EXHIBIT 10.1
AGREEMENT AND PLAN OF MERGER
By and Among
PULITZER PUBLISHING COMPANY,
PULITZER INC.,
and
HEARST-ARGYLE TELEVISION, INC.
May 25, 1998
PAGE
TABLE OF CONTENTS
PAGE
ARTICLE I
THE MERGER
1.01. THE MERGER. . . . . . . . . . . . . . . 1
1.02. EFFECT OF THE MERGER ON CAPITAL STOCK;
ADJUSTMENTS . . . . . . . . . . . . . . 2
1.03. EFFECTIVE TIME OF THE MERGER. . . . . . 4
1.04. EXCHANGE OF CERTIFICATES. . . . . . . . 4
1.05. DISTRIBUTION WITH RESPECT TO SHARES
REPRESENTED BY UNEXCHANGED
CERTIFICATES. . . . . . . . . . . . . . 5
1.06. NO FRACTIONAL SHARES. . . . . . . . . . 6
1.07. NO LIABILITY. . . . . . . . . . . . . . 7
1.08. LOST CERTIFICATES . . . . . . . . . . . 7
ARTICLE II
CERTAIN PRE-MERGER TRANSACTIONS
2.01. AMENDMENTS TO CHARTERS; FINANCING.. . . 7
2.02. CONTRIBUTION OF ASSETS TO AND
ASSUMPTION OF LIABILITIES BY NEWCO;
DISTRIBUTION OF NEWCO STOCK . . . . . . 8
ARTICLE III
REPRESENTATIONS AND WARRANTIES
REGARDING THE COMPANY AND NEWCO
3.01. ORGANIZATION AND AUTHORITY. . . . . . . 10
3.02. NO BREACH . . . . . . . . . . . . . . . 10
3.03. CONSENTS AND APPROVALS. . . . . . . . . 11
3.04. APPROVALS OF THE BOARDS; FAIRNESS
OPINION; VOTE REQUIRED. . . . . . . . . 12
3.05. CAPITALIZATION. . . . . . . . . . . . . 12
3.06. SEC REPORTS . . . . . . . . . . . . . . 13
3.07. FINANCIAL STATEMENTS. . . . . . . . . . 13
3.08. ABSENCE OF CERTAIN CHANGES. . . . . . . 14
3.09. ABSENCE OF UNDISCLOSED LIABILITIES. . . 14
3.10. COMPLIANCE WITH LAW . . . . . . . . . . 14
3.11. TAXES . . . . . . . . . . . . . . . . . 14
3.12. LITIGATION. . . . . . . . . . . . . . . 15
3.13. BROKERS AND FINDERS . . . . . . . . . . 16
3.14. ENVIRONMENTAL MATTERS . . . . . . . . . 16
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
REGARDING BROADCASTING
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4.01. ORGANIZATION AND AUTHORITY. . . . . . . 16
4.02. CAPITALIZATION. . . . . . . . . . . . . 16
4.03. FINANCIAL STATEMENTS. . . . . . . . . . 17
4.04. ABSENCE OF CERTAIN CHANGES. . . . . . . 17
4.05. ABSENCE OF UNDISCLOSED LIABILITIES. . . 17
4.06. COMPLIANCE WITH LAW . . . . . . . . . . 17
4.07. STATION NETWORK AFFILIATION AGREEMENTS. 18
4.08. CONDITION OF ASSETS; TITLE TO
PROPERTIES;
ENCUMBRANCES. . . . . . . . . . . . . . 18
4.09. LITIGATION. . . . . . . . . . . . . . . 20
4.10. EMPLOYEE BENEFIT MATTERS. . . . . . . . 20
4.11. LABOR MATTERS . . . . . . . . . . . . . 22
4.12. ENVIRONMENTAL MATTERS . . . . . . . . . 23
4.13. COMPLAINTS. . . . . . . . . . . . . . . 23
4.14. REPORTS.. . . . . . . . . . . . . . . . 23
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF ACQUIROR
5.01. ORGANIZATION AND AUTHORITY. . . . . . . 23
5.02. NO BREACH . . . . . . . . . . . . . . . 24
5.03. CONSENTS AND APPROVALS. . . . . . . . . 25
5.04. APPROVAL OF THE BOARD; VOTE REQUIRED. . 25
5.05. CAPITALIZATION. . . . . . . . . . . . . 25
5.06. SEC REPORTS . . . . . . . . . . . . . . 26
5.07. FINANCIAL STATEMENTS. . . . . . . . . . 26
5.08. ABSENCE OF CERTAIN CHANGES. . . . . . . 27
5.09. ABSENCE OF UNDISCLOSED LIABILITIES. . . 27
5.10. COMPLIANCE WITH LAW . . . . . . . . . . 27
5.11. TAXES.. . . . . . . . . . . . . . . . . 27
5.12. LITIGATION. . . . . . . . . . . . . . . 28
5.13. BROKERS AND FINDERS . . . . . . . . . . 28
5.14. SOLVENCY. . . . . . . . . . . . . . . . 28
5.15. FCC QUALIFICATION . . . . . . . . . . . 28
ARTICLE VI
OTHER AGREEMENTS
6.01. NO SOLICITATION . . . . . . . . . . . . 29
6.02. CONDUCT OF BUSINESS OF THE COMPANY. . . 30
6.03. CONDUCT OF BUSINESS OF BROADCASTING . . 31
6.04. CONDUCT OF BUSINESS OF ACQUIROR . . . . 33
6.05. ACCESS TO INFORMATION . . . . . . . . . 34
6.06. SEC FILINGS . . . . . . . . . . . . . . 35
6.07. REASONABLE BEST EFFORTS . . . . . . . . 38
6.08. PUBLIC ANNOUNCEMENTS. . . . . . . . . . 38
6.09. TAX MATTERS . . . . . . . . . . . . . . 39
6.10. NOTIFICATION. . . . . . . . . . . . . . 46
6.11. EMPLOYEE BENEFIT MATTERS. . . . . . . . 46
6.12. EMPLOYEE STOCK OPTIONS. . . . . . . . . 49
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6.13. MEETINGS OF STOCKHOLDERS. . . . . . . . 50
6.14. REGULATORY AND OTHER AUTHORIZATIONS.. . 50
6.15. FURTHER ASSURANCES. . . . . . . . . . . 53
6.16. IRS RULING. . . . . . . . . . . . . . . 53
6.17. RECORDS RETENTION.. . . . . . . . . . . 54
6.18. STOCK EXCHANGE LISTING. . . . . . . . . 54
6.19. COMPANY NAMES.. . . . . . . . . . . . . 54
6.20. OTHER AGREEMENTS. . . . . . . . . . . . 54
6.21. FORM 8-K; PROVISION OF FINANCIAL
STATEMENTS. . . . . . . . . . . . . . . 55
6.22. WORKING CAPITAL ADJUSTMENT. . . . . . . 55
6.23. CAPITAL EXPENDITURES. . . . . . . . . . 56
6.24. EXCESS CASH . . . . . . . . . . . . . . 56
6.25. INDEMNITY RELATING TO CERTAIN
LITIGATION. . . . . . . . . . . . . . . 57
6.26. CANCELLATION OF INTERCOMPANY
ARRANGEMENTS. . . . . . . . . . . . . . 57
6.27. NETWORK AFFILIATION AGREEMENTS. . . . . 58
6.28. GROSS-UP MATTERS. . . . . . . . . . . . 58
6.29. AFFILIATE LETTERS; FCC LETTERS. . . . . 59
ARTICLE VII
CLOSING AND CLOSING DATE; CONDITIONS TO CLOSING
7.01. CLOSING AND CLOSING DATE. . . . . . . . 59
7.02. CONDITIONS TO THE OBLIGATIONS OF THE
COMPANY, NEWCO AND ACQUIROR . . . . . . 59
7.03. CONDITIONS TO THE OBLIGATIONS OF THE
COMPANY AND NEWCO . . . . . . . . . . . 60
7.04. CONDITIONS TO OBLIGATIONS OF ACQUIROR . 61
ARTICLE VIII
TERMINATION
8.01. TERMINATION . . . . . . . . . . . . . . 63
8.02. EFFECT OF TERMINATION . . . . . . . . . 64
8.03. FEES AND EXPENSES . . . . . . . . . . . 64
ARTICLE IX
MISCELLANEOUS
9.01. SURVIVAL OF REPRESENTATIONS AND
WARRANTIES. . . . . . . . . . . . . . . 65
9.02. ENTIRE AGREEMENT. . . . . . . . . . . . 65
9.03. NOTICES . . . . . . . . . . . . . . . . 65
9.04. GOVERNING LAW . . . . . . . . . . . . . 66
9.05. KNOWLEDGE OF THE COMPANY. . . . . . . . 66
9.06. PARTIES IN INTEREST . . . . . . . . . . 67
9.07. COUNTERPARTS. . . . . . . . . . . . . . 67
9.08. PERSONAL LIABILITY. . . . . . . . . . . 67
9.09. BINDING EFFECT; ASSIGNMENT. . . . . . . 67
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9.10. AMENDMENT . . . . . . . . . . . . . . . 67
9.11. EXTENSION; WAIVER . . . . . . . . . . . 67
9.12. LEGAL FEES; COSTS . . . . . . . . . . . 67
9.13. DRAFTING. . . . . . . . . . . . . . . . 68
9.14. CONSENT TO JURISDICTION AND SERVICE OF
PROCESS.. . . . . . . . . . . . . . . . 68
ARTICLE X
DEFINITIONS
10.01. DEFINITIONS . . . . . . . . . . . . . . 68
10.02. INTERPRETATION. . . . . . . . . . . . . 79
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EXHIBITS AND SCHEDULES
Exhibit A Form of Company Charter Amendment
Exhibit B Form of Newco Charter Amendment
Exhibit C Form of Contribution and Assumption
Agreement
Exhibit D Form of Registration Rights
Agreement
Exhibit E Form of FCC Agreement
Exhibit F Form of Board Representation
Agreement
Exhibit G Form of Arizona Diamondbacks
Agreement
Exhibit H Form of Acquiror Voting Agreement
Exhibit I Form of Pulitzer Voting Agreement
Exhibit J Form of Affiliate Letter
Schedule 1.01 Directors of Surviving Corporation
Schedule 3.02 Right of Termination, Cancellation,
Modification or
Acceleration and Requirement of
Notice or Approval
Schedule 3.09 Additional Company Liabilities
Schedule 3.11(b) Material Claims and Investigations
for Taxes of Company
or Its Subsidiaries
Schedule 3.12 Company Litigation
Schedule 3.14 Environmental Liabilities of
Company
Schedule 4.03 Broadcasting Financial Statements
Schedule 4.05 Additional Broadcasting Liabilities
Schedule 4.06 Material Licenses and
Authorizations held by
Broadcasting
Schedule 4.07 Station Network Affiliation
Agreements
Schedule 4.08(b) Personal Property Permitted
Exceptions
Schedule 4.08(c) Personal Property Leases
Schedule 4.08(d)(1) Real Property
Schedule 4.08(d)(2) Real Estate Exceptions
Schedule 4.09 Broadcasting Litigation
Schedule 4.10(a) Employee Plans Currently Maintained
or Contributed to
by the Company or PBC for the
Benefit of any
Broadcasting Employee
Schedule 4.11(a) Labor or Collective Bargaining
Agreements of
Broadcasting
Schedule 4.11(b) Broadcasting Employees Represented
by Labor Organizations
Schedule 4.12(a) Environmental Liabilities of
Broadcasting
Schedule 5.02(a) Right of Termination, Cancellation,
Modification or Acceleration and
Requirement of Notice or
Approval Relating to Agreements
or Obligations of Acquiror
Schedule 5.02(b) Restrictions
Schedule 5.05(a) Existing Options, Warrants, Etc. of
Acquiror
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Schedule 5.09 Additional Acquiror Liabilities
Schedule 5.11(b) Material Claims and Investigations
for Taxes of Acquiror
Schedule 5.15 Acquiror FCC Qualifications
Schedule 6.03(a)(v) 1998 Broadcasting Budget
Schedule 6.11(f)(2) Employment and Related Agreements
of the Company
Schedule 6.11(f)(3) Broadcasting Employees Plans
Maintained Exclusively
for Broadcasting Employees
Schedule 6.11(f)(4) Post-Retirement Medical or Other
Welfare Benefits
Payable to Transferring Employees
Schedule 6.11(g) Participation and Severance
Agreements
vi
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this
"Agreement"), dated as of May 25, 1998, is made by and
among Pulitzer Publishing Company, a Delaware
corporation (the "Company"), Pulitzer Inc., a Delaware
corporation and wholly owned subsidiary of the Company
("Newco"), and Hearst-Argyle Television, Inc., a
Delaware corporation ("Acquiror").
RECITALS
WHEREAS, the Boards of Directors of the Company,
Newco and Acquiror have determined that it is in the
best interests of their respective stockholders to
enter into this Agreement which, among other things,
provides for (i) the Company to contribute to Newco or
its wholly-owned Subsidiary certain assets of the
Company (other than those assets described in the
Contribution Agreement as being retained by the
Company) and to distribute to its stockholders shares
of capital stock of Newco so that the stockholders of
the Company will become the stockholders of Newco; and
(ii) the Company (immediately following such
contribution and distribution) to merge with and into
Acquiror, as a result of which the stockholders of the
Company immediately prior to such merger will become
stockholders of Acquiror; and
WHEREAS, for federal income tax purposes, it is
intended that such transactions will qualify as
reorganizations within the meaning of Sections
368(a)(1)(D) and 368(a)(1)(A) of the Code,
respectively.
NOW, THEREFORE, in consideration of the foregoing
and the representations, warranties and agreements set
forth below, the parties hereto agree as follows:
ARTICLE I
THE MERGER
1.01. THE MERGER. Subject to the terms and
conditions hereof, at the Effective Time: (i) the
Company shall be merged with and into Acquiror (the
"Merger") and the separate existence of the Company
shall cease and Acquiror shall continue as the
surviving corporation in the Merger (the "Surviving
Corporation"); (ii) the Articles of Incorporation of
Acquiror, as in effect immediately prior to the
Effective Time, shall continue as the Articles of
Incorporation of the Surviving Corporation; (iii) the
1
Bylaws of Acquiror, as in effect immediately prior to
the Effective Time, shall continue as the Bylaws of the
Surviving Corporation; (iv) the Persons listed on
Schedule 1.01 shall be the directors of the Surviving
Corporation; and (v) the officers of Acquiror
immediately prior to the Effective Time shall continue
as the officers of the Surviving Corporation. From and
after the Effective Time, the Merger will have all the
effects provided by applicable law.
1.02. EFFECT OF THE MERGER ON CAPITAL STOCK;
ADJUSTMENTS. At the Effective Time, by virtue of the
Merger and without any action on the part of the holder
of any shares of capital stock:
(a) Subject to Sections 1.02(b) and 1.02(e)
hereof, each share of Company Stock issued and
outstanding immediately prior to the Merger shall
be converted into and shall become that number of
fully paid and nonassessable shares of Acquiror
Common Stock equal to the Common Stock Conversion
Number.
(b) Each share of Company Stock issued and
outstanding immediately prior to the Merger and
owned directly or indirectly by the Company as
treasury stock, by Newco or by any of the
Company's or Newco's respective Subsidiaries shall
be cancelled, and no consideration shall be
delivered in exchange therefor.
(c) Each share of the capital stock of
Acquiror issued and outstanding immediately prior
to the Merger shall remain outstanding.
(d) "Common Stock Conversion Number" shall
mean the quotient obtained by dividing (i) the
aggregate number of shares of Acquiror Common
Stock into which Company Stock shall be converted
(the "Aggregate Shares Delivered") by (ii) the
number of shares of Company Stock outstanding
immediately prior to the Effective Time (the
"Outstanding Company Stock").
For purposes hereof, the Aggregate Shares
Delivered shall equal the sum of (i) the Closing Price
Share Number and (ii) the Top-up Share Number, if any.
For purposes hereof, the "Closing Price Share Number"
shall equal the quotient obtained by dividing the
Aggregate Consideration by the Collar Price. The
"Collar Price" shall be whichever of the following
applies:
(i) $38.50 if the Closing Price is
greater than $38.50; or
(ii) the Closing Price, if the
Closing Price is greater than
or equal to $29.75 but less
than or equal to $38.50; or
(iii) $29.75, if the Closing
Price is less than $29.75.
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If the Closing Price is less than $29.75, the
Company shall have the right to give notice to Acquiror
(the "Termination Intent Notice") that the Company
intends to terminate this Agreement. The Termination
Intent Notice shall be delivered to Acquiror in person
at the location where the Closing is to take place no
later than 2:00 p.m. New York time on the business day
prior to the Closing Date (the "Pre-Closing Date"). If
the Company delivers a Termination Intent Notice,
Acquiror shall have the right to give notice to the
Company (the "Top-up Notice") that Acquiror elects to
increase the number of shares of Acquiror Common Stock
to be delivered in the Merger to that number of shares
(the "Maximum Number") of Acquiror Common Stock equal
to the Aggregate Consideration divided by the Closing
Price. The excess of the Maximum Number over the
Closing Price Share Number is referred to herein as the
"Collar Deficiency Number". The Top-up Notice shall be
delivered in person to the Company at the location
where the Closing is to take place no later than 8:00
p.m. New York time on the Pre-Closing Date. If
Acquiror has not delivered a Top-up Notice by the above
deadline, and the Company and Acquiror have not
otherwise reached by such deadline an agreement
regarding the number of shares of Acquiror Common Stock
to be delivered in the Merger, this Agreement shall
terminate and be of no further force or effect. If
Acquiror does deliver a Top-up Notice, or if the
Company and Acquiror otherwise agree, the number of
shares of Acquiror Common Stock to be delivered in the
Merger shall be increased by the Collar Deficiency
Number or such other number as the Company and Acquiror
may agree. The Collar Deficiency Number or such other
number is hereinafter referred to as "Top-up Share
Number".
For purposes hereof, the "Aggregate Consideration"
shall be $1,150,000,000.
For purposes hereof, (i) the Weighted Average
Price of Acquiror Common Stock on the NASDAQ or the
NYSE, as the case may be, shall be the "Closing Price";
(ii) the "Weighted Average Price" shall be the quotient
of (x) the sum of the Daily Mean Amount for all days
during the Measurement Period, divided by (y) the total
number of shares reported as traded during the
Measurement Period; (iii) the "Daily Mean Amount" shall
be (A) the mean of the reported high and low trading
prices during each day of the Measurement Period,
multiplied by (B) the number of shares reported as
traded for that day; and (iv) the "Measurement Period"
shall be the 15 trading days ending on and including
the second trading day prior to the Closing Date.
Without limiting the provisions of Section 6.04,
if, between the date hereof and the Effective Time, the
outstanding shares of Acquiror Common Stock shall have
been changed into a different number of shares or a
different class, by reason of any stock dividend,
3
subdivision, reclassification, recapitalization, split,
combination or exchange of shares, or if any
extraordinary dividend or distribution is made with
respect to the Acquiror Common Stock, then the
Aggregate Shares Delivered shall be correspondingly
adjusted to reflect such stock dividend, subdivision,
reclassification, recapitalization, split, combination
or exchange of shares, extraordinary dividend or
distribution or other similar event.
(e) The holder of any shares ("Dissenting
Shares") of Company Stock outstanding immediately
prior to the Merger that has validly exercised
such holder's appraisal rights, if any, under the
Delaware General Corporation Law (the "DGCL")
shall not be entitled to receive, in respect of
the shares of Company Stock as to which such
holder has validly exercised appraisal rights,
shares of Acquiror Common Stock unless and until
such holder shall have failed to perfect, or shall
have effectively withdrawn or lost, such holder's
right to payment for such holder's shares of
Company Stock under the DGCL. In such event, such
holder shall be entitled to receive the Acquiror
Common Stock (in addition to the shares of either
Newco Common Stock or Newco Class B Common Stock
received pursuant to the Distribution) which such
holder would have been entitled to receive had
such holder not exercised appraisal rights. The
Company shall give Acquiror prompt notice upon
receipt by the Company (i) prior to or at the
meeting of stockholders at which the Merger, this
Agreement and the Company Charter Amendment are
voted upon, of any written objection thereto or
written demand for appraisal of shares (any
stockholder duly making such objection being
hereinafter called a "Dissenting Stockholder") and
(ii) any other notices or communications made
after such time by a Dissenting Stockholder which
pertains to appraisal rights. The Company agrees
that, prior to the Effective Time, except with the
written consent of Acquiror, it will not
voluntarily make any payment with respect to, or
settle or offer to settle, any such demand. Each
Dissenting Stockholder who becomes entitled under
the DGCL to payment for such holder's shares of
Company Stock shall receive payment therefor after
the Effective Time from the Surviving Corporation.
1.03. EFFECTIVE TIME OF THE MERGER. Subject
to the terms and conditions set forth in this
Agreement, a certificate of merger shall be duly
prepared, executed and acknowledged by Acquiror and the
Company and thereafter delivered to the Secretary of
State of the State of Delaware (the "Certificate of
Merger") for filing pursuant to the DGCL on the Closing
Date. The Merger shall become effective upon the
filing of the Certificate of Merger with such Secretary
of State on the Closing Date (the "Effective Time").
1.04. EXCHANGE OF CERTIFICATES.
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(a) Prior to the Closing Date, the Company
shall retain a bank or trust company reasonably
acceptable to Acquiror to act as exchange agent (the
"Exchange Agent") in connection with the surrender of
certificates evidencing shares of Company Stock
converted into shares of Acquiror Common Stock pursuant
to the Merger. Prior to the Effective Time, Acquiror
shall deposit with the Exchange Agent the shares of
Acquiror Common Stock to be issued in the Merger, which
shares (collectively, the "Merger Stock") shall be
deemed to be issued at the Effective Time. At and
following the Effective Time, the Surviving Corporation
shall deliver to the Exchange Agent such cash as may be
required, from time to time, to make payments of cash
in lieu of fractional shares in accordance with Section
1.06 hereof.
(b) As soon as practicable after the
Effective Time, the Exchange Agent shall mail to each
person who was, at the Effective Time, a holder of
record of a certificate or certificates that
immediately prior to the Effective Time evidenced
Outstanding Company Stock (collectively, the
"Certificates"), other than the Company, Newco or any
of their respective Subsidiaries, (i) a letter of
transmittal (which shall specify that delivery of the
Certificates shall be effective, and risk of loss and
title to the Certificates shall pass, only upon
delivery of the Certificates to the Exchange Agent and
which shall be in such form and shall have such other
provisions as Acquiror and Newco shall reasonably
specify) and (ii) instructions for use in effecting the
surrender of the Certificates in exchange for
certificates representing the Merger Stock. Upon
surrender of a Certificate for cancellation to the
Exchange Agent, together with such letter of
transmittal duly executed and such other documents as
may be required by the Exchange Agent, the holder of
such Certificate shall be entitled to receive in
exchange therefor certificates representing the shares
of Merger Stock that such holder has the right to
receive pursuant to the terms hereof (together with any
dividend or distribution with respect thereto made
after the Effective Time to the extent provided in
Section 1.05 hereof and any cash paid in lieu of
fractional shares pursuant to Section 1.06), and the
Certificate so surrendered shall be canceled. In the
event of a transfer of ownership of Company Stock that
is not registered in the stock transfer records of the
Company, a certificate representing the proper number
of shares of Merger Stock may be issued to a transferee
if the Certificate representing such Company Stock is
presented to the Exchange Agent, accompanied by all
documents required to evidence and effect such transfer
and by evidence reasonably satisfactory to Acquiror and
Newco that any applicable stock transfer tax has been
paid.
(c) After the Effective Time, each
outstanding Certificate which theretofore represented
shares of Company Stock shall, until surrendered for
exchange in accordance with this Section 1.04, be
5
deemed for all purposes to evidence the number of full
shares of Merger Stock into which the shares of Company
Stock (which, prior to the Effective Time, were
represented thereby) shall have been so converted.
(d) Except as otherwise expressly provided
herein, the Surviving Corporation shall pay all charges
and expenses, including those of the Exchange Agent, in
connection with the exchange of shares of Merger Stock
for shares of Company Stock. Any Merger Stock
deposited with the Exchange Agent that remains
unclaimed by the former stockholders of the Company
after six months following the Effective Time shall be
delivered to the Surviving Corporation, upon demand,
and any former stockholders of the Company who have not
then complied with the instructions for exchanging
their Certificates shall thereafter look only to the
Surviving Corporation for the exchange of Certificates.
(e) Effective upon the Closing Date, the
stock transfer books of the Company shall be closed,
and there shall be no further registration of transfers
of shares of Company Stock thereafter on the records of
the Company.
(f) All Merger Stock issued upon conversion
of shares of Company Stock in accordance with the terms
hereof shall be deemed to have been issued in full
satisfaction of all rights pertaining to such shares of
Company Stock.
1.05. DISTRIBUTION WITH RESPECT TO SHARES
REPRESENTED BY UNEXCHANGED CERTIFICATES. No dividend
or other distribution declared or made after the
Effective Time with respect to the Merger Stock with a
record date after the Effective Time shall be paid to
the holder of any unsurrendered Certificate with
respect to the shares of Merger Stock issuable upon
surrender of a Certificate until the holder of such
Certificate shall surrender such Certificate in
accordance with Section 1.04. Subject to the effect of
applicable law, following surrender of any such
Certificate the Surviving Corporation shall pay,
without interest, to the record holder of certificates
representing shares of Merger Stock issued in exchange
therefor (i) at the time of such surrender, the amount
of dividends or other distributions with a record date
after the Effective Time theretofore paid with respect
to such shares of Merger Stock, and (ii) at the
appropriate payment date, the amount of dividends or
other distributions with a record date after the
Effective Time but prior to surrender of such
Certificate and a payment date subsequent to such
surrender payable with respect to such shares of Merger
Stock. In no event shall the stockholders entitled to
receive dividends or distributions be entitled to
receive interest thereon. All such dividends or other
distributions held by the Exchange Agent for payment or
delivery to the holders of unsurrendered Certificates
and unclaimed at the end of one year from the Effective
Time shall be repaid or redelivered by the Exchange
Agent to the Surviving Corporation, after which time
any holder of Certificates who has not theretofore
surrendered such Certificates to the Exchange Agent,
6
subject to applicable law, shall look as a general
creditor only to the Surviving Corporation for payment
or delivery of such dividends or distributions, as the
case may be.
