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EXHIBIT A
EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
DATED AS OF JANUARY 10, 1999
BY AND AMONG
THE TIMES MIRROR COMPANY,
HOLLYWOOD ONLINE INC.,
BIG ENTERTAINMENT, INC.
AND
BIG ACQUISITION CORP.
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TABLE OF CONTENTS
Page
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RECITALS ............................................................................1
ARTICLE 1 THE MERGER..................................................................1
SECTION 1.1. The Merger....................................................1
SECTION 1.2. Effective Time................................................2
SECTION 1.3. Closing of the Merger.........................................2
SECTION 1.4. Effects of the Merger.........................................2
SECTION 1.5. Articles of Incorporation and Bylaws..........................2
SECTION 1.6. Directors.....................................................2
SECTION 1.7. Officers......................................................2
SECTION 1.8. Aggregate Consideration.......................................3
(a) Merger Consideration..........................................3
(i) Conversion of Shares.....................................3
(ii) Parent Common Stock Price................................4
(b) Conversion of Stock of Sub....................................5
(c) Cancellation of Treasury Shares...............................5
SECTION 1.9. Exchange of Certificates......................................5
(a) Delivery of Certificates Representing Merger Consideration....5
(b) Delivery of Certificates Representing Shares..................5
(c) Fractional Shares.............................................5
(d) Effect of Exchange............................................5
ARTICLE 2 CONDITIONS TO CONSUMMATION OF MERGER........................................6
SECTION 2.1. Conditions to All Parties' Obligations........................6
(a) HSR Act; Other Governmental Approvals.........................6
(b) No Order......................................................6
(c) Shareholder Approval..........................................6
(d) Proxy Statement...............................................6
SECTION 2.2. Conditions to Parent's and Sub's Obligations..................6
(a) Representations, Warranties and Covenants;
Officer's Certificates .......................................6
(b) Certificates of Good Standing.................................7
(c) Resolutions...................................................7
(d) Third-Party Consents..........................................7
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(e) NATO Agreement...............................................7
(f) Domain Names..................................................7
(g) Ancillary Agreements..........................................7
(h) Tax Certificate...............................................8
SECTION 2.3. Limited Exception to Section 2.2(a) Condition to Parent's
and Sub's Obligations to Close................................8
SECTION 2.4. Conditions to Times Mirror and HOL's Obligations..............9
(a) Representations, Warranties and Covenants.....................9
(b) Certificates of Good Standing.................................9
(c) Resolutions...................................................9
(d) Third-Party Consents..........................................9
(e) Recommendation of Board of Directors of Parent................9
(f) Ancillary Agreements..........................................9
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF HOL......................................10
SECTION 3.1. Organization and Good Standing of HOL........................10
SECTION 3.2. Authority....................................................10
SECTION 3.3. No Breach....................................................10
SECTION 3.4. Consents and Approvals.......................................11
SECTION 3.5. Capital Stock of HOL.........................................11
SECTION 3.6. Equity Interests.............................................11
SECTION 3.7. Intentionally Omitted........................................11
SECTION 3.8. No Indebtedness..............................................11
SECTION 3.9. Assets Other Than Real Property..............................11
SECTION 3.10. Real Property................................................12
(a) Owned Property...............................................12
(b) Leased Property..............................................12
(c) Title to Real Property.......................................12
SECTION 3.11. Intellectual Property........................................12
(a) Proprietary Rights...........................................12
(b) Licenses.....................................................13
(c) Trade Secrets................................................13
(d) Photographs..................................................13
(e) Domain Names.................................................13
(f) Claims.......................................................13
SECTION 3.12. Contracts....................................................14
(a) Employment, Independent Contractor and Consulting Agreements.14
(b) Non-Competition Agreements...................................14
(c) Leases of Real Property......................................14
(d) Personal Property Leases.....................................14
(e) Supply and Service Agreements................................14
(f) Indebtedness.................................................14
(g) Guarantees...................................................15
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(h) Partnerships and Joint Ventures..............................15
(i) Online Service Agreements....................................15
(j) Electronic Ticketing and Merchandising Agreements............15
(k) Other Agreements.............................................15
SECTION 3.13. Litigation; Decrees..........................................15
SECTION 3.14. Employee Benefits and Related Matters........................15
(a) Plans........................................................15
(b) Compliance with ERISA and the Code...........................16
(c) Multiemployer Plan Liabilities...............................16
(d) Accumulated Funding Deficiencies; Liens......................17
(e) Employee Welfare Benefit Plans...............................17
SECTION 3.15. Absence of Changes or Events.................................17
SECTION 3.16. Compliance with Applicable Laws..............................17
(a) General......................................................17
SECTION 3.17. Environmental Matters........................................17
(a) Compliance...................................................17
(b) Hazardous Materials..........................................17
(c) Notices of Certain Environmental Matters.....................18
(d) Definitions..................................................18
(i) "Hazardous Material.....................................18
(ii) "Environmental Law......................................18
SECTION 3.18. Taxes........................................................18
(a) Definitions..................................................18
SECTION 3.19. Labor Matters................................................21
SECTION 3.20. Information Supplied.........................................21
SECTION 3.21. Insurance....................................................21
SECTION 3.22. Year 2000....................................................22
SECTION 3.23. Investor Representations.....................................22
SECTION 3.24. Exemption from Registration, Restricted Securities...........22
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF TIMES MIRROR.............................22
SECTION 4.1. Organization and Good Standing of Times Mirror...............22
SECTION 4.2. Authority....................................................22
SECTION 4.3. No Breach....................................................23
SECTION 4.4. Consents and Approvals.......................................23
SECTION 4.5. Title to and Transfer of the Shares..........................23
SECTION 4.6. Brokers......................................................23
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB...........................24
SECTION 5.1. Organization and Good Standing...............................24
SECTION 5.2. Authority....................................................24
SECTION 5.3. No Breach....................................................24
SECTION 5.4. Consents and Approvals.......................................24
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SECTION 5.5. Capital Stock of Parent......................................25
SECTION 5.6. SEC Reports; Financial Statements............................26
SECTION 5.7. Information Supplied.........................................26
SECTION 5.8. Vote Required................................................26
SECTION 5.9. Litigation; Decrees..........................................27
SECTION 5.10. Absence of Changes or Events.................................27
SECTION 5.11. No Prior Activities..........................................27
SECTION 5.12. Brokers......................................................27
SECTION 5.13. Taxes........................................................27
(a) Tax Returns and Taxes........................................27
(b) Tax Claims...................................................27
(c) Tax Free Reorganization......................................27
ARTICLE 6 COVENANTS OF HOL AND TIMES MIRROR..........................................28
SECTION 6.1. Delivery of Year-End Audited Financial Statements............28
SECTION 6.2. Access.......................................................29
SECTION 6.3. Ordinary Conduct.............................................29
(a) Charter and Bylaws...........................................30
(b) Dividends....................................................30
(c) Capital Stock................................................30
(d) Employee Matters.............................................30
(e) Compensation.................................................30
(f) Indebtedness.................................................30
(g) Encumbrances.................................................30
(h) Related-Party Transactions...................................30
(i) Accounting Policies and Tax Matters..........................30
(j) Acquisitions; Reorganizations................................30
(k) Capital Expenditures.........................................31
(l) Asset Dispositions...........................................31
(m) Other Actions................................................31
(n) Contracts....................................................31
(o) Agreements...................................................31
SECTION 6.4. Insurance....................................................31
SECTION 6.5. No Sale or Pledge............................................31
SECTION 6.6. Notice of Breach by Times Mirror or HOL......................31
SECTION 6.7. No Additional Representations................................32
ARTICLE 7 COVENANTS OF PARENT AND SUB................................................32
SECTION 7.1. Confidentiality..............................................32
SECTION 7.2. Conduct of Business of Parent................................32
(a) Parent Common Stock..........................................32
(b) Dividends....................................................33
(c) Reorganizations..............................................33
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(d) Charter and Bylaws..............................................33
(e) Indebtedness....................................................33
(f) Employment Agreements...........................................33
(g) Other Actions...................................................33
(h) Parent Rights Agreement.........................................33
(i) Agreements......................................................33
SECTION 7.3. Meetings of Shareholders........................................33
SECTION 7.4. Preparation of Proxy Statement..................................34
SECTION 7.5. No Additional Representations...................................34
SECTION 7.7. Notice of Breach by Parent or Sub...............................34
ARTICLE 8 MUTUAL COVENANTS..............................................................34
SECTION 8.1. Cooperation.....................................................34
SECTION 8.2. Publicity.......................................................34
SECTION 8.3. Records.........................................................35
SECTION 8.4. Antitrust Notification..........................................35
SECTION 8.5. Reasonable Efforts; Additional Agreements.......................36
SECTION 8.6. Tax-Free Reorganization.........................................36
ARTICLE 9 TERMINATION; AMENDMENT; WAIVER................................................36
SECTION 9.1. Termination.....................................................36
SECTION 9.2. Return of Confidential Information..............................37
SECTION 9.3. Effects of Termination..........................................37
ARTICLE 10 EMPLOYEE AND RELATED MATTERS..................................................38
SECTION 10.1. Offers of Employment............................................38
SECTION 10.2. Continuation of Plans...........................................38
SECTION 10.3. Mutual Cooperation..............................................38
(a) General.........................................................38
(b) Performance Cycle Bonus Payments................................38
ARTICLE 11 INDEMNIFICATION...............................................................39
SECTION 11.1. Indemnification by Times Mirror.................................39
SECTION 11.2. Indemnification by Parent.......................................39
SECTION 11.3. Adjustments to Losses...........................................40
SECTION 11.4. Termination of Indemnification..................................40
SECTION 11.5. Procedures Relating to Indemnification for Third Party Claims...40
SECTION 11.6. Tax Matters.....................................................41
(a) Tax Indemnification.............................................41
(b) Preparation of Tax Returns; Payment of Taxes....................41
(i) Times Mirror...............................................41
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(ii) Parent..................................................42
(iii) Closing Taxable Year; Allocation for Straddle Year.....43
(c) Refund Claims................................................44
(d) Carrybacks...................................................44
(e) Cooperation with Respect to Taxes............................44
(f) Tax Proceedings..............................................44
(g) Claim Period.................................................45
(h) Termination of Tax Sharing Arrangements......................46
SECTION 11.7. Exclusive Remedy.............................................46
ARTICLE 12 MISCELLANEOUS..............................................................46
SECTION 12.1. Expenses.....................................................46
SECTION 12.2. HOL Acquisition Agreement....................................46
SECTION 12.3. Assignment...................................................46
SECTION 12.4. No Third-Party Beneficiaries.................................46
SECTION 12.5. Notices......................................................47
(a) if to Parent, Sub or the Surviving Corporation, HOL..........47
(b) if to Times Mirror...........................................47
(c) if to HOL, prior to the Effective Time.......................47
SECTION 12.6. Counterparts.................................................47
SECTION 12.7. Entire Agreement.............................................48
SECTION 12.8. Severability.................................................48
SECTION 12.9. Amendment....................................................48
SECTION 12.10. Extension; Waiver............................................48
SECTION 12.11. Dispute Resolution; Equitable Enforcement....................48
(a) Accounting Disputes..........................................48
(b) Arbitration..................................................48
(c) Equitable Enforcement........................................49
SECTION 12.12. Interpretation of this Agreement.............................49
(a) Construction.................................................49
(b) Knowledge....................................................50
(c) Governing Law................................................50
(d) Headings, Exhibits and Schedules.............................50
SECTION 12.13. Survival of Representations..................................50
SECTION 12.14. No Consequential or Punitive Damages.........................50
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TABLE OF EXHIBITS
Exhibit A................................................................Shareholder Agreement
Exhibit B........................................................Registration Rights Agreement
Exhibit C............................................................Non-Competition Agreement
Exhibit D.....................................................................Voting Agreement
Exhibit E.............................................Form of Times Mirror/HOL Tax Certificate
Exhibit F...............................................Term Sheet of Series E Preferred Stock
Exhibit G..........................................Form of Additional Financial Representation
TABLE OF SCHEDULES
2.4(d) Parent Consents
3.1 HOL Foreign Jurisdictions
3.3 HOL Conflicts
3.4 HOL Consents
3.6 Equity Interests
3.9 Certain Liens
3.10(b) Leased Property
3.11(a) Intellectual Property
3.11(b) Licenses
3.11(d) Domain Names
3.11(e) Claims
3.12(a) Employment Agreements
3.12(b) Non-Competition Agreements
3.12(c) Leases of Real Property
3.12(d) Personal Property Leases
3.12(e) Supply and Service Agreements
3.12(f) Indebtedness
3.12(g) Guarantees
3.12(h) Partnerships and Joint Ventures
3.12(i) On-line Service Agreements
3.12(j) Electronic Merchandising Agreements
3.12(k) Other Agreements
3.13 Litigation; Decrees
3.14(a) Plans
3.14(b) Compliance with ERISA and Code
3.14(e) Employee Welfare Benefit Plans
3.15 Changes or Events
3.18(b) Tax Claims
5.5(a) Parent Options and Rights
5.10 Parent Changes or Events
6.3 Conduct of Business of HOL
6.4 HOL Insurance Policies
7.2 Conduct of Business of Parent
10.3 Severance Benefits
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TABLE OF DEFINED TERMS
Cross Reference
Term in Agreement Page
---- ------------ ----
Accounting Firm............................................... Section 11.6(b)(i)(2)....... 39
Acquisition Proposal.......................................... Section 6.5................. 29
Affiliated Group.............................................. Section 3.18(a)(i).......... 17
Agreement..................................................... Preamble..................... 1
Ancillary Agreements.......................................... Section 2.4(f)............... 6
Announcement Date............................................. Section 1.8(a)(ii)........... 4
Applicable Laws............................................... Section 3.16(a)............. 16
Audited Financial Statements.................................. Section 6.1................. 26
Average Share Price........................................... Section 1.8(a)(ii)........... 4
CA Agreement of Merger........................................ Section 1.2.................. 2
Cash Merger Consideration..................................... Section 1.8(a)(i)............ 3
CGCL.......................................................... Section 1.1.................. 1
Closing Date.................................................. Section 1.3.................. 2
Closing....................................................... Section 1.3.................. 2
Code.......................................................... Recitals..................... 1
Common Stock Merger Consideration............................. Section 1.8(a)(i)............ 3
Confidentiality Agreement..................................... Section 6.2................. 27
Contracts..................................................... Section 3.12................ 12
DGCL.......................................................... Section 1.1.................. 1
DOJ........................................................... Section 8.4................. 32
Effective Time................................................ Section 1.2.................. 2
Employment Agreements......................................... Section 10.3.(b)............ 35
Enforceability Exceptions..................................... Section 3.2.................. 9
Environmental Law............................................. Section 3.16(d)(ii)......... 16
ERISA Affiliate............................................... Section 3.14(a)............. 14
ERISA......................................................... Section 3.14(b)............. 15
Excess Share Amount........................................... Section 1.8(a)(i)............ 3
Exchange Act.................................................. Section 5.5(b).............. 24
FTC........................................................... Section 8.4................. 32
Hazardous Material............................................ Section 3.16(d)(i).......... 16
HOL Material Adverse Effect................................... Section 3.1.................. 8
HOL Plan...................................................... Section 3.14(a)............. 14
HOL........................................................... Preamble..................... 1
HSR Act....................................................... Section 2.1(a)............... 5
indemnified party............................................. Section 11.5................ 36
Knowledge..................................................... Section 12.12(b)............ 46
Leased Properties............................................. Section 3.10(b)............. 10
Losses........................................................ Section 2.3.................. 7
Merger Certificate............................................ Section 1.2.................. 2
Merger Consideration.......................................... Section 1.8(a)(i)............ 3
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Merger........................................................ Section 1.1.................. 1
NATO Agreement................................................ Section 3.12(h)............. 13
Parent Common Stock Price..................................... Section 1.8(a)(ii)........... 4
Parent Common Stock........................................... Section 1.8(a)(i)............ 3
Parent Material Adverse Effect................................ Section 5.1................. 22
Parent Preferred Stock........................................ Section 5.5(a).............. 23
Parent Rights Agreement....................................... Section 5.5(a).............. 23
Parent Rights................................................. Section 5.5(a).............. 23
Parent SEC Reports............................................ Section 5.6(a).............. 24
Parent Shareholders........................................... Recitals..................... 1
Parent........................................................ Preamble..................... 1
Performance Cycle Amount...................................... Section 10.3.(b)............ 35
Permitted Liens............................................... Section 3.9................. 10
Plans......................................................... Section 3.14(a)............. 14
Preferred Stock Merger Consideration.......................... Section 1.8(a)(i)............ 3
Proxy Statement............................................... Section 3.20................ 20
Records....................................................... Section 8.3................. 32
Reduced Common Stock Merger Consideration..................... Section 1.8(a)(i)............ 3
Related Corporation........................................... Section 5.13(c)(i).......... 25
SEC........................................................... Section 5.6(a).............. 24
Securities Act................................................ Section 5.6(a).............. 24
Share......................................................... Section 1.8(a)(i)............ 2
Sub........................................................... Preamble..................... 1
Surviving Corporation......................................... Section 1.1.................. 1
Tax Proceeding................................................ Section 11.6(f)(i).......... 41
Tax Return.................................................... Section 3.18(a)(iii)........ 17
Taxes......................................................... Section 3.18(a)(ii)......... 17
Third-Party Claim............................................. Section 11.5................ 37
Times Mirror Plan............................................. Section 3.14(a)............. 14
Times Mirror.................................................. Preamble..................... 1
Year 2000 Compliant........................................... Section 3.22................ 20
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") dated as of January
10, 1999 is by and among THE TIMES MIRROR COMPANY, a Delaware corporation,
("Times Mirror"), HOLLYWOOD ONLINE INC., a California corporation and a wholly
owned subsidiary of Times Mirror ("HOL"), BIG ENTERTAINMENT, INC., a Florida
corporation ("Parent"), and BIG ACQUISITION CORP., a Delaware corporation
("Sub").
