AGREEMENT AND PLAN OF MERGER
BY AND AMONG
TLMD STATION GROUP, INC.,
TLMD ACQUISITION CO.
AND
TELEMUNDO GROUP, INC.
DATED AS OF NOVEMBER 24, 1997
AGREEMENT AND PLAN OF MERGER
TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS.................................................... 1
Section 1.1. DEFINITIONS.............................................. 1
ARTICLE II. THE MERGER.................................................... 6
Section 2.1. THE MERGER............................................... 6
Section 2.2. EFFECTIVE TIME........................................... 6
Section 2.3. EFFECTS OF THE MERGER.................................... 6
Section 2.4. CERTIFICATE OF INCORPORATION AND BY-LAWS................. 6
Section 2.5. DIRECTORS................................................ 6
Section 2.6. OFFICERS................................................. 6
Section 2.7. CONVERSION OF SHARES..................................... 6
Section 2.8. CONVERSION OF SUB COMMON STOCK........................... 7
Section 2.9. DISSENTING SHARES........................................ 7
Section 2.10. PAYMENT FOR SHARES...................................... 8
Section 2.11. NO FURTHER RIGHTS OR TRANSFERS.......................... 9
Section 2.12. STOCK OPTIONS........................................... 9
Section 2.13. WARRANTS................................................ 10
Section 2.14. ADJUSTMENTS............................................. 10
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY................ 10
Section 3.1. ORGANIZATION............................................. 10
Section 3.2. CAPITALIZATION........................................... 11
Section 3.3. AUTHORITY RELATIVE TO THIS AGREEMENT..................... 12
Section 3.4. NO VIOLATION............................................. 12
Section 3.5. SEC REPORTS; NO UNDISCLOSED LIABILITIES.................. 13
Section 3.6. PROXY STATEMENT; OTHER INFORMATION....................... 14
Section 3.7. COMPLIANCE............................................... 14
Section 3.8. ABSENCE OF CERTAIN CHANGES............................... 15
Section 3.9. CERTAIN FEES............................................. 15
Section 3.10. FCC QUALIFICATIONS...................................... 15
Section 3.11. SECTION 203............................................. 15
Section 3.12. LITIGATION.............................................. 15
Section 3.13. INTELLECTUAL PROPERTY................................... 16
Section 3.14. LABOR MATTERS........................................... 16
Section 3.15. EMPLOYEE BENEFIT PLANS: ERISA.......................... 17
Section 3.16. TAXES................................................... 18
Section 3.17. AFFILIATION AGREEMENTS.................................. 18
Section 3.18. ENVIRONMENTAL MATTERS................................... 18
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ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB.............. 19
Section 4.1. ORGANIZATION............................................. 19
Section 4.2. AUTHORITY RELATIVE TO THIS AGREEMENT..................... 19
Section 4.3. NO VIOLATION............................................. 20
Section 4.4. PROXY STATEMENT.......................................... 20
Section 4.5. FINANCING................................................ 21
Section 4.6. NO PRIOR ACTIVITIES...................................... 21
Section 4.7. SURVIVING CORPORATION AFTER THE MERGER................... 21
Section 4.8. CERTAIN FEES............................................. 22
Section 4.9. FCC QUALIFICATIONS....................................... 22
ARTICLE V. COVENANTS...................................................... 22
Section 5.1. CONDUCT OF BUSINESS OF THE COMPANY....................... 22
Section 5.2. ACCESS TO INFORMATION.................................... 24
Section 5.3. NO SOLICITATION.......................................... 25
Section 5.4. STOCKHOLDERS' MEETING.................................... 27
Section 5.5. COOPERATION.............................................. 27
Section 5.6. PUBLIC ANNOUNCEMENTS..................................... 28
Section 5.7. INDEMNIFICATION AND INSURANCE............................ 28
Section 5.8. FCC COVENANTS............................................ 30
Section 5.9. NOTIFICATION OF CERTAIN MATTERS.......................... 30
Section 5.10. EMPLOYEE BENEFITS....................................... 30
Section 5.11. ACKNOWLEDGMENT OF PARENT AND SUB........................ 30
Section 5.12. RENEWAL................................................. 31
ARTICLE VI. CONDITIONS TO CONSUMMATION OF THE MERGER...................... 31
Section 6.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER................................................... 31
Section 6.2. CONDITIONS TO THE OBLIGATION OF PARENT AND SUB TO EFFECT
THE MERGER............................................... 32
Section 6.3. CONDITIONS TO THE OBLIGATION OF THE COMPANY TO EFFECT THE
MERGER................................................... 33
ARTICLE VII. TERMINATION; AMENDMENT; WAIVER............................... 34
Section 7.1. TERMINATION.............................................. 34
Section 7.2. CERTAIN ACTIONS PRIOR TO TERMINATION..................... 35
Section 7.3. EFFECT OF TERMINATION.................................... 35
Section 7.4. TERMINATION FEES......................................... 35
Section 7.5. AMENDMENT................................................ 36
Section 7.6. EXTENSION; WAIVER........................................ 36
ARTICLE VIII. MISCELLANEOUS............................................... 36
Section 8.1. NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS............................................... 36
Section 8.2. ENTIRE AGREEMENT; ASSIGNMENT............................. 37
Section 8.3. VALIDITY................................................. 37
Section 8.4. NOTICES.................................................. 37
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Section 8.5. GOVERNING LAW............................................ 39
Section 8.6. INTERPRETATION........................................... 39
Section 8.7. PARTIES IN INTEREST...................................... 39
Section 8.8. COUNTERPARTS............................................. 39
Section 8.9. EXPENSES................................................. 40
Section 8.10. OBLIGATION OF PARENT.................................... 40
Section 8.11. SALE OF THE COMPANY..................................... 40
Section 8.12. ACTIONS BY THE COMPANY.................................. 40
SIGNATURES ...........................................................S-1
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (the "AGREEMENT"), is dated as of November 24,
1997, by and among TLMD Station Group, Inc., a Delaware corporation ("PARENT"),
TLMD Acquisition Co., a Delaware corporation and a wholly-owned subsidiary of
Parent ("SUB"), and Telemundo Group, Inc., a Delaware corporation (the
"COMPANY").
ARTICLE I.
DEFINITIONS
Section 1.1. DEFINITIONS. As used herein, the terms below shall have
the following meanings. Any of such terms, unless the context otherwise
requires, may be used in the singular or plural, depending on the reference.
"ACCEPTABLE FCC ORDER" shall have the meaning set forth in Section 6.1.
"ADDITIONAL AMOUNT" shall have the meaning set forth in Section 2.7.
"AFFILIATION AGREEMENTS" shall have the meaning set forth in Section 3.17.
"AFFIRMED CONDITION" shall have the meaning set forth in Section 6.2(a).
"AGREEMENT" shall have the meaning set forth in the Preamble.
"ALTERNATIVE PROPOSAL" shall have the meaning set forth in Section 5.3(a).
"BENEFIT PLAN" shall have the meaning set forth in Section 3.15(a).
"BY-LAWS" shall mean the Amended and Restated By-Laws of the Company in
effect as of the date hereof.
"CERTIFICATE OF INCORPORATION" shall mean the Restated Certificate of
Incorporation of the Company in effect as of the date hereof.
"CERTIFICATE OF MERGER" shall have the meaning set forth in Section 2.2.
"CERTIFICATES" shall have the meaning set forth in Section 2.10(b).
"CLAIM" shall have the meaning set forth in Section 5.7(c).
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"COMMUNICATIONS ACT" shall mean the Communications Act of 1934, as
amended, and the rules, regulations and policies of the FCC thereunder.
"COMPANY" shall have the meaning set forth in the Preamble.
"COMPANY COMPLYING CERTIFICATE" shall have the meaning set forth in
Section 6.2(a).
"COMPANY DISCLOSURE SCHEDULE" shall mean the schedule prepared and
delivered by the Company to and for Parent and Sub and dated as of the date
hereof, which sets forth the exceptions to the representations and warranties
of the Company contained herein and certain other information called for by
this Agreement.
"COMPANY MATERIAL ADVERSE EFFECT" shall mean a material adverse effect on
the financial condition, results of operations or business of the Company and
its Subsidiaries, taken as a whole.
"CONFIDENTIALITY AGREEMENT" shall mean, collectively, the confidentiality
agreements between the Financial Advisor, acting on behalf of the Company,
and Liberty Media Corporation, dated as of July 23, 1997, between the
Financial Advisor, acting on behalf of the Company, and Sony Pictures
Entertainment Inc., dated as of April 30, 1997 and as amended as of July 25,
1997, and between the Financial Advisor, acting on behalf of the Company, and
Apollo Management, L.P., dated as of November 12, 1997.
"DEBT COMMITMENT LETTERS" shall have the meaning set forth in Section 4.5.
"DGCL" shall mean the General Corporation Law of the State of Delaware.
"DISSENTING SHARES" shall have the meaning set forth in Section 2.9(a).
"EFFECTIVE TIME" shall have the meaning set forth in Section 2.2.
"ENVIRONMENTAL LAWS" shall have the meaning set forth in Section 3.18.
"EQUITY COMMITMENTS" shall have the meaning set forth in Section 4.5.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended, and the rules and regulations promulgated thereunder.
"ERISA AFFILIATE" shall have the meaning set forth in Section 3.15(a).
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended.
"EXCHANGE AGENT" shall have the meaning set forth in Section 2.10(a).
"FCC" shall mean the Federal Communications Commission or any successor
agency thereto.
"FCC ORDER" shall mean an order or decision of the FCC which grants all
consents or approvals required under the Communications Act for the transfer
of control of all FCC licenses held by the Company to Parent and/or Sub and
the consummation of the Merger and the other Transactions, whether or not any
appeal or request for reconsideration or review of such order is
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pending, or whether the time for filing any such appeal or request for
reconsideration or review, or for any sua sponte action by the FCC with
similar effect, has expired. For purposes of this definition, the "FCC"
shall mean the FCC or its staff.
"FCC PERMITS" shall have the meaning set forth in Section 3.7(a).
"FILED SEC REPORTS" shall have the meaning set forth in Section 3.7(a).
"FINANCIAL ADVISOR" shall mean Lazard Freres & Co. LLC.
"FUND" shall have the meaning set forth in Section 2.10(a).
"GOVERNMENTAL ENTITY" shall mean any federal, state or local government
or regulatory agency, authority, commission or instrumentality.
"HAZARDOUS SUBSTANCE" shall have the meaning set forth in Section 3.18.
"HSR ACT" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended.
"INDEMNIFIED PARTIES" shall have the meaning set forth in Section 5.7(c).
"INTELLECTUAL PROPERTY" shall mean: (i) registered and unregistered
trademarks, service marks, slogans, trade names, domain names, logos and
trade dress; (ii) registered and unregistered copyrights, including, but not
limited to, copyrights in software programs, databases, and the content
contained on any Internet site(s); (iii) software programs and databases;
(iv) rights in names, likenesses, images and other attributes of individuals;
and (v) agreements pursuant to which the Company has obtained the right to
use any of the foregoing (together with other agreements to which the Company
or any Subsidiary is a party relating to the development, acquisition or use
of Intellectual Property, "License Agreements").
"KNOWLEDGE" shall mean the knowledge, after reasonable inquiry, of the
officers of the Company, Parent or Sub, as applicable, with the title of Vice
President or higher and, with respect to the Company, the general managers of
each of the Stations.
"LETTER OF TRANSMITTAL" shall have the meaning set forth in
Section 2.10(b).
"MERGER" shall have the meaning set forth in Section 2.1.
"MERGER CONSIDERATION" shall have the meaning set forth in Section 2.7.
"NMS" shall mean the Nasdaq National Market.
"NON-AFFIRMED CONDITION" shall have the meaning set forth in
Section 6.2(a).
"NON-COMPLYING CERTIFICATE" shall have the meaning set forth in
Section 6.2(a).
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"OPTION" shall have the meaning set forth in Section 2.12.
"PARENT" shall have the meaning set forth in the Preamble.
"PARENT DISCLOSURE DOCUMENTS" shall have the meaning set forth in
Section 5.4(b).
"PARENT RESPONSE" shall have the meaning set forth in Section 6.2(a).
"PARENT STOCKHOLDER" shall mean each of the persons who, at the date
hereof, are, and as of the Effective Time will be, stockholders of Parent.
"PENDING PROPOSAL" shall have the meaning set forth in Section 7.4.
"PREFERRED STOCK" shall have the meaning set forth in Section 3.2(a).
"PROXY STATEMENT" shall have the meaning set forth in Section 3.6.
"REPRESENTATIVES" shall have the meaning set forth in Section 5.3(a).
"SBI" shall mean Salomon Brothers Inc.
"SEC" shall mean the Securities and Exchange Commission or any successor
thereto.
"SEC REPORTS" shall have the meaning set forth in Section 3.5.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SERIES A COMMON STOCK" shall mean the Series A common stock, $.01 par
value, of the Company.
"SERIES B COMMON STOCK" shall mean the Series B common stock, $.01 par
value, of the Company.
"SHARE" shall mean a share of Stock.
"SIGNIFICANT SUBSIDIARIES" shall mean any Subsidiary which (i) is a
"significant subsidiary," as defined in Rule 1-02 of Regulation S-X under the
Exchange Act; (ii) holds any FCC Permits; (iii) owns, directly or indirectly,
any interest in any Subsidiary included in clause (i) or (ii); or (iv) is
otherwise material to the Company and its Subsidiaries, taken as a whole.
