<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report: February 13, 1996
Citicasters Inc.
----------------
(Exact name of registrant as
specified in charter)
Florida 1-8283 59-2054850
--------------- ------------ -------------------
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
One East Fourth Street
Cincinnati, Ohio 45202
Phone: (513) 562-8000
---------------------
(Address of principal executive
offices and telephone number,
including area code)
Page 1 of 4
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Item 5. Other Events.
On February 12, 1996, Citicasters Inc., a Florida corporation (the
"Company"), entered into an Agreement and Plan of Merger (the "Merger
Agreement") with Jacor Communications, Inc., an Ohio corporation ("Jacor"), and
JCAC, Inc., a Florida corporation and a wholly owned subsidiary of Jacor
("JCAC"), pursuant to which JCAC will merge with and into the Company, with the
Company as the surviving corporation (the "Merger"). Accordingly, after
consummation of the Merger, the Company will be a wholly owned subsidiary of
Jacor. A copy of the Merger Agreement, certain of the exhibits thereto and the
press release issued by the Company announcing the execution of the Merger
Agreement are attached as exhibits hereto.
Item 7. Exhibits.
2.1 Agreement and Plan of Merger, dated as of February 12, 1996,
among Citicasters Inc., Jacor Communications, Inc. and JCAC,
Inc.
2.2 Stockholders Agreement, dated as of February 12, 1996, among
Jacor Communications, Inc., JCAC, Inc., Great American
Insurance Company, American Financial Corporation, American
Financial Enterprises, Inc., Carl H. Lindner, The Carl H.
Lindner Foundation and S. Craig Lindner.
2.3 Jacor Shareholders Agreement, dated as of February 12, 1996,
among Citicasters Inc. and Zell/Chilmark Fund L.P.
2.4 Form of Escrow Agreement dated as of February __, 1996,
among Jacor Communications, Inc., Citicasters Inc. and
______________, as Escrow Agent.
2.5 Form of Employment Continuation Agreement (Executive Officer
Form), dated as of ___________, 1996, between Citicasters
Inc. and ________________________.
2.6 Form of Employment Continuation Agreement (Management Form),
dated as of ____________, 1996, between Citicasters Inc. and
_____________________.
2.7 Warrant Agreement, dated as of ______________, 1996, between
Jacor Communications, Inc. and KeyCorp Shareholder Services,
Inc. as Warrant Agent.
99.1 Press Release dated February 12, 1996.
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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 thereunto duly authorized.
CITICASTERS INC.
February 13, 1996 By: /s/ Samuel J. Simon
_______________________________________
Samuel J. Simon
Senior Vice President, General Counsel
and Secretary
Page 3 of 4
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EXHIBIT INDEX
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Document Page
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2.1 Agreement and Plan of Merger dated
as of February 12, 1996, among
Citicasters Inc., Jacor Communications,
Inc. and JCAC, Inc.
2.2 Stockholders Agreement, dated as of
February 12, 1996, among Jacor
Communications, Inc., JCAC, Inc.,
Great American Insurance Company,
American Financial Corporation,
American Financial Enterprises, Inc.,
Carl H. Lindner, The Carl H. Lindner
Foundation and S. Craig Lindner.
2.3 Jacor Shareholders Agreement, dated
as of February 12, 1996, among
Citicasters Inc. and Zell/Chilmark
Fund L.P.
2.4 Form of Escrow Agreement dated as
of February ___, 1996, among Jacor
Communications, Inc., Citicasters Inc.
and Escrow Agent.
2.5 Form of Employment Continuation Agreement
(Executive Officer Form), dated as of
___________, 1996, between Citicasters
Inc. and _______________________.
2.6 Form of Employment Continuation Agreement
(Management Form), dated as of ___________,
1996, between Citicasters Inc. and
______________________.
2.7 Warrant Agreement, dated as of ______________,
1996, between Jacor Communications, Inc.
and KeyCorp Shareholder Services, Inc.,
a Warrant Agent.
99.1 Press Release dated February 12, 1996.
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_________________________________________________________________
AGREEMENT AND PLAN OF MERGER
by and among
JACOR COMMUNICATIONS, INC.,
JCAC, INC.
and
CITICASTERS INC.
Dated as of February 12, 1996
_________________________________________________________________
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Table of Contents
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Page
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ARTICLE 1 THE MERGER; EFFECTIVE TIME; CLOSING . . . . . . . . . . 1
1.1 The Merger. . . . . . . . . . . . . . . . . . 1
1.2 The Closing. . . . . . . . . . . . . . . . . . 2
1.3 Effective Time. . . . . . . . . . . . . . . . 2
ARTICLE 2 ARTICLES OF INCORPORATION, BY-LAWS, DIRECTORS
AND OFFICERS OF THE SURVIVING CORPORATION . . . . . . . 2
2.1 Articles of Incorporation. . . . . . . . . . . 2
2.2 By-Laws. . . . . . . . . . . . . . . . . . . . 2
2.3 Directors. . . . . . . . . . . . . . . . . . . 2
ARTICLE 3 CONVERSION OF SHARES . . . . . . . . . . . . . . . . . . 3
3.1 Conversion of Shares; Options. . . . . . . . . 3
3.2 Exchange Procedures. . . . . . . . . . . . . . 5
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE COMPANY . . . . . 6
4.1 Organization and Standing. . . . . . . . . . . 6
4.2 Authorization, Validity and Effect. . . . . . 7
4.3 Capitalization. . . . . . . . . . . . . . . . 7
4.4 Company Subsidiaries. . . . . . . . . . . . . 8
4.5 No Conflict; Required Filings and Consents. . 9
4.6 Company Reports; Financial Statements. . . . . 10
4.7 Tax and Accounting Matters. . . . . . . . . . 11
4.8 Properties. . . . . . . . . . . . . . . . . . 12
4.9 Compliance with Laws; FCC Authorizations. . . 12
4.10 Employee Benefit Plans. . . . . . . . . . . . 13
4.11 Material Contracts. . . . . . . . . . . . . . 15
4.12 Legal Proceedings. . . . . . . . . . . . . . . 16
4.13 Certain Information. . . . . . . . . . . . . . 17
4.14 No Brokers. . . . . . . . . . . . . . . . . . 17
4.15 Opinion of Financial Advisor. . . . . . . . . 18
4.16 Environmental. . . . . . . . . . . . . . . . . 18
4.17 Personnel. . . . . . . . . . . . . . . . . . . 19
4.18 Takeover Statutes. . . . . . . . . . . . . . . 19
4.19 Cash Flow. . . . . . . . . . . . . . . . . . . 19
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF ACQUIROR
AND SUB . . . . . . . . . . . . . . . . . . . . . . . . 19
5.1 Organization and Standing. . . . . . . . . . . 20
5.2 Authorization, Validity and Effect. . . . . . 20
5.3 Capitalization. . . . . . . . . . . . . . . . 20
5.4 No Conflict; Required Filings and Consents . . 20
5.5 Acquiror Reports; Financial Statements. . . . 21
5.6 Legal Proceedings. . . . . . . . . . . . . . . 22
5.7 Certain Information. . . . . . . . . . . . . . 23
5.8 Ownership of Company Common Stock. . . . . . . 23
5.9 Merger Sub. . . . . . . . . . . . . . . . . . 24
</TABLE>
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5.10 Acquiror's Financing. . . . . . . . . . . . . . 24
5.11 Qualification as a Licensee. . . . . . . . . . . 24
5.12 No Brokers. . . . . . . . . . . . . . . . . . . 24
ARTICLE 6 COVENANTS AND AGREEMENTS . . . . . . . . . . . . . . . . . 24
6.1 No Solicitation and Other Actions. . . . . . . . 24
6.2 Interim Operations of the Company. . . . . . . . 26
6.3 Shareholder Approval. . . . . . . . . . . . . . 28
6.4 Information Statement; Registration Statement. . 29
6.5 Notification. . . . . . . . . . . . . . . . . . 30
6.6 Employee Benefits. . . . . . . . . . . . . . . . 30
6.7 Investigation and Confidentiality. . . . . . . . 31
6.8 Filings; Other Action. . . . . . . . . . . . . . 31
6.9 Indemnification and Insurance. . . . . . . . . . 32
6.10 Publicity. . . . . . . . . . . . . . . . . . . . 32
6.11 Transfer Taxes. . . . . . . . . . . . . . . . . 33
6.12 Letter of Credit. . . . . . . . . . . . . . . . 33
6.13 Environmental Inspection. . . . . . . . . . . . 33
6.14 Acknowledgement of Consents. . . . . . . . . . . 33
6.15 Rule 145 Affiliates. . . . . . . . . . . . . . . 33
6.16 Actions With Respect to the Warrants. . . . . . 34
ARTICLE 7 CONDITIONS TO CONSUMMATION OF THE MERGER . . . . . . . . . 34
7.1 Conditions to Obligations of the Parties. . . . 34
7.2 Conditions to Obligations of the Company. . . . 35
7.3 Conditions to Obligations of Acquiror and Sub. . 36
ARTICLE 8 TERMINATION OF AGREEMENT . . . . . . . . . . . . . . . . . 37
8.1 Termination. . . . . . . . . . . . . . . . . . . 37
8.2 Effect of Termination. . . . . . . . . . . . . . 38
ARTICLE 9 MISCELLANEOUS AND GENERAL . . . . . . . . . . . . . . . . 40
9.1 Expenses. . . . . . . . . . . . . . . . . . . . 40
9.2 Successors and Assigns. . . . . . . . . . . . . 40
9.3 Third Party Beneficiaries. . . . . . . . . . . . 40
9.4 Notices. . . . . . . . . . . . . . . . . . . . . 40
9.5 Complete Agreement. . . . . . . . . . . . . . . 41
9.6 Captions; References. . . . . . . . . . . . . . 42
9.7 Amendment. . . . . . . . . . . . . . . . . . . . 42
9.8 Waiver. . . . . . . . . . . . . . . . . . . . . 42
9.9 Governing Law. . . . . . . . . . . . . . . . . . 42
9.10 Non-Survival of Representations,
Warranties and Covenants . . . . . . . . . . . . 42
9.11 Severability. . . . . . . . . . . . . . . . . . 42
9.12 Enforcement of Agreement. . . . . . . . . . . . 43
9.13 Counterparts. . . . . . . . . . . . . . . . . . 43
</TABLE>
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of
February 12, 1996, among CITICASTERS INC. (the "Company"), a Florida
corporation, JACOR COMMUNICATIONS, INC. ("Acquiror"), an Ohio corporation, and
JCAC, INC. ("Sub"), a Florida corporation and a direct wholly owned Subsidiary
of Acquiror.
RECITALS
WHEREAS, the respective Boards of Directors of the Company, Acquiror
and Sub have determined that a business combination between the Company,
Acquiror and Sub is in the best interests of their respective companies and
shareholders;
WHEREAS, concurrently with the execution hereof, in order to induce
Acquiror to enter into this Agreement, Acquiror is entering into a Stockholders
Agreement (the "Stockholders Agreement") with Great American Insurance Company,
American Financial Corporation, American Financial Enterprises, Inc., Carl H.
Lindner, S. Craig Lindner and The Carl H. Lindner Foundation (the "Consenting
Stockholders") providing for certain voting and other restrictions with respect
to the shares of Company Common Stock (as defined in subsection 3.1(a))
beneficially owned by the Consenting Stockholders upon the terms and conditions
specified therein; and
WHEREAS, Acquiror, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
transactions contemplated hereby.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, and
subject to the terms and conditions set forth herein, the Company, Acquiror and
Sub hereby agree as follows:
ARTICLE 1
THE MERGER; EFFECTIVE TIME; CLOSING
1.1 THE MERGER. (a) Subject to the terms and conditions
contained in this Agreement, at the Effective Time (as defined in Section 1.3),
Sub shall be merged with and into the Company in accordance with the applicable
provisions of the Florida Business Corporation Act (the "FBCA"), and the
separate corporate existence of Sub shall thereupon cease (the "Merger").
Following the Merger, the Company shall continue as the surviving corporation
(sometimes hereinafter referred to as the "Surviving Corporation") and shall be
a wholly owned Subsidiary of Acquiror.
<PAGE> 5
(b) At the Effective Time, the corporate existence of
the Company, with all its rights, privileges, powers and franchises, shall
continue unaffected and unimpaired by the Merger. The Merger shall have the
effects specified in the FBCA.
1.2 THE CLOSING. The closing of the transactions contemplated
by this Agreement (the "Closing") shall take place at the offices of Graydon,
Head & Ritchey, 1900 Fifth Third Center, Cincinnati, Ohio, at 10:00 a.m., local
time, on the first business day immediately following the date on which the
last of the conditions (excluding conditions that by their terms cannot be
satisfied until the Closing Date) set forth in Article 7 is satisfied or waived
in accordance herewith, or at such other date, time and place as the Company
and Acquiror may agree in writing. The date on which the Closing occurs is
hereinafter referred to as the "Closing Date".
1.3 EFFECTIVE TIME. At or as promptly as practicable after the
Closing, the parties hereto shall cause articles of merger, in the form
attached hereto as Schedule 1.3 (the "Articles of Merger"), executed in
accordance with the relevant provisions of the FBCA, to be filed with the
Department of State of the State of Florida as provided in Section 607.1105 of
the FBCA. Upon the completion of such filing, or at such other time as may be
specified in such filing, the Merger shall become effective in accordance with
the FBCA. The time and date on which the Merger becomes effective is herein
referred to as the "Effective Time".
ARTICLE 2
ARTICLES OF INCORPORATION, BY-LAWS, DIRECTORS
AND OFFICERS OF THE SURVIVING CORPORATION
2.1 ARTICLES OF INCORPORATION. At the Effective Time and
without any further action on the part of the Company or Sub, the articles of
incorporation of Sub, as in effect immediately prior to the Effective Time and
amended as set forth in the Articles of Merger, shall become the articles of
incorporation of the Surviving Corporation until thereafter amended as provided
therein and under the FBCA.
2.2 BY-LAWS. At the Effective Time and without any further
action on the part of the Company or Sub, the by-laws of Sub, as in effect
immediately prior to the Effective Time, shall become the by-laws of the
Surviving Corporation until thereafter amended or repealed in accordance with
their terms and the articles of incorporation of the Surviving Corporation and
as provided under the FBCA.
2.3 DIRECTORS. The directors and officers of Sub at the
Effective time shall, from and after the Effective Time, be the
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directors and officers of the Surviving Corporation until the successors of all
such persons shall have been duly elected or appointed and qualified or until
their earlier death, resignation or removal in accordance with the Surviving
Corporation's articles of incorporation and by-laws.
ARTICLE 3
CONVERSION OF SHARES
3.1 CONVERSION OF SHARES; OPTIONS.
(a) At the Effective Time, each share of Class A
Common Stock, par value $.01 per share, of the Company (the "Company Common
Stock") issued and outstanding immediately prior to the Effective Time (other
than Company Common Stock owned by the Company, Acquiror, Sub or any direct or
indirect Subsidiary of the Company, Acquiror or Sub, or any Company Common
Stock held in the treasury of the Company) shall, by virtue of the Merger and
without any action on the part of the holders thereof, be converted into and
represent the right to receive: (i) $29.50 in cash, plus, in the event that the
Closing does not occur prior to October 1, 1996, for each full calendar month
ending prior to the Closing, commencing with October, 1996, an additional
amount of $.22125 in cash (the "Cash Consideration"); plus (ii) a warrant to
acquire a fractional share (determined as provided below) of the Acquiror
Common Stock (as defined below) (the "Warrant Consideration") (the Cash
Consideration and the Warrant Consideration being collectively referenced as
the "Merger Consideration") on the terms described in the Warrant Agreement to
be executed at Closing substantially in the form attached hereto as Exhibit 3.1
(a "Warrant"). The Warrant Consideration shall consist of a fractional share
the numerator of which is 4,400,000 and the denominator of which is the number
of shares of Company Common Stock, on a fully diluted basis, outstanding on the
Closing Date. Subject to the terms of the Warrant Agreement, the Warrants
shall expire on the fifth anniversary of the Effective Time and shall have an
exercise price of $28.00 per full share if the Effective Time is prior to
October 1, 1996 and $26.00 per full share if the Effective Time is on or after
October 1, 1996. The Merger Consideration shall be paid net to the
shareholders (without interest) upon surrender of the certificate or
certificates that, immediately prior to the Effective Time, represented issued
and outstanding Company Common Stock (the "Certificates"). At the time of the
exercise of the Warrant each holder of a Warrant shall receive, in lieu of any
fractional share of Acquiror Common Stock, the fair market value of such
fractional share determined at the time of the exercise of the Warrant.
(b) At the Effective Time, all of the Company Common
Stock issued and outstanding immediately prior to the Effective
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Time, by virtue of the Merger and without any action on the part of the holders
thereof, shall no longer be outstanding and shall be cancelled and retired and
shall cease to exist, and each holder of a Certificate representing any such
Company Common Stock shall thereafter cease to have any rights with respect to
such Company Common Stock, except each holder (other than the Company, Acquiror
or Sub or any direct or indirect Subsidiary of the Company, Acquiror or Sub)
will have the right to receive, without interest, the Merger Consideration for
such Company Common Stock upon the surrender of such Certificate or
Certificates in accordance with subsection 3.2(b).
(c) At the Effective Time, by virtue of the Merger and
without any action on the part of the holders thereof, each share of Company
Common Stock issued and outstanding immediately prior to the Effective Time and
owned by the Company, Acquiror, Sub or any direct or indirect Subsidiary of the
Company, Acquiror or Sub, or held in the treasury of the Company immediately
prior to the Effective Time, shall no longer be outstanding, shall be cancelled
without payment of any consideration therefor and shall cease to exist, and
each holder of a Certificate representing any such Company Common Stock shall
thereafter cease to have any rights with respect to such Company Common Stock.
(d) At the Effective Time, each share of common stock,
of Sub issued and outstanding immediately prior to the Effective Time, by
virtue of the Merger and without any action on the part of the holder thereof,
shall be converted into and become one fully-paid and non-assessable share of
common stock, par value $.01 per share, of the Surviving Corporation.
(e) The Company shall use its reasonable best efforts
to (i) cause all outstanding options to purchase shares of Company Common Stock
(each, an "Option") issued pursuant to the Company's 1993 Stock Option Plan or
the 1994 Directors Stock Option Plan (collectively, the "Stock Option Plans")
to become fully vested and exercisable and (ii) obtain from each holder of any
Option an agreement, in form and substance reasonably satisfactory to Acquiror,
to surrender as of the Effective Time all outstanding Options, in consideration
of the payment at the Effective Time of an amount of cash per share subject to
each such Option equal to the difference between the exercise price of such
Option and the Cash Consideration (less an amount equal to all taxes required
to be withheld from such payment), plus for each share subject to such Option,
the Warrant Consideration, or, alternatively, acquire upon payment of the
exercise price an amount of cash equal to the Cash Consideration, less an
amount equal to all taxes required to be withheld, in lieu of each share
formerly covered thereby, plus for each share covered by such Option, the
Warrant Consideration.
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3.2 EXCHANGE PROCEDURES.
(a) Securities Transfer Company shall act as exchange
agent (the "Exchange Agent") for the payment of the Merger Consideration upon
surrender of Certificates converted into the right to receive the Merger
Consideration pursuant to the Merger. Immediately after the Effective Time,
Acquiror shall make available, or cause Sub or the Surviving Corporation to
make available, to the Exchange Agent immediately available funds in an amount
necessary for the payment of the Cash Consideration (the "Funds"), and the
Warrants necessary for payment of the Warrant Consideration.
(b) Promptly after the Effective Time, the Exchange
Agent shall mail to each Person (as defined in Section 6.1 hereof) who was, at
the Effective Time, a holder of record of a Certificate or Certificates (other
than the Company, Acquiror or Sub or any direct or indirect Subsidiary of the
Company, Acquiror or Sub), a letter of transmittal and instructions for use in
effecting the surrender of the Certificates, in exchange for payment of the
Merger Consideration therefor. The letter of transmittal shall specify that
delivery shall be effected, and risk of loss and title shall pass, only upon
proper delivery to and receipt of such Certificates by the Exchange Agent and
shall be in such form and have such provisions as Acquiror shall reasonably
specify. Upon surrender to the Exchange Agent of such Certificates, together
with the letter of transmittal, duly executed and completed in accordance with
the instructions thereto and such other documents as may be reasonably required
by the Exchange Agent, the Exchange Agent shall promptly issue to the persons
entitled thereto, out of the Funds, by check, the amount of cash to which such
Persons are entitled pursuant to Section 3.1 after giving effect to any
required tax withholdings, and the Warrants to which such Persons are entitled,
and such Certificates shall forthwith be marked to evidence cancellation. No
interest will be paid or will accrue on any portion of the Merger
Consideration. If payment is to be made to a Person other than the registered
holder of the Certificates surrendered, it shall be a condition of such payment
that the Certificates so surrendered shall be properly endorsed or otherwise in
proper form for transfer and that the Person requesting such payment shall pay
any transfer or other taxes required by reason of the payment to a Person other
than the registered holder of the Certificates surrendered or establish to the
satisfaction of the Surviving Corporation or the Exchange Agent that such tax
has been paid or is not applicable. Until surrendered as contemplated by this
Section 3.2, each Certificate shall be deemed at any time after the Effective
Time to represent only the right to receive upon such surrender the Merger
Consideration into which the Company Common Stock represented by such
Certificate shall have been converted pursuant to Section 3.1.
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(c) One hundred eighty days following the Effective
Time, Acquiror shall be entitled to cause the Exchange Agent to deliver to it
any Funds (including any interest, dividends, earnings or distributions
received with respect thereto which shall be paid as directed by Acquiror) and
Warrants made available to the Exchange Agent by Acquiror which have not been
disbursed, and thereafter holders of Certificates who have not theretofore
complied with the instructions for exchanging their Certificates shall be
entitled to look only to the Acquiror for payment as general creditors thereof
with respect to the cash payable and Warrants issuable upon due surrender of
their Certificates.
(d) Acquiror shall pay all charges and expenses,
including those of the Exchange Agent, in connection with the exchange of the
Merger Consideration for Certificates.
(e) Notwithstanding anything to the contrary in this
Section 3.2, none of the Exchange Agent, Acquiror, the Company, the Surviving
Corporation or Sub shall be liable to a holder of a Certificate formerly
representing Company Common Stock for any amount properly delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.
(f) From and after the Effective Time, there shall be
no transfers on the stock transfer books of the Surviving Corporation of
Company Common Stock that was outstanding immediately prior to the Effective
Time. If, after the Effective Time, Certificates are presented to Acquiror,
the Surviving Corporation or the Exchange Agent, they shall be cancelled and
exchanged for the Merger Consideration, as provided in this Article 3.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the disclosure letter delivered at or prior to
the execution hereof to Acquiror (the "Company Disclosure Memorandum") or in
the Company Reports (as defined in Section 4.6), the Company represents and
warrants to Acquiror as of the date of this Agreement as follows:
4.1 ORGANIZATION AND STANDING. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Florida. The Company is duly qualified to do business, and in good
standing, in the states of the United States in which the character of the
properties owned or leased by it or the conduct of its business requires it to
be so qualified, except where the failure to be so qualified or to be in good
standing would not have a Material Adverse Effect. For purposes of this
Agreement, the term "Material Adverse Effect" means, with respect
6
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to the Company, the Surviving Corporation, Acquiror or Sub, a material adverse
effect on the business, assets, liabilities, financial condition or results of
operations of such party and its Subsidiaries taken as a whole or a material
adverse effect on the ability of such party to perform its obligations
hereunder; PROVIDED, HOWEVER, that results of operations shall not be a
component of Material Adverse Effect for events that occur after the date of
this Agreement, PROVIDED, FURTHER, HOWEVER, that no Material Adverse Effect
shall be deemed to have occurred by reason of a general deterioration in the
economy or in the broadcasting industry after the date of this Agreement. The
Company has furnished to Acquiror complete and correct copies of its Articles
of Incorporation and By-laws, as amended through the date hereof. Such
Articles of Incorporation and By-laws are in full force and effect and no other
organizational documents are applicable to or binding upon the Company.
4.2 AUTHORIZATION, VALIDITY AND EFFECT. The Company has the
requisite corporate power and authority to execute and deliver this Agreement
and all agreements and documents contemplated hereby to be executed and
delivered by it, and, subject to receipt of necessary shareholder approval, to
consummate the transactions contemplated hereby and thereby. The execution and
delivery of this Agreement and such other agreements and documents, and the
consummation of the transactions contemplated herein and therein, have been
duly and validly authorized by all necessary corporate action in respect
thereof on the part of the Company, subject, with respect to this Agreement, to
the approval of the shareholders of the Company as set forth below. This
Agreement has been duly and validly executed and delivered by the Company and
represents the legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms.
4.3 CAPITALIZATION. (a) The authorized capital stock of the
Company consists of (i) 500,000,000 shares of Company Common Stock, of which,
as of February 9, 1996, 20,236,633 shares were issued and outstanding, (ii)
125,000,000 shares of Class B Common Stock, par value $.01 per share (the
"Class B Shares"), of which no shares are issued and outstanding, and (iii)
9,500,000 shares of Preferred Stock, par value $.01 per share (the "Company
Preferred Shares"), of which no shares are issued and outstanding (the Company
Common Stock, the Class B Shares and the Company Preferred Shares are referred
to herein, collectively, as the "Company Capital Stock"). All of the issued
and outstanding shares of Company Common Stock are duly and validly issued and
outstanding and are fully paid and nonassessable. As of February 9, 1996, the
Company had outstanding Options representing the right to acquire from the
Company not more than 1,611,437.5 shares of Company Common Stock. All such
Options, the recipient of the Option, the grant date, exercise price, vesting
and other material terms are described in Section 4.3(b) of the Company
Disclosure Memorandum.
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<PAGE> 11
(b) Except as set forth in subsection 4.3(a), there
are no shares of capital stock or other equity securities of the Company
outstanding, and except as set forth in subsection 4.3(b) of the Company
Disclosure Memorandum, no outstanding options, warrants or rights to subscribe
for, securities or rights convertible into or exchangeable for, or contracts,
commitments or arrangements by which the Company is or may be required to issue
or sell (collectively, "Equity Rights") additional shares of the Company
Capital Stock.
(c) Since February 9, 1996, the Company has not (i)
issued any shares of Company Capital Stock or Equity Rights for shares of
Company Capital Stock, other than pursuant to the exercise of Options that were
issued and outstanding on February 9, 1996, (ii) purchased, redeemed or
otherwise acquired, directly or indirectly through one or more Company
Subsidiaries, any shares of Company Capital Stock, or (iii) declared, set
aside, made or paid to the shareholders of the Company dividends or other
distributions on the outstanding Company Common Stock.
4.4 COMPANY SUBSIDIARIES. (a) Subsection 4.4(a) of the Company
Disclosure Memorandum lists all material Subsidiaries of the Company (the
"Material Company Subsidiaries") and all other Subsidiaries. No Subsidiary
other than the Material Company Subsidiaries has any material operations, or
any liabilities. Except as indicated in subsection 4.4(a) of the Company
Disclosure Memorandum, all of the outstanding shares of capital stock of each
such Material Company Subsidiary are owned by the Company either directly or
indirectly through another Material Company Subsidiary. Except as set forth in
subsection 4.4(a) of the Company Disclosure Memorandum, no equity securities of
any Material Company Subsidiary may be required to be issued (other than to the
Company or another Material Company Subsidiary) by reason of any Equity Rights
for shares of the capital stock of any Material Company Subsidiary. Except as
set forth in subsection 4.4(a) of the Company Disclosure Memorandum, there are
no contracts, commitments, understandings or arrangements by which the Company
or any Material Company Subsidiary is or may be obligated to transfer any
shares of the capital stock of any Material Company Subsidiary. Except as set
forth in subsection 4.4(a) of the Company Disclosure Memorandum, all of the
outstanding shares of capital stock of each Material Company Subsidiary held by
the Company or any Material Company Subsidiary are fully paid and nonassessable
and are owned by the Company or such Material Company Subsidiary free and clear
of any claim, lien or encumbrance. Each Material Company Subsidiary is duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is incorporated or organized, has the corporate power
and authority necessary for it to own or lease its properties and assets and to
carry on its business as it is now being conducted, and is duly qualified to do
business and in good standing in the states of the United States in which the
ownership of its property or the conduct of its business requires
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it to be so qualified, except for such jurisdictions in which the failure to be
so qualified and in good standing would not have a Material Adverse Effect. As
used in this Agreement, the term "Subsidiary" shall mean, with respect to the
Company or Acquiror, any corporation or other legal entity of which such party
or any of its subsidiaries controls or owns, directly or indirectly, more than
50% of the stock or other equity interest entitled to vote on the election of
members to the board of directors or similar governing body.
(b) Except for interests in the Company's Subsidiaries
and except as set forth in subsection 4.4(b) of the Company Disclosure
Memorandum, neither the Company nor any of the Material Company Subsidiaries
owns, directly or indirectly, any interest or investment (whether equity or
debt) in any corporation, partnership, joint venture, business, trust or
entity, other than (i) investments of less than $1,000,000 in the aggregate and
(ii) promotional activities undertaken in the ordinary course of business.
4.5 NO CONFLICT; REQUIRED FILINGS AND CONSENTS. (a) None of the
execution and delivery of this Agreement by the Company, nor the consummation
by the Company of the transactions contemplated herein, nor compliance by the
Company with any of the provisions hereof, will (i) conflict with or result in
a breach of any provision of the articles of incorporation or by-laws or
equivalent organizational documents of the Company or any of the Material
Company Subsidiaries, (ii) except as set forth in clause 4.5(a)(ii) of the
Company Disclosure Memorandum, constitute or result in the breach of any term,
condition or provision of, or constitute a default under, or give rise to any
right of termination, cancellation or acceleration with respect to, or result
in the creation of any lien, charge or encumbrance upon, any property or assets
of the Company or the Material Company Subsidiaries, pursuant to any note,
bond, mortgage, indenture, license, agreement, lease or other instrument or
obligation to which any of them is a party or by which any of them or any of
their properties or assets may be subject, and that would, in any such event,
have a Material Adverse Effect, or (iii) subject to receipt of the requisite
approvals referred to in subsection 4.5(b), violate any order, writ,
injunction, decree, statute, rule or regulation of any governmental,
quasi-governmental, judicial, quasi-judicial or regulatory authority with
jurisdiction, domestic or foreign (each, a "Governmental Authority") applicable
to the Company or any of the Material Company Subsidiaries or any of their
properties or assets.
(b) Other than (i) in connection or compliance with
the provisions of applicable state and federal securities laws, and the rules
and regulations of the Securities and Exchange Commission (the "SEC")
thereunder, (ii) notices under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended (the "HSR Act"), (iii) applicable approvals of the Federal
Communications Commission
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(the "FCC") pursuant to applicable laws and regulations ("Communications Law");
(iv) filings with the Department of State of the State of Florida required to
effect the Merger under the FBCA, (v) in connection or compliance with the
applicable requirements of the Internal Revenue Code of 1986, as amended, (the
"Code") and state, local and foreign tax laws, (vi) as set forth in subsection
4.5(b) of the Company Disclosure Memorandum, and (vii) where the failure to
give such notice, make such filing or receive such order, authorization,
exemption, consent or approval would not have a Material Adverse Effect, no
notice to, filing with, authorization of, exemption by or consent or approval
of any Governmental Authority is necessary for the consummation by the Company
of the transactions contemplated in this Agreement.
(c) The affirmative written consents of the Consenting
Stockholders are the only votes or consents of the holders of any class or
series of Company Capital Stock necessary to approve this Agreement, the Merger
and the transactions contemplated hereby on behalf of the Company.
4.6 COMPANY REPORTS; FINANCIAL STATEMENTS. (a) The Company has
filed all forms, reports and documents required to be filed by it with the SEC
since January 1, 1994 (collectively, the "Company Reports"). As of their
respective dates, the Company Reports and any such reports, forms and other
documents filed by the Company with the SEC after the date of this Agreement
(i) complied when made, or shall comply when made, as to form in all material
respects with the applicable requirements of the Securities Act of 1933, as
amended (the "Securities Act"), the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and the rules and regulations promulgated thereunder and
(ii) did not when made, or shall not when made, 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 made therein, in light of the circumstances
under which they were made, not misleading. The representation in clause (ii)
of the preceding sentence does not apply to any misstatement or omission in any
Company Report filed prior to the date of this Agreement that was superseded by
a subsequent Company Report filed prior to the date of this Agreement.
(b) The consolidated balance sheets of the Company and
its Subsidiaries as of December 31, 1993 and December 31, 1994 and the related
statements of operations, changes in shareholders' equity and cash flows for
the year ended December 31, 1994, together with the notes thereto, are included
in the Company's Annual Reports on Form 10-K for the fiscal years ended
December 31, 1993 and December 31, 1994, respectively, as filed with the SEC,
and the unaudited consolidated balance sheets of the Company and its
Subsidiaries as of March 31, 1995, June 30, 1995 and September 30, 1995, and
the related unaudited statements of operations, changes in shareholders' equity
and cash flows for the periods then
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ended are included in the Company's Quarterly Reports on Form 10-Q for the
quarters ended March 31, 1995, June 30, 1995 and September 30, 1995,
respectively, as filed with the SEC (together, the "Company Financial
Statements"). The Company Financial Statements have been prepared in
accordance with United States generally accepted accounting principles ("GAAP")
applied on a consistent basis (except as disclosed therein) and fairly present,
in all material respects, the consolidated financial position and the
consolidated results of operations, changes in shareholders' equity and cash
flows of the Company and its consolidated Subsidiaries as of the dates and for
the periods indicated (subject, in the case of interim financial statements, to
normal recurring year-end adjustments, none of which are expected to be
material, and the absence of footnote disclosure).
(c) As of the date of this Agreement, except as set
forth in the Company Financial Statements or the notes thereto, or as described
in the Company Disclosure Memorandum, neither the Company nor any Subsidiary
has any material outstanding claims against it, liabilities or indebtedness,
contingent or otherwise, nor does there exist any condition, fact or
circumstances which the Company reasonably anticipates will create such claim
or liability, other than liabilities incurred subsequent to September 30, 1995,
in the ordinary course of business, consistent with past practices and which
individually and in the aggregate do not have a Material Adverse Effect.
(d) Since December 31, 1994 and except as disclosed in
the Company Reports, the Company and the Material Company Subsidiaries have
conducted their respective businesses only in the ordinary course and
consistent with past practices and have not subjected any of their assets or
properties to any Liens (except in connection with acquisitions disclosed in
the Company Reports).
(e) From December 31, 1994 through the date of this
Agreement, except as disclosed in the Company Disclosure Memorandum and the
Company Reports, there has been no event, condition or operation that has
caused or is reasonably anticipated to cause a Material Adverse Effect on the
Company.
4.7 TAX AND ACCOUNTING MATTERS. The Company and each of the
Material Company Subsidiaries have filed all material federal, state, county,
local and foreign tax returns, including information returns, required to be
filed by it, and paid or made adequate provision for the payment of all taxes
shown on such returns to be owed by it, including those with respect to income,
withholding, social security, unemployment, workers compensation, franchise, ad
valorem, premium, excise and sales taxes. The federal income tax returns of
the Company and the Material Company Subsidiaries for the fiscal year ended
December 31, 1985 and for all fiscal years prior thereto and fiscal years ended
December 31, 1989, December 31, 1990 and December 31, 1991 are closed by the
relevant statute
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<PAGE> 15
of limitations, and no claims for additional taxes for such fiscal years are
pending. Except as disclosed in Section 4.7 of the Company Disclosure
Memorandum, neither the Company nor any of the Material Company Subsidiaries is
a party to any pending action or proceeding, nor, to the actual knowledge of
the officers of the Company listed in Section 4.7 of the Company Disclosure
Memorandum (the "Company's Knowledge"), is any such action or proceeding
threatened, by any Governmental Authority for the assessment or collection of
taxes, interest, penalties or deficiencies that would reasonably be expected to
have a Material Adverse Effect.
4.8 PROPERTIES. Except as disclosed or reserved against in the
Company Financial Statements, the Company and the Material Company Subsidiaries
have good and marketable title to all of the material properties and assets,
tangible or intangible, reflected in the Company Financial Statements as being
owned by the Company and the Material Company Subsidiaries as of the dates
thereof, free and clear of all liens, encumbrances, charges, defaults or
equities of whatever character, except such imperfections or irregularities of
title, liens, encumbrances, charges or defaults that are publicly disclosed or
such imperfections or irregularities of title as do not affect the use thereof
in any material respect and statutory liens securing payments not yet due
("Liens"). All leased buildings and all leased fixtures, equipment and other
property and assets that are material to its business on a consolidated basis
are held under leases or subleases that are valid instruments enforceable in
accordance with their respective terms. Section 4.8 of the Company Disclosure
Memorandum contains a list of all real estate owned or leased by the Company or
a Material Company Subsidiary, identifying which properties are owned and which
are leased. All such leases were entered into in the ordinary course of
business. Other than as indicated in the Company Disclosure Memorandum, none
of the leases are with an Affiliate or contain any material terms or conditions
which make any such lease unreasonably onerous or commercially unreasonable.
4.9 COMPLIANCE WITH LAWS; FCC AUTHORIZATIONS. (a) Except as
set forth in subsection 4.9(a) of the Company Disclosure Memorandum, and except
for environmental matters, which shall be covered by Section 4.16 and which
shall not be covered by this Section 4.9, to the Company's Knowledge, each of
the Company and the Material Company Subsidiaries:
(i) is in material compliance with all laws,
regulations, reporting and licensing requirements and orders
applicable to its business or employees conducting its business, the
breach or violation of which would have a Material Adverse Effect;
(ii) has received no notification or communication from
any Governmental Authority (i) asserting that the Company or any of
the Material Company Subsidiaries is
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not in compliance with any of the statutes, regulations or ordinances
that such Governmental Authority enforces, which noncompliance would
have a Material Adverse Effect or (ii) threatening to revoke any
license, franchise, permit or authorization of any Governmental
Authority, which revocation would have a Material Adverse Effect.
(b) Set forth in subsection 4.9(b) of the Company
Disclosure Memorandum is a list of the FCC licenses (the "Station Licenses")
that are required for the lawful conduct of the radio and television
broadcasting business and operations of the Company and its Material Company
Subsidiaries (the "Stations") in the manner and to the full extent they are now
conducted. The Company or a Subsidiary thereof is the authorized legal holder
of the Station Licenses, none of which is subject to any material restriction
or condition which would limit the full operation of the Stations as now
operated. Except as set forth in subsection 4.9(b) of the Company Disclosure
Memorandum, there are no applications, complaints or proceedings pending or, to
the Company's Knowledge, threatened before the FCC relating to the business or
operations of the Stations other than applications, complaints or proceedings
which generally affect the radio or television broadcasting industries or those
that would not have, individually or in the aggregate, a Material Adverse
Effect on the Company. The Station Licenses listed in subsection 4.9(b) of the
Company Disclosure Memorandum are validly held, are in good standing and are in
full force and effect and are unimpaired by any act. Except as set forth in
subsection 4.9(b) of the Company Disclosure Memorandum, to the Company's
Knowledge, there is no reason related to the Company why the FCC would not
approve the transfer of control of the Company to Acquiror or any of its
Subsidiaries and the renewal of the Station Licenses upon the expiration of the
current term of each such Station License. Except as set forth in subsection
4.9(b) of the Company Disclosure Memorandum, all reports, forms and statements
required to be filed by the Company with the FCC with respect to the Stations
since the grant of the last renewal of the Station Licenses have been timely
filed and are complete and accurate, except where the failure to so file or
where the failure to be complete and accurate would, individually or in the
aggregate, not have a Material Adverse Effect on the Company. Except as set
forth in subsection 4.9(b) of the Company Disclosure Memorandum, each Station
is being operated in compliance with the Communications Law and the
specifications of the Station Licenses, in each case in all material respects.
4.10 EMPLOYEE BENEFIT PLANS.
(a) Except as specified in the Company Disclosure
Memorandum, neither the Company nor any Material Company Subsidiary has an
"employee pension benefit plan" as defined in Section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), including any
"multiemployer plan" as defined in Section
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<PAGE> 17
3(37) of ERISA (such plans so noted shall be referred to as the "Retirement
Plans"), "employee welfare benefit plan" as defined in Section 3(1) of ERISA
including without limitation post-employment benefit and retiree medical plans,
funds and programs ("Benefit Plans") or a "specified fringe benefit plan" as
defined in Section 6039D of the Code ("SFB Plans") (together, the Retirement
Plans, Benefit Plans and SFB Plans noted in the Company Disclosure Memorandum
shall be referred to collectively as the "Plans" and individually as a "Plan").
All Plans are maintained by the Company.
(b) Each Plan is, and has been at all times, operated
in material compliance with all statutes, orders or governmental rules or
regulations, including but not limited to ERISA and the Code, and any and all
collective bargaining agreements and other contracts applicable thereto.
(c) The Retirement Plans, and their related trusts, if
any, are qualified and tax-exempt under Sections 401 and 501 of the Code. The
Company has received favorable determination letters from the Internal Revenue
Service with respect to the qualification and tax exempt status of the
Retirement Plans and their related trusts, if any, under the Code, and nothing
has occurred (or failed to occur) since the receipt of such determination
letters to cause a loss of the Plans' qualification and tax-exempt status.
(d) All material required reports and descriptions of
the Plans (including IRS Form 5500 Annual Reports, Summary Annual Reports and
Summary Plan Descriptions) have been appropriately filed and distributed.
(e) All material notices required by ERISA, the Code
or any other state or federal law, ruling or regulation with respect to the
Plans have been appropriately filed.
(f) All contributions to the Plans for all periods
ending on or before the Closing Date will be made prior to the Closing Date by
the Company and each Material Company Subsidiary in accordance with past
practice and no Plans are currently or shall be unfunded or underfunded as of
the Closing Date.
(g) All insurance premiums (including premiums to the
Pension Benefit Guaranty Corporation) relating to the Plans have been paid in
full in a timely manner.
(h) With respect to the Plans, no prohibited
transactions (as defined in Section 406 of ERISA or Section 4975 of the Code)
that would result in liability to the Company have occurred and no reportable
events (as defined in Section 4043 of ERISA) have occurred.
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(i) There is not, and has not been, an accumulated
funding deficiency with respect to the Retirement Plans subject to the minimum
funding requirements of Section 412 of the Code or Section 302 of ERISA that
has resulted in any material liability to the Company that has not been
satisfied in full.
(j) No material action, suit, grievance, arbitration
or other manner of litigation, or claim with respect to the Plans or the assets
thereof (other than routine claims for benefits made in the ordinary course of
plan administration) are pending, threatened against or with respect to the
Plans, the Company, any Material Company Subsidiary or any fiduciaries (as
defined in Section 3(21) of ERISA) of the Plans (including any action, suit,
grievance, arbitration or other manner of litigation, or claim regarding
conduct which allegedly interferes with the attainment of rights under a Plan).
(k) Except as set forth in the Company Disclosure
Memorandum, neither the Company nor any Material Company Subsidiary has ever
contributed, nor has it ever been required to contribute, to any "multiemployer
plans" (as defined in Section 3(37) of ERISA) and neither the Company nor any
Material Company Subsidiary has or will incur any withdrawal liability with
respect to any such plans.
(l) Except as set forth in the Company Disclosure
Memorandum, neither the Company nor any Material Company Subsidiary has any
stock purchase plan, stock option plan, phantom stock plan, stock appreciation
rights plan, bonus plan or any severance, deferred compensation or retirement
plans or similar agreements (whether or not subject to ERISA).
(m) The Company and each Material Company Subsidiary
has complied with COBRA in all material respects.
(n) Any and all post-employment benefit plans, funds
and programs and retiree medical plans, funds and programs of the Company or
its Material Company Subsidiaries have been fully funded and neither the
Company nor any Material Company Subsidiary has any further obligation to make
any additional contributions to such plans.
4.11 MATERIAL CONTRACTS. Set forth in Section 4.11 of the
Company Disclosure Memorandum is a list, as of the date hereof, of the
following agreements (the "Company Contracts"):
(a) each partnership or joint venture agreement to
which the Company or any Material Company Subsidiary is a party;
(b) each agreement limiting the right of the Company
or any Material Company Subsidiary to engage in or compete with any Person in
any business or geographical area;
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(c) each agreement or other arrangement of or
involving the Company or any Material Company Subsidiary with respect to
indebtedness for money borrowed, including letters of credit, guaranties,
indentures, swaps and similar agreements;
(d) each management, consulting, employment, severance
or similar agreement requiring the payment of compensation in excess of
$150,000 annually, to which the Company or any of the Material Company
Subsidiaries is a party, other than agreements with on-air talent;
(e) each collective bargaining agreement to which the
Company or any Material Company Subsidiary is a party;
(f) each agreement with a national sales
representative to which the Company or any Material Company Subsidiary is a
party;
(g) each network affiliation agreement to which the
Company or any Material Company Subsidiary is a party; and
(h) each agreement with any Affiliate of the Company
(other than employment agreements) to which the Company or any Material Company
Subsidiary is a party which involves total payments or liabilities to or from
the Company or any Material Company Subsidiary in excess of $60,000.
Each of the Company Contracts is in full force and effect and is a legal, valid
and binding contract or agreement, and there is no default or breach (or, to
the Company's Knowledge, any event that, with the giving of notice or lapse of
time or both would result in a material default or breach) by the Company or
any of the Material Company Subsidiaries, or, to the Company's Knowledge, any
other party, in the timely performance of any obligation to be performed or
paid thereunder or any other material provision thereof, that, individually or
in the aggregate, would have a Material Adverse Effect. The Company
acknowledges that there are certain material contracts (including without
limitation agreements concerning radio syndicated programming and network
affiliation and other material agreements which are not available at the
Company's corporate offices on the date hereof), some of which are listed on
Section 4.11 of the Company Disclosure Memorandum and some of which are not,
that have not been furnished to Acquiror as of the date of this Agreement (the
"Undisclosed Contracts"). Within ten days after the date hereof, the Company
will deliver to Acquiror copies of all Undisclosed Contracts.
4.12 LEGAL PROCEEDINGS. As of the date of this Agreement, except
as disclosed in the Company Reports or as set forth in Section 4.12 of the
Company Disclosure Memorandum, there are no actions, suits, investigations or
proceedings instituted or pending, or to the Company's Knowledge, overtly
threatened, against
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the Company or any of the Material Company Subsidiaries, or against any
property, asset, interest or right of any of them, that involve more than
$100,000 in controversy, or that seek relief other than money damages from the
Company or a Subsidiary, or that would have, either individually or in the
aggregate, a Material Adverse Effect if adversely decided. Neither the Company
nor any of the Material Company Subsidiaries is subject to any judgment, order,
writ, injunction or decree that would have a Material Adverse Effect.
4.13 CERTAIN INFORMATION. (a) When the Registration Statement
(as defined in Section 6.4) to be filed with the SEC by Acquiror pursuant to
Section 6.4 hereof or any post-effective amendment thereto shall become
effective, and at all times subsequent to such effectiveness up to and
including the Effective Time, such Registration Statement and all amendments or
supplements thereto, with respect to all information set forth therein
furnished by the Company relating to the Company or its Subsidiaries, shall
comply as to form in all material respects with the provisions of all
applicable securities laws. Any written information supplied or to be supplied
by the Company specifically for inclusion in the Registration Statement will
not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in light of
the circumstances under which they were made not misleading.
(b) None of the information supplied or to be supplied
by the Company for inclusion in the Information Statement (as defined in
Section 6.4) shall, at the time such document is filed with the SEC and when it
is first mailed to the shareholders of the Company, be false or misleading with
respect to any material fact, or omit to state any material fact necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading. If at any time prior to the Effective Time any
event occurs which should be described in the Information Statement or any
supplement or amendment thereto, the Company will file and disseminate, as
required, a supplement or amendment which complies as to form in all material
respects with the provisions of all applicable securities laws. Prior to its
filing with the SEC, the Information Statement and each amendment or supplement
thereto shall be delivered to Acquiror and its counsel. All documents that the
Company is responsible for filing with the SEC or any other Governmental
Authority in connection with the transactions contemplated hereby shall comply
as to form in all material respects with the provisions of applicable law and
the applicable rules and regulations thereunder.
4.14 NO BROKERS. The Company has not entered into any contract,
arrangement or understanding with any Person or firm that may result in the
obligation of the Company, Acquiror or Sub to pay any finder's fees, brokerage
or agent's commissions or other like payments in connection with the
negotiations leading to this Agreement or the consummation of the transactions
contemplated
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hereby, except that the Company has retained Salomon Brothers Inc as its
financial advisor (the "Company Financial Advisor"), which Financial Advisor
may be entitled to an advisor fee of up to $3.0 million in connection with the
transactions contemplated hereby. In addition, the Company may reimburse
certain third parties for legal expenses incurred by such third parties not to
exceed $250,000 in the aggregate.
4.15 OPINION OF FINANCIAL ADVISOR. The Company has received the
opinion of the Company Financial Advisor to the effect that, as of the date
hereof, the consideration to be received by the holders of the Company Common
Stock in the Merger is fair to such holders from a financial point of view. A
copy of such opinion shall be delivered to Acquiror within 24 hours of its
receipt by the Company.
4.16 ENVIRONMENTAL. Except insofar as inaccuracies in the
following statements would not have a Material Adverse Effect on the Company:
(i) The properties owned or leased by the Company or any Subsidiary and
properties formerly owned or leased by the Company or any Subsidiary for which
the Company has contractual liability (the "Company Properties") are in
compliance in all material respects with all applicable federal, state and
local environmental and hazardous waste laws and regulations; (ii) no
enforcement actions are pending or threatened against the Company or any
Subsidiary and no notice of potential liability or administrative or judicial
proceedings (including notices regarding clean up of off-site third party
hazardous waste sites) has been received; (iii) there does not now exist on the
Company Properties, and there has not occurred on, from or under the Company
Properties, a material disposal or release of, Hazardous Substances, Hazardous
Wastes or Contaminants; (iv) the Company Properties contain no unregistered
underground storage tanks; (v) neither the Company nor any Subsidiary nor any
of their respective predecessors has any contingent liability in connection
with the release of any Hazardous Substances, Hazardous Wastes or Contaminants
into the environment; (vi) all broadcast facilities operated by the Company or
any Subsidiary are, and at all times prior hereto were, in compliance with all
applicable rules and regulations relating to RF radiation produced by a
broadcast station; and (vii) neither the Company or any Subsidiary nor any of
their respective predecessors has (A) given any release or waiver of liability
that would waive or impair any claim based on Hazardous Substances, Hazardous
Wastes or Contaminants to any current or prior tenant or owner of any real
property owned or leased at any time by either the Company or any Subsidiary or
to any party who may be potentially responsible for the presence of Hazardous
Substances, Hazardous Wastes or Contaminants on any such real property; or (B)
made any promise of indemnification to any party regarding Hazardous
Substances, Hazardous Wastes or Contaminants that may be located on any real
property owned or leased at any time by either the Company or any Subsidiary or
any
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<PAGE> 22
of their respective predecessors. Section 4.16 of the Company Disclosure
Memorandum contains a description of environmental indemnities of which either
the Company or any Subsidiary is a beneficiary.
4.17 PERSONNEL.
(a) Except as disclosed in Sections 4.10 and 4.11 of
the Company Disclosure Memorandum, or as required pursuant to Section 6.6(c)
hereof, there is no employment agreement, employee benefit or incentive
compensation plan or program or severance policy or program to which the
Company or any Material Company Subsidiary is a party (i) that is or could,
pursuant to its terms, be triggered or accelerated by reason of or in
connection with the execution of this Agreement or the consummation of the
transactions contemplated by this Agreement or (ii) which contains "change in
control" provisions pursuant to which the payment, vesting or funding of
compensation or benefits is or by reason of or in connection with the execution
of or consummation of the transactions contemplated by this Agreement or the
transactions contemplated by this Agreement.
(b) Except as set forth on Section 4.11 of the Company
Disclosure Memorandum, there are no labor disputes existing, or to the
Company's Knowledge, threatened, involving strikes, work stoppages, slow downs
or lockouts. There are no grievance proceedings or claims of unfair labor
practices filed or, to the Company's Knowledge, threatened to be filed with the
National Labor Relations Board against the Company or any Material Company
Subsidiary. To the Company's Knowledge, there is no union representation or
organizing effort pending or threatened against the Company or any Material
Company Subsidiary. Neither the Company nor any Material Company Subsidiary
has agreed to recognize any union or other collective bargaining unit except
those governed by the terms of the agreements listed in Section 4.11 of the
Company Disclosure Memorandum.
4.18 TAKEOVER STATUTES. No "fair price", "moratorium", "control
share acquisition" or other similar anti-takeover statute or regulation enacted
under any federal or state or other foreign law, applicable to the Company is
applicable to the Merger or the other transactions contemplated hereby.
4.19 CASH FLOW. The sum of the Company's (i) operating income,
(ii) amortization and depreciation and (iii) corporate, general and
administrative expenses, each as reflected in the Company's Audited Statement
of Operations contained in its Annual Report on Form 10-K for the fiscal year
ended December 31, 1995, shall not be less than $52,711,000.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF ACQUIROR AND SUB
Except as set forth in the disclosure letter delivered at or prior to
the execution hereof to the Company (the "Acquiror Disclosure Memorandum"),
Acquiror and Sub represent and warrant to the Company as of the date of this
Agreement as follows:
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5.1 ORGANIZATION AND STANDING. Each of Acquiror and Sub is a
corporation duly organized, validly existing and in good standing under the
laws of the State of its incorporation. Each of Acquiror and Sub is duly
qualified to do business, and in good standing, in the states of the United
States in which the character of the properties owned or leased by it or in
which the conduct of its business requires it to be so qualified, except where
the failure to be so qualified or to be in good standing would not have a
Material Adverse Effect. Acquiror has furnished to the Company complete and
correct copies of its Articles of Incorporation and Code of Regulations as
amended, through the date hereof. Such Articles of Incorporation and Code of
Regulations are in full force and effect and no other organizational documents
are applicable to or binding upon Acquiror.
5.2 AUTHORIZATION, VALIDITY AND EFFECT. Each of Acquiror and
Sub has the requisite corporate power and authority to execute and deliver this
Agreement and all agreements and documents contemplated hereby to be executed
and delivered by it, and to consummate the transactions contemplated hereby and
thereby. The execution and delivery of this Agreement and such other
agreements and documents, and the consummation of the transactions contemplated
herein and therein, have been duly and validly authorized by all necessary
corporate action in respect thereof on the part of each of Acquiror and Sub.
This Agreement has been duly and validly executed and delivered by each of
Acquiror and Sub and represents the legal, valid and binding obligation of each
of Acquiror and Sub, enforceable against each of them in accordance with its
terms.
5.3 CAPITALIZATION. The authorized capital stock of Acquiror
consists of 40,000,000 Common Shares, of which, as of February 1, 1996,
18,163,425 shares were issued and outstanding (the "Acquiror Common Stock").
The Automatic Conversion (as such term is defined in the Amended and Restated
Articles of Acquiror) has occurred. Except as set forth in this Section 5.3 or
Section 5.3 of the Acquiror Disclosure Memorandum, there are no shares of
capital stock or other equity securities of Acquiror outstanding and there are
no outstanding Equity Rights for additional shares of Acquiror Capital Stock.
All of the issued and outstanding shares of Acquiror Common Stock are duly and
validly issued and outstanding and are fully paid and nonassessable.
5.4 NO CONFLICT; REQUIRED FILINGS AND CONSENTS. (a) None of the
execution and delivery of this Agreement by Acquiror or Sub, nor the
consummation by Acquiror or Sub of the transactions contemplated herein, nor
compliance by Acquiror or Sub with any of the provisions hereof, will (i)
conflict with or result in a breach of any provision of the articles of
incorporation or by-laws or equivalent organizational documents of Acquiror or
Sub, (ii) constitute or result in the breach of any term, condition or
provision of, or constitute a default under, or give rise to any
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right of termination, cancellation or acceleration with respect to, or result
in the creation of any lien, charge or encumbrance upon, any property or assets
of Acquiror or Sub or, pursuant to any note, bond, mortgage, indenture,
license, agreement, lease or other instrument or obligation to which either of
them is a party or by which either of them or their respective properties or
assets may be subject, and that would, in any such event, have a Material
Adverse Effect, or (iii) subject to receipt of the requisite approvals referred
to in subsection 5.4(b) of the Acquiror Disclosure Memorandum, to the actual
knowledge of the officers of Acquiror listed in clause 5.4(a)(iii) of the
Acquiror Disclosure Memorandum ("Acquiror's Knowledge"), violate any order,
writ, injunction, decree, statute, rule or regulation of any Governmental
Authority applicable to Acquiror, Sub or any of their respective properties or
assets.
(b) Other than (i) in connection or compliance with
the provisions of applicable state and federal securities laws, and the rules
and regulations of the SEC thereunder, including the registration of Warrants
issuable in the Merger at the Effective Time pursuant to the Registration
Statement, (ii) notices and completion of waiting periods under the HSR Act,
(iii) applicable approvals of the FCC, (iv) filings with the Department of
State of the State of Florida required to effect the Merger under the FBCA, (v)
in connection or compliance with the applicable requirements of the Code and
state, local and foreign tax laws, (vi) as set forth in subsection 5.4(b) of
the Acquiror Disclosure Memorandum, and (vii) where the failure to give such
notice, make such filing, or receive such authorization, exemption, consent or
approval would not have a Material Adverse Effect, no notice to, filing with,
authorization of, or exemption by, or consent or approval of any Governmental
Authority is necessary for the consummation by Acquiror or Sub of the
transactions contemplated in this Agreement.
(c) The affirmative vote of the shares of Acquiror
Common Stock beneficially owned by The Zell/Chilmark Fund L.P. at a meeting of
the shareholders of Acquiror duly called for such purpose is sufficient, and no
further vote or consent of any class or series of capital stock of Acquiror is
necessary, to approve the authorization for issuance by Acquiror of shares of
Acquiror Common Stock and Warrants in an amount necessary for payment of the
Merger Consideration.
5.5 ACQUIROR REPORTS; FINANCIAL STATEMENTS. (a) The Acquiror
has filed all forms, reports and documents required to be filed by it with the
SEC since January 1, 1994 (collectively, the "Acquiror Reports"). As of their
respective dates, the Acquiror Reports and any such reports, forms and other
documents filed by the Acquiror with the SEC after the date of this Agreement
(i) complied when made, or shall comply when made, as to form in all material
respects with the applicable requirements of the Securities Act, the Exchange
Act and the rules and regulations
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promulgated thereunder and (ii) did not when made, or shall not when made,
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 made
therein, in light of the circumstances under which they were made, not
misleading. The representation in clause (ii) of the preceding sentence does
not apply to any misstatement or omission in any Acquiror Report filed prior to
the date of this Agreement that was superseded by a subsequent Acquiror Report
filed prior to the date of this Agreement.
(b) The consolidated balance sheets of the Acquiror
and its Subsidiaries as of December 31, 1993 and December 31, 1994 and the
related statements of operations, changes in shareholders' equity and cash
flows for the year ended December 31, 1994, together with the notes thereto,
are included in the Acquiror's Annual Reports on Form 10-K for the fiscal years
ended December 31, 1993 and December 31, 1994, respectively, as filed with the
SEC, and the unaudited consolidated balance sheets of the Acquiror and its
Subsidiaries as of March 31, 1995, June 30, 1995 and September 30, 1995, and
the related unaudited statements of operations, changes in shareholders' equity
and cash flows for the periods then ended are included in the Acquiror's
Quarterly Reports on Form 10-Q for the quarters ended March 31, 1995, June 30,
1995 and September 30, 1995, respectively, as filed with the SEC (together, the
"Acquiror Financial Statements"). The Acquiror Financial Statements have been
prepared in accordance with GAAP applied on a consistent basis (except as
disclosed therein) and fairly present, in all material respects, the
consolidated financial position and the consolidated results of operations,
changes in shareholders' equity and cash flows of the Acquiror and its
consolidated Subsidiaries as of the dates and for the periods indicated
(subject, in the case of interim financial statements, to normal recurring
year-end adjustments, none of which are expected to be material, and the
absence of footnote disclosure). The Acquiror and its Subsidiaries do not have
any material liabilities not disclosed on the Acquiror Financial Statements.
5.6 LEGAL PROCEEDINGS. As of the date of this Agreement and
except as set forth in Section 5.6 of the Acquiror Disclosure Memorandum, there
are no actions, suits or proceedings instituted or pending, or to Acquiror's
Knowledge, overtly threatened, against Acquiror or Sub, or against any
property, asset, interest or right of any of them, that involve more than
$100,000 in controversy, or that seek relief other than money damages from the
Acquiror or any Subsidiary, or that would have, either individually or in the
aggregate, a Material Adverse Effect on Acquiror if adversely decided. Neither
Acquiror nor Sub is subject to any judgment, order, writ, injunction or decree
that would have a Material Adverse Effect.
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5.7 CERTAIN INFORMATION.
(a) When the Registration Statement or any
post-effective amendment thereto shall become effective, and at times
subsequent to such effectiveness up to and including the Effective Time, the
Registration Statement and all amendments or supplements thereto, shall comply
as to form in all material respects with the provisions of all applicable
securities laws. If at any time prior to the Effective Time any event occurs
which should be described in the Registration Statement or any supplement or
amendment thereto, Acquiror will file and disseminate, as required, a
supplement or amendment which complies as to form in all material respects with
the provisions of all applicable securities laws. Prior to its filing with the
SEC, the Registration Statement and each amendment or supplement thereto shall
be delivered to the Company and its counsel. With respect to any information
supplied by Acquiror, the Registration Statement will not, at the time the
prospectus included therein is mailed to shareholders of the Company, and at
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, in light of the circumstances under which they
were made, not misleading.
(b) None of the information supplied or to be supplied
by Acquiror or Sub for inclusion in the Information Statement shall, at the
time such document is filed with the SEC or when it is first mailed to the
shareholders of the Company, be false or misleading with respect to any
material fact, or omit to state any material fact necessary in order to make
the statements therein, in light of the circumstances under which they are
made, not misleading. All documents that Acquiror or Sub are responsible for
filing with the SEC or any other Governmental Authority in connection with the
transactions contemplated hereby shall comply as to form in all material
respects with the provisions of applicable law and the applicable rules and
regulations thereunder.
(c) When the Registration Statement or any
post-effective amendment thereto shall become effective, and at times
subsequent to such effectiveness up to and including the Effective Time, the
Registration Statement and all amendments or supplements thereto, except with
respect to information set forth therein provided by the Company, shall not be
false or misleading with respect to any material fact, or omit to state any
material fact necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading.
5.8 OWNERSHIP OF COMPANY COMMON STOCK. Except as set forth in
Section 5.8 of the Acquiror Disclosure Memorandum, none of Acquiror nor, to
Acquiror's Knowledge, any Affiliates (as defined below) of Acquiror or Sub,
owns any shares of Company Common Stock or other securities convertible into
shares of Company Common Stock. For purposes of this Agreement, an "Affiliate"
of a
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specified Person is a Person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
the Person specified.
5.9 MERGER SUB. Sub was formed solely for the purpose of
engaging in the transactions contemplated hereby. Sub is, and shall be on the
Closing Date, a wholly owned direct Subsidiary of Acquiror. Except for
obligations or liabilities incurred in connection with its incorporation or
organization, and the transactions contemplated hereby, Sub has not incurred
any obligations or liabilities or engaged in any business or activities of any
type or kind whatsoever or entered into any agreements or arrangements with any
Person or entity.
5.10 ACQUIROR'S FINANCING. Acquiror has or will have sufficient
funds available to consummate the transactions contemplated by this Agreement
and to pay all transaction related fees and expenses.
5.11 QUALIFICATION AS A LICENSEE. Acquiror will, from and after
the date upon which Acquiror executes the applications described in subsection
6.8, be legally, financially and otherwise qualified under the Communications
Law to be owner and operator of the properties and assets of the Surviving
Corporation, any of its Material Company Subsidiaries, or any Station. Except
as disclosed in Section 5.11 of the Acquiror Disclosure Memorandum or in the
Acquiror Reports, no fact exists that would under the Communications Law
disqualify Acquiror as the owner and operator of the properties or assets of
any Station.
5.12 NO BROKERS. Neither Acquiror nor Sub has entered into a
contract, arrangement or understanding with any Person or firm that may result
in the obligation of Acquiror, Sub or the Company to pay any finder's fees,
brokerage or agent's commissions or other like payments in connection with the
negotiations leading to this Agreement or the consummation of the transactions
contemplated hereby.
ARTICLE 6
COVENANTS AND AGREEMENTS
6.1 NO SOLICITATION AND OTHER ACTIONS. (a) From and after the
date of this Agreement and except as set forth in subsection 6.1(b), the
Company shall not, and the Company shall direct and use its reasonable best
efforts to cause the officers, directors, employees, agents, advisors and other
representatives of the Company not to, directly or indirectly, (i) solicit,
initiate, knowingly encourage, or participate in discussions or negotiations
regarding, any proposals or offers from any individual, corporation,
partnership, limited liability corporation, joint
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venture, trust, association, unincorporated organization, other entity, group
or Governmental Authority ("Person") relating to any Competing Transaction (as
defined in subsection 6.1(c)) or (ii) furnish to any other Person any nonpublic
information or access to such information with respect to, or otherwise
concerning, any Competing Transaction. The Company shall immediately cease and
cause to be terminated any existing discussions or negotiations with any third
parties conducted heretofore with respect to any proposed Competing
Transaction. The Company shall promptly disclose the identity of any Person
who attempts to initiate any discussions contemplating a Competing Transaction.
(b) Notwithstanding anything to the contrary contained
in this Section 6.1 or in any other provision of this Agreement, until the
consents required by the Stockholders Agreement have been duly executed and
delivered, the Company shall not be prohibited by this Agreement from (i)
participating in discussions or negotiations with, and, during such period, the
Company may furnish information to, a Person that seeks to engage in
discussions or negotiations, requests information or makes a proposal to
acquire the Company pursuant to a Competing Transaction, if the Company's
directors determine in good faith that such action is required for the
discharge of their fiduciary obligations, based upon the written advice of
independent legal counsel, who may be the Company's regularly engaged legal
counsel (a "Director Duty"); (ii) complying with Rule 14d-9 or Rule 14e-2
promulgated under the Exchange Act with regard to a tender or exchange offer;
(iii) making any disclosure to the Company's shareholders in accordance with a
Director Duty; (iv) failing to make, modifying or amending its recommendations,
consents or approvals referred to herein in accordance with a Director Duty; or
(v) terminating this Agreement and entering into an agreement providing for a
Competing Transaction in accordance with a Director Duty. In the event that
the Company or any of its officers, directors, employees, agents, advisors or
other representatives participate in discussions or negotiations with, or
furnish information to a Person that seeks to engage in such discussions or
negotiations, requests information or makes a proposal to acquire the Company
pursuant to a Competing Transaction pursuant to this subsection 6.1(b), then:
(i) the Company shall immediately disclose to the Acquiror the decision of the
Company's directors; (ii) the identity of the Person; and (iii) copies of all
information or material not previously furnished to Acquiror which the Company,
or its agents, provides or causes to be provided to such Person or any of its
officers, directors, employees, agents, advisors or representatives.
(c) For the purposes of this Agreement, "Competing
Transaction" shall mean any of the following involving the Company: (i) any
merger, consolidation, share exchange, business combination or other similar
transaction; (ii) any sale, lease, exchange, transfer or other disposition of
all or substantially all of the assets of the Company and the Material Company
Subsidiaries, taken
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as a whole, in a single transaction or series of related transactions; or (iii)
any tender offer or exchange offer for shares of Company Common Stock.
6.2 INTERIM OPERATIONS OF THE COMPANY. Prior to the Effective
Time, except as contemplated by any other provision of this Agreement or as set
forth in Section 6.2 of the Company Disclosure Memorandum, unless Acquiror has
previously consented in writing thereto (which consent may be withheld only
after substantive discussions with representatives of the Company) the Company
shall not, and shall not permit any of the Material Company Subsidiaries to:
(a) grant any general increase in compensation or
benefits to its employees or to its officers, except in the ordinary course
consistent with past practice or as required by law; pay any bonus compensation
except in the ordinary course consistent with past practice or in accordance
with the provisions of any applicable program or plan adopted by the Board of
Directors of the Company or such Material Company Subsidiary prior to the date
hereof; enter into or amend the terms of any severance agreements with its
officers; or effect any change in retirement benefits for any class of its
employees or officers (unless such change is required by applicable law) that
would materially increase the retirement benefit liabilities of the Company and
the Material Company Subsidiaries on a consolidated basis; PROVIDED, HOWEVER,
that nothing in this subsection (a) shall prevent the payment or other
performance of any award or grant made prior to the date hereof and disclosed
in the Company Reports filed prior to the date hereof, the Company Disclosure
Memorandum or pursuant to this Agreement;
(b) amend, alter or revise any existing employment
contract, understanding, arrangement or agreement between the Company or any of
the Material Company Subsidiaries and any Person receiving compensation
(including salary and bonus) in excess of $150,000 per year (unless such
amendment is required by law) to increase the compensation (including bonus) or
benefits payable thereunder or pursuant thereto or enter into any new
employment contract, understanding, arrangement or agreement with any Person
having a salary thereunder in excess of $150,000 that the Company or such
Material Company Subsidiary does not have the unconditional right to terminate
without liability (other than liability for services already rendered) at any
time on or after the Effective Time;
(c) adopt any new employee benefit plan or make any
change in or to any existing Company ERISA Plans or Company Benefit
Arrangements other than any such change that (i) is required by law, (ii) in
the opinion of counsel is necessary or advisable to maintain the tax qualified
status of any such, plan, or (iii) would not materially increase, in the
aggregate, the employee benefit
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plan liabilities of the Company and the Material Company Subsidiaries, taken as
a whole;
(d) sell, lease or otherwise dispose of any of its
assets (including capital stock of Material Company Subsidiaries) or acquire
any business or assets, except in the ordinary course of business, in each case
for an amount not exceeding $1,000,000;
(e) incur any material amount of indebtedness for
borrowed money or make any loans, advances or capital contributions to, or
investments (other than non-controlling investments in the ordinary course of
business) in, any other Person other than a Subsidiary of the Company, or issue
or sell any debt securities, other than (i) borrowings in connection with
acquisitions permitted by subsection 6.2(d), (ii) borrowings under existing
lines of credit in the ordinary course of business not to exceed $5,000,000 in
the aggregate at any time outstanding and (iii) borrowings made or indebtedness
incurred to fund payments made in connection with the exercise of Options
pursuant to Section 3.1(e).
(f) except as set forth in subsection 6.2(f) of the
Company Disclosure Memorandum, authorize, commit to or make capital
expenditures in each case in an amount exceeding $6,000,000;
(g) mortgage or otherwise encumber or subject to any
Lien any material amount of properties or assets owned by the Company or any of
the Material Company Subsidiaries as of the date of this Agreement except for
such of the foregoing as are in the normal course of business;
(h) make any material change to its accounting
(including tax accounting) methods, principles or practices, except as may be
required by GAAP;
(i) amend or propose to amend its articles of
incorporation or by-laws or equivalent organizational documents;
(j) declare or pay any dividend or distribution with
respect to the Company Capital Stock;
(k) except pursuant to Options already granted as of
the date of this Agreement, issue, sell, deliver or agree to issue, sell,
deliver (whether through issuance or granting of options, warrants,
commitments, subscriptions or rights to purchase) any Company Capital Stock or
split, combine, reclassify or subdivide the Company Capital Stock;
(l) make any tax election or settle or compromise any
material tax liability for an amount greater than reflected on the Company's
Financial Statements;
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(m) except pursuant to Options already granted as of
the date of this Agreement, directly or indirectly redeem, purchase or
otherwise acquire any shares of its capital stock or other securities;
(n) enter into any new lines of business or otherwise
make material changes to the operation of its business;
(o) except as to liabilities accrued on the books of
the Company as of the date of this Agreement, pay or agree to pay in settlement
or compromise of any suits or claims of liability against the Company, its
directors, officers, employees or agents, more than an aggregate of $100,000
for all such suits and claims;
(p) enter into any agreement providing the
acceleration or payment or performance or other consequence as a result of a
change in control of the Company;
(q) purchase any radio or television stations, enter
into any local marketing arrangements, joint sales agreement or similar
agreements;
(r) except as permitted under Sections 6.2(d), 6.2(e),
6.2(f) and 6.2(l), enter into any contract, agreement or understanding, whether
in the ordinary course of business or not, which would be the type of agreement
which, if entered into prior to the date hereof, would have to be disclosed
pursuant to Section 4.11 or which would obligate the Company or any Subsidiary
to make payments of more than $150,000 per year;
(s) take any action or agree, in writing or otherwise,
to take any of the foregoing actions or any action which would make any
representation or warranty in Article 4 hereof materially untrue or incorrect;
or
(t) commit to any of the foregoing.
6.3 SHAREHOLDER APPROVAL. (a) With respect to the Company, this
Agreement, the Merger, and the other transactions contemplated hereby are
subject to approval of the shareholders of the Company, and in connection
therewith, the Consenting Stockholders have entered into the Stockholders
Agreement, which requires the Consenting Stockholders to execute written
consents in favor of this Agreement and the Merger by 5:00 p.m. Eastern
Standard Time on the thirtieth day after the execution of this Agreement by the
Company unless the Agreement is terminated prior to such date.
(b) The authorization for issuance of shares of Acquiror
Common Stock and Warrants is subject to the approval of the shareholders of
Acquiror and in connection therewith, Zell/Chilmark L.P., the holder of in
excess of 69% of the outstanding Acquiror Common Stock has entered into the
Jacor
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Shareholder Agreement, the form of which is attached as Exhibit 6.3, pursuant
to which Zell/Chilmark L.P. has granted an irrevocable proxy to the Company
solely for the purpose of voting its shares of Acquiror Common Stock in favor
of any proposal for the authorization for issuance of such number of shares of
Acquiror Common Stock and Warrants as are necessary for payment of the Merger
Consideration.
(c) The Company and Acquiror shall each cause an
information statement to be mailed to their respective shareholders, and the
Company and Acquiror shall each furnish to the other all information concerning
itself that the other may reasonably request in connection with the
preparation, filing and mailing of such information statement.
6.4 INFORMATION STATEMENT; REGISTRATION STATEMENT. (a) As soon
as practicable following the date hereof, Acquiror and the Company shall
cooperate to prepare promptly and file with the SEC an Information Statement
with respect to the Merger (the "Information Statement") and a registration
statement on Form S-4 relating to the Warrants issuable in the Merger at the
Effective Time (the "Registration Statement"), subject, however, to deferral
until such time as Acquiror and the Company may reasonably agree in writing.
As soon as practicable following receipt of final comments from the staff of
the SEC on the Information Statement and Registration Statement (or advice that
such staff will not review such filing), Acquiror shall use its best efforts to
have the Registration Statement declared effective by the SEC and to maintain
the effectiveness of such Registration Statement until completion of the
Merger. Promptly after the effectiveness of the Registration Statement, the
Company shall mail the Information Statement to all holders of Company Common
Stock and holders of Acquiror Common Stock. Acquiror and the Company shall
cooperate with each other in the preparation of the Information Statement and
the Registration Statement and shall advise the other in writing if, at any
time prior to the Effective Time, any such party shall obtain knowledge of any
facts that might make it necessary or appropriate to amend or supplement the
Information Statement or the Registration Statement in order to make the
statements contained or incorporated by reference therein not misleading or to
comply with applicable law. Notwithstanding the foregoing, each party shall be
responsible for the information and disclosures which it makes or incorporates
by reference in all regulatory filings, the Information Statement and the
Registration Statement.
(b) Acquiror shall file, no later than the third business
day following the Closing, a registration statement with the SEC relating to
the issuance of shares of Acquiror Common Stock issuable upon exercise of the
Warrants ("Warrant Shares") (such registration statement to be referred to
herein as the "Warrant Shares Registration Statement"). Acquiror shall use its
reasonable best efforts to have the Warrant Shares Registration Statement
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declared effective and to cause the issuance of Warrant Shares to be
registered, qualified or exempted under applicable state securities laws as
soon as is reasonably practicable. Acquiror shall use its reasonable best
efforts to amend or supplement the Warrant Shares Registration Statement or the
prospectus contained therein and to take such actions as may be necessary to
cause the Warrant Shares Registration Statement to remain effective until the
earlier of (i) the seventh anniversary of the Closing and (ii) the expiration
or exercise of all outstanding Warrants. Prior to the Effective Time, Acquiror
will exercise its reasonable best efforts to cause the Warrants to be included
for trading in the National Association of Securities Dealers quotation system.
6.5 NOTIFICATION. Each of the Company and Acquiror shall, after
obtaining knowledge of the occurrence, non-occurrence or threatened occurrence
or non-occurrence of any fact or event that would cause or constitute a
material breach or failure of any of the representations and warranties,
covenants or conditions set forth herein, or that would constitute or result in
a Material Adverse Effect to such party, notify the other parties in writing
thereof with reasonable promptness.
6.6 EMPLOYEE BENEFITS. (a) For a period of at least two years
after the Effective Time, Acquiror shall cause the Surviving Corporation and
each Material Company Subsidiary to maintain compensation and benefit
arrangements, plans and programs for the benefit of current, former and retired
salaried employees of the Company and such subsidiaries and their respective
predecessors that are, in the aggregate, considering all compensation and
benefits, not less favorable than those provided by Acquiror or any of its
Affiliates to their similarly situated current, former and retired salaried
employees; provided, however, that nothing in this Agreement shall preclude or
restrict the Surviving Corporation from terminating the employment of any
employee.
(b) If any salaried employee of the Company or any
Material Company Subsidiary becomes a participant in any employee benefit plan,
practice or policy of Acquiror, any of its Affiliates or the Surviving
Corporation, Acquiror shall cause such employee to be given credit under such
plan, practice or policy for all service prior to the Effective Time with the
Company and its subsidiaries, or any predecessor employer, for all purposes
(including eligibility, vesting and determination of benefits) for which such
service is either taken into account or recognized.
(c) Following the Effective Time, Acquiror shall, or
shall cause the Surviving Corporation to, honor the terms of all consulting,
employment, severance and similar agreements set forth in Section 4.11 of the
Company Disclosure Memorandum that were in effect immediately prior to the date
hereof. Within sixty days after the date hereof, the Company shall offer to
enter into Employment Continuation Agreements which will be binding upon the
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Surviving Corporation with each of the persons and at the compensation listed
on Exhibit 6.6(c) substantially in the forms attached hereto as Exhibit
6.6(c)(i) and Exhibit 6.6.(c)(ii).
6.7 INVESTIGATION AND CONFIDENTIALITY. Prior to the Effective
Time, Acquiror and the Company each shall keep the other advised of all
material developments relevant to the transactions contemplated hereby and may
make or cause to be made such investigation, if any, of the business and
properties of the other party and its subsidiaries and of their respective
financial and legal condition as Acquiror or the Company reasonably deems
necessary or advisable to familiarize itself and its advisors with such
business, properties and other matters; PROVIDED, HOWEVER, that such
investigation shall be reasonably related to the transactions contemplated
hereby and shall not interfere unnecessarily with normal operations. Acquiror
and, except as otherwise may be required by a Director Duty, the Company each
agree to furnish the other party and the other party's advisors with such
financial and operating data and other information with respect to its
businesses, properties and employees as Acquiror or the Company shall from time
to time reasonably request. All information furnished to the Company or
Acquiror by the other party hereunder (including, without limitation, all
environmental information obtained pursuant to Section 6.13 or otherwise) shall
be maintained by such party pursuant to the terms of the confidentiality
agreement (the "Confidentiality Agreement") between the Company and Acquiror
dated February 1, 1996, which shall survive the execution of this Agreement and
remain in full force and effect until the Effective Time.
6.8 FILINGS; OTHER ACTION. Subject to the terms and conditions
herein provided, the parties shall (a) within seven business days hereof make
their respective filings and thereafter make any other required submissions
under the HSR Act and the Communications Law; (b) use their reasonable best
efforts to cooperate with each other in (i) determining which filings are
required to be made prior to the Effective Time with, and which consents,
approvals, permits or authorizations are required to be obtained prior to the
Effective Time from, Governmental Authorities in connection with the execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby and (ii) timely making all such filings and timely seeking
all such consents, approvals, permits or authorizations; and (c) use their
reasonable best efforts to take, or cause to be taken, all other action and do,
or cause to be done, all other things necessary, proper or appropriate to
consummate and make effective the transactions contemplated by this Agreement
and satisfy the conditions to the transactions contemplated hereby; PROVIDED,
HOWEVER, that nothing in this Section 6.8 shall require the Acquiror or Sub, or
require the Acquiror or Sub to cause the Surviving Corporation, to divest or
hold separate any Station or Stations, or asset or groups of assets, or enter
into new
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arrangements or terminate any existing arrangement, or take any other specific
action requested by any Governmental Authorities. If, at any time after the
Effective Time, any further action is necessary or desirable to carry out the
purposes of this Agreement, subject to the remaining provisions hereof, the
officers and directors of the parties shall promptly take all such necessary
action.
6.9 INDEMNIFICATION AND INSURANCE.
(a) For not less than six years following the
Effective Time, Acquiror shall indemnify and hold harmless each present and
former employee, agent, director or officer of the Company and its Subsidiaries
("Indemnified Parties") from and against any and all claims arising out of or
in connection with activities in such capacity, or on behalf of, or at the
request of, the Company, its Subsidiaries or their Affiliates, and shall
advance expenses incurred with respect to the foregoing, as they are incurred,
to the fullest extent permitted under applicable law; PROVIDED, HOWEVER, that
if any claim or claims are asserted or made within such six-year period, all
rights to indemnification in respect of such claims shall continue until the
final disposition of any and all such claims.
(b) Acquiror shall cause the Surviving Corporation to
keep in effect provisions in the Company's Restated Articles of Incorporation
and By-laws providing for exculpation of director and officer liability and its
indemnification of or advancement of expenses to the Indemnified Parties to the
fullest extent permitted under the FBCA, which provisions shall not be amended
except as required by applicable law or except to make changes permitted by law
that would enhance the Indemnified Parties' right of indemnification or
advancement of expenses.
(c) If, after the Effective Time, Acquiror or any of
its successors or assigns (i) consolidates with or merges into any other Person
and shall not be the continuing or surviving corporation or entity of such
consolidation or merger, or (ii) transfers all or substantially all of its
property and assets to any Person, then, in each such case, proper provision
shall be made so that the successors and assigns of Acquiror assume all of the
obligations set forth in this Section 6.9. The provisions of this Section 6.9
are intended to be for the benefit of, and shall be enforceable by each Person
who is now, or has been at any time prior to the date of this Agreement, or who
becomes prior to the Effective Time, an officer, director, employee or agent of
the Company or any of its Subsidiaries (and their heirs and representatives).
6.10 PUBLICITY. Acquiror and the Company shall each issue press
releases relating to this Agreement. Each such release will be reviewed by the
other party and all such initial press releases
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shall be mutually satisfactory to the parties. Thereafter the Company and
Acquiror shall, subject to their respective legal obligations (including
requirements of national securities exchanges and other similar regulatory
bodies), consult with each other regarding the text of any press release before
issuing any such press release with respect to the transactions contemplated
hereby and in making any filings with any Governmental Authority or with any
national securities exchange with respect thereto.
6.11 TRANSFER TAXES. Acquiror shall pay any and all transfer
taxes (including, without limitation, any real estate transfer taxes) incurred
in connection with the Merger, whether such taxes are imposed on Acquiror, the
Company, their respective Subsidiaries or their shareholders.
6.12 LETTER OF CREDIT. Simultaneously with the execution and
delivery of the consents of the Consenting Stockholders in accordance with
Section 6.3, the parties shall enter into the Letter of Credit Escrow Agreement
substantially in the form attached hereto as Exhibit 6.13 (the "Letter of
Credit Escrow Agreement"). Pursuant to the Letter of Credit Escrow Agreement,
the Acquiror will deliver or cause to be delivered to the Escrow Agent (as
defined in the Letter of Credit Escrow Agreement) an irrevocable letter of
credit in the amount of $75,000,000 to be issued by an issuer reasonably
acceptable to the Company (the "Letter of Credit"). The Letter of Credit shall
be held and drawn on only as provided in Section 8.2(b) and in the Letter of
Credit Escrow Agreement.
6.13 ENVIRONMENTAL INSPECTION. Within 100 days of the date of
this Agreement, Acquiror and Sub shall have the right, at their own expense, to
cause the inspection of the properties of the Company and its subsidiaries to
verify the accuracy of the Company's representations and warranties in Section
4.16. Any invasive testing or sampling, including, without limitation, testing
of soil, ground or surface water, at any of such properties shall be conducted
only following reasonable advance written notice to the Company and without any
unreasonable interference with the conduct of the Company's business.
6.14 ACKNOWLEDGEMENT OF CONSENTS. The Company shall promptly
forward to Acquiror a copy of all consents received from the Consenting
Stockholders and shall promptly acknowledge in writing to Acquiror that
consents have been received from the holders of a majority of the outstanding
voting stock of the Company and that accordingly the Agreement and Plan of
Merger has been duly approved pursuant to Florida law.
6.15 RULE 145 AFFILIATES. At least 40 days prior to the Closing,
the Company shall deliver to Acquiror a letter identifying all persons who are,
at the time the Consenting Stockholders approve this Agreement and the Merger,
deemed to be "affiliates" of
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<PAGE> 37
the Company for purposes of Rule 145 under the Securities Act (the "Rule 145
Affiliates"). The Company shall use its reasonable best efforts to cause each
Rule 145 Affiliate to deliver to Acquiror at least 30 days prior to the Closing
an agreement substantially in the form of Exhibit 6.15 to this Agreement.
6.16 ACTIONS WITH RESPECT TO THE WARRANTS. If, after the date
hereof and prior to issuance of the Warrants, Acquiror shall take any action
which, if the Warrants had been issued and outstanding as of the date of any
such action, would have required an adjustment in the exercise price of the
Warrants or in the number of shares purchasable upon exercise of the Warrants,
then the exercise price of the Warrants or such number of shares shall be
adjusted upon issuance of the Warrants to give effect to the adjustment which
would have been required as a result of such action.
ARTICLE 7
CONDITIONS TO CONSUMMATION OF THE MERGER
7.1 CONDITIONS TO OBLIGATIONS OF THE PARTIES. The respective
obligations of the Company, Acquiror and Sub to effect the Merger shall be
subject to the satisfaction or waiver at or prior to the Closing of each of the
following conditions:
(a) This Agreement and the transactions contemplated
hereby shall have been approved in the manner required by applicable law by the
holders of a majority of the Company Common Stock as required by the
Stockholders Agreement and by the holders of Acquiror Common Stock as required
by the By-Laws of the National Association of Securities Dealers.
(b) The waiting period applicable to the consummation
of the Merger under the HSR Act shall have expired or been terminated.
(c) None of the parties hereto shall be subject to any
order or injunction of a court or Governmental Authority of competent
jurisdiction that prohibits the consummation of the transactions contemplated
by this Agreement. In the event any such order or injunction shall have been
issued, each party agrees to use its reasonable best efforts to have any such
order overturned or injunction lifted.
(d) All orders, approvals, and consents of the FCC
required in connection with the consummation of the transactions contemplated
hereby shall have been obtained or granted, whether or not any appeal or
request for reconsideration of such order is pending, or whether the time for
filing any such appeal or request
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<PAGE> 38
for reconsideration or for any sua sponte action by the FCC has expired.
(e) All consents, authorizations, orders and approvals
of (or filings or registrations with) any Governmental Authority (other than
the FCC) required in connection with the execution, delivery and performance of
this Agreement shall have been obtained or made, except for filings in
connection with the Merger and any other documents required to be filed after
the Effective Time and except where the failure to have obtained or made any
such consent, authorization, order, approval, filing or registration would not
have a Material Adverse Effect on the Surviving Corporation following the
Effective Time.
(f) The Registration Statement shall have become
effective in accordance with the provisions of the Securities Act and no stop
order suspending the effectiveness of the Registration Statement shall have
been issued by the SEC and remain in effect.
7.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The obligations
of the Company to effect the Merger shall be subject to the satisfaction or
waiver at or prior to the Closing of each of the following additional
conditions:
(a) The representations and warranties of Acquiror and
Sub set forth in this Agreement shall be true and correct in all respects as of
the date of this Agreement and as of the Effective Time with the same effect as
though all such representations and warranties had been made on and as of the
Effective Time (except for any such representations and warranties made as of
specified date, which shall be true and correct in all respects as of such
date), except to the extent that the aggregate effect of the inaccuracies in
such representations and warranties as of the applicable times (each considered
without any exclusions for lack of Material Adverse Effect set forth in the
individual representation or warranty) does not constitute a Material Adverse
Effect on Acquiror when compared to the state of facts which would exist if all
such representations and warranties were true in all respects as of the
applicable times.
(b) Each of the agreements and covenants of Acquiror
and Sub to be performed and complied with by Acquiror and Sub pursuant to this
Agreement prior to the Effective Time shall have been duly performed and
complied with in all material respects.
(c) Acquiror shall have delivered to the Company a
certificate, dated as of the Closing Date and signed on its behalf by its chief
executive officer and its chief financial officer, as to the satisfaction by it
of the conditions set forth in subsections 7.2(a) and 7.2(b).
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<PAGE> 39
7.3 CONDITIONS TO OBLIGATIONS OF ACQUIROR AND SUB. The
obligations of Acquiror and Sub to effect the Merger shall be subject to the
satisfaction or waiver at or prior to the Closing of the following conditions:
(a) The representations and warranties of the Company
set forth in this Agreement shall be true and correct in all respects as of the
date of this Agreement and as of the Effective Time with the same effect as
though all such representations and warranties had been made on and as of the
Effective Time (except for (i) any such representations and warranties made as
of specified date, which shall be true and correct in all respects as of such
date) and (ii) the representations and warranties in Section 4.16, the accuracy
of which shall be tested pursuant to Section 8.1(i) and therefore shall not be
a condition to the obligations of Acquiror and Sub to effect the Merger),
except to the extent that the aggregate effect of the inaccuracies in such
representations and warranties as of the applicable times (each considered
without any exclusions for lack of Material Adverse Effect set forth in the
individual representation or warranty) does not constitute a Material Adverse
Effect on the Company when compared to the state of facts which would exist if
all such representations and warranties were true in all respects as of the
applicable times.
(b) Each of the agreements and covenants of the
Company to be performed and complied with by the Company pursuant to this
Agreement prior to the Effective Time shall have been duly performed and
complied with except to the extent that the aggregate effect of any
non-performance or noncompliance by the Company (each considered without any
exclusions for lack of Material Adverse Effect set forth in the individual
covenant or agreement) does not constitute a Material Adverse Effect on the
Company when compared to the state of facts which would exist if all such
agreements and covenants had been performed and complied with by the Company.
(c) From the date of this Agreement through June 30,
1996, the Cash Flow (as defined in Section 7.3 of the Company Disclosure
Memorandum) of the Company shall have been at least 90% of that projected in
the forecast set forth in Section 7.3 of the Company Disclosure Memorandum (the
"Forecast"), and from July 1, 1996 through September 30, 1996 (or through the
end of the month preceding the month in which the Closing occurs if the Closing
occurs after August 1, 1996, but earlier than September 30, 1996), the Cash
Flow of the Company shall have been at least 75% of that projected in the
Forecast.
(d) The Company shall have delivered to Acquiror a
certificate, dated as of the Closing Date and signed on its behalf by its chief
executive officer and its chief financial officer, as to the satisfaction by it
of the conditions set forth in subsections 7.3(a), 7.3(b) and 7.3(c).
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<PAGE> 40
ARTICLE 8
TERMINATION OF AGREEMENT
8.1 TERMINATION. Notwithstanding any other provision of this
Agreement, this Agreement may be terminated at any time prior to the Effective
Time:
(a) by mutual written consent of the Company and
Acquiror;
(b) by the Company or Acquiror, upon written notice to
the other party, if the Merger shall not have been consummated on or prior to
May 31, 1997 (the "Outside Date"), unless such failure of consummation shall be
due to the failure of the party seeking such termination to perform or observe
in all material respects the covenants and agreements hereof to be performed or
observed by such party;
(c) by the Company or Acquiror, upon written notice to
the other party, if a Governmental Authority of competent jurisdiction shall
have issued an injunction, order or decree enjoining or otherwise prohibiting
the consummation of the transactions contemplated by this Agreement, and such
injunction, order or decree shall have become final and non-appealable or if a
Governmental Authority has otherwise made a final determination that any
required Regulatory Authorization would not be forthcoming; PROVIDED, HOWEVER,
that the party seeking to terminate this Agreement pursuant to this clause has
used all required efforts as specified in Section 6.8 to remove such
injunction, order or decree;
(d) by the Company or Acquiror, if any condition to
such party's obligations to consummate the transactions contemplated hereby is
incapable of being satisfied on or prior to the Outside Date; PROVIDED,
HOWEVER, that (i) the terminating party has not breached the terms of this
Agreement; (ii) if the Company is the terminating party, the Consenting
Stockholders have not breached the terms of the Stockholders Agreement; and
(iii) if Acquiror is the terminating party, Zell/Chilmark Fund L.P. has not
breached the terms of the Jacor Shareholders Agreement, in each case in any
manner that proximately contributes to the failure to consummate the Merger by
the Outside Date;
(e) by the Company or Acquiror, if the FCC shall have
issued an order or ruling or taken other action denying approval of the
transactions contemplated by this Agreement, and such order, ruling or other
action shall have become final and non-appealable; PROVIDED, HOWEVER, that the
party seeking to terminate this Agreement pursuant to this clause has used all
required efforts as specified in Section 6.8 to obtain such FCC approval;
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<PAGE> 41
(f) by the Company, if prior to the delivery of the
consents of the Consenting Stockholders delivered pursuant to the Stockholder
Agreement, the Board of Directors of the Company determines in accordance with
a Director Duty that such termination is required by reason of a Competing
Transaction being proposed;
(g) by the Company or Acquiror, if prior to the
delivery of the consents of the Consenting Stockholders delivered pursuant to
the Stockholders Agreement, the Board of Directors of the Company shall have
withdrawn or modified in a manner materially adverse to Acquiror its approval
of the adoption of this Agreement or the approval of the Merger, because the
Board of Directors has determined to recommend to the Company's shareholders or
approve a Competing Transaction, in accordance with a Director Duty;
(h) by Acquiror, if any Consenting Stockholder shall
have breached any material representation or warranty, or failed to perform any
covenant or duty contained in, the Stockholders Agreement, other than a breach
or noncompliance that would not materially affect the benefits Acquiror is
receiving from the Stockholders Agreement;
(i) by Acquiror, within 100 days of the date of this
Agreement, if Acquiror reasonably believes, on the basis of the inspection
conducted pursuant to Section 6.13, that the Company's representations and
warranties in Section 4.16 are not true and correct both as of the date of this
Agreement and at all times within 100 days after the date of this Agreement;
(j) by Acquiror, within 20 days of the date of this
Agreement, if (i) the termination, if any, of any of the Undisclosed Contracts
because of the consummation of the Merger would constitute a Material Adverse
Effect on the Company or (ii) any or all of the Undisclosed Contracts
constitute a Material Adverse Effect on the Company when compared to the state
of facts which would exist if the Company were not a party to any or all of the
Undisclosed Contracts; or
(k) by the Company if (i) Zell/Chilmark Fund L.P.
shall have breached any material representation or warranty, or failed to
perform any covenant or duty contained in, the Jacor Shareholders Agreement,
other than a breach or noncompliance that would not materially affect the
benefits the Company is receiving from the Jacor Shareholders Agreement, or
(ii) in the event that all required authorizations of the shareholders of
Acquiror to effect the transactions contemplated by this Agreement shall not be
obtained.
8.2 EFFECT OF TERMINATION. (a) In the event that (i) this
Agreement is terminated pursuant to clause 8.1(f), clause 8.1(g), or clause
8.1(h) and (ii) at the time of termination, there has been no misrepresentation
by or breach of any obligation of
38
<PAGE> 42
Acquiror or Sub under this Agreement other than a breach of or noncompliance
with any obligation which would not constitute a Material Adverse Effect on
Acquiror, then the Company shall pay the Acquiror a fee of $20,000,000, which
amount shall be payable by wire transfer of same day funds within two business
days after the date this Agreement is terminated. Such amount shall be in
addition to the amounts payable by certain of the Consenting Stockholders to
the Acquiror pursuant to the Stockholders Agreement.
(b) If after the execution of the Letter of Credit
Escrow Agreement and the issuance of the Letter of Credit this Agreement is
terminated: (i) pursuant to Section 8.1(b), except if there has been a failure
to satisfy any of the conditions specified in Section 7.3; (ii) pursuant to
Section 8.1(c); (iii) by the Company, pursuant to Section 8.1(d); (iv) pursuant
to Section 8.1(e); or (v) pursuant to Section 8.1(k), then the Company shall be
permitted to draw on the Letter of Credit. The Company shall not be permitted
to draw on the Letter of Credit under any other circumstances. The obligations
of the parties to this Agreement under the last sentence of Section 6.7 and
under Sections 8.2 and 9.1 shall survive any termination of this Agreement.
(c) From and after the execution of the Letter of
Credit Escrow Agreement and the issuance of the Letter of Credit and except as
set forth in Section 8.2(d), the right to terminate this Agreement and receive
$75 million pursuant to a draw on the Letter of Credit under the circumstances
permitted in Sections 8.1 and 8.2(b) shall be the Company's exclusive remedy
and $75 million shall be the maximum measure of damages for any claim the
Company might have against Acquiror or its Affiliates in connection with the
transactions contemplated by this Agreement, including without limitation, any
claim for breach or nonperformance of this Agreement or any tort claim.
(d) If (i) the Merger has not been consummated, (ii)
this Agreement has not been terminated by the Company, (iii) the Letter of
Credit Escrow Agreement has been executed and the Letter of Credit has been
issued, and (iv) the Company believes that Acquiror has wilfully breached this
Agreement, the Company may choose to irrevocably waive the right to draw on the
Letter of Credit and instead bring an action against Acquiror or its Affiliates
for such alleged wilful breach of this Agreement (a "Letter of Credit Waiver").
A Letter of Credit Waiver must be made in writing and delivered by the Company
to Acquiror and the Escrow Agent (as defined in the Letter of Credit Escrow
Agreement). If the Company makes a Letter of Credit Waiver, the Company and
the Acquiror will take all necessary steps to cancel the Letter of Credit.
(e) Prior to the execution of the Letter of Credit
Escrow Agreement and the issuance of the Letter of Credit, the
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Company's sole remedies in connection with the transactions contemplated in
this Agreement shall be to terminate this Agreement (if permitted under Section
8.1) and/or bring an action against Acquiror or its Affiliates for wilful
breach of this Agreement if the Company believes that Acquiror has wilfully
breached this Agreement; PROVIDED, HOWEVER, that the bringing of such an action
shall not affect Acquiror's right to immediately receive any fee it is entitled
to under Section 8.2(a) and that if such a lawsuit is brought or the Company
exercises such a right of termination, the Letter of Credit Escrow Agreement
shall not be executed and the Letter of Credit shall not be issued.
ARTICLE 9
MISCELLANEOUS AND GENERAL
9.1 EXPENSES. Whether or not the Merger is consummated, all
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expenses except as expressly provided herein and except that (a) the filing fee
in connection with the HSR Act filing, (b) the filing fee in connection with
the filing of the Information Statement with the SEC, (c) the filing fees in
connection with necessary applications to the FCC, and (d) the expenses
incurred in connection with printing and mailing the Information Statement
shall be shared equally by the Company and Acquiror.
9.2 SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns, but shall not be assignable by any party hereto without
the prior written consent of the other parties hereto, provided however that
Acquiror may assign its rights under this Agreement to an Affiliate at any time
and to a non-Affiliate if the Acquiror, in its sole discretion, determines that
it is appropriate to do so because of difficulties encountered in satisfying
the conditions in Article 7 of this Agreement. Any such assignment shall not
affect Acquiror's liability hereunder.
9.3 THIRD PARTY BENEFICIARIES. Except as set forth in Article
3 and Sections 6.4(b), 6.6 and 6.9 (all of which shall inure to the benefit of
the persons or entities benefitting from the provisions thereof, which persons
are intended to be third party beneficiaries thereof), each party hereto
intends that this Agreement shall not benefit or create any right or cause of
action in or on behalf of any Person other than the parties hereto.
9.4 NOTICES. Any notice or other communication provided for
herein or given hereunder to a party hereto shall be sufficient if in writing,
and sent by facsimile transmission (electronically confirmed), delivered in
Person, mailed by first class registered
40
<PAGE> 44
or certified mail, postage prepaid, or sent by Federal Express or other
overnight courier of national reputation, addressed as follows:
If to Acquiror or Sub:
Randy Michaels
Jacor Communications, Inc.
1300 PNC Center
201 East Fifth Street
Cincinnati, Ohio 45202
Facsimile: (513) 621-0090
with a copy to:
Thomas W. Kahle, Esq.
Graydon, Head & Ritchey
1900 Fifth Third Center
511 Walnut Street
Cincinnati, Ohio 45202
Facsimile: (513) 651-3836
and
---
Scott J. Davis, Esq.
Mayer, Brown & Platt
190 South LaSalle Street
Chicago, Illinois 60603
Facsimile: (312) 701-7711
If to the Company:
Citicasters Inc.
One East Fourth Street
Cincinnati, Ohio 45202
Facsimile: (513) 562-8075
with a copy to:
Jones, Day, Reavis & Pogue
North Point
901 Lakeside Avenue
Cleveland, Ohio 44114
Attn: Lyle G. Ganske, Esq.
Facsimile: (216) 579-0212
or to such other address with respect to a party as such party shall notify the
other parties in writing as above provided.
9.5 COMPLETE AGREEMENT. This Agreement, the Company Disclosure
Memorandum, the Acquiror Disclosure Memorandum and the other documents and
agreements delivered by the parties in
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connection herewith, together with the Confidentiality Agreement, contain the
complete agreement among the parties hereto with respect to the Merger and the
other transactions contemplated hereby and thereby and supersede all prior
agreements and understandings among the parties hereto with respect thereto.
9.6 CAPTIONS; REFERENCES. The captions contained in this
Agreement are for convenience of reference only and do not form a part of this
Agreement. When a reference is made in this Agreement to a clause, a Section,
a subsection or an Article, such reference shall be to such clause, Section,
subsection or Article of this Agreement unless otherwise indicated.
9.7 AMENDMENT. At any time, the parties hereto, by action taken
by their respective Board of Directors or pursuant to authority delegated by
their respective Boards of Directors, may amend this Agreement; PROVIDED,
HOWEVER, that no amendment after approval by the shareholders of the Company
shall be made that changes in a manner adverse to such shareholders the Merger
Consideration without the further approval of such shareholders. This
Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto.
9.8 WAIVER. At any time prior to the Effective Time, the
parties hereto may (a) extend the time for the performance of any of the
obligations or other acts of the parties hereto, (b) waive any inaccuracies in
the representations and warranties contained herein or in any document
delivered pursuant hereto, or (c) waive compliance with any of the agreements
or conditions contained herein, to the extent permitted by applicable law. Any
agreement on the part of a party hereto to any such extension or waiver shall
be valid only if set forth in a writing signed on behalf of such party.
9.9 GOVERNING LAW. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of Florida,
without regard to its rules of conflict of laws.
9.10 NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS.
Except as set forth in this Section 9.10, no representation, warranty or
covenant contained in this Agreement shall survive the Merger or, except as set
forth in Section 8.2, the earlier termination of this Agreement. The
obligations set forth in Article 3 and Sections 6.4(b), 6.6, 6.9 and 6.11 shall
survive the Merger.
9.11 SEVERABILITY. Any term or provision of this Agreement that
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 or affecting the validity or enforceability of any of the terms or
provisions of
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this Agreement in any other jurisdiction. If any provision of this Agreement
is so broad as to be unenforceable, the provision shall be interpreted to be
only so broad as is enforceable.
9.12 ENFORCEMENT OF AGREEMENT. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement was not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions hereof, this being in
addition to any other remedy to which they are entitled at law or in equity.
9.13 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which shall
constitute but one instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date and year first above written.
CITICASTERS INC.
By:________________________
Its:_______________________
JACOR COMMUNICATIONS, INC.
By:________________________
Its:_______________________
JCAC, INC.
By:________________________
Its:_______________________
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INDEX OF DEFINED TERMS
<TABLE>
<CAPTION>
Page
<S> <C>
Acquiror . . . . . . . . . . . . . . . . . . . . . . . . 1
Acquiror Common Stock . . . . . . . . . . . . . . . . . . 20
Acquiror Disclosure Memorandum . . . . . . . . . . . . . 19
Acquiror Financial Statements . . . . . . . . . . . . . . 22
Acquiror Reports . . . . . . . . . . . . . . . . . . . . 21
Acquiror's Knowledge . . . . . . . . . . . . . . . . . . 21
Affiliate . . . . . . . . . . . . . . . . . . . . . . . . 23
Agreement . . . . . . . . . . . . . . . . . . . . . . . . 1
Articles of Merger . . . . . . . . . . . . . . . . . . . 2
Benefit Plans . . . . . . . . . . . . . . . . . . . . . . 14
Cash Consideration . . . . . . . . . . . . . . . . . . . 3
Certificates . . . . . . . . . . . . . . . . . . . . . . 3
Class B Shares . . . . . . . . . . . . . . . . . . . . . 7
Closing . . . . . . . . . . . . . . . . . . . . . . . . . 2
Closing Date . . . . . . . . . . . . . . . . . . . . . . 2
Code . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Communications Law . . . . . . . . . . . . . . . . . . . 10
Company . . . . . . . . . . . . . . . . . . . . . . . . . 1
Company Capital Stock . . . . . . . . . . . . . . . . . . 7
Company Common Stock . . . . . . . . . . . . . . . . . . 3
Company Contracts . . . . . . . . . . . . . . . . . . . . 15
Company Disclosure Memorandum . . . . . . . . . . . . . . 6
Company Financial Advisor . . . . . . . . . . . . . . . . 18
Company Financial Statements . . . . . . . . . . . . . . 11
Company Preferred Shares . . . . . . . . . . . . . . . . 7
Company Properties . . . . . . . . . . . . . . . . . . . 18
Company Reports . . . . . . . . . . . . . . . . . . . . . 10
Company's Knowledge . . . . . . . . . . . . . . . . . . . 12
Competing Transaction . . . . . . . . . . . . . . . . . . 25
Confidentiality Agreement . . . . . . . . . . . . . . . . 31
Consenting Stockholders . . . . . . . . . . . . . . . . . 1
Director Duty . . . . . . . . . . . . . . . . . . . . . . 25
Effective Time . . . . . . . . . . . . . . . . . . . . . 2
Employee pension benefit plan . . . . . . . . . . . . . . 13
Employee welfare benefit plan . . . . . . . . . . . . . . 14
Equity Rights . . . . . . . . . . . . . . . . . . . . . . 8
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Exchange Act . . . . . . . . . . . . . . . . . . . . . . 10
Exchange Agent . . . . . . . . . . . . . . . . . . . . . 5
FBCA . . . . . . . . . . . . . . . . . . . . . . . . . . 1
FCC . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Funds . . . . . . . . . . . . . . . . . . . . . . . . . . 5
GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Governmental Authority . . . . . . . . . . . . . . . . . 9
HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . 9
Indemnified Parties . . . . . . . . . . . . . . . . . . . 32
Information Statement . . . . . . . . . . . . . . . . . . 29
Letter of Credit . . . . . . . . . . . . . . . . . . . . 33
Letter of Credit Escrow Agreement . . . . . . . . . . . . 33
Liens . . . . . . . . . . . . . . . . . . . . . . . . . . 12
</TABLE>
<PAGE> 48
<TABLE>
<S> <C>
Material Adverse Effect . . . . . . . . . . . . . . . . . 6
Material Company Subsidiaries . . . . . . . . . . . . . . 8
Merger . . . . . . . . . . . . . . . . . . . . . . . . . 1
Merger Consideration . . . . . . . . . . . . . . . . . . 3
Multiemployer plan . . . . . . . . . . . . . . . . . . . 13
Multiemployer plans . . . . . . . . . . . . . . . . . . . 15
Option . . . . . . . . . . . . . . . . . . . . . . . . . 4
Outside Date . . . . . . . . . . . . . . . . . . . . . . 37
Person . . . . . . . . . . . . . . . . . . . . . . . . . 25
Plan . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Plans . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Registration Statement . . . . . . . . . . . . . . . . . 29
Retirement Plans . . . . . . . . . . . . . . . . . . . . 14
Rule 145 Affiliates . . . . . . . . . . . . . . . . . . . 34
SEC . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Securities Act . . . . . . . . . . . . . . . . . . . . . 10
SFB Plans . . . . . . . . . . . . . . . . . . . . . . . . 14
Station Licenses . . . . . . . . . . . . . . . . . . . . 13
Stations . . . . . . . . . . . . . . . . . . . . . . . . 13
Stock Option Plans . . . . . . . . . . . . . . . . . . . 4
Stockholders Agreement . . . . . . . . . . . . . . . . . 1
Sub . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . 9
Surviving Corporation . . . . . . . . . . . . . . . . . . 1
Undisclosed Contracts . . . . . . . . . . . . . . . . . . 16
Warrant . . . . . . . . . . . . . . . . . . . . . . . . . 3
Warrant Consideration . . . . . . . . . . . . . . . . . . 3
Warrant Shares . . . . . . . . . . . . . . . . . . . . . 29
Warrant Shares Registration Statement . . . . . . . . . . 29
</TABLE>
ii
<PAGE> 1
STOCKHOLDERS AGREEMENT
THIS STOCKHOLDERS AGREEMENT, dated as of February 12, 1996, is
among JACOR COMMUNICATIONS, INC., an Ohio corporation ("Parent"), JCAC, INC., a
Florida corporation and a wholly owned subsidiary of Parent ("Acquisition"),
GREAT AMERICAN INSURANCE COMPANY, an Ohio corporation ("Seller A"), AMERICAN
FINANCIAL CORPORATION, an Ohio corporation ("Seller B"), AMERICAN FINANCIAL
ENTERPRISES, INC., a Connecticut corporation ("Seller C"), CARL H. LINDNER
("Seller D"), THE CARL H. LINDNER FOUNDATION, a charitable foundation ("Seller
E") and S. CRAIG LINDNER ("Seller F"). Seller A, Seller B, Seller C, Seller
D, Seller E and Seller F are sometimes individually referred to herein as a
"Seller" and are sometimes collectively referred to herein as the "Sellers".
WHEREAS, Parent, Acquisition, and Citicasters Inc., a Florida
corporation (the "Company"), are, concurrently with the execution of this
Agreement, entering into an Agreement and Plan of Merger (the "Merger
Agreement"), which provides, among other things, upon the terms and subject to
the conditions thereof, that Acquisition will be merged with and into the
Company in accordance with the Florida Business Corporation Act (the "Merger")
such that each share of Class A Common Stock, par value $.01 per share, of the
Company (the "Shares") issued and outstanding immediately prior to the
effective time of the Merger (other than Shares owned by the Company, Parent,
Acquisition or any direct or indirect subsidiary of the Company, Parent or
Acquisition, and any Shares held in the treasury of the Company) will be
converted into the right to receive the Merger Consideration (as defined in the
Merger Agreement);
WHEREAS, each Seller owns the number of Shares (the "Seller's
Shares") set forth on Schedule A hereto opposite the name of such Seller; and
WHEREAS, in order to induce Parent and Acquisition to enter
into the Merger Agreement, each Seller has agreed to enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements herein contained, and intending to be legally
bound hereby, Parent, Acquisition and the Sellers hereby agree as follows.
Section 1. REPRESENTATIONS AND WARRANTIES OF SELLERS.
Each Seller represents and warrants to Parent and Acquisition as follows:
<PAGE> 2
(a) Each of Seller A, Seller B and Seller C is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation.
(b) Each of Seller A, Seller B, Seller C and Seller E has
all necessary power and authority to execute and deliver this Agreement, to
perform its obligations hereunder and to consummate the transactions
contemplated hereby.
(c) The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby have
been duly and validly authorized by the board of directors of each of Seller A,
Seller B, Seller C and Seller E and no other proceedings on the part of any of
Seller A, Seller B, Seller C or Seller E are necessary to authorize this
Agreement or to consummate the transactions so contemplated.
(d) This Agreement has been duly and validly executed and
delivered by each Seller and constitutes a legal, valid and binding agreement
of each Seller enforceable against each Seller in accordance with its terms,
except that the enforceability hereof may be subject to applicable bankruptcy,
insolvency or other similar laws now or hereinafter in effect affecting
creditors' rights generally.
(e) The execution, delivery and performance by the
Sellers of this Agreement and the consummation of the transactions contemplated
hereby do not and will not (i) contravene or conflict with the Certificate of
Incorporation or By-Laws of any of Seller A, Seller B or Seller C or any
organizational or governing documents of Seller E; (ii) contravene or conflict
with or constitute a violation of any provision of any law, regulation,
judgment, injunction, order or decree binding upon or applicable to any Seller,
any of their respective subsidiaries or any of their respective properties;
(iii) conflict with, or result in the breach or termination of any provision of
or constitute a default (with or without the giving of notice or the lapse of
time or both) under, or give rise to any right of termination, cancellation, or
loss of any benefit to which any Seller or any of its subsidiaries is entitled
under any provision of any agreement, contract, license or other instrument
binding upon such Seller, any of its subsidiaries or any of their respective
properties, or allow the acceleration of the performance of, any obligation of
any Seller or any of its subsidiaries under any indenture, mortgage, deed of
trust, lease, license, contract, instrument or other agreement to which such
Seller or any of its subsidiaries is a party or by which any Seller or any of
its subsidiaries or any of their respective assets or properties is subject or
bound; or (iv) result in the creation or imposition of any security interests,
liens, claims, pledges, charges, voting agreements or other encumbrances of any
nature whatsoever (collectively, "Liens") on any asset of any Seller or any of
its subsidiaries, except in the case of clauses (ii), (iii)
2
<PAGE> 3
and (iv) for any such contraventions, conflicts, violations, breaches,
terminations, defaults, cancellations, losses, accelerations and Liens which
would not individually or in the aggregate materially interfere with the
consummation of the transactions contemplated by this Agreement.
(f) As of the date hereof, none of the Sellers and none
of their respective properties is subject to any order, writ, judgment,
injunction, decree, determination or award which would prevent or delay the
consummation of the transactions contemplated hereby.
(g) Each Seller has, and at all times between the date of
this Agreement and the consummation of the Merger such Seller will have, (i)
good and valid title to such Seller's Shares, free and clear of any Liens and
(ii) the right to vote such Seller's Shares.
(h) There are no options or rights to acquire, or any
agreements to which any Seller is a party relating to, any Seller's Shares,
other than this Agreement.
(i) The Seller's Shares described in Schedule A represent
all of the Shares beneficially owned (within the meaning of Rule 13d-3 under
the Exchange Act) by any of the Sellers.
Section 2. REPRESENTATIONS AND WARRANTIES OF PARENT AND
ACQUISITION. Each of Parent and Acquisition represents and warrants to the
Sellers as follows:
(a) Each of Parent and Acquisition is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation.
(b) Each of Parent and Acquisition has all necessary
corporate power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the transactions contemplated
hereby.
(c) The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby have
been duly and validly authorized by the board of directors of each of Parent
and Acquisition and no other corporate proceedings on the part of Parent or
Acquisition are necessary to authorize this Agreement or to consummate the
transactions so contemplated.
(d) This Agreement has been duly and validly executed and
delivered by each of Parent and Acquisition and constitutes a legal, valid and
binding agreement of each of Parent and Acquisition enforceable against each of
Parent and Acquisition in accordance with its terms, except that the
enforceability hereof
3
<PAGE> 4
may be subject to applicable bankruptcy, insolvency, or other similar laws, now
or hereinafter in effect affecting creditors' rights generally.
Section 3. NEGATIVE COVENANTS OF SELLERS. Except as
provided for herein or in the Merger Agreement, each Seller agrees not to
(either directly or indirectly):
(a) sell, transfer, pledge, assign, hypothecate or
otherwise dispose of, or enter into any contract, option or other arrangement
or understanding with respect to the sale, transfer, pledge, assignment,
hypothecation or other disposition of such Seller's Shares (including, without
limitation, through the disposition or transfer of control of another person)
other than to an affiliate of Seller D that agrees to be bound by this
Agreement;
(b) grant any proxies with respect to such Seller's
Shares, deposit such Seller's Shares into a voting trust or enter into a voting
agreement with respect to any of such Seller's Shares; or
(c) take any action which would make any representation
or warranty of any Seller herein untrue or incorrect in any material respect.
Section 4. NO SOLICITATION. (a) From and after the
date of this Agreement and except as set forth in subsection 4.(b), the Sellers
shall not, and the Sellers shall use their reasonable best efforts to cause the
Company not to, directly or indirectly, (i) solicit, initiate, knowingly
encourage, or participate in discussions or negotiations regarding, any
proposals or offers from any individual, corporation, partnership, limited
liability corporation, joint venture, trust, association, unincorporated
organization, other entity, group or governmental authority ("Person") relating
to any Competing Transaction (as defined in subsection 4.(c)) or (ii) furnish
to any other Person any nonpublic information or access to such information
with respect to, or otherwise concerning, any Competing Transaction. The
Sellers shall immediately cease and cause to be terminated any existing
discussions or negotiations with any third parties conducted heretofore with
respect to any proposed Competing Transaction. The Sellers shall promptly
disclose to Parent the identity of any Person who attempts to initiate any
discussions contemplating a Competing Transaction.
(b) Notwithstanding anything to the contrary contained in
this Section 4 or in any other provision of this Agreement, until the consents
required by Section 5 have been duly executed and delivered, the Sellers shall
not be required to cause the Company to refrain from (i) participating in
discussions or negotiations with, and, during such period, furnishing
information to, a Person that seeks to engage in discussions or negotiations,
4
<PAGE> 5
requests information or makes a proposal to acquire the Company pursuant to a
Competing Transaction, if the Company's directors have determined in good faith
that such action is required for the discharge of their fiduciary obligations,
based upon the written advice of independent legal counsel, who may be the
Company's regularly engaged legal counsel (a "Director Duty"); or (ii)
terminating this Agreement and entering into an agreement providing for a
Competing Transaction in accordance with a Director Duty. In the event that
the Sellers participate (directly or indirectly) in discussions or negotiations
with, or furnish information to, a Person that seeks to engage in such
discussions or negotiations, requests information or makes a proposal to
acquire the Company pursuant to a Competing Transaction pursuant to this
subsection 4.(b), then: (i) the Sellers shall immediately disclose to Parent
the decision of the Company's directors; (ii) the identity of the Person; and
(iii) copies of all information or material not previously furnished to Parent
or Acquisition which the Sellers, the Company, or their respective agents
provides or causes to be provided to such Person or any of its officers,
directors, employees, agents, advisors or representatives.
(c) For the purposes of this Agreement, "Competing
Transaction" shall mean any of the following involving the Company: (i) any
merger, consolidation, share exchange, business combination or other similar
transaction; (ii) any sale, lease, exchange, transfer or other disposition of
all or substantially all of the assets of the Company and its subsidiaries,
taken as a whole, in a single transaction or series of related transactions; or
(iii) any tender offer or exchange offer for Shares.
Section 5. WRITTEN CONSENT.
(a) Prior to the close of business on the thirtieth day
following the date of this Agreement (the "Delivery Date"), unless the Merger
Agreement has been terminated on or prior to the Delivery Date, each Seller
will execute and deliver to the corporate secretary of the Company a written
consent with respect to such Seller's Shares in the form attached hereto as
Exhibit A, which written consent will not be withdrawn or revoked. Such
written consents of the Sellers will constitute the irrevocable written consent
of each of the Sellers with respect to his or its Seller's Shares to the
approval and adoption of the Merger Agreement.
(b) For so long as this Agreement is in effect, in any
meeting of the stockholders of the Company, however called, and in any action
by consent of the stockholders of the Company, each Seller shall vote or cause
to be voted all of such Seller's Shares: (i) against any action or agreement
that would result in a breach in any material respect of any covenant,
representation or warranty or other obligation of any Seller under this
Agreement or of the Company, Parent or Acquisition under the Merger Agreement;
(ii)
5
<PAGE> 6
against any action or agreement that would impede, interfere with or discourage
the transactions contemplated by this Agreement or the Merger Agreement,
including, without limitation: (1) any extraordinary corporate transaction,
such as a merger, reorganization or liquidation involving the Company or any of
its subsidiaries, (2) a sale or transfer of a material amount of assets of the
Company, or any of its subsidiaries or the issuance of securities by the
Company or any of its subsidiaries, (3) any change in the board of directors of
the Company, (4) any change in the present capitalization or dividend policy of
the Company (other than as contemplated by the Merger Agreement) or (5) any
other material change in the Company's corporate structure or business; and
(iii) in favor of any action or agreement that would further the consummation
of the transactions contemplated by this Agreement or the Merger Agreement.
Section 6. REGISTRATION AGREEMENT. Prior to the closing
of the Merger, the parties will enter into an agreement providing for shelf
registration of resale of the Warrants and the Warrant Shares (each as defined
in the Merger Agreement) with terms and conditions customary for transactions
that are similar to the Merger.
Section 7. SPECIFIC PERFORMANCE. The parties hereto
agree that irreparable damage would occur in the event any provision of this
Agreement was not performed in accordance with the terms hereof and that the
parties shall be entitled to specific performance of the terms hereof, in
addition to any other remedy at law or in equity.
Section 8. EXPENSES. Each party shall bear its own
expenses and costs in connection with this Agreement and the transactions
contemplated hereby.
Section 9. AMENDMENT; ASSIGNMENT. This Agreement may
not be modified, amended, altered or supplemented except upon the execution and
delivery of a written agreement executed by the parties hereto. This Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns and shall be assignable by the parties
hereto; PROVIDED, HOWEVER, that this Agreement shall not be assignable by any
Seller without the prior written consent of Parent other than to an affiliate
of Seller D that agrees to be bound by this Agreement. No assignment hereunder
will relieve any party to this Agreement of its obligations hereunder.
Section 10. PARTIES IN INTEREST. This Agreement shall be
binding upon and inure solely to the benefit of each party hereto and its
successors and permitted assigns, and nothing in this Agreement, express or
implied, is intended to or shall confer upon any other person any rights,
benefits or remedies of any nature whatsoever under or by reason of this
Agreement.
6
<PAGE> 7
Section 11. NOTICES. All notices, requests, claims,
demands and other communications hereunder shall be in writing and shall be
given (and shall be deemed to have been duly given upon receipt) by delivery in
person, by facsimile or by registered or certified mail (postage prepaid,
return receipt requested), to the other party as follows:
(a) If to Parent or Acquisition, to:
Randy Michaels
Jacor Communications, Inc.
1300 PNC Center
201 East Fifth Street
Cincinnati, Ohio 45202
Facsimile: (513) 621-0090
with a copy to:
Thomas W. Kahle, Esq.
Graydon, Head & Ritchey
1900 Fifth Third Center
511 Walnut Street
Cincinnati, Ohio 45202
Facsimile: (513) 651-3836
and
---
Scott J. Davis, Esq.
Mayer, Brown & Platt
190 South LaSalle Street
Chicago, Illinois 60603
Facsimile: (312) 701-7711
(b) If to the Sellers, to:
James C. Kennedy, Esq.
American Financial Group, Inc.
One East Fourth Street
Suite 919
Cincinnati, Ohio 45202
Facsimile: (513) 579-2113
or to such other address as the person to whom notice is given may have
previously furnished to the other in writing in the manner set forth above.
Section 12. REASONABLE BEST EFFORTS. Subject to the
terms and conditions herein provided, each of the parties hereto agrees to use
its reasonable best efforts to take, or cause to be taken, all actions, and to
do, or cause to be done, all things reasonably necessary, proper or advisable
under applicable laws and
7
<PAGE> 8
regulations to consummate and make effective the transactions contemplated by
this Agreement.
Section 13. GOVERNING LAW. This Agreement shall be
governed by and construed in accordance with the law of the State of Florida,
without regard to the principles of conflicts of law thereof.
Section 14. TERMINATION.
(a) This Agreement shall terminate upon termination of
the Merger Agreement without the consummation of the Merger. No such
termination shall relieve any party from liability for any breach of this
Agreement.
(b) If (i) the Merger Agreement is terminated pursuant to
Sections 8.1(f), 8.1(g) or 8.1(h) of that Agreement and (ii) a transaction is
consummated within eighteen months after the termination of the Merger
Agreement that results (1) in the sale, exchange, conversion or other
disposition (by merger or otherwise) of some or all of the Shares owned by
Seller D or Seller F (2) a payment (by dividend or otherwise) to Seller D or
Seller F following a sale of all or substantially all of the assets of the
Company, a recapitalization, a restructuring or other similar event (in the
case of (1) or (2), an "Other Transaction"), Seller D and Seller F shall,
immediately after the consummation of the Other Transaction, pay to Parent a
sum (the "Compensating Payment") equal to the number of Shares sold, exchanged,
converted, or otherwise disposed or with respect to which Seller D or Seller F
received a payment, in the Other Transaction multiplied by one half of the Per
Share Difference. The Per Share Difference shall equal (x) the fair market
value, valued as of the time the Other Transaction is consummated, of the
consideration per Share received by Seller D or Seller F in the Other
Transaction less (y) the expected fair market value per Share, valued as of
December 1, 1996, that Seller D or Seller F would have received in the Merger.
If Seller D, Seller F and Parent cannot agree on the amount of the Compensating
Payment, Seller D and Seller F shall pay Parent immediately a sum equal to what
Seller D and Seller F believe the Compensating Payment to be (the "Immediate
Payment") plus interest at 9% per year on the Immediate Payment for the period
between the time the Other Transaction is consummated and the time the
Immediate Payment is made, and the final amount of the Compensating Payment
shall be determined in accordance with the commercial arbitration rules of the
American Arbitration Association by an arbitrator or arbitrators appointed in
accordance with such rules. Such arbitration shall take place in Cincinnati,
Ohio, and judgment upon any award rendered in such arbitration may be entered
in any court of appropriate jurisdiction; the parties hereto consent to the
entry of such judgment and agree that no appeal shall be taken therefrom.
Parent shall be entitled to receive immediately the difference between the
final amount of the Compensating Payment
8
<PAGE> 9
determined by the arbitrators and the Immediate Payment (the "Difference") and
interest at 9% per year on the Difference for the period between the date the
Competing Transaction is consummated and the date the Difference is paid to
Parent. In no event shall Parent be required to make any payment under this
Agreement.
(c) This Section 14 shall survive the termination of this
Agreement.
Section 15. SEVERABILITY. The provisions of this
Agreement shall be deemed severable and the invalidity or unenforceability of
any provision shall not affect the validity and enforceability of the other
provisions hereof. If any provision of this Agreement, or the application
thereof to any person or entity or any circumstance, is invalid or
unenforceable, (a) a suitable and equitable provision shall be substituted
therefor in order to carry out, so far as may be valid and enforceable, the
intent and purpose of such invalid and unenforceable provision and (b) the
remainder of this Agreement and the application of such provision to other
persons, entities or circumstances shall not be affected by such invalidity or
unenforceability, nor shall such invalidity or unenforceability affect the
validity or enforceability of such provision, or the application thereof, in
any other jurisdiction.
Section 16. ENTIRE AGREEMENT. This Agreement constitutes
the entire agreement among the parties hereto with respect to the subject
matter hereof and supersedes all other prior agreements and understandings,
both written and oral, among the parties with respect to the subject matter
hereof.
Section 17. DESCRIPTIVE HEADINGS. The descriptive
headings herein are inserted for convenience of reference only and are not
intended to be part of or to affect the meaning or interpretation of this
Agreement.
Section 18. CERTAIN DEFINITIONS. For purposes of this
Agreement, the term:
(a) "affiliate" of a person means a person that directly
or indirectly, through one or more intermediaries, controls, is controlled by,
or is under common control with, the first mentioned person;
(b) "control" (including the terms "controlled by" and
"under common control with") means the possession, directly or indirectly or as
trustee or executor, of the power to direct or cause the direction of the
management policies of a person, whether through the ownership of stock, as
trustee or executor, by contract or credit arrangement or otherwise;
(c) "knowledge" means knowledge after reasonable inquiry;
9
<PAGE> 10
(d) "person" means an individual, corporation,
partnership, association, trust, unincorporated organization, other entity or
group (as defined in Section 13(d)(3) of the Exchange Act); and
(e) "subsidiary" or "subsidiaries" of any person means
any corporation, partnership, joint venture or other legal entity of which such
person (either alone or through or together with any other subsidiary), owns,
directly or indirectly, 50% or more of the stock or other equity interests the
holder of which is generally entitled to vote for the election of the board of
directors or other governing body of such corporation, partnership, joint
venture or other legal entity.
Section 19. COUNTERPARTS. This Agreement may be executed
in two or more counterparts, each of which shall be deemed to be an original,
but all of which shall constitute one and the same agreement.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to
be executed on its behalf by its representatives thereunto duly authorized, all
as of the day and year first above written.
GREAT AMERICAN INSURANCE COMPANY
By: __________________________
Name:
Title:
AMERICAN FINANCIAL CORPORATION
By: __________________________
Name:
Title:
AMERICAN FINANCIAL ENTERPRISES, INC.
By: __________________________
Name:
Title:
CARL H. LINDNER
_________________________
Carl H. Lindner
10
<PAGE> 11
THE CARL H. LINDNER FOUNDATION
By: __________________________
Name:
Title:
S. CRAIG LINDNER
__________________________
S. Craig Lindner
JACOR COMMUNICATIONS, INC.
By: __________________________
Name:
Title:
JCAC, INC.
By: __________________________
Name:
Title:
11
<PAGE> 12
SCHEDULE A
TO THE
STOCKHOLDERS AGREEMENT
Capitalized terms used in this Schedule A and not otherwise defined in
this Schedule A have the respective meanings assigned to such terms in the
attached Stock Purchase Agreement.
<TABLE>
<CAPTION>
NAME OF EACH SELLER NUMBER OF SHARES
- ------------------- ----------------
<S> <C>
GREAT AMERICAN INSURANCE COMPANY 3,455,698 Shares
AMERICAN FINANCIAL CORPORATION 1,500,000 Shares
AMERICAN FINANCIAL ENTERPRISES, INC. 2,611,191 Shares
CARL H. LINDNER 3,257,913 Shares
THE CARL H. LINDNER FOUNDATION 170,253 Shares
S. CRAIG LINDNER 85,500 Shares
======================== =================
Total 11,080,555 Shares
</TABLE>
<PAGE> 13
EXHIBIT A
WRITTEN CONSENT
OF A SHAREHOLDER OF
CITICASTERS, INC.
PURSUANT TO SECTION 607.0704
OF THE FLORIDA BUSINESS CORPORATION ACT
The undersigned, being the holder of ________ shares of Class A Common
Stock, par value $.01 per share, of Citicasters, Inc., a Florida corporation
(the "Company"), by executing this written consent, hereby approves the
Agreement and Plan of Merger (the "Merger Agreement") dated as of February 12,
1996 among the Company, Jacor Communications, Inc., an Ohio corporation
("Acquiror") and JCAC, Inc., a Florida corporation and wholly owned subsidiary
of Acquiror ("Acquisition") and thereby approves the adoption by the surviving
corporation in the merger contemplated by the Merger Agreement of the Articles
of Incorporation and By-Laws of Acquisition.
IN WITNESS WHEREOF, the undersigned has executed this written consent
as of the date written below.
Date:
______________
[Shareholder]
_______________________
[Shareholder]
13
<PAGE> 1
JACOR SHAREHOLDERS AGREEMENT
THIS SHAREHOLDERS AGREEMENT, dated as of February ___, 1996,
is among Citicasters Inc., a Florida corporation ("Citicasters"), and the
Zell/Chilmark Fund L.P., a Delaware limited partnership ("ZCF").
WHEREAS, Jacor Communications, Inc., an Ohio corporation (the
"Company"), JCAC, Inc., a Florida corporation ("Acquisition") and Citicasters
are, concurrently with the execution of this Agreement, entering into an
Agreement and Plan of Merger (the "Merger Agreement"), which provides, among
other things, upon the terms and subject to the conditions thereof, that
Acquisition will be merged with and into Citicasters in accordance with the
Florida Business Corporation Act (the "Merger") such that each share of Class A
Common Stock, par value $.01 per share, of Citicasters (the "Shares") issued
and outstanding immediately prior to the effective time of the Merger (other
than Shares owned by Citicasters, the Company, Acquisition or any direct or
indirect subsidiary of Citicasters, the Company or Acquisition, and any Shares
held in the treasury of the Company) will be converted into the right to
receive the Merger Consideration (as defined in the Merger Agreement);
WHEREAS, ZCF owns in excess of 69.0% of the outstanding shares
(the "ZCF Shares") of the Company's common stock, without par value ("Common
Stock"); and
WHEREAS, in order to induce Citicasters to enter into the
Merger Agreement, ZCF has agreed to enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements herein contained, and intending to be legally
bound hereby, ZCF and Citicasters hereby agree as follows.
Section 1. REPRESENTATIONS AND WARRANTIES OF ZCF. ZCF
represents and warrants to Citicasters as follows:
(a) ZCF is a limited partnership duly organized, validly
existing and in good standing under the laws of the State of Delaware.
(b) ZCF has all necessary power and authority to execute
and deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby.
(c) The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby have
been duly and validly authorized by ZCF and no other
<PAGE> 2
proceedings on the part of ZCF are necessary to authorize this Agreement or to
consummate the transactions so contemplated.
(d) This Agreement has been duly and validly executed and
delivered by ZCF and constitutes a legal, valid and binding agreement of ZCF
enforceable against ZCF in accordance with its terms, except that the
enforceability hereof may be subject to applicable bankruptcy, insolvency or
other similar laws now or hereinafter in effect, affecting creditors' rights
generally.
(e) For so long as this Agreement is in effect, ZCF
hereby grants Citicasters an irrevocable proxy and irrevocably appoints
Citicasters or its designees, with full power of substitution, its attorney and
proxy to vote all the ZCF Shares, and any shares of Common Stock hereafter
acquired by ZCF, at any meeting of the shareholders of the Company, however
called, in favor of any proposal to approve for issuance shares of Common Stock
and warrants to purchase shares of Common Stock, in each case, in an amount
necessary for the payment of the Merger Consideration pursuant to the Merger
Agreement, and if required, the adoption of the Merger Agreement and the
approval of the Merger. This Agreement does not grant to Citicasters or its
designees any right to vote on any other matters which may be presented to the
Company's shareholders at such meeting. The proxy granted hereby shall be
deemed to be a proxy coupled with an interest for purposes of Section
1701.48(D) of the Ohio Revised Code.
(f) For so long as this Agreement is in effect, in any
meeting of the stockholders of the Company, however called, ZCF shall vote or
cause to be voted all of the ZCF Shares, and any shares of Common Stock
hereafter acquired by ZCF, in favor of any proposal to approve for issuance
shares of Common Stock and warrants to purchase shares of Common Stock, in each
case, in an amount necessary for the payment of the Merger Consideration
pursuant to the Merger Agreement.
(g) As of the date of this Agreement, ZCF is the
beneficial owner of at least 69.0% of the outstanding shares of Common Stock.
Section 2. SPECIFIC PERFORMANCE. The parties hereto agree
that irreparable damage would occur in the event any provision of this
Agreement was not performed in accordance with the terms hereof and that the
parties shall be entitled to specific performance of the terms hereof, in
addition to any other remedy at law or in equity.
Section 3. EXPENSES. Each party shall bear its own expenses
and costs in connection with this Agreement and the transactions contemplated
hereby.
2
<PAGE> 3
Section 4. AMENDMENT; ASSIGNMENT. This Agreement may not be
modified, amended, altered or supplemented except upon the execution and
delivery of a written agreement executed by the parties hereto. No party may
assign any of its rights or obligations under this Agreement without the prior
written consent of the other party.
Section 5. PARTIES IN INTEREST. This Agreement shall be
binding upon and inure solely to the benefit of each party hereto and its
successors and permitted assigns, and nothing in this Agreement, express or
implied, is intended to or shall confer upon any other person any rights,
benefits or remedies of any nature whatsoever under or by reason of this
Agreement.
Section 6. NOTICES. All notices, requests, claims, demands
and other communications hereunder shall be in writing and shall be given (and
shall be deemed to have been duly given upon receipt) by delivery in person, by
facsimile or by registered or certified mail (postage prepaid, return receipt
requested), to the other party as follows:
(a) If to ZCF, to:
David J. Rosen
Zell/Chilmark Fund L.P.
Two North Riverside Plaza
Suite 1900
Chicago, Illinois 60606
Facsimile: (312) 902-1573
with a copy to:
Thomas W. Kahle, Esq.
Graydon, Head & Ritchey
1900 Fifth Third Center
511 Walnut Street
Cincinnati, Ohio 45202
Facsimile: (513) 651-3836
and
---
Scott J. Davis, Esq.
Mayer, Brown & Platt
190 South LaSalle Street
Chicago, Illinois 60603
Facsimile: (312) 701-7711
3
<PAGE> 4
(b) If to Citicasters, to:
Samuel J. Simon, Esq.
Citicasters Inc.
Suite 600
One East Fourth Street
Cincinnati, Ohio 45202
Facsimile: (513) 562-8075
with a copy to:
James C. Kennedy, Esq.
American Financial Group, Inc.
One East Fourth Street
Suite 919
Cincinnati, Ohio 45202
Facsimile: (513) 579-2113
or to such other address as the person to whom notice is given may have
previously furnished to the other in writing in the manner set forth above.
Section 7. REASONABLE BEST EFFORTS. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to use its
reasonable best efforts to take, or cause to be taken, all actions, and to do,
or cause to be done, all things reasonably necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement.
Section 8. GOVERNING LAW. This Agreement shall be governed
by and construed in accordance with the law of the State of Ohio, without
regard to the principles of conflicts of law thereof.
Section 9. TERMINATION. This Agreement shall terminate upon
the earlier to occur of the consummation of the Merger or the termination of
the Merger Agreement without the consummation of the Merger. No such
termination shall relieve any party from liability for any breach of this
Agreement.
Section 10. SEVERABILITY. The provisions of this Agreement
shall be deemed severable and the invalidity or unenforceability of any
provision shall not affect the validity and enforceability of the other
provisions hereof. If any provision of this Agreement, or the application
thereof to any person or entity or any circumstance, is invalid or
unenforceable, (a) a suitable and equitable provision shall be substituted
therefor in order to carry out, so far as may be valid and enforceable, the
intent and purpose of such invalid and unenforceable provision and (b) the
4
<PAGE> 5
remainder of this Agreement and the application of such provision to other
persons, entities or circumstances shall not be affected by such invalidity or
unenforceability, nor shall such invalidity or unenforceability affect the
validity or enforceability of such provision, or the application thereof, in
any other jurisdiction.
Section 11. ENTIRE AGREEMENT. This Agreement constitutes the
entire agreement among the parties hereto with respect to the subject matter
hereof and supersedes all other prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof.
Section 12. DESCRIPTIVE HEADINGS. The descriptive headings
herein are inserted for convenience of reference only and are not intended to
be part of or to affect the meaning or interpretation of this Agreement.
Section 13. COUNTERPARTS. This Agreement may be executed in
two or more counterparts, each of which shall be deemed to be an original, but
all of which shall constitute one and the same agreement.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to
be executed on its behalf by its representatives thereunto duly authorized, all
as of the day and year first above written.
Zell/Chilmark Fund L.P.
By: __________________________
Name:
Title:
Citicasters Inc.
By: __________________________
Name:
Title:
5
<PAGE> 1
ESCROW AGREEMENT
----------------
THIS ESCROW AGREEMENT (this "Agreement"), dated as of
________________, 1996, is made by and among Jacor Communications, Inc., an
Ohio corporation ("Acquiror"), Citicasters, Inc., a Florida corporation (the
"Company"), and [Star Bank, National Association], as Escrow Agent ("Escrow
Agent").
Acquiror and the Company are the parties to an Agreement and Plan of
Merger dated as of the date hereof (as in effect from time to time, the "Merger
Agreement"). Each capitalized term which is used but not otherwise defined in
this Agreement has the meaning assigned to that term in the Merger Agreement.
If the Merger Agreement is terminated by the Company pursuant to any
Escrow-Surrender Provision (as defined below), then the Company will be
entitled to a payment in the amount of the Escrow Payment (as defined below).
As security for the obligations to make such payment, Acquiror is depositing or
causing to be deposited a Letter of Credit (as defined below) in accordance
with the terms of this Agreement, to be held and acted upon by Escrow Agent in
accordance with the provisions of this Agreement.
The parties agree as follows:
1 DEFINITIONS. As used in this Agreement:
(a) "Escrow-Surrender Event" means solely the termination
of the Merger Agreement under the circumstances defined in Sections 8.2(b)(i),
8.2(b)(ii), 8.2(b)(iii), 8.2(b)(iv) or 8.2(b)(v) of the Merger Agreement.
(b) "Escrow-Retention Event" means the termination of the
Merger Agreement in any manner that is not an Escrow-Surrender Event.
2 ESCROW PAYMENT. (a) Simultaneously with the delivery of the
consents by the Consenting Shareholders (as defined in the Merger Agreement)
(the "Delivery Date"), Acquiror will deliver or cause to be delivered to Escrow
Agent an irrevocable, direct pay letter of credit issued to Escrow Agent on
behalf of Acquiror by __________________ (the "Initial Issuing Bank") in the
amount of $75,000,000.00 (the "Escrow Payment"). If Acquiror fails to comply
with the requirements of the preceding sentence, Acquiror will on the day
immediately following the Delivery Date pay to the Escrow Agent in immediately
available funds the sum of $75,000,000.00. Acquiror, at its option and at its
expense, may replace the Initial Letter of Credit (or any Replacement Letter of
Credit) by delivery of another irrevocable, direct pay letter of credit in the
amount
<PAGE> 2
of $75,000,000.00 issued by an institution that is reasonably acceptable
to the Company, and in a form that is reasonably acceptable to the Company (any
such other letter of credit being referred to herein as a "Replacement Letter
of Credit"). Upon receipt of a Replacement Letter of Credit, Escrow Agent will
surrender the replaced letter of credit to the issuing institution for
cancellation. Any letter of credit held by the Escrow Agent at any time
pursuant to this Agreement is referred to herein as the "Letter of Credit," and
any institution that has issued such Letter of Credit is referred to herein as
the "Issuing Bank".
(b) Notwithstanding anything in this Agreement to the
contrary, the Letter of Credit (or any Replacement Letter of Credit) may have
any expiration date reasonably determined by Acquiror; PROVIDED, HOWEVER, that
(i) if the Merger Agreement shall not have been terminated and (ii) if a
Replacement Letter of Credit in the amount of $75,000,000.00 issued by an
institution reasonably acceptable to the Company and in a form that is
reasonably acceptable to the Company shall not have been delivered and accepted
by the Escrow Agent at least two business days prior to the expiration date of
the then outstanding Letter of Credit (the "Expiration Date"), then the Escrow
Agent shall (x) on the business day immediately preceding the Expiration Date,
present to the Issuing Bank in accordance with the Letter of Credit a draft for
payment to the Escrow Agent of an amount equal to $75,000,000.00 (the "Letter
of Credit Proceeds"); and (y) upon receipt of the Letter of Credit Proceeds,
hold such proceeds in escrow until Acquiror shall have delivered, and the
Escrow Agent shall have accepted, a Letter of Credit in the amount of
$75,000,000.00 issued by an institution reasonably acceptable to the Company
and in a form that is reasonably acceptable to the Company.
3 APPOINTMENT OF ESCROW AGENT. Acquiror and the Company hereby
designate and appoint Escrow Agent as their joint escrow agent pursuant to the
terms of this Agreement. Escrow Agent agrees to (a) act as Escrow Agent, (b)
hold and act upon the Letter of Credit and (c) deliver the proceeds of any
payment under the Letter of Credit, in each case in accordance with the terms
and conditions of this Escrow Agreement.
4 DISBURSEMENT REQUESTS. At any time after termination of the
Merger Agreement pursuant to any Escrow-Surrender Event, the Company may
deliver to Escrow Agent and simultaneously to Acquiror a written notice (a
"Company Payment Request") which states that such termination has occurred and
requests that Escrow Agent, unless the Escrow Agent shall have already drawn on
the Letter of Credit pursuant to Section 2(b) of this Agreement, (i) present to
the Issuing Bank in accordance with the Letter of Credit a draft for payment to
Escrow Agent of an amount equal to $75,000,000.00, and (ii) upon receipt of
proceeds of such payment under the Letter of Credit, pay such proceeds in the
manner indicated in such notice. If the Escrow Agent shall have already drawn
on the Letter
2
<PAGE> 3
of Credit pursuant to Section 2(b) of this Agreement, the Escrow
Agent shall, on the second business day after the Escrow Agent's receipt of the
Company Payment Request, pay the proceeds of the Letter of Credit to the
Company in the manner indicated in the Company Payment Request. Promptly upon
termination of the Merger Agreement pursuant to an Escrow-Retention Provision,
the Company shall deliver to Escrow Agent and Acquiror a written notice (a
"Company Surrender Request") which states that such termination has occurred
and requests that Escrow Agent surrender the Letter of Credit to the Issuing
Bank for cancellation, or if the Escrow Agent shall have already drawn on the
Letter of Credit pursuant to Section 2(b), requests the Escrow Agent to pay the
proceeds of the Letter of Credit to Acquiror in the manner indicated in the
Company Surrender Request.
5 ESCROW AGENT'S RELEASE OF THE ESCROW FUND.
-----------------------------------------
(a) ACTIONS UPON JOINT INSTRUCTIONS. Escrow Agent will
give instructions to the Issuing Bank or take other actions with respect to the
Letter of Credit, and make disbursements, in accordance with the joint written
instructions of the Company and Acquiror.
(b) CONSUMMATION OF MERGER. At the closing of the
Merger, pursuant to joint written instructions executed by Acquiror and the
Company, Escrow Agent will surrender the Letter of Credit to the Issuing Bank
for cancellation, or if the Escrow Agent shall have drawn on the Letter of
Credit pursuant to Section 2(b), the Escrow Agent will pay the proceeds of the
Letter of Credit to Acquiror as directed by Acquiror. If the Letter of Credit
is cancelled pursuant to this paragraph 5(b), then this Agreement will
terminate.
(c) ACTIONS UPON COMPANY PAYMENT REQUEST. Upon receipt
from the Company of a Company Payment Request pursuant to
paragraph 4, Escrow Agent will immediately (and in any event within one
business day) give Acquiror notice of such Company Payment Request. Escrow
Agent will take the requested actions set forth in such Company Payment Request
on the second business day following receipt of such Company Payment Request.
(d) ACTIONS UPON COMPANY SURRENDER REQUEST. Immediately
upon receipt from the Company of a Company Surrender Request pursuant to
paragraph 4, Escrow Agent will take the requested actions set forth in such
Company Surrender Request.
(e) LETTER OF CREDIT WAIVER. Immediately upon receipt
from the Company or Acquiror of a Letter of Credit Waiver (as defined in the
Merger Agreement), Escrow Agent will surrender the Letter of Credit to the
Issuing Bank for cancellation, or if the Escrow Agent shall have already drawn
on the Letter of Credit pursuant to Section 2(b), pay the proceeds of the
Letter of Credit
3
<PAGE> 4
to Acquiror. Upon such surrender or payment, this Agreement
will terminate.
6 LIABILITY OF ESCROW AGENT. Escrow Agent's duties and
obligations under this Agreement will be determined solely by the express
provisions of this Agreement. Escrow Agent will be under no obligation to
refer to any documents other than this Agreement and the instructions and
requests delivered to Escrow Agent hereunder. Escrow Agent will not have any
duties or responsibilities except as expressly provided in this Agreement.
Escrow Agent will not be obligated to recognize, and will not have any
liability or responsibility arising under, any agreement to which Escrow Agent
is not a party, even though reference thereto may be made herein. With respect
to Escrow Agent's responsibility, the Company and Acquiror further agree that:
(a) Escrow Agent will have no liability by reason of any
error of judgment or for any act done or step taken or omitted by Escrow Agent,
or for any mistake of fact or law or anything which Escrow Agent may do or
refrain from doing in Agent's gross negligence, bad faith or willful
misconduct. Escrow Agent may consult with counsel of its own choice (other
than counsel for Acquiror or the Company or any of their affiliates) and will
have full and complete authorization and protection for any action taken or
suffered by Escrow Agent hereunder in good faith and in accordance with the
opinion of such counsel. The reasonable costs of such counsel's services will
be paid to Escrow Agent in accordance with paragraph 7. The Company and
Acquiror will jointly indemnify and hold Escrow Agent harmless from and against
any and all liability and expense which may arise out of any action taken or
omitted by Escrow Agent in accordance with this Agreement, except for such
liability and expenses which results from Escrow Agent's gross negligence, bad
faith or willful misconduct.
(b) The Company or Acquiror may examine the Escrow
Agent's records pertaining to this Agreement at any time during normal business
hours at Escrow Agent's office upon 24 hours' prior notice.
(c) This Agreement is a personal one, Escrow Agent's
duties hereunder being only to the other parties hereto, their successors,
permitted assigns and legal representatives, and to no other Person.
(d) No succession to, or assignment of, the interest of
Acquiror or the Company will be binding upon the Escrow Agent unless and until
written evidence of such succession or assignment, in form satisfactory to
Escrow Agent, has been filed with and accepted by Escrow Agent.
4
<PAGE> 5
(e) Escrow Agent may rely or act upon requests or
instructions signed by the proper parties or bearing a signature or signatures
reasonably believed by Escrow Agent to be genuine of the proper parties.
(f) In case any emergency held by Escrow Agent will be
attached, garnished or levied upon under a court order, or the delivery thereof
will be stayed or enjoined by a court order, or any writ, order, judgment or
decree will be made or entered by any court, or any order, judgment or decree
will be made or entered by any court affecting the property deposited under
this Agreement or any party thereof, Escrow Agent is hereby expressly
authorized, in its sole discretion, to obey and comply with all writs, orders,
judgments or decrees so entered or issued, whether or with or without
jurisdiction, and in case Escrow Agent obeys or complies with any such writ,
order, judgment or decree, Escrow Agent will not be liable to Acquiror or the
Company or to any other Person by reason of such compliance in connection with
such litigation, and the Company and Acquiror jointly and severally agree to
pay to Escrow Agent on demand its reasonable costs, attorneys' fees, charges,
disbursements and expenses in connection with such litigation
(g) Subject to the terms of this paragraph 6(g), Escrow
Agent reserves the right to resign at any time by giving written notice of
resignation to Acquiror and the Company specifying the effective date thereof.
Within 30 days after receiving such notice, Acquiror and the Company jointly
will appoint a successor escrow agent to which Escrow Agent may distribute the
property then held hereunder, less Escrow Agent's accrued fees and reasonable
costs and expenses. Escrow Agent hereby agrees to use commercially reasonable
efforts to comply with the Issuing Bank's conditions for transfer of the Letter
of Credit to a successor escrow agent. If a successor escrow agent has not
been appointed or has not accepted such appointment by the end of such 30-day
period, Escrow Agent may apply to a court of competent jurisdiction for the
appointment of a successor escrow agent, and Acquiror and the Company will pay
the reasonable costs, expenses and attorneys' fees which are incurred in
connection with such proceeding. Notwithstanding the above, if a transfer of
the Letter of Credit is prohibited by this terms, or if the Letter of Credit
does not expressly permit a subsequent holder to draw on such Letter of Credit,
then Escrow Agent shall not deliver the Letter of Credit to the clerk for any
such court, but instead either (i) Acquiror shall arrange for the replacement
of such Letter of Credit with another Letter of Credit permitting such transfer
and permitting the subsequent holder to draw on the replacement Letter of
Credit in accordance with the terms hereof and as specified in the replacement
Letter of Credit (which shall be on the same terms and conditions contained in
the Letter of Credit), in which event the Escrow Agent may deposit such
replacement Letter of Credit with the clerk of any such court, or
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<PAGE> 6
(ii) the Escrow Agent shall draw on such non-transferable Letter of Credit and
deliver the proceeds to the clerk of such court.
(h) Escrow Agent does not have any interest in the escrow
fund, but is serving as escrow holder only and has possession thereof. If any
payments of income from the escrow fund will be subject to withholding
regulations then in force with respect to United States taxes, Acquiror and the
Company agree to provide Escrow Agent with appropriate forms for or with
respect to such withholder. This paragraph 6(h) and paragraphs 6(a), 6(f),
6(g) and 7 will survive notwithstanding any termination of this Agreement or
Escrow Agent's resignation.
7 COMPENSATION OF ESCROW AGENT. Escrow Agent will be entitled
to a reasonable fee for services rendered and for reimbursement of
extraordinary expenses incurred in performance of its duties, which
extraordinary expenses are not included in said fee. Said fee and expenses
will be divided equally between Acquiror, on the one hand, and the Company, on
the other hand.
8 NOTICES. All notices, requests, demands, claims and other
communications hereunder ("Notices") will be in writing, personally delivered
or sent by facsimile and addressed to the intended recipient as set forth
below:
Notices to the Company:
----------------------
Citicasters Inc.
Suite 600
One East Fourth Street
Cincinnati, Ohio 45202
Attention: Samuel J. Simon, Esq.
Phone: (513) 562-8019
Facsimile: [Need Fax Number]
with a copy (which will not constitute notice to
------------------------------------------------
the Company to:
--------------
Jones, Day, Reavis & Pogue
North Point
901 Lakeside Avenue
Cleveland, Ohio 44114
Attention: Lyle G. Ganske, Esq.
Phone: (216) 586-7264
Facsimile: (216) 579-0212
Notices to Acquiror:
-------------------
Jacor Communications, Inc.
1300 PNC Center
201 East Fifth Street
Cincinnati, OH 45202
6
<PAGE> 7
Attention: Mr. Randy Michaels
Phone: (513) 621-1300
Facsimile: (513) 621-0090
with a copy (which will not constitute notice to
------------------------------------------------
Acquiror) to:
------------
Graydon, Head & Ritchey
1900 Fifth Third Center
511 Walnut Street
Cincinnati, Ohio 45202
Attention: Thomas W. Kahle
Phone: (513) 621-6464
Facsimile: (513) 651-3836
and to:
Mayer, Brown & Platt
190 South LaSalle Street
Chicago, IL 60603-3441
Attention: Scott J. Davis, Esq.
Phone: (312) 701-7311
Facsimile: (312) 701-7711
Notices to Escrow Agent:
-----------------------
[Star Bank, National Association]
______________________________
Attention: __________________
Phone: _______________________
Facsimile: [Need Fax Number]
Any notices will be deemed to have been given pursuant to this Agreement when
personally delivered or sent by facsimile (electronically confirmed). Any
party may change the address to which Notices are to be delivered by giving the
other parties notice in the manner provided in this paragraph 8.
9 BINDING EFFECT: Assignment. This Agreement and all of the
provisions hereof will be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns.
10 SEVERABILITY. If any provision of this Agreement is held to
be illegal, invalid or unenforceable under present or future laws effective
during the term of this Agreement, such provision will be fully severable; this
Agreement will be construed and enforced as if such illegal, invalid, or
unenforceable provision had never comprised a part of this Agreement; and the
remaining provisions of this Agreement will remain in full force and effect
7
<PAGE> 8
and will not be affected by the illegal, invalid, or unenforceable provision
or by its severance from this Agreement.
11 NO STRICT CONSTRUCTION. The language used in this Agreement
will be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction will be applied against any
Person.
12 HEADINGS. The headings used in this Agreement are for
convenience of reference only and do not constitute a part of this Agreement
and will not be deemed to limit, characterize or in any way affect any
provision of this Agreement, and all provisions of this Agreement will be
enforced and construed as if no heading had been used in this Agreement.
13 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, any one of which need not contain the signatures of more than one
Person, but all such counterparts taken together will constitute one and the
same instrument.
14 GOVERNING LAW. This Agreement will be governed by and
construed in accordance with the domestic laws of the State of Ohio, without
giving effect to any choice of law or conflict of law provision (whether of the
State of Ohio or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of Ohio.
15 NUMBER. Each defined term used in this Agreement has a
comparable meaning used in its plural or singular form.
16 INCLUDING. Whenever the term "including" (whether or not that
term is followed by the word "but not limited to" or "without limitation" or
words of similar effect) is used in this Agreement in connection with a listing
of items within a particular classification, that listing will be interpreted
to be illustrative only and will not be interpreted as a limitation on, or
exclusive listing of, the items within that classification.
17 TERMINATION. If the Letter of Credit is cancelled pursuant to
the terms of this Agreement, then this Agreement will terminate. This
Agreement shall survive any termination of the Merger Agreement.
* * * * *
8
<PAGE> 9
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
[ACQUIROR]
By:_______________________________
Its:______________________________
CITICASTERS INC.
By:_______________________________
Its:______________________________
[STAR BANK, NATIONAL ASSOCIATION] as
Escrow Agent
By:_______________________________
Its:______________________________
9
<PAGE> 10
EXHIBIT A
---------
[To Come]
10
<PAGE> 1
[Executive Officer Form]
EMPLOYMENT CONTINUATION AGREEMENT
This EMPLOYMENT CONTINUATION AGREEMENT (this "Agreement"), is made and
entered into on this ____ day of February, 1996, by Citicasters Inc., a Florida
corporation (the "Company"), and _________________ (the "Executive").
WITNESSETH:
WHEREAS, the Executive presently is the ____________________ of the
Company and has made and is expected to continue to make major contributions
to the profitability, growth and financial strength of the Company;
WHEREAS, the Company wishes to assure itself of both present and future
continuity of management in the event of any Change in Control (as that term is
hereafter defined);
WHEREAS, the Company wishes to ensure that certain of its executives
are not practically disabled from discharging their duties upon a Change in
Control; and
WHEREAS, although effective and binding as of the date hereof, this
Agreement shall become operative only upon the occurrence of a Change in
Control;
NOW, THEREFORE, the Company and the Executive agree as follows:
1. Operation of the Agreement.
(a) This Agreement shall be effective and binding
immediately upon its execution, but anything in this Agreement to the contrary
notwithstanding, this Agreement shall not be operative unless and until there
shall have occurred a Change in Control. For purposes of this Agreement, a
"Change in Control" shall have occurred if at any time during the Term (as that
term is hereafter defined) the Company is merged or consolidated or reorganized
into or with another corporation or other legal person and as a result of such
merger, consolidation or reorganization less than 51% of the combined voting
power of the then-outstanding securities of such corporation or person
immediately after such transaction is held in the aggregate by the holders of
then-outstanding securities entitled to vote generally in the election of
directors ("Voting Stock") of the Company immediately prior to such
transaction.
<PAGE> 2
(b) Upon the occurrence of a Change of Control at any
time during the Term, this Agreement shall become immediately operative.
(c) The period during which this Agreement shall be in
effect (the "Term") shall commence as of the date hereof and shall expire as of
the later of (i) the close of business on June 1, 1997 or (ii) the expiration
of the Period of Employment (as that term is hereafter defined); provided,
however, that if, prior to a Change in Control, the Executive ceases for any
reason to be an elected officer or assistant officer of the Company, thereupon
the Term shall be deemed to have expired and this Agreement shall immediately
terminate and be of no further effect.
2. Employment; Period of Employment.
(a) Subject to the terms and conditions of this
Agreement, upon the occurrence of a Change in Control, the Company shall
continue the Executive in its employ and the Executive shall remain in the
employ of the Company for the period set forth in Section 2(b) below (the
"Period of Employment"). So long as the Executive remains in the employ of the
Company, the Executive shall devote substantially all of his time during normal
business hours (subject to vacations, sick leave and other absences in
accordance with the policies of the Company as in effect for executives
immediately prior to the Change in Control) to the business and affairs of the
Company.
(b) The Period of Employment shall commence on the date
of the occurrence of a Change in Control and, subject only to the provisions of
Section 4 hereof, shall continue until the earlier of (i) the Executive's
death; (ii) the Executive's attainment of age 65; or (iii) the second
anniversary of the occurrence of the Change in Control.
3. Compensation During Period of Employment.
(a) Upon the occurrence of a Change in Control, the
Executive shall receive during the Period of Employment (i) annual base salary
at a rate not less than [specify the rate listed in Exhibit 6.6(c) to Agreement
and Plan of Merger], payable monthly or otherwise as in effect immediately
prior to a Change in Control ("Base Pay"); and (ii) an annual amount equal to
not less than [specify the amount listed on Exhibit 6.6(c) to Agreement and
Plan of Merger] ("Incentive Pay"); provided, however, that nothing herein shall
preclude a change in the mix of Base Pay and Incentive Pay by an increase in
the relative amount of Base Pay, provided that the aggregate compensation
received by the Executive in any one year is not reduced and provided, further,
that in no event shall any increase in the Executive's aggregate compensation
or any
2
<PAGE> 3
portion thereof in any way diminish any other obligation of the Company under
this Agreement.
(b) For his service pursuant to Section 2(a) hereof,
during the Period of Employment the Executive shall be a full participant in
any and all employee retirement income and welfare benefit policies, plans,
programs or arrangements which are made available generally to other executives
of the Company during the Period of Employment, including without limitation
any executive automobile, stock option, stock purchase, stock appreciation,
performance improvement, long-term incentive, medical or health, life
insurance, vacation, disability, salary continuation and any other retirement
income or welfare benefit policy, plan, program or arrangement or any
equivalent successor policy, plan, program or arrangement that may now exist or
be adopted hereafter by the Company or any successor thereto (collectively,
"Employee Benefits"); provided, however, that the Executive's rights thereunder
shall be governed by the terms thereof and shall not be enlarged or limited
hereunder or otherwise affected hereby.
4. Termination Following a Change in Control.
(a) In the event of the occurrence of a Change in
Control, this Agreement may be terminated by the Company during the Period of
Employment only upon the occurrence thereafter of one or more of the following
events:
(i) If the Executive shall become permanently
disabled and begins actually to receive disability benefits pursuant
to the disability plan of the Company applicable to the Executive or
any successor plan adopted prior to a Change in Control; or
(ii) For "Cause", which for purposes of this
Agreement shall mean that, prior to any termination pursuant to
Section 4(b) hereof, the Executive shall have committed:
(A) an act of fraud, embezzlement or
theft in connection with his duties or in the course of his
employment with the Company or a felony or any crime involving
moral turpitude;
(B) intentional wrongful damage to
the property of the Company;
(C) intentional wrongful disclosure
of secret processes or confidential information of the Company;
(D) failure to comply with the
policies, rules, or directives of the management of the
Company; or
(E) gross or repeated neglect of duties;
3
<PAGE> 4
and any such act shall have been harmful to the Company or would tend
to bring discredit upon the Company.
(b) In the event of the occurrence of a Change in
Control, this Agreement may be terminated by the Executive with the right to
receive benefits under Section 5 hereof, only upon the occurrence thereafter of
one or more of the following events:
(i) Any termination by the Company of the
employment of the Executive during the Period of Employment, unless
(x) Cause for termination shall exist or (y) as a result of the death
of the Executive or (z) by reason of the Executive's disability and
the actual receipt of disability benefits as provided in Section
4(a)(i) hereof; or
(ii) Termination by the Executive of his
employment with the Company during the Period of Employment and upon
the occurrence of any of the following events:
(A) The liquidation, dissolution,
merger, consolidation or reorganization of the Company or
transfer of all or a significant portion of its business
and/or assets unless the successor or successors (by
liquidation, merger, consolidation, reorganization or
otherwise) to which all or a significant portion of its
business and/or assets have been transferred (directly or by
operation of law) shall have assumed all duties and
obligations of the Company under this Agreement pursuant to
Section 7 hereof; or
(B) Without limiting the generality or
effect of the foregoing, any material breach of this Agreement
by the Company.
(c) Notwithstanding anything contained in this Agreement
to the contrary, in the event of a Change in Control, the Executive may decline
the Company's offer of continued employment hereunder, or terminate employment
with the Company for any reason, or without reason, during the 60-day period
immediately following the first occurrence of a Change in Control, with the
right to severance compensation as provided in Section 5 hereof.
(d) A termination by the Company pursuant to Section
4(a) hereof or by the Executive pursuant to Section 4(b) or Section 4(c) hereof
shall not affect any rights which the Executive may have pursuant to any other
agreement, policy, plan, program or arrangement of the Company providing
Employee Benefits, which rights shall be governed by the terms thereof. If
this Agreement or the employment of the Executive is terminated under
circumstances in which the Executive is not entitled to any payments under
Sections 3 or 5 hereof, the Executive shall have no
4
<PAGE> 5
further obligation or liability to the Company hereunder with respect to his
prior or any future employment by the Company.
5. Severance Compensation.
(a) If, following the occurrence of a Change in Control,
the Company shall terminate the Executive's employment other than pursuant to
Section 4(a) hereof, or if the Executive shall terminate his employment
pursuant to Section 4(b) or Section 4(c) hereof, the Company shall pay or cause
to be paid to the Executive, the Base Pay which the Executive would have
received pursuant to this Agreement for the remainder of the Period of
Employment had his employment with the Company continued for such period; plus
the aggregate Incentive Pay which the Executive would have received pursuant
to this Agreement with respect to the Period of Employment had his employment
continued for such period.
(b) Any Incentive Pay that is payable to the Executive
with respect to a period that is less than a full calendar year (a "partial
calendar year") shall be prorated by multiplying (i) the Incentive Pay that
would have been payable to the Executive with respect to the entire calendar
year had the Executive's employment with the Company continued until the end of
such year by (ii) a fraction the numerator of which equals the number of days
in the partial calendar year and the denominator of which equals 365.
6. No Mitigation Obligation. The parties thereto expressly agree
that the Executive shall not be required to mitigate the amount of any payment
provided for in this Agreement by seeking other employment or otherwise, nor
shall any profits, income, earnings or other benefits from any source
whatsoever create any mitigation, offset, reduction or any other obligation on
the part of the Executive hereunder or otherwise.
7. Successors and Binding Agreement.
(a) The Company shall require any successor (whether
direct or indirect, by purchase, merger, consolidation, reorganization or
otherwise) to all or substantially all of the business and/or assets of the
Company, by agreement in form and substance satisfactory to the Executive,
expressly to assume and agree to perform this Agreement and each of the
Company's obligations hereunder. This Agreement shall be binding upon and
inure to the benefit of the Company and any successor of or to the Company,
including without limitation any persons acquiring directly or indirectly all
or substantially all of the business and/or assets of the Company whether by
purchase, merger, consolidation, reorganization or otherwise (and such
successor shall thereafter be deemed the "Company" for the purposes of this
Agreement), but shall not otherwise be assignable or delegable by the Company.
5
<PAGE> 6
(b) This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees and/or legatees.
(c) This Agreement is personal in nature and neither of
the parties hereto shall, without the consent of the other, assign, transfer or
delegate this Agreement or any rights or obligations hereunder except as
expressly provided in Section 7(a) hereof. Without limiting the generality of
the foregoing, the Executive's right to receive payments hereunder shall not be
assignable or transferable, whether by pledge, creation of a security interest
or otherwise, other than by a transfer by his will or by the laws of descent
and distribution and, in the event of any attempted assignment or transfer
contrary to this Section 7(c), the Company shall have no liability to pay to
the purported assignee or transferee any amount so attempted to be assigned or
transferred.
8. Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Ohio, without giving effect to the principles of conflict of laws of such
State.
9. Miscellaneous. No provisions of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing signed by the Executive and the Company. No waiver by
either party hereto at any time of any breach by the other party hereto or
compliance with any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar provisions
or conditions at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, expressed or implied with respect to the
subject matter hereof have been made by either party which are not set forth
expressly in this Agreement.
10. Validity. The invalidity or unenforceability of any provision
of this Agreements shall not affect the validity or enforceability of any other
provision of this Agreement which shall remain in full force and effect.
11. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same agreement.
12. Employment Rights. Nothing expressed or implied in this
Agreement shall create any right or duty on the part of the Company or the
Executive to have the Executive continue as an officer or assistant officer of
the Company or to remain in the employment of the Company prior to any Change
in Control.
6
<PAGE> 7
13. Withholding of Taxes. The Company may withhold from any
amounts payable under this Agreement all federal, state, city or other taxes as
shall be required pursuant to any law or government regulation or ruling.
14. Limitation on Payments and Benefits. Notwithstanding any
provision of this Agreement to the contrary, if any amount or benefit to be
paid or provided under this Agreement would be an "Excess Parachute Payment,"
within the meaning of Section 280G of the Internal Revenue Code of 1986, as
amended (the "Code"), or any successor provision thereto, but for the
application of this sentence, then the payments and benefits to be paid or
provided under this Agreement shall be reduced to the minimum extent necessary
(but in no event to less than zero) so that no portion of any such payment or
benefit, as so reduced, constitutes an Excess Parachute Payment. The
determination of whether any reduction in such payments or benefits to be
provided under this Agreement or otherwise is required pursuant to the
preceding sentence shall be made at the expense of the Company, if requested by
the Executive or the Company, by the Company's independent accountants. The
fact that the Executive's right to payments or benefits may be reduced by
reason of the limitations contained in this Section 14 shall not of itself
limit or otherwise affect any other rights of the Executive other than pursuant
to this Agreement. In the event that any payment or benefit intended to be
provided under this Agreement or otherwise is required to be reduced pursuant
to this Section 14, the Executive shall be entitled to designate the payments
and/or benefits to be so reduced in order to give effect to this Section 14.
The Company shall provide the Executive with all information reasonably
requested by the Executive to permit the Executive to make such designation.
In the event that the Executive fails to make such designation within 10
business days of the date the Executive's employment with the Company
terminates, the Company may effect such reduction in any manner it deems
appropriate.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the date first set forth above.
__________________________________
[EXECUTIVE]
CITICASTERS INC.
By:________________________________
Title:_____________________________
7
<PAGE> 1
[Management Form]
EMPLOYMENT CONTINUATION AGREEMENT
This EMPLOYMENT CONTINUATION AGREEMENT (this "Agreement"), is made and
entered into on this ____ day of February, 1996, by Citicasters Inc., a Florida
corporation (the "Company"), and _________________ (the "Executive").
WITNESSETH:
WHEREAS, the Executive presently is the ____________________ of the
Company and has made and is expected to continue to make major contributions to
the profitability, growth and financial strength of the Company;
WHEREAS, the Company wishes to assure itself of both present and future
continuity of management in the event of any Change in Control (as that term is
hereafter defined);
WHEREAS, the Company wishes to ensure that certain of its executives
are not practically disabled from discharging their duties upon a Change in
Control; and
WHEREAS, although effective and binding as of the date hereof, this
Agreement shall become operative only upon the occurrence of a Change in
Control;
NOW, THEREFORE, the Company and the Executive agree as follows:
1. Operation of the Agreement.
(a) This Agreement shall be effective and binding
immediately upon its execution, but anything in this Agreement to the contrary
notwithstanding, this Agreement shall not be operative unless and until there
shall have occurred a Change in Control. For purposes of this Agreement, a
"Change in Control" shall have occurred if at any time during the Term (as that
term is hereafter defined) the Company is merged or consolidated or reorganized
into or with another corporation or other legal person and as a result of such
merger, consolidation or reorganization less than 51% of the combined voting
power of the then-outstanding securities of such corporation or person
immediately after such transaction is held in the aggregate by the holders of
then-outstanding securities entitled to vote generally in the election of
directors ("Voting Stock") of the Company immediately prior to such
transaction.
(b) Upon the occurrence of a Change of Control at any
time during the Term, this Agreement shall become immediately operative.
<PAGE> 2
(c) The period during which this Agreement shall be in
effect (the "Term") shall commence as of the date hereof and shall expire as of
the later of (i) the close of business on June 1, 1997 or (ii) the expiration
of the Period of Employment (as that term is hereafter defined); provided,
however, that if, prior to a Change in Control, the Executive ceases for any
reason to be an elected officer or assistant officer of the Company, thereupon
the Term shall be deemed to have expired and this Agreement shall immediately
terminate and be of no further effect.
2. Employment; Period of Employment.
(a) Subject to the terms and conditions of this
Agreement, upon the occurrence of a Change in Control, the Company shall
continue the Executive in its employ and the Executive shall remain in the
employ of the Company for the period set forth in Section 2(b) below (the
"Period of Employment"). So long as the Executive remains in the employ of the
Company, the Executive shall devote substantially all of his time during normal
business hours (subject to vacations, sick leave and other absences in
accordance with the policies of the Company as in effect for executives
immediately prior to the Change in Control) to the business and affairs of the
Company.
(b) The Period of Employment shall commence on the date
of the occurrence of a Change in Control and, subject only to the provisions of
Section 4 hereof, shall continue until the earlier of (i) the Executive's
death; (ii) the Executive's attainment of age 65; or (iii) the second
anniversary of the occurrence of the Change in Control.
3. Compensation During Period of Employment.
(a) Upon the occurrence of a Change in Control, the
Executive shall receive during the Period of Employment annual base salary at a
rate not less than [specify the rate listed in Exhibit 6.6(c) to the Agreement
and Plan of Merger], payable monthly or otherwise as in effect immediately
prior to a Change in Control ("Base Pay"); provided, however, that in no event
shall any increase in the Executive's aggregate compensation or any portion
thereof in any way diminish any other obligation of the Company under this
Agreement.
(b) For his service pursuant to Section 2(a) hereof,
during the Period of Employment the Executive shall be a full participant in
any and all employee retirement income and welfare benefit policies, plans,
programs or arrangements which are made available generally to other executives
of the Company during the Period of Employment, including without limitation
any executive automobile, stock option, stock purchase, stock appreciation,
performance improvement, long-term incentive, medical or health, life
insurance, vacation, disability, salary continuation and any other retirement
income or welfare benefit policy, plan, program or
2
<PAGE> 3
arrangement or any equivalent successor policy, plan, program or arrangement
that may now exist or be adopted hereafter by the Company or any successor
thereto (collectively, "Employee Benefits"); provided, however, that the
Executive's rights thereunder shall be governed by the terms thereof and shall
not be enlarged or limited hereunder or otherwise affected hereby.
4. Termination Following a Change in Control.
(a) In the event of the occurrence of a Change in
Control, this Agreement may be terminated by the Company during the Period of
Employment only upon the occurrence thereafter of one or more of the following
events:
(i) If the Executive shall become permanently
disabled and begins actually to receive disability benefits pursuant
to the disability plan of the Company applicable to the Executive or
any successor plan adopted prior to a Change in Control; or
(ii) For "Cause", which for purposes of this
Agreement shall mean that, prior to any termination pursuant to
Section 4(b) hereof, the Executive shall have:
(A) committed an act of fraud,
embezzlement or theft in connection with his duties or in the
course of his employment with the Company or a felony or any
crime involving moral turpitude;
(B) caused intentional wrongful
damage to the property of the Company;
(C) wrongfully disclosed secret
processes or confidential information of the Company;
(D) failed to comply with the
policies, rules, or directives of the management of the
Company;
(E) grossly or repeatedly neglected
his or her duties; or
(F) engaged in any Competitive
Activity (as that term is hereinafter defined);
and any such act shall have been harmful to the Company or would tend to bring
discredit upon the Company.
(b) In the event of the occurrence of a Change in
Control, this Agreement may be terminated by the Executive with the right to
receive benefits under Section 5 hereof, only upon the occurrence thereafter of
one or more of the following events:
3
<PAGE> 4
(i) Any termination by the Company of the
employment of the Executive during the Period of Employment, unless
(x) Cause for termination shall exist or (y) as a result of the death
of the Executive or (z) by reason of the Executive's disability and
the actual receipt of disability benefits as provided in Section
4(a)(i) hereof; or
(ii) Termination by the Executive of his
employment with the Company during the Period of Employment and upon
the occurrence of any of the following events:
1(A) A significant adverse change in the
nature or scope of the authorities, powers, functions,
responsibilities or duties in respect of the Company which the
Executive had immediately prior to the Change in Control;
(B) The liquidation, dissolution,
merger, consolidation or reorganization of the Company or
transfer of all or a significant portion of its business
and/or assets unless the successor or successors (by
liquidation, merger, consolidation, reorganization or
otherwise) to which all or a significant portion of its
business and/or assets have been transferred (directly or by
operation of law) shall have assumed all duties and
obligations of the Company under this Agreement pursuant to
Section 7 hereof; or
(C) Without limiting the generality or
effect of the foregoing, any material breach of this Agreement
by the Company.
(c) A termination by the Company pursuant to Section
4(a) hereof or by the Executive pursuant to Section 4(b) hereof shall not
affect any rights which the Executive may have pursuant to any other agreement,
policy, plan, program or arrangement of the Company providing Employee
Benefits, which rights shall be governed by the terms thereof. If this
Agreement or the employment of the Executive is terminated under circumstances
in which the Executive is not entitled to any payments under Sections 3 or 5
hereof, the Executive shall have no further obligation or liability to the
Company hereunder with respect to his prior or any future employment by the
Company.
5. Severance Compensation. If, following the occurrence of a
Change in Control, the Company shall terminate the Executive's employment other
than pursuant to Section 4(a) hereof, or if the Executive shall terminate his
employment pursuant to Section 4(b) hereof, the Company shall pay or cause to
be paid to the Executive, the Base Pay which the Executive would have received
pursuant to
____________________
1 To be included only in Agreements with general managers.
4
<PAGE> 5
this Agreement for the remainder of the Period of Employment had his employment
with the Company continued for such period, provided however that the Company's
obligation to make any payment hereunder shall terminate if Executive engages
in any Competitive Activity.
6. No Mitigation Obligation. The parties thereto expressly agree
that the Executive shall not be required to mitigate the amount of any payment
provided for in this Agreement by seeking other employment or otherwise, nor
shall any profits, income, earnings or other benefits from any source
whatsoever create any mitigation, offset, reduction or any other obligation on
the part of the Executive hereunder or otherwise, except as expressly provided
in Section 5 hereof.
7. Successors and Binding Agreement.
(a) The Company shall require any successor (whether
direct or indirect, by purchase, merger, consolidation, reorganization or
otherwise) to all or substantially all of the business and/or assets of the
Company, by agreement in form and substance satisfactory to the Executive,
expressly to assume and agree to perform this Agreement and each of the
Company's obligations hereunder. This Agreement shall be binding upon and
inure to the benefit of the Company and any successor of or to the Company,
including without limitation any persons acquiring directly or indirectly all
or substantially all of the business and/or assets of the Company whether by
purchase, merger, consolidation, reorganization or otherwise (and such
successor shall thereafter be deemed the "Company" for the purposes of this
Agreement), but shall not otherwise be assignable or delegable by the Company.
(b) This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees and/or legatees.
(c) This Agreement is personal in nature and neither of
the parties hereto shall, without the consent of the other, assign, transfer or
delegate this Agreement or any rights or obligations hereunder except as
expressly provided in Section 7(a) hereof. Without limiting the generality of
the foregoing, the Executive's right to receive payments hereunder shall not be
assignable or transferable, whether by pledge, creation of a security interest
or otherwise, other than by a transfer by his will or by the laws of descent
and distribution and, in the event of any attempted assignment or transfer
contrary to this Section 7(c), the Company shall have no liability to pay to
the purported assignee or transferee any amount so attempted to be assigned or
transferred.
8. Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by
5
<PAGE> 6
the laws of the State of Ohio, without giving effect to the principles of
conflict of laws of such State.
9. Miscellaneous. No provisions of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing signed by the Executive and the Company. No waiver by
either party hereto at any time of any breach by the other party hereto or
compliance with any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar provisions
or conditions at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, expressed or implied with respect to the
subject matter hereof have been made by either party which are not set forth
expressly in this Agreement.
10. Validity. The invalidity or unenforceability of any provision
of this Agreements shall not affect the validity or enforceability of any other
provision of this Agreement which shall remain in full force and effect.
11. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same agreement.
12. Employment Rights. Nothing expressed or implied in this
Agreement shall create any right or duty on the part of the Company or the
Executive to have the Executive continue as an officer or assistant officer of
the Company or to remain in the employment of the Company prior to any Change
in Control.
13. Withholding of Taxes. The Company may withhold from any
amounts payable under this Agreement all federal, state, city or other taxes as
shall be required pursuant to any law or government regulation or ruling.
14. Competitive Activity. For the purpose of this Agreement, the
term "Competitive Activity shall mean:
(i) rendering any services as an officer, director, employee,
agent, consultant or in any other capacity to, or own any interest
(other than an interest of less than five percent (5%) of the stock of
a publicly held company), as an individual owner, stockholder, partner
or in any other manner in any person, firm, corporation, partnership
or other entity which is a Competitive Business; or
(ii) soliciting or otherwise attempting to employ or engage
any current or future employee of the Company or any successor for
employment or association in any Competitive Business or otherwise
offer any inducement to any current or future employee of the Company
or any
6
<PAGE> 7
successor to leave the employ or association of the Company or any
successor.
For purposes of this Agreement, Competitive Business shall mean any
business operation located in the viewer or listener market area in which the
Executive performed services for the Company and which engages, as all or a
part of its business, in radio or television broadcasting.
15. Limitation on Payments and Benefits. Notwithstanding any
provision of this Agreement to the contrary, if any amount or benefit to be
paid or provided under this Agreement would be an "Excess Parachute Payment,"
within the meaning of Section 280G of the Internal Revenue Code of 1986, as
amended (the "Code"), or any successor provision thereto, but for the
application of this sentence, then the payments and benefits to be paid or
provided under this Agreement shall be reduced to the minimum extent necessary
(but in no event to less than zero) so that no portion of any such payment or
benefit, as so reduced, constitutes an Excess Parachute Payment. The
determination of whether any reduction in such payments or benefits to be
provided under this Agreement or otherwise is required pursuant to the
preceding sentence shall be made at the expense of the Company, if requested by
the Executive or the Company, by the Company's independent accountants. The
fact that the Executive's right to payments or benefits may be reduced by
reason of the limitations contained in this Section 15 shall not of itself
limit or otherwise affect any other rights of the Executive other than pursuant
to this Agreement. In the event that any payment or benefit intended to be
provided under this Agreement or otherwise is required to be reduced pursuant
to this Section 15, the Executive shall be entitled to designate the payments
and/or benefits to be so reduced in order to give effect to this Section 15.
The Company shall provide the Executive with all information reasonably
requested by the Executive to permit the Executive to make such designation.
In the event that the Executive fails to make such designation within 10
business days of the date the Executive's employment with the Company
terminates, the Company may effect such reduction in any manner it deems
appropriate.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the date first set forth above.
_____________________________
[EXECUTIVE]
CITICASTERS INC.
By:________________________
Its:_______________________
7
<PAGE> 1
JACOR COMMUNICATIONS, INC.
AND
KEYCORP SHAREHOLDER SERVICES, INC.
AS WARRANT AGENT
****************
WARRANT AGREEMENT
DATED AS OF _____________, 1996
****************
<PAGE> 2
WARRANT AGREEMENT, dated as of _______________, 1996 between Jacor
Communications, Inc., an Ohio corporation (the "Company"), and KeyCorp
Shareholder Services Inc., of ___________________________, a national banking
association, as Warrant Agent (the "Warrant Agent") ("Agreement").
The Company proposes to issue Common Stock Purchase Warrants, as
hereinafter described (the "Warrants"), to purchase up to an aggregate of
[_______] shares of its Common Stock without par value ("Common Stock") (the
shares of Common Stock issuable on exercise of the Warrants being referred to
herein as the "Warrant Shares"), pursuant to an Agreement and Plan of Merger
among the Company, JCAC, Inc. and Citicasters, Inc. dated as of February, 1996,
pursuant to which the Company will issue the Warrants, each Warrant entitling
the holder thereof to purchase _____ of a share of Common Stock.
The Company wishes the Warrant Agent to act on behalf of the Company
and the Warrant Agent is willing to act in connection with the issuance,
division, transfer, exchange and exercise of Warrants.
In consideration of the foregoing and for the purpose of defining the
terms and provisions of the Warrants and the respective rights and obligations
thereunder of the Company and the registered owners of the Warrants (the
"Holders"), the Company and the Warrant Agent hereby agree as follows:
SECTION 1. APPOINTMENT OF WARRANT AGENT. The Company hereby
appoints the Warrant Agent to act as agent for the Company in accordance with
the instructions hereinafter set forth in this Agreement, and the Warrant Agent
hereby accepts such appointment.
SECTION 2. TRANSFERABILITY AND FORM OF WARRANT.
2.1 REGISTRATION. The Warrants shall be numbered and
shall be registered in a Warrant Register as they are issued. The Company and
the Warrant Agent shall be entitled to treat the Holder of any Warrant as the
owner in fact thereof for all purposes and shall not be bound to recognize any
equitable or other claim to or interest in such Warrant on the part of any
other person, and shall not be liable for any registration of transfer of
Warrants which are registered or to be registered in the name of a fiduciary or
the nominee of a fiduciary unless made with the actual knowledge that a
fiduciary or nominee is committing a breach of trust in requesting such
registration of transfer, or with such knowledge of such acts that its
participation therein amounts to bad faith.
2.2 TRANSFER. The Warrants shall be transferable only on
the books of the Company maintained at the principal office of the Warrant
Agent upon delivery thereof duly endorsed by the Holder or by his duly
authorized attorney or representative, or accompanied by proper evidence of
succession, assignment or authority to transfer, which endorsement shall be
guaranteed by a bank or trust company or a broker or dealer which is a member
of the National Association of Securities Dealers, Inc. In all cases of
transfer by an attorney, the original power of attorney, duly approved, or a
copy thereof, duly certified, shall be deposited and remain with the Warrant
Agent. In case of transfer by executors, administrators, guardians or other
legal representatives, duly authenticated evidence of their authority shall be
produced, and may be
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required to be deposited and remain with the Warrant Agent in its discretion.
Upon any registration of transfer, the Warrant Agent shall countersign and
deliver a new Warrant or Warrants to the persons entitled thereto.
2.3 FORM OF WARRANT. The text of the Warrant and of the
Purchase Form shall be substantially as set forth in Exhibit A attached hereto.
The price per Warrant Share and the number of Warrant Shares issuable upon
exercise of each Warrant are subject to adjustment upon the occurrence of
certain events, all as hereinafter provided. The Warrants shall be executed on
behalf of the Company by its President or one of its Vice Presidents, under its
corporate seal reproduced thereon attested by its Secretary or an Assistant
Secretary. The signature of any such officers on the Warrants may be manual or
facsimile.
Warrants bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall bind
the Company, notwithstanding that such individuals or any one of them shall
have ceased to hold such offices prior to the delivery of such Warrants or did
not hold such offices on the date of this Agreement.
Warrants shall be dated as of the date of countersignature
thereof by the Warrant Agent either upon initial issuance or upon division,
exchange, substitution or transfer.
SECTION 3. COUNTERSIGNATURE OF WARRANTS. The Warrants shall be
countersigned by the Warrant Agent (or any successor to the Warrant Agent then
acting as warrant agent under this Agreement) and shall not be valid for any
purpose unless so countersigned. Warrants may be countersigned, however, by
the Warrant Agent (or by its successor as warrant agent hereunder) and may be
delivered by the Warrant Agent, notwithstanding that the persons whose manual
or facsimile signatures appear thereon as proper officers of the Company shall
have ceased to be such officers at the time of such countersignature, issuance
or delivery. The Warrant Agent shall, upon written instructions of the
Chairman of the Board, the President, a Vice President, the Treasurer or the
Secretary of the Company, countersign, issue and deliver Warrants entitling the
Holders thereof to purchase not more than [_______] Warrant Shares (subject to
adjustment pursuant to Section 10 hereof) and shall countersign and deliver
Warrants as otherwise provided in this Agreement.
SECTION 4. EXCHANGE OF WARRANT CERTIFICATES. Each Warrant
certificate may be exchanged for another certificate or certificates entitling
the Holder thereof to purchase a like aggregate number of Warrant Shares as the
certificate or certificates surrendered then entitle such Holder to purchase.
Any Holder desiring to exchange a Warrant certificate or certificates shall
make such request in writing delivered to the Warrant Agent, and shall
surrender, properly endorsed, the certificate or certificates to be so
exchanged. Thereupon, the Warrant Agent shall countersign and deliver to the
person entitled thereto a new Warrant certificate or certificates, as the case
may be, as so requested.
SECTION 5. TERM OF WARRANTS; EXERCISE OF WARRANTS.
5.1 TERM OF WARRANTS. Subject to the terms of this
Agreement, each Holder shall have the right, which may be exercised commencing
the date of issuance of the Warrants
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and until 5:00 P.M., Eastern Time, on ______________, [2001] [the fifth
anniversary of the date of the Effective Time as defined in the Agreement and
Plan of Merger among the Company, JCAC, Inc., and Citicasters, Inc.] (the
"Expiration Date"), to purchase from the Company the number of fully paid and
nonassessable Warrant Shares which the Holder may at the time be entitled to
purchase on exercise of such Warrants.
5.2 EXERCISE OF WARRANTS. A Warrant may be exercised upon
surrender to the Warrant Agent, at its principal office, of the certificate or
certificates evidencing the Warrants to be exercised, together with the form of
election to purchase on the reverse thereof duly filled in and signed, which
signature shall be guaranteed by a bank or trust company or a broker or dealer
which is a member of the National Association of Securities Dealers, Inc., and
upon payment to the Warrant Agent for the account of the Company of the Warrant
Price (as defined in and determined in accordance with the provisions of
Sections 9 and 10 hereof), for the number of Warrant Shares in respect of which
such Warrants are then exercised. Payment of the aggregate Warrant Price shall
be made in cash or by certified or bank cashier's check drawn on a banking
institution chartered by the government of the United States or any state
thereof.
Subject to Section 6 hereof, upon such surrender of Warrants
and payment of the Warrant Price as aforesaid, the Warrant Agent shall cause to
be issued and delivered with all reasonable dispatch to or upon the written
order of the Holder and in such name or names as the Holder may designate, a
certificate or certificates for the number of full Warrant Shares so purchased
upon the exercise of such Warrants, together with cash, as provided in Section
11 hereof, in respect of any fractional Warrant Shares otherwise issuable upon
such surrender. Such certificate or certificates shall be deemed to have been
issued and any person so designated to be named therein shall be deemed to have
become a holder of record of such Warrant Shares as of the date of the
surrender of such Warrants and payment of the Warrant Price, as aforesaid. The
rights of purchase represented by the Warrants shall be exercisable, at the
election of the Holders thereof, either in full or from time to time in part
and, in the event that a certificate evidencing Warrants is exercised in
respect of less than all of the Warrant Shares purchasable on such exercise at
any time prior to the date of expiration of the Warrants, a new certificate
evidencing the remaining Warrant or Warrants will be issued, and the Warrant
Agent is hereby irrevocably authorized to countersign and to deliver the
required new Warrant certificate or certificates pursuant to the provisions of
this Section and of Section 3 hereof, and the Company, whenever required by the
Warrant Agent, will supply the Warrant Agent with Warrant certificates duly
executed on behalf of the Company for such purpose.
5.3 RESTRICTION ON EXERCISE. A Warrant may not be
exercised in whole or in part if in the reasonable opinion of counsel to the
Company the issuance of the Common Stock upon such exercise would cause the
Company to be in violation of the Telecommunications Act of 1996 or the rules
and regulations in effect thereunder. A Holder desiring to exercise Warrants
shall, if requested by the Company, furnish to the Company such additional
information as the Company deems reasonably necessary in order to determine if
exercise of a Warrant may cause the Company to be in said violation. In the
event the Company's counsel determines that, in such counsel's opinion after
review of such information, if any, requested by and delivered to, the Company,
the exercise of a Warrant would cause the Company to be in violation of the
Telecommunications Act of 1996 or the rules and regulations in effect
thereunder, the Company
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shall notify such Holder to that effect. Upon receipt of said notice, such
Holder may take such steps, at its own expense, as it reasonably determines
necessary so that the exercise of the Warrant would not cause such a violation;
provided, that upon completion of said steps, such Holder shall notify the
Company and the provisions of this Section 5.3 shall then apply with respect to
the proposed revised transaction.
5.4 LEGEND ON CERTIFICATE. The certificates evidencing
the Warrants may, in the sole discretion of the Company, bear a legend relating
to certain limitations on the ownership of Common Stock imposed by the
Telecommunications Act of 1996.
SECTION 6. PAYMENT OF TAXES. The Company will pay all
documentary stamp taxes, if any, attributable to the initial issuance of
Warrant Shares upon the exercise of Warrants; provided, however, that the
Company shall not be required to pay any tax or taxes which may be payable in
respect of any transfer involved in the issue or delivery of any Warrants or
certificates for Warrant Shares in a name other than that of the registered
Holder of Warrants in respect of which such Warrant Shares are issued.
SECTION 7. MUTILATED OR MISSING WARRANTS. In case any of the
certificates evidencing the Warrants shall be mutilated, lost stolen or
destroyed, the Company shall issue, and the Warrant Agent shall countersign and
deliver in exchange and substitution for and upon cancellation of the mutilated
Warrant certificate, or in lieu of and substitution for the Warrant certificate
lost, stolen or destroyed, a new Warrant certificate of like tenor and
representing an equivalent right or interest, but only upon receipt of evidence
satisfactory to the Company and the Warrant Agent of such loss, theft or
destruction of such Warrant and indemnity or bond, if requested, also
satisfactory to them. An applicant for such a substitute Warrant certificate
shall also comply with such other reasonable regulations and pay such other
reasonable charges as the Company or the Warrant Agent may prescribe.
SECTION 8. RESERVATION OF WARRANT SHARES; PURCHASE, CALL AND
CANCELLATION OF WARRANTS.
8.1 RESERVATION OF WARRANT SHARES. There have been
reserved, and the Company shall at all times keep reserved, out of its
authorized Common Stock, a number of shares of Common Stock sufficient to
provide for the exercise of the rights of purchase represented by the
outstanding Warrants. The Transfer Agent for the Common Stock and every
subsequent transfer agent for any shares of the Company's capital stock
issuable upon the exercise of any of the rights of purchase aforesaid will be
irrevocably authorized and directed at all times to reserve such number of
authorized shares as shall be required for such purpose. The Company will keep
a copy of this Agreement on file with the Transfer Agent for the Common Stock
and with every subsequent transfer agent for any shares of the Company's
capital stock issuable upon the exercise of the rights of purchase represented
by the Warrants. The Warrant Agent is hereby irrevocably authorized to
requisition from time to time from such Transfer Agent the stock certificates
required to honor outstanding Warrants upon exercise thereof in accordance with
the terms of this Agreement. The Company will supply such Transfer Agent with
duly executed stock certificates for such purposes and will provide or
otherwise make available any cash which may be payable as provided in Section
11 hereof. All Warrants surrendered in the
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exercise of the rights thereby evidenced shall be canceled by the Warrant Agent
and shall thereafter be delivered to the Company.
8.2 PURCHASE OF WARRANTS BY THE COMPANY. The Company
shall have the right, except as limited by law, other agreements or herein, to
purchase or otherwise acquire Warrants at such times, in such manner and for
such consideration as it may deem appropriate.
8.3 CANCELLATION OF WARRANTS. In the event the Company
shall purchase or otherwise acquire Warrants, the same shall thereupon be
delivered to the Warrant Agent and be canceled by it and retired. The Warrant
Agent shall cancel any Warrant surrendered for exchange, substitution, transfer
or exercise in whole or in part.
SECTION 9. WARRANT PRICE. The price per share at which Warrant
Shares shall be purchasable upon exercise of Warrants shall be $______ (the
"Warrant Price"), subject to adjustment pursuant to Section 10 hereof.
SECTION 10. ADJUSTMENT OF WARRANT PRICE AND NUMBER OF WARRANT
SHARES. The number and kind of securities purchasable upon the exercise of
each Warrant and the Warrant Price shall be subject to adjustment from time to
time upon the happening of certain events, as hereinafter defined.
10.1 MECHANICAL ADJUSTMENTS. The number of Warrant Shares
purchasable upon the exercise of each Warrant and the Warrant Price shall be
subject to adjustment as follows:
(a) In case the Company shall (i) pay a dividend
in shares of Common Stock or make a distribution in shares of
Common Stock, (ii) subdivide its outstanding shares of Common Stock,
(iii) combine its outstanding shares of Common Stock into a smaller
number of shares of Common Stock, or (iv) issue by reclassification of
its shares of Common Stock other securities of the Company (including
any such reclassification in connection with a consolidation or merger
in which the Company is surviving corporation), the number of Warrant
Shares purchasable upon exercise of each Warrant immediately prior
thereto shall be adjusted so that the Holder of each Warrant shall be
entitled to receive the kind and number of Warrant Shares or other
securities of the Company which he would have owned or have been
entitled to receive after the happening of any of the events described
above, had such Warrant been exercised immediately prior to the
happening of such event or any record date with respect thereto. An
adjustment made pursuant to this paragraph (a) shall become effective
immediately after the effective date of such event retroactive to the
record date, if any, or such event.
(b) In case the Company shall issue rights,
options or warrants to all holders of its outstanding Common
Stock, without any charge to such holders, entitling them (for a
period within 45 days after the record date mentioned below) to
subscribe for or purchase shares of Common Stock at a price per share
which is
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lower at the record date mentioned below than the then current
market price per share of Common Stock (as defined in paragraph (d)
below) the number of Warrant Shares thereafter purchasable upon the
exercise of each Warrant shall be determined by multiplying the number
of Warrant Shares theretofore purchasable upon exercise of each
Warrant by a fraction, of which the numerator shall be the number of
shares of Common Stock outstanding on the date of issuance of such
rights, options or warrants plus the number of additional shares of
Common Stock offered for subscription or purchase, and of which the
denominator shall be the number of shares of Common Stock outstanding
on the date of issuance of such rights, options or warrants plus the
number of shares which the aggregate offering price of the total
number of shares of Common Stock so offered would purchase at the then
current market price per share of Common Stock. Such adjustment shall
be made whenever such rights, options or warrants are issued, and
shall become effective retroactively immediately after the record date
for the determination of stockholders entitled to receive such rights,
options or warrants.
(c) In case the Company shall distribute to all
holders of its shares of Common Stock evidences of its indebtedness
or assets (excluding cash dividends or distributions payable out
of consolidated earnings or surplus legally available for dividends
and dividends or distributions referred to in paragraph (a) or
rights, options or warrants, or convertible or exchangeable
securities containing the right to subscribe for or purchase shares of
Common Stock (excluding those referred to in paragraph (b) above),
then in each case the number of Warrant Shares thereafter purchasable
upon the exercise of each Warrant shall be determined by multiplying
the number of Warrant Shares theretofore purchasable upon the exercise
of each Warrant, by a fraction, of which the numerator shall be the
then current market price per share of Common Stock (as defined in
paragraph (d) below) on the date of such distribution, and of which
the denominator shall be the then current market price per share of
Common Stock, less the then fair value (as determined by the Board of
Directors of the Company, whose determination shall be conclusive) of
the portion of the assets or evidences of indebtedness so distributed
or of such subscription rights, options or warrants, or of such
convertible or exchangeable securities applicable to one share of
Common Stock. Such adjustment shall be made whenever any such
distribution is made, and shall become effective on the date of
distribution retroactive to the record date for the determination of
shareholders entitled to receive such distribution.
In the Company's sole discretion, in the event of a
distribution by the Company to all holders of its shares of
Common Stock of the capital stock of a subsidiary or securities
convertible into or exercisable for such stock, then in lieu of an
adjustment in the number of Warrant Shares purchasable upon the
exercise of each Warrant, the Holder of each Warrant, upon the
exercise thereof at any time after such distribution shall be entitled
to receive the stock or other securities to which such Holder would
have been entitled if such Holder had exercised such Warrant
immediately prior thereto, all subject to further adjustment as
provided in this subsection 10.1; provided, however, that no
adjustment in respect of dividends
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or interest on such stock or other securities shall be made
during the term of a Warrant or upon the exercise of a Warrant.
(d) For the purpose of any computation under paragraphs
(b) and (c) of this Section, the current market price per share of
Common Stock at any date shall be the average of the daily closing prices
for 20 consecutive trading days commencing 30 trading days before the date
of such computation. The closing price for each day shall be the last
reported sales price regular way or, in case no reported sale takes place
on such day, the average of the closing bid and asked prices regular way
for such day, in each case on the principal national securities exchange
on which the shares of Common Stock are listed or admitted to trading or,
if not listed or admitted to trading, the average of the closing bid and
asked prices of the Common Stock in the over-the-counter market as
reported by NASDAQ or any comparable system. In the absence of one or
more such quotations, the Company shall determine the current market price
on the basis of such quotations as it considers appropriate.
(e) No adjustment in the number of Warrant Shares
purchasable hereunder shall be required unless and until such
adjustment would require an increase or decrease of at least one percent
(1%) in the number of Warrant Shares purchasable upon the exercise of each
Warrant; provided, however, that any adjustments which by reason of this
paragraph (e) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations shall
be made to the nearest one-thousandth of a share.
(f) Whenever the number of shares purchasable upon the
exercise of each Warrant is adjusted as provided in paragraphs (a), (b)
and (c) above, the Warrant Price payable upon exercise of each Warrant
shall be adjusted by multiplying such Warrant Price immediately prior to
such adjustment by a fraction, of which the numerator shall be the number
of Warrant Shares purchasable upon the exercise of each Warrant
immediately prior to such adjustment, and of which the denominator shall
be the number of Warrant Shares purchasable immediately thereafter.
(g) No adjustment in the number of Warrant Shares
purchasable upon the exercise of each Warrant need be made under
paragraphs (b) and (c) if the Company issues or distributes to each Holder
of Warrants the rights, options, warrants, or convertible or exchangeable
securities, or evidence of indebtedness or assets referred to in those
paragraphs which each Holder of Warrants would have been entitled to
receive had the Warrants been exercised prior to the happening of such
event or the record date with respect thereto. No adjustment in the
number of Warrant Shares purchasable upon the exercise of each Warrant
need be made for sales of Warrant Shares pursuant to a Company plan for
reinvestment of dividends or interest. No adjustment need be made for a
change in the par value of the Warrant Shares.
(h) For the purpose of this subsection 10.1, the term
"shares of Common Stock" shall mean (i) the class of stock designated
as the Common Stock of the Company at the date of this Agreement, or (ii)
any other class of stock resulting from successive
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<PAGE> 9
changes or reclassification of such shares consisting solely of changes
in par value, or from par value to no par value, or from no par value to
par value. In the event that at any time, as a result of an adjustment
made pursuant to paragraph (a) above, the Holders shall become entitled to
purchase any shares of the Company other than shares of Common Stock,
thereafter the number of such other shares so purchasable upon exercise of
each Warrant and the Warrant Price of such shares shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent
as practicable to the provisions with respect to the Warrant Shares
contained in paragraph (a) through (c), inclusive, above, and the
provisions of Section 5 and subsections 10.2 through 10.4, inclusive,
with respect to the Warrant Shares, shall apply on like terms to any such
other shares.
(i) Upon the expiration of any rights, options, warrants
or conversion or exchange privileges, if any thereof shall not have
been exercised, the Warrant Price and the number of shares of Common Stock
purchasable upon the exercise of each Warrant shall, upon such expiration,
be readjusted and shall thereafter be such as it would have been had it
been originally adjusted (or had the original adjustment not been
required, as the case may be) as if (A) the only shares of Common Stock so
issued were the shares of Common Stock, if any, actually issued or sold
upon the exercise of such rights, options, warrants or conversion or
exchange rights and (B) such shares of Common Stock, if any, were issued
or sold for the consideration, if any, actually received by the Company
for the issuance, sale or grant of all such rights, options, warrants or
conversion or exchange rights whether or not exercised; provided, further,
that no such readjustment shall have the effect of increasing the Warrant
Price by an amount in excess of the amount of the adjustment initially
made in respect to the issuance, sale or grant of such rights, options,
warrants or conversion or exchange rights.
10.2 DETERMINATION OF CONSIDERATION. Upon any issuance or
sale for a consideration other than cash, or a consideration part of which is
other than cash, of any shares of Common Stock or Convertible Securities or any
rights or options to subscribe for, purchase or otherwise acquire any shares of
Common Stock or Convertible Securities, the amount of the consideration other
than cash received by the Company shall be deemed to be the fair value of such
consideration as determined in good faith by the Board of Directors of the
Company. In case any shares of Common Stock or Convertible Securities or any
rights, options or warrants to subscribe for, purchase or otherwise acquire any
shares of Common Stock or Convertible Securities shall be issued or sold
together with other shares, stock or securities or other assets of the Company
for a consideration which covers both, the consideration for the issue or sale
of such shares of Common Stock or Convertible Securities or such rights or
options shall be deemed to be the portion of such consideration allocated
thereto in good faith by the Board of Directors of the Company.
10.3 VOLUNTARY ADJUSTMENT BY THE COMPANY. The Company may
at its option, at any time during the term of the Warrants, reduce the then
current Warrant Price to any amount deemed appropriate by the Board of
Directors of the Company.
10.4 NOTICE OF ADJUSTMENT. Whenever the number of Warrant
Shares purchasable upon the exercise of each Warrant or the Warrant Price of
such Warrant Shares is
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adjusted, as herein provided, to an extent that such adjustment is equal to or
greater than 5% of the Warrant Price in effect prior to such adjustment, the
Company shall cause the Warrant Agent promptly to mail by first class mail,
postage prepaid, to each Holder notice of such adjustment or adjustments and
shall deliver to the Warrant Agent a certificate of a firm of independent
public accountants selected by the Board of Directors of the Company (who may
be the regular accountants employed by the Company) setting forth the number of
Warrant Shares purchasable upon the exercise of each Warrant and the Warrant
Price of such Warrant Shares after such adjustment, setting forth a brief
statement of the facts requiring such adjustment and setting forth the
computation by which such adjustment was made. Such certificate shall be
conclusive evidence of the correctness of such adjustment. The Warrant Agent
shall be entitled to rely on such certificate and shall be under no duty or
responsibility with respect to any such certificate, except to exhibit the
same, from time to time, to any Holder desiring an inspection thereof during
reasonable business hours. The Warrant Agent shall not at any time be under
any duty or responsibility to any Holders to determine whether any facts exist
which may require any adjustment of the Warrant Price or the number of Warrant
Shares or other stock or property purchasable on exercise thereof, or with
respect to the nature or extent of any such adjustment when made, or with
respect to the method employed in making such adjustment.
10.5 NO ADJUSTMENT OF DIVIDENDS. Except as provided in
subsection 10.1, no adjustment in respect of any dividends shall be made during
the term of a Warrant or upon the exercise of a Warrant.
10.6 PRESERVATION OF PURCHASE RIGHTS RECLASSIFICATION,
CONSOLIDATION, ETC. In case of any consolidation of the Company with or merger
of the Company into another corporation or in case of any sale, transfer or
lease to another corporation of all or substantially all the property of the
Company, the Company or such successor or purchasing corporation, as the case
may be, shall execute with the Warrant Agent an agreement that (i) each Holder
shall have the right thereafter upon payment of the Warrant Price in effect
immediately prior to such action to purchase upon exercise of each Warrant the
kind and amount of shares and other securities and property (including cash)
which he would have owned or have been entitled to receive after the happening
of such consolidation, merger, sale, transfer or lease had such Warrant been
exercised immediately prior to such action; or (ii) in the event that all of
the property to which a Holder would be entitled to receive in such an action
had such Warrant been exercised immediately prior to such action is cash, then
upon surrender of a certificate representing Warrants each Holder shall be
entitled to receive cash in the amount of the difference between the amount
which such Holder would have paid to exercise such Warrants in full at the
Warrant Price in effect immediately prior to such action and the amount of cash
which he would have been entitled to receive after the happening of such
consolidation, merger, sale, transfer or lease had such Warrant been exercised
immediately prior to such action; provided, however, that no adjustment in
respect of dividends, interest or other income on or from such shares or other
securities and property shall be made during the term of a Warrant or upon the
exercise of a Warrant. The Company shall mail by first class mail, postage
prepaid, to each Holder, notice of the execution of any such agreement. Such
agreement shall provide for adjustments, which shall be as nearly equivalent as
may be practicable to the adjustments provided for in this Section 10. The
provisions of this subsection 10.6 shall similarly apply to successive
consolidations, mergers, sales, transfers or leases. The Warrant Agent shall
be under no duty or responsibility to determine the correctness of any
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<PAGE> 11
provisions contained in any such agreement relating to the kind or amount of
shares of stock or other securities or property receivable upon exercise of
Warrants or with respect to the method employed and provided therein for any
adjustments and shall be entitled to rely upon the provisions contained in any
such agreement.
10.7 STATEMENT ON WARRANTS. Irrespective of any
adjustments in the Warrant Price or the number or kind of shares purchasable
upon the exercise of the Warrants, Warrants theretofore or thereafter issued
may continue to express the same price and number and kind of shares as are
stated in the Warrants initially issuable pursuant to this Agreement.
SECTION 11. FRACTIONAL INTERESTS. The Company shall not be
required to issue fractional Warrant Shares on the exercise of Warrants. If
more than one Warrant shall be presented for exercise in full at the same time
by the same Holder, the number of full Warrant Shares which shall be issuable
upon the exercise thereof shall be computed on the basis of the aggregate
number of Warrant Shares purchasable on exercise of the Warrants so presented.
If any fraction of a Warrant Share would, except for the provisions of this
Section 11, be issuable on the exercise of any Warrant (or specified portion
thereof), the Warrant Agent shall pay (and shall be promptly reimbursed by the
Company upon demand therefor) an amount in cash equal to the closing price for
one share of the Common Stock, as defined in paragraph (d) of subsection 10.1,
on the trading day immediately preceding the date the Warrant is presented for
exercise, multiplied by such fraction.
SECTION 12. NO RIGHTS AS STOCKHOLDERS; NOTICES TO HOLDERS.
Nothing contained in this Agreement or in any of the Warrants shall be
construed as conferring upon the Holders or their transferees the right to vote
or to receive dividends or to consent or to receive notice as stockholders in
respect of any meeting of stockholders for the election of directors of the
Company or any other matter, or any rights whatsoever as stockholders of the
Company. If, however, at any time prior to the expiration of the Warrants and
prior to their exercise, any of the following events shall occur:
(a) the Company shall declare any dividend payable in any
securities upon its shares of Common Stock or make any distribution (other than
a cash dividend as to which no adjustment in the Warrant Price is to be made as
herein provided) to the holders of its shares of Common Stock; or
(b) the Company shall offer to the holders of its shares
of Common Stock any additional shares of Common Stock or securities convertible
into shares of Common Stock or any right to subscribe thereto; or
(c) a dissolution, liquidation or winding up of the
Company (other than in connection with a consolidation, merger, transfer or
lease of all or substantially all of its property, assets, and business as an
entirety) shall be proposed.
then in any one or more of said events the Company shall (a) give notice in
writing of such event to the Warrant Agent and the Holders as provided in
Section 18 hereof and (b) cause notice of such event to be published once in
THE WALL STREET JOURNAL, such giving of notice and publication
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to be completed at least 20 days prior to the date fixed as a record date or
the date of closing the transfer books for the determination of the
stockholders entitled to such dividend, distribution, or subscription rights,
or for the determination of stockholders entitled to vote on such proposed
dissolution, liquidation or winding up. Such notice shall specify such record
date or the date of closing the transfer books, as the case may be. Failure to
publish or mail such notice or any defect therein or in the publication or
mailing thereof shall not affect the validity of any action taken in connection
with such dividend, distribution or subscription rights, or such proposed
dissolution, liquidation or winding up.
SECTION 13. DISPOSITION OF PROCEEDS ON EXERCISE OF WARRANTS;
INSPECTION OF WARRANT AGREEMENT. The Warrant Agent shall account to the
Company with respect to Warrants exercised two business days thereafter and
concurrently pay to the Company all monies received by the Warrant Agent for
the purchase of the Warrant Shares through the exercise of such Warrants.
The Warrant Agent shall keep copies of this Agreement and any notices
given or received hereunder available for inspection by the Holders during
normal business hours at its principal office. The Company shall supply the
Warrant Agent from time to time with such numbers of copies of this Agreement
as the Warrant Agent may request.
SECTION 14. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF WARRANT
AGENT. Any corporation into which the Warrant Agent may be merged or with
which it may be consolidated, or any corporation resulting from any merger or
consolidation to which the Warrant Agent shall be a party, or any corporation
succeeding to the corporation trust business of the Warrant Agent, shall be the
successor to the Warrant Agent hereunder without the execution or filing of any
paper or any further act on the part of any of the parties hereto, provided
that such corporation would be eligible for appointment as a successor Warrant
Agent under the provisions of Section 16 hereof. In case at the time such
successor to the Warrant Agent shall succeed to the agency created by this
Agreement, any of the Warrants shall have been countersigned but not delivered,
any such successor to the Warrant Agent may adopt the countersignature of the
original Warrant Agent and deliver such Warrants so countersigned; and in case
at that time any of the Warrants shall not have been countersigned, any
successor to the Warrant Agent may countersign such Warrants either in the name
of the predecessor Warrant Agent or in the name of the successor Warrant Agent;
and in all such cases Warrants shall have the full force provided in the
Warrants and in this Agreement.
In case at any time the name of the Warrant Agent shall be changed and
at such time any of the Warrants shall have been countersigned but not
delivered, the Warrant Agent may adopt the countersignatures under its prior
name and deliver such Warrants so countersigned; and in case at that time any
of the Warrants shall not have been countersigned, the Warrant Agent may
countersign such Warrants either in its prior name or in its changed name; and
in all such Warrants shall have the full force provided in the Warrants and in
this Agreement.
SECTION 15. CONCERNING THE WARRANT AGENT. The Warrant Agent
undertakes the duties and obligations imposed by this Agreement upon the
following terms and conditions, by all of which the Company and the Holders, by
their acceptance of Warrants, shall be bound.
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<PAGE> 13
15.1 CORRECTNESS OF STATEMENTS. The statements contained
herein and in the Warrants shall be taken as statements of the Company and the
Warrant Agent assumes no responsibility for the correctness of any of the same
except such as describe the Warrant Agent or action taken by it. The Warrant
Agent assumes no responsibility with respect to the distribution of the
Warrants except as herein otherwise provided.
15.2 BREACH OF COVENANTS. The Warrant Agent shall not be
responsible for any failure of the Company to comply with any of the covenants
contained in this Agreement or in the Warrant to be complied with by the
Company.
15.3 PERFORMANCE OF DUTIES. The Warrant Agent may execute
and exercise any of the rights or powers hereby vested in it or perform any
duty hereunder either itself or by or through its attorneys or agents (which
shall not include its employees) and shall not be responsible for the
misconduct or negligence of any agent appointed with due care.
15.4 RELIANCE ON COUNSEL. The Warrant Agent may consult
at any time with legal counsel satisfactory to it and the Company (who may be
counsel for the Company) and the Warrant Agent shall incur no liability or
responsibility to the Company or to any Holder in respect of any action taken,
suffered or omitted by it hereunder in good faith and in accordance with the
opinion or the advice of such counsel.
15.5 PROOF OF ACTIONS TAKEN. Whenever in the performance
of its duties under this Agreement the Warrant Agent shall deem it necessary or
desirable that any fact or matter be proved or established by the Company prior
to taking or suffering any action hereunder, such fact or matter (unless other
evidence in respect thereof be herein specifically prescribed) may be deemed
conclusively to be proved and established by a certificate signed by the
Chairman of the Board or President, a Vice President, the Treasurer or the
Secretary of the Company and delivered to the Warrant Agent; and such
certificate shall be full authorization to the Warrant Agent for any action
taken or suffered in good faith by it under the provisions of this Agreement in
reliance upon such certificate.
15.6 COMPENSATION. The Company agrees to pay the Warrant
Agent reasonable compensation for all services rendered by the Warrant Agent in
the performance of its duties under this Agreement in accordance with the fee
schedule agreed to from time to time by the Company and the Warrant Agent, to
reimburse the Warrant Agent for all expenses, taxes and governmental charges
and other charges of any kind and nature reasonably incurred by the Warrant
Agent in the performance of its duties under this Agreement, and to indemnify
the Warrant Agent and save it harmless against any and all liabilities,
including judgments, costs and counsel fees, for anything done or omitted by
the Warrant Agent in the performance of its duties under this Agreement except
as a result of the Warrant Agent's negligence or bad faith.
15.7 LEGAL PROCEEDINGS. The Warrant Agent shall be under
no obligation to institute any action, suit or legal proceeding or to take any
other action likely to involve expense unless the Company or one or more
Holders shall furnish the Warrant Agent with reasonable security and indemnity
for any costs and expenses which may be incurred, but this provision shall
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<PAGE> 14
not affect the power of the Warrant Agent to take such action as the Warrant
Agent may consider proper, whether with or without any such security or
indemnity. All rights of action under this Agreement or under any of the
Warrants may be enforced by the Warrant Agent without the possession of any of
the Warrants or the production thereof at any trial or other proceedings
relative thereto, any such action, suit or proceeding instituted by the Warrant
Agent shall be brought in its name as Warrant Agent, and any recovery of
judgment shall be for the ratable benefit of the Holders, as their respective
rights or interests may appear.
15.8 OTHER TRANSACTIONS IN SECURITIES OF COMPANY. The
Warrant Agent and any stockholder, director, officer or employee of the Warrant
Agent may buy, sell or deal in any of the Warrants, or other securities of the
Company or become pecuniarily interested in any transaction in which the
Company may be interested or contract with or lend money to the Company or
otherwise act as fully and freely as though it were not Warrant Agent under
this Agreement. Nothing herein shall preclude the Warrant Agent from acting in
any other capacity for the Company or for any other legal entity.
15.9 LIABILITY OF WARRANT AGENT. The Warrant Agent shall
act hereunder solely as agent, and its duties shall be determined solely by the
provisions hereof. The Warrant Agent shall not be liable for anything which it
may do or refrain from doing in connection with this Agreement except for its
own negligence or bad faith.
15.10 RELIANCE ON DOCUMENTS. The Warrant Agent will not
incur any liability or responsibility to the Company or to any Holder for any
action taken in reliance on any notice, resolution, waiver, consent, order,
certificate, or other paper, documents or instrument reasonably believed by it
to be genuine and to have been signed, set or presented by the proper party or
parties.
15.11 VALIDITY OF AGREEMENT. The Warrant Agent shall not
be under any responsibility in respect of the validity of this Agreement or the
execution and delivery hereof (except the due execution hereof by the Warrant
Agent) or in respect of the validity or execution of any Warrant (except its
countersignature thereof); nor shall the Warrant Agent by any act hereunder be
deemed to make any representation or warranty as to the authorization or
reservation of any Warrant Shares (or other stock) to be issued pursuant to
this Agreement or any Warrant, or as to whether any Warrant Shares (or other
stock) will, when issued, be validly issued, fully paid and nonassessable, or
as to the Warrant Price or the number or amount of Warrant Shares or other
securities or other property issuable upon exercise of any Warrant.
15.12 INSTRUCTIONS FROM COMPANY. The Warrant Agent is
hereby authorized and directed to accept instructions with respect to the
performance of its duties hereunder from the Chairman of the Board, the
President, a Vice President, the Secretary or the Treasurer of the Company, and
to apply to such officer for advice or instructions in connection with its
duties, and shall not be liable for any action taken or suffered to be taken by
it in good faith in accordance with instructions of any such officer or
officers.
SECTION 16. CHANGE OF WARRANT AGENT. The Warrant Agent may
resign and be discharged from its duties under this Agreement by giving to the
Company 30 days notice in
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<PAGE> 15
writing. The Warrant Agent may be removed by like notice to the Warrant Agent
from the Company. If the Warrant Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall appoint a successor to
the Warrant Agent. If the Company shall fail to make such appointment within a
period of 30 days after such removal or after it has been notified in writing
of such resignation or incapacity by the resigning or incapacitated Warrant
Agent or by any Holder (who shall with such notice submit his Warrant for
inspection by the Company), then any Holder may apply to any court of competent
jurisdiction for the appointment of a successor to the Warrant Agent. Any
successor warrant agent, whether appointed by the Company or such a court,
shall be a bank or trust company, in good standing, incorporated under the laws
of the United States of America or any state thereof and having at the time of
its appointment as warrant agent a combined capital and surplus of at least
$100,000,000. After appointment, the successor warrant agent shall be vested
with the same powers, rights, duties and responsibilities as if it had been
originally named as Warrant Agent without further act or deed, but the former
Warrant Agent shall deliver and transfer to the successor warrant agent any
property at the time held by it hereunder, and execute and deliver for further
assurance, conveyance, act or deed necessary for the purpose. Failure to file
any notice provided for in this Section 16, however, or any defect therein,
shall not affect the legality or validity of the resignation or removal of the
Warrant Agent or the appointment of the successor warrant agent, as the case
may be. In the event of such resignation or removal, the successor warrant
agent shall mail, by first class mail, postage prepaid, to each Holder, written
notice of such removal or resignation and the name and address of such
successor warrant agent.
SECTION 17. IDENTITY OF TRANSFER AGENT. Forthwith upon the
appointment of any subsequent transfer agent for the Common Stock, or any other
shares of the Company's capital stock issuable upon the exercise of the
Warrants, the Company will file with the Warrant Agent a statement setting
forth name and address of such subsequent transfer agent.
SECTION 18. NOTICES. Any notice pursuant to this Agreement by
the Company or by any Holder to the Warrant Agent, or by the Warrant Agent or
by any Holder to the Company, shall be in writing and shall be delivered in
person or by facsimile transmission, or mailed first class, postage prepaid (a)
to the Company, at its offices at
_____________________________________________________________________________
____________________; or (b) the Warrant agent, to
[Bank] . Each party hereto may from
time to time change the address to which notices to it are to be delivered or
mailed hereunder by notice to the other party.
Any notice mailed pursuant to this Agreement by the Company or the
Warrant Agent to the Holders shall be in writing and shall be mailed first
class, postage prepaid, or otherwise delivered to such Holders at their
respective addresses on the books of the Warrant Agent.
SECTION 19. SUPPLEMENTS AND AMENDMENTS. The Company and the
Warrant Agent may from time to time supplement or amend this Agreement without
the approval of any Holder, in order to cure any ambiguity or to correct or
supplement any provision contained herein which may be defective or
inconsistent with any other provision herein, or to make any other provisions
in regard to matters or questions arising hereunder which the Company and the
Warrant Agent may deem necessary or desirable and which shall not be
inconsistent with the provisions of the Warrants and which shall not adversely
affect the interests of the Holders.
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<PAGE> 16
This Agreement shall not otherwise be modified, supplemented or
altered in any respect except with the consent in writing of the Holders of
Warrants representing not less than 50% of the Warrants then outstanding; and
provided, further, that no change in (i) the number or nature of the securities
purchasable upon the exercise of any Warrant, (ii) the Warrant Price therefor,
(iii) the acceleration of the Expiration Date, or (iv) the anti-dilution
provisions of Section 10 hereof which would adversely affect the interests of
any Holder shall be made without the consent in writing of the Holder of the
certificate representing such Warrant, other than such changes as are
specifically prescribed by this Agreement as originally executed or are made in
compliance with applicable law.
SECTION 20. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Warrant Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
SECTION 21. MERGER OR CONSOLIDATION OF THE COMPANY. The Company
will not merge or consolidate with or into, or sell, transfer or lease all or
substantially all of its property to, any other corporation unless the
successor or purchasing corporation, as the case may be (if not the Company),
shall expressly assume, by supplemental agreement satisfactory in form to the
Warrant Agent and executed and delivered to the Warrant Agent, the due and
punctual performance and observance of each and every covenant and condition of
this Agreement to be performed and observed by the Company.
SECTION 22. APPLICABLE LAW. This Agreement and each Warrant
issued hereunder shall be governed by and construed in accordance with the laws
of the State of Ohio, without giving effect to principles of conflict of laws.
SECTION 23. BENEFITS OF THIS AGREEMENT. Nothing in this
Agreement shall be construed to give to any person or corporation other than
the Company, the Warrant Agent, and the Holders any legal or equitable right,
remedy or claim under this Agreement; but this Agreement shall be for the sole
and exclusive benefit of the Company, the Warrant Agent and the Holders of the
Warrants.
SECTION 24. COUNTERPARTS. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
SECTION 25. CAPTIONS. The captions of the Sections and
subsections of this Agreement have been inserted for convenience only and shall
have no substantive effect.
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<PAGE> 17
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, all as of the day and year first above written.
JACOR COMMUNICATIONS, INC..
By:_________________________________
[SEAL] Title:______________________________
Attest:
______________________________________
Secretary
KEYCORP SHAREHOLDER SERVICES,
INC.
as Warrant Agent
By:_________________________________
[SEAL] Title:______________________________
Attest:
______________________________________
Corporate Trust Officer
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<PAGE> 18
EXHIBIT A TO THE WARRANT AGREEMENT
VOID AFTER 5:00 P.M. EASTERN TIME, _______________________, 2001
No.
Warrants to Purchase
[_______] Shares of Common Stock
JACOR COMMUNICATIONS, INC.
COMMON STOCK PURCHASE WARRANTS
This certifies that, for value received, __________________________ or
registered assigns (the "Holder"), is entitled to purchase from Jacor
Communications, Inc., an Ohio corporation (the "Company") , at any time, at the
purchase price of $_______ per share (the "Warrant Price"), the number of
shares of Common Stock, without par value, of the Company ("Common Stock"),
shown above. The number of shares purchasable upon exercise of the Warrants
and the Warrant Price are subject to adjustment from time to time as set forth
in the Warrant Agreement referred to below.
Warrants may be exercised in whole or in part by presentation of this
Warrant Certificate with the Purchase Form on the reverse side hereof duly
executed, which signature shall be guaranteed by a bank or trust company or a
broker or dealer which is a member of the National Association of Securities
Dealers, Inc., and simultaneous payment of the Warrant Price at the principal
office of KeyCorp Shareholder Services, Inc. (the "Warrant Agent") in
__________________________. Payment of such price shall be made at the option
of the Holder hereof in cash or by certified or bank cashier's check drawn upon
a bank chartered by the government of the United States or any state thereof.
This Warrant Certificate is issued under and in accordance with a
Warrant Agreement dated as of __________________________, 1996, between the
Company and the Warrant Agent and is subject to the terms and provisions
contained in the Warrant Agreement, to all of which the Holder of this Warrant
Certificate by acceptance hereof consents. A copy of the Warrant Agreement may
be obtained by the Holder hereof upon written request to the Company.
Upon any partial exercise of the Warrants evidenced by this Warrant
Certificate, there shall be countersigned and issued to the Holder hereof a new
Warrant Certificate for the shares of Common Stock as to which the Warrants
evidenced by this Warrant Certificate shall not have been exercised. This
Warrant Certificate may be exchanged at the office of the Warrant Agent by
surrender of this Warrant Certificate properly endorsed either separately or in
combination with one or more other Warrant Certificates for one or more new
Warrant Certificates evidencing the right of the Holder thereof to purchase the
same aggregate number of shares as were purchasable on exercise of the Warrants
evidenced by the Warrant Certificate or Certificates exchanged. No fractional
shares will be issued upon the exercise of any Warrant, but the
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<PAGE> 19
Company will pay the cash value thereof determined as provided in the Warrant
Agreement. This Warrant Certificate is transferable at the office of the
Warrant Agent in the manner and subject to the limitations set forth in the
Warrant Agreement.
The Holder hereof may be treated by the Company, the Warrant Agent, and
all other persons dealing with this Warrant Certificate as the absolute owner
hereof for any purpose and as the person entitled to exercise the rights
represented hereby, or to the transfer hereof on the books of the Company any
notice to the contrary notwithstanding, and until such transfer on such books,
the Company may treat the Holder thereof as the owner for all purposes.
Neither the Warrants nor this Warrant Certificate entitle any Holder
hereof to any of the rights of a stockholder of the Company.
This Warrant Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Warrant Agent.
DATED:
COUNTERSIGNED:
[ Bank ]
Warrant Agent
By:________________________________
Authorized Signature
JACOR COMMUNICATIONS, INC.
Attest:____________________________ By:________________________________
Secretary
Title:_____________________________
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<PAGE> 20
JACOR COMMUNICATIONS, INC.
PURCHASE FORM
(To be executed upon exercise of Warrant)
Warrant Agent
The undersigned hereby irrevocably elects to exercise the right to
purchase _______________ shares of Common Stock evidenced by the within Warrant
Certificate, according to the terms and conditions thereof, and herewith makes
payment of the purchase price in full by tendering cash or certified or bank
cashier's check drawn upon a bank chartered by the government of the United
States or any state thereof in the aggregate amount of
$__________________________. The undersigned requests that certificates for
such shares of Common Stock shall be issued in the name of
________________________________________________________________________________
(Please print Name, Address and Social Security No.)
________________________________________________________________________________
________________________________________________________________________________
and, if said number of shares shall not be all the shares purchasable
thereunder, that a New Warrant Certificate for the balance remaining of the
shares purchasable under the within Warrant Certificate be issued in the name
of the undersigned Warrantholder or his Assignee as below indicated and
delivered to the address stated below.
DATED:____________________, ______
Name of Warrantholder or Assignee:__________________________________________
(Please Print)
Address:____________________________________________________________________
____________________________________________________________________
Signature:__________________________________________________
Signature Guaranteed: (The above signature must correspond with the name as
written upon the face of this Warrant Certificate in every
particular, without alteration or enlargement or any
change whatever, unless this Warrant Certificate has been
assigned.)
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<PAGE> 21
ASSIGNMENT
(To be signed only upon assignment of Warrant Certificate)
FOR VALUED RECEIVED, the undersigned hereby sells, assigns and
transfers unto _________________________________________________________
________________________________________________________________________________
(Name and Address of Assignee Must be Printed or Typewritten)
the within Warrant Certificate, irrevocably constituting and appointing
______________________________________________________________, Attorney to
transfer said Warrant Certificate on the books of the Company, with full power
of substitution in the premises.
DATED:_________________________, ______
Signature:______________________________
Signature Guaranteed: (The above signature must
correspond with the name as
written on the face of this
Warrant Certificate in every
particular, without
alteration or enlargement or
any change whatever.)
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<PAGE> 1
Date: February 12, 1996 Contact: Gregory C. Thomas
(513) 562-8007
For Release: Immediately
CITICASTERS ANNOUNCES MERGER WITH JACOR
(Cincinnati) Citicasters Inc. announced today that it had entered into a
definitive merger agreement with Jacor Communications, Inc. providing for the
acquisition of Citicasters by Jacor for cash in the amount of $29.50 per share
and certain warrants to purchase Jacor stock. If the Jacor transaction does
not close by September 30, 1996, the cash purchase price per share will be
increased by $.22125 for each full month thereafter ending prior to the closing
of the transaction. A five-year warrant to purchase approximately .2 shares of
Jacor common stock at $28 per share ($26 per share if the closing of this
transaction does not occur until on or after October 1, 1996) will be issued
with respect to each Citicasters share, subject to certain adjustments. John
P. Zanotti, Chief Executive Officer of Citicasters, stated "We believe this
merger represents tremendous value for our shareholders along with new
opportunities for our employees."
Certain entities and persons that control Citicasters have agreed to execute
irrevocable consents in favor of the Jacor transaction on March 13, 1996.
These consents are sufficient to approve the transaction under applicable law
and, when delivered, will preclude the consideration of any other offers. The
consummation of the transaction is subject to certain conditions, including the
receipt of FCC and other regulatory approvals.
Salomon Brothers Inc. served as financial advisor to Citicasters in
connection with the transaction.
Citicasters currently operates 19 radio stations including 14 FM and 5 AM
stations along with two network-affiliated television stations in major markets
throughout the country.
Citicasters common stock is quoted on NASDAQ National Market System under the
symbol CITI.