RECITALS
WHEREAS the Boards of Directors of HOL, Parent and Sub have each (i)
determined that the Merger (as defined below) is fair and in the best interests
of their respective stockholders and (ii) approved the Merger and the issuance
by Parent of shares of Parent Common Stock and Series E Preferred Stock, if any
(each as defined below), to Times Mirror, upon the terms and subject to the
conditions set forth in this Agreement;
WHEREAS, concurrently with the execution of this Agreement, each of
Xxxxxxxx Xxxxxxxxxx, Xxxxxx X. Xxxxxxx, Xxxxxx X. Xxxxxxxxx and Tekno Simon, LLC
(collectively, the "Parent Shareholders") has entered into a Voting Agreement
with Times Mirror, pursuant to which each Parent Shareholder has agreed to
approve the issuance by Parent of shares of Parent Common Stock and Series E
Preferred Stock, if any, to Times Mirror pursuant to the Merger as contemplated
by this Agreement, if approval of Parent's shareholders of such issuance is
required by NASDAQ rules or regulations;
WHEREAS for federal income tax purposes it is intended that the Merger
qualify as a reorganization under the provisions of Sections 368(a)(1)(A) and
(a)(2)(E) of the Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, HOL, Parent and Sub desire that the Merger and the other
transactions contemplated herein be consummated upon the terms and subject to
the conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements herein contained and
intending to be legally bound hereby, Times Mirror, HOL, Parent and Sub hereby
agree as follows:
ARTICLE 1
THE MERGER
SECTION 1.1. The Merger. At the Effective Time (as defined below) and
upon the terms and subject to the conditions of this Agreement and in accordance
with the California General Corporation Law (the "CGCL") and the Delaware
General Corporation Law (the "DGCL"), Sub shall be merged with and into HOL (the
"Merger"). Following the Xxxxxx, XXX
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shall continue as the surviving corporation (the "Surviving Corporation") and
the separate corporate existence of Sub shall cease.
SECTION 1.2. Effective Time. Subject to the terms and conditions set
forth in this Agreement, (a) an agreement of merger and accompanying officers'
certificates (together, the "CA Agreement of Merger") shall be duly executed and
acknowledged by Parent, Sub and HOL and thereafter delivered to the Secretary of
State of the State of California for filing pursuant to the CGCL on the Closing
Date (as defined in Section 1.3), and (b) a Certificate of Merger (the "Merger
Certificate") shall be duly executed and acknowledged by HOL and thereafter
delivered to the Secretary of State of the State of Delaware for filing pursuant
to the DGCL on the Closing Date. The Merger shall become effective at such time
as a properly executed copy of the CA Agreement of Merger is duly filed with the
Secretary of State of the State of California in accordance with the CGCL, or
such later time as HOL and Sub may agree upon and set forth in the CA Agreement
of Merger (the time the Merger becomes effective being referred to herein as the
"Effective Time").
SECTION 1.3. Closing of the Merger. The closing of the Merger (the
"Closing") will take place at a time and on a date (the "Closing Date") to be
specified by the parties, which shall be no later than the first business day
following the satisfaction or waiver of the conditions set forth in Section 2.1
below, at such place as the parties shall mutually agree in writing, unless
another time or date is agreed to in writing by the parties hereto.
SECTION 1.4. Effects of the Merger. The Merger shall have the effects
set forth in the CGCL and the DGCL. Without limiting the generality of the
foregoing and subject thereto, at the Effective Time the Surviving Corporation
shall succeed to all the rights and property of Sub and HOL and shall be subject
to all the debts and liabilities of Sub and HOL.
SECTION 1.5. Articles of Incorporation and Bylaws. The Articles of
Incorporation and Bylaws of HOL in effect at the Effective Time shall be the
Articles of Incorporation and Bylaws of the Surviving Corporation until amended
in accordance with applicable law.
SECTION 1.6. Directors. The directors of Sub at the Effective Time shall
be the initial directors of the Surviving Corporation, each to hold office in
accordance with the Articles of Incorporation and bylaws of the Surviving
Corporation until such director's successor is duly elected or appointed and
qualified.
SECTION 1.7. Officers. The officers of Sub at the Effective Time shall
be the initial officers of the Surviving Corporation, each to hold office in
accordance with the Articles of Incorporation and bylaws of the Surviving
Corporation until such officer's successor is duly elected or appointed and
qualified.
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SECTION 1.8. Aggregate Consideration.
(a) Merger Consideration.
(i) Conversion of Shares. At the Effective Time, all of the
shares of common stock, no par value, of HOL (individually a "Share" and
collectively the "Shares") issued and outstanding immediately prior to
the Effective Time (other than Shares held in HOL's treasury, which
shall be canceled as provided in Section 1.8(c)) shall, by virtue of the
Merger and without any action on the part of Sub, HOL or the holder
thereof, be converted into and shall become a number of fully paid and
nonassessable shares of common stock, $.01 par value per share, of
Parent ("Parent Common Stock") equal to the quotient of (A) the
aggregate amount of thirty-one million dollars ($31,000,000) divided by
(B) the Parent Common Stock Price (as defined below) (the "Common Stock
Merger Consideration");
(1) provided, however, that in the event that,
pursuant to such calculation, the Shares would be converted into and
would become a number of shares of Parent Common Stock that would be,
for equity accounting purposes, in excess of 19.9% of the fully diluted
voting stock of Parent (which outstanding voting capital stock shall
include, for purposes of this calculation, such shares of Parent Common
Stock that would comprise the Common Stock Merger Consideration), then
the number of shares of Parent Common Stock that would comprise the
Common Stock Merger Consideration shall be reduced by such excess number
of shares (such excess number of shares, the "Excess Share Amount") of
Parent Common Stock (such remaining share amount, the "Reduced Common
Stock Merger Consideration"). In such event, the Shares shall, by virtue
of the Merger and without any action on the part of Sub, HOL or the
holder thereof, be converted into and shall become a number of fully
paid and nonassessable shares of Parent Common Stock equal to the sum of
the Reduced Common Stock Merger Consideration plus a number of fully
paid and nonassessable shares of Series E Preferred Stock (as defined
below) having an aggregate initial liquidation preference equal to the
product of (x) the Excess Share Amount multiplied by (y) the Parent
Common Stock Price (such number of shares of Series E Preferred Stock,
the "Preferred Stock Merger Consideration");
(2) provided, further, however, that in no event
shall the Shares be converted into a number of shares of Series E
Preferred Stock that would have an aggregate initial liquidation
preference in excess of six million dollars ($6,000,000);
(3) provided, still further, however, that in the
event the number of shares of Series E Preferred Stock that would
comprise the Preferred Stock Merger Consideration would have an
aggregate initial liquidation preference of one million dollars
($1,000,000) or less (such dollar amount, the "Cash Merger
Consideration"), then, at the option of Parent, the Shares shall, by
virtue of the Merger and without any action on the part of Sub, HOL or
the holder thereof, be converted into and shall become the sum of a
number of fully paid and nonassessable shares of Parent
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Common Stock equal to the Reduced Common Stock Merger Consideration plus
the Cash Merger Consideration (such numbers of shares of Parent Common
Stock, Series E Preferred Stock (if any) and Cash Merger Consideration
(if any) that the Shares are converted into and become, pursuant to this
Section 1.8(a)(i), the "Merger Consideration.")
(4) provided, still further, however, that in the event
that, pursuant to the calculation of the Common Stock Merger
Consideration pursuant to this Section 1.8(a)(i), the Shares would be
converted into and would become a number of shares of Parent Common
Stock that would be equal to or in excess of 20% of the issued and
outstanding common stock of Parent or the voting power of Parent
immediately prior to the Effective Time and the aggregate Parent Common
Stock Price of the excess shares would be equal to one million dollars
($1,000,000) or less, then, at the option of Parent, the Shares shall,
by virtue of the Merger and without any action on the part of Sub, HOL
or the holder thereof, be converted into and shall become the sum of a
number of fully paid and nonassessable shares of Parent Common Stock
equal to 19.9% of the issued and outstanding common stock of Parent or
the voting power of Parent immediately prior to the Effective Time plus
an amount in cash equal to the product of (x) the number of excess
shares multiplied by (y) the Parent Common Stock Price.
(5) For purposes of this Agreement, "Series E
Preferred Stock" means that series of preferred stock with such terms as
are set forth on Exhibit F hereto and such other terms as are mutually
acceptable to the parties hereto. Unless the context otherwise requires,
each reference in this Agreement to shares of Parent Common Stock shall
include the associated Parent Rights. Notwithstanding the foregoing, if,
between the date of this Agreement and the Effective Time, the
outstanding shares of Parent Common Stock or the Shares shall have been
changed into a different number of shares or a different class of
capital stock or other securities or property of Parent or any other
person by reason of any stock dividend, other distribution, subdivision,
reclassification, recapitalization, split, combination or exchange of
shares of Parent Common Stock (whether by merger or consolidation, sale
of all or substantially all of Parent's assets, spin-off or another
business combination), then the Merger Consideration contemplated by
this Agreement shall be correspondingly adjusted to reflect such stock
dividend, subdivision, reclassification, recapitalization, split,
combination or exchange of shares.
(ii) Parent Common Stock Price. The "Parent Common Stock Price"
shall be equal to, with respect to one share of Parent Common Stock, the average
of the per share closing bid prices (the "Average Share Price") of Parent Common
Stock on the NASDAQ SmallCap Market for the fifteen (15) trading days ending on
the third trading day immediately preceding, and the fifteen (15) trading days
beginning on the third trading day immediately following, the date (the
"Announcement Date") on which Parent and Times Mirror publicly announce the
proposed Merger; provided, however, that, in no event may the Average Share
Price exceed $17.5289 or be less than $8.4499.
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(b) Conversion of Stock of Sub. At the Effective Time, each
outstanding share of the common stock, par value $.01 per share, of Sub shall be
converted into one share of common stock, no par value, of the Surviving
Corporation.
(c) Cancellation of Treasury Shares. At the Effective Time, each
Share held in the treasury of HOL shall, by virtue of the Merger and without any
action on the part of Sub, HOL or the holder thereof, be canceled, retired and
cease to exist and no shares of Parent Common Stock or other consideration shall
be delivered with respect thereto.
SECTION 1.9. Exchange of Certificates.
(a) Delivery of Certificates Representing Merger Consideration.
At the Effective Time, Parent shall deliver to Times Mirror in exchange for
certificates representing the outstanding Shares (i) certificates representing
the number of shares of Parent Common Stock to be delivered pursuant to Section
1.8(a) and (ii) cash to be paid in lieu of fractional shares of Parent Common
Stock as contemplated by Section 1.9(c).
(b) Delivery of Certificates Representing Shares. At the
Effective Time, Times Mirror shall deliver to Parent for cancellation in
accordance with this Article 1 certificates representing the outstanding Shares.
(c) Fractional Shares. No fractions of a share of Parent Common
Stock shall be issued in the Merger. In lieu thereof, in the event that Times
Mirror would otherwise be entitled to a fraction of a share of Parent Common
Stock, Times Mirror shall, upon surrender of its certificate or certificates
representing outstanding Shares, be entitled to receive an amount of cash
(without interest) determined by multiplying the Average Share Price by the
fractional share interest to which Times Mirror would otherwise be entitled. The
parties acknowledge that payment of the cash consideration in lieu of issuing
fractional shares was not separately bargained for consideration but merely
represents a mechanical rounding off for purposes of simplifying the corporate
and accounting complexities which would otherwise be caused by the issuance of
fractional shares.
(d) Effect of Exchange. All shares of Parent Common Stock
delivered upon the surrender of certificates representing Shares in accordance
with the terms hereof (including any cash paid pursuant to Section 1.9(c)) shall
be deemed, to the fullest extent permitted by Applicable Law, to have been
delivered in full satisfaction of all rights pertaining to such Shares, and
after the Effective Time there shall be no further registration of transfers on
the stock transfer books of the Surviving Corporation of the Shares which were
outstanding immediately prior to the Effective Time.
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ARTICLE 2
CONDITIONS TO CONSUMMATION OF MERGER
SECTION 2.1. Conditions to All Parties' Obligations. The respective
obligations of the parties hereto to consummate the Merger shall be subject to
the satisfaction (or waiver by each party) as of the Effective Time of the
following conditions:
(a) HSR Act; Other Governmental Approvals. Any waiting period
applicable to the consummation of the Merger contemplated under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended, and the rules
and regulations thereunder (the "HSR Act") shall have expired or have been
terminated, and any other notices, registrations, consents, approvals or
authorizations to or of any federal, state or foreign governmental authority
with respect to the Merger shall have been either filed, in the case of notices
or registrations, or received, in the case of consents, approvals and
authorizations.
(b) No Order. 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, regulation,
injunction or other order (whether temporary, preliminary or permanent) which
remains in effect, and which has the effect of making the transactions
contemplated hereby illegal or otherwise prohibiting consummation of the
transactions contemplated by this Agreement.
(c) Shareholder Approval. The issuance by Parent of the shares of
Parent Common Stock and Series E Preferred Stock to Times Mirror pursuant to
this Agreement shall have been approved by the requisite vote, if any, of the
shareholders of Parent in accordance with any Applicable Laws and/or NASDAQ
rules or regulations.
(d) Proxy Statement. In the event that NASDAQ rules or
regulations would require the approval by the shareholders of Parent with
respect to the issuance by Parent of shares of Parent Common Stock and Series E
Preferred Stock, the definitive Proxy Statement shall have been mailed to
shareholders of Parent in compliance with the Exchange Act.
SECTION 2.2. Conditions to Parent's and Sub's Obligations. The
obligations of Parent and Sub to consummate the Merger are subject to the
satisfaction (or waiver by each of Parent and Sub) as of the Effective Time of
the following conditions:
(a) Representations, Warranties and Covenants. Subject to Section
2.3, the representations and warranties of each of HOL and Times Mirror made in
this Agreement, the Ancillary Agreements and any certificate or document
required to be delivered by Times Mirror or HOL pursuant to the terms of this
Agreement and not qualified as to materiality or HOL Material Adverse Effect
shall be true and correct in all material respects and those representations and
warranties of each of HOL and Times Mirror so qualified shall be true and
correct in all respects, in each case as of the date of this Agreement, and each
of HOL and Times Mirror shall have performed or complied with, or shall have
caused to be performed or complied with, in all material respects all
obligations and covenants required by this Agreement, the
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Ancillary Agreements and any certificate or document required to be delivered by
Times Mirror or HOL pursuant to the terms of this Agreement to be performed or
complied with by HOL and Times Mirror by the Effective Time.
(b) Certificates of Good Standing. Parent and Sub shall have
received (i) from HOL and Times Mirror, certificates as to HOL and Times Mirror,
respectively, issued by the appropriate governmental authority of the state of
incorporation of each of HOL and Times Mirror, and (ii) from HOL, certificates
as to HOL issued by the appropriate governmental authority of each of the states
set forth on Schedule 3.1, evidencing its good standing in such jurisdiction or
state as of a date not more than ten days prior to the Effective Time (such good
standing to be reaffirmed by bring-down telegram or other official means on the
Closing Date).
(c) Resolutions. Parent and Sub shall have received (i) from HOL
certified copies of resolutions duly adopted by the Board of Directors of HOL
authorizing the execution, delivery and performance of this Agreement and each
of the Ancillary Agreements to which it is a party and the consummation of the
transactions contemplated hereby and thereby and (ii) from Times Mirror
certified copies of its general standing resolutions duly adopted by the Board
of Directors of Times Mirror authorizing the execution, delivery and performance
of this Agreement and each of the Ancillary Agreements to which it is a party
and the consummation of the transactions contemplated hereby and thereby and
(iii) from Times Mirror certified copies of resolutions acting in its capacity
as the sole shareholder of HOL approving this Agreement and each of the
Ancillary Agreements to which it is a party and the consummation of the
transactions contemplated hereby and thereby, and all such resolutions shall not
have been revoked and shall remain in full force and effect as of the Effective
Time.
(d) Third-Party Consents. HOL and Times Mirror shall have
obtained in writing any material third-party consents required under any of the
Contracts that are indicated with an asterisk on Schedule 3.4.
(e) NATO Agreement. The NATO Agreement shall be in full force and
effect in accordance with its terms as of the date hereof, HOL shall not be in
default thereunder, there shall not be any event or circumstance that would
have, or could be reasonably expected to have, a material adverse effect on
HOL's rights and obligations thereunder or give rise to any right of
termination, cancellation or non-renewal of any other party thereto and there
shall not otherwise have been any material adverse change to HOL's rights and
obligations thereunder.
(f) Domain Names. The domain name "xxxxxxxxx.xxx" as registered
with InterNIC/Network Solutions, Inc. shall be valid and in full force and
effect and no event or circumstance shall have occurred in respect of such
domain name which would have, or could reasonably be expected to have, a
material adverse effect on HOL's use and enjoyment thereof.
(g) Ancillary Agreements. Each of the Shareholder Agreement and
the Non-Competition Agreement shall have been executed and delivered by the
parties thereto, substantially in the forms of Exhibit A and Exhibit C,
respectively.
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(h) Tax Certificate. Each of Times Mirror and HOL shall have
delivered a certificate in the form attached hereto as Exhibit E (i) at the time
of the filing of the definitive form of Proxy Statement and (ii) at the Closing.
SECTION 2.3. Limited Exception to Section 2.2(a) Condition to Parent's
and Sub's Obligations to Close. The language of Section 2.2(a) notwithstanding,
the condition to the obligations of Parent and Sub to consummate the Merger
contained in Section 2.2(a) shall be deemed to be satisfied notwithstanding any
inaccuracy or breach in the representations, warranties or covenants that
otherwise are required to be true and correct as provided in such Section 2.2(a)
if, 5 business days prior to the Effective Time, Times Mirror delivers to Parent
and Sub a certificate (which certificate shall be reaffirmed by a like
certificate delivered at the Effective Time) dated as of the Effective Time
signed by the chief financial officer of Times Mirror that sets forth (i) the
reasonable details of any such inaccuracy or breach; (ii) a firm undertaking by
Times Mirror to indemnify Parent and Sub for any and all damage, loss (including
any diminution in the value of HOL as of the date of this Agreement), liability,
claim, penalty, judgment, assessment, cost and expense of any kind (including
reasonable expenses of investigation and reasonable attorneys' fees and
expenses) (collectively, "Losses") that may arise from any such inaccuracy or
breach; and (iii) the amount of the Losses resulting from any such inaccuracy or
breach and the basis for the determination thereof, accompanied by a cash
payment (which shall be by wire transfer of immediately available funds) in the
amount of such Losses; provided, however, that (a) such condition shall not be
deemed to be satisfied by the delivery of such certificate if the aggregate
amount of such Losses is reasonably expected to be $3,100,000 or more; (b) Times
Mirror shall not have any liability for the amount of such Losses unless the
aggregate amount thereof exceeds, on a cumulative basis, an amount equal to
$1,000,000, in which case Times Mirror shall be responsible only for the amount
of such Losses in excess of $1,000,000; and (c) this Section 2.3 shall not apply
to (x) any Losses with respect to the matters for which Parent is entitled to
indemnification under Sections 11.1 and 11.6, (y) any breach by Times Mirror or
HOL of the covenants set forth in Sections 6.1, 6.3, 6.5, 6.6, 8.5(c), 8.6 and
11.6 and (z) any inaccuracy or breach of any representation and warranty or
covenant covered by this Section 2.3 that arises from fraud or willful
misconduct on the part of either Times Mirror, HOL or any of their respective
officers, directors, employees or agents. In the absence of such fraud or
willful misconduct, the remedy contained in this Section 2.3 shall constitute
the sole and exclusive remedy after the Closing of Parent and Sub with respect
to any inaccuracy in or breach of any representation and warranty or covenant of
Times Mirror or HOL specified in any certificate delivered by Times Mirror
pursuant to this Section 2.3 (unless excluded from the coverage of this Section
2.3). In addition, if the amount of any of the Losses specified in such
certificate is reasonably expected to be $3,100,000 or more, Parent may, in its
sole discretion, elect to deem such condition to be satisfied by the delivery of
such certificate and the accompanying payment referred to in the first sentence
of this Section 2.3.
Notwithstanding the foregoing, Parent shall have the right to object in
writing to Times Mirror's statement of the amount of any Losses set forth in any
certificate delivered pursuant to this Section 2.3 within five business days of
the Effective Time. If any such objection is not resolved by Times Mirror and
Parent within five days of the date of such written objection, such dispute
shall be resolved by submitting it to arbitration in accordance with Section
12.11(b).
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SECTION 2.4. Conditions to Times Mirror's and HOL's Obligations. The
obligations of Times Mirror and HOL to consummate the Merger are subject to the
satisfaction (or waiver by each of Times Mirror and HOL) as of the Effective
Time of the following conditions:
(a) Representations, Warranties and Covenants; Officers'
Certificates. The representations and warranties of each of Parent and Sub made
in this Agreement and not qualified as to materiality or Parent Material Adverse
Effect shall be true and correct in all material respects, and those
representations and warranties of each of HOL and Times Mirror so qualified
shall be true and correct in all respects, in each case as of the date of this
Agreement, and each of Parent and Sub shall have performed or complied in all
material respects with all obligations and covenants required by this Agreement
to be performed or complied with by Parent or Sub by the Effective Time.
(b) Certificates of Good Standing. HOL and Times Mirror shall
have received certificates as to Parent and Sub, respectively, issued by the
appropriate governmental authority of the jurisdiction of incorporation of each
of Parent and Sub evidencing its good standing in such jurisdiction as of a date
not more than ten days prior to the Effective Time (such good standing to be
reaffirmed by bring-down telegram or other official means on the Closing Date).
(c) Resolutions. HOL and Times Mirror shall have received from
(i) Parent certified copies of resolutions duly adopted by the Board of
Directors of Parent authorizing the execution, delivery and performance of this
Agreement and each of the Ancillary Agreements to which it is a party and the
consummation of the transactions contemplated hereby and thereby, (ii) Sub
certified copies of resolutions duly adopted by the Board of Directors of Sub
authorizing the execution, delivery and performance of this Agreement and each
of the Ancillary Agreements to which it is a party and the consummation of the
transactions contemplated hereby and thereby and (iii) Parent certified copies
of resolutions acting in its capacity as the sole shareholder of Sub approving
this Agreement and each of the Ancillary Agreements to which it is a party and
the consummation of the transactions contemplated hereby and thereby, and all
such resolutions shall not have been revoked and shall remain in full force and
effect as of the Effective Time.
(d) Third-Party Consents. Parent shall have obtained in writing
any material third-party consents required under any of the contracts to which
Parent is a party that are indicated with an asterisk on Schedule 2.4(d).
(e) Recommendation of Board of Directors of Parent. If such
shareholder approval is required by NASDAQ rules and regulations, Parent,
through its Board of Directors, shall have recommended to its shareholders (via
the Proxy Statement) that such shareholders approve the issuance of shares of
Parent Common Stock to Times Mirror pursuant to this Agreement.
(f) Ancillary Agreements. Each of the Shareholders Agreement and
the Registration Rights Agreement shall have been executed and delivered by the
parties thereto, substantially in the forms of Exhibit A and Exhibit B,
respectively (such agreements, together with the Non-Competition Agreement and
the Voting Agreement in the form of Exhibit D, the "Ancillary Agreements").
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF HOL
HOL hereby represents and warrants to each of Parent and Sub as follows:
SECTION 3.1. Organization and Good Standing of HOL. HOL is a corporation
duly organized and validly existing under the laws of the State of California.
HOL has all requisite corporate power and authority and possesses all
governmental franchises, licenses, permits, authorizations and approvals
necessary to enable it to carry on its business as presently conducted, other
than such franchises, licenses, permits, authorizations and approvals the lack
of which would not have a material adverse effect on the business, assets,
properties, liabilities, financial or other condition or results of operations
of HOL (such effects, taken individually or in the aggregate, an "HOL Material
Adverse Effect"). HOL is duly qualified and in good standing to do business in
the jurisdictions set forth on Schedule 3.1, which jurisdictions constitute each
jurisdiction in which the nature of its business or the ownership, leasing or
holding of its properties makes such qualification necessary, except such
jurisdictions where the failure be so qualified or in good standing would not
have an HOL Material Adverse Effect.
SECTION 3.2. Authority. HOL has all requisite corporate power and
authority to execute and deliver this Agreement and each Ancillary Agreement to
which it is a party and to consummate the transactions contemplated hereby and
thereby. All necessary corporate action required to have been taken by or on
behalf of HOL by Applicable Law or its charter documents has been taken to
authorize (a) the approval, execution and delivery on behalf of HOL of this
Agreement and each Ancillary Agreement to which it is a party and (b) the
performance by HOL of its obligations under this Agreement and each Ancillary
Agreement to which it is a party and the consummation of the transactions
contemplated hereby and thereby. This Agreement and each Ancillary Agreement to
which it is a party constitutes a valid and binding agreement of HOL,
enforceable against it 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 set forth in clauses (i) and (ii)
being referred to as the "Enforceability Exceptions").
SECTION 3.3. No Breach. The execution and delivery by HOL of this
Agreement and each Ancillary Agreement to which it is a party do not, and the
consummation of the transactions to which HOL is a party contemplated hereby
will not, (a) violate or conflict with the Articles of Incorporation or bylaws
of HOL or (b) except as set forth on Schedule 3.3 hereto, constitute a material
breach or default under, or give rise to any, third-party right of termination,
cancellation, modification or acceleration under, or result in the creation of
any material lien under, any contract that HOL is a party to or any contract or
arrangement by which HOL or its assets are bound, or (ii) violate or conflict
with any Applicable Law, assuming that the consents contemplated by Section 3.4
are obtained and in effect.
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SECTION 3.4. Consents and Approvals. Except for (a) the filing and
recordation of the Merger Certificate as required by the DGCL and of the CA
Agreement of Merger as required by the CGCL and (b) filings, permits,
notifications, registrations, authorizations, consents and approvals as may be
required under applicable requirements of the HSR Act and Applicable Law,
neither the execution and delivery by HOL of this Agreement or any Ancillary
Agreement to which it is a party nor the consummation of the transactions to
which HOL is a party contemplated hereby and thereby will require any consent,
approval, authorization or permit of, or filing with or notification to, or
registration with, any federal, state or foreign governmental or regulatory
authority, except where the failure to obtain such consent, approval,
authorization or permit, or to make such filing, registration or notification,
(A) would not materially impair HOL from performing its obligations under this
Agreement and (B) would not have an HOL Material Adverse Effect.
SECTION 3.5. Capital Stock of HOL. The authorized capital stock of HOL
consists of one thousand (1,000) shares of common stock, no par value, of which
one hundred thirty-three and three hundred thirty-four one thousandth (133.334)
shares, constituting the Shares, are duly authorized and validly issued and
outstanding, fully paid and nonassessable. Except for the Shares, there are no
shares of capital stock or other equity securities of HOL outstanding. The
Shares have not been issued in violation of, and none of the Shares is subject
to, any preemptive or subscription rights. Except as may exist under the
agreements listed on Schedule 3.12(a), there are no outstanding warrants,
options, "phantom" stock rights, agreements, convertible or exchangeable
securities or other commitments (other than this Agreement) pursuant to which
HOL is or may become obligated to issue, sell, purchase, return or redeem any
shares of capital stock or other securities of HOL, and no equity securities of
HOL are reserved for issuance for any purpose. Other than this Agreement, the
Shares are not subject to any voting trust agreement or other contract,
agreement, arrangement, commitment or understanding, including any such
agreement, arrangement, commitment or understanding restricting or otherwise
relating to the voting, registration, dividend rights or disposition of the
Shares or any other securities exchangeable or exercisable for or convertible
into Shares or any other capital stock of HOL.
SECTION 3.6. Equity Interests. Except as set forth on Schedule 3.6, HOL
does not directly or indirectly own any capital stock of or other equity
interests in any corporation, partnership or other entity.
SECTION 3.7. Intentionally Omitted.
SECTION 3.8. No Indebtedness. As of the date hereof and as of the
Effective Time, HOL shall not have any indebtedness of any kind, other than
liabilities (but not indebtedness for borrowed money) under the NATO Agreement,
the Water Garden office lease, the Contracts as set forth in Schedules 3.12(a)
through 3.12(k) and in connection with any accrued vacation benefits or sick pay
with respect to any employee of HOL.
SECTION 3.9. Assets Other Than Real Property. HOL has good title to all
of its assets and properties, tangible or intangible, free and clear of all
mortgages, liens, security interests or other encumbrances of any nature
whatsoever, except (a) such as are disclosed on Schedule 3.9
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and (b) Permitted Liens. For purposes of this Agreement, "Permitted Liens" shall
mean (i) mechanics', carriers', workmen's, warehousemen's, repairmen's or other
like liens arising in the ordinary course of business, (ii) liens arising under
the original purchase price conditional sale contracts and equipment leases with
third parties entered into in the ordinary course, (iii) liens for Taxes and
other governmental obligations not yet due and payable or which thereafter may
be paid without penalty and (iv) other imperfections of title, restrictions or
encumbrances, if any, which liens, imperfections of title, restrictions or other
encumbrances do not materially impair the continued use in the business of the
respective owner thereof and operation of the specific assets to which they
relate.
This Section 3.9 does not relate to real property or interests in real
property, which are the subject of Section 3.10, or to intellectual property,
which is the subject of Section 3.11.
SECTION 3.10. Real Property.
(a) Owned Property. HOL does not own any real property.
(b) Leased Property. Schedule 3.10(b) sets forth a true and
complete list of all real property and interests in real property leased by HOL
("Leased Properties") and identifies any leases relating to the Leased
Properties, each as amended to date (true and complete copies of which leases,
as so amended, have heretofore been made available to Parent). HOL has not
received any written notices of any violations of Applicable Laws relating to
the Leased Properties. No work has been performed or is in progress at, and no
materials have been furnished with respect to, the Leased Properties or any
portion thereof which might give rise to mechanics', materialmens' or other
similar liens.
(c) Title to Real Property. HOL has good and marketable title to
the leasehold estates in all Leased Properties, free and clear of all mortgages,
liens, security interests, easements, covenants, rights-of-way and other similar
restrictions of any nature whatsoever, except (i) Permitted Liens, (ii)
easements, covenants, rights-of-way and other similar restrictions of record and
(iii) (A) zoning, building and other similar restrictions, (B) mortgages, liens,
security interests or encumbrances that have been placed by any developer,
landlord or other third party on property over which HOL has easement rights or
on any Leased Property and subordination or similar agreements relating thereto
and (C) unrecorded easements, covenants, rights-of-way or other similar
restrictions, none of which items set forth in clauses (A), (B) and (C) above
materially impairs the continued use in the business of HOL and the operation of
the property to which they relate.
SECTION 3.11. Intellectual Property.
(a) Proprietary Rights. Schedule 3.11(a) sets forth a true
and complete list of trademarks, trade names and service marks and
applications therefor and all patents (if any), copyrights and
applications therefor that are registered or filed in the name of HOL or
are otherwise material to HOL's business as presently conducted and all
other licenses or other like rights relating to intellectual property of
any kind that are material to the operation of HOL's business (the
"Intellectual Property"). Except as set forth on
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Schedule 3.11(a), as to Intellectual Property owned by HOL, HOL has
valid title and ownership, free and clear of any liens or claims of
third parties and, as to Intellectual Property licensed for use in HOL's
business, HOL has the valid right to use such Intellectual Property in
accordance with the terms of any such licenses.
(b) Licenses.
(i) Except for the licenses as disclosed in Schedule
3.11(b), or pursuant to a Contract identified on Schedule 3.12(k), if
any, HOL has not licensed to any third party the right to use or exploit
any of the Intellectual Property or any portion thereof in any
jurisdiction in a manner that is material, individually or in the
aggregate.
(ii) Any video, audio, text, still photograph, logo or
title or any other material or other Intellectual Property (other than
music, recording, mechanical or performance rights) owned by any third
party and used in the operation of the business of HOL prior to the
Effective Time was obtained by HOL under either a written or an oral
license to HOL from the owner or agent of any such material, which
licenses are, to HOL's Knowledge in the case of oral licenses only,
binding and enforceable and, the use of all such licenses prior to the
Effective Time by HOL has not violated the express or implied terms of
any such written or oral license in any material respect.
Notwithstanding anything to the contrary contained in this Section 3.11,
HOL makes no warranty that it has any title to or ownership rights in
any studio-provided materials and the right to use such materials after
the conclusion of a film's theatrical release.
(c) Trade Secrets. HOL has at all times exercised reasonable
precautions to maintain the confidentiality of its information that derives
economic value, actual or potential, from not being generally known to other
persons who can obtain economic value from its disclosure or use.
(d) Photographs. HOL employs a staff photographer who takes
pictures for use on HOL's website, and HOL has full title and ownership of all
such photographs.
(e) Domain Names. HOL has registered each of the domain names set
forth on Schedule 3.11(d) with InterNIC/Network Solutions, Inc. and each of such
registrations is valid and in full force and effect.
(f) Claims.
(i) Except as set forth on Schedule 3.11(f), no claims are
pending or, to the Knowledge of HOL, threatened against HOL by any
person with respect to the ownership, validity, enforceability or use of
any Intellectual Property or otherwise challenging or questioning the
validity or effectiveness of any Intellectual Property, except for any
such claim that would not have an HOL Material Adverse Effect. Except as
set forth on Section 3.11(f), no claims are pending or, to the Knowledge
of HOL, threatened against HOL by any person in which such person
alleges that any activities or
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conduct of business of HOL infringes upon the intellectual property
rights, moral rights or rights of publicity of any third party.
(ii) Except as set forth on Schedule 3.11(f), no past or
present officer, employee or consultant of HOL has a basis for claiming
an ownership interest (a material ownership interest as to any
consultant only) in any of the processes, software or products used in
the operation of the business of HOL as a result of having been involved
in the development of such process, software or product while employed
by or consulting to HOL.
SECTION 3.12. Contracts. Schedules 3.12(a) through 3.12(k) set forth a
true and complete list of all material contracts to which HOL is a party
(together with the leases related to the Leased Properties, "Contracts"),
including but not limited to the following (true and complete copies of which,
each as currently in effect, have been heretofore made available to Parent):
(a) Employment, Independent Contractor and Consulting Agreements.
(i) Any employment agreement, employment contract or any agreement or contract
providing for the payment of any "phantom" stock rights or severance
compensation or for the provision, vesting and/or acceleration of any employee
benefits following a change of ownership or control of HOL and (ii) any
independent contractor or consulting agreement that has an aggregate liability
after the Effective Time in excess of $25,000 and is not terminable by notice of
less than 60 calendar days;
(b) Non-Competition Agreements. Except as set forth on Schedule
3.12(b), any covenant or agreement that restricts the ability of HOL to compete
in any line of business in any place in the world;
(c) Leases of Real Property. Any lease under which HOL is a
lessor or sublessor of, or makes available for use by any third party, any Real
Property;
(d) Personal Property Leases. Any lease under which (i) HOL is
lessee of, or holds or uses, any machinery, equipment, vehicle or other tangible
personal property owned by a third party or (ii) HOL is a lessor or sublessor
of, or makes available for use by any third party, any tangible personal
property owned or leased by HOL, in any such case which has an aggregate
liability after the Effective Time in excess of $25,000 and is not terminable by
notice of less than 60 calendar days;
(e) Supply and Service Agreements. Any continuing agreement or
contract for the future purchase by HOL of materials, supplies or equipment
(other than purchase contracts and orders for inventory in the ordinary course
of business consistent with past practice) or any advertising agreement or
arrangement, in any such case which has an aggregate liability after the
Effective Time in excess of $25,000 and is not terminable by notice of less than
60 calendar days;
(f) Indebtedness. Any agreement or contract under which HOL has
borrowed or loaned any money or issued any note, bond, indenture or other
evidence of indebtedness or
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directly or indirectly guaranteed indebtedness, liabilities or obligations of
others (other than endorsements for the purpose of collection in the ordinary
course of business), or any other note, bond, indenture or other evidence of
indebtedness;
(g) Guarantees. Any agreement or contract under which Times
Mirror or any other person has directly or indirectly guaranteed indebtedness,
liabilities or obligations of HOL and any guarantees by HOL or similar contracts
obligating HOL for the indebtedness of any person;
(h) Partnerships and Joint Ventures. The First Amended and
Restated Master NATO Agreement dated as of April 15, 1996, by and between HOL,
Times Mirror and the National Association of Theatre Owners, Inc., a New York
not-for-profit corporation, and any Exhibitor Services Agreement entered into in
connection therewith (together, the "NATO Agreement"), and any other partnership
agreement or other joint venture agreement to which HOL is a party;
(i) Online Service Agreements. Any agreement or contract under
which any third party has agreed to provide HOL with online services;
(j) Electronic Ticketing and Merchandising Agreements. Any
agreement or contract under which HOL provides online ticketing and
merchandising services; and
(k) Other Agreements. Any other agreement, contract, lease,
license (including Intellectual Property licenses), commitment or instrument to
which HOL is a party or by or to which the assets or business of HOL is bound or
subject, which in any case has an aggregate liability after the Effective Time
in excess of $25,000, and is not terminable by notice of less than 60 calendar
days (other than purchase contracts and orders for inventory in the ordinary
course of business, consistent with past practice).
Except as disclosed on Schedules 3.12(a) through 3.12(k) or the other schedules
hereto, each of Times Mirror and HOL has performed in all material respects all
obligations required to be performed by it to date under the Contracts to which
it is a party and it is not in breach or default in any material respect
thereunder and, to the Knowledge of HOL, no other party to any of the Contracts
is in breach or default in any material respect thereunder.
SECTION 3.13. Litigation; Decrees. Schedule 3.13 sets forth a list, as
of the date of this Agreement, of all pending and, to the Knowledge of HOL,
threatened lawsuits or claims by or against HOL or otherwise involving HOL or
its properties, assets, operations or business. Except as disclosed on Schedule
3.13, HOL is not in default under any judgment, order or decree of any court,
administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign, applicable to HOL or its properties,
assets, operations or business.
SECTION 3.14. Employee Benefits and Related Matters.
(a) Plans. Schedule 3.14(a) sets forth each employee pension,
retirement, profit sharing, stock bonus, stock option, stock purchase,
incentive, deferred compensation,
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medical, dental, vision, life insurance, accidental death and dismemberment
insurance, business travel insurance, vacation pay, salary continuation, sick
pay, disability, severance, golden parachute or other plan, fund, program,
policy, contract or arrangement (including any contracts or agreements with
certain employees of HOL that relate to the transactions contemplated by this
Agreement) providing employee benefits that is maintained or contributed to by
Times Mirror or HOL in which any HOL personnel have participated or under which
any HOL personnel have accrued and remain entitled to any benefits (the
"Plans"). Each Plan covering only HOL personnel and which is sponsored by HOL
(an "HOL Plan") is identified as such on Schedule 3.14(a). Each Plan not so
identified shall, for purposes of this Agreement, be referred to as a "Times
Mirror Plan." None of the HOL Plans are subject to Title IV of ERISA. HOL has
made available to Parent true, complete and correct copies of (i) each Plan (or,
in the case of any unwritten Plans, descriptions thereof), (ii) the most recent
annual report on Form 5500 filed with the IRS with respect to each Plan (if any
such report was required), (iii) the most recent summary plan description for
each Plan for which such a summary plan description is required and (iv) each
trust agreement and group annuity contract relating to any Plan. Neither HOL nor
any corporation or trade or business (whether or not incorporated) which would
be treated as a member of the controlled group including HOL under Sections
414(b), (c), (m) and (o) of the Code or Section 4001(a)(14) of ERISA (as defined
in Section 3.14(b)) (an "ERISA Affiliate") would be liable for any amount
pursuant to Section 4062, 4063 or 4064 of ERISA, if any Plan which is subject to
Title IV of ERISA were to terminate. Except as disclosed on Schedule 3.14(a), no
HOL employee is entitled to any benefit under any Plan by reason of the
transactions contemplated hereby, and no Plan includes any common stock or other
security issued by Times Mirror or any ERISA Affiliate among its assets.
(b) Compliance with ERISA and the Code. None of Times Mirror, HOL
or any of the Plans or any trust created thereunder, or any trustee or
administrator thereof, has engaged in a transaction in connection with which HOL
would be subject to either a material liability or civil penalty assessed
pursuant to Sections 409, 502(i) or 502(1) of ERISA or a material Tax imposed
pursuant to Section 4971, 4972, 4974, 4975, 4976 or 4980B of the Code. Except as
described on Schedule 3.14(b), each of the Plans has been operated and
administered in all material respects in accordance with Applicable Laws,
including the Employee Retirement Income Security Act of 1974, as amended
("ERISA") and the Code. Each Plan intended to be a qualified plan under Code
Section 401 has received a favorable determination letter to that effect (a copy
of which has been made available to Parent) and nothing has occurred since the
issuance of such letter that would adversely affect the Tax qualification of any
such Plan. There are no pending or, to the Knowledge of Times Mirror or HOL,
threatened claims by or on behalf of any of the Plans, by any employee or
beneficiary covered under any such Plan, or otherwise involving any such Plan
(other than ordinary course claims for benefits).
(c) Multiemployer Plan Liabilities. None of Times Mirror, HOL or
any ERISA Affiliate is, or has been within the last six years, obligated to
contribute, on behalf of any current or former employee of HOL, to a
multiemployer plan (as defined in Section 3(37) of ERISA) and no such ERISA
Affiliate is liable or reasonably expected to be liable for any withdrawal
liability under Section 4201 of ERISA. None of Parent, Sub or HOL will have any
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liability with respect to any multiemployer plan as a result of the Merger or
the transactions contemplated by this Agreement.
(d) Accumulated Funding Deficiencies; Liens. None of the Plans or
any trust established thereunder has incurred any accumulated funding deficiency
(as defined in Section 302 of ERISA and Section 412 of the Code), whether or not
waived, as of the last day of the most recent fiscal year of each of the Plans.
No contribution failure has occurred with respect to any Plan sufficient to give
rise to a lien under Section 302(f) of ERISA. None of Parent, Sub or HOL is
liable or reasonably expected to be liable for any contributions to any employee
benefit plan subject to Title IV of ERISA sponsored by any ERISA Affiliate.
(e) Employee Welfare Benefit Plans. With respect to any Plan that
is an employee welfare benefit plan, except as disclosed on Schedule 3.14(e),
(i) no such Plan is funded through a welfare benefits fund, as such term is
defined in Section 419(e) of the Code and (ii) each such Plan that is a group
health plan, as such term is defined in Section 5000(b)(1) of the Code, complies
with the applicable requirements of Section 4980B(f) of the Code.
SECTION 3.15. Absence of Changes or Events. Since December 31, 1998,
there has not been any event or circumstance which has caused or is reasonably
likely to cause an HOL Material Adverse Effect, other than changes relating to
the economy in general or the internet content provider industry in general and
not specifically relating to HOL. Except as disclosed on Schedule 3.15 or as
contemplated by this Agreement, since September 30, 1998, the business of HOL
has been conducted only in the ordinary course and has not taken any of the
actions prohibited or restricted under Section 6.3.
SECTION 3.16. Compliance with Applicable Laws. Except as previously
disclosed by HOL to Parent in writing, to the Knowledge of HOL:
(a) General. HOL is in compliance with, and has not received
written notice of any alleged non-compliance with, all applicable statutes,
laws, ordinances, rules, orders and regulations of any governmental authority or
instrumentality, domestic or foreign ("Applicable Laws"), except for any such
incidents of noncompliance that would not have an HOL Material Adverse Effect.
This Section 3.16 does not relate to matters with respect to Taxes or
environmental matters.
SECTION 3.17. Environmental Matters. Except as previously disclosed by
HOL to Parent in writing:
(a) Compliance. To the Knowledge of HOL, HOL is in compliance
with all applicable Environmental Laws, except for any such incidents of
noncompliance that would not have an HOL Material Adverse Effect.
(b) Hazardous Materials. There has been no release of any
Hazardous Material to soil or water originating at, on, or from any of the Real
Properties during the period that HOL or any of its divisions has leased such
Real Property, except for any such releases that would not have an HOL Material
Adverse Effect.
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(c) Notices of Certain Environmental Matters. HOL has not
received written notice of (i) any alleged violation of Environmental Law or
(ii) liability for any release of any Hazardous Material or violation of any
Environmental Laws in connection with the present or past business or properties
of HOL, and there exists no pending or, to the Knowledge of HOL, threatened
writ, injunction, decree, order or judgment outstanding, nor any pending or, to
the Knowledge of HOL, threatened lawsuit, proceeding, citation, claims, summons
or government agency investigation relating thereto, except for any such matters
that would not have an HOL Material Adverse Effect.
(d) Definitions. For purposes of Sections 3.16(b) and 3.16(c):
(i) "Hazardous Material" means any material, chemical,
substance or waste the presence of which requires investigation or remediation
under any federal, state or local statute, regulation, ordinance, order, or
common law; or which is characterized, classified or otherwise defined as a
hazardous toxic, pollutant or contaminant or words of similar meaning and is
regulated as such by any governmental authority, agency, department, commission,
board, agency or instrumentality of the United States or state or any political
subdivision thereof, including but not limited to, petroleum, asbestos,
polychlorinated biphenyls and radioactive materials.
(ii) "Environmental Law" means any applicable law
(including common law), statute, regulation, rule, ordinance, code, license,
order or other legal requirement, of any governmental agency, department,
commission, board, bureau or instrumentality of the United States, states and
political subdivisions thereof and all applicable judicial and administrative
and regulatory decrees, judgments and orders relating to the protection of human
health or the environment or natural resources, including the Comprehensive
Environmental Response, Compensation and Liability Act, the Resource
Conservation Recovery Act, the Clean Air Act, the Clean Water Act and the
Occupational Safety and Health Act or analogous state laws.
SECTION 3.18. Taxes Except as set forth on Schedule 3.18:
(a) Definitions: For purposes of this Agreement:
(i) "Affiliated Group" means any affiliated group within
the meaning of Section 1504 of the Code, or any combined, unitary or
similar group under a similar provision of state, local or foreign law.
(ii) "Taxes" (each individually, a "Tax") means all
federal, state, local or foreign taxes, assessments, duties, levies or
similar charges of any kind including, without limitation, net income,
gross income, gross receipts, sales, use, ad valorem, transfer,
franchise, profits, license, lease, withholding, payroll, employment,
excise, stamp, premium, property or other taxes of any kind whatsoever,
together with any interest and any penalties, additions to tax or
additional amounts with respect thereto, whether disputed or not, and
shall include any transferee or successor liability in respect of Taxes
(whether by contract or otherwise) and any liability in respect of Tax
as a result
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of being a member of any Affiliated Group, including any consolidated,
combined, unitary or similar group.
(iii) "Tax Return" means any return (including any
consolidated, combined or unitary return in which HOL is, or was,
included or includable), declaration, claim for refund, report,
statement or information statement required to be filed with respect to
Taxes or any amendment thereto, and including any schedule or attachment
thereto.
(b) All Tax Returns that are required to be filed by, or on
behalf of, HOL have been duly filed on a timely basis under the statutes, rules
and regulations of each jurisdiction in which such Tax Returns are required to
be filed. All such Tax Returns are true, complete and accurate in all material
respects. All Taxes due with respect to such Tax Returns have been timely paid.
(c) HOL has duly and timely withheld and paid over to the
appropriate taxing authorities all Taxes and other amounts required to be so
withheld and paid for all periods under all applicable laws in connection with
amounts paid or owing to any employee, independent contractor, subcontractor,
lender, stockholder or other third party or other personnel supplied by any
third party.
(d) No claim for assessment or collection of Taxes has been
asserted against or with respect to HOL.
(e) There is no pending claim by a taxing authority in a
jurisdiction with respect to which a Tax Return is not currently filed by or on
behalf of HOL that HOL is or may be subject to taxation by that jurisdiction,
nor is HOL or Times Mirror aware that any such assertion of jurisdiction is
threatened.
(f) None of the assets of HOL is (a) "tax-exempt use" property
within the meaning of Section 168(h) of the Code, (b) required to be treated as
owned by another person pursuant to the provisions of Section 168(f)(8) of the
Internal Revenue Code of 1954, as amended and in effect immediately prior to the
enactment of the Tax Reform Act of 1986, (c) "tax-exempt bond financed property"
within the meaning of Section 168(g) of the Code, or (d) "limited use property"
(as that term is used in Rev. Proc. 76-30).
(g) Neither HOL nor Times Mirror with respect to HOL has (A)
filed a consent pursuant to Section 341(f) of the Code or agreed to have Section
341(f)(2) of the Code apply to the disposition of a subsection (f) asset (as
such term is defined in Section 341(f)(4) of the Code) owned by the HOL, (B) is
required to make any adjustments pursuant to Section 481(a) of the Code or any
other similar provision of state, local or foreign law by reason of a change in
accounting method initiated by HOL or has any Knowledge that the Internal
Revenue Service ("IRS") has proposed any such adjustment or change in accounting
method, or has any application pending with any taxing authority requesting
permission for any changes in accounting methods that relate to the business or
operations of HOL, other than as described on Schedule 3.18(g)(B), (C) executed
or entered into a closing agreement pursuant to Section 7121
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of the Code or any predecessor provision thereof or any similar provision of
state, local or foreign law with respect to HOL, (D) executed a power of
attorney with respect to any Tax matter which is currently in force, other than
with respect to federal income Tax matters or (E) requested any extension of
time within which to file any Tax Return, which Tax Return has since not been
filed, or (F) executed or filed with the IRS or any other taxing authority any
agreement, waiver, or other document or arrangement extending or having the
effect of extending the period for assessment or collection of Taxes (including,
but not limited to, any applicable statute of limitations).
(h) HOL is not a party to any tax sharing, tax indemnification or
similar agreement or arrangement (whether or not written) with respect to Taxes
pursuant to which it will or may have any obligation to make any payments after
the Closing Date.
(i) For federal income tax purposes, HOL is a member of the
Affiliated Group of which Times Mirror is the common parent, and joins in the
filing of a consolidated federal income tax with Times Mirror. HOL is not now
and has never been a member of any Affiliated Group (other than the Affiliated
Group of which Times Mirror is the common parent).
(j) HOL is not party to any joint venture, partnership or other
arrangement or contract that constitutes a partnership for federal income tax
purposes.
(k) HOL has not constituted either a "distributing corporation"
or a "controlled corporation" (within the meaning of Section 355(a)(1)(A) of the
Code) in a distribution of stock qualifying for tax-free treatment under Section
355 of the Code (i) in the two years prior to the date of this Agreement or (ii)
in a distribution which could otherwise constitute part of a "plan" or "series
of related transactions" (within the meaning of Section 355(e) of the Code) in
conjunction with the Merger.
(l) No gain or loss will be recognized by HOL, for federal income
tax purposes, upon the Merger by reason of the consolidated return Treasury
Regulations promulgated under Section 1502 of the Code.
(m) Schedule 3.17 lists all the material Tax elections made by or
with respect to HOL or as to which HOL would be bound with respect to taxable
periods ending after the Closing Date.
(n) HOL has received no prepaid subscription income which would
or may be includable in the gross income of HOL after the Closing Date under
Section 455 of the Code.
(o) Except for the payment of the Performance Cycle Amount, there
is no contract, agreement, plan or arrangement covering any Person that could
give rise to the payment of any amount that would not be deductible by HOL by
reason of Section 280G of the Code.
(p) Each of HOL and Times has no reason to believe that any
conditions exist that could reasonably be expected to prevent the Merger from
qualifying as a reorganization within the meaning of Section 368(a)(1)(A) and
Section 368(a)(2)(E) of the Code.
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(q) At the Effective Time, HOL will hold at least 90% of the fair
market value of its net assets, and at least 70% of the fair market value of its
gross assets, held immediately prior to the Effective Time. For purposes of this
representation, any amounts paid by HOL to Times Mirror in connection with or
pursuant to the Merger, any amounts used by HOL to pay its transaction expenses
and those of Times Mirror, and all redemptions and distributions (except for
regular, normal dividends) made by HOL are treated as assets of HOL immediately
prior to the Effective Time.
SECTION 3.19. Labor Matters. There is no labor strike, dispute, or work
stoppage or lockout pending or, to the Knowledge of HOL, threatened against or
affecting HOL and there is no pending or, to the Knowledge of HOL, threatened
grievance asserting that HOL has committed an unfair labor practice. HOL is not
a party to or otherwise bound by any collective bargaining agreement, contract
or other agreement or understanding with a labor union or labor organization, no
such contract or agreement is being negotiated, and there is not and has not
been, in the last five years, any application for certification or recognition
by any union or organization for any of HOL's employees. There are no
complaints, charges or claims against HOL or to HOL's Knowledge threatened
against HOL, with any public or governmental authority, arbitrator or court
based on, arising out of, in connection with, or otherwise relating to the
employment or termination of employment of HOL, of any individual. To HOL's
Knowledge, HOL is in material compliance with all laws, regulations and orders
relating to the employment of labor, including all such laws, regulations and
orders relating to wages, hours, WARN, collective bargaining, discrimination,
civil rights, safety and health, workers' compensation and the collection and
payment of withholding and/or social security taxes and any similar tax except
for immaterial non-compliance.
SECTION 3.20. Information Supplied. None of the information supplied or
to be supplied by HOL for inclusion in or incorporation by reference to the
proxy statement, if any, relating to the meeting of Parent's shareholders to be
held in connection with the Merger (the "Proxy Statement") will, at the date
mailed to the shareholders of Parent and at the time of the meeting of the
shareholders of Parent to be held in connection with the Merger, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances in which they were made, not misleading.
SECTION 3.21. Insurance. Set forth on Schedule 6.4 is a true and
complete list of all material fire and casualty, general liability, business
interruption and product liability insurance policies maintained with respect to
HOL's business as of the date of this Agreement. All such policies are with
reputable insurance carriers, provide (together with any self-insurance)
adequate coverage for all normal risks in accordance with customary practices
for comparable businesses, are in full force and effect, all premiums due and
payable thereon have been paid (other than retroactive or retrospective premium
adjustments that are not yet, but may be, required to be paid with respect to
any period ending prior to the Closing Date), and no notice of cancellation or
termination has been received with respect to any such policy which has not been
replaced on substantially similar terms. The activities and operations of HOL
have been conducted in a
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manner so as to conform in all material respects to all applicable provisions of
such insurance policies.
SECTION 3.22. Year 2000. To the Knowledge of HOL, each computer program
programmed and used by HOL in its business is Year 2000 compliant or will be
Year 2000 compliant in sufficient time to avoid any material disruption to HOL's
business. "Year 2000 Compliant" means that such program is capable of managing
and manipulating data involving dates after the year 1999 without any functional
or data abnormality and without inaccurate result related to such dates, to the
extent that other computer programs, used in combination with the computer
programs programmed and used by HOL, properly exchanges data involving dates
with it.
SECTION 3.23. Investor Representations. The shares of Parent Common
Stock and Series E Preferred Stock, if any, received by Times Mirror pursuant to
the Merger will be acquired for Times Mirror's own account and not with a view
to or in connection with the sale or distribution of any part thereof.
SECTION 3.24. Exemption from Registration; Restricted Securities. Times
Mirror understands that the shares of Parent Common Stock and Series E Preferred
Stock, if any, received by Times Mirror pursuant to the Merger will not be
registered under the Securities Act on the ground that such sale provided for in
this Agreement is exempt from registration under the Securities Act, and that
the reliance of Parent on such exemption is predicated in part on Times Mirror's
representations set forth in this Agreement and the certificates representing
the same will bear an appropriate legend reflecting such exempt issuance without
registration. Times Mirror understands that the shares of Parent Common Stock
and Series E Preferred Stock, if any, received by Times Mirror pursuant to the
Merger are restricted securities within the meaning of Rule 144 under the Act.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF TIMES MIRROR
Times Mirror hereby represents and warrants to Parent and Sub as
follows:
SECTION 4.1. Organization and Good Standing of Times Mirror. Times
Mirror is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. Times Mirror has all requisite
corporate power and authority and possesses all governmental franchises,
licenses, permits, authorizations and approvals necessary to enable it to carry
on its business as presently conducted, other than such franchises, licenses,
permits, authorizations and approvals the lack of which would not materially
impair Times Mirror from performing its obligations under this Agreement.
SECTION 4.2. Authority. Times Mirror has all requisite corporate power
and authority to execute and deliver this Agreement and each Ancillary Agreement
to which it is a party and to consummate the transactions to which Times Mirror
is a party contemplated hereby and thereby. All necessary corporate action
required to have been taken by or on behalf of Times Mirror by
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Applicable Law or its charter documents has been taken to authorize (a) the
approval, execution and delivery on behalf of Times Mirror of this Agreement and
each Ancillary Agreement to which it is a party and (b) the performance by Times
Mirror of its obligations under this Agreement and each Ancillary Agreement to
which it is a party and the consummation of the transactions contemplated hereby
and thereby. This Agreement and each Ancillary Agreement to which it is a party
constitutes a valid and binding agreement of Times Mirror, enforceable against
it in accordance with its terms, except as the same may be limited by the
Enforceability Exceptions.
SECTION 4.3. No Breach. The execution and delivery by Times Mirror of
this Agreement and each Ancillary Agreement to which it is a party do not, and
the consummation of the transactions to which Times Mirror is a party
contemplated hereby and thereby will not, (a) violate or conflict with the
Certificate of Incorporation or bylaws of Times Mirror or (b) constitute a
material breach or default or give rise to any lien, third-party right of
termination, cancellation, material modification or acceleration under any
material agreement, understanding or undertaking to which Times Mirror is a
party or by which it is bound, or violate or conflict with any Applicable Law.
SECTION 4.4. Consents and Approvals. Except for (a) the filing and
recordation of the Merger Certificate as required by the DGCL and of the CA
Agreement of Merger as required by the CGCL and (b) filings, permits
notifications, registrations, authorizations, consents and approvals as may be
required under applicable requirements of the HSR Act and Applicable Law,
neither the execution and delivery by Times Mirror of this Agreement nor any
Ancillary Agreement to which it is a party nor the consummation of the
transactions to which Times Mirror is a party contemplated hereby and thereby
will require any consent, approval, authorization or permit of, or filing with
or notification to, or registration with, any federal, state or foreign
governmental or regulatory authority, except where the failure to obtain such
consent, approval, authorization or permit, or to make such filing, registration
or notification, (i) would not prevent HOL from performing its obligations under
this Agreement and (ii) would not have an HOL Material Adverse Effect.
SECTION 4.5. Title to and Transfer of the Shares. Times Mirror is the
record and sole beneficial owner of the Shares and has good and marketable title
thereto, free and clear of any liens, claims, encumbrances, security interests,
options, charges and other rights and restrictions of any kind and, at the
Effective Time, Parent will have good and marketable title to the Shares, free
and clear of any liens, claims, encumbrances, security interests, options,
charges and other rights and restrictions of any kind.
SECTION 4.6. Brokers. No broker, finder or investment banker is entitled
to any brokerage finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Times Mirror or HOL.
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ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub hereby represent and warrant to each of Times Mirror and
HOL as follows:
SECTION 5.1. Organization and Good Standing. Each of Parent and Sub is a
corporation duly organized, validly existing and in good standing under the laws
of the state of its incorporation. Parent has all requisite corporate power and
authority and possesses all governmental franchises, licenses, permits,
authorizations and approvals necessary to enable it to carry on its business as
presently conducted other than such franchises, licenses, permits,
authorizations and approvals the lack of which would not have a material adverse
effect on the business, assets, properties, liabilities, financial or other
condition or results of operations of Parent or on the ability of Parent to
perform its obligations under this Agreement (such effects, taken individually
or in the aggregate, a "Parent Material Adverse Effect").
SECTION 5.2. Authority. Each of Parent and Sub has all requisite
corporate power and authority to execute and deliver this Agreement and each
Ancillary Agreement to which it is a party and to consummate the transactions to
which each of Parent and Sub is a party contemplated hereby and thereby. All
necessary corporate action required to have been taken by or on behalf of each
of Parent and Sub by Applicable Law or its charter documents has been taken to
authorize (a) the approval, execution and delivery on behalf of each of Parent
and Sub of this Agreement and each Ancillary Agreement to which it is a party
and (b) the performance by each of Parent and Sub of its obligations under this
Agreement and each Ancillary Agreement to which it is a party and the
consummation of the transactions contemplated hereby and thereby. This Agreement
and each Ancillary Agreement to which it is a party constitutes a valid and
binding agreement of each of Parent and Sub, enforceable against each of them in
accordance with its terms, except as the same may be limited by the
Enforceability Exceptions.
SECTION 5.3. No Breach. The execution and delivery by each of Parent and
Sub of this Agreement and each Ancillary Agreement to which it is a party do
not, and the consummation of the transactions to which each of Parent and Sub is
a party contemplated hereby and thereby will not, (a) violate or conflict with
the organizational documents of Parent or Sub or (b) constitute a material
breach or default or give rise to any lien or other encumbrance, third-party
right of termination, cancellation, material modification or acceleration under
any material agreement, understanding or undertaking to which Parent is a party
or by which it is bound, or violate or conflict with any Applicable Law
(assuming that the consents contemplated by Section 5.4 are obtained and in
effect).
SECTION 5.4. Consents and Approvals. Except for (a) the filing and
recordation of the Merger Certificate as required by the DGCL and of the CA
Agreement of Merger as required by the CGCL and (b) filings, permits,
notifications, registrations, authorizations, consents and approvals as may be
required under applicable requirements of the Securities Act, the Exchange Act,
state securities or blue sky laws, the HSR Act and Applicable Law, neither the
execution
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and delivery by Parent or Sub of this Agreement or any Ancillary
Agreement to which it is a party nor the consummation of the transactions to
which either Parent or Sub is a party contemplated hereby and thereby will
require any consent, approval, authorization or permit of, or filing with or
notification to, or registration with, any governmental or regulatory authority,
except where the failure to obtain such consent, approval, authorization or
permit, or to make such filing, registration or notification (A) would not
materially impair Parent or Sub from performing is respective obligations under
this Agreement and (B) would not have a Parent Material Adverse Effect.
SECTION 5.5. Capital Stock of Parent.
(a) The authorized capital stock of Parent consists of (i)
25,000,000 shares of Parent Common Stock, of which, as of the date hereof,
8,161,954 shares of Parent Common Stock were issued and outstanding (each
together with a Parent Common Stock purchase right (the "Parent Rights") issued
pursuant to the Rights Agreement (the "Parent Rights Agreement"), dated as of
August 23, 1996 by and between Parent and American Stock Transfer & Trust
Company), and 394,466 shares of Parent Common Stock were issued and held as
collateral for lease obligations of the Parent; and (ii) one million shares of
Preferred Stock ("Parent Preferred Stock"), designated as follows: (A) 217,600
shares of Series A Variable Rate Convertible Preferred Stock, $6.25 stated value
per share, all of which shares, as of the date hereof, are issued and
outstanding, (b) 142,223 shares of Series B Variable Rate Convertible Preferred
Stock, $5.21 stated value per share, of which, as of the date hereof, 122,846
shares are issued and outstanding, (C) 100,000 shares of 4% $100 Series C
Convertible Preferred Stock, $100 stated value per share, of which, as of the
date hereof, 20,000 shares are issued and outstanding, (D) 1,000 shares of 7%
Series D Convertible Preferred Stock, $10,000 stated value per share, of which,
as of the date hereof, 250 shares are issued and outstanding and (E) 50 shares
of 7% Series D-2 Convertible Preferred Stock, $10,000 stated value per share,
all of which shares, as of the date hereof, are issued and outstanding. All of
the shares of Parent Common Stock are, and, upon the issuance by Parent of any
shares of Series E Preferred Stock, the Series E Preferred Stock will be, duly
authorized and validly issued and outstanding, fully paid and nonassessable.
Except for the outstanding shares of the Parent Common Stock and the Parent
Preferred Stock, as of the date hereof, there are no shares of capital stock or
other equity securities of Parent outstanding. The shares of Parent Common Stock
have not been, and the shares of Series E Preferred Stock will not be, issued in
violation of, and none of the shares of Parent Common Stock is, or Series E
Preferred Stock will be, subject to, any preemptive or subscription rights. As
of the date hereof, except as set forth on Schedule 5.5(a) and except for the
Parent Rights and the Parent Preferred Stock, there are no outstanding warrants,
options, "phantom" stock rights, agreements, convertible or exchangeable
securities or other commitments (other than this Agreement) pursuant to which
Parent is or may become obligated to issue, sell, purchase, return or redeem any
shares of capital stock or other securities of Parent, and no equity securities
of Parent are reserved for issuance for any purpose. Other than this Agreement
and except as set forth on Schedule 5.5(a), the shares of Parent Common Stock
are not, and the shares of Series E Preferred Stock will not be, subject to any
voting trust agreement or other contract, agreement, arrangement, commitment or
understanding, including any such agreement, arrangement, commitment or
understanding restricting or otherwise relating to the voting, registration,
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dividend rights or disposition of the shares of Parent Common Stock or any other
securities exchangeable or exercisable for or convertible into Parent Common
Stock or any other capital stock of Parent.
(b) The Parent Common Stock constitutes the only class of equity
securities or Parent or its subsidiaries registered or required to be registered
under the Securities Exchange Act of 1934, as amended (the "Exchange Act").
SECTION 5.6. SEC Reports; Financial Statements.
(a) Parent has filed all required forms, reports and documents
required to be filed by it ("Parent SEC Reports") with the Securities and
Exchange Commission ("SEC"), each of which has complied as to form in all
material respects with all applicable requirements of the Securities Act of
1933, as amended (the "Securities Act"), and the Exchange Act, each as in effect
on the dates such forms, reports and documents were filed. None of such Parent
SEC Reports, including, without limitation, any financial statements or
schedules included or incorporated by reference therein, contained, as of their
respective dates (and, if amended or superseded by a filing prior to the date of
this Agreement or the Effective Time, then on the date of such filing), 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 circumstances under which they were made
not misleading. The audited consolidated financial statements of Parent included
in the Parent SEC Reports were prepared in accordance with GAAP and present
fairly the consolidated financial position of Parent and its consolidated
subsidiaries as of the dates thereof and their consolidated results of
operations and changes in financial position for the periods then ended.
(b) Parent has heretofore made available or promptly will make
available to Times Mirror and HOL a complete and correct copy of any amendments
or modifications which are required to be filed with the SEC but have not yet
been filed with the SEC to any Parent SEC Reports.
SECTION 5.7. Information Supplied. None of the information supplied or
to be supplied by Parent or Sub for inclusion or incorporation by reference to
the Proxy Statement, if any, will, at the date mailed to the shareholders of
Parent and at the time of the meeting of the shareholders of Parent to be held
in connection with the Merger, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances in which they were
made, not misleading. The Proxy Statement will comply as to form in all material
respects with the provisions of the Exchange Act and the rules and regulations
thereunder.
SECTION 5.8. Vote Required. The affirmative vote of the holders of a
majority of the shares of Parent Common Stock represented at a meeting where a
quorum is present is the only vote of the holders of any class or series of
Parent's capital stock necessary to approve the issuance by Parent of the shares
of Parent Common Stock to Times Mirror pursuant to this Agreement if shareholder
approval of such issuance of the shares of Parent Common Stock and
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Series E Preferred Stock pursuant to the Merger as contemplated by this
Agreement should be required by NASDAQ rules or regulations.
SECTION 5.9. Litigation; Decrees. Except as publicly disclosed by Parent
in the Parent SEC Reports, neither Parent nor any of its subsidiaries is in
default under any judgment, order or decree of any court, administrative agency
or commission or other governmental authority or instrumentality, domestic or
foreign, applicable to Parent or any of its subsidiaries or any of the
properties, assets, operations or businesses of Parent or any of its
subsidiaries, except where such default would not have a Parent Material Adverse
Effect.
SECTION 5.10. Absence of Changes or Events. Except as publicly disclosed
by Parent in the Parent SEC Reports, since September 30, 1998, there has not
been any event or circumstance which has caused, or is reasonably likely to
cause, a Parent Material Adverse Effect, other than changes relating to the
economy in general or the entertainment, media or Internet industry in general
and not specifically relating to Parent. Except as disclosed on Schedule 5.10 or
in the Parent SEC Reports or as contemplated by this Agreement, since September
30, 1998, the business of Parent and its subsidiaries has been conducted only in
the ordinary course.
SECTION 5.11. No Prior Activities. Except for obligations incurred in
connection with its incorporation or organization or the negotiation and
consummation of this Agreement and the transactions contemplated hereby, Sub has
neither incurred any obligation or liability nor engaged in any business or
activity of any type or kind whatsoever or entered into any agreement or
arrangement with any person.
SECTION 5.12. Brokers. No broker, finder or investment banker is
entitled to any brokerage finder's or other fee or commission in connection with
the transactions contemplated by this Agreement based upon arrangements made by
or on behalf of Parent or Sub.
SECTION 5.13. Taxes.
(a) Tax Returns and Taxes. Parent or Sub, as applicable, has
filed or caused to be filed in a timely manner (within any applicable extension
periods) with the appropriate Tax authorities all Tax Returns they are required
to have filed and have paid or provided for all Taxes they are required to have
paid, except where the failure to have filed such a Tax Return or paid or
provided for such Taxes would not have a Parent Material Adverse Effect. There
are no material Tax liens or assessments against Parent or any property or
assets of Parent, other than liens for Taxes that are not due and payable or
which may thereafter be paid without penalty.
(b) Tax Claims. Except as set forth on Schedule 5.13(b), no
material claim for assessment or collection of Taxes is presently being asserted
against Parent and Parent is not a party to any pending action, proceeding, or
investigation by any governmental taxing authority nor does Parent have
Knowledge of any such threatened action, proceeding or investigation.
(c) Tax Free Reorganization. Parent represents to Times Mirror as
follows, and acknowledges that Times Mirror is relying on the truth and accuracy
of the representations
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set forth in this Section 5.13(c) in treating the Merger as a reorganization
qualifying under the provisions of Section 368(a) of the Code:
(i) Neither Parent nor any "Related Corporation" to Parent
has any plan or intention to redeem or otherwise acquire any Parent Common Stock
issued in the Merger other than redemptions or acquisitions pursuant to (i) any
right Parent or any Affiliate of Parent may have pursuant to this Agreement or
any Ancillary Agreements and (ii) open market transactions. For purposes of this
paragraph, a "Related Corporation" to Parent is a corporation in which Parent
owns, directly or indirectly, stock possessing at least fifty percent of the
total combined voting power of all classes of stock entitled to vote, or at
least fifty percent of the total value of shares of all classes of stock
(determined by taking into account the constructive ownership of stock rules
under Section 318(a) of the Code as modified by Section 304(c) of the Code). For
purposes of the foregoing, a Related Corporation will be considered as acquiring
shares of Parent Common Stock acquired by a partnership in which it is a partner
in accordance with its partner's equity interest in the partnership`.
(ii) Parent has no plan or intention to liquidate HOL, to
cause HOL to merge with or into another corporation, to sell or otherwise
dispose of the Shares acquired in the Merger or to cause HOL to sell or
otherwise dispose of any of its assets or of any of the assets acquired from
Sub, except for dispositions made in the ordinary course of business, transfers
to corporations controlled, directly or indirectly, by Parent, or transfers to
partnerships in which such corporations (a) own more than a thirty-three and
one-third percent interest in the capital and profits or (b) own more than a
twenty percent interest in the capital and profits and perform active and
substantial management functions.
(iii) Following the Merger, Parent will cause HOL to
continue its historic business or use a significant portion of its historic
business assets in a business within the meaning of Treasury Regulations Section
1.368-1(d).
(iv) Parent has no plan or intention to cause HOL to issue
additional shares after the Merger, or take any other action, that would result
in Parent losing control of HOL.
ARTICLE 6
COVENANTS OF HOL AND TIMES MIRROR
SECTION 6.1. Delivery of Year-End Audited Financial Statements.
(a) As soon as practicable and in any event not later than
January 31, 1999, HOL shall, and Times Mirror shall cause HOL to, deliver to
Parent the audited balance sheets of HOL and the notes thereto at each of
December 31, 1996, December 31, 1997 and December 31, 1998, and the audited
statements of income, shareholders' equity and cash flows and the notes thereto
of HOL for the years then ended (collectively, the "Audited Financial
Statements"), which shall be prepared by Ernst & Young LLP in accordance with
GAAP, and, in the opinion of the management of HOL, will include all adjustments
(consisting of normal recurring
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adjustments) necessary for a fair presentation of HOL's financial position and
the results of its operations and cash flows as of the date thereof and for the
period covered thereby. The financial statements delivered pursuant to this
Section 6.1 shall be accompanied by a certificate of the chief financial officer
of HOL confirming that such financial statements have been prepared as described
above and containing the additional representations and certifications set forth
on Exhibit G.
(b) HOL shall cause to be made available to Parent and Sub,
simultaneously with the delivery of the Audited Financial Statements, the work
papers (the "Work Papers") of Ernst & Young LLP or any other accountants with
respect to the audits performed of the Audited Financial Statements and any
special memoranda or correspondence prepared in connection with the same in
order that Parent and Sub may make such reasonable review, examination and
investigation of the business of HOL as Parent may reasonably desire; provided,
however, all such information or documentation made available pursuant to this
sentence shall be subject to the terms of the Confidentiality Agreement.
(c) Parent shall have fifteen (15) days from the date the Audited
Financial Statements are delivered and the Work Papers are made available to
Parent to review the Audited Financial Statements. If the Audited Financial
Statements are not satisfactory to Parent in its discretion, Parent shall
provide written notice to Times Mirror to such effect and shall have the right
to terminate this Agreement; provided, however, that if Parent does not, within
such fifteen (15) day period, provide such written notice to Times Mirror, the
Audited Financial Statements shall be deemed to be acceptable to Parent and
Parent shall have no further rights to terminate the Agreement pursuant to this
Section 6.1.
SECTION 6.2. Access. Prior to the Effective Time, HOL and Times Mirror
and their officers, directors, employees, advisors, representatives and
authorized agents will provide Parent and Sub and their representatives,
employees, counsel and accountants, during scheduled appointments reasonably
requested by Parent and reasonably approved by HOL occurring during normal
business hours and in a manner not unreasonably disruptive to the conduct of the
business of HOL or any of HOL's officers, directors, employees, advisors,
representatives or authorized agents, access to the personnel, properties, books
and records of HOL and Times Mirror (to the extent related to HOL), including
access to HOL employees for the purpose of pre-enrolling such HOL employees in
any employee benefit or welfare plans of Parent; provided, however, that all
information and documentation made available pursuant to the terms of this
Section 6.2 shall be subject to the terms of the Confidentiality Agreement
between Parent and Times Mirror dated as of August 25, 1998 (the
"Confidentiality Agreement").
SECTION 6.3. Ordinary Conduct. Except as contemplated by this Agreement
or as set forth on Schedule 6.3, from the date of this Agreement to the
Effective Time, HOL will, and Times Mirror will cause HOL to, conduct HOL's
business in the ordinary course consistent with present practices and make all
reasonable efforts to preserve and maintain all its relationships with
customers, suppliers and others with whom HOL deals. Except as contemplated by
this Agreement, HOL will not, and Times Mirror will cause HOL not to, do any of
the following, without the prior written consent of Parent:
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(a) Charter and Bylaws. Amend its Articles of Incorporation or
bylaws;
(b) Dividends. Declare, set aside or pay any dividend or make any
other distributions to Times Mirror whether or not upon or in respect of any
shares of its capital stock.
(c) Capital Stock. (i) Sell, pledge or otherwise dispose of any
of the Shares or (ii) issue, sell, make any changes in, redeem or otherwise
acquire any shares of its capital stock or issue any capital stock or any
option, warrant or right relating thereto or any securities convertible into or
exchangeable or exercisable for any shares of capital stock;
(d) Employee Matters. Adopt or amend any Plan or collective
bargaining agreement, except as required by Applicable Law;
(e) Compensation. (i) Grant to any executive officer or employee
any increase in compensation or benefits or any rights to receive severance
payments or other benefits upon a termination of employment or a change of
ownership or control of the employer, except (A) as may be required under
existing agreements set forth on Schedule 3.12(a), (B) general increases to
employees in the ordinary course of business consistent with past practice, or
(C) any increases, payments or benefits for which Times Mirror shall be solely
and unconditionally obligated, including any stay bonuses, or (ii) terminate any
executive officer or employee other than in the ordinary course of business,
consistent with past practice;
(f) Indebtedness. Incur or assume any liabilities, obligations or
indebtedness for borrowed money (except for any monetary amounts owed to Times
Mirror under any intercompany loans which shall be canceled without
consideration at the Closing) or guarantee any such liabilities, obligations or
indebtedness;
(g) Encumbrances. Permit, allow or suffer any of its assets to be
subjected to any mortgage, pledge, lien, encumbrance, restriction or charge of
any kind, other than those excepted from the representations set forth in
Sections 3.9 and 3.10;
(h) Related-Party Transactions. Except in the ordinary course of
business and consistent with past practice, pay, loan or advance any amount to,
or sell, transfer or lease any of its assets to, or enter into any agreement or
arrangement with Times Mirror or any affiliate of Times Mirror;
(i) Accounting Policies and Tax Matters. Make (i) any change in
any method of accounting or accounting practice or policy other than those
required by GAAP or (ii) any change in any Tax election or settle or compromise
any Tax liability;
(j) Acquisitions; Reorganizations. Acquire or agree to acquire by
merging or consolidating with, or by purchasing the stock of, or a substantial
portion of the assets of, or by any other manner, any business or any
corporation, partnership, association or other business organization or division
thereof or otherwise acquire or agree to acquire any assets (other than in the
ordinary course of business, consistent with past practice), except as maybe
contemplated under the terms of this Agreement;
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(k) Capital Expenditures. Make or incur any capital expenditures
other than those made or incurred substantially in accordance with Times
Mirror's fiscal year 1999 capital expenditure budget with respect to HOL
heretofore disclosed in writing to Parent;
(l) Asset Dispositions. Sell, lease or otherwise dispose of, or
agree to sell, lease or otherwise dispose of, any of its assets, except in the
ordinary course of business;
(m) Other Actions. Not knowingly take any action or omit to take
any action that would cause any of its representations and warranties to become
untrue in any material respect;
(n) Contracts. Modify, amend, grant any consent, waiver or
release under, assign, transfer or terminate any Contract or enter into any
agreement, contract or arrangement with any person which would constitute a
Contract, except for contracts entered into in the ordinary course of business,
consistent with past practice; or
(o) Agreements. Agree, whether in writing or otherwise, to do any
of the foregoing.
SECTION 6.4. Insurance. Times Mirror and HOL shall keep, or cause to be
kept, all insurance policies presently maintained relating to HOL and its
properties, or suitable replacements therefor, in full force and effect through
the close of business at the Effective Time. Schedule 6.4 sets forth a true and
complete list of all the insurance policies presently owned and maintained by or
for the benefit of HOL.
SECTION 6.5. No Sale or Pledge. From the date hereof until the earlier
of the Closing and the termination of this Agreement pursuant to Section 9.1,
HOL shall not, and Times Mirror shall not permit HOL to merge, consolidate or
enter into any share exchange, recapitalization, business combination or similar
transaction with any other person (any such transaction other than the
transactions contemplated by this Agreement, an "Acquisition Proposal"). In
addition, from the date hereof until the earlier of the Closing and the
termination of this Agreement pursuant to Section 9.1, HOL shall not, and Times
Mirror shall cause HOL not to, and each of Times Mirror and HOL shall not permit
or authorize any of its directors, officers, employees, agents or other
representatives (including legal and financial advisors) to, directly or
indirectly, (i) solicit, initiate or encourage the submission of any Acquisition
Proposal or (ii) participate in any discussions or negotiations regarding, or
furnish to any Person any information with respect to, or take any other action
to facilitate, any Acquisition Proposal or any inquiries or the making of any
proposal that constitutes, or may reasonably be expected to lead to, any
Acquisition Proposal. Immediately after the execution and delivery of this
Agreement, each of Times Mirror and HOL shall, and shall cause their respective
officers, directors, employees, investment bankers, attorneys, accountants and
other agents of either of them to, cease and terminate any existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any possible Acquisition Proposal.
SECTION 6.6. Notice of Breach by Times Mirror or HOL. Times Mirror
promptly shall notify Parent in writing of any inaccuracy in or any breach of
any representation and warranty of
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Times Mirror or HOL contained in this Agreement or any certificate or document
delivered pursuant to this Agreement that it acquires Knowledge of subsequent to
the date of this Agreement and before the Closing and shall also notify Parent
in writing of any event or occurrence after the date hereof that it acquires
Knowledge of subsequent to the date of this Agreement and before the Closing
which, if it had existed or occurred on or prior to the date hereof and was not
disclosed to Parent at such time, would have caused the representation and
warranty to which such event or occurrence relates to be untrue.
SECTION 6.7. No Additional Representations. Each of Times Mirror and HOL
acknowledges that none of Parent, Sub or any other person has made any
representation or warranty, expressed or implied, as to the accuracy or
completeness of any information regarding Parent except as expressly set forth
in this Agreement, the Ancillary Agreements or the schedules hereto and thereto
and any certificate delivered pursuant hereto and thereto. Without limiting the
generality of the foregoing, none of Parent, Sub or any other person will have
or be subject to any liability or indemnification obligation to Times Mirror,
HOL or any other person resulting from the distribution to Times Mirror or HOL,
or Times Mirror or HOL's use of, any such information, and any information,
document, or material made available to Times Mirror or HOL in certain "data
rooms," management presentations or in any other form in anticipation of the
transactions contemplated by this Agreement.
ARTICLE 7
COVENANTS OF PARENT AND SUB
SECTION 7.1. Confidentiality. Each of Parent and Sub acknowledges that
the information being provided to each of them by or on behalf of HOL and Times
Mirror is subject to the terms of the Confidentiality Agreement, the terms of
which are incorporated herein by reference. Effective as of, and only as of, the
Effective Time, the Confidentiality Agreement will terminate only with respect
to information relating solely to HOL, and each of Parent and Sub acknowledges
that any and all other information provided to it by Times Mirror or Times
Mirror's representatives concerning any other subsidiary of Times Mirror or any
other operations of Times Mirror shall remain subject to the terms and
conditions of the Confidentiality Agreement after the Effective Time.
SECTION 7.2. Conduct of Business of Parent. Except as contemplated by
this Agreement or as set forth on Schedule 7.2, during the period from the date
of this Agreement to the Effective Time, Parent will, and will cause each of its
subsidiaries to, conduct their respective businesses in the ordinary course
consistent with present practices and will make all reasonable efforts to
preserve and maintain their respective relationships with customers, suppliers
and others with whom Parent and each of its subsidiaries deals. Except as
otherwise contemplated by this Agreement, prior to the Effective Time, neither
Parent nor any of its subsidiaries will, without the prior written consent of
Times Mirror and HOL:
(a) Parent Common Stock. Take any action that would result in a
failure to maintain the trading of the Parent Common Stock on the NASDAQ
SmallCap Market;
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(b) Dividends. Declare, set aside or pay any dividend or other
distribution in respect of its capital stock except for dividends payable in
Parent Common Stock, dividends payable on the Parent Preferred Stock and
dividends by a subsidiary of Parent to Parent or another subsidiary of Parent;
(c) Reorganizations. Acquire or agree to acquire by merging or
consolidating with, by purchasing an equity interest in or the assets of, or by
any other manner, any business or any corporation, partnership or other business
organization or division thereof, or otherwise acquire or agree to acquire any
assets of any other entity (other than the purchase of assets from suppliers,
clients or vendors in the ordinary course of business and consistent with past
practice), if such transaction would prevent or materially delay the
consummation of the transactions contemplated by this Agreement;
(d) Charter and Bylaws. Adopt or propose to adopt any amendments
to its charter documents which would have a material adverse impact on the
consummation of the transactions contemplated by this Agreement;
(e) Indebtedness. Incur or assume any liabilities, obligations or
indebtedness for borrowed money or guarantee any such liabilities, obligations
or indebtedness in an aggregate principal amount exceeding $1,000,000, other
than indebtedness for borrowed money incurred in the ordinary course of Parent's
business or otherwise pursuant to existing credit facilities of Parent or to
refinance or refund any existing credit facilities of Parent;
(f) Employment Agreements. Enter into or change the terms of, any
employment or compensation agreements or arrangements with any employee of HOL
which would become effective prior to the Effective Time;
(g) Other Actions. Not knowingly take any action or omit to take
any action that would cause any of its representations and warranties to become
untrue in any material respect;
(h) Parent Rights Agreement. Amend the Parent Rights Agreement in
any manner that would permit any person to acquire more than 15% of the shares
of Parent Common Stock, or redeem the Parent Rights; or
(i) Agreements. Agree, whether in writing or otherwise, to do any
of the foregoing.
SECTION 7.3. Meeting of Shareholders. If shareholder approval for the
issuance of Parent Common Stock and the Series E Preferred Stock pursuant to the
Merger as contemplated by this Agreement is required by NASDAQ rules or
regulations, Parent shall take all action necessary in accordance with the
Florida Business Corporation Act and its Amended and Restated Articles of
Incorporation and Bylaws to duly call, give notice of, convene, and hold a
meeting of its shareholders as promptly as practicable to consider and vote upon
the approval of the issuance of the shares of Parent Common Stock to Times
Mirror pursuant to this Agreement and Parent's Amended and Restated Articles of
Incorporation. Parent will, through its Board of
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Directors (subject to their fiduciary duties), recommend that its shareholders
approve such matters.
SECTION 7.4. Preparation of Proxy Statement. If shareholder approval for
the issuance of Parent Common Stock and the Series E Preferred Stock pursuant to
the Merger as contemplated by this Agreement is required by NASDAQ rules or
regulations, Parent shall promptly prepare and file with the SEC the Proxy
Statement. Parent shall also take any action required to be taken under any
applicable state securities laws in connection with the issuance of Parent
Common Stock in the Merger, and HOL shall furnish all information concerning HOL
and Times Mirror as may be reasonably requested in connection with any such
action.
SECTION 7.5. No Additional Representations. Each of Parent and Sub
acknowledges that none of Times Mirror, HOL or any other person has made any
representation or warranty, expressed or implied, as to the accuracy or
completeness of any information regarding HOL except as expressly set forth in
this Agreement, the Ancillary Agreements or the schedules hereto and thereto and
any certificate delivered pursuant hereto and thereto. Without limiting the
generality of the foregoing, none of Times Mirror, HOL or any other person will
have or be subject to any liability or indemnification obligation to Parent, Sub
or any other person resulting from the distribution to Parent or Sub, or Parent
or Sub's use of, any such information, and any information, document, or
material made available to Parent or Sub in certain "data rooms," management
presentations or in any other form in anticipation of the transactions
contemplated by this Agreement.
SECTION 7.6. Notice of Breach by Parent or Sub. Parent shall promptly
notify Times Mirror in writing of any inaccuracy in or any breach of any
representation and warranty of Parent or Sub contained in this Agreement or any
certificate or document delivered pursuant to this Agreement that it acquires
Knowledge of subsequent to the date of this Agreement and before the Closing and
shall also notify Times Mirror in writing of any event or occurrence after the
date hereof that it acquires Knowledge of subsequent to the date of this
Agreement and before the Closing which, if it had existed or occurred on or
prior to the date hereof and was not disclosed to Times Mirror at such time,
would have caused the representation and warranty to which such event or
occurrence relates to be untrue.
ARTICLE 8
MUTUAL COVENANTS
SECTION 8.1. Cooperation. HOL, Times Mirror and Parent shall use all
reasonable commercial efforts to cooperate with each other and to cause their
respective officers, employees, affiliates, agents, auditors and representatives
to cooperate with each other after the Effective Time to ensure the orderly
transfer of HOL to Parent and to minimize any disruption to the respective
businesses of HOL or Parent that might result from the transactions contemplated
hereby.
SECTION 8.2. Publicity. Each of HOL, Times Mirror, Parent and Sub agrees
that, from the date of this Agreement through the Effective Time, no public
release or announcement
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concerning the transactions contemplated hereby shall be issued by any party
without the prior consent of each other party (which consent shall not be
unreasonably withheld), except as such release or announcement may be required
by Applicable Law or the rules or regulations of any United States or foreign
securities exchange, in which case the party required to make the release or
announcement shall allow each other party reasonable time to comment on such
release or announcement in advance of such issuance.
SECTION 8.3. Records.
(a) At the Effective Time, Times Mirror shall deliver or cause to
be delivered to Parent true and complete copies of all original agreements,
documents, books, records and files, each as currently in effect (collectively,
"Records"), in the possession of Times Mirror related to the business and
operations of HOL to the extent not then in the possession of HOL, subject to
the following exceptions:
(i) Parent recognizes that certain Records may contain
incidental information relating to HOL or may relate primarily to subsidiaries
or divisions of Times Mirror other than HOL or businesses of HOL previously
sold, and that Times Mirror may retain such Records and shall provide true and
complete copies of the relevant portions thereof to Parent and HOL;
(ii) Times Mirror may retain all Records prepared in
connection with the sale of the Shares, including bids received from other
parties and analyses relating to HOL; and
(iii) Times Mirror may retain any Tax Returns or Tax
records, and Parent and HOL shall be provided with copies of such Tax Returns or
Tax records to the extent they relate to HOL.
(b) After the Effective Time, upon reasonable written notice,
Times Mirror and Parent agree to furnish or cause to be furnished to each other
and their representatives, employees, counsel and accountants access, during
normal business hours, to such information (including Records pertinent to HOL)
and assistance relating to HOL as is reasonably necessary for financial
reporting and accounting matters, the preparation and filing of any Tax Returns
or the defense of any Tax Claim or assessment; provided, however, that such
access does not unreasonably disrupt the normal operations of Times Mirror,
Parent or HOL.
SECTION 8.4. Antitrust Notification. Each of Times Mirror and Parent
will as promptly as practicable, but in no event later than ten business days
following the execution and delivery of this Agreement, file with the United
States Federal Trade Commission (the "FTC") and the United States Department of
Justice (the "DOJ") the notification and report form, if any, required for the
transactions contemplated hereby and any supplemental information requested in
connection therewith pursuant to the HSR Act, and make similar filings within,
to the extent reasonably practicable, a similar time frame with any other
governmental entity for which such filing is required. Any such notification and
report form and supplemental information will be in compliance with the
requirements of the HSR Act or other applicable antitrust regulation. Each
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of Times Mirror and Parent shall furnish to the other such necessary information
and reasonable assistance as the other may reasonably request in connection with
its preparation of any filing or submission which is necessary under the HSR Act
or other applicable antitrust regulation. Times Mirror and Parent shall: request
early termination of the waiting period under the HSR Act and any other
applicable antitrust regulation; shall respond with reasonable diligence and
dispatch to any request for additional information made in response to such
filings; and shall keep each other apprised of the status of any communications
with, and inquiries or requests for additional information from, the FTC and the
DOJ and shall comply promptly with any such inquiry or request. Each of Times
Mirror and Parent will use its reasonable commercial efforts to obtain any
clearance required under the HSR Act or other applicable antitrust regulation
for the consummation of the transactions contemplated hereby.
SECTION 8.5. Reasonable Efforts; Additional Agreements. Subject to the
terms and conditions provided herein, each of the parties hereto agrees to use
all reasonable commercial efforts to take or cause to be taken all actions and
to do or cause to be done all things reasonably necessary, proper or advisable
under Applicable Laws to consummate and make effective the transactions
contemplated by this Agreement and each of the Ancillary Agreements to which it
is a party, including, without limitation: (a) cooperating in the preparation
and filing of the Proxy Statement, if required, and any amendments thereto; (b)
executing any additional agreements, instruments or other documents or taking
any other actions necessary to consummate the transactions contemplated hereby;
and (c) not knowingly taking or agreeing to take any action that would cause any
of the representations and warranties contained in this Agreement or any
certificate or other document being delivered pursuant to the terms of this
Agreement to be untrue in any material respect.
SECTION 8.6. Tax-Free Reorganization. Each party hereto shall use all
reasonable efforts to cause the Merger to be treated as a reorganization
qualifying under the provisions of Section 368(a) of the Code and shall use all
reasonable efforts to prevent any affiliate of such party from taking any
actions which could prevent the Merger from being treated as a reorganization
qualifying under the provisions of Sections 368(a)(1)(A) and (a)(2)(E) of the
Code.
ARTICLE 9
TERMINATION; AMENDMENT; WAIVER
SECTION 9.1. Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the
Effective Time:
(a) by mutual written consent of Times Mirror and Parent ;
(b) by Parent pursuant to its termination right under Section
6.1(c);
(c) by Times Mirror, HOL, Parent or Sub if (i) any 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 order, decree or ruling which remains
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in effect, and which has the effect of making the transactions contemplated
hereby illegal or otherwise prohibiting consummation of the transactions
contemplated by this Agreement and such order, decree, ruling or other action is
or shall have become nonappealable or (ii) the Merger has not been consummated
by 150 days after the date hereof; and
(d) Subject to Section 2.3, by Times Mirror or HOL if either
Parent or Sub, or by Parent or Sub if either Times Mirror or HOL, (i) shall have
materially breached any of its agreements and covenants under this Agreement or
any Ancillary Agreement or (ii) any representation or warranty of such party
contained in this Agreement or any certificate or other document being delivered
pursuant to this Agreement shall fail to be true and correct in all material
respects, and, in the cases of the foregoing clauses (i) and (ii), such breach
or failure shall continue for 30 days without cure after written notice thereof
or, in the case of the foregoing clause (ii) only, such breach or failure would
render the conditions set forth in Sections 2.2(e) or 2.4(f), as the case may
be, incapable of being satisfied by the 150th day after the date hereof.