"SPECIAL MEETING" shall have the meaning set forth in Section 5.4(a)(i).
"STATIONS" shall mean the full-power and low-power television stations
owned and operated by the Company.
"STOCK" shall mean, collectively, the Series A Common Stock, par value
$.01, of the Company together with the Series B Common Stock, par value $.01,
of the Company.
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"STOCK OPTION PLANS" shall have the meaning set forth in Section 2.12.
"SUB" shall have the meaning set forth in the Preamble.
"SUBSIDIARY" shall mean, with respect to any person, (A) (i) a
corporation in which such person, a subsidiary of such person, or such person
and one or more subsidiaries of such person, directly or indirectly, at the
date of determination, has either (a) a 50% or greater ownership interest or
(b) the power, under ordinary circumstances, to elect or to direct the
election of 50% or more of the board of directors of such corporation, (ii) a
partnership in which such person, a subsidiary of such person or such person
and one or more subsidiaries of such person (a) is, at the date of
determination, general partner or (b) has a 50% or greater ownership interest
in such partnership or the right to elect, or direct the election of, 50% or
more of the governing body of such partnership and (iii) any other person
(other than corporation or a partnership) in which such person, directly or
indirectly, at the date of determination, has either (a) a 50% or greater
ownership interest or (b) the power to elect, or direct the election of 50%
or more of the directors or other governing body of such other person and (B)
any other person which is consolidated with such person in accordance with
generally accepted accounting principles. For purposes of this Agreement,
the term "parent," when not capitalized, means, with respect to any person,
any other person of which such person is, directly or indirectly, a
Subsidiary.
"SUPERIOR OFFER" shall have the meaning set forth in Section 7.1(e).
"SURVIVING CORPORATION" shall have the meaning set forth in Section 2.1.
"THIRD PARTIES" shall have the meaning set forth in Section 5.3(a).
"TRANSACTIONS" shall have the meaning set forth in Section 5.3(a).
"TRIGGER DATE" shall mean the date which is seven months after the date
on which Parent and Sub shall have initially filed with the FCC the FCC Form
315 for approval of the changes of control of the FCC Permits; PROVIDED,
HOWEVER, that if it has not earlier occurred, such date shall be deemed to be
August 1, 1998.
"WARRANTS" shall mean, collectively, (i) those certain warrants dated
December 30, 1994 issued to the Company's bondholders and general unsecured
creditors as of such date entitling the holder of each such warrant to
purchase one share of Series A Common Stock at a price equal to $7.00 per
share (of which 624,094 of such warrants were outstanding as of November 12,
1997 (ii) that certain warrant dated as of December 30, 1994 issued to
Reliance Insurance Company and its subsidiaries entitling the holder of each
such warrant to purchase one share of Series A Common Stock at a price equal
to $7.19 per share (of which 416,667 of such warrants were outstanding as of
November 12, 1997).
"1994 PLAN" shall have the meaning set forth in Section 2.12.
"1996 PLAN" shall have the meaning set forth in Section 2.12.
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ARTICLE II.
THE MERGER
Section 2.1. THE MERGER. At the Effective Time (as hereinafter
defined), upon the terms and subject to the conditions hereof, and in
accordance with the DGCL, Sub shall be merged with and into the Company (the
"MERGER") as soon as practicable following the satisfaction of the conditions
set forth in Article VI hereof. Following the Merger, the Company shall
continue as the surviving corporation (the "SURVIVING CORPORATION") and the
separate corporate existence of Sub shall cease.
Section 2.2. EFFECTIVE TIME. The Merger shall be consummated by and
shall be effective at the time of acceptance for filing by the Delaware
Secretary of State of a certificate of merger (the "CERTIFICATE OF MERGER")
in such form as is required by, and executed in accordance with, the relevant
provisions of the DGCL, and such other documents as shall be required by the
provisions of the DGCL (the time of such filing being the "EFFECTIVE TIME").
Section 2.3. EFFECTS OF THE MERGER. The Merger shall have the effects
set forth in the DGCL. As of the Effective Time, the Company shall be a
wholly-owned subsidiary of Parent.
Section 2.4. CERTIFICATE OF INCORPORATION AND BY-LAWS. Subject to
Section 5.7 hereof, the Certificate of Incorporation and By-Laws of the
Company as in effect at the Effective Time shall be the Certificate of
Incorporation and By-Laws of the Surviving Corporation and thereafter may be
amended in accordance with their respective terms, the DGCL and Section 5.7
hereof.
Section 2.5. DIRECTORS. The directors of Sub at the Effective Time
shall be the directors of the Surviving Corporation and will hold office from
the Effective Time until the next annual stockholders' meeting of the
Surviving Corporation and until their successors shall be elected or
appointed and shall be duly qualified.
Section 2.6. OFFICERS. The officers of the Company at the Effective
Time shall be the initial officers of the Surviving Corporation and will hold
office from the Effective Time until their respective successors are duly
elected or appointed and qualified in the manner provided in the certificate
of incorporation and by-laws of the Surviving Corporation, or as otherwise
provided by law.
Section 2.7. CONVERSION OF SHARES. Each Share issued and outstanding
immediately prior to the Effective Time (other than Shares held by Parent,
Sub or any other wholly-owned subsidiary of Parent, or in the treasury of the
Company or by any wholly-owned subsidiary of the Company, all of which shall
be canceled and no payment will be made with respect thereto, and Dissenting
Shares, as hereinafter defined) shall, by virtue of the Merger and without
any action on the part of the holder thereof, be converted into the right to
receive from Parent the Merger Consideration (as defined below), subject to
applicable withholding or back-up withholding taxes, if any, payable by the
holder thereof, without interest thereon, upon surrender of the certificate
formerly representing such Share. As used in this Agreement, the term "MERGER
CONSIDERATION" shall mean the sum, in cash, of $44.00 plus the Additional
Amount (as defined
6
below). As used in this Agreement, the term "ADDITIONAL AMOUNT" shall mean,
subject to Section 6.1(a), an amount equal to the product of: (a) $44.00;
MULTIPLIED BY (b) 8%, MULTIPLIED BY (c) a fraction, the numerator of which
shall be the number of days in the period from and including the Trigger Date
to but excluding the date on which the Effective Time of the Merger occurs,
and the denominator of which shall be 365.
Section 2.8. CONVERSION OF SUB COMMON STOCK. Each share of common
stock, par value $.01 per share, of Sub issued and outstanding immediately
prior to the Effective Time shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into and represent the
right to receive one share of common stock of the Surviving Corporation,
which thereafter will constitute all of the issued and outstanding common
stock of the Surviving Corporation.
Section 2.9. DISSENTING SHARES.
(a) GENERAL. Notwithstanding anything in this Agreement to the
contrary, Shares which are issued and outstanding immediately prior to the
Effective Time and which are held by stockholders who have not voted such
Shares in favor of the Merger, who shall have delivered a written demand for
appraisal of such Shares in the manner provided in the DGCL and who, as of
the Effective Time, shall not have effectively withdrawn or lost such right
to appraisal ("DISSENTING SHARES") shall not be converted into or represent a
right to receive the Merger Consideration pursuant to Section 2.7 hereof, but
the holders thereof shall be entitled only to such rights as are granted by
Section 262 of the DGCL. Each holder of Dissenting Shares who becomes
entitled to payment for such Shares pursuant to Section 262 of the DGCL shall
receive payment therefor from the Surviving Corporation in accordance with
the DGCL; PROVIDED, HOWEVER, that (i) if any such holder of Dissenting Shares
shall have failed to establish his entitlement to appraisal rights as
provided in Section 262 of the DGCL, (ii) if any such holder of Dissenting
Shares shall have effectively withdrawn his demand for appraisal of such
Shares or lost his right to appraisal and payment for his Shares under
Section 262 of the DGCL or (iii) if neither any holder of Dissenting Shares
nor the Surviving Corporation shall have filed a petition demanding a
determination of the value of all Dissenting Shares within the time provided
in Section 262 of the DGCL, such holder or holders (as the case may be) shall
forfeit the right to appraisal of such Shares and each such Share shall
thereupon be deemed to have been converted, as of the Effective Time, into
and represent the right to receive payment from the Surviving Corporation of
the Merger Consideration, without interest thereon, as provided in Section
2.7 hereof.
(b) NOTICE OF APPRAISAL DEMANDS. The Company shall give Parent and
Sub (i) prompt notice of any written demands for appraisal, withdrawals of
demands for appraisal and any other instruments served pursuant to Section
262 of the DGCL received by the Company and (ii) the opportunity to direct
all negotiations and proceedings with respect to demands for appraisal under
Section 262 of the DGCL. The Company shall not, except with the prior
written consent of Parent, voluntarily make any payment with respect to any
demands for appraisal or offer to settle or settle any such demands.
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Section 2.10. PAYMENT FOR SHARES.
(A) EXCHANGE MECHANICS. Prior to the Effective Time, Parent shall
designate a bank or trust company reasonably satisfactory to the Company to
act as Exchange Agent in the Merger (the "EXCHANGE AGENT"). At or prior to
the Effective Time, Parent will, or will take all steps necessary to enable
and cause the Surviving Corporation to, provide the Exchange Agent funds (the
"FUND") necessary to make the payments contemplated by Section 2.7. Out of
the Fund, the Exchange Agent shall, pursuant to irrevocable instructions,
make the payments referred to in Section 2.7. The Fund shall not be used for
any other purpose. The Exchange Agent may invest portions of the Fund, as
directed by Parent (so long as such directions do not impair the Exchange
Agent's ability to make the payments referred to in Section 2.7 hereof or
otherwise impair the rights of holders of Shares), provided that no such
investments may be made other than in direct obligations of the United States
of America, obligations for which the full faith and credit of the United
States of America is pledged to provide for the payment of principal and
interest, commercial paper rated of the highest quality by Xxxxx'x Investors
Services, Inc. or Standard & Poor's Corporation, or certificates of deposit
issued by a commercial bank having capital exceeding $500,000,000. Any net
earnings resulting from, or interest or income produced by, such investments
shall be paid to the Surviving Corporation as and when requested by Parent.
The Surviving Corporation shall replace any monies lost through any
investment made pursuant to this Section 2.10. Deposit of funds pursuant
hereto shall not relieve Parent or the Surviving Corporation of their
obligations to make payments in respect of Shares and Parent hereby
guarantees the Surviving Corporation's obligations in respect thereof.
(b) LETTER OF TRANSMITTAL. Promptly after the Effective Time, the
Surviving Corporation shall cause the Exchange Agent to mail to each record
holder, as of the Effective Time, of an outstanding certificate or
certificates which immediately prior to the Effective Time represented Shares
(the "CERTIFICATES") a form letter of transmittal (the "LETTER OF
TRANSMITTAL") for return to the Exchange Agent (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon proper delivery of the Certificates to the Exchange
Agent) and instructions for use in effecting the surrender of the
Certificates, for payment therefor. Upon surrender to the Exchange Agent of
a Certificate, together with the Letter of Transmittal duly executed, the
holder of such Certificate shall be entitled to receive in exchange therefor
cash in an amount equal to the product of the number of Shares represented by
such Certificate MULTIPLIED BY the Merger Consideration subject to any
required withholding taxes, and such Certificate shall forthwith be canceled.
No interest will be paid or accrued on the cash payable upon the surrender
of the Certificates. If payment is to be made to a person other than the
person in whose name the Certificate surrendered is registered, it shall be a
condition of payment that the Certificate so surrendered shall be properly
endorsed or otherwise in proper form for transfer and that the person
requesting such payment shall pay any transfer or other taxes required by
reason of the payment to a person other than the registered holder of the
Certificate surrendered or establish to the satisfaction of the Surviving
Corporation that such tax has been paid or is not applicable. Until
surrendered in accordance with the provisions of this Section 2.10, each
Certificate (other than Certificates representing Shares held by Parent, Sub
or any other wholly-owned subsidiary of Parent, the Company or any
wholly-owned subsidiary of
8
the Company which shall have been canceled, or Dissenting Shares) shall
represent for all purposes the right to receive the Merger Consideration in
cash MULTIPLIED BY the number of Shares evidenced by such Certificate,
without any interest thereon.
(c) RETURN OF UNCLAIMED FUNDS. Any cash provided to the Exchange
Agent pursuant to this Section 2.10 and not exchanged for Certificates within
six months after the Effective Time will be returned by the Exchange Agent to
the Surviving Corporation, which thereafter will act as Exchange Agent.
Notwithstanding the foregoing, neither the Exchange Agent nor any party
hereto shall be liable to a holder of Shares for any Merger Consideration
delivered to a public official pursuant to applicable abandoned property,
escheat and similar laws.
Section 2.11. NO FURTHER RIGHTS OR TRANSFERS. At and after the
Effective Time, each holder of a Certificate that represented issued and
outstanding Shares immediately prior to the Effective Time shall cease to
have any rights as a stockholder of the Company, except for the right to
surrender his or her Certificate or Certificates in exchange for the payment
provided pursuant to Sections 2.7 and 2.10 hereof or to perfect his or her
right to receive payment for his or her Shares pursuant to Section 262 of the
DGCL and Section 2.9 hereof if such holder has validly exercised and
perfected and not withdrawn his or her right to receive payment for his or
her Shares, and there shall be no transfers on the stock transfer books of
the Surviving Corporation of the Shares which were outstanding immediately
prior to the Effective Time. If, after the Effective Time, Certificates
formerly representing Shares are presented to the Surviving Corporation, they
shall be canceled and exchanged for cash as provided in this Article II,
subject to applicable law in the case of Dissenting Shares.
Section 2.12. STOCK OPTIONS. Immediately prior to the Effective Time,
each holder of a then-outstanding Company stock option issued pursuant to
either (a) the Company's 1994 Stock Plan, as amended (the "1994 PLAN"), or
(b) the Company's 1996 Non-Employee Director Stock Option Plan (the "1996
PLAN" and, collectively, with the 1994 Plan, the "STOCK OPTION PLANS"),
whether or not then presently exercisable, to purchase Shares (an "OPTION")
will be entitled to receive, and shall receive, in settlement of such Option
a cash payment from the Company equal to the product of (i) the total number
of Shares then subject to each such Option with an exercise price per Share
less than the Merger Consideration MULTIPLIED BY (ii) the excess of the
Merger Consideration over the exercise price per Share subject to such
Option, subject to any required withholding of taxes. If necessary or
appropriate under the Stock Option Plans, the Company will, upon the request
of Parent, use its reasonable best efforts to obtain the written
acknowledgment of each person holding an Option that the payment of the
amount of cash referred to above will satisfy in full the Company's
obligation to such person pursuant to such Option. By virtue of the
foregoing treatment of the Options, at the Effective Time all Options shall
be canceled and shall cease to exist. Prior to the Effective Time, the
Company shall make any amendments to the terms of the Stock Option Plans that
are necessary to give effect to the transactions contemplated by this
Section 2.12.
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Section 2.13. WARRANTS. Immediately prior to the Effective Time, each
holder of a then-outstanding Warrant will be entitled to receive, and shall
receive, in settlement of such Warrant a cash payment from the Company equal
to the product of (i) the total number of Shares then subject to each such
Warrant with an exercise price per Share less than the Merger Consideration
MULTIPLIED BY (ii) the excess of the Merger Consideration over the exercise
price per Share subject to such Warrant, subject to any required withholding
of taxes. If necessary or appropriate under the terms of such Warrant, the
Company will, upon the request of Parent, use its reasonable best efforts to
obtain the written acknowledgment of each person holding a Warrant that the
payment of the amount of cash referred to above will satisfy in full the
Company's obligation to such person pursuant to such Warrant. By virtue of
the foregoing treatment of the Warrants, at the Effective Time all Warrants
shall be canceled and shall cease to exist. Prior to the Effective Time, the
Company shall make any amendments to the terms of the Warrants that are
necessary and give effect to the transactions contemplated by this Section
2.13.
Section 2.14. ADJUSTMENTS. If, between the date of this Agreement and
the Effective Time, the outstanding Shares shall be changed into a different
number of shares or a different class by reason of any reclassification,
recapitalization, split-up, combination, exchange of shares or readjustment,
or a stock dividend thereon shall be declared with a record date prior to the
Effective Time, the amount of consideration to be received pursuant to this
Article II in exchange for each outstanding Share, Option, or Warrant shall
be correspondingly adjusted.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents, warrants and, with respect to the covenants contained
in Section 3.6 only, covenants to Parent and Sub as follows:
Section 3.1. ORGANIZATION. Except as set forth in Section 3.1 of the
Company Disclosure Schedule, the Company and each of its Significant
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of its state or jurisdiction of incorporation and is
in good standing as a foreign corporation in each jurisdiction where the
properties owned, leased or operated, or the business conducted, by it
require such qualification and where failure to be in good standing or to so
qualify would, individually or in the aggregate, have a Company Material
Adverse Effect. The Company has made available to Parent true and correct
copies of the certificate of incorporation and By-Laws or equivalent
organizational documents, each as amended to the date hereof, of the Company
and each Significant Subsidiary. Such certificates of incorporation, by-laws
and equivalent organizational documents are in full force and effect. The
Company is not in violation of its Certificate of Incorporation or By-Laws.
No Significant Subsidiary is in violation of its certificate of
incorporation, by-laws or equivalent organizational documents, except for
violations that would not, individually or in the aggregate, have a Company
Material Adverse Effect.
10
Section 3.2. CAPITALIZATION.
(a) COMPANY CAPITALIZATION. The authorized capital stock of the
Company consists of 14,388,394 shares of Series A Common Stock, 5,611,606
shares of Series B Common Stock and 1,000,000 shares of preferred stock
("PREFERRED STOCK"). As of September 30, 1997, there were (i) 6,966,895
shares of Series A Common Stock issued and outstanding and (ii) 3,198,761
shares of Series B Common Stock issued and outstanding and (iii) no shares of
Preferred Stock issued and outstanding. Since September 30, 1997, no Shares
have been issued (except for (x) the issuance of Shares pursuant to the
exercise of Options outstanding under the Stock Option Plans at such date,
the issuance of Shares pursuant to the exercise of the Warrants outstanding
on such date, and (y) the issuance pursuant to the terms of the Certificate
of Incorporation of Shares of Series A Common Stock upon the sale of Shares
of Series B Common Stock issued and outstanding on such date), and no shares
of Preferred Stock have been issued. Except as set forth in Section 3.2(a)
of the Company Disclosure Schedule and except for 2,080,761 shares of Series
A Common Stock issuable (i) upon exercise of Options outstanding as of
September 30, 1997 or issued in compliance with Section 5.1 issued pursuant
to the Stock Option Plans and (ii) upon exercise of the Warrants, there are
not now, and at the Effective Time there will not be, any existing options,
warrants, calls, subscriptions, convertible or exchangeable securities, or
other rights, or other agreements or commitments, obligating the Company or
any of its Subsidiaries to issue, transfer or sell or cause to be issued,
transferred or sold any shares of capital stock of the Company or any of its
Subsidiaries. All issued and outstanding Shares are validly issued, fully
paid, nonassessable and free of preemptive rights. None of the outstanding
shares of capital stock of the Company is held by the Company or any of its
Subsidiaries.
(b) SUBSIDIARY CAPITALIZATION. Except as set forth in Section
3.2(b) of the Company Disclosure Schedule, all of the outstanding shares of
capital stock of each of the Significant Subsidiaries have been validly
issued and are fully paid and non-assessable and are owned directly or
indirectly by the Company free and clear of all liens, charges, claims or
encumbrances or as imposed by applicable securities laws. Except as set
forth in Section 3.2(b) of the Company Disclosure Schedule, there are no
outstanding options, warrants, calls, subscriptions, or other rights, or
other agreements or commitments, obligating any Significant Subsidiary of the
Company to issue, transfer or sell any shares of its capital stock. There
are no proxies outstanding with respect to any shares of capital stock of the
Company's Subsidiaries.
(c) Except as set forth in Section 3.2(c) of the Company Disclosure
Schedule and interests in the Subsidiaries, neither the Company nor any
Significant Subsidiary owns directly or indirectly any interest or investment
(whether equity or debt) in any corporation, partnership, joint venture,
business, trust or entity (other than non-controlling investments in the
ordinary course of business and corporate partnering, development,
cooperative marketing and similar undertakings and arrangements entered into
in the ordinary course of business).
11
Section 3.3. AUTHORITY RELATIVE TO THIS AGREEMENT.
(a) COMPANY APPROVALS. The Company has full corporate power and
authority to execute and deliver this Agreement and, subject to obtaining the
necessary approval of this Agreement by the affirmative vote of a majority of
the outstanding shares of Class A Common Stock and Class B Common Stock, voting
together as a single class (the "STOCKHOLDER APPROVAL"), to consummate the
Transactions. The execution and delivery of this Agreement by the Company and
the consummation of the Transactions have been duly authorized by the Board of
Directors of the Company, and no other corporate proceedings on the part of the
Company are necessary for the execution and delivery of this Agreement by the
Company and, subject to the filing of the Certificate of Merger pursuant to
Section 2.2 and obtaining the Stockholder Approval, the performance by the
Company of its obligations hereunder and the consummation by the Company of the
Transactions. This Agreement has been duly executed and delivered by the
Company and, assuming this Agreement constitutes a valid and binding obligation
of each of Parent and Sub, this Agreement constitutes a valid and binding
agreement of the Company, enforceable against the Company in accordance with its
terms, except to the extent that its enforceability may be limited by applicable
bankruptcy, insolvency, reorganization or other laws affecting the enforcement
of creditors rights generally or by general equitable principles.
(b) OTHER AUTHORIZATIONS. Except as set forth in Section 3.3(b) of
the Company Disclosure Schedule, other than in connection with, or in compliance
with, applicable requirements of (i) the DGCL with respect to the filing of the
Certificate of Merger, (ii) the Exchange Act (including, without limitation, the
filing of the Proxy Statement), (iii) the requirements of the NMS, (iv) the HSR
Act and (v) the Communications Act (including, without limitation, requirements
related to the transfer of control licenses in connection with the operation of
the Stations), no authorization, consent or approval of, or filing with, any
court or any public body or authority is necessary for the execution and
delivery of this Agreement and the consummation by the Company of the
Transactions other than authorizations, consents and approvals the failure to
obtain, or filings the failure to make, which would not, in the aggregate, have
a Company Material Adverse Effect.
Section 3.4. NO VIOLATION. None of the execution or delivery of this
Agreement by the Company, the performance by the Company of its obligations
hereunder or the consummation by the Company of the Transactions will (a)
subject to obtaining the Stockholder Approval, constitute a breach or violation
of any provision of the Certificate of Incorporation or By-Laws of the Company,
(b) except as set forth in Section 3.4 of the Company Disclosure Schedule,
constitute a breach, violation or default (or any event which, with notice or
lapse of time or both, would constitute a default) under, or result in the
termination of, or accelerate the payment or performance required by, or result
in the creation of any lien or encumbrance upon any of the properties or assets
of the Company or any of its Subsidiaries or permit any person to require the
Company or any Subsidiary to repurchase or repay any obligation under, any note,
bond, mortgage, indenture, deed of trust, license, agreement or other instrument
or obligation to which the Company or any of its Subsidiaries is a party or by
which they or any of their respective properties or assets are bound, (c)
constitute a violation of any order, writ, injunction, decree,
12
statute, rule or regulation of any court or governmental authority applicable
to the Company, any of its Subsidiaries or any of their properties or assets,
or (d) except as set forth in Section 3.4 of the Company Disclosure Schedule,
give any person the right to require the Company or any Subsidiary to
purchase any assets from, or sell any assets to, such person or trigger any
"change of control" provisions in any agreement to which the Company or any
of its Subsidiaries is a party, other than, in the case of clauses (b), (c)
and (d) above, such breaches, violations, defaults, terminations,
accelerations or creation of liens and encumbrances or rights to require the
Company or any Subsidiary to purchase or sell any assets or trigger any
"change of control" provisions which, in the aggregate, would not have a
Company Material Adverse Effect or as set forth in Section 3.4 of the Company
Disclosure Schedule.
Section 3.5. SEC REPORTS; NO UNDISCLOSED LIABILITIES. Since September
30, 1995, the Company has filed all forms, reports and documents ("SEC REPORTS")
with the SEC required to be filed by it pursuant to the Securities Act, and the
Exchange Act and the SEC rules and regulations promulgated thereunder. True and
correct copies of all such SEC Reports have been made available to Parent by the
Company. All of the SEC Reports complied (as of their respective filing dates)
in all material respects with the applicable requirements of the Securities Act,
the Exchange Act and the SEC rules and regulations promulgated thereunder. None
of such SEC Reports (as of their respective filing dates) contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The audited and
unaudited consolidated financial statements of the Company included in the SEC
Reports have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis (except as otherwise stated in such
financial statements included in the Filed SEC Reports, including the related
notes, and except that the interim financial statements do not contain all of
the footnote disclosures required by generally accepted accounting principles)
and fairly present in all material respects the financial position of the
Company and its consolidated Subsidiaries as of the dates thereof and the
results of their operations and their cash flows for the periods then ended,
subject, in the case of the interim unaudited financial statements, to normal
year-end audit adjustments, which, except as disclosed in the Filed SEC Reports,
would not be material in amount or effect. Neither the Company nor any of its
Subsidiaries has any liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) that would be required to be reflected on, or
reserved against in, the consolidated financial statements of the Company or in
the notes thereto, prepared in accordance with generally accepted accouning
principles consistently applied, except for (i) liabilities or obligations that
were so reserved on, or reflected in (including the notes to), the consolidated
balance sheet of the Company as of December 31, 1996 or September 30, 1997;
(ii) liabilities or obligations arising in the ordinary course of business
consistent with past practice since September 30, 1997; (iii) liabilities or
obligations which would not, individually or in the aggregate, have a Company
Material Adverse Effect; (iv) liabilities or obligations related to this
Agreement or the Transactions; and (v) payments required as a result of the
consummation of the Merger under the acceleration provisions of the terms
existing on the date hereof of the Company's employment agreements, severance
agreements or Benefit Plans which would not,
13
individually or in the aggregate, have a Company Material Adverse Effect. No
Subsidiary of the Company is required to file any report or form with the SEC.
Section 3.6. PROXY STATEMENT; OTHER INFORMATION. None of the information
included or incorporated by reference in the letter to stockholders, notice of
meeting, proxy statement and form of proxy, or the information statement
(including, without limitation, the proxy or information statement containing
information required by Regulation 14A under the Exchange Act, and, if
applicable, Rule 13e-3 and Schedule 13E-3 under the Exchange Act), as the case
may be, to be distributed to stockholders of the Company in connection with the
Merger, or any schedules required to be filed with the SEC in connection
therewith (collectively referred to herein as the "PROXY STATEMENT"), if
required, except information supplied by Parent or Sub in writing for inclusion
in the Proxy Statement or in such schedules (as to which the Company makes no
representation), will, as of the date the Proxy Statement is first mailed to
such stockholders, and on the date of the Special Meeting, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. No representation
is made by the Company with respect to any forward-looking information which may
have been supplied by the Company whether or not included in the Proxy
Statement. The Proxy Statement will comply (at the time of its mailing) as to
form in all material respects with the Exchange Act and the rules and
regulations thereunder. The Company will promptly correct any statements in the
Proxy Statement that to its knowledge have become false or misleading and take
all steps necessary to cause such Proxy Statement as so corrected to be filed
with the SEC and disseminated to the stockholders of the Company in accordance
with applicable law.
Section 3.7. COMPLIANCE.
(a) Except as disclosed by the Company in the SEC Reports filed with
the SEC prior to the date hereof (the "FILED SEC REPORTS") or as set forth in
Section 3.7(a) of the Company Disclosure Schedule, the Company and its
Subsidiaries hold all permits, licenses, waivers, exemptions, orders, franchises
and approvals necessary for the lawful conduct of their respective businesses in
the manner in which they are currently being conducted (including, but not
limited to, those required under the Communications Act or the rules and
regulations of the FCC (the "FCC PERMITS")), except where the failure to possess
the same would not, individually or in the aggregate, have a Company Material
Adverse Effect. The Company and its Subsidiaries are in compliance with the
terms of all FCC Permits, except where the failure to so comply would not have a
Company Material Adverse Effect.
(b) The FCC Permits are in full force and effect unimpaired by any
condition that could have a material adverse effect on the financial condition,
results of operations, or business of the Stations. Except as set forth in the
Filed SEC Reports or identified in Section 3.7(b) of the Company Disclosure
Schedule, no application, action or proceeding is pending for the renewal or
modification of any of the FCC Permits and, except for actions or proceedings
affecting television broadcast stations generally, no application, complaint,
action or proceeding
14
is pending or, to the Company's knowledge, threatened that is reasonably
likely to result in (i) the denial of an application for renewal, (ii) the
revocation, modification, non-renewal or suspension of any of the Station
licenses and other material FCC Permits, (iii) the issuance of a
cease-and-desist order, or (iv) the imposition of any administrative or
judicial sanction with respect to any of the Stations, individually or in the
aggregate, with respect to this clause (iv) that would have a Company
Material Adverse Effect.
(c) The Stations, their respective physical facilities, electrical
and mechanical systems and transmitting and studio equipment (i) are being
operated in all material respects in compliance with the specification of the
applicable Station licenses and other material FCC Permits, and (ii) are being
operated in all material respects in compliance with all material requirements
of the Communications Act. The Company and the Stations have complied in all
material respects with all requirements of the FCC and the Federal Aviation
Administration with respect to the construction and/or alteration of the
Company's antenna structures and "no hazard" determinations for each antenna
structure owned by the Stations have been obtained.
Section 3.8. ABSENCE OF CERTAIN CHANGES. Except as set forth in the
Filed SEC Reports or identified in Section 3.8 of the Company Disclosure
Schedule, since September 30, 1997 there has not been any material adverse
change in the financial condition, results of operations or business of the
Company and its Subsidiaries, taken as a whole.
Section 3.9. CERTAIN FEES. With the exception of the fees payable to the
Financial Advisor and SBI pursuant to the respective engagement letters dated
July 17, 1997 and November 20, 1997 which have been delivered to Parent, neither
the Company, any of its Subsidiaries nor any of their officers, directors or
employees has employed any broker or finder or incurred any liability for any
financial advisory, brokerage or finder's fees or commissions to any brokers or
finders in connection with the Transactions.
Section 3.10. FCC QUALIFICATIONS. After due investigation, except for
matters described in Section 3.10 of the Company Disclosure Schedule, the
Company is not aware of any facts or circumstances related to the Company that
are likely to prevent or delay prompt consent to the transfer of control
applications (as described in Section 5.8(b)) to a qualified purchaser and the
issuance of the FCC Order.
Section 3.11. SECTION 203. The Board of Directors of the Company has
approved this Agreement and the Merger. Section 203 of the DGCL has been
rendered inapplicable to the consummation of the Merger and the other
Transactions.
Section 3.12. LITIGATION. Except as disclosed in the Filed SEC Reports or
identified in Section 3.12 of the Company Disclosure Schedule, there are no
civil, criminal or administrative actions, suits, claims, hearings,
investigations or proceedings pending or, to the knowledge of the Company,
threatened against the Company or any of its Subsidiaries at law or in equity,
or before or by any federal or state commission, board, bureau, agency or
instrumentality, that could reasonably be expected, individually or together
with any other action, suit, claim, hearing,
15
investigation or proceeding arising out of or based upon the same or
substantially the same facts or circumstances, to have a Company Material
Adverse Effect.
Section 3.13. INTELLECTUAL PROPERTY. Except as disclosed in the Filed SEC
Reports or identified in Section 3.13 of the Company Disclosure Schedules and
except to the extent that the inaccuracy of any of the following (or the
circumstances giving rise to such inaccuracy), individually or in the aggregate,
could not reasonably be expected to have a Company Material Adverse Effect:
(a) The Company or its Subsidiaries own or have the valid right to
use all Intellectual Property used in or necessary for the conduct of their
businesses as currently conducted or proposed by the Company to be conducted,
free and clear of all liens, charges, claims or encumbrances and the Company has
not granted to any third party a license to use the trademark "Telemundo" or any
related logo, except as displayed or embedded as part of video programming
licensed for exhibition to third parties or pursuant to the Affiliation
Agreements or for customary cross-promotional or advertising purposes.
(b) To the knowledge of the Company, (i) neither the Company's nor
any Subsidiary's use of any Intellectual Property nor the conduct of the
Company's nor any Subsidiary's business infringes any Intellectual Property
rights of any third party, and no such claims have been asserted against the
Company or any Subsidiary which have not been resolved, and (ii) no third party
is materially infringing any of the Company's or any Subsidiary's Intellectual
Property rights, and no such claims are pending or threatened by the Company or
any Subsidiary against any third party.
Section 3.14. LABOR MATTERS. Except as set forth in the Filed SEC Reports
or identified in Section 3.14 of the Company Disclosure Schedules, there is no
labor strike, dispute, slowdown, work stoppage or lockout actually pending or,
to the knowledge of the Company, threatened against or affecting the Company or
any Subsidiary and, since January 1, 1995, there has not been any such action.
Except as set forth in the Filed SEC Reports or identified in Section 3.14 of
the Company Disclosure Schedule, neither the Company nor any Subsidiary is a
party to or bound by any collective bargaining, guild or similar agreement with
any labor organization, or work rules or practices agreed to with any labor
organization or employee association applicable to employees of the Company or
any Subsidiary. The Company and its Subsidiaries have at all times been in
compliance with all applicable laws respecting employment and employment
practices, terms and conditions of employment, wages, hours of work, and
occupational safety and health, except where any failure to be in compliance
could not reasonably be expected to have a Company Material Adverse Effect, and
are not engaged in any unfair labor practices as defined in the National Labor
Relations Act or other applicable law, ordinance or regulation which could
reasonably be expected to have a Company Material Adverse Effect. There is no
grievance or arbitration proceeding arising out of any collective bargaining or
guild agreement or other grievance procedure relating to the Company or its
Subsidiaries which could reasonably be expected to have a Company Material
Adverse Effect.
16
Section 3.15. EMPLOYEE BENEFIT PLANS: ERISA
(a) Section 3.15(a) of the Company Disclosure Schedule sets forth a
true and complete list of each material compensation plan and each other
material "EMPLOYEE BENEFIT PLAN" (within the meaning of Section 3(2) of ERISA)
that is maintained or contributed to, or was maintained or contributed to, at
any time since January 1, 1995, by the Company, any Subsidiary or by any trade
or business, whether or nor incorporated, which together with the Company would
be deemed a "single employer" within the meaning of Section 4001(b) of ERlSA (an
"ERISA AFFILIATE") for the benefit of any employee, former employee, consultant,
officer, or director of the Company or any Subsidiary (a "BENEFIT PLAN").
(b) Except as set forth in the Filed SEC Reports or identified in
Section 3.15(b) of the Company's Disclosure Schedule: (i) no Benefit Plan is a
"multiemployer plan," as such term is defined in Section (3)(37) of ERISA, or a
"multiple employer plan" within the meaning of Section 413(c) of the Code;
(ii) each of the Benefit Plans is, and has always been, operated in all respects
in accordance with the requirements of all applicable law; (iii) each of the
Benefit Plans intended to be "qualified" within the meaning of Section 401(a) of
the Code has received a favorable determination letter from the Internal Revenue
Service to that effect; (iv) no Benefit Plan has an accumulated or waived
funding deficiency within the meaning of Section 412 of the Code; (v) neither
the Company nor any ERISA Affiliate has incurred, directly or indirectly, any
liability (including any material contingent liability) to or on account of a
Benefit Plan pursuant to Title IV of ERISA; (vi) no proceedings have been
instituted to terminate any Benefit Plan that is subject to Title IV of ERISA;
(vii) no "reportable event," as such term is defined in Section 4043(b) of
ERISA, has occurred with respect to any Benefit Plan that is not reflected on an
applicable annual report filed on behalf of such plan; and (viii) no condition
exists that presents a risk to the Company or any ERISA Affiliate of incurring a
liability to or on account of a Benefit Plan pursuant to Title IV of ERISA;
provided, however, that the representations made in the foregoing clauses (ii)
through (viii) of this Section 3.15(b) shall be deemed to be true and correct
except to the extent that their untruth would, individually or in the aggregate,
have a Company Material Adverse Effect.
(c) Except as would not, individually or in the aggregate, have a
Company Material Adverse Effect, (i) there are no pending, or to the knowledge
of the Company, threatened or anticipated claims (other than routine claims for
benefits) by, on behalf of or against any of the Benefit Plans, or any trusts
related thereto or any trustee or administrator thereof, and (ii) no litigation
or administrative or other proceeding (including, without limitation, any
litigation or proceeding under Title IV of ERlSA) has occurred or, to the
knowledge of the Company, is threatened involving any Benefit Plan or any trusts
related thereto or any trustee or administrator thereof.
17
Section 3.16. TAXES Except as set forth in Section 3.16 of the Company
Disclosure Schedule:
(a) Each of the Company and its Subsidiaries has filed all material
tax returns and reports required to be filed by it, or requests for extensions
to file such returns or reports have been timely filed and granted and have not
expired, and all tax returns and reports are complete and accurate in all
respects, except to the extent that such failures to file, have extensions
granted that remain in effect or be complete and accurate in all respects, as
applicable, would not, individually or in the aggregate, have a Company Material
Adverse Effect. The Company and each of its Subsidiaries has paid (or the
Company has paid on its behalf) all taxes shown as currently due on such tax
returns and reports. The most recent financial statements contained in the SEC
Reports reflect an adequate reserve for all taxes payable by the Company and its
Subsidiaries for all taxable periods and portions thereof accrued through the
date of such financial statements in accordance with generally accepted
accounting principles, and no deficiencies for any taxes have been proposed,
asserted or assessed against the Company or any Subsidiary that are not
adequately reserved for, except for inadequately reserved taxes and inadequately
reserved deficiencies that would not, individually or in the aggregate, have a
Company Material Adverse Effect. No requests for waivers of the time to assess
any taxes against the Company or any Subsidiary have been granted and are
pending, except for requests with respect to such taxes that have been
adequately reserved for in the most recent financial statements contained in the
SEC Reports, or, to the extent not adequately reserved, the assessment of which
would not, individually or in the aggregate, have a Company Material Adverse
Effect.
(b) As used in this Section 3.16 and in Section 5.1, "taxes" shall
include all Federal, state, local and foreign income, franchise, property,
sales, use, excise and other taxes, including obligations for withholding taxes
from payments due or made to any other person and any interest, penalties or
additions to tax.
Section 3.17. AFFILIATION AGREEMENTS. The Company has provided Parent
with access to true and correct copies of all affiliation agreements between the
Company or any of its Subsidiaries and a television broadcast station pursuant
to which such station has agreed to broadcast the network programming of the
Company (the "AFFILIATION AGREEMENTS"). Each of the Affiliation Agreements is
in full force and effect, is the valid and binding obligation of the parties
thereto and is enforceable in accordance with its terms. The Company is not
and, to the knowledge of the Company, no other party to any Affiliation
Agreement is in material breach or default with respect to its obligations
thereunder, or has given notice of, or, to the Company's knowledge, has any
basis for, any action to terminate, cancel, rescind or procure a judicial
reformation thereof.
Section 3.18. ENVIRONMENTAL MATTERS. The Company and its Subsidiaries are
in material compliance with all federal, state, and local laws governing
pollution or the protection of human health or the environment ("ENVIRONMENTAL
LAWS"), except in each case where noncompliance with Environmental Laws would
not reasonably be expected to have a Company Material
18
Adverse Effect. Neither the Company nor any of its Subsidiaries has received
any written notice with respect to the business of, or any property owned or
leased by, the Company or any of its Subsidiaries from any Governmental
Entity or third party alleging that the Company or any of its Subsidiaries is
not in material compliance with any Environmental Law. To the knowledge of
the Company, there has been no release of a "HAZARDOUS SUBSTANCE," as that
term is defined in the Comprehensive Environmental Response, Compensation,
and Liability Act, 42 U.S.C. Section 9601 ET SEQ., in excess of a reportable
quantity on any real property owned or leased by the Company or any of its
Subsidiaries.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
OF PARENT AND SUB
Parent and Sub represent and warrant and, with respect to the covenants
contained in Section 4.4 only, covenant to the Company as follows:
Section 4.1. ORGANIZATION. Each of Parent and Sub is a corporation duly
organized, validly existing and in good standing under the laws of its state or
jurisdiction of incorporation and is in good standing as a foreign corporation
in each other jurisdiction where the properties owned, leased or operated, or
the business conducted, by it require such qualification and where failure to be
in good standing or so to qualify would, individually or in the aggregate, have
a material adverse effect on the financial condition, results of operations or
businesses of Parent and Sub, taken as a whole.
Section 4.2. AUTHORITY RELATIVE TO THIS AGREEMENT.
(a) PARENT AND SUB APPROVALS. Each of Parent and Sub has full
corporate power and authority to execute and deliver this Agreement and to
consummate the Transactions. The execution and delivery of this Agreement by
Parent and Sub and the consummation of the Transactions have been duly
authorized by the respective Boards of Directors of Parent and Sub, and by
Parent as the sole stockholder of Sub, and no other corporate proceedings on the
part of Parent or Sub are necessary for the execution and delivery of this
Agreement by each of Parent and Sub, the performance by each of Parent and Sub
of their respective obligations hereunder and the consummation by each of Parent
and Sub of the transactions so contemplated. This Agreement has been duly
executed and delivered by each of Parent and Sub and, assuming this Agreement
constitutes a valid and binding obligation of the Company, this Agreement
constitutes a valid and binding agreement of each of Parent and Sub, enforceable
against each of Parent and Sub in accordance with its terms, except to the
extent that its enforceability may be limited by applicable bankruptcy,
insolvency, reorganization or other laws affecting the enforcement of creditors
rights generally or by general equitable principles.
(b) OTHER AUTHORIZATIONS. Other than in connection with, or in
compliance with, applicable requirements of (i) the DGCL with respect to the
Transactions, (ii) the Exchange Act (including, without limitation, the filing
of the Proxy Statement), (iii) the HSR Act and (iv) the Communications Act
(including, without limitation, requirements related to the transfer of
19
licenses in connection with the operation of the television stations owned
and operated by the Company), no authorization, consent or approval of, or
filing with, any court or any public body or authority is necessary for the
consummation by Parent and Sub of the Transactions other than authorizations,
consents and approvals the failure to obtain, or filings the failure to make,
would not, in the aggregate, have a material adverse effect on the financial
condition, results of operations or business of Parent and its Subsidiaries,
taken as a whole, or on the ability of Parent and Sub to consummate the
Transactions.
Section 4.3. NO VIOLATION. Neither the execution or delivery of this
Agreement by Parent and Sub, the performance by Parent and Sub of their
respective obligations hereunder nor the consummation by them of the
Transactions will (a) constitute a breach or violation under the certificate of
incorporation or by-laws of Parent or Sub or (b) constitute a breach, violation
or default (or any event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of, or accelerate the
performance required by, or result in the creation of any lien or encumbrance
upon any of the properties or assets of Parent or any of its Subsidiaries under,
any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or
other instrument to which Parent or any of its Subsidiaries is a party or by
which they or any of their respective properties or assets are bound or (c)
constitute a violation of any order, writ, injunction, decree, statute, rule or
regulation of any court or governmental authority applicable to Parent or Sub or
any of their respective properties or assets, give any person the right to
require Parent or Sub to purchase any assets from, or sell any assets to, such
person or trigger any "change of control" provisions in any material agreement
to which Parent or Sub is a party other than, in the case of clauses (b), (c)
and (d) above, such breaches, violations, defaults, terminations, accelerations
or creation of liens and encumbrances which, in the aggregate, would not,
individually or in the aggregate, have a material adverse effect on the
financial condition, results of operations or business of Parent and Sub, taken
as a whole, or on the ability of Parent and Sub to consummate the Transactions.
Section 4.4. PROXY STATEMENT.
(a) None of the information supplied in writing by Parent, Sub or
their respective affiliates specifically for inclusion in the Proxy Statement
will, at the time the Proxy Statement is mailed or at the time of the Special
Meeting (as defined in Section 5.4) or at the Effective Time, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. If at any time
prior to the Special Meeting any event with respect to Parent or Sub, or with
respect to information supplied by Parent or Sub for inclusion in the Proxy
Statement, shall occur which is required to be described in an amendment of, or
a supplement to, such documents, such event shall be so described to the Company
in a timely manner.
(b) PARENT DISCLOSURE. The Parent Disclosure Documents, will (as of
their respective filing dates) comply in as to form in all material respects
with the applicable requirements of the Securities Act and the Exchange Act and
the SEC rules and regulations
20
promulgated thereunder. None of Parent Disclosure Documents will, at the
time they are filed, at the time of any distribution thereof or at the time
of the Special Meeting, contain any untrue statement of a material fact or
omit to state any material fact necessary to make the statements made
therein, in light of the circumstances under which they were made, not
misleading; PROVIDED, HOWEVER, that this representation and warranty will not
apply to statements or omissions in the Parent Disclosure Documents based
solely upon information furnished to Parent in writing by the Company
specifically for use therein.
Section 4.5. FINANCING. Parent has received binding written commitments
(the "EQUITY COMMITMENTS") from its stockholders to contribute equity capital to
the Parent in the aggregate amount of $273,200,000 plus additional amounts
necessary to fund the Additional Amount (if any) hereunder and Sub has received
from Parent a binding written commitment from Parent that Parent will
immediately thereafter contribute the Equity Commitments to Sub. The Equity
Commitments include an unconditional commitment from each of the Parent
Stockholders that an aggregate of $100,000,000 will be contributed to Parent,
whether or not the Merger is consummated, to satisfy the obligations of Parent
and Sub hereunder, including without limitation, claims made as a result of any
breaches by Parent or Sub of the terms of this Agreement. Parent and Sub have
or have access to the funds, or have, at the date hereof, binding written
commitments from responsible financial institutions to provide Parent or Sub
with the funds (the "DEBT COMMITMENT LETTERS") necessary, together with the
Equity Commitments, to consummate the Merger and the other Transactions and to
provide working capital for the business of the Company, and to consummate the
Transactions, including the payment of related fees and expenses. True and
correct copies of all such financing commitments have previously been furnished
to the Company along with letters from each of Parent Stockholders stating that
the Company may rely on the Equity Commitments as if they were addressed to the
Company. As of the date hereof, none of the Equity Commitments or commitments
represented by the Debt Commitment Letters has been withdrawn and Parent and Sub
do not know of any facts or circumstances existing at the date hereof that would
result in any of the conditions contained in the Debt Commitment Letters not
being satisfied.
Section 4.6. NO PRIOR ACTIVITIES. Sub has not incurred, directly or
indirectly, any material liabilities or obligations, except those incurred in
connection with its organization or with the negotiation of this Agreement and
the Transactions. Sub has not engaged, directly or indirectly, in any business
or activity of any type or kind, or entered into any agreement or arrangement
with any person or entity, and is not subject to or bound by any material
obligation or undertaking, that is not contemplated by or in connection with
this Agreement and the Transactions.
Section 4.7. SURVIVING CORPORATION AFTER THE MERGER. At the Effective
Time and after giving effect to any changes in the Surviving Corporation's
assets and liabilities as a result of the Merger and after giving effect to the
financing for the Merger and the use of proceeds therefrom, the Surviving
Corporation will not (a) be insolvent (either because its financial condition is
such that the sum of its debts is greater than the fair market value of its
assets or because the present fair saleable value of its assets will be less
than the amount required to pay its debts as they
21
become due), (b) have unreasonably small capital with which to engage in its
business or (c) have incurred or plan to incur debts beyond its ability to
pay as they become absolute and matured.
Section 4.8. CERTAIN FEES. Neither the Parent or Sub nor any affiliates
thereof nor any of their respective officers, directors or employees has
employed any broker or finder or incurred any liability required to be paid by
the Company prior to the Closing for any financial advisory, brokerage or
finder's fees or commissions to any brokers or finders in connection with the
Transactions.
Section 4.9. FCC QUALIFICATIONS. Parent and Sub, to their knowledge
after consulting with regulatory counsel and based on the FCC's current practice
and precedent, are, for purposes of obtaining the FCC Order, legally,
technically, financially and otherwise qualified to acquire control of the
Company, and Parent and Sub are not aware of any facts or circumstances related
to Parent or Sub that are likely to prevent consent to the transfer of control
applications (as described in Section 5.8(b)) and issuance of the FCC Order.
Parent's equity ownership is structured as described in the bid letter dated
November 17, 1997 and delivered by Parent and Sub to the Financial Advisor on
behalf of the Company. Parent and Sub, to their knowledge after consulting with
regulatory counsel, are not aware, except for the continuation of existing
waivers, that any waiver of any FCC rule or policy is necessary to be obtained
for the grant of the applications for transfer of control of the Company to
Parent and Sub, nor will processing pursuant to any exception to any rule of
general applicability be requested or required in connection with the
consummation of the Transactions.
ARTICLE V.
COVENANTS
Section 5.1. CONDUCT OF BUSINESS OF THE COMPANY. Except as expressly
contemplated by this Agreement or as set forth in Section 5.1 of the Company
Disclosure Schedule, during the period from the date of this Agreement to the
Effective Time, the Company will, and will cause each of its Subsidiaries to,
conduct its respective operations according to its ordinary and usual course of
business and consistent with past practice and use reasonable efforts to (i)
preserve intact its business organizations' goodwill, (ii) keep available the
services of its present officers and key employees, and (iii) preserve the
goodwill and business relationships with suppliers, distributors and others
having business relationships with it. Without limiting the generality of the
foregoing, and except as expressly contemplated by this Agreement or as set
forth in Section 5.1 of the Company Disclosure Schedule, prior to the Effective
Time, the Company will not, and the Company will cause its Subsidiaries not to,
without the prior written consent of Parent (such consent, except in the cases
of clauses (a), (h) and (i) below, not to be unreasonably withheld):
(a) issue, sell, pledge or otherwise dispose of, grant or otherwise
create any additional shares of, or authorize or propose the issuance, sale,
pledge, disposal, grant or creation of any shares of capital stock of the
Company and its Subsidiaries, or securities convertible into or exchangeable for
such shares, or any rights, warrants or options to acquire such shares or other
22
convertible or exchangeable securities, other than the issuance of Shares
pursuant to the exercise of Options or Warrants as outstanding on the date
hereof or otherwise issuable pursuant to the automatic grant provisions of the
1996 Plan as in effect on the date hereof, relating to director options;
(b) purchase, redeem or otherwise acquire or retire, or offer to
purchase, redeem or otherwise acquire or retire, any shares of its capital
stock, other than in transactions between the Company and its wholly-owned
subsidiaries and any required repurchases of options or stock upon termination
of employment to the extent required by agreements in effect on the date hereof;
(c) declare, set aside, make or pay any dividend or distribution,
payable in cash, stock, property or otherwise, on any shares of its capital
stock (other than dividends paid by wholly-owned Subsidiaries of the Company to
the Company);
(d) other than with respect to intercompany payables and receivables
and intercompany debt, incur or become contingently liable with respect to any
indebtedness or guarantee of any indebtedness or issue any debt securities other
than indebtedness incurred to finance working capital requirements in the
ordinary course of business consistent with past practice;
(e) merge, consolidate with or consummate any other business
combination with any person or acquire or agree to acquire by merging or
consolidating with, or by purchasing a substantial equity interest in or a
substantial portion of the assets of, or by any other manner, any business or
any corporation, partnership, association or other business entity;
(f) sell, lease, license (other than exhibition licenses entered into
in the ordinary course of business consistent with past practice), mortgage,
transfer or otherwise dispose of any properties or assets which are material to
the Company and its Subsidiaries, taken as a whole;
(g) except as disclosed in Section 5.1 of the Company Disclosure
Schedule or as may be required by applicable law or by contracts existing as of
the date hereof, (i) increase the compensation payable or to become payable to
its officers or employees, except for non-officer employees and production and
talent personnel, increases in the ordinary course of business consistent with
past practice; (ii) enter into any written employment agreement with any
employee, except in the ordinary course of business which, in any event, shall
be terminable, without penalty, on not more than six months notice; (iii) grant
any severance or termination pay to any director, officer or employee
inconsistent with Company policy; or (iv) establish, adopt, enter into,
terminate, withdraw from or amend in any material respect or take any action to
accelerate any rights or benefits under any collective bargaining agreement, any
stock option plan, or any material Benefit Plan;
(h) enter into any programming commitment other than in the ordinary
course of business consistent with past practice;
23
(i) enter into any local marketing, joint marketing or similar
agreements, modify or amend any such existing agreements on terms less favorable
to the Company than such existing agreements, if such terms would, individually
or in the aggregate, have a Company Material Adverse Effect;
(j) incur any commitments for capital expenditures (as such term is
used in accordance with generally accepted accounting principles) in excess of
$10,000,000 in any twelve month period.
(k) incur any obligations to make any payment of, or in respect of,
any tax, except in the ordinary course of business consistent with past
practice, settle any material tax audit, make or change any tax election or file
any amended tax returns; in each case other than (i) in connection with the
current audit of the Company's federal income tax returns for the years ended
December 31, 1994 and December 31, 1995, details of which have previously been
provided to representatives of Parent or Sub and (ii) obligations and actions
which action would not result in a Company Material Adverse Effect;
(l) cancel or waive any claim or right of substantial value or settle
any material pending litigation;
(m) enter into any paid programming or infomercial agreement or any
agreement granting any person the right to program any block of network or local
time, in each case which is not terminable at the Company's discretion upon not
more than 30 days notice or which does not extend beyond June 30, 1998;
(n) except as set forth in Section 5.1 of the Company Disclosure
Schedule or in the ordinary course of business consistent with past practice,
pay, discharge or satisfy any material claims, liabilities or obligations
(absolute, accrued, contingent or otherwise) before they are due or fail to pay
accounts payable in accordance with their terms;
(o) propose or adopt any amendments to its certificate of
incorporation or by-laws;
(p) agree, in writing or otherwise, to take any of the foregoing
actions; or
(q) take, or agree or commit to take, any action that would make any
representation or warranty of the Company hereunder inaccurate in any respect
at, or as of any time prior to, the Effective Time or result in any of the
conditions to the Merger set forth in this Agreement not being satisfied.
Section 5.2. ACCESS TO INFORMATION.
(a) GENERAL. So long as this Agreement has not been terminated,
between the date of this Agreement and the Effective Time, the Company will give
Parent and its authorized representatives reasonable access during normal
business hours to all offices, stations, studios,
24
production facilities and other facilities and to all books and records of it
and its Subsidiaries, will permit Parent to make such inspections as it may
reasonably require and will cause its officers and those of its Subsidiaries
to furnish Parent (at such time as it would otherwise become available in the
ordinary and usual course of business and consistent with past practice) with
such financial and operating data and other information (consistent with that
which is currently being prepared by the Company) with respect to the
business and properties of the Company and its Subsidiaries as Parent may
from time to time reasonably request.
(b) CONFIDENTIALITY. Subject to any additional requirements of law
(including, without limitation, FCC regulations) and the terms of the
Confidentiality Agreement, Parent and Sub (i) will hold and will cause their
respective representatives, advisors and financing sources to hold in strict
confidence, unless compelled to disclose by judicial or administrative process,
or, in the written opinion of its counsel with a copy sent to the Company, by
other requirements of law, all documents and information concerning the Company
and its Subsidiaries furnished to Parent, Sub or any of their respective
representatives, advisors and financing sources in connection with the
Transactions, PROVIDED, HOWEVER, that, prior to any disclosure pursuant to the
foregoing, Parent shall notify the Company and afford the Company an opportunity
to obtain a protective order against such disclosure (except to the extent that
such information can be shown to have been (x) previously known by Parent, (y)
in the public domain through no fault of Parent, its representatives or advisors
or (z) later lawfully acquired by Parent from other sources, unless Parent knows
that such other sources are not entitled to disclose such information) and (ii)
will not release or disclose such information to any other person, except in
connection with this Agreement to (1) its auditors, attorneys, financial
advisors and other representatives and advisors with a need to know such
information and (2) responsible financial institutions in connection with
obtaining the financing contemplated by Section 4.5 hereof, provided that such
person shall have first been advised of the confidentiality provisions of this
Section 5.2 and the Confidentiality Agreement and agreed to be bound thereby.
If the Transactions are not consummated, such confidence shall be maintained
except to the extent such information can be shown to have been (i) previously
known by Parent, (ii) in the public domain through no fault of Parent, its
representatives or advisors or (iii) later lawfully acquired by Parent from
other sources, unless Parent knows that such other sources are not entitled to
disclose such information and, if requested by the Company, Parent will return
to the Company all copies of information furnished by the Company to Parent or
its agents, representatives, advisors or financing sources, or derived
therefrom, or shall in writing confirm the destruction of such information.
Section 5.3. NO SOLICITATION.
(a) The Company shall not, nor shall it permit any of its
Subsidiaries, or any officer, director, employee, agent or representative of the
Company or any of its Subsidiaries (including, without limitation, any
investment banker, attorney or accountant retained by the Company or any of its
Subsidiaries) (collectively, "REPRESENTATIVES"), directly or indirectly, to
(i) initiate, solicit or encourage any inquiries or proposals that constitute,
or could reasonably be expected to lead to, a proposal or offer for a merger,
consolidation, business combination, sale of assets representing a substantial
portion of the assets of the Company and its Subsidiaries, taken
25
as a whole, or a sale of shares representing 20% or more of the capital stock
of the Company, including, without limitation, by way of a tender offer or
exchange offer by any person for 20% or more of the shares of capital stock
of the Company, other than the Merger and the other transactions contemplated
by this Agreement (the "TRANSACTIONS") (any of the foregoing inquiries or
proposals being referred to in this Agreement as an "ALTERNATIVE PROPOSAL"),
(ii) engage in negotiations or discussions concerning, or provide to any
person or entity any non-public information or data relating to the Company
or any of its Subsidiaries for the purposes of, or otherwise cooperate with
or assist or participate in, facilitate or encourage, any inquiries relating
to or the making of any Alternative Proposal, (iii) agree to, approve or
recommend any Alternative Proposal or (iv) take any other action inconsistent
with the obligations and commitments of the Company pursuant to this Section
5.3; PROVIDED, HOWEVER, that nothing contained in this Agreement shall
prevent the Company or its Board of Directors from (A) furnishing non-public
information to, or entering into discussions or negotiations with, any person
or entity in connection with an unsolicited bona fide written Alternative
Proposal (for which financing, to the extent required, is then committed or
which, in the good faith judgment of the Company's board of directors after
consultation with the Company's financial advisor, is reasonably capable of
being obtained) to the Company or its stockholders from persons other than
Parent and its affiliates (a "THIRD PARTY"), if and only to the extent that
(1) the Board of Directors of the Company, by action of a majority of the
members of the Board of Directors who are not affiliated with either the
Parent or the person making such Alternative Proposal or their respective
affiliates, determines in good faith, after consultation with the Company's
outside counsel and its financial advisors, that (x) such Alternative
Proposal is more favorable from a financial point of view to the Company's
stockholders than the Merger and the other Transactions and (y) failure by
the Board of Directors to furnish such information to or enter into
discussions or negotiations with such Third Party could reasonably be
expected to result in a breach of its fiduciary duties to the Company's
stockholders under applicable law, and (2) prior to furnishing such
non-public information to, or entering into discussions or negotiations with,
such Third Party, the Board of Directors of the Company receives from such
person or entity an executed confidentiality agreement with terms no less
favorable to such party than those contained in the Confidentiality
Agreement; or (B) complying with Rule 14d-9 or Rule 14e-2 promulgated under
the Exchange Act with regard to an Alternative Proposal or making any other
public disclosure that, based upon advice of the Company's outside counsel,
the Board of Directors determines in its good faith judgment is required by
applicable law, rule or regulation; PROVIDED, that prior to making any such
other public disclosure the Company shall to the extent reasonably
practicable inform the Parent that it intends to make such disclosure. The
Company will immediately cease and cause to be terminated any existing
activities, discussions or negotiations by the Company or its Representatives
with any parties conducted heretofore with respect to any of the foregoing.
(b) The Company shall (i) promptly notify the Parent in writing after
receipt by the Company or its Representatives of any Alternative Proposal or any
inquiries indicating that any person is considering making or wishes to make an
Alternative Proposal, (ii) promptly notify the Parent in writing after receipt
of any request for non-public information relating to the Company or any of its
Subsidiaries or for access to the Company's or any of its Subsidiaries'
26
properties, books or records by any person that, to the Company's knowledge,
may be considering making, or has made, an Alternative Proposal and (iii)
keep the Parent advised of the status and principal terms of any such
Alternative Proposal, indication or request.
Section 5.4. STOCKHOLDERS' MEETING.
(A) GENERAL. The Company shall, in accordance with its charter
documents:
(i) duly call, give notice of, convene and hold an annual or
special meeting (the "SPECIAL MEETING") of its stockholders as soon as
practicable for the purpose of considering and taking action upon this
Agreement;
(ii) subject to its fiduciary duties under applicable law as
advised in writing by counsel, include in the Proxy Statement the
recommendation of its Board of Directors that stockholders of the
Company vote in favor of the approval and adoption of this Agreement
and the Transactions contemplated hereby; and
(iii) use its reasonable best efforts (x) (1) to obtain and
furnish the information required to be included by it in the Proxy
Statement, (2) to file the Proxy Statement with the SEC, (3) to
respond promptly to any comments made by the SEC with respect to the
Proxy Statement and any preliminary version thereof and (4) to cause
the Proxy Statement to be mailed to its stockholders at the earliest
practicable time and (y) subject to its fiduciary duties under
applicable law as advised in writing by counsel, to obtain the
Stockholder Approval.
(b) PARENT DISCLOSURE DOCUMENTS. As soon as practicable after the
date of this Agreement, Parent and/or Sub shall file (separately, or as part
of the Proxy Statement) with the SEC, if required, a Rule 13E-3 Transaction
Statement with respect to the Merger (together with any supplements or
amendments thereto, the "PARENT DISCLOSURE DOCUMENTS"). Each of Sub and
Parent agrees to correct any information provided by it for use in the Sub
Disclosure Documents if and to the extent that it shall have become false or
misleading in any material respect. Sub agrees to take all steps necessary
to cause the Sub Disclosure Documents as so corrected to be filed with the
SEC and to be disseminated to holders of Shares, in each case as and to the
extent required by applicable federal securities laws. The Company and its
counsel shall be given reasonable opportunity to review and comment on each
Sub Disclosure Document prior to its being filed with the SEC.
(c) VOTING OF SHARES BY PARENT AND SUB. Parent agrees that, at the
Special Meeting, all Shares owned by Parent, Sub or any other affiliate of
Parent will be voted in favor of the Merger.
Section 5.5. COOPERATION. Subject to the terms and conditions herein
provided (including, without limitation, Section 5.8), each of the parties
hereto agrees to use its reasonable best efforts (a) to take, or cause to be
taken, all action, and to do, or cause to be done, all things necessary, proper
or advisable under applicable laws and regulations to consummate and make
27
effective the Transactions including, without limitation, (i) promptly making
their respective filings, and thereafter using their reasonable best efforts
promptly to make any required submissions, under the HSR Act and (ii)
promptly making any filings that are required to be made or seeking any
consents, approvals, permits or authorizations that are required to be
obtained under any other federal, state or foreign law or regulation
(including those required under the Communications Act and by the FCC as are
more fully described in Section 5.8 of this Agreement) and (b) to refrain
from taking, directly or indirectly, any action that would result in a breach
of this Agreement. Parent shall notify the Company and keep it reasonably
apprised of developments relating to its ability to satisfy the conditions
set forth in Sections 6.1(d), 6.2(d) and 6.2(e). In case at any time after
the Effective Time any further action is necessary or desirable to carry out
the purposes of this Agreement, the proper officers and directors of each
party to this Agreement shall use their respective reasonable best efforts to
take all such necessary action.
Section 5.6. PUBLIC ANNOUNCEMENTS. Parent, Sub and the Company will
consult with each other before issuing any press release or otherwise making
any public statements with respect to the Merger and shall not issue any such
press release or make any such public statement prior to such consultation,
except as may be required by law or any securities exchange or similar
authority (in which case prior notice of at least 24 hours by the Company to
Parent or by Parent or Sub to the Company, as applicable, of such issuance of
a press release or making of a public statement shall be required).
Section 5.7. INDEMNIFICATION AND INSURANCE.
(a) CONTINUATION OF CHARTER OBLIGATIONS. The Company shall and
from and after the Effective Time, Parent and the Surviving Corporation
shall, maintain the right to indemnification and exculpation of officers and
directors provided for in the Certificate of Incorporation and By-Laws of the
Company as in effect on the date hereof, with respect to indemnification and
exculpation for acts and omissions occurring prior to the Effective Time,
including, without limitation, the Transactions.
(b) CONTINUATION OF D&O INSURANCE. For six years after the
Effective Time, Parent or the Surviving Corporation shall maintain officers'
and directors' liability insurance covering the persons who are presently
covered by the Company's officers' and directors' liability insurance
policies (copies of which have heretofore been delivered to Parent) with
respect to actions and omissions occurring prior to the Effective Time, on
terms which are not materially less favorable, in the aggregate, than the
terms of such current insurance in effect for the Company on the date hereof.
(c) INDEMNIFICATION. The Company shall and from and after the
Effective Time, the Surviving Corporation shall, (i) to the fullest extent
permitted under applicable law, indemnify and hold harmless, each present and
former director and officer of the Company (collectively, the "INDEMNIFIED
PARTIES") against any costs or expenses (including attorneys' fees),
judgments, fines, losses, claims, damages, liabilities and amounts paid in
settlement in
28
connection with any pending, threatened or completed claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative or
investigative, arising out of or pertaining to any action or omission
occurring prior to the Effective Time (including, without limitation, any
claim, action, suit, proceeding or investigation arising out of or pertaining
to the Transactions (a "CLAIM")) and (ii) in the event of any such Claim
(whether arising before or after the Effective Time), upon receipt from the
Indemnified Party to whom expenses are advanced of an undertaking to repay
such advances required under the DGCL, advance expenses to each such
Indemnified Party, including the payment of the fees and expenses of counsel
selected by such Indemnified Party, which counsel shall be reasonably
satisfactory to the Company or the Surviving Corporation, as the case may be,
promptly after statements therefor are received, PROVIDED, that the Company
shall not, in connection with any one Claim or separate but substantially
similar or related Claims, be liable for the fees and expenses of more than
one separate firm of attorneys (in addition to any local counsel) at any time
for all such Indemnified Parties, and PROVIDED, FURTHER, that the Company
shall be entitled to participate in the defense thereof, and (iii) cooperate
fully in the defense of any such matter. Promptly after receipt by an
Indemnified Party of notice of any Claim as to which such persons intends to
seek indemnification hereunder, such person shall give notice thereof to the
Company; except that the failure to promptly give notice of any such Claim to
the Company shall not affect such persons right to indemnification, unless
the Company's ability to defend the Claim is materially impaired as a result.
Neither the Company nor the Surviving Corporation shall be liable for any
settlement effected without its written consent (which consent shall not be
unreasonably withheld).
(d) ELIGIBILITY FOR INDEMNIFICATION. Notwithstanding any provision
to the contrary contained in the Certificate of Incorporation or By-Laws of
the Company as in effect on the date hereof, any determination required to be
made with respect to whether an Indemnified Party's conduct complies with the
standards set forth under the DGCL, under such charter provisions shall be
made by independent counsel selected by the Indemnified Party and reasonably
acceptable to the Company, Parent, Sub or the Surviving Corporation, which
shall pay such counsel's fees and expenses (it being agreed that neither the
Company, Parent, Sub nor the Surviving Corporation shall challenge any such
determination by such independent counsel which is favorable to an
Indemnified Party).
(e) SURVIVAL. This Section 5.7 shall survive the Closing, is
intended to benefit the Company, Parent, Sub or the Surviving Corporation and
each of the Indemnified Parties (each of whom shall be entitled to enforce
this Section 5.7 against the Company, Parent or the Surviving Corporation, as
the case may be) and shall be binding on all successors and assigns of Parent
and the Surviving Corporation.
(f) MERGER, ASSIGNMENT, ETC. In the event Parent, the Surviving
Corporation or any of their respective successors or assigns (i) consolidates
with or merges into any other person and shall not be the continuing or
surviving corporation or entity of such consolidation or merger or (ii)
transfers all or substantially all of its properties and assets to any
person, then, and in each such case, proper provision shall be made so that
the successors and assigns of Parent or the Surviving Corporation assume the
obligations set forth in this Section 5.7.
29
Section 5.8. FCC COVENANTS
(a) Each of Parent and Sub shall use its reasonable best efforts to
take, or cause to be taken, all action and to do or satisfy, or cause to be
done or satisfied, all things and conditions necessary, proper or advisable
to obtain the FCC Order and to satisfy all conditions and take all actions
required thereby, in each case so as to come into compliance with FCC
requirements and to consummate the Merger as promptly as practicable;
PROVIDED, HOWEVER, this Section 5.8 shall not be interpreted as obligating
Parent, Sub, any Parent Stockholder or any affiliates thereof, to consent to
the imposition of any condition or restriction set forth in Section 6.1(d)
hereof; PROVIDED, FURTHER, that Parent and Sub shall make all reasonable
modifications and adjustments to their respective relationships and
arrangements among the Parent Stockholders (including the grant of proxies to
other Parent Stockholders with respect to general voting rights) with respect
to Parent that are required in order to obtain an Acceptable FCC Order, so
long as such modifications and adjustments do not modify in any material
respect the contemplated minority stockholder protective provisions or modify
in any material respect the economic arrangement among and between the Parent
Stockholders. The Company shall also use such efforts, but shall not be
required to take any action that would be effective prior to the Effective
Time.
(b) As promptly as practicable, following the date of this
Agreement (but in no event later than January 1, 1998), the Company and
Parent and Sub shall prepare and file with the FCC all necessary applications
for approval of the Merger and the other Transactions. Without limiting the
foregoing, the Company, Parent and Sub shall submit to the FCC an application
to be filed on FCC Form 315 pursuant to the Communications Act.
Section 5.9. NOTIFICATION OF CERTAIN MATTERS. Between the date of this
Agreement and the consummation of the Merger, the Company will promptly
notify Parent and Sub in writing if it becomes aware of any fact or condition
that causes or constitutes a breach of its representations and warranties as
of the date of this Agreement, or if it becomes aware of the occurrence after
the date of this Agreement of any fact or condition which would (except as
expressly contemplated by this Agreement) cause or constitute a breach of any
such representation or warranty had such representation or warranty been made
as of the time of occurrence or discovery of such fact or condition.
Notwithstanding the foregoing provisions of this Section 5.9, no party shall
be required to give notice with respect to events that are reported in the
financial or general interest newspapers that do not specifically relate to
such party or the Transactions.
Section 5.10. EMPLOYEE BENEFITS. Parent agrees to honor, and from and
after the Effective Time shall cause the Surviving Corporation to honor, in
accordance with their respective terms as in effect on the date hereof, the
employment, severance, bonus, and commission agreements and similar
arrangements to which the Company is a party which are set forth in Section
5.10 of the Company Disclosure Schedule.
Section 5.11. ACKNOWLEDGMENT OF PARENT AND SUB. Parent and Sub
acknowledge that any projections prepared by the Company and provided to
Parent and/or Sub as part of the due
30
diligence process were and are merely estimates made by the Company as of the
time they were provided and Parent and Sub have in no way relied on any such
projections. Parent and Sub agree and acknowledge that neither the Company
nor any of its affiliates has made or is making any representation or
warranty as to the accuracy or completeness of the Confidential Information
Memorandum furnished by the Financial Advisor on behalf of the Company or any
supplement thereto provided by such person. Without limiting the foregoing,
Parent and Sub agree and acknowledge that the only representations and
warranties made by the Company with respect to the Transactions are those
representations and warranties contained in this Agreement (together with the
exceptions to such representations and warranties set forth in the Company
Disclosure Schedule) and only those representations and warranties have and
will have any legal effect following the date hereof which effect will
continue solely to the extent specifically set forth herein.
Section 5.12. RENEWAL. To the extent permitted by FCC regulations, with
respect to each Affiliation Agreement which requires that a notice be given,
or other action be taken, prior to the Effective Time in order to exercise
the Company's option to extend the scheduled expiration date of, or otherwise
renew, such Affiliation Agreement, the Company shall consult with Parent with
respect thereto and shall give such notice and shall take such other action
unless, after such consultation, Parent shall otherwise agree in writing.
ARTICLE VI.
CONDITIONS TO CONSUMMATION OF THE MERGER
Section 6.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligations of each party to effect the Merger are
subject to the satisfaction or waiver, where legally permissible, prior to
the Effective Time of the following conditions:
(a) Stockholder Approval of this Agreement shall have been obtained;
(b) No statute, rule, regulation, order, decree or injunction shall
have been enacted, entered, promulgated or enforced by any court or
governmental authority of competent jurisdiction which restrains, enjoins or
otherwise prohibits the consummation of the Merger; PROVIDED, HOWEVER, that
the Company, Parent and Sub shall use their reasonable best efforts to have
any such order, decree or injunction vacated;
(c) The applicable waiting period under the HSR Act shall have
expired or been terminated; and
(d) The FCC Order shall have been obtained without the imposition
of any conditions or restrictions that (i) seek to prohibit or limit the
ownership or operation by any of the Parent Stockholders or the Surviving
Corporation or any portion of its or their respective businesses or assets,
or to compel any Parent Stockholder or the Surviving Corporation to dispose
of or hold separate any portion of their business or assets, (ii) seek to
impose material limitations on the ability of any Parent Stockholder to
acquire or hold equity interests of the Parent, exercise the minority
protective provisions contemplated by the Parent or modify in any
31
material respect the economic arrangement among and between the Parent
Stockholders, (iii) seek to prohibit any Parent Stockholder from effectively
controlling in any respect any of the business or operations of such Parent
Stockholder, or (iv) which otherwise is reasonably likely to adversely effect
the financial condition, results of operations or business of any Parent
Stockholder, the Parent or the Surviving Corporation, that, in the case of
conditions or restrictions of the type referred to in clauses (i), (ii) or
(iii), are not acceptable to Parent in its sole discretion ("ACCEPTABLE FCC
ORDER").
Section 6.2. CONDITIONS TO THE OBLIGATION OF PARENT AND SUB TO EFFECT
THE MERGER. The obligation of Parent and Sub to effect the Merger are
subject to the satisfaction or waiver, where legally permissible, prior to
the Effective Time of the following conditions:
(a) The representations and warranties of the Company set forth in
this Agreement shall be true and correct as of the date of this Agreement and
(except to the extent such representations and warranties speak as of an
earlier date or as specifically set forth below) as of immediately before the
Effective Time, except as otherwise contemplated by this Agreement, and the
Company shall have performed all obligations required to be performed by it
at or prior to the Effective Time, except to the extent the failure of such
representations and warranties to be true and correct as of immediately
before the Effective Time or the failure to perform obligations hereunder
would not, individually or in the aggregate, have a Company Material Adverse
Effect. Notwithstanding the foregoing, on June 30, 1998, the Company shall
deliver a certificate signed on behalf of the Company by the chief financial
officer of the Company certifying that, in the good faith judgment of such
officer upon inquiry of the other officers of the Company (Vice President
level and above), on such date such officer believes that the representation
and warranty of the Company contained in Section 3.8 hereof is true and
correct, as if made at that date (a "COMPANY COMPLYING CERTIFICATE") or, if
such representation and warranty is not true and correct, then stating with
specificity in what respect such representation is not true and correct (a
"NON-COMPLYING CERTIFICATE"). If on June 30, 1998, the Company shall have
delivered a Complying Certificate, then, from and after June 30, 1998, the
representation in Section 3.8 shall be deemed to be true and correct, except
as may be specifically set forth below. If the Company shall have delivered
a Non-Complying Certificate then the representation and warranty contained in
Section 3.8 shall, to the extent of the matters so noticed, be deemed not to
be satisfied unless such matters shall have been cured. Notwithstanding the
foregoing, if (i) within 15 days of the delivery of a Company Complying
Certificate or a Company Non-Complying Certificate, as applicable, the chief
financial officer of Parent delivers a certificate to the Company certifying
that in the good faith judgment of such officer upon reasonable inquiry, such
officer believes, as of June 30, 1998, that the representation and warranty
of the Company set forth in Section 3.8 is not true and correct, stating with
specificity in what respect such representation is not true and correct (the
"PARENT RESPONSE") and (ii) the Company shall confirm in writing that such
matter renders such representation not true and correct (an "AFFIRMED
CONDITION"), then the representation and warranty of the Company contained in
Section 3.8 shall be deemed not to be satisfied, to the extent of the
Affirmed Condition, unless the Affirmed Condition shall be cured. If the
Company does not confirm in writing that any matter contained in the Parent
Response renders the
32
representation and warranty made in Section 3.8 not true and correct (a
"NON-AFFIRMED CONDITION"), each of the parties hereby reaffirms that it shall
retain its right to exercise any and all remedies and/or defenses available
to it with respect to such Non-Affirmed Condition. If cured prior to
December 31, 1998, no matter set forth in a Company Non-Complying Certificate
or a Parent Response shall thereafter render the representation and warranty
of the Company set forth in Section 3.8 to be not true and correct, and upon
cure, each such matter shall be deemed waived. In no event shall any matter
arising after June 30, 1998 or not set forth in a Company Non-Complying
Certificate or Parent Response be deemed to render the representation and
warranty of the Company set forth in Section 3.8 not true and correct. No
Additional Amount shall accrue or be payable with respect to any period
beginning on the date on which all of the conditions set forth in Section 6.1
and 6.2 hereof have been finally satisfied and ending on the date on which
all matters that are specified in any Non-Complying Certificate or are
Affirmed Conditions are cured.
(b) Parent shall have received a certificate signed on behalf of
the Company by the chief executive officer and the chief financial officer of
the Company to the effect of clause (a) above;
(c) Subject to the provisions of Section 5.12 of this Agreement,
the Company shall have exercised its option to extend any Affiliation
Agreement which the Company or any Subsidiary has the option to extend and
which expires (or which requires notice to be given or other action to be
taken in order to so extend such Affiliation Agreement) prior to the
Effective Time, or, after consulting with Parent, shall have executed an
Affiliation Agreement in such market with a comparable affiliate;
(d) The FCC Order shall not have been reversed, stayed, enjoined,
annulled or suspended; or
(e) The Parent shall have obtained funds pursuant to the Debt
Commitment Letters (or such alternative financing as is reasonably acceptable
to the Parent) sufficient, together with the Equity Commitments (the
provision of which is not a condition to the respective obligations of Parent
and Sub to effect the Merger), to perform its obligations under this
Agreement, to provide working capital for the business of the Company, and to
consummate the Transactions, including the payment of related fees and
expenses.
Section 6.3. CONDITIONS TO THE OBLIGATION OF THE COMPANY TO EFFECT THE
MERGER. The obligation of the Company to effect the Merger are subject to
the satisfaction or waiver, where legally permissible, prior to the Effective
Time of the following conditions:
(a) The representations and warranties of Parent and Sub set forth
in this Agreement shall be true and correct as of the date of this Agreement
and (except to the extent such representations and warranties speak as of an
earlier date) as of immediately before the Effective Time, except as
otherwise contemplated by this Agreement, and Parent and Sub shall have
performed all obligations required to be performed by them at or prior to the
Effective Time, except to the extent the failure of such representations and
warranties to be true and correct
33
as of immediately before the Effective Time or the failure to perform
obligations hereunder would not, individually or in the aggregate, have a
Company Material Adverse Effect;
(b) The Company shall have received a certificate signed on behalf
of Parent and Sub by their respective chief executive officers and the chief
financial officers to the effect of clause (a) above.
ARTICLE VII.
TERMINATION; AMENDMENT; WAIVER
Section 7.1. TERMINATION. This Agreement may be terminated and the
Merger contemplated hereby may be abandoned at any time prior to the
Effective Time, notwithstanding approval thereof by the stockholders of the
Company:
(a) by mutual written consent duly authorized by the boards of
directors of Parent and the Company;
(b) subject to Section 7.4(b), by the Company or the Parent if the
Effective Time shall not have occurred on or before December 31, 1998;
PROVIDED, HOWEVER, that the right of the Company or the Parent to terminate
this Agreement pursuant to this Section 7.1(b) shall not be available in the
event that the Company's or the Parent's, as the case may be, failure to
fulfill any obligation under this Agreement has been the cause of, or
resulted in, the failure of the Effective Time to occur on or before such
date;
(c) by Parent or the Company if any court of competent jurisdiction
in the United States or other United States governmental body shall have
issued an order, decree or ruling or taken any other action restraining,
enjoining or otherwise prohibiting the Merger and such order, decree, ruling
or other action shall have become final and nonappealable;
(d) by the Company or the Parent, if, at the Special Meeting
(including any adjournment or postponement thereof) called pursuant to
Section 5.4 hereof, the Stockholder Approval shall not have been obtained; or
(e) by the Company, subject to Section 7.2, if the Board of
Directors of the Company shall concurrently approve, and the Company shall
concurrently enter into, a definitive agreement providing for the
implementation of a Superior Offer, PROVIDED, HOWEVER, that (i) the Company
is not then in breach of Section 5.3, (ii) the Board of Directors of the
Company shall have complied with Section 7.2 in connection with such Superior
Offer, and (iii) the Company shall simultaneously make the payments required
by Section 7.4(a). For purposes of this Agreement, "SUPERIOR OFFER" means an
Alternative Proposal which is superior from a financial point of view to the
Company's stockholders (other than any stockholders affiliated with the
Parent) to the Merger and the other Transactions contemplated hereby and for
which financing, to the extent required, is then committed or which, in the
good faith judgment of the Company's board of directors after consultation
with the Company's financial advisors is reasonably capable of being obtained.
34
Section 7.2. CERTAIN ACTIONS PRIOR TO TERMINATION. The Company shall
provide to the Parent written notice of its intention to terminate this
Agreement pursuant to Section 7.1(e) advising the Parent (a) that the Board
of Directors of the Company has determined, by action of a majority of the
members of the Board of Directors of the Company who are not affiliated with
either the Parent or the person making such Alternative Proposal or their
respective affiliates, that such Alternative Proposal is a Superior Offer and
that, in the exercise of its good faith judgment as to fiduciary duties to
stockholders under applicable law, after consultation with the Company's
outside legal counsel, failure by the Board of Directors to terminate this
Agreement could reasonably be expected to result in a breach of such duties
and (b) as to the material terms of any such Alternative Proposal. At any
time after the fifth business day following receipt of such notice, the
Company may terminate this Agreement as provided in Section 7.1(e) only if
the Board of Directors of the Company determines, by action of a majority of
the members of the Board of Directors of the Company who are not affiliated
with either the Parent or the person making such Alternative Proposal or
their respective affiliates, that failure by the Board of Directors to
terminate this Agreement continues to be reasonably expected to result in a
breach of its fiduciary duties to stockholders under applicable law (which
determination shall be made in light of any revised proposal made by the
Parent prior to the expiration of such five business day period) and
concurrently enters into a definitive agreement providing for the
implementation of such Alternative Proposal.
Section 7.3. EFFECT OF TERMINATION. In the event of termination of
this Agreement by the Company or the Parent as provided in Section 7.1
hereof, this Agreement shall forthwith become void (except as set forth (i)
in the last sentence of Section 5.2(b), (ii) in Sections 7.4, 8.2, 8.3, 8.4
and 8.9 and (iii) in this Section 7.3); provided that no party hereto shall
be relieved from liability for any breach of this Agreement.
Section 7.4. TERMINATION FEES.
(a) If this Agreement is terminated pursuant to (a) Section 7.1(d) or
(b) Section 7.1(e), and if the Company is not at that time entitled to
terminate this Agreement by reason of Section 7.1(b) or 7.1(c), then the
Company shall promptly (and in any event within two days of receipt by the
Company of written notice from the Parent) pay to the Parent (by wire
transfer of immediately available funds to an account designated by the
Parent) concurrently with the execution of a definitive agreement with
respect to any Alternative Proposal, a termination fee of $15,000,000 plus an
amount equal to documented fees and expenses incurred by or on behalf of the
Parent and its affiliates and investors in connection with this Agreement and
the Transactions up to an aggregate maximum amount of $2,500,000; PROVIDED,
HOWEVER, that the Company shall not be obligated to pay such fee to the
Parent if this Agreement is terminated pursuant to Section 7.1(d) unless
(a)(i) at the time of the Company Meeting, the Company has received an
Alternative Proposal (a "PENDING PROPOSAL") or (ii) prior to the termination
of this Agreement the Board of Directors of the Company shall have withdrawn,
or modified in a manner adverse to the Parent, its approval or recommendation
of the Merger and the other Transactions, and (b) within one year after the
termination of this Agreement, the Company enters into a definitive agreement
or otherwise consummates with any person such or any other Alternative
Proposal, and,
35
PROVIDED, FURTHER, that if such termination fee becomes payable as a result
of a termination pursuant to Section 7.1(d), then such termination fee shall
be paid promptly following the earlier of the execution of such definitive
agreement providing for an Alternative Proposal and the consummation of an
Alternative Proposal, as the case may be.
(b) If (i) this Agreement is terminated pursuant to (i) Section 7.1(b)
and (ii) Parent is not at that time entitled to terminate this Agreement by
reason of Section 7.1(c) or 7.1(d), and (iii) Parent has not received an
Acceptable FCC Order, and (iv) the conditions set forth in Sections 6.1(c)
and 6.2(a), (b), (c) and (e) have been, or if the FCC Order had been
obtained, would have been, otherwise satisfied, then Parent shall promptly
(and in any event within two days of receipt by Parent of written notice from
the Company) pay to the Company (by wire transfer of immediately available
funds to an account designated by the Company) a termination fee of
$17,500,000; PROVIDED, HOWEVER, that Parent shall not be obligated to pay
such fee to the Company if the sole reason that Parent and Sub have failed to
obtain the Acceptable FCC Order is due to changes, after the date hereof, in
the Communications Act or the rules and regulations of the FCC, in effect as
of the date hereof (except those which have been proposed in formal
rulemaking proceedings and have been subject to public comment prior to the
date hereof).
Section 7.5. AMENDMENT. To the extent permitted by applicable law,
this Agreement may be amended by action taken by the Company, Parent and Sub
(and the stockholders of the Company, if required by applicable law) at any
time before or after adoption of this Agreement by the Company's
stockholders; PROVIDED, HOWEVER, that after the adoption of this Agreement by
the Company's stockholders, no amendment shall be made which decreases the
price per Share, changes the form of consideration to be received by the
holders of Shares in the Merger or which adversely affects the rights of
stockholders of the Company hereunder without the approval of such
stockholders. This Agreement may not be amended except by an instrument in
writing signed on behalf of all the parties.
Section 7.6. EXTENSION; WAIVER. At any time prior to the Effective
Time, the parties may (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document, certificate or writing delivered pursuant hereto or (c) waive
compliance with any of the agreements or conditions contained herein unless
waiver is unlawful or specifically prohibited. Any agreement on the part of
any party to any such extension or waiver shall be valid only if set forth in
an instrument in writing signed on behalf of such party.
ARTICLE VIII.
MISCELLANEOUS
Section 8.1. NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS. The representations and warranties made herein shall terminate at
the Effective Time or the earlier termination of this Agreement pursuant to
Section 7.1 as the case may be; PROVIDED, HOWEVER, that if the Merger is
consummated, Sections 2.10, 2.11, 5.5 (with respect to the last sentence
thereof), 5.7 and 5.10 will survive the Effective Time to the extent
contemplated by such
36
sections, and provided further that the last sentence of Section 5.2(b) and
Sections 7.3, 7.4 and 8.9 will in all events survive the termination of this
Agreement.
Section 8.2. ENTIRE AGREEMENT; ASSIGNMENT. This Agreement, the Annexes
and Schedules referred to herein, the letter(s) contemplated by Section 4.5
hereof and the Confidentiality Agreement (a) constitute the entire agreement
among the parties with respect to the subject matter hereof and supersede all
other prior agreements and understandings, both written and oral, among the
parties or any of them with respect to the subject matter hereof and (b)
shall not be assigned by operation of law or otherwise, provided that Parent
may assign its rights and obligations or those of Sub to any wholly-owned,
direct or indirect, Subsidiary of Parent, but no such assignment shall
relieve Parent of its obligations hereunder if such assignee does not perform
such obligations.
Section 8.3. VALIDITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability
of any other provisions of this Agreement, which shall remain in full force
and effect.
Section 8.4. NOTICES. All notices and other communications among the
parties shall be in writing and shall be deemed to have been duly given when
(i) delivered in person, or (ii) one business day after delivery to a
reputable overnight courier service (I.E., Federal Express), postage
pre-paid, or (iii) delivered by telecopy and promptly confirmed by telephone
and by delivery of a copy in person or overnight as aforesaid, in each case
with postage prepaid, addressed as follows:
If to Parent or Sub:
TLMD Station Co.
c/o Apollo Management, L.P.
1301 Avenue of the Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx Xxxxxx
with a copy to:
Liberty Media Corporation
0000 Xxxx Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxx
37
Sony Pictures Entertainment, Inc.
00000 Xxxx Xxxxxxxxxx Xxxxxxxxx
Xxxxxx Xxxx, Xxxxxxxxxx 00000-0000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxxx
Apollo Management, L.P.
1301 Avenue of the Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx Xxxxxx
Bastion Capital Corporation
1999 Avenue of the Stars, Ste. 2960
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile: (00) 000-0000
Attention: Xxxxxxxxx Xxxx
With a courtesy copy to (which shall not constitute notice):
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx, Xx.
Troop Xxxxxxxxx Xxxxxxx & Xxxxxx, LLP
00000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Facsimile: (000) 000-0000
Attention: C.N. Xxxxxxxx Xxxxxxx III
Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx Xxxxxx
Irell & Xxxxxxx, LLP
000 Xxxxx Xxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx Xxxxxxx
38
If to the Company:
Telemundo Group, Inc.
0000 Xxxx 0xx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Telecopy: 310/306-7313
Attention: Xxxxxxx X. Xxxxxx, General Counsel
with a courtesy copy to (which shall not constitute notice):
Xxxxxx & Xxxxxxx
000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telecopy: 213/891-8763
Attention: Xxxx X. Xxxxxxx, Esq.
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof).
Section 8.5. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, REGARDLESS OF
THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE PRINCIPLES OF CONFLICTS
OF LAWS THEREOF.
Section 8.6. INTERPRETATION. For purposes of this Agreement neither
the Company nor any Subsidiary of the Company shall be deemed to be an
affiliate or Subsidiary of Sub or Parent. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Inclusion of information in the
Company Disclosure Schedule, does not constitute an admission or
acknowledgment of the materiality of such information. If an ambiguity or
question of intent or interpretation arises, then this Agreement will be
construed as if drafted jointly by the parties to this Agreement, and no
presumption or burden of proof will arise favoring or disfavoring any party
to this Agreement by virtue of the authorship of any of the provisions of
this Agreement.
Section 8.7. PARTIES IN INTEREST. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and except for the
provisions of Sections 2.7, 2.12, 2.13, 5.7 and 5.10 (which are intended to
be for the benefit of the persons referred to therein and their
beneficiaries, and may be enforced by such persons as intended third-party
beneficiaries), nothing in this Agreement, express or implied, is intended to
confer upon any other person any rights or remedies of any nature whatsoever
under or by reason of this Agreement.
Section 8.8. COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original, but all
of which shall constitute one and the same agreement.
39
Section 8.9. EXPENSES. All costs and expenses incurred in connection
with the Transactions shall be paid by the party incurring such expenses.
Section 8.10. OBLIGATION OF PARENT. Whenever this Agreement requires
Sub to take any action, such requirement will be deemed to include an
undertaking on the part of Parent to cause Sub to take such action.
Section 8.11. SALE OF THE COMPANY. The parties hereto agree and
acknowledge that for the purposes of this Agreement no "sale" of the Company
shall be deemed to have occurred until the consummation of the Merger at the
Effective Time.
Section 8.12. ACTIONS BY THE COMPANY. Any action or decision requiring
the approval of the Board of Directors of the Company which is to be taken or
which is made or required to be taken or made by or for the benefit of the
Company pursuant to, in connection with or in furtherance of this Agreement
(including, without limitation, with respect to Sections 7.5 and 7.6 hereof)
shall be made or taken, as applicable, at the discretion and with the
approval of the members of the Board of Directors of the Company who are not
affiliated with Parent or Sub or their respective affiliates or stockholders.
* * * * * * * * * *
40
IN WITNESS WHEREOF, each of the parties has caused this Agreement and
Plan of Merger to be executed on its behalf by its officers thereunto duly
authorized, all as of the day and year first above written.
TLMD STATION GROUP, INC.
("Parent")
By:
-----------------------------------
Name:
Title:
TLMD ACQUISITION CO.
("Sub")
By:
-----------------------------------
Name:
Title:
TELEMUNDO GROUP, INC.
("Company")
By:
-----------------------------------
Name:
Title:
