Exhibit 2.1
EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
by and among
THE XXXX DISNEY COMPANY,
ABC CHICAGO FM RADIO, INC.,
CITADEL BROADCASTING CORPORATION
and
ALPHABET ACQUISITION CORP.
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Dated as of February 6, 2006
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TABLE OF CONTENTS
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ARTICLE I DEFINED TERMS...............................................................................2
Section 1.1 Defined Terms..........................................................................2
ARTICLE II THE SEPARATION AND THE MERGER..............................................................17
Section 2.1 The Separation........................................................................17
Section 2.2 The Merger............................................................................17
Section 2.3 Closing...............................................................................18
Section 2.4 Effective Time........................................................................18
Section 2.5 Effects of the Merger.................................................................18
Section 2.6 Certificates of Incorporation and Bylaws..............................................18
Section 2.7 Additional Actions....................................................................19
ARTICLE III EFFECT OF THE MERGER, CONVERSION OF SHARES AND RELATED MATTERS.............................19
Section 3.1 Conversion of Capital Stock...........................................................19
Section 3.2 Exchange of Shares....................................................................20
Section 3.3 Employee Stock Options and Other Equity Awards........................................21
Section 3.4 Company Special Dividend..............................................................23
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF TWDC AND SPINCO..........................................23
Section 4.1 Due Organization, Good Standing and Corporate Power...................................23
Section 4.2 Authorization and Validity of Agreement...............................................24
Section 4.3 Corporate Authority Relative to this Agreement; No Violation..........................24
Section 4.4 TWDC Reports and Financial Statements.................................................25
Section 4.5 Capitalization........................................................................25
Section 4.6 Affiliate Transactions................................................................26
Section 4.7 Spinco Financial Statements...........................................................26
Section 4.8 Information to be Supplied............................................................26
Section 4.9 Assets................................................................................27
Section 4.10 Absence of Certain Changes or Events..................................................28
Section 4.11 Actions; Litigation...................................................................28
Section 4.12 Compliance with Laws; Certain Licenses................................................29
Section 4.13 FCC Licenses; Operations of Licensed Facilities.......................................29
Section 4.14 Environmental Matters.................................................................31
Section 4.15 Tax Matters...........................................................................31
Section 4.16 Employee Benefits.....................................................................33
Section 4.17 Labor Matters.........................................................................34
Section 4.18 Intellectual Property.................................................................35
Section 4.19 Material Contracts....................................................................35
Section 4.20 Board Approvals; Votes Required.......................................................37
Section 4.21 Operations of Spinco..................................................................37
Section 4.22 Brokers or Finders....................................................................37
Section 4.23 Company Securities....................................................................37
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ARTICLE V REPRESENTATIONS AND WARRANTIES OF COMPANY AND MERGER SUB...................................37
Section 5.1 Due Organization, Good Standing and Corporate Power...................................37
Section 5.2 Authorization and Validity of Agreement...............................................38
Section 5.3 Corporate Authority Relative to this Agreement; No Violation..........................38
Section 5.4 Company Reports and Financial Statements..............................................39
Section 5.5 Capitalization........................................................................39
Section 5.6 Affiliate Transactions................................................................40
Section 5.7 Information to be Supplied............................................................40
Section 5.8 Absence of Certain Changes or Events..................................................40
Section 5.9 Actions; Litigation...................................................................41
Section 5.10 Compliance with Laws; Certain Licenses................................................41
Section 5.11 FCC Licenses; Operations of Licensed Facilities.......................................42
Section 5.12 Environmental Matters.................................................................44
Section 5.13 Tax Matters...........................................................................44
Section 5.14 Employee Benefits.....................................................................46
Section 5.15 Labor Matters.........................................................................47
Section 5.16 Intellectual Property.................................................................48
Section 5.17 Material Contracts....................................................................48
Section 5.18 Board Approval; Vote Required.........................................................50
Section 5.19 Assets................................................................................50
Section 5.20 Operations of Merger Sub..............................................................50
Section 5.21 Brokers or Finders....................................................................51
Section 5.22 Opinion of Financial Advisor..........................................................51
Section 5.23 Takeover Laws.........................................................................51
Section 5.24 TWDC Securities.......................................................................51
ARTICLE VI COVENANTS..................................................................................51
Section 6.1 Conduct of the Business Pending the Merger............................................51
Section 6.2 Conduct of Business by Company Pending the Merger.....................................55
Section 6.3 Preparation of Registration Statement and Information Statement/Prospectus............59
Section 6.4 No Solicitation.......................................................................60
Section 6.5 Tax Matters...........................................................................61
Section 6.6 Cooperation...........................................................................62
Section 6.7 Employee Matters......................................................................62
Section 6.8 Competition Approvals; FCC Approvals; IRS Rulings.....................................65
Section 6.9 Access................................................................................69
Section 6.10 Director and Officer Indemnification; Insurance.......................................69
Section 6.11 Rule 145 Affiliates...................................................................70
Section 6.12 Public Announcements..................................................................70
Section 6.13 Defense of Litigation.................................................................70
Section 6.14 Notification of Certain Events........................................................70
Section 6.15 Section 16 Matters....................................................................71
Section 6.16 Accounting Matters....................................................................71
Section 6.17 Confidentiality.......................................................................71
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Section 6.18 Control of Other Party's Business.....................................................72
Section 6.19 Debt Instruments......................................................................72
Section 6.20 Non-Solicitation of Employees.........................................................72
Section 6.21 Covenant Not To Compete...............................................................73
Section 6.22 Post-Closing Cooperation..............................................................73
ARTICLE VII CONDITIONS OF THE MERGER...................................................................74
Section 7.1 Conditions to the Obligations of Each Party...........................................74
Section 7.2 Additional Conditions to the Obligations of TWDC and Spinco...........................75
Section 7.3 Additional Conditions to the Obligations of Company and Merger Sub....................76
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER..........................................................77
Section 8.1 Termination or Abandonment............................................................77
Section 8.2 Effect of Termination; Fees and Expenses..............................................78
ARTICLE IX GENERAL PROVISIONS.........................................................................79
Section 9.1 Non-Survival of Representations and Warranties; Survival of Certain Covenants.........79
Section 9.2 Notices...............................................................................79
Section 9.3 Counterparts..........................................................................81
Section 9.4 Entire Agreement; No Third-Party Beneficiaries........................................81
Section 9.5 Assignment............................................................................81
Section 9.6 Governing Law.........................................................................82
Section 9.7 Enforcement...........................................................................82
Section 9.8 Severability..........................................................................82
Section 9.9 Headings..............................................................................82
Section 9.10 Attorneys' Fees.......................................................................82
Section 9.11 Amendment.............................................................................82
Section 9.12 Extension; Waiver.....................................................................83
Section 9.13 Procedure for Termination, Amendment, Extension or Waiver.............................83
Section 9.14 Interpretation........................................................................83
EXHIBITS AND SCHEDULES
Exhibit A Form of Separation Agreement
Exhibit B Form of Affiliate Agreement
Exhibit C Form of FIRPTA Certificate
Exhibit D Form of ABC News Production/Distribution Agreement
Exhibit E Form of Satellite/DARS License Agreement
Exhibit F Form of Radio Disney Services Agreement
Exhibit G Form of ESPN Radio Services Agreement
Exhibit H Form of Lease Agreements and Term Sheets
Exhibit I Form of Engineering Services Agreement
Exhibit J Form of ESPN Radio Network Sales Representation Agreement
Exhibit K Form of Radio Disney Stations' Sales Representation Agreement
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Exhibit L Form of Trademark License Agreement (Network)
Exhibit M Form of Trademark License Agreement (Station)
TWDC/Spinco Disclosure Schedules
Company Disclosure Schedules
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, dated as of February 6, 2006 (this
"Agreement"), is entered into by and among The Xxxx Disney Company, a Delaware
corporation ("TWDC"), ABC Chicago FM Radio, Inc., a Delaware corporation and an
indirect, wholly-owned Subsidiary of TWDC ("Spinco"), Citadel Broadcasting
Corporation, a Delaware corporation ("Company") and Alphabet Acquisition Corp.,
a Delaware corporation and a wholly-owned Subsidiary of Company ("Merger Sub"
and, together with TWDC, Spinco and Company, the "Parties" and each, a "Party").
W I T N E S S E T H
WHEREAS, TWDC indirectly through its Subsidiaries is engaged in the
Business;
WHEREAS, prior to the Effective Time on the Closing Date, TWDC shall,
pursuant to the Separation Agreement, separate the Business from TWDC, transfer
the Business to Spinco and distribute the stock of Spinco to the stockholders of
TWDC;
WHEREAS, the TWDC Board of Directors, the Spinco Board of Directors, the
Company Board of Directors and the Merger Sub Board of Directors have each
approved and declared advisable, and in the best interests of their respective
companies and stockholders, the Merger, and accordingly have agreed to effect
the Merger upon the terms and subject to the conditions set forth in this
Agreement and in accordance with the Delaware General Corporation Law (the
"DGCL");
WHEREAS, it is the intention of the Parties that, for U.S. federal income
tax purposes, (i) the transactions undertaken in connection with the Separation
will qualify as tax-free transactions under Sections 332, 351, 355, 361, 368 and
other applicable provisions of the Code, (ii) the Merger will qualify as a
"reorganization" within the meaning of Section 368(a) of the Code and (iii) this
Agreement and the Separation Agreement together are a "plan of reorganization"
within the meaning of Section 1.368-2(g) and 1.368-3(a) of the Treasury
Regulations; and
WHEREAS, simultaneously with the execution and delivery of this Agreement,
Forstmann Little & Co. Equity Partnership-VI, L.P., Forstmann Little & Co.
Equity Partnership-VII, L.P., Forstmann Little & Co. Subordinated Debt and
Equity Management Buyout Partnership-VII, L.P. and Forstmann Little & Co.
Subordinated Debt and Equity Management Buyout Partnership-VIII, L.P. (the
"Principal Stockholders"), TWDC and Spinco are entering into an agreement (the
"Support Agreement") pursuant to which the Principal Stockholders agree to take
certain actions in furtherance of the Merger and are each concurrently therewith
executing and delivering written consents in accordance with Section 228 of the
DGCL (the "Principal Stockholders Written Consent") pursuant to which the record
holders of Company Common Stock beneficially owned by the Principal Stockholders
will consent to the necessary actions required pursuant to this Agreement
without a meeting, without prior notice and without a vote.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby, the
Parties hereby agree as follows:
ARTICLE I
DEFINED TERMS
Section 1.1 Defined Terms. When used in this Agreement, the following
terms shall have the respective meanings specified therefor below (such meanings
to be equally applicable to both the singular and plural forms of the terms
defined).
"ABC News Production/Distribution Agreement" shall mean the ABC News
Production/Distribution Agreement in substantially the form attached hereto as
Exhibit D.
"Action" shall mean any action, claim, charge, grievance, complaint,
arbitration, proceeding, review, audit, hearing, investigation, litigation or
suit (whether civil, criminal, administrative, investigative or informal)
commenced, brought or heard by or before any Governmental Authority.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Exchange Act.
"Agreement" shall have the meaning set forth in the preamble hereof.
"Ancillary Agreements" shall mean, collectively, (a) the Separation
Agreement, (b) the Support Agreement, (c) the Tax Sharing Agreement, (d) the ABC
News Production/Distribution Agreement, (e) the Satellite/DARS License
Agreement, (f) the Radio Disney Services Agreement, (g) the ESPN Radio Services
Agreement, (h) the Lease Agreements, (i) the Engineering Services Agreement, (j)
the ESPN Radio Network Sales Representation Agreement, (k) Radio Disney
Stations' Sales Representation Agreement, (l) the Trademark License Agreement
(Network), (m) the Trademark License Agreement (Station) and (n) all other
documents required to be delivered on the Closing Date by any party pursuant to
this Agreement.
"Base Dividend" shall mean the difference, if positive, of (a) $12.68
minus (b) the Post-Dividend Company Price.
"Benefit Plans" shall have the meaning set forth in Section 4.16(a).
"Business" shall have the meaning set forth in the Separation Agreement.
"Business Assets" shall have the meaning set forth in the Separation
Agreement.
"Business Benefit Plans" shall have the meaning set forth in Section
4.16(a) hereof.
"Business Day" shall mean any day, other than a Saturday, Sunday or one on
which banks are authorized by Law to close in New York, New York.
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"Business Employee" shall mean, except for those individuals specified on
Section 1.1 (Excluded Employees) of the TWDC/Spinco Disclosure Schedules, any
individual who is engaged primarily in the conduct of the Business and is an
employee with respect to the Business immediately prior to the Effective Time
(including employees who are not actively at work by reason of illness,
vacation, leave of absence or disability) and who becomes an employee of any
Spinco Entity at the Effective Time; provided, however that any Business
Employee who is receiving or entitled to receive long-term disability benefits
under any Business Benefit Plan on or prior to the Effective Time shall become
or remain the sole responsibility of TWDC and shall not be considered a Business
Employee for any purpose hereunder until such time as such individual returns to
employment or is entitled to return to employment with a Spinco Entity.
"Business Intellectual Property" shall mean the Intellectual Property used
or held for use in the Business as currently conducted and material to the
Business.
"Business Liabilities" shall have the meaning set forth in the Separation
Agreement.
"Business Material Adverse Effect" shall mean any effect, change or
circumstance that is materially adverse to the Business, the Spinco Entities,
TWDC or any of TWDC's Subsidiaries with respect to the Business, or the
financial condition, operations or results of operations of the Business, taken
as a whole, or the ability of TWDC or Spinco to consummate the Transactions and
to perform their obligations under this Agreement and the Ancillary Agreements;
provided, however, that none of the following shall be deemed to constitute, and
none of the following shall be taken into account in determining whether there
has occurred, a Business Material Adverse Effect: (a) any adverse effect, change
or circumstance arising from or relating to (i) general business or economic
conditions, including any such conditions as they relate to the Business, (ii)
national or international political or social conditions, including the
engagement by the U.S. in hostilities, whether or not pursuant to the
declaration of a national emergency or war, or the occurrence of any military or
terrorist attack upon the U.S., or any of its territories, possessions, or
diplomatic or consular offices or upon any military installation, equipment or
personnel of the U.S., (iii) financial, banking, or securities markets
(including any disruption thereof and any decline in the price of any security
or any market index), (iv) changes in GAAP, (v) changes in any Laws, (vi) the
negotiation, execution, delivery, public announcement or the pendency of this
Agreement, the Ancillary Agreements or the Transactions, (vii) the loss of the
services of any Business Employee by reason of resignation, retirement, death or
permanent disability (except to the extent that any Key Business Employee is
hired by TWDC or any of its Subsidiaries (other than any Spinco Entity) after
the date hereof but prior to the Effective Time); or (viii) the taking of any
action required by this Agreement or the Ancillary Agreements in connection with
the Transactions; and (b) any adverse effect, change, circumstance or effect on
the Business that is cured by TWDC or Spinco before the earlier of (i) the
Closing Date and (ii) the date on which this Agreement is terminated pursuant to
Section 8.1 hereof.
"Business Material Contracts" shall have the meaning set forth in Section
4.19(a) hereof.
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"Certificate of Merger" shall have the meaning set forth in Section 2.4
hereof.
"Closing Date" shall have the meaning set forth in Section 2.3 hereof.
"Code" shall mean the U.S. Internal Revenue Code of 1986, as amended.
"Communications Act" shall mean the U.S. Communications Act of 1934, as
amended, and any regulations promulgated thereunder.
"Company" shall have the meaning set forth in the preamble hereof.
"Company Acquisition Proposal" shall mean, other than in connection with
the Merger or as otherwise specifically contemplated by this Agreement, any
proposal relating to (a) any merger, consolidation, share exchange, business
combination, recapitalization or other similar transaction or series of related
transactions involving Company or Subsidiaries representing a material portion
of Company's business, other than the Merger; (b) any sale, lease, exchange,
transfer or other disposition (including by way of merger, consolidation or
exchange), in a single transaction or a series of related transactions, of the
assets of Company or any of its Subsidiaries constituting 15% or more of the
consolidated assets of Company or accounting for 15% or more of the consolidated
revenues of Company; (c) any tender offer, exchange offer or similar transaction
or series of related transactions made by any Person involving Company Common
Stock or the common stock of any of Company's Subsidiaries constituting 15% or
more of the shares of Company Common Stock or the common stock of any of
Company's Subsidiaries outstanding as of the date thereof; (d) the acquisition
by any Person (other than TWDC or any of its Affiliates) of beneficial ownership
(as determined pursuant to Rule 13d-3 promulgated under the Exchange Act) or the
formation of any group (as defined in Section 13(d) of the Exchange Act) to
acquire beneficial ownership (as determined pursuant to Rule 13d-3 promulgated
under the Exchange Act) of more than 15% of the shares of Company Common Stock
or the common stock of any Company's Subsidiaries outstanding as of the date
thereof or (e) any other substantially similar transaction.
"Company Adverse Impact" shall have the meaning set forth in Section
6.8(d)(iii) hereof.
"Company Average Stock Price" shall mean the average of the per share
closing prices of Company Common Stock on the NYSE during the Pricing Period.
"Company Benefit Plans" shall mean each material "employee benefit plan"
(as defined in Section 3(3) of ERISA), and all other material employee benefit,
pension, profit-sharing, savings, deferred compensation, bonus, incentive, stock
option (or other equity-based), severance, change in control, welfare (including
post-retirement medical and life insurance) and fringe benefit plans, programs
and arrangements, whether or not subject to ERISA (i) sponsored, maintained or
contributed to or required to be contributed to by Company or any of its
Subsidiaries or to which Company or any of its Subsidiaries is a party and (ii)
in which any current or former Company Employee or current director or
consultant is a participant.
"Company Board of Directors" shall mean the board of directors of Company.
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"Company Common Stock" shall mean the common stock of Company, par value
$0.01 per share.
"Company Convertible Notes" shall mean the 1.875% convertible subordinated
debentures of Company due 2011 issued pursuant to the indenture between Company
and The Bank of New York, as trustee, dated as of February 18, 2004.
"Company Diluted Shares Outstanding" shall mean the sum of (a) the Company
Shares Outstanding plus (b) the maximum number of shares of Company Common Stock
issuable under (i) restricted stock units of Company and (ii) Company Options or
any other securities exercisable for, convertible into or exchangeable for
shares of Company Common Stock (in each case whether vested or unvested) owned
(whether beneficially or of record) by Xxxxx Xxxxxxx and Forstmann Little & Co.
and their respective Affiliates, or any relations by blood or marriage of any of
them or family limited partnerships, trusts or foundations having received such
Company Options or securities from any of them, in any case on the Spinco
Funding Date plus (c) to the extent that a Counting Determination has not been
received by TWDC, the maximum number of shares of Company Common Stock issuable
upon conversion of the Company Convertible Notes, in the case of this clause (c)
determined (i) in the case of a split-off, the Business Day immediately prior to
the date of commencement of an exchange offer by TWDC in respect of the split
off or (ii) in the case of a spin-off, on the Spinco Funding Date, but after
giving effect, in the case of each of clauses (a), (b) and (c) above, to any
adjustments in the number of shares of Company Common Stock resulting from the
transactions contemplated by this Agreement, including the Special Dividend;
provided, that in accordance with Section 2.3 hereof, all references to "on the
Spinco Funding Date" contained in this definition shall be replaced with
references to "immediately prior to the Effective Time" and any Company Options
attempted to be exercised between the Spinco Funding Date and the Effective Time
as provided in Section 3.3(a)(ii) hereof shall be counted in the calculations
Company Diluted Shares Outstanding.
"Company Disclosure Schedules" shall mean the disclosure schedules
delivered by Company to TWDC concurrently herewith.
"Company Employee" shall mean any individual who is an employee of Company
(including employees who are not actively at work on such date by reason of
illness, vacation, leave of absence or short-term disability), immediately prior
to the Effective Time.
"Company Equity Interests" shall have the meaning set forth in Section
5.5(a) hereof.
"Company Equity Plan" shall mean Company's Amended and Restated 2002
Long-Term Incentive Plan.
"Company FCC Licenses" shall have the meaning set forth in Section 5.11(a)
hereof.
"Company Intellectual Property" shall have the meaning set forth in
Section 5.16(a) hereof.
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"Company Licensed Facilities" shall have the meaning set forth in Section
5.11(a) hereof.
"Company LMA Facilities" shall have the meaning set forth in Section
5.11(b) hereof.
"Company LMA FCC Licenses" shall have the meaning set forth in Section
5.11(b) hereof.
"Company Material Adverse Effect" shall mean any effect, change or
circumstance that is materially adverse to Company, its Subsidiaries or the
financial condition, operations or results of operations of Company, taken as a
whole, or the ability of Company to consummate the Merger and to perform its
obligations under this Agreement and the Ancillary Agreements; provided,
however, that none of the following shall be deemed to constitute, and none of
the following shall be taken into account in determining whether there has
occurred, a Company Material Adverse Effect: (a) any adverse effect, change or
circumstance arising from or relating to (i) general business or economic
conditions, including any such conditions as they relate to Company, (ii)
national or international political or social conditions, including the
engagement by the U.S. in hostilities, whether or not pursuant to the
declaration of a national emergency or war, or the occurrence of any military or
terrorist attack upon the U.S., or any of its territories, possessions, or
diplomatic or consular offices or upon any military installation, equipment or
personnel of the U.S., (iii) financial, banking, or securities markets
(including any disruption thereof and any decline in the price of any security
or any market index), (iv) changes in GAAP, (v) changes in any Laws, (vi) the
negotiation, execution, delivery, public announcement or the pendency of this
Agreement, the Ancillary Agreements or the Transactions or (vii) the taking of
any action required by this Agreement or the Ancillary Agreements in connection
with the Merger; and (b) any adverse effect, change, circumstance or effect on
Company that is cured by Company before the earlier of (i) the Closing Date and
(ii) the date on which this Agreement is terminated pursuant to Section 8.1
hereof.
"Company Material Contracts" shall have the meaning set forth in Section
5.17(a) hereof.
"Company Options" shall mean each option to acquire shares of Company
Common Stock.
"Company Preferred Stock" shall have the meaning set forth in Section
5.5(a) hereof.
"Company Radio Stations" shall have the meaning set forth in Section
5.11(a) hereof.
"Company SEC Documents" shall have the meaning set forth in Section 5.4(a)
hereof.
"Company Securities" shall mean, collectively, all outstanding (a) shares
of capital stock or voting securities of Company, (b) securities of Company or
any of its Subsidiaries convertible into or exchangeable for shares of capital
stock or voting securities of
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Company or (c) options or other rights to acquire from Company or any of its
Subsidiaries, or other obligations of Company or any of its Subsidiaries to
issue, any capital stock, voting securities or securities convertible into or
exchangeable for capital stock or voting securities of Company.
"Company Shares Outstanding" shall mean the aggregate number of shares of
Company Common Stock outstanding (including shares of restricted Common Stock
whether vested or unvested) on the Spinco Funding Date; provided, that in
accordance with Section 2.3 hereof, the reference to "on the Spinco Funding
Date" contained in this definition shall be replaced with a reference to
"immediately prior to the Effective Time".
"Company Stockholder Approval" shall have the meaning set forth in Section
5.18(b) hereof.
"Company Stockholder Meeting" shall have the meaning set forth in Section
6.3(b) hereof.
"Company Stockholders" shall mean the holders of Company Common Stock.
"Company Tax Opinion" shall have the meaning set forth in Section 7.3(d)
hereof.
"Confidentiality Agreement" shall mean the Confidentiality Agreement,
dated as of May 5, 2005, by and between TWDC and Company, as amended.
"Contract" shall mean any written or oral agreement, arrangement,
authorization, sale order, purchase order, open bid, commitment, contract,
indenture, mortgage, note, instrument, evidence of indebtedness, real estate or
other lease, loan, license, obligation, restriction, memorandum of
understanding, letter of intent, covenant, or undertaking of any kind or
character, or other document to which any Person is a party or that is binding
on any Person or its capital stock, assets or business, in each case, whether
express or implied, including all amendments, modifications and supplements
thereto and waivers and consents thereunder.
"Counting Determination" shall mean a determination by the IRS in the IRS
Rulings to the effect that, for purposes of Section 355(e) of the Code, there
will be no net increase in the number of shares of stock of Spinco (or Company
as a successor to Spinco) acquired pursuant to a plan, within the meaning of
Section 355(e) of the Code, on (i) the conversion of a Company Convertible Note
into shares of Company Common Stock and (ii) the simultaneous redemption by
Company of an equal number of shares of Company Common Stock held by a
partnership or other entity that is affiliated with or advised by Forstmann
Little & Co.
"Delayed Transfer Assets" shall have the meaning set forth in the
Separation Agreement.
"DGCL" shall have the meaning set forth in the recitals hereof.
"Distribution" shall have the meaning set forth in the Separation
Agreement.
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"DOJ" shall mean the U.S. Department of Justice.
"Effective Time" shall have the meaning set forth in Section 2.4 hereof.
"Encumbrances" shall mean all liens, security interests, pledges,
mortgages, deeds of trusts, charges, options, encumbrances or other
restrictions, including restrictions on the use, voting, transfer, receipt of
income or other exercise of any attributes of ownership, and all other similar
rights of third parties, of any kind or nature.
"Engineering Services Agreement" shall mean the Engineering Services
Agreement in substantially the form attached hereto as Exhibit I.
"Environmental Claims" shall mean any claim, action, notice, letter,
demand or request for information (in each case in writing) by any Person or
entity alleging potential liability (including potential liability for
investigatory costs, cleanup costs, governmental response costs, natural
resources damages, property damages, personal injuries or penalties) arising out
of, based on or resulting from any violation of Environmental Law or the
release, emission, discharge, presence or disposal of any Hazardous Material at
any location.
"Environmental Law" shall mean any Law or Order relating to pollution or
the protection, cleanup or restoration of the environment, or to human health,
including the Federal Clean Air Act, the Federal Clean Water Act, the Federal
Resource Conservation and Recovery Act, the Federal Comprehensive Environmental
Response, Compensation, and Liability Act and the Federal Toxic Substances
Control Act, in each case as in effect on or prior to the date hereof.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder.
"ERISA Affiliate" shall mean, with respect to any Person, any other Person
or any trade or business, whether or not incorporated, that, together with such
first Person would be deemed a "single employer" within the meaning of Section
4001(b) of ERISA.
"ESPN Radio Services Agreement" shall mean the ESPN Radio Services
Agreement in substantially the form attached hereto as Exhibit G.
"ESPN Radio Network Sales Representation Agreement" shall mean the ESPN
Radio Network Sales Representation Agreement in substantially the form attached
hereto as Exhibit J.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"Exchange Agent" shall have the meaning set forth in Section 3.2(a)
hereof.
"Exchange Fund" shall have the meaning set forth in Section 3.2(a) hereof.
"Exchange Ratio" shall have the meaning set forth in Section 3.1(a)(i)
hereof.
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"Excluded Assets" shall have the meaning set forth in the Separation
Agreement.
"FCC" shall mean the U.S. Federal Communications Commission or any
successor agency thereto.
"FCC Applications" shall have the meaning set forth in Section 6.8(b)(i)
hereof.
"FCC Consent" shall mean an action by the FCC (including action duly taken
by the FCC's staff pursuant to delegated authority) granting its consent to the
FCC Applications.
"FTC" shall mean the U.S. Federal Trade Commission.
"GAAP" shall mean generally accepted accounting principles of the United
States, as in effect from time to time.
"xx.xxx Common Stock" shall have the meaning set forth in Section 4.5(a)
hereof.
"Governmental Authority" shall mean any of the DOJ, the FCC, the FTC, the
SEC and any other Federal, state, county, local, provincial, municipal or other
U.S. or foreign governments or governmental or regulatory or legislative
agencies, authorities (including Taxing, antitrust or competition and
self-regulatory authorities), instrumentalities, commissions, departments,
boards, bureaus, bodies or other governmental or quasi-governmental entities
having competent jurisdiction over any Party, any of their respective
Subsidiaries, and any other tribunal, court, judicial or quasi-judicial agency,
administrative agency, mediator or arbitrator of competent jurisdiction.
"Hazardous Material" shall mean chemicals, pollutants, contaminants,
hazardous materials, hazardous substances and hazardous wastes, medical waste,
toxic substances, petroleum and petroleum products and by-products,
asbestos-containing materials, PCBs, and any other chemicals, pollutants,
substances or wastes, in each case regulated, or that could result in liability,
under Environmental Law.
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvement Act of
1976, as amended, and the rules and regulations promulgated thereunder.
"Indebtedness" shall have the meaning set forth in the Separation
Agreement.
"Information Statement/Prospectus" shall mean the information
statement/prospectus of Company and the information statement of TWDC to be
distributed to Company Stockholders and TWDC Stockholders in connection with the
Transactions, including any preliminary information statement/prospectus or
definitive information statement/prospectus filed with the SEC in accordance
with the terms and provisions of this Agreement. The Information
Statement/Prospectus shall constitute a part of the Registration Statement.
"Infringes" shall have the meaning set forth in Section 4.18(c) hereof.
9
"Intellectual Property" shall mean, collectively, all U.S. and foreign
issued, registered, unregistered and pending: (a) utility and design patents,
registered designs and invention disclosures, patent applications, divisionals,
continuations, continuations-in-part, reissues, renewals, registrations,
confirmations, re-examinations, certificates of inventorship, extensions and the
like, and any provisional applications of any such patents or patent
applications ; (b) copyrightable works and copyright registrations and
applications therefor , including those relating to radio programming, jingles,
Internet web sites, web pages and related items, marketing and promotional
materials, computer software, data files, source and object codes, user
interfaces, manuals and other specifications and documentation and all know-how
relating thereto (and all other intellectual property and proprietary rights
incorporated in any of the foregoing); (c) trademarks, service marks, assumed,
brand, corporate, d/b/a, service and trade names, Internet domain names, logos
and business symbols, call letters, slogans, trade dress and other source
indicators and all registrations and applications therefor and renewals thereof
and all goodwill associated therewith; (d) trade secrets, improvements,
know-how, data, processes, methods, inventions (whether or not patentable or
reduced to practice) and other proprietary rights or confidential business
information, including technical and scientific know-how, inventions,
discoveries, developments, processes, formulas, methods, practices, techniques,
procedures, designs, drawings, assembly procedures, computer programs,
apparatuses, plans, specifications, technology, and related improvements and
know-how, whether or not copyrightable, patentable or reduced to practice; and
(e) other intellectual property and rights of publicity.
"Intended Tax Consequences" means the Tax consequences set forth in the
Recitals hereof and nonrecognition treatment to the TWDC Stockholders (except
for cash received in lieu of fractional shares) and the Company Stockholders.
"IRS" shall mean the U.S. Internal Revenue Service.
"IRS Rulings" shall have the meaning set forth in Section 6.8(d)(i)
hereof.
"IRS Submissions" shall have the meaning set forth in Section 6.8(d)(ii)
hereof.
"Key Business Employees" shall mean those Business Employees set forth on
Section 1.1 (Key Business Employees) of the TWDC/Spinco Disclosure Schedules.
"Knowledge" shall mean (i) with respect to the TWDC Entities and the
Spinco Entities, the actual knowledge of the persons listed on Section 1.1
(Knowledge) of the TWDC/Spinco Disclosure Schedules and (ii) with respect to
Company and its Subsidiaries, the actual knowledge of the persons listed on
Section 1.1 (Knowledge) of the Company Disclosure Schedules, in each case after
due inquiry.
"Law" shall mean any federal, state, county, local, provincial, municipal
or other U.S. or foreign constitution, code, law (including common law),
ordinance, regulation, reporting or licensing requirement, rule, plan, or
statute applicable to a Person or its assets, liabilities, or business,
including those promulgated, interpreted or enforced by any Governmental
Authority.
10
"Lease Agreements" shall mean the lease agreements in substantially the
form attached hereto as Exhibit H and definitive agreements reflecting the terms
set forth in the term sheets attached hereto as Exhibit H.
"License" shall mean any license, ordinance, authorization, permit,
certificate, right, easement, variance, exemption, consent, franchise or
approval from any Governmental Authority, domestic or foreign.
"Maximum Spinco Debt" shall have the meaning set forth in the Separation
Agreement.
"Merger" shall have the meaning set forth in Section 2.2(b) hereof.
"Merger Sub" shall have the meaning set forth in the preamble hereof.
"Merger Sub Board of Directors" shall mean the board of directors of
Merger Sub.
"Merger Sub Common Stock" shall have the meaning set forth in Section
2.2(a) hereof.
"NYSE" shall mean the New York Stock Exchange, Inc.
"Opinion of Counsel" shall mean a "will" opinion of Xxxxx Xxxxxxxxxx LLP
that is in form and substance reasonably satisfactory to TWDC.
"Option Ratio" shall mean the quotient determined by dividing (a) the
average of the daily closing prices per share of TWDC Common Stock on the NYSE,
as reported in The Wall Street Journal, for the 10 consecutive trading days
immediately preceding the Closing Date by (b) the average of the daily closing
prices per share of Company Common Stock on the NYSE, as reported in The Wall
Street Journal, for the 10 consecutive trading days immediately following the
Closing Date.
"Order" shall mean any administrative decision or award, decree,
injunction, judgment, order, quasi-judicial decision or award, ruling,
restriction, charge or writ of any Governmental Authority, whether temporary,
preliminary or permanent.
"Party" and "Parties" shall have the meanings set forth in the preamble
hereof.
"Per-Share Special Dividend" shall mean the quotient of (a) the Special
Dividend divided by (b) the Company Shares Outstanding.
"Person" shall mean any natural person, firm, individual, business trust,
trust, association, corporation, partnership, limited liability company, joint
venture, company, unincorporated entity or Governmental Authority.
"Post-Dividend Company Price" shall mean the quotient of (a)
$1,300,000,000 divided by (b) the Spinco Shares; provided, however, that
notwithstanding any exercise by
11
TWDC of its option set forth in the proviso of the definition of Spinco Shares,
for purposes of this definition, Spinco Shares shall be calculated as if such
option were not exercised (i.e., using 0.48 in clause (a)(ii) of the definition
of Spinco Shares).
"Pricing Period" shall mean the period of 10 consecutive trading days
ending on (and including) the date that is one trading day prior to the Spinco
Funding Date.
"Principal Stockholders" shall have the meaning set forth in the recitals
hereof.
"Principal Stockholders Written Consent" shall have the meaning set forth
in the recitals hereof.
"Radio Disney Services Agreement" shall mean the Radio Disney Services
Agreement in substantially the form attached hereto as Exhibit F.
"Radio Disney Stations' Sales Representation Agreement" shall mean the
Radio Disney Stations' Sales Representation Agreement in substantially the form
attached hereto as Exhibit K.
"Redactable Information" shall have the meaning set forth in Section
6.8(d)(ii) hereof.
"Registration Statement" shall mean the registration statement on Form S-4
to be filed by Company with the SEC in connection with the issuance of shares of
Company Common Stock in the Merger (as amended and supplemented from time to
time).
"Renewal Application" shall have the meaning set forth in Section
6.8(b)(iv) hereof.
"Renewal Station" shall have the meaning set forth in Section 6.8(b)(iv)
hereof.
"Representations" shall have the meaning set forth in Section 6.8(d)(i)
hereof.
"Restructuring" shall have the meaning set forth in the Separation
Agreement.
"Return" shall mean any return, report, declaration, form, claim for
refund or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
"RMT Debt Adjustment" shall mean:
(a) at any Company Average Stock Price that would not result in the Value
Deficit or Value Surplus exceeding $250,000,000 (disregarding the limitation
included in each such definition), an amount equal to the product of (i) the
difference of the Company Average Stock Price minus the Base Dividend and (ii)
the increase in the number of Spinco Shares resulting from the exercise by
Spinco of the Spinco Shares Election over the number of Spinco Shares that
would have existed absent the Spinco Shares Election (the "Spinco Shares
Increase");
12
(b) at any Company Average Stock Price that would result in the Value Deficit
exceeding $250,000,000 (disregarding the limitation included in the definition),
an amount equal to the product of (i) the difference between (A) the Company
Average Stock Price that would result in the Value Deficit being equal to
$250,000,000 (taking into account the Spinco Shares Election) minus (B) the
Base Dividend and (ii) the Spinco Shares Increase; and
(c) at any Company Average Stock Price that would result in the Value
Surplus exceeding $250,000,000 (disregarding the limitation included in such
definition), an amount equal to the product of (i) the difference of (A) the
Company Average Stock Price that would result in the Value Surplus being equal
to $250,000,000 (taking into account the Spinco Shares Election) minus (B) the
Base Dividend and (ii) the Spinco Shares Increase.
"Rule 145 Affiliate" shall have the meaning set forth in Section 6.11
hereof.
"Satellite/DARS License Agreement" shall mean the Satellite/DARS License
Agreement in substantially the form attached hereto as Exhibit E.
"SEC" shall mean the U.S. Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
"Separation" shall have the meaning set forth in the Separation Agreement.
"Separation Agreement" shall mean the Separation Agreement by and between
TWDC and Spinco dated as of the date hereof.
"Separation Date" shall mean the date and time that the Separation shall
become effective.
"Special Dividend" shall mean a dividend or series of dividends in respect
of Company Common Stock in an aggregate amount equal to the sum of (a) the
product of (i) the Base Dividend and (ii) the Company Shares Outstanding and (b)
the product of (i) quotient of any Value Surplus divided by the Spinco Ownership
Percentage and (ii) 1 minus the Spinco Ownership Percentage.
"Spinco" shall have the meaning set forth in the preamble hereof.
"Spinco Acquisition Proposal" shall mean, other than in connection with
the Transactions or as otherwise specifically contemplated by this Agreement or
the Separation Agreement, any proposal relating to (a) any merger,
consolidation, share exchange, business combination, recapitalization or other
similar transaction or series of related transactions involving the Business
other than the Transactions; (b) any sale, lease, exchange, transfer or other
disposition (including by way of merger, consolidation or exchange), in a single
transaction or a series of related transactions, of the assets of the Business
or the Spinco Entities constituting 15% or more of the
13
consolidated assets of the Business or accounting for 15% or more of the
consolidated revenues of the Business; (c) any spin-off, split-off or sale of
the Business to the public or to the TWDC Stockholders; or (d) any other
substantially similar transaction.
"Spinco Audited Financial Statements" shall have the meaning set forth in
Section 4.7(a) hereof.
"Spinco Benefit Plans" shall have the meaning set forth in Section 4.16(b)
hereof.
"Spinco Board of Directors" shall mean the board of directors of Spinco.
"Spinco Certificate" shall have the meaning set forth in Section 3.1(a)(i)
hereof.
"Spinco Common Stock" shall mean the common stock of Spinco, no par value
per share.
"Spinco Debt" shall have the meaning set forth in the Separation
Agreement.
"Spinco Debt Commitment Letter" shall have the meaning set forth in the
Separation Agreement.
"Spinco Entities" shall mean Spinco and each of the Spinco Subsidiaries.
"Spinco Equity Interests" shall have the meaning set forth in Section
4.5(b) hereof.
"Spinco Funding Date" shall have the meaning set forth in the Separation
Agreement.
"Spinco Ownership Percentage" shall mean the quotient of (a) Spinco Shares
divided by (b) the sum of (i) the Spinco Shares and (ii) the Company Shares
Outstanding.
"Spinco Shares" shall mean the difference of (a) the quotient of (i) the
Company Diluted Shares Outstanding divided by (ii) 0.48, minus (b) the Company
Diluted Shares Outstanding; provided that in no event shall the Spinco Shares be
fewer than 127,240,887; provided, further, that if determined by TWDC, in its
sole discretion, that it is necessary or advisable from a tax standpoint, then
the 0.48 referred to in clause (a)(ii) above may, at TWDC's option, be reduced
to a fraction equal to or greater than 0.45 (the "Spinco Shares Election").
"Spinco Subsidiaries" shall have the meaning set forth in the Separation
Agreement.
"Stockholder Arrangements" shall mean the agreements and arrangements set
forth in Section 1.1 (Stockholder Arrangements) of the Company Disclosure
Schedule.
"Subsidiary" of any Person shall mean any corporation, partnership, joint
venture, limited liability company, trust or estate of which (or in which) more
than 50% of (i) the issued and outstanding capital stock having ordinary voting
power to elect a majority of the board of directors of such corporation
(irrespective of whether at the time capital stock of any other class
14
or classes of such corporation shall or might have voting power upon the
occurrence of any contingency), (ii) the interest in the capital or profits of
such limited liability company, partnership or joint venture or (iii) the
beneficial interest in such trust or estate is at the time directly or
indirectly owned or controlled by such Person and one or more of its other
Subsidiaries or by one or more of such Person's other Subsidiaries. The term
"Subsidiary" shall include all Subsidiaries of any Subsidiary.
"Support Agreement" shall have the meaning set forth in the recitals
hereof.
"Surviving Corporation" shall have the meaning set forth in Section 2.2(b)
hereof.
"Taxable Period" shall mean any taxable year or any other period that is
treated as a taxable year (or other period, or portion thereof, in the case of a
Tax imposed with respect to such other period) with respect to which any Tax may
be imposed under any applicable Law.
"Taxes" shall mean any and all United States federal, state, and local and
any and all non-United States taxes, assessments, duties, impositions, levies
and other governmental charges and liabilities, including taxes based upon or
measured by gross receipts, income, profits, sales, use and occupation, and
value added, ad valorem, transfer, gains, franchise, withholding, payroll,
recapture, employment, excise, unemployment, insurance, social security,
business license, occupation, business organization, stamp, environmental and
property taxes, whether disputed or not, together with all interest, penalties
and additions imposed with respect to such amounts. For purposes of this
Agreement, "Taxes" also includes any obligations under any agreements or
arrangements with any Person with respect to the liability for, or sharing of,
Taxes (including pursuant to Section 1.1502-6 of the Treasury Regulations or
comparable provisions of state, local or foreign Tax Law) and including any
liability for Taxes as a transferee or successor, by contract or otherwise.
"Tax Sharing Agreement" shall have the meaning set forth in the Separation
Agreement.
"Termination Date" shall have the meaning set forth in Section 8.1(b)
hereof.
"Territory" shall mean any geographical market in which, as of the
Effective Time, any of the Spinco Entities or Company or any Subsidiary of
Company is engaged in the business of owning or operating radio stations
included in the Business or the business of Company and licensed to, or having a
transmitter site in, such geographical market.
"Tolling Agreement" shall have the meaning set forth in Section 6.8(b)(iv)
hereof.
"Trademark License Agreement (Network)" shall mean the Trademark License
Agreement (Network) in substantially the form attached hereto as Exhibit L.
"Trademark License Agreement (Station)" shall mean the Trademark License
Agreement (Station) in substantially the form attached hereto as Exhibit M.
"Transactions" shall mean, collectively, the transactions contemplated by
this Agreement, the Restructuring, the Distribution, the Merger and the
Ancillary Agreements.
15
"Transfer Taxes" shall have the meaning set forth in Section 6.5(b)
hereof.
"Treasury Regulations" shall mean the income tax regulations,
including temporary and proposed regulations, promulgated under the Code by the
U.S. Treasury, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"TWDC" shall have the meaning set forth in the preamble hereof.
"TWDC Adverse Impact" shall have the meaning set forth in Section
6.8(d)(iii).
"TWDC Board of Directors" shall mean the board of directors of TWDC.
"TWDC Common Stock" shall have the meaning set forth in the
Separation Agreement.
"TWDC Competing Business" shall have the meaning set forth in
Section 6.21(a) hereof.
"TWDC Converted Option" shall have the meaning set forth in Section
3.3(b)(i) hereof.
"TWDC Converted RSU" shall have the meaning set forth in Section
3.3(b)(ii).
"TWDC Entities" shall have the meaning set forth in the Separation
Agreement.
"TWDC Equity Interests" shall have the meaning set forth in Section
4.5(a) hereof.
"TWDC Equity Plans" shall mean TWDC's Amended and Restated 1995
Stock Incentive Plan, TWDC's 2005 Stock Incentive Plan and any other stock
option or stock incentive compensation plan of TWDC in which Business Employees
participate.
"TWDC FCC Licenses" shall have the meaning set forth in Section
4.13(a) hereof.
"TWDC Licensed Facilities" shall have the meaning set forth in
Section 4.13(a) hereof.
"TWDC Option" shall have the meaning set forth in Section 3.3(b)(i)
hereof.
"TWDC Preferred Stock" shall have the meaning set forth in Section
4.5(a) hereof.
"TWDC Radio Stations" shall have the meaning set forth in Section
4.13(a) hereof.
"TWDC RSU" shall have the meaning set forth in Section 3.3(b)(ii).
16
"TWDC SEC Documents" shall have the meaning set forth in Section 4.4
hereof.
"TWDC Securities" shall mean, collectively, all outstanding (a)
shares of capital stock or voting securities of TWDC, (b) securities of TWDC or
any of its Subsidiaries convertible into or exchangeable for shares of capital
stock or voting securities of TWDC or (c) options or other rights to acquire
from TWDC or any of its Subsidiaries, or other obligations of TWDC or any of its
Subsidiaries to issue, any capital stock, voting securities or securities
convertible into or exchangeable for capital stock or voting securities of TWDC.
"TWDC/Spinco Disclosure Schedules" shall mean the disclosure
schedules delivered by TWDC to Company concurrently herewith.
"TWDC Stockholders" shall mean the holders of TWDC Common Stock.
"TWDC Tax Opinion" shall have the meaning set forth in Section
7.2(c) hereof.
"Value Deficit" shall mean the product of (a) the excess, if any, of
(i) $12.68 over (ii) Company Average Stock Price and (b) the Spinco Shares;
provided that in no event shall the Value Deficit exceed $250,000,000.
"Value Surplus" shall mean the product of (a) the excess, if any, of
(i) the Company Average Stock Price over (ii) $12.68 and (b) the Spinco Shares;
provided that in no event shall the Value Surplus exceed $250,000,000.
"WARN" shall have the meaning set forth in Section 4.17(a)(iii)
hereof.
ARTICLE II
THE SEPARATION AND THE MERGER
Section 2.1 The Separation. Prior to the Effective Time and pursuant
to the terms and conditions of the Separation Agreement, TWDC and Spinco shall
effect the Separation.
Section 2.2 The Merger.
(a) Immediately prior to the Effective Time, the issued and
outstanding shares of capital stock of Merger Sub shall consist of only shares
of the common stock, par value $0.01 per share, of Merger Sub ("Merger Sub
Common Stock"), all of which shall be owned directly by Company.
(b) Upon the terms and subject to the conditions of this Agreement,
Merger Sub will be merged with and into Spinco (the "Merger") at the Effective
Time in accordance with the DGCL and upon the terms set forth in this Agreement.
Following the Merger, the separate corporate existence of Merger Sub will cease,
and Spinco will continue as the surviving corporation (Spinco as the surviving
corporation following the Merger is sometimes referred to herein as the
"Surviving Corporation") and will succeed to and assume all the rights, powers,
privileges and franchises, and be subject to all of the obligations of Merger
Sub in accordance
17
with the DGCL and upon the terms set forth in this Agreement. As a result of the
Merger, the Surviving Corporation will be a wholly-owned Subsidiary of Company.
Section 2.3 Closing. The closing of the Merger will take place at
10:00 a.m., New York time, on a date to be specified by the Parties, which will
be no later than the second Business Day after the satisfaction or waiver of the
conditions set forth in Article VII hereof (the "Closing Date") at the offices
of Xxxxx Xxxxxxxxxx LLP, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
unless another date or place is agreed to in writing by the Parties. If as of
immediately prior to the Effective Time the number of Spinco Shares calculated
pursuant to the provisos to the definitions of Company Shares Outstanding and
Company Diluted Shares Outstanding is greater than the number of Spinco Shares
as originally calculated as of the Spinco Funding Date, TWDC, may at its option,
cause the Closing Date to be delayed until such time as all calculations of
amounts pursuant to defined terms in this Agreement and the Separation Agreement
incorporating the term "Spinco Shares" are recalculated utilizing such
recalculated number of Spinco Shares and the parties shall take all necessary
actions to effectuate the transactions contemplated by this Agreement and the
Separation Agreement (including, but not limited to, the Spinco Debt, the
Distribution and Per-Share Special Dividend) taking into account such
recalculated amounts.
Section 2.4 Effective Time. On the Closing Date, the Parties will
execute and file in the office of the Secretary of State of Delaware a
certificate of merger (the "Certificate of Merger") executed in accordance with
the DGCL. The Merger will become effective at the time of filing of the
Certificate of Merger with the Secretary of State of Delaware in accordance with
the DGCL, or at such later time as is agreed upon by the Parties and set forth
in the Certificate of Merger (such time as the Merger becomes effective is
referred to herein as the "Effective Time").
Section 2.5 Effects of the Merger.
(a) The Merger will have the effects set forth in this Agreement,
the Certificate of Merger and the DGCL.
(b) Immediately following the Effective Time, Spinco's name shall be
Alphabet Acquisition Corp. and its headquarters shall be located at 0000 X. Xxxx
Xxxx Xxxx, Xxxxx 000, Xxx Xxxxx, Xxxxxx 00000.
Section 2.6 Certificates of Incorporation and Bylaws.
(a) Certificates of Incorporation. At the Effective Time, the
certificate of incorporation of Surviving Corporation as in effect immediately
prior to the Effective Time shall be amended so as to contain only the
provisions contained in the certificate of incorporation of Merger Sub until
thereafter amended in accordance with the terms thereof and applicable Law.
(b) Bylaws. At the Effective Time, the bylaws of Merger Sub as in
effect immediately prior to the Effective Time shall become the bylaws of the
Surviving Corporation until thereafter amended in accordance with the terms
thereof and applicable Law.
18
Section 2.7 Additional Actions. If TWDC or Company determines that
it is necessary or advisable to restructure the Transaction to yield the
Intended Tax Consequences, then the Parties will collaborate reasonably and in
good faith in order to determine an alternative structure for the Transactions,
and the Parties agree to use their reasonable best efforts to modify the
relevant provisions of this Agreement and the other Transaction Agreements
accordingly. In all events, the chosen structure will preserve to the greatest
extent possible the economics of the Transactions contemplated by the
Transaction Agreements (disregarding any cost associated with the Company
Convertible Notes). In furtherance of the foregoing, each of the Parties shall
take all actions reasonably necessary to modify the IRS Rulings and Opinions of
Counsel to reflect the transactions as so modified and to effectuate the change
in transaction structure contemplated by this Section 2.7, and each such Party
shall use its reasonable best efforts to cause the transactions contemplated
hereby, as so modified, to be consummated as soon as practicable thereafter.
ARTICLE III
EFFECT OF THE MERGER, CONVERSION OF SHARES AND RELATED MATTERS
Section 3.1 Conversion of Capital Stock. At the Effective Time, by
virtue of the Merger and without any action on the part of any holder of the
capital stock of TWDC, Spinco, Merger Sub or Company:
(a) Conversion of Spinco Capital Stock.
(i) Each share of Spinco Common Stock issued and outstanding
immediately prior to the Effective Time (other than shares to be canceled in
accordance with Section 3.1(a)(ii) hereof) shall be automatically converted into
the right to receive one fully paid and nonassessable share of Company Common
Stock (the "Exchange Ratio"). Following the Effective Time, all shares of Spinco
Common Stock shall no longer be outstanding and shall automatically be retired
and cease to exist, and each certificate or book-entry credit previously
evidencing any such shares of Spinco Common Stock (a "Spinco Certificate") shall
thereafter evidence only the right to receive the number of whole shares of
Company Common Stock into which the shares of Spinco Common Stock formerly
evidenced by such Spinco Certificates have been converted pursuant to this
Section 3.1. Spinco Certificates shall be exchanged for certificates
representing whole shares of Company Common Stock issued in consideration
therefor upon the surrender of such Spinco Certificates in accordance with this
Section 3.1(a), without any interest thereon.
(ii) All shares of Spinco Common Stock held in Spinco's
treasury or owned by any Spinco Entity, TWDC Entity, Company or any wholly-owned
Subsidiary of Company shall be canceled and extinguished and shall cease to
exist, and no shares of Company Common Stock or other consideration shall be
delivered in exchange therefor.
(b) Merger Sub Common Stock. At the Effective Time, each share of
Merger Sub Common Stock issued and outstanding immediately prior to the
Effective Time shall be automatically converted into one fully paid and
nonassessable share of common stock, par value $0.01 per share, of the Surviving
Corporation.
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(c) Company Common Stock. Each share of Company Common Stock that is
issued and outstanding immediately prior to and at the Effective Time shall
remain outstanding following the Effective Time.
Section 3.2 Exchange of Shares.
(a) Company to Make Shares Available. At or prior to the Effective
Time, Company shall deposit, or shall cause to be deposited, with a bank or
trust company appointed by TWDC (the "Exchange Agent"), for the benefit of the
holders of Spinco Certificates, for exchange in accordance with this Article III
the shares of Company Common Stock to be issued pursuant to Section 3.1(a)
hereof and delivered pursuant to Section 3.2(b) below in exchange for Spinco
Certificates (such shares of Company Common Stock, together with any dividends
or distributions with respect thereto, the "Exchange Fund").
(b) Exchange Procedures. As promptly as practicable after the
Effective Time, the Exchange Agent shall distribute to each holder of shares of
Spinco Common Stock immediately prior to the Effective Time (other than shares
to be canceled in accordance with Section 3.1(a)(ii) hereof) (i) the number of
shares of Company Common Stock into which the shares of Spinco Common Stock held
by such Person have been converted in accordance with Section 3.1(a) hereof and
(ii) the amount of dividends or other distributions, if any, with a record date
on or after the Effective Time which theretofore became payable with respect to
such shares of Company Common Stock, in each case which such holder has the
right to receive pursuant to the provisions of this Section 3.2(b), and the
Spinco Common Stock held by such Person shall forthwith be cancelled.
(c) Distributions With Respect to Undistributed Shares. No dividends
or other distributions declared or made after the Effective Time with respect to
Company Common Stock with a record date after the Effective Time shall be paid
with respect to any shares of Company Common Stock that are not able to be
distributed by the Exchange Agent promptly after the Effective Time, whether due
to a legal impediment to such distribution or otherwise. Subject to the effect
of applicable laws, following the distribution of any such previously
undistributed shares of Company Common Stock, there shall be paid to the record
holder of the certificates representing such shares of Company Common Stock,
without interest (i) the amount of dividends or other distributions with a
record date after the Effective Time theretofor paid with respect to such whole
shares of Company Common Stock and (ii) at the appropriate payment date
therefor, the amount of dividends or other distributions with a record date
after the Effective Time but prior to the distribution of such shares and a
payment date subsequent to the distribution of such shares payable with respect
to such whole shares of Company Common Stock. Company shall deposit in the
Exchange Fund all such dividends and distributions.
(d) No Further Rights in Spinco Common Stock. All shares of Company
Common Stock issued upon conversion of shares of Spinco Common Stock in
accordance with the terms of this Section 3.2 shall be deemed to have been
issued at the Effective Time in full satisfaction of all rights pertaining to
such shares of Spinco Common Stock.
(e) Termination of Exchange Fund. Any portion of the Exchange Fund
made available to the Exchange Agent that remains undistributed 180 days after
the Effective Time
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shall be delivered to Company, and any holders of shares of Spinco Common Stock
as of the Record Date shall thereafter look only to Company for payment of the
applicable number of shares of Company Common Stock and any dividends or other
distributions with respect to Company Common Stock.
(f) No Liability. None of TWDC, Company, Spinco, Merger Sub, the
Surviving Corporation or the Exchange Agent shall be liable to any holder of
shares of Spinco Common Stock for any shares of Company Common Stock (or
dividends or distributions with respect thereto) or cash delivered to a public
official pursuant to any applicable abandoned property, escheat or similar Law.
(g) Withholding Rights. The Exchange Agent, on behalf of Company
and/or Spinco, shall be entitled to deduct and withhold from the consideration
otherwise payable pursuant to this Agreement to any holder of any Spinco Common
Stock such amounts as may be required to be deducted and withheld with respect
to the making of such payment under the Code, or under any provision of state,
local or foreign Tax Law. To the extent that amounts are so withheld and paid
over to the appropriate Tax authority, such withheld amounts will be treated for
all purposes of this Agreement as having been paid to the holder of Spinco
Common Stock in respect of which such deduction and withholding was made.