Notwithstanding anything to the contrary contained in this
Agreement, the right of a party to terminate this Agreement under this Section
9.1 shall not be available to any party (i) which is in material breach of its
obligations hereunder or (ii) whose failure to fulfill its obligations hereunder
is the cause of, or results in, the failure to satisfy any of the conditions to
the consummation of the Merger set forth in Article 2.
SECTION 9.2. Return of Confidential Information. In the event of
termination by any party pursuant to Section 9.1, written notice thereof shall
forthwith be given to the other parties and the transactions contemplated by
this Agreement shall be terminated, without further action by any party. If the
transactions contemplated by this Agreement are terminated as provided herein:
(a) Parent and Sub shall return and cause to be returned all
documents and copies and other material received from or on behalf of Times
Mirror or HOL relating to the business of Times Mirror or HOL or to the
transactions contemplated hereby, whether obtained before or after the execution
hereof, to Times Mirror;
(b) Parent and Sub shall destroy all analyses, summaries and
other documents based upon such confidential materials, and shall deliver to HOL
and Times Mirror a certificate signed by an authorized officer of each of Parent
and Sub confirming the foregoing; and
(c) All confidential information received by Parent and Sub with
respect to the businesses of Times Mirror or HOL shall be treated in accordance
with the Confidentiality Agreement, which shall remain in full force and effect
notwithstanding the termination of this Agreement.
SECTION 9.3. Effects of Termination. If this Agreement is terminated and
the transactions contemplated hereby are abandoned pursuant to Section 9.1, this
Agreement shall become void and of no further force and effect, except for the
provisions of (a) Section 7.1 relating to the obligations of each of Parent and
Sub to keep confidential certain information and data obtained by it, (b)
Section 7.5 relating to the acknowledgment by each of Parent and Sub
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that no additional representations were made by or on behalf of Times Mirror or
HOL other than those set forth in this Agreement, (c) Section 8.2 relating to
publicity, (d) Section 12.1 relating to expenses generally, (e) Section 12.5
relating to notices, (f) Section 12.11 relating to arbitration and consent to
jurisdiction, (g) Section 12.14 relating to the limitation on consequential and
punitive damages and (h) this Article 9. Nothing in this Article 9 shall be
deemed to release any party from any liability for any breach by such party of
the terms and provisions of this Agreement or to impair the right of any party
to compel specific performance by any other party of its obligations under this
Agreement.
ARTICLE 10
EMPLOYEE AND RELATED MATTERS
SECTION 10.1. Offers of Employment. The Surviving Corporation shall
assume responsibility for all HOL employees on substantially the same terms and
conditions to which such employees were subject immediately prior to the
Effective Time, subject to the provisions of this Article 10. Any HOL employee
who is not actively employed at the Effective Time shall be offered active
employment with the Surviving Corporation following the expiration of such leave
of absence only to the extent that HOL would have been obligated to offer
employment to any such employee.
SECTION 10.2. Continuation of Plans. As of the Effective Time, HOL
personnel shall cease to participate in or be covered by all Times Mirror Plans,
and neither HOL nor any other affiliate of HOL after the Merger, including the
Parent and Sub shall have any responsibility for benefits under such Plans. As
of the Effective Time, Parent or HOL shall remain the sponsor of each HOL Plan,
and neither Times Mirror nor any other affiliate of Times Mirror shall have any
responsibility for benefits under any such Plan. Without limiting the foregoing,
Parent or HOL shall be solely responsible for providing and continuing benefits
under COBRA to HOL personnel and qualified beneficiaries with respect to
"qualifying events", as such term is used in Section 4980B of the Code, whether
such qualifying event occurs prior to, on, or following, the Effective Time.
SECTION 10.3. Mutual Cooperation.
(a) General. Each of Parent and HOL agrees to cooperate, and
agrees to use its best efforts to cause its affiliates to cooperate and in a
complete, diligent and timely manner to provide Times Mirror with such
compensation, service, payroll and other pertinent census data as may be
required by Times Mirror for purposes of calculating or affecting distribution
of benefits to which any HOL employee or former employee may be entitled under
any benefit plan established, maintained or contributed to by Times Mirror.
(b) Performance Cycle Bonus Payments. Parent acknowledges that
Times Mirror or HOL may have an obligation after the Effective Time to pay all
or a portion of the performance cycle bonuses owing to Xxxxx X. Xxxxxxx, Xxxxxxx
X. Xxxxxxx, Xxxxxx X. Xxxxxxxx and Xxxxxx X. Xxxxxxxx pursuant to the employment
agreements set forth on Schedule 3.12(a) (the "Employment Agreements"). If any
of such persons elects not to accelerate the
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Determination Date (as defined in each Employment Agreement) of the Performance
Cycle Amount (as defined below), Times Mirror shall advance payment in cash
(which shall be by wire transfer of immediately available funds) to Parent for
the payment by Parent of any performance cycle bonuses immediately prior to the
date of payment as determined in accordance with Section 5.2 or like provision
of each of the employment agreements set forth on Schedule 3.12(a) (such amount,
the "Performance Cycle Amount"). If such persons collectively agree to
accelerate the Determination Date of the Performance Cycle Amount, Times Mirror
shall pay the performance cycle bonuses owing to such persons on or before the
Closing Date.
ARTICLE 11
INDEMNIFICATION
SECTION 11.1. Indemnification by Times Mirror. Without duplication of
any amounts payable for indemnification under Section 11.6, Times Mirror shall
indemnify Parent, Sub, the Surviving Corporation, each of their affiliates (as
defined in Rule 405 under the Securities Act) and each of their respective
officers, directors, shareholders, partners, employees and agents against and
hold them harmless from any and all Losses suffered or incurred by any such
indemnified party to the extent arising from (a) any alleged liability of HOL
under ERISA arising from HOL having been a member of Times Mirror's "control
group" prior to the Effective Time and from HOL's participation in any Times
Mirror Plan; (b) Times Mirror's obligation to advance payment to Parent for the
payment by Parent of the Performance Cycle Amount as provided in Section
10.3(b); (c) any breach or inaccuracy in any representation or warranty
contained in Sections 3.2 (Authority of HOL), 3.5 (Capital Stock of HOL), 3.6
(Equity Interests of HOL), 3.8 (No Indebtedness of HOL), 3.19 (Information
Supplied), 4.2 (Authority of Times Mirror), 4.5 (Title to and Transfer of the
Shares), 4.6 (Brokers) and any of the representations and warranties of Times
Mirror and HOL contained in Exhibit F (Times Mirror/HOL Tax Certificate); and
(d) any breach by Times Mirror or HOL of the covenants contained in Sections
6.1, 6.3, 6.5, 6.6, 8.5(c), 8.6, 11.1 and 11.6.
SECTION 11.2. Indemnification by Parent. Parent shall indemnify Times
Mirror and its affiliates, officers, directors, shareholders, partners,
employees and agents against and hold them harmless from any Losses suffered or
incurred by any such indemnified party to the extent arising from (a) the
obligations of Times Mirror under (i) the Guaranty of Lease dated November 6,
1998, by and between Times Mirror and Water Garden Company L.L.C. with respect
to the obligations of HOL under that certain office lease dated November 6,
1998, by and between HOL and Water Garden Company L.L.C., pertaining to the
property and building located at 0000 00xx Xxxxxx, Xxxxxx 360 and 000, Xxxxx
Xxxxx, Xxxxx Xxxxxx, Xxxxxxxxxx 00000 (which shall be net of any unpaid or
unperformed obligations of Times Mirror or HOL under same attributable to any
period prior to the Closing), and (ii) the NATO Agreement (which shall be net of
any unpaid or unperformed obligations of Times Mirror or HOL under same
attributable to any period prior to the Closing); (b) any breach or inaccuracy
in any representation or warranty contained in Section 5.2 (Authority of Parent
and Sub), 5.5 (Capital Stock of Parent), 5.6 (SEC Reports; Financial
Statements), 5.7 (Information Supplied), 5.12 (Brokers) and 5.13 (Taxes); and
(c) any breach by Parent or Sub of the covenants contained in Sections 7.2, 7.6,
8.5(c), 8.6 and 11.2.
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SECTION 11.3. Adjustments to Losses. The amount of any Losses for which
indemnification is provided under this Article 11 (including the obligation of
Times Mirror to advance payment to Parent for the payment of the Performance
Cycle Amount pursuant to Section 10.3(b)) shall be reduced by any amounts
recovered or recoverable by the indemnified party under insurance policies with
respect to such Losses. Furthermore, the amount of any Losses and the obligation
of Times Mirror to advance payment to Parent for the payment of the Performance
Cycle Amount pursuant to Section 10.3(b) shall be (a) increased to take account
of any Tax cost incurred by the indemnified party by reason of the receipt of
the indemnity payment (grossed-up for such increase) and (b) reduced to take
account of any Tax benefit actually realized by the indemnified party in respect
of the taxable year in which the Loss is incurred or paid and, with respect to a
Tax benefit arising in a year subsequent to the year in which the Loss is paid
or incurred, the indemnified party shall pay to the indemnifying party the
amount of such Tax benefit when such Tax Benefit is actually realized. In
computing the amount of any such Tax cost or Tax benefit, the indemnified party
shall be deemed to recognize all other items of income, gain, loss, deduction or
credit before recognizing any item arising from the receipt of any indemnity
payment hereunder or the incurrence or payment of any indemnified loss,
liability, claim, damage or expense.
SECTION 11.4. Termination of Indemnification. The obligations to
indemnify and hold harmless a party hereto, (a) pursuant to Section 5.13, shall
terminate at the time the applicable statutes of limitations with respect to the
Tax liabilities in question expire (giving effect to any extension thereof by
waiver or otherwise), (b) pursuant to Sections 11.1 and 11.2, shall terminate
when the applicable representation or warranty terminates pursuant to Section
12.13.
SECTION 11.5. Procedures Relating to Indemnification for Third Party
Claims. In order for a party (the "indemnified party") to be entitled to any
indemnification provided for under Sections 11.1 and 11.2 of this Agreement in
respect of, arising out of or involving a claim or demand made by any person,
firm, governmental authority or corporation against the indemnified party (a
"Third-Party Claim"), such indemnified party must notify the indemnifying party
in writing, and in reasonable detail, of the Third-Party Claim within 15 days
after receipt by such indemnified party of written notice of the Third-Party
Claim; provided, however, that failure to give such notification shall not
affect the indemnification provided hereunder except to the extent the
indemnifying party shall have been actually and materially prejudiced as a
result of such failure. Thereafter, the indemnified party shall deliver to the
indemnifying party, within 5 business days after the indemnified party's receipt
thereof, copies of all notices and documents (including court papers) received
by the indemnified party relating to the Third-Party Claim.
If a Third-Party Claim is made against an indemnified party, the
indemnifying party will be entitled to participate in the defense thereof and,
if it so chooses, to assume the defense thereof with counsel selected by the
indemnifying party and reasonably satisfactory to the indemnified party. Should
the indemnifying party so elect to assume the defense of a Third-Party Claim,
the indemnifying party will not be liable to the indemnified party for legal
fees and expenses subsequently incurred by the indemnified party in connection
with the defense thereof. If the indemnifying party assumes such defense, the
indemnified party shall have the right to participate in the defense thereof and
to employ counsel, at its own expense, separate from the
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counsel employed by the indemnifying party, it being understood that the
indemnifying party shall control such defense; provided, however, that such
indemnified party shall pay the fees and expenses of such counsel unless the
named parties to any such claim or proceeding include both such indemnified
party and the indemnifying party and such indemnified party has been advised by
legal counsel that there may be one or more legal defenses available to it which
are different from or additional to those available to the indemnifying party
(in which case, if such indemnified party informs the indemnifying party in
writing that it elects to employ separate counsel at the expense of the
indemnifying party, the indemnifying party shall not have the right to assume
the defense of such claim or proceeding on behalf of such indemnified party), it
being understood that the indemnifying party shall not, in connection with any
one claim or proceeding, be liable for the fees and expenses of more than one
separate firm of attorneys at any time for such indemnified party. The
indemnifying party shall be liable for the fees and expenses of counsel employed
by the indemnified party for any period during which the indemnifying party has
not assumed the defense thereof. If the indemnifying party chooses to defend or
prosecute any Third-Party Claim, all the parties hereto shall cooperate in the
defense or prosecution thereof. Such cooperation shall include the retention and
(upon the indemnifying party's request) the provision to the indemnifying party
of records and information which are reasonably relevant to such Third-Party
Claim, and making employees available on a mutually convenient basis to provide
additional information and explanation of any material provided hereunder.
Whether or not the indemnifying party shall have assumed the defense of a
Third-Party Claim, the indemnified party shall not admit any liability with
respect to, or settle, compromise or discharge, such Third-Party Claim without
the indemnifying party's prior written consent (which consent shall not be
unreasonably withheld).
SECTION 11.6. Tax Matters
(a) Tax Indemnification. Times Mirror agrees to be responsible
for, and to indemnify and hold the indemnified parties listed in Section 11.1
harmless from and against, any and all Losses relating to, resulting from or
based upon:
(i) any and all Taxes with respect to any taxable periods
(or portions thereof) of HOL (or any predecessor) ending on or prior to
the Closing Date;
(ii) any and all Taxes of HOL for the period allocated to
Times Mirror pursuant to Section 11.6(b)(iii); and
(iii) any liability under Treasury Regulation Section
1.1502-6(a) or any analogous or similar state, local or foreign law or
regulation as a result of HOL (or any predecessor) being a member of any
Affiliated Group at any time on or prior to the Closing Date.
(b) Preparation of Tax Returns; Payment of Taxes.
(i) Times Mirror.
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(1) Times Mirror (A) shall include, or cause to be
included, HOL in, and shall file, (I) the United States
consolidated federal income Tax Return of Times Mirror for its
taxable year ended December 31, 1998 and for all subsequent
taxable periods of HOL ending on or prior to the Closing Date
and (II) all other consolidated, combined or unitary Tax Returns
of Times Mirror or its subsidiaries in which HOL has been, or is
required to be, includable for the taxable periods of HOL ending
on or prior to the Closing Date and (B) also shall file, or
shall cause HOL to file, all other Tax Returns of, or which
include, HOL required to be filed (taking into account any
extensions) on or prior to the Closing Date. Such Tax Returns
shall be prepared in a manner consistent with prior practice
with respect to HOL. Times Mirror shall prepare and deliver any
such Tax Returns (or the relevant portions thereof), to Parent
at least 10 business days prior to their due date and Parent
shall have the right to review and, other than with respect to
federal income tax returns, approve (which approval shall not be
unreasonably withheld) such Tax Returns (or the relevant
portions thereof).
(2) Following the Closing, Times Mirror shall be
responsible for preparing or causing to be prepared all foreign,
state and local Tax Returns required to be filed by HOL on a
separate return basis after the Closing Date with respect to
taxable periods that end on or prior to the Closing Date. Such
Tax Returns shall be prepared in a manner consistent with prior
practice. Times Mirror shall prepare and deliver such Tax
Returns, along with the amount of any Taxes shown due thereon,
to Parent for filing at least 10 business days prior to their
due date and Parent shall have the right to review and approve
such Tax Returns (which approval shall not be unreasonably
withheld).
(3) Notwithstanding the foregoing, following the
Closing Date, neither Times Mirror nor any subsidiary shall
amend any Tax Return without the prior written consent of Parent
(which consent shall not be unreasonably withheld) if any
adjustment provided in such Tax Return would adversely affect
the Taxes payable by HOL for taxable periods ending after the
Closing Date. Similarly, neither Parent nor HOL shall amend any
Tax Return with respect to Tax years ending on or before the
Closing Date or straddle years without the prior written consent
of Times Mirror (which consent shall not be unreasonably
withheld) if any adjustment provided in such Tax Return would
adversely affect the Taxes or indemnification payments payable
by Times Mirror for taxable periods ending on or before the
Closing Date.
(ii) Parent.
(1) Parent shall cause to be filed all Tax Returns
required to be filed by HOL after the Closing Date, and shall,
subject to receiving the payments from Times Mirror referred to
in Section 11.6(b)(ii)(2), pay the Taxes shown due thereon.
Nothing contained in the foregoing shall in any manner
terminate, limit
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or adversely affect any right of any party to receive
indemnification pursuant to any provision in this Agreement.
(2) With respect to any Tax Returns which Parent
shall cause to be filed pursuant to Section 11.6(b)(ii)(1)
hereof, Times Mirror shall pay to Parent an amount equal to that
portion of the Taxes shown on such Tax Return for which Times
Mirror has an obligation to indemnify any party pursuant to the
provisions of Section 11.6(a). Parent shall provide Times Mirror
with a schedule showing the computation of such amount at least
35 days prior to the due date (including extensions, if any) for
filing the Tax Returns which reflects Taxes for which Times
Mirror has an obligation to indemnify any party pursuant to the
provisions of Section 11.6(a) along with a copy of such Tax
Return (or the relevant portions thereof). Times Mirror shall
have the right to review any such Tax Return (or the relevant
portion thereof) and schedule, and Parent and Times Mirror shall
attempt in good faith mutually to resolve any disagreements
regarding the determination of such amount within ten (10) days
of the Times Mirror's receipt thereof. Any disagreement
regarding such determination shall be resolved by an independent
nationally recognized accounting firm (the "Accounting Firm").
The parties will instruct the Accounting Firm to reach its
conclusion regarding any such dispute within fifteen (15) days
after its appointment. The report of the Accounting Firm shall
be final, binding and conclusive on Times Mirror and Parent. The
fees and expenses of the Accounting Firm shall be borne equally
by Times Mirror and Parent. Any amount owing under this Section
11.6(b)(ii)(2) shall be paid no later than five (5) days before
the due date for payment of Taxes with respect to any such Tax
Return.
(iii) Closing Taxable Year; Allocation for Straddle Year.
For federal income tax purposes, the taxable year of HOL shall end as of
the close of the Closing Date and, with respect to all other Taxes,
Times Mirror and Parent will, unless prohibited by applicable law, close
the taxable period of HOL as of the close of the Closing Date. Except as
otherwise required by applicable law, neither Times Mirror nor Parent
shall take any position inconsistent with the preceding sentence on any
Tax Return. In any case where applicable law does not permit HOL to
close its taxable year on the Closing Date or in any case in which a Tax
is assessed with respect to a taxable period which includes the Closing
Date (but does not begin or end on that day), then Taxes, if any,
attributable to the taxable period of HOL beginning before and ending
after the Closing Date shall be allocated (A) to Times Mirror for the
period up to and including the Closing Date, and (B) to Parent for the
period subsequent to the Closing Date. Any allocation of income,
deductions, credits or other items required to determine any Taxes
attributable to any period beginning before and ending after the Closing
Date shall be prepared by Parent and shall be made by means of a closing
of the books and records of HOL as of the close of the Closing Date,
provided that exemptions, allowances, deductions or other items that are
calculated on an annual basis (including, but not limited to,
depreciation and amortization deductions) shall be allocated between the
period ending on the Closing
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Date and the period after the Closing Date in proportion to the number
of days in each such period.
(c) Refund Claims. Any refund of Taxes received (or utilized as a
credit against Taxes due by Parent or any member of its Affiliated Group for
taxable periods beginning on or after the Closing Date) by HOL after the Closing
Date shall be retained by the HOL, provided, however, that in the event HOL
shall receive a refund of Taxes after the Closing Date (or utilize such refund
as a credit against Taxes due for taxable periods beginning on or after the
Closing Date) with respect to a Tax Return of HOL relating to taxable periods
ending on or prior to the Closing Date (other than a refund or credit arising by
reason of a carryback of any item incurred after the Closing Date), then the
amount of such refund or credit and any interest thereon, net of any Taxes
payable on receipt thereof, shall be reimbursed by HOL to Times Mirror within 10
business days after such Tax benefit is realized by HOL as a refund or credit,
provided that Times Mirror shall return to HOL the amount, if any, by which the
amount of such Tax benefit is thereafter reduced pursuant to a final
determination.
(d) Carrybacks. Times Mirror shall in good faith consider
requests by HOL for filing carryback refund claims for the carryback of any
losses recognized by HOL in post-Closing Date years that may be carried back to
pre-Closing Date periods (the refunds from which would belong to Parent).
However, Times Mirror has no obligation to comply with such requests.
(e) Cooperation with Respect to Taxes. Parent and Times Mirror
agree to furnish or cause to be furnished to each other, and each at their own
expense, as promptly as practicable, such information (including access to books
and records) and assistance, including making employees available on a mutually
convenient basis to provide additional information and explanations of any
material provided, relating to HOL as is reasonably necessary for the
determination of any Taxes, for the filing of any Tax Return (including any
amended Tax Return or claim for refund), for the preparation for any audit, and
for the prosecution or defense of any claim, suit or proceeding relating to any
adjustment or proposed adjustment with respect to Taxes. Each of Parent and
Times Mirror agree (A) to retain all books and records with respect to Tax
matters pertinent to HOL relating to any taxable period beginning before the
Closing Date until the expiration of the relevant statute of limitations (and
such longer period as reasonably requested in writing), and (B) to give the
other party reasonable written notice prior to transferring, destroying or
discarding any such books and records and, in such event, if the other party so
requests, to allow the other party to take possession of such books and records.
(f) Tax Proceedings.
(i) In the event that any audit or examination shall be
instituted, or any deficiency asserted or assessment made, or any
administrative or court proceeding commenced by the IRS or any other
taxing authority (a "Tax Proceeding") with respect to any taxable period
ending prior to or on the Closing Date of which Parent has notice,
Parent shall promptly cause written notice of the Tax Proceeding to be
forwarded to Times Mirror. Similarly, Times Mirror shall promptly cause
written notice of any Tax
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Proceeding of which Times Mirror has notice relating to any
indemnifiable Taxes to be forwarded to Parent.
(ii) Times Mirror shall have the right to elect, at its
sole option and expense, and subject to the provisions of this Section
11.6(f), to represent the interests of HOL in the Tax Proceeding and
collect, settle or pay any amount due or owed by HOL with respect to any
taxable period ending prior to or on the Closing Date, with counsel of
its choice reasonably satisfactory to Parent. In the event Times Mirror
elects to represent HOL in the Tax Proceeding, Times Mirror shall within
five (5) days (or sooner, if the nature of the Tax Proceeding so
requires) notify Parent of its intent to do so and Parent shall cause
HOL to appoint Times Mirror as attorney in fact with the exclusive
authority to represent HOL in the Tax Proceeding. Parent shall have (x)
the right to participate fully in the Tax Proceeding, including through
separate counsel of its own choosing at its sole cost and expense, (y)
the right to receive reasonable advance notice from Times Mirror of any
meetings, hearings or proceedings, and (z) the right, if possible, to
review in advance and comment on any pleadings, briefs, or other
documents to be filed. Times Mirror shall not enter into any settlement,
closing or other agreement with respect to any Tax Proceeding without
the prior written consent of Parent (not to be unreasonably withheld,
conditioned or delayed) if such settlement, closing agreement or other
agreement will adversely affect Taxes payable by HOL for taxable periods
(or portions thereof) beginning after the Closing Date. If Times Mirror
elects not to represent HOL in the Tax Proceeding, or fails to timely
notify Parent of its election herein provided or contests its obligation
to indemnify, then Parent may represent the interests of HOL in any Tax
Proceeding in any manner that it reasonably may deem appropriate.
(iii) Parent and Times Mirror jointly shall represent the
interests of HOL in any Tax Proceeding relating to any taxable period of
HOL which includes (but does not begin or end on) the Closing Date. Any
disputes regarding the conduct or resolution of any such Tax Proceeding
shall be resolved by the Accounting Firm. The parties will instruct the
Accounting Firm to reach its conclusion regarding any such dispute
within 20 days after its appointment. The report of the Accounting Firm
shall be final, binding and conclusive on Times Mirror and Parent. All
costs, fees and expenses paid to third parties in the course of such Tax
Proceeding (including the fees of the Accounting Firm) shall be borne by
Parent and Times Mirror in the same ratio as the ratio in which,
pursuant to the terms of this Agreement (including Section 11.6(b)
hereof), Parent and Times Mirror would share the responsibility for
payment of the Taxes asserted by the taxing authority in such Tax
Proceeding if such Tax Proceeding were sustained in its entirety.
(g) Claim Period. Any claim for indemnity under this Section 11.6
may be made at any time prior to 90 days after the expiration of the applicable
Tax statute of limitations with respect to the relevant taxable period of HOL or
of such indemnified party (including all periods of extension, whether automatic
or permissive).
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(h) Termination of Tax Sharing Arrangements. Any tax sharing, tax
indemnification or similar agreement or arrangement with respect to Taxes (other
than the provisions of this Agreement) between or among HOL, Times Mirror and
any subsidiary of Times Mirror shall be terminated as to HOL as of the Closing
Date and HOL shall have no liability from and after the Closing Date under any
such agreements or arrangements.
SECTION 11.7. Exclusive Remedy. In the absence of fraud or willful
misconduct on the part of the indemnifying party or any of its officers,
directors, employees or agents, the remedy contained in Sections 2.3, 11.1 and
11.2 shall constitute the sole and exclusive remedy after the Closing of the
indemnified party (and its respective officers, directors, employees and agents)
against the indemnifying party for Losses suffered or incurred in connection
with this Agreement and the transactions contemplated hereby.
ARTICLE 12
MISCELLANEOUS
SECTION 12.1. Expenses. Whether or not the transactions contemplated
hereby are consummated, and except as otherwise provided in this Agreement, all
fees, costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such fees,
costs or expenses. Without limiting the generality of the immediately preceding
sentence, the fees, costs and expenses incurred by HOL in connection with this
Agreement and the transactions contemplated hereby shall be borne by Times
Mirror and none of such fees, costs or expenses shall be paid by HOL.
SECTION 12.2. HOL Acquisition Agreement. At the Closing, Times Mirror
shall assign and transfer all of its rights to Parent under that certain Stock
Purchase Agreement dated as of January 16, 1996 by and among Times Mirror and
the other parties on the signature pages thereto.
SECTION 12.3. Assignment. This Agreement and the rights and obligations
hereunder shall not be assignable or transferable by Parent, Sub, Times Mirror
or HOL (including by operation of Applicable Law in connection with a merger, or
sale of substantially all the assets, of Parent, Times Mirror or HOL) without
the prior written consent of the other parties hereto (except that nothing
herein shall be construed (a) as obligating (i) Times Mirror to obtain the
consent of HOL or (ii) HOL to obtain the consent of Times Mirror to any of the
transactions described in the immediately prior parenthetical or (b) as
obligating (i) Parent to obtain the consent of Sub or (ii) Sub to obtain the
consent of Parent to any of the transactions described in the immediately prior
parenthetical); provided, however, that no assignment shall limit or affect the
assignor's obligations hereunder.
SECTION 12.4. No Third-Party Beneficiaries. This Agreement is for the
sole benefit of the parties hereto and their permitted assigns and nothing
herein expressed or implied shall give or be construed to give to any person or
entity, other than the parties hereto and such assigns, any legal or equitable
rights hereunder.
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SECTION 12.5. Notices. All notices or other communications required or
permitted to be given hereunder shall be in writing and shall be delivered by
hand or sent prepaid telecopy, or sent, postage prepaid, by registered,
certified or express mail, or reputable overnight courier service and shall be
deemed given when so delivered by hand or telecopied, or if mailed, three days
after mailing (one Business Day in the case of express mail or overnight courier
service), as follows:
(a) if to Parent, Sub or the Surviving Corporation:
Big Entertainment, Inc.
0000 Xxxxxx Xxxx
Xxxxx 000 Xxxx
Xxxx Xxxxx, Xxxxxxx 00000
Attention: Xxxxxxxx Xxxxxxxxxx
Telecopier No.: (000) 000-0000
with a copy to:
Weil, Gotshal & Xxxxxx LLP
000 0xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxxxxxx
Telecopier No.: (000) 000-0000
(b) if to Times Mirror:
The Times Mirror Company
000 Xxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx Xxxxxxxx
Telecopier No.: (000) 000-0000
with a copy to:
The Times Mirror Company
000 Xxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
Telecopier No.: (000) 000-0000
(c) if to HOL, prior to the Effective Time:
0000 00xx Xxxxxx,
Xxxxx 000, Xxxxx Xxxxx
Xxxxx Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx
Telecopier No.: (000) 000-0000
SECTION 12.6. Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more such counterparts have been signed
by each of the parties and delivered to the other party.
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SECTION 12.7. Entire Agreement. This Agreement, the Ancillary Agreements
and the Confidentiality Agreement and the Schedules attached hereto and thereto
and any certificates delivered pursuant hereto or thereto contain the entire
agreement and understanding between the parties hereto with respect to the
subject matter hereof and supersede all prior agreements and understandings
relating to such subject matter.
SECTION 12.8. Severability. If any provision of this Agreement or the
application of any such provision to any person or circumstance shall be held
invalid, illegal or unenforceable in any respect by a court of competent
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision hereof.
SECTION 12.9. Amendment. This Agreement may be amended by action taken
by HOL, Times Mirror, Parent and Sub at any time only by an instrument in
writing signed on behalf of each of the parties hereto.
SECTION 12.10. Extension; Waiver. At any time prior to the Effective
Time, any party hereto may (a) extend the time for the performance of any of the
obligations or other acts of any other party, (b) waive any inaccuracies in the
representations and warranties of any other party contained herein or in any
document, certificate or writing delivered pursuant hereto or (c) waive
compliance by any other party with any of the agreements or conditions contained
herein. Any agreement on the part of any party hereto to any such extension or
waiver shall be valid only if set forth in an instrument, in writing, signed on
behalf of such party. The failure of any party hereto to assert any of its
rights hereunder shall not constitute a waiver of such rights.
SECTION 12.11. Dispute Resolution; Equitable Enforcement.
(a) Accounting Disputes. Notwithstanding anything to the contrary
contained in this Section 12.11, any controversy, dispute or claim arising under
this Agreement related to or arising out of accounting matters relating to this
Agreement shall be resolved by means of discussions between the regularly
retained independent certified public accountants of Parent and Times Mirror. In
the event that the independent certified public accountants of each of Parent
and Times Mirror are unable to resolve the dispute within 60 days after the
dispute is first submitted to them, then a third independent certified public
accountant of recognized national standing shall be selected by the independent
certified public accountants of each of Parent and Times Mirror and the
determination of such third independent certified public accountant, with
respect to the matter in dispute, shall be rendered within 45 days after the
dispute has been submitted to it and such determination shall be final and
binding on all of the parties hereto.
(b) Arbitration. Except as otherwise provided in Section 12.11(a)
or (c), any controversy, dispute or claim arising under this Agreement which
cannot be settled by mutual agreement shall be finally settled by arbitration as
follows: any party who is aggrieved shall deliver a notice to other party
setting forth the specific points in dispute. Any points remaining in dispute
twenty (20) days after the giving of such notice shall be submitted to
arbitration in New York, New York to Endispute, before a single arbitrator
appointed in accordance with Endispute's Arbitration Rules, modified only as
herein expressly provided. The arbitrator may enter a default decision against
any party who fails to participate in the arbitration proceedings.
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The decision of the arbitrator on the points in dispute will be final,
unappealable and binding and judgment on the award may be entered in any court
having jurisdiction thereof. The parties agree that this clause has been
included to rapidly and inexpensively resolve any disputes between them with
respect to this Agreement, and that this clause shall be grounds for dismissal
of any court action commenced by either party with respect to this Agreement,
other than post-arbitration actions seeking to enforce an arbitration award. The
parties shall keep confidential, and shall not disclose to any person, except as
may be required by law, the existence of any controversy hereunder, the referral
of any such controversy to arbitration or the status or resolution thereof.
(c) Equitable Enforcement. Notwithstanding anything to the
contrary contained in this Section 12.11, any claim by either party for
injunctive or other equitable relief, including specific performance (including
specific performance of the agreement to resolve disputes related to or arising
out of accounting matters contained in Section 12.11(a) and the agreement to
arbitrate contained in Section 12.11(b)), may be brought in any state or federal
court located in the Southern District of New York in the State of New York,
before or as a result of arbitration, and any judgment, order or decree relating
thereto shall have precedence over any arbitral award or proceeding. Each of
Parent, Sub, Times Mirror and HOL irrevocably submits to the exclusive
jurisdiction of the state or federal courts situated in the Southern District in
the State of New York, for the purposes of any suit, action or other proceeding
arising out of this Agreement or any transaction contemplated hereby. Each of
Parent, Sub, Times Mirror and HOL agrees to commence any action, suit or
proceeding relating hereto in any of such courts only. Each of Parent, Sub,
Times Mirror and HOL further agrees that service of any process, summons, notice
or document by U.S. registered mail to such party's respective address set forth
in Section 12.5 above shall be effective service of process for any action, suit
or proceeding in New York with respect to any matters to which it has submitted
to jurisdiction as set forth above in the immediately preceding sentence. Each
of Parent, Sub, Times Mirror and HOL irrevocably and unconditionally waives any
objection to the laying of venue of any action, suit or proceeding arising out
of this Agreement or the transactions contemplated hereby in any of such courts
only and hereby further irrevocably and unconditionally waives and agrees not to
plead or claim in any such court that any such action, suit or proceeding
brought in any such court has been brought in an inconvenient forum.
SECTION 12.12. Interpretation of this Agreement.
(a) Construction. Unless the context of this Agreement clearly
requires otherwise, references to the plural include the singular, the singular
includes the plural, the part includes the whole, "including" is not limiting
and "or" has the inclusive meaning represented by the phrase "and/or." The words
"hereof," "herein," "hereby," "hereunder" and similar terms in this Agreement
refer to this Agreement as a whole (including the Preamble, the Recitals, the
Schedules and the Exhibits) and not to any particular provision of this
Agreement. Article, section, exhibit, schedule, recital and preamble references
in this Agreement are to those portions of this Agreement unless otherwise
specified.
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(b) Knowledge. Whenever any representation or warranty of any
party contained in this Agreement or in any certificate or other document
delivered in connection with this Agreement is qualified to the "Knowledge" of
such party, such qualification shall mean the actual knowledge, after due
inquiry, of (i) in the case of Times Mirror, Xxxxx Xxxxxxxx, Xxxx X. Xxxxxx and
Xxxxxx Xxxxxxxx; (ii) in the case of HOL, Xxxxx X. Xxxxxxx, Xxxxxxx X. Xxxxxxx
and Xxxxxxx X. Xxxxxxx; (iii) in the case of Parent, Xxxxxxxx Xxxxxxxxxx and
Xxxxxx X. Xxxxxxx.
(c) Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of California
applicable to agreements made and to be performed entirely within such State.
(d) Headings, Exhibits and Schedules. The headings contained in
this Agreement, in any Exhibit or Schedule hereto and in the Table of Contents
to this Agreement, are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement. Any capitalized terms used
in any Exhibit or Schedule but not otherwise defined therein shall have the
meaning as defined in this Agreement. Any matter disclosed in one Schedule
hereto shall be deemed incorporated by reference into each other Schedule hereto
and disclosed in each such Schedule to the extent that the relevancy of such
matter to each such other Schedule is apparent from the disclosure included on
the Schedule.
SECTION 12.13. Survival of Representations. The representations and
warranties described in Sections 11.1 and 11.2 (other than representations and
warranties contained in Section 5.13 which shall survive for the periods set
forth below in this Section 12.13) shall survive after the Effective Time
indefinitely for purposes of the indemnification set forth in Sections 11.1 and
11.2. The representations and warranties contained in Section 5.13 relating to
Taxes shall survive until 90 days after the expiration of the applicable statute
of limitations with respect to such Taxes.
SECTION 12.14. No Consequential or Punitive Damages. NOTWITHSTANDING
ANYTHING TO THE CONTRARY ELSEWHERE IN THIS AGREEMENT, NO PARTY (OR ITS
AFFILIATES) SHALL, IN ANY EVENT, BE LIABLE TO ANY OTHER PARTY (OR ITS
AFFILIATES) FOR ANY CONSEQUENTIAL DAMAGES, INCLUDING, BUT NOT LIMITED TO, LOSS
OF REVENUE OR INCOME, OR LOSS OF BUSINESS REPUTATION OR OPPORTUNITY, OR ANY
PUNITIVE DAMAGES RELATING TO THE BREACH OR ALLEGED BREACH OF THIS AGREEMENT.
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IN WITNESS WHEREOF, the parties have caused this Agreement and
Plan of Merger to be duly executed as of the date first written above.
THE TIMES MIRROR COMPANY,
a Delaware corporation
By: /s/ Xxxxxx Xxxxxxxx
---------------------------------
Name: Xxxxxx Xxxxxxxx
Title: Executive Vice President and
Chief Financial Officer
HOLLYWOOD ONLINE INC.,
a California corporation
By: /s/ Xxxxxxx Xxxxxxx
---------------------------------
Name: Xxxxxxx Xxxxxxx
Title: Chief Executive Officer
BIG ENTERTAINMENT, INC.,
a Florida corporation
By: /s/ Xxxxxxxx Xxxxxxxxxx
---------------------------------
Name: Xxxxxxxx Xxxxxxxxxx
Title: Chief Executive Officer
BIG ACQUISITION CORP.,
a Delaware corporation
By: /s/ Xxxxxxxx Xxxxxxxxxx
---------------------------------
Name: Xxxxxxxx Xxxxxxxxxx
Title:
