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MERGER AGREEMENT
CHANCELLOR BROADCASTING COMPANY
EVERGREEN MEDIA CORPORATION
▇▇▇▇▇▇ ACQUISITION CORPORATION
AND
▇▇▇▇ MEDIA GROUP, INC.
JULY 14, 1997
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MERGER AGREEMENT
THIS MERGER AGREEMENT (this "Agreement") is entered into as of July 14,
1997 by and among: Chancellor Broadcasting Company, a Delaware corporation
("Chancellor"); Evergreen Media Corporation, a Delaware corporation
("Evergreen") (each of Chancellor and Evergreen, a "Parent" and collectively
"Parents"); ▇▇▇▇▇▇ Acquisition Corporation, a Delaware corporation jointly
owned by Chancellor and Evergreen ("Merger Sub"); and ▇▇▇▇ Media Group, Inc., a
Delaware corporation (the "Company").
RECITALS
Acquisition and Merger. The Boards of Directors of each Parent, Merger Sub
and the Company have determined that it is in the best interest of their
respective companies and their stockholders to consummate the business
transactions contemplated herein. In order to effectuate such transaction, (i)
Parents have organized Merger Sub as a jointly owned subsidiary to make a
tender offer to purchase the Common Stock of the Company and (ii) the parties
have agreed, subject to the terms and conditions set forth in this Agreement,
to merge Merger Sub with and into the Company so that the Company continues as
the surviving corporation and becomes a jointly owned subsidiary of each of
Parents.
Definitions. Capitalized terms not defined in text are used as defined in
Section 8.1 hereof.
TERMS OF AGREEMENT
In consideration of the mutual representations, warranties, covenants and
agreements contained herein, the parties hereto agree as follows:
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ARTICLE I
THE OFFER; THE MERGER; CLOSING
1.1. THE OFFER.
(a) Provided that this Agreement shall not have been terminated
in accordance with Section 9.1 hereof and that none of the
events set forth in Annex 1 hereto shall have occurred or be
existing, as promptly as practicable, but in any event within
five business days of the date of this Agreement, Merger Sub
shall, and Parents shall cause Merger Sub to, commence an
offer (the "Offer") to purchase for cash all shares of the
issued and outstanding shares of Common Stock, par value $.01
per share (the "Common Stock") of the Company at a price of
$11.00 per share in cash (the "Offer Price"). The obligations
of Merger Sub to accept for payment and to pay for any shares
of Common Stock validly tendered and not withdrawn shall be
subject only to the conditions set forth on Annex 1 hereto
(the "Tender Offer Conditions").
Without the written consent of the Company, prior to
termination of this Agreement, Merger Sub shall not terminate
the Offer, decrease the Offer Price, decrease the number of
shares of Common Stock being sought in the Offer, change the
form of consideration payable in the Offer (other than by
adding consideration), add additional conditions to the
Offer, or make any other change in the terms or conditions of
the Offer which is adverse to the holders of shares of Common
Stock, it being agreed that neither a waiver by Merger Sub of
any Tender Offer Condition (other than the Minimum Condition
(as defined in Annex 1 hereto)) in whole or in part at any
time and from time to time in its discretion, nor the
extension of the Offer as permitted in subsection (b) below,
shall be deemed to be adverse to any holder of shares of
Common Stock. It is agreed that the conditions set forth on
Annex I are for the sole benefit of Parents and Merger Sub
and may be asserted by Parents or Merger Sub regardless of
the circumstances giving rise to any such condition or may be
waived by Parents or Merger Sub, in whole or in part at any
time and from time to time, in its sole discretion. The
failure by Parents or Merger Sub at any time to exercise any
of the foregoing rights shall not be deemed a waiver of any
such right and each such right shall be deemed an ongoing
right which may be asserted at any time and from time to
time. Any determination by Parents or Merger Sub with
respect to any of the foregoing conditions (including,
without limitation, the satisfaction of such conditions)
shall be final and binding on the parties. The Company
agrees that no shares of Common Stock held by the Company
will be tendered in the Offer.
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(b) The Offer shall be made by means of an offer to purchase and
related letter of transmittal (the "Letter of Transmittal")
(collectively, the "Offer to Purchase"). Notwithstanding the
foregoing, Merger Sub expressly reserves the right to
increase the Offer Price and extend the Offer: (i) if any of
the Tender Offer Conditions have not been satisfied, for the
period of time Merger Sub deems reasonably necessary to satisfy
such condition; and (ii) to the extent required by law. Upon
the terms and subject to the conditions of the Offer, Merger
Sub shall purchase the shares of Common Stock which are
validly tendered and not withdrawn on or prior to the
expiration of the Offer. The Offer initially shall expire at
12:00 midnight eastern standard time on the 20th business day
following the date of commencement of the Offer (such date and
time, as extended in accordance with the terms hereof, the
"Expiration Date").
(c) On the date the Offer is commenced, Merger Sub shall file with
the SEC a tender offer statement on Schedule 14D-1 (together
with all amendments and supplements thereto, the "Schedule
14D-1") with respect to the Offer. The Schedule 14D-1 shall
contain or shall incorporate by reference the Offer to Purchase
(or portions thereof) and forms of the related Letter of
Transmittal and summary advertisement, as well as all other
information and exhibits required by law. Each of Parents,
Company (solely with respect to information it has supplied)
and Merger Sub agrees promptly to correct any information in
the documents pursuant to which the Offer will be made (the
"Offer Documents") that shall be or have become false or
misleading in any material respect and each of Parents and
Merger Sub further agrees to take all steps necessary to cause
the Schedule 14D-1 as so corrected to be filed with the SEC and
the other Offer Documents as so corrected to be disseminated to
holders of the Common Stock, in each case if, as and to the
extent required by applicable federal securities laws. The
Company and its counsel shall be given an opportunity to review
the Schedule 14D-1 prior to its being filed with the SEC.
Parents and Merger Sub agree to provide the Company and its
counsel with any written comments Parents, Merger Sub or their
counsel may receive from the SEC with respect to the Offer
Documents, promptly after the receipt of such comments.
(d) The Company hereby represents and warrants that the Board of
Directors of the Company (the "Board of Directors") (at a
meeting duly called and held) has by the requisite vote of
such Board of Directors and a separate unanimous approval of
the directors of the Company who are neither employees of the
Company nor employees of any Affiliate of DLJ Merchant Banking
Partners, L.P.: (i) determined that the Offer and the Merger,
taken together, are fair to, and in the best interests of, the
holders of Common Stock; (ii) approved the Offer and the
Merger subject to the
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terms and conditions set forth herein; (iii) resolved to
recommend that the stockholders of the Company accept the
Offer and tender their shares of Common Stock thereunder to
Merger Sub and approve the Merger; (iv) approved and adopted
the Merger, this Agreement, the Stockholder Tender Agreement
(the "Stockholder Tender Agreement") and the Management Tender
Agreement (the "Management Tender Agreement"). The Company
further represents and warrants that the transactions
contemplated by this Agreement, the Stockholder Tender
Agreement and the Management Tender Agreement have been
approved for purposes of Section 203 of the General
Corporation Law of the State of Delaware (the "DGCL") and
similar provisions of any other similar state statutes that
might be deemed applicable to the transactions contemplated
hereby by the unanimous vote of all of the directors of the
Company and a separate unanimous approval of the directors of
the Company who are neither employees of the Company nor
employees of any Affiliate of DLJ Merchant Banking Partners,
L.P. The Company shall file with the SEC as soon as
practicable on the date of the commencement of the Offer, a
Solicitation/Recommendation Statement on Schedule 14D-9 (the
"Schedule 14D-9") containing the recommendations referred to
in the preceding sentence subject to the Board of Directors of
the Company concluding in good faith, based on advice of its
counsel and investment bankers, that not making such
recommendation is an action necessary in order for such Board
of Directors to comply with its fiduciary obligations under
applicable law. Parents, Merger Sub and their counsel shall
be given the opportunity to review the Schedule 14D-9 and any
amendment or supplement thereto prior to its filing with the
SEC. If at any time prior to the expiration or termination of
the Offer any event occurs which is required by applicable law
to be described in an amendment to the Schedule 14D-9 or any
supplement thereto, the Company will file and disseminate, as
required, an amendment or supplement which complies in all
material respects with the Exchange Act and the rules and
regulations thereunder and any other applicable laws. In
connection with the Offer, the Company will promptly furnish
Merger Sub with mailing labels, security position listings,
and any available listing or computer list containing the
names and addresses of the record holders of Common Stock as
of the most recent practicable date, the Company shall also
furnish Merger Sub with such additional information
(including, but not limited to, updated lists of holders of
Common Stock and their addresses, mailing labels and lists of
security positions) and such other assistance as Merger Sub or
its agents may reasonably request in communicating the Offer
to the Company's stockholders.
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1.2. COMPOSITION OF THE BOARD OF DIRECTORS.
(a) Promptly upon the acceptance for payment of, and payment by
Merger Sub, in accordance with the Offer, for shares of Common
Stock pursuant to the Offer, and from time to time thereafter
as shares of Common Stock are acquired by Merger Sub, Merger
Sub shall be entitled to designate such number of directors,
rounded up to the next whole number, but at no time prior to
the Effective Time (as hereinafter defined) more than three
fewer than the total number of directors on the Board of
Directors of the Company, equal to that number of directors
which equals the product of the total number of directors on
the Board of Directors (giving effect to the directors elected
pursuant to this sentence) multiplied by the percentage that
such number of shares of Common Stock so accepted for payment
and paid for or otherwise acquired or owned by Merger Sub or
Parents bears to the number of shares of Common Stock
outstanding. The Company shall, at such time, cause Merger
Sub's designees to be so elected.
(b) The Company's obligations to cause designees of Merger Sub to
be elected or appointed to the Board of Directors of the
Company shall be subject to Section 14(f) of the Exchange Act,
and Rule 14f-1 promulgated thereunder. The Company shall
promptly take all actions required pursuant to Section 14(f)
and Rule 14f-1 in order to fulfill its obligations under this
Section 1.2(b), and shall include in the Schedule 14D-9 such
information with respect to the Company and its officers and
directors as is required under Section 14(f) and Rule 14f-1.
Parents and Merger Sub will supply to the Company any
information with respect to any of them and their nominees,
officers, directors and affiliates required by Section 14(f)
and Rule 14f-1.
(c) After the time that Merger Sub's designees constitute at least
a majority of the Board of Directors of the Company (the
"Change in Majority Directors") and until the Effective Time,
any amendment or termination of this Agreement, extension for
the performance or waiver of the obligations or other acts of
Parents or Merger Sub or waiver of the Company's rights
hereunder shall also require the approval of a majority (or
such higher percentage as is required under the bylaws of the
Company) of the then serving directors, if any, who are
directors as of the date hereof (the "Continuing Directors").
If the number of Continuing Directors prior to the Effective
Time is reduced below three for any reason, the remaining
Continuing Directors or Director shall be entitled to designate
persons to fill such vacancies who shall be deemed Continuing
Directors for all purposes of this Agreement.
(d) Notwithstanding the forgoing, the last two directors to be
removed pursuant to this Section 1.2 shall be Messrs. Olds
and ▇▇▇▇▇.
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1.3. THE MERGER. Subject to the terms and conditions of this Agreement,
and in accordance with the DGCL, at the Effective Time, Merger Sub
will be merged with and into the Company (the "Merger"), with the
Company being the surviving corporation (the "Surviving
Corporation") in the Merger and the separate corporate existence of
Merger Sub shall cease.
1.4. CONVERSION OF SECURITIES; PAYMENT TO STOCKHOLDERS. At the
Effective Time, by virtue of the Merger and without any action on
the part of the Company, Parents or Merger Sub:
(a) Each outstanding share of Common Stock of the Company other
than Excluded Shares (as defined below) and Dissenting Shares
(as defined in Section 1.7) shall be converted into and become
the right to receive the Offer Price in cash without interest
(the "Merger Consideration"). Each share of common stock of
Merger Sub issued and outstanding at the Effective Time shall
be converted into ten (10) shares of the Surviving Corporation.
All shares of Common Stock that are owned directly or
indirectly by the Company, Parents, Merger Sub or any of the
Parents' Subsidiaries at the Effective Time (the "Excluded
Shares") shall be canceled, and no consideration shall be
delivered in exchange therefor.
(b) (i) Parents shall authorize one or more persons to act as
Paying Agent hereunder (the "Agent") to receive the funds to
which holders of shares of the Common Stock shall become
entitled hereunder.
(ii) As soon as practicable after the Effective Time, upon
surrender to the Paying Agent for cancellation of one or more
certificates representing shares of Common Stock to be
converted into the right to receive the Merger Consideration,
the Merger Consideration shall be paid with respect to such
shares in accordance with Section 1.9.
