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EXHIBIT 10.1
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER
By and Among
PULITZER PUBLISHING COMPANY,
PULITZER INC.,
and
HEARST-ARGYLE TELEVISION, INC.
dated as of May 25, 1998
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TABLE OF CONTENTS
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ARTICLE I THE MERGER
1.01. THE MERGER.......................................................... 6
1.02. EFFECT OF THE MERGER ON CAPITAL STOCK............................... 6
1.03. EFFECTIVE TIME OF THE MERGER........................................ 7
1.04. EXCHANGE OF CERTIFICATES............................................ 7
1.05. DISTRIBUTION WITH RESPECT TO SHARES REPRESENTED BY UNEXCHANGED
CERTIFICATES........................................................ 8
1.06. NO FRACTIONAL SHARES................................................ 9
1.07. NO LIABILITY........................................................ 9
1.08. LOST CERTIFICATES................................................... 9
ARTICLE II CERTAIN PRE-MERGER TRANSACTIONS
2.01. AMENDMENTS TO CHARTERS; FINANCING................................... 9
2.02. CONTRIBUTION OF ASSETS TO AND ASSUMPTION OF LIABILITIES BY NEWCO;
DISTRIBUTION OF NEWCO STOCK......................................... 10
ARTICLE III REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY
AND NEWCO
3.01. ORGANIZATION AND AUTHORITY.......................................... 11
3.02. NO BREACH........................................................... 12
3.03. CONSENTS AND APPROVALS.............................................. 12
3.04. APPROVALS OF THE BOARDS; FAIRNESS OPINION; VOTE REQUIRED............ 12
3.05. CAPITALIZATION...................................................... 13
3.06. SEC REPORTS......................................................... 13
3.07. FINANCIAL STATEMENTS................................................ 14
3.08. ABSENCE OF CERTAIN CHANGES.......................................... 14
3.09. ABSENCE OF UNDISCLOSED LIABILITIES.................................. 14
3.10. COMPLIANCE WITH LAW................................................. 14
3.11. TAXES............................................................... 14
3.12. LITIGATION.......................................................... 15
3.13. BROKERS AND FINDERS................................................. 15
3.14. ENVIRONMENTAL MATTERS............................................... 15
ARTICLE IV REPRESENTATIONS AND WARRANTIES REGARDING BROADCASTING
4.01. ORGANIZATION AND AUTHORITY.......................................... 15
4.02. CAPITALIZATION...................................................... 16
4.03. FINANCIAL STATEMENTS................................................ 16
4.04. ABSENCE OF CERTAIN CHANGES.......................................... 16
4.05. ABSENCE OF UNDISCLOSED LIABILITIES.................................. 16
4.06. COMPLIANCE WITH LAW................................................. 16
4.07. STATION NETWORK AFFILIATION AGREEMENTS.............................. 16
4.08. CONDITION OF ASSETS; TITLE TO PROPERTIES; ENCUMBRANCES.............. 17
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4.09. LITIGATION......................................................... 18
4.10. EMPLOYEE BENEFIT MATTERS........................................... 18
4.11. LABOR MATTERS...................................................... 19
4.12. ENVIRONMENTAL MATTERS.............................................. 20
4.13. COMPLAINTS......................................................... 20
4.14. REPORTS............................................................ 20
ARTICLE V REPRESENTATIONS AND WARRANTIES OF ACQUIROR
5.01. ORGANIZATION AND AUTHORITY......................................... 20
5.02. NO BREACH.......................................................... 21
5.03. CONSENTS AND APPROVALS............................................. 21
5.04. APPROVAL OF THE BOARD; VOTE REQUIRED............................... 21
5.05. CAPITALIZATION..................................................... 22
5.06. SEC REPORTS........................................................ 22
5.07. FINANCIAL STATEMENTS............................................... 22
5.08. ABSENCE OF CERTAIN CHANGES......................................... 23
5.09. ABSENCE OF UNDISCLOSED LIABILITIES................................. 23
5.10. COMPLIANCE WITH LAW................................................ 23
5.11. TAXES.............................................................. 23
5.12. LITIGATION......................................................... 23
5.13. BROKERS AND FINDERS................................................ 23
5.14. SOLVENCY........................................................... 24
5.15. FCC QUALIFICATION.................................................. 24
ARTICLE VI OTHER AGREEMENTS
6.01. NO SOLICITATION.................................................... 24
6.02. CONDUCT OF BUSINESS OF THE COMPANY................................. 25
6.03. CONDUCT OF BUSINESS OF BROADCASTING................................ 26
6.04. CONDUCT OF BUSINESS OF ACQUIROR.................................... 27
6.05. ACCESS TO INFORMATION.............................................. 27
6.06. SEC FILINGS........................................................ 28
6.07. REASONABLE BEST EFFORTS............................................ 30
6.08. PUBLIC ANNOUNCEMENTS............................................... 30
6.09. TAX MATTERS........................................................ 30
6.10. NOTIFICATION....................................................... 35
6.11. EMPLOYEE BENEFIT MATTERS........................................... 35
6.12. EMPLOYEE STOCK OPTIONS............................................. 38
6.13. MEETINGS OF STOCKHOLDERS........................................... 38
6.14. REGULATORY AND OTHER AUTHORIZATIONS................................ 38
6.15. FURTHER ASSURANCES................................................. 40
6.16. IRS RULING......................................................... 40
6.17. RECORDS RETENTION.................................................. 40
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6.18. STOCK EXCHANGE LISTING............................................. 41
6.19. COMPANY NAMES...................................................... 41
6.20. OTHER AGREEMENTS................................................... 41
6.21. FORM 8-K; PROVISION OF FINANCIAL STATEMENTS........................ 41
6.22. WORKING CAPITAL ADJUSTMENT......................................... 41
6.23. CAPITAL EXPENDITURES............................................... 42
6.24. EXCESS CASH........................................................ 42
6.25. INDEMNITY RELATING TO CERTAIN LITIGATION........................... 43
6.26. CANCELLATION OF INTERCOMPANY ARRANGEMENTS.......................... 43
6.27. NETWORK AFFILIATION AGREEMENTS..................................... 43
6.28. GROSS-UP MATTERS................................................... 43
6.29. AFFILIATE LETTERS; FCC LETTERS..................................... 44
ARTICLE VII CLOSING AND CLOSING DATE; CONDITIONS TO CLOSING
7.01. CLOSING AND CLOSING DATE........................................... 44
7.02. CONDITIONS TO THE OBLIGATIONS OF THE COMPANY, NEWCO AND ACQUIROR... 44
7.03. CONDITIONS TO THE OBLIGATIONS OF THE COMPANY AND NEWCO............. 45
7.04. CONDITIONS TO OBLIGATIONS OF ACQUIROR.............................. 46
ARTICLE VIII TERMINATION
8.01. TERMINATION........................................................ 46
8.02. EFFECT OF TERMINATION.............................................. 47
8.03. FEES AND EXPENSES.................................................. 47
ARTICLE IX MISCELLANEOUS
9.01. SURVIVAL OF REPRESENTATIONS AND WARRANTIES......................... 48
9.02. ENTIRE AGREEMENT................................................... 48
9.03. NOTICES............................................................ 48
9.04. GOVERNING LAW...................................................... 49
9.05. KNOWLEDGE OF THE COMPANY........................................... 49
9.06. PARTIES IN INTEREST................................................ 49
9.07. COUNTERPARTS....................................................... 49
9.08. PERSONAL LIABILITY................................................. 49
9.09. BINDING EFFECT; ASSIGNMENT......................................... 49
9.10. AMENDMENT.......................................................... 50
9.11. EXTENSION; WAIVER.................................................. 50
9.12. LEGAL FEES; COSTS.................................................. 50
9.13. DRAFTING........................................................... 50
9.14. CONSENT TO JURISDICTION AND SERVICE OF PROCESS..................... 50
ARTICLE X DEFINITIONS
10.01 DEFINITIONS....................................................... 50
10.02 INTERPRETATION.................................................... 58
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EXHIBITS AND SCHEDULES
Exhibit A Form of Company Charter Amendment
Exhibit B Form of Newco Charter Amendment
Exhibit C Form of Contribution and Assumption Agreement
Exhibit D Form of Registration Rights Agreement
Exhibit E Form of FCC Agreement
Exhibit F Form of Board Representation Agreement
Exhibit G Form of Arizona Diamondbacks Agreement
Exhibit H Form of Acquiror Voting Agreement
Exhibit I Form of Pulitzer Voting Agreement
Exhibit J Form of Affiliate Letter
Schedule 1.01 Directors of Surviving Corporation
Schedule 3.02 Right of Termination, Cancellation, Modification or
Acceleration and Requirement of Notice or Approval
Schedule 3.09 Additional Company Liabilities
Material Claims and Investigations for Taxes of Company
Schedule 3.11(b) or Its Subsidiaries
Schedule 3.12 Company Litigation
Schedule 3.14 Environmental Liabilities of Company
Schedule 4.03 Broadcasting Financial Statements
Schedule 4.05 Additional Broadcasting Liabilities
Schedule 4.06 Material Licenses and Authorizations held by Broadcasting
Schedule 4.07 Station Network Affiliation Agreements
Schedule 4.08(b) Personal Property Permitted Exceptions
Schedule 4.08(c) Personal Property Leases
Schedule 4.08(d)(1) Real Property
Schedule 4.08(d)(2) Real Estate Exceptions
Schedule 4.09 Broadcasting Litigation
Schedule 4.10(a) Employee Plans Currently Maintained or Contributed to by
the Company or PBC for the Benefit of any Broadcasting
Employee
Schedule 4.11(a) Labor or Collective Bargaining Agreements of Broadcasting
Schedule 4.11(b) Broadcasting Employees Represented by Labor Organizations
Schedule 4.12(a) Environmental Liabilities of Broadcasting
Schedule 5.02(a) Right of Termination, Cancellation, Modification or
Acceleration and Requirement of Notice or Approval
Relating to Agreements or Obligations of Acquiror
Schedule 5.02(b) Restrictions
Schedule 5.05(a) Existing Options, Warrants, Etc. of Acquiror
Schedule 5.09 Additional Acquiror Liabilities
Schedule 5.11(b) Material Claims and Investigations for Taxes of Acquiror
Schedule 5.15 Acquiror FCC Qualifications
Schedule 6.03(a)(v) 1998 Broadcasting Budget
Schedule 6.11(f)(2) Employment and Related Agreements of the Company
Broadcasting Employees Plans Maintained Exclusively for
Schedule 6.11(f)(3) Broadcasting Employees
Post-Retirement Medical or Other Welfare Benefits Payable
Schedule 6.11(f)(4) to Transferring Employees
Schedule 6.11(g) Participation and Severance Agreements
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AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER
This Amended and Restated Agreement and Plan of Merger (this "Agreement"),
dated as of May 25, 1998, is made by and among Pulitzer Publishing Company, a
Delaware corporation (the "Company"), Pulitzer Inc., a Delaware corporation
and wholly owned subsidiary of the Company ("Newco"), and Hearst-Argyle
Television, Inc., a Delaware corporation ("Acquiror").
RECITALS
WHEREAS, the Boards of Directors of the Company, Newco and Acquiror have
determined that it is in the best interests of their respective stockholders
to enter into this Agreement which, among other things, provides for (i) the
Company to contribute to Newco or its wholly-owned Subsidiary certain assets
of the Company (other than those assets described in the Contribution
Agreement as being retained by the Company) and to distribute to its
stockholders shares of capital stock of Newco so that the stockholders of the
Company will become the stockholders of Newco; and (ii) the Company
(immediately following such contribution and distribution) to merge with and
into Acquiror, as a result of which the stockholders of the Company
immediately prior to such merger will become stockholders of Acquiror; and
WHEREAS, for federal income tax purposes, it is intended that such
transactions will qualify as reorganizations within the meaning of Sections
368(a)(1)(D) and 368(a)(1)(A) of the Code, respectively; and
WHEREAS, the parties hereto have determined to amend certain provisions of
this Agreement and to amend and restate this Agreement in accordance herewith.
NOW, THEREFORE, in consideration of the foregoing and the representations,
warranties and agreements set forth below, the parties hereto agree as
follows:
ARTICLE I
THE MERGER
1.01. THE MERGER. Subject to the terms and conditions hereof, at the
Effective Time: (i) the Company shall be merged with and into Acquiror (the
"Merger") and the separate existence of the Company shall cease and Acquiror
shall continue as the surviving corporation in the Merger (the "Surviving
Corporation"); (ii) the Articles of Incorporation of Acquiror, as in effect
immediately prior to the Effective Time, shall continue as the Articles of
Incorporation of the Surviving Corporation; (iii) the Bylaws of Acquiror, as
in effect immediately prior to the Effective Time, shall continue as the
Bylaws of the Surviving Corporation; (iv) the Persons listed on Schedule 1.01
shall be the directors of the Surviving Corporation; and (v) the officers of
Acquiror immediately prior to the Effective Time shall continue as the
officers of the Surviving Corporation. From and after the Effective Time, the
Merger will have all the effects provided by applicable law.
1.02. EFFECT OF THE MERGER ON CAPITAL STOCK. At the Effective Time, by
virtue of the Merger and without any action on the part of the holder of any
shares of capital stock:
(a) Subject to Sections 1.02(b) and 1.02(e) hereof, each share of Company
Stock issued and outstanding immediately prior to the Merger shall be
converted into and shall become that number of fully paid and nonassessable
shares of Acquiror Common Stock equal to the Common Stock Conversion
Number.
(b) Each share of Company Stock issued and outstanding immediately prior
to the Merger and owned directly or indirectly by the Company as treasury
stock, by Newco or by any of the Company's or Newco's respective
Subsidiaries shall be cancelled, and no consideration shall be delivered in
exchange therefor.
(c) Each share of the capital stock of Acquiror issued and outstanding
immediately prior to the Merger shall remain outstanding.
(d) "Common Stock Conversion Number" shall mean the quotient obtained by
dividing (i) the aggregate number of shares of Acquiror Common Stock into
which Company Stock shall be converted (the
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"Aggregate Shares Delivered") by (ii) the number of shares of Company Stock
outstanding immediately prior to the Effective Time (the "Outstanding
Company Stock").
For purposes hereof, the Aggregate Shares Delivered shall equal the quotient
obtained by dividing the Aggregate Consideration by $31.00.
For purposes hereof, the "Aggregate Consideration" shall be $1,150,000,000.
Without limiting the provisions of Section 6.04, if, between the date hereof
and the Effective Time, the outstanding shares of Acquiror Common Stock shall
have been changed into a different number of shares or a different class, by
reason of any stock dividend, subdivision, reclassification, recapitalization,
split, combination or exchange of shares, or if any extraordinary dividend or
distribution is made with respect to the Acquiror Common Stock, then the
Aggregate Shares Delivered shall be correspondingly adjusted to reflect such
stock dividend, subdivision, reclassification, recapitalization, split,
combination or exchange of shares, extraordinary dividend or distribution or
other similar event.
(e) The holder of any shares ("Dissenting Shares") of Company Stock
outstanding immediately prior to the Merger that has validly exercised such
holder's appraisal rights, if any, under the Delaware General Corporation
Law (the "DGCL") shall not be entitled to receive, in respect of the shares
of Company Stock as to which such holder has validly exercised appraisal
rights, shares of Acquiror Common Stock unless and until such holder shall
have failed to perfect, or shall have effectively withdrawn or lost, such
holder's right to payment for such holder's shares of Company Stock under
the DGCL. In such event, such holder shall be entitled to receive the
Acquiror Common Stock (in addition to the shares of either Newco Common
Stock or Newco Class B Common Stock received pursuant to the Distribution)
which such holder would have been entitled to receive had such holder not
exercised appraisal rights. The Company shall give Acquiror prompt notice
upon receipt by the Company (i) prior to or at the meeting of stockholders
at which the Merger, this Agreement and the Company Charter Amendment are
voted upon, of any written objection thereto or written demand for
appraisal of shares (any stockholder duly making such objection being
hereinafter called a "Dissenting Stockholder") and (ii) any other notices
or communications made after such time by a Dissenting Stockholder which
pertains to appraisal rights. The Company agrees that, prior to the
Effective Time, except with the written consent of Acquiror, it will not
voluntarily make any payment with respect to, or settle or offer to settle,
any such demand. Each Dissenting Stockholder who becomes entitled under the
DGCL to payment for such holder's shares of Company Stock shall receive
payment therefor after the Effective Time from the Surviving Corporation.
1.03. EFFECTIVE TIME OF THE MERGER. Subject to the terms and conditions set
forth in this Agreement, a certificate of merger shall be duly prepared,
executed and acknowledged by Acquiror and the Company and thereafter delivered
to the Secretary of State of the State of Delaware (the "Certificate of
Merger") for filing pursuant to the DGCL on the Closing Date. The Merger shall
become effective upon the filing of the Certificate of Merger with such
Secretary of State on the Closing Date (the "Effective Time").
1.04. EXCHANGE OF CERTIFICATES.
(a) Prior to the Closing Date, the Company shall retain a bank or trust
company reasonably acceptable to Acquiror to act as exchange agent (the
"Exchange Agent") in connection with the surrender of certificates evidencing
shares of Company Stock converted into shares of Acquiror Common Stock
pursuant to the Merger. Prior to the Effective Time, Acquiror shall deposit
with the Exchange Agent the shares of Acquiror Common Stock to be issued in
the Merger, which shares (collectively, the "Merger Stock") shall be deemed to
be issued at the Effective Time. At and following the Effective Time, the
Surviving Corporation shall deliver to the Exchange Agent such cash as may be
required, from time to time, to make payments of cash in lieu of fractional
shares in accordance with Section 1.06 hereof.
(b) As soon as practicable after the Effective Time, the Exchange Agent
shall mail to each person who was, at the Effective Time, a holder of record
of a certificate or certificates that immediately prior to the Effective Time
evidenced Outstanding Company Stock (collectively, the "Certificates"), other
than the Company, Newco or any of their respective Subsidiaries, (i) a letter
of transmittal (which shall specify that delivery of the
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Certificates shall be effective, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the
Exchange Agent and which shall be in such form and shall have such other
provisions as Acquiror and Newco shall reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in
exchange for certificates representing the Merger Stock. Upon surrender of a
Certificate for cancellation to the Exchange Agent, together with such letter
of transmittal duly executed and such other documents as may be required by
the Exchange Agent, the holder of such Certificate shall be entitled to
receive in exchange therefor certificates representing the shares of Merger
Stock that such holder has the right to receive pursuant to the terms hereof
(together with any dividend or distribution with respect thereto made after
the Effective Time to the extent provided in Section 1.05 hereof and any cash
paid in lieu of fractional shares pursuant to Section 1.06), and the
Certificate so surrendered shall be canceled. In the event of a transfer of
ownership of Company Stock that is not registered in the stock transfer
records of the Company, a certificate representing the proper number of shares
of Merger Stock may be issued to a transferee if the Certificate representing
such Company Stock is presented to the Exchange Agent, accompanied by all
documents required to evidence and effect such transfer and by evidence
reasonably satisfactory to Acquiror and Newco that any applicable stock
transfer tax has been paid.
(c) After the Effective Time, each outstanding Certificate which theretofore
represented shares of Company Stock shall, until surrendered for exchange in
accordance with this Section 1.04, be deemed for all purposes to evidence the
number of full shares of Merger Stock into which the shares of Company Stock
(which, prior to the Effective Time, were represented thereby) shall have been
so converted.
(d) Except as otherwise expressly provided herein, the Surviving Corporation
shall pay all charges and expenses, including those of the Exchange Agent, in
connection with the exchange of shares of Merger Stock for shares of Company
Stock. Any Merger Stock deposited with the Exchange Agent that remains
unclaimed by the former stockholders of the Company after six months following
the Effective Time shall be delivered to the Surviving Corporation, upon
demand, and any former stockholders of the Company who have not then complied
with the instructions for exchanging their Certificates shall thereafter look
only to the Surviving Corporation for the exchange of Certificates.
(e) Effective upon the Closing Date, the stock transfer books of the Company
shall be closed, and there shall be no further registration of transfers of
shares of Company Stock thereafter on the records of the Company.
(f) All Merger Stock issued upon conversion of shares of Company Stock in
accordance with the terms hereof shall be deemed to have been issued in full
satisfaction of all rights pertaining to such shares of Company Stock.
1.05. DISTRIBUTION WITH RESPECT TO SHARES REPRESENTED BY UNEXCHANGED
CERTIFICATES. No dividend or other distribution declared or made after the
Effective Time with respect to the Merger Stock with a record date after the
Effective Time shall be paid to the holder of any unsurrendered Certificate
with respect to the shares of Merger Stock issuable upon surrender of a
Certificate until the holder of such Certificate shall surrender such
Certificate in accordance with Section 1.04. Subject to the effect of
applicable law, following surrender of any such Certificate the Surviving
Corporation shall pay, without interest, to the record holder of certificates
representing shares of Merger Stock issued in exchange therefor (i) at the
time of such surrender, the amount of dividends or other distributions with a
record date after the Effective Time theretofore paid with respect to such
shares of Merger Stock, and (ii) at the appropriate payment date, the amount
of dividends or other distributions with a record date after the Effective
Time but prior to surrender of such Certificate and a payment date subsequent
to such surrender payable with respect to such shares of Merger Stock. In no
event shall the stockholders entitled to receive dividends or distributions be
entitled to receive interest thereon. All such dividends or other
distributions held by the Exchange Agent for payment or delivery to the
holders of unsurrendered Certificates and unclaimed at the end of one year
from the Effective Time shall be repaid or redelivered by the Exchange Agent
to the Surviving Corporation, after which time any holder of Certificates who
has not theretofore surrendered such Certificates to the Exchange Agent,
subject to applicable law, shall look as a general creditor only to the
Surviving Corporation for payment or delivery of such dividends or
distributions, as the case may be.
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1.06. NO FRACTIONAL SHARES.
(a) No certificates or scrip representing fractional shares of Acquiror
Common Stock shall be issued upon the surrender of Certificates pursuant to
Section 1.04. Such fractional share interests shall not entitle the owner
thereof to any rights as a security holder of Acquiror. In lieu of any such
fractional shares of Acquiror Common Stock, each holder of Outstanding Company
Stock entitled to receive shares of Acquiror Common Stock in the Merger, upon
surrender of a Certificate for exchange pursuant to Section 1.04, shall be
entitled to receive an amount in cash (without interest), rounded to the
nearest cent, determined by multiplying the fractional interest in Acquiror
Common Stock to which such holder would otherwise be entitled (after taking
into account all shares of Company Stock then held of record by such holder)
by the closing sale price of a share of Acquiror Common Stock as reported on
the NASDAQ or the NYSE, as the case may be, on the Closing Date.
(b) As soon as practicable after the determination of the amount of cash, if
any, to be paid to holders of Company Stock in lieu of any fractional share
interests, Acquiror shall promptly deposit with the Exchange Agent cash in the
required amounts and the Exchange Agent will mail such amounts, without
interest, to such holders; PROVIDED, HOWEVER, that no such amount will be paid
to any holder of Certificates prior to the surrender by such holder of the
Certificates which formerly represented such holder's Company Stock. Any such
amounts that remain unclaimed by the former stockholders of the Company after
six months following the Effective Time shall be delivered to the Surviving
Corporation by the Exchange Agent, upon demand, and any former stockholders of
the Company who have not then surrendered their Certificates shall thereafter
look only to the Surviving Corporation for payment in lieu of any fractional
interests.
1.07. NO LIABILITY. Any amounts remaining unclaimed by holders of shares on
the day immediately prior to such time as such amounts would otherwise escheat
to or become the property of any governmental entity shall, to the extent
permitted by applicable law, become the property of the Surviving Corporation
(or Newco in the case of Newco Common Stock or Newco Class B Common Stock and
dividends or distributions with respect thereto) free and clear of any claims
or interest of any holder previously entitled thereto. None of the Surviving
Corporation, Newco or the Exchange Agent will be liable to any holder of
shares of Company Stock for any shares of Merger Stock or any Newco Common
Stock or Newco Class B Common Stock, dividends or distributions with respect
thereto or cash payable in lieu of fractional shares delivered to a state
abandoned property administrator or other public official pursuant to any
applicable abandoned property, escheat or similar law.
1.08. LOST CERTIFICATES. If any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed, the Exchange Agent will
issue in exchange for such lost, stolen or destroyed Certificate the shares of
Merger Stock (and any dividend or distribution with respect thereto made after
the Effective Time and prior to such issuance and any cash payable in lieu of
fractional shares pursuant to Section 1.06) deliverable in respect thereof as
determined in accordance with the terms hereof. When authorizing such payment
in exchange for any lost, stolen or destroyed Certificate, the person to whom
the Merger Stock is to be issued, as a condition precedent to the issuance
thereof, shall give the Surviving Corporation a bond satisfactory to the
Surviving Corporation against any claim that may be made against the Surviving
Corporation with respect to the Certificate alleged to have been lost, stolen
or destroyed.
