, give notice of, convene and hold a special meeting (which, as
may be duly adjourned, the "Company Special Meeting") of its stockholders for
the purpose of approving and adopting the agreement of merger (as such term is
used in Section 251 of the DGCL) set forth in this Agreement, approving the
Merger and approving the Charter Amendment, in each case by the holders of a
majority of the outstanding shares of Company Common Stock (with the holders of
Company Class A Common Stock and the holders of Company Class B Common Stock
voting together as a single class) and the affirmative vote of the holders of a
majority of the outstanding shares of each of the Company Class A Common Stock
and Company Class B Common Stock voting as separate classes (the "Company
Stockholder Approval"). The Company agrees to use its reasonable efforts to
cause the Company Special Meeting to occur within seventy-five (75) days after
the date on which the Registration Statement becomes effective, but not earlier
than twenty (20) business days after the date the Proxy Statement is first
mailed to stockholders. The Company shall include in the Proxy Statement the
recommendation of its Board of Directors ("Company Board Recommendation") that
its stockholders vote in favor of the Company Stockholder Approval, subject to
the duties of the Board of Directors of the Company to make any further
disclosure to the stockholders (which shall not, unless expressly stated,
constitute a withdrawal or adverse modification of such recommendation) and
subject to the right to withdraw, modify or change such recommendation in
accordance with Section 5.10 of this Agreement. If the Board of Directors of the
Company withdraws, modifies or changes its recommendation of this Agreement or
the Merger in a manner adverse to Parent or resolves to do any of the foregoing,
the Company shall nevertheless remain obligated to call, give notice of, convene
and hold the Company Special Meeting.
Section 5.4 Approvals and Consents; Cooperation.
(a) The Company and Parent shall together, or pursuant to an allocation
of responsibility to be agreed upon between them:
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(i) as soon as is reasonably practicable take all such action as
may be required under state blue sky or securities laws in connection with the
transactions contemplated by this Agreement;
(ii) promptly prepare and file with the NYSE listing applications
covering the shares of Parent Common Stock issuable in the Merger or upon
exercise of the Company stock options, warrants, conversion rights or other
rights or vesting or payment of other Company equity based awards and use its
reasonable best efforts to obtain, prior to the Effective Time, approval for the
listing of such Parent Common Stock, subject only to official notice of
issuance;
(iii) cooperate with one another in seeking any actions, consents,
approvals or waivers or making any filings in connection with the transactions
contemplated by this Agreement; and
(iv) cooperate with one another in obtaining the opinions
described in Section 6.1(g) of this Agreement.
(b) Subject to the limitations contained in Section 5.2, the Company
and Parent shall each furnish to one another and to one another's counsel all
such information as may be required in order to effect the foregoing actions.
Section 5.5 Access to Information; Confidentiality. As permitted by law,
each of the Company and Parent shall, upon reasonable notice to an Executive
Officer (as defined in Section 8.2 hereof) of the Company or Parent, as the case
may be, afford to the other party, and to such party's authorized officers,
employees, accountants, counsel, financial advisors and other representatives
(collectively, "Representatives"), reasonable access during normal business
hours, in a manner so as not to interfere with the normal operations of the
Company or Parent and their respective Subsidiaries and subject to reasonable
restrictions imposed by an Executive Officer of the Company or Parent, as the
case may be, during the period prior to the Effective Time to all the
properties, books, contracts, commitments and records of the Company or Parent
and their respective Subsidiaries, and during such period, the Company or Parent
shall furnish promptly to the other party (a) a copy of each report, schedule,
registration statement and other document filed by it or its Subsidiaries during
such period pursuant to the requirements of applicable federal or state
securities laws and (b) all other information concerning its business,
properties and personnel as the other party may reasonably request.
Notwithstanding anything to the contrary in this Agreement, neither party nor
any or its Subsidiaries shall be required to disclose any information to the
other party or its authorized representatives if doing so would (i) violate any
federal, state, local or foreign law, rule or regulation to which such party or
any of its Subsidiaries is subject, (ii) violate the regulations or requirements
of the NYSE, (iii) violate the terms of any confidentiality agreement or similar
agreement or arrangement to which such party or any of its Subsidiaries is a
party (provided that such party shall use all reasonable efforts to cause the
counterparty thereto to waive such agreement) or (iv) directly or indirectly
affect either party's competitive position in any of the markets in which either
party operates or in respect of the activities in which either party is engaged.
No investigation or information furnished pursuant to this Section 5.5 shall
affect any representations or warranties made by the parties herein or the
conditions to the obligations of the
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parties to consummate the Merger. Each party will, and will counsel its
Representatives to, keep such information provided to it by the other party
confidential in accordance with the terms of the Confidentiality Agreement,
dated February 18, 2000, between Parent and the Company (the "Confidentiality
Agreement") the terms of which are incorporated herein by reference, as if such
information were Confidential Information (as such term is defined in the
Confidentiality Agreement).
Section 5.6 Affiliates. The Company shall, prior to the Effective Time,
deliver to Parent a list (reasonably satisfactory to counsel for Parent),
setting forth the names and addresses of all Persons who are, at the time of the
Company Special Meeting, in the Company's reasonable judgment, "affiliates" of
the Company for purposes of Rule 145 under the Securities Act. The Company shall
furnish such information and documents as Parent may reasonably request for the
purpose of reviewing such list. The Company will use its reasonable efforts to
cause its affiliates to deliver to Parent not later that 10 days prior to the
date of the Company Special Meeting, a written agreement substantially in the
form attached as Exhibit 5.6, with such modifications as may be appropriate, and
will use its reasonable efforts to cause Persons or entities who become
"affiliates" after such date but prior to the Closing Date to execute and
deliver these agreements at least 5 days prior to the Closing Date.
Section 5.7 Rights Under Stock Plans.
(a) Each outstanding option or warrant to purchase shares of Company
Common Stock ("Option") granted under the Company Stock Option Plans or
otherwise, which is outstanding immediately prior to the Effective Time, whether
or not then exercisable, shall vest in accordance with the terms of such Company
Stock Option Plan or agreement under which it was granted and shall be assumed
by Parent and deemed to constitute an option or warrant to acquire, on the same
terms and conditions, mutatis mutandis (including, without limitation
adjustments for any stock dividend, subdivision, reclassification,
recapitalization, split, combination, exchange of shares or similar
transaction), as were applicable under such Option or agreement prior to the
Effective Time, the number of shares of Parent Common Stock as the holder of
such Option would have been entitled to receive pursuant to the Merger had such
holder exercised such Option in full immediately prior to the Effective Time
(not taking into account whether or not such Option was in fact exercisable) at
a price per share equal to (x) the aggregate exercise price for Company Common
Stock purchasable pursuant to such Option divided by (y) the Class A Conversion
Number; provided, that the number of shares of Parent Common Stock that may be
purchased upon exercise of any such Option or agreement shall not include any
fractional share and, upon exercise of such Option or agreement, a cash payment
shall be made for any fractional share based upon the last sale price per share
of Parent Common Stock on the trading day immediately preceding the date of
exercise. From and after the Effective Time, Parent and the Surviving
Corporation shall comply with the terms of the Company Stock Option Plans and
the agreements governing any Options. The adjustments provided herein with
respect to any Options that are "incentive stock options" (as defined in Section
422 of the Code) shall be effected in a manner consistent with Section 424(a) of
the Code.
(b) Parent shall cause to be taken all corporate action necessary to
reserve for
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issuance a sufficient number of shares of Parent Common Stock for delivery upon
exercise of Options in accordance with this Section 5.7. As promptly as
practicable after the Effective Time, Parent shall use its reasonable efforts to
cause Parent Common Stock subject to assumed Options to be registered under the
Securities Act pursuant to a registration statement on Form S-8 (or any
successor or other appropriate forms) and shall use its reasonable efforts to
cause the effectiveness of such registration statement (and current status of
the prospectus or prospectuses contained therein) to occur promptly after the
Effective Time and to be maintained for so long as such Options remain
outstanding.
(c) At the Effective Time, by virtue of the Merger and without any
action on the part of the holder of any stock appreciation right ("SAR"), each
outstanding SAR issued by the Company on or prior to the date of this Agreement
shall, as of the Effective Time, automatically and without any action on the
part of the holder thereof, be assumed by Parent. The holders of such SARs shall
continue to have, and be subject to, the same terms and conditions set forth in
the agreements pursuant to which the SARs were issued in effect immediately
prior to the Effective Time, except that (i) such SARs shall be exercisable for
cash representing that number of whole shares of Parent Common Stock equal to
the product of the number of shares of Class A Common Stock covered by the SAR
immediately prior to the Effective Time multiplied by the Class A Conversion
Number rounded up to the nearest whole number of shares of Parent Common Stock
and (ii) the per share strike price for the cash representing shares of Parent
Common Stock issuable upon the exercise of such assumed SAR shall be equal to
the quotient determined by dividing the strike price per share of Class A Common
Stock specified for such SAR under the applicable agreement immediately prior to
the Effective Time by the Class A Conversion Number, rounding the resulting
strike price down to the nearest whole cent. The holders of the SARs will be
entitled to receive only cash upon exercise of the SARs in lieu of Parent Common
Stock as such amount shall be determined in accordance with the agreements
pursuant to which the SARs were issued.
Section 5.8 Filings; Other Action.
(a) Subject to the terms and conditions herein provided, the Company
and Parent shall (i) promptly make their respective filings and thereafter make
any other required submissions under the HSR Act, and (ii) use reasonable
efforts to cooperate with one another in (A) determining whether any filings are
required to be made with, or consents, permits, authorizations or approvals are
required to be obtained from, any third party, the United States government or
any agencies, departments or instrumentalities thereof or other governmental or
regulatory bodies or authorities of federal, state, local and foreign
jurisdictions in connection with the execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby and thereby and (B)
timely making all such filings and timely seeking all such consents, permits,
authorizations or approvals, and (iii) take, or cause to be taken, all other
actions and do, or cause to be done, all other things necessary, proper or
advisable to consummate and make effective the transactions contemplated hereby,
including, without limitation, taking or undertaking all such further action as
may be necessary to resolve such objections, if any, as the Federal Trade
Commission, the Antitrust Division of the Department of Justice, state antitrust
enforcement authorities or competition authorities of any other nation or other
jurisdiction or any other Person may assert under relevant antitrust or
competition laws
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with respect to the transactions contemplated hereby, subject to Parent's right
to direct such actions and things to be done set forth in Section 5.8(b) below.
(b) Without limiting the generality of the undertakings pursuant to
Section 5.8(a): (i) each of Parent and the Company shall provide promptly to the
Governmental Entities with regulatory jurisdiction over enforcement of any
applicable antitrust laws (each a, "Government Antitrust Entity") information
and documents requested by such Government Antitrust Entity or necessary, proper
or advisable to permit consummation of the transactions contemplated by this
Agreement; (ii) without in any way limiting the provisions of Section 5.8(a)(i)
above, each of Parent and the Company shall file any Notification and Report
Form and related material required under the HSR Act as soon as reasonably
practicable after the date of this Agreement, and thereafter use its
commercially reasonable efforts to certify as soon as reasonably practicable its
substantial compliance with any requests for additional information or
documentary material that may be made under the HSR Act, unless Parent in its
reasonable judgment determines that it is reasonable in the circumstances not to
comply substantially with any requests for additional information and
documentary material under the HSR Act; (iii) each of the Company and Parent
will keep the other informed of any material communication, and provide to the
other copies of all correspondence, between it (or its advisors) and any
Government Antitrust Entity relating to this Agreement or any of the matters
described in this Section 5.8(b); and (iv) each of the Company and Parent shall
permit the other to review any material communication to be given by it to, and
shall consult with each other in advance of any telephonic calls, meeting or
conference with, any Government Antitrust Entity and, to the extent permitted,
give the other party the opportunity to attend and participate in such
telephonic calls, meetings and conferences. Notwithstanding any of the
foregoing, no failure to obtain termination of the waiting period under the HSR
Act shall be deemed to be a breach hereunder by the Company or Parent. Subject
to the foregoing, Parent shall be principally responsible for and in control of
the process of dealing with any Government Antitrust Entity. Notwithstanding the
provisions of Section 5.8(a) and 5.8(b), in the event that either Parent or the
Company is requested, as a condition to obtaining the approval of any
Governmental Antitrust Entity to the transactions contemplated hereunder, to
take any action which if taken would have a Material Adverse Effect on the
combined consolidated businesses, assets, operations or prospects of Parent and
Company, then neither Parent nor the Company shall be required to take such
action and no failure by either Parent or the Company to take such action shall
be deemed a breach of this Section 5.8 or of any other provision of this
Agreement.
Section 5.9 Further Assurances. In case at any time after the Effective Time
any further action is necessary or desirable to carry out the purposes of this
Agreement, the proper officers of the Company and Parent shall take all such
necessary action.
Section 5.10 No Solicitation by the Company.
(a) The Company agrees that it, prior to the Effective Time, shall not,
directly or indirectly, nor shall it permit any of its Subsidiaries to, nor
shall it authorize or permit any officer, director, employee or agent of, or any
investment banker, attorney, accountant or other advisor or representative of,
the Company or any of its Subsidiaries (collectively, the "Company
Representatives") to, directly or indirectly through another Person, solicit,
initiate, encourage,
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induce or facilitate the making, submission or announcement of any Acquisition
Proposal, or participate in any discussions or negotiations regarding, or
furnish to any Person any information with respect to, or take any other action
to facilitate any inquiries or the making of any proposal that constitutes, or
would reasonably be expected to lead to, any Acquisition Proposal, or approve,
endorse or recommend any Acquisition Proposal, or enter into any letter of
intent, agreement in principle, acquisition agreement or other document or
contract contemplating or otherwise relating to an Acquisition Proposal,
provided, however, that, prior to the adoption and approval of this Agreement by
the requisite Company Stockholder Approval, the foregoing shall not prohibit the
Company from furnishing information to or entering into discussions or
negotiations with, any Person that makes an unsolicited bona fide proposal to
enter into a business combination with the Company pursuant to an Acquisition
Proposal which the Board of Directors of the Company (or any committee thereof
considering such proposal) in good faith determines is reasonably likely to be
more favorable to the Company's stockholders than the transactions contemplated
by this Agreement (a "Superior Proposal"), so long as:
(i) prior to furnishing any information to, or entering into
discussions or negotiations with, such a Person the Company provides 48 hours'
advance written notice to Parent to the effect that it is furnishing information
to, or entering into substantive discussions or negotiations with, a Person from
whom the Company shall have received an executed confidentiality agreement in
form and substance similar to the Confidentiality Agreement prior to furnishing
such information;
(ii) such notice shall include the terms and conditions of such
Acquisition Proposal or any agreement proposed by, or any information supplied
to, any such Person;
(iii) prior to furnishing any nonpublic information to any such
Person, the Company furnishes such nonpublic information to Parent (to the
extent that such nonpublic information has not been previously furnished by the
Company to Parent);
(iv) neither the Company nor any of its Subsidiaries nor any of
the Company Representatives shall have violated any of the restrictions set
forth in this Section 5.10;
(v) such unsolicited bona fide proposal relating to a Superior
Proposal is made by a third party that the Board of Directors of the Company (or
any committee thereof considering such proposal) determines in good faith has
the good faith intent to proceed with negotiations to consider such Superior
Proposal;
(vi) the Board of Directors of the Company (or any committee
thereof considering such proposal), after duly considering the written advice of
outside legal counsel to the Company, determines in good faith that such action
is required for the Board of Directors of the Company to comply with its
fiduciary duties to stockholders imposed by applicable law; and
(vii) the Company uses all reasonable efforts to keep Parent
informed in all material respects of the status and terms of any such
negotiations or discussions (including without limitation the identity of the
Person with whom such negotiations or discussions are
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being held) and provides Parent copies of such written proposals and any
amendments or revisions thereto or correspondence related thereto.
(b) The Company shall notify Parent orally and in writing of the fact
that it has received inquiries, offers or proposals that it reasonably believes
to be bona fide with respect to an Acquisition Proposal within 24 hours after
the Company obtains Knowledge of the receipt thereof. The Company will
immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any other Person that have been conducted
heretofore with respect to a potential Acquisition Proposal. The Company agrees
to inform the Company Representatives of the obligations undertaken in this
Section 5.10; provided, however, that nothing contained in this Agreement shall
prevent the Board of Directors of the Company from referring any third-party to
this Section 5.10.
(c) The Company agrees not to release or permit the release of any
Person from, or to waive or permit the waiver of any provision of, any
confidentiality, "standstill" or similar agreement to which the Company or any
of its Subsidiaries is a party, and will use its best efforts to enforce or
cause to be enforced each such agreement at the request of Parent.
(d) Except as expressly permitted by this Section 5.10, neither the
Board of Directors of the Company nor any committee thereof shall (i) withdraw,
modify or change, or propose publicly to withdraw, modify or change, in a manner
adverse to Parent, the approval or recommendation by such Board of Directors or
such committee of the Merger or this Agreement, (ii) approve or recommend, or
propose publicly to approve or recommend, any Superior Proposal or (iii) cause
the Company to enter into any letter of intent, agreement in principle,
acquisition agreement or other similar agreement (each, an "Acquisition
Agreement") related to any Acquisition Proposal. Notwithstanding the foregoing,
in the event that the Board of Directors of the Company (or any committee
thereof considering an Acquisition Proposal) determines in good faith, after
consultation with outside counsel, that in light of a Superior Proposal it is
necessary to do so in order to act in a manner consistent with its fiduciary
duties to the Company's stockholders under applicable law, the Board of
Directors of the Company may (subject to this and the following sentences)
withdraw, modify or change its recommendation of the Merger, but only after 48
hours following Parent's receipt of written notice advising Parent that the
Board of Directors of the Company is prepared to do so, and only if, during such
48- hour period, the Company and its advisors shall have negotiated in good
faith with Parent to make such adjustments in the terms and conditions of this
Agreement as would enable Parent to proceed with the transactions contemplated
herein on such adjusted terms.
(e) Nothing contained in this Section 5.10 shall prohibit the Company
from taking and disclosing to its stockholders a position contemplated by Rules
14d-9 and/or 14e-2(a) promulgated under the Exchange Act or from making any
disclosure to the Company's stockholders if, in the good faith judgment of the
Board of Directors of the Company, after consultation with outside counsel,
failure so to disclose would be inconsistent with its obligations under
applicable law.
Section 5.11 Director and Officer Liability.
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(a) Parent, Merger Sub and the Company agree that all rights to
indemnification and all limitations on liability existing in favor of any
Indemnitee (as defined below) as provided in the Company's Amended and Restated
Certificate of Incorporation, Company's By-laws, the charter or By-laws of any
Subsidiary of the Company or any Indemnity Agreement (as defined below) shall
survive the Merger and continue in full force and effect. To the extent
permitted by (i) the DGCL, (ii) the Company's Amended and Restated Certificate
of Incorporation, the Company's By-laws, the charter or By-laws of any
Subsidiary of the Company or (iii) any agreement providing for indemnification
by the Company or any Subsidiary of the Company of any Indemnitee in effect on
the date of this Agreement (including any indemnity provisions contained in any
agreement providing for the registration of securities) (each, an "Indemnity
Agreement"), advancement of Indemnitee Expenses (as defined below) pursuant to
this Section 5.11 shall be mandatory rather than permissive and the Parent shall
cause the Surviving Corporation to advance Costs (as defined below) in
connection with such indemnification. Parent shall cause the Surviving
Corporation to honor in accordance with their terms all Indemnity Agreements. In
the event that the Surviving Corporation fails to make any payments required or
permitted under any Indemnity Agreement, Parent agrees to make all such payments
within 15 days thereafter.
(b) For a period of six (6) years after the Effective Time, Parent
shall, or shall cause the Surviving Corporation to, maintain officers' and
directors' liability insurance and fiduciary liability insurance covering the
Indemnitees who are currently covered by the Company's existing officers' and
directors' or fiduciary liability insurance policies on terms no less
advantageous to such indemnified parties than such existing insurance; provided,
however, that neither Parent nor the Surviving Corporation will be required in
order to maintain such policies to pay an annual premium in excess of 150% of
the greater of (i) the last annual premium paid by the Company prior to the date
of this Agreement and (ii) the annual premium for the year in which the Closing
occurs (the "Cap"); and provided, further, that, if equivalent coverage cannot
be obtained, or can be obtained only by paying an annual premium in excess of
the Cap, then Parent shall, or shall cause the Surviving Corporation to,
maintain policies that, in Parent's good faith judgment, provide the maximum
coverage available at an annual premium equal to the Cap.
(c) In addition to the other rights provided for in this Section 5.11
and not in limitation thereof, for six (6) years from and after the Effective
Time, Parent shall cause the Surviving Corporation to, to the fullest extent
permitted by applicable law, (i) indemnify and hold harmless the individuals who
on or prior to the Effective Time were officers, directors or employees of the
Company or any of its Subsidiaries, and the heirs, executors, trustees,
fiduciaries and administrators of such officers, directors or employees and each
person who served at the request, or on behalf, of the Company or any of its
Subsidiaries as an officer, director or employee of another corporation,
partnership, trust, joint venture, pension or other employee benefit plan or
enterprise (collectively, the "Indemnitees") against all losses, Indemnitee
Expenses (as hereinafter defined), claims, damages, liabilities, judgments, or
amounts paid in settlement (collectively, "Costs") in respect to any threatened,
pending or completed claim, action, suit or proceeding, whether criminal, civil,
administrative or investigative based on, or arising out of or relating to the
fact that such person is or was a director, officer or employee of the Company
or any of its Subsidiaries or served at the request,
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or on behalf, of the Company or any of its Subsidiaries and arising out of acts
or omissions occurring on or prior to the Effective Time (including, without
limitation, in respect of acts or omissions in connection with this Agreement
and the transactions contemplated hereby) (an "Indemnifiable Claim") and (ii)
advance to such Indemnitees all Indemnitee Expenses incurred in connection with
any Indemnifiable Claim promptly after receipt of reasonably detailed statements
therefor; provided that, except as otherwise provided pursuant to any Indemnity
Agreement, the person to whom Indemnitee Expenses are to be advanced provides an
undertaking to repay such advances if it is ultimately determined that such
person is not entitled to indemnification from Parent or the Surviving
Corporation. In the event that the Surviving Corporation fails to make any
payments required or permitted under this Section 5.11(c), Parent agrees to make
all such payments within 15 days thereafter. In the event any Indemnifiable
Claim is asserted or made within such six year period, all rights to
indemnification and advancement of Indemnitee Expenses in respect of any such
Indemnifiable Claim shall continue until such Indemnifiable Claim is disposed of
or all judgments, orders, decrees or other rulings in connection with such
Indemnifiable Claim are fully satisfied; provided, however, that Parent shall
not be liable for any settlement effected without its written consent (which
consent shall not be unreasonably withheld or delayed). Except as otherwise may
be provided pursuant to any Indemnity Agreement, the Indemnitees as a group may
retain only one law firm with respect to each related matter except to the
extent there is, in the opinion of counsel to an Indemnitee, under applicable
standards of professional conduct, a conflict on any significant issue between
positions of any two or more Indemnitees. For the purposes of this Section 5.11,
"Indemnitee Expenses" shall include reasonable attorneys' fees and all other
costs, charges and expenses paid or incurred in connection with investigating,
defending, being a witness in or participating in (including on appeal), or
preparing to defend, be a witness in or participate in any Indemnifiable Claim.
(d) Notwithstanding any other provisions hereof, the obligations of the
Company, the Surviving Corporation and Parent contained in this Section 5.11
shall be binding upon the successors and assigns of Parent and the Surviving
Corporation. In the event Parent or the Surviving Corporation or any of their
respective successors or assigns (i) consolidates with or merges into any other
Person or (ii) transfers all or substantially all of its properties or assets to
any Person, then, and in each case, proper provision shall be made so that
successors and assigns of Parent or the Surviving Corporation, as the case may
be, honor the indemnification obligations set forth in this Section 5.11.
(e) The obligations of the Company, the Surviving Corporation, and
Parent under this Section 5.11 shall survive the consummation of the Merger and
shall not be terminated or modified in such a manner as to adversely affect any
Indemnitee to whom this Section 5.11 applies without the consent of such
affected Indemnitee (it being expressly agreed that the Indemnitees to whom this
Section 5.11 applies shall be third party beneficiaries of this Section 5.11,
each of whom may enforce the provisions of this Section 5.11).
(f) Parent shall cause the Surviving Corporation to advance all
Indemnitee Expenses to any Indemnitee incurred enforcing the indemnity or other
obligations provided for in this Section 5.11.
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Section 5.12 Accountants' "Comfort" Letters. The Company and Parent will
each use reasonable efforts to cause to be delivered to each other letters from
their respective independent accountants, dated a date within two business days
before the effective date of the Registration Statement, in form reasonably
satisfactory to the recipient and customary in scope for comfort letters
delivered by independent accountants in connection with registration statements
on Form S-4 under the Securities Act.
Section 5.13 Additional Reports. The Company and Parent shall each furnish
to the other copies of any reports of the type referred to in Sections 3.4 and
4.4 which it files with the SEC on or after the date of this Agreement, and the
Company or Parent, as the case may be, represents and warrants that as of the
respective dates thereof, such reports will not contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; provided, that the foregoing shall not
apply to the financial statements contained therein (which are covered by the
following sentence). Any consolidated financial statements included in such
reports (including any related notes and schedules) will fairly present, in all
material respects, the financial position of the Company and its consolidated
Subsidiaries or Parent and its consolidated Subsidiaries, as the case may be, as
of the dates thereof and their results of operations and changes in financial
position or other information included therein for the periods or as of the
dates then ended (subject, where appropriate, to normal year-end adjustments),
in each case in accordance with GAAP consistently applied during the periods
involved (except as otherwise disclosed in the notes thereto and except that
such unaudited financial statements will not include all of the footnote
disclosures notes required by GAAP).
Section 5.14 Plan of Reorganization. This Agreement is intended to
constitute a "plan of reorganization" within the meaning of Section 1.368-2(g)
of the income tax regulations promulgated under the Code. From and after the
date of this Agreement and until the Effective Time, each party hereto shall use
its reasonable efforts to cause the Merger to qualify, and will not knowingly
take any actions or cause any actions to be taken which could prevent the Merger
from qualifying, as a reorganization under the provisions of Section 368(a) of
the Code. Following the Effective Time, neither the Surviving Corporation,
Parent nor any of their affiliates shall knowingly take any action or knowingly
cause any action to be taken which would cause the Merger to fail to qualify as
a reorganization under Section 368(a) of the Code.
Section 5.15 Conveyance Taxes. Each of Parent and the Company, respectively,
shall timely pay any stock transfer and stamp taxes, any transfer, recording,
registration and other fees, and any similar taxes or fees not including any
income tax, gross receipts tax or any similar tax measured with respect to gross
or net income (collectively, the "Conveyance Taxes") imposed on it at or prior
to the Effective Time in connection with the transactions contemplated hereunder
that are required to be paid in connection therewith. Parent and the Company
shall cooperate in the preparation, execution and filing of all Tax Returns,
questionnaires, applications, or other documents regarding any such Conveyance
Taxes.
Section 5.16 Public Announcements. The initial press release relating to
this Agreement shall be a joint press release mutually agreed upon by Parent and
the Company. Unless otherwise required by applicable Law or the requirements of
any listing agreement with any applicable stock
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exchange, Parent and the Company shall each use their reasonable efforts to
consult with each other before issuing any press release or otherwise making any
public statements with respect to this Agreement or any transaction contemplated
by this Agreement and shall not issue any such press release or make any such
public statement prior to such consultation.
Section 5.17 Termination Fee and Expenses.
(a) Except as provided in paragraph (c) and (d), all Expenses (as
defined below) incurred by the parties hereto shall be borne solely and entirely
by the party that has incurred such Expenses; provided, however, that if this
Agreement is terminated for any reason, then the share of Parent and the Company
for all Expenses (including any fees and expenses of accountants, experts, and
consultants, but excluding the fees and expenses of legal counsel and investment
bankers) related to preparing, printing, filing and mailing the Registration
Statement, the Proxy Statement and all SEC and other regulatory filing fees
incurred in connection with the Registration Statement, Proxy Statement and HSR
Act, shall be one-half each.
(b) "Expenses" as used in this Agreement shall include all reasonable
out-of-pocket expenses (including, without limitation, all reasonable fees and
expenses of counsel, accountants, investment bankers, experts and consultants to
a party hereto and its affiliates) incurred by a party or on its behalf in
connection with or related to the authorization, preparation, negotiation,
execution and performance of this Agreement, the preparation, printing, filing
and mailing of the Registration Statement, the Proxy Statement, the solicitation
of stockholder approvals, requisite HSR Act filings and all other matters
related to the consummation of the transactions contemplated hereby.
(c) The Company agrees that, if:
(i) Parent terminates this Agreement pursuant to Section 7.1(g);
(ii) Parent terminates this Agreement pursuant to Section 7.1(d)
as a direct result of a material breach by the Company of a representation,
warranty or covenant under this Agreement that is within the control of the
Company or Parent terminates this Agreement pursuant to Section 7.1(b) at a time
that a Company Breach (as defined in Section 7.1(d)) within the control of the
Company exists; or
(iii) the Company or Parent terminates this Agreement pursuant to
Section 7.1(f) due to the failure to receive Company Stockholder Approval;
and, in each case described in clauses (i) through (iii) of this Section
5.17(c), within ten months after the termination of this Agreement:
(A) a transaction is consummated, which transaction, if offered or proposed,
would constitute an Acquisition Proposal;
(B) a definitive agreement (the execution and delivery of which has been
authorized by the boards of directors, or comparable bodies, that would if
consummated constitute an Acquisition Proposal) for such a transaction is
entered into and such transaction is
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consummated whether or not within such ten-month period; or
(C) any Person shall have acquired beneficial ownership or the right to acquire
beneficial ownership of, or any "group" (as such term is defined under
Section 13(d) of the Exchange Act and the rules and regulations promulgated
hereunder), shall have been formed that beneficially owns, or has the right
to acquire beneficial ownership of, outstanding shares of capital stock of
the Company then representing 50% or more of any class of the Company Common
Stock, provided that this subclause (C) shall not apply to Robert F.X.
Sillerman and his Affiliates with respect to the shares of Company Common
Stock beneficially owned by Mr. Sillerman or his Affiliates as of the date
of this Agreement,
then, upon the first to occur of any such case referred to in subclauses (A),
(B) or (C), the Company shall pay to Parent a termination fee of $100 million,
plus the reasonably documented Expenses of Parent up to $20 million (in each
case, less any amounts paid by the Company to Parent pursuant to the following
paragraph). Parent may assert its right to the termination fee and Expenses
under one or more cases set forth under this Section 5.17(c), but in no event
shall Parent receive a termination fee or fees of more than $100 million or
reimbursement of Expenses in an amount of more than $20 million under this
Section 5.17.
Without limiting the foregoing, if Parent terminates this Agreement
pursuant to Section 7.1(g), then, within 48 hours of such termination, the
Company shall pay to Parent a termination fee of $50 million, plus the
reasonably documented Expenses of Parent of up to $20 million.
(d) Notwithstanding the provisions of Section 5.17(c), if the Company
or Parent terminates this Agreement pursuant to Section 7.1(f) due to the
failure to receive Company Stockholder Approval and (x) at the time of such
termination, Parent shall not have a right to terminate this Agreement pursuant
to Section 7.1(g), (y) the Company does not enter into an Acquisition Agreement
within seventy-five (75) days after the date of such termination and (z) the
applicable Parent Common Stock Market Value is less than $69.72 per share, then
the Company shall not be required to pay to Parent any termination fee (but
shall be required to pay reasonably documented Expenses of Parent up to $20
million) pursuant to Section 5.17(c).
Section 5.18 Notice of Certain Events. Each party to this Agreement shall as
promptly as reasonably practicable notify the other parties hereto of:
(a) any notice or other communication from any Person alleging that the
consent of such Person (or other Person) is or may be required in connection
with the transactions contemplated by this Agreement;
(b) any notice or other communication from any Governmental Entity in
connection with the transactions contemplated by this Agreement;
(c) any actions, suits, claims, investigations or proceedings commenced
or, to
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the best of its Knowledge, threatened against, relating to or involving or
otherwise affecting it which would cause any representation or warranty
contained in this Agreement to be untrue or inaccurate in any material respect
at any time from the date of this Agreement to the Effective Time or which
relate to the consummation of the transactions contemplated by this Agreement;
(d) any notice of, or other communication relating to, a default or
event that, with notice or lapse of time or both, would become a default,
received by it or any of its Subsidiaries subsequent to the date of this
Agreement, under any material agreement; and
(e) any Material Adverse Effect of the Company or Material Adverse
Effect of Parent or the occurrence of any event which is reasonably likely to
result in a Material Adverse Effect of the Company or a Material Adverse Effect
of Parent, as the case may be.
Section 5.19 Section 16(b) Board Approval.
(a) Prior to Closing, the Board of Directors of Parent shall, by
resolution duly adopted by such Board of Directors or a duly authorized
committee of "non-employee directors" thereof, approve and adopt, for purposes
of exemption from "short-swing" liability under Section 16(b) of the Exchange
Act, the acquisition of Parent Common Stock at the Effective Time by officers
and directors of Parent (including officers or directors of the Company who
become, prior to, at, or following the Effective Time of the Merger, officers or
directors of Parent) as a result of the conversion of shares of Company Common
Stock in the Merger and the assumption of the Options by Parent at the Effective
Time. Such resolution shall set forth the name of the applicable "insiders" for
purposes of Section 16 of the Exchange Act, the number of securities to be
acquired by each individual, that the approval is being granted to exempt the
transaction under Rule 16b-3 under the Exchange Act, and, for the Options to be
assumed by Parent at the Effective Time, the material terms of the options and
warrants to purchase Parent Common Stock acquired by such insiders as a result
of the assumption by Parent of such Options.
(b) Prior to Closing, the Board of Directors of the Company shall, by
resolution duly adopted by such Board of Directors or a duly authorized
committee of "non-employee directors" thereof, approve and adopt, for purposes
of exemption from "short-swing" liability under Section 16(b) of the Exchange
Act, the conversion at the Effective Time of the shares of the Company Common
Stock held by officers and directors of the Company into shares of Parent Common
Stock as a result of the conversion of shares in the Merger, and the assumption
by Parent at the Effective Time of the Options of the officers and directors of
the Company. Such resolution shall set forth the name of the applicable
"insiders" for purposes of Section 16 of the Exchange Act and, for each
"insider," the number of shares of Company Common Stock to be converted into
shares of Parent Common Stock at the Effective Time, the number and material
terms of the Options to be assumed by Parent at the Effective Time, and that the
approval is being granted to exempt the transaction under Rule 16b-3 under the
Exchange Act.
Section 5.20 Employee Plans and Employment Agreements.
(a) From and after the Effective Time, the Surviving Corporation and
its
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Subsidiaries will honor in accordance with their terms all existing employment,
severance, consulting and salary continuation agreements between the Company or
any of its Subsidiaries and any current or former officer, director, employee or
consultant of the Company or any of its Subsidiaries or group of such officers,
directors, employees or consultants.
(b) As soon as administratively feasible following the Closing Date,
the Surviving Corporation and its Subsidiaries shall or Parent shall cause the
Surviving Corporation and it Subsidiaries to, provide employees of the Company
or its Subsidiaries (excluding employees covered by collective bargaining
agreements) employee benefit plans, severance benefits, programs, policies and
arrangements that are no less favorable in the aggregate than such programs and
policies provided to similarly situated employees of Parent and its
Subsidiaries.
(c) To the extent permitted under applicable law, each employee of the
Company or its Subsidiaries shall be given credit for all service with the
Company or its Subsidiaries (or service credited by the Company or its
Subsidiaries) under all employee benefit plans, programs, policies and
arrangements maintained by the Surviving Corporation in which they participate
or in which they become participants for all purposes including, without
limitation, service for purposes of determining (i) shor term and long-term
disability benefits; (ii) severance benefits; (iii) vacation benefits; and (iv)
vesting and eligibility but not accrued benefits under any qualified,
non-qualified pension or retirement plan and each welfare benefit plan. All
pre-existing conditions and exclusions (to the extent such conditions or
exclusions are covered under the plans of the Company and any of its
Subsidiaries) shall be waived. All expenses incurred by any employee for
deductibles and co-payments in the portion of the year prior to the date an
employee first became a participant in such plan shall be credited to the
benefit of such employee under such plan in the year in which such employee's
participation commenced.
Section 5.21 Stock Exchange Listing. Parent shall promptly prepare and
submit to the NYSE and any other applicable exchange a listing application
covering the shares of Parent Common Stock to be issued in the Merger and shall
use reasonable best efforts to cause such shares to be approved for listing on
such exchange, subject to official notice of issuance, prior to the Effective
Time.
ARTICLE 6
CONDITIONS TO THE MERGER
Section 6.1 Conditions to the Obligations of Each Party. The obligations of
the Company, Parent and Merger Sub to consummate the Merger are subject to the
satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) The Registration Statement shall have become effective under the
Securities Act and no stop order suspending the effectiveness of the
Registration Statement shall have been issued by the SEC and no proceeding for
that purpose shall have been initiated by the SEC.
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(b) The Company Stockholder Approval shall have been obtained.
(c) No statute, rule, regulation, executive order, decree, preliminary
or permanent injunction or restraining order shall have been enacted, entered,
promulgated or enforced by any Governmental Entity which prohibits the
consummation of the transactions contemplated hereby. No action or proceeding
(other than any action or proceeding pursuant to or in connection with the
Antitrust Laws) by any Governmental Entity shall have been commenced (and be
pending), or, to the Knowledge of the parties hereto, threatened, against the
Company or Parent or any of their respective Affiliates, partners, associates,
officers or directors, or any officers or directors of such Persons, seeking to
prevent or delay the transactions contemplated hereby or challenging any of the
terms of provisions of this Agreement or seeking material damages in connection
therewith.
(d) All consents and approvals (other than any consent or approval
required pursuant to or in connection with the Antitrust Laws) of Governmental
Entities necessary for consummation of the transactions contemplated hereby
shall have been obtained, other than those which, if not obtained, would not in
the aggregate reasonably be expected to have a Material Adverse Effect on the
Company or Parent.
(e) Any waiting period (and any extension thereof) applicable to the
consummation of the Merger under the HSR Act shall have expired or been
terminated.
(f) The shares of Parent Common Stock to be issued in the Merger or
upon exercise of the Options shall have been authorized for listing on the NYSE,
subject to official notice of listing.
(g) Each of the Company and Parent shall have received prior to the
effectiveness of the Registration Statement an opinion of its tax counsel, Paul,
Hastings, Janofsky & Walker LLP, and Akin, Gump, Strauss, Hauer & Feld, L.L.P.,
respectively, in form and substance reasonably satisfactory to the Company and
Parent, as applicable, to the effect that, the Merger will qualify for federal
income tax purposes as a reorganization within the meaning of Section 368(a) of
the Code, that the Company, Parent and Merger Sub will each be a "party to the
reorganization" within the meaning of Section 368(b) of the Code, and that
accordingly none of the Company, Parent and Merger Sub shall recognize gain or
loss for federal income tax purposes as a result of the Merger and stockholders
of the Company will not recognize gain or loss for federal income tax purposes
on the receipt pursuant to the Merger of Parent Common Stock in exchange for
shares of Company Common Stock, except with respect to cash received in lieu of
fractional shares of Parent Common Stock. For purposes of these opinions, the
Merger will not include the Charter Amendment. In rendering such opinions, Paul,
Hastings, Janofsky & Walker LLP and Akin, Gump, Strauss, Hauer & Feld, L.L.P.
shall receive and may rely upon representations contained in certificates of
Parent, Merger Sub and the Company in form and substance substantially similar
to the certificates attached hereto as Exhibits 6.1(a)-1 and 6.1(a)-2.
Section 6.2 Conditions to the Obligations of Parent and Merger Sub. The
obligations of Parent and Merger Sub to consummate the Merger are subject to the
satisfaction or waiver by Parent
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on or prior to the Closing Date of the following further condition:
(a) The Company shall have performed in all material respects its
obligations under this Agreement required to be performed by it at or prior to
the Effective Time and the representations and warranties of the Company
contained in this Agreement, to the extent qualified with respect to materiality
shall be true and correct in all respects, and to the extent not so qualified
shall be true and correct in all material respects, in each case as of the date
of this Agreement and at and as of the Effective Time as if made at and as of
such time, except as expressly contemplated by the Company Disclosure Letter or
this Agreement and except that the accuracy of representations and warranties
that by their terms speak as of the date of this Agreement or some other date
will be determined as of such date, and Parent shall have received a certificate
of the Chief Executive Officer and Chief Financial Officer of the Company as to
the satisfaction of this condition.
Section 6.3 Conditions to the Obligations of the Company. The obligations of
the Company to consummate the Merger are subject to the satisfaction or waiver
by the Company on or prior to the Closing Date of the following further
condition:
(a) Parent shall have performed in all material respects its
obligations under this Agreement required to be performed by it at or prior to
the Effective Time and the representations and warranties of Parent contained in
this Agreement, to the extent qualified with respect to materiality shall be
true and correct in all respects, and to the extent not so qualified shall be
true and correct in all material respects, in each case as of the date of this
Agreement and at and as of the Effective Time as if made at and as of such time,
except as expressly contemplated by Parent Disclosure Letter or this Agreement
and except that the accuracy of representations and warranties that by their
terms speak as of the date of this Agreement or some other date will be
determined as of such date, and the Company shall have received a certificate of
the Chief Executive Officer and Chief Financial Officer of Parent as to the
satisfaction of this condition.
ARTICLE 7
TERMINATION
Section 7.1 Termination. This Agreement may be terminated at any time prior
to the Effective Time, whether before or after approval by the stockholders of
the Company:
(a) by the mutual written consent of Parent and the Company;
(b) by either Parent or the Company if the Effective Time shall not
have occurred on or before January 31, 2001 (the "Termination Date"); provided
that the party seeking to terminate this Agreement pursuant to this Section
7.1(b) shall not have breached in any material respect its obligations under
this Agreement in any manner that shall have proximately contributed to the
failure to consummate the Merger on or before the Termination Date;
(c) by the Company if there has been a material breach by Parent of any
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representation, warranty, covenant or agreement set forth in this Agreement
which breach (if susceptible to cure) has not been cured in all material
respects within twenty business days following receipt by Parent of notice of
such breach (a "Parent Breach");
(d) by Parent, if there has been a material breach by the Company of
any representation, warranty, covenant or other agreement set forth in this
Agreement which breach (if susceptible to cure) has not been cured in all
material respects within twenty business days following receipt by the Company
of notice of such breach (a "Company Breach");
(e) by either the Company or Parent, if there shall be any applicable
law, rule or regulation that makes consummation of the Merger illegal or if any
judgment, injunction, order or decree of a court or other Governmental Entity of
competent jurisdiction shall restrain or prohibit the consummation of the
Merger, and such judgment, injunction, order or decree shall become final and
nonappealable;
(f) by either the Company or Parent, if the Company Stockholder
Approval referred to in Section 5.3 shall not have been obtained by reason of
the failure to obtain the requisite vote upon a vote at a duly held meeting of
stockholders or at any adjournment or postponement thereof; or
(g) by Parent, if a Company Triggering Event shall have occurred. A
"Company Triggering Event" shall be deemed to have occurred if: (i) the Board of
Directors of the Company (or any committee thereof) shall have failed to
recommend that the Company's stockholders vote to adopt this Agreement, or shall
have withdrawn or modified in a manner adverse to Parent the Company Board
Recommendation; (ii) the Company shall have failed to include in the Proxy
Statement the Company Board Recommendation or a statement to the effect that the
Board of Directors of the Company has determined and believes that the Merger is
in the best interests of the Company's stockholders; (iii) the Board of
Directors of the Company (or any committee thereof) fails to publicly reaffirm
the Company Board Recommendation, or fails to reaffirm its determination that
the Merger is in the best interests of the Company's stockholders, within ten
business days after Parent reasonably requests in writing that such
recommendation or determination be reaffirmed; (iv) the Board of Directors of
the Company (or any committee thereof) shall have approved, endorsed or
recommended any Acquisition Proposal; (v) the Company shall have entered into
any letter of intent or similar document or any Contract relating to any
Acquisition Proposal; (vi) the Company shall have failed to hold the Company
Special Meeting as promptly as practicable and in any event within 75 days after
the Form S-4 Registration Statement is declared effective under the Securities
Act; (vii) a tender or exchange offer relating to securities of the Company
shall have been commenced and the Company shall not have sent to its security
holders, within ten business days after the commencement of such tender or
exchange offer, a statement disclosing that the Company recommends rejection of
such tender or exchange offer; (viii) an Acquisition Proposal is publicly
announced, and the Company fails to issue a press release that reaffirms the
Company Board Recommendation within ten business days after such Acquisition
Proposal is announced or (ix) the Company or any of its Subsidiaries or any
Company Representative shall have violated the restrictions set forth in Section
5.10, other than in an immaterial respect.
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Section 7.2 Effect of Termination. In the event of termination of the
Agreement and the abandonment of the Merger pursuant to this Article 7, all
obligations of the parties shall terminate, this Agreement shall forthwith
become void and have no effect, without any liability or obligation on the part
of any party hereto, except the obligations of the parties pursuant to this
Section 7.2 and except for the provisions of Sections 5.16, 5.17, the last
sentence of Section 5.5 and Article 8, other than Section 8.11 and 8.12, and
except to the extent that such termination results from the willful and material
breach by a party of any of its representations, warranties, covenants or
agreements set forth in this Agreement.
ARTICLE 8
GENERAL PROVISIONS
Section 8.1 Notices. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given if delivered personally or sent by facsimile transmission or overnight
courier (providing proof of delivery) to the parties at the following addresses
(or at such address for a party as shall be specified by like notice):
(a) if to the Company, to:
SFX Entertainment, Inc.
650 Madison Avenue
New York, New York 10022
Attention: Howard J. Tytel
Facsimile No.: (212) 753-3188
with a copy to:
Winston & Strawn
200 Park Avenue
New Park, New York 10166
Attention: Jonathan Goldstein
Daniel A. Ninivaggi
Facsimile No.: (212) 294-4700
(b) if to Parent or Merger Sub, to:
Clear Channel Communications, Inc.
200 Concord Plaza
Suite 600
San Antonio, Texas 78216
Attention: Mark P. Mays
Facsimile No.: (210) 822-2299
with a copy to:
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
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300 Convent Street, Suite 1500
San Antonio, Texas 78205
Attention: Stephen C. Mount
John Strickland
Facsimile No.: (210) 224-2035
Section 8.2 Definitions. For purposes of this Agreement:
(a) "Acquisition Proposal" means any offer or proposal for (whether or
not in writing and whether or not delivered to the Company's stockholders
generally), from any Person relating to any (i) direct or indirect acquisition
or purchase of a business that constitutes 15% or more of the net revenues, net
income or the assets of the Company and its Subsidiaries taken as a whole, (ii)
direct or indirect acquisition or purchase of 15% or more of any class of equity
securities of the Company or any of its Subsidiaries whose business constitutes
15% or more of the net revenues, net income or assets of the Company and its
Subsidiaries, taken as a whole, (iii) tender offer or exchange offer that if
consummated would result in any Person beneficially owning 15% more of any class
of equity securities of the Company or any of its Subsidiaries whose business
constitutes 15% or more of the net revenues, net income or assets of the Company
and its Subsidiaries, taken as a whole, or (iv) merger, consolidation, business
combination, recapitalization, liquidation, dissolution or similar transaction
involving the Company or any of its Subsidiaries whose business constitutes 15%
or more of the net revenues, net income or assets of the Company and its
Subsidiaries, taken as a whole, other than the transactions contemplated by this
Agreement.
(b) "Affiliate" of any person means another person that directly or
indirectly, through one or more intermediaries controls, is controlled by, or is
under common control with, such first person.
(c) "Antitrust Laws" mean and include the Sherman Act, as amended, the
Clayton Act, as amended, the HSR Act, the Federal Trade Commission Act, as
amended, and all other federal, state or foreign statutes, rules, regulations,
orders, decrees, administrative and judicial doctrines and other laws that are
designed or intended to prohibit, restrict or regulate actions having the
purpose or effect of monopolization or restraint of trade.
(d) "Control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a person,
whether through the ownership of voting securities, by contract or otherwise.
(e) "Executive Officer" means, with respect to the Company, those
executive officers of the Company listed on Exhibit 8.2(e)(i) hereto and, with
respect to Parent, those executive officers of Parent listed on Exhibit
8.2(e)(ii) hereto.
(f) "Governmental Entity" means any government or any agency, bureau,
board, commission, court, department, official, political subdivision, tribunal
or other instrumentality of any government, whether federal, state or local,
domestic or foreign.
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<PAGE>
(g) "Knowledge", "Know" or "Known" means, with respect to the matter in
question, if any of the Executive Officers of the Company or Parent, as the case
may be, has actual knowledge of such matter.
(h) "Law" shall mean any foreign or domestic, whether federal, state,
county, municipal or local, law, statute, code, ordinance, rule, regulation,
order, judgment, writ, stipulation, award, injunction, decree or arbitration
award or finding.
(i) "Lien" means any encumbrance, hypothecation, infringement, lien,
mortgage, pledge, restriction, security interest, title retention or other
security arrangement, or any adverse right or interest, charge or claim of any
nature whatsoever of, on, or with respect to any asset, property or property
interest; provided, however, that the term "Lien" shall not include (i) liens
for water and sewer charges and current taxes not yet due and payable or being
contested in good faith, (ii) mechanics , carriers', workers', repairers',
materialmen's, warehousemen's and other similar liens arising or incurred in the
ordinary course of business (iii) all liens approved in writing by the other
party hereto, (iv) statutory rights of set-off and (v) restrictions on transfer
imposed by federal or state securities laws.
(j) "Material Adverse Effect" means, any adverse change in the
business, financial condition or results of operations of the Company or Parent,
as the case may be, or its respective Subsidiaries that is material to the
Company or Parent, as the case may be, and its respective Subsidiaries taken as
a whole except for (i) any change resulting form general economic, financial or
market conditions or (ii) any change resulting from conditions or circumstances
generally affecting the industries in which the Company or Parent, as the case
may be, or its respective Subsidiaries participate.
(k) "Parent Common Stock Market Value" shall mean the average of the
daily closing price per share of Parent Common Stock on the New York Stock
Exchange for each of the ten consecutive trading days for which such shares are
actually traded (as reported on the New York Stock Exchange Composite
Transaction Tape as reported in the Wall Street Journal, Eastern Edition) ending
on the close of trading on the tenth New York Stock Exchange trading day
immediately preceding the date on which the Company Special Meeting is first
convened.
(l) "Person" means any natural person, firm, individual, business
trust, trust, association, corporation, partnership, limited liability company,
joint venture, company, unincorporated entity or Governmental Entity.
(m) "Permitted Liens" shall mean: (i) Liens imposed by Law securing
payments not yet delinquent or the validity of which are being contested in good
faith by appropriate actions, (ii) Liens arising out of pledges or deposits
under workmen's compensation laws, unemployment insurance, old age pensions, or
other social security benefits other than any Lien imposed by ERISA; (iii) Liens
incurred or deposits made in the ordinary course of business to secure surety
bonds provided that such Liens shall extend only to cash collateral for such
surety bonds; (iv) purchase money Liens arising in the ordinary course, (v)
Liens for Taxes and special assessments (e.g., for municipal improvements) not
yet due and payable and/or delinquent, (vi) Liens reflected or reserved against
in the latest unaudited balance sheet of the
49
<PAGE>
Company included in the Company SEC Reports (which have not been discharged),
(vii) Liens which in the aggregate do not materially detract from the value or
materially impair the present and continued use of the properties or assets
subject thereto in the usual and normal conduct of the respective businesses of
the Company and its Subsidiaries, (viii) Liens on leases, subleases,
sub-subleases, easements, licenses, rights of use, rights to access and rights
of way arising from the provisions of such agreements or benefiting or created
by any superior estate, right or interest which is prior in right or prior in
lien to that of the subject lease, sublease, sub-sublease, easement, license,
right of use, right to access or right of way, (ix) any Liens set forth in the
title policies, endorsements, title commitments, title certificates and title
reports relating to the Company's interests in real property identified in the
Company Disclosure Letter, (x) any leases, subleases, occupancy agreements or
licenses set forth in the Company Disclosure Letter, (xi) the Lien of any and
all security agreements, documents, mortgages and deeds of trust held by, or for
the benefit of any lenders under any of the Company's credit agreements, and
their respective successors and assigns, (xii) any state of facts that an
accurate survey or personal inspection of the Company's or any of its
Subsidiaries' real property (whether owned, leased or licensed) would show,
provided same does not materially adversely affect the use thereof for their
present purposes, (xiii) encroachments of stoops, areas, cellar steps or doors,
trim, copings, retaining walls, bay windows, balconies, sidewalk elevators,
fences, fire escapes, cornices, foundations, footings and similar projections,
if any, on, over or under any of the Company's or any of its Subsidiaries' real
property (whether owned, leased or licensed) or the streets or sidewalks
abutting any of such real property, and the rights of governmental authorities
to require the removal of any such projections and variations between record
lines of such real property and retaining walls and the like, if any, (xiv) any
easements or rights of use, if any, created in favor of any public utility or
municipal department or agency for electricity, steam, gas, telephone, cable
television, water, sewer or other services in any street or avenue abutting the
Company's or any of its Subsidiaries' real property (whether owned, leased or
licensed), and the right, if any, to use and maintain wires, cables, terminal
boxes, lines, service connections, poles, mains and facilities servicing any of
such real property or in, on, over or across any of such real property, (xv)
covenants, easements, restrictions, agreements, consents and other instruments,
now of record, provided same do not materially adversely interfere with the use
of the Company's or any of its Subsidiaries' real property (whether owned,
leased or licensed) for their present purposes, (xvi) variations, if any,
between tax lot lines and property lines, (xvii) deviations, if any, of fences
or shrubs from property lines, (xviii) any other declaration or instrument
affecting any of the Company's or any of its Subsidiaries' real property
(whether owned, leased or licensed) necessary or appropriate to comply with any
Law, ordinance, regulation, zoning resolution or requirement of applicable
governmental authorities or any other public authority, applicable to the
maintenance, demolition, construction, alteration, repair or restoration of the
improvements at the Company's or any of its Subsidiaries' real property (whether
owned, leased or licensed), which does not materially adversely affect the use
of thereof for their present purposes, (xix) the provisions of the applicable
zoning resolution and other regulations, resolutions and ordinances and any
amendments thereto now or hereafter adopted, provided same do not materially
adversely interfere with the use of the Company's or any of its Subsidiaries'
real property for their present purposes, (xx) Liens described in the Company
SEC Reports, and (xxi) any other Liens set forth in the Company Disclosure
Letter.
(n) "Subsidiary" or "Subsidiaries" of any Person means another Person,
an
50
<PAGE>
amount of the voting securities, other voting ownership or voting partnership
interests of which is sufficient to elect at least a majority of its board of
directors or other governing body (or, if there are no such voting interests,
50% or more of the equity interests of which) is owned directly or indirectly by
such first Person.
(o) "Tax" or "Taxes" means any and all federal, state, local, foreign
or other taxes of any kind (together with any and all interest, penalties,
additions to tax and additional amounts imposed with respect thereto) imposed by
any taxing authority, including, without limitation, taxes or other charges on
or with respect to income, franchise, windfall or other profits, gross receipts,
property, sales, use, transfer, capital stock, payroll, employment, social
security, workers' compensation, unemployment compensation, or net worth, and
taxes or other charges in the nature of excise, withholding, ad valorem or value
added.
(p) "Tax Return" means any return, report or similar statement
(including the attached schedules) required to be filed with respect to any Tax,
including, without limitation, any information return, claim for refund, amended
return or declaration of estimated Tax.
Section 8.3 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
Section 8.4 Entire Agreement; No Third-Party Beneficiaries. This Agreement
constitutes the entire agreement, and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter of this Agreement (provided, however, that the provisions of the
Confidentiality Agreement shall remain valid and in effect) and, except for the
provisions of Article 2 and Sections 5.7 and 5.11, is not intended to confer
upon any Person other than the parties any rights or remedies hereunder.
Section 8.5 Assignment. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned, in whole or in
part, by operation of law or otherwise by any of the parties hereto without the
prior written consent of the other parties, except that Merger Sub may assign,
in its sole discretion, any or all of its rights, interests and obligations
under this Agreement to Parent or to any direct or indirect wholly owned
subsidiary of Parent, but no such assignment shall relieve Merger Sub of any of
its obligations under this Agreement. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of, and be enforceable by,
the parties hereto and their respective legal representatives, successors and
assigns.
Section 8.6 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, without regard
to any applicable conflicts of law.
Section 8.7 Enforcement. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled
51
<PAGE>
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions of this Agreement in any court of
the United States located in the State of Delaware or in any Delaware state
court, this being in addition to any other remedy to which they are entitled at
law or in equity. In addition, each of the parties hereto (a) consents to submit
itself to the personal jurisdiction of any federal court located in the State of
Delaware state court in the event any dispute arises out of this Agreement or
any of the transactions contemplated by this Agreement, (b) agrees that it will
not attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court and (c) agrees that it will not bring any
action relating to this Agreement or any of the transactions contemplated by
this Agreement in any court other than a federal or state court sitting in the
State of Delaware.
Section 8.8 Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement in any other jurisdiction. If any provision of this Agreement is so
broad as to be unenforceable, such provision shall be interpreted to be only so
broad as is enforceable.
Section 8.9 Interpretation. Headings of the Articles and Sections of this
Agreement are for convenience of the parties only, and shall be given no
substantive or interpretive effect whatsoever. The disclosure of any matter in
any section of the Company Disclosure Letter or Parent Disclosure Letter shall
not be deemed to constitute an admission by any party or to otherwise imply that
any such matter is material or may have a Material Adverse Effect for purposes
of this Agreement.
Section 8.10 Finders or Brokers. Except for Bear Stearns & Co. and Lehman
Brothers with respect to the Company, and Salomon Smith Barney Inc. with respect
to Parent, a copy of whose engagement agreements have been provided by the
Company and Parent to the other, neither the Company nor Parent nor any of their
respective Subsidiaries has employed any investment banker, broker, finder or
intermediary in connection with the transactions contemplated hereby who might
be entitled to any fee or any commission in connection with or upon consummation
of the Merger.
Section 8.11 Survival of Representations and Warranties. The representations
and warranties of the parties contained in this Agreement shall not survive the
Effective Time.
Section 8.12 Survival of Covenants and Agreements. The covenants and
agreements of the parties to be performed after the Effective Time contained in
this Agreement shall survive the Effective Time.
Section 8.13 Attorneys' Fees. If any action in law or equity, including an
action for declaratory relief, is brought to enforce or interpret any provision
of this Agreement, the prevailing party shall be entitled to recover reasonable
attorneys' fees and expenses from the other party, which fees and expenses shall
be in addition to any other relief which may be awarded.
Section 8.14 Amendment. This Agreement may be amended by the parties at any
time
52
<PAGE>
before or after approval hereof by the stockholders of the Company and Parent;
provided, however, that after such stockholder approval there shall not be made
any amendment that by law requires further approval by the stockholders of the
Company or Parent without the further approval of such stockholders. This
Agreement may not be amended except by an instrument in writing signed on behalf
of each of the parties.
Section 8.15 Extension; Waiver. At any time prior to the Effective Time, the
parties may (a) extend the time for the performance of any of the obligations or
other acts of the other parties, (b) waive any inaccuracies in the
representations and warranties contained in this Agreement or in any document
delivered pursuant to this Agreement or (c) subject to the proviso of Section
8.14, waive compliance with any of the agreements or conditions contained in
this Agreement. Any agreement on the part of a party to any such extension or
waiver shall be valid only if set forth in an instrument in writing, signed on
behalf of such party. The failure of any party to this Agreement to assert any
of its rights under this Agreement or otherwise shall not constitute a waiver of
those rights.
Section 8.16 Procedure for Termination, Amendment, Extension or Waiver. A
termination of this Agreement or other action attributed to the Board of
Directors pursuant to Section 7.1, an amendment of this Agreement pursuant to
Section 8.14 or an extension or waiver pursuant to Section 8.15 shall, in order
to be effective, require in the case of Parent, Merger Sub or the Company,
action by its Board of Directors (or a committee thereof), acting by the
affirmative vote of a majority of the members of the entire Board of Directors
or such committee.
[SIGNATURE PAGE FOLLOWS]
53
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AGREEMENT AND PLAN OF MERGER SIGNATURE PAGE
-------------------------------------------
IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the date first written above.
CLEAR CHANNEL COMMUNICATIONS, INC.
By: /s/ Randall T. Mays
-----------------------------------
Name: Randall T. Mays
---------------------------------
Title: Executive Vice President and
Chief Financial Officer
--------------------------------
CCU II MERGER SUB, INC.
By: /s/ Randall T. Mays
-----------------------------------
Name: Randall T. Mays
---------------------------------
Title: Executive Vice President
--------------------------------
SFX ENTERTAINMENT, INC.
By:/s/ Robert F.X. Sillerman
-----------------------------------
Robert. F.X. Sillerman
Executive Chairman
<PAGE>
EXHIBIT 5.6
AFFILIATE AGREEMENT
Clear Channel Communications, Inc.
200 Concord Plaza, Suite 600
San Antonio, TX 78216
Ladies and Gentlemen:
Reference is made to the Agreement and Plan of Merger (the "MERGER
AGREEMENT") dated as of February 28, 2000, among Clear Channel Communications,
Inc., a Texas corporation ("PARENT"), CCU II Merger Sub, Inc., a Delaware
corporation and a wholly owned subsidiary of Parent ("MERGER SUB"), and SFX
Entertainment, Inc., a Delaware corporation (the "COMPANY"), pursuant to which
Merger Sub will be merged with and into the Company.
The undersigned understands that it may be deemed to be an "AFFILIATE" of
the Company for purposes of Rule 145 promulgated under the Securities Act of
1933, as amended (the "ACT"). The undersigned is delivering this letter of
undertaking and commitment pursuant to Section 5.6 of the Merger Agreement.
With respect to such securities of Parent as may be received by the
undersigned pursuant to the Merger Agreement (the "SHARES"), the undersigned
represents to and agrees with Parent that:
A. The undersigned will not make any offer to sell or any sale or
other disposition of all or any part of the Shares in violation of the Act
or the rules and regulations thereunder, including Rule 145, and will hold
all the Shares subject to all applicable provisions of the Act and the
rules and regulations thereunder.
B. The undersigned has been advised that the offering, sale and
delivery of the Shares to the undersigned pursuant to the Merger Agreement
will be registered under the Act on a Registration Statement on Form S-4.
The undersigned has also been advised, however, that, since the undersigned
may be deemed an "AFFILIATE" of the Company, any public reoffering or
resale by the undersigned of any of the Shares will, under current law,
require either (i) the further registration under the Act of the Shares to
be sold, (ii) compliance with Rule 145 promulgated under the Act
(permitting limited sales under certain circumstances) or (iii) the
availability of another exemption from registration under the Act.
C. The undersigned also understands that, if Parent should deem it
necessary to comply with the requirements of the Act, stop transfer
instructions will be given to its transfer agents with respect to the
Shares and that there will be placed on the certificates for the Shares, or
any substitutions therefor, a legend stating in substance:
<PAGE>
Clear Channel Communications, Inc.
Page 2
"The securities represented by this certificate were issued in a
transaction under Rule 145 promulgated under the Securities Act of 1933, as
amended (the "ACT"), and may be sold, transferred or otherwise disposed of
only upon receipt by the Corporation of an opinion of counsel acceptable to
it that the securities are being sold in compliance with the limitations of
Rule 145 or that some other exemption from registration under the Act is
available, or pursuant to a registration statement under the Act."
Execution of this letter shall not be considered an admission on the part
of the undersigned that the undersigned is an "AFFILIATE" of the Company
for purposes of Rule 145 under the Act or as waiver of any rights the
undersigned may have to any claim that the undersigned is not such an
affiliate on or after the date of this letter.
Very truly yours,
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
<PAGE>
EXHIBIT 6.1(a)-1
CLEAR CHANNEL COMMUNICATIONS, INC. CERTIFICATE
In connection with the merger (the "Merger") of __________ Merger Sub, Inc.
("Merger Sub"), a direct wholly-owned subsidiary of Clear Channel
Communications, Inc. ("Parent") with and into SFX Entertainment, Inc.
("Company") pursuant to the Agreement and Plan of Merger dated as of
_________________________, 2000 by and among Parent, Merger Sub and Company (the
"Merger Agreement"), Parent hereby certifies, on behalf of Parent and Merger
Sub, the following:
1. The aggregate fair market value of the common stock of Parent ("Parent
Common Stock") and cash in lieu of fractional shares of Parent Common Stock,
if any, received by the stockholders of Company in the Merger will be
approximately equal to the aggregate fair market value of the common stock
of Company ("Company Common Stock") surrendered in the exchange.
2. The payment of cash in lieu of fractional shares of Parent Common Stock in
the Merger is solely for the purpose of avoiding the expense and
inconvenience to Parent of issuing fractional shares of Parent Common Stock
and does not represent separately bargained for consideration.
3. In connection with the Merger, less than 5% of the Company Common Stock will
be acquired for consideration other than Parent Common Stock, except for
cash received in lieu of fractional shares of Parent Common Stock, by (i)
Parent, (ii) a member of an Affiliated Group (as defined below) in which
Parent is a member, or (iii) a corporation in which Parent (or any
predecessor or successor corporation) owns, or which owns with respect to
Parent (or any predecessor or successor corporation), directly or
indirectly, immediately before or immediately after such acquisition, at
least 50% of the total combined voting power of all classes of stock
entitled to vote or at least 50% of the total value of shares of all classes
of stock, taking into account for purposes of this clause (iii), any stock
owned directly or indirectly by 5% or greater stockholders of Parent (or any
predecessor or successor corporation) or such corporation, stock owned
directly or indirectly by entities in which Parent (or any predecessor or
successor corporation) or such corporation owns a 5% or greater interest,
and any stock which may be acquired pursuant to exercise of options (a "50%
Subsidiary"). For purposes of this certificate, "Affiliated Group" shall
mean one or more chains of corporations connected through stock ownership
with a common parent corporation, but only if the common parent owns
directly at least 80% of the total voting power of the stock and at least
80% of the total value of the stock in at least one of the other
corporations and at least 80% of the total voting power of the stock and at
least 80% of the total value of the stock in each corporation (except the
common parent) is owned directly by one or more of the other corporations.
For purposes of the preceding sentence, "stock" does not include any stock
which (a) is not entitled to vote, (b) is limited and preferred as to
dividends and does not participate in corporate growth to any significant
extent, (c) has redemption and liquidation rights which do not exceed the
issue price of such stock (except for a
<PAGE>
reasonable redemption or liquidation premium), and (d) is not convertible
into another class of stock.
4. In the Merger, shares of Company Common Stock representing Control (as
defined below) of Company will be exchanged solely for voting Parent Common
Stock. For purposes of this representation, any shares of Company Common
Stock exchanged for cash or other property originating with Parent, or any
person related to Parent (as described in clauses (ii) and (iii) of
paragraph 3 of this certificate), will be treated as outstanding Company
Common Stock on the date of the Merger. For purposes of this certificate,
"Control" shall mean ownership of at least 80% of the total combined voting
power of all classes of stock entitled to vote and at least 80% of the total
number of shares of each other class of stock of the controlled corporation.
5. Following the Merger, Parent will cause Company to hold at least 90% of the
fair market value of its net assets and at least 70% of the fair market
value of its gross assets held immediately prior to the Merger and at least
90% of the fair market value of the net assets and at least 70% of the fair
market value of the gross assets of Merger Sub held immediately before the
Merger. For purposes of this representation, assets transferred from Parent
to Merger Sub are not included as assets of Merger Sub immediately before
the Merger where such assets are used to pay dissenters, to pay
reorganization expenses, to pay creditors of Company or to enable Merger Sub
to satisfy state minimum capitalization requirements (where the money is
returned to Parent as part of the transaction).
6. Following the Merger, the historic business of Company will be continued by,
or a significant portion of Company's historic business assets will be used
in a business of Parent or a corporation within Parent's Qualified Group (as
defined below). Parent has no plan or intention to (a) liquidate Company;
(b) merge Company with or into another corporation; (c) sell, distribute or
otherwise dispose of the Company Common Stock acquired in the Merger or (d)
cause or permit Company to sell or otherwise dispose of any of its assets or
any of the assets acquired from Merger Sub, except, in the case of (d), for
dispositions of assets made in the ordinary course of business or, in the
case of (c) and (d), transfers or successive transfers to one or more
corporations of which the transferor owns at least 80% of the total combined
voting power of all classes of stock entitled to vote and at least 80% of
the total number of shares of each other class of stock of such corporation
or sales, transfers or other dispositions of assets that, in the aggregate,
would not result in Parent or members of its Qualified Group (as defined
below) failing to continue the historic business of Company or to use a
significant portion of Company's historic business assets in a business. For
purposes of this certificate, "Qualified Group" means one or more chains of
corporations connected to Parent through stock ownership, but only if (i)
Parent owns directly stock possessing at least 80% of the total combined
voting power of all classes of stock entitled to vote and at least 80% of
the total number of shares of each other class of stock in at least one
other corporation in such chain, and (ii) one of the other corporations owns
directly stock possessing at least 80% of the total combined voting power of
all classes of stock entitled
<PAGE>
to vote and at least 80% of the total number of shares of each other class
of stock in each of the corporations, other than Parent, in the chain.
7. Parent has no plan or intention to cause Company to issue additional shares
of Company Common Stock that would result in Parent losing Control of
Company.
8. Parent has no plan or intention to reacquire, or cause (i) a member of its
Affiliated Group or (ii) a 50% Subsidiary to acquire, any of the Parent
Common Stock issued to the holders of Company Common Stock pursuant to the
Merger.
9. Parent, Company and the stockholders of Company will pay their respective
expenses, if any, incurred in connection with the Merger except as otherwise
provided in Section 5.17 of the Merger Agreement.
10. Neither Parent nor Merger Sub is a regulated investment company, a real
estate investment trust, or a corporation 50% or more of the value of whose
assets are stock and securities and 80% or more of the value of whose total
assets are assets held for investment (each, an "Investment Company"). For
purposes of this representation, in making the 50% and 80% determinations
under the preceding sentence, stock and securities in any subsidiary
corporation shall be disregarded and a parent shall be deemed to own its
ratable share of the subsidiary's assets, and a corporation shall be
considered a subsidiary if the parent owns 50% or more of the combined
voting power of all classes of stock entitled to vote, or 50% or more of the
total value of shares of all classes of stock outstanding. In determining
total assets there shall be excluded cash and cash items (including
receivables), government securities, and assets acquired (through incurring
indebtedness or otherwise) for purposes of ceasing to be an Investment
Company.
11. Prior to the Merger, Parent will be in Control of Merger Sub.
12. None of the Parent Common Stock to be received in the Merger by any
stockholder of Company which is (or was) a service provider to Company will
be separate consideration for, or allocable to, past or future services.
None of the compensation to be received by any stockholder of Company who is
(or was) a service provider to Company is separate consideration for, or
allocable to, such stockholder's shares of Company Common Stock to be
surrendered in the Merger, and the compensation to be paid to any such
person will be for services actually rendered and will be commensurate with
amounts paid to third parties bargaining at arm's length for similar
services.
13. Merger Sub will have no liabilities assumed by Company and will not transfer
to Company any assets subject to liabilities in the Merger. Merger Sub is a
corporation newly formed for the purpose of participating in the Merger and
at no time prior to the Merger has had assets (other than nominal assets
contributed upon the formation of Merger Sub, which assets will be held by
the Company following the Merger) or business operations.
<PAGE>
14. There is no intercorporate indebtedness existing between Parent and Company
or between Merger Sub and Company that was issued, acquired or will be
settled at a discount.
15. Neither Parent nor Merger Sub (nor any other subsidiary of Parent) has been
a party to a distribution of stock qualifying for tax-free treatment (i) in
the two years prior to the date of the Merger or (ii) in a distribution
which is part of a plan (or series of related transactions) in conjunction
with the Merger.
16. Except for a recent purchase of less than 5% of the Company Common Stock by
Parent, neither Parent, a member of its Affiliated Group nor a 50%
Subsidiary has owned during the past five years any shares of stock of
Company.
17. The Merger Agreement represents the full and complete agreement between
Parent, Merger Sub and Company regarding the Merger, and there are no other
written or oral agreements regarding the Merger other than those expressly
referred to in the Merger Agreement.
18. No stock of Merger Sub will be issued in the Merger.
19. There will be no dissenters to the Merger.
Parent understands that Paul, Hastings, Janofsky & Walker LLP, as tax
counsel for Company, and Akin, Gump, Strauss, Hauer & Feld, L.L.P., as counsel
for Parent, will rely on this certificate in rendering their opinion concerning
certain of the federal income tax consequences of the Merger and hereby commit
to inform them if, for any reason, any of the foregoing representations ceases
to be true prior to the date of the Merger.
IN WITNESS WHEREOF, Parent has executed this Certificate on
____________________, 2000.
CLEAR CHANNEL COMMUNICATIONS, INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
<PAGE>
EXHIBIT 6.1(a)-2
SFX ENTERTAINMENT, INC. CERTIFICATE
In connection with the merger (the "Merger") of CCU II Merger Sub, Inc.
("Merger Sub"), a direct wholly-owned subsidiary of Clear Channel
Communications, Inc. ("Parent") with and into SFX Entertainment, Inc.
("Company") pursuant to the Agreement and Plan of Merger dated as of February
___, 2000 by and among Parent, Merger Sub and Company (the "Merger Agreement"),
Company hereby certifies the following:
1. The aggregate fair market value of the common stock of Parent ("Parent Common
Stock") and cash in lieu of fractional shares of Parent Common Stock, if any,
received by the stockholders of Company in the Merger will be approximately
equal to the aggregate fair market value of the common stock of Company
("Company Common Stock") surrendered in the exchange.
2. The payment of cash in lieu of fractional shares of Parent Common Stock in
the Merger is solely for the purpose of avoiding the expense and inconvenience
to Parent of issuing fractional shares of Parent Common Stock and does not
represent separately bargained for consideration.
3. Prior to and in connection with the Merger, no outstanding stock of Company
has been (i) redeemed by Company, (ii) acquired by a corporation (including by
reason of an acquisition by a partnership in which the corporation is a partner)
in which Company (or any predecessor or successor corporation) owns, or which
owns with respect to Company (or any predecessor or successor corporation),
directly or indirectly, immediately before or immediately after such
acquisition, at least 50% of the total combined voting power of all classes of
stock entitled to vote or at least 50% of the total value of shares of stock,
taking into account for purposes of this clause (ii), any stock owned directly
or indirectly by 5% or greater stockholders of Company (or any predecessor or
successor corporation) or such corporation, stock owned directly or indirectly
by entities in which Company (or any predecessor or successor corporation) or
such corporation owns a 5% or greater interest, and any stock which may be
acquired pursuant to the exercise of options (a "50% Subsidiary"), for
consideration other than Company Common Stock or (iii) the subject of any
extraordinary distribution by Company.
4. To the best knowledge of Company, there is no plan or intention on the part
of any particular stockholder of Company to sell, exchange or otherwise dispose
of Parent Common Stock to be received in the Merger directly or indirectly, to
any of (i) Parent (or any predecessor or successor corporation), (ii) a
corporation that, immediately before or immediately after such sale, exchange,
or other disposition, is a member of an Affiliated Group (as defined below) of
which Parent (or any predecessor or successor corporation) is a member, or (iii)
a 50% Subsidiary of Parent. For purposes of this certificate, "Affiliated Group"
shall mean one or more chains of corporations connected through stock ownership
with a common parent corporation, but only if the common parent owns directly at
least 80% of the total voting power of the stock and at least 80% of the total
value of the stock in at least one of the other corporations and at least 80% of
the total voting power of the stock and at least 80% of the total value of the
stock in
<PAGE>
each corporation (except the common parent) is owned directly by one or more of
the other corporations. For purposes of the preceding sentence, "stock" does not
include any stock which (a) is not entitled to vote, (b) is limited and
preferred as to dividends and does not participate in corporate growth to any
significant extent, (c) has redemption and liquidation rights which do not
exceed the issue price of such stock (except for a reasonable redemption or
liquidation premium), and (d) is not convertible into another class of stock.
5. On the date of the Merger, Company will not have outstanding any warrants,
options, convertible securities, or any other type of right pursuant to which
any person could acquire stock in Company except as provided in the Merger
Agreement.
6. Company has no plan or intention, prior to the date of the Merger, to issue
additional shares of its stock that would result in Parent failing to gain
Control of Company pursuant to the Merger Agreement.
7. Parent, Company and the stockholders of Company will pay their respective
expenses, if any, incurred in connection with the Merger except as otherwise
provided in Section 5.17 of the Merger Agreement.
8. Company is not a regulated investment company, a real estate investment
trust, or a corporation 50% or more of the value of whose assets are stock and
securities and 80% or more of the value of whose total assets are assets held
for investment (each, an "Investment Company"). For purposes of this
representation, in making the 50% and 80% determinations under the preceding
sentence, (i) stock and securities in any subsidiary corporation shall be
disregarded and the parent corporation shall be deemed to own its ratable share
of the subsidiary's assets, and (ii) a corporation shall be considered a
subsidiary if the parent owns 50% or more of the combined voting power of all
classes of stock entitled to vote or 50% or more of the total value of shares of
all classes of stock outstanding. In determining total assets there shall be
excluded cash and cash items (including receivables), government securities, and
assets acquired (through incurring indebtedness or otherwise) for purposes of
ceasing to be an Investment Company.
9. Company is not under the jurisdiction of a court in a case under Title 11 of
the United States Code, or a receivership, foreclosure, or similar proceeding in
a federal or state court.
10. There is no intercorporate indebtedness existing between Parent and Company
or between Merger Sub and Company that was issued, acquired or will be settled
at a discount.
11. In the Merger, shares of Company Common Stock representing Control of
Company will be exchanged solely for voting Parent Common Stock. For purposes of
this representation, any shares of Company Common Stock exchanged for cash or
other property originating with Parent or a direct or indirect subsidiary of
Parent will be treated as outstanding Company Common Stock on the date of the
Merger.
12. In contemplation of or as part of the Merger, Company has not sold,
transferred or otherwise disposed of any of its assets to the extent that would
prevent Parent or members of its
<PAGE>
Qualified Group (as defined below) from causing Company after the Merger to
continue the historic business of Company or to use a significant portion of
Company's historic business assets in a business. For purposes of this
certificate, "Qualified Group" means one or more chains of corporations
connected with Parent through stock ownership, but only if (i) Parent owns
directly stock possessing at least 80% of the total combined voting power of all
classes of stock entitled to vote and at least 80% of the total number of shares
of each other class of stock in at least one other corporation in such chain,
and (ii) one of the other corporations owns directly stock possessing at least
80% of the total combined voting power of all classes of stock entitled to vote
and at least 80% of the total number of shares of each other class of stock in
each of the corporations, other than Parent, in the chain.
13. Following the Merger, Company will hold at least 90% of the fair market
value of its net assets and at least 70% of the fair market value of its gross
assets held immediately prior to the Merger and at least 90% of the fair market
value of the net assets and at least 70% of the fair market value of the gross
assets of Merger Sub held immediately before the Merger. For purposes of this
representation, assets transferred from Parent to Merger Sub are not included as
assets of Merger Sub immediately before the Merger where such assets are used to
pay dissenters, to pay reorganization expenses, to pay creditors of Company or
to enable Merger Sub to satisfy state minimum capitalization requirements (where
the money is returned to Parent as part of the transaction).
14. None of the Parent Common Stock to be received in the Merger by any
stockholder of Company which is (or was) a service provider to Company will be
separate consideration for, or allocable to, past or future services. None of
the compensation to be received by any stockholder of Company who is (or was) a
service provider to Company is separate consideration for, or allocable to, such
stockholder's shares of Company Common Stock to be surrendered in the Merger,
and the compensation to be paid to any such person will be for services actually
rendered and will be commensurate with amounts paid to third parties bargaining
at arm's length for similar services.
15. On the date of the Merger, the fair market value of the assets of Company
will exceed the sum of its liabilities, plus the amount of liabilities, if any,
to which the assets are subject.
16. Neither Company nor any of its subsidiaries has been a party to a
distribution of stock qualifying for tax-free treatment (i) in the two years
prior to the date of the Merger or (ii) in a distribution which is part of a
plan (or series of related transactions) in conjunction with the Merger.
17. The Merger Agreement represents the full and complete agreement between
Parent, Merger Sub and Company regarding the Merger, and there are no other
written or oral agreements regarding the Merger other than those expressly
referred to in the Merger Agreement.
Company understands that Akin, Gump, Strauss, Hauer & Feld, L.L.P., as counsel
for Parent, and Paul, Hastings, Janofsky & Walker LLP, as tax counsel for
Company, will rely on this certificate in rendering their opinion concerning
certain of the federal income tax consequences of the Merger and hereby commit
to inform them if, for any reason, any of the foregoing representations ceases
to be true prior to the date of the Merger.
<PAGE>
IN WITNESS WHEREOF, Company has executed this Certificate on
_________________________, 2000.
SFX ENTERTAINMENT, INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
<PAGE>
EXHIBIT 8.2(e)(i)
For purposes of section 8.2 of the Agreement an Executive Officer means with
respect to the Company, those individuals listed below:
Robert F.X. Sillerman
Howard J. Tytel
Thomas P. Benson
Michael G. Ferrel
<PAGE>
EXHIBIT 8.2(e)(ii)
For purposes of section 8.2 of the Agreement an Executive Officer means
with respect to the Parent those individuals listed below:
L. Lowry Mays
Mark P. Mays
Randall T. Mays
Kenneth E. Wyker
Julie A. Hill
<PAGE>
Exhibit 99.1
CLEAR CHANNEL COMMUNICATIONS, INC. AND SFX ENTERTAINMENT, INC.
ANNOUNCE MERGER
- --------------------------------------------------------------------------------
(SAN ANTONIO AND NEW YORK) -- FEBRUARY 29, 2000... LOWRY MAYS, Chairman and CEO
OF CLEAR CHANNEL COMMUNICATIONS, INC. (NYSE: CCU) and ROBERT F.X. SILLERMAN,
Executive Chairman of SFX ENTERTAINMENT, INC. (NYSE: SFX) announced today that
the companies have entered into a definitive merger agreement. SFX is the
world's largest diversified promoter, producer and venue operator for live
entertainment events. As of the market close on February 28, 2000, the
transaction values SFX Entertainment at approximately $4.4 billion. This
includes the assumption of approximately $1.1 billion of SFX's debt net of cash.
SFX provides integrated promotion, production, venue operation and event
management services for a broad variety of live entertainment events. SFX
currently owns or operates 120 live entertainment venues in 31 of the top 50
U.S. markets, including 16 amphitheaters in the top 10 markets. In addition, SFX
is a leading fully-integrated sports marketing and management company,
representing more than 650 professional athletes and is the largest producer and
promoter of specialized motor sports shows in the U.S.
Including pending acquisitions, Clear Channel will own and operate radio
stations and/or outdoor advertising properties in virtually every U.S. market
where SFX owns and/or operates live entertainment venues.
Lowry Mays said: "This transaction allows Clear Channel, through SFX, to gain
immediate leadership in the highly attractive live entertainment segment, while
taking advantage of the natural relationship between radio and live music
events. It leverages the marketing and promotional strength of Clear Channel's
broadcasting and outdoor advertising platforms and adds a new component to the
marketing solutions, which Clear Channel can provide to its customers to help
them sell their products. Additionally, it creates an exceptional platform for
Clear Channel to pursue initiatives relating to the Internet and music."
Robert F.X. Sillerman said: "Having known the Mays family for almost 20 years
and having watched the spectacular growth of the company and performance of
their stock, it was a surprisingly easy decision to accept their offer. In the
ever-expanding world of media and entertainment, the combination of distribution
and content is becoming increasingly important. While what we have created as
the world's leader in live entertainment and sports marketing is gratifying,
there is no question that the combination with Clear Channel will accelerate our
growth and further strengthen our already excellent prospects. This is a classic
win-win situation for our shareholders and for Clear Channel's shareholders."
Under the terms of the agreement, SFX Class A shareholders will receive 0.6
shares of Clear Channel Communications, Inc. common stock for each SFX share,
and SFX Class B shareholders will receive one share of Clear Channel
Communications, Inc. common stock for each SFX share, on a fixed exchange basis.
The transaction is expected to be consummated early in the third quarter of
2000, subject to the vote of SFX's stockholders, and customary regulatory
approvals and closing conditions.
<PAGE>
Salomon Smith Barney acted as financial advisor to Clear Channel in the
transaction. Bear Stearns acted as financial advisor to SFX Entertainment.
Lehman Brothers acted as financial advisor to SFX's Committee of Independent
Directors.
Clear Channel Communications, Inc. is a global leader in the out-of-home
advertising industry with radio and television stations and outdoor displays in
32 countries around the world. Including announced transactions, Clear Channel
operates 867 radio and 19 television stations in the United States reaching over
120 million people weekly. Through its wholly owned subsidiary Premiere Radio
Networks, Clear Channel reaches 40 million people weekly on 7,800 affiliates.
Additionally, Clear Channel has equity interests in over 240 radio stations
internationally. Clear Channel also operates more than 550,000 outdoor
advertising displays.
SFX Entertainment is the world's largest diversified promoter, producer and
presenter of live entertainment events. SFX currently owns and/or operates 120
live entertainment venues in 31 of the top 50 US markets, including 16
amphitheaters in the top 10 markets. In 1999, more than 60 million people
attended approximately 26,000 events promoted and/or produced by SFX, including
more than 7,000 music concerts, 13,300 theatrical shows, 1,400 family
entertainment shows and 520 specialized sports shows.
SFX produces and promotes live music events, as well as develops and manages
touring Broadway shows in 55 markets. SFX is also a leading fully integrated
sports marketing and management company specializing in the representation of
athletes and broadcasters, integrated event management, television
programming/production and marketing consulting services in sports, news and
other entertainment industries. Additionally, SFX Sports produces and promotes
specialized motor sports events.
Certain statements in this release, including the operation and prospects of the
combined company, constitute "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995. Such forward-looking
statements involve known and unknown risks, uncertainties and other factors
which may cause the actual results performance or achievements of Clear Channel
or SFX to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements.
MEDIA CONTACTS:
SFX Entertainment Clear Channel Communications
Dan Klores Associates - Public Contact: Terri Hunter or Lanita Edwards
Relations (210) 822-2828
Contact: Sean F. Cassidy
(212) 981-5233
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