1.06. NO FRACTIONAL SHARES.
(a) No certificates or scrip representing
fractional shares of Acquiror Common Stock shall be
issued upon the surrender of Certificates pursuant to
Section 1.04. Such fractional share interests shall
not entitle the owner thereof to any rights as a
security holder of Acquiror. In lieu of any such
fractional shares of Acquiror Common Stock, each holder
of Outstanding Company Stock entitled to receive shares
of Acquiror Common Stock in the Merger, upon surrender
of a Certificate for exchange pursuant to Section 1.04,
shall be entitled to receive an amount in cash (without
interest), rounded to the nearest cent, determined by
multiplying the fractional interest in Acquiror Common
Stock to which such holder would otherwise be entitled
(after taking into account all shares of Company Stock
then held of record by such holder) by the closing sale
price of a share of Acquiror Common Stock as reported
on the NASDAQ or the NYSE, as the case may be, on the
Closing Date.
(b) As soon as practicable after the
determination of the amount of cash, if any, to be paid
to holders of Company Stock in lieu of any fractional
share interests, Acquiror shall promptly deposit with
the Exchange Agent cash in the required amounts and the
Exchange Agent will mail such amounts, without
interest, to such holders; PROVIDED, HOWEVER, that no
such amount will be paid to any holder of Certificates
prior to the surrender by such holder of the
Certificates which formerly represented such holder's
Company Stock. Any such amounts that remain unclaimed
by the former stockholders of the Company after six
months following the Effective Time shall be delivered
to the Surviving Corporation by the Exchange Agent,
upon demand, and any former stockholders of the Company
who have not then surrendered their Certificates shall
thereafter look only to the Surviving Corporation for
payment in lieu of any fractional interests.
1.07. NO LIABILITY. Any amounts remaining
unclaimed by holders of shares on the day immediately
prior to such time as such amounts would otherwise
escheat to or become the property of any governmental
entity shall, to the extent permitted by applicable
law, become the property of the Surviving Corporation
(or Newco in the case of Newco Common Stock or Newco
Class B Common Stock and dividends or distributions
with respect thereto) free and clear of any claims or
interest of any holder previously entitled thereto.
None of the Surviving Corporation, Newco or the
7
Exchange Agent will be liable to any holder of shares
of Company Stock for any shares of Merger Stock or any
Newco Common Stock or Newco Class B Common Stock,
dividends or distributions with respect thereto or cash
payable in lieu of fractional shares delivered to a
state abandoned property administrator or other public
official pursuant to any applicable abandoned property,
escheat or similar law.
1.08. LOST CERTIFICATES. If any Certificate
shall have been lost, stolen or destroyed, upon the
making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or
destroyed, the Exchange Agent will issue in exchange
for such lost, stolen or destroyed Certificate the
shares of Merger Stock (and any dividend or
distribution with respect thereto made after the
Effective Time and prior to such issuance and any cash
payable in lieu of fractional shares pursuant to
Section 1.06) deliverable in respect thereof as
determined in accordance with the terms hereof. When
authorizing such payment in exchange for any lost,
stolen or destroyed Certificate, the person to whom the
Merger Stock is to be issued, as a condition precedent
to the issuance thereof, shall give the Surviving
Corporation a bond satisfactory to the Surviving
Corporation against any claim that may be made against
the Surviving Corporation with respect to the
Certificate alleged to have been lost, stolen or
destroyed.
ARTICLE II
CERTAIN PRE-MERGER TRANSACTIONS
The following transactions shall occur prior to
the Effective Time:
2.01. AMENDMENTS TO CHARTERS; FINANCING.
(a) Prior to the Contribution, the
Distribution and the Effective Time, the Company shall
amend its Certificate of Incorporation substantially as
set forth in Exhibit A hereto (the "Company Charter
Amendment") and Newco shall amend and restate its
Certificate of Incorporation substantially as set forth
in Exhibit B hereto (the "Newco Charter Amendment").
(b) Prior to the Contribution, the
Distribution and the Effective Time, the Company shall
use commercially reasonable efforts to obtain financing
in the amount of $700,000,000 on terms reasonably and
mutually acceptable to the Company and Acquiror, which
may be secured by the Broadcasting Assets (the "New
Company Debt"). Out of the proceeds of the New Company
Debt, the Company, on or before the Closing Date, shall
pay or provide for the Existing Company Debt and the
Deal Expenses, and the balance of the proceeds of the
New Company Debt, along with any other remaining cash
and cash equivalents then owned by the Company, shall
be contributed by the Company to Newco pursuant to the
Contribution and Assumption Agreement to be entered
into by the Company and Newco in substantially the form
attached hereto as EXHIBIT C (the "Contribution
Agreement"). The Acquiror shall assist the Company in
8
any manner reasonably requested by the Company in
connection with obtaining the New Company Debt. The
New Company Debt shall remain outstanding following the
Effective Time, and the Transactions contemplated
hereby shall not result in a breach or event of default
or an event, which with notice or lapse of time or
both, would be a breach or event of default, or would
require the repayment of the New Company Debt.
2.02. CONTRIBUTION OF ASSETS TO AND ASSUMPTION
OF LIABILITIES BY NEWCO; DISTRIBUTION OF
NEWCO STOCK.
(a) Prior to the Effective Time and pursuant
to the terms of the Contribution Agreement, the Company
shall contribute and transfer (together with the
transactions described in Section 2.02(b) below, the
"Contribution") to Newco or its wholly-owned Subsidiary
all of the Company's right, title and interest in and
to any and all assets of the Company, whether tangible
or intangible and whether fixed, contingent or
otherwise; PROVIDED, HOWEVER, that the Company shall
not contribute to Newco or its wholly-owned Subsidiary
(i) the issued and outstanding capital stock of,
Pulitzer Broadcasting Company ("PBC") or WESH
Television, Inc., KCCI Television, Inc. and WDSU
Television, Inc. (collectively, the "Broadcasting
Subsidiaries"); (ii) any of the assets of PBC or the
Broadcasting Subsidiaries, whether real or personal,
tangible or intangible, and whether fixed, contingent
or otherwise and any other assets used or held for use
primarily in the business conducted by Broadcasting or
the Stations (collectively, the "Broadcasting Assets");
and (iii) the Company's rights created pursuant to this
Agreement, the Contribution Agreement and the
Transaction Agreements.
(b) In consideration for the transactions
described in SECTION 2.02(A) above, concurrently
therewith and pursuant to the Contribution Agreement,
Newco shall (A) assume any and all liabilities of the
Company of every kind whatsoever, whether absolute,
known, unknown, fixed, contingent or otherwise and
cause the Company and Broadcasting to be released from
the Existing Company Debt; PROVIDED, HOWEVER, that the
Company shall retain, and Newco or its wholly-owned
Subsidiary will not assume and will have no liability
with respect to, (i) the New Company Debt, (ii) any
liabilities associated with the radio and/or television
business operations of Broadcasting or the Broadcasting
Assets except as otherwise specifically provided
herein, including SECTIONS 6.06(G), 6.09, 6.11, 6.25
AND 6.28, and (iii) the Company's obligations created
pursuant to this Agreement, the Contribution Agreement
and the Transaction Agreements and (B) issue and
deliver to the Company shares of Newco Common Stock as
set forth in the Contribution Agreement. Newco
acknowledges that the liabilities to be assumed by it
pursuant to the first sentence of this SECTION 2.02(B)
include any and all liabilities associated with any
9
claim, action or proceeding brought by or on behalf of
the holders of Company Stock in connection with the
Transactions other than liabilities with respect to
which Acquiror is obligated to indemnify Newco pursuant
to Sections 6.06, 6.09 and 6.25 hereof.
(c) Following the Contribution and
immediately prior to the Effective Time, the Company
shall distribute (the "Distribution") certificates
representing one fully paid and nonassessable share of
Newco Common Stock to the holder of each share of
Company Common Stock outstanding on the record date
designated for the Distribution by or pursuant to an
authorization of the Board of Directors of the Company
(the "Record Date"), and certificates representing one
fully paid and nonassessable share of Newco Class B
Common Stock to the holder of each share of Company
Class B Common Stock outstanding on the Record Date.
Each share of the capital stock of Newco issued and
outstanding on the Record Date and owned directly or
indirectly by the Company or any of its Subsidiaries
(other than those to be distributed in accordance with
the first sentence of this paragraph) shall be
cancelled at the time of the Distribution.
(d) The Board of Directors of the Company
shall formally declare the Distribution and shall
authorize the Company to pay the Distribution
immediately prior to the Effective Time, subject to the
satisfaction or waiver of the conditions set forth in
subsection (e) below by delivery of certificates for
Newco Common Stock and Newco Class B Common Stock to
the Transfer Agent for delivery to the Persons entitled
thereto. The Distribution shall be deemed effective
upon notification by the Company to the Transfer Agent
that the Distribution has been declared, that the
conditions thereto have been waived or satisfied and
that the Transfer Agent is authorized to proceed with
the distribution of Newco Common Stock and Newco Class
B Common Stock.
(e) The obligations of the Company to
consummate the Contribution and the Distribution
hereunder shall be subject to the fulfillment of each
of the following conditions:
(i) All of the transactions
contemplated by Sections 2.01(a) and (b) and
Sections 2.02(a) and (b) shall have been
consummated.
(ii) Each condition to the Closing set
forth in Sections 7.02, 7.03 and 7.04 hereof,
other than the condition set forth in Section
7.02(b) hereof, as to the consummation of the
Transactions contemplated by this Article II,
shall have been satisfied or waived.
(iii) The Board of Directors of the
Company shall be reasonably satisfied that,
after giving effect to the Contribution, (i)
the Company will not be insolvent and will
10
not have unreasonably small capital with
which to engage in its businesses, (ii) the
Company will be able to pay its debts when
they come due, and (iii) the Company's
surplus would be sufficient to permit,
without violation of Section 170 of the DGCL,
the Distribution.
(f) Consummation of the Distribution is a
condition precedent to Acquiror's acquisition of the
Retained Business pursuant to the Merger.
ARTICLE III
REPRESENTATIONS AND
WARRANTIES REGARDING THE COMPANY AND NEWCO
The Company and Newco jointly and severally
represent and warrant to Acquiror as follows:
3.01. ORGANIZATION AND AUTHORITY. Each of the
Company and Newco is a corporation duly organized,
validly existing and in good standing under the laws of
the state of its incorporation. Each of the Company
and Newco has all requisite corporate power and
authority to execute and deliver this Agreement and,
subject to the items referred to in Sections 3.02 and
3.03, to consummate the Transactions. Subject to the
items referred to in Sections 3.02 and 3.03, all
necessary action, corporate or otherwise, required to
have been taken by or on behalf of the Company and
Newco by applicable law, their respective charter
documents or otherwise to authorize (i) the approval,
execution and delivery on behalf of the Company and
Newco of this Agreement and (ii) the performance by the
Company and Newco of their respective obligations under
this Agreement and the consummation of the Transactions
has been taken, except that this Agreement and the
Company Charter Amendment must be approved by the
stockholders of the Company. Assuming that this
Agreement and each other agreement contemplated hereby
(each a "Transaction Agreement") constitutes or will
constitute, as the case may be, a legal, valid and
binding agreement of Acquiror, this Agreement and each
other Transaction Agreement to which the Company or
Newco is or will be a party constitutes or will
constitute, as the case may be, a valid and binding
agreement of each of the Company and Newco, as the case
may be, enforceable against each of them in accordance
with its terms, except (i) as the same may be limited
by applicable bankruptcy, insolvency, moratorium or
similar laws of general application relating to or
affecting creditors' rights, including the effect of
statutory or other laws regarding fraudulent
conveyances and preferential transfers, and (ii) for
the limitations imposed by general principles of
equity. The foregoing exceptions are hereinafter
referred to as the "Enforceability Exceptions." The
Company has heretofore made available to Acquiror true
11
and complete copies of the Certificate of Incorporation
and Bylaws of the Company and Newco as in effect on the
date hereof.
3.02. NO BREACH. The execution and delivery
of this Agreement by each of the Company and Newco do
not, and the consummation of the Transactions hereby by
each of the Company and Newco will not, (i) assuming
that the requisite stockholder approval is obtained,
violate or conflict with the Certificate of
Incorporation or Bylaws of the Company or Newco, or
(ii) except as set forth on Schedules 3.02 hereto, or
subject to obtaining the approvals and making the
filings described in SECTION 3.03, constitute a breach
or default (or an event that with notice or lapse of
time or both would become a breach or default) of, or
give rise to any third-party right of termination,
cancellation, modification or acceleration under, or
otherwise require notice or approval under, any
agreement, understanding or undertaking to which the
Company or Newco or any of their respective
Subsidiaries is a party or by which any of them is
bound, or give rise to any Lien on any of their
properties, except where such breach, default, Lien,
third-party right, cancellation, modification or
acceleration would not have a Material Adverse Effect
on Broadcasting or on the Retained Business taken as a
whole or materially interfere with or delay the
Transactions, or (iii) subject to obtaining the
approvals and making the filings described in SECTION
3.03 hereof, constitute a violation of any statute,
law, ordinance, rule, regulation, judgment, decree,
order or writ of any judicial, arbitral, public, or
governmental authority having jurisdiction over the
Company or any of its Subsidiaries or Newco or any of
its Subsidiaries or any of their respective properties
or assets except as would not have a Material Adverse
Effect on Broadcasting or on the Retained Business
taken as a whole or materially interfere with or delay
the Transactions.
3.03. CONSENTS AND APPROVALS. Neither the
execution and delivery of this Agreement nor the
consummation of the Transactions by the Company and
Newco will require any License from, or filing with or
notification to, any governmental or regulatory
authority, except (i) for filings required under the
Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder (the "Securities
Act"), (ii) for filings required under the Securities
Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder (the "Exchange
Act"), (iii) for filings under state securities or
"blue sky" laws, (iv) for filings and approvals
required by the rules and regulations of the NYSE, (v)
for notification pursuant to, and expiration or
termination of the waiting period under, the Xxxx-
Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended, and the rules and regulations promulgated
thereunder (the "HSR Act"), (vi) for the filing of the
Certificate of Merger as set forth in Article I hereof,
(vii) for the filing of the Company Charter Amendment
12
and the Newco Charter Amendment with the Secretary of
State of the State of Delaware and appropriate
documents with the relevant authorities of other states
in which the Company and Newco and their respective
Subsidiaries are qualified to do business, (viii) for
consents or waivers from the relevant governmental
entities necessary to transfer ownership of
Broadcasting's Federal Communications Commission
("FCC") Licenses to Acquiror, and (ix) where the
failure to obtain such Licenses, or to make such
filings or notifications, would not prevent the Company
or Newco from performing its respective obligations
under this Agreement without having a Material Adverse
Effect on Broadcasting or on the Retained Business
taken as a whole or materially interfere with or delay
the Transactions; PROVIDED, HOWEVER, that no
representation or warranty is made with respect to the
foregoing relating to, or arising by reason of, the New
Company Debt or the legal or regulatory status of
Acquiror or the facts pertaining specifically to it.
3.04. APPROVALS OF THE BOARDS; FAIRNESS
OPINION; VOTE REQUIRED. The Boards of Directors of the
Company and Newco have each, by resolutions duly
adopted at meetings duly called and held, unanimously
approved and adopted this Agreement, the Merger, the
Contribution and the Distribution, and the other
Transactions on the material terms and conditions set
forth herein. The transactions contemplated by the
Pulitzer Voting Agreement have been duly and validly
approved by the Board of Directors of the Company prior
to the execution and delivery of the Pulitzer Voting
Agreement in accordance with Section 203 of the DGCL.
The Board of Directors of the Company has declared the
advisability of the Company Charter Amendment and
recommended adoption of the Company Charter Amendment
and this Agreement by the stockholders of the Company
and directed that the Company Charter Amendment and
this Agreement be submitted to the stockholders of the
Company for their consideration, and no other corporate
proceedings on the part of the Company or its
stockholders are necessary to authorize the execution,
delivery and performance of this Agreement by the
Company and the consummation by the Company of the
Transactions, other than obtaining the approval of the
Company's stockholders described below. The Board of
Directors of the Company has received the opinion, as
of the date of this Agreement, of Xxxxxxx Sachs, one of
the financial advisors to the Company, that the
consideration to be received by the holders of shares
of the Company Stock in the Merger and the
Distribution, taken as a whole, is fair to such holders
from a financial point of view. The vote of a majority
of all outstanding shares of Company Stock entitled to
vote thereon, voting together as a single class, and
the vote of a majority of the outstanding shares of
Company Common Stock entitled to vote thereon, voting
separately as a class, in favor of the Company Charter
Amendment are the only votes of the holders of any
class or series of the capital stock of the Company
necessary to approve the Company Charter Amendment
under applicable law and the Company's Certificate of
Incorporation and Bylaws. The vote of a majority of
all outstanding shares of Company Stock entitled to
vote thereon, voting together as a single class, in
favor of the adoption of this Agreement, are the only
13
votes of the holders of any class or series of the
capital stock of the Company necessary to adopt this
Agreement and approve the Merger under applicable law
and the Company's Certificate of Incorporation and
Bylaws.
3.05. CAPITALIZATION.
(a) As of the date of this Agreement, the
authorized capital stock of the Company consists of (i)
100,000,000 shares of Company Common Stock, (ii)
50,000,000 shares of Company Class B Common Stock, and
(iii) 25,000,000 shares of preferred stock, par value
$0.01 per share (the "Company Preferred Stock"). As of
April 30, 1998, there were issued and outstanding
6,897,008 shares of Company Common Stock and 15,423,859
shares of Company Class B Common Stock. All such
outstanding shares are duly authorized, validly issued
and fully paid and nonassessable. Since April 30, 1998
no shares of Company Stock have been issued except upon
exercise of options outstanding on such date or
restricted stock or purchases pursuant to the Employee
Stock Purchase Plan. There are no shares of Company
Preferred Stock issued and outstanding. There are no
preemptive or other similar rights available to the
existing holders of the capital stock of the Company.
Other than options, restricted stock and shares granted
or issuable pursuant to the Employee Stock Purchase
Plan, the Company Option Plans, and the Company's
restricted stock plan, or other than as contemplated by
this Agreement, there are no outstanding options,
warrants, rights, puts, calls, commitments, or other
Contracts issued by or binding upon the Company or any
of its Subsidiaries requiring or providing for, and
there are no outstanding debt or equity securities of
the Company or its Subsidiaries which, upon the
conversion, exchange or exercise thereof, would require
or provide for, the issuance, transfer or sale by the
Company or any of its Subsidiaries of any new or
additional equity interests in the Company, PBC or the
Broadcasting Subsidiaries (or any other securities of
the Company which, with notice, lapse of time or
payment of monies, are or would be convertible into or
exercisable or exchangeable for equity interests in the
Company, PBC or the Broadcasting Subsidiaries). Except
for the Voting Trust Agreement, dated June 19, 1995 (as
it may be amended to permit conversion of Company Class
B Common Stock to Company Common Stock in accordance
with the Company's certificate of incorporation),
between certain holders of the Company Class B Common
Stock and the Trustees (as defined therein), and except
as otherwise contemplated by this Agreement, there are
no voting trusts or other agreements or understandings
to which the Company or any of its Subsidiaries is a
party with respect to the voting of capital stock of
the Company.
(b) As of the date of this Agreement, the
authorized capital stock of Newco consists of 1,000
14
common shares, par value $100 per share (the "Newco
Common Shares"). Upon the filing of the Newco Charter
Amendment with the Secretary of State of the State of
Delaware, the authorized capital stock of Newco will
consist of (i) 100,000,000 shares of Newco Common
Stock; (ii) 50,000,000 shares of Newco Class B Common
Stock; and (iii) 25,000,000 shares of preferred stock,
par value $0.01 per share, (the "Newco Preferred
Stock"). As of the date of this Agreement, there are
issued and outstanding 000 Xxxxx Xxxxxx Shares, all of
which are owned by the Company, and no other shares of
capital stock of Newco.
3.06. SEC REPORTS. The Company has filed all
forms, reports and documents required to be filed by it
with the Securities and Exchange Commission (the "SEC")
since January 1, 1997 (collectively, the "Company's SEC
Reports"). The Company's SEC Reports have complied in
all material respects with all applicable requirements
of the Securities Act and the Exchange Act. As of
their respective dates, none of the Company's SEC
Reports, including any financial statements or
schedules included or incorporated by reference
therein, contained any untrue statements of a material
fact or omitted to state a material fact required to be
stated or incorporated by reference therein or
necessary in order to make the statements therein, in
light of the circumstances under which they were made,
not misleading.
3.07. FINANCIAL STATEMENTS. The (i) audited
consolidated financial statements of the Company
contained in the Company's Annual Report on Form 10-K
for the fiscal year ended December 28, 1997 (the
"Company 10-K"), and (ii) unaudited condensed
consolidated financial statements of the Company
contained in the Company's Quarterly Report on Form 10-
Q for the three months ended March 29, 1998 (the
"Company 10-Q" and together with the Company 10-K, the
"Company Financial Statements"), present fairly, in all
material respects, the Company's consolidated financial
position and the results of its consolidated operations
and its consolidated cash flows as of the relevant
dates thereof and for the periods covered thereby in
accordance with GAAP (subject to normal year-end
adjustments in the case of the unaudited interim
financial statements).
3.08. ABSENCE OF CERTAIN CHANGES. Since the
date of the balance sheet included in the Company 10-Q,
except as contemplated or disclosed by this Agreement,
the Company and its Subsidiaries have conducted their
respective businesses in the ordinary course of
business consistent with past practice, and there has
not been any change, event or condition of any
character that, individually or in the aggregate, has
or would reasonably be expected to have a Material
Adverse Effect on the Company and its Subsidiaries
taken as a whole or materially interfere with or delay
the Transactions.
3.09. ABSENCE OF UNDISCLOSED LIABILITIES. To
the knowledge of the Company, except as set forth in
15
Schedule 3.09 or otherwise disclosed in this Agreement,
neither the Company nor any of its Subsidiaries has any
obligation or liability of any kind whatsoever, whether
accrued, contingent, absolute, determined, determinable
or otherwise, of a type required by GAAP to be
disclosed in a balance sheet of the Company or any of
its Subsidiaries except (i) such liabilities and
obligations that are reflected in the Company Financial
Statements or disclosed in the notes thereto, (ii)
liabilities and obligations incurred in the ordinary
course of business after March 29, 1998, and (iii)
liabilities and obligations that will not, individually
or in the aggregate, have a Material Adverse Effect on
Broadcasting or on the Retained Business taken as a
whole or materially interfere with or delay the
Transactions.
3.10. COMPLIANCE WITH LAW. The Company and
its Subsidiaries (other than the Broadcasting
Subsidiaries) hold all Licenses from all governmental
authorities necessary for the lawful conduct of their
respective businesses, except where the failure to hold
any such License would not have a Material Adverse
Effect on Broadcasting or on the Retained Business
taken as a whole or materially interfere with or delay
the Transactions. To the Company's knowledge, the
Company has not violated, and is not in violation of,
any such Licenses or any applicable Laws of any
governmental authorities, except where such violations
do not and, insofar as reasonably can be foreseen, will
not have a Material Adverse Effect on Broadcasting or
on the Retained Business taken as a whole or materially
interfere with or delay the Transactions.
3.11. TAXES.
(a) All Company Consolidated Income Tax
Returns and any other material Tax Returns of the
Company and Broadcasting required to have been filed on
or before the date hereof have been filed with the
appropriate governmental agencies in all jurisdictions
in which such Tax Returns were required to have been
filed. All of such Tax Returns were true, correct and
complete in all material respects and all Taxes shown
to be due on such Tax Returns have been paid. All
material Taxes payable by or with respect to the
Company and its Subsidiaries but not reflected on any
Tax Return required to have been filed prior to the
date of the most recent balance sheet included in the
Company 10-Q have been fully paid or adequate provision
therefor has been made and reflected on such balance
sheet.
(b) Except as set forth on Schedule 3.11(b)
hereto, there is no claim or investigation involving an
amount greater than $1,000,000 pending or threatened
against the Company or any of its Subsidiaries for past
Taxes, and adequate provision for the claims or
investigations set forth on Schedule 3.11(b) has been
made as reflected on the Company Financial Statements.
Except as set forth on Schedule 3.11(b), neither the
16
Company nor any of its Subsidiaries has waived or
extended any applicable statute of limitations relating
to the assessment of federal, state or local Taxes of
the Company or any of its Subsidiaries, respectively.
(c) The Company is not, and on the Closing
Date will not be, an investment company within the
meaning of Section 368(a)(2)(F)(iii) and (iv) of the
Code.
(d) Except for the Technical Advice Request
currently pending with the IRS relating to the
examination of the 1993 and 1994 Company Consolidated
Income Tax Returns and the Closing Agreement executed
by the Company on May 11, 1994, a copy of which has
been furnished to Acquiror, neither the Company nor any
Broadcasting Subsidiary has pending a Tax Ruling
Request (as defined below) other than in connection
with the Contribution, Distribution and Merger or
entered into a Closing Agreement (as defined below)
with the IRS. "Tax Ruling Request," as used in this
Agreement, shall mean a request for a written ruling of
a Taxing authority relating to Taxes. "Closing
Agreement," as used in this Agreement, shall mean a
material written and legally binding agreement with the
IRS relating to Taxes.
(e) Neither the Company nor any Broadcasting
Subsidiary has, with regard to any assets or property
held or acquired by any of them, filed a consent to the
application of Section 341(f)(2) of the Code, or agreed
to have Section 341(f)(2) of the Code apply to any
disposition of a subsection (f) asset (as such term is
defined in Section 341(f)(4) of the Code) owned by the
Company or any Broadcasting Subsidiary.
3.12. LITIGATION. Except as is set forth on
Schedule 3.12, there is no suit, action, proceeding or
investigation pending against or, to the knowledge of
the Company, threatened against or affecting the
Company or any of its Subsidiaries (other than the
Broadcasting Subsidiaries) or any of their respective
material properties nor, to the knowledge of the
Company, is there any judgment, decree, inquiry, rule
or order outstanding against the Company or any of its
Subsidiaries (other than the Broadcasting Subsidiaries)
that would reasonably be expected to have a Material
Adverse Effect on Broadcasting or on the Retained
Business taken as a whole, or materially interfere with
or delay the Transactions.
3.13. BROKERS AND FINDERS. Neither the
Company, Newco nor any officer, director or employee or
Affiliate of the Company or Newco has employed any
investment banker, broker or finder or incurred any
liability for any brokerage fees, commissions or
finder's fees in connection with the Transactions,
except that the Company has employed Xxxxxxx Xxxxx and
Huntleigh as its financial advisors. The Company has
previously provided to Acquiror a written estimate of
the Deal Expenses, which estimate was prepared in good
faith.
17
3.14. ENVIRONMENTAL MATTERS. Except as set
forth on Schedule 3.14, to the knowledge of the Company
there are no Environmental Liabilities of the Company
or any of its Subsidiaries (other than the Broadcasting
Subsidiaries) that, individually or in the aggregate,
may reasonably be expected to have a Material Adverse
Effect on Broadcasting or on the Retained Business
taken as a whole or may materially interfere with or
delay the Transactions.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES REGARDING BROADCASTING
The Company represents and warrants to Acquiror as
follows:
4.01. ORGANIZATION AND AUTHORITY. Each of PBC
and the Broadcasting Subsidiaries is a corporation duly
organized, validly existing and in good standing under
the laws of its state of incorporation. Each of PBC
and the Broadcasting Subsidiaries is qualified to do
business as a corporation and is, where applicable, in
good standing, in each jurisdiction where such
qualification is necessary except where the failure to
so qualify would not reasonably be expected to have a
Material Adverse Effect on Broadcasting. Each of PBC
and the Broadcasting Subsidiaries has all requisite
corporate power and authority to own, lease and operate
its properties and to carry on its business as now
being conducted, except where the failure to have such
power or authority would not have a Material Adverse
Effect on Broadcasting. The Company has heretofore
delivered to Acquiror true and complete copies of the
certificates of incorporation and bylaws of PBC and
each Broadcasting Subsidiary as currently in effect.
4.02. CAPITALIZATION. All of the issued and
outstanding shares of capital stock of PBC are owned
directly by the Company, free and clear of any Liens,
and are duly authorized, validly issued and fully paid
and nonassessable. All of the issued and outstanding
shares of capital stock of the Broadcasting
Subsidiaries are owned, directly or indirectly, by PBC,
free and clear of any Liens, and are duly authorized,
validly issued and fully paid and nonassessable. Other
than as contemplated by this Agreement,there are no
outstanding options, warrants, rights, puts, calls,
commitments, or other Contracts issued by or binding
upon PBC or any Broadcasting Subsidiary requiring or
providing for, and there are no outstanding debt or
equity securities of PBC or any Broadcasting Subsidiary
which upon the conversion, exchange or exercise thereof
would require or provide for, the issuance, transfer or
sale by PBC or any Broadcasting Subsidiary of any new
or additional equity interests in PBC or the
Broadcasting Subsidiaries (or any other securities of
PBC or any Broadcasting Subsidiary which, with notice,
lapse of time or payment of monies, are or would be
convertible into or exercisable or exchangeable for
equity interests in PBC or such Broadcasting
Subsidiary). There are no voting trusts or other
agreements or understandings to which the Company, PBC
or any of the Broadcasting Subsidiaries is a party with
respect to the voting of the capital stock of PBC or
18
the Broadcasting Subsidiaries. PBC and the
Broadcasting Subsidiaries have not engaged in any
material respect in any businesses or other activities
except for the ownership and operation of broadcast
radio and/or television stations and other activities
incidental thereto.
4.03. FINANCIAL STATEMENTS. The unaudited
"Summary Financial Data," "Consolidated Income
Statement," "Statement of Net Assets" and "1998 Four
Period Results" (collectively, the "Broadcasting
Unaudited Financial Statements") contained in Schedule
4.03 were prepared from the books and records of
Broadcasting which books and records were maintained in
accordance with accounting principles consistently
applied and present fairly, in all material respects,
the financial position of Broadcasting as at the dates
thereof and the results of operations and cash flows
for the periods covered thereby.
4.04. ABSENCE OF CERTAIN CHANGES. Since March
29, 1998, except as contemplated or disclosed by this
Agreement, Broadcasting has conducted its business in
the ordinary course consistent with past practice and
there has not been any change, event or condition of
any character that, individually or in the aggregate,
has or would reasonably be expected to have a Material
Adverse Effect on Broadcasting or materially interfere
with or delay the Transactions.
4.05. ABSENCE OF UNDISCLOSED LIABILITIES. To
the knowledge of the Company, except as set forth in
Schedule 4.05 or as otherwise disclosed in this
Agreement, Broadcasting has no obligations or
liabilities except (i) such liabilities and obligations
that are reflected in the Broadcasting Unaudited
Financial Statements or disclosed in the notes thereto,
(ii) liabilities and obligations incurred in the
ordinary course of business after March 29, 1998, and
(iii) liabilities and obligations that will not,
individually or in the aggregate, have a Material
Adverse Effect on Broadcasting or materially interfere
with or delay the Transactions.
4.06. COMPLIANCE WITH LAW. Subject to the
renewal of certain Licenses as indicated on Schedule
4.06, PBC and the Broadcasting Subsidiaries hold all
Licenses from all governmental authorities necessary
for the lawful conduct of Broadcasting's business,
including any activity ancillary or incidental to the
ownership or operations of the Stations, except where
19
the failure to hold any such License would not have a
Material Adverse Effect on Broadcasting or materially
interfere with or delay the Transactions. The material
Licenses held by Broadcasting are set forth on Schedule
4.06. To the Company's knowledge, neither PBC nor any
of the Broadcasting Subsidiaries has violated, or is in
violation of, any such Licenses or any Laws of any
governmental authorities that are applicable to
Broadcasting or to the operation of the Stations or the
other Broadcasting Assets, except where such violations
do not, and insofar as reasonably can be foreseen will
not, have a Material Adverse Effect on Broadcasting or
materially interfere with or delay the Transactions.
4.07. STATION NETWORK AFFILIATION AGREEMENTS.
Each Station Network Affiliation Agreement listed on
Schedule 4.07 hereto is the validly existing, legally
enforceable obligation of each Broadcasting party
thereto and, to the knowledge of the Company, each
other party thereto, subject to the Enforceability
Exceptions. PBC and each Broadcasting Subsidiary are
validly and lawfully operating under each Station
Network Affiliation Agreement to which it is a party,
and PBC and each Broadcasting Subsidiary have duly
complied in all material respects with all of the terms
and conditions of each Station Network Affiliation
Agreement to which it is a party. The Company is not
aware of any third party breach or default (or other
act or omission that with notice, passage of time or
both would constitute a default) under any Station
Network Affiliation Agreement.
4.08. CONDITION OF ASSETS; TITLE TO
PROPERTIES;
ENCUMBRANCES.
(a) The material tangible personal
Broadcasting Assets are in the possession of PBC and
the Broadcasting Subsidiaries and, taking into account
the age of such Broadcasting Assets, are in good
operating condition and repair, structurally sound,
adequate for the uses and purposes for which they are
being used or intended, and are available for immediate
use in the operation of the Stations, and, except as
would be natural taking into account the age of such
Broadcasting Assets, none of such Broadcasting Assets
requires maintenance or repairs other than ordinary,
routine maintenance and repairs. Except for the
representations and warranties expressly stated in
Articles III and IV of this Agreement, the Company
disclaims all representations and warranties, express
or implied, with respect to the Broadcasting Assets
described in this Section 4.08(a), including all
implied warranties of merchantability or fitness for a
particular purpose.
(b) PBC and the Broadcasting Subsidiaries
are the exclusive holders of all (and none of the
Company or its Newspaper Subsidiaries holds any) rights
(or leasehold interests, as the case may be) in or to
all Real Property and personal, tangible and intangible
property and assets primarily used or held for use in
the ownership and operation of the Stations owned or
20
operated by Broadcasting except in the case of title to
Real Property which is covered in Section 4.08(d). PBC
and each Broadcasting Subsidiary has good and valid
title (or valid leasehold interest in, in the case of
leased personal property) to their respective personal
property, free and clear of all Liens except the
following (collectively, the "Permitted Exceptions"):
(i) materialmen's, mechanics', carriers', workmen's,
warehousemen's, repairmen's, or other like Liens
arising in the ordinary course of business, or deposits
to obtain the release of such Liens; (ii) Liens for
current taxes not yet due and payable or to the extent
the taxpayer is contesting such taxes in good faith
through appropriate proceedings; (iii) Liens or minor
imperfections of title that do not materially impair
the continued use and operation of the assets to which
they relate and do not have a Material Adverse Effect
on Broadcasting; (iv) in the case of leased personal
property, the terms and conditions of such lease; and
(v) the exceptions set forth on Schedules 4.08(b) and
4.08(d)(2) hereto. Except as would not result in any
Material Adverse Effect on Broadcasting, PBC and each
Broadcasting Subsidiary owns or has the lawful right to
use all property necessary to operate their businesses
lawfully and to maintain the same as presently
conducted.
(c) Schedule 4.08(c) lists all leases of
personal property leased by PBC or the Broadcasting
Subsidiaries, including all such leases with related
parties or Affiliates, pursuant to which PBC or a
Broadcasting Subsidiary is obligated to make lease
payments in excess of $100,000 per year. Correct and
complete copies of such leases have heretofore been
made available to Acquiror. Except as would not result
in a Material Adverse Effect on Broadcasting, (i) all
of such leases are valid and in full force and effect,
(ii) neither PBC and the Broadcasting Subsidiaries nor,
to the knowledge of the Company, any other party
thereto is in default under any of such leases, and
(iii) no event has occurred which with the giving of
notice or the passage of time or both would constitute
a default under any of such leases.
(d) Schedule 4.08(d)(1) lists (y) each
parcel of owned Real Property with a book value in
excess of $1,000,000, as reflected in the audited
financial statements of the Company contained in the
Company 10-K, and (z) each lease of Real Property
pursuant to which PBC or a Broadcasting Subsidiary is
currently obligated to make payments of fixed rent in
excess of $100,000 per annum. To the knowledge of the
Company, either PBC or the Broadcasting Subsidiaries
has fee title to, or holds by valid and existing lease
or license, the Real Property, free and clear of all
Liens except for such Liens: (i) which would not have
a Material Adverse Effect on Broadcasting; (ii) which
are set forth on Schedule 4.08(d)(2); (iii) which arise
out of taxes or general or special assessments not yet
due and payable or the validity of which is being
contested in good faith by appropriate proceedings; or
(iv) which are materialmen's, mechanics', carriers',
workmen's, repairmen's, warehouseman's or other like
Liens which would not have a Material Adverse Effect on
Broadcasting. The Company has made available to
Acquiror complete and accurate copies of all deeds,
leases and other material agreements with respect to
21
the Real Property. To the knowledge of the Company,
there does not exist under any leases of Real Property
any default beyond any applicable notice and grace
period by PBC or any Broadcasting Subsidiary which
would have a Material Adverse Effect on Broadcasting.
(e) To the knowledge of the Company, neither
PBC nor the Broadcasting Subsidiaries has received
written notice from any governmental or quasi-
governmental authority with respect to any actual or
threatened taking of any material portion of the Real
Property for any purpose by the exercise of the right
of condemnation or eminent domain.
(f) To the knowledge of the Company, the
Real Property has not suffered any material damage by
fire or other casualty that has not heretofore been
repaired.
4.09. LITIGATION. Except as is set forth in
Schedule 4.09 hereto, there is no suit, action,
proceeding or investigation pending against or, to the
knowledge of the Company, threatened against or
affecting PBC or any Broadcasting Subsidiary or any of
their respective material properties (except for
proceedings or investigations affecting the television
or radio industries generally) that would reasonably be
expected to adversely affect the validity or
enforceability of any of the material Licenses of, or
otherwise to have a Material Adverse Effect on,
Broadcasting nor is there any judgment, decree,
inquiry, rule or order outstanding against PBC or any
Broadcasting Subsidiary that would reasonably be
expected to have a Material Adverse Effect on
Broadcasting, materially interfere with or delay the
Transactions or have an adverse effect on the validity
or enforceability of any of the material Licenses of
Broadcasting or the Station Network Affiliation
Agreements.
4.10. EMPLOYEE BENEFIT MATTERS.
(a) Schedule 4.10(a) lists each Employee
Plan which is currently sponsored, maintained or
contributed to by the Company, any of its Subsidiaries
or any of their ERISA Affiliates for the benefit of any
Broadcasting Employee (a "Broadcasting Employee Plan").
For the purposes hereof, the term "Employee Plan" means
any plan, program, contract or arrangement, whether
oral or written, which (i) is an "employee benefit
plan," as such term is defined in Section 3(3) of
ERISA, whether or not subject to ERISA, or (ii) is an
incentive, bonus, stock option, stock purchase, phantom
stock, severance, fringe benefit or other compensatory
22
plan, contract, or arrangement that is not an employee
benefit plan within the meaning of Section 3(3) of
ERISA. No Broadcasting Employee Plan is a
multiemployer plan within the meaning of Sections 3(37)
and 4001(a)(3) of ERISA.
(b) The Company has delivered or made
available to Acquiror true and complete copies of the
plan documents, contracts, policy statements and
summary plan descriptions that currently apply to the
operation or funding of each Broadcasting Employee
Plan. With respect to each Broadcasting Employee Plan
(including, without limitation, a plan that is a
"pension plan" within the meaning of Section 3(2) of
ERISA (a "Broadcasting Pension Plan")), the Company has
delivered or made available to Acquiror, where
applicable, true and complete copies of (i) the most
recent annual report (5500 series) filed with the IRS
or Department of Labor, (ii) the most recent audited
financial statement, (iii) the most recent actuarial
valuation report, (iv) the last determination letter
issued by the IRS, and (v) the most recent PBGC-1 filed
with PBGC.
(c) Each Broadcasting Employee Plan
described in Section 6.11(c), (d) or (f) has been
maintained and administered substantially in accordance
with its terms and with the provisions of applicable
law and, with respect to each such Broadcasting
Employee Plan, (i) no application, proceeding or other
matter is pending before the IRS, the Department of
Labor, PBGC or any other governmental agency, (ii)
there is no pending action, suit, proceeding or claim
(other than routine claims for benefits) that could
reasonably be expected to give rise to a material
liability or expense of the Company or PBC, and (iii)
to the knowledge of the Company, no facts exist that
are likely to result in such an action, suit,
proceeding or claim. A favorable IRS determination
letter is currently in effect with respect to each
funded Broadcasting Pension Plan, and no subsequent
amendments have been or will be adopted or other action
taken which would adversely affect the qualified status
of any such Broadcasting Pension Plan.
(d) With respect to each funded employee
pension plan (within the meaning of Section 3(2) of
ERISA) maintained by the Company, any of its
Subsidiaries or any of their ERISA Affiliates within
six years prior to the date hereof for the benefit of
any of its employees (other than a multiemployer plan
within the meaning of Section 3(37) of ERISA), where
applicable, (i) there has been no termination or
partial termination within the meaning of Section
411(d)(3) of the Code, except to the extent that the
Transactions will result in such a partial termination;
(ii) there has been no accumulated funding deficiency,
whether or not waived, within the meaning of Section
302(a)(2) of ERISA or Section 412 of the Code, and
there has been no failure to make a required
installment by its due date under Section 412(m) of the
23
Code; (iii) no non-exempt prohibited transaction
(within the meaning of Section 406 of ERISA or Section
4975 of the Code) has occurred which could result in
the imposition of a material tax or liability against
the Company or any of its Subsidiaries; and (iv) with
respect to each such plan which is covered by Title IV
of ERISA, (A) no reportable event within the meaning of
Section 4043(c) of ERISA has occurred, except a
reportable event occurring as a result of the
consummation of the transactions contemplated by this
Agreement or any prior event which will not result in a
liability to the Company or any of its Subsidiaries or
any of their Affiliates after the consummation of said
transactions; (B) no notice of intent to terminate the
plan has been provided to participants or filed with
PBGC under Section 4041 of ERISA, nor has PBGC
instituted or threatened to institute any proceeding
under Section 4042 of ERISA to terminate the plan; and
(C) no liability has been incurred under Title IV of
ERISA to PBGC or otherwise (except for the payment of
PBGC premiums) which has not been satisfied. Neither
the Company, any of its Subsidiaries nor any of their
ERISA Affiliates has ceased operations at a facility so
as to become subject to the provisions of Section
4068(f) of ERISA, withdrawn as a substantial employer
so as to become subject to the provisions of Section
4063 of ERISA or ceased making contributions on or
before the Closing Date to any such plan which is a
pension plan subject to Section 4064(a) of ERISA.
(e) Neither the Company, any of its
Subsidiaries nor any of their ERISA Affiliates has
incurred or expects to incur any withdrawal liability
under Title IV of ERISA (either as a contributing
employer or as part of a controlled group which
includes a contributing employer) in connection with a
complete or partial withdrawal from a Multiemployer
Plan that will be unsatisfied at the Effective Time;
and, with respect to any Multiemployer Plan to which
the Company or any ERISA Affiliate is, or within the
preceding six years, was required to make or accrue a
contribution, neither the Company, any of its
Subsidiaries nor any of their ERISA Affiliates has
received notice from such Multiemployer Plan that the
plan is in reorganization or insolvency pursuant to
Sections 4241 or 4245 or ERISA or that the plan is
intended to terminate or has terminated under Sections
4041A or 4042 of ERISA.
(f) The Company, its Subsidiaries and each
of their ERISA Affiliates has complied in all material
respects with its obligations under the provisions of
Section 4980B of the Code with respect to any group
health plan. Except as identified on Schedule 4.10(a),
no Broadcasting Employee Plan provides health or death
benefits (whether or not insured) to Broadcasting
Employees beyond the termination of their employment or
other services.
(g) All Broadcasting Employee Plans which
provide medical, dental health or long-term disability
benefits are insured and, to the Company's knowledge,
claims with respect to any participant or covered
dependent under any such Broadcasting Employee Plan
24
will not result in any uninsured liability to the
Acquiror, the Company, PBC or any of their
Subsidiaries.
4.11. LABOR MATTERS.
(a) Except as set forth on Schedule 4.11(a),
neither PBC nor any Broadcasting Subsidiary is a party
to any labor or collective bargaining agreement and
there are no labor or collective bargaining agreements
which pertain to any Broadcasting employees.
(b) Except as set forth on Schedule 4.11(b),
as of the date of this Agreement, (i) no employees of
PBC or any of the Broadcasting Subsidiaries are
represented by any labor organization and (ii) no labor
organization or group of employees of PBC or any of the
Broadcasting Subsidiaries has made a pending demand for
recognition or certification, and there are no
representation or certification proceedings or
petitions seeking a representation proceeding presently
pending or, to the knowledge of the Company, threatened
to be brought or filed with the NLRB or any other labor
relations tribunal or authority. To the knowledge of
the Company, as of the date of this Agreement, there
are no formal organizing activities involving a
material number of Broadcasting employees pending with,
or threatened by, any labor organization.
(c) Except as would not result in a Material
Adverse Effect on Broadcasting, (i) there are no
strikes, work stoppages, slowdowns, lockouts, material
arbitrations or material grievances or other material
labor disputes pending or, to the knowledge of the
Company, threatened against or involving PBC or any of
the Broadcasting Subsidiaries and (ii) there are no
unfair labor practice charges, grievances or complaints
pending or, to the knowledge of the Company, threatened
by or on behalf of any employee or group of employees
of PBC or any of the Broadcasting Subsidiaries.
4.12. ENVIRONMENTAL MATTERS.
(a) Except as set forth on Schedule 4.12(a),
to the knowledge of the Company there are no
Environmental Liabilities of Broadcasting that may
reasonably be expected to have a Material Adverse
Effect on Broadcasting or materially interfere with or
delay the Transactions.
(b) Since January 1, 1997 and prior to the
date of this Agreement, to the knowledge of the Company
there has been no material environmental assessment
investigation, study, Audit, test, review or other
analysis conducted in relation to the current business
of Broadcasting or any property or facility now owned
or leased by Broadcasting which has not been delivered
or made available to Acquiror prior to the date hereof.
25
4.13. COMPLAINTS. As of the date of this
Agreement, there is not, to the knowledge of the
Company, any FCC investigation, notice of apparent
liability or order of forfeiture pending or outstanding
against any of the Stations respecting any violation,
or allegation thereof, of any FCC rule, regulation or
policy, or, to the knowledge of the Company, any
complaint before the FCC as a result of which an
investigation, notice of apparent liability, or order
of forfeiture may issue from the FCC relating to any of
the Stations.
4.14. REPORTS. Excluding reports and
statements which do not materially affect the business
and operations of any of the Stations, all reports and
statements currently required to be filed by the
Company or any of its Subsidiaries with the FCC or with
any other governmental agency with respect to the
Stations have been filed and substantially complied
with and shall continue to be filed and be in
substantial compliance on a current basis until the
Closing Date. All such material reports and statements
are substantially complete and correct as filed, and
copies thereof have heretofore been made available to
Acquiror.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF ACQUIROR
Acquiror represents and warrants to the Company
and Newco as follows:
5.01. ORGANIZATION AND AUTHORITY. Acquiror is
a corporation duly organized, validly existing and in
good standing under the laws of its state of
incorporation. Acquiror has all requisite corporate
power and authority to own, lease and operate its
properties and to carry on its business as now being
conducted, except where the failure to have such power
or authority would not have a Material Adverse Effect
on Acquiror and its Subsidiaries taken as a whole.
Acquiror has all requisite corporate power and
authority to execute and deliver this Agreement and,
subject to the items referred to in Sections 5.02 and
5.03, to consummate the Transactions. Subject to the
items referred to in Sections 5.02 and 5.03, all
necessary action, corporate or otherwise, required to
have been taken by or on behalf of Acquiror by
applicable law, its charter documents or otherwise to
authorize (i) the approval, execution and delivery on
its behalf of this Agreement and (ii) its performance
of its obligations under this Agreement and the
consummation of the Transactions has been taken, except
that this Agreement must be approved by the
26
stockholders of Acquiror, and the Board of Directors of
Acquiror must increase the size of such Board to comply
with the Board Representation Agreement. Assuming that
this Agreement and each Transaction Agreement
constitutes or will constitute, as the case may be, a
legal, valid and binding agreement of the Company or
Newco, as the case may be, this Agreement and each
other Transaction Agreement to which Acquiror is or
will be a party constitutes or will constitute, as the
case may be, a valid and binding agreement of Acquiror,
enforceable against it in accordance with its terms,
subject to (i) the Enforceability Exceptions and (ii)
in the case of the Board Representation Agreement to
the Communications Act of 1934, as amended (the
"Communications Act"), and the rules and regulations
thereunder (the "Rules and Regulations") regarding
cross-ownership of radio and television stations, to
the extent that such Rules and Regulations may prohibit
Newco or any of its officers, directors or shareholders
from designating or acting as a director or observer on
Acquiror's Board of Directors. Acquiror has heretofore
made available to the Company true and complete copies
of its Certificate of Incorporation and Bylaws as in
effect on the date hereof.
5.02. NO BREACH. The execution and delivery
of this Agreement by Acquiror do not and the
consummation of the Transactions by Acquiror will not
(i) assuming that the requisite stockholder approval is
obtained, violate or conflict with its Certificate of
Incorporation or Bylaws or (ii) except as set forth on
Schedule 5.02(a) hereto, or subject to obtaining the
approvals and making the filings described in Section
5.03, constitute a breach or default (or an event which
with notice or lapse of time or both would become a
breach or default) of, or give rise to any third-party
right of termination, cancellation, modification or
acceleration under, or otherwise require notice or
approval under, any agreement, understanding or
undertaking to which Acquiror or any of its
Subsidiaries is a party or by which any of them is
bound, or give rise to any Lien on any of their
properties, except where such breach, default, Lien,
third-party right, cancellation, modification or
acceleration would not have a Material Adverse Effect
on Acquiror and its Subsidiaries taken as a whole or
materially interfere with or delay the Transactions, or
(iii) subject to obtaining the approvals and making the
filings described in Section 5.03 hereof, constitute a
violation of any statute, law, ordinance, rule,
regulation, judgment, decree, order or writ of any
judicial, arbitral, public, or governmental authority
having jurisdiction over Acquiror or any of its
Subsidiaries or any of their respective properties or
assets, except as would not have a Material Adverse
Effect on Acquiror and its Subsidiaries taken as a
whole. Except as set forth on Schedule 5.02(b),
neither Acquiror nor any of its Subsidiaries is a party
to or bound by any Contract that restricts or purports
to restrict the ability of any of them or any Affiliate
of them to engage in any location in the business of
television broadcasting, except for such restrictions
that would not have a Material Adverse Effect on
Acquiror and its Subsidiaries taken as a whole or
materially interfere with or delay the Transactions.
27
5.03. CONSENTS AND APPROVALS. Neither the
execution and delivery of this Agreement by Acquiror
nor the consummation of the Transactions by Acquiror
will require any License from, or filing with, or
notification to, any governmental or regulatory
authority, except (i) for filings required under the
Securities Act, (ii) for filings required under the
Exchange Act, (iii) for filings required under state
securities or "blue sky" laws, (iv) for filings and
approvals required by the rules and regulations of
NASDAQ or the NYSE, as the case may be, (v) for
notification pursuant to the HSR Act and expiration or
termination of the waiting period thereunder, (vi) for
the filing of the Certificate of Merger as set forth in
Article I hereof, (vii) for any waiver, consent or
declaratory ruling by the FCC with respect to the Rules
and Regulations regarding cross-ownership of radio or
television stations, to the extent that such Rules and
Regulations may prohibit (A) Newco or any of its
officers, directors or shareholders from designating or
acting as a director or observer on Acquiror's Board of
Directors or (B) a designee of Newco from serving on
the Board of Directors of Acquiror, (viii) for consents
or waivers from the relevant governmental entities
necessary to transfer control of Broadcasting's FCC
Licenses to Acquiror, and (ix) where the failure to
obtain such Licenses or to make such filings or
notifications, would not have a Material Adverse Effect
on Acquiror and its Subsidiaries taken as a whole or
materially interfere with or delay the Transactions;
PROVIDED, HOWEVER, that no representation or warranty
is made with respect to the foregoing relating to, or
arising by reason of, the legal or regulatory status of
the Company or Broadcasting or the respective facts
pertaining specifically to them.
5.04. APPROVAL OF THE BOARD; VOTE REQUIRED.
The Board of Directors of Acquiror has, by resolutions
duly adopted at a meeting duly called and held,
unanimously approved and adopted this Agreement, the
Merger, the Transaction Agreements and the other
Transactions on the material terms and conditions set
forth herein. The transactions contemplated by the
Acquiror Voting Agreement have been duly and validly
approved by the Board of Directors of Acquiror prior to
the execution and delivery of the Acquiror Voting
Agreement in accordance with Section 203 of the DGCL.
The affirmative vote or action by written consent of a
majority of the votes that holders of the outstanding
shares of capital stock of Acquiror are entitled to
cast voting as a single class are the only votes of the
holders of any class or series of the capital stock of
Acquiror necessary to approve this Agreement, the
Merger and the Transaction Agreements under applicable
law and Acquiror's Articles of Incorporation and
Bylaws.
5.05. CAPITALIZATION.
(a) As of the date of this Agreement, the
authorized capital stock of Acquiror consists of: (i)
200,000,000 shares of common stock, par value $.01, of
28
which 100,000,000 shares are designated as Series A
Common Stock and 100,000,000 shares are designated as
Series B Common Stock, and (ii) 1,000,000 shares of
preferred stock, par value $.01, of which 12,500 shares
are designated as Series A Preferred Stock and 12,500
shares are designated as Series B Preferred Stock. As
of May 13, 1998, there were issued and outstanding the
following shares of such stock: (i) 53,842,377 shares
of common stock outstanding, consisting of 12,543,729
shares of Series A Common Stock and 41,298,648 shares
of Series B Common Stock, and (ii) 21,876 shares of
preferred stock outstanding, consisting of 10,938
shares of Series A Preferred Stock and 10,938 shares of
Series B Preferred Stock. All such outstanding shares
are duly authorized, validly issued and fully paid and
nonassessable. There are no preemptive or other
similar rights available to the existing holders of the
capital stock of Acquiror. As of the date of this
Agreement, and other than as set forth on Schedule
5.05(a) or other than as contemplated by this
Agreement, there are no outstanding options, warrants,
rights, puts, calls, commitments, or other Contracts
issued by or binding upon Acquiror or any of its
Subsidiaries requiring or providing for, and there are
no outstanding debt or equity securities of Acquiror or
its Subsidiaries which, upon the conversion, exchange
or exercise thereof, would require or provide for the
issuance, sale or transfer by Acquiror or any of its
Subsidiaries of any new or additional equity interests
in Acquiror or any of its Subsidiaries (or any other
securities of Acquiror which, with notice, lapse of
time or payment of monies, are or would be convertible
into or exercisable or exchangeable for equity
interests in Acquiror or any of its Subsidiaries).
Except as described on Schedule 5.05(a), there are no
voting trusts or other agreements or understandings to
which Acquiror or any of its Subsidiaries is a party
with respect to the voting of capital stock of
Acquiror.
(b) The shares of Acquiror Common Stock to
be issued in the Merger, upon their issuance in
accordance with the terms hereof, will be duly
authorized, validly issued, fully paid and
nonassessable and free and clear of all Liens, other
than any Liens created by the stockholders of the
Company.
5.06. SEC REPORTS. Acquiror has filed all
required forms, reports and documents required to be
filed by it with the SEC since January 1, 1997
(collectively, "Acquiror's SEC Reports") and delivered
or made available to the Company copies thereof.
Acquiror's SEC Reports have complied in all material
respects with all applicable requirements of the
Securities Act and the Exchange Act. As of their
respective dates, none of the Acquiror's SEC Reports,
including any financial statements or schedules
included or incorporated by reference therein,
contained any untrue statement of a material fact or
omitted to state a material fact required to be stated
or incorporated by reference therein or necessary in
order to make the statements therein, in light of the
29
circumstances under which they were made, not
misleading.
5.07. FINANCIAL STATEMENTS. The (i) audited
consolidated financial statements of Acquiror contained
in Acquiror's Annual Report on Form 10-K for the year
ended December 31, 1997 ("Acquiror's 10-K"), and (ii)
unaudited condensed consolidated financial statements
of Acquiror contained in Acquiror's Quarterly Report on
Form 10-Q for the three months ended March 31, 1998
("Acquiror's 10-Q" and together with Acquiror's 10-K,
"Acquiror's Financial Statements"), were prepared in
accordance with GAAP and present fairly, in all
material respects, Acquiror's consolidated financial
position and the results of its consolidated operations
and its consolidated cash flows as of the relevant
dates thereof and for the periods covered thereby in
accordance with GAAP (subject to normal year-end
adjustments in the case of the unaudited interim
financial statements).
5.08. ABSENCE OF CERTAIN CHANGES. Since the
date of the balance sheet of Acquiror included in
Acquiror's 10-Q, except as contemplated or disclosed by
this Agreement, the Acquiror and its Subsidiaries have
conducted their respective businesses in the ordinary
course of business consistent with past practice, and
except as contemplated by this Agreement there has not
been any change, event or condition of any character
that, individually or in the aggregate, has or would
reasonably be expected to have a Material Adverse
Effect on Acquiror and its Subsidiaries taken as a
whole or materially interfere with or delay the
Transactions.
5.09. ABSENCE OF UNDISCLOSED LIABILITIES. To
the knowledge of Acquiror, except as set forth in
Schedule 5.09 or otherwise disclosed in this Agreement,
neither Acquiror nor any of its Subsidiaries has any
obligation or liability of any kind whatsoever, whether
accrued, contingent, absolute, determined, determinable
or otherwise, of a type required by GAAP to be
disclosed in a balance sheet of Acquiror or any of its
Subsidiaries except (i) such liabilities and
obligations that are reflected in Acquiror's Financial
Statements or disclosed in the notes thereto, (ii)
liabilities and obligations incurred in the ordinary
course of business after March 31, 1998, and
(iii) liabilities and obligations that will not,
individually or in the aggregate, have a Material
Adverse Effect on Acquiror or its Subsidiaries taken as
a whole or materially interfere with or delay the
Transactions.
5.10. COMPLIANCE WITH LAW. Acquiror holds all
Licenses from all governmental authorities necessary
for the lawful conduct of its business, except where
the failure to hold any such License would not have a
Material Adverse Effect on Acquiror and its
30
Subsidiaries taken as a whole or materially interfere
with or delay the Transactions. To Acquiror's
knowledge, Acquiror has not violated, and is not in
violation of, any such Licenses or any applicable Laws
of any governmental authorities, except where such
violations do not and, insofar as reasonably can be
foreseen, will not have a Material Adverse Effect on
Acquiror and its Subsidiaries taken as a whole or
materially interfere with or delay the Transactions.
5.11. TAXES.
(a) All material Tax Returns of Acquiror and
its Subsidiaries required to have been filed on or
before the date hereof have been filed with the
appropriate governmental agencies in all jurisdictions
in which such Tax Returns were required to have been
filed. All of such Tax Returns were true, correct and
complete in all material respects and all Taxes shown
to be due on such Tax Returns have been paid. All
material Taxes payable by or with respect to Acquiror
and its Subsidiaries but not reflected on any Tax
Return required to have been filed prior to the date of
Acquiror's Financial Statements have been fully paid or
adequate provision therefor has been made and reflected
on such balance sheet.
(b) Except as set forth on Schedule 5.11(b)
hereto, there is no claim or investigation involving an
amount greater than $1,000,000 pending or threatened
against Acquiror or any of its Subsidiaries for past
Taxes, and adequate provision for the claims or
investigations set forth on Schedule 5.11(b) has been
made as reflected on Acquiror's Financial Statements.
Except as set forth on Schedule 5.11(b), neither
Acquiror nor any of its Subsidiaries has waived or
extended any applicable statute of limitations relating
to the assessment of federal, state or local Taxes.
(c) Acquiror is not, and on the Closing Date
will not be, an investment company within the meaning
of Section 368(a)(2)(F)(iii) and (iv) of the Code.
5.12. LITIGATION. There is no suit, action,
proceeding or investigation pending against or, to the
knowledge of Acquiror, threatened against or affecting
Acquiror or any of its Subsidiaries or any of their
respective properties nor, to the knowledge of
Acquiror, is there any judgment, decree, inquiry, rule
or order outstanding against Acquiror or any of its
Subsidiaries that, individually or in the aggregate,
would reasonably be expected to have a Material Adverse
Effect on Acquiror and its Subsidiaries taken as a
whole, or materially interfere with or delay the
ability of Acquiror to consummate the Transactions.
5.13. BROKERS AND FINDERS. Neither Acquiror
nor any of its officers, directors, employees or
Affiliates has employed any investment banker, broker
or finder or incurred any liability for any brokerage
fees, commissions or finder's fees in connection with
31
the Transactions, except that Acquiror has employed
Credit Suisse First Boston Corporation as its financial
advisor in connection with the Transactions and for
whose fees and expenses Acquiror is responsible.
5.14. SOLVENCY. After giving effect to the
Merger, the New Company Debt and the other
Transactions, Acquiror will not be insolvent and will
not have unreasonably small capital with which to
engage in its businesses, and Acquiror will be able to
pay its debts as they come due.
5.15. FCC QUALIFICATION. Except as set forth
on Schedule 5.15, Acquiror is, for purposes of
obtaining the approval of the FCC under the
Communications Act, legally, financially and otherwise
qualified to acquire control of the Company and, after
due investigation, Acquiror is not aware of any facts
or circumstances relating to Acquiror or any of its
Subsidiaries that might disqualify Acquiror as a
transferee of the Licenses, or as owner and operator of
the Broadcasting Assets or otherwise might prevent or
delay the prompt approval of this Agreement, the
Transaction Agreements or the Transactions.
ARTICLE VI
OTHER AGREEMENTS
6.01. NO SOLICITATION.
(a) Neither the Company nor any of its
Subsidiaries, nor any of its or their officers,
directors, representatives or agents shall, directly or
indirectly, knowingly encourage, solicit, initiate or,
except as otherwise provided in this Section 6.01(a),
participate in any way in discussions or negotiations
with or knowingly provide any confidential information
to, any Person (other than Acquiror or any Affiliate or
associate of Acquiror and their respective directors,
officers, employees, representatives and agents)
concerning any merger, consolidation, business
combination, recapitalization, liquidation or
dissolution of the Company, PBC or any Broadcasting
Subsidiary, the sale of any substantial part of the
assets of PBC or any of the Broadcasting Subsidiaries
(other than in the ordinary course of business
consistent with past practice), the sale of any shares
of the capital stock of PBC or any of the Broadcasting
Subsidiaries, or the sale of shares representing a
controlling interest of the capital stock of the
Company, PBC or the Broadcasting Subsidiaries or any
similar transaction or series of transactions involving
Broadcasting; PROVIDED, HOWEVER, that nothing contained
in this Section 6.01(a) shall prohibit the Board of
Directors of the Company from (i) taking and disclosing
to the Company's stockholders a position with respect
32
to a tender offer for Company Stock by a third party
pursuant to Rules 14d-9 and 14e-2 promulgated under the
Exchange Act, (ii) making such disclosure to the
Company's stockholders as, in the judgment of the Board
of Directors of the Company, with the advice of outside
counsel, may be required under applicable Law, or (iii)
responding to any unsolicited third party proposal or
inquiry by advising the Person making such proposal or
inquiry of the terms of this Section 6.01(a).
Notwithstanding anything to the contrary set forth
herein, the Board of Directors of the Company may
respond to any Acquisition Proposal and may provide
information and afford access to, and negotiate and
hold discussions with, any Person or group in
connection therewith if the Board of Directors of the
Company determines, with the advice of outside counsel,
that it may be required to do so to comply with its
fiduciary duties. For purposes hereof, "Acquisition
Proposal" means any proposal, offer or any expression
of interest by any third party relating to a possible
transaction described in this Section 6.01(a) by any
Person, other than Acquiror. Subject to the fiduciary
duties of the Company's Board of Directors, in the
event that the Company, Newco or any of their
Subsidiaries or any of their respective officers,
directors, employees, representatives or agents
receives from any Person an Acquisition Proposal, the
Company shall promptly advise Acquiror of such
Acquisition Proposal and thereafter keep Acquiror
reasonably and promptly informed of all material facts
and circumstances relating to the Acquisition Proposal
and the Company's response thereto.
(b) Acquiror will promptly notify the
Company and provide it with pertinent information in
the event that Acquiror or any of its Subsidiaries, or
any of its or their officers, directors,
representatives or agents (i) solicits, initiates or
participates in any way in discussions or negotiations
with, or provides any confidential information to, any
Person or group (other than the Company or any
Affiliate or associate of the Company and their
respective directors, officers, employees,
representatives and agents) concerning any merger, sale
of substantially all of the assets, or the sale of
shares representing a controlling interest of the
capital stock of Acquiror, or any similar transaction
or series of transactions involving Acquiror, or (ii)
receives any proposal or inquiry in respect of any such
transaction or any request to provide any such
information or hold any such negotiations or
discussions.
6.02. CONDUCT OF BUSINESS OF THE COMPANY.
Except as contemplated by this Agreement, during the
period from the date hereof to the Closing Date, the
Company shall not, without the prior written consent of
Acquiror:
(a) amend its Certificate of Incorporation
or Bylaws;
(b) declare, set aside or pay any dividend
or other distribution (whether in cash, stock or
33
property or any combination thereof) in respect of
its capital stock, except for cash dividends
declared and paid consistent with the Company's
past practice (except that (i) any Subsidiary of
the Company other than PBC or a Broadcasting
Subsidiary may declare and pay dividends that are
payable to the Company or to any other Subsidiary
of the Company, (ii) PBC or any Broadcasting
Subsidiary may declare and pay dividends in cash
and cash equivalents that are payable to the
Company or to any other Subsidiary of the Company
and (iii) PBC may declare and pay a dividend of
all of the capital stock of Pulitzer Sports Inc.
to the Company) or redeem or acquire any of its
securities other than for cash;
(c) except pursuant to the terms of the
Company Class B Common Stock, the Company Option
Plans, or the Employee Stock Purchase Plan, split,
combine or reclassify any of its capital stock or
issue or authorize the issuance of any other
securities in respect of, in lieu of or in
substitution of any shares of its capital stock;
(d) except (x) to the extent that the
Company is acting in the ordinary course of
business or is otherwise released therefrom as
described in Section 2.02 or (y) any investment or
acquisition relating to the newspaper business or
any activity related thereto, (i) create, incur or
assume any Indebtedness, other than the New
Company Debt, not currently outstanding (including
obligations in respect of capital leases), (ii)
assume, guarantee, endorse or otherwise become
liable or responsible (whether directly,
contingently or otherwise) for the obligations of
any other Person or (iii) make any loans, advances
or capital contributions to, or investments in,
any Person other than Newco or another Subsidiary;
(e) except pursuant to the terms of the
Company Class B Common Stock, the Company Option
Plans, or the Employee Stock Purchase Plan, issue,
sell, deliver or agree or commit to issue, sell or
deliver (whether through the issuance or granting
of options, warrants, commitments, subscriptions,
rights to purchase or otherwise) any stock of any
class or any other securities or amend any of the
terms of any securities outstanding at the date
hereof;
(f) terminate, amend, modify or waive
compliance with any of the terms or conditions of
the Contribution Agreement directly or indirectly
respecting the Retained Assets or the Retained
Liabilities or affecting the rights or obligations
of the Company thereunder from and after the
Effective Time;
(g) subject to the fiduciary duties of the
Board of Directors, terminate, amend, modify or
34
waive any of the terms or conditions of any
confidentiality agreement in effect as of the date
hereof between the Company and any other
prospective acquiror of the Company or
Broadcasting, provided that the Company, PBC or
any Broadcasting Subsidiary may waive, and
Acquiror will not enforce after Closing, any
restriction on employment of any employee of the
Company, PBC or any Broadcasting Subsidiary who is
not employed by the Acquiror, PBC or any
Broadcasting Subsidiary at Closing or whose
employment with any of them is terminated after
Closing; or
(h) take, or agree in writing or otherwise
to take, any of the foregoing actions or any other
actions that would (i) make any representation or
warranty of the Company or Newco contained in this
Agreement untrue or incorrect, in any material
respect, as of the date when made or as of the
Closing Date, (ii) result in any of the conditions
to Closing in Article VII of this Agreement not
being satisfied, or (iii) be inconsistent, in any
material respect, with the terms of this Agreement
or the Transactions.
6.03. CONDUCT OF BUSINESS OF BROADCASTING.
(a) Except as contemplated by this
Agreement, during the period from the date hereof to
the Closing Date, the Company shall cause PBC and the
Broadcasting Subsidiaries to conduct their operations
in the ordinary course of business consistent with past
practices. Without limiting the generality of the
foregoing, except as otherwise contemplated by this
Agreement, without the prior written consent of
Acquiror, the Company shall not permit PBC or any of
the Broadcasting Subsidiaries to:
(i) amend its Certificate of
Incorporation or Bylaws;
(ii) issue, sell, deliver or agree or
commit to issue, sell or deliver (whether
through the issuance or granting of options,
warrants, commitments, subscriptions, rights
to purchase or otherwise) any stock of any
class or any other securities or amend any of
the terms of any securities outstanding on
the date hereof;
(iii) acquire, lease, sell or
dispose of any assets or any FCC Licenses
other than acquisitions, leases, sales or
dispositions of inventory and equipment in
the ordinary course of business consistent
with past practices or inventory items
expended, depleted or worn out in accordance
with Broadcasting's normal operating
procedures;
35
(iv) except for Permitted Exceptions,
subject to any Lien any of its properties or
assets, tangible or intangible;
(v) increase the amount of any cash
compensation payable to any employee if such
increase would cause the aggregate cash
compensation payable to all employees on an
annualized basis to exceed, by more than 5%
percent, the cash compensation payable by
Broadcasting to all employees under its 1998
budget as outlined in Schedule 6.03(a)(v)
(PROVIDED that this Section 6.03(a)(v) shall
not apply to the employment, bonus and/or
severance agreements made with the corporate
executives of PBC and the Station managers
(all of which agreements are listed on
Schedule 4.10(a) hereto));
(vi) declare, set aside or pay any
dividend or other distribution (whether in
cash, stock or property or any combination
thereof) in respect of its capital stock, or
redeem or otherwise acquire any of its
securities, except as provided in Sections
6.24 and 6.02(b);
(vii) fail to maintain the
Broadcasting Assets in the condition
specified in Section 4.08(a) hereof;
(viii) by any act or omission to act
within its reasonable knowledge and power,
surrender, modify, adversely affect or
forfeit any of the material Licenses;
(ix) enter into or amend any program
license or program contract for any Station
which will be in effect after the Effective
Time, or enter into or amend any other
contract or agreement which, in each case,
will be in effect after the Effective Time
and requiring payments to or by PBC or any of
the Broadcasting Subsidiaries of more than
$250,000;
(x) (i) create, incur or assume any
Indebtedness not currently outstanding
(including obligations in respect of capital
leases), (ii) except in the ordinary course
of business, assume, guarantee, endorse or
otherwise become liable or responsible
(whether directly, contingently or otherwise)
for the obligations of any other Person, or
(iii) except in the ordinary course of
business, make any loans, advances or capital
contributions to, or investments in, any
Person other than Newco or another
Subsidiary; or
(xi) take, or agree in writing or
otherwise to take, any of the foregoing
36
actions or any other action that would (i)
make any representation or warranty of the
Company or Newco contained in this Agreement
untrue or incorrect, in any material respect,
as of the date when made or as of the Closing
Date, (ii) result in any of the conditions to
Closing in Article VII of this Agreement not
being satisfied or (iii) be inconsistent, in
any material respect, with the terms of this
Agreement or the Transactions.
(b) The Company shall use its commercially
reasonable efforts to: (i) maintain the present
operations of the Stations; (ii) preserve intact the
business organization of the Stations; and (iii)
preserve for the Stations the existing relationships
with employees, suppliers, customers and their agencies
and others having business with the Stations.
(c) Prior to the Effective Time, control of
the television and radio operations of PBC and the
Broadcasting Subsidiaries shall remain with the
Company. The Company and Acquiror acknowledge and
agree that neither Acquiror nor any of its employees,
agents or representatives, directly or indirectly,
shall, or have any right to, control, direct or
otherwise supervise, or attempt to control, direct or
otherwise supervise, such broadcast operations; it
being understood that at all times prior to the
Effective Time, supervision of all programs, equipment
and operations shall remain within the complete control
and discretion of the Company.
(d) The Company shall use its commercially
reasonable efforts to cause Broadcasting to maintain in
full force and effect the Station Network Affiliation
Agreements set forth on Schedule 4.07 hereto.
6.04. CONDUCT OF BUSINESS OF ACQUIROR. Except
as contemplated by this Agreement, during the period
from the date hereof to the Closing Date, Acquiror will
not, without the prior written consent of the Company;
(a) amend its certificate of incorporation
(other than to provide for the issuance of
preferred stock and to increase its authorized
shares of common stock or any series thereof);
(b) issue, sell, deliver or agree or commit
to issue, sell or deliver (whether through the
issuance or granting of options, warrants,
commitments, subscriptions, rights to purchase or
otherwise) any stock of any class; PROVIDED,
HOWEVER, that Acquiror may (i) issue shares of its
capital stock upon the exercise of options
37
outstanding on the date hereof, (ii) grant options
to purchase shares of its capital stock (and issue
any shares of capital stock upon exercise of such
options) pursuant to employee compensation
arrangements consistent with past practices,
(iii) issue shares of common stock upon conversion
of any shares of capital stock, and (iv) issue
shares of capital stock at or above fair market
value;
(c) declare, set aside or pay any dividend
or other distribution (whether in cash, stock or
property or any combination thereof) in respect of
its capital stock, except for dividends declared
and paid consistent with Acquiror's past practice;
(d) (i) enter into a transaction or (ii)
except for Indebtedness incurred in connection
with Section 2.01(b), create, incur or assume any
Indebtedness not currently outstanding (including
obligations in respect of capital leases but
excluding indebtedness incurred in refinancing,
replacement or substitution of indebtedness that
is currently outstanding) that in the case of
clauses (i) or (ii) would result in a down-grading
below investment grade in the rating of any rated
debt securities of the Company by both Standard &
Poors Corporation and Xxxxx'x Investors Service;
(e) sell, lease or dispose of any assets
material to Acquiror and its Subsidiaries taken as
a whole, other than (i) sales of inventory in the
ordinary course of business consistent with past
practices and (ii) in connection with or in
exchange for acquisitions of assets related to the
business of Acquiror;
(f) make any material change in the lines of
business in which it participates or is engaged;
or
(g) take, or agree in writing or otherwise
to take, any of the foregoing actions or any other
actions that would (i) make any representation or
warranty of Acquiror contained in this Agreement
untrue or incorrect, in any material respect, as
of the date when made or as of the Closing Date,
(ii) result in any of the conditions to Closing in
Article VII of this Agreement not being satisfied
in any material respect or (iii) be inconsistent,
in any material respect, with the terms of this
Agreement or the Transactions.
6.05. ACCESS TO INFORMATION. Between the date
of this Agreement and the Effective Time, (a) the
Company and Acquiror will each (i) give the other party
and its authorized representatives reasonable access,
during regular business hours upon reasonable notice,
to all offices and other facilities of such party and
its Subsidiaries and to all books and records of such
38
party and its Subsidiaries, (ii) permit the other party
to make such reasonable inspections of the offices,
facilities, books and records described in clause (i)
as it may require, (iii) cause its officers and those
of its Subsidiaries to furnish the other party with
such financial and operating data and other information
with respect to the business and properties of the
Company and Broadcasting, or Acquiror and its
Subsidiaries, as the case may be, as the other party
may, from time to time, reasonably request, and (iv)
permit Acquiror to conduct, at its expense,
environmental tests and assessments and (b) Acquiror
will keep the Company informed, and the Company will
keep Acquiror informed, in each case as to material
developments affecting the other party and its
Subsidiaries. All such access and information obtained
by Acquiror and its authorized representatives shall be
subject to the terms and conditions of the letter
agreement between the Company and Acquiror dated in
February 1998 (the "Confidentiality Agreement"). All
such information obtained by the Company and its
authorized representatives, and, after the Closing, all
other information regarding the Broadcasting Assets, or
its business and operations which Newco or any of its
Subsidiaries possesses or has access to (including
pursuant to Section 6.17), shall be treated in
accordance with the terms of the Confidentiality
Agreement as if such agreement obligated such Persons
to hold such information confidential on the same basis
as set forth therein MUTATIS MUTANDIS and Acquiror and
its Subsidiaries were beneficiaries of such
obligations.
6.06. SEC FILINGS.
(a) The Company, Newco and Acquiror shall
prepare jointly and, as soon as practicable after the
date of this Agreement, file with the SEC a joint proxy
statement/registration statement (the "Preliminary
Joint Proxy Statement/Prospectus") comprising
preliminary proxy materials of the Company and Acquiror
under the Exchange Act with respect to the Merger and
the Transactions and Registration Statement on Form S-4
containing a preliminary prospectus of Acquiror under
the Securities Act with respect to the Merger Stock,
and will thereafter use their respective reasonable
best efforts to respond to any comments of the SEC with
respect thereto and to cause a definitive joint proxy
statement/prospectus (including all supplements and
amendments thereto, the "Joint Proxy
Statement/Prospectus") and proxy to be mailed to the
Company's and Acquiror's stockholders as promptly as
practicable.
(b) As soon as practicable after the date
hereof, the Company, Newco and Acquiror shall prepare
and file any other filings required to be filed by each
under the Exchange Act, any other federal or state
laws, or the rules and regulations of the NYSE or
NASDAQ, relating to the Merger, the Contribution and
the Distribution, and the other Transactions, including
in the case of Newco, an Information Statement on Form
39
10 under the Exchange Act with respect to the Newco
Common Stock (collectively, the "Other Filings") and
will use their respective reasonable best efforts to
respond to any comments, if any, of the SEC or any
other appropriate government official with respect
thereto.
(c) The Company, Newco and Acquiror shall
cooperate with each other and provide to each other all
information necessary in order to prepare the
Preliminary Joint Proxy Statement/Prospectus, the Joint
Proxy Statement/Prospectus and the Other Filings
(collectively, the "SEC Filings") and shall provide
promptly to the other party any information that such
party may obtain that could necessitate amending any
such document.
(d) The Company and Acquiror will notify the
other party promptly of the receipt of any comments
from the SEC or its staff or any other government
official and of any requests by the SEC or its staff or
any other government official for amendments and/or
supplements to any of the SEC Filings or for additional
information and will supply the other party with copies
of all correspondence between the Company or any of its
representatives, Newco or any of its representatives,
or Acquiror or any of its representatives, as the case
may be, on the one hand, and the SEC or its staff or
any other government official, on the other hand, with
respect thereto. If at any time prior to the Effective
Time, any event shall occur that should be set forth in
an amendment of, or a supplement to, any of the SEC
Filings, the Company, Newco and Acquiror agree promptly
to prepare and file such amendment or supplement and to
distribute such amendment or supplement as required by
applicable law, including, in the case of an amendment
or supplement to the Joint Proxy Statement/Prospectus,
mailing such supplement or amendment to the Company's
and Acquiror's stockholders.
(e) The information provided and to be
provided by the Company, Newco and Acquiror for use in
SEC Filings shall at all times prior to the Effective
Time be true and correct in all material respects and
shall not omit to state any material fact required to
be stated therein or necessary in order to make such
information in light of the circumstances under which
they were made, not false or misleading, and the
Company, Newco and Acquiror each agree to correct any
such information provided by it for use in the SEC
Filings that shall have become false or misleading.
Each SEC Filing, when filed with the SEC or any
government official, shall comply in all material
respects with all applicable requirements of law.
(f) Acquiror shall indemnify, defend and
hold harmless the Company and Newco, each of their
officers and directors and each other Person, if any,
who controls any of the foregoing within the meaning of
the Exchange Act, against any losses, claims, damages
or liabilities, joint or several, to which any of the
40
foregoing may become subject under the Securities Act,
the Exchange Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon (i) an untrue
statement or alleged untrue statement of a material
fact contained in any SEC Filing or (ii) the omission
or alleged omission to state a material fact required
to be stated therein or necessary to make the
statements therein, in light of the circumstances under
which they were made, not misleading, PROVIDED that
Acquiror was responsible for such misstatement or
omission, and, upon request from time to time, Acquiror
shall reimburse the Company, Newco and each such
officer, director and controlling Person for any legal
or any other expenses reasonably incurred by any of
them in connection with investigating or defending any
such loss, claim, damage, liability or action or
enforcing this indemnity.
(g) Newco (and, if this Agreement is
terminated prior to the consummation of the Merger, the
Company, jointly and severally with Newco) shall
indemnify, defend and hold harmless Acquiror, each of
its officers and directors and each other Person, if
any, who controls any of the foregoing within the
meaning of the Exchange Act, against any losses,
claims, damages or liabilities, joint or several, to
which any of the foregoing may become subject under the
Securities Act, the Exchange Act or otherwise, insofar
as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based
upon (i) an untrue statement or alleged untrue
statement of a material fact contained in any SEC
Filing or (ii) the omission or alleged omission to
state a material fact required to be stated therein or
necessary to make the statements therein, in light of
the circumstances under which they were made, not
misleading, PROVIDED that the Company or Newco was
responsible for such misstatement or omission, and,
upon request from time to time, Newco (and, if this
Agreement is terminated prior to the consummation of
the Merger, the Company) shall reimburse Acquiror and
each such officer, director and controlling Person for
any legal or any other expenses reasonably incurred by
any of them in connection with investigating or
defending any such loss, claim, damage, liability or
action or enforcing this indemnity.
(h) For the purpose of this Section 6.06,
the term "Indemnifying Party" shall mean the party
having an obligation hereunder to indemnify the other
party pursuant to this Section 6.06, and the term
"Indemnified Party" shall mean the party having the
right to be indemnified pursuant to this Section 6.06.
Whenever any claim shall arise for indemnification
under this Section 6.06, the Indemnified Party shall
promptly notify the Indemnifying Party in writing of
such claim and, when known, the facts constituting the
basis for such claim (in reasonable detail). Failure
by the Indemnified Party to so notify the Indemnifying
Party shall not relieve the Indemnifying Party of any
liability hereunder except to the extent that such
failure prejudices the Indemnifying Party.
41
(i) After such notice, if the Indemnifying
Party undertakes to defend any such claim, then the
Indemnifying Party shall be entitled, if it so elects,
to take control of the defense and investigation with
respect to such claim and to employ and engage
attorneys of its own choice and reasonably acceptable
to the Indemnified Party to handle and defend the same,
at the Indemnifying Party's cost, risk and expense,
upon written notice to the Indemnified Party of such
election, which notice acknowledges the Indemnifying
Party's obligation to provide indemnification
hereunder. The Indemnifying Party shall not settle any
third-party claim that is the subject of
indemnification without the prior written consent of
the Indemnified Party, which consent shall not be
unreasonably withheld; PROVIDED, HOWEVER, that the
Indemnifying Party may settle a claim without the
Indemnified Party's consent if such settlement (i)
makes no admission or acknowledgment of liability or
culpability with respect to the Indemnified Party, (ii)
includes a complete release of the Indemnified Party
and (iii) does not require the Indemnified Party to
make any payment or forego or take any action or
otherwise materially adversely affect the Indemnified
Party. The Indemnified Party shall cooperate in all
reasonable respects with the Indemnifying Party and its
attorneys in the investigation, trial and defense of
any lawsuit or action with respect to such claim and
any appeal arising therefrom (including the filing in
the Indemnified Party's name of appropriate cross
claims and counterclaims). The Indemnified Party may,
at its own cost, participate in any investigation,
trial and defense of such lawsuit or action controlled
by the Indemnifying Party and any appeal arising
therefrom. If, after receipt of a notice of claim
pursuant to Section 6.06(h), the Indemnifying Party
does not undertake to defend any such claim, the
Indemnified Party may, but shall have no obligation to,
contest any lawsuit or action with respect to such
claim and the Indemnifying Party shall be bound by the
result obtained with respect thereto by the Indemnified
Party (including the settlement thereof without the
consent of the Indemnifying Party). If there are one
or more legal defenses available to the Indemnified
Party that conflict with those available to the
Indemnifying Party or there is otherwise an actual or
potential conflict of interest, the Indemnified Party
shall have the right, at the expense of the
Indemnifying Party, to assume the defense of the
lawsuit or action; PROVIDED, HOWEVER, that the
Indemnified Party may not settle such lawsuit or action
without the consent of the Indemnifying Party, which
consent shall not be unreasonably withheld.
(j) If the indemnification provided for in
this Section 6.06 shall for any reason be unavailable
to the Indemnified Party in respect of any loss, claim,
damage or liability, or action referred to herein, then
the Indemnifying Party shall, in lieu of indemnifying
the Indemnified Party, contribute to the amount paid or
42
payable by the Indemnified Party as a result of such
loss, claim, damage or liability, or action in respect
thereof, in such proportion as is appropriate to
reflect the relative fault of the Indemnifying Party on
the one hand and the Indemnified Party on the other
hand with respect to the statements or omissions that
resulted in such loss, claim, damage or liability, or
action in respect thereof, as well as any other
relevant equitable considerations. The relative fault
shall be determined by reference to whether the untrue
or alleged untrue statement or omission of a material
fact related to information supplied by the
Indemnifying Party on the one hand or the Indemnified
Party on the other hand, the intent of the parties and
their relative knowledge, access to information and
opportunity to correct or prevent such statement or
omission. The amount paid or payable by the
Indemnified Party as a result of the loss, claim,
damage or liability, or action in respect thereof,
referred to above in this paragraph shall be deemed to
include, for purposes of this paragraph, any legal or
other expenses reasonably incurred by the Indemnified
Party in connection with investigating or defending any
such action or claim or enforcing this provision. No
person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation.
6.07. REASONABLE BEST EFFORTS. Subject to the
other terms and conditions hereof, each of the parties
hereto agrees to use its reasonable best efforts to
take, or cause to be taken, all appropriate action, and
to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and
regulations to consummate and make effective the
Transactions contemplated by this Agreement in the most
expeditious manner practicable, including the
satisfaction of all conditions to the Merger and the
other Transactions and seeking to remove promptly any
injunction or other legal barrier that may prevent or
delay such consummation. Each of the parties shall
promptly notify the other whenever a material consent
is obtained and shall keep the other informed as to the
progress in obtaining such material consents.
6.08. PUBLIC ANNOUNCEMENTS. Except as
otherwise may be required by law, no party hereto shall
make any public announcements or otherwise communicate
with any news media with respect to this Agreement or
any of the Transactions without such prior consultation
with the other parties as to the timing and content of
any such announcement as may be reasonable under the
circumstances; PROVIDED, HOWEVER, that nothing
contained herein shall prevent any party from promptly
making all filings with governmental authorities as
may, in its judgment, be required or advisable in
connection with the execution and delivery of this
Agreement, the Transaction Agreements or the
consummation of the Transactions.
43
6.09. TAX MATTERS.
(a) INDEMNIFICATION OBLIGATIONS.
(i) NEWCO'S INDEMNIFICATION
OBLIGATIONS. Newco shall be liable for, shall pay
and shall indemnify and hold the Surviving
Corporation and its Subsidiaries harmless, on an
After-Tax Basis, against (A) subject to Section
6.09(a)(ii)(D), any Tax of the Company or any
Subsidiary of the Company attributable to any Pre-
Closing Tax Period, including, without limitation,
any Spin-Off Tax, but not including any Tax
assessed against the Company as a result of the
Merger not qualifying as a reorganization under
Section 368(a)(1)(A) of the Code by reason of any
action or inaction on the part of Acquiror
subsequent to the Effective Time, (B) any Tax of
Newco or any Subsidiary of Newco, whether
attributable to a Pre-Closing Tax Period or Post-
Closing Tax Period, and (C) any Transfer Taxes
which may be imposed or assessed as a result of
the Contribution and the Distribution.
(ii) ACQUIROR'S INDEMNIFICATION
OBLIGATIONS. Acquiror and the Surviving
Corporation shall be liable for, shall pay and
shall indemnify and hold Newco and its
Subsidiaries harmless, on an After-Tax Basis,
against (A) any Tax of Acquiror or any Subsidiary
of Acquiror (other than the Company or any
Subsidiary of the Company) attributable to any
Pre-Closing Tax Period, (B) any Tax of Acquiror,
any Subsidiary of Acquiror, the Surviving
Corporation, Broadcasting or any Subsidiary of the
Surviving Corporation attributable to any Post-
Closing Tax Period, (C) any Transfer Tax imposed
or assessed as a result of the Merger, and (D) any
Taxes (including, for purposes of this Section
6.09(a)(ii)(D), any income Taxes for which any
stockholders of the Company immediately prior to
the Effective Time are liable as a result of the
Transactions) arising primarily as a result of a
breach by Acquiror of any of the covenants set
forth in Section 6.09(i)(ii) hereof (provided that
actions or omissions by Newco do not materially
contribute to the incurrence of such Taxes).
(iii) PRORATION OF TAXES. To the
extent required or permitted by applicable Law or
administrative practice, the then-current Tax
period of the Company and any of the Broadcasting
Subsidiaries shall terminate as of the close of
the Closing Date. Any Taxes imposed with respect
to any Straddle Period shall be allocated between
the Pre-Closing Tax Period and the Post-Closing
Tax Period, based on the permanent books and
records maintained by the Company, as follows:
44
(A) in the case of any Taxes
based upon or related to income, as if
the Pre-Closing Tax Period ended on the
Closing Date and the Post-Closing Tax
Period began on the date immediately
following the Closing Date; and
(B) in the case of any Taxes
other than Taxes based upon or related
to income, the amount of Taxes
attributable to the Pre-Closing Tax
Period shall be calculated by reference
to the number of days in such period
ending on the Closing Date as compared
to the total number of days in the
Straddle Period, and the amount of Taxes
attributable to the Post-Closing Tax
Period shall be calculated by reference
to the number of days in such period
beginning after the Closing Date as
compared to the total number of days in
the Straddle Period.
(iv) REFUNDS AND CREDITS OF TAXES. Each
party shall be entitled to all refunds or credits
of any Tax, including, without limitation, in the
case of Newco, any refunds attributable to the
Spin-Off Tax, for which such party is liable
hereunder. Any party receiving a refund or credit
(and interest, if any, with respect thereto) that
is for the account of another party hereunder
shall promptly and, in any event, no later than
five Business Days following its receipt, pay to
the other party such refund or credit (and any
interest with respect thereto).
(v) CONTROL OF TAX PROCEEDINGS.
(A) Newco shall be designated as
the agent for the Company Group pursuant to
Section 1.1502-77(d) of the Treasury
Regulations, subject to the approval of the
District Director of the IRS, and any similar
provisions of applicable state income or
franchise Tax laws for any Tax period
relating to Taxes for which Newco is
obligated to indemnify the Surviving
Corporation and its Subsidiaries under
Section 6.09(a)(i). Whenever any Taxing
authority asserts a claim, makes an
assessment or otherwise disputes the amount
of Taxes for which Newco is obligated to
indemnify the Surviving Corporation and its
Subsidiaries under Section 6.09(a)(i), in
whole or in part, under this Agreement,
including, without limitation, any Taxes of
the Company or any Subsidiary of the Company
attributable to any Pre-Closing Tax Period
(except as otherwise provided in Section
6.09(a)(i)) and any Spin-Off Tax, Acquiror
shall promptly inform Newco, and Newco, at
its cost and expense, shall have the right to
control any resulting proceedings and to
determine whether and when to settle any such
claim, assessment or dispute, PROVIDED,
HOWEVER, that Newco shall not, without
Acquiror's consent, which consent shall not
45
be unreasonably withheld, take any action or
omit to take any action relating to a
Pre-Closing Tax Period which would result in
an increase of more than $1,000,000 in the
Tax liability of the Surviving Corporation or
any Subsidiary of the Surviving Corporation
for all Post-Closing Tax Periods, computed on
an After-Tax Basis.
(B) If any Taxing authority
notifies Newco of a claim, makes an
assessment or otherwise disputes the amount
of Taxes for which Acquiror is obligated to
indemnify Newco and its Subsidiaries under
Section 6.09(a)(ii), in whole or in part,
under this Agreement, Newco shall promptly
inform Acquiror, and Acquiror, at its cost
and expense, shall have the right to control
any resulting proceedings and to determine
whether and when to settle any such claim,
assessment or dispute, provided, however,
that Acquiror shall not take any action or
omit to take any action relating to a Post-
Closing Tax Period which would result in an
increase of more than $1,000,000 in the Tax
liability of the Company or any Subsidiary of
the Company for all Pre-Closing Tax Periods,
computed on an After-Tax Basis.
(C) Notwithstanding the foregoing
provisions of this Section 6.09(a)(v), in the
event any Taxing authority asserts a claim,
makes an assessment or otherwise disputes the
amount of Taxes attributable to any Straddle
Period for which both Newco and Acquiror may
be liable under this Agreement, Newco and
Acquiror, at their respective cost and
expense, shall jointly participate in any
resulting proceedings and mutually determine
whether and when to settle any such claim,
assessment or dispute, PROVIDED, HOWEVER,
that Newco or Acquiror, at its cost and
expense, may, by written notice to the other,
elect to control the defense of such claim,
assessment or dispute, including the decision
whether and when to settle such claim,
assessment or dispute, but in the event Newco
or Acquiror so elects, the other shall no
longer be obligated to indemnify Acquiror or
Newco, as the case may be, and its
Subsidiaries for any portion of the Taxes
attributable to such Straddle Period which
are in dispute.
(b) TAX RETURNS.
(i) Newco shall be responsible for the
preparation and timely filing of all Company
Consolidated Income Tax Returns for any Pre-
Closing Tax Period, including Company Consolidated
46
Income Tax Returns for such period that are due
after the Closing Date, all Tax Returns for any
Tax period relating to the Newspaper Subsidiaries,
and all Broadcasting Tax Returns required to be
filed on or before the Closing Date. Within
twenty (20) days following the filing of Company
Consolidated Income Tax Returns for the Tax period
ended on the Closing Date, Newco shall furnish
Acquiror with (i) copies of such Tax Returns, and
(ii) information concerning (A) the Tax basis of
the assets of Broadcasting as of the Closing Date;
(B) the earnings and profits of the Company and
Broadcasting as of the Closing Date; (C) the
Company's Tax basis in the stock of Broadcasting
and PBC's Tax basis in the stock of each of its
Subsidiaries as of the Closing Date; (D) the net
operating loss carryover, investment tax credit
carryover, alternative minimum tax carryover and
the capital loss carryover, if any, available to
the Surviving Corporation and its Subsidiaries for
a Post-Closing Tax Period; and (E) all elections
with respect to Company Consolidated Income Taxes
in effect for Broadcasting as of the Closing Date.
Other than elections in the ordinary course of
business consistent with past practice or
elections which will not have the effect of
increasing the Taxes of Acquiror in a Post-Closing
Tax Period, no Tax elections shall be made with
respect to any of the Tax Returns for which Newco
is responsible under this Section 6.09(b)(i) on
behalf of the Company or any Broadcasting
Subsidiary without the consent of Acquiror.
(ii) Acquiror shall be responsible for
the preparation and timely filing of all Tax
Returns relating to the business or assets of the
Company or Broadcasting required to be filed after
the Closing Date (other than the Tax Returns to be
prepared and filed by Newco pursuant to Section
6.09(b)(i)), PROVIDED, HOWEVER, that all such Tax
Returns relating to any Pre-Closing Tax Period or
Straddle Period shall be prepared in a manner
consistent with the past practice of the Company
in preparing such Tax Returns. Acquiror shall
provide Newco with a draft of any such Tax Return
relating to any Pre-Closing Tax Period or Straddle
Period at least thirty (30) days prior to the due
date for filing such Tax Return (taking into
account any applicable extensions), and Newco may
provide Acquiror with written comments on such
draft Tax Return within ten (10) days after its
receipt of such draft. Subject to Section
6.09(e), Acquiror and Newco shall attempt to
resolve any disputes regarding such draft Tax
Return in good faith at least ten (10) days prior
to the due date for filing such Tax Return.
(c) COOPERATION. Acquiror and Newco shall
cooperate with each other in a timely manner in the
preparation and filing of any Tax Returns described in
47
Section 6.09(b), payment of any Taxes in accordance
with this Agreement, and the conduct of any audit or
other proceeding relating thereto. Each party shall
execute and deliver such powers of attorney and make
available such other documents as are necessary to
carry out the intent of this Section 6.09. Each party
agrees to notify the other party of any audit
adjustments that do not result in Tax liability but can
reasonably be expected to affect Tax Returns of the
other party.
(d) RETENTION OF RECORDS. Acquiror and
Newco shall each, to the extent potentially relevant to
the other party, (1) retain records, documents,
accounting data and other information (including
computer data) necessary for the preparation and filing
of all Tax Returns or the audit of such Tax Returns,
and (2) give to the other reasonable access to such
records, documents, accounting data, Tax Returns and
related books and records and other information
(including computer data) and to its personnel
(insuring their cooperation) and premises, for purposes
of the review or audit of such Tax Returns to the
extent relevant to an obligation or liability of a
party under this Agreement.
(e) PAYMENTS; DISPUTES. Except as otherwise
provided in this Section 6.09, any amounts owed by any
party ("Indemnitor") to any other party ("Indemnitee")
under this Section 6.09 shall be paid within ten days
of notice from the Indemnitee, PROVIDED, HOWEVER, that
if such amounts are being contested before a Taxing
authority in good faith, the Indemnitor shall not be
required to make payment until it is determined finally
by such Taxing authority, unless the Indemnitor has
authorized the Indemnitee to make payment to such
Taxing Authority. Unless otherwise required under
applicable Law, the Company, Newco and Acquiror agree
to treat any and all indemnity payments made pursuant
to this Agreement as having been made immediately prior
to the Distribution and as a dividend from or a capital
contribution to Newco, as the case may be, for federal,
state and local Tax purposes. If Acquiror and Newco
cannot agree on any calculation or determination of any
of their respective liabilities or any other matter
under this Section 6.09, such calculation or
determination shall be made by an independent public
accounting firm reasonably acceptable to both such
parties. The decision of such firm shall be final and
binding. The fees and expenses incurred in connection
with such calculation or determination shall be borne
equally by the disputing parties.
(f) TERMINATION OF TAX SHARING AGREEMENTS.
Except as specifically provided in this Section 6.09,
any Tax Sharing Agreement or policy of the Company
Group shall be terminated at the Effective Time, and
the Company and Broadcasting shall have no obligation
under such agreements after the Effective Time.
(g) SURVIVAL. Notwithstanding anything in
this Agreement to the contrary, the provisions of this
48
Section 6.09 shall survive for the full period of all
statutes of limitations (giving effect to any waiver or
extension thereof) applicable to Taxes and Tax Returns
subject to this Section 6.09.
(h) DEFINITIONS.
(i) "After-Tax Basis" means, with
respect to any payment, an amount calculated by
taking into account the Tax consequences of the
receipt of such payment, as well as any Tax
benefit associated with the liability giving rise
to the payment, in each case calculated on a
present value basis using the Agreed Rate.
(ii) "Broadcasting Tax Return" means any
Tax Return of PBC or any of its Subsidiaries.
(iii) "Company Consolidated Income
Tax Returns" means any Tax Return of the Company
or any Subsidiary with respect to Company
Consolidated Income Taxes.
(iv) "Company Consolidated Income Taxes"
means the federal income Tax and all applicable
state or local income or franchise Taxes of the
Company Group.
(v) "Company Group" means the
affiliated group of corporations, within the
meaning of Section 1504(a) of the Code, of which
the Company is the common parent or any unitary,
combined or consolidated group of corporations for
state income Tax purposes in which the Company or
any Broadcasting Subsidiary is included.
(vi) "Pre-Closing Tax Period" means any
Tax period, or portion thereof, ending on or
before the close of business on the Closing Date.
(vii) "Post-Closing Tax Period"
means any Tax Period or portion thereof, beginning
after the close of business on the Closing Date.
(viii) "Spin-Off Tax" means any Tax
to which the Company or any Subsidiary of the
Company is subject as a result of the application
of Section 311(b), Section 355(c)(2), Section
355(e) or Section 361(c)(2) of the Code (or any
corresponding or similar provision of state or
local law) to the Distribution.
(ix) "Straddle Period" means any Tax
period which begins before and ends after the
Closing Date.
(x) "Tax" (including with correlative
meaning, the terms "Taxes" and "Taxable") means
49
any income, gross receipts, ad valorem, premium,
excise, value-added, sales, use, transfer,
franchise, license, severance, stamp, occupation,
service, lease, withholding, employment, payroll
premium, property or windfall profits tax,
alternative or add-on-minimum tax, or other tax,
fee or assessment, and any payment required to be
made to any state abandoned property administrator
or other public official pursuant to an abandoned
property, escheat or similar law, together with
any interest and any penalty, addition to tax or
additional amount imposed by any Taxing authority
responsible for the imposition of any such Tax or
payment.
(xi) "Tax Return" means any return,
report, statement, information statement, refund
claim and the like, including any amendment
thereto, required to be filed with any Taxing
authority with respect to Taxes.
(xii) "Tax Sharing Agreement" means
any Tax sharing agreement or arrangement (whether
or not written) binding on a Person, and any
agreement or arrangement (including any
arrangement required or permitted by law) which
(i) requires a Person to make a payment to or for
the account of any other Person, (ii) requires or
permits the transfer or assignment of income,
revenues, receipts or gains to a Person from any
other Person, or (iii) otherwise requires a Person
to indemnify any other Person in respect of Taxes.
(xiii) "Transfer Tax" means any
excise, sales, use, transfer, documentary, filing,
recordation or other similar tax or fee, together
with any interest, additions or penalties with
respect thereto and any interest in respect of
such additions or penalties.
(i) ADDITIONAL COVENANTS.
(i) Each of the Company, Acquiror and
their respective Affiliates shall exercise their
best efforts to obtain and assist in obtaining the
advance letter ruling from the IRS contemplated by
Section 6.16 hereof. Without in any way limiting
the foregoing, each of the Company and Acquiror
agrees that it (and such of its Affiliates as are
reasonably required by the IRS) shall make such
representations as are reasonably required by the
IRS pursuant to Rev. Proc. 96-30, 1996-1 C.B. 696,
including, in particular, Sections 4.04 and 4.05
thereof.
(ii) Acquiror covenants that any
representations made by it or any of its
Affiliates to the IRS in connection with the IRS
ruling request and any information supplied by it
to the IRS in connection with the ruling request
50
will be true and accurate. In addition, for a
period of two years after the Closing Date:
(A) except for actions taken in
the ordinary course of business or as
otherwise required by applicable Law,
Acquiror shall not sell, transfer, distribute
or otherwise dispose of any of the operating
assets of Broadcasting or any shares of
capital stock of Broadcasting or a
Broadcasting Subsidiary, whether by merger or
otherwise, in a transaction or series of
transactions which would cause the
Transactions to fail to satisfy the
continuity of business enterprise
requirements of the Treasury Regulations; and
(B) Acquiror shall not adopt a
plan of liquidation or initiate and enter
into an agreement of merger or other
transaction pursuant to which the corporate
legal existence of Acquiror would terminate
or the outstanding stock of Acquiror would,
in a taxable transaction, be converted into
cash, other property or the stock or
securities of any other issuer.
Notwithstanding the foregoing, Acquiror may take any
actions described in clauses (A) and (B) above if it
first obtains either (i) a ruling from the IRS; or (ii)
an opinion reasonably satisfactory to Newco of
nationally recognized tax counsel that such actions
will not result in the Distribution or the Merger being
taxable to the Company's stockholders.
(j) PAYMENT OF SPIN-OFF TAX. The Company
shall pay the Spin-Off Tax to the appropriate
governmental authorities as and when such payment is
required to be made, including by making estimated Tax
payments which take into account its liability for the
Spin-Off Tax as and when such estimated Tax payments
are required to be made.
6.10. NOTIFICATION. Each party hereto shall,
in the event of, or promptly after obtaining knowledge
of the occurrence or threatened occurrence of, any fact
or circumstance that would cause or constitute a breach
of any of its representations and warranties set forth
herein, give notice thereof to the other parties and
shall use its reasonable best efforts to prevent or
promptly remedy such breach.
6.11. EMPLOYEE BENEFIT MATTERS.
(a) Except as otherwise provided herein, as
of the Effective Time, Newco will assume sponsorship of
and responsibility for the employer obligations under
the Company Employee Plans. From and after the
Effective Time, except with respect to previously
51
accrued and unpaid benefits, all Broadcasting Employees
will cease to be covered by any Company Employee Plan
that is assumed by Newco. Except as otherwise
specifically provided herein, neither Acquiror, the
Company, PBC nor any of their respective Affiliates,
shall retain or acquire any liability or obligation
under any Company Employee Plan; and Newco will defend
and indemnify Acquiror, the Surviving Corporation, PBC
and their respective Affiliates from and against all
Losses arising from or relating to any such liability
or obligation that is not so retained or acquired. The
indemnification arrangements set forth in this Section
6.11(a) shall be subject to the procedures set forth in
Section 2.04 of the Contribution Agreement. All
Broadcasting Employees who become employees of Acquiror
as of the Effective Time will thereupon become fully
vested in their accrued benefits under the Broadcasting
Pension Plans.
(b) All Broadcasting Employees who are
employed by the Company or PBC or a subsidiary of PBC
immediately prior to the Effective Time will remain or
become employees of PBC (or a Subsidiary of PBC) or
Surviving Corporation, as the case may be, immediately
after the Effective Time (the "Transferred Employees").
At the Effective Time, Acquiror will provide or cause
Transferred Employees (and, where applicable, their
eligible dependents) to be provided with compensation,
pension, retirement, welfare (including, without
limitation, group health, life insurance, disability,
severance and vacation benefits) and fringe benefits
(exclusive of any benefit or plan which provides for
any opportunity to acquire or invest in employer
equity) which, in the aggregate, are not less favorable
than the compensation, pension, welfare and fringe
benefits theretofore provided to such Transferred
Employees (and their dependents) under the Broadcasting
Employee Plans, PROVIDED HOWEVER that Acquiror shall
not be required to offer post-retirement benefits
except as provided in Section 6.11(f). Each
Transferred Employee's pre-Effective Time service with
the Company or its Affiliates will be treated as
service with Acquiror and its Affiliates for purposes
of determining such Transferred Employee's eligibility,
vesting and seniority (but expressly excluding service
for determining benefit accruals) under the Employee
Plans of Acquiror and its Affiliates, if such service
is otherwise creditable under such plans, from and
after the Effective Time.
(c) At or as soon as practicable after the
Effective Time, the account balances held for the
Transferred Employees under the Pulitzer Retirement
Savings Plan (the "Pulitzer Savings Plan") will be
transferred in cash (or such other form as may be
agreed upon by Newco and Acquiror) by the trustee of
the trust maintained under the Pulitzer Savings Plan to
52
the trustee of the trust maintained under an existing
or newly-established qualified defined contribution
plan sponsored by Acquiror or PBC (the "Transferee DC
Plan") in a plan-to-plan transfer of assets and
liabilities that satisfies the requirements of
applicable law, including Sections 411(d) and 414(l) of
the Code. After the Effective Time and until the
completion of the aforesaid plan-to-plan transfer of
assets and liabilities, Newco will cause the
fiduciaries of the Pulitzer Savings Plan to process
distributions that become payable to Transferred
Employees whose employment with Acquiror, PBC or any of
their Subsidiaries is terminated, and the amount to be
transferred in the plan-to-plan transfer will be
reduced accordingly. The Company, Newco and Acquiror
will make or cause to be made any plan amendments and
filings as may be required in connection with said
plan-to-plan transfer of assets and liabilities from
the Pulitzer Savings Plan to the Transferee DC Plan,
whether before or after the Effective Time. Newco and
Acquiror each may require, as a condition to the plan-
to-plan transfer from the Pulitzer Savings Plan to the
Transferee DC Plan, evidence reasonably satisfactory to
it or its counsel of the qualified status of the
Transferee DC Plan or the Pulitzer Savings Plan, as the
case may be, at the time of such transfer under Section
401(a) of the Code. Each of the parties will pay its
own expenses in connection with the plan-to-plan
transfer of assets and liabilities from the Pulitzer
Savings Plan to the Transferee DC Plan. Newco and
Acquiror will take such other and further actions as
may be required or reasonably requested by the other in
order to carry out the transfer of assets and
liabilities contemplated by this subsection without
undue delay.
(d) At or as soon as practicable after the
Effective Time, Newco shall cause the trustee of the
Pulitzer Publishing Company Pension Plan (the "Pulitzer
Pension Plan") to transfer to the trustee of the trust
maintained as part of an existing or newly-established
qualified defined benefit pension plan maintained or to
be maintained by Acquiror or PBC (the "Transferee DB
Plan") cash (or such other assets as may be agreed upon
by said trustees) and benefit liabilities accrued prior
to the Effective Time for and on behalf of the
Transferred Employees under the Pulitzer Pension Plan
in a plan-to-plan transfer of assets and liabilities
that satisfies the requirements of applicable law,
including the provisions of Sections 414(l) and 411(d)
of the Code. For these purposes, the amount of the
plan-to-plan asset transfer will be equal to the
current liability as defined in Section 412(l)(7) of
the Code (calculated as of the Effective Time
with appropriate interest adjustment to the date of
transfer at the rate assumed for calculating the
benefit liability) using the 1983 Group Annuity
Mortality Table and the PBGC annuity valuation rate in
effect at the Effective Time, provided that the amount
transferred shall in no event be less than the amount
required to be transferred pursuant to Section 414(l)
53
of the Code, and Section 4044 of ERISA as of the
Effective Time. The value of the assets and
liabilities to be transferred from the Pulitzer Pension
Plan to the Transferee DB Plan shall initially be
calculated and certified as correct as soon as
practicable following the Effective Time by an actuary
selected by Newco ("Newco's Actuary"). The Acquiror
will have the right to appoint is own actuary
("Acquiror's Actuary") for the purpose of verifying
whether the calculation made by Newco's Actuary is
correct. Such calculation shall be based upon the
method and assumptions specified for this purpose by
Section 414(l) of the Code and the regulations issued
thereunder. The calculations certified by Newco's
Actuary shall be final, conclusive and binding unless,
within thirty (30) days after the delivery of such
certification to Acquiror's Actuary, together with such
supporting information as Acquiror's Actuary may
reasonably request, Acquiror's Actuary shall notify
Newco's Actuary of its disagreement with same. If any
such disagreement is not resolved to the satisfaction
of Newco and Acquiror within thirty (30) days of
Newco's receipt of such notification, then either Newco
or Acquiror may elect to have the calculations
submitted for resolution to a third independent actuary
designated for this purpose by both Newco's Actuary and
Acquiror's Actuary, whose determination shall be made
within thirty (30) days and shall be conclusive and
binding on all Persons. After the Effective Time and
until the completion of the aforesaid plan-to-plan
transfer of assets and liabilities, Newco will cause
the fiduciaries of the Pulitzer Pension Plan to process
distributions that become payable to Transferred
Employees whose employment with Acquiror, PBC or any of
their Subsidiaries is terminated, and the value of
assets and liabilities to be transferred in the
plan-to-plan transfer will be reduced accordingly. The
Company, Newco and Acquiror will make or cause to be
made any plan amendments and filings (including,
without limitation, any filing required pursuant to
Section 4043(c) of ERISA) as may be required or
appropriate in connection with said plan-to-plan
transfer of assets and liabilities from the Pulitzer
Pension Plan to the Transferee DB Plan, whether before
or after the Effective Time. Newco and Acquiror each
may require, as a condition of the plan-to-plan
transfer from the Pulitzer Pension Plan to the
Transferee DB Plan, evidence reasonably satisfactory to
it or its counsel of the qualified status of the
Transferee DB Plan or the Pulitzer Pension Plan, as the
case may be, at the time of such transfer under Section
401(a) of the Code. Each of the parties will pay its
own expenses in connection with the plan-to-plan
transfer of assets and liabilities from the Pulitzer
Pension Plan to the Transferee DB Plan. Newco and
Acquiror will take such other and further actions as
may be required or reasonably requested by the other in
order to carry out the transfer of assets and
liabilities contemplated by this subsection without
undue delay.
(e) No provision of this Section 6.11 or
this Agreement shall create any third party beneficiary
or other rights in any employee or former employee
(including any beneficiary or dependent thereof) or any
bargaining unit representing any employee or former
employee of the Company, PBC or any of their
Subsidiaries in respect of continued employment (or
54
resumed employment) with Acquiror or any of its
Subsidiaries, and no provision of this Section 6.11 or
this Agreement shall create any such rights in any such
employee or former employee in respect of any benefits
that may be provided, directly or indirectly, under any
Employee Plan or any plan or arrangement which may be
established by Acquiror or any of its Subsidiaries.
(f) The following obligations and
Broadcasting Employee Plans will not be assumed by
Newco and will continue to be the sole responsibility
of the Company and PBC: (1) the satisfaction and timely
payment of any retirement or other benefits that have
been earned as of the Effective Time by Transferring
Employees (other than Xxx X. Xxxxxx) under the Pulitzer
Publishing Company Supplemental Executive Retirement
Plan (which benefits will become fully vested as of the
Effective Time) (the "SERP Liability"), PROVIDED,
HOWEVER, that Newco will pay to the Surviving
Corporation in cash, promptly after the Effective Time
on demand by Acquiror, as an adjustment to the
Contribution to be treated for tax purposes in
accordance with the treatment of indemnitee payments
under Section 6.09(e), in an amount equal to the excess
of the SERP Liability over the deferred tax asset
attributable to the SERP Liability calculated in
accordance with GAAP, consistently applied, (2) the
executive employment and participation agreements
listed on Schedule 6.11(f)(2) annexed hereto, (3) the
group health plan maintained by PBC and any other
Broadcasting Employee Plan listed on Schedule
6.11(f)(3) annexed hereto, which is sponsored and
maintained by PBC or any of its subsidiaries
exclusively for the benefit of any current or former
Broadcasting Employees (and their eligible dependents
and beneficiaries) (it being understood that the assets
to be contributed to Newco pursuant to Section 2.02
will not include employee balances, if any, under such
plans), and (4) post-retirement medical or other
welfare benefits which are or may become payable to any
Transferring Employee or any dependent or beneficiary
of a Transferring Employee pursuant to the Broadcasting
Employee Plan(s) listed on Schedule 6.11(f)(4) annexed
hereto.
(g) At or immediately prior to the Effective
Time, the Company will satisfy its retention and
transaction incentive obligations then payable under
any participation and employment agreements described
on Schedule 6.11(g). Notwithstanding anything to the
contrary contained herein, any retention or transaction
incentive, stock option cashout (described in Section
6.12 of this Agreement) or other compensatory amounts
payable by the Company to an individual who, for the
taxable year of the Company ending on the date the
Merger is consummated, is a "covered employee" of the
Company (within the meaning of Section 162(m)(3) of the
Code), will be paid at the Effective Time to the
trustee of a trust established for their benefit by
Newco (the "Newco Trust") if and to the extent that the
payment of those amounts, when added to all other
compensation paid or payable to that individual, would
55
not be deductible by the Company for such taxable year
by reason of the deduction limitation prescribed by
Section 162(m)(1) of the Code. Obligations covered by
amounts transferred to the Newco Trust will be deemed
to have been assumed by Newco for purposes of applying
the provisions of Section 6.11(a) of this Agreement,
and neither the Acquiror, the Surviving Corporation,
PBC nor any of their respective Affiliates will have
any further liability with respect to said covered
obligations. At the Effective Time, the Company will
have made all contributions theretofore required to be
made to any Broadcasting Employee Plan for the benefit
of Transferred Employees.
6.12. EMPLOYEE STOCK OPTIONS. At or
immediately prior to the Effective Time, the Company
will cause all options then outstanding under the
Company's 1986 and 1994 stock option plans (the
"Company Option Plans"), whether or not vested, to be
cashed out and terminated. The amount payable by the
Company in respect of the termination of an outstanding
Company stock option will be equal to the difference
between the exercise price of the option and the
closing price of the Company Common Stock on the
trading date ending immediately prior to the Effective
Time. The Company may prohibit the exercise of vested
options after a specified cutoff date prior to the
Effective Time in order to facilitate the orderly
liquidation and termination of the remaining vested and
nonvested outstanding options. Unless the Board
determines otherwise, the Company will suspend payroll
deductions and Company stock option grants under the
Employee Stock Purchase Plan as of or prior to October
1, 1998. All such Employee Stock Purchase Plan grants
will have been exercised or terminated before the
Effective Time.
6.13. MEETINGS OF STOCKHOLDERS. Subject to
the terms and conditions of this Agreement, each of the
Company and Acquiror shall take all action necessary,
in accordance with applicable law and its charter and
bylaws, to duly call, give notice of, convene and hold
a meeting of its stockholders to consider and vote upon
the adoption and approval of the Merger, this Agreement
and the Transactions (except the Company Charter
Amendment, in the case of Acquiror). The Company and
Acquiror shall coordinate and cooperate with respect to
the timing of their respective stockholder meetings and
shall endeavor to hold such meetings on the same day.
The stockholder vote required for the adoption and
approval of the Merger, this Agreement and the
Transactions (except the Company Charter Amendment, in
the case of Acquiror) shall be the vote required: (i)
in the case of the Company, by the DGCL and the
Company's Certificate of Incorporation; and (ii) in the
case of Acquiror, by the DGCL and Acquiror's
Certificate of Incorporation. The Boards of Directors
of the Company and Acquiror shall recommend that their
respective stockholders approve the Merger, this
Agreement and the related Transactions (except the
56
Company Charter Amendment, in the case of Acquiror) and
such recommendation shall be contained in the Joint
Proxy Statement/Prospectus. Nothing contained in the
preceding sentence shall prohibit the Company from
taking and disclosing to its stockholders a position
contemplated by Rule 14e-2(a) promulgated under the
Exchange Act or from making any disclosure to the
Company or the Company's stockholders if, in the good
faith judgment of the Board of Directors of the
Company, after consultation with outside counsel,
failure so to disclose would be inconsistent with its
duties to the Company or the Company's stockholders
under applicable law. Notwithstanding the preceding
sentence, neither the Company nor its Board of
Directors nor any committee thereof shall withdraw or
modify, or propose publicly to withdraw or modify its
position with respect to, this Agreement or the Merger
or, except as permitted by the preceding sentence,
approve or recommend, or propose publicly to approve or
recommend, an Acquisition Proposal.
6.14. REGULATORY AND OTHER AUTHORIZATIONS.
(a) The Company and Acquiror agree to use
their respective commercially reasonable efforts (i) to
obtain all Licenses and waivers of federal, state,
local and foreign regulatory bodies and officials (each
a "Governmental Authority") and non-governmental third
parties that may be or become necessary for performance
of their respective obligations pursuant this
Agreement, (ii) to lift or rescind any injunction or
restraining order or other order adversely affecting
the ability of the parties hereto to consummate the
Transactions contemplated hereby and (iii) to effect
all necessary registrations and filings including, but
not limited to, filings under the HSR Act and
submissions of information requested by any
Governmental Authority. The parties hereto further
covenant and agree, with respect to any threatened or
pending preliminary or permanent injunction or other
order, decree or ruling or statute, rule, regulation,
executive order or withheld waiver or approval that
would adversely affect the ability of the parties
hereto to consummate the Merger and the other
Transactions contemplated hereby, to respectively use
their commercially reasonable efforts (including, if
necessary, the measures described in subsection (b)
below) to prevent the entry, enactment or promulgation
thereof or to obtain such waiver or approval, as the
case may be.
(b) Without limiting the obligations of the
parties hereto under Section 6.14(a), Acquiror and the
Company agree to take or cause to be taken the
following actions: (i) provide promptly to
Governmental Authorities with regulatory jurisdiction
over (a) enforcement of any applicable antitrust laws
("Government Antitrust Entity") or (b) the laws, rules
or regulations of the FCC or otherwise relating to the
broadcast, newspaper, mass media or communications
industry ("Government Communications Entity," and
together with Government Antitrust Entity, a
"Government Regulatory Entity") information and
57
documents requested by any Government Regulatory
Entity, or necessary, proper or advisable to permit
consummation of the Transactions contemplated by this
Agreement; (ii) without in any way limiting the
provisions of Section 6.14(b)(i) above, (a) file any
Notification and Report Form and related material
required under the HSR Act as soon as practicable and
in any event not later than fifteen (15) business days
after the date hereof (which shall request early
termination of the waiting period imposed by the HSR
Act), and thereafter use its reasonable efforts to
certify as soon as practicable its substantial
compliance with any requests for additional information
or documentary material that may be made under the HSR
Act and (b) file the FCC Application as soon as
practicable and in any event not later than fifteen
(15) business days after the date hereof; (iii) the
proffer by Acquiror of its willingness to sell or
otherwise dispose of either WBAL or WGAL or any other
broadcast station, if such action is necessary or
reasonably advisable for the purpose of avoiding or
preventing any action by any Government Regulatory
Entity which would restrain, enjoin, withhold approval
or otherwise prevent consummation of the Transactions
contemplated by this Agreement; and (iv) Acquiror shall
take promptly, in the event that any permanent or
preliminary injunction or other order is entered or
becomes reasonably foreseeable to be entered in any
proceeding that would make consummation of the
Transactions contemplated hereby in accordance with the
terms of this Agreement unlawful or that would prevent
or delay consummation of the Transactions contemplated
hereby, any and all commercially reasonable steps
including the appeal thereof, the posting of a bond or
the taking of the steps contemplated by clause (iii) of
this subsection (b) necessary to vacate, modify,
suspend such injunction or order, or obtain such
approval so as to permit such consummation. Each of
the Company and Acquiror will provide to the other
copies of all correspondence between it (or its
advisors) and any Government Regulatory Entity relating
to this Agreement or any of the matters described in
this Section 6.14(b) other than statements or filings
under the HSR Act. Acquiror and Company agree that all
telephonic calls, meetings or hearings with a
Government Regulatory Entity regarding the Transactions
contemplated hereby or any of the matters described in
this Section 6.14(b) shall include representatives of
each of Acquiror and Company.
(c) Each party hereto shall promptly inform
the other of any material communication from any other
Government Regulatory Entity regarding any of the
Transactions contemplated hereby. If any party hereto
or any Affiliate thereof receives a request for
additional information or documentary material from any
such Government Regulatory Entity with respect to the
Transactions contemplated hereby, then such party shall
endeavor in good faith to make, or cause to be made, as
soon as reasonably practicable and after consultation
with the other party, an appropriate response in
compliance with such request. Acquiror shall advise
Company promptly in respect of any understandings,
undertakings or agreements (oral or written) that
58
Acquiror proposes to make or enter into with any other
Government Regulatory Entity in connection with the
Transactions contemplated hereby.
(d) Notwithstanding the generality of any
other provision of this Section 6.14, each of Acquiror
and the Company, to the extent applicable, further
agrees to file contemporaneously with the filing of the
FCC Application any requests for waivers of applicable
FCC rules or rules or regulations of other Governmental
Regulatory Entities as may be required, to
expeditiously prosecute such waiver requests and to
diligently submit any additional information or
amendments for which the FCC or any other relevant
Governmental Regulatory Entity may ask with respect to
such waiver requests. In furtherance of the foregoing,
Acquiror will agree to seek a temporary waiver (not
more than 6 months in duration) of the FCC's mass media
ownership rules (the "Temporary Waiver") to allow for
the disposition of the assets comprising either WBAL or
WGAL or any other broadcast station (the "Divestiture
Assets") to the extent that, under the FCC's mass media
ownership rules, the Divestiture Assets could not be
held in common control with any of the Acquiror
broadcasting assets following the Effective Time, and
(i) conditional waivers of the FCC's mass media
ownership rules (the "Conditional Waivers") to allow
for the common ownership of WESH-TV, Daytona Beach,
Florida, and WWWB-TV, Lakeland, Florida, and WLKY-TV,
Louisville, Kentucky, and WLWT-TV, Cincinnati, Ohio;
and (ii) waivers of the FCC's mass media ownership
rules to permit the common ownership of (A) WLKY-TV,
Louisville, Kentucky, and WLKY (AM), Louisville,
Kentucky, and (B) WXII (TV), Winston-Salem, North
Carolina, and WXII (AM), Eden, North Carolina.
Acquiror further covenants that, prior to the Effective
Time, it shall not acquire any new or increased
"attributable interest," as defined in the FCC rules,
in any media property ("Further Media Interest"), which
Further Media Interest could not be held in common
control with any Station by Acquiror following the
Effective Time (including by virtue of the FCC's
multiple ownership limits), without the prior written
consent of the Company. Notwithstanding anything to
the contrary contained in this Agreement, it shall not
be a condition to the Closing that any such waiver
shall have been obtained.
(e) If at Closing one or more applications
for renewal of any of the Company's FCC Licenses is
pending or any order of the FCC granting an application
for renewal of any of the Company's FCC Licenses has
not become a Final Order, then each party agrees to
abide by the procedures established in Stockholders of
CBS, Inc., FCC 95-469 (rel. Nov. 22, 1995) paragraphs 31-35,
for processing applications for assignment of licenses
during the pendency of an application for renewal of a
station license (or such other procedures as may be
established by the FCC). For purposes of this
provision, a "Final Order" is an order of the FCC
granting any such renewal application (i) that has not
been reversed, stayed, enjoined, set aside, annulled or
59
suspended; (ii) as to which, no timely request for a
stay, petition for reconsideration or appeal of sua
sponte action of the FCC with comparable effect is
pending; and (iii) the time for filing any such
request, petition or appeal or for the taking of any
such action sua sponte by the FCC has expired. The
parties further agree that the pendency of any such
renewal application or applications, or the fact that
the FCC grant of any renewal application shall not have
become a Final Order, shall not be a cause for delaying
the Closing. Notwithstanding anything in this
Agreement to the contrary, this Section shall survive
the Closing until any order issued by the FCC with
respect to any such renewal application becomes a Final
Order.
6.15. FURTHER ASSURANCES. Upon the terms and
subject to the conditions hereof, each of the parties
hereto shall execute such documents and other
instruments and take such further actions as may be
reasonably required or desirable to carry out the
provisions hereof and consummate the Transactions or,
at and after the Closing Date, to evidence the
consummation of the Transactions by this Agreement.
6.16. IRS RULING. The Company shall, as
promptly as practicable after the date hereof, prepare
and submit to the IRS a request for an advance letter
ruling from the IRS that the Contribution and
Distribution will qualify as a reorganization within
the meaning of Section 368(a)(1)(D) of the Code and
that the Company's stockholders will recognize no gain
or loss (and no amount will be included in the income
of the Company's stockholders) under Section 355(a) of
the Code as a result of the Distribution. Such request
shall be true and correct in all material respects, and
all facts material to the ruling shall be disclosed in
such request. The Company shall afford Acquiror with
reasonable opportunity to review and comment on the IRS
ruling request prior to its submission to the IRS. The
Company shall advise Acquiror's tax counsel of the
substance of all communications with the IRS relating
to the IRS ruling request, and provide Acquiror and its
tax counsel with copies of all written materials
submitted to the IRS and written communications
received from the IRS in connection with such ruling
request. If any written communication to the IRS is to
include information relating to Acquiror or any of its
Affiliates (other than public filings made with the
SEC) or representations of Acquiror, any of its
Affiliates or any of their respective officers,
directors or shareholders, such information shall be
delivered to Acquiror and its tax counsel for their
review and comment prior to submission, and the Company
shall make such reasonable changes and corrections to
such information or representations as are requested by
Acquiror.
6.17. RECORDS RETENTION.
(a) For a period of five years after the
Closing Date, Acquiror shall retain all of its books
60
and records relating to Broadcasting for periods prior
to the Closing Date and Newco shall have the right to
inspect and copy such books and records during normal
business hours, upon reasonable prior notice, in
connection with the preparation of financial
statements, reports and filings and for any other
reasonable purpose including its indemnification
obligations under this Agreement and the Contribution
Agreement.
(b) For a period of five years after the
Closing Date, Newco shall retain all of its books and
records relating to Newco and the Newspaper
Subsidiaries for periods prior to the Closing Date and
Acquiror shall have the right to inspect and copy such
books and records during normal business hours, upon
reasonable prior notice, in connection with the
preparation of financial statements, reports and
filings and for any other reasonable purpose including
its indemnification obligations under this Agreement
and the Contribution Agreement.
6.18. STOCK EXCHANGE LISTING. Newco shall
apply to the NYSE for the listing of the Newco Common
Stock and shall use its reasonable best efforts to
receive approval for the listing of such shares and, if
such listing is not available, then the NASDAQ.
Acquiror shall submit a supplemental listing
application to NASDAQ or the NYSE, as the case may be,
for the listing of the Merger Stock and shall use its
reasonable best efforts to receive approval for the
listing of such stock.
6.19. COMPANY NAMES.
(a) Acquiror acknowledges that the name
"Pulitzer," or any part thereof, whether alone or in
combination with one or more other words, are to the
extent owned by the Company or any of its Subsidiaries
an asset of the Company being transferred to Newco in
the Contribution. On the Closing Date, Acquiror shall
(i) cause PBC and the Broadcasting Subsidiaries to
change their names to delete any reference therein to
the aforesaid name, (ii) reasonably cooperate in
assisting Newco to change its name to Pulitzer Inc.,
and (iii) cease using the aforesaid name in connection
with the business operations of Broadcasting.
(b) Between the consummation of the
Contribution and the Closing, the Company, PBC and the
Broadcasting Subsidiaries shall have a non-exclusive
license to use the name "Pulitzer. "
6.20. OTHER AGREEMENTS. Contemporaneously
with the execution and delivery of this Agreement, the
parties thereto have executed and delivered the
following agreements: (i) a Registration Rights
Agreement in substantially the form set forth in
Exhibit D, (ii) the FCC Agreement in substantially the
form set forth in Exhibit E, (iii) a Board
Representation Agreement in substantially the form set
61
forth in Exhibit F, (iv) the Arizona Diamondbacks
agreement in substantially the form set forth in
Exhibit G, (v) the Acquiror Voting Agreement in
substantially the form of Exhibit H, and (vi) the
Pulitzer Voting Agreement in substantially the form of
Exhibit I. The Company, Newco and Acquiror shall fully
and timely perform all their respective obligations
under, and take all actions necessary to effectuate the
intent and purposes of, the foregoing agreements.
6.21. FORM 8-K; PROVISION OF FINANCIAL
STATEMENTS.
(a) As soon as practicable after the date
hereof, the Company will prepare and file a Current
Report on Form 8-K (the "Form 8-K") which will include
a description of the business of Broadcasting and
certain financial and other information with respect to
Broadcasting. The Company covenants that the Form 8-K
will not contain any untrue statement of a material
fact or omit to state a material fact required to be
stated therein or necessary in order to make the
statements therein, in light of the circumstances under
which they were made, not misleading.
(b) At the request of Acquiror, the Company
agrees to provide (or, if requested by Acquiror,
cooperate with Acquiror in the preparation of) as
promptly as practicable (but in any event within 45
days of the request) such financial statements (audited
or unaudited, as requested by Acquiror) relating to
Broadcasting as the Acquiror may reasonably request in
order to comply with the requirements of the Securities
Act or the Exchange Act or in order to secure financing
(including pursuant to a public offering registered
under the Securities Act).
6.22. WORKING CAPITAL ADJUSTMENT.
(a) Two days prior to the Effective Time,
the Company shall inform Acquiror of (i) the Company's
estimate of the Working Capital Amount as of the end of
the most recently available month end period
immediately preceding the Effective Time (the
"Estimated Working Capital Amount") and (ii) the
Company's basis for such estimates. The calculation of
the Estimated Working Capital Amount shall be
reasonably satisfactory to Acquiror.
(b) At the Effective Time, Acquiror shall
pay to Newco in immediately available funds the amount,
if any, by which the Estimated Working Capital Amount
exceeds $41,000,000 or Newco shall pay to Acquiror in
immediately available funds the amount, if any, by
which $41,000,000 exceeds the Estimated Working Capital
Amount.
(c) As promptly as practicable after the
Effective Time, but in any event within ninety (90)
days thereafter, Acquiror shall prepare and deliver to
Newco a schedule (the "Acquiror Schedule") showing
Acquiror's determination of the Working Capital Amount
at the Closing Date. If Newco disagrees with the
62
determination set forth in the Acquiror Schedule, Newco
shall give notice thereof to Acquiror within sixty (60)
days after delivery of the Acquiror Schedule to Newco,
such notice to include reasonable detail regarding the
basis for the disagreement.
(d) Acquiror and Newco shall attempt to
settle any such disagreement; any such settlement shall
be final and binding upon Acquiror and Newco. If,
however, Acquiror and Newco are unable to settle such
dispute within sixty (60) days after receipt by
Acquiror of such notice of dispute, the dispute shall
be submitted to an independent certified public
accounting firm mutually acceptable to Acquiror and
Newco for resolution, and the decision of such firm
shall be final and binding upon Acquiror and Newco.
All costs incurred in connection with the resolution of
said dispute by such independent public accountants,
including expenses and fees for services rendered,
shall be paid one-half by Acquiror and one-half by
Newco. Acquiror and Newco shall use reasonable efforts
to have the dispute resolved within ninety (90) days
after such dispute is submitted to said independent
public accountants. The final determination of the
Working Capital Amount (whether as a result of Newco's
failing to give notice of Newco's disagreement with
Acquiror's determination within the time period
prescribed above, a resolution by Acquiror and Newco of
any such disagreement, or a determination by an
accounting firm selected pursuant to this paragraph to
resolve any disagreement among the parties) may occur
on different dates.
(e) Within ten (10) Business Days following
a final determination of the Final Working Capital
Amount ("Final Working Capital Amount"), (i) if the
Final Working Capital Amount exceeds the Estimated
Working Capital Amount, then Acquiror will pay to Newco
in immediately available funds an amount equal to such
excess plus interest at the Agreed Rate from the
Closing Date to the date of payment and (ii) if the
Estimated Working Capital Amount exceeds the Final
Working Capital Amount, Newco will pay to Acquiror in
immediately available funds an amount equal to such
excess plus interest at the Agreed Rate from the
Closing Date to the date of payment. Any such payments
shall be made on an After-Tax Basis.
(f) In the event that after the Effective
Time it is determined that the Company shall have
failed to pay or provide for the Existing Company Debt
and the Deal Expenses as provided in Section 2.01(b)
and the Surviving Corporation makes such payment, Newco
shall promptly pay such amount to the Surviving
Corporation in immediately available funds promptly
upon demand therefor.
6.23. CAPITAL EXPENDITURES. Prior to the
Effective Time, PBC and the Broadcasting Subsidiaries
shall be responsible for and pay all capital
expenditures incurred in the ordinary and usual course
of their respective businesses based upon the Company's
plans concerning the timing of such capital
expenditures during 1998.
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6.24. EXCESS CASH. From time to time, after
the date of execution of this Agreement and until the
Effective Time, and subject to applicable law, (i) PBC
and the Broadcasting Subsidiaries may pay cash
dividends, or otherwise make cash distributions, to the
Company or any of its Subsidiaries and (ii) the Company
shall contribute to Newco cash held by the Company,
including the proceeds of the New Company Debt after
payment or provision for the Existing Company Debt and
the Deal Expenses as provided in Section 2.01(b).
Immediately prior to the Contribution, PBC and the
Broadcasting Subsidiaries shall, to the extent
permitted by law, pay dividends in cash or cash
equivalents, or otherwise make contributions in cash or
cash equivalents, to the Company and its Subsidiaries
so that neither PBC nor the Broadcasting Subsidiaries
owns any cash or cash equivalents at the Effective
Time.
6.25. INDEMNITY RELATING TO CERTAIN
LITIGATION.
(a) Newco shall indemnify from and after the
Closing Date (i) the Surviving Corporation, its
Subsidiaries, including Broadcasting, and their
Affiliates against all Losses in connection with any
suit, action, proceeding or investigation pending at or
arising after the Closing Date that relates to the
Newspaper Subsidiaries or their respective operations
prior to the Effective Time and (ii) any person who was
an officer, director, partner or employee of the
Company, PBC or any Broadcasting Subsidiary against all
Losses in connection with any such suit, action,
proceeding or investigation. The Company and Newco,
jointly and severally, shall indemnify Acquiror and its
Subsidiaries against all Losses arising prior to the
Closing, and Newco shall indemnify the Surviving
Corporation and its Subsidiaries against all Losses
arising after the Closing, from or relating to any
claim, action or proceeding brought by or on behalf of
the holders of Company Stock in connection with the
Transactions except by reason of actions taken or
omitted to be taken by Acquiror or except as provided
in Section 6.06 hereof. The obligations of the Company
pursuant to this Section 6.25(a) shall terminate at the
Effective Time.
(b) Acquiror shall indemnify from and after
the Closing Date (i) Newco, its Subsidiaries and their
Affiliates against all Losses in connection with any
suit, action, proceeding or investigation pending at or
arising after the Closing Date that relates to the
business and operations of Broadcasting and (ii) any
person who was an officer, director, partner or
employee of PBC or any Broadcasting Subsidiary prior
to, whether or not any person continues in such
capacity after, the Closing against all Losses in
connection with any such suit, action, proceeding or
investigation. Acquiror shall indemnify the Company
and Newco against all Losses arising from or relating
64
to any claim, action or proceeding brought by or on
behalf of the holders of Acquiror Common Stock in
connection with the Transactions except by reason of
actions taken or omitted to be taken by the Company or
except as provided in Section 6.06 hereof.
(c) The indemnification arrangements set
forth in this Section 6.25 shall be subject to the
procedures set forth in Section 2.04 of the
Contribution Agreement.
6.26. CANCELLATION OF INTERCOMPANY
ARRANGEMENTS. Prior to the Effective Time, and except
as otherwise provided herein or as otherwise agreed by
the parties hereto, all accounts, payables,
receivables, contracts, commitments and agreements
between the Company and its Newspaper Subsidiaries, on
the one hand, and PBC and the Broadcasting
Subsidiaries, on the other hand, will be settled,
cancelled or otherwise terminated.
6.27. NETWORK AFFILIATION AGREEMENTS. Upon
the terms and subject to the conditions hereof, each of
the parties shall use its respective reasonable best
efforts to take or cause to be taken all actions and to
do or cause to be done all other things necessary to
assign the Station Network Affiliation Agreements to
Acquiror.
6.28. GROSS-UP MATTERS.
(a) Newco shall be liable for, shall pay and
shall indemnify and hold the Surviving Corporation, its
Subsidiaries, their Affiliates and their respective
directors, officers and employees harmless against all
Losses arising from or relating to any claim or dispute
relating to the Gross-Up Agreements and/or the Gross-Up
Amount.
(b) Newco shall have the sole authority to
deal with and control any matters, disputes, claims,
proceedings or litigations relating to the Gross-Up
Agreements and/or the Gross-Up Amount. If Acquiror
receives written notice that any Person is asserting a
claim or is otherwise disputing the amount of the
Gross-Up Amount for which Newco is or may be liable, in
whole or in part, under this Agreement, Acquiror shall
promptly inform Newco, and Newco, at its sole cost and
expense, shall have the sole right to control any
resulting actions, proceedings or negotiations,
including the sole right to determine whether and when
to settle any such claim or dispute, PROVIDED HOWEVER,
that the failure by an indemnified party hereunder to
so notify Newco shall not affect Newco's obligations
except to the extent that Newco is actually prejudiced
by such failure and Newco may not settle a claim
without the Surviving Corporation's consent if such
settlement (i) makes an admission or acknowledgement of
liability or culpability with respect to any
indemnified party hereunder, (ii) does not include a
complete release of such indemnified parties, or (iii)
requires any indemnified party hereunder to make any
payment or forego or take any action or otherwise
materially adversely affect such indemnified party.
65
(c) Acquiror shall use commercially
reasonable efforts to cooperate with Newco at Newco's
expense, in a timely manner in the resolution of any
claim or dispute by any Person relating to the Gross-Up
Agreements and/or the Gross-Up Amount, including the
performance of all rights and non-monetary obligations
of the Surviving Corporation under the Gross-Up
Agreements and the conduct of any actions or
proceedings relating thereto.
(d) Any amounts owed by Newco to any
indemnified party under this Section 6.28 shall be paid
within ten days of notice from such indemnified party,
PROVIDED, HOWEVER, that if Newco has not paid such
amounts and is contesting such amounts in good faith,
Newco shall not be required to make payment until it is
determined finally, by settlement, by agreement or
determination in accordance with the Gross-Up
Agreements or by a court, that payment is due.
66
6.29. AFFILIATE LETTERS; FCC LETTERS.
(a) At least thirty (30) days prior to the
Closing Date, the Company shall deliver to Acquiror a
list of names and addresses of those persons who were,
in the Company's reasonable judgment, at the record
date for the meeting of the Company's stockholders to
be held for the purposes of voting on the Transactions,
"affiliates" (each such person, an "Affiliate") of the
Company within the meaning of Rule 145 of the rules and
regulations promulgated under the Securities Act. The
Company shall use all reasonable efforts to deliver or
cause to be delivered to Acquiror prior to the Closing
Date, from each of the Affiliates of the Company
identified in the foregoing list, an Affiliate Letter
in the form attached hereto as Exhibit J. The
Surviving Corporation shall be entitled to place
legends as specified in such Affiliate Letters on the
certificates evidencing any Acquiror Common Stock to be
received by such Affiliates pursuant to the terms of
this Agreement, and to issue appropriate stop transfer
instructions to the transfer agent for the Acquiror
Common Stock, consistent with the terms of such
Affiliate Letters.
(b) At least five (5) days prior to the
Closing, the Company shall deliver to Acquiror a list
names and addresses of those Persons who, in the
Company's reasonable judgment will own immediately
after the Effective Time 5% or more of outstanding
Acquiror Common Stock. The Company shall use all
reasonable efforts to deliver or cause to be delivered
to Acquiror at the Closing, from each of the
stockholders identified on the foregoing list (other
than institutional holders of such Stock), an FCC
Agreement in the form attached hereto as Exhibit E
other than those Persons who have executed such FCC
Agreement on the date hereof.
ARTICLE VII
CLOSING AND CLOSING DATE; CONDITIONS TO CLOSING
7.01. CLOSING AND CLOSING DATE. As soon as
practicable after the satisfaction or waiver of the
conditions set forth herein (but no later than five (5)
business days thereafter) and immediately prior to the
filing of the Certificate of Merger, a closing of the
Transactions (the "Closing") shall take place at the
offices of Fulbright & Xxxxxxxx L.L.P., 000 Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx, or on such other date and
at such other location as the parties may agree in
writing. The date on which the Closing occurs is
referred to as the "Closing Date."
7.02. CONDITIONS TO THE OBLIGATIONS OF THE
COMPANY, NEWCO AND ACQUIROR. The respective
obligations of the Company and Newco, on the one hand,
67
to consummate the Transactions and the obligations of
the Acquiror, on the other hand, to consummate the
Merger are subject to the requirements that:
(a) The Transactions shall have been
approved and adopted by the stockholders of the Company
and of Acquiror, as applicable and as contemplated
hereby;
(b) The Transactions contemplated by Article
II hereof shall have been consummated in accordance
with the terms hereof and in accordance with applicable
Law and the Company shall have drawn down in its
entirety the New Company Debt;
(c) Any waiting period applicable to the
consummation of the Transactions under the HSR Act
shall have expired or been terminated;
(d) Any governmental or regulatory Licenses,
notices or temporary or permanent waivers, including
FCC Approval, necessary for the performance of the
parties' respective obligations pursuant to this
Agreement shall have been either filed (in the case of
notices) or received and be in effect, PROVIDED that in
no event shall the foregoing require the satisfaction
of any condition or the taking of any action that could
under the terms of the FCC Approval be so satisfied or
taken subsequent to the consummation of the Merger.
"FCC Approval" means action by the FCC or its staff
granting consent to the transfer of control of the
material Licenses held by Broadcasting to Acquiror
which: (i) has not been reversed, stayed, enjoined,
set aside, annulled or suspended; (ii) with respect to
which no timely request for a stay, petition for
reconsideration or appeal of sua sponte action of the
FCC with comparable effect is pending; and (iii) as to
which the time for filing any such request, petition or
appeal or for the taking of any such sua sponte action
by the FCC has expired;
(e) No federal, state or foreign
governmental authority or other agency or commission or
court of competent jurisdiction shall have enacted,
issued, promulgated, enforced or entered any statute,
rule, or regulation, or any permanent injunction or
other order (whether temporary, preliminary or
permanent), which remains in effect and which has the
effect of making any of the Transactions illegal or
otherwise prohibiting any of the Transactions, or which
questions the validity or the legality of any of the
Transactions and which could reasonably be expected to
have a Material Adverse Effect on Broadcasting or on
Acquiror and its Subsidiaries taken as a whole; and
(f) The Registration Statement on Form S-4
shall have been declared effective under the Securities
Act and no stop orders with respect thereto shall have
been issued.
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7.03. CONDITIONS TO THE OBLIGATIONS OF THE
COMPANY AND NEWCO. The obligations of the Company and
Newco to effect the Transactions are subject to the
satisfaction, on or prior to the Closing Date, of the
following conditions:
(a) The representations and warranties of
Acquiror contained in this Agreement, the Transaction
Agreements to which it is a party or in any other
document delivered pursuant hereto shall be true and
correct in all material respects on and as of the
Closing Date with the same effect as if made on and as
of the Closing Date, and at the Closing Acquiror shall
have delivered to the Company and Newco a certificate
to that effect;
(b) Each of the obligations of Acquiror to
be performed on or before the Closing Date pursuant to
the terms of this Agreement or the Transaction
Agreements shall have been duly performed in all
material respects on or before the Closing Date, and at
the Closing Acquiror shall have delivered to the
Company and Newco a certificate to that effect;
(c) The Acquiror Common Stock shall have
been approved for listing on the NYSE or the NASDAQ, as
the case may be, subject to official notice of
issuance;
(d) The Newco Common Stock shall have been
approved for listing on the NYSE or the NASDAQ, as the
case may be, subject to official notice of issuance;
(e) [reserved.]
(f) The Company shall have received from the
IRS an advance letter ruling as contemplated by Section
6.16 hereof;
(g) The Company shall have received from its
counsel, Fulbright & Xxxxxxxx L.L.P. (or another
nationally recognized law firm acceptable to the
Company), an opinion that, based upon appropriate
representations, certificates and letters acceptable to
Fulbright & Xxxxxxxx L.L.P. (or another nationally
recognized law firm acceptable to the Company) dated as
of the Closing Date, the Merger constitutes a tax-free
reorganization under Section 368(a)(1)(A) of the Code
(with appropriate exceptions, assumptions and
qualifications); and
(h) The Company and Newco shall have
received all customary closing documents they may
reasonably request relating to the existence of
Acquiror and the authority of Acquiror to enter into
this Agreement, the Transaction Agreements and the
Transactions, all in form and substance reasonably
satisfactory to the Company and Newco.
70
7.04. CONDITIONS TO OBLIGATIONS OF ACQUIROR.
The obligations of Acquiror to effect the Merger are
subject to the satisfaction, on or prior to the Closing
Date, of the following conditions:
(a) The representations and warranties of
the Company and Newco contained in this Agreement, the
Transaction Agreements to which they are a party or in
any other document delivered pursuant hereto shall be
true and correct in all material respects on and as of
the Closing Date with the same effect as if made on and
as of the Closing Date, and at the Closing the Company
and Newco shall have delivered to Acquiror their
respective certificates to that effect;
(b) Each of the obligations of the Company
and Newco to be performed on or before the Closing Date
pursuant to the terms of this Agreement shall have been
duly performed in all material respects on or before
the Closing Date, and at the Closing the Company and
Newco shall have delivered to Acquiror their respective
certificates to that effect;
(c) The Company shall have delivered to
Acquiror a certificate signed by the Chief Financial
Officer of the Company certifying, as of the Closing,
as to the number of shares of capital stock of the
Company outstanding, indicating the class and series of
such shares;
(d) Acquiror shall have received all
customary closing documents it may reasonably request
relating to the existence of the Company, Newco, PBC
and the Broadcasting Subsidiaries and the authority of
the Company and Newco to enter into this Agreement and
the Transactions, all in form and substance reasonably
satisfactory to Acquiror;
(e) Acquiror shall have received from its
counsel, Xxxxxx & Xxxxx LLP (or another nationally
recognized law firm acceptable to Acquiror), an opinion
that, based upon appropriate representations,
certificates and letters acceptable to Xxxxxx & Xxxxx
LLP (or another nationally recognized law firm
acceptable to Acquiror) dated as of the Closing Date,
the Merger constitutes a tax-free reorganization under
Section 368(a)(1)(A) of the Code (with appropriate
exceptions, assumptions and qualifications);
(f) The Company shall have paid in full the
Existing Company Debt as of the Closing;
(g) There shall have been obtained and
delivered to Acquiror all necessary approvals and
consents to the assignment to Acquiror of the Station
Network Affiliation Agreements; and
70
(h) Each of the Affiliates referred to in
Section 6.29(a) shall have executed and delivered to
Acquiror the Affiliate Letter referred to therein.
71
ARTICLE VIII
TERMINATION
8.01. TERMINATION. This Agreement may be
terminated and the Transactions may be abandoned at any
time prior to the Closing:
(a) by mutual written consent duly
authorized by the Boards of Directors of the Company,
Newco and Acquiror;
(b) by either the Company or Acquiror (i)
if, at the stockholders' meetings referred to in
Section 6.13 (including any postponement or adjournment
thereof), the Merger and the other Transactions that
require stockholder approval shall fail to be approved
and adopted by the affirmative vote specified herein,
or (ii) so long as the terminating party is not then in
breach of any of its obligations hereunder, after April
1, 1999 or such other date as the parties shall have
mutually agreed (the "Termination Date") if the Merger
shall not have been consummated on or before such date;
(c) by the Company, provided neither it nor
Newco is then in breach of any of its material
obligations hereunder, if either (i) Acquiror fails to
perform, in any material respect, any covenant in this
Agreement when performance thereof is due and does not
cure the failure within twenty (20) Business Days after
written notice by the Company thereof, or (ii) any
other condition in Sections 7.02 or 7.03 has not been
satisfied and is not capable of being satisfied prior
to the Termination Date;
(d) by the Company, whether or not the
conditions set forth in Section 7.02 have been
satisfied, if the Board of Directors of the Company
determines, with the advice of outside counsel, in the
exercise of its fiduciary duties to approve or
recommend a Superior Proposal or to authorize the
Company to enter into an agreement with respect to a
Superior Proposal;
(e) by Acquiror, provided it is not then in
breach of any of its material obligations hereunder, if
either (i) the Company or Newco fails to perform, in
any material respect, any covenant in this Agreement
when performance thereof is due and does not cure the
failure within twenty (20) Business Days after written
notice by Acquiror thereof or (ii) any other condition
in Section 7.02 or Section 7.04 has not been satisfied
and is not capable of being satisfied prior to the
Termination Date;
(f) by the Company as provided in Section
1.02;
(g) by either the Company or Acquiror if
either has received any communication from an HSR
Authority (such communication to be confirmed in
72
writing by such HSR Authority to the other party)
indicating that an HSR Authority has authorized the
institution of litigation challenging any of the
Transactions under the U.S. antitrust laws, which
litigation will include a motion seeking an order or
injunction prohibiting the consummation of any of the
Transactions; or
(h) by Acquiror if the Board of Directors of
the Company shall have withdrawn or modified in any
manner materially adverse to Acquiror its approval or
recommendation of this Agreement or the Transactions or
shall have approved or recommended a Superior Proposal.
8.02. EFFECT OF TERMINATION. Except as set
forth in the following sentence, in the event of the
termination of this Agreement and abandonment of the
Transactions by any of the parties pursuant to Section
8.01 hereof, prompt written notice thereof shall be
given to the other party and this Agreement, except for
the provisions of Section 6.06(f)-(j), Section 8.03,
Section 9.08 and Section 9.12 and the provisions of the
Confidentiality Agreement, shall forthwith become null
and void and have no effect, without any liability or
further obligation on the part of any party or its
directors, officers or stockholders. Nothing in this
Section 8.02 shall relieve any party to this Agreement
of liability for breach of this Agreement. If this
Agreement is terminated as provided herein, all
filings, applications and other submissions relating to
the Merger shall, to the extent practicable, be
withdrawn from the agency or Person to which made.
8.03. FEES AND EXPENSES.
(a) In order to induce Acquiror to, among
other things, enter into this Agreement, the Company
agrees as follows: If (1) subsection (c) below does
not apply and (2) this Agreement is terminated (A) by
the Company pursuant to Sections 8.01(d), (B) by either
the Company or Acquiror pursuant to Section 8.01(b)(i)
hereof in the event that the Merger, this Agreement and
the other Transactions are not approved at the
stockholders' meeting of the Company referred to in
Section 6.13, or (C) by Acquiror pursuant to Section
8.01(h), then the Company shall pay to Acquiror a fee
equal to $50,000,000.
(b) In order to induce the Company and Newco
to, among other things, enter into this Agreement,
Acquiror agrees as follows: If this Agreement is
terminated by the Company or Acquiror pursuant to
Section 8.01(b)(i) hereof, in the event that the
Merger, this Agreement and the other Transactions, if
any, that require stockholder approval are not approved
at the stockholders' meeting of Acquiror referred to in
Section 6.13, then Acquiror shall promptly pay to the
Company a fee equal to $50,000,000.
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(c) In order to induce the Company and Newco
to, among other things, enter into this Agreement,
Acquiror agrees promptly to pay to the Company a fee
equal to $50,000,000 in the event that the Company is
unable to obtain the New Company Debt at the time of
any of the following: (i) this Agreement is terminated
pursuant to Section 8.01(a); (ii) this Agreement is
terminated pursuant to Section 8.01(b)(ii); or (iii)
this Agreement is terminated pursuant to
Section 8.01(c)(i), in each case for any reason other
than (x) the Company's failure to use commercially
reasonable efforts to obtain the New Company Debt or
(y) a breach of this Agreement by the Company.
(d) Except in circumstances where the second
sentence of Section 8.02 is applicable or as otherwise
expressly provided herein each of the parties shall pay
all costs and expenses incurred or to be incurred by it
in negotiating and preparing this Agreement and in
carrying out and closing the Transactions (including
any title insurance policies, surveys and environmental
reports on the Real Property).
(e) Any amounts payable pursuant to Section
8.03 shall be made in immediately available funds no
later than two (2) Business Days after termination of
this Agreement.
ARTICLE IX
MISCELLANEOUS
9.01. SURVIVAL OF REPRESENTATIONS AND
WARRANTIES. The representations and warranties
contained herein shall not survive beyond the Closing
Date. This Section 9.01 shall not limit any covenant
or agreement of the parties hereto which by its terms
requires performance after the Closing Date.
9.02. ENTIRE AGREEMENT. This Agreement,
including the Exhibits and Schedules hereto and the
documents delivered pursuant to this Agreement,
together with the Confidentiality Agreement, constitute
the entire agreement among the parties with respect to
the subject matter hereof and supersedes all prior
written and oral and all contemporaneous oral
agreements and understandings with respect to the
subject matter hereof. The Exhibits and Schedules
hereto are an integral part of this Agreement and are
incorporated by reference herein.
9.03. NOTICES. All notices and other
communications hereunder shall be in writing and shall
be deemed to have been duly given when delivered in
person, by telecopy (with confirmation of
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transmission), by express or overnight mail delivered
by a nationally recognized air courier (delivery
charges prepaid), or by registered or certified mail
(postage prepaid, return receipt requested) to the
respective parties as follows:
If to Acquiror or to the Company (after the
Merger):
Hearst-Argyle Television, Inc.
000 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxx
Telecopy: (000) 000-0000
with a copy to:
Xxxxxx & Xxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxx,Esq.
Telecopy: (000) 000-0000
If to the Company (before the Merger) or Newco:
Pulitzer Publishing Company
000 Xxxxx Xxxxxx Xxxxxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx
Telecopy: (000) 000-0000
with a copy to:
Fulbright & Xxxxxxxx L.L.P.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Telecopy: (000) 000-0000
or to such other address as the party to whom notice is
given may have previously furnished to the others in
writing in the manner set forth above. Any notice or
communication delivered in person shall be deemed
effective on delivery. Any notice or communication
sent by telecopy or by air courier shall be deemed
effective on the first business day at the place at
which such notice or communication is received
following the day on which such notice or communication
was sent. Any notice or communication sent by
registered or certified mail shall be deemed effective
on the fifth business day at the place from which such
notice or communication was mailed following the day on
which such notice or communication was mailed.
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9.04. 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 principles of conflicts of
laws applicable thereto.
9.05. KNOWLEDGE OF THE COMPANY. The phrase
"to the knowledge of the Company" and phrases of
similar import shall mean the actual knowledge of
Xxxxxxx X. Xxxxxxxx, Xxx X. Xxxxxx, Xxxxxx X. Xxxxxxx,
Xxxxxxxx X. Xxxxxxxx XX, C. Xxxxx Xxxxxx and Xxxx
Xxxxxxx.
9.06. PARTIES IN INTEREST. This Agreement
shall be binding upon and inure solely to the benefit
of each party hereto, and 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, except
for Sections 6.06(f)-(j), 6.25, 6.28 and 9.08 (which
are intended to be for the benefit of the Persons
provided for therein and may be enforced by such
Persons).
9.07. COUNTERPARTS. This Agreement (and any
amendment hereof) may be executed in any number of
counterparts, each of which shall be deemed to be an
original as against any party whose signature appears
thereon, and all of which shall together constitute one
and the same instrument. This Agreement (and any
amendment hereof) shall become binding when one or more
counterparts hereof, individually or taken together,
shall bear the signatures of all of the parties
reflected hereon as the signatories.
9.08. PERSONAL LIABILITY. This Agreement
shall not create or be deemed to create or permit any
personal liability or obligation on the part of any
direct or indirect stockholder of any party hereto or
any officer, director, employee, agent, representative
or investor of any party hereto.
9.09. BINDING EFFECT; ASSIGNMENT. This
Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective legal
representatives and successors. This Agreement may not
be assigned by any party hereto and any purported
assignment in violation hereof shall be null and void.
9.10. AMENDMENT. This Agreement may not be
amended except by an instrument in writing signed on
behalf of all the parties. Any amendment to this
Agreement after the meetings of the stockholders of the
Company and the Acquiror referred to in Section 6.13
may, subject to applicable law, be made without seeking
the approval of such stockholders.
9.11. EXTENSION; WAIVER. All parties hereto
affected thereby may (i) extend the time for the
76
performance of any of the obligations or other acts of
any other party hereto, (ii) waive any inaccuracies in
the representations and warranties of any other party
contained herein or in any document, certificate or
writing delivered pursuant hereto by any other party,
or (iii) waive compliance with any of the covenants,
agreements or conditions contained herein or any breach
thereof. 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.
9.12. LEGAL FEES; COSTS. If any party hereto
institutes any action or proceeding to enforce any
provision of this Agreement, the prevailing party
therein shall be entitled to receive from the losing
party reasonable attorneys' fees and costs incurred in
such action or proceeding, whether or not such action
or proceeding is prosecuted to final judgment.
9.13. DRAFTING. Each party acknowledges that
its legal counsel participated in the preparation of
this Agreement and, therefore, stipulates that the rule
of construction that ambiguities are to be resolved
against the drafting party shall not be applied in the
interpretation of this Agreement to favor any party
against the other.
9.14. CONSENT TO JURISDICTION AND SERVICE OF
PROCESS. The parties hereto irrevocably: (a) agree
that any suit, action or other legal proceeding arising
out of this Agreement may be brought in the courts of
the State of New York or the courts of the United
States located in New York County, New York, (b)
consent to the jurisdiction of each court in any such
suit, action or proceeding, (c) waive any objection
which they, or any of them, may have to the laying of
venue of any such suit, action or proceeding in any of
such courts, and (d) waives the right to a trial by
jury in any such suit, action or other legal
proceeding. Each of the Company and Newco hereby
designates and appoints Fulbright & Xxxxxxxx L.L.P.,
000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the
"Authorized Agent"), as its agent to accept and
acknowledge on its behalf, service of any and all
process which may be served in any such suit, action or
other proceeding, and agrees that service upon such
Authorized Agent shall be deemed in every respect
service of process on the Company or Newco (as the case
may be) or with respect to Newco its successors or
assigns and, to the extent permitted by applicable law,
shall be taken and held to be valid personal service,
except that such appointment shall end at the Effective
Time in the case of the Company. Each of the Company
and Newco represent and warrant that the Authorized
Agent has agreed to act as such agent for service of
process.
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ARTICLE X
DEFINITIONS
10.01. DEFINITIONS. When used in this
Agreement, the following terms shall have the meanings
indicated.
"Acquiror" has the meaning set forth in the first
paragraph of this Agreement.
"Acquiror's Actuary" has the meaning set forth in
Section 6.11(d).
"Acquiror Common Stock" means the Series A Common
Stock, par value $.01 per share, of Acquiror.
"Acquiror's Financial Statements" has the meaning
set forth in Section 5.07.
"Acquiror's 10-K" has the meaning set forth in
Section 5.07.
"Acquiror's 10-Q" has the meaning set forth in
Section 5.07.
"Acquiror's SEC Reports" has the meaning set forth
in Section 5.06.
"Acquiror Schedule" has the meaning set forth in
Section 6.22(b).
"Acquiror Voting Agreement" means the voting
agreement, dated the date hereof, between Acquiror, the
Company and Hearst Corporation.
"Acquisition Proposal" has the meaning set forth
in Section 6.01(a).
"Affiliate" of any Person means any other Person,
directly or indirectly, through one or more
intermediary Persons, controlling, controlled by or
under common control with such Person.
"After Tax Basis" has the meaning set forth in
Section 6.09(h)(i).
"Aggregate Consideration" has the meaning set
forth in Section 1.02(d).
"Aggregate Shares Delivered" has the meaning set
forth in Section 1.02(d).
"Agreed Rate" means the annual rate of interest
quoted, from time to time, by Citibank, N.A. in New
78
York City as its prime rate of interest for the purpose
of determining the interest rates charged by it for
United States dollar commercial loans made in the
United States.
"Agreement" or "this Agreement" shall mean, and
the words "herein", "hereof" and "hereunder" and words
of similar import shall refer to, this instrument as it
from time to time may be amended, including the
exhibits and schedules hereto.
"Audit or "audited" when used in regard to
financial statements shall mean an examination of the
financial statements by a firm of independent public
accountants in accordance with generally accepted
auditing standards for the purpose of expressing an
opinion thereon.
"Authorized Agent" has the meaning set forth in
Section 9.14.
"Broadcasting" means, collectively, PBC and the
Broadcasting Subsidiaries.
"Broadcasting Assets" has the meaning set forth in
Section 2.02(a).
"Broadcasting Employee" means any employee or
former employee of Broadcasting.
"Broadcasting Employee Plan" has the meaning set
forth in Section 4.10(a).
"Broadcasting Pension Plan" has the meaning set
forth in Section 4.10(b).
"Broadcasting Subsidiaries" has the meaning set
forth in Section 2.02(a).
"Broadcasting Tax Returns" has the meaning set
forth in Section 6.09(h)(ii).
"Broadcasting Unaudited Financial Statements" has
the meaning set forth in Section 4.03.
"Business Day" means any day other than a
Saturday, Sunday or other day on which commercial
banking institutions in New York City are authorized or
required by law, regulation or executive order to be
closed.
"Certificate of Merger" has the meaning set forth
in Section 1.03.
"Certificates" has the meaning set forth in
Section 1.04(b).
79
"Closing" and "Closing Date" have the meanings set
forth in Section 7.01.
"Closing Agreement" has the meaning set forth in
Section 3.11(d).
"Closing Price" has the meaning set forth in
Section 1.02(d).
"Closing Price Share Number" has the meaning set
forth in Section 1.02(d).
"Code" means Internal Revenue Code of 1986, as
amended.
"Collar Deficiency Number" has the meaning set
forth in Section 1.02(d).
"Collar Price" has the meaning set forth in
Section 1.02(d).
"Common Stock Conversion Number" has the meaning
set forth in Section 1.02(d).
"Communications Act" has the meaning set forth in
Section 5.01.
"Company" has the meaning set forth in the first
paragraph of this Agreement.
"Company Charter Amendment" has the meaning set
forth in Section 2.01(a).
"Company Class B Common Stock" means the Company's
Class B Common Stock, par value $.01 per share.
"Company Common Stock" means the Company's Common
Stock, par value $.01 per share.
"Company Consolidated Income Taxes" has the
meaning set forth in Section 6.09(h)(iv).
"Company Consolidated Income Tax Returns" has the
meaning set forth in Section 6.09(h)(iii).
"Company Employee Plan" means any Employee Plan
that is or was sponsored or contributed to by the
Company, Newco or any of their ERISA Affiliates
covering the employees or former employees (or their
beneficiaries or dependents) of the Company, Newco or
any of their ERISA Affiliates.
"Company Financial Statements" has the meaning set
forth in Section 3.07.
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"Company Group" has the meaning set forth in
Section 6.09(h)(v).
"Company Option Plans" has the meaning set forth
in Section 6.12.
"Company Preferred Stock" has the meaning set
forth in Section 3.05(a).
"Company's SEC Reports" has the meaning set forth
in Section 3.06.
"Company Stock" means, collectively, the Company
Common Stock and the Company Class B Common Stock.
"Company 10-K" has the meaning set forth in
Section 3.07.
"Company 10-Q" has the meaning set forth in
Section 3.07.
"Confidentiality Agreement" has the meaning set
forth in Section 6.05.
"Contract" means any contract, agreement or
understanding.
"Contribution" has the meaning set forth in
Section 2.02(a).
"Contribution Agreement" has the meaning set forth
in Section 2.01(b).
The term "control", with respect to any Person,
shall mean the power to direct the management and
policies of such Person, directly or indirectly, by or
through stock ownership, agency or otherwise, or
pursuant to or in connection with an agreement,
arrangement or understanding (written or oral) with one
or more other Persons by or through stock ownership,
agency or otherwise; and the terms "controlling" and
"controlled" shall have meanings correlative to the
foregoing.
"Daily Mean Amount" has the meaning set forth in
Section 1.02(d).
"Deal Expenses" means the sum of (i) all fees and
expenses due Xxxxxxx Sachs and Huntleigh relating to
the Merger and the Transactions; (ii) all out-of-pocket
costs and expenses incurred by the Company or any of
its Subsidiaries with respect to this Agreement, the
Merger and the Transactions, including commitment fees
payable to the providers of New Company Debt and all
fees and expenses due legal counsel, accountants,
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compensation advisors and other advisors for the
Company or any of its Subsidiaries relating to this
Agreement, the Merger and the Transactions to the
extent not paid or provided for on the Closing Date;
(iii) all payments due at Closing (x) in connection
with the Transactions or (y) for the benefit of
employees of the Company, PBC or the Broadcasting
Subsidiaries pursuant to the agreements listed on
Schedule 6.11(f)(2) or 6.11(g); and (iv) all amounts
payable to cancel all outstanding options under the
Company Option Plans immediately before the Closing.
"DGCL" has the meaning set forth in Section
1.02(e).
"Dissenting Shares" has the meaning set forth in
Section 1.02(e).
"Dissenting Stockholder" has the meaning set forth
in Section 1.02(e).
"Distribution" has the meaning set forth in
Section 2.02(c).
"ERISA" means the Employee Retirement Income
Security Act of 1974, as amended.
"ERISA Affiliate" means a Person and/or such
Person's Subsidiary or any trade or business (whether
or not incorporated) which is under common control with
such entity or such entity's Subsidiaries or which is
treated as a single employer with such Person or any
Subsidiary of such Person under Section 414(b), (c),
(m) or (o) of the Code or Section 4001(b)(1) of ERISA.
"Effective Time" has the meaning set forth in
Section 1.03.
"Employee Plan" has the meaning set forth in
Section 4.10(a).
"Employee Stock Purchase Plan" means the Pulitzer
Publishing Company 1997 Employee Stock Purchase Plan.
"Enforceability Exceptions" has the meaning set
forth in Section 3.01.
"Environmental Law" or "Environmental Laws" means
all laws, rules, regulations, statutes, ordinances,
decrees or orders of any governmental entity relating
to (i) the control of any potential pollutant or
protection of the air, water or land, (ii) solid,
gaseous or liquid waste generation, handling,
treatment, storage, disposal or transportation, and
(iii) exposure to hazardous, toxic or other substances
alleged to be harmful, and includes, (A) the terms and
conditions of any License from any governmental entity,
and (B) judicial, administrative, or other regulatory
decrees, judgments, and orders of any governmental
entity. The term "Environmental Laws" shall include,
82
but not be limited to, the following statutes and the
regulations promulgated thereunder: the Clean Air Act,
42 U.S.C. Sec. 7401 et seq., the Clean Water Act, 33
U.S.C. Sec. 1251 et seq., the Resource Conservation and
Recovery Act, 42 U.S.C. Sec. 6901 et seq., the Superfund
Amendments and Xxxxxxxxxxxxxxx Xxx, 00 X.X.X. Xxx. 00000
et seq., the Toxic Substances Control Act, 15 U.S.C.
Sec. 2601 et seq., the Water Pollution Control Act, 33
U.S.C. Sec.1251 et seq., the Safe Drinking Water Act, 42
U.S.C. Sec.300f et seq., the Comprehensive Environmental
Response, Compensation, and Liability Act, 42 U.S.C.
Sec. 9601 et seq., and any state, county, or local
regulations similar thereto.
"Environmental Liabilities" shall mean any and all
liabilities, responsibilities, claims, suits, losses,
costs (including remediation, removal, response,
abatement, clean-up, investigative, and/or monitoring
costs and any other related costs and expenses), other
causes of action recognized now or at any later time,
damages, settlements, expenses, charges, assessments,
Liens, penalties, fines, pre-judgment and post-judgment
interest, attorney fees and other legal fees (i)
pursuant to any agreement, order, notice, requirement,
responsibility, or directive (including directives
embodied in Environmental Laws), injunction, judgment
or similar documents (including settlements) arising
out of or in connection with any Environmental Laws, or
(ii) pursuant to any claim by a governmental entity or
other Person for personal injury, property damage,
damage to natural resources, remediation, or similar
costs or expenses incurred or asserted by such
governmental entity or Person pursuant to common law or
statute.
"Estimated Working Capital Amount" has the meaning
set forth in Section 6.22(a).
"Exchange Act" has the meaning set forth in
Section 3.03.
"Exchange Agent" has the meaning set forth in
Section 1.04(a).
"Existing Company Debt" means the sum as of the
Closing Date of (i) aggregate principal amount of debt
under the Company's agreements with Prudential referred
to in Schedule 3.02, together with all accrued and
unpaid interest thereon, outstanding as of Closing
Date, (ii) the principal amount of debt under the
Company's agreements with the First National Bank of
Chicago referred to in Schedule 3.02, together with all
accrued and unpaid interest thereon, outstanding as of
the Closing Date, and (iii) any other Indebtedness
(other than the New Company Debt) of the Company and
its Subsidiaries, together with all accrued and unpaid
interest thereon outstanding. Existing Company Debt
shall include any prepayment penalty or premium
required to prepay the Existing Company Debt at
Closing.
"FCC" has the meaning set forth in Section 3.03.
"FCC Application" means any application filed with
the FCC necessary to transfer ownership of
Broadcasting's FCC Licenses to Acquiror.
"Final Order" has the meaning set forth in Section
6.14(e).
"Final Working Capital Amount" has the meaning set
forth in Section 6.22(e).
"FCC" has the meaning set forth in Section 3.03.
00
"XXX Xxxxxxxx" has the meaning set forth in
Section 7.02(d).
"Form 8-K" has the meaning set forth in Section
6.21(a).
"Further Media Interest" has the meaning set forth
in Section 6.14(d).
"GAAP" shall mean generally accepted accounting
principles in effect on the date hereof as set forth in
the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified
Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or as may be
generally accepted by the accounting profession of the
United States.
"Xxxxxxx Xxxxx" means Xxxxxxx, Sachs & Co.
"Government Antitrust Entity" has the meaning set
forth in Section 6.14(b).
"Government Communications Entity" has the meaning
set forth in Section 6.14(b).
"Government Regulatory Entity" has the meaning set
forth in Section 6.14(b).
"Governmental Authority" has the meaning set forth
in Section 6.14(a).
"Gross-Up Agreements" means (i) the Agreement,
dated as of May 12, 1986, by and among The Pulitzer
Publishing Company, a Missouri corporation, and each of
the owners of shares of capital stock of The Pulitzer
Publishing Company who was a signatory to such
Agreement, (ii) the Agreement, dated as of May 12,
1986, by and among The Pulitzer Publishing Company and
each of the owners of shares of capital stock of The
Pulitzer Publishing Company who was a signatory to such
Agreement, (iii) the Agreement, dated as of September
29, 1986, by and among The Pulitzer Publishing Company
and each of the parties thereto; and (iv) the
Agreement, dated as of September 29, 1986, by and among
The Pulitzer Publishing Company and each of the owners
84
of shares of capital stock of The Pulitzer Publishing
Company who was a signatory to such Agreement.
"Gross-Up Amount" means the amount, if any, due by
the Company to any Person with respect to the
consummation of the Transactions pursuant to the Gross-
Up Agreements.
"HSR Act" has the meaning set forth in Section 3.03.
"HSR Authority" means either the Department of
Justice or the Federal Trade Commission.
"Huntleigh" means Huntleigh Securities
Corporation.
"IRS" means the Internal Revenue Service.
"Indebtedness" of any Person means all obligations
of such Person (i) for borrowed money, (ii) evidenced
by notes, bonds, debentures or similar instruments,
(iii) for the deferred purchase price of goods or
services (other than trade payables or accruals
incurred in the ordinary course of business), (iv)
under capital leases and (v) in the nature of
guarantees of the obligations described in clauses (i)
through (iv) above of any other Person.
"Indemnified Party" has the meaning set forth in
Section 6.06(h).
"Indemnifying Party" has the meaning set forth in
Section 6.06(h).
"Indemnitee" has the meaning set forth in Section
6.09(e).
"Indemnitor" has the meaning set forth in Section
6.09(e).
"Joint Proxy Statement/Prospectus" has the meaning
set forth in Section 6.06(a).
"Laws" means all applicable statutes, laws,
ordinances, rules and regulations (including any of the
foregoing related to occupational safety, storage,
disposal, discharge into the environment of hazardous
wastes, environmental protection, conservation, unfair
competition, labor practices or corrupt practices).
"Licenses" means approvals, authorizations,
consents, rights, certificates, orders, franchises,
determinations, permissions, permits, qualifications,
registrations, licenses, authorities or grants issued,
declared, designated or adopted by any nation or
government, any federal, state, municipal or other
85
political subdivision thereof or any department,
commission, board, bureau, agency or instrumentality
exercising executive, legislative, judicial, regulatory
or administrative functions pertaining to government.
"Liens" means any lien, claim, charge,
restriction, pledge, mortgage, security interest or
other encumbrance of any nature whatsoever.
"Losses" means all losses, claims, damages,
liabilities or actions, including any legal or other
expenses reasonably incurred in connection with
investigating or defending any such loss, claim, damage
or liability or action or enforcing any indemnity with
respect thereto.
"Material Adverse Effect" means a material adverse
effect on the business, condition (financial or
otherwise) or assets of the named entity or the named
entities taken as a whole, other than changes or
effects resulting from (i) changes attributable to
conditions affecting the newspaper, radio and/or
television businesses generally, (ii) changes in
general economic conditions, (iii) cyclical changes
that are consistent with the past operating history of
the named entity or entities, or (iv) changes
attributable to the announcement or pendency of the
Merger and the other Transactions. When the term
"Material Adverse Effect" or material is used with
respect to more than one act, occurrence, item or
circumstance, all such acts, occurrences, items and
circumstances shall be considered individually and in
the aggregate.
"Maximum Number" has the meaning set forth in
Section 1.02(d).
"Measurement Period" has the meaning set forth in
Section 1.02(d).
"Merger" has the meaning set forth in Section
1.01.
"Merger Stock" has the meaning set forth in
Section 1.04(a).
"Multiemployer Plan" means a multiemployer plan,
as defined in Sections 3(37) and 4001(a)(3) of ERISA.
"NASDAQ" means the Nasdaq National Market.
"NLRB" means the National Labor Relations Board.
"NYSE" means the New York Stock Exchange, Inc.
"New Company Debt" has the meaning set forth in
Section 2.01(b).
"Newco" has the meaning set forth in the first
paragraph of this Agreement.
86
"Newco's Actuary" has the meaning set forth in
Section 6.11(d).
"Newco Charter Amendment" has the meaning set
forth in Section 2.01(a).
"Newco Class B Common Stock" means the Class B
Common Stock, $0.01 par value per share, of Newco.
"Newco Common Shares" has the meaning set forth in
Section 3.05(b).
"Newco Common Stock" means the Common Stock, $0.01
par value per share, of Newco.
"Newco Preferred Stock" has the meaning set forth
in Section 3.05(b).
"Newspaper Subsidiaries" means the Post-Dispatch
division of the Company and all direct and indirect
Subsidiaries of the Company, other than Broadcasting,
prior to the Contribution.
"Other Filings" has the meaning set forth in
Section 6.06(b).
"Outstanding Company Stock" has the meaning set
forth in Section 1.02(d).
"PBC" has the meaning set forth in Section
2.02(a).
"Permitted Exceptions" has the meaning set forth
in Section 4.08(b).
"Person" means any individual, general
partnership, limited partnership, corporation, limited
liability company, joint venture, trust, business
trust, cooperative or association, and the heirs,
executors, administrators, legal representatives,
successors, and assigns of such Person where the
context so requires.
"Post-Closing Tax Period" has the meaning set
forth in Section 6.09(h)(vii).
"Pre-Closing Date" has the meaning set forth in
Section 1.02(d).
"Pre-Closing Tax Period" has the meaning set forth
in Section 6.09(h)(vi).
"Preliminary Joint Proxy Statement/Prospectus" has
the meaning set forth in Section 6.06(a).
"Prudential" means The Prudential Insurance
Company of America.
87
"Pulitzer Pension Plan" has the meaning set forth
in Section 6.11(d).
"Pulitzer Savings Plan" has the meaning set forth
in Section 6.11(c).
"Pulitzer Voting Agreement" means the voting
agreement, dated the date hereof, between the Company
and certain holders of Company Stock.
"Real Property" means all realty owned or leased
and used primarily in the business and operations of
PBC and the Broadcasting Subsidiaries, including all
appurtenances, improvements and fixtures located on
such realty, but excluding personal property.
"Record Date" has the meaning set forth in Section
2.02(c).
"Retained Assets" has the meaning set forth in the
Contribution Agreement.
"Retained Business" means the assets and
liabilities of the Company and its Subsidiaries after
giving effect to the Contribution and the Distribution.
"Retained Liabilities" has the meaning set forth
in the Contribution Agreement.
"Rules and Regulations" has the meaning set forth
in Section 5.01.
"SEC" has the meaning set forth in Section 3.06.
"SEC Filings" has the meaning set forth in Section
6.06(c).
"Securities Act" has the meaning set forth in
Section 3.03.
"Spin-Off Tax" has the meaning set forth in
Section 6.09(h)(viii).
"Station Network Affiliation Agreements" has the
meaning set forth in Section 4.07.
"Stations" means, collectively, KETV-TV, KOAT-TV,
KOCT-TV, KOVT-TV, KCCI-TV, WLKY-TV, WGAL-TV, WDSU-TV,
WYFF-TV, WXII-TV, WESH-TV, KTAR(AM), KMVP(AM),
KKLT(FM), WLKY(AM), and WXII(AM).
"Subsidiary" as to any Person means (i) any
corporation of which such Person owns, either directly
or through its Subsidiaries, more than 50% of the total
combined voting power of all classes of voting
securities of such corporation or (ii) any partnership,
88
association, joint venture or other form of business
organization, whether or not it constitutes a legal
entity, in which such Person directly or indirectly
through its Subsidiaries owns more than 50% of the
total equity interests.
"Superior Proposal" means an Acquisition Proposal
that the Board of Directors of the Company determines
in the good faith exercise of its business judgment
(after consultation with the Company's independent
financial advisors) to be more favorable to the
Company's stockholders than the Merger.
"Surviving Corporation" has the meaning set forth
in Section 1.01.
"Tax" has the meaning set forth in Section
6.09(h)(x).
"Tax Return" has the meaning set forth in Section
6.09(h)(xi).
"Tax Ruling Request" has the meaning set forth in
Section 3.11(d).
"Temporary Waiver" has the meaning set forth in
Section 6.14(d).
"Termination Date" has the meaning set forth in
Section 8.01(b).
"Termination Intent Notice" has the meaning set
forth in Section 1.02(d).
"Top-up Notice" has the meaning set forth in
Section 1.02(d).
"Top-up Share Number" has the meaning set forth in
Section 1.02(d).
"Transaction Agreement" has the meaning set forth
in Section 3.01.
"Transactions" means (i) the Contribution, (ii)
the Distribution, (iii) the Company Charter Amendment,
(iv) the Newco Charter Amendment, (v) the borrowing by
the Company of the New Company Debt, (vi) and any other
transactions contemplated by this Agreement (including
the Merger) and the Transaction Agreements.
"Transfer Agent" means First Chicago Trust Company
of New York.
"Transferee DB Plan" has the meaning set forth in
Section 6.11(d).
89
"Transferee DC Plan" has the meaning set forth in
Section 6.11(c).
"Transferred Employees" has the meaning set forth
in Section 6.11(b).
"Weighted Average Price" has the meaning set forth
in Section 1.02(d).
"Working Capital Amount" means the difference
between (x) the total current assets of the Company and
its Subsidiaries and (y) the total current liabilities
(other than the New Company Debt, the Existing Company
Debt and Deal Expenses) of the Company and its
Subsidiaries (in each case calculated in accordance
with GAAP immediately prior to the Effective Time and
after giving effect to the Contribution, the
Distribution and the disposition of cash and cash
equivalents contemplated by Section 6.24).
10.02. INTERPRETATION. Unless the context
otherwise requires, the terms defined in Section 10.01
shall have the meanings herein specified for all
purposes of this Agreement, applicable to both the
singular and plural forms of any of the terms defined
herein. All accounting terms defined in this Section
10.01, and those accounting terms used in this
Agreement not defined in Section 10.01, except as
otherwise expressly provided herein, shall have the
meanings customarily given thereto in accordance with
GAAP. Except as otherwise expressly provided herein,
all terms used in conjunction with description of
securities have the meanings given to those terms under
the Exchange Act. When a reference is made in this
Agreement to Sections, such reference shall be to a
Section of this Agreement unless otherwise indicated.
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.
Whenever the words "include", "includes" or "including"
are used in this Agreement, they shall be deemed to be
followed by the words "without limitation". The use of
the neuter gender herein shall be deemed to include the
masculine and feminine genders wherever necessary or
appropriate, the use of the masculine gender shall be
deemed to include the neuter and feminine genders and
the use of the feminine gender shall be deemed to
include the neuter and masculine genders wherever
necessary or appropriate.
[The remainder of this page intentionally left blank]
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IN WITNESS WHEREOF, each of the parties has caused
this Agreement to be executed on its behalf by its
officers thereunto duly authorized on the day and year
first above written.
PULITZER PUBLISHING COMPANY
By:___________________________
Name:
Title:
PULITZER INC.
By:___________________________
Name:
Title:
HEARST-ARGYLE TELEVISION, INC.
By:___________________________
Name:
Title:
91