Section 3.3 Employee Stock Options and Other Equity Awards.
(a) Company Stock Options.
(i) If Company elects to adjust the Company Options held by
Company Employees under the Company Equity Plan or otherwise in each case
pursuant to, and in accordance with, the terms thereof, to reflect the effects
of the Special Dividend, Company shall, at or prior to the Effective Time, make
such adjustments to each such Company Option, whether vested or unvested, that
is outstanding immediately prior to the Effective Time, in the manner set forth
on Section 3.3(a) of the Company Disclosure Schedules. Notwithstanding the
foregoing, such adjustments shall be effected in a manner so as to not be deemed
a modification under Sections 409A and 424(a) of the Code.
(ii) Between the Spinco Funding Date and the Effective Time,
Company shall not recognize any attempted exercise of Company Options, shall not
issue any shares of Company Common Stock upon the exercise of Company Options
and shall instruct the transfer agent for shares of Company Common Stock not to
issue any shares of Company Common Stock upon any attempted exercise of Company
Options. Any such attempted exercise shall be null and void and have no effect,
and the holder thereof may only validly elect to exercise such Company Option
after the Effective Time. For the avoidance of doubt, the holder of any Company
Option that has attempted to exercise such Company Option between the Spinco
Funding Date and the Effective Time shall not be entitled to (i) any dividend
paid with respect to the underlying stock or (ii) vote such underlying stock
unless and until such holder validly exercises the Company Options after the
Effective Time.
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(b) TWDC Stock Options and Other Equity Awards.
(i) At or prior to the Effective Time, TWDC and Company shall
take all action necessary such that each option to acquire shares of TWDC Common
Stock (each, a "TWDC Option") held by a Business Employee under a TWDC Equity
Plan, whether vested or unvested, that is outstanding immediately prior to the
Effective Time shall be assumed by Company as of the Effective Time; provided
that TWDC or Spinco shall have obtained the agreement of the Business Employee
who is the holder of the applicable TWDC Option to the foregoing assumption and
the conversion set forth in this Section 3.3(b)(i). Accordingly, each such TWDC
Option will cease to represent a right to acquire shares of TWDC Common Stock
and shall be converted into an option (a "TWDC Converted Option") to purchase
shares of Company Common Stock. The number of shares of Company Common Stock
subject to each TWDC Converted Option shall be equal to the product of the
number of shares of TWDC Common Stock subject to such TWDC Option multiplied by
the Option Ratio; provided that any fractional shares of Company Common Stock
resulting from such multiplication shall be rounded to the nearest whole share.
The exercise price per share of Company Common Stock subject to each TWDC
Converted Option shall equal the quotient of the exercise price per share of
TWDC Common Stock under the corresponding TWDC Option divided by the Option
Ratio; provided that such exercise price shall be rounded to the nearest whole
cent. Each such TWDC Converted Option will otherwise have substantially the same
terms and conditions as the corresponding TWDC Option, including vesting and
term of exercise, except that references to TWDC will be changed to refer to
Company and references to any of the TWDC Equity Plans will be changed to refer
to an applicable benefit plan of Company. Notwithstanding anything in this
Agreement to the contrary, the conversion of options under this Section
3.3(b)(i) shall be made in a manner that is intended to comply with Section 409A
of the Code, and, if applicable, Section 424(a) of the Code. Any Business
Employee who is a holder of a TWDC Option who does not agree to the conversion
contemplated by this Section 3.3(b)(i) will be treated under the terms of the
applicable TWDC Equity Plan as having terminated his or her employment or other
service arrangement with TWDC and its Subsidiaries on the Closing Date and will
have such rights, as applicable, under the original terms of the TWDC Option as
in effect at the time of effective termination.
(ii) Each award of restricted stock units held by a Business
Employee under a TWDC Equity Plan and subject to a restricted stock unit award
that is outstanding at the Effective Time (a "TWDC RSU") shall be assumed by
Company as of the Effective Time; provided that TWDC or Spinco have obtained the
agreement of the Business Employee who is the holder of the applicable TWDC RSU
to the foregoing assumption and conversion set forth in this Section 3.3(b)(ii).
Accordingly, each such TWDC RSU will be converted into an award of restricted
stock units with respect to shares of Company Common Stock (a "TWDC Converted
RSU"). The number of units subject to a TWDC Converted RSU shall be equal to the
product of the number of units subject to the TWDC RSU multiplied by the Option
Ratio. Each such TWDC Converted RSU will otherwise have substantially the same
terms and conditions as the corresponding TWDC RSU, except that (A) references
to TWDC will be changed to refer to Company and references to any of the TWDC
Equity Plans will be changed to refer to an applicable plan of Company and (B)
any performance vesting provisions will be adjusted, in the sole discretion of
TWDC so that the vesting of the TWDC Converted RSU is based upon performance
requirements relating to Company that are comparable to the original performance
22
requirements of the TWDC RSU. Notwithstanding anything in this Agreement to the
contrary, the conversion of TWDC RSUs under this Section 3.3(b)(ii) shall be
made in a manner that is intended to comply with Section 409A of the Code.
(c) Following the Effective Time, Company shall take all corporate
action necessary to reserve for issuance a sufficient number of shares of
Company Common Stock for delivery upon exercise of the TWDC Converted Options in
accordance with this Section 3.3. As soon as practicable following the Effective
Time, Company shall file with the SEC a registration statement on Form S-8 (or
any successor form) or another appropriate form with respect to the shares of
Company Common Stock subject to the TWDC Converted Options and the TWDC
Converted RSUs and shall use its reasonable efforts to maintain the
effectiveness of such registration statement on Form S-8 (and maintain current
the status of the prospectus contained therein) for so long as the TWDC
Converted Options and the TWDC Converted RSUs remain outstanding.
Section 3.4 Company Special Dividend. Prior to the Closing, Company
shall set a record date (which shall be no earlier than two trading days prior
to the Closing Date) for and declare, and immediately prior to the Closing,
Company shall pay the Special Dividend. Company acknowledges and agrees that in
connection with the Special Dividend and any regular dividends between the date
of this Agreement and the Closing Date, pursuant to and in accordance with the
last paragraph of Section 11.08 of that certain Indenture, dated as of February
18, 2004, relating to the Company Convertible Notes, by and between Company and
The Bank of New York, as Trustee, no adjustment shall be made to the conversion
price of the Company Convertible Notes. Company agrees that in the event of a
repurchase of the Company Convertible Notes, any offer to purchase shall expire
or otherwise be terminated prior to the commencement of an exchange offer by
TWDC in respect of a split-off.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF TWDC AND SPINCO
Except as set forth in the TWDC/Spinco Disclosure Schedules
(regardless of whether or not the relevant Section hereof refers to the
TWDC/Spinco Disclosure Schedules) or in the TWDC SEC Documents, TWDC and Spinco
hereby represent and warrant to Company (which, in the case of Sections 4.5(b),
4.7(b), 4.9(b), 4.12(b), 4.13(i), 4.14(a), 4.14(b), 4.17(a), 4.17(d), 4.18(a)
and 4.18(b), are made after giving effect to the Separation) as follows:
Section 4.1 Due Organization, Good Standing and Corporate Power.
(a) Each of TWDC and Spinco is a corporation duly organized, validly
existing and in good standing under the Laws of the State of Delaware. TWDC and
its Subsidiaries have all requisite corporate power and authority to own, lease
and operate their properties that will be contributed to Spinco pursuant to the
Separation Agreement and to carry on the Business as it is now being conducted.
Each of TWDC and its Subsidiaries is duly qualified or licensed to do business
and is in good standing in each jurisdiction in which the property owned, leased
or operated by the Business that will be contributed to Spinco pursuant to the
Separation Agreement or the nature of the Business conducted by it makes such
qualification necessary, except in such jurisdictions where the failure to be so
qualified or licensed and in
23
good standing would not have or reasonably be expected to have, individually or
in the aggregate, a Business Material Adverse Effect.
Section 4.2 Authorization and Validity of Agreement. Each of TWDC
and Spinco has full corporate power and authority to execute and deliver this
Agreement and each Ancillary Agreement to which it is a party, to perform its
obligations hereunder or thereunder and to consummate the Transactions. The
execution, delivery and performance of this Agreement and the Ancillary
Agreements by each of TWDC and Spinco, and the consummation by each of them of
the Transactions, have been duly authorized and unanimously approved by each of
the TWDC Board of Directors, the Spinco Board of Directors and by TWDC as the
sole stockholder of Spinco, and no other corporate action on the part of TWDC or
Spinco is necessary to authorize the execution, delivery and performance of this
Agreement and the Ancillary Agreements or the consummation of the Transactions.
This Agreement and the Ancillary Agreements have been duly executed and
delivered by each of TWDC and Spinco, as applicable, and, to the extent it is a
party thereto, each is a valid and binding obligation of each of TWDC and Spinco
enforceable against each of TWDC and Spinco in accordance with their terms,
except to the extent that its enforceability may be subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other similar Law
affecting the enforcement of creditors' rights generally and by general
equitable principles.
Section 4.3 Corporate Authority Relative to this Agreement; No
Violation. Assuming (a) the filings required under the HSR Act are made and the
waiting periods thereunder (if applicable) have been terminated or expired, (b)
the filings (if any) required under the Communications Act are made, the FCC
Consent is granted and has not been vacated, reversed, stayed, enjoined, set
aside, annulled or suspended and any applicable requirements of the FCC pursuant
to the Communications Act are met, (c) the applicable requirements of the
Securities Act and the Exchange Act are met, (d) the requirements under any
applicable state securities or blue sky Laws are met, (e) the requirements of
the NYSE in respect of the listing of the shares of Spinco Common Stock to be
issued pursuant hereto are met and (f) the filing of the Certificate of Merger
and other appropriate Merger documents, if any, as required by the DGCL, is
made, the execution and delivery of this Agreement and the Ancillary Agreements
by TWDC and Spinco, as applicable, and the consummation by TWDC and Spinco of
the Transactions do not and will not: (w) violate or conflict with any provision
of their respective certificates of incorporation or bylaws; (x) violate or
conflict with any Law or Order of any Governmental Authority applicable to TWDC
or Spinco or by which any of the properties or assets that will be contributed
to Spinco pursuant to the Separation Agreement may be bound; (y) require any
filing with, or License, consent or approval of, or the giving of any notice to,
any Governmental Authority; or (z) result in a violation or breach of, conflict
with, constitute (with or without due notice or lapse of time or both) a default
under, or give rise to any right of termination, cancellation or acceleration,
or result in the creation of any Encumbrance upon any of the properties or
assets of TWDC and its Subsidiaries that will be contributed to Spinco pursuant
to the Separation Agreement or give rise to any obligation, right of
termination, cancellation, acceleration or increase of any obligation or a loss
of a material benefit under, any of the terms, conditions or provisions of any
Contract to which TWDC or Spinco is a party that will be contributed to Spinco
pursuant to the Separation Agreement, or by which Spinco or the properties or
assets that will be contributed to Spinco pursuant to the Separation Agreement
may be bound, excluding in the case of clauses (w) through (z) above, conflicts,
violations, breaches,
24
defaults, rights of payment and reimbursement, terminations, modifications,
accelerations and creations and impositions of Encumbrances which would not have
or reasonably be expected to have, individually or in the aggregate, a Business
Material Adverse Effect.
Section 4.4 TWDC Reports and Financial Statements. As of their
respective filing dates (and if amended or superseded by a filing prior to the
date of this Agreement, then on the date of such filing), all reports,
prospectuses, forms, schedules, registration statements, proxy statements or
information statements required to be filed by TWDC under the Securities Act or
under the Exchange Act (the "TWDC SEC Documents") complied in all material
respects with the requirements of the Securities Act or the Exchange Act, as
applicable, and none of such TWDC SEC Documents when filed (and if amended or
superseded by a filing prior to the date of this Agreement, then on the date of
such filing) contained an untrue statement of material fact or omitted to state
any material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. Since January 1, 2003, TWDC has timely filed all reports,
registration statements and other documents required to be filed with the SEC
under the rules and regulations of the SEC. The books and records of TWDC and
its Subsidiaries have been, and are being, maintained in accordance with GAAP
and any other applicable legal and accounting requirements. Each of the
foregoing representations in this Section 4.4 is made only with respect to
information relating to the Business and with "materiality" being defined by
reference to TWDC as a whole and not by reference to Spinco or the Business.
Section 4.5 Capitalization.
(a) The authorized capital stock of TWDC consists solely of
4,700,000,000 shares of capital stock, of which 3,600,000,000 shares are
classified and designated as TWDC Common Stock, 1,000,000,000 shares are
classified and designated as xx.xxx common stock, par value $0.01 per share
("xx.xxx Common Stock"), and 100,000,000 are classified and designated as
preferred stock, par value $0.01 per share, of TWDC ("TWDC Preferred Stock"). As
of February 6, 2006, no shares of TWDC Preferred Stock were issued and
outstanding, no shares of xx.xxx Common Stock were issued and outstanding, and
1,926,038,083 shares of TWDC Common Stock (excluding treasury shares) were
issued and outstanding, and as of February 6, 2006, 5,630,554 shares of TWDC
Common Stock were reserved for issuance upon the exercise of TWDC Options held
by Business Employees and 618,810 shares of TWDC Common Stock were reserved for
issuance upon the vesting of TWDC RSUs held by Business Employees. All issued
and outstanding shares of TWDC Common Stock have been duly authorized and
validly issued and are fully paid and non-assessable. As of the date of this
Agreement and except for shares issuable pursuant to the TWDC Options and TWDC
RSUs, there are no outstanding options, warrants, rights, calls, subscriptions,
claims of any character, agreements, obligations, convertible or exchangeable
securities, or other commitments, contingent or otherwise, relating to TWDC
Common Stock or any capital stock equivalent or other nominal interest in TWDC
or any of its Subsidiaries which relate to TWDC ("TWDC Equity Interests")
pursuant to which TWDC or any of its Subsidiaries is or may become obligated to
issue shares of its capital stock or other equity interests or any securities
convertible into or exchangeable for, or evidencing the right to subscribe for
any TWDC Equity Interests. There are no Contracts or commitments to which TWDC
is a party relating to the issuance, sale or transfer of any equity securities
or other securities of TWDC.
25
(b) Immediately following the Distribution, there will be a number
of shares of Spinco Common Stock issued and outstanding equal to the
Pre-Distribution Spinco Shares Outstanding, and all issued and outstanding
shares of Spinco Common Stock will have been duly authorized and validly issued
and fully paid and non-assessable. At such time, and except for shares issuable
in connection with this Agreement and the Ancillary Agreements, there will be no
outstanding options, warrants, rights, calls, subscriptions, claims of any
character, agreements, obligations, convertible or exchangeable securities, or
other commitments, contingent or otherwise, relating to Spinco Common Stock or
any capital stock equivalent or other nominal interest in Spinco which relate to
Spinco ("Spinco Equity Interests") pursuant to which Spinco is or may become
obligated to issue shares of its capital stock or other equity interests or any
securities convertible into or exchangeable for, or evidencing the right to
subscribe for any Spinco Equity Interests. Also at such time, there will be no
outstanding obligations of Spinco to repurchase, redeem or otherwise acquire any
outstanding securities of Spinco Equity Interests. Except pursuant to this
Agreement and the Ancillary Agreements, immediately following the Distribution,
there will be no Contracts or commitments relating to the issuance, sale,
transfer or voting of any equity securities or other securities of Spinco.
Section 4.6 Affiliate Transactions. Except for this Agreement and
the Ancillary Agreements, there are no transactions or Contracts between or
among (a) any of the Spinco Entities, on the one hand, and (b) TWDC or any of
its Subsidiaries (other than the Spinco Entities) or Affiliates, on the other
hand, of the type that would be required to be disclosed if Spinco were a
company subject to Item 404 of Regulation S-K promulgated under the Securities
Act and that will remain in effect following the Separation.
Section 4.7 Spinco Financial Statements.
(a) Audited Financial Statements. The financial statements delivered
to Company as Section 4.7(a) of the TWDC/Spinco Disclosure Schedules, which
consist of the audited statements of assets and liabilities of the Business as
of October 1, 2005, September 30, 2004 and September 30, 2003, and the audited
statements of operations and cash flows for the years ended October 1, 2005,
September 30, 2004 and September 30, 2003, in each case, audited by
PricewaterhouseCoopers LLP (collectively, the "Spinco Audited Financial
Statements"), whose report thereon is included therewith, were prepared in
accordance with GAAP, consistently applied, and present fairly, in all material
respects, the financial position of the Business as of the dates thereof and the
results of its operations and changes in cash flows as of the dates thereof and
for the periods covered thereby.
(b) Undisclosed Liabilities. Except as set forth in the Spinco
Audited Financial Statements, the Spinco Entities do not have any liability or
obligation of any nature (whether accrued, absolute, contingent or otherwise)
other than (i) liabilities or obligations incurred in the ordinary course of
business since October 1, 2005, (ii) liabilities or obligations not required to
be disclosed on a balance sheet prepared in accordance with GAAP or in the notes
thereto and (iii) liabilities or obligations that would not, individually or in
the aggregate, reasonably be expected to have a Business Material Adverse
Effect.
Section 4.8 Information to be Supplied. The Registration Statement
(and the Information Statement/Prospectus to be included therein) and the other
documents required to be
26
filed by Spinco or TWDC with the SEC in connection with the Transactions will
comply as to form, in all material respects, with the requirements of the
Exchange Act or the Securities Act, as applicable, and together with the
information supplied or to be supplied by TWDC (whether with respect to TWDC,
the Business or otherwise) for inclusion in the Information Statement/Prospectus
to be included in the Registration Statement, will not, (a) on the date of its
filing, (b) in the case of the Registration Statement, at the time the
Registration Statement becomes effective under the Securities Act or (c) in the
case of the Information Statement/Prospectus, on the date(s) on which the
Information Statement/Prospectus is mailed to TWDC Stockholders and Company
Stockholders, contain any untrue statement of material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading.
Section 4.9 Assets.
(a) Except as set forth in Section 4.9(c) of the TWDC/Spinco
Disclosure Schedules, after giving effect to the transactions described in or
contemplated by this Agreement (including as permitted pursuant to Section 6.1)
and the Ancillary Agreements, the Business Assets will, at the Effective Time,
constitute those assets reasonably required to operate the Business in all
material respects as it is currently conducted.
(b) Following the Restructuring, Spinco or one of the Spinco
Subsidiaries will have good, valid and marketable title to, or in the case of
leased properties and assets, valid leasehold interests in, all of the tangible
Business Assets except where the failure to have such good, valid and marketable
title or valid leasehold interests would not, individually or in the aggregate,
reasonably be expected to be materially adverse to the Spinco Entities taken as
a whole, in each case subject to no Encumbrances, except for (i) Encumbrances
reflected in the Spinco Audited Financial Statements, (ii) Encumbrances
consisting of zoning or planning restrictions, easements, permits and other
restrictions or limitations on the use of real property or irregularities in
title thereto which do not materially detract from the value of, or materially
impair the use of, such property as it is presently used in connection with the
Business, (iii) Encumbrances for current Taxes, assessments or governmental
charges or levies on property not yet due or which are being contested in good
faith and for which appropriate reserves in accordance with GAAP have been
created, (iv) mechanic's, materialmen's and similar Encumbrances arising in the
ordinary course of business or by operation of Law and (v) any conditions that
are shown on the surveys, title policies, deeds or other such documents
previously delivered by TWDC to Company with respect to such real property.
(c) Section 4.9(c) of the TWDC/Spinco Disclosure Schedules lists the
material corporate overhead or administrative support services currently
provided to Spinco or any Spinco Entity by TWDC or any of its Affiliates other
than the Spinco Entities.
(d) None of the Spinco Entities is a party to any agreement to
purchase any material real property that will remain in effect following the
Closing.
(e) Section 4.9(e) of the TWDC/Spinco Disclosure Schedules sets
forth the address of each material real property to be owned or leased by Spinco
or any of the Spinco Subsidiaries following the Separation which constitutes all
of the material real property currently
27
used for the Business. For purposes of this Section 4.9(e) "material real
property" shall mean all of the main studios and main transmitter sites of the
Business. All buildings, structures and improvements located on such material
real property are in reasonably good condition and repair, ordinary wear and
tear excepted, except where the failure to conform with such standards would not
materially and adversely impair the use of such material real property as
currently used by the Business.
Section 4.10 Absence of Certain Changes or Events.
(a) Except (i) as specifically contemplated or permitted by this
Agreement or the Ancillary Agreements, (ii) as set forth in the Spinco Audited
Financial Statements and (iii) for changes resulting from the announcement of
this Agreement or the Transactions, since October 1, 2005, the Business has been
conducted in all material respects only in the ordinary course, and there has
not been any event (including any damage, destruction or loss whether or not
covered by insurance) that would, individually or in the aggregate, reasonably
be expected to have a Business Material Adverse Effect.
(b) From October 1, 2005 through the date hereof, there has not been
(i) any declaration, setting aside or payment of or dividend on, or other
distribution (whether in cash, stock or property) in respect of, any Spinco
Entity's capital stock or other equity or voting interests, except for dividends
by a wholly-owned Spinco Subsidiary to its stockholders, (ii) any purchase,
redemption or other acquisition of any shares of capital stock of, or other
equity or voting interests in, any Spinco Entity or any options, warrants, calls
or rights to acquire such shares or other interests, (iii) any split,
combination or reclassification of any of Spinco's capital stock or other equity
or voting interests or any issuance or the authorization of any issuance of any
other securities in respect of, in lieu of or in substitution for shares of
capital stock of, or other equity or voting interest in, Spinco, (iv) other than
as would be permitted by Section 6.1(j) hereof, any change in accounting
principles, practices or methods by TWDC or any of its Subsidiaries that would
adversely affect the Business, (v) any settlement or similar written agreement
the performance of which will involve a material payment after the execution of
this Agreement, (vi) any loan to any Business Employee that was not made in the
ordinary course of business consistent with past practice or any loan to any
director, officer or member of management of any Spinco Entity or (vii) any
increase in the compensation payable to any Business Employees or any material
amendment of any Business Benefit Plan or other benefits to which Business
Employees are entitled, except for increases or amendments (A) required by
applicable Law, (B) in the ordinary and usual course of business consistent with
past practice or (C) permitted by Section 6.1(h) hereof.
Section 4.11 Actions; Litigation.
(a) No Action against TWDC, any of TWDC's Subsidiaries, any Spinco
Entity or the Business is pending or, to TWDC's Knowledge, threatened, except
with respect to such Actions the outcome of which would not, individually or in
the aggregate, reasonably be expected to have a Business Material Adverse
Effect.
28
(b) There is no Order against TWDC, any of TWDC's Subsidiaries, any
Spinco Entity or the Business that would, individually or in the aggregate,
reasonably be expected to have a Business Material Adverse Effect.
Section 4.12 Compliance with Laws; Certain Licenses.
(a) Except with respect to Environmental matters, Tax matters,
employee benefits and labor matters (which are addressed in Section 4.14,
Section 4.15, Section 4.16 and Section 4.17, respectively), the Spinco Entities
are in compliance, in all material respects, with all Laws and Orders of any
Governmental Authority applicable to any of them or their respective operations,
except to the extent that such noncompliance would not, individually or in the
aggregate, reasonably be expected to have a Business Material Adverse Effect.
(b) The Spinco Entities hold all Licenses that are required for the
conduct of the Business as currently conducted and are in compliance, in all
material respects, with the terms of all such Licenses so held, except, in the
case of each of the foregoing, as would not, individually or in the aggregate,
reasonably be expected to have a Business Material Adverse Effect.
Section 4.13 FCC Licenses; Operations of Licensed Facilities. Except
as would not, individually or in the aggregate, reasonably be expected to have a
Business Material Adverse Effect:
(a) TWDC, its Subsidiaries and the Spinco Entities have operated the
radio stations of the Business (the "TWDC Radio Stations") for which TWDC, such
Subsidiaries and the Spinco Entities hold Licenses issued to them by the FCC and
set forth on Section 4.13(a) of the TWDC/Spinco Disclosure Schedules (the "TWDC
FCC Licenses"), in each case which TWDC Radio Stations are owned or operated by
TWDC, such Subsidiaries and the Spinco Entities (the "TWDC Licensed
Facilities"), in compliance, in all material respects, with the terms of such
TWDC FCC Licenses and the Communications Act. Section 4.13 of the TWDC/Spinco
Disclosure Schedules sets forth a complete list of all TWDC FCC Licenses and all
pending applications filed by or on behalf of any TWDC Radio Station. There are
no TWDC Radio Stations for which TWDC, any of its Subsidiaries or any Spinco
Entity provides programming or advertising services pursuant to a local
marketing or joint sales agreement;
(b) TWDC, Spinco and their respective Subsidiaries have timely filed
or made all material applications, reports and other disclosures required by the
FCC to be made with respect to the TWDC Licensed Facilities and have timely paid
all FCC regulatory fees with respect thereto;
(c) TWDC, Spinco and their respective Subsidiaries have, and are the
authorized legal holders of, all Licenses necessary for or used in the operation
of the business of the TWDC Licensed Facilities in substantially the same manner
as it is now being conducted;
(d) All TWDC FCC Licenses are in full force and effect and have not
been revoked, suspended, canceled, rescinded or terminated and have not expired,
and are not subject to any conditions except for conditions applicable to radio
licenses generally or as otherwise
29
disclosed on the face of the TWDC FCC Licenses and have been issued for full
terms customarily issued;
(e) There is not now issued, outstanding or pending, or to TWDC's
Knowledge, threatened, by or before the FCC, any complaint, investigation, order
to show cause, cease and desist order, notice of violation, notice of apparent
liability, or notice of forfeiture against TWDC relating to any TWDC Licensed
Facility;
(f) No application is pending for the renewal of any of the TWDC FCC
Licenses and TWDC is not aware of any reason that could reasonably be expected
to result in a refusal by the FCC to renew the TWDC FCC Licenses for a full term
in the normal course upon timely filing a complete and properly executed
application for renewal and payment of all applicable filing fees;
(g) There is not pending or, to TWDC's Knowledge, there is not
threatened, any action or proceeding by or before the FCC to revoke, suspend,
cancel, rescind or materially adversely modify any of the TWDC FCC Licenses
(other than rulemaking proceedings affecting the radio broadcasting industry
generally);
(h) TWDC, Spinco and their respective Subsidiaries are in compliance
in all material respects with all requirements of the Federal Aviation
Administration with respect to the construction and/or alteration of the TWDC
Radio Station's antenna structures, and, where required, "no hazard"
determinations for each antenna structure have been obtained, and where
required, each antenna structure has been registered with the FCC;
(i) Spinco or its Subsidiaries are entities legally and financially
qualified under the Communications Act to enter into this Agreement and to hold
the Company FCC Licenses. None of TWDC, Spinco or their respective Subsidiaries
have any Knowledge of any fact that would, under existing law (including the
Communications Act) and existing rules, regulations and practices of the FCC,
disqualify Spinco or its Subsidiaries as a transferee of the Company FCC
Licenses, or as owner and operator of the Company Licensed Facilities. None of
TWDC, Spinco or their respective Subsidiaries will take any action that it knows
or has reason to know would cause such disqualification and none of TWDC, Spinco
or their respective Subsidiaries will fail to take any action if it knows or has
reason to know that the failure to take such action would cause such
disqualification;
(j) To TWDC's Knowledge, there are no facts, conditions or events
relating to TWDC, Spinco or their respective Subsidiaries, or to any of the TWDC
Licensed Facilities, that could reasonably be expected to cause the FCC to (i)
deny or designate for hearing any of the FCC Applications; or (ii) impose any
materially adverse condition in connection with approval of the transfer of
control of the Subsidiaries of TWDC holding the TWDC FCC Licenses to Spinco (as
applicable), Company or the Surviving Corporation (other than conditions imposed
as a result of rulemakings affecting the radio broadcasting industry generally);
and
(k) Except as set forth in Section 4.13(k) of the TWDC/Spinco
Disclosure Schedules, neither TWDC, its Subsidiaries nor any of the Spinco
Entities has any applications filed by or on behalf of any TWDC Radio Station
pending before the FCC.
30
Section 4.14 Environmental Matters.
(a) Each Spinco Entity has obtained all material Licenses and other
authorizations under Environmental Laws required for the conduct and operation
of its business and has been and is in compliance, in all material respects,
with the terms and conditions contained therein and is in compliance, in all
material respects, with all applicable Environmental Laws.
(b) None of the Spinco Entities is subject to any material
contractual environmental indemnification obligation regarding businesses
currently owned or operated by Spinco or regarding properties currently owned or
leased by Spinco, except pursuant to leases set forth on Section 4.9(e) of the
TWDC/Spinco Disclosure Schedules.
(c) There are no material Environmental Claims pending or, to TWDC's
Knowledge, threatened against any Spinco Entity or with respect to the Business.
(d) There is no condition on, at or under any property currently or
to TWDC's Knowledge formerly owned, leased or used by any Spinco Entity or
created by any of Spinco Entity's operations that would reasonably be expected
to create a material liability for Spinco under applicable Environmental Laws.
(e) There are no past or present actions, activities, circumstances,
events or incidents with respect to any of the Spinco Entities (including to
TWDC's Knowledge any offsite disposal of, or exposure to, any Hazardous
Materials) that would reasonably be expected to form the basis of a material
claim under Environmental Laws or create material liability under applicable
Environmental Laws.
(f) TWDC has made available to Company all Phase I environmental
reports and other environmental assessment reports or documents regarding
material Environmental Claims in its or any of its Subsidiaries' or any Spinco
Entity's possession, custody or control relating to (i) the environmental
conditions on, under or about the properties or assets currently or formerly
owned, leased, operated or used by any Spinco Entity or any predecessor in
interest thereto, and (ii) any Hazardous Materials used, managed, handled,
transported, treated, generated, stored, discharged, emitted, or otherwise
released by any Spinco Entity or any other Person on, under, about or from any
of the properties currently or formerly owned or leased in connection with the
Business, or otherwise in connection with the use or operation of any of the
properties and assets of any of the Spinco Entities or their respective
businesses and operations.
Section 4.15 Tax Matters.
Except as would not, individually or in the aggregate, reasonably be
expected to have a Business Material Adverse Effect; provided, however, that the
representation in clause (g) below is made without regard to any materiality
qualifier:
(a) All Returns required to be filed by or with respect to TWDC or
any of its Subsidiaries that relate to the Business for all Taxable Periods have
been timely filed. All such Returns (i) were prepared in the manner required by
applicable Law, (ii) are true, correct, and
31
complete in all respects and (iii) accurately reflect the liability for Taxes of
TWDC and any of its Subsidiaries that relate to the Business.
(b) TWDC and each of its Subsidiaries have paid, or caused to be
paid, all Taxes that relate to the Business due and/or assessed, whether or not
shown (or required to be shown) on a Return, and have provided a sufficient
reserve for the payment of all Taxes that relate to the Business not yet due and
payable without regard to deferred tax assets and liabilities in the Spinco
Audited Financial Statements. No adjustment relating to any Return of or
including TWDC or any of its Subsidiaries that relates to the Business has been
proposed or threatened formally or informally by any taxing authority.
(c) Spinco and each Spinco Entity has complied (and until the
Closing Date will comply) in all respects with the provisions of the Code
relating to the withholding and payment of Taxes, including the withholding and
reporting requirements under Sections 1441 through 1446, 3401 through 3406, and
6041 through 6049 of the Code and related regulations, as well as similar
provisions under any other Laws, and have, within the time and in the manner
prescribed by Law, withheld from employee wages and paid over to the proper
Governmental Authorities all amounts required.
(d) There are no examinations or other administrative or court
Actions relating to Taxes in progress or pending that relate to the Business nor
has TWDC and each of its Subsidiaries received a revenue agent's or similar
report asserting a Tax deficiency that relates to the Business by the IRS or any
relevant state, local or foreign taxing authorities.
(e) There are no security interests on any of the assets of Spinco
or any Spinco Entity that arose in connection with any failure (or alleged
failure) to pay any Taxes and, except for liens for real and personal property
Taxes that are not yet due and payable, there are no liens for any Tax upon any
asset of Spinco or any Spinco Entity. Neither Spinco nor any Spinco Entity have
entered into a closing agreement pursuant to Section 7121 of the Code.
(f) No extension of time with respect to any date on which a Return
was or is to be filed by Spinco or any Spinco Entity is in force, and no waiver
or agreement by Spinco or any Spinco Entity is in force for the extension of
time for the assessment or payment of any Taxes. Neither Spinco nor any Spinco
Entity have granted a power of attorney to any Person with respect to any
Taxable Period.
(g) Neither Spinco nor any Spinco Entity has been a member of an (i)
affiliated group (within the meaning of Section 1504 of the Code) or (ii)
affiliated, combined, consolidated, unitary, or similar group for state or local
Tax purposes, other than the group of which TWDC is the common parent.
(h) Other than in connection with the Separation, neither Spinco nor
any Spinco Entity has constituted either a "distributing corporation" or a
"controlled corporation" in a distribution of stock qualifying for tax-free
treatment under Section 355 of the Code in the two years prior to the date of
this Agreement.
32
(i) None of Spinco or any Spinco Entity has engaged in any listed
transaction, or any reportable transaction the principal purpose of which was
tax avoidance, within the meaning of Sections 6011, 6111 and 6112 of the Code.
Section 4.16 Employee Benefits.
(a) Section 4.16(a) of the TWDC/Spinco Disclosure Schedules lists
each material "employee benefit plan" (as defined in Section 3(3) of ERISA), and
all other material employee benefit, pension, profit-sharing, savings, deferred
compensation, bonus, incentive, stock option (or other equity-based),
employment, severance, change in control, welfare (including post-retirement
medical and life insurance) plans, programs and arrangements, whether or not
subject to ERISA (i) sponsored, maintained or contributed to or required to be
contributed to by TWDC or any of its Subsidiaries or to which TWDC or any of its
Subsidiaries is a party (the "Benefit Plans") and (ii) in which any Business
Employee participated prior to the Effective Time (the "Business Benefit
Plans"). TWDC has heretofore delivered or made available to Company, to the
extent requested by Company, true and complete copies of each Business Benefit
Plan, any related trust or other funding vehicle, the most recent annual reports
or summaries required to be prepared or filed under ERISA or the Code and the
most recent determination letter received from the IRS with respect to each such
plan intended to qualify under Section 401 of the Code.
(b) Except as set forth on Section 4.16(b) of the TWDC/Spinco
Disclosure Schedules (the "Spinco Benefit Plans"), any Business Material
Contract with any Business Employee and any other agreement with on-air talent
or employees providing services to the Business, no Business Employee is
entitled to material payments or benefits under any Business Benefit Plans for
which any Spinco Entity or the Spinco Entities have any liability as of the
Effective Time.
(c) Neither Spinco nor any of its ERISA Affiliates has incurred any
liability under Title IV or Section 302 of ERISA or under Section 412 of the
Code that has not been satisfied in full and no condition exists that would
reasonably be expected to result in Spinco incurring any such liability for
events occurring on or prior to the Effective Time.
(d) Except as a result of the consummation of the Transactions or as
a result of any actions taken by Company, with respect to each Business Benefit
Plan that is a "multiemployer pension plan" (as defined in Section 3(37) of
ERISA), neither Spinco nor any of its ERISA Affiliates have made or suffered a
"complete withdrawal" or "partial withdrawal" (as such terms are defined
respectively in Sections 4203 and 4205 of ERISA).
(e) Except as would not, individually or in the aggregate,
reasonably be expected to have a Business Material Adverse Effect, each Business
Benefit Plan has been operated and administered in all material respects in
accordance with its terms and applicable Law, including, but not limited to,
ERISA, the Code, and the Laws of any other Governmental Authority.
(f) Except as otherwise provided in or contemplated by this
Agreement, the consummation of the Transactions shall not result, by itself or
in conjunction with any other
33
event, in the payment or acceleration of any amount, the acceleration of any
benefit or any increase in any vested interest or entitlement to any benefit or
payment by any Business Employee. Without limiting the generality of the
foregoing, no amount paid or payable by TWDC, Spinco or their Affiliates in
connection with the Transactions (either solely as a result thereof or as a
result of such Transactions in conjunction with any other event) will be an
"excess parachute payment" within the meaning of Section 280G of the Code.
Section 4.17 Labor Matters.
(a) Except as would not, in the case of clauses (i)(B), (ii) and
(iii) below, individually or in the aggregate, reasonably be expected to have a
Business Material Adverse Effect:
(i) No Spinco Entity is a party to, or bound by, and no
Business Employee is subject to, any (A) collective bargaining agreement (other
than those set forth on Section 4.17(a)(i) of the TWDC/Spinco Disclosure
Schedules) or (B) other Contract with a labor union or labor organization, nor
is any such Contract presently being negotiated.
(ii) With respect to any Business Employee, no Spinco Entity
nor TWDC or any Subsidiary is the subject of any Action asserting that such
Spinco Entity has committed an unfair labor practice or seeking to compel it to
bargain with any labor organization as to wages or conditions of employment,
nor, to TWDC's Knowledge, is any such Action threatened.
(iii) With respect to the Business Employees, the Spinco
Entities and TWDC and its Subsidiaries are in compliance, in all material
respects, with their obligations pursuant to the Worker Adjustment and
Retraining Notification Act of 1988, as amended ("WARN") and all other
notification and bargaining obligations arising under any collective bargaining
agreement, Law or otherwise.
(b) No strike, work stoppage or lockout involving any Spinco Entity
or any Business Employee has occurred during the two year period prior to the
date hereof, is pending or, to TWDC's Knowledge, threatened.
(c) To the Knowledge of TWDC, there have been no Actions initiated
by any labor organization to represent any Business Employees not currently
represented by a labor organization within the past two years, nor, to TWDC's
Knowledge, are there any campaigns underway to solicit employees to authorize
representation by any labor organization.
(d) With respect to the Business Employees, Spinco is in material
compliance with all applicable U.S. and non-U.S. Laws relating to employment
practices, terms and conditions of employment, and the employment of former,
current, and prospective employees, independent contractors and "leased
employees" (within the meaning of Section 414(n) of the Code) of Spinco
including all such U.S. and non-U.S. Law and Contracts relating to wages, hours,
collective bargaining, employment discrimination, immigration, disability, civil
rights, human rights, fair labor standards, occupational safety and health,
workers' compensation, pay equity, wrongful discharge and violation of the
potential rights of such former, current, and prospective employees, independent
contractors and leased employees, except as would not,
34
individually or in the aggregate, reasonably be expected to have a Business
Material Adverse Effect.
(e) Except as would not, individually or in the aggregate,
reasonably be expected to have a Business Material Adverse Effect, to TWDC's
Knowledge, no Spinco Entity is in material breach of any collective bargaining
agreement that applies to any Business Employee nor is any labor union or labor
organization that is party to any such collective bargaining agreement in
material default thereunder.
Section 4.18 Intellectual Property.
(a) Set forth on Section 4.18(a) of the TWDC/Spinco Disclosure
Schedules is a list of all patents, pending patent applications, registrations
and applications for registration of Intellectual Property and Internet web
sites owned or used by the Spinco Entities to carry on the Business as currently
conducted and as currently proposed to be conducted.
(b) Following the Restructuring, the Spinco Entities will own all
right, title, and interest in and to, or otherwise have the right to use,
pursuant, to TWDC's Knowledge, to a valid and enforceable written license, the
Business Intellectual Property free, in the case of Intellectual Property owned
by the Spinco Entities, of all Encumbrances, except for licenses granted in the
ordinary course of business.
(c) No Action or Order is pending, nor to TWDC's Knowledge,
threatened, with respect to any Business Intellectual Property owned by any
Spinco Entity alleging that any such Business Intellectual Property, or the use
thereof, or the operation of the Business, infringes, misappropriates, impairs,
or dilutes or otherwise violates ("Infringes") the rights of others or
challenging the ownership, validity, patentability, enforceability,
registrability or use of any Business Intellectual Property, and no Spinco
Entity is subject to any outstanding Order or other dispute involving any
third-party Intellectual Property; and to TWDC's Knowledge, no such Order or
other dispute is threatened.
(d) To TWDC's Knowledge, none of the Business Intellectual Property
owned or used by any Spinco Entity Infringes the Intellectual Property rights of
others or is being Infringed by others.
(e) To TWDC's Knowledge, no current or former employee of, or
consultant to, TWDC, any of its Subsidiaries or any Spinco Entity owns any
right, title or interest in or to any Business Intellectual Property (excluding
professional stage names) authored, developed or otherwise created by such
employee or consultant, whether with any other Person, during his or her
employment or other engagement with TWDC, any of its Subsidiaries or the Spinco
Entity, and, except as would not, individually or in the aggregate, reasonably
be expected to have a Business Material Adverse Effect, no Business Intellectual
Property that constitutes a trade secret has been disclosed to any third party
other than pursuant to a valid written agreement to protect the confidentiality
of such trade secret.
Section 4.19 Material Contracts.
35
(a) Section 4.19(a) of the TWDC/Spinco Disclosure Schedules sets
forth each of the following with respect to the Business:
(i) any "material contract" (as defined in Item 601(b)(10) of
Regulation S-K promulgated under the Securities Act) (the term "material
contract" to be applied as if Spinco were a separate company for the purpose of
this Section 4.19(a)(i)) or any Contract or other commitment that would be such
a "material contract" but for the exception for contracts entered into in the
ordinary course of business;
(ii) any non-competition agreements or any other Contract that
materially limits or will materially limit any of the Spinco Entities from
engaging in the Business;
(iii) any Contract with respect to any partnerships, joint
ventures or strategic alliances material to the Business;
(iv) any Contract pursuant to which any Spinco Entity has or
will incur Indebtedness;
(v) any agreement with on-air talent or employees providing
services to the Business that involves a commitment for annual consideration in
excess of $500,000;
(vi) any Contract other than with on-air talent or employees
that provides for annual payments in excess of $1,000,000 by or to the Business
(other than leases set forth on Section 4.9(e) of the TWDC/Spinco Disclosure
Schedules); and
(vii) any Contract that provides for annual payments in excess
of $250,000 by or to any Spinco Entity and contains a "change of control"
provision (other than leases set forth on Section 4.9(e) of the TWDC/Spinco
Disclosure Schedules).
The Contracts required to be set forth on Section 4.19(a) of the TWDC/Spinco
Disclosure Schedules and the leases required to be set forth on Section 4.9(e)
of the TWDC/Spinco Disclosure Schedules are referred to herein as the "Business
Material Contracts."
(b) Except as would not, individually or in the aggregate,
reasonably be expected to have a Business Material Adverse Effect, each of the
Business Material Contracts are valid and in full force and effect, against
TWDC, its Subsidiary or the Spinco Entity which is a party thereto (or will
become party thereto in connection with the Transactions) and, to TWDC's and
Spinco's Knowledge, the counterparty thereto, and constitute legal, valid and
binding obligations of TWDC, its Subsidiary or the Spinco Entity which is party
thereto and, to TWDC's Knowledge, the counterparty thereto, enforceable by TWDC
or the Subsidiary or the Spinco Entity which is a party thereto in accordance
with their terms except to the extent that such enforceability (i) may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to creditors' rights generally, and (ii) is subject to general
principles of equity.
(c) None of TWDC, any of its Subsidiaries or any Spinco Entity is in
material breach or default under (and no event has occurred, and none of TWDC,
any of its Subsidiaries
36
or the Spinco Entities has violated any provisions of, or committed or failed to
perform any act that, with notice or the passage of time or both would
constitute a material breach or default under) any Business Material Contract
nor, to TWDC's or Spinco's Knowledge, is any other party to any Business
Material Contract in material default thereunder, except as would not,
individually or in the aggregate, reasonably be expected to have a Business
Material Adverse Effect.
Section 4.20 Board Approvals; Votes Required.
(a) Board Approvals. Each of the TWDC Board of Directors, by
unanimous vote taken at a meeting duly called and held, and the Spinco Board of
Directors, by unanimous written consent of the directors in lieu of a meeting,
have (i) determined that this Agreement, the Ancillary Agreements and the
Transactions (including the Merger), taken together, are advisable and (ii)
approved this Agreement, the Ancillary Agreements and the Transactions
(including the Merger).
(b) Votes Required. The affirmative vote of TWDC, as the sole
stockholder of Spinco, is the only vote of the TWDC Stockholders and the holders
of Spinco Common Stock necessary to adopt this Agreement. Upon such adoption,
the approval of the holders of Spinco Common Stock after the Separation Date
will not be required to effect the Transactions. The approval of TWDC
Stockholders is not required to effect the Transactions.
Section 4.21 Operations of Spinco. Spinco is an indirect,
wholly-owned Subsidiary of TWDC, that at the time of the Distribution will own,
directly or indirectly, the Business Assets and will have assumed, directly or
indirectly, the Business Liabilities, all as provided in the Separation
Agreement.
Section 4.22 Brokers or Finders. Except for Bear, Xxxxxxx & Co. Inc.
and Xxxxxxx, Sachs & Co., neither TWDC, its Subsidiaries nor any of the Spinco
Entities has employed any investment banker, broker, finder or intermediary in
connection with the Transactions who might be entitled to any fee or any
commission in connection with or upon consummation of the Transactions, and any
such fee or commission, and any costs or expenses incurred in connection
therewith shall be borne solely by TWDC.
Section 4.23 Company Securities. Neither TWDC, its Subsidiaries nor
any of the Spinco Entities owns any Company Securities.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF COMPANY AND MERGER SUB
Except as set forth in the Company Disclosure Schedules (regardless
of whether or not the relevant Section hereof refers to the Company Disclosure
Schedules) or in the Company SEC Documents, Company hereby represents and
warrants to TWDC as follows:
Section 5.1 Due Organization, Good Standing and Corporate Power.
(a) Company is a corporation duly organized, validly existing and in
good standing under the Laws of the State of Delaware. Company and its
Subsidiaries have all
37
requisite corporate power and authority to own, lease and operate their
properties and assets and to carry on its business as it is now being conducted.
Each of Company and its Subsidiaries is duly qualified or licensed to do
business and is in good standing in each jurisdiction in which the property
owned, leased or operated or the nature of the business conducted by it makes
such qualification necessary, except in such jurisdictions where the failure to
be so qualified or licensed and in good standing would not have or reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect.
(b) Merger Sub is a corporation duly incorporated, validly existing
and in good standing under the Laws of the State of Delaware. The copies of the
certificate of incorporation and bylaws of Merger Sub which were previously
furnished or made available to Company are true, complete and correct copies of
such documents as in effect on the date of this Agreement.
Section 5.2 Authorization and Validity of Agreement. Each of Company
and Merger Sub has full corporate power and authority to execute and deliver
this Agreement and each Ancillary Agreement to which it is a party, to perform
its obligations hereunder and thereunder and to consummate the Transactions. The
execution, delivery and performance of this Agreement and the Ancillary
Agreements by Company and Merger Sub, as applicable, and the consummation by
Company and Merger Sub of the Transactions, have been duly authorized and
unanimously approved by the Company Board of Directors and the Merger Sub Board
of Directors, and no other corporate action on the part of Company or Merger Sub
is necessary to authorize the execution, delivery and performance of this
Agreement and the Ancillary Agreements or the consummation of the Transactions.
This Agreement and the Ancillary Agreements have been duly executed and
delivered by Company and Merger Sub and, to the extent Company or Merger Sub is
a party thereto, each is a valid and binding obligation of Company or Merger
Sub, as applicable, and enforceable against Company and Merger Sub, as
applicable, in accordance with their terms, except to the extent that its
enforceability may be subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other similar Laws affecting the enforcement of
creditors' rights generally and by general equitable principles.
Section 5.3 Corporate Authority Relative to this Agreement; No
Violation. Assuming (a) the filings required under the HSR Act are made and the
waiting periods thereunder (if applicable) have been terminated or expired, (b)
the filings (if any) required under the Communications Act are made, the FCC
Consent is granted and has not been vacated, reversed, stayed, enjoined, set
aside, annulled or suspended and any applicable requirements of the FCC pursuant
to the Communications Act are met, (c) the applicable requirements of the
Securities Act and the Exchange Act are met, (d) the requirements under any
applicable state securities or blue sky Laws are met, (e) the requirements of
the NYSE in respect of the listing of the shares of Company Common Stock to be
issued pursuant hereto are met and (f) the filing of the Certificate of Merger
and other appropriate Merger documents, if any, as required by the DGCL, is
made, the execution and delivery of this Agreement and the Ancillary Agreements
by Company and Merger Sub, as applicable, and the consummation by Company and
Merger Sub of the Transactions, do not and will not: (w) violate or conflict
with any provision of their respective certificates of incorporation or bylaws;
(x) violate or conflict with any Law or Order of any Governmental Authority
applicable to Company or any of its Subsidiaries; (y) require any filing with,
or License, consent or approval of, or the giving of any notice to, any
Governmental
38
Authority; or (z) result in a violation or breach of, conflict with, constitute
(with or without due notice or lapse of time or both) a default under, or give
rise to any right of termination, cancellation or acceleration, or result in the
creation of any Encumbrance upon any of the properties or assets of Company or
any of its Subsidiaries or give rise to any obligation, right of termination,
cancellation, acceleration or increase of any obligation or a loss of a material
benefit under, any of the terms, conditions or provisions of any Contract to
which Company is a party, excluding in the case of clauses (w) through (z)
above, conflicts, violations, breaches, defaults, rights of payment and
reimbursement, terminations, modifications, accelerations and creations and
impositions of Encumbrances which would not have or reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect.
Section 5.4 Company Reports and Financial Statements.
(a) As of their respective filing dates (and if amended or
superseded by a filing prior to the date of this Agreement, then on the date of
such filing), all reports, prospectuses, forms, schedules, registration
statements, proxy statements or information statements required to be filed by
Company under the Securities Act or under the Exchange Act (the "Company SEC
Documents") complied in all material respects with the requirements of the
Securities Act or the Exchange Act, as applicable, and none of such Company SEC
Documents when filed (and if amended or superseded by a filing prior to the date
of this Agreement, then on the date of such filing) contained an untrue
statement of material fact or omitted to state any material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The audited
consolidated financial statements and unaudited consolidated interim financial
statements included in the Company SEC Documents (including any related notes
and schedules) fairly present in all material respects the financial position of
Company and its Subsidiaries as of the dates thereof and the results of
operations and changes in financial position or other information included
therein for the periods or as of the dates then ended, subject, where
appropriate, to normal year-end adjustments, in each case in accordance with
past practice and GAAP during the periods involved (except as otherwise stated
therein). Since January 1, 2003, Company has timely filed all reports,
registration statements and other documents required to be filed with the SEC
under the rules and regulations of the SEC. The books and records of Company and
its Subsidiaries have been, and are being, maintained in accordance with GAAP
and any other applicable legal and accounting requirements.
(b) Undisclosed Liabilities. Except as set forth in the Company SEC
Documents filed prior to the date hereof, Company does not have any liability or
obligation of any nature (whether accrued, absolute, contingent or otherwise)
other than (i) liabilities or obligations incurred in the ordinary course of
business since the date of such Company SEC Documents, (ii) liabilities or
obligations not required to be disclosed on a balance sheet prepared in
accordance with GAAP or in the notes thereto and (iii) liabilities or
obligations that would not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect.
Section 5.5 Capitalization.
39
(a) The authorized capital stock of Company consists solely of
700,000,000 shares of capital stock, of which 200,000,000 are classified and
designated as preferred stock, par value $0.01 per share, of Company ("Company
Preferred Stock"). As of February 6, 2006, no shares of Company Preferred Stock
and 112,803,126 shares of Company Common Stock were issued and outstanding, and
9,175,216 shares of Company Common Stock were reserved for issuance upon the
exercise of outstanding Company Options. All issued and outstanding shares of
Company Common Stock have been duly authorized and validly issued and are fully
paid and non-assessable. As of the date of this Agreement, and except for shares
issuable pursuant to the Company Options and the Company Convertible Notes,
there are no outstanding options, warrants, rights, calls, subscriptions, claims
of any character, agreements, obligations, convertible or exchangeable
securities, or other commitments, contingent or otherwise, relating to Company
Common Stock or any capital stock equivalent or other nominal interest in
Company or any of its Subsidiaries which relate to Company ("Company Equity
Interests"), pursuant to which Company or any of its Subsidiaries is or may
become obligated to issue shares of its capital stock or other equity interests
or any securities convertible into or exchangeable for, or evidencing the right
to subscribe for any Company Equity Interests. There are no Contracts or
commitments to which Company is a party relating to the issuance, sale or
transfer of any equity securities or other securities of Company.
(b) The authorized capital stock of Merger Sub consists solely of
1,000 shares of Merger Sub Common Stock.
Section 5.6 Affiliate Transactions. Except for this Agreement and
the Ancillary Agreements there are no transactions or Contracts between or among
(a) Company or any of its Subsidiaries, on the one hand, and (b) Company's
Affiliates (other than wholly-owned Subsidiaries of Company) and other Persons,
on the other hand, of the type that are required to be disclosed under Item 404
of Regulation S-K promulgated under the Securities Act.
Section 5.7 Information to be Supplied. The information supplied or
to be supplied by Company for inclusion in the Information Statement/Prospectus
to be included in the Registration Statement will not, (a) on the date of its
filing, (b) in the case of the Registration Statement, at the time the
Registration Statement becomes effective under the Securities Act or (c) in the
case of the Information Statement/Prospectus, on the date(s) on which the
Information Statement/Prospectus is mailed to TWDC Stockholders and Company
Stockholders, contain any untrue statement of material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading.
Section 5.8 Absence of Certain Changes or Events.
(a) Except (i) as specifically contemplated or permitted by this
Agreement or the Ancillary Agreements, as applicable; (ii) as set forth in the
financial statements as of and for the year ended December 31, 2004 and as of
and for the nine-month-period ended September 30, 2005, in each case included in
the Company SEC Documents and (iii) for changes resulting from the announcement
of this Agreement or the Transactions, the business of Company has, since
September 30, 2005, been conducted in all material respects only in the ordinary
course, and there has not been any event (including any damage, destruction or
loss, whether or not covered
40
by insurance), that would, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect.
(b) Since September 30, 2005 through the date hereof, there has not
been (i) any declaration, setting aside or payment of or dividend on, or other
distribution (whether in cash, stock or property) in respect of, Company or any
of its Subsidiaries' capital stock, or other equity or voting interests, except
for dividends in respect of Company Common Stock in an amount not to exceed
$0.18 per quarter per share and dividends by a wholly-owned Subsidiary of
Company to its stockholders; (ii) any purchase, redemption or other acquisition
of any shares of capital stock of, or other equity or voting interests in,
Company or any of its Subsidiaries or any options, warrants, calls or rights to
acquire such shares or other interests, except for repurchases of shares of
Company Common Stock in accordance with past practice; (iii) any split,
combination or reclassification of any of Company's capital stock or other
equity or voting interests or any issuance or authorization of any issuance of
any other securities in respect of, in lieu of or in substitution for shares of
capital stock of, or other equity or voting interest in, Company; (iv) other
than as would be permitted by Section 6.2(j) hereof, any change in accounting
principles, practices or methods by Company or any of its Subsidiaries that
would adversely affect the business of Company; (v) any settlement or similar
written agreement the performance of which will involve a material payment after
the execution of this Agreement; (vi) any loan to any Company Employee that was
not made in the ordinary course of business consistent with past practice or any
loan to any director, officer or member of management of Company or any of its
Subsidiaries; or (vii) any increase in the compensation payable to any Company
Employee or any material amendment of any Company Benefit Plan or other benefits
to which Company Employees are entitled, except for increases or amendments (A)
required by applicable Law, (B) in the ordinary and usual course of business
consistent with past practice or (C) permitted by Section 6.2(h) hereof.
Section 5.9 Actions; Litigation.
(a) No Action against Company or any of its Subsidiaries is pending
or, to Company's Knowledge, threatened, except with respect to such Actions the
outcome of which would not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect.
(b) There is no Order against Company or any of its Subsidiaries
that would, individually or in the aggregate, reasonably be expected to have a
Company Material Adverse Effect.
Section 5.10 Compliance with Laws; Certain Licenses.
(a) Except with respect to Environmental matters, Tax matters,
employee benefits and labor matters (which are addressed in Section 5.12,
Section 5.13, Section 5.14 and Section 5.15, respectively), Company and its
Subsidiaries are in compliance, in all material respects, with all Laws and
Orders of any Governmental Authority applicable to any of them or their
respective operations, except to the extent that such noncompliance would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect.
41
(b) Company and its Subsidiaries hold all Licenses that are required
for the conduct of its business as currently conducted and are in compliance, in
all material respects, with the terms of all such Licenses so held, except, in
the case of each of the foregoing, as would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect.
Section 5.11 FCC Licenses; Operations of Licensed Facilities. Except
as would not, individually or in the aggregate, reasonably be expected to have a
Company Material Adverse Effect:
(a) Company and its Subsidiaries have operated their respective
radio stations (the "Company Radio Stations") for which Company and such
Subsidiaries hold Licenses issued to Company and such Subsidiaries by the FCC
and set forth on Section 5.11(a) of the Company Disclosure Schedules attached
hereto (the "Company FCC Licenses"), in each case which Company Radio Stations
are owned or operated by Company and such Subsidiaries (the "Company Licensed
Facilities"), in compliance, in all material respects, with the terms of such
Company FCC Licenses and the Communications Act. Section 5.11(a) of the Company
Disclosure Schedules sets forth a complete list of all Company FCC Licenses and
all Company LMA Facilities and all pending applications filed by or on behalf of
any Company Radio Station and any Company LMA Facility;
(b) To Company's Knowledge, each Company Radio Station for which
Company or any of its Subsidiaries provides programming or advertising services
pursuant to a local marketing or joint sales agreement (the "Company LMA
Facilities") has been operated in compliance, in all material respects, with the
terms of the Licenses issued by the FCC to the owner of such Company LMA
Facility (the "Company LMA FCC Licenses");
(c) Company and its Subsidiaries have timely filed or made all
material applications, reports and other disclosures required by the FCC to be
made with respect to the Company Licensed Facilities and have timely paid all
FCC regulatory fees with respect thereto;
(d) Company and its Subsidiaries have, and are the authorized legal
holders of, all Licenses necessary for or used in the operation of the business
of the Company Licensed Facilities in substantially the same manner as it is now
being conducted;
(e) To Company's Knowledge, the third parties with which Company and
its Subsidiaries have entered into local marketing agreements or joint sales
agreements with respect to Company LMA Facilities have, and are the authorized
legal holders of, the Company LMA FCC Licenses necessary for or used in the
operation of the business of the respective Company LMA Facility to which such
local marketing or joint sales agreement relates;
(f) All Company FCC Licenses and, to Company's Knowledge, Company
LMA FCC Licenses, are in full force and effect and have not been revoked,
suspended, canceled, rescinded or terminated and have not expired, and are not
subject to any conditions except for conditions applicable to radio licenses
generally or as otherwise disclosed on the face of the Company FCC Licenses or
Company LMA FCC Licenses and have been issued for full terms customarily issued;
42
(g) There is not now issued, outstanding or pending, or to Company's
Knowledge, threatened, by or before the FCC, any complaint, investigation, order
to show cause, cease and desist order, notice of violation, notice of apparent
liability or notice of forfeiture against Company or to Company's Knowledge the
third parties with which Company and its Subsidiaries have entered into local
marketing agreements or joint sales agreements relating to any Company Licensed
Facility. To Company's Knowledge, there is not now issued, outstanding, pending,
or threatened, by or before the FCC, any complaint, investigation, order to show
cause, cease or desist order, notice or violation, notice of apparent liability
or notice of forfeiture against any third parties with which Company or its
Subsidiaries have entered into local marketing agreements or joint sales
agreements relating to any Company LMA Facility;
(h) No application is pending for the renewal of any of the Company
FCC Licenses or, to Company's Knowledge, any of the Company LMA FCC Licenses and
Company is not aware of any reason that could reasonably be expected to result
in a refusal by the FCC to renew the Company FCC Licenses or the Company LMA FCC
Licenses for a full term in the normal course upon timely filing a complete and
properly executed application for renewal and payment of all applicable filing
fees;
(i) There is not pending nor, to Company's Knowledge, is there
threatened, any action or proceeding by or before the FCC to revoke, suspend,
cancel, rescind or materially adversely modify any of the Company FCC Licenses
or the Company LMA FCC Licenses (other than rulemaking proceedings affecting the
radio broadcasting industry generally);
(j) The Company and its Subsidiaries are in compliance in all
material respects with all requirements of the Federal Aviation Administration
with respect to the construction and/or alteration of the Station's antenna
structures, and, where required, "no hazard" determinations for each antenna
structure have been obtained, and where required, each antenna structure has
been registered with the FCC;
(k) Company or its Subsidiaries are entities legally and financially
qualified under the Communications Act to enter into this Agreement and to hold
the TWDC FCC Licenses. Neither the Company nor its Subsidiaries have any
Knowledge of any fact that would, under existing law (including the
Communications Act) and existing rules, regulations and practices of the FCC,
disqualify the Company or its Subsidiaries as a transferee of the TWDC FCC
Licenses, or as owner and operator of the TWDC Licensed Facilities. Neither the
Company nor its Subsidiaries will take any action that it knows or has reason to
know would cause such disqualification and neither the Company nor its
Subsidiaries will fail to take any action if it knows or has reason to know that
the failure to take such action would cause such disqualification;
(l) To Company's Knowledge, there are no facts, conditions or events
relating to Company or any of its Subsidiaries, or to any of the Company
Licensed Facilities, that could reasonably be expected to cause the FCC to (i)
deny or designate for hearing any of the FCC Applications or (ii) impose any
materially adverse condition in connection with approval of the transfer of
control of the Company or any of its Subsidiaries holding Company FCC Licenses
to Surviving Corporation (other than conditions imposed as result of rulemakings
affecting the radio broadcasting industry generally); and
43
(m) Except as set forth in Section 5.11(m) of the Company Disclosure
Schedules, neither Company nor any of its Subsidiaries has any applications
filed by or on behalf of any Company Radio Station pending before the FCC.
Section 5.12 Environmental Matters.
(a) Each of Company and its Subsidiaries has obtained all material
Licenses and other authorizations under Environmental Laws required for the
conduct and operation of its business and has been and is in compliance, in all
material respects, with the terms and conditions contained therein and is in
compliance, in all material respects, with all applicable Environmental Laws.
(b) Neither Company nor any of its Subsidiaries is subject to any
material contractual environmental indemnification obligation regarding
businesses currently owned or operated by Company or regarding properties
currently owned or leased by Company, except pursuant to leases set forth on
Section 5.12(b) of the Company Disclosure Schedules.
(c) There are no material Environmental Claims pending or, to
Company's Knowledge, threatened against Company or any of its Subsidiaries.
(d) There is no condition on, at or under any property currently or
to Company's Knowledge formerly owned, leased or used by Company or any of its
Subsidiaries or created by Company's or any of its Subsidiary's operations that
would reasonably be expected to create a material liability under applicable
Environmental Laws.
(e) There are no past or present actions, activities, circumstances,
events or incidents with respect to Company or any of its Subsidiaries
(including to Company's Knowledge any offsite disposal of, or exposure to, any
Hazardous Materials) that would reasonably be expected to form the basis of a
material claim under Environmental Laws or create material liability under
applicable Environmental Laws.
(f) Company has made available to TWDC all Phase I environmental
reports and other environmental assessment reports or documents regarding
material Environmental Claims in its or any of its Subsidiaries' possession,
custody or control relating to (i) the environmental conditions on, under or
about the properties or assets currently or formerly owned, leased, operated or
used by Company, any of its Subsidiaries or any predecessor in interest thereto,
and (ii) any Hazardous Materials used, managed, handled, transported, treated,
generated, stored, discharged, emitted, or otherwise released by Company, any of
its Subsidiaries or any other Person on, under, about or from any of the
properties currently or formerly owned or leased, or otherwise in connection
with the use or operation of any of the properties and assets of Company or any
of its Subsidiaries, or their respective businesses and operations.
Section 5.13 Tax Matters.
Except as would not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect, provided, however, that the
representation in clause (g) below is made without regard to any materiality
qualifier:
44
(a) All Returns required to be filed by or with respect to Company
or any of its Subsidiaries for all Taxable Periods have been timely filed. All
such Returns (i) were prepared in the manner required by applicable Law, (ii)
are true, correct, and complete in all respects and (iii) accurately reflect the
liability for Taxes of Company and its Subsidiaries.
(b) Company and each of its Subsidiaries have paid, or caused to be
paid, all Taxes due and/or assessed, whether or not shown (or required to be
shown) on a Return, and have provided a sufficient reserve for the payment of
all Taxes not yet due and payable without regard to deferred tax assets and
liabilities on the consolidated financial statements of Company and its
Subsidiaries included in Company SEC Documents filed prior to the date hereof.
No adjustment relating to any Return of or including Company or any of its
Subsidiaries has been proposed or threatened formally or informally by any
taxing authority.
(c) Company and each of its Subsidiaries have complied (and until
the Closing Date will comply) in all respects with the provisions of the Code
relating to the withholding and payment of Taxes, including the withholding and
reporting requirements under Sections 1441 through 1446, 3401 through 3406, and
6041 through 6049 of the Code and related regulations, as well as similar
provisions under any other Laws, and have, within the time and in the manner
prescribed by Law, withheld from employee wages and paid over to the proper
Governmental Authorities all amounts required.
(d) There are no examinations or other administrative or court
Actions relating to Taxes in progress or pending with respect to the Company or
any if its Subsidiaries nor has Company or any of its Subsidiaries received a
revenue agent's or similar report asserting a Tax deficiency by the IRS or any
relevant state, local or foreign taxing authorities.
(e) There are no security interests on any of the assets of Company
or any of its Subsidiaries that arose in connection with any failure (or alleged
failure) to pay any Taxes and, except for liens for real and personal property
Taxes that are not yet due and payable, there are no liens for any Tax upon any
asset of Company or any of its Subsidiaries. Neither Company nor any of its
Subsidiaries have entered into a closing agreement pursuant to Section 7121 of
the Code.
(f) No extension of time with respect to any date on which a Return
was or is to be filed by Company or any of its Subsidiaries is in force, and no
waiver or agreement by Company or any of its Subsidiaries is in force for the
extension of time for the assessment or payment of any Taxes. Neither Company
nor any of its Subsidiaries have granted a power of attorney to any Person with
respect to any Taxable Period.
(g) Neither Company nor any of its Subsidiaries has been a member of
an (i) affiliated group (within the meaning of Section 1504 of the Code) or (ii)
affiliated, combined, consolidated, unitary, or similar group for state or local
Tax purposes, other than the group of which Company is the common parent.
(h) Neither Company nor any of its Subsidiaries has constituted
either a "distributing corporation" or a "controlled corporation" in a
distribution of stock qualifying for
45
tax-free treatment under Section 355 of the Code in the two years prior to the
date of this Agreement.
(i) None of Company or any of its Affiliates has engaged in any
listed transaction, or any reportable transaction the principal purpose of which
was tax avoidance, within the meaning of Sections 6011, 6111 and 6112 of the
Code.
(j) All outstanding Company Options other than the Company
Convertible Notes and Company Options included in the Company Diluted Shares
Outstanding were issued to Persons who are not ten-percent shareholders or
controlling shareholders of Company (in each case within the meaning of Treasury
Regulations Section 1.355-7(h)) in transactions to which section 83 or section
421(a) or (b) of the Code applied in connection with the performance of services
as an employee, director, or independent contractor for Company or one of its
Subsidiaries as compensation that is not excessive by reference to the services
performed.
Section 5.14 Employee Benefits.
(a) Section 5.14(a) of the Company Disclosure Schedules lists each
material Company Benefit Plan. Company has heretofore delivered or made
available to TWDC, to the extent requested by TWDC, true and complete copies of
each Company Benefit Plan, any related trust or other funding vehicle, the most
recent annual reports or summaries required to be prepared or filed under ERISA
or the Code and the most recent determination letter received from the IRS with
respect to each such plan intended to qualify under Section 401 of the Code.
(b) Neither Company nor any of its ERISA Affiliates has incurred any
liability under Title IV or Section 302 of ERISA or under Section 412 of the
Code that has not been satisfied in full, and no condition exists that would
reasonably be expected to result in Company incurring any such liability.
(c) Except as a result of the consummation of the Transaction or as
a result of any actions taken by TWDC, with respect to each Company Benefit Plan
that is a "multiemployer pension plan" (as defined in Section 3(37) of ERISA),
neither Company nor any of its ERISA Affiliates have made or suffered a
"complete withdrawal" or "partial withdrawal" (as such terms are defined
respectively in Sections 4203 and 4205 of ERISA).
(d) Except as would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect, each Company
Benefit Plan has been operated and administered in all material respects in
accordance with its terms and applicable Law, including, but not limited to,
ERISA, the Code and the Laws of any other Governmental Authority. Except as
would not result in a material liability to Company, all contributions required
to be made with respect to any Company Benefit Plan have been timely made. There
are no pending or, to Company's Knowledge, threatened Actions by, on behalf of
or against any of the Company Benefit Plans or any assets thereof, other than
routine Actions for benefits under such plans.
(e) Each Company Benefit Plan intended to be "qualified" within the
meaning of Section 401(a) of the Code has received a determination letter from
the IRS stating that they and the trusts maintained thereunder are exempt from
taxation under Section 401(a) or Section
46
501(a) of the Code, respectively, and each trust maintained under any Company
Benefit Plan intended to satisfy the requirements of Section 501(c)(9) of the
Code has satisfied such requirements, and in any such case, no event has
occurred or condition is known to exist that would reasonably be expected to
adversely affect such tax-qualified status for any such Company Benefit Plan or
any such trust.
(f) Except as otherwise provided in or contemplated by this
Agreement, the consummation of the Transactions shall not result, by itself or
in conjunction with any other event, in the payment or acceleration of any
amount, or acceleration of any benefit or any increase in any vested interest or
entitlement to any benefit or payment by any Company Employee or director of
Company. Without limiting the generality of the foregoing, no amount paid or
payable by the Company or any of its Subsidiaries in connection with the
Transactions (either solely as a result thereof or as a result of such
Transactions in conjunction with any other event) will be an "excess parachute
payment" within the meaning of Section 280G of the Code.
Section 5.15 Labor Matters.
(a) Except as would not, in the case of clauses (i)(B), (ii) or
(iii), (iv) and (v) below, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect:
(i) Neither Company nor any of its Subsidiaries is a party to,
or bound by, any (A) collective bargaining agreement or (B) other Contract with
a labor union or labor organization, nor is any such Contract presently being
negotiated;
(ii) Neither Company nor any of its Subsidiaries is the
subject of any Action asserting that Company or any of its Subsidiaries has
committed an unfair labor practice or seeking to compel it to bargain with any
labor organization as to wages or conditions of employment nor, to Company's
Knowledge, is any such Action threatened; and
(iii) Company and all of its Subsidiaries are in compliance,
in all material respects, with their obligations pursuant to WARN and all other
notification and bargaining obligations arising under any collective bargaining
agreement, Law or otherwise.
(b) No strike, work stoppage or lockout involving Company or any of
its Subsidiaries has occurred during the two year period prior to the date
hereof, is pending or, to Company's Knowledge, threatened.
(c) To the Company's Knowledge, there have been no Actions initiated
by any labor organization to represent any employees of Company not currently
represented by a labor organization within the past two years nor, to Company's
Knowledge, are there any campaigns being conducted to solicit cards from
employees to authorize representation by any labor organization.
(d) Company is in material compliance with all applicable U.S. and
non-U.S. Laws relating to employment practices, terms and conditions of
employment, and the employment of former, current, and prospective employees,
independent contractors and "leased employees" (within the meaning of Section
414(n) of the Code) of Company including all such
47
U.S. and non-U.S. Law and Contracts relating to wages, hours, collective
bargaining, employment discrimination, immigration, disability, civil rights,
human rights, fair labor standards, occupational safety and health, workers'
compensation, pay equity, wrongful discharge and violation of the potential
rights of such former, current, and prospective employees, independent
contractors and leased employees, except as would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect.
(e) Except as would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect, to Company's
Knowledge, neither Company nor any of its Subsidiaries is in material breach of
any collective bargaining agreement that applies to any Company Employee nor is
any labor union or labor organization that is party to any such collective
bargaining agreement in material default thereunder.
Section 5.16 Intellectual Property.
(a) Company and its Subsidiaries own all right, title, and interest
in and to, or otherwise have the right to use, pursuant, to the Company's
Knowledge, to a valid and enforceable written license, the Intellectual Property
used or held for use in the business of Company as currently conducted and
material to Company's business (the "Company Intellectual Property"), free, in
the case of Intellectual Property owned by Company or any of its Subsidiaries,
of all Encumbrances except for licenses granted in the ordinary course of
business.
(b) No Action or Order is pending, nor to Company's Knowledge,
threatened, with respect to any Company Intellectual Property owned by Company
or any of its Subsidiaries alleging that any such Company Intellectual Property,
or the use thereof, or the operation of its business, Infringes the rights of
others or challenging the ownership, validity, patentability, enforceability,
registrability or use of any Company Intellectual Property, and neither Company
nor any of its Subsidiaries is subject to any outstanding Order or other dispute
involving any third-party Intellectual Property and to Company's Knowledge, no
such Order or other dispute is threatened.
(c) To Company's Knowledge, none of the Company Intellectual
Property owned or used by Company or any of its Subsidiaries Infringes the
Intellectual Property rights of others or is being Infringed by others.
(d) To Company's Knowledge, no current or former employee of, or
consultant to, Company or any of its Subsidiaries owns any right, title or
interest in or to any Company Intellectual Property (excluding professional
stage names) authored, developed or otherwise created by such employee or
consultant, whether with any other Person, during his or her employment or other
engagement with Company or any of its Subsidiaries, and, except as would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect, no Company Intellectual Property that constitutes a
trade secret of Company or any of its Subsidiaries has been disclosed to any
third party other than pursuant to a valid written agreement to protect the
confidentiality of such trade secret.
Section 5.17 Material Contracts.
48
(a) Section 5.17(a) of the Company Disclosure Schedules sets forth
each of the following that Company or any of its Subsidiaries is a party to or
bound by:
(i) any "material contract" (as defined in Item 601(b)(10) of
Regulation S-K promulgated under the Securities Act) or any Contract or other
commitment that would be such a "material contract" but for the exception for
contracts entered into in the ordinary course of business;
(ii) any non-competition agreements or any other Contract that
materially limits or will materially limit any of Company or its Subsidiaries
from engaging in their respective businesses;
(iii) any Contract with respect to any partnerships, joint
ventures or strategic alliances material to Company;
(iv) any Contract pursuant to which any of Company or its
Subsidiaries has or will incur Indebtedness;
(v) any agreement with on-air talent or employees providing
services to Company or its Subsidiaries that involves a commitment for annual
consideration in excess of $500,000;
(vi) any Contract other than with on-air talent or employees
that provides for annual payments in excess of $1,000,000 by or to Company; and
(vii) any Contract that provides for annual payments in excess
of $250,000 and contains a "change of control" provision.
The Contracts required to be set forth on Section 5.17(a) of the Company
Disclosure Schedules are referred to herein as the "Company Material Contracts".
(b) Except as would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect, each of the
Company Material Contracts are valid and in full force and effect, against
Company or its Subsidiary which is party thereto and, to Company's Knowledge,
the counterparty thereto, and constitute legal, valid and binding obligations of
Company or its Subsidiary which is party thereto and, to Company's Knowledge,
the counterparty thereto, enforceable by Company or the Subsidiary which is a
party thereto in accordance with their terms except to the extent that such
enforceability (i) may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to creditors' rights generally, and
(ii) is subject to general principles of equity.
(c) Neither Company or any of its Subsidiaries is in material breach
or default under (and no event has occurred, and none of Company or any of its
Subsidiaries has violated any provisions of, or committed or failed to perform
any act that, with notice or the passage of time or both would constitute a
material breach or default under) any Company Material Contract nor, to
Company's Knowledge, is any other party to any Company Material Contract in
material default thereunder, except as would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect.
49
Section 5.18 Board Approval; Vote Required.
(a) Board Approval. Each of the Company Board of Directors, by
unanimous vote taken at a meeting duly called and held, and the Merger Sub Board
of Directors, by unanimous written consent of the directors in lieu of a
meeting, have (i) determined that this Agreement, the Ancillary Agreements and
the Transactions (including the Merger), taken together, are advisable, fair and
in the best interest of Company and Merger Sub and their respective stockholders
and (ii) approved this Agreement, the Ancillary Agreements and the Transactions
(including the Merger). The Company Board of Directors, at a meeting duly called
and held, by unanimous vote has approved and declared advisable the issuance of
Company Common Stock in the Merger.
(b) Vote Required. The only approvals or consents of the holders of
any class or series of capital stock necessary to adopt this Agreement, the
Ancillary Agreements and approve the Merger and the Transactions is the
affirmative votes of Company, as the sole stockholder of Merger Sub, and of the
holders of a majority of the outstanding shares of Company Common Stock (the
"Company Stockholder Approval"), which Company shall obtain by written consent
pursuant to Section 228 of the DGCL on the date hereof immediately following the
execution and delivery of this Agreement. The affirmative vote of Company, as
the sole stockholder of Merger Sub and the execution and delivery to the
secretary of Company of the Principal Stockholders Written Consent, in the form
attached to the Support Agreement, are sufficient to adopt this Agreement, the
Ancillary Agreements and approve the Merger, the Ancillary Agreements and the
Transactions, including the issuance of shares of Company Common Stock in the
Merger, and no other corporate proceedings are necessary to adopt or approve
this Agreement, the Ancillary Agreements or to consummate the Merger or the
Transactions, other than the Board approval referred to in Section 5.18(a).
Section 5.19 Assets. Company and its Subsidiaries have good, valid
and marketable title to, or in the case of leased properties and assets, a valid
leasehold interests in, all of the tangible assets of Company and its
Subsidiaries that are necessary to carry on the business of Company and its
Subsidiaries substantially as currently conducted, except where the failure to
have such good, valid and marketable title or valid leasehold interests would
not, individually or in the aggregate, reasonably be expected to be materially
adverse to Company and its Subsidiaries, taken as a whole, in each case subject
to no Encumbrances, except for (i) Encumbrances reflected in the Company SEC
Documents; (ii) Encumbrances consisting of zoning or planning restrictions,
easements, permits and other restrictions or limitations on the use of real
property or irregularities in title thereto which do not materially detract from
the value of, or materially impair the use of, such property by Company or any
of its Subsidiaries; (iii) Encumbrances for current Taxes, assessments or
governmental charges or levies on property not yet due or which are being
contested in good faith and for which appropriate reserves in accordance with
GAAP have been created; (iv) mechanic's, materialmen's and similar Encumbrances
arising in the ordinary course of business or by operation of Law; and (v) any
conditions that are shown on the surveys, title policies, deeds or other such
documents previously delivered by Company to TWDC with respect to such real
property.
Section 5.20 Operations of Merger Sub. Merger Sub is a direct,
wholly-owned Subsidiary of Company, was formed solely in connection with the
Transactions and has
50
engaged in no business activities other than in connection with the performance
of its obligations hereunder and under the Ancillary Agreements.
Section 5.21 Brokers or Finders. Except for JPMorgan Chase and
Xxxxxxx Xxxxx & Co., copies of whose engagement agreements have been or will be
provided to TWDC, neither Company nor any of its Subsidiaries has employed any
investment banker, broker, finder or intermediary in connection with the
Transactions who might be entitled to any fee or any commission in connection
with or upon consummation of the Transactions and any such fee or commission,
and any costs or expenses incurred in connection therewith shall be borne solely
by Company.
Section 5.22 Opinion of Financial Advisor. The Company Board of
Directors has received opinions of JPMorgan Chase and Xxxxxxx Xxxxx & Co. to the
effect that, as of the date of such opinion, the Exchange Ratio is fair, from a
financial point of view, to Company Stockholders.
Section 5.23 Takeover Laws. No "fair price," "moratorium," "control
share acquisition," "business combination," "stockholder protection" or other
similar anti-takeover statute or regulation enacted under the DGCL or the Law of
any other jurisdiction will apply to this Agreement, the Ancillary Agreements or
the Transactions.
Section 5.24 TWDC Securities. Neither Company nor any of its
Subsidiaries owns any TWDC Securities.
ARTICLE VI
COVENANTS
Section 6.1 Conduct of the Business Pending the Merger. Following
the date of this Agreement and until the earlier of the Effective Time or the
termination of this Agreement, except in connection with the Restructuring or as
contemplated or permitted by this Agreement or the Ancillary Agreements or
described in Section 6.1 of the TWDC/Spinco Disclosure Schedules or to the
extent that Company shall otherwise consent in writing, which consent shall not
be unreasonably withheld or delayed, TWDC and Spinco agree, as to themselves and
their respective Subsidiaries, as applicable:
(a) Ordinary Course. Each of TWDC and Spinco shall conduct the
Business, and TWDC and Spinco shall cause their respective Subsidiaries, as
applicable, to conduct the Business only in, and shall not take any action with
respect to the Business except in, the ordinary course of business and in a
manner consistent in all material respects with past practice and, with respect
to the Business only, shall use reasonable efforts to preserve intact its
current business organization, maintain its material rights and Licenses, keep
available the services of its current officers, business unit managers and other
key employees and preserve its relationships with its customers, suppliers and
others having business dealings with it in such a manner that its goodwill and
ongoing businesses are not impaired in any material respect as of the Effective
Time.
(b) Dividends; Changes in Stock. Spinco shall not, nor shall TWDC or
Spinco permit any of the Spinco Subsidiaries to, nor shall any of the Spinco
Entities propose to:
51
(i) declare, set aside or pay any dividends on or make other
distributions in respect of any shares of the capital stock or partnership
interests of any of the Spinco Entities (whether in cash, securities, property
or any combination thereof), except for the declaration and payment of cash
dividends or distributions paid on or with respect to a class of capital stock
or partnership interests, all of which shares of capital stock or partnership
interests (with the exception of directors' qualifying shares and other
similarly nominal holdings required by Law to be held by Persons other than
Spinco or the wholly-owned Spinco Subsidiaries), as applicable, of the
applicable corporation or partnership are owned directly or indirectly by TWDC;
(ii) split, combine or reclassify any of the capital stock of any of
the Spinco Entities or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of, or in substitution for, shares of the
capital stock of any of the Spinco Entities; or
(iii) amend the terms or change the period of exercisability of,
purchase, repurchase, redeem or otherwise acquire, or permit any of the Spinco
Entities to amend the terms or change the period of exercisability of, purchase,
repurchase, redeem or otherwise acquire, any of Spinco's securities or any
securities of any of the Spinco Subsidiaries, including shares of Spinco Common
Stock, or any option, warrant or right, directly or indirectly, to acquire any
such securities or propose to do any of the foregoing.
(c) Issuance of Securities. Neither TWDC nor Spinco shall, nor shall they
permit any of their respective Subsidiaries, as applicable, to (i) issue, sell,
pledge, dispose of or encumber, or authorize the issuance, sale, pledge,
disposition or encumbrance of, (A) any shares of any Spinco Entity's capital
stock of any class or (B) any options, warrants, convertible securities or other
rights of any kind to acquire any shares of capital stock, or any other
ownership interest, in any Spinco Entity (it being understood that this Section
6.1(c) shall not restrict the issuance of shares of TWDC Common Stock or TWDC
Options or other securities convertible into or exercisable or exchangeable for
TWDC Common Stock other than any issuance of any of the foregoing to any
Business Employee (except that shares of TWDC Common Stock may be issued to any
Business Employee upon exercise of a TWDC Option currently outstanding or the
occurrence of a payment event under any of the TWDC RSUs currently outstanding))
or (ii) with respect to the Business Employees, accelerate the timing of
payments or vesting under, or otherwise materially amend or supplement, any
existing benefit, stock option compensation plan or arrangement (other than as
may be required by Law), in each case other than pursuant to Section 3.2(b) or
Section 3.3 hereof.
(d) Governing Documents. Neither TWDC nor Spinco shall amend or propose to
amend or otherwise change Spinco's or any Spinco Subsidiary's certificate of
incorporation or bylaws or similar governance documents, nor shall TWDC or
Spinco permit any Spinco Subsidiary to amend or propose to amend or otherwise
change its certificate of incorporation or bylaws or similar governance
documents, in each case except to the extent required to comply with applicable
Law, the provisions of this Agreement or the Ancillary Agreements.
(e) Acquisitions. Spinco shall not, nor shall TWDC or Spinco permit any of
the Spinco Subsidiaries to, in a single transaction or a series of transactions,
acquire or agree to
52
acquire by merging or consolidating with, or by purchasing any equity interest
in or assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division thereof
(excluding the acquisition of assets having a fair market value not exceeding
$50,000,000 in the aggregate).
(f) Dispositions. TWDC, with respect to the Business only, and Spinco
shall not, nor shall TWDC permit any of its Subsidiaries, with respect to the
Business only, or Spinco permit any of the Spinco Subsidiaries to, in a single
transaction or a series of related transactions, sell, lease, pledge, encumber
or otherwise dispose of, or agree to sell, lease, pledge, encumber, transfer,
license or otherwise dispose of, any of its assets (other than Contracts, which
are governed by Section 6.1(l) hereof) (excluding the disposition of assets
having a fair market value not exceeding $50,000,000 in the aggregate).
(g) Indebtedness. Spinco shall not, nor shall TWDC or Spinco permit any of
the Spinco Subsidiaries to:
(i) incur any indebtedness for borrowed money or guarantee or otherwise
become contingently liable for any such indebtedness or issue or sell any debt
securities or warrants or rights to acquire any debt securities of any of the
Spinco Entities or guarantee any debt securities of others or enter into any
lease other than in connection with operating leases in the ordinary course of
business consistent with past practice;
(ii) issue any debt securities or assume, guarantee or endorse, or
otherwise as an accommodation become responsible for, the obligations of any
Person for borrowed money or otherwise;
(iii) make any loans, advances, capital contributions to or investments
in any other Person except (A) loans or advances by it or any of its
wholly-owned Subsidiaries to it or any of its wholly-owned Subsidiaries, (B)
investments or capital contributions in any of its wholly-owned Subsidiaries,
(C) as required by binding Contracts in effect as of the date hereof or (D) in
the ordinary course of business consistent with past practice; provided that the
aggregate amount of such loans, advances, capital contributions to or
investments in any other Person made in reliance on this clause (D) shall not
exceed $10,000,000; or
(iv) authorize capital expenditures or purchases of fixed assets other
than in the ordinary course of business consistent with past practice;
which, in the case of clauses (i), (ii), (iii) or (iv) above, would obligate
Spinco or the Surviving Corporation to pay any amounts, or assume any
obligations to be performed by Spinco or the Surviving Corporation, at or after
the Effective Time.
(h) Employee Arrangements. Except pursuant to the terms of any collective
bargaining agreements in effect as of the date hereof, as contemplated by this
Agreement, or as otherwise required by applicable Law or as a result of
collective bargaining, neither TWDC, with respect to the Business only, nor
Spinco shall, nor shall either of them permit any of its respective
Subsidiaries, as applicable, to:
53
(i) grant any increases in the compensation (including bonus and
incentive compensation) or fringe benefits of any Business Employee, except in
the ordinary course of business consistent with past practice;
(ii) pay or agree to pay to any Business Employee any pension,
retirement allowance, severance benefit or other material employee benefit not
required or contemplated by any of the existing Business Benefit Plans as in
effect on the date hereof;
(iii) except in the ordinary course of business consistent with past
practice, enter into any new, or terminate or amend any existing, employment,
severance or termination Contract or other arrangement with any Business
Employee or his or her representative;
(iv) become obligated under any new pension plan, welfare plan,
employee benefit plan (including any equity incentive plan), severance plan,
benefit arrangement or similar plan or arrangement of any Spinco Entity that was
not in existence on the date hereof, or amend any such plan or arrangement in
existence on the date hereof, except in each case as would not result in a
material increase in the annual aggregate cost (based on TWDC's historical
annual aggregate cost) of maintaining such pension plan, welfare plan, employee
benefit plan, severance plan, trust, fund, policy or arrangement;
(v) implement any plant closing or layoff that could implicate WARN; or
(vi) make any loan to (x) any director, officer or member of senior
management of a Spinco Entity, or (y) except in the ordinary course of business
consistent with past practice and in compliance with applicable Laws, to any
other Business Employee.
(i) No Liquidation or Dissolution. Neither TWDC, with respect to the
Business only, nor Spinco shall adopt a plan or agreement of complete or partial
liquidation, dissolution, merger, consolidation, restructuring, recapitalization
or other material reorganization or any other transaction that would preclude or
be inconsistent in any material respect with, or hinder or delay in any material
respect, consummation of the Transactions.
(j) Accounting Methods. Neither TWDC nor Spinco shall make any material
change in Spinco's or the Business' methods of accounting or procedures in
effect at October 1, 2005 except (i) as required by changes in GAAP, (ii) as may
be made in response to SEC guidance, in each case, as concurred with by TWDC's
or Spinco's independent auditors or (iii) as may be required in connection with
the Transaction, so long as any such changes are in accordance with GAAP, and
neither TWDC nor Spinco shall change Spinco's fiscal year.
(k) Affiliate Transactions. Neither TWDC, nor Spinco shall, nor shall TWDC
or Spinco permit any of their respective Subsidiaries to, enter into or amend
any Contract or arrangement with respect to the Business with any of their
respective Affiliates which Contract or arrangement would be required to be
disclosed by Spinco under Item 404 of Regulation S-K if Spinco were required to
file reports with the SEC pursuant to Sections 13(a) and 15(d) of the Exchange
Act.
54
(l) Contracts. TWDC, with respect to the Business only, and Spinco shall
not, nor shall TWDC permit any of its Subsidiaries, with respect to the Business
only, or Spinco permit any of the Spinco Subsidiaries to, except in the ordinary
course of business consistent with past practice, modify, amend, terminate or
enter into any Business Material Contract, or waive, release or assign any
material rights or claims of any Spinco Entity thereunder.
(m) Settlement of Litigation. TWDC, with respect to the Business only, and
Spinco shall not, nor shall TWDC permit any of its Subsidiaries, with respect to
the Business only, or Spinco permit any of the Spinco Subsidiaries to, pay,
discharge, satisfy or settle any Action (absolute, accrued, asserted or
unasserted, contingent or otherwise) if such payment, discharge, satisfaction or
settlement would (i) require any material payment by Spinco following the
Effective Time or (ii) restrict Spinco from operating the Business in any
material respect or require the taking of any action by Spinco that would
materially and adversely affect the operation of the Business, in each case
following the Effective Time.
(n) Restrictive Agreements. TWDC, with respect to the Business only, and
Spinco shall not, nor shall TWDC permit any of its Subsidiaries, with respect to
the Business only, or Spinco permit any of the Spinco Subsidiaries to, enter
into any Contract or arrangement that limits or otherwise restricts any Spinco
Entity in any material respect, or that would, following the Effective Time,
limit or restrict any Spinco Entity in any material respect from engaging in the
Business.
(o) Ancillary Agreements. At or prior to the Separation Date, TWDC and
Spinco shall execute and deliver the Ancillary Agreements.
(p) Intellectual Property. TWDC, with respect to the Business only, and
Spinco shall not, nor shall TWDC permit any of its Subsidiaries, with respect to
the Business, or Spinco permit any of the Spinco Subsidiaries to, sell,
transfer, license (except in connection with any radio network), abandon, let
lapse, encumber or otherwise dispose of any Intellectual Property that is
necessary to carry on the Business substantially as currently conducted, except,
in each case, in the ordinary course of business.
(q) Certain Agreements. TWDC, with respect to the Business only, and
Spinco shall not, nor shall TWDC permit any of its Subsidiaries, with respect to
the Business, or Spinco permit any of the Spinco Subsidiaries to, agree in
writing or otherwise to take any action (i) that would, or would reasonably be
expected to, prevent, impair or materially delay the ability of TWDC or Spinco
or any of their respective Subsidiaries to consummate the Transactions or (ii)
inconsistent with the foregoing clauses (a) through (p).
Section 6.2 Conduct of Business by Company Pending the Merger.
Following the date of this Agreement and until the earlier of the Effective Time
or the termination of this Agreement, except as contemplated or permitted by
this Agreement or the Ancillary Agreements or described in Section 6.2 of the
Company Disclosure Schedules or to the extent that TWDC shall otherwise consent
in writing, which consent shall not be unreasonably withheld or delayed, Company
and Merger Sub agree, as to themselves and their respective Subsidiaries, as
applicable:
55
(a) Ordinary Course. Company shall conduct its business, and shall cause
its Subsidiaries to conduct their businesses, and Company shall not take any
action except, in the ordinary course of business and in a manner consistent in
all material respects with past practice, and shall use reasonable efforts to
preserve intact its current business organization, maintain its material rights
and Licenses, keep available the services of its current officers, business unit
managers and other key employees and preserve its relationships with its
customers, suppliers and others having business dealings with it in such a
manner that its goodwill and ongoing businesses are not impaired in any material
respect as of the Effective Time.
(b) Dividends; Changes in Stock. Company shall not, nor shall it permit
any of its Subsidiaries to, nor shall it or any of its Subsidiaries propose to:
(i) other than with respect to the Special Dividend and regular cash
dividends in respect of Company Common Stock in an amount not to exceed $0.18
per quarter per share, declare, set aside or pay any dividends on or make other
distributions in respect of any shares of the capital stock or partnership
interests of Company or any of its Subsidiaries (whether in cash, securities,
property or any combination thereof), except for the declaration and payment of
cash dividends or distributions paid on or with respect to a class of capital
stock or partnership interests all of which shares of capital stock or
partnership interests (with the exception of directors' qualifying shares and
other similarly nominal holdings required by Law to be held by Persons other
than Company or its wholly-owned Subsidiaries), as applicable, of the applicable
corporation or partnership are owned directly or indirectly by Company;
(ii) split, combine or reclassify any of the capital stock of Company
or any of its Subsidiaries or issue or authorize or propose the issuance of any
other securities in respect of, in lieu of, or in substitution for, shares of
the capital stock of Company or any of its Subsidiaries; or
(iii) other than repurchases of Company Common Stock in accordance with
past practice or repurchases of Company Convertible Notes, in each case subject
to Section 6.2 of the Company Disclosure Schedule, amend the terms or change the
period of exercisability of, purchase, repurchase, redeem or otherwise acquire,
or permit Company or any of its Subsidiaries to amend the terms or change the
period of exercisability of, purchase, repurchase, redeem or otherwise acquire,
any of its securities or any securities of any of its Subsidiaries, including
shares of Company Common Stock, or any option, warrant or right, directly or
indirectly, to acquire any such securities or propose to do any of the
foregoing.
(c) Issuance of Securities. Company shall not, nor shall Company permit
any of its Subsidiaries, to (i) issue, sell, pledge, dispose of or encumber, or
authorize the issuance, sale, pledge, disposition or encumbrance of, (A) any
shares of Company's or any of its Subsidiaries' capital stock of any class or
(B) any options, warrants, convertible securities or other rights of any kind to
acquire any shares of capital stock, or any other ownership interest, in Company
or any of its Subsidiaries or (ii) accelerate the timing of payments or vesting
under, or otherwise materially amend or supplement, any existing benefit, stock
option compensation plan or arrangement (other than as may be required by Law),
in each case other than pursuant to Section 3.2(b) or Section 3.3 hereof.
56
(d) Governing Documents. Company shall not amend or propose to amend or
otherwise change Company's certificate of incorporation or bylaws or similar
governance documents, nor shall Company permit any of its Subsidiaries to amend
or propose to amend or otherwise change its certificate of incorporation or
bylaws or similar governance documents, in each case, except to the extent
required to comply with applicable Law, the provisions of this Agreement or the
Ancillary Agreements.
(e) Acquisitions. Company shall not, nor shall Company permit any of its
Subsidiaries to, in a single transaction or a series of transactions, acquire or
agree to acquire by merging or consolidating with, or by purchasing any equity
interest in or assets of, or by any other manner, any business or any
corporation, partnership, association or other business organization or division
thereof (excluding the acquisition of assets having a fair market value not
exceeding $50,000,000 in the aggregate).
(f) Dispositions. Company shall not, and shall not permit any of its
Subsidiaries to, in a single transaction or a series of related transactions,
sell, lease, pledge, encumber, transfer, license or otherwise dispose of, or
agree to sell, lease, pledge, encumber, transfer, license or otherwise dispose
of, any of its assets (other than Contracts, which are governed by Section
6.2(l) hereof) (excluding the disposition of assets having a fair market value
not exceeding $50,000,000 in the aggregate).
(g) Indebtedness. Company shall not, and shall not permit any of its
Subsidiaries to:
(i) incur any indebtedness for borrowed money or guarantee or otherwise
become contingently liable for any such indebtedness or issue or sell any debt
securities or warrants or rights to acquire any debt securities of Company or
any of its Subsidiaries or guarantee any debt securities of others or enter into
any lease other than in connection with operating leases in the ordinary course
of business consistent with past practice;
(ii) issue any debt securities or assume, guarantee or endorse, or
otherwise as an accommodation become responsible for, the obligations of any
Person, for borrowed money or otherwise;
(iii) make any loans, advances, capital contributions to or investments
in any other Person except (A) loans or advances by it or any of its
wholly-owned Subsidiaries to it or any of its wholly-owned Subsidiaries, (B)
investments or capital contributions in any of its wholly-owned Subsidiaries,
(C) as required by binding Contracts in effect as of the date hereof, (D) in the
ordinary course of business consistent with past practice; provided that the
aggregate amount of such loans, advances, capital contributions to or
investments in any other Person made in reliance on this clause (D) shall not
exceed $10,000,000; or
(iv) authorize capital expenditures or purchases of fixed assets other
than in the ordinary course of business consistent with past practice;
which, in the case of clauses (i), (ii), (iii) or (iv) above, would obligate
Company or the Surviving Corporation to pay any amounts, or assume any
obligations to be performed by Company or the Surviving Corporation, at or after
the Effective Time.
57
(h) Employee Arrangements. Except pursuant to the terms of any collective
bargaining agreements in effect as of the date hereof, as contemplated by this
Agreement, or as otherwise required by applicable Law or as a result of
collective bargaining, Company shall not, and shall not permit any of its
Subsidiaries to:
(i) grant any increases in compensation (including bonus and incentive
compensation) or fringe benefits of any Company Employee, except in the ordinary
course of business consistent with past practice;
(ii) pay or agree to pay to any Company Employee any pension,
retirement allowance, severance benefit or other material employee benefit not
required or contemplated by any of the existing Company Benefit Plans as in
effect on the date hereof;
(iii) except in the ordinary course of business consistent with past
practice, enter into any new, or terminate or amend any existing, collective
bargaining agreement, employment, severance or termination Contract or other
arrangement with any Company Employee or his or her representative;
(iv) implement any plant closing or layoff that could implicate WARN;
(v) become obligated under any new pension plan, welfare plan, employee
benefit plan (including any equity incentive plan), severance plan, benefit
arrangement or similar plan or arrangement of Company or any of its Subsidiaries
that was not in existence on the date hereof, or amend any such plan or
arrangement in existence on the date hereof, except in each case as would not
result in a material increase in the annual aggregate cost (based on Company's
historical annual aggregate cost) of maintaining such pension plan, welfare
plan, employee benefit plan, severance plan, trust, fund, policy or arrangement;
(vi) make any loan to (x) any director, officer or member of senior
management of Company, or (y) except in the ordinary course of business
consistent with past practice and in compliance with applicable laws, to any
other Company Employee.
(i) No Liquidation or Dissolution. Company shall not, and shall not permit
any of its Subsidiaries to, adopt a plan or agreement of complete or partial
liquidation, dissolution, merger, consolidation, restructuring, recapitalization
or other material reorganization or any other transaction that would preclude or
be inconsistent in any material respect with, or hinder or delay in any material
respect, consummation of the Transactions.
(j) Accounting Methods. Company shall not, and shall not permit any of its
Subsidiaries to, make any material change in Company's methods of accounting or
procedures in effect at September 30, 2005, except (i) as required by changes in
GAAP and (ii) as may be made in response to SEC guidance in each case as
concurred with by Company's independent auditors, and Company shall not, and
shall not permit any of its Subsidiaries to, change Company's fiscal year.
(k) Affiliate Transactions. Company shall not, and shall not permit any of
its Subsidiaries to, enter into or amend any Contract or arrangement with any of
their respective
58
Affiliates other than with wholly-owned Subsidiaries of Company, which Contract
or arrangement would be required to be disclosed by Company under Item 404 of
Regulation S-K.
(l) Contracts. Company shall not, and shall not permit any of its
Subsidiaries to, except in the ordinary course of business consistent with past
practice, modify, amend, terminate or enter into any Company Material Contract,
or waive, release or assign any material rights or claims of Company or any of
its Subsidiaries thereunder.
(m) Settlement of Litigation. Company shall not, and shall not permit any
of its Subsidiaries to, pay, discharge, satisfy or settle any Action (absolute,
accrued, asserted or unasserted, contingent or otherwise) if such payment,
discharge, satisfaction or settlement would (i) require any material payment by
Company or the Surviving Corporation following the Effective Time or (ii)
restrict Company or the Surviving Corporation from operating their respective
businesses in any material respect or require the taking of any action by
Company that would materially and adversely affect Company's or the Surviving
Corporation's operation of their respective businesses, in each case following
the Effective Time.
(n) Restrictive Agreements. Company shall not, and shall not permit any of
its Subsidiaries to, enter into any Contract or arrangement that limits or
otherwise restricts Spinco or any of its Subsidiaries in any material respect,
or that would, following the Effective Time, limit or restrict Spinco or any of
its Subsidiaries in any material respect from engaging in the Business.
(o) Intellectual Property. Company shall not, and shall not permit any of
its Subsidiaries to, sell, transfer, license, abandon, let lapse, encumber or
otherwise dispose of any Intellectual Property that is necessary to carry on the
business of Company and its Subsidiaries as currently conducted, except, in each
case, in the ordinary course of business.
(p) Certain Agreements. Company shall not, and shall not permit any of its
Subsidiaries to, agree in writing or otherwise to take any action (i) that
would, or would reasonably be expected to, prevent, impair or materially delay
the ability of Company or any of its Subsidiaries to consummate the Transactions
or (ii) inconsistent with the foregoing clauses (a) through (o).
Section 6.3 Preparation of Registration Statement and Information
Statement/Prospectus.
(a) Promptly following the execution of this Agreement, TWDC, Spinco and Company
shall prepare the Information Statement/Prospectus, and Company shall prepare
and file with the SEC the Registration Statement, in which the Information
Statement/Prospectus shall be included. TWDC and Spinco shall furnish to Company
all information concerning it as is required by the SEC in connection with the
preparation of the Registration Statement. Company shall use its reasonable
efforts to have the Registration Statement declared effective under the
Securities Act promptly after such filing and to keep the Registration Statement
effective as long as is necessary to consummate the Transactions, and TWDC and
Spinco shall use their reasonable efforts to assist Company in this regard. The
Parties shall promptly provide copies, consult with each other and prepare
written responses with respect to any written
59
comments received from the SEC with respect to the Information
Statement/Prospectus and the Registration Statement, and advise one another of
any oral comments received from the SEC with respect to the Information
Statement/Prospectus and the Registration Statement. The Parties shall cooperate
in preparing and filing with the SEC any necessary amendment or supplement to
the Information Statement/Prospectus or the Registration Statement. No amendment
or supplement to the Information Statement/Prospectus or Registration Statement
shall be filed without the approval of all of the Parties, which approval shall
not be unreasonably withheld or delayed. Company will use its reasonable efforts
to cause the Information Statement/Prospectus to be mailed to the Company
Stockholders and TWDC will use its reasonable efforts to cause the Information
Statement/Prospectus to be mailed to the TWDC Stockholders, in each case
promptly after the Registration Statement is declared effective under the
Securities Act. The Information Statement/Prospectus and the Registration
Statement shall comply as to form in all material respects with the rules and
regulations promulgated by the SEC under the Securities Act and the Exchange
Act, respectively.
(b) In addition to the actions specified in Section 6.3(a), Company shall
promptly take, or shall cause its officers to promptly take, any action required
under Section 228 of the DGCL reasonably necessary to give operative effect to
the Principal Stockholders Written Consent. Company shall, if necessary due to
the invalidity or effective revocation of the Principal Stockholders Written
Consent, call a meeting of the Company Stockholders (the "Company Stockholder
Meeting") in connection with the Transactions.
(c) If, at any time after the mailing of the definitive Information
Statement/Prospectus, any event should occur that results in the Information
Statement/Prospectus or the Registration Statement containing an untrue
statement of a material fact or omitting to state any material fact required to
be stated therein or necessary to make the statements therein, in the light of
the circumstances under which they are made, not misleading, or that otherwise
should be described in an amendment or supplement to the Information
Statement/Prospectus or the Registration Statement, the Parties shall promptly
notify the other Parties of the occurrence of such event and then promptly
prepare, file and clear with the SEC such amendment or supplement and Company
shall, as may be required by the SEC, mail to the Company Stockholders and the
TWDC Stockholders each such amendment or supplement.
Section 6.4 No Solicitation.
(a) From the date of this Agreement and prior to the earlier of the
Effective Time or the termination of this Agreement, Company agrees that neither
it nor any of its Subsidiaries shall, and Company shall cause its directors,
officers, partners, employees, advisors, Affiliates, representatives, agents and
other intermediaries (including any accountants, financial or legal advisors, or
other consultants) not to, (i) directly or indirectly, solicit, initiate or
encourage any inquiry or proposal regarding a Company Acquisition Proposal, (ii)
provide any non-public information or data to any Person relating to a Company
Acquisition Proposal, (iii) waive, amend or modify any standstill or
confidentiality agreement (other than the Confidentiality Agreement) to which it
or any of its Subsidiaries is a party, (iv) engage in any discussions or
negotiations concerning a Company Acquisition Proposal or (v) otherwise
facilitate any effort or attempt to make or implement a Company Acquisition
Proposal or agree to, recommend or accept a Company Acquisition Proposal.
60
(b) Notwithstanding anything to the contrary contained in this Agreement,
Company or the Company Board of Directors shall be permitted, to the extent
applicable, to comply with Rule 14d-9 and 14e-2 promulgated under the Exchange
Act with regard to a Company Acquisition Proposal; provided, however, that
neither Company nor the Company Board of Directors nor any committee thereof
shall approve or recommend, or propose publicly to approve or recommend, a
Company Acquisition Proposal.
(c) From the date of this Agreement and prior to the earlier of the
Effective Time or the termination of this Agreement, each of TWDC and Spinco
agrees that neither it nor any of their respective Subsidiaries, as applicable,
shall, and each of TWDC and Spinco shall cause its respective directors,
officers, partners, employees, advisors, Affiliates, representatives, agents and
other intermediaries (including any accountants, financial or legal advisors, or
other consultants), not to (i) directly or indirectly, solicit, initiate or
encourage any inquiry or proposal regarding a Spinco Acquisition Proposal, (ii)
provide any non-public information or data to any Person relating to a Spinco
Acquisition Proposal, (iii) waive, amend or modify any standstill or
confidentiality agreement (other than the Confidentiality Agreement) to which it
or any of its Subsidiaries, is a party relating primarily to the Business, (iv)
engage in any discussions or negotiations concerning a Spinco Acquisition
Proposal, or (v) otherwise facilitate any effort or attempt to make or implement
a Spinco Acquisition Proposal or agree to, recommend or accept a Spinco
Acquisition Proposal and each of TWDC and Spinco shall request the return of any
confidential information distributed to any such parties in connection with any
such activities, discussions or negotiations.
Section 6.5 Tax Matters.
(a) Prior to the Effective Time, each of TWDC, Company and Spinco agrees
that it will use its reasonable best efforts not to take or fail to take, and
will cause its Subsidiaries and the Spinco Subsidiaries to use their reasonable
best efforts, as applicable, not to take or fail to take, any action, which
action or failure to take such action could cause (i) the transactions
constituting the Separation not to constitute tax-free transactions for federal
income tax purposes under Sections 332, 351, 355, 361, 368 and other applicable
provisions of the Code (other than cash received in lieu of fractional shares,
certain deferral gains in existence as of the date hereof and certain royalty
free licenses), (ii) the Merger not to qualify as a "reorganization" within the
meaning of Section 368(a) of the Code and (iii) any failure to obtain the IRS
Rulings.
(b) All sales and transfer taxes, deed taxes, conveyance fees, recording
charges and similar taxes imposed as a result of the Separation (collectively,
the "Transfer Taxes"), together with any interest, penalties or additions to
such Transfer Taxes, shall be borne solely by TWDC. TWDC and Company shall
cooperate in good faith to minimize, to the fullest extent possible under such
Laws, the amount of any such Transfer Taxes payable in connection therewith.
(c) Between the date hereof and the Effective Time, TWDC and Company will
cooperate in good faith to identify and agree to (in a manner consistent with
the IRS Rulings and Opinions of Counsel) modify actions and/or specify
additional actions (i) that may be taken by Company and Spinco that do not
constitute a Restructuring Tainting Act (as defined in the
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Tax Sharing Agreement) and (ii) of Company and Spinco that shall be prohibited
during the Restricted Period (as defined in the Tax Sharing Agreement).
(d) Prior to the filing of the Ruling Request, TWDC and Company shall use
their reasonable best efforts to obtain from each of Xxxxx Xxxxxxx and Forstmann
Little & Co. a representation letter reasonably acceptable to their respective
counsel relating to certain matters under Section 355(e) of the Code, such
representations to be repeated when appropriate prior to the Effective Time.
Section 6.6 Cooperation. The Parties shall use their reasonable
efforts to, together or pursuant to the allocation of responsibility set forth
below or otherwise to be agreed upon between them take, or cause to be taken,
the following actions:
(a) NYSE and Other Listings. Company shall prepare and file, and shall use
reasonable efforts to have approved prior to the Effective Time, an application
for the listing on the NYSE of the Company Common Stock to be issued pursuant to
the Merger and shares of Company Common Stock to be reserved for issuance
pursuant to any director or employee benefit plan or arrangement, subject to
official notice of issuance prior to the Closing Date.
(b) Blue Sky Filings. Company shall take all such action as may be
required under state securities or "blue sky" laws in connection with the
issuance of shares of Company Common Stock pursuant to the Merger.
(c) Further Assistance. The Parties shall use their reasonable efforts to
provide such further assistance as any of the other Parties may reasonably
request in connection with the foregoing and with carrying out the purpose of
this Agreement.
(d) Cooperation of Third Parties. Where the cooperation of any third
parties, such as insurers or trustees, would be necessary in order for any Party
to completely fulfill its obligations under this Agreement or any Ancillary
Agreement, such Party will use its reasonable efforts to seek the cooperation of
such third parties.
Section 6.7. Employee Matters.
(a) As of the Effective Time, the Business Employees shall cease to be
employees of TWDC or its Subsidiaries (as applicable) and shall become or
continue to be employees of Spinco or its Subsidiaries without any interruption
in employment, and Spinco or its Subsidiaries shall be the sole employer of the
Business Employees at the Effective Time. At the Effective Time, Spinco and its
Subsidiaries shall not employ any individuals other than the Business Employees.
The Business Employees (including Business Employees covered by collective
bargaining agreements) shall be entitled to all compensation or benefits accrued
and payable under each Business Benefit Plan other than a Spinco Benefit Plan
(excluding any Business Benefit Plan providing severance or termination pay)
immediately prior to the Effective Date, which shall be paid by TWDC in
accordance with the terms and conditions of such Business Benefit Plans as if
such Business employee terminated employment with the sponsor of or
participating employer in such Business Benefit Plan at the Effective Time. With
respect to each of the collective bargaining agreements that currently cover one
or more Business Employees, the Company agrees to take all actions necessary so
that, effective at the Effective
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Time, Spinco shall assume and be bound by such agreements with respect to the
applicable Business Employees, or shall enter into substantially identical
collective bargaining agreements with respect to the applicable Business
Employees, in each case such that, among other things, Spinco shall assume and
be bound by the obligations under such agreements to provide employee benefits
to the applicable Business Employees in accordance with the terms thereof. The
Company acknowledges that it shall have a duty to bargain, pursuant to the
National Labor Relations Act, with any and all labor organizations certified or
recognized as the bargaining representative for any Business Employees.
Notwithstanding the foregoing, TWDC shall retain all liabilities under the
current terms of the collective bargaining agreements (i) relating to Business
Benefit Plans for collectively bargained Business Employees to the extent
provided in Section 6.7(b) of this Agreement, (ii) for all retiree welfare
benefit obligations (other than those for which Business Employees may meet the
eligibility requirements following the Effective Time and for which Business
Employees are intended to pay the entire cost of coverage), and (iii) for all
retiree welfare benefit obligations under which former employees under such
collective bargaining agreements are currently receiving benefits or are
eligible to receive benefits.
(b) Except for the Spinco Benefit Plans, any Business Material Contract
with any Business Employee and any other agreement with on-air talent or
employees providing services to the Business, (i) Spinco shall not establish,
maintain or assume any Benefit Plan as of the Effective Time, and (ii) Spinco
shall not assume or be deemed to assume any liabilities (contingent or
otherwise) or obligations related to or with respect to any Benefit Plan as of
the Effective Time. TWDC or its ERISA Affiliates shall not assume any Company
Benefit Plan, nor shall they assume or be deemed to assume any liabilities
(contingent or otherwise) or obligations related to or with respect to any
Company Benefit Plan or any other employee benefit plan, policy or arrangement
of the Company or its ERISA Affiliates, regardless of when such liabilities or
obligations may be incurred, reported or assessed.
(c) Except as required pursuant to any collective bargaining agreements,
for a period of at least two years following the Effective Time, Company shall
provide, or cause its Subsidiaries or Spinco to provide, to Business Employees
(i) at least the same bonus opportunity (substantially consistent with past
practice) and base wages and salaries as was provided by TWDC or its
Subsidiaries to Business Employees immediately prior to the Effective Time and
(ii) employee benefits and fringe benefits under plans, programs and
arrangements (other than equity-based plans) that are at least as favorable as
the employee benefits and fringe benefits provided by Company to similarly
situated employees of Company. Notwithstanding the foregoing, for a period of
two years following the Effective Time, Company shall provide, or cause its
Subsidiaries or Spinco to provide, except as required pursuant to any collective
bargaining agreement entered into following the Effective Time, to the extent
that the Business Employees participate in any such collective bargaining
agreement, to all Business Employees who remain employed following the Effective
Time, medical, dental, vision, life insurance and disability benefits and
company automobiles in accordance with the terms set forth on Section 6.7(c) of
the TWDC/Spinco Disclosure Schedule.
(d) Notwithstanding anything in Section 6.7(c) to the contrary and except
as provided under any collective bargaining agreements, at and for a period of
at least two years following the Effective Time, Company shall cause the
Business Employees to be eligible for
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coverage under a severance or separation pay benefits plan that is at least as
favorable as the severance or separation pay benefits plan provided by TWDC or
its Subsidiaries to such Business Employees immediately prior to the Effective
Time and, without limiting Section 6.7(d) hereof, with (i) any service prior to
the Effective Time with TWDC or its Subsidiaries previously credited to Business
Employees for such purpose to be credited under the severance or separation pay
benefits plan of Spinco and (ii) eligibility for benefits under such Spinco plan
to include employees who are constructively terminated as a result of a non de
minimus reduction in position, title (for Vice Presidents or above), overall
responsibilities, level of authority, level of reporting (for Vice Presidents or
above), base compensation, annual incentive compensation opportunity, aggregate
employee benefits to the extent inconsistent with Section 6.7(c) hereof, or a
request that the participant's location of employment be relocated by more than
fifty (50) miles.
(e) To the extent that service is relevant for purposes of eligibility or
vesting (other than benefit accrual under a defined benefit plan) under any
Company Benefit Plan or any other employee benefit or fringe benefit plan,
program or arrangement established or maintained by Company, Spinco or their
Subsidiaries after the Effective Time for the benefit of Business Employees,
such plan, program or arrangement shall credit Business Employees for service on
or prior to the Effective Time with TWDC or its Subsidiaries, as the case may
be, to the same extent credited for such purposes under the comparable plan,
program or arrangement immediately prior to the Effective Time. Following the
Effective Time, Company shall cause each "employee welfare plan" (as defined in
Section 3(1) of ERISA) covering Business Employees (i) to reduce each such
eligible employee's (and his or her eligible dependents) annual deductible
limits under such plans for the plan year in which the Effective Time occurs to
the extent deductible expenses were incurred and recognized for comparable
purposes under the comparable Business Benefit Plan immediately prior to the
Effective Time, and (ii) to the extent waived under the Business Benefit Plans,
to waive any pre-existing condition limitations or exclusions that do not apply
to such employees immediately prior to the Effective Time.
(f) On or prior to the Closing Date, TWDC shall deliver to Company a list
setting forth (i) the names of all of the Business Employees, (ii) the date of
employment and title or job position of each such Business Employee, and (iii)
the total annual salary, wages, bonus or other compensation of each such
Business Employee. In addition, on or prior to the Closing Date, TWDC shall
deliver to the Company information relating to the expenses incurred by the
Business Employees that count against annual deductible limits and co-payments
limits of the "employee welfare plans" covering Business Employees.
(g) Following the date of this Agreement and until the earlier of the
Effective Time or the termination of this Agreement, upon reasonable notice, and
subject to collective bargaining agreements and applicable Law in the case of
union employees, TWDC shall make available to Company all Business Employees for
the purpose of interviewing during normal business hours; provided that such
interviews shall not unreasonably interfere with any of the operations of the
Business or the operations of TWDC or any of its Subsidiaries. TWDC shall
furnish to Company such employee information and records as Company may
reasonably request.
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Section 6.8 Competition Approvals; FCC Approvals; IRS Rulings.
(a) Competition Approvals. (i) The Parties shall, as promptly as
practicable, make their respective filings and any other required or requested
submissions under the HSR Act, promptly respond to any requests for additional
information from the FTC or the DOJ, and cooperate in the preparation of, and
coordinate, such filings, submissions and responses (including the exchange of
drafts between each Party's outside counsel) so as to reduce the length of any
review periods and (ii) subject to the terms and conditions of this Agreement,
each of the Parties shall use their reasonable efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary under
applicable Laws and regulations to consummate and make effective the
Transactions, including providing information and using their reasonable efforts
to obtain all necessary exemptions, rulings, consents, authorizations, approvals
and waivers to effect all necessary registrations and filings and to lift any
injunction or other legal bar to the Transactions, as promptly as practicable,
and to take all other actions necessary to consummate the Transactions
contemplated hereby in a manner consistent with applicable Law, it being
understood that this Section 6.8(a) does not address any filings required under
the Communications Act or the IRS Rulings (which are addressed in Section 6.8(b)
and Section 6.8(d), respectively). Without limiting the generality of the
foregoing, TWDC, Company and Spinco agree, and shall cause each of their
respective Subsidiaries, to cooperate and to use their respective reasonable
efforts to obtain any government clearances (other than the FCC Consent)
required to consummate the Merger (including through compliance with the HSR Act
and any applicable foreign government reporting requirements), to respond to any
government requests (other than by the FCC) for information, and to contest and
resist any Action, and to have vacated, lifted, reversed or overturned any Order
(other than the FCC Consent), that restricts, prevents or prohibits the
consummation of the Transactions, including by pursuing all available avenues of
administrative and judicial appeal and all available legislative action. The
Parties will consult and cooperate with one another, and consider in good faith
the views of one another, in connection with any analyses, appearances,
presentations, memoranda, briefs, arguments, opinions and proposals made or
submitted by or on behalf of any Party in connection with proceedings under or
relating to the HSR Act or any other federal, state or foreign antitrust or fair
trade Law, and will provide one another with copies of all material
communications from and filings with, any Governmental Authorities (other than
the FCC) in connection with the Transactions contemplated hereby. Any filing
fees required to be paid by the Parties under the HSR Act shall be borne
one-half by Spinco and one-half by Company.
(b) FCC Approvals.
(i) As promptly as practicable after the date of this Agreement (but in
no event later than 15 Business Days following the date of this Agreement), the
Parties shall file with the FCC the applications requesting FCC consent to
transfer of control of (A) the Subsidiaries of TWDC or Spinco holding the TWDC
FCC Licenses and (B) the Company or any of its Subsidiaries holding Company FCC
Licenses ("FCC Applications"). The Parties shall diligently take, or cooperate
in the taking of, all necessary, desirable and proper actions, provide any
additional information reasonably required or requested by the FCC, and
otherwise use their reasonable efforts to obtain promptly the requested consent
and approval of the applications by the FCC;
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(ii) Each Party will keep the other informed of any material
communication (including any meeting, conference or telephonic call), and will
provide the other copies of all correspondence between it (or its advisors) and
the FCC, and each Party will permit the other Parties to review any material
communication relating to the FCC Applications to be given by it to the FCC.
Each Party shall notify the other Parties hereto in the event it becomes aware
of any other facts, actions, communications, or occurrences that might directly
or indirectly affect the Parties' intent or ability to effect prompt FCC
approval of the FCC Applications. The Parties will jointly be responsible for
the process of dealing with the FCC with respect to the Transactions, including
the timing (subject to the express limitations on timing set forth in this
Section 6.8(b)), negotiation and determination of any actions proposed to be
taken by the Parties or their respective Subsidiaries. The Parties shall oppose
any petitions to deny or other objections filed with respect to the FCC
Applications and any requests for reconsideration or judicial review of the FCC
Consent. Notwithstanding the foregoing in this Section 6.8(b), no Party will be
required to take any action under this Section 6.8(b) that is inconsistent with
applicable Law. The fees required by the FCC for the filing of the FCC
Applications shall be borne one-half by Spinco and one-half by Company;
(iii) In order to avoid disruption or delay in the processing of the
FCC Applications, the Parties agree, as part of the FCC Applications, to request
that the FCC apply its policy permitting license transfers in transactions
involving multiple markets to proceed, notwithstanding the pendency of one or
more license renewal applications. The Parties agree to make such
representations and undertakings as necessary or appropriate to invoke such
policy, including undertakings to assume the position of applicant with respect
to any pending license renewal applications, and to assume the risks relating to
such applications. Each of the Parties agree not to, and shall not permit any of
their respective Subsidiaries to, take any action that would reasonably be
expected to materially delay, materially impede or prevent receipt of the FCC
Consent; and
(iv) The Parties acknowledge that license renewal applications may be
pending before the FCC with respect to the TWDC FCC Licenses and the Company FCC
Licenses (each such station the license for which is subject to a renewal
application, a "Renewal Station" and each such pending license renewal
application a "Renewal Application"). To the extent reasonably necessary to
expedite grant of a Renewal Application, and thereby facilitate grant of the FCC
Applications, the Parties shall be permitted to enter into tolling agreements
with the FCC with respect to the relevant Renewal Application, to extend, for a
period of up to three years following the date of renewal, the statute of
limitations for the FCC to determine or impose a forfeiture penalty against such
Renewal Station in connection with any pending complaints that such Renewal
Station aired programming that contained obscene, indecent, or profane material
(a "Tolling Agreement"). The Parties shall consult in good faith with each other
prior to entering any such Tolling Agreement.
(c) Required Actions. Without limiting the generality of the undertakings
pursuant to this Section 6.8, the Company shall proffer to (A) sell or otherwise
dispose of, or hold separate and agree to sell or otherwise dispose of such
assets, categories of assets or businesses of Company, its Subsidiaries, any of
the Spinco Entities or the Business, and (B) terminate such existing
relationships and contractual rights and obligations of Company, its
Subsidiaries, any of the Spinco Entities or the Business (and, in each case, to
enter into
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agreements with the FCC, the FTC or the DOJ, as the case may be, giving effect
thereto) in each case with respect to the foregoing clauses (A) or (B), if such
action is necessary or reasonably advisable for the purpose of promptly
obtaining the FCC's, the FTC's or the DOJ's approval of the Transactions, as the
case may be.
(d) IRS Rulings and Opinions.
(i) TWDC and Spinco shall use their reasonable best efforts to seek, as
promptly as practicable, one or more private letter rulings from the IRS, in
form and substance reasonably satisfactory to TWDC (the "IRS Rulings"), and one
or more Opinions of Counsel, to the effect that (x) the transactions that
comprise the Restructuring shall qualify as nonrecognition transactions under
Section 332, 351, 355, 361 or 368 of the Code, (y) the Distribution shall
qualify as a nonrecognition transaction to TWDC and its stockholders under
Section 355(a) of the Code, and (z) the Merger shall qualify as a reorganization
under Section 368 of the Code. The IRS Rulings and Opinions of Counsel may be
based upon customary factual statements, representations and covenants by the
Parties, their Subsidiaries and their stockholders consistent with the existing
published guidance of the IRS, including Revenue Procedures 83-59, 86-42, 90-52,
96-30 and 2003-48 (including, in the case of Section 4.03 of Revenue Procedure
2003-48, which adds new section 4.08(12) to Revenue Procedure 96-30, the
representation described in subsection (ii) thereof), in each case with
appropriate modifications to reflect the particular facts of the Transactions
(collectively, the "Representations"). For this purpose, Company acknowledges
that compliance with Section 4.04(b), (c) and (d) of the Tax Sharing Agreement
is required by the Representations. Company agrees to cooperate and use its
reasonable best efforts to, and to cause its Subsidiaries and its stockholders
to, assist in obtaining the IRS Rulings and the Opinions of Counsel, including
providing such appropriate information and representations as the IRS or Xxxxx
Xxxxxxxxxx LLP shall require in connection with the IRS Rulings or Opinions of
Counsel.
(ii) TWDC shall be responsible for the preparation and filing of all
ruling requests and supplements thereto to be submitted to the IRS in connection
with the IRS Rulings (the "IRS Submissions"). Prior to submitting any IRS
Submission, TWDC shall provide Company with a reasonable opportunity to review
and comment on a draft of the IRS Submission; provided, however, with respect to
statements or representations relating to Company or, after the Merger, Spinco,
Company shall have the right to approve such statements or representations prior
to filing, such approval not to be unreasonably withheld, delayed or
conditioned, and TWDC shall furnish Company with copies of all IRS Submissions
as submitted to the IRS. Notwithstanding the foregoing, TWDC may redact from any
IRS Submission any information ("Redactable Information") that (y) TWDC, in its
good faith judgment, considers to be confidential information or legal
analysis/qualifications which in either case are not germane to Company's or
Spinco's obligations under this Agreement or any Ancillary Agreement and (z) is
not (and is not reasonably expected to become) a part of any other publicly
available information.
(iii) In the event that (y) TWDC is not able to obtain any of the IRS
Rulings and Opinions of Counsel, or (z) in obtaining the IRS Rulings and
Opinions of Counsel, the Parties would be required to make factual statements,
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representations and/or covenants that differ materially from the Representations
and the differences in such factual statements, representations and/or covenants
would reasonably be expected to result in, in the aggregate, a significant
adverse effect on TWDC and its Subsidiaries, taken as whole (provided that
solely for purposes of determining whether the magnitude of such effect is
"significant," such effect shall be measured relative to the Spinco Entities
only and TWDC and its Subsidiaries (other than the Spinco Entities) shall be
disregarded) (a "TWDC Adverse Impact"), on the one hand, or a significant
adverse effect on the Company and its Subsidiaries, taken as a whole (including
by affecting Company's ability to take actions in the ordinary course of
operating a radio station or radio network, such as programming changes
(including changes in format), adoption and change of call signs, contracts and
other relationships with talent, sales, employment and labor matters, capital
expenditures, ordinary-course acquisitions and dispositions of assets,
acquisitions for cash or debt, and ordinary (i.e., non-equity-linked and not
part of an investment unit) "straight" debt financing and refinancing as
described in Section 1361 of the Code, but without regard to the identity of the
borrower or the lender) (a "Company Adverse Impact"), on the other hand, TWDC,
Spinco and Company shall use their reasonable best efforts to restructure the
Transactions in a manner that will preserve the economics of the Transactions to
TWDC, Spinco, Company, TWDC Stockholders and Company Stockholders and result in
the receipt of such rulings and opinions.
(iv) If, despite the Parties' efforts, TWDC is not able to obtain any
of the IRS Rulings and Opinions of Counsel, or may only obtain such rulings and
opinions by providing factual statements, representations and/or covenants that
differ materially from the Representations and the differences in such factual
statements, representations and/or covenants would reasonably be expected to
result in, individually or in the aggregate, a TWDC Adverse Impact, TWDC may
terminate this Agreement pursuant to Section 8.1(i) hereof.
(v) If despite the Parties' efforts, TWDC may only obtain the IRS
Rulings and Opinions of Counsel by providing factual statements, representations
and/or covenants that differ materially from the Representations and the
differences in such factual statements, representations and/or covenants would
reasonably be expected to result in, individually or in the aggregate, a Company
Adverse Impact, Company may terminate this Agreement pursuant to Section 8.1(j)
hereof.
(vi) TWDC and Company shall cooperate with each other in obtaining, and
shall use their respective reasonable best efforts to obtain (and shall cause
their respective Subsidiaries and stockholders to cooperate in obtaining and use
their reasonable best efforts to obtain), a written opinion of their respective
tax counsel, Xxxxxxxx & Xxxxx LLP, in the case of the Company, and Xxxxx
Xxxxxxxxxx LLP, in the case of TWDC and Spinco, in form and substance reasonably
satisfactory to the Company and TWDC, respectively (each such opinion, a "Merger
Tax Opinion"), dated as of the Effective Time, to the effect that, on the basis
of facts, representations and assumptions set forth in such opinion, the Merger
will be treated as a tax-free reorganization within the meaning of Section
368(a) of the Code. Each of the Parties shall deliver to Xxxxxxxx & Xxxxx LLP
and Xxxxx Xxxxxxxxxx LLP for purposes of the Merger Tax Opinions (and shall
cause their Subsidiaries and stockholders to deliver) reasonably requested
representations and covenants reasonably satisfactory in form and substance to
Xxxxxxxx & Xxxxx LLP and Xxxxx Xxxxxxxxxx LLP.
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Section 6.9 Access.
(a) Subject to Section 6.17 hereof, upon reasonable notice, each of TWDC,
with respect to the Business only, Spinco and Company shall, throughout the
period prior to the earlier of the Effective Time or the termination of this
Agreement, afford to each other and each other's respective officers, employees,
accountants, counsel and other authorized representatives, reasonable access to
its officers, employees, consultants and representatives and, during normal
business hours, in a manner that does not unreasonably interfere with business
and operations, to its and its Subsidiaries' and the Spinco Subsidiaries'
officers, properties, Contracts, commitments, books, records (including Returns
filed and those in preparation, work papers and other materials relating to
Taxes), papers, plans and drawings and any report, schedule or other document
filed or received by it pursuant to the requirements of the federal or state
securities Laws, and shall use their respective reasonable efforts to cause its
respective representatives to furnish promptly to the other such additional
financial and operating data and other information, including environmental
information, as to its and its Subsidiaries' and the Spinco Subsidiaries'
respective businesses and properties as the other or its duly authorized
representatives, as the case may be, may reasonably request, and instruct its
employees, legal counsel, financial advisors, auditors and other authorized
representatives to cooperate with the other in such other Party's investigation;
provided, however, that the foregoing shall not permit any Party to conduct any
invasive or destructive environmental sampling, testing or analysis on the other
Party's property.
(b) For the purposes of this Section 6.9, all communications, including
requests for information or access, pursuant to this Section 6.9, shall only be
made by and among representatives of each of TWDC, Spinco and Company, each of
whom shall initially be designated in writing by each of TWDC, Spinco and
Company, respectively, and may be replaced with a substitute representative by
TWDC, Spinco or Company from time to time upon reasonable written notice to the
other Parties.
(c) Notwithstanding the foregoing, neither TWDC, with respect to the
Business, Spinco, Company nor their respective Subsidiaries, as applicable,
shall be required to provide any information to the extent that any such Person
is legally obligated to keep such information confidential or otherwise not to
provide such information or to the extent that such access would constitute a
waiver of the attorney-client privilege. Each of Company, Spinco and TWDC will,
and will cause their respective Subsidiaries to hold, and will direct its and
their officers, employees, investment bankers, attorneys, accountants and other
advisors and representatives to hold, any and all information received from any
of the Parties, directly or indirectly, in confidence in accordance with the
Confidentiality Agreement.
Section 6.10 Director and Officer Indemnification; Insurance.
(a) Company shall for a period of at least six years after the Effective
Time, indemnify and hold harmless, and provide advancement of expenses to, all
past and present directors or officers of TWDC, Spinco, Company, Merger Sub and
their respective Subsidiaries, and each individual who prior to the Effective
Time becomes a director or officer of TWDC, Spinco, Company, Merger Sub and
their respective Subsidiaries, to the maximum extent allowed under applicable
Law in respect of acts or omissions occurring at or prior to the Effective Time
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(including for acts or omissions occurring in connection with this Agreement or
the Ancillary Agreements and the consummation of the Transactions contemplated
hereby and thereby).
(b) Company shall maintain in effect for each of the applicable Persons
referred to in clause (a) above for a period of six years after the Effective
Time policies of directors' and officers' liability insurance and fiduciary
liability insurance of at least the same coverage, and containing terms and
conditions which are, in the aggregate, no less advantageous to the insured, as
the current policies of directors' and officers' liability insurance maintained
by TWDC or Company, with respect to claims arising from facts or events that
occurred on or before the Effective Time.
Section 6.11 Rule 145 Affiliates. TWDC shall, at least 30 days prior
to the Effective Time, cause to be delivered to Company a list, reviewed by its
counsel, identifying all Persons who are, at the Effective Time, "affiliates" of
Spinco for purposes of Rule 145 promulgated under the Securities Act (each, a
"Rule 145 Affiliate"). TWDC shall furnish such information and documents as
Company may reasonably request for the purpose of reviewing such list. TWDC
shall use its reasonable efforts to cause each Person who is identified as a
Rule 145 Affiliate in the list furnished pursuant to this Section 6.11 to
execute a written agreement, substantially in the form of Exhibit B attached
hereto, at least 15 days prior to the Effective Time.
Section 6.12 Public Announcements. TWDC, Spinco and Company shall
consult with each other prior to making any press release or public announcement
relating to the Transactions and shall not issue any such press release or make
any such public announcement prior to such consultation and without the consent
of the other Parties, which consent shall not be unreasonably withheld, except
as may be required by applicable Law, Order or by obligations pursuant to any
listing agreement with any national securities exchange, in which case the Party
proposing to issue such press release or make such public announcement shall use
its reasonable efforts to consult in good faith with the other Party before
issuing any such press release or making any such public announcement.
Section 6.13 Defense of Litigation. Each of TWDC, Spinco and Company
shall use its reasonable efforts to defend against all Actions in which such
Party is named as a defendant that challenge or otherwise seek to enjoin,
restrain or prohibit the Transactions. None of TWDC, Spinco or Company shall
settle any such Action or fail to perfect on a timely basis any right to appeal
any judgment rendered or Order entered against such Party therein without having
previously consulted with the other Parties. Each of TWDC, Spinco and Company
shall use all reasonable efforts to cause each of its Affiliates, directors and
officers to use all reasonable efforts to defend any such Action in which such
Affiliate, director or officer is named as a defendant and which seeks any such
relief to comply with this Section 6.13 to the same extent as if such Person was
a Party.
Section 6.14 Notification of Certain Events. Each of the Parties
shall promptly notify the other Parties of: (a) the occurrence, or
nonoccurrence, of any event the occurrence or nonoccurrence of which could
reasonably be expected to cause any representation or warranty of such Party in
this Agreement to be untrue or inaccurate if the effect thereof would be that
the condition to Effective Time set forth in Section 7.2(a) or Section 7.3(a)
hereof, as
70
applicable, would be incapable of being fulfilled as of the Closing Date; (b)
the occurrence, or nonoccurrence, of any event the occurrence or nonoccurrence
of which could reasonably be expected to cause a Company Material Adverse Effect
or a Business Material Adverse Effect, as applicable; and (c) the breach by such
Party of any covenant or agreement set forth in this Agreement to be performed
or complied with by it prior to the Effective Time and, as a result thereof, the
condition set forth in Section 7.2(a) or Section 7.3(a) hereof, as applicable,
would be incapable of being fulfilled as of the Closing Date; provided, however,
that (i) delivery of any notification or information pursuant to this Section
6.14 shall be for notification purposes only and shall not expand or limit the
rights or affect the obligations of any Party hereunder or give rise to any
other liability on the part of any Party, and (ii) the failure to have complied
with this Section 6.14 shall not constitute a breach or have any implications on
any Party's rights or obligations hereunder or give rise to any liability on the
part of any Party.
Section 6.15 Section 16 Matters. Prior to the Effective Time,
Company, TWDC and Spinco shall take all actions as may be required to cause any
(i) dispositions of Spinco Common Stock or TWDC Common Stock (including
derivative securities with respect thereto) or (ii) acquisitions of Spinco
Common Stock or Company common Stock (including derivative securities with
respect thereto) resulting from the transactions contemplated by this Agreement
by each individual who is subject to the reporting requirements of Section 16(a)
of the Exchange Act with respect to Company or TWDC, or will become subject to
such reporting requirements with respect to Company, to be exempt under Rule
16b-3, promulgated under the Exchange Act.
Section 6.16 Accounting Matters.
(a) In connection with the information regarding Spinco and the Business
provided by TWDC and Spinco specifically for inclusion or incorporation by
reference in the Registration Statement, TWDC and Spinco shall use their
reasonable efforts to cause to be delivered to Company two letters from TWDC's
and Spinco's independent public accountants, one dated approximately the date on
which the Registration Statement shall become effective and one dated the
Closing Date, each addressed to TWDC, Spinco and Company, in form and substance
reasonably satisfactory to Company and reasonably customary in scope and
substance for comfort letters delivered by independent public accountants in
connection with registration statements similar to the Registration Statement.
(b) In connection with the information regarding Company provided by
Company specifically for inclusion or incorporation by reference in the
Registration Statement, Company shall use its reasonable efforts to cause to be
delivered to TWDC and Spinco two letters from Company's independent public
accountants, one dated approximately the date on which the Registration
Statement shall become effective and one dated the Closing Date, each addressed
to TWDC, Spinco and Company, in form and substance reasonably satisfactory to
TWDC and Spinco and reasonably customary in scope and substance for comfort
letters delivered by independent public accountants in connection with
registration statements similar to the Registration Statement.
Section 6.17 Confidentiality. TWDC and Company acknowledge that they
have previously executed the Confidentiality Agreement, which shall continue in
full force and
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effect in accordance with its terms. TWDC agrees that it shall not terminate,
amend, modify or waive any provision of any confidentiality agreement entered
into with third parties since January 1, 2004 in connection with the divestiture
of the Business.
Section 6.18 Control of Other Party's Business. Nothing contained in
this Agreement shall give TWDC or Spinco, directly or indirectly, the right to
control or direct Company's operations prior to the Effective Time. Nothing
contained in this Agreement shall give Company or Merger Sub, directly or
indirectly, the right to control or direct TWDC's, or Spinco's operations prior
to the Effective Time. Prior to the Effective Time, each of TWDC, Spinco,
Company and Merger Sub shall exercise and be responsible for, consistent with
the terms and conditions of this Agreement and applicable Law (including the HSR
Act and the Communications Act), complete control and supervision over their
respective operations, including, in the case of TWDC and Spinco, complete
control and supervision of all programs, employees, finances and policies of the
Business.
Section 6.19 Debt Instruments. Except as set forth in Section 6.19 of
the Company Disclosure Schedules, prior to or at the Effective Time, TWDC and
each of its Subsidiaries, with respect to obligations of the Business only, and
Company and each of its Subsidiaries shall use their reasonable efforts to
prevent the occurrence, as a result of the Transactions, of a change in control
or any event that constitutes a default (or an event that, with notice or lapse
of time or both, would become a default) under any debt instrument of any such
entity, including debt securities registered under the Securities Act, including
by seeking an amendment or waiver of any such change in control or default;
provided, however, that neither TWDC, Company nor any of their respective
Subsidiaries shall be required to pay any amounts in connection therewith
without the prior written consent of such Party. Each of TWDC and Spinco shall
use its reasonable efforts to cause all conditions to the issuance of the Spinco
Debt to be satisfied or waived prior to the Closing.
Section 6.20 Non-Solicitation of Employees.
(a) TWDC agrees that, for a period of six months from and after the
Closing Date it shall not, and it shall cause its Subsidiaries not to, without
the prior written consent of Spinco, directly or indirectly, solicit to hire or
hire (or cause or seek to cause to leave the employ of the Spinco Entities), or
enter into a consulting agreement with, any key Business Employee who (i) has a
title of senior vice president or higher or (ii) is on-air talent, unless such
Person ceased to be an employee of any Spinco Entity prior to such action by
TWDC or any of its Subsidiaries (other than Spinco).
(b) The restrictions set forth in the foregoing clause (a) shall not apply
to (i) general solicitations (such as advertisements) for employment placed by
TWDC or any of its Subsidiaries and not specifically targeted at the employees
of any Spinco Entity, (ii) responding to or hiring any employee of any Spinco
Entity who contacts TWDC or any of its Subsidiaries without any prior
solicitation (other than as permitted by clause (i) above) or (iii) any employee
of any Spinco Entity who responds to search firm inquiries (so long as not
directed to solicit such person) conducted on behalf of TWDC or any of its
Subsidiaries.
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(c) Company and Spinco hereby agree that their sole remedy in the
event of a breach of the covenant contained in this Section 6.20, whether
willful or inadvertent, will be an injunction preventing such employment, and
that they will not under any circumstances be entitled to monetary damages from
TWDC, any of its Affiliates or any such employee with respect to any such
breach.
Section 6.21 Covenant Not To Compete.
(a) In furtherance of the Transactions, TWDC covenants and agrees
that, for a period ending on the third (in the case of clause (i)) or second (in
the case of clause (ii)) anniversary of the Closing Date, neither TWDC nor any
of its Subsidiaries shall, without the prior written consent of Company, (i) own
or operate any broadcast radio station which is operated pursuant to a License
issued by the FCC in any of the Territories, except for stations that carry the
programming of the ESPN Radio(TM) network or the Radio Disney(TM) network, (ii)
distribute audio programming for broadcasting over a group of affiliated
terrestrial radio stations in the United States (collectively, the "TWDC
Competing Business"); provided, however, that nothing set forth in this Section
6.21 shall prohibit TWDC or its Subsidiaries from: (i) engaging in any business
included in the Excluded Assets and conducted by TWDC or any of its Subsidiaries
(excluding Spinco) immediately prior to the Closing Date and described in
Section 6.21 of the TWDC/Spinco Disclosure Schedules; (ii) engaging in the
production, development or licensing of content; (iii) the operation of the ESPN
Radio Network or the Radio Disney Network (or any derivative thereof); (iv)
owning any interest acquired as a creditor in bankruptcy or otherwise than by a
voluntary investment decision; or (v) acquiring the assets or capital stock or
other equity interests of any other Person engaged in a TWDC Competing Business,
provided that in the case of clause (v) such TWDC Competing Business is divested
or terminated within 24 months of its acquisition unless the end of such
24-month period occurs after the end of the term of this Section 6.21 in which
case the divestiture obligation shall not be operative.
(b) The Parties agree that the covenants included in this Section
6.21 are, taken as a whole, reasonable in their geographic and temporal
coverage, and no Party shall raise any issue of geographic or temporal
reasonableness in any proceeding to enforce such covenant; provided, however,
that if the provisions of this Section 6.21 should ever be deemed to exceed the
time or geographic limitations or any other limitations permitted by applicable
Law in any jurisdiction, then such provisions shall be deemed reformed in such
jurisdiction to the minimum extent required by applicable Law to cure such
problem.
(c) The Parties acknowledge and agree that in the event of a breach
of the provisions of this Section 6.21, monetary damages shall not constitute a
sufficient remedy. Consequently, in the event of any such breach, the
non-breaching Party may, in addition to any other rights and remedies existing
in its favor, apply to any court of Law or equity of competent jurisdiction for
specific performance and/or preliminary and final injunctive relief or other
relief in order to enforce or prevent any violation of the provisions hereof.
Section 6.22 Post-Closing Cooperation. Subject to the terms and
conditions hereof, each Party agrees to use its reasonable efforts to execute
and deliver, or cause to be executed and delivered, all documents and to take,
or cause to be taken, all actions that may be
73
reasonably necessary or appropriate, in the reasonable opinion of counsel for
each of TWDC, Spinco and Company, to effectuate the provisions of this
Agreement.
ARTICLE VII
CONDITIONS OF THE MERGER
Section 7.1 Conditions to the Obligations of Each Party. The
respective obligations of each Party to consummate the Merger are subject to the
satisfaction on or prior to the Effective Time of the following conditions, any
or all of which may be waived, in whole or in part, by each Party to the extent
permitted by applicable Law:
(a) The Separation shall have been consummated in accordance with
the Separation Agreement;
(b) The Company Stockholder Approval shall have been obtained, be in
full force and effect and a period of at least 20 calendar days shall have
elapsed from the date the Information Statement/Prospectus was first mailed to
the Company Stockholders; provided that if the Company Stockholder Approval is
not obtained by written consent pursuant to Section 228 of the DGCL, the Company
Stockholder Approval shall have been obtained by the affirmative vote of at
least a majority of the outstanding Company Common Stock at the Company
Stockholder Meeting;
(c) All consents, approvals and authorizations of any Governmental
Authority required for the consummation of the Transactions (other than under
the HSR Act or the Communications Act) shall have been obtained and shall be in
full force and effect at the Effective Time, except those consents the failure
of which to obtain would not, individually or in the aggregate, reasonably be
expected to have a Business Material Adverse Effect or a Company Material
Adverse Effect;
(d) All consents or approvals of each Person required for the
consummation of the Transactions under any Contract to which TWDC or Company or
their respective Subsidiaries shall be a party, or by which their respective
properties and assets are bound, shall have been obtained (in each case without
the payment or imposition of any material costs or obligations) and shall be in
full force and effect at the Effective Time, except (i) where the failure to so
obtain such consents and approvals would not, individually or in the aggregate,
reasonably be expected to have a Business Material Adverse Effect or a Company
Material Adverse Effect or (ii) to the extent that reasonably acceptable
alternative arrangements, including arrangements with respect to Delayed
Transfer Assets pursuant to the Separation Agreement, relating to the failure to
obtain any such consent or approval are otherwise provided for;
(e) Any applicable waiting period under the HSR Act relating to the
Transactions shall have expired or been terminated;
(f) (i) The Registration Statement shall have been declared
effective in accordance with the Securities Act and the Exchange Act and shall
not be the subject of any stop order or Actions seeking a stop order and no
similar Action in respect of the Information Statement/Prospectus shall have
been initiated or threatened by the SEC and not concluded or withdrawn, and (ii)
the shares of Spinco Common Stock to be issued in the Distribution and the
74
Merger and such other shares to be reserved for issuance in connection with the
Transactions shall have been approved for listing on the NYSE, subject to
official notice of issuance;
(g) No Order issued by any Governmental Authority of competent
jurisdiction (other than the FCC) or other legal impediment preventing or making
illegal the consummation of the Transactions shall be in effect; provided,
however, that the Parties shall use their reasonable efforts to have any such
Order (other than the FCC) vacated; and
(h) The FCC Consent shall have been issued and shall be in full
force and effect.
Section 7.2 Additional Conditions to the Obligations of TWDC and
Spinco. The obligations of TWDC and Spinco to consummate the Merger are subject
to the satisfaction at or prior to the Effective Time of the following
conditions, any or all of which may be waived, in whole or in part, by TWDC to
the extent permitted by applicable Law:
(a) The representations and warranties of Company and Merger Sub
contained in this Agreement (disregarding all materiality or Company Material
Adverse Effect qualifications or exceptions) shall be true and correct in all
respects in each case as of the Effective Time as if made as of the Effective
Time (except to the extent such representations and warranties address matters
as of a particular date, which shall be true and correct as of the specified
date), except where the failure to be true and correct would not, individually
or in the aggregate, reasonably be expected to have a Company Material Adverse
Effect and (ii) Company and Merger Sub shall have performed in all material
respects their respective covenants and agreements contained in this Agreement
required to be performed at or prior to the Effective Time;
(b) Company shall have delivered to TWDC a certificate, dated as of
the Effective Time, of the Chief Executive Officer and Chief Financial Officer
of Company (on Company's behalf and without any personal liability) certifying
the satisfaction by Company and Merger Sub of the conditions set forth in
Section 7.2(a) hereof;
(c) TWDC and Spinco shall have received an opinion of Xxxxx
Xxxxxxxxxx LLP, in form and substance reasonably satisfactory to TWDC and Spinco
and dated as of the Closing Date, (i) to the effect that the Merger will
constitute a "reorganization" for federal income tax purposes within the meaning
of Section 368(a) of the Code and (ii) addressing such federal income tax
matters as TWDC and Spinco may request regarding the Separation to the extent
such matters are not addressed in the IRS Rulings (the "TWDC Tax Opinion"). In
rendering such TWDC Tax Opinion, Xxxxx Xxxxxxxxxx LLP may require and rely upon
customary representations contained in certificates of officers of TWDC,
Company, Spinco and others;
(d) Company shall have entered into and delivered to TWDC the
Ancillary Agreements to which it or any of its Subsidiaries is a party;
(e) TWDC shall have received the IRS Rulings in form and substance
satisfactory to TWDC (taking into account any changes pursuant to Section 6.8(d)
hereof);
75
(f) Prior to the Distribution, Spinco shall have incurred Spinco
Debt in the amount and on the terms and conditions set forth in the Spinco Debt
Commitment Letter;
(g) Prior to the Closing Date, each of the Stockholder Arrangements
shall have been terminated and be of no further force and effect to the extent
set forth on Section 1.1 (Stockholder Arrangements) of the Company Disclosure
Schedules.
Section 7.3 Additional Conditions to the Obligations of Company and
Merger Sub. The obligations of Company and Merger Sub to consummate the Merger
is subject to the satisfaction at or prior to the Effective Time of the
following conditions, any or all of which may be waived, in whole or in part, by
Company to the extent permitted by applicable Law:
(a) (i) The representations and warranties of TWDC relating to TWDC
and Spinco contained in this Agreement (disregarding all materiality or Business
Material Adverse Effect qualifications or exceptions) shall be true and correct
in all, in each case as of the Effective Time as if made as of the Effective
Time (except to the extent such representations and warranties address matters
as of a particular date, which shall be true and correct as of the specified
date), except where the failure to be true and correct would not, individually
or in the aggregate, reasonably be expected to have a Business Material Adverse
Effect and (ii) TWDC and Spinco shall have performed in all material respects
their respective covenants and agreements contained in this Agreement required
to be performed at or prior to the Effective Time;
(b) TWDC shall have delivered to Company a certificate, dated as of
the Effective Time, of the Senior Executive Vice President and Chief Financial
Officer of TWDC (on TWDC's behalf and without any personal liability) certifying
the satisfaction by TWDC of the conditions set forth in the foregoing clause
(a);
(c) Spinco shall have delivered to Company a certificate, dated as
of the Effective Time, of the Vice President of Spinco (on Spinco's behalf and
without any personal liability) certifying the satisfaction by Spinco of the
conditions set forth in the foregoing clause (a);
(d) Company shall have received an opinion of Xxxxxxxx & Xxxxx LLP,
in form and substance reasonably satisfactory to Company and dated as of the
Closing Date, to the effect that the Merger will constitute a reorganization for
federal income tax purposes within the meaning of Section 368(a) of the Code
(the "Company Tax Opinion"). In rendering such Company Tax Opinion, Xxxxxxxx &
Xxxxx LLP may require and rely upon customary representations contained in
certificates of officers of TWDC, Company, Spinco and others;
(e) The applicable TWDC Entities and Spinco shall have entered into
the applicable Ancillary Agreements; and
(f) Spinco shall have furnished to Company a certification in
accordance with Treasury Regulations Section 1.1445-2(c) certifying that stock
in Spinco is not a real property interest because Spinco is not and has not been
a United States real property holding corporation
76
(as defined in Section 897(c)(2) of the Code) during the applicable period
specified in Section 897(c)(1)(A)(ii) of the Code, substantially in the form
attached hereto as Exhibit C.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
Section 8.1 Termination or Abandonment. Notwithstanding anything
contained in this Agreement to the contrary, this Agreement may be terminated
and abandoned at any time prior to the Effective Time, whether before or after
any approval of the matters presented in connection with the Transactions by the
stockholders of Company or the stockholder of Spinco:
(a) by the mutual written consent of TWDC and Company;
(b) by either TWDC or Company if the Effective Time shall not have
occurred on or before February 6, 2007, provided that such date may be extended
by either TWDC or Company (by written notice thereof to the other party) up to
and including August 6, 2007 in the event that all of the conditions to the
Merger, other than the condition set forth in Section 7.1(h) shall have been or
are capable of being satisfied at the time of such extension (the latest
applicable date shall be referred to herein as the "Termination Date"), unless
the failure of the Effective Time to have occurred by the Termination Date shall
be due to the failure of the Party seeking to terminate this Agreement pursuant
to this Section 8.1(b) to perform or observe in all material respects the
covenants and agreements of such party set forth herein;
(c) by Company (so long as Company is not then in material breach of
any covenant, representation or warranty or other agreement contained herein),
if there has been a material breach by TWDC or Spinco of any of its
representations, warranties, covenants or agreements contained in this
Agreement, or any such representation and warranty shall have become untrue in
any material respect, in either case such that Section 7.3(a) hereof would be
incapable of being satisfied, and such breach or condition has not been cured
within 30 Business Days following receipt by TWDC or Spinco, if applicable, of
notice of such breach;
(d) by TWDC (so long as TWDC is not then in material breach of any
covenant, representation or warranty or other agreement contained herein), if
(i) there has been a material breach by Company of any of its representations,
warranties, covenants or agreements contained in this Agreement, or any such
representation and warranty shall have become untrue in any material respect, in
either case such that Section 7.2(a) hereof would be incapable of being
satisfied, and such breach or condition has not been cured within 30 Business
Days following receipt by Company of notice of such breach or (ii) the condition
contained in Section 7.2(e) hereof shall be incapable of being satisfied;
(e) by either TWDC or Company if any Law or Order by any
Governmental Authority preventing or prohibiting consummation of the
Transactions shall have become final and nonappealable;
(f) by TWDC, if the Principal Stockholders Written Consent is
rendered invalid for reasons other than (i) the willful breach of Section 6.3(b)
hereof by Company, (ii) the willful breach of the Support Agreement by any
Principal Stockholder or Company or (iii) any
77
Principal Stockholder's effective revocation of the Principal Stockholders
Written Consent; provided, that TWDC shall not be permitted to terminate this
Agreement pursuant to this Section 8.1(f) if (x) Company has provided notice to
TWDC that it proposes to cure such invalidity by convening the Company
Stockholder Meeting pursuant to the second sentence of Section 6.3(b) hereof and
Company thereafter uses its reasonable best efforts to convene the Company
Stockholder Meeting or (y) Company has otherwise cured such invalidity after
receipt of TWDC's consent to such cure, such consent not to be unreasonably
withheld;
(g) by TWDC, if the Principal Stockholders Written Consent has not
become effective under applicable Law due to (i) the willful breach of Section
6.3(b) hereof by Company, (ii) the willful breach of the Support Agreement by
any Principal Stockholder or Company or (iii) any Principal Stockholder's
effective revocation of the Principal Stockholders Written Consent;
(h) by TWDC or Company, if Company is required pursuant to the
second sentence of Section 6.3(b) to hold the Company Stockholder Meeting and
the Company Stockholder Approval is not obtained at the Company Stockholder
Meeting;
(i) by TWDC in accordance with Section 6.8(d)(iv) hereof; or
(j) by Company in accordance with Section 6.8(d)(v) hereof.
The Party desiring to terminate this Agreement pursuant to this
Section 8.1 will give written notice of such termination to the other Party,
specifying the provision pursuant to which such termination is effected.
Section 8.2 Effect of Termination; Fees and Expenses.
(a) If this Agreement is terminated by TWDC or Company pursuant to
Section 8.1 hereof, then this Agreement shall become void and have no effect
with no liability or obligation on the part of TWDC, Spinco or Company, except
to the extent that such termination results from the material breach by a Party
of any of its covenants or agreements set forth in this Agreement; provided,
however, that the provisions of the Confidentiality Agreement and this Section
8.2 shall remain in full force and effect and shall survive any termination of
this Agreement.
(b) If this Agreement is terminated pursuant to (i) Section 8.1(f),
Section 8.1(g)or Section 8.1(h) hereof or (ii) Section 8.1(b) or Section 8.1(d)
and, in the case of this clause (ii), (A) a Company Acquisition Proposal shall
have been commenced, publicly disclosed, publicly proposed, publicly announced
or otherwise communicated to Company or the Company Stockholders prior to such
termination, and (B) within 15 months of such termination, Company or any of its
Subsidiaries or Affiliates enters into any definitive agreement with respect to,
or consummates, a Company Acquisition Proposal, then in each such case Company
shall pay to TWDC, (x) in the case of a termination pursuant to clause (i) above
within one Business Day following the delivery of notice of such termination, or
(y) in the case of termination pursuant to clause (ii) above, at or prior to the
earlier of the time Company, any of its Subsidiaries or Affiliates enters into
such agreement with respect to, or consummates, such Company
78
Acquisition Proposal, a termination fee equal to $81,000,000 by wire transfer of
immediately available funds.
(c) If this Agreement is terminated pursuant to Section 8.1(b) or
Section 8.1(c) and (i) a Spinco Acquisition Proposal shall have been commenced,
publicly disclosed, publicly proposed, publicly announced or otherwise
communicated to TWDC or the TWDC Stockholders prior to such termination, and
(ii) within 15 months of such termination, TWDC or any of its Subsidiaries or
Affiliates enters into any definitive agreement with respect to, or consummates,
a Spinco Acquisition Proposal, then in each such case TWDC shall pay to Company
at or prior to the earlier of the time TWDC, any of its Subsidiaries or
Affiliates enters into such agreement with respect to, or consummates, such
Spinco Acquisition Proposal, a termination fee equal to $81,000,000 by wire
transfer of immediately available funds.
(d) If this Agreement is terminated (i) by Company or TWDC pursuant
to Section 8.1(b) hereof and at the time of any such termination all of the
conditions set forth in Article VII have been satisfied or waived except for any
of the conditions set forth in Section 7.2(c) or 7.2(e) or (ii) by TWDC pursuant
to Section 8.1(i) hereof, then TWDC shall pay to Company, promptly upon receipt
of supporting documentation related thereto, the reasonable actual and
documented out of pocket expenses of Company in connection with the transactions
contemplated by this Agreement not to exceed $15,000,000, by wire transfer of
immediately available funds.
(e) All fees and expenses incurred by TWDC and Spinco related to the
financing of the transactions pursuant to Section 2.07 of the Separation
Agreement, whether such liabilities arise prior to, on or after the Effective
Time shall be paid by Spinco. Company and Spinco shall each pay one-half of the
costs and expenses incurred in connection with the filing, printing and mailing
of the Information Statement/Prospectus and Registration Statement (including
any SEC filing fees).
ARTICLE IX
GENERAL PROVISIONS
Section 9.1 Non-Survival of Representations and Warranties; Survival
of Certain Covenants. None of the representations, warranties, covenants or
agreements in this Agreement or in any instrument delivered pursuant to this
Agreement will survive the Effective Time or termination of this Agreement;
provided, however, that the agreements contained in Article II, Article III,
Article VI and this Article IX that by their terms apply or are to be performed
in whole or in part after the Effective Time shall survive the Effective Time.
Section 9.2 Notices. All notices, requests, claims, demands and
other communications under this Agreement will be in writing and will be deemed
given if delivered personally or sent by overnight courier (providing proof of
delivery) to the Parties at the following addresses (or at such address for a
Party as will be specified by like notice):
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(a) if to TWDC, to:
The Xxxx Disney Company
000 Xxxxx Xxxxx Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx Xxxxx
Facsimile No.: (000) 000-0000
with a copy to:
The Xxxx Disney Company
000 Xxxxx Xxxxx Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. XxXxxxxx
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxx Xxxxxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx
M. Xxxx Xxxxxx-Far
Facsimile No.: (000) 000-0000
(b) if to Spinco, to:
ABC Chicago FM Radio, Inc.
c/o The Xxxx Disney Company
000 Xxxxx Xxxxx Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx Xxxxx
Facsimile No.: (000) 000-0000
with a copy to:
The Xxxx Disney Company
000 Xxxxx Xxxxx Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. XxXxxxxx
Facsimile No.: (000) 000-0000
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with a copy to:
Xxxxx Xxxxxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx
M. Xxxx Xxxxxx-Far
Facsimile No.: (000) 000-0000
(c) if to Company or Merger Sub, to:
Citadel Broadcasting Corporation
0000 X. Xxxx Xxxx Xxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxx 00000
Attention: Xxxxx Xxxxxxx
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxxxxx & Xxxxx LLP
Citigroup Center
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxxx
Xxxxxx X. Xxxxx
Facsimile No.: (000) 000-0000
Section 9.3 Counterparts. This Agreement may be executed in one or
more counterparts, all of which will be considered one and the same agreement
and will become effective when one or more counterparts have been signed by each
Party and delivered to the other Parties, it being understood that all the
Parties need not sign the same counterpart.
Section 9.4 Entire Agreement; No Third-Party Beneficiaries. This
Agreement, together with the Ancillary Agreements, the Confidentiality
Agreement, the exhibits, the Disclosure Schedules and the other documents
delivered pursuant hereto, constitutes the entire agreement, and supersedes all
prior agreements and understandings, both written and oral, among the Parties
with respect to the subject matter hereof (provided, however, that the
provisions of the Confidentiality Agreement will remain valid and in effect) and
is not intended to confer upon any Person other than the Parties any rights or
remedies hereunder.
Section 9.5 Assignment. Neither this Agreement nor any of the
rights, interests or obligations under this Agreement will be assigned, in whole
or in part, by operation of Law or otherwise, by any of the Parties without the
prior written consent of the other Parties, which consent shall not be
unreasonably withheld, except that TWDC or Spinco may assign, in its sole
discretion, any or all of its rights, interests or obligations under this
Agreement to any one or more of its direct or indirect wholly-owned Subsidiaries
or Spinco Subsidiaries, as applicable; provided that no such assignment will
relieve the assigning Party from any of its
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obligations hereunder. Subject to the preceding sentence, this Agreement will be
binding upon, inure to the benefit of, and be enforceable by, the Parties and
their respective successors and assigns.
Section 9.6 Governing Law. This Agreement will be governed by, and
construed in accordance with, the Laws of the State of Delaware, without regard
to any applicable conflicts of law.
Section 9.7 Enforcement. The Parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the Parties will be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States
located in the State of Delaware or in Delaware state court, this being in
addition to any other remedy to which they are entitled at Law or in equity. In
addition, each of the Parties (a) consents to submit itself to the personal
jurisdiction of any federal court located in the State of Delaware or any
Delaware state court in the event any dispute arises out of this Agreement or
any of the Transactions, (b) agrees that it will not attempt to deny or defeat
such personal jurisdiction by motion or other request for leave from any such
court and (c) agrees that it will not bring any action relating to this
Agreement or any of the Transactions in any court other than a federal or state
court sitting in the State of Delaware.
Section 9.8 Severability. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction will, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable, such provision will be
interpreted to be only so broad as is enforceable.
Section 9.9 Headings. Headings of the Articles and Sections of this
Agreement are for convenience of the Parties only, and will be given no
substantive or interpretive effect whatsoever.
Section 9.10 Attorneys' Fees. If any Action at law or equity,
including an Action for declaratory relief, is brought to enforce or interpret
any provision of this Agreement, the prevailing party shall be entitled to
recover reasonable attorneys' fees and expenses from the other party, which fees
and expenses shall be in addition to any other relief which may be awarded.
Section 9.11 Amendment. This Agreement may be amended by the Parties
at any time before or after approval hereof by the stockholders of Spinco and
Company; provided, however, that after such stockholder approvals there shall
not be made any amendment that by Law requires further approval by the
stockholders of Spinco or Company without the further approval of such
stockholders. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the Parties.
82
Section 9.12 Extension; Waiver. At any time prior to the Effective
Time, the Parties may (a) extend the time for the performance of any of the
obligations or other acts of the other Parties, (b) waive any inaccuracies in
the representations and warranties contained in this Agreement or in any
document delivered pursuant to this Agreement or (c) subject to the proviso of
Section 9.11, waive compliance with any of the agreements or conditions
contained in this Agreement. Any agreement on the part of a Party to any such
extension or waiver shall be valid only if set forth in an instrument in
writing, signed on behalf of such Party. The failure of any Party to assert any
of its rights under this Agreement or otherwise shall not constitute a waiver of
those rights.
Section 9.13 Procedure for Termination, Amendment, Extension or
Waiver. A termination of this Agreement or other action attributed to the TWDC
Board of Directors or the Company Board of Directors pursuant to Section 8.1, an
amendment of this Agreement pursuant to Section 9.11 or an extension or waiver
pursuant to Section 9.12 shall, in order to be effective, require, in the case
of TWDC or Company, action by the TWDC Board of Directors or the Company Board
of Directors, as the case may be, acting by the affirmative vote of a majority
of the members of the entire TWDC Board of Directors or the Company Board of
Directors, as the case may be.
Section 9.14 Interpretation. Words herein in the singular shall be
held to include the plural and vice versa and words of one gender shall be held
to include the other genders as the context requires. The terms "hereof,"
"herein," and "herewith" and words of similar import herein (or in any Ancillary
Agreement) shall, unless otherwise stated, be construed to refer to this
Agreement (or the applicable Ancillary Agreement) taken as a whole (including
all of the schedules and exhibits hereto and thereto) and not to any particular
provision of this Agreement (or such Ancillary Agreement). Article, Section,
Exhibit, Schedule and Appendix references are to the Articles, Sections,
Exhibits, Schedules and Appendices to this Agreement (or the applicable
Ancillary Agreement) unless otherwise specified. The word "including" and words
of similar import when used in this Agreement (or the applicable Ancillary
Agreement) means "including, without limitation," unless the context otherwise
requires or unless otherwise specified. Unless expressly stated to the contrary
in this Agreement or in any Ancillary Agreement, all references to "the date
hereof," "the date of this Agreement," "hereby" and "hereupon" and words of
similar import shall all be references to February 6, 2006 (or the date of which
the relevant Ancillary Agreement is first entered into, as the case may be)
regardless of any amendment or restatement hereof (or thereof). The Parties have
participated jointly in the negotiation and drafting of this Agreement, and in
the event an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the Parties, and no
presumption or burden of proof shall arise favoring or disfavoring any party
hereto by virtue of the authorship of any provisions of this Agreement.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, TWDC, Spinco, Company and Merger Sub have caused
this Agreement to be signed by their respective officers thereunto duly
authorized, all as of the date first written above.
The Xxxx Disney Company
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Senior Executive Vice
President and Chief
Financial Officer
ABC CHICAGO FM RADIO, INC.
By: /s/ Xxxxx X. Xxxxxxxx
-----------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Vice President
CITADEL BROADCASTING CORPORATION
By: /s/ Xxxxx Xxxxxxx
-----------------------------------
Name: Xxxxx Xxxxxxx
Title: Chief Executive Officer
ALPHABET ACQUISITION CORP.
By: /s/ Xxxxx Xxxxxxx
-----------------------------------
Name: Xxxxx Xxxxxxx
Title: President
Signature Page
Agreement and Plan of Merger
