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Sample Business ContractsHome: Sample Business Contracts:
AGREEMENT AND PLAN OF MERGER
By and Among
AMERICAN RADIO SYSTEMS CORPORATION,
WESTINGHOUSE ELECTRIC CORPORATION
and
R ACQUISITION CORP.
Dated as of
September 19, 1997
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TABLE OF CONTENTS
Page
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ARTICLE 1 DEFINED. TERMS.............................................................2
ARTICLE 2 THE MERGER.................................................................2
2.1 The Merger................................................................2
2.2 Closing...................................................................2
2.3 Effective Time............................................................2
2.4 Effect of the Merger......................................................2
2.5 Certificate of Incorporation..............................................2
2.6 Bylaws....................................................................3
2.7 Directors and Officers....................................................3
2.8 Tower Distribution/Tower Merger...........................................3
ARTICLE 3 CONVERSION OF SHARES; EXCHANGE OF CERTIFICATES.............................3
3.1 Conversion of Capital Stock...............................................3
3.2 Exchange of Certificates. ...............................................4
3.3 Closing of American's Transfer Books......................................5
3.4 Dissenting Shares.........................................................5
3.5 Tower Common Stock........................................................6
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF AMERICAN.................................6
4.1 Organization and Business; Power and Authority; Effect of Transaction.....6
4.2 Financial and Other Information. ........................................8
4.3 Changes in Condition......................................................8
4.4 Properties................................................................9
4.5 Compliance with Private Authorizations....................................9
4.6 Compliance with Governmental Authorizations and Applicable
Law; Litigation..........................................................9
4.7 Related Transactions.....................................................11
4.8 Taxes and Tax Matters....................................................11
4.9 Employee Retirement Income Security Act of 1974..........................12
4.10 Insurance................................................................14
4.11 Authorized Capital Stock.................................................15
4.12 Employment Arrangements..................................................15
4.13 Voting Requirements......................................................15
4.14 Brokers..................................................................16
4.15 Information Supplied.....................................................16
4.16 Ordinary Course of Business..............................................16
4.17 Environmental Matters....................................................17
4.18 State Takeover Statutes..................................................17
4.19 Opinion of Financial Advisor.............................................17
4.20 Contracts; Debt Instruments..............................................17
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF MERGEPARTY..............................18
5.1 Organization and Business; Power and Authority; Effect of Transaction....18
5.2 Compliance with Governmental Authorizations and Applicable
Law; Litigation.........................................................19
5.3 Opinion of Financial Advisor.............................................20
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5.4 Mergeparty Financing.....................................................20
ARTICLE 6 COVENANTS.................................................................20
6.1 Access to Information; Confidentiality...................................20
6.2 Agreement to Cooperate...................................................21
6.3 Public Announcements.....................................................23
6.4 Notification of Certain Matters..........................................23
6.5 Stockholder Approval. ..................................................23
6.6 Information Statement. .................................................24
6.7 Miscellaneous............................................................24
6.8 Option Plans.............................................................24
6.9 Conduct of Business by Mergeparty Pending the Merger.....................26
6.10 Conduct of Business by American Pending the Merger.......................26
6.11 Control of Operations....................................................28
6.12 Directors', Officers' and Employees' Indemnification and Insurance.......28
6.13 Solicitation of Employees................................................30
6.14 Change of Name...........................................................30
6.15 Benefit Plans............................................................30
6.16 American Cumulative Preferred Stock......................................30
6.17 American Tower Transaction...............................................31
6.18 Purchase Price Adjustment................................................36
6.19 Tower Leases.............................................................39
ARTICLE 7 CLOSING CONDITIONS........................................................40
7.1 Conditions to Obligations of Each Party to Effect the Merger.............40
7.2 Conditions to Obligations of Mergeparty..................................41
7.3 Conditions to Obligations of American....................................42
ARTICLE 8 TERMINATION, AMENDMENT AND WAIVER.........................................42
8.1 Termination..............................................................42
8.2 Effect of Termination. ...............................................43
ARTICLE 9 GENERAL PROVISIONS........................................................44
9.1 Amendment................................................................44
9.2 Waiver...................................................................44
9.3 Fees, Expenses and Other Payments........................................44
9.4 Notices..................................................................44
9.5 Specific Performance; Other Rights and Remedies..........................45
9.6 Survival of Representations, Warranties, Covenants and Agreements........46
9.7 Severability.............................................................46
9.8 Counterparts.............................................................46
9.9 Section Headings.........................................................46
9.10 Governing Law............................................................46
9.11 Further Acts.............................................................46
9.12 Entire Agreement; No Other Representations or Agreements.................47
9.13 Assignment...............................................................47
9.14 Parties in Interest......................................................47
9.15 Mutual Drafting..........................................................47
9.16 Obligations of American and of Mergeparty................................47
9.17 Mergeparty Agent for Mergeparty Subsidiary...............................48
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APPENDIX A: Definitions
EXHIBITS:
EXHIBIT A: Restated Certificate of Incorporation (Section 2.5)
EXHIBIT B: Market Fee Schedule
EXHIBIT C: Form of Opinion of FCC Counsel to American
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AGREEMENT AND PLAN OF MERGER
Agreement and Plan of Merger, dated as of September 19, 1997, by and
among American Radio Systems Corporation, a Delaware corporation ("American"),
Westinghouse Electric Corporation, a Pennsylvania corporation ("Mergeparty"),
and R Acquisition Corp., a Delaware corporation ("Mergeparty Subsidiary").
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of American, Mergeparty
and Mergeparty Subsidiary have approved the merger (the "Merger") of Mergeparty
Subsidiary into American on the terms and conditions set forth in this
Agreement and Plan of Merger (this "Agreement") and have approved this
Agreement; and
WHEREAS, the Board of Directors of American has determined that the
sale of American Tower Systems Holding Corporation ("American Tower") at this
time is not in the best interest of American and its stockholders, and that the
distribution of all of the common stock of American Tower through a pro rata
distribution of the common stock of American Tower to the holders of American
common stock (the "Tower Distribution"), on the terms and conditions set forth
in this Agreement, is fair to and in the best interests of, American and its
stockholders, the Board of Directors of American has approved the Tower
Distribution and has directed that the Tower Distribution be submitted to the
stockholders of American for their approval; and
WHEREAS, the Board of Directors of Mergeparty has approved and adopted
this Agreement as the sole stockholder of Mergeparty Subsidiary, and the Board
of Directors of American has directed that this Agreement be submitted to the
stockholders of American for their approval and adoption; and
WHEREAS, this Agreement provides that Mergeparty Subsidiary shall be
merged into American, and American shall be the surviving corporation; and
WHEREAS, the parties agree that, subject to certain conditions
contained in this Agreement, the consummation of the Tower Distribution is a
condition of the consummation of the Merger; and
WHEREAS, as a condition of the willingness of Mergeparty to enter into
this Agreement, and as an inducement thereto Mergeparty and certain of the
stockholders of American who are entitled to cast votes in favor of approval
and adoption of the Merger Agreement sufficient to constitute the Required Vote
are delivering written consents of stockholders approving and adopting the
Merger Agreement and approving the Tower Distribution.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements herein contained and
other valuable consideration, the receipt and adequacy whereof are hereby
acknowledged, the parties hereto hereby, intending to be legally bound,
represent, warrant, covenant and agree as follows:
<PAGE> 6
ARTICLE 1
DEFINED TERMS
As used herein, unless the context otherwise requires, the terms
defined in Appendix A shall have the respective meanings set forth therein.
Terms defined in the singular shall have a comparable meaning when used in the
plural, and vice versa, and the reference to any gender shall be deemed to
include all genders. Unless otherwise defined or the context otherwise clearly
requires, terms for which meanings are provided in this Agreement shall have
such meanings when used in either Disclosure Schedule and each Collateral
Document executed or required to be executed pursuant hereto or thereto or
otherwise delivered, from time to time, pursuant hereto or thereto. References
to "hereof," "herein" or similar terms are intended to refer to the Agreement
as a whole and not a particular section, and references to "this Section" or
"this Article" are intended to refer to the entire section or article and not a
particular subsection thereof. The term "either party" shall, unless the
context otherwise requires, refer to American, on the one hand, and Mergeparty
and Mergeparty Subsidiary, on the other hand.
ARTICLE 2
THE MERGER
2.1 The Merger. (a) Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with the Delaware General
Corporation Law (the "DCL"), at the Effective Time, Mergeparty Subsidiary shall
be merged with and into American. As a result of the Merger, the separate
corporate existence of Mergeparty Subsidiary shall cease and American shall
continue as the surviving corporation in the Merger (sometimes referred to, as
such, as the "Surviving Corporation").
2.2 Closing. Unless this Agreement shall have been terminated pursuant
to Section 8.1 and subject to the satisfaction or, to the extent permitted by
Applicable Law, waiver of the conditions set forth in Article 7, the closing of
the Merger (the "Closing") will take place, at 10:00 a.m., on the Closing Date,
at the offices of Cravath, Swaine & Moore, 825 Eighth Avenue, New York, New
York 10019, on the date that is the second (2nd) day after the date on which
all of the conditions set forth in Article 7 (other than those which require
delivery of opinions or documents at the Closing) shall have been satisfied or
waived, unless another date, time or place is agreed to in writing by the
parties. The date on which the Closing occurs is herein referred to as the
"Closing Date."
2.3 Effective Time. Subject to the provisions of this Agreement, as
promptly as practicable after the Closing, the parties hereto shall cause the
Merger to be consummated by filing a Certificate of Merger and any related
filings required under the DCL with the Secretary of State of the State of
Delaware. The Merger shall become effective at such time as such documents are
duly filed with the Secretary of State of the State of Delaware, or at such
later time as is specified in such documents (the "Effective Time").
2.4 Effect of the Merger. The Merger shall have the effects provided
for under the DCL.
2.5 Certificate of Incorporation. The Certificate of Incorporation of
American, as in effect immediately prior to the Effective Time, shall be
amended as of the Effective Time as described in
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Exhibit A and, as so amended, such Certificate of Incorporation, together with
the certificates of designation for the American Cumulative Preferred Stock and
the American Convertible Preferred Stock, shall be the Certificate of
Incorporation of the Surviving Corporation until thereafter changed or amended
as provided therein or by Applicable Law. Such amendment shall not be deemed to
affect in any manner the Certificates of Designation of (i) the 11_% Series B
Cumulative Exchangeable Preferred Stock, par value $.01 per share, of American
(the "American Cumulative Preferred Stock") or (ii) the 7% Convertible
Exchangeable Preferred Stock, par value $.01 per share, of American (the
"American Convertible Preferred Stock" and, collectively with the American
Cumulative Preferred Stock, the "American Preferred Stock").
2.6 Bylaws. The bylaws of American in effect at the Effective Time
shall be the bylaws of the Surviving Corporation until amended in accordance
with Applicable Law and the Organic Documents of American.
2.7 Directors and Officers. From and after the Effective Time, until
successors are duly elected or appointed and qualified, or upon their earlier
resignation or removal, in accordance with Applicable Law and the Organic
Documents of Mergeparty Subsidiary and American, as applicable, (a) the
directors of Mergeparty Subsidiary at the Effective Time shall be the directors
of the Surviving Corporation, and (b) the officers of American at the Effective
Time shall be the officers of the Surviving Corporation.
2.8 Tower Distribution/Tower Merger. The Board of Directors of
American in its sole and absolute discretion may abandon the Tower Distribution
and, in lieu thereof, effect the distribution of all of the common stock of
American Tower Sub to the holders of American Common Stock through a merger of
American Tower with and into American (the "Tower Merger"); provided that the
Tower Distribution shall not be abandoned unless an agreement of merger
relating to the Tower Merger shall be approved by the Board of Directors of
American and approved and adopted by the stockholders of American; provided
further, that the Board of Directors of American in its sole and absolute
discretion may abandon the Tower Distribution and the Tower Merger by
delivering written notice to such effect to Mergeparty (the "Notice of
Abandonment").
ARTICLE 3
CONVERSION OF SHARES; EXCHANGE OF CERTIFICATES
3.1 Conversion of Capital Stock. At the Effective Time, by virtue of
the Merger and without any action on the part of Mergeparty, Mergeparty
Subsidiary or American or their respective stockholders:
(a) Each share of Common Stock, par value $1.00 per share, of
Mergeparty Subsidiary issued and outstanding immediately prior to the Effective
Time shall be converted into and become one validly issued, fully paid and
nonassessable share of Common Stock, par value $.01 per share, of the Surviving
Corporation;
(b) Each share of the American Cumulative Preferred Stock issued and
outstanding immediately prior to the Effective Time shall remain outstanding;
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(c) Each share of the American Convertible Preferred Stock issued and
outstanding immediately prior to the Effective Time shall remain outstanding;
(d) Subject to paragraph (e) below, each share of Class A Common
Stock, par value $.01 per share ("Class A Common"), each share of Class B
Common Stock, par value $.01 per share ("Class B Common"), and each share of
Class C Common Stock, par value $.01 per share, of American (collectively, the
"American Common Stock") issued and outstanding immediately prior to the
Effective Time (other than Dissenting Shares) shall, by virtue of the Merger
and without any action on the part of the holder thereof, be converted into the
right to receive $44.00 (the "Merger Consideration"); and
(e) Each share of American Common Stock owned by American or any of
its Subsidiaries or Mergeparty or any of its Subsidiaries immediately prior to
the Effective Time shall automatically be canceled and extinguished without any
conversion thereof and no payment shall be made with respect thereto.
As a result of the Merger and without any action on the part of the
holder thereof, at the Effective Time all shares of American Common Stock shall
cease to be outstanding and shall be canceled and retired and shall cease to
exist, and each holder of any certificates formerly representing such shares
shall thereafter cease to have any rights with respect to such shares, except,
subject to paragraph (e) above, the right to receive, without interest, the
Merger Consideration, or, in the case of a holder of Dissenting Shares, the
right to perfect the right to receive payment for Dissenting Shares pursuant to
Section 262 of the DCL.
3.2 Exchange of Certificates.
(a) From time to time, on or prior to or after the Effective Time,
Mergeparty shall deposit or cause to be deposited with an exchange agent
selected by Mergeparty and not reasonably disapproved of by American (the
"Exchange Agent") in trust for the benefit of the American stockholders cash in
amounts and at times necessary for the prompt payment of the Merger
Consideration upon the surrender of Certificates.
(b) Not more than five (5) business days subsequent to the Effective
Time, the Exchange Agent shall mail to each holder of record of a certificate
or certificates that immediately prior to the Effective Time represented
outstanding shares of American Common Stock (the "Certificates") (i) a letter
of transmittal (which shall specify that delivery shall be effected, and risk
of loss and title to the Certificates shall pass, only upon actual delivery of
the Certificates to the Exchange Agent and shall be in such form and have such
other provisions as American and Mergeparty may agree) and (ii) instructions
for use in effecting the surrender of the Certificates in exchange for the
Merger Consideration. Upon surrender of Certificates for cancellation to the
Exchange Agent, together with a duly executed letter of transmittal and such
other documents as the Exchange Agent shall reasonably require, the holder of
such Certificate shall receive in exchange therefor the Merger Consideration
multiplied by the number of shares of American Common Stock formerly
represented by such Certificates. The amount paid to the holder of Certificates
shall be in the form of a wire transfer of immediately available funds if so
requested by any holder entitled to receive not less than $500,000 in cash, and
the cost of such wire transfers shall be borne by the Surviving Corporation.
Such letter of transmittal and instructions shall be available at the Closing
for holders of American Common Stock. Notwithstanding the foregoing, neither
the Exchange
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Agent nor any party hereto shall be liable to a holder of shares of American
Common Stock for any Merger Consideration delivered to a public official
pursuant to applicable abandoned property, escheat or similar Laws.
(c) Promptly following the date which is six (6) months after the
Closing Date, the Exchange Agent shall deliver to Mergeparty all cash in its
possession relating to the transactions described in this Agreement that remain
unclaimed, and the Exchange Agent's duties shall terminate. Thereafter, each
holder of a Certificate may surrender such Certificate to the Surviving
Corporation and (subject to applicable abandoned property, escheat and similar
Laws) receive in exchange therefor the aggregate Merger Consideration to which
such holder is entitled, without any interest thereon.
(d) If the Merger Consideration (or any portion thereof) is to be paid
to a Person other than the Person in whose name the Certificate surrendered in
exchange therefor is registered, it shall be a condition to the payment of the
Merger Consideration that the Certificate so surrendered shall be properly
endorsed or accompanied by appropriate stock powers (with signatures guaranteed
in accordance with the transmittal letter) and otherwise in proper form for
transfer, that such transfer otherwise be proper and that the Person requesting
such transfer pay to the Exchange Agent any transfer or other Taxes payable by
reason of the foregoing or establish to the satisfaction of the Exchange Agent
that such Taxes have been paid or are not required to be paid.
(e) In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the Person claiming
such Certificate to be lost, stolen or destroyed and subject to such other
reasonable conditions as the Exchange Agent may impose, the Exchange Agent
shall issue in exchange for such lost, stolen or destroyed Certificate the
Merger Consideration (to the extent applicable) deliverable in respect thereof
as determined in accordance with this Article. When authorizing such issue of
the Merger Consideration in exchange therefor, the Exchange Agent may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed Certificate (if other than a recognized
financial institution) to give the Exchange Agent a bond or other surety in
such sum as it may reasonably direct as indemnity against any Claim that may be
made against the Exchange Agent with respect to the Certificate alleged to have
been lost, stolen or destroyed.
(f) At and after the Effective Time, the holder of a Certificate shall
cease to have any rights as an American stockholder, except for the right to
surrender Certificates in the manner prescribed by Section 3.2 in exchange for
payment of the Merger Consideration, or, in the case of a holder of Dissenting
Shares, the right to perfect the right to receive payment for Dissenting Shares
pursuant to Section 262 of the DCL.
(g) The Surviving Corporation shall be entitled to, or shall be
entitled to cause the Exchange Agent to, deduct and withhold from the
consideration otherwise payable pursuant to this Agreement to any holder of
shares of American Common Stock such amounts as are required to be deducted and
withheld 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 by the Surviving Corporation or the Exchange Agent, as the case may
be, such withheld amounts shall be treated for all purposes of this Agreement
as having been paid to the holder of the shares of American Common Stock in
respect of which such deduction and withholding was made by the Surviving
Corporation or the Exchange Agent.
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(h) The Exchange Agent shall invest any funds held by it for purposes
of this Section 3.2 as directed by Mergeparty, on a daily basis. Any interest
and other income resulting from such investments shall be paid to Mergeparty
and any risk of loss resulting from such investments shall be borne by
Mergeparty.
3.3 Closing of American's Transfer Books. At the Effective Time, the
stock transfer books of American shall be closed and no transfer of shares of
American Common Stock which were outstanding immediately prior to the Effective
Time shall thereafter be made. If, after the Effective Time, subject to the
terms and conditions of this Agreement, Certificates formerly representing
American Common Stock are presented to the Surviving Corporation, they shall be
canceled and exchanged for the Merger Consideration in accordance with the
provisions of this Article.
3.4 Dissenting Shares.
(a) Notwithstanding any other provision of this Agreement to the
contrary, shares of American Common Stock that are outstanding immediately
prior to the Effective Time and which are held by American stockholders who
shall have not voted in favor of the Merger or consented thereto in writing and
who shall be entitled to and shall have demanded properly in writing appraisal
rights for such shares of American Common Stock in accordance with Section 262
of the DCL and who shall not have withdrawn such demand or otherwise have
forfeited appraisal rights (collectively, the "Dissenting Shares"), shall not
be converted into or represent the right to receive the Merger Consideration
payable in respect of each share of American Common Stock represented thereby.
Such American stockholders shall be entitled to receive payment of the
appraised value of such shares of American Common Stock held by them in
accordance with the provisions of the DCL; provided, however, that all
Dissenting Shares held by American stockholders who shall have failed to
perfect or who effectively shall have withdrawn, forfeited or lost their
appraisal rights with respect to such shares of American Common Stock under the
DCL shall thereupon be deemed to have been converted into and to have become
exchangeable for, as of the Effective Time, the right to receive, without any
interest thereon, the Merger Consideration upon surrender, in the manner
provided in Section 3.2, of the Certificates with respect to such shares.
(b) American shall give Mergeparty prompt notice of any demands for
appraisal rights received by it, withdrawals of such demands, and any other
instruments served pursuant to the DCL and received by American and relating
thereto. American shall give Mergeparty the opportunity to direct all
negotiations and proceedings with respect to demands for appraisal rights under
the provisions of the DCL. American shall not, except with the prior written
consent of Mergeparty, make any payment with respect to any demands for
appraisal rights, or offer to settle, or settle, any such demands.
3.5 Tower Common Stock. In the event that prior to the Effective Time,
the Tower Common Stock distributable upon the Tower Distribution or issuable in
the Tower Merger shall not have been distributed or issued, American and
Mergeparty shall cooperate with each other so that the Exchange Agent may
effect such issuance or distribution simultaneously with the exchange of
Certificates for Merger Consideration as provided in this Article 3, together
with any cash in lieu of a fractional share and any dividends or other
distributions which may be payable to a holder of Tower Common Stock following
the Effective Time.
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF AMERICAN
Except as set forth with respect to specifically identified
representations and warranties in the American Disclosure Schedule, American
hereby represents and warrants to Mergeparty and Mergeparty Subsidiary as
follows:
4.1 Organization and Business; Power and Authority; Effect of
Transaction.
(a) American is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Delaware and has all requisite
power and authority (corporate and other) to own or hold under lease its
properties and to conduct its business as now conducted and as presently
proposed to be conducted. American is duly qualified and in good standing as a
foreign corporation in each other jurisdiction (as shown on Section 4.1(a) of
the American Disclosure Schedule) in which the character of the property owned
or leased by it or the nature of its business or operations requires such
qualification, with full power and authority (corporate and other) to carry on
the business in which it is engaged, except in such jurisdictions where the
failure to be so qualified or in good standing, individually or in the
aggregate, is not reasonably likely to have a Material Adverse Effect on
American.
(b) Each of American and its Subsidiaries has all requisite power and
authority (corporate and other) to execute, deliver and perform its obligations
under this Agreement and each Collateral Document executed or required to be
executed by such party pursuant hereto or thereto and to consummate the Merger
and the other transactions contemplated hereby and thereby, and the execution,
delivery and performance of this Agreement and each Collateral Document
executed or required to be executed pursuant hereto or thereto have been duly
authorized by all requisite corporate or other action on the part of American
and its Subsidiaries, other than the approval of the American stockholders
contemplated by Section 4.13 of this Agreement, and no other corporate
proceedings on the part of American or any of its Subsidiaries are necessary to
authorize this Agreement or the transactions contemplated hereby or to
consummate the Merger or the other transactions so contemplated (other than,
with respect to the Merger, the Required Vote). This Agreement has been duly
executed and delivered by American and constitutes, and each Collateral
Document executed or required to be executed by American and its Subsidiaries
pursuant hereto or to consummate the Merger when executed and delivered by
American and its Subsidiaries, as applicable, will constitute, a valid and
binding obligation of American and its Subsidiaries, as applicable, enforceable
in accordance with their respective terms, except as such enforceability may be
limited by bankruptcy, moratorium, insolvency and similar laws affecting the
rights and remedies of creditors and obligations of debtors generally and by
general principles of equity. The provisions of Section 203 of the DCL will not
apply to this Agreement or the Merger. As of the date hereof, the Board of
Directors of American, at a meeting duly called and held at which a quorum was
present throughout, has approved the Merger and this Agreement, and has
recommended that the American stockholders approve and adopt this Agreement and
the transactions contemplated hereby, including without limitation the Merger.
(c) The execution, delivery and performance by American and its
Subsidiaries, as applicable, of this Agreement and any Collateral Document
executed or required to be executed by such parties pursuant hereto or thereto
do not, and the consummation by American of the Merger and the other
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transactions contemplated hereby and thereby, and compliance with the terms,
conditions and provisions hereof or thereof by such parties will not:
(i) (A) Except as set forth in Section 4.1(c) of the American
Disclosure Schedule, conflict with, or result in a breach or violation
of, or constitute a default under, any Organic Document of American or
its Subsidiaries, as applicable, or (B) conflict with, or result in a
breach or violation of, or constitute a default under, or permit the
termination, cancellation or acceleration of any obligation or
liability in, or but for any requirement of the giving of notice or
passage of time or both would constitute such a conflict with, breach
or violation of, or default under, or permit any such termination,
cancellation or acceleration of, any agreement, arrangement, contract,
undertaking, understanding, Applicable Law or other obligation or
Private Authorization of American or its Subsidiaries, as applicable,
except, in the case of clause (B), for such conflicts, breaches,
violations, terminations, cancellations, defaults or accelerations
that would not, individually or in the aggregate, be reasonably likely
to have a Material Adverse Effect on American; or
(ii) result in or permit the creation or imposition of any
Lien upon any property now owned or leased by American except for such
Liens that would not, individually or in the aggregate, be reasonably
likely to have a Material Adverse Effect on American; or
(iii) require any Governmental Authorization or Governmental
Filing except for (A) the FCC Consents, (B) filings under the
Hart-Scott-Rodino Act, (C) the filing with the Commission of (I) the
Information Statement and (II) such reports under Section 13(a) or
15(d) of the Exchange Act as may be required in connection with this
Agreement and the transactions contemplated by this Agreement, (D) the
filing of the Certificate of Merger with the Delaware Secretary of
State and appropriate documents with the relevant authorities of other
states in which American is qualified to do business and (E) such
other Governmental Authorizations and Governmental Filings the failure
of which to be made or obtained would not be individually or in the
aggregate, reasonably likely to have a Material Adverse Effect on
American.
(d) American does not have any direct or indirect Subsidiaries other
than those set forth on Section 4.1(d) of the American Disclosure Schedule;
each of such Subsidiaries is (i) wholly-owned unless noted otherwise in Section
4.1(d) of the American Disclosure Schedule, (ii) a corporation which is duly
organized, validly existing and in good standing under the laws of the
respective state of incorporation set forth opposite its name on Section 4.1(d)
of the American Disclosure Schedule, and (iii) duly qualified and in good
standing as a foreign corporation in each other jurisdiction (as shown on
Section 4.1(d) of the American Disclosure Schedule) in which the character of
the property owned or leased by it or the nature of its business or operations
requires such qualification, with full power and authority (corporate and
other) to carry on the business in which it is engaged, except where the
failure to be so qualified or in good standing, individually or in the
aggregate, would not be reasonably likely to have a Material Adverse Effect on
American. As of the date hereof, American owns, directly or indirectly, all of
the outstanding capital stock and equity interests (as shown in Section 4.1(d)
of the American Disclosure Schedule) of such Subsidiaries, free and clear of
all Liens (except as set forth in the American Financial Statements or Section
4.1(d) of the American Disclosure Schedule), and all such stock has been duly
authorized and validly issued and is fully paid and nonassessable. There are no
outstanding Option Securities or Convertible Securities, or agreements or
understandings of any nature whatsoever, relating to
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the authorized and unissued or outstanding capital stock of such Subsidiaries
(except as set forth in the American Financial Statements or Section 4.1(d) of
the American Disclosure Schedule).
4.2 Financial and Other Information. American has heretofore furnished
to Mergeparty copies of the audited consolidated financial statements of
American and its Subsidiaries set forth in its Annual Report on Form 10-K (the
"American 10-K") for the fiscal year ended December 31, 1996 and the unaudited
consolidated financial statements of American and its Subsidiaries set forth in
its Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 1997
(collectively, the "American Financial Statements"). The American Financial
Statements, including in each case the notes thereto, comply as to form, in all
material respects, with applicable accounting requirements and the published
rules and regulations of the Commission with respect thereto, have been
prepared in accordance with GAAP applied on a consistent basis throughout the
periods covered thereby, except as otherwise noted therein, and fairly present
in all material respects the financial condition, results of operations and
cash flows of American and its Subsidiaries on the bases therein stated, as of
the respective dates thereof, and for the respective periods covered thereby
subject, in the case of unaudited financial statements, to normal year-end
audit adjustments and accruals. American has filed all required reports and
other documents with the Commission since July 1, 1995 (the "American SEC
Documents"). Except as set forth in the American SEC Documents filed and
publicly available prior to the date hereof (the "Filed American SEC
Documents"), neither American nor any of its Subsidiaries has any liabilities
or obligations of any nature (whether accrued, absolute, contingent or
otherwise) which, individually or in the aggregate, would be reasonably likely
to have a Material Adverse Effect on American. None of the American Disclosure
Schedule or the American SEC Documents contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
required to be stated herein or therein or necessary in order to make the
statements contained herein or therein, in light of the circumstances under
which they were made, not misleading.
4.3 Changes in Condition. Except as set forth in Section 4.3 of the
American Disclosure Schedule, between June 30, 1997 and the date hereof, there
has been no Material Adverse Change in American.
4.4 Properties. (a) American and each of its Subsidiaries (other than
the Tower Subsidiaries) has good and marketable title to all material parcels
of real property owned by it and good and merchantable title to all material
items of property and assets, tangible and intangible, (i) reflected in the
financial statements of American as of June 30, 1997, and (ii) acquired after
June 30, 1997, except in each case for those sold or otherwise disposed of
since June 30, 1997, in each case free and clear of all Liens, except (x)
Permitted Liens and (y) Liens set forth in the American Financial Statements or
Section 4.4 of the American Disclosure Schedule.
(b) All of the assets of American and its Subsidiaries material to the
continued operation of their respective businesses are in good operating
condition, reasonable wear and tear excepted, and usable in the ordinary course
of business, except where the failure to be in such condition or so usable
would not, individually or in the aggregate, be reasonably likely to have a
Material Adverse Effect on American.
4.5 Compliance with Private Authorizations. American and each of its
Subsidiaries (other than the Tower Subsidiaries) has obtained all Private
Authorizations which are necessary for the ownership and operation by American
or its Subsidiaries of the business of American and its Subsidiaries, taken as
a whole, and the conduct of business thereof as now conducted and which, if not
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obtained and maintained, would, individually or in the aggregate, be reasonably
likely to have a Material Adverse Effect on American. All such Private
Authorizations are, to American's knowledge, in full force and effect, and
neither American nor any of its Subsidiaries (other than the Tower
Subsidiaries) is, to American's knowledge, in breach or violation of, or in
default in the performance, observance or fulfillment of, any such Private
Authorization, and, to American's knowledge, no Event exists or has occurred,
which constitutes, or but for any requirement of the giving of notice or
passage of time or both would constitute, such a breach, violation or default,
under any such Private Authorization, except for such defaults, breaches or
violations as would not, individually or in the aggregate, be reasonably likely
to have a Material Adverse Effect on American.
4.6 Compliance with Governmental Authorizations and Applicable Law;
Litigation.
(a) Section 4.6(a) of the American Disclosure Schedule contains a list
of each material Governmental Authorization (including without limitation all
material American FCC Licenses) required under Applicable Laws to own and
operate the business of American and its Subsidiaries (other than the Tower
Subsidiaries), including without limitation each of the American Stations, as
currently operated, all of which are in full force and effect, subject to such
qualifications and exceptions as may be set forth in Section 4.6(a) of the
American Disclosure Schedule. Certain of the Subsidiaries of American (other
than any of the Tower Subsidiaries) are the authorized legal holders of the
American FCC Licenses listed in Section 4.6(a) of the American Disclosure
Schedule, none of which is subject to any restriction or condition which would
limit in any material respect the operations of any of the American Stations as
currently conducted except as noted in Section 4.6(a) of the American
Disclosure Schedule. The American FCC Licenses listed in Section 4.6(a) of the
American Disclosure Schedule are valid and in full force and effect and are not
impaired in any material respect by any act or omission of American or any of
its Subsidiaries, subject to such qualifications and exceptions as may be set
forth in Section 4.6(a) of the American Disclosure Schedule; and the operation
of each of the American Stations is in accordance with such American FCC
Licenses in all material respects, except to the extent so listed in Sections
4.6(a) and (b) of the American Disclosure Schedule. American is fully qualified
to be the transferor of control of the American FCC Licenses. All material
reports, forms and statements required to be filed by American or any of its
Subsidiaries with the FCC with respect to each of the American Stations have
been filed and are true, complete and accurate in all material respects.
American or one of its Subsidiaries (other than the Tower Subsidiaries) has
obtained all Governmental Authorizations in addition to the American FCC
Licenses listed in Section 4.6(a) of the American Disclosure Schedule which are
necessary for the ownership or operations or the conduct of the business of
American and its Subsidiaries, taken as a whole (except with respect to the
American Brokered Stations), as now conducted and which, if not obtained and
maintained, would, individually or in the aggregate, be reasonably likely to
have a Material Adverse Effect on American and American's performance with
respect thereto, and the operation of the American Brokered Stations is in
accordance with all applicable Governmental Authorizations except where the
failure to be so in accordance would not be reasonably likely to have a
Material Adverse Effect on American. As of the date hereof, except as noted in
Section 4.6(a) of the American Disclosure Schedule, no application, action or
proceeding is pending for the renewal or material modification of any of the
American FCC Licenses and, to American's knowledge, except as noted in Section
4.6(b) of the American Disclosure Schedule, there is not now before the FCC any
material investigation, proceeding, notice of violation, order of forfeiture or
complaint against American or any of its Subsidiaries relating to any of the
American Stations or other FCC licensed facilities that, if adversely decided,
would be reasonably likely to have a Material Adverse Effect on American (and
as of the date hereof American does not have knowledge of any basis that would
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cause the FCC not to renew any of the American FCC Licenses). Except as noted
in Schedule 4.6(b) of the American Disclosure Schedule, as of the date hereof,
there is not now pending and, to American's knowledge, there is not threatened,
any action by or before the FCC to revoke, suspend, cancel, rescind or modify
in any material respect any of the American FCC Licenses that, if adversely
decided, would be reasonably likely to have a Material Adverse Effect on
American (other than proceedings to amend FCC rules of general applicability to
the radio industry).
(b) Except as otherwise specifically set forth in Section 4.6(b) of
the American Disclosure Schedule, since January 1, 1996, American and its
Subsidiaries (other than the Tower Subsidiaries) have conducted its and each of
their respective businesses and owned and operated its and each of their
respective properties in accordance with all Applicable Laws (excluding
Environmental Laws) and Governmental Authorizations, except for such breaches,
violations and defaults as, individually or in the aggregate, have not had and
are not reasonably likely to have a Material Adverse Effect on American. Except
as otherwise specifically described in Section 4.6(b) of the American
Disclosure Schedule and except with respect to Environmental Laws, neither
American nor any of its Subsidiaries is in or is charged in writing by any
Authority with, or, to American's knowledge, is threatened or under
investigation by any Authority with respect to, any breach or violation of, or
default in the performance, observance or fulfillment of, any Applicable Law
relating to the ownership and operation of American's and its Subsidiaries'
properties or the conduct of American's and its Subsidiaries' business which
will, individually or in the aggregate, be reasonably likely to have a Material
Adverse Effect on American. Except as otherwise specifically described in
Section 4.6(b) of the American Disclosure Schedule and except with respect to
Environmental Laws, no Event exists or has occurred, which constitutes, or but
for any requirement of giving of notice or passage of time or both would
constitute, such a breach, violation or default, under any Governmental
Authorization or any Applicable Law, except for such breaches, violations or
defaults as, individually or in the aggregate, have not had and would not be
reasonably likely to have a Material Adverse Effect on American. With respect
to matters, if any, of a nature referred to in Section 4.6(b) of the American
Disclosure Schedule, except as otherwise specifically described in Section
4.6(b) of the American Disclosure Schedule, all such information and matters
set forth in the American Disclosure Schedule, if adversely determined against
American or one of its Subsidiaries (other than the Tower Subsidiaries),
individually or in the aggregate, would not be reasonably likely to have a
Material Adverse Effect on American.
(c) Except as disclosed in the Filed American SEC Documents or in
Section 4.6(c) of the American Disclosure Schedule, there are no Legal Actions
pending or, to the knowledge of American, threatened against or affecting
American or any of its Subsidiaries (other than the Tower Subsidiaries)
including any action by or before the FCC to revoke, suspend, cancel, rescind
or modify in any material respect any of the American FCC Licenses, except for
Legal Actions that, individually or in the aggregate, would not be reasonably
likely to have a Material Adverse Effect on American.
4.7 Related Transactions. Except as set forth in Section 4.7 of the
American Disclosure Schedule, as contemplated herein or as disclosed in the
Filed American SEC Documents, no director, officer, Affiliate or "associate"
(as such term is defined in Rule 12b-2 under the Exchange Act) of American or
any of its Subsidiaries is currently a party to any transaction which would be
required to be disclosed under Item 404 of Regulation S-K of the Securities
Act.
4.8 Taxes and Tax Matters. Except as provided in Section 4.8 of the
American Disclosure Schedule:
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(a) American has filed completely and correctly in all material
respects all Tax Returns which are required by all Applicable Laws to be filed
by it, and has paid, or made adequate provision for the payment of, all
material Taxes which have or may become due and payable pursuant to said Tax
Returns and all other Taxes, governmental charges and assessments received to
date other than those Taxes being contested in good faith for which adequate
provision has been made on the most recent balance sheet forming part of the
American Financial Statements. The Tax Returns of American have been prepared,
in all material respects, in accordance with all Applicable Laws and generally
accepted principles applicable to taxation consistently applied;
(b) all material Taxes which American is required by law to withhold
and collect have been duly withheld and collected, and have been paid over, in
a timely manner, to the proper Taxing Authorities to the extent due and
payable;
(c) American has not executed any waiver to extend, or otherwise taken
or failed to take any action that would have the effect of extending, the
applicable statute of limitations in respect of any Tax liabilities of American
for the fiscal years prior to and including the most recent fiscal year;
(d) American is not a "consenting corporation" within the meaning of
Section 341(f) of the Code. American has at all times been taxable as a
Subchapter C corporation under the Code;
(e) American has never been a member of any consolidated group (other
than with American and its Subsidiaries) for Tax purposes. American is not a
party to any tax sharing agreement or arrangement, other than with its
Subsidiaries;
(f) no Liens for Taxes exist with respect to any of the assets or
properties of American, except for statutory Liens for Taxes not yet due or
payable or that are being contested in good faith;
(g) all of the U.S. Federal income Tax Returns filed by or on behalf
of each of American and its Subsidiaries have been examined by and settled with
the Internal Revenue Service, or the statute of limitations with respect to the
relevant Tax liability expired, for all taxable periods through and including
the period ending on the date on which the Effective Time occurs;
(h) all Taxes due with respect to any completed and settled audit,
examination or deficiency litigation with any Taxing Authority have been paid
in full;
(i) there is no audit, examination, deficiency, or refund litigation
pending with respect to any Taxes and during the past three years no Taxing
Authority has given written notice of the commencement of any audit,
examination or deficiency litigation, with respect to any Taxes;
(j) American is not bound by any currently effective private ruling,
closing agreement or similar agreement with any Taxing Authority relating to a
material amount of Taxes;
(k) Except with respect to like-kind exchanges pursuant to Section
1031 of the Code, American shall not be required to include in a taxable period
ending after the Effective Time, any taxable income attributable to income that
economically accrued in a prior taxable period as a result of Section
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481 of the Code, the installment method of accounting or any comparable
provision of state or local Tax law;
(l) (A) no material amount of property of American is "tax exempt
property" within the meaning of Section 168(h) of the Code, (B) no material
amount of assets of American is subject to a lease under Section 7701(h) of the
Code, and (C) American is not a party to any material lease made pursuant to
Section 168(f)(8) of the Internal Revenue Code of 1954, as amended and in
effect prior to the date of enactment of the Tax Equity and Fiscal
Responsibility Act of 1982; and
(m) immediately following the Merger, American will not have any
material amount of income or gain that has been deferred under Treasury
Regulation Section 1.1502-13, or any material excess loss account in a
Subsidiary under Treasury Regulation Section 1.1502-19.
4.9 Employee Retirement Income Security Act of 1974.
(a) American (which for purposes of this Section 4.9 shall include any
ERISA Affiliate) currently sponsors, maintains and contributes only to the
Plans and Benefit Arrangements set forth in Section 4.9(a) of the American
Disclosure Schedule. American has delivered or made available to Mergeparty
true, complete and correct copies of (1) each Plan and Benefit Arrangement (or,
in the case of any unwritten Plans or Benefit Arrangements, reasonable
descriptions thereof), (2) the two most recent annual reports on Form 5500
(including all schedules and attachments thereto) filed with the Internal
Revenue Service with respect to each Plan (if any such report was required by
Applicable Law), (3) the most recent summary plan description (or similar
document) for each Plan for which such a summary plan description is required
by Applicable Law or was otherwise provided to plan participants or
beneficiaries and (4) each trust agreement and insurance or annuity contract or
other funding or financing arrangement relating to any Plan. To the knowledge
of American, each such Form 5500 and each such summary plan description (or
similar document) does not, as of the date hereof, contain any material
misstatements. Except as set forth in Section 4.9(a) of the American Disclosure
Schedule, as to all Plans and Benefit Arrangements listed in Section 4.9(a) of
the American Disclosure Schedule:
(i) all such Plans and Benefit Arrangements comply and have
been administered in form and in operation in accordance with their
respective terms, and with all Applicable Laws, in all material
respects, and American has not received any notice from any Authority
disputing or investigating such compliance;
(ii) all such Plans maintained by American that are intended
to comply with Sections 401 and 501 of the Code comply in all material
respects with all applicable requirements of such sections, and no
Event has occurred which is known to American which will give rise to
disqualification of any such Plan under such sections or to a tax
under Section 511 of the Code and each such Plan has been the subject
of a determination letter from the Internal Revenue Service to the
effect that such Plan and related trust is qualified and exempt from
Federal income Taxes under Sections 401(a) and 501(a), respectively,
of the Code; no such determination letter has been revoked, and, to
the knowledge of American, revocation has not been threatened.
American has delivered or made available to Mergeparty a copy of the
most recent determination letter received with respect to each Plan
for which such a letter has been issued, as well as a copy of any
pending application for a determination letter. American has also
provided or made
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available to Mergeparty a list of all Plan amendments as to which a
favorable determination letter has not yet been received;
(iii) none of the assets of any such Plan are invested in
employer securities or employer real property;
(iv) there are no Claims (other than routine Claims for
benefits or actions seeking qualified domestic relations orders)
pending or, to American's knowledge, threatened involving such Plans
or the assets of such Plans, and, to American's knowledge, no facts
exist which are reasonably likely to give rise to any such Claims
(other than routine Claims for benefits or actions seeking qualified
domestic relations orders);
(v) no such Plan is subject to Title IV of ERISA, and
American has no actual or potential liability thereunder;
(vi) all group health Plans of American have been operated in
compliance in all material respects with the group health plan
continuation coverage requirements of COBRA;
(vii) neither American nor, to its knowledge, any of its
directors, officers, employees or any other fiduciary has committed
any breach of fiduciary responsibility imposed by ERISA or any similar
Applicable Law that would subject American or any of its respective
directors, officers or employees to liability under ERISA or any
similar Applicable Law;
(viii) American is not and never has been a party to any
Multiemployer Plan or made contributions to any such Plan;
(ix) except as set forth in the American Financial Statements
and pursuant to the provisions of COBRA, American does not maintain
any Plan that provides for post-retirement medical or life insurance
benefits, and American does not have any obligation or liability with
respect to any such Plan previously maintained by it, except as the
provisions of COBRA may apply to any former employees or retirees of
American;
(x) all material contributions to, and material payments
from, the Plans and Benefit Arrangements that may have been required
to be made in accordance with the terms of the Plans and Benefit
Arrangements, and any applicable collective bargaining agreement, have
been made. All such contributions to, and payments from, the Plans and
Benefit Arrangements, except those payments to be made from a trust
qualified under Section 401(a) of the Code, for any period ending
before the Closing Date that are not yet, but will be, required to be
made, will be properly accrued and reflected in the Closing Balance
Sheet;
(xi) (1) no "prohibited transaction" (as defined in Section
4975 of the Code or Section 406 of ERISA) has occurred that involves
the assets of any Plan; (2) no prohibited transaction has occurred
that could subject American, any of its employees, or, to the
knowledge of American, a trustee, administrator or other fiduciary of
any trust created under any Plan to the tax or sanctions on prohibited
transactions imposed by Section 4975 of the Code or Title I of ERISA;
(3) none of American, any of its ERISA Affiliates or, to the knowledge
of American, any trustee, administrator or other fiduciary of any Plan
or any agent of any of the foregoing has
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<PAGE> 19
engaged in any transaction or acted in a manner that could, or has
failed to act so as to, subject American or any trustee, administrator
or other fiduciary to any liability for breach of fiduciary duty under
ERISA or any other Applicable Law;
(xii) American has not incurred any material liability to a
Plan (other than for contributions not yet due) which liability has
not been fully paid or accrued for payment as of the date hereof;
(xiii) except as otherwise contemplated by this Agreement, no
current or former employee of American will be entitled to any
additional benefits or any acceleration of the time of payment or
vesting of any benefits under any Plan or Benefit Arrangement as a
result of the transactions contemplated by this Agreement;
(xiv) no compensation payable by American to any of its
employees under any existing Plan, Benefit Arrangement (including by
reason of the transactions contemplated hereby) will be subject to
disallowance under Section 162(m) of the Code;
(xv) any amount that could be received (whether in cash or
property or the vesting of property) as a result of any of the
transactions contemplated by this Agreement by any employee, officer,
director or independent contractor of American who is a "disqualified
individual" (as such term is defined in proposed Treasury Regulation
Section 1.280G-1) under any employment arrangement would not be
characterized as an "excess parachute payment" (as such term is
defined in Section 280G(b)(1) of the Code);
(xvi) no Plan which is an employee stock ownership plan (an
"ESOP") constitutes a leveraged employee stock ownership plan within
the meaning of Section 4975(e)(7) of the Code and there are no
unallocated shares of stock of American currently held under any such
ESOP in a suspense account; and
(xvii) there are no outstanding options (or contractual
obligations to issue options) to acquire American Common Stock or
other American securities other than options held by employees or
directors of American and issued under Benefit Arrangements (the
aggregate number of which are as set forth in Section 4.11 of the
American Disclosure Schedule).