(iii) As of the Effective Time, all shares of Common Stock
issued and outstanding immediately prior to the Effective
Time, shall no longer be outstanding and shall automatically
be canceled and retired and shall cease to exist, and each
holder of a certificate representing any such shares of
Common Stock shall, to the extent such certificate represents
such shares, cease to have any rights with respect thereto,
except the right to receive the Merger Consideration in cash
in consideration therefor upon surrender of such certificate.
(iv) The Paying Agent and Parents shall be entitled to deduct
and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of Common Stock such
amounts as the Paying
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Agent, Merger Sub or Parents, as the case may be, is required
to deduct and withhold with respect to the making of such
payment under the Code, or any provision of state, local or
foreign tax law. To the extent that amounts are so withheld,
such withheld amounts shall be treated for all purposes of
this Agreement as having been paid to the holder of Common
Stock in respect of which such deduction and withholding was
made.
(v) In the event that a certificate representing Common Stock
shall have been lost, stolen or destroyed, upon the making of
an affidavit of that fact by the person claiming such
certificate to be lost, stolen or destroyed, the Paying Agent
shall issue in exchange for such lost, stolen or destroyed
certificate the cash in respect thereof. The owner of such
lost, stolen or destroyed certificate shall deliver to
Parents such indemnity as it may reasonably direct as
protection against any claim that may be made against Parents
with respect to the certificate alleged to have been lost,
stolen or destroyed.
(c) From and after the Effective Time, the stock transfer books of
the Company shall be closed and no transfer of shares of
Common Stock shall thereafter be made.
(d) Promptly following the first anniversary of the Effective
Date, the Paying Agent shall deliver to Parents the Merger
Consideration, all cash held for payment of fractional shares
and all other documents in its possession relating to the
transactions described in this Agreement, and the Paying
Agent's duties shall terminate. Notwithstanding the
foregoing, neither the Paying Agent nor any party hereto shall
be liable to a holder of Common Stock for any amount paid to a
public official pursuant to applicable abandoned property,
escheat and similar laws.
1.5. FILING OF CERTIFICATE OF MERGER. At the Closing, the parties
shall cause the Merger to be consummated by filing a duly executed
Certificate of Merger with the Secretary of State of the State of
Delaware, in such form as the Company determines is required by and
in accordance with the relevant provisions of the DGCL (the date and
time of such filing is referred to herein as the "Effective Date"
and "Effective Time" respectively).
1.6. EFFECT OF THE MERGER. At the Effective Time, the effect of
the Merger shall be as provided under the DGCL. Without limiting
the generality of the foregoing, at the Effective Time:
(a) Subject to the terms and conditions of this Agreement, at the
Effective Time, the Parents shall cause Merger Sub to merge
with and into the Company and the separate corporate existence
of Merger Sub shall thereupon cease. The Company shall be the
Surviving Corporation and
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shall, following the Merger, be governed by the laws of the
State of Delaware, and the separate corporate existence of
the Company, with all its rights, privileges, immunities,
powers and franchises, of a public as well as of a private
nature, shall continue unaffected by the Merger. From and
after the Effective Time, the Merger shall have the effects
specified in the DGCL.
(b) The Certificate of Incorporation of the Company shall be
amended at the Effective Time to read as set forth in
Exhibit A hereto, and as so amended shall be the Certificate
of Incorporation of the Surviving Company until duly amended
in accordance with the terms thereof and the DGCL.
(c) The By-Laws of Merger Sub as in effect immediately prior to
the Effective Time shall be the By-Laws of the Surviving
Corporation, until duly amended in accordance with the terms
thereof and the DGCL.
(d) At the Effective Time, the Continuing Directors shall resign
(unless requested not to do so in the case of Messrs. Olds and
▇▇▇▇▇) and the other directors of the Company immediately prior
to the Effective Time shall remain in office and be the
directors of the Surviving Corporation, each of such directors
to hold office, subject to the applicable provisions of the
Certificate of Incorporation and By-Laws of the Surviving
Corporation, until their respective successors shall be duly
elected or appointed and qualified. The officers of the
Company immediately prior to the Effective Time shall be the
initial officers of the Surviving Corporation, in each case
until their respective successors are duly elected or appointed
and qualified.
1.7. DISSENTING SHAREHOLDERS. Notwithstanding the provisions of
this Section or any other provisions of this Agreement to the
contrary, shares of Common Stock that are issued and outstanding
immediately prior to the Effective Time and that are held by persons
(collectively, the "Dissenting Stockholders") who have properly
demanded appraisal of their shares of Common Stock in accordance
with Section 262 of the DGCL (the "Dissenting Shares") shall not be
converted into the rights to receive any of the pro rata Merger
Consideration applicable to such shares at or after the Effective
Time but shall become the rights to receive such consideration as
may be determined to be due to such Dissenting Stockholder pursuant
to the laws of the State of Delaware unless and until the holder of
such Dissenting Shares shall have failed to perfect or shall have
effectively withdrawn or lost such rights to appraisals and payments
under the DGCL. If a holder of such Dissenting Shares shall have so
failed to perfect or shall have effectively withdrawn or lost such
right to appraisal and payment, then, as of the Effective Time or
the occurrence of such event, whichever last occurs, such holder's
Dissenting Shares shall be converted into and shall represent solely
the right to receive the pro rata Merger Consideration applicable to
such shares, without any interest therein, as
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provided in Section 1.4. The Company shall give Parents: (i)
prompt notice of any written demands for appraisal, withdrawals of
demands for any appraisal and any other similar demands or
instruments served pursuant to the DGCL, received by the Company;
and (ii) the opportunity to direct all negotiations and proceedings
with respect to demands for appraisal under the DGCL. The Company
will not voluntarily make any payment with respect to any demands
for appraisal and will not, except with the prior written consent
of Parents, settle or offer to settle any such demands.
1.8. THE CLOSING. Subject to the terms and conditions of this
Agreement, the consummation of the Merger, the closing of the
transactions hereunder (the "Closing") shall take place on or
before five days following the satisfaction of the conditions in
Articles VI and VII, at the offices of Akin, Gump, Strauss, ▇▇▇▇▇ &
▇▇▇▇, L.L.P. in New York, New York, or such other place and time as
Parents and the Company may otherwise agree. The date on which such
Closing occurs is herein referred to as the "Closing Date".
1.9. PROCEDURE AT THE CLOSING. At the Closing, the parties agree
that the following shall occur:
(a) The Company shall have satisfied each of the
conditions set forth in Article VI and shall deliver to
Parents the documents, certificates, opinions, consents and
letters required by Article VI.
(b) Parents and Merger Sub shall have satisfied each
of the conditions set forth in Article VII and shall deliver
to the Company the documents, certificates, consents and
letters required by Article VII.
(c) The Merger Consideration shall be paid.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
As a material inducement to Parents and Merger Sub to enter into this
Agreement and to consummate the transactions contemplated hereby, the Company
makes the following representations and warranties to Parents and Merger Sub:
2.1. CORPORATE STATUS; SUBSIDIARIES.
(a) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware,
and has the
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requisite power and authority to own or lease its properties
and to carry on its business as presently conducted. The
Company is legally qualified to do business as a foreign
corporation in each of the jurisdictions where the nature of
the properties and the conduct of its business require such
qualification and is in good standing in each of the
jurisdictions in which it is so qualified, except where the
failure to so qualify would not cause a Material Adverse
Effect to the Company. There is no pending or, to the
knowledge of the Company, threatened proceeding for the
dissolution, liquidation or insolvency of the Company.
(b) Each of the Company's Subsidiaries is a
corporation, duly organized, validly existing and in good
standing under the laws of the state of its incorporation and
has the requisite power and authority to own or lease its
properties and to carry on its business as now being
conducted, except where to the failure to so qualify would not
cause a Material Adverse Effect on the Company. Each of the
Company's Subsidiaries is legally qualified to do business as
a foreign corporation in each of the jurisdictions where the
nature of its properties and the conduct of its business
require such qualification, and is in good standing in each of
the jurisdictions in which it is so qualified, except where
the failure to so qualify would not cause a Material Adverse
Effect on the Company. There is no pending or threatened
proceeding for the dissolution, liquidation or insolvency of
any of the Company's Subsidiaries.
2.2. POWER AND AUTHORITY. The Company has the corporate power and
authority to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the transactions
contemplated hereby. The Company has taken all action on the part
of its Board of Directors necessary to authorize its execution and
delivery of this Agreement.
2.3. ENFORCEABILITY. This Agreement has been duly executed and
delivered by the Company and constitutes its legal, valid and
binding obligation enforceable against the Company in accordance
with its terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and general
equitable principles regardless of whether such enforceability is
considered in a proceeding at law or in equity.
2.4. CAPITALIZATION.
(a) As of the date hereof, the authorized capital
stock of the Company consists of 26,000,000 shares of Common
Stock and 4,000,000 shares of preferred stock. As of July 11,
1997 (i) 13,682,079 shares of Common Stock were validly issued
and outstanding, fully paid and non-assessable, of which
207,751 shares were held in treasury; (ii) there were 1,475,768
shares of
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Common Stock reserved for issuance upon exercise of outstanding
options; (iii) there were 45,673 shares of Common Stock
reserved for issuance in connection with Restricted Stock
grants; and (iv) no shares of preferred stock were issued or
outstanding. Except as set forth on Schedule 2.4(a) of the
Disclosure Statement previously delivered by the Company to
representatives of Parents (the "Company Disclosure
Statement"), (1) no preemptive rights, rights of first refusal
or similar rights exist with respect to the shares of capital
stock of the Company, and no such rights arise or become
exercisable by virtue of or in connection with the
transactions contemplated hereby; (2) there are no outstanding
or authorized rights, options, warrants, convertible
securities, subscription rights, conversion rights, exchange
rights or other agreements or commitments of any kind that
could require the Company to issue or sell any shares of its
capital stock (or securities convertible into or exchangeable
for shares of its capital stock) (the matters in clauses (1)
and (2) with respect to any entity being referred to as
"Equity Rights"); (3) there are no outstanding stock
appreciation, phantom stock, profit participation or other
similar rights with respect to the Company (being referred to
with respect to any entity as "Equity Programs"); (4) there
are no proxies, voting rights or other agreements or
understandings with respect to the voting or transfer of the
capital stock of the Company (being referred to with respect
to any entity as "Voting Agreements"); (5) and there are no
outstanding agreements, arrangements or understandings
pursuant to which the Company is obligated to redeem or
otherwise acquire any of its outstanding shares of capital
stock (being referred to with respect to any entity as
"Redemption Rights").
(b) Set forth on Schedule 2.4(b) of the Company Disclosure
Statement is a complete and accurate list showing, as of the
date hereof, all Subsidiaries of the Company (other than NCC)
and, as to each such Subsidiary, the jurisdiction of its
incorporation, the number of shares of each class of capital
stock authorized, and the number outstanding and the
percentage of the outstanding shares of each such class owned
(directly or indirectly) by the Company. Except as set forth
on Schedule 2.4(b), no class of capital stock of any
Subsidiary of the Company is subject to any Equity Rights,
Voting Agreements, Equity Programs or Redemption Rights. All
of the outstanding capital stock of each such Subsidiary has
been validly issued, is fully paid and non-assessable and is
owned by the Company or by a Subsidiary of the Company as set
forth on Schedule 2.4(b), free and clear of all Liens other
than the Liens securing the KMC Credit Agreement. Neither the
Company nor any such Subsidiary is a party to any agreement
restricting the transfer or hypothecation of any shares of any
such Subsidiary's capital stock (generally being referred to
as "Transfer Restrictions"), other than as provided in the
KMC Credit Agreement and the Indenture governing the 10 1/2%
Notes. Except as set forth on Schedule 2.4,
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the Company does not own or hold, directly or indirectly, any
capital stock or equity security of, or any equity interest
in, any Person other than such Subsidiaries.
(c) All of the partnership interests of each
partnership Affiliate beneficially owned directly or
indirectly by the Company or any Subsidiary are set forth on
Schedule 2.4(c) of the Company Disclosure Statement and have
been validly created pursuant to the partnership agreement of
such Partnership Affiliate and all of the partnership
interests of each partnership Affiliate owned by the Company
or any Subsidiary, as applicable, are free and clear of any
Liens, Equity Rights, Voting Agreements, Redemption Rights or
Transfer Restrictions, except as set forth in the partnership
agreements relating to such partnership interests or on
Schedule 2.4(c) of the Company Disclosure Statement.
2.5. NO VIOLATION. Except as set forth on Schedule 2.5 of the
Company Disclosure Statement, the execution and delivery of this
Agreement by the Company, the performance by the Company of its
obligations hereunder and the consummation by the Company of the
transactions contemplated by this Agreement will not: (i) contravene
any provision of the certificate of incorporation, bylaws or other
organizational documents, (as to any entity, "Organizational
Documents") of the Company or any Subsidiary; (ii) violate or
conflict with any law, statute, ordinance, rule, regulation, decree,
writ, injunction, judgment, ruling or order of any Governmental
Authority or of any arbitration award which is either applicable to,
binding upon, or enforceable against the Company or any Subsidiary;
(iii) conflict with, result in any breach of, or constitute a
default (or an event which would, with the passage of time or the
giving of notice or both, constitute a default) under, or give rise
to a right to terminate, amend, modify, abandon or accelerate, or
adversely affect the rights and privileges of the Company or any
Subsidiary under, any Contract which is applicable to, binding upon
or enforceable against the Company or its Subsidiaries; (iv) result
in or require the creation or imposition of any Lien upon or with
respect to any of the property or assets of the Company or any
Subsidiary; (v) give to any individual or entity a right or claim
against the Company, which would have a Material Adverse Effect on
the Company; or (vi) require the consent, approval, authorization or
permit of, or filing with or notification to, any Governmental
Authority, any court or tribunal or any other Person, except (A)
pursuant to the Exchange Act and applicable inclusion requirements
of AMEX, (B) filings required under the HSR Act, (C) any filings
required to be made by Parents or Merger Sub, or (D) any
governmental permits or licenses required to operate the business of
Parents or Merger Sub.
2.6. REPORTS AND FINANCIAL STATEMENTS. From January 1, 1997 until
the date hereof, the Company has filed all reports, registrations
and statements, together with any required amendments thereto, that
it was required to file with the SEC, including,
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but not limited to, any Forms 10-K, Forms 10-Q, Forms 8-K and
proxy statements (collectively, the "Company Reports"). As of
their respective dates (but taking into account any amendments
filed prior to the date of this Agreement), the Company Reports
complied in all material respects with all the rules and
regulations promulgated by the SEC and did not contain any untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made,
not misleading. The financial statements of the Company
included in the Company Reports comply as to form in all material
respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto,
have been prepared in accordance with GAAP consistently applied
during the periods presented (except, as noted therein, or, in
the case of the unaudited statements, as permitted by Form 10-Q of
the SEC) and fairly present (subject, in the case of the unaudited
statements, to normal audit adjustments) the financial position of
the Company and its consolidated subsidiaries as of the date
thereof and the results of their operations and their cash flows
for the periods then ended.
2.7. REPRESENTATION AGREEMENTS.
(a) Except as set forth on Schedule 2.7(a) of the Company
Disclosure Statement, each Representation Agreement is
in full force and effect and is a legal, valid and binding
obligation of the Company or a Subsidiary of the Company, and
there is not (i) any breach by the Company or any Subsidiary of
the Company, or to the knowledge of the Company, any other
party, in the performance of any obligation to be performed
under any such Representation Agreement; (ii) to the Company's
or any Subsidiary's knowledge, any written notice of
cancellation or termination of any such Representation
Agreement; or (iii) any Representation Agreement that has been
canceled or terminated since July 1, 1996 in respect of a
terminated station or terminated group of affiliated stations
that represented in excess of $20 million in annualized
▇▇▇▇▇▇▇▇, except in each case for such as would have no
reasonable likelihood of having a Material Adverse Effect on
the Company.
(b) Except in each case where the failure would have no reasonable
likelihood of having a Material Adverse Effect (i) the
information on Schedule 2.7(b)(i) of the Company Disclosure
Statement is true and correct in all material respects; (ii)
true and correct copies of all Master Agreements pertaining to
the radio broadcast companies listed on Schedule 2.7(b)(ii) of
the Company Disclosure Statement that are covered by a Master
Agreement have been made available to representatives of the
Parents; (iii) each Station Agreement for a radio station
covered by such a Master Agreement is in substantially the form
or otherwise contains provisions for termination contemplated
by the related Master Agreement; and (iv) the
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Station Agreements relating to the stations referred to on
Schedule 2.7(b)(i) that are not covered by a Master Agreement
have termination provisions that require the related stations
to give not less than one year's advance written notice prior
to termination and provide that a termination by a client
without such prior written notice entitles the Company or its
Subsidiary to at least its standard commission under the
Station Agreement for not less than a 12 month period from the
date of such client's termination.
(c) Except in each case where the failure would have no
reasonable likelihood of having a Material Adverse Effect,
(i) the information on Schedule 2.7(c)(i) of the Company
Disclosure Statement is true and correct in all material
respects; (ii) true and correct copies of all Master
Agreements pertaining to the television broadcast companies
listed on Schedule 2.7(c)(ii) of the Company Disclosure
Statement that are covered by a Master Agreement have been
made available to representatives of the Parents; (iii) each
Station Agreement for a television station covered by a Master
Agreement is in substantially the form or otherwise contains
provisions for termination contemplated by the Master
Agreement; and (iv) the Station Agreements relating to the
stations referred to on Schedule 2.7(c)(i) that are not
covered by a Master Agreement have termination provisions that
require the related stations to give not less than six month's
advance written notice prior to termination and provide that a
by a client without such prior written notice entitles the
Company or its Subsidiary to at least its standard commission
under the Station Agreement for not less than a six month
period from the date of such client's termination.
(d) The Company makes no representation in this Section 2.7
regarding Representation Agreements with Parents, Capstar
Radio or any of their respective Affiliates.
2.8. NO COMMISSIONS. Except as disclosed on Schedule 2.8 of the
Company Disclosure Statement, the Company has not incurred any
obligation for any finder's, broker's, or agent's fees or
commissions or similar compensation in connection with the
transactions contemplated hereby.
2.9. MATERIAL DEVELOPMENTS; ABSENCE OF UNDISCLOSED LIABILITIES.
Except as disclosed in or contemplated by the Company Reports filed
prior to the date hereof or as disclosed on Schedule 2.9 of the
Company Disclosure Statement, there has been no Material Adverse
Change with respect to the Company since December 31, 1996. Except
as disclosed in or contemplated by the Company Reports filed prior
to the date hereof or as set forth on Schedule 2.9 of the Company
Disclosure Statement, the Company does not have any liabilities or
obligations, whether accrued, absolute, contingent or otherwise,
except liabilities incurred in the ordinary course of business
consistent with past practice, or other liabilities which would not
have a reasonable likelihood of having a Material Adverse Effect
on the Company.
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2.10. TAXES. All Tax Returns required to be filed by the Company
or any of its Tax Affiliates have been filed with the appropriate
Governmental Authorities in all jurisdictions in which such Tax
Returns are required to be filed, except where the failure to file
such returns, reports and statements would have no reasonable
likelihood of having a Material Adverse Effect on the Company, all
such Tax Returns are true and correct in all material respects, and,
except as disclosed on Schedule 2.13 of the Company Disclosure
Statement, there is no liability for Taxes for any taxable year or
other period ending on or before the date hereof (as if the date
hereof were the end of a taxable year or period) in excess of
reserves therefore that have been established on the books of the
Company or such a Tax Affiliate, as the case may be, in conformity
with GAAP except as has arisen in the ordinary course of business
since March 31, 1997 or except as would have no reasonable
likelihood of having a Material Adverse Effect on the Company. The
Company and each of the Tax Affiliates have complied with all
applicable laws, rules, and regulations relating to the withholding
and payment of Taxes and have timely withheld from employee wages
and paid over to the proper Governmental Authorities all amounts
required to be so withheld and paid over for all periods in full and
complete compliance with the tax, social security and unemployment
withholding provisions of applicable Federal state, local and
foreign law, except where such nonpayment would have no reasonable
likelihood of having a Material Adverse Effect on the Company.
Neither the Company nor any Tax Affiliate is or has been a party to
any tax sharing agreement, and neither has assumed the liability of
any other Person for Taxes. There are no Liens on any of the assets
of the Company or the Tax Affiliates with respect to Taxes, other
than for Taxes not yet due and payable.
2.11. EMPLOYEE BENEFITS.
(a) Set forth on Schedule 2.11 of the Company Disclosure Schedule
is a list setting forth each employee benefit plan or
arrangement maintained, contributed to or sponsored by the
Company or any ERISA Affiliate or under which the Company or
any Affiliate may incur any liability, including, but not
limited to, employee pension benefit plans, as defined in
Section 3(2) ERISA, multiemployer plans, as defined in Section
3(37) or 4001(a)(3) of ERISA, employee welfare benefit plans,
as in Section 3(1) of ERISA, deferred compensation plans,
stock option plans, bonus plans, stock purchase plans,
hospitalization, disability and other insurance plans,
employment or consulting or termination agreements, severance
or termination pay plans and policies, whether or not
described in Section 3(3) of ERISA, ("Employee Benefit Plans")
(true and accurate copies of which, together with the most
recent annual reports on Form 5500 and summary plan
descriptions with respect thereto, were furnished to Parent).
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(b) Compliance with Law. With respect to each Employee Benefit
Plan (i) each has been administered in all material respects
in compliance with its terms and with all applicable laws,
including, but not limited to, ERISA and the Code; (ii) no
actions, suits, claims or disputes are pending, or
threatened; (iii) no audits, inquiries, reviews, proceedings,
claims, or demands are pending with any governmental or
regulatory agency; (iv) there are no facts which could give
rise to any material liability in the event of any such
investigation, claim, action, suit, audit, review, or other
proceeding; (v) all material reports, returns and similar
documents required to be filed with any governmental agency or
distributed to any plan participant have been duly or timely
filed or distributed; and (vi) no "prohibited transaction" has
occurred within the meaning of the applicable provisions of
ERISA or the Code; (vi) none of the Company or any of its
Subsidiaries nor any plan fiduciary of any Employee Benefit
Plan has otherwise violated the provisions of Part 4 of Title
I, Subtitle B of ERISA or knowingly participated in a
violation of Part 4 of Title I, Subtitle B of ERISA by any
plan fiduciary of any Employee Benefit Plan or has been
assessed any civil penalty under Section 502 (l) of ERISA.
(c) Qualified Plans. With respect to each Employee Benefit Plan
intended to qualify under Code Section 401(a) or 403(a), (i)
the Internal Revenue Service has issued a favorable
determination letter, true and correct copies of which have
been furnished to representatives of Parents, that such plans
are qualified and exempt from federal income taxes; (ii) no
such determination letter has been revoked nor has revocation
been threatened, nor has any amendment or other action or
omission occurred with respect to any such plan since the date
of its most recent determination letter or application
therefor in any respect which would adversely affect its
qualifications or materially increase its costs; (iii) no such
plan is a defined benefit plan within the meaning of Section
3(35) of ERISA; (iv) all contributions to, and payments from
and with respect to such plans which may have been required to
be made in accordance with such plans and when applicable,
have been timely made; and (v) all contributions to the plans
and all payments under the plans (except those to be made from
a trust qualified under Section 401(a) of the Code) and all
payments with respect to the plans (except those to be made
from a trust qualified under Section 401(a) of the Code) and
all payments of benefits with respect to the plans and all
insurance premiums for any period ending before the Effective
Date that are not yet but will be required to be made, are
properly accrued and reflected on the Company Reports.
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(d) Multiemployer Plans. None of the Company nor any ERISA
Affiliate has at any time contributed to or been obligated to
contribute to any "multiemployer plan" (within the meaning of
Section 3(37) or 4001(a)(3) of ERISA) and neither the Company
nor any ERISA Affiliate has incurred any withdrawal liability
which remains unsatisfied.
(e) Welfare Plans. Except as set forth on Schedule 2.11 of the
Company Disclosure Statement, neither the Company nor any ERISA
Affiliate is obligated under any employee welfare benefit plan
as described in Section 3(1) of ERISA ("Welfare Plan") to
provide medical or death or other benefits with respect to any
employee or former employee of the Company, any ERISA Affiliate
or any of their predecessors after termination of employment
(other than as may be required under Section 4980 of the Code)
and no condition exists which would prevent the Company or one
of its ERISA Affiliates from amending or terminating any such
Welfare Plan; (ii) the Company and each ERISA Affiliate has
complied with the notice and continuation coverage requirements
of Section 4980B of the Code and the regulations thereunder
with respect to each Welfare Plan that is a group health plan
within the meaning of Section 5000(b)(1) of the Code; and (iii)
there are no reserves, assets, surplus or prepaid premiums
under any Welfare Plan which is an Employee Benefit Plan.
(f) Employment Arrangements. Except as set forth on Schedule 2.4
or Schedule 2.11 of the Company Disclosure Statement, and
except as provided by law, the employment of all persons
presently employed or retained by the Company or any of its
Subsidiary is terminable at will. Except as set forth on
Schedule 2.11 of the Company Disclosure Statement, there is no
contract, agreement, plan or arrangement covering any employee
or former employee of the Company or any of its Subsidiaries
that, individually or collectively, provides for the payment of
any amount (i) that is not deductible under Section 162(a) (1)
or 404 of the Code or (ii) that is an "excess parachute
payment" pursuant to Section 280G of the Code.
(g) No Acceleration. Except as contemplated hereby or as set
forth on Schedule 2.4(a) or Schedule 2.11 of the Company
Disclosure Statement, neither the execution and delivery of
this Agreement or other related agreements by the Company nor
the consummation of the transactions contemplated hereby will
result in the acceleration or creation of any rights of any
person to benefits under any employee benefit plan or
arrangement (including, without limitation, the acceleration of
the vesting or exercisability of any stock options, the
acceleration of the vesting of any restricted stock, the
acceleration of the accrual or vesting of any
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benefits under any Pension Plan or the acceleration or
creation of any rights under any severance, parachute or
change in control agreement).
(h) No Other Material Liability. No event has occurred in
connection with which the Company or any of its Subsidiaries,
directly or indirectly, could be subject to any material
liability (A) under any statute, regulation or governmental
order relating to any Employee Benefit Plan or (B) pursuant to
any obligation of the Company or any of its Subsidiaries to
indemnify any person against liability incurred under any such
statute, regulation or order as they relate to such plans.
Except as set forth on Schedule 2.11 or Schedule 4.1 of the
Company Disclosure Statement, none of the Company or any ERISA
Affiliate has any announced plan or legally binding commitment
to create any additional Employee Benefit Plan or other
benefit arrangement which is intended to cover employees or
former employees of the Company or any Subsidiary or to amend
or modify any existing such plan or arrangement.
(i) No representation is made in this Section 2.11 regarding NCC.
2.12. ENVIRONMENTAL
(a) The Company is currently and has in the past been
in compliance with all Environmental Laws, except where the
failure to be or have been in compliance would not be
reasonably likely to have a Material Adverse Effect on the
Company. There are no existing, and the Company is not aware
of any potential or threatened, Environmental Claims against
the Company or its Subsidiaries which are reasonably likely to
have a Material Adverse Effect on the Company. There are no
consent decrees, consent orders, judgments, judicial or
administrative orders, agreements with (other than permits) or
liens by, any Governmental Authority or quasi-governmental
authority relating to any Environmental Laws which regulate,
obligate or bind the Company or its Subsidiaries.
(b) True and correct copies of any environmental
reports, audits or assessments which have been conducted,
either by or on behalf of the Company or its Subsidiaries,
regarding any of the Company's or its Subsidiaries current or
former properties have been made available to the Parent.
2.13. LITIGATION. Except as set forth on Schedule 2.13 of the Company
Disclosure Statement, there is no action, suit or other legal or
administrative proceeding or governmental investigation pending,
or, to their knowledge, threatened, anticipated or contemplated
against, by or affecting the Company or its Subsidiaries, or any
of the Company's or any of its Subsidiaries' properties or assets,
which, individually or in the aggregate, would be reasonably
likely to have a Material Adverse Effect on the Company, or which
question the validity or
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enforceability of this Agreement or the transactions contemplated
hereby. There are no outstanding orders, decrees or stipulations
issued by any Governmental Authority in any proceeding to which the
Company or any of its Subsidiaries is or was a party which have not
been complied with in full or which continue to impose any
obligations on the Company or any its Subsidiaries (other than
those that would not be reasonably likely to have a Material
Adverse Effect).
2.14. DISCLOSURE IN PROXY STATEMENT, SCHEDULE 14D-9 AND SCHEDULE 14D-1.
None of the information which has been or will be supplied by the
Company for inclusion or incorporation by reference in the Proxy
Statement in connection with the meeting of the stockholders of the
Company held to approve the Merger (the "Proxy Statement") will, at
the time such Proxy Statement is mailed to the stockholders of the
Company, include an untrue statement of a material fact, or omit to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading. None of the
information which has been or will be supplied by the Company for
inclusion or incorporation by reference in the Offer Documents or
any amendments or supplements thereto including the Schedule 14D-1
and the Offer to Purchase, will, at the time the Offer Documents
(or such amendments or supplements) are filed with the SEC, contain
any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements made
therein, in light of the circumstances in which they are made, not
misleading. The Schedule 14D-9 or any amendments or supplements
thereto will not, at the time it or any such amendments or
supplements are filed with the SEC, sent or given to stockholders
of the Company, or at the time the Offer is consummated is filed
with the Commission, contain any untrue statement of a material
fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in
light of the circumstance in which they were made, not misleading.
Notwithstanding the foregoing, no representation or warranty is
made with respect to any information with respect to Parents,
Merger Sub or their respective officers, directors or affiliates
provided to the Company by Parents or Merger Sub in writing for
inclusion in the Proxy Statement, the Schedule 14D-9 or the
supplements or amendments thereto. The Schedule 14D-9 will comply
in all material respects with the Exchange Act and the rules and
regulations thereunder and any other applicable laws.
2.15. OPINION OF FINANCIAL ADVISORS. The Company has received (and
delivered to representatives of Parents a true copy thereof) the
opinion from Credit Suisse First Boston to the effect that the
consideration to be received by the Company's stockholders in the
Offer and the Merger is fair to the Company's stockholders from a
financial point of view and such opinion has not been modified or
withdrawn.
2.16. VOTE REQUIRED. The affirmative vote of the holders of a majority
of the outstanding shares of Common Stock is the only vote of the
holders of any class
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or series of the Company's capital stock necessary to approve this
Agreement and the transactions contemplated hereby.
2.17. TAKEOVER RESTRICTIONS. To the best knowledge of the Company, other
than Section 203 of the DGCL, no state takeover statute or similar
statute or regulation of any state or other jurisdiction applies or
purports to apply to the Agreement or any of the transactions
contemplated herein, including the Merger. No provision of the
certificate of incorporation or bylaws of the Company or any
Subsidiary would, directly or indirectly, restrict or impair the
ability of Merger Sub or its affiliates to vote, or otherwise to
exercise the rights of a shareholder with respect to, securities of
the Company or any Subsidiary that may be acquired or controlled by
Merger Sub or its affiliates pursuant to this Agreement or permit
any shareholder to acquire securities of the Company on a basis not
available to Merger Sub in the event that Merger Sub were to
acquire securities of the Company.
2.18. PATENTS, TRADEMARKS, ETC. To the Company's best knowledge, the
Company or its Subsidiaries own, or are licensed or otherwise have
adequate right to use, all patents, patent rights, trademarks,
trademark rights, service marks, service ▇▇▇▇ rights, trade names,
trade name rights, copyrights, know-how, technology, trade secrets
and other proprietary information (collectively, the "Intellectual
Property") which are material to the conduct of the business of the
Company and its Subsidiaries. To the Company's best knowledge, no
claims have been asserted by any person, and neither the Company
nor any of its Subsidiaries has asserted a claim against any
person, with respect to any of the Intellectual Property owned or
used by the Company or its Subsidiaries, challenging or questioning
the validity or effectiveness of any license or agreement relating
thereto to which the Company or any Subsidiary is a party, in any
case that would be reasonably likely to have a Material Adverse
Effect on the Company.
2.19. COMPLIANCE WITH LAW. The business of the Company and its
Subsidiaries is not being conducted and the properties and assets of
the Company and its Subsidiaries are not currently owned or operated
in violation of any law, ordinance, regulation, order, judgment,
injunction, award or decree of any governmental or regulatory entity
or court or arbitrator, except for possible violations which either
individually or in the aggregate do not, and so far as can be
reasonably foreseen will not, have a Material Adverse Effect.
2.20. ABSENCE OF LIENS. Except for Liens granted pursuant to the KMC
Credit Agreement and such as to not interfere in any material
respect with the use and operation thereof or would have no
reasonable likelihood of having a Material Adverse Effect, there are
no Liens on any of the assets of the Company or its Subsidiaries
(other than NCC) to secure indebtedness for borrowed money.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
PARENTS AND MERGER SUB
As a material inducement to the Company to enter into this Agreement and
to consummate the transactions contemplated hereby, each Parent and Merger Sub,
jointly and severally, make the following representations and warranties to the
Company:
3.1. CORPORATE STATUS. Each Parent and Merger Sub is a corporation,
duly organized, validly existing and in good standing under the
laws of the State of Delaware and has the requisite power and
authority to own or lease its properties and to carry on its
business as now being conducted. There is no pending or
threatened proceeding for the dissolution, liquidation or
insolvency of either Parent or Merger Sub.
3.2. POWER AND AUTHORITY. Each Parent and Merger Sub has the
corporate power and authority to execute and deliver this Agreement,
to perform its obligations hereunder, and to consummate the
transactions contemplated hereby. Each Parent, and Merger Sub and
the stockholders of each have taken all corporate action necessary
to authorize the execution and delivery of this Agreement, the
performance of its obligations hereunder, and the consummation of
the transactions contemplated hereby.
3.3. ENFORCEABILITY. This Agreement has been duly executed and
delivered by each Parent and Merger Sub, and constitutes the legal,
valid and binding obligation of each of them, enforceable against
each of them in accordance with its terms, except as the same may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer or similar laws affecting the
enforcement of creditors' rights generally and general equitable
principles regardless of whether such enforceability is considered
in a proceeding at law or in equity.
3.4. NO VIOLATION. The execution and delivery of this Agreement by each
Parent and Merger Sub, the performance by each Parent and Merger
Sub of their obligations hereunder and the consummation by them of
the transactions contemplated by this Agreement will not: (i)
contravene any provision of their Organizational Documents; (ii)
violate or conflict with any law, statute, ordinance, rule,
regulation, decree, writ, injunction, judgment or order of any
Governmental Authority or of any arbitration award which is either
applicable to, binding upon or enforceable against either of them;
(iii) conflict with, result in any breach of, constitute a default
(or an event which would, with the passage of time or the giving
of notice or both, constitute a default) under, require any
consent under, or give rise to a right of payment under or the
right to terminate or amend any
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Contract which is applicable to, binding upon or enforceable
against any of Parents or Merger Sub or any Subsidiary of any of
them; (iv) result in or require the creation or imposition of any
Lien upon or with respect to any of the properties or assets of
any of the Parents or Merger Sub or any subsidiary of any of them;
(v) give to any individual or entity a right or claim against any
of the Parents or Merger Sub or any subsidiary of any of them; or
(vi) require the consent, approval, authorization or permit of, or
filing with or notification to, any Governmental Authority, any
court or tribunal or any other Person, except any applicable
filings required under the HSR Act and the Exchange Act.
3.5. REPORTS AND FINANCIAL STATEMENTS. From January 1, 1997 until
the date hereof, each Parent has filed all reports, registrations
and statements, together with any required amendments thereto, that
it was required to file with the SEC, including, but not limited, to
any Forms 10-K, Forms 10-Q, Forms 8-K and proxy statements
(collectively, the "Parent Reports"). As of their respective dates
(but taking into account any amendments filed prior to the date of
this Agreement), the Parent Reports complied in all material
respects with all the rules and regulations promulgated by the SEC
and did not contain any untrue statement of a material fact or omit
to state a material fact required to be stated herein or necessary
to make the statements therein, in light of the circumstances under
which they were made, not misleading.
3.6. NO COMMISSIONS. Except as disclosed to the Company, neither
of the Parents, nor Merger Sub nor any of Parents' Subsidiaries have
incurred any obligation for any finder's, broker's or agent's fees
or commissions or similar compensation in connection with the
transactions contemplated hereby.
3.7. DISCLOSURE IN PROXY STATEMENT. None of the information which has
been or will be supplied by either Parent for inclusion or
incorporation by reference in the Proxy Statement will, at the
time such Proxy Statement is mailed to the stockholders of Parents
and the Company, include an untrue statement of a material fact,
or omit to state a material fact, or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading. None of the information which has been or
will be supplied by Parents and Merger Sub specifically for
inclusion in the Proxy Statement and the Schedule 14D-9 or any
amendment or supplement thereto of the Company will, at the time
the Schedule 14D-9 is filed with the SEC, contain any untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements made, in light of the
circumstance under which they are made, not misleading. The Offer
Documents or any amendment or supplement thereto will not, at the
time of filing with the SEC, contain any untrue statement of a
material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements
therein, in light of the circumstances in which they were made,
not misleading. Notwithstanding the foregoing, no representation
or warranty is made with respect to any information with respect
to the Company or
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its officers, directors and affiliates provided to Parents or
Merger Sub by the Company in writing for inclusion in the Offer
Documents, the Proxy Statement, the Schedule 14D-1 or amendments
or supplements thereto. The Schedule 14D-1 will comply in all
material respects with the Exchange Act and the rules and
regulations thereunder and any other applicable laws.
3.8. FINANCING. Parents will have or will obtain available funds
necessary to consummate the Offer and the Merger and the
transactions contemplated hereby and thereby, to pay related fees
and expenses and to refinance indebtedness under the KMC Credit
Agreement and the 10 1/2% Notes, as required by this Agreement.
ARTICLE IV
CONDUCT OF BUSINESS AND PROPERTIES PRIOR TO THE CHANGE IN
MAJORITY DIRECTORS
4.1. CONDUCT OF BUSINESS BY THE COMPANY PRIOR TO THE CHANGE IN MAJORITY
DIRECTORS. The Company covenants and agrees that, between the date
of this Agreement and the Change in Majority Directors, the
business of the Company and the Subsidiaries shall be conducted
only in, and the Company and the Subsidiaries shall not take any
action except in, the ordinary course of business consistent with
past practice. The Company shall use its reasonable best efforts
to preserve intact the Company's and the Subsidiaries' present
lines of business, maintain their respective rights and preserve
their respective present relationships with customers, suppliers,
and other persons with which it has significant business relations.
By way of amplification and not limitation, except as contemplated
by this Agreement or as set forth on Schedule 4.1, the Company
shall not, nor shall it permit any Subsidiary or other entity it
controls, between the date of this Agreement and the Change in
Majority Directors, directly or indirectly, do any of the following
without the prior consent of Parents:
(a) Amend or otherwise change its certificate of incorporation or
bylaws, or equivalent Organizational Documents, or amend any
material term of any outstanding security;
(b) (i) Declare or pay any dividends on or make or become
obligated to make other distributions in respect of any of its
capital stock, except dividends by the wholly-owned
Subsidiaries in the ordinary course of business consistent
with past practice, (ii) split, combine or reclassify any of
its capital stock or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or
in substitution for, shares of its capital stock, except for
any such transaction by a wholly owned Subsidiary of the
Company which remains a wholly owned Subsidiary after
consummation of such transaction, or (iii) repurchase,
redeem or otherwise acquire any
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shares of its capital stock or any securities convertible into
or exercisable for any shares of its capital stock;
(c) Issue, deliver or sell, or authorize or propose the issuance,
delivery or sale of, any shares of its capital stock of any
class or any securities convertible into or exercisable for,
or any rights, warrants or options to acquire, any such shares
or enter into any agreement with respect to any of the
foregoing and shall not amend any equity-related awards issued
pursuant to the Employee Benefit Plans, other than the
issuance of capital stock or other equity interests upon the
exercise of stock options issued prior to the date of this
Agreement;
(d) (i) Incur or suffer to exist any indebtedness for borrowed
money other than under the KMC Credit Agreement in the
ordinary course of business or guarantee any such indebtedness
or issue or sell any debt securities or warrants or rights to
acquire any debt securities of the Company or any of the
Subsidiaries, or guarantee any debt securities of other
Persons other than indebtedness of the Company or any
Subsidiary of the Company to the Company or any wholly-owned
Subsidiary of the Company and other than in the ordinary
course of business; or (ii) make any loans, advances or
capital contributions to any other Person, other than loans or
advances to employees not in excess of $250,000 in the
aggregate in the ordinary course of business consistent with
past practices, and other than by the Company or a wholly-
owned Subsidiary of the Company to or in the Company or any
wholly-owned Subsidiary of the Company;
(e) (i) Increase the compensation payable or to become payable to
any of its executive officers or employees; (ii) adopt or
amend (except as may be required by law) any bonus, profit
sharing, compensation, stock option, pension, retirement,
deferred compensation, employment or other employee benefit
plan, agreement, trust, fund or other arrangement (including
any Employee Benefit Plan) for the benefit or welfare of any
director, executive officer or other employees or former
director or employees; (iii) grant any new or modified
severance or termination arrangement or increase or accelerate
any benefits payable under its severance or termination pay
policies in effect on the date hereof, except to employees
other than to any executive officer and not to exceed $250,000
in the aggregate; (iv) effectuate a "plant closing" or "mass
layoff", as those terms are defined in the Worker Adjustment
and Retraining Notification Act of 1988 WARN, affecting in
whole or in part any site of employment, facility, operating
unit or employee of the Company or any of the Company's
Subsidiaries; or (v) take any action with respect to the grant
of any severance or termination pay, or stay, bonus or other
incentive arrangement (other than pursuant to benefit plans
and policies in effect on the date of this Agreement), except
in each case (A) any such increases or
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grants made in the ordinary course of business and in
accordance with past practice, or (B) as provided in Section
5.11;
(f) Except in the ordinary course of business, consistent with
past practice, acquire (including, without limitation, for
cash or shares of stock or partnership interests, by merger,
consolidation or acquisition of stock or assets) any interest
in any Person or other business organization or division
thereof or any assets, or make any investment either by
purchase of stock or securities, contributions of capital or
property transfer, or purchase any property or assets of any
other Person, other than such acquisitions or investments
which in the aggregate do not exceed $100,000;
(g) Make any commitments for capital or other expenditures in
excess of $2 million;
(h) Acquire by purchase Representation Agreements for amounts,
individually or in the aggregate, exceeding $2 million;
(i) Modify, terminate, or enter into any material Contract other
than as provided herein or in the ordinary course of business,
consistent with past practice;
(j) Take any action with respect to accounting policies or
procedures, or with respect to Tax elections, audits or
controversies, other than in the ordinary course of business
and in a manner consistent with past practices;
(k) Pay, discharge or satisfy any existing claims, liabilities or
obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge or
satisfaction in the ordinary course of business and consistent
with past practice of due and payable liabilities reflected or
reserved against in its financial statements, as appropriate,
or liabilities incurred after the date thereof in the ordinary
course of business and consistent with past practice and other
than other claims, liabilities or obligations not exceeding $3
million in the aggregate;
(l) (i) Enter into any material transaction with any executive
officer, director or Affiliate thereof; (ii) pay or become
obligated to pay any material liability or obligation to any
executive officer, director or Affiliate, other than as
disclosed on Schedule 2.11 and 4.1 of the Company Disclosure
Statement; (iii) or waive any rights of material value or
cancel any material debts or claims or any debts or claims
with respect to an officer, director or Affiliate;
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(m) Except as otherwise permitted hereby, take any action that
could reasonably be expected to result in any of the
representations and warranties of the Company set forth in
Sections 2.1, 2.2, 2.3, 2.4, 2.5, 2.6, 2.8, 2.10, 2.11, 2.12,
2.14, 2.15, 2.16, 2.17, 2.18, 2.19 and 2.20 of this Agreement
(other than any representation or warranty which is expressly
made as of a specified date) (the "Surviving Representations"),
becoming untrue in any material respect or any of the
conditions to the Merger set forth in Article VI not being
satisfied; or
(n) Agree, in writing or otherwise, to take or authorize any of
the foregoing actions.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1. FURTHER ASSURANCES. Each party shall execute and deliver such
additional instruments and other documents and shall take such
further actions as may be necessary or appropriate to effectuate,
carry out and comply with all of the terms of this Agreement and
the transactions contemplated hereby.
5.2. COOPERATION. Each of the parties agrees to cooperate with the
other in the preparation and filing of all forms, notifications,
reports and information, if any, required or reasonably deemed
advisable pursuant to any law, rule or regulation in connection with
the transactions contemplated by this Agreement and to use their
respective reasonable best efforts to agree jointly on a method to
overcome any objections by any Governmental Authority to any such
transactions.
5.3. OTHER ACTIONS. Each of the parties hereto shall use its reasonable
best efforts to take, or cause to be taken, all appropriate
actions, and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated herein
as soon as possible, including, without limitation, using its
reasonable best efforts to effect the Offer and Merger pursuant to
Section 253 of the DGCL, if greater than 90% of the outstanding
Common Stock is accepted for payment in the Offer, and to obtain
all licenses, permits, consents, approvals, authorizations,
qualifications and orders of any Governmental Authority and parties
to Contracts with the Company as are necessary for the consummation
of the transactions contemplated hereby; provided, however, in no
event shall either party be required to divest or forfeit material
incidents of control of any material assets in order to obtain
approval of a governmental authority (including, without
limitation, under the HSR Act). Each of the parties shall make on
a prompt and timely basis all governmental or regulatory
notifications and filings required to be made by it for the
consummation of the transactions contemplated hereby.
5.4. HSR ACT. Parents and the Company shall make promptly their
respective filings, if any, and thereafter make any other required
submissions, under the ▇▇▇ ▇▇▇,
▇▇
▇▇
with respect to the transactions contemplated hereby. The parties
hereto shall cooperate on any exchange of information subject to
joint attorney/client privilege.
5.5. ACCESS TO INFORMATION. From the date hereof to the Effective
Time, the Company shall (and shall cause its Subsidiaries and their
respective officers, directors, employees, auditors, counsel,
representatives, and agents to) afford the officers, employees,
auditors, counsel, representatives, and agents (the
"Representatives") of Parents reasonable access at all reasonable
times to its officers, employees, agents, properties, offices and
other facilities, books, records and tax returns, and shall furnish
such Representatives with all financial, operating and other data
and information as may be reasonably requested.
5.6. NOTIFICATION OF CERTAIN MATTERS. Each of the parties to this
Agreement shall give prompt notice to the other parties of the
occurrence or non-occurrence of any event which would likely cause
any covenant, condition or agreement contained herein not to be
complied with or satisfied; provided, however, that, any such
disclosure shall not in any way be deemed to amend, modify or in any
way affect the representations, warranties and covenants made by any
party in or pursuant to this Agreement.
5.7. CONFIDENTIALITY; PUBLICITY. Each party to this Agreement shall
comply with the provisions of any confidentiality agreement between
Parents or any Affiliate and the Company (the "Confidentiality
Agreement"), which shall remain in full force and effect in
accordance with its terms. Parents, Merger Sub and the Company
will consult with each other before issuing, and provide each other
the opportunity to review, comment upon and concur with, any press
release or other public statements with respect to the transactions
completed by this Agreement, and shall not issue any such press
release or make any such public statement prior to such
consultation, except as either party may determine is required by
applicable law, court process or by obligations pursuant to any
listing agreement with any national securities exchange. The
parties agree that the initial press release to be issued with
respect to the transactions contemplated by this Agreement shall be
in the form agreed upon by the parties.
5.8. SOLICITATION
(a) The Company agrees that it shall not, nor shall it permit any
of its Subsidiaries to (and the Company shall use its best
efforts to cause any officer, director, employee,
representative or agent of the Company or any of the Company's
Subsidiaries not to): (i) solicit, initiate, or encourage the
submission of (including by way of furnishing information),
any Takeover Proposal (as hereinafter defined); (ii) enter
into any agreement with respect to any Takeover Proposal; or
(iii) participate in any discussions or negotiations
regarding, or furnish to any person any
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information with respect to, or take any other action to
facilitate any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, any
Takeover Proposal; provided, however, that prior to the
acceptance for payment of shares of Common Stock pursuant to
the Offer, to the extent required by the fiduciary
obligations of the Board of Directors of the Company under
applicable law (after consultation with counsel), the Company
may, in response to a Takeover Proposal which was unsolicited
or which did not otherwise result from a breach of this
Section 5.8(a), and subject to providing one full day's prior
written notice of its decision to Parents, (x) furnish
information with respect to the Company to any person making
such Takeover Proposal pursuant to a customary
confidentiality agreement (as determined by the Company's
outside counsel), and (y) participate in discussions and
negotiations regarding such Takeover Proposal; provided,
however, that the Company shall not enter into any definitive
agreement with any Person regarding such Takeover Proposal
for the lesser of (a) three days and (b) the time remaining
until one full business day prior to the expiration of the
Offer; and provided, further, that nothing contained in this
Section 5.8(a) shall prohibit the Company or its Board of
Directors from disclosing to the Company's stockholders a
position with respect to a tender offer by a Third Party
pursuant to Rules 14d-9 and 14e-2 of the Exchange Act. For
purposes of this Agreement, "Takeover Proposal" means any
bona fide proposal or offer or public announcement of a
proposal, plan or intention to do (whether or not in writing
and whether or not delivered to the stockholders of the
Company generally) a merger or other business combination
involving the Company or to acquire in any manner, directly
or indirectly, a material equity interest in, any voting
securities of, or a substantial portion of the assets of the
Company and its Subsidiaries, other than the transactions
contemplated by this Agreement. "Superior Proposal" means a
Takeover Proposal made by a Third Party and its Subsidiaries,
on terms that the Board of Directors determines in good faith
(based on the advice of its counsel and financial advisors)
to be more favorable to its stockholders than the Offer,
taking into account all legal, financial, regulatory and
other aspects of the proposal, including the financing for
the proposal (or contingencies therefor), the Person making
the proposal, and the certainty of consummation, and which
the Board of Directors determines in good faith (after
consultation with counsel) should be considered by the Board
of Directors in order to prevent the Board of Directors from
breaching its fiduciary duties to stockholders under
applicable law.
(b) In addition to the obligations of the Company set forth in
paragraph (a) of this Section 5.8, the Company shall
immediately advise Parents orally and in writing of any
request for information or of any Takeover Proposal, the
material terms and conditions of such request or Takeover
Proposal and
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the identity of the Person and its Affiliates (if known to the
Company) making such request or Takeover Proposal. The
Company will keep Parents reasonably informed of the status
and details (including amendments or proposed amendments) of
any such request or Takeover Proposal.
5.9. PROXY STATEMENT.
(a) If necessary and as soon as practicable, the Company will take
all steps necessary duly to call, give notice of, convene and
hold a meeting of its stockholders as soon as practicable for
the purpose of approving the Merger and for such other
purposes as may be necessary or desirable. The Company will
(i) subject to the terms of Section 5.8, endorse the Offer and
Merger and recommend to its stockholders the approval of this
Agreement, the Merger and the transactions to be consummated
hereunder; and (ii) use its best efforts to obtain the
necessary approvals by its stockholders of this Agreement and
the Merger.
(b) As soon as practicable, the Company will prepare and file with
the SEC a proxy statement (together with any amendments or
supplements thereto, the "Proxy Statement"), which shall
(subject to Section 5.8) include the recommendations and
findings of the Board of Directors set forth in Section 2.16,
and will use its reasonable best efforts to respond to any
comments of the SEC or its staff and to cause the Proxy
Statement to be mailed to the Company stockholders. Parents
shall furnish all information concerning Parents and their
Affiliates as the Company may reasonably request in connection
with the preparation of the Proxy Statement.
(c) Notwithstanding the foregoing, in the event that Merger Sub
shall acquire at least 90 percent of the outstanding shares of
Common Stock (assuming the exercise of all outstanding
Options), the Company agrees, at the request of Parents, to
take all necessary and appropriate action to cause the Merger
to become effective, in accordance with Section 253 of the
DGCL, as soon as reasonably practicable after such acquisition
and satisfaction or waiver of the conditions of Article VI,
without a meeting of the stockholders of the Company.
5.10. EMPLOYMENT MATTERS. From and after the date of purchase of shares
of Common Stock pursuant to the Offer, Parents will cause the
Surviving Corporation to honor, in accordance with their terms, all
existing employment and severance agreements between the Company or
any of its Subsidiaries and any officer, director, or employee of
the Company or any of its Subsidiaries. From and after the date of
purchase of shares of Common Stock pursuant to the Offer, Evergreen
shall, or shall cause the Surviving Corporation or its Subsidiaries
to, provide employees of the Surviving Corporation and the
Subsidiaries employee benefits
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that are substantially comparable to benefits provided to such
employees prior to such time (other than with respect to stock and
stock-based plans or programs, including stock grants, restricted
stock, options to purchase stock, dividend rights, or other stock
based awards) with credit for time of service with the Company and
its Subsidiaries. From and after any termination of a Company
Employee Benefit Plan, Evergreen shall, or shall cause the
Surviving Corporation to, provide U.S. employees of the Surviving
Corporation and its Subsidiaries (other than NCC) with a similar
employee benefit plan (if then in existence at Evergreen) that, in
the aggregate, provides benefits that are substantially comparable
to those provided generally to employees of Evergreen and its
Subsidiaries; provided, however, that from and after the Effective
Time, except as expressly set forth in this Section 5.10, no
provision of this Agreement shall prevent Parents or the Surviving
Corporation from amending or terminating any such plan, program or
policy or any benefit plan established or maintained for the
benefit of current or former employees of the Company or any of its
Subsidiaries. In addition, promptly after the date of purchase of
shares of Common Stock pursuant to the Offer, Parents shall make
arrangements for provision to employees of the Company and its
Subsidiaries an equity incentive program at the Surviving
Corporation funded with options to acquire shares of or shares of
the survivor of the contemplated merger of the Parents in size and
scope comparable to the Company's current stock option and other
stock-based plans, on terms satisfactory to the Continuing
Directors.
5.11. STOCK OPTIONS. The Compensation Committee of the Board of
Directors of the Company shall adopt resolutions which provide for
the cancellation of all Options as of the Effective Time in exchange
for the payment of the excess, if any, of the Offer Price over the
exercise price therefor, net of applicable income and employment
taxes, if any.
5.12. DIRECTORS' AND OFFICERS' INSURANCE AND INDEMNIFICATION. For six
years after the Effective Time, Parents shall cause the Surviving
Corporation to, indemnify, defend and hold harmless the present and
former officers, directors, employees and agents of the Company and
its Subsidiaries (each an "Indemnified Party") the full extent
permitted by the Company's certificate of incorporation, bylaws or
indemnification agreements in effect at the date hereof, including
provisions relating to advancement of expenses incurred in the
defense of any action or suit; provided, that in the event any
claim or claims are asserted or made within such six year period,
all rights to indemnification in respect of any such claim or
claims shall continue until disposition of any and all such claims;
provided, further, that any determination required to be made with
respect to whether an Indemnified Party's conduct complies with the
standards set forth under Delaware law, the Company's certificate
of incorporation or bylaws or such agreements, as the case may be,
shall be made by independent counsel mutually acceptable to Parents
and the Indemnified Party; and provided, further, that nothing
herein shall impair any rights or obligations of any present or
former directors or officers of the
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Company. Parents or the Surviving Corporation shall maintain
the Company's existing officers' and directors' liability insurance
policy ("D&O Insurance") for a period of six years after the
Effective Time; provided, that the Parents may substitute therefor
policies of substantially similar coverage and amounts containing
terms no less advantageous to such former directors or officers;
provided, further that if the existing D&O Insurance expires, is
terminated or canceled during such period, Parents or the Surviving
Corporation will use all reasonable efforts to obtain substantially
similar D&O Insurance; provided, further, however, that in no event
shall either Parents or the Surviving Corporation be required to
pay aggregate premiums for insurance under this Section in excess
of 200% of the aggregate premiums paid by the Company in 1996.
5.13. CERTAIN AGREEMENTS. Except with respect to a Superior Proposal,
neither the Company nor any Subsidiary of the Company will waive or
fail to enforce any provision of any confidentiality or standstill
or similar agreement to which it is a party without the prior
written consent of Merger Sub.
5.14. FINANCING. From and after the date of purchase of shares of
Common Stock pursuant to the Offer, Parents agree to timely make
available or cause to be made available to the Company funds
sufficient to provide for working capital of the Company and to
refinance indebtedness under the KMC Credit Agreement and the 10
1/2% Notes, as required. The Company agrees to cooperate with
Parents and their Affiliates to enable Parents and their Affiliates
to obtain such funds including through the incurrence or refinancing
of indebtedness by the Company and their Subsidiaries, to the extent
the same would not conflict with the obligations of the Company or
its Subsidiaries under any agreement to which any of them is subject
and seek to obtain such waivers as may be necessary or appropriate.
ARTICLE VI
CONDITIONS TO THE OBLIGATIONS OF PARENTS AND MERGER SUB
The obligations of Parents and Merger Sub to effect the Merger shall be
subject to the fulfillment at or prior to the Closing Date of the following
conditions, any or all of which may be waived in whole or in part by Parents
and Merger Sub:
6.1. ACCURACY OF REPRESENTATIONS AND WARRANTIES AND COMPLIANCE WITH
OBLIGATIONS. The representations and warranties of the Company
contained in this Agreement shall be true and correct when made as
of the date of this Agreement, except for failures that would not,
individually or in the aggregate, have a Material Adverse Effect on
the Company. The Surviving Representations shall be true and
correct on and as of the Closing Date, except for failures that
would not, individually or in the aggregate, have a Material Adverse
Effect on the
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Company. The Company shall have performed or complied in all
material respects with all of its obligations required by Articles
I, IV and V of this Agreement to be performed or complied with at
or prior to the Closing Date. The Company shall have delivered to
Parents a certificate, dated as of the Closing Date, and signed by
an executive officer of the Company, certifying to the effect of
the above.
6.2. ORGANIZATIONAL DOCUMENTS. The Company shall have delivered to
Parents (i) copies of the Organizational Documents of the Company
as in effect immediately prior to the Effective Time; (ii) copies
of resolutions adopted by the Board of Directors and the
stockholders of the Company authorizing the transactions
contemplated by this Agreement; (iii) a certificate of good
standing of the Company issued by the Secretary of State of
Delaware as of a date not more than five business days prior to the
Effective Time, certified in each case as of the Effective Time by
the Secretary of the Company as being true, correct and complete,
and (iv) the written resignations of each of the Continuing
Directors.
6.3. GOVERNMENTAL CONSENTS. The Company and Parents shall have received
consents to the Merger contemplated hereby with respect to any
Governmental Authority on or prior to the Closing and effective
through and including the Closing Date.
6.4. NO ORDER OR INJUNCTION. There shall not be issued and in effect by
or before any court or other governmental body an order or
injunction restraining or prohibiting the transactions contemplated
hereby.
6.5. OTHER DOCUMENTS. Parents shall have received such other documents,
instruments and certificates incidental to the transactions
contemplated by this Agreement as are reasonably requested by
Parents.
ARTICLE VII
CONDITIONS TO THE OBLIGATIONS OF
THE COMPANY
The obligations of the Company to effect the Merger shall be subject to
the fulfillment at or prior to the Effective Time of the following conditions,
any or all of which may be waived in whole or in part by the Company.
7.1. ACCURACY OF REPRESENTATIONS AND WARRANTIES AND COMPLIANCE WITH
OBLIGATIONS. The representations and warranties of Parents and
Merger Sub contained in this Agreement shall be true and correct in
all material respects when made as of the date of this Agreement.
Parents and Merger Sub shall have performed and complied in all
material respects with all of its obligations required
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by this Agreement to be performed or complied with at or prior to
the Effective Time, except in the event failure to comply would not
prevent the consummation of the transactions contemplated hereby.
Each of the Parents and the Merger Sub shall have delivered to the
Company a certificate, dated as of the Effective Date, and signed by
an executive officer of each of the Parents and the Merger Sub,
certifying to the effect of the above.
7.2. STOCKHOLDER APPROVAL. This Agreement and the Merger shall have been
approved by the affirmative vote, in person or by proxy, of the
holders of a majority of the outstanding shares of the Common Stock
entitled to vote at regular or special meeting.
7.3. NO ORDER OR INJUNCTION. There shall not be issued and in effect by
or before any court or other governmental body an order or
injunction restraining or prohibiting the transactions contemplated
hereby.
7.4. CORPORATE CERTIFICATE. Parents and Merger Sub shall have delivered
the Company (i) copies of the Organizational Documents of each
Parent and Merger Sub as in effect immediately prior to the
Effective Time; (ii) copies of resolutions adopted by the Board of
Directors of each Parent and Merger Sub and the stockholders of
Merger Sub authorizing the transactions contemplated by this
Agreement; and (iii) a certificate of good standing of each Parent
and Merger Sub issued by the Secretary of State of Delaware as of a
date not more than five business days prior to the Effective Time,
certified in each case as of the Effective Time by the respective
Secretary of each Parent and Merger Sub as being true, correct and
complete.
7.5. OTHER DOCUMENTS. The Company shall have received such other
documents, instruments and certificates incidental to the
transactions contemplated by this Agreement as are reasonably
requested by it.
ARTICLE VIII
DEFINITIONS
8.1. DEFINED TERMS. As used herein, the following terms shall have the
following meanings:
"Affiliate" shall have the meaning ascribed to it in Rule 12b-2 of
the Exchange Act, as in effect on the date hereof.
"AMEX" means the American Stock Exchange.
"Code" means the Internal Revenue Code of 1986, as amended.
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"Contract" means any agreement, contract, lease, note, mortgage,
indenture, loan agreement, franchise agreement, covenant, employment
agreement, license, instrument, purchase and sales order, commitment,
undertaking, obligation, whether written or oral, express or implied.
"Environmental Claims" means all accusations, allegations, notices
of violation, liens, claims, demands, suits, or causes of action for any
damage, including, without limitation, personal injury, property damage
(including, without limitation, any depreciation or diminution of
property values), lost use of property or consequential damages, arising
directly or indirectly out of (i) Environmental Laws; or (ii) the
presence, use, handling, storage, treatment, recycling, generation,
transportation, release, spilling, leaking, pumping, pouring, emptying,
discharging, injecting, escaping, leaching, disposal, dumping or
threatened release of Hazardous Substances at any location, whether or
not owned, leased or operated by the Company or its Subsidiaries.
"Environmental Laws" means all applicable federal, state, district,
local and foreign laws, all rules or regulations promulgated thereunder,
and all orders, consent orders, judgments, notices, permits or demand
letters issued, promulgated or entered pursuant thereto, relating to
pollution or protection of the environment (including, without
limitation, ambient air, surface water, ground water, land surface, or
subsurface strata), including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA"), the
Toxic Substances Control Act ("TSCA"), the Hazardous Materials
Transportation Act, the Resource Conservation and Recovery Act ("RCRA"),
the Clean Water Act, the Safe Drinking Water Act, the Clean Air Act, the
Atomic Energy Act of 1954, the Occupational Safety and Health Act
("OSHA") and the Emergency Planning and Community-Right-to-Know Act, each
as amended, and all analogous laws promulgated or issued by any
Governmental Authority.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"ERISA Affiliate" means any entity which is (or at any relevant time
was) (i) a Subsidiary of the Company, or (ii) a member of a "controlled
group of corporations" with, under "common control" with, or a member of
an "affiliated service group" with, the Company or any of its
Subsidiaries, as set forth in Section 414 (b), (c), (m) or (o) of the
Code.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"GAAP" means generally accepted accounting principles in effect in
the United States of America from time to time.
"Governmental Authority" means any nation or government, any state,
regional, local or other political subdivision thereof, and any entity or
official exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
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"Hazardous Substances" means all pollutants, contaminants,
chemicals, wastes, any other carcinogenic, ignitable, corrosive,
reactive, toxic or otherwise hazardous substances or materials (whether
solids, liquids or gases) and any other materials or substances subject
to regulation, control or remediation under Environmental Laws.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended.
"KMC Credit Agreement" means the Credit Agreement, dated as of
December 19, 1996, among ▇▇▇▇ Media Corporation, the Lenders as defined
therein, the DLJ Capital Funding, Inc., as Syndication Agent and the
First National Bank of Boston, as Administration Agent, as amended.
"Lien" means any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including, but not limited to, any
conditional sale or other title retention agreement, any lease in the
nature thereof, and the filing of or agreement to give any financing
statement under the Uniform Commercial Code or comparable law or any
jurisdiction in connection with such mortgage, pledge, security interest,
encumbrance, lien or charge)
"Material Adverse Change (or Effect)" means a change (or effect), in
the condition (financial or otherwise), properties, assets, liabilities,
rights, obligations, operations, business or prospects which change (or
effect) individually or in the aggregate, is materially adverse to such
condition, properties, assets, liabilities, rights, obligations,
operations, business or prospects. With respect to any Person, a Material
Adverse Change (or Effect) refers to such Person and its Subsidiaries.
"NCC" means National Cable Communications, L.P.
"Register", "registered" and "registration" refer to a registration
of the offering and sale of securities effected by preparing and filing a
registration statement in compliance with the Securities Act and the
declaration or ordering of the effective of such registration statement.
"Representation Agreement" means any agreement (including, without
limitation, any agreement applicable to a specific radio or television
broadcast station (each, a "Station Agreement") or any master agreement,
mutual agreement or letter agreement (each, a "Master Agreement")
applicable to one or more radio or television broadcast stations or
Station Agreements) now in effect or hereafter entered into between the
Company or any of its Subsidiaries and owners and operators of electronic
media (including, without limitation, radio and television stations,
cable systems, interactive television projects, Internet and other
on-line services) pursuant to which the Company or such Subsidiary sells
advertising on such media, as such agreements may be amended,
supplemented or otherwise modified from time to time.
"SEC" means the Securities and Exchange Commission.
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"Securities Act" means the Securities Act of 1933, as amended.
"Subsidiary" shall mean, as to any Person, any corporation, joint
venture, limited liability company, partnership, other business entity or
Person of which at least a majority of voting securities or other
ownership interests are, at the time as of which any determination is
being made, owned directly or indirectly by such Person, and as to the
Company, shall also include NCC.
"Tax Affiliate" means, as to any Person, (i) any Subsidiary of such
Person, and (ii) any Affiliate of such Person with which such Person
files or is eligible to file consolidate, combined or unitary tax
returns.
"Tax Authority" includes the Internal Revenue Service and any state,
local, foreign or other governmental authority responsible for the
administration of any Taxes.
"Tax Return" means any declaration, estimate, return, report,
information statement, schedule or other document (including any related
or supporting information) with respect to Taxes that is required to be
filed with any Tax Authority.
"Taxes" includes all federal, provincial, territorial, state,
municipal, local, domestic, foreign or other taxes, imposts, rates,
levies, assessments and other charges including, without limitation, ad
valorem, capital, capital stock, customs and import duties, disability
documentary stamp, employment, estimated, excise, fees, franchise,
gains, goods and services, gross income, gross receipts, income,
intangible, inventory, license, mortgage recording, net income,
occupation, payroll, personal property, production, profits, property,
real property, recording, rent, sales, severance, sewer, social security,
stamp, transfer, transfer gains, unemployment, use, value added, water,
windfall profits, and withholding, together with any interest, additions,
fines or penalties with respect thereto or in respect of any failure to
comply with any requirement regarding Tax Returns and any interest in
respect of such additions, fines or penalties and shall include any
transferee liability in respect of any and all of the above.
"10 1/2% Notes" means the 10 1/2% Senior Subordinated Notes due 2007
of ▇▇▇▇ Media Corporation.
"Third Party" means any Person other than Parents, Merger Sub or any
of their respective Affiliates.
8.2. OTHER DEFINITIONAL PROVISIONS.
(a) All terms defined in this Agreement shall have
the defined meanings when used in any certificates, reports or
other documents made or delivered pursuant hereto or thereto,
unless the context otherwise requires.
(b) Terms defined in the singular shall have a comparable meaning
when used in the plural, and vice versa.
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(c) As used herein, the neuter gender shall also denote the
masculine and feminine, and the feminine gender shall also
denote the neuter and feminine where the context so permits.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
9.1. TERMINATION. This Agreement may be terminated at any time prior to
the Effective Time:
(a) By mutual written consent of all of the parties hereto at any
time prior to the Closing;
(b) By Parents and Merger Sub upon delivery of written notice to
the Company in accordance with Section 10.1 of this Agreement
in the event of a material breach by the Company of any
provisions of this Agreement, which breach shall not be
remedied within ten business days of written notice specifying
such breach in reasonable detail and demanding that the same
be remedied;
(c) By the Company upon delivery of written notice to Parents in
accordance with Section 10.1 of this Agreement in the event of
a material breach by Parents or Merger Sub of any provision of
this Agreement, which breach shall not be remedied within ten
business days of written notice specifying such breach in
reasonable detail and demanding that the same be remedied;
(d) By Parents, Merger Sub, or the Company upon delivery of
written notice to the others in accordance with Section 10.1
of this Agreement, if the Closing shall not have occurred by
December 31, 1997, unless the failure of the Closing to occur
is the result of a breach by the terminating party that caused
the Closing to be delayed;
(e) By Parents, Merger Sub or the Company if a court of competent
jurisdiction or governmental, regulatory or administrative
agency or commission shall have issued an order, decree or
ruling or taken any other action (which order, decree or
ruling each of the parties hereto shall use all reasonable
efforts to lift), in each case permanently restraining,
enjoining or otherwise prohibiting the transactions
contemplated by this Agreement, and such order, decree, ruling
or other action shall have become final and nonappealable;
(f) By Parents and Merger Sub if, due to any event, occurrence or
non-occurrence, as the case may be, which results in or
constitutes a failure to
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satisfy a Tender Offer Condition, the Offer is terminated or
expires in accordance with its terms without Merger Sub having
purchased any Common Stock thereunder provided, that Parents
or Merger Sub may not terminate if any of them is in material
breach of this Agreement;
(g) By Parents and Merger Sub or the Company if th stockholders of
the Company shall have failed to approve this Agreement, the
Merger and the transactions contemplated herein at the meeting
called pursuant to Section 5.9, provided that prior to or
contemporaneous with such termination the payments set forth
in Section 10.3 of this Agreement shall have been paid to
Merger Sub;
(h) By Parents and Merger Sub if (i) the Board of Directors (A)
shall withdraw or modify in any manner adverse to Parents or
Merger Sub its approval or recommendation of this Agreement or
the Merger or the Stockholder Agreement, (B) in response to
the commencement of any tender offer or exchange offer by
Persons other than Parents and their Affiliates for more than
25% of the outstanding shares of the Company's Common Stock,
shall have not recommended rejection of such tender offer or
exchange offer within the time prescribed therefor by
applicable law, (C) shall approve or recommend any Takeover
Proposal other than the Offer, or (D) shall resolve to take
any of the actions specified in clauses (A) or (C) above or
(ii) the stockholders party to the Stockholder Tender
Agreement fail to tender their shares of Common Stock in the
Offer unless permitted under the terms of the Stockholder
Tender Agreement;
(i) By the Company, if Parents or Merger Sub terminate the Offer
in accordance with this Agreement, or the Offer shall have
expired without Parents or Merger Sub purchasing any Shares of
Common Stock pursuant hereto; provided, that, the Company may
not terminate if it is in material breach of this Agreement;
or
(j) By the Company, if the Board of Directors of the Company shall
have determined to accept a Superior Proposal, provided that
prior to or contemporaneous with such termination the payments
set forth in Section 10.3 of this Agreement shall have been
paid to Merger Sub.
9.2. EFFECT OF TERMINATION. Except for the provisions of Section 5.7
and Section 10.3 hereof, which shall survive any termination of
this Agreement, in the event of termination of this Agreement
pursuant to Section 9.1, this Agreement shall forthwith become void
and of no further force and effect, and the parties shall be
released from any and all obligations hereunder; provided, however,
that nothing herein shall relieve any party from liability for the
willful breach of any of its representations, warranties, covenants
or agreements set forth in this Agreement.
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ARTICLE X
GENERAL PROVISIONS
10.1. NOTICES. All notices, requests, demands, claims, and other
communications hereunder shall be in writing and shall be deemed
given if delivered by certified or registered mail (first class
postage pre-paid), guaranteed overnight delivery or facsimile
transmission if such transmission is confirmed by delivery by
certified or registered mail (first class postage pre-paid) or
guaranteed overnight delivery, to the following addresses and
telecopy numbers (or to such other addresses or telecopy numbers
which such party shall designate in writing to the other party):
(a) if to the Company to:
▇▇▇▇ Media Group, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Akin, Gump, Strauss, ▇▇▇▇▇ & ▇▇▇▇, L.L.P.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to Parents or Merger Sub to:
Evergreen Media Corporation
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
and to
Chancellor Broadcasting Company
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
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with a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
10.2. ENTIRE AGREEMENT. This Agreement, the Stockholder Tender Agreement,
the Management Tender Agreement, and the Confidentiality Agreement
and other documents delivered at the Closing pursuant hereto,
contain the entire understanding of the parties in respect of its
subject matters and supersedes all prior agreements and
understanding (oral or written) between or among the parties with
respect to such subject matter. The Company Disclosure Statement
constitutes a part hereof as though set forth in full above.
10.3. EXPENSES.
(a) (i) In addition to any other amounts which may be payable or
become payable pursuant to any other paragraph of this Section
10.3, the Company shall (provided that neither of Parents nor
Merger Sub is then in material breach of its obligations under
this Agreement), promptly, but in no event later than the
earlier of (A) the time specified in Section 9.1 hereof, if
any, or (B) one business day after the termination of this
Agreement reimburse Parents and Merger Sub (to be paid as
Parents jointly direct in writing) for all documented Expenses
up to $2 million.
(ii) As used in this Agreement, "Expenses" includes all
out-of-pocket expenses (including, without limitation, all
fees and expenses of all banks (including commitment fees),
investment banking firms and other financial institutions,
and their respective agents and counsel, and counsel,
accountants, experts and consultants to a party hereto and
its affiliates) incurred by a party or its affiliate on its
or their behalf, whether incurred prior to, on or after the
date of this Agreement, in connection with or related to the
authorization, preparation, negotiation, execution and
performance of this Agreement and the transactions
contemplated hereby and the financing thereof, including the
preparation, printing, filing and mailing of the Offer
Documents and all other matters related to the transactions
contemplated hereby.
(b) If (i) this Agreement shall have been terminated pursuant to
Section 9.1(b) or pursuant to condition (a) of Annex 1 and
either of the following shall have occurred prior to such
termination: (A)(x) any corporation, partnership, person,
other entity or "group" (as referred to in Section
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13(d)(3) of the Exchange Act) other than Merger Sub, Parents,
or any of their respective Affiliates, but excluding the
entities' signatory to the Stockholder Tender Agreement and
their Affiliates or any "group" of which any such Persons is a
member, shall have become the beneficial owner of more than
25% of the outstanding shares of the Company's Common Stock,
or (y) any Person (other than Merger Sub, Parents, or any of
their respective Affiliates or any "group" of which any such
Persons is a member) shall have made, or proposed,
communicated or disclosed in a manner which is or otherwise
becomes public, a Takeover Proposal (including by making such
Takeover Proposal) and (B) on or prior to the eighteen-month
anniversary of the date of this Agreement, the Company either
consummates with a Person referred to in (A)(x) or (y) a
transaction the proposal of which would otherwise qualify as
an Takeover Proposal under Section 5.8 or enters into a
definitive agreement with respect to and subsequently
consummates a transaction with a Person referred to in (A)(x)
or (y) the proposal of which would otherwise qualify as an
Takeover Proposal under Section 5.8; or (ii) this Agreement is
terminated pursuant to Section 9.1(h) or (j), then in the case
of clauses (i) or (ii) of this Section 10.3(b) the Company
shall (1) in the case of clauses (b)(i)(A) and (b)(ii) above,
promptly, but in no event later than the earlier of (a) the
time, if any, specified in Section 9.1, or (b) one business
day after the termination of this Agreement and (2) in the
case of clause (b)(i)(B) above, promptly, but in no event
later than the date of the event specified therein shall have
occurred, pay Parents (as they jointly direct in writing)
Merger Sub a fee of $8 million in cash, which amount shall be
payable in same day funds.
(c) In addition to the other provisions of this Section 10.3, in
the event a fee is or becomes payable pursuant to Section 10.3
hereof, the Company agrees promptly, but in no event later
than two business days following written notice thereof, to
reimburse Merger Sub or its designee for all reasonable
out-of-pocket costs, fees and expenses, including, without
limitation, the reasonable fees and disbursements of counsel
and the expenses of litigation, incurred in connection with
collecting the Expenses pursuant to paragraph (a) of this
Section and the fee pursuant to paragraph (b) of this Section,
as a result of any breach by the Company of its obligations
under this Section 10.3.
(d) Except as set forth in Section 10.3(a), each of the parties
hereto shall pay all the fees and expenses incurred by it
incident to preparing for, entering into and carrying into
effect this Agreement and the transactions contemplated
herein; provided that the Company covenants and represents and
warrants that such fees and expenses incurred by the Company
for services of attorneys, accountants, investment bankers
(including for the
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fairness opinion) and all other advisors to the Company
associated with the transactions contemplated herein, will not
exceed $5 million.
10.4. AMENDMENT; WAIVER. This Agreement may not be modified, amended,
supplemented, canceled, or discharged, except by written
instrument executed by all parties. No failure to exercise and no
delay in exercising, any right, power or privilege under this
Agreement shall operate as a waiver, nor shall any single or
partial exercise of any right, power or privilege hereunder
preclude the exercise of any other right, power or privilege. No
waiver of any breach of any provision shall be deemed to be a
waiver of any preceding or succeeding breach of the same or any
other provision, nor shall any waiver be implied from any course
of dealing between the parties. No extension of time for
performance of any obligations or other acts hereunder or under
any other agreement shall be deemed to be an extension of the time
for performance of any other obligations or any other acts.
10.5. BINDING EFFECT; ASSIGNMENT. The rights and obligations of this
Agreement shall bind and inure to the benefit of the parties and
their respective successors and assigns. Nothing expressed or
implied herein shall be construed to give any other person any
legal or equitable rights hereunder. Except as expressly provided
herein, the rights and obligations of this Agreement may not be
assigned by the without the prior written consent of Parents and
Merger Sub within the prior written consent of the Company.
10.6. REPRESENTATIONS AND WARRANTIES. None of the representation and
warranties contained in this Agreement or any instrument or other
document deliver pursuant to this Agreement shall survive the
Effective Time.
10.7. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which
together shall constitute one and the same instrument.
10.8. INTERPRETATION. When a reference is made in this Agreement to an
article, section, paragraph, clause, schedule or exhibit, such
reference shall be deemed to be to this Agreement unless otherwise
indicated. The headings contained herein and on the schedules are
for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement or the schedules.
Whenever, the words "include," "includes" or "including" are used
in this Agreement, they shall be deemed to be followed by the words
"without limitation." Time shall be of the essence in this
Agreement.
10.9. GOVERNING LAW; INTERPRETATION. This Agreement shall be construed
in accordance with and governed for all purposes by the laws of the
State of Delaware without giving effect to the principles of
conflicts of laws thereunder which would specify the application of
the law of another jurisdiction.
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10.10. JURISDICTION; CONSENT TO SERVICE OF PROCESS.
(a) Each party hereto hereby irrevocably submits to the exclusive
jurisdiction of any federal or state court located within the
State of Delaware over any dispute arising out of or relating
to this Agreement and waives any objections which it may now
or hereafter have to the laying of the venue of any suit,
action or proceeding arising out of or relating to this
Agreement brought in any state or federal court of competent
jurisdiction in the State of Delaware, and hereby further
irrevocably waives any claim that any such suit, action or
proceeding brought in any such court has been brought in any
inconvenient forum. No suit, action or proceeding against a
party hereto with respect to this Agreement may be brought in
any court, domestic or foreign, or before any similar domestic
or foreign authority other than in a court of competent
jurisdiction in the State of Delaware, and each party hereto
hereby irrevocably waives any right which it may otherwise
have had to bring such an action in any other court, domestic
or foreign, or before any similar domestic or foreign
authority.
(b) Each of the parties hereto consents to process being served by
any party to this Agreement in any suit, action or proceeding
by the mailing of a copy thereof in accordance with the
provisions of Section 10.1.
10.11. ARM'S LENGTH NEGOTIATIONS. Each party hereto expressly represents
and warrants to all other parties hereto that (i) before executing
this Agreement, said party has fully informed himself or itself of
the terms, contents, conditions, and effects of this Agreement;
(ii) said party has relied solely and completely upon his or its
own judgment in executing this Agreement; (iii) said party has had
the opportunity to seek and has obtained the advice of counsel
before executing this Agreement; (iv) said party has acted
voluntarily and of his or its own free will in executing this
Agreement; (v) said party is not acting under duress, whether
economic or physical, in executing this Agreement; and (vi) this
Agreement is the result of arm's length negotiations conducted by
and among the parties and their respective counsel.
10.12. MATTERS AFFECTING PARENTS. It is understood and agreed that,
except as expressly provided in this Agreement, no condition in
or matter affecting the pending transactions between the Parents
shall act as a condition to the obligations of Parents or Merger
Sub hereunder or give rise to any right on the part of Parents or
Merger Sub to terminate this Agreement. The obligations of Parents
hereunder are joint and several. Any amendment, consent or waiver
on part of Parents or Merger Sub may be given by Evergreen on part
of Parents and Merger Sub.
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THE REMAINDER OF THIS PAGE IS INTENTIONALLY BLANK.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first written above.
CHANCELLOR BROADCASTING COMPANY
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
EVERGREEN MEDIA CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Chairman of the Board, President
and Chief Executive Officer
▇▇▇▇▇▇ ACQUISITION CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President and Chief Executive Officer
▇▇▇▇ MEDIA GROUP, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President and Chief Executive Officer
47
ANNEX 1
The capitalized terms used herein have the meanings set forth in the
Merger Agreement dated as of July 14, 1997 (the "Merger Agreement") to which
this Annex 1 is attached.
CONDITIONS OF THE OFFER
Notwithstanding any other provision of the Merger Agreement or the Offer,
Merger Sub shall not be required to accept for payment, purchase or pay for any
shares of Common Stock tendered and may terminate or (subject to the terms of
the Merger Agreement) amend the Offer and may postpone the acceptance for
payment of and payment for any shares of Common Stock, if prior to the time of
acceptance for payment of shares of Common Stock tendered and if pursuant to
the Offer (whether or not any shares of Common Stock have theretofore been
accepted for payment or paid for pursuant to the Offer) (i) there shall not
have been validly tendered and not properly withdrawn pursuant to the Offer at
least a majority of the shares of Common Stock, on a fully diluted basis (the
"Minimum Condition"), (ii) any waiting period under the HSR Act applicable to
the purchase of shares of Common Stock pursuant to the Offer shall not have
expired or been terminated, or (iii) any of the following shall occur:
(a) Any representation or warranty of the Company in the Merger
Agreement shall have been untrue or incorrect as of the date of the
Merger Agreement, or any Surviving Representation shall become
untrue or incorrect, except in each case for any failure that would
not have a Material Adverse Effect on the Company; or the Company
shall have failed to perform or comply in all material respects with
its obligations required by Articles I, IV and V of the Merger
Agreement to be performed or complied with prior to payment for any
shares of Common Stock tendered in the Offer.
(b) There shall have been instituted or be pending any action,
proceeding, application, claim or counterclaim by any government or
governmental authority or agency, domestic or foreign, before any
court or governmental regulatory or administrative agency,
authority, or tribunal, domestic or foreign, (i) challenging the
acquisition by Parents or Merger Sub of the shares of Common Stock,
seeking to restrain or prohibit the making or consummation of the
Offer; (ii) seeking to obtain from Parents or Merger Sub any
material damages, fines or legal sanctions related to the Offer or
the Merger or the subsequent ownership or operation of the Company;
(iii) seeking to prohibit or limit the ownership or operation by
Parents or Merger Sub or any of their affiliates of any material
portion of the business or assets of the Company or to compel
Parents or Merger Sub or any of their affiliates to dispose of or
forfeit material incidents of control all or any material portion of
the business or assets of the Company or of Merger Sub; (iv) seeking
to impose limitations on the ability of Parents or Merger Sub or any
of their affiliates effectively to exercise full rights of ownership
of the shares of Common Stock, including, without limitation, the
right to vote any shares of Common Stock
48
acquired or owned by Parents or Merger Sub or any of their
affiliates on all matters properly presented to the Company's
stockholders; or (v) seeking to require divestiture by Parents or
Merger Sub or any of their affiliates of any shares of Common
Stock; or
(c) There shall be any statute, rule, regulation, legislation,
interpretation, judgment, order or injunction proposed, enacted,
promulgated, entered, enforced, issued or deemed applicable to the
Offer, the Merger or other similar business combination by Merger
Sub or any affiliate of Parents with the Company, or any other
action shall have been taken by any government, governmental
authority or agency or court with respect to a proceeding described
in paragraph (b) above, domestic or foreign, that has, or, in
Parents' sole discretion, could be expected to result in, any of the
consequences referred to in paragraph (b) above; or
(d) There shall have been instituted or be pending any action,
proceeding, application, claim or counterclaim by any Person (other
than a governmental authority or agency), before any court or
governmental regulatory or administrative agency, authority, or
tribunal, domestic or foreign, that (i) relates solely to the
business of the Company or its Subsidiaries (including employee
related matters) prior to the date of the Merger Agreement (and not
in connection with or in contemplation of the transactions
contemplated by the Merger Agreements and (ii) would if adversely
determined have a Material Adverse Effect; or
(e) There shall have occurred (i) any general suspension of trading in,
or limitation on prices for, securities on the New York Stock
Exchange, Inc., the American Stock Exchange, or the Nasdaq Stock
Market; (ii) the declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States
(whether or not mandatory); (iii) a decline of at least 25% in
either the Dow ▇▇▇▇▇ Average of Industrial Stocks or the Standard &
Poor's 500 Index from that existing at the close of business on July
11, 1997; or (iv) in the case of any of the foregoing existing at
July 11, 1997, a material acceleration or worsening thereof;
The foregoing conditions are for the sole benefit of Parents and
Merger Sub and may be asserted by Parents or Merger Sub regardless of the
circumstances giving rise to any such conditions and may be waived by Parents
or Merger Sub, in whole or in part, at any time and from time to time, in its
sole discretion. The failure by Parents or Merger Sub at any time to exercise
any of the foregoing rights will not be deemed a waiver of any such right and
the waiver of such right with respect to any particular facts or circumstances
shall not be deemed a wavier with respect to any other facts or circumstances,
and each such right will be deemed an ongoing right which may be asserted at
any time and from time to time. Any determination by Parents or Merger Sub
concerning the event descried above will be fined and binding upon all parties.