<PAGE>
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
SCHEDULE 13D
Under the Securities Exchange Act of 1934
Clear Channel Communications, Inc.
----------------------------------
(Name of Issuer)
COMMON STOCK, Par Value $0.10
-----------------------------
(Title of Class of Securities)
184502102
---------
CUSIP Number
H & F INVESTORS III, INC.
One Maritime Plaza, 12th Floor
San Francisco, California 94111
(415) 788-5111
with a copy to:
Timothy G. Hoxie, Esq.
Heller Ehrman White & McAuliffe
333 Bush Street
San Francisco, California 94104
(415) 772-6052
-------------------------------------
(Name, address and telephone number
of person authorized to receive
notices and communications)
February 25, 1997
------------------
(Date of Event which requires
filing of this statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this statement, and is filing this
statement because of Rule 13d-1(b)(3) or (4), check the following:
/ /
Check the following box if a fee is being paid with this statement:
/ /
(Page 1 of ___ pages)
<PAGE>
CUSIP NO. 184502102 13D
1) Name of Reporting Persons:
Hellman & Friedman Capital Partners III, L.P.
- --------------------------------------------------------------------------------
2) Check the Appropriate Box if a Member of a Group (See
Instructions)
(a) /X/
--------------------------------------------
(b) / /
--------------------------------------------
- --------------------------------------------------------------------------------
3) SEC Use Only
------------------------------------
- --------------------------------------------------------------------------------
4) Source of Funds (See Instructions):
- --------------------------------------------------------------------------------
5) / / Check if Disclosure of Legal proceedings
is Required Pursuant to Items 2(d) or 2(e)
- --------------------------------------------------------------------------------
6) Citizenship or Place of Organization: California
- --------------------------------------------------------------------------------
Number 7) Sole Voting Power: -0-
of
Shares ----------------------------------------------------------
Beneficially 8) Shared Voting Power: 5,356,552
Owned
by ----------------------------------------------------------
Each 9) Sole Dispositive Power: -0-
Reporting
Person ----------------------------------------------------------
With 10) Shared Dispositive Power: 5,356,552
- --------------------------------------------------------------------------------
11) Aggregate Amount Beneficially Owned by Each
Reporting Person: 5,356,552
- --------------------------------------------------------------------------------
12) / / Check if the Aggregate Amount in Row (11)
Excludes Certain Shares (See Instructions)
- --------------------------------------------------------------------------------
13) Percent of Class Represented by amount in Row (11):
6.51%
- --------------------------------------------------------------------------------
14) Type of Reporting Person (See Instructions): PN
- --------------------------------------------------------------------------------
(Page 2 of ___ pages)
<PAGE>
CUSIP NO. 184502102 13D
1) Name of Reporting Persons:
H & F Orchard Partners III, L.P.
- --------------------------------------------------------------------------------
2) Check the Appropriate Box if a Member of a Group (See
Instructions)
(a) /X/
-------------------------------------------
(b) / /
-------------------------------------------
- --------------------------------------------------------------------------------
3) SEC Use Only
-------------------------------------
- --------------------------------------------------------------------------------
4) Source of Funds (See Instructions):
- --------------------------------------------------------------------------------
5) / / Check if Disclosure of Legal proceedings
is Required Pursuant to Items 2(d) or 2(e)
- --------------------------------------------------------------------------------
6) Citizenship or Place of Organization: California
- --------------------------------------------------------------------------------
Number 7) Sole Voting Power: -0-
of
Shares ----------------------------------------------------------
Beneficially 8) Shared Voting Power: 394,283
Owned
by ----------------------------------------------------------
Each 9) Sole Dispositive Power: -0-
Reporting
Person ----------------------------------------------------------
With 10) Shared Dispositive Power: 394,283
- --------------------------------------------------------------------------------
11) Aggregate Amount Beneficially Owned by Each
Reporting Person: 394,283
- --------------------------------------------------------------------------------
12) / / Check if the Aggregate Amount in Row (11)
Excludes Certain Shares (See Instructions)
- --------------------------------------------------------------------------------
13) Percent of Class Represented by amount in Row (11):
0.51%
- --------------------------------------------------------------------------------
14) Type of Reporting Person (See Instructions): PN
- --------------------------------------------------------------------------------
(Page 3 of ___ pages)
<PAGE>
CUSIP NO. 184502102 13D
1) Name of Reporting Persons:
H & F International Partners III, L.P.
- --------------------------------------------------------------------------------
2) Check the Appropriate Box if a Member of a Group (See
Instructions)
(a) /X/
------------------------------------------------------------
(b) / /
------------------------------------------------------------
- --------------------------------------------------------------------------------
3) SEC Use Only
---------------------------------------------------
- --------------------------------------------------------------------------------
4) Source of Funds (See Instructions):
- --------------------------------------------------------------------------------
5) / / Check if Disclosure of Legal proceedings
is Required Pursuant to Items 2(d) or 2(e)
- --------------------------------------------------------------------------------
6) Citizenship or Place of Organization: California
- --------------------------------------------------------------------------------
Number 7) Sole Voting Power: -0-
of
Shares ----------------------------------------------------------
Beneficially 8) Shared Voting Power: 118,810
Owned
by ----------------------------------------------------------
Each 9) Sole Dispositive Power: -0-
Reporting
Person ----------------------------------------------------------
With 10) Shared Dispositive Power: 118,810
- --------------------------------------------------------------------------------
11) Aggregate Amount Beneficially Owned by Each
Reporting Person: 118,810
- --------------------------------------------------------------------------------
12) / / Check if the Aggregate Amount in Row (11)
Excludes Certain Shares (See Instructions)
- --------------------------------------------------------------------------------
13) Percent of Class Represented by amount in Row (11):
0.15%
- --------------------------------------------------------------------------------
14) Type of Reporting Person (See Instructions): PN
- --------------------------------------------------------------------------------
(Page 4 of ___ pages)
<PAGE>
CUSIP NO. 184502102 13D
1) Name of Reporting Persons:
H&F Investors III
- --------------------------------------------------------------------------------
2) Check the Appropriate Box if a Member of a Group (See
Instructions)
(a) /X/
-------------------------------------------------------------
(b) / /
-------------------------------------------------------------
- --------------------------------------------------------------------------------
3) SEC Use Only
----------------------------------------------------
- --------------------------------------------------------------------------------
4) Source of Funds (See Instructions):
- --------------------------------------------------------------------------------
5) / / Check if Disclosure of Legal proceedings
is Required Pursuant to Items 2(d) or 2(e)
- --------------------------------------------------------------------------------
6) Citizenship or Place of Organization: California
- --------------------------------------------------------------------------------
Number 7) Sole Voting Power: -0-
of
Shares ----------------------------------------------------------
Beneficially 8) Shared Voting Power: 5,869,645
Owned
by ----------------------------------------------------------
Each 9) Sole Dispositive Power: -0-
Reporting
Person ----------------------------------------------------------
With 10) Shared Dispositive Power: 5,869,645
- --------------------------------------------------------------------------------
11) Aggregate Amount Beneficially Owned by Each
Reporting Person: 5,869,645
- --------------------------------------------------------------------------------
12) / / Check if the Aggregate Amount in Row (11)
Excludes Certain Shares (See Instructions)
- --------------------------------------------------------------------------------
13) Percent of Class Represented by amount in Row (11):
7.1%
- --------------------------------------------------------------------------------
14) Type of Reporting Person (See Instructions): PN
- --------------------------------------------------------------------------------
(Page 5 of ___ pages)
<PAGE>
CUSIP NO. 184502102 13D
1) Name of Reporting Persons:
Hellman & Friedman Associates III, L.P.
- --------------------------------------------------------------------------------
2) Check the Appropriate Box if a Member of a Group (See
Instructions)
(a) /X/
-------------------------------------------------------------
(b) / /
- --------------------------------------------------------------------------------
3) SEC Use Only
---------------------------------------------------
- --------------------------------------------------------------------------------
4) Source of Funds (See Instructions):
- --------------------------------------------------------------------------------
5) / / Check if Disclosure of Legal proceedings
is Required Pursuant to Items 2(d) or 2(e)
- --------------------------------------------------------------------------------
6) Citizenship or Place of Organization: California
- --------------------------------------------------------------------------------
Number 7) Sole Voting Power: -0-
of
Shares ----------------------------------------------------------
Beneficially 8) Shared Voting Power: 5,869,645
Owned
by ----------------------------------------------------------
Each 9) Sole Dispositive Power: -0-
Reporting
Person ----------------------------------------------------------
With 10) Shared Dispositive Power: 5,869,645
- --------------------------------------------------------------------------------
11) Aggregate Amount Beneficially Owned by Each
Reporting Person: 5,869,645
- --------------------------------------------------------------------------------
12) / / Check if the Aggregate Amount in Row (11)
Excludes Certain Shares (See Instructions)
- --------------------------------------------------------------------------------
13) Percent of Class Represented by amount in Row (11):
7.1%
- --------------------------------------------------------------------------------
14) Type of Reporting Person (See Instructions): PN
- --------------------------------------------------------------------------------
(Page 6 of ___ pages)
<PAGE>
CUSIP NO. 184502102 13D
1) Name of Reporting Persons:
H & F Administration III, L.L.C.
- --------------------------------------------------------------------------------
2) Check the Appropriate Box if a Member of a Group (See
Instructions)
(a) /X/
-------------------------------------------------------------
(b) / /
-------------------------------------------------------------
- --------------------------------------------------------------------------------
3) SEC Use Only
----------------------------------------------------
- --------------------------------------------------------------------------------
4) Source of Funds (See Instructions):
- --------------------------------------------------------------------------------
5) / / Check if Disclosure of Legal proceedings
is Required Pursuant to Items 2(d) or 2(e)
- --------------------------------------------------------------------------------
6) Citizenship or Place of Organization: California
- --------------------------------------------------------------------------------
Number 7) Sole Voting Power: -0-
of
Shares ----------------------------------------------------------
Beneficially 8) Shared Voting Power: 5,869,645
Owned
by ----------------------------------------------------------
Each 9) Sole Dispositive Power: -0-
Reporting
Person ----------------------------------------------------------
With 10) Shared Dispositive Power: 5,869,645
- --------------------------------------------------------------------------------
11) Aggregate Amount Beneficially Owned by Each
Reporting Person: 5,869,645
- --------------------------------------------------------------------------------
12) / / Check if the Aggregate Amount in Row (11)
Excludes Certain Shares (See Instructions)
- --------------------------------------------------------------------------------
13) Percent of Class Represented by amount in Row (11):
7.1%
- --------------------------------------------------------------------------------
14) Type of Reporting Person (See Instructions): OO
- --------------------------------------------------------------------------------
(Page 7 of ___ page)
<PAGE>
CUSIP NO. 184502102 13D
1) Name of Reporting Persons:
H & F Investors III, Inc.
- --------------------------------------------------------------------------------
2) Check the Appropriate Box if a Member of a Group (See
Instructions)
(a) /X/
-------------------------------------------------------------
(b) / /
-------------------------------------------------------------
- --------------------------------------------------------------------------------
3) SEC Use Only
- --------------------------------------------------------------------------------
4) Source of Funds (See Instructions):
- --------------------------------------------------------------------------------
5) / / Check if Disclosure of Legal proceedings
is Required Pursuant to Items 2(d) or 2(e)
- --------------------------------------------------------------------------------
6) Citizenship or Place of Organization: California
- --------------------------------------------------------------------------------
Number 7) Sole Voting Power: -0-
of
Shares ----------------------------------------------------------
Beneficially 8) Shared Voting Power: 5,869,645
Owned
by ----------------------------------------------------------
Each 9) Sole Dispositive Power: -0-
Reporting
Person ----------------------------------------------------------
With 10) Shared Dispositive Power: 5,869,645
- --------------------------------------------------------------------------------
11) Aggregate Amount Beneficially Owned by Each
Reporting Person: 5,869,645
- --------------------------------------------------------------------------------
12) / / Check if the Aggregate Amount in Row (11)
Excludes Certain Shares (See Instructions)
- --------------------------------------------------------------------------------
13) Percent of Class Represented by amount in Row (11):
7.1%
- --------------------------------------------------------------------------------
14) Type of Reporting Person (See Instructions): CO
- --------------------------------------------------------------------------------
(Page 8 of ___ pages)
<PAGE>
CUSIP NO. 184502102 13D
1) Name of Reporting Persons:
H&F Management III, L.L.C.
- --------------------------------------------------------------------------------
2) Check the Appropriate Box if a Member of a Group (See
Instructions)
(a) /X/
-------------------------------------------------------------
(b) / /
-------------------------------------------------------------
- --------------------------------------------------------------------------------
3) SEC Use Only
---------------------------------------------------
- --------------------------------------------------------------------------------
4) Source of Funds (See Instructions):
- --------------------------------------------------------------------------------
5) / / Check if Disclosure of Legal proceedings
is Required Pursuant to Items 2(d) or 2(e)
- --------------------------------------------------------------------------------
6) Citizenship or Place of Organization: California
- --------------------------------------------------------------------------------
Number 7) Sole Voting Power: -0-
of
Shares ----------------------------------------------------------
Beneficially 8) Shared Voting Power: 5,869,645
Owned
by ----------------------------------------------------------
Each 9) Sole Dispositive Power: -0-
Reporting
Person ----------------------------------------------------------
With 10) Shared Dispositive Power: 5,869,645
- --------------------------------------------------------------------------------
11) Aggregate Amount Beneficially Owned by Each
Reporting Person: 5,869,645
- --------------------------------------------------------------------------------
12) / / Check if the Aggregate Amount in Row (11)
Excludes Certain Shares (See Instructions)
- --------------------------------------------------------------------------------
13) Percent of Class Represented by amount in Row (11):
7.1%
- --------------------------------------------------------------------------------
14) Type of Reporting Person (See Instructions): 00
- --------------------------------------------------------------------------------
(Page 9 of ___ pages)
<PAGE>
CUSIP NO. 184502102 13D
1) Name of Reporting Persons:
F. Warren Hellman (individually, and as trustee of the
Hellman Family revocable Trust)
- --------------------------------------------------------------------------------
2) Check the Appropriate Box if a Member of a Group (See
Instructions)
(a) /X/
-------------------------------------------------------------
(b) / /
-------------------------------------------------------------
- --------------------------------------------------------------------------------
3) SEC Use Only
---------------------------------------------------
- --------------------------------------------------------------------------------
4) Source of Funds (See Instructions): OO (WC of other group
member)
- --------------------------------------------------------------------------------
5) / / Check if Disclosure of Legal proceedings
is Required Pursuant to Items 2(d) or 2(e)
- --------------------------------------------------------------------------------
6) Citizenship or Place of Organization: U.S.
- --------------------------------------------------------------------------------
Number 7) Sole Voting Power: -0-
of
Shares ----------------------------------------------------------
Beneficially 8) Shared Voting Power: 5,869,645
Owned
by ----------------------------------------------------------
Each 9) Sole Dispositive Power: -0-
Reporting
Person ----------------------------------------------------------
With 10) Shared Dispositive Power: 5,869,645
- --------------------------------------------------------------------------------
11) Aggregate Amount Beneficially Owned by Each
Reporting Person: 5,869,645
- --------------------------------------------------------------------------------
12) / / Check if the Aggregate Amount in Row (11)
Excludes Certain Shares (See Instructions)
- --------------------------------------------------------------------------------
13) Percent of Class Represented by amount in Row (11):
7.1%
- --------------------------------------------------------------------------------
14) Type of Reporting Person (See Instructions): IN
- --------------------------------------------------------------------------------
(Page 10 of ___ pages)
<PAGE>
CUSIP NO. 184502102 13D
1) Name of Reporting Persons:
Tully M. Friedman (individually, and as trustee of the Tully
M. Friedman Revocable Trust)
- --------------------------------------------------------------------------------
2) Check the Appropriate Box if a Member of a Group (See
Instructions)
(a) /X/
-------------------------------------------------------------
(b) / /
-------------------------------------------------------------
- --------------------------------------------------------------------------------
3) SEC Use Only
---------------------------------------------------
- --------------------------------------------------------------------------------
4) Source of Funds (See Instructions): OO (WC of other group
member)
- --------------------------------------------------------------------------------
5) / / Check if Disclosure of Legal proceedings
is Required Pursuant to Items 2(d) or 2(e)
- --------------------------------------------------------------------------------
6) Citizenship or Place of Organization: U.S.
- --------------------------------------------------------------------------------
Number 7) Sole Voting Power: -0-
of
Shares ----------------------------------------------------------
Beneficially 8) Shared Voting Power: 5,869,645
Owned
by ----------------------------------------------------------
Each 9) Sole Dispositive Power: -0-
Reporting
Person ----------------------------------------------------------
With 10) Shared Dispositive Power: 5,869,645
- --------------------------------------------------------------------------------
11) Aggregate Amount Beneficially Owned by Each
Reporting Person: 5,869,645
- --------------------------------------------------------------------------------
12) / / Check if the Aggregate Amount in Row (11)
Excludes Certain Shares (See Instructions)
- --------------------------------------------------------------------------------
13) Percent of Class Represented by amount in Row (11):
7.1%
- --------------------------------------------------------------------------------
14) Type of Reporting Person (See Instructions): IN
- --------------------------------------------------------------------------------
(Page 11 of ___ pages)
<PAGE>
CUSIP NO. 184502102 13D
INTRODUCTION
H&F Investors III, Inc. ("Investors III, Inc.") hereby files this Statement
on Schedule 13D (the "Statement") on behalf of the Reporting Persons identified
herein pursuant to the Agreement with respect to Schedule 13D attached hereto as
Exhibit 7(1).
Item 1. SECURITY AND ISSUER.
The class of equity securities to which this Statement relates is the
common stock, $0.10 par value (the "Common Stock"), of Clear Channel
Communications, Inc. (the "Issuer"), a corporation incorporated under the laws
of Texas whose principal executive offices are located at 200 Concord Plaza,
Suite 600, San Antonio, Texas 78216.
Item 2. IDENTITY AND BACKGROUND.
This Statement is filed on behalf of Hellman & Friedman Capital Partners
III, L.P., a California limited partnership ("HFCP III"), H&F International
Partners III, L.P., a California limited partnership ("International Partners
III"), H&F Orchard Partners III, L.P., a California limited partnership
("Orchard Partners III"), H&F Investors III, a California general partnership,
the general partner of HFCP III, International Partners III and Orchard Partners
III ("Investors III"), H&F Administration III, L.L.C., a Delaware limited
liability company, the administration general partner of Investors III
("Administration III"), Hellman & Friedman Associates III, L.P.,
(Page 15 of ___ pages)
<PAGE>
CUSIP NO. 184502102 13D
a California limited partnership, the managing general partner of Investors III
("Associates III"), H&F Management III, L.L.C., a Delaware limited liability
company, a general partner of Associates III ("Management III"), H&F Investors
III, Inc., a California corporation, the general partner of Associates III
("Investors III, Inc.") and F. Warren Hellman and Tully M. Friedman (each,
trustee of a revocable trust which is a 50% shareholder in Investors III, Inc.).
The foregoing partnerships, corporations and individuals (referred to
collectively herein as the "Reporting Persons"), because of common ultimate
control of their investment decisions by Messrs. Hellman and Friedman,
constitute a "group" for purposes of Section 13(d) of the Securities Exchange
Act of 1934 ("Exchange Act"). Although Messrs. Hellman and Friedman are not
obligated to cause all shares owned by the group to be voted similarly, they are
likely to do so.
a. HFCP III.
The principal executive offices of HFCP III are located at One
Maritime Plaza, 12th Floor, San Francisco, California 94111. HFCP III was
formed for the purpose of making investments in a variety of special situations,
including without limitation, financial restructurings, recapitalizations and
financial service start-up companies. HFCP III is a limited partnership formed
under the laws of the State of California.
(Page 16 of ___ pages)
<PAGE>
CUSIP NO. 184502102 13D
b. INTERNATIONAL PARTNERS III.
The principal executive offices of International Partners III are
located at One Maritime Plaza, 12th Floor, San Francisco, California 94111.
International Partners III was formed for the purpose of making investments in a
variety of special situations, including without limitation, financial
restructurings, recapitalizations and financial service start-up companies.
International Partners III is a limited partnership formed under the laws of the
State of California.
c. ORCHARD PARTNERS III.
The principal executive offices of Orchard Partners III are located at
One Maritime Plaza, 12th Floor, San Francisco, California 94111. Orchard
Partners III was formed for the purpose of making investments in a variety of
special situations, including without limitation, financial restructurings,
recapitalizations and financial service start-up companies. Orchard Partners
III is a limited partnership formed under the laws of the State of California.
(Page 17 of ___ pages)
<PAGE>
CUSIP NO. 184502102 13D
d. INVESTORS III.
The principal executive offices of Investors III are located at One
Maritime Plaza, 12th Floor, San Francisco, California 94111. Investors III is a
general partnership formed under the laws of the State of California for the
purpose of serving as the general partner of each of HFCP III, International
Partners III and Orchard Partners III.
e. ADMINISTRATION III.
The principal executive offices of Administration III are located at
One Maritime Plaza, 12th Floor, San Francisco, California 94111. Administration
III is a Delaware limited liability company whose principal business is serving
as the administration general partner of Investors III.
f. ASSOCIATES III.
The principal executive offices of Associates III are located at One
Maritime Plaza, 12th Floor, San Francisco, California 94111. Associates III is
a California limited partnership whose principal business is serving as the
managing general partner of Investors III.
(Page 18 of ___ pages)
<PAGE>
CUSIP NO. 184502102 13D
g. MANAGEMENT III.
The principal executive offices of Management III are located at One
Maritime Plaza, 12th Floor, San Francisco, California 94111. Management III is
a Delaware limited liability company whose principal business is serving as the
general partner of Associates III.
h. INVESTORS III, INC.
The principal executive offices of Investors III, Inc. are located at
One Maritime Plaza, 12th Floor, San Francisco, California 94111. Investors III,
Inc. is a California corporation whose principal business is serving as a
general partner of Associates III and as the manager of Administration III. The
names, business addresses, present principal occupations and citizenships of the
executive officers and members of the Board of Directors of Investors III, Inc.
are set forth on Schedule 1 hereto.
i. F. WARREN HELLMAN.
Mr. Hellman is a trustee of a revocable trust which owns 50% of the
outstanding common stock of Investors III, Inc. Mr. Hellman's business address
is One Maritime Plaza, 12th Floor, San Francisco, California 94111. Mr. Hellman
is a partner of
(Page 19 of ___ pages)
<PAGE>
CUSIP NO. 184502102 13D
Hellman & Friedman, a general partnership formed under the laws of the State of
California, and as such is primarily engaged in investment activities.
j. TULLY M. FRIEDMAN.
Mr. Friedman is trustee of a revocable trust which owns 50% of the
outstanding common stock of Investors III, Inc. Mr. Friedman's business address
is One Maritime Plaza, 12th Floor, San Francisco, California 94111. Mr.
Friedman is a partner of Hellman & Friedman, a general partnership formed under
the laws of the State of California, and as such is primarily engaged in
investment activities.
During the last five years none of the Reporting Persons, nor any of
the directors or executive officers of Investors III, Inc., has been convicted
in a criminal proceeding (excluding traffic violations or similar misdemeanors)
nor have any of such persons been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction as a result of which such person
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, Federal or
State securities laws or finding any violation with respect to such laws.
(Page 20 of ___ pages)
<PAGE>
CUSIP NO. 184502102 13D
Item 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
On February 25, 1997 HFCP III, Orchard Partners III and International
Partners III (collectively, the "Partnerships"), the other stockholders of Eller
Media Corporation ("Eller Media") and the Issuer entered into a Stock Purchase
Agreement (the "Purchase Agreement") pursuant to which the Issuer agreed to
acquire from the Partnerships and the other stockholders of Eller Media
(collectively the "Stockholders") all of the outstanding shares of Eller Media.
The Purchase Agreement, a copy of which is attached as Exhibit 7(2), provides
that the purchase price to be paid by the Issuer to the Stockholders for such
shares shall consist of $325,329,131 in cash and between 8,707,009 and 9,624,639
shares of Common Stock (of which the Partnerships would receive between
5,869,395 and 6,487,969 shares, in the aggregate). The exact number of Clear
Channel shares to be issued to the Stockholders depends on the price of the
Common Stock; at the closing price of the Common Stock on March 4, 1997 of $47
per share, 8,707,009 shares of Common Stock (i.e., the minimum number of shares
issuable to the Stockholders pursuant to the Purchase Agreement) would be issued
to the Stockholders. Of such shares, the Partnerships would receive an
aggregate of 5,869,645 shares of Common Stock. The closing of the
transactions contemplated by the Purchase Agreement is expected to occur on
or about April 10, 1997 and is subject to the satisfaction of various
conditions set forth in the Purchase Agreement.
(Page 21 of ___ pages)
<PAGE>
CUSIP NO. 184502102 13D
Item 4. PURPOSE OF TRANSACTION.
The Partnerships will acquire the shares of Common Stock as
described in Item 3 solely for purposes of investment. At the closing of the
transactions contemplated by the Purchase Agreement, the Stockholders
(including the partnerships) will enter into, among other things, a
Registration Rights Agreement pursuant to which the Stockholders will have
the right to require the Issuer to register, on the terms and subject to the
conditions set forth in such agreement, the shares of Common Stock to be
acquired by the Stockholders pursuant to the Purchase Agreement. The form of
Registration Rights Agreement contemplates that the Stockholders will
exercise their first "demand" registration right under that agreement at the
closing of the transactions contemplated by the Purchase Agreement; the
Partnerships presently intend to sell a portion of their Common Stock in any
such registered offering. The form of Registration Rights Agreement is
attached hereto as Exhibit 7(3).
The Purchase Agreement gives HFCP III the right, if (and only if) the
Partnerships continue to hold 5,250,000 shares of Common Stock six months after
the closing of the transactions contemplated by the Purchase Agreement, to
nominate one person to serve as a director of the Issuer. The Partnerships do
not presently intend to hold sufficient shares of Common Stock to make possible
the exercise of that right.
(Page 22 of ___ pages)
<PAGE>
CUSIP NO. 184502102 13D
Item 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) and (b). The aggregate number of shares and percentage of Common
Stock of the Issuer (based upon the representation of the Issuer in the Purchase
Agreement that it had 76,965,200 shares of Common Stock outstanding at December
31, 1996) beneficially owned by each person named in Item 2, as well as the
number of shares of Common Stock as to which such person is deemed to have sole
power to vote or to direct the vote, shared power to vote or to direct the vote,
sole power to dispose or to direct the disposition, or shared power to dispose
or direct the disposition, in each case after giving effect to the transactions
contemplated by the Purchase Agreement, is set forth in the following table.
(This table assumes that the minimum number of shares issuable under the
Purchase Agreement are in fact issued, as would be the case based on the closing
price of the Issuer Common Stock as of March 4, 1997. A higher number of shares
of Common Stock may be acquired by the Reporting Persons at the closing of the
transactions under the Purchase Agreement, up to a maximum of 6,487,969 shares
in the aggregate, pursuant to the provisions of the Purchase Agreement described
in Item 3.)
(Page 23 of ___ pages)
<PAGE>
CUSIP NO. 184502102 13D
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
No. of Shares
Beneficially Percentage Power to Vote Power to Dispose
Person Owned of Class Sole Shared Sole Shared
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
HFCP III 5,356,552 6.51% 0 5,356,552 0 5,356,552
- -------------------------------------------------------------------------------------------
Orchard Partners III 394,283 0.51% 0 394,283 0 394,283
- -------------------------------------------------------------------------------------------
International Partners III 118,810 0.15% 0 118,810 0 118,810
- -------------------------------------------------------------------------------------------
Investors III 5,869,645 7.1% 0 5,869,645 0 5,869,645
- -------------------------------------------------------------------------------------------
Administration III 5,869,645 7.1% 0 5,869,645 0 5,869,645
- -------------------------------------------------------------------------------------------
Associates III 5,869,645 7.1% 0 5,869,645 0 5,869,645
- -------------------------------------------------------------------------------------------
Management III 5,869,645 7.1% 0 5,869,645 0 5,869,645
- -------------------------------------------------------------------------------------------
Investors III, Inc. 5,869,645 7.1% 0 5,869,645 0 5,869,645
- -------------------------------------------------------------------------------------------
F. Warren Hellman 5,869,645 7.1% 0 5,869,645 0 5,869,645
- -------------------------------------------------------------------------------------------
Tully M. Friedman 5,869,645 7.1% 0 5,869,645 0 5,869,645
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
</TABLE>
The information required by Item 2 with respect to persons with whom voting
or dispositive power is shared is set forth in Item 2.
(c) To the best knowledge of the Reporting Persons, no person described in
paragraph (a) of this Item 5 has effected any transaction in the Common Stock of
the Issuer during the past 60 days other than as provided for in the Purchase
Agreement
(Page 24 of ___ pages)
<PAGE>
CUSIP NO. 184502102 13D
described in Items 3 and 4 above and attached hereto as Exhibit 7(2).
(d) To the best knowledge of the Reporting Persons, no person other than
the Reporting Persons has the right to receive or the power to direct the
receipt of dividends from, or the proceeds from the sale of, Common Stock of the
Issuer.
(e) Not applicable.
Item 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
In addition to the Purchase Agreement and Registration Rights Agreement
referred to in Items 3 and 4 above, the Partnerships, the other Stockholders and
the Issuer will enter into an Escrow Agreement at the closing of the
transactions contemplated by the Purchase Agreement pursuant to which a portion
of the shares of the Common Stock to be held by the Partnerships and the other
Stockholders will be held by an escrow agent as security for representations and
warranties made by the Stockholders to the Issuer in the Purchase Agreement.
The form of Escrow Agreement is attached hereto as Exhibit 7(4).
The description of the Purchase Agreement, Registration Rights Agreement
and Escrow Agreement contained in Items 3, 4 and
(Page 25 of ___ pages)
<PAGE>
CUSIP NO. 184502102 13D
6 is qualified in its entirety by the complete text of such documents, copies of
which are attached hereto as Exhibit 7(2), Exhibit 7(3), and Exhibit 7(4)
respectively.
Item 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 7 (1). Agreement with respect to Schedule 13D.
Exhibit 7 (2). Stock Purchase Agreement
Exhibit 7 (3). Form of Registration Rights Agreement
Exhibit 7 (4). Form of Escrow Agreement
(Page 26 of ___ pages)
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of the undersigned's knowledge and
belief, the undersigned certifies that the information set forth in this
statement is true, complete and correct.
H&F INVESTORS III, INC.
Dated: March 6, 1997 By: Joseph Niehaus
-------------------------------
Title: Vice President
----------------------------
<PAGE>
CUSIP NO. 184502102 13D
LIST OF EXHIBITS
Exhibit No Description Page
----------- ----
7(1) Agreement with respect to Schedule 13D.
7(2) Stock Purchase Agreement
7(3) Form of Registration Rights Agreement
7(4) Form of Escrow Agreement
<PAGE>
CUSIP NO. 184502102 13D
SCHEDULE 1
H&F Investors III, Inc. ("Investors III, Inc.")
- -----------------------------------------------
Directors and Executive Officers
- --------------------------------
<TABLE>
<CAPTION>
Present Principal
Name and Address(1) Title Principal Occupation Business and Address
- ------------------- ----- -------------------- --------------------
<S> <C> <C> <C>
F. Warren Hellman Director and Partner, Investments
One Maritime Plaza President Hellman & Friedman One Maritime Plaza
12th Floor H&F Investors III, 12th Floor
San Francisco, CA Inc. San Francisco, CA 94111
94111
Tully M. Friedman Director, Partner, Investments
One Maritime Plaza Vice President and Hellman & Friedman One Maritime Plaza
12th Floor Treasurer 12th Floor
San Francisco, CA H&F Investors III, San Francisco, CA 94111
94111 Inc.
Matthew R. Barger Director, Partner, Investments
One Maritime Plaza Vice President Hellman & Friedman One Maritime Plaza
12th Floor H&F Investors III, 12th Floor
San Francisco, CA Inc. San Francisco, CA 94111
94111
John M. Pasquesi Vice President and Partner, Investments
One Maritime Plaza H&F Investors III, Hellman & Friedman One Maritime Plaza
12th Floor Inc. 12th Floor
San Francisco, CA San Francisco, CA 94111
94111
John L. Bunce, Jr. Vice President, Partner, Investments
One Maritime Plaza Secretary Hellman & Friedman One Maritime Plaza
12th Floor H&F Investors III, 12th Floor
San Francisco, CA Inc. San Francisco, CA 94111
94111
Marco W. Hellman Vice President Partner, Investments
One Maritime Plaza H&F Investors III, Hellman & Friedman One Maritime Plaza
12th Floor Inc. 12th Floor
San Francisco, CA San Francisco, CA 94111
94111
</TABLE>
- -----------------------
(1) Each of Messrs. F. Warren Hellman, Friedman, Barger, Pasquesi, Bunce and
Marco W. Hellman, Cohen, Niehaus, Hammarskjold and Ms. Lee are United
States Citizens.
<PAGE>
CUSIP NO. 184502102 13D
<TABLE>
<CAPTION>
Present Principal
Name and Address(1) Title Principal Occupation Business and Address
- ------------------- ----- -------------------- --------------------
<S> <C> <C> <C>
Mitchell R. Cohen Vice President Partner, Investments
One Maritime Plaza H&F Investors III, Hellman & Friedman One Maritime Plaza
12th Floor Inc. 12th Floor
San Francisco, CA San Francisco, CA 94111
94111
Georgia Lee Vice President Partner, Investments
One Maritime Plaza H&F Investors III, Hellman & Friedman One Maritime Plaza
12th Floor Inc. 12th Floor
San Francisco, CA San Francisco, CA 94111
94111
Joseph M. Niehaus Vice President Partner, Investments
One Maritime Plaza H&F Investors III, Hellman & Friedman One Maritime Plaza
12th Floor Inc. 12th Floor
San Francisco, CA San Francisco, CA 94111
94111
Philip U. Hammarskjold Vice President Partner, Investments
One Maritime Plaza H&F Investors III, Hellman & Friedman One Maritime Plaza
12th Floor Inc. 12th Floor
San Francisco, CA San Francisco, CA 94111
94111
</TABLE>
- -----------------------
(1) Each of Messrs. F. Warren Hellman, Friedman, Barger, Pasquesi, Bunce and
Marco W. Hellman, Cohen, Niehaus, Hammarskjold and Ms. Lee are United
States Citizens.
<PAGE>
EXHIBIT 7(1)
AGREEMENT WITH RESPECT TO SCHEDULE 13D
The undersigned hereby agree that any Statement on Schedule 13D to be
filed with the Securities and Exchange Commission by any of the undersigned,
including any amendment thereto, with respect to securities of Clear Channel
Communications, Inc., a Texas corporation, may be filed by H&F Investors III,
Inc. on behalf of all of the undersigned.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed in counterparts by their duty authorized signatories as of the ___th
day of March 1997.
HELLMAN & FRIEDMAN
CAPITAL PARTNERS III, L.P.
By: Its General Partner,
H&F Investors III
By: Its Managing General Partner,
Hellman & Friedman Associates III, L.P.
By: Its Managing General Partner, H&F
Investors III, Inc.
By: /s/ Joseph Niehaus
------------------------------
Its: Vice President
H&F ORCHARD PARTNERS III, L.P.
By: Its General Partner,
H&F Investors III
By: Its Managing General Partner,
Hellman & Friedman Associates III, L.P.
By: Its Managing General Partner, H&F
Investors III, Inc.
By: /s/ Joseph Niehaus
------------------------------
Its: Vice President
<PAGE>
H&F INTERNATIONAL PARTNERS III, L.P.
By: Its General Partner,
H&F Investors III
By: Its Managing General Partner,
Hellman & Friedman Associates III, L.P.
By: Its Managing General Partner, H&F
Investors III, Inc.
By: /s/ Joseph Niehaus
------------------------------
Its: Vice President
H&F INVESTORS III
By: Its Managing General Partner,
Hellman & Friedman Associates III, L.P.
By: Its Managing General Partner, H&F Investors
III, Inc.
By: /s/ Joseph Niehaus
-----------------------------------
Its: Vice President
H & F INVESTORS III, INC.
By: /s/ Joseph Niehaus
---------------------------------------------
Its: Vice President
H & F MANAGEMENT III, L.L.C.
By: /s/ F. Warren Hellman
---------------------------------------------
F. Warren Hellman, its Manager
H & F ADMINISTRATION III, L.L.C.
By: Its Manager, H&F Investors III, Inc.
By: /s/ Joseph Niehaus
----------------------------------------
Its: Vice President
<PAGE>
HELLMAN & FRIEDMAN ASSOCIATES III, L.P.
By: Its Managing General Partner, H&F Investors III,
Inc.
By: /s/ Joseph Niehaus
----------------------------------------
Its: Vice President
/s/ F. Warren Hellman
--------------------------------------------------
F. WARREN HELLMAN
/s/ Tully M. Friedman
--------------------------------------------------
TULLY M. FRIEDMAN
<PAGE>
EXHIBIT 7(2)
STOCK PURCHASE AGREEMENT
BY AND AMONG
CLEAR CHANNEL COMMUNICATIONS, INC.
ELLER MEDIA CORPORATION
AND
THE STOCKHOLDERS OF
ELLER MEDIA CORPORATION
DATED FEBRUARY 25, 1997
<PAGE>
TABLE OF CONTENTS
Page
----
1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Sale of Shares; Purchase Price. . . . . . . . . . . . . . . . . 8
(a) Sale of Shares. . . . . . . . . . . . . . . . . . . . . . 8
(b) Purchase Price. . . . . . . . . . . . . . . . . . . . . . 9
(c) Company Stock Options . . . . . . . . . . . . . . . . . . 10
(d) Escrow Agreement. . . . . . . . . . . . . . . . . . . . . 10
3. Representations and Warranties as to the Company. . . . . . . . 11
(a) Organization and Good Standing. . . . . . . . . . . . . . 11
(b) Capitalization. . . . . . . . . . . . . . . . . . . . . . 11
(c) Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . 11
(d) Execution and Effect of Agreement . . . . . . . . . . . . 12
(e) Financial Statements. . . . . . . . . . . . . . . . . . . 12
(f) No Undisclosed Liabilities. . . . . . . . . . . . . . . . 13
(g) No Material Adverse Change; No Dividends. . . . . . . . . 13
(h) Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(i) Patents, Trademarks and Copyrights. . . . . . . . . . . . 14
(j) Real Property; Leases of Real Property. . . . . . . . . . 14
(k) Permits; Compliance with Laws . . . . . . . . . . . . . . 15
(l) Insurance . . . . . . . . . . . . . . . . . . . . . . . . 15
(m) Material Contracts. . . . . . . . . . . . . . . . . . . . 15
(n) Title to Properties; Absence of Encumbrances. . . . . . . 16
(o) Restrictions. . . . . . . . . . . . . . . . . . . . . . . 16
(p) Litigation; Consents. . . . . . . . . . . . . . . . . . . 17
(q) Environmental Matters . . . . . . . . . . . . . . . . . . 17
(r) Collective Bargaining Agreements and Labor. . . . . . . . 18
(s) Employee Benefit Plans; ERISA . . . . . . . . . . . . . . 18
4. Representations and Warranties of the Stockholders. . . . . . . 21
(a) Title; Agreements . . . . . . . . . . . . . . . . . . . . 21
(b) Execution and Effect of Agreement . . . . . . . . . . . . 22
(c) Investment. . . . . . . . . . . . . . . . . . . . . . . . 22
5. Representations and Warranties of Purchaser . . . . . . . . . . 22
(a) Organization and Good Standing. . . . . . . . . . . . . . 23
(b) Capitalization. . . . . . . . . . . . . . . . . . . . . . 23
(c) Execution and Effect of Agreement . . . . . . . . . . . . 23
(d) Restrictions. . . . . . . . . . . . . . . . . . . . . . . 23
(e) Litigation; Consents. . . . . . . . . . . . . . . . . . . 24
(f) SEC Reports . . . . . . . . . . . . . . . . . . . . . . . 24
(g) Investment. . . . . . . . . . . . . . . . . . . . . . . . 25
i
<PAGE>
Page
----
6. Covenants of the Stockholders, the Company and Purchaser. . . . 25
(a) Filings and Other Actions . . . . . . . . . . . . . . . . 25
(b) Access to Documents; Opportunity to Ask Questions . . . . 25
(c) Indemnification of Directors and Officers of the Company. 26
(d) Conduct of Business . . . . . . . . . . . . . . . . . . . 26
(e) Notification of Certain Matters . . . . . . . . . . . . . 27
(f) Board of Directors of Purchaser . . . . . . . . . . . . . 27
(g) Company Stock Options . . . . . . . . . . . . . . . . . . 27
(h) Registration Statement. . . . . . . . . . . . . . . . . . 27
7. Conditions Precedent to Purchaser's Obligation. . . . . . . . . 28
8. Conditions Precedent to the Company's and the Stockholders'
Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . 29
9. Closing Date; Closing . . . . . . . . . . . . . . . . . . . . . 30
10. No Brokers. . . . . . . . . . . . . . . . . . . . . . . . . . . 31
11. Survival of Representations and Warranties. . . . . . . . . . . 32
12. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . 32
(a) By the Stockholders . . . . . . . . . . . . . . . . . . . 32
(b) By Purchaser. . . . . . . . . . . . . . . . . . . . . . . 33
(c) Damages . . . . . . . . . . . . . . . . . . . . . . . . . 33
(d) Defense of Claims . . . . . . . . . . . . . . . . . . . . 33
(e) Brokers and Finders . . . . . . . . . . . . . . . . . . . 35
(f) Exclusive Remedy. . . . . . . . . . . . . . . . . . . . . 35
13. Stockholder Representative. . . . . . . . . . . . . . . . . . . 35
14. Specific Performance. . . . . . . . . . . . . . . . . . . . . . 37
15. Termination; Amendments to Disclosure Letter. . . . . . . . . . 37
(a) Termination . . . . . . . . . . . . . . . . . . . . . . . 37
(b) Amendments to Disclosure Letter . . . . . . . . . . . . . 38
(c) Consequences of Termination . . . . . . . . . . . . . . . 38
16. Confidentiality; Press Releases . . . . . . . . . . . . . . . . 39
17. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
18. Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . 41
19. Successors. . . . . . . . . . . . . . . . . . . . . . . . . . . 41
ii
<PAGE>
Page
----
20. Choice of Law . . . . . . . . . . . . . . . . . . . . . . . . . 42
21. No Reliance on Other Information. . . . . . . . . . . . . . . . 42
22. Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
23. Severability. . . . . . . . . . . . . . . . . . . . . . . . . . 42
24. Titles. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
25. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . 43
26. No Third-Party Beneficiaries. . . . . . . . . . . . . . . . . . 43
27. Construction. . . . . . . . . . . . . . . . . . . . . . . . . . 43
28. Cumulative Remedies . . . . . . . . . . . . . . . . . . . . . . 43
EXHIBITS
Exhibit A - Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . A-1
Exhibit B - Purchase Price Allocation. . . . . . . . . . . . . . . . . . . B-1
Exhibit C - Form of Escrow Agreement . . . . . . . . . . . . . . . . . . . C-1
Exhibit D - Form of Option Assumption Agreement. . . . . . . . . . . . . . D-1
Exhibit E - Form of Registration Rights Agreement. . . . . . . . . . . . . E-1
Exhibit F - Escrow Allocation. . . . . . . . . . . . . . . . . . . . . . . F-1
Exhibit G - Company Stock Option Rollover Example. . . . . . . . . . . . . G-1
iii
<PAGE>
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "AGREEMENT"), dated as of
February 25, 1997, is by and among Clear Channel Communications, Inc., a Texas
corporation ("PURCHASER"), Eller Media Corporation, a Delaware corporation (the
"COMPANY"), and those persons listed on EXHIBIT A hereto (individually,
including both option holders and stockholders as identified on such exhibit,
each a "STOCKHOLDER" and collectively, the "STOCKHOLDERS"), being the beneficial
owners of all shares, and all options to acquire shares, of capital stock of the
Company issued and outstanding on the date hereof.
RECITALS
WHEREAS, the Stockholders as a group own all of the shares of Common
Stock, par value $.01 per share, of the Company, issued and outstanding or
issuable pursuant to options outstanding on the date hereof, with each
Stockholder owning or having the right to acquire the number of shares set forth
opposite such Stockholder's name on EXHIBIT A;
WHEREAS, the Company, through its subsidiaries, is in the business
of (a) owning, leasing, constructing, posting, painting and maintaining outdoor
advertising displays and (b) renting and selling space on such outdoor and other
out-of-home advertising displays, consisting principally of painted bulletins
and poster panels of various sizes to the general public for outdoor and other
out-of-home advertising purposes; and
WHEREAS, the Stockholders desire to sell to Purchaser, and Purchaser
desires to purchase from the Stockholders, the Shares (as defined herein), in
exchange for the Purchase Price (as defined herein), as allocated in the manner
set forth on EXHIBIT B hereto, upon the terms and subject to the conditions
hereinafter set forth.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and mutual
covenants hereinafter contained, the parties hereto agree as follows:
1. DEFINITIONS. As used in this Agreement, the following terms
shall have the indicated meanings, which meanings shall be applicable, except
to the extent otherwise indicated in a definition of a particular term, both
to the singular and plural forms of such terms. Any agreement referred to
below shall mean such agreement as amended, supplemented and modified from
time to time to the extent permitted by the applicable provisions thereof and
by this Agreement.
"ADCO NOTE" shall mean that certain 61/4% Convertible Secured Note
Due 2002, dated January 3, 1997, in favor of Richard Traverso d/b/a ADCO Outdoor
Advertising, in the principal amount of $9.5 million.
1
<PAGE>
"AFFILIATE" shall have the meaning specified in Rule 12b-2 of the
regulations promulgated under the Exchange Act.
"AGGREGATE CONSIDERATION" shall mean the sum of the Cash
Consideration plus the Stock Consideration, as adjusted pursuant to Section 2 of
this Agreement.
"AGREEMENT" has the meaning specified in the first paragraph of this
Agreement.
"AVERAGE SHARE PRICE" shall mean the average closing price of
Purchaser Common Stock on the NYSE during the 10 trading days beginning 13
trading days prior to the Closing Date; PROVIDED, HOWEVER, that, if Purchaser
exercises its option pursuant to Section 9(a) of this Agreement to extend the
Closing Date beyond April 10, 1997, the Stockholders may, at their option, elect
to use April 10, 1997 or the Closing Date as so extended as the Closing Date for
the purposes of this definition.
"BALANCE SHEET" shall mean, as of the date hereof, the unaudited
Consolidated Balance Sheet of the Company and its Subsidiaries at December 31,
1996, and at and after the date of delivery to Purchaser of such Balance Sheet
accompanied by the unqualified report of Arthur Andersen LLP, such audited
Balance Sheet.
"BALANCE SHEET DATE" shall mean December 31, 1996.
"BANKRUPTCY AND EQUITY EXCEPTIONS" has the meaning set forth in
Section 3(d) of this Agreement.
"BEST EFFORTS" shall mean reasonable good faith efforts but shall in
no event require the commencement of litigation against any third party or the
payment of any fees to any third party.
"BUSINESS DAY" shall mean any weekday on which commercial banks in
New York City are open. Any action, notice or right which is to be exercised or
lapses on or by a given date which is not a Business Day may be taken, given or
exercised, and shall not lapse, until the end of the next Business Day.
"CASH CONSIDERATION" has the meaning specified in Section 2(b) of
this Agreement.
"CHASE CREDIT AGREEMENT" shall mean that certain Amended and
Restated Credit Agreement, dated as of November 19, 1996, between Eller Media
Company, as Borrower, the Company, as Parent Guarantor, the Subsidiary
Guarantors named therein, each of the lenders that is a signatory thereto, and
The Chase Manhattan Bank, as Administrative Agent.
"CLAIM" has the meaning specified in Section 12(d) of this
Agreement.
"CLAIM NOTICE" has the meaning specified in Section 12(d) of this
Agreement.
"CLOSING" has the meaning specified in Section 9(a) of this
Agreement.
2
<PAGE>
"CLOSING DATE" has the meaning specified in Section 9(a) of this
Agreement.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"COMMISSION" shall mean the Securities and Exchange Commission.
"COMPANY" has the meaning specified in the first paragraph of this
Agreement.
"COMPANY COMMON STOCK" shall mean the Common Stock, par value $.01
per share, of the Company.
"COMPANY EMPLOYEE BENEFIT PLANS" shall mean Employee Benefit Plans
and any other material employee benefit arrangements or payroll practices,
including, without limitation, employment agreements, severance agreements,
executive compensation arrangements, incentive programs or arrangements, sick
leave, vacation pay, severance pay policies, plant closing benefits, salary
continuation for disability, consulting or other compensation arrangements,
workers' compensation, retirement, deferred compensation, bonus, stock purchase,
hospitalization, medical insurance, life insurance, tuition reimbursement or
scholarship programs, any plans providing benefits or payments in the event of a
change of control, change in ownership, or sale of a substantial portion
(including all or substantially all) of the assets of the Company, maintained by
the Company, a Subsidiary or an ERISA Affiliate or to which the Company, a
Subsidiary or an ERISA Affiliate has contributed or is or was obligated to make
payments, excluding any Multiemployer Plan, in each case with respect to any
employees or former employees of the Company, a Subsidiary or an ERISA
Affiliate.
"COMPANY EMPLOYEE PENSION PLANS" shall mean Company Employee Benefit
Plans which constitute "employee pension benefit plans" as defined in Section
3(2) of ERISA.
"COMPANY STOCK OPTION AGREEMENTS" shall mean the Company stock
option agreements listed on Schedule 3(b) of this Agreement.
"COMPANY STOCK OPTIONS" shall mean the stock options of the Company
pursuant to the Company Stock Option Agreements.
"COMPANY WELFARE PLANS" shall mean Company Benefit Employee Plans
which constitute "employee welfare benefit plans" within the meaning of Section
3(1) of ERISA.
"DAMAGES" has the meaning specified in Section 12(a) of this
Agreement.
"DISCLOSURE LETTER" shall mean the schedules prepared and delivered
by the Company and the Stockholders to Purchaser in a letter dated as of the
date hereof (and as updated pursuant to Section 15 hereof) which set forth the
exceptions to the representations and warranties contained in Section 3 hereof
and certain other information called for by this Agreement. Unless otherwise
specified, each reference in this Agreement to any numbered schedule is a
reference to that numbered schedule which is included in the Disclosure Letter.
3
<PAGE>
"EMPLOYEE BENEFIT PLAN" shall have the meaning ascribed to such term
by Section 3(3) of ERISA.
"ENCUMBRANCES" shall mean any lien, security interest, mortgage,
pledge, hypothecation, easement or conditional sale or other title retention
agreement; PROVIDED, HOWEVER, that Encumbrances shall not include any Permitted
Encumbrance.
"ENVIRONMENTAL LAWS" shall mean any federal, state, or local law,
ordinance, regulation, order or permit pertaining to the environment, natural
resources or public health or safety as presently in effect.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"ERISA AFFILIATE" shall refer to any trade or business, whether or
not incorporated, under common control of the Company within the meaning of
Section 414(b) or (c) of the Code and, solely for the purposes of potential
liability under Section 302(c)(11) of ERISA and Section 412(c)(11) of the Code
and the lien created under Section 302(f) of ERISA and Section 412(n) of the
Code, within the meaning of Section 414(m) or (o) of the Code.
"ESCROW AGENT" shall mean the entity designated by Purchaser and the
Stockholders to act as escrow agent under the Escrow Agreement.
"ESCROW AGREEMENT" shall mean that certain Escrow Agreement, dated
as of the Closing Date, by and among Purchaser, the Stockholder Representative
and the Escrow Agent, substantially in the form of EXHIBIT C attached hereto.
"ESCROWED SHARES" shall mean a number of shares of Purchaser Common
Stock equal to $35 million divided by the Average Share Price (which, to the
extent provided on EXHIBIT B hereto, may include Option Shares).
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"EXCHANGE RATE" has the meaning specified in Section 2(b) of this
Agreement.
"FINANCIAL STATEMENTS" shall mean (1) the audited Consolidated
Balance Sheet of the Company and its Subsidiaries at December 31, 1995 and the
related audited Consolidated Statements of Earnings and Cash Flows of the
Company and its Subsidiaries for the year then ended, certified by Arthur
Andersen LLP, and (ii) as of the date hereof the unaudited Consolidated Balance
Sheet of the Company and its Subsidiaries at December 31, 1996 and the related
unaudited Consolidated Statements of Earnings and Cash Flows of the Company and
its Subsidiaries for the year then ended, and at and after the date of delivery
to Purchaser of such Financial Statements accompanied by the unqualified report
of Arthur Andersen LLP, such audited Financial Statements.
4
<PAGE>
"HART-SCOTT-RODINO ACT" shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
"HAZARDOUS MATERIALS" shall mean hazardous wastes as presently
defined by the Resource Conservation and Recovery Act of 1976, 42 U.S.C. Section
6901 et. seq., as amended, and regulations promulgated thereunder and hazardous
substances as presently defined by the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C. Section 9601 et seq., as
amended ("CERCLA" or "SUPERFUND") and regulations promulgated thereunder, and
shall also mean every "hazardous material," "hazardous substance," "hazardous
waste," "toxic substance," or petroleum or petroleum product, as defined or
described in every state, local or other federal Environmental Law which is or
was applicable to the operations of the Company and its Subsidiaries.
"H&F FUNDS" shall mean Hellman & Friedman Capital Partners III,
L.P., H&F Orchard Partners III, L.P. and H&F International Partners III, L.P.,
and their Permitted Assignees (as defined in the Registration Rights Agreement)
and Permitted Transferees (as defined in the Registration Rights Agreement).
"HFCP III" has the meaning specified in Section 6(f)(ii) of this
Agreement.
"INDEBTEDNESS" shall mean all obligations which arise from borrowed
money or the deferred purchase price of property or services, including
capitalized leases under generally accepted accounting principles (other than
accounts payable arising in the ordinary course of business).
"MATERIAL LEASE" or "MATERIAL LEASES" has the meaning specified in
Section 3(j) of this Agreement.
"MULTIEMPLOYER PLAN" shall mean any Employee Benefit Plan to which
the Company, any Subsidiary or any ERISA Affiliate has or has had after
September 25, 1980 an obligation to contribute that constitutes a multiple
employer plan described in Section 3(37) of ERISA.
"MULTIPLE EMPLOYER PLAN" shall mean any Employee Benefit Plan to
which the Company, any Subsidiary or any ERISA Affiliate has or has had after
September 25, 1980 an obligation to contribute that constitutes a multiple
employer plan which is subject to Section 413(c) of the Code and which is not a
Multiemployer Plan.
"NEW DISCLOSURE MATTERS" has the meaning specified in Section 15(b)
of this Agreement.
"NYSE" shall mean the New York Stock Exchange.
"1997 BUDGET" has the meaning specified in Section 6(d) of this
Agreement.
5
<PAGE>
"OPTION ASSUMPTION AGREEMENT" shall mean that certain form of Option
Assumption Agreement, dated as of the Closing Date, to be entered into between
Purchaser and each employee of the Company who holds Company Stock Options which
remain unexercised on the Closing Date, substantially in the form of EXHIBIT D
attached hereto.
"OPTION SHARES" shall mean shares of Company Common Stock issuable
pursuant to Company Stock Options.
"OPTIONEES" shall mean the holders of Company Stock Options
outstanding on the date hereof.
"PERMITTED ENCUMBRANCE" shall mean, (a) Encumbrances imposed by any
governmental authority for Taxes, assessments or charges not yet due and payable
or which are being contested in good faith and by appropriate proceedings if
adequate reserves with respect thereto are maintained on the books of the
Company or its Subsidiaries in accordance with generally accepted accounting
principles; (b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Encumbrances arising in the ordinary course of
business which are not overdue for a period of more than 30 days or which are
being contested in good faith and by appropriate proceedings, if adequate
reserves with respect thereto are maintained on the books of the Company and its
Subsidiaries in accordance with generally accepted accounting principles; (c)
pledges or deposits in connection with worker's compensation, unemployment
insurance and other social security legislation; (d) deposits to secure the
performance of any or all of the following: bids, trade contracts (other than
for borrowed money), leases, statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature incurred in the
ordinary course of business; (e) easements, rights-of-way, restrictions and
other similar encumbrances on real property incurred in the ordinary course of
business and encroachments (whether or not in the ordinary course of business)
which, in the aggregate, are not substantial in amount, and which do not in any
case materially detract from the value of the property subject thereto or
interfere with the ordinary conduct of the business thereon; and (f) all the
exceptions to title reflected in Schedule 3(n).
"PHANTOM STOCK GRANTEES" shall mean the holders of Phantom Stock
Units outstanding on the date hereof.
"PHANTOM STOCK UNITS" shall mean the aggregate number of units of
phantom stock issuable pursuant to the terms of the Company phantom stock
agreements listed on Schedule 3(b) of this Agreement.
"POST-AGREEMENT DATE DISCLOSURE MATTERS" has the meaning specified
in Section 15(b) of this Agreement.
"PRE-AGREEMENT DATE DISCLOSURE MATTERS" has the meaning specified in
Section 15(b) of this Agreement.
"PRE-CLOSING TAX PERIOD" has the meaning specified in Section 3(h)
of this Agreement.
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"PREFERRED STOCK" has the meaning specified in Section 3(b) of this
Agreement.
"PURCHASE PRICE" has the meaning specified in Section 2(b) of this
Agreement.
"PURCHASER" has the meaning specified in the first paragraph of
this Agreement.
"PURCHASER COMMON STOCK" shall mean the Common Stock, par value $.10
per share, of Purchaser.
"PURCHASER FINANCIAL STATEMENTS" has the meaning specified in
Section 5(f) of this Agreement.
"PURCHASER SEC DOCUMENTS" has the meaning specified in Section 5(f)
of this Agreement.
"REGISTRATION RIGHTS AGREEMENT" shall mean that certain Registration
Rights Agreement, dated the Closing Date, substantially in the form of EXHIBIT E
attached hereto.
"REPRESENTATIVE" shall mean any officer, director, principal,
attorney, employee, consultant or other representative.
"RESTATED OPTION" has the meaning specified in Section 2(c) of this
Agreement.
"RESTATED OPTION AGREEMENT" has the meaning specified in Section
2(c) of this Agreement.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"SHARE" or "SHARES" has the meaning specified in Section 2(a) of
this Agreement.
"STOCKHOLDER" or "STOCKHOLDERS" has the meaning specified in the
first paragraph of this Agreement.
"STOCK CONSIDERATION" has the meaning specified in Section 2(b) of
this Agreement.
"STOCKHOLDER REPRESENTATIVE" has the meaning specified in Section
13(a) of this Agreement.
"STOCKHOLDERS AGREEMENT" shall mean that certain Stockholders
Agreement, dated August 18, 1995, by and among (i) Eller Media Company; (ii)
Hellman & Friedman Capital Partners III, L.P.; (iii) H&F Orchard Partners III,
L.P.; (iv) H&F International Partners III, L.P.; (v) EM Holdings LLC; (vi) Karl
Eller; and (vii) Irving Grousbeck, American Media Management, Inc., Richard
Reiss, Jr., Glenn Krevlin (as trustee fbo Nina Krevlin, Glenn Krevlin, Michael
Krevlin and Jill Krevlin), K. Tucker Anderson, and Bruce Halle.
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"STRADDLE PERIOD" has the meaning specified in Section 3(h) of this
Agreement.
"SUBSIDIARY" shall mean each corporation, partnership or other
entity, fifty percent (50%) or more of the outstanding voting shares of which or
other voting interests or equity interests in the case of a partnership are
owned or controlled directly or indirectly by the Company.
"TAX" or "TAXES" means all taxes, charges, fees, imposts, levies or
other assessments, including, without limitation, all net income, franchise,
profits, gross receipts, capital, sales, use, ad valorem, value added, transfer,
transfer gains, inventory, capital stock, license, withholding, payroll,
employment, social security, unemployment, excise, severance, stamp, occupation,
real or personal property, and estimated taxes, water, rent and sewer service
charges, customs duties, fees, assessments and charges of any kind whatsoever,
together with any interest and any penalties, fines, additions to tax or
additional amounts thereon, imposed by any taxing authority (federal, state,
local or foreign) and shall include any transferee liability in respect of
Taxes.
"TAX RETURN" means all returns, declarations, reports, estimates,
information returns and statements required to be filed in respect of any Taxes.
"VEBA" has the meaning specified in Section 3(s) of this Agreement.
"WARN" shall mean the Workers Adjustment and Retraining Notification
Act of 1988 and any similar state or local plant closing law.
2. SALE OF SHARES; PURCHASE PRICE.
(a) SALE OF SHARES. On the terms and subject to the conditions
set forth in this Agreement and, subject to the immediately following sentence
hereof, each Stockholder hereby severally agrees to sell, assign and transfer to
Purchaser, and Purchaser hereby agrees to purchase from such Stockholder, on the
Closing Date, the number of shares of Company Common Stock owned by such
Stockholder on the date hereof as set forth opposite such Stockholder's name on
EXHIBIT B hereto, plus such number of additional shares of Company Common Stock
as will hereafter be acquired by such Stockholder prior to the Closing Date upon
the exercise of Company Stock Options held by such Stockholder as set forth on
EXHIBIT B, for the aggregate consideration set forth on EXHIBIT B opposite such
Stockholder's name, subject to the Escrow Agreement provided for in Section
2(d). In the event any Optionee who on the date hereof is an employee of the
Company does not fully exercise Company Stock Options as listed opposite such
Optionee's name on EXHIBIT B under the column "Value of Stock Consideration" on
or prior to the Closing Date, Purchaser hereby agrees to assume such options
pursuant to Section 2(c) hereof and no shares of Purchaser Common Stock will be
issuable at Closing in respect of the unexercised portion of such Company Stock
Options. As used herein, "SHARES" shall mean the aggregate number of shares of
Company Common Stock to be sold by the Stockholders and purchased by the
Purchaser pursuant to this Section 2.
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(b) PURCHASE PRICE.
(i) In consideration of the transactions contemplated by
this Agreement, Purchaser shall pay to the Stockholders, the Optionees and the
Phantom Stock Grantees an aggregate purchase price (the "PURCHASE PRICE") equal
to (A) $325,329,131 (the "CASH CONSIDERATION") in cash (without interest),
payable in immediately available funds, plus (B) a number of shares of Purchaser
Common Stock (the "STOCK CONSIDERATION") determined as set forth in subsection
(ii) of this Section 2(b), subject to the Escrow Agreement described in Section
2(d) hereof. The Purchase Price shall be allocated among the Stockholders, the
Optionees and the Phantom Stock Grantees in the manner set forth on EXHIBIT B
hereto.
(ii) The Stock Consideration shall equal the number of shares
of Purchaser Common Stock obtained as a result of dividing $400,000,000 by the
Average Share Price. Notwithstanding the foregoing, if the Average Share Price
exceeds $45.94, the Stock Consideration shall be 8,707,009 shares of Purchaser
Common Stock; and if the Average Share Price is less than $41.56, the Stock
Consideration shall be 9,624,639 shares of Purchaser Common Stock. Should the
Average Share Price be greater than $45.94 or less than $41.56, the Stockholders
shall adjust the proportions of Cash Consideration and Stock Consideration on
EXHIBIT B hereto in a manner that insures that each Stockholder will receive the
Aggregate Consideration in proportion to the value of such Stockholder's
respective ownership in the Company as reflected by such Stockholder's share of
the Aggregate Consideration as shown on EXHIBIT B as of the date hereof.
(iii) Notwithstanding subsection (i) of this Section 2(b),
each Stockholder may elect to receive the Purchase Price in different
proportions of Cash Consideration and Stock Consideration than provided on
EXHIBIT B hereto, but only to the extent that other Stockholders make the
opposite complementary elections, to the end that the aggregate amount of cash
and number of shares of Purchaser Common Stock included in the Purchase Price
shall not (other than as a result of rounding) be different as a result of all
such elections. To the extent the Stockholders make such an election, the
Stockholder Representative will deliver a revised EXHIBIT B reflecting such an
election(s) to Purchaser no later than ten (10) days prior to the Closing Date.
(iv) If, between the date of this Agreement and the Closing
Date, the outstanding shares of Purchaser Common Stock shall have been changed
into a different number of shares or a different class by reason of any
reclassification, recapitalization, split-up, stock dividend, stock combination,
exchange of shares or readjustment, the Stock Consideration shall be
proportionately adjusted (rounded to the nearest six decimal places).
(v) No fractional shares of Purchaser Common Stock shall be
issued, but in lieu thereof each holder of Shares who would otherwise be
entitled to receive a fraction of a share of Purchaser Common Stock shall
receive from Purchaser an amount of cash equal to the product of (i) the
fraction of a share of Purchaser Common Stock to which such holder would
otherwise be entitled multiplied by (ii) the Average Share Price.
(c) COMPANY STOCK OPTIONS. On the Closing Date, all then
outstanding Company Stock Options will be fully vested and immediately
exercisable. Purchaser shall enter
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into an Option Assumption Agreement with each employee of the Company who holds
Company Stock Options which have not been exercised on or prior to the Closing
Date such that, immediately after the Closing, all such unexercised Company
Stock Options shall be fully vested and immediately exercisable for shares of
Purchaser Common Stock (each a "RESTATED OPTION"). Each Restated Option shall
be identical to such Company Stock Option, except that the Restated Option shall
(i) be exercisable for a number of shares of Purchaser Common Stock determined
by dividing the sum of the value of the Stock Consideration set forth on EXHIBIT
B hereto plus the aggregate amount of the exercise price pursuant to such
Restated Option by the Average Share Price, and (ii) have an exercise price per
share of Purchaser Common Stock equal to the aggregate exercise price of the
unexercised portion of the Company Stock Option immediately prior to the Closing
Date, divided by the number of shares of Purchaser Common Stock determined
pursuant to clause (i), and rounded to the nearest whole cent. Notwithstanding
the foregoing, for purposes of calculating the number of shares of Purchase
Common Stock pursuant to clause (i), the Average Share Price shall not be
greater than $45.94 nor less than $41.56. A sample calculation pursuant to this
Section 2(c) is set forth on EXHIBIT G hereto. Purchaser shall reserve a
sufficient number of shares of Purchaser Common Stock for issuance upon exercise
of such Restated Options, shall cause the shares so issuable to be included in
Purchaser's registration statement on Form S-8, and shall cause such
registration statement to remain effective until the Restated Options are
exercised, expire or lapse. On the Closing Date, and upon surrender of any
outstanding Company Stock Option Agreement, Purchaser and the holder of such
outstanding Company Stock Option shall enter into a restated option agreement (a
"RESTATED OPTION AGREEMENT") evidencing the Restated Option to which such
Company Stock Option relates. In the event any holder of a Company Stock Option
Agreement exercises all or a portion of his or its Company Stock Options
pursuant to the terms of such Company Stock Option Agreement on or prior to the
Closing Date, such holder shall enter an agreement with Purchaser to sell such
shares of Company Common Stock issued upon the exercise of such Company Stock
Options upon the terms and subject to the conditions of this Agreement.
(d) ESCROW AGREEMENT. In order to establish a procedure for the
satisfaction of any claims by Purchaser for indemnification pursuant to Section
12 hereof, the Stockholder Representative shall enter into the Escrow Agreement
with Purchaser pursuant to which, among other things, (i) Purchaser shall
deposit with the Escrow Agent a number of shares of Purchaser Common Stock to be
received by the Stockholders pursuant to Section 2(b) equal to $35 million
divided by the Average Share Price multiplied by the percentages with respect to
the Stockholders (excluding Optionees with respect to Company Stock Options
which are not exercised at or prior to Closing) as set forth on EXHIBIT F hereto
and (ii) rights with respect to a number of shares of Purchaser Common Stock
issuable upon the exercise of Restated Options equal to $35 million divided by
the Average Share Price multiplied by the percentages with respect to the
Optionees (excluding Optionees with respect to Company Stock Options which are
exercised at or prior to Closing) as set forth on EXHIBIT F hereto shall be made
subject to an escrow fund pursuant to the Option Assumption Agreements. The
Escrowed Shares shall be available to secure, in accordance with the Escrow
Agreement, and shall be the sole source of payment of, the Stockholders'
indemnity obligations under Section 12 hereof. All costs of the escrow shall be
paid one-half by the Purchaser, on the one hand, and one-half by the
Stockholders collectively, on the other, all as further provided in the Escrow
Agreement.
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3. REPRESENTATIONS AND WARRANTIES AS TO THE COMPANY. Each of the
Company and the Stockholders hereby severally represents and warrants to
Purchaser that, except as otherwise set forth in the Disclosure Letter (which
Disclosure Letter sets forth the schedules referred to in this Section 3 and
Section 4), the following representations and warranties are, as of the date
hereof, and will be, as of the Closing Date, true and correct (it being
understood that the inclusion of any item on a schedule hereto shall not be
deemed an acknowledgement that such item is material, and any disclosure set
forth on any schedule is deemed to be set forth on all other schedules, to the
extent applicable):
(a) ORGANIZATION AND GOOD STANDING. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware, and has full corporate power and authority to own its
properties and carry on its business as presently conducted. The Company is
duly qualified to do business as a foreign corporation and is in good standing
in each jurisdiction where the character of its properties owned or leased or
the nature of its activities makes such qualification necessary, except where
the failure to be so qualified or in good standing would not be material to the
Company and its Subsidiaries, taken as a whole. The copies of the Company's
Certificate of Incorporation and By-Laws (together with all amendments thereto)
which have been previously delivered or made available to Purchaser are correct
and complete as of the date hereof.
(b) CAPITALIZATION. The authorized capital stock of the Company
consists of (i) 10,000 shares of Company Common Stock, of which 1,917 shares are
outstanding as of the date hereof, and (ii) 2,000 shares of Preferred Stock, par
value $.01 per share ("PREFERRED STOCK"), of which no shares are outstanding as
of the date hereof. All of the outstanding Shares of the Company have been
validly issued and are fully paid and non-assessable. No shares of Company
Common Stock or Preferred Stock are held by the Company as treasury stock.
Except as set forth on Schedule 3(b), there is no existing option, warrant,
call, commitment or other security or agreement of any kind to which the Company
is a party requiring, and there are no convertible securities of the Company
outstanding which upon conversion would require, the issuance of any additional
shares of capital stock of the Company or other securities convertible into
shares of capital stock or any debt or equity security of the Company of any
kind.
(c) SUBSIDIARIES. The Company has no Subsidiaries, except as
listed on Schedule 3(c) hereto. The authorized and outstanding capital stock or
equity interests of each Subsidiary is as set forth on Schedule 3(c) hereto.
All of such outstanding shares or equity interests have been validly issued and
are fully paid, non-assessable and, except as set forth on Schedule 3(c), owned
by the Company or a Subsidiary as indicated thereon, free and clear of any and
all Encumbrances. No shares of capital stock are held by any Subsidiary as
treasury stock. There is no existing option, warrant, call, commitment or other
security or agreement of any kind to which any Subsidiary is a party requiring,
and there are no convertible securities of any Subsidiary outstanding which upon
conversion would require, the issuance of any additional shares of capital stock
or equity interests of any Subsidiary or other securities convertible into
shares of capital stock or any other debt or equity security of any kind of any
Subsidiary. Each Subsidiary is duly incorporated or organized and validly
existing in good standing under the laws of its respective state of
incorporation or organization. Each Subsidiary has all requisite corporate or
partnership power and authority to own its properties and carry on its business
as presently
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conducted. Each Subsidiary is duly qualified to do business as a foreign
corporation or partnership and is in good standing in each jurisdiction where
the character of its properties owned or leased or the nature of its activities
makes such qualification necessary, except where the failure to be so qualified
or in good standing would not be material to the Company and its Subsidiaries,
taken as a whole. There have been delivered or made available to Purchaser
complete and correct copies as of the date hereof of the Certificate of
Incorporation and By-Laws (together with all amendments and proposed amendments
thereto) or other organizational documents of non-corporate Subsidiaries of each
Subsidiary.
(d) EXECUTION AND EFFECT OF AGREEMENT. The Company has the
corporate power and authority to execute and deliver this Agreement and to
perform its obligations hereunder, and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by the
Company and the consummation by the Company of the transactions contemplated
hereby have been duly authorized by the Board of Directors of the Company and no
other corporate proceeding on the part of the Company is necessary to authorize
the execution, delivery and performance of this Agreement and the transactions
contemplated hereby. This Agreement has been duly executed and delivered by the
Company and constitutes the legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors' rights and remedies generally,
and subject as to enforceability, to general principles of equity, including
principles of commercial reasonableness, good faith and fair dealing (regardless
of whether enforcement is sought in a proceeding at law or in equity), and
except as limited by the unenforceability under certain circumstances under law
or court decisions of provisions providing for the indemnification of or
contribution to a party with respect to a liability where such indemnification
or contribution is contrary to public policy (the "BANKRUPTCY AND EQUITY
EXCEPTIONS").
(e) FINANCIAL STATEMENTS. The Company has delivered to Purchaser
copies of the Financial Statements. Each of the Financial Statements (including
the footnotes thereto) is complete and correct, is in accordance with the books
and records of the Company and has been prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods covered thereby, and, with respect to the unaudited financial
statements, subject to normal year-end audit adjustments, and presents fairly in
all material respects the financial position, results of operations and cash
flows of the Company and its Subsidiaries at the dates and for the periods
indicated.
(f) NO UNDISCLOSED LIABILITIES. As at the Balance Sheet Date,
neither the Company nor any Subsidiary had any Indebtedness or liabilities
(whether accrued, absolute, contingent or otherwise, and whether due or to
become due) which would normally be disclosed on a balance sheet (including its
footnotes) prepared in accordance with generally accepted accounting principles
if such Indebtedness or liabilities had been known at the time of the balance
sheet's preparation, which is not shown on the Balance Sheet or disclosed in the
Financial Statements (including the footnotes thereto). Except as set forth in
the Balance Sheet, neither the Company nor any Subsidiary has outstanding any
Indebtedness or liability which would normally be disclosed on a balance sheet
(including its footnotes) prepared in accordance with generally accepted
accounting principles if such Indebtedness or liabilities had been known at the
time of
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the balance sheet's preparation, other than those incurred since the Balance
Sheet Date in the ordinary course of business or disclosed herein or in a
schedule hereto or in any document referred to in a schedule or in the Financial
Statements (including the footnotes thereto).
(g) NO MATERIAL ADVERSE CHANGE; NO DIVIDENDS. Since the Balance
Sheet Date, there has been no material adverse change in the business (as
presently conducted or presently expected to be conducted), financial condition
or results of operations of the Company and its Subsidiaries, taken as a whole.
Since the Balance Sheet Date (i) no dividends or distributions have been
declared or paid on or made with respect to the shares of capital stock or other
equity interests of the Company or the Subsidiaries nor have any such shares
been repurchased or redeemed, other than dividends or distributions paid to the
Company or a Subsidiary and (ii) except as set forth in the Disclosure Letter,
neither the Company nor any Subsidiary has taken any action which would have
violated Section 6(d) if this Agreement had been dated December 31, 1996 and
such covenants had been binding and applicable from and after such date.
(h) TAXES.
(i) Except as set forth in Schedule 3(h) hereto, neither the
Company nor any of its Subsidiaries has any material liability for any Taxes
imposed by law in respect of any taxable period ending on or before the Closing
Date, or any Taxes imposed by law in respect of the portion of any Straddle
Period (as defined below) which ends on the Closing Date (a "PRE-CLOSING TAX
PERIOD"), other than amounts properly reserved or reflected in the Financial
Statements or arising in the ordinary course of business since the date thereof.
As used in this Agreement, the term "STRADDLE PERIOD" means any taxable period
beginning before and ending after the Closing Date.
(ii) The Company and each of its Subsidiaries has filed or
will timely file all material Tax Returns required to have been filed prior to
the Closing Date (subject to any timely extensions permitted by law) by it with
the appropriate taxing authority with respect to Taxes for any period ending on
or before the Closing Date, and all Taxes shown to be payable on such Tax
Returns have been paid or will be paid prior to the Closing Date.
(iii) Except as set forth in Schedule 3(h) hereto, (A) to the
knowledge of the Company, no deficiency for any amount of Tax has been asserted
or assessed by a taxing authority against the Company or any of its
Subsidiaries, which is still pending, and (B) neither the Company nor any of its
Subsidiaries has filed any waiver of the statute of limitations applicable to
the assessment or collection of any Tax imposed in respect of a Pre-Closing Tax
Period which is still open.
(iv) All material Taxes that the Company or any of its
Subsidiaries are required by law to withhold or collect have been duly withheld
or collected, and have been timely paid over to the appropriate tax authorities.
(v) No consent under Section 341(f) of the Code has been
filed with respect to the Company or any of its Subsidiaries.
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(vi) Neither the Company nor any of its Subsidiaries has any
liability for the Taxes of any person other than the Company and its
Subsidiaries under Sections 1.1502-6 or 1.1502-78 of Title 26 of the Code of
Federal Regulations (or any similar provisions of state, local or foreign income
tax law).
(vii) Except as set forth in Schedule 3(h) hereto, neither the
Company nor any of its Subsidiaries is a party to any tax indemnity agreement,
tax sharing agreement or other agreement under which the Company or a Subsidiary
could become liable to another person as a result of the imposition upon of a
Tax upon such person, or the assessment or collection of such a Tax.
(viii) Except as set forth in Schedule 3(h) hereto,
neither the Company nor any of its Subsidiaries has agreed to make, or is
required to make, any adjustment under Section 481 of the Code (or any similar
provision of state, local or foreign income tax law) by reason of a change in
accounting methods or otherwise.
(i) PATENTS, TRADEMARKS AND COPYRIGHTS. Schedule 3(i) hereto
contains a complete and correct list of each material patent, trademark, trade
name, service mark and copyright owned or used by the Company or a Subsidiary
and pending applications therefor, and each license or other agreement relating
thereto. Except as set forth on Schedule 3(i) hereto, each of the foregoing is
owned by the party shown on such Schedule as owning the same, free and clear of
all Encumbrances. To the Company's knowledge, there have been no material
claims asserted in writing, which are still pending, that any of the foregoing
is invalid or conflicts with the asserted rights of others. The Company and
each Subsidiary possess all patents, patent licenses, trade names, trademarks,
service marks, brand marks, brand names, copyrights, know-how, formulas and
other proprietary and trade rights material to the conduct of its respective
business as now conducted.
(j) REAL PROPERTY; LEASES OF REAL PROPERTY. Except as set forth
on Schedule 3(j) hereto, neither the Company nor any of its Subsidiaries owns
any real property. Schedule 3(j) hereto contains a complete and correct list in
all material respects of all leases, subleases, license agreements or other
rights of possession or occupancy of real property to which the Company or any
Subsidiary is a party (as tenant, occupier or possessor) pursuant to which the
current net annual rent payable by the Company or any Subsidiary currently
exceeds $50,000 (each such lease or agreement, a "MATERIAL LEASE" and
collectively the "MATERIAL LEASES"). Except as set forth on Schedule 3(j), all
of the Material Leases are in full force and effect. Complete and correct
copies of each Material Lease have been furnished or made available to
Purchaser. Except as disclosed on Schedule 3(j) hereto, no consent is required
of any landlord or other third party to any Material Lease to consummate the
transactions contemplated hereby, and upon consummation of the transactions
contemplated hereby, each Material Lease will continue to entitle the Company or
its Subsidiaries, as the case may be, to the use and possession of the real
property specified in such Material Leases and for the purposes for which such
real property is now being used by the Company or its Subsidiaries,
respectively. Except as set forth in such Schedule, neither the Company nor any
of its Subsidiaries is in default in any material respect beyond any applicable
notice or grace period or has received written notice of any such default still
outstanding on the date hereof under any such Material Lease, and to the
Company's
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knowledge, on the date hereof, there exists no uncured material default
thereunder by any third party. All Material Leases are in full force and effect
and are enforceable against the parties thereto in accordance with their terms
except as limited by the Bankruptcy and Equity Exceptions.
(k) PERMITS; COMPLIANCE WITH LAWS.
(i) The Company and its Subsidiaries have all permits,
licenses and governmental authorizations material to ownership or occupancy of
their respective properties and assets and the carrying on of their respective
business.
(ii) The Company, its Subsidiaries and their respective
billboards are in compliance in all material respects with all applicable
federal, state and local laws and regulations relating to zoning, land use, and
billboard operations and content.
(iii) Except as set forth on Schedule 3(p) hereto, the Company
and its Subsidiaries are in compliance in all material respects with all
applicable federal, state and local laws and regulations relating to employee or
occupational safety, discrimination in hiring, promotion or pay of employees,
employee hours and wages or employee benefits.
(l) INSURANCE. Schedule 3(1) hereto contains a complete and
correct list in all material respects of all policies of insurance of any kind
or nature covering the Company or its Subsidiaries, including, without
limitation, policies of life, fire, theft, employee fidelity and other casualty
and liability insurance, and such policies are in full force and effect.
Complete and correct copies of each such policy have been furnished or made
available to Purchaser.
(m) MATERIAL CONTRACTS. Except as listed in Schedule 3(m) hereto
or any other schedule hereto, neither the Company nor any Subsidiary is a party
to any (i) material contract not made in the ordinary course of business; (ii)
contract for the employment of any officer or employee; (iii) advertising
agreement with a remaining term in excess of one year and a payment obligation
in excess of $50,000; (iv) franchise, distributorship or sales agency agreement;
(v) contract for the future purchase of materials, supplies, services,
merchandise or equipment not capable of being fully performed or not terminable
within a period of one year from the date hereof or in excess of normal
operating requirements; (vi) agreement for the sale or lease of any of its
assets other than in the ordinary course of business; (vii) contract or
commitment for capital expenditures in excess of $100,000; (viii) mortgage,
pledge, conditional sales contract, security agreement, factoring agreement, or
other similar agreement with respect to any of its real or personal property;
(ix) lease of machinery or equipment involving annual payments in excess of
$100,000; (x) agreement with a labor union or labor association; (xi) loan
agreement, promissory note issued by it, guarantee, subordination or similar
type of agreement; (xii) stock option, retirement, severance, pension, bonus,
profit sharing, group insurance, medical or other fringe benefit plan or program
providing employee benefits; (xiii) consulting agreement involving annual
payments in excess of $50,000; or (xiv) municipal or other governmental
franchise agreements. Complete and correct copies of each such agreement have
been furnished or made available to Purchaser. Except as set forth in Schedule
3(m) hereto, the Company and its Subsidiaries have performed in all material
respects all of the obligations required to be performed by them to date
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and are not in default in any material respect under any of the agreements,
leases, contracts or other documents to which they are a party listed on
Schedule 3(m). Except as set forth in Schedule 3(m) hereto, to the Company's
knowledge, no party with whom the Company or its Subsidiaries has such a
scheduled agreement is in material default thereunder. All such scheduled
agreements are in full force and effect and are enforceable against the parties
thereto in accordance with their terms subject to the Bankruptcy and Equity
Exceptions. Except as disclosed herein or in Schedule 3(m) hereto, neither the
Company nor any of its Subsidiaries is a party to any non-compete or similar
agreement which restricts in any material way the current operation of their
businesses taken as a whole.
(n) TITLE TO PROPERTIES; ABSENCE OF ENCUMBRANCES. The Company and
its Subsidiaries own or have good and marketable title to all of their
respective properties and assets shown as owned on the Balance Sheet or acquired
thereafter (except for assets disposed of in the ordinary course of business
since the Balance Sheet Date or as set forth in Schedule 3(n) hereto), free and
clear of any and all Encumbrances, except as set forth in Schedule 3(n) hereto
or except for Permitted Encumbrances.
(o) RESTRICTIONS. Except as set forth in Schedules 3(j) or 3(o)
hereto, except for leases which do not constitute Material Leases and other than
the required consent under the Chase Credit Agreement, neither the execution or
delivery of this Agreement by the Company nor the consummation by the Company of
the transactions contemplated hereby, will violate in any material respect any
statute, regulation, rule, injunction, judgment, order, decree, ruling, charge
or restriction of any government, governmental agency, or court to which the
Company or any of its Subsidiaries is a party or to which any of them is bound
or subject, conflict in any material respect with or result in a material breach
of, or give rise to a right of termination of, or accelerate the performance
required by, any terms of any material agreement to which the Company or its
Subsidiaries is a party, or constitute a default in any material respect
thereunder, or result in the creation of any Encumbrance upon any of their
respective assets (except Encumbrances that individually and in the aggregate
are not material), nor will it violate in any material respect any of the
provisions of their respective Certificates of Incorporation or By-Laws or, as
to non-corporate Subsidiaries, organizational documents, or violate in any
material respect any judgment or decree by which any of them is bound.
(p) LITIGATION; CONSENTS. There is no action, suit, proceeding or
formal governmental inquiry or investigation pending against the Company or its
Subsidiaries which seeks to restrain or prohibit or otherwise challenges the
consummation, legality or validity of the transactions contemplated hereby.
Except as disclosed in Schedule 3(p) hereto, there is no action, suit,
proceeding, formal governmental inquiry or investigation pending against the
Company or the Subsidiaries involving a potential future payment by the Company
or its Subsidiaries of $50,000 or more or otherwise material to the Company and
its Subsidiaries. Other than in connection with or in compliance with the
provisions of the Hart-Scott-Rodino Act and except as set forth on Schedule 3(p)
hereto, no consent, approval or authorization of any governmental authority on
the part of the Company or the Subsidiaries is required in connection with the
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execution and delivery of this Agreement or the consummation of any of the
transactions contemplated hereby, except where the failure to obtain any
consent, approval or authorization would not be material.
(q) ENVIRONMENTAL MATTERS. Except as disclosed in Schedule 3(q)
hereto, (i) the operations of the Company and its Subsidiaries are now and have
been in compliance in all material respects with applicable Environmental Laws,
(ii) neither the Company nor any of its Subsidiaries is subject to any pending
or, to the Company's knowledge, material threatened judicial or administrative
proceeding alleging the violation of any Environmental Law, (iii) neither the
Company nor any of its Subsidiaries has received any written notice that it is a
potentially responsible party at any Superfund site or state-equivalent site;
(iv) neither the Company nor any of its Subsidiaries has disposed of or released
Hazardous Materials (at a concentration or level which requires remedial action
under any applicable Environmental Law) nor are underground storage tanks
present on, in, at or under any real property currently owned or leased by the
Company or its Subsidiaries; (v) the Company and its Subsidiaries have not
disposed of or released any Hazardous Materials in or at any other real property
at a concentration or level which requires remedial action under any applicable
Environmental Law; (vi) the Company and its Subsidiaries have all material
permits and approvals required by Environmental Laws to conduct their existing
business operations; (vii) neither the Company nor its Subsidiaries have agreed
to indemnify any predecessor or other party, including a buyer, seller, landlord
or tenant, with respect to any environmental liability, other than customary
indemnity arrangements contained in leases where the Company or any of its
Subsidiaries is a landlord or tenant; (viii) the contemplated stock purchase
that is the subject of this Agreement is not subject to any state environmental
transfer laws; (ix) to the Company's knowledge, no other party has released
Hazardous Materials at a concentration or level which requires remedial action
under any applicable Environmental Law at any property now or formerly owned or
operated by the Company or its Subsidiaries or in a location that would threaten
or contaminate such properties in any material respect; and (x) the Company and
its Subsidiaries have delivered copies to Purchaser of all material
environmental reports, permits, suits, information requests, orders, notices of
violation, closure letters, site status letters and similar documentation that
are in their possession; PROVIDED, HOWEVER, that, except with respect to clause
(ii) above, the representations and warranties set forth above are made to the
Company's knowledge as to matters or events occurring prior to August 18, 1995.
(r) COLLECTIVE BARGAINING AGREEMENTS AND LABOR.
(i) Except as set forth in Schedule 3(r) hereto, neither the
Company nor any of its Subsidiaries is a party to any labor or collective
bargaining agreement and there are no labor or collective bargaining agreements
which pertain to employees of the Company or the Subsidiaries.
(ii) Except as set forth in Schedule 3(r) hereto, there are
no pending strikes, work stoppages, slowdowns, lockouts, or material
arbitrations or other labor disputes pending against the Company or the
Subsidiaries.
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(iii) Except as set forth in Schedule 3(r) hereto, there are
no material pending complaints, charges or claims against the Company or the
Subsidiaries filed with any public or governmental authority, arbitrator or
court based upon the employment or termination of employment by the Company or
the Subsidiaries of any individual.
(iv) Except as set forth in Schedule 3(r) hereto, the Company
and the Subsidiaries are in compliance in all material respects with all laws,
regulations and orders relating to the employment of labor, including all such
laws, regulations and orders relating to wages, hours, WARN, collective
bargaining, discrimination, civil rights, safety and health, workers'
compensation and the collection and payment of withholding and/or social
security taxes and any similar tax.
(s) EMPLOYEE BENEFIT PLANS; ERISA.
(i) Schedule 3(s)(i) contains a complete and correct list of
the Company Employee Benefit Plans and Multiemployer Plans. Schedule 3(s)(i)
clearly identifies all Company Employee Benefit Plans and Multiemployer Plans
which are (i) Company Employee Pension Plans, (ii) Multiemployer Plans, (iii)
Multiple Employer Plans, (iv) plans other than Multiemployer Plans and Multiple
Employer Plans that are subject to Section 412 of the Code or Section 302 of
ERISA, (v) plans intended to qualify under Section 401 of the Code, and (vi)
Company Welfare Plans which provide for continuing benefits or coverage for any
participant or any beneficiary of a participant after such participant's
termination of employment except coverage or benefits required by Part 6 of
Title I of ERISA or Section 4980B of the Code if paid 100% by the participant or
beneficiary.
(ii) Except as set forth on Schedule 3(s)(ii):
(A) true, correct and complete copies of the following
documents, with respect to each of the Company Employee Benefit Plans, have been
made available or delivered to Purchaser; (I) all plan documents, including
trust agreements, insurance policies and service agreements and amendments
thereto, (II) the most recent Forms 5500 and any financial statements attached
thereto and those for the prior three years, (III) the last Internal Revenue
Service determination letter, (IV) summary plan descriptions, (V) the most
recent actuarial report and those for the prior three years, and (VI) written
descriptions of all non-written agreements relating to any such plan;
(B) all amendments and actions required to bring the
Company Employee Benefit Plans into conformity in all material respect with all
of the applicable provisions of ERISA, the Code and any other applicable laws
(including the rules and regulations thereunder) have been made or taken except
to the extent that such amendments or actions are not required by law to be made
or taken until a date after the Closing Date;
(C) the Company Employee Pension Plans which are
intended to qualify under Section 401 of the Code are so qualified in form and
the trusts maintained pursuant thereto are exempt from federal income taxation
under Section 501 of the Code, and, to the knowledge of the Company, its
Subsidiaries and any ERISA Affiliates, nothing has
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occurred with respect to the operation of such plans which could cause the loss
of such qualification or exemption or the imposition of any lien, penalty, or
tax under ERISA or the Code, and the Company, its Subsidiaries and ERISA
Affiliates have not received any material adverse notice concerning a Company
Employee Benefit Plan from the Internal Revenue Service, the Department of Labor
or the Pension Benefit Guaranty Corporation within the four years preceding the
date of this Agreement;
(D) no Company Employee Pension Plans have been
amended in any manner which would require the posting of any security under
Section 401(a)(29) of the Code or Section 307 of ERISA;
(E) the Company, Subsidiaries and any ERISA Affiliates
have met the minimum funding standards and have made all contributions required
under Section 302 of ERISA and Section 412 of the Code; no accumulated funding
deficiency, whether or not waived, exists with respect to any Company Employee
Pension Plan, and no event has occurred or circumstances exists that may result
in an accumulated funding deficiency as of the last day of the current plan year
for any such plan;
(F) the Company, its Subsidiaries and any ERISA
Affiliates have paid all amounts due to the PBGC pursuant to Section 4007 of
ERISA;
(G) the actuarial report for each Company Employee
Pension Plan fairly presents the financial condition and the results of
operations of each such plan in accordance with generally accepted accounting
principles;
(H) the benefit liabilities (as defined in Section
4001(a)(16) of ERISA) of each Company Employee Pension Plan which is a defined
benefit plan calculated using the actuarial assumptions that would be used by
the PBGC in the event of the termination of such plan do not exceed the fair
market value of the assets of such plan;
(I) there are no material pending claims or lawsuits
which have been asserted or instituted by or against the Company Employee
Benefit Plans, against the assets of any of the trusts under such plans or by or
against the plan sponsor, plan administrator, or any fiduciary of the Company
Employee Benefit Plans (other than routine benefit claims) and none of the
Company nor any Subsidiary or ERISA Affiliate have knowledge of facts which
could form the basis for any such claim or lawsuit;
(J) the Company Employee Benefit Plans have been
maintained in accordance with their plan documents and with all provisions of
the Code and ERISA (including rules and regulations thereunder) and other
applicable law, in all material respects, and none of the Company nor, to the
knowledge of the Company, its Subsidiaries and any ERISA Affiliates, any other
"party in interest" or "disqualified person" with respect to the Company
Employee Benefit Plans has engaged in a "prohibited transaction" within the
meaning of Section 4975 of the Code or Title I, Part 4 or ERISA which is not
exempt under applicable law, regulations and administrative exemptions;
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(K) none of the Company nor any Subsidiary or ERISA
Affiliate has incurred any outstanding liability under Section 4062 of ERISA to
the PBGC, to a trust established under Section 4041 or 4042 of ERISA, or to a
trustee appointed under Section 4042 of ERISA;
(L) none of the Company Employee Benefit Plans
contains any provisions which would prohibit the transactions contemplated by
this Agreement or which would give rise to any severance, termination or other
payments or liabilities as a result of the transactions contemplated by this
Agreement, and as of the Closing Date no payment that is owed or may become due
any director, officer, employee, or agent of the Company, a Subsidiary or an
ERISA Affiliate will be non-deductible by the Company, Subsidiary or ERISA
Affiliate by reason of Section 280G of the Code or under Section 4999 of the
Code;
(M) the Company has no liability (whether actual,
contingent, with respect to any of its assets or otherwise) with respect to any
Employee Benefit Plan maintained by any ERISA Affiliate which is not a
Subsidiary;
(N) no reportable event (as defined in Section 4043 of
ERISA and the regulations thereunder, excluding any such event with respect to
which the Department of Labor has waived the requirement of 30-days notice) has
occurred with respect to any Company Employee Pension Plan;
(O) none of the Company nor any Subsidiary or ERISA
Affiliate has knowledge of any facts or circumstances that may give rise to any
liability of any the Company, a Subsidiary or an ERISA Affiliate to the PBGC
under Title IV of ERISA (other than liability under Section 4007 of ERISA); and
(P) except to the extent advance notice may be
required by applicable law, each of the Company Employee Benefit Plans
(including without limitation each such plan covering retirees of the Company, a
Subsidiary or an ERISA Affiliate, or the beneficiaries of such retirees) may be
terminated or amended by its sponsoring employer, in any manner and at any time,
without the consent of and without any further liability to its participants and
beneficiaries for benefits that may be accrued or expenses that may be incurred
after the date of such termination or amendment.
(iii) With respect to each Multiemployer Plan or Multiple
Employer Plan,
(A) none of the Company nor any Subsidiary or ERISA
Affiliate has incurred any liability under Title IV of ERISA as a result of any
withdrawal from the Multiemployer Plan or Multiple Employer Plan which has not
been fully satisfied;
(B) to the knowledge of the Company, its Subsidiaries
and any ERISA Affiliates, no event has occurred or circumstance exists that
presents a risk of the occurrence of any withdrawal from, or the termination,
reorganization, or insolvency of, the Multiemployer Plan or Multiple Employer
Plan that could result in withdrawal or other liability of the Company, a
Subsidiary an ERISA Affiliate under Sections 4201, 4063 or 4064 of ERISA;
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(C) none of the Company nor any Subsidiary or ERISA
Affiliate has received notice from the Multiemployer Plan that is in
reorganization or is insolvent that increased contributions may be required to
avoid a reduction in plan benefits or the imposition of any excise tax, or that
such plan intends to terminate or has terminated; and
(D) to the knowledge of the Company, its Subsidiaries
and any ERISA Affiliates, no Multiemployer Plan is a party to any pending merger
or asset or liability transfer or is subject to any proceeding brought by the
PBGC.
(iv) Except as disclosed on Schedule 3(s)(iv), the Company
has not prepaid or prefunded any Company Welfare Plan through a trust, reserve,
premium stabilization or similar account, other than pursuant to any insurance
contract which does not include a "fund" as defined in Sections 419(e)(3) and
(4) of the Code; all contributions by the Company, a Subsidiary or an ERISA
Affiliate to a voluntary employees' beneficiary association, as defined in
Section 501(c)(9) of the Code, whose members include employees of the Company, a
Subsidiary or an ERISA Affiliate ("VEBA") are deductible under the Code; the
Internal Revenue Service has issued a determination letter that such VEBA is
exempt from federal income tax and no event has occurred or circumstance exists
that will or could give rise to disqualification or loss of tax-exempt status of
such VEBA; no amount or any asset of such VEBA is subject to tax as unrelated
business taxable income.
(v) The Company, its Subsidiaries and ERISA Affiliates do
not have material potential withdrawal liability with respect to the
Multiemployer Plans (being the aggregate potential withdrawal liabilities of the
Company, its Subsidiaries and ERISA Affiliates with respect to all Multiemployer
Plans).
4. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS. Each of the
Stockholders hereby severally represents and warrants to Purchaser, solely as to
himself or itself and not with respect to any other Stockholder, that the
following representations and warranties are, as of the date hereof, and will
be, as of the Closing Date, true and correct:
(a) TITLE; AGREEMENTS. Except for the Stockholders Agreement and
except with respect to Optionees who do not exercise their Company Stock Options
on or prior to the Closing Date, and except with respect to the lien of the
Escrow Agreement, such Stockholder holds of record and holds beneficially the
number of shares of Company Common Stock set forth opposite its or his name on
EXHIBIT A, free and clear of any and all Encumbrances or other restrictions on
transfer. Except for the Stockholders Agreement and other than this Agreement,
such Stockholder is not a party to any voting trust, proxy or other agreement or
understanding with respect to any capital stock of the Company.
(b) EXECUTION AND EFFECT OF AGREEMENT. Such Stockholder has the
full right, power (corporate or otherwise) and authority to execute and deliver
this Agreement and to perform its or his obligations hereunder, and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by such Stockholder, and the consummation by such Stockholder of
the transactions contemplated hereby have been duly authorized by all necessary
action (corporate or otherwise) and no other proceeding on the part of such
Stockholder
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is necessary to authorize the execution, delivery and performance of this
Agreement and the transactions contemplated hereby. This Agreement has been
duly executed and delivered by such Stockholder and constitutes the legal, valid
and binding obligation of such Stockholder, enforceable against such Stockholder
in accordance with its terms, except as limited by (A) the Bankruptcy and Equity
Exceptions and (B) the effect of laws governing the enforceability of agencies
and obligations after death or incapacity.
(c) INVESTMENT. Such Stockholder:
(i) understands that the shares of Purchaser Common Stock to
be acquired by him pursuant to Section 2 hereof have not been, and will not be,
except as contemplated by the Registration Rights Agreement, registered under
the Securities Act, or under any state securities laws, and are being offered
and sold in reliance upon federal and state exemptions for transactions not
involving any public offering;
(ii) is acquiring the shares of Purchaser Common Stock solely
for his or its own account for investment purposes, and not with a view to the
distribution thereof, except as contemplated by the Registration Rights
Agreement;
(iii) is a sophisticated investor with knowledge and
experience in business and financial matters;
(iv) has received certain information concerning Purchaser
and has had the opportunity to obtain additional information as desired in order
to evaluate the merits and the risks inherent in holding the shares of Purchaser
Common Stock; and
(v) is able to bear the economic risk and lack of liquidity
inherent in holding the shares of Purchaser Common Stock.
5. REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser hereby
represents and warrants to the Company and the Stockholders that the following
representations and warranties are, as of the date hereof, and will be, as of
the Closing Date, true and correct:
(a) ORGANIZATION AND GOOD STANDING. Each of Purchaser and its
subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of its state of incorporation. Purchaser and each of
its subsidiaries has full corporate power and authority to own its properties
and carry on its business as it is now being conducted. Purchaser and each of
its subsidiaries is duly qualified to do business as a foreign corporation and
is in good standing under the laws of (i) each jurisdiction in which it owns
real property and (ii) each other jurisdiction in which the conduct of its
business or the ownership of its assets requires such qualification and where a
failure to be so qualified or in good standing would not be material to the
Purchaser and its subsidiaries, taken as a whole. The copies of Purchaser's
Certificate of Incorporation and By-Laws (together with all amendments thereto)
which have been previously delivered or made available to the Company and the
Stockholders are correct and complete as of the date hereof.
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(b) CAPITALIZATION. The authorized capital stock of Purchaser
consists of (i) 100,000,000 shares of Purchaser Common Stock (of which
76,965,200 shares were outstanding as of December 31, 1996) and (ii) 2,000,000
shares of Preferred Stock, par value $.01 per share, of which no shares are
outstanding as of the date hereof. All of the outstanding shares of capital
stock of Purchaser have been, and the shares of Purchaser Common Stock to be
issued pursuant to this Agreement will be, validly issued and are fully paid and
non-assessable. As of December 31, 1996, Purchaser had reserved 3,801,890
shares of Purchaser Common Stock for issuance upon exercise of outstanding
employee and director stock options. Since December 31, 1996 through the date
hereof, Purchaser has not issued any shares of its capital stock except upon the
exercise of employee stock options. Except as set forth above or contemplated
by this Agreement or as disclosed in the Purchaser SEC Documents and or the
Purchaser Financial Statements, as of the date hereof, there are no outstanding
subscriptions, options, warrants, rights, convertible securities or other
agreements or commitments of any character obligating Purchaser to issue any
securities, except pursuant to benefit plans described in the Purchaser SEC
Documents. There are no agreements granting registration rights to any
stockholders (other than the Registration Rights Agreement contemplated by this
Agreement) with respect to the capital stock of Purchaser.
(c) EXECUTION AND EFFECT OF AGREEMENT. Purchaser has the
corporate power and authority to enter into this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement by Purchaser and the consummation
by Purchaser of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of Purchaser, and no other
corporate proceeding on the part of Purchaser is necessary to authorize the
execution, delivery and performance of this Agreement and the transactions
contemplated hereby. This Agreement has been duly executed and delivered by
Purchaser and constitutes the legal, valid and binding obligation of Purchaser,
enforceable against it in accordance with its terms, except as limited by the
Bankruptcy and Equity Exceptions.
(d) RESTRICTIONS. Neither the execution or delivery of this
Agreement by Purchaser nor the consummation of the transactions contemplated
hereby, (i) will violate any statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge or restriction of any government, governmental
agency, or court to which Purchaser of any of its subsidiaries is a party or to
which any of them is bound or subject, or the provisions of the charter or
bylaws of Purchaser or any of its subsidiaries, or (ii) subject to modification
of Purchaser's credit agreements to permit consummation of the transactions
contemplated by this Agreement, will conflict in any material respect with or
result in a material breach of, or give rise to a right of termination of, or
accelerate the performance required by, any terms of any material agreement to
which Purchaser or any subsidiary is a party, or constitute a default in any
material respect thereunder, or result in the creation of any lien, security
interest, mortgage, pledge, hypothecation, easement or conditional sale or other
title retention agreement upon any of their respective assets (except
encumbrances that individually and in the aggregate are not material).
(e) LITIGATION; CONSENTS. There is no action, suit, proceeding or
formal governmental inquiry or investigation pending against Purchaser which
seeks to restrain or prohibit or otherwise challenges the consummation, legality
or validity of the transactions contemplated hereby, and, except as expressly
contemplated hereby, no consent, approval or
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authorization of any governmental authority on the part of Purchaser is required
in connection with the execution and delivery of this Agreement or the
consummation of any of the transactions contemplated hereby. There is no
action, suit, proceeding or formal governmental inquiry or investigation pending
against Purchaser or any of its subsidiaries which is material to Purchaser and
its subsidiaries, taken as a whole.
(f) SEC REPORTS. Purchaser has filed with the Commission all
forms, reports, schedules, statements and other documents required to be filed
by it and its subsidiaries under the Exchange Act or the Securities Act since
January 1, 1994 (as such documents have been amended since the time of their
filing, collectively, the "PURCHASER SEC DOCUMENTS"). As of their respective
dates or, if amended, as of the date of the last such amendment, the Purchaser
SEC Documents (i) did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading and (ii) complied in all material respects with
the applicable requirements of the Exchange Act and the Securities Act, as the
case may be. Each of the consolidated financial statements (the "PURCHASER
FINANCIAL STATEMENTS") included in the Purchaser SEC Documents have been
prepared from, and are in accordance with, the books and records of Purchaser
and/or its consolidated subsidiaries, comply in all material respects with
applicable accounting requirements and the rules and regulations of the
Commission with respect thereto, have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto) and fairly present in
all material respects the consolidated financial position and the consolidated
results of operations and cash flows of Purchaser and its consolidated
subsidiaries as at the dates thereof or for the periods presented therein.
Purchaser has delivered to each of the Company and the Stockholders a correct
and complete copy of each Purchaser SEC Document (together with all exhibits and
schedules thereto and as amended to date) filed since January 1, 1996. Since
the date of the most recent Purchaser SEC Document, there has been no material
adverse change in the business (as presently conducted or presently expected to
be conducted), financial condition or results of operations of Purchaser and its
subsidiaries, taken as a whole.
(g) INVESTMENT. Purchaser is not acquiring the Company Common
Stock with a view to or for sale in connection with any distribution thereof
within the meaning of the Securities Act.
6. COVENANTS OF THE STOCKHOLDERS, THE COMPANY AND PURCHASER.
(a) FILINGS AND OTHER ACTIONS. Upon the terms and subject to the
conditions contained herein, each of the parties hereto agrees: (i) to take all
such action as may reasonably be required under state blue sky or securities
laws in connection with the transactions contemplated hereby; (ii) to cooperate
with one another in determining whether any filings are required to be made
with, or consents or permits are required to be obtained from, any governmental
authority in any jurisdiction or any lender, lessor or other third party in
connection with the contracts, the proprietary rights and leases, or otherwise,
prior to the Closing Date in connection with the consummation of the
transactions contemplated hereby and cooperate in making any such filings
promptly and in seeking timely to obtain any such consents and permits;
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(iii) to make their respective filings promptly and any other required or
requested submissions under the Hart-Scott-Rodino Act, to furnish to each other
party hereto all such information in its possession as may be necessary for the
completion of such filings and submissions to be filed by the other party, and
to use their Best Efforts to obtain an early termination of the applicable
waiting period; (iv) to use their Best Efforts to defend all actions challenging
this Agreement or the consummation of the transactions contemplated hereby and
use their Best Efforts to lift or rescind any injunction or restraining order or
other court order adversely affecting the ability of the parties to consummate
the transactions contemplated hereby; and (v) to use Best Efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all other things
necessary, proper or advisable to consummate and make effective the transactions
contemplated hereby.
(b) ACCESS TO DOCUMENTS; OPPORTUNITY TO ASK QUESTIONS. From and
after the date hereof and until the Closing Date, the Company shall, and shall
cause the Subsidiaries to make available for inspection by Purchaser or its
Representatives, upon reasonable advance notice, during normal business hours
and in a manner so as not to interfere with normal business operations, the
Company's and the Subsidiaries' corporate or comparable records, books of
account, contracts and all other documents reasonably requested by Purchaser or
its Representatives in order to permit Purchaser and such Representatives to
make reasonable inspection and examination of the business and affairs of the
Company and the Subsidiaries. The Company shall also make available, upon
reasonable advance notice, during normal business hours and in a manner so as
not to interfere with normal business operations, any real property owned or
leased by the Company or its Subsidiaries for environmental site assessments,
including well sampling and subsurface investigation. The Company shall further
cause the managerial employees, counsel, environmental consultants and regular
independent certified public accountants of the Company and the Subsidiaries to
be available upon reasonable advance notice to answer questions of Purchaser's
Representatives concerning the business and affairs of the Company and the
Subsidiaries and shall further cause them to make available all relevant books
and records in connection with such inspection and examination and, in the case
of environmental consultants, to make available all environmental data and
reports in their possession relating to the Company and its Subsidiaries, and,
at Purchaser's sole election and expense, to update previously prepared
environmental reports relating to the Company and its Subsidiaries. Each of
Purchaser and its respective Representatives will treat and hold as such any
confidential information it receives from any of the Company and its
Subsidiaries in the course of the reviews contemplated by this Section 6(b),
will not use any of the confidential information except in connection with this
Agreement, and, if this Agreement is terminated for any reason whatsoever,
agrees to return to the Company all tangible embodiments (and all copies)
therefor which are in its possession.
(c) INDEMNIFICATION OF DIRECTORS AND OFFICERS OF THE COMPANY.
Purchaser will not take any action to alter or impair any exculpatory or
indemnification provisions existing at the date hereof in any indemnification
agreement or in the Certificate of Incorporation or Bylaws of the Company for
the benefit of any individual now or hereafter and prior to the Closing Date
serving as a director or officer of the Company.
(d) CONDUCT OF BUSINESS. From and after the date hereof and until
the Closing Date, the Company shall conduct and cause the business of the
Subsidiaries to be conducted in
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the ordinary course, consistent with the present conduct of their business.
During such period of time, except upon the prior written consent of Purchaser,
the Company shall not and shall not permit any Subsidiaries to: (i) amend its
Certificate of Incorporation or By-Laws or comparable organizational documents
(except to the extent reflected in the Disclosure Letter); (ii) issue any
additional shares of capital stock or issue, sell or grant any option or right
to acquire or otherwise dispose of or commit to dispose of any of its authorized
but unissued capital stock or other corporate securities (except upon exercise
of Company Stock Options currently outstanding); (iii) declare or pay any
dividends or make any other distribution in cash or property on its capital
stock or other equity interests, except to the Company or a Subsidiary; (iv)
repurchase or redeem any shares of its stock or other equity interests; (v)
voluntarily incur any obligation or liability, except obligations and
liabilities incurred in the ordinary course of business or permitted by clause
(x) below; (vi) except as disclosed on Schedule 6(d), enter into any employment
agreement or alter any bonus, profit-sharing, incentive, or other compensation
arrangement for any of its officers or directors (other than make changes which
do not increase the compensation or benefits provided by the foregoing), or
otherwise materially change personnel policies, compensation programs or benefit
plans, except for changes in the ordinary course of business; (vii) mortgage,
pledge, or otherwise encumber any part of its assets, tangible or intangible,
except Permitted Encumbrances; (viii) sell, transfer or acquire any properties
or assets, tangible or intangible, other than in the ordinary course of
business, and except as set forth in Schedule 3(n) hereto; (ix) except as set
forth on Schedule 6(d) hereto, merge or consolidate with any corporation,
acquire control or acquire any capital stock or other securities, or all or
substantially all of the assets, of any other corporation or business entity, or
take any steps incident to or in furtherance of any such actions whether by
entering into an agreement providing therefor or otherwise; (x) other than the
ADCO Note and except in connection with the transactions set forth on Schedule
6(d) hereto or to fund working capital requirements arising in the ordinary
course of business consistent with the 1997 budget heretofore provided to
Purchaser (the "1997 BUDGET"), incur Indebtedness in excess of the level
outstanding at December 31, 1996; (xi) incur any capital expenditures beyond
those set forth in the 1997 Budget; or (xii) take any other action not
contemplated hereby which would cause any of the representations and warranties
made by the Company and the Stockholders in this Agreement not to be true and
correct in all material respects on and as of the Closing Date with the same
force and effect as if such representations and warranties had been made on and
as of the Closing Date.
(e) NOTIFICATION OF CERTAIN MATTERS. The Company and the
Stockholders shall give prompt notice to Purchaser, and Purchaser shall give
prompt notice to the Company and the Stockholders, of (i) the occurrence, or
failure to occur, of any event which occurrence or failure would be likely to
cause any representation or warranty contained in this Agreement, the Disclosure
Letter (as updated pursuant to Section 15 hereof) or any written certificate or
schedule delivered pursuant hereto to be untrue or inaccurate at any time from
the date hereof until the Closing Date and (ii) any material failure of the
Company, the Stockholders, Purchaser or any of their respective Affiliates, as
the case may be, or of any officer, director, employee or agent thereof, to
comply with or satisfy any covenant, condition or agreement to be complied with
or satisfied by it under this Agreement; PROVIDED, HOWEVER, that no such
notification shall affect the representations or warranties of the parties or
the conditions to the obligations to the parties hereunder.
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(f) BOARD OF DIRECTORS OF PURCHASER.
(i) On the Closing Date, Purchaser shall appoint Karl Eller
to its Board of Directors, and shall thereafter cause Karl Eller to be included
in the annual slate of directors to be proposed by the management of Purchaser
until such time as either Purchaser owns less than a majority of the Company
Common Stock or Karl Eller is no longer the Chief Executive Officer or Chairman
of the Board of the Company.
(ii) If, 180 days after the Closing Date, H&F Funds shall own
more than 5.25 million Registrable Shares (as defined in the Registration Rights
Agreement), upon request of Hellman & Friedman Capital Partners III ("HFCP
III"), Purchaser will cause its Board of Directors to be increased by one, and
will promptly appoint or cause to be elected as a director of Purchaser a
nominee of HFCP III, and shall thereafter cause such nominee (or any successor
designated by HFCP III) to be included in the annual slate of directors to be
proposed by the management of Purchaser until such time as H&F Funds own less
than 5.25 million Registrable Shares.
(g) COMPANY STOCK OPTIONS. Within ten (10) days from the date
hereof the Stockholders and the Company shall cause any Optionees listed on
EXHIBIT A hereto who have not executed this Agreement on the date hereof to
execute a counterpart to this Agreement.
(h) REGISTRATION STATEMENT. Purchaser agrees in good faith to
commence working promptly after the date of this Agreement on preparation of a
registration statement to cover the offering contemplated by Section 2(g) of the
Registration Rights Agreement and will use its Best Efforts to file such
registration statement, and to have it become effective, as soon as practicable
after the Closing Date.
7. CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATION. The obligation of
Purchaser to consummate the transactions contemplated hereby are subject to the
satisfaction, on or prior to the Closing Date, of the following conditions, any
of which may be waived by Purchaser in writing:
(a) Each of the representations and warranties (as updated
pursuant to Section 15 hereof and as in effect on the Closing Date) of the
Company and the Stockholders contained in Sections 3 and 4 hereof shall be true
and correct in all material respects as of the Closing Date with the same force
and effect as though the same had been made on and as of the Closing Date,
except for those given as of a particular date, which shall be true and correct
in all material respects as of such date, and except for changes therein
permitted or contemplated hereby.
(b) The Company and the Stockholders shall have performed and
complied in all material respects with each of the covenants and provisions in
this Agreement required herein to be performed or complied with by the Company
and the Stockholders between the date hereof and the Closing Date.
(c) No action or proceeding shall have been instituted or
threatened against Purchaser, the Stockholders, the Company or the Subsidiaries
before any court or other
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governmental body, seeking to restrain or prohibit the consummation of the
transactions contemplated hereby, which in the reasonable opinion of Purchaser
makes it inadvisable to consummate such transactions.
(d) Purchaser shall have received a certificate to the effect set
forth in subsections (a) and (b) above, dated the Closing Date, signed by a duly
authorized officer of the Company and each Stockholder, or a duly authorized
officer thereof (as to himself or itself and not with respect to any other
Stockholder, in the case of representations, warranties and covenants made by
the Stockholders).
(e) Purchaser shall have received a certificate of a duly
authorized officer of the Company, dated the Closing Date, setting forth
resolutions of the Board of Directors of the Company generally authorizing the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby and certifying that such resolutions were duly
adopted and have not been rescinded or amended as of the Closing Date.
(f) Purchaser shall have received such evidence as Purchaser may
reasonably request in order to establish the power and authority of the
Stockholders to consummate the transactions contemplated by this Agreement.
(g) The waiting period (and any extension thereof) under the
Hart-Scott-Rodino Act shall have expired or been terminated and the parties
shall have received all other required authorizations, consents and approvals of
government and governmental agencies.
(h) The Company and the Stockholders shall have made all
deliveries and taken all actions required by Section 9(c) hereof.
(i) The consents of all persons who are parties to any agreements
with the Company which, if not obtained, would be material to the continued
operation of the Company and its Subsidiaries (other than the Chase Credit
Agreement), shall have been obtained and copies thereof shall have been provided
to Purchaser.
(j) Purchaser shall have received the opinion of Latham & Watkins,
counsel for the Company and certain Stockholders, and the opinion of Heller,
Ehrman, White & McAuliffe, counsel for certain other Stockholders, as to such
matters to be mutually agreed upon.
(k) The Optionees listed on EXHIBIT A hereto who have not executed
this Agreement on the date hereof shall have executed counterpart pages to this
Agreement.
(l) The Stockholders Agreement shall have been terminated.
8. CONDITIONS PRECEDENT TO THE COMPANY'S AND THE STOCKHOLDERS'
OBLIGATIONS. The obligations of the Company and the Stockholders to
consummate the transactions contemplated hereby are subject to the satisfaction,
on or prior to the Closing Date, of the following conditions, any of which may
be waived by the Company and the Stockholders in writing:
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(a) Each of the representations and warranties of Purchaser
contained in Section 5 hereof shall be true and correct in all material respects
as of the Closing Date with the same force and effect as though the same had
been made on and as of the Closing Date, except for those given as of a
particular date, which shall be true and correct in all material respects as of
such date, and except for changes therein permitted or contemplated hereby.
(b) Purchaser shall have performed and complied in all material
respects with each of the covenants and provisions in this Agreement required
herein to be performed or complied with by Purchaser between the date hereof and
the Closing Date.
(c) No action or proceeding, shall have been instituted or
threatened against Purchaser, the Stockholders, the Company or the Subsidiaries
before any court or other governmental body, seeking to restrain or prohibit the
consummation of the transactions contemplated hereby, which in the reasonable
opinion of the Company or any Stockholder makes it inadvisable to consummate
such transactions.
(d) The Company and the Stockholders shall have received a
certificate to the effect set forth in subsections (a) and (b) above, dated the
Closing Date, signed by a duly authorized officer of Purchaser.
(e) The Company and the Stockholders shall have received a
certificate of a duly authorized officer of Purchaser, dated the Closing Date,
setting forth the resolutions of the Board of Directors of Purchaser authorizing
the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, and certifying that such resolutions were duly
adopted and have not been rescinded or amended as of the Closing Date.
(f) The waiting period (and any extension thereof) under the
Hart-Scott-Rodino Act shall have expired or been terminated and the parties
shall have received all other required authorizations, consents and approvals of
governments and governmental agencies.
(g) Purchaser shall have made all deliveries and taken all actions
required by Section 9(c) hereof.
(h) The Stockholders shall have received the opinion of Piper &
Marbury L.L.P., counsel for Purchaser, as to such matters to be mutually agreed
upon.
9. CLOSING DATE; CLOSING.
(a) Except as hereinafter provided, the closing hereunder (herein
called the "CLOSING") shall take place at the offices of Latham & Watkins, 633
West Fifth Street, Suite 4000, Los Angeles, California 90071 at 10:00 A.M. on
the later of (i) the Business Day that is or next follows seven (7) days after
the earlier to occur of: (A) written notice has been received by any party
hereto of the early termination of the waiting period under the
Hart-Scott-Rodino Act; (B) the waiting period under the Hart-Scott-Rodino Act
has expired; or (C) if the waiting period under the Hart-Scott-Rodino Act has
been extended, written notice has been received by any party hereto that such
waiting period has been terminated (but in no event later than June 30, 1997);
or (ii) April 10, 1997, unless otherwise mutually agreed to in writing by
Purchaser, the
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Company and the Stockholders. Notwithstanding the foregoing, Purchaser may, at
its option, extend the April 10, 1997 date set forth in the foregoing clause
(ii) to a date not later than April 30, 1997, provided that the Cash
Consideration shall be increased by $89,000 per day from and including April 11,
1997 through and including the Closing Date as so extended. The date of the
Closing is referred to in this Agreement as the "CLOSING DATE."
(b) All proceedings to be taken and all documents to be executed
and delivered by the Company and the Stockholders in connection with the
consummation of the transactions contemplated hereby shall be reasonably
satisfactory in form and substance to Purchaser and its counsel. All
proceedings to be taken and all documents to be executed and delivered by
Purchaser in connection with the consummation of the transactions contemplated
hereby shall be reasonably satisfactory in form and substance to the Company and
the Stockholders and their respective counsel. All proceedings to be taken and
all documents to be executed and delivered by all parties at the Closing shall
be deemed to have been taken and executed simultaneously and no proceedings
shall be deemed taken nor any documents executed or delivered until all have
been taken, executed and delivered.
(c) At the Closing the following actions shall be taken:
(i) The Company and the Stockholders will deliver the
certificates, and other items described in Section 7 or as otherwise reasonably
required by Purchaser and such other evidence of the performance of all of the
covenants and the satisfaction of all conditions required of the Company and the
Stockholders by this Agreement as Purchaser shall reasonably require.
(ii) Purchaser will deliver the certificates, and other items
described in Section 8 or as otherwise reasonably required by the Company and
the Stockholders and such other evidence of the performance of all the covenants
and the satisfaction of all conditions required of Purchaser by this Agreement
and as the Company and the Stockholders shall reasonably require.
(iii) Each of the Stockholders will deliver to Purchaser
certificates representing all of his or its Shares, duly endorsed in blank or,
in lieu thereof, accompanied by stock powers duly executed in blank, and in
proper form for transfer.
(iv) Purchaser will deliver to each of the Stockholders or,
in accordance with instructions provided by such Stockholder, to the Stockholder
Representative, the Purchase Price in the amounts set forth on EXHIBIT B hereto,
subject to the Escrow Agreement.
(v) Purchaser and each Stockholder who chooses to be a party
shall enter into the Registration Rights Agreement.
(vi) Purchaser, the Stockholder Representative and the Escrow
Agent shall enter into the Escrow Agreement and Purchaser shall deposit the
Escrowed Shares with the Escrow Agent.
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(vii) Purchaser and each holder of Company Stock Options
outstanding immediately prior to the Closing Date shall enter into an Option
Assumption Agreement.
(viii) Purchaser and each holder of a Restated Option
shall enter into a Restated Option Agreement.
(ix) Purchaser shall appoint Karl Eller to its Board of
Directors.
10. NO BROKERS. The Company and the Stockholders represent to
Purchaser, and Purchaser represents to the Company and the Stockholders, that
they respectively have had no dealings with any broker or finder in connection
with the transactions contemplated by this Agreement, except that Purchaser has
engaged the services and will pay the fees and expenses of Daniels & Associates,
and except that the Company and the Stockholders have engaged the services, and
the Stockholders will pay, the fees and expenses of Alex. Brown & Sons
Incorporated.
11. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The parties hereto
agree that the representations and warranties (in each case, as updated pursuant
to Section 15 hereof and as in effect on the Closing Date), and the covenants
and agreements contained in this Agreement or in any certificate, document or
instrument delivered in connection herewith, shall survive the execution and
delivery of this Agreement, and the Closing hereunder, regardless of any
investigation made by the parties hereto; PROVIDED, HOWEVER, that, except for
claims or actions with respect to Section 4(a), any claims or actions with
respect thereto shall terminate unless within twelve (12) months from the
Closing Date written notice of such claims is given to the Stockholder
Representative, in the case of claims made pursuant to Section 12(a) hereof, or
to Purchaser, in the case of claims made pursuant to Section 12(b) hereof, or
such actions are commenced within such twelve-month period; and PROVIDED
FURTHER, that nothing in this Section 11 shall (a) affect the obligations of
Purchaser under the Option Assumption Agreements or the Registration Rights
Agreement, (b) limit the indemnification obligations of the parties under
Section 12 with respect to claims timely made or actions timely commenced in
accordance with the provisions of this Section 11 and Section 12 or (c) limit
Purchaser's obligations pursuant to Sections 2(c), 6(c) and 6(f) of this
Agreement or the Stockholders' obligations pursuant to Section 16(b) of this
Agreement.
12. INDEMNIFICATION.
(a) BY THE STOCKHOLDERS.
(i) Each of the Stockholders severally (on a PRO RATA basis
as provided in the Escrow Agreement), but not jointly, agrees to indemnify and
hold Purchaser and its Affiliates harmless from and against any and all losses,
claims, demands, liabilities, obligations, damages, deficiencies, assessments,
judgments, payments, penalties, costs and expenses (including without limitation
reasonable attorneys' fees, any amounts paid in investigation, defense or
settlement of any of the foregoing and interest) (herein, "DAMAGES") incurred in
connection with, arising out of, resulting from or incident to, (A) any breach
of any representation or warranty (as updated pursuant to Section 15 hereof and
as in effect on the Closing Date) made by the
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Company and the Stockholders in this Agreement (other than the representations
and warranties made in Section 4(a) hereof), (B) any breach of any covenant or
agreement made by the Company and the Stockholders in this Agreement, (C) any
liability or obligation which the Company or its Subsidiaries pays or becomes
obligated to pay after December 31, 1996 and prior to twelve months after the
Closing Date in respect of costs of defense, settlement or resolution of any
litigation matter which has been disclosed on Schedule 3(p) to this Agreement,
to the extent, and only to the extent, that such costs in the aggregate, after
giving credit for any insurance recoveries to which the Company or the
Subsidiaries is entitled, exceeds the aggregate amount of the Company's reserves
therefor on the Balance Sheet, or (D) any Pre-Agreement Disclosure Matter (as
hereinafter defined). The parties hereby acknowledge and agree that after the
Closing Date recourse against the Escrowed Shares constitutes the sole remedy,
at law or in equity, that Purchaser may have against the Stockholders, and that
the Escrowed Shares shall be Purchaser's exclusive method of receiving
indemnification from the Stockholders, pursuant to this Section 12(a)(i).
Notwithstanding the foregoing, Purchaser may not receive any of the Escrowed
Shares in connection with Damages arising from breaches or inaccuracies pursuant
to this Section 12(a)(i) unless the aggregate of such Damages indemnified
against shall exceed $10 million, in which event such indemnification shall be
effective with respect to all Damages in excess of such amount, and shall be
limited to the Escrowed Shares. For purposes of determining the Stockholders'
indemnification obligations pursuant to this Section 12(a)(i), each
representation and warranty stated in Sections 3 and 4 hereof shall be deemed to
exclude any materiality standard, materiality exception and materiality
qualification stated therein. The parties acknowledge that the limitations on
liability of the Stockholders in this Section 12(a)(i) contained were an
essential inducement to the Stockholders to cause them to enter into and perform
this Agreement, and without which they would not have done so.
(ii) Each of Stockholders, severally but not jointly, agrees
to indemnify and hold Purchaser and its Affiliates harmless from and against any
and all Damages incurred in connection with, arising out of, resulting from or
incident to, any breach of the representations and warranties contained in
Section 4(a) hereof.
(b) BY PURCHASER. Purchaser agrees to indemnify and hold each of
the Stockholders and their respective Affiliates harmless from and against any
and all Damages incurred in connection with, arising out of, resulting from or
incident to, (i) any breach of any representation or warranty made by Purchaser
in this Agreement, (ii) any breach of any covenant or agreement made by
Purchaser in this Agreement, or (iii) operation of the business of the Company
and the Subsidiaries after the Closing Date.
(c) DAMAGES. The term "DAMAGES" as used in this Section 12 is not
limited to matters asserted by third parties against any indemnified party, but
includes Damages incurred or sustained by any indemnified party in the absence
of third party claims. Any Damages otherwise due and payable under this Section
12 shall be (i) decreased to the extent of any reduction of Tax liability that
is realizable by the indemnified party upon payment of an indemnifiable loss and
(ii) increased to the extent of any increase in Tax liability that is imposed on
the indemnified party upon the receipt of an indemnity payment pursuant to this
Section 12. In addition, Damages shall be determined net of any insurance
recoveries by any indemnified party and shall be net of any indemnity to which
the Company is entitled pursuant to that certain
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Stock Purchase Agreement, dated as of July 14, 1995, by and between Eller
Investment Company, Inc., an Arizona corporation, and General Electric Capital
Corporation, a New York corporation.
(d) DEFENSE OF CLAIMS.
(i) If a claim for Damages (a "CLAIM") is to be made by a
party entitled to indemnification hereunder against the indemnifying party, the
party claiming such indemnification shall, subject to Section 11, give written
notice (a "CLAIM NOTICE") to the indemnifying party as soon as practicable after
the party entitled to indemnification becomes aware of any fact, condition or
event which may give rise to Damages for which indemnification may be sought
under this Section 12. Such Claim Notice shall specify the nature and amount of
the Claim asserted, if actually known to the party entitled to indemnification
hereunder. If any lawsuit or enforcement action is filed against any party
entitled to the benefit of indemnity hereunder, written notice thereof shall be
given to the indemnifying party as promptly as practicable (and in any event
within fifteen (15) calendar days after the service of the citation or summons).
Subject to the limitations of Section 11, the failure of any indemnified party
to give timely notice hereunder shall not affect rights to indemnification
hereunder, except to the extent that the indemnifying party demonstrates actual
damage caused by such failure. After such notice, if the indemnifying party
shall acknowledge in writing to the indemnified party that the indemnifying
party shall be obligated under the terms of its indemnity hereunder in
connection with such lawsuit or action, then the indemnifying party shall be
entitled, if it so elects at its own cost and expense, (A) to take control of
the defense and investigation of such lawsuit or action, (B) to employ and
engage attorneys of its own choice to handle and defend the same unless the
named parties to such action or proceeding include both the indemnifying party
and the indemnified party and the indemnified party has been advised in writing
by counsel that there may be one or more legal defenses available to such
indemnified party that are different from or additional to those available to
the indemnifying party, in which event the indemnified party shall be entitled,
at the indemnifying party's cost and expense, to separate counsel of its own
choosing, and (C) to compromise or settle such claim, which compromise or
settlement shall be made only with the written consent of the indemnified party,
such consent not to be unreasonably withheld. If the indemnifying party fails
to assume the defense of such claim within thirty (30) calendar days after
receipt of the Claim Notice, the indemnified party against which such claim has
been asserted will (upon delivering notice to such effect to the indemnifying
party) have the right to undertake, at the indemnifying party's cost and
expense, the defense, compromise or settlement of such claim on behalf of and
for the account and risk of the indemnifying party; PROVIDED, HOWEVER, that such
Claim shall not be compromised or settled without the written consent of the
indemnifying party, which consent shall not be unreasonably withheld. In the
event the indemnified party assumes the defense of the claim, the indemnified
party will keep the indemnifying party reasonably informed of the progress of
any such defense, compromise or settlement. The indemnifying party shall be
liable for any settlement of any action effected pursuant to and in accordance
with this Section 12 and for any final judgment (subject to any right of
appeal), and the indemnifying party agrees to indemnify and hold harmless an
indemnified party from and against any Damages by reason of such settlement or
judgment.
(ii) In the case of any enforcement action involving a Tax,
the contest rights of the indemnifying party set forth in the fourth sentence of
Section 12(d)(i) shall not apply
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to such action unless the action is limited to matters which solely affect
liability in respect of a Pre-Closing Tax Period. In any action involving a Tax
which is not so limited, the indemnified party shall be entitled at its own
expense (A) to take control of the defense and investigation of such action, (B)
to employ and engage attorneys of its own choice to handle and defend the same,
and (C) to compromise or settle such action, which compromise or settlement
shall be made only with the written consent of the indemnifying party, such
consent not to be unreasonably withheld.
(iii) In the event that any action, suit, proceeding or
investigation relating hereto or to the transactions contemplated by this
Agreement is commenced, the parties hereto agree to cooperate to defend against
and respond thereto and make available to each other such personnel, witnesses,
books, records, documents or other information within its control that are
necessary or appropriate for such defense.
(e) BROKERS AND FINDERS. Pursuant to the provisions of this
Section 12 and subject to the limitations of Section 11, each of Purchaser and
the Stockholder shall indemnify, hold harmless and defend the other party from
the payment of any and all broker's and finder's expenses, commissions, fees or
other forms of compensation which may be due or payable from or by the
indemnifying party, or may have been earned by any third party acting on behalf
of the indemnifying party in connection with the negotiation and execution
hereof and the consummation of the transactions contemplated hereby.
(f) EXCLUSIVE REMEDY. Except as set forth in Sections 14 and
15(c), the rights of indemnification provided to Purchaser and the Stockholders
in this Section 12 are intended to be the sole remedies of such parties for any
claim by either Purchaser against the Stockholders or by the Stockholders
against Purchaser, and the parties intend, to the maximum possible extent, to
preclude any other claims, on whatever cause of action predicated.
13. STOCKHOLDER REPRESENTATIVE.
(a) The Stockholders irrevocably make, constitute and appoint Paul
J. Meyer as their agent (the "STOCKHOLDER REPRESENTATIVE") and authorize and
empower him to fulfill the role of Stockholder Representative hereunder. In the
event of the resignation of a Stockholder Representative, the resigning
Stockholder Representative shall appoint a successor either from among the
Stockholders or who shall otherwise be acceptable to Purchaser and who shall
agree in writing to accept such appointment, and the resigning Stockholder
Representative's resignation shall not be effective until such a successor shall
exist. The Stockholders entitled to receive a majority of the Escrowed Shares
may remove the Stockholder Representative at any time. If a Stockholder
Representative should die or become incapacitated or be removed by the
Stockholders and pursuant to this Section 13, his successor shall be appointed
within 21 days of his death or incapacity by the remaining Stockholders entitled
to receive a majority of the Escrowed Shares, and such successor either shall be
a Stockholder or shall otherwise be acceptable to Purchaser. If the
Stockholders fail to appoint a successor within such 21-day period, then
Purchaser shall have the right to appoint the successor from among the
Stockholders. The choice of a successor Stockholder Representative appointed in
any manner permitted above shall be final and binding upon all of the
Stockholders. The decisions and actions of any
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successor Stockholder Representative shall be, for all purposes, those of a
Stockholder Representative as if originally named herein.
(b) Each Stockholder by the execution of this Agreement hereby
irrevocably makes, constitutes and appoints the Stockholder Representative as
such person's true and lawful attorney in fact and agent, for such person and in
such person's name, (i) to receive all notices and communications directed to
such Stockholder under this Agreement and the Escrow Agreement, (ii) to execute
and deliver any and all documents required to be executed and delivered by such
Stockholder pursuant to this Agreement in order to effect the transactions
contemplated by this Agreement, (iii) upon the specific request of any
Stockholder, to receive and provide receipt for all consideration required to be
delivered to such Stockholder under this Agreement, (iv) to perform any and all
actions required to be taken by such Stockholder in connection with any claim
for indemnity pursuant to the provisions of Section 12 of this Agreement and
(iv) to execute and deliver all instruments and documents of every kind incident
to the foregoing to all intents and purposes and with the same effect as such
Stockholder could do personally, and each such Stockholder hereby ratifies and
confirms as his or her own act, all that the Stockholder Representative shall do
or cause to be done pursuant to the provisions hereof. Notwithstanding the
foregoing, except with respect to administrative and other ministerial tasks,
the Stockholder Representative is required and entitled to act only at the
written direction of Stockholders entitled to receive a majority of the Escrowed
Shares.
(c) It is acknowledged by the Stockholders appointing the
Stockholder Representative that the designation of the Stockholder
Representative as attorney-in-fact is coupled with an interest and is binding
upon such Stockholders notwithstanding the death, incapacity or dissolution of
any such Stockholder. If any such event shall occur prior to the completion of
the transactions contemplated by this Agreement, the Stockholder Representative
is, nevertheless, to the extent that he is legally able to do so, authorized and
directed to complete all transactions and act pursuant to this authority as if
such event had not occurred. Purchaser is entitled to deal solely with the
Stockholder Representative in connection with this Agreement and is entitled to
rely upon the provisions hereof and the authority granted to the Stockholder
Representative to act on behalf of the Stockholders.
(d) The Stockholder Representative's acceptance of his duties
under this Agreement is subject to the following terms and conditions, which the
parties hereto agree shall govern and control with respect to his rights,
duties, liabilities and immunities as Stockholder Representative (but not in his
capacity as a Stockholder or as an officer, director, or employee of the
Company):
(i) The Stockholder Representative makes no representation
and has no responsibility as to the validity of this Agreement or of any other
instrument referred to herein, or as to the correctness of any statement
contained herein, and he shall not be required to inquire as to the performance
of any obligation under this Agreement.
(ii) The Stockholder Representative shall be protected in
acting upon written notice, request, waiver, consent, receipt or other paper or
document, not only as to its due execution and the validity and effectiveness of
its provisions, but also as to the truth of any
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information therein contained, which he in good faith believes to be genuine and
what it purports to be.
(iii) The Stockholder Representative shall not be liable for
any error of judgment, or for any act done or step taken or omitted by him in
good faith, or for any mistake of fact or law, or for anything which he may do
or refrain from doing in connection therewith, except his own gross negligence
or willful misconduct.
(iv) The Stockholder Representative may consult with
competent and responsible legal counsel selected by him, and he shall not be
liable for any action taken or omitted by him in good faith in accordance with
the advice of such counsel.
(v) The Stockholders shall bear pro rata all expenses
(including transfer taxes and other governmental charges) incurred by the
Stockholder Representative in connection with his duties hereunder and shall
indemnify him against and save him harmless from any and all claims,
liabilities, costs, payments and expenses, including fees of counsel (who may be
selected by the Stockholder Representative), for anything done or omitted by him
in the performance of this Agreement or the Escrow Agreement, except as a result
of his own gross negligence or willful misconduct.
(vi) The Stockholder Representative shall have no duties or
responsibilities except those expressly set forth herein. He shall not be bound
by any modification of this Agreement unless in writing and signed by the other
parties hereto and if his duties as Stockholder Representative hereunder are
affected, unless he shall have given prior written consent thereto.
14. SPECIFIC PERFORMANCE. The parties hereto acknowledge that
irreparable damage would result if this Agreement is not specifically enforced.
Therefore, the rights and obligations of the parties under the Agreement,
including, without limitation, their respective rights and obligations to sell
and purchase the Shares, shall be enforceable by a decree of specific
performance issued by any court of competent jurisdiction, and appropriate
injunctive relief may be applied for and granted in connection therewith. Such
remedies shall, however, be cumulative and not exclusive and shall be in
addition to any other remedies which any party may have under this Agreement or
otherwise.
15. TERMINATION; AMENDMENTS TO DISCLOSURE LETTER.
(a) TERMINATION. Anything contained in this Agreement to the
contrary notwithstanding, this Agreement may be terminated:
(i) At any time on or prior to the Closing Date, by the
mutual consent in writing of Purchaser, the Company and the Stockholders;
(ii) Purchaser may terminate this Agreement by giving written
notice to the Company and the Stockholders at any time prior to the Closing Date
(A) in the event the Company or the Stockholders have breached any
representation or warranty (as updated pursuant
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to this Section 15 and as in effect on the Closing Date), or covenant contained
in this Agreement in any material respect, Purchaser has notified the Company
and the Stockholders of the breach, and the breach has continued without cure
for a period of 30 days after the notice of breach, or (B) the Average Share
Price is less than $36.37, or (C) if the Closing shall not have occurred on or
before the Closing Date specified in Section 9(a) (unless the failure results
primarily from Purchaser breaching any representation, warranty or covenant
contained in this Agreement); or
(iii) The Company or the Stockholders may terminate this
Agreement by giving written notice to Purchaser at any time prior to the Closing
Date (A) in the event Purchaser has breached any representation, warranty or
covenant contained in this Agreement in any material respect, the Company or the
Stockholders have notified Purchaser of the breach, and the breach has continued
without cure for a period of 30 days after the notice of breach, or (B) the
Average Share Price is less than $36.37, or (C) if the Closing shall not have
occurred on or before the Closing Date specified in Section 9(a) (unless the
failure results primarily from the Company or the Stockholders breaching any
representation, warranty or covenant contained in this Agreement).
(b) AMENDMENTS TO DISCLOSURE LETTER. Between the date hereof and
the Closing Date, the Company and the Stockholders may add to the Disclosure
Letter by notification in writing to Purchaser of the matter to be added, which
may be matters relating to events first arising after the date of this Agreement
("POST-AGREEMENT DATE DISCLOSURE MATTERS") or may be matters which relate to
events first arising prior to the date of this Agreement and which, if not so
added to the Disclosure Letter, would constitute a breach of the representations
and warranties provided by the Company and the Stockholders on the date of this
Agreement ("PRE-AGREEMENT DATE DISCLOSURE MATTERS" and, collectively with the
Post-Agreement Date Disclosure Matters, the "NEW DISCLOSURE MATTERS"). If the
aggregate dollar amount involved in the New Disclosure Matters exceeds
$5,000,000, Purchaser may, at its election by written notice to the Company and
the Stockholders on or before the Closing Date, either (i) accept the Disclosure
Letter as so modified and close the transactions contemplated hereby, in which
case the Disclosure Letter as so modified will be deemed to have been delivered
on or before the date of this Agreement or (ii) terminate this Agreement. If
the aggregate dollar amount involved in the Pre-Agreement Date Disclosure
Matters exceeds $5,000,000, the Company and the Stockholders may terminate this
Agreement by written notice to Purchaser, unless Purchaser agrees in writing
that the aggregate indemnity obligation of the Stockholders in respect of such
Pre-Agreement Date Disclosure Matters pursuant to Section 12(a)(i) will in all
events be limited to $5,000,000. Nothing contained herein will preclude
Purchaser from alleging that any matter disclosed in a proposed modification to
the Disclosure Letter which is not subject to quantification does not give rise
to a right not to close under this Agreement because of the inability of the
Company and the Stockholders to satisfy the condition set forth in Section 7(a)
hereof due to such New Disclosure Matter. Notwithstanding the foregoing, it is
understood that the Company will as soon as practicable furnish to Purchaser its
audited financial statements for the year 1996 in substitution for its unaudited
1996 financial statements (as contemplated by the definition "Financial
Statements"), and it is agreed that Purchaser shall have no right to object to
such substitution unless the audited 1996 financial statements contain material
adjustments or disclosures not contained in the unaudited 1996 financial
statements.
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(c) CONSEQUENCES OF TERMINATION. In the event that this Agreement
shall be terminated pursuant to this Section 15, (i) each party will redeliver
all documents, work papers and other material of any other party relating to the
transactions contemplated hereby, whether so obtained before or after the
execution hereof, to the party furnishing the same, and (ii) all further
obligations of the parties under this Agreement shall terminate without further
liability of any party to any other party (except that each party shall remain
liable for any willful or intentional breach of any representation, warranty or
covenant contained herein, as to which all remedies, including the availability
of specific performance or other injunctive relief, shall remain available);
PROVIDED, HOWEVER, that the confidentiality provisions contained in Section 16
below shall survive such termination.
16. CONFIDENTIALITY; PRESS RELEASES.
(a) Purchaser agrees to keep non-public information regarding the
Company and the Subsidiaries confidential until the Closing Date and agrees that
it will only use such information in connection with the transactions
contemplated by this Agreement and not disclose any of such information other
than (i) to Purchaser's Representatives who are involved with the transactions
contemplated by this Agreement, (ii) to the extent such information presently is
or hereafter becomes available, on a non-confidential basis, from a source other
than the Stockholders or the Company, and (iii) to the extent disclosure is
required by law, regulation or judicial order by any governmental authority.
(b) The Company and the Stockholders agree to keep non-public
information regarding Purchaser, and the Stockholders agree to keep non-public
information regarding the Company and the Subsidiaries, confidential and agree
that they will only use such information in connection with the transactions
contemplated by this Agreement and not disclose any of such information other
than (i) to the Stockholders' and the Company's respective Representatives who
are involved with the transactions contemplated by this Agreement, (ii) to the
extent such information presently is or hereafter becomes available, on a
non-confidential basis, from a source other than Purchaser, and (iii) to the
extent disclosure is required by law, regulation or judicial order by any
governmental authority.
(c) Prior to any disclosure required by law, regulation or
judicial order, Purchaser, the Company or the Stockholders, as the case may be,
shall advise each of the others of such requirement so that it may seek a
protective order.
(d) Prior to Closing or thereafter, none of Purchaser, the Company
or the Stockholders shall make any press release or public announcement in
connection with the transactions contemplated hereby without the prior written
consent of the other parties or, if required by law, without prior consultation
with the other parties.
17. NOTICES. Any notices or other communications required or permitted
hereunder, shall be sufficiently given if in writing and personally delivered or
sent by pre-paid first class mail, overnight courier, telex or facsimile,
addressed as follows or to such other address as the parties shall have given
notice of pursuant hereto:
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In the case of Purchaser:
Clear Channel Communications, Inc.
200 Concord Plaza
Suite 600
San Antonio, Texas 78216
Attention: Randall T. Mays
Telecopy: 210-822-2299
With a copy to:
Clear Channel Communications, Inc.
200 Concord Plaza
Suite 600
San Antonio, Texas 78216
Attention: Kenneth E. Wyker, Esq.
Telecopy: 210-822-2299
Piper & Marbury L.L.P.
36 South Charles Street
Baltimore, Maryland 21201
Attention: R.W. Smith, Jr., Esq.
Telecopy: 410-576-1700
In the case of the Company or
the Stockholders:
Eller Media Corporation
2850 East Camelback Road, Suite 300
Phoenix, Arizona 85016
Attention: Paul J. Meyer, Esq.
Telecopy: 602-381-5740
Paul J. Meyer, Esq.
c/o Eller Media Corporation
2850 East Camelback Road
Suite 300
Phoenix, Arizona 85016
Telecopy: 602-957-8602
39
<PAGE>
With a copy to:
H & F Investors III, Inc.
One Maritime Plaza, 12th Fl.
San Francisco, California 94111
Attention: John L. Bunce, Jr.
Telecopy: 415-788-0176
Heller, Ehrman, White & McAuliffe
333 Bush Street
San Francisco, California 94104
Attention: Paul J. Mundie, Esq.
Telecopy: 415-772-6168
Latham & Watkins
633 West Fifth Street, Suite 4000
Los Angeles, California 90071
Attention: Thomas W. Dobson, Esq.
Telecopy: 213-891-8763
All such notices an communications shall be deemed to have been duly given: when
personally delivered; three Business Days after being deposited in the mail, as
aforesaid; next day, if by overnight courier with guaranteed delivery; when
answered back, if telexed; and when receipt is acknowledged, if transmitted by
facsimile.
18. ENTIRE AGREEMENT. This Agreement together with all exhibits and
schedules hereto (including the Disclosure Letter as updated pursuant to Section
15 hereof) represent the entire understanding and agreement among the parties
hereto with respect to the subject matter hereof and supersedes all prior
understandings and agreements, whether written or oral, and can be amended,
supplemented or changed, and any provision hereof can be waived, only by written
instrument making specific reference to this Agreement signed by the party
against whom enforcement of any such amendment, supplement, modification or
waiver is sought, including, in the case of the Stockholders, all Stockholders
who are a party to this Agreement at the time such enforcement is sought. No
waiver of any of the provisions of this Agreement shall be deemed or shall
constitute a waiver of any other provision hereof (whether or not similar), nor
shall such waiver constitute a continuing waiver unless otherwise expressly
provided.
19. SUCCESSORS. This Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective successors and assigns;
provided, however, that this Agreement and all rights and obligations hereunder
may not be assigned or transferred without the prior written consent of the
other parties hereto, except that Purchaser may assign its rights hereunder to a
wholly owned subsidiary.
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<PAGE>
20. CHOICE OF LAW.
(a) This Agreement shall be construed, interpreted and the rights
of the parties determined in accordance with the laws of the State of Delaware
(without reference to the choice of law provisions of Delaware law) except with
respect to matters of law concerning the internal corporate affairs of any
corporate entity which is a party to or the subject of this Agreement, and as to
those matters the law of the jurisdiction under which the respective entity
derives its powers shall govern.
(b) Each of the parties hereto irrevocably consents to the service
of any process, pleading, notices or other papers by the mailing of copies
thereof by registered, certified or first class mail, postage prepaid, to such
party at such party's address set forth herein, or by any other method provided
or permitted under Delaware law. Additionally, each party hereby appoints RL&F
Service Corp., One Rodney Square, Wilmington, Delaware 19810, as agent for
service of process in Delaware.
(c) Each party irrevocably and unconditionally agrees and consents
that any suit, action or other legal proceeding arising out of or related to
this Agreement shall be brought and heard in New Castle County, State of
Delaware, and each party irrevocably consents to personal jurisdiction in any
and all tribunals in said County.
(d) To the extent that Purchaser has or hereafter may acquire any
immunity from jurisdiction of any court or from any legal process (whether
through service or notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise) with respect to itself or its property,
Purchaser hereby irrevocably waives such immunity in respect of their
obligations pursuant to this Agreement.
21. NO RELIANCE ON OTHER INFORMATION. Except for the representations
and warranties contained in this Agreement, none of the parties hereto nor any
Representative or Affiliate or other person acting for any of them makes any
other representation or warranty, express or implied.
22. EXPENSES. Whether or not the transactions contemplated hereby are
consummated, (a) Purchaser shall pay all of its legal, accounting and other
out-of-pocket expenses incident to the transactions contemplated hereby and (ii)
the Stockholders shall pay their own and the Company's legal, accounting and
other out-of-pocket expenses incident to the transactions contemplated hereby,
provided however, that Purchaser, on the one hand, and the Stockholders, on the
other, shall divide and share equally filing fees in connection with government
filings necessary to consummate the transactions contemplated hereby (provided
that if this Agreement is terminated, each party shall attempt to obtain any
available refunds of such fees or otherwise utilize such fees in other
transactions such that expense to the parties is minimized).
23. SEVERABILITY. If at any time subsequent to the date hereof, any
provision of this Agreement shall be held by any court of competent jurisdiction
to be illegal, void or unenforceable, such provision shall be of no force and
effect, but the illegality or unenforceability
41
<PAGE>
of such provision shall have no effect upon and shall not impair the
enforceability of any other provision of this Agreement.
24. TITLES. The titles, captions or headings of the Sections herein are
inserted for convenience of reference only and are not intended to be a part of
or to affect the meaning or interpretation of this Agreement.
25. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument.
26. NO THIRD-PARTY BENEFICIARIES. No person (other than parties to this
Agreement or their respective successors or permitted assigns) shall have or be
construed to have any legal or equity right, remedy or claim under or in respect
of or by virtue of this Agreement or any provision herein contained; PROVIDED,
HOWEVER, that the provisions of Section 6(c) above concerning indemnification
are intended for the benefit of the individuals specified therein, and their
respective legal representatives, successors and assigns; and PROVIDED FURTHER,
that Section 2(c) above concerning the Restated Options is intended for the
benefit of holders of Company Stock Option Agreements and their respective legal
representatives, successors and assigns.
27. CONSTRUCTION. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of authorship of any provision
of this Agreement.
28. CUMULATIVE REMEDIES. All rights and remedies of any party hereto
are cumulative of each other and of every right or remedy such party may
otherwise have at law or in equity, and the exercise of one or more rights or
remedies shall not prejudice or impair the concurrent or subsequent exercise of
other rights or remedies.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
PURCHASER
By /s/ Randall Mays
-------------------------------------
Name: Randall Mays
Title: Executive Vice President
ELLER MEDIA CORPORATION
By /s/ Karl Eller
--------------------------------------
Name:
Title:
HELLMAN & FRIEDMAN
CAPITAL PARTNERS III, L.P.
By: Its General Partner,
H&F Investors III
By: Its Managing General Partner,
Hellman & Friedman Associates
III, L.P.
By: Its Managing General Partner,
H&F Investors III, Inc.
By: /s/ Joseph Niehaus
---------------------------
Its: Vice President
43
<PAGE>
H&F ORCHARD PARTNERS III, L.P.
By: Its General Partner,
H&F Investors III
By: Its Managing General Partner,
Hellman & Friedman Associates
III, L.P.
By: Its Managing General Partner,
H&F Investors III, Inc.
By: /s/ Joseph Niehaus
--------------------------
Its: Vice President
H&F INTERNATIONAL PARTNERS III, L.P.
By: Its General Partner,
H&F Investors III
By: Its Managing General Partner,
Hellman & Friedman Associates
III, L.P.
By: Its Managing General Partner,
H&F Investors III, Inc.
By: /s/ Joseph Niehaus
---------------------------
Its: Vice President
EM HOLDINGS LLC
By: /s/ Karl Eller
--------------------------
Its:
/s/ H. Irving Grousbeck
------------------------------
H. Irving Grousbeck
44
<PAGE>
AMERICAN MEDIA MANAGEMENT, INC.
By: /s/ Arthur Kern
-----------------------------
Its: Chairman/CEO
/s/ Richard Reiss, Jr.
--------------------------------
Richard Reiss, Jr.
/s/ Glenn Krevlin
--------------------------------
Glenn Krevlin, as Trustee fbo
Nina Krevlin, Glenn Krevlin,
Michael Krevlin and Jill Krevlin
/s/ K. Tucker Andersen
--------------------------------
K. Tucker Andersen
/s/ Bruce Halle
--------------------------------
Bruce Halle
/s/ Timothy J. Donmoyer
--------------------------------
Timothy J. Donmoyer
45
<PAGE>
/s/ Patricia Salas Pineda
--------------------------------
Patricia Salas Pineda
/s/ Karl Eller
--------------------------------
Karl Eller
/s/ Paul J. Meyer
--------------------------------
Paul J. Meyer
46
<PAGE>
EXHIBIT 7(3)
FORM OF
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT"), dated as of
_________________, 1997, is entered into by and among Clear Channel
Communications, Inc., a Texas corporation (the "COMPANY"), and the persons
listed on the signature pages hereof (the "STOCKHOLDERS").
RECITALS
A. The Company and the Stockholders desire to enter into this
Agreement for the purpose of granting to the Stockholders certain rights with
respect to registering under the Securities Act of 1933, as amended, shares of
Common Stock, par value $.10 per share, of the Company.
B. The Common Stock is being acquired by the Stockholders pursuant
to the stock purchase (the "TRANSACTION") contemplated by the Stock Purchase
Agreement, dated as of February 25, 1997, by and among the Company, Eller Media
Corporation, a Delaware corporation, and the persons listed on Exhibit A
thereto.
AGREEMENT
In consideration of the Recitals and mutual promises contained herein,
and other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties, intending to be legally bound, hereby agree as
follows:
1. DEFINITIONS. As used in this Agreement, the following terms
shall have the following meanings:
"ADVICE" shall have the meaning set forth in Section 4 hereof.
"AFFILIATE" means, with respect to any specified person, any other
person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified person. For the purposes of this
definition, "control" when used with respect to any specified person, means the
power to direct the management and policies of such person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"AGREEMENT" shall have the meaning set forth in the heading hereof.
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"BUSINESS DAY" means any day that is not a Saturday, a Sunday or a
legal holiday on which banking institutions in the State of New York are not
required to be open.
"CAPITAL STOCK" means, with respect to any person, any and all shares,
interests, participations or other equivalents (however designated) of corporate
stock issued by such person, including each class of common stock and preferred
stock of such person.
"COMMON STOCK" means the Common Stock, par value $.10 per share, of
the Company issued to any Holder named on the signature pages hereof in the
Transaction or any other shares of capital stock or other securities of the
Company into which such shares of Common Stock shall be reclassified or changed,
including, by reason of a merger, consolidation, reorganization or
recapitalization. If the Common Stock has been so reclassified or changed, or
if the Company pays a dividend or makes a distribution on the Common Stock in
shares of capital stock or subdivides (or combines) its outstanding shares of
Common Stock into a greater (or smaller) number of shares of Common Stock, a
share of Common Stock shall be deemed to be such number of shares of stock and
amount of other securities to which a holder of a share of Common Stock
outstanding immediately prior to such change, reclassification, exchange,
dividend, distribution, subdivision or combination would be entitled.
"COMPANY" shall have the meaning set forth in the heading hereof.
"COMPANY COMMON STOCK" shall mean shares of Common Stock, par value
$.10 per share, of the Company.
"DELAY PERIOD" shall have the meaning set forth in Section 2(d)
hereof.
"DEMAND NOTICE" shall have the meaning set forth in Section 2(a)
hereof.
"DEMAND REGISTRATION" shall have the meaning set forth in Section 2(b)
hereof.
"EFFECTIVENESS PERIOD" shall have the meaning set forth in Section
2(d) hereof.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the SEC promulgated thereunder.
"H&F FUNDS" shall mean Hellman & Friedman Capital Partners III, L.P.,
H&F Orchard Partners III, L.P. and H&F International Partners III, L.P.
"HOLDER" means a person who owns Registrable Shares and is either (i)
a Stockholder, (ii) a Permitted Transferee or (iii) a Permitted Assignee.
"INCLUSION NOTICE" shall have the meaning set forth in Section 2(a)
hereof.
"INDEMNIFIED PARTY" shall have the meaning set forth in Section 7(c)
hereof.
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"INDEMNIFYING PARTY" shall have the meaning set forth in Section 7(c)
hereof.
"INSPECTORS" shall have the meaning set forth in Section 4(l) hereof.
"INTERRUPTION PERIOD" shall have the meaning set forth in Section 4
hereof.
"LOSSES" shall have the meaning set forth in Section 7(a) hereof.
"PERMITTED ASSIGNEE" means a Holder who acquires (a) more than $5
million in value of Common Stock at the date of transfer from a Holder, or (b)
Common Stock from a Holder in a transfer in which consent to assignment of this
Agreement is granted pursuant to Section 9(e), in either case in a transfer
exempt pursuant to Rule "4(1-1/2)" (or any similar private transfer exemption),
provided that in each case the transferee assumes and agrees to perform and
becomes a party to this Agreement.
"PERMITTED TRANSFEREES" means, as to any Holder, (A) any other Holder,
(B) any Affiliate or partner of a Stockholder (and in the case of a general
partner of a Stockholder, any partner of such general partner or its partners or
members); (C) any person who is the spouse or former spouse of, or any lineal
descendent (including adopted children) of, or any spouse of such lineal
descendant (including adopted children) of, or the grandparent, parent, brother
or sister of, or spouse of such brother or sister of, a Holder or Permitted
Transferee of such person; (D) upon the death of any Holder or any Permitted
Transferee of such person, the executors of the estate of such Holder or
Permitted Transferee, any of such Holder's or such Permitted Transferee's heirs,
testamentary trustees, devisees, or legatees; (E) any trust principally for the
benefit of one or more of the foregoing Holders or Permitted Transferees
(including a charitable lead or remainder trust); or (F) upon the disability of
any Holder or Permitted Transferee, any guardian or conservator of such Holder
or Permitted Transferee; provided that in each case such transferee assumes and
agrees to perform and becomes a party to this Agreement.
"PERSON" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"PIGGYBACK REGISTRATION" shall have the meaning set forth in Section
3(a) hereof.
"PROSPECTUS" means the prospectus included in any Registration
Statement (including a prospectus that discloses information previously omitted
from a prospectus filed as part of an effective Registration Statement in
reliance upon Rule 430A), as amended or supplemented by any prospectus
supplement, with respect to the terms of the offering of any portion of the
Registrable Shares covered by such Registration Statement and all other
amendments and supplements to such prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such prospectus.
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"RECORDS" shall have the meaning set forth in Section 4(l) hereof.
"REGISTRABLE SHARES" means shares of Common Stock unless (i) they have
been effectively registered under Section 5 of the Securities Act and disposed
of pursuant to an effective Registration Statement, or (ii) all of such Common
Stock of a Holder can be freely sold and transferred without restriction under
the volume limitation provisions of Rule 144 or Rule 145 under the Securities
Act or any successor rule such that, after any such transfer referred to in this
clause (ii), such securities may be freely transferred without restriction under
the Securities Act. In addition, any shares of Common Stock held by a
Stockholder who owns Common Stock representing more than 1% of the then
outstanding Company Common Stock shall be considered Registrable Shares.
Further, no Holder who is not a Stockholder shall be deemed to own Registrable
Shares after three years from the date hereof. For purposes of this definition,
the H&F Funds shall be considered a single Stockholder.
"REGISTRATION" means registration under the Securities Act of an
offering of Registrable Shares pursuant to a Demand Registration or a Piggyback
Registration.
"REGISTRATION PERIOD" means, as to any Holder, the period beginning on
the date hereof and ending on the date when such Holder no longer owns any
Registrable Shares.
"REGISTRATION STATEMENT" means any registration statement under the
Securities Act of the Company that covers any of the Registrable Shares pursuant
to the provisions of this Agreement, including the related Prospectus, all
amendments and supplements to such registration statement, including pre- and
post-effective amendments, all exhibits thereto and all material incorporated by
reference or deemed to be incorporated by reference in such registration
statement.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.
"STOCKHOLDERS" shall have the meaning set forth in the heading hereof.
"TRANSACTION" shall have the meaning set forth in Recital B.
"UNDERWRITTEN OFFERING" means a registration under the Securities Act
in which securities of the Company are sold to an underwriter for reoffering to
the public.
2. DEMAND REGISTRATION.
(a) Subject to the last sentence of this Section 2(a), any
Holder or Holders shall have the right during the Registration Period, by
written notice (the "DEMAND NOTICE") given to the Company, to request the
Company to register under and in accordance with the provisions of the
Securities Act all or any portion of the Registrable Shares designated
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by such Holders; PROVIDED, HOWEVER, that the aggregate value (based on the
closing price per share of Common Stock at the respective dates of such notices)
of Registrable Shares requested to be registered pursuant to any Demand Notice
and pursuant to any related Inclusion Notices received pursuant to the following
sentence shall be at least $ 20 million. Upon receipt of any such Demand
Notice, the Company shall promptly (and in no event later than 15 days after
receipt of such Demand Notice) notify all other Holders of the receipt of such
Demand Notice and allow them the opportunity to include Registrable Shares held
by them in the proposed registration by submitting their own written notice to
the Company no later than 15 days after receipt of the notice from the Company
of the Demand Notice requesting inclusion of a specified number of such Holders'
Registrable Securities (the "INCLUSION NOTICE"). In connection with any Demand
Registration in which more than one Holder participates, in the event that such
Demand Registration involves an Underwritten Offering and the managing
underwriter or underwriters participating in such offering advise in writing the
Holders of Registrable Shares to be included in such offering that the total
number of Registrable Shares to be included in such offering exceeds the amount
that can be sold in (or during the time of) such offering without delaying or
jeopardizing the success of such offering (including the price per share of the
Registrable Shares to be sold), then the amount of Registrable Shares to be
offered for the account of such Holders shall be reduced pro rata on the basis
of the number of Registrable Shares to be registered by each such Holder. The
Holders as a group shall be entitled to three Demand Registrations pursuant to
this Section 2. If any such Demand Registration does not become effective or is
not maintained for a period (whether or not continuous) of at least 120 days (or
such shorter period as shall terminate when all the Registrable Shares covered
by such Demand Registration (other than any shares reserved for issuance upon
exercise of the underwriters' overallotment option) have been sold pursuant
thereto), the affected Holders will be entitled to an additional Demand
Registration pursuant hereto. For purposes of the foregoing, the 120-day period
does not have to be consecutive and may be interrupted by Delay Periods or
Interruption Periods as set forth herein. It is agreed that the registration of
Registrable Shares pursuant to an Inclusion Notice shall not be deemed to be a
separate Demand Registration. Nothing in this Section 2(a) shall limit any
rights pursuant to Section 3 hereof.
(b) The Company, within 45 days of the date on which the Company
receives a Demand Notice given by Holders in accordance with Section 2(a)
hereof, shall file with the SEC, and the Company shall thereafter use
commercially reasonable efforts to cause to be declared effective, a
Registration Statement on the appropriate form for the registration and sale, in
accordance with the intended method or methods of distribution, of the total
number of Registrable Shares specified by the Holders in such Demand Notice (a
"DEMAND REGISTRATION").
(c) The Company shall use commercially reasonable efforts to
cause the Registration Statement to be declared effective and to keep each
Registration Statement filed pursuant to this Section 2 continuously effective
and usable for the resale of the Registrable Shares covered thereby until the
earlier of (i) 120 days from the date on which the SEC declares such
Registration Statement effective (as such period may be extended pursuant to
this Section 2) and (ii) the date on which all the Registrable Shares covered by
such Registration Statement (other than any shares reserved for issuance upon
exercise of the underwriters' overallotment option) have been sold pursuant to
such Registration Statement.
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(d) Except with respect to the first Demand Notice contemplated
by Section 2(g) hereof, the Company shall be entitled to postpone the filing of
any Registration Statement otherwise required to be prepared and filed by the
Company pursuant to this Section 2 for a reasonable period of time, but not in
excess of 90 days (a "DELAY PERIOD"), if the Board of Directors of the Company
determines in good faith that the registration and distribution of the
Registrable Shares covered or to be covered by such Registration Statement would
materially interfere with any pending material financing, acquisition or
corporate reorganization or other material corporate development involving the
Company or any of its subsidiaries or would require premature disclosure thereof
and promptly gives the Holders written notice of such determination, containing
a general statement of the reasons for such postponement and an approximation of
the period of the anticipated delay; PROVIDED, HOWEVER, that (i) the aggregate
number of days included in all Delay Periods during any consecutive 12 months
shall not exceed the aggregate of (x) 120 days minus (y) the number of days
occurring during all Interruption Periods during such consecutive 12 months and
(ii) a period of at least 60 days shall elapse between the termination of any
Delay Period or Interruption Period and the commencement of the immediately
succeeding Delay Period. If the Company shall so postpone the filing of a
Registration Statement, the Holders of Registrable Shares to be registered shall
have the right to withdraw the request for registration by giving written notice
from the Holders of a majority of the Registrable Shares that were to be
registered to the Company within 30 days after receipt of the notice of
postponement or, if earlier, the termination of such Delay Period (and, in the
event of such withdrawal, such request shall not be counted for purposes of
determining the number of requests for registration to which the Holders of
Registrable Shares are entitled pursuant to this Section 2). The time period
for which the Company is required to maintain the effectiveness of any
Registration Statement shall be extended by the aggregate number of days of all
Delay Periods and all Interruption Periods occurring during such Registration
and such period and any extension thereof is hereinafter referred to as the
"EFFECTIVENESS PERIOD." The Company shall not be entitled to initiate a Delay
Period or an Interruption Period unless it shall (A) concurrently prohibit sales
by all other security holders under registration statements covering securities
held by such other security holders (excluding exercise of options pursuant to a
Form S-8) and (B) forbid purchases and sales in the open market by senior
executives of the Company.
(e) Except with respect to the first Demand Registration
contemplated by Section 2(g) hereof, the Company shall not include any
securities that are not Registrable Shares in any Registration Statement filed
pursuant to this Section 2 without the prior written consent of the Holders of a
majority in number of the Registrable Shares held by Holders covered by such
Registration Statement, which consent shall not be unreasonably withheld.
(f) Holders of a majority in number of the Registrable Shares to
be included in a Registration Statement pursuant to this Section 2 may, at any
time prior to the effective date of the Registration Statement relating to such
Registration, revoke such request by providing a written notice to the Company
revoking such request. The Holders of Registrable Shares who revoke such
request shall reimburse the Company for all its out-of-pocket expenses incurred
in the preparation, filing and processing of the Registration Statement;
PROVIDED, HOWEVER, that, if such revocation was pursuant to Section 2(d) (for a
postponement)
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or was based on the Company's failure to comply in any material respect with its
obligations hereunder, such reimbursement shall not be required, and such
registration shall not count against the maximum number of Demand Registrations
to which the applicable Holders are entitled under Section 2(a). In addition,
if pursuant to the terms of this Section 2(f), the Holders reimburse the Company
for its out-of-pocket expenses incurred in the preparation, filing and
processing of any Registration Statement requested, and subsequently revoked by
such Holder(s), such registration shall not count against the maximum number of
Demand Registrations to which the applicable Holder(s) are entitled under
Section 2(a).
(g) Notwithstanding anything herein to the contrary, the
Stockholders hereby give their first Demand Notice to the Company as set forth
on Schedule I hereto, subject to their right to revoke such request pursuant to
Section 2(f), and understand and agree that the Company intends to include
authorized but unissued Company Common Stock for sale in such Registration
pursuant to a firm commitment Underwritten Offering. In the event the managing
underwriter or underwriters participating in such offering advise in writing the
Company and the Holders of Registrable Shares to be included in such offering
that the total number of Registrable Shares and shares of Company Common Stock
to be sold by the Company to be included in such offering exceeds the amount
that can be sold in (or during the time of) such offering without delaying or
jeopardizing the success of such offering (including the price per share of the
Registrable Shares and other shares of Company Common Stock to be sold), then
the amount of shares to be offered shall be reduced in the following order of
priority: (i) first, the amount of Company Common Stock to be sold by the
Company shall be reduced, to the extent necessary, until such amount equals
zero, and (ii) second, to the extent necessary, the amount of Registrable Shares
shall be reduced pro rata on the basis of the number of Registrable Shares to be
registered by each such Holder. It is understood that the second Demand Notice
may not be given for a period of at least six months after the completion of the
sale of Registrable Shares effected pursuant to the first Demand Registration,
and that the third Demand Notice may not be given for a period of at least
twelve months after the completion of the sale of Registrable Shares effected
pursuant to the second Demand Registration, and that no Demand Notice will be
given for a period of 120 days after the sale of any shares of Company Common
Stock pursuant to a Registration Statement in which the Holders have been given
an opportunity to participate as provided in Section 3(a) hereof and have either
sold any shares as part of such offering or have elected not to participate.
3. PIGGYBACK REGISTRATION.
(a) RIGHT TO PIGGYBACK. If at any time during the Registration
Period the Company proposes to file a registration statement under the
Securities Act with respect to a public offering of securities of the same type
as the Registrable Shares pursuant to a firm commitment Underwritten Offering
for cash for its own account (other than a registration statement (i) on Form
S-8 or any successor forms thereto, or (ii) filed solely in connection with a
dividend reinvestment plan or employee benefit plan of the Company or its
Affiliates) or for the account of any holder of securities of the same type as
the Registrable Shares (to the extent that the Company has the right to include
Registrable Shares in any registration statement to be filed by the Company on
behalf of such holder), then the Company shall give written notice of
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such proposed filing to the Holders at least 10 days before the anticipated
filing date of such registration statement. Such notice shall offer the Holders
the opportunity to register such amount of Registrable Shares as they may
request (a "PIGGYBACK REGISTRATION"). Subject to Section 3(b) hereof, the
Company shall include in each such Piggyback Registration all Registrable Shares
with respect to which the Company has received written requests for inclusion
therein within 10 days after notice has been given to the Holders. Each Holder
shall be permitted to withdraw all or any portion of the Registrable Shares of
such Holder from a Piggyback Registration at any time prior to the effective
date of such Piggyback Registration; PROVIDED, HOWEVER, that if such withdrawal
occurs after the filing of the Registration Statement with respect to such
Piggyback Registration, the withdrawing Holders shall reimburse the Company for
the portion of the registration expenses payable with respect to the Registrable
Shares so withdrawn.
(b) PRIORITY ON PIGGYBACK REGISTRATIONS. The Company shall
permit the Holders to include all such Registrable Shares on the same terms and
conditions as any similar securities, if any, of the Company included therein.
Notwithstanding the foregoing, if the Company or the managing underwriter or
underwriters participating in such offering advise the Holders in writing that
the total amount of securities requested to be included in such Piggyback
Registration exceeds the amount which can be sold in (or during the time of)
such offering without delaying or jeopardizing the success of the offering
(including the price per share of the securities to be sold), then the amount of
securities to be offered for the account of the Holders and other holders of
securities who have registration rights with respect thereto shall be reduced
(to zero if necessary) pro rata on the basis of the number of common stock
equivalents requested to be registered by each such Holder or holder
participating in such offering.
(c) RIGHT TO ABANDON. Nothing in this Section 3 shall create
any liability on the part of the Company to the Holders if the Company in its
sole discretion should decide not to file a registration statement proposed to
be filed pursuant to Section 3(a) hereof or to withdraw such registration
statement subsequent to its filing and prior to the later of its effectiveness
or the release of the Registrable Shares for public offering by the managing
underwriter, in the case of an underwritten public offering, regardless of any
action whatsoever that a Holder may have taken, whether as a result of the
issuance by the Company of any notice hereunder or otherwise.
(d) PRIORITY OVER DEMAND REGISTRATIONS. If the Company at any
time within 15 days after receipt of a Demand Notice (or any applicable Delay
Period) notifies the Holders of its proposal to file a Registration Statement
covered by Section 3(a) hereof pursuant to which a majority of shares to be sold
will be sold by the Company (without regard to any shares to be sold by the
Holders), the Company's proposed filing and notice thereof will take priority
over the Demand Notice, and the Demand Notice will be considered to have been
revoked and will not be considered or counted as a Demand Registration under
Section 2. Subject to the provisions of Section 2(g), the revocation of the
Demand Notice shall in no way affect or preclude a new Demand Notice if the
Company abandons the proposed registration as
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contemplated by Section 3(c). The provisions of this Section 2(d) will not
apply to the first Demand Notice pursuant to Section 2(g) hereof.
4. REGISTRATION PROCEDURES. In connection with the registration
obligations of the Company pursuant to and in accordance with Sections 2 and 3
hereof (and subject to Sections 2 and 3 hereof), the Company shall use
commercially reasonable efforts to effect such registration to permit the sale
of such Registrable Shares in accordance with the intended method or methods of
disposition thereof, and pursuant thereto the Company shall (subject to Sections
2 and 3 hereof):
(a) At least three business days before filing a Registration
Statement or Prospectus, furnish to the Holders (or their representatives) who
are participating in such Registration Statement and the underwriters, if any,
copies of all such documents (which may be drafts or proofs) proposed to be
filed, which documents will be subject to the review of such Holders and such
underwriters (and their respective counsel), and, in the case of a Demand
Registration, the Company will not file any Registration Statement or amendment
thereto or any Prospectus or any supplement thereof to which the registering
Holders or the underwriters, if any, shall reasonably object;
(b) prepare and file with the SEC a Registration Statement for
the sale of the Registrable Shares on any form for which the Company then
qualifies or which counsel for the Company shall deem appropriate in accordance
with such Holders' intended method or methods of distribution thereof, subject
to Section 2(b) hereof, and, subject to the Company's right to terminate or
abandon a registration pursuant to Section 3(c) hereof, use commercially
reasonable efforts to cause such Registration Statement to become effective and
remain effective as provided herein;
(c) prepare and file with the SEC such amendments (including
post-effective amendments) to such Registration Statement, and such supplements
to the related Prospectus, as may be required by the rules, regulations or
instructions applicable to the Securities Act during the applicable period in
accordance with the intended methods of disposition specified by the Holders of
the Registrable Shares covered by such Registration Statement, make generally
available earnings statements satisfying the provisions of Section 11(a) of the
Securities Act (provided that the Company shall be deemed to have complied with
this clause if it has complied with Rule 158 under the Securities Act), and
cause the related Prospectus as so supplemented to be filed pursuant to Rule 424
under the Securities Act; PROVIDED, HOWEVER, that before filing a Registration
Statement or Prospectus, or any amendments or supplements thereto (other than
reports required to be filed by it under the Exchange Act), the Company shall
furnish to the Holders of Registrable Shares covered by such Registration
Statement and their counsel for their reasonable review and comment, copies of
all documents required to be filed;
(d) notify the Holders of any Registrable Shares covered by such
Registration Statement promptly and (if requested) confirm such notice in
writing, (i) when a Prospectus or any Prospectus supplement or post-effective
amendment has been filed, and, with
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respect to such Registration Statement or any post-effective amendment, when the
same has become effective, (ii) of any request by the SEC for amendments or
supplements to such Registration Statement or the related Prospectus or for
additional information regarding such Holders, (iii) of the issuance by the SEC
of any stop order suspending the effectiveness of such Registration Statement or
the initiation of any proceedings for that purpose, (iv) of the receipt by the
Company of any notification with respect to the suspension of the qualification
or exemption from qualification of any of the Registrable Shares for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose, and (v) of the happening of any event that requires the making of any
changes in such Registration Statement, Prospectus or documents incorporated or
deemed to be incorporated therein by reference so that they will not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not misleading;
(e) use commercially reasonable efforts to obtain the withdrawal
of any order suspending the effectiveness of such Registration Statement, or the
lifting of any suspension of the qualification or exemption from qualification
of any Registrable Shares for sale in any jurisdiction in the United States;
(f) furnish to the Holder of any Registrable Shares covered by
such Registration Statement, each counsel for such Holders and each managing
underwriter, if any, without charge, one conformed copy of such Registration
Statement, as declared effective by the SEC, and of each post-effective
amendment thereto, in each case including financial statements and schedules and
all exhibits and reports incorporated or deemed to be incorporated therein by
reference; and deliver, without charge, such number of copies of the preliminary
prospectus, any amended preliminary prospectus, each final Prospectus and any
post-effective amendment or supplement thereto, as such Holder may reasonably
request in order to facilitate the disposition of the Registrable Shares of such
Holder covered by such Registration Statement in conformity with the
requirements of the Securities Act;
(g) prior to any public offering of Registrable Shares covered
by such Registration Statement, use commercially reasonable efforts to register
or qualify such Registrable Shares for offer and sale under the securities or
Blue Sky laws of such jurisdictions as the Holders of such Registrable Shares
shall reasonably request in writing; PROVIDED, HOWEVER, that the Company shall
in no event be required to qualify generally to do business as a foreign
corporation or as a dealer in any jurisdiction where it is not at the time so
qualified or to execute or file a general consent to service of process in any
such jurisdiction where it has not theretofore done so or to take any action
that would subject it to general service of process or taxation in any such
jurisdiction where it is not then subject;
(h) upon the occurrence of any event contemplated by paragraph
4(d)(v) above, prepare a supplement or post-effective amendment to such
Registration Statement or the related Prospectus or any document incorporated or
deemed to be incorporated therein by reference and file any other required
document so that, as thereafter delivered to the purchasers of the Registrable
Shares being sold thereunder (including upon the termination of any Delay
Period), such Prospectus will not contain an untrue statement of a material fact
or omit to state
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any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading;
(i) use commercially reasonable efforts to cause all Registrable
Shares covered by such Registration Statement to be listed on each securities
exchange or automated interdealer quotation system, if any, on which similar
securities issued by the Company are then listed or quoted;
(j) use commercially reasonable efforts to comply with all
applicable rules and regulations of the SEC and any securities exchange or
regulatory body;
(k) on or before the effective date of such Registration
Statement, provide the transfer agent of the Company for the Registrable Shares
with printed certificates for the Registrable Shares covered by such
Registration Statement which are in a form eligible for deposit with The
Depository Trust Company;
(l) if such offering is an Underwritten Offering, make available
for inspection by any Holder of Registrable Shares included in such Registration
Statement, any underwriter participating in any offering pursuant to such
Registration Statement, and any attorney, accountant or other agent retained by
any such Holder or underwriter (collectively, the "INSPECTORS"), such financial
and other records and other information, pertinent corporate documents and
properties of any of the Company and its subsidiaries and Affiliates
(collectively, the "RECORDS"), as shall be reasonably necessary to enable them
to exercise their due diligence responsibilities; PROVIDED, HOWEVER, that the
Records that the Company determines, in good faith, to be confidential and which
it notifies the Inspector in writing are confidential shall not be disclosed to
any Inspector unless such Inspector signs a confidentiality agreement reasonably
satisfactory to the Company, which agreement shall permit the release of such
Records if such release is ordered pursuant to a subpoena or other order from a
court of competent jurisdiction; PROVIDED, HOWEVER, that each Holder of
Registrable Shares agrees that it shall, promptly after learning that disclosure
of such Records is sought in a court having jurisdiction, give notice to the
Company so that the Company, at the Company's expense, may undertake appropriate
action to prevent disclosure of such Records; and
(m) if such offering is an Underwritten Offering, enter into
such agreements (including an underwriting agreement in form, scope and
substance as is customary in underwritten offerings) and take all such other
appropriate and reasonable actions requested by the Holders of a majority of the
Registrable Shares being sold in connection therewith (including those
reasonably requested by the managing underwriters) in order to expedite or
facilitate the disposition of such Registrable Shares, and in such connection,
(i) use commercially reasonable efforts to obtain opinions of counsel to the
Company and updates thereof (which counsel and opinions (in form, scope and
substance) shall be reasonably satisfactory to the managing underwriters and
counsel to the Holders of the Registrable Shares being sold), addressed to each
selling Holder of Registrable Shares covered by such Registration Statement and
each of the underwriters as to the matters customarily covered in opinions
requested in underwritten offerings and such other matters as may be reasonably
requested by such counsel
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and underwriters, (ii) use commercially reasonable efforts to obtain "cold
comfort" letters and updates thereof from the independent certified public
accountants of the Company (and, if necessary, any other independent certified
public accountants of any subsidiary of the Company or of any business acquired
by the Company for which financial statements and financial data are, or are
required to be, included in the Registration Statement), addressed to each
selling Holder of Registrable Shares covered by the Registration Statement
(unless such accountants shall be prohibited from so addressing such letters by
applicable standards of the accounting profession) and each of the underwriters,
such letters to be in customary form and covering matters of the type
customarily covered in "cold comfort" letters in connection with underwritten
offerings (iii) if requested and if an underwriting agreement is entered into,
provide indemnification provisions and procedures substantially to the effect
set forth in Section 7 hereof with respect to all parties to be indemnified
pursuant to said Section. The above shall be done at each closing under such
underwriting or similar agreement, or as and to the extent required thereunder.
In addition, the Company agrees not to effect any public sale or distribution of
Common Stock or any securities convertible into or exchangeable or exercisable
for Common Stock, during the period commencing with the effective date of any
underwritten Demand or Piggyback Registration and until the earlier of (A) the
abandonment of such offering or (B) the termination of any "hold back" period
reasonably requested by the underwriters (with exceptions for issuances pursuant
to outstanding options, warrants, and convertible or exchangeable securities,
pursuant to employee and dividend reinvestment plans, and such other exceptions
as are customary or agreed with the managing underwriter).
The Company may require each Holder of Registrable Shares covered
by a Registration Statement to furnish such information regarding such Holder
and such Holder's intended method of disposition of such Registrable Shares as
it may from time to time reasonably request in writing. If any such information
is not furnished within a reasonable period of time after receipt of such
request, the Company may exclude such Holder's Registrable Shares from such
Registration Statement. In addition, the Company may require each Holder of
Registrable Shares covered by a Registration Statement to agree not to effect
any public sale or distribution of Common Stock, or any securities convertible
into or exchangeable or exercisable for Common Stock, during the period
commencing with the effective date of any underwritten Demand or Piggyback
Registration and until the earlier of (A) the abandonment of such offering or
(B) the termination of any "hold back" period reasonably requested by the
underwriters (with such exceptions as are customary or agreed with the managing
underwriter). In addition, if the Holders have been given an opportunity to
participate in a Registration Statement pursuant to Section 3(a), any Holder who
owns Registrable Shares representing 1% or more of the then outstanding shares
of Common Stock of the Company will agree, if so requested by the Company, not
to effect any public sale or distribution of Common Stock, or any securities
convertible into or exchangeable or exercisable for Common Stock, during the
period commencing with the effective date of any underwritten Piggyback
Registration and until the earlier of (A) the abandonment of such offering or
(B) 30 days after the effective date of such Piggyback Registration; provided
that each officer and director of the Company who beneficially owns 1% or more
of the then outstanding Company Common Stock and each stockholder of the Company
who owns "restricted" shares of Company Common Stock (as defined in Rule 144)
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constituting 1% or more of the then outstanding Company Common Stock agrees to
the same hold-back arrangements.
Each Holder of Registrable Shares covered by a Registration
Statement agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 4(d)(ii), 4(d)(iii),
4(d)(iv) or 4(d)(v) hereof, that such Holder shall forthwith discontinue
disposition of any Registrable Shares covered by such Registration Statement or
the related Prospectus until receipt of the copies of the supplemented or
amended Prospectus contemplated by Section 4(h) hereof, or until such Holder is
advised in writing (the "ADVICE") by the Company that the use of the applicable
Prospectus may be resumed, and has received copies of any amended or
supplemented Prospectus or any additional or supplemental filings which are
incorporated, or deemed to be incorporated, by reference in such Prospectus
(such period during which disposition is discontinued being an "INTERRUPTION
PERIOD") and, if requested by the Company, the Holder shall deliver to the
Company (at the expense of the Company) all copies then in its possession, other
than permanent file copies then in such holder's possession, of the Prospectus
covering such Registrable Shares at the time of receipt of such request.
Each Holder of Registrable Shares covered by a Registration
Statement further agrees not to utilize any material other than the applicable
current preliminary prospectus or Prospectus in connection with the offering of
such Registrable Shares.
5. REGISTRATION EXPENSES. The costs, fees and expenses incident to
the Company's performance of or compliance with this Agreement, including (i)
all registration and filing fees, including NASD filing fees, (ii) all fees and
expenses of compliance with securities or Blue Sky laws, including reasonable
fees and disbursements of counsel in connection therewith, (iii) printing
expenses (including expenses of printing certificates for Registrable Shares and
of printing preliminary and final prospectuses if the printing of prospectuses
is requested by the Holders or the managing underwriter, if any), (iv)
messenger, telephone and delivery expenses, (v) fees and disbursements of
counsel for the Company, (vi) fees and disbursements of all independent
certified public accountants of the Company (including expenses of any "cold
comfort" letters required in connection with this Agreement) and all other
persons retained by the Company in connection with this Agreement and the
Registration Statement, (vii) all other costs, fees and expenses incident to the
Company's performance or compliance with this Agreement (excluding the Company's
internal direct and indirect expenses, any expenses which the Company would
otherwise incur, including the costs of its financial and other reporting under
the Exchange Act and filings made on its own behalf under the Securities Act,
any amounts payable by the Company on behalf of other sellers pursuant to other
registration rights agreements or otherwise, and discounts, commissions and
brokers' fees or fees of similar securities industry professionals and any
transfer taxes payable by the Company, which shall be borne by the Company),
shall be borne by the Holders and, if applicable, the Company, pro rata (based
on the number of Registrable Shares sold by such Holders in such offering as a
percentage of the total number of shares sold in the offering). The fees and
expenses of any persons retained by any Holder, including counsel for such
Holder, and any discounts, commissions or brokers' fees or fees of similar
securities industry professionals and any transfer
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taxes relating to the disposition of the Registrable Shares by a Holder, will be
payable by such Holder.
6. UNDERWRITING REQUIREMENTS.
(a) Subject to Section 6(b) hereof, any Holder giving a Demand
Notice shall have the right, by written notice, to request that any Demand
Registration provide for an Underwritten Offering.
(b) In the case of any Underwritten Offering pursuant to a
Demand Registration, the Company shall select the institution or institutions
that shall manage or lead such offering, with the consent of the Holders of a
majority of the Registrable Shares covered by the Demand Notice to be disposed
of in connection therewith, which consent shall not be unreasonably withheld.
In the case of any Underwritten Offering pursuant to a Piggyback Registration,
the Company shall select the institution or institutions that shall manage or
lead such offering.
7. INDEMNIFICATION.
(a) INDEMNIFICATION BY THE COMPANY. The Company shall, without
limitation as to time, indemnify and hold harmless, to the full extent permitted
by law, each Holder of Registrable Shares whose Registrable Shares are covered
by a Registration Statement or Prospectus, the officers, directors and agents
and employees of each of them, each Person who controls each such Holder (within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act) and the officers, directors, agents and employees of each such controlling
person, to the fullest extent lawful, from and against any and all losses,
claims, damages, liabilities, judgment, costs (including, without limitation,
costs of preparation and reasonable attorneys' fees) and expenses (collectively,
"LOSSES"), as incurred, arising out of or based upon any untrue or alleged
untrue statement of a material fact contained in such Registration Statement or
Prospectus or in any amendment or supplement thereto or in any preliminary
prospectus, or arising out of or based upon any omission or alleged omission of
a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as the same are based upon
information furnished in writing to the Company by or on behalf of such Holder
expressly for use therein or by any underwriter in a Demand Registration;
PROVIDED, HOWEVER, that the Company shall not be liable to any such Holder to
the extent that any such Losses arise out of or are based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
any preliminary prospectus if (i) having previously been furnished by or on
behalf of the Company with copies of the Prospectus, such Holder failed to send
or deliver a copy of the Prospectus with or prior to the delivery of written
confirmation of the sale of Registrable Shares by such Holder to the person
asserting the claim from which such Losses arise and (ii) the Prospectus would
have corrected in all material respects such untrue statement or alleged untrue
statement or such omission or alleged omission; and provided further, however,
that the Company shall not be liable in any such case to the extent that any
such Losses arise out of or are based upon an untrue statement or alleged untrue
statement or omission or alleged omission in the Prospectus, if (x) such untrue
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statement or alleged untrue statement, omission or alleged omission is corrected
in all material respects in an amendment or supplement to the Prospectus and (y)
having previously been furnished by or on behalf of the Company with copies of
the Prospectus as so amended or supplemented, such Holder thereafter fails to
deliver such Prospectus as so amended or supplemented, prior to or currently
with the sale of Registrable Shares. In connection with any Underwritten
Offering, the Company will also indemnify underwriters, selling brokers, dealer
managers and similar securities industry professionals participating in the
distribution, their officers and directors and each Person who controls such
Persons (within the meaning of Section 15 of the Securities Act) to the same
extent as provided above with respect to indemnification of Holders of
Registrable Shares, or on such other terms as are reasonable and customary and
requested by the managing underwriter.
(b) INDEMNIFICATION BY HOLDER OF REGISTRABLE SHARES. In
connection with any Registration Statement in which a Holder is participating,
such Holder shall furnish to the Company in writing such information as the
Company reasonably requests for use in connection with such Registration
Statement or the related Prospectus and agrees to indemnify, to the full extent
permitted by law, the Company, its directors, officers, agents or employees,
each Person who controls the Company (within the meaning of Section 15 of the
Securities Act and Section 20 of the Exchange Act) and the directors, officers,
agents or employees of such controlling Persons, from and against all Losses as
incurred arising out of or based upon any untrue or alleged untrue statement of
a material fact contained in such Registration Statement or the related
Prospectus or any amendment or supplement thereto, or any preliminary
prospectus, or arising out of or based upon any omission or alleged omission of
a material fact required to be stated therein or necessary to make the
statements therein not misleading, to the extent, but only to the extent, that
such untrue or alleged untrue statement or omission or alleged omission is based
upon any information so furnished in writing by or on behalf of such Holder to
the Company expressly for use in such Registration Statement or Prospectus.
(c) If any Person shall be entitled to indemnity hereunder (an
"INDEMNIFIED PARTY"), indemnified party shall give prompt notice to the party
from which such indemnity is sought (the "INDEMNIFYING PARTY") of any claim or
of the commencement of any proceeding with respect to indemnitee party seeks
indemnification or contribution pursuant hereto; PROVIDED, HOWEVER, that the
delay or failure to so notify the indemnifying party shall not relieve the
indemnifying party from any obligation or liability except to the extent that
the indemnifying party has been prejudiced by such delay or failure. The
indemnifying party shall have the right, exercisable by giving written notice to
an indemnified party promptly after the receipt of written notice from such
indemnified party of such claim or proceeding, to assume, at the indemnifying
party's expense, the defense of any such claim or proceeding, with counsel
reasonably satisfactory to such indemnified party; PROVIDED, HOWEVER, that (i)
an indemnified party shall have the right to employ separate counsel in any such
claim or proceeding and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such indemnified party
unless: (1) the indemnifying party agrees to pay such fees and expenses; (2) the
indemnifying party fails promptly to assume the defense of such claim or
proceeding or fails to employ counsel reasonably satisfactory to such
indemnified party; or (3) the named parties to any proceeding (including
impleaded parties) include both such indemnified
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party and the indemnifying party, and such indemnified party shall have been
advised by counsel that there are likely to be one or more legal defenses
available to it that are inconsistent with those available to the indemnifying
party or that a conflict of interest is likely to exist among such indemnified
party and any other indemnified parties (in which case the indemnifying party
shall not have the right to assume the defense of such action on behalf of such
indemnified party); and (ii) subject to clause (3) above, the indemnifying party
shall not, in connection with any one such claim or proceeding or separate but
substantially similar or related claims or proceedings in the same jurisdiction,
arising out of the same general allegations or circumstances, be liable for the
fees and expenses of more than one firm of attorneys (together with appropriate
local counsel) at any time for all of the indemnified parties, or for fees and
expenses that are not reasonable. Whether or not such defense is assumed by the
indemnifying party, such indemnified party shall not be subject to any liability
for any settlement made without its consent. The indemnifying party shall not
consent to entry of any judgment or enter into any settlement that does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such indemnified party of a release, in form and substance reasonably
satisfactory to the indemnified party, from all liability in respect of such
claim or litigation for which such indemnified party would be entitled to
indemnification hereunder.
(d) CONTRIBUTION. If the indemnification provided for in this
Section 7 is unavailable to an indemnified party in respect of any Losses (other
than in accordance with its terms), then each applicable indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount paid
or payable by such indemnified party as a result of such Losses, in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party, on the one hand, and such indemnified party, on the other hand, in
connection with the actions, statements or omissions that resulted in such
Losses as well as any other relevant equitable considerations. The relative
fault of such indemnifying party, on the one hand, and indemnified party, on the
other hand, shall be determined by reference to, among other things, whether any
action in question, including any untrue statement of a material fact or
omission or alleged omission to state a material fact, has been taken by, or
relates to information supplied by, such indemnifying party or indemnified
party, and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent any such action, statement or omission. The
amount paid or payable by a party as a result of any Losses shall be deemed to
include any legal or other fees or expenses incurred by such party in connection
with any investigation or proceeding. The parties hereto agree that it would
not be just and equitable if contribution pursuant to this Section 7(d) were
determined by pro rata allocation or by any other method of allocation that does
not take account of the equitable considerations referred to in the this Section
7(d). Notwithstanding the provision of this Section 7(d), an indemnifying party
that is a Holder shall not be required to contribute any amount which is in
excess of the amount by which the total proceeds received by such Holder from
the sale of the Registrable Shares sold by such Holder (net of all underwriting
discounts and commissions) exceeds the amount of any damages that such
indemnifying party has otherwise been required to pay by reason of such untrue
or alleged untrue statement or omission or alleged omission. No person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation.
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8. RULE 144. The Company covenants that it will use all reasonable
commercial efforts to timely file the reports required to be filed by it under
the Securities Act or the Exchange Act (including but not limited to the reports
under Sections 13 and 15(d) of the Exchange Act referred to in subparagraph
(c)(1) of Rule 144 adopted by the SEC under the Securities Act) and the rules
and regulations adopted by the SEC thereunder (or if the Company is not required
to file such reports, the Company will, upon the request of any Holder of
Registrable Shares, make publicly available other information), and will take
such further action as any Holder of Registrable Shares may reasonably request,
all to the extent required from time to time to enable such Holder of
Registrable Shares to sell Registrable Shares within the exemption provided by
(i) Rule 144 under the Securities Act, as such Rule may be amended from time to
time, or (ii) any similar rule or regulation hereafter adopted by the SEC. Upon
the request of any Holder of Registrable Shares, the Company will deliver to
such Holder a written statement as to whether it has complied with such
requirements.
9. MISCELLANEOUS.
(a) TERMINATION. Section 2 of this Agreement shall terminate on
the later of 2 years after the date of this Agreement or the date when the H&F
Funds collectively own less than 2,285,000 Registrable Shares (appropriately
adjusted for stock splits, combinations, stock dividends and similar
transactions). This Agreement and the obligations of the Company and the
Holders hereunder (other than Section 7 hereof) shall terminate on the earlier
of (i) the first date on which there remains outstanding Registrable Shares
having a value (based on the closing price per share of Common Stock) of less
than $20 million and (ii) 5 years after the date of this Agreement.
(b) NOTICES. All notices, requests, demands and other
communications which are required or may be given under this Agreement shall be
in writing and shall be deemed to have been duly given when received if
personally delivered; when transmitted if transmitted by telecopy, electronic or
digital transmission method; the day after it is sent, if sent for next day
delivery to a domestic address by recognized overnight delivery service (e.g.,
Federal Express); and upon receipt, if sent by certified or registered mail,
return receipt requested. In each case, notice shall be sent to each of the
Stockholders at the address indicated below such Stockholder's name on the
signature pages hereto, and to the Company at the address indicated below:
Clear Channel Communications, Inc.
200 Concord Plaza, Suite 600
San Antonio, Texas 78216
Attention: Randall T. Mays
Telecopy: (210) 822-2299
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with a copy to:
Clear Channel Communications, Inc.
200 Concord Plaza, Suite 600
San Antonio, Texas 78216
Attention: Kenneth E. Wyker, Esq.
Telecopy: (210) 822-2299
Piper & Marbury L.L.P.
36 South Charles Street
Baltimore, Maryland 21201
Attention: R.W. Smith, Jr., Esq.
Telecopy: (410) 539-1700
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
(c) INTERPRETATION. When a reference is made in this Agreement
to Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. Headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Whenever the word "include", "includes" or "including" are used
in this Agreement, they shall be deemed to be followed by the words "without
limitation". This Agreement shall not be construed for or against either party
by reason of the authorship or alleged authorship of any provision hereof or by
reason of the status of the respective parties. All terms defined in this
Agreement in the singular shall have the same comparable meanings when used in
the plural and vice versa, unless otherwise specified.
(d) ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. This
Agreement constitutes the entire agreement and supersedes all prior agreements
and understandings, both written and oral, among the parties with respect to the
subject matter hereof and is not intended to confer upon any person other than
the parties hereto any rights or remedies hereunder.
(e) ASSIGNMENT. Neither this Agreement nor any of the rights,
interests, or obligations hereunder shall be assigned (whether by operation of
law or otherwise) by any Holder without the consent of the Company, or by the
Company without the consent of Holders of at least a majority in number of the
Registrable Shares then outstanding; provided that any Holder can assign its
rights hereunder to a Permitted Transferee or Permitted Assignee without the
consent of the Company. Subject to the preceding sentence, this Agreement will
be binding upon, inure to the benefit of and be enforceable by the parties and
their respective successors and assigns. In no event shall any transferee of
Common Stock be entitled, solely as a result of such transfer, to any of the
benefits of this Agreement or to enforce the same.
(f) GOVERNING LAW. This Agreement shall be construed,
interpreted and the rights of the parties determined in accordance with the laws
of the State of Delaware (without reference to the choice of law provisions),
except with respect to matters of law
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concerning the internal corporate affairs of any corporate entity which is a
party to or the subject of this Agreement, and as to those matters the law of
the jurisdiction under which the respective entity derives its powers shall
govern.
(g) SEVERABILITY. Each party agrees that, should any court or
other competent authority hold any provision of this Agreement or part hereof to
be null, void or unenforceable, or order any party to take any action
inconsistent herewith or not to take an action consistent herewith or required
hereby, the validity, legality and enforceability of the remaining provisions
and obligations contained or set forth herein shall not in any way be affected
or impaired thereby. Upon any such holding that any provision of this Agreement
is null, void or unenforceable, the parties will negotiate in good faith to
modify this Agreement so as to effect the original intent of the parties as
closely as possible in an acceptable manner to the end that the transactions
contemplated by this Agreement are consummated to the extent possible. Except
as otherwise contemplated by this Agreement, to the extent that a party hereto
took an action inconsistent herewith or failed to take action consistent
herewith or required hereby pursuant to an order or judgment of a court or other
competent authority, such party shall incur no liability or obligation unless
such party did not in good faith seek to resist or object to the imposition or
entering of such order or judgment.
(h) INJUNCTIVE RELIEF. The parties acknowledge that it will be
impossible to measure in money the damages that would be suffered if the parties
fail to comply with any of the obligations herein imposed on them and that in
the event of any such failure, an aggrieved person or entity will be irreparably
damaged and will not have an adequate remedy at law. Any such person or entity
shall, therefore, be entitled to injunctive relief, including specific
performance, to enforce such obligations, and if any action should be brought in
equity to enforce any of the provisions of this Agreement, none of the parties
shall raise the defense that there is an adequate remedy at law.
(i) ATTORNEYS' FEES. If any party to this Agreement brings an
action to enforce its rights under this Agreement, the prevailing party shall be
entitled to recover its costs and expenses, including without limitation
reasonable attorneys' fees, incurred in connection with such action, including
any appeal of such action.
(j) CUMULATIVE REMEDIES. All rights and remedies of any party
hereto are cumulative of each other and of every other right or remedy such
party may otherwise have at law or in equity, and the exercise of one or more
rights or remedies shall not prejudice or impair the concurrent or subsequent
exercise of other rights or remedies.
(k) COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same instrument and
shall become effective when executed and delivered by each of the parties.
(l) AMENDMENTS AND WAIVERS. Except as otherwise provided
herein, the provisions of this Agreement may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the Company has
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obtained the written consent of Holders of at least a majority in number of the
Registrable Shares then outstanding, or the Holders have obtained the written
consent of the Company.
(m) OTHER AGREEMENTS. The Company shall not enter into any
registration rights agreements which are in conflict with the provisions of this
Agreement.
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first above written.
CLEAR CHANNEL COMMUNICATIONS, INC.
By: ________________________
Name:
Title:
STOCKHOLDERS:
[To Come]
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EXHIBIT 7(4)
FORM OF
ESCROW AGREEMENT
THIS ESCROW AGREEMENT, dated as of this ____ day of ________, 1997
(this "AGREEMENT"), is by and among Clear Channel Communications, Inc., a Texas
corporation ("PURCHASER"), Paul J. Meyer, as stockholder representative (the
"STOCKHOLDER REPRESENTATIVE"), and ______________________, as escrow agent, a
national banking association with its office at _______________________ (the
"ESCROW AGENT").
RECITALS
A. Concurrently with the execution and delivery hereof, Purchaser is
acquiring all of the issued and outstanding shares of capital stock of Eller
Media Corporation, a Delaware corporation (the "COMPANY"), pursuant to a Stock
Purchase Agreement, dated as of February 25, 1997 (the "STOCK PURCHASE
AGREEMENT"), by and among Purchaser, the Company and those persons listed on
EXHIBIT A thereto (individually, including both option holders and stockholders
as identified on such exhibit, each a "STOCKHOLDER" and collectively, the
"STOCKHOLDERS").
B. Purchaser and the Stockholders desire to set aside a portion of
the consideration to be paid to the Stockholders pursuant to Section 2(b) of the
Stock Purchase Agreement, for the purpose of providing Purchaser with a remedy
in the event of a breach by the Company or the Stockholders of the
representations, warranties and covenants made in the Stock Purchase Agreement.
C. Purchaser and the holders of Company Stock Options (as defined in
the Stock Purchase Agreement) which have not been exercised on or prior to the
Closing Date (as defined in the Stock Purchase Agreement) desire to set aside a
portion of the Purchaser Common Stock (as defined in the Stock Purchase
Agreement) to be delivered to holders of Restated Options (as defined in the
Stock Purchase Agreement) upon exercise of such Restated Options pursuant to the
Option Assumption Agreements (as defined in the Stock Purchase Agreement), for
the purpose of providing Purchaser with a remedy in the event of a breach by the
Company or the Stockholders of the representations, warranties and covenants
made in the Stock Purchase Agreement.
D. A material condition to the consummation of the transactions
contemplated by the Stock Purchase Agreement is that the parties hereto enter
into this Agreement.
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AGREEMENT
NOW THEREFORE, in consideration of the mutual covenants and premises
contained herein and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
1. DEFINITIONS. Except as hereinafter defined, capitalized terms used in
this Agreement will have the meanings assigned to such terms in the Stock
Purchase Agreement.
"AVERAGE DISBURSEMENT SHARE PRICE" shall mean the average closing
price of Purchaser Common Stock on the NYSE during the 10 trading days beginning
13 trading days prior to the date of any disbursement of Escrowed Funds pursuant
to this Agreement.
"CLAIM" shall mean a claim for Damages incurred by Purchaser pursuant
to Section 12 of the Stock Purchase Agreement.
"CLAIM DATE" shall have the meaning set forth in Section 5 hereof.
"CLAIM EXPIRATION TIME" shall mean the first anniversary of the date
hereof.
"CLAIM NOTICE" shall have the meaning set forth in Section 5 hereof.
"COMPANY" shall have the meaning set forth in Recital A hereof.
"DAMAGE AMOUNT" shall have the meaning set forth in Section 5 hereof.
"ESCROW AGENT" shall have the meaning set forth in the heading hereof.
"ESCROW AMOUNT" shall mean $35 million.
"ESCROWED FUNDS" shall have the meaning set forth in Section 4 hereof.
"ESCROWED SHARES" shall have the meaning set forth in Section 3
hereof.
"FINAL INSTRUCTION" shall have the meaning set forth in Section 6
hereof.
"HOLDERS" shall mean the Stockholders, together with the holders of
Company Stock Options which have not been exercised on or prior to the Closing
Date.
"INDEMNIFIABLE AMOUNT" shall mean those amounts for which Purchaser is
entitled to indemnity pursuant to Section 12(a) of the Stock Purchase Agreement.
"NON-ESCROWED SHARES" shall mean a number of shares of Purchaser
Common Stock equal to the Escrow Amount divided by the Average Share Price
multiplied by the percentages with respect to the Optionees who will receive
Restated Options as set forth on EXHIBIT F to the Stock Purchase Agreement.
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"NUMBER OF FULLY DILUTED SHARES" shall mean, at the time of
determination, the sum of the following number of shares: (i) the number of
shares of Company Common Stock outstanding plus (ii) the number of shares of
Company Common Stock for which Company Stock Options issued and outstanding are
exercisable pursuant to the terms of such Company Stock Options.
"PURCHASER" shall have the meaning set forth in the heading hereof.
"PURCHASER NET CLAIM" shall have the meaning set forth in Section 5
hereof.
"STOCKHOLDER REPRESENTATIVE" shall have the meaning set forth in the
heading hereof.
"STOCKHOLDER" or "STOCKHOLDERS" shall have the meaning set forth in
Recital A hereof.
"STOCK PURCHASE AGREEMENT" shall have the meaning set forth in Recital
A hereof.
"TOTAL SHARES AVAILABLE" shall mean the sum of the Non-Escrowed Shares
plus the Escrowed Shares.
2. APPOINTMENT OF ESCROW AGENT. Purchaser and the Stockholder
Representative hereby designate and appoint ______________________ as Escrow
Agent for the purposes set forth herein and the Escrow Agent hereby accepts such
appointment on the terms herein provided.
3. DEPOSIT OF ESCROWED SHARES.
(a) Subject to Section 8 hereof, simultaneously with the execution
and delivery of this Agreement, Purchaser shall deliver to the Escrow Agent one
or more certificates in the name of the Escrow Agent representing a number of
shares of Purchaser Common Stock equal to the Escrow Amount divided by the
Average Share Price multiplied by the percentages with respect to the
Stockholders (including the Optionees who will not receive Restated Options) as
set forth on EXHIBIT F to the Stock Purchase Agreement (the "ESCROWED SHARES").
Upon receipt of the Escrowed Shares, the duties and obligations of each of the
parties to this Agreement will commence.
(b) If, prior to the termination of this Agreement, any Restated
Options are exercised in full or in part, a number of shares of Purchaser Common
Stock issuable upon such exercise equal to (i) the number of shares of Purchaser
Common Stock issuable upon such exercise, multiplied by (ii) the Escrow Amount,
divided by (iii) the Number of Fully Diluted Shares, divided by (iv) the Average
Disbursement Share Price, shall be delivered to the Escrow Agent and registered
in the name of the Escrow Agent, and such shares shall become and thereafter be
treated as and included with the term "ESCROWED SHARES" hereunder.
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4. MAINTENANCE OF ESCROW.
(a) The Escrow Agent shall hold the Escrowed Shares in escrow, and
shall maintain and disburse the Escrowed Shares, pursuant to this Agreement.
(b) All stock splits or dividends payable in stock or other
securities of Purchaser that are made by Purchaser with respect to the Escrowed
Shares while such shares are held by the Escrow Agent, shall be registered in
the name of the Escrow Agent, deposited in escrow and governed by this
Agreement. The Escrowed Shares, such stock or other dividends deposited in
escrow and any cash in lieu of fractional shares of Purchaser Common Stock are
collectively referred to in this Agreement as the "ESCROWED FUNDS." All other
dividends or distributions made by Purchaser with respect to the Escrowed Shares
while such shares are held by the Escrow Agent shall be delivered to the Holders
pro rata in accordance with their respective ownership of Escrowed Shares at the
time of such distribution, and such dividends or distributions shall be made to
each such Holder at the same time such dividends or distributions are paid or
delivered to holders of Purchaser Common Stock.
5. PURCHASER'S RIGHT TO ASSERT CLAIM TO ESCROWED FUNDS. Purchaser shall
have the right to make one or more Claims on or prior to the Claim Expiration
Time by delivering a notice of such Claim (a "CLAIM NOTICE") to the Stockholder
Representative and the Escrow Agent prior to such time (the date of such notice,
the "CLAIM DATE"). If Purchaser asserts a Claim, such Claim Notice shall state
with particularity (i) the basis for the Claim, together with sufficient facts
relating thereto so that the Stockholder Representative may reasonably evaluate
such Claim, (ii) Purchaser's estimate of the amount that equals the aggregate
amount of such Indemnifiable Amount (the "DAMAGE AMOUNT"), (iii) Purchaser's
estimate of the amount (the "PURCHASER NET CLAIM") that equals (A) the Damage
Amount multiplied by (B) the aggregate number of Escrowed Shares (including any
shares added to Escrowed Shares pursuant to Section 3(b) above) divided by (C)
the aggregate number of Total Shares Available, and (iv) a calculation of the
number of Escrowed Shares to be disbursed from the Escrow Funds in connection
with such Purchaser Net Claim (for purposes of such calculation, each share of
Purchaser Common Stock shall be valued at the Average Disbursement Share Price).
6. DETERMINATION OF VALID PURCHASER NET CLAIM; FINAL INSTRUCTION. For
purposes of this Agreement, a "FINAL INSTRUCTION" shall mean a written notice
given to the Escrow Agent directing the disbursement of the amount of the
Purchaser Net Claim (which had previously been set forth in a Claim Notice
properly delivered in accordance with the provisions of Section 5 hereof), and
shall be signed both by Purchaser and by the Stockholder Representative except
as otherwise provided below in clause (b) or (d). A Final Instruction shall be
delivered to the Escrow Agent under the following circumstances, and accompanied
by the indicated documentation:
(a) If the Stockholder Representative disputes either the validity,
amount or calculation of the Claim and/or the Purchaser Net Claim, the
Stockholder Representative shall give written notice of such dispute to
Purchaser, with a copy to the Escrow Agent, within twenty (20) Business Days
after the delivery of the Claim Notice by Purchaser to the Stockholder
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Representative. In such circumstances, no Final Instruction may be given to the
Escrow Agent except as provided in (c) or (d) below.
(b) If the Stockholder Representative fails to respond to the Claim
Notice within twenty (20) Business Days after the delivery to the Stockholder
Representative and the Escrow Agent of the Claim Notice, or if the Stockholder
Representative notifies the Escrow Agent that there is no dispute with respect
to the Claim and the Purchaser Net Claim, Purchaser shall have the right to
deliver to the Escrow Agent a Final Instruction, signed only by Purchaser, with
respect to the Claim and the Purchaser Net Claim.
(c) If the Stockholder Representative and Purchaser reach an
agreement with respect to the proper determination of the Claim and the
Purchaser Net Claim, the Stockholder Representative and Purchaser shall give to
the Escrow Agent a Final Instruction, signed by both the Stockholder
Representative and Purchaser, with respect to the Claim and the Purchaser Net
Claim.
(d) If the Stockholder Representative and Purchaser are unable to
reach an agreement with respect to the proper determination of the Claim and/or
the Purchaser Net Claim, the disputed Claim and/or Purchaser Net Claim shall be
submitted by Purchaser and the Stockholder Representative to court action to be
conducted New Castle County, State of Delaware, as provided in Section 20 of the
Stock Purchase Agreement. Upon final, non-appealable resolution of such
disputed Claim and/or the Purchaser Net Claim, either the Stockholder
Representative or Purchaser shall have the right to deliver to the Escrow Agent
a Final Instruction with respect to the Claim and the Purchaser Net Claim based
on and in compliance with the resolution of such court action, signed only by
the Stockholder Representative or by Purchaser, as the case may be, and
accompanied by a copy of any judgment or other court order with respect thereto.
Subject to Section 8 hereof, upon receipt of a Final Instruction in
accordance with this Section, the Escrow Agent shall disburse to Purchaser from
the Escrowed Funds such number of shares of Purchaser Common Stock as shall
equal the Purchaser Net Claim based on the valuation procedures set forth in
Section 9 hereof and shall distribute the remaining Escrowed Funds in accordance
with Section 7 hereof. Notwithstanding anything to the contrary in the
foregoing, in no event shall the Escrow Agent distribute any portion of the
Escrowed Funds with respect to any Claim Notice received by the Escrow Agent
after the Claim Expiration Time.
7. DISTRIBUTION OF ESCROWED FUNDS. Subject to Section 8 hereof, if
Purchaser fails to make a Claim on or prior to the Claim Expiration Time in
accordance with Section 5 hereof, then as promptly as practicable thereafter
(and in no event later than ten (10) Business Days following the Claim
Expiration Time), the Escrow Agent shall deliver the Escrowed Shares with all
other Escrowed Funds relating to such Escrowed Shares to the Holders pro rata in
accordance with their respective ownership of Escrowed Shares at the time of
such distribution. If Purchaser timely makes a Claim or Claims and if at or
after the expiration of the Claim Expiration Time, such Purchaser Net Claim or
Purchaser Net Claims (whether or not in dispute) aggregate less than the
remaining amount of the Escrowed Funds, then, subject to Section 8
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hereof, the Escrow Agent shall deliver such remaining amount of Escrowed
Funds (less 110% of the amount of such Purchaser Net Claim or Purchaser Net
Claims) to the Holders pro rata in accordance with their respective ownership
of Escrowed Shares at the time of such distribution. If, however, Purchaser
timely makes a Claim or Claims in accordance with Section 5 hereof and if at
the expiration of the Claim Expiration Time, such Claim or Claims (whether or
not in dispute) aggregate more than the remaining amount of the Escrowed
Funds, then, subject to Section 8 hereof, only upon the Escrow Agent's
receipt of a Final Instruction shall the Escrow Agent deliver that portion of
the Escrowed Funds to Purchaser that is set forth in such Final Instruction
and then deliver any remaining portion of the Escrowed Funds to the Holders
pro rata in accordance with their respective ownership of Escrowed Shares at
the time of such distribution.
8. ADJUSTMENT OF RESTATED OPTIONS. Notwithstanding any provision herein
to the contrary, no actual deposit shall be made of shares of Purchaser Common
Stock subject to Restated Options (other than as contemplated by Section 3(b)
hereof), and the Optionees' share of any Damage Amount shall be effected by a
reduction in the appropriate number of shares of Purchaser Common Stock
(determined pursuant to EXHIBIT F of the Stock Purchase Agreement) that are
subject to such Restated Options after the Closing Date in such manner so as to
insure that the Optionees bear their share of the Damage Amount in accordance
with the percentages set forth on EXHIBIT F to the Stock Purchase Agreement.
9. VALUATION OF ESCROWED SHARES; FRACTIONAL SHARES. For purposes of
determining the number of Escrowed Shares to be disbursed from the Escrow Funds
under this Agreement with respect to a Purchaser Net Claim, each share of
Purchaser Common Stock shall be valued at the Average Disbursement Share Price
and fractional shares shall be rounded to the nearest whole number.
10. RELIANCE BY ESCROW AGENT; LIABILITY OF ESCROW AGENT. The Escrow Agent
shall be protected in acting upon any written notice, request, waiver, consent,
certificate, receipt, authorization or other paper or document that the Escrow
Agent believes to be genuine and what it purports to be. The Escrow Agent may
confer with its own corporate or outside legal counsel in the event of any
dispute or question as to the construction of any of the provisions hereof, or
its duties hereunder, and shall incur no liability and shall be fully protected
in acting in accordance with the written opinions of such counsel. The duties
of the Escrow Agent hereunder will be limited to the observance of the express
provisions of this Agreement. The Escrow Agent will not be subject to, or be
obliged to recognize, any other agreement between the parties hereto or
directions or instructions not specifically set forth as provided for herein.
The Escrow Agent will not make any payment or disbursement from or out of the
Escrow Funds that is not expressly authorized pursuant to this Agreement. The
Escrow Agent may rely upon and act upon any instrument received by it pursuant
to the provisions of this Agreement that it reasonably believes to be genuine
and in conformity with the requirements of this Agreement. The Escrow Agent
undertakes to use the same degree of care and skill in performing its services
hereunder as an ordinary prudent person would do or use under the circumstances
in the conduct of his or her own affairs. The Escrow Agent will not be liable
for any action taken or not taken by it under the terms hereof in the absence of
breach of its obligations hereunder or gross negligence or willful misconduct on
its part.
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11. INDEMNIFICATION OF ESCROW AGENT. Purchaser, and the one hand, and the
Stockholders collectively, on the other, will indemnify and hold the Escrow
Agent harmless from and against any and all losses, costs, damages or expenses
(including, but not limited to, reasonable attorneys' fees) it may sustain by
reason of its service as Escrow Agent hereunder, and except such losses, costs,
damages or expenses (including, but not limited to, reasonable attorneys' fees)
incurred by reason of such acts or omissions for which the Escrow Agent is
liable or responsible under the last sentence of Section 10 hereof. Any
indemnification amounts payable pursuant to this Section 11 shall be paid
one-half by the Purchaser, on the one hand, and one-half by the Stockholders
collectively, on the other.
12. STOCKHOLDER REPRESENTATIVE; SUCCESSOR STOCKHOLDER REPRESENTATIVE.
(a) The Holders have made, constituted and appointed the Stockholder
Representative as their agent and authorized and empowered him to fulfill the
role of Stockholder Representative hereunder. In the event of the resignation
of the Stockholder Representative, the resigning Stockholder Representative
shall appoint a successor either from among the Stockholders or who shall
otherwise be acceptable to Purchaser and who shall agree in writing to accept
such appointment, and the resigning Stockholder Representative's resignation
shall not be effective until such a successor shall exist. The Holders entitled
to receive a majority of the Escrowed Shares may remove the Stockholder
Representative at any time. If a Stockholder Representative should die or
become incapacitated or be removed by the Holders pursuant to this Section 12,
his successor shall be appointed within 21 days of his death or incapacity by
the remaining Holders entitled to receive a majority of the Escrowed Shares, and
such successor either shall be a Stockholder or shall otherwise be acceptable to
Purchaser. If the Holders fail to appoint a successor within such 21-day
period, then Purchaser shall have the right to appoint the successor from among
the Stockholders. The choice of a successor Stockholder Representative
appointed in any manner permitted above shall be final and binding upon all of
the Holders. The decisions and actions of any successor Stockholder
Representative shall be, for all purposes, those of a Stockholder Representative
as if originally named herein.
(b) Each Holder has made, constituted and appointed the Stockholder
Representative as such person's true and lawful attorney in fact and agent, for
such person and in such person's name, (i) to receive all notices and
communications directed to such Holder under this Agreement and the Stock
Purchase Agreement, (ii) to execute and deliver any and all documents required
to be executed and delivered by such Holder pursuant to this Agreement in order
to effect the transactions contemplated hereby, and (iii) to execute and deliver
all instruments and documents of every kind incident to the foregoing to all
intents and purposes and with the same effect as such Holder could do
personally. Notwithstanding the foregoing, except with respect to
administrative and other ministerial tasks, the Stockholder Representative is
required and entitled to act only at the written direction of Holders entitled
to receive a majority of the Escrowed Shares.
(c) It is acknowledged by the Holders appointing the Stockholder
Representative that the designation of the Stockholder Representative as
attorney-in-fact is coupled with an interest and is binding upon such Holders
notwithstanding the death, incapacity or dissolution of any such Holder. If any
such event shall occur prior to the completion of the
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transactions contemplated by this Agreement, the Stockholder Representative is,
nevertheless, to the extent that he is legally able to do so, authorized and
directed to complete all transactions and act pursuant to this authority as if
such event had not occurred. Purchaser is entitled to deal solely with the
Stockholder Representative in connection with this Agreement and is entitled to
rely upon the provisions hereof and the authority granted to the Stockholder
Representative to act on behalf of the Holders.
(d) The Stockholder Representative's acceptance of his duties under
this Agreement is subject to the following terms and conditions, which the
parties hereto agree shall govern and control with respect to his rights,
duties, liabilities and immunities as Stockholder Representative (but not in his
capacity as a Stockholder or as an officer, director, or employee of the
Company):
(i) The Stockholder Representative makes no representation and
has no responsibility as to the validity of this Agreement or of any other
instrument referred to herein, or as to the correctness of any statement
contained herein, and he shall not be required to inquire as to the performance
of any obligation under this Agreement.
(ii) The Stockholder Representative shall be protected in
acting upon written notice, request, waiver, consent, receipt or other paper or
document, not only as to its due execution and the validity and effectiveness of
its provisions, but also as to the truth of any information therein contained,
which he in good faith believes to be genuine and what it purports to be.
(iii) The Stockholder Representative shall not be liable for any
error of judgment, or for any act done or step taken or omitted by him in good
faith, or for any mistake of fact or law, or for anything which he may do or
refrain from doing in connection therewith, except his own gross negligence or
willful misconduct.
(iv) The Stockholder Representative may consult with competent
and responsible legal counsel selected by him, and he shall not be liable for
any action taken or omitted by him in good faith in accordance with the advice
of such counsel.
(v) The Holders shall bear pro rata all expenses (including
transfer taxes and other governmental charges) incurred by the Stockholder
Representative in connection with his duties hereunder and shall indemnify him
against and save him harmless from any and all claims, liabilities, costs,
payments and expenses, including fees of counsel (who may be selected by the
Stockholder Representative), for anything done or omitted by him in the
performance of this Agreement or the Stock Purchase Agreement, except as a
result of his own gross negligence or willful misconduct.
(vi) The Stockholder Representative shall have no duties or
responsibilities except those expressly set forth herein and in the Stock
Purchase Agreement. He shall not be bound by any modification of this Agreement
or the Stock Purchase Agreement unless in writing and signed by the other
parties hereto or thereto and if his duties as
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Stockholder Representative hereunder or thereunder are affected, unless he shall
have given prior written consent thereto.
13. FEES AND EXPENSES OF THE ESCROW AGENT. All fees of the Escrow Agent
for its services hereunder, together with any expenses reasonably incurred by
the Escrow Agent in connection with this Agreement, shall be paid one-half by
Purchaser, on the one hand, and one-half by the Stockholders collectively, on
the other.
14. RESIGNATION OF ESCROW AGENT. The Escrow Agent may resign from its
duties hereunder by giving each of the parties hereto not less than sixty
(60) days prior written notice of the effective date of such resignation (which
effective date shall be at least sixty (60) days after the date such notice is
given). The parties hereto intend that a substitute Escrow Agent will be
appointed by mutual agreement of Purchaser and the Stockholder Representative to
fulfill the duties of the Escrow Agent hereunder for the remaining term of this
Agreement in the event of the Escrow Agent's resignation. If on or before the
effective date of such resignation, a substitute Escrow Agent has not been
appointed, the Escrow Agent will thereupon deposit the Escrowed Funds into the
registry of a court of competent jurisdiction.
15. DESIGNEES FOR INSTRUCTIONS. Purchaser, may, by notice to the Escrow
Agent, designate one or more persons who will execute notices and from whom the
Escrow Agent may take instructions hereunder. Such designations may be changed
from time to time upon notice to the Escrow Agent from Purchaser. The Escrow
Agent will be entitled to rely conclusively on any notices or instructions from
any person so designated by Purchaser.
16. INSPECTION. All property held as part of the escrow shall at all
times be clearly identified as being held by the Escrow Agent hereunder. Any
party hereto may at any time during the Escrow Agent's business hours (with
reasonable notice) inspect any records or reports relating to the Escrowed
Funds.
17. VOTING OF ESCROWED SHARES. With respect to any matter on which the
Escrowed Shares or any other shares of Purchaser Common Stock in the Escrowed
Funds are entitled to vote, the Escrow Agent shall seek voting instructions from
the Holders. With respect to Holders who timely provide such instruction, the
Escrow Agent shall vote the Escrowed Shares that would be distributed to such
Holders (assuming no Claim is made) in accordance with the instructions received
by such Holders, but shall not otherwise vote such shares.
18. NOTICES. All notices, requests, demands and other communications
which are required or may be given under this Agreement shall be in writing and
shall be deemed to have been duly given when received if personally delivered;
when transmitted if transmitted by telecopy, electronic or digital transmission
method; the day after it is sent, if sent for next day delivery to a domestic
address by recognized overnight delivery service (E.G., Federal Express); and
upon receipt, if sent by certified or registered mail, return receipt requested.
Notwithstanding the foregoing, a Claim Notice delivered pursuant to Section 5
hereof and a Final Instruction provided pursuant to Section 6 hereof shall be
deemed to have been duly given only if delivered personally, by recognized
overnight delivery or by certified or registered mail
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and if receipt of such Claim Notice or such Final Instruction, as the case may
be, was acknowledged in writing. In each case notice shall be sent to:
(a) If to Purchaser: Clear Channel Communications, Inc.
200 Concord Plaza, Suite 600
San Antonio, Texas 78216
Attention: Randall T. Mays
Telecopy: (210) 822-2299
with a copy to: Clear Channel Communications, Inc.
200 Concord Plaza, Suite 600
San Antonio, Texas 78216
Attention: Kenneth E. Wyker, Esq.
Telecopy: (210) 822-2299
Piper & Marbury L.L.P.
36 South Charles Street
Baltimore, Maryland 21201
Attention: R.W. Smith, Jr., Esq.
Telecopy: (410) 576-1700
(b) If to the Stockholder Representative:
Paul J. Meyer, Esq.
c/o Eller Media Corporation
2850 East Camelback Road, Suite 300
Phoenix, Arizona 85016
Telecopy: 602-381-5740
with a copy to: H & F Investors III, Inc.
One Maritime Plaza, 12th Floor
San Francisco, California 94111
Attention: John L. Bunce, Jr.
Telecopy: (415) 788-0176
Heller, Ehrman, White & McAuliffe
333 Bush Street
San Francisco, California 94104
Attention: Paul J. Mundie, Esq.
Telecopy: (415) 772-6168
Latham & Watkins
633 West Fifth Street, Suite 4000
Los Angeles, California 90071-2007
Attention: Thomas W. Dobson, Esq.
Telecopy: (213) 891-8763
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(c) If to the Escrow Agent:____________________________________
____________________________________
____________________________________
or to such other place and with such other copies as either party may designate
as to itself by written notice to the others.
19. ASSIGNMENT; BINDING EFFECT. Neither this Agreement nor any of the
rights or obligations hereunder may be assigned by any party without the prior
written consent of the other parties. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns.
20. AMENDMENT AND TERMINATION. This Agreement may be amended or modified
by and upon written notice to the Escrow Agent given jointly by Purchaser and
the Stockholder Representative, but the duties and responsibilities of the
Escrow Agent may not be increased without its written consent. This Agreement
will terminate on the date on which all the Escrowed Funds have been distributed
in accordance with the terms set forth herein.
21. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
22. SEVERABILITY AND FURTHER ASSURANCES. This Agreement constitutes the
entire agreement among the parties and supersedes all prior and contemporaneous
agreements and undertakings on the parties in connection herewith. No failure
or delay of the Escrow Agent in exercising any right, power or remedy may be, or
may be deemed to be, a waiver thereof; nor may any single or partial exercise of
any right, power or remedy preclude any other or further exercise of any right,
power or remedy. In the event that any one or more of the provisions contained
in this Agreement, shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, then to the maximum extent permitted by law, such
invalidity, illegality or unenforceability shall not affect any other provision
of this Agreement. Each of the parties hereto shall, at the request of the
other party, deliver to the requesting party all further documents or other
assurances as may reasonably be necessary or desirable in connection with this
Agreement.
23. TITLES. The titles, captions or headings of the Sections herein are
for convenience of reference only and are not intended to be a part of or to
affect the meaning or interpretation of this Agreement.
24. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with the laws of the State of Delaware without regard to the
principles of conflicts of laws.
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25. TAX REPORTING. Unless otherwise required by Treasury Regulations
issued in the future, the parties will treat the Escrowed Shares and any other
shares of Purchaser Common Stock deposited with the Escrow Agent hereunder for
purposes of Section 468B(g) of the Internal Revenue Code of 1986, as amended,
and for all other income tax purposes as being owned by the Holders during the
period such shares are held in escrow, and therefore any income earned on such
shares during such period will be allocated and reported to the Holders as such
income is earned. The parties will make any elections or filings required to
characterize such shares in a manner consistent with the preceding sentence.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have executed this Escrow
Agreement as of the date first written above.
CLEAR CHANNEL COMMUNICATIONS, INC.
By
-----------------------
Name:
Title:
-------------------------
Paul J. Meyer
ESCROW AGENT
By
-----------------------
Name:
Title:
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