(b) The execution, delivery and performance by American of this
Agreement and the Collateral Documents executed or required to be executed by
American pursuant hereto and thereto will not involve any prohibited
transaction within the meaning of ERISA or Section 4975 of the Code.
4.10 Insurance. All material fire and casualty, general liability,
business interruption, product liability, and sprinkler and water damage
insurance policies maintained by American or any of its Subsidiaries (other
than the Tower Subsidiaries) are with reputable insurance carriers, provide
full and adequate coverage, for American and such Subsidiaries (other than the
Tower Subsidiaries) and their respective properties and assets, and are in
character and amount at least equivalent to that carried by Persons engaged in
similar businesses and subject to the same or similar perils or hazards, except
where the failure to maintain such insurance policies, either individually or
in the aggregate, would not be reasonably likely to have a Material Adverse
Effect on American.
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4.11 Authorized Capital Stock. The authorized and outstanding capital
stock, Option Securities and Convertible Securities of American, as of
September 18, 1997, are as set forth in Section 4.11 of the American Disclosure
Schedule. Except as set forth in Section 4.11 of the American Disclosure
Schedule, since September 18, 1997, American has not issued any shares of
capital stock of any class, any Option Securities or any Convertible
Securities, except for the issue of American Common Stock pursuant to the
conversion of Convertible Securities or the exercise of Option Securities
outstanding on September 18, 1997 and in each case in accordance with their
present terms or as otherwise described or contemplated by the Filed American
SEC Documents. All of such outstanding capital stock has been duly authorized
and validly issued, is fully paid and nonassessable and is not subject to any
preemptive or similar rights. American has, prior to the date hereof, made
available to Mergeparty a true and correct copy of the Restated Certificate of
Incorporation of American (the "Restated Certificate") as in effect on the date
hereof. Except as set forth in Section 4.11 of the American Disclosure
Schedule, there are no bonds, debentures, notes or other indebtedness of
American outstanding having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matters on which
stockholders of American may vote. Except as set forth in Section 4.11 of the
American Disclosure Schedule, or, except as set forth in the Restated
Certificate, there are no contractual obligations of American or any of its
Subsidiaries outstanding to repurchase, redeem or otherwise acquire any shares
of capital stock of American or any of its Subsidiaries. Except as contemplated
by the provisions of Section 6.20 hereof or as set forth in Section 4.11 of the
American Disclosure Schedule, there are no contractual obligations of American
to vote or to dispose of any shares of the capital stock of any of its
Subsidiaries.
4.12 Employment Arrangements. Except as described in the Filed
American SEC Documents or in Section 4.12 of the American Disclosure Schedule,
as of the date hereof (i) none of the employees of American or any of its
Subsidiaries (other than the Tower Subsidiaries) is now, or, to American's
knowledge, since November 1, 1993 and while an employee of American or any of
its Subsidiaries has been, represented by any labor union or other employee
collective bargaining organization, or are now, or, to American's knowledge,
since November 1, 1993 have been, parties to any labor or other collective
bargaining agreement, (ii) there are, to American's knowledge, no pending labor
strikes, work stoppages, lockouts, slow downs, grievances (including unfair
labor charges), disputes or controversies with any union or any other employee
or collective bargaining organization of such employees, or threats of such
labor strikes, work stoppages, lockouts or slowdowns or any pending demands for
collective bargaining by any union or other such organization, and (iii)
neither American nor any of its Subsidiaries (other than the Tower
Subsidiaries) nor any of its or any of their employees is now, or, to
American's knowledge, since November 1, 1993 has been, subject to or involved
in or, to American's knowledge, threatened with, any union elections, petitions
therefor or other organizational or recruiting activities. American and its
Subsidiaries (other than the Tower Subsidiaries) have performed all obligations
required to be performed under all Employment Arrangements and none of them is
in breach or violation of or in default or arrears under any of the terms,
provisions or conditions thereof, except for such breaches, violations,
defaults and arrears, which either individually or in the aggregate, have not
had and are not reasonably likely to have a Material Adverse Effect on
American.
4.13 Voting Requirements. Section 4.13 of the American Disclosure
Schedule sets forth a list of certain stockholders of American and the number
of shares of Class A Common and Class B Common owned of record by each such
stockholder as of the date hereof and the number of outstanding shares of Class
A Common Stock and/or of Class B Common Stock as of September 18, 1997. The
affirmative vote of the holders of shares of American Common Stock,
representing a majority of the outstanding
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<PAGE> 21
voting power of American Common Stock, voting as a single class (the "Required
Vote"), is the only vote necessary to approve and adopt this Agreement and the
transactions contemplated by this Agreement. As of September 18, 1997,
31,408,544 votes constituted a majority of the outstanding voting power of
American Common Stock.
4.14 Brokers. No broker, investment banker, financial advisor or other
person, other than Credit Suisse First Boston Corporation ("CSFB"), the fees
and expenses of which will be paid by American, is entitled to any broker's,
finder's, financial advisor's or other similar fee or commission in connection
with the transactions contemplated by this Agreement. American has furnished to
Mergeparty true and complete copies of all agreements under which any such fees
or expenses may be payable and all indemnification and other agreements related
to the engagement of the persons to whom such fees may be payable.
4.15 Information Supplied. The Information Statement will not, at the
date it is first mailed to the American stockholders (and, in the event
American shall prepare a Proxy Statement pursuant to Section 6.6 hereof, at the
time of the American Stockholders Meeting, the Proxy Statement will not)
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. For purposes of the foregoing, the truth of any information or the
existence of any omissions at the time of any American Stockholders Meeting
shall be determined with reference to the Proxy Statement as then amended or
supplemented. The Information Statement will comply as to form in all material
respects with the requirements of the Exchange Act and the rules and
regulations thereunder. Notwithstanding the foregoing, no representation or
warranty is made by American with respect to statements made or incorporated by
reference therein based on information supplied by Mergeparty or Mergeparty
Subsidiary including materials of Mergeparty and Mergeparty Subsidiaries
incorporated by reference in the Information Statement.
4.16 Ordinary Course of Business. Except as may be described in the
Filed American SEC Documents or in Section 4.9(a) or Section 4.16 of the
American Disclosure Schedule and except for the Tower Merger or Tower
Distribution, as the case may be, since June 30, 1997 to the date hereof, (i)
each of American and its Subsidiaries (other than the Tower Subsidiaries) has
operated its business in the normal, usual and customary manner in the ordinary
and regular course of business, consistent with prior practice (it being
understood and agreed for purposes of this Section 4.16 by the parties that the
acquisition, disposition and exchange of radio stations is in the ordinary
course of business) and (ii) there has not been by American and its
Subsidiaries (other than the Tower Subsidiaries) (a) any declaration, setting
aside or payment of any dividend or other distribution payable in cash, stock,
property or otherwise except for (x) the payment of dividends or the making of
distributions by a direct or indirect wholly-owned Subsidiary of American and
(y) the payment of dividends on shares of American Preferred Stock in
accordance with their terms, (b) any split, combination or reclassification of
any of its capital stock or any issuance or the authorization of any issuance
of any other securities in respect of, in lieu of or in substitution for shares
of its capital stock, (c) (I) any granting to any executive officer or other
key employee of American or any of its Subsidiaries of any increase in
compensation, except for normal increases in the ordinary course of business
consistent with past practice or as required under Benefit Arrangements, (II)
any granting to any such executive officer of any increase in severance or
termination pay, except as was required under any Benefit Arrangement, (III)
except in the ordinary course, any entering into, amendment in any material
respect or termination of any Governmental Authorization, Private Authorization
or material agreement, arrangement, contract, undertaking, understanding or
other
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obligation, or (IV) any adoption or amendment of any Plan or Benefit
Arrangement (including changing any actuarial or other assumption used to
calculate funding obligations with respect to any Plan, or changing the manner
in which contributions to any Plan are made or the basis on which such
contributions are determined) except as required to comply with changes in
Applicable Law, (d) except insofar as may have been disclosed in the Filed
American SEC Documents or required by a change in GAAP, any change in
accounting methods, principles or practices by American materially affecting
its assets, liabilities or business, (e) any sale, disposition or contract to
dispose of any of its properties or assets having a value in excess of
$1,000,000 other than in the ordinary course, and (f) any damage, destruction
or loss, whether or not covered by insurance, that has had a Material Adverse
Effect on American.
4.17 Environmental Matters. Except as set forth in the American SEC
Documents or Section 4.17 of the American Disclosure Schedule, American:
(a) (i) has not been notified in writing that it is potentially liable
and, has not received any written request for information or other
correspondence concerning its potential liability with respect to any site or
facility, under or pursuant to any Environmental Law, (ii) to the knowledge of
American, is not a potentially responsible party" under, the Comprehensive
Environmental Response, Compensation and "Liability Act of 1980, as amended,
the Resource Conservation and Recovery Act, as amended, or any similar state
Law, and (iii) to the knowledge of American, is not the subject of or, to the
knowledge of American, threatened with any Legal Action involving a demand for
damages or other potential liability, including any Lien, with respect to
violations or breaches of any Environmental Law;
(b) to the knowledge of American, is in compliance with all
Environmental Laws and has obtained all Environmental Permits required under
Environmental Laws, except for such noncompliances and failures to obtain
Environmental Permits as, individually or in the aggregate, have not had and
would not be reasonably likely to have a Material Adverse Affect on American;
(c) (i) has not entered into or received any consent decree,
compliance order or administrative order issued pursuant to any Environmental
Law, and (ii) is not a party in interest or in default under any judgment,
order, writ, injunction or decree of any Final Order issued pursuant to any
Environmental Law; and
(d) to the knowledge of American, there have not been any releases,
spills or disposal activities of or involving Hazardous Materials, including
without limitation from underground storage tanks, on or from any property
owned, operated or leased by American which releases, spills or disposal
activities resulted or could reasonably be expected to result in investigation
and cleanup expenditures which upon payment of such expenditures would be
reasonably likely to have a Material Adverse Effect on American.
Notwithstanding anything to the contrary contained in this Agreement,
American makes no representation or warranty with respect to its compliance
with Environmental Laws or environmental matters generally, except as
specifically set forth in this Section 4.17.
4.18 State Takeover Statutes. Except for Section 203 of the DCL, to
American's knowledge, no other state takeover Law, statute or similar statute
or regulation applies or purports to apply to the Merger, this Agreement or any
of the transactions contemplated by this Agreement.
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4.19 Opinion of Financial Advisor. American has received the opinion
of CSFB, dated the date of this Agreement, to the effect that, as of such date,
the Merger Consideration to be received by the holders of American Common Stock
in the Merger is fair from a financial point of view to the holders of American
Common Stock.
4.20 Contracts; Debt Instruments. (a) Except as set forth in Section
4.20 of the American Disclosure Schedule, neither American nor any of its
Subsidiaries is in violation of or in default under (nor does there exist any
condition which upon the passage of time or the giving of notice, or both,
would cause such a violation of or default under) any material agreement,
arrangement, contract, undertaking, understanding or other obligation,
including the American Preferred Stock ("Contracts"), to which it is a party or
by which it or any of its properties or assets is bound, except for violations
or defaults, that individually or in the aggregate, would not be reasonably
likely to have a Material Adverse Effect on American, and none of the Contracts
prohibits American from incurring an additional $1.00 of indebtedness.
(b) American has made available to Mergeparty (i) true and correct
copies of all Contracts to which any indebtedness of American or any of its
Subsidiaries (other than the Tower Subsidiaries) in an aggregate principal
amount in excess of $1,000,000 is outstanding or may be incurred and (ii)
accurate information regarding the respective principal amounts currently
outstanding as of the date hereof thereunder.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF MERGEPARTY
Except as set forth with respect to specifically identified
representations and warranties in the Mergeparty Disclosure Schedule,
Mergeparty represents and warrants to American as follows:
5.1 Organization and Business; Power and Authority; Effect of
Transaction.
(a) Each of Mergeparty and Mergeparty Subsidiary is a corporation duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of organization and has all requisite power and authority
(corporate and other) to own or hold under lease its properties and to conduct
its business as now conducted and as presently proposed to be conducted. Each
of Mergeparty and Mergeparty Subsidiary is duly qualified and in good standing
as a foreign corporation in each other jurisdiction (as shown on Section 5.1(a)
of the Mergeparty Disclosure Schedule) in which the character of the property
owned or leased by it or the nature of its business or operations requires such
qualification, with full power and authority (corporate and other) to carry on
the business in which it is engaged, except in such jurisdictions where the
failure to be so qualified and in good standing, individually or in the
aggregate, is not reasonably likely to have a Material Adverse Effect on
Mergeparty.
(b) Each of Mergeparty and Mergeparty Subsidiary has all requisite
power and authority (corporate and other) to execute, deliver and perform its
obligations under this Agreement and each Collateral Document executed or
required to be executed by Mergeparty and/or Mergeparty Subsidiary pursuant
hereto or thereto or to consummate the Merger and the other transactions
contemplated hereby
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and thereby, and the execution, delivery and performance of this Agreement and
each Collateral Document executed or required to be executed pursuant hereto
have been duly authorized by all requisite corporate or other action on the
part of Mergeparty and/or Mergeparty Subsidiary, and no other corporate
proceedings on the part of Mergeparty and/or Mergeparty Subsidiary are
necessary to authorize this Agreement or the transactions contemplated hereby
or to consummate the Merger or the other transactions so contemplated. This
Agreement has been duly executed and delivered by each of Mergeparty and
Mergeparty Subsidiary and constitutes, and each Collateral Document executed or
required to be executed pursuant hereto or to consummate the Merger when
executed and delivered by Mergeparty and/or Mergeparty Subsidiary will
constitute, a valid and binding obligation of Mergeparty and/or Mergeparty
Subsidiary, enforceable in accordance with their respective terms, except as
such enforceability may be limited by bankruptcy, moratorium, insolvency and
similar laws affecting the rights and remedies of creditors and obligations of
debtors generally and by general principles of equity. As of the date hereof,
the Boards of Directors of each of Mergeparty and Mergeparty Subsidiary, at
meetings duly called and held at which a quorum was present throughout, have
unanimously approved the Merger and this Agreement. The Board of Directors of
Mergeparty has, as the sole stockholder of Mergeparty Subsidiary, approved and
adopted this Agreement and the Merger, and the transactions contemplated
hereby.
(c) At the time of execution of this Agreement, Mergeparty and all of
its Affiliates or "associates" (as defined in the Exchange Act) collectively
beneficially own less than 5% of the outstanding shares of American Common
Stock.
(d) The execution, delivery and performance by each of Mergeparty
and/or Mergeparty Subsidiary of this Agreement and any Collateral Document
executed or required to be executed by such party pursuant hereto or thereto,
do not, and the consummation by Mergeparty Subsidiary of the Merger and the
other transactions hereby and thereby and compliance with the terms, conditions
and provisions hereof or thereof by Mergeparty and/or Mergeparty Subsidiary
will not:
(i) (A) conflict with, or result in a breach or violation of,
or constitute a default under, any Organic Document of Mergeparty or
Mergeparty Subsidiary or (B) any Applicable Law applicable to
Mergeparty or Mergeparty Subsidiary, or conflict with, or result in a
breach or violation of, or constitute a default under, or permit the
termination, cancellation or acceleration of any obligation or
liability in, or but for any requirement of the giving of notice or
passage of time or both would constitute such a conflict with, breach
or violation of, or default under, or permit any such termination,
cancellation or acceleration of, any Contract or Private Authorization
of Mergeparty or Mergeparty Subsidiary, except, in the case of clause
(B), for such conflicts, breaches, violations, terminations,
cancellations or accelerations that would not, individually or in the
aggregate, be reasonably likely to have a Material Adverse Effect on
Mergeparty; or
(ii) result in or permit the creation or imposition of any
Lien upon any property now owned or leased by Mergeparty or Mergeparty
Subsidiary except for such Liens that would not, individually or in
the aggregate, be reasonably likely to have a Material Adverse Effect
on Mergeparty or Mergeparty Subsidiary; or
(iii) require any Governmental Authorization or Governmental
Filing except for (A) the FCC Consents, (B) filings under the
Hart-Scott-Rodino Act, (C) the filing with the
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Commission of such reports under Section 13(a) or 15(d) of the
Exchange Act as may be required in connection with this Agreement and
the transactions contemplated by this Agreement, (D) the filing of the
Certificate of Merger with the Delaware Secretary of State and
appropriate documents with the relevant authorities of other states in
which American is qualified to do business and (E) such other
Governmental Authorizations and Governmental Filings the failure of
which to be made or obtained would, individually or in the aggregate,
not be reasonably likely to have a Material Adverse Effect on
American.
(e) Mergeparty Subsidiary was formed solely for the purpose of
engaging in the transactions contemplated by this Agreement and has not engaged
in any business activities or conducted any operations other than in connection
with the transactions contemplated by this Agreement.
5.2 Compliance with Governmental Authorizations and Applicable Law;
Litigation. Except as disclosed in any report or other document filed by
Mergeparty with the SEC prior to the date hereof or in Section 5.2 of the
Mergeparty Disclosure Schedule, there are no Legal Actions pending or, to the
knowledge of Mergeparty, threatened against Mergeparty or any of its
Subsidiaries, except for Legal Actions that, individually or in the aggregate,
would not be reasonably likely to have a Material Adverse Effect on Mergeparty
or prevent or materially burden or materially impair the ability of Mergeparty
to consummate the transactions contemplated by this Agreement. Except as set
forth in Section 5.2 of the Mergeparty Disclosure Schedule, there are not facts
relating to Mergeparty (or any Affiliate thereof) under the FCA that would
disqualify it (or any Affiliate or assignee) from obtaining control of the
American FCC Licenses or that would prevent it (or any Affiliate or assignee)
from consummating the transactions contemplated by this Agreement or, to
Mergeparty's knowledge, materially delay the grant of the FCC Consents. Except
as may be set forth in Section 5.2 of the Mergeparty Disclosure Schedule, it is
not necessary for Mergeparty or any of its Subsidiaries or other Affiliates (or
assigns) to (a) seek or obtain any waiver from the FCC, (b) dispose of any
interest in any media or communications property or interest (including without
limitation any of the American Stations or the American Brokered Stations), (c)
terminate any venture or arrangement, or (d) effectuate any change or
restructuring of ownership (including without limitation the removal or
withdrawal of officers or directors or the conversion or repurchase of equity
securities in Mergeparty or any Affiliate) to obtain, or to avoid any delay in
obtaining, the FCC Consents. Mergeparty is able to certify on an FCC Form 315
that it is financially qualified.
5.3 Opinion of Financial Advisor. The Board of Directors of Mergeparty
has received the opinion of Chase Securities Inc., dated the date of this
Agreement, to the effect that, as of such date, the aggregate Merger
Consideration to be paid by Mergeparty is fair to Mergeparty from a financial
point of view.
5.4 Mergeparty Financing. On the Closing Date, Mergeparty will have
sufficient funds to consummate the transactions contemplated by this Agreement,
including without limitation the Merger, and to pay all related fees and
expenses.
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ARTICLE 6
COVENANTS
6.1 Access to Information; Confidentiality. American shall afford to
Mergeparty and its accountants, counsel, investment bankers, financial advisors
and other agents and representatives (the "Representatives") full access during
normal business hours throughout the period prior to the Closing Date to all of
its (and its Subsidiaries', other than those of the Tower Subsidiaries)
properties, books, contracts, commitments and records (including without
limitation Tax Returns) and, during such period, shall furnish promptly upon
request (i) a copy of each report, schedule and other document filed or
received by it pursuant to the requirements of any Applicable Law (including
without limitation the FCA) or filed by it or any of its Subsidiaries (other
than the Tower Subsidiaries) with any Authority in connection with the Merger
or which may have a material effect on it or its business, financial condition
or results of operations, and (ii) such other information concerning any of the
foregoing as Mergeparty shall reasonably request; provided, however, that the
foregoing shall not require American to permit any disclosure or to disclose
any information, that in the reasonable judgment of American would result in
the disclosure of any trade secrets of third parties or violate any of its
obligations with respect to confidentiality if American shall have used its
best efforts to obtain the consent of such third party to such inspections or
disclosure. All requests for information shall be directed to an executive
officer of American or such other Persons as may be designated by American. All
information disclosed pursuant to this Section or otherwise shall be governed
by the terms of the Confidentiality Agreement, the terms and provisions of
which are incorporated herein by reference with the same force and effect as
though set forth here in their entirety. No investigation pursuant to this
Section or otherwise shall affect any representation or warranty of American in
this Agreement or any condition to the obligations of Mergeparty hereto.
6.2 Agreement to Cooperate.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, each of the parties hereto shall use best efforts (x) to take, or
cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable to consummate the Merger and the Tower Merger or
Tower Disposition, as the case may be, and (y) to refrain from taking, or cause
to be taken, any action and to refrain from doing or causing to be done, any
thing which could impede or impair the consummation of the Merger and the Tower
Merger or Tower Distribution, as the case may be, including, in all cases,
without limitation using its best efforts (i) to prepare and file with the
applicable Authorities as promptly as practicable after the execution of this
Agreement all requisite applications and amendments thereto, together with
related information, data and exhibits, necessary to request issuance of orders
approving the Merger by all such applicable Authorities, (ii) to obtain all
necessary or appropriate waivers, consents and approvals, (iii) to effect all
necessary registrations, filings and submissions, (iv) to defend any suit,
action or proceeding, whether judicial or administrative, challenging the
Merger or any of the transactions contemplated by the Merger Agreement,
including seeking to lift any injunction or other legal bar to the Merger (and,
in such case, to proceed with the Merger as expeditiously as possible), and (v)
to obtain the satisfaction of the conditions specified in Article 7, including
without limitation the securing of all authorizations, consents, waivers,
modifications, order or approvals referred to in Sections 7.1(b) and 7.1(d).
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(b) Without limiting the generality of the foregoing, the parties
acknowledge and agree that the transfer of control of the American FCC Licenses
as contemplated by this Agreement is subject to the prior consent and approval
of the FCC. Within twenty (20) business days following the date of this
Agreement, American and Mergeparty shall file with the FCC appropriate
applications requesting the FCC's written consent to the transfer of control of
the American FCC Licenses pursuant to this Agreement and have caused all
necessary persons to join in one or more such applications filed with the FCC
(the "Applications"). American and Mergeparty will use their best efforts to
take such steps as may be necessary (i) diligently to prosecute the
Applications and to prepare and file any further Applications or amendments as
may be necessary to obtain the consent for the transfer of control to
Mergeparty of the licenses held by the American Brokered Stations to be
acquired by American and (ii) to obtain the FCC Consents, including action by
Mergeparty, at its sole cost and expense (except as provided elsewhere in this
Agreement), to satisfy or cause to be removed all Divestiture Conditions, if
any. The failure by American or Mergeparty to use its best efforts to timely
file or diligently prosecute its portion of any Application or, in the case of
Mergeparty, the failure to use its best efforts to make any Required
Divestiture or otherwise satisfy or cause to be removed all Divestiture
Conditions on or before the Termination Date, shall be a material breach by
American or Mergeparty, as the case may be, of this Agreement. American agrees
that any delay in prosecuting the Applications or obtaining the FCC Consents
resulting from Mergeparty's good faith negotiations, subject to Applicable Law,
with the FCC, Antitrust Division or FTC with respect to the imposition of a
Divestiture Condition shall not constitute a failure by Mergeparty to use its
best efforts diligently to prosecute the Applications or obtain the FCC
Consents and so long as such negotiations do not interfere with satisfaction of
all conditions to Closing prior to the Termination Date. If reconsideration or
judicial review is sought with respect to any FCC Consent, American and
Mergeparty shall (promptly and with all due efforts) oppose such efforts to
obtain reconsideration or judicial review.
(c) Without limiting the generality of Section 6.2(a), the parties
undertake and agree to file as soon as practicable after the date hereof, and
in any event within ten (10) business days hereof, a Notification and Report
Form under the Hart-Scott-Rodino Act with the Federal Trade Commission (the
"FTC") and the Antitrust Division of the Department of Justice (the "Antitrust
Division"). Each of the parties shall (i) use its best efforts to comply as
expeditiously as possible with all lawful requests of the FTC or the Antitrust
Division for additional information and documents and (ii) not extend any
waiting period under the Hart-Scott-Rodino Act or enter into any agreement with
the FTC or the Antitrust Division not to consummate the transactions
contemplated by this Agreement, except with the prior written consent of the
other party hereto; provided, however, that nothing shall limit the ability of
Mergeparty to extend the 20-day waiting period under the Hart-Scott-Rodino Act
following substantial compliance with any request for additional information
that may be forthcoming, if such extension is reasonably necessary to allow the
continuation of good-faith negotiations intended to remove any objection to the
transaction that the FTC or Antitrust Division may have asserted, and if such
extension will expire not less than 30 days prior to the Termination Date.
(d) Anything in this Agreement, including without limitation Section
6.2(b), to the contrary notwithstanding, Mergeparty shall obtain the FCC
Consents and clearances under the Hart-Scott-Rodino Act and the grant of any
waivers in connection therewith prior to the Termination Date in accordance
with this Agreement unless the failure to obtain such FCC Consents, clearances
and waivers is primarily the result of one or more Uncontrollable Events. For
purposes of this Agreement, the term "Uncontrollable Events" shall mean (i)
acts or omissions on the part of American or any of its Subsidiaries in
conducting its respective operations other than those relating to the number of
American
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FCC Licenses or amount of revenues in a particular market, (ii) an unremedied
or unwaived material breach by American of its obligations under this
Agreement, or (iii) any change in or enactment of Applicable Law by Congress
and signed by the President and which (A) has the effect of decreasing the
number of radio licenses which a Person may own nationally or locally or (B)
materially and adversely relates to the concentration of radio licenses which a
Person may own in a market, and as a result of the change or enactment referred
to in either clause (A) or (B) above, Mergeparty's performance of its
obligations under this Agreement would have a Material Adverse Effect on
Mergeparty's radio and television broadcasting business. Mergeparty shall file
with the FCC, within sufficient time to permit timely grant of the
Applications, applications for consent to assign or transfer, pursuant to trust
arrangements satisfying the FCC's local multiple ownership rules and policies,
such radio broadcast stations as Mergeparty may designate, so that the radio
broadcast stations of Mergeparty and American not designated for such trust
arrangements may be held by the Surviving Corporation in compliance with the
FCC's local multiple ownership rules and policies. Mergeparty shall, to the
extent necessary to obtain grant of the trust applications, thereafter promptly
file or cause to be filed any further applications (including applications to
assign radio broadcast stations to third party purchasers for value) that may
be required by the FCC. Notwithstanding the two preceding sentences, with
regard to stations located in the San Jose market, the obligations of
Mergeparty to submit trust or sale applications shall be excused for such
stations to the extent and for the duration of the period that Mergeparty is
unable to identify the stations to be placed in trust or sold because of the
failure of American to notify Mergeparty of the resolution of the Antitrust
Division impediment impacting the American transactions pending in the San Jose
market.
(e) If Mergeparty or any of its Affiliates receives an administrative
or other order or notification relating to any violation or claimed violation
of the rules and regulations of the FCC, or of any other Authority (including
without limitation seeking or relating to a Divestiture Condition), that could
affect Mergeparty's or Mergeparty Subsidiary's ability to consummate the
transactions contemplated hereby, or if Mergeparty or any other Affiliate of
Mergeparty should become aware of any fact relating to the qualifications of
Mergeparty or any of its Affiliates that reasonably could be expected to cause
the FCC to withhold its consent to the assignment of the American FCC Licenses,
Mergeparty shall promptly notify American thereof and American shall do
likewise with Mergeparty and Mergeparty shall use its best efforts, and take
such steps as are necessary, in order to satisfy or remove the Divestiture
Conditions to enable the Closing to occur prior to the Termination Date.
Mergeparty covenants and agrees to keep American fully informed as to all
matters concerning all Required Divestitures and shall promptly notify American
in writing of any and all significant developments relating thereto and
American agrees to do likewise with Mergeparty.
(f) Mergeparty acknowledges and agrees that certain of the American
Stations and American Brokered Stations may file applications for renewal of
license during the time that an application for the FCC Consents is pending
before the FCC. To the extent any such application for renewal may be filed,
Mergeparty agrees to amend the transferee's portion of any application for the
FCC Consents and, as may be required, to amend any license renewal applications
for all of the American Stations or American Brokered Stations, to confirm
Mergeparty's intention to consummate this Agreement during the pendency of such
license renewal application, and to agree to assume the consequences associated
with succeeding to the place of American in such license renewal applications.
The making of this statement shall not be deemed to limit or waive any other
rights that Mergeparty may otherwise have under this Agreement.
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(g) The parties shall cooperate with one another in the preparation,
execution and filing of all Tax Returns, questionnaires, applications, or other
documents regarding any real property transfer or gains, sales, use, transfer,
value added, stock transfer and stamp Taxes, any transfer, recording,
registration and other fees, and any similar Taxes which become payable in
connection with the Merger that are required or permitted to be filed on or
before the Closing Date.
(h) Subject to Applicable Laws relating to the exchange of
information, American, on the one hand, and Mergeparty, on the other hand,
shall have the right to review in advance, and to the extent practicable each
will consult the other with respect to, all the information relating to
American or Mergeparty, as the case may be, and any of their respective
Subsidiaries, that appear in any filing made with, or written materials
submitted to, any Authority and/or other Person in connection with the Merger
and the other transactions contemplated by this Agreement. In exercising the
foregoing right, each of American and Mergeparty shall act reasonably and as
promptly as practicable.
6.3 Public Announcements. Until the Closing, or in the event of
termination of this Agreement, each party shall consult with the other before
issuing any press release or otherwise making any public statements with
respect to this Agreement or the Merger and shall not issue any such press
release or make any such public statement without the prior consent of the
other. Notwithstanding the foregoing, the parties acknowledge and agree that
they may, without each other's prior consent, issue such press releases or make
such public statements as may be required by Applicable Law, in which case, to
the extent practicable, they will consult with the other regarding the nature,
content and form of such press release or public statement.
6.4 Notification of Certain Matters. Each party shall give prompt
notice to the other, of the occurrence or non-occurrence of any Event the
occurrence or non-occurrence of which would be reasonably likely to cause (i)
any representation or warranty made by it contained in this Agreement to be
untrue or inaccurate in any material respect or (ii) any failure made by it to
comply with or satisfy, or be able to comply with or satisfy, in any material
respect, any covenant, condition or agreement to be complied with or satisfied
by it under this Agreement in any material respect, such that, in any such
case, one or more of the conditions of Closing would not be satisfied;
provided, however, that the delivery of any notice pursuant to this Section
shall not limit or otherwise affect the rights and remedies available hereunder
to the party receiving such notice or the obligations of the party delivering
such notice and shall not, in any event, affect the representations,
warranties, covenants and agreements of the parties or the conditions to their
respective obligations under this Agreement.
6.5 Stockholder Approval. If, after the date hereof, approval and
adoption of this Agreement shall be required by the American stockholders under
Applicable Law (the "American Stockholder Approval"), American will, as soon as
practicable following the date thereof, establish a record date (which will be
as soon as practicable following the date hereof) for, duly call, give notice
of, convene and hold a meeting of its stockholders (the "American Stockholders
Meeting") for the purpose of obtaining the American Stockholder Approval.
American will, through its Board of Directors, recommend to its stockholders
approval and adoption of this Agreement, subject to the fiduciary duties of the
Board of Directors of American under Applicable Law. American shall, if it
desires in its sole and absolute discretion, also submit for the approval of
its stockholders at the meeting of stockholders referred to in this Section
6.5, the Tower Merger, the Tower Distribution or an Alternative Transaction, as
the case may be, and, through its Board of Directors, recommend to its
stockholders approval of an agreement
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contemplating the Tower Merger, the Tower Distribution or an Alternative
Transaction, as the case may be, and approval of such transaction.
6.6 Information Statement.
(a) In the event the American Stockholders Meeting is not required
because Mergeparty shall have delivered to American valid written consents of
stockholders constituting the Required Vote, then American shall prepare and
file with the Commission as soon as is reasonably practicable after the date
hereof an information statement (the "Information Statement") complying with
applicable rules and regulations of the Commission and the DCL. Mergeparty and
American shall promptly furnish to the other all information, and take such
other actions, as may reasonably be requested in connection with any action
taken to comply with the provisions of this Section 6.6.
(b) Each of American and Mergeparty shall correct promptly any
information provided by it to be used specifically in the Information Statement
that shall have become false or misleading in any material respect and shall
take all steps necessary to file with the Commission and have cleared by the
Commission any amendment or supplement to the Information Statement so as to
correct such Information Statement and cause it to be disseminated to the
stockholders of American, to the extent required by Applicable Law. Without
limiting the generality of the foregoing, American shall notify Mergeparty
promptly of the receipt of the comments of the Commission and of any request by
the Commission for amendments or supplements to the Information Statement, or
for additional information, and shall supply Mergeparty with copies of all
correspondence between it or its representatives, on the one hand, and the
Commission or members of its staff, on the other hand, with respect to the
Information Statement. Whenever any event occurs which should be described in
an amendment or a supplement to the Information Statement, American shall, upon
learning of such event, promptly prepare, file and clear with the Commission
and mail to the stockholders of American such amendment or supplement;
provided, however, that, prior to such mailing, (i) American shall consult with
Mergeparty with respect to such amendment or supplement, (ii) shall afford
Mergeparty reasonable opportunity to comment thereon, and (iii) each such
amendment or supplement shall be reasonably satisfactory to Mergeparty.
(c) In the event American shall be required to call the American
Stockholders Meeting pursuant to Section 6.5 hereof, all references to the
Information Statement in this Agreement shall be deemed to be references to the
Proxy Statement.
6.7 Miscellaneous. Nothing contained in this Agreement shall prohibit
American from (a) taking and disclosing to its stockholders a position
contemplated by Rules 14d-9 and 14e-2(a) promulgated under the Exchange Act or
(b) making any disclosure to American's stockholders if, in the good faith
judgment of the majority of the members of the Board of Directors of American,
after consultation with independent counsel, failure to so disclose would be
inconsistent with Applicable Laws.
6.8 Option Plans.
(a) With respect to each unexpired option to purchase American Common
Stock that is outstanding immediately prior to the Tower Merger or Tower
Distribution, as applicable (each, an "American Option") which is held by
employees or directors of American or any of its Subsidiaries (each, an
"Optionholder") immediately prior to the Tower Merger or the Tower
Distribution, as the case may be, American shall, or shall cause American Tower
to, hold in escrow the consideration that the
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Optionholder would have received in connection with the Tower Merger or the
Tower Distribution, as applicable, had the Optionholder exercised such American
Option and held the American Common Stock received upon exercise thereof
through the record date of the Tower Merger or Tower Distribution, as
applicable (the "Tower Consideration"). The Tower Consideration shall be held
in escrow by American or, in its sole and absolute discretion, a reputable
financial institution, pending the consummation of the Merger. Notwithstanding
the terms of any Benefit Arrangement or any agreement evidencing the grant of
an American Option to the contrary, no adjustment will be made to the American
Options (including, but not limited to, the exercise price or number of shares
of American Common Stock subject to an American Option) in respect of the Tower
Merger or Tower Distribution, as applicable, except as provided in this Section
6.8.
(b) All American Options outstanding immediately prior to the
Effective Time, except as provided otherwise in this Section 6.8, will be
canceled by American and will be converted into the right to receive the Merger
Consideration. At the Effective Time, each Optionholder shall receive, with
respect to each unexpired American Option of the Optionholder so canceled by
American, solely (x) the Tower Consideration held in escrow pursuant to Section
6.8(a) above, plus (y) an amount in cash equal to the Merger Consideration
reduced by the exercise price of the American Option. Except as provided in the
preceding sentence, no other consideration will be paid by American to an
Optionholder in respect of his or her canceled American Options. If the Merger
is not consummated, the cancellation of the Optionholder's American Options
shall be rescinded and the Optionholder shall continue to hold such American
Options upon their original terms and conditions. At the election of any
Optionholder who is a "disqualified individual" (as such term is defined in
proposed Treasury Regulation Section 1.280G-1), this Section 6.8(b) will be
inoperative with respect to such American Options as he or she may specify to
the extent that the acceleration, vesting cancellation and cash-out of American
Options at the Effective Time as provided herein would constitute an "excess
parachute payment" (as such term is defined in Section 280G(b)(1) of the Code).
Any Optionholder who makes such election shall forfeit the American Options
which are subject to such election and shall receive no consideration therefor.
(c) With respect to American Options held by Tower Employees,
notwithstanding the foregoing provisions of this Section 6.8 and in lieu
thereof, and subject to the approval of the provisions of this Section 6.8 by
the Board of Directors of American and the Compensation Committee thereof, such
Tower Employees may elect to have their American Options assumed by American
Tower and converted into options to acquire Tower Common Stock as of the
effective time of the Tower Merger or Tower Distribution, as the case may be,
such conversion to be effectuated in a manner that will preserve the spread in
such American Options between the option exercise price and the fair market
value of American Common Stock and the ratio of the spread to the exercise
price prior to such conversion and, to the extent applicable, otherwise in
conformity with the rules under Section 424(a) of the Code and the regulations
promulgated thereunder.
(d) American will use its best efforts (including best efforts to
obtain any consents of Optionholders, if required) to cause the cancellation of
all of the American Options immediately prior to the Effective Time.
(e) Notwithstanding the foregoing provisions of this Section 6.8, in
the event that any amount payable under Section 6.8(b) to an Optionholder in
respect of his American Options would fail to be deductible by American (or any
successor thereto) solely by reason of Section 162(m) of the Code (after taking
into account all amounts paid or reasonably expected to be payable to the
Optionholder in the same
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taxable year in which the payments under Section 6.8(b) are made to the
Optionholder and which are not otherwise exempt from Code Section 162(m) in
determining whether any amount payable to the Optionholder will fail to be
deductible thereunder), then, with respect to such portion of the Optionholder's
American Options the cancellation and cash-out of which would be nondeductible
under said Section 162(m) (the "Section 162(m) Options"), such Section 162(m)
Options shall be canceled in accordance with the foregoing provisions of this
Section 6.8, but the payments of the Tower Consideration and other cash
consideration contemplated in Section 6.8(b) hereof in respect of the
Optionholder's Section 162(m) Options shall be made to the Optionholder on the
110th day following the Effective Time. American shall use its best efforts to
obtain the written consent of each Optionholder affected by this Section 6.8(e)
to the foregoing provisions hereof.
(f) All amounts payable hereunder to an Optionholder shall be reduced
by any applicable withholding taxes.
Notwithstanding anything to the contrary in this Agreement,
American shall have the right, in its sole and absolute discretion, to
accelerate, on such terms and conditions as it shall determine, in whole or in
part, the vesting of any or all of the American Options outstanding on the date
hereof so that such American Options are exercisable in full prior to the
Effective Date.
6.9 Conduct of Business by Mergeparty Pending the Merger. Except as
otherwise contemplated by this Agreement, or as has been publicly disclosed
prior to the date hereof, after the date hereof and prior to the Closing Date
or earlier termination of this Agreement unless American shall otherwise agree
in writing, with respect to Mergeparty's media business, Mergeparty shall, and
shall cause its Subsidiaries, to:
(i) conduct their respective businesses in the ordinary and
usual course of business and consistent with past practice, which
includes the acquisition of other radio broadcasting stations;
(ii) not amend or propose to amend its Organic Documents in
any manner materially adverse to the holders of the American Preferred
Stock;
(iii) use all best efforts to preserve intact their
respective business organizations and goodwill, keep available the
services of their respective present officers and key employees, and
preserve the goodwill and business relationships with customers and
others having business relationships with them and not engage in any
action, directly or indirectly, with the intent to adversely affect
the transactions contemplated by this Agreement; and
(iv) not authorize or enter into any agreement that would
violate any of the foregoing.
6.10 Conduct of Business by American Pending the Merger. Except as set
forth in Section 6.10 of the American Disclosure Schedule or as otherwise
contemplated by this Agreement, including without limitation the transactions
contemplated by the Tower Documentation and Section 6.19 hereof, after the date
hereof and prior to the Closing Date or earlier termination of this Agreement,
unless Mergeparty shall otherwise consent in writing, American shall, and shall
cause its Subsidiaries, to:
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(i) conduct their respective businesses in the ordinary and
usual course of business and consistent with past practice;
(ii) not (A) amend or propose to amend their respective
Organic Documents, (B) split, combine or reclassify (whether by stock
dividend or otherwise) their outstanding capital stock or issue or
authorize the issuance of any other securities in respect of, in lieu
of, or in substitution for shares of its capital stock, or (C)
declare, set aside or pay any dividend or distribution payable in
cash, stock, property or otherwise, except for (x) the payment of
dividends or the making of distributions by a direct or indirect
wholly-owned Subsidiary of American and (y) the payment of dividends
on shares of the American Preferred Stock in accordance with their
terms;
(iii) not issue, sell, pledge or dispose of, or agree to
issue, sell, pledge or dispose of, any shares of American Stock,
Convertible Securities or Option Securities, except that American may
issue shares of American Common Stock upon conversion of Convertible
Securities and exercise of Option Securities outstanding on the date
hereof and in accordance with their present terms, including any
adjustment to the conversion price of Convertible Securities as a
result of the Tower Distribution or Tower Merger;
(iv) not (A) incur or become contingently liable with respect
to any indebtedness other than (x) short-term borrowings not to exceed
$25 million in the aggregate outstanding at any one time, (y)
borrowings to finance pending acquisitions of radio stations set forth
in Section 6.10 of the American Disclosure Schedule and, pursuant to
agreements in effect on the date hereof and (z) borrowings not to
exceed $120 million to finance a capital contribution by American to
Tower, (B) redeem, purchase, acquire or offer to purchase or acquire
any shares of its capital stock, Convertible Securities or Option
Securities, except pursuant to the conversion or exercise thereof, as
the case may be, or except to the extent required by the present terms
thereof, (C) sell, lease, license, pledge, dispose of or encumber any
properties or assets or sell any businesses other than pursuant to
agreements in effect on the date hereof and set forth in Section 6.10
of the American Disclosure Schedule or Liens arising in accordance
with the provisions of indebtedness in effect on the date hereof and
in accordance with their present terms, or (D) make any loans,
advances or capital contributions to, or investments in, any other
Person, other than to any direct or indirect wholly owned Subsidiary
of American (other than the Tower Subsidiaries) and, except as
provided in clause (z) above, or to officers and employees of American
or any of its Subsidiaries for travel, business or relocation expenses
in the ordinary course of business;
(v) use all reasonable efforts to preserve intact their
respective business organizations and goodwill, keep available the
services of their respective present officers and key employees, and
preserve the goodwill and business relationships with customers and
others having business relationships with them and not engage in any
action, directly or indirectly, with the intent to adversely impact
the transactions contemplated by this Agreement;
(vi) confer on a regular and frequent basis with one or more
representatives of Mergeparty to report material operational matters
and the general status of ongoing operations;
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(vii) not adopt, enter into, amend or terminate any
employment, severance, special pay arrangement with respect to
termination of employment or other similar arrangements or agreements
with any directors, officers or key employees;
(viii) maintain with financially responsible insurance
companies insurance on their respective tangible assets and their
respective businesses in such amounts and against such risks and
losses as are consistent with past practice;
(ix) not make any Tax election that could reasonably be
likely to have a Material Adverse Effect on American or settle or
compromise any material income Tax liability;
(x) except in the ordinary course of business or except as
would not reasonably be likely to hav |