ARTICLE II
CERTAIN PRE-MERGER TRANSACTIONS
The following transactions shall occur prior to the Effective Time:
2.01. AMENDMENTS TO CHARTERS; FINANCING.
(a) Prior to the Contribution, the Distribution and the Effective Time, the
Company shall amend its Certificate of Incorporation substantially as set
forth in Exhibit A hereto (the "Company Charter Amendment") and Newco shall
amend and restate its Certificate of Incorporation substantially as set forth
in Exhibit B hereto (the "Newco Charter Amendment").
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(b) Prior to the Contribution, the Distribution and the Effective Time, the
Company shall use commercially reasonable efforts to obtain financing in the
amount of $700,000,000 on terms reasonably and mutually acceptable to the
Company and Acquiror, which may be secured by the cash proceeds thereof, the
Broadcasting Assets or the issued and outstanding shares of capital stock of
PBC and/or the Broadcasting Subsidiaries (the "New Company Debt"). Out of the
proceeds of the New Company Debt, the Company, on or before the Closing Date,
shall pay or provide for the Existing Company Debt and the Deal Expenses, and
the balance of the proceeds of the New Company Debt, along with any other
remaining cash and cash equivalents then owned by the Company, shall be
contributed by the Company to Newco pursuant to the Contribution and
Assumption Agreement to be entered into by the Company and Newco in
substantially the form attached hereto as Exhibit C (the "Contribution
Agreement"). The Acquiror shall assist the Company in any manner reasonably
requested by the Company in connection with obtaining the New Company Debt.
The New Company Debt shall remain outstanding following the Effective Time,
and the Transactions contemplated hereby shall not result in a breach or event
of default or an event, which with notice or lapse of time or both, would be a
breach or event of default, or would require the repayment of the New Company
Debt.
2.02. CONTRIBUTION OF ASSETS TO AND ASSUMPTION OF LIABILITIES BY NEWCO;
DISTRIBUTION OF NEWCO STOCK.
(a) Prior to the Effective Time and pursuant to the terms of the
Contribution Agreement, the Company shall contribute and transfer (together
with the transactions described in Section 2.02(b) below, the "Contribution")
to Newco or its wholly-owned Subsidiary all of the Company's right, title and
interest in and to any and all assets of the Company, whether tangible or
intangible and whether fixed, contingent or otherwise; PROVIDED, HOWEVER, that
the Company shall not contribute to Newco or its wholly-owned Subsidiary (i)
the issued and outstanding capital stock of, Pulitzer Broadcasting Company
("PBC") or WESH Television, Inc., KCCI Television, Inc. and WDSU Television,
Inc. (collectively, the "Broadcasting Subsidiaries"); (ii) any of the assets
of PBC or the Broadcasting Subsidiaries, whether real or personal, tangible or
intangible, and whether fixed, contingent or otherwise and any other assets
used or held for use primarily in the business conducted by Broadcasting or
the Stations (collectively, the "Broadcasting Assets"); and (iii) the
Company's rights created pursuant to this Agreement, the Contribution
Agreement and the Transaction Agreements.
(b) In consideration for the transactions described in Section 2.02(a)
above, concurrently therewith and pursuant to the Contribution Agreement,
Newco shall (A) assume any and all liabilities of the Company of every kind
whatsoever, whether absolute, known, unknown, fixed, contingent or otherwise
and cause the Company and Broadcasting to be released from the Existing
Company Debt; PROVIDED, HOWEVER, that the Company shall retain, and Newco or
its wholly-owned Subsidiary will not assume and will have no liability with
respect to, (i) the New Company Debt, (ii) any liabilities associated with the
radio and/or television business operations of Broadcasting or the
Broadcasting Assets except as otherwise specifically provided herein,
including Sections 6.06(g), 6.09, 6.11, 6.25 and 6.28, and (iii) the Company's
obligations created pursuant to this Agreement, the Contribution Agreement and
the Transaction Agreements and (B) issue and deliver to the Company shares of
Newco Common Stock as set forth in the Contribution Agreement. Newco
acknowledges that the liabilities to be assumed by it pursuant to the first
sentence of this Section 2.02(b) include any and all liabilities associated
with any claim, action or proceeding brought by or on behalf of the holders of
Company Stock in connection with the Transactions other than liabilities with
respect to which Acquiror is obligated to indemnify Newco pursuant to Sections
6.06, 6.09 and 6.25 hereof.
(c) Following the Contribution and immediately prior to the Effective Time,
the Company shall distribute (the "Distribution") certificates representing
one fully paid and nonassessable share of Newco Common Stock to the holder of
each share of Company Common Stock outstanding on the record date designated
for the Distribution by or pursuant to an authorization of the Board of
Directors of the Company (the "Record Date"), and certificates representing
one fully paid and nonassessable share of Newco Class B Common Stock to the
holder of each share of Company Class B Common Stock outstanding on the Record
Date. Each share of the capital stock of Newco issued and outstanding on the
Record Date and owned directly or indirectly by the Company or any of its
Subsidiaries (other than those to be distributed in accordance with the first
sentence of this paragraph) shall be cancelled at the time of the
Distribution.
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(d) The Board of Directors of the Company shall formally declare the
Distribution and shall authorize the Company to pay the Distribution
immediately prior to the Effective Time, subject to the satisfaction or waiver
of the conditions set forth in subsection (e) below by delivery of
certificates for Newco Common Stock and Newco Class B Common Stock to the
Transfer Agent for delivery to the Persons entitled thereto. The Distribution
shall be deemed effective upon notification by the Company to the Transfer
Agent that the Distribution has been declared, that the conditions thereto
have been waived or satisfied and that the Transfer Agent is authorized to
proceed with the distribution of Newco Common Stock and Newco Class B Common
Stock.
(e) The obligations of the Company to consummate the Contribution and the
Distribution hereunder shall be subject to the fulfillment of each of the
following conditions:
(i) All of the transactions contemplated by Sections 2.01(a) and (b) and
Sections 2.02(a) and (b) shall have been consummated.
(ii) Each condition to the Closing set forth in Sections 7.02, 7.03 and
7.04 hereof, other than the condition set forth in Section 7.02(b) hereof,
as to the consummation of the Transactions contemplated by this Article II,
shall have been satisfied or waived.
(iii) The Board of Directors of the Company shall be reasonably satisfied
that, after giving effect to the Contribution, (i) the Company will not be
insolvent and will not have unreasonably small capital with which to engage
in its businesses, (ii) the Company will be able to pay its debts when they
come due, and (iii) the Company's surplus would be sufficient to permit,
without violation of Section 170 of the DGCL, the Distribution.
(f) Consummation of the Distribution is a condition precedent to Acquiror's
acquisition of the Retained Business pursuant to the Merger.
ARTICLE III
REPRESENTATIONS AND
WARRANTIES REGARDING THE COMPANY AND NEWCO
The Company and Newco jointly and severally represent and warrant to
Acquiror as follows:
3.01. ORGANIZATION AND AUTHORITY. Each of the Company and Newco is a
corporation duly organized, validly existing and in good standing under the
laws of the state of its incorporation. Each of the Company and Newco has all
requisite corporate power and authority to execute and deliver this Agreement
and, subject to the items referred to in Sections 3.02 and 3.03, to consummate
the Transactions. Subject to the items referred to in Sections 3.02 and 3.03,
all necessary action, corporate or otherwise, required to have been taken by
or on behalf of the Company and Newco by applicable law, their respective
charter documents or otherwise to authorize (i) the approval, execution and
delivery on behalf of the Company and Newco of this Agreement and (ii) the
performance by the Company and Newco of their respective obligations under
this Agreement and the consummation of the Transactions has been taken, except
that this Agreement and the Company Charter Amendment must be approved by the
stockholders of the Company. Assuming that this Agreement and each other
agreement contemplated hereby (each a "Transaction Agreement") constitutes or
will constitute, as the case may be, a legal, valid and binding agreement of
Acquiror, this Agreement and each other Transaction Agreement to which the
Company or Newco is or will be a party constitutes or will constitute, as the
case may be, a valid and binding agreement of each of the Company and Newco,
as the case may be, enforceable against each of them in accordance with its
terms, except (i) as the same may be limited by applicable bankruptcy,
insolvency, moratorium or similar laws of general application relating to or
affecting creditors' rights, including the effect of statutory or other laws
regarding fraudulent conveyances and preferential transfers, and (ii) for the
limitations imposed by general principles of equity. The foregoing exceptions
are hereinafter referred to as the "Enforceability Exceptions." The Company
has heretofore made available to Acquiror true and complete copies of the
Certificate of Incorporation and Bylaws of the Company and Newco as in effect
on the date hereof.
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3.02. NO BREACH. The execution and delivery of this Agreement by each of the
Company and Newco do not, and the consummation of the Transactions hereby by
each of the Company and Newco will not, (i) assuming that the requisite
stockholder approval is obtained, violate or conflict with the Certificate of
Incorporation or Bylaws of the Company or Newco, or (ii) except as set forth
on Schedules 3.02 hereto, or subject to obtaining the approvals and making the
filings described in Section 3.03, constitute a breach or default (or an event
that with notice or lapse of time or both would become a breach or default)
of, or give rise to any third-party right of termination, cancellation,
modification or acceleration under, or otherwise require notice or approval
under, any agreement, understanding or undertaking to which the Company or
Newco or any of their respective Subsidiaries is a party or by which any of
them is bound, or give rise to any Lien on any of their properties, except
where such breach, default, Lien, third-party right, cancellation,
modification or acceleration would not have a Material Adverse Effect on
Broadcasting or on the Retained Business taken as a whole or materially
interfere with or delay the Transactions, or (iii) subject to obtaining the
approvals and making the filings described in Section 3.03 hereof, constitute
a violation of any statute, law, ordinance, rule, regulation, judgment,
decree, order or writ of any judicial, arbitral, public, or governmental
authority having jurisdiction over the Company or any of its Subsidiaries or
Newco or any of its Subsidiaries or any of their respective properties or
assets except as would not have a Material Adverse Effect on Broadcasting or
on the Retained Business taken as a whole or materially interfere with or
delay the Transactions.
3.03. CONSENTS AND APPROVALS. Neither the execution and delivery of this
Agreement nor the consummation of the Transactions by the Company and Newco
will require any License from, or filing with or notification to, any
governmental or regulatory authority, except (i) for filings required under
the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder (the "Securities Act"), (ii) for filings required under
the Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder (the "Exchange Act"), (iii) for filings under state
securities or "blue sky" laws, (iv) for filings and approvals required by the
rules and regulations of the NYSE, (v) for notification pursuant to, and
expiration or termination of the waiting period under, the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended, and the rules and regulations
promulgated thereunder (the "HSR Act"), (vi) for the filing of the Certificate
of Merger as set forth in Article I hereof, (vii) for the filing of the
Company Charter Amendment and the Newco Charter Amendment with the Secretary
of State of the State of Delaware and appropriate documents with the relevant
authorities of other states in which the Company and Newco and their
respective Subsidiaries are qualified to do business, (viii) for consents or
waivers from the relevant governmental entities necessary to transfer
ownership of Broadcasting's Federal Communications Commission ("FCC") Licenses
to Acquiror, and (ix) where the failure to obtain such Licenses, or to make
such filings or notifications, would not prevent the Company or Newco from
performing its respective obligations under this Agreement without having a
Material Adverse Effect on Broadcasting or on the Retained Business taken as a
whole or materially interfere with or delay the Transactions; PROVIDED,
HOWEVER, that no representation or warranty is made with respect to the
foregoing relating to, or arising by reason of, the New Company Debt or the
legal or regulatory status of Acquiror or the facts pertaining specifically to
it.
3.04. APPROVALS OF THE BOARDS; FAIRNESS OPINION; VOTE REQUIRED. The Boards
of Directors of the Company and Newco have each, by resolutions duly adopted
at meetings duly called and held, unanimously approved and adopted this
Agreement, the Merger, the Contribution and the Distribution, and the other
Transactions on the material terms and conditions set forth herein. The
transactions contemplated by the Pulitzer Voting Agreement have been duly and
validly approved by the Board of Directors of the Company prior to the
execution and delivery of the Pulitzer Voting Agreement in accordance with
Section 203 of the DGCL. The Board of Directors of the Company has declared
the advisability of the Company Charter Amendment and recommended adoption of
the Company Charter Amendment and this Agreement by the stockholders of the
Company and directed that the Company Charter Amendment and this Agreement be
submitted to the stockholders of the Company for their consideration, and no
other corporate proceedings on the part of the Company or its stockholders are
necessary to authorize the execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of the
Transactions, other than obtaining the approval of the Company's stockholders
described below. The Board of Directors of the Company has
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received the opinion, as of the date of this Agreement, of Xxxxxxx Sachs, one
of the financial advisors to the Company, that the consideration to be
received by the holders of shares of the Company Stock in the Merger and the
Distribution, taken as a whole, is fair to such holders from a financial point
of view. The vote of a majority of all outstanding shares of Company Stock
entitled to vote thereon, voting together as a single class, and the vote of a
majority of the outstanding shares of Company Common Stock entitled to vote
thereon, voting separately as a class, in favor of the Company Charter
Amendment are the only votes of the holders of any class or series of the
capital stock of the Company necessary to approve the Company Charter
Amendment under applicable law and the Company's Certificate of Incorporation
and Bylaws. The vote of a majority of all outstanding shares of Company Stock
entitled to vote thereon, voting together as a single class, in favor of the
adoption of this Agreement, are the only votes of the holders of any class or
series of the capital stock of the Company necessary to adopt this Agreement
and approve the Merger under applicable law and the Company's Certificate of
Incorporation and Bylaws.
3.05. CAPITALIZATION.
(a) As of the date of this Agreement, the authorized capital stock of the
Company consists of (i) 100,000,000 shares of Company Common Stock, (ii)
50,000,000 shares of Company Class B Common Stock, and (iii) 25,000,000 shares
of preferred stock, par value $0.01 per share (the "Company Preferred Stock").
As of April 30, 1998, there were issued and outstanding 6,897,008 shares of
Company Common Stock and 15,423,859 shares of Company Class B Common Stock.
All such outstanding shares are duly authorized, validly issued and fully paid
and nonassessable. Since April 30, 1998 no shares of Company Stock have been
issued except upon exercise of options outstanding on such date or restricted
stock or purchases pursuant to the Employee Stock Purchase Plan. There are no
shares of Company Preferred Stock issued and outstanding. There are no
preemptive or other similar rights available to the existing holders of the
capital stock of the Company. Other than options, restricted stock and shares
granted or issuable pursuant to the Employee Stock Purchase Plan, the Company
Option Plans, and the Company's restricted stock plan, or other than as
contemplated by this Agreement, there are no outstanding options, warrants,
rights, puts, calls, commitments, or other Contracts issued by or binding upon
the Company or any of its Subsidiaries requiring or providing for, and there
are no outstanding debt or equity securities of the Company or its
Subsidiaries which, upon the conversion, exchange or exercise thereof, would
require or provide for, the issuance, transfer or sale by the Company or any
of its Subsidiaries of any new or additional equity interests in the Company,
PBC or the Broadcasting Subsidiaries (or any other securities of the Company
which, with notice, lapse of time or payment of monies, are or would be
convertible into or exercisable or exchangeable for equity interests in the
Company, PBC or the Broadcasting Subsidiaries). Except for the Voting Trust
Agreement, dated June 19, 1995 (as it may be amended to permit conversion of
Company Class B Common Stock to Company Common Stock in accordance with the
Company's certificate of incorporation), between certain holders of the
Company Class B Common Stock and the Trustees (as defined therein), and except
as otherwise contemplated by this Agreement, there are no voting trusts or
other agreements or understandings to which the Company or any of its
Subsidiaries is a party with respect to the voting of capital stock of the
Company.
(b) As of the date of this Agreement, the authorized capital stock of Newco
consists of 1,000 common shares, par value $100 per share (the "Newco Common
Shares"). Upon the filing of the Newco Charter Amendment with the Secretary of
State of the State of Delaware, the authorized capital stock of Newco will
consist of (i) 100,000,000 shares of Newco Common Stock; (ii) 100,000,000
shares of Newco Class B Common Stock; and (iii) 100,000,000 shares of
preferred stock, par value $0.01 per share, (the "Newco Preferred Stock"). As
of the date of this Agreement, there are issued and outstanding 000 Xxxxx
Xxxxxx Shares, all of which are owned by the Company, and no other shares of
capital stock of Newco.
3.06. SEC REPORTS. The Company has filed all forms, reports and documents
required to be filed by it with the Securities and Exchange Commission (the
"SEC") since January 1, 1997 (collectively, the "Company's SEC Reports"). The
Company's SEC Reports have complied in all material respects with all
applicable requirements of the Securities Act and the Exchange Act. As of
their respective dates, none of the Company's SEC Reports, including any
financial statements or schedules included or incorporated by reference
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therein, contained any untrue statements of a material fact or omitted to
state a material fact required to be stated or incorporated by reference
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
3.07. FINANCIAL STATEMENTS. The (i) audited consolidated financial
statements of the Company contained in the Company's Annual Report on Form 10-
K for the fiscal year ended December 28, 1997 (the "Company 10-K"), and (ii)
unaudited condensed consolidated financial statements of the Company contained
in the Company's Quarterly Report on Form 10-Q for the three months ended
March 29, 1998 (the "Company 10-Q" and together with the Company 10-K, the
"Company Financial Statements"), present fairly, in all material respects, the
Company's consolidated financial position and the results of its consolidated
operations and its consolidated cash flows as of the relevant dates thereof
and for the periods covered thereby in accordance with GAAP (subject to normal
year-end adjustments in the case of the unaudited interim financial
statements).
3.08. ABSENCE OF CERTAIN CHANGES. Since the date of the balance sheet
included in the Company 10-Q, except as contemplated or disclosed by this
Agreement, the Company and its Subsidiaries have conducted their respective
businesses in the ordinary course of business consistent with past practice,
and there has not been any change, event or condition of any character that,
individually or in the aggregate, has or would reasonably be expected to have
a Material Adverse Effect on the Company and its Subsidiaries taken as a whole
or materially interfere with or delay the Transactions.
3.09. ABSENCE OF UNDISCLOSED LIABILITIES. To the knowledge of the Company,
except as set forth in Schedule 3.09 or otherwise disclosed in this Agreement,
neither the Company nor any of its Subsidiaries has any obligation or
liability of any kind whatsoever, whether accrued, contingent, absolute,
determined, determinable or otherwise, of a type required by GAAP to be
disclosed in a balance sheet of the Company or any of its Subsidiaries except
(i) such liabilities and obligations that are reflected in the Company
Financial Statements or disclosed in the notes thereto, (ii) liabilities and
obligations incurred in the ordinary course of business after March 29, 1998,
and (iii) liabilities and obligations that will not, individually or in the
aggregate, have a Material Adverse Effect on Broadcasting or on the Retained
Business taken as a whole or materially interfere with or delay the
Transactions.
3.10. COMPLIANCE WITH LAW. The Company and its Subsidiaries (other than the
Broadcasting Subsidiaries) hold all Licenses from all governmental authorities
necessary for the lawful conduct of their respective businesses, except where
the failure to hold any such License would not have a Material Adverse Effect
on Broadcasting or on the Retained Business taken as a whole or materially
interfere with or delay the Transactions. To the Company's knowledge, the
Company has not violated, and is not in violation of, any such Licenses or any
applicable Laws of any governmental authorities, except where such violations
do not and, insofar as reasonably can be foreseen, will not have a Material
Adverse Effect on Broadcasting or on the Retained Business taken as a whole or
materially interfere with or delay the Transactions.
3.11. TAXES.
(a) All Company Consolidated Income Tax Returns and any other material Tax
Returns of the Company and Broadcasting required to have been filed on or
before the date hereof have been filed with the appropriate governmental
agencies in all jurisdictions in which such Tax Returns were required to have
been filed. All of such Tax Returns were true, correct and complete in all
material respects and all Taxes shown to be due on such Tax Returns have been
paid. All material Taxes payable by or with respect to the Company and its
Subsidiaries but not reflected on any Tax Return required to have been filed
prior to the date of the most recent balance sheet included in the Company 10-
Q have been fully paid or adequate provision therefor has been made and
reflected on such balance sheet.
(b) Except as set forth on Schedule 3.11(b) hereto, there is no claim or
investigation involving an amount greater than $1,000,000 pending or
threatened against the Company or any of its Subsidiaries for past Taxes, and
adequate provision for the claims or investigations set forth on Schedule
3.11(b) has been made as reflected on the Company Financial Statements. Except
as set forth on Schedule 3.11(b), neither the Company nor any of
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its Subsidiaries has waived or extended any applicable statute of limitations
relating to the assessment of federal, state or local Taxes of the Company or
any of its Subsidiaries, respectively.
(c) The Company is not, and on the Closing Date will not be, an investment
company within the meaning of Section 368(a)(2)(F)(iii) and (iv) of the Code.
(d) Except for the Technical Advice Request currently pending with the IRS
relating to the examination of the 1993 and 1994 Company Consolidated Income
Tax Returns and the Closing Agreement executed by the Company on May 11, 1994,
a copy of which has been furnished to Acquiror, neither the Company nor any
Broadcasting Subsidiary has pending a Tax Ruling Request (as defined below)
other than in connection with the Contribution, Distribution and Merger or
entered into a Closing Agreement (as defined below) with the IRS. "Tax Ruling
Request," as used in this Agreement, shall mean a request for a written ruling
of a Taxing authority relating to Taxes. "Closing Agreement," as used in this
Agreement, shall mean a material written and legally binding agreement with
the IRS relating to Taxes.
(e) Neither the Company nor any Broadcasting Subsidiary has, with regard to
any assets or property held or acquired by any of them, filed a consent to the
application of Section 341(f)(2) of the Code, or agreed to have Section
341(f)(2) of the Code apply to any disposition of a subsection (f) asset (as
such term is defined in Section 341(f)(4) of the Code) owned by the Company or
any Broadcasting Subsidiary.
3.12. LITIGATION. Except as is set forth on Schedule 3.12, there is no suit,
action, proceeding or investigation pending against or, to the knowledge of
the Company, threatened against or affecting the Company or any of its
Subsidiaries (other than the Broadcasting Subsidiaries) or any of their
respective material properties nor, to the knowledge of the Company, is there
any judgment, decree, inquiry, rule or order outstanding against the Company
or any of its Subsidiaries (other than the Broadcasting Subsidiaries) that
would reasonably be expected to have a Material Adverse Effect on Broadcasting
or on the Retained Business taken as a whole, or materially interfere with or
delay the Transactions.
3.13. BROKERS AND FINDERS. Neither the Company, Newco nor any officer,
director or employee or Affiliate of the Company or Newco has employed any
investment banker, broker or finder or incurred any liability for any
brokerage fees, commissions or finder's fees in connection with the
Transactions, except that the Company has employed Xxxxxxx Xxxxx and Huntleigh
as its financial advisors. The Company has previously provided to Acquiror a
written estimate of the Deal Expenses, which estimate was prepared in good
faith.
3.14. ENVIRONMENTAL MATTERS. Except as set forth on Schedule 3.14, to the
knowledge of the Company there are no Environmental Liabilities of the Company
or any of its Subsidiaries (other than the Broadcasting Subsidiaries) that,
individually or in the aggregate, may reasonably be expected to have a
Material Adverse Effect on Broadcasting or on the Retained Business taken as a
whole or may materially interfere with or delay the Transactions.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES REGARDING BROADCASTING
The Company represents and warrants to Acquiror as follows:
4.01. ORGANIZATION AND AUTHORITY. Each of PBC and the Broadcasting
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of its state of incorporation. Each of PBC and the
Broadcasting Subsidiaries is qualified to do business as a corporation and is,
where applicable, in good standing, in each jurisdiction where such
qualification is necessary except where the failure to so qualify would not
reasonably be expected to have a Material Adverse Effect on Broadcasting. Each
of PBC and the Broadcasting Subsidiaries has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its
business as now being conducted, except where the failure to have such power
or authority would not have a Material Adverse Effect on Broadcasting. The
Company has heretofore delivered to Acquiror true and complete copies of the
certificates of incorporation and bylaws of PBC and each Broadcasting
Subsidiary as currently in effect.
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4.02. CAPITALIZATION. All of the issued and outstanding shares of capital
stock of PBC are owned directly by the Company, free and clear of any Liens,
and are duly authorized, validly issued and fully paid and nonassessable. All
of the issued and outstanding shares of capital stock of the Broadcasting
Subsidiaries are owned, directly or indirectly, by PBC, free and clear of any
Liens, and are duly authorized, validly issued and fully paid and
nonassessable. Other than as contemplated by this Agreement, there are no
outstanding options, warrants, rights, puts, calls, commitments, or other
Contracts issued by or binding upon PBC or any Broadcasting Subsidiary
requiring or providing for, and there are no outstanding debt or equity
securities of PBC or any Broadcasting Subsidiary which upon the conversion,
exchange or exercise thereof would require or provide for, the issuance,
transfer or sale by PBC or any Broadcasting Subsidiary of any new or
additional equity interests in PBC or the Broadcasting Subsidiaries (or any
other securities of PBC or any Broadcasting Subsidiary which, with notice,
lapse of time or payment of monies, are or would be convertible into or
exercisable or exchangeable for equity interests in PBC or such Broadcasting
Subsidiary). There are no voting trusts or other agreements or understandings
to which the Company, PBC or any of the Broadcasting Subsidiaries is a party
with respect to the voting of the capital stock of PBC or the Broadcasting
Subsidiaries. PBC and the Broadcasting Subsidiaries have not engaged in any
material respect in any businesses or other activities except for the
ownership and operation of broadcast radio and/or television stations and
other activities incidental thereto.
4.03. FINANCIAL STATEMENTS. The unaudited "Summary Financial Data,"
"Consolidated Income Statement," "Statement of Net Assets" and "1998 Four
Period Results" (collectively, the "Broadcasting Unaudited Financial
Statements") contained in Schedule 4.03 were prepared from the books and
records of Broadcasting which books and records were maintained in accordance
with accounting principles consistently applied and present fairly, in all
material respects, the financial position of Broadcasting as at the dates
thereof and the results of operations and cash flows for the periods covered
thereby.
4.04. ABSENCE OF CERTAIN CHANGES. Since March 29, 1998, except as
contemplated or disclosed by this Agreement, Broadcasting has conducted its
business in the ordinary course consistent with past practice and there has
not been any change, event or condition of any character that, individually or
in the aggregate, has or would reasonably be expected to have a Material
Adverse Effect on Broadcasting or materially interfere with or delay the
Transactions.
4.05. ABSENCE OF UNDISCLOSED LIABILITIES. To the knowledge of the Company,
except as set forth in Schedule 4.05 or as otherwise disclosed in this
Agreement, Broadcasting has no obligations or liabilities except (i) such
liabilities and obligations that are reflected in the Broadcasting Unaudited
Financial Statements or disclosed in the notes thereto, (ii) liabilities and
obligations incurred in the ordinary course of business after March 29, 1998,
and (iii) liabilities and obligations that will not, individually or in the
aggregate, have a Material Adverse Effect on Broadcasting or materially
interfere with or delay the Transactions.
4.06. COMPLIANCE WITH LAW. Subject to the renewal of certain Licenses as
indicated on Schedule 4.06, PBC and the Broadcasting Subsidiaries hold all
Licenses from all governmental authorities necessary for the lawful conduct of
Broadcasting's business, including any activity ancillary or incidental to the
ownership or operations of the Stations, except where the failure to hold any
such License would not have a Material Adverse Effect on Broadcasting or
materially interfere with or delay the Transactions. The material Licenses
held by Broadcasting are set forth on Schedule 4.06. To the Company's
knowledge, neither PBC nor any of the Broadcasting Subsidiaries has violated,
or is in violation of, any such Licenses or any Laws of any governmental
authorities that are applicable to Broadcasting or to the operation of the
Stations or the other Broadcasting Assets, except where such violations do
not, and insofar as reasonably can be foreseen will not, have a Material
Adverse Effect on Broadcasting or materially interfere with or delay the
Transactions.
4.07. STATION NETWORK AFFILIATION AGREEMENTS. Each Station Network
Affiliation Agreement listed on Schedule 4.07 hereto is the validly existing,
legally enforceable obligation of each Broadcasting party thereto and, to the
knowledge of the Company, each other party thereto, subject to the
Enforceability Exceptions. PBC and each Broadcasting Subsidiary are validly
and lawfully operating under each Station Network Affiliation Agreement to
which it is a party, and PBC and each Broadcasting Subsidiary have
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duly complied in all material respects with all of the terms and conditions of
each Station Network Affiliation Agreement to which it is a party. The Company
is not aware of any third party breach or default (or other act or omission
that with notice, passage of time or both would constitute a default) under
any Station Network Affiliation Agreement.
4.08. CONDITION OF ASSETS; TITLE TO PROPERTIES; ENCUMBRANCES.
(a) The material tangible personal Broadcasting Assets are in the possession
of PBC and the Broadcasting Subsidiaries and, taking into account the age of
such Broadcasting Assets, are in good operating condition and repair,
structurally sound, adequate for the uses and purposes for which they are
being used or intended, and are available for immediate use in the operation
of the Stations, and, except as would be natural taking into account the age
of such Broadcasting Assets, none of such Broadcasting Assets requires
maintenance or repairs other than ordinary, routine maintenance and repairs.
Except for the representations and warranties expressly stated in Articles III
and IV of this Agreement, the Company disclaims all representations and
warranties, express or implied, with respect to the Broadcasting Assets
described in this Section 4.08(a), including all implied warranties of
merchantability or fitness for a particular purpose.
(b) PBC and the Broadcasting Subsidiaries are the exclusive holders of all
(and none of the Company or its Newspaper Subsidiaries holds any) rights (or
leasehold interests, as the case may be) in or to all Real Property and
personal, tangible and intangible property and assets primarily used or held
for use in the ownership and operation of the Stations owned or operated by
Broadcasting except in the case of title to Real Property which is covered in
Section 4.08(d). PBC and each Broadcasting Subsidiary has good and valid title
(or valid leasehold interest in, in the case of leased personal property) to
their respective personal property, free and clear of all Liens except the
following (collectively, the "Permitted Exceptions"): (i) materialmen's,
mechanics', carriers', workmen's, warehousemen's, repairmen's, or other like
Liens arising in the ordinary course of business, or deposits to obtain the
release of such Liens; (ii) Liens for current taxes not yet due and payable or
to the extent the taxpayer is contesting such taxes in good faith through
appropriate proceedings; (iii) Liens or minor imperfections of title that do
not materially impair the continued use and operation of the assets to which
they relate and do not have a Material Adverse Effect on Broadcasting; (iv) in
the case of leased personal property, the terms and conditions of such lease;
and (v) the exceptions set forth on Schedules 4.08(b) and 4.08(d)(2) hereto.
Except as would not result in any Material Adverse Effect on Broadcasting, PBC
and each Broadcasting Subsidiary owns or has the lawful right to use all
property necessary to operate their businesses lawfully and to maintain the
same as presently conducted.
(c) Schedule 4.08(c) lists all leases of personal property leased by PBC or
the Broadcasting Subsidiaries, including all such leases with related parties
or Affiliates, pursuant to which PBC or a Broadcasting Subsidiary is obligated
to make lease payments in excess of $100,000 per year. Correct and complete
copies of such leases have heretofore been made available to Acquiror. Except
as would not result in a Material Adverse Effect on Broadcasting, (i) all of
such leases are valid and in full force and effect, (ii) neither PBC and the
Broadcasting Subsidiaries nor, to the knowledge of the Company, any other
party thereto is in default under any of such leases, and (iii) no event has
occurred which with the giving of notice or the passage of time or both would
constitute a default under any of such leases.
(d) Schedule 4.08(d)(1) lists (y) each parcel of owned Real Property with a
book value in excess of $1,000,000, as reflected in the audited financial
statements of the Company contained in the Company 10-K, and (z) each lease of
Real Property pursuant to which PBC or a Broadcasting Subsidiary is currently
obligated to make payments of fixed rent in excess of $100,000 per annum. To
the knowledge of the Company, either PBC or the Broadcasting Subsidiaries has
fee title to, or holds by valid and existing lease or license, the Real
Property, free and clear of all Liens except for such Liens: (i) which would
not have a Material Adverse Effect on Broadcasting; (ii) which are set forth
on Schedule 4.08(d)(2); (iii) which arise out of taxes or general or special
assessments not yet due and payable or the validity of which is being
contested in good faith by appropriate proceedings; or (iv) which are
materialmen's, mechanics', carriers', workmen's, repairmen's, warehouseman's
or other like Liens which would not have a Material Adverse Effect on
Broadcasting. The Company has made
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available to Acquiror complete and accurate copies of all deeds, leases and
other material agreements with respect to the Real Property. To the knowledge
of the Company, there does not exist under any leases of Real Property any
default beyond any applicable notice and grace period by PBC or any
Broadcasting Subsidiary which would have a Material Adverse Effect on
Broadcasting.
(e) To the knowledge of the Company, neither PBC nor the Broadcasting
Subsidiaries has received written notice from any governmental or quasi-
governmental authority with respect to any actual or threatened taking of any
material portion of the Real Property for any purpose by the exercise of the
right of condemnation or eminent domain.
(f) To the knowledge of the Company, the Real Property has not suffered any
material damage by fire or other casualty that has not heretofore been
repaired.
4.09. LITIGATION. Except as is set forth in Schedule 4.09 hereto, there is
no suit, action, proceeding or investigation pending against or, to the
knowledge of the Company, threatened against or affecting PBC or any
Broadcasting Subsidiary or any of their respective material properties (except
for proceedings or investigations affecting the television or radio industries
generally) that would reasonably be expected to adversely affect the validity
or enforceability of any of the material Licenses of, or otherwise to have a
Material Adverse Effect on, Broadcasting nor is there any judgment, decree,
inquiry, rule or order outstanding against PBC or any Broadcasting Subsidiary
that would reasonably be expected to have a Material Adverse Effect on
Broadcasting, materially interfere with or delay the Transactions or have an
adverse effect on the validity or enforceability of any of the material
Licenses of Broadcasting or the Station Network Affiliation Agreements.
4.10. EMPLOYEE BENEFIT MATTERS.
(a) Schedule 4.10(a) lists each Employee Plan which is currently sponsored,
maintained or contributed to by the Company, any of its Subsidiaries or any of
their ERISA Affiliates for the benefit of any Broadcasting Employee (a
"Broadcasting Employee Plan"). For the purposes hereof, the term "Employee
Plan" means any plan, program, contract or arrangement, whether oral or
written, which (i) is an "employee benefit plan," as such term is defined in
Section 3(3) of ERISA, whether or not subject to ERISA, or (ii) is an
incentive, bonus, stock option, stock purchase, phantom stock, severance,
fringe benefit or other compensatory plan, contract, or arrangement that is
not an employee benefit plan within the meaning of Section 3(3) of ERISA. No
Broadcasting Employee Plan is a multiemployer plan within the meaning of
Sections 3(37) and 4001(a)(3) of ERISA.
(b) The Company has delivered or made available to Acquiror true and
complete copies of the plan documents, contracts, policy statements and
summary plan descriptions that currently apply to the operation or funding of
each Broadcasting Employee Plan. With respect to each Broadcasting Employee
Plan (including, without limitation, a plan that is a "pension plan" within
the meaning of Section 3(2) of ERISA (a "Broadcasting Pension Plan")), the
Company has delivered or made available to Acquiror, where applicable, true
and complete copies of (i) the most recent annual report (5500 series) filed
with the IRS or Department of Labor, (ii) the most recent audited financial
statement, (iii) the most recent actuarial valuation report, (iv) the last
determination letter issued by the IRS, and (v) the most recent PBGC-1 filed
with PBGC.
(c) Each Broadcasting Employee Plan described in Section 6.11(c), (d) or (f)
has been maintained and administered substantially in accordance with its
terms and with the provisions of applicable law and, with respect to each such
Broadcasting Employee Plan, (i) no application, proceeding or other matter is
pending before the IRS, the Department of Labor, PBGC or any other
governmental agency, (ii) there is no pending action, suit, proceeding or
claim (other than routine claims for benefits) that could reasonably be
expected to give rise to a material liability or expense of the Company or
PBC, and (iii) to the knowledge of the Company, no facts exist that are likely
to result in such an action, suit, proceeding or claim. A favorable IRS
determination letter is currently in effect with respect to each funded
Broadcasting Pension Plan, and no subsequent amendments have been or will be
adopted or other action taken which would adversely affect the qualified
status of any such Broadcasting Pension Plan.
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(d) With respect to each funded employee pension plan (within the meaning of
Section 3(2) of ERISA) maintained by the Company, any of its Subsidiaries or
any of their ERISA Affiliates within six years prior to the date hereof for
the benefit of any of its employees (other than a multiemployer plan within
the meaning of Section 3(37) of ERISA), where applicable, (i) there has been
no termination or partial termination within the meaning of Section 411(d)(3)
of the Code, except to the extent that the Transactions will result in such a
partial termination; (ii) there has been no accumulated funding deficiency,
whether or not waived, within the meaning of Section 302(a)(2) of ERISA or
Section 412 of the Code, and there has been no failure to make a required
installment by its due date under Section 412(m) of the Code; (iii) no non-
exempt prohibited transaction (within the meaning of Section 406 of ERISA or
Section 4975 of the Code) has occurred which could result in the imposition of
a material tax or liability against the Company or any of its Subsidiaries;
and (iv) with respect to each such plan which is covered by Title IV of ERISA,
(A) no reportable event within the meaning of Section 4043(c) of ERISA has
occurred, except a reportable event occurring as a result of the consummation
of the transactions contemplated by this Agreement or any prior event which
will not result in a liability to the Company or any of its Subsidiaries or
any of their Affiliates after the consummation of said transactions; (B) no
notice of intent to terminate the plan has been provided to participants or
filed with PBGC under Section 4041 of ERISA, nor has PBGC instituted or
threatened to institute any proceeding under Section 4042 of ERISA to
terminate the plan; and (C) no liability has been incurred under Title IV of
ERISA to PBGC or otherwise (except for the payment of PBGC premiums) which has
not been satisfied. Neither the Company, any of its Subsidiaries nor any of
their ERISA Affiliates has ceased operations at a facility so as to become
subject to the provisions of Section 4068(f) of ERISA, withdrawn as a
substantial employer so as to become subject to the provisions of Section 4063
of ERISA or ceased making contributions on or before the Closing Date to any
such plan which is a pension plan subject to Section 4064(a) of ERISA.
(e) Neither the Company, any of its Subsidiaries nor any of their ERISA
Affiliates has incurred or expects to incur any withdrawal liability under
Title IV of ERISA (either as a contributing employer or as part of a
controlled group which includes a contributing employer) in connection with a
complete or partial withdrawal from a Multiemployer Plan that will be
unsatisfied at the Effective Time; and, with respect to any Multiemployer Plan
to which the Company or any ERISA Affiliate is, or within the preceding six
years, was required to make or accrue a contribution, neither the Company, any
of its Subsidiaries nor any of their ERISA Affiliates has received notice from
such Multiemployer Plan that the plan is in reorganization or insolvency
pursuant to Sections 4241 or 4245 or ERISA or that the plan is intended to
terminate or has terminated under Sections 4041A or 4042 of ERISA.
(f) The Company, its Subsidiaries and each of their ERISA Affiliates has
complied in all material respects with its obligations under the provisions of
Section 4980B of the Code with respect to any group health plan. Except as
identified on Schedule 4.10(a), no Broadcasting Employee Plan provides health
or death benefits (whether or not insured) to Broadcasting Employees beyond
the termination of their employment or other services.
(g) All Broadcasting Employee Plans which provide medical, dental health or
long-term disability benefits are insured and, to the Company's knowledge,
claims with respect to any participant or covered dependent under any such
Broadcasting Employee Plan will not result in any uninsured liability to the
Acquiror, the Company, PBC or any of their Subsidiaries.
4.11. LABOR MATTERS.
(a) Except as set forth on Schedule 4.11(a), neither PBC nor any
Broadcasting Subsidiary is a party to any labor or collective bargaining
agreement and there are no labor or collective bargaining agreements which
pertain to any Broadcasting employees.
(b) Except as set forth on Schedule 4.11(b), as of the date of this
Agreement, (i) no employees of PBC or any of the Broadcasting Subsidiaries are
represented by any labor organization and (ii) no labor organization or group
of employees of PBC or any of the Broadcasting Subsidiaries has made a pending
demand for recognition
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or certification, and there are no representation or certification proceedings
or petitions seeking a representation proceeding presently pending or, to the
knowledge of the Company, threatened to be brought or filed with the NLRB or
any other labor relations tribunal or authority. To the knowledge of the
Company, as of the date of this Agreement, there are no formal organizing
activities involving a material number of Broadcasting employees pending with,
or threatened by, any labor organization.
(c) Except as would not result in a Material Adverse Effect on Broadcasting,
(i) there are no strikes, work stoppages, slowdowns, lockouts, material
arbitrations or material grievances or other material labor disputes pending
or, to the knowledge of the Company, threatened against or involving PBC or
any of the Broadcasting Subsidiaries and (ii) there are no unfair labor
practice charges, grievances or complaints pending or, to the knowledge of the
Company, threatened by or on behalf of any employee or group of employees of
PBC or any of the Broadcasting Subsidiaries.
4.12. ENVIRONMENTAL MATTERS.
(a) Except as set forth on Schedule 4.12(a), to the knowledge of the Company
there are no Environmental Liabilities of Broadcasting that may reasonably be
expected to have a Material Adverse Effect on Broadcasting or materially
interfere with or delay the Transactions.
(b) Since January 1, 1997 and prior to the date of this Agreement, to the
knowledge of the Company there has been no material environmental assessment
investigation, study, Audit, test, review or other analysis conducted in
relation to the current business of Broadcasting or any property or facility
now owned or leased by Broadcasting which has not been delivered or made
available to Acquiror prior to the date hereof.
4.13. COMPLAINTS. As of the date of this Agreement, there is not, to the
knowledge of the Company, any FCC investigation, notice of apparent liability
or order of forfeiture pending or outstanding against any of the Stations
respecting any violation, or allegation thereof, of any FCC rule, regulation
or policy, or, to the knowledge of the Company, any complaint before the FCC
as a result of which an investigation, notice of apparent liability, or order
of forfeiture may issue from the FCC relating to any of the Stations.
4.14. REPORTS. Excluding reports and statements which do not materially
affect the business and operations of any of the Stations, all reports and
statements currently required to be filed by the Company or any of its
Subsidiaries with the FCC or with any other governmental agency with respect
to the Stations have been filed and substantially complied with and shall
continue to be filed and be in substantial compliance on a current basis until
the Closing Date. All such material reports and statements are substantially
complete and correct as filed, and copies thereof have heretofore been made
available to Acquiror.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF ACQUIROR
Acquiror represents and warrants to the Company and Newco as follows:
5.01. ORGANIZATION AND AUTHORITY. Acquiror is a corporation duly organized,
validly existing and in good standing under the laws of its state of
incorporation. Acquiror has all requisite corporate power and authority to
own, lease and operate its properties and to carry on its business as now
being conducted, except where the failure to have such power or authority
would not have a Material Adverse Effect on Acquiror and its Subsidiaries
taken as a whole. Acquiror has all requisite corporate power and authority to
execute and deliver this Agreement and, subject to the items referred to in
Sections 5.02 and 5.03, to consummate the Transactions. Subject to the items
referred to in Sections 5.02 and 5.03, all necessary action, corporate or
otherwise, required to have been taken by or on behalf of Acquiror by
applicable law, its charter documents or otherwise to authorize (i) the
approval, execution and delivery on its behalf of this Agreement and (ii) its
performance of its obligations under this Agreement and the consummation of
the Transactions has been taken, except that this Agreement must
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be approved by the stockholders of Acquiror, and the Board of Directors of
Acquiror must increase the size of such Board to comply with the Board
Representation Agreement. Assuming that this Agreement and each Transaction
Agreement constitutes or will constitute, as the case may be, a legal, valid
and binding agreement of the Company or Newco, as the case may be, this
Agreement and each other Transaction Agreement to which Acquiror is or will be
a party constitutes or will constitute, as the case may be, a valid and
binding agreement of Acquiror, enforceable against it in accordance with its
terms, subject to (i) the Enforceability Exceptions and (ii) in the case of
the Board Representation Agreement to the Communications Act of 1934, as
amended (the "Communications Act"), and the rules and regulations thereunder
(the "Rules and Regulations") regarding cross-ownership of radio and
television stations, to the extent that such Rules and Regulations may
prohibit Newco or any of its officers, directors or shareholders from
designating or acting as a director or observer on Acquiror's Board of
Directors. Acquiror has heretofore made available to the Company true and
complete copies of its Certificate of Incorporation and Bylaws as in effect on
the date hereof.
5.02. NO BREACH. The execution and delivery of this Agreement by Acquiror do
not and the consummation of the Transactions by Acquiror will not (i) assuming
that the requisite stockholder approval is obtained, violate or conflict with
its Certificate of Incorporation or Bylaws or (ii) except as set forth on
Schedule 5.02(a) hereto, or subject to obtaining the approvals and making the
filings described in Section 5.03, constitute a breach or default (or an event
which with notice or lapse of time or both would become a breach or default)
of, or give rise to any third-party right of termination, cancellation,
modification or acceleration under, or otherwise require notice or approval
under, any agreement, understanding or undertaking to which Acquiror or any of
its Subsidiaries is a party or by which any of them is bound, or give rise to
any Lien on any of their properties, except where such breach, default, Lien,
third-party right, cancellation, modification or acceleration would not have a
Material Adverse Effect on Acquiror and its Subsidiaries taken as a whole or
materially interfere with or delay the Transactions, or (iii) subject to
obtaining the approvals and making the filings described in Section 5.03
hereof, constitute a violation of any statute, law, ordinance, rule,
regulation, judgment, decree, order or writ of any judicial, arbitral, public,
or governmental authority having jurisdiction over Acquiror or any of its
Subsidiaries or any of their respective properties or assets, except as would
not have a Material Adverse Effect on Acquiror and its Subsidiaries taken as a
whole. Except as set forth on Schedule 5.02(b), neither Acquiror nor any of
its Subsidiaries is a party to or bound by any Contract that restricts or
purports to restrict the ability of any of them or any Affiliate of them to
engage in any location in the business of television broadcasting, except for
such restrictions that would not have a Material Adverse Effect on Acquiror
and its Subsidiaries taken as a whole or materially interfere with or delay
the Transactions.
5.03. CONSENTS AND APPROVALS. Neither the execution and delivery of this
Agreement by Acquiror nor the consummation of the Transactions by Acquiror
will require any License from, or filing with, or notification to, any
governmental or regulatory authority, except (i) for filings required under
the Securities Act, (ii) for filings required under the Exchange Act, (iii)
for filings required under state securities or "blue sky" laws, (iv) for
filings and approvals required by the rules and regulations of NASDAQ or the
NYSE, as the case may be, (v) for notification pursuant to the HSR Act and
expiration or termination of the waiting period thereunder, (vi) for the
filing of the Certificate of Merger as set forth in Article I hereof, (vii)
for any waiver, consent or declaratory ruling by the FCC with respect to the
Rules and Regulations regarding cross-ownership of radio or television
stations, to the extent that such Rules and Regulations may prohibit (A) Newco
or any of its officers, directors or shareholders from designating or acting
as a director or observer on Acquiror's Board of Directors or (B) a designee
of Newco from serving on the Board of Directors of Acquiror, (viii) for
consents or waivers from the relevant governmental entities necessary to
transfer control of Broadcasting's FCC Licenses to Acquiror, and (ix) where
the failure to obtain such Licenses or to make such filings or notifications,
would not have a Material Adverse Effect on Acquiror and its Subsidiaries
taken as a whole or materially interfere with or delay the Transactions;
PROVIDED, HOWEVER, that no representation or warranty is made with respect to
the foregoing relating to, or arising by reason of, the legal or regulatory
status of the Company or Broadcasting or the respective facts pertaining
specifically to them.
5.04. APPROVAL OF THE BOARD; VOTE REQUIRED. The Board of Directors of
Acquiror has, by resolutions duly adopted at a meeting duly called and held,
unanimously approved and adopted this Agreement,
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the Merger, the Transaction Agreements and the other Transactions on the
material terms and conditions set forth herein. The transactions contemplated
by the Acquiror Voting Agreement have been duly and validly approved by the
Board of Directors of Acquiror prior to the execution and delivery of the
Acquiror Voting Agreement in accordance with Section 203 of the DGCL. The
affirmative vote or action by written consent of a majority of the votes that
holders of the outstanding shares of capital stock of Acquiror are entitled to
cast voting as a single class are the only votes of the holders of any class
or series of the capital stock of Acquiror necessary to approve this
Agreement, the Merger and the Transaction Agreements under applicable law and
Acquiror's Articles of Incorporation and Bylaws.
5.05. CAPITALIZATION.
(a) As of the date of this Agreement, the authorized capital stock of
Acquiror consists of: (i) 200,000,000 shares of common stock, par value $.01,
of which 100,000,000 shares are designated as Series A Common Stock and
100,000,000 shares are designated as Series B Common Stock, and (ii) 1,000,000
shares of preferred stock, par value $.01, of which 12,500 shares are
designated as Series A Preferred Stock and 12,500 shares are designated as
Series B Preferred Stock. As of May 13, 1998, there were issued and
outstanding the following shares of such stock: (i) 53,842,377 shares of
common stock outstanding, consisting of 12,543,729 shares of Series A Common
Stock and 41,298,648 shares of Series B Common Stock, and (ii) 21,876 shares
of preferred stock outstanding, consisting of 10,938 shares of Series A
Preferred Stock and 10,938 shares of Series B Preferred Stock. All such
outstanding shares are duly authorized, validly issued and fully paid and
nonassessable. There are no preemptive or other similar rights available to
the existing holders of the capital stock of Acquiror. As of the date of this
Agreement, and other than as set forth on Schedule 5.05(a) or other than as
contemplated by this Agreement, there are no outstanding options, warrants,
rights, puts, calls, commitments, or other Contracts issued by or binding upon
Acquiror or any of its Subsidiaries requiring or providing for, and there are
no outstanding debt or equity securities of Acquiror or its Subsidiaries
which, upon the conversion, exchange or exercise thereof, would require or
provide for the issuance, sale or transfer by Acquiror or any of its
Subsidiaries of any new or additional equity interests in Acquiror or any of
its Subsidiaries (or any other securities of Acquiror which, with notice,
lapse of time or payment of monies, are or would be convertible into or
exercisable or exchangeable for equity interests in Acquiror or any of its
Subsidiaries). Except as described on Schedule 5.05(a), there are no voting
trusts or other agreements or understandings to which Acquiror or any of its
Subsidiaries is a party with respect to the voting of capital stock of
Acquiror.
(b) The shares of Acquiror Common Stock to be issued in the Merger, upon
their issuance in accordance with the terms hereof, will be duly authorized,
validly issued, fully paid and nonassessable and free and clear of all Liens,
other than any Liens created by the stockholders of the Company.
5.06. SEC REPORTS. Acquiror has filed all required forms, reports and
documents required to be filed by it with the SEC since January 1, 1997
(collectively, "Acquiror's SEC Reports") and delivered or made available to
the Company copies thereof. Acquiror's SEC Reports have complied in all
material respects with all applicable requirements of the Securities Act and
the Exchange Act. As of their respective dates, none of the Acquiror's SEC
Reports, including any financial statements or schedules included or
incorporated by reference therein, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated or
incorporated by reference therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
5.07. FINANCIAL STATEMENTS. The (i) audited consolidated financial
statements of Acquiror contained in Acquiror's Annual Report on Form 10-K for
the year ended December 31, 1997 ("Acquiror's 10-K"), and (ii) unaudited
condensed consolidated financial statements of Acquiror contained in
Acquiror's Quarterly Report on Form 10-Q for the three months ended March 31,
1998 ("Acquiror's 10-Q" and together with Acquiror's 10-K, "Acquiror's
Financial Statements"), were prepared in accordance with GAAP and present
fairly, in all material respects, Acquiror's consolidated financial position
and the results of its consolidated operations and its consolidated cash flows
as of the relevant dates thereof and for the periods covered thereby in
accordance with GAAP (subject to normal year-end adjustments in the case of
the unaudited interim financial statements).
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5.08. ABSENCE OF CERTAIN CHANGES. Since the date of the balance sheet of
Acquiror included in Acquiror's 10-Q, except as contemplated or disclosed by
this Agreement, the Acquiror and its Subsidiaries have conducted their
respective businesses in the ordinary course of business consistent with past
practice, and except as contemplated by this Agreement there has not been any
change, event or condition of any character that, individually or in the
aggregate, has or would reasonably be expected to have a Material Adverse
Effect on Acquiror and its Subsidiaries taken as a whole or materially
interfere with or delay the Transactions.
5.09. ABSENCE OF UNDISCLOSED LIABILITIES. To the knowledge of Acquiror,
except as set forth in Schedule 5.09 or otherwise disclosed in this Agreement,
neither Acquiror nor any of its Subsidiaries has any obligation or liability
of any kind whatsoever, whether accrued, contingent, absolute, determined,
determinable or otherwise, of a type required by GAAP to be disclosed in a
balance sheet of Acquiror or any of its Subsidiaries except (i) such
liabilities and obligations that are reflected in Acquiror's Financial
Statements or disclosed in the notes thereto, (ii) liabilities and obligations
incurred in the ordinary course of business after March 31, 1998, and (iii)
liabilities and obligations that will not, individually or in the aggregate,
have a Material Adverse Effect on Acquiror or its Subsidiaries taken as a
whole or materially interfere with or delay the Transactions.
5.10. COMPLIANCE WITH LAW. Acquiror holds all Licenses from all governmental
authorities necessary for the lawful conduct of its business, except where the
failure to hold any such License would not have a Material Adverse Effect on
Acquiror and its Subsidiaries taken as a whole or materially interfere with or
delay the Transactions. To Acquiror's knowledge, Acquiror has not violated,
and is not in violation of, any such Licenses or any applicable Laws of any
governmental authorities, except where such violations do not and, insofar as
reasonably can be foreseen, will not have a Material Adverse Effect on
Acquiror and its Subsidiaries taken as a whole or materially interfere with or
delay the Transactions.
5.11. TAXES.
(a) All material Tax Returns of Acquiror and its Subsidiaries required to
have been filed on or before the date hereof have been filed with the
appropriate governmental agencies in all jurisdictions in which such Tax
Returns were required to have been filed. All of such Tax Returns were true,
correct and complete in all material respects and all Taxes shown to be due on
such Tax Returns have been paid. All material Taxes payable by or with respect
to Acquiror and its Subsidiaries but not reflected on any Tax Return required
to have been filed prior to the date of Acquiror's Financial Statements have
been fully paid or adequate provision therefor has been made and reflected on
such balance sheet.
(b) Except as set forth on Schedule 5.11(b) hereto, there is no claim or
investigation involving an amount greater than $1,000,000 pending or
threatened against Acquiror or any of its Subsidiaries for past Taxes, and
adequate provision for the claims or investigations set forth on Schedule
5.11(b) has been made as reflected on Acquiror's Financial Statements. Except
as set forth on Schedule 5.11(b), neither Acquiror nor any of its Subsidiaries
has waived or extended any applicable statute of limitations relating to the
assessment of federal, state or local Taxes.
(c) Acquiror is not, and on the Closing Date will not be, an investment
company within the meaning of Section 368(a)(2)(F)(iii) and (iv) of the Code.
5.12. LITIGATION. There is no suit, action, proceeding or investigation
pending against or, to the knowledge of Acquiror, threatened against or
affecting Acquiror or any of its Subsidiaries or any of their respective
properties nor, to the knowledge of Acquiror, is there any judgment, decree,
inquiry, rule or order outstanding against Acquiror or any of its Subsidiaries
that, individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect on Acquiror and its Subsidiaries taken as a whole, or
materially interfere with or delay the ability of Acquiror to consummate the
Transactions.
5.13. BROKERS AND FINDERS. Neither Acquiror nor any of its officers,
directors, employees or Affiliates has employed any investment banker, broker
or finder or incurred any liability for any brokerage fees, commissions or
finder's fees in connection with the Transactions, except that Acquiror has
employed Credit
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Suisse First Boston Corporation as its financial advisor in connection with
the Transactions and for whose fees and expenses Acquiror is responsible.
5.14. SOLVENCY. After giving effect to the Merger, the New Company Debt and
the other Transactions, Acquiror will not be insolvent and will not have
unreasonably small capital with which to engage in its businesses, and
Acquiror will be able to pay its debts as they come due.
5.15. FCC QUALIFICATION. Except as set forth on Schedule 5.15, Acquiror is,
for purposes of obtaining the approval of the FCC under the Communications
Act, legally, financially and otherwise qualified to acquire control of the
Company and, after due investigation, Acquiror is not aware of any facts or
circumstances relating to Acquiror or any of its Subsidiaries that might
disqualify Acquiror as a transferee of the Licenses, or as owner and operator
of the Broadcasting Assets or otherwise might prevent or delay the prompt
approval of this Agreement, the Transaction Agreements or the Transactions.
ARTICLE VI
OTHER AGREEMENTS
6.01. NO SOLICITATION.
(a) Neither the Company nor any of its Subsidiaries, nor any of its or their
officers, directors, representatives or agents shall, directly or indirectly,
knowingly encourage, solicit, initiate or, except as otherwise provided in
this Section 6.01(a), participate in any way in discussions or negotiations
with or knowingly provide any confidential information to, any Person (other
than Acquiror or any Affiliate or associate of Acquiror and their respective
directors, officers, employees, representatives and agents) concerning any
merger, consolidation, business combination, recapitalization, liquidation or
dissolution of the Company, PBC or any Broadcasting Subsidiary, the sale of
any substantial part of the assets of PBC or any of the Broadcasting
Subsidiaries (other than in the ordinary course of business consistent with
past practice), the sale of any shares of the capital stock of PBC or any of
the Broadcasting Subsidiaries, or the sale of shares representing a
controlling interest of the capital stock of the Company, PBC or the
Broadcasting Subsidiaries or any similar transaction or series of transactions
involving Broadcasting; PROVIDED, HOWEVER, that nothing contained in this
Section 6.01(a) shall prohibit the Board of Directors of the Company from (i)
taking and disclosing to the Company's stockholders a position with respect to
a tender offer for Company Stock by a third party pursuant to Rules 14d-9 and
14e-2 promulgated under the Exchange Act, (ii) making such disclosure to the
Company's stockholders as, in the judgment of the Board of Directors of the
Company, with the advice of outside counsel, may be required under applicable
Law, or (iii) responding to any unsolicited third party proposal or inquiry by
advising the Person making such proposal or inquiry of the terms of this
Section 6.01(a). Notwithstanding anything to the contrary set forth herein,
the Board of Directors of the Company may respond to any Acquisition Proposal
and may provide information and afford access to, and negotiate and hold
discussions with, any Person or group in connection therewith if the Board of
Directors of the Company determines, with the advice of outside counsel, that
it may be required to do so to comply with its fiduciary duties. For purposes
hereof, "Acquisition Proposal" means any proposal, offer or any expression of
interest by any third party relating to a possible transaction described in
this Section 6.01(a) by any Person, other than Acquiror. Subject to the
fiduciary duties of the Company's Board of Directors, in the event that the
Company, Newco or any of their Subsidiaries or any of their respective
officers, directors, employees, representatives or agents receives from any
Person an Acquisition Proposal, the Company shall promptly advise Acquiror of
such Acquisition Proposal and thereafter keep Acquiror reasonably and promptly
informed of all material facts and circumstances relating to the Acquisition
Proposal and the Company's response thereto.
(b) Acquiror will promptly notify the Company and provide it with pertinent
information in the event that Acquiror or any of its Subsidiaries, or any of
its or their officers, directors, representatives or agents (i) solicits,
initiates or participates in any way in discussions or negotiations with, or
provides any confidential information to, any Person or group (other than the
Company or any Affiliate or associate of the Company and their
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respective directors, officers, employees, representatives and agents)
concerning any merger, sale of substantially all of the assets, or the sale of
shares representing a controlling interest of the capital stock of Acquiror,
or any similar transaction or series of transactions involving Acquiror, or
(ii) receives any proposal or inquiry in respect of any such transaction or
any request to provide any such information or hold any such negotiations or
discussions.
6.02. CONDUCT OF BUSINESS OF THE COMPANY. Except as contemplated by this
Agreement, during the period from the date hereof to the Closing Date, the
Company shall not, without the prior written consent of Acquiror:
(a) amend its Certificate of Incorporation or Bylaws;
(b) declare, set aside or pay any dividend or other distribution (whether
in cash, stock or property or any combination thereof) in respect of its
capital stock, except for cash dividends declared and paid consistent with
the Company's past practice (except that (i) any Subsidiary of the Company
other than PBC or a Broadcasting Subsidiary may declare and pay dividends
that are payable to the Company or to any other Subsidiary of the Company,
(ii) PBC or any Broadcasting Subsidiary may declare and pay dividends in
cash and cash equivalents that are payable to the Company or to any other
Subsidiary of the Company and (iii) PBC may declare and pay a dividend of
all of the capital stock of Pulitzer Sports Inc. to the Company) or redeem
or acquire any of its securities other than for cash;
(c) except pursuant to the terms of the Company Class B Common Stock, the
Company Option Plans, or the Employee Stock Purchase Plan, split, combine
or reclassify any of its capital stock or issue or authorize the issuance
of any other securities in respect of, in lieu of or in substitution of any
shares of its capital stock;
(d) except (x) to the extent that the Company is acting in the ordinary
course of business or is otherwise released therefrom as described in
Section 2.02 or (y) any investment or acquisition relating to the newspaper
business or any activity related thereto, (i) create, incur or assume any
Indebtedness, other than the New Company Debt, not currently outstanding
(including obligations in respect of capital leases), (ii) assume,
guarantee, endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for the obligations of any other
Person or (iii) make any loans, advances or capital contributions to, or
investments in, any Person other than Newco or another Subsidiary;
(e) except pursuant to the terms of the Company Class B Common Stock, the
Company Option Plans, or the Employee Stock Purchase Plan, issue, sell,
deliver or agree or commit to issue, sell or deliver (whether through the
issuance or granting of options, warrants, commitments, subscriptions,
rights to purchase or otherwise) any stock of any class or any other
securities or amend any of the terms of any securities outstanding at the
date hereof;
(f) terminate, amend, modify or waive compliance with any of the terms or
conditions of the Contribution Agreement directly or indirectly respecting
the Retained Assets or the Retained Liabilities or affecting the rights or
obligations of the Company thereunder from and after the Effective Time;
(g) subject to the fiduciary duties of the Board of Directors, terminate,
amend, modify or waive any of the terms or conditions of any
confidentiality agreement in effect as of the date hereof between the
Company and any other prospective acquiror of the Company or Broadcasting,
provided that the Company, PBC or any Broadcasting Subsidiary may waive,
and Acquiror will not enforce after Closing, any restriction on employment
of any employee of the Company, PBC or any Broadcasting Subsidiary who is
not employed by the Acquiror, PBC or any Broadcasting Subsidiary at Closing
or whose employment with any of them is terminated after Closing; or
(h) take, or agree in writing or otherwise to take, any of the foregoing
actions or any other actions that would (i) make any representation or
warranty of the Company or Newco contained in this Agreement untrue or
incorrect, in any material respect, as of the date when made or as of the
Closing Date, (ii) result in any of the conditions to Closing in Article
VII of this Agreement not being satisfied, or (iii) be inconsistent, in any
material respect, with the terms of this Agreement or the Transactions.
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6.03. CONDUCT OF BUSINESS OF BROADCASTING.
(a) Except as contemplated by this Agreement, during the period from the
date hereof to the Closing Date, the Company shall cause PBC and the
Broadcasting Subsidiaries to conduct their operations in the ordinary course
of business consistent with past practices. Without limiting the generality of
the foregoing, except as otherwise contemplated by this Agreement, without the
prior written consent of Acquiror, the Company shall not permit PBC or any of
the Broadcasting Subsidiaries to:
(i) amend its Certificate of Incorporation or Bylaws;
(ii) issue, sell, deliver or agree or commit to issue, sell or deliver
(whether through the issuance or granting of options, warrants,
commitments, subscriptions, rights to purchase or otherwise) any stock of
any class or any other securities or amend any of the terms of any
securities outstanding on the date hereof;
(iii) acquire, lease, sell or dispose of any assets or any FCC Licenses
other than acquisitions, leases, sales or dispositions of inventory and
equipment in the ordinary course of business consistent with past practices
or inventory items expended, depleted or worn out in accordance with
Broadcasting's normal operating procedures;
(iv) except for Permitted Exceptions, subject to any Lien any of its
properties or assets, tangible or intangible;
(v) increase the amount of any cash compensation payable to any employee
if such increase would cause the aggregate cash compensation payable to all
employees on an annualized basis to exceed, by more than 5% percent, the
cash compensation payable by Broadcasting to all employees under its 1998
budget as outlined in Schedule 6.03(a)(v) (PROVIDED that this Section
6.03(a)(v) shall not apply to the employment, bonus and/or severance
agreements made with the corporate executives of PBC and the Station
managers (all of which agreements are listed on Schedule 4.10(a) hereto));
(vi) declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect
of its capital stock, or redeem or otherwise acquire any of its securities,
except as provided in Sections 6.24 and 6.02(b);
(vii) fail to maintain the Broadcasting Assets in the condition specified
in Section 4.08(a) hereof;
(viii) by any act or omission to act within its reasonable knowledge and
power, surrender, modify, adversely affect or forfeit any of the material
Licenses;
(ix) enter into or amend any program license or program contract for any
Station which will be in effect after the Effective Time, or enter into or
amend any other contract or agreement which, in each case, will be in
effect after the Effective Time and requiring payments to or by PBC or any
of the Broadcasting Subsidiaries of more than $250,000;
(x) (i) create, incur or assume any Indebtedness not currently
outstanding (including obligations in respect of capital leases), (ii)
except in the ordinary course of business, assume, guarantee, endorse or
otherwise become liable or responsible (whether directly, contingently or
otherwise) for the obligations of any other Person, or (iii) except in the
ordinary course of business, make any loans, advances or capital
contributions to, or investments in, any Person other than Newco or another
Subsidiary; or
(xi) take, or agree in writing or otherwise to take, any of the foregoing
actions or any other action that would (i) make any representation or
warranty of the Company or Newco contained in this Agreement untrue or
incorrect, in any material respect, as of the date when made or as of the
Closing Date, (ii) result in any of the conditions to Closing in Article
VII of this Agreement not being satisfied or (iii) be inconsistent, in any
material respect, with the terms of this Agreement or the Transactions.
(b) The Company shall use its commercially reasonable efforts to: (i)
maintain the present operations of the Stations; (ii) preserve intact the
business organization of the Stations; and (iii) preserve for the Stations the
existing relationships with employees, suppliers, customers and their agencies
and others having business with the Stations.
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(c) Prior to the Effective Time, control of the television and radio
operations of PBC and the Broadcasting Subsidiaries shall remain with the
Company. The Company and Acquiror acknowledge and agree that neither Acquiror
nor any of its employees, agents or representatives, directly or indirectly,
shall, or have any right to, control, direct or otherwise supervise, or
attempt to control, direct or otherwise supervise, such broadcast operations;
it being understood that at all times prior to the Effective Time, supervision
of all programs, equipment and operations shall remain within the complete
control and discretion of the Company.
(d) The Company shall use its commercially reasonable efforts to cause
Broadcasting to maintain in full force and effect the Station Network
Affiliation Agreements set forth on Schedule 4.07 hereto.
6.04. CONDUCT OF BUSINESS OF ACQUIROR. Except as contemplated by this
Agreement, during the period from the date hereof to the Closing Date,
Acquiror will not, without the prior written consent of the Company;
(a) amend its certificate of incorporation (other than to provide for the
issuance of preferred stock and to increase its authorized shares of common
stock or any series thereof);
(b) issue, sell, deliver or agree or commit to issue, sell or deliver
(whether through the issuance or granting of options, warrants, commitments,
subscriptions, rights to purchase or otherwise) any stock of any class;
PROVIDED, HOWEVER, that Acquiror may (i) issue shares of its capital stock
upon the exercise of options outstanding on the date hereof, (ii) grant
options to purchase shares of its capital stock (and issue any shares of
capital stock upon exercise of such options) pursuant to employee compensation
arrangements consistent with past practices, (iii) issue shares of common
stock upon conversion of any shares of capital stock, and (iv) issue shares of
capital stock at or above fair market value;
(c) declare, set aside or pay any dividend or other distribution (whether in
cash, stock or property or any combination thereof) in respect of its capital
stock, except for dividends declared and paid consistent with Acquiror's past
practice;
(d) (i) enter into a transaction or (ii) except for Indebtedness incurred in
connection with Section 2.01(b), create, incur or assume any Indebtedness not
currently outstanding (including obligations in respect of capital leases but
excluding indebtedness incurred in refinancing, replacement or substitution of
indebtedness that is currently outstanding) that in the case of clauses (i) or
(ii) would result in a down-grading below investment grade in the rating of
any rated debt securities of the Company by both Standard & Poors Corporation
and Xxxxx'x Investors Service;
(e) sell, lease or dispose of any assets material to Acquiror and its
Subsidiaries taken as a whole, other than (i) sales of inventory in the
ordinary course of business consistent with past practices and (ii) in
connection with or in exchange for acquisitions of assets related to the
business of Acquiror;
(f) make any material change in the lines of business in which it
participates or is engaged; or
(g) take, or agree in writing or otherwise to take, any of the foregoing
actions or any other actions that would (i) make any representation or
warranty of Acquiror contained in this Agreement untrue or incorrect, in any
material respect, as of the date when made or as of the Closing Date, (ii)
result in any of the conditions to Closing in Article VII of this Agreement
not being satisfied in any material respect or (iii) be inconsistent, in any
material respect, with the terms of this Agreement or the Transactions.
6.05. ACCESS TO INFORMATION. Between the date of this Agreement and the
Effective Time, (a) the Company and Acquiror will each (i) give the other
party and its authorized representatives reasonable access, during regular
business hours upon reasonable notice, to all offices and other facilities of
such party and its Subsidiaries and to all books and records of such party and
its Subsidiaries, (ii) permit the other party to make such reasonable
inspections of the offices, facilities, books and records described in clause
(i) as it may require, (iii) cause its officers and those of its Subsidiaries
to furnish the other party with such financial and operating data and other
information with respect to the business and properties of the Company and
Broadcasting, or Acquiror and its Subsidiaries, as the case may be, as the
other party may, from time to time, reasonably request,
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and (iv) permit Acquiror to conduct, at its expense, environmental tests and
assessments and (b) Acquiror will keep the Company informed, and the Company
will keep Acquiror informed, in each case as to material developments
affecting the other party and its Subsidiaries. All such access and
information obtained by Acquiror and its authorized representatives shall be
subject to the terms and conditions of the letter agreement between the
Company and Acquiror dated in February 1998 (the "Confidentiality Agreement").
All such information obtained by the Company and its authorized
representatives, and, after the Closing, all other information regarding the
Broadcasting Assets, or its business and operations which Newco or any of its
Subsidiaries possesses or has access to (including pursuant to Section 6.17),
shall be treated in accordance with the terms of the Confidentiality Agreement
as if such agreement obligated such Persons to hold such information
confidential on the same basis as set forth therein MUTATIS MUTANDIS and
Acquiror and its Subsidiaries were beneficiaries of such obligations.
6.06. SEC FILINGS.
(a) The Company, Newco and Acquiror shall prepare jointly and, as soon as
practicable after the date of this Agreement, file with the SEC a joint proxy
statement/registration statement (the "Preliminary Joint Proxy
Statement/Prospectus") comprising preliminary proxy materials of the Company
and Acquiror under the Exchange Act with respect to the Merger and the
Transactions and Registration Statement on Form S-4 containing a preliminary
prospectus of Acquiror under the Securities Act with respect to the Merger
Stock, and will thereafter use their respective reasonable best efforts to
respond to any comments of the SEC with respect thereto and to cause a
definitive joint proxy statement/prospectus (including all supplements and
amendments thereto, the "Joint Proxy Statement/Prospectus") and proxy to be
mailed to the Company's and Acquiror's stockholders as promptly as
practicable.
(b) As soon as practicable after the date hereof, the Company, Newco and
Acquiror shall prepare and file any other filings required to be filed by each
under the Exchange Act, any other federal or state laws, or the rules and
regulations of the NYSE or NASDAQ, relating to the Merger, the Contribution
and the Distribution, and the other Transactions, including in the case of
Newco, an Information Statement on Form 10 under the Exchange Act with respect
to the Newco Common Stock (collectively, the "Other Filings") and will use
their respective reasonable best efforts to respond to any comments, if any,
of the SEC or any other appropriate government official with respect thereto.
(c) The Company, Newco and Acquiror shall cooperate with each other and
provide to each other all information necessary in order to prepare the
Preliminary Joint Proxy Statement/Prospectus, the Joint Proxy
Statement/Prospectus and the Other Filings (collectively, the "SEC Filings")
and shall provide promptly to the other party any information that such party
may obtain that could necessitate amending any such document.
(d) The Company and Acquiror will notify the other party promptly of the
receipt of any comments from the SEC or its staff or any other government
official and of any requests by the SEC or its staff or any other government
official for amendments and/or supplements to any of the SEC Filings or for
additional information and will supply the other party with copies of all
correspondence between the Company or any of its representatives, Newco or any
of its representatives, or Acquiror or any of its representatives, as the case
may be, on the one hand, and the SEC or its staff or any other government
official, on the other hand, with respect thereto. If at any time prior to the
Effective Time, any event shall occur that should be set forth in an amendment
of, or a supplement to, any of the SEC Filings, the Company, Newco and
Acquiror agree promptly to prepare and file such amendment or supplement and
to distribute such amendment or supplement as required by applicable law,
including, in the case of an amendment or supplement to the Joint Proxy
Statement/Prospectus, mailing such supplement or amendment to the Company's
and Acquiror's stockholders.
(e) The information provided and to be provided by the Company, Newco and
Acquiror for use in SEC Filings shall at all times prior to the Effective Time
be true and correct in all material respects and shall not omit to state any
material fact required to be stated therein or necessary in order to make such
information in light of the circumstances under which they were made, not
false or misleading, and the Company, Newco and Acquiror
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each agree to correct any such information provided by it for use in the SEC
Filings that shall have become false or misleading. Each SEC Filing, when
filed with the SEC or any government official, shall comply in all material
respects with all applicable requirements of law.
(f) Acquiror shall indemnify, defend and hold harmless the Company and
Newco, each of their officers and directors and each other Person, if any, who
controls any of the foregoing within the meaning of the Exchange Act, against
any losses, claims, damages or liabilities, joint or several, to which any of
the foregoing may become subject under the Securities Act, the Exchange Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon (i) an untrue statement or
alleged untrue statement of a material fact contained in any SEC Filing or
(ii) the omission or alleged omission to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, PROVIDED that
Acquiror was responsible for such misstatement or omission, and, upon request
from time to time, Acquiror shall reimburse the Company, Newco and each such
officer, director and controlling Person for any legal or any other expenses
reasonably incurred by any of them in connection with investigating or
defending any such loss, claim, damage, liability or action or enforcing this
indemnity.
(g) Newco (and, if this Agreement is terminated prior to the consummation of
the Merger, the Company, jointly and severally with Newco) shall indemnify,
defend and hold harmless Acquiror, each of its officers and directors and each
other Person, if any, who controls any of the foregoing within the meaning of
the Exchange Act, against any losses, claims, damages or liabilities, joint or
several, to which any of the foregoing may become subject under the Securities
Act, the Exchange Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon (i)
an untrue statement or alleged untrue statement of a material fact contained
in any SEC Filing or (ii) the omission or alleged omission to state a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, PROVIDED that the Company or Newco was responsible for such
misstatement or omission, and, upon request from time to time, Newco (and, if
this Agreement is terminated prior to the consummation of the Merger, the
Company) shall reimburse Acquiror and each such officer, director and
controlling Person for any legal or any other expenses reasonably incurred by
any of them in connection with investigating or defending any such loss,
claim, damage, liability or action or enforcing this indemnity.
(h) For the purpose of this Section 6.06, the term "Indemnifying Party"
shall mean the party having an obligation hereunder to indemnify the other
party pursuant to this Section 6.06, and the term "Indemnified Party" shall
mean the party having the right to be indemnified pursuant to this Section
6.06. Whenever any claim shall arise for indemnification under this Section
6.06, the Indemnified Party shall promptly notify the Indemnifying Party in
writing of such claim and, when known, the facts constituting the basis for
such claim (in reasonable detail). Failure by the Indemnified Party to so
notify the Indemnifying Party shall not relieve the Indemnifying Party of any
liability hereunder except to the extent that such failure prejudices the
Indemnifying Party.
(i) After such notice, if the Indemnifying Party undertakes to defend any
such claim, then the Indemnifying Party shall be entitled, if it so elects, to
take control of the defense and investigation with respect to such claim and
to employ and engage attorneys of its own choice and reasonably acceptable to
the Indemnified Party to handle and defend the same, at the Indemnifying
Party's cost, risk and expense, upon written notice to the Indemnified Party
of such election, which notice acknowledges the Indemnifying Party's
obligation to provide indemnification hereunder. The Indemnifying Party shall
not settle any third-party claim that is the subject of indemnification
without the prior written consent of the Indemnified Party, which consent
shall not be unreasonably withheld; PROVIDED, HOWEVER, that the Indemnifying
Party may settle a claim without the Indemnified Party's consent if such
settlement (i) makes no admission or acknowledgment of liability or
culpability with respect to the Indemnified Party, (ii) includes a complete
release of the Indemnified Party and (iii) does not require the Indemnified
Party to make any payment or forego or take any action or otherwise materially
adversely affect the Indemnified Party. The Indemnified Party shall cooperate
in all reasonable respects with the Indemnifying Party and its attorneys in
the investigation, trial and defense of any lawsuit or
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action with respect to such claim and any appeal arising therefrom (including
the filing in the Indemnified Party's name of appropriate cross claims and
counterclaims). The Indemnified Party may, at its own cost, participate in any
investigation, trial and defense of such lawsuit or action controlled by the
Indemnifying Party and any appeal arising therefrom. If, after receipt of a
notice of claim pursuant to Section 6.06(h), the Indemnifying Party does not
undertake to defend any such claim, the Indemnified Party may, but shall have
no obligation to, contest any lawsuit or action with respect to such claim and
the Indemnifying Party shall be bound by the result obtained with respect
thereto by the Indemnified Party (including the settlement thereof without the
consent of the Indemnifying Party). If there are one or more legal defenses
available to the Indemnified Party that conflict with those available to the
Indemnifying Party or there is otherwise an actual or potential conflict of
interest, the Indemnified Party shall have the right, at the expense of the
Indemnifying Party, to assume the defense of the lawsuit or action; PROVIDED,
HOWEVER, that the Indemnified Party may not settle such lawsuit or action
without the consent of the Indemnifying Party, which consent shall not be
unreasonably withheld.
(j) If the indemnification provided for in this Section 6.06 shall for any
reason be unavailable to the Indemnified Party in respect of any loss, claim,
damage or liability, or action referred to herein, then the Indemnifying Party
shall, in lieu of indemnifying the Indemnified Party, contribute to the amount
paid or payable by the Indemnified Party as a result of such loss, claim,
damage or liability, or action in respect thereof, in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party on the one
hand and the Indemnified Party on the other hand with respect to the
statements or omissions that resulted in such loss, claim, damage or
liability, or action in respect thereof, as well as any other relevant
equitable considerations. The relative fault shall be determined by reference
to whether the untrue or alleged untrue statement or omission of a material
fact related to information supplied by the Indemnifying Party on the one hand
or the Indemnified Party on the other hand, the intent of the parties and
their relative knowledge, access to information and opportunity to correct or
prevent such statement or omission. The amount paid or payable by the
Indemnified Party as a result of the loss, claim, damage or liability, or
action in respect thereof, referred to above in this paragraph shall be deemed
to include, for purposes of this paragraph, any legal or other expenses
reasonably incurred by the Indemnified Party in connection with investigating
or defending any such action or claim or enforcing this provision. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.
6.07. REASONABLE BEST EFFORTS. Subject to the other terms and conditions
hereof, each of the parties hereto agrees to use its reasonable best efforts
to take, or cause to be taken, all appropriate action, and to do, or cause to
be done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the Transactions contemplated by
this Agreement in the most expeditious manner practicable, including the
satisfaction of all conditions to the Merger and the other Transactions and
seeking to remove promptly any injunction or other legal barrier that may
prevent or delay such consummation. Each of the parties shall promptly notify
the other whenever a material consent is obtained and shall keep the other
informed as to the progress in obtaining such material consents.
6.08. PUBLIC ANNOUNCEMENTS. Except as otherwise may be required by law, no
party hereto shall make any public announcements or otherwise communicate with
any news media with respect to this Agreement or any of the Transactions
without such prior consultation with the other parties as to the timing and
content of any such announcement as may be reasonable under the circumstances;
PROVIDED, HOWEVER, that nothing contained herein shall prevent any party from
promptly making all filings with governmental authorities as may, in its
judgment, be required or advisable in connection with the execution and
delivery of this Agreement, the Transaction Agreements or the consummation of
the Transactions.
6.09. TAX MATTERS.
(a) INDEMNIFICATION OBLIGATIONS.
(i) NEWCO'S INDEMNIFICATION OBLIGATIONS. Newco shall be liable for, shall
pay and shall indemnify and hold the Surviving Corporation and its
Subsidiaries harmless, on an After-Tax Basis, against (A) subject to
Section 6.09(a)(ii)(D), any Tax of the Company or any Subsidiary of the
Company
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attributable to any Pre-Closing Tax Period, including, without limitation,
any Spin-Off Tax, but not including any Tax assessed against the Company as
a result of the Merger not qualifying as a reorganization under Section
368(a)(1)(A) of the Code by reason of any action or inaction on the part of
Acquiror subsequent to the Effective Time, (B) any Tax of Newco or any
Subsidiary of Newco, whether attributable to a Pre-Closing Tax Period or
Post-Closing Tax Period, and (C) any Transfer Taxes which may be imposed or
assessed as a result of the Contribution and the Distribution.
(ii) ACQUIROR'S INDEMNIFICATION OBLIGATIONS. Acquiror and the Surviving
Corporation shall be liable for, shall pay and shall indemnify and hold
Newco and its Subsidiaries harmless, on an After-Tax Basis, against (A) any
Tax of Acquiror or any Subsidiary of Acquiror (other than the Company or
any Subsidiary of the Company) attributable to any Pre-Closing Tax Period,
(B) any Tax of Acquiror, any Subsidiary of Acquiror, the Surviving
Corporation, Broadcasting or any Subsidiary of the Surviving Corporation
attributable to any Post-Closing Tax Period, (C) any Transfer Tax imposed
or assessed as a result of the Merger, and (D) any Taxes (including, for
purposes of this Section 6.09(a)(ii)(D), any income Taxes for which any
stockholders of the Company immediately prior to the Effective Time are
liable as a result of the Transactions) arising primarily as a result of a
breach by Acquiror of any of the covenants set forth in Section 6.09(i)(ii)
hereof (provided that actions or omissions by Newco do not materially
contribute to the incurrence of such Taxes).
(iii) PRORATION OF TAXES. To the extent required or permitted by
applicable Law or administrative practice, the then-current Tax period of
the Company and any of the Broadcasting Subsidiaries shall terminate as of
the close of the Closing Date. Any Taxes imposed with respect to any
Straddle Period shall be allocated between the Pre-Closing Tax Period and
the Post-Closing Tax Period, based on the permanent books and records
maintained by the Company, as follows:
(A) in the case of any Taxes based upon or related to income, as if
the Pre-Closing Tax Period ended on the Closing Date and the Post-
Closing Tax Period began on the date immediately following the Closing
Date; and
(B) in the case of any Taxes other than Taxes based upon or related
to income, the amount of Taxes attributable to the Pre-Closing Tax
Period shall be calculated by reference to the number of days in such
period ending on the Closing Date as compared to the total number of
days in the Straddle Period, and the amount of Taxes attributable to
the Post-Closing Tax Period shall be calculated by reference to the
number of days in such period beginning after the Closing Date as
compared to the total number of days in the Straddle Period.
(iv) REFUNDS AND CREDITS OF TAXES. Each party shall be entitled to all
refunds or credits of any Tax, including, without limitation, in the case
of Newco, any refunds attributable to the Spin-Off Tax, for which such
party is liable hereunder. Any party receiving a refund or credit (and
interest, if any, with respect thereto) that is for the account of another
party hereunder shall promptly and, in any event, no later than five
Business Days following its receipt, pay to the other party such refund or
credit (and any interest with respect thereto).
(v) CONTROL OF TAX PROCEEDINGS.
(A) Newco shall be designated as the agent for the Company Group
pursuant to Section 1.1502-77(d) of the Treasury Regulations, subject
to the approval of the District Director of the IRS, and any similar
provisions of applicable state income or franchise Tax laws for any Tax
period relating to Taxes for which Newco is obligated to indemnify the
Surviving Corporation and its Subsidiaries under Section 6.09(a)(i).
Whenever any Taxing authority asserts a claim, makes an assessment or
otherwise disputes the amount of Taxes for which Newco is obligated to
indemnify the Surviving Corporation and its Subsidiaries under Section
6.09(a)(i), in whole or in part, under this Agreement, including,
without limitation, any Taxes of the Company or any Subsidiary of the
Company attributable to any Pre-Closing Tax Period (except as otherwise
provided in Section 6.09(a)(i)) and any Spin-Off Tax, Acquiror shall
promptly inform Newco, and Newco, at its cost and expense, shall have
the right to control any resulting proceedings and to determine whether
and when to settle any such claim,
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assessment or dispute, PROVIDED, HOWEVER, that Newco shall not, without
Acquiror's consent, which consent shall not be unreasonably withheld,
take any action or omit to take any action relating to a Pre-Closing
Tax Period which would result in an increase of more than $1,000,000 in
the Tax liability of the Surviving Corporation or any Subsidiary of the
Surviving Corporation for all Post-Closing Tax Periods, computed on an
After Tax Basis.
(B) If any Taxing authority notifies Newco of a claim, makes an
assessment or otherwise disputes the amount of Taxes for which Acquiror
is obligated to indemnify Newco and its Subsidiaries under Section
6.09(a)(ii), in whole or in part, under this Agreement, Newco shall
promptly inform Acquiror, and Acquiror, at its cost and expense, shall
have the right to control any resulting proceedings and to determine
whether and when to settle any such claim, assessment or dispute,
provided, however, that Acquiror shall not take any action or omit to
take any action relating to a Post-Closing Tax Period which would
result in an increase of more than $1,000,000 in the Tax liability of
the Company or any Subsidiary of the Company for all Pre-Closing Tax
Periods, computed on an After-Tax Basis.
(C) Notwithstanding the foregoing provisions of this Section
6.09(a)(v), in the event any Taxing authority asserts a claim, makes an
assessment or otherwise disputes the amount of Taxes attributable to
any Straddle Period for which both Newco and Acquiror may be liable
under this Agreement, Newco and Acquiror, at their respective cost and
expense, shall jointly participate in any resulting proceedings and
mutually determine whether and when to settle any such claim,
assessment or dispute, PROVIDED, HOWEVER, that Newco or Acquiror, at
its cost and expense, may, by written notice to the other, elect to
control the defense of such claim, assessment or dispute, including the
decision whether and when to settle such claim, assessment or dispute,
but in the event Newco or Acquiror so elects, the other shall no longer
be obligated to indemnify Acquiror or Newco, as the case may be, and
its Subsidiaries for any portion of the Taxes attributable to such
Straddle Period which are in dispute.
(b) TAX RETURNS.
(i) Newco shall be responsible for the preparation and timely filing of
all Company Consolidated Income Tax Returns for any Pre-Closing Tax Period,
including Company Consolidated Income Tax Returns for such period that are
due after the Closing Date, all Tax Returns for any Tax period relating to
the Newspaper Subsidiaries, and all Broadcasting Tax Returns required to be
filed on or before the Closing Date. Within twenty (20) days following the
filing of Company Consolidated Income Tax Returns for the Tax period ended
on the Closing Date, Newco shall furnish Acquiror with (i) copies of such
Tax Returns, and (ii) information concerning (A) the Tax basis of the
assets of Broadcasting as of the Closing Date; (B) the earnings and profits
of the Company and Broadcasting as of the Closing Date; (C) the Company's
Tax basis in the stock of Broadcasting and PBC's Tax basis in the stock of
each of its Subsidiaries as of the Closing Date; (D) the net operating loss
carryover, investment tax credit carryover, alternative minimum tax
carryover and the capital loss carryover, if any, available to the
Surviving Corporation and its Subsidiaries for a Post-Closing Tax Period;
and (E) all elections with respect to Company Consolidated Income Taxes in
effect for Broadcasting as of the Closing Date. Other than elections in the
ordinary course of business consistent with past practice or elections
which will not have the effect of increasing the Taxes of Acquiror in a
Post-Closing Tax Period, no Tax elections shall be made with respect to any
of the Tax Returns for which Newco is responsible under this Section
6.09(b)(i) on behalf of the Company or any Broadcasting Subsidiary without
the consent of Acquiror.
(ii) Acquiror shall be responsible for the preparation and timely filing
of all Tax Returns relating to the business or assets of the Company or
Broadcasting required to be filed after the Closing Date (other than the
Tax Returns to be prepared and filed by Newco pursuant to Section
6.09(b)(i)), PROVIDED, HOWEVER, that all such Tax Returns relating to any
Pre-Closing Tax Period or Straddle Period shall be prepared in a manner
consistent with the past practice of the Company in preparing such Tax
Returns. Acquiror shall provide Newco with a draft of any such Tax Return
relating to any Pre-Closing Tax Period or Straddle Period at least thirty
(30) days prior to the due date for filing such Tax Return (taking into
account any applicable extensions), and Newco may provide Acquiror with
written comments on such draft Tax Return within ten (10) days after its
receipt of such draft. Subject to Section 6.09(e), Acquiror and
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Newco shall attempt to resolve any disputes regarding such draft Tax Return
in good faith at least ten (10) days prior to the due date for filing such
Tax Return.
(c) COOPERATION. Acquiror and Newco shall cooperate with each other in a
timely manner in the preparation and filing of any Tax Returns described in
Section 6.09(b), payment of any Taxes in accordance with this Agreement, and
the conduct of any audit or other proceeding relating thereto. Each party
shall execute and deliver such powers of attorney and make available such
other documents as are necessary to carry out the intent of this Section 6.09.
Each party agrees to notify the other party of any audit adjustments that do
not result in Tax liability but can reasonably be expected to affect Tax
Returns of the other party.
(d) RETENTION OF RECORDS. Acquiror and Newco shall each, to the extent
potentially relevant to the other party, (1) retain records, documents,
accounting data and other information (including computer data) necessary for
the preparation and filing of all Tax Returns or the audit of such Tax
Returns, and (2) give to the other reasonable access to such records,
documents, accounting data, Tax Returns and related books and records and
other information (including computer data) and to its personnel (insuring
their cooperation) and premises, for purposes of the review or audit of such
Tax Returns to the extent relevant to an obligation or liability of a party
under this Agreement.
(e) PAYMENTS; DISPUTES. Except as otherwise provided in this Section 6.09,
any amounts owed by any party ("Indemnitor") to any other party ("Indemnitee")
under this Section 6.09 shall be paid within ten days of notice from the
Indemnitee, PROVIDED, HOWEVER, that if such amounts are being contested before
a Taxing authority in good faith, the Indemnitor shall not be required to make
payment until it is determined finally by such Taxing authority, unless the
Indemnitor has authorized the Indemnitee to make payment to such Taxing
Authority. Unless otherwise required under applicable Law, the Company, Newco
and Acquiror agree to treat any and all indemnity payments made pursuant to
this Agreement as having been made immediately prior to the Distribution and
as a dividend from or a capital contribution to Newco, as the case may be, for
federal, state and local Tax purposes. If Acquiror and Newco cannot agree on
any calculation or determination of any of their respective liabilities or any
other matter under this Section 6.09, such calculation or determination shall
be made by an independent public accounting firm reasonably acceptable to both
such parties. The decision of such firm shall be final and binding. The fees
and expenses incurred in connection with such calculation or determination
shall be borne equally by the disputing parties.
(f) TERMINATION OF TAX SHARING AGREEMENTS. Except as specifically provided
in this Section 6.09, any Tax Sharing Agreement or policy of the Company Group
shall be terminated at the Effective Time, and the Company and Broadcasting
shall have no obligation under such agreements after the Effective Time.
(g) SURVIVAL. Notwithstanding anything in this Agreement to the contrary,
the provisions of this Section 6.09 shall survive for the full period of all
statutes of limitations (giving effect to any waiver or extension thereof)
applicable to Taxes and Tax Returns subject to this Section 6.09.
(h) DEFINITIONS.
(i) "After-Tax Basis" means, with respect to any payment, an amount
calculated by taking into account the Tax consequences of the receipt of
such payment, as well as any Tax benefit associated with the liability
giving rise to the payment, in each case calculated on a present value
basis using the Agreed Rate.
(ii) "Broadcasting Tax Return" means any Tax Return of PBC or any of its
Subsidiaries.
(iii) "Company Consolidated Income Tax Returns" means any Tax Return of
the Company or any Subsidiary with respect to Company Consolidated Income
Taxes.
(iv) "Company Consolidated Income Taxes" means the federal income Tax and
all applicable state or local income or franchise Taxes of the Company
Group.
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(v) "Company Group" means the affiliated group of corporations, within
the meaning of Section 1504(a) of the Code, of which the Company is the
common parent or any unitary, combined or consolidated group of
corporations for state income Tax purposes in which the Company or any
Broadcasting Subsidiary is included.
(vi) "Pre-Closing Tax Period" means any Tax period, or portion thereof,
ending on or before the close of business on the Closing Date.
(vii) "Post-Closing Tax Period" means any Tax Period or portion thereof,
beginning after the close of business on the Closing Date.
(viii) "Spin-Off Tax" means any Tax to which the Company or any
Subsidiary of the Company is subject as a result of the application of
Section 311(b), Section 355(c)(2), Section 355(e) or Section 361(c)(2) of
the Code (or any corresponding or similar provision of state or local law)
to the Distribution.
(ix) "Straddle Period" means any Tax period which begins before and ends
after the Closing Date.
(x) "Tax" (including with correlative meaning, the terms "Taxes" and
"Taxable") means any income, gross receipts, ad valorem, premium, excise,
value-added, sales, use, transfer, franchise, license, severance, stamp,
occupation, service, lease, withholding, employment, payroll premium,
property or windfall profits tax, alternative or add-on-minimum tax, or
other tax, fee or assessment, and any payment required to be made to any
state abandoned property administrator or other public official pursuant to
an abandoned property, escheat or similar law, together with any interest
and any penalty, addition to tax or additional amount imposed by any Taxing
authority responsible for the imposition of any such Tax or payment.
(xi) "Tax Return" means any return, report, statement, information
statement, refund claim and the like, including any amendment thereto,
required to be filed with any Taxing authority with respect to Taxes.
(xii) "Tax Sharing Agreement" means any Tax sharing agreement or
arrangement (whether or not written) binding on a Person, and any agreement
or arrangement (including any arrangement required or permitted by law)
which (i) requires a Person to make a payment to or for the account of any
other Person, (ii) requires or permits the transfer or assignment of
income, revenues, receipts or gains to a Person from any other Person, or
(iii) otherwise requires a Person to indemnify any other Person in respect
of Taxes.
(xiii) "Transfer Tax" means any excise, sales, use, transfer,
documentary, filing, recordation or other similar tax or fee, together with
any interest, additions or penalties with respect thereto and any interest
in respect of such additions or penalties.
(i) ADDITIONAL COVENANTS.
(i) Each of the Company, Acquiror and their respective Affiliates shall
exercise their best efforts to obtain and assist in obtaining the advance
letter ruling from the IRS contemplated by Section 6.16 hereof. Without in
any way limiting the foregoing, each of the Company and Acquiror agrees
that it (and such of its Affiliates as are reasonably required by the IRS)
shall make such representations as are reasonably required by the IRS
pursuant to Rev. Proc. 96-30, 1996-1 C.B. 696, including, in particular,
Sections 4.04 and 4.05 thereof.
(ii) Acquiror covenants that any representations made by it or any of its
Affiliates to the IRS in connection with the IRS ruling request and any
information supplied by it to the IRS in connection with the ruling request
will be true and accurate. In addition, for a period of two years after the
Closing Date:
(A) except for actions taken in the ordinary course of business or as
otherwise required by applicable Law, Acquiror shall not sell,
transfer, distribute or otherwise dispose of any of the operating
assets of Broadcasting or any shares of capital stock of Broadcasting
or a Broadcasting Subsidiary, whether by merger or otherwise, in a
transaction or series of transactions which would cause the
Transactions to fail to satisfy the continuity of business enterprise
requirements of the Treasury Regulations; and
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(B) Acquiror shall not adopt a plan of liquidation or initiate and
enter into an agreement of merger or other transaction pursuant to
which the corporate legal existence of Acquiror would terminate or the
outstanding stock of Acquiror would, in a taxable transaction, be
converted into cash, other property or the stock or securities of any
other issuer.
Notwithstanding the foregoing, Acquiror may take any actions described in
clauses (A) and (B) above if it first obtains either (i) a ruling from the
IRS; or (ii) an opinion reasonably satisfactory to Newco of nationally
recognized tax counsel that such actions will not result in the
Distribution or the Merger being taxable to the Company's stockholders.
(j) PAYMENT OF SPIN-OFF TAX. The Company shall pay the Spin-Off Tax to the
appropriate governmental authorities as and when such payment is required to
be made, including by making estimated Tax payments which take into account
its liability for the Spin-Off Tax as and when such estimated Tax payments are
required to be made.
6.10. NOTIFICATION. Each party hereto shall, in the event of, or promptly
after obtaining knowledge of the occurrence or threatened occurrence of, any
fact or circumstance that would cause or constitute a breach of any of its
representations and warranties set forth herein, give notice thereof to the
other parties and shall use its reasonable best efforts to prevent or promptly
remedy such breach.
6.11. EMPLOYEE BENEFIT MATTERS.
(a) Except as otherwise provided herein, as of the Effective Time, Newco
will assume sponsorship of and responsibility for the employer obligations
under the Company Employee Plans. From and after the Effective Time, except
with respect to previously accrued and unpaid benefits, all Broadcasting
Employees will cease to be covered by any Company Employee Plan that is
assumed by Newco. Except as otherwise specifically provided herein, neither
Acquiror, the Company, PBC nor any of their respective Affiliates, shall
retain or acquire any liability or obligation under any Company Employee Plan;
and Newco will defend and indemnify Acquiror, the Surviving Corporation, PBC
and their respective Affiliates from and against all Losses arising from or
relating to any such liability or obligation that is not so retained or
acquired. The indemnification arrangements set forth in this Section 6.11(a)
shall be subject to the procedures set forth in Section 2.04 of the
Contribution Agreement. All Broadcasting Employees who become employees of
Acquiror as of the Effective Time will thereupon become fully vested in their
accrued benefits under the Broadcasting Pension Plans.
(b) All Broadcasting Employees who are employed by the Company or PBC or a
subsidiary of PBC immediately prior to the Effective Time will remain or
become employees of PBC (or a Subsidiary of PBC) or Surviving Corporation, as
the case may be, immediately after the Effective Time (the "Transferred
Employees"). At the Effective Time, Acquiror will provide or cause Transferred
Employees (and, where applicable, their eligible dependents) to be provided
with compensation, pension, retirement, welfare (including, without
limitation, group health, life insurance, disability, severance and vacation
benefits) and fringe benefits (exclusive of any benefit or plan which provides
for any opportunity to acquire or invest in employer equity) which, in the
aggregate, are not less favorable than the compensation, pension, welfare and
fringe benefits theretofore provided to such Transferred Employees (and their
dependents) under the Broadcasting Employee Plans, PROVIDED HOWEVER that
Acquiror shall not be required to offer post-retirement benefits except as
provided in Section 6.11(f). Each Transferred Employee's pre-Effective Time
service with the Company or its Affiliates will be treated as service with
Acquiror and its Affiliates for purposes of determining such Transferred
Employee's eligibility, vesting and seniority (but expressly excluding service
for determining benefit accruals) under the Employee Plans of Acquiror and its
Affiliates, if such service is otherwise creditable under such plans, from and
after the Effective Time.
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(c) At or as soon as practicable after the Effective Time, the account
balances held for the Transferred Employees under the Pulitzer Retirement
Savings Plan (the "Pulitzer Savings Plan") will be transferred in cash (or
such other form as may be agreed upon by Newco and Acquiror) by the trustee of
the trust maintained under the Pulitzer Savings Plan to the trustee of the
trust maintained under an existing or newly-established qualified defined
contribution plan sponsored by Acquiror or PBC (the "Transferee DC Plan") in a
plan-to-plan transfer of assets and liabilities that satisfies the
requirements of applicable law, including Sections 411(d) and 414(l) of the
Code. After the Effective Time and until the completion of the aforesaid plan-
to-plan transfer of assets and liabilities, Newco will cause the fiduciaries
of the Pulitzer Savings Plan to process distributions that become payable to
Transferred Employees whose employment with Acquiror, PBC or any of their
Subsidiaries is terminated, and the amount to be transferred in the plan-to-
plan transfer will be reduced accordingly. The Company, Newco and Acquiror
will make or cause to be made any plan amendments and filings as may be
required in connection with said plan-to-plan transfer of assets and
liabilities from the Pulitzer Savings Plan to the Transferee DC Plan, whether
before or after the Effective Time. Newco and Acquiror each may require, as a
condition to the plan-to-plan transfer from the Pulitzer Savings Plan to the
Transferee DC Plan, evidence reasonably satisfactory to it or its counsel of
the qualified status of the Transferee DC Plan or the Pulitzer Savings Plan,
as the case may be, at the time of such transfer under Section 401(a) of the
Code. Each of the parties will pay its own expenses in connection with the
plan to plan transfer of assets and liabilities from the Pulitzer Savings Plan
to the Transferee DC Plan. Newco and Acquiror will take such other and further
actions as may be required or reasonably requested by the other in order to
carry out the transfer of assets and liabilities contemplated by this
subsection without undue delay.
(d) At or as soon as practicable after the Effective Time, Newco shall cause
the trustee of the Pulitzer Publishing Company Pension Plan (the "Pulitzer
Pension Plan") to transfer to the trustee of the trust maintained as part of
an existing or newly-established qualified defined benefit pension plan
maintained or to be maintained by Acquiror or PBC (the "Transferee DB Plan")
cash (or such other assets as may be agreed upon by said trustees) and benefit
liabilities accrued prior to the Effective Time for and on behalf of the
Transferred Employees under the Pulitzer Pension Plan in a plan-to-plan
transfer of assets and liabilities that satisfies the requirements of
applicable law, including the provisions of Sections 414(l) and 411(d) of the
Code. For these purposes, the amount of the plan-to-plan asset transfer will
be equal to the current liability as defined in Section 412(l)(7) of the Code
(calculated as of the Effective Time with appropriate interest adjustment to
the date of transfer at the rate assumed for calculating the benefit
liability) using the 1983 Group Annuity Mortality Table and the PBGC annuity
valuation rate in effect at the Effective Time, provided that the amount
transferred shall in no event be less than the amount required to be
transferred pursuant to Section 414(l) of the Code, and Section 4044 of ERISA
as of the Effective Time. The value of the assets and liabilities to be
transferred from the Pulitzer Pension Plan to the Transferee DB Plan shall
initially be calculated and certified as correct as soon as practicable
following the Effective Time by an actuary selected by Newco ("Newco's
Actuary"). The Acquiror will have the right to appoint is own actuary
("Acquiror's Actuary") for the purpose of verifying whether the calculation
made by Newco's Actuary is correct. Such calculation shall be based upon the
method and assumptions specified for this purpose by Section 414(l) of the
Code and the regulations issued thereunder. The calculations certified by
Newco's Actuary shall be final, conclusive and binding unless, within thirty
(30) days after the delivery of such certification to Acquiror's Actuary,
together with such supporting information as Acquiror's Actuary may reasonably
request, Acquiror's Actuary shall notify Newco's Actuary of its disagreement
with same. If any such disagreement is not resolved to the satisfaction of
Newco and Acquiror within thirty (30) days of Newco's receipt of such
notification, then either Newco or Acquiror may elect to have the calculations
submitted for resolution to a third independent actuary designated for this
purpose by both Newco's Actuary and Acquiror's Actuary, whose determination
shall be made within thirty (30) days and shall be conclusive and binding on
all Persons. After the Effective Time and until the completion of the
aforesaid plan to plan transfer of assets and liabilities, Newco will cause
the fiduciaries of the Pulitzer Pension Plan to process distributions that
become payable to Transferred Employees whose employment with Acquiror, PBC or
any of their Subsidiaries is terminated, and the value of assets and
liabilities to be transferred in the plan to plan transfer will be reduced
accordingly. The Company, Newco and Acquiror will make or cause to be made any
plan amendments and filings (including, without limitation, any filing
required pursuant to Section 4043(c) of ERISA) as may be required or
appropriate in
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connection with said plan-to-plan transfer of assets and liabilities from the
Pulitzer Pension Plan to the Transferee DB Plan, whether before or after the
Effective Time. Newco and Acquiror each may require, as a condition of the
plan-to-plan transfer from the Pulitzer Pension Plan to the Transferee DB
Plan, evidence reasonably satisfactory to it or its counsel of the qualified
status of the Transferee DB Plan or the Pulitzer Pension Plan, as the case may
be, at the time of such transfer under Section 401(a) of the Code. Each of the
parties will pay its own expenses in connection with the plan-to-plan transfer
of assets and liabilities from the Pulitzer Pension Plan to the Transferee DB
Plan. Newco and Acquiror will take such other and further actions as may be
required or reasonably requested by the other in order to carry out the
transfer of assets and liabilities contemplated by this subsection without
undue delay.
(e) No provision of this Section 6.11 or this Agreement shall create any
third party beneficiary or other rights in any employee or former employee
(including any beneficiary or dependent thereof) or any bargaining unit
representing any employee or former employee of the Company, PBC or any of
their Subsidiaries in respect of continued employment (or resumed employment)
with Acquiror or any of its Subsidiaries, and no provision of this Section
6.11 or this Agreement shall create any such rights in any such employee or
former employee in respect of any benefits that may be provided, directly or
indirectly, under any Employee Plan or any plan or arrangement which may be
established by Acquiror or any of its Subsidiaries.
(f) The following obligations and Broadcasting Employee Plans will not be
assumed by Newco and will continue to be the sole responsibility of the
Company and PBC: (1) the satisfaction and timely payment of any retirement or
other benefits that have been earned as of the Effective Time by Transferring
Employees (other than Xxx X. Xxxxxx) under the Pulitzer Publishing Company
Supplemental Executive Retirement Plan (which benefits will become fully
vested as of the Effective Time) (the "SERP Liability"), PROVIDED, HOWEVER,
that Newco will pay to the Surviving Corporation in cash, promptly after the
Effective Time on demand by Acquiror, as an adjustment to the Contribution to
be treated for tax purposes in accordance with the treatment of indemnitee
payments under Section 6.09(e), in an amount equal to the excess of the SERP
Liability over the deferred tax asset attributable to the SERP Liability
calculated in accordance with GAAP, consistently applied, (2) the executive
employment and participation agreements listed on Schedule 6.11(f)(2) annexed
hereto, (3) the group health plan maintained by PBC and any other Broadcasting
Employee Plan listed on Schedule 6.11(f)(3) annexed hereto, which is sponsored
and maintained by PBC or any of its subsidiaries exclusively for the benefit
of any current or former Broadcasting Employees (and their eligible dependents
and beneficiaries) (it being understood that the assets to be contributed to
Newco pursuant to Section 2.02 will not include employee balances, if any,
under such plans), and (4) post-retirement medical or other welfare benefits
which are or may become payable to any Transferring Employee or any dependent
or beneficiary of a Transferring Employee pursuant to the Broadcasting
Employee Plan(s) listed on Schedule 6.11(f)(4) annexed hereto.
(g) At or immediately prior to the Effective Time, the Company will satisfy
its retention and transaction incentive obligations then payable under any
participation and employment agreements described on Schedule 6.11(g).
Notwithstanding anything to the contrary contained herein, any retention or
transaction incentive, stock option cashout (described in Section 6.12 of this
Agreement) or other compensatory amounts payable by the Company to an
individual who, for the taxable year of the Company ending on the date the
Merger is consummated, is a "covered employee" of the Company (within the
meaning of Section 162(m)(3) of the Code), will be paid at the Effective Time
to the trustee of a trust established for their benefit by Newco (the "Newco
Trust") if and to the extent that the payment of those amounts, when added to
all other compensation paid or payable to that individual, would not be
deductible by the Company for such taxable year by reason of the deduction
limitation prescribed by Section 162(m)(1) of the Code. Obligations covered by
amounts transferred to the Newco Trust will be deemed to have been assumed by
Newco for purposes of applying the provisions of Section 6.11(a) of this
Agreement, and neither the Acquiror, the Surviving Corporation, PBC nor any of
their respective Affiliates will have any further liability with respect to
said covered obligations. At the Effective Time, the Company will have made
all contributions theretofore required to be made to any Broadcasting Employee
Plan for the benefit of Transferred Employees.
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6.12. EMPLOYEE STOCK OPTIONS. At or immediately prior to the Effective Time,
the Company will cause all options then outstanding under the Company's 1986
and 1994 stock option plans (the "Company Option Plans"), whether or not
vested, to be cashed out and terminated. The amount payable by the Company in
respect of the termination of an outstanding Company stock option will be
equal to the difference between the exercise price of the option and the
average daily closing price of the Company Common Stock for the ten trading
days immediately prior to the Closing Date. The Company may prohibit the
exercise of vested options after a specified cutoff date prior to the
Effective Time in order to facilitate the orderly liquidation and termination
of the remaining vested and nonvested outstanding options. Unless the Board
determines otherwise, the Company will suspend payroll deductions and Company
stock option grants under the Employee Stock Purchase Plan as of or prior to
October 1, 1998. All such Employee Stock Purchase Plan grants will have been
exercised or terminated before the Effective Time.
6.13. MEETINGS OF STOCKHOLDERS. Subject to the terms and conditions of this
Agreement, each of the Company and Acquiror shall take all action necessary,
in accordance with applicable law and its charter and bylaws, to duly call,
give notice of, convene and hold a meeting of its stockholders to consider and
vote upon the adoption and approval of the Merger, this Agreement and the
Transactions (except the Company Charter Amendment, in the case of Acquiror).
The Company and Acquiror shall coordinate and cooperate with respect to the
timing of their respective stockholder meetings and shall endeavor to hold
such meetings on the same day. The stockholder vote required for the adoption
and approval of the Merger, this Agreement and the Transactions (except the
Company Charter Amendment, in the case of Acquiror) shall be the vote
required: (i) in the case of the Company, by the DGCL and the Company's
Certificate of Incorporation; and (ii) in the case of Acquiror, by the DGCL
and Acquiror's Certificate of Incorporation. The Boards of Directors of the
Company and Acquiror shall recommend that their respective stockholders
approve the Merger, this Agreement and the related Transactions (except the
Company Charter Amendment, in the case of Acquiror) and such recommendation
shall be contained in the Joint Proxy Statement/Prospectus. Nothing contained
in the preceding sentence shall prohibit the Company from taking and
disclosing to its stockholders a position contemplated by Rule 14e-2(a)
promulgated under the Exchange Act or from making any disclosure to the
Company or the Company's stockholders if, in the good faith judgment of the
Board of Directors of the Company, after consultation with outside counsel,
failure so to disclose would be inconsistent with its duties to the Company or
the Company's stockholders under applicable law. Notwithstanding the preceding
sentence, neither the Company nor its Board of Directors nor any committee
thereof shall withdraw or modify, or propose publicly to withdraw or modify
its position with respect to, this Agreement or the Merger or, except as
permitted by the preceding sentence, approve or recommend, or propose publicly
to approve or recommend, an Acquisition Proposal.
6.14. REGULATORY AND OTHER AUTHORIZATIONS.
(a) The Company and Acquiror agree to use their respective commercially
reasonable efforts (i) to obtain all Licenses and waivers of federal, state,
local and foreign regulatory bodies and officials (each a "Governmental
Authority") and non-governmental third parties that may be or become necessary
for performance of their respective obligations pursuant to this Agreement,
(ii) to lift or rescind any injunction or restraining order or other order
adversely affecting the ability of the parties hereto to consummate the
Transactions contemplated hereby and (iii) to effect all necessary
registrations and filings including, but not limited to, filings under the HSR
Act and submissions of information requested by any Governmental Authority.
The parties hereto further covenant and agree, with respect to any threatened
or pending preliminary or permanent injunction or other order, decree or
ruling or statute, rule, regulation, executive order or withheld waiver or
approval that would adversely affect the ability of the parties hereto to
consummate the Merger and the other Transactions contemplated hereby, to
respectively use their commercially reasonable efforts (including, if
necessary, the measures described in subsection (b) below) to prevent the
entry, enactment or promulgation thereof or to obtain such waiver or approval,
as the case may be.
(b) Without limiting the obligations of the parties hereto under Section
6.14(a), Acquiror and the Company agree to take or cause to be taken the
following actions: (i) provide promptly to Governmental Authorities with
regulatory jurisdiction over (a) enforcement of any applicable antitrust laws
("Government Antitrust Entity") or
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(b) the laws, rules or regulations of the FCC or otherwise relating to the
broadcast, newspaper, mass media or communications industry ("Government
Communications Entity," and together with Government Antitrust Entity, a
"Government Regulatory Entity") information and documents requested by any
Government Regulatory Entity, or necessary, proper or advisable to permit
consummation of the Transactions contemplated by this Agreement; (ii) without
in any way limiting the provisions of Section 6.14(b)(i) above, (a) file any
Notification and Report Form and related material required under the HSR Act
as soon as practicable and in any event not later than fifteen (15) business
days after the date hereof (which shall request early termination of the
waiting period imposed by the HSR Act), and thereafter use its reasonable
efforts to certify as soon as practicable its substantial compliance with any
requests for additional information or documentary material that may be made
under the HSR Act and (b) file the FCC Application as soon as practicable and
in any event not later than fifteen (15) business days after the date hereof;
(iii) the proffer by Acquiror of its willingness to sell or otherwise dispose
of either WBAL or WGAL or any other broadcast station, if such action is
necessary or reasonably advisable for the purpose of avoiding or preventing
any action by any Government Regulatory Entity which would restrain, enjoin,
withhold approval or otherwise prevent consummation of the Transactions
contemplated by this Agreement; and (iv) Acquiror shall take promptly, in the
event that any permanent or preliminary injunction or other order is entered
or becomes reasonably foreseeable to be entered in any proceeding that would
make consummation of the Transactions contemplated hereby in accordance with
the terms of this Agreement unlawful or that would prevent or delay
consummation of the Transactions contemplated hereby, any and all commercially
reasonable steps including the appeal thereof, the posting of a bond or the
taking of the steps contemplated by clause (iii) of this subsection (b)
necessary to vacate, modify, suspend such injunction or order, or obtain such
approval so as to permit such consummation. Each of the Company and Acquiror
will provide to the other copies of all correspondence between it (or its
advisors) and any Government Regulatory Entity relating to this Agreement or
any of the matters described in this Section 6.14(b) other than statements or
filings under the HSR Act. Acquiror and Company agree that all telephonic
calls, meetings or hearings with a Government Regulatory Entity regarding the
Transactions contemplated hereby or any of the matters described in this
Section 6.14(b) shall include representatives of each of Acquiror and Company.
(c) Each party hereto shall promptly inform the other of any material
communication from any other Government Regulatory Entity regarding any of the
Transactions contemplated hereby. If any party hereto or any Affiliate thereof
receives a request for additional information or documentary material from any
such Government Regulatory Entity with respect to the Transactions
contemplated hereby, then such party shall endeavor in good faith to make, or
cause to be made, as soon as reasonably practicable and after consultation
with the other party, an appropriate response in compliance with such request.
Acquiror shall advise Company promptly in respect of any understandings,
undertakings or agreements (oral or written) that Acquiror proposes to make or
enter into with any other Government Regulatory Entity in connection with the
Transactions contemplated hereby.
(d) Notwithstanding the generality of any other provision of this Section
6.14, each of Acquiror and the Company, to the extent applicable, further
agrees to file contemporaneously with the filing of the FCC Application any
requests for waivers of applicable FCC rules or rules or regulations of other
Governmental Regulatory Entities as may be required, to expeditiously
prosecute such waiver requests and to diligently submit any additional
information or amendments for which the FCC or any other relevant Governmental
Regulatory Entity may ask with respect to such waiver requests. In furtherance
of the foregoing, Acquiror will agree to seek a temporary waiver (not more
than 6 months in duration) of the FCC's mass media ownership rules (the
"Temporary Waiver") to allow for the disposition of the assets comprising
either WBAL or WGAL or any other broadcast station (the "Divestiture Assets")
to the extent that, under the FCC's mass media ownership rules, the
Divestiture Assets could not be held in common control with any of the
Acquiror broadcasting assets following the Effective Time, and (i) conditional
waivers of the FCC's mass media ownership rules (the "Conditional Waivers") to
allow for the common ownership of WESH-TV, Daytona Beach, Florida, and WWWB-
TV, Lakeland, Florida, and WLKY-TV, Louisville, Kentucky, and WLWT-TV,
Cincinnati, Ohio; and (ii) waivers of the FCC's mass media ownership rules to
permit the common ownership of (A) WLKY-TV, Louisville, Kentucky, and WLKY
(AM), Louisville, Kentucky, and (B) WXII (TV), Winston-Salem, North Carolina,
and
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WXII (AM), Eden, North Carolina. Acquiror further covenants that, prior to the
Effective Time, it shall not acquire any new or increased "attributable
interest," as defined in the FCC rules, in any media property ("Further Media
Interest"), which Further Media Interest could not be held in common control
with any Station by Acquiror following the Effective Time (including by virtue
of the FCC's multiple ownership limits), without the prior written consent of
the Company. Notwithstanding anything to the contrary contained in this
Agreement, it shall not be a condition to the Closing that any such waiver
shall have been obtained.
(e) If at Closing one or more applications for renewal of any of the
Company's FCC Licenses is pending or any order of the FCC granting an
application for renewal of any of the Company's FCC Licenses has not become a
Final Order, then each party agrees to abide by the procedures established in
Stockholders of CBS, Inc., FCC 95-469 (rel. Nov. 22, 1995) Paragraphs 31-35, for
processing applications for assignment of licenses during the pendency of an
application for renewal of a station license (or such other procedures as may
be established by the FCC). For purposes of this provision, a "Final Order" is
an order of the FCC granting any such renewal application (i) that has not
been reversed, stayed, enjoined, set aside, annulled or suspended; (ii) as to
which, no timely request for a stay, petition for reconsideration or appeal of
sua sponte action of the FCC with comparable effect is pending; and (iii) the
time for filing any such request, petition or appeal or for the taking of any
such action sua sponte by the FCC has expired. The parties further agree that
the pendency of any such renewal application or applications, or the fact that
the FCC grant of any renewal application shall not have become a Final Order,
shall not be a cause for delaying the Closing. Notwithstanding anything in
this Agreement to the contrary, this Section shall survive the Closing until
any order issued by the FCC with respect to any such renewal application
becomes a Final Order.
6.15. FURTHER ASSURANCES. Upon the terms and subject to the conditions
hereof, each of the parties hereto shall execute such documents and other
instruments and take such further actions as may be reasonably required or
desirable to carry out the provisions hereof and consummate the Transactions
or, at and after the Closing Date, to evidence the consummation of the
Transactions by this Agreement.
6.16. IRS RULING. The Company shall, as promptly as practicable after the
date hereof, prepare and submit to the IRS a request for an advance letter
ruling from the IRS that the Contribution and Distribution will qualify as a
reorganization within the meaning of Section 368(a)(1)(D) of the Code and that
the Company's stockholders will recognize no gain or loss (and no amount will
be included in the income of the Company's stockholders) under Section 355(a)
of the Code as a result of the Distribution. Such request shall be true and
correct in all material respects, and all facts material to the ruling shall
be disclosed in such request. The Company shall afford Acquiror with
reasonable opportunity to review and comment on the IRS ruling request prior
to its submission to the IRS. The Company shall advise Acquiror's tax counsel
of the substance of all communications with the IRS relating to the IRS ruling
request, and provide Acquiror and its tax counsel with copies of all written
materials submitted to the IRS and written communications received from the
IRS in connection with such ruling request. If any written communication to
the IRS is to include information relating to Acquiror or any of its
Affiliates (other than public filings made with the SEC) or representations of
Acquiror, any of its Affiliates or any of their respective officers, directors
or shareholders, such information shall be delivered to Acquiror and its tax
counsel for their review and comment prior to submission, and the Company
shall make such reasonable changes and corrections to such information or
representations as are requested by Acquiror.
6.17. RECORDS RETENTION.
(a) For a period of five years after the Closing Date, Acquiror shall retain
all of its books and records relating to Broadcasting for periods prior to the
Closing Date and Newco shall have the right to inspect and copy such books and
records during normal business hours, upon reasonable prior notice, in
connection with the preparation of financial statements, reports and filings
and for any other reasonable purpose including its indemnification obligations
under this Agreement and the Contribution Agreement.
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(b) For a period of five years after the Closing Date, Newco shall retain
all of its books and records relating to Newco and the Newspaper Subsidiaries
for periods prior to the Closing Date and Acquiror shall have the right to
inspect and copy such books and records during normal business hours, upon
reasonable prior notice, in connection with the preparation of financial
statements, reports and filings and for any other reasonable purpose including
its indemnification obligations under this Agreement and the Contribution
Agreement.
6.18. STOCK EXCHANGE LISTING. Newco shall apply to the NYSE for the listing
of the Newco Common Stock and shall use its reasonable best efforts to receive
approval for the listing of such shares and, if such listing is not available,
then the NASDAQ. Acquiror shall submit a supplemental listing application to
NASDAQ or the NYSE, as the case may be, for the listing of the Merger Stock
and shall use its reasonable best efforts to receive approval for the listing
of such stock.
6.19. COMPANY NAMES.
(a) Acquiror acknowledges that the name "Pulitzer," or any part thereof,
whether alone or in combination with one or more other words, are to the
extent owned by the Company or any of its Subsidiaries an asset of the Company
being transferred to Newco in the Contribution. On the Closing Date, Acquiror
shall (i) cause PBC and the Broadcasting Subsidiaries to change their names to
delete any reference therein to the aforesaid name, (ii) reasonably cooperate
in assisting Newco to change its name to Pulitzer Inc., and (iii) cease using
the aforesaid name in connection with the business operations of Broadcasting.
(b) Between the consummation of the Contribution and the Closing, the
Company, PBC and the Broadcasting Subsidiaries shall have a non-exclusive
license to use the name "Pulitzer. "
6.20. OTHER AGREEMENTS. Contemporaneously with the execution and delivery of
this Agreement, the parties thereto have executed and delivered the following
agreements: (i) a Registration Rights Agreement in substantially the form set
forth in Exhibit D, (ii) the FCC Agreement in substantially the form set forth
in Exhibit E, (iii) a Board Representation Agreement in substantially the form
set forth in Exhibit F, (iv) the Arizona Diamondbacks agreement in
substantially the form set forth in Exhibit G, (v) the Acquiror Voting
Agreement in substantially the form of Exhibit H, and (vi) the Pulitzer Voting
Agreement in substantially the form of Exhibit I. The Company, Newco and
Acquiror shall fully and timely perform all their respective obligations
under, and take all actions necessary to effectuate the intent and purposes
of, the foregoing agreements.
6.21. FORM 8-K; PROVISION OF FINANCIAL STATEMENTS.
(a) As soon as practicable after the date hereof, the Company will prepare
and file a Current Report on Form 8-K (the "Form 8-K") which will include a
description of the business of Broadcasting and certain financial and other
information with respect to Broadcasting. The Company covenants that the Form
8-K will not contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
(b) At the request of Acquiror, the Company agrees to provide (or, if
requested by Acquiror, cooperate with Acquiror in the preparation of) as
promptly as practicable (but in any event within 45 days of the request) such
financial statements (audited or unaudited, as requested by Acquiror) relating
to Broadcasting as the Acquiror may reasonably request in order to comply with
the requirements of the Securities Act or the Exchange Act or in order to
secure financing (including pursuant to a public offering registered under the
Securities Act).
6.22. WORKING CAPITAL ADJUSTMENT.
(a) Two days prior to the Effective Time, the Company shall inform Acquiror
of (i) the Company's estimate of the Working Capital Amount as of the end of
the most recently available month end period immediately preceding the
Effective Time (the "Estimated Working Capital Amount") and (ii) the Company's
basis for such estimates. The calculation of the Estimated Working Capital
Amount shall be reasonably satisfactory to Acquiror.
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(b) At the Effective Time, Acquiror shall pay to Newco in immediately
available funds the amount, if any, by which the Estimated Working Capital
Amount exceeds $41,000,000 or Newco shall pay to Acquiror in immediately
available funds the amount, if any, by which $41,000,000 exceeds the Estimated
Working Capital Amount.
(c) As promptly as practicable after the Effective Time, but in any event
within ninety (90) days thereafter, Acquiror shall prepare and deliver to
Newco a schedule (the "Acquiror Schedule") showing Acquiror's determination of
the Working Capital Amount at the Closing Date. If Newco disagrees with the
determination set forth in the Acquiror Schedule, Newco shall give notice
thereof to Acquiror within sixty (60) days after delivery of the Acquiror
Schedule to Newco, such notice to include reasonable detail regarding the
basis for the disagreement.
(d) Acquiror and Newco shall attempt to settle any such disagreement; any
such settlement shall be final and binding upon Acquiror and Newco. If,
however, Acquiror and Newco are unable to settle such dispute within sixty
(60) days after receipt by Acquiror of such notice of dispute, the dispute
shall be submitted to an independent certified public accounting firm mutually
acceptable to Acquiror and Newco for resolution, and the decision of such firm
shall be final and binding upon Acquiror and Newco. All costs incurred in
connection with the resolution of said dispute by such independent public
accountants, including expenses and fees for services rendered, shall be paid
one-half by Acquiror and one-half by Newco. Acquiror and Newco shall use
reasonable efforts to have the dispute resolved within ninety (90) days after
such dispute is submitted to said independent public accountants. The final
determination of the Working Capital Amount (whether as a result of Newco's
failing to give notice of Newco's disagreement with Acquiror's determination
within the time period prescribed above, a resolution by Acquiror and Newco of
any such disagreement, or a determination by an accounting firm selected
pursuant to this paragraph to resolve any disagreement among the parties) may
occur on different dates.
(e) Within ten (10) Business Days following a final determination of the
Final Working Capital Amount ("Final Working Capital Amount"), (i) if the
Final Working Capital Amount exceeds the Estimated Working Capital Amount,
then Acquiror will pay to Newco in immediately available funds an amount equal
to such excess plus interest at the Agreed Rate from the Closing Date to the
date of payment and (ii) if the Estimated Working Capital Amount exceeds the
Final Working Capital Amount, Newco will pay to Acquiror in immediately
available funds an amount equal to such excess plus interest at the Agreed
Rate from the Closing Date to the date of payment. Any such payments shall be
made on an After-Tax Basis.
(f) In the event that after the Effective Time it is determined that the
Company shall have failed to pay or provide for the Existing Company Debt and
the Deal Expenses as provided in Section 2.01(b) and the Surviving Corporation
makes such payment, Newco shall promptly pay such amount to the Surviving
Corporation in immediately available funds promptly upon demand therefor.
6.23. CAPITAL EXPENDITURES. Prior to the Effective Time, PBC and the
Broadcasting Subsidiaries shall be responsible for and pay all capital
expenditures incurred in the ordinary and usual course of their respective
businesses based upon the Company's plans concerning the timing of such
capital expenditures during 1998.
6.24. EXCESS CASH. From time to time, after the date of execution of this
Agreement and until the Effective Time, and subject to applicable law, (i) PBC
and the Broadcasting Subsidiaries may pay cash dividends, or otherwise make
cash distributions, to the Company or any of its Subsidiaries and (ii) the
Company shall contribute to Newco cash held by the Company, including the
proceeds of the New Company Debt after payment or provision for the Existing
Company Debt and the Deal Expenses as provided in Section 2.01(b). Immediately
prior to the Contribution, PBC and the Broadcasting Subsidiaries shall, to the
extent permitted by law, pay dividends in cash or cash equivalents, or
otherwise make contributions in cash or cash equivalents, to the Company and
its Subsidiaries so that neither PBC nor the Broadcasting Subsidiaries owns
any cash or cash equivalents at the Effective Time, except that each of the
Stations may retain cash in those operating and payroll checking accounts in
existence as of the date hereof, in amounts necessary, as determined by the
Company, for general operating purposes of each of the Stations or group of
Stations, as the case may be.
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6.25. INDEMNITY RELATING TO CERTAIN LITIGATION.
(a) Newco shall indemnify from and after the Closing Date (i) the Surviving
Corporation, its Subsidiaries, including Broadcasting, and their Affiliates
against all Losses in connection with any suit, action, proceeding or
investigation pending at or arising after the Closing Date that relates to the
Newspaper Subsidiaries or their respective operations prior to the Effective
Time and (ii) any person who was an officer, director, partner or employee of
the Company, PBC or any Broadcasting Subsidiary against all Losses in
connection with any such suit, action, proceeding or investigation. The
Company and Newco, jointly and severally, shall indemnify Acquiror and its
Subsidiaries against all Losses arising prior to the Closing, and Newco shall
indemnify the Surviving Corporation and its Subsidiaries against all Losses
arising after the Closing, from or relating to any claim, action or proceeding
brought by or on behalf of the holders of Company Stock in connection with the
Transactions except by reason of actions taken or omitted to be taken by
Acquiror or except as provided in Section 6.06 hereof. The obligations of the
Company pursuant to this Section 6.25(a) shall terminate at the Effective
Time.
(b) Acquiror shall indemnify from and after the Closing Date (i) Newco, its
Subsidiaries and their Affiliates against all Losses in connection with any
suit, action, proceeding or investigation pending at or arising after the
Closing Date that relates to the business and operations of Broadcasting and
(ii) any person who was an officer, director, partner or employee of PBC or
any Broadcasting Subsidiary prior to, whether or not any person continues in
such capacity after, the Closing against all Losses in connection with any
such suit, action, proceeding or investigation. Acquiror shall indemnify the
Company and Newco against all Losses arising from or relating to any claim,
action or proceeding brought by or on behalf of the holders of Acquiror Common
Stock in connection with the Transactions except by reason of actions taken or
omitted to be taken by the Company or except as provided in Section 6.06
hereof.
(c) The indemnification arrangements set forth in this Section 6.25 shall be
subject to the procedures set forth in Section 2.04 of the Contribution
Agreement.
6.26. CANCELLATION OF INTERCOMPANY ARRANGEMENTS. Prior to the Effective
Time, and except as otherwise provided herein or as otherwise agreed by the
parties hereto, all accounts, payables, receivables, contracts, commitments
and agreements between the Company and its Newspaper Subsidiaries, on the one
hand, and PBC and the Broadcasting Subsidiaries, on the other hand, will be
settled, cancelled or otherwise terminated.
6.27. NETWORK AFFILIATION AGREEMENTS. Upon the terms and subject to the
conditions hereof, each of the parties shall use its respective reasonable
best efforts to take or cause to be taken all actions and to do or cause to be
done all other things necessary to assign the Station Network Affiliation
Agreements to Acquiror.
6.28. GROSS-UP MATTERS.
(a) Newco shall be liable for, shall pay and shall indemnify and hold the
Surviving Corporation, its Subsidiaries, their Affiliates and their respective
directors, officers and employees harmless against all Losses arising from or
relating to any claim or dispute relating to the Gross-Up Agreements and/or
the Gross-Up Amount.
(b) Newco shall have the sole authority to deal with and control any
matters, disputes, claims, proceedings or litigations relating to the Gross-Up
Agreements and/or the Gross-Up Amount. If Acquiror receives written notice
that any Person is asserting a claim or is otherwise disputing the amount of
the Gross-Up Amount for which Newco is or may be liable, in whole or in part,
under this Agreement, Acquiror shall promptly inform Newco, and Newco, at its
sole cost and expense, shall have the sole right to control any resulting
actions, proceedings or negotiations, including the sole right to determine
whether and when to settle any such claim or dispute, PROVIDED HOWEVER, that
the failure by an indemnified party hereunder to so notify Newco shall not
affect Newco's obligations except to the extent that Newco is actually
prejudiced by such failure and Newco
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may not settle a claim without the Surviving Corporation's consent if such
settlement (i) makes an admission or acknowledgement of liability or
culpability with respect to any indemnified party hereunder, (ii) does not
include a complete release of such indemnified parties, or (iii) requires any
indemnified party hereunder to make any payment or forego or take any action
or otherwise materially adversely affect such indemnified party.
(c) Acquiror shall use commercially reasonable efforts to cooperate with
Newco at Newco's expense, in a timely manner in the resolution of any claim or
dispute by any Person relating to the Gross-Up Agreements and/or the Gross-Up
Amount, including the performance of all rights and non-monetary obligations
of the Surviving Corporation under the Gross-Up Agreements and the conduct of
any actions or proceedings relating thereto.
(d) Any amounts owed by Newco to any indemnified party under this Section
6.28 shall be paid within ten days of notice from such indemnified party,
PROVIDED, HOWEVER, that if Newco has not paid such amounts and is contesting
such amounts in good faith, Newco shall not be required to make payment until
it is determined finally, by settlement, by agreement or determination in
accordance with the Gross-Up Agreements or by a court, that payment is due.
6.29. AFFILIATE LETTERS; FCC LETTERS.
(a) At least thirty (30) days prior to the Closing Date, the Company shall
deliver to Acquiror a list of names and addresses of those persons who were,
in the Company's reasonable judgment, at the record date for the meeting of
the Company's stockholders to be held for the purposes of voting on the
Transactions, "affiliates" (each such person, an "Affiliate") of the Company
within the meaning of Rule 145 of the rules and regulations promulgated under
the Securities Act. The Company shall use all reasonable efforts to deliver or
cause to be delivered to Acquiror prior to the Closing Date, from each of the
Affiliates of the Company identified in the foregoing list, an Affiliate
Letter in the form attached hereto as Exhibit J. The Surviving Corporation
shall be entitled to place legends as specified in such Affiliate Letters on
the certificates evidencing any Acquiror Common Stock to be received by such
Affiliates pursuant to the terms of this Agreement, and to issue appropriate
stop transfer instructions to the transfer agent for the Acquiror Common
Stock, consistent with the terms of such Affiliate Letters.
(b) At least five (5) days prior to the Closing, the Company shall deliver
to Acquiror a list names and addresses of those Persons who, in the Company's
reasonable judgment will own immediately after the Effective Time 5% or more
of outstanding Acquiror Common Stock. The Company shall use all reasonable
efforts to deliver or cause to be delivered to Acquiror at the Closing, from
each of the stockholders identified on the foregoing list (other than
institutional holders of such Stock), an FCC Agreement in the form attached
hereto as Exhibit E other than those Persons who have executed such FCC
Agreement on the date hereof.
ARTICLE VII
CLOSING AND CLOSING DATE; CONDITIONS TO CLOSING
7.01. CLOSING AND CLOSING DATE. As soon as practicable after the
satisfaction or waiver of the conditions set forth herein (but no later than
five (5) business days thereafter) and immediately prior to the filing of the
Certificate of Merger, a closing of the Transactions (the "Closing") shall
take place at the offices of Fulbright & Xxxxxxxx L.L.P., 000 Xxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx, or on such other date and at such other location as the
parties may agree in writing. The date on which the Closing occurs is referred
to as the "Closing Date."
7.02. CONDITIONS TO THE OBLIGATIONS OF THE COMPANY, NEWCO AND ACQUIROR. The
respective obligations of the Company and Newco, on the one hand, to
consummate the Transactions and the obligations of the Acquiror, on the other
hand, to consummate the Merger are subject to the requirements that:
(a) The Transactions shall have been approved and adopted by the
stockholders of the Company and of Acquiror, as applicable and as
contemplated hereby;
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(b) The Transactions contemplated by Article II hereof shall have been
consummated in accordance with the terms hereof and in accordance with
applicable Law and the Company shall have drawn down in its entirety the
New Company Debt;
(c) Any waiting period applicable to the consummation of the Transactions
under the HSR Act shall have expired or been terminated;
(d) Any governmental or regulatory Licenses, notices or temporary or
permanent waivers, including FCC Approval, necessary for the performance of
the parties' respective obligations pursuant to this Agreement shall have
been either filed (in the case of notices) or received and be in effect,
PROVIDED that in no event shall the foregoing require the satisfaction of
any condition or the taking of any action that could under the terms of the
FCC Approval be so satisfied or taken subsequent to the consummation of the
Merger. "FCC Approval" means action by the FCC or its staff granting
consent to the transfer of control of the material Licenses held by
Broadcasting to Acquiror which: (i) has not been reversed, stayed,
enjoined, set aside, annulled or suspended; (ii) with respect to which no
timely request for a stay, petition for reconsideration or appeal of sua
sponte action of the FCC with comparable effect is pending; and (iii) as to
which the time for filing any such request, petition or appeal or for the
taking of any such sua sponte action by the FCC has expired;
(e) No federal, state or foreign governmental authority or other agency
or commission or court of competent jurisdiction shall have enacted,
issued, promulgated, enforced or entered any statute, rule, or regulation,
or any permanent injunction or other order (whether temporary, preliminary
or permanent), which remains in effect and which has the effect of making
any of the Transactions illegal or otherwise prohibiting any of the
Transactions, or which questions the validity or the legality of any of the
Transactions and which could reasonably be expected to have a Material
Adverse Effect on Broadcasting or on Acquiror and its Subsidiaries taken as
a whole; and
(f) The Registration Statement on Form S-4 shall have been declared
effective under the Securities Act and no stop orders with respect thereto
shall have been issued.
7.03. CONDITIONS TO THE OBLIGATIONS OF THE COMPANY AND NEWCO. The
obligations of the Company and Newco to effect the Transactions are subject to
the satisfaction, on or prior to the Closing Date, of the following
conditions:
(a) The representations and warranties of Acquiror contained in this
Agreement, the Transaction Agreements to which it is a party or in any
other document delivered pursuant hereto shall be true and correct in all
material respects on and as of the Closing Date with the same effect as if
made on and as of the Closing Date, and at the Closing Acquiror shall have
delivered to the Company and Newco a certificate to that effect;
(b) Each of the obligations of Acquiror to be performed on or before the
Closing Date pursuant to the terms of this Agreement or the Transaction
Agreements shall have been duly performed in all material respects on or
before the Closing Date, and at the Closing Acquiror shall have delivered
to the Company and Newco a certificate to that effect;
(c) The Acquiror Common Stock shall have been approved for listing on the
NYSE or the NASDAQ, as the case may be, subject to official notice of
issuance;
(d) The Newco Common Stock shall have been approved for listing on the
NYSE or the NASDAQ, as the case may be, subject to official notice of
issuance;
(e) [INTENTIONALLY OMITTED]
(f) The Company shall have received from the IRS an advance letter ruling
as contemplated by Section 6.16 hereof;
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(g) The Company shall have received from its counsel, Fulbright &
Xxxxxxxx L.L.P. (or another nationally recognized law firm acceptable to
the Company), an opinion that, based upon appropriate representations,
certificates and letters acceptable to Fulbright & Xxxxxxxx L.L.P. (or
another nationally recognized law firm acceptable to the Company) dated as
of the Closing Date, the Merger constitutes a tax-free reorganization under
Section 368(a)(1)(A) of the Code (with appropriate exceptions, assumptions
and qualifications); and
(h) The Company and Newco shall have received all customary closing
documents they may reasonably request relating to the existence of Acquiror
and the authority of Acquiror to enter into this Agreement, the Transaction
Agreements and the Transactions, all in form and substance reasonably
satisfactory to the Company and Newco.
7.04. CONDITIONS TO OBLIGATIONS OF ACQUIROR. The obligations of Acquiror to
effect the Merger are subject to the satisfaction, on or prior to the Closing
Date, of the following conditions:
(a) The representations and warranties of the Company and Newco contained
in this Agreement, the Transaction Agreements to which they are a party or
in any other document delivered pursuant hereto shall be true and correct
in all material respects on and as of the Closing Date with the same effect
as if made on and as of the Closing Date, and at the Closing the Company
and Newco shall have delivered to Acquiror their respective certificates to
that effect;
(b) Each of the obligations of the Company and Newco to be performed on
or before the Closing Date pursuant to the terms of this Agreement shall
have been duly performed in all material respects on or before the Closing
Date, and at the Closing the Company and Newco shall have delivered to
Acquiror their respective certificates to that effect;
(c) The Company shall have delivered to Acquiror a certificate signed by
the Chief Financial Officer of the Company certifying, as of the Closing,
as to the number of shares of capital stock of the Company outstanding,
indicating the class and series of such shares;
(d) Acquiror shall have received all customary closing documents it may
reasonably request relating to the existence of the Company, Newco, PBC and
the Broadcasting Subsidiaries and the authority of the Company and Newco to
enter into this Agreement and the Transactions, all in form and substance
reasonably satisfactory to Acquiror;
(e) Acquiror shall have received from its counsel, Xxxxxx & Xxxxx LLP (or
another nationally recognized law firm acceptable to Acquiror), an opinion
that, based upon appropriate representations, certificates and letters
acceptable to Xxxxxx & Xxxxx LLP (or another nationally recognized law firm
acceptable to Acquiror) dated as of the Closing Date, the Merger
constitutes a tax-free reorganization under Section 368(a)(1)(A) of the
Code (with appropriate exceptions, assumptions and qualifications);
(f) The Company shall have paid in full the Existing Company Debt as of
the Closing;
(g) There shall have been obtained and delivered to Acquiror all
necessary approvals and consents to the assignment to Acquiror of the
Station Network Affiliation Agreements; and
(h) Each of the Affiliates referred to in Section 6.29(a) shall have
executed and delivered to Acquiror the Affiliate Letter referred to
therein.
ARTICLE VIII
TERMINATION
8.01. TERMINATION. This Agreement may be terminated and the Transactions may
be abandoned at any time prior to the Closing:
(a) by mutual written consent duly authorized by the Boards of Directors
of the Company, Newco and Acquiror;
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(b) by either the Company or Acquiror (i) if, at the stockholders'
meetings referred to in Section 6.13 (including any postponement or
adjournment thereof), the Merger and the other Transactions that require
stockholder approval shall fail to be approved and adopted by the
affirmative vote specified herein, or (ii) so long as the terminating party
is not then in breach of any of its obligations hereunder, after May 1,
1999 or such other date as the parties shall have mutually agreed (the
"Termination Date") if the Merger shall not have been consummated on or
before such date;
(c) by the Company, provided neither it nor Newco is then in breach of
any of its material obligations hereunder, if either (i) Acquiror fails to
perform, in any material respect, any covenant in this Agreement when
performance thereof is due and does not cure the failure within twenty (20)
Business Days after written notice by the Company thereof, or (ii) any
other condition in Sections 7.02 or 7.03 has not been satisfied and is not
capable of being satisfied prior to the Termination Date;
(d) by the Company, whether or not the conditions set forth in Section
7.02 have been satisfied, if the Board of Directors of the Company
determines, with the advice of outside counsel, in the exercise of its
fiduciary duties to approve or recommend a Superior Proposal or to
authorize the Company to enter into an agreement with respect to a Superior
Proposal;
(e) by Acquiror, provided it is not then in breach of any of its material
obligations hereunder, if either (i) the Company or Newco fails to perform,
in any material respect, any covenant in this Agreement when performance
thereof is due and does not cure the failure within twenty (20) Business
Days after written notice by Acquiror thereof or (ii) any other condition
in Section 7.02 or Section 7.04 has not been satisfied and is not capable
of being satisfied prior to the Termination Date;
(f) [INTENTIONALLY OMITTED];
(g) by either the Company or Acquiror if either has received any
communication from an HSR Authority (such communication to be confirmed in
writing by such HSR Authority to the other party) indicating that an HSR
Authority has authorized the institution of litigation challenging any of
the Transactions under the U.S. antitrust laws, which litigation will
include a motion seeking an order or injunction prohibiting the
consummation of any of the Transactions; or
(h) by Acquiror if the Board of Directors of the Company shall have
withdrawn or modified in any manner materially adverse to Acquiror its
approval or recommendation of this Agreement or the Transactions or shall
have approved or recommended a Superior Proposal.
8.02. EFFECT OF TERMINATION. Except as set forth in the following sentence,
in the event of the termination of this Agreement and abandonment of the
Transactions by any of the parties pursuant to Section 8.01 hereof, prompt
written notice thereof shall be given to the other party and this Agreement,
except for the provisions of Section 6.06(f)-(j), Section 8.03, Section 9.08
and Section 9.12 and the provisions of the Confidentiality Agreement, shall
forthwith become null and void and have no effect, without any liability or
further obligation on the part of any party or its directors, officers or
stockholders. Nothing in this Section 8.02 shall relieve any party to this
Agreement of liability for breach of this Agreement. If this Agreement is
terminated as provided herein, all filings, applications and other submissions
relating to the Merger shall, to the extent practicable, be withdrawn from the
agency or Person to which made.
8.03. FEES AND EXPENSES.
(a) In order to induce Acquiror to, among other things, enter into this
Agreement, the Company agrees as follows: If (1) subsection (c) below does
not apply and (2) this Agreement is terminated (A) by the Company pursuant
to Sections 8.01(d), (B) by either the Company or Acquiror pursuant to
Section 8.01(b)(i) hereof in the event that the Merger, this Agreement and
the other Transactions are not approved at the stockholders' meeting of the
Company referred to in Section 6.13, or (C) by Acquiror pursuant to Section
8.01(h), then the Company shall pay to Acquiror a fee equal to $50,000,000.
(b) In order to induce the Company and Newco to, among other things,
enter into this Agreement, Acquiror agrees as follows: If this Agreement is
terminated by the Company or Acquiror pursuant to
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Section 8.01(b)(i) hereof, in the event that the Merger, this Agreement and
the other Transactions, if any, that require stockholder approval are not
approved at the stockholders' meeting of Acquiror referred to in Section
6.13, then Acquiror shall promptly pay to the Company a fee equal to
$50,000,000.
(c) In order to induce the Company and Newco to, among other things,
enter into this Agreement, Acquiror agrees promptly to pay to the Company a
fee equal to $50,000,000 in the event that the Company is unable to obtain
the New Company Debt at the time of any of the following: (i) this
Agreement is terminated pursuant to Section 8.01(a); (ii) this Agreement is
terminated pursuant to Section 8.01(b)(ii); or (iii) this Agreement is
terminated pursuant to Section 8.01(c)(i), in each case for any reason
other than (x) the Company's failure to use commercially reasonable efforts
to obtain the New Company Debt or (y) a breach of this Agreement by the
Company.
(d) Except in circumstances where the second sentence of Section 8.02 is
applicable or as otherwise expressly provided herein each of the parties
shall pay all costs and expenses incurred or to be incurred by it in
negotiating and preparing this Agreement and in carrying out and closing
the Transactions (including any title insurance policies, surveys and
environmental reports on the Real Property).
(e) Any amounts payable pursuant to Section 8.03 shall be made in
immediately available funds no later than two (2) Business Days after
termination of this Agreement.
ARTICLE IX
MISCELLANEOUS
9.01. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties contained herein shall not survive beyond the Closing Date. This
Section 9.01 shall not limit any covenant or agreement of the parties hereto
which by its terms requires performance after the Closing Date.
9.02. ENTIRE AGREEMENT. This Agreement, including the Exhibits and Schedules
hereto and the documents delivered pursuant to this Agreement, together with
the Confidentiality Agreement, constitute the entire agreement among the
parties with respect to the subject matter hereof and supersedes all prior
written and oral and all contemporaneous oral agreements and understandings
with respect to the subject matter hereof. The Exhibits and Schedules hereto
are an integral part of this Agreement and are incorporated by reference
herein.
9.03. NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given when delivered in person,
by telecopy (with confirmation of transmission), by express or overnight mail
delivered by a nationally recognized air courier (delivery charges prepaid),
or by registered or certified mail (postage prepaid, return receipt requested)
to the respective parties as follows:
If to Acquiror or to the Company (after the Merger):
Hearst-Argyle Television, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxx
Telecopy: (000) 000-0000
with a copy to:
Xxxxxx & Xxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxx, Esq.
Telecopy: (000) 000-0000
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If to the Company (before the Merger) or Newco:
Pulitzer Publishing Company
000 Xxxxx Xxxxxx Xxxxxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx
Telecopy: (000) 000-0000
with a copy to:
Fulbright & Xxxxxxxx L.L.P.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Telecopy: (000) 000-0000
or to such other address as the party to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
Any notice or communication delivered in person shall be deemed effective on
delivery. Any notice or communication sent by telecopy or by air courier shall
be deemed effective on the first business day at the place at which such
notice or communication is received following the day on which such notice or
communication was sent. Any notice or communication sent by registered or
certified mail shall be deemed effective on the fifth business day at the
place from which such notice or communication was mailed following the day on
which such notice or communication was mailed.
9.04. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, regardless of the laws that
might otherwise govern under principles of conflicts of laws applicable
thereto.
9.05. KNOWLEDGE OF THE COMPANY. The phrase "to the knowledge of the Company"
and phrases of similar import shall mean the actual knowledge of Xxxxxxx X.
Xxxxxxxx, Xxx X. Xxxxxx, Xxxxxx X. Xxxxxxx, Xxxxxxxx X. Xxxxxxxx XX, C. Xxxxx
Xxxxxx and Xxxx Xxxxxxx.
9.06. PARTIES IN INTEREST. This Agreement shall be binding upon and inure
solely to the benefit of each party hereto, and nothing in this Agreement,
express or implied, is intended to confer upon any other Person any rights or
remedies of any nature whatsoever under or by reason of this Agreement, except
for Sections 6.06(f)-(j), 6.25, 6.28 and 9.08 (which are intended to be for
the benefit of the Persons provided for therein and may be enforced by such
Persons).
9.07. COUNTERPARTS. This Agreement (and any amendment hereof) may be
executed in any number of counterparts, each of which shall be deemed to be an
original as against any party whose signature appears thereon, and all of
which shall together constitute one and the same instrument. This Agreement
(and any amendment hereof) shall become binding when one or more counterparts
hereof, individually or taken together, shall bear the signatures of all of
the parties reflected hereon as the signatories.
9.08. PERSONAL LIABILITY. This Agreement shall not create or be deemed to
create or permit any personal liability or obligation on the part of any
direct or indirect stockholder of any party hereto or any officer, director,
employee, agent, representative or investor of any party hereto.
9.09. BINDING EFFECT; ASSIGNMENT. This Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective legal
representatives and successors. This Agreement may not be assigned by any
party hereto and any purported assignment in violation hereof shall be null
and void.
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9.10. AMENDMENT. This Agreement may not be amended except by an instrument
in writing signed on behalf of all the parties. Any amendment to this
Agreement after the meetings of the stockholders of the Company and the
Acquiror referred to in Section 6.13 may, subject to applicable law, be made
without seeking the approval of such stockholders.
9.11. EXTENSION; WAIVER. All parties hereto affected thereby may (i) extend
the time for the performance of any of the obligations or other acts of any
other party hereto, (ii) waive any inaccuracies in the representations and
warranties of any other party contained herein or in any document, certificate
or writing delivered pursuant hereto by any other party, or (iii) waive
compliance with any of the covenants, agreements or conditions contained
herein or any breach thereof. Any agreement on the part of any party to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party.
9.12. LEGAL FEES; COSTS. If any party hereto institutes any action or
proceeding to enforce any provision of this Agreement, the prevailing party
therein shall be entitled to receive from the losing party reasonable
attorneys' fees and costs incurred in such action or proceeding, whether or
not such action or proceeding is prosecuted to final judgment.
9.13. DRAFTING. Each party acknowledges that its legal counsel participated
in the preparation of this Agreement and, therefore, stipulates that the rule
of construction that ambiguities are to be resolved against the drafting party
shall not be applied in the interpretation of this Agreement to favor any
party against the other.
9.14. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. The parties hereto
irrevocably: (a) agree that any suit, action or other legal proceeding arising
out of this Agreement may be brought in the courts of the State of New York or
the courts of the United States located in New York County, New York, (b)
consent to the jurisdiction of each court in any such suit, action or
proceeding, (c) waive any objection which they, or any of them, may have to
the laying of venue of any such suit, action or proceeding in any of such
courts, and (d) waives the right to a trial by jury in any such suit, action
or other legal proceeding. Each of the Company and Newco hereby designates and
appoints Fulbright & Xxxxxxxx L.L.P., 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000 (the "Authorized Agent"), as its agent to accept and acknowledge on its
behalf, service of any and all process which may be served in any such suit,
action or other proceeding, and agrees that service upon such Authorized Agent
shall be deemed in every respect service of process on the Company or Newco
(as the case may be) or with respect to Newco its successors or assigns and,
to the extent permitted by applicable law, shall be taken and held to be valid
personal service, except that such appointment shall end at the Effective Time
in the case of the Company. Each of the Company and Newco represent and
warrant that the Authorized Agent has agreed to act as such agent for service
of process.
ARTICLE X
DEFINITIONS
10.01. DEFINITIONS. When used in this Agreement, the following terms shall
have the meanings indicated.
"Acquiror" has the meaning set forth in the first paragraph of this
Agreement.
"Acquiror's Actuary" has the meaning set forth in Section 6.11(d).
"Acquiror Common Stock" means the Series A Common Stock, par value $.01 per
share, of Acquiror.
"Acquiror's Financial Statements" has the meaning set forth in Section 5.07.
"Acquiror's 10-K" has the meaning set forth in Section 5.07.
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"Acquiror's 10-Q" has the meaning set forth in Section 5.07.
"Acquiror's SEC Reports" has the meaning set forth in Section 5.06.
"Acquiror Schedule" has the meaning set forth in Section 6.22(b).
"Acquiror Voting Agreement" means the voting agreement, dated the date
hereof, between Acquiror, the Company and Hearst Corporation.
"Acquisition Proposal" has the meaning set forth in Section 6.01(a).
"Affiliate" of any Person means any other Person, directly or indirectly,
through one or more intermediary Persons, controlling, controlled by or under
common control with such Person.
"After Tax Basis" has the meaning set forth in Section 6.09(h)(i).
"Aggregate Consideration" has the meaning set forth in Section 1.02(d).
"Aggregate Shares Delivered" has the meaning set forth in Section 1.02(d).
"Agreed Rate" means the annual rate of interest quoted, from time to time,
by Citibank, N.A. in New York City as its prime rate of interest for the
purpose of determining the interest rates charged by it for United States
dollar commercial loans made in the United States.
"Agreement" or "this Agreement" shall mean, and the words "herein", "hereof"
and "hereunder" and words of similar import shall refer to, this instrument as
it from time to time may be amended, including the exhibits and schedules
hereto.
"Audit or "audited" when used in regard to financial statements shall mean
an examination of the financial statements by a firm of independent public
accountants in accordance with generally accepted auditing standards for the
purpose of expressing an opinion thereon.
"Authorized Agent" has the meaning set forth in Section 9.14.
"Broadcasting" means, collectively, PBC and the Broadcasting Subsidiaries.
"Broadcasting Assets" has the meaning set forth in Section 2.02(a).
"Broadcasting Employee" means any employee or former employee of
Broadcasting.
"Broadcasting Employee Plan" has the meaning set forth in Section 4.10(a).
"Broadcasting Pension Plan" has the meaning set forth in Section 4.10(b).
"Broadcasting Subsidiaries" has the meaning set forth in Section 2.02(a).
"Broadcasting Tax Returns" has the meaning set forth in Section 6.09(h)(ii).
"Broadcasting Unaudited Financial Statements" has the meaning set forth in
Section 4.03.
"Business Day" means any day other than a Saturday, Sunday or other day on
which commercial banking institutions in New York City are authorized or
required by law, regulation or executive order to be closed.
"Certificate of Merger" has the meaning set forth in Section 1.03.
"Certificates" has the meaning set forth in Section 1.04(b).
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"Closing" and "Closing Date" have the meanings set forth in Section 7.01.
"Closing Agreement" has the meaning set forth in Section 3.11(d).
"Code" means Internal Revenue Code of 1986, as amended.
"Common Stock Conversion Number" has the meaning set forth in Section
1.02(d).
"Communications Act" has the meaning set forth in Section 5.01.
"Company" has the meaning set forth in the first paragraph of this
Agreement.
"Company Charter Amendment" has the meaning set forth in Section 2.01(a).
"Company Class B Common Stock" means the Company's Class B Common Stock, par
value $.01 per share.
"Company Common Stock" means the Company's Common Stock, par value $.01 per
share.
"Company Consolidated Income Taxes" has the meaning set forth in Section
6.09(h)(iv).
"Company Consolidated Income Tax Returns" has the meaning set forth in
Section 6.09(h)(iii).
"Company Employee Plan" means any Employee Plan that is or was sponsored or
contributed to by the Company, Newco or any of their ERISA Affiliates covering
the employees or former employees (or their beneficiaries or dependents) of
the Company, Newco or any of their ERISA Affiliates.
"Company Financial Statements" has the meaning set forth in Section 3.07.
"Company Group" has the meaning set forth in Section 6.09(h)(v).
"Company Option Plans" has the meaning set forth in Section 6.12.
"Company Preferred Stock" has the meaning set forth in Section 3.05(a).
"Company's SEC Reports" has the meaning set forth in Section 3.06.
"Company Stock" means, collectively, the Company Common Stock and the
Company Class B Common Stock.
"Company 10-K" has the meaning set forth in Section 3.07.
"Company 10-Q" has the meaning set forth in Section 3.07.
"Confidentiality Agreement" has the meaning set forth in Section 6.05.
"Contract" means any contract, agreement or understanding.
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"Contribution" has the meaning set forth in Section 2.02(a).
"Contribution Agreement" has the meaning set forth in Section 2.01(b).
The term "control", with respect to any Person, shall mean the power to
direct the management and policies of such Person, directly or indirectly, by
or through stock ownership, agency or otherwise, or pursuant to or in
connection with an agreement, arrangement or understanding (written or oral)
with one or more other Persons by or through stock ownership, agency or
otherwise; and the terms "controlling" and "controlled" shall have meanings
correlative to the foregoing.
"Deal Expenses" means the sum of (i) all fees and expenses due Xxxxxxx Xxxxx
and Huntleigh relating to the Merger and the Transactions; (ii) all out-of-
pocket costs and expenses incurred by the Company or any of its Subsidiaries
with respect to this Agreement, the Merger and the Transactions, including
commitment fees payable to the providers of New Company Debt and all fees and
expenses due legal counsel, accountants, compensation advisors and other
advisors for the Company or any of its Subsidiaries relating to this
Agreement, the Merger and the Transactions to the extent not paid or provided
for on the Closing Date; (iii) all payments due at Closing (x) in connection
with the Transactions or (y) for the benefit of employees of the Company, PBC
or the Broadcasting Subsidiaries pursuant to the agreements listed on Schedule
6.11(f)(2) or 6.11(g); and (iv) all amounts payable to cancel all outstanding
options under the Company Option Plans immediately before the Closing.
"DGCL" has the meaning set forth in Section 1.02(e).
"Dissenting Shares" has the meaning set forth in Section 1.02(e).
"Dissenting Stockholder" has the meaning set forth in Section 1.02(e).
"Distribution" has the meaning set forth in Section 2.02(c).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means a Person and/or such Person's Subsidiary or any
trade or business (whether or not incorporated) which is under common control
with such entity or such entity's Subsidiaries or which is treated as a single
employer with such Person or any Subsidiary of such Person under Section
414(b), (c), (m) or (o) of the Code or Section 4001(b)(1) of ERISA.
"Effective Time" has the meaning set forth in Section 1.03.
"Employee Plan" has the meaning set forth in Section 4.10(a).
"Employee Stock Purchase Plan" means the Pulitzer Publishing Company 1997
Employee Stock Purchase Plan.
"Enforceability Exceptions" has the meaning set forth in Section 3.01.
"Environmental Law" or "Environmental Laws" means all laws, rules,
regulations, statutes, ordinances, decrees or orders of any governmental
entity relating to (i) the control of any potential pollutant or protection of
the air, water or land, (ii) solid, gaseous or liquid waste generation,
handling, treatment, storage, disposal or transportation, and (iii) exposure
to hazardous, toxic or other substances alleged to be harmful, and includes,
(A) the terms and conditions of any License from any governmental entity, and
(B) judicial, administrative, or other regulatory decrees, judgments, and
orders of any governmental entity. The term "Environmental Laws" shall
include, but not be limited to, the following statutes and the regulations
promulgated thereunder: the Clean Air
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Act, 42 U.S.C. (S) 7401 et seq., the Clean Water Act, 33 U.S.C. (S) 1251 et
seq., the Resource Conservation and Recovery Act, 42 U.S.C. (S) 6901 et seq.,
the Superfund Amendments and Xxxxxxxxxxxxxxx Xxx, 00 X.X.X. (X) 00000 et seq.,
the Toxic Substances Control Act, 15 U.S.C. (S) 2601 et seq., the Water
Pollution Control Act, 33 U.S.C. (S) 1251 et seq., the Safe Drinking Water
Act, 42 U.S.C.(S) 300f et seq., the Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. (S) 9601 et seq., and any state,
county, or local regulations similar thereto.
"Environmental Liabilities" shall mean any and all liabilities,
responsibilities, claims, suits, losses, costs (including remediation,
removal, response, abatement, clean-up, investigative, and/or monitoring costs
and any other related costs and expenses), other causes of action recognized
now or at any later time, damages, settlements, expenses, charges,
assessments, Liens, penalties, fines, pre-judgment and post-judgment interest,
attorney fees and other legal fees (i) pursuant to any agreement, order,
notice, requirement, responsibility, or directive (including directives
embodied in Environmental Laws), injunction, judgment or similar documents
(including settlements) arising out of or in connection with any Environmental
Laws, or (ii) pursuant to any claim by a governmental entity or other Person
for personal injury, property damage, damage to natural resources,
remediation, or similar costs or expenses incurred or asserted by such
governmental entity or Person pursuant to common law or statute.
"Estimated Working Capital Amount" has the meaning set forth in Section
6.22(a).
"Exchange Act" has the meaning set forth in Section 3.03.
"Exchange Agent" has the meaning set forth in Section 1.04(a).
"Existing Company Debt" means the sum as of the Closing Date of (i)
aggregate principal amount of debt under the Company's agreements with
Prudential referred to in Schedule 3.02, together with all accrued and unpaid
interest thereon, outstanding as of Closing Date, (ii) the principal amount of
debt under the Company's agreements with the First National Bank of Chicago
referred to in Schedule 3.02, together with all accrued and unpaid interest
thereon, outstanding as of the Closing Date, and (iii) any other Indebtedness
(other than the New Company Debt) of the Company and its Subsidiaries,
together with all accrued and unpaid interest thereon outstanding. Existing
Company Debt shall include any prepayment penalty or premium required to
prepay the Existing Company Debt at Closing.
"FCC" has the meaning set forth in Section 3.03.
"FCC Application" means any application filed with the FCC necessary to
transfer ownership of Broadcasting's FCC Licenses to Acquiror.
"Final Order" has the meaning set forth in Section 6.14(e).
"Final Working Capital Amount" has the meaning set forth in Section 6.22(e).
"FCC" has the meaning set forth in Section 3.03.
"FCC Approval" has the meaning set forth in Section 7.02(d).
"Form 8-K" has the meaning set forth in Section 6.21(a).
"Further Media Interest" has the meaning set forth in Section 6.14(d).
"GAAP" shall mean generally accepted accounting principles in effect on the
date hereof as set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board or
as may be generally accepted by the accounting profession of the United
States.
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"Xxxxxxx Sachs" means Xxxxxxx, Xxxxx & Co.
"Government Antitrust Entity" has the meaning set forth in Section 6.14(b).
"Government Communications Entity" has the meaning set forth in Section
6.14(b).
"Government Regulatory Entity" has the meaning set forth in Section 6.14(b).
"Governmental Authority" has the meaning set forth in Section 6.14(a).
"Gross-Up Agreements" means (i) the Agreement, dated as of May 12, 1986, by
and among The Pulitzer Publishing Company, a Missouri corporation, and each of
the owners of shares of capital stock of The Pulitzer Publishing Company who
was a signatory to such Agreement, (ii) the Agreement, dated as of May 12,
1986, by and among The Pulitzer Publishing Company and each of the owners of
shares of capital stock of The Pulitzer Publishing Company who was a signatory
to such Agreement, (iii) the Agreement, dated as of September 29, 1986, by and
among The Pulitzer Publishing Company and each of the parties thereto; and
(iv) the Agreement, dated as of September 29, 1986, by and among The Pulitzer
Publishing Company and each of the owners of shares of capital stock of The
Pulitzer Publishing Company who was a signatory to such Agreement.
"Gross-Up Amount" means the amount, if any, due by the Company to any Person
with respect to the consummation of the Transactions pursuant to the Gross-Up
Agreements.
"HSR Act" has the meaning set forth in Section 3.03.
"HSR Authority" means either the Department of Justice or the Federal Trade
Commission.
"Huntleigh" means Huntleigh Securities Corporation.
"IRS" means the Internal Revenue Service.
"Indebtedness" of any Person means all obligations of such Person (i) for
borrowed money, (ii) evidenced by notes, bonds, debentures or similar
instruments, (iii) for the deferred purchase price of goods or services (other
than trade payables or accruals incurred in the ordinary course of business),
(iv) under capital leases and (v) in the nature of guarantees of the
obligations described in clauses (i) through (iv) above of any other Person.
"Indemnified Party" has the meaning set forth in Section 6.06(h).
"Indemnifying Party" has the meaning set forth in Section 6.06(h).
"Indemnitee" has the meaning set forth in Section 6.09(e).
"Indemnitor" has the meaning set forth in Section 6.09(e).
"Joint Proxy Statement/Prospectus" has the meaning set forth in Section
6.06(a).
"Laws" means all applicable statutes, laws, ordinances, rules and
regulations (including any of the foregoing related to occupational safety,
storage, disposal, discharge into the environment of hazardous wastes,
environmental protection, conservation, unfair competition, labor practices or
corrupt practices).
"Licenses" means approvals, authorizations, consents, rights, certificates,
orders, franchises, determinations, permissions, permits, qualifications,
registrations, licenses, authorities or grants issued, declared, designated or
adopted by any nation or government, any federal, state, municipal or other
political subdivision thereof or any department, commission, board, bureau,
agency or instrumentality exercising executive, legislative, judicial,
regulatory or administrative functions pertaining to government.
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"Liens" means any lien, claim, charge, restriction, pledge, mortgage,
security interest or other encumbrance of any nature whatsoever.
"Losses" means all losses, claims, damages, liabilities or actions,
including any legal or other expenses reasonably incurred in connection with
investigating or defending any such loss, claim, damage or liability or action
or enforcing any indemnity with respect thereto.
"Material Adverse Effect" means a material adverse effect on the business,
condition (financial or otherwise) or assets of the named entity or the named
entities taken as a whole, other than changes or effects resulting from (i)
changes attributable to conditions affecting the newspaper, radio and/or
television businesses generally, (ii) changes in general economic conditions,
(iii) cyclical changes that are consistent with the past operating history of
the named entity or entities, or (iv) changes attributable to the announcement
or pendency of the Merger and the other Transactions. When the term "Material
Adverse Effect" or material is used with respect to more than one act,
occurrence, item or circumstance, all such acts, occurrences, items and
circumstances shall be considered individually and in the aggregate.
"Merger" has the meaning set forth in Section 1.01.
"Merger Stock" has the meaning set forth in Section 1.04(a).
"Multiemployer Plan" means a multiemployer plan, as defined in Sections
3(37) and 4001(a)(3) of ERISA.
"NASDAQ" means the Nasdaq National Market.
"NLRB" means the National Labor Relations Board.
"NYSE" means the New York Stock Exchange, Inc.
"New Company Debt" has the meaning set forth in Section 2.01(b).
"Newco" has the meaning set forth in the first paragraph of this Agreement.
"Newco's Actuary" has the meaning set forth in Section 6.11(d).
"Newco Charter Amendment" has the meaning set forth in Section 2.01(a).
"Newco Class B Common Stock" means the Class B Common Stock, $0.01 par value
per share, of Newco.
"Newco Common Shares" has the meaning set forth in Section 3.05(b).
"Newco Common Stock" means the Common Stock, $0.01 par value per share, of
Newco.
"Newco Preferred Stock" has the meaning set forth in Section 3.05(b).
"Newspaper Subsidiaries" means the Post-Dispatch division of the Company and
all direct and indirect Subsidiaries of the Company, other than Broadcasting,
prior to the Contribution.
"Other Filings" has the meaning set forth in Section 6.06(b).
"Outstanding Company Stock" has the meaning set forth in Section 1.02(d).
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"PBC" has the meaning set forth in Section 2.02(a).
"Permitted Exceptions" has the meaning set forth in Section 4.08(b).
"Person" means any individual, general partnership, limited partnership,
corporation, limited liability company, joint venture, trust, business trust,
cooperative or association, and the heirs, executors, administrators, legal
representatives, successors, and assigns of such Person where the context so
requires.
"Post-Closing Tax Period" has the meaning set forth in Section 6.09(h)(vii).
"Pre-Closing Tax Period" has the meaning set forth in Section 6.09(h)(vi).
"Preliminary Joint Proxy Statement/Prospectus" has the meaning set forth in
Section 6.06(a).
"Prudential" means The Prudential Insurance Company of America.
"Pulitzer Pension Plan" has the meaning set forth in Section 6.11(d).
"Pulitzer Savings Plan" has the meaning set forth in Section 6.11(c).
"Pulitzer Voting Agreement" means the amended and restated voting agreement,
dated as of the date hereof, between the Company and certain holders of
Company Stock.
"Real Property" means all realty owned or leased and used primarily in the
business and operations of PBC and the Broadcasting Subsidiaries, including
all appurtenances, improvements and fixtures located on such realty, but
excluding personal property.
"Record Date" has the meaning set forth in Section 2.02(c).
"Retained Assets" has the meaning set forth in the Contribution Agreement.
"Retained Business" means the assets and liabilities of the Company and its
Subsidiaries after giving effect to the Contribution and the Distribution.
"Retained Liabilities" has the meaning set forth in the Contribution
Agreement.
"Rules and Regulations" has the meaning set forth in Section 5.01.
"SEC" has the meaning set forth in Section 3.06.
"SEC Filings" has the meaning set forth in Section 6.06(c).
"Securities Act" has the meaning set forth in Section 3.03.
"Spin-Off Tax" has the meaning set forth in Section 6.09(h)(viii).
"Station Network Affiliation Agreements" has the meaning set forth in
Section 4.07.
"Stations" means, collectively, KETV-TV, KOAT-TV, KOCT-TV, KOVT-TV, KCCI-TV,
WLKY-TV, WGAL-TV, WDSU-TV, WYFF-TV, WXII-TV, WESH-TV, KTAR(AM), KMVP(AM),
KKLT(FM), WLKY(AM), and WXII(AM).
"Subsidiary" as to any Person means (i) any corporation of which such Person
owns, either directly or through its Subsidiaries, more than 50% of the total
combined voting power of all classes of voting securities of
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such corporation or (ii) any partnership, association, joint venture or other
form of business organization, whether or not it constitutes a legal entity,
in which such Person directly or indirectly through its Subsidiaries owns more
than 50% of the total equity interests.
"Superior Proposal" means an Acquisition Proposal that the Board of
Directors of the Company determines in the good faith exercise of its business
judgment (after consultation with the Company's independent financial
advisors) to be more favorable to the Company's stockholders than the Merger.
"Surviving Corporation" has the meaning set forth in Section 1.01.
"Tax" has the meaning set forth in Section 6.09(h)(x).
"Tax Return" has the meaning set forth in Section 6.09(h)(xi).
"Tax Ruling Request" has the meaning set forth in Section 3.11(d).
"Temporary Waiver" has the meaning set forth in Section 6.14(d).
"Termination Date" has the meaning set forth in Section 8.01(b).
"Transaction Agreement" has the meaning set forth in Section 3.01.
"Transactions" means (i) the Contribution, (ii) the Distribution, (iii) the
Company Charter Amendment, (iv) the Newco Charter Amendment, (v) the borrowing
by the Company of the New Company Debt, (vi) and any other transactions
contemplated by this Agreement (including the Merger) and the Transaction
Agreements.
"Transfer Agent" means First Chicago Trust Company of New York.
"Transferee DB Plan" has the meaning set forth in Section 6.11(d).
"Transferee DC Plan" has the meaning set forth in Section 6.11(c).
"Transferred Employees" has the meaning set forth in Section 6.11(b).
"Working Capital Amount" means the difference between (x) the total current
assets of the Company and its Subsidiaries and (y) the total current
liabilities (other than the New Company Debt, the Existing Company Debt and
Deal Expenses) of the Company and its Subsidiaries (in each case calculated in
accordance with GAAP immediately prior to the Effective Time and after giving
effect to the Contribution, the Distribution and the disposition of cash and
cash equivalents contemplated by Section 6.24).
10.02. INTERPRETATION. Unless the context otherwise requires, the terms
defined in Section 10.01 shall have the meanings herein specified for all
purposes of this Agreement, applicable to both the singular and plural forms
of any of the terms defined herein. All accounting terms defined in this
Section 10.01, and those accounting terms used in this Agreement not defined
in Section 10.01, except as otherwise expressly provided herein, shall have
the meanings customarily given thereto in accordance with GAAP. Except as
otherwise expressly provided herein, all terms used in conjunction with
description of securities have the meanings given to those terms under the
Exchange Act. When a reference is made in this Agreement to Sections, such
reference
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shall be to a Section of this Agreement unless otherwise indicated. The
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement.
Whenever the words "include", "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation". The use of the neuter gender herein shall be deemed to include
the masculine and feminine genders wherever necessary or appropriate, the use
of the masculine gender shall be deemed to include the neuter and feminine
genders and the use of the feminine gender shall be deemed to include the
neuter and masculine genders wherever necessary or appropriate.
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized as of the day
and year first above written.
Pulitzer Publishing Company
By: /s/ Xxxxxxx X. Xxxxxxxx
----------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title:Chairman of the Board,
President and Chief
Executive Officer
Pulitzer Inc.
By: /s/ Xxxxxxx X. Xxxxxxxx
----------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title:Chairman of the Board
Hearst-Argyle Television, Inc.
By: /s/ Xxxx X. Xxxxxx
----------------------------------
Name: Xxxx X. Xxxxxx
Title:Senior Vice-President,
Secretary and General
Counsel
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